[EXECUTION COPY]
TRANSACTION AGREEMENT
DATED MAY 19, 1999,
BETWEEN
DANKA BUSINESS SYSTEMS, PLC
AND
KIS HOLDINGS, LLC
TABLE OF CONTENTS
[Not part of this Agreement]
ARTICLE I The Transactions . . . . . . . . . . . . . . . . . .1
1.1 Reorganization . . . . . . . . . . . . . . . . . . .1
1.2 Recapitalization . . . . . . . . . . . . . . . . . .5
1.3 Purchase and Sale of Units . . . . . . . . . . . . .6
1.4 Manner of Payment. . . . . . . . . . . . . . . . . .7
1.5 Enumeration of Transferred Assets. . . . . . . . . .7
1.6 Excluded Assets. . . . . . . . . . . . . . . . . . 11
1.7 Permitted Liabilities. . . . . . . . . . . . . . . 13
1.8 Excluded Liabilities.. . . . . . . . . . . . . . . 14
1.9 Allocation of the Purchase Price . . . . . . . . . 18
1.10 Time and Place of Closing. . . . . . . . . . . . . 18
1.11 Purchase Price Adjustments . . . . . . . . . . . . 19
1.12 Hypothetical Tax . . . . . . . . . . . . . . . . . 22
ARTICLE II Representations and Warranties . . . . . . . . . . 22
2.1 General Statement. . . . . . . . . . . . . . . . . 22
2.2 Holdings' Representations and Warranties . . . . . 22
2.3 Parent's Representations and Warranties. . . . . . 25
2.4 Limitation on Warranties . . . . . . . . . . . . . 47
2.5 Definition of Knowledge. . . . . . . . . . . . . . 47
ARTICLE III Conduct Prior to the Closing . . . . . . . . . . . 47
3.1 General. . . . . . . . . . . . . . . . . . . . . . 47
3.2 Parent's Obligations . . . . . . . . . . . . . . . 48
3.3 Holdings' Obligations. . . . . . . . . . . . . . . 54
3.4 Joint Obligations. . . . . . . . . . . . . . . . . 55
3.5 Insurance. . . . . . . . . . . . . . . . . . . . . 56
ARTICLE IV Conditions to Closing. . . . . . . . . . . . . . . 57
4.1 Conditions to Parent's Obligations . . . . . . . . 57
4.2 Conditions to Holdings' Obligations. . . . . . . . 58
ARTICLE V Closing. . . . . . . . . . . . . . . . . . . . . . 60
5.1 Form of Documents. . . . . . . . . . . . . . . . . 60
5.2 Holdings' Deliveries at the Closing. . . . . . . . 60
5.3 Parent's Deliveries at the Closing . . . . . . . . 61
5.4 Deliveries at the Foreign Closings . . . . . . . . 64
ARTICLE VI Post-Closing Agreements. . . . . . . . . . . . . . 64
6.1 Post-Closing Agreements. . . . . . . . . . . . . . 64
6.2 Inspection of Records. . . . . . . . . . . . . . . 64
6.3 Certain Tax Matters. . . . . . . . . . . . . . . . 66
6.4 Use of Trademarks; References to Parent. . . . . . 67
6.5 Payments of Accounts Receivable. . . . . . . . . . 67
6.6 Third Party Claims . . . . . . . . . . . . . . . . 68
6.7 Non-Assignment . . . . . . . . . . . . . . . . . . 68
6.8 Use of Parent's Trademarks . . . . . . . . . . . . 70
6.9 Non-Competition and Non-Solicitation . . . . . . . 70
6.10 Further Assurances . . . . . . . . . . . . . . . . 72
6.11 Interim Operations of the Subsidiaries . . . . . . 72
6.12 Reimbursement for Moving Expenses. . . . . . . . . 73
6.13 Purchase of Certain Assets . . . . . . . . . . . . 73
ARTICLE VII Employees and Employee Benefit Plans . . . . . . . 74
7.1 Employment of Parent's Employees . . . . . . . . . 74
7.2 Welfare Benefits . . . . . . . . . . . . . . . . . 75
7.3 Service Crediting. . . . . . . . . . . . . . . . . 75
7.4 401(k) Plan. . . . . . . . . . . . . . . . . . . . 75
7.5 Liabilities Accrued Prior to Closing . . . . . . . 75
7.6 Vacation.. . . . . . . . . . . . . . . . . . . . . 76
7.7 Other Terms Relating to Non-U.S.
Employee Matters.. . . . . . . . . . . . . . . . . 76
ARTICLE VIII Indemnification . . . . . . . . . . . . . . . . . 77
8.1 General. . . . . . . . . . . . . . . . . . . . . . 77
8.2 Certain Definitions. . . . . . . . . . . . . . . . 77
8.3 Indemnification Obligations of Parent. . . . . . . 77
8.4 Limitation on Parent's Indemnification
Obligations. . . . . . . . . . . . . . . . . . . . 78
8.5 Holdings' Indemnification Covenants. . . . . . . . 80
8.6 Cooperation. . . . . . . . . . . . . . . . . . . . 82
8.7 Third Party Claims . . . . . . . . . . . . . . . . 83
8.8 Environmental Indemnities. . . . . . . . . . . . . 84
8.9 Tax Indemnities. . . . . . . . . . . . . . . . . . 86
8.10 Indemnification Exclusive Remedy . . . . . . . . . 86
8.11 Tax Treatment. . . . . . . . . . . . . . . . . . . 87
ARTICLE IX Effect of Termination/Proceeding . . . . . . . . . 87
9.1 General. . . . . . . . . . . . . . . . . . . . . . 87
9.2 Right to Terminate . . . . . . . . . . . . . . . . 87
9.3 Certain Effects of Termination . . . . . . . . . . 88
9.4 Remedies . . . . . . . . . . . . . . . . . . . . . 88
9.5 Right to Damages . . . . . . . . . . . . . . . . . 89
ARTICLE X Miscellaneous. . . . . . . . . . . . . . . . . . . 89
10.1 Fees . . . . . . . . . . . . . . . . . . . . . . . 89
10.2 Sales and Transfer Taxes (other than VAT). . . . . 89
10.3 Definition of Reasonable Efforts . . . . . . . . . 89
10.4 Publicity. . . . . . . . . . . . . . . . . . . . . 90
10.5 Notices. . . . . . . . . . . . . . . . . . . . . . 90
10.6 Expenses . . . . . . . . . . . . . . . . . . . . . 92
10.7 Entire Agreement . . . . . . . . . . . . . . . . . 92
10.8 Value Added Taxes. . . . . . . . . . . . . . . . . 93
10.9 Non-Waiver . . . . . . . . . . . . . . . . . . . . 96
10.10 Counterparts . . . . . . . . . . . . . . . . . . . 96
10.11 Severability . . . . . . . . . . . . . . . . . . . 96
10.12 Applicable Law . . . . . . . . . . . . . . . . . . 96
10.13 Binding Effect; Benefit. . . . . . . . . . . . . . 96
10.14 Assignability. . . . . . . . . . . . . . . . . . . 97
10.15 Amendments . . . . . . . . . . . . . . . . . . . . 97
10.16 Headings . . . . . . . . . . . . . . . . . . . . . 97
10.17 Governmental Reporting . . . . . . . . . . . . . . 97
10.18 Waiver of Trial by Jury. . . . . . . . . . . . . . 97
10.19 Rule of Construction . . . . . . . . . . . . . . . 97
10.20 Consent to Jurisdiction. . . . . . . . . . . . . . 98
10.21 Definitions. . . . . . . . . . . . . . . . . . . . 98
EXHIBITS
Exhibit A - Danka US Contribution Agreement
Exhibit B - Membership Interest Purchase Agreement
Exhibit C - Operating Agreement
Exhibit D - Material Consents
Exhibit E - Material Permits
Exhibit F - Written Opinion of XxXxxxxxx, Will & Xxxxx
Exhibit G - Written Opinion of Altheimer & Xxxx
Exhibit H - Written Opinion of Xxxxxxxx Chance
Exhibit I - Supply Agreement
Exhibit J - Transitional Support Services Agreement
Exhibit K - Services and Supplies Agreement Terms and Conditions
Exhibit L - Preferred Outsourcing Agreement Terms and Conditions
Exhibit M - Pledge and Security Agreement
SCHEDULES
Disclosure Schedule
Schedule 1.1(c) - Principal Amounts of Demand Notes
Schedule 1.5(v) - Certain Fixed Assets
Schedule 1.6(l) - Excluded Agreements
Schedule 1.6(m) - Schedule of Other Excluded Assets
Schedule 1.8(f) - Change of Control Agreements
Schedule 1.9 - Purchase Price Allocation Among Subsidiaries
Schedule 1.11 - Accounting Policies and EBIT and Working Capital
Definitions
Schedule 1.12 - Hypothetical Tax Effective Income Tax Rates
Schedule 2.2(c) - European Filings
Schedule 3.2(h) - Credit Agreement Documents
Schedule 3.2(i) - Capital Expenditures
Schedule 3.3(c) - Bonds
Schedule 6.13 - Customer Agreements Subject to Asset Repurchase
TRANSACTION AGREEMENT
THIS TRANSACTION AGREEMENT (the "Agreement") is made May 19,
1999 (the "Execution Date"), between DANKA BUSINESS SYSTEMS, PLC,
a public limited company incorporated under the laws of England
and Wales ("Parent"), and KIS HOLDINGS, LLC, a Delaware limited
liability company ("Holdings").
R E C I T A L S
A. Certain indirect subsidiaries of Parent are in the
business of providing facilities management and outsourcing
services aimed at providing total document management solutions,
including, without limitation, mail center operations, mail
delivery, literature fulfillment and supplies management,
shipping and receiving, network fax, on-line image retrieval /
distribution, document processing and preflight, central
reprographics, color copy, convenience copy / fleet management,
microfilming, color print, data center output, print-on-demand,
network print, computer output to microfilm (COM), CD output and
electronic scanning and indexing (the "Business").
B. Parent desires to recapitalize the Business on the
terms and subject to the conditions set forth herein, and
Holdings desires to purchase directly from a subsidiary of Parent
a controlling interest in the Business, on the terms and subject
to the conditions herein contained.
A G R E E M E N T S
Therefore, for good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties
agree as follows:
ARTICLE I
The Transactions
1.1 Reorganization. On the terms and subject to the
conditions contained in this Agreement, and provided that all
conditions of Closing set forth in Article IV shall have been
satisfied, Parent shall cause the following transactions
(collectively, the "Reorganization Transactions") to occur on the
Closing Date, in the order set forth in this Section 1.1 and
prior to the transactions described in Sections 1.2 and 1.3:
(a) Parent shall cause Danka Office Imaging Company,
an indirect wholly-owned subsidiary of Parent ("Danka US")
to (i) form a Delaware single-member limited liability
company wholly owned by Danka US (the "New U.S.
Subsidiary"), (ii) transfer to the New U.S. Subsidiary (x)
all of the assets of Danka US which constitute Transferred
Assets (as herein defined) and (y) cash in an amount equal
to the sum of (A) Danka US's portion of the Kodak Receivable
Amount (as herein defined) as of the Closing Date and (B)
all collections by Danka US with respect to the Kodak
Receivable Amount between the Execution Date and the Closing
Date, and (iii) cause the New U.S. Subsidiary to assume the
liabilities of Danka US which constitute Permitted
Liabilities (as herein defined), pursuant to a Contribution
Agreement in the form attached hereto as Exhibit A;
(b) Parent shall cause Danka US to contribute to the
capital of DSI Company, LLC, a New York limited liability
company (the "Company"), the entire membership interest in
the New U.S. Subsidiary, in consideration for the issuance
of 23,259,999 common units of the Company;
(c) Parent shall cause the Foreign Subsidiaries (as
herein defined) to transfer their respective Transferred
Assets to the New Foreign Subsidiaries, as follows:
(i) Parent shall cause Danka Canada Inc. and
Kalmara Inc. (collectively, "Danka Canada") to transfer
and assign the assets of Danka Canada which constitute
Transferred Assets to a wholly-owned Canadian
subsidiary of the Company formed pursuant to Section
3.2(c) ("Canadian Acquisition"), and shall cause
Canadian Acquisition to assume the liabilities of Danka
Canada which constitute Permitted Liabilities, pursuant
to an Asset Purchase Agreement, in such form as the
parties may agree;
(ii) Parent shall cause Danka Services
International N.V. ("Danka Belgium") to transfer and
assign the assets of Danka Belgium which constitute
Transferred Assets to a wholly-owned Belgian subsidiary
of the Company formed pursuant to Section 3.2(c)
("Belgian Acquisition"), and shall cause Belgian
Acquisition to assume the liabilities of Danka Belgium
which constitute Permitted Liabilities, pursuant to an
Asset Purchase Agreement, in such form as the parties
may agree;
(iii) Parent shall cause Danka Services
International A/S ("Danka Denmark") to transfer and
assign the assets of Danka Denmark which constitute
Transferred Assets to a wholly-owned Danish subsidiary
of the Company formed pursuant to Section 3.2(c)
("Danish Acquisition"), and shall cause Danish
Acquisition to assume the liabilities of Danka Denmark
which constitute Permitted Liabilities, pursuant to an
Asset Purchase Agreement, in such form as the parties
may agree;
(iv) Parent shall cause Danka Services
International S.A. ("Xxxxx Xxxxxx") to transfer and
assign the assets of Danka France which constitute
Transferred Assets to a wholly-owned indirect French
subsidiary of the Company formed pursuant to Section
3.2(c) ("French Acquisition"), and shall cause French
Acquisition to assume the liabilities of Danka France
which constitute Permitted Liabilities, pursuant to
Going Concerns Transfer Agreement, in such form as the
parties may agree;
(v) Parent shall cause Danka Services GmbH
("Danka Germany") to transfer and assign the assets of
Danka Germany which constitute Transferred Assets to a
wholly-owned German subsidiary of the Company formed
pursuant to Section 3.2(c) ("German Acquisition"), and
shall cause German Acquisition to assume the
liabilities of Danka Germany which constitute Permitted
Liabilities, pursuant to an Asset Purchase Agreement,
in such form as the parties may agree;
(vi) Parent shall cause Danka Services
International S.R.L. ("Danka Italy") to transfer and
assign the assets of Danka Italy which constitute
Transferred Assets to a wholly-owned Italian subsidiary
of the Company formed pursuant to Section 3.2(c)
"Italian Acquisition"), and shall cause Italian
Acquisition to assume the liabilities of Danka Italy
which constitute Permitted Liabilities, pursuant to an
Asset Purchase Agreement, in such form as the parties
may agree;
(vii) Parent shall cause Danka Services
International X.X. ("Xxxxx Xxxxxxxxxxx") to transfer
and assign the assets of Danka Netherlands located in
the Netherlands which constitute Transferred Assets to
a wholly-owned Dutch subsidiary of the Company formed
pursuant to Section 3.2(c) ("Dutch Acquisition"), and
shall cause Dutch Acquisition to assume the liabilities
of Danka Netherlands which constitute Permitted
Liabilities, pursuant to an Asset Purchase Agreement,
in such form as the parties may agree;
(viii) Parent shall cause Danka Services
International Akticbolag ("Danka Sweden") to transfer
and assign the assets of Danka Sweden which constitute
Transferred Assets to a wholly-owned Swedish subsidiary
of the Company formed pursuant to Section 3.2(c)
("Swedish Acquisition"), and shall cause Swedish
Acquisition to assume the liabilities of Danka Sweden
which constitute Permitted Liabilities pursuant to an
Asset Purchase Agreement, in such form as the parties
may agree;
(ix) Parent shall cause Danka Services
International AS ("Danka Norway") to transfer and
assign the assets of Danka Norway which constitute
Transferred Assets to a wholly-owned Norwegian
subsidiary of the Company formed pursuant to Section
3.2(c) ("Norwegian Acquisition"), and shall cause
Norwegian Acquisition to assume the liabilities of
Danka Norway which constitute Permitted Liabilities,
pursuant to an Asset Purchase Agreement, in such form
as the parties may agree; and
(x) Parent shall cause Danka Europe Ltd. ("Danka
UK") to transfer and assign the assets of Danka UK
(including those located in Ireland) which constitute
Transferred Assets to an English subsidiary of the
Company formed pursuant to Section 3.2(c), incorporated
in England and Wales ("UK Acquisition"), and shall
cause UK Acquisition to assume the liabilities of Danka
UK which constitute Permitted Liabilities, pursuant to
an Asset Purchase Agreement, in such form as the
parties may agree.
The foregoing agreements, the Contribution Agreement
referenced in Sections 1.1(a) and any other agreements,
documents or instruments executed in connection therewith
are referred to herein collectively as the "Ancillary
Agreements." Danka Canada, Danka Belgium, Danka Denmark,
Danka France, Danka Germany, Danka Italy, Danka Netherlands,
Danka Sweden, Danka Norway and Danka UK are referred to
herein as the "Foreign Subsidiaries." The Foreign
Subsidiaries, Danka US, and, as of the Execution Date, KIS
Imaging Services, Inc., a Delaware corporation ("KIS"), are
referred to herein collectively as the "Subsidiaries."
Danka Canada, Danka Belgium, Danka Denmark, Danka Germany,
Danka Netherlands and Danka UK are referred to herein as the
"Material Foreign Subsidiaries." Canadian Acquisition,
Belgian Acquisition, Danish Acquisition, French Acquisition,
German Acquisition, Italian Acquisition, Dutch Acquisition,
Swedish Acquisition, Norwegian Acquisition and UK
Acquisition are referred to herein as the "New Foreign
Subsidiaries." The New U.S. Subsidiary and the New Foreign
Subsidiaries are referred to herein collectively as the "New
Subsidiaries." The Business, as conducted by Danka US and,
as of the Execution Date, KIS, in the United States is
referred to herein as the "U.S. Business". The term
"wholly-owned" refers to direct or indirect ownership. The
consideration for the transfers of the Transferred Assets by
the Foreign Subsidiaries to the New Foreign Subsidiaries
shall consist of promissory notes, payable on demand (the
"Demand Notes"), plus the assumption of the liabilities of
the Foreign Subsidiaries which constitute Permitted
Liabilities. The respective principal amounts of the Demand
Notes shall be as set forth in Schedule 1.1(c), reduced, in
each case, by the applicable portions of the Kodak
Receivable Amount due to the respective payees of the Demand
Notes as of the Closing Date and by the respective amounts
of any portions of the Kodak Receivable Amount which was
collected by the payees of such Demand Notes between the
Execution Date and the Closing Date.
1.2 Recapitalization. On the terms and subject to the
conditions contained in this Agreement, and provided that all
conditions of Closing set forth in Article IV shall have been
satisfied, Parent shall cause the following transactions
(collectively, the "Recapitalization Transactions") to occur on
the Closing Date, following consummation of the Reorganization
Transactions, prior to the transactions described in Section 1.3,
and in the order set forth in this Section 1.2:
(a) Parent shall cause the Company to borrow
$181,512,500 (the "Proceeds") pursuant to the Debt Financing
(as herein defined), such proceeds to be made by wire
transfers of immediately available funds. For the purpose
of paying the principal amounts of the Demand Notes as
provided in Section 1.2(c), (i) an amount equal to the
principal amount of the Demand Note payable to Danka UK (as
provided on Schedule 1.1(c), but reduced by the applicable
portion of the Kodak Receivable Amount as of the Closing
Date) shall be made available in U.K. pounds, translated
from U.S. Dollars at the applicable foreign exchange rate in
effect at the close of business in New York City on the day
immediately preceding the Closing Date; (ii) an amount
equal to the principal amount of the Demand Note payable to
Danka Canada (as provided on Schedule 1.1(c), but reduced by
the applicable portion of the Kodak Receivable Amount) shall
be made available in Canadian Dollars, translated from U.S.
Dollars at the applicable foreign exchange rate in effect at
the close of business in New York City on the day
immediately preceding the Closing Date; and (iii) an amount
equal to the aggregate principal amount of all other Demand
Notes payable to the other Foreign Subsidiaries (in each
case as provided on Schedule 1.1(c), but reduced, in each
case, by the applicable portion of the Kodak Receivable
Amount) shall be made available in Euros, translated from
U.S. Dollars at the applicable foreign exchange rate in
effect at the close of business in New York City on the day
immediately preceding the Closing Date;
(b) Parent shall cause the Company to redeem
22,050,000 common units of the Company from Danka US for an
aggregate redemption price of $220,481,250, of which
$84,112,500 shall be payable in cash and $136,387,500 shall
be payable by the issuance of 1,363,875 preferred units of
the Company, par value $100.00 per unit; leaving 1,210,000
common units of the Company outstanding and held by Danka
US; and
(c) Parent shall cause the Company to transfer or loan
to each of the New Foreign Subsidiaries a portion of the
Proceeds in an amount equal to the face amount of the Demand
Note made by such New Foreign Subsidiary (reduced, in each
case, by the applicable portion of the Kodak Receivable
Amount, as described in Section 1.1(e)) and shall cause the
Demand Notes to be paid in full.
1.3 Purchase and Sale of Units. On the terms and subject
to the conditions contained in this Agreement, and provided that
all conditions of Closing set forth in Article IV shall have been
satisfied, Parent and Holdings shall cause the following
transactions (collectively, the "Purchase Transactions") (the
Reorganization Transactions, the Recapitalization Transactions
and the Purchase Transactions being collectively referred to
herein as the "Transactions") to occur on the Closing Date,
following consummation of the Recapitalization Transactions and
in the order set forth in this Section 1.3:
(a) Pursuant to a Membership Interest Purchase
Agreement attached hereto as Exhibit B (the "Membership
Interest Purchase Agreement"), Holdings shall purchase from
Danka US, and Parent shall cause Danka US to sell to
Holdings, (i) 1,089,000 common units of the Company (the
"Common Units"), representing at least 80% of the
outstanding common units of the Company, for a purchase
price of $10,890,000, and (ii) 1,091,100 preferred units of
the Company (the "Preferred Units"), representing at least
80% of the outstanding preferred units of the Company, for a
purchase price of $109,110,000; and
(b) Parent shall cause Danka US to, and Holdings
shall, enter into an Operating Agreement with respect to the
Company, in the form attached hereto as Exhibit C.
1.4 Manner of Payment. All amounts payable to Danka US
under Section 1.2(b) and 1.3(a), as the case may be, shall be
made by wire transfers of immediately available funds (such
amounts, collectively with amounts payable to the Foreign
Subsidiaries in payment of the Demand Notes under Section 1.2(c),
being collectively the "Cash Amounts"). Said wire transfers
shall be made to such bank accounts of the respective
Subsidiaries as Parent shall specify by written notice to
Holdings delivered not later than two days before the Closing
Date or the applicable Foreign Closing Date (as herein defined),
as applicable.
