EXHIBIT 10.2
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STRATEGIC ALLIANCE AGREEMENT
between
Iron Mountain Incorporated,
Iron Mountain UK Limited,
Britannia Data Management Limited
and
Mentmore Abbey plc
dated as of January 4, 1999
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TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS AND INTERPRETATION........................................................2
1.1 Defined Terms................................................................2
1.2 Interpretation...............................................................9
ARTICLE II
SCOPE OF ACTIVITIES..................................................................10
2.1 Articles....................................................................10
2.2 Capital Contributions and Loans.............................................10
2.3 Scope of Activities.........................................................10
2.4 Exclusivity.................................................................11
2.5 Service Agreements; Other Agreements........................................13
ARTICLE III
DIVIDENDS............................................................................14
3.1 Declaration of Dividends....................................................14
ARTICLE IV
CAPITALIZATION; FINANCING............................................................14
4.1 Debt Financing..............................................................14
4.2 Equity Financing............................................................14
4.3 Budget......................................................................14
4.4 Pledge of Shares............................................................15
ARTICLE V
CORPORATE GOVERNANCE.................................................................15
5.1 Composition of the Board....................................................15
5.2 Appointment and Removal of Members of the
Britannia Board.........................................................16
5.3 Frequency and Place of Board Meetings.......................................16
5.4 Voting and Delegation of Voting Authority...................................16
5.5 Special Meetings............................................................16
5.6 Notice of Board Meetings....................................................16
5.7 Quorum; Telephonic Meetings.................................................17
5.8 Unanimous Written Consent...................................................17
5.9 Remuneration................................................................17
5.10 Decisions and Actions at Meetings of the
Britannia Board.........................................................17
5.11 Unanimous Approval.........................................................19
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5.12 Auditors...................................................................20
5.13 Fair Value Determination...................................................20
5.14 Management Reporting.......................................................20
5.15 Financial Statements.......................................................20
ARTICLE VI
DEFAULT IN PAYMENT...................................................................21
6.1 Payment Default.............................................................21
6.2 Cure of Payment Default.....................................................21
ARTICLE VII
SHAREHOLDER VOTES; SHARE TRANSFERS...................................................21
7.1 Shareholder Votes...........................................................21
7.2 Shareholder Approval........................................................21
7.3 Breach or Violation.........................................................22
7.4 Bankruptcy..................................................................23
7.5 Change of Control...........................................................24
7.6 Share Acquisition in the Event of Breach, Bankruptcy
or Change of Control....................................................24
7.7 Transfer Mechanics..........................................................26
7.8 Deadlock....................................................................28
7.9 Other Transfers.............................................................30
7.10 Other Transfer Conditions..................................................30
ARTICLE VIII
REPRESENTATIONS AND WARRANTIES.......................................................31
8.1 Representations and Warranties of Each Party................................31
8.2 Survival....................................................................31
ARTICLE IX
GOVERNING LAW; DISPUTE RESOLUTION....................................................32
9.1 Governing Law...............................................................32
9.2 Conciliation................................................................32
9.3 Arbitration.................................................................32
9.4 Survival....................................................................34
ARTICLE X
TERMINATION..........................................................................34
10.1 Termination Upon Unanimous Agreement.......................................34
10.2 Termination Upon Failure of Certain Conditions.............................34
10.3 Consequences of Termination................................................34
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ARTICLE XI
CONFIDENTIALITY......................................................................34
11.1 Confidentiality Obligation.................................................34
11.2 Definition of Confidential Information.....................................35
11.3 Disclosure Required by Law or Court Order..................................35
11.4 Use of Confidential Information............................................35
ARTICLE XII
ADDITIONAL REPRESENTATION AND OBLIGATIONS............................................36
12.1 Representation of the Parent...............................................36
12.2 Covenant of the Parent.....................................................36
12.3 Indemnification............................................................36
12.4 Shareholder Covenant.......................................................36
ARTICLE XIII
MISCELLANEOUS........................................................................36
13.1 Fees and Expenses..........................................................36
13.2 Amendment and Modification.................................................36
13.3 Survival of Representations and Warranties.................................37
13.4 Notices....................................................................37
13.5 Counterparts...............................................................38
13.6 Entire Agreement; No Third Party Beneficiaries.............................38
13.7 Severability...............................................................38
13.8 Time of Essence............................................................39
13.9 Extension; Waiver..........................................................39
13.10 Assignment................................................................39
13.11 Headings..................................................................39
13.12 Section References........................................................39
13.13 Relationship Between the Parties..........................................39
13.14 Voting....................................................................40
13.15 News Releases.............................................................40
13.16 Precedence of Agreement...................................................40
[Exhibits Omitted]
EXHIBIT A
AMENDED AND RESTATED ARTICLES OF ASSOCIATION OF
BRITANNIA.......................................................................Ex. A-1
EXHIBIT B
IT LICENSE AGREEMENT ...........................................................Ex. B-1
EXHIBIT C
EXISTING ARM LEASE ARRANGEMENT..............................................Ex. C-1
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EXHIBIT D
CONSORTIUM TAX SHARING AGREEMENT................................................Ex. D-1
EXHIBIT E
MENTMORE EXCLUSIVE SELF-STORAGE REGION.........................................Ex. E-1
EXHIBIT F
IM EXCLUSIVE RECORDS MANAGEMENT REGION..........................................Ex. F-1
EXHIBIT G
BRITANNIA RECORDS MANAGEMENT /
RIGHT OF FIRST REFUSAL REGION.......................................................G-1
EXHIBIT H
AGREED ACCOUNTING POLICIES..........................................................H-1
EXHIBIT I
DEED OF ADHERENCE...............................................................Ex. I-1
EXHIBIT J
SHARE OPTION PLANS..............................................................Ex. J-1
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STRATEGIC ALLIANCE AGREEMENT
THIS STRATEGIC ALLIANCE AGREEMENT (the "Strategic Alliance
Agreement") is made as of this 4th day of January, 1999, by and between Iron
Mountain (U.K.) Ltd ("IM"), a company registered in England and Wales, having
its registered office at ▇/▇ ▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇; Iron
Mountain Incorporated, a corporation organized under the laws of the State of
Delaware, having its principal executive office at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ (the "Parent"); Britannia Data
Management Limited, a company registered in England and Wales, whose registered
office is at ▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇
("Britannia"); and Mentmore Abbey plc ("Mentmore"), a company registered in
England and Wales, whose registered office is at ▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇. Each of IM and Mentmore is sometimes referred to herein
as a "Shareholder," and collectively as the "Shareholders." Each of the
Shareholders, the Parent and Britannia is sometimes referred to individually as
a "Party" and collectively as the "Parties."
WHEREAS, the Parent and Mentmore have entered into a
Transaction Agreement dated December 2, 1998 (the "Transaction Agreement"), and
Britannia and IM have entered into a Subscription Agreement dated December 1,
1998 pursuant to which agreements IM has acquired fifty point one percent
(50.1%) of the issued share capital of Britannia in a series of transactions
more particularly described in such Transaction Agreement; and
WHEREAS, pursuant to the Transaction Agreement, Arcus Data
Security Limited ("Arcus"), previously a Wholly Owned Subsidiary (as defined
herein) of the Parent registered in England and Wales, has been reorganized as a
Wholly Owned Subsidiary of Britannia, and, pursuant to an agreement relating to
the sale of the records management of Abbey Storage Limited ("Abbey") made
between Abbey and Britannia dated December 1, 1998, the records management
business and assets of Abbey (operating as a division of Abbey under the name
Abbey Records Management ("ARM")), have been transferred to British Data
Management Limited ("BDM"), a Wholly Owned Subsidiary of Britannia registered in
England and Wales; and
WHEREAS, the Shareholders intend for Britannia to develop and
expand the Records Management Business (as defined herein) throughout the United
Kingdom; and
WHEREAS, the Parties have decided to enter into this strategic
alliance (the "Strategic Alliance") for the development and expansion of the
Records Management Business in the United Kingdom; and
WHEREAS, the Shareholders (or their Affiliates) will enter
into various support, service, Intellectual Property and other agreements with
Britannia as part of their Strategic Alliance;
NOW, THEREFORE, in consideration of the mutual promises made
herein, the Parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND INTERPRETATION
1.1 Defined Terms. Capitalized terms used in this Agreement
shall have the meanings specified in this Article I or as defined elsewhere in
this Agree ment (such meanings to be equally applicable to the singular and
plural forms thereof).
"Abandonment" shall have the meaning specified in Section
2.4(b).
"Affiliate" shall mean a person who, with respect to a
specified person, directly or indirectly through one or more intermediaries
controls, or is controlled by, or is under common control with, the person
specified.
"Agreed Accounting Policies" shall mean the accounting
policies in effect as of October 31, 1998, including but not limited to those
set forth on Exhibit H hereto.
"Agreement" shall mean this Strategic Alliance Agreement,
together with all Exhibits hereto (including without limitation the Articles),
as amended or supplemented from time to time.
"Articles" shall have the meaning specified in Section 2.1(a).
"Auction Notice" shall have the meaning specified in Section
7.8(c).
"Bankrupt Shareholder" shall have the meaning specified in
Section 7.4(a).
"Bankruptcy Buy-Out Notice" shall have the meaning specified
in Section 7.4.(a).
"Beneficial Owner" shall mean, with respect to any shares or
other securities, any Person (a) who directly or indirectly, through any
contract, arrangement,
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understanding, relationship, or otherwise has or shares (i) voting power which
includes the power to vote, or to direct the voting of, such security or (ii)
investment power which includes the power to dispose, or to direct the
disposition of, such security; (b) who directly or indirectly creates or uses a
trust, proxy, power of attorney, pooling arrangement or any other contract,
arrangement, or device with the purpose or effect of divesting such person of
beneficial ownership of a security or preventing the vesting of such beneficial
ownership as part of a plan or scheme to evade any applicable legal reporting
requirements with respect to such security; or (c) who has the right to acquire
beneficial ownership (as defined in (a) above) within sixty (60) days, including
but not limited to any right to acquire such security (i) through the exercise
of any option, warrant or right; (ii) through the conversion of a security;
(iii) pursuant to the power to revoke a trust, discretionary account, or similar
arrangement; or (iv) pursuant to the automatic termination of a trust, discre
tionary account or similar arrangement.
"Bid Appraiser" shall have the meaning specified in Section
7.8(c).
"Breach" shall have the meaning specified in Section 7.3(a)
hereof.
"Breach Buy-Out Notice" shall have the meaning specified in
Section 7.3(a).
"Breach Notice" shall have the meaning specified in Section
7.3(a).
"Breaching Shareholder" shall have the meaning specified in
Section 7.3(a).
"Britannia Board" shall mean the board of directors of
Britannia from time to time.
"Budget" shall mean the initial capital and operating budget
of Britannia as agreed among the Shareholders and Britannia's annual capital and
operating budget as approved by the Britannia Board from time to time.
"Business Day" shall mean a day of the year on which banks are
not required or authorized to close in New York, New York or London, England.
"Business Plan" shall mean the initial business plan of
Britannia as agreed among the Shareholders and Britannia's annual business plan
as approved by the Britannia Board from time to time.
"Buy-Out Appraiser" shall have the meaning specified in
Section 7.6(a).
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"Buy-Out Notice" shall mean a Breach Buy-Out Notice, a
Bankruptcy Buy-Out Notice, a Change of Control Buy-Out Notice or a Buy-Out
Notice provided pursuant to Section 7.6(a).
