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Exhibit 1
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SUBSCRIPTION AGREEMENT
BETWEEN
DANKA BUSINESS SYSTEMS PLC
AND
CYPRESS MERCHANT BANKING PARTNERS II L.P.,
CYPRESS MERCHANT BANKING II C.V.
AND
55TH STREET PARTNERS II L.P.
DATED AS OF NOVEMBER 2, 1999
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TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS............................................................
SECTION 1.1. Certain Defined Terms.....................................................
SECTION 1.2. Other Defined Terms.......................................................
SECTION 1.3. Other Definitional Provisions.............................................
ARTICLE II SUBSCRIPTION AND SALE..................................................
SECTION 2.1. The Closing...............................................................
SECTION 2.2. Subscription and Payment..................................................
SECTION 2.3. Conversion Price of Participating Shares..................................
SECTION 2.4. Closing Deliveries by the Company.........................................
SECTION 2.5. Closing Deliveries by the Subscribers.....................................
ARTICLE III REPRESENTATIONS AND WARRANTIES REGARDING
THE COMPANY............................................................
SECTION 3.1. Organization..............................................................
SECTION 3.2. Authority; Enforceability.................................................
SECTION 3.3. Capitalization............................................................
SECTION 3.4. Non-Contravention, etc....................................................
SECTION 3.5. Consents and Approvals....................................................
SECTION 3.6. Significant Subsidiaries, etc..............................................
SECTION 3.7. Company Reports...........................................................
SECTION 3.8. Financial Information.....................................................
SECTION 3.9. No Undisclosed Liabilities................................................
SECTION 3.10. Absence of Certain Changes or Events.....................................
SECTION 3.11. Material Contracts........................................................
SECTION 3.12. Employee Benefit Plans...................................................
SECTION 3.13. Compliance with Law; Other Instruments...................................
SECTION 3.14. Litigation...............................................................
SECTION 3.15. Real Property............................................................
SECTION 3.16. Intellectual Property....................................................
SECTION 3.17. Tax Matters..............................................................
SECTION 3.18. Environmental Laws.......................................................
SECTION 3.19. Insurance................................................................
SECTION 3.20. Brokers..................................................................
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SECTION 3.21. Transactions with Affiliates.............................................
SECTION 3.22. Labor Matters............................................................
SECTION 3.23. Year 2000 Problem........................................................
SECTION 3.24. Offering of Participating Shares.........................................
SECTION 3.25. Accuracy and Completeness of Information Provided........................
SECTION 3.26. No Other Representations or Warranties...................................
ARTICLE IV REPRESENTATIONS AND WARRANTIES REGARDING
THE SUBSCRIBERS........................................................
SECTION 4.1. Organization..............................................................
SECTION 4.2. Authority.................................................................
SECTION 4.3. Non-Contravention.........................................................
SECTION 4.4. Consents and Approvals....................................................
SECTION 4.5. Subscription for Investment...............................................
SECTION 4.6. Financial Capability......................................................
SECTION 4.7. Brokers...................................................................
SECTION 4.8. No Other Representations or Warranties....................................
ARTICLE V ADDITIONAL AGREEMENTS..................................................
SECTION 5.1. Conduct of Business Prior to the Closing..................................
SECTION 5.2. Regulatory and Other Authorizations; Notices and Consents.................
SECTION 5.3. Access to Information.....................................................
SECTION 5.4. Further Action............................................................
SECTION 5.5. Non-Solicitation..........................................................
SECTION 5.6. Availability of Shares.....................................................
SECTION 5.7. Other Businesses..........................................................
SECTION 5.8. Credit Agreement, etc.....................................................
SECTION 5.9. Use of Proceeds...........................................................
SECTION 5.10. Shareholder Approvals, etc...............................................
SECTION 5.11. Legend on Certificates for Participating Shares, etc.....................
SECTION 5.12. Directors' and Officers' Insurance.......................................
SECTION 5.13. Operating Company........................................................
ARTICLE VI CONDITIONS TO CLOSING..................................................
SECTION 6.1. Conditions to Obligations of the Subscribers..............................
SECTION 6.2. Conditions to Obligations of the Company..................................
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ARTICLE VII SURVIVAL; INDEMNIFICATION..............................................
SECTION 7.1. Survival of Representations and Warranties................................
SECTION 7.2. Indemnification...........................................................
SECTION 7.3. Indemnification Amounts. .................................................
SECTION 7.4. Additional Limitations....................................................
SECTION 7.5. Indemnification Procedures................................................
SECTION 7.6. Non-Exclusive Remedy......................................................
SECTION 7.7. Certain Limitations.......................................................
ARTICLE VIII TERMINATION............................................................
SECTION 8.1. Termination...............................................................
ARTICLE IX GENERAL PROVISIONS.....................................................
SECTION 9.1. Termination Fee............................................................
SECTION 9.2. Notices...................................................................
SECTION 9.3. Interpretation............................................................
SECTION 9.4. Counterparts..............................................................
SECTION 9.5. Entire Agreement; No Third Party Beneficiaries............................
SECTION 9.6. Governing Law; Consent to Jurisdiction....................................
SECTION 9.7. Severability..............................................................
SECTION 9.8. Assignment................................................................
SECTION 9.9. Amendment.................................................................
SECTION 9.10. Waiver of Jury Trial.....................................................
SECTION 9.11. Judgment Currency.......................................................
SECTION 9.12. Public Disclosure........................................................
SCHEDULES
EXHIBITS:
Exhibit A-1 Form of Articles Amendments
Exhibit A-2 Form of Shareholders Resolutions
Exhibit B Form of Registration Rights Agreement
Exhibit C Form of Certificate of Officer of the Company
Exhibit D-1 Form of Legal Opinion of Altheimer & Xxxx
Exhibit D-2 Form of Legal Opinion of Xxxxx Xxxx, Esq., General Counsel
of the Company
Exhibit E-1 Proposed Amendments to Credit Agreement
Exhibit E-2 Proposed Amendments to TROL Financing Agreements
Exhibit E-3 Form of Amendment to GE Capital Lease Financing
Agreements
Exhibit E-4 Modification to Proposed Amendments to Credit Agreement
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Exhibit F Form of Certificate of General Partner of Subscribers
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SUBSCRIPTION AGREEMENT
SUBSCRIPTION AGREEMENT (this "Agreement"), dated as of
November 2, 1999, between DANKA BUSINESS SYSTEMS PLC, a limited liability
company organized and existing under the laws of England and Wales (the
"Company"), and CYPRESS MERCHANT BANKING PARTNERS II L.P., a Delaware limited
partnership, CYPRESS MERCHANT BANKING II C.V., a limited partnership organized
and existing under the laws of The Netherlands and 55TH STREET PARTNERS II
L.P., a Delaware limited partnership (collectively, the "Subscribers").
W I T N E S S E T H :
WHEREAS, subject to the terms and conditions set forth in
this Agreement, the Company has agreed to issue 6.50% Senior Convertible
Participating Shares (the "Participating Shares"), which are convertible into
Ordinary Shares, nominal value 1.25 xxxxx per share ("Ordinary Shares"), of the
Company and which may, in certain circumstances, be delivered to such holders
in the form of American Depositary Shares representing such Ordinary Shares
("ADSs"), and the Subscribers have agreed to subscribe for the Participating
Shares;
WHEREAS, as a condition and inducement to the Subscribers'
willingness to enter into this Agreement, prior to or at Closing, the Company's
shareholders must approve resolutions (the "Shareholders Resolutions")
approving amendments to the Articles of Association of the Company and certain
other matters necessary for the consummation of the transactions herein
provided substantially in the form of Exhibit A-1 hereto (the "Articles
Amendments"), to be effective as of the Closing (the Shareholders Resolutions
to be substantially in the form of Exhibit A-2 hereto);
WHEREAS, as a condition and inducement to the Subscribers'
willingness to enter into this Agreement, prior to or at Closing, the Company
must enter into a Registration Rights Agreement with the Subscribers in the
form of Exhibit B hereto (the "Registration Rights Agreement"), to be dated as
of the Closing; and
WHEREAS, the Company and the Subscribers are entering into
this Agreement to provide for the issue and subscription of the Participating
Shares.
NOW, THEREFORE, in consideration of the premises and the
mutual terms, conditions and agreements set forth herein, the Company and the
Subscribers hereby agree as follows:
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ARTICLE I
DEFINITIONS
SECTION 1.1. Certain Defined Terms. As used in this Agreement,
the following terms shall have the following meanings:
"ADR Deposit Agreement" means the Deposit Agreement dated as
of June 25, 1992 between the Company and The Bank of New York, as Depositary,
and owners and holders of American Depositary Receipts, as amended.
"ADR Depositary" means The Bank of New York as depositary
under the ADR Deposit Agreement.
"ADRs" means American Depositary Receipts evidencing ADSs and
issued from time to time pursuant to the ADR Deposit Agreement.
"Affiliate" means, with respect to any Person, any other
Person that directly, or indirectly through one or more intermediaries,
controls, is controlled by or is under common control with, such specified
Person, for so long as such Person remains so associated to the specified
Person.
"Business Day" means any day other than a Saturday, Sunday or
other day on which commercial banks in New York City or London are authorized
or required by law to close.
"Companies Acts" means the U.K. Companies Xxx 0000 and 1989
(including all instruments or orders made or issued thereunder).
"Company Plans" means the U.S. Plans and the U.K. Plans.
"control" means, with respect to the relationship between or
among two or more Persons, the possession, directly or indirectly, of the power
to direct or cause the direction of the affairs or management of a Person,
whether through the ownership of voting securities, as trustee or executor, by
contract or otherwise, and the terms "controlled by" and "under common control
with" shall have correlative meanings.
"Convertible Subordinated Notes Indenture" means the
Indenture dated as of March 13, 1995 between the Company and The Bank of New
York, as trustee, relating to the Convertible Subordinated Notes.
"Convertible Subordinated Notes" means the Company's
outstanding 6.75% Convertible Subordinated Notes due 2002 in an aggregate
principal amount of U.S.$200,000,000.
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"Credit Agreement" means the Credit Agreement dated as of
December 5, 1995, among the Company, Dankalux Sarl & Co., SCA and Danka Holding
Company, the several financial institutions party thereto, and Nationsbank,
N.A., as agent, as amended or supplemented (taking into account waivers
thereunder).
"ERISA" means the U.S. Employee Retirement Income Security Act
of 1974, as amended
"Encumbrance" means any security interest, right of
pre-emption, pledge, mortgage, lien (statutory or other), charge, equity,
option to purchase, lease or otherwise acquire any interest or any claim,
restriction, covenant, title defect, hypothecation, assignment, deposit
arrangement or other encumbrance of any kind or any preference, priority or
other security agreement or preferential arrangement of any kind or nature
whatsoever (including, without limitation, any conditional sale or other title
retention agreement).
"Exchange Act" means the U.S. Securities Exchange Act of 1934,
as amended.
"GE Capital Lease Financing Agreements" means the Global
Operating Agreement, dated as of December 22, 1997, between General Electric
Capital Corporation and Danka Business Systems PLC, as amended or supplemented,
each Principal Document (as therein defined), as amended or supplemented, and
the Operating Agreement, dated as of January 29, 1999, between Danka Office
Imaging Company and General Electric Capital Corporation, as amended or
supplemented (taking into account any waivers thereunder).
"Governmental Authority" means any governmental, regulatory
or administrative agency, authority, instrumentality or commission or any
court, tribunal or judicial or arbitral body of the United States (federal,
state or local), the United Kingdom, any other country or the European
Community or any other supranational organization or body.
"Governmental Order" means any order, writ, judgment,
injunction, decree, stipulation, determination or award entered by or with any
Governmental Authority.
"HSR Act" means the U.S. Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended.
"Indebtedness" means, with respect to any Person, (a) all
indebtedness of such Person, whether or not contingent, for borrowed money
(including reimbursement obligations in respect of letters of credit,
guarantees or similar instruments), (b) all obligations of such Person for the
deferred subscription price of property or services, (c) all other indebtedness
of such Person evidenced by notes, bonds, debentures, letters of credit or
other similar instruments, (d) all obligations under leases required to be
classified and accounted for as capital leases in accordance with U.S. GAAP and
(e) all indebtedness of others referred to in clauses (a) through (d) above
guaranteed directly or indirectly in any manner by such Person, except, in the
case of
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clauses (a) through (e), indebtedness of the Company or any of its Subsidiaries
to the Company or any of its wholly-owned Subsidiaries.
"Intellectual Property" means all intellectual property
rights, including without limitation (a) copyrights and copyrightable works,
including computer hardware, firmware, applications, programs, software,
databases, equipment, systems, semiconductors and related items, (b)
trademarks, service marks, trade names, brand names, domain names, product
names, corporate names and logos, (c) patents, inventions, technology,
processes and know-how, (d) trade secrets and confidential or proprietary
information and materials and (e) all registrations, applications, recordings,
licenses or other agreements and common-law or other rights related to the
foregoing.
"Listing Rules" means the listing rules of the London Stock
Exchange.
"London Stock Exchange" means London Stock Exchange Limited.
"Market Value" shall have the meaning set forth in Articles
Amendments (except that, solely for purposes of this Agreement, the Market
Value for the Ordinary Shares shall be determined based upon the closing prices
for the ADSs for a 10 (not 20) day trading period ended on the relevant date of
determination hereunder).
"material" shall have the meaning for such term as used under
the Securities Act and the Exchange Act (including, without limitation, under
SEC Staff Accounting Bulletin No. 99) ; provided, however, that, in the case of
the Company, the term "material" shall, to the extent relevant or applicable in
the case of a particular representation, warranty, covenant, agreement or
condition, be determined based upon the Company and its Subsidiaries taken as a
whole, and the term "materiality" and the phrase "in all material respects"
shall have correlative meanings.
"Material Adverse Effect" means a material adverse effect
upon the business, operations, properties, assets, liabilities, financial
condition, results of operations or prospects of the Company and its
Subsidiaries, taken as a whole, or on the ability of the parties hereto to
perform their respective obligations under this Agreement and the Registration
Rights Agreement and to consummate the transactions contemplated hereby and
thereby (including, without limitation, the issuance and sale of the
Participating Shares, the conversion of the Participating Shares into Ordinary
Shares or ADSs and the issuance of additional Participating Shares as dividends
or by way of bonus issue on the Participating Shares).
"knowledge" means, with respect to any Person, the actual
knowledge of such Person or, in the case of the Company or its Subsidiaries,
the actual knowledge of at least one of the Company's executive officers (as
such term is defined in Rule 405 under the Securities Act), in each case, after
reasonable inquiry in the light of the circumstances.
"Permits" means all licenses, permits, orders, consents,
approvals, registrations, authorizations, qualifications and filings with and
under all U.S. federal, state or local, English or
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other non-U.S. laws and Governmental Authorities and the NASDAQ National Market
System and the London Stock Exchange.
"Person" means any individual, corporation, limited liability
company, limited or general partnership, joint venture, association,
joint-stock company, trust, unincorporated organization, government or any
agency or political subdivisions thereof, or any group comprised of two or more
of the foregoing.
"SEC" means the U.S. Securities and Exchange Commission.
"Securities Act" means the U.S. Securities Act of 1933, as
amended.
"Share Capital" means any and all shares, interest,
participation or other equity equivalents (however designated and whether
voting or non-voting), and any and all rights (other than any evidence of
indebtedness), warrants or options exchangeable for or convertible into such
shares, interest, participation, other equity equivalents including, to the
fullest extent applicable, American depository receipts or similar instruments
representing any such Share Capital.
"Significant Subsidiary" means any Subsidiary that
constitutes a "significant subsidiary" (as such term is defined in Article
1-02(w) of Regulation S-X under the Securities Act).