1.5 Enumeration of Transferred Assets. The "Transferred
Assets" shall consist of the assets, properties and rights as of
the Closing Date, wherever situated and located, of the
Subsidiaries, which are used primarily in or relate primarily to
the conduct of the Business or which are described in this
Section 1.5. The Transferred Assets shall be transferred to the
New Subsidiaries, free and clear of Liens (as herein defined)
other than Permitted Liens (as herein defined). The Transferred
Assets shall not include any of the assets, properties and rights
described in Section 1.6 (the "Excluded Assets"), but include,
without limitation, the following assets used by any of the
Subsidiaries and all of the Subsidiaries' right, title and
interest thereto, except to the extent that any of the foregoing
are also enumerated in Section 1.6 as being Excluded Assets,
provided that this exception shall not apply to the extent that
any item enumerated in Section 1.6 specifically refers to one or
more subparagraphs of this Section 1.5:
(a) all inventory held for use primarily in the
conduct of the Business (including, without limitation, raw
materials, work in process, finished goods, service parts
and supplies) ("Inventory");
(b) all furniture, art work, fixtures, equipment
(including office equipment), machinery, parts, computer
hardware, copiers, tools, dies, jigs, patterns, molds,
automobiles and trucks and all other tangible personal
property (other than Inventory)used primarily in the conduct
of the Business (collectively, "Fixed Assets");
(c) all leasehold interests and leasehold improvements
created by all leases (excluding capitalized leases) of
personal property used primarily in connection with the
Business under which any of the Subsidiaries is a lessee or
lessor;
(d) the Subsidiaries' respective entire leasehold
interest as lessee of real property used primarily in
connection with the Business (the "Leased Premises") under
the leases which are listed in the Disclosure Schedule;
(e) all trade accounts receivable, trade notes
receivable, trade negotiable instruments and trade chattel
paper received as a result of the conduct of the Business;
(f) all deposits and rights with respect thereto in
connection with the Business;
(g) subject to Section 6.7, all contracts (and
benefits arising therefrom) relating primarily to or arising
primarily out of the Business, all rights against suppliers
for repair or replacement of defective products covering any
of the tangible assets of the Business, to the extent
legally transferable, and all Permits (as herein defined)
and Environmental Permits (as herein defined);
(h) all sales orders and sales contracts, purchase
orders and purchase contracts, quotations and bids generated
by the operation of the Business;
(i) subject to Section 6.7, all license agreements,
distribution agreements, sales representative agreements,
service agreements, supply agreements, franchise agreements,
computer software leases, licenses and agreements and
technical service agreements relating primarily to the
Business;
(j) except as provided in Section 1.6(o), all
intellectual property rights used by any of the Subsidiaries
primarily in or relating primarily to the Business or its
operations (including, without limitation, U.S. and foreign
patents and applications therefor, know-how, unpatented
inventions, trade secrets, secret formulas, business and
marketing plans, U.S. and foreign copyrights, U.S. and
foreign trademarks, service marks, trade or business names,
trade dress and slogans (and all registrations of such
copyrights, trademarks, service marks, trade names, trade
dress and slogans, and all applications for registration
thereof), Software (as defined herein), licenses and rights
with respect to the foregoing (collectively, "Intellectual
Property") used by any of the Subsidiaries) and all goodwill
associated with such intellectual property rights, including
without limitation all Intellectual Property listed as
Intellectual Property on Schedule 2.3(v) of the Disclosure
Schedule (as herein defined);
(k) all customer and supplier lists, customer records
and information relating primarily to the Business;
(l) all books and records relating primarily to the
Business, including, without limitation, blueprints,
drawings and other technical papers, personnel, payroll,
employee benefit, accounts receivable and payable,
inventory, maintenance, and asset history records, asset
registry, ledgers, and books of original entry, all
insurance records and OSHA and EPA files relating to
occupational health and safety and protection of public
health and the environment;
(m) all rights in connection with prepaid expenses
with respect to the Transferred Assets;
(n) all letters of credit issued to any of the
Subsidiaries relating primarily to the Business;
(o) all sales and promotional materials, catalogues
and advertising literature relating primarily to the
Business;
(p) all telephone numbers or telephone directories
relating primarily to the Business and all lock boxes
relating primarily to the Business to which any of the
Subsidiaries' account debtors remit payments;
(q) all rights (including claims) related primarily to
the Transferred Assets or Permitted Liabilities;
(r) all rights in and to claims, rights of
indemnification and causes of action against third parties
to the extent they relate to the Business or its conduct,
the Transferred Assets or the Permitted Liabilities;
provided that notwithstanding the inclusion of the foregoing
rights, the applicable Subsidiaries shall continue to enjoy
all rights in and to such claims, rights of indemnification
and causes of action, together with Holdings and/or the New
Subsidiaries, but only to the extent such claims, rights of
indemnification and causes of action relate to the Excluded
Assets or the Excluded Liabilities. With respect to claims,
rights of indemnification and causes of action with respect
to a matter or series or group of matters that are asserted
by both a Subsidiary and a New Subsidiary ("Joint Claims"),
such Subsidiary and New Subsidiary shall agree to cooperate
with each other to determine the relative value of each
party's claim and to share in such limitations as may be
applicable to any Joint Claims on a pro rata basis with the
relative value of each party's claim;
(s) any amounts and other claims due the Business from
Parent or any Affiliate of Parent (including any Subsidiary)
with respect to the provision by the Business of services to
Parent or any such Affiliate (which services for purposes of
this paragraph (s) do not include any loans or advances to
Parent or any such Affiliate);
(t) all cash generated by the Business with respect
to Foreign Subsidiaries whose assets are not transferred on
the Closing Date and which arise in the operation of the
Business between the Closing Date and the applicable Foreign
Closing Date with respect to such Subsidiary (so long as
such Foreign Closing Date actually occurs);
(u) all rights under confidentiality agreements
executed by Parent or any of its Affiliates with respect to
the proposed transfer of the Business, whether with Holdings
or with any other person or entity; provided, however, that
Parent and its Affiliates shall retain those rights under
such agreements that (x) cover information of Parent and its
Affiliates not relating to the Business, (y) involve so-called
"standstill" provisions, and/or (z) involve covenants
with respect to solicitation of employees of Parent and its
Affiliates;
(v) notwithstanding the use of the term "primarily" in
this Section 1.5 and elsewhere in the Agreement to describe
the Transferred Assets, the parties hereto agree that
irrespective of whether an asset is used "primarily" in the
Business, the Transferred Assets shall include all Fixed
Assets, Inventory or Software (as herein defined) (1)
located at a facility that is used exclusively for the
Business, (2) located at a facility of a customer of the
Business at which the Business is conducted, and (3) located
at the facility commonly known as Building 14 in Rochester,
New York ("Building 14"), as set forth in Schedule 1.5(v).
1.6 Excluded Assets. Subject to the specific guidelines
set forth in Section 1.5(v), the Excluded Assets shall consist of
the following items:
(a) except as provided in Section 1.5(t), all cash on
hand and in banks (exclusive of letters of credit issued by
customers of any of the Subsidiaries) and marketable
securities and the like;
(b) the Subsidiaries' bank accounts (exclusive of the
lock box accounts referred to in Section 1.5(p)), checkbooks
and canceled checks;
(c) except as provided in Sections 1.5(s), all
contracts with, and claims and rights against, Parent or any
of Parent's Affiliates (as herein defined), including those
included in the accounts maintained by any of the
Subsidiaries in accordance with its customary practices, in
which there are recorded or reflected the amounts owed by
any business of Parent or any of its Affiliates to the
Business or by the Business to any business of Parent or any
of its Affiliates, attributable to intercompany transactions
(the "Intercompany Accounts") and including any rights of
any of the Subsidiaries against any other Subsidiaries;
(d) rights in and to claims (and in each case benefits
to the extent they arise therefrom) against third parties to
the extent such claims are not primarily related to the
Transferred Assets or the Permitted Liabilities, and rights
in and to claims (and benefits to the extent they arise
therefrom) that relate to Excluded Liabilities (as herein
defined);
(e) insurance policies of any of the Subsidiaries and
rights in connection therewith, other than rights arising
with respect to claims (other than claims with respect to
Excluded Liabilities) pending with respect to the Business
as of the Closing Date;
(f) rights arising from prepaid expenses, if any, with
respect to Excluded Assets;
(g) rights arising from any refunds due (including,
without limitation, any retrospective premium adjustments)
with respect to insurance premium payments to the extent
they relate to insurance policies which constitute Excluded
Assets and refunds due and unpaid from federal, state,
foreign and/or local taxing authorities with respect to
taxes heretofore paid by any of the Subsidiaries;
(h) deposits of any of the Subsidiaries with any
federal, state, local or foreign tax authorities, including,
without limitation, tax deposits, prepayments and estimated
payments;
(i) except as provided in Section 1.5(r) and 1.5(u)
and notwithstanding Section 1.6(d) above, all rights of
indemnification, claims and causes of action which relate to
the conduct of the Business prior to the Closing Date,
including, without limitation, those against any person
under any purchase or other agreement pursuant to which
Parent or any of its Affiliates acquired any portion of the
Business or those arising by operation of law or equity or
otherwise, but excluding claims for repair or replacement of
defective products against the suppliers thereof with
respect to tangible assets of the Business;
(j) Parent's rights under this Agreement;
(k) the Subsidiaries' corporate charters, minute and
stock record books, and corporate seals, tax returns and tax
receipts (other than copies of relevant portions of tax
returns and tax receipts relating to Assumed Taxes);
(l) the agreements, if any, set forth on Schedule
1.6(l);
(m) the assets, if any, described on Schedule 1.6(m);
(n) all amounts due the Business from Xxxxxxx Kodak
Company and its affiliates as of the Closing Date
(collectively, the "Kodak Receivable Amount");
(o) all assets and properties of any of the
Subsidiaries which are not used primarily in the conduct of
the Business; and
(p) other than the initials "DSI," all intellectual
property rights and any associated goodwill of Parent or any
Subsidiary related to the names or marks "Danka Services
International," "Danka Services," "Danka Imaging Services,"
"Danka Office Imaging" and any other name or xxxx which
consists of or uses the name "Danka," including, without
limitation, any Internet domain name which contains the word
"Danka".
1.7 Permitted Liabilities. The liabilities and obligations
of each of the respective Subsidiaries with respect to the
Business which are described in this Section 1.7 are referred to
herein as the "Permitted Liabilities." The Permitted Liabilities
shall consist of the following, and only the following,
liabilities of the Subsidiaries with respect to the Business:
(a) accounts payable as of the Closing Date (but only
to the extent such accounts payable are primarily
attributable to the Business and would be reflected on a
balance sheet of the Business prepared in accordance with
United States generally accepted accounting principles
("GAAP") applied in a manner consistent with the Financial
Statements (as defined herein), as modified or supplemented
pursuant to Schedule 1.11, including accounts payable to
Parent and its Affiliates under the Intercompany Accounts to
the extent that such liabilities arise out of sales of Fixed
Assets, parts or supplies to the Business or provision of
service for Fixed Assets and only to the extent that such
liabilities were determined on a basis that was not less
favorable to the Business than an arms'-length basis;
(b) all accrued and unpaid expenses as of the Closing
Date, including, without limitation, accrued vendor
payables, accrued salaries, wages, payroll taxes, bonuses,
vacation pay and employee benefits, and accrued and unpaid
expenses payable to Parent or the Subsidiaries under the
Intercompany Accounts, but only to the extent such accrued
expenses relate primarily to the Business and would be
reflected on a balance sheet of the Business prepared in
accordance with GAAP applied in a manner consistent with the
Financial Statements (as defined herein), as modified or
supplemented pursuant to Schedule 1.11, but excluding
accrued bonuses with respect to periods ending on or prior
to March 31, 1999;
(c) liabilities arising after the Closing Date of any
of the Subsidiaries under any written purchase order, sales
order, operating lease, agreement or commitment of any kind
(other than capitalized leases) relating primarily to the
Business by which any of the Subsidiaries is bound, which
have not been performed prior to the Closing Date, which is
assigned to any of the New Subsidiaries and which is set
forth in the Disclosure Schedule (or which is not required
to be set forth thereon) pursuant to this Agreement;
(d) liabilities of any of the Subsidiaries arising
from events on or after the Closing Date under any Permits
(as herein defined) and Environmental Permits (as herein
defined) which were issued to any of the Subsidiaries prior
to the Closing Date and are assigned to a New Subsidiary,
but only to the extent such liabilities relate to the
conduct of the Business after the Closing Date;
(e) all liabilities with respect to real estate,
personal property or similar ad valorem taxes ("Property
Taxes") arising out of the operation of the U.S. Business or
ownership or use of the assets thereof (i) for the taxable
period during which the Closing Date occurs in an amount
multiplied by a fraction, the numerator of which is the
number of days remaining in such period beginning on the day
after the Closing Date, and the denominator of which is the
total number of days in such period and (ii) for any taxable
period beginning after the Closing Date (collectively, the
"Assumed Taxes"). The Assumed Taxes shall be treated as a
Permitted Liability, irrespective of whether, at the time of
Closing, liability for such Taxes has actually attached, or
whether such Taxes have become actually payable or have been
paid by Parent or any Subsidiary;
(f) all liabilities of Foreign Subsidiaries (including
non-income tax liabilities which would otherwise be Excluded
Liabilities under Section 1.8(c)), the assets of which are
not transferred to New Foreign Subsidiaries on the Closing
Date, but solely to the extent they arise in the operation
of the Business between the Closing Date and the Foreign
Closing Date with respect to such Subsidiary, treating as a
liability for this purpose any amount computed for the
account of any Subsidiary under Section 1.12 that has not
been compensated by an adjustment in favor of Parent or any
Subsidiary under Section 1.5(t); and
(g) all liabilities arising out of the obligations of
Holdings or the New Subsidiaries in Article VII hereof or in
the Ancillary Agreements.
1.8 Excluded Liabilities. Except as expressly set forth in
Section 1.7 above, the New Subsidiaries shall not assume and
shall not be liable or responsible for any debt, obligation or
liability of the Business, Parent, the Subsidiaries or any
Affiliate of Parent or any claim against any of the foregoing of
any kind, whether known or unknown, contingent or otherwise.
Such liabilities which are not expressly set forth in Section 1.7
are referred to herein as the "Excluded Liabilities." The New
Subsidiaries shall not assume, and the Subsidiaries shall remain
liable for, the Excluded Liabilities. Without limiting anything
in the foregoing, none of the New Subsidiaries shall assume,
undertake or accept, or have any responsibility with respect to
the following liabilities or obligations:
(a) except as provided in paragraphs (a), (f) or (g)
of Section 1.7, any liabilities to Parent or any of Parent's
Affiliates (including any liability reflected in the
Intercompany Accounts and any liability of any Subsidiary to
any other Subsidiary) as of the Closing Date;
(b) any liabilities for legal, accounting, audit and
investment banking fees, brokerage commissions, and any
other expenses incurred by Parent or the Subsidiaries in
connection with the negotiation and preparation of this
Agreement and the Transactions;
(c) any liabilities of any of Parent or any of its
Affiliates, including the Subsidiaries, for Taxes due and
payable as of the Closing Date or otherwise related to
periods ending on or prior to the Closing Date, except as
otherwise provided in Sections 8.5(g) or 10.2, irrespective
of the manner in which such Taxes are reflected on the
financial statements of Parent or any of the Subsidiaries,
other than the Assumed Taxes, payroll taxes included in
Section 1.7(b), Taxes included in Section 1.7(f) and
Hypothetical Taxes;
(d) any liability for or related to indebtedness of
any of the Subsidiaries to banks, financial institutions or
other persons or entities with respect to borrowed money or
otherwise;
(e) any liabilities of Parent or any of the
Subsidiaries under those leases (including all finance
leases), contracts, insurance policies, commitments, sales
orders, purchase orders, Permits and Environmental Permits
which are not Permitted Liabilities, subject, however, to
the provisions of Sections 6.8 and 6.14;
(f) any liabilities of Parent or any of the
Subsidiaries to pay severance or so-called change of control
payments to employees of the Business which arise by virtue
of the transfer of the Transferred Assets pursuant to the
provisions hereof; provided, however, that if any such
liabilities shall arise out of any action by Holdings, the
Company or any New Subsidiary on or following the Closing
Date, including liabilities arising pursuant to those
agreements listed on Schedule 1.8(f) hereto, only the amount
of any enhanced severance benefits in excess of the
severance benefits (if any) which would be payable to such
employees by virtue of the normal severance policies of the
Business as of the Closing Date shall constitute Excluded
Liabilities;
(g) any liability in respect of any retaliation,
discrimination, harassment or wrongful discharge claim or
claims under any Federal, state or local civil rights or
similar law, or any retaliatory breach of any oral, written
or implied contract of employment claim, unfair labor
practice claim, charge or wage and hour claim, or the Worker
Adjustment Retraining and Notification Act ("WARN Act") or
any similar local or state law, arising out of the conduct
of the Business by any of the Subsidiaries prior to the
Closing (other than any such liabilities which result from
Holdings' or a New Subsidiary's failure to comply with the
provisions of Article VII and other than any such
liabilities which arise as a result of actual terminations
or layoffs by a New Subsidiary of employees of the Business
which occur after the Closing Date and result from the
aggregation of any terminations or layoffs of employees of
the Business conducted by any of the Subsidiaries prior to
the Closing Date, it being understood and agreed that any
such liabilities constitute Permitted Liabilities hereunder
so long as, but only so long as, such employees who were
terminated by any of the Subsidiaries within the thirty-day
period ending on the day immediately before Closing Date are
listed in a schedule delivered by Parent to Holdings at the
Closing);
(h) any claims against or liabilities of Parent or any
of the Subsidiaries for injury to or death of persons or
damage to or destruction of tangible property (including,
without limitation, any workmen's compensation claim)
arising out of the conduct of the Business by any of the
Subsidiaries prior to the Closing Date, regardless of when
said claim or liability is asserted, including, without
limitation, any claim or liability for consequential or
punitive damages in connection with the foregoing;
(i) except as specifically provided in Article VII or
otherwise required by applicable law, any liabilities
arising out of or in connection with any of the Business'
employee welfare and pension benefit (including profit
sharing) plans;
(j) liabilities for any so-called "sale incentive
bonuses" payable to the Subsidiaries' employees by reason of
the transfer of the Transferred Assets (without implication
that the contrary would otherwise be true, it is understood
and agreed that liabilities under the agreements listed in
Schedule 1.8(f) do not constitute so-called "sale incentive
bonuses");
(k) any liabilities or obligations, whether known or
unknown, fixed or contingent, with respect to, or relating
to, any Environmental Laws (as herein defined) or any
environmental, health or safety matter, including, but not
limited to, any liabilities arising out of any acts,
omissions, or conditions that first occurred or existed
prior to the Closing Date;
(l) except as otherwise contemplated hereby, any
liability whether presently in existence or arising
hereafter which is attributable to an asset that is not a
Transferred Asset;
(m) any liability of Parent or any of the Subsidiaries
for litigation (contingent or otherwise) arising out of, in
relation to or caused by the operation of the Business prior
to the Closing Date;
(n) any liability with respect to any employee of
Parent or any of the Subsidiaries who does not become a
Transferred Employee (as herein defined);
(o) accrued bonuses with respect to periods ending on
or prior to March 31, 1999;
(p) that certain account payable of Danka UK payable
to Xxxxxxx Kodak Company in the amount of $1,634,263; and
(q) without limitation by the specific enumeration of
the foregoing, any liabilities not expressly enumerated in
Section 1.7.
1.9 Allocation of the Purchase Price. Holdings and Parent
agree that the Enterprise Value (as defined herein) is allocable
among the Subsidiaries as set forth in Schedule 1.9 hereto. As
used herein, the term "Enterprise Value" means the sum of the
Cash Amounts and the value of the membership interest in the
Company retained by Danka US following consummation of the
Transactions. Parent and Holdings further agree that they will
use their respective reasonable efforts to determine the
allocation of the total consideration (the "Consideration")
transferred to each of the Subsidiaries pursuant to this
Agreement for the U.S. Transferred Assets to meet the
requirements of Section 1060 of the Code (as herein defined). To
the extent the Consideration for the Transferred Assets of the
U.S. Business is adjusted after the Closing Date, the parties
agree to revise and amend any agreed Schedule and IRS Form 8594
in the same manner and according to the same procedure. Parent
and Holdings each agree to prepare and file in a timely manner an
IRS Form 8594 and other appropriate information, as required by
Section 1060 of the Code and pertinent regulations and Internal
Revenue Service instructions, in accordance with any agreement
between the parties as to the Consideration and allocation of the
Consideration, with respect to those Transferred Assets and
Permitted Liabilities required to be reflected on such Form.
Holdings and Parent each agree to submit to the other a draft
copy of any Form 8594 that Holdings or Danka US proposes to file
with respect to the US Transferred Assets at least 45 days before
the proposed filing date thereof and to jointly discuss and
attempt to agree, in good faith, with respect to the contents
thereof. Each party shall provide to the other party the final
version of such Form and information promptly after filing. The
parties shall follow a similar procedure with respect to the
allocation of the Consideration among the assets transferred by
the Foreign Subsidiaries under each of the other Ancillary
Agreements. The agreed determination and allocation of the
Consideration to the Transferred Assets, if any, shall be binding
on Parent and Holdings and their respective Affiliates for all
tax reporting purposes.
1.10 Time and Place of Closing. The Closing of the
Transactions (the "Closing") shall be consummated as set forth in
Sections 1.1, 1.2 and 1.3 at 10:00 a.m. at the offices of
Altheimer & Xxxx, 00 Xxxxx Xxxxxx Xxxxx, Xxxxx 0000, Xxxxxxx,
Xxxxxxxx, 00000 on the third business day after the conditions
set forth in Sections 4.1 and 4.2 (other than Section 4.1(d) and
Sections 4.2(e) and (f)) shall be satisfied or waived, subject,
however, to the provisions of Section 9.2. Notwithstanding the
preceding sentence, if the condition of Closing set forth in
Section 4.1(g) and 4.2(h) with respect to any of the transfers of
Transferred Assets and assumptions of Permitted Liabilities
described in Sections 1.1(c)(iv), (vi), (viii) or (ix) has not
been satisfied but all other conditions of Closing have been
satisfied, (i) the Closing shall nonetheless take place with the
exception of those transactions described in such sections as to
which such conditions have not been satisfied, (ii) the
obligations of Parent to cause the relevant New Foreign
Subsidiary to acquire the Transferred Assets to be acquired by it
shall, once the Closing occurs, be obligations of Holdings, and
(iii) the closing of such transaction (each, a "Foreign Closing")
shall take place on the date which is three business days after
the condition set forth in Sections 4.1(g) and 4.2(h) with
respect to such transaction has been satisfied. The date on
which the Closing shall occur is referred to herein as the
"Closing Date" and the date on which a Foreign Closing shall
occur is referred to herein as a "Foreign Closing Date".
1.11 Purchase Price Adjustments
(a) For purposes of this Agreement, the term "Net
Working Capital" of the Business shall mean the excess of
current and other assets of the Business as set forth on
Schedule 1.11 over current liabilities of the Business as
set forth on Schedule 1.11, computed in accordance with the
methods, formulae, prorations and reserves, and the
adjustments thereto, set forth in Schedule 1.11 hereto.
(b) As soon as practicable, but in no event later than
ninety (90) days after the Closing Date, Parent shall
deliver to Holdings (the date of such delivery being the
"Adjustment Date") a statement of the Net Working Capital
for the Business as a whole (the "Statement"). The
Statement shall (i) have been prepared by Parent and, if
requested by either party, will be audited by KPMG, LLP
("KPMG") in accordance with United States generally accepted
auditing standards and otherwise be in accordance with GAAP
applied in a manner consistent with the Audited Annual
Statements (as herein defined), as modified or supplemented
pursuant to Schedule 1.11, and contain the auditor's
opinions of KPMG, if the Statement is audited, (ii) exclude
any assets of the Business which are not Transferred Assets
and any liabilities of the Business which are not Permitted
Liabilities, and (iii) set forth the Net Working Capital of
the Business (the "Closing Date Net Working Capital"), as of
the close of business on the Closing Date (disregarding (i)
the Transactions and (ii) the Debt Financing (as herein
defined)). In rendering the Statement, Parent and KPMG
shall consult from time to time with Holdings and its
auditors, PricewaterhouseCoopers ("PWC") and permit Holdings
and PWC at the earliest practicable date access to and
copies of the work papers and calculations related to the
Statement.
(c) Holdings may dispute the calculation of the
Closing Date Net Working Capital only to the extent that
Holdings asserts in good faith that the Statement was not
prepared in accordance with GAAP applied in a manner
consistent with the Audited Annual Statements, as modified
or supplemented by Schedule 1.11, in which case Holdings'
notification as set forth below shall be accompanied by a
report of PWC, stating that such firm concurs with Holdings'
assertion as set forth above. All such disputes shall be
resolved in the following manner:
(i) If Holdings disputes a calculation of the
Closing Date Net Working Capital, or any portion
thereof, Holdings shall notify Parent in writing within
thirty (30) days after the Adjustment Date, and shall
specify therein in detail the basis and reason for such
dispute and the amount which is in dispute (the
"Disputed Amount"), and such notice of dispute shall be
accompanied by a certificate of PWC certifying that the
positions taken by Holdings in such notice are in
accordance with this Agreement and Schedule 1.11;
(ii) During the thirty (30) day period following
the date of such notice, Holdings and Parent shall
attempt to resolve such dispute; and
(iii) If at the end of the thirty (30) day period
specified in clause (ii) above, the parties shall have
failed to reach agreement with respect to such dispute,
the dispute shall be referred to Ernst & Young (the
"Accounting Firm"), for resolution. The Accounting
Firm shall be instructed to resolve all disputes in
accordance with GAAP applied in a manner consistent
with the Audited Annual Statements, as modified or
supplemented by Schedule 1.11. The Accounting Firm
shall be instructed to use every reasonable effort to
perform such services within sixty (60) days of the
submission to it of the Statement and notice of dispute
and, in any case, as soon as practicable after such
submission. In connection with the resolution of any
such dispute, the Accounting Firm shall have access to
all documents, records, work papers, facilities and
personnel necessary to perform its function as
arbitrator. The Accounting Firm shall allow Holdings
and Parent to present their respective positions
regarding the dispute and shall thereafter as promptly
as possible provide the parties hereto a written
determination of the dispute, such written
determination shall be final and binding upon the
parties hereto, and judgment may be entered on the
award. The Accounting Firm may, at its discretion,
conduct a conference concerning the dispute with
Holdings and Parent, at which conference each party
shall have the right to present additional documents,
materials and other information and to have present its
advisors, counsel and accountants. In connection with
such process, there shall be no hearings, oral
examinations, testimony, depositions, discovery or
other similar proceedings. The Accounting Firm shall
determine the proportion of its fees and expenses to be
paid by each of Parent and Holdings, based primarily
on the degree to which the Accounting Firm has accepted
the positions of the respective parties.
(d) Within five (5) business days after Holdings and
Parent have resolved all disputes:
(i) Holdings shall cause the Company to pay to
Danka US, in immediately available funds, an amount
equal to the difference (if any, and if a positive
result) between (A) the Closing Date Net Working
Capital minus (B) the Base Amount; or, alternatively,
(ii) Parent shall cause Danka US to pay to the
Company, in immediately available funds, an amount
equal to the difference (if any, and if a positive
result) between (1) the Base Amount, minus (2) the
Closing Date Net Working Capital,
in either case together with interest at a rate of 7%
per annum for the period from the Closing Date to the date
of such payment. The Base Amount as of May 31, 1999 shall
equal $26,100,000; the Base Amount as of June 30, 1999 shall
equal $24,000,000; and the Base Amount as of July 31, 1999
shall equal $25,700,000. If the Closing Date is not one of
the foregoing three dates, then the parties shall determine
in good faith the Base Amount as of the Closing Date.