"Buy-Out Price" shall have the meaning specified in Section
7.6(a).
"Chairman" shall have the meaning specified in Section 5.5.
"Change of Control" shall mean in respect of the Parent or
Mentmore, the occurrence of any of the following events: (a) the Parent or
Mentmore, as the case may be, merges with or into, another entity or conveys,
transfers, leases or otherwise disposes of all or substantially all of its
assets to any Person, other than any such transaction in which, immediately
after such transaction, the holders of common stock of the Parent or the
ordinary share capital of Mentmore, as the case may be, are entitled to
exercise, directly or indirectly, at least a majority of the voting rights
attaching to the capital stock of the surviving or transferee Person; (b) any
Person taken together with any Person or Persons acting in concert, (as such
term is defined in the City Code on Take-Overs and Mergers (the "Code")), with
such Person acquiring 50% or more of the issued ordinary share capital of
Mentmore or 50% or more of the issued and outstanding common stock of the Parent
following an offer by such Person or Persons to acquire the whole or part of the
issued ordinary share capital of Mentmore or the Parent, (c) during any
consecutive two-year period, individuals who at the beginning of such period
constituted the board of directors (together with any new directors whose
election to such board of directors, or whose nomination for election by the
stockholders of the Parent or the shareholders of Mentmore, as the case may be,
was approved by a vote of sixty-six and two thirds percent (66 2/3%) of the
directors then still in office who were either directors at the beginning of
such period or whose election or nomination for election was previ ously
approved), cease for any reason to constitute a majority of the board of
directors then in office; or (d) any Wholly Owned Subsidiary of the Parent or
Mentmore, as the case may be, that holds Shares on the date hereof or as a
result of a transfer consistent with Section 7.10(b) ceases to be a Wholly Owned
Subsidiary of the Parent or Mentmore, as the case may be.
"Change of Control Buy-Out Notice" shall have the meaning
speci fied in Section 7.5.
"Change of Control Shareholder" shall have the meaning
specified in Section 7.5.
"Conciliation Committee" shall have the meaning specified in
Section 9.2(a).
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"Confidential Information" shall have the meaning specified in
Section 11.2.
"Deadlock" shall mean a failure of the Shareholders to agree
upon a course of action in relation to any matter that requires the unanimous
decision of the Britannia Board and/or the Shareholders (other than any matter
relating to the date or place of meetings of the Britannia Board or any decision
relating to a change in or expansion of Britannia's existing lines of business
pursuant to Section 5.10(h)), after such matter has been considered by the
Conciliation Committee in accordance with the procedure set forth in Section
9.2(a).
"Default Notice" shall have the meaning specified in Section
6.1.
"Default Rate" shall mean the lesser of (a) LIBOR plus five
percent (5%) and (b) the highest rate of interest permitted by applicable law.
"Defaulting Shareholder" shall have the meaning specified in
Section 6.1.
"Dispute" shall have the meaning specified in Section 9.2(a).
"Dual Board Member" shall have the meaning set forth in
Section 5.1.
"Equity Cap" shall have the meaning set forth in Section 4.2.
"Equity Valuation" shall have the meaning set forth in Section
7.8(c) hereof.
"Extraordinary Dividends" shall mean any dividends in excess
of Ordinary Dividends.
"Initial Designation Period" shall have the meaning specified
in Section 7.6(a).
"Initial Offer" shall have the meaning specified in Section
7.9(a) hereof.
"Initial Offer Period" shall have the meaning specified in
Section 7.9(a).
"Intellectual Property" shall have the meaning specified in
Section 9.1 of the Transaction Agreement.
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"Law" shall mean any law, rule, regulation, decree,
interpretation, enforcement policy or policy statement (whether or not published
or having the force of law), including the rules of the Stock Exchange, the
Takeover Code or any US Exchange or quotation system.
"Majority Approval" shall have the meaning specified in
Section 5.11.
"Material" or "Materially" shall mean that a fact, event,
action, obligation or provision of this Agreement is of sufficient importance
that a reason able person would take it into account in judging his economic or
legal interest.
"Nonbankrupt Shareholder" shall have the meaning specified in
Section 7.4(a).
"Nonbreaching Shareholder" shall have the meaning specified in
Section 7.3(a).
"Non-Change of Control Shareholder" shall have the meaning
specified in Section 7.5.
"Nondefaulting Shareholder" shall mean any Shareholder that is
not a Defaulting Shareholder.
"Non-Transferring Shareholder" shall have the meaning
specified in Section 7.9(a).
"Nonwithdrawing Shareholder" shall mean any Shareholder that
is not a Withdrawing Shareholder.
"Option Exercise Notice" shall have the meaning specified in
Section 7.6(a).
"Ordinary Dividends" shall mean any dividends not in excess of
Britannia's profit after tax for the most recently completed financial year less
the amounts of anticipated capital expenditures and amounts required for working
capital purposes, in each case as specified in the Budget for the financial year
in which such dividends are declared.
"Party" shall have the meaning specified in the Preamble.
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"Person" shall mean an individual, corporation, partnership,
joint venture, trust, unincorporated organization or any other juridical or
non-juridical entity, or a sovereign state or any agency or political
subdivision thereof.
"Purchasing Shareholder" shall have the meaning specified in
Section 7.8(c).
"Records Management Business" shall mean (i) the provision of
records management and related services including storage for all major media
(including paper, computer disks and tapes, microfilm and microfiche, master
audio and video tapes, film and optical disks, X-rays and blueprints),
records-related services (including courier pick-up and delivery, filing,
retrieval, copying and destruction), related database management, customized
reporting and disaster recovery support and (ii) any other business engaged in
by Britannia from time to time that has an annual turnover of no less than two
and one half million pounds ((pound)2,500,000) or represents at least five
percent (5%) of Britannia's aggregate turn over, whichever is lower.
"Rejection Notice" shall have the meaning specified in Section
7.6(b).
"Related Transaction" shall have the meaning specified in
Section 2.4(b) hereof.
"Related Transaction Market" shall mean the area within a
radius of 20 miles around any particular location or locations in which a
Related Transaction is to be effected (excluding any area within such radius
resulting from the crossing of any national boundaries), or such other area as
the Britannia Board shall define with Unanimous Approval at a Related
Transaction Meeting.
"Related Transaction Meeting" shall have the meaning specified
in Section 2.4(b).
"Right of First Refusal" shall have the meaning specified in
Section 2.4(b).
"Self-Storage Business" shall mean the provision of storage or
space for such purposes as customers may require, which (for the avoidance of
doubt) may include storage of customers' records together with the provision of
limited assis tance in servicing such records, provided that the primary purpose
of such business shall be the provision of self-service storage space and that
such business shall not be marketed as serviced records management.
"Shareholder" shall have the meaning specified in the
Preamble.
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"Shares" shall mean the issued ordinary shares of 10p each in
the capital of Britannia.
"Special Meeting"shall have the meaning specified in Section
5.5.
"Stock Exchange" shall mean the London Stock Exchange Limited.
"Subsequent Offer" shall have the meaning specified in Section
7.9(a).
"Subsidiary" means, in respect of any Person, any corporation,
association, partnership or other business entity of which more than 50% of the
total voting power of shares of common stock or other interests (including
partnership interests) entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof
or otherwise to exercise effective control is at the time owned or controlled,
directly or indirectly, by (i) such Person, (ii) such Person and one or more
Subsidiaries of such Person or (iii) one or more Subsidiaries of such Person.
"Third Party Offer Period" shall have the meaning specified in
Section 7.9(a).
"Transfer" shall mean any sale, exchange, gift and any other
disposi tion of any kind, whether voluntary or involuntary, affecting title to,
interest in or possession of any of the Shares.
"Transferring Shareholder" shall have the meaning specified in
Section 7.9(a) hereof.
"Unanimous Approval" shall have the meaning specified in
Section 5.11.
"US GAAP" shall mean United States generally accepted
accounting principles.
"Withdrawing Shareholder" shall mean a Breaching Shareholder
that has received a Breach Buy-Out Notice, a Bankrupt Shareholder that has
received a Bankruptcy Buy-Out Notice or a Change of Control Shareholder that has
received a Change of Control Buy-Out Notice.
"Wholly Owned Subsidiary" with respect to any Person means a
Subsidiary of such Person all of the common stock or ordinary shares (as
appropri ate) of which is owned by such Person or another Wholly Owned
Subsidiary.
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1.2 Interpretation.
(a) Whenever the words "include," "includes" or "including"
are used in this Agreement they shall be deemed to be followed by the words
"without limitation."
(b) In the computation of periods of time from a specified to
a later specified date, the word "from" means "from but excluding" and the words
"until" and "to" mean "to and including."
(c) The words "hereof," "herein" and "herewith" and words of
similar import shall, unless otherwise stated, be construed to refer to this
Agreement as a whole and not to any particular provision of this Agreement, and
Article, Section, paragraph, Exhibit and schedule references are to the
Articles, Sections, paragraphs, Exhibits and schedules of this Agreement unless
otherwise clearly indicated to the contrary.
(d) Unless otherwise specified, the term "days" shall mean
calendar days.
(e) The meaning assigned to each term defined herein shall be
equally applicable to both the singular and the plural forms of such term, and
words denoting any gender shall include all genders. Where a word or phrase is
defined herein, each of its other grammatical forms shall have a corresponding
meaning.
(f) A reference to any Party to this Agreement or any other
agreement or document shall include such Party's successors and permitted
assigns and any reference to an agreement or document shall mean such document,
as the same may be supplemented amended or modified from time to time in
accordance with the terms thereof and hereof.
(g) A reference to any legislation or to any provision of any
legisla tion shall include any modification or re-enactment thereof, any
legislative provision substituted therefor and all regulations and statutory
instruments issued thereunder or pursuant thereto.
(h) As used in this Agreement, any reference to any event,
change or effect being material or having a material adverse effect on or with
respect to any entity (or group of entities taken as a whole) means such event,
change or effect is materially adverse to (i) the consolidated financial
condition, businesses or results of operations of such entity as a whole (or, if
used with respect thereto, of such group of entities taken as a whole) or (ii)
the ability of such entity (or group) to consummate the transactions
contemplated by this Agreement.
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(i) The Shareholders have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Shareholders, and no presumption or burden of proof
shall arise favoring or disfavoring any Shareholder by virtue of the authorship
of any provisions of this Agreement.
ARTICLE II
SCOPE OF ACTIVITIES
2.1 Articles. (a) At the closing of the transactions
contemplated in the Transaction Agreement, the Shareholders shall take all
action necessary to approve the form of amended and restated Articles of
Association of Britannia (the "Articles") set forth as Exhibit A hereto.
(b) The Parties agree that any Breach (as defined herein) of
any provision of this Agreement or any Exhibit hereto shall be deemed to be a
Breach of this Agreement subject to resolution in accordance with Article VII;
provided, however, that only a knowing breach of any of the representations and
warranties set forth in the Transaction Agreement (having taken into account all
limitations and restrictions in relation to such representations and warranties
contained in the Transaction Agreement) shall be deemed a Breach of this
Agreement; provided, further, that any waiver of any right or rights under any
Exhibit hereto shall be deemed to be a waiver of any right or rights hereunder;
provided, further, that in the event the Parent and Mentmore decide to complete
the Transaction Agreement notwithstanding any breach of representation or
warranty contained therein, any such breach shall not be deemed to be a Breach
of this Agreement; and provided, further, that only knowing breaches of any of
the representations and warranties set forth in the Transaction Agreement
resulting in a claim for damages under the Transaction Agreement in excess of
(pound)500,000 or with respect to which Britannia reasonably makes a provision
after the date of this Agreement in excess of (pound)500,000 shall be deemed to
be a Breach of this Agreement. For purposes of this Section 2.1(b), references
to a "knowing breach" shall mean only a breach made with Knowledge, (as such
term is defined in the Transaction Agreement).
