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EXHIBIT 2.2
SHARE PURCHASE AGREEMENT
DATED AS OF
JUNE 27, 2001
BY AND AMONG
▇▇▇▇▇▇▇ SPA ASIA LIMITED,
▇▇▇▇▇▇▇ LEISURE LIMITED,
SIERRA PACIFIC INVESTMENTS LLC,
PACIFIC CENTURY CAPITAL LIMITED,
FRANKY TJAHYADIKARTA,
OKIE R. LUKITA,
AND
▇▇▇▇▇▇▇ ▇.▇. ▇▇▇▇▇▇▇▇
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TABLE OF CONTENTS
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ARTICLE I. PURCHASE AND SALE OF MANDARA SHARES; SELLER LOANS......................................................2
SECTION 1.1 PURCHASE AND SALE...............................................................................2
SECTION 1.2 THE CLOSING.....................................................................................2
SECTION 1.3 CONSIDERATION; NON-REFUNDABLE DEPOSIT...........................................................2
SECTION 1.4 PURCHASE PRICE ADJUSTMENT.......................................................................3
SECTION 1.5 GUARANTEED EBITDA SURPLUS AMOUNT................................................................5
ARTICLE II. REPRESENTATIONS AND WARRANTIES OF SELLERS REGARDING THE MANDARA
ENTITIES..............................................................................................8
SECTION 2.1 ORGANIZATION....................................................................................8
SECTION 2.2 CHARTER DOCUMENTS AND RECORDS...................................................................8
SECTION 2.3 NO CONFLICTS....................................................................................8
SECTION 2.4 CONSENTS........................................................................................9
SECTION 2.5 NO DEFAULTS UNDER INDEBTEDNESS..................................................................9
SECTION 2.6 NO COMMISSIONS..................................................................................9
SECTION 2.7 SUBSIDIARIES....................................................................................9
SECTION 2.8 EQUITY INTERESTS OF THE MANDARA ENTITIES........................................................9
SECTION 2.9 RELATED PARTY AGREEMENTS.......................................................................10
SECTION 2.10 LITIGATION, ETC................................................................................10
SECTION 2.11 GOVERNMENTAL APPROVALS; COMPLIANCE WITH LAWS...................................................10
SECTION 2.12 ENVIRONMENTAL MATTERS..........................................................................10
SECTION 2.13 LIABILITIES AND OBLIGATIONS....................................................................10
SECTION 2.14 RECEIVABLES AND INVENTORIES....................................................................11
SECTION 2.15 REAL PROPERTIES................................................................................11
SECTION 2.16 TANGIBLE ASSETS................................................................................12
SECTION 2.17 PROPRIETARY RIGHTS.............................................................................12
SECTION 2.18 RELATIONS WITH GOVERNMENTS, ETC................................................................13
SECTION 2.19 MATERIAL CONTRACTS.............................................................................13
SECTION 2.20 INSURANCE......................................................................................15
SECTION 2.21 EMPLOYEE MATTERS...............................................................................15
SECTION 2.22 TAXES..........................................................................................17
SECTION 2.23 ABSENCE OF CERTAIN CHANGES.....................................................................17
SECTION 2.24 BANK RELATIONSHIPS; POWERS OF ATTORNEY.........................................................18
SECTION 2.25 FINANCIAL STATEMENTS...........................................................................19
SECTION 2.26 CONTROL OF RELATED BUSINESSES..................................................................19
ARTICLE III. REPRESENTATIONS AND WARRANTIES REGARDING THE SELLERS................................................19
SECTION 3.1 ORGANIZATION...................................................................................19
SECTION 3.2 AUTHORIZATION AND ENFORCEABILITY...............................................................20
SECTION 3.3 NO CONFLICTS...................................................................................20
SECTION 3.4 CONSENTS.......................................................................................20
SECTION 3.5 LITIGATION, ETC................................................................................20
SECTION 3.6 NO COMMISSIONS.................................................................................20
SECTION 3.7 INVESTMENT INTENT; SECURITIES DOCUMENTS........................................................21
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF BUYER AND ▇▇▇▇▇▇▇..................................................21
SECTION 4.1 ORGANIZATION...................................................................................21
SECTION 4.2 AUTHORIZATION AND ENFORCEABILITY...............................................................21
SECTION 4.3 NO CONFLICTS...................................................................................21
SECTION 4.4 CONSENTS.......................................................................................22
SECTION 4.5 LITIGATION, ETC................................................................................22
SECTION 4.6 NO COMMISSIONS.................................................................................22
SECTION 4.7 ▇▇▇▇▇▇▇ SHARES.................................................................................22
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SECTION 4.8 SEC REPORTS....................................................................................22
SECTION 4.9 GOVERNMENTAL APPROVALS; COMPLIANCE WITH LAWS...................................................23
SECTION 4.10 ABSENCE OF UNDISCLOSED LIABILITIES.............................................................23
ARTICLE V. CONDUCT OF BUSINESS PENDING THE CLOSING...............................................................23
SECTION 5.1 CONDUCT OF BUSINESS PENDING THE CLOSING........................................................23
ARTICLE VI. CERTAIN AGREEMENTS AND COVENANTS OF THE PARTIES PENDING THE CLOSING AND RELATED TAX MATTERS..........25
SECTION 6.1 NO SHOP........................................................................................25
SECTION 6.2 ACCESS TO INFORMATION; COOPERATION.............................................................26
SECTION 6.3 TAX MATTERS....................................................................................26
SECTION 6.4 BUSINESS RELATIONS.............................................................................27
SECTION 6.5 COMMERCIALLY REASONABLE EFFORTS................................................................27
ARTICLE VII. CLOSING DELIVERIES AND CONDITIONS...................................................................28
SECTION 7.1 CLOSING DELIVERIES OF THE SELLERS..............................................................28
SECTION 7.2 ADDITIONAL CONDITIONS TO THE OBLIGATION OF BUYER AND ▇▇▇▇▇▇▇...................................28
SECTION 7.3 CLOSING DELIVERIES OF BUYER AND ▇▇▇▇▇▇▇........................................................29
ARTICLE VIII. COVENANTS FOLLOWING THE CLOSING....................................................................30
SECTION 8.1 MANDARA'S OPERATIONS DURING THE TEST PERIOD....................................................30
SECTION 8.2 RESERVED.......................................................................................30
SECTION 8.3 RESERVED.......................................................................................30
SECTION 8.4 APPROVED PIPELINE PROJECTS.....................................................................30
SECTION 8.5 ADDITIONAL AGREEMENT WITH RESPECT TO DEVELOPMENT PROJECTS......................................31
ARTICLE IX. INDEMNIFICATION......................................................................................32
SECTION 9.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES.....................................................32
SECTION 9.2 AGREEMENT BY THE SELLERS TO INDEMNIFY..........................................................32
SECTION 9.3 AGREEMENT BY THE BUYER AND ▇▇▇▇▇▇▇ TO INDEMNIFY................................................33
SECTION 9.4 THIRD PARTY ACTIONS............................................................................33
SECTION 9.5 LIMITS ON INDEMNIFICATION......................................................................34
SECTION 9.6 REMEDIES EXCLUSIVE.............................................................................36
SECTION 9.7 PAYMENTS OF INDEMNIFIABLE DAMAGES..............................................................36
SECTION 9.8 ACKNOWLEDGEMENT REGARDING MATERIALITY..........................................................36
ARTICLE X. LIMITATIONS ON COMPETITION............................................................................36
SECTION 10.1 PROHIBITED ACTIVITIES..........................................................................36
SECTION 10.2 DAMAGES........................................................................................38
SECTION 10.3 REASONABLE RESTRAINT...........................................................................38
SECTION 10.4 INDEPENDENT COVENANT...........................................................................38
SECTION 10.5 MATERIALITY....................................................................................38
ARTICLE XI. DEFINITIONS AND DEFINITIONAL PROVISIONS..............................................................38
SECTION 11.1 DEFINED TERMS..................................................................................38
SECTION 11.2 OTHER DEFINED TERMS............................................................................48
SECTION 11.3 OTHER DEFINITIONAL PROVISIONS..................................................................48
ARTICLE XII. CONFIDENTIALITY.....................................................................................48
SECTION 12.1 TREATMENT OF CONFIDENTIAL INFORMATION..........................................................48
ARTICLE XIII. TERMINATION AND EXPENSES...........................................................................49
SECTION 13.1 TERMINATION OF THIS AGREEMENT..................................................................49
SECTION 13.2 EFFECT OF TERMINATION..........................................................................49
SECTION 13.3 EXPENSES.......................................................................................49
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SECTION 13.4 LIABILITIES IN EVENT OF TERMINATION............................................................49
ARTICLE XIV. MISCELLANEOUS.......................................................................................50
SECTION 14.1 PUBLIC ANNOUNCEMENTS...........................................................................50
SECTION 14.2 NOTICES........................................................................................50
SECTION 14.3 GOVERNING LAW..................................................................................51
SECTION 14.4 BINDING EFFECT; ASSIGNMENT; THIRD PARTY BENEFICIARIES..........................................51
SECTION 14.5 ENTIRE AGREEMENT...............................................................................52
SECTION 14.6 FURTHER ASSURANCES.............................................................................52
SECTION 14.7 AMENDMENTS.....................................................................................52
SECTION 14.8 WAIVERS........................................................................................52
SECTION 14.9 HEADINGS; COUNTERPARTS.........................................................................52
SECTION 14.10 SEVERABILITY...................................................................................52
SECTION 14.11 RIGHTS AND REMEDIES............................................................................53
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EXHIBITS AND SCHEDULES
EXHIBITS
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Exhibit 1.3(a)(ii) Registration Rights Agreement
Exhibit 1.3(a)(iii) Subordinated Promissory Notes executed by ▇▇▇▇▇▇▇ in
favor of Sellers
Exhibit 1.4(e) Jurisdictional Cash Balance Targets
Exhibit 6.3(c) Executed Certificate
Exhibit 7.1(a) Edleson Employment Agreement
Exhibit 7.1(d) Opinion of ▇▇▇▇▇▇ & ▇▇▇▇▇▇
Exhibit 7.1(f) Instruments of Transfer of the Mandara Shares
Exhibit 7.1(g) Form of Release
Exhibit 7.1(k) Form of Pledge Agreement
Exhibit 7.3(e)(i) Opinion of Akerman, Senterfitt & ▇▇▇▇▇▇, P.A.
Exhibit 7.3(e)(ii) Opinion of ▇▇▇▇▇ ▇. ▇▇▇▇▇
SCHEDULES
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SCHEDULE 2.1 Organization
SCHEDULE 2.3(b) No Conflicts
SCHEDULE 2.4 Mandara Entity Consents
SCHEDULE 2.7 Subsidiaries of the Mandara Entities
SCHEDULE 2.8 Equity Interests of the Mandara Entities
SCHEDULE 2.9 Related Party Agreements
SCHEDULE 2.10 Litigation, Etc.
SCHEDULE 2.11 Governmental Approvals; Compliance With Laws
SCHEDULE 2.13 Liabilities and Obligations
SCHEDULE 2.15(a) Real Properties
SCHEDULE 2.17 Proprietary Rights
SCHEDULE 2.19(a) Material Contracts
SCHEDULE 2.20 Insurance
SCHEDULE 2.21(a) Employee Matters/Employment Agreements
SCHEDULE 2.21(b) Employee Benefit Plans
SCHEDULE 2.21(g) Governmental Requirements
SCHEDULE 2.22 Taxes
SCHEDULE 2.23 Absence of Certain Changes
SCHEDULE 2.24 Bank Relationships; Powers of Attorney
SCHEDULE 2.25 Financial Statements
SCHEDULE 2.26 Control of Related Businesses
SCHEDULE 3.4 Seller Consents
SCHEDULE 4.4 Buyer and ▇▇▇▇▇▇▇ Consents
SCHEDULE 4.6 No Commissions
SCHEDULE 10.1 Prohibited Activities
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SHARE PURCHASE AGREEMENT
This Share Purchase Agreement (this "AGREEMENT") is entered into as of
June 27, 2001, by and among ▇▇▇▇▇▇▇ SPA ASIA LIMITED, a Bahamas international
business company ("BUYER"), ▇▇▇▇▇▇▇ LEISURE LIMITED, a Bahamas international
business company ("▇▇▇▇▇▇▇"), SIERRA PACIFIC INVESTMENTS LLC, a Delaware limited
liability company ("SPI"), PACIFIC CENTURY CAPITAL LIMITED, a British Virgin
Islands company ("PCCL"), FRANKY TJAHYADIKARTA, OKIE R. LUKITA and ▇▇▇▇▇▇▇ ▇.▇.
▇▇▇▇▇▇▇▇. Each of SPI, PCCL, Franky Tjahyadikarta, Okie R. Lukita and ▇▇▇▇▇▇▇
▇.▇. ▇▇▇▇▇▇▇▇, referred to herein, individually, as a "SELLER" and,
collectively, the "SELLERS". Certain other capitalized terms used herein without
definition have the meanings specified in ARTICLE XI.
WHEREAS, Mandara Spa Asia Limited, a British Virgin Islands company
formerly known as Spa Partners Asia Limited ("MANDARA" or the "COMPANY"),
together with its direct and indirectly wholly owned subsidiaries (each, a
"SUBSIDIARY" and, together with Mandara, collectively, the "MANDARA ENTITIES"),
is engaged in the business of owning and operating various spa facilities in
hotel resorts that provide spa, beauty and fitness services and products
including, but not limited to, massage therapies, facials, aromatherapies and
other skin treatments, hair salon services, hair removal, fitness training,
manicures, pedicures and related services (collectively, the "BUSINESS");
WHEREAS, Sellers collectively own sixty percent (60%) of the
outstanding capital shares of Mandara (the "MANDARA SHARES"), which are owned by
Sellers as follows: (i) 37.42% by SPI (3,742 shares); (ii) 17.62% by PCCL (1,762
shares); (iii) 1.03% by Okie R. Lukita (103 shares); (iv)1.03% by Franky
Tjahyadikarta (103 shares); and (v) 2.90% by ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ (290 shares);
WHEREAS, Buyer desires to purchase from the Sellers, and the Sellers
desire to sell to Buyer, the Mandara Shares; and
WHEREAS, in addition to the foregoing, Buyer desires to acquire from
the Sellers, the Sellers' right, title and interest of in, to and under those
certain Unsecured Promissory Notes, each dated as of May 11, 2000, made by
Mandara in favor of each Seller, pursuant to which the Company is entitled to
borrow up to an aggregate of $2,100,000 and pursuant to which no amounts have
been borrowed to date (collectively, the "SELLER LOANS").
NOW, THEREFORE, in consideration of the foregoing premises and the
covenants and agreements herein contained, and intending to be legally bound
hereby, the Parties hereto agree as follows:
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ARTICLE I.
PURCHASE AND SALE OF MANDARA SHARES; SELLER LOANS
SECTION 1.1 PURCHASE AND SALE. Subject to the terms and conditions of
this Agreement, at the Closing, the Sellers shall sell, assign, transfer and
convey to Buyer all of their respective right, title and interest in and to: (a)
the Mandara Shares, free and clear of any Liens (other than Permitted Liens),
and (b) the Seller Loans.
SECTION 1.2 THE CLOSING. Subject to the terms and conditions of this
Agreement, the consummation of the purchase and sale of the Mandara Shares and
the Seller Loans, and the other transactions contemplated hereby (the "CLOSING")
shall take place as promptly as practicable after satisfaction or waiver of the
conditions set forth in ARTICLE VII (the "CLOSING DATE") at the offices of
Buyer, or such other time and place as the parties may otherwise agree;
PROVIDED, HOWEVER, in no event shall the Closing Date be earlier than July 1,
2001. The parties shall use commercially reasonable efforts to cause the Closing
Date to be July 2, 2001.
SECTION 1.3 CONSIDERATION; NON-REFUNDABLE DEPOSIT.
(a) The consideration to be paid by Buyer for its purchase of the
Mandara Shares and the Seller Loans (the "CONSIDERATION") shall be equal
$8,880,000(the "PURCHASE PRICE"), subject to adjustment pursuant to SECTION 1.4
(the "PURCHASE PRICE ADJUSTMENT").
(b) The Consideration shall be payable by Buyer to Sellers as follows
(unless otherwise specified by Sellers in writing, all Consideration shall be
allocated between the Sellers in accordance with their respective Pro Rata
Percentages):
(i) cash in an amount equal to $5,880,000;
(ii) 99,825 shares of voting common shares, par value (U.S.)
$.01 per share, of ▇▇▇▇▇▇▇ (the "▇▇▇▇▇▇▇ COMMON SHARES"), which number
of shares is equal to the quotient of (A) $1,600,000 divided by (B)
$16.028, which is the average closing sale price of a share of ▇▇▇▇▇▇▇
Common Shares as quoted on the NASDAQ National Market ("NASDAQ") for
the twenty (20) consecutive trading days that immediately precede the
second (2nd) trading day prior to the date hereof, as such closing sale
prices are reported (absent manifest error in the printing thereof) by
THE WALL STREET JOURNAL (the "AVERAGE CLOSING SALE PRICE"). ▇▇▇▇▇▇▇ has
not purchased or caused to be purchased, and will not purchase or cause
to be purchased, any ▇▇▇▇▇▇▇ Common Shares, whether pursuant to its
share repurchase program or otherwise, during the period used to
determine the Average Closing Sale Price. No fractional ▇▇▇▇▇▇▇ Common
Shares will be issued. The ▇▇▇▇▇▇▇ Common Shares issued pursuant to
this SECTION 1.3(B)(II) are referred to herein as the "▇▇▇▇▇▇▇ SHARES".
With respect to the ▇▇▇▇▇▇▇ Shares, the Sellers shall be entitled to
registration rights pursuant to the terms of a registration rights
agreement in the form attached hereto as EXHIBIT 1.3(A)(II) (the
"REGISTRATION RIGHTS AGREEMENT"); and
(iii) an aggregate of $1,400,000 in the form of forty-two (42)
month 9% Subordinated Notes executed by ▇▇▇▇▇▇▇ in favor of Sellers, in
the form attached hereto as EXHIBIT 1.3(A)(III), which promissory notes
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shall bear interest at an annual rate of nine percent (9%), compounded
quarterly (together with any additional promissory notes delivered to
Sellers in respect of the Purchase Price Adjustment, the "NOTES").
(c) Contemporaneously with the execution of this Agreement, ▇▇▇▇▇▇▇
and/or Buyer shall pay to the Sellers, as a non-refundable deposit, cash in the
aggregate amount of $1,000,000 (the "NON-REFUNDABLE DEPOSIT"), which amount
shall be paid by wire transfer of immediately available funds to one or more
accounts designated by the Sellers in writing. The parties agree and acknowledge
that the Non-Refundable Deposit shall not be subject to refund, repayment or
recovery to or by ▇▇▇▇▇▇▇ or Buyer, regardless of whether the Closing occurs or
this Agreement is terminated, but in the event the Closing occurs, the amount of
cash payable by Buyer to Sellers at Closing shall be reduced by the amount of
the Non-Refundable Deposit. Notwithstanding the foregoing, the payment of the
Non-Refundable Deposit shall not be deemed to limit or restrict any rights to
indemnification otherwise available to Buyer and/or ▇▇▇▇▇▇▇ pursuant to ARTICLE
IX hereof.
(d) The Parties agree that the amount of the Purchase Price (as the
same may be adjusted hereunder) allocated for income tax purposes to each
"unrealized receivable" (as defined in Section 751(c) of the Code) and
"inventory item" (as defined in Section 751(d) of the Code), and the Seller
Loans shall not exceed the adjusted tax basis of each such asset as of the
Closing Date. The parties shall file all Returns consistently with such
allocation, and shall not voluntarily take any action inconsistent therewith
upon examination of any Returns, in any refund claim, in any litigation, or
otherwise with respect to such Returns unless required to pursuant to a
"determination" (as defined in Section 1313(a) of the Code or any similar state,
local or foreign Tax provision).
SECTION 1.4 PURCHASE PRICE ADJUSTMENT.