Notwithstanding the foregoing, if the difference between the
Base Amount and the Closing Date Net Working Capital is less
than $500,000, there shall be no adjustment pursuant to this
paragraph (d), and no payments shall be made pursuant to
such paragraph.
(e) Any payments made under this Section 1.11 shall be
paid in U.S. Dollars.
1.12 Hypothetical Tax. The parties agree that the amounts
otherwise due from any New Subsidiary shall be adjusted by a
hypothetical tax cost or benefit (the "Hypothetical Tax") to such
New Subsidiary as a result of income or losses, as the case may
be, from operation by the Subsidiaries of the Business during the
period from the Closing Date to the relevant Foreign Closing
Date. The Hypothetical Tax shall be computed on a stand-alone
basis, shall take into consideration only operating results and
not gains or losses on asset transfers contemplated hereunder and
shall not take into consideration any current or past losses or
credits otherwise available to a Subsidiary. The tax rate used
in computing the Hypothetical Tax shall be the maximum combined
effective national, state and local rate, as shown on Schedule
1.12, provided, however, that, if, by reason of change in law,
the actual rate in effect on the Closing Date or the date of the
relevant Foreign Closing differs from the rate set forth on
Schedule 1.12, the actual rate shall be used.
ARTICLE II
Representations and Warranties
2.1 General Statement. The parties make the
representations and warranties to each other which are set forth
in this Article II. All such representations and warranties
shall survive the Closing (and none shall merge into any
instrument of conveyance). All representations and warranties of
Parent are made subject to the exceptions which are noted in the
schedule delivered by Parent to Holdings concurrently herewith
and identified by the parties as the "Disclosure Schedule";
however, any disclosure set forth on any particular schedule
shall be deemed disclosed only for the purpose of such schedule
and for such other schedules for which it is reasonably evident
on the face of such disclosure that such disclosure is applicable
to such other schedules.
2.2 Holdings' Representations and Warranties. Holdings
represents and warrants to Parent that:
(a) Holdings is a limited liability company duly
organized, existing and in good standing, under the laws of
its state of organization.
(b) Holdings has all necessary limited liability
company power and authority to enter into and perform
(x) this Agreement and (y) all documents and instruments to
be executed by Holdings pursuant to this Agreement
(collectively, "Holdings' Ancillary Documents"). The
execution, delivery and performance of this Agreement and
Holdings' Ancillary Documents by Holdings and the
consummation of the transactions contemplated hereby and
thereby have been duly and validly approved by the board of
managers or a duly appointed committee of the board of
managers of Holdings; and no other limited liability company
proceedings are necessary on the part of Holdings to
authorize the execution, delivery and performance of this
Agreement by Holdings and the consummation by Holdings of
the transaction contemplated hereby. This Agreement has
been duly executed and delivered by Holdings and constitutes
a legal, valid and binding agreement of Holdings,
enforceable against Holdings in accordance with its terms.
(c) Except for the notifications, applications and
filings listed in Schedule 2.2(c) (the "European Filings"),
no consent, authorization, order or approval of, notice to,
or filing or registration with, any governmental authority
is required for the execution, delivery and performance by
Holdings of this Agreement. No representation is made
pursuant to this Section 2.2(c) or 2.2(d) as to any consent,
authorization, notice, order, approval, filing, registration
or any violation, conflict or breach which arises by reason
of the regulatory status of Parent or the Subsidiaries or by
reason of any facts pertaining to any of them.
(d) Neither the execution and delivery of this
Agreement and Holdings' Ancillary Documents by Holdings, nor
the consummation by Holdings of the transactions
contemplated hereby and thereby, will (with notice or lapse
of time or both) violate, conflict with or result in a
breach of any of the terms, conditions or provisions of
Holdings' Certificate of Formation or Operating Agreement,
or of any statute or administrative regulation, or of any
order, writ, injunction, judgment or decree of any court or
governmental authority or of any arbitration award
applicable to Holdings.
(e) Holdings is not a party to any unexpired,
undischarged or unsatisfied written or oral contract,
agreement, indenture, mortgage, debenture, note or other
instrument under the terms of which execution, delivery or
performance by Holdings according to the terms of this
Agreement will be a default or an event of acceleration, or
grounds for termination, and whereby timely performance by
Holdings and according to the terms of this Agreement may be
prohibited, prevented or delayed.
(f) Neither Holdings nor any of its Affiliates has
dealt with any person or entity who is entitled to a
broker's commission, finder's fee, investment banker's fee
or similar payment from Parent or any of its Affiliates
(including the Subsidiaries) for arranging the transaction
contemplated hereby or introducing the parties to each
other. As used herein, an "Affiliate" is any person or
entity which, at the time of determination, controls a party
to this Agreement, which, at the time of determination, that
party controls, or which, at the time of determination, is
under common control with that party. "Control" means the
power, direct or indirect, to direct or cause the direction
of the management and policies of a person or entity through
voting securities, contract or otherwise.
(g) The committed capital of Holdings consists of
120,000,000 units, all of which have been subscribed for at
a subscription price of $1.00 per unit, for an aggregate
subscription price of $120,000,000 (the "Equity Financing"),
which, subject to fulfillment of the conditions set forth in
Section 4.2, will be used to pay the purchase price of the
Common Units and the Preferred Units. Holdings has
furnished to Parent a true and complete copy of the
Operating Agreement of Holdings which contains the
commitments of Holdings' members to subscribe for such
units.
(h) In order to finance the Transactions, Holdings ,
on behalf of the Company, has obtained a binding commitment
letter from Credit Suisse First Boston for additional debt
financing (the "Debt Financing"). Holdings has provided to
Parent a copy of such commitment, which has not been amended
or supplemented.
(i) Holdings has been organized solely for the purpose
of consummating the Transactions, has conducted no business
or operations of any nature and has incurred no obligations
or liabilities other than those created by or in connection
with this Agreement. Holdings is its own "ultimate parent
entity," as such term is defined under the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended
("Xxxx-Xxxxx-Xxxxxx Act"), and the rules promulgated
thereunder. Holdings is not a $10 million person, as
determined under the Xxxx-Xxxxx-Xxxxxx Act and the rules
promulgated thereunder.
(j) After giving effect to the consummation of the
Transactions, the assets of each of Holdings, the Company
and each of the New Subsidiaries will exceed its liabilities
and each of Holdings, the Company and each of the New
Subsidiaries will have the financial resources and ability
to pay and discharge its obligations as they become due.
2.3 Parent's Representations and Warranties. Subject to
Section 2.1, Parent represents and warrants to Holdings that:
CORPORATE
(a) Parent is a corporation duly organized and
existing under the laws of England and Wales. Each of the
Subsidiaries is a corporation duly organized and existing
under the laws of its jurisdiction of organization. The
Subsidiaries have all necessary corporate power and
authority to conduct the Business as the Business is now
being conducted. The Subsidiaries are the only subsidiaries
of Parent which conduct any portion of, or own any of the
assets of, the Business. Neither Parent nor any of its
Affiliates other than the Subsidiaries directly owns any
assets used primarily in the Business or conduct any portion
of the Business nor are any of their employees engaged in
the conduct of the Business.
(b) Each Subsidiary has qualified as a foreign
corporation, and is, to the extent applicable, in good
standing, under the laws of all jurisdictions where the
nature of the Business or the nature or location of its
assets which are used in the Business requires such
qualification except where the failures to so qualify and to
be in good standing, in the aggregate, are not reasonably
likely to have a Material Adverse Effect (as herein
defined). For the purposes of this Agreement, "Material
Adverse Effect" means either (i) a material adverse effect
on the business, condition (financial or otherwise), assets,
prospects or results of operations of the Business, taken as
a whole or (ii) a material adverse effect on the timely
performance, including any unreasonable delay therein, by
Parent and the Subsidiaries of the Transactions. With
respect to clause (i) above, except as such term is used in
Sections 3.4(d) and 4.2(a) hereof, a Material Adverse Effect
shall be deemed to include a loss, expense or cost to the
Business in excess of $250,000.
(c) Parent has all necessary corporate power and
authority to enter into and perform (x) this Agreement and
(y) all documents and instruments to be executed by Parent
pursuant to this Agreement (collectively, "Parent's
Ancillary Documents"). Subject to obtaining the Shareholder
Approval, the Subsidiaries have all necessary corporate
power and authority to enter into and perform the Ancillary
Agreements and all documents and instruments to be executed
by any Subsidiary pursuant to this Agreement and the
Ancillary Agreements (collectively, the "Subsidiary
Ancillary Documents") to which they are respective parties.
The execution, delivery and performance of this Agreement
and Parent's Ancillary Documents by Parent, the execution,
delivery and performance of the Ancillary Agreements and the
Subsidiary Ancillary Documents by the Subsidiaries, and the
consummation of the transactions contemplated hereby and
thereby, have been (or in the case of the Subsidiaries, will
be) duly and validly approved by the board of directors of
Parent and the boards of directors (or similar bodies) and
shareholders of the Subsidiaries; and no other corporate
proceedings or approvals are necessary on the part of Parent
or any of the Subsidiaries to authorize the execution,
delivery and performance of this Agreement by Parent and the
Ancillary Agreements by the Subsidiaries and the
consummation by Parent and the Subsidiaries of the
transactions contemplated hereby and thereby. This
Agreement has been duly executed and delivered by Parent and
constitutes a legal, valid and binding agreement of Parent,
enforceable against Parent in accordance with its terms.
The Parent's Ancillary Documents when executed and delivered
by Parent will be legal, valid and binding agreements of
Parent enforceable against Parent in accordance with their
terms. The Ancillary Agreements and the Subsidiary
Ancillary Documents, when executed and delivered by the
Subsidiaries, will constitute legal, valid and binding
agreements of the Subsidiaries, enforceable against the
respective Subsidiaries in accordance with their terms.
(d) Except for the European Filings, and based on
Holdings' representations and warranties set forth in
Section 2.2(i), no consent, authorization, order or approval
of, notice to, or filing or registration with, any
governmental authority is required for the execution,
delivery and performance of this Agreement, Parent's
Ancillary Documents and the Ancillary Agreements and the
Subsidiary Ancillary Documents and the consummation by
Parent and the Subsidiaries of the transaction contemplated
by this Agreement, Parent's Ancillary Documents and the
Ancillary Agreements and the Subsidiary Ancillary Documents.
No representation is made pursuant to this Section 2.3(d) or
Section 2.3(e) as to any consent, authorization, notice,
order, approval, filing, registration or any violation,
conflict or breach which arises by reason of the regulatory
status of Holdings or the New Subsidiaries or by reason of
any facts pertaining to any of them.
(e) Neither the execution and delivery and performance
of this Agreement and Parent's Ancillary Documents by
Parent, nor the execution and delivery and performance of
the Ancillary Agreements and the Subsidiary Ancillary
Documents by the Subsidiaries, nor the consummation by
Parent and the Subsidiaries of the transactions contemplated
hereby and thereby, will (with notice or lapse of time or
both) violate, conflict with or result in a breach of any of
the terms, conditions or provisions of the Memorandum of
Association or Articles of Association of Parent or the
organizational documents of any of the Subsidiaries, or of
any law, permit, statute or administrative regulation of, or
agreement with, any federal, state, or local governmental
authority, or of any order, writ, injunction, judgment or
decree of any court or any governmental authority or of any
arbitration award.
(f) Since the date of filing of its Articles of
Organization and up to and including the Execution Date, the
sole membership interest in the Company has been held by
Danka US. As of the Closing Date, pursuant to articles of
amendment to be filed with the Secretary of State of the
State of New York pursuant to Section 3.2(c)(ii), the
authorized capital of the Company will consist of 1,363,875
preferred units and 23,260,000 common units, of which one
common unit will be issued and outstanding and owned by
Danka US. There are no equity interests of the Company of
any other class authorized, issued or outstanding. The
issued and outstanding membership interests in the Company
have been validly issued and are owned beneficially and of
record by Danka US, free and clear of all options, proxies,
voting trusts, voting agreements, judgments, pledges,
charges, escrows, rights of first refusal or first offer,
mortgages, indentures, claims, transfer restrictions, liens,
equities, encumbrances, security interests and other
encumbrances of every kind and nature whatsoever, whether
arising by agreement, operation of law or otherwise. There
are no outstanding subscriptions, options, warrants, rights
(including preemptive rights), calls, convertible securities
or other agreements or commitments of any character relating
to the issued or unissued units or other securities of the
Company obligating the Company to issue any securities of
any kind. The Company's articles of organization were filed
with the New York Secretary of State on October 7, 1996.
FINANCIAL
(g) Copies of the combined balance sheet and
statements of income and cash flows (together with any
supplementary information thereto) of the Business, as of
and for each of the years ended March 31, 1998 and March 31,
1999, are contained in the Disclosure Schedule. Such
financial statements are referred to herein collectively as
the "Financial Statements." The Financial Statements have
been prepared from the books and records of the Subsidiaries
and present fairly, in all material respects, the financial
position of the Business as of the date thereof, and the
results of operations and cash flows of the Business for the
period covered by said statements, in accordance with GAAP,
consistently applied, subject to (i) the omission of
footnote disclosures required by GAAP; and (ii) any
adjustments which may be required pursuant to the audits
required by Section 3.2(a).
(h) Intentionally omitted.
(i) The Company has no obligation or liability of any
nature whatsoever (direct or indirect, matured or unmatured,
absolute, accrued, contingent or otherwise), whether or not
required by GAAP to be provided or reserved against on a
balance sheet. Since its formation, the Company has not
operated or carried on any business.
(j) The Subsidiaries have full legal and beneficial
title to, and the corporate power to transfer and/or sell,
the Transferred Assets owned by them respectively, and Danka
US, following the Reorganization Transactions and the
Recapitalization Transactions, will have full legal and
beneficial title to, and the corporate power to transfer
and/or sell, the Preferred Units and the Common Units, free
and clear of any liens, claims, encumbrances, mortgages,
pledges, security interests, easements, rights of way,
covenants, restrictions, rights, options, conditional sales
or other title retention agreements of and kind or nature
(collectively, "Liens") except for the following:
(i) statutory liens for Taxes (as herein defined) not yet
due and payable, (ii) statutory liens of landlords,
carriers, warehousemen, mechanics and materialmen incurred
in the ordinary course of business for sums not yet due and
payable and which, in the aggregate, do not materially
detract from the value or use of the Transferred Assets;
(iii) liens incurred or deposits made in the ordinary course
of business in connection with workers' compensation,
unemployment insurance and other types of social security or
to secure the performance of tenders, statutory obligations,
surety and appeal bonds, bids, leases, government contracts,
performance and return of money bonds and similar
obligations; and (iv) minor irregularities of title which do
not in the aggregate materially detract from the value or
use of the Transferred Assets or materially impair the
conduct of the Business (collectively, "Permitted Liens").
(k) (i) For purposes of this Agreement, the term
"Taxes" means all Federal, state, local, foreign and
other income, sales, use, ad valorem, withholding,
gross receipts, excise, asset, franchise, property,
alternative minimum, capital duty, employment, social
security (or its equivalent), goods and services, value
added, transfer or other taxes, customs duties or
tariffs, fees, assessments or charges of any kind,
together with any interest and any penalties with
respect thereto, and the term "Tax" means any one of
the foregoing Taxes; the term "Code" means the Internal
Revenue Code of 1986, as amended.
(ii) There have been filed on a timely basis all
material returns required to be filed by Parent and the
Subsidiaries on or prior to the date hereof pertaining
to (x) the Assumed Taxes, and (y) Taxes in Belgium,
Italy and Germany (provided that in Germany, this
representation is made only with respect to wage taxes,
trade taxes and VAT) relating to the Business, except
for such returns which, in the aggregate, are not
reasonably likely to have a Material Adverse Effect.
There have been filed on a timely basis all material
returns required to be filed by the Company which
pertain to Taxes.
(iii) With respect to all amounts in respect of
Assumed Taxes imposed upon any of the Subsidiaries, or
for Assumed Taxes for which any of Parent and the
Subsidiaries is liable to taxing authorities, with
respect to all taxable periods or portions of periods
ending on or before the Closing Date, all applicable
tax laws have been complied with, and all such amounts
required to be paid by the applicable Subsidiaries to
taxing authorities on or before the date hereof have
been paid, except for such failures to so comply or to
so pay such amounts that in the aggregate are not
reasonably likely to have a Material Adverse Effect.
With respect to all amounts in respect of Taxes imposed
upon the Company, with respect to all taxable periods
or portions of periods ending on or prior to the
Closing Date, all applicable tax laws have been
complied with, and all amounts required to be paid by
the Company to taxing authorities on or before the date
hereof have been paid.
(iv) There are at present no pending tax audits,
assessments or other proceedings relating to (x)
Assumed Taxes or the assets pertaining thereto; or (y)
Taxes in Belgium, Italy and Germany (provided that in
Germany, this representation is made only with respect
to wage taxes, trade taxes and VAT) relating to the
Business, and neither Parent nor any of the
Subsidiaries has received any written notice of any
such proceeding.
(v) Parent has provided to Holdings copies of all
relevant portions of private rulings and closing
agreements which impact Taxes of the Business or any of
the Transferred Assets or the Permitted Liabilities.
(vi) There has been no claim of nexus or other
taxing authority with respect exclusively to the
Business by any tax jurisdiction in which Parent or the
appropriate Subsidiary does not file returns relating
to the Business.
(vii) None of the Transferred Assets to be
transferred by any of the Foreign Subsidiaries is a
"United States real property interest," within the
meaning of section 897(c) of the Code.
(viii) As of the Closing Date and each Foreign
Closing Date, as appropriate, each of the Foreign
Subsidiaries shall have made all payments of VAT (as
defined herein) due and payable with respect to the
conduct of the Business, shall have filed all returns
and reports required to have been filed prior to such
date and shall have complied with all applicable
provisions relating to VAT.
(ix) Each of the Transferred Assets transferred by
Danka US to the New U.S. Subsidiary was acquired by
Danka US from KIS Imaging Services, Inc. or in taxable
asset acquisitions after 1993.
(x) Except as set forth on Schedule 2.3(k)(x) of
the Disclosure Schedule, no Tax elections have been
filed by the Company.
(xi) The Company does not have an overall foreign
loss, as defined in Section 904(f)(2) of the Code.
(xii) There is no agreement, plan, arrangement or
other contract covering any employee or independent
contractor of the Business that could give rise to the
payment of any amount that could not be deductible
pursuant to Section 280G of the Code.
(xiii) At all times since its organization, the
Company has been a disregarded entity, as determined
under Section 7701 of the Code.
CONDUCT OF BUSINESS
(l) Since December 31, 1998, (I) other than changes
resulting from either changes in general economic conditions
or changes affecting the Business' industry generally, no
event or events have occurred which have had or are
reasonably likely to have a Material Adverse Effect and
(II) none of Parent and the Subsidiaries has, with respect
to the Business:
(i) sold or transferred any material portion of
its assets or property except for (A) sales of
inventory in the usual and ordinary course of business,
and (B) cash applied in payment of the Subsidiaries'
respective liabilities in the usual and ordinary course
of business, and except as permitted by this Agreement;
(ii) suffered any loss, or any material
interruption in use, of any material assets or property
(whether or not covered by insurance), on account of
fire, flood, riot, strike or other hazard or Act of
God;
(iii) waived any material rights other than in the
ordinary course of business;
(iv) without limitation of any of the foregoing,
conducted its business and operations other than in the
usual and ordinary course of business consistent with
past practice (this clause (iv) shall not be deemed to
be breached by virtue of the entry by Parent into this
Agreement or by the Subsidiaries into the Ancillary
Agreements or its or their consummation of the
transactions contemplated hereby and thereby).
Notwithstanding the foregoing, Parent and the Subsidiaries,
in response to the liquidity problems of Parent and certain
of its subsidiaries, have accelerated collections of
accounts receivable, extended payments of accounts payable,
and deferred certain capital expenditures, for the purpose
of increasing the net cash flow of the Business.
CONTRACTS
(m) As used herein, the term "Material Contracts"
refers to the following undischarged written and, to
Parent's knowledge, oral, contracts, agreements, leases and
other instruments to which Parent or any of the Subsidiaries
is a party with respect to the Business:
(i) agreements for the employment for any period
of time whatsoever, or in regard to the employment, or
restricting the employment, of any employee or former
employee of any of the Subsidiaries who is or was
employed in the conduct of the Business (provided that
with respect to non-U.S. Subsidiaries, the Disclosure
Schedule only lists such agreements for those
individuals whose annual salary exceeds the equivalent
of $50,000);
(ii) consulting agreements pertaining to the
conduct of the Business;
(iii) collective bargaining agreements covering
employees employed in the conduct of the Business or in
respect of which Holdings, the Company or any of the
New Foreign Subsidiaries or any of their Affiliates
will be bound by reason of the Transactions, and
agreements with trade unions and work councils;
(iv) plans or contracts or arrangements providing
for incentive compensation, equity (or equity based)
compensation and deferred compensation;
(v) agreements restricting in any manner the
Business' right to compete with any other person or
entity, restricting the Business' right to sell to or
purchase from any other person or to employ any person,
or restricting the right of any other party to compete
with the Business or the ability of such person or
entity to employ any of the Subsidiaries' respective
employees employed in the conduct of the Business;
(vi) agreements between any of the Subsidiaries
and any of their respective Affiliates relating to the
Business, including with respect to the purchase of
goods or the performance of services;
(vii) agreements of agency, representation,
distribution, or franchise relating to the Business
which cannot be canceled by any of the Subsidiaries
without payment or penalty upon notice of sixty (60)
days or less;
(viii) service agreements affecting any of the
Transferred Assets where the annual service charge is
in excess of $50,000 or has an unexpired term as of the
Closing Date in excess of one year;
(ix) guaranties, performance, bid or completion
bonds, or surety or indemnification agreements with
respect to the Business;
(x) leases or subleases with respect to the
Business, either as lessee or sublessee, lessor or
sublessor, of real or personal property or intangibles
to be assigned to the New Subsidiaries pursuant to this
Agreement, where the lease or sublease provides for an
annual rent in excess of (A) $25,000 and has an
unexpired term as of the Closing Date in excess of one
year or (B) $50,000;
(xi) agreements between Parent or the relevant
Subsidiaries and any person granting any right to use,
license or sublicense, or practice any right under the
Intellectual Property (other than with respect to
"off-the-shelf" Software); and
(xii) any other agreements related to the Business
which is to be assigned to any of the New Subsidiaries
under this Agreement (including, without limitation,
agreements with customers, vendors and suppliers) which
provides for the receipt or expenditure by or any of
the New Subsidiaries after such assignment of more than
$100,000, except purchase orders for the purchase of
goods by, or the rendering of services to, the
Business, in the ordinary course of business.
The Disclosure Schedule contains a list of Material
Contracts as of the date hereof. All Material Contracts are
binding upon the parties thereto. Parent has made available
to Holdings copies of all written Material Contracts. No
default (or event which with notice or lapse of time or both
would be a default) by any of the Subsidiaries has occurred
thereunder and, to Parent's knowledge, no default (or event
which with notice or lapse of time or both would be a
default) by the other contracting parties has occurred
thereunder, except for such defaults which in the aggregate
are not reasonably likely to have a Material Adverse Effect.
Parent is not a party to any undischarged Material Contract
on behalf of the Business.
(n) With the exception of provisions in contracts,
leases, licenses and other instruments which prohibit the
assignment of the Subsidiaries' respective rights thereunder
without the consent of the other party thereto, neither the
execution, delivery and performance of this Agreement and
Parent's Ancillary Documents by Parent, nor the execution,
delivery and performance of the Ancillary Agreements and the
Subsidiary Ancillary Documents by the Subsidiaries, nor the
consummation by Parent and the Subsidiaries of the
transactions contemplated hereby and thereby, will (with
notice or lapse of time or both) violate, conflict with or
result in a breach of any of the terms, conditions or
provisions of or result in (or give any party any right of)
acceleration, termination or cancellation of any of the
terms of any contract, lease, license, agreement, indenture,
mortgage, debenture, note or other instrument related to the
Business, which violations, conflicts, or results would in
the aggregate be reasonably likely to have a Material
Adverse Effect (it being understood that, in the absence of
the Bank Consent (as herein defined), the performance by
Parent and the Subsidiaries of this Agreement, Parent's
Ancillary Documents, the Ancillary Agreements and the
Subsidiary Ancillary Documents will result in a violation of
the Credit Agreement (as herein defined)).