2.2 Capital Contributions and Loans. Pursuant to Britannia's
Budget and subject to the limitations set forth in Article IV hereof, the
Shareholders shall make capital contributions and loans to Britannia from time
to time.
2.3 Scope of Activities. (a) The business purpose of the
Sharehold ers in executing this Agreement is to promote, market, develop and
expand the Records Management Business in the United Kingdom and to operate the
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Records Management Business to maximize post-tax earnings, as more particularly
described in the Business Plan.
(b) The Shareholders shall procure (insofar as it is within
their power to do so and subject to the other provisions of this Agreement) that
Britannia shall, carry out all other activities necessary or useful to fulfill
the foregoing purposes, and such other activities as the Britannia Board may
agree upon. The Shareholders further agree to procure (insofar as it is within
their power to do so and subject to the other provisions of this Agreement) the
due implementation by Britannia of the intended effect of any provision
requiring action by Britannia.
2.4 Exclusivity. Unless the Shareholders otherwise unanimously
agree in writing, Britannia shall be the Shareholders' exclusive channel for the
marketing and development of the Records Management Business in the United
Kingdom.
(a) IM and the Parent each agree that neither they nor any of
their Subsidiaries shall directly or indirectly own, manage, engage in,
participate in, provide advice or consulting services to or have a financial
interest in any enterprise (other than an interest as a trade creditor arising
from ordinary course, arms' length transactions) which is engaged in the
Self-Storage Business in the countries identi fied on Exhibit E hereto (the
"Mentmore Exclusive Self-Storage Region"). Mentmore agrees that neither it nor
any of its Subsidiaries shall directly or indirectly own, manage, engage in,
participate in, provide advice or consulting services to or have a financial
interest in any enterprise (other than an interest as a trade creditor arising
from ordinary course, arms' length transactions) which is engaged in the Records
Management Business in the countries identified on Exhibit F hereto (the "IM
Exclusive Records Management Region"). Subject to Section 2.4(b) below, neither
IM, the Parent, Mentmore nor any of their respective Subsidiaries (other than
Britannia or its Subsidiaries) shall directly or indirectly own, manage, engage
in, participate in, provide advice or consulting services to or have a financial
interest in any enterprise (other than an interest as a trade creditor arising
from ordinary course, arms' length transactions) which is engaged in the Records
Management Business in the countries identified on Exhibit G hereto (the
"Britannia Records Management/Right of First Refusal Region"); provided,
however, that this Section 2.4(a) shall not prohibit IM, the Parent, Mentmore or
any of their Subsidiaries acquiring up to three percent (3%) of any class of
publicly traded securities of any Person which may engage in the Records
Management Business or the Self-Storage Business.
(b) Notwithstanding anything to the contrary in this Section
2.4 , the Shareholders and the Parent agree that neither Shareholder nor the
Parent (nor any Subsidiary of either Shareholder or the Parent, other than
Britannia) shall engage in
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negotiations connected with a business opportunity relating to the Records
Management Business (a "Related Transaction") in the Britannia Records
Management/Right of First Refusal Region without first (i) informing the
Chairman of such Related Transaction, (ii) providing the Chairman with all
relevant information relating to such Related Transaction known to the relevant
Party and (iii) permitting Britannia to decide whether or not the Related
Transaction is to be effected by Britannia (the right to make such decision
being a "Right of First Refusal"). The Chairman shall convene a Special Meeting
(a "Related Transaction Meeting") within ten (10) Business Days of the date the
Chairman is informed of the Related Transaction. The notice for such Special
Meeting shall contain a reasonably detailed summary of the Related Transaction
as communicated to the Chairman. The Shareholders and the Parent (and any
Subsidiary of either Shareholder or the Parent other than Britannia) shall be
prohibited from pursuing the Related Transaction in any manner, or taking any
action in connection therewith, until the Britannia Board shall have decided
whether or not to exercise its Right of First Refusal, which decision must be
made within ten (10) days of the date of the Related Transaction Meeting. In the
event the Britannia Board decides such Related Transaction is to be effected by
Britannia, the Shareholders and the Parent (and any Subsidiary of either
Shareholder or the Parent other than Britannia) shall be prohib ited from taking
any action (other than pursuant to this Agreement or to further the business
aims of, or to provide assistance to, Britannia) in respect of such Related
Transaction and Britannia shall be the Parties' (and their Subsidiaries')
exclusive channel for negotiating and effecting the Related Transaction and for
the marketing and development of the Records Management Business in the Related
Transaction Market. In the event the Britannia Board decides that the Related
Transaction will not be effected by Britannia, a Shareholder that has caused its
representative(s) on the Britannia Board to vote in favor of Britannia pursuing
the Related Transaction (or any Affiliate of such Shareholder other than
Britannia) will thereafter be free to effect the Related Transaction on terms
that are not materially more favorable to such Shareholder than those on which
the Related Transaction was acted upon by the Britannia Board. In such event,
(i) neither Britannia, nor the other Shareholder, nor (if the other Shareholder
is IM) the Parent (nor any of their respective Subsidiaries) shall individually
or jointly with any other Person effect such Related Transaction, enter into
discussions or negotiations with any Person relating thereto, provide technology
or financial assistance to any Person in connection therewith and (ii) the
Shareholder effecting the Related Transaction (or any Affiliate of such
Shareholder other than Britannia) shall thereafter have the exclusive right to
discuss, negotiate or effect any transaction in or related to the Records
Management Business in the Related Transaction Market; provided, however, that,
if, after the Britannia Board has voted to cause Britannia to exercise its Right
of First Refusal or has permitted a Shareholder (or an Affiliate of such
Shareholder) to pursue the Related Transaction, either Britannia or the
Shareholder (or an Affiliate of such Shareholder) pursuing the Related
Transaction, as the case may be, does not enter into a definitive agreement
relating to the Related Transaction
12
within ninety (90) days of the Related Transac tion Meeting and consummate the
transaction within sixty (60) days of entering into such definitive agreement,
Britannia or such Shareholder (or the relevant Affiliate of such Shareholder)
shall be deemed to have abandoned the Related Transaction and shall promptly
notify the other Shareholder or Shareholders, as the case may be, of its
decision to abandon the Related Transaction (an "Abandonment"). Following any
Abandonment, neither Shareholder nor the Parent (nor any of their respective
Subsidiaries other than Britannia) shall pursue any Related Transactions in the
Related Transaction Market without following the procedures set forth in this
Section 2.4(b).
(c) Any Breach of any provision of this Section 2.4, other
than with the consent of a Nonbreaching Shareholder (as defined herein),
notwithstanding any declaration of invalidity with respect thereto by any
competent governmental, judicial or administrative authority, shall be deemed a
Breach of this Agreement entitling the Nonbreaching Shareholder to the remedies
set forth in Article VII hereof.
(d) The provisions of this Section 2.4 shall only remain in
effect for so long as this Agreement remains in effect.
2.5 Service Agreements; Other Agreements.
(a) In order to assist Britannia in carrying out its
objectives as set forth in this Agreement, the Shareholders (or an appropriate
Affiliate thereof) shall provide Britannia with, and Britannia shall pay for,
such support and assistance as Britannia reasonably require from time to time at
the fully-burdened cost of the Shareholder or Affiliate providing such support
and assistance.
(b) Subject to the provisions of Section 5.10(l) hereof, the
Sharehold ers expressly agree and acknowledge that customer contract terms
(including pricing terms) of Britannia shall be governed by local market
standards and shall not necessarily be subject to global contract conditions.
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ARTICLE III
DIVIDENDS
3.1 Declaration of Dividends. Subject to Section 7.2 hereof
and unless (i) prohibited by applicable law or any agreement to which Britannia
is, or may become, subject, or (ii) the Board specifies otherwise, Britannia
shall distribute annually to the Shareholders 100% of all amounts available for
distribution as Ordinary Dividends.
ARTICLE IV
CAPITALIZATION; FINANCING
4.1 Debt Financing. The Shareholders hereby agree that any
expan sion or development of the Records Management Business, including by way
of acquisition or capital investment, shall be funded principally by Britannia's
incur rence of debt.
4.2 Equity Financing. Each of the Shareholders will, subject
to applicable UK law, be required to invest additional equity, beyond such
amounts as are contemplated in the Transaction Agreement and in such a manner as
will preserve the relative percentage shareholdings of each Shareholder upon the
comple tion of the transactions contemplated in the Transaction Agreement, up to
a cumula tive maximum per Shareholder of three million pounds ((pound)3,000,000)
(the "Equity Cap"), in the manner and on the time schedule set forth in
Britannia's Budget. Subject to the provisions of such Budget and subject to
Sections 4.3 and 7.2(b) below, each of the Shareholders will also be entitled to
invest additional equity in Britannia; provided, however, that neither IM nor
Mentmore nor any of their Affiliates shall have any obligation to make any
equity investments in Britannia above the Equity Cap.
4.3 Budget. Subject to Section 5.10 hereof, Britannia shall
prepare a budget (the "Budget") on at least an annual basis setting forth
Britannia's anticipated capital requirements and the amounts of such capital to
be raised as debt and equity, respectively, together with Britannia's
anticipated revenues and expenses, its targeted new sales volume and other
operational forecasts or objectives. Such Budget shall indicate the capital
intended to be raised from the Shareholders and other sources as well as the
timing of any required capital contributions by the Shareholders. The
Shareholders expressly agree that they shall not be obligated to contribute any
amounts to Britannia in the form of debt and that they shall not be obligated to
make any equity investments beyond the Equity Cap. The Shareholders further
agree that any adjustment in the Shareholders' percentage equity ownership of
Britannia shall
14
be subject to the unanimous approval of Britannia's Shareholders; provided, how
ever, that in the event that any Shareholder's percentage ownership of the
Shares of Britannia falls to or below twenty percent (20%), such Shareholder
shall be deemed to be a Withdrawing Shareholder pursuant to Section 7.6 below
and the other Shareholder shall be deemed a Nonwithdrawing Shareholder pursuant
to such Section; provided, further, such deemed Nonwithdrawing Shareholder may
initiate the procedures set forth in such Section 7.6 by providing a Buy-Out
Notice to the deemed Withdrawing Shareholder and Britannia within thirty (30)
days of the date such deemed Withdrawing Shareholder's percentage ownership of
the Shares of Britannia falls to or below twenty percent (20%); and provided,
further, the deemed Nonwithdrawing Shareholder may thereafter purchase the
deemed Withdrawing Shareholder's Shares in accordance with Sections 7.6 and 7.7
below.
