SHAREHOLDERS AGREEMENT
THIS SHAREHOLDERS AGREEMENT (the "Agreement") is dated as of December 11, 1996
among
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ Products Co., a Delaware corporation ("C&A Products"),
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ Europe, Inc., a Delaware corporation, ("C&A"),
Perstorp G.m.b.H, a German company, ("Pelican"),
Perstorp A.B., a Swedish company ("Pelican Corp"),
Perstorp Biotec A.B., a Swedish company (the "Company"),
Perstorp Components N.V., a Belgium company ("Components Belgium"), and
Perstorp Components A.B., a Swedish company ("Components Sweden").
WHEREAS:
(A) Pelican, Pelican Corp., C&A Products and the Company are parties to an
agreement, dated the date hereof (the "Formation Agreement"), providing for
the acquisition by the Company of all of the issued share capital of
Components Sweden and Components Belgium which will simultaneously acquire
certain assets constituting the components business of Pelican France and
establish a branch in France.
(B) Pursuant to the Formation Agreement, Pelican will own shares representing
49.9% of the share capital (including the voting rights) of the Company and
may in the future acquire further shares in the Company (the "Pelican
Shares").
(C) Pursuant to the Formation Agreement, C&A will own shares representing 49.9%
of the share capital (including the voting rights) of the Company and may in
the future acquire further shares in the Company (the "C&A Shares").
(D) The parties believe it would be in their and the Company's interest to
ensure a degree of continuity of management and ownership of the Company by
imposing certain restrictions and obligations on the ownership, retention
and disposition of the Shares and management of the Company and its
subsidiaries.
ACCORDINGLY, IT IS AGREED as follows:
1. INTERPRETATION
1.1 Capitalized terms used herein and not otherwise defined herein have the
meanings given such terms in the Formation Agreement, except that the term
"Companies" means the Company, Components Sweden and Components Belgium.
For the avoidance of any doubt, C&A Products will be deemed to be an
Affiliate of C&A and Pelican will be deemed to be an Affiliate of Pelican
Corp.
1.2 In this Agreement, unless the context otherwise requires:
a. references to "Persons" include individuals, bodies corporate
(wherever incorporated), unincorporated associations, joint ventures,
partnerships and other legal entities, including without limitation
Governmental Authorities;
b. the headings are inserted for convenience only and will not affect the
construction of this Agreement;
c. any reference to a Law or an enactment is a reference to it as from
time to time amended, consolidated or re-enacted (with or without
modification) and includes all instruments or orders made under such
Law or enactment;
d. except as to matters involving the internal corporate governance of
the Company which are specifically provided for in the Swedish
Companies Act (Aktiebolagslagen) (the "Swedish Companies Act"), which
will be governed by the Swedish Companies Act, references to any legal
term for any action, remedy, method of judicial proceeding, legal
document, legal status, court, official or any other legal concept
will, in respect of any jurisdiction other than England, be deemed to
include the legal concept which in that jurisdiction most nearly
corresponds to the English legal term;
e. references to a $ are to United States dollars;
f. references to Sections, Articles, Exhibits or Schedules are to
Sections, Articles, Exhibits or Schedules of this Agreement;
g. each term defined in this Agreement has the meaning assigned to it;
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h. "or" is disjunctive but not necessarily exclusive;
i. words in the singular include the plural and vice versa;
j. no provision of this Agreement will be interpreted in favor of, or
against, any of the parties hereto by reason of the extent to which
any such party or its counsel participated in the drafting thereof or
by reason of the extent to which any such provision is inconsistent
with any prior draft hereof;
k. any reference to any word, term of art or legal concept recognized
under English law will be deemed to include the word, term of art or
legal concept which most closely approximates the legal meaning or
effect of the same in the applicable jurisdiction;
l. the Schedules, Exhibits and documents in the agreed form are part of
the operative provisions of this Agreement and references to this
Agreement will, unless otherwise expressly stated, include references
to such Schedules, Exhibits and documents; and
m. the covenants set forth in Sections 3.4, 3.5, 6.2 and 6.3 will be
deemed to be covenants of each of the Companies, as to which no other
party will have any liability except to the extent any such other
party causes a Company to breach such a covenant.
2. CONDITIONS PRECEDENT, EFFECTIVE DATE
2.1 This Agreement will come automatically into full force and effect on the
date when the share transfers contemplated in Section 2.1 of the Formation
Agreement have been duly completed (the "Effective Date").
2.2 This Agreement will be null and void without further action if the
Formation Agreement is terminated.
3. BUSINESS OF THE COMPANY
3.1 Pelican and C&A will cause the Company to amend its Articles of
Association so that from the Effective Date they read in their entirety as
set forth in Exhibit 3.1. To the extent permissible under applicable Law,
the provisions of Sections 4.6, 7.1, 7.2 and 7.6 shall be included in the
Articles of Association of each of the Companies.
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3.2 The Companies' initial business plan is attached hereto as Schedule 3.2
(as amended from time to time in accordance with this Agreement, the
"Business Plan").
3.3 Except to the extent otherwise specified herein, neither C&A nor Pelican
will cause, or permit any of their respective subsidiaries to cause, any
of the Companies to enter into any business transaction between any of the
Companies, on the one side, and Pelican or C&A or their respective
Affiliates, on the other side, to be carried out other than on terms that
are comparable in all material respects to those which would otherwise be
available to the relevant Company from an independent third party dealing
on an arm's length basis.
3.4 Except to the extent otherwise specified herein, any debt financing
required by the Companies from time to time will be raised in such manner
as the Board of Directors of the Company ("Board") may from time to time
determine. None of Pelican, C&A or their respective Affiliates will be
obligated to furnish any security, guarantees or other assurance
(collectively, "Assurance") in order to secure financing for the
Companies.
3.5 The Companies will maintain insurance coverages in such amounts and
covering such risks as may be determined by the Board from time to time.
3.6 The parties agree to cooperate with one another to procure that the
following events occur as soon as reasonably practicable after the
Effective Date:
(a) the First Note will be paid in full using the Company's cash balances;
(b) Pelican will negotiate and finalize the detailed terms and conditions
(the "Terms") of legally binding loan agreements with one or more
banks in respect of loans in one or more currencies of approximately
US$ 50 million in aggregate (the "Bank Debt"). The Terms will be
substantially in line with the terms described in the term sheets set
out in Schedule 3.6 and be reasonably acceptable to C&A, such Terms to
be deemed reasonably acceptable if they comply with Schedule 3.6;
(c) upon finalization of the Terms in accordance with paragraph (b) above,
the Companies will execute all necessary documents and take all other
necessary steps (including the giving of security and the payment of
bank fees) to give effect to the Terms and will draw down the Bank
Debt in full;
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(d) upon the draw down of the Bank Debt, the Companies will immediately
apply the funds drawn down:
(i) to repay in full the intercompany obligations (the "Intercompany
Debt") described in (i) of the definition of Retained Liabilities
in the Formation Agreement (including interest accruing on the
Intercompany Debt up to the date of repayment); and
(ii) to repay to the fullest extent possible the EASPP Notes not
already repaid.
3.7 Pelican and C&A will procure that all resolutions needed to give effect to
clause 3.6 are duly passed and to this end (and without limitation) will
instruct their respective Board nominees to vote in favor of any necessary
Board resolutions. The provisions of clause 7.6 will not apply to any such
Board resolutions.
3.8 The parties agree that at the end of each fiscal quarter of the Companies
all Free Cashflow earned by the Companies will be applied towards reducing
the principal amounts outstanding in respect of Principal Debt. For this
purpose "Free Cashflow" means in relation to any fiscal period the EBITDA
of the Companies for such period as adjusted for changes in working
capital employed in the business of the Companies and after deducting
interest, taxes and capital expenditure and reserves deemed necessary by
the Board for the business or as otherwise approved by the Board and
anticipated capital and working capital requirements. "Principal Debt"
means prior to the drawdown of the Bank Debt, the Inter-Company Debt and
EASPP Notes and thereafter the Bank Debt.
