Document:

Exhibit 10.1

 

COMPANY NO. 03512889

 

THE COMPANIES ACT 1985

 

 

PRIVATE COMPANY LIMITED BY SHARES

 

 

ARTICLES OF ASSOCIATION

 

OF

 

ACTIVE
HOTELS LIMITED

 

(Adopted by written resolution passed on 21
September 2004)

 

PRELIMINARY

 

1.                                       These Articles constitute the Articles of the Company.  Table A is excluded for the purposes of
section 8(2) of the Act.

 

INTERPRETATION

 

2.                                       In these Articles:

 

2.1                                 the following words and expressions have the following meanings:

 

“2006 Exercise
Period” means the period beginning on the third Business Day after
the directors have served the 2006 Valuation Report on each B Ordinary
Shareholder and ending on the tenth Business Day after such date of service;

 

“2006 Valuation
Report” means the Valuation Report prepared by the directors in accordance
with Article 46 below which sets out the Option Price for any shares
subject to an Exercise Notice during the 2006 Exercise Period;

 

“2007 Exercise
Period” means the period beginning on the third Business Day after
the directors have served the 2007 Valuation Report on each B Ordinary
Shareholder and ending on the tenth Business Day after such date of service;

 

“2007 Valuation
Report” means the Valuation Report prepared by the directors in
accordance with Article 46 below which sets out the Option Price for any
shares subject to an Exercise Notice during the 2007 Exercise Period;

 

“2008 Exercise
Period” means the period beginning on the third Business Day after
the directors have served the 2008 Valuation Report on each B Ordinary
Shareholder and ending on the tenth Business Day after such date of service;

 

1

 

“2008 Valuation
Report” means the Valuation Report prepared by the directors in
accordance with Article 46 below which sets out the Option Price for any
shares subject to an Exercise Notice during the 2008 Exercise Period;

 

“A Ordinary
Shareholder” means the holder of the A Ordinary Shares in the
Company unless there is more than one holder of the A Ordinary Shares in which
case any reference in these Articles to the “A Ordinary Shareholder” shall be
construed as meaning the holder of the majority of the A Ordinary Shares or in
the event that there is no such majority holder, to each of the holders of the
A Ordinary Shares;

 

“A Ordinary Shares”
means the A Ordinary Shares of 0.1 pence each in the Company;

 

“Accounts”
means the audited balance sheet and profit and loss account of the Company,
including all notes, reports, statements and other documents annexed to them;

 

“Act”
means the Companies Act 1985 including any statutory modification or
re-enactment thereof for the time being in force;

 

“address” in relation to an electronic
communication, includes any number or address used for the purposes of such
communication;

 

“Adjustment” means an adjustment to the shares and/or the Option Price in
accordance with Article 56 below;

 

“Arbitrator”
means PwC or such other person appointed pursuant to Article 50;

 

“Articles”
means the articles of association of the Company;

 

“auditors”
means the auditors of the Company;

 

“Bad Leaver”
means a B Ordinary Shareholder who ceases to be an employee of the Company
other than as a Good Leaver;

 

“B Ordinary
Shareholder” means any holder of B Ordinary Shares in the Company;

 

“B Ordinary Shares”
means the B Ordinary Shares of 0.1 pence each in the Company;

 

“Business
Day” means a day (other than a Saturday or a Sunday) on which banks
are generally open for business in London;

 

“Call
Exercise Notice” means the notice of exercise of the Call Option
setting out the number of B Ordinary Shares in relation to which the A Ordinary
Shareholder intends to exercise the Call Option

 

“Call
Option” means  the call
option granted by each B Ordinary Shareholder to the A Ordinary Shareholder
under Article 38;

 

2

 

“clear days”
in relation to the period of a notice means that period excluding the day when
the notice is given or deemed to be given and the day for which it is given or
on which it is to take effect;

 

“communication” means the same as in the
Electronic Communications Act 2000;

 

“director”
means, except where the context otherwise requires, a director of the Company
and “directors” means the
directors or any of them acting as the board of directors of the Company;

 

“electronic communication” means the same as
in the Electronic Communications Act 2000;

 

“Exercise
Date” means the date on which any B Ordinary Shareholder or the A
Ordinary Shareholder (as the case may be) serves an Exercise Notice;

 

“Exercise
Notice” means a Call Exercise Notice or a Put Exercise Notice (as
the case may be);

 

“Fair
Market Value” means a price per share determined in accordance with
Article 44;

 

“Good Leaver”
means a B Ordinary Shareholder who ceases to be an employee of the Company as a
result of his:

 

(i)            death;
or

 

(ii)           being
dismissed by reason of absence from work due to ill health or accident (save
for ill health which arises as a result of an abuse of drink or drugs),
provided that the relevant B Ordinary Shareholder delivers to the Company a medical
certificate signed by a doctor duly evidencing his ill health or accident and
provided further that the Company reserves the right to require such B Ordinary
Shareholder to undergo a medical examination by a doctor or consultant
nominated by it; or

 

(iii)          retirement
once the B Ordinary Shareholder reaches the age of 60; or

 

(iv)          being
made redundant by the Company;

 

“Granted
Securities” means B Ordinary Shares which have been subscribed at a
price of 0.1 pence per share;

 

“holder”
in relation to shares means the member whose name is entered in the register of
members as the holder of the shares;

 

“Institute
of Chartered Accountants” means the Institute of Chartered
Accountants in England & Wales, whose postal address is Chartered
Accountants’ Hall, PO Box 433, London EC2P 2BJ;

 

“Office”
means the registered office of the Company;

 

“Option”
means either or both of the Call Option and the Put Option (as the context
requires);

 

3

 

“Option
Price” means in respect of Granted Securities which have Vested and
in respect of Purchased Securities Fair Market Value and in respect of Granted
Securities which have not Vested 0.1 pence per share;

 

“Priceline”
means Priceline.com, Incorporated whose principal place of business is 800
Connecticut Avenue, Norwalk, CT06854, USA;

 

“Priceline
Shares” means common stock, of par value $0.008 per share of Priceline
registered on NASDAQ or of such other par value as such common stock may
convert into;

 

“Purchased
Securities” means B Ordinary Shares which have been subscribed at a
price of £16.9235 per share;

 

“Put
Exercise Notice” means the notice of exercise of the Put Option
setting out the number of B Ordinary Shares in relation to which any B Ordinary
Shareholder intends to exercise the Put Option;

 

“Put
Option” means the put option granted by the A Ordinary Shareholder
to each B Ordinary Shareholder under Article 39;

 

“PwC”
means Pricewaterhouse Coopers LLP of 1 Embankment Place, London, WC2N 6RH;

 

 “Seal” means the common seal of the Company
and includes any official seal kept by the Company by virtue of sections 39 or
40 of the Act;

 

“Shares”
means the A Ordinary Shares and the B Ordinary Shares in the Company;

 

“secretary”
means the secretary of the Company or any other person appointed to perform the
duties of the secretary of the Company, including a joint, assistant or deputy
secretary;

 

“Securities
Act” means the
U.S. Securities Exchange Act of 1934, as amended, and all rules and regulations
promulgated thereunder;

 

“United Kingdom”
means Great Britain and Northern Ireland;

 

“Valuation
Report” means the report prepared by the directors in accordance
with Article 46; and

 

“Vest”
means the process of a B Ordinary Shareholder becoming entitled (i) to exercise
the Put Option in respect of Granted Shares and (ii) to be paid an Option Price
equal to Fair Market Value for such Shares (as defined in Article 44).

 

2.2                                 powers of delegation shall not be restrictively construed but the
widest interpretation shall be given to them;

 

4

 

2.3                                 the word “directors” in
the context of the exercise of any power contained in the Articles includes any
committee consisting of one or more directors, any director holding executive
office and any local or divisional board, manager or agent of the company to
which or, as the case may be, to whom the power in question has been delegated;

 

2.4                                 no power of delegation shall be limited by the existence or, except
where expressly provided by the terms of delegation, the exercise of that or
any other power of delegation;

 

2.5                                 except where expressly provided by the terms of delegation, the
delegation of a power shall not exclude the concurrent exercise of that power
by any other body or person who is for the time being authorised to exercise it
under the Articles or under another delegation of the power;

 

2.6                                 unless the context otherwise requires, words or expressions
contained in these Articles bear the same meaning as in the Act but excluding
any statutory modification thereof not in force when the Articles become
binding on the Company;

 

2.7                                 references to a document being executed include references to its
being executed under hand or under seal or by any other method;

 

2.8                                 unless the context otherwise requires, any reference to “writing” or “written” shall include any method of reproducing words or text
in a legible and non-transitory form;

 

2.9                                 save where specifically required or indicated otherwise words
importing one gender shall be treated as importing any gender, words importing
individuals shall be treated as importing corporations and vice versa, words
importing the singular shall be treated as importing the plural and vice versa,
and words importing the whole shall be treated as including a reference to any part
thereof;

 

2.10                           clause and paragraph
headings are inserted for ease of reference only and shall not affect
construction.

 

SHARE CAPITAL

 

3.                                       The authorised share capital of the Company is £7,650 divided into
7,460,839 A Ordinary Shares of 0.1 pence each and 189,161 B Ordinary Shares of
0.1 pence each.

 

RIGHTS ATTACHING TO SHARES

 

4.                                       The rights and restrictions attaching to the A Ordinary Shares and
the B Ordinary Shares are as follows:

 

Income

 

4.1                                 holders of the A Ordinary Shares and the holders of the B Ordinary
Shares shall be entitled to receive such sums by way of dividend as the Company
may by ordinary resolution declare or as the directors may determine in either
case in accordance with the provisions of the Act and Articles 156-163 but such
that, subject to Articles 4.2

 

5

 

and 4.3 below, the A Ordinary Shares and
the B Ordinary Shares need not rank pari
passu for such dividends;

 

4.2                                 holders of the A Ordinary Shares shall, in priority to the holders
of the B Ordinary Shares, be entitled to be paid an annual dividend that is
equal to £1,650,000 (the “Threshold Amount”);

 

4.3                                 holders of the A Ordinary Shares and the holders of the B Ordinary
Shares (as if the same constituted one class of share) shall then be entitled
to the balance of any dividend that the Company may by ordinary resolution
declare after the payment of the amount equal to the Threshold Amount referred
to in Article 4.2 above, such balance to be shared among the holders of
the A Ordinary Shares and the B Ordinary Shares (as if the same constituted one
class of share) pro rata according to the amount fully paid up on the A
Ordinary Shares and B Ordinary Shares (including any amount of share premium
paid thereon);

 

Capital

 

4.4                                 the assets of the Company available for distribution to holders
remaining after payment of all other debts and liabilities of the Company (and
of the costs, charges and expenses of any winding up) shall be distributed
amongst the holders of the A Ordinary Shares and the holders of the B Ordinary
Shares pari passu as if they were
all shares of the same class;

 

Voting

 

4.5                                 every holder of A Ordinary Shares and B Ordinary Shares who (being
an individual) is present or (being a corporation) is present by a duly
authorised representative (not being himself a member entitled to vote) shall
have one vote for every such share of which he is the holder.

 

AUTHORITY TO ALLOT

 

5.                                       The directors are generally and unconditionally authorised pursuant
to section 80 of the Act to allot relevant securities (within the meaning
of section 80(2) of the Act).  The
authority hereby conferred shall, subject to section 80(7) of the Act, be
for a period of five years from the date of adoption of these Articles unless
renewed varied or revoked by the Company in general meeting and the maximum
amount of relevant securities which may be allotted pursuant to such authority
shall be the authorised but as yet unissued share capital of the Company at the
date of adoption of these Articles or, where the authority is renewed, at the
date of the renewal.

 

6.                                       The directors shall be entitled under the authority contained in
Article 5 or any renewal thereof to make at any time prior to the expiry
of such authority any offer or agreement which would or might require relevant
securities of the Company to be allotted after the expiry of such authority.

 

7.                                       The provisions of sections 89(1) and 90(1) to (6) of the Act shall
not apply to the Company.

 

6

 

8.             Subject
to the provisions of the Act and without prejudice to any rights attached to
any existing shares, any share may be issued with such rights or restrictions
as the Company may by ordinary resolution determine or, subject to and in
default of such determination, as the directors shall determine.

 

9.             Subject
to the provisions of the Act, shares may be issued which are to be redeemed or
are liable to be redeemed at the option of the Company or the holder on such
terms and in such manner as may be provided by the Articles.

 

10.           Subject
to the provisions of Articles 5 to 9 inclusive, the provisions of the Act and
to any resolution of the Company in general meeting passed pursuant to those
provisions:

 

10.1         all
unissued shares for the time being in the capital of the Company (whether
forming part of the original or any increased share capital) shall be at the
disposal of the directors; and

 

10.2         the
directors may allot (with or without conferring a right of renunciation), grant
options over, or otherwise dispose of them to such persons on such terms and
conditions and at such times as they think fit.

 

11.           The
Company may exercise the powers of paying commissions conferred by the
Act.  Subject to the provisions of the
Act, any such commission may be satisfied by the payment of cash or by the
allotment of fully or partly paid shares or partly in one way and partly in the
other.

 

12.           Except
as required by law, no person shall be recognised by the Company as holding any
share upon any trust and (except as otherwise provided by the Articles or by
law) the Company shall not be bound by or recognise any interest in any share
except an absolute right to the entirety thereof in the holder.

 

SHARE
CERTIFICATES

 

13.           Every
member, upon becoming the holder of any shares, shall be entitled without
payment to one certificate for all the shares of each class held by him (and,
upon transferring a part of his holding of shares of any class, to a
certificate for the balance of such holding) or several certificates each for
one or more of his shares upon payment for every certificate after the first of
such reasonable sum as the directors may determine.  Every certificate shall be sealed with the
Seal or executed in such other manner as the directors may approve, having
regard to the Act and the provisions of the Articles, and shall specify the
number, class and distinguishing numbers (if any) of the shares to which it
relates and the amount or respective amounts paid up thereon.  The Company shall not be bound to issue more
than one certificate for shares held jointly by several persons and delivery of
a certificate to one joint holder shall be a sufficient delivery to all of
them.

 

14.           If a
share certificate is defaced, worn-out, lost or destroyed, it may be renewed on
such terms (if any) as to evidence and indemnity and payment of the expenses
reasonably incurred by the Company in investigating evidence as the directors
may determine but 

 

7

 

otherwise free of charge, and (in the case
of defacement or wearing-out) on delivery up of the old certificate.

 

LIEN

 

15.           The
Company shall have a first and paramount lien on every share (not being a fully
paid share) for all moneys (whether presently payable or not) payable at a
fixed time or called in respect of that share. 
The directors may at any time declare any share to be wholly or in part
exempt from the provisions of this Article 15.  The Company’s lien on a share shall extend to
any amount payable in respect of it.

 

16.           The
Company may sell in such manner as the directors determine any shares on which
the Company has a lien if a sum in respect of which the lien exists is
presently payable and is not paid within fourteen clear days after notice has
been given to the holder of the share or to the person entitled to it in
consequence of the death or bankruptcy of the holder, demanding payment and
stating that if the notice is not complied with the shares may be sold.

 

17.           To
give effect to a sale the directors may authorise some person to execute an
instrument of transfer of the shares sold to, or in accordance with the
directions of, the purchaser.  The title
of the transferee to the shares shall not be affected by any irregularity in or
invalidity of the proceedings in reference to the sale.

 

18.           The net
proceeds of the sale, after payment of the costs, shall be applied in payment
of so much of the sum for which the lien exists as is presently payable, and
any residue shall (upon surrender to the Company for cancellation of the
certificate for the shares sold and subject to a like lien for any moneys not
presently payable as existed upon the shares before the sale) be paid to the
person entitled to the shares at the date of the sale.

 

CALLS
ON SHARES AND FORFEITURE

 

19.           Subject
to the terms of allotment, the directors may make calls upon the members in
respect of any moneys unpaid on their shares (whether in respect of nominal
value or premium) and each member shall (subject to receiving at least fourteen
clear days’ notice specifying when and where payment is to be made) pay to the
Company as required by the notice the amount called on his shares.  A call may be required to be paid by
instalments.  A call may, before receipt
by the Company of any sum due thereunder, be revoked in whole or part and
payment of a call may be postponed in whole or part.  A person upon whom a call is made shall
remain liable for calls made upon him notwithstanding the subsequent transfer
of the shares in respect whereof the call was made.

 

20.           A call
shall be deemed to have been made at the time when the resolution of the
directors authorising the call was passed.