4.4 Pledge of Shares. In addition to the Shareholders'
obligation to provide equity investments up to the amount of the Equity Cap, the
Shareholders agree to pledge their Shares to Britannia's creditors to the extent
necessary to obtain the funds identified in Britannia's Budget; provided,
however, that it shall not be a breach of this Section 4.4 for either
Shareholder to fail to pledge its Shares to Britannia's creditors if such Shares
have previously been pledged, mortgaged, assigned or otherwise encumbered to
such Shareholder's creditors. To the extent that Britannia's financing needs do
not require any pledge of Shares at such time as either Shareholder (at its
discretion) desires to pledge, mortgage, assign or otherwise encumber its Shares
to its creditors, each Shareholder shall be free to pledge, mortgage, assign or
otherwise encumber its stock to banks or other financial institu tions. Save as
provided in this Section 4.4, any failure of the Shareholders to pledge their
stock or any pledge of stock that is inconsistent with the provisions of this
Section 4.4 shall be deemed a Breach of this Agreement and shall give the
Nonbreaching Shareholder the rights set forth in Article VII hereof.
ARTICLE V
CORPORATE GOVERNANCE
5.1 Composition of the Board. The Britannia Board shall
consist of five (5) members, two (2) of whom shall be designated by Mentmore and
three (3) of whom shall be designated by IM. At Mentmore's sole option, one (1)
of the members of the Britannia Board appointed by IM may also serve as a member
of the board of Mentmore (the "Dual Board Member"). Such Dual Board Member must
relinquish all day-to-day management responsibilities in connection with
Mentmore or any Affiliate thereof (other than Britannia). The Parties agree to
take all action necessary to ensure that the members of the Britannia Board
shall also be members of all boards of directors of all Subsidiaries of
Britannia.
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5.2 Appointment and Removal of Members of the Britannia Board.
Any appointment or removal of a member of the Britannia Board by a Shareholder
shall be effected by notice in writing to Britannia signed by or on behalf of
the Shareholder in question and shall take effect, subject to any contrary
intention expressed in the notice, when the notice effecting the same is
delivered to Britannia; provided, however, that a member of the Britannia Board
may only be removed by the Shareholder that appointed such member.
5.3 Frequency and Place of Board Meetings. The number and date
of ordinary meetings of the Britannia Board shall be determined by the Britannia
Board; provided, however, that there shall be at least one (1) meeting of the
Britannia Board per year. Meetings of the Britannia Board shall be held in
London or Boston or such other place as the Board may decide by Unanimous
Approval; provided, however, that if such Unanimous Approval is not obtained,
the meetings of the Britannia Board shall be held alternately in London and
Boston. Minutes of all meetings of the Britannia Board will be circulated to the
Shareholders within ten (10) days of the relevant meeting of the Britannia
Board.
5.4 Voting and Delegation of Voting Authority. Members of the
Britannia Board may designate an alternate and may grant a power of attorney to
another member of the Britannia Board to attend meetings of the Britannia Board
and vote at such meetings on behalf of the member of the Britannia Board as to
which such person is the alternate or has granted such power of attorney.
5.5 Special Meetings. Special meetings of the Britannia Board
("Special Meetings") may be called at any time by the Chairman of the Britannia
Board (the "Chairman"). Special Meetings may also be requested at any time by
either Shareholder. Any request for a Special Meeting shall be sent to the
Chairman who will send out to the Shareholders a notice of the Special Meeting
within ten (10) Business Days of receiving such request. If the Chairman fails
to send out a notice of a Special Meeting within such time, the Shareholder
requesting the Special Meeting may send the notice to the other Shareholder.
5.6 Notice of Board Meetings. Written notice of any meeting of
the Britannia Board shall be provided to each Shareholder by the Chairman no
later than ten (10) Business Days prior to the date of any Special Meeting, and
no later then fifteen (15) Business Days prior to the date of any ordinary
meeting. Notice of each meeting of the Britannia Board will state the date,
place and hour of the meeting of the Britannia Board and will include an agenda,
which shall include any item proposed by any member of the Britannia Board to be
placed thereon; provided, however, that any items proposed to be included on the
agenda shall be submitted to the Chairman and notice of such items shall be
provided to each Shareholder by the Chairman no later than five (5) Business
Days prior to the date of any meeting of the Britannia Board; provided, further,
that votes may only be taken on those items listed
16
on the agenda; and provided, further, that any of the provisions of this Section
5.6 may be modified by the unanimous agreement of the Shareholders.
5.7 Quorum; Telephonic Meetings. The participation in person
or by proxy of three (3) of the five (5) members of the Britannia Board will
constitute a quorum at meetings of the Britannia Board if no decisions are made
regarding those issues listed in Section 5.10 requiring the Unanimous Approval
of the members of the Britannia Board. In order to take decisions on those
issues listed in Section 5.10 that require Unanimous Approval of the Britannia
Board, at least one member of the Britannia Board appointed by each Shareholder
must attend in person or by proxy the meeting of the Britannia Board at which
such issues are voted upon. Members of the Britannia Board may participate in a
meeting of the Britannia Board by means of telephone conference or similar
communications equipment through which all persons participating in the meeting
can hear and understand each other simulta neously, and such participation shall
constitute presence in person at such meeting. If a quorum is not reached within
one hour after the scheduled commencement of a meeting of the Britannia Board,
the Chairman shall have the right to adjourn such meeting for a period of time
designated by the Chairman, but not exceeding thirty (30) days.
5.8 Unanimous Written Consent. Notwithstanding anything in
this Article V to the contrary, any decision of the Britannia Board may be taken
by unanimous written consent of all members of the Britannia Board.
5.9 Remuneration. Members of the Britannia Board will not
receive any remuneration for serving as members of the Britannia Board;
provided, however, that Britannia will reimburse the members of the Britannia
Board for their reasonable out-of-pocket expenses associated with their travel
to and from meetings of the Board.
5.10 Decisions and Actions at Meetings of the Britannia Board.
Subject to the other provisions of this Article V and in addition to such other
matters as require Board approval under applicable law, the vote of the
Britannia Board shall be required for the following matters:
(a) any dissolution, reorganization, merger or sale or
exchange of assets of Britannia or any Subsidiary of Britannia in a transaction
or series of transactions in which the total value is in excess of twenty
percent (20%) of the fair market value (as determined in accordance with Section
5.13 below) of Britannia's total assets or any termination of the Agreement
other than in accordance with its terms;
(b) acquisitions and dispositions of assets (including shares,
property or other equity interests) of Britannia or any Subsidiary of Britannia
in a transaction
17
or series of related transactions in which the total consideration paid or
received for such assets is in excess of twenty percent (20%) of the fair market
value (as deter mined in accordance with Section 5.13 below) of Britannia's
total assets;
(c) any commencement of litigation or arbitration proceedings
by Britannia or any direct or indirect subsidiary of Britannia, or any
assignment, transfer, pledge, compromise or release of any claim or debt by
Britannia or any direct or indirect subsidiary of Britannia, or any offer of
settlement, any agreement to arbitrate or consent to arbitration or judicial
settlement by Britannia or any direct or indirect subsidiary of Britannia, in
any such case, not in the ordinary course or if the amount involved (including
all likely costs and expenses) is in excess of (pound)250,000;
(d) approval of any material contract or other arrangement
outside the ordinary course of business and not contemplated by the then current
Business Plan or Budget;
(e) the listing of any securities of Britannia on any stock
exchange on which such securities are not listed on the date hereof;
(f) the incurrence of any debt by Britannia or any Wholly
Owned Subsidiary of Britannia (i) other than from commercial banks or financial
institutions and (ii) which is in the ordinary course of business or is
contemplated by the then current Business Plan or Budget;
(g) all transactions with Affiliates on other than arms'
length terms and conditions;
(h) changing Britannia's lines of business (or those of any of
its operating subsidiaries);
(i) changing, or preparing the management accounts required
pursuant to Section 5.13 on any basis other than, the Agreed Accounting
Policies;
(j) entering into any transaction or series of transactions
requiring approval under Sections 320-322 of the Companies ▇▇▇ ▇▇▇▇;
(k) subject to Section 5.12 below, appointment and removal of
Britannia's external auditor;
(l) approval of the Business Plan and the annual Budget, and
any deviations from such plan and such budgets, including the approval of
capital expenditures not included in the annual Budget;
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(m) appointment or removal of executive officers and other
senior managers in their capacity as executive officers or senior managers
(whether of Britannia or any Subsidiary through which it operates the Records
Management Business);
(n) adoption of, or material modifications to, any benefit or
compen sation plans of Britannia;
(o) election of the Chairman of the Britannia Board;
(p) specification of any amounts available to be distributed
as dividends in accordance with Section 3.1 and 7.2 hereof; and
(q) any dissolution, reorganization, merger or termination of
Britan nia or any Subsidiary of Britannia in a transaction or series of
transactions in which the total value is equal to or less than twenty percent
(20%) of the fair market value (as determined in accordance with Section 5.13
below) of Britannia's total assets;
(r) acquisitions and dispositions of assets (including stock,
property or other equity interests) of Britannia or any Subsidiary of Britannia
in a transaction or series of related transactions in which the total
consideration paid or received for such assets is equal to or less than twenty
percent (20%) of the fair market value (as determined in accordance with Section
5.13 below) of Britannia's total assets and is greater than (pound)100,000,
subject to any annual limit on such acquisitions or disposi tions set forth in
the Business Plan;
(s) expanding its existing business into any countries in
which it or its subsidiaries are not operating at the time of any such proposed
expansion; and
(t) subject to Section 5.11 below, directing Britannia in its
capacity as shareholder in any operating companies through which the Records
Management Business is operated to vote its shares in such operating companies
in such a manner as to implement any of the matters specified in (a) to (s)
inclusive above.
5.11 Unanimous Approval. All items (a) to (k) inclusive above
shall require the unanimous approval of all members of the Britannia Board
present at the meeting of the Britannia Board at which such matters are voted
upon (such approval being termed herein "Unanimous Approval"); and all other
matters to be acted on by the Britannia Board in Section 5.10 above shall only
require the approval of a majority of the members of the Britannia Board present
at the meeting of the Britannia Board at which such matters are voted upon (such
approval being termed herein "Majority Approval"), in each case, including any
such member present by
19
proxy, by representation by his or her alternate or by telephone conference or
similar communications in accordance with Section 5.7; provided, however, that
Unanimous Approval shall be required to cause Britannia to vote its Shares in
any operating subsidiaries through which it operates the Records Management with
respect to any of the matters specified in (a) through (k) above and Majority
Approval shall be required for all other matters.
5.12 Auditors. Britannia's initial auditors shall be ▇▇▇▇▇▇
▇▇▇▇▇▇. Britannia's auditors will be subject to an annual review by the
Britannia Board. Subject to Section 5.11 above, either Shareholder may propose a
change in Britan nia's auditor.
5.13 Fair Value Determination. Prior to the consummation of
any transaction identified in Sections 5.10(a), (b), (q) or (r) above, a
majority of the members of the Britannia Board shall determine the fair market
value of Britannia's assets and communicate such determination to the
Shareholders; provided, however, that either Shareholder may request that an
independent third party jointly selected by the Shareholders or, in the absence
of agreement between the Shareholders, by Britannia's auditors, review the
determination of the Britannia Board and, acting as expert and not as
arbitrator, establish the fair market value of Britannia's assets in a manner
that shall be final and binding on the Parties; provided, further that no such
determination shall be necessary for a proposed acquisition or disposition of
assets (including stock, property or other equity interests) of Britannia or any
Subsidiary of Britannia in a transaction or series of related transactions in
which the total consider ation paid or received for such assets is less than
(pound)100,000.