4. BOARD OF DIRECTORS AND MANAGEMENT
4.1 The Board will consist of eight Directors, in addition (in the case of the
Company or Components Sweden) to any employee representatives required by
Swedish law. Employee representatives will not have any of the powers
which Directors have (including without limitation the power to vote)
except and only to the extent required by law. Pelican and C&A will each
be entitled to nominate four Directors and four deputy Directors. Subject
to the foregoing limitation on number, the parties will ensure that the
Directors and deputy Directors nominated by Pelican and C&A, including
without limitation pursuant to Section 4.4, are elected to the Board at
each election of Directors.
4.2 A deputy Director nominated by Pelican or C&A as herein provided may
exercise the powers of a Director nominated by the same party when, but
only when such
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Director is not in attendance at a meeting of the Board or is otherwise
not available to exercise his powers as a Director. Deputy Directors will
be entitled to be present and speak at all meetings of the Board, but not
to vote except as provided in the first sentence of this Section 4.2.
4.3 Pelican will have the right to designate one of the Directors nominated by
Pelican as the Chairman of the Board, and C&A will have the right to
designate one of the Directors nominated by C&A as the Deputy Chairman of
the Board. A Deputy Director may act as Chairman or Deputy Chairman, as
the case may be, when entitled to exercise the powers of the Director
holding such office in accordance with the first sentence of Section 4.2.
4.4 Pelican and C&A will each have the right, exercisable in such party's sole
discretion, to remove from office (a) any Director or deputy Director
designated by such party (but not by any other party) and to nominate a
person to replace any Director or deputy Director designated by such party
(but not by any other party) who has resigned, been removed or ceased to
hold office for any other reason and (b) the Chairman and Deputy Chairman
elected in accordance with Section 4.3 (regardless of which party
nominated such removed individual); in which event the party who had the
right to nominate the removed individual under Section 4.3 will have the
right to appoint a successor thereto.
4.5 Meetings of the Board will be convened by the Chairman of the Board at
least once each fiscal quarter of the Company, unless otherwise agreed by
Pelican and C&A. At the written request of either Pelican or C&A (a copy
of which shall be sent simultaneously to the other party), the Chairman or
Deputy Chairman will, upon at least five Business Days' prior notice to
each of Pelican and C&A, convene a meeting of the Board at any time within
five Business Days of such notice. Except as otherwise required by
applicable law, all meetings of the Board will be held as agreed by
Pelican and C&A, or, absent such agreement, at Components Belgium's
offices. Any Director or deputy Director may participate in any Board
meeting by conference telephone or similar means by which all participants
may communicate with each other and all meetings of the Board will be held
in locations in which such means of participation is available. The
Chairman of the Board or Deputy Chairman of the Board will produce and
circulate to each member of the Board at least three Business Days in
advance of any Board meeting an agenda for each Board meeting and such
additional supporting materials as such person may determine in good faith
to be reasonably appropriate in the circumstances. No
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action may be taken by the Board which is not identified in any such
agenda.
4.6 No meetings of the Board will be valid, and no action taken at a meeting
by the Board will be valid, unless at least seven Directors (including any
deputy Director properly replacing a Director for such meeting) are
present or otherwise participating; provided, however, that if, at any
meeting of the Board, there is not present or otherwise participating a
sufficient number of Directors to hold a valid meeting, either Pelican or
C&A may request (either directly or indirectly) the Chairman or Deputy
Chairman to adjourn the meeting and, upon not less than five Business
Days' prior written notice to all Directors and Deputy Directors,
reconvene such meeting in accordance with Section 4.5 and such reconvened
meeting will be valid, and all actions properly taken at such meeting will
be valid, even if less than seven Directors are present, provided that the
only matters which may be considered by the Directors at such reconvened
meeting are those of which notice was given for the prior meeting.
4.7 Notwithstanding any other provision of this Agreement, C&A will have the
right at all times to designate and remove the Managing Director of each
of the Companies after prior consultation with Pelican for any reason and,
in accordance with C&A's request, the Board shall appoint or remove any
Managing Director. Notwithstanding any other provision of this Agreement,
Pelican will, in its discretion, have the right at all times to remove the
Managing Director of any of the Companies for bad faith, malfeasance or
fraud and for such other reason as in Pelican's reasonable opinion
prejudices its interests as a shareholder of the Company.
4.8 The Board will direct the Managing Directors to submit to the Board (a)
monthly statements of operations not more than 15 calendar days after the
end of each month and such other periodic reports as may be required by
the Board, and (b) at least 30 calendar days prior to each fiscal year, a
proposed annual budget which includes projected revenues, expenses,
capital expenditures and cash flows for the ensuing year.
4.9 The Managing Director of each of the Companies (other than JV Holdings)
will be a full time employee and will, subject to the terms of this
Agreement and such limitations as may from time to time be imposed by the
Board,
(a) have the authority to manage the day-to-day business and affairs of
his or her company;
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(b) be responsible to and report to the Board;
(c) have the authority to implement determinations of the Board; and
(d) have such other authority as is provided by applicable law.
4.10 Whenever this Agreement requires an action to be taken by the Board of any
of the Companies, Pelican, C&A and each of the Companies will use all
reasonable efforts to cause such action to be taken.
4.11 The members of the Board will also constitute members of the board of
directors of each of Components Sweden and Components Belgium
(collectively, the "Subsidiary Boards"), except that members of the Board
who are elected by employees rather than Pelican or C&A will not be
members of the Subsidiary Boards unless required by Law and may, if
requested by the Chairman of the Board or Deputy Chairman of the Board, be
excused from any deliberations or actions by a Subsidiary Board of which
they are not a member. Each meeting of the Board will also constitute a
meeting of the Subsidiary Boards and no action may be taken by any
Subsidiary Board that is not approved by the Board as herein provided.
5. GENERAL AND SPECIAL MEETINGS OF SHAREHOLDERS
5.1 General or special meetings of shareholders of the Company will be
convened when required by law or the Articles of Association of the
Company and will be held in Brussels, Belgium, unless otherwise agreed by
Pelican and C&A or the Board or otherwise required by law.
5.2 No general or special meeting of shareholders of the Company will be
valid, and no resolution may be passed at a general or special meeting of
shareholders, unless both Pelican and C&A are each represented at such
meeting by a duly authorized representative; provided, however, that if
either Pelican or C&A is not represented at a general or special meeting
of shareholders of the Company, such meeting shall be adjourned and the
other shareholder may direct the Company to reconvene such meeting, upon
at least fourteen days' prior written notice (or such longer period as may
be required by law or the Company's Articles of Association), which
reconvened meeting will be valid, and all resolutions adopted at such
meeting by the holders of a simple majority of the shares represented at
such meeting, unless otherwise provided by Swedish Law, will be binding,
even if either Pelican or C&A is not represented at such special meeting;
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provided further however, that the only matters which may be considered by
the shareholders at such reconvened meeting are those of which notice was
given for the prior meeting.
5.3 The Chairman of the Board (or any Deputy Director properly replacing him),
or in his absence, the Deputy Chairman, shall act as chairman at any
general or special meeting of shareholders, but shall have no voting
rights at any such meeting.
6. AUDITORS, ACCOUNTING AND ACCESS
6.1 Unless otherwise determined by the Board, the Companies' auditor will be
Ernst & Young.
6.2 The Companies will keep records of their assets and liabilities and their
results of operations according to applicable generally accepted
accounting principles and legal requests.
6.3 The Companies will each allow the representatives of Pelican and C&A
(including representatives who are authorized public accountants) access
to such of their buildings and other properties, employees, books and
records, and other data and information as such party may reasonably
request. The Companies will cause their respective auditors to give
Pelican and C&A access to their records and personnel, upon reasonable
request.
6.4 Unless otherwise approved by the Board as herein provided and subject to
the requirements of applicable law, the fiscal year of the Companies will
end on the last Saturday in December of each year.