 

21.           The
joint holders of a share shall be jointly and severally liable to pay all calls
in respect thereof.

 

22.           If a
call remains unpaid after it has become due and payable, the person from whom
it is due and payable shall pay interest on the amount unpaid from the day it
became due and

 

8

 

payable until it is paid and shall also pay all costs
and expenses incurred by the Company as determined by the directors in order to
procure payment of the sums due or in consequence of the non-payment of such
sums.  The rate of interest shall be the
rate fixed by the terms of allotment of the share or in the notice of the call
or, if no rate is fixed, at the appropriate rate (as defined by the Act) but
the directors may waive payment of the interest, costs and expenses wholly or
in part.

 

23.           An
amount payable in respect of a share on allotment or at any fixed date, whether
in respect of nominal value or premium or as an instalment of a call, shall be
deemed to be a call and if it is not paid the provisions of the Articles shall
apply as if that amount had become due and payable by virtue of a call.

 

24.           Subject
to the terms of allotment, the directors may make arrangements on the issue of
shares for a difference between the holders in the amounts and times of payment
of calls on their shares.

 

25.           The
directors may, if they think fit, receive from any member willing to advance
the same all or any part of the moneys uncalled and unpaid upon any shares held
by him, and upon all or any of the moneys so advanced may (until the same
would, but for such advance, become payable) pay interest at such rate as may
be agreed upon between the directors and the member paying such sum in advance.

 

26.           If a
call remains unpaid after it has become due and payable, the directors may give
to the person from whom it is due not less than fourteen clear days’ notice
requiring payment of the amount unpaid together with any interest which may
have accrued plus expenses or costs determined in accordance with Article 22. 
The notice shall name the place where payment is to be made and shall
state that if the notice is not complied with the shares in respect of which
the call was made will be liable to be forfeited.

 

27.           If the
notice is not complied with any share in respect of which it was given may,
before the payment required by the notice has been made, be forfeited by a
resolution of the directors and the forfeiture shall include all dividends or
other moneys payable in respect of the forfeited shares and not paid before the
forfeiture.

 

28.           Subject
to the provisions of the Act, a forfeited share may be sold, re-allotted or
otherwise disposed of on such terms and in such manner as the directors
determine either to the person who was before the forfeiture the holder or to
any other person and at any time before sale, re-allotment or other
disposition, the forfeiture may be cancelled on such terms as the directors
think fit.  Where for the purposes of its
disposal a forfeited share is to be transferred to any person the directors may
authorise some person to execute an instrument of transfer of the share to that
person.

 

29.           A
person any of whose shares have been forfeited shall cease to be a member in
respect of them and shall surrender to the Company for cancellation the
certificate for the shares forfeited but shall remain liable to the Company for
all moneys which at the date of forfeiture were presently payable by him to the
Company in respect of those shares with interest at the rate at which interest
was payable on those moneys before the forfeiture or, if no interest was so
payable, at the appropriate rate (as defined in the Act) plus costs and
expenses from the date of forfeiture until payment but the directors may waive

 

9

 

payment wholly or in part or enforce payment without
any allowance for the value of the shares at the time of forfeiture or for any
consideration received on their disposal.

 

30.           A
statutory declaration by a director or the secretary that a share has been
forfeited on a specified date shall be conclusive evidence of the facts stated
in it as against all persons claiming to be entitled to the share and the
declaration shall (subject to the execution of an instrument of transfer if
necessary) constitute a good title to the share and the person to whom the
share is disposed of shall not be bound to see to the application of the
consideration, if any, nor shall his title to the share be affected by any
irregularity in or invalidity of the proceedings in reference to the forfeiture
or disposal of the share.

 

TRANSFER OF SHARES

 

31.           The
directors shall not register any transfer of B Ordinary Shares:

 

31.1         unless
such transfer is made in accordance with the provisions of Articles 38 to 60 (Put and Call Option); or

 

31.2         such
transfer is made in accordance with the provisions of Articles 72 to 79 (Pre-Emption Transfers) and (i) such
transfer is made after 3 April 2008 and (ii) the transfer is not being
made pursuant to any exercise of the Put Option or the Call Option.

 

32.           The
directors may at any time register any transfer of B Ordinary Shares if such
transfer is made in accordance with Articles 61 to 71 (Drag Along and Tag Along).

 

33.           The
directors shall register any transfer of A Ordinary Shares which complies with
the provisions of these Articles.

 

34.           Subject
to such of the restrictions set out in these Articles as may be applicable, any
member may transfer all or any of his shares by instrument of transfer in
writing in any usual form or in any other form which the directors may
approve.  The instrument of transfer
shall be executed by or on behalf of the transferor and, unless the share is
fully paid, by or on behalf of the transferee and the transferee shall remain
the holder of the shares and as such a member of the Company until the name of
the transferee is entered in the Register of Members in respect thereof.

 

35.           If the
directors refuse to register a transfer of a share they shall within two months
after the date on which the transfer was lodged with the Company send to the
transferee notice of the refusal.

 

36.           No fee
shall be charged for the registration of any instrument of transfer or other
document relating to or affecting the title to any share.

 

37.           The
Company shall be entitled to retain any instrument of transfer which is
registered, but any instrument of transfer which the directors refuse to
register shall be returned to the person lodging it when notice of the refusal
is given.

 

10

 

PUT
AND CALL OPTION

 

38.           Each B
Ordinary Shareholder grants to the A Ordinary Shareholder an Option to purchase
the Granted Securities and the Purchased Securities for the Option Price on the
terms and subject to the conditions of these Articles (the “Call Option”).

 

39.           The A
Ordinary Shareholder grants to each B Ordinary Shareholder an Option to sell
the Granted Securities and the Purchased Securities to the A Ordinary
Shareholder for the Option Price on the terms and subject to the conditions of
these Articles (the “Put Option”).

 

40.           The A
Ordinary Shareholder may exercise the Call Option with respect to:

 

40.1         any
Granted Securities that have Vested and/or 1/3 of the Purchased Securities held
by each B Ordinary Shareholder by serving a Call Exercise Notice on any B
Ordinary Shareholder at any time during the 2006 Exercise Period; and/or

 

40.2         any
Granted Securities that have Vested and/or 2/3rd of the Purchased
Securities held by each B Ordinary Shareholder (less any Purchased Securities
or Granted Securities previously held by that B Ordinary Shareholder which have
been acquired by the A Ordinary Shareholder pursuant to an earlier exercise of
the Put Option or the Call Option) by serving a Call Exercise Notice on any B
Ordinary Shareholder at any time during the 2007 Exercise Period; and/or

 

40.3         any
Granted Securities that have Vested and/or any Purchased Securities held by
each B Ordinary Shareholder (less any Purchased Securities or Granted
Securities previously held by that B Ordinary Shareholder which have been
acquired by the A Ordinary Shareholder pursuant to an earlier exercise of the
Put Option or the Call Option) by serving a Call Exercise Notice on any B
Ordinary Shareholder at any time during the 2008 Exercise Period.

 

41.           Each B
Ordinary Shareholder if he is an employee or a Good Leaver may exercise the Put
Option with respect to:

 

41.1         any of
its Granted Securities that have Vested and/or 1/3 of its Purchased Securities
by serving a Put Exercise Notice on the A Ordinary Shareholder at any time
during the 2006 Exercise Period; and/or

 

41.2         any of
its Granted Securities that have Vested and/or 2/3rd of its
Purchased Securities (less any Purchased Securities or Granted Securities
previously held by it which have been acquired by the A Ordinary Shareholder
pursuant to an earlier exercise of the Put Option or the Call Option) by
serving a Put Exercise Notice on the A Ordinary Shareholder at any time during
the 2007 Exercise Period; and/or

 

41.3         any of
its Granted Securities that have Vested and/or any of its Purchased Securities
(less any Purchased Securities or Granted Securities previously held by it
which have been acquired by the A Ordinary Shareholder pursuant to an earlier
exercise of the Put Option or the Call Option) by serving a Put Exercise Notice
on the A Ordinary Shareholder at any time during the 2008 Exercise Period.

 

42.           Notwithstanding
the foregoing, if any B Ordinary Shareholder is a Bad Leaver, the A Ordinary
Shareholder may, with respect to:

 

11

 

42.1         any
Granted Securities of that B Shareholder that have Vested on or before the 184th
day preceding the date upon which the B Ordinary Shareholder ceases to be an
employee of the Company, exercise the Call Option immediately or at any time
thereafter by serving a Call Exercise Notice on the B Ordinary Shareholder;
and/or

 

42.2         any
Granted Securities of that B Shareholder that have Vested after the 184th
day preceding the date upon which the B Ordinary Shareholder ceases to be an
employee of the Company, exercise the Call Option by serving a Call Exercise
Notice on the B Ordinary Shareholder at any time not less than 183 days after
the date upon which such Granted Securities have Vested; and

 

42.3         any
Granted Securities of that B Shareholder that have not Vested, exercise the
Call Option immediately or at any time thereafter.

 

43.           An
Exercise Notice shall constitute a legally binding contract between the
relevant B Ordinary Shareholder and the A Ordinary Shareholder for the sale and
purchase of the entire legal and beneficial interest in the number of shares
specified in the Exercise Notice free from any claim, charge, lien or
encumbrance, and with all rights attached thereto at the Completion Date.

 

44.           Subject
to Article 45 below, where the Option Price is to be the Fair Market
Value, such Fair Market Value shall be the price per share as at the date of
the most recent Valuation Report as being in the directors’ opinion the fair
value of a share as between a willing seller and a willing buyer (with no
discount to reflect the unquoted status of the shares) provided that the
directors, in determining the fair value of such shares shall:

 

44.1         determine
the sum which a willing buyer would offer to a willing seller for the whole of
the issued share capital of the Company;

 

44.2         divide
the resultant figure by the number of issued shares (assuming that all
outstanding options or rights to acquire shares have been exercised in full
(whether or not yet exercisable) and assuming that any shares available to be
allotted to employees or directors of the Company pursuant to any employees’
share scheme have been allotted and assuming that any Granted Securities in the
Company have Vested);

 

44.3         base
their valuation on the latest Accounts of the Company and any projections or
forecasts prepared by the directors, and for the avoidance of doubt the
directors shall not base their valuation on any financial statements,
projections or forecasts prepared by any other person which have not been first
approved by a simple majority of the directors of the Company,

 

but so
that there shall be no addition or subtracting of any premium or discount
arising in relation to the size of the holding the subject of the relevant
transfer, or in relation to any restrictions on the transferability of the
shares arising only out of the provisions of the Articles and provided further
that the directors shall take into account in relation to determining the
appropriate figure for Article 40.1 above any

 

12

 

bona fide offer from any
third party to purchase the entire issued share capital the subject of an
Exercise Notice.

 

45.           If (i)
any B Ordinary Shareholder ceases to be an employee of the Company for whatever
reason and (ii) the A Ordinary Shareholder elects to exercise the Call Option
pursuant to Article 42 above, the Option Price shall be the Option Price
of the shares referred to in the relevant Exercise Notice as at the date of the
most recent Valuation Report, provided that if:

 

(a)           the
most recent Valuation Report was delivered to the parties on or before the date
which is four months prior to the service of the Call Exercise Notice on the
relevant B Ordinary Shareholder, the A Ordinary Shareholder shall arrange for
the directors to prepare an updated Valuation Report and serve it on the
parties and the Option Price as set out in such updated Valuation Report shall
be the relevant Option Price for the purposes of this Article 45; or

 

(b)           (i)
the Call Exercise Notice is exercised within four months of the service of the
most recent Valuation Report on the relevant B Ordinary Shareholder and (ii) an
event or circumstance has occurred since the most recent Valuation Report such
that the Fair Market Value of the Shares as set out in the most recent
Valuation Report does not correspond to the Fair Market Value of the Shares as
at the date of service of the relevant Call Exercise Notice, the A Ordinary
Shareholder or the holders of a majority of the B Ordinary Shares may arrange
for the directors to prepare an updated Valuation Report and serve it on the
parties and the Option Price as set out in such updated Valuation Report shall
be the relevant Option Price for the purposes of this Article 45.

 

46.           The
directors shall prepare the Valuation Report, which shall set out the Fair
Market Value of the Shares as at the date of the Valuation Report and shall
serve the Valuation Report on the A Ordinary Shareholder and the B Ordinary
Shareholder, on or about 20 March 2006, 20 March 2007, and 20
March 2008 respectively.

 

47.           The
Fair Market Value of the shares as set out in the Valuation Report shall be
final and binding on the parties, save that if the holders of a majority of the
B Ordinary Shares serve notice on the A Ordinary Shareholder that the Fair
Market Value as set out in the relevant Valuation Report does not, in their
opinion reflect the true Fair Market Value of the shares, either party may
within 10 Business Days of the date of such notice refer the matter to the
Arbitrator.

 

48.           Within
20 Business Days of referral of the matter to the Arbitrator pursuant to
Article 47 above, each of the A Ordinary Shareholder and the relevant B
Ordinary Shareholder shall submit to the Arbitrator its own determination of
the Fair Market Value of the shares specified in the Exercise Notice, including
an explanation of the basis of its valuation, the methodology applied and key
assumptions used.  As soon as reasonably
practicable thereafter, the Arbitrator will determine and notify the parties in
writing which of the two parties’ valuation (the “Closer
Valuation”) more closely reflects in the opinion of the Arbitrator
the Fair Market Value of the shares specified in the Exercise Notice and the
Closer Valuation shall be deemed to be Fair Market Value for the purposes of
determining the Option Price for such shares.

 

13

 

49.           The
decision of the Arbitrator shall, save in the case of manifest error, be final
and binding on the A Ordinary Shareholder and the relevant B Ordinary
Shareholder.  The costs incurred by the
Arbitrator shall be borne by the party whose valuation is not adopted by the
Arbitrator as reflecting the Fair Market Value of the shares specified in the
Exercise Notice.

 

50.           The
parties shall use all reasonable endeavours to appoint PwC as the Arbitrator
within 14 days of the service of any notice pursuant to Articles 47 and 59 or
such later date as the parties may agree. 
If PwC shall not agree to accept such appointment, the Arbitrator shall
be appointed by agreement between the parties or, if they do not so agree
within 7 days of the service of such notice, the appointment shall be made by
the President, for the time being, of the Institute of Chartered Accountants on
the application of either party.

 

51.           Completion
of the sale and purchase of the shares (or, in the case of the partial exercise
of an Option, the number of the shares referred to in the relevant Exercise
Notice) (“Completion”) shall take place at the
offices of the Company on either (i) the date specified in the relevant
Exercise Notice being no less than 10 and no more than 12 Business Days after
service of the relevant Exercise Notice or (ii) in the event that the matter is
referred to the Arbitrator in accordance with Article 48, the date being
10 Business Days after the date upon which the Arbitrator publishes its
decision (the “Completion Date”).

 

52.           At
Completion, the B Ordinary Shareholder shall deliver or procure the delivery to
the A Ordinary Shareholder of:

 

52.1         a duly
executed transfer or transfers in respect of the number of the shares referred
to in the relevant Exercise Notice in favour of the A Ordinary Shareholder or
such person(s) as the A Ordinary Shareholder may direct;

 

52.2         the
share certificate(s) representing the shares referred to in the relevant
Exercise Notice (or an express indemnity in a form reasonably satisfactory to
the A Ordinary Shareholder in the case of any share certificate(s) found to be
missing); and

 

52.3         such other documents as may be necessary to enable the A Ordinary
Shareholder or its nominee(s) to obtain a good title to the shares referred to
in the relevant Exercise Notice.

 

53.           Subject
to compliance by the relevant B Ordinary Shareholder with its obligations set
out in Article 52, on Completion the A Ordinary Shareholder will pay to
the relevant B Ordinary Shareholder the Option Price.  The Option Price shall be satisfied either in
cash or at the choice of the A Ordinary Shareholder by the allotment of
Priceline Shares to the relevant B Ordinary Shareholder in accordance with
Article 54.

 

54.           If
pursuant to Article 53 above, the A Ordinary Shareholder elects to satisfy
the Option Price by way of the allotment of Priceline Shares, the aggregate
number of Priceline Shares to be allotted to the relevant B Ordinary
Shareholder shall be calculated as follows:

 

14

 

	
   

  	
  No of
  Priceline Shares =

  	
  Option
  Price  x Y

  
	
   

  	
   

  	
  the
  Issue Price

  	
   

  	
   

  

 

where the Issue Price is the closing price of
Priceline Shares as reported on NASDAQ on the last day prior to the date of
Completion on which NASDAQ was open for business; and

 

Y is the number of B Ordinary Shares referred to in the
relevant Exercise Notice.