(a) Within sixty (60) days after the Closing Date, Buyer shall prepare
and deliver to Sellers a written determination (the "DETERMINATION") of the
actual amount of the Working Capital of the Mandara Entities as of the Closing
Date (the "PRELIMINARY WORKING CAPITAL AMOUNT") and the actual aggregate cash
balances of the Mandara Entities on the Closing Date (the "PRELIMINARY CASH
BALANCE AMOUNT"), including the basis for such Determination set forth in
reasonable detail, prepared in accordance with GAAP and expressed in United
States dollars. For the purposes of this Agreement, the term "WORKING CAPITAL"
means the total consolidated non-cash current assets of the Mandara Entities
that consist of trade accounts receivable, inventory and other prepaid assets
minus the total consolidated current liabilities of the Mandara Entities which
consist of trade accounts payable and other accounts payable. Upon receipt of
the Determination, Sellers shall have sixty (60) days (the "REVIEW PERIOD") to
review such Determination and related computations of the Working Capital and
the cash balances of the Mandara Entities on the Closing Date. During the Review
Period, Buyer shall give Sellers and their representatives full access at all
reasonable times to the books, records and other materials of Mandara Entities
and the personnel of, and work papers prepared by or for the Buyer, the Mandara
Entities or their respective accountants, including, without limitation, to such
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historical financial information relating to the Mandara Entities as the Sellers
may reasonably request in order to permit the timely review of the
Determination. If Sellers shall not have given written notice to Buyer setting
forth in reasonable detail any objection of Sellers to such Determination (a
"WORKING CAPITAL STATEMENT OF OBJECTIONS") prior to the expiration of the Review
Period, then such Determination shall be final and binding upon the parties, and
the Preliminary Working Capital Amount shall be deemed the Working Capital
amount of the Mandara Entities as of the Closing Date (the "FINAL WORKING
CAPITAL AMOUNT"), and the Preliminary Cash Balance Amount shall be deemed the
aggregate cash balances of the Mandara Entities on the Closing Date (the "FINAL
CASH BALANCE AMOUNT"). In the event that Sellers deliver a Working Capital
Statement of Objections during the Review Period, Buyer and Sellers shall use
their reasonable efforts to agree on the amount of Working Capital and the cash
balances of the Mandara Entities on the Closing Date within thirty (30) days
following the receipt by Buyer of the Working Capital Statement of Objections.
If the parties are unable to reach an agreement as to such amounts within such
thirty (30) day period, then the matter shall be submitted to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
LLP or, if ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP is unwilling or unable to serve in such capacity,
another "big five" accountant mutually acceptable to Buyer and Sellers (such
accountant, the "SETTLEMENT ACCOUNTANT"), who, acting as an expert and not as an
arbitrator, shall resolve the matters still in dispute and adjust the
Determination to reflect such resolution and establish the Final Working Capital
Amount and the Final Cash Balance Amount; PROVIDED, HOWEVER, that the Settlement
Accountant may not determine an amount of Working Capital or a cash balance
amount in excess of those claimed by Sellers or less than those claimed by
Buyer. The Settlement Accountant shall make such determination within forty-five
(45) days following the submission of the matter to the Settlement Accountant
for resolution, and such determination shall be final and binding upon Buyer and
the Sellers. Buyer and Sellers shall contribute equally to all costs (including
fees and expenses charged by the Settlement Accountant) in connection with the
resolution of any such dispute.
(b) The parties agree that, at Closing, the Working Capital of the
Mandara Entities should be $240,000 (the "TARGET WORKING CAPITAL AMOUNT") and
the aggregate cash balances of the Mandara Entities should be $512,000 (the
"TARGET CASH BALANCE AMOUNT").
(c) In the event that (i) the Final Working Capital Amount is GREATER
than the Target Working Capital Amount (such excess, the "EXCESS WORKING CAPITAL
AMOUNT"), the Purchase Price shall be increased by, and ▇▇▇▇▇▇▇ shall pay to
Sellers, an amount equal to sixty percent (60%) of such Excess Working Capital
Amount, or (ii) the Final Cash Balance Amount is GREATER than the Target Cash
Balance Amount (such excess, the "EXCESS CASH BALANCE AMOUNT"), the Purchase
Price shall be increased by, and ▇▇▇▇▇▇▇ shall pay to Sellers, an amount equal
to sixty percent (60%) of such Excess Cash Balance Amount, subject to the
provisions of SECTION 1.4(E)(III). Any payments due under this SECTION 1.4(C)
shall be made by cash payments to Sellers within five (5) business days
following the determination of the final amounts pursuant to SECTION 1.4(A).
(d) In the event that (i) the Final Working Capital Amount is LESS than
the Target Working Capital Amount (such deficiency, the "WORKING CAPITAL
DEFICIENCY"), the Purchase Price shall be reduced by, and Sellers shall pay to
▇▇▇▇▇▇▇, within five (5) business days following the determination of the final
amounts pursuant to SECTION 1.4(A), an amount equal to sixty percent (60%) of
such Working Capital Deficiency, or (ii) the Final Cash Balance Amount is LESS
than the Target Cash Balance Amount (such deficiency, the "CASH BALANCE
DEFICIENCY"), the Purchase Price shall be reduced by, and Sellers shall pay to
▇▇▇▇▇▇▇, within five (5) business days following the determination of the final
amounts pursuant to SECTION 1.4(A), an amount equal to sixty percent (60%) of
such Cash Balance Deficiency, subject to the provisions of SECTION 1.4(E)(IV).
▇▇▇▇▇▇▇ shall have the option to require Sellers to make any payment required
under this SECTION 1.4(D) in cash or to reduce the principal amount of the
Notes. In the event that ▇▇▇▇▇▇▇ elects to require Sellers to make such payment
in cash, Sellers shall pay such amount (together with an amount equal to the
equivalent of interest thereon at an annual rate of nine percent (9%),
compounded quarterly, from the Closing Date through the date of payment) by wire
transfer of immediately available funds to an account designated by ▇▇▇▇▇▇▇. In
the event that ▇▇▇▇▇▇▇ elects to satisfy such payment obligation by reduction of
the principal amount of the Notes ▇▇▇▇▇▇▇ shall provide written notice of such
election to Sellers and each Seller shall, within five (5) business days
following receipt of such written notice, deliver to ▇▇▇▇▇▇▇ at ▇▇▇▇▇▇▇'▇
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election, the original of any Note with respect to which ▇▇▇▇▇▇▇ is entitled to
make such a reduction against delivery to such Seller of a replacement
promissory note in the proper reduced principal amount (which replacement
promissory note shall be deemed a "Note" for the purposes of this Agreement). If
any of the Sellers shall fail to deliver its respective Note to ▇▇▇▇▇▇▇, (i)
such note shall automatically, and without further action, be deemed amended to
reflect the reduction of the principal amount of such Note in accordance with
the immediately preceding sentence and (ii) such Seller shall be estopped from
collecting, or enforcing its rights with respect to, any principal (or any
interest accruing thereon) otherwise subject to reduction in accordance with the
immediately preceding sentence.
(e) In addition to the foregoing, with respect to the cash balances of
the Mandara Entities, the parties further agree as follows: (i) with respect to
each jurisdiction in which the Mandara Entities maintain cash accounts, the
actual cash balances of the Mandara Entities at Closing in each such
jurisdiction shall be within ten percent (10%) of the amounts set forth for such
jurisdiction on EXHIBIT 1.4(E) (the "JURISDICTIONAL CASH BALANCE TARGETS); (ii)
any distributions or dividends made by any of the Mandara Entities prior to the
Closing in accordance with this Agreement shall be made with respect to such
jurisdictions in such a manner and by such Mandara Entities so as to comply with
the Jurisdictional Cash Balance Targets; (iii) in the event that the actual cash
balance of the Mandara Entities at Closing exceeds one hundred ten percent
(110%) of the Jurisdictional Cash Balance Target in any jurisdiction that seeks
to impose withholding Taxes with respect to dividends, distributions or other
repatriations of cash from such jurisdiction (as indicated on EXHIBIT 1.4(E)),
then the amount of the excess cash balance in such jurisdiction shall be deemed
to be net of any withholding Taxes that would otherwise be payable on such
excess cash amount upon the dividend, distribution or other repatriation thereof
(the "NET CASH BALANCE AMOUNT"), and, for the purposes of determining whether
Sellers are entitled any payments in respect of any Excess Cash Balance Amount
pursuant to SECTION 1.4(C) and, if so, the amount thereof, such Excess Cash
Balance Amount shall be calculated using the Net Cash Balance Amounts, if any,
with respect to any applicable withholding Tax jurisdiction.
SECTION 1.5 GUARANTEED EBITDA SURPLUS AMOUNT.
(a) Each of the Sellers, severally and not jointly, hereby guarantees,
solely to the extent of its respective Percentage Interest, that for the period
from July 1, 2001 through December 31, 2002 (the "TEST PERIOD"), the Actual
EBITDA Surplus Amount (as hereinafter defined) of the Mandara Entities shall not
be less than $2,885,580 (such amount, the "GUARANTEED EBITDA SURPLUS AMOUNT").
For the purposes of this Agreement, "ACTUAL EBITDA SURPLUS AMOUNT" shall mean
the amount of the actual EBITDA (as hereinafter defined) of the Mandara Entities
earned during the Test Period LESS the Additional Capital Expenses (as
hereinafter defined), if any, incurred during the Test Period.
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(b) For purposes of this Agreement, the following terms shall have the
meanings specified below:
(i) "EBITDA" means the actual cumulative consolidated earnings
of the Mandara Entities before interest income, interest expense,
Taxes, depreciation and amortization, as determined in accordance with
GAAP, consistent with the Mandara Entities' past practices, LESS any
EBITDA Exclusion Amounts. For the avoidance of doubt, the parties agree
and acknowledge that (A) EBITDA shall include the results of operations
of Mandara Spa Thailand as adjusted to reflect the Company's forty-nine
percent (49%) interest therein, and (B) the operations of any Approved
Pipeline Project (as defined in SECTION 8.4(B) below) shall be taken
into account for the purposes of determining EBITDA.
(ii) "EBITDA EXCLUSION AMOUNTS" means any earnings or losses
generated by any Excluded Project (as defined in SECTION 8.5(B) below).
(iii) "ADDITIONAL CAPITAL EXPENSES" shall mean an amount equal
to the equivalent of interest at twelve percent (12%) per annum on any
amounts actually expended by the Mandara Entities following the Closing
Date in accordance with this Agreement in respect of an Approved
Pipeline Project (as defined in SECTION 8.4(B), below) (excluding any
unreasonable expenses required by Buyer or ▇▇▇▇▇▇▇); PROVIDED, HOWEVER,
that Buyer shall deliver to the Sellers a statement of all such costs
in respect of any Approved Pipeline Project certified by a senior
executive officer of ▇▇▇▇▇▇▇, together with such additional
documentation as may be reasonably required to establish that such
costs were related to such projects.
(c) As promptly as practicable after the end of the expiration Test
Period (but in no event later than March 31, 2003), Buyer shall (i) determine
the amount of the actual EBITDA of the Mandara Entities and the Additional
Capital Expenses, if any, for the Test Period, in each case based upon financial
statements prepared and audited by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP or another "big five"
accountant ("BUYER'S ACCOUNTANT"), and (ii) deliver to Sellers a written
statement thereof, certified by an executive officer of ▇▇▇▇▇▇▇, together with
such additional documentation as may be reasonably required to support Buyer's
determination (such written statement, the "EBITDA STATEMENT"). Upon receipt of
the EBITDA Statement, Sellers shall have sixty (60) days (the "EBITDA REVIEW
PERIOD") to review such EBITDA Statement and related computations of the actual
EBITDA of the Mandara Entities and any Additional Capital Expenses. During the
EBITDA Review Period, Buyer shall give Sellers and their representatives full
access at all reasonable times to the books, records and other materials of
Mandara Entities and the personnel of, and work papers prepared by or for, the
Buyer, the Mandara Entities or their respective accountants, including, without
limitation, to such historical financial information relating to the Mandara
Entities as the Sellers may reasonably request in order to permit the timely
review of the EBITDA Statement. If Sellers shall not have given written notice
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to Buyer setting forth in reasonable detail any objection of Sellers to such
EBITDA Statement (an "EBITDA STATEMENT OF OBJECTIONS") prior to the expiration
of the EBITDA Review Period, then such EBITDA Statement shall be final and
binding upon the parties. In the event that Sellers deliver an EBITDA Statement
of Objections during the EBITDA Review Period, Buyer and Sellers shall use all
reasonable efforts to resolve the dispute within thirty (30) days following the
receipt by Buyer of the EBITDA Statement of Objections. If the parties are
unable to reach an agreement as to the amount of the actual EBITDA and/or any
Additional Capital Expenses within such thirty (30) day period, then the matter
shall be submitted to the Settlement Accountant, who, acting as an expert and
not as an arbitrator, shall resolve the matters still in dispute and adjust the
EBITDA Statement to reflect such resolution and establish the final actual
amount of EBITDA and Additional Capital Expenses; PROVIDED, HOWEVER, that the
Settlement Accountant may not determine an amount of EBITDA in excess of that
claimed by Sellers or less than that claimed by Buyer, or an amount of
Additional Capital Expenses in excess of those claimed by Buyer or less than
those claimed by Sellers. The Settlement Accountant shall make such
determination within forty-five (45) days following the submission of the matter
for resolution, and such determination shall be final and binding upon Buyer and
the Sellers. Buyer and Sellers shall contribute equally to all costs (including
fees and expenses charged by the Settlement Accountant) in connection with the
resolution of any such dispute. Following the determination of the final actual
EBITDA amount and amount of Additional Expenses, if any, the parties shall
calculate the Actual EBITDA Surplus Amount in accordance with SECTION 1.5(A).
(d) In the event that the Guaranteed EBITDA Surplus Amount exceeds the
Actual EBITDA Surplus Amount, then ▇▇▇▇▇▇▇ shall have the right to reduce the
aggregate principal amount of the Notes by an amount equal to the product of (i)
the amount by which the Guaranteed EBITDA Surplus Amount exceeds the Actual
EBITDA Surplus Amount, multiplied by (ii) sixty percent (60%) (such amount, the
"SHORTFALL AMOUNT"). In addition, to the extent ▇▇▇▇▇▇▇ has made payments of
interest with respect to that portion of the principal amount of the Notes to be
reduced pursuant to this SECTION 1.5(D) (the "REIMBURSABLE INTEREST AMOUNT"),
▇▇▇▇▇▇▇ shall also have the right to recoup the Reimbursable Interest Amount by
a further reduction of the aggregate principal amount of the Notes by an amount
equal to the Reimbursable Interest Amount; PROVIDED, HOWEVER, that Sellers shall
have the option of paying ▇▇▇▇▇▇▇ the Reimbursable Interest Amount in cash
within five (5) business days following the determination of the final Shortfall
Amount, in which case ▇▇▇▇▇▇▇ shall have no right to further reduce the
principal amount of the Notes (unless and until Sellers shall fail to make such
cash payment in respect of any Reimbursable Interest Amount). The aggregate
reductions of the Notes made by ▇▇▇▇▇▇▇ in accordance with this SECTION 1.5(D)
are referred to herein as the "EBITDA NOTE REDUCTIONS." All EBITDA Note
Reductions shall be made pro rata between the Notes held by each of the Sellers
in accordance with their respective Pro Rata Percentages. Each Seller shall
deliver to ▇▇▇▇▇▇▇ the original of any Note with respect to which ▇▇▇▇▇▇▇ is
entitled to make an EBITDA Note Reduction against delivery to such Seller of a
replacement promissory note in the proper reduced principal amount (which
replacement promissory note shall be deemed a "Note" for the purposes of this
Agreement). If any of the Sellers shall fail to deliver its respective Note to
▇▇▇▇▇▇▇, (i) such Note shall automatically, and without further action, be
deemed amended to reflect the reduction of the principal amount of such Note in
accordance with the immediately preceding sentence and (ii) such Seller shall be
estopped from collecting, or enforcing its rights with respect to, any principal
(or any interest accruing thereon) otherwise subject to reduction in accordance
with the immediately preceding sentence. In the event that the aggregate amount
of the EBITDA Note Reductions exceeds the aggregate principal amount of the
Notes: (i) the Notes shall be automatically cancelled and Sellers shall
surrender the originals of the Notes to ▇▇▇▇▇▇▇ for cancellation, and (ii) each
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Seller shall pay to Buyer the amount by which such Seller's Pro Rata Percentage
of the aggregate Shortfall Amount exceeds the principal amount of the such
Seller's Note at the time of such reduction. Any amounts to be paid by Sellers
in cash pursuant to this SECTION 1.5(D) shall be paid within five (5) business
days after the determination of the final Shortfall Amount by wire transfer of
immediately available funds to a bank account or accounts as shall be designated
in writing by the recipient no later than one business day prior to the payment
date.
ARTICLE II.
REPRESENTATIONS AND WARRANTIES
OF SELLERS REGARDING THE MANDARA ENTITIES
As a material inducement to the Buyer to enter into this Agreement and
to consummate the transactions contemplated hereby, each of the Sellers, jointly
and severally, hereby represents and warrants to Buyer, as of the date of this
Agreement and as of the Closing Date, as follows:
SECTION 2.1 ORGANIZATION. SCHEDULE 2.1 sets forth the name, type of
Entity and Organizational Jurisdiction of each of the Mandara Entities, and each
jurisdiction in which such Mandara Entity is qualified to conduct business. Each
of the Mandara Entities (a) is validly existing and in good standing under the
laws of its Organizational Jurisdiction, (b) has all requisite power and
authority under those laws and its Charter Documents to own or lease and to
operate its properties and to carry on its business as now conducted, and (c) is
qualified or licensed to do business and is in good standing in each
jurisdiction in which it is required to be so licensed or qualified.
SECTION 2.2 CHARTER DOCUMENTS AND RECORDS. Sellers have made available
to Buyer true, complete and correct copies of the Charter Documents of each of
the Mandara Entities as in effect on the date hereof, and no amendments,
modifications or revocation has been made since the date thereof (or with
respect to publicly-filed documents, since the date of the certificate of the
appropriate Governmental Authority with respect thereto) or is pending with
respect to any of such Charter Documents.
SECTION 2.3 NO CONFLICTS. The execution, delivery and performance by
the Sellers of this Agreement and consummation of the transactions contemplated
hereby, do not:
(a) violate or contravene any provision of the Charter Documents of any
of the Mandara Entities;
(b) violate, conflict with, or give any Person (other than the Mandara
Entities) a contractual right to declare a default, accelerate or terminate (in
each case with or without notice or lapse of time or both), any provision of any
Covered Agreement to which any Mandara Entity is a party or by which any of
their respective assets are bound, in each case other than as set forth in
SCHEDULE 2.3(B);
(c) result in the creation or imposition of any Liens, except for
Permitted Liens, with respect to any of the assets or properties of any Mandara
Entity; or
(d) violate, contravene or conflict with any (i) statute, law, rule or
regulation (each, a "LAW"), (ii) award, judgment, decree, or other order (each,
an "ORDER") of any Governmental Authority having jurisdiction over any Mandara
Entity, or (iii) authorization, approval, consent, license, permit, registration
variance or other similar rights, approvals or authorizations from any
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Governmental Authority (each, a "GOVERNMENTAL APPROVAL") issued to any Mandara
Entity.
SECTION 2.4 CONSENTS. Except as set forth in SCHEDULE 2.4, no consent,
approval, exemption or authorization is required to be obtained from, no notice
is required to be given to and no filing is required to be made with, any Person
(including, without limitation, any Governmental Authority) by any Mandara
Entity (a) in order to authorize or permit the consummation of the transactions
contemplated by this Agreement and the other Transaction Documents, or (b) under
or pursuant to any Governmental Approval held by or issued to any Mandara Entity
(including, without limitation, environmental, health, safety and operating
permits and licenses) by reason of this Agreement or any of the other
Transaction Documents or the consummation of the transactions contemplated
hereby or thereby.
SECTION 2.5 NO DEFAULTS UNDER INDEBTEDNESS. No condition or state of
facts exists, or, with the giving of notice or the lapse of time or both, would
exist, which (a) entitles any holder of any outstanding Indebtedness, or any
Guaranty not constituting Indebtedness, of the Mandara Entities to accelerate
the maturity, or require a mandatory prepayment, of that Indebtedness or
Guaranty, or affords that holder, or any beneficiary of that Guaranty, the right
to require the Mandara Entities to redeem, purchase or otherwise acquire,
reacquire or repay any of that Indebtedness, or to perform that Guaranty in
whole or in part, or (b) entitles any Person to obtain any Lien upon any
properties or assets constituting any part of the business of the Mandara
Entities pursuant to such Indebtedness or Guaranty.
SECTION 2.6 NO COMMISSIONS. None of the Mandara Entities has, directly
or indirectly, in connection with this Agreement or the transactions
contemplated hereby (a) employed any broker, finder or agent or (b) agreed to
pay or incurred any obligation to pay any broker's or finder's fee, any sales
commission or any similar form of compensation.