7. BOARD AND SHAREHOLDER RESOLUTIONS
7.1 Unless otherwise required by applicable law, the Articles of Association
or Section 5.2 or 7.6 of this Agreement, all resolutions at general and
special meetings of shareholders and meetings of the Board of the Company,
Components Belgium and Components Sweden will be adopted only if approved
(a) in the case of a shareholders meeting, by the holders of a majority of
the issued and outstanding voting shares and (b) in the case of a Board
meeting, except as expressly provided in Section 4.6, by at least 75% of
the members of the Board and at least one Director nominated by Pelican
and one Director nominated by C&A.
7.2 Except to the extent otherwise provided in Section 7.6 of this Agreement,
the following actions shall not be taken by the Company, Components
Belgium or Components Sweden, until a resolution providing therefor has
been
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approved (a) at a meeting of the Board of such Company or (b) at a general
or special meeting of shareholders of the Company, by both Pelican and
C&A:
(a) any amendment to the Articles of Association of any of the Companies;
(b) any change in the share capital and any issuance of new shares or any
convertible bonds, convertible notes, convertible debentures, share
options or other similar rights which are convertible into or
exchangeable or exercisable for shares of any of the Companies;
(c) any termination, dissolution or liquidation of any of the Companies
(other than a compulsory liquidation according to law) or any merger
with, or purchase of all or substantially all of the assets or shares
of, another company by any of the Companies, or any sale or other
transfer of all or substantially all of the assets or shares of any of
the Companies;
(d) any loan or credit to or from any shareholder of the Company or its
officers or Affiliates, and any guarantee or indemnity for the benefit
of any such shareholder, officer or Affiliate (other than loans,
credits, guarantees or indemnities among the Companies), by any of the
Companies;
(e) any incurrence of any indebtedness for borrowed money by any of the
Companies (including the giving of any guarantee, security or
indemnity) other than (i) indebtedness incurred by any Company in
accordance with either the Business Plan or annual budget (including
any Interim Budget) then in effect; (ii) indebtedness incurred by any
Company in accordance with any revolving credit facility, line of
credit or other unused credit facility approved by the Board; (iii)
indebtedness in an additional amount aggregating for all Companies not
more than $5,000,000 principal amount outstanding at any time in
addition to the aggregate amount of the Intercompany Debt and the
EASPP Notes ("Starting Debt"); and (iv) intra-company indebtedness;
(f) any imposition of any lien, mortgage, charge, security interest or
other encumbrance on the assets of any of the Companies to secure an
obligation of any of the Companies other than such as are a "Permitted
Security Interest" under Section 5 of Schedule 6.1 to the Formation
Agreement or are first imposed prior to the
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Effective Date (in respect of Starting Debt or otherwise);
(g) any capital expenditures by any of the Companies in excess of $100,000
in any fiscal year for any land, building or other capital asset other
than those in accordance with the Business Plan or annual budget
(including any Interim Budget) then in effect or otherwise approved in
advance by the Board;
(h) any fee, remuneration or other benefit to any Director of any of the
Companies, except for disbursements incurred by such Director in the
performance of his duties and supported by reasonable substantiating
documentation;
(i) any declaration, payment or making of any dividend or other similar
distribution of any of the Companies' assets;
(j) any appointment of any person with signing authority for any of the
Companies other than authorities reasonably necessary to enable the
business of any of the Companies to be carried out in the ordinary
course thereof;
(k) any change in the material terms of any employment agreement with the
Managing Director of any of the Companies (it being understood that a
Managing Director appointed in accordance with Section 4.7 may be
given an employment agreement having the same material terms as were
applicable to such person's predecessor without further action by the
Board);
(l) the approval of the annual financial statements;
(m) any approval of any annual budget or any material modification of the
strategic direction set forth in the Business Plan; provided, however,
that, (i) notwithstanding the provisions of this Section 7.2 or
Section 7.5, in the event that the Board is unable to agree upon the
annual budget for the Companies for any year, the budget in effect for
the year prior to such year shall be the Companies' budget for such
year (the "Interim Budget") until the Board is able to agree upon a
new budget, except that in no such event shall the Companies' capital
expenditures in any fiscal year to which any such Interim Budget
applies exceed the amount of depreciation and amortization (calculated
in accordance with the principles used in preparing the Companies'
financial statements)
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for such year and (ii) any debt incurred for a specific purpose not in
the ordinary course of business will not be deemed to authorize any
additional incurrence of such debt under the Interim Budget;
(n) any agreement by any of the Companies which by its terms (i) provides
for the payment by such Company of more than $100,000 in the aggregate
or such other amount as may from time to time be approved by the Board
in accordance with this Section 7.2 or (ii) has an initial term of
longer than 24 months and is outside the ordinary course of business;
(o) any change in the fiscal year of any of the Companies; and
(p) any change in the name of any of the Companies.
7.3 All minutes of meetings of the Board and shareholders of each of the
Companies will be written in the English language (which version will be
governing in the event of any dispute) and, at the request of Pelican,
translated into Swedish whenever required by law.
7.4 Except to the extent such authority has been delegated in accordance with
applicable law, the authority to execute any document or otherwise act to
bind any of the Companies may only be exercised by the Managing Director
in accordance with the Swedish Companies Act or the Belgium Companies Act,
as the case may be, or by joint signature of any two members of the Board
provided that one such Director has been appointed by Pelican and the
other has been designated by C&A.
7.5 If the required director vote for a decision on a matter described in
Section 7.2 cannot be obtained at a meeting of the Board and/or a general
or special meeting of shareholders (a "Meeting"), the following procedure
will apply:
first:
the matter may be removed from the agenda of such Meeting;
second:
if said matter is not so removed, then the parties will try to resolve
the matter after consultation with their lawyers and auditors;
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third:
if said matter is not so resolved within one month of such Meeting,
then the Chief Executive Officers ("CEO") of each of Pelican and C&A
or any other person assigned by such CEO (excluding Directors and
deputy Directors of the Company) will meet within two months of the
Meeting at which the matter was removed from the agenda to discuss in
good faith whether there is a mutually acceptable solution to the
matter.
7.6 Notwithstanding any other provision of this Agreement, except to the
extent prohibited by the Swedish Companies Act, matters relating to the
subject matter of this Section 7.6 shall be determined at a meeting of the
Board and whenever the Board is taking any action with respect to (a) a
proposed transaction between any of the Companies, on the one side, and
Pelican, C&A or any of their respective Affiliates, on the other side, (b)
the assertion of any rights by any of the Companies against Pelican, C&A
or any of their respective Affiliates, or (c) any other matter in which
the interests of any of the Companies on the one side, and Pelican, C&A or
any of their respective Affiliates, on the other side, are adverse, no
Director nominated by the party whose (or whose Affiliates') interests are
adverse to those of any of the Companies may vote upon any resolution of
the Board relating to such matter, and any such resolution may be adopted
solely by a majority of the Directors voting upon such resolution;
provided, however, that these provisions shall not require Board approval
of the continuation of the current Nedcar collaboration arrangement
described in Section 9.3(c) of the Formation Agreement during the term of
the current Nedcar arrangement (the parties acknowledging, however, that
any other issues relating to the Nedcar arrangement (including without
limitation issues relating to Pelican Germany's compliance with its
obligations thereunder and the remedies to be pursued in the event of
noncompliance) or to Section 9.3(c) of the Formation Agreement will be
determined by the Board on behalf of the Companies solely by the members
of the Board not nominated by Pelican without prejudice to Pelican's
rights under the Formation Agreement to dispute any termination of the
Nedcar arrangement pursuant to Section 9.3(c) thereof). For purposes of
this Section 7.6, none of the Companies shall be deemed to be an Affiliate
of Pelican or C&A.
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8. ROLE OF C&A
8.1 Until expiration of the C&A Call Option (as defined below), C&A will
provide to the Companies such general and advisory services as C&A
generally provides to its subsidiaries in the ordinary course of business
and are necessary or appropriate to manage the business and affairs of the
Companies if and to the extent such management is not provided by their
boards of directors, Managing Directors or other officers or employees of
the Companies (such services, the "C&A Services"). A list of the services
initially expected to be so provided is set forth as Schedule 8.1.