"Subsidiary" means (i) any corporation of which a majority of
the securities entitled to vote generally in the election of directors thereof,
at the time as of which any determination is being made, are owned by another
entity, either directly or indirectly and (ii) any joint venture, general or
limited partnership, limited liability company or other legal entity in which
an entity is the record or beneficial owner, directly or indirectly, of a
majority of the voting interests or the general partner.
"TROL Financing Agreements" means the Participation
Agreement, dated as of November 15, 1995, among Danka Holding Company, as
Construction Agent, Danka Holding Company, as Lessee, First Security Bank of
Utah, N.A., as Owner Trustee under the Danka Trust 1995-1, Nationsbank of
Florida, N.A., as Holder, Nationsbank of Florida, N.A., as Administrative Agent
for the Lenders and Sun Trust Bank, Tampa Bay, as Co-Agent, as amended or
supplemented, and each other Operative Agreement (as therein defined), as
amended or supplemented (taking into account any waivers thereunder).
"Taxes Act" means the U.K. Income and Corporation Xxxxx Xxx
0000.
"Voting Shares" means shares of the class or classes of Share
Capital (including, in the case of the Company, the Ordinary Shares and the
Participating Shares) pursuant to which the holders thereof have the general
voting power to vote at meetings of Shareholder
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(irrespective of whether or not at the time shares of any other class or
classes shall have or might have voting power by reason of the happening of any
contingency).
"U.K. GAAP" means generally accepted accounting principles
applied on a consistent basis and set forth in, or in accordance with, the U.K.
Companies Acts 1985, the U.K. Statements of Standard Accounting Practice, the
U.K. Financial Reporting Standards and pronouncements of the Urgent Issues Task
Force in the United Kingdom. The requirement that such principles be applied on
a consistent basis shall mean that the accounting principles applied in a
current period are comparable in all material respects to those applied in a
preceding period.
"U.K. Plan" means any arrangement for the provision of
relevant benefits (as defined in Section 612(1) of the Taxes Act excluding the
words "or to be given on or in anticipation of or in connection with any change
in the nature of the service of the employee in question" in lines 3 and 4 of
that definition, under which any employee or former employee of the Company or
any of its Subsidiaries has any present or future right to benefits and under
which the Company or any of its Subsidiaries has any present or future
liability.
"U.S. GAAP" means generally accepted accounting principles
applied on a consistent basis and set forth in the opinions of the Accounting
Principles Board of the American Institute of Certified Public Accountants, or
their successors, which are applicable in the circumstances as of the date in
question. The requirement that such principles be applied on a consistent basis
shall mean that the accounting principles applied in a current period are
comparable in all material respects to those applied in a preceding period.
"U.S. Plan" means any "employee benefit plan" (within the
meaning of ERISA section 3(3), including, without limitation, multiemployer
plans within the meaning of ERISA section 3(37)), stock purchase, stock option,
severance, employment, change-in-control, fringe benefit, collective
bargaining, bonus, incentive, commission, profit sharing, deferred compensation
and any other employee benefit plan, agreement or program, whether or not
subject to ERISA (including any funding mechanism therefor now in effect or
required in the future as a result of the transactions contemplated by this
Agreement and the Registration Rights Agreement or otherwise), whether formal
or informal, oral or written, under which any employee or former employee of
the Company or any of its Subsidiaries has any present or future right to
benefits and under which the Company or any of its Subsidiaries has any present
or future liability, other than any plan, agreement or program which is
maintained outside the United States primarily for the benefit of non-U.S.
residents.
SECTION 1.2. Other Defined Terms. The following terms shall
have the meanings defined for such terms in the sections set forth below:
Term Section
---- -------
ADSs preamble
Antitrust Division 5.2(a)
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Articles Amendments preamble
Balance Sheets 3.9
Closing 2.1
Closing Date 2.1
Code 3.12(c)
Company Reports 3.7
Competition Act 3.13(c)
Contract 3.4
Controlled Group 3.12(c)
Conversion Price 2.3
Damages 7.2(a)
Deductible 7.3(a)
Environmental Laws 3.18(c)
Environmental Permits 3.18(c)
Forward-Looking Statement 3.8
FTC 5.2(a)
Government Approval 3.5
HSR Approval 3.5
Indemnitee 7.4(a)
Indemnitor 7.4(a)
Insurance Policies 3.19
Law 3.4
Lease 3.15(c)
Litigation 3.14
Material Company Intellectual Property 3.16(a)
Material Contracts 3.11
Material Leased Properties 3.15(b)
Material Owned Properties 3.15(a)
Material Properties 3.15(b)
Materials of Environmental Concern 3.18(c)
Non-Governmental Approval 3.5
Notice 7.4(a)
Ordinary Shares preamble
Participating Shares preamble
Subscription Price 2.2
Registration Rights Agreement preamble
Shareholders Resolutions preamble
Software 3.23
Tax Return 3.17(v)
Taxes 3.17(v)
Year 2000 Compliant 3.23
SECTION 1.3. Other Definitional Provisions. (a) The words
"hereof," "herein" and "hereunder" and words of similar import when used in
this Agreement shall refer to this
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Agreement as a whole and not to any particular provision of this Agreement, and
Article, Section and Exhibit references are to this Agreement unless otherwise
specified.
(b) The meanings given to terms defined herein shall be
equally applicable to both the singular and plural forms of such terms.
(c) All references to U.S. dollar amounts in this Agreement
shall be deemed to include, to the fullest extent applicable, the equivalent
amount in any relevant non-U.S. currency translated into U.S. dollars on the
date of determination based upon the (i) rate for customs purposes by The
Federal Reserve Bank of New York for cable transfers payable in such non-U.S.
currency or, in the absence thereof, (ii) the exchange rate quoted or published
by the relevant central bank for such non-U.S. currency or, in the absence
thereof, (iii) the exchange rate quoted or published by the foreign exchange
operations of an internationally recognized commercial bank selected in good
faith by the Company.
(d) All references to U.S. federal or New York state legal
terms or concepts in this Agreement shall be deemed to include, to the fullest
extent applicable, the equivalent legal terms or concepts in or of other
jurisdictions. Notwithstanding the preceding sentence or any provision of this
Agreement to the contrary, the preceding sentence and the application of the
definitional provisions thereof shall be subject in all respects to Section
9.6.
ARTICLE II
SUBSCRIPTION AND SALE
SECTION 2.1. The Closing. The closing (the "Closing") of the
transactions provided for in this Agreement shall be held at the offices of
Xxxxxxx Xxxxxxx & Xxxxxxxx, 00 Xxxxxxxxxxx, 00xx Xxxxx, Xxxxxx XX0X 0XX,
Xxxxxxx as promptly as possible after, and in no event later than five Business
Days after, the conditions to the Closing set forth in Article VI hereof have
been satisfied or waived (other than the conditions which are set forth in
Sections 6.1(n) and 6.2(i) or which by their terms are to be satisfied at the
Closing), or at such other time, date and place as shall be agreed upon by the
parties hereto. The actual time and date of the Closing are herein called the
"Closing Date."
SECTION 2.2. Subscription and Payment. Upon the terms and
subject to the conditions of this Agreement, each of the Subscribers hereby
agrees to subscribe for and purchase, at the Closing, the number of
Participating Shares set forth opposite its name on Schedule 2.2, and the
Company hereby agrees to allot and issue, to the Subscribers, at the Closing,
against payment of the subscription price in immediately available funds, an
aggregate of 200,000 Participating Shares, in each case, fully paid and free
and clear of all Encumbrances, for an aggregate subscription price of
U.S.$200,000,000 (the "Subscription Price").
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SECTION 2.3. Conversion Price of Participating Shares. Each
Participating Share shall, subject to the next sentence, initially be
convertible into 320 Ordinary Shares based upon a Conversion Price (as such
term is defined in the form of Articles Amendments) of U.S.$3.125 per Ordinary
Share. The Conversion Price shall be subject to adjustment prior to issue and
allotment of the Participating Shares at the Closing in the event that (i) the
Market Value for the Ordinary Shares as determined at the close of business
(New York City time) three Business Days immediately preceding the Closing Date
shall have decreased to below U.S.$2.25 per Ordinary Share (for the avoidance
of doubt, after taking into account the then prevailing ratio of Ordinary
Shares per ADS) and (ii) the Company and the Subscribers, in their respective
sole discretion, shall mutually agree in writing not later than the close of
business (New York City time) on the Business Day immediately preceding the
Closing Date to a downward adjustment to the Conversion Price, in which event
each Participating Share shall be initially convertible into a higher number of
Ordinary Shares based upon a Conversion Price per Ordinary Share equal to such
Market Value multiplied by a factor of 1.25.
SECTION 2.4. Closing Deliveries by the Company. At the
Closing, the Company shall deliver to the Subscribers:
(i) certificates evidencing the Participating Shares,
registered in the name of the applicable Subscriber;
(ii) a receipt for the Subscription Price;
(iii) an executed Registration Rights Agreement;
(iv) a non-refundable commission payable to the Subscribers
or an Affiliate of the Subscribers by wire transfer of immediately
available funds to a bank account or accounts to be designated by the
Subscribers in writing at least two Business Days prior to the Closing
Date in an amount equal to U.S.$4,000,000, which represents 2% of the
Subscription Price (for the avoidance of doubt, the Company being
responsible for any VAT payable in respect of such commission).
SECTION 2.5. Closing Deliveries by the Subscribers. At the
Closing, each of the Subscribers shall deliver to the Company:
(i) the applicable Subscription Price for the Participating
Shares to be subscribed for by such Subscriber pursuant to Section
2.2, by wire transfer of immediately available funds to a bank account
or accounts to be designated by the Company in writing at least two
Business Days prior to the Closing Date;
(ii) receipts for the Participating Shares subscribed for by
such Subscriber pursuant to Section 2.2; and
(iii) an executed Registration Rights Agreement.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES REGARDING THE COMPANY
The Company hereby represents and warrants to the Subscribers
on the date hereof as follows:
SECTION 3.1. Organization. The Company is a limited liability
company duly incorporated and validly existing under the laws of England and
Wales. Each of the Company's Subsidiaries is a corporation, limited liability
company or other Person duly organized, validly existing and, to the extent
applicable, in good standing under the laws of the jurisdiction of its
organization, except where the failure to be so organized, existing or in good
standing that would not, individually or in the aggregate, be reasonably
expected to have a Material Adverse Effect. The Company and each of its
Subsidiaries have full power and authority to conduct their respective
businesses as they are presently being conducted and to own, lease and operate
their respective properties and assets, except, in the case of any Subsidiary
only, where the failure to have such power or authority would not, individually
or in the aggregate, be reasonably expected to have a Material Adverse Effect.
The Company and each of its Subsidiaries are duly qualified to do business as
foreign entities and are in good standing in each jurisdiction in which the
character or location of the properties and assets owned or operated by them or
the nature of the businesses conducted by them makes such qualification
necessary, except where the failure to be so qualified or in good standing,
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect. The Company has provided to the Subscribers a complete
and correct copy of its Memorandum and Articles of Association, and all
amendments thereto, as in effect on the date of this Agreement.
SECTION 3.2. Authority; Enforceability. (a) The Company has
all necessary corporate power and authority to enter into this Agreement and
the Registration Rights Agreement and, subject to the Shareholders Resolutions
being passed, perform its obligations hereunder and thereunder and consummate
the transactions contemplated hereby and thereby. The Company has, subject to
the Shareholders Resolutions being passed, taken all corporate action necessary
to execute and deliver this Agreement and the Registration Rights Agreement, to
consummate the transactions contemplated hereby and thereby and to perform
their respective obligations hereunder and thereunder. This Agreement and the
Registration Rights Agreement have been or will be duly executed and delivered
by the Company. Assuming the due execution of this Agreement and the
Registration Rights Agreement by the Subscribers, this Agreement constitutes,
and the Registration Rights Agreement will constitute, legal, valid and binding
obligations of the Company enforceable against it in accordance with their
terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws of general applicability relating
to or affecting creditors' rights, general equitable principles (whether
considered in a proceeding in equity or at law) and an implied covenant of good
faith and fair dealing (it being recognized that the issuance of ADSs
representing, and the related deposit of, Ordinary Shares to be issued upon
conversion of Participating Shares will be subject to the provisions of the ADR
Deposit Agreement).
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(b) Upon the passing of the Shareholders Resolutions by the
Company's shareholders, no further corporate action is required to make
effective the Articles Amendments and such other matters as are referred to in
the Shareholders Resolutions.
SECTION 3.3. Capitalization. (a) As of October 29, 1999, the
capitalization of the Company consisted of:
(i) 500,000,000 authorized Ordinary Shares, of which
233,026,993 shares were issued and fully paid; and
(ii) no shares of any other class or series of Share
Capital were authorized or issued.
As of October 29, 1999, 187,456,851 Ordinary Shares were represented by ADSs.
Since October 29, 1999, no Ordinary Shares have been issued,
other than upon the exercise of Company options described in Schedule 3.3(b)
and the issue of 4,959,128 Ordinary Shares for the Company's 401(k) plan
representing the employer stock match as set forth in Schedule 3.3(b).
All of the issued Ordinary Shares have been duly and validly
authorized and validly issued and are fully paid and nonassessable and were not
issued in violation of, or subject to, any preemptive, subscription or other
similar rights of any other Person. All of the outstanding ADSs have to the
knowledge of the Company, been duly and validly authorized and validly issued
and are entitled to the benefits specified in the corresponding ADRs and in the
ADR Deposit Agreement.
(b) Except as set forth on Schedule 3.3(b), and except as
provided in Section 2.2, there are no subscriptions, options, warrants, puts,
calls, commitments, contracts, preemptive rights, demands or other rights,
agreements or arrangements outstanding as to which the Company or any of its
Subsidiaries is a party for the purchase of, nor any securities issued by the
Company or any of its Subsidiaries that are convertible into or exchangeable
for, any Share Capital of the Company (or any other securities of the Company
or any of its Subsidiaries which, whether after notice, lapse of time or
payment of monies, are or would be convertible into or exercisable or
exchangeable for Share Capital of the Company), nor has the Company taken or
agreed to take any action to issue or grant the same. Except as set forth in
Schedule 3.3(b), the Company is not obligated to purchase, redeem or otherwise
acquire any shares of its Share Capital. Except for any sanction which may be
imposed on a shareholder for failing to comply with a notice served under
section 212 of the U.K. Companies Xxx 0000, there are no restrictions upon the
voting or transfer of any Voting Shares pursuant to the Memorandum and Articles
of Association of the Company or any agreement or other instrument to which the
Company or any of its Subsidiaries are a party or by which the Company or any
of the Subsidiaries are bound. Except as set forth on Schedule 3.3(b), the
consummation of the transactions contemplated by this Agreement will not
trigger the anti-dilution provisions or other price adjustment mechanisms
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of any outstanding subscriptions, options, warrants, puts, calls, commitments,
contracts, preemptive rights, demands, conversion rights or other agreements or
arrangements under which the Company or any of its Subsidiaries is or may be
obligated to issue or acquire Ordinary Shares or any other Share Capital.
(c) At the Closing, the authorized capital of the Company
will be:
(i) 500,000,000 Ordinary Shares; and
(ii) 500,000 Participating Shares.
When issued in accordance with this Agreement and the terms of the
Participating Shares, respectively, the Participating Shares, the Ordinary
Shares to be issued upon the conversion of the Participating Shares and any
additional Participating Shares to be issued as dividends or by way of bonus
issue on the Participating Shares will have been duly and validly authorized,
will be validly issued, fully paid and nonassessable and will be delivered to
the Subscribers free and clear of all Encumbrances (other than any Encumbrances
created by the Subscribers) and will not be issued in violation of, nor subject
to, any preemptive, subscription or other similar rights of any other Person.
