EXECUTION COPY
ASSET PURCHASE AGREEMENT
DATED JUNE 17, 1999,
AMONG
DANKA OFFICE IMAGING COMPANY, AS SELLER
DANKA HOLDING COMPANY
AND
XEROX CORPORATION, AS PURCHASER
TABLE OF CONTENTS
[Not part of this Agreement]
ARTICLE I Purchase and Sale of Assets . . . . . . . . . . .1
1.1 Agreement to Purchase and Sell. . . . . . . . . .1
1.2 Enumeration of Purchased Assets . . . . . . . . .2
1.3 Real Estate and Intellectual Property . . . . . .4
1.4 Excluded Assets . . . . . . . . . . . . . . . . .4
ARTICLE II Assumption of Liabilities . . . . . . . . . . . .6
2.1 Agreement to Assume . . . . . . . . . . . . . . .6
2.2 Description of Assumed Liabilities. . . . . . .6
2.3 Excluded Liabilities. . . . . . . . . . . . . . .7
ARTICLE III Purchase Price, Manner of Payment and
Closing . . . . . . . . . . . . . . . . . . . . .9
3.1 Purchase Price. . . . . . . . . . . . . . . . . .9
3.2 Allocation of Purchase Price
and the Consideration . . . . . . . . . . . . . .9
3.3 Time and Place of Closing . . . . . . . . . . . 10
3.4 Manner of Payment of the Purchase Price . . . . 10
3.5 Purchase Price Adjustment . . . . . . . . . . . 11
ARTICLE IV Representations and Warranties. . . . . . . . . 13
4.1 General Statement . . . . . . . . . . . . . . . 13
4.2 Purchaser's Representations and Warranties. . . 13
4.3 Seller's Representations and Warranties . . . . 14
4.4 Limitation on Warranties. . . . . . . . . . . . 29
4.5 Definition of Knowledge . . . . . . . . . . . . 29
ARTICLE V Conduct Prior to the Closing. . . . . . . . . . 30
5.1 General . . . . . . . . . . . . . . . . . . . . 30
5.2 Seller's Obligations. . . . . . . . . . . . . . 30
5.3 Purchaser's Obligations . . . . . . . . . . . . 31
5.4 Joint Obligations . . . . . . . . . . . . . . . 32
ARTICLE VI Conditions to Closing . . . . . . . . . . . . . 34
6.1 Conditions to Seller's Obligations. . . . . . . 34
6.2 Conditions to Purchaser's Obligations . . . . . 34
ARTICLE VII Closing . . . . . . . . . . . . . . . . . . . . 35
7.1 Form of Documents . . . . . . . . . . . . . . . 35
7.2 Purchaser's Deliveries at the Closing . . . . . 35
7.3 Seller's, DBS's and Holdings' Deliveries at the
Closing . . . . . . . . . . . . . . . . . . . . 36
ARTICLE VIII Post-Closing Agreements . . . . . . . . . . . . 39
8.1 Post-Closing Agreements . . . . . . . . . . . . 39
8.2 Inspection of Records . . . . . . . . . . . . . 39
8.3 Certain Tax Matters . . . . . . . . . . . . . . 39
8.4 Use of Trademarks; References to Seller . . . . 41
8.5 Payments of Accounts Receivable . . . . . . . . 41
8.6 Third Party Claims. . . . . . . . . . . . . . . 41
8.7 Products Liability Insurance. . . . . . . . . . 41
8.8 Post Closing Services . . . . . . . . . . . . . 41
8.9 Non-Assignment. . . . . . . . . . . . . . . . . 43
8.10 Use of Seller's Trademarks. . . . . . . . . . . 44
8.11 Non-Solicitation. . . . . . . . . . . . . . . . 44
8.12 Further Assurances. . . . . . . . . . . . . . . 45
ARTICLE IX Employees and Employee Benefit Plans. . . . . . 45
9.1 Employment of Seller's Employees. . . . . . . . 45
9.2 Welfare Benefits. . . . . . . . . . . . . . . . 46
9.3 401(k) Plan . . . . . . . . . . . . . . . . . . 46
9.4 Liabilities Accrued Prior to Closing. . . . . . 46
9.5 Vacation. . . . . . . . . . . . . . . . . . . . 47
ARTICLE X Indemnification . . . . . . . . . . . . . . . . 47
10.1 General . . . . . . . . . . . . . . . . . . . . 47
10.2 Certain Definitions . . . . . . . . . . . . . . 47
10.3 Indemnification Obligations of Seller . . . . . 47
10.4 Limitation on Seller's Indemnification
Obligations . . . . . . . . . . . . . . . . . . 48
10.5 Purchaser's Indemnification Covenants . . . . . 50
10.6 Cooperation . . . . . . . . . . . . . . . . . . 51
10.7 Third Party Claims. . . . . . . . . . . . . . . 51
10.8 Environmental Indemnities . . . . . . . . . . . 53
10.9 Tax Indemnities . . . . . . . . . . . . . . . . 53
10.10 Indemnification Exclusive Remedy. . . . . . . . 54
ARTICLE XI Effect of Termination/Proceeding. . . . . . . . 54
11.1 General . . . . . . . . . . . . . . . . . . . . 54
11.2 Right to Terminate. . . . . . . . . . . . . . . 54
11.3 Certain Effects of Termination. . . . . . . . . 55
11.4 Remedies. . . . . . . . . . . . . . . . . . . . 56
11.5 Right to Damages. . . . . . . . . . . . . . . . 56
ARTICLE XII Miscellaneous . . . . . . . . . . . . . . . . . 56
12.1 Fees. . . . . . . . . . . . . . . . . . . . . . 56
12.2 Sales and Transfer Taxes. . . . . . . . . . . . 56
12.3 Definition of Reasonable Efforts . . . . . . . 57
12.4 Publicity . . . . . . . . . . . . . . . . . . . 57
12.5 Notices . . . . . . . . . . . . . . . . . . . . 57
12.6 Expenses. . . . . . . . . . . . . . . . . . . . 58
12.7 Entire Agreement. . . . . . . . . . . . . . . . 58
12.8 Non-Waiver. . . . . . . . . . . . . . . . . . . 59
12.9 Counterparts. . . . . . . . . . . . . . . . . . 59
12.10 Severability. . . . . . . . . . . . . . . . . . 59
12.11 Applicable Law. . . . . . . . . . . . . . . . . 59
12.12 Binding Effect; Benefit.. . . . . . . . . . . . 59
12.13 Assignability . . . . . . . . . . . . . . . . . 60
12.14 Amendments. . . . . . . . . . . . . . . . . . . 60
12.15 Headings. . . . . . . . . . . . . . . . . . . . 60
12.16 Governmental Reporting. . . . . . . . . . . . . 60
12.17 Waiver of Trial by Jury . . . . . . . . . . . . 60
12.18 Rule of Construction. . . . . . . . . . . . . . 60
12.19 Consent to Jurisdiction . . . . . . . . . . . . 60
12.20 Definitions . . . . . . . . . . . . . . . . . . 61
EXHIBITS
Exhibit A - Material Consents
Exhibit B - Permits
Exhibit C - Opinion of Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
and Xxxxxx Xxxxxx
Exhibit D - Opinion of Altheimer & Xxxx
Exhibit E - Opinion of Xxxxxxxx Chance
SCHEDULES
Disclosure Schedule
Schedule 1.4(l) - Excluded Agreements
Schedule 1.4(m) - Schedule of Other Excluded Assets
Schedule 2.2(c) - Assumed Change of Control Benefits
Schedule 3.2 - Allocation of Cash Amount
Schedule 3.5 - Accounting Methods
Schedule 5.3(c) - Bonds
ASSET PURCHASE AGREEMENT
THIS AGREEMENT is made June 17, 1999 (the "Execution Date"),
among DANKA OFFICE IMAGING COMPANY, a Delaware corporation
("Seller"), DANKA HOLDING COMPANY, a Delaware corporation
("Holdings"), and Xerox Corporation, a New York corporation
("Purchaser").