(o) The Disclosure Schedule contains a list of all
licenses, permits, registration and governmental approvals
(the "Permits") (other than Environmental Permits, which are
exclusively provided for in Section 2.3(t)) held by the
Subsidiaries as of the Execution Date with respect to the
Business. The Subsidiaries possess all Permits which are
required in order for the Subsidiaries to conduct the
Business as presently conducted, except where the failure to
possess such Permits would not in the aggregate be
reasonably likely to have a Material Adverse Effect. All
Permits possessed by the Subsidiaries of a type referred to
in the preceding sentence are, to the extent legally
transferable without governmental approval, being
transferred to the New Subsidiaries at the Closing and the
Foreign Closings (as the case may be).
EMPLOYEES
(p) With respect to employees of the Subsidiaries
employed in the conduct of the Business:
(i) As used herein, the term "Pension Plans"
refer to all employee pension benefit plans (as defined
in Section 3(2) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), whether or
not excluded from coverage under specific Titles or
Subtitles of ERISA) that are sponsored, maintained, or
contributed to or required to be contributed to by the
Parent, a Subsidiary or by any trade, or business,
whether or not incorporated (an "ERISA Affiliate"),
that together with the Parent or a Subsidiary would be
deemed a "single employer" within the meaning of
section 4001(b) of ERISA, or to which Parent, a
Subsidiary or an ERISA Affiliate is a party, whether
written or oral, for the benefit of employees or former
employees of the U.S. Business. No Pension Plan is a
multiemployer plan (as defined in Section 3(37) of
ERISA);
(ii) the Disclosure Schedule contains a true and
complete list of those employee welfare benefit plans
(as defined in Section 3(1) of ERISA, whether or not
excluded from coverage under specific Titles or
Subtitles of ERISA) that are sponsored, maintained, or
contributed to or required to be contributed to by the
Parent, a Subsidiary or an ERISA Affiliate for the
benefit of employees or former employees of the U.S.
Business (the "Welfare Plans");
(iii) neither Danka US nor any ERISA Affiliate of
Danka US has incurred any liability to the Pension
Benefit Guaranty Corporation ("PBGC") as a result of
the voluntary or involuntary termination of any pension
plan subject to Title IV of ERISA; there is currently
no active filing by Danka US or any ERISA Affiliate
with the PBGC (and no proceeding has been commenced by
the PBGC) to terminate any pension plan subject to
Title IV of ERISA maintained or funded, in whole or in
part, by Danka US or any ERISA Affiliate; and neither
Danka US nor any ERISA Affiliate has made a complete or
partial withdrawal from a multiemployer plan resulting
in withdrawal liability, as such term is defined in
Section 4201 of ERISA (without regard to subsequent
reduction or waiver of such liability under either
Section 4207 or 4208 of ERISA); no liability under
Title IV or section 302 of ERISA has been incurred by
Parent, a Subsidiary or any ERISA Affiliate that has
not been satisfied in full, and no condition exists
that presents a material risk to Parent, a Subsidiary
or any ERISA Affiliate of incurring any such liability,
other than liability for premiums due to the PBGC
(which premiums have been paid when due). Insofar as
the representation made in this section 2.3(p)(iii)
applies to sections 4064, 4069 or 4204 of Title IV of
ERISA, it is made with respect to any employee benefit
plan, program, agreement or arrangement subject to
Title IV of ERISA to which the Parent, a Subsidiary or
any ERISA Affiliate made, or was required to make,
contributions during the five (5)-year period ending
on the last day of the most recent plan year ended
prior to the Closing Date;
(iv) the consummation of the Transactions will
not, either alone or in combination with another event,
(i) entitle any current or former employee or officer
of Parent, a Subsidiary or any ERISA Affiliate to
severance pay, unemployment compensation or any other
payment or (ii) accelerate the time of payment or
vesting, or increase the amount of compensation due any
such employee or officer, or (iii) constitute a "change
in control" triggering the payment of additional
benefits to any employee of Parent, any Subsidiary or
any ERISA Affiliate;
(v) there has been no material failure of a
Welfare Plan that is a group health plan (as defined in
section 5000(b)(l) of the Code) to meet the
requirements of section 4980B(f) of the Code with
respect to a qualified beneficiary (as defined in
section 4980B(g) of the Code). With respect to the U.S.
Business, neither the Parent nor any Subsidiary has
contributed to a nonconforming group health plan (as
defined in section 5000(c) of the Code) and no ERISA
Affiliate of the Parent or any Subsidiary has incurred
a tax under section 5000(e) of the Code which is or
could become a liability of the Parent or a Subsidiary;
(vi) there are no pending or, to Parent's
knowledge, threatened claims by or on behalf of any
Welfare Plan or any Pension Plan, by any employee or
beneficiary covered under any such plan, or otherwise
involving any such plan (other than routine claims for
benefits);
(vii) with respect to any plan, arrangement,
contract or other program for the purpose of providing
or otherwise making available retirement benefits to
employees of the Subsidiaries which is not an Excluded
Liability pursuant to Section 1.8(i) (collectively,
"Non-U.S. Plans"), each Non-U.S. Plan is in compliance
in all material respects with the provisions of all
laws applicable to each such Non-U.S. Plan and each
Subsidiary has accrued or paid contributions for or
otherwise taken into account on its books and records
all pension, welfare or retirement liabilities required
to be accrued, contributed or otherwise taken into
account under the laws applicable to each Non-U.S.
Plan. The Subsidiaries have filed, or will have filed
prior to the Closing Date, all reports or other
documents with respect to each Non-U.S. Plan required
by the law applicable to each such Non-U.S. Plan;
(viii) there is no union representing the
employees of the U.S. Business and no request for union
representation pending, or to Parent's knowledge,
threatened against the Business;
(ix) there are no pending or, to Parent's
knowledge, threatened, material unfair labor practice
charges or employee grievance charges with respect to
the Business;
(x) the Disclosure Schedule contains a list of
all employees of the Subsidiaries employed in the
conduct of the Business as of November 30, 1998, whose
annual salaries exceed $50,000 and said list correctly
reflects their base salaries, bonuses, dates of
employment and positions;
(xi) except as set forth in the Disclosure
Schedule, since the enactment of the WARN Act, none of
the Subsidiaries has effectuated a "plant closing" or
"mass layoff" (as defined in the WARN Act or any
similar state, local or foreign law or regulation)
affecting any site of employment of the Business or one
or more facilities or operating units within any site
of employment or facility of the Business, without
complying with the WARN Act or similar state, local or
foreign law or regulation, and, during the ninety day
period preceding the date hereof, none of the
Subsidiaries' employees in the Business has suffered an
"employment loss" (as defined in the WARN Act or any
similar state, local or foreign law or regulation).
LITIGATION AND CLAIMS
(q) There is no litigation, arbitration or proceeding,
in law or in equity, and there are no proceedings or
governmental investigations before any commission or other
administrative authority, pending, or, to Parent's
knowledge, threatened, against Parent or its Affiliates or
(without limiting the generality of the foregoing) any of
the Subsidiaries or, to Parent's knowledge, any of their
respective employees, officers or directors with respect to
or affecting the Business, and except for those which, if
decided adversely to such party or the applicable Subsidiary
would not, in the aggregate, be reasonably likely to have a
Material Adverse Effect. There is no such litigation,
proceeding or investigation pending, or to Parent's
knowledge, threatened, against Parent or its Affiliates or
any of the Subsidiaries with respect to the consummation of
the transaction contemplated hereby, or the use of the
Transferred Assets (whether used by any of the New
Subsidiaries after the Closing or by any of the Subsidiaries
prior thereto).
(r) Neither Parent nor any Subsidiary is a party to,
or bound by, any decree, order or arbitration award (or
agreement entered into in any administrative, judicial or
arbitration proceeding with any governmental authority)
except for those the enforcement of which or compliance with
which, in the aggregate, have not had and are not reasonably
likely to have a Material Adverse Effect.
(s) Except for laws, rules and regulations relating to
the environment (which are exclusively provided for in
Section 2.3(t) hereof), neither Parent nor any of the
Subsidiaries, is (or since December 31, 1996 has been), with
respect to the Business, in violation of, or delinquent in
respect of, any decree, order or arbitration award or law,
statute, or regulation of or agreement with, or Permit from,
any federal, state or local governmental authority (or to
which the properties, assets, personnel, business activities
of the Business or the Leased Premises are subject or to
which it, itself, with respect to the Business, is subject),
including, without limitation, laws, statutes and
regulations relating to equal employment opportunities, fair
employment practices, and discrimination, except for such
violations or delinquencies which in the aggregate are not
reasonably likely to have a Material Adverse Effect.
ENVIRONMENTAL MATTERS
(t) (i) The Subsidiaries, with respect to the
Business, have obtained all permits, licenses and other
authorizations that are required under the
Environmental Laws ("Environmental Permits") for
(A) the operation of the Business and (B) the
ownership, use and operation of each location owned,
operated or leased by the Subsidiaries; all such
permits, licenses and authorizations are in effect; no
appeal nor any other action is pending to revoke any
such permit, license or authorization; and the
Subsidiaries are in full compliance with all terms and
conditions of all such permits, licenses and
authorizations. The Disclosure Schedule contains a
complete and accurate list of all Environmental Permits
held by the Subsidiaries with respect to the Business.
(ii) The Subsidiaries, with respect to the
Business, have been and are in compliance with all
applicable Environmental Laws.
(iii) Parent has heretofore made available to
Holdings true and complete copies of all environmental
studies made by or on behalf of Parent relating to each
location owned, used or operated by the Subsidiaries in
connection with the Business, to the extent that such
studies are in the possession of Parent or the
Subsidiaries.
(iv) There is no civil, criminal or administrative
action, suit, demand, claim, hearing, notice of
violation, investigation, proceeding, order, decree,
judgment, notice or demand letter existing or pending,
or to the knowledge of Parent, threatened, relating to
the Subsidiaries with respect to the Business or any
property currently or formerly owned, operated or
leased by the Subsidiaries in connection with the
Business, relating in any way to the Environmental
Laws.
(v) The Subsidiaries have not, and to Parent's
knowledge, no other person has, Released, discharged,
or otherwise disposed, of any Hazardous Substances on,
beneath or adjacent to any property formerly owned,
operated or leased by the Subsidiaries in connection
with the Business, except for Releases of Hazardous
Substances subject to a permit or authorization
pursuant to or otherwise in conformity with applicable
Environmental Law.
(vi) No employee of the Subsidiaries in the course
of his or her employment with a Subsidiary, in
connection with the Business, has been exposed to any
Hazardous Substances during the course of his or her
employment which is reasonably likely to give rise to
any claim against any of the Subsidiaries.
(vii) The Subsidiaries, in connection with the
Business, have not received any notice or order from
any governmental agency or private or public entity
advising them that they are responsible for or
potentially responsible for Cleanup or paying for the
cost of Cleanup of any Hazardous Substances and none of
the Subsidiaries, in connection with the Business, has
entered into any agreements concerning such Cleanup,
nor are the Parent or any of the Subsidiaries, in
connection with the Business, aware of any facts which
might reasonably give rise to such notice, order or
agreement.
(viii) None of the Subsidiaries, in connection
with the Business, have entered into any contract,
lease, consent order or judgment or other agreement
that may require them to pay to, reimburse, guarantee,
pledge, defend, indemnify or hold harmless any person
for or against any liabilities or costs arising out of
or related to the generation, manufacture, use,
transportation or disposal of Hazardous Substances, or
otherwise arising in connection with or under
Environmental Laws (it being understood and agreed that
none of such agreements, and none of the obligations
thereunder, constitute Transferred Assets or Permitted
Liabilities).
(ix) For purposes of this Agreement, the following
terms have the meanings ascribed herein:
(A) "Cleanup" shall mean all actions
required to (1) clean up, remove, treat or
remediate Hazardous Substances in the indoor or
outdoor environment, (2) prevent the Release of
Hazardous Substances so that they do not migrate,
endanger or threaten to endanger public health or
welfare or the indoor or outdoor environment, (3)
perform pre-remedial studies and investigations
and post-remedial monitoring and care, (4) respond
to any government requests for information or
documents in any way relating to cleanup, removal,
treatment or remediation or potential clean up,
removal, treatment or remediation of Hazardous
Substances in the indoor or outdoor environment or
(5) any administrative, judicial, or other
proceedings related to the above.
(B) "Environmental Laws" shall mean all
foreign, federal, state and local laws, statutes,
codes, regulations, rules, ordinances, bylaws,
decrees, directives, technical norms, orders,
decisions of a tribunal and common law in effect
as of the Execution Date, relating to pollution or
protection of the environment or human health and
safety, including, without limitation, laws
relating to (1) Releases or threatened Releases of
Hazardous Substances into the indoor or outdoor
environment (including, without limitation,
ambient air, surface water, groundwater, land,
surface and subsurface strata) or otherwise
relating to the manufacture, processing,
distribution, use, treatment, storage, Release,
transport or handling of Hazardous Substances; (2)
record keeping, notification, disclosure and
reporting requirements respecting Hazardous
Substances, and (3) endangered or threatened
species of fish, wildlife and plants and the
management, use, impairment or loss of natural
resources.
(C) "Hazardous Substances" shall mean (i)
any petrochemical or petroleum products,
radioactive materials, asbestos in any form that
is or could become friable, urea formaldehyde foam
insulation, transformers or other equipment that
contain dielectric fluid containing
polychlorinated biphenyls, and radon gas; (ii) any
chemicals, materials or substances defined as or
included in the definition of "hazardous
substances," "hazardous wastes," "hazardous
materials," "restricted hazardous materials,"
"extremely hazardous substances," "toxic
substances," "contaminants" or "pollutants" or
words of similar meaning and regulatory effect; or
(iii) any other chemical, material, agent or
substance, exposure to which is prohibited,
limited, or regulated by any applicable
Environmental Law.
(D) "Release" shall mean any release, spill,
emission, discharge, leaking, pumping, injection,
deposit, disposal, discharge, dispersal, leaching
or migration into the indoor or outdoor
environment (including, without limitation,
ambient air, surface water, groundwater, and
surface or subsurface strata) or into or out of
any property, including, without limitation, the
movement of Hazardous Substances through or in the
air, soil, surface water, groundwater or property.
LEASED PREMISES
(u) None of Parent or the Subsidiaries owns any real
estate which is used in the conduct of the Business. The
Leased Premises are leased to the Subsidiaries pursuant to
written leases, true and complete copies of which have been
made available to Holdings. None of the Subsidiaries is in
default under any term of any agreement relating to the
Leased Premises nor, to Parent's knowledge, is any other
party thereto in default thereunder, except for such
defaults which in the aggregate are not reasonably likely to
have a Material Adverse Effect.
INTELLECTUAL PROPERTY
(v) With respect to the Intellectual Property:
(i) A Subsidiary is the owner of or has rights to
use all of the Intellectual Property;
(ii) the Disclosure Schedule sets forth a complete
and accurate list of all U.S. and foreign copyright
registrations, copyright applications, patents and
patent applications, trademark and service xxxx
registrations (including Internet domain name
registrations), trademark and service xxxx applications
and material unregistered trademarks and service marks
included within the Intellectual Property, excluding
those trademarks, service marks and Internet domain
names containing the term "Danka," owned by or under
obligation of assignment to any Subsidiary;
(iii) except with respect to unregistered
trademarks and service marks, each owner listed on the
Disclosure Schedule is listed in the records of the
appropriate governmental entity as the sole owner of
record (except as otherwise indicated in the Disclosure
Schedule);
(iv) the Disclosure Schedule lists all Software,
as defined hereinafter, which is owned ("Proprietary
Software") or licensed, leased or otherwise used in the
Business (other than "off-the-shelf" software) and
identifies which Software is owned, licensed, leased or
otherwise used, as the case may be;
(v) the Disclosure Schedule sets forth a complete
and accurate list of all agreements (other than
agreements with respect to "off-the-shelf" software)
between any Subsidiary, on the one hand, and any
person, on the other hand, granting any right to use or
practice any rights under any of the Intellectual
Property (collectively, "Intellectual Property
Licenses");
(vi) the conduct of the Business and the exercise
of rights relating to the Intellectual Property,
including without limiting the generality of the
foregoing, the content of any web site which
constitutes a Transferred Asset, does not infringe upon
or otherwise violate, intellectual property rights of
any Person;
(vii) to Parent's knowledge, no person is
infringing upon or otherwise violating any of the
Intellectual Property;
(viii) neither Parent nor any Subsidiary has
received notice of any claims, and, to Parent's
knowledge, there are no pending claims, of any persons
relating to the scope, ownership or use of any of the
Intellectual Property;
(ix) each copyright registration, patent and
registered trademark and application therefor listed on
the Disclosure Schedule is in proper form, not
disclaimed and has been duly maintained, including the
submission of all necessary filings in accordance with
the legal and administrative requirements of the
appropriate jurisdictions except with respect to use
requirements as to trademarks;
(x) no Subsidiary has licensed or sublicensed its
rights in any of the Intellectual Property or received
or granted any such rights, other than pursuant to
Intellectual Property Licenses; and
(xi) all Proprietary Software set forth in the
Disclosure Schedule was either developed (a) by
employees of Parent or a Subsidiary within the scope of
their employment; or (b) by independent contractors who
have assigned their right to a Subsidiary pursuant to
written agreements.
As used herein "Software" means any and all (i) computer
programs, including any and all software implementation of
algorithms, models and methodologies whether in source code
or object code, (ii) databases and computations, including
any and all data and collections of data, (iii) all
documentation, including user manuals and training
materials, relating to any of the foregoing, and (iv) the
content and information contained in any Web site which
content and information relate exclusively to the Business.
(w) (i) To Parent's knowledge, no Date Data and no
Date-Sensitive Systems used by Parent and the
Subsidiaries with respect to the Business fails to be
Year 2000 Compliant (as defined below), where such
failure would be reasonably expected to have a Material
Adverse Effect.
(ii) Parent or the Subsidiaries have sought
written representations or assurances from each person
that (A) provides Date-Sensitive Systems or Date Data
to the Parent or the Subsidiaries which is material to
the Business, (B) processes in any way Date Data for
the Parent or the Subsidiaries which is material to the
Business or (C) otherwise provides any material product
or service to the Parent or the Subsidiaries with
respect to the Business, that all of such entity's Date
Data and Date-Sensitive Systems are Year 2000
Compliant, in each case except where the failure to be
Year 2000 Compliant would not be reasonably likely to
have a Material Adverse Effect.
(iii) As used herein, "Date Data" means any data
of any type that includes date information or which is
otherwise derived from, dependent on or related to date
information. "Date-Sensitive System" means any
software, microcode or hardware system or component,
including any electronic or electronically controlled
system or component, that uses or processes any Date
Data and that is installed, in development or on order
by the Parent or any of the Subsidiaries for their
internal use or for the use of third parties, or which
the Parent or any of the Subsidiaries sell, lease,
license, assign or otherwise provide to any third
party. "Year 2000 Compliant" means (i) with respect to
Date Data, that such data is in proper format and
accurate for all dates, including for those before, on
or after December 31, 1999 and (ii) with respect to
Date-Sensitive Systems, that each such system
accurately processes all Date Data, without loss of any
functionality or performance, including but not limited
to calculating, comparing, sequencing, storing and
displaying such Date Data (including all leap year
considerations), when used as a stand-alone system or
in combination with other software or hardware.
GENERAL
(x) The Transferred Assets are sufficient to conduct
the Business as it is presently being conducted, and the
Transferred Assets conveyed to the New Subsidiaries on the
Closing Date will be sufficient to enable the New
Subsidiaries to continue to conduct the Business as it is
presently being conducted.
(y) Neither Parent, nor any of its Affiliates, has
dealt with any person or entity who is entitled to a
broker's commission, finder's fee, investment banker's fee
or similar payment from Holdings for arranging the
transaction contemplated hereby or introducing the parties
to each other.
(z) Parent and/or an Affiliate of Parent has received
the opinion of Wasserstein, Perella & Co., Inc. ("WP"),
dated as of the Execution Date, to the effect that, as of
the Execution Date, the consideration to be received by the
Subsidiaries pursuant hereto is fair from a financial point
of view.
(aa) The Disclosure Schedule sets forth correct and
complete lists of (i) the thirty (30) largest (by dollar
volume) customers of the Business during the fiscal year
most recently completed prior to the Execution Date and (ii)
the thirty (30) largest (by dollar volume) vendors of the
Business during the calendar year most recently completed
prior to the Execution Date. Except as set forth in the
Disclosure Schedule, to the knowledge of Parent, there are
no outstanding material disputes with any customer or vendor
listed on the lists provided pursuant to the immediately
preceding sentence and no such customer or vendor has
refused to continue to do business with the Business or has
stated its intention not to continue to do business with the
Business.
(bb) To Parent's knowledge, neither Parent nor any
Subsidiary nor any of their respective directors, officers,
agents, employees or any other persons acting on their
behalf has, in connection with the operation of the
Business, (i) used any corporate or other funds for unlawful
contributions, payments, gifts or entertainment, or made any
unlawful expenditures relating to political activity to
government officials or established or maintained any
unlawful or unrecorded funds in violation of Section 104 of
the Foreign Corrupt Practices Act of 1977, as amended, or
any other applicable foreign, federal or state law; or (ii)
accepted or received any unlawful contributions, payments,
expenditures or gifts.
(cc) After giving effect to the closing of all of the
Transactions on the Closing Date, (a) the assets of Parent
and each of the Subsidiaries will exceed their respective
liabilities and (b) Parent and each of the Subsidiaries will
be solvent, will be able to pay their debts as they mature,
will own property with fair saleable value greater than the
amount required to pay their debts and will have capital
sufficient to carry on their business (if any) as then
constituted.
2.4 Limitation on Warranties. No inaccuracy in any of the
subparagraphs of Section 2.3(p), (t) or (v) shall give rise to
any breach of any of the representations and warranties therein
contained except to the extent that such inaccuracy, individually
or in the aggregate, would: (i) be reasonably likely to have a
Material Adverse Effect; or (ii) result in an increase in a
Permitted Liability beyond that which would have existed in the
absence of such inaccuracy. Except as set forth in Section 2.3,
Parent makes no express or implied warranty of any kind
whatsoever, including with respect to (a) any information
furnished by Parent or its financial advisor, WP, or any of
Parent's other representatives or agents, (b) the physical
condition or value of any of the Transferred Assets or (c) the
future profitability or future earnings performance of the
Business. Except as set forth in Section 2.3, Holdings agrees
that neither Parent nor any other person or entity shall have any
liability to Holdings or any other person resulting from the
distribution of any information to Holdings, or Holdings' use of
any information, documents or materials made available to
Holdings in any form. ALL IMPLIED WARRANTIES OF MERCHANTABILITY
AND FITNESS FOR A PARTICULAR PURPOSE ARE EXPRESSLY EXCLUDED.
2.5 Definition of Knowledge. For the purposes of this
Agreement, the knowledge of Parent shall be deemed to be limited
to the actual knowledge as of the Closing Date of Xxxxx Xxxxxxx,
Xxxx Xxxxxxxxx, Xxxxx Xxxx and L. Xxxx Xxxxx, in each case
without giving effect to imputed knowledge.
ARTICLE III
Conduct Prior to the Closing
3.1 General. Parent and Holdings shall have the rights and
obligations with respect to the period between the date hereof
and the Closing Date, inclusive, which are set forth in the
remainder of this Article III.
3.2 Parent's Obligations. The following are Parent's
obligations:
(a) As soon as reasonably practicable after the
Execution Date, but in no event later than May 31, 1999,
Parent shall deliver to Holdings (i) financial statements
for the Business as of and for the year ended March 31, 1998
(the "Audited 1998 Financial Statements"), and
(ii) financial statements for the Business as of and for the
year ended March 31, 1999 (the "Audited 1999 Financial
Statements"), each audited by KPMG. The Audited 1998
Financial Statements and the Audited 1999 Financial
Statements (collectively, the "Audited Annual Statements")
shall have been prepared in accordance with GAAP applied in
a manner consistent with the Financial Statements, as
modified or supplemented pursuant to Schedule 1.11. Each of
the Audited Annual Statements shall be addressed to Parent.
In rendering the Audited Annual Statements, Parent and its
auditors shall consult from time to time with Holdings and
PWC and permit Holdings and PWC at the earliest practicable
date (i) access to and copies of the work papers and
calculations related to the Audited Annual Statements and
(ii) to provide comments to KPMG as to whether, in their
opinion, the audit of the Audited Annual Statements complies
with the requirements of this Agreement.
(b) Subject to applicable law and privilege, Parent
shall give, and shall cause the Subsidiaries to give, to the
officers, employees, attorneys, consultants, accountants and
lenders of Holdings' and Xxxxxxxx Ventures reasonable access
during normal business hours to all of the properties,
books, contracts, documents, records and personnel of Parent
and the Subsidiaries relating to the Business and shall
furnish to Holdings such information as Holdings may at any
time and from time to time reasonably request.