Any ADSs that may be issued in connection with the conversion of the
Participating Shares will, to the knowledge of the Company, upon issuance be
duly and validly issued and will also be entitled to the benefits specified in
the corresponding ADRs and in the deposit agreement relating to such ADSs.
(d) Except as set forth on Schedule 3.3(d), and except for
the Registration Rights Agreement, the Company has not granted or agreed to
grant any rights relating to the registration of its securities under U.S.
applicable federal and state securities laws, including piggyback registration
rights.
(e) Neither the Company nor any of its Subsidiaries is a
party to, or has knowledge of, any voting trusts, proxies or any other
agreements or understandings with respect to the voting of the Ordinary Shares
pursuant to which any Person, acting pursuant to such voting trust, proxies or
other agreements or understandings, controls more than 5% of the voting rights
of the Ordinary Shares.
(f) As of the date hereof, the only outstanding Indebtedness
for borrowed money of the Company and its Subsidiaries is (i) Indebtedness
under the Credit Agreement and the Convertible Subordinated Notes and (ii) the
Indebtedness set forth on Schedule 3.3(f). There exists (i) no default or event
of default (with or without notice or lapse of time or both) by the Company or
any of its Subsidiaries under the provisions of the Credit Agreement and (ii)
no default or event of default (with or without notice or lapse of time or
both) by the Company or any of its Subsidiaries under the provisions of any
other instrument evidencing such other Indebtedness or of any agreement
relating thereto, that, in either case, permits or would reasonably be expected
to result in the parties thereto accelerating all or any part of such
Indebtedness, except, in the case of clause (ii), where such acceleration would
not result in a
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default under the Credit Agreement and would not otherwise, individually or in
the aggregate, be reasonably expected to have a Material Adverse Effect.
SECTION 3.4. Non-Contravention, etc. (a) Except as set forth
on Schedule 3.4, neither the execution or delivery of this Agreement or the
Registration Rights Agreement by the Company nor the performance by the Company
of its obligations hereunder or thereunder nor the consummation by the Company
of the transactions contemplated hereby or thereby (including, without
limitation, the allotment and issue of the Participating Shares, the conversion
of the Participating Shares into Ordinary Shares, the issuance and delivery of
ADSs and the creation, allotment and issue of additional Participating Shares
as dividends or by way of bonus issue on the Participating Shares), will result
in (i) a violation of or a conflict with any provision of the Memorandum and
Articles of Association of the Company or the comparable organizational
documents of any of its Subsidiaries, (ii) breach of, or a default under (with
or without notice or lapse of time or both), any term or provision of, or
create any right of termination, cancellation, acceleration or additional
payment arising under, any material provision of any note, bond, mortgage,
indenture, license, contract, commitment, arrangement, agreement, lease or
other instrument or obligation (each, a "Contract") or material Permit to which
the Company or any of its Subsidiaries is a party or is subject or by which any
of its properties or assets are bound, (iii) a violation by the Company or any
of its Subsidiaries of any Government Order or statute, law, ordinance, rule or
regulation of the United States (federal, state or local), the United Kingdom,
any other country or the European Community or any other supranational
organization or body ("Law") to which the Company or any of its Subsidiaries is
subject or by which any of its properties or assets are bound, or (iv) the
imposition of any material Encumbrance on the business, properties or assets of
the Company or any of its Subsidiaries or any of the Ordinary Shares or the
Participating Shares (it being recognized that the issuance of ADSs
representing, and the related deposit of, Ordinary Shares to be issued upon
conversion of Participating Shares will be subject to the provisions of the ADR
Deposit Agreement).
(b) The notices, proxy materials and circulars relating to
the Shareholders Resolutions and the Articles Amendments, when prepared, will
contain all information and particulars required, to the extent applicable,
pursuant to the Securities Act, the Exchange Act, the Companies Acts, the
Listing Rules and any other applicable Law.
SECTION 3.5. Consents and Approvals. Except as set forth on
Schedule 3.5, no consent, approval, order or authorization of, notice to, or
declaration, filing or registration with, any Governmental Authority
("Government Approval"), or consent, approval or waiver of any other Person
("Non-Governmental Approval"), is required to be made or obtained by the
Company in connection with the execution, delivery and performance of this
Agreement or the Registration Rights Agreement and the consummation of the
transactions contemplated hereby or thereby (including, without limitation, the
allotment and issue of the Participating Shares, the conversion of the
Participating Shares into Ordinary Shares, the issuance and delivery of ADSs
and the creation, allotment and issue of additional Participating Shares as
dividends or by way of bonus issue on the Participating Shares) except for (i)
the Shareholders Resolutions and the Articles Amendments and ancillary filings
in respect thereof with the U.K. Companies Registry
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and the London Stock Exchange, and the clearance by the SEC and the London
Stock Exchange of all necessary notices, proxy materials and circulars related
thereto, (ii) the amendment to the Credit Agreement, the TROL Financing
Agreements and the GE Capital Lease Financing Agreements as contemplated by
Section 5.8, (iii) the filing of any notices, reports and other documents
required by, and the expiration or termination of any waiting periods under,
the HSR Act ("HSR Approval") and any notices or filings under European
Community or European national antitrust, competition or merger laws and
regulations, (iv) such other Non-Governmental Approvals the failure of which to
obtain would not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect and except, further, as may be required under
any U.S. state securities or "blue sky" laws the failure of which to obtain
would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect and (v) such Governmental Approvals as are contemplated
by the Registration Rights Agreement.
SECTION 3.6. Significant Subsidiaries, etc. (a) Schedule
3.6(a) sets forth each Significant Subsidiary of the Company, including its
name, place of organization or formation, and if not wholly owned directly or
indirectly by the Company, the record ownership as of the date of this
Agreement of all Share Capital issued by such Significant Subsidiary. All
shares of Share Capital of any Significant Subsidiary directly or indirectly
owned by the Company have been duly and validly authorized and validly issued,
are fully paid, and, in the case of corporations, nonassessable and, except as
set forth on Schedule 3.6(a), are directly or indirectly owned by the Company
free and clear of all Encumbrances and have not been issued in violation of,
nor subject to, any preemptive, subscription or other similar rights of any
other Person (other than as described on Schedule 3.6(a)).
(b) There are no outstanding subscriptions, options,
warrants, puts, calls, commitments, contracts, preemptive rights, demands or
other rights, agreements or arrangements as to which the Company or any of its
Significant Subsidiaries is a party for the purchase of, nor any securities
issued by the Company or any of its Significant Subsidiaries convertible into
or exchangeable for, any Share Capital of any Significant Subsidiary of the
Company (or any other securities of any Significant Subsidiary of the Company
which, whether after notice, lapse of time or payment of monies, are or would
be convertible into or exercisable or exchangeable for Share Capital of any
Significant Subsidiary of the Company), nor has any Significant Subsidiary of
the Company taken or agreed to take any action to issue or grant the same, in
each case other than agreements or arrangements providing for the issuance of
any Share Capital of any Significant Subsidiary to the Company or any of its
other direct or indirect wholly-owned Significant Subsidiaries (and not to any
other Person).
(c) None of the Company or any of its Significant
Subsidiaries is party to any voting trust, proxy or any other agreement or
understanding with respect to the voting of any Share Capital of any
Significant Subsidiary of the Company.
(d) Except for the Subsidiaries, the Company does not own any
material Share Capital, other securities or other interest in any other Person,
and neither the Company nor any of its Significant Subsidiaries has any
written, or to the knowledge of the Company, oral
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understanding or agreement to provide any material funds to, or make any
material investment (in the form of a loan, capital contribution or otherwise)
in, any other Person, other than a wholly-owned Subsidiary of the Company.
SECTION 3.7. Company Reports. The Company has made available
to the Subscribers an accurate and complete copy of each report, return,
document, notice or announcement filed since January 1, 1997 by the Company
with the SEC pursuant to the Exchange Act, with Companies House pursuant to the
Companies Acts or with the London Stock Exchange pursuant to the Listing Rules
(collectively, and in each case including all exhibits and schedules thereto
and documents incorporated by reference therein, the "Company Reports"). As of
its date of filing, each Company Report complied in all material respects with
the requirements of applicable law and the rules and regulations promulgated
thereunder applicable to such Company Report, except as set forth in Schedule
3.7. No Company Report (including any and all financial statements included
therein) contained when filed or, in the case of any Company Report filed since
January 1, 1999 (except to the extent revised or superseded by a subsequent
filing with the SEC, Companies House or the London Stock Exchange, as the case
may be, prior to the date hereof) contains, any untrue statement of a material
fact or omitted or omits to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances in which they were made, not misleading. Since January 1, 1997,
the Company has filed all reports and other documents required to be filed by
it under applicable law on a timely basis (after giving effect to Rule 12b-25
under the Exchange Act). The Company has duly registered its Ordinary Shares
and ADSs under the Exchange Act in accordance with the Exchange Act and the
rules and regulations promulgated by the SEC thereunder, and its Ordinary
Shares have been duly admitted to listing under the Listing Rules.
Notwithstanding the preceding sentences of this Section 3.7, any projection,
business plan or similar forward-looking statement (a "Forward-Looking
Statement") contained in a Company Report shall not be deemed to have contained
an untrue statement of a material fact or omitted to state any fact necessary
to make the statements therein not misleading if such Forward-Looking Statement
(i) was prepared in good faith, (ii) was based upon reasonable assumptions and
(iii) the Company did not believe and had no reasonable grounds to believe that
such Forward-Looking Statement contained an untrue statement of a material fact
or omitted to state a material fact necessary to make the statements therein
not misleading at the time of preparation or delivery thereof.
SECTION 3.8. Financial Information. Each of the consolidated
financial statements (including the notes thereto) included in the Company
Reports complied as to form, as of its date of filing with the SEC, Companies
House or the London Stock Exchange, as the case may be, in all material
respects with applicable legal and accounting requirements and the published
rules and regulations of the SEC or the London Stock Exchange, respectively,
with respect thereto, has been prepared in accordance with U.S. GAAP and U.K.
GAAP, respectively, applied on a consistent basis during the periods involved
(except as may be indicated in the notes thereto) and fairly present, in all
material respects, the consolidated financial position of the Company and its
consolidated Subsidiaries as of the dates thereof and the consolidated results
of their operations and cash flows for the periods then ended. The books and
records of the
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Company and its consolidated Subsidiaries have been, and are being, maintained
in all material respects in accordance with U.S. GAAP and U.K. GAAP,
respectively.
SECTION 3.9. No Undisclosed Liabilities. Neither the Company
nor any of its Subsidiaries had at June 30, 1999, and since such date none of
them has incurred, any liabilities or obligations of any nature whatsoever
(whether accrued, absolute, contingent or otherwise and whether or not required
to be reflected in the Company's financial statements in accordance with U.S.
GAAP or U.K. GAAP, as the case may be), except for (i) liabilities included or
reserved for in the Company's audited consolidated balance sheet (including the
notes thereto) included in its Annual Report on Form 10-K for the fiscal year
ended March 31, 1999 or the Company's unaudited consolidated balance sheet
(including the notes thereto) included in its Quarterly Report on Form 10-Q for
the quarter ended June 30, 1999, each as filed with the SEC (the "Balance
Sheets"), (ii) liabilities disclosed on Schedule 3.9, (iii) liabilities
incurred since June 30, 1999 in the ordinary course of business consistent with
past practice, (iv) obligations to be performed or satisfied after the date
hereof under any existing Contract or Permit and (v) any other liabilities
which would not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect.
SECTION 3.10. Absence of Certain Changes or Events. (a)
Except as set forth in the Company Reports filed and publicly available prior
to the date hereof, since June 30, 1999, no event, change or circumstance has
occurred which has had, or would reasonably be expected to result in,
individually or in the aggregate, a Material Adverse Effect.
(b) Except as disclosed in the Company Reports filed and
publicly available prior to the date hereof, since June 30, 1999, the Company
has not taken any action or omitted to take any action and there has not
occurred any event which, if it had taken place following the execution of this
Agreement, would not have been permitted by Section 5.1 hereof without the
prior consent of the Subscribers.
SECTION 3.11. Material Contracts. Schedule 3.11(a) sets forth
all Contracts to which the Company or its Subsidiaries is a party or is subject
that are material to the Company and its Subsidiaries taken as a whole
(collectively, the "Material Contracts"). Each of the Material Contracts is in
full force and effect, and, assuming the due authorization, execution and
delivery thereof by the counterparties thereto, is legal, valid and binding
obligations of the Company or its Subsidiary, as the case may be, enforceable
against it in accordance with its terms, subject to the effects of bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and similar laws
of general applicability relating to or affecting creditors' rights, general
equitable principles (whether considered in a proceeding in equity or at law)
and an implied covenant of good faith and fair dealing. Except as set forth on
Schedule 3.11(b), there are no existing or alleged defaults, nor have any
events or circumstances occurred which, with or without notice or the lapse of
time or both, would constitute defaults by the Company or its Subsidiaries, or,
to the knowledge of the Company, any other party, under any of the Material
Contracts.
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SECTION 3.12. Employee Benefit Plans. (a) Schedule 3.12
contains a true and complete list of each material Company Plan.
(b) (i) Each U.S. Plan has been established and administered
in material compliance with its terms and the applicable provisions of ERISA,
the U.S. Internal Revenue Code of 1986, as amended (the "Code"), and other
applicable Law; (ii) each U.S. Plan which is intended to be qualified within
the meaning of Code section 401(a) is so qualified and has received a favorable
determination letter as to its qualification, and nothing has occurred, whether
by action or failure to act, that could reasonably be expected to cause the
loss of such qualification; (iii) with respect to each U.S. Plan, no event has
occurred and no condition exists that would subject the Company or any of its
Subsidiaries, either directly or by reason of their affiliation with any member
of their "Controlled Group" (defined as any organization which is a member of a
controlled group of organizations within the meaning of Code sections 414(b),
(c), (m) or (o)), to any tax, fine, lien, penalty or other liability imposed by
ERISA, the Code or other applicable Law; (iv) no U.S. Plan provides retiree
welfare benefits and neither the Company nor any of its Subsidiaries have any
obligation to provide any retiree welfare benefits other than as required by
Section 4980B of the Code; and (v) neither the Company nor any member of its
Controlled Group has engaged in, or is a successor or parent corporation to an
entity that has engaged in, a transaction described in Sections 4069 or 4212(c)
of ERISA, except, in the case of clauses (i) through (v), for any failures,
conditions or other circumstances which would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
(c) None of the U.S. Plans is subject to Title IV of ERISA
(including, without limitation, any multiemployer plan within the meaning of
ERISA section 4001(a)(3)) and none of the Company, its Subsidiaries or any
member of their Controlled Group has incurred any material withdrawal liability
under Title IV of ERISA which remains unsatisfied. All benefits payable under
the U.K. Plans are "money purchase benefits" within the meaning of Section
181(1) Xxxxxxx Xxxxxxx Xxx 0000 or are, in all material respects, effectively
and fully insured under policies with insurers of repute.
(d) Each U.K. Plan is approved as an exempt approved scheme
(within the meaning of Chapter I of Part XIV of the Taxes Act) or an approved
personal pension scheme (within the meaning of Chapter IV of Part XIV of the
Taxes Act) and, to the knowledge of the Company, all the U.K. Plans have at all
times been administered in all material respects in accordance with the trusts
powers and provisions of the U.K. Plans and the requirements of applicable Law
and of the Pension Schemes Office and in all material respects with due regard
to the relevant requirements of trust law.
(e) With respect to any Company Plan, (i) no actions, suits
or claims (other than routine claims for benefits in the ordinary course) are
pending or, to the knowledge of the Company, threatened and (ii) there are no
matters which have been or are likely to be investigated by the Occupational
Pensions Regulatory Authority in respect of any U.K. Plan, except, in the case
of clauses (i) and (ii), for any actions, suits, claims or matters which would
not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.