Notwithstanding any other provision hereof, the parties hereby acknowledge
and agree that such services will only be provided on an as-needed basis
and as contemplated by the first sentence of this Section 8.1 and that in
all events C&A will not be obligated hereunder or otherwise to provide any
service to any of the Companies if or to the extent that C&A or any of its
Subsidiaries would be required to incur any capital expense or hire any
personnel that or whom C&A did not intend to incur or hire (or cause or
permit an Affiliate to incur or hire) for any business or purpose
unrelated to the businesses or affairs of the Companies. C&A agrees that
the salaries of C&A's internal personnel who perform the C&A Services (but
not the salaries and other employee costs of employees of the Company)
will be included in the Service Fee provided for in Section 8.3. Such
internal personnel will include Messrs. ▇. ▇▇▇▇▇▇ and ▇. ▇▇▇▇▇▇▇ so long
as they are employed by C&A or their replacements.
8.2 Notwithstanding any other provision hereof or of any applicable law, the
parties hereto hereby expressly acknowledges that, except as expressly
provided in Section 10, C&A and its Affiliates are engaged in, and may in
the future be engaged in, businesses and activities that are or may be
directly competitive with the business of the Companies and that, except
as provided in Section 10, (a) C&A and its Affiliates will be free to own
or otherwise participate directly or indirectly in the ownership or
operation of any business or activity of any Person, whether or not such
business or activity competes with or is enhanced by any business or
activity of the Companies and (b) C&A and its Affiliates will have no
liability to the Companies, Pelican or any other Person by reason of such
activities or the failure to submit any opportunity to the Companies.
Although it is C&A's intention to provide the C&A Services in good faith,
with due regard to the interests of the Companies and C&A in substantially
the same manner as C&A provides similar services to its other
Subsidiaries, the parties
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hereto hereby expressly acknowledge and agree that C&A or any Affiliate or
designee thereof will have no liability to the Companies, Pelican or any
other Person by reason of any act or omission, including negligence, in
providing the C&A Services except (x) for actual fraud intentionally
committed by an employee of C&A or such Affiliate or (y) in respect of any
transaction between any of the Companies on the one hand, and C&A or any
Affiliate thereof, on the other hand, unless such transaction was (1)
approved or ratified by the members of the Board designated by Pelican,
(2) permitted or required hereunder, or (3) effected on terms that are not
materially more favorable to C&A or its Affiliate party thereto than would
be available to an unrelated third party.
8.3 For the provision of C&A Services pursuant to Section 8.1, C&A will be
paid a quarterly fee (the "Service Fee") (payable at the time of delivery
of the Companies' quarterly financial statements to the Board) equal to
the lesser of (a) 1% of the quarterly consolidated total revenues of the
Companies as reflected in their then most recent consolidated quarterly
financial statements or (b) such fee as would have been charged for such
quarter in accordance with C&A Product's then-current method for
calculating the charge for similar services to its Affiliates. In
addition, promptly after the incurrence thereof, C&A will be reimbursed
for its actual and reasonable out-of-pocket costs and expenses incurred in
respect of the provision of C&A Services, including without limitation
travel and other expenses incurred by C&A internal personnel in providing
the C&A Services. The Company will reimburse C&A and Pelican for their
respective actual and reasonable travel and other out-of-pocket costs and
expenses incurred in attending Board and Shareholder meetings of the
Company. To the extent that any employees of JV Holdings or its Affiliates
are assigned to C&A Europe, JV Holdings and its Affiliates will invoice
C&A Europe all personnel related costs including but not limited to
salaries, social charges, company cars and travel expenses. As of
Completion there are two persons on the payroll of Components Sweden that
will be assigned to C&A Europe, namely ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇ and
on a proportional basis Sven-▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇.
8.4 (a) To the fullest extent permitted by applicable law, each Company will
indemnify and hold harmless Pelican, C&A and each of their respective
Affiliates and any shareholder, director, officer, employee, agent,
Affiliate and professional or other advisor of Pelican, C&A or such
Affiliates (collectively, the "Indemnified
15
Persons") from and against any and all loss, cost, damage, expense
(including without limitation fees and expenses of attorneys and other
advisors and any court costs incurred by any Indemnified Person) or
liability incurred by reason of any claim against such Indemnified
Person by any person or entity, which claim is asserted by reason of
the ownership of any of the Companies' share capital or the
participation in the business or affairs of any of the Companies, by
such Indemnified Person. Notwithstanding the foregoing, no Indemnified
Person shall be indemnified pursuant to the terms of the preceding
sentence, (i) to the extent that it is finally judicially determined
by a court of competent jurisdiction that the loss, cost, damage,
expense or liability resulted from the Indemnified Person's actual
fraud intentionally committed or willful misconduct, (ii) in the case
of Pelican and its Affiliates and any shareholder, director, officer,
employee, agent and professional or other advisor of Pelican or its
Affiliates, for any loss, cost, damage, expense or liability incurred
as a result of (x) Pelican's indemnification obligations pursuant to
the Formation Agreement or (y) the ownership of the Companies and
their assets, or the conduct of their businesses, prior to the
Effective Date, or (iii) in the case of C&A and its Affiliates and any
shareholder, director, officer, employee, agent and professional or
other advisor of C&A or its Affiliates, for any loss, cost, damage,
expense or liability incurred as a result of C&A's indemnification
obligations pursuant to the Formation Agreement. The Company will pay
in advance or reimburse reasonable expenses (including without
limitation advancing costs of defense) incurred by any Indemnified
Person who is or is threatened to be named or made a defendant,
respondent or witness in a proceeding concerning the business and
affairs of any of the Companies if the Indemnified Person delivers a
written undertaking to repay those amounts if it is finally judicially
determined by a court of competent jurisdiction, that the Indemnified
Person is not entitled to indemnification hereunder.
(b) The rights to indemnification under this Section 8.4 are not exclusive
of other rights which any Indemnified Person may otherwise have at law
or in equity, including without limitation rights to indemnification
or contribution, and nothing in this Section 8.4 will affect the
rights or obligations of any Indemnified Person (or the limitations on
those rights or obligations) under any other agreement or instrument
to which that Indemnified Person is a party (it being understood that
no Indemnified Person shall be entitled to recover in respect of any
claim under this Agreement
16
more than once in respect of any matter to the extent that to do so
would constitute double recovery).
(c) Notwithstanding any other provision of this Agreement, if any
Indemnified Person receives notice of any action or proceeding to
enforce any third party claim under circumstances in which such
Indemnified Person believes that such Person is entitled to
indemnification pursuant to this Section 8.4, such Indemnified Person
may commence an action or proceeding against the Company in the same
court in which the action or proceeding was commenced by such third
party and, for such purpose, the Company hereby consents to personal
jurisdiction and waives all objections to venue. The Company agrees
that in any such action or proceeding process may be served upon it by
any means authorized by applicable statutes, rules, treaties or
conventions. If such service of process shall be made by any means as
aforesaid, no party shall contest in any court the same or the
personal jurisdiction of the court in which such action or proceeding
was commenced.
8.5 Subsequent Recoveries. Following the Effective Date, if any amount is paid
by any indemnifying party hereunder in discharge of all or part of any
claim for indemnity hereunder and such amount (or part thereof) is
subsequently recovered (whether by payment, discount, credit, set-off or
otherwise) by the indemnified party from an unrelated third party in
respect of the matter in relation to which the claim was made, the
indemnified party will, to the full extent permitted by Law, forthwith
repay to the indemnifying party a sum corresponding to such amount
recovered from the third party less all obligations, retrospective or
other premium adjustments, costs and expenses (including without
limitation attorney's and other fees and expenses) of such recovery and
less the net tax cost to the indemnified party of such recovery.