R E C I T A L S
A. Seller, through its so-called Omnifax, dex Business
Systems and EBS Divisions, refurbishes, distributes and services
facsimile machines and remanufactures and sells toner cartridges
and other consumables for facsimile machines. The business of
Seller of refurbishing, distributing and servicing facsimile
machines and remanufacturing and selling toner cartridges and
other consumables for facsimile machines, through such Divisions,
is herein referred to as the "Business." Holdings owns certain
real estate used by Seller primarily in the Business and certain
intellectual property used primarily in the Business.
B. Seller desires to sell to Purchaser all of Seller's
assets used exclusively in the Business as well as those assets
used primarily in or relating primarily to the Business and its
operation, Holdings desires to sell such real estate and
intellectual property used exclusively in the Business as well as
that Real Estate and Intellectual Property (each as herein
defined) used primarily in or relating primarily to the Business
to Purchaser, and Purchaser desires to purchase said assets, all
on the terms and subject to the conditions contained in this
Agreement.
X. Xxxxx Business Systems, PLC ("DBS") desires to
guarantee the performance of all of Seller's and Holdings'
obligations under this Agreement.
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
Purchase and Sale of Assets
1.1 Agreement to Purchase and Sell. On the terms and
subject to the conditions contained in this Agreement,
(a) Purchaser agrees to purchase from Seller, and
Seller agrees to sell to Purchaser, the assets, properties
and rights as of the Closing Date (as herein defined),
wherever situated or located, of Seller which are used
exclusively in or relate exclusively to the conduct of the
Business as well as those assets which are used primarily in
or relate primarily to the conduct of the Business or which
are described in Section 1.2 (the "Purchased Assets"), free
and clear of Liens (as defined herein) other than Permitted
Liens (as defined herein). Without limiting the generality
of the foregoing, the Purchased Assets shall not include any
of the assets, properties and rights described in Section
1.4 (the "Excluded Assets");
(b) Purchaser agrees to purchase from Holdings, and
Holdings agrees to sell to Purchaser, the real estate owned
by Holdings which is described in Section 1.3 (the "Real
Estate") and the intellectual property owned by Holdings
which is used primarily in the Business and described in
Section 1.3 (the "Holdings Intellectual Property"); and
(c) Purchaser agrees to purchase from Danka Group B.V.
the Intellectual Property owned by Danka Group B.V. which is
used primarily in the Business.
1.2 Enumeration of Purchased Assets. The Purchased Assets
shall include without limitation the following assets owned by
Seller and all of the tangible personal property used exclusively
in the Business as well as those assets used primarily in the
Business, and, in each case, all of Seller's right, title and
interest thereto, except to the extent that any of the foregoing
are also enumerated in Section 1.4 as being Excluded Assets:
(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) (the "Inventories");
(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;
(c) all leasehold interests and leasehold improvements
created by all leases, including, without limitation,
capitalized leases, of personal property used primarily in
connection with the Business under which Seller is a lessee
or lessor;
(d) Seller's entire leasehold interest as lessee of
real property used primarily in connection with the Business
(the "Leased Premises");
(e) all trade accounts receivable, notes receivable
(including with respect to leases of equipment), negotiable
instruments and chattel paper received as a result of the
conduct of the Business (excluding accounts receivable from
Seller and its Affiliates included in the Intercompany
Accounts) (the "Accounts Receivable");
(f) all deposits and rights with respect thereto in
connection with the Business;
(g) subject to Section 8.9, 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 8.9, all license agreements,
distribution agreements, sales representative agreements,
service agreements, supply agreements, franchise agreements,
computer software leases, licenses (including the so-called
"OMD" software license) and agreements and technical
service agreements relating primarily to the Business;
(j) all customer lists, customer records and
information relating primarily to the Business;
(k) 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;
(l) all rights in connection with prepaid expenses
with respect to the Purchased Assets (the "Prepaids");
(m) all letters of credit issued to Seller relating
primarily to the Business;
(n) all sales and promotional materials, catalogues
and advertising literature relating primarily to the
Business;
(o) all telephone numbers and telephone directories
relating primarily to the Business and all lock boxes
relating primarily to the Business to which Seller's account
debtors remit payments;
(p) except as provided in Section 1.4(p) all
intellectual property rights used by Seller primarily in or
relating primarily to the Business or its operations
(collectively with the Holdings Intellectual Property, the
"Intellectual Property") (including, without limitation,
U.S. and foreign patents and applications therefor,
know-how, unpatented inventions, trade secrets, secret
formulas, customer and supplier lists, 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) and all goodwill associated
with such intellectual property rights;
(q) all rights (including claims) related primarily to
the Purchased Assets or Assumed Liabilities; and
(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 Purchased Assets or the Assumed Liabilities; provided
that notwithstanding the inclusion of the foregoing rights,
Seller shall continue to enjoy all rights in and to such
claims, rights of indemnification and causes of action,
together with Purchaser, 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 Seller and Purchaser ("Joint Claims"),
Seller and Purchaser 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;
1.3 Real Estate and Intellectual Property. The Real Estate
and Intellectual Property to be sold by Holdings shall consist of
the following:
(a) the Real Estate shall consist of that certain real
property commonly known as Xxxx X-00, 0000 XX 000xx Xxxxxx,
Xxxxx, Xxxxxxx and all appurtenances, easements and other
rights, buildings and other improvements located thereon;
(b) the Holdings Intellectual Property shall consist
of all intellectual property rights, if any, of Holdings,
used primarily in or relating primarily to the Business or
its operations (including, without limitation, all
trademarks, designs, service marks, Internet domain names,
trade or business names, trade dress and slogans (and all
registrations of any of the foregoing, and all applications
for registration thereof), Software (as herein defined),
licenses and rights with respect to the foregoing and all
goodwill associated with such intellectual property rights.