 

55.           Until
the Completion Date, the relevant B Ordinary Shareholder shall be entitled to
exercise all voting and other rights attached to the shares referred to in the
relevant Exercise Notice and shall be entitled to receive and retain all
dividends and other distributions in respect of the shares.

 

56.           If any
of the events in Article 57 occurs, such adjustments (if any) shall be
made as may be required to the number and/or description of the shares and/or
to the Option Price so as to preserve as far as possible the equivalent
economic value of the rights of the parties immediately prior to the relevant
event having regard to any diluting or concentrating effect of the relevant
event and the redesignation of, or replacement with any other securities of,
the shares.

 

57.           The
events referred to in Article 56 are the occurrence of any of the
following in relation to the shares:

 

57.1         a
sub-division, consolidation or reclassification of the shares;

 

57.2         a
distribution (whether by way of bonus, capitalisation or similar issue or
otherwise) by the Company to existing holders of the shares of (i) additional
shares or (ii) other share capital or securities or (iii) securities, rights or
warrants granting the right to a distribution of shares or to purchase,
subscribe or receive shares or any other shares or securities or assets (other
than the payment of a cash dividend);

 

57.3         the
reclassification of, or a change in, the shares (other than one referred to in
Article 57.2);

 

57.4         the
consolidation, amalgamation or merger of the Company with or into another
entity (other than a consolidation, amalgamation or merger following which the
Company is the surviving entity and which does not result in any
reclassification of, or change in, the shares); or

 

57.5         any
event in respect of the shares analogous to any of the foregoing events or
otherwise having a diluting or concentrating effect on the market value of the
shares.

 

58.           Any
adjustment made in accordance with Article 56 shall have effect from the
date of the relevant event in Article 56.

 

59.           The
nature of any adjustment required to be made in accordance with Article 57
shall be determined by the directors of the Company within 10 Business Days of
the occurrence of any of the events referred to in Article 57 above, save
that if the holders of a majority of the B Ordinary Shares serve notice on the
A Ordinary Shareholder

 

15

 

that the adjustment determined by the directors
pursuant to this Article 59 does not, in their opinion reflect the true
adjustment that is required, either party may within 10 Business Days of the
date of such notice refer the matter to the Arbitrator.

 

60.           Articles
38 to 60 shall only be amended with the consent of the holders of a majority of
the B Ordinary Shares.

 

TAG ALONG RIGHTS

 

61.           If the
effect of any transfer of shares by the A Ordinary Shareholder would, if
completed, enable any person or persons acting in concert with each other to,
directly or indirectly own shares of the Company carrying the right to 50% or
more of the total number of votes which could be cast at a general meeting, the
transferor shall procure the making by the proposed transferee (the “Offeror”) of an Offer to all of the B
Ordinary Shareholders.

 

62.           An
Offer means an unconditional offer, open for acceptances for not less than 21
days, to purchase the B Ordinary Shares held by the recipient of an Offer for a
consideration (in cash or with a cash alternative) and on terms no less
favourable than the most favourable terms provided by such person during the
twelve months preceding and including the proposed date of such transfer in
relation to shares of the Company.

 

63.           Every
B Ordinary Shareholder on receipt of an Offer shall be bound within 21 days of
the date of such Offer (which date shall be specified therein) either to accept
or reject such offer in writing (and in default of so doing shall be deemed to
have rejected the Offer) (the “Offer Period”).

 

64.           In the
event that an Offer is made, then no member shall transfer shares to the
Offeror unless, in relation to every acceptance received within the Offer
Period from members, the Offeror executes all such documents, pays all such
consideration and does all such other acts or things which are necessary to be
done by the Offeror to transfer the shares of the accepting members to the
Offeror in accordance with the terms of the Offer.

 

65.           In the
event that, pursuant to an Offer being made in accordance with Article 61,
the Offeror becomes the holder or has agreed to become the holder of shares
conferring the right in aggregate to exercise 90% or more of the votes which
could be cast at a general meeting, then if so requested by any member within
10 Business Days after the end of the Offer Period, the Offeror shall be bound
to purchase from such member all (but not some only) of the Shares at a price
per share equal to and on terms no less favourable than those on which the
Offer must be made in accordance with Article 61.  The provisions of Article 61 shall apply
mutatis mutandis to any transfer
of shares in accordance with this Article 65.

 

16

 

DRAG ALONG RIGHTS

 

66.           If the
A Ordinary Shareholder (the “Seller”) wishes
to transfer shares in the Company representing in aggregate not less than 50%
of the A Ordinary Shares of the Company (the “Majority
Holding”) to any third party (the “Purchaser”),
then the Seller shall procure (as far as it is able) that the Purchaser makes
the same offer or offers to all the other shareholders of the Company for the
same consideration per respective share as the consideration it is to receive
from the Purchaser in respect of the transfer of the Majority Holding to the
Purchaser (the “Drag Along Price”).

 

67.           The
Seller shall give notice to the Company of:

 

(i)            its intention to transfer
the Majority Holding to the Purchaser;

(ii)           the Drag Along Price; and

(iii)          the requirement that all Shares
issued at the time of such notice (other than the shares held by the Seller)
are required to be transferred to the Purchaser for the Drag Along Price,

 

(the “Drag
Along Notice”).

 

68.           Upon
receipt of the Drag Along Notice, the Company shall procure that such notice is
delivered promptly to each B Ordinary Shareholder.

 

69.           The
giving of a Drag Along Notice by the Seller to the Company in accordance with
Article 67 shall have the effect of obliging the holder from time to time
of any B Ordinary Shares to sell to the Purchaser (or its nominee) the B
Ordinary Shares for the Drag Along Price.

 

70.           Completion
of the sale of the B Ordinary Shares shall take place on the date of completion
of the transfer of the Majority Holding.

 

71.           The
directors shall pay any purchase money received from the Purchaser with respect
to the B Ordinary Shares into a separate bank account in the Company’s name and
shall hold such money on trust (but without interest) for the owner of the B
Ordinary Shares until he (if necessary) delivers up his certificate for the
relevant B Ordinary Shares to the Company when he shall thereupon be paid the
purchase money.

 

PRE-EMPTION
TRANSFERS

 

72.           No
member or person entitled by transmission shall transfer or dispose of or agree
to transfer or dispose of or grant any interest or right in any B Ordinary
Share (hereinafter a “transferee”)
without first offering the same for transfer to the A Ordinary
Shareholder.  Such offer may be in
respect of all or part only of the B Ordinary Shares held by the proposing
transferor and shall be made by the proposing transferor by the giving in writing
of a notice to the Company (a “Transfer Notice”).

 

73.           Each
Transfer Notice shall specify the number and class of shares offered (the “Sale Shares”) and (unless the Transfer Notice is deemed
given as provided by these Articles) the price per share at which the Sale
Shares are offered (the “Specified Price”)
and the identity(ies) of the proposed transferee(s) (if any) and it shall

 

17

 

constitute the directors as the agent of the proposed
transferor for the sale of the Sale Shares to the A Ordinary Shareholder.

 

74.           Upon
receipt by the Company of the Transfer Notice the directors shall forthwith
give written notice to the A Ordinary Shareholder of the number and description
of the Sale Shares and the Specified Price and the identity(ies) of the
proposed transferee(s) (if any) inviting each of such holders to state by
notice in writing to the Company within 60 days whether he is willing to
purchase any of the Sale Shares and, if so, what maximum number of the Sale
Shares (“Maximum”) he is willing to purchase,
and shall also forthwith give a copy of such notice to the proposing
transferor.

 

75.           Within
30 days of the expiration of the said period of 60 days the directors shall
allocate to the A Ordinary Shareholder the Maximum, provided that if the
Maximum stated in all notices served pursuant to Article 74 exceeds the
aggregate number of Sale Shares, the number of shares to be allocated to each A
Ordinary Shareholder shall be scaled down pro rata to the size of the Maximum
set forth in the notice.

 

76.           Forthwith
upon such allocation being made, the A Ordinary Shareholder shall be bound to
pay to the Company (as agent for the proposing transferor) the total sale
proceeds for the transfer of the number of shares allocated to the A Ordinary
Shareholder pursuant to Article 75 at the price per share equal to the
Specified Price (the “Proceeds”) and
each A Ordinary Shareholder shall accept a transfer of such number of shares
and the proposing transferor shall be bound forthwith upon payment of the
Proceeds to deliver to the Company (as agent for the A Ordinary Shareholder)
such documents as are required to transfer such shares to the A Ordinary
Shareholder.

 

77.           If in
any case the proposing transferor, after having become bound to transfer Sale
Shares as aforesaid makes default in so doing the Company may receive the
Proceeds and the directors may appoint some person to execute instruments of
transfer of such Sale Shares in favour of the A Ordinary Shareholder and shall thereupon,
subject to such transfers being properly stamped, cause the name of the A
Ordinary Shareholder to be entered in the Register of Members as the holder of
those Sale Shares allocated to him as aforesaid and shall hold the Proceeds in
trust for the proposing transferor.  The
issue of a receipt by the Company therefor shall be a good discharge to the A
Ordinary Shareholder and after its name shall have been entered in the Register
of Members in exercise of the aforesaid power the validity of the transactions
shall not be questioned by any person.

 

78.           If, at
the expiration of the period of 30 days referred to in Article 75 above,
any of the Sale Shares have not been allocated in accordance with the
provisions of Article 77, the proposing transferor may at any time within
a period of 60 days after the expiration of the said period of 30 days referred
to in Article 75 above transfer such unallocated Sale Shares to the
proposed transferee(s) (if any) specified in the Transfer Notice, or to any
other person at any price per Share not being less than the Specified Price
provided that the Board may require to be satisfied on reasonable grounds that
such unallocated Sale Shares are being transferred in pursuance of a bona fide
sale for the consideration stated in the transfer without any deduction, rebate
or allowance whatsoever to the transferee and if not so satisfied may refuse to
register the instrument of transfer.

 

18

 

TRANSMISSION
OF SHARES

 

79.           If a
member dies the survivor or survivors where he was a joint holder, and his
personal representatives where he was a sole holder or the only survivor of
joint holders, shall be the only persons recognised by the Company as having
any title to his interest; but nothing herein contained shall release the
estate of a deceased member from any liability in respect of any share which
had been jointly held by him.

 

80.           A
person becoming entitled to a share in consequence of the death or bankruptcy
of a member may, upon such evidence being produced as the directors may
properly require, elect either to become the holder of the share or to have
some person nominated by him registered as the transferee.  If the person so becoming entitled shall
elect to become registered as the holder he shall give notice to the Company to
that effect.  If he elects to have
another person registered he shall execute an instrument of transfer of the
share to that person.  All the Articles
relating to the transfer of shares shall apply to the notice or instrument of
transfer as if it were an instrument of transfer executed by the member and the
death or bankruptcy of the member had not occurred.  The provisions of this Article shall
apply to any person becoming entitled to a share in consequence of the merger
or consolidation of any member being a corporation as they apply to any person
becoming entitled to a share in consequence of the death or bankruptcy of a
member.

 

81.           A
person becoming entitled to a share in consequence of the death or bankruptcy
of a member shall have the rights to which he would be entitled if he were the
holder of the share, except that he shall not, before being registered as the
holder of the share, be entitled in respect of it to attend or vote at any
meeting of the Company or at any separate meeting of the holders of any class
of shares in the Company.  

 

ALTERATION
OF SHARE CAPITAL

 

82.           The
Company may by ordinary resolution:

 

82.1         increase
its share capital by new shares of such amount as the resolution prescribes;

 

82.2         consolidate
and divide all or any of its share capital into shares of larger amount than
its existing shares;

 

82.3         subject
to the provisions of the Act, sub-divide its shares, or any of them, into
shares of smaller amount and the resolution may determine that, as between the
shares resulting from the sub-division, any of them may have any preference or
advantage as compared with the others; and

 

82.4         cancel
shares which, at the date of the passing of the resolution, have not been taken
or agreed to be taken by any person and diminish the amount of its share
capital by the amount of the shares so cancelled.

 

83.           Whenever
as a result of a consolidation of shares any members would become entitled to
fractions of a share, the directors may, on behalf of those members, sell the
shares representing the fractions for the best price reasonably obtainable to
any person (including, subject to the provisions of the Act, the Company) and
distribute the net proceeds of sale in due proportion among those members, and
the directors may

 

19

 

authorise some person to execute an instrument of
transfer of the shares to, or in accordance with the directions of, the
purchaser.  The transferee shall not be
bound to see to the application of the purchase money nor shall his title to
the shares be affected by any irregularity in or invalidity of the proceedings
in reference to the sale.

 

84.           Subject
to the provisions of the Act, the Company may by special resolution reduce its
share capital, any capital redemption reserve and any share premium account in
any way.

 

PURCHASE
OF OWN SHARES

 

85.           Subject
to the provisions of the Act, the Company may purchase its own shares
(including any redeemable shares) and, if it is a private company, make a
payment in respect of the redemption or purchase of its own shares otherwise
than out of distributable profits of the Company or the proceeds of a fresh
issue of shares.

 

GENERAL
MEETINGS

 

86.           All
general meetings other than annual general meetings shall be called
extraordinary general meetings.

 

87.           The
directors may call general meetings and, on the requisition of members pursuant
to the provisions of the Act, shall forthwith proceed to convene an
extraordinary general meeting for a date not later than eight weeks after
receipt of a requisition.  If there are
not within the United Kingdom sufficient directors to call a general meeting,
any director or any member of the Company may call a general meeting.

 

NOTICE
OF GENERAL MEETINGS

 

88.           An
annual general meeting and an extraordinary general meeting called for the
passing of a special resolution shall be called by at least twenty-one clear
days’ notice.  All other extraordinary
general meetings shall be called by at least fourteen clear days’ notice but a
general meeting may be called by shorter notice if it is so agreed:

 

88.1         in the
case of an annual general meeting, by all the members entitled to attend and
vote thereat; and

 

88.2         in the
case of any other meeting, by a majority in number of the members having a
right to attend and vote being a majority together holding not less than
ninety-five per cent in nominal value of the shares giving that right or such
other majority as has been decided on by elective resolution of the members
under the Act.

 

89.           The
notice shall specify the time and place of the meeting and the general nature
of the business to be transacted and, in the case of an annual general meeting,
shall specify the meeting as such.

 

90.           Subject
to the provisions of these Articles and to any restrictions imposed on any
shares, the notice shall be given to all members to all persons entitled to a
share in consequence of the death or bankruptcy of a member and to the
auditors.

 

20

 

91.           The
accidental omission to give notice of a meeting to, or the non-receipt of
notice of a meeting by, any person entitled to receive notice shall not
invalidate the proceedings at that meeting.

 

92.           Where
for any purpose an ordinary resolution of the Company is required, a special or
extraordinary resolution shall also be effective.  Where for any purpose an extraordinary
resolution is required, a special resolution shall also be effective.

 

PROCEEDINGS
AT GENERAL MEETINGS

 

93.           No
business shall be transacted at any meeting unless a quorum is present.  Two persons entitled to vote upon the
business to be transacted, each being a member or a proxy for a member or a
duly authorised representative of a corporation, shall be a quorum.  

 

94.           If
such a quorum is not present within half an hour from the time appointed for
the meeting, or if during the meeting such a quorum ceases to be present, the
meeting shall stand adjourned to the same day in the next week at the same time
and place or to such time and place as the directors may determine.

 

95.           The
chairman, if any, of the board of directors or in his absence some other
director nominated by the directors shall preside as chairman of the meeting,
but if neither the chairman nor such other director (if any) be present within
fifteen minutes after the time appointed for holding the meeting and willing to
act, the directors present shall elect one of their number to be chairman and,
if there is only one director present and willing to act, he shall be chairman.

 

96.           If no
director is willing to act as chairman, or if no director is present within
fifteen minutes after the time appointed for holding the meeting, the members
present and entitled to vote shall choose one of their number to be chairman.

 

97.           A
director shall, notwithstanding that he is not a member, be entitled to attend
and speak at any general meeting and at any separate meeting of the holders of
any class of shares in the Company.

 

98.           The
chairman may, with the consent of a meeting at which a quorum is present (and
shall if so directed by the meeting), adjourn the meeting from time to time and
from place to place, but no business shall be transacted at an adjourned
meeting other than business which might properly have been transacted at the
meeting had the adjournment not taken place. 
Where a meeting is adjourned for fourteen days or more, at least seven
clear days’ notice shall be given specifying the time and place of the
adjourned meeting and the general nature of the business to be transacted.  Otherwise it shall not be necessary to give
any such notice.