9. RESTRICTIONS ON TRANSFERS
9.1 During the term of this Agreement, neither Pelican nor C&A may offer,
sell, assign, grant a participation in, pledge or otherwise transfer or
dispose of ("Transfer") any interest in any of the Pelican Shares or the
C&A Shares, as the case may be, other than in an Unrestricted Transfer (as
defined below) or pursuant to the provisions of Sections 9.4, 9.5, 9.6 and
9.7. The Pelican Shares and the C&A Shares are both referred to herein as
"Shares".
17
9.2 Each certificate representing Shares will include the following legend:
"The shares represented by this share certificate are subject to, and may
be transferred only in accordance with, a Shareholders Agreement dated
(date of signing of this Agreement), among ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ Products Co.,
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ Europe, Inc., Perstorp G.m.b.H., Perstorp A.B., Perstorp
Biotec A.B., Perstorp Components N.V. and Perstorp Components A.B., a copy
of which is filed with the Company. Any such transfer in violation of such
Agreement is void."
9.3 (a) Any Transfer of Shares made in accordance with this Section 9.3 by
Pelican or C&A will constitute an "Unrestricted Transfer" for purposes
of this Agreement.
(b) Pelican or C&A may from time to time Transfer all or any portion of
its Shares to any Person which is either a direct or indirect wholly
owned Subsidiary or Holding Company of such party or a direct or
indirect wholly owned Subsidiary of any such Holding Company;
provided, however, that, notwithstanding anything to the contrary in
this Agreement, Pelican and C&A may not Transfer any Shares to any
such Person unless (i) such Person executes a written instrument
reasonably satisfactory to the other party agreeing to be bound by the
terms and provisions of this Agreement as if such Person had been an
original party to this Agreement and that such Shares so Transferred
will be automatically Transferred back to the Transferring party no
later than immediately prior to such Person ceasing to be its
Subsidiary and (ii) the Transferring party irrevocably and
unconditionally (jointly and severally with such other Person)
guarantees the due compliance by such Person of all of the obligations
pursuant to this Agreement.
9.4 C&A Call Option
(a) C&A will have the right (the "C&A Call Option") to purchase all, but
not less than all, of the Pelican Shares and an additional 0.01% of
the share capital of the Company (the sole ownership of which Pelican
hereby covenants to obtain prior to the C&A Call Option Closing) (such
share capital, collectively, the "Pelican Called Shares") at the
Exercise Price (as defined in Section 9.6) for a period (the "C&A Call
Option Term") commencing on the Effective Date and terminating 30 days
after the date of delivery of consolidated financial statements of the
Company for the 12th full fiscal quarter completed after the Effective
Date. C&A may exercise the C&A Call Option at any time during the C&A
Call Option Term by delivering a written notice (the "C&A Call Option
Notice") to Pelican not more than 30 calendar days
18
after any date during the C&A Call Option Term on which consolidated
financial statements of the Company are delivered to shareholders
following the completion of any fiscal quarter during the C&A Call
Option Term.
(b) The consummation of the purchase of the Pelican Called Shares pursuant
to the C&A Call Option (the "C&A Call Option Closing") will be held as
soon as practicable, but not later than 30 days after, the delivery of
the C&A Call Option Notice. At the C&A Call Option Closing, (i)
Pelican will deliver to C&A one or more certificates evidencing all of
the Pelican Called Shares duly endorsed for transfer to C&A, together
with such other duly executed instruments or documents as may be
reasonably required to permit C&A to acquire the Pelican Called Shares
free and clear of any and all claims, liens, pledges, charges,
encumbrances, security interests, options, trusts, commitments and
voting and other restrictions of any kind (collectively,
"Encumbrances"), except for Encumbrances created by this Agreement,
any applicable securities laws or C&A; (ii) C&A will deliver to
Pelican, by certified or official bank check or wire transfer to such
accounts as are designated by Pelican, an amount in immediately
available funds equal to the Exercise Price; and (iii) Pelican will be
deemed without further action (A) to represent and warrant to C&A
that, upon the C&A Call Option Closing, Pelican will convey and C&A
will acquire the entire record and beneficial ownership of, and good
and valid title to, the Pelican Called Shares, free and clear of any
and all Encumbrances, except for Encumbrances created by this
Agreement, any applicable securities laws or C&A and (B) to agree that
for a period of three years from the C&A Call Option closing neither
it nor any of its Affiliates will (x) establish or seek to establish
any manufacturing or assembly facility in Sweden, Belgium, Holland or
Luxembourg that manufactures any products for sale in the automotive
industry that are of a type also manufactured or sold by any of the
Companies on the date of the C&A Call Option Closing, (y) obtain in
any manner, or bid on or otherwise seek to obtain in any manner, any
of the automotive original equipment programs that have been awarded
to any of the Companies prior to or after Completion or (z) solicit
for hire any officer or employee of any Company who at any time during
the period of six months prior to the date of such solicitation was in
possession of confidential information relating to the Business. The
restrictions placed on Pelican and its Affiliates pursuant to clause
(B) of the preceding sentence will not prevent any of them from
acquiring another company, group of companies or business (the
"Acquired Entity") which was already engaged in such activity (the
"Relevant Business")
19
prior to such acquisition, provided that the annual turnover of the
Relevant Business as shown in the most recently audited annual
accounts of the Acquired Entity prior to the acquisition did not
account for more than 25% of the aggregate turnover of the Acquired
Entity as shown by such accounts. If, however, Pelican or any of its
Affiliates acquires any Relevant Business, such entity will promptly
notify C&A and will procure that the Relevant Business is offered for
sale to C&A at not more than that part of the purchase price paid by
such entity for the Acquired Entity allocated in accordance with GAAP
to the Relevant Business of such Acquired Entity, and C&A will be
given three months to decide whether to accept such offer and to
negotiate appropriate terms. The principles set forth in Sections 10.6
and 10.7 shall be applied in interpreting and enforcing the preceding
sentence and clause (B) of the second preceding sentence.
9.5 Pelican Call Option
(a) Upon termination and expiration of the C&A Call Option without such
option having been exercised (the "C&A Expiration"), Pelican will have
the right (the "Pelican Call Option") to purchase all, but not less
than all, of the C&A Shares and an additional 0.01% of the share
capital of the Company (the sole ownership of which C&A hereby
covenants to obtain prior to the Pelican Call Option Closing) (such
share capital, collectively, the "C&A Called Shares") at the Exercise
Price during the period (the "Pelican Call Option Term") commencing on
the date of the C&A Expiration and ending on the first anniversary
thereof. Pelican may exercise the Pelican Call Option by delivering a
written notice (the "Pelican Call Option Notice") to C&A not more than
30 days after each date during the Pelican Call Option Term on which
consolidated financial statements of the Company are delivered to
shareholders following the completion of any fiscal quarter during the
Pelican Call Option Term.