SECTION 2.7 SUBSIDIARIES. Set forth on SCHEDULE 2.7 is a list of each
Subsidiary of the Mandara Entities and, except as set forth thereon, none of the
Mandara Entities owns, of record or beneficially, directly or indirectly through
any Person, nor controls, directly or indirectly through any Person or
otherwise, any Equity Interests or any option, warrant or right to acquire
Equity Interests of any Entity.
SECTION 2.8 EQUITY INTERESTS OF THE MANDARA ENTITIES. SCHEDULE 2.8 sets
forth (a) if applicable, the authorized Equity Interests of each Mandara Entity;
(b) all of the issued and outstanding Equity Interests of each Mandara Entity;
and (c) the identity and respective holdings of all such holders of Equity
Interests of the Mandara Entities. Except as set forth on such SCHEDULE 2.8,
there are no outstanding preemptive, conversion or other rights, options,
warrants or agreements granted or issued by, or binding upon the Mandara
Entities or any of the Sellers for the purchase or acquisition of, any Equity
Interests of any of the Mandara Entities, other than those issued, reserved or
committed to be sold pursuant to this Agreement or as provided for in the
Charter Documents of the Mandara Entities. The Mandara Entities have no equity
appreciation rights, phantom stock plan or similar rights outstanding. Except as
may exist by virtue of the Charter Documents of Mandara, there will not as of
the Closing be any Liens upon any of the Mandara Shares (other than Permitted
Liens or Liens that are the result of actions taken by Buyer).
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SECTION 2.9 RELATED PARTY AGREEMENTS. SCHEDULE 2.9 sets forth all
existing agreements between any of the Mandara Entities, on the one hand, and
any of the equityholders, members or managers of any of the Mandara Entities, or
any of their respective Family Members, including Entities controlled by any of
the foregoing (collectively, "RELATED PARTIES"), on the other hand.
SECTION 2.10 LITIGATION, ETC. Except as set forth on Schedule 2.10:
(a) there are no actions, suits, claims or other legal or
administrative proceedings by or before any Governmental Authority or any other
arbitration, mediation or any other third party dispute resolution proceeding or
procedure (each, an "ACTION") pending or, to the Knowledge of the Sellers,
threatened, against any Mandara Entity, and the Mandara Entities have not
received any notice of any pending investigations by any Governmental Authority
nor, to the Knowledge of Sellers, is any such investigation threatened; or
(b) to the Knowledge of the Sellers, there are no complaints pending or
threatened, against any Mandara Entity before any Better Business Bureau or
other Entity that addresses consumer complaints.
SECTION 2.11 GOVERNMENTAL APPROVALS; COMPLIANCE WITH LAWS. Except (i)
as disclosed on SCHEDULE 2.11, (ii) for matters that are the subject of the
representations and warranties contained in SECTIONS 2.12, 2.21 AND 2.22, or
(iii) for matters that would not reasonably be expected to have a Material
Adverse Effect with respect to the Mandara Entity in question, each Mandara
Entity:
(a) is in compliance with all Laws and Orders of any Governmental
Authority having jurisdiction over it or the operation of its Business;
(b) has all Governmental Approvals that are necessary to permit it to
conduct and operate the Business (or portion thereof) in the manner it currently
conducts and operates such business and to permit it to own and use its assets
in the manner in which it currently owns and uses them; and
(c) is in compliance with all of the terms and requirements of each of
its Governmental Approvals and no notice has been received by it, or, to the
Knowledge of the Sellers, any of its employees any notice from any Governmental
Authority of its intention to cancel, terminate, suspend or not renew any of
those Governmental Approvals.
SECTION 2.12 ENVIRONMENTAL MATTERS. There has been no storage,
generation, transportation, handling, treatment, disposal, discharge, emission
or other release of any kind of toxic or other wastes or other hazardous
substances by, due to or caused by the Mandara Entities upon any of the property
now or previously owned or leased by the Mandara Entities, or upon any other
property, in violation of any Law or Order and which would, under any Law or
Order give rise to any liability.
SECTION 2.13 LIABILITIES AND OBLIGATIONS. Except as set forth on
SCHEDULE 2.13, none of the Mandara Entities has any liabilities or obligations
whether accrued, absolute, fixed, contingent or otherwise, that, pursuant to
GAAP, would be required to be reflected or taken into account on the
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consolidated balance sheet of the Mandara Entities as of the date hereof, except
(a) to the extent reflected or taken into account in the Current Balance Sheet
and not heretofore paid or discharged; and (b) liabilities incurred in the
ordinary course of business consistent with past practice since the date of the
Current Balance Sheet (none of which relates to breach of contract, breach of
warranty, tort, infringement or violation of law, or which arose out of any
litigation). SCHEDULE 2.13 also lists and describes, for each of the Mandara
Entities each of its outstanding Guarantees not constituting Indebtedness and,
for each of those Guarantees, whether any Sellers or any Affiliate thereof is a
Person whose obligation is covered by such Guaranty and, if such Guaranty is
secured by any property or asset of any Mandara Entity, the nature of that
security.
SECTION 2.14 RECEIVABLES AND INVENTORIES.
(a) All of the Receivables (as hereinafter defined) are valid,
represent bona fide transactions and arose in the ordinary course of business of
the Mandara Entities. To the Knowledge of the Sellers, no account debtor is
asserting any defense to payment or right of setoff with respect to any of the
Receivables in excess of amounts reserved on the Current Balance Sheet therefor
and no Mandara Entity has made any agreement with any debtor for the deduction
therefrom. For purposes of this Agreement, the term "RECEIVABLES" means all
receivables of the applicable Mandara Entity, including all trade account
receivables arising from the provision of services, sale of inventory, notes
receivable, and insurance proceeds receivable.
(b) With respect to each of the Mandara Entities: all Inventories
consist of a quality and quantity usable and saleable in the ordinary course of
business except for (i) obsolete items, (ii) items of below-standard quality or
(iii) items for which it has established a reserve on the Current Balance Sheet
for obsolescence or unmerchantability (clauses (i) through (iii), collectively,
the "IMPAIRED INVENTORY") all of which items of Impaired Inventory, (A) as of
the Current Balance Sheet Date, have been written off, written down or
adequately reserved against to their net realizable value on the Current Balance
Sheet and (B) since the Current Balance Sheet Date, have been written off,
written down or adequately reserved against to their net realizable value in the
books and records of such Mandara Entity. Each of the Mandara Entities has, and
will through the Closing Date continue to have, adequate quantities and types of
Inventories to enable it to conduct its Business consistent with past practices
and anticipated operations.
SECTION 2.15 REAL PROPERTIES.
(a) None of the Mandara Entities owns any parcel of real property.
SCHEDULE 2.15(A) sets forth a list of all leases, licenses, concessions or
similar agreements for the use or occupancy of real property to which any of the
Mandara Entities is a party ("REAL PROPERTY LEASES"), true and complete copies
of which have previously been made available to Buyer, in each case setting
forth the lessor and lessee thereof and the address of the property covered by
such lease. The real property leased pursuant to the Real Property Leases is
referred to herein as the "LEASED PREMISES."
(b) With respect to each Real Property Lease, (i) each is in full force
and effect and, to the Knowledge of the Sellers, is valid and binding on the
lessor party thereto, (ii) no Person other than the Mandara Entities is in
possession of any portion of the Leased Premises (except as otherwise provided
for by the applicable Real Property Lease) and (iii) except as otherwise
disclosed on a schedule to this Agreement, no event has occurred which, with the
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passage of time or the giving of notice or both, would cause a breach of or
default by any of the Mandara Entities under any of such Real Property Leases.
(c) To the Knowledge of the Sellers, there are no (i) pending or
threatened condemnation proceedings relating to the Leased Premises; (ii)
pending or threatened Actions relating to the Leased Premises; or (iii) other
conditions or proceedings that would reasonably be expected to have an adverse
effect upon the use or occupancy of the Leased Premises by the Mandara Entity
that is the lessee thereof.
(d) The Fixed Assets of the Mandara Entities are located at the Leased
Premises, except for such Fixed Assets that are not directly related to the
provision of services and sales of products at such Leased Premises, and Fixed
Assets (E.G., laptop computers, cellular telephones, vehicles, uniforms, etc.)
that are in the possession of the personnel of the Mandara Entities in the
ordinary course of business and consistent with the current policies and
procedures of the applicable Mandara Entity.
(e) All facilities located on the Leased Premises and utilized by the
Mandara Entities are currently supplied with utilities and other services
necessary for the operation of such facilities, including gas, electricity,
water, telephone, sanitary sewer, and storm sewer, as applicable, all of which
services are (i) to the Knowledge of the Sellers, adequate in accordance with
all applicable Laws and Orders, and (ii) adequate for the operation of the
Business as currently conducted by the Mandara Entities.
(f) No action has been taken by the Mandara Entities, or inaction by
the Mandara Entities has occurred, and none of the Mandara Entities has received
any written notice from any insurance carrier of any defects or inadequacies in
the real property underlying the Leased Premises or of which the Leased Premises
is a part or any portion thereof which would reasonably be expected to adversely
affect the insurability of the Leased Premises or increase the cost of insurance
covering any portion of the Leased Premises.
SECTION 2.16 TANGIBLE ASSETS.
(a) Each of the Mandara Entities has good and marketable title to, or a
valid leasehold interest in, the properties and assets used by it in the conduct
of the Business, free and clear of any Liens (other than Permitted Liens) or
restrictions on use, except in each case for such imperfections of title or
leasehold interest that do not have an adverse effect on the property or asset
in question.
(b) The Fixed Assets (as hereinafter defined) currently in use or
necessary for the Business by the Mandara Entities are in good operating
condition, normal wear and tear excepted. For purposes of this Agreement, the
term "FIXED ASSETS" means all vehicles, machinery, equipment, tools, supplies,
leasehold improvements, furniture and fixtures owned or leased by the Mandara
Entities as set forth on the Current Balance Sheet or acquired by the Mandara
Entities since the date of the Current Balance Sheet.
SECTION 2.17 PROPRIETARY RIGHTS. SCHEDULE 2.17 sets forth the
registrations and other legal rights of the Mandara Entities to use the
trademark "Mandara Spa" for the provision of spa services. Except as set forth
on SCHEDULE 2.17, the Mandara Entities own or possess legal rights to use all
other Proprietary Rights in the conduct of the Business as currently conducted.
To the Knowledge of Sellers, use by the Mandara Entities of the Proprietary
Rights necessary for the conduct of the Business do not conflict with, or,
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infringe upon, the rights of others. None of the Mandara Entities has received
any communications alleging that the Mandara Entities has violated or, by
conducting the Business, would violate any of the Proprietary Rights of any
other Person. To the Knowledge of the Sellers, the carrying on of the business
of the Mandara Entities by the employees of the Mandara Entities does not
conflict with or result in a breach of the terms, conditions or provisions of,
or constitute a default under any contract, covenant or instrument with any
Person other than Buyer, ▇▇▇▇▇▇▇ or any of their Affiliates under which any
Mandara Entity is obligated with respect to any Proprietary Rights used in the
Business.
SECTION 2.18 RELATIONS WITH GOVERNMENTS, ETC. None of the Mandara
Entities has, directly or through an intermediary, offered, paid, promised to
pay or authorized the payment of money or offered, given, or authorized the
giving of anything of value to an official, employee, officer or representative
of any government, or department, agency or instrumentality of any government,
or a political party, party official or candidate for political office, for
purposes of inducing such person to use his/her influence to assist the Mandara
Entities in obtaining or retaining business or to benefit the Mandara Entities
and has not otherwise violated the U.S. Foreign Corrupt Practices Act of 1977,
as amended.
SECTION 2.19 MATERIAL CONTRACTS.
(a) Except as set forth on SCHEDULE 2.19(A), none of the Mandara
Entities is a party to any contract, lease, agreement, plan, license,
arrangement, obligation or commitment, whether written or oral (collectively,
"CONTRACTS"):
(i) evidencing Indebtedness or the deferred purchase price of
property, or pursuant to which it has guaranteed any obligation of any
other Person, except for any such Contract with an outstanding
principal amount not exceeding $75,000 in the aggregate and which may
be prepaid on not more than thirty (30) days' notice without payment of
penalty or premium;
(ii) creating a Lien (other than a Permitted Lien) on any of
the properties or assets of the Mandara Entities;
(iii) prohibiting or limiting the ability of the Mandara
Entities to engage in any line of business, to compete with any Person
or to carry on its business anywhere in the world;
(iv) that are confidentiality agreements, joint venture,
partnership or limited liability company agreements or similar
arrangements;
(v) for the purchase or sale of materials, commodities,
supplies, products or other personal property, or for the furnishing or
receipt of services, the performance of which will extend more than one
year or involve consideration in excess of $75,000 in the aggregate,
other than those which could be terminated on thirty (30) days' or less
notice without penalty or premium;
(vi) (A) for the sale, transfer, lease, license or parting
with possession or ownership of any assets of the Mandara Entities
(other than sales of products and services of Mandara Entities in the
ordinary course of its business and consistent with past practice, and
sales of obsolete or excess Inventory), or (B) for the lease of assets
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of the Mandara Entities to any Person (other than a Mandara Entity)
where the obligation of the Mandara Entities has not been satisfied;
(vii) for or with respect to the lease of personal property
from any Person providing for lease payments in excess of $75,000 per
annum in the aggregate, other than those which could be terminated on
thirty (30) days' or less notice without penalty or premium;
(viii) for the employment or engagement of any Person on a
full-time, part-time, consulting, or other basis providing annual base
compensation in excess of $75,000 in the aggregate or which provide for
the payment of deferred compensation (each, an "EMPLOYMENT AGREEMENT");
(ix) that are agency, sales representative, broker,
distribution or marketing agreements, the performance of which will
extend over a period of more than one year from the date hereof and
involve consideration in excess of $75,000;
(x) that are service or management contracts, equipment,
labor, maintenance or repair contracts or other agreements (other than
the Real Property Leases) affecting the Leased Premises or the
operation, repair or maintenance thereof and involve consideration in
excess of $75,000;
(xi) under which it has advanced or loaned any amounts in
excess of $10,000 in the aggregate to any of its equityholders, members
of the Board of Directors, directors, officers or employees; or
(xii) involving the license to or use by any Person (other
than a Mandara Entity) of any Proprietary Right of the Mandara
Entities.
The Company has made available to the Buyer a true, complete and
correct copy of each written Contract and a reasonably detailed written
description of each oral Contract listed on SCHEDULE 2.19(A) (such Contracts,
together with the Real Property Leases, the "COVERED AGREEMENTS").
(b) Except as set forth on SCHEDULE 2.19(B) with respect to each
Covered Agreement listed on SCHEDULE 2.19(a):
(i) (A) such Covered Agreement is a legally valid and binding
obligation of the Mandara Entity(ies) party thereto, and such Covered
Agreement will continue to be a legally valid and binding obligation of
such Mandara Entity(ies) in full force and effect on identical terms
immediately following the consummation of the transactions contemplated
hereby, and (B) to the Knowledge of the Sellers, such Covered Agreement
is a legally valid and binding obligation of each Person (other than
the Mandara Entity(ies)) party thereto, and such Covered Agreement will
continue to be a legally valid and binding obligation of such Person in
full force and effect on identical terms immediately following the
consummation of the transactions contemplated hereby;
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(ii) none of the Mandara Entities party thereto is in default
under such Covered Agreement;
(iii) to the Knowledge of the Sellers, no other Person that is
a party to such Covered Agreement is in default thereunder; and
(iv) to the Knowledge of the Sellers, no event has occurred or
circumstance exists that (with or without the giving of notice, the
lapse of time or both) gives any Person that is a party to such Covered
Agreement, other than the Mandara Entities, the contractual right to
declare a default, exercise any remedy under, accelerate the maturity
or performance of, or terminate such Covered Agreement.
SECTION 2.20 INSURANCE. SCHEDULE 2.20 sets forth a list of all
insurance policies carried by the Mandara Entities (the "INSURANCE POLICIES").
The Insurance Policies provide coverage for the matters covered thereby in
amounts and on terms that are adequate for the Business as currently conducted
by the Mandara Entities in light of prevailing industry practice. Except as set
forth in SCHEDULE 2.20, there have been no claims by any Mandara Entity under
any insurance policies for the most recently ended three policy years. The
Sellers have made available to Buyer: (a) a complete list of all worker's
compensation claims with respect to the Mandara Entities for the most recently
ended three (3) policy years; and (b) true, complete and correct copies of all
Insurance Policies, all of which (i) have been issued by insurers of recognized
responsibility and (ii) currently are in full force and effect. No insurance
carried by any Mandara Entity has been canceled by the insurer, and none of the
Mandara Entities has been denied insurance coverage during the past three (3)
years. During the past three (3) years, none of the Mandara Entities has
received any notice or other communication from any issuer of any Insurance
Policy of any cancellation or termination thereof or any increase in any
deductibles, retained amounts or the premiums payable thereunder, and, to the
Knowledge of the Sellers, no such cancellation, termination or increase in
deductibles, retainages or premiums has been threatened.
SECTION 2.21 EMPLOYEE MATTERS.
(a) SCHEDULE 2.21(A) lists all Employment Agreements to which a Mandara
Entity is a party that provides for annual base compensation in excess of
$75,000 per year, and the Sellers have made available to Buyer true, complete
and correct copies of all such Employment Agreements.
(b) SCHEDULE 2.21(B) contains a complete list of each Employee Benefit
Plan. The Mandara Entities do not have any liability with respect to any
Employee Benefit Plan other than the Employee Benefit Plans set forth on
SCHEDULE 2.21(B). No Employee Benefit Plan is a Pension Plan and no Mandara
Entity maintains or contributes to or has any liability to any Pension Plan.
None of the Employee Benefit Plans is (i) a voluntary employees' beneficiary
association under Section 501(c)(9) of the Code, or (ii) a multi-employer
welfare arrangement as defined in Section 3(40) of ERISA.
(c) None of the Mandara Entities or any ERISA Affiliates thereof
participate currently, and have never participated in, and are not required
currently and have never been required to contribute to or otherwise participate
in any Multiemployer Plan.
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(d) No Welfare Plan provides, and none of the Mandara Entities are
required to provide, post-retirement health or life benefits, except as required
by applicable law. No Welfare Plan is funded within the meaning of ERISA.
(e) With respect to each Employee Benefit Plan: (i) each has been
administered in compliance with its terms and in material compliance with all
applicable laws including, without limitation, ERISA, the Code, the Consolidated
Omnibus Budget Reconciliation Act (COBRA), and the Health Insurance Portability
and Accountability Act of 1996 (HIPAA); (ii) no actions, suits, claims or
disputes are pending or threatened against any such plan, the trustee or
fiduciary of any such plan, the Mandara Entities or any assets of any such plan;
(iii) no audits, proceedings, claims or demands are pending with any
Governmental Authority including, without limitation, the IRS and the Department
of Labor; (iv) all reports, returns and similar documents required to be filed
with any Governmental Authority or distributed to any such plan participant have
been duly or timely filed or distributed; (v) no "prohibited transaction",
within the meaning of ERISA or the Code, or breach of any duty imposed on
"fiduciaries" pursuant to ERISA has occurred; (vi) all required or discretionary
(in accordance with historical practices) payments, premiums, contributions,
reimbursements or accruals for all periods ending prior to or as of the Closing
shall have been made or properly accrued on the Current Balance Sheet or will be
properly accrued on the Closing Statement; (vii) no such plan has any unfunded
liabilities which are not reflected on the Current Balance Sheet or which will
not be reflected on the Closing Statement; and (viii) no Welfare Plan is a
multi-employer welfare arrangement as defined in Section 3(40) of ERISA.
(f) The Sellers have made available to Buyer copies of all written
Employee Policies and Procedures and Other Compensation Plans.
(g) Each of the Mandara Entities is in compliance in all respects with
all applicable Governmental Requirements respecting employment and employment
practices, terms and conditions of employment and wages and hours, and none of
the Mandara Entities is liable for any arrears of wages or penalties for failure
to comply with any of the foregoing. There are no (i) unfair labor practice
charges or complaints or racial, color, religious, sex, national origin, age,
disability or handicap discrimination charges or complaints pending or, to the
Knowledge of the Sellers, threatened against the Mandara Entities before any
Governmental Authority, or (ii) existing or, to the Knowledge of the Sellers,
threatened labor strikes, disputes, grievances, controversies or other labor
troubles affecting any of the Mandara Entities including any claim or threatened
claim against such Mandara Entity by any employee of such Mandara Entity.