5.14 Management Reporting. Britannia's managing director will
provide the Britannia Board with regular reports and management accounts contain
ing both narrative and financial information on Britannia's and its
subsidiaries' operations, results and financial condition. All management
accounts pursuant to this Section 5.14 shall be prepared in accordance with the
Agreed Accounting Policies. Such reports must be provided to the Britannia Board
on at least a monthly basis. In addition, the managing director will provide, at
Britannia's cost, either Shareholder with such information concerning Britannia
and its subsidiaries (and their operations, results, financial condition or
prospects) as such Shareholder shall reasonably require.
5.15 Financial Statements. In addition to the management
accounts to be prepared pursuant to Section 5.14, Britannia shall prepare in a
timely fashion and audited by a firm that is qualified to practice before the
U.S. Securities and Exchange Commission (a) annual financial statements in
accordance with the Agreed Accounting Policies and (b) annual and quarterly
financial statements in accordance with US GAAP. The Parties expressly agree and
acknowledge that IM shall have the unilateral right to determine all US GAAP
accounting issues that may
20
arise in connection with the preparation of financial statements in accordance
with US GAAP and to make any appropriate U.S. tax filings or elections.
ARTICLE VI
DEFAULT IN PAYMENT
6.1 Payment Default. Subject to the provisions of Section 4.3,
if any Shareholder fails to pay in full any contribution to the capital of
Britannia pursuant to this Agreement, the Articles, or the Budget (each such
Shareholder being a "Defaulting Shareholder"), such failure (a "Payment
Default") shall constitute a Breach of this Agreement by such Defaulting
Shareholder. A Payment Default shall be deemed to have occurred on the date on
which such amount was due. The Chairman of the Board shall, within seven (7)
Business Days of having been informed of the Payment Default, send notice
thereof to the Shareholders (such notice being a "Default Notice").
6.2 Cure of Payment Default. A Payment Default shall be deemed
to have been cured when (and only when) the full amount of the Payment Default,
plus interest thereon at the Default Rate (as in effect from time to time),
accruing from the date of the Payment Default until the date of cure, has been
paid by the curing Defaulting Shareholder.
ARTICLE VII
SHAREHOLDER VOTES; SHARE TRANSFERS
7.1 Shareholder Votes. Britannia and each Shareholder, in its
capacity as a shareholder of Britannia, expressly agrees and covenants that it
will do all things, including voting its Shares, necessary to cause it to comply
with any obligation set forth in this Agreement.
7.2 Shareholder Approval. In accordance with the applicable
provisions of the laws of England and Wales and the Articles, and in addition to
such other matters as require Board approval under the laws of England and Wales
the following items shall be subject to a vote of Britannia's shareholders:
(a) modifications, amendments or replacement of Britannia's
memo randum of association or Articles, the adoption of a new memorandum or
articles of association or any other alteration to any of Britannia's
constitutive documents;
21
(b) any increase or reduction in Britannia's authorized share
capital, the creation of any new class of shares or the alteration or abrogation
of the rights attaching to any class of shares in Britannia's authorized share
capital, issuance of any new shares in Britannia, any issuance of shares or
other equity interests (whether such issuance alters or may alter the
Shareholders' percentage equity ownership in Britannia or otherwise) or any
requirement for the Shareholders to contribute additional capital to Britannia
beyond the Equity Cap;
(c) all repurchases of shares (of whatever class) or other
equity interests by Britannia;
(d) the declaration of any Extraordinary Dividends;
(e) any resolution for the winding up of or the making of an
adminis tration order in respect of Britannia or any Subsidiary of Britannia;
and
(f) the declaration of Ordinary Dividends.
A unanimous vote of the Shareholders shall be required for all
matters listed in (a)-(e) above and a majority vote of the Shareholders shall be
sufficient for the declaration of Ordinary Dividends pursuant to clause (f)
above.
7.3 Breach or Violation. (a) Subject to Section 2.1(b), if any
Shareholder or the Parent (such Shareholder, or if the Parent, the Parent and IM
collectively, being referred to as a "Breaching Shareholder") is in breach of
any Material obligation under this Agreement (including, without limitation,
through any (i) violation of any Material provision of the Articles, (ii) any
failure to vote (or cause to be voted) its Shares in Britannia pursuant to
Sections 7.1 or 7.2 above, or take (or cause to be taken) any other action in
respect of Britannia as required under this Agreement, notwithstanding that the
action taken or omitted may be valid and lawful when judged under another
instrument (including the Articles), when taken in isolation or under a law
other than the law chosen in Section 9.1, (iii) any Payment Default or (iv) any
inability or failure to perform its Material obligations hereunder or under any
Exhibit hereto or to take (or cause to be taken) actions generally required to
be taken hereunder or under any Exhibit hereto (any of (i), (ii), (iii) or (iv)
being a "Breach"), then the non-breaching Shareholder (the "Nonbreaching
Shareholder") may give written notice of such Breach or violation to such
Breaching Shareholder (with a simultaneous copy to Britannia) (such notice being
a "Breach Notice"). If such breach or violation continues unremedied for at
least thirty (30) days after delivery of the Breach Notice, then the
Nonbreaching Shareholder may give written notice to the Breaching Shareholder
(with a simultaneous copy to Britannia) of activation of buy-out rights under
Section 7.6(a) below with respect to the Shares owned by such Breaching
Shareholder (such notice being a "Breach Buy- Out Notice").
22
(b) A Breaching Shareholder may cure any breach giving rise to
a Breach Buy-Out Notice (i) by ceasing any action prohibited by the terms of
this Agreement or by taking any action required to be taken hereunder, (ii) in
the case of a Payment Default, by making all payments required pursuant to
Section 6.2 and (iii) by reimbursing the Nonbreaching Shareholder and Britannia
for any and all reason able, out-of-pocket expenses and costs (including all
reasonable legal costs) incurred by the Nonbreaching Shareholder and Britannia
as a result of the breach of any Material obligation hereunder.
7.4 Bankruptcy. (a) If any Shareholder or the Parent shall:
(i) have commenced a receivership, bankruptcy or
insolvency proceeding, or commenced or convened a meeting to consider
dissolution, liquidation, administration or (if applicable) made a
proposal for a voluntary arrangement or proposed or entered into any
other arrangement or composi tion with and to the benefit of its
creditors generally or commenced, made or proposed any proceeding
analogous to the foregoing;
(ii) had commenced against it such a proceeding, and
such proceeding has resulted in the entry of an order against such
Shareholder which shall not have been vacated, discharged, stayed or
bonded pending appeal within thirty (30) days from the entry thereof;
or
(iii) be bankrupt or insolvent, or generally unable
to pay its debts as they become due;
(any such Shareholder, or if the Parent, the Parent and IM collectively, being
referred to as a "Bankrupt Shareholder"), then the other Shareholder (the
"Nonbankrupt Shareholder") may immediately give written notice to such Bankrupt
Shareholder (with a simultaneous copy to Britannia), of activation of buy-out
rights under Section 7.6(a) with respect to the Shares of such Bankrupt
Shareholder (such notice being a "Bankruptcy Buy-Out Notice").
(b) A Bankrupt Shareholder may cure any situation giving rise
to a Bankruptcy Buy-Out Notice (i) by definitively terminating any proceeding
referred to in Section 7.4(a)(i), or obtaining the vacation, discharge, stay or
bonding pending appeal of the order for relief referred to in Section 7.4(a)(ii)
and (ii) reimbursing the Nonbankrupt Shareholder and Britannia for any and all
reasonable, out-of-pocket expenses and costs (including all reasonable legal
costs) incurred by the Nonbankrupt Shareholder and Britannia as a result of the
situation giving rise to the Bankruptcy Buy-out Notice.
23
7.5 Change of Control. (a) If a Change of Control occurs with
respect to any Shareholder or the Parent (such Shareholder or, if the Parent,
the Parent and IM collectively, being a "Change of Control Shareholder") then
the other Shareholder (the "Non-Change of Control Shareholder") may immediately
give written notice to the Change of Control Shareholder with a simultaneous
copy to Britannia) of activation of buy-out rights under Section 7.6(a) with
respect to the Shares of such Change of Control Shareholder (such notice being a
"Change of Control Buy-Out Notice").
(b) A Change of Control Shareholder may cure the situation
giving rise to the Change of Control Buy-Out Notice by (i) obtaining the
rescission of any agreement or contract giving rise to a Change of Control and
(ii) reimbursing the Non-Change of Control Shareholder and Britannia for any and
all reasonable, out-of-pocket expenses and costs (including all reasonable legal
costs) incurred by the Non-Change of Control Shareholder and Britannia incurred
as a as a result of the situation giving rise to the Change of Control Buy-Out
Notice.
7.6 Share Acquisition in the Event of Breach, Bankruptcy or
Change of Control. (a) Upon delivery of a Buy-Out Notice, the Nonwithdrawing
Share holder shall have an irrevocable (except to the extent set forth in
paragraph (b) below) and exclusive option, but not the obligation, to purchase
all (but not less than all) of the Shares owned by the Withdrawing Shareholder;
provided, however, that the Withdrawing Shareholder may at any time within
fourteen (14) days of delivery of a Buy-Out Notice invoke the conciliation and
arbitration provisions of Article IX hereof. If (i) the Withdrawing Shareholder
fails both to cure the situation giving rise to the Buy-Out Notice and to invoke
such conciliation and arbitration provisions within fourteen (14) days of
delivery of a Buy-Out Notice or (ii) the Conciliation Committee or the arbitral
tribunal acting pursuant to Article IX hereof concludes that the Buy-Out Notice
was appropriately delivered to the Withdrawing Shareholder, the Nonwithdrawing
Shareholder may, at its option, at the expiration of such fourteen (14) day
period or upon notification of the final decision of the Conciliation Com mittee
or the arbitral tribunal (X) waive its rights hereunder and elect to leave the
Shareholders' relative shareholdings in Britannia unaffected by the event or
situation giving rise to the Buy-Out Notice, (Y) activate its option to purchase
the Withdraw ing Shareholder's Shares by delivery of notice to the Withdrawing
Shareholder and Britannia (the "Option Exercise Notice") or (Z) declare a
Deadlock and trigger the withdrawal and sale provisions of Section 7.8(b)
hereof; provided, however, that in the event the delivery of the Option Exercise
Notice or the declaration of a Deadlock pursuant to the foregoing sub-clauses
(Y) or (Z) is the result of a Breach, all deci sions of the Britannia Board
shall be taken solely by the directors appointed by the Nonwithdrawing
Shareholder and the presence of the directors appointed by the Withdrawing
Shareholder shall not be required for any quorum pursuant to Section 5.7. The
price of the shares to be purchased pursuant to such option shall be agreed
among the Shareholders through discussions between the
24
Shareholders' respective chief executive officers, or, if such agreement cannot
be reached within thirty (30) days of the delivery of the Option Exercise
Notice, pursuant to a valuation of such Shares by an independent merchant bank
(or other third party) (the "Buy-Out Appraiser"). The Buy-Out Appraiser shall be
designated jointly by the Shareholders or, in the event the Shareholders cannot
agree on such Buy-Out Appraiser within twenty (20) days (the "Initial
Designation Period") of the conclusion of the twenty (20) day negotiation period
described above, by an independent merchant bank (or other third party)
designated by two independent merchant banks (one of which shall be designated
by one of the Shareholders and the other of which shall be designated by the
other Shareholder) within twenty (20) days of the conclusion of the Initial
Designation Period. Within thirty (30) days of being selected, the Buy-Out Ap
praiser shall determine the price (the "Buy-Out Price") to be paid to the
Withdrawing Shareholder for its Shares on the basis of such Shareholder's
proportionate interest in the going concern value of Britannia (i.e., at the
price at which a willing buyer and a willing seller, neither being under any
compulsion to buy or sell and both having reasonable knowledge of relevant
facts, would agree to buy and sell the Shares of Britannia for cash, free and
clear of all liens, claims and encumbrances), and shall notify the Shareholders
of such determination and the bases on which such determi nation was made. At
its own cost and expense, either Shareholder may, for a period of seven (7) days
following such determination, indicate errors in the calculation of the Buy-Out
Price to the Buy-Out Appraiser, who shall make any necessary adjust ments to the
Buy-Out Price within seven (7) days of receiving notification of such errors;
provided, however, that the Buy-Out Price as ultimately determined by the
Buy-Out Appraiser in its discretion shall be final and binding on the Parties;
and provided, further, that the Buy-Out Price shall be decreased by all
reasonable, out-of-pocket expenses and costs (including all reasonable legal
costs) incurred by the Nonwithdrawing Shareholder as a result of the situation
giving rise to the activation of buy-out rights, the costs of the valuation to
be performed pursuant to this Section 7.6(a) and, in the event the Withdrawing
Shareholder is a Breaching Shareholder, by an amount equal to 5% of the price
determined by the appraiser.
