SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
January 19, 1999 (January 4, 1999)
IRON MOUNTAIN INCORPORATED
(Exact name of registrant as specified in its charter)
Delaware 0-27584 04-3107342
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
745 Atlantic Avenue
Boston, Massachusetts 02111
(Address of principal executive offices, including zip code)
(617) 535-4766
(Registrant's telephone number, including area code)
<PAGE>
Item 2. Acquisition or Disposition of Assets.
On January 4, 1999, Iron Mountain Incorporated ("Iron Mountain"),
through a wholly owned subsidiary, purchased a majority interest in Britannia
Data Management Limited, a corporation formed under the laws of England and
Wales ("BDM"), from Mentmore Abbey plc pursuant to an Agreement, dated as of
December 2, 1998, between Iron Mountain and Mentmore Abbey plc. The acquisition
will be accounted for as a purchase and BDM will be included in Iron Mountain's
consolidated financial results from the date of acquisition.
Consideration for the 50.1 percent interest in BDM was $47.7 million
and was comprised of cash and the capital stock of Arcus Data Security Limited
("ADS"), Iron Mountain's existing data security business in London. The funds
used for the consideration were comprised of borrowings under Iron Mountain's
$250 million revolving credit facility, dated September 27, 1997, as amended,
among Iron Mountain, various financial institutions and The Chase Manhattan
Bank, as administrative agent for such lenders.
The assets acquired by Iron Mountain included real property, tangible
personal property (consisting primarily of office equipment, furniture and
fixtures, motor vehicles, racking and shelving) and intangible personal property
regularly used in BDM's records management business. Iron Mountain intends to
use the acquired property and equipment in the operation of its records
management business in the United Kingdom.
Item 7. Financial Statements and Exhibits
(a) In accordance with Item 7(a)(4) of Form 8-K, the required financial
statements will be filed, by amendment to this Form 8-K, on or before
March 22, 1999.
(b) See preceding response.
(c) Exhibits.
Exhibit No. Item
2.1 Agreement, dated as of December 2, 1998, by and between Iron Mountain
and Mentmore Abbey plc.
10.1 Amendment No. 2 to the Second Amended and Restated Credit Agreement,
dated as of November 9, 1998, among Iron Mountain, the lenders party
thereto and The Chase Manhattan Bank, as Administrative Agent.
10.2 Strategic Alliance Agreement, dated as of January 4, 1999, by and among
Iron Mountain, Iron Mountain (U.K.) Limited, BDM and Mentmore Abbey
plc.
2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
IRON MOUNTAIN INCORPORATED
(Registrant)
By: /s/ Jean A. Bua
Jean A. Bua
Vice President and Corporate Controller
Date: January 19, 1999
3
EXHIBIT 2.1
CONFORMED COPY
AGREEMENT
by and between
IRON MOUNTAIN INCORPORATED,
and
MENTMORE ABBEY plc
dated as of
DECEMBER 2, 1998
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<TABLE>
<CAPTION>
Table of Contents
<S> <C> <C>
ARTICLE I
TRANSACTIONS
Section 1.1 Sale and Transfer of Shares Held by Mentmore and Abbey..........................Page 1
Section 1.2 Consideration for Shares Held by Mentmore and Abbey.............................Page 1
ARTICLE II
THE CLOSING
Section 2.1 The Closing.....................................................................Page 2
Section 2.2 Closing of the Share Purchase from Mentmore and Abbey...........................Page 2
ARTICLE III
TRANSACTION ADJUSTMENTS
Section 3.1 Britannia Net Indebtedness......................................................Page 3
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF MENTMORE
Section 4.1 Mentmore Legal Power, Organization..............................................Page 4
Section 4.2 Authorization; Validity of the Transaction Agreements;
Necessary Action - Mentmore.................................................Page 4
Section 4.3 Share Ownership.................................................................Page 4
Section 4.4 No Encumbrances on Shares.......................................................Page 5
Section 4.5 Legal Power and Organization - Britannia and Abbey..............................Page 5
Section 4.6 Legal Power and Organization - BDM..............................................Page 5
Section 4.7 Subsidiaries and Affiliates.....................................................Page 5
Section 4.8 Britannia Capitalization........................................................Page 6
Section 4.9 Board Approvals Regarding Transactions..........................................Page 7
Section 4.10 Vote Required..................................................................Page 7
Section 4.11 Consents and Approvals; No Violations..........................................Page 7
Section 4.12 Financial Statements...........................................................Page 7
Section 4.13 Books and Records..............................................................Page 8
Section 4.14 No Undisclosed Liabilities.....................................................Page 8
Section 4.15 Accounts Receivable............................................................Page 8
Section 4.16 Interim Operations.............................................................Page 8
Section 4.17 Absence of Certain Changes.....................................................Page 8
Section 4.18 Litigation....................................................................Page 10
Section 4.19 Employee Benefit Plans........................................................Page 10
Section 4.20 Tax Matters; Government Benefits..............................................Page 11
Section 4.21 Title to Properties; Encumbrances.............................................Page 12
<PAGE>
Section 4.22 Real Property.................................................................Page 12
Section 4.23 Warehouses and Equipment......................................................Page 13
Section 4.24 Leases........................................................................Page 13
Section 4.25 Intellectual Property.........................................................Page 13
Section 4.26 Labor Matters.................................................................Page 14
Section 4.27 Personnel.....................................................................Page 15
Section 4.28 Potential Conflict of Interest................................................Page 15
Section 4.29 Environmental Matters.........................................................Page 16
Section 4.30 Compliance with Laws..........................................................Page 17
Section 4.31 Contracts and Commitments.....................................................Page 18
Section 4.32 Customers and Suppliers.......................................................Page 19
Section 4.33 Insurance.....................................................................Page 19
Section 4.34 Operational Matters...........................................................Page 20
Section 4.35 Brokers or Finders............................................................Page 20
Section 4.36 Full Disclosure...............................................................Page 20
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF IM
Section 5.1 IM Legal Power; Organization...................................................Page 21
Section 5.2 Authorization; Validity of Transaction Agreements;
Necessary Action - IM.......................................................Page 21
Section 5.3 Share Ownership................................................................Page 22
Section 5.4 No Encumbrances on Shares of Arcus.............................................Page 22
Section 5.5 Legal Power; Organization......................................................Page 22
Section 5.6 Subsidiaries...................................................................Page 22
Section 5.7 Arcus Capitalization...........................................................Page 22
Section 5.8 Board Approvals Regarding Transactions.........................................Page 23
Section 5.9 Consents and Approvals; No Violations..........................................Page 23
Section 5.10 Financial Statements..........................................................Page 23
Section 5.11 Books and Records.............................................................Page 23
Section 5.12 No Undisclosed Liabilities....................................................Page 24
Section 5.13 Accounts Receivable...........................................................Page 24
Section 5.14 Interim Operations............................................................Page 24
Section 5.15 Absence of Certain Changes....................................................Page 24
Section 5.16 Litigation....................................................................Page 25
Section 5.17 Employee Benefit Plans........................................................Page 26
Section 5.18 Tax Matters; Government Benefits..............................................Page 26
Section 5.19 Title to Properties; Encumbrances.............................................Page 27
Section 5.20 Real Property.................................................................Page 27
Section 5.21 Warehouses and Equipment......................................................Page 27
Section 5.22 Leases........................................................................Page 28
Section 5.23 Intellectual Property.........................................................Page 28
Section 5.24 Labor Matters.................................................................Page 28
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Section 5.25 Personnel.....................................................................Page 29
Section 5.26 Potential Conflict of Interest................................................Page 29
Section 5.27 Environmental Matters.........................................................Page 30
Section 5.28 Compliance with Laws..........................................................Page 31
Section 5.29 Contracts and Commitments.....................................................Page 31
Section 5.30 Customers and Suppliers.......................................................Page 32
Section 5.31 Insurance.....................................................................Page 32
Section 5.32 Operational Matters...........................................................Page 32
Section 5.33 Brokers or Finders............................................................Page 33
Section 5.34 Sufficient Funds..............................................................Page 33
Section 5.35 Full Disclosure...............................................................Page 33
ARTICLE VI
COVENANTS
Section 6.1 Access; Confidentiality........................................................Page 33
Section 6.2 Efforts and Actions to Cause Closing to Occur..................................Page 35
Section 6.3 Notification of Certain Matters................................................Page 36
Section 6.4 No Solicitation of Competing Transaction.......................................Page 36
Section 6.5 Publicity......................................................................Page 37
Section 6.6 Interim Operations of Britannia, Abbey and BDM ................................Page 37
Section 6.7 Interim Operations of Arcus....................................................Page 39
ARTICLE VII
CONDITIONS
Section 7.1 Conditions to Obligations of IM to Effect the Closing..........................Page 40
Section 7.2 Conditions to Obligations of Mentmore to Effect the Closing....................Page 42
Section 7.3 No Right to Rescind............................................................Page 44
ARTICLE VIII
TERMINATION
Section 8.1 Termination....................................................................Page 44
Section 8.2 Effect of Termination..........................................................Page 45
ARTICLE IX
REMEDIES
Section 9.1 IM Indemnification.............................................................Page 45
Section 9.2 IM Damages.....................................................................Page 46
Section 9.3 Mentmore's Total Liability.....................................................Page 47
Section 9.4 IM Notice of Third-Party Claim; Defense........................................Page 48
Section 9.5 Mentmore Indemnification.......................................................Page 48
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Section 9.6 Mentmore Damages...............................................................Page 49
Section 9.7 IM's Total Liability...........................................................Page 50
Section 9.8 Mentmore Notice of Claim; Defense..............................................Page 50
Section 9.9 Procedure. ....................................................................Page 51
Section 9.10 Offsets.......................................................................Page 51
Section 9.11 Survival of Remedies..........................................................Page 52
Section 9.12 Tax Effect of Indemnification Payments........................................Page 52
Section 9.13 Effect of Investigation.......................................................Page 52
Section 9.14 Duty to Mitigate..............................................................Page 52
Section 9.15 Duty to Fund..................................................................Page 52
ARTICLE X
DEFINITIONS AND INTERPRETATION
Section 10.1 Definitions...................................................................Page 52
Section 10.2 Interpretation................................................................Page 59
ARTICLE XI
MISCELLANEOUS
Section 11.1 Fees and Expenses.............................................................Page 60
Section 11.2 Amendment and Modification....................................................Page 60
Section 11.3 Survival of Representations and Warranties....................................Page 60
Section 11.4 Notices.......................................................................Page 60
Section 11.5 Counterparts..................................................................Page 61
Section 11.6 Entire Agreement; No Third Party Beneficiaries................................Page 61
Section 11.7 Severability..................................................................Page 62
Section 11.8 Governing Law.................................................................Page 62
Section 11.9 Dispute Resolution...........................................................Page 62
Section 11.10 Post-Closing Cooperation.....................................................Page 63
Section 11.11 Time of Essence..............................................................Page 63
Section 11.12 Extension; Waiver............................................................Page 63
Section 11.13 Assignment...................................................................Page 64
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[Exhibits and Schedules Omitted]
EXHIBIT A
Whitechapel Lease..................................................Ex. A-1
EXHIBIT B
License Agreement..................................................Ex. B-1
EXHIBIT C
Britannia Inactive Subsidiaries....................................Ex. C-1
EXHIBIT D
Mentmore Tax Deed..................................................Ex. D-1
EXHIBIT E
IM Tax Deed........................................................Ex. E-1
EXHIBIT F
Whitechapel Option Agreement.......................................Ex. F-1
SCHEDULE I
Net Indebtedness Statement..........................................Sch. I
SCHEDULE II
Britannia Knowledge List...........................................Sch. II
SCHEDULE III
IM Knowledge List.................................................Sch. III
v
<PAGE>
AGREEMENT
Agreement, dated as of December 2, 1998, by and between Iron
Mountain Incorporated, a corporation incorporated under the laws of Delaware,
United States of America ("IM"), and Mentmore Abbey plc, a company incorporated
under the laws of England and Wales ("Mentmore"). Certain capitalized terms used
in this Agreement have the meanings assigned to them in Article X beginning on
page 53.
WHEREAS, each of the Boards of Directors of IM and Mentmore
have approved, and deem it advisable and in the best interests of their
respective stockholders to consummate, the acquisition of 50.1% of Britannia
Data Management Limited, a company incorporated under the laws of England and
Wales ("Britannia"), by IM, which acquisition is to be effected by the
Transactions contemplated by this Agreement upon the terms and subject to the
conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing and the
mutual representa tions, warranties, covenants and agreements set forth herein,
intending to be legally bound hereby, the parties hereto agree as follows:
ARTICLE I
TRANSACTIONS
Section 1.1 Sale and Transfer of Shares Held by Mentmore and
Abbey. Subject to the terms and conditions of this Agreement, at the Closing
(i), Mentmore shall sell, convey, transfer and deliver with full title guarantee
to IM, TWELVE MILLION, THIRTY-NINE THOUSAND, SEVEN HUNDRED SEVEN (12,039,707)
Shares of Britannia, free and clear of all Encumbrances, and (ii) Mentmore shall
cause Abbey Storage Limited, a company incorporated under the laws of England
and Wales ("Abbey") to sell, convey, transfer and deliver with full title
guarantee to IM, TWO HUNDRED FIFTY THOUSAND, SEVEN HUNDRED NINETY-EIGHT
(250,798) Shares of Britannia, free and clear of all Encumbrances. Such Shares
shall be duly authorized, validly issued and fully paid (or credited as fully
paid).
Section 1.2 Consideration for Shares Held by Mentmore and
Abbey. Subject to the terms and conditions of this Agreement, in consideration
of the aforesaid sale, conveyance, transfer and delivery of the 12,290,505
Shares, IM shall pay (i) to Mentmore, TWENTY-THREE MILLION, ONE HUNDRED
SIXTY-SEVEN THOUSAND, FOUR HUNDRED TWO UNITED KINGDOM POUNDS STERLING
((pound)23,167,402), and (ii) to Abbey FOUR HUNDRED EIGHTY-TWO THOUSAND, FIVE
HUNDRED NINETY-EIGHT UNITED KINGDOM POUNDS STERLING ((pound)482,598).
<PAGE>
ARTICLE II
THE CLOSING
Section 2.1 The Closing. The consummation of the sale and
transfer of Shares referred to in ARTICLE I above shall take place at the London
offices of Skadden, Arps, Slate, Meagher & Flom LLP at 2:00 p.m., London time,
on January 4, 1999 or ten Business Days following the satisfaction or waiver of
all conditions to close set forth in Article VII (whichever shall first occur),
unless another date or place is agreed in writing by each of the parties hereto
(the "Closing").
Section 2.2 Closing of the Share Purchase from Mentmore and
Abbey. At the Closing:
(a) Mentmore shall deliver to IM:
(i) definitive share certificates
representing 12,039,707 Shares of Britannia, accompanied by stock transfer forms
in respect of such Shares duly and validly executed and otherwise sufficient to
vest in IM good and marketable title to such Shares, with full title guarantee,
free and clear of all Encumbrances; and
(ii) such other documents as are reasonably
required to be delivered pursuant to this Agreement to IM by Mentmore.
(b) IM shall deliver to Mentmore:
(i) a transfer of immediately available
funds in the amount of (pound)23,167,402; and
(ii) such other documents as are reasonably
required to be delivered by IM to Mentmore pursuant to this Agreement.
(c) Mentmore shall procure the delivery by Abbey to
IM of:
(i) definitive share certificates
representing 250,798 Shares of Britannia, accompanied by stock transfer forms in
respect of such Shares duly and validly executed and otherwise sufficient to
vest in IM good and marketable title to such Shares, with full title guarantee,
fee and clear of all Encumbrances; and
(ii) such other documents are reasonably
required to be delivered pursuant to this Agreement to IM by Abbey.
(d) IM shall deliver to Abbey:
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(i) a transfer of immediately available
funds in the amount of (pound)482,598; and
(ii) such other documents as are reasonably
required to be delivered by IM to Abbey pursuant to this Agreement.
ARTICLE III
TRANSACTION ADJUSTMENTS
Section 3.1 Britannia Net Indebtedness. (a) Within thirty (30)
days from the Closing, the parties shall cause Britannia to deliver to Mentmore
and IM a statement of consolidated Net Indebtedness of Britannia and its
Subsidiaries (and for the avoidance of doubt, excluding the ARM Assets), as of
the close of business on the Closing Date, certified by Robson Rhodes (the
"Britannia Net Indebtedness Statement"). The Britannia Net Indebtedness
Statement shall be prepared in accordance with Schedule I.
(b) To the extent that the Net Indebtedness of
Britannia on the Britannia Net Indebtedness Statement is greater than TEN
MILLION UNITED KINGDOM POUNDS STERLING ((pound)10,000,000), within ten calendar
days of receipt of the Britannia Net Indebtedness Statement, Mentmore shall make
a payment to IM equivalent to the amount of the excess of the Net Indebtedness
of Britannia over (pound)10,000,000.
(c) To the extent that the Net Indebtedness of
Britannia on the Britannia Net Indebtedness Statement is less than
(pound)10,000,000, within ten calendar days of receipt of the Britannia Net
Indebtedness Statement, IM shall make a payment to Mentmore equivalent to the
amount of the excess of (pound)10,000,000 over the Net Indebtedness of
Britannia.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF MENTMORE
Except as set forth in the Mentmore Disclosure Letter prepared
and signed by Mentmore and delivered to IM simultaneously with the execution
hereof, Mentmore represents and warrants to IM that all of the statements
contained in this Article IV are true and correct as of the date of this
Agreement (or, if made as of a specified date, as of such date), and, subject to
Section 7.1 (a) will be true and correct in all material respects as of the
Closing Date as though made on the Closing Date. Each exception set forth in the
Mentmore Disclosure Letter and each other response to this Agreement set forth
in the Mentmore Disclosure Letter is identified by reference to, or has been
grouped under a heading referring to, a specific individual section of this
Agreement and, except as otherwise specifically stated with respect to such
exception, relates only to such section. The disclosures in each section of the
Mentmore Disclosure Letter relate only to the representations and warranties set
forth in the section of this
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Agreement to which such section of the Mentmore Disclosure Letter expressly
relates and not to any other representation and warranty contained in this
Agreement, except to the extent that one section of the Mentmore Disclosure
Letter specifically refers to another section thereof. It is agreed that IM will
not be entitled to claim that any fact or combination of facts constitutes a
breach of any of the statements contained in Article IV if and to the extent
that such fact or combination of facts has been specifically disclosed in the
Mentmore Disclosure Letter in accordance with this paragraph.
Section 4.1 Mentmore Legal Power, Organization. Mentmore is a
company duly incorporated under the laws of England and Wales and has all
requisite power and authority to execute and deliver this Agreement and to
consummate the Transactions.
Section 4.2 Authorization; Validity of the Transaction
Agreements; Necessary Action - Mentmore. (a) Subject to its shareholders
approving this Agreement and the Transactions contemplated herein, Mentmore has
taken all necessary corporate or other action to authorize the execution,
delivery and performance of this Agreement and the Arcus Stock Transfer
Agreement, the Subscription Agreement, the Strategic Alliance Agreement, the
Hive Across Agreement, the License Agreement, the Whitechapel Lease, the
Whitechapel Option Agreement, the Mentmore Tax Deed and the IM Tax Deed
(collectively, the "Transaction Agreements"). This Agreement has been duly
executed and delivered by Mentmore and, assuming the due and valid
authorization, execution and delivery by IM, constitutes a legal, valid and
binding obligation of Mentmore, enforceable against Mentmore in accordance with
its terms, except (i) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting
enforcement of creditors' rights generally, and (ii) the availability of the
remedy of specific performance or injunctive or other forms of equitable relief
may be subject to equitable defenses and would be subject to the discretion of
the court before which any proceeding therefor may be brought.
(b) The other Transaction Agreements if and when
executed will be duly executed and delivered by Mentmore or one of its
Subsidiaries and, assuming the due and valid authorization, execution and
delivery by the other party to such other Transaction Documents, constitute
legal, valid and binding obligations of Mentmore or one of its Subsidiaries, as
the case may be, enforceable against Mentmore or one of its Subsidiaries, as the
case may be, in accordance with its terms, except (i) as limited by applicable
bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting enforcement of creditors' rights generally, and (ii) the
availability of the remedy of specific performance or injunctive or other forms
of equitable relief may be subject to equitable defenses and would be subject to
the discretion of the court before which any proceeding therefor may be brought.
Section 4.3 Share Ownership. (a) Mentmore is the registered
and beneficial owner of 24,828,953 of the authorized and issued Shares of
Britannia. Abbey is the registered and beneficial owner of 250,798 Shares of the
authorized and issued share capital of Britannia. Britannia has not issued or
allotted any share capital other than the Shares. The transfers of Shares to IM
pursuant to the Transactions: (i) will vest in IM legal and beneficial ownership
of the Shares, free and clear of all Encumbrances (other than Encumbrances, if
any, that may attach to such Shares which are directly or indirectly
attributable to IM or any of its Affiliates (other than Britannia or BDM or any
of their respective Subsidiaries)); (ii) such Shares will be validly issued and
fully paid (or credited as fully paid); and (iii) at the time of Closing, there
will be no outstanding options,
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rights or agreements of any kind relating to the allotment, issuance, sale or
transfer of any share capital or other equity securities of Britannia.
(b) Except as set forth in the Mentmore Disclosure
Letter, Mentmore is the registered and beneficial owner of all of the authorized
and issued shares of Abbey. Except as set forth in the Mentmore Disclosure
Letter, there are no other holders of any securities issued by Abbey. The
transfer of the ARM Assets by Abbey to BDM pursuant to the Transactions will
vest in BDM legal and beneficial ownership of such ARM Assets, free and clear of
all Encumbrances.
Section 4.4 No Encumbrances on Shares. The Owned Shares and
the share certificates representing the Owned Shares, are now, and at all times
during the term hereof shall be, held free and clear of all Encumbrances
whatsoever, except for any Encumbrances created by this Agreement.
Section 4.5 Legal Power and Organization - Britannia and
Abbey. (a) Britannia is a company incorporated under the laws of England and
Wales and has full corporate power and authority to carry on its business as it
is now being conducted and to own the properties and assets it now owns.
(b) Abbey is a company incorporated under the laws of
England and Wales, and has full corporate power and authority to (i) carry on
its business as it is now being conducted, (ii) to own the properties and assets
it now owns, including, without limitation the ARM Assets and the 250,798
Shares, and (iii) to sell, convey, transfer and deliver the 250,798 Shares
pursuant to this Agreement and the ARM Assets pursuant to the Hive Across
Agreement.
Section 4.6 Legal Power and Organization - BDM. BDM is a
company incorporated under the laws of England and Wales and has full corporate
power and authority to carry on its business as it is now being conducted and to
own the properties and assets it now owns.
Section 4.7 Subsidiaries and Affiliates. (a) The Mentmore
Disclosure Letter sets forth the name, jurisdiction of incorporation and
capitalization of each Britannia Subsidiary and each BDM Subsidiary. There are
no jurisdictions in which such Subsidiaries are required to be qualified to
conduct their business as currently conducted. Exhibit C hereto sets forth the
name, jurisdiction of incorporation and capitalization of each Inactive
Subsidiary of Britannia. Except as set forth in the Mentmore Disclosure Letter,
neither Britannia nor BDM owns, directly or indirectly, any capital stock or
other equity securities of any corporation or has any direct or indirect equity
or ownership interest in any business other than publicly traded securities
constituting less than five (5) percent of the outstanding equity of the issuing
entity. All the issued shares of each Britannia Subsidiary and each BDM
Subsidiary is owned directly or indirectly by Britannia or BDM (as the case may
be), free and clear of all Encumbrances, and is issued and fully paid (or
credited as fully paid), and there are no outstanding options, rights or
agreements of any kind relating to the issuance, sale or transfer of any capital
stock or other equity securities of any such Britannia Subsidiary or BDM
Subsidiary, to any Person except Britannia or BDM (as the case may be).
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(b) Each Britannia Subsidiary and each BDM Subsidiary
(i) is a company incorporated under the laws of its jurisdiction of
incorporation as set forth in the Mentmore Disclosure Letter, and (ii) has full
corporate power and authority to carry on its business as it is now being
conducted and to own the properties and assets it now owns. The Mentmore
Disclosure Letter contains complete and correct copies of the certificate of
incorporation and articles of association of each Britannia Subsidiary and BDM
Subsidiary as presently in effect.
(c) Neither Britannia nor BDM nor any of their
respective Subsidiaries has any liabilities or obligations of any nature,
whether accrued, contingent or otherwise, arising out of Britannia's ownership
of the Inactive Subsidiaries listed on Exhibit C.
(d) Upon consummation of the Hive Across Agreement in
accordance with its terms, BDM will receive substantially all of the assets and
employees necessary to conduct the ARM business (i) as currently conducted by
Abbey, and (ii) as conducted by Abbey in the last two fiscal years (ending
October 31, 1997 and 1998, respectively) in the manner which generated the
revenues and cash flows reflected in the Combined Financial Statements
attributable to the ARM.
Section 4.8 Britannia Capitalization. (a) The authorized share
capital of Britannia consists of 32,000,000 Shares. As of the date hereof,
25,079,751 Shares are issued and registered: 24,828,953 Shares in the name of
Mentmore and, except as set forth in the Mentmore Disclosure Letter, 250,798
Shares in the name of Abbey. There is no Voting Debt of Britannia or any
Britannia Subsidiary issued and outstanding. Except as set forth above and
except as set forth in the Mentmore Disclosure Letter as of the date hereof,
there are no existing options, warrants, calls, pre-emptive rights,
subscriptions or other rights, agreements, arrangements or commitments of any
character, relating to the issued or unissued capital stock of Britannia or any
Britannia Subsidiary, obligating Britannia or any Britannia Subsidiary to issue,
transfer or sell or cause to be issued, transferred or sold any Voting Debt of,
or other equity interest in, Britannia or any Britannia Subsidiary, or
securities convertible into or exchangeable for such shares or equity interests,
or obligating Britannia or any Britannia Subsidiary to grant, extend or enter
into any such option, warrant, call, subscription or other right, agreement,
arrangement or commitment.
(b) Upon consummation of the Transactions, IM shall
own Shares of Britannia which shall constitute 50.1 percent (50.1%) of the then
authorized and issued share capital of Britannia.
(c) Except as set forth in the Mentmore Disclosure
Letter, there are no voting trusts or other agreements or understandings to
which Mentmore, Britannia or any Britannia Subsidiary is a party with respect to
the voting of the capital stock of Britannia or any of the Britannia
Subsidiaries.
(d) Except as set forth in the Mentmore Disclosure
Letter, no Indebtedness of Britannia, or of any direct or indirect Britannia
Subsidiary, contains any restriction (including, without limitation, a
prepayment penalty) upon (i) the prepayment of any Indebtedness of Britannia or
any direct or indirect Britannia Subsidiary, (ii) the incurrence of Indebtedness
by Britannia or
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any direct or indirect Britannia Subsidiary, or (iii) the ability of Britannia
or any direct or indirect Britannia Subsidiary to grant any Encumbrance on its
properties or assets, including, without limitation, the properties and assets
of BDM or any BDM Subsidiary. The Mentmore Disclosure Letter sets forth as at
October 31, 1998, the amount of principal and unpaid interest outstanding under
each instrument evidencing Indebtedness of Britannia and any direct or indirect
Britannia Subsidiaries, if any, that will accelerate or become due or result in
a right of redemption or repurchase on the part of the holder of such
Indebtedness (with or without due notice or lapse of time) as a result of the
execution of this Agreement or the consummation of any of the Transactions.
Section 4.9 Board Approvals Regarding Transactions. Britannia,
Abbey and BDM have taken all necessary corporate or other action pursuant to (i)
applicable law, (ii) their respective certificates of incorporation and articles
of association, and (iii) corporate resolutions, to consummate those of the
Transactions which involve them. None of the aforesaid actions by the Boards of
Directors of Britannia, Abbey and BDM has been amended, rescinded or modified.
Section 4.10 Vote Required. The shareholders of Mentmore will
be required to approve this Agreement and the Transactions by a vote at an
extraordinary general meeting (an "EGM"). Mentmore will be required to prepare
and send to its shareholders a Super Class 1 Circular providing sufficient
notice of the EGM and information regarding the vote to be taken. At the EGM,
shareholders of Mentmore holding a majority of the Shares represented at the EGM
must approve the Agreement and the Transactions (provided that at such EGM there
must be at least two (2) shareholders present in person). No other action is
required on the part of the Mentmore shareholders to approve the Agreement or
the Transactions. No action is required on the part of the shareholders of
Abbey, Britannia or BDM to approve this Agreement, the Transactions or any of
the Transaction Agreements.
Section 4.11 Consents and Approvals; No Violations. Except as
set forth in the Mentmore Disclosure Letter, none of the execution, delivery or
performance of this Agreement by Mentmore, the consummation by Mentmore,
Britannia, Abbey or BDM of the Transactions, or compliance by Mentmore,
Britannia, Abbey or BDM with any of the provisions hereof or contained in the
other Transaction Agreements, will (i) conflict with or result in any breach of
any provision of the certificate of incorporation or the articles of association
of Mentmore, Britannia, Abbey or BDM or any of their respective Subsidiaries,
(ii) to the Knowledge of Mentmore, require any filing with, or permit,
authorization, consent or approval of, any Governmental Entity, (iii) result in
a material violation or breach of, or constitute (with or without due notice or
the passage of time or both) a default (or give rise to any right of
termination, amendment, cancellation or acceleration) under any of the terms,
conditions or provisions of any agreement to which Mentmore, Britannia, Abbey or
BDM is a party, or (iv) violate any order, writ, injunction, decree, statute,
rule or regulation applicable to Mentmore, Britannia, Abbey or BDM, or any
Subsidiary of Mentmore, Britannia, Abbey or BDM, or any of their respective
properties or assets.
Section 4.12 Financial Statements. True and complete copies of
the Combined Financial Statements (certified by Robson Rhodes as providing a
true and fair view of affairs of the companies included), are included in the
Mentmore Disclosure Letter. The Combined Financial Statements have been prepared
from, and are in accordance with, the books and records of Britannia,
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Abbey and BDM and their respective Subsidiaries; they comply in all material
respects with applicable accounting requirements, have been prepared in
accordance with U.K. GAAP applied on a consistent basis during the periods
involved (except as may be stated in the notes thereto), and give a fair view of
the consolidated financial position, and the consolidated results of operations
and cash flows (and changes in financial position, if any), of Britannia and BDM
and their respective Subsidiaries and the ARM Assets, as of the times and for
the periods referred to therein.
Section 4.13 Books and Records. To the Knowledge of Mentmore,
the books of account, minute books and share register of Abbey (as relates to
the ARM Assets), and Britannia and BDM and their respective Subsidiaries, are
complete and correct in all material respects and have been maintained in
accordance with sound business practices. The minute books of Abbey (as relates
to the ARM Assets), and Britannia and BDM and their respective Subsidiaries (as
at the date of this Agreement), contain accurate and complete records of all
meetings held since October 8, 1996 of, and corporate action taken since October
8, 1996 by, their respective shareholders, and no meeting of any of such
shareholders has been held since October 8, 1996 for which minutes have not been
prepared and are not contained in such minute books.
Section 4.14 No Undisclosed Liabilities. Except (i) as
disclosed in the Mentmore Disclosure Letter, (ii) as disclosed in the Combined
Financial Statements, or (iii) for liabilities and obligations incurred in the
ordinary course of business and consistent with past practice since the Combined
Balance Sheet Date, neither Britannia nor BDM nor any of their respective
Subsidiaries has any liabilities or obligations of any nature, whether or not
accrued, contingent or otherwise. The reserves reflected in the Combined
Financial Statements are adequate, appropriate and reasonable and have been
calculated in a consistent manner with prior periods.
Section 4.15 Accounts Receivable. All accounts receivable of
Abbey (as relates to the ARM Assets), and Britannia and BDM and each of their
respective Subsidiaries, reflected in the Combined Balance Sheet, represent
sales actually made in the ordinary course of business, and are current and
collectible net of any reserves shown on the Combined Balance Sheet.
Section 4.16 Interim Operations. Since the Combined Balance
Sheet Date, the business of Abbey (as relates to the ARM Assets), and Britannia
and BDM and each of their respective Subsidiaries, has been conducted only in
the ordinary and usual course consistent with past practice. Since the Combined
Balance Sheet Date, there have not been any material adverse changes in the
financial condition, assets or results of operations of Abbey (as relates to the
ARM Assets), or Britannia or BDM or any of their respective Subsidiaries. Since
the Combined Balance Sheet Date, such assets have not been affected in any way
as a result of flood, fire, explosion or other casualty (whether or not covered
by insurance). To the best Knowledge of Mentmore, there is no circumstance which
is likely to cause Abbey (as relates to the ARM Assets), Britannia or BDM or any
of their respective Subsidiaries, to suffer any material adverse change in its
business, operations or prospects.
Section 4.17 Absence of Certain Changes. Except as set forth
in the Mentmore Disclosure Letter, since the Combined Balance Sheet Date, Abbey
(as relates to the ARM Assets), and Britannia and BDM and each of their
respective Subsidiaries, has conducted its respective
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business only in the ordinary and usual course, and neither Abbey (as relates to
the ARM Assets), nor Britannia nor BDM nor any of their respective Subsidiaries,
has:
(a) incurred any liabilities or obligations
(absolute, accrued, contingent or otherwise) except non-material items incurred
in the ordinary course of business and consistent with past practice, and all
periodic installments or payments under any lease or other agreement providing
for periodic installments or payments, as a single obligation or liability), or
experienced any change in any assumptions underlying or methods of calculating
any bad debt, contingency or other reserves;
(b) paid, discharged or satisfied any claim,
liability or obligation (whether absolute, accrued, contingent or otherwise)
other than the payment, discharge or satisfaction in the ordinary course of
business and consistent with past practice of liabilities and obligations
reflected or reserved against in the Combined Balance Sheet or incurred in the
ordinary course of business and consistent with past practice since the Combined
Balance Sheet Date;
(c) permitted or allowed any of its property or
assets (real, personal or mixed, tangible or intangible) to be subjected to any
Encumbrance, except for liens for current taxes not yet due;
(d) written off as uncollectible any notes or
accounts receivable, except for immaterial write-downs and write-offs in the
ordinary course of business and consistent with past practice;
(e) cancelled any debts or waived any claims or
rights in excess of (pound)10,000;
(f) except to a Person whose property and assets are
reflected in the Combined Balance Sheet, sold, transferred, or otherwise
disposed of any of its properties or assets (real, personal or mixed, tangible
or intangible), except in the ordinary course of business and consistent with
past practice;
(g) disposed of or permitted to lapse any rights to
the use of any Intellectual Property, or disposed of or to the Knowledge of
Mentmore disclosed to any Person other than representatives of IM, any trade
secret, formula, process, know-how or other Intellectual Property not
theretofore a matter of public knowledge;
(h) granted any general increase in the compensation
of officers or employees (including any such increase pursuant to any bonus,
pension, profitsharing or other plan or commitment), or any increase of more
than (pound)1000 per person in the compensation payable or to become payable to
any officer or employee;
(i) made any single capital expenditure or commitment
in excess of (pound)100,000 for additions to property, plant, equipment or
intangible capital assets or made aggregate capital expenditures and commitments
in excess of (pound)250,000 for additions to property, plant, equipment or
intangible capital assets;
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(j) declared, paid or set aside for payment any
dividend or other distribution in respect of its issued share capital stock or
redeemed, purchased or otherwise acquired, directly or indirectly, any shares of
its issued share capital;
(k) made any change in any method of accounting,
accounting practice, tax accounting, or tax accounting practice;
(l) paid, loaned or advanced any amount to, or sold,
transferred or leased any properties or assets (real, personal or mixed,
tangible or intangible) to, or entered into any agreement or arrangement with,
any of its officers or directors or any Affiliate or Associate of any of its
officers or directors except for directors' fees, and compensation to officers
at rates not exceeding the rates of compensation in effect at October 31, 1998;
or
(m) agreed, whether in writing or otherwise, to take
any action described in this Section 4.17.