(b) The consummation of the purchase of the C&A Called Shares pursuant to
the Pelican Call Option (the "Pelican Call Option Closing") will be
held as soon as practicable, but not later than 30 days, after the
delivery of the Pelican Call Option Notice. At the Pelican Call Option
Closing, (i) C&A will deliver to Pelican one or more certificates
evidencing all of the C&A Called Shares duly endorsed for transfer to
Pelican, together with such other duly executed instruments or
documents as may be reasonably required to permit Pelican to acquire
the C&A Called Shares free and clear of any and all Encumbrances,
except for Encumbrances created by this Agreement, by any
20
applicable securities laws or by Pelican; (ii) Pelican will deliver to
C&A by certified or official bank check or wire transfer to such
accounts as are designated by C&A an amount in immediately available
funds equal to the Exercise Price; and (iii) C&A will be deemed
without further action (A) to represent and warrant to Pelican that,
upon the Pelican Call Option Closing, C&A will convey and Pelican will
acquire the entire record and beneficial ownership of, and good and
valid title to, the C&A Called Shares, free and clear of any and all
Encumbrances, except for Encumbrances created by this Agreement, any
applicable securities laws or Pelican, and (B) to agree that for a
period of three years from the Pelican Call Option Closing neither it
nor any of its Affiliates will (x) establish or seek to establish any
manufacturing or assembly facility in Sweden, Belgium, Holland or
Luxembourg that manufactures any products for sale in the automotive
industry that are of a type also manufactured or sold by any of the
Companies on the date of the Pelican Call Option Closing, (y) obtain
in any manner, or bid on or otherwise seek to obtain in any manner,
any of the automotive original equipment programs that have been
awarded to any of the Companies prior to or after Completion or (z)
solicit for hire any officer or employee of any Company who at any
time during the period of six months prior to the date of such
solicitation was in possession of confidential information relating to
the Business. The restrictions placed on C&A and its Affiliates
pursuant to clause (B) of the preceding sentence will not prevent any
of them from acquiring another company, group of companies or business
(the "Acquired Entity") which was already engaged in such activity
(the "Relevant Business") prior to such acquisition, provided that the
annual turnover of the Relevant Business as shown in the most recently
audited annual accounts of the Acquired Entity prior to the
acquisition did not account for more than 25% of the aggregate
turnover of the Acquired Entity as shown by such accounts. If,
however, C&A or any of its Affiliates acquires any Relevant Business,
such entity will promptly notify Pelican and will procure that the
Relevant Business is offered for sale to Pelican at not more than that
part of the purchase price paid by such entity for the Acquired Entity
allocated in accordance with GAAP to the Relevant Business of such
Acquired Entity and Pelican will be given three months to decide
whether to accept such offer and to negotiate appropriate terms. The
principles set forth in Section 10.6 and 10.7 shall be applied in
interpreting and enforcing the preceding sentence and clause (B) of
the second preceding sentence.
21
9.6 Exercise Price
(a) The "Exercise Price" will be an amount equal to:
0.50 x [(EBITDA x M) - I]
Where: (i) "EBITDA" means the consolidated net income of the Companies
before interest, taxes, depreciation, amortization and service fees,
as adjusted for extraordinary items (non-recurring items and other
items not related to the operations of the Business), as shown on the
consolidated income statement for the Companies for the 12 month
period ended on the last day of the most recent fiscal quarter prior
to the date on which the C&A Call Option Notice or Pelican Call Option
Notice, as the case may be, is given, prepared in accordance with
generally accepted accounting principles and in accordance with
consistent methods and principles, (ii) "M" means the Agreed Multiple
determined in accordance with Schedule 9.6(b) hereto and (iii) "I"
means all indebtedness for borrowed money and other obligations which
would constitute indebtedness as shown on a consolidated balance sheet
of the companies as of the date of completion of the transaction to
which the computation relates and any obligation or liability referred
to in clauses (i) through (iii), inclusive, of the definition of
"Retained Liabilities" in the Formation Agreement, such indebtedness
to be reduced by the amount of Free Cashflow as of the date of the
immediately preceding fiscal quarter determined in accordance with the
example set forth on Schedule 9.6(b), not previously applied to reduce
such indebtedness.
(b) "Agreed Multiple" means the ratio determined in accordance with
Schedule 9.6(b) attached hereto.
(c) The Exercise Price will be paid in United States dollars based upon
the currency exchange rate between United States dollars and Swedish
Krona, prevailing on the last day of the most recent fiscal quarter
prior to the date on which the C&A Call Option Notice or Pelican Call
Option Notice, as the case may be, is given, as indicated in the Wall
Street Journal, New York edition, on the first Business Day subsequent
to such date.
9.7 Rights of First Offer
(a) Subject to compliance with the remaining provisions of this Section
9.7, each party may Transfer any Shares after the termination and
expiration of the Pelican Call Option.
22
(b) Prior to consummating any Transfer subject to this Section 9.7 (a
"Third-Party Sale"), the Party proposing to effect the Third-Party
Sale (the "Offering Party") will deliver to other party (the
"Non-Offering Party") a written notice (an "Offer Notice") specifying
(i) the number of shares proposed to be sold in such Third- Party Sale
(the "Offered Shares"), (ii) the aggregate amount of cash
consideration (the "Offer Price") for which the Offering Party
proposes to sell the Offered Shares, (iii) the identity of the
purchaser in such Third-Party Sale, and (iv) all other material terms
of such proposed Third-Party Sale. If the Non-Offering Party delivers
to the Offering Party a written notice (an "Acceptance Notice") within
20 Business Days following the delivery of the Offer Notice (such 20
Business Day period being referred to herein as the "ROFO Acceptance
Period") stating that such Non- Offering Party irrevocably and
unconditionally agrees to purchase all (but not less than all) of the
Offered Shares for the Offer Price and on the other terms set forth in
the Offer Notice, the Offering Party will sell all (but not less than
all) of the Offered Shares to such Non-Offering Party, and such
Non-Offering Party will purchase all such Offered Shares from the
Offering Party, on the terms and subject to the conditions set forth
below.
(c) The consummation of any purchase of Offered Shares by the Non-Offering
Party pursuant to this Section 9.7 (the "ROFO Closing") will occur not
earlier than 30 Business Days nor later than 60 Business Days
following the delivery of the Acceptance Notice (the intervening
period being referred to herein as the "ROFO Closing Period") at such
time and place as may be agreed upon by the Offering Party and the
Non-Offering Party or, if such parties fail to agree to such place, at
the principal office of the Company at 10:00 a.m. (local time) on the
last day of the ROFO Closing Period. At the ROFO Closing, (i) the
Offering Party will deliver to the Non-Offering Party one or more
certificates evidencing all of the Offered Shares duly endorsed for
transfer to the Non-Offering Party, together with such other duly
executed instruments or documents as may be reasonably required to
permit the Non-Offering Party to acquire the Offered Shares free and
clear of any and all Encumbrances, except for Encumbrances created by
this Agreement, any applicable securities laws or the Non-Offering
Party, (ii) the Non-Offering Party will deliver to the Offering Party
by certified or official bank check or wire transfer to an account
designated by the Offering Party an amount in immediately available
funds equal to the Offer Price, and (iii) the Offering Party will be
deemed to represent and warrant to the Non-Offering Party that, upon
the ROFO Closing, the
23
Offering Party will convey and the Non-Offering Party will acquire the
entire record and beneficial ownership of, and good and valid title
to, the Offered Shares, free and clear of any and all Encumbrances,
except for Encumbrances created by this Agreement, any applicable
securities laws or the Non-Offering Party.
(d) If no Acceptance Notice relating to a proposed Third- Party Sale is
delivered to the Offering Party prior to the expiration of the ROFO
Acceptance Period, or an Acceptance Notice is so delivered to the
Offering Party but the ROFO Closing fails to occur prior to the
expiration of the ROFO Closing Period, the Offering Party may
consummate the proposed Third-Party Sale in accordance with Section
9.7(e); provided, however, that no such Third Party Sale may be
consummated if the ROFO Closing failed to occur due to the fault of
the Offering Party (in which case, in addition to the Non- Offering
Party's right to damages or to injunctive or other equitable relief,
the last sentence of Section 9.7(e) shall be applicable).
(e) The Offering Party may consummate a Third-Party Sale that it is
otherwise entitled to consummate pursuant to Section 9.7(d) only (i)
during the 60 Business Day period immediately following the expiration
of the ROFO Acceptance Period (in the event that no Acceptance Notice
was timely delivered to the Offering Party) or the ROFO Closing Period
(in the event an Acceptance Notice was timely delivered to the
Offering Party but the ROFO Closing failed timely to occur) and (ii)
to the purchaser and on the terms set forth in the Offer Notice. If
any Third Party Sale is not consummated in accordance with the
provisions of this Section 9.7(e), the Offering Party may not Transfer
its Shares to any third party without again complying with the
provisions of this Section 9.7.
9.8 No party will enter into any transaction or series of transactions for the
purpose or with the effect of, directly or indirectly, denying or
impairing in any material respect the rights or obligations of any party
under Sections 9.4, 9.5 or 9.7 and any attempt to Transfer any Shares not
in compliance with this Agreement will be null and void.