(b) Notwithstanding the irrevocability of the option of the
Nonwithdrawing Shareholder set forth in Section 7.6(a), the Nonwithdrawing
Shareholder shall have the right, exercisable by giving written notice to the
Withdrawing Shareholder within ten (10) Business Days after receipt of the
appraised price from the merchant bank or other third party designated pursuant
to Section 7.6(a) (the "Rejection Notice"), to elect not to proceed with the
purchase of the Withdrawing Shareholder's Shares. In such an event, the
Nonwithdrawing Shareholder shall have the right (i) to leave the Shareholders'
relative shareholdings unaffected by the event giving rise to the activation of
buy-out rights hereunder or (ii) to declare a Deadlock and trigger the
withdrawal and sale provisions of Section 7.8(b). Unless the Rejection Notice
contains the Nonwithdrawing Shareholder's
25
election to declare a Deadlock, it shall be deemed to have elected to leave the
Shareholders' relative shareholdings unaffected.
(c) Notwithstanding any other provision in this Agreement to
the contrary, the exercise by the Nonwithdrawing Shareholder of the option
specified in Section 7.6(a) to purchase the Shares owned by the Withdrawing
Shareholder shall be deemed to have been canceled if at any time prior to the
determination of the price to be paid for the Withdrawing Shareholder's Shares
pursuant to Section 7.6(a) above, the Withdrawing Shareholder (i) remedies the
breach or violation giving rise to the Breach Buy-Out Notice (including, in the
case of a Payment Default, by curing the Payment Default pursuant to Section
6.2), (ii) cures the situation giving rise to the Bankruptcy Buy-Out Notice
(including without limitation by definitively terminating any proceeding
referred to in Section 7.4(a)(i), or obtaining the vacation, discharge, stay or
bonding pending appeal of the order for relief referred to in Section
7.4(a)(ii)), or (iii) reverses the situation giving rise to the Change of
Control (including without limitation obtaining the rescission of any agreement
giving rise to such Change of Control), as the case may be, and (X) pays all
costs associated with the valuation conducted pursuant to Section 7.6(a) above
and (Y) reimburses the Nonwithdrawing Shareholder and Britannia for any and all
reasonable, out-of-pocket expenses and costs (including all reasonable legal
costs) incurred by such party as a result of the situation giving rise to the
activation of buy-out rights under Section 7.6(a).
7.7 Transfer Mechanics. (a) In the event of any sale or
purchase of Shares pursuant to this Article VII, each Shareholder shall use its
best efforts to do all things reasonably necessary to consummate any such
purchase as promptly as practicable, including without limitation amending this
Agreement, the Articles and any other agreement between the Shareholders, and
entering into agreements and instruments with third parties and obtaining any
necessary shareholder and governmental approvals. Each party to any purchase of
Shares pursuant to this Section 7.7 shall bear its own expenses incurred in
connection with the consummation of such purchase of Shares.
(b) The completion of any purchase of Shares pursuant to this
Article VII shall take place as promptly as practicable after the execution of
all necessary agreements and instruments, the receipt of any necessary consents
and the comple tion of all matters necessary to consummate such purchase in
accordance with Section 7.7(a) above. At such completion:
(i) the Withdrawing Shareholder, or in the event of a
sale pursuant to Section 7.8(b) each Shareholder, shall transfer the
Shares so purchased to the Purchaser with full title guarantee, free
and clear of all liens, security interests or adverse claims of any
kind or nature, and shall
26
deliver to such purchaser any certificates representing the Shares
purchased, duly endorsed for transfer;
(ii) the Withdrawing Shareholder, or in the event of a sale
pursuant to Section 7.8(b) each Shareholder, shall cause the following
persons to resign:
(A) each member of the Britannia Board nominated by
it; and
(B) any officer nominated by it or by any member of
the Britannia Board nominated by it;
(iii) the purchaser(s) shall deliver to the Withdrawing Share
holder, or in the event of a sale pursuant to Section 7.8(b) to the
accounts specified by each Shareholder, in full payment of the purchase
price of the Shares purchased, the amount determined in accordance with
Section 7.6(a) or 7.8(b);
(iv) the Shareholders shall amend this Agreement, the Arti
cles and any other agreement between the Shareholders as the
Nonwithdrawing Shareholder may direct, in each case in such a manner so
as to preserve the Nonwithdrawing Shareholder's relative rights and
obligations under such documents;
(v) subject to stamping, Britannia shall enter the transfer of
Shares in the Shareholders' Register;
(vi) neither Shareholder shall make any representations or
warranties to the other Shareholder in connection with any purchase of
Shares pursuant to this Article VII other than those specifically
identified in Section 7.7(b)(i);
(vii) any purchase pursuant to this Article VII shall relieve
the Withdrawing Shareholder of its liabilities and obligations under
this Agreement (other than any obligations under any obligations
pursuant to Article XI hereof); and
(viii) by signing this Agreement, the Withdrawing Shareholder
shall be deemed to have given a power-of-attorney to the Chair man of
the Board to take, in its name and on its behalf, all actions
contemplated by this Section 7.7(b); provided, however, that such
power-of-attorney shall be valid if, and only if, the Withdrawing
Shareholder shall have refused to take, or shall have unreasonably
delayed the taking of, any action
27
authorized by this Section 7.7(b); and provided, further, that such
power of attor ney shall not authorize any act prohibited by the laws
of England and Wales, the Listing Rules of the Stock Exchange or the
City Code on Takeovers and Mergers.
(c) The Shareholders acknowledge and agree that they shall use
all reasonable endeavors to obtain any shareholder approval required by Law in
connec tion with any sale or purchase of Shares pursuant to this Article VII.
Subject to Section 7.9(a) below, the Shareholders further acknowledge and agree
that neither Shareholder shall be obligated to complete any sale or purchase
pursuant to this Article VII until it shall have obtained any required
shareholder approval. For purposes of this Article VII (including, for the
avoidance of doubt, all previous and subsequent Sections of this Article VII)
and subject to the foregoing provisions of this Section 7.7(c), neither
Shareholder shall be deemed to be in breach of any obligations to act within set
time limits if such act requires shareholder approval, until such time as any
required shareholder approval has been obtained, in which event such time limits
shall be deemed to run from the date on which such consent is obtained.
7.8 Deadlock. In the event of the occurrence of a Deadlock,
the Shareholders hereby agree as follows:
(a) Withdrawal by one Shareholder. In the event that, upon the
occurrence of a Deadlock, one Shareholder (the Withdrawing Shareholder) desires
to terminate its participation in Britannia and the other Shareholder (the
Nonwithdrawing Shareholder) does not, the procedures set forth in Sections 7.6
and 7.7 above shall govern the transfer of such Withdrawing Shareholder's Shares
to such Nonwithdrawing Shareholder; provided, that such Nonwithdrawing
Shareholder shall initiate such procedures by providing a Buy-Out Notice within
thirty (30) days of the occurrence of a Deadlock and such Buy-Out Notice shall
constitute an Option Exercise Notice; and provided, further, that the price paid
by the Nonwithdrawing Shareholder for the Shares of the Withdrawing Shareholder
shall not be reduced by the amount of any damages suffered or costs incurred by
the Nonwithdrawing Shareholder or by any discount factor provided for elsewhere
herein.
(b) Withdrawal by both Shareholders. In the event a
Nonwithdrawing Shareholder invokes this Section 7.8(b) pursuant to the
provisions of Sections 7.3 - 7.6 hereof or 7.6(b) hereof or in the event that,
upon the occurrence of a Deadlock, both Shareholders desire to terminate their
participation in the Strategic Alliance established by this Agreement and to
sell their entire shareholdings in, or substantially all the assets of,
Britannia to a third party, the Shareholders shall attempt, through discussions
between their respective chief executive officers, to agree upon the price at
which such shareholdings or such assets
28
are to be sold. If such agreement cannot be reached within twenty (20) days of
the occurrence of a Deadlock or the invocation of this Section 7.8(b) pursuant
of Sections 7.3 - 7.6 hereof, an independent merchant bank (or other third
party) shall be designated to organize the sale of Britannia's entire business
(whether through a sale of one hundred percent (100%) of the Shares in Britannia
or otherwise) through a competitive open-market auction or otherwise as such
independent merchant bank (or other third party) shall deem appropriate to
maximize the value to be obtained. The independent merchant bank (or other third
party) shall be designated as provided in Section 7.6(a); provided, however,
that such merchant bank shall be designated within sixty (60) days of the
occurrence of such Deadlock and in no event shall such auction or other
disposition process be consummated in less than one hundred and twenty (120)
days from the date such Deadlock occurs, unless the Shareholders unanimously
agree in writing otherwise; and provided, further, that the share transfer
formalities set forth in Sections 7.7(a) and (b) above shall in any event be
respected.
(c) Withdrawal by Neither Shareholder. In the event that, upon
the occurrence of a Deadlock, neither Shareholder desires to sell or transfer
its interest in Britannia, an independent merchant bank or other independent
third party (the "Bid Appraiser") to be designated jointly by the Shareholders
or, if the Shareholders cannot agree on the designation of a Bid Appraiser
within twenty (20) days from the occurrence of such Deadlock, by an independent
merchant bank (or other third party) designated by two independent merchant
banks to be designated as provided in Section 7.6(a), shall conduct a
competitive bidding process between the Shareholders. Britannia's managing
director shall provide the Shareholders with such information concerning
Britannia and its subsidiaries (and their operations, results, financial
condition or prospects) as the Shareholders may reasonably require in connection
with such bidding process. Each of IM and Mentmore shall provide an all cash
sealed bid for one hundred percent (100%) of the equity in Britannia (the
"Equity Valuation") to such Bid Appraiser and the Shareholder providing the
highest such sealed bid the ("Purchasing Shareholder") shall be required to
purchase the Shares of the other Shareholder at a price per Share proportionate
to the Equity Valuation provided by the Purchasing Shareholder; provided,
however, that (i) the Bid Appraiser to be designated pursuant to this clause (c)
shall be designated within no more than sixty (60) days of the occurrence of a
Deadlock, (ii) sealed bids containing the Shareholders' respective Equity
Valuations shall be provided to the Bid Appraiser within thirty (30) days of the
designation of such Bid Appraiser, (iii) such Bid Appraiser shall notify the
Shareholders in writing of the highest Equity Valuation (the "Auction Notice")
received by such Bid Appraiser and the corre sponding selection of a Purchasing
Shareholder within ten (10) days of the receipt by such Bid Appraiser of the
Shareholders' respective Equity Valuations and (iv) following delivery of the
Auction Notice to the Purchasing Shareholder, the share transfer procedures set
forth in Sections 7.7(a) and (b) above shall be respected.