Section 4.18 Litigation. Except as set forth in the Mentmore
Disclosure Letter, there is no civil, criminal, administrative or arbitration
proceeding or investigation by or before any court or governmental or other
regulatory or administrative agency or commission pending or, to the Knowledge
of Mentmore, threatened against or involving Mentmore (as relates to the
Transactions contemplated by this Agreement), Abbey (as relates to the ARM
Assets), or Britannia or BDM or any of their respective Subsidiaries, and to the
Knowledge of Mentmore, there are no circumstances which could lead to such
civil, criminal, administrative or arbitration proceeding or investigation.
Neither Mentmore (as relates to the Transactions contemplated by this
Agreement), Abbey (as relates to the ARM Assets), nor Britannia nor BDM nor any
of their respective Subsidiaries, is subject to any judgment, order or decree
which may have a material adverse effect on its business practices or on its
ability to acquire any property or conduct its business in any area.
Section 4.19 Employee Benefit Plans. (a) The Mentmore
Disclosure Letter contains a true and complete list of each deferred
compensation and each incentive compensation, share purchase, share option and
other share compensation plan, scheme, program, agreement or arrangement; each
employment severance or termination pay, medical, surgical, hospitalization,
life insurance and other "welfare" plan, fund or program; each profit-sharing,
stock bonus or other "pension" plan, fund or program; each employment,
termination or severance agreement; and each other employee benefit plan,
scheme, fund, program, agreement or arrangement, in each case, that is
contributed to or required to be contributed to by Abbey (as relates to Abbey
employees being transferred to BDM pursuant to the Hive Across Agreement,
hereinafter sometimes referred to as the "ARM Employees"), or Britannia or BDM
or by any Affiliate of any of them, or to which Abbey (as relates to the ARM
Employees), or Britannia or BDM or an Affiliate of any of them, is a party,
whether written or oral, for the benefit of any employee or former employee of
Abbey (as relates to the ARM Employees), or Britannia or BDM or any of their
respective Subsidiaries (any such plan, fund, scheme, program, agreement or
arrangement shall be referred to herein as a "Mentmore Plan"). Neither Abbey (as
relates to the ARM Employees), nor Britannia nor BDM, nor any Affiliate of any
of them, has any commitment or formal plan, whether legally binding or not, to
create any additional
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employee benefit plan or modify or change any existing Mentmore Plan that would
affect any employee or former employee of Abbey (as relates to the ARM
Employees), or Britannia or BDM or any of their respective Subsidiaries.
(b) To the Knowledge of Mentmore, the Mentmore
Disclosure Letter contains true and complete copies of each trust deed or other
written documentation for each Mentmore Plan and any amendments thereto (or if a
Mentmore Plan is not a written plan, a description thereof), each agreement
creating or modifying any related trust or other funding vehicle.
(c) Except as set forth in the Mentmore Disclosure
Letter, no Mentmore Plan provides medical, surgical, hospitalization, death or
similar benefits (whether or not insured) for employees or former employees of
Abbey (as relates to the ARM Employees), or Britannia or BDM or any of their
respective Subsidiaries, for periods extending beyond their retirement or other
termination of service, other than (i) coverage mandated by applicable law, (ii)
death benefits under any "pension" plan, or (iii) benefits the full cost of
which is borne by the current or former employee (or his beneficiary).
Section 4.20 Tax Matters; Government Benefits. (a) Except as
set forth in the Mentmore Disclosure Letter, Abbey (as relates to the ARM
Assets), and Britannia and BDM and each of their respective Subsidiaries, has
(i) timely filed (or there have been filed on their behalf) with appropriate
taxing authorities all Tax Returns required to be filed by them on or prior to
the date hereof, and such Tax Returns are true, correct and complete in all
respects, and (ii) paid in full (or made provision in accordance with U.K. GAAP,
or there has been paid or provision has been made on their behalf in the Closing
Balance Sheet for the payment of) all Taxes for all periods ending on or prior
to the date hereof.
(b) To the Knowledge of Mentmore, there are no liens
for Taxes upon any property or assets of Abbey (as relates to the ARM Assets),
or Britannia or BDM or any of their respective Subsidiaries, except for liens
for Taxes not yet due.
(c) To the Knowledge of Mentmore, except as set forth
in the Mentmore Disclosure Letter, neither Abbey (as relates to the ARM Assets),
nor Britannia nor BDM nor any of their respective Subsidiaries, has made any
change in tax accounting methods, received a ruling from any taxing authority or
signed an agreement with respect thereto, or signed any closing agreements with
respect to any Tax years.
(d) Except as set forth in the Mentmore Disclosure
Letter, since October 8, 1996, Abbey (as relates to the ARM Assets), and
Britannia and BDM and each of their respective Subsidiaries, has complied in all
respects with all applicable laws, rules and regulations relating to the payment
and withholding of Taxes (including, without limitation, withholding of Taxes
pursuant to any foreign laws) and have, within the time and the manner
prescribed by law, withheld and paid over to the proper taxing authorities all
amounts required to be so withheld and paid over under applicable laws.
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Section 4.21 Title to Properties; Encumbrances. Except as set
forth in the Mentmore Disclosure Letter, each of Abbey (as relates to the ARM
Assets), and Britannia and BDM and their respective Subsidiaries, is the legal
and beneficial owner of all the properties (other than Real Property referred to
in Section 4.22 hereof) and assets that it purports to own (tangible and
intangible), free and clear of all Encumbrances, including all the properties
(other than Real Property referred to in Section 4.22 hereof) and assets
reflected in the Combined Balance Sheet, except for property having an aggregate
book value not in excess of (pound)50,000 sold since the Combined Balance Sheet
Date in the ordinary course of business and consistent with past practice. All
such properties and assets purchased by Abbey (as relates to the ARM Assets), or
Britannia or BDM or any of their respective Subsidiaries, since the Combined
Balance Sheet Date (other than inventory and short term investments which
individually or in the aggregate do not exceed (pound)50,000) are listed in the
Mentmore Disclosure Letter. The rights, properties (other than Real Property
referred to in Section 4.22 hereof) and other assets presently owned, leased or
licensed by Abbey (as relates to the ARM Assets), and Britannia and BDM and
their respective Subsidiaries, and described elsewhere in this Agreement include
all such rights, properties and other assets necessary to permit Abbey (as
relates to the ARM Assets), and Britannia and BDM and their respective
Subsidiaries, to conduct their respective businesses in all material respects in
the same manner as such businesses have been conducted prior to the date hereof.
Section 4.22 Real Property. (a) Except as set forth on the
Mentmore Disclosure Letter, each of Abbey (as relates to the ARM Assets), and
Britannia and BDM and their respective Subsidiaries, is the legal and beneficial
owner of all the Real Properties that it purports to own, free and clear of all
Encumbrances, including all the Real Properties reflected in the Combined
Balance Sheet. The Real Properties owned or leased by Abbey (as relates to the
ARM Assets), and Britannia and their respective Subsidiaries, include all such
Real Properties necessary to permit Abbey (as relates to the ARM Assets), and
Britannia and BDM and their respective Subsidiaries, to conduct their respective
businesses in all material respects in the same manner as such businesses have
been conducted prior to the date hereof.
(b) The Mentmore Disclosure Letter sets forth a
complete list of all Real Property that is owned or used by Abbey (as relates to
the ARM Assets), or Britannia or BDM or any of their respective Subsidiaries, or
that is reflected as an asset of Abbey (as relates to the ARM Assets), or
Britannia or BDM or any of their respective Subsidiaries, on the Combined
Balance Sheet. The Mentmore Disclosure Letter contains true and complete copies
of (i) all deeds with respect to the Real Property and (ii) all documents
evidencing all Encumbrances upon the Real Property. There are no proceedings,
claims, disputes or conditions affecting any Real Property that might curtail or
interfere with the use of such property. To the Knowledge of Mentmore, neither
the whole nor any portion of the Real Property is subject to any governmental
decree or order to be sold or is being condemned, expropriated or otherwise
taken by any public authority with or without payment of compensation therefor,
nor has any such condemnation, expropriation or taking been proposed.
(c) To the Knowledge of Mentmore, except as set forth
in the Mentmore Disclosure Letter, neither Abbey (as relates to the ARM Assets),
nor Mentmore, Britannia nor BDM
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nor any of their respective Subsidiaries, has received any notice of, or other
writing referring to, any requirements or recommendations by any insurance
company that has issued a policy covering any part of the Real Property or by
any board of fire underwriters or other body exercising similar functions,
requiring or recommending any repairs or work to be done on any part of the Real
Property, which repair or work has not been completed.
(d) To the Knowledge of Mentmore, each of Abbey (as
relates to the ARM Assets), and Britannia and BDM and each of their respective
Subsidiaries, has obtained all appropriate licenses, easements and rights of
way, including proofs of dedication, required to use and operate the Real
Property in the manner in which the Real Property is currently being used and
operated. Each of Abbey (as relates to the ARM Assets), and Britannia and BDM
and each of their respective Subsidiaries, has all permits necessary to own or
operate the Real Property as currently owned and operated, and no such permits
will be required, as a result of the Transactions contemplated by this
Agreement, to be issued after the date hereof in order to permit Britannia and
BDM and each of their respective Subsidiaries, following the Closing, to
continue to own or operate the Real Property, other than any such permits that
are ministerial in nature.
(e) To the Knowledge of Mentmore, neither Abbey (as
relates to the ARM Assets), nor Britannia nor BDM nor any of their respective
Subsidiaries, has received notification that it is in violation of any
applicable building, zoning, anti-pollution, health or other law, ordinance or
regulation in respect of the Real Property.
Section 4.23 Warehouses and Equipment. None of the warehouses,
structures or equipment owned or used by Abbey (as relates to the ARM Assets),
or Britannia or BDM or any of their respective Subsidiaries, is in need of
maintenance or repairs except for ordinary, routine maintenance and repairs
which are not material in nature or would not cost in excess of (pound)100,000
per site.
Section 4.24 Leases. The Mentmore Disclosure Letter contains
an accurate and complete copy of each Lease to which Abbey (as relates to the
ARM Assets), and Britannia and BDM and their respective Subsidiaries, is a party
(herein referred to as a "Mentmore Lease"). Each Mentmore Lease is valid,
binding and enforceable in accordance with its terms and is in full force and
effect. The leasehold estate created by each Mentmore Lease is free and clear of
all Encumbrances. Except as set forth in the Mentmore Disclosure Letter, there
are no existing defaults by Britannia, Abbey or BDM or any of their respective
Subsidiaries under any of the Mentmore Leases, and no event has occurred that
(whether with or without notice, lapse of time or the happening or occurrence of
any other event) would constitute a default under any Mentmore Lease, including
(by way of example only) the failure by the lessee to perform all maintenance or
repairs required to be performed by the lessee under such Mentmore Leases.
Section 4.25 Intellectual Property. Either BDM or a BDM
Subsidiary owns, or is licensed or otherwise possesses legally enforceable
rights to use, the BDM Intellectual Property, and to the Knowledge of Mentmore,
the consummation of the Transactions will not alter or impair such ability in
any respect. To the Knowledge of Mentmore, there are no oppositions,
cancellations, invalidity proceedings, interferences or re-examination
proceedings presently pending with respect
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to the BDM Intellectual Property. To the Knowledge of Mentmore, the conduct of
the business of Abbey (as it relates to the ARM Assets), and Britannia and BDM
and their respective Subsidiaries, and the BDM Intellectual Property does not
infringe any Intellectual Property rights or any other proprietary right of any
Person, and neither Abbey, nor Britannia nor BDM nor any of their respective
Subsidiaries, has received any written notice from any other Person pertaining
to or challenging the right of Abbey, or Britannia or BDM or any of their
respective Subsidiaries, to use any of the BDM Intellectual Property. Neither
Abbey, nor Britannia nor BDM nor any of their respective Subsidiaries, has made
any claim of a violation or infringement by others of its rights to or in
connection with the BDM Intellectual Property which is still pending.
Section 4.26 Labor Matters. (a) There is no labor strike,
industrial or trade dispute, slowdown, stoppage or lockout actually pending, or
to the Knowledge of Mentmore, threatened against or affecting Abbey (as relates
to the ARM Employees), or Britannia or BDM or any of their respective
Subsidiaries, and during the past two (2) years there has not been any such
action.
(b) Neither Abbey, nor Britannia nor BDM nor any of
their respective Subsidiaries, is a party to or bound by any collective
bargaining or similar agreement with any labor organization or work rules or
practices agreed to with any labor organization or employee association
applicable to employees of Britannia or BDM or any of their respective
Subsidiaries, or to the ARM Employees.
(c) Except as set forth in the Mentmore Disclosure
Letter, none of the employees of Britannia or BDM or any of their respective
Subsidiaries, or the ARM Employees, is represented by any labor organization
and, to the Knowledge of Mentmore, neither Abbey, nor Britannia nor BDM nor any
of their respective Subsidiaries (as at the date of this Agreement), have
recognized or done any act which might be construed as recognition of a trade
union within the past two (2) years.
(d) Except as set forth in the Mentmore Disclosure
Letter, no collective bargaining agreement which is binding on Britannia, or BDM
or any of their respective Subsidiaries, or the ARM Employees, restricts any of
them from relocating or closing any of their operations relating to the
Transactions.
(e) Each of Abbey (as relates to the ARM Employees),
and Britannia and BDM and each of their respective Subsidiaries, is, and has at
all times been, in compliance, in all material respects, with all applicable
laws respecting employment and employment practices, terms and conditions of
employment, wages, hours of work and occupational safety and health, and is not
engaged in any unfair labor practices, as defined in applicable laws.
(f) There is no unfair Labor practice charge,
complaint, or investigation against Abbey (as relates to the ARM Employees), or
Britannia or BDM or any of their respective Subsidiaries, pending, or to the
Knowledge of Mentmore threatened, before the Inland Revenue, the Benefits
Agency, the Contribution Agency or the Immigration Service (which are the only
appropriate Governmental Entities before which such charge, complaint or
investigation could be brought).
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(g) To the Knowledge of Mentmore, there is no
presently pending grievance arising out of any collective bargaining agreement
or other grievance procedure.
(h) To the Knowledge of Mentmore, no charge,
complaint or investigation with respect to or relating to Abbey (as relates to
the ARM Employees), or Britannia or BDM or any of their respective Subsidiaries,
is pending before the Equal Opportunity Commission, the Commission for Racial
Equality, the National Disability Council or the Health and Safety Executive
(which are the only appropriate Governmental Entities before which such charge,
complaint or investigation could be brought).
(i) To the Knowledge of Mentmore, neither Abbey (as
relates to the ARM Employees), nor Britannia nor BDM nor any of their respective
Subsidiaries, has received notice of the intent of any local or foreign agency
responsible for the enforcement of labor or employment laws to conduct an
investigation with respect to or relating to Abbey (as relates to the ARM
Employees), or BDM or any of their respective Subsidiaries, and no such
investigation is in progress.
(j) Except as set forth in the Mentmore Disclosure
Letter, there are no complaints, lawsuits or other proceedings pending or, to
the Knowledge of Mentmore, threatened in any forum by or on behalf of any
present or former employee of Abbey (as relates to the ARM Employees), or
Britannia or BDM or any of their respective Subsidiaries, any applicant for
employment, or classes of the foregoing, alleging breach of any express or
implied contract of employment, or other discriminatory, wrongful or tortious
conduct in connection with the employment relationship.
Section 4.27 Personnel. To the Knowledge of Mentmore, the
Mentmore Disclosure Letter sets forth a true and complete list of (i) the names
and current salaries of all directors and elected and appointed officers of each
of Abbey (as relates to the ARM Employees), and Britannia and BDM and each of
their respective Subsidiaries, and the family relationships, if any, among such
persons; and (ii) all group insurance programs in effect for employees of each
of Abbey (as relates to the ARM Employees), and Britannia and BDM and their
respective Subsidiaries. To the Knowledge of Mentmore, neither Abbey, nor
Britannia nor BDM nor any of their respective Subsidiaries, is in default with
respect to any of its obligations referred to in the preceding sentence. To the
Knowledge of Mentmore, no key employee or group of employees has any plans to
terminate their employment with Abbey (as relates to the ARM Employees), or
Britannia or BDM or any of their respective Subsidiaries, as a result of the
Transactions or otherwise.
Section 4.28 Potential Conflict of Interest. No officer or
director of Mentmore, Abbey (as relates to the ARM Assets), or Britannia or BDM
or any of their respective Subsidiaries, owns or holds, directly or indirectly,
any interest in (excepting not more than 5% stock holdings for investment
purposes in securities of publicly held and traded companies) or is an officer,
director, employee or consultant of any Person that is a competitor, lessor,
lessee, customer or supplier of Abbey (as relates to the ARM Assets), or
Britannia or BDM or any of their respective Subsidiaries, and to the Knowledge
of Mentmore, no officer or director of Abbey (as relates to the ARM Assets), or
Mentmore, Britannia or BDM or any of their respective Subsidiaries, (a) owns or
holds, directly or indirectly, in whole or in part, any Intellectual Property
that Abbey (as relates to the ARM Assets), or Britannia or BDM or any of their
respective Subsidiaries, uses or the use of which is necessary for the business
of Abbey (as relates to the ARM
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Assets), or Britannia or BDM or any of their respective Subsidiaries, (b) has
any claim, charge or action against Abbey, or Britannia or BDM or any of their
respective Subsidiaries, except for claims for reasonable unreimbursed travel or
entertainment expenses, accrued vacation pay, accrued benefits under any
employee benefit plan or similar agreements existing on the date hereof, (c) has
made, on behalf of Britannia, Abbey or BDM or any of their respective
Subsidiaries, any payment or commitment to pay any commission, fee or other
amount to, or to purchase or otherwise contract to purchase or obtain any goods
or services from, any other Person of which any officer or director of Abbey (as
relates to the ARM Assets), or Mentmore, Britannia or BDM or any of their
respective Subsidiaries (or, to the Knowledge of Mentmore, a relative of any of
the foregoing), is a partner or shareholder (except stock holdings solely for
investment purposes in securities of publicly held and traded companies) or (d)
owes any money to Abbey (as relates to the ARM Assets), or Mentmore, Britannia
or any of their respective Subsidiaries, or (e) has any material interest in any
property, used in or pertaining to the business of Abbey (as relates to the ARM
Assets), or Mentmore, Britannia or BDM or any of their respective Subsidiaries.
Section 4.29 Environmental Matters. (a) Except as set forth in
the Mentmore Disclosure Letter, each of Abbey (as relates to the ARM Assets),
and Britannia and BDM and their respective Subsidiaries, is in full compliance
with all Environmental Laws. Such compliance includes, but is not limited to,
the possession by each of Abbey (as relates to the ARM Assets), and Britannia
and BDM and each of their respective Subsidiaries, of all permits and other
governmental authorizations required under all applicable Environmental Laws,
and compliance with the terms and conditions thereof. Each permit and other
governmental authorization currently held by each of Abbey (as relates to the
ARM Assets), and Britannia and BDM and each of their respective Subsidiaries,
pursuant to the Environmental Laws is specifically identified in the Mentmore
Disclosure Letter.
(b) Except as set forth in the Mentmore Disclosure
Letter, neither Britannia, Abbey nor BDM nor any of their respective
Subsidiaries has received any communication (written or oral), whether from
Mentmore, a Governmental Entity, citizens group, employee or otherwise, that
alleges that Abbey (as relates to the ARM Assets), or Britannia or BDM or any of
their respective Subsidiaries, is not in full compliance with any Environmental
Laws, and there are no circumstances that may prevent or interfere with such
full compliance in the future. Mentmore has delivered to IM prior to the
execution of this Agreement all information that is in the possession of or
reasonably available to Mentmore, Britannia, Abbey or BDM or any of their
respective Subsidiaries regarding environmental matters pertaining to, or the
environmental condition of, the businesses of Abbey (as relates to the ARM
Assets), or Britannia or BDM or any of their respective Subsidiaries, or the
compliance (or non-compliance) by Abbey (as relates to the ARM Assets), or
Britannia or BDM or any of their respective Subsidiaries, with, any
Environmental Laws.
(c) There is no Environmental Claim by any Person or
entity alleging potential liability (including, without limitation, potential
liability for investigatory costs, cleanup costs, governmental response costs,
natural resources damages, property damages, personal injuries, or penalties)
arising out of, based on or resulting from (i) the presence, or release into the
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environment, of any Materials of Environmental Concern at any location, whether
or not owned or operated by Abbey (as relates to the ARM Assets), or Britannia
or BDM or any of their respective Subsidiaries, or (ii) circumstances forming
the basis of any violation, or alleged violation, of any Environmental Law, that
in either case is pending or threatened against Abbey (as relates to the ARM
Assets), or Britannia or BDM or any of their respective Subsidiaries, or against
any Person whose liability for any Environmental Claim Abbey (as relates to the
ARM Assets), or Britannia or BDM or any of their respective Subsidiaries, has
retained or assumed either contractually or by operation of law.
(d) Except as set forth in the Mentmore Disclosure
Letter, there are no past or present actions, activities, circumstances,
conditions, events or incidents, including, without limitation, the release,
emission, discharge, presence or disposal of any Materials of Environmental
Concern, that could form the basis of any Environmental Claim against Abbey (as
relates to the ARM Assets), or Britannia or BDM or any of their respective
Subsidiaries, or, to the Knowledge of Mentmore, against any Person whose
liability for any Environmental Claim Abbey (as relates to the ARM Assets), or
Britannia or BDM or any of their respective Subsidiaries, has retained or
assumed either contractually or by operation of law.
(e) Without in any way limiting the generality of the
foregoing, (i) all on- site and off-site locations where Abbey (as relates to
the ARM Assets), or Britannia or BDM or any of their respective Subsidiaries,
has (previously or currently) stored, disposed or arranged for the disposal of
Materials of Environmental Concern are specifically identified in the Mentmore
Disclosure Letter, (ii) all underground storage tanks, and the capacity and
contents of such tanks, located on any property owned, leased, operated or
controlled by Abbey (as relates to the ARM Assets), or Britannia or BDM or any
of their respective Subsidiaries, are specifically identified in the Mentmore
Disclosure Letter, (iii) there is no asbestos contained in or forming part of
any building, building component, structure or office space owned, leased,
operated or controlled by Abbey (as relates to the ARM Assets), or Britannia or
BDM or any of their respective Subsidiaries, and (iv) no PCBs or PCB-containing
items are used or stored at any property owned, leased, operated or controlled
by Abbey (as relates to the ARM Assets), or Britannia or BDM or any of their
respective Subsidiaries.
(f) None of Abbey (as relates to the ARM Assets), or
Britannia or BDM or any of their respective Subsidiaries, is subject to any
Environmental Law requiring (i) the performance of site assessment for Materials
of Environmental Concern, (ii) the removal or remediation of Materials of
Environmental Concern, (iii) the giving of notice to, or receiving the approval
of, any Governmental Entity or (iv) the recording or delivery to any other
Person of any disclosure document or statement pertaining to environmental
matters by virtue of the Transactions contemplated hereby or as a condition to
the effectiveness of any of the Transactions contemplated hereby.
Section 4.30 Compliance with Laws. Except as disclosed in the
Mentmore Disclosure Letter, Abbey (as relates to the ARM Assets), and Britannia
and BDM and their respective Subsidiaries, have complied in a timely manner and
in all material respects with all laws, rules and regulations, ordinances,
judgments, decrees, orders, writs and injunctions of all United
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Kingdom, state, local, foreign governments and agencies thereof that affect the
business, properties or assets of Abbey (as relates to the ARM Assets), or
Britannia or BDM or any of their respective Subsidiaries, and no notice, charge,
claim, action or assertion has been received by Abbey (as relates to the ARM
Assets), or Britannia or BDM or any of their respective Subsidiaries, or has
been filed, commenced or, to the Knowledge of Mentmore, threatened against Abbey
(as relates to the ARM Assets), or Britannia or BDM or any of their respective
Subsidiaries, alleging any violation of any of the foregoing; provided, however,
nothing contained in this Section 4.30 shall be deemed to relate to Real
Property, Taxes or matters relating to Environmental Laws, all of which are
covered elsewhere in this Article IV.
Section 4.31 Contracts and Commitments. Except as specifically
identified in the Mentmore Disclosure Letter:
(a) No purchase contracts or commitments of Abbey (as
relates to the ARM Assets), or Britannia or BDM or any of their respective
Subsidiaries, continue for a period of more than 12 months or are in excess of
an arms-length negotiated price;
(b) There are no outstanding sales contracts,
commitments or proposals of Abbey (as relates to the ARM Assets), or Britannia
or BDM or any of their respective Subsidiaries, which continue for a period of
more than 12 months and, to the Knowledge of Mentmore, will result in any Loss
(as defined below) to Abbey (as relates to the ARM Assets), or Britannia or BDM
or any of their respective Subsidiaries, upon completion or performance thereof.
For the purpose of this Agreement, "Loss" shall mean a gross loss before
deducting the allocation of fixed costs;
(c) Neither Abbey (as relates to the ARM Assets), nor
Britannia nor BDM nor any of their respective Subsidiaries, has any outstanding
contracts with agents, consultants, advisors, distributors or dealers (in each
case whose annual basic compensation is in excess of (pound)35,000) that are not
cancellable by it on notice of not longer than 90 days and without liability,
penalty or premium, or any agreement or arrangement providing for the payment of
any bonus or commission based on sales or earnings;
(d) Neither Abbey (as relates to the ARM Assets), nor
Britannia nor BDM nor any of their respective Subsidiaries, has any employment
agreement, or any other agreement with any Person (in each case whose annual
compensation is in excess of (pound)35,000) that contains any severance or
termination pay liabilities or obligations that are not cancellable by it on
notice of not longer than 90 days and without liability, penalty or premium;
(e) Neither Abbey (as relates to the ARM Assets), nor
Britannia nor BDM nor any of their respective Subsidiaries, is in default under
or in violation of, nor is there any valid basis for any claim of default under
or violation of, any contract, commitment or restriction to which it is a party
or by which it is bound;
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(f) Neither Abbey (as relates to the ARM Assets), nor
Britannia nor BDM nor any of their respective Subsidiaries, is party to any
agreement restricting it from carrying on its business anywhere in the world;
(g) Except as set forth in the Mentmore Disclosure
Letter, neither Abbey (as relates to the ARM Assets), nor Britannia nor BDM nor
any of their respective Subsidiaries, has any Indebtedness, including guarantees
of or agreements to acquire, any such debt obligation of others;
(h) Neither Abbey (as relates to the ARM Assets), nor
Britannia nor BDM nor any of their respective Subsidiaries, has any outstanding
loan to any Person other than to Britannia, Abbey or BDM or a wholly-owned
Subsidiary of Britannia, Abbey or BDM; and
(i) Neither Abbey (as relates to the ARM Assets), nor
Britannia nor BDM nor any of their respective Subsidiaries, has any power of
attorney outstanding, or any obligations or liabilities (whether absolute,
accrued, contingent or otherwise), as guarantor, surety, co-signer, endorser,
co-maker, indemnitor or otherwise in respect of the obligation of any Person,
corporation, partnership, joint venture, association, organization or other
entity, except for a power of attorney permitting the endorsement of checks and
the taking of similar actions in the ordinary course of business.
Section 4.32 Customers and Suppliers. To the Knowledge of
Mentmore, (a) no Person who accounted for more than five percent (5%) of the
sales of Abbey (as relates to the ARM Assets), or Britannia and its consolidated
Subsidiaries, or BDM and its consolidated Subsidiaries, during the period from
November 1, 1996 to October 31, 1998, and no material licensor, or licensee of
Abbey (as relates to the ARM Assets), or Britannia and its consolidated
Subsidiaries, or BDM and its consolidated Subsidiaries, has any intention to
cancel or otherwise modify its relationship with Britannia, Abbey or ARM; and
(b) the consummation of the Transactions contemplated hereby will not adversely
affect any of such relationships. Neither Abbey (as relates to the ARM Assets),
nor Britannia nor BDM nor any of their respective Subsidiaries, has any
commitment or obligation to continue to utilize the services of, or otherwise to
do business with, any licensor, vendor, supplier or licensee of Abbey (as
relates to the ARM Assets), or Britannia or BDM or any of their respective
Subsidiaries.
Section 4.33 Insurance. The Mentmore Disclosure Letter sets
forth (a) a true and complete list and description, of all insurance policies,
other insurance arrangements and other contracts or arrangements for the
transfer or sharing of insurance risks by Abbey (as relates to the ARM Assets),
or Britannia or BDM or any of their respective Subsidiaries, in force on the
date hereof with respect to the business or assets of Abbey (as relates to the
ARM Assets), or Britannia or BDM or of their respective Subsidiaries, together
with a statement of the aggregate amount of claims paid out, and claims pending,
under each such insurance policy or other arrangement at the date hereof, and
(b) a description of such risks that Abbey (as relates to the ARM Assets), or
Britannia or BDM or any of their respective Subsidiaries, or the respective
Board of Directors or officers thereof, have designated as being self-insured.
All such policies are in full force and effect, all premiums due thereon have
been paid by Abbey (as relates to the ARM Assets), or Britannia or
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BDM or their respective Subsidiaries, and Abbey (as relates to the ARM Assets),
and Britannia and BDM and their respective Subsidiaries, are otherwise in
compliance in all material respects with the terms and provisions of such
policies. Furthermore, (w) neither Abbey (as relates to the ARM Assets), nor
Britannia nor BDM nor any of their respective Subsidiaries, has received any
written notice of cancellation or non-renewal of any such policy or arrangement
nor, to the Knowledge of Mentmore, is the termination of any such policies or
arrangements threatened; (x) there is no claim pending under any of such
policies or arrangements as to which coverage has been questioned, denied or
disputed by the underwriters of such policies or arrangements; (y) neither Abbey
(as relates to the ARM Assets), nor Britannia nor BDM nor any of their
respective Subsidiaries, has received any written notice from any of its
insurance carriers that any insurance premiums will be increased in the future
or that any insurance coverage presently provided for will not be available to
Abbey (as relates to the ARM Assets), or Britannia or BDM or any of their
respective Subsidiaries, in the future on substantially the same terms as now in
effect; and (z) none of such policies or arrangements provides for any
retrospective premium adjustment, experienced-based liability or loss sharing
arrangement affecting Abbey (as relates to the ARM Assets), or Britannia or BDM
or any of their respective Subsidiaries.
Section 4.34 Operational Matters. With respect to the
operations of Abbey (as relates to the ARM Assets), and Britannia and BDM and
their respective Subsidiaries:
(a) substantially all items received by Abbey (as
relates to the ARM Assets), and Britannia and BDM and their respective
Subsidiaries, from their respective customers (including files for refiling) are
logged into their respective inventory systems or their customers' inventory
systems and can be located through use of such inventory systems;
(b) substantially all the stored items for which
customers of Abbey (as relates to the ARM Assets), and Britannia and BDM and
their respective Subsidiaries, are billed, exist and, in all material respects,
can be accounted for; and
(c) the invoices of Abbey (as relates to the ARM
Assets), and Britannia and BDM and their respective Subsidiaries, to customers
reflect services actually provided at rates in effect at such time for such
customers.
Section 4.35 Brokers or Finders. No agent, broker, investment
banker, financial advisor or other firm or Person is or will be entitled to any
brokers' or finders' fee or any other commission or similar fee payable by
Mentmore, Britannia, Abbey or BDM or any of their respective Subsidiaries in
connection with any of the Transactions.
Section 4.36 Full Disclosure. To the Knowledge of Mentmore,
Mentmore has not failed to disclose to IM any facts material to the business,
results of operations, assets, or liabilities, of Abbey (as relates to the ARM
Assets), or Britannia or BDM or their respective Subsidiaries, which could
result in a loss in excess of (pound)500,000. No representation or warranty by
Mentmore in this Agreement and no statement contained in any document
(including, without limitation, financial statements and the Mentmore Disclosure
Letter), certificate, or other writing furnished or to be furnished by Mentmore
to IM or any of its representatives pursuant to the provisions hereof or in
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connection with the Transactions, omits or will omit to state any material fact
necessary, in light of the circumstances under which it was made, to make the
statements herein or therein not misleading.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF IM
Except as set forth in the IM Disclosure Schedule prepared and
signed by IM and delivered to Mentmore simultaneously with the execution hereof,
IM represents and warrants to Mentmore that all of the statements contained in
this Article V are true and correct as of the date of this Agreement (or, if
made as of a specified date, as of such date), and, subject to Section 7.2 (b)
will be true and correct as of the Closing Date as though made on the Closing
Date. Each exception set forth in the IM Disclosure Schedule and each other
response to this Agreement set forth in the IM Disclosure Schedule is identified
by reference to, or has been grouped under a heading referring to, a specific
individual section of this Agreement and, except as otherwise specifically
stated with respect to such exception, relates only to such section. The
disclosures in each section of the IM Disclosure Schedule relate only to the
representations and warranties set forth in the section of this Agreement to
which such section of the IM Disclosure Schedule expressly relates and not to
any other representation and warranty contained in this Agreement, except to the
extent that one section of the IM Disclosure Schedule specifically refers to
another section thereof. It is agreed that Mentmore will not be entitled to
claim that any fact or combination of facts constitutes a breach of any of the
statements contained in Article V and to the extent that such fact or
combination of facts has been specifically disclosed in the IM Disclosure
Schedule in accordance with this paragraph.
IM represents and warrants to Mentmore that:
Section 5.1 IM Legal Power; Organization. IM is a corporation
duly organized, validly existing and in good standing under the laws of Delaware
and has all requisite power and authority to execute and deliver this Agreement
and to consummate the Transactions.
Section 5.2 Authorization; Validity of Transaction Agreements;
Necessary Action - IM. IM has taken all necessary corporate or other action to
authorize the execution, delivery and performance of this Agreement and the
other Transaction Agreements. This Agreement has been duly executed and
delivered by IM and, assuming the due and valid authorization, execution and
delivery by Mentmore, constitutes a legal, valid and binding obligation of IM,
enforceable against IM in accordance with its terms, except (i) as limited by
applicable bankruptcy, insolvency, reorganization, moratorium and other laws of
general application affecting enforcement of creditors' rights generally, and
(ii) the availability of the remedy of specific performance or injunctive or
other forms of equitable relief may be subject to equitable defenses and would
be subject to the discretion of the court before which any proceeding therefor
may be brought. The other Transaction Agreements, if and when executed by IM,
will be duly executed and delivered by IM and, assuming the due and valid
authorization, execution and delivery by Mentmore, Britannia, Abbey or BDM as
the case may be, will constitute legal , valid and binding obligations of IM,
enforceable against IM
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in accordance with its terms, except (i) as limited by applicable bankruptcy,
insolvency, reorganization, moratorium and other laws of general application
affecting enforcement of creditors' rights generally, and (ii) the availability
of the remedy of specific performance or injunctive or other forms of equitable
relief may be subject to equitable defenses and would be subject to the
discretion of the court before which any proceeding therefor may be brought.
Section 5.3 Share Ownership. IM or one of its wholly-owned
Subsidiaries is the registered and beneficial owner of all of the authorized and
issued shares of Arcus. Arcus has not issued or allotted any share capital other
than the issued shares of Arcus. The transfer of shares to Mentmore pursuant to
the Transactions: (i) will vest in Mentmore ownership of the shares, free and
clear of all Encumbrances (other than Encumbrances, if any, that attach to such
shares which are directly or indirectly attributable to Mentmore or any of its
Affiliates); (ii) such shares will be validly issued, and fully paid (or
credited as fully paid); and (iii) there will be no outstanding options, rights
or agreements of any kind relating to the issuance, sale or transfer of any
share capital or other equity securities of Arcus.
Section 5.4 No Encumbrances on Shares of Arcus. The shares of
Arcus and the certificates representing such shares, are now, and at all times
during the term hereof shall be, held free and clear of all Encumbrances
whatsoever, except for any Encumbrances created by this Agreement.
Section 5.5 Legal Power; Organization. Arcus is a company
incorporated under the laws of England and Wales and has full corporate power
and authority to carry on its business as it is now being conducted and to own
the properties and assets it now owns.