1.4 Excluded Assets. The Excluded Assets shall consist of
the following items:
(a) all cash on hand and in banks and cash equivalents
(exclusive of letters of credit issued by customers of
Seller), and marketable securities and the like;
(b) Seller's bank accounts (exclusive of the lock box
accounts referred to in Section 1.2(o)), checkbooks and
canceled checks;
(c) all contracts with, and claims and rights against,
Seller or any of Seller's Affiliates (as herein defined)
including those included in the accounts maintained by
Seller in accordance with its customary practices, in which
there are recorded or reflected the amounts owed by any
business of Seller or any of its Affiliates to the Business
or by the Business to any business of Seller or any of its
Affiliates, attributable to intercompany transactions (the
"Intercompany Accounts");
(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
Purchased Assets or the Assumed Liabilities (as herein
defined), 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 Seller and rights in
connection therewith;
(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 Seller or its predecessors;
(h) deposits of Seller, Holdings or their predecessors
with any federal, state, local or foreign tax authorities,
including, without limitation, tax deposits, prepayments and
estimated payments;
(i) except as provided in Section 1.2(r) and
notwithstanding Section 1.4(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
Seller 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) Seller's rights under this Agreement;
(k) Seller's or Holdings' corporate charter, minute
and stock record books, and corporate seal, 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
1.4(l);
(m) the assets, if any, described on Schedule 1.4(m);
(n) all assets and properties of Seller used, but not
primarily, in the conduct of Business;
(o) all assets of Holdings not specifically enumerated
in Section 1.3; and
(p) all intellectual property rights and any
associated goodwill of Seller or Holdings related to the
xxxx "Danka" and any name or xxxx which consists of or
contains the name "Danka", provided, however, that Purchaser
shall acquire the exclusive right to use any such marks used
primarily in the Business by deleting the name "Danka"
therefrom.
ARTICLE II
Assumption of Liabilities
2.1 Agreement to Assume. At the Closing (as herein
defined), Purchaser shall assume and agree to discharge and
perform when due, the liabilities and obligations of Seller with
respect to the Business which are described in Section 2.2 (the
"Assumed Liabilities"). All liabilities and obligations of
Seller enumerated in Section 2.3 are collectively referred to
herein as "Excluded Liabilities." Purchaser shall not assume,
and Seller shall remain liable for, the Excluded Liabilities.
2.2 Description of Assumed Liabilities. The Assumed
Liabilities shall consist of the following, and only the
following, liabilities of Seller with respect to the Business:
(a) accounts payable as of the Closing Date (as herein
defined) which are required to be set forth on a balance
sheet of the Business in accordance with U.S. generally
accepted accounting principles ("GAAP") applied in a manner
consistent with the Financial Statements and in accordance
with Schedule 3.5, excluding accounts payable to Seller and
its Affiliates under the Intercompany Accounts (the accounts
payable as to which liability is to be assumed being
referred to as the "Assumed Trade Debts");
(b) all accrued and unpaid expenses as of the Closing
Date which are required to be set forth on a balance sheet
of the Business in accordance with GAAP applied in a manner
consistent with the Financial Statements and in accordance
with Schedule 3.5, including, without limitation, accrued
vendor payables and accrued salaries, wages, payroll taxes,
bonuses, vacation pay and other employee benefits with
respect to those employees and former employees of Seller
who become employees of Purchaser immediately after the
Closing (such accrued salaries, wages, payroll taxes,
bonuses, vacation pay and other employee benefits being the
"Accrued Employee Expenses"), but excluding all accrued and
unpaid expenses payable to Seller under the Intercompany
Accounts and all Taxes, except to the extent properly
includible in Accrued Employee Expenses or accrued vendor
payables;
(c) liabilities arising after the Closing Date of
Seller under any written purchase order, sales order, lease,
agreement or commitment of any kind by which Seller is
bound, which is assigned to Purchaser and which is set forth
in the Disclosure Schedule (or which is not required to be
set forth thereon) pursuant to this Agreement (including,
without limitation, change in control severance benefits
under those agreements listed in Schedule 2.2(c));
(d) liabilities of Seller 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 Seller prior to the Closing Date to the extent
such liabilities relate to the conduct of the Business;
(e) all liabilities with respect to real estate,
personal property or similar ad valorem Taxes arising out of
the ownership or the operation of the Business for the
taxable period during which the Closing Date occurs (the
"Property Taxes") 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 (the product of the Property Taxes multiplied by such
fraction being referred to herein as the "Assumed Taxes").
It is understood and agreed that the Assumed Taxes shall not
include that portion of sales and transfer taxes payable
pursuant to Section 12.2 by Seller. The Assumed Taxes shall
be treated as an Assumed Liability, irrespective of whether,
at the time of Closing, liability for the Property Taxes has
attached, or whether such Property Taxes have become payable
or have been paid by Seller or Holdings;
(f) product warranty liabilities of Seller with
respect to products shipped on or prior to the Closing Date
and products constituting finished goods inventory as of the
Closing Date;
(g) liabilities with respect to returns or allowances
of products which were sold on or prior to the Closing Date
or which constitute finished goods inventory as of the
Closing Date; and
(h) all liabilities arising out of the obligations
assumed by Purchaser in Article IX hereof or in the
Purchaser's Ancillary Documents.