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(f) No Company Plan exists that could result in the payment
to any present or former employee of the Company or any of its Subsidiaries of
any money or other property or accelerate or provide any other rights or
benefits to any present or former employee of the Company or any of its
Subsidiaries as a result of the transactions contemplated by this Agreement and
the Registration Rights Agreement. There is no contract, plan or arrangement
(written or otherwise) covering any employee or former employee of the Company
or any of its Subsidiaries that, individually or collectively, could give rise
to the payment of any amount that would not be deductible pursuant to the terms
of Section 280G of the Code, except for any such contract, plan or arrangement
which would not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect.
(g) As of the Closing, the Company constitutes an "operating
company" as defined in 29 CFR ss. 2510.3-101(c).
SECTION 3.13. Compliance with Law; Other Instruments. (a)
Except as set forth on Schedule 3.13(a), the Company and its Subsidiaries are
in compliance with, and are not in default under, all applicable Laws and
Government Orders except for such failures to be in compliance or such defaults
which, individually or in the aggregate, would not reasonably be expected to
have a Material Adverse Effect. The Company and its Subsidiaries have not
received any notice of, and to the knowledge of the Company, no investigation
or review is in process or threatened by any Governmental Authority with
respect to, any violation or alleged violation of any Law or Government Order
other than any violation which would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
(b) The Company holds all Permits necessary for the ownership
and conduct of its business in each of the jurisdictions in which it conducts
or operates its business in the manner now conducted and all of such Permits
are in full force and effect, except for those failures to hold or to remain in
full force and effect which, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect. There are no pending
or, to the knowledge of the Company, threatened, suits, actions, proceedings or
investigations with respect to the possible revocation, cancellation,
suspension, limitation or nonrenewal of any such Permits, and there has
occurred no event which (whether with notice or lapse of time or both) could
reasonably be expected to result in or constitute the basis for such a
revocation, cancellation, suspension, limitation or nonrenewal thereof, except
in such cases where such revocation, cancellation, suspension, limitation or
nonrenewal would not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect.
(c) The Company and each of the Subsidiaries is not, and has
not been party to any agreement between undertakings, decision by any
association of undertakings or concerted practice which will following the
entry into force of the U.K. Competition Act 1998 (the "Competition Act") in
respect of such agreement, decision or practice (as the case may be) infringe
the Chapter I prohibition of the Competition Act, whether or not it will be
exempted under sections 4 to 11 of the Competition Act or be excluded under
section 3 of the Competition Act and has not in respect of any such agreement,
decision or practice received, or made any
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notifications seeking, early guidance from the Director General of Fair Trading
pursuant to paragraph 7(2) of Schedule 13 of the Competition Act; and the
Company and each of the Subsidiaries is not and has not been, party to any
conduct, course of conduct, arrangement, action or omission which constitutes
an abuse of dominant position under Chapter II of the Competition Act,
following the entry into force of the Competition Act.
SECTION 3.14. Litigation. Except as disclosed on Schedule
3.14, there is no action, order, writ, summons, application, injunction,
judgment, fine or decree outstanding or suit, litigation, proceeding, arbitral
action, investigation or claim, including, without limitation, those involving
any Governmental Authority ("Litigation"), pending or, to the knowledge of the
Company, threatened by or against or relating to (a) the Company or any of its
Subsidiaries or any of their respective assets or properties, which, if
reasonably expected to be adversely determined and if so adversely determined,
would, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect or (b) the transactions contemplated by this Agreement
and the Registration Rights Agreement. The Company does not have any knowledge
of any event which could lead to any such Litigation of the type referred to in
clause (a) or (b) of the preceding sentence, except as set forth on Schedule
3.14.
SECTION 3.15. Real Property.
(a) Except for the Encumbrances described in Section 3.15(c)
and except as disclosed on Schedule 3.15(c), the Company and/or any of its
Subsidiaries own good and marketable title to all of the material real property
(including all buildings, structures and improvements thereon) owned by the
Company or any of its Subsidiaries (the "Material Owned Properties"), free and
clear of any material Encumbrances.
(b) (i) Except for the Encumbrances described in Section
3.15(c) and except as set forth on Schedule 3.15(b), the Company and/or any of
its Subsidiaries holds a valid leasehold interest in the material real property
(including all buildings, structures and improvements thereon) leased by the
Company or any of its Subsidiaries (the "Material Leased Properties" and,
together with the Material Owned Properties, the "Material Properties")
pursuant to a valid lease or ground lease (each, a "Lease"), (ii) each Lease
relating to a Material Leased Property as of the date hereof and immediately
prior to the Closing will be in full force and effect and is valid and
enforceable in accordance with its terms, (iii) the Company or its Subsidiary
which is the lessee under each Lease relating to a Material Leased Property is
not in default under any such Lease in respect of any monetary obligation or
otherwise in any material respect, subject however to obtaining any consents
identified on Schedule 3.15(b) as it relates to such Lease and (iv) the Company
or its Subsidiary which is the lessee under each Lease relating to a Material
Leased Property enjoys peaceable and quiet possession thereunder.
(c) Except as set forth on Schedule 3.15(c), the Properties
are not subject to any material Encumbrances except for (i) Encumbrances
imposed or promulgated by law or any Governmental Authority with respect to
real property, including zoning regulations that do not adversely affect the
current use of the Material Property, or materially detract from the value of
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or materially interfere with the present use of the Material Property; (ii)
mechanics', carriers', workmen's, repairmen's or other like liens arising or
incurred in the ordinary course of business which relate to liabilities the
total amount of which are not material or are for amounts not yet due; (iii)
any other item currently of record in the applicable land or comparable real
property records that does not materially detract from the value of or
materially interfere with the present use of the applicable Material Property,
and do not otherwise materially impair business operations conducted by the
Company and its Subsidiaries and which have been incurred only in the ordinary
course of business; and (iv) any other Encumbrances which are not, individually
or in the aggregate, material to the Company and its Subsidiaries taken as a
whole.
(d) There is no pending or, to the knowledge of the Company,
threatened condemnation, expropriation, eminent domain or similar proceeding
affecting all or any part of the Material Properties, and the Company and its
Subsidiaries have not received any written or oral notice of any of the same or
have any knowledge that any such proceeding is contemplated.
SECTION 3.16. Intellectual Property. (a) Schedule 3.16(a)
sets forth a complete and accurate list of all material Intellectual Property
that the Company and its Subsidiaries own or are licensed to use (in each case,
as set forth on Schedule 3.16(a)) (the "Material Company Intellectual
Property"). All of the Material Company Intellectual Property is valid,
enforceable, unexpired, is free of Encumbrances, has not been abandoned and, to
the knowledge of the Company, does not infringe or otherwise impair the
Intellectual Property or other rights of any Person, except where any failure
with respect to the foregoing would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect. The Company owns or
has the valid right to use all of the Intellectual Property used in or
necessary for the conduct of its business as currently conducted, except where
any failure with respect to the foregoing would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
(b) The Company has not licensed or otherwise granted to
others any rights to use the Material Company Intellectual Property.
(c) To the knowledge of the Company, the use of the Material
Company Intellectual Property by the Company is in accordance with any
applicable licenses pursuant to which the Company acquired the right to use the
Material Company Intellectual Property.
(d) The Company and its Subsidiaries have taken all
reasonable actions to protect or maintain the Material Company Intellectual
Property. To the Company's knowledge, no Person is challenging, infringing on
or otherwise violating any right of the Company with respect to the Material
Company Intellectual Property, and no Government Order has been rendered or is,
to the knowledge of the Company, threatened, by any Governmental Authority that
would limit, cancel or question the validity of, or the right of the Company or
any Subsidiary to own or use any Material Company Intellectual Property, in
each case where the foregoing would, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
SECTION 3.17. Tax Matters. Except as set forth on Schedule
3.17:
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(a) There have been properly completed and filed on a timely
basis (taking into account extensions of time to file granted therefor) all
material Tax Returns required to be filed with respect to the Company and each
of its Subsidiaries on or prior to the date hereof;
(b) All Taxes of the Company and each of its Subsidiaries
with respect to taxable periods, or portion thereof, ending on or before the
Closing Date have been paid or an adequate reserve, or liability (other than
for deferred Taxes except to the extent that deferred Taxes includes any
liability for current Taxes) for any unpaid Taxes has been established on the
most recent balance sheets;
(c) (i) No issues have been raised in writing by any taxing
authority which could give rise to an adjustment in excess of U.S.$50,000 in
connection with any Tax Return of the Company or any of its Subsidiaries with
respect to the Company or any of its Subsidiaries for any taxable period with
respect to which the statute of limitations has not expired, (ii) no waivers of
statutes of limitation with respect to any such Tax Returns that have been
given by the Company or any of its Subsidiaries are currently in force and no
power of attorney granted by or with respect to the Company and any of its
Subsidiaries is currently in force, (iii) all deficiencies asserted or
assessments made as a result of any examinations have been paid, (iv) neither
the Company nor any of its Subsidiaries has (A) applied for or received a tax
ruling or (B) entered into any closing agreement under Section 7121 of the Code
(or any similar provision of U.S. state or local or non-U.S. Law), and (v)
neither the Company nor any of its Subsidiaries has agreed to make any material
adjustment under Section 481(a) of the Code (or any similar provision of U.S.
state or local or non-U.S. Law) by reason of a change of accounting or
otherwise;
(d) All material arrangements, agreements or undertakings,
between the Company or any of its Subsidiaries and the Internal Revenue
Service, the Inland Revenue, H.M. Customs & Excise or any other non-U.S. tax
authorities regarding or affecting the taxation treatment of the Company or any
of its Subsidiaries have been disclosed on Schedule 3.17(d);
(e) There are no material charges, liens or powers of sale
for Taxes on or over any asset of the Company or any of its Subsidiaries other
than for current Taxes not yet due and payable or if due, (i) not delinquent or
(ii) being contested in good faith by appropriate proceedings;
(f) Neither the Company nor any of its Subsidiaries has ever
been a member of an affiliated group of corporations within the meaning of
Section 1504 of the Code;
(g) No consent has been filed relating to the Company or any
of its Subsidiaries pursuant to Section 341(f) of the Code;
(h) The Company and each of its Subsidiaries has duly and
timely withheld from employee salaries, wages, and other compensation and paid
over to the appropriate taxing authorities all material amounts required to be
so withheld and paid over for all periods under all
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applicable law. The Company and each of its Subsidiaries has withheld and paid
over all other material amounts required to be so withheld and paid over for
all periods under all applicable Law;
(i) Neither the Company nor any of its Subsidiaries has made
any material payments, or is currently obligated to make any material payments
that will not be deductible under Section 280G of the Code;
(j) As of the Closing Date, neither the Company nor any of
its Subsidiaries will be a party to, be bound by or have any obligation under,
any tax sharing agreement or similar contract or arrangement or any agreement
that obligates it to make any material payments computed by reference to the
taxes, taxable income or taxable losses of any other Person, other than
agreements among the Company and its wholly-owned Subsidiaries;
(k) The aggregate amount of U.S. federal income tax net
operating losses of the U.S. subsidiaries (all of which are members of a U.S.
federal income tax consolidated group) as of the end of the fiscal year March
31, 1999, after adjustment for net operating loss carrybacks to prior years but
unadjusted for (1) amounts representing timing differences which will result in
deductions to the consolidated group in taxable years subsequent to March 31,
1999, and (2) the portion of the tax reserve on the Company's March 31, 1999
financial statements attributable to such subsidiaries, was not less than
U.S.$232,000,000;
(l) Neither the Company's nor any of its Subsidiaries' U.S.
federal income tax net operating loss are subject to a limitation under Section
382 of the Code, and the acquisition of the Shares by the Buyer will not
trigger a Section 382 limitation;
(m) All arrangements for surrenders (other than among the
Company and its wholly-owned Subsidiaries) allow tax assets in a Subsidiary to
be sold for a sum equal to the percentage rate of corporation tax prevailing in
the year of surrender;
(n) No jurisdiction seeks to charge tax on the worldwide
profits or gains of the Company or its Subsidiaries other than the
jurisdictions in which the Company or its Subsidiaries currently report their
worldwide profits or gains;
(o) If the Company is in a VAT group for the purposes of the
U.K. Value Added Tax Xxx 0000, all the members of the VAT group are 100%
Subsidiaries of the Company;
(p) Stamp duty has been paid on the title documents of all
material business assets used in the U.K. and acquired in the last six years;
and
(q) For purposes of this Agreement, the terms below are
defined as follows:
(i) "Taxes" means all forms of tax, duty, rate, levy, charge
or other imposition or withholding whenever and by whatever authority
imposed and whether of the Xxxxxx
00
00
Xxxxxx, xxx Xxxxxx Xxxxxxx, or elsewhere, including, without
limitation, any tax (including income tax required to be deducted or
withheld from or accounted for in respect of any payment), corporation
tax, advance corporation tax, capital gains tax, capital transfer tax,
inheritance tax, development land tax, petroleum revenue tax, value
added tax, customs duties, excise duties, lottery duty, air passenger
duty, insurance premium tax, rates (including the uniform business
rate), stamp duty, capital duty, stamp duty reserve tax, national
insurance and other similar contributions, any liability arising under
Section 419, Section 601 or Section 703 of the Taxes Act and any other
taxes, duties, rates, levies, charges, imposts or withholdings
corresponding to, similar to, replaced by or replacing any of them
together with any interest, penalty or fine in connection with any
taxation, and any liability to make a payment by way of reimbursement,
recharge, indemnity, damages or a management charge connected in any
way with any taxation and regardless of whether any such taxes,
duties, rates, levies, charges, imposts, withholdings, interest,
penalties or fines are chargeable directly or primarily against or
attributable directly or primarily to the Company, any of its
Subsidiaries or any other person and of whether any amount in respect
of any of them is recoverable from any other person.
(ii) "Tax Return" means any return, report, information
return or other document (including any related or supporting
information) filed or required to be filed with any taxing authority
with respect to Taxes.
SECTION 3.18. Environmental Laws. (a) (i) the Company and its
Subsidiaries comply and have complied, during all applicable statute of
limitations periods, with all applicable Environmental Laws and, the Company
and its Subsidiaries possess and comply, and have possessed and complied during
all applicable statute of limitations periods, with all Environmental Permits;
(ii) there are and have been no Materials of Environmental Concern or other
conditions at any property owned, operated, or otherwise used by the Company or
any of its Subsidiaries, now or in the past, or at any other location
(including, without limitation, any facility to which Materials of
Environmental Concern from the Company or any of its Subsidiaries or the
Properties have been sent) that are in circumstances that could reasonably be
expected to give rise to any liability of the Company or any of its
Subsidiaries, or to result in costs arising out of any Environmental Law; (iii)
no judicial, administrative, or arbitral proceeding (including, without
limitation, any notice of violation or alleged violation), under any
Environmental Law or with respect to any Materials of Environmental Concern to
which the Company or any of its Subsidiaries is, or to the knowledge of the
Company will be, named as a party, or affecting the Properties, is pending or,
to the knowledge of or the Company, threatened; nor is the Company or any of
its Subsidiaries the subject of any investigation or the recipient of any
request for information in connection with any such proceeding or potential
proceeding; (iv) there are no orders, judgments, decrees, or agreements under
any Environmental Law or with respect to any Materials of Environmental Concern
to which the Company or any of its Subsidiaries is a party or affecting the
Properties; (v) to the knowledge of the Company, there are no events,
conditions, circumstances, practices, plans, or legal requirements (in effect
or reasonably anticipated), that could be expected to prevent the Company or
any of its Subsidiaries
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from, or materially increase the burden on the Company or any of its
Subsidiaries of (A) complying with applicable Environmental Laws, or (B)
obtaining, renewing, or complying with all Environmental Permits; and (vi) to
the knowledge of the Company, each of the foregoing representations and
warranties is true and correct with respect to any entity for which the Company
or any of its Subsidiaries has assumed or retained liability, whether by
contract or operation of law, except, in the case of clauses (i) through (vi),
for any failures, conditions or other circumstances which would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
(b) For purposes of this Agreement, the terms below are
defined as follows:
(i) "Environmental Laws" means any and all Laws and
Governmental Orders of any Governmental Authority and all codes of
practice, industry agreements and guidance notes, regulating, relating
to or imposing liability or standards of conduct concerning protection
of the environment or of human health, or employee health and safety.