Section 5.6 Subsidiaries. Arcus does not have any
Subsidiaries.
Section 5.7 Arcus Capitalization. (a) The authorized and
issued share capital of Arcus consists of 325,100 shares. As of the date hereof,
325,100 shares are issued and outstanding and registered in the name of IM or
one of its wholly-owned Subsidiaries. There is no Voting Debt of Arcus issued
and outstanding. Except as set forth above, as of the date hereof, there are no
existing options, warrants, calls, pre-emptive rights, subscriptions or other
rights, agreements, arrangements or commitments of any character, relating to
the issued or unissued share capital of Arcus, obligating Arcus to issue,
transfer or sell or cause to be issued, transferred or sold any Voting Debt of,
or other equity interest in, Arcus, or securities convertible into or
exchangeable for such shares or equity interests, or obligating Arcus to grant,
extend or enter into any such option, warrant, call, subscription or other
right, agreement, arrangement or commitment.
(b) There are no voting trusts or other agreements or
understandings to which IM or Arcus is a party with respect to the voting of the
issued share capital of Arcus.
(c) No Indebtedness of Arcus contains any restriction
(including, without limitation, a prepayment penalty) upon (i) the prepayment of
any Indebtedness of Arcus, (ii) the incurrence of Indebtedness by Arcus, or
(iii) the ability of Arcus to grant any Encumbrance on its properties or assets.
The IM Disclosure Schedule sets forth as at October 31, 1998, the amount of
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principal and unpaid interest outstanding under each instrument evidencing
Indebtedness of Arcus, if any, that will accelerate or become due or result in a
right of redemption or repurchase on the part of the holder of such Indebtedness
(with or without due notice or lapse of time) as a result of the execution of
this Agreement or the consummation of any of the Transactions.
(d) At the Closing Arcus will have Net Indebtedness
of (pound)400,000.
Section 5.8 Board Approvals Regarding Transactions. IM has
taken all necessary corporate or other action pursuant to (i) applicable law,
(ii) its certificate of incorporation, (iii) its By-Laws, and (iv) corporate
resolutions to approve the Transactions, and none of the aforesaid actions by IM
and its Board of Directors has been amended, rescinded or modified.
Section 5.9 Consents and Approvals; No Violations. None of the
execution, delivery or performance of this Agreement by IM, the consummation by
IM of the Transactions, or compliance by IM with any of the provisions hereof or
contained in the other Transaction Agreements, will (i) conflict with or result
in any breach of any provision of the certificate of incorporation, the by-laws
of IM or Arcus or any Subsidiary of IM, (ii) to the Knowledge of IM, require any
filing with, or permit, authorization, consent or approval of, any Governmental
Entity, (iii) result in a material violation or breach of, or constitute (with
or without due notice or the passage of time or both) a default (or give rise to
any right of termination, amendment, cancellation or acceleration) under any of
the terms, conditions or provisions of any agreement to which Arcus is a party,
or (iv) violate any order, writ, injunction, decree, statute, rule or regulation
applicable to Arcus, any of its properties or assets.
Section 5.10 Financial Statements. True and correct copies of
the Arcus Audited Financial Statements and the Arcus Unaudited Financial
Statements are included in the IM Disclosure Schedule. The Arcus Audited
Financial Statements and the Arcus Unaudited Financial Statements have been
prepared from, and are in accordance with, the books and records of Arcus and
they comply in all material respects with applicable accounting requirements;
the Arcus Audited Financial Statements have been prepared in accordance with
U.K. GAAP applied on a consistent basis during the periods involved (except as
may be stated in the notes thereto); the Arcus Audited Financial Statements and
the Arcus Unaudited Financial Statements give a fair view of the financial
position and the results of operations and cash flows (and changes in financial
position, if any) of Arcus as of the times and for the periods referred to
therein, subject in the case of the Arcus Unaudited Financial Statements to
normal year-end adjustments.
Section 5.11 Books and Records. To the Knowledge of IM, the
books of account, minute books and stock record books of Arcus are complete and
correct in all material respects and have been maintained in accordance with
sound business practices. The minute books of Arcus contain accurate and
complete records of all meetings held since January 5, 1998 and corporate action
taken since January 5, 1998, by their respective shareholders, and no meeting of
any of such shareholders has been held for which minutes have not been prepared
and are not contained in such minute books.
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Section 5.12 No Undisclosed Liabilities. Except (i) as
disclosed in the Arcus Audited Financial Statements and the Arcus Unaudited
Financial Statements, and (ii) for liabilities and obligations incurred in the
ordinary course of business and consistent with past practice since the Arcus
Balance Sheet Date pursuant to the terms of this Agreement, Arcus does not have
any liabilities or obligations of any nature, whether or not accrued, contingent
or otherwise. The reserves reflected in the Arcus Financial Statements are
adequate, appropriate and reasonable and have been calculated in a consistent
manner with prior periods.
Section 5.13 Accounts Receivable. All accounts receivable of
Arcus, reflected in the Arcus Balance Sheet, represent sales actually made in
the ordinary course of business, and are current and collectible net of any
reserves shown on the Arcus Balance Sheet.
Section 5.14 Interim Operations. Since the Arcus Balance Sheet
Date, the business of Arcus has been conducted only in the ordinary and usual
course consistent with past practice. Since the Arcus Balance Sheet Date, there
have not been any material adverse changes in the financial condition, assets or
results of operations of Arcus. Since the Arcus Balance Sheet Date, such assets
have not been affected in any way as a result of flood, fire, explosion or other
casualty (whether or not covered by insurance). To the Knowledge of IM, there is
no circumstance which is likely to cause Arcus to suffer any material adverse
change in its business, operations or prospects.
Section 5.15 Absence of Certain Changes. Except as set forth
in the IM Disclosure Schedule, since the Arcus Balance Sheet Date, Arcus has
conducted its business only in the ordinary and usual course, and Arcus has not:
(a) incurred any liabilities or obligations
(absolute, accrued, contingent or otherwise) except non-material items incurred
in the ordinary course of business and consistent with past practice, and all
periodic installments or payments under any lease or other agreement providing
for periodic installments or payments, as a single obligation or liability), or
experienced any change in any assumptions underlying or methods of calculating
any bad debt, contingency or other reserves;
(b) paid, discharged or satisfied any claim,
liability or obligation (whether absolute, accrued, contingent or otherwise)
other than the payment, discharge or satisfaction in the ordinary course of
business and consistent with past practice of liabilities and obligations
reflected or reserved against in the Arcus Balance Sheet or incurred in the
ordinary course of business and consistent with past practice since the Arcus
Balance Sheet Date;
(c) permitted or allowed any of its property or
assets (real, personal or mixed, tangible or intangible) to be subjected to any
Encumbrance, except for liens for current taxes not yet due;
(d) written off as uncollectible any notes or
accounts receivable, except for immaterial write-downs and write-offs in the
ordinary course of business and consistent with past practice;
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(e) cancelled any debts or waived any claims or
rights in excess of (pound)10,000;
(f) sold, transferred, or otherwise disposed of any
of its properties or assets (real, personal or mixed, tangible or intangible),
except in the ordinary course of business and consistent with past practice;
(g) disposed of or permitted to lapse any rights to
the use of any Intellectual Property, or disposed of, or to the Knowledge of IM,
disclosed to any Person other than representatives of Mentmore, any trade
secret, formula, process, know-how or other Intellectual Property not
theretofore a matter of public knowledge;
(h) granted any general increase in the compensation
of officers or employees (including any such increase of more than (pound)1000
per person pursuant to any bonus, pension, profitsharing or other plan or
commitment) or any increase in the compensation payable or to become payable to
any officer or employee;
(i) made any single capital expenditure or commitment
in excess of (pound)100,000 for additions to property, plant, equipment or
intangible capital assets or made aggregate capital expenditures and commitments
in excess of (pound)250,000 for additions to property, plant, equipment or
intangible capital assets;
(j) declared, paid or set aside for payment any
dividend or other distribution in respect of its capital stock or redeemed,
purchased or otherwise acquired, directly or indirectly, any shares of its share
capital;
(k) made any change in any method of accounting or
accounting practice or tax accounting or tax accounting practice;
(l) paid, loaned or advanced any amount to, or sold,
transferred or leased any properties or assets (real, personal or mixed,
tangible or intangible) to, or entered into any agreement or arrangement with,
any of its officers or directors or any Affiliate or Associate of any of its
officers or directors except for directors' fees, and compensation to officers
at rates not exceeding the rates of compensation paid during the fiscal year
ended April 30, 1998; or
(m) agreed, whether in writing or otherwise, to take
any action described in this Section 5.15.
Section 5.16 Litigation. There is no action, suit, inquiry,
proceeding or investigation by or before any court or governmental or other
regulatory or administrative agency or commission pending or to the Knowledge of
IM threatened against or involving Arcus; and to the Knowledge of IM, there is
no valid basis for any such action, proceeding or investigation. Arcus is not
subject to any judgment, order or decree which may have an adverse effect on its
business practices or on its ability to acquire any property or conduct its
business in any area.
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Section 5.17 Employee Benefit Plans. (a) The IM Disclosure
Schedule contains a true and complete list of each deferred compensation and
each incentive compensation, share purchase, stock option and other share
compensation plan, scheme, program, agreement or arrangement; each severance or
termination pay, medical, surgical, hospitalization, life insurance and other
"welfare" scheme, agreement or arrangement; each profit-sharing, stock bonus or
other "pension" plan, fund or program; each employment, termination or severance
agreement; and each other employee benefit plan, fund, scheme, program,
agreement or arrangement, in each case, that is contributed to or required to be
contributed to by Arcus or by any Affiliate of Arcus or to which Arcus or an
Affiliate is a party, whether written or oral, for the benefit of any employee
or former employee of Arcus (any such plan, fund, program, agreement or
arrangement shall be referred to herein as an "Arcus Plan"). Neither Arcus nor
any Affiliate of Arcus has any commitment or formal plan, whether legally
binding or not, to create any additional employee benefit plan or modify or
change any existing Arcus Plan that would affect any employee or former employee
of Arcus.
(b) To the Knowledge of IM, the IM Disclosure
Schedule contains true and complete copies of each trust deed or other written
documentation for each Arcus Plan and any amendments thereto (or if an Arcus
Plan is not a written plan, a description thereof), each agreement creating or
modifying any related trust or other funding vehicle.
(c) No Arcus Plan provides medical, surgical,
hospitalization, death or similar benefits (whether or not insured) for
employees or former employees of Arcus for periods extending beyond their
retirement or other termination of service, other than (i) coverage mandated by
applicable law, (ii) death benefits under any "pension" plan, or (iii) benefits
the full cost of which is borne by the current or former employee (or his
beneficiary).
Section 5.18 Tax Matters; Government Benefits. (a) Arcus has
(i) timely filed (or there have been filed on their behalf) with appropriate
taxing authorities all Tax Returns required to be filed by them on or prior to
the date hereof, and such Tax Returns are true, correct and complete in all
respects and (ii) paid in full or made provision in accordance with U.K. GAAP
(or there has been paid or provision has been made on their behalf) for the
payment of all Taxes for all periods ending on or prior to the date hereof.
(b) To the Knowledge of IM, there are no liens for
Taxes upon any property or assets of Arcus, except for liens for Taxes not yet
due.
(c) To the Knowledge of IM, Arcus has not made any
change in tax accounting methods, received a ruling from any taxing authority or
signed an agreement with respect thereto, or signed any closing agreements with
respect to any Tax years.
(d) Since January 5, 1998, Arcus has complied in all
respects with all applicable laws, rules and regulations relating to the payment
and withholding of Taxes (including, without limitation, withholding of Taxes
pursuant to any foreign laws) and have, within the time and the manner
prescribed by law, withheld and paid over to the proper taxing authorities all
amounts required to be so withheld and paid over under applicable laws.
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Section 5.19 Title to Properties; Encumbrances. Arcus is the
legal and beneficial owner of all the properties and assets that it purports to
own (tangible and intangible) free and clear of all Encumbrances, including all
the properties and assets reflected in the Arcus Balance Sheet (except for
property having an aggregate book value not in excess of (pound)50,000 sold
since the Arcus Balance Sheet Date in the ordinary course of business and
consistent with past practice). All such properties and assets purchased by
Arcus since the Arcus Balance Sheet Date, (other than inventory and short term
investments which individually or in the aggregate do not exceed (pound)50,000)
are listed in the IM Disclosure Schedule. The rights, properties and other
assets presently owned, leased or licensed by Arcus and described elsewhere in
this Agreement include all such rights, properties and other assets necessary to
Arcus to conduct its business in all material respects in the same manner as
such businesses have been conducted prior to the date hereof.
Section 5.20 Real Property. (a) The IM Disclosure Schedule
sets forth a complete list of all real property that is used by Arcus. To the
Knowledge of IM there are no proceedings, claims, disputes or conditions
affecting any real property that might curtail or interfere with the use of such
property. To the Knowledge of IM neither the whole nor any portion of the real
property of Arcus which is subject to an Arcus Lease is subject to any
governmental decree or order to be sold or is being condemned, expropriated or
otherwise taken by any public authority with or without payment of compensation
therefor, nor has any such condemnation, expropriation or taking been proposed.
(b) To the Knowledge of IM, Arcus has not received
any notice of, or other writing referring to, any requirements or
recommendations by any insurance company that has issued a policy covering any
part of the real property used by Arcus, or by any board of fire underwriters or
other body exercising similar functions, requiring or recommending any repairs
or work to be done on any part of the real property used by Arcus, which repair
or work has not been completed.
(c) To the Knowledge of IM, Arcus has obtained all
appropriate licenses, easements and rights of way, including proofs of
dedication, required to use and operate the real property used by Arcus, in the
manner in which the real property used by Arcus is currently being used and
operated. Arcus has all permits necessary to operate the real property used by
Arcus, as currently operated, and no such permits will be required, as a result
of the Transactions contemplated by this Agreement, to be issued after the date
hereof in order to permit Arcus, following the Closing, to continue to operate
the real property used by Arcus, other than any such permits that are
ministerial in nature.
(d) To the Knowledge of IM Arcus has not received
notification that it is in violation of any applicable building, zoning,
anti-pollution, health or other law, ordinance or regulation in respect of the
real property used by Arcus.
Section 5.21 Warehouses and Equipment. None of the warehouses,
structures or equipment owned or used by Arcus is in need of maintenance or
repairs, except for ordinary, routine
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maintenance and repairs which are not material in nature or would cost in excess
of (pound)100,000 per site.
Section 5.22 Leases. The IM Disclosure Schedule contains an
accurate and complete copy of each Lease to which Arcus is a party (herein
referred to as an "Arcus Lease"). Each Arcus Lease is valid, binding and
enforceable in accordance with its terms and is in full force and effect. The
leasehold estate created by each Arcus Lease is free and clear of all
Encumbrances. There are no existing defaults by Arcus under any of the Arcus
Leases. No event has occurred that (whether with or without notice, lapse of
time or the happening or occurrence of any other event) would constitute a
default under any Arcus Lease, including (by way of example only) the failure by
the lessee to perform all maintenance or repairs required to be performed by the
lessee under such Arcus Lease.
Section 5.23 Intellectual Property. Arcus is licensed or
otherwise possesses legally enforceable rights to use, the Arcus Intellectual
Property, and to the Knowledge of IM, the consummation of the Transactions will
not alter or impair such ability in any respect. To the Knowledge of IM, there
are no oppositions, cancellations, invalidity proceedings, interferences or
re-examination proceedings presently pending with respect to the Arcus
Intellectual Property. To the Knowledge of IM, the conduct of the business of
Arcus and the Arcus Intellectual Property does not infringe any Intellectual
Property rights or any other proprietary right of any Person, and Arcus has not
received any written notice from any other Person pertaining to or challenging
the right of Arcus to use any of the Arcus Intellectual Property. Arcus has not
made any claim (which is still pending) of a violation or infringement by others
of its rights to or in connection with the Arcus Intellectual Property.
Section 5.24 Labor Matters. (a) There is no labor strike,
dispute, corporate campaign, slowdown, stoppage or lockout actually pending, or
to the Knowledge of IM, threatened against or affecting Arcus, and during the
past two (2) years there has not been any such action.
(b) Arcus is not a party to or bound by any
collective bargaining or similar agreement with any labor organization or work
rules or practices agreed to with any labor organization or employee association
applicable to employees of Arcus.
(c) None of the employees of Arcus is represented by
any labor organization and, to the Knowledge of IM, Arcus has not recognized or
done any act which might be construed as recognition of a trade union within the
past two (2) years.
(d) No collective bargaining agreement which is
binding on Arcus restricts Arcus from relocating or closing any of its
operations.
(e) Arcus is, and has at all times been, in
compliance, in all material respects, with all applicable laws respecting
employment and employment practices, terms and conditions of employment, wages,
hours of work and occupational safety and health, and is not engaged in any
unfair labor practices, as defined in applicable laws.
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(f) There is no unfair Labor practice charge,
complaint or investigation against Arcus pending or, to the Knowledge of IM,
threatened before any Governmental Entity.
(g) To the Knowledge of IM, there is no presently
pending grievance arising out of any collective bargaining agreement or other
grievance procedure.
(h) To the Knowledge of IM, no charge, complaint or
investigation with respect to or relating to Arcus is pending before any agency
responsible for the prevention of unlawful employment practices.
(i) To the Knowledge of IM, Arcus has not received
notice of the intent of any local or foreign agency responsible for the
enforcement of labor or employment laws to conduct an investigation with respect
to or relating to Arcus and no such investigation is in progress.
(j) There are no complaints, lawsuits or other
proceedings pending or, to the Knowledge of IM, threatened in any forum by or on
behalf of any present or former employee of Arcus, any applicant for employment,
or classes of the foregoing, alleging breach of any express or implied contract
of employment, or other discriminatory, wrongful or tortious conduct in
connection with the employment relationship.
Section 5.25 Personnel. To the Knowledge of IM, the IM
Disclosure Schedule sets forth a true and complete list of (i) the names and
current salaries of all directors and elected and appointed officers of Arcus,
and the family relationships, if any, among such persons; and (ii) all group
insurance programs in effect for employees of Arcus. Arcus is not in default
with respect to any of its obligations referred to in the preceding sentence. To
the Knowledge of IM, no key employee or group of employees has any plans to
terminate their employment with Arcus as a result of the Transactions or
otherwise.
Section 5.26 Potential Conflict of Interest. Except
as set forth on the IM Disclosure Schedule, no officer or director of IM or
Arcus or any of the IM Subsidiaries owns or holds, directly or indirectly, any
interest in (excepting not more than 5% stock holdings for investment purposes
in securities of publicly held and traded companies) or is an officer, director,
employee or consultant of any Person that is a competitor, lessor, lessee,
customer or supplier of Arcus, and to the Knowledge of IM no officer or director
of IM or Arcus (a) owns or holds, directly or indirectly, in whole or in part,
any Intellectual Property that Arcus uses or the use of which is necessary for
the business of Arcus, (b) has any claim, charge, action or cause of action
against Arcus, except for claims for reasonable unreimbursed travel or
entertainment expenses, accrued vacation pay, accrued benefits under any
employee benefit plan or similar agreements existing on the date hereof, (c) has
made, on behalf of Arcus, any payment or commitment to pay any commission, fee
or other amount to, or to purchase or obtain or otherwise contract to purchase
or obtain any goods or services from, any other Person of which any officer or
director of Arcus (or, to the Knowledge of IM, a relative of any of the
foregoing) is a partner or shareholder (except stock holdings solely for
investment purposes in securities of publicly held and traded companies) or (d)
owes any money to Arcus, or (e) has any material interest in any property, real
or personal, tangible or intangible, used in or pertaining to the business of
Arcus.
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Section 5.27 Environmental Matters. (a) Arcus is in full
compliance with all Environmental Laws. Such compliance includes, but is not
limited to, the possession by Arcus of all permits and other governmental
authorizations required under all applicable Environmental Laws, and compliance
with the terms and conditions thereof. Each permit and other governmental
authorization currently held by Arcus pursuant to the Environmental Laws is
specifically identified in the IM Disclosure Schedule.
(b) Arcus has not received any communication (written
or oral), whether from IM, a Governmental Entity, citizens group, employee or
otherwise, that alleges that Arcus is not in full compliance with any
Environmental Laws, and there are no circumstances that may prevent or interfere
with such full compliance in the future. IM has delivered to Mentmore prior to
the execution of this Agreement all information that is in the possession of or
reasonably available to IM or Arcus regarding environmental matters pertaining
to, or the environmental condition of, the business or the compliance (or
non-compliance) by Arcus with, any Environmental Laws.
(c) There is no Environmental Claim by any Person or
entity alleging potential liability (including, without limitation, potential
liability for investigatory costs, cleanup costs, governmental response costs,
natural resources damages, property damages, personal injuries, or penalties)
arising out of, based on or resulting from (i) the presence, or release into the
environment, of any Materials of Environmental Concern at any location operated
by Arcus, or (ii) circumstances forming the basis of any violation, or alleged
violation, of any Environmental Law, that in either case is pending or
threatened against Arcus, or against any Person whose liability for any
Environmental Claim Arcus has retained or assumed either contractually or by
operation of law.
(d) There are no past or present actions, activities,
circumstances, conditions, events or incidents, including, without limitation,
the release, emission, discharge, presence or disposal of any Materials of
Environmental Concern, that could form the basis of any Environmental Claim
against Arcus or, to the Knowledge of IM, against any Person whose liability for
any Environmental Claim Arcus has retained or assumed either contractually or by
operation of law.
(e) Without in any way limiting the generality of the
foregoing, (i) all on- site and off-site locations where Arcus has (previously
or currently) stored, disposed or arranged for the disposal of Materials of
Environmental Concern are specifically identified in the IM Disclosure Schedule,
(ii) all underground storage tanks, and the capacity and contents of such tanks,
located on any property owned, leased, operated or controlled by Arcus are
specifically identified in the IM Disclosure Schedule, (iii) there is no
asbestos contained in or forming part of any building, building component,
structure or office space owned, leased, operated or controlled by Arcus and
(iv) no PCBs or PCB-containing items are used or stored at any property owned,
leased, operated or controlled by Arcus.
(f) Arcus is not subject to any Environmental Law
requiring (i) the performance of site assessment for Materials of Environmental
Concern, (ii) the removal or remediation of Materials of Environmental Concern,
(iii) the giving of notice to, or receiving the
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approval of, any Governmental Entity, or (iv) the recording or delivery to any
other Person of any disclosure document or statement pertaining to environmental
matters by virtue of the Transactions contemplated hereby or as a condition to
the effectiveness of any of the Transactions contemplated hereby.
Section 5.28 Compliance with Laws. Arcus has complied in a
timely manner and in all material respects with all laws, rules and regulations,
ordinances, judgments, decrees, orders, writs and injunctions of all United
Kingdom, state, local, foreign governments and agencies thereof that affect the
business, properties or assets of Arcus, and no notice, charge, claim, action or
assertion has been received by Arcus or has been filed, commenced or, to the
Knowledge of IM, threatened against Arcus alleging any violation of any of the
foregoing; provided, however, nothing contained in this Section 5.28 shall be
construed to relate to real property, Taxes or matters relating to Environmental
Laws, all of which are covered elsewhere in this Article V.
Section 5.29 Contracts and Commitments. Except as specifically
identified in the IM Disclosure Schedule:
(a) No purchase contracts or commitments of Arcus
continue for a period of more than 12 months or are in excess of an arm's-length
negotiated price;
(b) There are no outstanding sales contracts,
commitments or proposals of Arcus which continue for a period of more than 12
months and, to the Knowledge of IM, will result in any Loss to Arcus upon
completion or performance thereof;
(c) Arcus does not have any outstanding contracts
with agents, consultants, advisors, distributors or dealers (in each case whose
annual basic compensation is in excess of (pound)35,000) that are not
cancellable by it on notice of not longer than 90 days and without liability,
penalty or premium, or any agreement or arrangement providing for the payment of
any bonus or commission based on sales or earnings;
(d) Arcus does not have any employment agreement, or
any other agreement with any Person (in each case whose annual compensation is
in excess of (pound)35,000) that contains any severance or termination pay
liabilities or obligations;
(e) Arcus is not in default under or in violation of,
nor is there any valid basis for any claim of default under or violation of, any
contract, commitment or restriction to which it is a party or by which it is
bound;
(f) Arcus is not party to any agreement restricting
it from carrying on its business anywhere in the world;
(g) Arcus does not have any Indebtedness, including
guarantees of, or agreements to acquire, any such debt obligation of others;
(h) Arcus does not have any outstanding loan to any
Person; and
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(i) Arcus does not have any power of attorney
outstanding or any obligations or liabilities (whether absolute, accrued,
contingent or otherwise), as guarantor, surety, co-signer, endorser, co-maker,
indemnitor or otherwise in respect of the obligation of any Person, corporation,
partnership, joint venture, association, organization or other entity, except
for a power of attorney permitting the endorsement of checks and the taking of
similar actions in the ordinary course of business.
Section 5.30 Customers and Suppliers. To the Knowledge of IM,
(a) no such Person who accounted for more than five percent (5%) of the sales of
Arcus during the period from November 1, 1996 to October 31, 1998 and no
material licensor, or licensee of Arcus has any intention to cancel or otherwise
modify its relationship with Arcus; and (b) the consummation of the Transactions
contemplated hereby will not adversely affect any of such relationships. Arcus
does not have any commitment or obligation to continue to utilize the services
of, or otherwise to do business with, any licensor, vendor, supplier or licensee
of Arcus.
Section 5.31 Insurance. The IM Disclosure Schedule sets forth
(a) a true and complete list and description, of all insurance policies, other
insurance arrangements and other contracts or arrangements for the transfer or
sharing of insurance risks by Arcus in force on the date hereof with respect to
the business or assets of Arcus, together with a statement of the aggregate
amount of claims paid out, and claims pending, under each such insurance policy
or other arrangement at the date hereof, and (b) a description of such risks
that Arcus, or its Board of Directors or officers, have designated as being
self-insured. All such policies are in full force and effect, all premiums due
thereon have been paid by Arcus and Arcus is otherwise in compliance in all
material respects with the terms and provisions of such policies. Furthermore,
except as set forth in the IM Disclosure Schedule; (w) Arcus has not received
any notice of cancellation or non-renewal of any such policy or arrangement nor
is the termination of any such policies or arrangements to the Knowledge of IM,
threatened; (x) there is no claim pending under any of such policies or
arrangements as to which coverage has been questioned, denied or disputed by the
underwriters of such policies or arrangements; (y) Arcus has not received any
notice from any of its insurance carriers that any insurance premiums will be
increased in the future or that any insurance coverage presently provided for
will not be available to Arcus in the future on substantially the same terms as
now in effect; and (z) none of such policies or arrangements provides for any
retrospective premium adjustment, experienced-based liability or loss sharing
arrangement affecting Arcus.
Section 5.32 Operational Matters. With respect to the
operations of Arcus:
(a) substantially all items received by Arcus from
its customers (including files for refiling) are logged into Arcus' inventory
system and can be located through use of such inventory system;
(b) the stored items for which customers of Arcus are
billed, exist and, in all material respects, can be accounted for; and
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(c) the invoices of Arcus to customers reflect
services actually provided at rates in effect at such time for such customers.
Section 5.33 Brokers or Finders. No agent, broker, investment
banker, financial advisor or other firm or Person is or will be entitled to any
brokers' or finders' fee or any other commission or similar fee payable by IM or
Arcus in connection with any of the Transactions, except for William Blair & Co.
LLC.
Section 5.34 Sufficient Funds. IM has available, or has made
arrangements to obtain (through existing credit arrangements or otherwise),
sufficient funds to acquire all of the Shares to be purchased pursuant hereto
and to pay all its fees and expenses related to the Transactions.
Section 5.35 Full Disclosure. To the Knowledge of IM, IM has
not failed to disclose to Mentmore any facts material to the business, results
of operations, assets or liabilities of Arcus which could result in a loss in
excess of (pound)100,000. No representation or warranty by IM in this Agreement
and no statement contained in any document (including, without limitation,
financial statements and the IM Disclosure Schedule), certificate, or other
writing furnished or to be furnished by IM to Mentmore or any of its
representatives pursuant to the provisions hereof or in connection with the
Transactions, or omits or will omit to state any material fact necessary, in
light of the circumstances under which it was made, in order to make the
statements herein or therein not misleading.
ARTICLE VI
COVENANTS
Section 6.1 Access; Confidentiality. (a) Between the date of
this Agreement and the Closing, Mentmore shall (i) afford IM and its authorized
representatives reasonable access to all employees, offices and other facilities
of Abbey (as relates to the ARM Assets), and Britannia and BDM and their
respective Subsidiaries, and to all books and records of Abbey (as relates to
the ARM Assets), and Britannia and BDM and their respective Subsidiaries, (ii)
permit IM to make such inspections and, at IM's expense, to make copies of such
books and records as it may reasonably require, and (iii) furnish IM with such
financial and operating data and other information relating to Abbey (as relates
to the ARM Assets), and Britannia and BDM and their respective Subsidiaries, as
IM may from time to time reasonably request. IM and its authorized
representatives shall conduct all such inspections during normal business hours
and in a manner that will minimize disruptions to the business and operations of
Britannia, Abbey and BDM and their respective Subsidiaries.
(b) Between the date of this Agreement and the
Closing, IM shall (i) afford Mentmore and its authorized representatives
reasonable access to all employees, offices and other facilities of Arcus and to
all books and records of Arcus, (ii) permit Mentmore to make such inspections
and to make copies, at Mentmore's expense, of such books and records as it may
reasonably require, and (iii) furnish Mentmore with such financial and operating
data and other information relating to Arcus as Mentmore may from time to time
reasonably request. Mentmore
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and its authorized representatives shall conduct all such inspections during
normal business hours and in a manner that will minimize disruptions to the
business and operations of Arcus.
(c) Mentmore shall procure that IM and its authorized
representatives (including its designated engineers or consultants) may, on
prior notice, enter into and upon all or any portion of the properties of Abbey
(as relates to the ARM Assets), and Britannia and BDM or any of their respective
Subsidiaries, (including all Real Property and all real estate which is the
subject of a Lease) in order to investigate and assess, as IM deems necessary or
appropriate, the environmental condition of such properties or the business
conducted thereat; provided, however, that such investigation may not include
the performance of soil and surface or ground water sampling, monitoring,
borings or testing. Mentmore shall procure that Abbey (as relates to the ARM
Assets) and Britannia and BDM and their respective Subsidiaries, shall cooperate
with IM and its authorized representatives in conducting such investigation,
shall allow IM and its authorized representatives reasonable access to their
properties and businesses, together with full permission to conduct such
investigation, and shall provide to IM and its authorized representatives all
plans, reports, any environmental investigation results, reports or assessments
previously or contemporane ously conducted or prepared by or on behalf of, or in
the possession of or reasonably available to Mentmore, Abbey (as relates to the
ARM Assets), and Britannia and BDM and their respective Subsidiaries, or any of
their engineers, consultants or agents, and all information relating to
environmental matters in respect of their properties and businesses.
(d) IM shall procure that Mentmore and its authorized
representatives (including its designated engineers or consultants) may, on
prior notice, enter into and upon all or any portion of the properties of Arcus
(including all Real Property and all real estate which is the subject of a
Lease) in order to investigate and assess, as Mentmore deems necessary or
appropriate, the environmental condition of such properties or the business
conducted thereat; provided, however, that such investigation may not include
the performance of soil and surface or ground water sampling, monitoring,
borings or testing. IM shall procure that Arcus shall cooperate with Mentmore
and its authorized representatives in conducting such investigation, shall allow
Mentmore and its authorized representatives reasonable access to their
properties and businesses, together with full permission to conduct such
investigation, and shall provide to Mentmore and its authorized representatives
all plans, reports, any environmental investigation results, reports or
assessments previously or contemporaneously conducted or prepared by or on
behalf of, or in the possession of or reasonably available to IM or Arcus, or
any of their engineers, consultants or agents, and all information relating to
environmental matters in respect of their properties and businesses.
(e) The provisions of the Confidentiality Agreement
shall remain binding and in full force and effect until the Closing. The
information contained herein, in the Mentmore Disclosure Letter , the IM
Disclosure Schedule or delivered to IM or Mentmore or their authorized
representatives pursuant hereto shall be subject to the Confidentiality
Agreement as Confidential Information (as defined therein) until the Closing
and, for that purpose and to that extent, the terms of the Confidentiality
Agreement are incorporated herein by reference. All obligations under the
Confidentiality Agreement shall terminate simultaneously with the Closing.
Except as otherwise provided herein, IM and Mentmore shall, and Mentmore shall
procure that Britannia, Abbey and BDM shall, and shall cause their respective
Subsidiaries and their respective consultants, advisors
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and representatives to, after the date hereof, treat as strictly confidential
(unless compelled to disclose by judicial or administrative process or, in the
opinion of legal counsel, by other requirements of law, including, without
limitation the requirements of the London Stock Exchange or any other national
securities exchange) the terms of this Agreement and all nonpublic, confidential
or proprietary information concerning any of them, provided to them pursuant to
the negotiation of this Agreement or the Strategic Alliance Agreement.
Section 6.2 Efforts and Actions to Cause Closing to Occur. (a)
Prior to the Closing, upon the terms and subject to the conditions of this
Agreement, IM and Mentmore shall use their respective reasonable efforts to
take, or cause to be taken, all actions, and to do, or cause to be done and
cooperate with each other in order to do, all things necessary, proper or
advisable (subject to any applicable laws) to consummate the Closing and the
Transactions as promptly as practicable including, but not limited to (i) the
preparation and filing of all forms, registrations and notices required to be
filed to consummate the Closing and the other Transactions and the taking of
such actions as are necessary to obtain any requisite approvals, authorizations,
consents, orders, licenses, permits, qualifications, exemptions or waivers by
any third party or Governmental Entity, (ii) the preparation of any disclosure
documents requested by Mentmore in order to facilitate obtaining its
shareholders' approval, and (iii) the satisfaction of the other party's
conditions to Closing. In addition, no party hereto shall take any action after
the date hereof that would reasonably be expected to materially delay the
obtaining of, or result in not obtaining, any permission, approval or consent
from any Governmental Entity necessary to be obtained prior to Closing.
(b) Prior to the Closing, each party shall promptly
consult with the other party hereto with respect to, provide any necessary
information with respect to, and provide the other parties (or their respective
counsel) with copies of, all filings made by such party with any Governmental
Entity or any other information supplied by such party to a Governmental Entity
in connection with this Agreement and the Transactions. Each party hereto shall
promptly inform the others of any communication received by such party from any
Governmental Entity regarding any of the Transactions. If any party hereto or
Affiliate thereof receives a request for additional information or documentary
material from any such Governmental Entity with respect to any of the
Transactions, then such party shall endeavor in good faith to make, or cause to
be made, as soon as reasonably practicable and after consultation with the other
parties, an appropriate response in compliance with such request. To the extent
that transfers, amendments or modifications of permits (including environmental
permits) are required as a result of the execution of this Agreement or
consummation of any of the Transactions, BDM shall use its reasonable efforts to
effect such transfers, amendments or modifications.
(c) IM and Mentmore shall each use its reasonable
efforts to obtain, prior to the Closing, all consents necessary to the
consummation of the Transactions contemplated hereby as set forth in the
Mentmore Disclosure Letter or the IM Disclosure Schedule, as previously agreed
by the Parties including, without limitation, (i) the unconditional consent to
the Closing and the other Transactions of each lender to whom Abbey (as relates
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to the ARM Assets), or Arcus, Britannia, or BDM or any of their respective
Subsidiaries, owes in excess of (pound)100,000 as of the Closing Date, (ii) the
unconditional consent to the Closing and the other Transactions of each Person
holding a mortgage or lien on real property or material personal property owned
or leased by Abbey (as relates to the ARM Assets), or Arcus, Britannia or BDM or
any of their respective Subsidiaries, (iii) the unconditional consent to the
Closing and the other Transactions of each lessor of real or personal property
leased by Abbey (as relates to the ARM Assets), or Arcus, Britannia or BDM or
their respective Subsidiaries, and (iv) the unconditional consent to the Closing
and the other Transactions of each other party to each material contract with
Abbey (as relates to the ARM Assets), or Arcus, Britannia or BDM or any of their
respective Subsidiaries, but only if the failure to obtain such consent would
give rise to the right of any Person to accelerate the maturity of any debt owed
by the Abbey (as relates to the ARM Assets), or Arcus, Britannia or BDM or any
of their respective Subsidiaries, or terminate or modify the terms of any lease
or other contract to which Abbey (as relates to the ARM Assets), or Arcus,
Britannia or BDM or any of their respective Subsidiaries, is a party. All such
consents shall be in writing and executed counterparts thereof shall be
delivered to IM or Mentmore, as the case may be, at or prior to the Closing.