2.3 Excluded Liabilities. Notwithstanding Section 2.2 (and
without implication that Purchaser is assuming any liability not
expressly excluded by this Section 2.3 and, where applicable,
without implication that any of the following would constitute
Assumed Liabilities but for the provisions of this Section 2.3),
the following claims against and liabilities of Seller are
excluded and shall not be assumed or discharged by Purchaser and
Seller shall be solely and exclusively liable and responsible for
all debts, obligations, contracts or liabilities, whether known
or unknown, contingent or otherwise, which arise out of the
conduct of the Business prior to the Closing which are not
Assumed Liabilities (the "Excluded Liabilities") including,
without limitation, the following:
(a) except as provided in Section 2.2(h), any
liabilities to Seller or any of Seller's Affiliates (as
herein defined) (including any liability reflected in the
Intercompany Accounts);
(b) any liabilities for legal, accounting, audit and
investment banking fees, brokerage commissions, and any
other expenses incurred by Seller in connection with the
negotiation and preparation of this Agreement and the sale
of the Purchased Assets to Purchaser;
(c) any liabilities of any of Seller or any of its
Affiliates, including Seller's predecessors, for Taxes,
irrespective of the manner in which such Taxes are reflected
on the financial statements of Seller, other than the
Assumed Taxes, payroll taxes or any Taxes in accrued vendor
payables included in Section 2.2(b) and that portion of
sales and transfer taxes payable pursuant to Section 12.2 by
Purchaser;
(d) any liability for or related to indebtedness of
Seller to banks, financial institutions or other persons or
entities with respect to borrowed money or otherwise;
(e) any liabilities of Seller under those leases,
contracts, insurance policies, commitments, sales orders,
purchase orders, Permits and Environmental Permits which are
Assumed Liabilities, subject, however, to the provisions of
Section 8.9;
(f) any liabilities of Seller to pay severance
benefits which arise by virtue of the sale of the Purchased
Assets pursuant to the provisions hereof (other than any
such liabilities which arise out of any action by Purchaser
on or following the Closing Date, it being understood and
agreed that any such liabilities constitute Assumed
Liabilities hereunder);
(g) any liability in respect of any wrongful discharge
claim or claims under any Federal or state civil rights or
similar law, or the Worker Adjustment Retraining and
Notification Act ("WARN Act") or any similar local or state
law, arising out of the sale of the Purchased Assets or the
conduct of the Business by Seller prior to the Closing
(other than any such liabilities which arise as a result of
actual terminations or layoffs by Purchaser 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 Seller prior to the
Closing Date, it being understood and agreed that any such
liabilities constitute Assumed Liabilities hereunder so long
as, but only so long as, such employees who were terminated
by Seller within the thirty-day period ending on the day
immediately before Closing Date are listed in a schedule
delivered by Seller to Purchaser at the Closing);
(h) any claims against or liabilities of Seller 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 Seller, 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 IX or
in any of the Ancillary Agreements or otherwise required by
applicable law, any liabilities arising out of or in
connection with any of Seller's employee welfare and pension
benefit (including profit sharing) plans and any other
retirement plan or program;
(j) except for any such liabilities which arise out of
any action by Purchaser following the Closing Date, it being
understood and agreed that any such liabilities constitute
Assumed Liabilities hereunder, any so-called "sale-bonuses"
payable to Seller's employees by reason of the sale of the
Purchased Assets, and any liabilities for salaries, wages,
bonuses, vacation pay and other compensation which are owed
to employees of Seller who, notwithstanding Purchaser's
compliance with Section 9.1, do not become employees of
Purchaser (without implication that the contrary would
otherwise be true, it is understood and agreed that
liabilities under the agreements listed in Schedule 2.2(c)
do not constitute so-called "sale-bonuses" and are Assumed
Liabilities hereunder);
(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 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
Purchased Asset;
(m) any liability of Seller for litigation (contingent
or otherwise) arising out of, in relation to or caused by
the operation of the Business prior to the Closing Date; and
(n) without limitation by the specific enumeration of
the foregoing, any liabilities not expressly assumed by
Purchaser pursuant to the provisions of Section 2.2.
ARTICLE III
Purchase Price, Manner of Payment and Closing
3.1 Purchase Price. In consideration of the sale,
conveyance, assignment, transfer and delivery of the Purchased
Assets, the Real Estate and the Holdings Intellectual Property,
Purchaser shall pay at the Closing (as hereinafter defined) the
allocable portions of the Cash Amount (as herein defined) to
Holdings and Seller, and assume the Assumed Liabilities as of the
Closing Date (the Cash Amount and the assumption of the Assumed
Liabilities being collectively the "Purchase Price"). As used
herein, the "Cash Amount" shall mean the sum of the DOIC Cash
Amount (as herein defined) and the Holdings Cash Amount (as
herein defined). The Cash Amount shall be $44,998,000, the "DOIC
Cash Amount" shall be $41,948,000 and the "Holdings Cash Amount"
shall be $3,050,000.
3.2 Allocation of Purchase Price and the Consideration.
(a) Purchaser, Holdings and Seller agree that the Cash
Amount for the Purchased Assets, the Real Estate and the
Holdings Intellectual Property is allocable as between
Seller and Holdings as set forth in Schedule 3.2 hereto,
based on the net fair market value of the assets and
businesses sold by each of Seller and Holdings. Purchaser,
Holdings and Seller further agree that prior to the Closing
Date they will use their best efforts to determine the
amount of the Purchase Price and allocate the total amount
of the Purchase Price transferred by Purchaser to each of
Seller and Holdings, pursuant to this Agreement in
accordance with the fair market value of the assets and the
amount of liabilities transferred.
(b) Purchaser, Holdings and Seller further agree that
they will use their best efforts to determine the allocation
of the Purchase Price for the Purchased Assets, the Real
Estate and the Holdings Intellectual Property to meet the
requirements of Section 1060 of the Code. Seller, Holdings
and Purchaser each agrees 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 as to the Purchase Price and
allocation of the Purchase Price, with respect to those
Purchased Assets, the Real Estate and the Holdings
Intellectual Property and the Assumed Liabilities required
to be reflected on such Form. Purchaser, Holdings and
Seller each agrees to submit to the other a draft copy of
any Form 8594 it proposes to file with respect to the
Purchased Assets, the Real Estate and the Holdings
Intellectual Property at least 45 days before the proposed
filing date thereof and to jointly discuss and attempt to
agree in good faith to the contents thereof. Each party
shall provide to the other party the final version of such
Form and information promptly after filing. To the extent
the Purchase Price for the Purchased Assets, the Real Estate
and the Holdings Intellectual Property is adjusted after the
Closing Date, the parties agree to revise and amend any
agreed Schedule and their respective Forms 8594 in the same
manner and according to the same procedure.
(c) Any agreed determination, allocation or
determination and allocation of the Purchase Price to the
Purchased Assets, the Real Estate and the Holdings
Intellectual Property shall be binding on Seller, Holdings
and Purchaser for all tax reporting purposes.
3.3 Time and Place of Closing. The transaction
contemplated by this Agreement shall be consummated (the
"Closing") 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
5.4(e), 6.1(c) and 6.2(d) shall be satisfied or waived, subject,
however, to the provisions of Section 11.2; provided, however,
that if any of the other conditions to the Closing set forth in
Section 6.1 or Section 6.2 shall not be satisfied or waived, the
date of the Closing shall be extended for a period of 10 business
days after delivery by Seller to Purchaser (with respect to a
condition set forth in Section 6.1) or Purchaser to Seller (with
respect to a condition set forth in Section 6.2), as the case may
be, of written notice of the condition or conditions which are
not satisfied or waived; and provided, further, that if, at the
end of such 10 business day period any such condition is not
satisfied or waived, the party serving such notice shall be
entitled to terminate this Agreement. The date on which the
Closing occurs in accordance with the preceding sentence is
referred to in this Agreement as the "Closing Date." If the
Closing shall occur, it shall be deemed to be effective as of
12:01 a.m., prevailing time at the places where the Purchased
Assets are located, on the Closing Date.