 

99.           A
resolution put to the vote of a meeting shall be decided on a show of hands
unless before, or on the declaration of the result of, the show of hands a poll
is duly demanded by the chairman or any member present in person or by proxy or
duly authorised representative and entitled to vote.

 

100.         Unless a
poll is duly demanded a declaration by the chairman that a resolution has been
carried or carried unanimously, or by a particular majority, or lost, or not
carried by a

 

21

 

particular majority and an entry to that effect in the
minutes of the meeting shall be conclusive evidence of the fact without proof
of the number or proportion of the votes recorded in favour of or against the
resolution.

 

101.         The
demand for a poll may, before the poll is taken, be withdrawn but only with the
consent of the chairman and a demand so withdrawn shall not be taken to have
invalidated the result of a show of hands declared before the demand was made.

 

102.         A poll
shall be taken as the chairman directs and he may appoint scrutineers (who need
not be members) and fix a time and place for declaring the result of the
poll.  The result of the poll shall be
deemed to be the resolution of the meeting at which the poll was demanded.

 

103.         In the
case of an equality of votes, whether on a show of hands or on a poll, the
chairman shall be entitled to a casting vote in addition to any other vote he
may have.

 

104.         A poll
demanded on the election of a chairman or on a question of adjournment shall be
taken forthwith.  A poll demanded on any
other question shall be taken either forthwith or at such time and place as the
chairman directs not being more than thirty days after the poll is
demanded.  The demand for a poll shall
not prevent the continuance of a meeting for the transaction of any business
other than the question on which the poll was demanded.  If a poll is demanded before the declaration
of the result of a show of hands and the demand is duly withdrawn, the meeting
shall continue as if the demand had not been made.

 

105.         No
notice need be given of a poll not taken forthwith if the time and place at
which it is to be taken are announced at the meeting at which it is demanded.  In any other case at least seven clear days’
notice shall be given specifying the time and place at which the poll is to be
taken.

 

106.         A
resolution in writing executed by or on behalf of each member who would have
been entitled to vote upon it if it had been proposed at a general meeting at
which he was present shall be as effectual as if it had been passed at a
general meeting duly convened and held and may consist of several instruments
in the like form each executed by or on behalf of one or more members.

 

VOTES
OF MEMBERS

 

107.         Subject
to any rights or restrictions attached to any shares, on a show of hands every
member who (being an individual) is present in person or (being a corporation)
is present by a duly authorised representative, not being himself a member
entitled to vote, shall have one vote and on a poll every member shall have one
vote for every share of which he is the holder.

 

108.         In the
case of joint holders the vote of the senior who tenders a vote, whether in
person or by proxy, shall be accepted to the exclusion of the votes of the
other joint holders; and seniority shall be determined by the order in which
the names of the holders stand in the register of members.

 

22

 

109.         A member
in respect of whom an order has been made by any court having jurisdiction
(whether in the United Kingdom or elsewhere) in matters concerning mental
disorder may vote, whether on a show of hands or on a poll, by his receiver,
curator bonis or other person authorised in that behalf appointed by that
court, and any such receiver, curator bonis or other person may, on a poll,
vote by proxy.  Evidence to the
satisfaction of the directors of the authority of the person claiming to
exercise the right to vote shall be deposited at the Office, or at such other
place as is specified in accordance with the Articles for the deposit of
instruments of proxy, not less than 48 hours before the time appointed for
holding the meeting or adjourned meeting at which the right to vote is to be
exercised and in default the right to vote shall not be exercisable.

 

110.         No
member shall vote at any general meeting or at any separate meeting of the
holders of any class of shares in the Company, either in person or by proxy, in
respect of any share held by him unless all moneys presently payable by him in
respect of that share have been paid.

 

111.         No
objection shall be raised to the qualification of any voter except at the
meeting or adjourned meeting at which the vote objected to is tendered, and
every vote not disallowed at the meeting shall be valid.  Any objection made in due time shall be
referred to the chairman whose decision shall be final and conclusive.

 

112.         On a
poll votes may be given either personally or by proxy.  A member may appoint more than one proxy to
attend on the same occasion.  A member
entitled to more than one vote need not, if he votes, use all his votes or cast
all the votes he uses the same way.

 

113.         The
appointment of a proxy shall be executed by or on behalf of the appointor and
shall be in any form which is usual or which the directors may approve.

 

114.         The
appointment of a proxy shall be deemed to include the right to demand, or join
in demanding, a poll.  The appointment of
a proxy shall also be deemed to confer authority to vote on any amendment of a
resolution put to the meeting for which it is given as the proxy thinks
fit.  The appointment of a proxy shall,
unless it provides to the contrary, be valid for any adjournment of the meeting
as well as for the meeting to which it relates.  Deposit of an appointment of a
proxy shall not preclude a member from attending and voting at the meeting or
at any adjournment thereof.

 

115.         The
appointment of a proxy and any authority under which it is executed or a copy
of such authority certified notarially or in some other way approved by the
directors may:

 

115.1       in the
case of an instrument in writing, be deposited at the Office or at such other
place within the United Kingdom as is specified in the notice convening the
meeting or in any instrument of proxy sent out by the Company in relation to
the meeting not less than 48 hours before the time for holding the meeting or
adjourned meeting at which the person named in the instrument proposes to vote;
or

 

115.2       in the case of an appointment contained in an
electronic communication, where an address has been specified for the purpose
of receiving electronic communications:

 

115.2.1                    in the notice convening the meeting, or

 

23

 

115.2.2                    in any instrument of proxy sent out by the
Company in relation to the meeting, or

 

115.2.3                    in any invitation contained in an electronic
communication to appoint a proxy issued by the Company in relation to the
meeting,

 

be received at such address
not less than 48 hours before the time for holding the meeting or adjourned
meeting at which the person named in the appointment proposes to vote;

 

115.3       in the
case of a poll taken more than 48 hours after it is demanded, be deposited or
received as aforesaid after the poll has been demanded and not less than 24
hours before the time appointed for the taking of the poll; or

 

115.4       where the
poll is not taken forthwith but is taken not more than 48 hours after it was
demanded, be delivered at the meeting at which the poll was demanded to the
chairman or to the secretary or to any director;

 

and an appointment of proxy which is not deposited,
delivered or received in a manner so permitted shall be invalid.

 

116.         A vote
given or poll demanded by proxy or by the duly authorised representative of a
corporation shall be valid notwithstanding the previous determination of the
authority of the person voting or demanding a poll unless notice of the
determination was received by the Company at the Office or at such other place
at which the instrument of proxy was duly deposited or, where the appointment
of the proxy was contained in an electronic communication, at the address at
which such appointment was duly received before the commencement of the meeting
or adjourned meeting at which the vote is given or the poll demanded or (in the
case of a poll taken otherwise than on the same day as the meeting or adjourned
meeting) the time appointed for taking the poll.

 

NUMBER
OF DIRECTORS

 

117.         Unless
otherwise determined by ordinary resolution, the number of directors (other
than alternate directors) shall not be subject to any maximum but shall not be
less than two.  A sole director may
exercise all the powers and discretions expressed by the Articles to be vested
in the directors generally.

 

ALTERNATE
DIRECTORS

 

118.         Any
director (other than an alternate director) may appoint any other director, or
any other person approved by resolution of the directors and willing to act, to
be an alternate director and may remove from office an alternate director so
appointed by him.  Any appointment or
removal of an alternate director shall be by notice to the Company signed by
the director making or revoking the appointment or in any other manner approved
by the directors.  The notice may be:

 

118.1       delivered
personally to the secretary or to a director other than the director making or
revoking the appointment; or

 

24

 

118.2       sent by
post in a prepaid envelope addressed to the Office or to another address
designated by the directors for that purpose or by leaving it at the Office or
such other address; or

 

118.3       sent by
electronic communication to an address designated by the directors for that
purpose.

 

119.         The
appointment or removal of an alternate director shall take effect when the
notice is deemed delivered in accordance with Articles 118 or 121 (as the case
may be) or on such later date (if any) specified in the notice.

 

120.         An
alternate director shall be entitled to receive notice of all meetings of
directors and of all meetings of committees of directors of which his appointor
is a member, to attend and vote at any such meeting at which the director
appointing him is not personally present, and generally to perform all the functions
of his appointor as a director in his absence but shall not be entitled to
receive any remuneration from the Company for his services as an alternate
director.

 

121.         An
alternate director shall cease to be an alternate director:

 

121.1       if his
appointor ceases to be a director; or

 

121.2       if his
appointor revokes his appointment pursuant to Article 128; or

 

121.3       on the
happening of any event which, if he were a director, would cause him to vacate
his office as director; or

 

121.4       if he
resigns his office by notice to the Company.

 

122.         Save as
otherwise provided in the Articles, an alternate director shall be deemed for
all purposes to be a director and shall alone be responsible for his own acts
and defaults and he shall not be deemed to be the agent of the director
appointing him.

 

POWERS
OF DIRECTORS

 

123.         Subject
to the provisions of the Act, the memorandum and the Articles and to any
directions given by special resolution, the business of the Company shall be
managed by the directors who may exercise all the powers of the Company.  No alteration of the memorandum or Articles
and no such direction shall invalidate any prior act of the directors which
would have been valid if that alteration had not been made or that direction
had not been given.  The powers given by
this Article 123  shall not be limited by any special
power given to the directors by the Articles and a meeting of directors at
which a quorum is present may exercise all powers exercisable by the directors.

 

124.         The
directors may, by power of attorney or otherwise, appoint any person to be the
agent of the Company for such purposes and on such conditions as they
determine, including authority for the agent to delegate all or any of his
powers.

 

125.         The
directors may exercise the voting power conferred by the shares in any body
corporate held or owned by the Company in such manner in all respects as they
think

 

25

 

fit (including without limitation the exercise of that
power in favour of any resolution appointing its members or any of them
directors of such body corporate, or voting or providing for the payment of
remuneration to the directors of such body corporate).

 

DELEGATION
OF DIRECTORS’ POWERS

 

126.         The
directors may delegate any of their powers to any committee consisting of one
or more directors.  The directors may
also delegate to any managing director or any director holding any other
executive office such of their powers as the directors consider desirable to be
exercised by him.  Any such delegation
shall, in the absence of express provision to the contrary in the terms of
delegation, be deemed to include authority to sub-delegate all or any of the
powers delegated to one or more directors (whether or not acting as a
committee) or to any employee or agent of the company.  Any such delegation may be made subject to
such conditions as the directors may specify, and may be revoked or
altered.  Subject to any conditions
imposed by the directors, the proceedings of a committee with two or more
members shall be governed by the Articles regulating the proceedings of
directors so far as they are capable of applying.

 

127.         The
directors may appoint any person to any office or employment having a
designation or title including the word “director” and/or may attach such a
designation or title to any existing office or employment with the Company and
may terminate any such appointment or the use of any such designation or
title.  The inclusion of the word “director”
in the designation or title of any such office or employment shall in no way
imply that the holder is a director of the Company, and the holder shall not
thereby be empowered in any respect to act as, or be deemed to be, a director
of the Company for any of the purposes of the Articles.

 

APPOINTMENT
AND REMOVAL OF DIRECTORS

 

128.         Without
prejudice to the powers of the Company under section 303 of the Act to
remove a director by ordinary resolution, the holder or holders for the time
being of more than one half in nominal value of the shares giving the right to
attend and vote at a general meeting of the Company may at any time and from
time to time appoint any person who is willing to act to be a director, either
to fill a vacancy or as an additional director, and may remove any director
from office.  Any appointment or removal
of a director under this Article 128 shall be by notice to the Company
signed by or on behalf of the appointor or appointors (which may consist of
several documents in the like form each signed by or on behalf of one or more
appointors).  The notice may be:

 

128.1       delivered
personally to the secretary or to a director other than the director being
appointed or removed; or

 

128.2       sent by
post in a prepaid envelope addressed to the Office or to another address
designated by the directors for that purpose or by leaving it at the Office or
such other address; or

 

128.3       sent by
electronic communication to an address designated by the directors for that
purpose.

 

26

 

The appointment or removal shall take effect when the
notice is deemed delivered in accordance with Article 118 or
Article 121 (as the case may be) or on such later date (if any) specified
in the notice.

 

129.         The
directors shall also have the power to appoint any person who is willing to act
to be a director, either to fill a vacancy or as an addition to the existing
directors, subject to any maximum for the time being in force.

 

DISQUALIFICATION
OF DIRECTORS

 

130.         The
office of a director shall be vacated if:

 

130.1       he ceases
to be a director by virtue of any provision of the Act or he becomes prohibited
by law from being a director; or

 

130.2       he becomes
bankrupt or makes any arrangement or composition with his creditors generally;
or

 

130.3       he is, or
may be, suffering from mental disorder and either:

 

130.3.1                    he is admitted to hospital in pursuance of an application for
admission for treatment under the Mental Health Act 1983, or in Scotland, an
application for admission under the Mental Health (Scotland) Act 1984; or

 

130.3.2                    an order is made by a court having jurisdiction (whether in the
United Kingdom or elsewhere) in matters concerning mental disorder for his
detention or for the appointment of a receiver, curator bonis or other person
to exercise powers with respect to his property or affairs;

 

130.4       he resigns
his office by notice to the Company; or

 

130.5       he shall
for more than six consecutive months have been absent without permission of the
directors from meetings of the directors held during that period and the
directors resolve that his office be vacated; or

 

130.6       he is
convicted of a criminal offence involving fraud or dishonesty and the directors
resolve that he shall for that reason cease to be a director; or

 

130.7       he is
removed as a director in accordance with the provisions of Article 128; or

 

130.8       he is
requested to resign in writing by all of the other directors.  In calculating the number of directors who
are required to make such a request to the director:

 

130.8.1                    an alternate director appointed by him acting in his capacity as
such shall be excluded; and

 

130.8.2                    a director and any alternate director appointed by him and acting in
his capacity as such shall constitute a single director for this purpose, so
that the signature of either shall be sufficient.

 

27

 

REMUNERATION
OF DIRECTORS

 

131.         The
directors shall be entitled to such remuneration as the Company may by ordinary
resolution determine and, unless the resolution provides otherwise, the remuneration
shall be deemed to accrue from day to day.

 

DIRECTORS’
EXPENSES

 

132.         The
directors may be paid all travelling, hotel, and other expenses properly
incurred by them in connection with their attendance at meetings of directors
or committees of directors or general meetings or separate meetings of the
holders of any class of shares or of debentures of the Company or otherwise in
connection with the discharge of their duties.

 

DIRECTORS’
APPOINTMENTS AND INTERESTS

 

133.         Subject
to the provisions of the Act the directors may appoint one or more of their
number to the office of managing director or to any other executive office
under the Company and may enter into an agreement or arrangement with any
director for his employment by the Company or for the provision by him of any
services outside the scope of the ordinary duties of a director.  Any such appointment, agreement or
arrangement may be made upon such terms as the directors determine and they may
remunerate any such director for his services as they think fit.  Any appointment of a director to an executive
office shall terminate if he ceases to be a director but without prejudice to
any claim to damages for breach of the contract of service between the director
and the Company.

 

134.         Subject
to the provisions of the Act, and provided that he has disclosed to the
directors the nature and extent of any material interest of his a director
notwithstanding his office:

 

134.1       may be a
party to, or otherwise interested in, any transaction or arrangement with the
Company or in which the Company is otherwise interested;

 

134.2       may be a
director or other officer of, or employed by, or a party to any transaction or
arrangement with, or otherwise interested in, any body corporate promoted by
the Company or in which the Company is otherwise interested; and

 

134.3       shall not,
by reason of his office, be accountable to the Company for any benefit which he
derives from any such office or employment or from any such transaction or
arrangement or from any interest in any such body corporate and no such
transaction or arrangement shall be liable to be avoided on the ground of any
such interest or benefit.

 

135.         For the
purposes of Article 134:

 

135.1       a general
notice given to the directors that a director is to be regarded as having an
interest of the nature and extent specified in the notice in any transaction or
arrangement in which a specified person or class of persons is interested shall
be deemed to be a disclosure that the director has an interest in any such transaction
of the nature and extent so specified; and

 

28

 

135.2       an
interest of which a director has no knowledge and of which it is unreasonable
to expect him to have knowledge shall not be treated as an interest of his.