Section 6.3 Notification of Certain Matters. (a) From time to
time prior to the Closing, IM and Mentmore shall promptly supplement or amend
the IM Disclosure Schedule or the Mentmore Disclosure Letter, as the case may
be, with respect to any matter arising after the delivery thereof pursuant
hereto that, if existing at, or occurring on, the date of this Agreement, would
have been required to be set forth or described in the IM Disclosure Schedule or
the Mentmore Disclosure Letter, as the case may be, or amendment of the IM
Disclosure Schedule or the Mentmore Disclosure Letter , as the case may be.
Subject to the provisions of Article VII (including, without limitation, Section
7.3) hereof, no supplement made pursuant to this Section shall be deemed to cure
any breach of any representation of or warranty made pursuant to this Agreement.
(b) From time to time prior to the Closing, IM and
Mentmore shall give notice promptly to the other party after becoming aware of
(i) the occurrence or non-occurrence of any event whose occurrence or
non-occurrence would be likely to cause either (A) any representation or
warranty contained in this Agreement to be untrue or inaccurate in any material
respect at any time from the date hereof to the Closing Date (as if such
representation or warranty was to be made as of the Closing Date), or (B) any
condition set forth in Article VII to be unsatisfied in any material respect at
any time from the date hereof to the Closing Date, and (ii) any material failure
of Mentmore, or IM, to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it hereunder; provided, however,
that (iii) the delivery of any notice pursuant to this Section shall not limit
or otherwise affect the remedies available hereunder to the party receiving such
notice, and (iv) the failure to give such notice shall not be required from and
after the time the party to whom such notice is to be given has actual knowledge
of the information required to be included in such notice.
Section 6.4 No Solicitation of Competing Transaction. Prior to
the Closing, Mentmore shall not, and shall procure that neither , Britannia,
Abbey nor BDM nor any of their respective Subsidiaries shall, (and Mentmore
shall for itself, and shall procure that, Britannia, Abbey and BDM, shall cause
their respective officers, directors, employees, representatives and agents,
including, but not limited to, investment bankers, attorneys and accountants,
not to), directly or indirectly, encourage, solicit, or initiate discussions or
negotiations with, or provide any information to, any Person or group (other
than IM, any of its Affiliates or representatives) concerning any Acquisition
Proposal, except that nothing contained in this Section 6.4 or any other
provision hereof
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shall prohibit Mentmore or the Mentmore Board of Directors from complying with
(i) the rules of the London Stock Exchange, (ii) the rules of the City Code on
Takeovers and Mergers, (iii) all legally binding laws, and (iv) in the case of
the Directors of each such company, complying with their fiduciary duties;
provided, however, that Mentmore may not withdraw or modify, or propose to
withdraw or modify, its position with respect to the Transactions or approve or
recommend, or propose to approve or recommend, any Acquisition Proposal, or
enter into any agreement with respect to any Acquisition Proposal, in each case
during the continuation of this Agreement. Upon execution of this Agreement,
Mentmore shall for itself, and shall procure that, Britannia, Abbey and BDM
shall, immediately cease any existing activities, discussions or negotiations
with any parties conducted heretofore with respect to any of the foregoing.
Mentmore shall for itself, and shall procure that, Britannia, Abbey and BDM
shall immediately notify IM of the existence of any proposal or inquiry received
by Mentmore, Britannia, Abbey or BDM prior to the Closing, and Mentmore shall
for itself, and shall procure that, Britannia, Abbey and BDM shall, immediately
communicate to IM the terms of any proposal or inquiry which it may receive (and
shall immediately provide to IM copies of any written materials received by
Mentmore, Britannia, Abbey or BDM in connection with such proposal, discussion,
negotiation or inquiry) and the identity of the party making such proposal or
inquiry.
Section 6.5 Publicity. The initial press release with respect
to the execution of this Agreement shall be a joint press release acceptable to
IM and Mentmore. Thereafter, until the Closing, or the date the Transactions are
terminated or abandoned pursuant to Article VIII, Mentmore and IM shall not, and
shall procure that none of their respective Affiliates shall, issue or cause the
publication of any press release or other announcement with respect to this
Agreement or the Transactions without prior consultation with the other parties,
except as may be required by law or by the Rules of the London Stock Exchange or
any listing agreement of any other national securities exchange or trading
market.
Section 6.6 Interim Operations of Britannia, Abbey and BDM .
Mentmore shall use its reasonable efforts to procure that after the date hereof
and prior to the Closing Date, except (i) as expressly contemplated by this
Agreement, or (ii) as may be agreed in writing by IM:
(a) neither Abbey (as relates to the ARM Assets), nor
Britannia nor BDM nor any of their respective Subsidiaries, will take any
action, or omit to take any action, which if taken or omitted to be taken prior
to the date hereof, would have been required to have been disclosed pursuant to
Section 4.17 hereof;
(b) neither Britannia, BDM nor Abbey (as relates to
the ARM Assets) nor any of their respective Subsidiaries, shall: (i) amend its
certificate of incorporation, memorandum or articles of association or similar
organizational documents, (ii) issue, sell, transfer, pledge, dispose of or
encumber any shares of any class or series of its share capital or Voting Debt,
or securities convertible into or exchangeable for, or options, warrants, calls,
commitments or rights of any kind to acquire, any shares of any class or series
of its capital stock or any Voting Debt, (iii) split, combine or reclassify any
shares of any class or series of its share capital, or (iv) redeem, purchase or
otherwise acquire directly or indirectly any shares of any class or series of
its share capital, or any instrument or security which consists of or includes a
right to acquire such shares;
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(c) neither Abbey (as relates to the ARM Assets), nor
Britannia nor BDM nor any of their respective Subsidiaries, shall incorporate
any new Subsidiary or acquire any share capital or other equity securities, or
equity or ownership interest in the business, of any other Person;
(d) neither Abbey (as relates to the ARM Assets), nor
Britannia nor BDM nor any of their respective Subsidiaries, shall modify, amend
or terminate any of its material contracts or waive, release or assign any
material rights or claims, except in the ordinary course of business and
consistent with past practice;
(e) neither Abbey (as relates to the ARM Assets), nor
Britannia nor BDM nor any of their respective Subsidiaries, shall enter into or
amend any employment, severance, consulting, termination or other agreement or
employee benefit plan or make any loan or advance to any of its officers,
directors, employees, Affiliates, agents or consultants (whose current basic
compensation is in excess of (pound)35,000) or make any change in its existing
borrowing or lending arrangements for or on behalf of any of such Persons
pursuant to an employee benefit plan or otherwise;
(f) neither Abbey (as relates to the ARM Assets), nor
Britannia nor BDM nor any of their respective Subsidiaries, shall permit any
insurance policy naming it as a beneficiary or a loss payable payee to be
cancelled or terminated without notice to IM, except policies providing coverage
for losses not in excess of (pound)50,000;
(g) neither Britannia, Abbey nor BDM nor any of their
respective Subsidiaries, shall pass a resolution approving complete or partial
liquidation, dissolution, merger, consolidation, restructuring, recapitalization
or other capital reorganization;
(h) neither Britannia, nor BDM nor any of their
respective Subsidiaries, shall make any election relating to Taxes (other than
in respect to elections relating to fiscal periods ended on or before October
31, 1998), change any election relating to Taxes already made, adopt any
accounting method relating to Taxes, change any accounting method relating to
Taxes unless required by U.K. GAAP, enter into any closing agreement relating to
Taxes, settle any claim or assessment relating to Taxes or consent to any claim
or assessment relating to Taxes or any waiver of the statute of limitations for
any such claim or assessment;
(i) neither Abbey (as relates to the ARM Assets), nor
Britannia nor BDM nor any of their respective Subsidiaries, shall take, or agree
to commit to take, any action that would or is reasonably likely to result in
any of the conditions to the Closing set forth in Article VII not being
satisfied, or would make any representation or warranty contained herein
inaccurate in any respect at, or as of any time prior to, the Closing Date, or
that would materially impair the ability of Mentmore, Britannia, Abbey or BDM ,
to consummate the Closing in accordance with the terms hereof or materially
delay such consummation; and
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(j) neither Abbey (as relates to the ARM Assets), nor
Britannia nor BDM nor any of their respective Subsidiaries, shall enter into an
agreement, contract, commitment or arrangement to do any of the foregoing, or to
authorize, recommend, propose or announce an intention to do any of the
foregoing.
Section 6.7 Interim Operations of Arcus. IM shall use its
reasonable efforts to procure that after the date hereof and prior to the
Closing Date, except (i) as expressly contemplated by this Agreement, or (ii) as
may be agreed in writing by Mentmore:
(a) Arcus will not take any action, or suffer any
action to be taken which, if taken or suffered to be taken prior to the date
hereof would have been required to have been disclosed pursuant to Section 5.15;
(b) Arcus shall not: (i) amend its certificate of
incorporation or articles of association or similar organizational documents,
(ii) issue, sell, transfer, pledge, dispose of or encumber any shares of any
class or series of its share capital or Voting Debt, or securities convertible
into or exchangeable for, or options, warrants, calls, commitments or rights of
any kind to acquire, any shares of any class or series of its capital stock or
any Voting Debt, (iii) split, combine or reclassify any shares of any class or
series of its share capital, or (iv) redeem, purchase or otherwise acquire
directly or indirectly any shares of any class or series of its share capital,
or any instrument or security which consists of or includes a right to acquire
such shares;
(c) Arcus shall not incorporate any new Subsidiary or
acquire any share capital or other equity securities, or equity or ownership
interest in the business, of any other Person;
(d) Arcus shall not modify, amend or terminate any of
its material contracts or waive, release or assign any material rights or
claims, except in the ordinary course of business and consistent with past
practice;
(e) Arcus shall not enter into or amend any
employment, severance, consulting, termination or other agreement or employee
benefit plan or make any loan or advance to any of its officers, directors,
employees, Affiliates, agents or consultants (whose current basic annual
compensation is in excess of (pound)35,000) or make any change in its existing
borrowing or lending arrangements for or on behalf of any of such Persons
pursuant to an employee benefit plan or otherwise;
(f) Arcus shall not permit any insurance policy
naming it as a beneficiary or a loss payable payee to be cancelled or terminated
without notice to Mentmore, except policies providing coverage for losses not in
excess of (pound)50,000;
(g) Arcus shall not pass a resolution approving
complete or partial liquidation, dissolution, merger, consolidation,
restructuring, recapitalization or other reorganization;
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(h) Arcus shall not make any election relating to
Taxes, change any election relating to Taxes already made, adopt any accounting
method relating to Taxes, change any accounting method relating to Taxes unless
required by U.K. GAAP, enter into any closing agreement relating to Taxes,
settle any claim or assessment relating to Taxes or consent to any claim or
assessment relating to Taxes or any waiver of the statute of limitations for any
such claim or assessment;
(i) neither IM nor Arcus shall take, or agree to
commit to take, any action that would or is reasonably likely to result in any
of the conditions to the Closing set forth in Article VII not being satisfied,
or would make any representation or warranty contained herein inaccurate in any
respect at, or as of any time prior to, the Closing Date, or that would
materially impair the ability of IM or Abbey to consummate the Closing in
accordance with the terms hereof or materially delay such consummation; and
(j) neither IM, nor any of its Subsidiaries, nor
Arcus, shall enter into an agreement, contract, commitment or arrangement to do
any of the foregoing, or to authorize, recommend, propose or announce an
intention to do any of the foregoing.
ARTICLE VII
CONDITIONS
Section 7.1 Conditions to Obligations of IM to Effect the
Closing. The obligations of IM to consummate the Closing of the Transaction as
provided in Article II shall be subject to the satisfaction on or prior to the
Closing Date of each of the following conditions, any and all of which may be
waived in whole or in part by IM.
(a) Representations and Warranties. All of the
representations and warranties of Mentmore set forth in this Agreement that are
qualified as to materiality shall be true and correct and any such
representations and warranties that are not so qualified shall be true and
correct in all material respects; provided, however, that this condition shall
be deemed to have been satisfied if the failure of any representations or
warranties to be so true and correct does not individually or collectively
exceed (pound)500,000.
(b) Obligations Performed. All of the covenants and
other obligations of Mentmore required to be performed hereunder shall have been
so performed in all material respects; provided, however, that this condition
shall be deemed to have been satisfied if the failure of any representations or
warranties to be so true and correct does not individually or collectively
exceed (pound)500,000.
(c) Government Action. There shall not be threatened
or pending any suit, action or proceeding by any Governmental Entity: (i)
seeking to prohibit or impose any material limitations on IM's (or that of any
of its Subsidiaries or Affiliates) ownership or operation of all or a material
portion of their businesses or assets or the business or assets of Abbey (as
relates to the ARM
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Assets), or Britannia or BDM or their respective Subsidiaries, or to compel IM
or its Subsidiaries and Affiliates, or Abbey (as relates to the ARM Assets), or
Britannia or BDM or any of their respective Subsidiaries, to dispose of or hold
separate any material portion of the business or assets; (ii) seeking to
restrain or prohibit the consummation of the Closing or the performance of any
of the other Transactions, or seeking to obtain from IM, Britannia, Abbey or BDM
any damages that are material in relation to Abbey (as relates to the ARM
Assets), or IM, Britannia or BDM or their respective Subsidiaries; (iii) seeking
to impose material limitations on the ability of IM, or rendering IM unable, to
accept payment for the Arcus shares, or pay for or purchase some or all of the
Shares, or consummate the Closing; (iv) seeking to impose material limitations
on the ability of IM effectively to exercise full rights of ownership of the
Shares, including, without limitation, the right to vote the Shares; or (v)
which otherwise is reasonably likely to have a material adverse affect on the
consolidated financial condition, businesses, results of operations or prospects
of Abbey (as relates to the ARM Assets), or IM, Britannia or BDM and their
respective Subsidiaries, taken as a whole. There shall not (x) be any statute,
rule, regulation, judgment, order or injunction enacted, entered, enforced,
promulgated or deemed applicable to the Transactions, or (y) be any other action
taken by any Governmental Entity, that is reasonably likely to result, directly
or indirectly, in any of the consequences referred to in clauses (i) through (v)
of this paragraph (c).
(d) Whitechapel Lease. The Whitechapel Lease in the
form of Exhibit A hereto shall have been executed and delivered and shall be
valid and binding upon the parties thereto.
(e) License Agreement. The License Agreement in the
form of Exhibit B hereto shall have been executed and delivered and shall be
valid and binding upon the parties thereto.
(f) Tax Deed. The Mentmore Tax Deed in the form of
Exhibit D hereto shall have been executed and delivered and shall be valid and
binding upon the parties thereto.
(g) Whitechapel Option Agreement. The Whitechapel
Option Agree ment in the form of Exhibit F hereto shall have been executed and
delivered and shall be valid and binding upon the parties thereto.
(h) Cross Guarantees. All guarantees by Britannia,
BDM or any of their respective Subsidiaries of the obligations of Mentmore or
any Mentmore Subsidiary (other than Britannia, BDM or any of their respective
Subsidiaries) to any bank or other financial institution shall have been
released.
(i) Certificate of Mentmore Officers. Mentmore shall
have delivered to IM at the Closing a certificate signed by its chief executive
officer and by its chief financial officer, dated the Closing Date, in form and
substance reasonably satisfactory to IM, to the effect that, as of the Closing
Date, (i) all of the representations and warranties of Mentmore set forth in
this Agreement that are qualified as to materiality are true and correct, (ii)
all such representations and warranties that are not so qualified are true and
correct in all material respects, (iii) there has not occurred since the date of
execution of this Agreement any material adverse change in the consolidated
financial condition, businesses, results of operations or prospects of Abbey (as
relates to the ARM Assets), Britannia and BDM and their respective Subsidiaries,
taken as a whole, and (iv)
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Mentmore has performed all material obligations required under this Agreement to
be performed by it at or prior to the Closing.
(j) Opinion of Mentmore Counsel. Mentmore shall have
delivered to IM at the Closing an opinion of Eversheds, counsel to Mentmore,
dated the Closing Date, in form and substance reasonably acceptable to IM and
substantially in the form previously agreed to by the parties to this Agreement.
(k) Consents Obtained. All material consents of any
Person set forth in the Mentmore Disclosure Letter and in Section 6.2 hereof
necessary to the consummation of the Closing and the other Transactions,
including, without limitation, consents from parties to loans, contracts, leases
or other agreements and consents from governmental agencies, shall have been
obtained, and a copy of each such consent shall have been provided to IM at or
prior to the Closing.
(l) Material Adverse Change. There shall not have
occurred since the date of execution of this Agreement any material adverse
change in the consolidated financial condition, assets, liabilities (absolute,
accrued, contingent or otherwise), reserves, businesses, results of operations
or prospects of Abbey (as relates to the ARM Assets), Britannia and BDM and
their respective Subsidiaries, taken as a whole, which individually or
collectively is in excess of (pound)500,000.
(m) Termination. This Agreement shall not have been
terminated in accordance with its terms.
The foregoing conditions are for the sole benefit of IM, may
be waived by IM, in whole or in part, at any time and from time to time in the
sole discretion of IM. The failure by IM at any time to exercise any of the
foregoing rights shall not be deemed a waiver of any such right and each such
right shall be deemed an ongoing right which may be asserted at any time and
from time to time.
Section 7.2 Conditions to Obligations of Mentmore to Effect
the Closing. The obligations of Mentmore to consummate the Closing of the
Transactions as provided in Article II shall be subject to the satisfaction on
or prior to the Closing Date of each of the following conditions, any and all of
which may be waived in whole or in part by Mentmore:
(a) Shareholder Approval. Holders of a majority of
the Shares represented at the EGM shall have approved a resolution approving
this Agreement and the Transactions contemplated herein, provided that a proper
quorum shall have been counted at such EGM.
(b) Representations and Warranties. All of the
representations and warranties of IM set forth in this Agreement that are
qualified as to materiality shall be true and correct and any such
representations and warranties that are not so qualified 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; provided, however, that this condition shall be
deemed to have satisfied this condition if the failure of any representations or
warranties to be so true and correct does not individually or collectively
exceed (pound)150,000.
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(c) Obligations Performed. All of the covenants and
other obligations of IM required to be performed hereunder shall have been so
performed in all material respects.
(d) Government Action. There shall not be threatened
or pending any suit, action or proceeding by any Governmental Entity: (i)
seeking to prohibit or impose any material limitations on Mentmore's (or that of
any of its Subsidiaries or Affiliates) ownership or operation of all or a
material portion of their businesses or assets or the business or assets of
Abbey (as relates to the ARM Assets), or Britannia or BDM or their respective
Subsidiaries, or to compel Mentmore or its Subsidiaries and Affiliates, or Abbey
(as relates to the ARM Assets), or Britannia or BDM or any of their respective
Subsidiaries, to dispose of or hold separate any material portion of the
business or assets; (ii) seeking to restrain or prohibit the consummation of the
Closing or the performance of any of the other Transactions, or seeking to
obtain from Mentmore, Britannia, Abbey or BDM any damages that are material in
relation to Abbey (as relates to the ARM Assets), or Mentmore, Britannia or BDM
or their respective Subsidiaries; (iii) seeking to impose material limitations
on the ability of BDM effectively to exercise full rights of ownership of the
shares of Arcus, including, without limitation, the right to vote the Shares; or
(iv) which otherwise is reasonably likely to have a material adverse affect on
the consolidated financial condition, businesses, results of operations or
prospects of Abbey (as relates to the ARM Assets), or Mentmore, Britannia or BDM
and their respective Subsidiaries, taken as a whole. There shall not (x) be any
statute, rule, regulation, judgment, order or injunction enacted, entered,
enforced, promulgated or deemed applicable to the Transactions, or (y) be any
other action taken by any Governmental Entity, that is reasonably likely to
result, directly or indirectly, in any of the consequences referred to in
clauses (i) through (iv) of this paragraph (d).
(e) Whitechapel Lease. The Whitechapel Lease in the
form of Exhibit A hereto shall have been executed and delivered and shall be
valid and binding upon the parties thereto.
(f) License Agreement The License Agreement in the
form of Exhibit B hereto shall have been executed and delivered and shall be
valid and binding upon the parties thereto.
(g) Tax Deed. The IM Tax Deed in the form of Exhibit
E hereto shall have been executed and delivered and shall be valid and binding
upon the Parties thereto.
(h) Whitechapel Option Agreement. The Whitechapel
Option Agree ment in the form of Exhibit F hereto shall have been executed and
delivered and shall be valid and binding upon the parties thereto.
(i) Certificate of IM Officers. IM shall have
delivered to Mentmore at the Closing a certificate signed by the chief executive
officer of IM, dated the Closing Date, in form and substance reasonably
satisfactory to Mentmore, to the effect that, as of the Closing Date, (i) all of
the representations and warranties of IM set forth in this Agreement that are
qualified as to materiality are true and correct, (ii) all such representations
and warranties that are not so qualified are true and correct in all material
respects, (iii) there has not occurred since the date of execution of this
Agreement any material adverse change in the financial condition, businesses,
results of
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operations or prospects of Arcus, and (iv) IM has performed all material
obligations required under this Agreement to be performed by it at or prior to
the Closing.
(j) Opinion of IM Counsel. IM shall have delivered to
Mentmore at the Closing opinions of counsel to IM, dated the Closing Date, in
form and substance reasonably acceptable to Mentmore and substantially in the
form previously agreed to by the parties to this Agreement.
(k) Consents Obtained. All material consents of any
Person set forth in the IM Disclosure Schedule and in Section 6.2 hereof
necessary to the consummation of the Closing and the other Transactions,
including, without limitation, consents from parties to loans, contracts, leases
or other agreements and consents from governmental agencies, shall have been
obtained, and a copy of each such consent shall have been provided to Mentmore
at or prior to the Closing.
(l) Termination. This Agreement shall not have been
terminated in accordance with its terms.
The foregoing conditions are for the sole benefit of Mentmore,
may be waived by Mentmore, in whole or in part, at any time and from time to
time in the sole discretion of Mentmore. The failure by Mentmore at any time to
exercise any of the foregoing rights shall not be deemed a waiver of any such
right and each such right shall be deemed an ongoing right which may be asserted
at any time and from time to time.
Section 7.3 No Right to Rescind. After Closing, (i) neither
party shall have any right to rescind this Agreement, and (ii) the sole right of
the parties shall be pursuant to Article IX.
ARTICLE VIII
TERMINATION
Section 8.1 Termination. The Transactions may be terminated or
abandoned at any time prior to the Closing Date, whether before or after
shareholder approval thereof by Mentmore's shareholders:
(a) By Mentmore or IM if the Closing shall not have
occurred on or before January 31, 1999.
(b) By the mutual written consent of Mentmore and IM.
(c) By Mentmore or IM if any Governmental Entity
shall have issued an order, decree or ruling or taken any other action (which
order, decree, ruling or other action the parties hereto shall use their
reasonable efforts to lift), which permanently restrains, enjoins or otherwise
prohibits any of the Transactions and such order, decree, ruling or other action
shall have become final and non-appealable.
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(d) By Mentmore if IM shall have breached any
representation, warranty, covenant or other agreement contained in this
Agreement, which would give rise to the failure of a condition set forth in
Section 7.2.
(e) By IM if Mentmore shall have breached any
representation, warranty, covenant or other agreement contained in this
Agreement which would give rise to the failure of a condition set forth in
Sections 7.1(a), (b), (c), (j) or (m).
Section 8.2 Effect of Termination. In the event of the
termination or abandonment of the Transactions by any party hereto pursuant to
the terms of this Agreement, written notice thereof shall forthwith be given to
the other party or parties specifying the provision hereof pursuant to which
such termination or abandonment of the Transactions is made, and there shall be
no liability on the part of IM or Mentmore except (i) for fraud or for breach of
this Agreement prior to such termination or abandonment of the Transactions and
(ii) as set forth in Section 11.1.
ARTICLE IX
REMEDIES
Section 9.1 IM Indemnification.
(a) Mentmore shall indemnify, defend and hold
harmless IM in its individual capacity and as trustee for all IM Indemnified
Persons (other than Britannia and BDM and their respective Subsidiaries) from
and against and in respect of 100% of any and all actual losses, liabilities,
damages, judgments, settlements and expenses (including interest and penalties
recovered by a third party with respect thereto and reasonable attorneys' fees
and expenses and reasonable accountants' fees and expenses incurred in the
investigation or defense of any of the same or in asserting, preserving or
enforcing any of the rights of IM arising under this Article IX) incurred by IM
or any of the IM Indemnified Persons (other than Britannia or BDM and their
respective Subsidiaries), that arise out of:
(i) any breach of any of Mentmore's
representations and warranties contained in Sections 4.1, 4.2, 4.3, 4.4, 4.5,
4.7(c) and 4.8;
(ii) the Inactive Subsidiaries; or
(iii) (A) any breach of any of Mentmore's
representations and warranties contained in Section 4.29 or the existence of any
of the events, circumstances or conditions described in Section 4.29 hereof, or
any pollution or threat to human health or the environment that (X) is related
in any way to Abbey's (as relates to the ARM Assets), or Britannia's or BDM's or
any of their respective Subsidiaries' (or any other owner's or operator's),
management, use, control, ownership or operation of the properties or businesses
of Abbey (as relates to the ARM Assets), or Britannia or BDM or any of their
respective Subsidiaries, prior to the Closing Date,
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including all on-site and off-site activities involving Materials of
Environmental Concern, and (Y) occurred, existed, or arises out of conditions or
circumstances that occurred or existed, or was caused, in whole or in part, on
or before the Closing Date, whether or not the pollution or threat to human
health or the environment is described in the Mentmore Disclosure Letter, and
(B) any Environmental Claim against Abbey (as relates to the ARM Assets), or
Britannia or BDM or any of their respective Subsidiaries, or any Person whose
liability for such Environmental Claim Abbey (as relates to the ARM Assets), or
Britannia or BDM or any of their respective Subsidiaries, has assumed or
retained either contractually or by operation of law (collectively, "IM
Environmental Losses"); provided, however, that the term "IM Environmental
Losses" shall not include any such losses, liabilities, damages, judgments,
settlements or expenses incurred as a result of (m) any action taken directly,
or indirectly by Britannia, BDM or any of their respective Subsidiaries after
the Closing Date which, at the time such action was taken, the entity taking
such action knew such action could result in an IM Environmental Loss, or (n)
any change in Environmental Law occurring after the Closing Date.
(b) Mentmore's indemnification obligations arising
under Sections 9.1(a)(i) and (ii) shall survive forever; and Mentmore's
indemnification obligations relating to IM Environmental Losses arising under
Section 9.1(a)(iii) shall survive until January 4, 2009.
(c) No claim for a recovery under Section 9.1 may be
asserted by IM in its individual capacity or as trustee for IM Indemnified
Persons after the expiration of the applicable indemnification period set forth
in Section 9.1(b) above; provided, however, that claims first asserted in
writing by IM in its individual capacity or as trustee for IM Indemnified
Persons with reasonable specificity prior to the expiration of the applicable
indemnification period shall not thereafter be barred by the expiration of the
applicable indemnification period.
Section 9.2 IM Damages.
(a) IM shareement.
(b) IM shall be entitled to claim damages from
Mentmore in respect of 100% of any and all losses, liabilities, damages,
judgments, settlements and expenses (including interest and penalties recovered
by a third party with respect thereto and reasonable attorneys' fees and
expenses incurred in the investigation or defense of any of the same or in
asserting, preserving or enforcing any of the rights of IM arising under this
Article IX) incurred by Britannia or BDM or their respective Subsidiaries that
arise out of:
(i) any civil, criminal, administrative or
arbitration proceeding or investigation by or before any court or governmental
or other regulatory or administrative agency
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or commission against or involving Abbey (as relates to the ARM Assets), or
Britannia or BDM or any of their respective subsidiaries, with respect to all
periods prior to the date of this Agreement;
(ii) the Inactive Subsidiaries; or
(iii) IM Environmental Losses.
(c) IM's right to claim damages under Section 9.2(a)
and (b) shall be limited as set forth below:
(i) all payments shall be made by Mentmore
directly to IM;
(ii) Mentmore's direct liability to IM in its
individual capacity and as trustee for IM Indemnified Persons (other than
Britannia, BDM and their respective Subsidiaries) for losses in connection with
Britannia's Inactive Subsidiaries and for IM Environmental Losses will be
governed by Section 9.1 above and not this Section 9.2;
(iii) Mentmore will be under no liability for
damages under Section 9.2(a) where the amount for which Mentmore would be liable
for such damages is less than (pound)10,000; and
(iv) Mentmore will be under no liability for
damages under Section 9.2(a) (of or greater than the amount specified in Section
9.2(c)(iii) above) unless the amount of its liability for damages under Section
9.2(a) is (when aggregated with its liability for other damages under Section
9.2(a)) in excess of (pound)500,000, in which event Mentmore will (subject to
the provisions of Section 9.2(c)(iii) above) be liable for damages under Section
9.2(a) for the whole amount of such liability and not merely for the excess.
(d) IM's right to claim damages under Section 9.2(a)
shall survive only until the earlier of (A) ten business days after delivery to
IM of the first full fiscal year audit of Britannia after the Closing Date or
(B) November 10, 2000; IM's right to claim damages under Sections 9.2(b)(i)
shall survive until the third anniversary of the Closing Date; IM's right to
claim damages under Section 9.2(b)(ii) shall survive forever; and IM's right to
claim damages under Section 9.2(b)(iii) shall survive until January 4, 2009.
(e) No claim for damages may be asserted by IM after
the expiration of the applicable indemnification period set forth in Section
9.2(d) above; provided, however, that claims first asserted in writing by IM
with reasonable specificity prior to the expiration of the applicable
indemnification period shall not thereafter be barred by the expiration of the
applicable indemnifica tion period.
Section 9.3 Mentmore's Total Liability. The maximum liability
of Mentmore in respect of Section 9.1 and Section 9.2, and any liability
actually paid under the Mentmore Tax Deed, shall not collectively exceed
(pound)28,750,000.
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Section 9.4 IM Notice of Third-Party Claim; Defense. IM shall
give Mentmore prompt notice of any third-party claim that may give rise to any
claim by IM under this Article IX, together with the estimated amount of such
claim, and Mentmore shall have the right to assume the defense (at Mentmore's
expense) of any such claim through counsel of Mentmore's own choosing by so
notifying IM within 30 days of the first receipt by Mentmore of such notice from
IM; provided, however, that any such counsel shall be reasonably satisfactory to
IM. Failure to give prompt notice shall not affect the indemnification
obligations hereunder in the absence of actual and material prejudice. If, under
applicable standards of professional conduct, a conflict with respect to any
significant issue between IM and Mentmore exists in respect of such third-party
claim, Mentmore shall pay the reasonable fees and expenses of such additional
counsel as may be required to be retained in order to resolve such conflict.
Mentmore shall be liable for the fees and expenses of counsel employed by IM for
any period during which Mentmore does not assume the defense of any such
third-party claim (other than during any period in which IM will have failed to
give notice of the third-party claim as provided above). If Mentmore assumes
such defense, IM shall have the right to participate in the defense thereof and
to employ counsel, at its own expense, separate from the counsel employed by
Mentmore, it being understood that Mentmore shall control such defense. If
Mentmore chooses to defend or prosecute a third-party claim, IM shall cooperate
in the defense or prosecution thereof, which cooperation shall include the
retention, and the provision to Mentmore, of records and information reasonably
relevant to such third-party claim, and making employees of BDM available on a
mutually convenient basis to provide additional information and explanation of
any materials provided hereunder. If Mentmore elects to defend or prosecute any
third-party claim, IM shall agree to any settlement, compromise or discharge of
such third-party claim that Mentmore may recommend and that, by its terms,
discharges IM and IM Indemnified Persons from the full amount of liability in
connection with such third-party claim; provided, however, that, without the
consent of IM, Mentmore shall not consent to, and IM shall not be required to
agree to, the entry of any judgment or enter into any settlement that (i)
provides for injunctive or other non-monetary relief affecting IM or any IM
Indemnified Person, or (ii) does not include as an unconditional term thereof
the giving of a release from all liability with respect to such claim by each
claimant or plaintiff to each of IM or any IM Indemnified Person that is the
subject of such third-party claim.
Section 9.5 Mentmore Indemnification.
(a) IM shall indemnify, defend and hold harmless
Mentmore in its individual capacity and as trustee for all Mentmore Indemnified
Persons from and against and in respect of 100% of any and all actual losses,
liabilities, damages, judgments, settlements and expenses (including interest
and penalties recovered by a third party with respect thereto and reasonable
attorneys' fees and expenses and reasonable accountants' fees and expenses
incurred in the investigation or defense of any of the same or in asserting,
preserving or enforcing any of the rights of Mentmore arising under this Article
IX) incurred by Mentmore or any of the Mentmore Indemnified Persons, that arise
out of:
(i) any breach of any of IM's representations
and warranties contained in Sections 5.1, 5.2, 5.3, 5.4, and 5.7; or
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(ii) (A) any breach of any of IM's
representations and warranties contained in Section 5.27 or the existence of any
of the events, circumstances or conditions described in Section 5.27 hereof, or
any pollution or threat to human health or the environment that (X) is related
in any way to Arcus's (or any other owner's or operator's), management, use,
control, ownership or operation of the properties or businesses of Arcus prior
to the Closing Date, including all on-site and off-site activities involving
Materials of Environmental Concern, and (Y) occurred, existed, or arises out of
conditions or circumstances that occurred or existed, or was caused, in whole or
in part, on or before the Closing Date, whether or not the pollution or threat
to human health or the environment is described in the IM Disclosure Letter, and
(B) any Environmental Claim against Arcus has assumed or retained either
contractually or by operation of law (collectively, "Mentmore Environmental
Losses"); provided, however, that the term "Mentmore Environmental Losses" shall
not include any such losses, liabilities, damages, judgments, settlements or
expenses incurred as a result of (m) any action taken by Arcus after the Closing
Date which, at the time such action was taken, Arcus knew such action could
result in a Mentmore Environmental Loss, or (n) any change in Environmental Law
occurring after the Closing Date.
(b) IM's indemnification obligations arising under
Section 9.5(a)(i) shall survive forever; IM's indemnification obligations
relating to Mentmore Environmental Losses arising under Section 9.5(a)(ii) shall
survive until January 4, 2009.
(c) No claim for a recovery under Section 9.5 may be
asserted by Mentmore in its individual capacity or as trustee for Mentmore
Indemnified Persons after the expiration of the applicable indemnification
period set forth in Section 9.5(b) above; provided, however, that claims first
asserted in writing by Mentmore in its individual capacity or as trustee for
Mentmore Indemnified Persons with reasonable specificity prior to the expiration
of the applicable indemnification period shall not thereafter be barred by the
expiration of the applicable indemnifica tion period.
Section 9.6 Mentmore Damages.