3.4 Manner of Payment of the Purchase Price. The Holdings
Cash Amount shall be payable in full on the Closing Date by wire
transfer to such account or accounts as Holdings shall designate
by written notice to Purchaser on or prior to the Closing Date.
The DOIC Cash Amount shall be payable in full on the Closing
Date, by wire transfers of immediately available funds. Said
wire transfers shall be made to such bank accounts as Seller
shall specify by written notice to Purchaser delivered not later
than two days before the Closing Date. Such payments shall be
made net of any withholding or other tax required by law.
3.5 Purchase Price Adjustment
(a) For purposes of this Agreement, the term "Adjusted
Stockholders' Equity" of the Business or the Purchased
Assets and Assumed Liabilities shall mean as of a particular
date, the stockholders' equity of such Purchased Assets and
Assumed Liabilities computed in accordance with the methods,
formulae, prorations and reserves, and the adjustments
thereto, set forth in Schedule 3.5 hereto, and which
adjustments shall include the elimination of assets which
are not Purchased Assets and liabilities which are not
Assumed Liabilities. In particular, the calculation of
Adjusted Stockholders' Equity shall exclude all cash and all
Intercompany Accounts.
(b) Within ninety (90) days after the Closing Date,
Seller shall deliver to Purchaser (the date of such delivery
being the "Adjustment Date") (i) a balance sheet for the
Purchased Assets and Assumed Liabilities transferred at the
Closing (the "Closing Date Balance Sheet") and (ii) a
statement of the Adjusted Stockholders' Equity as of Closing
Date (the "Statement of the Closing Date Adjusted
Stockholders' Equity" or "Statement"). The Closing Date
Balance Sheet and Statement shall (i) have been prepared by
Seller and certified by Seller's auditors, KPMG LLP ("KPMG")
(or such other firm of independent certified public
accountants appointed by Seller for this purpose) in
accordance with Schedule 3.5 and otherwise in accordance
with GAAP applied in a manner consistent with the Financial
Statements, and (ii) set forth the Adjusted Stockholders'
Equity of the Purchased Assets and Assumed Liabilities as of
the Closing Date (the "Closing Date Adjusted Stockholders'
Equity"). In rendering the Closing Date Balance Sheet and
the Statement, Seller and its auditors shall consult with
Purchaser and its auditors, and permit Purchaser and such
auditors at the earliest practicable date access to and
copies of the work papers and calculations related to the
Statement.
(c) Purchaser may dispute the calculation of the
Closing Date Adjusted Stockholders' Equity only to the
extent that Purchaser asserts in good faith that the Closing
Date Balance Sheet or Statement was not prepared in
accordance with Schedule 3.5 and otherwise in accordance
with GAAP applied in a manner consistent with the Financial
Statements or, if an item on a Closing Date Balance Sheet or
a Statement is not governed by Schedule 3.5 or GAAP applied
in a manner consistent with the financial statements, that
the treatment of such item on such Closing Date Balance
Sheet or Statement was not the most appropriate treatment
of such item under GAAP, in any of which cases Purchaser's
notification as set forth below shall be accompanied by a
report of a nationally recognized independent public
accounting firm selected by Purchaser other than the firm
used by Seller to prepare the Closing Date Balance Sheet or
Statement, stating that such firm concurs with Purchaser's
assertion as set forth above. All such disputes shall be
resolved in the following manner:
(i) If Purchaser disputes a calculation of the
Closing Date Adjusted Stockholders' Equity, or any
portion thereof, Purchaser shall notify Seller 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
Purchaser's outside accountants certifying that the
positions taken by Purchaser in such notice are in
accordance with this Agreement and Schedule 3.5;
(ii) During the thirty (30) day period following
the date of such notice, Purchaser and Seller 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 matter shall be referred to such other firm of
independent certified public accountants as the parties
mutually agree (the "Accounting Firm"), for resolution.
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 any Closing Date
Balance Sheet and the related 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 Purchaser
and Seller 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 disagreement with
the Purchaser and the Seller, 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 the Seller and the
Purchaser, 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 Purchaser and
Seller have resolved any dispute relating to the
calculations of the Closing Date Adjusted Stockholders'
Equity:
(i) Purchaser shall pay to Seller, in immediately
available funds, an amount equal to the difference (if
any, and if a positive result) between (A) the Closing
Date Adjusted Stockholders' Equity relating to the
Purchased Assets and Assumed Liabilities at the
Closing, minus (B) $29,901,573; or, alternatively,
(ii) Seller shall pay to Purchaser, in immediately
available funds, an amount equal to the difference (if
any, and if a positive result) between (1) $29,501,573,
minus (2) the Closing Date Adjusted Stockholders'
Equity relating to the Purchased Assets and Assumed
Liabilities at the Closing,
in either case together with interest for the period from
the Closing Date to the date of such payment at a rate
per annum in effect from time to time equal to the prime
interest rate as published in the Wall Street Journal, which
rate shall change automatically without notice and
simultaneously with each change in such prime interest rate.
(e) Notwithstanding the foregoing: (A)
notwithstanding the existence of any dispute pursuant to
paragraph (c) above, the parties shall make any adjusting
payment required under this Section 3.5, to the extent that
such adjusting payment is not disputed, at the time and in
the manner set forth above and (B) the balance (being any
amount in dispute or such different amount compromised and
settled by the parties or determined by the Accounting Firm
in accordance with the provisions of Section 3.5(c) above)
shall be paid in immediately available funds within ten (10)
days after such settlement or determination, as the case may
be.
ARTICLE IV
Representations and Warranties
4.1 General Statement. The parties make the
representations and warranties to each other which are set forth
in this Article IV. All such representations and warranties
shall survive the Closing (and none shall merge into any
instrument of conveyance). All representations and warranties of
Seller are made subject to the exceptions which are noted in the
schedule delivered by Seller to Purchaser 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 obvious on the face
of such disclosure that such disclosure is applicable to such
other schedules.
4.2 Purchaser's Representations and Warranties. Purchaser
represents and warrants to Seller that:
(a) Purchaser is a corporation duly organized,
existing and in good standing, under the laws of the state
of New York except to the extent the failure to be in good
standing is not reasonably likely to have a Purchaser
Material Adverse Effect (as herein defined). For the
purposes of this Agreement, "Purchaser Material Adverse
Effect" means either (i) a material adverse affect on the
business, condition (financial or otherwise), assets,
prospects or results of operations of Purchaser and its
subsidiaries, taken as a whole or (ii) a material adverse
effect on the timely performance, including any unreasonable
delay therein, by Purchaser of the transactions contemplated
by this Agreement.