(ii) "Environmental Permits" means any and all Permits and
any other authorizations required of the Company under any
Environmental Law.
(iii) "Materials of Environmental Concern" means any gasoline
or petroleum (including crude oil or any fraction thereof) or
petroleum products, polychlorinated biphenyls, urea-formaldehyde
insulation, asbestos, pollutants, contaminants, radioactivity, and any
other substances or forces of any kind, whether or not any such
substance or force is defined as hazardous or toxic under any
Environmental Law, that is regulated pursuant to or could give rise to
liability under any Environmental Law.
SECTION 3.19. Insurance. (i) All policies of fire, flood and
casualty, general liability, errors and omissions, directors and officers
liability and other forms of insurance held or maintained by the Company or any
of its Subsidiaries (the "Insurance Policies") are sufficient for compliance in
all material respects with Law, Leases and all other material agreements to
which the Company or any of its Subsidiaries is a party and are reasonable for
the business and assets of the Company and its Subsidiaries and the Properties,
(ii) all Insurance Policies are in full force and effect, and all premiums due
and payable thereon have been paid and the Company and its Subsidiaries have
complied with the provisions of such Insurance Policies, (iii) no insurer under
any Insurance Policy has canceled or generally disclaimed liability under any
such policy or indicated any intent to do so or to increase the premiums
payable under or not renew any such policy and (iv) to the knowledge of the
Company, there is no fact or circumstance that could invalidate the Insurance
Policies or make them unenforceable, except, in the case of clauses (ii), (iii)
and (iv), as would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
SECTION 3.20. Brokers. No broker, finder or investment banker
is entitled to any broker's, finder's or other fee or commission in connection
with the transactions contemplated by this Agreement and the Registration
Rights Agreement based upon agreements
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or other arrangements made by or on behalf of the Company, except for Xxxxxx
Brothers Inc. and except as set forth on Schedule 3.20, the fees of which will
be the responsibility of the Company, and which have been previously disclosed
to the Subscribers.
SECTION 3.21. Transactions with Affiliates. Except as set
forth in the Company Reports filed and publicly available prior to the date
hereof and as set forth on Schedule 3.21, since June 30, 1999, there have been
no contracts, agreements, arrangements or understandings of any kind between
any director or officer of the Company or any of its Subsidiaries or any other
Affiliate of the Company, on the one hand, and the Company or any of its
Subsidiaries, on the other hand, that would be required to be disclosed under
Item 404 of Regulation S-K under the Securities Act or require approval of the
shareholders of the Company under the Companies Acts or the Listing Rules.
SECTION 3.22. Labor Matters. Except as set forth on Schedule
3.22, neither the Company nor any of its Subsidiaries is a party to any
material collective bargaining agreement or other contract, agreement or
arrangement with any labor organization, works council or other representative
of any of their respective employees. In addition, there is no pending or, to
the knowledge of the Company, threatened any strike, walkout, industrial action
or other work stoppage or any union organizing effort by or respecting any of
the Company's or any of its Subsidiaries' employees, and the Company and its
Subsidiaries have not experienced any such labor controversy within the past
three years, except, in each case, for any labor-related actions or matters
which would not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect.
SECTION 3.23. Year 2000 Problem. Except as set forth on
Schedule 3.23, to the knowledge of the Company, (a) except for Software
described in clause (b) of this Section 3.23, all computer hardware, software,
databases, systems and other computer equipment (collectively, "Software")
owned, held, and/or used by the Company and its Subsidiaries can be used prior
to, during and after the calendar year 2000 A.D., and will operate during each
such time period, either on a stand-alone basis, or by interacting or
interoperating with third-party Software without error relating to the
processing, calculating, comparing, sequencing or other use of date data,
including any errors relating to the occurrence or non-occurrence of a "leap
year" in 1900 or 2000 (the foregoing ability, "Year 2000 Compliant"); (b) for
any Software that is not Year 2000 Compliant as of the Closing Date, the
Company expects such Software to be Year 2000 Compliant sufficiently promptly
so as to avoid any disruption or harm to the business or operations of the
Company; and (c) the Company and its Subsidiaries have taken all reasonable
measures to address the impact that the year 2000 date change may have on all
Software owned and/or used by them and have assigned resources reasonably
believed to be necessary to the execution of any necessary remediation efforts
to provide uninterrupted millennium functionality to record, store, process and
present calendar dates falling on or after January 1, 2000 in substantially the
same manner and with the same functionality as such software records, stores,
processes and presents such calendar dates falling on or before December 31,
1999, except, in the case of clauses (a) through (c), for any failures,
conditions or other circumstances which would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
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26
SECTION 3.24. Offering of Participating Shares. Neither the
Company nor any Person acting on its behalf has taken or will take any action
(including, without limitation, any offering of any securities of the Company
under circumstances which would require, under the Securities Act, the
integration of such offering with the offering and sale of the Participating
Shares) which might subject the offering or sale of the Participating Shares to
the registration requirements of the Securities Act.
SECTION 3.25. Accuracy and Completeness of Information
Provided. To the Company's knowledge, none of this Agreement and the documents
or written information delivered by the Company to the Subscribers or any of
their respective advisers or agents or otherwise prepared, issued, filed or
distributed in connection with the transactions contemplated by this Agreement
(including, without limitation, the Company Reports filed since January 1, 1999
with the SEC, Companies House or the London Stock Exchange and any notices,
proxy materials, circulars and associated documents required pursuant to the
Securities Act, the Exchange Act, the Listing Rules and any other applicable
Law) contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements contained therein, in
light of the circumstances when made, not misleading. To the Company's
knowledge, there is no fact or information relating to the Company or its
Subsidiaries that is known to the Company that could reasonably be expected to
be material to the Company and its Subsidiaries taken as a whole and that has
not been disclosed to the Subscribers in this Agreement (including the
Schedules hereto) or otherwise. Notwithstanding the two preceding sentences of
this Section 3.25, any Forward-Looking Statement so delivered by the Company
shall not be deemed to have contained an untrue statement of a material fact or
omitted to state any material fact necessary to make the statements therein not
misleading if such Forward- Looking Statement (i) was prepared in good faith,
(ii) was based upon reasonable assumptions and (iii) the Company did not
believe, and had no reasonable grounds to believe, that such Forward- Looking
Statement contained an untrue statement of a material fact or omitted to state
any material fact necessary to make the statements therein not misleading at
the time of preparation or delivery thereof.
SECTION 3.26. No Other Representations or Warranties. Except
for the representations and warranties contained in this Article III, neither
the Company nor any of its Subsidiaries nor any other Person has made or makes
any other express or implied representation or warranty, either oral or
written, on behalf of the Company or its Subsidiaries.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES REGARDING THE SUBSCRIBERS
Each of the Subscribers, severally and not jointly, hereby
represents and warrants to the Company as follows:
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SECTION 4.1. Organization. Such Subscriber is duly organized,
validly existing and in good standing as a limited partnership under the laws
of the jurisdiction of its organization.
SECTION 4.2. Authority. Such Subscriber has all necessary
limited partnership power and authority to enter into this Agreement and the
Registration Rights Agreement and has taken all action necessary to execute and
deliver such agreements, to consummate the transactions contemplated hereby and
thereby and to perform its obligations hereunder and thereunder. This Agreement
and the Registration Rights Agreement have been or will be duly executed and
delivered by such Subscriber. Assuming the due execution of this Agreement and
the Registration Rights Agreement by the Company and the other Subscribers,
this Agreement constitutes and the Registration Rights Agreement will
constitute a legal, valid and binding obligation of such Subscriber,
enforceable against it in accordance with its terms, subject to the effects of
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors'
rights, general equitable principles (whether considered in a proceeding in
equity or at law) and an implied covenant of good faith and fair dealing.
SECTION 4.3. Non-Contravention. Neither the execution and
delivery of this Agreement or the Registration Rights Agreement by such
Subscriber nor the performance by such Subscriber of its obligations hereunder
or thereunder nor the consummation by such Subscriber of the transactions
contemplated hereby or thereby, will result in (a) a violation of or a conflict
with any provision of the limited partnership agreement of such Subscriber, (b)
a breach or violation of, or a default under (with or without notice or lapse
of time or both), any term or provision of, or any right of termination,
cancellation, modification or acceleration arising under, any Contract or
Permit to which such Subscriber is a party or is subject or by which any of its
properties or assets are bound, (c) a violation by such Subscriber of any
Government Order or Law to which such Subscriber is subject or by which any of
its properties or assets are bound, or (d) the imposition of any Encumbrance on
the business, properties or assets of such Subscriber, except in the case of
clauses (b), (c) and (d), for those breaches, defaults, rights, violations or
impositions which, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect.
SECTION 4.4. Consents and Approvals. No Government Approval
with any Governmental Authority, or consent, approval or waiver of any other
Person, is required to be made or obtained by such Subscriber in connection
with the execution, delivery and performance of this Agreement or the
Registration Rights Agreement and the consummation of the transactions
contemplated hereby or thereby except those that have been made or obtained
prior to the date hereof, and except for the HSR Approval and any notices or
filings under European Community or European national antitrust, competition or
merger laws or regulations and except, further, for those Government Approvals,
consents, approvals or waivers which, individually or in the aggregate, would
not reasonably be expected to have a Material Adverse Effect.
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SECTION 4.5. Subscription for Investment. Such Subscriber
acknowledges that the Participating Shares have not been registered under the
Securities Act or under any state securities laws. Such Subscriber (a) is an
accredited investor (as defined in Rule 501 under the Securities Act), (b) is
acquiring its respective Participating Shares pursuant to an exemption from
registration under the Securities Act solely for investment with no present
intention to distribute any of its Participating Shares to any Person, (c) will
not sell or otherwise dispose of any of its Participating Shares, except in
compliance with the registration requirements or exemption provisions of the
Securities Act and any other applicable securities laws and (d) has such
knowledge and experience in financial and business matters and in investments
of this type that it is capable of evaluating the merits and risks of its
investment in the Participating Shares and of making an informed investment
decision.
SECTION 4.6. Financial Capability. Such Subscriber has or, on
the Closing Date, will have sufficient funds to purchase the Participating
Shares on the terms and conditions contemplated by this Agreement.
SECTION 4.7. Brokers. No broker, finder or investment banker
is entitled to any broker's, finder's or other fee or commission in connection
with the transactions contemplated by this Agreement and the Registration
Rights Agreement based upon agreements or other arrangements made by or on
behalf of such Subscriber.
SECTION 4.8. No Other Representations or Warranties. Except
for the representations and warranties contained in this Article IV, neither
such Subscriber nor any other Person has made or makes any other express or
implied representation or warranty, either oral or written, on behalf of such
Subscriber.
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.1. Conduct of Business Prior to the Closing. Except
as contemplated by this Agreement and the Registration Rights Agreement or
consented to in writing by the Subscribers, prior to the Closing, the Company
shall, and shall cause its Subsidiaries to, conduct their respective businesses
in all material respects only in the ordinary course and consistent with past
practice and shall use all reasonable efforts consistent with past practices to
preserve their respective relationships with customers and other Persons with
whom the Company or any of its Subsidiaries has business dealings and keep
available the services of their present employees to the extent material to the
operation of the business. Without limiting the generality of the foregoing,
except as contemplated by this Agreement and the Registration Rights Agreement
and to the fullest extent permitted under applicable Law and the fiduciary
duties of the directors of the Company, the Company shall not, and shall cause
each of its Subsidiaries not to, prior to the Closing do, or take any action
whatsoever in anticipation of
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doing, any of the following without the prior written consent of the
Subscribers (which consent shall not be unreasonably withheld):
(a) the proposal of any amendments to the Memorandum and
Articles of Association or equivalent constitutive documents of the Company or
the making of any such amendments in respect of any of its Significant
Subsidiaries;
(b) (i) the sale, lease, transfer, mortgage, encumbrance or
other disposition of any properties, rights or assets of the Company or any of
its Significant Subsidiaries, in one transaction or a series of related
transactions, including, without limitation, Share Capital in any Significant
Subsidiaries of the Company, to any Person other than its wholly-owned
Subsidiaries or (ii) the transfer of properties or assets to joint ventures,
partnerships, corporations or other business entities in which it is or thereby
becomes a participant, except, in the case of clause (i) or (ii), (A) in the
ordinary course of business consistent with past practice, (B) for such
properties or assets having an aggregate fair market value of less than
U.S.$25,000,000 and (C) for Danka Services International solely in accordance
with the Credit Agreement;
(c) the merger or consolidation of the Company or any of its
Significant Subsidiaries or the sale, directly or indirectly, of all or
substantially all of the assets of the Company or any of its Significant
Subsidiaries;
(d) (i) the acquisition (directly or through any of its
Subsidiaries) by merging or consolidating with, or by purchasing all or a
substantial portion of the stock or assets of, or by any other manner
acquiring, any business, properties, assets or Person, or (ii) the making of
any investment in any other Person, in the case of each of clause (i) and (ii),
in one transaction or a series of related transactions, for consideration
(including assumed debt) exceeding U.S.$25,000,000;
(e) the incurrence of any Indebtedness (other than (i)
short-term Indebtedness incurred to refinance existing short-term Indebtedness
or otherwise incurred in the ordinary course of business consistent with past
practice, (ii) Indebtedness incurred under the Credit Agreement or the TROL
Financing Agreements, in each case, as in effect on the date hereof or as
amended as contemplated hereby, and (iii) Indebtedness incurred under the GE
Capital Lease Financing Agreements (or similar financing agreement in the
ordinary course of business consistent with past practice), in each case, as in
effect on the date hereof or as amended as contemplated hereby), assumption,
guarantee, endorsement or otherwise as an accommodation becoming responsible
for the obligations of any other Person (other than to the Company or any of
its wholly-owned Subsidiaries), or the making of any loan, advance or capital
contribution (other than to the Company or any of its wholly-owned
Subsidiaries) in excess of U.S.$25,000,000 in the aggregate;
(f) the making, declaration, setting aside or payment of any
dividend or making of any other distribution (whether in cash, Share Capital or
other property) on, or directly or
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30
indirectly redeeming, purchasing or otherwise acquiring, any shares of its
Share Capital or any securities or obligations convertible into or exchangeable
for any shares of its Share Capital;
(g) entering into any direct or indirect transaction by the
Company or any of its Subsidiaries with an Affiliate of the Company, other than
any transaction between or among the Company and any of its Subsidiaries or any
other transaction which (i) is in the ordinary course of business; (ii)
involves or has a potential value of U.S.$10,000,000 or less; and (iii) is no
less favorable to the Company than an arm's-length transaction with a third
party which is not such a party as determined in good faith by the Board;
(h) to the extent reasonably within the Company's control,
(i) the removal or election of the chief executive officer of the Company or
(ii) approval of any new, or modification of any existing, director or
executive officer compensation plans or agreements offered by the Company or
any of its Subsidiaries;
(i) the commencement of any proceeding or the filing of any
petition in any court relating to bankruptcy, reorganization, insolvency,
winding up, liquidation or relief from debtors involving the Company;
(j) the initiation, settlement or compromise of any
litigation (whether or not commenced prior to the date of this Agreement),
other than settlements or compromises of litigation where the amount paid does
not exceed U.S.$10,000,000 for any single litigation matter or related group of
litigation matters (provided such settlement or compromise agreements do not
involve any non-monetary obligations on the part of Company or any of its
Subsidiaries);
(k) the allotment or issue by the Company of any Ordinary
Shares or other Share Capital (except, in each case, Ordinary Shares issued or
reserved for issuance by the Company, or ADSs representing such Ordinary
Shares, (i) upon exercise of outstanding share options or (ii) upon conversion
of the outstanding U.S.$200,000,000 aggregate principal amount of the Company's
6.75% Convertible Subordinated Notes due 2002);
(l) make any material change in any method of accounting or
accounting practice or policy except as required by U.S. GAAP or U.K. GAAP, as
the case may be, and with the concurrence of its independent accountants or
auditors;
(m) take any action which would reasonably be expected to
cause any representation or warranty of the Company contained in this Agreement
to be or become untrue at Closing in any material respect; or
(n) agree to, or make any commitment to, take, or authorize,
any of the actions prohibited by this Section 5.1.