(c) Parent shall:
(i) cause to be formed or shall acquire (by way
of purchase of a "shelf" corporation or other entity),
the New Subsidiaries. Parent shall cause the Company
to subscribe for equity interests in the New
Subsidiaries in such amounts as required under
applicable law. Prior to the Closing Date, no New
Foreign Subsidiary shall incur any liabilities of any
kind or nature, except such liabilities as are incident
to the Transactions;
(ii) cause the articles of organization of the
Company to be amended and restated such that (x) the
Company's authorized capital shall consist of 1,363,875
preferred units and 23,260,000 common units, each with
the preferences and rights described in Exhibit C
hereto; (y) the outstanding membership interest in the
Company held by Danka US is converted into one common
unit of the Company; and (z) the Company is authorized
to hold the equity interests in the New Subsidiaries
and otherwise participate in the Transactions. as
contemplated by this Agreement; and
(iii) cause Danka US to prepare and sign an
Entity Classification Election (Form 8832) under
Section 7701 of the Code to cause the Company to elect
to be classified as an association taxable as a
corporation, effective as of the day prior to the
Closing Date (the "Company Election), such election to
be filed by Holdings in accordance with Section 6.3(e).
(d) Parent shall use reasonable efforts and make every
good faith attempt (and Holdings shall cooperate with
Parent) to obtain the consents to the assignment of, or
alternate arrangements satisfactory to Holdings with respect
to, the contracts, leases, or other instruments which
constitute Transferred Assets, including without limitation
those which are enumerated in Exhibit D attached hereto (the
"Material Consents") (it being understood and agreed that
Parent shall bear up to an aggregate of $500,000 of any fees
or other charges (other than incidental filing fees and
costs) imposed to obtain third party consents (including
Material Consents) and the assignment of Permits (including
Material Permits).
(e) Parent shall use reasonable efforts and make every
good faith attempt (and Holdings shall cooperate with
Parent) to obtain the consents to the assignment of, or the
issuance to a New Subsidiary of a replacement Permit with
respect to, all Permits, including without limitation those
Permits which are enumerated in Exhibit E attached hereto
(the "Material Permits") (it being understood and agreed
that Parent shall bear up to an aggregate of $500,000 of any
fees or other charges (other than incidental filing fees and
costs) imposed to obtain third party consents (including
Material Consents) and the assignment of Permits (including
Material Permits).
(f) Parent shall cause the Subsidiaries to carry on
the Business in the usual and ordinary course of business,
consistent with past practices (but in no event shall this
Section 3.2(f) be deemed to permit the Subsidiaries to
continue to engage in the practices described in the final
sentence of Section 2.3(l)).
(g) Parent shall, and shall cause the Subsidiaries to,
cooperate with Holdings and any Affiliate of Holdings to (i)
engage in such discussions with the customers of the
Business, as Holdings may reasonably request, relating to
the Transactions and (ii) as Holdings may reasonably
request, facilitate the smooth transition of ownership of
the business to Holdings, the Company and the New
Subsidiaries.
(h) Parent shall use reasonable efforts and make every
good faith attempt (and Holdings shall cooperate with
Parent) to obtain the consents (the "Bank Consents")
required pursuant to that certain Credit Agreement (the
"Credit Agreement") dated as of December 5, 1996 among
Parent, Dankalux Sarl & Co. SCA, Danka Holding Company,
certain banks signatory thereto (the "Banks") and
NationsBank, National Association, as agent for such Banks
(in such capacity, the "Bank Agent"), as amended, with
respect to the consummation of the Transactions. The Credit
Agreement, and all amendments and waivers thereto (as listed
in Schedule 3.2(h)) represent all credit agreements for
which a consent is required from any bank with respect to
consummation of the Transactions by Parent or any of the
Subsidiaries.
(i) Except as expressly approved in writing by
Holdings, and without limiting the generality of any other
provision of this Agreement, neither Parent nor any of the
Subsidiaries shall, with respect to the conduct of the
Business:
(i) prepay any material obligations of the
Business;
(ii) other than in the ordinary course of business
consistent with past practice, establish, adopt, enter
into or amend any collective bargaining agreement,
increase the compensation payable to any employee
employed in the conduct of the Business, increase
compensation payable to any officer of the Business,
enter into any employment, deferred compensation,
termination, severance or similar agreement (or any
amendment to any such existing agreement) with any
director, officer or employee engaged in the Business
(other than, for non-U.S. Subsidiaries, any such
agreement with any employee whose annual salary is less
than $50,000), increase the benefits payable under any
existing severance or termination pay policies or
agreements or adopt any new employee benefit or pension
plan;
(iii) other than in the ordinary course of
business consistent with past practice, transfer any
employee of the Business to any other business of
Parent or any Affiliate, or transfer any employee of
any other business of Parent or any Affiliate to the
Business;
(iv) sell, transfer, assign, lease or otherwise
dispose of any material asset or property of the
Business except for (A) sales of Inventory in the usual
and ordinary course of business and (B) application of
cash in payment of liabilities of the Business in the
usual and ordinary course of business;
(v) change any method of accounting or accounting
practice;
(vi) fail to maintain Inventories and Fixed Assets
of the Business at current levels, except for sales or
acquisitions of Inventories and acquisitions of Fixed
Assets in the ordinary course of business, and maintain
the properties of the Business in good repair, order
and condition, reasonable wear and tear excepted;
(vii) fail to maintain and keep in full force and
effect all insurance on assets and property or for the
benefit of employees of the Business, all liability and
casualty insurance, and all bonds on personnel,
presently carried;
(viii) subject to the limitations contained
herein, fail to preserve intact the organization and
reputation of the Business and to keep available the
services of the present executives, employees and
agents of the Business and to preserve the goodwill of
suppliers, customers (including reasonable efforts to
maintain in effect existing customer contracts) and
others having business relationships with the Business;
(ix) fail to maintain its books, accounts and
records in the usual, regular and ordinary manner on a
basis consistent with prior years;
(x) enter into, amend or terminate, or agree to
enter into, amend or terminate, any Material Contract,
other than in the ordinary and regular course of
business;
(xi) extend credit in the sale of products,
collection of receivables or otherwise, other than in
the ordinary and regular course of business;
(xii) take any material action, not previously
announced to the trade, including providing promotions,
discounts or price increases, other than in the
ordinary and regular course of business;
(xiii) voluntarily incur or become subject to,
agree to incur or become subject to, any material debt,
obligation or liability, contingent or otherwise,
except current liabilities and other than in the
ordinary and regular course of business;
(xiv) modify or vary the terms on which the
Business , on the one hand, and Parent or any of its
Affiliates, on the other hand, conducts business with
each other;
(xv) make any payments to Parent or any of its
Affiliates, other than payments for goods or services
received by the Business in the ordinary and regular
course of business, or enter into any agreements with
Parent or any of its Affiliates other than for the
supply of goods and services by or to the Business in
the ordinary and regular course of business;
(xvi) fail to pay material obligations or
liabilities of the Business when due, except where such
obligation is the subject of a bona fide dispute;
(xvii) (x) fail to make capital expenditures
reasonably required for the continued operation of the
Business in the ordinary course and consistent with
past practice (disregarding the practices described in
the final sentence of Section 2.3(l)) (provided that if
Parent or the Subsidiaries makes any capital
expenditures not set forth on Schedule 3.2(i) or in
amounts greater than those set forth on such schedule
with respect thereto, Holdings shall, at the Closing,
reimburse Parent or the applicable Subsidiary for such
additional capital expenditures), or (y) fund any
capital expenditures of the Business through any
leasing arrangements;
(xviii) fail to provide sufficient cash resources
to the Business to comply with the provisions of this
Section 3.2(i);
(xix) intentionally take any action to seek,
encourage, or solicit any inquiry, proposal, expression
of interest or offer from any other person or entity
with respect to an acquisition, combination or similar
transaction involving the Business or substantially all
of the assets related thereto, and Parent will promptly
inform Holdings of the existence of any such inquiry,
proposal, expression of interest or offer and shall not
without the written consent of Holdings furnish any
information to or participate in any discussions or
negotiations with any other person or entity regarding
the same; or
(xx) take any action to collect any portion of
the Kodak Receivable Amount.
(j) Parent agrees, upon reasonable request, and
subject to the terms of the Confidentiality Letter, (a) to
promptly provide (and to cause the management of the
Business to provide) to Credit Suisse First Boston all
financial and other information in Parent's and such
management's possession with respect to the Business and
with respect to the Transactions, including but not limited
to information and projections prepared by Parent or
management of the Business, (b) to make senior officers and
representatives of the Business available to Credit Suisse
First Boston in connection with the Debt Financing,
including making them available to assist in the preparation
of one or more offering documents (including assistance in
obtaining industry data), to participate in due diligence
sessions and to participate in one or more road shows to
market any applicable securities and (c) to cause the
management of the Business to assist in the preparation of
one or more appropriate offering documents and to assist in
preparing other appropriate marketing materials, in each
case to be used in connection with the Debt Financing.
(k) At the Closing, Parent shall cause the Company and
the New Subsidiaries to execute the documents required in
connection with the Debt Financing, in such form as shall be
approved by Holdings (it being understood that such
documents shall not impose any liability or obligation of
any kind on Parent or any of its Affiliates, other than the
Company and the New Subsidiaries).
(l) Notwithstanding anything in this Agreement to the
contrary, Parent shall cause the Subsidiaries, prior to the
Closing Date, to pay in full all amounts due with respect to
capitalized leases to which any of the Subsidiaries is a
party with respect to the Business, and to purchase the
assets which are the subject of such leases, so that such
assets constitute Transferred Assets and, as of the Closing,
are free and clear of Liens other than Permitted Liens.
3.3 Holdings' Obligations. The following are Holdings'
obligations:
(a) Holdings and its Affiliates shall comply with all
obligations of Xxxxxxxx Ventures under that certain letter
agreement, dated December 29, 1998 between Parent and
Xxxxxxxx Ventures, as amended or supplemented from time to
time (the "Confidentiality Letter").
(b) In the event that any Permit or Environmental
Permit which is to be assigned to Holdings is not
assignable, and Holdings needs such Permit or Environmental
Permit in order to operate the Business, Holdings shall use
its reasonable efforts and make every good faith attempt
(and Parent shall cooperate with Holdings) to obtain such
Permit or Environmental Permit at Parent's expense.
(c) Holdings shall (i) use its reasonable efforts and
make every good faith attempt to obtain for the benefit of
Parent unconditional releases of the Subsidiaries'
respective obligations and liabilities, and substitute and
replace itself for any of the Subsidiaries, under each
surety, performance, fidelity or similar bond and other
similar obligation with respect to the Business in each case
listed in Schedule 3.3(c) (collectively, the "Bonds") or
(ii) if unable to obtain the foregoing with respect to any
Bond after the use of its reasonable efforts and every good
faith attempt or obtain a back-up bond or insurance over
each such unreleased and/or unreplaced Bond, by issuers and
in amounts reasonably satisfactory to Parent, in order to
assure Parent that it and the Subsidiaries will have no
obligations or liabilities under the Bonds. Nothing herein
contained shall relieve Holdings of its liability hereunder
to duly and fully perform all obligations for which the
Bonds were given as security.
(d) Holdings shall use its best efforts to secure the
Equity Financing and the Debt Financing at the Closing, in
accordance with and on the terms of the agreements and
commitment letters referred to in Sections 2.2(g) and (h).
3.4 Joint Obligations. The following shall apply with
equal force to Parent and Holdings:
(a) Without implication that such laws apply to the
transaction contemplated hereby, neither Parent nor
Holdings, the Company, any Subsidiary or any New Subsidiary
shall comply with the provisions of any laws relating to
bulk sales.
(b) Parent shall cause Danka US and the New U.S.
Subsidiary to, and Holdings shall, use their reasonable
efforts to obtain all available statutory or regulatory
clearances or exemptions from state and local sales, use and
transfer taxes with respect to the transfer of the
Transferred Assets of the U.S. Business. To the extent it
is determined that clearances or proof of exemption cannot
be obtained from one or more of the relevant taxing
authorities but either of the parties reasonably believes
that sales, use and/or transfer tax is not due with respect
to the transfer of specific assets being sold, the parties
agree to obtain and be bound by the written opinion of a law
firm with a nationally recognized state income tax practice
or an internationally recognized firm of independent public
accountants. Each of Parent and Holdings shall pay one-half
of the cost of obtaining such opinion.
(c) Each party shall, promptly after becoming aware
thereof, give the other party written notice of the
existence or occurrence of any condition which would make
any representation or warranty herein contained of such
party untrue or which might reasonably be expected to
prevent or delay the consummation of the Transactions.
(d) No party shall intentionally perform any act
which, if performed, or intentionally omit to perform any
act which, if omitted to be performed, would prevent or
excuse the performance of this Agreement by any party hereto
or which would result in any representation or warranty
herein contained of said party being untrue as if originally
made on and as of the Closing Date (other than, in the case
of Parent, changes in the ordinary course of business
consistent with past practice which do not in the aggregate
have a Material Adverse Effect).
(e) Each party shall use its respective reasonable
efforts to take, or cause to be taken, all action and to do,
or cause to be done, all things necessary, proper or
advisable to consummate the transaction contemplated hereby
as soon as possible.
(f) Prior to the Closing Date, except as the parties
may otherwise agree, the parties shall take all steps
necessary to ensure that the information and content of any
website which information and content is to be transferred
to a New Subsidiary as part of the Transferred Assets is
stored on a website, the Internet domain name of which does
not include the word "Danka."
(g) The parties shall make each of the European
Filings to the relevant government, regulatory,
supranational or state agency, department or body (a
"Relevant Agency") and take any further action necessary in
connection therewith.
(h) The parties shall make all notifications to, and
carry out all consultations with, trade unions, works
councils and other similar bodies required by the law of the
jurisdictions in which the Subsidiaries operate.
3.5 Insurance.
(a) Prior to the Closing, Parent will provide to
Holdings a schedule of insurance relating to the Business,
assets or operations of the Parent and the Subsidiaries.
The schedule of insurance will list the policies, limits of
liability, deductibles (or self insured retention),
premiums, name and address of insurers and brokers and
expiration dates of each policy for the current year and the
past 4 years. Parent and the Subsidiaries are responsible
for all claims that relate to the Transferred Assets and
that occurred prior to the Closing or Foreign Closing, as
the case may be, that related to such assets.
(b) Prior to the Closing, Holdings will to provide
Parent a schedule of insurance relating to the business,
assets or operations of the New Subsidiaries, relating to
the Transferred Assets. The schedule of insurance will list
the policies, limits of liability, deductibles (or self
insured retention), premiums, name and address of insurers
and brokers and expiration dates of each policy for the
current year. Holdings, the Company and the New
Subsidiaries are responsible for all claims that relate to
the Transferred Assets and that occur after the Closing or
Foreign Closing, as the case may be, that relate to such
assets.
ARTICLE IV
Conditions to Closing
4.1 Conditions to Parent's Obligations. The obligation of
Parent to consummate the Transactions is subject to the
fulfillment of all of the following conditions on or prior to the
Closing Date, upon the non-fulfillment of any of which this
Agreement may, at Parent's option, be terminated pursuant to and
with the effect set forth in Article IX:
(a) The representations and warranties made by
Holdings shall be true and correct in all material respects
as if originally made on and as of the Closing Date.
(b) All material obligations of Holdings to be
performed hereunder through, and including on, the Closing
Date (including, without limitation, all material
obligations which Holdings would be required to perform at
the Closing if the transaction contemplated hereby was
consummated) shall have been fully performed.
(c) No suit, proceeding or investigation shall have
been commenced by any governmental authority on any grounds
to restrain, enjoin or hinder the consummation of the
transaction contemplated hereby.
(d) Holdings shall have delivered to Parent the
written opinion of XxXxxxxxx, Will & Xxxxx addressed to
Parent, dated as of the Closing Date, in substantially the
form contained in Exhibit F attached hereto.
(e) The Bank Consent shall have been obtained.
(f) With respect to the European Filings (other than
with respect to the Foreign Subsidiaries which are not
Material Foreign Subsidiaries), either: (x) the parties
shall have received notice from the Relevant Agency that, in
connection with the matters to which the European Filing
relates, there is no objection, or the matters are
authorized, or a referral will not be made to another
government, regulatory, supranational or state agency,
department or body; or (y) applicable waiting periods
(including any extensions) shall have expired or terminated
without receipt of a negative or conditional response, or
the announcement of an investigation, from the Relevant
Agency.
4.2 Conditions to Holdings' Obligations. The obligation of
Holdings to consummate the Transactions to which it is a party
is subject to the fulfillment of all of the following conditions
on or prior to the Closing Date, upon the non-fulfillment of any
of which this Agreement may, at Holdings' option, be terminated
pursuant to and with the effect set forth in Article IX:
(a) The representations and warranties made by Parent
shall be true and correct in all respects as if originally
made on and as of the Closing Date (except to the extent any
specific representation and warranty is expressly made as of
an earlier date, in which case (with respect to such
representation and warranty) as of such date), except for
failures of representations or warranties to be true and
correct (without regard to any materiality or Material
Adverse Effect qualifiers therein, including, but not
limited to, the first sentence of Section 2.4) which,
individually or in the aggregate, are not having and are not
reasonably expected to have, a Material Adverse Effect.
(b) (i) Parent shall have complied with its
obligations set forth in Section 3.2(a); and (ii) all other
material obligations of Parent to be performed hereunder
through, and including on, the Closing Date (including,
without limitation, all material obligations which Parent
would be required to perform at the Closing if the
transaction contemplated hereby was consummated) shall have
been fully performed.
(c) The Bank Consent and all of the Material Consents
shall have been obtained, and all of the Material Permits
shall have been assigned to a New Subsidiary, or a
replacement Permit with respect thereto shall have been
issued to the applicable New Subsidiary, as the case may be.
(d) No suit, proceeding or investigation shall have
been commenced by any governmental authority on any grounds
to restrain, enjoin or hinder the consummation of the
transaction contemplated hereby.
(e) Parent shall have delivered to Holdings the
written opinion of Altheimer & Xxxx, U.S. counsel to
Parent, addressed to Holdings, dated as of the Closing Date,
in substantially the form of Exhibit G attached hereto.
(f) Parent shall have delivered to Holdings the
written opinion of Xxxxxxxx Chance, solicitor for Parent,
substantially in the form of Exhibit H attached hereto.
(g) With respect to the European Filings (other than
with respect to the Foreign Subsidiaries which are not
Material Foreign Subsidiaries), either: (x) the parties
shall have received notice from the Relevant Agency that, in
connection with the matters to which the European Filing
relates, there is no objection, or the matters are
authorized, or a referral will not be made to another
government, regulatory, supranational or state agency,
department or body; or (y) applicable waiting periods
(including any extensions) shall have expired or terminated
without receipt of a negative or conditional response, or
the announcement of an investigation, from the Relevant
Agency.
(h) The opinions of KPMG with respect to the Audited
Annual Statements, as contained therein, shall be without
qualification;
(i) Concurrently with the delivery of the Annual
Audited Statements, KPMG shall have delivered a computation
of the earnings of the Business before goodwill
amortization, interest and taxes, as defined in Schedule
1.11 ("EBIT") for the years ended March 31, 1998 and 1999,
as reflected on the income statements included in the
Audited Annual Statements, and such EBIT amounts with
respect to 1998 and 1999 shall exceed $23,400,000 and
$25,400,000 respectively.
(j) Since the Execution Date, there shall have
occurred no material adverse change in the business,
condition (financial or otherwise), prospects or results of
operations of the Business, taken as a whole.
(k) Credit Suisse First Boston shall have provided the
Debt Financing in accordance with the commitment described
in Section 2.2(h).
(l) Parent and the Subsidiaries shall not have made
any voluntary or involuntary filing, application or petition
for bankruptcy, receivership or similar proceedings.
(m) The Bank Agent shall have delivered (i) UCC
termination statements and any other appropriate lien
satisfaction instruments as Holdings may reasonably request
to release any liens arising in connection with the Credit
Agreement on the Transferred Assets and on the equity of the
Company and the New Subsidiaries; and (ii) a letter
acknowledging that each security interest and lien granted
pursuant to the Credit Agreement and related collateral
documentation on the Transferred Assets and on the equity of
the Company and the New Subsidiaries has been terminated and
released (whether by operation of law or otherwise).
ARTICLE V
Closing
5.1 Form of Documents. At the Closing and Foreign
Closings, as appropriate, the parties shall deliver the
documents, and shall perform the acts, which are set forth in
this Article V. All documents which Parent shall deliver shall
be in form and substance reasonably satisfactory to Holdings and
Holdings' counsel. All documents which Holdings shall deliver
shall be in form and substance reasonably satisfactory to Parent
and Parent's counsel.
5.2 Holdings' Deliveries at the Closing. Subject to the
fulfillment or written waiver of the conditions set forth in
Section 4.2, Holdings shall execute and/or deliver to Parent or
the Subsidiaries all of the following:
(a) the purchase price for the Common Units and the
Preferred Units being purchased pursuant to the Membership
Interest Purchase Agreement;
(b) certified copies of Holdings' Certificate of
Formation and Operating Agreement;
(c) certificates of good standing of Holdings, issued
not earlier than ten (10) days prior to the Closing Date by
the Secretary of State of Delaware;
(d) incumbency and specimen signature certificates
with respect to the officers of Holdings executing this
Agreement and Holdings' Ancillary Documents on behalf of
Holdings;
(e) certified copy of resolutions of Holdings' board
of managers, authorizing the execution, delivery and
performance of this Agreement and Holdings' Ancillary
Documents;
(f) a closing certificate executed by the President of
Holdings (or any other officer of Holdings specifically
authorized to do so), on behalf of Holdings, pursuant to
which Holdings represents and warrants to Parent that: (i)
Holdings' representations and warranties to Parent are true
and correct as of the Closing Date as if then originally
made (or, if any such representation or warranty is untrue
in any respect, specifying the respect in which the same is
untrue); (ii) that all covenants required by the terms
hereof to be performed by Holdings on or before the Closing
Date, to the extent not waived in writing by Parent, have
been so performed (or, if any such covenant has not been
performed, indicating that such covenant has not been
performed); and (iii) all documents to be executed by
Holdings and delivered at the Closing have been executed by
duly authorized officers of Holdings;
(g) a certificate of insurance, reflecting the
coverages set forth in Section 6.7;
(h) valid resale certificates with respect to the
Transferred Assets where applicable; and
(i) such other documents from Holdings as may
reasonably be required in order to effectuate the Closing
which documents are contemplated (i) hereby and (ii) by the
Holdings' Ancillary Documents.
5.3 Parent's Deliveries at the Closing. Subject to the
fulfillment or written waiver of the conditions set forth in
Section 4.1, Parent shall execute (where applicable in recordable
form) and/or deliver or cause to be executed and/or delivered to
Holdings and/or the New Subsidiaries all of the following:
(a) certificates, if any, representing the Common
Units and the Preferred Units purchased by Holdings pursuant
to the Membership Interest Purchase Agreement;
(b) certified copies of the organizational documents
of Parent, the Company and each of the Subsidiaries and New
Subsidiaries (the cost of obtaining certified copies of such
documents with respect to the New Subsidiaries shall be
borne by Holdings);
(c) certificates of good standing of Danka US and the
Company, issued not earlier than ten (10) days prior to the
Closing Date by the Secretaries of State of Delaware and (in
the case of Danka US) New York, and, to the extent the same
shall be legally obtainable, certificates of good standing
with respect to the Subsidiaries and the New Subsidiaries
(the cost of obtaining such certificates with respect to the
New Subsidiaries to be borne by Holdings);
(d) an incumbency and specimen signature certificate
with respect to the officers of Parent executing this
Agreement and Parent's Ancillary Documents on behalf of
Parent, and incumbency and specimen signature certificates
with respect to the officers of the Company, the
Subsidiaries and the New Subsidiaries executing the
Ancillary Agreements on behalf of the Company, the
Subsidiaries and the New Subsidiaries;
(e) a certified copy of resolutions of Parent's board
of directors authorizing the execution, delivery and
performance of this Agreement and Parent's Ancillary
Documents, and certified copies of resolutions of the boards
of directors (or similar bodies) and shareholders or
unitholders of the Company, the Subsidiaries and the New
Subsidiaries, authorizing the execution, delivery and
performance of the Ancillary Agreements to which they are
parties;
(f) a closing certificate duly executed by the
Chairman of Parent (or any other senior officer of Parent
specifically authorized to do so), on behalf of Parent,
pursuant to which Parent represents and warrants to Holdings
that: (i) Parent's representations and warranties to
Holdings are true and correct as of the Closing Date as if
then originally made (except to the extent any specific
representation and warranty is expressly made as of an
earlier date, in which case (with respect to such
representation and warranty) as of such date), or, if any
such representations or warranties are untrue in any such
respects, specifying the respects in which the same are
untrue; (ii) all covenants required by the terms hereof to
be performed by Parent on or before the Closing Date, to the
extent not waived in writing by Holdings, have been so
performed (or, if any such covenant has not been so
performed, indicating that such covenant has not been
performed); (iii) all documents to be executed and delivered
by Parent at the Closing have been executed by duly
authorized officers of Parent; and (iv) Parent and the
Subsidiaries have not made any voluntary or involuntary
filing, application or petition for bankruptcy, receivership
or similar proceedings.