9.9 Notwithstanding any other provision hereof, the Company will not issue any
shares of capital stock to a shareholder without offering to C&A and
Pelican, by notice given to the other shareholders at least 15 Business
Days prior to the date of such issuance, the right to purchase its pro
rata share of such capital stock on the same terms as such capital stock
is to be issued to the other shareholders. The procedures for
24
the acceptance of any such offer and the closing of any such issuance will
be as determined by the Board.
9.10 Individual Shareholders Agreements
(a) On the Effective Date, C&A will enter into an agreement with a Person
designated by C&A and reasonably acceptable to Pelican substantially
in the form of Schedule 9.10(a)(i) attached hereto (the "C&A
Individual Shareholder Agreement") and on the Effective Date Pelican
will enter into an agreement with a Person designated by Pelican and
reasonably acceptable to C&A substantially in the form of Schedule
9.10(a)(ii) attached hereto (the "Pelican Individual Shareholder
Agreement" and, together with the C&A Individual Shareholder
Agreement, the "Individual Shareholder Agreements"). Neither Pelican
nor C&A will make any amendment or alteration of any of the Individual
Shareholder Agreements without the prior written consent of the other
party.
(b) Upon C&A's exercise of the C&A Call Option or delivery of a ROFO
Acceptance Notice, Pelican will at the C&A Call Option Closing or the
ROFO Closing, as the case may be, assign to C&A all its rights and
obligations pursuant to the Pelican Individual Shareholder Agreement.
Upon Pelican's exercise of the Pelican Call Option or delivery of a
ROFO Acceptance Notice, C&A will at the Pelican Call Option Closing or
ROFO Closing, as the case may be, assign to Pelican all its rights and
obligations pursuant to the C&A Individual Shareholder Agreement.
(c) In the event any party hereto exercises its option right pursuant to
any of the Individual Shareholder Agreements, such party shall
promptly inform the other party in writing of such exercise.
9.11 Pre-Emptive rights
The parties hereby waive any pre-emptive rights they may have according to
the Articles of Association of the Company in connection with any transfer
of shares made under the provisions of this Article 9 or any of the
Individual Shareholder Agreements.
9.12 Indemnity for Assurances
If either C&A or Pelican exercises its rights hereunder to purchase from
the other the Pelican Shares or the C&A Shares, respectively, without
further action, it will be a condition to the consummation of the
transaction that the purchasing shareholder shall have
25
either (i) arranged for the refinancing of all bank debt of the Companies
as to which the selling shareholder or any of its Affiliates (other than
the Companies) has either given its guarantee or other assurance of
payment (an "Assurance") which refinancing will include a release of the
selling Shareholder from all liability under any such Assurance or (ii)
otherwise obtained the release of the selling Shareholder or any of its
Affiliates (other than the Companies) from all liability under any
Assurance previously given by the selling shareholder; provided, however,
that such release will not be required in respect of any breach of any
such Assurance to the extent occurring in whole or in part prior to the
completion of such purchase.
10. RESTRICTIONS ON THE PARTIES
10.1 During the period (the "Noncompetition Term") commencing on the Effective
Date and ending on the date on which the C&A Call Option or the Pelican
Call Option is exercised or, if earlier, December 31, 2000, Pelican and
C&A will not, and each of C&A Products and Pelican Corp will cause their
respective Affiliates not to, directly or indirectly, establish or seek to
establish or be interested in any manufacturing or assembly facility in
Sweden, Belgium, Holland or Luxembourg that manufactures any of the
products for sale in the automotive industry that are of a type also
manufactured or sold by any of the Companies and the Companies will not,
directly or indirectly, establish any manufacturing facility at any
location other than their current locations (and any adjacent properties)
unless approved by the Board.
10.2 During the Noncompetition Term, C&A and its Affiliates, on the one hand,
and the Companies, on the other hand, will not obtain in any manner, or
bid on or otherwise seek to obtain in any manner, any of the automotive
original equipment programs that have been awarded to the other prior to
or after the Effective Date.
10.3 During the Noncompetition Term, Pelican and its Affiliates, on the one
hand, and the Companies, on the other hand, will not obtain in any manner,
or bid on or otherwise seek to obtain in any manner, any of the automotive
original equipment programs that have been awarded to the other prior to
or after the Effective Date.
10.4 During the Noncompetition Term, Pelican and C&A and their Affiliates, on
the one hand, and the Companies, on the other hand, will not solicit for
hire any officer or employee of any Company who at any time
26
during the period of six months prior to the date of such solicitation was
in possession of confidential information relating to the Business.
10.5 Except insofar as may be required by law and in any event only after prior
consultation with the other parties hereto (to the extent reasonably
practicable), and except as contemplated by this Agreement, (a) neither
Pelican and its Affiliates nor C&A or its Affiliates will at any time
disclose to any Person not a party to this Agreement or a director,
officer or employee thereof any trade secret or other confidential
information which it holds in relation to any of the Companies or its
affairs and (b) each party hereto will cause its directors, officers and
employees not to disclose to any Person not a party to this Agreement or a
director, officer or employee thereof any trade secrets or other
confidential information which such director, officer or employee holds in
relation to any of the Companies or its affairs. C&A and its Affiliates
may disclose to their directors, officers, employees, agents and advisers
such information as is necessary or appropriate to perform the services
contemplated by Section 8.
10.6 Each party acknowledges and agrees that each of Sections 10.1 through 10.5
constitutes an entirely separate and independent restriction and that the
duration, extent and application of each restriction are no greater than
is reasonable and necessary for the protection of the interests of the
other party and each of the Companies but that, if any such restriction
were to be adjudged by any court or authority of competent jurisdiction to
be void or unenforceable but would be valid if part of the wording thereof
were to be deleted and/or the period thereof were to be reduced and/or the
area dealt with thereby were to be reduced, such restriction will apply
within the jurisdiction of that court or competent authority with such
modifications as are necessary to make it valid and effective.
10.7 Each party acknowledges that any breach of any of the covenants contained
in Sections 10.1 through 10.5 would cause an irreparable injury to the
other parties and that damages and remedies at law for any breach of such
would be inadequate. The parties acknowledge that, in addition to any
other remedies available to the other party, it will be entitled to
injunctive relief and other equitable relief to prevent an actual,
intended, likely or probable breach of such covenant.
10.8 During the Noncompetition Term, each of C&A Products and Pelican AB will
procure that no company which is one of its respective Subsidiaries and
which is a party
27
to the Intellectual Property Agreement will cease to be such a Subsidiary
until such company has undertaken (in a form reasonably satisfactory to
the Companies) to be bound by the covenants set out in this Section 10.
11. TERM OF AGREEMENT
11.1 This Agreement will become effective upon the Effective Date and continue
in full force and effect for a period of six years thereafter. If not
terminated by written notice given by either party at least six months
before the six-year anniversary date, it will be automatically extended
for additional periods of two years unless and until terminated by written
notice at least six months prior to the expiration of any such additional
period.
11.2 Notwithstanding the foregoing, this Agreement will terminate automatically
upon the occurrence of any of the following events:
(a) any reorganization, merger, consolidation or sale of shares in the
Company approved in advance by Pelican and C&A if following such
reorganization, merger, consolidation or sale, Pelican and C&A do not
beneficially own, directly or indirectly, 75% or more of the combined
voting power of the then-outstanding voting securities entitled to
vote generally in the election of directors of the corporation or
corporations resulting from such reorganization, merger, consolidation
or sale; or
(b) the consummation of the C&A Call Option Closing, the Pelican Call
Option Closing or any ROFO Closing; provided, however, that (i) in the
event that C&A exercises the C&A Call Option or otherwise purchases
the Pelican Shares, the provisions of Sections 9.4(b) and 10.1 through
10.5, as applied to Pelican and its Affiliates, will continue in full
force and effect for three years after the consummation of any such
event and (ii) in the event that Pelican exercises the Pelican Call
Option or otherwise purchases the C&A Shares, the provisions of
Sections 9.5(b) and 10.1 through 10.5, as applied to C&A and its
Affiliates, will continue in full force and effect for three years
after the consummation of any such event.