(a) Mentmore shall be entitled to claim damages from
IM in respect of 49.9% of any and all losses, liabilities, damages, judgments,
settlements and expenses (including interest and penalties recovered by a third
party with respect thereto and reasonable attorneys' fees and expenses incurred
in the investigation or defense of any of the same or in asserting, preserving
or enforcing any of the rights of Mentmore arising under this Article IX)
incurred by Arcus or BDM (as relates to the business or assets of Arcus) that
arise out of any breach of any of IM's representa tions, warranties and
covenants contained in this Agreement;
(b) Mentmore shall be entitled to claim damages from
IM in respect of 100% of any and all losses, liabilities, damages, judgments,
settlements and expenses (including interest and penalties recovered by a third
party with respect thereto and reasonable attorneys' fees and expenses incurred
in the investigation or defense of any of the same or in asserting, preserving
or enforcing any of the rights of Mentmore arising under this Article IX)
incurred by Arcus or BDM (as relates to the business or assets of Arcus) that
arise out of:
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(i) any civil, criminal, administrative or
arbitration proceeding or investigation by or before any court or governmental
or other regulatory or administrative agency or commission against or involving
Arcus or relating to Arcus with respect to all periods prior to the date of this
Agreement; or
(ii) Mentmore Environmental Losses.
(c) Mentmore's right to claim damages under Section
9.6(a) and (b) shall be limited as set forth below:
(i) all payments shall be made by IM directly
to Mentmore;
(ii) IM's direct liability to Mentmore in its
individual capacity and as trustee for Mentmore Indemnified Persons for Mentmore
Environmental Losses will be governed by Section 9.5 above and not this Section
9.6;
(iii) IM will be under no liability for
damages under Section 9.6(a) where the amount for which IM would be liable for
such damages is less than (pound)10,000; and
(iv) IM will be under no liability for
damages under Section 9.6(c) (of or greater than the amount specified in Section
9.6(c)(iii) above) unless the amount of its liability for damages under Section
9.6(a) is (when aggregated with its liability for other damages under Section
9.6(a)) in excess of (pound)150,000, in which event IM will (subject to the
provisions of Section 9.6(c)(iii) above) be liable for damages under Section
9.6(a) for the whole amount of such liability and not merely for the excess.
(d) Mentmore's right to claim damages under Section
9.6(a) shall survive only until the earlier of (A) ten business days after
delivery to Mentmore of the first full fiscal year audit of Britannia after the
Closing Date or (B) November 10, 2000; Mentmore's right to claim damages under
Sections 9.6(b)(i) shall survive until the third anniversary of the Closing
Date; and Mentmore's right to claim damages under Section 9.6(b)(ii) shall
survive until January 4, 2009.
(e) No claim for damages may be asserted by Mentmore
after the expiration of the applicable indemnification period set forth in
Section 9.6(d) above; provided, however, that claims first asserted in writing
by Mentmore with reasonable specificity prior to the expiration of the
applicable indemnification period shall not thereafter be barred by the
expiration of the applicable indemnification period.
Section 9.7 IM's Total Liability. The maximum liability of IM
in respect of Section 9.5 and 9.6, and any liability actually paid under the IM
Tax Deed, shall not exceed (pound)1,500,000.
Section 9.8 Mentmore Notice of Claim; Defense. Mentmore shall
give IM prompt notice of any third-party claim that may give rise to any
indemnification obligation under this Article IX, together with the estimated
amount of such claim, and IM shall have the right to assume the defense (at IM's
expense) of any such claim through counsel of IM's choosing by so notifying
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Mentmore within 30 days of the first receipt by IM of such notice from Mentmore;
provided, however, that any such counsel shall be reasonably satisfactory to
Mentmore. Failure to give prompt notice shall not affect the indemnification
obligations hereunder in the absence of actual and material prejudice. If, under
applicable standards of professional conduct, a conflict with respect to any
significant issue between Mentmore and IM exists in respect of such third-party
claim, IM shall pay the reasonable fees and expenses of such additional counsel
as may be required to be retained in order to resolve such conflict. IM shall be
liable for the fees and expenses of counsel employed by Mentmore for any period
during which IM does not assume the defense of any such third-party claim (other
than during any period in which Mentmore will have failed to give notice of the
third-party claim as provided above). If IM assumes such defense, Mentmore shall
have the right to participate in the defense thereof and to employ counsel, at
its own expense, separate from the counsel employed by IM, it being understood
that IM shall control such defense. If IM chooses to defend or prosecute a
third-party claim, Mentmore shall cooperate in the defense or prosecution
thereof, which cooperation shall include the retention, and the provision to IM,
of records and information reasonably relevant to such third-party claim, and
making employees of Mentmore available on a mutually convenient basis to provide
additional information and explanation of any materials provided hereunder. If
IM elects to defend or prosecute any third-party claim, Mentmore shall agree to
any settlement, compromise or discharge of such third-party claim that IM may
recommend and that, by its terms, discharges Mentmore and Mentmore Affiliates
from the full amount of liability in connection with such third-party claim;
provided, however, that, without the consent of Mentmore, IM shall not consent
to, and Mentmore shall not be required to agree to, the entry of any judgment or
enter into any settlement that (i) provides for injunctive or other non monetary
relief affecting Mentmore or any Affiliate of Mentmore, or (ii) does not include
as an unconditional term thereof the giving of a release from all liability with
respect to such claim by each claimant or plaintiff to each of Mentmore or any
Affiliates of Mentmore that is the subject of such third-party claim.
Section 9.9 Procedure. (a) IM shall provide Mentmore with a
written notice of a claim under Section 9.1 or 9.2 specifying in reasonable
detail the amount of the claim and the facts supporting the claim. Within twenty
business days of receipt the notice referred to above in this paragraph (a),
Mentmore shall be obligated to pay to IM the amount of such claim or commence
the dispute resolution procedures set forth in Section 11.9 of this Agreement.
(b) Mentmore shall provide IM with a written notice of a claim
under Section 9.5 or 9.6 specifying in reasonable detail the amount of the claim
and the facts supporting the claim in reasonable detail. Within twenty business
days of receipt the notice referred to above in this paragraph (b), IM shall be
obligated to pay to Mentmore the amount of such claim or commence the dispute
resolution procedures set forth in Section 11.9 of this Agreement.
Section 9.10 Offsets. Any payments required to be made
pursuant to this Article IX shall be required to be made: (i) only with respect
to damages actually suffered by an aggrieved party; (ii) after giving effect, if
any, to any provision on the Closing Balance Sheet with respect to Abbey (as
relates to the ARM Assets), Britannia and BDM and their respective Subsidiaries
and the Arcus balance sheet for the period ending December 31, 1998 with respect
to such damages; and (iii) after giving effect to any payments received from any
applicable insurance policy.
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Section 9.11 Survival of Remedies. The remedies set forth in
this Article IX shall survive the Closing and shall survive the proposed
transfer of the business and assets (subject to the liabilities)) of Arcus to
BDM after the Closing); provided, however, that if there is an agreed sale of
BDM pursuant to the Strategic Alliance Agreement, these remedies will terminate
and be of no further force or effect.
Section 9.12 Tax Effect of Indemnification Payments. All
indemnity payments made pursuant to this Agreement shall be treated for all Tax
purposes as adjustments to the consideration paid with respect to the Shares.
Section 9.13 Effect of Investigation. The right to
indemnification, or other remedies based on any representation, warranty,
covenant or obligation contained in this Agreement or the Closing Documents
shall not be affected by any investigation conducted with respect to, or any
knowledge acquired (or capable of being acquired) at any time, whether before or
after the execution and delivery of this Agreement or the date the Closing
occurs, with respect to the accuracy or inaccuracy of or compliance with, any
such representation, warranty, covenant or obligation. The waiver by any party
of any condition to the obligation to consummate the Transactions contemplated
by this Agreement, where such condition is based on the accuracy of any
representation or warranty, or on the performance of or compliance with any
covenant or obligation, shall not affect the right by such party to
indemnification, or other remedy based on such representation, warranty,
covenant or obligation.
Section 9.14 Duty to Mitigate. Nothing herein shall in any way
diminish IM's or Mentmore's common law duty to mitigate the IM Losses or damages
or Mentmore Losses or damages, as the case may be.
Section 9.15 Duty to Fund. Mentmore and IM each agree to fund
(on a pro rata basis based on their respective shareholder's interest in
Britannia), any capital requirements of Britannia, BDM or any of their
respective Subsidiaries, arising solely out of actual monetary losses, damages
or expenses incurred by Britannia or BDM (or any of their respective
Subsidiaries), for which payments are required to be made pursuant to Section
9.2 or 9.6 hereof. The party receiving a payment under Section 9.2 or 9.6 will
not be required to fund such capital requirements (referred to in the prior
sentence. In an amount which exceeds the payment it received pursuant to Section
9.2 or 9.6, as the case may be.
ARTICLE X
DEFINITIONS AND INTERPRETATION
Section 10.1 Definitions. For all purposes of this Agreement,
except as otherwise expressly provided or unless the context clearly requires
otherwise:
"Abbey" shall mean Abbey Storage Limited, a wholly-owned
subsidiary of Mentmore incorporated under the laws of England and Wales.
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"Acquisition Proposal" shall mean any proposal or offer to
acquire all or a substantial part of the business or properties of Abbey (as
relates to the ARM Assets), Britannia or BDM or any of their respective
Subsidiaries, or any capital stock of Britannia or BDM or any of their
respective Subsidiaries, whether by merger, tender offer, exchange offer, sale
of assets or similar transactions involving Mentmore, Britannia, Abbey or BDM or
any of their respective Subsidiaries, divisions or operating or principal
business units.
"Affiliate" shall mean a Person that directly or indirectly
through one or more intermediaries, controls, or is controlled by, or is under
common control with the Person specified.
"Agreement" or "this Agreement" shall mean this Agreement,
together with the Exhibits and Schedules hereto, the Mentmore Disclosure Letter
and the IM Disclosure Schedule.
"Arcus" shall mean Arcus Data Security Limited, an indirect
wholly-owned subsidiary of IM, incorporated under the laws of England and Wales.
"Arcus Audited Financial Statements" shall mean the balance
sheets of Arcus as at December 31, 1996 and 1997, together with the statements
of profit and loss, shareholders' equity and cash flows for each of the periods
then ended, all certified by Keen, Dicey Grover, independent certified public
accountants, whose reports thereon are included therein.
"Arcus Balance Sheet" shall mean the most recent unaudited
balance sheet of Arcus as at October 31, 1998.
"Arcus Balance Sheet Date" shall mean October 31, 1998.
"Arcus Intellectual Property" shall mean all Intellectual
Property that is currently used in the business of Arcus, or that is necessary
to conduct the business of Arcus, as presently conducted or as currently
proposed to be conducted.
"Arcus Lease" shall have the meaning set forth in Section
5.22.
"Arcus Plan" shall have the meaning set forth in Section 5.17.
"Arcus Stock Transfer Agreement" shall mean the agreement,
between IM and Britannia pursuant to which (if executed by the parties) IM will
transfer all of its shares of Arcus to Britannia in exchange for 150,000 newly
issued shares of Britannia.
"Arcus Unaudited Financial Statements" shall mean the
unaudited balance sheet of Arcus as at October 31, 1998, together with the
unaudited statements of profit and loss, shareholders' equity and cash flows for
the period then ended.
"ARM Assets" shall mean the assets (subject to certain
liabilities) of Abbey which are subject to the Hive Across Agreement.
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"ARM Employees" shall have the meaning set forth in Section
4.19.
"BDM " shall mean British Data Management Limited, a company
incorporated under the laws of England and Wales.
"BDM Intellectual Property" shall mean all Intellectual
Property that is currently used in the business of Abbey (as relates to the ARM
Assets), and Britannia and BDM and any of their respective Subsidiaries, or that
is necessary to conduct the business of Abbey (as relates to the ARM Assets), or
Britannia or BDM or any of their respective Subsidiaries, as presently conducted
or as currently proposed to be conducted.
"Britannia" shall mean Britannia Data Management Limited, a
company incorporated under the laws of England and Wales.
"Britannia Net Indebtedness Statement" shall have the meaning
set forth in Section 3.1.
"BSS" shall mean Britannia Storage Systems Limited.
"Closing" shall mean the closing referred to in Section 2.1.
"Closing Balance Sheet" shall mean the combined balance sheet
of Britannia, BDM and their respective consolidated Subsidiaries and the ARM
Assets at the close of business on the Closing Date.
"Closing Date" shall mean the date on which the Closing
occurs.
"Combined Balance Sheet" shall mean the audited combined
balance sheet of Britannia, BDM and their consolidated Subsidiaries and the ARM
Assets (but excluding Britannia Storage Systems Limited, Stelstor Limited and
Kelvedon Installation, Maintenance and Manufacturing, Limited), at October 31,
1998 included in the Combined Financial Statements.
"Combined Balance Sheet Date" shall mean October 31, 1998.
"Combined Financial Statements" shall mean the consolidated
combined balance sheets of Britannia and BDM and their respective consolidated
Subsidiaries, and the ARM Assets being transferred to BDM pursuant to the Hive
Across Agreement, (but excluding BSS, Stelstor Limited and Kelvedon
Installation, Maintenance and Manufacturing, Limited), as at October 31 in each
of the fiscal periods ending on October 31, 1997 and 1998, together with the
consolidated combined statements of profit and loss, shareholders' equity and
cash flows for each of the periods then ended, all certified by Robson Rhodes,
independent certified public accountants, whose reports thereon are included
therein.
"Computer Software" shall mean computer software programs,
databases and all documentation related thereto.
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"Confidentiality Agreement" shall mean a letter agreement
dated September 17, 1998 between Mentmore and IM.
"Copyrights" shall mean registered and unregistered copyrights
(including, but not limited to, those in computer software and databases),
rights of publicity and all registrations and applications to register the same.
"EGM" shall mean the Extra-ordinary General Meeting of the
Mentmore shareholders to be held on January 4, 1999.
"Encumbrances" shall mean any and all liens, charges, security
interests, options, claims, mortgages, pledges, proxies, voting trusts or
agreements, obligations, understandings or arrangements or other restrictions of
any nature whatsoever.
"Environmental Claim" shall mean any claim, action,
investigation or notice by any Person alleging potential liability for
investigatory, cleanup or governmental response costs, or natural resources or
property damages, or personal injuries, attorney's fees or penalties relating to
(i) the presence, or release into the environment, of any Materials of
Environmental Concern at any location owned or operated by Britannia, Abbey (as
relates to the ARM Assets) or BDM or any of their respective Subsidiaries, now
or before closing, or (ii) any violation, or alleged violation, of any
Environmental Law.
"Environmental Law" shall mean each local and foreign law and
regulation relating to pollution, protection or preservation of human health or
the environment including, without limitation, ambient air, surface water,
ground water, land surface or subsurface strata, and natural resources, and
including, without limitation, each law and regulation relating to emissions,
discharges, releases or threatened releases of Materials of Environmental
Concern, or otherwise relating to the generation, storage, containment (whether
above ground or underground), disposal, transport or handling of Materials of
Environmental Concern, or the preservation of the environment or mitigation of
adverse effects thereon and each law and regulation with regard to record
keeping, notification, disclosure and reporting requirements respecting
Materials of Environmental Concern.
"GAAP" shall mean generally accepted accounting principles.
"Governmental Entity" shall mean a court, arbitral tribunal,
administrative agency or commission or other governmental or other regulatory
authority or agency.
"Hive Across Agreement" shall mean the agreement pursuant to
which (if executed by the parties) Mentmore will cause certain of the assets
(subject to certain liabilities) of Abbey to be transferred to BDM in exchange
for (pound)3,600,000.
"IM" shall mean Iron Mountain Incorporated, a Delaware
corporation.
"IM Disclosure Schedule" shall mean the disclosure schedule of
even date herewith prepared and signed by IM and delivered to Mentmore
simultaneously with the execution hereof.
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"IM Environmental Losses" shall have the meaning set forth in
Section 9.1(a)(iii).
"IM Indemnified Persons" shall mean IM and each of its
Affiliates.
"IM Tax Deed" shall mean the agreement, substantially in the
form of Exhibit E hereto, among IM (or one of its Affiliates), BDM and Arcus
referring to IM's Tax indemnifications.
"Inactive Subsidiary" shall mean each Subsidiary of Britannia
listed on Exhibit C.
"Indebtedness" of an entity shall mean (i) loans and bank
overdrafts and any other borrowings, (ii) liabilities arising on legally binding
contract transactions (other than current liabilities incurred in the ordinary
course of business and payable in accordance with customary practice) and, for
the avoidance of doubt, including property purchases and deferred acquisition
consideration determinable or calculable as of the Closing Date, (iii) any other
indebtedness, contingent or otherwise, existing at Closing that is evidenced by
a note, bond, debenture or similar instrument, (iv) all obligations under
capital leases (other than obligations in respect of future interest costs as
calculated under U.K. GAAP), (v) all liabilities secured by any lien on any Real
Property of the entity whose indebtedness is being determined, or any of its
Subsidiaries, (vi) all indebtedness owed to the shareholder of an entity whose
indebtedness is being determined, or to one of the Subsidiaries of such
shareholder, (vii) all guarantee obligations (other than current liabilities
incurred in the ordinary course of business and payable in accordance with
customary practice) in respect of liabilities existing at Closing (and for the
avoidance of doubt, this part (vii) shall exclude the contingent guarantees by
Britannia relating to the Heathrow lease, BSS's lease and BRI's guaranty of bank
debt), and (viii) accrued interest (greater than 30 days) as of the close of
business on the Closing Date with respect to obligations of the type referred to
in clauses (i) through (vii) of this definition.
"Intellectual Property" shall mean all of the following:
Trademarks, Patents, Copyrights, Trade Secrets and Licenses.
"Knowledge" concerning a particular subject, area or aspect of
the business or affairs of any entity shall mean the actual knowledge of, with
respect to Mentmore, those persons listed on Schedule I, and with respect to IM,
those persons listed on Schedule II.
"Lease" shall mean each lease pursuant to which a Person
leases any real or personal property (excluding leases relating solely to
personal property calling for rental or similar periodic payments not exceeding
(pound)20,000 per annum).
"Licenses" shall mean all licenses and agreements pursuant to
which Britannia, Abbey or BDM has acquired rights in or to any Trademarks,
Patents or Copyrights, or licenses and agreements pursuant to which Britannia,
Abbey (as it relates to the ARM Assets subject to the Hive Across Agreement) or
BDM has licensed or transferred the right to use any of the foregoing.
"Loss" shall have the meaning set forth in section 4.31(b).
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"Materials of Environmental Concern" shall mean pollutants,
contaminants, toxic or hazardous substances, materials and wastes, petroleum and
petroleum products, asbestos and asbestos-containing materials, polychlorinated
biphenyls, radon and lead and lead-based paints and materials.
"Mentmore" shall mean Mentmore Abbey plc, a company
incorporated under the laws of England and Wales.
"Mentmore Disclosure Letter" shall mean the disclosure
schedule of even date herewith prepared and signed by Mentmore and delivered to
IM simultaneously with the execution hereof.
"Mentmore Environmental Losses" shall have the meaning set
forth in Section 9.5(a)(ii).
"Mentmore Indemnified Persons" shall mean Mentmore and each of
its Affiliates.
"Mentmore Lease" shall have the meaning set forth in Section
4.24.
"Mentmore Plan" shall have the meaning set forth in Section
4.19.
"Mentmore Tax Deed" shall mean the agreement, substantially in
the form of Exhibit D hereto, among IM (or one of its Affiliates), Mentmore and
Britannia relating to Mentmore's Tax indemnifications.
"Net Indebtedness" of an entity shall mean Indebtedness less
(i) cash on hand and any cash or cash equivalents as determined in accordance
with U.K. GAAP, and (ii) any amounts owed by an entity's ultimate shareholder
and such ultimate shareholder's direct or indirect Subsidiaries.
"Owned Shares" shall mean the 12,290,505 Shares currently to
be sold to IM pursuant to this Agreement.
"Patents" shall mean issued U.S. and foreign patents and
pending patent applications, patent disclosures, and any and all divisions,
continuations, continuations-in-part, reissues, reexaminations, and extension
thereof, any counterparts claiming priority therefrom, utility models, patents
of importation/confirmation, certificates of invention and like statutory
rights.
"Person" shall mean a natural person, partnership,
corporation, limited liability company, business trust, joint stock company,
trust, unincorporated association, joint venture, Governmental Entity or other
entity or organization.
"Real Property" shall mean all real property that is owned or
used by Britannia, and BDM and their respective Subsidiaries or that is
reflected as an asset of Britannia, Abbey (as relates to the ARM Assets) or BDM
or any of their respective Subsidiaries on the Combined Balance Sheet.
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"Shares" shall mean ordinary shares of 10 pence per share,
issued by Britannia.
"Strategic Alliance Agreement" shall mean the Strategic
Alliance Agreement among Mentmore, Britannia, IM and one of IM's Affiliates
which (if executed by the parties) will provide ongoing relationships between IM
and Mentmore as the shareholders of BDM.
"Subscription Agreement" shall mean the agreement between IM
and Britannia pursuant to which (if executed by the parties) IM will subscribe
for and purchase 400,000 newly issued Shares of Britannia for (pound)4,000,000.
"Subsidiary" shall mean, with respect to any party, any
corporation or other organization, whether incorporated or unincorporated, of
which (a) at least a majority of the securities or other interests having by
their terms ordinary voting power to elect a majority of the Board of Directors
or others performing similar functions with respect to such corporation or other
organization is directly or indirectly owned or controlled by such party or by
any one or more of its Subsidiaries, or by such party and one or more of its
Subsidiaries or (b) such party or any other Subsidiary of such party is a
partner (excluding any such partnership where such party or any Subsidiary of
such party does not have a majority of the voting interest in such partnership).
"Tax" or "Taxes" shall mean all taxes, charges, fees, duties,
levies, penalties or other assessments imposed by any federal, state, local or
foreign governmental authority, including, but not limited to, income, gross
receipts, excise, property, sales, gain, use, license, custom duty,
unemployment, capital stock, transfer, franchise, payroll, withholding, social
security, minimum estimated, and other taxes, and shall include interest,
penalties or additions attributable thereto.
"Tax Return" shall mean any return, declaration, report, claim
for refund, or information return or statement relating to Taxes, including any
schedule or attachment thereto, and including any amendment thereof.
"Trademarks" shall mean U.K. and foreign registered and
unregistered trademarks, trade dress, service marks, logos, trade names,
corporate names and all registrations and applications to register the same.
"Trade Secrets" shall mean all categories of trade secrets as
defined in the Uniform Trade Secrets Act including, but not limited to, business
information.
"Transaction Agreements" shall have the meaning set forth in
Section 4.2.
"Transactions" shall mean the transactions provided for or
contemplated by this Agreement and the other Transaction Agreements.
"U.S. GAAP" shall mean United States generally accepted
accounting principles.
"Voting Debt" shall mean indebtedness having general voting
rights and debt convertible into securities having such rights.
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"Whitechapel Lease" shall mean the lease between BDM and
Mentmore with respect to the Whitechapel premises, a copy of which is attached
hereto as Exhibit E.
"Whitechapel Option Agreement" shall mean the option agreement
between Abbey and BDM, a copy of which is attached hereto as Exhibit F.
Section 10.2 Interpretation.
(a) When a reference is made in this Agreement to a
section or article, such reference shall be to a section or article of this
Agreement unless otherwise clearly indicated to the contrary.
(b) Whenever the words "include", "includes" or
"including" are used in this Agreement they shall be deemed to be followed by
the words "without limitation."
(c) In the computation of periods of time from a
specified to a later specified date, the word "from" means "from but excluding"
and the words "until" and "to" mean "to and including".
(d) The words "hereof", "herein" and "herewith" and
words of similar import shall, unless otherwise stated, be construed to refer to
this Agreement as a whole and not to any particular provision of this Agreement,
and article, section, paragraph, exhibit and schedule references are to the
articles, sections, paragraphs, exhibits and schedules of this Agreement unless
otherwise specified.
(e) Unless otherwise specified, the term "days" shall
mean calendar days.
(f) The meaning assigned to each term defined herein
shall be equally applicable to both the singular and the plural forms of such
term, and words denoting any gender shall include all genders. Where a word or
phrase is defined herein, each of its other grammatical forms shall have a
corresponding meaning.
(g) A reference to any party to this Agreement or any
other agreement or document shall include such party's successors and permitted
assigns and any reference to an agreement or document shall mean such document,
as the same may be supplemented amended or modified from time to time in
accordance with its terms.
(h) A reference to any legislation or to any
provision of any legislation shall include any modification or re-enactment
thereof, any legislative provision substituted therefor and all regulations and
statutory instruments issued thereunder or pursuant thereto.
(i) As used in this Agreement, any reference to any
event, change or effect being material or having a material adverse effect on or
with respect to any entity (or group of entities taken as a whole) means such
event, change or effect is materially adverse to (i) the consolidated financial
condition, businesses or results of operations of such entity as a whole (or,
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if used with respect thereto, of such group of entities taken as a whole) or
(ii) the ability of such entity (or group) to consummate the Transactions.
(j) The parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties, and no presumption or burden of proof
shall arise favoring or disfavoring any party by virtue of the authorship of any
provisions of this Agreement.
ARTICLE XI
MISCELLANEOUS
Section 11.1 Fees and Expenses.
(a) Except as specifically provided to the contrary
in this Agreement, all costs and expenses incurred in connection with the
preparation, execution and performance of this Agreement and the consummation of
the Transactions shall be paid by the party incurring such expenses.
(b) Notwithstanding anything to the contrary in this
Agreement, stock transfer taxes, stamp duties and similar taxes (but not capital
gains and similar taxes) imposed by any jurisdiction on the Transactions
contemplated by this Agreement shall be borne by the parties in equal amounts.
Section 11.2 Amendment and Modification. This Agreement may be
amended, modified and supplemented in any and all respects, but only by a
written instrument signed by all of the parties hereto expressly stating that
such instrument is intended to amend, modify or supplement this Agreement.
Section 11.3 Survival of Representations and Warranties. Each
of the representa tions and warranties in this Agreement or in any schedule,
instrument or other document delivered pursuant to this Agreement shall survive
the Closing Date and shall continue in force thereafter except as otherwise
limited by this Agreement.
Section 11.4 Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given if delivered personally,
telecopied (which is confirmed) or sent by an overnight courier service, such as
Federal Express, to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
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if to IM, to:
Iron Mountain Records Management, Inc.
745 Atlantic Avenue, 10th Floor
Boston, Massachusetts 02111-2735
Attention: Donald P. Richards, Vice President
Telephone: (617) 535-4858
Telecopy: (617) 357-4057
with a copy to:
Iron Mountain Records Management, Inc.
745 Atlantic Avenue, 10th Floor
Boston, Massachusetts 02111-2735
Attention: Garry B. Watzke, Esq.
Telephone: (617) 535-4702
Telecopy: (617) 350-7881
if to Mentmore to:
Mentmore Abbey plc
7 Abbey Business Centre
Ingate Place
London SW8 3NS
Attention: Clive D. Drysdale
Telephone: 44.171.720.5067
Telecopy: 44.171.498.8342
with a copy to:
Eversheds
10 Newhall Street
Birmingham B3 3LX
Attention: Milton N. Psyllides
Telephone: 44.121.233.2001
Telecopy: 44.121.236.1583
Section 11.5 Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall be considered one and the same
agreement and shall become effective when two or more counterparts have been
signed by each of the parties and delivered to the other parties.
Section 11.6 Entire Agreement; No Third Party Beneficiaries;
Deed of Adherence. (a) This Agreement and the Confidentiality Agreement
(including the documents and the instruments
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referred to herein and therein): (i) constitute the entire agreement and
supersede all prior agreements and understandings, both written and oral, among
the parties with respect to the subject matter hereof and thereof, and (ii) are
not intended to confer upon any Person other than the parties hereto and thereto
any rights or remedies hereunder. Each party agrees that it is entering into
this Agreement solely on the basis of the representations and warranties set
forth herein.
(b) Mentmore and IM agree to procure the execution of
a deed of adherence (in respect of Britannia's participation, solely with
respect to and for the benefit of Richard Makowski), as an associated employer
in the Mentmore Pension and Life Assurance Scheme, and Mentmore and IM will use
all reasonable endeavors to obtain Inland Revenue approval of Britannia's
participation in the Mentmore Pension and Life Assurance Scheme.
(c) Mentmore and IM will procure that Britannia will
comply with all the provisions applicable to it as an associated employer
(solely with respect to and for the benefit of Richard Makowski), in the
Mentmore Pension and Life Assurance Scheme including, without prejudice to the
generality of the foregoing, payment of employer and employee contributions, and
will take all such steps as may be necessary to secure approval of the Pension's
Superannuations Office or such arrangement.
Section 11.7 Severability. Any term or provision of this
Agreement that is held by a court of competent jurisdiction or other authority
to be invalid, void or unenforceable in any situation in any jurisdiction shall
not affect the validity or enforceability of the remaining terms and provisions
hereof or the validity or enforceability of the offending term or provision in
any other situation or in any other jurisdiction. If the final judgment of a
court of competent jurisdiction or other authority declares that any term or
provision hereof is invalid, void or unenforceable, the parties agree that the
court making such determination shall have the power to reduce the scope,
duration, area or applicability of the term or provision, to delete specific
words or phrases, or to replace any invalid, void or unenforceable term or
provision with a term or provision that is valid and enforceable and that comes
closest to expressing the intention of the invalid or unenforceable term or
provision.
Section 11.8 Governing Law. This Agreement shall be governed
by and construed in accordance with the laws of England and Wales without giving
effect to the principles of conflicts of law thereof.
Section 11.9 Dispute Resolution.
(a) Any dispute, controversy or claim arising out of
or in connection with this Agreement or the Transactions, or the breach,
termination or validity thereof, shall be finally settled by arbitration by
three arbitrators appointed in accordance with the Rules of Arbitration of the
International Chamber of Commerce ("ICC") then in effect, except as modified
herein. The arbitration shall be held in London, England. The arbitration
proceedings shall be conducted and the award shall be rendered in English.
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(b) The parties hereby waive any rights of
application or appeal to the courts of England and Wales to the fullest extent
permitted by law in connection with any question of law arising in the course of
the arbitration or with respect to any award made, except for actions to enforce
an arbitral award and actions seeking interim, interlocutory or other
provisional relief in any court of competent jurisdiction.
(c) The award shall be final and binding upon the
parties as from the date rendered, and shall be the sole and exclusive remedy
between the parties regarding any claims, counterclaims, issues, or accounting
presented to the arbitral tribunal. Judgment upon any award may be entered in
any court having jurisdiction.
(d) Each of the parties shall bear its own costs and
expenses and an equal share of the arbitrators' and administrative fees and
costs of the arbitration.
(e) Any monetary award shall be made and promptly
payable in United Kingdom Pounds free of any tax, deduction or offset, and the
arbitral tribunal shall be authorized in its discretion to grant pre-award and
post-award interest at commercial rates. Any costs, fees, or taxes incident to
enforcing the award shall, to the maximum extent permitted by law, be charged
against the party resisting such enforcement.
(f) This Agreement and the rights and obligations of
the parties shall remain in full force and effect pending the award in any
arbitration proceeding hereunder.
(g) All notices by one party to the other in
connection with the arbitration shall be in accordance with the provisions of
Section 11.4 hereof.
It is further expressly stated that the arbitrators appointed
as provided above shall have sole and final jurisdiction for all disputes which
may arise in connection with this Agreement and its Schedules.
Section 11.10 Post-Closing Cooperation. In case at any time
after the Closing Date any further action is necessary, proper or advisable to
carry out the purposes of this Agreement, as soon as reasonably practicable,
each party hereto shall take, or cause its proper officers or directors to take,
all such necessary, proper or advisable actions.
Section 11.11 Time of Essence. Each of the parties hereto
hereby agrees that, with regard to all dates and time periods set forth or
referred to in this Agreement, time is of the essence.
Section 11.12 Extension; Waiver. At any time prior to the
Closing Date, the parties may (a) extend the time for the performance of any of
the obligations or other acts of the other parties, (b) waive any inaccuracies
in the representations and warranties of the other parties contained in this
Agreement or in any document delivered pursuant to this Agreement or (c) waive
compliance by the other parties with any of the agreements or conditions
contained in this Agreement. Any agreement on the part of a party to any such
extension or waiver shall be valid only if set forth in an instrument in writing
signed on behalf of such party. The failure of any party to this
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Agreement to assert any of its rights under this Agreement or otherwise shall
not constitute a waiver of those rights.
Section 11.13 Assignment. Neither this Agreement nor any of
the rights, interests or obligations hereunder shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written content of the other party, except that either party may assign, in its
sole discretion, any or all of its rights, interests and obligations (other than
pursuant to Article IX hereof) to any direct or indirect wholly-owned Subsidiary
of such party; provided, however, if any portion of the equity capital of such
assignee is proposed to be transferred, prior to such transfer, the rights,
interests and obligations so assigned pursuant to this Section 11.13 must be
reassigned to the original assignor. Subject to the preceding sentence, this
Agreement shall be binding upon, inure to the benefit of and be enforceable by
the parties and their respective successors and assigns.
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IN WITNESS WHEREOF, IM and Mentmore have executed this
Agreement or caused this Agreement to be executed by their respective officers
thereunto duly authorized as of the date first written above.
MENTMORE ABBEY PLC
By /s/Nicholas Smith
Name: Nicholas Smith
Title: Chairman
IRON MOUNTAIN INCORPORATED
By /s/ Donald P. Richards
Name: Donald P. Richards
Title: Vice President
EXHIBIT 10.1
CONFORMED COPY
AMENDMENT NO. 2
AMENDMENT NO. 2 (this "Agreement") dated as of November 9,
1998 among IRON MOUNTAIN INCORPORATED, a Delaware corporation (the "Company");
each of the lenders (the "Lenders") listed on the signature pages hereof; and
THE CHASE MANHATTAN BANK, as administrative agent for the Lenders under the
Credit Agreement referred to below (in such capacity, the "Administrative
Agent").
The Company, the Lenders and the Administrative Agent are
parties to a Second Amended and Restated Credit Agreement dated as of September
26, 1997 (as from time to time amended, the "Credit Agreement"), providing,
subject to the terms and conditions thereof, for extensions of credit (by the
making of loans and the issuing of letters of credit) by the Lenders to the
Company in an aggregate principal or face amount not exceeding $250,000,000. The
Company has requested the Lenders to amend the Credit Agreement in certain
respects, and the Lenders are willing to so amend the Credit Agreement, all on
the terms and conditions set forth herein. Accordingly, the parties hereto
hereby agree as follows:
Section 1. Definitions. Except as otherwise defined in this
Agreement, terms defined in the Credit Agreement are used herein as defined
therein.
Section 2. Amendments. Subject to (i) the Administrative
Agent's receipt of counterparts of this Agreement, duly executed by each of the
Company, the Majority Lenders and the Administrative Agent, (ii) the consent and
agreement hereto by the Subsidiary Guarantors and (iii) payment by the Company
to the Administrative Agent of such fees as the Company shall have agreed to pay
in connection herewith, but effective as of the date hereof, the Credit
Agreement shall be amended as follows:
A. Definitions. Section 1.01 of the Credit Agreement is
amended by inserting the following definitions in their appropriate
alphabetical locations (or, in the case of any definition for a term
that is defined in the Credit Agreement before giving effect to this
Agreement, by amending and restating such definition to read as set
forth below):
"Arcus UK" shall mean Arcus Data Security Limited, an
English company that, prior to the formation of the Pond Joint
Venture, was wholly owned by Arcus Data Security, Inc., a
Delaware corporation and Wholly Owned Subsidiary of the
Company.
"Excluded Subsidiary" shall mean any Subsidiary of
the Company principally engaged in the records management
business organized outside of the United States of America.
"IMRM" shall mean Iron Mountain Records Management,
Inc., a Delaware corporation and a Wholly-Owned Subsidiary of
the Company.
AMENDMENT NO. 2
<PAGE>
- 2 -
"IMST" shall mean Iron Mountain Statutory Trust -
1998, a Connecticut statutory trust.
"Pond Joint Venture" shall mean Britannia Data
Management Limited, an English company, a majority of the
shares of Capital Stock of which (immediately after giving
effect to the Pond Transaction) will be owned by the Company
or a Subsidiary of the Company.