 

DIRECTORS’ BENEFITS, PENSIONS AND INSURANCE

 

136.         The
directors may provide benefits, whether by the payment of gratuities or
pensions or by insurance or otherwise, for any director who has held but no
longer holds any executive office or employment with the Company or with any
body corporate which is or has been a subsidiary of the Company or a
predecessor in business of the Company or of any such subsidiary, and for any
member of his family (including a spouse and a former spouse) or any person who
is or was dependent on him, and may (as well before as after he ceases to hold
such office or employment) contribute to any fund and pay premiums for the
purchase or provision of any such benefit.

 

137.         Without
prejudice to the provisions of Article 171, the directors may exercise all
the powers of the Company to purchase and maintain insurance for or for the
benefit of any person who is or was:

 

137.1       a
director, other officer, employee or auditor of the Company, or any body which
is or was the holding company or subsidiary undertaking of the Company, or in
which the Company or such holding company or subsidiary undertaking has or had
any interest (whether direct or indirect) or with which the Company or such
holding company or subsidiary undertaking is or was in any way allied or
associated; or

 

137.2       a trustee
of any pension fund in which employees of the company or any other body
referred to in Article 137
is or has been interested,

 

including without limitation insurance against any
liability incurred by such person in respect of any act or omission in the
actual or purported execution or discharge of his duties or in the exercise or
purported exercise of his powers or otherwise in relation to his duties, powers
or offices in relation to the relevant body or fund.

 

138.         Without prejudice to the
generality of Article 136, no director or former
director shall be accountable to the Company or the members for any benefit
provided pursuant to Articles 136 or 137. 
The receipt of any such benefit shall not disqualify any person from
being or becoming a director of the
Company.

 

139.         Pursuant
to section 719 of the Act, the directors are hereby authorised to make
such provision as may seem appropriate for the benefit of any persons employed
or formerly employed by the Company or any of its subsidiary undertakings in
connection with the cessation or the transfer of the whole or part of the
undertaking of the Company or any subsidiary undertaking.  Any such provision shall be made by a
resolution of the directors in accordance with section 719.

 

PROCEEDINGS
OF DIRECTORS

 

140.         Subject
to the provisions of the Articles, the directors may regulate their proceedings
as they think fit.  A director may, and
the secretary at the request of a director shall, call a meeting of the
directors.  Notice of a meeting of the
directors shall be deemed to

 

29

 

be properly given to a director if it is given to him
personally or by word of mouth or sent in writing or by electronic communication
to him at his last known address or any other address given by him to the
Company for this purpose.  A director
absent or intending to be absent from the United Kingdom may request that
notices of directors’ meetings shall during his absence be sent in writing or
by electronic communication to him at an address given by him to the Company
for this purpose, but such notices need not be given any earlier than notices
given to directors not so absent and, if no such request is made to the directors,
any director may waive notice of a meeting and any such waiver may be
retrospective.

 

141.         Questions
arising at a meeting shall be decided by a majority of votes.  In the case of an equality of votes, the
chairman shall be entitled to a casting vote in addition to any other vote he
may have.  A director who is also an
alternate director shall be entitled in the absence of his appointor to a
separate vote on behalf of his appointor in addition to his own vote.

 

142.         The
quorum for the transaction of the business of the directors may be fixed by the
directors and unless so fixed at any other number shall be two, except when
there is only one director.  If there is
only one director, he may exercise all the powers and discretions conferred on
directors by the Articles.  A person who
holds office only as an alternate director shall, if his appointor is not
present, be counted in the quorum.

 

143.         The
directors may appoint one of their number to be the chairman of the board of
directors and may at any time remove him from that office.  Unless he is unwilling to do so, the director
so appointed shall preside at every meeting of directors at which he is
present.  But if there is no director
holding that office, or if the director holding it is unwilling to preside or
is not present within five minutes after the time appointed for the meeting,
the directors present may appoint one of their number to be chairman of the
meeting.

 

144.         All acts
done by a meeting of directors, or of a committee of directors, or by a person
acting as a director shall, notwithstanding that it be afterwards discovered
that there was a defect in the appointment of any director or that any of them
were disqualified from holding office, or had vacated office, or were not
entitled to vote, be as valid as if every such person had been duly appointed
and was qualified and had continued to be a director and had been entitled to
vote.

 

145.         A
resolution in writing signed by all the directors entitled to receive notice of
a meeting of directors or of a committee of directors shall be as valid and
effectual as if it had been passed at a meeting of directors or (as the case
may be) a committee of directors duly convened and held and may consist of
several documents in the like form each signed by one or more directors; but a
resolution signed by an alternate director need not also be signed by his
appointor and, if it is signed by a director who has appointed an alternate
director, it need not be signed by the alternate director in that capacity.

 

146.         The
contemporaneous connection of a number of the directors not less than the
quorum, regardless of physical location, by any means of electronic
communication, shall be deemed to constitute a properly held meeting of the
directors so long as the following conditions are met:

 

30

 

146.1       throughout
the meeting each of the directors taking part must be able to:

 

146.1.1                    hear each of the other directors taking part; and

 

146.1.2                    subject as mentioned below, send and receive communications
simultaneously to and from all of the other directors taking part;

 

146.2       at the
beginning and at the conclusion of the meeting the chairman shall ask all of
those who have been a party to the proceedings to acknowledge their presence
and to confirm that they have attended throughout the meeting.  Such a meeting shall be deemed to take place
where it is convened to be held or (if no director is present in that place)
where the largest group of those participating is assembled, or, if there is no
such group, where the chairman of the meeting is.  The word “meeting” in the Articles shall be
construed accordingly.

 

The meeting shall have been validly conducted
notwithstanding that a director may have been accidentally disconnected during
the meeting, so long as a quorum of directors were connected at all times.  A minute of the proceedings shall be
sufficient evidence of the observance of the necessary formalities if certified
by a director who was party to them.

 

147.         Subject
to such disclosure as is required by the Act and the Articles, a director shall
be entitled to vote at any meeting of directors or of a committee of directors
on, and be counted in the quorum present at a meeting in relation to, any
resolution concerning a matter in which he has, directly or indirectly, an
interest or duty which is material and which conflicts or may conflict with the
interests of the Company.

 

SECRETARY

 

148.         Subject
to the provisions of the Act, the secretary shall be appointed by the holder or
holders for the time being of more than one half in nominal value of the shares
giving the right to attend and vote at a general meeting of the Company or the
directors for such term, at such remuneration and upon such conditions as they
may think fit and any secretary so appointed may be removed by such
appointor(s).  Any appointment or removal
of a secretary under this Article 148 shall be by notice to the Company
signed by or on behalf of the appointor or appointors (which may consist of
several documents in the like form each signed by or on behalf of one or more
appointors).

 

149.         Two or
more joint secretaries, each of whom shall have full authority to act alone and
independently of each other, may be appointed pursuant to the provisions of
Article 148.

 

MINUTES

 

150.         The
directors shall cause minutes to be made in books kept for the purpose:

 

150.1       of all
appointments of officers made by the directors; and

 

150.2       of all
proceedings at meetings of the Company, of the holders of any class of shares
in the Company, and of the directors, and of committees of directors, including
the names of the directors present at each such meeting.

 

31

 

THE
SEAL, EXECUTION OF DEEDS

 

151.         If the
Company has a Seal, it shall only be used by the authority of a resolution of
the directors, or a committee of directors authorised by the directors.  The directors (or the committee of directors,
as the case may be) shall determine who may sign any instrument to which the
Seal is affixed and unless otherwise so determined it shall be signed by a
director and by the secretary or by at least two directors.  Any document may be executed under the Seal
by impressing the Seal by mechanical means or by printing the Seal or a
facsimile of it on the document or by applying the Seal or a facsimile of it by
any other means to the document.

 

152.         A
document signed, with the authority of a resolution of the directors, by a
director and the secretary or by two directors and expressed (in whatever form
of words) to be executed by the Company has the same effect as if executed
under the Seal.  For the purpose of the
preceding sentence only, “secretary” shall have the same meaning as in the Act
and not the meaning given to it by Article 2.

 

153.         The
Company may exercise the powers conferred by section 39 of the Act with
regard to having an official seal for use abroad.

 

RECORD DATES

 

154.         Notwithstanding
any other provision of the Articles, the Company or the directors may fix any
date as the record date for any dividend, distribution, allotment or issue,
which may be on or at any time before or after any date on which the dividend,
distribution, allotment or issue is declared, paid or made.

 

DIVIDENDS

 

155.         Subject
to the provisions of the Act, the Company may by ordinary resolution declare
dividends in accordance with the respective rights of the members, but no
dividend shall exceed the amount recommended by the directors.

 

156.         Subject
to the provisions of the Act the directors may pay interim dividends in
accordance with the respective rights of the members if it appears to them that
they are justified by the profits of the Company available for
distribution.  Such interim dividends may
be paid in cash or wholly or partly by the distribution of assets.  If the share capital is divided into
different classes, the directors may pay interim dividends on shares which
confer deferred or non-preferred rights with regard to dividend as well as on
shares which confer preferential rights with regard to dividend, but no interim
dividend shall be paid on shares carrying deferred or non-preferred rights if,
at the time of payment, any preferential dividend is in arrear.  The directors may also pay at intervals
settled by them any dividend payable at a fixed rate if it appears to them that
the profits available for distribution justify the payment.  Provided the directors act in good faith they
shall not incur any liability to the holders of shares conferring preferred
rights for any loss they may suffer by the lawful payment of an interim
dividend on any shares having deferred or non-preferred rights.

 

32

 

157.         Except
as otherwise provided by the rights attached to shares, all dividends shall be
declared and paid according to the amounts paid up on the shares on which the
dividend is paid.  All dividends shall be
apportioned and paid proportionately to the amounts paid up on the shares
during any portion or portions of the period in respect of which the dividend
is paid; but, if any share is issued on terms providing that it shall rank for
dividend as from a particular date, that share shall rank for dividend
accordingly.

 

158.         A
general meeting declaring a dividend may, upon the recommendation of the
directors, direct that it shall be satisfied wholly or partly by the
distribution of assets.

 

159.         Where
any difficulty arises in regard to the distribution of assets pursuant to the
payment or declaration of any dividend, the directors may settle the same and
in particular may issue fractional certificates and fix the value for
distribution of any assets and may determine that cash shall be paid to any
member upon the footing of the value so fixed in order to adjust the rights of
members and may vest any assets in trustees.

 

160.         Any
dividend or other moneys payable in respect of a share may be paid by cheque
sent by post to the registered address of the person entitled or, if two or
more persons are the holders of the share or are jointly entitled to it by
reason of the death or bankruptcy of the holder, to the registered address of
that one of those persons who is first named in the register of members or to
such person and to such address as the person or persons entitled may in
writing direct.  Every cheque shall be
made payable to the order of the person or persons entitled or to such other
person as the person or persons entitled may in writing direct and payment of
the cheque shall be a good discharge to the Company.  Any joint holder or other person jointly
entitled to a share as aforesaid may give receipts for any dividend or other
moneys payable in respect of the share.

 

161.         No
dividend or other moneys payable in respect of a share shall bear interest
against the Company unless otherwise provided by the rights attached to the
share.

 

162.         Any
dividend which has remained unclaimed for twelve years from the date when it
became due for payment shall, if the directors so resolve, be forfeited and
cease to remain owing by the Company.

 

ACCOUNTS

 

163.         No
member shall (as such) have any right of inspecting any accounting records or
other book or document of the Company except as conferred by statute or
authorised by the directors or by ordinary resolution of the Company.

 

CAPITALISATION
OF PROFITS

 

164.         The
directors may with the authority of an ordinary resolution of the Company:

 

164.1       subject as
hereinafter provided, resolve to capitalise any undivided profits of the
Company not required for paying any preferential dividend (whether or not they
are available for distribution) or any sum standing to the credit of the
Company’s share premium account or capital redemption reserve;

 

33

 

164.2       appropriate
the sum resolved to be capitalised to the members who would have been entitled
to it if it were distributed by way of dividend and in the same proportions and
apply such sum on their behalf either in or towards paying up the amounts, if
any, for the time being unpaid on any shares held by them respectively, or in
paying up in full unissued shares or debentures of the Company of a nominal
amount equal to that sum, and allot the shares or debentures credited as fully
paid to those members, or as they may direct, in those proportions, or partly
in one way and partly in the other; but the share premium account, the capital
redemption reserve, and any profits which are not available for distribution
may, for the purposes of this Article 164.2, only be applied in paying up
unissued shares to be allotted to members credited as fully paid;

 

164.3       make such
provision by the issue of fractional certificates or by payment in cash or
otherwise as they determine in the case of shares or debentures becoming
distributable under this Article 164  in
fractions; and

 

164.4       authorise
any person to enter on behalf of all the members concerned into an agreement
with the Company providing for the allotment to them respectively, credited as
fully paid, of any shares or debentures to which they are entitled upon such
capitalisation, any agreement made under such authority being binding on all
such members.

 

NOTICES

 

165.         Any notice to be given to or by any person pursuant to the Articles
(other than a notice calling a meeting of the directors or a committee of the
directors) shall be in writing or shall
be given using electronic communications to an address for the time being
notified for that purpose to the person giving the notice.  The
Company may give any notice to a member:

 

165.1       personally; or

 

165.2       by sending it by post in a prepaid envelope addressed to the member
at his registered address or by leaving it at that address; or

 

165.3       by giving it using an electronic communication to an address for the
time being notified to the company by the member.

 

In the case of joint holders of a share, all notices
shall be given to the joint holder whose name stands first in the register of
members in respect of the joint holding and notice so given shall be sufficient
notice to all the joint holders.

 

166.         A member
present, either in person or by proxy, at any meeting of the Company or of the
holders of any class of shares in the Company shall be deemed to have received
notice of the meeting and, where requisite, of the purposes for which it was
called.

 

167.         Every
person who becomes entitled to a share shall be bound by any notice in respect
of that share which, before his name is entered in the register of members, has
been duly given to a person from whom he derives his title.

 

34

 

168.         Proof
that an envelope containing a notice was properly addressed, prepaid and posted
shall be conclusive evidence that the notice was given.  Proof that a notice contained in an
electronic communication was sent in accordance with guidance issued by the
Institute of Chartered Secretaries and Administrators shall be conclusive
evidence that the notice was given.  A
notice shall be deemed to be given at the expiration of 48 hours after the
envelope containing it was posted or, in the case of a notice contained in an
electronic communication, at the expiration of 48 hours after the time it was
sent.

 

169.         A notice
may be given by the company to the persons entitled to a share in consequence
of the death or bankruptcy of a member by sending or delivering it, in any
manner authorised by the Articles for the giving of notice to a member,
addressed to them by name, or by the title of representatives of the deceased,
or trustee of the bankrupt or by any like description at the address, if any,
within the United Kingdom supplied for that purpose by the persons claiming to
be so entitled. Until such an address has been supplied, a notice may be given
in any manner in which it might have been given if the death or bankruptcy had
not occurred.

 

WINDING
UP

 

170.         If the
Company is wound up, the liquidator may, with the sanction of an extraordinary
resolution of the Company and any other sanction required by the Act, divide
among the members in specie the whole or any part of the assets of the Company
and may, for that purpose, value any assets and determine how the division
shall be carried out as between the members or different classes of members.
The liquidator may, with the like sanction, vest the whole or any part of the
assets in trustees upon such trusts for the benefit of the members as he with
the like sanction determines, but no member shall be compelled to accept any
assets upon which there is a liability.

 

INDEMNITY

 

171.         Subject
to the provisions of the Act but without prejudice to any indemnity to which a
director may otherwise be entitled, every director or other officer or auditor
of the Company shall be indemnified out of the assets of the Company against
any liability incurred by him in defending any proceedings, whether civil or
criminal, in which judgment is given in his favour or in which he is acquitted
or in connection with any application in which relief is granted to him by the
court from liability for negligence, default, breach of duty or breach of trust
in relation to the affairs of the Company.

 

35Exhibit 10.1

 

Execution Copy

 

AGREEMENT

 

This
Agreement is entered into as of the 17th day of September 2004, between DYNAMIC
MATERIALS CORPORATION, a Delaware corporation (“DMC”), acting through its
unincorporated division SPIN FORGE (“DMC/SF”) and AEROJET-GENERAL CORPORATION,
an Ohio corporation (“Aerojet”).