(h) (i) None of the Mandara Entities nor any ERISA Affiliate thereof
has ever been a party to any agreement with any union, labor organization or
collective bargaining unit, (ii) no employees of the Mandara Entities are
represented by any union, labor organization or collective bargaining unit and
(iii) to the Knowledge of the Sellers, none of the employees of the Mandara
Entities has threatened to organize or join a union, labor organization or
collective bargaining unit.
(i) None of the Mandara Entities is a party to any agreement (other
than the Employment Agreements), or has established any policy, practice or
program, requiring it to make a payment or provide any other form of
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compensation or benefit or vesting rights to any person performing services for
the Mandara Entities which would not be payable or provided in the absence of
this Agreement or the consummation of the transactions contemplated by this
Agreement, including any payment under Section 280G of the Code.
SECTION 2.22 TAXES. Except as set forth on SCHEDULE 2.22:
(a) All Mandara Entities have duly and timely filed all Returns
required to be filed with the appropriate Taxing Authority, each Tax shown to be
payable on each such Return has been paid, and all Taxes incurred or payable by
the Mandara Entities have been timely paid. With respect to all Taxes for which
any of the Mandara Entities is liable, but the payment of which is not yet due,
such Taxes shall be accrued for in accordance with GAAP (with personal, real and
intangible property Taxes being accrued for on a per diem basis and all other
Taxes being determined as if the relevant tax period ended on the Closing Date)
and shall be taken into account, together with any prepaid Taxes (as similarly
determined), in the determination of the Working Capital of the Mandara Entities
contemplated by SECTION 1.4. The Returns reflect accurately the Tax liabilities
of the Mandara Entities required to be reflected therein.
(b) No Liens for Taxes exist upon the Assets of the Mandara Entities
except Liens for Taxes which are not yet due.
(c) No audit or Action with respect to any Tax for which any Mandara
Entity is asserted to be liable is pending or, to the Knowledge of the Sellers,
threatened.
(d) There are no requests for rulings or determinations in respect of
any Taxes pending between any Mandara Entity and any Taxing Authority.
(e) No extension of any period during which any Tax may be assessed or
collected and for which any Mandara Entity is or may be liable has been granted
to any Taxing Authority.
(f) All amounts required to be withheld by any Mandara Entity and paid
to governmental agencies for income, social security, unemployment insurance,
sales, excise, use and other Taxes have been collected or withheld and paid to
the proper Taxing Authority. The Mandara Entities have made all deposits
required by law to be made with respect to employees' withholding and other
employment Taxes.
(g) True, correct and complete copies of all material income Returns
filed by or with respect to the Mandara Entities for the past three (3) years
have been made available to Buyer.
(h) None of the Mandara Entities which are limited liability companies
or limited partnerships organized under the laws of states within the United
States of America are treated as corporations for federal income tax purposes.
SECTION 2.23 ABSENCE OF CERTAIN CHANGES. Since the date of the Current
Balance Sheet, except as set forth in SCHEDULE 2.23, none of the following has
occurred with respect to the Mandara Entities:
(a) any circumstance, condition, event or state of facts, which has
caused, or would reasonably be expected to cause, an adverse effect with respect
to the Mandara Entities, taken as a whole;
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(b) any Restricted Payment (other than cash distributions to the
shareholders of the Company that are made in accordance with SECTION 1.4(E) and
that do not result in the consolidated cash balances of the Company being less
than the Target Cash Balance Amount);
(c) any increase in the compensation payable to any officers,
directors, managers, consultants or employees of the Mandara Entities, except
for increases in the ordinary course consistent with past practice;
(d) any distribution, sale or transfer of, or any commitment to
distribute, sell or transfer, any of its assets or properties of any kind, other
than distributions, sales or transfers in the ordinary course of its business
and consistent with its past practices (but excluding therefrom any
distributions, sales or transfers to the Sellers or any Related Parties);
(e) any cancellation, or agreement to cancel, any Indebtedness,
obligation or other liability owing to it, provided that the Mandara Entities
may negotiate and adjust bills in the course of good faith disputes with
customers in a manner consistent with past practice;
(f) any plan, agreement or arrangement granting any preferential rights
to purchase or acquire any interest in any of its assets, property or rights or
requiring the consent of any Person to the transfer and assignment of any such
assets, property or rights;
(g) any purchase or acquisition of, or agreement, plan or arrangement
to purchase or acquire, any property, rights or assets outside of the ordinary
course of its business consistent with its past practices;
(h) any waiver of any of its rights or claims;
(i) other than the transactions contemplated by this Agreement, any
transaction or series of related transactions by it outside of the ordinary
course of its business (it being agreed that any transaction or other action
that constitutes gross negligence, recklessness or intentional misconduct shall
not be deemed to be in the "ordinary course" of the business of the Mandara
Entities);
(j) any investment in the Equity Interests, options, warrants, rights
to acquire the Equity Interests or the Indebtedness of any Person other than
short-term certificates of deposit of a commercial bank or trust company;
(k) any capital expenditures, or commitments to make capital
expenditures, singly or in the aggregate, in excess of $50,000;
(l) any cancellation or termination of a Covered Agreement; or
(m) any incurrence of any Indebtedness or any Guaranty not constituting
Indebtedness or any commitment to incur any Indebtedness or any such Guaranty.
SECTION 2.24 BANK RELATIONSHIPS; POWERS OF ATTORNEY. SCHEDULE 2.24 sets
forth:
(a) the name of each financial institution with which the Mandara
Entities have borrowing or investment arrangements, deposit or checking accounts
or safety deposit boxes;
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(b) the types of those arrangements and accounts, including, as
applicable, names in which accounts or boxes are held, the account or box
numbers and the name of each Person authorized to draw thereon or have access
thereto; and
(c) the name of each Person holding a general or special power of
attorney from with respect to the Mandara Entities and a description of the
terms of each such power.
SECTION 2.25 FINANCIAL STATEMENTS. Attached hereto as SCHEDULE 2.25 are
true, correct and complete copies of (i) the audited consolidated financial
statements of Mandara, including the notes thereto, as of and for the fiscal
year ended December 31, 2000 together with the report of Ernst & Young LLP
thereon, and (ii) the unaudited consolidated financial statements of Mandara as
of and for the four (4) month period ended April 30, 2001, which unaudited
financial statements were internally prepared by Mandara (the financial
statements referred to in clauses (i) and (ii), collectively, the "FINANCIAL
STATEMENTS")). The consolidated unaudited balance sheet of the Mandara Entities
as of April 30, 2001 (the "CURRENT BALANCE SHEET DATE"), included in the
Financial Statements is referred to herein as the "CURRENT BALANCE SHEET." The
Financial Statements of the Mandara Entities fairly present in all material
respects the financial position of the Mandara Entities at the respective
balance sheet dates and the results of operations for the periods covered
thereby, and have been prepared in accordance with GAAP consistently applied
throughout the periods indicated, except, in the case of interim financial
statements, for normal year-end audit adjustments and the absence of footnotes.
The books and records of the Mandara Entities fully and fairly reflect in all
material respects all transactions, properties, assets and liabilities of the
Mandara Entities. There are no extraordinary or material non-recurring items of
income or expense during the periods covered by the Financial Statements and the
balance sheets included in the Financial Statements do not reflect any writeup
or revaluation increasing the book value of any assets, except as specifically
disclosed in the notes thereto.
SECTION 2.26 CONTROL OF RELATED BUSINESSES. Except as disclosed on
SCHEDULE 2.26, none of the Sellers, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, either
directly or together with other Persons, operates or owns a business or trade
(other than the Company and Mandara Spa LLC and their respective Affiliates and
subsidiaries) that (a) is engaged in any line of business which is the same as
or substantially similar to the Business, or (b) is party to any existing
Contract with the Company.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES REGARDING THE SELLERS
As a material inducement to the Buyer to enter into this Agreement and
to consummate the transactions contemplated hereby, each of the Sellers,
severally and not jointly, hereby represents and warrants to Buyer, as of the
date of this Agreement and as of the Closing Date, as follows:
SECTION 3.1 ORGANIZATION. For each Seller other than natural persons,
such Seller (a) is duly formed, validly existing and in good standing under the
laws of its Organizational Jurisdiction, and (b) has all requisite power and
authority under those laws and its Charter Documents to own or lease and to
operate its properties and to carry on its business as now conducted.
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SECTION 3.2 AUTHORIZATION AND ENFORCEABILITY. Such Seller has the power
and authority, and has taken all action necessary, to execute, deliver and
perform its obligations under this Agreement and each of the other Transaction
Documents to which such Seller is a party. This Agreement has been, and each of
the other Transaction Documents to which such Seller is a party will, at the
time of its execution, have been duly authorized, executed and delivered by such
Seller, and, when executed and delivered by each of the other parties hereto or
thereto, will constitute such Seller's legally valid and binding obligation,
enforceable against such Seller in accordance with its terms, except as that
enforceability may be (i) limited by any applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and (ii) subject to general principles of equity
(regardless of whether that enforceability is considered in a proceeding in
equity or at law).
SECTION 3.3 NO CONFLICTS. The execution, delivery and performance by
such Seller of this Agreement and consummation of the transactions contemplated
hereby, do not:
(a) for each Seller that is not a natural person, violate or contravene
any provision of the Charter Documents of such Seller;
(b) violate, contravene or conflict with any (i) Law, (ii) Order of any
Governmental Authority having jurisdiction over any Seller, or (iii)
Governmental Approval issued to any Seller; or
(c) violate, contravene or conflict with any (i) Law or Order of any
Governmental Entity having jurisdiction over such Seller, or (ii) Governmental
Approval applicable to such Seller.
SECTION 3.4 CONSENTS. Except as set forth in SCHEDULE 3.4, no consent,
approval, exemption or authorization is required to be obtained from, no notice
is required to be given to and no filing is required to be made with, any Person
(including, without limitation, any Governmental Authority) by any Seller in
order to authorize or permit the consummation of the transactions contemplated
by this Agreement and the other Transaction Documents, or (b) except for such
consents, approvals, exemptions, authorizations, notices or filings with Persons
other than Governmental Authorities, the failure to obtain or give, as
appropriate, would not reasonably be expected to have an adverse effect on the
consummation of the transactions contemplated hereby or the operation of the
Business following the Closing.
SECTION 3.5 LITIGATION, ETC. There are no Actions pending or, to the
Knowledge of such Seller, threatened, against such Seller that (a) questions the
validity or enforceability of any of the obligations of such Seller under this
Agreement or any other Transaction Document, or (b) seeks (i) to prevent or
delay the consummation by such Seller of the transactions contemplated by this
Agreement, or (ii) damages in connection with any consummation by such Seller of
the transactions contemplated by this Agreement or any other Transaction
Document.
SECTION 3.6 NO COMMISSIONS. None of the Sellers, directly or
indirectly, in connection with this Agreement or the transactions contemplated
hereby (a) employed any broker, finder or agent or (b) agreed to pay or incurred
any obligation to pay any broker's or finder's fee, any sales commission or any
similar form of compensation.
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SECTION 3.7 INVESTMENT INTENT; SECURITIES DOCUMENTS. Such Seller is
acquiring the ▇▇▇▇▇▇▇ Shares to be issued to it hereunder for its own account
for investment and not with a view to, or for the sale in connection with, any
distribution of any of the ▇▇▇▇▇▇▇ Shares, except in compliance with applicable
state and federal securities laws. Such Seller has such Knowledge and experience
in financial and business matters that it is capable of evaluating the risks of
an investment in ▇▇▇▇▇▇▇ Common Shares, has had the opportunity to discuss the
transactions contemplated hereby with ▇▇▇▇▇▇▇ and has had the opportunity to
obtain such information pertaining to ▇▇▇▇▇▇▇ as has been requested, including
but not limited to filings made by ▇▇▇▇▇▇▇ with the SEC under the Exchange Act.
Such Seller hereby represents that it can bear the economic risk of losing its
investment in ▇▇▇▇▇▇▇ Common Shares and has adequate means for providing for
current financial needs and contingencies. Such Seller acknowledges receiving
the ▇▇▇▇▇▇▇ SEC Reports prior to the Closing Date, in accordance with the
requirements of the Securities Act.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF BUYER AND ▇▇▇▇▇▇▇
As a material inducement to the Sellers to enter into this Agreement
and to consummate the transactions contemplated hereby, each of the Buyer and
▇▇▇▇▇▇▇, severally and not jointly, hereby represent and warrant to the Sellers,
as of the date of this Agreement and as of the Closing Date, as follows:
SECTION 4.1 ORGANIZATION. Each of Buyer and ▇▇▇▇▇▇▇ (a) is duly formed,
validly existing and in good standing under the laws of its Organizational
Jurisdiction, and (b) has all requisite power and authority under those laws and
its Charter Documents to own or lease and to operate its properties and to carry
on its business as now conducted.
SECTION 4.2 AUTHORIZATION AND ENFORCEABILITY. Each of Buyer and ▇▇▇▇▇▇▇
has the corporate power and authority, and has taken all corporate action
necessary, to execute, deliver and perform its obligations under this Agreement
and each of the other Transaction Documents to which such it is a party. This
Agreement has been, and each of the other Transaction Documents to which Buyer
and/or ▇▇▇▇▇▇▇ is a party will, at the time of its execution, have been duly
authorized, executed and delivered by Buyer and/or ▇▇▇▇▇▇▇, and, when executed
and delivered by each of the other parties hereto or thereto, will constitute
each of Buyer's and ▇▇▇▇▇▇▇'▇ legally valid and binding obligation, enforceable
against Buyer and ▇▇▇▇▇▇▇ in accordance with its terms, except as that
enforceability may be (i) limited by any applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and (ii) subject to general principles of equity
(regardless of whether that enforceability is considered in a proceeding in
equity or at law).
SECTION 4.3 NO CONFLICTS. The execution, delivery and performance by
Buyer and ▇▇▇▇▇▇▇ of this Agreement and consummation of the transactions
contemplated hereby, do not:
(a) violate or contravene any provision of the Charter Documents of
either of Buyer or ▇▇▇▇▇▇▇;
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(b) violate, conflict with, or give any Person a contractual right to
declare a default, accelerate or terminate (in each case with or without notice
or lapse of time or both), any provision of any agreement to which ▇▇▇▇▇▇▇ or
Buyer is a party or by which any of their respective assets are bound;
(c) except as set forth in SCHEDULE 4.3, result in the creation or
imposition of any Liens, except for Permitted Liens and the Notes, with respect
to any of the assets or properties of Buyer or ▇▇▇▇▇▇▇; or
(d) violate, contravene or conflict with any (i) Law, (ii) Order of any
Governmental Authority having jurisdiction over either Buyer or ▇▇▇▇▇▇▇, or
(iii) Governmental Approval issued to either Buyer or ▇▇▇▇▇▇▇.
SECTION 4.4 CONSENTS. Except as set forth in SCHEDULE 4.4, no consent,
approval, exemption or authorization is required to be obtained from, no notice
is required to be given to and no filing is required to be made with, any Person
(including, without limitation, any Governmental Authority) by either Buyer or
▇▇▇▇▇▇▇ (a) in order to authorize or permit the consummation of the transactions
contemplated by this Agreement and the other Transaction Documents, or (b) under
or pursuant to any Governmental Approval held by or issued to any Mandara Entity
(including, without limitation, environmental, health, safety and operating
permits and licenses) by reason of this Agreement or any of the other
Transaction Documents or the consummation of the transactions contemplated
hereby or thereby.
SECTION 4.5 LITIGATION, ETC. There are no Actions pending or, to the
knowledge Buyer or ▇▇▇▇▇▇▇, threatened, against any of Buyer, ▇▇▇▇▇▇▇ or any of
their respective subsidiaries, and neither Buyer nor ▇▇▇▇▇▇▇ has received any
notice of any pending investigations by any Governmental Authority nor, to the
their knowledge is any such investigation threatened.
SECTION 4.6 NO COMMISSIONS. Except as disclosed on SCHEDULE 4.6,
neither Buyer nor ▇▇▇▇▇▇▇ has, directly or indirectly, in connection with this
Agreement or the transactions contemplated hereby (a) employed any broker,
finder or agent or (b) agreed to pay or incurred any obligation to pay any
broker's or finder's fee, any sales commission or any similar form of
compensation. None of the Sellers nor any of their affiliates have or will have
any liability for any commissions or other amounts now or hereafter payable to
any broker, finder or agent of or to ▇▇▇▇▇▇▇ or Buyer as a result of the
transactions contemplated hereby.
SECTION 4.7 ▇▇▇▇▇▇▇ SHARES. Upon consummation of the transactions
contemplated hereby and the issuance and delivery of certificates representing
the ▇▇▇▇▇▇▇ Shares to the Sellers, the ▇▇▇▇▇▇▇ Shares will be validly issued,
fully paid and non-assessable shares of ▇▇▇▇▇▇▇ Common Shares.
SECTION 4.8 SEC REPORTS. Copies of the most recent annual report on
Form 10-K, the Annual Report to shareholders, all quarterly reports filed since
the filing of the Form 10-K, the Proxy Statement for the most recent annual
meeting of shareholders of ▇▇▇▇▇▇▇, and any other filings or reports filed or
made to the United States Securities and Exchange Commission (collectively, the
"▇▇▇▇▇▇▇ SEC REPORTS") have been filed and are available via the United States
Securities and Exchange Commission's ▇▇▇▇▇ system except where such ▇▇▇▇▇▇▇ SEC
Reports are not required to be filed thereon. As of their respective dates, none
of the ▇▇▇▇▇▇▇ SEC Reports contained any untrue statements of material fact or
omitted to state a material fact required to be stated therein or necessary to
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make the statements made therein, in light of the circumstances in which they
were made, not misleading. ▇▇▇▇▇▇▇ has timely filed all SEC Reports required to
be filed by it pursuant to the Securities Act and the Exchange Act which
complied as to form at the time such form, document or report was filed, in all
material respects with the applicable requirements of the Securities Act and the
Exchange Act.
SECTION 4.9 GOVERNMENTAL APPROVALS; COMPLIANCE WITH LAWS. Except as
disclosed in the ▇▇▇▇▇▇▇ SEC Reports or for matters that would not reasonably be
expected to have a ▇▇▇▇▇▇▇ Material Adverse Effect, each of ▇▇▇▇▇▇▇ and Buyer:
(a) is in compliance with all Laws and Orders of any Governmental
Authority having jurisdiction over it or the operation of its business;
(b) has all Governmental Approvals that are necessary for to permit it
to conduct and operate its business (or portion thereof) in the manner it
currently conducts and operates such business and to permit it to own and use
its assets in the manner in which it currently owns and uses them; and
(c) is in compliance with all of the terms and requirements of each of
its Governmental Approvals and no notice has been received by it, or, to the
knowledge of ▇▇▇▇▇▇▇, any of its employees any notice from any Governmental
Authority of its intention to cancel, terminate, suspend or not renew any of
those Governmental Approvals
SECTION 4.10 ABSENCE OF UNDISCLOSED LIABILITIES. Except as set forth in
the ▇▇▇▇▇▇▇ SEC Reports, ▇▇▇▇▇▇▇ has no liabilities or obligations whether
accrued, absolute, fixed, contingent or otherwise, except (a) to the extent
reflected or taken into account in the ▇▇▇▇▇▇▇'▇ most recent balance sheet and
not heretofore paid or discharged; and (b) liabilities incurred in the ordinary
course of business consistent with past practice since the date of the ▇▇▇▇▇▇▇'▇
most recent balance sheet (none of which relates to breach of contract, breach
of warranty, tort, infringement or violation of law, or which arose out of any
Litigation).
ARTICLE V.
CONDUCT OF BUSINESS PENDING THE CLOSING
SECTION 5.1 CONDUCT OF BUSINESS PENDING THE CLOSING.
(a) From the date hereof until the Closing, except with the prior
written consent of the Buyer or as otherwise expressly permitted or required by
this Agreement, the Sellers shall cause each of the Mandara Entities to:
(i) carry on its business in substantially the same manner as
it has heretofore and not introduce any new method of management,
operation or accounting (except as required by GAAP or any applicable
Law or Order);
(ii) comply with the terms and conditions of, and not cancel,
its present insurance policies;
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(iii) use its commercially reasonable efforts to (A) maintain
and preserve its business organization intact, and (B) retain the
services of its present employees;
(iv) comply with all applicable Governmental Requirements and
provide notice to Buyer of any governmental inquiry, notice or
investigation; and
(v) maintain the instruments and agreements governing its
outstanding Indebtedness and leases on their present terms and not
incur new Indebtedness or enter into new lease instruments or
agreements, except for endorsement of the promissory notes evidencing
the Seller Loans.