"Pond Transaction" shall mean (i) the contribution by
the Company or a Subsidiary of the Company to the Pond Joint
Venture of Capital Stock of Arcus UK having a fair market
value of up to but not exceeding (pound)2,000,000 and (ii) the
purchase by the Company or a Subsidiary of the Company of
Capital Stock of the Pond Joint Venture for an aggregate
consideration of up to but not exceeding (pound)37,250,000.
"Synthetic Lease Obligations shall mean the
obligations of IMRM under (i) the Lease Agreement between
IMRM, as lessee, and IMST, as lessor, in substantially the
form furnished by the Company to the Administrative Agent on
November 6, 1998, and (ii) the Assignment of Lease and Agency
Agreement among IMST, IMRM and the Bank of Nova Scotia, as
agent bank, in substantially the form furnished by the Company
to the Administrative Agent on November 6, 1998.
B. EBITDA. The definition of "EBITDA" in Section 1.01 of the
Credit Agreement is hereby amended by restating the second paragraph
therein as follows:
"For the purposes of calculating the ratios set forth
in Sections 9.09(a), 9.10 and 9.11 there may, at the Company's
option, and for purposes of calculating the ratio set forth in
Section 9.09(b) there will, be included in EBITDA for any
relevant period, on a pro forma basis (adjusted to give effect
to expenses that will not be ongoing), the net income (and the
additions and subtractions thereto referred to above) for such
period of any Person (or assets) acquired after the
commencement of such period in connection with any Permitted
Acquisition or any acquisition pursuant to Sections
9.14(viii)(b) and 9.14(viii)(c) hereof having Acquisition
Consideration, in the case of any such Permitted Acquisition,
or an aggregate amount of consideration paid, in the case of
such acquisition pursuant to Section 9.14(viii)(b) and
9.14(viii)(c) hereof, of more than $500,000. The net income
(and the related additions and subtractions) of the Person or
assets acquired pursuant to such acquisition for such period
shall be calculated by reference to the most recent available
quarterly financial statements of the acquired business,
annualized."
C. Permitted Indebtedness. The definition of "Permitted
Indebtedness" in Section 1.01 of the Credit Agreement is hereby amended
by restating clause (vii) therein as follows:
AMENDMENT NO. 2
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- 3 -
"(vii) Indebtedness of the Company in an aggregate
outstanding principal amount not at any time exceeding
$10,000,000;"
D. Financial Statements and Other Information. (x) Section
9.01 of the Credit Agreement is hereby amended by (i) substituting, in
the beginning lines thereof, "The Company shall deliver to each of the
Lenders (except as provided in paragraph (e) below):" for "The Company
shall deliver to each of the Lenders:" and (ii) restating paragraph (e)
thereof as follows:
"(e) promptly upon the filing thereof, copies of all
registration statements (other than any registration
statements on Form S-8 or its equivalent) and any reports
which the Company shall have filed with the Securities and
Exchange Commission, which shall be delivered to the
Administrative Agent and any Lenders upon such Lender's
request;"
(y) Section 9.01 of the Credit Agreement is hereby
further amended by substituting "105 days" for "90 days" in paragraph
(a) thereof and by substituting "60 days" for "45 days" in paragraph
(b) thereof.
E. Indebtedness. Section 9.08 of the Credit Agreement is
hereby amended by deleting the "and" before the beginning of clause
(iv) thereof, deleting the period at the end of clause (iv) thereof,
and adding the following thereto:
"; (v) so long as no Default shall have occurred and
be continuing hereunder at the time of such creation or
incurrence, Indebtedness created or incurred by the Pond Joint
Venture or any Excluded Subsidiary (subject to the limitations
set forth in Section 9.09 hereof, and provided that any
Indebtedness incurred under this clause (v) shall be without
recourse to and shall not be Guaranteed by the Company or any
Subsidiary (other than the Pond Joint Venture or any Excluded
Subsidiary) of the Company); and (vi) the Synthetic Lease
Obligations and the guarantee by the Company thereof
(provided, that the aggregate principal amount of the
Synthetic Lease Obligations shall not at any time exceed
$47,500,000 and that such obligations shall be without
recourse to any Subsidiary (other than IMRM) of the Company
and shall not be Guaranteed by any Subsidiary of the
Company)."
F. Leverage Ratios. Section 9.09 of the Credit Agreement is
hereby amended to read as follows:
"9.09 Leverage Ratios. (a) The Company will not, as
at the end of any fiscal quarter, permit the ratio, calculated
as at the end of such fiscal quarter for the period of four
fiscal quarters then ended, of (i) the excess of (x) the
aggregate outstanding principal amount of Funded Indebtedness
(on a consolidated basis) of the Company and its Subsidiaries
at such date over (y) the aggregate amount of cash and Liquid
Investments of the Company and Subsidiaries at such date to
(ii) EBITDA for such
AMENDMENT NO. 2
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period (the "Leverage Ratio") to exceed the ratio set forth
below:
Period Leverage Ratio
From the Amendment and Restatement Effective Date
through December 31, 1998 6.00 to 1
From January 1, 1999
through June 30, 1999 5.75 to 1
From July 1, 1999
through December 31, 1999 5.50 to 1
From January 1, 2000
through June 30, 2000 5.25 to 1
From July 1, 2000
through December 31, 2000 5.00 to 1
From January 1, 2001
through June 30, 2001 4.75 to 1
From July 1, 2001
and at all times thereafter 4.50 to 1
(b) The Company will not, as at the end of any fiscal
quarter, permit the ratio, calculated as at the end of such
fiscal quarter for the period of four fiscal quarters then
ended, of (i) the excess of (x) the aggregate outstanding
principal amount of Indebtedness (on a consolidated basis) of
the Pond Joint Venture and each Excluded Subsidiary at such
date over (y) the aggregate amount of cash and Liquid
Investments of the Pond Joint Venture and each Excluded
Subsidiary at such date to (ii) EBITDA for such period (the
"Foreign Leverage Ratio") to exceed 3.50 to 1. Solely for
purposes of this clause (b), in determining the Foreign
Leverage Ratio, EBITDA shall be determined by including only
the Pond Joint Venture and each Excluded Subsidiary."
G. Interest Coverage Ratio. Section 9.10 of the Credit
Agreement is hereby amended by restating the ratio grids therein to
read as follows:
"Period Interest Coverage
Ratio
From the Amendment and Restatement Effective
Date through December 31, 1998 1.70 to 1
AMENDMENT NO. 2
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- 5 -
From January 1, 1999
through December 31, 1999 1.85 to 1
From January 1, 2000
through December 31, 2000 2.00 to 1
From January 1, 2001
through September 30, 2001 2.25 to 1
From October 1, 2001
and at all times thereafter 2.50 to 1"
H. Mergers, Asset Dispositions, Etc. Clause (viii) of Section
9.12 of the Credit Agreement is hereby amended to read as follows:
"(viii) so long as no Default shall have occurred and
be continuing hereunder at the time of such Acquisition or
transaction, Permitted Acquisitions and related Additional
Expenditures and any other transaction expressly permitted by
Section 9.14 hereof; provided that any such Permitted
Acquisition is an acquisition of another business operating
principally in the United States of America."
I. Liens. (1) Clause (iii) of Section 9.13 of the Credit
Agreement is hereby amended to read as follows:
"(iii) Liens contemplated by, or securing
Indebtedness described in, clauses (ii), (iv), (v) and (vii)
of the definition of Permitted Indebtedness."
(2) Section 9.13 of the Credit Agreement is hereby
further amended by deleting the "and" before the beginning of clause
(vi) thereof, deleting the period at the end of clause (vi) thereof,
and adding the following thereto:
"; (vii) Liens securing Indebtedness permitted by
clause (v) of Section 9.08 hereof, provided that such Liens
extend only to the assets of the Pond Joint Venture or any
Excluded Subsidiary incurring such Indebtedness as a primary
obligor (and not as a Guarantor) or Capital Stock of the Pond
Joint Venture or such Excluded Subsidiary; and (viii) Liens on
property leased by IMRM pursuant to the Synthetic Lease
Obligations permitted by clause (vi) of Section 9.08 hereof."
J. Investments. Section 9.14(v) of the Credit Agreement is
hereby amended to read as follows:
AMENDMENT NO. 2
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"(v) (w) equity Investments in Wholly-Owned
Subsidiaries of the Company; (x) additional equity Investments
in Subsidiaries of the Company (other than Wholly-Owned
Subsidiaries) with the prior written consent of the Majority
Lenders; (y) additional equity Investments in any Person
principally engaged in the same line or lines of business as
the Company and its Subsidiaries, provided that the aggregate
amount invested pursuant to this clause (y) shall not exceed
(i) $85,000,000 minus (ii) the aggregate consideration paid or
contributed by the Company or any Subsidiary of the Company
pursuant to the Pond Transaction (converted into Dollars at
the applicable spot rate of exchange, as determined by the
Company, on the date of the consummation of the Pond
Transaction); and (z) Investments in the form of loans,
advances or other obligations owed by any Wholly-Owned
Subsidiary to the Company, and Investments in the form of
loans, advances or other obligations owed by the Company to
any Wholly-Owned Subsidiary; provided that the aggregate
amount of Investments by the Company permitted by subclauses
(w) or (z) of this clause (v) in any Subsidiary of the Company
that is a mortgagor under any Permitted Mortgage shall not
exceed, in the aggregate for all such Subsidiaries,
$10,000,000 at any one time outstanding;"
K. Investments. Clause (viii) of Section 9.14 of the Credit
Agreement is hereby amended to read as follows:
"(viii) Investments consisting of (a) Permitted
Acquisitions in accordance with Section 9.12 hereof; (b) the
Pond Transaction; and (c) any acquisition (by purchase of
shares, merger or otherwise) by the Pond Joint Venture or any
Excluded Subsidiary of (x) a majority of the shares of Capital
Stock of any Person principally engaged in the same line or
lines of business as the Company and its Subsidiaries or (y)
assets principally related to the records management
business."
L. Capital Expenditures. Section 9.19 of the Credit Agreement
is hereby amended by substituting "$50,000,000" for "$40,000,000" in
the first sentence thereof.
M. Certain Obligations Respecting Subsidiaries. Section
9.22(a) of the Credit Agreement is hereby amended to read as follows:
"(a) The Company will, and will cause each of its
Subsidiaries to, take such action from time to time as shall
be necessary to ensure that the Company and each of its
Subsidiaries at all times owns (subject only to the Lien of
the Security Documents) (i) all of the issued and outstanding
shares of each class of Capital Stock of each of such Person's
Subsidiaries (other than, in each case, Capital Stock of
Excluded Subsidiaries) and (ii) more than 50% of the issued
and outstanding shares of Capital Stock of each Person
acquired pursuant to clauses (b) and (c) of Section 9.14(viii)
hereof. Without limiting the generality of the foregoing, the
Company shall not, and shall not permit any of its
Subsidiaries to, sell, transfer or otherwise
AMENDMENT NO. 2
<PAGE>
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dispose of any shares of stock in any Subsidiary (other than
an Excluded Subsidiary) owned by them, nor permit any
Subsidiary of the Company (other than an Excluded Subsidiary)
to issue any shares of Capital Stock of any class whatsoever
to any Person (other than to the Company or to another
Wholly-Owned Subsidiary or pursuant to Section 9.12 hereof).
In the event that any such additional shares of Capital Stock
shall be issued by any Subsidiary of the Company, or any
Subsidiary shall be acquired, the Company agrees (so long as
the certificates evidencing such shares of stock are not
subject to a lien permitted under Section 9.13(vii) hereof,
and in any event subject to clause (c) below) forthwith to
deliver to the Administrative Agent pursuant to the Security
Documents the certificates evidencing such shares of stock,
accompanied by undated stock powers executed in blank and
shall take such other action as the Administrative Agent shall
request to perfect the security interest created therein
pursuant to the Security Documents."
N. Events of Default. Section 10.01(h) of the Credit Agreement
is hereby amended to read as follows:
"(h) a final judgment or judgments for the payment of
money shall be rendered by a court or courts against the
Company or any of its Subsidiaries in excess of $1,000,000 in
the aggregate, and the same shall not be discharged (or
provision shall not be made for such discharge), or a stay of
execution thereof shall not be procured, within 30 days from
the date of entry thereof, or the Company or such Subsidiary
shall not, within said period of 30 days, or such longer
period during which execution of the same shall have been
stayed, appeal therefrom and cause the execution thereof to be
stayed during such appeal; or"
Section 3. Representations and Warranties. The Company hereby
represents and warrants to the Administrative Agent and the Lenders that:
(a) the representations and warranties made by each of the
Company and the Subsidiary Guarantors in each Basic Document to which
it is a party (other than the representations and warranties set forth
in paragraphs (a) and (b) of Section 8.10 of the Credit Agreement) are
correct on and as of the date hereof, as though made on and as of such
date (or, if any such representation or warranty is expressly stated to
have been made as of a specific date, as of such specific date); and
(b) no event has occurred and is continuing that constitutes a
Default or an Event of Default (and the parties agree that breach of
any of said representations and warranties shall constitute an Event of
Default under Section 10.01(c) of the Credit Agreement).
Section 4. Miscellaneous. Except as herein provided, the
Credit Agreement and each of the other Basic Documents shall remain unchanged
and in full force and effect. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument and any of the parties hereto may execute this Agreement by signing
any such
AMENDMENT NO. 2
<PAGE>
- 8 -
counterpart. This Agreement shall be governed by, and construed in accordance
with, the law of the State of New York.
AMENDMENT NO. 2
<PAGE>
- 9 -
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto duly authorized,
as of the date first above written.
THE COMPANY
IRON MOUNTAIN INCORPORATED
By /s/ J.P. Lawrence
Name: J.P. Lawrence
Title: Vice President, Treasurer
THE ADMINISTRATIVE AGENT
THE CHASE MANHATTAN BANK
By /s/ Carol A. Ulmer
Name: Carol A. Ulmer
Title: Vice President
THE LENDERS
THE CHASE MANHATTAN BANK
By /s/ Carol A. Ulmer
Name: Carol A. Ulmer
Title: Vice President
BANKBOSTON, N.A.
By /s/ Virginia Dennett
Name: Virginia Dennett
Title: Director
AMENDMENT NO. 2
<PAGE>
- 10 -
THE BANK OF NEW YORK
By /s/ David C. Judge
Name: David C. Judge
Title: Senior Vice President
CIBC INC.
By /s/ Christine Harrigan
Name: Christine Harrigan
Title: Executive Director
FLEET NATIONAL BANK
By /s/ Michael A. Palmer
Name: Michael A. Palmer
Title: Vice President
CREDIT LYONNAIS NEW YORK BRANCH
By /s/ Vladimir Labun
Name: Vladimir Labun
Title: First Vice President - Manager
US TRUST
By /s/ D. G. Eastman
Name: D. G. Eastman
Title: Vice President
AMENDMENT NO. 2
<PAGE>
- 11 -
UNION BANK OF CALIFORNIA, N.A.
By /s/ Nancy A. Perkins
Name: Nancy A. Perkins
Title: Vice President
THE BANK OF NOVA SCOTIA
By /s/ T. M. Pitcher
Name: T. M. Pitcher
Title: Authorized Signatory
HELLER FINANCIAL, INC.
By /s/ Linda W. Wolf
Name: Linda W. Wolf
Title: Senior Vice President
NATIONAL CITY BANK
By /s/ Lisa Lisi
Name: Lisa Lisi
Title: Vice President
ERSTE BANK DER OESTERREICHISCHEN
SPARKASSEN AG (f/k/a GIROCREDIT BANK
AG DER SPARKASSEN, GRAND CAYMAN
ISLAND BRANCH)
By /s/ Arcinee Hovanessian
Name: Arcinee Hovessian
Title: Vice President
By /s/ John S. Runnion
Name: John S. Runnion
Title: First Vice President
AMENDMENT NO. 2
<PAGE>
- 12 -
CONSENTED TO AND AGREED:
IRON MOUNTAIN RECORDS MANAGEMENT, INC.
DATA SECURITIES INTERNATIONAL, INC.
IRON MOUNTAIN/SAFESITE, INC.
IRON MOUNTAIN RECORDS MANAGEMENT, INC.
IM SAN DIEGO, INC.
IRON MOUNTAIN CONSULTING SERVICES, INC.
IRON MOUNTAIN RECORDS MANAGEMENT OF SAN ANTONIO-FP, INC.
IRON MOUNTAIN RECORDS MANAGEMENT OF SAN ANTONIO, INC.
CRITERION ATLANTIC PROPERTY, INC.
HOLLYWOOD PROPERTY, INC.
IM EARHART, INC.
IM BILLERICA, INC.
IRON MOUNTAIN RECORDS MANAGEMENT OF MICHIGAN, INC.
IRON MOUNTAIN SAFE DEPOSIT CORPORATION
NATIONAL UNDERGROUND STORAGE, INC.
IRON MOUNTAIN RECORDS MANAGEMENT OF MARYLAND, INC.
IRON MOUNTAIN RECORDS MANAGEMENT OF MISSOURI, LLC
ARCUS DATA SECURITY, INC.
TOWLER DATA SERVICES, INC.
HIMSCORP OF PHILADELPHIA, INC.
RECORDKEEPERS, INC.
HIMSCORP OF PITTSBURGH, INC.
HIMSCORP OF CLEVELAND, INC.
HIMSCORP OF NEW ORLEANS, INC.
HIMSCORP OF PORTLAND, INC.
HIMSCORP OF SAN DIEGO, INC.
HIMSCORP OF DETROIT, INC.
HIMSCORP OF LOS ANGELES, INC.
HIMSCORP OF HOUSTON, INC.
COPYRIGHT, INC.
IM-AEI ACQUISITION CORPORATION
IRON MOUNTAIN RECORDS MANAGEMENT OF UTAH, INC.
ARCUS STAFFING RESOURCES, INC.
By /s/ J.P. Lawrence
Title: Vice President, Treasurer
AMENDMENT NO. 2
EXHIBIT 10.2
- -------------------------------------------------------------------------------
STRATEGIC ALLIANCE AGREEMENT
between
Iron Mountain Incorporated,
Iron Mountain UK Limited,
Britannia Data Management Limited
and
Mentmore Abbey plc
dated as of January 4, 1999
- -------------------------------------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
<S> <C> <C>
ARTICLE I
DEFINITIONS AND INTERPRETATION........................................................2
1.1 Defined Terms................................................................2
1.2 Interpretation...............................................................9
ARTICLE II
SCOPE OF ACTIVITIES..................................................................10
2.1 Articles....................................................................10
2.2 Capital Contributions and Loans.............................................10
2.3 Scope of Activities.........................................................10
2.4 Exclusivity.................................................................11
2.5 Service Agreements; Other Agreements........................................13
ARTICLE III
DIVIDENDS............................................................................14
3.1 Declaration of Dividends....................................................14
ARTICLE IV
CAPITALIZATION; FINANCING............................................................14
4.1 Debt Financing..............................................................14
4.2 Equity Financing............................................................14
4.3 Budget......................................................................14
4.4 Pledge of Shares............................................................15
ARTICLE V
CORPORATE GOVERNANCE.................................................................15
5.1 Composition of the Board....................................................15
5.2 Appointment and Removal of Members of the
Britannia Board.........................................................16
5.3 Frequency and Place of Board Meetings.......................................16
5.4 Voting and Delegation of Voting Authority...................................16
5.5 Special Meetings............................................................16
5.6 Notice of Board Meetings....................................................16
5.7 Quorum; Telephonic Meetings.................................................17
5.8 Unanimous Written Consent...................................................17
5.9 Remuneration................................................................17
5.10 Decisions and Actions at Meetings of the
Britannia Board.........................................................17
5.11 Unanimous Approval.........................................................19
-i-
<PAGE>
5.12 Auditors...................................................................20
5.13 Fair Value Determination...................................................20
5.14 Management Reporting.......................................................20
5.15 Financial Statements.......................................................20
ARTICLE VI
DEFAULT IN PAYMENT...................................................................21
6.1 Payment Default.............................................................21
6.2 Cure of Payment Default.....................................................21
ARTICLE VII
SHAREHOLDER VOTES; SHARE TRANSFERS...................................................21
7.1 Shareholder Votes...........................................................21
7.2 Shareholder Approval........................................................21
7.3 Breach or Violation.........................................................22
7.4 Bankruptcy..................................................................23
7.5 Change of Control...........................................................24
7.6 Share Acquisition in the Event of Breach, Bankruptcy
or Change of Control....................................................24
7.7 Transfer Mechanics..........................................................26
7.8 Deadlock....................................................................28
7.9 Other Transfers.............................................................30
7.10 Other Transfer Conditions..................................................30
ARTICLE VIII
REPRESENTATIONS AND WARRANTIES.......................................................31
8.1 Representations and Warranties of Each Party................................31
8.2 Survival....................................................................31
ARTICLE IX
GOVERNING LAW; DISPUTE RESOLUTION....................................................32
9.1 Governing Law...............................................................32
9.2 Conciliation................................................................32
9.3 Arbitration.................................................................32
9.4 Survival....................................................................34
ARTICLE X
TERMINATION..........................................................................34
10.1 Termination Upon Unanimous Agreement.......................................34
10.2 Termination Upon Failure of Certain Conditions.............................34
10.3 Consequences of Termination................................................34
-ii-
<PAGE>
ARTICLE XI
CONFIDENTIALITY......................................................................34
11.1 Confidentiality Obligation.................................................34
11.2 Definition of Confidential Information.....................................35
11.3 Disclosure Required by Law or Court Order..................................35
11.4 Use of Confidential Information............................................35
ARTICLE XII
ADDITIONAL REPRESENTATION AND OBLIGATIONS............................................36
12.1 Representation of the Parent...............................................36
12.2 Covenant of the Parent.....................................................36
12.3 Indemnification............................................................36
12.4 Shareholder Covenant.......................................................36
ARTICLE XIII
MISCELLANEOUS........................................................................36
13.1 Fees and Expenses..........................................................36
13.2 Amendment and Modification.................................................36
13.3 Survival of Representations and Warranties.................................37
13.4 Notices....................................................................37
13.5 Counterparts...............................................................38
13.6 Entire Agreement; No Third Party Beneficiaries.............................38
13.7 Severability...............................................................38
13.8 Time of Essence............................................................39
13.9 Extension; Waiver..........................................................39
13.10 Assignment................................................................39
13.11 Headings..................................................................39
13.12 Section References........................................................39
13.13 Relationship Between the Parties..........................................39
13.14 Voting....................................................................40
13.15 News Releases.............................................................40
13.16 Precedence of Agreement...................................................40
[Exhibits Omitted]
EXHIBIT A
AMENDED AND RESTATED ARTICLES OF ASSOCIATION OF
BRITANNIA.......................................................................Ex. A-1
EXHIBIT B
IT LICENSE AGREEMENT ...........................................................Ex. B-1
EXHIBIT C
EXISTING ARM LEASE ARRANGEMENT..............................................Ex. C-1
-iii-
<PAGE>
EXHIBIT D
CONSORTIUM TAX SHARING AGREEMENT................................................Ex. D-1
EXHIBIT E
MENTMORE EXCLUSIVE SELF-STORAGE REGION.........................................Ex. E-1
EXHIBIT F
IM EXCLUSIVE RECORDS MANAGEMENT REGION..........................................Ex. F-1
EXHIBIT G
BRITANNIA RECORDS MANAGEMENT /
RIGHT OF FIRST REFUSAL REGION.......................................................G-1
EXHIBIT H
AGREED ACCOUNTING POLICIES..........................................................H-1
EXHIBIT I
DEED OF ADHERENCE...............................................................Ex. I-1
EXHIBIT J
SHARE OPTION PLANS..............................................................Ex. J-1
</TABLE>
-iv-
<PAGE>
STRATEGIC ALLIANCE AGREEMENT
THIS STRATEGIC ALLIANCE AGREEMENT (the "Strategic Alliance
Agreement") is made as of this 4th day of January, 1999, by and between Iron
Mountain (U.K.) Ltd ("IM"), a company registered in England and Wales, having
its registered office at c/o 10 Garretts, 180 Strand, London, WC2R 2NN; Iron
Mountain Incorporated, a corporation organized under the laws of the State of
Delaware, having its principal executive office at 745 Atlantic Avenue, 10th
Floor, Boston, Massachusetts 02111-2735 (the "Parent"); Britannia Data
Management Limited, a company registered in England and Wales, whose registered
office is at 7 Abbey Business Centre, Ingate Place, London SW8 3NS
("Britannia"); and Mentmore Abbey plc ("Mentmore"), a company registered in
England and Wales, whose registered office is at 7 Abbey Business Centre, Ingate
Place, London SW8 3NS. Each of IM and Mentmore is sometimes referred to herein
as a "Shareholder," and collectively as the "Shareholders." Each of the
Shareholders, the Parent and Britannia is sometimes referred to individually as
a "Party" and collectively as the "Parties."
WHEREAS, the Parent and Mentmore have entered into a
Transaction Agreement dated December 2, 1998 (the "Transaction Agreement"), and
Britannia and IM have entered into a Subscription Agreement dated December 1,
1998 pursuant to which agreements IM has acquired fifty point one percent
(50.1%) of the issued share capital of Britannia in a series of transactions
more particularly described in such Transaction Agreement; and
WHEREAS, pursuant to the Transaction Agreement, Arcus Data
Security Limited ("Arcus"), previously a Wholly Owned Subsidiary (as defined
herein) of the Parent registered in England and Wales, has been reorganized as a
Wholly Owned Subsidiary of Britannia, and, pursuant to an agreement relating to
the sale of the records management of Abbey Storage Limited ("Abbey") made
between Abbey and Britannia dated December 1, 1998, the records management
business and assets of Abbey (operating as a division of Abbey under the name
Abbey Records Management ("ARM")), have been transferred to British Data
Management Limited ("BDM"), a Wholly Owned Subsidiary of Britannia registered in
England and Wales; and
WHEREAS, the Shareholders intend for Britannia to develop and
expand the Records Management Business (as defined herein) throughout the United
Kingdom; and
<PAGE>
WHEREAS, the Parties have decided to enter into this strategic
alliance (the "Strategic Alliance") for the development and expansion of the
Records Management Business in the United Kingdom; and
WHEREAS, the Shareholders (or their Affiliates) will enter
into various support, service, Intellectual Property and other agreements with
Britannia as part of their Strategic Alliance;
NOW, THEREFORE, in consideration of the mutual promises made
herein, the Parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND INTERPRETATION
1.1 Defined Terms. Capitalized terms used in this Agreement
shall have the meanings specified in this Article I or as defined elsewhere in
this Agree ment (such meanings to be equally applicable to the singular and
plural forms thereof).
"Abandonment" shall have the meaning specified in Section
2.4(b).
"Affiliate" shall mean a person who, with respect to a
specified person, directly or indirectly through one or more intermediaries
controls, or is controlled by, or is under common control with, the person
specified.
"Agreed Accounting Policies" shall mean the accounting
policies in effect as of October 31, 1998, including but not limited to those
set forth on Exhibit H hereto.
"Agreement" shall mean this Strategic Alliance Agreement,
together with all Exhibits hereto (including without limitation the Articles),
as amended or supplemented from time to time.
"Articles" shall have the meaning specified in Section 2.1(a).
"Auction Notice" shall have the meaning specified in Section
7.8(c).
"Bankrupt Shareholder" shall have the meaning specified in
Section 7.4(a).
"Bankruptcy Buy-Out Notice" shall have the meaning specified
in Section 7.4.(a).
"Beneficial Owner" shall mean, with respect to any shares or
other securities, any Person (a) who directly or indirectly, through any
contract, arrangement,
2
<PAGE>
understanding, relationship, or otherwise has or shares (i) voting power which
includes the power to vote, or to direct the voting of, such security or (ii)
investment power which includes the power to dispose, or to direct the
disposition of, such security; (b) who directly or indirectly creates or uses a
trust, proxy, power of attorney, pooling arrangement or any other contract,
arrangement, or device with the purpose or effect of divesting such person of
beneficial ownership of a security or preventing the vesting of such beneficial
ownership as part of a plan or scheme to evade any applicable legal reporting
requirements with respect to such security; or (c) who has the right to acquire
beneficial ownership (as defined in (a) above) within sixty (60) days, including
but not limited to any right to acquire such security (i) through the exercise
of any option, warrant or right; (ii) through the conversion of a security;
(iii) pursuant to the power to revoke a trust, discretionary account, or similar
arrangement; or (iv) pursuant to the automatic termination of a trust, discre
tionary account or similar arrangement.
"Bid Appraiser" shall have the meaning specified in Section
7.8(c).
"Breach" shall have the meaning specified in Section 7.3(a)
hereof.
"Breach Buy-Out Notice" shall have the meaning specified in
Section 7.3(a).
"Breach Notice" shall have the meaning specified in Section
7.3(a).
"Breaching Shareholder" shall have the meaning specified in
Section 7.3(a).
"Britannia Board" shall mean the board of directors of
Britannia from time to time.
"Budget" shall mean the initial capital and operating budget
of Britannia as agreed among the Shareholders and Britannia's annual capital and
operating budget as approved by the Britannia Board from time to time.
"Business Day" shall mean a day of the year on which banks are
not required or authorized to close in New York, New York or London, England.
"Business Plan" shall mean the initial business plan of
Britannia as agreed among the Shareholders and Britannia's annual business plan
as approved by the Britannia Board from time to time.
"Buy-Out Appraiser" shall have the meaning specified in
Section 7.6(a).
3
<PAGE>
"Buy-Out Notice" shall mean a Breach Buy-Out Notice, a
Bankruptcy Buy-Out Notice, a Change of Control Buy-Out Notice or a Buy-Out
Notice provided pursuant to Section 7.6(a).
"Buy-Out Price" shall have the meaning specified in Section
7.6(a).
"Chairman" shall have the meaning specified in Section 5.5.
"Change of Control" shall mean in respect of the Parent or
Mentmore, the occurrence of any of the following events: (a) the Parent or
Mentmore, as the case may be, merges with or into, another entity or conveys,
transfers, leases or otherwise disposes of all or substantially all of its
assets to any Person, other than any such transaction in which, immediately
after such transaction, the holders of common stock of the Parent or the
ordinary share capital of Mentmore, as the case may be, are entitled to
exercise, directly or indirectly, at least a majority of the voting rights
attaching to the capital stock of the surviving or transferee Person; (b) any
Person taken together with any Person or Persons acting in concert, (as such
term is defined in the City Code on Take-Overs and Mergers (the "Code")), with
such Person acquiring 50% or more of the issued ordinary share capital of
Mentmore or 50% or more of the issued and outstanding common stock of the Parent
following an offer by such Person or Persons to acquire the whole or part of the
issued ordinary share capital of Mentmore or the Parent, (c) during any
consecutive two-year period, individuals who at the beginning of such period
constituted the board of directors (together with any new directors whose
election to such board of directors, or whose nomination for election by the
stockholders of the Parent or the shareholders of Mentmore, as the case may be,
was approved by a vote of sixty-six and two thirds percent (66 2/3%) of the
directors then still in office who were either directors at the beginning of
such period or whose election or nomination for election was previ ously
approved), cease for any reason to constitute a majority of the board of
directors then in office; or (d) any Wholly Owned Subsidiary of the Parent or
Mentmore, as the case may be, that holds Shares on the date hereof or as a
result of a transfer consistent with Section 7.10(b) ceases to be a Wholly Owned
Subsidiary of the Parent or Mentmore, as the case may be.
"Change of Control Buy-Out Notice" shall have the meaning
speci fied in Section 7.5.
"Change of Control Shareholder" shall have the meaning
specified in Section 7.5.
"Conciliation Committee" shall have the meaning specified in
Section 9.2(a).
4
<PAGE>
"Confidential Information" shall have the meaning specified in
Section 11.2.
"Deadlock" shall mean a failure of the Shareholders to agree
upon a course of action in relation to any matter that requires the unanimous
decision of the Britannia Board and/or the Shareholders (other than any matter
relating to the date or place of meetings of the Britannia Board or any decision
relating to a change in or expansion of Britannia's existing lines of business
pursuant to Section 5.10(h)), after such matter has been considered by the
Conciliation Committee in accordance with the procedure set forth in Section
9.2(a).
"Default Notice" shall have the meaning specified in Section
6.1.
"Default Rate" shall mean the lesser of (a) LIBOR plus five
percent (5%) and (b) the highest rate of interest permitted by applicable law.
"Defaulting Shareholder" shall have the meaning specified in
Section 6.1.
"Dispute" shall have the meaning specified in Section 9.2(a).
"Dual Board Member" shall have the meaning set forth in
Section 5.1.
"Equity Cap" shall have the meaning set forth in Section 4.2.
"Equity Valuation" shall have the meaning set forth in Section
7.8(c) hereof.
"Extraordinary Dividends" shall mean any dividends in excess
of Ordinary Dividends.
"Initial Designation Period" shall have the meaning specified
in Section 7.6(a).
"Initial Offer" shall have the meaning specified in Section
7.9(a) hereof.
"Initial Offer Period" shall have the meaning specified in
Section 7.9(a).
"Intellectual Property" shall have the meaning specified in
Section 9.1 of the Transaction Agreement.
5
<PAGE>
"Law" shall mean any law, rule, regulation, decree,
interpretation, enforcement policy or policy statement (whether or not published
or having the force of law), including the rules of the Stock Exchange, the
Takeover Code or any US Exchange or quotation system.
"Majority Approval" shall have the meaning specified in
Section 5.11.
"Material" or "Materially" shall mean that a fact, event,
action, obligation or provision of this Agreement is of sufficient importance
that a reason able person would take it into account in judging his economic or
legal interest.
"Nonbankrupt Shareholder" shall have the meaning specified in
Section 7.4(a).
"Nonbreaching Shareholder" shall have the meaning specified in
Section 7.3(a).
"Non-Change of Control Shareholder" shall have the meaning
specified in Section 7.5.
"Nondefaulting Shareholder" shall mean any Shareholder that is
not a Defaulting Shareholder.
"Non-Transferring Shareholder" shall have the meaning
specified in Section 7.9(a).
"Nonwithdrawing Shareholder" shall mean any Shareholder that
is not a Withdrawing Shareholder.
"Option Exercise Notice" shall have the meaning specified in
Section 7.6(a).
"Ordinary Dividends" shall mean any dividends not in excess of
Britannia's profit after tax for the most recently completed financial year less
the amounts of anticipated capital expenditures and amounts required for working
capital purposes, in each case as specified in the Budget for the financial year
in which such dividends are declared.
"Party" shall have the meaning specified in the Preamble.
6
<PAGE>
"Person" shall mean an individual, corporation, partnership,
joint venture, trust, unincorporated organization or any other juridical or
non-juridical entity, or a sovereign state or any agency or political
subdivision thereof.
"Purchasing Shareholder" shall have the meaning specified in
Section 7.8(c).
"Records Management Business" shall mean (i) the provision of
records management and related services including storage for all major media
(including paper, computer disks and tapes, microfilm and microfiche, master
audio and video tapes, film and optical disks, X-rays and blueprints),
records-related services (including courier pick-up and delivery, filing,
retrieval, copying and destruction), related database management, customized
reporting and disaster recovery support and (ii) any other business engaged in
by Britannia from time to time that has an annual turnover of no less than two
and one half million pounds ((pound)2,500,000) or represents at least five
percent (5%) of Britannia's aggregate turn over, whichever is lower.
"Rejection Notice" shall have the meaning specified in Section
7.6(b).
"Related Transaction" shall have the meaning specified in
Section 2.4(b) hereof.
"Related Transaction Market" shall mean the area within a
radius of 20 miles around any particular location or locations in which a
Related Transaction is to be effected (excluding any area within such radius
resulting from the crossing of any national boundaries), or such other area as
the Britannia Board shall define with Unanimous Approval at a Related
Transaction Meeting.
"Related Transaction Meeting" shall have the meaning specified
in Section 2.4(b).
"Right of First Refusal" shall have the meaning specified in
Section 2.4(b).
"Self-Storage Business" shall mean the provision of storage or
space for such purposes as customers may require, which (for the avoidance of
doubt) may include storage of customers' records together with the provision of
limited assis tance in servicing such records, provided that the primary purpose
of such business shall be the provision of self-service storage space and that
such business shall not be marketed as serviced records management.