29
7.9 Other Transfers. (a) In the event any Shareholder (the
"Trans ferring Shareholder") desires to transfer all (but not less than all) of
its Shares to any third party in any circumstance not covered by the provisions
of Sections 7.1 - 7.8 above, such Shareholder must first offer in writing (the
"Initial Offer") such Shares to the other Shareholder (the "Non-Transferring
Shareholder") at a price to be determined by the Transferring Shareholder. Such
Initial Offer must specify all material terms and conditions (including, without
limitation, all representations and warranties to be made and any
indemnification to be provided) on which the Trans ferring Shareholder proposes
to transfer its Shares and must remain open for a period of ninety (90) days
(the "Initial Offer Period") from the date on which such Initial Offer is
received by the Non-Transferring Shareholder. In the event (i) such Initial
Offer has not been accepted (such acceptance to be unconditional save for any
requirement that shareholder approval be obtained in relation to the Initial
Offer) by the Non-Transferring Shareholder at the conclusion of the Initial
Offer Period or (ii) such Initial Offer has been so accepted but the transfer of
Shares to the Non-Trans ferring Shareholder is not completed within forty-five
(45) days of the date of such acceptance (such period to be extended for as long
as any act or decision of any governmental authority or body prevents the
completion of such transfer, and for the avoidance of doubt, to be subject to
Section 7.7(c)), the Transferring Shareholder may offer such Shares (the
"Subsequent Offer") to a third party for a period of one hundred and eighty
(180) days after the expiration of the Initial Offer Period (the "Third Party
Offer Period"), the Transferring Shareholder may not accept any offer at a price
below the price at which, or on terms and conditions more favorable to the
Transferring Shareholder than those on which, such Transferring Shareholder's
Shares were offered to the Non-Transferring Shareholder pursuant to the Initial
Offer.
(b) In the event (i) the Subsequent Offer has not been
accepted (such acceptance to be unconditional save for any requirement that
shareholder approval be obtained in relation to the Subsequent Offer) at the
conclusion of the Third Party Offer Period or (ii) such Subsequent Offer has
been so accepted but the transfer of Shares to the Non-Transferring Shareholder
is not completed within forty-five (45) days of the date of such acceptance
(such period to be extended for as long as any act or decision of any
governmental authority or body prevents the completion of such transfer and, for
the avoidance of doubt, to be subject to Section 7.7(c) above) the Subsequent
Offer shall lapse and the Transferring Shareholder may only transfer its Shares
by recommencing and respecting the procedure set forth in Section 7.9(a) above.
7.10 Other Transfer Conditions. (a) No transfer of Shares to
any third party (including a transfer permitted by the second sentence of
Section 7.10(b)) shall be permitted or registered in Britannia's shareholder
register unless and until any such third party has delivered to Britannia a Deed
of Adherence in the form attached as Exhibit I hereto.
30
(b) Except for a sale pursuant to and in accordance with the
provi sions of Section 7.1 - 7.9 or this Section 7.10(b), or a pledge pursuant
to and in accordance with Section 4.5, no Shareholder shall sell, assign,
exchange, encumber, distribute, transfer, pledge, or otherwise dispose of, by
gift or otherwise, any Shares or any rights associated therewith (including,
without limitation, any rights to receive dividends or other distributions owned
by such Shareholder at the date hereof or at any time hereafter).
Notwithstanding the foregoing sentence, either Shareholder may transfer all but
not less than all of its Shares to a Wholly Owned Subsidiary of the Parent or
Mentmore, as the case may be, subject to such Wholly Owned Subsidiary entering
into a Deed of Adherence in the form attached as Exhibit I hereto; provided that
in the event any such transferee ceases to be a Wholly Owned Subsidiary of the
Parent or Mentmore, as the case may be, such transferee shall transfer the
relevant Shares to the Parent or Mentmore or another Wholly Owned Subsidiary of
the Parent or Mentmore.
ARTICLE VIII
REPRESENTATIONS AND WARRANTIES
8.1 Representations and Warranties of Each Party. Each Party
makes the following representations and warranties as of the date of this
Agreement to the other Parties, recognizing that each of the other Parties is
relying and will continue to rely thereon:
(a) The Agreement is a legal, valid and binding instrument of
each Party, enforceable in accordance with its terms, subject to applicable
bankruptcy, insolvency and similar laws affecting creditors' rights generally,
and subject, as to enforceability, to any applicable limitations on the granting
of specific performance (or any similar remedy) in the jurisdiction in which
enforcement is sought.
(b) The execution and delivery of this Agreement by each
Party, and the consummation of the transactions contemplated hereby, (i) do not
require the consent, approval, authorization, notification, registration or
qualification of or with any governmental authority, and (ii) do not result in a
breach or violation of any of the terms and provisions of, or constitute a
default under, (A) any Material indenture, mortgage, deed of trust, lease or any
other agreement or instrument of whatsoever nature to which such Party is a
party or by which it or any of its property or assets is bound, or (B) such
Party's memorandum or articles of association, charter, certificate of
incorporation, by-laws (or similar document) or any of its constitutive
documents.
8.2 Survival. All representations and warranties contained in
this Agreement or in any certificate or instrument delivered pursuant hereto
shall survive
31
the execution of this Agreement and shall not be affected in any respect by any
investigation conducted by any Party or any information which any Party may
receive.
ARTICLE IX
GOVERNING LAW; DISPUTE RESOLUTION
9.1 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of England and Wales without giving effect
to the principles of conflicts of laws thereof.
9.2 Conciliation. (a) Subject to the provisions of Section
7.6(a) hereof, any dispute arising out of or relating to this Agreement,
including, without limitation, the interpretation of any provision of this
Agreement or the breach, termination or invalidity of this Agreement (a
"Dispute") shall be submitted for resolution to a committee (the "Conciliation
Committee") pursuant to this Section 9.2; provided, however, that in the event
any situation giving rise to a Buy-Out Notice is submitted to the Conciliation
Committee prior to the exercise of buy-out or withdrawal and sale rights
pursuant to Section 7.6(a), the Conciliation Committee shall only determine
whether or not the situation giving rise to the Buy-Out Notice in fact exists
and has not been cured. If the Conciliation Committee determines that the
Nonwithdrawing Shareholder had no grounds for the delivery of a Buy-Out Notice,
such Nonwithdrawing Shareholder shall be obligated to reimburse the Withdrawing
Shareholder for all out-of-pocket costs and expenses, including reasonable legal
expenses, incurred by the Withdrawing Shareholder as a result of the delivery of
the Buy-Out Notice. The Conciliation Committee shall be composed of the chief
executive or other nominee of each Shareholder (or a delegate thereof) who shall
have full power and authority to resolve any Dispute. The Conciliation Committee
shall meet as necessary in order to resolve the Dispute. The Conciliation
Committee shall attempt to resolve such Dispute by mutual agreement within ten
(10) Business Days of referral of such Dispute to it; provided, however, that
the Parties may agree to lengthen such period. Decisions of the Conciliation
Committee shall be final and binding on the Parties.
(b) No Shareholder may submit any Dispute to arbitration
unless and until the procedure specified in Section 9.2(a) has been followed.
9.3 Arbitration. (a) Any dispute the Conciliation Committee is
unable to resolve within the period specified in Section 9.2(a) shall be finally
settled by arbitration by three arbitrators appointed in accordance with the
Rules of Arbitra tion of the International Chamber of Commerce ("ICC") then in
effect, except as modified herein. The arbitration shall be held in London,
England. The arbitration proceedings shall be conducted, and the award shall be
rendered, in English.
32
(b) The Parties expressly waive any rights they may have to
litigate or resolve any Dispute otherwise than in accordance with this Article
IX and the Parties hereby waive any rights of application or appeal to the
courts of England to the fullest extent permitted by law in connection with any
question of law arising in the course of the arbitration or with respect to any
award made, except for actions to enforce an arbitral award and actions seeking
interim, interlocutory or other provi sional relief in any court of competent
jurisdiction.
(c) The award shall be final and binding upon the Parties as
from the date rendered, and shall be the sole and exclusive remedy between the
Parties regarding any claims (including, without limitation, any claim for
specific perfor ▇▇▇▇▇ of any obligation hereunder), counterclaims, issues, or
accounting presented to the arbitral tribunal and judgment upon any award may be
entered in any court having jurisdiction; provided, however, that in the event
any situation giving rise to a Buy-Out Notice is referred to arbitration prior
to the exercise of buy-out or withdrawal and sale rights pursuant to Section
7.6(a), the arbitrators shall only determine whether the situation giving rise
to the Buy-Out Notice in fact exists and has not been cured; and provided,
further, that if the arbitral tribunal determines that the Nonwithdrawing
Shareholder had no grounds for the delivery of a Buy-Out Notice, such
Nonwithdrawing Shareholder shall be obligated to reimburse the Withdrawing
Shareholder for all out-of-pocket costs and expenses, including reasonable legal
expenses, incurred by the Withdrawing Shareholder as a result of the delivery of
the Buy-Out Notice.
(d) Subject to 9.2(a) and (b) above, each of the Parties shall
bear its own costs and expenses and an equal share of the arbitrators' and
administrative fees of the arbitration.
(e) Any monetary award shall be made and promptly payable in
Pounds sterling free of any tax, deduction or offset, and the arbitral tribunal
shall be authorized in its discretion to grant pre-award and post-award interest
at commercial rates. Any costs, fees, or taxes incident to enforcing the award
shall, to the maximum extent permitted by law, be charged against the Party
resisting such enforcement.
(f) This Agreement and the rights and obligations of the
Parties shall remain in full force and effect pending the award in any
arbitration proceeding here under.
(g) All notices by one Party to the other in connection with
the arbitration shall be in accordance with the provisions of Section 13.4
hereof.
(h) The arbitration language shall be English. It is further
expressly stated that the arbitrators appointed as provided above shall have
sole and final
33
jurisdiction for all disputes which may arise in connection with this Agreement
and its Exhibits.
9.4 Survival. All provisions of this Article IX shall survive
the termination of this Agreement pursuant to Article X.
ARTICLE X
TERMINATION
10.1 Termination Upon Unanimous Agreement. This Governing
Agreement may be terminated at any time by the unanimous written consent of the
Shareholders.
10.2 Termination Upon Failure of Certain Conditions. If the
Shareholders fail to consummate all the transactions identified in the
Transaction Agreement within six months of the date hereof, this Agreement shall
be terminated with no liability to either Shareholder.