(b) From the date hereof until the Closing, except with the prior
written consent of the Buyer or as otherwise expressly permitted or required by
this Agreement, the Sellers shall ensure that none of the Mandara Entities will:
(i) make any change in its Charter Documents;
(ii) issue any additional Equity Interests or issue or
otherwise create any options, warrants or rights to acquire any of its
Equity Interests;
(iii) make any Restricted Payment (other than cash
distributions to the shareholders of the Company that are made in
accordance with SECTION 1.4(E) and that that do not result in the
consolidated cash balance of the Company being less than the Target
Cash Balance Amount);
(iv) increase or agree to increase the compensation payable to
any member of its Board of Directors, or any officers, directors,
managers, consultants or employees except for increases in the ordinary
course consistent with past practice;
(v) make any investments (other than short-term certificates
of deposit of a commercial bank or trust company) in the Equity
Interests (or options, warrants or rights to acquire the Equity
Interests) or Indebtedness of any Person;
(vi) enter into any contract to incur, or otherwise agree to
incur any liability or make any capital payment or expenditure of any
kind in excess of $50,000, other than in the ordinary course of its
business and consistent with its past practice;
(vii) (A) prepay any Indebtedness other than in the ordinary
course of business consistent with past practices, or (B) create,
assume or permit to be created or imposed any Liens, except for
Permitted Liens, upon any of its assets or properties, whether now
owned or hereafter acquired other than in the ordinary course of
business consistent with past practice;
(viii) except as required by any applicable Law or Order, (A)
adopt, establish, amend or terminate any of its Employee Benefit Plans,
or any Other Compensation Plans or Employee Policies and Procedures or
(B) take any discretionary action, or omit to take any contractually
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required action, if that action or omission could either (y) deplete
the assets of any of its Employee Benefit Plans, or (z) increase the
liabilities or obligations under any such plan;
(ix) sell, assign, lease or otherwise transfer or dispose of
any of its owned or leased property or equipment other than in the
ordinary course of its business and consistent with its past practice,
or to dispose of excess or obsolete inventory or equipment other than
for appropriate value;
(x) negotiate for the acquisition of any Entity or the
start-up of any new line of business;
(xi) waive any of its rights or claims, provided that it may
negotiate and adjust bills and Receivables in the course of good faith
disputes with customers in a manner consistent with past practice;
(xii) effect any other transaction that is not in the ordinary
course of its business and consistent with its past practice or that is
prohibited hereby; or
(xiii) amend or terminate any Covered Agreement to which it is
a party.
(c) From the date hereof until the Closing, except with the prior
written consent of the Buyer or as otherwise expressly permitted or required by
this Agreement, none of the Sellers shall:
(i) make or revoke any Tax election respecting the Mandara
Entities that affects such Mandara Entity, Buyer or the Membership
Interest; or
(ii) directly or indirectly purchase or sell (including short
sales) any ▇▇▇▇▇▇▇ Common Shares in any transactions effected on The
Nasdaq Stock Market or otherwise.
ARTICLE VI.
CERTAIN AGREEMENTS AND COVENANTS
OF THE PARTIES PENDING THE CLOSING AND RELATED TAX MATTERS
SECTION 6.1 NO SHOP. Between the date hereof and the Closing, none of
the Sellers shall solicit or encourage, and the Sellers shall ensure that none
of the Mandara Entities solicit or encourage, directly or indirectly, any
inquiries or the making or implementation of any proposal or offer with respect
to a merger, acquisition, consolidation or similar transaction involving, or any
purchase of all or any significant portion of the assets or any equity
securities of, the Mandara Entities, or engage in any activities, discussions or
negotiations concerning, or provide any Confidential Information respecting, the
Mandara Entities, Buyer or any of Buyer Affiliates to, or have any discussions
with, any Person relating to such an offer or proposal or otherwise facilitate
any effort or attempt to make or implement such an offer or proposal. Each of
the Sellers shall, and shall cause each of the Mandara Entities to immediately
cease and cause to be terminated any existing activities, discussions or
negotiations with any Persons conducted heretofore with respect to any of the
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foregoing, and each will take the steps necessary to inform the Persons referred
to in the first sentence of this SECTION 6.1 of the obligations undertaken in
this SECTION 6.1.
SECTION 6.2 ACCESS TO INFORMATION; COOPERATION.
(a) From the date hereof and until the Closing, each of the Sellers
shall, and shall cause the Mandara Entities to, (i) afford to the
Representatives of the Buyer, at reasonable times, reasonable access to the key
employees, sites, properties, books and records of each of the Mandara Entities,
(ii) provide Buyer with such additional financial and operating data and other
information relating to the business and properties of each of the Mandara
Entities as Buyer may from time to time reasonably request and (iii) cooperate
with Buyer and its Representatives in the preparation of any documents or other
material that may be required in connection with this Agreement or any other
Transaction Document. From the date hereof and until the Closing, each of the
Buyer and ▇▇▇▇▇▇▇ shall (i) afford to the Representatives of the Sellers, at
reasonable times, reasonable access to the key employees, sites, properties,
books and records of ▇▇▇▇▇▇▇, (ii) provide Sellers with such additional
financial and operating data and other information as Sellers may from time to
time reasonably request, and (iii) cooperate with Sellers and their
Representatives in the preparation of any documents or other material that may
be required in connection with this Agreement or any other Transaction Document.
Each of the Parties will treat all Confidential Information obtained by them in
connection with the negotiation and performance of this Agreement as
confidential in accordance with the provisions of ARTICLE XII.
(b) If this Agreement is terminated pursuant to ARTICLE XIII, each
Party promptly shall return all written Confidential Information of the other
Parties it then possesses to such other Parties.
SECTION 6.3 TAX MATTERS.
(a) For any period ending on or before the Closing Date, (i) the
Sellers shall prepare, or cause to be prepared, all income tax Returns of the
Mandara Entities, (ii) the Mandara Entities shall prepare, or cause to be
prepared, all other Returns of the Mandara Entities and (iii) the Mandara
Entities shall file, or cause to be filed, all such Returns, and the Mandara
Entities shall pay or cause to be paid, on a timely basis, all Taxes due thereon
which are the obligations of the Mandara Entities. The Sellers shall prepare and
provide Buyer with a copy of Mandara's federal income tax Return for the tax
period ending on the Closing Date at least 30 days prior to the due date for its
filing and, if requested by the Buyer, such Return shall include all documents
and statements necessary for the making of an election pursuant to Section 754
of the Code with respect to Mandara.
(b) The Parties shall cooperate and provide each other with such
information and records and access to officers, directors, employees and agents
as may be reasonably required in connection with the preparation of any Return
or in any Tax audit or other Tax proceeding relating to the Mandara Entities.
(c) At the Closing, each Seller shall complete, execute and deliver to
Buyer an executed certificate in the form attached hereto as EXHIBIT 6.3(C), to
the effect that no withholding is required under Section 1445 of the Code in
connection with the transactions contemplated by this Agreement.
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(d) With respect to any particular Tax of a Mandara Entity relating to
a particular tax period (or portion thereof) ending on or prior to the Closing
Date, Buyer shall promptly pay to each Seller such Seller's proportionate share
of the excess of (i) the sum of the amount of such Taxes for such tax period
actually paid by such Mandara Entity (or its Affiliates) on or before the
Closing Date (if any) plus the amount of such Taxes for such tax period treated
as a current liability in calculating the Final Working Capital Amount pursuant
to SECTION 1.4 (if any) over (ii) the sum of the actual amount of such Taxes
incurred (as may be determined in connection with a Return filing, a
"determination" as defined in Section 1313(a) of the Code or a similar provision
of state, local or foreign Law, or any other event) for such tax period (for a
tax period ending after the Closing Date, the amount of such Taxes relating to
the portion of the tax period ending on the Closing Date shall be computed as if
the relevant tax period ended on the Closing Date, except that personal, real
and intangible Taxes shall be allocated on a per diem basis) plus the amount of
such Taxes for such tax period treated as a current asset in calculating the
Final Working Capital Amount pursuant to SECTION 1.4 (if any). Notwithstanding
the foregoing, any amounts that would otherwise be payable to Sellers pursuant
to this SECTION 6.3(D) shall be retained by Buyer, ▇▇▇▇▇▇▇ or the Mandara
Entities, as the case may be, and shall offset, on a dollar-for-dollar basis,
the amount of any Indemnifiable Damages incurred by Buyer, ▇▇▇▇▇▇▇ or the
Mandara Entities arising out of, or resulting from, any breach of any
representation or warranty set forth in SECTION 2.22 (which amount shall be
calculated, for the purposes of this SECTION 6.3(D) only, without regard to the
Indemnification Threshold).
SECTION 6.4 BUSINESS RELATIONS. The Sellers, Buyer and ▇▇▇▇▇▇▇ shall
cooperate to present the transactions contemplated hereby to the parties with
which the Mandara Entities have material contractual relations (I.E., lessors
and other facility owners/operators), as soon as practicable after the date
hereof and consistent with applicable securities laws and other Laws, in such a
manner as to minimize the disruption to the Business and assure such contractual
parties that the Mandara Entities will continue to be operated by substantially
the same management team and in accordance with past practices. The Parties
shall cooperate to ensure that such contacts with contractual parties are made
in a manner reasonably acceptable to Sellers and the Mandara Entities,
including, without limitation, the delivery of a letter of introduction from
▇▇▇▇▇▇▇ and Buyer to each of such contractual parties.
SECTION 6.5 COMMERCIALLY REASONABLE EFFORTS. Subject to the terms and
conditions of this Agreement, each of the Parties shall use its commercially
reasonable efforts in good faith to take or cause to be taken as promptly as
practicable all reasonable actions that are within its control to fulfill,
satisfy or discharge each of the agreements, covenants and other obligations
that it has undertaken pursuant to this Agreement or any other Transaction
Document. Each of the Parties shall use its commercially reasonable efforts to
obtain all consents, approvals, exemptions, authorizations and shall give all of
the notices described in SCHEDULE 2.4, SCHEDULE 3.4 and SCHEDULE 4.4 in
connection with the consummation of the transactions contemplated by this
Agreement.
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ARTICLE VII.
CLOSING DELIVERIES AND CONDITIONS
SECTION 7.1 CLOSING DELIVERIES OF THE SELLERS. The obligation of Buyer
and ▇▇▇▇▇▇▇ to consummate the transactions contemplated by this Agreement shall
be subject to the delivery, prior to or at Closing, of each of the following by
Sellers (the delivery of any or all of which may be waived by Buyer and ▇▇▇▇▇▇▇
in their discretion):
(a) a counterpart signature page to the Employment Agreement, dated as
of the Closing, between ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and Mandara, duly executed by ▇▇.
▇▇▇▇▇▇▇, which Employment Agreement shall be in substantially the form attached
hereto as EXHIBIT 7.1(A) (the "EDLESON EMPLOYMENT AGREEMENT");
(b) a counterpart signature page to the Registration Rights Agreement,
dated as of the Closing, duly executed by each of the Sellers;
(c) the original promissory notes evidencing the Seller Loans, each
duly endorsed and collaterally assigned by the holder thereof in favor of Buyer;
(d) an opinion of ▇▇▇▇▇▇ & ▇▇▇▇▇▇, counsel to Sellers, dated as of the
Closing Date, in the form attached hereto as EXHIBIT 7.1(D);
(e) good standing certificates (or similar certifications of status),
dated not more than thirty (30) business days prior to the Closing Date, of each
of the Mandara Entities issued by the appropriate Governmental Authorities or
other Persons (i) in their Organizational Jurisdiction and (ii) in each other
jurisdiction where they are qualified to do business;
(f) Instruments of Transfer of the Mandara Shares, dated as of the
Closing Date, in the form attached hereto as EXHIBIT 7.1(F), executed by each of
the Sellers assigning the Mandara Shares to Buyer;
(g) a Mutual General Release, in the form attached hereto as EXHIBIT
7.1(G) (the "RELEASE"), executed by each of the Sellers releasing claims against
the Mandara Entities;
(h) an undertaking from each of Non-Compete Party agreeing to be bound
by the restrictions set forth under ARTICLE X of this Agreement;
(i) the Charter Documents of the Mandara Entities;
(j) a counterpart signature page to a Pledge and Security Agreement,
dated as of the Closing Date, between Buyer and each of SPI and PCCL (the
"PLEDGE AGREEMENTS"), duly executed by each of SPI and PCCL, each of which
Pledge Agreements shall be in substantially the form attached hereto as EXHIBIT
7.1(K), and shall be accompanied by a stock power executed in blank and
instructions to ▇▇▇▇▇▇▇ to deliver any ▇▇▇▇▇▇▇ Shares otherwise deliverable to
SPI and PCCL hereunder to the pledgee under said Pledge Agreements.
SECTION 7.2 ADDITIONAL CONDITIONS TO THE OBLIGATION OF BUYER AND
▇▇▇▇▇▇▇. The obligation of Buyer and ▇▇▇▇▇▇▇ to consummate the transactions
contemplated by this Agreement shall be subject to the following additional
condition: (any or all of which may be waived by Buyer and ▇▇▇▇▇▇▇ in their
discretion):
(a) between the date hereof and the Closing Date, there shall have been
no Material Adverse Change in the Business of the Mandara Entities, taken as a
whole, caused by the grossly negligent, reckless or intentional misconduct of
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(i) any Seller, (ii) any member, member of the board of managers or officer of
any Seller, or (iii) any of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ or ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇;
(b) Sellers shall have delivered to Buyer a certificate confirming that
the condition set forth in SECTION 7.2(A) has been satisfied.
SECTION 7.3 CLOSING DELIVERIES OF BUYER AND ▇▇▇▇▇▇▇. The obligation of
Sellers to consummate the transactions contemplated by this Agreement shall be
subject to the delivery, prior to or at Closing, of each of the following by
Buyer and/or ▇▇▇▇▇▇▇ (the delivery of any or all of which may be waived by
Sellers in their discretion):
(a) a counterpart signature page to the Edleson Employment Agreement,
duly executed by Mandara;
(b) a counterpart signature page to the Registration Rights Agreement,
duly executed by ▇▇▇▇▇▇▇;
(c) a counterpart signature page to each of the Pledge Agreements duly
executed by Buyer;
(d) the Consideration (less (i) the amount of the Non-Refundable
Deposit, and (ii) and ▇▇▇▇▇▇▇ Shares being pledged by SPI and PCCL pursuant to
the Pledge Agreements), which Consideration shall be delivered to the Sellers in
accordance with the terms of SECTION 1.3 hereof free and clear of any Liens;
(e) an opinion of (i) Akerman, Senterfitt & ▇▇▇▇▇▇, P.A., U.S. counsel
to Buyer and ▇▇▇▇▇▇▇, in the form attached hereto as EXHIBIT 7.3(E)(I), and (ii)
▇▇▇▇▇ ▇. ▇▇▇▇▇, Bahamian counsel to Buyer and ▇▇▇▇▇▇▇, in the form attached
hereto as EXHIBIT 7.3(E)(II);
(f) good standing certificates (or similar certifications of status),
dated not more than thirty (30) business days prior to the Closing Date, of each
of Buyer and Seller issued by the appropriate Governmental Authorities or other
Persons (i) in their Organizational Jurisdiction, and (ii) in each other
jurisdiction where they are qualified to do business;
(g) a certificate, duly executed by an executive officer of ▇▇▇▇▇▇▇,
certifying that ▇▇▇▇▇▇▇ did not purchase, or cause the purchase of, any ▇▇▇▇▇▇▇
Common Shares during the period used to determine the Average Closing Sales
Price of the ▇▇▇▇▇▇▇ Shares;
(h) one or more letters of introduction from ▇▇▇▇▇▇▇ to be delivered by
Sellers in connection with the presentations contemplated by SECTION 6.4 hereof,
which letters shall be in substantially the form of EXHIBIT 7.3(H) attached
hereto;
(i) Instruments of Transfer of the Mandara Shares, dated as of the
Closing Date, in the form attached hereto as EXHIBIT 7.1(F), executed by Buyer;
and
(j) the Release, executed by the Company releasing claims of the
Mandara Entities against the Sellers.
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ARTICLE VIII.
COVENANTS FOLLOWING THE CLOSING
SECTION 8.1 MANDARA'S OPERATIONS DURING THE TEST PERIOD. The Parties
agree that a person mutually acceptable to Buyer and the Sellers (the
"OPERATIONAL MANAGER") shall, subject to the provisions of this SECTION 8.1,
retain primary day-to-day responsibility and decision-making authority with
respect to the business and operations of the Mandara Entities during the Test
Period. Notwithstanding the foregoing, the Parties agree that Buyer shall have
the right, power, and authority to take any action or make any decision with
respect to Mandara's business and operations that it deems reasonably necessary
(a "NECESSARY ACTION") to preserve and maintain the Business and operations
(including, without limitation, its goodwill) of the Mandara Entities in
accordance with past practices; PROVIDED, HOWEVER, that none of Buyer, ▇▇▇▇▇▇▇
or any ▇▇▇▇▇▇▇ Affiliates may take any Necessary Action that would reasonably be
expected to have an adverse impact on the ability of the Mandara Entities to
achieve the Guaranteed EBITDA Surplus Amount without the prior written consent
of ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (which consent shall not be unreasonably withheld), or if he
is not employed by the Company, each of the Sellers (which consent shall not be
unreasonably withheld) and, in each instance, Buyer agrees that it shall use
commercially reasonable efforts to minimize the adverse impact of such Necessary
Action, if any, on the ability of the Mandara Entities to meet or exceed the
Guaranteed EBITDA Surplus Amount. The parties agree that the Operational Manager
shall be ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ for so long as he is employed by Buyer or ▇▇▇▇▇▇▇.
SECTION 8.2 RESERVED.
SECTION 8.3 RESERVED.
SECTION 8.4 APPROVED PIPELINE PROJECTS.
(a) At the Closing or as soon as practicable thereafter, ▇▇▇▇▇▇▇ and
Sellers shall each deliver to the other a list of all land-based spa development
opportunities that are being actively pursued by ▇▇▇▇▇▇▇ or the Mandara
Entities, as the case may be, as of the Closing Date (such projects, the
"PIPELINE PROJECTS"). For the purposes of this Agreement, the term "actively
pursued" shall mean that (i) good faith oral and/or written communications
commenced prior to April 1, 2001 and are continuing with a third party
owner/operator with respect to such development opportunity; and (ii) the
development opportunity is one which ▇▇▇▇▇▇▇ or the applicable Mandara Entity,
as the case may be, believes in good faith it is capable of being awarded and,
if awarded, developing consistent with the anticipated terms and conditions of
such project. In the event that either ▇▇▇▇▇▇▇, on the one hand, or Sellers, on
the other hand, dispute the inclusion or attempted inclusion of a Pipeline
Project on the list delivered to it hereunder, the Parties shall attempt to
resolve such dispute in good faith (including, without limitation, providing the
Party(ies) objecting to the inclusion or attempted inclusion such evidence as
such disputing Party(ies) may reasonably request to establish that the Pipeline
Project in question was actively pursued within the time periods specified
herein). In the event that the Parties are unable to resolve any such disputes
within ten (10) business days following the Closing, they shall jointly select a
mutually acceptable third party (it being agreed that any "big five" accountant
shall be deemed mutually acceptable), who shall determine whether the project in
question properly constitutes a Pipeline Project of the Party claiming the same
within the meaning of this Agreement. Such mutually acceptable third party shall
make such determination within thirty (30) days following the submission of the
matter to it for resolution, and such determination shall be final and binding
upon the Parties. If the project is determined to be a Pipeline Project, the
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Party(ies) that challenged its inclusion as a Pipeline Project shall bear the
expense of the such third party; if the project is determined not to be a
Pipeline Project, the Party(ies) that initially sought its inclusion shall bear
the expense of the such third party.