(b) Purchaser has full corporate power and authority
to enter into and perform (x) this Agreement and (y) all
documents and instruments to be executed by Purchaser
pursuant to this Agreement (collectively, "Purchaser's
Ancillary Documents"). The execution, delivery and
performance of this Agreement by Purchaser and the
consummation of the transaction contemplated hereby has been
duly and validly approved by the board of directors or a
duly appointed committee of the board of directors of
Purchaser; and no other corporate proceedings are necessary
on the part of Purchaser to authorize the execution,
delivery and performance of this Agreement by Purchaser and
the consummation by Purchaser of the transaction
contemplated hereby. This Agreement has been duly executed
and delivered by Purchaser and constitutes a legal, valid
and binding agreement of Purchaser, enforceable against
Purchaser in accordance with its terms.
(c) Except for filings under the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended
("Xxxx-Xxxxx-Xxxxxx Act"), 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 Purchaser of this Agreement and
Purchaser's Ancillary Documents, and the consummation by
Purchaser of the transaction contemplated by this Agreement
and Purchaser's Ancillary Documents. No representation is
made pursuant to this Section 4.2(c) or 4.2(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 Seller or by
reason of any facts pertaining to Seller.
(d) Neither the execution and delivery of this
Agreement and Purchaser's Ancillary Documents by Purchaser,
nor the consummation by Purchaser of the transaction
contemplated hereby, will conflict with or result in a
breach of any of the terms, conditions or provisions of
Purchaser's Certificate of Incorporation or By-laws, 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 Purchaser.
(e) Purchaser 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 performance by Purchaser
according to the terms of this Agreement and Purchaser's
Ancillary Documents will be a default or an event of
acceleration, or grounds for termination, and whereby timely
performance by Purchaser according to the terms of this
Agreement and Purchaser's Ancillary Documents may be
prohibited, prevented or delayed.
(f) Neither Purchaser 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 Seller or any of its Affiliates for
arranging the transaction contemplated hereby or introducing
the parties to each other. As used herein, an "Affiliate"
is any person or entity which controls a party to this
Agreement, which, at the time of determination, that party
controls, or which 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) Purchaser has all funds required in order to
complete the purchase of the Purchased Assets, on the terms
contained in this Agreement.
4.3 Seller's Representations and Warranties. Seller
represents and warrants to Purchaser that, except as set forth in
the Disclosure Schedule:
CORPORATE
(a) Each of Seller and Holdings is a corporation duly
organized, existing and in good standing, under the laws of
its state of incorporation. Seller has all necessary
corporate power and authority to conduct the Business as the
Business is now being conducted.
(b) Each of Seller and Holdings 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
Seller of the transactions contemplated by this Agreement.
(c) Each of Seller and Holdings 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 Seller pursuant to this Agreement (collectively,
"Seller's Ancillary Documents"). The execution, delivery
and performance of this Agreement and Seller's Ancillary
Documents by Seller and Holdings and the consummation of the
transaction contemplated hereby has been duly and validly
approved by the board of directors of Seller and the board
of directors of Holdings; and no other corporate proceedings
or approvals are necessary on the part of Seller or Holdings
to authorize the execution, delivery and performance of this
Agreement by Seller and the consummation by Seller and
Holdings of the transaction contemplated hereby. This
Agreement has been duly executed and delivered by each of
Seller and Holdings, and constitutes a legal, valid and
binding agreement of each of Seller and Holdings,
enforceable against each of them in accordance with its
terms. The Seller's Ancillary Documents when executed and
delivered by Seller will be legal, valid and binding
agreements of Seller enforceable against Seller in
accordance with their terms.
(d) Except for filings under the Xxxx-Xxxxx-Xxxxxx
Act, 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 and Seller's Ancillary
Documents and the consummation by Seller and Holdings of the
transaction contemplated by this Agreement and Seller's
Ancillary Documents. No representation is made pursuant to
this Section 4.3(d) or 4.3(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 Purchaser or by reason of any
facts pertaining to any of them.
(e) Neither the execution and delivery and performance
of this Agreement and Seller's Ancillary Documents by Seller
or Holdings, nor the consummation by Seller and Holdings of
the transaction contemplated hereby, 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
Seller's or Holdings' respective Certificates of
Incorporation or By-laws, or of any law, permit, statute or
administrative regulation 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.
FINANCIAL
(f) Copies of the balance sheet, statements of income,
retained earnings and cash flows, and notes to financial
statements (together with any supplementary information
thereto) of the Business, as of and for the year ended 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 Seller 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, except as disclosed therein.
(g) [Intentionally Omitted]
(h) Seller has full legal and beneficial title to, and
the corporate power to sell, the Purchased Assets, 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 Purchased 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 Purchased Assets or materially impair the conduct
of the Business (collectively, "Permitted Liens").
(i) (i) For purposes of this Agreement, the term
"Taxes" means all Federal, state, local, foreign and
other income, sales, use, ad valorem, withholding,
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
returns required to be filed by Seller on or prior to
the date hereof pertaining to the Assumed Taxes except
for such returns which, in the aggregate, are not
reasonably likely to have a Material Adverse Effect.
(iii) To Seller's knowledge, with respect to all
amounts in respect of Assumed Taxes imposed upon
Seller, or for Assumed Taxes for which Seller 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 Seller 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.
(iv) To Seller's knowledge after due inquiry,
there are at present no pending tax audits, assessments
or other proceedings relating to Assumed Taxes or the
assets pertaining thereto, and Seller has received no
written notice of any such proceeding.
(v) Seller and Holdings have provided to
Purchaser copies of all private rulings and closing
agreements relating solely to Taxes of the Business or
to any of the Purchased Assets or the Assumed
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 Seller does
not file returns relating to the Business.
(vii) Seller's accounts receivable relating to the
Business do not include any sales or other transfer
Taxes with respect to any sale for which no invoice has
been issued.
CONDUCT OF BUSINESS
(j) 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)
Seller has not, 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 Seller's 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, in each case prior to the Execution Date, and,
except as disclosed to Purchaser prior to the Closing
Date;
(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 Seller into this
Agreement or its consummation of the transaction
contemplated hereby).
Notwithstanding the foregoing, Seller in response to the
liquidity problems of Seller has 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. Such
actions, and any such actions taken between the date hereof
and the Closing Date, shall not constitute a breach of this
paragraph (j) or of any other representation, warranty or
covenant of Seller contained in this Agreement.