"Shareholder" shall have the meaning specified in the
Preamble.
7
<PAGE>
"Shares" shall mean the issued ordinary shares of 10p each in
the capital of Britannia.
"Special Meeting"shall have the meaning specified in Section
5.5.
"Stock Exchange" shall mean the London Stock Exchange Limited.
"Subsequent Offer" shall have the meaning specified in Section
7.9(a).
"Subsidiary" means, in respect of any Person, any corporation,
association, partnership or other business entity of which more than 50% of the
total voting power of shares of common stock or other interests (including
partnership interests) entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof
or otherwise to exercise effective control is at the time owned or controlled,
directly or indirectly, by (i) such Person, (ii) such Person and one or more
Subsidiaries of such Person or (iii) one or more Subsidiaries of such Person.
"Third Party Offer Period" shall have the meaning specified in
Section 7.9(a).
"Transfer" shall mean any sale, exchange, gift and any other
disposi tion of any kind, whether voluntary or involuntary, affecting title to,
interest in or possession of any of the Shares.
"Transferring Shareholder" shall have the meaning specified in
Section 7.9(a) hereof.
"Unanimous Approval" shall have the meaning specified in
Section 5.11.
"US GAAP" shall mean United States generally accepted
accounting principles.
"Withdrawing Shareholder" shall mean a Breaching Shareholder
that has received a Breach Buy-Out Notice, a Bankrupt Shareholder that has
received a Bankruptcy Buy-Out Notice or a Change of Control Shareholder that has
received a Change of Control Buy-Out Notice.
"Wholly Owned Subsidiary" with respect to any Person means a
Subsidiary of such Person all of the common stock or ordinary shares (as
appropri ate) of which is owned by such Person or another Wholly Owned
Subsidiary.
8
<PAGE>
1.2 Interpretation.
(a) Whenever the words "include," "includes" or "including"
are used in this Agreement they shall be deemed to be followed by the words
"without limitation."
(b) In the computation of periods of time from a specified to
a later specified date, the word "from" means "from but excluding" and the words
"until" and "to" mean "to and including."
(c) The words "hereof," "herein" and "herewith" and words of
similar import shall, unless otherwise stated, be construed to refer to this
Agreement as a whole and not to any particular provision of this Agreement, and
Article, Section, paragraph, Exhibit and schedule references are to the
Articles, Sections, paragraphs, Exhibits and schedules of this Agreement unless
otherwise clearly indicated to the contrary.
(d) Unless otherwise specified, the term "days" shall mean
calendar days.
(e) The meaning assigned to each term defined herein shall be
equally applicable to both the singular and the plural forms of such term, and
words denoting any gender shall include all genders. Where a word or phrase is
defined herein, each of its other grammatical forms shall have a corresponding
meaning.
(f) A reference to any Party to this Agreement or any other
agreement or document shall include such Party's successors and permitted
assigns and any reference to an agreement or document shall mean such document,
as the same may be supplemented amended or modified from time to time in
accordance with the terms thereof and hereof.
(g) A reference to any legislation or to any provision of any
legisla tion shall include any modification or re-enactment thereof, any
legislative provision substituted therefor and all regulations and statutory
instruments issued thereunder or pursuant thereto.
(h) As used in this Agreement, any reference to any event,
change or effect being material or having a material adverse effect on or with
respect to any entity (or group of entities taken as a whole) means such event,
change or effect is materially adverse to (i) the consolidated financial
condition, businesses or results of operations of such entity as a whole (or, if
used with respect thereto, of such group of entities taken as a whole) or (ii)
the ability of such entity (or group) to consummate the transactions
contemplated by this Agreement.
9
<PAGE>
(i) The Shareholders have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Shareholders, and no presumption or burden of proof
shall arise favoring or disfavoring any Shareholder by virtue of the authorship
of any provisions of this Agreement.
ARTICLE II
SCOPE OF ACTIVITIES
2.1 Articles. (a) At the closing of the transactions
contemplated in the Transaction Agreement, the Shareholders shall take all
action necessary to approve the form of amended and restated Articles of
Association of Britannia (the "Articles") set forth as Exhibit A hereto.
(b) The Parties agree that any Breach (as defined herein) of
any provision of this Agreement or any Exhibit hereto shall be deemed to be a
Breach of this Agreement subject to resolution in accordance with Article VII;
provided, however, that only a knowing breach of any of the representations and
warranties set forth in the Transaction Agreement (having taken into account all
limitations and restrictions in relation to such representations and warranties
contained in the Transaction Agreement) shall be deemed a Breach of this
Agreement; provided, further, that any waiver of any right or rights under any
Exhibit hereto shall be deemed to be a waiver of any right or rights hereunder;
provided, further, that in the event the Parent and Mentmore decide to complete
the Transaction Agreement notwithstanding any breach of representation or
warranty contained therein, any such breach shall not be deemed to be a Breach
of this Agreement; and provided, further, that only knowing breaches of any of
the representations and warranties set forth in the Transaction Agreement
resulting in a claim for damages under the Transaction Agreement in excess of
(pound)500,000 or with respect to which Britannia reasonably makes a provision
after the date of this Agreement in excess of (pound)500,000 shall be deemed to
be a Breach of this Agreement. For purposes of this Section 2.1(b), references
to a "knowing breach" shall mean only a breach made with Knowledge, (as such
term is defined in the Transaction Agreement).
2.2 Capital Contributions and Loans. Pursuant to Britannia's
Budget and subject to the limitations set forth in Article IV hereof, the
Shareholders shall make capital contributions and loans to Britannia from time
to time.
2.3 Scope of Activities. (a) The business purpose of the
Sharehold ers in executing this Agreement is to promote, market, develop and
expand the Records Management Business in the United Kingdom and to operate the
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Records Management Business to maximize post-tax earnings, as more particularly
described in the Business Plan.
(b) The Shareholders shall procure (insofar as it is within
their power to do so and subject to the other provisions of this Agreement) that
Britannia shall, carry out all other activities necessary or useful to fulfill
the foregoing purposes, and such other activities as the Britannia Board may
agree upon. The Shareholders further agree to procure (insofar as it is within
their power to do so and subject to the other provisions of this Agreement) the
due implementation by Britannia of the intended effect of any provision
requiring action by Britannia.
2.4 Exclusivity. Unless the Shareholders otherwise unanimously
agree in writing, Britannia shall be the Shareholders' exclusive channel for the
marketing and development of the Records Management Business in the United
Kingdom.
(a) IM and the Parent each agree that neither they nor any of
their Subsidiaries shall directly or indirectly own, manage, engage in,
participate in, provide advice or consulting services to or have a financial
interest in any enterprise (other than an interest as a trade creditor arising
from ordinary course, arms' length transactions) which is engaged in the
Self-Storage Business in the countries identi fied on Exhibit E hereto (the
"Mentmore Exclusive Self-Storage Region"). Mentmore agrees that neither it nor
any of its Subsidiaries shall directly or indirectly own, manage, engage in,
participate in, provide advice or consulting services to or have a financial
interest in any enterprise (other than an interest as a trade creditor arising
from ordinary course, arms' length transactions) which is engaged in the Records
Management Business in the countries identified on Exhibit F hereto (the "IM
Exclusive Records Management Region"). Subject to Section 2.4(b) below, neither
IM, the Parent, Mentmore nor any of their respective Subsidiaries (other than
Britannia or its Subsidiaries) shall directly or indirectly own, manage, engage
in, participate in, provide advice or consulting services to or have a financial
interest in any enterprise (other than an interest as a trade creditor arising
from ordinary course, arms' length transactions) which is engaged in the Records
Management Business in the countries identified on Exhibit G hereto (the
"Britannia Records Management/Right of First Refusal Region"); provided,
however, that this Section 2.4(a) shall not prohibit IM, the Parent, Mentmore or
any of their Subsidiaries acquiring up to three percent (3%) of any class of
publicly traded securities of any Person which may engage in the Records
Management Business or the Self-Storage Business.
(b) Notwithstanding anything to the contrary in this Section
2.4 , the Shareholders and the Parent agree that neither Shareholder nor the
Parent (nor any Subsidiary of either Shareholder or the Parent, other than
Britannia) shall engage in
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negotiations connected with a business opportunity relating to the Records
Management Business (a "Related Transaction") in the Britannia Records
Management/Right of First Refusal Region without first (i) informing the
Chairman of such Related Transaction, (ii) providing the Chairman with all
relevant information relating to such Related Transaction known to the relevant
Party and (iii) permitting Britannia to decide whether or not the Related
Transaction is to be effected by Britannia (the right to make such decision
being a "Right of First Refusal"). The Chairman shall convene a Special Meeting
(a "Related Transaction Meeting") within ten (10) Business Days of the date the
Chairman is informed of the Related Transaction. The notice for such Special
Meeting shall contain a reasonably detailed summary of the Related Transaction
as communicated to the Chairman. The Shareholders and the Parent (and any
Subsidiary of either Shareholder or the Parent other than Britannia) shall be
prohibited from pursuing the Related Transaction in any manner, or taking any
action in connection therewith, until the Britannia Board shall have decided
whether or not to exercise its Right of First Refusal, which decision must be
made within ten (10) days of the date of the Related Transaction Meeting. In the
event the Britannia Board decides such Related Transaction is to be effected by
Britannia, the Shareholders and the Parent (and any Subsidiary of either
Shareholder or the Parent other than Britannia) shall be prohib ited from taking
any action (other than pursuant to this Agreement or to further the business
aims of, or to provide assistance to, Britannia) in respect of such Related
Transaction and Britannia shall be the Parties' (and their Subsidiaries')
exclusive channel for negotiating and effecting the Related Transaction and for
the marketing and development of the Records Management Business in the Related
Transaction Market. In the event the Britannia Board decides that the Related
Transaction will not be effected by Britannia, a Shareholder that has caused its
representative(s) on the Britannia Board to vote in favor of Britannia pursuing
the Related Transaction (or any Affiliate of such Shareholder other than
Britannia) will thereafter be free to effect the Related Transaction on terms
that are not materially more favorable to such Shareholder than those on which
the Related Transaction was acted upon by the Britannia Board. In such event,
(i) neither Britannia, nor the other Shareholder, nor (if the other Shareholder
is IM) the Parent (nor any of their respective Subsidiaries) shall individually
or jointly with any other Person effect such Related Transaction, enter into
discussions or negotiations with any Person relating thereto, provide technology
or financial assistance to any Person in connection therewith and (ii) the
Shareholder effecting the Related Transaction (or any Affiliate of such
Shareholder other than Britannia) shall thereafter have the exclusive right to
discuss, negotiate or effect any transaction in or related to the Records
Management Business in the Related Transaction Market; provided, however, that,
if, after the Britannia Board has voted to cause Britannia to exercise its Right
of First Refusal or has permitted a Shareholder (or an Affiliate of such
Shareholder) to pursue the Related Transaction, either Britannia or the
Shareholder (or an Affiliate of such Shareholder) pursuing the Related
Transaction, as the case may be, does not enter into a definitive agreement
relating to the Related Transaction
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within ninety (90) days of the Related Transac tion Meeting and consummate the
transaction within sixty (60) days of entering into such definitive agreement,
Britannia or such Shareholder (or the relevant Affiliate of such Shareholder)
shall be deemed to have abandoned the Related Transaction and shall promptly
notify the other Shareholder or Shareholders, as the case may be, of its
decision to abandon the Related Transaction (an "Abandonment"). Following any
Abandonment, neither Shareholder nor the Parent (nor any of their respective
Subsidiaries other than Britannia) shall pursue any Related Transactions in the
Related Transaction Market without following the procedures set forth in this
Section 2.4(b).
(c) Any Breach of any provision of this Section 2.4, other
than with the consent of a Nonbreaching Shareholder (as defined herein),
notwithstanding any declaration of invalidity with respect thereto by any
competent governmental, judicial or administrative authority, shall be deemed a
Breach of this Agreement entitling the Nonbreaching Shareholder to the remedies
set forth in Article VII hereof.
(d) The provisions of this Section 2.4 shall only remain in
effect for so long as this Agreement remains in effect.
2.5 Service Agreements; Other Agreements.
(a) In order to assist Britannia in carrying out its
objectives as set forth in this Agreement, the Shareholders (or an appropriate
Affiliate thereof) shall provide Britannia with, and Britannia shall pay for,
such support and assistance as Britannia reasonably require from time to time at
the fully-burdened cost of the Shareholder or Affiliate providing such support
and assistance.
(b) Subject to the provisions of Section 5.10(l) hereof, the
Sharehold ers expressly agree and acknowledge that customer contract terms
(including pricing terms) of Britannia shall be governed by local market
standards and shall not necessarily be subject to global contract conditions.
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ARTICLE III
DIVIDENDS
3.1 Declaration of Dividends. Subject to Section 7.2 hereof
and unless (i) prohibited by applicable law or any agreement to which Britannia
is, or may become, subject, or (ii) the Board specifies otherwise, Britannia
shall distribute annually to the Shareholders 100% of all amounts available for
distribution as Ordinary Dividends.
ARTICLE IV
CAPITALIZATION; FINANCING
4.1 Debt Financing. The Shareholders hereby agree that any
expan sion or development of the Records Management Business, including by way
of acquisition or capital investment, shall be funded principally by Britannia's
incur rence of debt.
4.2 Equity Financing. Each of the Shareholders will, subject
to applicable UK law, be required to invest additional equity, beyond such
amounts as are contemplated in the Transaction Agreement and in such a manner as
will preserve the relative percentage shareholdings of each Shareholder upon the
comple tion of the transactions contemplated in the Transaction Agreement, up to
a cumula tive maximum per Shareholder of three million pounds ((pound)3,000,000)
(the "Equity Cap"), in the manner and on the time schedule set forth in
Britannia's Budget. Subject to the provisions of such Budget and subject to
Sections 4.3 and 7.2(b) below, each of the Shareholders will also be entitled to
invest additional equity in Britannia; provided, however, that neither IM nor
Mentmore nor any of their Affiliates shall have any obligation to make any
equity investments in Britannia above the Equity Cap.
4.3 Budget. Subject to Section 5.10 hereof, Britannia shall
prepare a budget (the "Budget") on at least an annual basis setting forth
Britannia's anticipated capital requirements and the amounts of such capital to
be raised as debt and equity, respectively, together with Britannia's
anticipated revenues and expenses, its targeted new sales volume and other
operational forecasts or objectives. Such Budget shall indicate the capital
intended to be raised from the Shareholders and other sources as well as the
timing of any required capital contributions by the Shareholders. The
Shareholders expressly agree that they shall not be obligated to contribute any
amounts to Britannia in the form of debt and that they shall not be obligated to
make any equity investments beyond the Equity Cap. The Shareholders further
agree that any adjustment in the Shareholders' percentage equity ownership of
Britannia shall
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be subject to the unanimous approval of Britannia's Shareholders; provided, how
ever, that in the event that any Shareholder's percentage ownership of the
Shares of Britannia falls to or below twenty percent (20%), such Shareholder
shall be deemed to be a Withdrawing Shareholder pursuant to Section 7.6 below
and the other Shareholder shall be deemed a Nonwithdrawing Shareholder pursuant
to such Section; provided, further, such deemed Nonwithdrawing Shareholder may
initiate the procedures set forth in such Section 7.6 by providing a Buy-Out
Notice to the deemed Withdrawing Shareholder and Britannia within thirty (30)
days of the date such deemed Withdrawing Shareholder's percentage ownership of
the Shares of Britannia falls to or below twenty percent (20%); and provided,
further, the deemed Nonwithdrawing Shareholder may thereafter purchase the
deemed Withdrawing Shareholder's Shares in accordance with Sections 7.6 and 7.7
below.
4.4 Pledge of Shares. In addition to the Shareholders'
obligation to provide equity investments up to the amount of the Equity Cap, the
Shareholders agree to pledge their Shares to Britannia's creditors to the extent
necessary to obtain the funds identified in Britannia's Budget; provided,
however, that it shall not be a breach of this Section 4.4 for either
Shareholder to fail to pledge its Shares to Britannia's creditors if such Shares
have previously been pledged, mortgaged, assigned or otherwise encumbered to
such Shareholder's creditors. To the extent that Britannia's financing needs do
not require any pledge of Shares at such time as either Shareholder (at its
discretion) desires to pledge, mortgage, assign or otherwise encumber its Shares
to its creditors, each Shareholder shall be free to pledge, mortgage, assign or
otherwise encumber its stock to banks or other financial institu tions. Save as
provided in this Section 4.4, any failure of the Shareholders to pledge their
stock or any pledge of stock that is inconsistent with the provisions of this
Section 4.4 shall be deemed a Breach of this Agreement and shall give the
Nonbreaching Shareholder the rights set forth in Article VII hereof.
ARTICLE V
CORPORATE GOVERNANCE
5.1 Composition of the Board. The Britannia Board shall
consist of five (5) members, two (2) of whom shall be designated by Mentmore and
three (3) of whom shall be designated by IM. At Mentmore's sole option, one (1)
of the members of the Britannia Board appointed by IM may also serve as a member
of the board of Mentmore (the "Dual Board Member"). Such Dual Board Member must
relinquish all day-to-day management responsibilities in connection with
Mentmore or any Affiliate thereof (other than Britannia). The Parties agree to
take all action necessary to ensure that the members of the Britannia Board
shall also be members of all boards of directors of all Subsidiaries of
Britannia.
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5.2 Appointment and Removal of Members of the Britannia Board.
Any appointment or removal of a member of the Britannia Board by a Shareholder
shall be effected by notice in writing to Britannia signed by or on behalf of
the Shareholder in question and shall take effect, subject to any contrary
intention expressed in the notice, when the notice effecting the same is
delivered to Britannia; provided, however, that a member of the Britannia Board
may only be removed by the Shareholder that appointed such member.
5.3 Frequency and Place of Board Meetings. The number and date
of ordinary meetings of the Britannia Board shall be determined by the Britannia
Board; provided, however, that there shall be at least one (1) meeting of the
Britannia Board per year. Meetings of the Britannia Board shall be held in
London or Boston or such other place as the Board may decide by Unanimous
Approval; provided, however, that if such Unanimous Approval is not obtained,
the meetings of the Britannia Board shall be held alternately in London and
Boston. Minutes of all meetings of the Britannia Board will be circulated to the
Shareholders within ten (10) days of the relevant meeting of the Britannia
Board.
5.4 Voting and Delegation of Voting Authority. Members of the
Britannia Board may designate an alternate and may grant a power of attorney to
another member of the Britannia Board to attend meetings of the Britannia Board
and vote at such meetings on behalf of the member of the Britannia Board as to
which such person is the alternate or has granted such power of attorney.
5.5 Special Meetings. Special meetings of the Britannia Board
("Special Meetings") may be called at any time by the Chairman of the Britannia
Board (the "Chairman"). Special Meetings may also be requested at any time by
either Shareholder. Any request for a Special Meeting shall be sent to the
Chairman who will send out to the Shareholders a notice of the Special Meeting
within ten (10) Business Days of receiving such request. If the Chairman fails
to send out a notice of a Special Meeting within such time, the Shareholder
requesting the Special Meeting may send the notice to the other Shareholder.
5.6 Notice of Board Meetings. Written notice of any meeting of
the Britannia Board shall be provided to each Shareholder by the Chairman no
later than ten (10) Business Days prior to the date of any Special Meeting, and
no later then fifteen (15) Business Days prior to the date of any ordinary
meeting. Notice of each meeting of the Britannia Board will state the date,
place and hour of the meeting of the Britannia Board and will include an agenda,
which shall include any item proposed by any member of the Britannia Board to be
placed thereon; provided, however, that any items proposed to be included on the
agenda shall be submitted to the Chairman and notice of such items shall be
provided to each Shareholder by the Chairman no later than five (5) Business
Days prior to the date of any meeting of the Britannia Board; provided, further,
that votes may only be taken on those items listed
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on the agenda; and provided, further, that any of the provisions of this Section
5.6 may be modified by the unanimous agreement of the Shareholders.
5.7 Quorum; Telephonic Meetings. The participation in person
or by proxy of three (3) of the five (5) members of the Britannia Board will
constitute a quorum at meetings of the Britannia Board if no decisions are made
regarding those issues listed in Section 5.10 requiring the Unanimous Approval
of the members of the Britannia Board. In order to take decisions on those
issues listed in Section 5.10 that require Unanimous Approval of the Britannia
Board, at least one member of the Britannia Board appointed by each Shareholder
must attend in person or by proxy the meeting of the Britannia Board at which
such issues are voted upon. Members of the Britannia Board may participate in a
meeting of the Britannia Board by means of telephone conference or similar
communications equipment through which all persons participating in the meeting
can hear and understand each other simulta neously, and such participation shall
constitute presence in person at such meeting. If a quorum is not reached within
one hour after the scheduled commencement of a meeting of the Britannia Board,
the Chairman shall have the right to adjourn such meeting for a period of time
designated by the Chairman, but not exceeding thirty (30) days.
5.8 Unanimous Written Consent. Notwithstanding anything in
this Article V to the contrary, any decision of the Britannia Board may be taken
by unanimous written consent of all members of the Britannia Board.
5.9 Remuneration. Members of the Britannia Board will not
receive any remuneration for serving as members of the Britannia Board;
provided, however, that Britannia will reimburse the members of the Britannia
Board for their reasonable out-of-pocket expenses associated with their travel
to and from meetings of the Board.
5.10 Decisions and Actions at Meetings of the Britannia Board.
Subject to the other provisions of this Article V and in addition to such other
matters as require Board approval under applicable law, the vote of the
Britannia Board shall be required for the following matters:
(a) any dissolution, reorganization, merger or sale or
exchange of assets of Britannia or any Subsidiary of Britannia in a transaction
or series of transactions in which the total value is in excess of twenty
percent (20%) of the fair market value (as determined in accordance with Section
5.13 below) of Britannia's total assets or any termination of the Agreement
other than in accordance with its terms;
(b) acquisitions and dispositions of assets (including shares,
property or other equity interests) of Britannia or any Subsidiary of Britannia
in a transaction
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or series of related transactions in which the total consideration paid or
received for such assets is in excess of twenty percent (20%) of the fair market
value (as deter mined in accordance with Section 5.13 below) of Britannia's
total assets;
(c) any commencement of litigation or arbitration proceedings
by Britannia or any direct or indirect subsidiary of Britannia, or any
assignment, transfer, pledge, compromise or release of any claim or debt by
Britannia or any direct or indirect subsidiary of Britannia, or any offer of
settlement, any agreement to arbitrate or consent to arbitration or judicial
settlement by Britannia or any direct or indirect subsidiary of Britannia, in
any such case, not in the ordinary course or if the amount involved (including
all likely costs and expenses) is in excess of (pound)250,000;
(d) approval of any material contract or other arrangement
outside the ordinary course of business and not contemplated by the then current
Business Plan or Budget;
(e) the listing of any securities of Britannia on any stock
exchange on which such securities are not listed on the date hereof;
(f) the incurrence of any debt by Britannia or any Wholly
Owned Subsidiary of Britannia (i) other than from commercial banks or financial
institutions and (ii) which is in the ordinary course of business or is
contemplated by the then current Business Plan or Budget;
(g) all transactions with Affiliates on other than arms'
length terms and conditions;
(h) changing Britannia's lines of business (or those of any of
its operating subsidiaries);
(i) changing, or preparing the management accounts required
pursuant to Section 5.13 on any basis other than, the Agreed Accounting
Policies;
(j) entering into any transaction or series of transactions
requiring approval under Sections 320-322 of the Companies Act 1985;
(k) subject to Section 5.12 below, appointment and removal of
Britannia's external auditor;
(l) approval of the Business Plan and the annual Budget, and
any deviations from such plan and such budgets, including the approval of
capital expenditures not included in the annual Budget;
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(m) appointment or removal of executive officers and other
senior managers in their capacity as executive officers or senior managers
(whether of Britannia or any Subsidiary through which it operates the Records
Management Business);
(n) adoption of, or material modifications to, any benefit or
compen sation plans of Britannia;
(o) election of the Chairman of the Britannia Board;
(p) specification of any amounts available to be distributed
as dividends in accordance with Section 3.1 and 7.2 hereof; and
(q) any dissolution, reorganization, merger or termination of
Britan nia or any Subsidiary of Britannia in a transaction or series of
transactions in which the total value is equal to or less than twenty percent
(20%) of the fair market value (as determined in accordance with Section 5.13
below) of Britannia's total assets;
(r) acquisitions and dispositions of assets (including stock,
property or other equity interests) of Britannia or any Subsidiary of Britannia
in a transaction or series of related transactions in which the total
consideration paid or received for such assets is equal to or less than twenty
percent (20%) of the fair market value (as determined in accordance with Section
5.13 below) of Britannia's total assets and is greater than (pound)100,000,
subject to any annual limit on such acquisitions or disposi tions set forth in
the Business Plan;
(s) expanding its existing business into any countries in
which it or its subsidiaries are not operating at the time of any such proposed
expansion; and
(t) subject to Section 5.11 below, directing Britannia in its
capacity as shareholder in any operating companies through which the Records
Management Business is operated to vote its shares in such operating companies
in such a manner as to implement any of the matters specified in (a) to (s)
inclusive above.
5.11 Unanimous Approval. All items (a) to (k) inclusive above
shall require the unanimous approval of all members of the Britannia Board
present at the meeting of the Britannia Board at which such matters are voted
upon (such approval being termed herein "Unanimous Approval"); and all other
matters to be acted on by the Britannia Board in Section 5.10 above shall only
require the approval of a majority of the members of the Britannia Board present
at the meeting of the Britannia Board at which such matters are voted upon (such
approval being termed herein "Majority Approval"), in each case, including any
such member present by
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proxy, by representation by his or her alternate or by telephone conference or
similar communications in accordance with Section 5.7; provided, however, that
Unanimous Approval shall be required to cause Britannia to vote its Shares in
any operating subsidiaries through which it operates the Records Management with
respect to any of the matters specified in (a) through (k) above and Majority
Approval shall be required for all other matters.
5.12 Auditors. Britannia's initial auditors shall be Robson
Rhodes. Britannia's auditors will be subject to an annual review by the
Britannia Board. Subject to Section 5.11 above, either Shareholder may propose a
change in Britan nia's auditor.
5.13 Fair Value Determination. Prior to the consummation of
any transaction identified in Sections 5.10(a), (b), (q) or (r) above, a
majority of the members of the Britannia Board shall determine the fair market
value of Britannia's assets and communicate such determination to the
Shareholders; provided, however, that either Shareholder may request that an
independent third party jointly selected by the Shareholders or, in the absence
of agreement between the Shareholders, by Britannia's auditors, review the
determination of the Britannia Board and, acting as expert and not as
arbitrator, establish the fair market value of Britannia's assets in a manner
that shall be final and binding on the Parties; provided, further that no such
determination shall be necessary for a proposed acquisition or disposition of
assets (including stock, property or other equity interests) of Britannia or any
Subsidiary of Britannia in a transaction or series of related transactions in
which the total consider ation paid or received for such assets is less than
(pound)100,000.
5.14 Management Reporting. Britannia's managing director will
provide the Britannia Board with regular reports and management accounts contain
ing both narrative and financial information on Britannia's and its
subsidiaries' operations, results and financial condition. All management
accounts pursuant to this Section 5.14 shall be prepared in accordance with the
Agreed Accounting Policies. Such reports must be provided to the Britannia Board
on at least a monthly basis. In addition, the managing director will provide, at
Britannia's cost, either Shareholder with such information concerning Britannia
and its subsidiaries (and their operations, results, financial condition or
prospects) as such Shareholder shall reasonably require.
5.15 Financial Statements. In addition to the management
accounts to be prepared pursuant to Section 5.14, Britannia shall prepare in a
timely fashion and audited by a firm that is qualified to practice before the
U.S. Securities and Exchange Commission (a) annual financial statements in
accordance with the Agreed Accounting Policies and (b) annual and quarterly
financial statements in accordance with US GAAP. The Parties expressly agree and
acknowledge that IM shall have the unilateral right to determine all US GAAP
accounting issues that may
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arise in connection with the preparation of financial statements in accordance
with US GAAP and to make any appropriate U.S. tax filings or elections.
ARTICLE VI
DEFAULT IN PAYMENT
6.1 Payment Default. Subject to the provisions of Section 4.3,
if any Shareholder fails to pay in full any contribution to the capital of
Britannia pursuant to this Agreement, the Articles, or the Budget (each such
Shareholder being a "Defaulting Shareholder"), such failure (a "Payment
Default") shall constitute a Breach of this Agreement by such Defaulting
Shareholder. A Payment Default shall be deemed to have occurred on the date on
which such amount was due. The Chairman of the Board shall, within seven (7)
Business Days of having been informed of the Payment Default, send notice
thereof to the Shareholders (such notice being a "Default Notice").
6.2 Cure of Payment Default. A Payment Default shall be deemed
to have been cured when (and only when) the full amount of the Payment Default,
plus interest thereon at the Default Rate (as in effect from time to time),
accruing from the date of the Payment Default until the date of cure, has been
paid by the curing Defaulting Shareholder.
ARTICLE VII
SHAREHOLDER VOTES; SHARE TRANSFERS
7.1 Shareholder Votes. Britannia and each Shareholder, in its
capacity as a shareholder of Britannia, expressly agrees and covenants that it
will do all things, including voting its Shares, necessary to cause it to comply
with any obligation set forth in this Agreement.
7.2 Shareholder Approval. In accordance with the applicable
provisions of the laws of England and Wales and the Articles, and in addition to
such other matters as require Board approval under the laws of England and Wales
the following items shall be subject to a vote of Britannia's shareholders:
(a) modifications, amendments or replacement of Britannia's
memo randum of association or Articles, the adoption of a new memorandum or
articles of association or any other alteration to any of Britannia's
constitutive documents;
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(b) any increase or reduction in Britannia's authorized share
capital, the creation of any new class of shares or the alteration or abrogation
of the rights attaching to any class of shares in Britannia's authorized share
capital, issuance of any new shares in Britannia, any issuance of shares or
other equity interests (whether such issuance alters or may alter the
Shareholders' percentage equity ownership in Britannia or otherwise) or any
requirement for the Shareholders to contribute additional capital to Britannia
beyond the Equity Cap;
(c) all repurchases of shares (of whatever class) or other
equity interests by Britannia;
(d) the declaration of any Extraordinary Dividends;
(e) any resolution for the winding up of or the making of an
adminis tration order in respect of Britannia or any Subsidiary of Britannia;
and
(f) the declaration of Ordinary Dividends.
A unanimous vote of the Shareholders shall be required for all
matters listed in (a)-(e) above and a majority vote of the Shareholders shall be
sufficient for the declaration of Ordinary Dividends pursuant to clause (f)
above.
7.3 Breach or Violation. (a) Subject to Section 2.1(b), if any
Shareholder or the Parent (such Shareholder, or if the Parent, the Parent and IM
collectively, being referred to as a "Breaching Shareholder") is in breach of
any Material obligation under this Agreement (including, without limitation,
through any (i) violation of any Material provision of the Articles, (ii) any
failure to vote (or cause to be voted) its Shares in Britannia pursuant to
Sections 7.1 or 7.2 above, or take (or cause to be taken) any other action in
respect of Britannia as required under this Agreement, notwithstanding that the
action taken or omitted may be valid and lawful when judged under another
instrument (including the Articles), when taken in isolation or under a law
other than the law chosen in Section 9.1, (iii) any Payment Default or (iv) any
inability or failure to perform its Material obligations hereunder or under any
Exhibit hereto or to take (or cause to be taken) actions generally required to
be taken hereunder or under any Exhibit hereto (any of (i), (ii), (iii) or (iv)
being a "Breach"), then the non-breaching Shareholder (the "Nonbreaching
Shareholder") may give written notice of such Breach or violation to such
Breaching Shareholder (with a simultaneous copy to Britannia) (such notice being
a "Breach Notice"). If such breach or violation continues unremedied for at
least thirty (30) days after delivery of the Breach Notice, then the
Nonbreaching Shareholder may give written notice to the Breaching Shareholder
(with a simultaneous copy to Britannia) of activation of buy-out rights under
Section 7.6(a) below with respect to the Shares owned by such Breaching
Shareholder (such notice being a "Breach Buy- Out Notice").
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(b) A Breaching Shareholder may cure any breach giving rise to
a Breach Buy-Out Notice (i) by ceasing any action prohibited by the terms of
this Agreement or by taking any action required to be taken hereunder, (ii) in
the case of a Payment Default, by making all payments required pursuant to
Section 6.2 and (iii) by reimbursing the Nonbreaching Shareholder and Britannia
for any and all reason able, out-of-pocket expenses and costs (including all
reasonable legal costs) incurred by the Nonbreaching Shareholder and Britannia
as a result of the breach of any Material obligation hereunder.
7.4 Bankruptcy. (a) If any Shareholder or the Parent shall:
(i) have commenced a receivership, bankruptcy or
insolvency proceeding, or commenced or convened a meeting to consider
dissolution, liquidation, administration or (if applicable) made a
proposal for a voluntary arrangement or proposed or entered into any
other arrangement or composi tion with and to the benefit of its
creditors generally or commenced, made or proposed any proceeding
analogous to the foregoing;
(ii) had commenced against it such a proceeding, and
such proceeding has resulted in the entry of an order against such
Shareholder which shall not have been vacated, discharged, stayed or
bonded pending appeal within thirty (30) days from the entry thereof;
or
(iii) be bankrupt or insolvent, or generally unable
to pay its debts as they become due;
(any such Shareholder, or if the Parent, the Parent and IM collectively, being
referred to as a "Bankrupt Shareholder"), then the other Shareholder (the
"Nonbankrupt Shareholder") may immediately give written notice to such Bankrupt
Shareholder (with a simultaneous copy to Britannia), of activation of buy-out
rights under Section 7.6(a) with respect to the Shares of such Bankrupt
Shareholder (such notice being a "Bankruptcy Buy-Out Notice").
(b) A Bankrupt Shareholder may cure any situation giving rise
to a Bankruptcy Buy-Out Notice (i) by definitively terminating any proceeding
referred to in Section 7.4(a)(i), or obtaining the vacation, discharge, stay or
bonding pending appeal of the order for relief referred to in Section 7.4(a)(ii)
and (ii) reimbursing the Nonbankrupt Shareholder and Britannia for any and all
reasonable, out-of-pocket expenses and costs (including all reasonable legal
costs) incurred by the Nonbankrupt Shareholder and Britannia as a result of the
situation giving rise to the Bankruptcy Buy-out Notice.
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7.5 Change of Control. (a) If a Change of Control occurs with
respect to any Shareholder or the Parent (such Shareholder or, if the Parent,
the Parent and IM collectively, being a "Change of Control Shareholder") then
the other Shareholder (the "Non-Change of Control Shareholder") may immediately
give written notice to the Change of Control Shareholder with a simultaneous
copy to Britannia) of activation of buy-out rights under Section 7.6(a) with
respect to the Shares of such Change of Control Shareholder (such notice being a
"Change of Control Buy-Out Notice").
(b) A Change of Control Shareholder may cure the situation
giving rise to the Change of Control Buy-Out Notice by (i) obtaining the
rescission of any agreement or contract giving rise to a Change of Control and
(ii) reimbursing the Non-Change of Control Shareholder and Britannia for any and
all reasonable, out-of-pocket expenses and costs (including all reasonable legal
costs) incurred by the Non-Change of Control Shareholder and Britannia incurred
as a as a result of the situation giving rise to the Change of Control Buy-Out
Notice.