 

RECITALS

 

WHEREAS, DMC/SF is the owner and operator of certain
technology, equipment and tooling used in the manufacture of certain rocket
motor case and pressure tanks manufactured at DMC/SF’s El Segundo facility (the
“Facility”);

 

WHEREAS, DMC/SF is terminating all of its operations
at the Facility, including its rocket motor case and pressure tanks
manufacturing operations (the “Business”);

 

WHEREAS, DMC is leasing to Aerojet certain equipment
used in the manufacture of rocket motor case and pressure tanks (the “Spin
Forge Assets”);

 

WHEREAS, Aerojet desires to lease the Facility and
the Spin Forge Assets, and to acquire the necessary technology, in order to
manufacture rocket motor cases and pressure tanks and continue operation of the
Business, and DMC/SF is willing to lease the Facility and Spin Forge Assets and
sell the technology to Aerojet on the terms and conditions set forth in this
Agreement and the Ancillary Agreements (as hereinafter defined);

 

NOW,
THEREFORE, the parties agree as follows:

 

1.                  Ancillary
Agreements.  Concurrently with the execution and delivery
of this Agreement, the parties shall execute and deliver a Real Property Lease
with respect to the Facility which Aerojet shall lease from DMC/SF (the
“Sublease”), an Equipment Lease for the lease of the Spin Forge Assets (the
“Equipment Lease”), a Transition Services Agreement (the “TSA”) relating to
certain services to be provided by DMC to Aerojet after Closing in connection
with the transfer of the Business; and an Option Agreement relating to the Real
Property (the

 

1

 

“Option Agreement”).  The Sublease, the Equipment Lease, the TSA
and the Option Agreement are referred to herein as the “Ancillary Agreements.”

 

2.                  Sale and Purchase
of Assets; Liabilities.

 

2.1            Sale and
Purchase.        Upon the terms and subject to the conditions of this Agreement, DMC/SF
shall sell, convey, assign, transfer and deliver to Aerojet, and Aerojet shall
purchase and acquire from DMC/SF, free and clear of any encumbrances, all of
DMC/SF’s right, title and interest in DMC/SF’s property and assets, tangible
and intangible, used in the Business and described below (but excluding the
Excluded Assets):

 

(a)             the property listed or described in Schedule
2.1(a), including, without limitation, usable inventory together with any
existing warranty by the manufacturers or sellers or lessors of any item or
component part thereof and all existing maintenance records and other documents
related thereto (collectively, the “Scheduled Property”);

 

(b)            the books and records, including business
records, books, models, tracings, films, slides, art work and printing plates,
tool drawings, plans, designs, blueprints, schematic drawings, engineering
data, computer software (object code, and, to the extent transferable, source
code) data and the like in the possession of and used by DMC/SF relating
specifically to the Business, including, records relating to the purchase of
materials, supplies and services, as set forth in Schedule 2.1(b); (collectively,
the “Books and Records”).

 

(c)             all right, title and interest to the
intangible personal property of DMC/SF used in connection with the Business as
currently conducted, including all copyrights, trademark and trade name rights
to the name “Spin Forge,” and any other Information used in connection with the
Business as currently conducted, as listed in Schedule 2.1(c), together with
the goodwill of the Business associated therewith.  “Information” means any and all documented and undocumented
information (including patents and patent applications), including software
code, documentation, maskworks, test algorithms, technical information, data
and drawings of whatever kind in whatever medium, specifications, know-how,
formulae, compositions, processes, designs, sketches, photographs, graphs,
drawings, samples, nonpatented inventions, discoveries, and ideas, past and
current manufacturing and distribution methods and processes, current and
anticipated customer requirements, price lists, part lists, customer lists,
market

 

2

 

studies, business plans, database
technologies, systems, structures, architectures, improvements, devices,
concepts, methods and information, however documented, and any and all notes,
analysis, compilations, studies, summaries, and other material containing or
based, in whole or in part, on any information included in the foregoing.  “Spin Forge Technology” means Information,
including Information relating to the manufacture of ATACMS, HAWK, HSAD and
other rocket motor cases, as well as pressure tanks for the Minuteman and Delta
II rockets and certain forging and machining development work for General
Electric Corporation and Chart Industries owned by DMC/SF or for which DMC/SF
has a right to license to Aerojet without any cost to DMC/SF; that is or has
been used in or is necessary for the use in the operation of the Spin Forge
business or the manufacture of the Products. 
DMC/SF will promptly deliver to Aerojet, the Spin Forge Technology with
respect to the Products as set forth in Schedule 2.1(c);

 

(d)            the contracts listed in Schedule 2.1(d); and

 

(e)             the Licenses and Permits relating exclusively
to the Business and listed on Schedule 2.1(e).

 

All of the property and assets to be
transferred to Aerojet as set forth in Section 2.1 (a)-(e) is referred to
collectively as the “Acquired
Assets,” which the parties
hereto acknowledge does not include the assets subject to the Equipment Lease.

 

2.2            Excluded Assets. 
Notwithstanding anything to the contrary contained in Article 2.1 or
elsewhere in this Agreement, all assets of DMC/SF not described in Article 2.1
hereof (collectively, the “Excluded Assets”)
are not part of the sale and purchase contemplated hereunder, are excluded from
the Assets and shall remain the property of DMC/SF after the Closing.

 

2.3            Purchase Price.  The
aggregate purchase price for the Assets shall be One Million Six Hundred and
Sixty Six Thousand Nine Hundred and Twenty Seven Dollars ($1,664,927)  as determined by
the parties acting in good faith, such amount being equal to DMC/SF’s direct
costs plus manufacturing overhead, determined in accordance with applicable
federal acquisition regulations, cost accounting standards and generally
accepted accounting principles, but not to exceed contracted or budgeted value,
if such contracted or budgeted values

 

3

 

exist. 
This lump-sum price shall be adjusted based on mutual agreement of
inventory value at the time of Closing. 
Payment will be made net ninety (90) days after the inventory enters
Aerojet’s manufacturing Work-in-Process accounts, but in no event later than
January 1, 2007. Aerojet shall notify DMC on the first day after the accounting
close of each month as to which products entered Work-in-Process in the prior
month.  The value the parties attributed
to each item included in the Scheduled Property shall be listed on Schedule 2.1(a),
as adjusted for sales and production activity through the Closing Date pursuant
to mutually-agreed upon criteria.

 

2.4            Liabilities.

 

(a)             No Assumed Liabilities.  Aerojet shall assume no liabilities of
DMC/SF in connection with the transactions contemplated by this Agreement.  Aerojet shall assume only those liabilities
of DMC/SF that are arising out of, relating to or otherwise in any respect of
contracts included in the Acquired Assets to the extent such obligations or
liabilities (1) arise out of events or conditions occurring after the Closing
Date or arise out of the operation of the Business after the Closing Date, or
(2) arise out of events or conditions occurring after the Closing Date. The
Assumed Liabilities include:

 

(i)
any Environmental Matter (as defined in Article 3.10 hereof) including but not
limited to (1) any violation, liability, penalty, cost, damage, fine, order,
judgment or obligation under Environmental Laws (as defined in Article 3.10
hereof) to the extent they arise out of acts or omissions occurring after the
Closing Date, (2) the presence of any and all environmental conditions,
environmental liabilities or Hazardous Substances (as defined in Article 3.10
hereof) at, in, by, from, or related to, the Facility or the operation of the
Business that arose, commenced, occurred or existed after the Closing Date; or
(3) the recycling, reclamation, incineration, or the arrangement of
transportation, by Aerojet in the operation of the Facility or of the Business
of any Hazardous Substances (as defined in Article 3.10 hereof) that occurred
after the Closing Date;

 

(ii)
any workplace safety liability arising under federal, state, or local
occupational safety laws for acts or incidents occurring after the Closing Date
(e.g., OSHA);

 

4

 

(b)            Retained Liabilities.  All debts, liabilities, or obligations that
(1) arise out of events or conditions occurring on or prior to the Closing or
arise out of the operation of the Business at or prior to the Closing or (2)
arise, mature or become due at or prior to the Closing, shall remain the sole
responsibility of and shall be retained, paid, performed and discharged by
DMC/SF.  Aerojet shall not assume, pay,
or in any way be liable or responsible for any of such debts, liabilities, or
obligations (collectively, the “Retained Liabilities”), including but not
limited to:

 

(i)                any wages, salary, severance, bonuses,
commissions, vacation or holiday pay, post retirement medical benefits, fringe
benefits, long-term disability benefits, life insurance benefits, any duties,
obligations or liabilities arising under any employee benefit plan, policy or
practice, whether defined by ERISA or otherwise, relating to the Business
employees or other amounts due to any employees or former employees of the
Business which accrue on or before the date such employees become employees of
Aerojet (as provided in Article 6.1 hereof), including but not limited to
claims (for severance benefits and otherwise) by such employees that were
discharged or constructively discharged pursuant to the transactions
contemplated pursuant to this Agreement; as well as any federal, state, or
local government claims, audit charges, enforcement actions, or other
proceedings regarding labor, employment or socioeconomic issues;

 

(ii)             any liability or obligation of DMC/SF
relating to, resulting from, caused by, or arising out of the ownership,
operations or control of the Business (including but not limited to breach of
contract and warranty claims relating to products delivered prior to the Closing
Date, except for those products delivered to Aerojet) by DMC/SF,

 

(iii)          any Environmental Matter (as defined in Article 3.10 hereof) including
but not limited to (1) any violation, liability, penalty, cost, damage, fine,
order, judgment or obligation under Environmental Laws (as defined in Article
3.10 hereof) to the extent they arise out of acts or omissions occurring on or
prior to the Closing Date, (2) the presence of any and all environmental
conditions, environmental liabilities or Hazardous Substances (as defined in
Article 3.10 hereof) at, in, by, from, or related to, the Premises or the
operation of the Business that arose, commenced, occurred or existed prior to
the Closing Date; and (3) the recycling, reclamation, incineration, or the
arrangement of transportation, by

 

5

 

DMC/SF in the operation of the Premises or of
the Business of any Hazardous Substances (as defined in Article 3.10 hereof)
that occurred on or before the Closing Date;

 

(iv)         any Worker’s Compensation liability;

 

(v)            any workplace safety liability arising under
federal, state, or local occupational safety laws (e.g., OSHA);

 

(vi)         any supplier or vendor liabilities, except as specifically agreed to at
Closing and pursuant to assignment or novation of any such contract.

 

3.                  Representations and Warranties of DMC/SF. 
DMC/SF represents and warrants to Aerojet as follows:

 

3.1            DMC is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware, and has
the power and authority to own its properties and to carry on its business as
now conducted.

 

3.2            DMC/SF has the power and authority to enter
into this Agreement and the Ancillary Agreements and to consummate the
transactions contemplated herein and therein. 
This Agreement has been duly executed and delivered by DMC/SF and the
Ancillary Agreements, upon execution by DMC/SF, will have been duly executed
and delivered by DMC/SF, and each such agreement is or upon execution will be a
valid and binding obligation of DMC/SF, enforceable against DMC/SF in
accordance with its terms.  Neither the
execution of this Agreement or the Ancillary Agreements by DMC/SF nor the
consummation of the transactions contemplated herein or therein by DMC/SF will
violate, conflict with or result in the breach of any provision of the
Certificate of Incorporation or Bylaws of DMC or any contract, agreement,
license, lease, sublease or arrangement or series of related contracts
(excluding purchase orders and customer orders in the ordinary course of
business), (i) which involves annual expenditures or receipts by DMC/SF of more
than $[25,000] or (ii) which provides for performance, regardless of amount,
over a period in excess of one year after the date of such contract, arrangement
or commitment, except as would not have a Material Adverse Effect.

 

3.3            Except as would not reasonably be likely to
have, individually or in the aggregate, a material adverse effect on the
operation of the Business (a “Material Adverse

 

6

 

Effect”), no approval of or filing, other
than those approvals or filings that have been obtained or made, with any
foreign, federal, state or local court, authority or administrative agency is
necessary to authorize the execution and delivery of this Agreement and the
Ancillary Agreements by DMC/SF or the consummation of the transactions
contemplated herein and therein by DMC/SF.

 

3.4            To the knowledge of DMC/SF, as of the date
hereof there are no pending complaints, investigations or other enforcement
proceedings by OSHA or other state, county or local health and safety agencies
against DMC/SF relating to the equipment leased pursuant to the Equipment Lease
(the “Leased Equipment”) in a manner that would have a Material Adverse Effect.

 

3.5            To the knowledge of DMC/SF, as of the date
hereof there are no actions, claims, proceedings, and investigations
(“Actions”), including without limitation Actions for personal injuries,
products liability, or breach of warranty arising from products sold by DMC/SF,
threatened against DMC/SF or any properties or rights of DMC/SF (including,
without limitation, the patents, trademarks, copyrights, technology, know-how,
or processes sold pursuant to Sections 2.1(b) and (c) hereto), before any
court, arbitrator, or administrative or governmental body.  To the knowledge of DMC/SF, there are no
such Actions threatened challenging the validity or propriety of, or otherwise
relating to or involving, this Agreement, any Ancillary Agreement, or the
transactions contemplated hereby or thereby. 
To the knowledge of DMC/SF, no state of facts exists that would
constitute grounds for (i) the institution of any Action against DMC/SF or
against any properties or rights of DMC/SF, except for those Actions that would
not have a Material Adverse Effect, or (ii) the challenge of the validity or
propriety of the transactions contemplated by this Agreement or any other
Ancillary Agreement.  DMC/SF is not
subject to any judgment, order, or decree entered in any lawsuit or proceeding
that has materially adversely affected, or that can reasonably be expected to
materially affect, the transactions contemplated by this Agreement, DMC/SF, or
the Transferred Assets, including, without limitation, DMC/SF’s business practices
and its ability to acquire any property or conduct business in any way.

 

7

 

3.6            Contracts and Commitments.

 

(a)             Schedule 3.6 hereto contains a complete list
of each contract and commitment of DMC/SF that is material to the operations,
assets, business, or financial condition of DMC/SF or that by its terms can
reasonably be expected to require future payment by or to DMC/SF of $25,000 or
more, including but not limited to the following:

 

(i)                all employment contracts and commitments
between the Business and its employees, other than those terminable by the
Business at will and without payment or penalty;

 

(ii)             all collective bargaining agreements and
union contracts to which the Business is a party;

 

(iii)          all contracts or commitments, written or oral, which involve annual
expenditures or receipts by the Business in excess of $25,000 with
distributors, brokers, manufacturer’s representatives, sales representatives,
service or warranty representatives, customers, and other persons, firms, or
corporations engaged in the sale or distribution of the Business’ products;

 

(iv)         all purchase orders issued by the Business in excess of $25,000, all
sales orders received by the Business in excess of $25,000, and all purchase or
sales orders that call for delivery or performance on a date more than one year
from the date of this Agreement;

 

(v)            all contracts and arrangements between the
Business or any person or entity that controls, is controlled by, or is under
common control with, the Business or any family member of any such person (such
entity or person, being hereinafter referred to as an “Affiliate”)

 

(b)            The Business is not a party to any written
agreement that would restrict it from carrying on any line of business anywhere
in the world.

 

(c)             Each of the contracts listed on Schedules
2.1(d) and 3.6 is valid and binding and has been entered into in the ordinary
course of business.  The Business is not
in default under or in material breach or violation of, and DMC/SF has not
received notice of any asserted claim of default by any other party under, or a
breach or violation of, any of the contracts, agreements, and commitments set
forth in Schedules 2.1(d) and 3.6 hereto.

 

8

 

3.7            Title to Properties; Absence of Liens and Encumbrances. 
Except as set forth on Schedule 3.7 hereto, DMC/SF has good and
marketable title to or a valid leasehold interest in all of its properties and
assets, tangible and intangible, free and clear of all liens and
encumbrances.  There is no material
asset used or required by DMC/SF in the conduct of its business which is not
owned by the DMC/SF or licensed or leased to it pursuant to one of the licenses
or leases listed in Schedules 3.8 and 3.9 hereto.

 

3.8            Leases.  Schedule 3.8 hereto contains
a complete list of (i) each lease pursuant to which DMC/SF leases, as lessor or
lessee, any real property interest and (ii) each lease pursuant to which DMC/SF
leases, as lessor or lessee, any type of property where Aerojet’s inability to
acquire DMC/SF’s rights thereunder would have a Material Adverse Effect.  Each such lease is valid and binding and is
in full force and effect, subject only to exceptions based on bankruptcy,
insolvency or similar laws of general application, and, there are no existing
defaults by any party to any such lease, or any condition, event or act known
to DMC/SF which, with notice or lapse of time or both, would constitute such a
default.  Without limiting the
foregoing, DMC/SF is not in default under any of such leases, and DMC/SF has
not received any notice from any person asserting a default by DMC/SF under any
such lease.