(b) With respect to any Pipeline Projects that are included on the list
delivered by Sellers, and which are NOT on the list delivered by ▇▇▇▇▇▇▇ (such
projects, the "MANDARA PIPELINE PROJECTS"), the parties agree that each such
project shall be deemed an "APPROVED PIPELINE PROJECT" in the event that (i)
Buyer desires to have the Mandara Entities develop or commit to develop such
Mandara Pipeline Project and delivers written notice to such effect to Sellers
prior to the six month anniversary of the Closing Date; and (ii) Shiseido Co.,
Ltd. (or any Affiliate thereof) agrees to fund its proportional share of any
development expenses estimated to be incurred in connection with such Mandara
Pipeline Project or to an appropriate reduction in its percentage ownership
interest of Mandara as a result of Buyer's funding such amount. With respect to
each Approved Pipeline Project, the parties agree that, during the Test Period:
(i) Buyer shall cause the Mandara Entities to fund and develop each Approved
Pipeline Project in accordance with the development schedule established
therefor (which development schedule shall be mutually agreeable to ▇▇▇▇▇▇▇ and
Sellers); (ii) Sellers shall have the option to have any EBITDA resulting from
or otherwise generated by any of such Approved Pipeline Projects be included in
the EBITDA of the Mandara Entities for the purposes of the calculations under
SECTION 1.5; and (iii) in the event Sellers elect to have such EBITDA included
in the calculation of EBITDA pursuant to the foregoing clause (ii), any amounts
actually expended by the Mandara Entities to construct and fit out the Approved
Pipeline Projects shall be used to determine the amount of Additional Capital
Expenses pursuant to SECTION 1.5(B)(IV).
(c) The parties agree that, except for Approved Pipeline Projects,
prior to the six month anniversary of the Closing Date, none of the Mandara
Entities, Buyer, ▇▇▇▇▇▇▇ or any of their Affiliates shall, directly or
indirectly, develop, construct, pursue or otherwise undertake (or agree to do
any of the foregoing) any Mandara Pipeline Project without the prior written
consent of the Sellers; PROVIDED, HOWEVER, that this restriction shall not apply
to any Mandara Pipeline Project with respect to which Shiseido Co., Ltd. (or any
of its Affiliates) refuses to fund its proportional share of any estimated
development expenses or does not agree to an appropriate reduction in its
percentage ownership interest of Mandara as a result of Buyer's funding such
amount.
SECTION 8.5 ADDITIONAL AGREEMENT WITH RESPECT TO DEVELOPMENT PROJECTS.
(a) Except for any Approved Pipeline Projects that Sellers elect to
have included in EBITDA calculations pursuant to SECTION 8.4(B) and other
projects that the parties hereafter agree in writing shall be included in the
EBITDA calculations under SECTION 1.5, the parties agree that, during the Test
Period, the Mandara Entities shall not undertake or agree to undertake any other
spa development projects without the consent of the Operational Manager, which
consent shall not be unreasonably withheld (it being agreed that the Operational
Manager shall be entitled to take into account the interests of the Sellers in
determining whether or not to consent to such any of such spa development
projects).
(b) Except for any Approved Pipeline Projects that Sellers elect to
have included in EBITDA calculations pursuant to SECTION 8.4(B) and other
projects that the parties hereafter agree in writing shall be included in the
EBITDA calculations under SECTION 1.5, the parties agree that, during the Test
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Period, no income or expenses from any other development projects, operations or
spa facilities of the Mandara Entities (collectively, the "EXCLUDED PROJECTS")
shall be included for the purposes of the EBITDA calculations under SECTION 1.5.
ARTICLE IX.
INDEMNIFICATION
SECTION 9.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties set forth in ARTICLE II, ARTICLE III and ARTICLE
IV and in any certification thereof delivered in connection herewith will
terminate and expire on the eighteen (18) month anniversary of the Closing Date,
except (a) the representations and warranties in SECTION 2.21 and SECTION 2.22
will survive until the expiration of the applicable statutes of limitation
(including all periods of extension and tolling), if any; (b) the
representations and warranties set forth in SECTIONS 2.1, 2.2, 2.6, 2.7, 2.8,
3.1, 3.2, 3.6, 3.7, 4.1, 4.2, 4.6, AND 4.7 shall survive indefinitely; and (c)
the representations and warranties in SECTION 2.12 will survive until the third
anniversary of the Closing Date. Notwithstanding anything in this Agreement to
the contrary, a party shall have the right to commence Litigation after the
expiration of any of the above-specified time periods with respect to claims as
to which proper notice was provided to the party against which such claim is
being asserted prior to the expiration of such time period.
SECTION 9.2 AGREEMENT BY THE SELLERS TO INDEMNIFY. Each of the Sellers
agrees to indemnify and hold the Buyer and ▇▇▇▇▇▇▇ and each of its subsidiaries,
officers, directors, employees, Affiliates, successors and assigns
(collectively, the "BUYER INDEMNIFIED PARTIES") harmless from and against the
aggregate of all expenses, losses, costs, deficiencies, liabilities and damages
(including, without limitation, reasonable related counsel and paralegal fees
and expenses) incurred or suffered by the Buyer Indemnified Parties arising out
of or resulting from:
(a) any breach of a representation or warranty made jointly and
severally by the Sellers in ARTICLE II of this Agreement;
(b) any breach of a representation or warranty made severally by any of
the Sellers in ARTICLE III of this Agreement;
(c) any breach of the covenants or agreements made by any of the
Sellers in SECTIONS 1.4 or 1.5, or ARTICLE X of this Agreement; or
(d) any breach of the covenants or agreements made by any of the
Sellers in this Agreement (other than the covenants or agreements made severally
by any of the Sellers pursuant to SECTIONS 1.4 or 1.5, or ARTICLE X of this
Agreement),
(e) The indemnification obligations of the Sellers shall be: (i)
several, and not joint, with respect to claims under SECTION 9.2(B) and SECTION
9.2(C) (it being agreed that no Seller shall have any liability hereunder other
than with respect breaches of the representations, warranties and covenants
referenced to in such sections by such Seller); and (ii) joint and several with
respect to claims under SECTION 9.2(A) or SECTION 9.2(D). For the avoidance of
doubt, the Parties agree and acknowledge that any Indemnifiable Damages of the
Buyer Indemnified Parties hereunder shall be determined, calculated and limited
to the amount of the Indemnifiable Damages incurred by Buyer/▇▇▇▇▇▇▇ in respect
thereof (E.G., if a breach of a Seller representation represents $1,000,000 in
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damages to Mandara Spa Asia Limited, the harm to, and Indemnifiable Damages of,
the Buyer Indemnified Parties in respect thereof would be $600,000 (I.E.,
Buyer's 60% ownership interest in Mandara Spa Asia Limited multiplied by
$1,000,000)).
SECTION 9.3 AGREEMENT BY THE BUYER AND ▇▇▇▇▇▇▇ TO INDEMNIFY. Each of
the Buyer and ▇▇▇▇▇▇▇, jointly and severally, agrees to indemnify and hold each
of the Sellers and their respective members, managers, officers, directors and
successors thereof (the "SELLER INDEMNIFIED PARTIES") harmless from and against
the aggregate of all expenses, losses, costs, deficiencies, liabilities and
damages (including, without limitation, related reasonable counsel and paralegal
fees and expenses) incurred or suffered by the Seller Indemnified Parties
arising out of or resulting from:
(a) any breach of a representation or warranty made by the Buyer or
▇▇▇▇▇▇▇ in this Agreement; or
(b) any breach of the covenants or agreements made by the Buyer or
▇▇▇▇▇▇▇ in this Agreement.
SECTION 9.4 THIRD PARTY ACTIONS. With respect to each claim made by a
third party for which an Indemnified Party (as hereinafter defined) seeks
indemnification under this ARTICLE IX (a "THIRD PARTY CLAIM"), the Indemnified
Party shall give prompt notice to the Indemnifying Party (as hereinafter
defined) of the Third Party Claim, provided that failure to give such notice
promptly shall not relieve or limit the obligations of the Indemnifying Party
unless the Indemnifying Party has been materially prejudiced thereby (and such
failure to notify the Indemnifying Party will not relieve it or him from any
other liability he or it may have to the Indemnified Party). The Indemnifying
Party will have the right to defend the Indemnified Party against any Third
Party Claim with counsel of their choice reasonably satisfactory to the
Indemnified Party so long as and to the extent that (a) the Indemnifying Party
notifies the Indemnified Party in writing, within fifteen (15) days after
receipt from the Indemnified Party of notice of the claim, that the Indemnifying
Party will indemnify the Indemnified Party, to the extent provided in this
Agreement, from and against any damages with respect to which such Indemnified
Party is entitled to indemnification under SECTION 9.2 or SECTION 9.3 hereof
(collectively, "INDEMNIFIABLE DAMAGES") that the Indemnified Party may suffer
resulting from, arising out of, relating to, in the nature of, or caused by the
claim; (b) the claim seeks the recovery of solely money damages and does not
contain a claim for an injunction, specific performance, a declaration of rights
or other equitable relief; and (c) the Indemnifying Party conducts the defense
of the claim actively and diligently. If there is a conflict of interest,
however, that would prevent counsel for the Indemnifying Party from also
representing the Indemnified Party as reasonably determined by the Indemnified
Party, then the Indemnified Party shall have the right to select separate
counsel to participate in the defense of such action on behalf of the
Indemnified Party. After notice from the Indemnifying Party to the Indemnified
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Party of their election to so assume the defense thereof, the Indemnifying Party
will not be liable to the Indemnified Party pursuant to the provisions of this
ARTICLE IX for the related counsel and paralegal fees and expenses subsequently
incurred by the Indemnified Party in connection with the defense thereof, unless
(i) the Indemnified Party shall have employed counsel in accordance with the
provisions of the preceding sentence, (ii) the Indemnifying Party shall not have
employed counsel reasonably satisfactory to the Indemnified Party to represent
the Indemnified Party within a reasonable time after notice of the commencement
of the action, or (iii) the Indemnifying Party has not authorized the employment
of counsel for the Indemnified Party at the expense of the Indemnifying Party.
Notwithstanding anything to the contrary in this Section, the Indemnifying Party
shall have no right to settle or compromise, without the prior written consent
of the Indemnified Party, any action for which they have assumed the defense to
the extent the settlement or compromise provides for any injunctive or other
equitable relief against the Indemnified Party other than monetary damages, or
does not include as an unconditional term thereof the providing to the
Indemnified Party by the third party of a release of all liability in respect of
such claim, and nothing stated in this Section shall otherwise affect the
Indemnifying Party's obligation to pay the Indemnified Party all Indemnifiable
Damages pursuant to the provisions of this ARTICLE IX. The Indemnified Party
shall reasonably cooperate with the Indemnifying Party in the defense of any
action assumed by the Indemnifying Party in accordance with the terms of this
Section and shall make available to the Indemnifying Party such information as
the Indemnifying Party reasonably requests in connection with any such defense.
For purposes of this Section 9.4, an "INDEMNIFIED PARTY" shall mean a party
claiming indemnification under this Agreement, and an "INDEMNIFYING PARTY" shall
mean a party from whom indemnification is sought under this Agreement. The
payments required by this SECTION 9.4 will be made periodically during the
course of the investigation or defense, as and when bills are received or
expenses incurred.
SECTION 9.5 LIMITS ON INDEMNIFICATION. Notwithstanding anything to the
contrary contained in this Agreement and in lieu of qualifying the
representations and warranties in ARTICLE II (other than in SECTIONS 2.11,
2.21(E) and 2.25), ARTICLE III and ARTICLE IV (other than in SECTION 4.9) by
materiality or Material Adverse Effect, the parties agree that:
(a) no amount shall be payable by any Indemnifying Party pursuant to
SECTIONS 9.2(A), 9.2(B), 9.3(A) unless (i) with respect to a potential claim,
such claim for Indemnifiable Damages exceeds $10,000 and (ii) the aggregate
amount of all claims for Indemnifiable Damages exceeds $100,000 (the
"INDEMNIFICATION THRESHOLD"), in which case such Indemnified Party shall be
entitled to the full amount of such Indemnifiable Damages; PROVIDED, HOWEVER,
that the Indemnification Threshold shall not apply to (A) any Indemnifiable
Damages pursuant to SECTIONS 9.2(C), 9.2(D) or 9.3(B) of this Agreement, (B) any
breach of any representation or warranty by any Seller with respect to the
amount of indebtedness for borrowed money of the Mandara Entities other than as
set forth on the Current Balance Sheet, pursuant to the Seller Loans (and the
similar loan made by Shiseido Co., Ltd.) or otherwise disclosed on the
disclosure schedules delivered by Sellers pursuant hereto; or (C) any breach by
any Seller of any representation or warranty set forth in SECTION 2.22, solely
in the event that and to the extent that Sellers actually received any amounts
pursuant to SECTION 6.3 (it being agreed that, except as provided herein, any
breach by any Seller of any representation or warranty set forth in SECTION 2.22
shall otherwise be subject to the limitations of this SECTION 9.5(A); PROVIDED
FURTHER that, for the avoidance of doubt, the Parties acknowledge and agree that
the Indemnification Threshold shall serve as a trigger for indemnification and
not as a deductible;
(b) the maximum amount of Indemnifiable Damages for which indemnity may
be recovered from Sellers in the aggregate pursuant to this Agreement shall be
an amount equal to $5,000,000 (the "INDEMNIFICATION CAP");
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(c) the maximum amount of Indemnifiable Damages for which indemnity may
be recovered from Buyer and ▇▇▇▇▇▇▇ in the aggregate shall be an amount equal to
the Indemnification Cap; PROVIDED, HOWEVER, that this limitation shall not apply
with respect to any failure of any party to pay and deliver any amount pursuant
to SECTIONS 1.3, 1.4 or 1.5 hereof;
(d) the amount of any Indemnifiable Damages claimed by any Buyer
Indemnified Party hereunder shall be net of any insurance, indemnity,
contribution or other payments or recoveries of a like nature with respect
thereto actually realized by such Buyer Indemnified Parties (it being agreed
that, promptly after the realization of any such reductions of Indemnifiable
Damages pursuant hereto, such Buyer Indemnified Party shall reimburse Sellers
for such reduction in Indemnifiable Damages for which such Buyer Indemnified
Party was indemnified prior to the realization of such reductions of
Indemnifiable Damages);
(e) notwithstanding any provision to the contrary contained in this
Agreement, in the event that an Indemnifying Party can establish that an
Indemnified Party had actual knowledge, on or before the date of this Agreement,
of a breach of a representation or warranty of the Indemnifying Party upon which
a claim for indemnification by the Indemnified Party is based, then the
Indemnifying Party shall have no liability for any indemnified losses resulting
from or arising out of such claim; PROVIDED, HOWEVER, that this limitation shall
not apply with respect to any breach of a representation or warranty known to
the Indemnified Party with respect to which the Indemnified Party provided
written notice of to the Indemnifying Party prior to the date of this Agreement;
(f) in the event that Sellers are required to make any payments
pursuant to a claim for Indemnifiable Damages, Sellers shall have the option of
paying and satisfying all or any portion of such claim by a reduction, on a
dollar for dollar basis, of the outstanding principal amount, if any, of the
Notes, it being agreed that any such reduction shall be made in a pro rata
manner as between the Sellers based on based on their Pro Rata Percentages (and
Buyer and ▇▇▇▇▇▇▇ hereby agree that, while any amounts remain payable under the
Notes, they shall not enter into any agreement or arrangement that would
otherwise prohibit, restrict or otherwise limit Sellers right to offset pursuant
to this Agreement and/or any of the Notes);
(g) the amount of any Indemnifiable Damages claimed by any Buyer
Indemnified Party hereunder shall be reduced to take into account any net
reduction in any Tax liability realized by such Buyer Indemnified Party in
connection with the Indemnifiable Damages for which indemnification is sought
hereunder (it being agreed that, promptly after the realization of any such
reductions of Indemnifiable Damages pursuant hereto, such Buyer Indemnified
Party shall reimburse Sellers for such reduction in Indemnifiable Damages for
which such Buyer Indemnified Party was indemnified prior to the realization of
such reductions of Indemnifiable Damages); and
(h) neither Buyer nor ▇▇▇▇▇▇▇ shall have the right to seek recovery or
payment in respect of any Indemnifiable Damages if (A) the matter(s) that gave
rise to such Indemnifiable Damages is cured, repaired or otherwise remedied by
the Mandara Entities and (B) the amounts expended to cure, repair or otherwise
remedy such damages are treated as expenses that reduce the amount of EBITDA of
the Mandara Entities earned during the Test Period for the purposes of SECTION
1.5 of this Agreement.
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SECTION 9.6 REMEDIES EXCLUSIVE. Each party hereby acknowledges and
agrees that its sole remedy with respect to any claims for money damages
relating to the Mandara Shares or the Business of the Mandara Entities or the
subject matter of this Agreement shall be pursuant to the indemnification
provisions of this ARTICLE IX. In furtherance of the foregoing, each party
hereby waives to the fullest extent permitted by law, any and all other rights,
claims, and causes of action it may have against the other parties or their
respective Representatives and Affiliates relating to the Mandara Shares, the
Business or the subject matter of this Agreement, other than claims for or in
the nature of fraud.
SECTION 9.7 PAYMENTS OF INDEMNIFIABLE DAMAGES. All Indemnifiable
Damages shall be treated as adjustment to the Purchase Price for Tax purposes,
unless a different Tax treatment is required pursuant to a "determination" (as
defined in Section 1313(a) of the Code, or has provided in any equivalent
provision of state, local or foreign Law).
SECTION 9.8 ACKNOWLEDGEMENT REGARDING MATERIALITY. Due to the absence
of materiality and Material Adverse Effect qualifiers in the representations and
warranties in ARTICLE II (other than in SECTIONS 2.11, 2.21(E) and 2.25), and
ARTICLE III, the parties agree that the failure of Sellers to disclose on the
disclosure schedules delivered pursuant hereto a matter that would otherwise be
required to be disclosed pursuant to such representation or warranty, which
matter is not material or which matter could not reasonably be expected to cause
or result in a Material Adverse Effect, shall not give rise to a claim of fraud
or intentional misrepresentation against any Seller or any of their Affiliates.
Notwithstanding the foregoing agreement and acknowledgment, neither Buyer nor
▇▇▇▇▇▇▇ is waiving any other rights or remedies it has or may have hereunder,
including, but not limited to, the right to bring an action for indemnification
under this ARTICLE IX with respect to the failure of Sellers to make such
disclosure.
ARTICLE X.
LIMITATIONS ON COMPETITION
SECTION 10.1 PROHIBITED ACTIVITIES. Each of the Sellers (other than
Franky Tjahyadikarta and Okie R. Lukita) and the other Persons identified on
SCHEDULE 10.1 attached hereto (each, a "NON-COMPETE PARTY"), severally and not
jointly, agrees as follows (it being agreed that, with respect to ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, in the event of a conflict between any of the
provisions of this ARTICLE X and the provisions of their respective Employment
Agreements with the Company or other subsidiaries of ▇▇▇▇▇▇▇, the provisions of
such Employment Agreements shall prevail):
(a) NON-COMPETITION. Except as provided in this SECTION 10.1(A), such
Non-Compete Party covenants and agrees that for a period of three (3) years
following the Closing Date, such Non-Compete Party shall not engage, directly or
indirectly, whether as an individual, sole proprietor, or as a principal, agent,
officer, director, employer, employee, consultant, independent contractor,
partner or shareholder of any firm, corporation or other entity or group or
otherwise in any Competing Business. For purposes of this Agreement, the term
"COMPETING BUSINESS" shall mean any individual, sole proprietorship,
partnership, firm, corporation or other entity or group which offers or sells or
attempts to offer or sell (i) spa services, skin or hair care products, or (ii)
any other services then offered or sold by the Company as of August 1, 2001 or
during the one (1) year period prior thereto, including, but not limited to, in
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the case of each of the preceding clauses (i) and (ii), offers or sales or
attempts to offer or sell any of such services or products to or from any day
spa, destination spa, resort, hotel, passenger cruise vessel or retail
establishment. Notwithstanding the foregoing, nothing herein shall preclude or
prohibit any Non-Compete Party from (A) maintaining a passive investment in
publicly held entities provided that such Non-Compete Party does not have more
than a five percent (5%) beneficial ownership in any such; (B) in the case of
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ only, owning approximately one percent (1%) of the shares of a
privately held company, Essentiel Elements, which is in the business of
manufacturing distributing spa products (provided that such Non-Compete Party is
not on the Board or active in the day to day management of such company); (C)
serving as an officer or director of any entity, the majority of the voting
securities of which is owned, directly or indirectly, by the Company; (D) in the
case of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ only, maintaining a direct or indirect ownership
interest in, and operating the business of the Mount View Hotel & Spa located in
Calistoga, California, (E) in addition to the foregoing, in the case of ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ only, acquiring, maintaining or disposing of a direct or indirect
ownership interest of at least twenty percent (20%) in up to six (6) hotel or
resort properties (including hotels or resorts containing spa facilities);
PROVIDED, HOWEVER, that none of such hotels or resorts shall be located within
ten (10) miles of Outrigger Wailea Resort on the island of Maui, Hawaii or
within the "Area Restriction" on the island of Oahu, Hawaii (as such term is
defined in Section 18 of that certain Lease, dated December 14, 2001, between
Hilton Hawaiian Village LLC and Mandara Spa (Hawaii), L.L.C.), and (F) in the
case of ▇▇▇▇ ▇▇▇▇▇▇▇ only, (1) engaging in the activities described on SCHEDULE
A attached to the Edleson Employment Agreement related to (x) the specific
hotels referenced thereon and (y) the activities described in the last
paragraph thereof, or (2) directly or indirectly owning, operating or managing
a total of five (5) hotels, in addition to those on SCHEDULE A, each of which
may include a spa as a hotel amenity, so long as the total number of rooms in
such up to five (5) hotels owned, operated or managed does not exceed fifteen
hundred (1,500) rooms (the "FIVE HOTEL RESTRICTION"), it being further agreed
that the Five Hotel Restriction shall not apply to any hotel which, after the
date hereof enters into an agreement with any Mandara Entity, whereby such
Mandara Entity has agreed in writing to provide spa services to such hotel for
a period of at least three (3) years (each of the activities referred to in
foregoing clauses (A) through (F), collectively, the "PERMITTED ACTIVITY").