(g) counterparts of the Ancillary Agreements, executed
by the Subsidiaries and the New Subsidiaries, together with
all documents to be executed and delivered by the
Subsidiaries and the New Subsidiaries pursuant to the
provisions of the Ancillary Agreements;
(h) the Bank Consent, together with the other items
described in Section 4.2(m);
(i) bills of sale, assignments of contracts, leases,
and Intellectual Property and such other instruments of
transfer, and assumption agreements with respect to the
transfers of the Transferred Assets and the assumptions of
the Permitted Liabilities;
(j) copies of the Material Consents and consents with
respect to, or reissuances of, Material Permits which have
been obtained;
(k) the schedule of terminated employees described in
Section 1.6(g);
(l) certificates of title or origin (or like
documents) with respect to all vehicles included in the
Transferred Assets and other Equipment for which a
certificate of title or origin is required in order for
title thereto to be transferred to the appropriate New
Subsidiary;
(m) resignations of all officers and directors of the
Company and the New Subsidiaries, effective upon the
Closing;
(n) a schedule, setting forth (i) the Kodak Receivable
Amount, by Subsidiary, as of the Closing Date, and (ii) all
collections with respect to the Kodak Receivable Amount
between the Execution Date and the Closing Date;
(o) a Supply Agreement, in the form attached hereto as
Exhibit I;
(p) a Transitional Support Services Agreement, in the
form attached hereto as Exhibit J; and
(q) a Services and Supplies Agreement, with the terms
and conditions attached hereto as Exhibit K;
(r) a Preferred Outsourcing Agreement, with the terms
and conditions attached hereto as Exhibit L;
(s) a Pledge and Security Agreement, in the form
attached hereto as Exhibit M, together with the
certificates, if any, representing the pledged securities
thereunder; and
(t) such other documents as may reasonably be required
from Parent, the Company, the Subsidiaries and the New
Subsidiaries in order to effectuate the Closing which
documents are contemplated (i) hereby (ii) by the Parent's
Ancillary Documents and (iii) by the Ancillary Agreements.
5.4 Deliveries at the Foreign Closings. At each of the
Foreign Closings, the parties shall deliver to each other such
documents and instruments similar to those to be delivered at the
Closing as the parties may reasonably agree to accomplish the
transactions contemplated hereby and by the applicable Ancillary
Agreement.
ARTICLE VI
Post-Closing Agreements
6.1 Post-Closing Agreements. From and after the Closing,
the parties shall have the respective rights and obligations
which are set forth in the remainder of this Article VI.
6.2 Inspection of Records.
(a) Parent and the Subsidiaries shall each make their
respective books and records (and shall use reasonable
efforts to make available work papers in the possession of
their respective accountants, and other than books and
records delivered to Holdings, the Company and the New
Subsidiaries hereunder) available for inspection by the
Holdings, the Company or the New Subsidiaries, or by their
duly accredited representatives, for reasonable business
purposes at all reasonable times during normal business
hours, for a seven (7) year period after the Closing Date,
or for such longer period of time as may be required to
comply with Section 6.3, with respect to all transactions of
the Business occurring prior to and those relating to the
Closing, the historical financial condition, results of
operations and cash flows of the Business, or the Permitted
Liabilities. Such records shall be made available at
Parent's executive office. If Parent or any of the
Subsidiaries during such period elects to dispose of such
records, they shall first give Holdings sixty (60) days
written notice, during which period Holdings shall have the
right to take such records without further consideration.
As used in this Section 6.2, the right of inspection
includes the right to make extracts or copies.
(b) Holdings, the Company and the New Subsidiaries
shall make available to Parent and the Subsidiaries the
books and records delivered by Parent and the Subsidiaries
to Holdings, the Company and the New Subsidiaries in
connection with the Closing, subject to the same terms and
conditions as those set forth in Section 6.2(a) with respect
to books and records of Parent and the Subsidiaries.
(c) The representatives of a party inspecting the
records of the other party shall be reasonably satisfactory
to the other party. In addition, in connection with
lawsuits or other proceedings, Parent or Holdings, as the
case may be, shall use reasonable efforts to make available
at the requesting party's expense, personnel (for reasonable
periods of time) of Parent or Holdings, as the case may be,
for purposes of investigation, depositions and testimony.
In addition, Holdings shall give reasonable assistance to
Parent, through the New Subsidiaries' respective employees,
in order for Parent and the Subsidiaries to record entries
relating to the closing of Parent's and the Subsidiaries'
books relating to the Business, to prepare the Statement, to
prepare and file Tax returns related to the Business and to
reconcile Intercompany Accounts.
6.3 Certain Tax Matters.
(a) Following the Closing and any Foreign Closing,
from time to time as the actual amount of each of the
Property Taxes becomes known, the applicable Subsidiary
shall forthwith pay to the applicable New Subsidiary the
excess of such Property Tax over the Assumed Tax with
respect thereto.
(b) With respect to the Property Taxes, Holdings
shall cause the appropriate New Subsidiaries to prepare and
file (and, to the extent applicable, distribute) all
returns, reports and information statements, forms or
similar documents for distribution to third parties, with
respect to such Property Taxes, all in a timely and proper
fashion and as may be necessary or appropriate to assure
that Parent, Holdings, the Company, the Subsidiaries and the
New Subsidiaries shall be in full and prompt compliance with
law, and shall pay all Property Taxes shown on such returns
as due and payable. Holdings shall upon the request of
Parent forthwith provide to Parent proof of its compliance
with the foregoing. Except as set forth above, Parent and
the Subsidiaries, in each case, shall be responsible for
filing all returns for Taxes relating to the Transferred
Assets, the Permitted Liabilities and the income and
operation of the Business before the Closing, regardless of
when such returns are due.
(c) The parties understand and agree that this
Agreement shall be interpreted, and that the parties shall
administer their dealings in relation to this Agreement, so
as to effect the following principles relating to Taxes:
(i) Holdings, the Company and the New
Subsidiaries shall be responsible for (A) all Taxes
arising out of the ownership and operation of the
Business beginning on the day after the Closing Date
and all Foreign Closing Dates, as appropriate, (B) the
Assumed Taxes, (C) employment Taxes reflected in
Permitted Liabilities, and (D) the Hypothetical Tax.
(ii) Except as set forth in Section 6.3(c)(i),
Parent and the Subsidiaries shall be responsible for
all Taxes arising out of the ownership and operation of
the Business up to and including the Closing Date and
all Foreign Closing Dates, as appropriate. Without
limiting the generality of the foregoing, Parent and
the Subsidiaries shall be responsible for sales, use
and other transfer Taxes included in Accounts
Receivable that are Transferred Assets. Parent's and
the Subsidiaries' responsibility for Taxes, as set
forth above, shall prevail irrespective of the manner
in which any payment of Taxes or obligation to pay
Taxes (or the right to any credit, deposit or refund of
Taxes) is reflected in the financial statements of
Parent and the Subsidiaries.
(iii) The party responsible for any Tax pursuant
to Section 6.3(c)(i) and (ii) shall be entitled to all
credits for and deposits and refunds of such Tax.
(d) Parent and Holdings each acknowledge and agree
that the transfers of the Transferred Assets to the New
Subsidiaries and the agreement for administration of
Unassigned Assets provided in Section 6.7 are, and shall be
treated as, taxable transfers between unconnected parties on
the Closing Date or, if appropriate, the Foreign Closing
Date, for (i) all United States federal, state and local
income tax purposes and (ii) all purposes with respect to
non-U.S. taxes on income and/or profits. Parent and
Holdings shall file, and shall cause the Subsidiaries, the
Company and the New Subsidiaries to file, any and all
returns of tax or other tax filings in a manner which is
consistent with such treatment.
(e) Holdings shall, within 73 days after the Closing
Date, cause the Company Election to be filed on behalf of
the Company.
6.4 Use of Trademarks; References to Parent. Parent and
its Affiliates (including the Subsidiaries) shall cease to use
and shall not license or permit any third party to use any name,
trade dress, service xxxx, slogan, logo or trademark and the like
which is confusingly similar to any of the trademarks or service
marks which constitute Transferred Assets hereunder. Nothing set
forth in this Agreement shall prevent Parent or any of the
Subsidiaries from using or licensing to use the name and xxxx
"Danka"and any name or xxxx incorporating the name "Danka,"
including, without limitation, any Internet domain name using or
incorporating the name "Danka." Holdings, the Company and the
New Subsidiaries may refer to the Business as formerly being
Parent's for a period of one year following the Closing.
6.5 Payments of Accounts Receivable. In the event Parent
or any of its Affiliates (including the Subsidiaries) shall
receive any instrument of payment of any of the accounts
receivable of the Business, Parent or such Subsidiary shall,
within five (5) business days of receipt, deliver it to the
appropriate New Subsidiary, endorsed where necessary, without
recourse, in favor of the appropriate New Subsidiary and, pending
such delivery, shall hold it in trust for or the appropriate New
Subsidiary.
6.6 Third Party Claims. The parties shall cooperate with
each other with respect to the defense of any Third Party Claims
(as herein defined) subsequent to the Closing Date which are not
subject to the indemnification provisions contained in Article
VIII, provided that the party requesting cooperation shall
reimburse the other party for the other party's reasonable
out-of-pocket costs and expenses of furnishing such cooperation.
6.7 Non-Assignment. Notwithstanding any provision to the
contrary contained herein, in the event and to the extent that
Parent and the Subsidiaries are unable to obtain any required
consent, approval or amendment required to assign any contract,
agreement, lease, license, permit or approval constituting part
of the Transferred Assets (the "Unassigned Assets"):
(a) the Unassigned Assets shall not constitute
Transferred Assets, except to the extent provided below;
(b) Parent and the Subsidiaries shall, at the
direction of Holdings, the Company or the applicable New
Subsidiary and at Holdings', the Company's and the
applicable New Subsidiary's sole cost and with full
indemnification from Holdings, the Company and the
applicable New Subsidiary, use their reasonable efforts to
(x) provide or cause to be provided to the New Subsidiaries,
as the case may be, the benefits of any Unassigned Assets,
(y) cooperate in any arrangement, reasonable and lawful as
to Parent and the Subsidiaries, as Holdings, the Company or
the New Subsidiaries may request, which is designed to
provide such benefits to the New Subsidiaries, and
(z) enforce for the account of any of the New Subsidiaries,
any rights of Parent and the Subsidiaries arising from such
Unassigned Assets, including the right to elect to terminate
in accordance with the terms thereof on the advice of
Holdings, the Company or any of the New Subsidiaries;
(c) Any of the New Subsidiaries, as the case may be,
shall use its reasonable efforts to perform the obligations
of Parent and the Subsidiaries arising under such Unassigned
Assets, to the extent that, by reason of the transactions
consummated pursuant to this Agreement, Holdings, the
Company or any of the New Subsidiaries has control over the
resources necessary to perform such obligations; and
(d) Holdings, the Company and the New Subsidiaries
shall, jointly and severally, indemnify and hold harmless
Parent, the Subsidiaries and their representatives from and
against any damages arising out of or resulting from any of
the New Subsidiaries' performance or failure to perform
under such Unassigned Assets and from and against any
damages arising out of or resulting from any action or
inaction taken by Parent or a Subsidiary at the direction of
Holdings, the Company or a New Subsidiary pursuant to this
Section 6.7; provided, however, that such indemnification
shall not be available with respect to amounts (not to
exceed $500,000) incurred by Parent and the Subsidiaries to
obtain third party consents (including Material Consents)
and the assignment of Permits (including Material Permits)
as described in Section 3.2.
Parent and the Subsidiaries shall, without further consideration
therefor, pay and remit to any of the New Subsidiaries, as the
case may be, promptly, all monies, rights and other
considerations received in respect of such performance. If and
when any such consent shall be obtained or Unassigned Assets
shall otherwise become assignable or able to be novated, Parent
and the Subsidiaries shall promptly assign and novate all their
rights and obligations thereunder to the applicable New
Subsidiary without the payment of further consideration and the
applicable New Subsidiary shall, without the payment of any
further consideration therefor, assume such rights and
obligations and Parent and the Subsidiaries shall be relieved of
any and all liability thereunder. The parties agree that the
above provisions shall apply in a like manner to rights of
indemnification, claims and causes of action against third
parties which would otherwise constitute Transferred Assets or
Permitted Liabilities. Subject to the adjustments required by
Section 1.9, as between the parties hereto, any Unassigned Assets
shall nonetheless be treated as though such Unassigned Asset was
assigned and transferred, and was, in fact, a Transferred Asset
and the liabilities arising thereunder and related thereto
constituted Permitted Liabilities to the same extent as provided
in Section 1.7(c). In the event that any contracts to which
Parent and one or more of its Affiliates are jointly parties (or
pursuant to which goods and/or services are provided to Parent
and one or more of its Affiliates) are assigned or transferred
pursuant to this Agreement, then from and after the Closing,
Holdings, the Company and the New Subsidiaries shall, if and to
the extent requested by Parent, take such action as is necessary
to, and cooperate with Parent in its efforts to, remove such
Affiliate as a party to such contract. It is expressly agreed
that Parent's only obligation with respect to any contract with
any governmental agency or instrumentality shall be to reasonably
cooperate with Holdings and to use reasonable efforts in
obtaining any consents or novations necessary to effect the
transfer of such contract to the applicable New Subsidiary.
Nothing contained in any transfer document required to be
executed by Parent or any Subsidiary in connection with the
transfer of any such governmental contract shall alter or in any
manner affect the status of such contract as a Transferred Asset
and/or a Permitted Liability hereunder or relieve Holdings, the
Company or any New Subsidiary of its obligations or liabilities
with respect thereto or in connection therewith, including
pursuant to Article VIII hereof.
6.8 Use of Parent's Trademarks. The New Subsidiaries may
continue to use, until exhausted, but in no event more than six
months following the Closing Date, the supplies of stationery,
invoices, order forms, packaging material and the like which are
on hand as of the Closing Date which bear any of Parent's or its
Affiliates' trademarks or service marks which are not included in
the Transferred Assets or the Intellectual Property, as long as
the New Subsidiaries shall affix thereto a sticker or stamp
indicating the New Subsidiaries' ownership of the Business.
6.9 Non-Competition and Non-Solicitation. In furtherance
of the Transactions, Parent covenants and agrees that, except as
provided pursuant to Section 6.11, none of Parent nor any of its
Affiliates including the Subsidiaries will (nor will Parent or
any of its Affiliates join with any third party in any joint
venture or alliance to or which):
(a) for a period ending on the date which is eighteen
months after the Closing Date, enter into any contract with
any customer of the Business as of the Closing Date to
perform any of the services performed by the Business at any
location at which the Business is conducted as of the
Closing Date by any of the Subsidiaries with respect to such
customer (a "Customer Location"), including through the sale
of office equipment to any such Customer Location where such
sale is made for the purpose of inducing or attempting to
persuade such customer to use such customer's own employees
and assets (including office equipment purchased directly by
such customer) as a substitute for such customer's then-current
use of the services of the Business; or
(b) for a period ending on the first anniversary of
the Closing Date:
(i) engage in a business included within the
definition of "Business" (a "Competing Business")
anywhere in the world, whether such engagement shall be
as owner, partner, agent, consultant or shareholder
(except as the holder of not more than five percent
(5%) of the outstanding shares of an entity whose
equity securities are listed on any national, regional
or foreign securities exchange or reported by the
National Association of Securities Dealers Automated
Quotation System or any successor thereto and except as
the holder of securities of the Company); and
(ii) solicit the employment of or hire or engage
in any discussion with any person who is currently or
immediately prior to the Closing Date an officer or
employee of Parent or any Subsidiary with respect to
the Business or any person who is an officer or
employee of any New Subsidiary whose primary employment
duties are with respect to any New Subsidiary's
operation of the Business, in each case while such
person is in the employ of the New Subsidiaries or
their Affiliates.
Except as provided in Article VII, Holdings covenants and agrees
that, without implication that the contrary would otherwise be
true, until the first anniversary of the Closing Date neither
Holdings nor any of its Affiliates (including the Company and the
New Subsidiaries) shall solicit the employment of or hire or
engage in any discussion with any person who is an officer or
employee of Parent or any subsidiary of Parent, while such person
is in the employ of Parent or any subsidiary of Parent. The term
"solicitation" as used in such sentence and such clause shall not
include solicitations which are not targeted at particular
individuals, such as "help wanted" advertising. This Section
shall survive the Closing of this Agreement. Parent and Holdings
acknowledge that the provisions of this Section 6.9, including
the periods of restriction, the geographical areas of restriction
and the restraints imposed are fair and reasonably required for
the protection of the other party hereto. In the event that any
of the provisions of this Section 6.9 relating to the geographic
areas of restriction or the periods of restriction shall be
deemed to exceed the maximum area or period of time which a court
of competent jurisdiction would deem enforceable, the geographic
areas and times shall, for the purposes of this Agreement, be
deemed to be the maximum areas or time periods which a court of
competent jurisdiction would deem valid and enforceable in any
state in which such court of competent jurisdiction shall be
convened. Each party hereto acknowledges that any breach of its
obligations under this Section 6.9 may result in irreparable
injury to the other party hereto, for which such other party may
not have an adequate remedy at law. In the event of any such
breach, the non-breaching party may, in its sole discretion and
in addition to any other remedies available to it, bring an
action or actions against the breaching party for injunctive
relief, specific performance or both, and seek to have entered a
temporary restraining order, preliminary or permanent injunction,
or order compelling specific performance. The prevailing party
in any action seeking to enforce the provisions of this Section
6.9 shall obtain reimbursement of its actual costs and attorneys'
fees in connection with such action. In the event of a breach of
any covenant set forth in this Section 6.9, the term of such
covenant will be extended by the period of the duration of such
breach. This Section 6.9 will be binding on (i) Parent and any
successor of Parent if Parent is acquired by or enters into any
business combination with any entity or (ii) any purchaser of all
or part of the assets of Parent's business (including any
subsidiary or Affiliate of Parent). Parent will cause any
purchaser of any portion of the operations of it and its
Affiliates (other than purchases of inventory in the ordinary
course of business and of isolated assets) to agree in writing to
comply with the provisions of this Section 6.9 as if applicable
to it in the same manner as it is applicable to the Parent, and
to deliver a written copy of such agreement to Holdings. Except
as specifically provided in Section 6.9(a) above, nothing herein
shall be deemed to prevent Parent and its Affiliates from,
directly or indirectly, selling or seeking to sell office
equipment at any Customer Locations or otherwise or continuing to
conduct their respective businesses, other than the Business, as
such businesses are being conducted as of the Closing Date.
6.10 Further Assurances. The parties shall execute such
further documents, and perform such further acts, as may be
necessary or reasonably requested by Holdings, the Company or any
of the New Subsidiaries to consummate the Transactions.
6.11 Interim Operations of the Subsidiaries. Each of Parent
and the Subsidiaries covenants and agrees that, except as
consented to by Holdings in writing, after the Closing Date and
until the acquisition of all of the Transferred Assets by the New
Foreign Subsidiaries (provided that the following restrictions
shall cease to apply with respect to any particular Subsidiary
after all of the Transferred Assets held by such Subsidiary have
been acquired by any New Foreign Subsidiary):
(a) the business of the Subsidiaries for which there
has been no Foreign Closing shall be run as directed by
Holdings, in its sole discretion, for the benefit of
Holdings, the Company and the New Foreign Subsidiaries, and
Parent and the Subsidiaries shall take no action with
respect to such business which is not approved by Holdings;
all costs and expenses of each such Subsidiary shall be paid
by a New Foreign Subsidiary, and all income and earnings of
each such Subsidiary shall be for the account of a New
Foreign Subsidiary; and
(b) Holdings, the Company or a New Foreign Subsidiary
shall have the right to designate the officers and directors
of each Subsidiary for which there has been no Foreign
Closing, and Parent shall cause each such Subsidiary to
appoint or elect all such persons in such capacities;
provided however, that the foregoing shall not prohibit the
transfer by any Subsidiary to Parent or any of its Affiliates of
any Excluded Assets or Excluded Liabilities in a manner
reasonably acceptable to Holdings after at least five (5)
business days' notice prior thereto; provided, further, that
neither Parent nor any Subsidiary shall be required pursuant to
this Section 6.11 to take any action which may be in violation of
any applicable law. Notwithstanding anything in this Section
6.11 which may be to the contrary, Holdings, the Company and the
New Foreign Subsidiaries shall jointly and severally indemnify
and hold harmless Parent and any such Subsidiary from and against
any losses or damages which may be incurred by Parent or any such
Subsidiary arising out of any action taken or not taken by Parent
or any such Subsidiary pursuant to this Section 6.11 as a direct
result of Holdings' direction.
6.12 Reimbursement for Moving Expenses. Parent shall cause
Danka US to reimburse the New U.S. Subsidiary for all reasonable
and documented expenses incurred by the New U.S. Subsidiary in
vacating Building 14, provided that (i) Building 14 is vacated on
or before December 31, 1999, and (ii) the aggregate amount of
such reimbursement shall not exceed $1,500,000.
6.13 Purchase of Certain Assets. If, following the Closing
Date, any of the agreements between the Business and its
customers listed on Schedule 6.13 is terminated prior to its
expiration by such customer, promptly following such termination
Parent shall cause the applicable Subsidiary to purchase from the
applicable New Subsidiary, and Holdings shall cause the
applicable New Subsidiary to sell to the applicable Subsidiary,
such tangible assets of the Business which were used in
connection with such agreement as Holdings may specify, at a
purchase price for each such asset equal to the net book value of
such asset on the applicable New Subsidiary's books; provided,
however, that the Subsidiaries' obligations pursuant to this
Section 6.13 shall be limited to the purchase of assets with an
aggregate net book value of $5,000,000. If within six months
following such termination, the Company or any of the New
Subsidiaries shall renew or replace such contract, Holdings shall
cause the New Subsidiary which entered into such replacement
contract to refund to the payor the amount previously paid in
respect of such contract pursuant to this Section 6.13.
ARTICLE VII
Employees and Employee Benefit Plans
7.1 Employment of Parent's Employees. On the Closing Date,
Holdings shall cause the New Subsidiaries to (a) offer to employ
or to continue to employ as of the Closing Date each of the
Subsidiaries' employees actively employed (and, with respect to
the U.S. Business, not on disability or leave) in the conduct of
the Business (each an "Affected Employee") in comparable
positions, at compensation, with benefits and upon terms and
conditions which are in the aggregate no less favorable to the
employees than the position, compensation and benefits in effect
on the date hereof (except that no stock-based plan need be
offered to the Affected Employees, including, specifically any
stock purchase plan or stock option plan)and (b) in the case of
the Affected Employees of each of the Subsidiaries other than
Danka US and Danka Canada, to assume (by operation of law or
otherwise) the contracts of employment of all such Affected
Employees with effect from the Closing Date in accordance with
and to the extent required by the Acquired Rights Directive (as
defined below) insofar as it has been adopted by local law.
Holdings shall not, and shall not permit the Company or any of
the New Subsidiaries to, take any action which would result in
Parent or any Subsidiary having any liability under the WARN Act
or any similar state or local law. As used herein, "Acquired
Rights Directive" means Council Directive 77/187/EEC on the
approximation of the laws of the Member States relating to the
safeguarding of employees' rights in the event of transfers of
undertakings, businesses or parts of businesses and/or any
legislation or regulation implementing that directive in any
member state. Each Affected Employee who has actually commenced
employment with the New Subsidiaries is hereinafter referred to
individually as a "Transferred Employee" and collectively as the
"Transferred Employees." Except for voluntary resignations and
deaths, Holdings shall cause the New Subsidiaries to continue to
employ each Transferred Employee until at least the last day of
the second full calendar month commencing after the Closing Date,
but may at any time terminate any Transferred Employee for cause
or in connection with normal seasonal layoffs.
7.2 Welfare Benefits. From and after the Closing Date, the
New Subsidiaries shall be solely liable for all claims and
liabilities under welfare plans which are attributable to
treatments or services rendered after the Closing Date. Holdings
shall cause the New Subsidiaries to cover all Transferred
Employees and their eligible dependents and beneficiaries with
group medical benefits, and all waiting periods and pre-existing
conditions under such benefits shall be waived.
7.3 Service Crediting. Effective as of the Closing Date,
each of Holdings, the Company and the New Subsidiaries will count
the service of all Transferred Employees with Parent, its
Subsidiaries, and their Affiliates and all service credited by
Parent, its Subsidiaries or its Affiliates (including service of
Transferred Employees with Xxxxxxx Kodak Company and its
Affiliates for which such persons have received credit with
Parent, its Subsidiaries and their Affiliates for purposes of
such policies and plans) under such New Subsidiary's vacation
policy and welfare benefit plans applicable to such Transferred
Employees. In addition, such service shall be counted by
Holdings, the Company and the New Subsidiaries in determining
each Transferred Employee's eligibility to participate in, and
each such Transferred Employee's vested percentage in, each of
the applicable New Subsidiary's employee benefit plans (as
defined in Section 3(3) of ERISA) applicable to such Transferred
Employee, but not for benefit accrual purposes.
7.4 401(k) Plan. As soon as practicable after the Closing
Date, Holdings and the Company shall establish or designate an
individual account plan qualified under Section 401(a) of the
Code and containing a cash or deferred arrangement meeting the
requirements of Section 401(k) of the Code ("Holdings' 401(k)
Plan") which shall cover the Transferred Employees. Each
Transferred Employee who is a participant in the Danka 401(k)
Profit Sharing Plan shall be given the opportunity to receive a
distribution of his or her account balance and shall be given the
opportunity to elect to "roll over" such account balance to the
Holdings' 401(k) Plan, subject to and in accordance with the
provision of such plans and applicable law.