10.3 Consequences of Termination. Subject to Section 10.2, if
this Agreement is terminated, the Shareholders shall either sell Britannia's
entire business to a third party in accordance with Section 7.8(b) or submit
sealed bids for the purchase of one hundred percent (100%) of the equity in
Britannia in accordance with Section 7.8(c).
ARTICLE XI
CONFIDENTIALITY
11.1 Confidentiality Obligation. In the event Confidential
Information as defined in Section 11.2 hereof is disclosed to either Shareholder
or the Parent, such Shareholder or Parent agrees not to disclose such
Confidential Information to any other Person without the prior written consent
of the owner of such Confidential Information; provided, however, that each such
Shareholder or the Parent may, subject to Section 11.3 and if necessary in order
to further its business objectives, disclose such Confidential Information to
(i) any of its officers, directors, employees, legal or accounting
representatives who has a need to know such Confidential Information and (ii)
its investors and investment bankers and such investors' or investment bankers'
respective representatives, it being understood that the Party disclosing
Confidential Information to any such person shall be liable for any further
disclosure of such Confidential Information by such person in a manner
inconsistent with the provisions of this Article XI. The restrictions set forth
in this
34
Section 11.1 shall remain in effect until ten (10) years after the date of any
termination of this Agreement pursuant to Article X.
11.2 Definition of Confidential Information. For purposes of
this Agreement, "Confidential Information" shall mean any financial, commercial,
technical or other nonpublic information of any Party or any Affiliate thereof,
which is disclosed (whether prior to or after the date hereof) to any Party or
any Affiliate thereof in connection with the Records Management Business or in
connection with the activities of Britannia or any of its Subsidiaries,
including without limitation any engineering or other drawings, data bases,
computer software, designs, specifications, technical information, know-how,
documentation, price books, client lists and service material, of all kinds and
in whatsoever form; provided, however, that "Confidential Information" shall not
include any information so disclosed if:
(i) the recipient of such information shall have
had knowledge of such information prior to the date on which such
recipient received it from a Party or an Affiliate of a Party;
(ii) such information shall have entered the public
domain through no fault of such recipient; or
(iii) such recipient shall have learned of such
information from a third party in such a manner that such recipient
reasonably believed that such third party was authorized to disclose
such information.
11.3 Disclosure Required by Law or Court Order. In the event
that any recipient of Confidential Information is required by order of any
competent authority or by application of any Law (including, without limitation,
any requirement of any U.S. stock exchange or quotation system, Listing Rules of
the Stock Exchange or the City Code on Takeovers and Mergers) to disclose any
Confidential Information supplied to it by any other Person, the recipient
required to make such disclosure shall, in a manner consistent with such Law,
promptly notify the other Person or Persons involved so that such Person or
Persons may seek an appropriate protective order and/or waive the required
recipient's compliance with Section 11.1. In the event that such protective
order or other remedy is not obtained, then the recipient or recipients so
required to disclose Confidential Information shall furnish only that portion of
such Confidential Information that is legally required to be disclosed.
11.4 Use of Confidential Information. During the term of this
Agreement, any Confidential Information disclosed to a Person permitted to
receive such information pursuant to Section 11.1 may be used by such recipient
only in connection with the Records Management Business. Nothing in this
Agreement
35
shall be construed to grant any additional rights in or licenses to such
Confidential Information.
ARTICLE XII
ADDITIONAL REPRESENTATION AND OBLIGATIONS
12.1 Representation of the Parent. The Parent hereby
represents that as of the date hereof, IM has sufficient funds available to
satisfy its equity investment obligations pursuant to Section 4.2 hereof.
12.2 Covenant of the Parent. The Parent hereby undertakes to
procure that IM or any other Wholly Owned Subsidiary of the Parent that succeeds
in title to the Shares held by IM shall satisfy all of its obligations hereunder
(other than its obligations under Section 4.2) and comply with all restrictions
and limitations applicable to it hereunder.
12.3 Indemnification. IM will indemnify and keep indemnified
Mentmore for 50.1% of all losses, damages, costs and expenses (including all
reasonable legal expenses) arising out of or in respect of the guaranty dated
July 22, 1997 granted by Mentmore to the Department of Social Security.
12.4 Shareholder Covenant. The Shareholders agree to comply
with their respective obligations (if any) under the terms of the share option
and sharesave plans referred to in Exhibit J hereto and agree to cooperate in a
fair and reasonable manner in relation to the administration of such plans.
ARTICLE XIII
MISCELLANEOUS
13.1 Fees and Expenses. Except as specifically provided to the
contrary in this Agreement, all costs and expenses incurred in connection with
this Agreement and the consummation of the Transactions shall be paid by the
Party incurring such expenses.
13.2 Amendment and Modification. This Agreement may be
amended, modified and supplemented in any and all respects, but only by a
written instrument signed by all of the Parties hereto expressly stating that
such instrument is intended to amend, modify or supplement this Agreement.
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13.3 Survival of Representations and Warranties. Each of the
representations and warranties in this Agreement or in any Exhibit, schedule,
instrument or other document delivered pursuant to this Agreement shall survive
the closing of the transactions contemplated in the Transaction Agreement and
shall continue in force thereafter except as limited by Section 9.1(c) of such
Transaction Agreement.
13.4 Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally,
telecopied (which is confirmed) or sent by an overnight courier service, such as
Federal Express, to the Parties at the following addresses (or at such other
address for a Party as shall be specified by like notice):
if to IM or the Parent, to:
Iron Mountain Incorporated
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Vice President
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Iron Mountain Incorporated
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
if to Mentmore, to:
Mentmore Abbey plc
▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Telephone: ▇▇-▇▇▇-▇▇▇-▇▇▇▇
Telecopy: ▇▇-▇▇▇-▇▇▇-▇▇▇▇
37
with a copy to:
Eversheds
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Telephone: ▇▇-▇▇▇-▇▇▇-▇▇▇▇
Telecopy: ▇▇-▇▇▇-▇▇▇-▇▇▇▇
if to Britannia, to:
Britannia Data Management Limited
▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention:
Telephone:
Telecopy:
with a copy to:
13.5 Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be considered one and the same agreement
and shall become effective when two or more counterparts have been signed by
each of the Parties and delivered to the other Parties.
13.6 Entire Agreement; No Third Party Beneficiaries. This
Agreement (including the documents and the instruments referred to herein): (a)
constitutes the entire agreement and supersede all prior agreements and
understandings, both written and oral, among the Parties with respect to the
subject matter hereof and thereof, and (b) is not intended to confer upon any
Person other than the Parties hereto and thereto any rights or remedies
hereunder.
13.7 Severability. Any term or provision of this Agreement
that is held by a court of competent jurisdiction or other authority to be
invalid, void or unenforceable in any situation in any jurisdiction shall not
affect the validity or enforceability of the remaining terms and provisions
hereof or the validity or enforceability of the offending term or provision in
any other situation or in any other jurisdiction. If the final judgment of a
court of competent jurisdiction or other authority declares that any term or
38
provision hereof is invalid, void or unenforceable, the Parties agree that the
court making such determination shall have the power to reduce the scope,
duration, area or applicability of the term or provision, to delete specific
words or phrases, or to replace any invalid, void or unenforceable term or
provision with a term or provision that is valid and enforceable and that comes
closest to expressing the intention of the invalid or unenforceable term or
provision.
13.8 Time of Essence. Subject to Section 7.7(c) hereof, each
of the Parties hereto hereby agrees that, with regard to all dates and time
periods set forth or referred to in this Agreement, time is of the essence.
13.9 Extension; Waiver. At any time prior to the closing of
the transactions contemplated in the Transaction Agreement, the Parties may (a)
extend the time for the performance of any of the obligations or other acts of
the other Parties, (b) waive any inaccuracies in the representations and
warranties of the other Parties contained in this Agreement or in any document
delivered pursuant to this Agreement or (c) waive compliance by the other
Parties with any of the agreements or conditions contained in this Agreement.
Any agreement on the part of a party to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of such
party. The failure of any party to this Agreement to assert any of its rights
under this Agreement or otherwise shall not constitute a waiver of those rights.
13.10 Assignment. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any of the
Parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other Party, except that each of the Shareholders may
assign, in its sole discretion, any or all of its rights, interests and
obligations hereunder to any Wholly Owned Subsidiary; provided any such Wholly
Owned Subsidiary must execute a Deed of Adherence in substantially the form of
Exhibit I hereto; and provided, further, that in the event any Wholly Owned
Subsidiary to whom such rights, interests or obligations have been assigned
ceases to be a Wholly Owned Subsidiary, the rights, interests or obligations
assigned to such Wholly Owned Subsidiary must be reassigned either to the
relevant Shareholder or another Wholly Owned Subsidiary of the relevant
Shareholder (such subsidiary being required to execute a Deed of Adherence in
substantially the form of Exhibit I hereto). Subject to the preceding sentence,
this Agreement shall be binding upon, inure to the benefit of and be enforceable
by the Parties and their respective permitted successors and assigns.
13.11 Headings. The headings contained in this Agreement are
for convenience of reference only and shall not affect in any way the meaning or
interpretation of this Agreement.
13.12 Section References. All references to Articles and
Sections herein are to the Articles and Sections of this Agreement unless
otherwise specified.
13.13 Relationship Between the Parties.
39
(a) No provision of this Agreement shall be construed as
creating a partnership, agency or fiduciary relationship between any of the
Parties.
(b) The relationship of the Shareholders to Britannia shall be
that of shareholders, except as might otherwise be provided in any other written
agreement between one or more of the Shareholders and Britannia. No Shareholder
shall act as an agent for or on behalf of Britannia, except as might
specifically be provided in any other written agreement between Britannia and
such Shareholder. Each Shareholder shall conduct its affairs with regard to
third parties so as to avoid the appearance or creation of any other or greater
relationship between such Shareholder and Britannia. No Shareholder shall take
any action on behalf of or binding on Britannia without the explicit approval
and authorization of Britannia.
(c) Any agreement entered into by a Party which violates any
provision of this Agreement, or is otherwise outside the scope of this
Agreement, shall not be binding on the other Party or on Britannia, and only the
Party entering into such agreement shall be subject to any liability which might
arise therefrom.
13.14 Voting. Each Shareholder shall take, and shall cause
each member of the Board nominated by it to take, all actions necessary to
implement the provisions of this Agreement, except such actions as are
indisputably illegal or invalid under applicable law.
13.15 News Releases. Each Shareholder agrees that no public
release or announcement concerning the execution of this Agreement shall be
issued by such Shareholder except in accordance with Section 6.6 of the
Transaction Agreement.
13.16 Precedence of Agreement. Where the context so requires,
the provisions of this Agreement shall have precedence over the provisions of
the Articles of Association as amended from time to time.
40
IN WITNESS WHEREOF, the Parties have executed this Agreement as a deed
on the first date written above.
Executed and delivered as a deed by
Mentmore Abbey plc:
Acting by:
_______________________________________
Chairman: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
_______________________________________
Director: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Executed and delivered as a deed by Iron
Mountain U.K. Ltd:
Acting by:
_______________________________________
Director: ▇▇▇▇▇▇▇ ▇▇▇▇▇
_______________________________________
Vice President: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
41
Executed and delivered as a deed by Iron
Mountain Incorporated:
Acting by:
_______________________________________
Director
_______________________________________
Director
Executed and delivered as a deed by
Britannia Data Management Limited:
Acting by:
_______________________________________
Director
_______________________________________
Director/Secretary
42