 

3.9            Intellectual Property. 
DMC/SF owns, licenses, or otherwise has the right to use all Information
and Spin Forge Technology used in the Business as currently conducted.  Schedule 2.1(c) hereto contains a complete
and accurate list of (i) all patents, trademarks, copyrights, technology,
know-how, work instructions, and processes used or proposed to be used by
DMC/SF, all applications therefor, and all licenses and other agreements
relating thereto; and (ii) all agreements relating to technology, know-how, or
processes that DMC/SF is licensed or authorized to use by others or licenses or
authorizes others to use.  Except as set
forth in any of such licenses or agreements, DMC/SF has the sole and exclusive
right to use its patents, trademarks, copyrights, technology, know-how, and
processes identified in Schedule 2.1(c) and no consent of any third party is
required for the use thereof by Aerojet upon completion of the transfer of the
Acquired Assets.  To DMC/SF’s knowledge,
no claims have been asserted by any person to the use of any such patents,
trademarks, copyrights, technology, know-how, or processes, or challenging or
questioning the validity or effectiveness of any such license or agreement, and
DMC/SF knows of no valid basis for any such claims.  DMC/SF has not received

 

9

 

any notice and is not aware of any facts or
alleged facts indicating that the use of such patents, trademarks, copyrights,
technology, know-how, or processes by DMC/SF infringes on the rights of any
other person. No additional proprietary rights other than those listed on
Schedule 2.1(c) are material to the conduct of the Business of DMC/SF.

 

3.10      Environmental Matters.  For
purposes of this Article 3.10, the property of DMC/SF shall mean the Facility
subject to the Sublease and the Leased Equipment.  Additionally, for purposes of this Article 3.10, “Hazardous
Substance” means any chemical, waste, pollutant, contaminant or toxic, reactive
or corrosive material or substance, or any other chemical, material, or
substance included in the definition of “pollutant,” “hazardous substances,” “hazardous
waste,” “hazardous materials,” “extremely hazardous substances,” “restricted
hazardous materials,” “toxic substances” or “toxic pollutants” or words of
similar import, the release of which is prohibited, limited or regulated by any
governmental authority under any Environmental Law.  Further, “Environmental Laws” means any U.S. federal, state,
county or local law, statute, or ordinance that regulates or relates to the
existence of, or provides a remedy for, release of Hazardous Substances, the
protection of the environment, natural resources or the environment, the
management of Hazardous Substances, or other activities involving Hazardous
Substances.  Environmental Laws include
all of the following federal laws and amendments thereto, their implementing
regulations and all state and local laws, regulations and ordinances that
regulate the same subject matter: (a) the Comprehensive Environmental Response,
Compensation and Liability Act (CERCLA), 42 USC 9601 et seq.; (b) the Solid
Waste Disposal Act, 42 USC 6901 et seq., including the Resource Conservation
and Recovery Act (RCRA), and Laws governing underground storage tanks; (c) the
Toxic Substances Control Act (TSCA), 15 USC 2601 et seq., including those
provisions governing use and disposal of Polychlorinated Biphenyls (PCBs); (d)
the Hazardous Materials Transportation Act (HMTA), 49 USC 5101 et seq.; (e) the
Federal Insecticide, Fungicide and Rodenticide Act (FIFRA), 7 USC 136 et seq.;
(f) the Clean Air Act, 42 USC 7401 et seq.; (g) the Federal Water Pollution
Control Act, 33 USC 1251 et seq.; (h) the Emergency Planning and Community
Right-to-Know Act (EPCRA), 42 USC 11001 et seq.; and (i)  the Safe Drinking Water Act, 42 USC 300f et
seq.

 

Except
as set forth on Schedule 3.10, to the knowledge of DMC/SF:

 

10

 

(a)             the operations of DMC/SF comply in all
material respects with all applicable Environmental Law.

 

(b)            DMC/SF has obtained, is in compliance with,
and has made all appropriate filings for issuance or renewal of, all permits,
licenses, authorizations, registrations, notices or other governmental consents
required by applicable Environmental Laws (“Environmental Permits”) issued to,
or required to be obtained or maintained by DMC/SF to carry on its business as
presently conducted, including any amendment, modification, limitation,
condition or renewal thereof.  Schedule
3.10(b) hereto sets forth all such Environmental Permits required for the
operation of the business of DMC/SF and all such Environmental Permits are in
good standing and DMC/SF is in compliance in all material respects with all
terms and conditions of such permits and there is no ongoing or threatened
action to revoke or modify such permits. 
DMC/SF knows of no intention on the part of any relevant authority to
revoke, suspend, invalidate, vary, or modify in any material respect or not
renew any Environmental Permits.  No
Environmental Permits contain any conditions making them personal to DMC/SF.

 

(c)             DMC/SF has not filed or received any notice
under any Environmental Law indicating, at any time since DMC/SF has owned,
leased or operated the Facility, a past or present unauthorized disposal or
release of a Hazardous Substance in violation of or imposing liability under
any Environmental Law, and DMC/SF has timely filed or prepared all material
notices, reports and plans required to be filed or prepared, as the case may
be, under all applicable Environmental Laws with respect to the past or present
manufacturing, processing, use, treatment, storage or disposal of a Hazardous
Substance or reporting of a spill or release of a Hazardous Substance during
its lease of the Facility. No discharge, release, spillage, uncontrolled loss,
seepage, or filtration of any Hazardous Substance has occurred at, upon or
under the Premises at any time owned, leased or operated by DMC/SF which was
not authorized pursuant to and in accordance with Environmental Permits.

 

(d)            DMC/SF does not utilize, store, dispose of,
treat, generate, process, transport, release, or own any Hazardous Substance,
nor has DMC/SF ever done so.

 

(e)             There are no above ground or underground
storage tanks on or in the Facility owned or operated by DMC/SF from which
there have been releases of Hazardous

 

11

 

Substances, except as permitted by law or
where the releases would not have a material adverse effect on human health or
safety or DMC/SF.

 

(f)               DMC/SF has not received any notice of writs,
injunctions, decrees, orders, or judgments outstanding, or suits, claims,
actions, proceedings, or investigations instituted or threatened under any
Environmental Laws, including, but not limited to, any notice from any
governmental authority or private or public entity advising DMC/SF that it is
or is potentially responsible for response costs under CERCLA or any analogous
state law with respect to a release or threatened release of Hazardous
Substances.

 

(g)            DMC/SF has not received notice of any failure
of DMC/SF to comply in any material respect with any Environmental Law or the
requirements of any Environmental Permit, or any failure of DMC/SF to have any
Environmental Permit.  DMC/SF has
heretofore made available to Aerojet true, correct and complete copies of all
material reports, correspondence, memoranda, computer data and the complete
files relating to environmental matters in the possession or control of DMC/SF
with respect to the Facility.

 

(h)            DMC/SF has not paid any material fine,
penalty or assessment within the prior five years with respect to environmental
matters relating to the Premises.

 

(i)                DMC/SF has in effect an environmental
insurance policy that covers (subject to the terms and conditions of the
policy) the Premises, among other properties, as summarized on the attached
Schedule 3.10(i).

 

3.11      Compliance with Laws. 
DMC/SF is not in violation of, has not been charged with any violation
of, or, to the best of its knowledge, is not under any investigation with
respect to any charge concerning any violation of any requirements of law (other
than Environmental Laws which are covered in Section 3.11).  DMC/SF is in substantial compliance with
respect to any order, writ, injunction or decree of any court, agency or
instrumentality.

 

3.12      Licenses and Permits. 
Schedule 3.12 sets forth a complete and correct list of all material
licenses and permits specifically related to the design, manufacture, and
export licensing of the products of the Business (the “Licenses and
Permits”).

 

3.13      Litigation.                             No
statute, regulation or order of any governmental body is in effect that
restrains or prohibits the transactions contemplated hereby, nor are there any
Actions or proceedings pending before any governmental body challenging the
lawfulness,

 

12

 

validity or propriety of or seeking to
prevent, or otherwise relating to or involving, any of the transactions
contemplated by this Agreement or any of the Ancillary Agreements or seeking
monetary or other relief by reason of the consummation of any of such transactions.

 

4.                  Representations and Warranties of Aerojet. 
Aerojet represents and warrants to DMC/SF as follows:

 

4.1            Aerojet is a corporation duly organized,
validly existing and in good standing under the laws of the State of Ohio, has
full power and authority to own its properties and to carry on its business as
now conducted.

 

4.2            Aerojet has full power and authority to enter
into this Agreement and the Ancillary Agreements and to consummate the
transactions contemplated herein and therein. 
This Agreement has been duly executed and delivered by Aerojet and the
Ancillary Agreements, upon execution by Aerojet, will have been duly executed
and delivered by Aerojet, and each such Agreement is or upon execution will be
a valid and binding obligation of Aerojet, enforceable in accordance with its
terms.  Neither the execution of this
Agreement or the Ancillary Agreements by Aerojet nor the consummation of the
transactions contemplated herein or therein by Aerojet will constitute or cause
a breach or violation of any covenant or obligation binding upon Aerojet or
affecting any of its properties.

 

4.3            No approval of or filing with any federal,
state or local court, authority or administrative agency is necessary to
authorize the execution of this Agreement by Aerojet or the consummation of the
transactions contemplated herein by Aerojet.

 

4.4            No statute, regulation or order of any
governmental body is in effect that restrains or prohibits the transactions
contemplated hereby, nor are there any Actions or proceedings pending before
any governmental body challenging the lawfulness, validity or propriety of or
seeking to prevent, or otherwise relating to or involving, any of the
transactions contemplated by this Agreement or any of the Ancillary Agreements
or seeking monetary or other relief by reason of the consummation of any of
such transactions.

 

5.                  Indemnification.

 

5.1            Indemnification by DCM/SF.  Subject to the limits set
forth in this Article 5, DMC/SF agrees to indemnify, defend and hold Aerojet
and each of Aerojet’s Affiliates,

 

13

 

officers, directors, employees, agents,
successors and assigns (Aerojet and such persons are collectively hereinafter
referred to as “Aerojet’s
Indemnified Persons”)
harmless from and against any and all loss, liability, damage or deficiency
(including reasonable attorneys’ fees) (collectively “Losses”) that Aerojet’s Indemnified Persons
may suffer, sustain, incur or become subject to, caused by or due to: (a) any
breach of any representation or warranty of DMC/SF in this Agreement; (b) the
failure to perform any covenant, undertaking, agreement or other obligation of
DMC/SF under this Agreement; (c) any Excluded Asset; or (d) any Retained
Liability.

 

5.2            Indemnification by Aerojet.  Subject to the limits set forth in this Article5, Aerojet agrees to
indemnify, defend and hold DMC/SF and DMC/SF’s Affiliates, officers, directors,
employees, agents, successors and assigns (DMC/SF and such persons are
hereinafter collectively referred to as “DMC/SF’s Indemnified Persons”),
harmless from and against any and all Losses that DMC/SF’s Indemnified Persons
may suffer, sustain, incur or become subject to, caused by or due to: (a) any
breach of any representation or warranty of Aerojet in this Agreement; (b) the
failure to perform any covenant, undertaking, agreement or other obligation of
Aerojet under this Agreement; or (c) the ownership, operations or control of
the Business after the Closing or (d) any of the Acquired Assets after they
have been delivered from DMC/SF to Aerojet.

 

5.3            Survival of
Representations and Warranties; Deductible. The
several representations and warranties of the parties contained in this
Agreement and the parties’ right to indemnity in accordance with this Article 5
shall survive the Closing Date and shall remain in full force and effect
thereafter as follows: with respect to Article 3 (except for Article 3.10) for
a period of 12 months after the Closing Date; with respect to Article 3.10 upon
the earlier of (i) the termination of the Sublease or (ii) the assumption by
Aerojet of the Master Lease (as defined in the Sublease); for all other
representations and warranties, for a period of 12 months after the Closing
Date and shall be effective with respect to any inaccuracy therein or breach
thereof, notice of which shall have been duly given within such 12 month period
in accordance with Article 5.4 hereof, after which 12-month or the Sublease
term, , as the case may be, they shall terminate and be of no further force or
effect.  Anything to the contrary
contained herein notwithstanding, neither party shall be entitled to any
recovery from the other party with respect

 

14

 

to any inaccuracy or breach of such
warranties or representations unless and until the amount of such Loss
suffered, sustained or incurred by the asserting party, or to which such party
becomes subject, by reason of such inaccuracy or breach, shall exceed Ten
Thousand Dollars ($10,000.00) calculated on a cumulative basis and not a per
item basis (the “Basket
Amount”),
and then only with respect to the excess over the Basket Amount but in no event
shall either party be liable to the other in an aggregate amount in excess of
Eight Hundred Thousand Dollars ($800,000.00) (the “Cap”).  The
Basket Amount and the Cap shall not be applicable to claims arising under
Article 3.12  (Title
to Transferred Assets) or to claims based on fraud, willful misrepresentation
or deceit.

 

5.4            Notice and Opportunity
to Defend.  If there occurs an event that either party
asserts is an indemnifiable event pursuant to Articles 5.1 and 5.2 hereof, the
party seeking indemnification (the “Indemnitee”) shall notify the party obligated to provide
indemnification (the “Indemnitor”) promptly.  If such event involves (i) any claim, or
(ii) the commencement of any action or proceeding by a third person, the
Indemnitee will give the Indemnitor written notice of such claim or the
commencement of such action or proceeding within 15 days of the Indemnitee’s
becoming aware thereof; provided, however, that delay or failure to so notify
the Indemnitor shall only relieve the Indemnitor of its obligations to the
extent, if at all, that it is prejudiced by reasons of such delay or failure.  The Indemnitor shall have a period of 30
days within which to respond thereto. 
If the Indemnitor accepts responsibility within such 30 day period, the
Indemnitor shall provide the Indemnitee with such assurances as may be
reasonably required by the Indemnitee to assure that the Indemnitor will assume
and be responsible for the entire liability at issue, subject to the Cap.  The Indemnitee agrees to cooperate fully
with the Indemnitor and its counsel in the defense against any such asserted
liability.  In any event, the Indemnitee
shall have the right to participate in a non-controlling manner and at its own
expense in the defense of such asserted liability.  Any compromise of such asserted liability by the Indemnitor shall
require the prior written consent of the Indemnitee, which shall not be
withheld unreasonably, and until such consent is obtained, the Indemnitor shall
continue defense of such asserted liability. 
If, however, the Indemnitee refuses its consent to a bona fide offer of
settlement that the Indemnitor wishes to accept, the Indemnitee may continue to
pursue such matter, free of any participation by the Indemnitor, at the sole
expense of the Indemnitee.  In such

 

15

 

event, the obligation of the Indemnitor to
the Indemnitee shall be equal to the lesser of (y) the amount of the offer of
settlement which the Indemnitee refused to accept plus Indemnitee’s Loss, if
any, prior to the date the Indemnitor notifies the Indemnitee of the offer of
settlement, and (z) the actual out-of-pocket amount the Indemnitee is obligated
to pay as a result of the Indemnitee’s continuing to pursue such matter, in
each case subject to the Cap.  The
Indemnitor shall be entitled to recover from the Indemnitee any additional
expenses incurred by the Indemnitor as a result of the decision of the
Indemnitee to pursue such matter.

 

5.5            Exclusive Remedy.  Except
as provided in the Ancillary Agreements, each party hereto agrees that, from
and after the Closing, its sole and exclusive remedy at law with respect to any
and all claims relating to the subject matter of this Agreement shall be
pursuant to the indemnification provisions set forth in this Article 5.

 

6.                  Other Agreements
and Covenants.

 

6.1            Prorations.  Aerojet shall reimburse DMC a
pro rata portion of any operating expenses other than those governed by the
Sublease or Equipment Lease relating to the Business paid prior to the Closing
Date and paid by DMC for periods after the Closing Date.  DMC shall reimburse Aerojet a pro rata
portion of any operating expenses or taxes paid by Aerojet after the Closing
Date relating to periods prior to the Closing Date.

 

6.2            DMC/SF Employees.  At the time of the Closing,
Aerojet will offer employment to selected employees of DMC/SF. Employees hired
by Aerojet will be credited with a vacation accrual upon their hiring, using
the Aerojet vacation accrual schedule, but based on each employee’s years of
service at DMC/SF as of the date of Closing. 
Aerojet will also offer the same benefits currently provided to Aerojet
employees to any DMC/SF employee hired by Aerojet.