7.5 Liabilities Accrued Prior to Closing. All liabilities
and expenses owed to Transferred Employees by any of the
Subsidiaries, which are incurred prior to the Closing Date or
relate to any period prior to the Closing Date, will be paid to
such Transferred Employee by the applicable Subsidiary prior to
the Closing Date or as soon as practicable thereafter.
7.6 Vacation. Effective as of the Closing Date, the
applicable New Subsidiary shall grant vacation days or hours
determined under the applicable Subsidiary's vacation program
applicable to each Transferred Employee. The vacation days or
hours granted by the New Subsidiaries hereunder shall be provided
under a program no more restrictive than that of the Business as
of the Closing Date.
7.7 Other Terms Relating to Non-U.S. Employee Matters.
Notwithstanding any other provision of this Article VII:
(a) in the case of employees of each of the
Subsidiaries other than Danka US and Danka Canada, the term
"Affected Employees" shall include employees in the conduct
of the Business that are not actively employed on the
Closing Date, in accordance with and to the extent required
by the Acquired Rights Directive insofar as it has been
adopted by local law; and
(b) as soon as practicable after the Closing Date, the
New Canadian Subsidiary will establish a new registered
pension plan (the "New Pension Plan") and a new group
registered retirement savings plan (the "New Group RRSO"),
effective as of the Closing Date, for the benefit of the
Transferred Employees and related plan members who were
employees of Danka Canada. Transferred Employees who are
members of the Kalmara Group RRSO will be given the option
to transfer their RRSP balances to the New Group RRSP, to
personal RRSP accounts or to withdraw their RRSP balances,
subject to applicable withholdings. The parties will seek
any required approvals from the regulatory authorities to a
transfer from the Pension Plan to the New Pension Plan of an
amount of cash or assets equal to the aggregate account
balances for the Transferred Employees, adjusted to the
transfer date.
(c) with regard to the pension obligations of Danka
Services GmbH (Danka Germany), under its company pension
scheme, the Unterstutzungseinrichtung der Firma Imaging
Services GmbH, Parent shall use its best efforts to transfer
the membership of Danka Germany in the UMU-Unterstutzungskasse
Mittelstandischer Unternehmen ("UMU") together with all
related rights and obligations against the UMU to Holdings
with effect as of the Closing Date. If membership of Holdings
in the UMU [is] not attainable, Parent will pay to Holdings
an amount equal to the pension liabilities of Danka Germany accrued
under the company pension scheme of Danka Germany as of the Closing
Date, unless sufficient reserves have otherwise been set aside at
Danka Germany in respect of such pension liabilities.
ARTICLE VIII
Indemnification
8.1 General. From and after the Closing, the parties shall
indemnify each other as provided in this Article VIII.
8.2 Certain Definitions. As used in this Agreement, the
following terms shall have the indicated meanings:
(a) "Damages" shall mean all assessments, levies,
losses, fines, penalties, damages, settlements, judgments,
costs and expenses, including, without limitation,
reasonable attorneys', accountants', investigators', and
experts' fees and expenses incurred in investigating or
defending a Third Party Claim, whether or not resulting
from, relating to or arising out of a Third Party Claim;
(b) "Indemnified Party" shall mean, with respect to a
particular matter, a party hereto who is entitled to
indemnification from another party hereto pursuant to this
Article VIII;
(c) "Indemnifying Party" shall mean, with respect to a
particular matter, a party hereto who is required to provide
indemnification under this Article VIII to another party
hereto;
(d) "Third Party Claim" shall mean any action, suit,
proceeding, investigation or like matter which is asserted
or threatened by a party other than the parties hereto,
their successors and permitted assigns, against any
Indemnified Party or to which any Indemnified Party is
subject.
8.3 Indemnification Obligations of Parent. Subject to the
provisions of Sections 8.4 and 8.8, Parent and the Subsidiaries
shall indemnify, save and keep harmless Holdings, the Company,
the New Subsidiaries and their respective successors and
permitted assigns ("Holdings Indemnitees") against and from all
Damages sustained or incurred by any of them (such liability
being joint and several among Parent and the Subsidiaries)
resulting from, relating to, or arising out of or by virtue of:
(a) any inaccuracy in or breach of any representation
and warranty made by Parent in this Agreement or in any
closing document delivered to Holdings in connection with
this Agreement (including the certificate referred to in
Section 5.3(f) and any similar certificate delivered at a
Foreign Closing);
(b) any breach by Parent of, or failure by Parent to
comply with, any of its covenants or obligations under this
Agreement, or any breach by any Subsidiary of any of its
covenants or obligations under the Ancillary Agreement to
which it is a party (including, without limitation, its
obligations under Section 6.3 and this Article VIII);
(c) the failure to discharge when due any liability or
obligation of Parent or any Subsidiary (other than the
Permitted Liabilities) including, without limitation, any
and all Excluded Liabilities;
(d) the failure of the parties to comply with the
provisions of any laws relating to bulk sales; or
(e) except to the extent such Taxes are covered by
Section 8.5(g) or Section 10.8, Taxes imposed on Parent or
any of its Affiliates pursuant to Treasury Regulations Sec-
tion 1.1502-6 (or any comparable provision under state,
local, or foreign law or regulation imposing joint, several
or secondary liability upon members of a consolidated, com-
bined, affiliated or unitary group) for any taxable period
ending prior to, or that includes, the Closing Date.
8.4 Limitation on Parent's Indemnification Obligations.
Parent's obligations pursuant to the provisions of Section 8.3
are subject to the following limitations:
(a) the Holdings Indemnitees shall not be entitled to
recover under Section 8.3(a) until the total amount which
Holdings Indemnitees would recover under Section 8.3(a), but
for this Section 8.4(a), exceeds $9,000,000, and then the
Holdings Indemnitees shall be entitled to recover only for
the excess over $9,000,000; it being understood and agreed
that for purposes of this Section 8.4(a) only, any
inaccuracy in or breach of any representation or warranty
made by Parent in this Agreement or in any closing document
delivered to Holdings in connection with this Agreement
shall be judged without regard to (i) any requirement in any
representation or warranty contained herein that an event or
fact be material or have a Material Adverse Effect on the
Business, and (ii) any other reference to (including any
qualification based upon or upon the absence of) materiality
or Material Adverse Effect contained in such representation
or warranty.
(b) the Holdings Indemnitees shall not be entitled to
recover under Section 8.3(a) unless a claim has been
asserted by written notice, specifying the details to the
extent then known of the alleged misrepresentation or breach
of warranty, delivered to Parent on or prior to September
30, 2000; provided, that, if a claim or notice has been
given with respect to such indemnification prior to such
date, the right to indemnification in connection with such
claim shall continue indefinitely until such claim and right
to indemnification is finally resolved; and provided
further, that, other than the expiration of applicable
statutes of limitation with respect to Sections 8.3(b)-(e),
both inclusive, there shall be no time limit on Holdings
Indemnitees' right to recover under such sections;
(c) the Holdings Indemnitees shall not be entitled to
recover under Section 8.3:
(i) with respect to consequential damages of any
kind, damages consisting of business interruption or
lost profits (regardless of the characterization
thereof), damages for diminution in value of the
Business, damages computed on a multiple of earnings or
similar basis, and punitive damages (provided, however,
that any punitive damages actually imposed on a
Holdings Indemnitee in connection with a Third Party
Claim shall constitute Damages hereunder and may be
recovered by Holdings Indemnitees, subject to the other
limitations set forth in this Section 8.4);
(ii) with respect to any inaccuracy in or breach
of any representation and warranty by or of Parent
which is contained herein if at or before the Closing
Date (or, as applicable to such matter, the Foreign
Closing Date) Holdings had actual knowledge of the
inaccuracy or breach of representation and warranty;
(iii) with respect to the nonassignability or
nontransferability of any of the Transferred Assets or
Permitted Liabilities or the failure to obtain any
consent, or to satisfy any conditions imposed incident
to the giving of any consent, required in connection
with, or as a consequence of, the transfer of any of
the Transferred Assets to, or the assumption of the
Permitted Liabilities by, any New Subsidiary;
(iv) to the extent the aggregate claims under
Section 8.3(a) of the Holdings Indemnitees exceed 10%
of the aggregate of the Cash Amounts;
(v) to the extent of any recovery of any Holdings
Indemnitee actually obtained (a) under insurance
policies (including title insurance policies) or (B)
from any third party pursuant to the rights in and to
claims, rights of indemnification or causes of action
described in Section 1.5(r), it being understood that
the Holdings Indemnitees shall in good faith pursue
recovery against the insurers or such third parties, as
the case may be, with the same degree of diligence as
they use to pursue claims against Holdings' insurers or
third parties, as the case may be, generally in the
conduct of the business of the Holdings Indemnitees;
(vi) to the extent that the claim for
indemnification is based upon circumstances which
resulted in a payment pursuant to Section 1.11(d)(ii)
hereof; and
(vii) without limiting the generality of anything
contained in Article VII hereof, with respect to any
claim by or liability to any employee employed by any
Subsidiary with respect to the Business arising as the
result of the termination of such employee's employment
with a New Subsidiary or any action by Holdings, the
Company or any New Subsidiary subsequent to the Closing
Date (and Holdings agrees that Holdings, the Company
and the New Subsidiaries shall indemnify the Parent
Indemnitees (as defined herein)for all such matters).
8.5 Holdings' Indemnification Covenants. Holdings, the
Company and the New Subsidiaries shall, jointly and severally,
indemnify, save and keep harmless Parent, the Subsidiaries and
their respective successors and permitted assigns (collectively,
"Parent Indemnitees") against and from all Damages sustained or
incurred by any of them resulting from or arising out of or by
virtue of:
(a) any inaccuracy in or breach of any representation
and warranty made by Holdings in this Agreement or in any
closing document delivered to Parent in connection with this
Agreement;
(b) any breach by Holdings, the Company or any New
Subsidiary of, or failure by Holdings, the Company or any
New Subsidiary to comply with, any of its covenants or
obligations under this Agreement (including, without
limitation, its obligations under this Article VIII) or any
of the Ancillary Agreements to which it is a party;
(c) Holdings', the Company's or any New Subsidiary's
failure to pay, discharge and perform any of the Permitted
Liabilities when due, provided, that neither Parent nor any
Subsidiary shall discharge or pay any such Permitted
Liability without the consent of Holdings, which consent may
not be unreasonably withheld or delayed;
(d) subject to Section 1.8(g), any plant closing or
mass layoff following the Closing which violates the WARN
Act or any similar state or local law at any facility of the
Business;
(e) acts or omissions of Holdings, the Company and/or
the New Subsidiaries after the Closing Date, including,
without limitation, the operation of the Business after a
New Subsidiary's acquisition thereof or relevant portion
thereof, except as set forth in Section 1.8(g);
(f) any obligation of any Subsidiary under any Bond;
or
(g) any increased liability for Taxes (including,
without limitation, both direct payments of Taxes, interest,
penalties and expenses and the discharge of increased Taxes
by the utilization of losses, deductions and credits of
Parent, the Subsidiaries or any of their Affiliates)
incurred by Parent, the Subsidiaries or any of their
Affiliates (i) which would not have arisen but for a final
determination by one or more taxing authorities that the
transactions enumerated in Sections 1.1, 1.2 or 1.3 hereof
or the agreement for administration of Unassigned Assets
provided in Section 6.7 hereof should be characterized for
tax purposes otherwise than as provided in Section 6.3(d);
or (ii) in the case of Taxes not based on income, incurred
solely by reason of the execution of the various steps in
Sections 1.1, 1.2 and 1.3 which would not have been required
to effect a taxable transfer of the Transferred Assets to an
unconnected party; provided that the indemnity described in
this Section 8.5(g) shall cease to apply if (x) Parent, any
of the Subsidiaries or any of their Affiliates breaches the
covenant set forth in the final sentence of Section 6.3(d)
hereof or (y) such increased Tax liability results from the
gross negligence or willful misconduct of Parent or any of
its Affiliates. Parent shall provide Holdings with a
detailed calculation of any amounts asserted to be payable
by Holdings, the Company or a New Subsidiary pursuant to
this Section 8.5(g), which calculation and amounts shall
have been verified in writing by an internationally
recognized firm of certified public accountants (which may
be an accounting firm regularly engaged by Parent or its
Affiliates). If any such increased liability for Taxes is
discharged by direct payment by any of Parent, the
Subsidiaries or any of their Affiliates of Taxes with
respect to a taxable period which includes the Closing Date
or, if applicable, the relevant Foreign Closing Date,
indemnification payments due pursuant to this Section 8.5(g)
shall be paid at the time provided in this Article VIII. If
any such increased liability for Taxes is discharged by
utilization of losses or credits otherwise available to any
of Parent, the Subsidiaries or any of their Affiliates, the
time for calculation of indemnification payments shall be
for the taxable period during which Parent, a Subsidiary or
an Affiliate actually would have recognized a tax benefit if
such losses or credits had not been utilized to discharge
such increased liability for Taxes in the taxable period in
which the Closing or Foreign Closing occurs. If the
preceding sentence is applicable, the amount of such
increased liability for Taxes shall be computed based on the
actual Taxes paid as a result of the unavailability of such
losses or credits, and the time for payment shall be as
provided in this Article VIII. The provisions of Section
8.7 shall apply to any Third Party Claims covered by this
Section 8.5(g). All indemnification payments pursuant to
this Section 8.5(g) shall be reduced by any net savings of
Taxes realized by the indemnified party by reason of the
event causing such Damages and increased by any net costs
for Taxes paid or incurred by the indemnified party as a
result of the receipt of such amount, with realization of
savings in Taxes and Taxes incurred being computed in the
manner provided in this Section 8.5(g).
8.6 Cooperation. Subject to the provisions of Section 8.7,
the Indemnifying Party shall have the right, at its own expense,
to participate in the defense of any Third Party Claim, and if
said right is exercised, the parties shall cooperate in the
investigation and defense of said Third Party Claim.
8.7 Third Party Claims. Except as otherwise provided in
Sections 8.8 and 8.9, forthwith following the receipt of notice
of a Third Party Claim, the party receiving the notice of the
Third Party Claim shall (i) notify the other party of its
existence setting forth with reasonable specificity the facts and
circumstances of which such party has received notice, and (ii)
if the party giving such notice is an Indemnified Party,
specifying the basis hereunder upon which the Indemnified Party's
claim for indemnification is asserted. The Indemnified Party
may, upon reasonable notice, tender the defense of a Third Party
Claim to the Indemnifying Party. If within thirty (30) days
after the date on which written notice of a Third Party Claim has
been given pursuant to this Section 8.7, the Indemnifying Party
shall acknowledge its indemnification obligations as provided in
this Article VIII in writing to the Indemnified Party and accept
the defense thereof (provided, that, if the Indemnifying Party
does not accept the defense of such Third Party Claim, it shall
so notify the Indemnified Party in sufficient time such that it
is not prejudiced thereby), then, except as hereinafter provided,
the Indemnified Party shall not, and the Indemnifying Party
shall, have the right to contest, defend, litigate or settle such
Third Party Claim. The Indemnified Party shall have the right to
be represented by counsel at its own expense in any such contest,
defense, litigation or settlement conducted by the Indemnifying
Party provided that the Indemnified Party shall be entitled to
reimbursement therefor if the Indemnifying Party shall lose its
right to contest, defend, litigate and settle the Third Party
Claim as herein provided. The Indemnifying Party shall lose its
right to contest, defend, litigate and settle the Third Party
Claim if it shall fail to diligently contest the Third Party
Claim. So long as the Indemnifying Party has not lost its right
and/or obligation to contest, defend, litigate and settle as
herein provided, the Indemnifying Party shall have the exclusive
right to contest, defend and litigate the Third Party Claim and
shall have the exclusive right, in its discretion exercised in
good faith, and upon the advice of counsel, to settle any such
matter, either before or after the initiation of litigation, at
such time and upon such terms as it deems fair and reasonable,
provided that at least ten (10) days prior to any such
settlement, written notice of its intention to settle shall be
given to the Indemnified Party; provided, that, (i) Parent shall
not agree to any settlement that affects the Business or the
manner in which it is conducted following the Closing without
Holdings' consent, which may not be unreasonably withheld or
delayed and (ii) the Indemnifying Party will not have the right
to conduct the defense if under applicable standards of
professional conduct a conflict on any significant issue between
the Indemnifying Party and any Indemnified Party exists in
respect of such claim, in which event the Indemnifying Party
shall reimburse the Indemnified Party for the reasonable fees and
expenses of one additional counsel to be retained in connection
with such defense in order to resolve such conflict, promptly
upon presentation by the Indemnified Party of invoices or other
documentation evidencing such amounts to be reimbursed. All
expenses (including without limitation attorneys' fees) incurred
by the Indemnifying Party in connection with the foregoing shall
be paid by the Indemnifying Party. No failure by an Indemnifying
Party to acknowledge in writing its indemnification obligations
under this Article VIII shall relieve it of such obligations to
the extent they exist. If an Indemnified Party is entitled to
indemnification against a Third Party Claim, and the Indemnifying
Party fails to accept a tender of, or assume the defense of a
Third Party Claim pursuant to the second sentence of this Section
8.7, or if, in accordance with the foregoing, the Indemnifying
Party shall lose its right to contest, defend, litigate and
settle such a Third Party Claim, the Indemnified Party shall have
the right, without prejudice to its right of indemnification
hereunder, in its discretion exercised in good faith and upon the
advice of counsel, to contest, defend and litigate such Third
Party Claim, and may settle such Third Party Claim, either before
or after the initiation of litigation, at such time and upon such
terms as the Indemnified Party deems fair and reasonable,
provided that at least ten (10) days prior to any such
settlement, written notice of its intention to settle is given to
the Indemnifying Party and the Indemnifying Party shall have
granted its approval therefor, which approval shall not be
unreasonably withheld or delayed. If, pursuant to this Section
8.7, the Indemnified Party so contests, defends, litigates or
settles a Third Party Claim for which it is entitled to
indemnification hereunder, as hereinabove provided, the
Indemnified Party shall be reimbursed by the Indemnifying Party
for the reasonable attorneys' fees and other expenses of
defending, contesting, litigating and/or settling the Third Party
claim which are incurred from time to time, forthwith following
the presentation to the Indemnifying Party of itemized bills for
said attorneys' fees and other expenses.
8.8 Environmental Indemnities. Upon any Holdings
Indemnitee becoming aware of the occurrence of any event or the
existence of any state of facts in respect of which the Holdings
Indemnitee will seek indemnification with respect to a claim for
breach of any of the representations and warranties contained in
Section 2.3(t) or, without limiting the generality of Section
2.3(t), an Excluded Liability under Section 1.6(k) (an
"Environmental Claim"), and thereafter:
(a) Holdings will give to Parent prompt notice
specifying in reasonable detail the basis for the
Environmental Claim;
(b) to the extent that so doing will not result in the
loss of any legal privilege otherwise available to Holdings,
Holdings will promptly deliver to Parent copies of all draft
and final environmental reports, studies, surveys, test data
and reports, assessments, cost estimates and all other
information available to it relating to or supporting the
Environmental Claim;
(c) Holdings and the New Subsidiaries will permit
representatives of Parent (including advisors and
consultants) to visit and inspect from time to time any of
the properties to which the Environmental Claim relates, and
to enter on such properties from time to time for the
purpose of conducting such environmental tests as Parent may
reasonably desire with respect to the Environmental Claim,
all during normal business hours and at Parent's expense;
(d) unless required to do so by applicable law, no
Holdings Indemnitee shall give notice to any governmental
authority of the event or of the existence of the state of
facts that may give rise to an Environmental Claim without
the prior written consent of Parent, which consent shall not
unreasonably be withheld, and in any event the Holdings
Indemnitee shall give Parent reasonable prior written notice
of any discussions or communications between any Holdings
Indemnitee (or representative or advisor thereof) and any
governmental authority relating to the Environmental Claim
and Parent shall be entitled to participate in such
discussions or communications;
(e) Holdings shall cause to be furnished to Parent
drafts of all proposed remediation plans not less than ten
business days prior to the date on which they are required
to be submitted to any applicable governmental authorities,
give Parent a reasonable opportunity to comment on such
draft plans, and give due and reasonable consideration to
all changes proposed by Parent or its representatives
thereto except to the extent such changes would be
inconsistent with existing law;
(f) without limiting the generality of paragraphs (a)
through (f) above, except in the case of an emergency
involving a significant threat to public health or the
environment or in a circumstance where action is required by
law, Holdings shall not undertake any remedial or other
action in respect of the Environmental Claim without the
prior written consent of Parent, which consent shall not
unreasonably be withheld.
8.9 Tax Indemnities. In the case of any indemnity relating
to Taxes except under Section 8.5(g), the person against which
the taxing jurisdiction asserts liability (whether as taxpayer,
transferee or otherwise) shall be responsible for handling and
controlling all administrative proceedings and litigation
relating to such Taxes. If the taxing authority asserts
liability against both parties, the Indemnitee shall be
responsible for handling and controlling administrative
proceedings and litigation relating to such Taxes. At its own
expense, the Indemnitor shall have the right to participate in
any proceedings so controlled by the Indemnitee and to review all
correspondence with the taxing authority relating to such
proceedings. The Indemnitee shall not settle any such matter
without the prior consent of the Indemnitor, but the Indemnitor
shall not unreasonably withhold such consent. At any time,
Parent or any Subsidiary may opt out of settling its share of any
such settlement.
8.10 Indemnification Exclusive Remedy. Except for claims or
causes of action based on fraud, indemnification pursuant to the
provisions of this Article VIII shall following the Closing be
the exclusive remedy of the parties for any misrepresentation or
breach of any warranty or covenant contained herein or in any
closing document executed and delivered pursuant to the
provisions hereof. Without limiting the generality of the
preceding sentence, following the Closing (i) no legal action
sounding in contribution, tort or strict liability may be
maintained by any party hereto (or a Holdings Indemnitee or
Parent Indemnitee not a party hereto) against any other party
hereto with respect to any matter that is the subject of this
Article VIII (including with respect to each of the failure to
discharge any Excluded Liability or any Environmental Claim),
(ii) Holdings, for itself and the other Holdings Indemnitees,
hereby waives any and all statutory rights of contribution or
indemnification that any of them might otherwise be entitled to
under any federal, state or local law, including legal action
pursuant to the Comprehensive Environmental Response,
Compensation and Liability Act or any analogous state or local
law, regulation or ordinance or any similar rules of law embodied
in the common law and (iii) the only action which may be asserted
by any Holdings Indemnitee with respect to any Environmental
Claim shall be a contract action to enforce, or to recover
Damages pursuant to this Article VIII. Nothing herein contained
shall limit Parent's right (although it shall not have any
obligation) to pursue (whether separately, simultaneously or in
seriatim) recovery under one or more of the insurance policies
maintained by Holdings pursuant to Section 6.7 hereof, Parent's
own insurance policies or this Article VIII. The pursuit of one
or more of such remedies by Parent shall not be deemed to be a
waiver of the right to pursue any other remedy. Nothing herein
shall limit a Holdings Indemnitee's right to substitution or join
Parent or any Subsidiary in any action or proceeding relating to
an Excluded Liability.
8.11 Tax Treatment. All amounts paid pursuant to this
Article VIII shall be treated as included in, or as adjustments
to, the Consideration described in Section 1.9 for all Tax
purposes.
ARTICLE IX
Effect of Termination/Proceeding
9.1 General. The parties shall have the rights and
remedies with respect to the termination and/or enforcement of
this Agreement which are set forth in this Article IX.
9.2 Right to Terminate. This Agreement and the transaction
contemplated hereby may be terminated at any time prior to the
Closing:
(a) by the mutual written consent of Holdings and
Parent;
(b) by prompt notice given in accordance with
Section 10.5, by either of such parties if the Closing shall
not have occurred at or before 11:59 p.m. on July 1, 1999;
provided, however, that the right to terminate this
Agreement under this Section 9.2(b) shall not be available
to any party whose failure to fulfill any of its obligations
under this Agreement has been the cause of or resulted in
the failure of the Closing to occur on or prior to the
aforesaid date;
(c) by the party entitled to the benefit thereof, if
any condition set forth in Section 4.1 or Section 4.2 shall
become impossible to fulfill;
(d) by the Holdings if the Bank Consent shall not have
been obtained by July 1, 1999.
The party desiring to terminate this Agreement shall give written
notice of such termination to the other party.