(b) NON-SOLICITATION OF CUSTOMERS AND SUPPLIERS. Except as provided in
SECTION 10.1(A) or in this SECTION 10.1(B), each Non-Compete Party covenants and
agrees that for a period of three (3) years following the Closing Date, he shall
not, whether as an individual or sole proprietor, or as a principal, agent,
officer, director, employer, employee, consultant, independent contractor,
partner or shareholder of any firm, corporation or other entity or group or
otherwise, directly or indirectly, solicit the trade or business of, or trade,
or conduct business with, any customer, prospective customer, supplier, or
prospective supplier of the Company for any purpose other than for the benefit
of the Company, except in connection with a Permitted Activity; PROVIDED,
HOWEVER, that in no event shall any Non-Compete Party, whether in connection
with a Permitted Activity or otherwise: (i) with respect to any Competing
Business, solicit the trade or business of, or trade, or conduct business with
any passengers on any passenger cruise vessel on which, or guests at any hotel
or resort at which, the Company operates a spa facility (the "LIKELY POTENTIAL
CUSTOMERS") while such persons are passengers aboard such vessel or guests at
such resort; or (ii) take any action intended to cause a Likely Potential
Customer to patronize a spa facility in which the Non-Compete Party has an
interest instead of the spa facilities operated by the Company (including,
without limitation, placing any advertising signs in the area of the Area
Restriction, soliciting individuals on Company mailing lists or similar
actions), it being agreed that nothing in this proviso is intended to otherwise
prevent or prohibit any Non-Compete Party from using traditional advertising,
marketing and promotional channels in connection with Non-Compete Party's
engagement in any Permitted Activity.
(c) NON-SOLICITATION OF EMPLOYEES, ETC. Each Non-Compete Party
covenants and agrees that for a period of three (3) years following the Closing
Date, he shall not, directly or indirectly, as an individual or sole proprietor,
or as a principal, agent, employee, employer, consultant, independent
contractor, officer, director, shareholder or partner of any person, firm,
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corporation or other entity or group or otherwise, without the prior express
written consent of the Company approach, counsel or attempt to induce any person
who is then in the employ of, or then serving as independent contractor with,
the Company to leave the employ of, or terminate such independent contractor
relationship with, the Company or employ or attempt to employ any such person or
persons who at any time during the six (6) months preceding the Closing Date was
in the employ of, the Company.
SECTION 10.2 DAMAGES. Because of the difficulty of measuring economic
losses to Buyer as a result of any breach by a Non-Compete Party of the
covenants in SECTION 10.1, and because of the immediate and irreparable damage
that could be caused to Buyer for which it would have no other adequate remedy,
each Non-Compete Party agrees that Buyer may enforce the provisions of SECTION
10.1 by injunctions and restraining orders against such Non-Compete Party
without the posting of a bond or other security, if such Non-Compete Party
breaches any of those provisions.
SECTION 10.3 REASONABLE RESTRAINT. The Parties agree that SECTIONS 10.1
and 10.2, above, impose a reasonable restraint on a Non-Compete Party in light
of the activities and business of the Non-Compete Parties and Buyer on the date
hereof.
SECTION 10.4 INDEPENDENT COVENANT. All the covenants in this ARTICLE X
are intended by each Party to, and shall be construed as an agreement
independent of any other provision in this Agreement, and the existence of any
claim or cause of action of any Non-Compete Party against Buyer, whether
predicated on this Agreement or otherwise, shall not constitute a defense to the
enforcement by Buyer of any covenant in this ARTICLE X. It is specifically
agreed that the period specified in SECTION 10.1 shall be computed in the case
of each Non-Compete Party by excluding from that computation any time during
which that Non-Compete Party is in violation of any provision of SECTION 10.1,
above. The covenants contained in this ARTICLE X shall not be affected by any
breach of any other provision hereof by any party hereto.
SECTION 10.5 MATERIALITY. The Non-Compete Parties hereby agree that
this ARTICLE X is a material and substantial part of the transactions
contemplated hereby.
ARTICLE XI.
DEFINITIONS AND DEFINITIONAL PROVISIONS
SECTION 11.1 DEFINED TERMS. As used in this Agreement, the following
terms have the meanings assigned to them below:
"ACTION" has the meaning specified in SECTION 2.10.
"ACTUAL EBITDA SURPLUS AMOUNT" has the meaning specified in
SECTION 1.5(A).
"ADDITIONAL CAPITAL EXPENSES" has the meaning specified in
SECTION 1.5(B)(IV).
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"AGREEMENT" means this Agreement, including all attached
Schedules, Annexes, Addenda and Exhibits, as each of the same may be amended,
modified or supplemented from time to time pursuant to the provisions hereof or
thereof.
"AFFILIATE" means, as to any specified Person, any other
Person that, directly or indirectly through one or more intermediaries or
otherwise, controls, is controlled by or is under common control with the
specified Person. As used in this definition, "control" means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management or policies of a Person (whether through ownership of Equity
Interests of that Person, by contract or otherwise).
"APPROVED PIPELINE PROJECT" has the meaning specified in
SECTION 8.4(B).
"AVERAGE CLOSING SALE PRICE" has the meaning specified in
SECTION 1.3(B)(II)
"BUSINESS" has the meaning specified in the Recitals.
"BUYER" has the meaning specified in the Preamble.
"BUYER'S ACCOUNTANT" has the meaning specified in SECTION
1.5(C).
"BUYER INDEMNIFIED PARTIES" has the meaning specified in
SECTION 9.2.
"BUYER RIGHTS AND OBLIGATIONS" has the meaning specified in
the Preamble.
"CASH BALANCE DEFICIENCY" has the meaning specified in SECTION
1.4(D).
"CHARTER DOCUMENTS" means, with respect to any Entity at any
time, in each case as amended, modified and supplemented at that time, the
articles, memorandum or certificate of formation, incorporation, organization or
association (or the equivalent organizational documents) of that Entity, (b) the
bylaws, articles of association or limited liability company operating agreement
or regulations (or the equivalent governing documents) of that Entity and (c)
each document setting forth the designation, amount and relative tights,
limitations and preferences of any class or series of that Entity's Equity
Interests or of any rights in respect of that Entity's Equity Interests.
"CLOSING" has the meaning specified in SECTION 1.2.
"CLOSING DATE" has the meaning specified in SECTION 1.2.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMPANY" has the meaning specified in the Recitals.
"COMPETING BUSINESS" has the meaning specified in SECTION
10.1(A).
"CONFIDENTIAL INFORMATION" means, with respect to any Person,
all trade secrets and other confidential, nonpublic and/or, as the case may be,
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proprietary information of that Person, including information derived from
reports, investigations, research, work in progress, codes, marketing and sales
programs, capital expenditure projects, cost summaries, pricing formulae,
contract analyses, financial information, projections, confidential filings with
any Governmental Authority and all other confidential, nonpublic concepts,
methods of doing business, ideas, materials or information prepared or performed
for, by or on behalf of that Person.
"CONSIDERATION" has the meaning specified in SECTION 1.3(A).
"CONTRACTS" has the meaning specified in SECTION 2.19(A).
"COVERED AGREEMENTS" has the meaning specified in SECTION
2.19(A).
"CURRENT BALANCE SHEET" has the meaning specified in SECTION
2.25.
"CURRENT BALANCE SHEET DATE" has the meaning specified in
SECTION 2.25 .
"DETERMINATION" has the meaning specified in SECTION 1.4(A).
"EBITDA" has the meaning specified in SECTION 1.5(B)(I).
"EBITDA EXCLUSION AMOUNTS" has the meaning specified in
SECTION 1.5(B)(II).
"EBITDA NOTE REDUCTIONS" has the meaning specified in SECTION
1.5(D).
"EBITDA REVIEW PERIOD" has the meaning specified in SECTION
1.5(C).
"EBITDA STATEMENT" has the meaning specified in SECTION
1.5(C).
"EBITDA STATEMENT OF OBJECTIONS" has the meaning specified in
SECTION 1.5(C).
"EDLESON EMPLOYMENT AGREEMENT" has the meaning specified in
SECTION 7.1(A).
"EMPLOYEE BENEFIT PLAN" means any Pension Plan, Welfare Plan
and each deferred compensation, stock option, stock purchase, bonus, medical,
disability, severance or termination pay, insurance or incentive plan, and each
other employee benefit plan, program, agreement or arrangement, (whether funded
or unfunded, written or oral, qualified or nonqualified), sponsored, maintained
or contributed to, or required to be contributed to, by any Mandara Entity for
the benefit of any employee, terminated employee, leased employee or former
leased employee, director, officer, shareholder or independent contractor of the
Mandara Entities.
"EMPLOYEE POLICIES AND PROCEDURES" means at any time all
employee manuals and all material policies, procedures and work-related rules
that apply at that time to any employee, nonemployee director or officer of, or
any other natural person performing consulting or other independent contractor
services for, the Mandara Entities.
"EMPLOYMENT AGREEMENT" has the meaning specified in SECTION
2.19(A)(VIII).
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"ENTITY" means any sole proprietorship, corporation,
partnership of any kind having a separate legal status, limited liability
company, business trust, unincorporated organization or association, mutual
company, joint stock company or joint venture.
"EQUITY INTERESTS" means, with respect to: (a) any
corporation, any share, or any depositary receipt or other certificate
representing any share of an equity ownership interest in that corporation; and
(b) any other Entity, any share, membership or other percentage interest, unit
of participation or other equivalent (however designated) of an equity interest
in that Entity.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"ERISA AFFILIATE" means, with respect to any Mandara Entity at
any time, any other Person that is a member of any "group of organizations"
within the meaning of Section 414(b), (c), (m) or (o) of the Code or any
"controlled group" as defined in Section 4001(a)(14) of ERISA, of which a
Mandara Entity is or was a member at the same time.
"EXCESS CASH BALANCE AMOUNT" has the meaning specified in
SECTION 1.4(C).
"EXCESS WORKING CAPITAL AMOUNT" has the meaning specified in
SECTION 1.4(C).
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"EXCLUDED PROJECTS" has the meaning specified in SECTION
8.5(B).
"FAMILY MEMBERS" means any child, stepchild, grandchild,
parent, stepparent, grandparent, spouse, sibling, mother-in-law, father-in-law,
son-in-law, daughter-in-law, brother-in-law, or sister-in-law, and shall include
adoptive relationships.
"FINAL CASH BALANCE AMOUNT" has the meaning specified in
SECTION 1.4(A).
"FINAL WORKING CAPITAL AMOUNT" has the meaning specified in
SECTION 1.4(A).
"FINANCIAL STATEMENTS" has the meaning specified in SECTION
2.25.
"FIVE HOTEL RESTRICTION" has the meaning specified in SECTION
10.1(A).
"FIXED ASSETS" has the meaning specified in SECTION 2.16(B).
"GAAP" means generally accepted accounting principles and
practices in the United States as in effect from time to time, consistently
applied with prior periods.
"GOVERNMENTAL APPROVAL" has the meaning specified in SECTION
2.3(D).
"GOVERNMENTAL AUTHORITY" means (a) any national, state,
county, municipal or other government, domestic or foreign, or any agency,
board, bureau, commission, court, department or other instrumentality of any
such government, or (b) any Person having the authority under any applicable
Governmental Requirement to assess and collect Taxes.
"GOVERNMENTAL REQUIREMENT" means at any time (a) any law,
statute, code, ordinance, order, rule, regulation, judgment, decree, injunction,
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writ, edict, award, authorization or other requirement of any Governmental
Authority in effect at that time or (b) any obligation included in any
certificate, certification, franchise, permit or license issued by any
Governmental Authority or resulting from binding arbitration, including any
requirement under common law, at that time.
"GUARANTY" means, for any specified Person, any liability,
contingent or otherwise, of that Person guaranteeing or otherwise becoming
liable for any obligation of any other Person (the "PRIMARY OBLIGOR") in any
manner, whether directly or indirectly, and including any liability of the
specified Person, direct or indirect, (a) to purchase or pay (or advance or
supply funds for the purchase or payment of) that obligation or to purchase (or
to advance or supply funds for the purchase of) any security for the payment of
that obligation, (b) to purchase property, securities or services for the
purpose of assuring the owner of that obligation of its payment or (c) to
maintain working capital, equity capital or other financial statement condition
or liquidity of the primary obligor so as to enable the primary obligor to pay
that obligation; provided, that the term "Guaranty" does not include
endorsements for collection or deposit in the ordinary course of the endorser's
business.
"GUARANTEED EBITDA SURPLUS AMOUNT" has the meaning specified
in SECTION 1.5(A).
"IMPAIRED INVENTORY" has the meaning specified in SECTION
2.14(B).
"INDEBTEDNESS" of any Person means, (a) any liability of that
Person (i) for borrowed money or arising out of any extension of credit to or
for the account of that Person (including reimbursement or payment obligations
with respect to surety bonds, letters of credit, banker's acceptances and
similar instruments), for the deferred purchase price of property or services or
arising under conditional sale or other title retention agreements, other than
trade payables arising in the ordinary course of business not more than sixty
(60) days old, (ii) evidenced by notes, bonds, debentures or similar
instruments, (iii) in respect of capital leases or (iv) in respect of interest
rate protection agreements, (b) any liability secured by any Lien upon any
property or assets of that Person (or upon any revenues, income or profits of
that Person therefrom), whether or not that Person has assumed that liability or
otherwise become liable for the payment thereof or (c) any liability of others
of the type described in the preceding clause (a) or (b) in respect of which
that Person has incurred, assumed or acquired a liability by means of a
Guaranty.
"INDEMNIFIABLE DAMAGES" has the meaning specified in SECTION
9.4.
"INDEMNIFICATION CAP" has the meaning specified in SECTION
9.5(B).
"INDEMNIFICATION THRESHOLD" has the meaning specified in
SECTION 9.5(A).
"INDEMNIFIED PARTY" has the meaning specified in SECTION 9.4.
"INDEMNIFYING PARTY" has the meaning specified in SECTION 9.4.
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"INSURANCE POLICIES" has the meaning specified in SECTION
2.20.
"INVENTORIES" means all raw materials, supplies,
work-in-process, finished goods, goods on consignment and other materials
included in the inventories of such Person.
"IRS" means the Internal Revenue Service.
"KNOWN" or "KNOWLEDGE", whether or not capitalized, or any
similar phrase means that a Person is consciously aware and has actual knowledge
of facts or circumstances thereof; PROVIDED, HOWEVER, that, when used with
respect to (i) the Sellers, such terms shall mean the conscious awareness and
actual knowledge of each of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, or (ii) either Buyer or ▇▇▇▇▇▇▇, such terms shall mean the conscious
awareness and actual knowledge of each of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇ St. ▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇.
"LAW" has the meaning specified in SECTION 2.3(D).
"LEASED PREMISES" has the meaning specified in SECTION
2.15(A).
"LIEN" means, with respect to any property or asset of any
Person (or any revenues, income or profits of that Person therefrom) (in each
case whether the same is consensual or nonconsensual or arises by contract,
operation of Law, legal process or otherwise), any claim, against or any
mortgage, lien, security interest, pledge, attachment, levy or other charge or
encumbrance of any kind thereupon or in respect thereof. For purposes of this
Agreement: (i) a Person shall be deemed to own subject to a Lien any asset that
it has acquired or holds subject to the interest of a vendor or lessor under any
conditional sale agreement, capital lease or other title retention agreement
relating to that asset, and (ii) the term "Lien" shall not include any
restrictions or other encumbrances that exist by virtue of the Seller Loans
and/or the Operating Agreement of the Company.
"LIKELY POTENTIAL CUSTOMERS" has the meaning specified in
SECTION 10.1(B).
"MANDARA" has the meaning specified in the Recitals.
"MANDARA ENTITIES" has the meaning specified in the Recitals.
"MANDARA PIPELINE PROJECTS" has the meaning specified in
SECTION 8.4(B).
"MATERIAL ADVERSE CHANGE" means any change that has a Material
Adverse Effect.
"MATERIAL ADVERSE EFFECT" means an event, change, effect or
occurrence which, together with any other event, change effect or occurrence,
has a material adverse effect or impact on (i) the financial position,
condition, assets, operations, business or results of operations of Mandara
Entities, taken as a whole, except where this Agreement provides that Material
Adverse Effect relates to a specific Mandara Entity, in which event, Material
Adverse Effect shall be determined with respect to such Mandara Entity on an
individual basis, or (ii) the ability of the Sellers to perform their
obligations under this Agreement or to consummate the transactions contemplated
hereby.
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"MANDARA SHARES" has the meaning specified in the Recitals.
"MULTIEMPLOYER PLAN" means a "multiemployer" plan as defined
in Section 4001(a)(3) of ERISA, Section 414 of the Code or Section 3(37) of
ERISA.
"NASDAQ" has the meaning specified in SECTION 1.3(B)(II).
"NECESSARY ACTION" has the meaning specified in SECTION 8.1.
"NON-COMPETE PARTY" has the meaning specified in SECTION 10.1.
"NON-REFUNDABLE DEPOSIT" has the meaning specified in SECTION
1.3(C).
"NOTES" has the meaning specified in SECTION 1.3(B)(III).
"OPERATIONAL MANAGER" has the meaning specified in SECTION
8.1.
"ORDER" has the meaning specified in SECTION 2.3(D).
"ORGANIZATIONAL JURISDICTION" means, as applied to (i) any
corporation, its state or other jurisdiction of incorporation, (ii) any limited
liability company or limited partnership, the state or other jurisdiction under
whose laws it is organized and existing in that legal form, and (iii) any other
Entity, the state or other jurisdiction whose laws govern that Entity's internal
affairs.
"OTHER COMPENSATION PLAN" means any compensation arrangement,
plan, policy, practice or program established, maintained or sponsored by the
Mandara Entities or to which the Mandara Entities contribute, on behalf of any
of its employees, nonemployee directors or officers or other natural persons
performing consulting or other independent contractor services for the Mandara
Entities including all such arrangements, plans, policies, practices or programs
providing for severance pay, deferred compensation, incentive, bonus or
performance awards or the actual or phantom ownership of any Equity Interests or
options, warrants or rights to acquire Equity Interests of the Mandara Entities.
"PARTY" or "PARTIES" means any or all of the parties to this
Agreement.
"PCCL" has the meaning specified in the Preamble.
"PENSION PLAN" means any "employee pension benefit plan" of
the Mandara Entities as defined in Section 3(2) of ERISA, including any plan
that is covered by Title IV of ERISA or subject to the minimum funding standards
under Section 412 of the Code but excluding any Multiemployer Plan or any such
plan which is exempt from ERISA under Section 4(b)(4) of ERISA.
"PERCENTAGE INTEREST" means (i) 37.42% with respect to SPI;
(ii) 17.62% with respect to PCCL; (iii) 1.03% with respect to Okie R. Lukita;
(iv)1.03% with respect to Franky Tjahyadikarta; and (v) 2.90% with respect to
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇.
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"PERMITTED ACTIVITY" shall have the meaning specified in
SECTION 10.1(A).