CONTRACTS
(k) As used herein, the term "Material Contracts"
refers to the following undischarged written (and, either to
the extent they constitute or include Purchased Assets or
Assumed Liabilities or are known to Seller, oral) contracts,
agreements, leases and other instruments to which Seller 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 Seller who is or was
employed in the conduct of the Business;
(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 Purchaser or any of its Affiliates
will be bound by reason of the transactions
contemplated by this Agreement, 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 Seller's employees employed in
the conduct of the Business;
(vi) written agreements between Seller and any
of its 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 Seller without payment or
penalty upon notice of sixty (60) days or less;
(viii) service agreements affecting any of the
Purchased Assets where the annual service charge is in
excess of $25,000 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 Purchaser 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 Seller 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);
(xii) any other agreements related to the
Business which is to be assigned to Purchaser under
this Agreement including, without limitation,
agreements with customers, vendors and suppliers and
which provides for the receipt or expenditure by
Purchaser after such assignment of more than $50,000,
except contracts for the purchase or sale of goods or
the rendering of services in the ordinary course of
business which are cancelable without penalty.
The Disclosure Schedule contains a list of Material
Contracts as of the Execution Date and (insofar as
subparagraphs (ii), (iii), (iv), (v), (x) (insofar as real
property is concerned) and (xi) are concerned) the Closing
Date. All Material Contracts are binding upon the parties
thereto. No default (or event which with notice or lapse of
time or both would be a default) by Seller has occurred
thereunder and, to Seller's knowledge, as of the Execution
Date 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. Seller is not a party to any undischarged
Material Contract on behalf of the Business.
(l) With the exception of provisions in contracts,
leases, licenses and other instruments which prohibit the
assignment of Seller's rights thereunder without the consent
of the other party thereto, neither the execution, delivery
and performance of this Agreement and Seller's Ancillary
Documents by Seller nor the consummation by Seller 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.
(m) 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 4.3(r)) held by Seller
as of the Execution Date with respect to the Business.
Seller possesses all Permits which are required in order for
the Seller 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 Seller of a type
referred to in the preceding sentence are, to the extent
legally transferable and transferable without governmental
approval, being transferred to Purchaser at the Closing.
EMPLOYEES
(n) With respect to employees of Seller 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
Seller or by any trade, or business, whether or not
incorporated (an "ERISA Affiliate"), that together with
the Seller would be deemed a "single employer" within
the meaning of section 4001(b) of ERISA, or to which
Seller or an ERISA Affiliate is a party, whether
written or oral, for the benefit of employees or former
employees of the 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
Seller or an ERISA Affiliate for the benefit of
employees or former employees of the Business (the
"Welfare Plans");
(iii) neither Seller nor any ERISA Affiliate of
Seller 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 Seller 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
Seller or any ERISA Affiliate; and neither Seller 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
Seller or any ERISA Affiliate that has not been
satisfied in full, and no condition exists that
presents a material risk to Seller 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 4.3(n)(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 Seller 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
contemplated by this Agreement will not, either alone
or in combination with another event, (i) entitle any
current or former employee or officer of Seller 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) otherwise cause any payment of compensation to
any such employee or officer to be treated as not
deductible as an excess parachute payment under section
280G(a) of the Code;
(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
Business, Seller has not contributed to a nonconforming
group health plan (as defined in section 5000(c) of the
Code) and no ERISA Affiliate of Seller has incurred a
tax under section 5000(e) of the Code which is or could
become a liability of Seller;
(vi) there are no pending or, to Seller'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) there is no request for union
representation pending, or to Seller's knowledge,
threatened against the Business;
(viii) there are no pending or, to Seller's
knowledge, threatened material unfair labor practice
charges or employee grievance charges with respect to
the Business;
(ix) the Disclosure Schedule contains a list, as
of the Execution Date, of all employees of Seller
employed in the conduct of the Business as of
February 28, 1999, whose annual salaries exceed $35,000
and said list correctly reflects their base salaries,
bonuses, dates of employment and positions;
(x) except as set forth in the Disclosure
Schedule, since the enactment of the WARN Act, Seller
has not 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 Seller's 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); and
(xi) no Accrued Employee Expense constitutes an
excess parachute payment within the meaning of Section
280G or Section 4999 of the Code.
No inaccuracy in any of the foregoing subparagraphs of this
paragraph (n) shall give rise to any breach of any of the
representations and warranties herein contained except to
the extent that such inaccuracy, individually or in the
aggregate, would be reasonably likely to have a Material
Adverse Effect or to impose any liability or obligation on
Purchaser which would not otherwise constitute an Assumed
Liability.
LITIGATION AND CLAIMS
(o) As of the Execution Date and, except as disclosed
to Purchaser prior to the Closing Date, as of the Closing
Date, there is no litigation 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 Seller's knowledge, threatened,
against Seller or its Affiliates or (without limiting the
generality of the foregoing), to Seller'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 would not, in the
aggregate, be reasonably likely to have a Material Adverse
Effect. As of the Execution Date and, except as disclosed
to Purchaser prior to the Closing Date, as of the Closing
Date, there is no such litigation, proceeding or
investigation pending, or to Seller's knowledge, threatened
against Seller or its Affiliates with respect to the
consummation of the transaction contemplated hereby, or the
use of the Purchased Assets (whether used by Purchaser after
the Closing or by Seller prior thereto).
(p) Seller is not, as of the Execution Date and,
except as disclosed to Purchaser prior to the Closing Date,
as of the Closing Date, 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.
(q) Except for laws, rules and regulations relating to
the environment (which are exclusively provided for in
Section 4.3(r) hereof), Seller is not (or since April 1,
1997 has not 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 Real Estate or 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
(r) (i) Seller, with respect to the Business, has
obtained all permits, licenses and other authorizations that
are required under the Environmental Laws for (A) the
operation of the Business and (B) the ownership, use and
operation of each location owned, operated or leased by
Seller; 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 Seller is in
full compliance with all terms and conditions of all such
permits, licenses and authorizations.
(ii) Seller, with respect to the Business, has
been and is in compliance with all applicable
Environmental Laws.
(iii) Seller has heretofore made available to
Purchaser true and complete copies of all environmental
studies made by or on behalf of Seller relating to each
location owned, used or operated by Seller in
connection with the Business, to the extent that such
studies are in the possession of Seller.
(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 Seller, threatened,
relating to Seller with respect to the Business or any
property currently or formerly owned, operated or
leased by Seller in connection with the Business,
relating in any way to the Environmental Laws.
(v) Seller has not, and to Seller'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 Seller 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 Seller 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 Seller.
(vii) Seller, in connection with the Business,
has 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 Seller,
in connection with the Business, has not entered into
any agreements concerning such Cleanup, nor is Seller,
in connection with the Business, aware of any facts
which might reasonably give rise to such notice, order
or agreement.
(viii) As of the Execution Date, and except as
disclosed to Purchaser prior to the Closing Date, as of
the Closing Date, Seller, in connection with the
Business, has not entered into any agreement that may
require it 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 Purchased Assets or Assumed
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,
regulations, rules and ordinances, whether in
effect as of the Execution Date or the Closing
Date, relating to pollution or protection of the
environment or human health and safety, including,
without limitation, laws relating to 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 and all laws and regulations with
regard to record keeping, notification, disclosure
and reporting requirements respecting Hazardous
Substances, and all laws relating to endangered or
threatened species of fish, wildlife and plants
and the management or use 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 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 the movement of Hazardous
Substances through or in the air, soil, surface
water, groundwater or property.