9.3 Certain Effects of Termination. In the event of the
termination of this Agreement by either Parent or Holdings as
provided in Section 9.2:
(a) each party, if so requested by the other party,
will return promptly every document furnished to it by the
other party (or any subsidiary, division, associate or
Affiliate of such other party) in connection with the
transaction contemplated hereby, whether so obtained before
or after the execution of this Agreement, and any copies
thereof (except for copies of documents publicly available)
which may have been made, and will use reasonable efforts to
cause its representatives and any representatives of
financial institutions and investors and others to whom such
documents were furnished promptly to return such documents
and any copies thereof any of them may have made;
(b) the Confidentiality Letter shall remain in effect
notwithstanding any provision to the contrary contained
therein with respect to the execution of a definitive
purchase agreement; and
(c) Parent shall pay Holdings' reasonable documented
out of pocket expenses incurred in connection with this
Agreement and the Transactions, but in no event an amount
greater than $2,000,000 (the "Termination Fee") if this
Agreement is terminated pursuant to Section 9.2(d);
(d) Any payment required to be made pursuant to
Section 9.3(c) hereof shall be made not later than five
business days after all conditions giving rise to the
obligation to pay such fee under Section 9.3(c) have been
met. All payments under this Section 9.3 shall be made by
wire transfer of immediately available funds to an account
designated by Holdings.
This Section 9.3 shall survive any termination of this Agreement.
9.4 Remedies. Notwithstanding any termination right
granted in Section 9.2, in the event of the nonfulfillment of any
condition to a party's closing obligations, in the alternative,
such party may elect to do one of the following:
(a) proceed to close despite the nonfulfillment of any
closing condition, it being understood that consummation of
the Closing shall be deemed a waiver of each breach of any
representation, warranty or covenant and of such party's
rights and remedies with respect thereto to the extent that
such party shall have actual knowledge of such breach and
the Closing shall nonetheless occur;
(b) decline to close, terminate this Agreement as
provided in Section 9.2, and thereafter seek damages to the
extent permitted in Section 9.5; or
(c) seek specific performance of the obligations of
the other party. Each party hereby agrees that in the event
of any breach by such party of this Agreement, the remedies
available to the other party at law would be inadequate and
that such party's obligations under this Agreement may be
specifically enforced.
9.5 Right to Damages. Except as provided in Section 9.3(c)
and 9.3(d), if this Agreement is terminated pursuant to Section
9.2, neither party hereto shall have any claim against the other
except if the circumstances giving rise to such termination were
caused by the other party's intentional breach of the
representations, warranties or covenants set forth herein, in
which event termination pursuant to Section 9.2 shall not be
deemed or construed as limiting or denying any legal or equitable
right or remedy of said party.
ARTICLE X
Miscellaneous
10.1 Fees. Parent shall pay all fees and expenses charged
by WP.
10.2 Sales and Transfer Taxes (other than VAT). Subject to
Sections 8.5(g) and 10.8, Holdings shall cause the Company and
the New Subsidiaries, on the one hand, and Parent shall cause the
Subsidiaries, on the other hand, to each pay one-half of all
gross receipts and gross income, sales, use, excise, stamp and
transfer and conveyance taxes and customary duties arising in
connection with the Transactions.
10.3 Definition of Reasonable Efforts. Except as otherwise
specifically provided in this Agreement, for purposes of this
Agreement, the phrases "reasonable efforts" and "reasonable
efforts to cause," when used with reference to efforts to be made
by a party hereto or any of its Affiliates:
(a) shall not require such party or any of its
Affiliates to pay or transfer any money, property or other
thing of value to any other party except nominal and routine
charges for filing or recording fees, and courier and other
communication services;
(b) shall require such party and its Affiliates to act
in good faith and with all reasonable promptness and
dispatch with respect thereto; and
(c) shall require the other party and its Affiliates
to act with all reasonable promptness and dispatch and to
cooperate in all material respects with the first party's
and its Affiliates' efforts in connection therewith.
10.4 Publicity. Except as otherwise required by law or
applicable stock exchange rules, press releases concerning this
transaction shall be made only with the prior consent of the
other party, not to be unreasonably withheld or delayed (and, in
any event, Parent and Holdings shall use all reasonable efforts
to consult and agree with each other with respect to the content
of any such required press release). The parties agree that any
such press releases may state the amount of the Consideration.
In addition, with respect to any other written publicity related
to the Transactions or otherwise related to Parent, its direct
and indirect subsidiaries (including, without limitation, the
Subsidiaries) and/or their respective businesses (including,
without limitation, the Business), each party agrees not to (and
agrees to cause its Affiliates not to) disparage the other in any
such publicity.
10.5 Notices. All notices required or permitted to be given
hereunder shall be in writing and may be delivered by hand, by
facsimile, by nationally recognized private courier, or by United
States or United Kingdom mail. Notices delivered by hand, by
facsimile, by nationally recognized private courier or by United
States or United Kingdom mail, postage prepaid, registered or
certified mail, return receipt requested, shall be deemed given
on the date of receipt; provided, however, that a notice
delivered by facsimile shall only be effective if such notice is
also delivered by hand or deposited with a nationally recognized
private courier on or before two (2) business days after its
delivery by facsimile. All notices shall be addressed as
follows:
If to Parent
Addressed to
Danka Business Systems, PLC
Xxxxxxx Xxxxx
000 Xxxxxxxxxxx Xxxx
Xxxxxx X00 0XX Xxxxxxx
Attention: Secretary
Telecopy: 011-44-171-603-8448
with copies to:
00000 Xxxxx Xxxxxx Xxxxx
Xx. Xxxxxxxxxx, Xxxxxxx 00000
Attention: Chief Executive Officer and General Counsel
Telecopier: 000-000-0000
and
Altheimer & Xxxx
00 Xxxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxxxx and Xxxxx X. Xxxxxxxxx
Telecopier: (000) 000-0000
If to Holdings
Addressed to
DSI Holdings, LLC
0000 Xxxxxxx Xxxx
Xxxxxxxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxxx
Telecopier: 000-000-0000
with copies to
SVA Limited
00 Xxxxxxxxxxx Xxxxxx
Xxxxxx XX0X 0XX
Attention: Xxx Xxxxxxx
Telecopier: 00-000-000-0000
and
XxXxxxxxx, Will & Xxxxx
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxx, XX 00000
Attention: Xxxxxx Xxxxxxx
Telecopier: (000) 000-0000
and/or to such other respective addresses and/or addressees as
may be designated by notice given in accordance with the
provisions of this Section 10.5.
10.6 Expenses. Except as set forth in Articles III, VIII or
IX, each of Parent and Holdings shall bear all fees and expenses
incurred by such party in connection with, relating to or arising
out of the execution, delivery and performance of this Agreement
and the consummation of the transaction contemplated hereby,
including, without limitation, financial advisors', attorneys',
accountants' and other professional fees and expenses. For the
purposes of this Section 10.6, fees and expenses incurred by any
Subsidiary shall be deemed to have been incurred by Parent.
10.7 Entire Agreement. This Agreement, the Holdings'
Ancillary Documents, Parent's Ancillary Documents and the
Ancillary Agreements (the Holdings' Ancillary Documents, Parent's
Ancillary Documents and the Ancillary Agreements together being
referred to herein as the "Ancillary Materials"), the
Confidentiality Letter, and that certain Agreement of even date
herewith between Holdings and Parent relating to U.K. stamp duty,
constitute the entire agreement between the parties and shall be
binding upon and inure to the benefit of the parties hereto and
their respective legal representatives, successors and permitted
assigns. The Disclosure Schedule being delivered simultaneously
herewith shall be deemed to constitute exceptions to the
representations and warranties set forth in Section 2.3 to the
extent specified in Section 2.1. Each other exhibit and schedule
shall be considered incorporated into this Agreement and the
Ancillary Materials. The inclusion of any item in the Disclosure
Schedule is not evidence of the materiality of such item for the
purposes of this Agreement and the Ancillary Materials. The
parties make no representations or warranties to each other,
except as contained in this Agreement and the Ancillary
Materials, and any and all prior representations and warranties
made by any party or its representatives, whether verbally or in
writing, are deemed to have been merged into this Agreement and
the Ancillary Materials, it being intended that no such prior
representations or warranties shall survive the execution and
delivery of this Agreement and the Ancillary Materials. Holdings
acknowledges that it has conducted an independent investigation
of the financial condition, assets, liabilities, properties and
projected operations of the Business in making its determination
as to the propriety of the transactions contemplated by this
Agreement and the Ancillary Materials, and in entering into this
Agreement and the Ancillary Materials has relied solely on the
results of said investigation and on the representations and
warranties of Parent expressly contained in this Agreement and in
the Parent's Ancillary Documents delivered by Parent pursuant to
the provisions of this Agreement. In connection with Holdings'
investigation of the Business, Holdings has received from or on
behalf of Parent certain estimates, forecasts, plans and
financial projections. Holdings acknowledges that there are
uncertainties inherent in attempting to make such estimates,
forecasts, plans and projections, that Holdings is familiar with
such uncertainties, that Holdings is taking full responsibility
for making its own evaluation of the adequacy and accuracy of all
estimates, forecasts, plans and projections so furnished to it
(including the reasonableness of the assumptions underlying such
estimates, forecasts, plans and projections), and that Holdings
shall have no claim against Parent with respect thereto.
Accordingly, Parent makes no representation or warranty with
respect to such estimates, forecasts, plans and projections
(including any such underlying assumptions). Except as provided
in Section 7.7, in the event of any inconsistency between the
provisions hereof and the provisions of any of the Ancillary
Agreements, the provisions hereof shall control.
10.8 Value Added Taxes.
(a) All sums stated in this Agreement as being payable
by the New Foreign Subsidiaries to the Foreign Subsidiaries
or vice versa are exclusive of Value Added Tax ("VAT"),
which shall be charged in addition, if applicable.
(b) Parent shall cause the Foreign Subsidiaries and
Holdings shall cause the New Foreign Subsidiaries to use
their respective reasonable efforts (which shall include,
without limitation, providing each other with such
information or assistance as the other shall reasonably
request) to procure that the transfer of the Business and
the Transferred Assets under this Agreement is treated under
Article 5(8) of the Sixth Directive (where applicable) or
any other applicable legislation made pursuant to, or
derived from, such Article (such as Article 5 of the VAT
(Special Provisions) Order 1995 in the United Kingdom) or
such other legislation as is applicable in a country which
is not a member state of the European Union as not being a
supply of goods (or a supply of services) for VAT purposes.
(c) Parent and Holdings shall agree whether or not to
make an application to any relevant Tax authority for a
confirmatory declaration that VAT is not chargeable on the
transfer of the Business and/or the Transferred Assets under
the relevant Ancillary Agreement. If the parties agree to
make such an application, Parent shall procure the
submission (as soon as possible following the aforementioned
agreement) by the relevant Foreign Subsidiary to its
relevant Tax authority of such an application. If,
notwithstanding the reasonable efforts of Parent and the
relevant Foreign Subsidiary (in these paragraphs (c) and
(d), together "Parent"), an amount of VAT is deemed by a Tax
authority to be payable in respect thereof (or in respect of
a transfer of the Business or Transferred Assets for which
an application is not made), then Parent shall notify
Holdings and the relevant New Foreign Subsidiary (in these
paragraphs (c) and (d), together "Holdings") of that
determination forthwith. The relevant New Foreign
Subsidiary shall (unless it exercises its rights under
paragraph (d) below) pay over to the relevant Foreign
Subsidiary the amount of VAT chargeable in accordance with
paragraph (e) below.
(d) Notwithstanding paragraph (e) below, if Holdings
disagrees with any determination of any Tax authority that
VAT is chargeable, it may, within 5 business days of being
so notified, give notice to Parent that it requires Parent
to obtain a review by the relevant Tax authority of that
determination and Parent shall cause the relevant Foreign
Subsidiary to forthwith request the Tax authority to
undertake that review. Upon the relevant Foreign Subsidiary
being advised by the relevant Tax authority of the decision
arising out of that review, Parent shall forthwith notify
Holdings thereof. If Holdings disagrees with that decision,
provided that it furnishes Parent with an opinion of
independent legal counsel in support of its contention that
VAT is not so chargeable, it may give notice to Parent to
make an appeal against the decision of the relevant Tax
authority (an "Appeal") in a manner as Holdings shall
reasonably request or Holdings or the relevant New
Subsidiary may itself make an Appeal as it shall consider
appropriate with such assistance from Parent as Holdings
shall reasonably request, all at Holdings' expense. If,
following the Appeal, or as a result of no Appeal being
made, an amount of VAT is payable, then the relevant New
Foreign Subsidiary shall forthwith pay over to the relevant
Foreign Subsidiary the amount of VAT chargeable in
accordance with paragraph (e) below, together with any
interest, penalties and fines payable in relation thereto.
(e) Where, pursuant to the terms of this Agreement,
one party (the "Supplying Party") makes a supply to the
other (the "Paying Party") for VAT purposes, and
(notwithstanding paragraph (b) above) VAT is properly
chargeable in respect of such supply, the Paying Party shall
within 2 days prior to the date on which the Supplying Party
is obliged to pay such sum to the relevant Tax authority,
pay to the Supplying Party (in addition to any other
consideration for such supply) a sum equal to the amount of
such VAT subject to the receipt by the Paying Party of a
valid tax invoice in respect of such supply from the
Supplying Party.
(f) If after one year following the Closing or any
Foreign Closing, a trade account receivable or note
receivable which is a Transferred Asset proves to be
uncollectible, provided VAT bad debt relief is available in
the applicable jurisdiction, Parent hereby agrees to cause
the relevant Foreign Subsidiary or an Affiliate thereof to
acquire such trade account receivable or note receivable
from the applicable New Foreign Subsidiary, in exchange for
a payment from such Foreign Subsidiary or Affiliate in an
amount equal to fifty percent (50%) of the amount of VAT
recovered by the relevant Foreign Subsidiary or Affiliate
with respect thereto in cash or by credit against future
output tax liability of such Foreign Subsidiary or
Affiliate. Any payment due by a Foreign Subsidiary or
Affiliate under this Section 10.8(f) shall be made either
within 30 days after recovery of such amount from the
relevant taxing authority in cash or, if relevant, within 30
days after the date that such Foreign Subsidiary or
Affiliate would have been liable to make a payment of VAT to
the relevant taxing authority but for the credit referred to
above.
(g) In this Agreement:
(i) "VAT" means value added tax as provided for
in Article 2, EC Council Directive 67/227 (First
Council Directive of 11 April 1967 on the harmonization
of legislation of Member States concerning turnover
taxes) and legislation supplemental thereto and any
other tax (wherever and whenever imposed and whether
imposed in substitution thereof or in addition thereto)
of a similar fiscal nature; and
(ii) the "Sixth Directive" means EC Council
Directive 77/388 (Sixth Council Directive of 17 May
1977 on the harmonization of the laws of the Member
States relating to turnover taxes - common system of
value added tax: uniform basis of assessment).
10.9 Non-Waiver. The failure in any one or more instances
of a party to insist upon performance of any of the terms,
covenants or conditions of this Agreement, to exercise any right
or privilege in this Agreement conferred, or the waiver by said
party of any breach of any of the terms, covenants or conditions
of this Agreement, shall not be construed as a subsequent waiver
of any such terms, covenants, conditions, rights or privileges,
but the same shall continue and remain in full force and effect
as if no such forbearance or waiver had occurred. Except as
provided in Section 9.4(a), no waiver shall be effective unless
it is in writing and signed by an authorized representative of
the waiving party.
10.10 Counterparts. This Agreement may be executed in
multiple counterparts, each of which shall be deemed to be an
original, and all such counterparts shall constitute but one
instrument.
10.11 Severability. The invalidity of any provision of
this Agreement or portion of a provision shall not affect the
validity of any other provision of this Agreement or the
remaining portion of the applicable provision.
10.12 Applicable Law. This Agreement shall be governed
and controlled as to validity, enforcement, interpretation,
construction, effect and in all other respects by the internal
laws of the State of New York applicable to contracts made in
that State.
10.13 Binding Effect; Benefit. This Agreement shall
inure to the benefit of and be binding upon the parties hereto,
and their successors and permitted assigns. Nothing in this
Agreement, express or implied, shall confer on any person other
than the parties hereto, and their respective successors and
permitted assigns any rights, remedies, obligations or
liabilities under or by reason of this Agreement, including,
without limitation, third party beneficiary rights.
10.14 Assignability. This Agreement shall not be
assignable by either party without the prior written consent of
the other party. Parent agrees that it shall not withhold
consent to the assignment by Holdings to members of management of
the Business of Holdings' rights and obligations in Section
1.3(a) hereof to purchase the Common Units; provided that (i)
such assignment is with respect to up to 10% of the Common Units
to be so purchased; (ii) Holdings remains obligated to purchase
at the Closing any such Common Units which are not purchased at
the Closing by such assignees; and (iii) such assignees provide
to Danka US such representations and warranties as are customary
in private placements of securities.
10.15 Amendments. This Agreement shall not be modified
or amended except pursuant to an instrument in writing executed
and delivered on behalf of each of the parties hereto.
10.16 Headings. The headings contained in this
Agreement are for convenience of reference only and shall not
affect the meaning or interpretation of this Agreement.
10.17 Governmental Reporting. Anything to the contrary
in this Agreement notwithstanding, nothing in this Agreement
shall be construed to mean that a party hereto or other person
must make or file, or cooperate in the making or filing of, any
return or report to any governmental authority in any manner that
such person or such party reasonably believes or reasonably is
advised is not in accordance with law.
10.18 Waiver of Trial by Jury. Each of the parties
hereto waives the right to a jury trial in connection with any
suit, action or proceeding seeking enforcement of such party's
rights under this Agreement.
10.19 Rule of Construction. The parties acknowledge and
agree that each has negotiated and reviewed the terms of this
Agreement, assisted by such legal and tax counsel as they
desired, and has contributed to its revisions. The parties
further agree that the rule of construction that any ambiguities
are resolved against the drafting party will be subordinated to
the principle that the terms and provisions of this Agreement
will be construed fairly as to all parties and not in favor of or
against any party. The headings contained in this Agreement are
for convenience of reference only and shall not affect the
meaning or interpretation of this Agreement. The word
"including," means "including, without limitation."
10.20 Consent to Jurisdiction. Parent and Holdings each
agrees to the exclusive jurisdiction of any state or Federal
court within the Southern District of New York, with respect to
any claim or cause of action arising under or relating to this
Agreement, and waives personal service of any and all process
upon it, and consents that all services of process be made by
registered or certified mail, return receipt requested, directed
to it at its address as set forth in Section 10.5, and service so
made shall be deemed to be completed when received. Parent and
Holdings each waives any objection based on forum non conveniens
and waives any objection to venue of any action instituted
hereunder. Nothing in this paragraph shall affect the right of
Parent or Holdings to serve legal process in any other manner
permitted by law.
10.21 Definitions. The following terms are defined in
the following sections of this Agreement:
Defined Term Where Found
Accounting Firm 1.11(c)(iii)
Acquired Rights Directive 7.1
Adjustment Date 1.11(b)
Affected Employee 7.1
Affiliate 2.2(f)
Agreement Preamble
Ancillary Agreements 1.1(c)
Ancillary Materials 10.7
Appeal 10.8(d)
Assumed Taxes 1.7(e)
Audited Annual Statements 3.2(a)
Audited 1998 Financial Statements 3.2(a)
Audited 1999 Financial Statements 3.2(a)
Bank Agent 3.2(h)
Bank Consent 3.2(h)
Banks 3.2(h)
Belgian Acquisition 1.1(c)(ii)
Bonds 3.3(c)
Building 14 1.5(v)
Business Recitals
Canadian Acquisition 1.1(c)(i)
Cash Amounts 1.4
Cleanup 2.3(t)(ix)(A)
Closing 1.10
Closing Date 1.10
Closing Date Net Working Capital 1.11(b)
Code 2.3(k)(i)
Common Units 1.3(a)
Company 1.1(b)
Company Election 3.2(c)(iii)
Competing Business 6.9(b)
Confidentiality Letter 3.3(a)
Contaminants 2.3(t)(ix)(C)
Control 2.2(f)
Consideration 1.9
Credit Agreement 3.2(h)
Customer Location 6.9(a)
Damages 8.2(a)
Danish Acquisition 1.1(c)(iii)
Danka Belgium 1.1(c)(ii)
Danka Canada 1.1(c)(i)
Danka Denmark 1.1(c)(iii)
Danka France 1.1(c)(iv)
Danka Germany 1.1(c)(v)
Danka Italy 1.1(c)(vi)
Danka Netherlands 1.1(c)(vii)
Danka Norway 1.1(c)(ix)
Danka Sweden 1.1(c)(viii)
Danka UK 1.1(c)(x)
Danka US 1.1(a)
Date Data 2.3(w)(iii)
Date-Sensitive System 2.3(w)(iii)
Debt Financing 2.2(h)
Demand Notes 1.1(c)
Disclosure Schedule 2.1
Disputed Amount 1.11(c)(i)
Dutch Acquisition 1.1(c)(vii)
EBIT 4.2(h)(i)
Employment Loss 2.3(p)(xi)
Enterprise Value 1.9
Environmental Claim 8.8
Environmental Laws 2.3(t)(ix)(B)
Environmental Permit 2.3(t)(i)
Equity Financing 2.2(g)
ERISA 2.3(p)(i)
ERISA Affiliate 2.3(p)(i)
European Filings 2.2(c)
Excluded Assets 1.5
Excluded Liabilities 1.8
Execution Date Preamble
Extremely hazardous substances 2.3(t)(ix)(C)
Financial Statements 2.3(g)
Fixed Assets 1.5(b)
Foreign Closing 1.10
Foreign Closing Date 1.10
Foreign Subsidiaries 1.1(c)
French Acquisition 1.1(c)(iv)
GAAP 1.7(a)
German Acquisition 1.1(c)(v)
Xxxx-Xxxxx-Xxxxxx Act 2.2(i)
Hazardous materials 2.3(t)(ix)(C)
Hazardous substances 2.3(t)(ix)(C)
Hazardous wastes 2.3(t)(ix)(C)
Holdings Preamble
Holdings Indemnitees 8.3
Holdings' Ancillary Documents 2.2(b)
Holdings' 401(k) Plan 7.4
Hypothetical Tax 1.12
Including 10.19
Indemnified Party 8.2(b)
Indemnifying Party 8.2(c)
Intellectual Property 1.5(j)
Intellectual Property Licenses 2.3(v)(v)
Intercompany Accounts 1.6(c)
Inventory 1.5(a)
Italian Acquisition 1.1(c)(vi)
Joint Claims 1.5(r)
KIS 1.1(e)
Kodak Receivable Amount 1.6(n)
KPMG 1.11(b)
Leased Premises 1.5(d)
Liens 2.3(j)
Mass layoff 2.3(p)(xi)
Material Adverse Effect 2.3(b)
Material Consents 3.2(d)
Material Foreign Subsidiaries 1.1
Material Contracts 2.3(m)
Material Permits 3.2(e)
Membership Interest Purchase Agreement 1.3(a)
Net Working Capital 1.11(a)
New Foreign Subsidiaries 1.1(c)
New Group RRSP 7.7
New Pension Plan 7.7
New Subsidiaries 1.1(c)
New U.S. Subsidiary 1.1(a)
Non-U.S. Plans 2.3(p)(vii)
Norwegian Acquisition 1.1(c)(ix)
Parent Preamble
Parent Indemnitees 8.5
Parent Recommendation 3.2(j)
Parent's Ancillary Documents 2.3(c)
Paying Party 10.8(e)
PBGC 2.3(p)(iii)
Pension Plans 2.3(p)(i)
Permits 2.3(o)
Permitted Liabilities 1.7
Permitted Liens 2.3(j)
Plant Closing 2.3(p)(xi)
Pollutants 2.3(t)(ix)(C)
Preferred Units 1.3(a)
Proceeds 1.2(a)
Property Taxes 1.7(e)
Proprietary Software 2.3(v)(iv)
Purchase Transactions 1.3
PWC 1.11(b)
Reasonable efforts 10.3
Reasonable efforts to cause 10.3
Recapitalization Transactions 1.2
Release 2.3(t)(ix)(D)
Relevant Agency 3.3(g)
Reorganization Transactions 1.1
Restricted hazardous materials 2.3(t)(ix)(C)
Single employer 2.3(p)(i)
Sixth Directive 10.8(g)(ii)
Software 2.3(v)
Solicitation 6.9(b)
Statement 1.11(b)
Subsidiary Ancillary Documents 2.3(c)
Subsidiaries 1.1(c)
Supplying Party 10.8(e)
Swedish Acquisition 1.1(c)(viii)
Tax 2.3(k)(i)
Taxes 2.3(k)(i)
Termination Fee 9.3(c)
Third Party Claim 8.2(d)
Toxic substances 2.3(t)(ix)(C)
Transactions 1.3
Transferred Assets 1.5
Transferred Employee 7.1
UK Acquisition 1.1(c)(x)
U.S. Business 1.1(c)
U.S. Transferred Assets 1.9
Unassigned Assets 6.7
United States real property interest 2.3(k)(vii)
VAT 10.8(g)(i)
WARN Act 1.8(g)
Welfare Plans 2.3(p)(ii)
WP 2.3(z)
Year 2000 Compliant 2.3(w)(iii)
IN WITNESS WHEREOF, the parties have executed this
Transaction Agreement on the date first above written.
DANKA BUSINESS SYSTEMS, PLC
By: ___________________________
Its: _______________________
KIS HOLDINGS, LLC
By: ___________________________
Its: _______________________