SECTION 5.2. Regulatory and Other Authorizations; Notices and
Consents. (a) The Company shall promptly make any filings required under the
HSR Act or any other
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applicable Law for the making of the Articles Amendments, the allotment and
issue of the Participating Shares, the conversion of the Participating Shares
or the creation, allotment and issue of any additional Participating Shares as
dividends or by way of bonus issue on the Participating Shares. The Company
agrees to furnish the Subscribers with such necessary information and
reasonable assistance as the Subscribers may reasonably request in connection
with their preparation of any necessary filings or submissions to the Federal
Trade Commission ("FTC") or the Antitrust Division of the U.S. Department of
Justice (the "Antitrust Division"), including, without limitation, any filings
or notices necessary under the HSR Act, or to any Governmental Authority
pursuant to any European national antitrust, competition or merger laws and
regulations. Any such actions with respect to the conversion of the
Participating Shares or the issuance of any additional Participating Shares in
accordance with the terms of the Participating Shares, shall be taken by the
Company at such times as the Subscribers reasonably shall so request. The
Company shall, at its own expense, utilize all reasonable efforts to respond to
any request for additional information, or other formal or informal request for
information, witnesses or documents which may be made by any Governmental
Authority pertaining to the Company with respect to the allotment and issue of
the Participating Shares, the conversion of the Participating Shares or the
creation, allotment and issue of any additional Participating Shares as
dividends or by way of bonus issue on the Participating Shares, and shall keep
the Subscribers fully apprized of their actions with respect thereto.
(b) Each of the Subscribers shall promptly make any filings
which it is required to make under the HSR Act or any other applicable Law with
respect to the subscription for the Participating Shares, the conversion of the
Participating Shares or the receipt of any additional Participating Shares in
accordance with the terms of the Participating Shares, and the Subscribers
agree to furnish the Company with such necessary information and reasonable
assistance as they may request in connection with their preparation of any
necessary filings or submissions to the FTC or the Antitrust Division,
including, without limitation, any filings or notices necessary under the HSR
Act or to any Governmental Authority pursuant to any European Community or
European national antitrust, competition or merger laws or regulations. The
Subscribers shall, at their own expense, utilize all reasonable efforts to
respond promptly to any request for additional information, or other formal or
informal request for information, witnesses or documents which may be made by
any Governmental Authority pertaining to the Subscribers with respect to the
purchase of the Participating Shares, the conversion of the Participating
Shares or the receipt of any additional Participating Shares in accordance with
the terms of the Participating Shares, and shall keep the Company fully
apprised of its actions with respect thereto.
(c) Each of the parties hereto shall use their reasonable
best efforts to give such notices and obtain all other authorizations,
consents, orders and approvals of all Governmental Authorities and other
Persons that may be or become necessary for its execution and delivery of, and
the performance of its obligations pursuant to, this Agreement and the
Registration Rights Agreement and will cooperate with the other parties hereto
in promptly seeking to obtain all such authorizations, consents, orders and
approvals.
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SECTION 5.3. Access to Information. (a) The Company and its
Subsidiaries shall, and shall cause their respective officers, employees,
counsel, financial advisors and other representatives to, afford to the
Subscribers and their representatives and advisors reasonable access during
normal business hours prior to the Closing to their respective properties,
books, contracts, personnel, records, Tax Returns and related work papers and,
during such period, the Company and its Subsidiaries shall, and shall cause
their respective officers, employees and representatives to, furnish promptly
to the Subscribers all information concerning their respective businesses,
properties, financial condition, operations and personnel as the Subscribers
may from time to time reasonably request.
(b) All information provided or obtained pursuant to Section
5.3(a) hereof shall be held by the Subscribers (and the Subscribers shall make
certain that it agents are informed of the confidential nature of such
information and agree to maintain such information) in accordance with and
subject to the terms of the confidentiality agreement between the Company and
The Cypress Group LLC dated as of September 13, 1999.
(c) No investigation pursuant to this Section 5.3 shall
affect any representations or warranties of the parties herein or the
conditions to the obligations of the parties hereto.
SECTION 5.4. Further Action. Each of the parties hereto shall
use its reasonable efforts to take, or cause to be taken, all appropriate
action, do or cause to be done all things necessary, proper or advisable under
applicable law, and execute and deliver such documents and other papers, as may
be required to consummate the transactions contemplated by this Agreement and
the Registration Rights Agreement.
SECTION 5.5. Non-Solicitation. Prior to the Closing, except
with the prior written consent of the Subscribers and as contemplated by this
Agreement and the Registration Rights Agreement, the Company and its
Subsidiaries will not, and will direct their agents, representatives and
employees not to, (i) solicit any inquiries or proposals with respect to,
negotiate or consummate, or have any other substantive discussions concerning
(A) any direct or indirect sale, disposition or redemption of any substantial
portion of the securities of the Company or any Significant Subsidiaries, (B)
the direct or indirect sale or disposition of any substantial assets of the
Company or any of its Significant Subsidiaries, or (C) any merger,
reorganization, consolidation or recapitalization or other similar transaction
involving the Company or any of its Significant Subsidiaries, or (ii) discuss
or disclose any non-public information pertaining to the Company or any of its
Significant Subsidiaries with or to any Person in connection with the
foregoing, except, in the cases of clauses (i) and (ii), to the extent (but
only to the extent) required by applicable Law or fiduciary duties of the
directors of the Company, in each case based upon the formal advice of
independent English or U.S. counsel to the Company. The Company will notify the
Subscribers within 48 hours of any overture received from any other Person
concerning any such transaction and the terms of any proposal which may be
conveyed by any such other Person.
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SECTION 5.6. Availability of Shares. From and after the
Closing Date, the Company shall:
(a) at all times have sufficient authorized Share Capital
available for allotment and issue (i) to permit the issuance of additional
Participating Shares as dividends or by way of bonus issue on the Participating
Shares and (ii) to permit the conversion of all Participating Shares issued
from time to time into Ordinary Shares in accordance with the terms of the
Participating Shares.
(b) issue and cause the transfer agent to deliver such
Ordinary Shares as required upon conversion of the Participating Shares and
take all actions necessary to ensure that all such Ordinary Shares shall, when
issued and paid for pursuant to the conversion of the Participating Shares, be
duly and validly issued, fully paid and nonassessable; and
(c) cause the issuance of, and cause the ADR depositary to
deliver, ADSs representing such Ordinary Shares as required upon conversion of
the Participating Shares, and take all actions necessary to ensure that, to the
knowledge of the Company, all such ADSs shall, when issued, be duly and validly
issued and shall be entitled to the benefits specified in the corresponding
ADRs and in the deposit agreement relating to such ADSs; and
(d) if any Ordinary Shares to be issued on conversion of
Participating Shares, or ADSs representing such Ordinary Shares, require
registration with or approval of any governmental authority under any U.S.
federal or state, English or other non-U.S. law before such shares may be
validly issued or delivered upon conversion, then in good faith and as
expeditiously as possible, endeavor to secure such registration or approval, as
the case may be. If, and so long as, any Ordinary Shares into which the
Participating Shares are then convertible, or ADSs representing such Ordinary
Shares, are listed or quoted on any securities exchange or market, the Company
shall, if permitted by the rules of such securities exchange or market, list
and keep listed or quoted on such securities exchange or market, upon official
notice of issuance, all such shares issuable upon conversion.
SECTION 5.7. Other Businesses. Neither the terms of this
Agreement nor the ownership of any Participating Shares or Ordinary Shares
shall restrict any of the Subscribers or their Affiliates from engaging in or
owning an interest in any business that is competitive with the business of the
Company or any of its Subsidiaries.
SECTION 5.8. Credit Agreement, etc. (a) Prior to the Closing,
the Company shall use its best efforts to cause the Credit Agreement, the TROL
Financing Agreements and the GE Capital Lease Financing Agreements to be
amended by amendments, which shall be in substance substantially on the terms
attached hereto as Exhibits E-1, E-2 and E-3, respectively (modified, in the
case of Exhibit E-1, by Exhibit E-4).
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(b) The Company shall use its best efforts to obtain a
financing commitment from one or more major banks or financial institutions
with respect to the refinancing of the substantial portion of its outstanding
Indebtedness.
(c) Prior to the Closing, the Company shall use its best
efforts (i) to cause its independent auditors to determine, pursuant to Section
1204(b)(3) of the Convertible Subordinated Notes Indenture with respect to the
Convertible Subordinated Notes that no anti-dilution adjustment is required in
respect of the conversion price of the Convertible Subordinated Notes pursuant
to such Section 1204(b)(3) as a result of the issue and allotment of the
Participating Shares in accordance with this Agreement or, alternatively, (ii)
to obtain on commercially reasonable terms an amendment to, or waiver of, the
provisions of Section 1204(b) to permit the issue and allotment of the
Participating Shares in accordance with this Agreement.
SECTION 5.9. Use of Proceeds. The Company shall use all or
substantially all of the proceeds from the Subscription Price for the repayment
of indebtedness of the Company and its Subsidiaries under the Credit Agreement.
SECTION 5.10. Shareholder Approvals, etc. The Company shall,
promptly after the date hereof, duly issue a notice convening, and convene, an
extraordinary general meeting of its shareholders for the purpose of passing
the Shareholders Resolutions. In connection with such meeting, the Company
shall use its best efforts (a) to file and have cleared by the SEC and the
London Stock Exchange and thereafter to mail to its shareholders and to holders
of ADSs as promptly as practicable all necessary and desirable notices, proxy
materials and circulars for such meeting and (b) to obtain the necessary
approval by its shareholders of the foregoing and in accordance with applicable
Law (including, without limitation, recommendation to its shareholders that the
Shareholders Resolutions be passed). The Company shall not file, mail or
otherwise distribute any such notices, proxy materials or circulars or any
associated documents and shall not make or otherwise agree to any amendments to
the Shareholders Resolutions, the Articles Amendments or any notice, proxy
materials or circular, in each case without the prior approval by the
Subscribers and their U.S. and English counsel of the form and content thereof
(which approval shall not be unreasonably withheld). The preceding two
sentences of this Section 5.10 shall not require the Company or its directors
to take, or fail to take, any action to the extent (but only to the extent) not
permitted by applicable Law or fiduciary duties of the directors of the
Company, in each case based upon the formal advice of independent English or
U.S. counsel to the Company.
SECTION 5.11. Legend on Certificates for Participating
Shares, etc. (a) So long as applicable, each certificate representing the
Participating Shares or the Ordinary Shares or ADSs, as the case may be, shall
bear the following legend:
"The securities represented hereby have not been registered
under the U.S. Securities Act of 1933, as amended, and may
not be offered, sold, transferred or otherwise disposed of
except in compliance with such Act."
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The Company agrees that, promptly upon the request of the
Subscribers or any transferee, it will remove such legend from the certificates
representing Participating Shares or the Ordinary Shares or ADSs, as the case
may be, in the event that U.S. counsel for the Subscribers or such transferee
determines that the transfer thereof is no longer restricted by the Securities
Act and, if reasonably requested by the Company, such U.S. counsel provides a
written legal opinion to the foregoing effect.
(b) In the event that the Ordinary Shares are deemed to
constitute "restricted securities" (within the meaning of Rule 144 under the
Securities Act) or cannot otherwise be deposited into the Company's existing
ADR program consistent with the Securities Act, the Company shall use its best
efforts to establish a separate restricted American depositary receipt program
into which such Ordinary Shares may be deposited (or otherwise amend such
existing ADR program), in each case to permit such deposit and on terms
reasonably satisfactory to the Subscribers.
SECTION 5.12. Directors' and Officers' Insurance. Prior to
the Closing, the Company shall amend its directors' and officers' liability
insurance policy to include the persons designated by the Subscribers to serve
on the Company's Board of Directors as named insureds and to provide for
minimum annual coverage not less than in the amount of such policy on the date
hereof.
SECTION 5.13. Operating Company. So long as the Subscribers
retain their investment in the Participating Shares, the Company shall
constitute an "operating company" within the meaning of 29 CFR ss.
2510.3-101(c).
ARTICLE VI
CONDITIONS TO CLOSING
SECTION 6.1. Conditions to Obligations of the Subscribers.
The obligations of each of the Subscribers to consummate the transactions
contemplated by this Agreement and the Registration Rights Agreement shall be
subject to the fulfillment, at or prior to the Closing, of each of the
following conditions (provided, that any such condition may, to the extent
permitted by applicable law, be waived with respect to any Subscriber by such
Subscriber in its sole discretion):
(a) Representations, Warranties and Covenants. (i) Each of
the representations and warranties of the Company contained in this Agreement
that is qualified as to materiality or Material Adverse Effect shall be true
and correct, and each of the representations and warranties of the Company
contained in this Agreement that is not so qualified as to materiality or
Material Adverse Effect shall be true and correct in all material respects, in
each case as of the date of this Agreement and as of the Closing Date, with the
same force and effect as if made on and as of the Closing Date, except for
those representations and warranties which address matters only as of a
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particular date (which shall be true and correct, or true and correct in all
material respects, as the case may be, as of such date), and the Company shall
have performed in all material respects all agreements, obligations and
covenants required hereby to be performed and complied with by it prior to or
on the Closing Date. The Subscribers shall have received a certificate from the
Company signed by its chief executive officer with respect to the matters
described in this Section 6.1(a) in the form attached hereto as Exhibit C.
(ii) Notwithstanding Section 6.1(a)(i) hereof, the
Subscribers shall not deem a breach or violation of the representation and
warranty set forth in Section 3.10(a) hereof at or prior to Closing to
constitute a basis for determining not to consummate the transactions
contemplated by this Agreement and the Registration Rights Agreement except in
their reasonable judgment (after consultation with the Company).
(b) No Proceeding or Litigation. No action, suit,
investigation or proceeding shall have been commenced by any Governmental
Authority against any party hereto seeking to restrain or delay the
transactions contemplated by this Agreement and the Registration Rights
Agreement.
(c) No Order. There shall not be in effect any Law or
Governmental Order directing that the transactions contemplated by this
Agreement and the Registration Rights Agreement not be consummated or which has
the effect of rendering it unlawful to consummate such transactions.
(d) Articles Amendments. The Shareholders Resolutions shall
have been duly passed, and the Articles Amendments shall have become effective.
The Company shall have delivered to the Subscribers copies of the Articles
Amendments and the Shareholders Resolutions (certified by the Corporate
Secretary of the Company), which shall be substantially in the forms attached
hereto as Exhibits A-1 and A-2, respectively, in each case subject to amendment
in accordance with this Agreement.