"PERMITTED LIENS" means (i) Liens created by the Buyer and/or
▇▇▇▇▇▇▇, (ii) Liens for or in respect of Taxes, impositions, assessments, fees,
water and sewer rents and other governmental charges levied or assessed or
imposed against the Leased Premises which are not yet delinquent, (iii) the
rights of lessors and lessees under leases executed in the ordinary course of
business, (iv) the rights of licensors and licensees under licenses executed in
the ordinary course of business, or (v) Liens, and rights to Liens, of
mechanics, warehousemen, carriers, repairmen and others (including Governmental
Authorities) arising by operation of Law and incurred in the ordinary course of
business, securing obligations not yet delinquent.
"PERSON" means any natural person, Entity, estate, trust,
union or employee organization or Governmental Authority or, for the purpose of
the definition of "ERISA Affiliate," any trade or business.
"PIPELINE PROJECTS" has the meaning specified in SECTION
8.4(A).
"PLEDGE AGREEMENTS" has the meaning specified in SECTION
7.1(K).
"PRELIMINARY CASH BALANCE AMOUNT" has the meaning specified in
SECTION 1.4(A).
"PRELIMINARY WORKING CAPITAL AMOUNT" has the meaning specified
in SECTION 1.4(A).
"PROPRIETARY RIGHTS" means (a) patents, applications for
patents and patent rights (foreign or domestic), (b) in each case, whether
registered, unregistered or under pending registration, trademark rights, trade
names, trade name rights, corporate names, business names, trade styles or
dress, service marks and logos and other trade designations and copyrights, and
(c), in the case of the Mandara Entities, all agreements or rights relating to
the technology, product formulations, know-how or processes utilized by the
Mandara Entities in the Business and any licenses relating to any of the
foregoing.
"PRO RATA PERCENTAGE" means: (i) 62.37% with respect to SPI;
(ii) 29.37% with respect to PCCL; (iii) 1.72% with respect to Okie R. Lukita;
(iv)1.72% with respect to Franky Tjahyadikarta; and (v) 4.82% with respect to
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇.
"PURCHASE PRICE" has the meaning specified in SECTION 1.3(A).
"PURCHASE PRICE ADJUSTMENT" has the meaning specified in
SECTION 1.3(A).
"REAL PROPERTY LEASES" has the meaning specified in SECTION
2.15(A).
"RECEIVABLES" has the meaning specified in SECTION 2.14.
"REIMBURSABLE INTEREST AMOUNT" has the meaning specified in
SECTION 1.5(D).
"REGISTRATION RIGHTS AGREEMENT" shall have the meaning
specified in SECTION 1.3(A)(II).
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"RELATED PARTIES" has the meaning specified SECTION 2.9.
"RELEASE" has the meaning specified SECTION 7.1(G).
"REPRESENTATIVES" means, with respect to any Person, the
directors, officers, employees, Affiliates, accountants (including independent
certified public accountants), advisors, attorneys, consultants or other agents
of that Person, or any other representatives of that Person or of any of those
directors, officers, employees, Affiliates, accountants (including independent
certified public accountants), advisors, attorneys, consultants or other agents.
"RESTRICTED PAYMENT" means, with respect to any Entity at any
time, any of the following effected by that Entity: (a) any declaration or
payment of any dividend or other distribution in cash or otherwise (except as
expressly permitted by the Charter Documents of such Entity for Tax purposes),
or (b) any direct or indirect redemption, retirement, sinking fund deposit in
respect of, purchase or other acquisition for value of (i) any then outstanding
Equity Interests of such Entity or (ii) any then outstanding warrants, options
or other rights to acquire or subscribe for or purchase unissued or treasury
Equity Interests of that Entity; PROVIDED, HOWEVER, that no dividend,
distribution or other payment by any of the Mandara Entities shall constitute a
Restricted Payment if, immediately following such dividend, distribution or
payment, the Mandara Entities continue to have Working Capital in an amount not
less than the amount specified in SECTION 1.4(B).
"RETURNS" of any Person means the returns, reports or
statements (including any information returns) any Governmental Authority
requires to be filed by that Person for purposes of any Tax.
"REVIEW PERIOD" has the meaning specified in SECTION 1.4(A).
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SELLER" or "SELLERS" has the meaning specified in the
Preamble.
"SELLER INDEMNIFIED PARTIES" has the meaning specified in
SECTION 9.2.
"SELLER LOANS" has the meaning specified in the Recitals.
"SETTLEMENT ACCOUNTANT" has the meaning specified in SECTION
1.4(A).
"SHORTFALL AMOUNT" has the meaning specified in SECTION
1.5(D).
"SPI" has the meaning specified in the Preamble.
"▇▇▇▇▇▇▇" has the meaning specified in the Preamble.
"▇▇▇▇▇▇▇ COMMON SHARES" has the meaning specified in SECTION
1.3(B)(II).
"▇▇▇▇▇▇▇ MATERIAL ADVERSE EFFECT" means an event, change,
effect or occurrence which, together with any other event, change effect or
occurrence, has a material adverse effect or impact on (i) the financial
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52
position, condition, assets, operations, business or results of operations of
either of ▇▇▇▇▇▇▇ or the Buyer, or (ii) the ability of the Buyer and/or ▇▇▇▇▇▇▇
to perform their obligations under this Agreement (including, without
limitation, the Notes) or to consummate the transactions contemplated hereby.
"▇▇▇▇▇▇▇ SEC REPORTS" has the meaning specified in SECTION
4.8.
"▇▇▇▇▇▇▇ SHARES" has the meaning specified in SECTION
1.3(B)(II).
"SUBSIDIARY" has the meaning specified in the Recitals.
"TAX" or "TAXES" means all net or gross income, gross
receipts, net proceeds, sales, use, AD VALOREM, value added, franchise,
withholding, payroll, employment, excise, property, deed, stamp, alternative or
add-on minimum, environmental or other taxes, assessments, duties, fees, levies
or other governmental charges or assessments imposed by any Taxing Authority,
together with any interest, penalties, additions to tax or additional amounts
with respect thereto.
"TAXING AUTHORITY" means any Governmental Authority having
jurisdiction with respect to any Tax.
"TARGET CASH BALANCE AMOUNT" has the meaning specified in
SECTION 1.4(B).
"TARGET WORKING CAPITAL AMOUNT" has the meaning specified in
SECTION 1.4(B).
"TEST PERIOD" has the meaning specified in SECTION 1.5(A).
"THIRD PARTY CLAIM" has the meaning specified in SECTION 9.4.
"TRANSACTION DOCUMENT" means this Agreement and the other
written agreements, documents, instruments and certificates executed pursuant to
or in connection with this Agreement including those specified or referred to in
ARTICLE VII to be delivered at or before the Closing, all as amended, modified
or supplemented from time to time.
"WELFARE PLAN" means an "employee welfare benefit plan" as
defined in Section 3(l) of ERISA, other than any such plan that is exempt from
the provisions of ERISA under Section 4(b)(4) of ERISA, maintained or
contributed to by a Mandara Entity
"WORKING CAPITAL" has the meaning specified in SECTION 1.4(A).
"WORKING CAPITAL DEFICIENCY" has the meaning specified in
SECTION 1.4(D).
"WORKING CAPITAL STATEMENT OF OBJECTIONS" has the meaning
specified in SECTION 1.4(A).
"$" shall refer to United States dollars.
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SECTION 11.2 OTHER DEFINED TERMS. Words and terms not included in the
definitions in SECTION 11.1 which are defined elsewhere in this Agreement are
used herein as therein defined.
SECTION 11.3 OTHER DEFINITIONAL PROVISIONS.
(a) Except as otherwise specified herein, all references herein to any
Governmental Requirement defined or referred to herein, including the Code,
ERISA, the Exchange Act and the Securities Act, shall be deemed references to
that Governmental Requirement or any successor Governmental Requirement, as the
same may have been amended or supplemented from time to time, and any rules or
regulations promulgated thereunder.
(b) When used in this Agreement the words "herein," "hereof" and
"hereunder" and words of similar import refer to this Agreement as a whole and
not to any provision of this Agreement, and the words "Article," "Paragraph,"
"Section," "Annex," "Addendum," "Schedule" and "Exhibit" refer to articles,
paragraphs and sections of, and annexes, addenda, schedules and exhibits to,
this Agreement unless otherwise specified.
(c) Whenever the context so requires, the singular number includes the
plural and vice versa, and a reference to one gender includes the other gender
and the neuter.
(d) The word "including" (and, with correlative meaning, the word
"include") means including, without limiting the generality of any description
preceding such word, and the words "shall" and "will" are used interchangeably
and have the same meaning.
ARTICLE XII.
CONFIDENTIALITY
SECTION 12.1 TREATMENT OF CONFIDENTIAL INFORMATION..
(a) Each of the Sellers, on the one hand, and each Buyer and ▇▇▇▇▇▇▇,
on the other hand acknowledges that it has or may have had in the past,
currently has and in the future may have access to Confidential Information of
the other parties hereto. Each of the Parties agrees that it will keep
confidential all such Confidential Information furnished to it and, except with
the specific prior written consent of the other Party (meaning, with respect to
the Sellers, Buyer, and with respect to Buyer, the Sellers), will not disclose
such Confidential Information to any Person except Representatives of such
Party, provided that these Representatives (other than counsel) agree to the
confidentiality provisions of this SECTION 12.1; PROVIDED, HOWEVER, that
Confidential Information shall not include such information as (i) becomes known
to the public generally through no fault of the party receiving the Confidential
Information (ii) is required to be disclosed by law or the order of any
Governmental Authority provided, that prior to disclosing any information
pursuant to this clause (ii), a Party shall, if practicable, give prior written
notice thereof to the other Party and provide the other Party with the
opportunity to contest such disclosure, or (iii) the disclosing party reasonably
believes is required to be disclosed in connection with the defense of a lawsuit
against the disclosing party. In the event of a breach or threatened breach by
any Party of the provisions of this SECTION 12.1 with respect to any
Confidential Information, the other Party shall be entitled to an injunction
restraining such Party from disclosing, in whole or in part that Confidential
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Information. Nothing herein shall be construed as prohibiting a Party from
pursuing any other available remedy for such breach or threatened breach,
including the recovery of damages.
(b) Because of the difficulty of measuring economic losses as a result
of the breach of the covenants in SECTION 12.1(A), above, and because of the
immediate and irreparable damage that would be caused to a Party as a result of
such breach for which it would have no other adequate remedy, each of the
Parties agrees that a Party may enforce the provisions of SECTION 12.1(A) by
injunctions and restraining orders against any Party which breaches any of those
provisions.
(c) The obligations of the Parties under this SECTION 12.1 shall
survive the termination of this Agreement.
ARTICLE XIII.
TERMINATION AND EXPENSES
SECTION 13.1 TERMINATION OF THIS AGREEMENT. This Agreement may be
terminated prior to the Closing of the transactions contemplated hereby as
follows:
(a) at any time upon the mutual written consent of the Sellers and
Buyer; or
(b) by Sellers, in the event that the Closing shall not have occurred
by July 9, 2001 for any reason.
SECTION 13.2 EFFECT OF TERMINATION. In the event of the termination and
abandonment of this Agreement pursuant to SECTION 13.1, this Agreement shall
become void and have no effect, except that the provisions of ARTICLE XII this
SECTION 13 and ARTICLE XIV shall survive any such termination and abandonment.
In no event shall Sellers or any of them be liable to Buyer or ▇▇▇▇▇▇▇ for the
return, refund, repayment or other recovery of the Non-Refundable Deposit,
regardless of the reason for the termination.
SECTION 13.3 EXPENSES. Whether or not the transactions contemplated
hereby are consummated, (a) each party will pay the fees, expenses and
disbursements of such party and its Representatives which are incurred in
connection with the subject matter of this Agreement, and (b) Sellers will pay
all sales, use, transfer and other similar Taxes and fees incurred in connection
with the transactions contemplated hereby. Sellers and Buyer shall cooperate in
preparing and filing all Returns and other documentation on a timely basis as
required to comply with the provisions of any Laws relating to Taxes required to
be paid pursuant to this SECTION 13.3. Notwithstanding anything herein to the
contrary, Buyer and ▇▇▇▇▇▇▇ shall pay, and Sellers shall have no liability, for
any stamp, documentation or similar tax or charge imposed or sought to be
imposed by any Governmental Authority of the State of Florida or the
Commonwealth of the Bahamas in connection with the delivery of the ▇▇▇▇▇▇▇
Shares, the Notes or any other Consideration hereunder.
SECTION 13.4 LIABILITIES IN EVENT OF TERMINATION. If this Agreement is
terminated pursuant to SECTION 13.1, above, there shall be no liability or
obligation on the part of any Party hereto except (a) as provided in SECTION
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13.2, above, and (b) to the extent that such liability is based on the breach,
or failure to comply, by that Party of any of its representations, warranties or
covenants set forth in this Agreement.
ARTICLE XIV.
MISCELLANEOUS
SECTION 14.1 PUBLIC ANNOUNCEMENTS. Except as may be required by
applicable law, without the prior written consent of the other Parties, none of
the Parties will make, and each Party will direct its representatives not to
make, directly or indirectly, any public announcement or press release regarding
this Agreement or any of the proposed terms, conditions or existence or other
aspects of this Agreement or the transactions contemplated hereby. If a Party is
required by law to make any such disclosure, it shall first provide to the other
Party the content of the proposed disclosure, the reasons that such disclosure
is required by law, the timing of such disclosure and the medium in which such
disclosure is to be made.
SECTION 14.2 NOTICES. Any notices, demands or other communication given
in connection herewith shall be in writing and be deemed given (i) when
personally delivered, (ii) when sent by facsimile transmission to a number
provided in writing by the addressee and a confirmation of the transmission is
received by the sender or (iii) three (3) days after being deposited for
delivery with a recognized overnight courier, such as FedEx, with directions to
deliver within three (3) days, and addressed or sent, as the case may be, to the
address or facsimile number set forth below or to such other address or
facsimile number as such Party may designate in accordance herewith:
When Buyer or ▇▇▇▇▇▇▇ is the intended recipient:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ Leisure Limited or ▇▇▇▇▇▇▇ Spa Limited
c/▇ ▇▇▇▇▇▇▇ U.S. Holdings, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Akerman, Senterfitt & ▇▇▇▇▇▇, P.A.
SunTrust International Center
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇.▇. ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
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when SPI is the intended recipient:
c/o ▇▇▇▇▇▇ ▇▇▇▇▇ & Verges
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
c/o ▇▇▇▇▇▇ ▇▇▇▇▇
when PCCL is the intended recipient:
Graha Niaga, 20th Floor
▇▇. ▇▇▇▇. ▇▇▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
when Franky Tjahyadikarta is the intended recipient:
Graha Niaga, 20th Floor
▇▇. ▇▇▇▇. ▇▇▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇
when Okie R. Lukita is the intended recipient:
Graha Niaga, 20th Floor
▇▇. ▇▇▇▇. ▇▇▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇
when ▇▇▇▇▇▇▇ ▇.▇. ▇▇▇▇▇▇▇▇ is the intended recipient:
c/o Mandara Spa
▇▇. ▇▇▇▇ ▇▇▇▇ ▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇▇▇▇▇
SECTION 14.3 GOVERNING LAW. The validity, interpretation, performance
and enforcement of this Agreement shall be governed by the laws of the State of
Delaware (without giving effect to the laws, rules or principles of the State of
Delaware regarding conflicts of laws).
SECTION 14.4 BINDING EFFECT; ASSIGNMENT; THIRD PARTY BENEFICIARIES.
This Agreement shall be binding upon the Parties and their respective successors
and permitted assigns and shall inure to the benefit of the Parties and their
respective successors and permitted assigns. No Party shall assign any of its
rights or delegate any of its duties under this Agreement (by operation of law
or otherwise) without the prior written consent of the other Parties. Any
assignment of rights or delegation of duties under this Agreement by a Party
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without the prior written consent of the other Parties shall be void. No person
(including, without limitation, any employee of a Party) shall be, or be deemed
to be, a third party beneficiary of this Agreement unless this Agreement
specifically so provides.
SECTION 14.5 ENTIRE AGREEMENT. This Agreement together with the
Exhibits and Schedules attached hereto and the agreements, certificates and
instruments delivered pursuant hereto (including, without limitation, that
certain Additional Agreement by and among the Parties to be dated as of the date
of Closing) constitutes the entire agreement among the Parties with respect to
the subject matter hereof and cancels and supersedes all of the previous or
contemporaneous agreements, representations, warranties and understandings
(whether oral or written) by, between or among the Parties with respect to the
subject matter hereof.
SECTION 14.6 FURTHER ASSURANCES. At any time and from time to time
after the Closing, each Party shall, at its own cost and expense, execute,
deliver and acknowledge such other documents and take such further actions as
may be reasonably requested by the other Party in order to fully perform such
Party's obligations as contemplated hereby.
SECTION 14.7 AMENDMENTS. No addition to, and no cancellation, renewal,
extension, modification or amendment of, this Agreement shall be binding upon a
Party unless such addition, cancellation, renewal, extension, modification or
amendment is set forth in a written instrument that states that it adds to,
amends, cancels, renews, extends or modifies this Agreement and is executed and
delivered by each Party.
SECTION 14.8 WAIVERS. No waiver of any provision of this Agreement
shall be binding upon a Party unless such waiver is expressly set forth in a
written instrument that is executed and delivered by such Party. Such waiver
shall be effective only to the extent specifically set forth in such written
instrument. Neither the exercise (from time to time and at any time) by a Party
of, nor the delay or failure (at any time or for any period of time) to
exercise, any right, power or remedy shall constitute a waiver of the right to
exercise, or impair, limit or restrict the exercise of, such right, power or
remedy or any other right, power or remedy at any time and from time to time
thereafter. No waiver of any right, power or remedy of a Party shall be deemed
to be a waiver of any other right, power or remedy of such Party or shall,
except to the extent so waived, impair, limit or restrict the exercise of such
right, power or remedy.
SECTION 14.9 HEADINGS; COUNTERPARTS. The headings set forth in this
Agreement have been inserted for convenience of reference only, shall not be
considered a part of this Agreement and shall not limit, modify or affect in any
way the meaning or interpretation of this Agreement. This Agreement, and any
agreement delivered pursuant hereto, may be signed in any number of
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.
SECTION 14.10 SEVERABILITY. If any provision of this Agreement shall be
held to be invalid, unenforceable or illegal, in whole or in part, in any
jurisdiction under any circumstances for any reason, (a) such provision shall be
reformed to the minimum extent necessary to cause such provision to be valid,
enforceable and legal while preserving the intent of the Parties as expressed
in, and the benefits to the Parties provided by, this Agreement or (b) if such
provision cannot be so reformed, such provision shall be severed from this
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Agreement and an equitable adjustment shall be made to this Agreement
(including, without limitation, addition of necessary further provisions to this
Agreement) so as to give effect to the intent as so expressed and the benefits
so provided. Such holding shall not affect or impair the validity,
enforceability or legality of such provision in any other jurisdiction or under
any other circumstances. Neither such holding nor such reformation or severance
shall affect or impair the legality, validity or enforceability of any other
provision of this Agreement.
SECTION 14.11 RIGHTS AND REMEDIES. Subject to SECTION 9.6 above, all
rights, powers and remedies afforded to a Party under this Agreement, by law or
otherwise, shall be cumulative (and not alternative) and shall not preclude the
assertion, or the seeking by a Party of any other rights or remedies.
[SIGNATURES ON FOLLOWING PAGE]
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IN WITNESS WHEREOF, the Parties have duly executed and delivered this
Agreement as of the date first above written.
▇▇▇▇▇▇▇ LEISURE LIMITED,
a Bahamas international business company
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
▇▇▇▇▇▇▇ SPA ASIA LIMITED,
a Bahamas international business company
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chief Executive Officer
SIERRA PACIFIC INVESTMENTS LLC,
a Delaware limited liability company
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Authorized Person
PACIFIC CENTURY CAPITAL LIMITED,
a British Virgin Islands company
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Attorney-In-Fact
/s/ FRANKY TJAHYADIKARTA
-----------------------------------------
FRANKY TJAHYADIKARTA
/s/ OKIE R. LUKITA
-----------------------------------------
OKIE R. LUKITA
/s/ ▇▇▇▇▇▇▇ ▇.▇. ▇▇▇▇▇▇▇▇
-----------------------------------------
▇▇▇▇▇▇▇ ▇.▇. ▇▇▇▇▇▇▇▇
[SIGNATURE PAGE TO SHARE PURCHASE AGREEMENT]
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