7.6 Share Acquisition in the Event of Breach, Bankruptcy or
Change of Control. (a) Upon delivery of a Buy-Out Notice, the Nonwithdrawing
Share holder shall have an irrevocable (except to the extent set forth in
paragraph (b) below) and exclusive option, but not the obligation, to purchase
all (but not less than all) of the Shares owned by the Withdrawing Shareholder;
provided, however, that the Withdrawing Shareholder may at any time within
fourteen (14) days of delivery of a Buy-Out Notice invoke the conciliation and
arbitration provisions of Article IX hereof. If (i) the Withdrawing Shareholder
fails both to cure the situation giving rise to the Buy-Out Notice and to invoke
such conciliation and arbitration provisions within fourteen (14) days of
delivery of a Buy-Out Notice or (ii) the Conciliation Committee or the arbitral
tribunal acting pursuant to Article IX hereof concludes that the Buy-Out Notice
was appropriately delivered to the Withdrawing Shareholder, the Nonwithdrawing
Shareholder may, at its option, at the expiration of such fourteen (14) day
period or upon notification of the final decision of the Conciliation Com mittee
or the arbitral tribunal (X) waive its rights hereunder and elect to leave the
Shareholders' relative shareholdings in Britannia unaffected by the event or
situation giving rise to the Buy-Out Notice, (Y) activate its option to purchase
the Withdraw ing Shareholder's Shares by delivery of notice to the Withdrawing
Shareholder and Britannia (the "Option Exercise Notice") or (Z) declare a
Deadlock and trigger the withdrawal and sale provisions of Section 7.8(b)
hereof; provided, however, that in the event the delivery of the Option Exercise
Notice or the declaration of a Deadlock pursuant to the foregoing sub-clauses
(Y) or (Z) is the result of a Breach, all deci sions of the Britannia Board
shall be taken solely by the directors appointed by the Nonwithdrawing
Shareholder and the presence of the directors appointed by the Withdrawing
Shareholder shall not be required for any quorum pursuant to Section 5.7. The
price of the shares to be purchased pursuant to such option shall be agreed
among the Shareholders through discussions between the
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Shareholders' respective chief executive officers, or, if such agreement cannot
be reached within thirty (30) days of the delivery of the Option Exercise
Notice, pursuant to a valuation of such Shares by an independent merchant bank
(or other third party) (the "Buy-Out Appraiser"). The Buy-Out Appraiser shall be
designated jointly by the Shareholders or, in the event the Shareholders cannot
agree on such Buy-Out Appraiser within twenty (20) days (the "Initial
Designation Period") of the conclusion of the twenty (20) day negotiation period
described above, by an independent merchant bank (or other third party)
designated by two independent merchant banks (one of which shall be designated
by one of the Shareholders and the other of which shall be designated by the
other Shareholder) within twenty (20) days of the conclusion of the Initial
Designation Period. Within thirty (30) days of being selected, the Buy-Out Ap
praiser shall determine the price (the "Buy-Out Price") to be paid to the
Withdrawing Shareholder for its Shares on the basis of such Shareholder's
proportionate interest in the going concern value of Britannia (i.e., at the
price at which a willing buyer and a willing seller, neither being under any
compulsion to buy or sell and both having reasonable knowledge of relevant
facts, would agree to buy and sell the Shares of Britannia for cash, free and
clear of all liens, claims and encumbrances), and shall notify the Shareholders
of such determination and the bases on which such determi nation was made. At
its own cost and expense, either Shareholder may, for a period of seven (7) days
following such determination, indicate errors in the calculation of the Buy-Out
Price to the Buy-Out Appraiser, who shall make any necessary adjust ments to the
Buy-Out Price within seven (7) days of receiving notification of such errors;
provided, however, that the Buy-Out Price as ultimately determined by the
Buy-Out Appraiser in its discretion shall be final and binding on the Parties;
and provided, further, that the Buy-Out Price shall be decreased by all
reasonable, out-of-pocket expenses and costs (including all reasonable legal
costs) incurred by the Nonwithdrawing Shareholder as a result of the situation
giving rise to the activation of buy-out rights, the costs of the valuation to
be performed pursuant to this Section 7.6(a) and, in the event the Withdrawing
Shareholder is a Breaching Shareholder, by an amount equal to 5% of the price
determined by the appraiser.
(b) Notwithstanding the irrevocability of the option of the
Nonwithdrawing Shareholder set forth in Section 7.6(a), the Nonwithdrawing
Shareholder shall have the right, exercisable by giving written notice to the
Withdrawing Shareholder within ten (10) Business Days after receipt of the
appraised price from the merchant bank or other third party designated pursuant
to Section 7.6(a) (the "Rejection Notice"), to elect not to proceed with the
purchase of the Withdrawing Shareholder's Shares. In such an event, the
Nonwithdrawing Shareholder shall have the right (i) to leave the Shareholders'
relative shareholdings unaffected by the event giving rise to the activation of
buy-out rights hereunder or (ii) to declare a Deadlock and trigger the
withdrawal and sale provisions of Section 7.8(b). Unless the Rejection Notice
contains the Nonwithdrawing Shareholder's
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election to declare a Deadlock, it shall be deemed to have elected to leave the
Shareholders' relative shareholdings unaffected.
(c) Notwithstanding any other provision in this Agreement to
the contrary, the exercise by the Nonwithdrawing Shareholder of the option
specified in Section 7.6(a) to purchase the Shares owned by the Withdrawing
Shareholder shall be deemed to have been canceled if at any time prior to the
determination of the price to be paid for the Withdrawing Shareholder's Shares
pursuant to Section 7.6(a) above, the Withdrawing Shareholder (i) remedies the
breach or violation giving rise to the Breach Buy-Out Notice (including, in the
case of a Payment Default, by curing the Payment Default pursuant to Section
6.2), (ii) cures the situation giving rise to the Bankruptcy Buy-Out Notice
(including without limitation by definitively terminating any proceeding
referred to in Section 7.4(a)(i), or obtaining the vacation, discharge, stay or
bonding pending appeal of the order for relief referred to in Section
7.4(a)(ii)), or (iii) reverses the situation giving rise to the Change of
Control (including without limitation obtaining the rescission of any agreement
giving rise to such Change of Control), as the case may be, and (X) pays all
costs associated with the valuation conducted pursuant to Section 7.6(a) above
and (Y) reimburses the Nonwithdrawing Shareholder and Britannia for any and all
reasonable, out-of-pocket expenses and costs (including all reasonable legal
costs) incurred by such party as a result of the situation giving rise to the
activation of buy-out rights under Section 7.6(a).
7.7 Transfer Mechanics. (a) In the event of any sale or
purchase of Shares pursuant to this Article VII, each Shareholder shall use its
best efforts to do all things reasonably necessary to consummate any such
purchase as promptly as practicable, including without limitation amending this
Agreement, the Articles and any other agreement between the Shareholders, and
entering into agreements and instruments with third parties and obtaining any
necessary shareholder and governmental approvals. Each party to any purchase of
Shares pursuant to this Section 7.7 shall bear its own expenses incurred in
connection with the consummation of such purchase of Shares.
(b) The completion of any purchase of Shares pursuant to this
Article VII shall take place as promptly as practicable after the execution of
all necessary agreements and instruments, the receipt of any necessary consents
and the comple tion of all matters necessary to consummate such purchase in
accordance with Section 7.7(a) above. At such completion:
(i) the Withdrawing Shareholder, or in the event of a
sale pursuant to Section 7.8(b) each Shareholder, shall transfer the
Shares so purchased to the Purchaser with full title guarantee, free
and clear of all liens, security interests or adverse claims of any
kind or nature, and shall
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deliver to such purchaser any certificates representing the Shares
purchased, duly endorsed for transfer;
(ii) the Withdrawing Shareholder, or in the event of a sale
pursuant to Section 7.8(b) each Shareholder, shall cause the following
persons to resign:
(A) each member of the Britannia Board nominated by
it; and
(B) any officer nominated by it or by any member of
the Britannia Board nominated by it;
(iii) the purchaser(s) shall deliver to the Withdrawing Share
holder, or in the event of a sale pursuant to Section 7.8(b) to the
accounts specified by each Shareholder, in full payment of the purchase
price of the Shares purchased, the amount determined in accordance with
Section 7.6(a) or 7.8(b);
(iv) the Shareholders shall amend this Agreement, the Arti
cles and any other agreement between the Shareholders as the
Nonwithdrawing Shareholder may direct, in each case in such a manner so
as to preserve the Nonwithdrawing Shareholder's relative rights and
obligations under such documents;
(v) subject to stamping, Britannia shall enter the transfer of
Shares in the Shareholders' Register;
(vi) neither Shareholder shall make any representations or
warranties to the other Shareholder in connection with any purchase of
Shares pursuant to this Article VII other than those specifically
identified in Section 7.7(b)(i);
(vii) any purchase pursuant to this Article VII shall relieve
the Withdrawing Shareholder of its liabilities and obligations under
this Agreement (other than any obligations under any obligations
pursuant to Article XI hereof); and
(viii) by signing this Agreement, the Withdrawing Shareholder
shall be deemed to have given a power-of-attorney to the Chair man of
the Board to take, in its name and on its behalf, all actions
contemplated by this Section 7.7(b); provided, however, that such
power-of-attorney shall be valid if, and only if, the Withdrawing
Shareholder shall have refused to take, or shall have unreasonably
delayed the taking of, any action
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authorized by this Section 7.7(b); and provided, further, that such
power of attor ney shall not authorize any act prohibited by the laws
of England and Wales, the Listing Rules of the Stock Exchange or the
City Code on Takeovers and Mergers.
(c) The Shareholders acknowledge and agree that they shall use
all reasonable endeavors to obtain any shareholder approval required by Law in
connec tion with any sale or purchase of Shares pursuant to this Article VII.
Subject to Section 7.9(a) below, the Shareholders further acknowledge and agree
that neither Shareholder shall be obligated to complete any sale or purchase
pursuant to this Article VII until it shall have obtained any required
shareholder approval. For purposes of this Article VII (including, for the
avoidance of doubt, all previous and subsequent Sections of this Article VII)
and subject to the foregoing provisions of this Section 7.7(c), neither
Shareholder shall be deemed to be in breach of any obligations to act within set
time limits if such act requires shareholder approval, until such time as any
required shareholder approval has been obtained, in which event such time limits
shall be deemed to run from the date on which such consent is obtained.
7.8 Deadlock. In the event of the occurrence of a Deadlock,
the Shareholders hereby agree as follows:
(a) Withdrawal by one Shareholder. In the event that, upon the
occurrence of a Deadlock, one Shareholder (the Withdrawing Shareholder) desires
to terminate its participation in Britannia and the other Shareholder (the
Nonwithdrawing Shareholder) does not, the procedures set forth in Sections 7.6
and 7.7 above shall govern the transfer of such Withdrawing Shareholder's Shares
to such Nonwithdrawing Shareholder; provided, that such Nonwithdrawing
Shareholder shall initiate such procedures by providing a Buy-Out Notice within
thirty (30) days of the occurrence of a Deadlock and such Buy-Out Notice shall
constitute an Option Exercise Notice; and provided, further, that the price paid
by the Nonwithdrawing Shareholder for the Shares of the Withdrawing Shareholder
shall not be reduced by the amount of any damages suffered or costs incurred by
the Nonwithdrawing Shareholder or by any discount factor provided for elsewhere
herein.
(b) Withdrawal by both Shareholders. In the event a
Nonwithdrawing Shareholder invokes this Section 7.8(b) pursuant to the
provisions of Sections 7.3 - 7.6 hereof or 7.6(b) hereof or in the event that,
upon the occurrence of a Deadlock, both Shareholders desire to terminate their
participation in the Strategic Alliance established by this Agreement and to
sell their entire shareholdings in, or substantially all the assets of,
Britannia to a third party, the Shareholders shall attempt, through discussions
between their respective chief executive officers, to agree upon the price at
which such shareholdings or such assets
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are to be sold. If such agreement cannot be reached within twenty (20) days of
the occurrence of a Deadlock or the invocation of this Section 7.8(b) pursuant
of Sections 7.3 - 7.6 hereof, an independent merchant bank (or other third
party) shall be designated to organize the sale of Britannia's entire business
(whether through a sale of one hundred percent (100%) of the Shares in Britannia
or otherwise) through a competitive open-market auction or otherwise as such
independent merchant bank (or other third party) shall deem appropriate to
maximize the value to be obtained. The independent merchant bank (or other third
party) shall be designated as provided in Section 7.6(a); provided, however,
that such merchant bank shall be designated within sixty (60) days of the
occurrence of such Deadlock and in no event shall such auction or other
disposition process be consummated in less than one hundred and twenty (120)
days from the date such Deadlock occurs, unless the Shareholders unanimously
agree in writing otherwise; and provided, further, that the share transfer
formalities set forth in Sections 7.7(a) and (b) above shall in any event be
respected.
(c) Withdrawal by Neither Shareholder. In the event that, upon
the occurrence of a Deadlock, neither Shareholder desires to sell or transfer
its interest in Britannia, an independent merchant bank or other independent
third party (the "Bid Appraiser") to be designated jointly by the Shareholders
or, if the Shareholders cannot agree on the designation of a Bid Appraiser
within twenty (20) days from the occurrence of such Deadlock, by an independent
merchant bank (or other third party) designated by two independent merchant
banks to be designated as provided in Section 7.6(a), shall conduct a
competitive bidding process between the Shareholders. Britannia's managing
director shall provide the Shareholders with such information concerning
Britannia and its subsidiaries (and their operations, results, financial
condition or prospects) as the Shareholders may reasonably require in connection
with such bidding process. Each of IM and Mentmore shall provide an all cash
sealed bid for one hundred percent (100%) of the equity in Britannia (the
"Equity Valuation") to such Bid Appraiser and the Shareholder providing the
highest such sealed bid the ("Purchasing Shareholder") shall be required to
purchase the Shares of the other Shareholder at a price per Share proportionate
to the Equity Valuation provided by the Purchasing Shareholder; provided,
however, that (i) the Bid Appraiser to be designated pursuant to this clause (c)
shall be designated within no more than sixty (60) days of the occurrence of a
Deadlock, (ii) sealed bids containing the Shareholders' respective Equity
Valuations shall be provided to the Bid Appraiser within thirty (30) days of the
designation of such Bid Appraiser, (iii) such Bid Appraiser shall notify the
Shareholders in writing of the highest Equity Valuation (the "Auction Notice")
received by such Bid Appraiser and the corre sponding selection of a Purchasing
Shareholder within ten (10) days of the receipt by such Bid Appraiser of the
Shareholders' respective Equity Valuations and (iv) following delivery of the
Auction Notice to the Purchasing Shareholder, the share transfer procedures set
forth in Sections 7.7(a) and (b) above shall be respected.
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7.9 Other Transfers. (a) In the event any Shareholder (the
"Trans ferring Shareholder") desires to transfer all (but not less than all) of
its Shares to any third party in any circumstance not covered by the provisions
of Sections 7.1 - 7.8 above, such Shareholder must first offer in writing (the
"Initial Offer") such Shares to the other Shareholder (the "Non-Transferring
Shareholder") at a price to be determined by the Transferring Shareholder. Such
Initial Offer must specify all material terms and conditions (including, without
limitation, all representations and warranties to be made and any
indemnification to be provided) on which the Trans ferring Shareholder proposes
to transfer its Shares and must remain open for a period of ninety (90) days
(the "Initial Offer Period") from the date on which such Initial Offer is
received by the Non-Transferring Shareholder. In the event (i) such Initial
Offer has not been accepted (such acceptance to be unconditional save for any
requirement that shareholder approval be obtained in relation to the Initial
Offer) by the Non-Transferring Shareholder at the conclusion of the Initial
Offer Period or (ii) such Initial Offer has been so accepted but the transfer of
Shares to the Non-Trans ferring Shareholder is not completed within forty-five
(45) days of the date of such acceptance (such period to be extended for as long
as any act or decision of any governmental authority or body prevents the
completion of such transfer, and for the avoidance of doubt, to be subject to
Section 7.7(c)), the Transferring Shareholder may offer such Shares (the
"Subsequent Offer") to a third party for a period of one hundred and eighty
(180) days after the expiration of the Initial Offer Period (the "Third Party
Offer Period"), the Transferring Shareholder may not accept any offer at a price
below the price at which, or on terms and conditions more favorable to the
Transferring Shareholder than those on which, such Transferring Shareholder's
Shares were offered to the Non-Transferring Shareholder pursuant to the Initial
Offer.
(b) In the event (i) the Subsequent Offer has not been
accepted (such acceptance to be unconditional save for any requirement that
shareholder approval be obtained in relation to the Subsequent Offer) at the
conclusion of the Third Party Offer Period or (ii) such Subsequent Offer has
been so accepted but the transfer of Shares to the Non-Transferring Shareholder
is not completed within forty-five (45) days of the date of such acceptance
(such period to be extended for as long as any act or decision of any
governmental authority or body prevents the completion of such transfer and, for
the avoidance of doubt, to be subject to Section 7.7(c) above) the Subsequent
Offer shall lapse and the Transferring Shareholder may only transfer its Shares
by recommencing and respecting the procedure set forth in Section 7.9(a) above.
7.10 Other Transfer Conditions. (a) No transfer of Shares to
any third party (including a transfer permitted by the second sentence of
Section 7.10(b)) shall be permitted or registered in Britannia's shareholder
register unless and until any such third party has delivered to Britannia a Deed
of Adherence in the form attached as Exhibit I hereto.
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(b) Except for a sale pursuant to and in accordance with the
provi sions of Section 7.1 - 7.9 or this Section 7.10(b), or a pledge pursuant
to and in accordance with Section 4.5, no Shareholder shall sell, assign,
exchange, encumber, distribute, transfer, pledge, or otherwise dispose of, by
gift or otherwise, any Shares or any rights associated therewith (including,
without limitation, any rights to receive dividends or other distributions owned
by such Shareholder at the date hereof or at any time hereafter).
Notwithstanding the foregoing sentence, either Shareholder may transfer all but
not less than all of its Shares to a Wholly Owned Subsidiary of the Parent or
Mentmore, as the case may be, subject to such Wholly Owned Subsidiary entering
into a Deed of Adherence in the form attached as Exhibit I hereto; provided that
in the event any such transferee ceases to be a Wholly Owned Subsidiary of the
Parent or Mentmore, as the case may be, such transferee shall transfer the
relevant Shares to the Parent or Mentmore or another Wholly Owned Subsidiary of
the Parent or Mentmore.
ARTICLE VIII
REPRESENTATIONS AND WARRANTIES
8.1 Representations and Warranties of Each Party. Each Party
makes the following representations and warranties as of the date of this
Agreement to the other Parties, recognizing that each of the other Parties is
relying and will continue to rely thereon:
(a) The Agreement is a legal, valid and binding instrument of
each Party, enforceable in accordance with its terms, subject to applicable
bankruptcy, insolvency and similar laws affecting creditors' rights generally,
and subject, as to enforceability, to any applicable limitations on the granting
of specific performance (or any similar remedy) in the jurisdiction in which
enforcement is sought.
(b) The execution and delivery of this Agreement by each
Party, and the consummation of the transactions contemplated hereby, (i) do not
require the consent, approval, authorization, notification, registration or
qualification of or with any governmental authority, and (ii) do not result in a
breach or violation of any of the terms and provisions of, or constitute a
default under, (A) any Material indenture, mortgage, deed of trust, lease or any
other agreement or instrument of whatsoever nature to which such Party is a
party or by which it or any of its property or assets is bound, or (B) such
Party's memorandum or articles of association, charter, certificate of
incorporation, by-laws (or similar document) or any of its constitutive
documents.
8.2 Survival. All representations and warranties contained in
this Agreement or in any certificate or instrument delivered pursuant hereto
shall survive
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the execution of this Agreement and shall not be affected in any respect by any
investigation conducted by any Party or any information which any Party may
receive.
ARTICLE IX
GOVERNING LAW; DISPUTE RESOLUTION
9.1 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of England and Wales without giving effect
to the principles of conflicts of laws thereof.
9.2 Conciliation. (a) Subject to the provisions of Section
7.6(a) hereof, any dispute arising out of or relating to this Agreement,
including, without limitation, the interpretation of any provision of this
Agreement or the breach, termination or invalidity of this Agreement (a
"Dispute") shall be submitted for resolution to a committee (the "Conciliation
Committee") pursuant to this Section 9.2; provided, however, that in the event
any situation giving rise to a Buy-Out Notice is submitted to the Conciliation
Committee prior to the exercise of buy-out or withdrawal and sale rights
pursuant to Section 7.6(a), the Conciliation Committee shall only determine
whether or not the situation giving rise to the Buy-Out Notice in fact exists
and has not been cured. If the Conciliation Committee determines that the
Nonwithdrawing Shareholder had no grounds for the delivery of a Buy-Out Notice,
such Nonwithdrawing Shareholder shall be obligated to reimburse the Withdrawing
Shareholder for all out-of-pocket costs and expenses, including reasonable legal
expenses, incurred by the Withdrawing Shareholder as a result of the delivery of
the Buy-Out Notice. The Conciliation Committee shall be composed of the chief
executive or other nominee of each Shareholder (or a delegate thereof) who shall
have full power and authority to resolve any Dispute. The Conciliation Committee
shall meet as necessary in order to resolve the Dispute. The Conciliation
Committee shall attempt to resolve such Dispute by mutual agreement within ten
(10) Business Days of referral of such Dispute to it; provided, however, that
the Parties may agree to lengthen such period. Decisions of the Conciliation
Committee shall be final and binding on the Parties.
(b) No Shareholder may submit any Dispute to arbitration
unless and until the procedure specified in Section 9.2(a) has been followed.
9.3 Arbitration. (a) Any dispute the Conciliation Committee is
unable to resolve within the period specified in Section 9.2(a) shall be finally
settled by arbitration by three arbitrators appointed in accordance with the
Rules of Arbitra tion of the International Chamber of Commerce ("ICC") then in
effect, except as modified herein. The arbitration shall be held in London,
England. The arbitration proceedings shall be conducted, and the award shall be
rendered, in English.
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(b) The Parties expressly waive any rights they may have to
litigate or resolve any Dispute otherwise than in accordance with this Article
IX and the Parties hereby waive any rights of application or appeal to the
courts of England to the fullest extent permitted by law in connection with any
question of law arising in the course of the arbitration or with respect to any
award made, except for actions to enforce an arbitral award and actions seeking
interim, interlocutory or other provi sional relief in any court of competent
jurisdiction.
(c) The award shall be final and binding upon the Parties as
from the date rendered, and shall be the sole and exclusive remedy between the
Parties regarding any claims (including, without limitation, any claim for
specific perfor mance of any obligation hereunder), counterclaims, issues, or
accounting presented to the arbitral tribunal and judgment upon any award may be
entered in any court having jurisdiction; provided, however, that in the event
any situation giving rise to a Buy-Out Notice is referred to arbitration prior
to the exercise of buy-out or withdrawal and sale rights pursuant to Section
7.6(a), the arbitrators shall only determine whether the situation giving rise
to the Buy-Out Notice in fact exists and has not been cured; and provided,
further, that if the arbitral tribunal determines that the Nonwithdrawing
Shareholder had no grounds for the delivery of a Buy-Out Notice, such
Nonwithdrawing Shareholder shall be obligated to reimburse the Withdrawing
Shareholder for all out-of-pocket costs and expenses, including reasonable legal
expenses, incurred by the Withdrawing Shareholder as a result of the delivery of
the Buy-Out Notice.
(d) Subject to 9.2(a) and (b) above, each of the Parties shall
bear its own costs and expenses and an equal share of the arbitrators' and
administrative fees of the arbitration.
(e) Any monetary award shall be made and promptly payable in
Pounds sterling free of any tax, deduction or offset, and the arbitral tribunal
shall be authorized in its discretion to grant pre-award and post-award interest
at commercial rates. Any costs, fees, or taxes incident to enforcing the award
shall, to the maximum extent permitted by law, be charged against the Party
resisting such enforcement.
(f) This Agreement and the rights and obligations of the
Parties shall remain in full force and effect pending the award in any
arbitration proceeding here under.
(g) All notices by one Party to the other in connection with
the arbitration shall be in accordance with the provisions of Section 13.4
hereof.
(h) The arbitration language shall be English. It is further
expressly stated that the arbitrators appointed as provided above shall have
sole and final
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jurisdiction for all disputes which may arise in connection with this Agreement
and its Exhibits.
9.4 Survival. All provisions of this Article IX shall survive
the termination of this Agreement pursuant to Article X.
ARTICLE X
TERMINATION
10.1 Termination Upon Unanimous Agreement. This Governing
Agreement may be terminated at any time by the unanimous written consent of the
Shareholders.
10.2 Termination Upon Failure of Certain Conditions. If the
Shareholders fail to consummate all the transactions identified in the
Transaction Agreement within six months of the date hereof, this Agreement shall
be terminated with no liability to either Shareholder.
10.3 Consequences of Termination. Subject to Section 10.2, if
this Agreement is terminated, the Shareholders shall either sell Britannia's
entire business to a third party in accordance with Section 7.8(b) or submit
sealed bids for the purchase of one hundred percent (100%) of the equity in
Britannia in accordance with Section 7.8(c).
ARTICLE XI
CONFIDENTIALITY
11.1 Confidentiality Obligation. In the event Confidential
Information as defined in Section 11.2 hereof is disclosed to either Shareholder
or the Parent, such Shareholder or Parent agrees not to disclose such
Confidential Information to any other Person without the prior written consent
of the owner of such Confidential Information; provided, however, that each such
Shareholder or the Parent may, subject to Section 11.3 and if necessary in order
to further its business objectives, disclose such Confidential Information to
(i) any of its officers, directors, employees, legal or accounting
representatives who has a need to know such Confidential Information and (ii)
its investors and investment bankers and such investors' or investment bankers'
respective representatives, it being understood that the Party disclosing
Confidential Information to any such person shall be liable for any further
disclosure of such Confidential Information by such person in a manner
inconsistent with the provisions of this Article XI. The restrictions set forth
in this
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Section 11.1 shall remain in effect until ten (10) years after the date of any
termination of this Agreement pursuant to Article X.
11.2 Definition of Confidential Information. For purposes of
this Agreement, "Confidential Information" shall mean any financial, commercial,
technical or other nonpublic information of any Party or any Affiliate thereof,
which is disclosed (whether prior to or after the date hereof) to any Party or
any Affiliate thereof in connection with the Records Management Business or in
connection with the activities of Britannia or any of its Subsidiaries,
including without limitation any engineering or other drawings, data bases,
computer software, designs, specifications, technical information, know-how,
documentation, price books, client lists and service material, of all kinds and
in whatsoever form; provided, however, that "Confidential Information" shall not
include any information so disclosed if:
(i) the recipient of such information shall have
had knowledge of such information prior to the date on which such
recipient received it from a Party or an Affiliate of a Party;
(ii) such information shall have entered the public
domain through no fault of such recipient; or
(iii) such recipient shall have learned of such
information from a third party in such a manner that such recipient
reasonably believed that such third party was authorized to disclose
such information.
11.3 Disclosure Required by Law or Court Order. In the event
that any recipient of Confidential Information is required by order of any
competent authority or by application of any Law (including, without limitation,
any requirement of any U.S. stock exchange or quotation system, Listing Rules of
the Stock Exchange or the City Code on Takeovers and Mergers) to disclose any
Confidential Information supplied to it by any other Person, the recipient
required to make such disclosure shall, in a manner consistent with such Law,
promptly notify the other Person or Persons involved so that such Person or
Persons may seek an appropriate protective order and/or waive the required
recipient's compliance with Section 11.1. In the event that such protective
order or other remedy is not obtained, then the recipient or recipients so
required to disclose Confidential Information shall furnish only that portion of
such Confidential Information that is legally required to be disclosed.
11.4 Use of Confidential Information. During the term of this
Agreement, any Confidential Information disclosed to a Person permitted to
receive such information pursuant to Section 11.1 may be used by such recipient
only in connection with the Records Management Business. Nothing in this
Agreement
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shall be construed to grant any additional rights in or licenses to such
Confidential Information.
ARTICLE XII
ADDITIONAL REPRESENTATION AND OBLIGATIONS
12.1 Representation of the Parent. The Parent hereby
represents that as of the date hereof, IM has sufficient funds available to
satisfy its equity investment obligations pursuant to Section 4.2 hereof.
12.2 Covenant of the Parent. The Parent hereby undertakes to
procure that IM or any other Wholly Owned Subsidiary of the Parent that succeeds
in title to the Shares held by IM shall satisfy all of its obligations hereunder
(other than its obligations under Section 4.2) and comply with all restrictions
and limitations applicable to it hereunder.
12.3 Indemnification. IM will indemnify and keep indemnified
Mentmore for 50.1% of all losses, damages, costs and expenses (including all
reasonable legal expenses) arising out of or in respect of the guaranty dated
July 22, 1997 granted by Mentmore to the Department of Social Security.
12.4 Shareholder Covenant. The Shareholders agree to comply
with their respective obligations (if any) under the terms of the share option
and sharesave plans referred to in Exhibit J hereto and agree to cooperate in a
fair and reasonable manner in relation to the administration of such plans.
ARTICLE XIII
MISCELLANEOUS
13.1 Fees and Expenses. Except as specifically provided to the
contrary in this Agreement, all costs and expenses incurred in connection with
this Agreement and the consummation of the Transactions shall be paid by the
Party incurring such expenses.
13.2 Amendment and Modification. This Agreement may be
amended, modified and supplemented in any and all respects, but only by a
written instrument signed by all of the Parties hereto expressly stating that
such instrument is intended to amend, modify or supplement this Agreement.
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13.3 Survival of Representations and Warranties. Each of the
representations and warranties in this Agreement or in any Exhibit, schedule,
instrument or other document delivered pursuant to this Agreement shall survive
the closing of the transactions contemplated in the Transaction Agreement and
shall continue in force thereafter except as limited by Section 9.1(c) of such
Transaction Agreement.
13.4 Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally,
telecopied (which is confirmed) or sent by an overnight courier service, such as
Federal Express, to the Parties at the following addresses (or at such other
address for a Party as shall be specified by like notice):
if to IM or the Parent, to:
Iron Mountain Incorporated
745 Atlantic Avenue, 10th Floor
Boston, Massachusetts 02111-2735
Attention: Donald P. Richards, Vice President
Telephone: (617) 535-4858
Telecopy: (617) 350-7881
with a copy to:
Iron Mountain Incorporated
745 Atlantic Avenue, 10th Floor
Boston, Massachusetts 02111-2735
Attention: Garry B. Watzke, Esq.
Telephone: (617) 535-4702
Telecopy: (617) 350-7881
if to Mentmore, to:
Mentmore Abbey plc
7 Abbey Business Centre
Ingate Place
London SW8 3NS
Attention: Clive D. Drysdale
Telephone: 44-171-720-5067
Telecopy: 44-171-498-8342
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with a copy to:
Eversheds
10 Newhall Street
Birmingham B3 3LX
Attention: Milton N. Psyllides
Telephone: 44-121-233-2001
Telecopy: 44-121-236-1583
if to Britannia, to:
Britannia Data Management Limited
7 Abbey Business Centre
Ingate Place
London SW8 3NS
Attention:
Telephone:
Telecopy:
with a copy to:
13.5 Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be considered one and the same agreement
and shall become effective when two or more counterparts have been signed by
each of the Parties and delivered to the other Parties.
13.6 Entire Agreement; No Third Party Beneficiaries. This
Agreement (including the documents and the instruments referred to herein): (a)
constitutes the entire agreement and supersede all prior agreements and
understandings, both written and oral, among the Parties with respect to the
subject matter hereof and thereof, and (b) is not intended to confer upon any
Person other than the Parties hereto and thereto any rights or remedies
hereunder.
13.7 Severability. Any term or provision of this Agreement
that is held by a court of competent jurisdiction or other authority to be
invalid, void or unenforceable in any situation in any jurisdiction shall not
affect the validity or enforceability of the remaining terms and provisions
hereof or the validity or enforceability of the offending term or provision in
any other situation or in any other jurisdiction. If the final judgment of a
court of competent jurisdiction or other authority declares that any term or
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provision hereof is invalid, void or unenforceable, the Parties agree that the
court making such determination shall have the power to reduce the scope,
duration, area or applicability of the term or provision, to delete specific
words or phrases, or to replace any invalid, void or unenforceable term or
provision with a term or provision that is valid and enforceable and that comes
closest to expressing the intention of the invalid or unenforceable term or
provision.
13.8 Time of Essence. Subject to Section 7.7(c) hereof, each
of the Parties hereto hereby agrees that, with regard to all dates and time
periods set forth or referred to in this Agreement, time is of the essence.
13.9 Extension; Waiver. At any time prior to the closing of
the transactions contemplated in the Transaction Agreement, the Parties may (a)
extend the time for the performance of any of the obligations or other acts of
the other Parties, (b) waive any inaccuracies in the representations and
warranties of the other Parties contained in this Agreement or in any document
delivered pursuant to this Agreement or (c) waive compliance by the other
Parties with any of the agreements or conditions contained in this Agreement.
Any agreement on the part of a party to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of such
party. The failure of any party to this Agreement to assert any of its rights
under this Agreement or otherwise shall not constitute a waiver of those rights.
13.10 Assignment. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any of the
Parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other Party, except that each of the Shareholders may
assign, in its sole discretion, any or all of its rights, interests and
obligations hereunder to any Wholly Owned Subsidiary; provided any such Wholly
Owned Subsidiary must execute a Deed of Adherence in substantially the form of
Exhibit I hereto; and provided, further, that in the event any Wholly Owned
Subsidiary to whom such rights, interests or obligations have been assigned
ceases to be a Wholly Owned Subsidiary, the rights, interests or obligations
assigned to such Wholly Owned Subsidiary must be reassigned either to the
relevant Shareholder or another Wholly Owned Subsidiary of the relevant
Shareholder (such subsidiary being required to execute a Deed of Adherence in
substantially the form of Exhibit I hereto). Subject to the preceding sentence,
this Agreement shall be binding upon, inure to the benefit of and be enforceable
by the Parties and their respective permitted successors and assigns.
13.11 Headings. The headings contained in this Agreement are
for convenience of reference only and shall not affect in any way the meaning or
interpretation of this Agreement.
13.12 Section References. All references to Articles and
Sections herein are to the Articles and Sections of this Agreement unless
otherwise specified.
13.13 Relationship Between the Parties.
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(a) No provision of this Agreement shall be construed as
creating a partnership, agency or fiduciary relationship between any of the
Parties.
(b) The relationship of the Shareholders to Britannia shall be
that of shareholders, except as might otherwise be provided in any other written
agreement between one or more of the Shareholders and Britannia. No Shareholder
shall act as an agent for or on behalf of Britannia, except as might
specifically be provided in any other written agreement between Britannia and
such Shareholder. Each Shareholder shall conduct its affairs with regard to
third parties so as to avoid the appearance or creation of any other or greater
relationship between such Shareholder and Britannia. No Shareholder shall take
any action on behalf of or binding on Britannia without the explicit approval
and authorization of Britannia.
(c) Any agreement entered into by a Party which violates any
provision of this Agreement, or is otherwise outside the scope of this
Agreement, shall not be binding on the other Party or on Britannia, and only the
Party entering into such agreement shall be subject to any liability which might
arise therefrom.
13.14 Voting. Each Shareholder shall take, and shall cause
each member of the Board nominated by it to take, all actions necessary to
implement the provisions of this Agreement, except such actions as are
indisputably illegal or invalid under applicable law.
13.15 News Releases. Each Shareholder agrees that no public
release or announcement concerning the execution of this Agreement shall be
issued by such Shareholder except in accordance with Section 6.6 of the
Transaction Agreement.
13.16 Precedence of Agreement. Where the context so requires,
the provisions of this Agreement shall have precedence over the provisions of
the Articles of Association as amended from time to time.
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IN WITNESS WHEREOF, the Parties have executed this Agreement as a deed
on the first date written above.
Executed and delivered as a deed by
Mentmore Abbey plc:
Acting by:
_______________________________________
Chairman: Nicholas Smith
_______________________________________
Director: Clive Drysdale
Executed and delivered as a deed by Iron
Mountain U.K. Ltd:
Acting by:
_______________________________________
Director: Richard Reese
_______________________________________
Vice President: Donald Richards
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Executed and delivered as a deed by Iron
Mountain Incorporated:
Acting by:
_______________________________________
Director
_______________________________________
Director
Executed and delivered as a deed by
Britannia Data Management Limited:
Acting by:
_______________________________________
Director
_______________________________________
Director/Secretary
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