(e) HSR Act. Any applicable waiting periods under the HSR Act
with respect to the transactions contemplated by this Agreement and the
Registration Rights Agreement shall have expired or been terminated.
(f) Credit Agreement, etc. (i) The Credit Agreement, the TROL
Financing Agreements and the GE Capital Lease Financing Agreements shall have
been amended as set forth in Section 5.8(a).
(ii) The Company shall have obtained the financing commitment
as set forth in Section 5.8(b). The Company shall have delivered to the
Subscribers copies of such financing commitment, which shall be in form and
substance reasonably satisfactory to the Subscribers.
(iii) The actions described in Section 5.8(c) with respect to
the Convertible Subordinated Notes shall have been taken, and the Company shall
have delivered to the
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Subscribers a copy of the determination of the Company's independent auditors
to the effect set forth in Section 5.8(c) or, alternatively, the amendment to,
or waiver from, Section 1204(b) of the Convertible Subordinated Note Indenture
contemplated by Section 5.8(c), in each case in form and substance reasonably
satisfactory to the Subscribers.
(g) Other Approvals and Consents. In addition to those
specified in Sections 6.1(d), 6.1(e) and 6.1(f), any Governmental Approvals and
Non-Governmental Approvals (including under any Material Contract) necessary to
permit the consummation of the transactions contemplated by this Agreement and
the Registration Rights Agreement shall have been obtained (except where, in
the case of any such Non-Governmental Approvals, the failure to obtain any such
Non-Governmental Approvals would not, individually or in the aggregate, be
reasonably expected to have a Material Adverse Effect), and all of such
Governmental Approvals and Non-Governmental Approvals shall be in form and
substance reasonably satisfactory to the Subscribers.
(h) Registration Rights Agreement. The Company shall have
executed and delivered the Registration Rights Agreement.
(i) Legal Opinions. (i)The Company shall have caused to be
delivered to the Subscribers a legal opinion, addressed to the Subscribers, of
Xxxxxxxx Chance, English legal advisors to the Company (or another
internationally recognized firm of English legal advisors satisfactory to the
Subscribers), in form and substance reasonably satisfactory to the Subscribers
and confirming the validity and binding effect of this Agreement, the
Registration Rights Agreement and the Participating Shares and such other
matters relating to the transactions contemplated hereby and thereby as
requested by the Subscribers.
(ii) The Company shall have caused to be delivered to the
Subscribers legal opinions, addressed to the Subscribers, of (i) Altheimer &
Xxxx, U.S. counsel to the Company, and (ii) Xxxxx Xxxx, Esq., General Counsel
to the Company, in the forms attached hereto as Exhibits D-1 and D-2
respectively, with such modifications, if any, as may be in form and substance
reasonably satisfactory to the Subscribers.
(j) Other Closing Documents. The Company shall have delivered
to the Subscribers such other closing certificates and documents as reasonably
requested by the Subscribers, including without limitation good standing
certificates and certificates of the Corporate Secretary of the Company
annexing resolutions, incumbency, signature and other exhibits.
(k) Appointment of Directors. The size of the Board of
Directors of the Company shall have been increased by two directorships, and
two designees of the Subscribers shall have been duly elected to the Board of
Directors as contemplated by the terms of the Participating Shares.
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(l) Directors' and Officers' Insurance. The Company's
directors' and officers' liability insurance policy shall have been amended as
contemplated by Section 5.12.
(m) No Material Adverse Change in Financial Markets and Other
Conditions. Subsequent to the date hereof, there shall not have occurred, in
the reasonable judgment of the Subscribers (after consultation with the
Company), any material adverse change in the financial, banking or capital
markets in the United States or the United Kingdom which would materially and
adversely affect the Subscribers' investment in Participating Shares.
(n) Significant Decrease in Market Value of Ordinary Shares.
In the event that the Market Value for the Ordinary Shares as determined at the
close of business (New York City time) three Business Days immediately
preceding the Closing Date shall have decreased to below U.S.$2.25 per Ordinary
Share (for the avoidance of doubt, after taking into account the then
prevailing ratio of Ordinary Shares per ADS), the Subscribers shall have
advised the Company in writing not later than the close of business (New York
City time) on the Business Day immediately preceding the Closing Date that they
have, in their sole discretion, elected to proceed with the Closing or,
alternatively, agreed (or are willing to agree) to a downward adjustment of the
Conversion Price in accordance with Section 2.3.
SECTION 6.2. Conditions to Obligations of the Company. The
obligation of the Company to consummate the transactions contemplated by this
Agreement and the Registration Rights Agreement shall be subject to the
fulfillment, at or prior to the Closing, of each of the following conditions
(provided that any such condition may, to the extent permitted by applicable
law, be waived with respect to the Company by the Company in its sole
discretion):
(a) Representations, Warranties and Covenants. Each of the
representations and warranties of the Subscribers contained in this Agreement
that is qualified as to materiality or Material Adverse Effect shall be true
and correct, and each of the representations and warranties of the Subscribers
contained in this Agreement that is not so qualified as to materiality or
Material Adverse Effect shall be true and correct in all material respects, in
each case as of the date of this Agreement and as of the Closing Date, with the
same force and effect as if made on and as of the Closing Date, except for
those representations and warranties which address matters only as of a
particular date (which shall be true and correct, or true and correct in all
material respects, as the case may be, as of such date), and the Subscribers
shall have performed in all material respects all agreements, obligations,
covenants and conditions required hereby to be performed and complied with by
it prior to or on the Closing Date. The Company shall have received a
certificate from each of the Subscribers signed by a general partner thereof
with respect to the matters described in this Section 6.2(a) in the form
attached hereto as Exhibit E.
(b) No Proceeding or Litigation. No action, suit,
investigation or proceeding shall have been commenced by any Governmental
Authority against any party hereto seeking to restrain or delay the
transactions contemplated by this Agreement and the Registration Rights
Agreement.
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(c) No Order. There shall not be in effect any Law or
Governmental Order directing that the transactions contemplated by this
Agreement and the Registration Rights Agreement not be consummated or which has
the effect of rendering it unlawful to consummate such transactions.
(d) Articles Amendments. The Shareholders Resolutions shall
have been duly passed, and the Articles Amendments shall have become effective.
The Articles Amendments and the Shareholders Resolutions shall be substantially
in the forms attached hereto as Exhibits A-1 and A-2, respectively, in each
case subject to amendment in accordance with this Agreement.
(e) HSR Act. Any applicable waiting periods under the HSR Act
with respect to the transactions contemplated by this Agreement and the
Registration Rights Agreement shall have expired or been terminated.
(f) Credit Agreement, etc. (i) The Credit Agreement, the TROL
Financing Agreements and the GE Capital Lease Financing Agreements shall have
been amended as set forth in Section 5.8(a).
(ii) The Company shall have obtained the financing commitment
as set forth in Section 5.8(b), which shall be in form and substance reasonably
satisfactory to the Company.
(iii) The actions set forth in Section 5.8(c) with respect to
the Convertible Subordinated Notes shall have been taken, and the Company shall
have obtained the determination of the Company's independent auditors to the
effect set forth in Section 5.8(c) or, alternately, the amendment to, or waiver
of, Section 1204(b) of the Convertible Subordinated Note Indenture contemplated
by Section 5.8(c).
(g) Other Approvals and Consents. In addition to that
specified in Sections 6.2(d), 6.2(e) and 6.2(f), any Governmental Approvals and
Non-Governmental Approvals necessary to permit the consummation of the
transactions contemplated by this Agreement and the Registration Rights
Agreement shall have been obtained (except where, in the case of any such
Non-Governmental Approvals, the failure to obtain any such Non-Governmental
Approvals would not, individually or in the aggregate, be reasonably expected
to have a Material Adverse Effect), and the terms and conditions of such
Governmental Approvals and Non-Governmental Approvals so obtained would not
reasonably be expected to cause the Company to suffer a Material Adverse
Effect. Notwithstanding the preceding sentence, the condition set forth in this
Section 6.1(g) shall not be available to the Company to excuse its failure to
consummate the transactions contemplated by this Agreement and the Registration
Rights Agreement in the event of any wilful misconduct, gross negligence,
negligence or any other fault or responsibility whatsoever on the part of the
Company or any of its Subsidiaries or Affiliates.
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(h) Registration Rights Agreement. The Subscribers shall have
executed and delivered the Registration Rights Agreement.
(i) Significant Decrease in Market Value of Ordinary Shares.
In the event that the Market Value for the Ordinary Shares as determined at the
close of business (New York City time) three Business Days immediately preceding
the Closing Date shall have decreased to below U.S.$2.25 per Ordinary Share
(for the avoidance of doubt, after taking into account the then prevailing
ratio of Ordinary Shares per ADS), the Company shall have advised the
Subscribers in writing not later than the close of business (New York City
time) on the Business Day immediately preceding the Closing Date that it has,
in its sole discretion, elected to proceed with the Closing or, alternatively,
agreed (or are willing to agree) to a downward adjustment of the Conversion
Price in accordance with Section 2.3.
ARTICLE VII
SURVIVAL; INDEMNIFICATION
SECTION 7.1. Survival of Representations and Warranties. (a)
(i) The representations and warranties contained in the first sentence of
Section 3.1, Section 3.2, Section 3.3(c) and the last paragraph of Section
3.3(a) shall survive indefinitely.
(ii) All other representations and warranties contained in
this Agreement shall survive until the eighteen month anniversary of the
Closing Date, with the exception of Sections 3.12, 3.17, and 3.18, which shall
survive until the later of (A) the second anniversary of the Closing Date and
(B) three months after the expiration of the applicable statute of limitations
with respect to the subject matter thereof.
(b) The representations and warranties contained in this
Agreement, and the rights and remedies that may be exercised by any Person
seeking indemnification hereunder (except as expressly set forth in Section
7.4), shall not be limited or otherwise affected by or as a result of any
information furnished to, or any investigation made by, any such Person or its
representatives.
(c) For purposes of this Agreement, each statement or other
item of information set forth by the Company on any Schedule hereto shall be
deemed to be a part of (and, to the extent applicable, modify) the
corresponding representation and warranty made by the Company in this
Agreement.
SECTION 7.2. Indemnification. (a) From and after the Closing
Date and subject to the provisions of this Article VII, the Company shall
defend, indemnify and hold harmless the Subscribers and their respective
Affiliates and each director, officer, member, partner, employee and agent of
such Persons against any loss, damage, claim, liability, judgment or settlement
of any nature or kind, including all costs and expenses relating thereto,
including without limitation,
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interest, penalties and reasonable attorneys' fees (collectively, "Damages"),
arising out of, resulting from or relating to:
(i) the breach of any representation or warranty contained in
Article III, or any certificate delivered by the Company pursuant
hereto; and
(ii) the breach by the Company of any covenant or agreement
contained in this Agreement, or any certificate delivered by the
Company pursuant hereto.
(b) From and after the Closing Date and subject to the
provisions of this Article VII, each Subscriber shall, severally and not
jointly, defend, indemnify and hold harmless the Company and its Affiliates and
each director and officer of such Persons against any Damages arising out of,
resulting from or relating to:
(i) the breach by such Subscriber of any representation
or warranty contained in Article IV, or any certificate delivered by
the Subscribers pursuant hereto; and
(ii) the breach by such Subscriber of any covenant or
agreement (whether to be performed prior to or after Closing)
contained in this Agreement, or any certificate delivered by the
Subscribers pursuant hereto.
(c) The term "Damages" as used in this Article VII is not
limited to matters asserted by third parties against any Person entitled to be
indemnified under this Article VIII, but includes Damages incurred or sustained
by any such Person in the absence of third party claims.
SECTION 7.3. Indemnification Amounts. (a) No Indemnitor (as
defined below) shall have liability under Section 7.2(a)(i) or 7.2(b)(i), as
the case may be, until the aggregate amount of Damages theretofore incurred by
one or more Indemnitees (as defined below) in respect of such Indemnitor, as
the case may be, exceeds U.S.$2,000,000 in the aggregate (the "Deductible"), in
which case the Indemnitees in respect of such Indemnitor shall be entitled to
Damages in an aggregate amount up to (but not in excess of): (i) in the event
that the Company is the Indemnitor, the Subscription Price, and (ii) in the
event that any Subscriber is the Indemnitor, an amount equal to the product of
(A) U.S. $1,000,000 and (B) the quotient obtained by dividing the number of
Participating Shares purchased by such Subscribers by the total number of
Participating Shares purchased by all of the Subscribers; provided, however,
that the Indemnitor shall be liable only for the amount by which all Damages of
the Indemnitees in respect of such Indemnitor exceed the Deductible; and
provided, further, that no individual claim for payment of Damages may be made
under Section 7.2(a)(i) or (b)(i) unless such claim (or the aggregate amount of
related claims) is in an amount of U.S. $75,000 or greater.
(b) The limitations on the indemnification obligations set
forth in this Section 7.3 shall apply only to Section 7.2(a)(i) or 7.2(b)(i)
and not to any other covenants or agreements of the parties in this Agreement.
In addition, notwithstanding the provisions of paragraph (a) above, the
limitations on the indemnification obligations of the parties set forth therein
shall not
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apply to breaches of the representations and warranties made in Sections 3.3(c)
and the last sentence of 3.3(a).
(c) Notwithstanding anything to the contrary set forth
herein, no limitation on the indemnification obligations set forth in this
Section 7.3 shall apply to any breach of a representation or warranty made as
of the date hereof if such representation or warranty was made with knowledge
by the party making such representation or warranty that it (i) contained an
untrue statement of a material fact or (ii) omitted to state a material fact
necessary to make the statements contained therein not misleading. Solely for
purposes of calculating the amount of Damages incurred arising out of or
relating to any breach or representation or warranty (and not for purposes of
determining whether or not a breach has occurred), the references to "Material
Adverse Effect" or other materiality qualifications (or correlative terms),
including as expressed in accounting concepts, shall be disregarded.
SECTION 7.4. Additional Limitations. The Indemnitees shall
not be entitled to recover Damages against or from the Indemnitor in respect of
such Indemnitees under Section 7.2(a)(i) or 7.2(a)(ii) or 7.2(b)(i) or
7.2(b)(ii), as the case may be, in the following circumstances: (a) in case the
Indemnitor is the Company, with respect to any breach of any particular
representation, warranty, covenant or agreement, if at or prior to the Closing
any Subscriber had knowledge of such breach of such representation, warranty or
covenant or agreement and nonetheless proceeded to consummate the transactions
contemplated by this Agreement; or (b) with respect to consequential damages,
including, without limitation, damages regarding lost profits, or punitive
damages incurred or sustained by such Indemnitees, provided, however, that this
Section 7.4(b) shall not limit in any way the right of any Indemnitee to
recover such consequential or punitive damages paid or required to be paid by
such Indemnitee in respect of third party claims or otherwise.