12. MISCELLANEOUS
12.1 Prior to any Affiliate of Pelican or C&A which is the owner of Shares
ceasing to be an Affiliate of Pelican or C&A, respectively, Pelican or
C&A, as the case may be, will cause such Affiliate to Transfer all Shares
owned by it to another Affiliate of Pelican or C&A.
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12.2 No variation of this Agreement will be valid unless it is in writing and
signed by or on behalf of each of the parties hereto. The expression
"variation" will include any amendment, variation, supplement, deletion or
replacement however effected.
12.3 Each of the parties hereto will pay its own Costs incurred in connection
with the negotiation, preparation and implementation of this Agreement.
12.4 Without limiting the generality or effect of Section 10.6, if any
provision of this Agreement is held to be invalid or unenforceable, then
such provision will (so far as it is invalid or unenforceable) be given no
effect and will be deemed not to be included in this Agreement but without
invalidating any of the remaining provisions of this Agreement. The
parties will use all reasonable endeavors to replace the invalid or
unenforceable provisions by a valid provision the effect of which is as
close as possible to the intended effect of the invalid or unenforceable
provision.
12.5 This Agreement may be entered into in any number of counterparts and by
the parties to it on separate counterparts, each of which, when executed
and delivered, will be an original, but all the counterparts will together
constitute one and the same instrument.
12.6 (a) Any notice or other communication required or permitted to be given
under this Agreement will be in writing and signed by or on behalf of
the party giving it and may be served by hand delivery, delivery by a
recognized international courier service (such as UPS, DHL or Federal
Express) or transmission by facsimile to the address and for the
attention of the relevant party set out in Section 17.2 of the
Formation Agreement (or as otherwise notified from time to time
thereunder). Any notice so delivered will be deemed to have been
received (i) in the case of facsimile transmission, 12 hours after the
time of dispatch, and (ii) in the case of hand delivery (whether or
not by courier service), upon such delivery.
(b) In proving such notice, it will be sufficient to prove that the
envelope containing such notice was properly addressed and delivered
to the address shown thereon or that the facsimile transmission was
made, provided, however, that, in the case of facsimile transmission,
it must also be proven that hand delivery or delivery by a recognized
international courier service (such as UPS, DHL or Federal Express)
was made on the parties hereto (but not the lawyers contemplated to
receive copies) within five Business Days thereof.
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12.7 Each of the parties hereto hereby represents to the others that the
execution and delivery of this Agreement and the performance thereof does
not and will not contravene or constitute a default under its
constitution, by-laws or any other agreement, instrument or other form of
commitment to which a party hereto is also bound.
12.8 Failure by any party to this Agreement to assert its rights in respect of
any violation of this Agreement shall not be deemed a waiver of such
rights nor shall any waiver be implied from any act or omission. No waiver
in writing by a party with respect to any right shall extend its effect to
any subsequent violation either of whatsoever kind.
12.9 Save as expressly provided herein, neither this Agreement nor any rights,
benefits or obligations hereunder shall be assignable or transferable in
whole or in part, whether by operation of law or otherwise, by any of the
parties hereto without the prior written consent of the other parties;
provided, however, that either Pelican or C&A may assign its rights
immediately prior to and in connection with exercising the Pelican Call
Option or the C&A Call Option, as the case may be.
12.10 Pelican and C&A each agree that in all matters concerning the Companies
for which it is called upon to exercise its rights to vote, either as a
shareholder or through a Director, such rights must be exercised in good
faith and in conformity with the requirements of this Agreement, to the
extent applicable thereto.
12.11 In the event of any conflict between the terms of this Agreement and its
Exhibits and Schedules, the terms of this Agreement will, as among the
parties hereto, prevail and the parties will forthwith cause such
necessary alterations to be made to the Exhibits and Schedules so as to
resolve such conflict.
12.12 This Agreement does not render, and nothing herein contained will be
construed to render, C&A or Pelican an agent for the other party or liable
for any debt, obligations or liabilities of the other party now existing
or incurred in the performance of this Agreement. Nothing in this
Agreement will be deemed or construed to constitute or create between the
parties hereto a partnership pursuant to lag (1980:1102) om handelsbolag
och enkla bolag.
12.13 Each of the parties will do, or procure to be done, all such further acts
and things and execute, and procure the execution of, all such documents
as may from time
30
to time be required for the purpose of giving effect to all of the
provisions of this Agreement.
13. GOVERNING LAW AND JURISDICTION
13.1 This Agreement will be governed by and construed in accordance with the
laws of England, without giving effect to the principles of conflict of
laws thereof. If any provision of this Agreement conflicts with any
applicable law (including without limitation the Swedish Companies Act and
the Belgium Companies Act), such provision of this Agreement shall be
controlling except to the extent prohibited by such law.
13.2 Except as specifically provided in Section 7.5 hereof, all disputes
arising in connection with this Agreement will be finally settled under
the Rules of Arbitration of the International Chamber of Commerce, by
three Arbitrators appointed in accordance with those Rules. The place of
arbitration will be in London, England. The language of the arbitration
will be English.
14. PARENT COMPANY GUARANTEES
14.1 Pelican Corp. guarantees the performance by Pelican or any of its
Affiliates (to whom any of its obligations hereunder have been
transferred) of all of its obligations under or pursuant to this
Agreement.
14.2 C&A Products guarantees the performance by C&A or any of its Affiliates
(to whom any of its obligations hereunder have been transferred); of all
of its obligations under or pursuant to this Agreement.
14.3 The liability of Pelican Corp. and C&A Products under their respective
guarantees under Sections 14.1 and 14.2 respectively shall not be
discharged or impaired by any amendment to or variation of this Agreement,
any release of or granting of time or other indulgence to Pelican or C&A,
as the case may be, or any third party or any other act, event or omission
which but for this Section would operate to impair or discharge the
liability of Pelican Corp. or C&A Products under their respective
guarantees.
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IN WITNESS WHEREOF, this Agreement has been signed on behalf of the parties the
day and year first before written.
PERSTORP G.m.b.H.
By: /s/ Mats Tuner
Name:
Title:
in the presence of:
Witness Signature
Full Name:
Address:
Occupation:
PERSTORP A.B.
By: /s/ Mats Tuner
Name:
Title:
in the presence of:
Witness Signature
Full Name:
Address:
Occupation:
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ EUROPE, INC.
By: /s/ J. ▇▇▇▇▇▇▇ ▇▇▇▇▇
Name:
Title:
in the presence of:
Witness Signature
Full Name: /s/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Address:
Occupation:
32
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ PRODUCTS CO.
By: /s/ J. ▇▇▇▇▇▇▇ ▇▇▇▇▇
Name:
Title:
in the presence of:
Witness Signature
Full Name:
Address:
Occupation:
PERSTORP BIOTEC A.B.
By: /s/ Mats Tuner
/s/ ▇▇▇ ▇▇▇▇▇▇▇▇▇
Name:
Title:
in the presence of:
Witness Signature
Full Name:
Address:
Occupation:
PERSTORP COMPONENTS N.V.
By: /s/ Mats Tuner
Name:
Title:
in the presence of:
Witness Signature
Full Name:
Address:
Occupation:
33
PERSTORP COMPONENTS A.B.
By:
Name:
Title:
in the presence of:
Witness Signature
Full Name:
Address:
Occupation:
EXHIBITS AND SCHEDULES
Exhibit 3.1 Articles of Association
Schedule 3.2 Business Plan
Schedule 3.6 Financing Arrangements
Schedule 8.1 C&A Services
Schedule 9.6(b) Agreed Multiple
Schedule 9.10(a)(i) C&A Individual Shareholder Agreement
Schedule 9.10(a)(ii) Perstorp Individual Shareholder Agreement
The Registrant hereby undertakes to furnish supplementally a copy of any
schedule omitted herefrom as permitted by Item 601(b)(2) of Regulation S-K to
the Commission upon request.
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