 

6.3            Pre-Closing
Activities of DMC/SF. 
After the date hereof and until Aerojet takes possession of the Facility
and DMC/SF Assets under the Sublease and Equipment Lease, DMC/SF shall maintain
the Spin Forge Assets at the Facility. 
Upon reasonable notice to DMC/SF, Aerojet may enter the Facility to
inspect the Spin Forge Assets.  DMC/SF
shall exercise reasonable care with respect to the Spin Forge Assets.

 

16

 

6.4            Post-Closing
Warranty Work.  After the date hereof, as requested by
DCM/SF Aerojet will perform, in a commercially reasonable manner, on behalf of
DMC/SF any warranty repairs required on Spin Forge products manufactured by
DMC/SF prior to the date hereof.  DMC/SF
will reimburse Aerojet at Aerojet’s actual direct and indirect costs, such
indirect costs to be calculated in a manner consistent with Aerojet’s standard
practice for internally allocating such indirect costs, but no profit.  Services provided by Aerojet to DMC/SF
pursuant to this Article 6.3 shall be provided in accordance with a mutually
agreed upon scope of work, estimated cost, terms and conditions, and delivery
schedule.  DMC/SF shall be entitled to
audit Aerojet’s books and records with respect to any such warranty
repairs.  Nothing herein shall preclude
DMC/SF from having such warranty repairs performed by another vendor, supplier,
or affiliate of DMC/SF.

 

6.5            Termination of Certain Agreements. 
Upon Closing, the parties shall mutually terminate the “Teaming
Agreement” between Aerojet-General Corporation and Spin Forge, dated May 3,
2002, pursuant to Article III.F.1.d. thereof. 
In addition, upon Closing, the parties shall also mutually terminate the
“Joint Venture Agreement” between Spin Forge International, Inc. and Atlantic
Research Corporation, as amended and assigned, dated November 27, 1995,
pursuant to Article 7(a) thereof.

 

6.6            Novation/Assignment
of Contracts. 
DMC/SF and Aerojet each will use its reasonable commercial efforts after
the Closing Date to obtain all consents, approvals or authorizations of any
government, governmental agency, authority or instrumentality, court or
arbitration tribunal or third parties that are not obtained prior to the
Closing Date and that are required in connection with the transactions
contemplated by this Agreement and the Ancillary Agreements; provided that
Aerojet will be required to make any expenditures or incur any liability to
obtain any third party consent required in connection with the consummation of
the transactions contemplated by this Agreement, except as expressly agreed in
writing.

 

6.7            Nonassignable Authorizations.  To the extent that the assignment of any
contract, licenses, permit, or approval issued or to be issued or assigned or
to be assigned to Aerojet pursuant to this Agreement, including but not limited
to the Licenses and Permits, shall require the consent of any other party, this
Agreement shall not constitute a contract to assign the

 

17

 

same if an attempted assignment would
constitute a breach thereof.  If any
such consent is not obtained, then DMC/SF shall cooperate with Aerojet in any
reasonable arrangement requested by Aerojet designed to provide to Aerojet the
benefits under any such Licenses and Permits, including enforcement of any and
all rights of DMC/SF against the other party thereto arising out of breach or
cancellation thereof by such other party or otherwise.

 

6.8            Tax Matters.

 

All
transfer, documentary, sales, use, stamp, registration and other such taxes,
and all conveyance fees, recording charges and other fees and charges
(including any penalties and interest) incurred in connection with the
consummation of the transactions contemplated by this Agreement shall be paid
by Aerojet when due, and Aerojet will, at its own expense, file all necessary
Tax Returns and other documentation with respect to such Taxes, fees and
charges.

 

6.9            Access to Records.  For
a period of 90 days after Closing, subject to any laws relating to antitrust,
export controls, employment or privacy issues and subject to rules applicable
to visitors at either party’s offices generally, each party shall afford to the
other party and its representatives copies of and access to, upon reasonable
notice and during normal business hours, all books and records, contracts,
documents and information of and relating to the assets, liabilities,
operations and other aspects of the Business; provided, however, that such investigation shall
be conducted in a manner which does not interfere with the normal operations,
customers and employee relations of the party being investigated.  

 

6.10      Environmental Matters.

 

Aerojet
covenants and agrees to:  (a) comply
with all applicable Environmental Laws in the course of its Sublease of the
Facility, Equipment Lease, ownership, operation, use and/or occupancy of the
Facility; (b) take all necessary steps and measures to ensure that the
subsurface of the Facility remains undisturbed, except in case of emergencies or
imminent risk to human health or safety (in which case DMC/SF will immediately
be contacted and consulted in its capacity as Lessee and Sublessor of the
Facility), including without limitation, the prohibition of (i) the
installation of any underground storage tank, (ii) the storage or use of fuel
oil as a heating source, at the Facility, or (iii) the performance of any
subsurface investigation, including the installation of groundwater monitoring
wells or soil test pits or performance of subsurface

 

18

 

sampling in any manner unless directed to do
so by court order or a government regulatory agency (in such instance, Aerojet
shall provide written notice to DMC upon receipt of any and all orders or
directives and shall not commence any required work without the prior written
consent of DMC, such consent to not be unreasonably denied or delayed); and,
(c) to the extent possible, use commercially reasonable best efforts to include
in all legal instruments (e.g., permitted assignments or leases) whereby
Aerojet transfers some or all of its interest in the Acquired Assets to another
person or entity, a release of and covenant not to sue DMC by the transferee,
from any and all claims, demands, causes of actions (including causes of action
in tort), losses, damages, liabilities, costs and expenses (including
consultant’s and attorney’s fees and court costs) at any time by reason or
arising out of any Environmental Laws or issues concerning alleged Hazardous
Substances that the transferee might assert or allege against DMC.

 

7.                  General.

 

7.1            Non-Competition. 
DMC/SF agrees that for so long a Aerojet is producing rocket motor cases
or pressure tanks that were manufactured or offered for sale by DMC/SF as of
the Closing utilizing the Leased Equipment and the technology sold pursuant to
Sections 2.1(b) and (c) hereto (the “Spin Forge Products”), DMC shall not
engage in the business of manufacturing and selling Spin Forge Products.

 

7.2            Publicity.  No party shall issue any
press release or make any public announcement relating to the subject matter of
this Agreement without the prior written approval of the other party; provided, however, that DMC may issue any
press release or make any public announcement or filing it believes in good
faith is required by applicable law or any listing or trading agreement
concerning its publicly traded securities. 
Each party shall advise the other of any press release or announcements
to the public with respect to this Agreement and provide an opportunity to
review any such proposed communication prior to its release.

 

7.3            Governing Law.  This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of California without giving
effect to any choice or conflict of law provision or rule (whether of the state
of California or any other jurisdiction) that would cause the application of
the laws of any jurisdiction other than the state of California.

 

19

 

7.4            Waiver of Jury
Trial.  DMC/SF AND AEROJET HEREBY
IRREVOCABLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, ALL RIGHTS TO TRIAL
BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED UPON CONTRACT,
TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE
TRANSACTIONS CONTEMPLATED HEREBY.

 

7.5            Survival.  The Ancillary Agreements
shall survive the Closing in accordance with their terms.  The representations, warranties, covenants
and other agreements herein contained shall continue in full force and effect
after the Closing as set forth in Section 5.3 hereto.

 

7.6            Entire Agreement. 
This Agreement, together with the Ancillary Agreements and the exhibits
and schedules hereto and thereto, contains the entire agreement between the parties
hereto with respect to the subject matter hereof and supersedes all prior
agreements and understandings, written or oral, with respect thereto.  No amendment, supplement, modification,
waiver or termination of this Agreement shall be implied or be binding
(including any alleged waiver based on a party’s knowledge of any inaccuracy in
any representation or any breach of warranty or covenant contained herein)
unless in writing and signed by the party against which such amendment,
supplement, modification, waiver or termination is asserted.  No waiver of a provision of this Agreement
shall be deemed or shall constitute a waiver of any other provision hereof
(whether or not similar), nor shall such waiver constitute a continuing waiver
unless otherwise expressly therein provided

 

7.7            Successors and Assigns.  All of the terms and provisions of this
Agreement by or for the benefit of the parties shall be binding upon and inure
to the benefit of their respective successors, permitted assigns, heirs and
personal representatives.  The rights
and obligations provided by this Agreement shall not be assignable, except by
either party (without discharge of its obligations hereunder) to a subsidiary
or affiliate or a successor to its business, and, except as expressly provided
herein, nothing herein is intended to confer upon any person other than the
parties and their successors, any rights or remedies under or by reason of this
Agreement.

 

20

 

7.8            Form and Content
of Documents.  All
instruments or documents to be delivered by any party to this Agreement shall
be in form and content reasonably satisfactory to the counsel for the party
receiving such instrument or document.

 

7.9            Execution in Counterparts. 
This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same Agreement.

 

7.10      Interpretation and Construction.  The
parties have participated jointly in the negotiation and drafting of this
Agreement.  In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties and no presumption or burden of proof
shall arise favoring or disfavoring any party by virtue of the authorship of
any of the provisions of this Agreement. 
Any reference to any federal, state, local, or foreign statute or law
shall be deemed also to refer to all rules and regulations promulgated
thereunder, unless the context requires otherwise.  The term “including” shall mean including without
limitation.  The parties intend that
each representation, warranty, and covenant contained herein shall have
independent significance.  If any party
has breached any representation, warranty, or covenant contained herein in any
respect, the fact that there exists another representation, warranty, or
covenant relating to the same subject matter (regardless of the relative levels
of specificity) which the party has not breached shall not detract from or
mitigate the fact that the party is in breach of the first representation,
warranty, or covenant.  Any term or
provision of this Agreement that is invalid 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.

 

7.11      Notices.  All notices, requests, demand, claims and
other communications hereunder shall be in writing.  Any such written communication shall be deemed to have been duly
given (except as may otherwise be specifically provided herein to the
contrary), and shall be deemed sufficient to preserve the rights of the sending
party, if either (i) mailed by certified or registered mail, with postage
prepaid by sender, or shipped by express courier service, with charges prepaid
by sender and receipted for by or on behalf of the intended recipient, in each
case to the following address (or to such other address as any part may

 

21

 

designate for himself or itself by notice to
the other parties given pursuant hereto), or else (ii) delivered by hand with
evidence of delivery:

 

	
  If to DMC/SF:

  	
   

  	
  President

  
	
   

  	
   

  	
  Dynamic Materials
  Corporation

  
	
   

  	
   

  	
  5405 Spine Road

  
	
   

  	
   

  	
  Boulder, CO 80301

  
	
   

  	
   

  	
  Attention:  Yvon Cariou

  
	
   

  	
   

  	
  Fax Number (303) 604-1897

  
	
   

  	
   

  	
   

  
	
  With a copy to:

  	
   

  	
  Chief Financial Officer

  
	
   

  	
   

  	
  Dynamic Materials
  Corporation

  
	
   

  	
   

  	
  5405 Spine Road

  
	
   

  	
   

  	
  Boulder, CO 80301

  
	
   

  	
   

  	
  Attention:  Richard Santa

  
	
   

  	
   

  	
  Fax Number (303) 604-1897

  
	
   

  	
   

  	
   

  
	
  If to Aerojet

  	
   

  	
  Aerojet General
  Corporation

  
	
   

  	
   

  	
  P. O. Box 1036

  
	
   

  	
   

  	
  Camden, AR 71711-1036

  
	
   

  	
   

  	
  Attention: Robert Shenton

  
	
   

  	
   

  	
  Vice-President, Operations

  
	
   

  	
   

  	
  Fax Number: (870) 574-3528

  
	
   

  	
   

  	
   

  
	
  With a copy to:

  	
   

  	
  Aerojet General
  Corporation

  
	
   

  	
   

  	
  P. O. Box 13222

  
	
   

  	
   

  	
  Sacramento, CA 95813-6000

  
	
   

  	
   

  	
  Attention: Brian E.
  Sweeney

  
	
   

  	
   

  	
  Vice-President, Legal and
  Contracts

  
	
   

  	
   

  	
  Fax Number: (916) 351-8610

  

 

8.                  Conditions to Closing; Closing
Deliverables; Termination.

 

8.1            Simultaneous Execution
and Closing.  The
consummation of the sale and purchase of the Business contemplated by this
Agreement (the “Closing”) will occur simultaneously with the execution of the
Agreement.  Closing will occur at the
offices of                                      
at                                      
at 10:00 a.m. California time on September
                                         ,
                     
, or at such other date and time as may be mutually agreeable to the parties
hereto (the “Closing Date”).

 

22

 

8.2            Conditions Precedent
to Obligation of Aerojet.  The
obligation of Aerojet to proceed with the Closing is subject to the fulfillment
at Closing of the following conditions, any one or more of which may be waived
in whole or in part by Aerojet at Aerojet’s sole option:

 

(a)             Closing Documents.  Aerojet
shall have received the other documents referred to in Article 8.3(a).

 

8.2.         Conditions Precedent
to Obligation of DMC/SF.  The
obligation of DMC/SF to proceed with the Closing is subject to the fulfillment
at Closing of the following conditions, any one or more of which may be waived
in whole or in part by DMC/SF at DMC/SF’s sole option:

 

(a)             Closing Documents. 
DMC/SF shall also have received the other documents referred to in
Article 8.3(b).  All agreements, certificates and
other documents delivered by Aerojet to DMC/SF hereunder shall be in form and
substance satisfactory to counsel for DMC/SF, in the exercise of such counsel’s
reasonable professional judgment.

 

8.3            Deliveries and Proceedings at Closing.

 

(a)             Deliveries by DMC/SF.  DMC/SF shall deliver or cause to be
delivered to Aerojet at the Closing:

 

a.                  the Sublease executed by DMC;

 

b.                 the Equipment Lease executed by DMC

 

c.                  the Option Agreement executed by DMC;

 

d.                 the TSA executed by DMC;

 

e.                  the written consent of DMC’s banks to release
any and all liens on the Acquired Assets;

 

f.                    such other deeds, bills of sale, assignments,
certificates of title, documents and other instruments of transfer and
conveyance as may reasonably be requested by Aerojet executed by DMC;

 

g.                 a completed Schedule 2.1(a), with a lump sum
value for the Assets.

 

23

 

(b)            Deliveries by Aerojet.  Aerojet shall deliver or cause to be
delivered to DMC/SF at the Closing:

 

a.                  the Sublease executed by Aerojet;

 

b.                 the Equipment Lease executed by Aerojet;

 

c.                  the Option Agreement executed by Aerojet;

 

d.                 the TSA executed by Aerojet;

 

e.                  such other deeds, bills of sale, assignments,
certificates of title, documents and other instruments of transfer and
conveyance as may reasonably be requested by DMC/SF executed by Aerojet;

 

f.                    a completed Schedule 2.1(a), with a lump sum
value for the Assets.

 

IN
WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the date
first above written.

 

	
   

  	
  DYNAMIC MATERIALS
  CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Printed Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  AEROJET GENERAL
  CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Printed Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
										

 

24

 

Execution Copy

 

SCHEDULE 2.1 (a) - SPIN FORGE INVENTORY

 

	
  Description/Program
  Name

  	
   

  	
   

  	
   

  	
  Inventory

  Value

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ATACMS Cases and Domes

  	
   

  	
   

  	
   

  	
  $

  	
  268,520

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  HAWK - Work-in-process

  	
   

  	
  $

  	
  473,412

  	
   

  	
   

  	
   

  
	
  HAWK - Stores and Finished
  Goods

  	
   

  	
  427,833

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  901,245

  	
   

  	
   

  	
   

  
	
  Less - Amounts Previously
  Billed to Aerojet

  	
   

  	
  (147,853

  	
  )

  	
   

  	
   

  
	
  Adjusted HAWK Program
  Total

  	
   

  	
  $

  	
  753,392

  	
   

  	
  753,392

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  HSAD Generator Cases

  	
   

  	
  $

  	
  127,906

  	
   

  	
   

  	
   

  
	
  HSAD Booster Cases

  	
   

  	
  446,686

  	
   

  	
   

  	
   

  
	
  HSAD Program Total

  	
   

  	
  $

  	
  574,592

  	
   

  	
  574,592

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6992 - Minuteman III Tanks

  	
   

  	
   

  	
   

  	
  68,423

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Inventory Total

  	
   

  	
   

  	
   

  	
  $

  	
  1,664,927

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00072-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00072-of-00352.parquet"}]]