SECTION 7.5. Indemnification Procedures. (a) In the event
that any Person shall incur or suffer any Damages in respect of which
indemnification may be sought hereunder, such Person (the "Indemnitee") may
assert a claim for indemnification by written notice (the "Notice") to the
party from whom indemnification is being sought (the "Indemnitor"), stating the
amount of Damages, if known, and the nature and basis of such claim. In the
case of Damages arising or which may arise by reason of any third-party claim,
promptly after receipt by an Indemnitee of written notice of the assertion of
any claim or the commencement of any action with respect to any matter in
respect of which indemnification may be sought hereunder, the Indemnitee shall
give Notice to the Indemnitor and shall thereafter keep the Indemnitor
reasonably informed with respect thereto, provided that failure of the
Indemnitee to give the Indemnitor prompt notice as provided herein shall not
relieve the Indemnitor of any of its obligations hereunder, except to the
extent that the Indemnitor is materially prejudiced by such failure. In case
any such action is brought against any Indemnitee, the Indemnitor shall be
entitled to assume the defense thereof, by written notice of its intention to
do so to the Indemnitee within 20 days after receipt of the Notice. If the
Indemnitor shall assume the defense of such action, it shall not settle such
action without the prior written consent of the Indemnitee, which consent shall
not be unreasonably withheld; provided that an Indemnitee shall not be
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required to consent to any settlement that (i) does not include as an
unconditional term thereof the giving by the claimant or the plaintiff of an
unconditional release of the Indemnitee from all liability with respect to such
action or (ii) involves the imposition of equitable remedies or the imposition
of any material obligations on such Indemnitee other than financial obligations
for which such Indemnitee will be indemnified hereunder. As long as the
Indemnitor is contesting any such action in good faith and on a timely basis,
the Indemnitee shall not pay or settle any claims brought under such action
(and the Indemnitee may not pay or settle any such claim prior to providing
notice to the Indemnitor and an opportunity to assume the defense of such
action as contemplated hereby). Notwithstanding the assumption by the
Indemnitor of the defense of any action as provided in this Section 7.5, the
Indemnitee shall be permitted to participate in the defense of such action and
to employ counsel at its own expense; provided, however, that if (i) the
defendants in any action shall include both an Indemnitor and any Indemnitee
and such Indemnitee shall have reasonably concluded that counsel selected by
Indemnitor has a potential conflict of interest because of the availability of
different or additional defenses to such Indemnitee or (ii) the Indemnitor has
not employed counsel reasonably satisfactory to such Indemnitee, such
Indemnitee shall have the right to select one separate counsel to participate
in the defense of such action on its behalf, at the expense of the Indemnitor.
(b) If the Indemnitor shall fail to notify the Indemnitee of
its desire to assume the defense of any such action within the prescribed
period of time, or shall notify the Indemnitee that it will not assume the
defense of any such action, then the Indemnitee may assume the defense of any
such action, in which event it may do so acting in good faith in such manner as
it may deem appropriate, and the Indemnitor shall be bound by any final,
non-appealable determination made in such action; provided, however, that the
Indemnitee shall not be permitted to settle such action without the consent of
the Indemnitor, which consent shall not be unreasonably withheld or delayed.
The Indemnitor shall be permitted to join in the defense of such action and to
employ counsel at its own expense.
(c) Amounts payable by the Indemnitor to the Indemnitee in
respect of any Damages for which such party is entitled to indemnification
hereunder shall be payable by the Indemnitor as incurred by the Indemnitee.
(d) In the event of any dispute between the parties regarding
the applicability of the indemnification provisions of this Agreement, the
prevailing party shall be entitled to recover all Damages incurred by such
party arising out of, resulting from or relating to such dispute.
SECTION 7.6. Non-Exclusive Remedy. The indemnification
remedies provided in this Article VII shall not be deemed to be exclusive.
Accordingly, the exercise by any Person of any of its rights under this Article
VII shall not be deemed to be an election of remedies and shall not be deemed
to prejudice, or to constitute or operate as a waiver of, any other right or
remedy that such Person may be entitled to exercise (whether under this
Agreement, under any other contract, under any law or otherwise).
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SECTION 7.7. Certain Limitations. The indemnification
obligations of the parties hereto for any breach of a representation and
warranty described in Article III or IV of this Agreement shall survive for
only the period applicable to such representations and warranties as set forth
in Section 7.1 of this Agreement, and thereafter all such claims with respect
to representations and warranties of the parties hereto under this Agreement
shall be extinguished; provided, however, that such indemnification obligation
shall not be extinguished (and an indemnification claim in respect thereof
shall not be barred) in the event of Damages incurred as a result of an
investigation, review, suit, claim or action that was instituted or begun prior
to the expiration of the survival period set forth in Section 7.1. so long as
notice of a possible indemnification claim was provided by the Indemnitee to
the Indemnitor within such period.
ARTICLE VIII
TERMINATION
SECTION 8.1. Termination. (a) This Agreement may be
terminated, and the transactions contemplated hereby abandoned, at any time
prior to the Closing:
(i) by the Company on the one hand, or the
Subscribers on the other hand, in the event of a breach or default by
the other party of or in any representation, warranty, covenant or
agreement of such other party contained in this Agreement, which
breach or default (A) would permit the non-breaching or non-defaulting
party to elect not to consummate the transactions contemplated by this
Agreement pursuant to Article VI of this Agreement, and (B) either
cannot by its terms be cured or has not been cured within 30 days
after written notice of such breach or default, describing such breach
or default in reasonable detail, is given by the terminating party to
the breaching or defaulting party;
(ii) by the Company or any Subscriber if the Closing
shall not have occurred on or prior to 120 days after the date of this
Agreement; provided, however, that the right to terminate this
Agreement under this Section 8.1(a)(ii) shall not be available to any
party whose failure to fulfill any obligation under this Agreement
shall have been the cause of, or shall have resulted in, the failure
of the Closing to occur on or prior to such date;
(iii) by the Company or any Subscriber in the event
that any Governmental Authority whose consent is necessary for the
consummation of the transactions contemplated by this Agreement shall
have issued a final, non-appealable Government Order or taken any
other final, non-appealable action restraining, enjoining, denying
approval of or otherwise prohibiting the transactions contemplated by
this Agreement and the Registration Rights Agreement; or
(iv) by the mutual written consent of the Company and
each Subscriber.
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(b) Upon termination of this Agreement pursuant to Section
8.1(a), this Agreement and the Registration Rights Agreement shall be void and
of no further force and effect and no party shall have any liability to any
other party under this Agreement and the Registration Rights Agreement, except
for the obligations set forth in Articles VII and IX hereof. Notwithstanding
the preceding sentence of this Section 8.1(b) or any other provision of this
Agreement to the contrary, nothing contained in this Agreement (including,
without limitation, this Section 8.1) shall relieve (i) any party from any
liability for the breach or violation of any of the representations,
warranties, covenants and agreements set forth in this Agreement or (ii) the
Company from its obligations set forth in Section 9.1. The provisions of
Articles VII and IX shall survive any termination of this Agreement pursuant to
Section 8.1(a).
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.1. Termination Fee (a) As a condition and
inducement to the Subscribers' willingness to enter into this Agreement, if the
issue and allotment of the Participating Shares is not consummated hereunder,
the Company will pay, upon demand (within three Business Days), to the
Subscribers a termination fee of U.S.$2,000,000 by wire transfer of immediately
available funds to a bank account or accounts designated by the Subscribers;
provided, however, that the Subscribers shall not be entitled to such
termination fee if the issue and allotment of the Participating Shares is not
consummated hereunder for:
(i) any reason set forth in Section 6.1(a)(ii) or 6.1(m);
(ii) any reason set forth in Section 6.1(b), 6.1(c), 6.1(e),
6.1(g), 6.2(b), 6.2(c), 6.2(e) or 6.2(g) (but only in the absence of
any wilful misconduct, gross negligence, negligence or any other fault
or responsibility whatsoever on the part of the Company or any of its
Subsidiaries or Affiliates);
(iii) any reason set forth in Section 6.1(f)(ii) (but only in
the event that the Subscribers determine that the financing commitment
referred to therein is not reasonably satisfactory to them);
(iv) any reason set forth in Section 6.1(n); or
(v) any default by the Subscribers in the performance of
their obligations under this Agreement.
(b) The termination fee provided for in Section 9.1(a) shall
constitute the sole remedy of the Subscribers against the Company if the issue
and allotment of the Participating Shares is not consummated because of any
reason not involving wilful misconduct, gross negligence, negligence or any
other fault or responsibility whatsoever on the part of the
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Company or any of its Subsidiaries or Affiliates. The preceding sentence of
this Section 9.1(b) shall, however, not apply in the event (i) of any wilful
misconduct, gross negligence, negligence or any other fault or responsibility
whatsoever on the part of the Company or any of its Subsidiaries or Affiliates
or (ii) that the Company fails to pay such termination fee demand (within three
Business Days), in which case the Subscribers shall be entitled to exercise any
and all rights and remedies against the Company (whether under this Agreement,
under any other contract, under any law or otherwise).
SECTION 9.2. Notices. Any notice, request, claim, demand or
other communication under this Agreement shall be in writing, shall be either
personally delivered, delivered by facsimile transmission or sent by reputable
overnight courier service (charges prepaid) to the address for such Person set
forth below or such other address as the recipient party has specified by prior
written notice to the other parties hereto and shall be deemed to have been
given hereunder when receipt is acknowledged for personal delivery or facsimile
transmission or one day after deposit with a reputable overnight courier
service.
(a) if to the Subscribers:
c/o The Cypress Group LLC
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax: (000) 000-0000
Attention: Xxxxx X. Xxxxxxxxx
with a copy to:
Xxxxxxx Xxxxxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Fax: (000) 000-0000
Attention: Xxxxx X. Xxxxxx, Esq.
(b) if to the Company:
Danka Business Systems PLC
000 Xxxxxxxxxxx Xxxx
Xxxxxx X00 XXX, Xxxxxxx
Fax: (000-00-000) 000-0000
Attention: Corporate Secretary
with copies to:
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Danka Holding Company
00000 Xxxxx Xxxxxx Xxxxx
Xx. Xxxxxxxxxx, Xxxxxxx 00000
Fax: (000) 000-0000
Attention: General Counsel
Altheimer & Xxxx
00 Xxxxx Xxxxxx Xxxxx
Xxxxxxx, XX 00000
Fax: (000) 000-0000
Attention: Xxxxxxx X. Xxxx, Esq.
Xxxxx X. Xxxxxxxxx, Esq.
Xxxx X. Xxxx, Esq.
SECTION 9.3. Interpretation. When a reference is made in this
Agreement to Sections, such reference shall be to a Section of this Agreement
unless otherwise indicated. The table of contents and headings contained in
this Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement.
SECTION 9.4. Counterparts. This Agreement may be executed in
one or more counterparts, all of which shall be considered one and the same
agreement and shall become effective when one or more counterparts have been
signed by each of the parties and delivered to the other party, it being
understood that each party need not sign the same counterpart.
SECTION 9.5. Entire Agreement; No Third Party Beneficiaries.
(a) This Agreement constitutes the entire agreement and supersedes all prior
agreements and undertakings, both written and oral, between the parties with
respect to the subject matter hereof.
(b) Except for the provisions of Article VII relating to
Indemnified Parties, this Agreement shall be binding upon and inure solely to
the benefit of each party hereto and their permitted assigns, and nothing in
this Agreement, express or implied, is intended to or shall confer upon any
other Person any right, benefit or remedy of any nature whatsoever under or by
reason of this Agreement.
SECTION 9.6. Governing Law; Consent to Jurisdiction. THIS
AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK.
Each of the parties hereto hereby irrevocably and
unconditionally consents to submit to the exclusive jurisdiction of the courts
of the State of New York and the United States District Court for the Southern
District of New York for any Litigation in any court or before any Governmental
Authority arising out of or relating to this Agreement and the transactions
contemplated hereby and further agrees that service of any process, summons,
notice or document by U.S. mail to its respective address set forth in this
Agreement shall be effective
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service of process for any Litigation brought against it in any such court.
Each of the parties hereto hereby irrevocably and unconditionally waives any
objection to the laying of venue of any Litigation arising out of this
Agreement or the transactions contemplated hereby in the courts of the State of
New York sitting in the Borough of Manhattan in the City of New York, and
hereby further irrevocably and unconditionally waives and agrees not to plead
or claim in any such court that any such Litigation brought in any such court
has been brought in an inconvenient forum.
SECTION 9.7. Severability. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any law or
public policy, all other terms and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party.
SECTION 9.8. Assignment. Neither this Agreement nor any of
the rights, interests or obligations hereunder shall be assigned by any of the
parties hereto, in whole or in part (whether by operation of law or otherwise),
without the prior written consent of the other parties hereto, and any attempt
to make any such assignment without such consent shall be null and void;
provided, however, that the Subscribers may, without the consent of any of the
other parties to this Agreement, (i) assign its rights and obligations
hereunder to any of its Affiliates (provided, that no such assignment shall
relieve the Subscribers of their responsibility for the performance of their
obligations hereunder and provided, further, that no such assignment shall
result in any increase (other than an incidental increase) in VAT or similar
taxes or other meaningful costs payable by the Company in connection with the
issue and allotment of the Participating Shares at the Closing hereunder or any
delay (other than an incidental delay) in the consummation of the issue and
allotment of the Participating Shares at the Closing hereunder) and (ii)
subject to compliance with the terms of the legend set forth in Section 5.11,
transfer any or all of the Participating Shares to one or more other Persons
(which Persons shall be entitled to the benefits, but not subject to the
obligations, of Article VII in accordance with its terms). Subject to the
preceding sentence, this Agreement will be binding upon, inure to the benefit
of and be enforceable by, the parties and their respective successors and
assigns.
SECTION 9.9. Amendment. This Agreement may not be amended
except by an instrument in writing signed by the parties hereto.
SECTION 9.10. Waiver of Jury Trial. TO THE FULLEST EXTENT
PERMITTED BY LAW, THE PARTIES HERETO HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A
JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
AGREEMENT OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS
TRANSACTION.
SECTION 9.11. Judgment Currency. The Company agrees that, if
a judgment or order given or made by any court for the payment of any amount
due to the Subscribers hereunder is expressed in currency (the "judgment
currency") other than the currency (the "denomination currency") in which such
amount is payable, it shall indemnify the Subscribers
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49
against any deficiency arising or resulting from any variation in rates of
exchange between the date as of which the amount in the denomination currency
is notionally converted into the amount in the judgment currency for the
purposes of such judgement or order and the date of actual payment thereof.
This indemnity shall constitute a separate and independent obligation from the
other obligations contained in this Agreement, shall give rise to a separate
and independent cause of action, will apply irrespective of any indulgence
granted from time to time and shall continue in full force and effect
notwithstanding any judgment or order for a liquidated sum or sums in respect
of any amounts so due in respect hereof under any such judgment or order.
SECTION 9.12. Public Disclosure. Notwithstanding anything
herein to the contrary, each of the parties to this Agreement hereby agrees
with the other parties hereto that, except as may be required to comply with
the requirements of any applicable laws or regulations (including, without
limitation, regulations of the SEC, the Listing Rules and the Companies Acts),
no press release or similar public announcement or communication shall be made
or caused to be made concerning the execution or performance of this Agreement
unless the parties shall have agreed in advance with respect thereto (it being
recognized that the parties hereto shall issue a joint press release
satisfactory to such parties in connection with execution and delivery of this
Agreement and that the Company shall file with the SEC a Current Report on Form
8-K containing such press release and annexing this Agreement (other than the
Schedules and Exhibits X-0, X, X-0, X-0, X-0 and F hereto)).
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IN WITNESS WHEREOF, each of the undersigned has
caused this Agreement to be executed as of the date first written above by
their respective officers thereunto duly authorized.
DANKA BUSINESS SYSTEMS PLC
By:
------------------------
Name:
Title:
[Signatures continue on following page]
56
CYPRESS MERCHANT BANKING
PARTNERS II L.P.
By: Cypress Associates II LLC, its
General Partner
By:
------------------------
Name:
Title:
CYPRESS MERCHANT BANKING II C.V.
By: Cypress Associates II LLC, its
Managing General Partner
By:
------------------------
Name:
Title:
00XX XXXXXX PARTNERS II L.P.
By: Cypress Associates II LLC,
its General Partner
By:
------------------------
Name:
Title:
57
SCHEDULE 2.2
PURCHASERS OF PARTICIPATING SHARES
Number of Participating
Shares to be Purchased
-----------------------
Cypress Merchant Banking Partners II LLP 190,080
Cypress Merchant Banking II C.V. 8,080
00xx Xxxxxx Partners II L.P. 1,840
-------
200,000
=======