No inaccuracy in any of the foregoing subparagraphs of this
paragraph (r) shall give rise to any breach of any of the
representations and warranties herein contained except to
the extent that such inaccuracy, individually or in the
aggregate, would be reasonably likely to have a Material
Adverse Effect or to impose any liability or obligation on
Purchaser which would not otherwise constitute an Assumed
Liability.
REAL ESTATE AND LEASED PREMISES
(s) Holdings has full corporate power and authority to
sell the Real Estate. The Real Estate is legally described
in the Disclosure Schedule. Holdings holds, and will convey
to Purchaser, fee simple title to the Real Estate, subject
only to real estate taxes not yet delinquent and to
covenants, conditions, restrictions and easements of record
described in the Disclosure Schedule. The Real Estate is
not subject to any leases or tenancies. The Real Estate
constitutes all owned real property used primarily in, or
relating primarily to, the Business. Holdings is not
obligated under any option, right of first refusal or other
contractual right, contained in the condominium declaration
relating to the Real Estate or elsewhere, to sell the Real
Estate or any interest therein to any person or entity other
than Purchaser.
(t) The Leased Premises are leased to Seller pursuant
to written leases, true and complete copies of which have
been made available to Purchaser. Seller is not in default
under any term of any agreement relating to the Leased
Premises nor, to Seller'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.
(u) There are no condemnation proceedings pending or,
to Seller's knowledge, threatened with respect to any
material portion of the Real Estate.
INTELLECTUAL PROPERTY
(v) (i) Holdings or Seller is the owner of or has
exclusive 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 as of the
Execution Date and, as disclosed to Purchaser prior to
the Closing Date, as of the Closing Date, excluding
those trademarks, service marks and Internet domain
names containing the term "Danka," owned by or under
obligation of assignment to Holdings or Seller;
(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) as of
the Execution Date, 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 Seller or Holdings, 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) to Holdings' and Seller's knowledge, the
conduct of the Business and the exercise of rights
relating to the Intellectual Property does not infringe
upon or otherwise violate, intellectual property rights
of any Person;
(vii) to Holdings' and Seller's knowledge, no
person is infringing upon or otherwise violating any of
the Intellectual Property;
(viii) neither Holdings nor Seller has received
notice of any claims, and, to Seller'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) neither Holdings nor Seller 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 Holdings or Seller within the scope of
their employment; or (b) by independent contractors who
have assigned their right to Holdings or Seller
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.
No inaccuracy in any of the foregoing subparagraphs of this
paragraph (v) shall give rise to any breach of any of the
representations and warranties herein contained except to
the extent that such inaccuracy, individually or in the
aggregate, would be reasonably likely to have a Material
Adverse Effect or to impose any liability or obligation on
Purchaser which would not otherwise constitute an Assumed
Liability.
(w) (i) To Seller's knowledge, no Date Data and no
Date-Sensitive Systems used by Seller 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) Seller has sought written representations or
assurances from each person that (A) provides Date-
Sensitive Systems or Date Data to Seller which is
material to the Business, (B) processes in any way Date
Data for Seller which is material to the Business or
(C) otherwise provides any material product or service
to Seller 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 Seller for their internal use or for the use of
third parties, or which Seller sells, leases, licenses,
assigns or otherwise provides to any third party.
"Year 2000 Compliant" means (A) 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 (B) 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 Disclosure Schedule contains a list of assets
and properties (i) which have a market value of greater than
$5,000 or (ii) for which a replacement is not, in the
exercise of the reasonable efforts of Purchaser, available
to Purchaser, which assets and properties are used, but not
primarily, in the conduct of the Business as of the
Execution Date and, as supplemented by the Seller prior to
the Closing Date, as of the Closing Date. The Purchased
Assets, together with the Real Estate and the Holdings
Intellectual Property, are sufficient to conduct the
Business as it is presently being conducted, and the
Purchased Assets, Real Estate and the Holdings Intellectual
Property conveyed to Purchaser on the Closing Date will be
sufficient to enable Purchaser to continue to conduct the
Business as it is presently being conducted.
(y) Neither Seller, 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 Purchaser for arranging the
transaction contemplated hereby or introducing the parties
to each other.
(z) On the Closing Date, and after giving effect to
the sale of the Business, (i) the assets of Seller, at a
fair valuation, shall exceed the sum of its liabilities, and
the present fair saleable value of its assets shall exceed
its probable liability on its existing debts as they become
absolute and matured, (ii) Seller shall have sufficient
capital with which to conduct its business, and (iii)
immediately following the Closing, Seller shall have debts
only within its ability to pay as they mature.
(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 Seller, there are,
as of the Execution Date and, except as disclosed to
Purchaser prior to the Closing Date, as of the Closing Date,
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 Seller's knowledge, neither Seller nor any of
its respective directors, officers, agents, employees or any
other persons acting on its 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.
4.4 Limitation on Warranties. Except as set forth in
Section 4.3, Seller makes no express or implied warranty of any
kind whatsoever, including with respect to (a) any information
furnished by Seller or its financial advisor, WP, or any of
Seller's other representatives or agents, (b) the physical
condition or value of any of the Purchased Assets or (c) the
future profitability or future earnings performance of the
Business. Purchaser agrees that neither Seller nor any other
person or entity shall have any liability to Purchaser or any
other person resulting from the distribution of any information
to Purchaser, or Purchaser's use of any information, documents or
materials made available to Purchaser in any form. ALL IMPLIED
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR
PURPOSE ARE EXPRESSLY EXCLUDED.
4.5 Definition of Knowledge. For the purposes of this
Agreement, the knowledge of Seller shall be deemed to be limited
to the actual knowledge as of the Closing Date of Xxxx Xxxxxxxxx,
Xxxxx Xxxx, Xxxxxx Xxxxxxxx, Xxxxxx Xxxxxxx and Xxxxx Xxxxxx, the
chief executive officer and the chief financial officer of
Seller, the senior legal officer or officers of Seller in charge
of legal matters and regulatory compliance relating to the
Business and senior officers of Seller in charge of employee and
human resource matters relating to the Business, in each case
without giving effect to imputed knowledge.
ARTICLE V
Conduct Prior to the Closing
5.1 General. Seller and Purchaser shall have the rights
and obligations with respect to the period between the date
hereof and the Closing Date which are set forth in the remainder
of this Article V.
5.2 Seller's Obligations. The following are Seller's
obligations:
(a) Subject to applicable law and privilege, Seller
shall give to Purchaser's officers, employees, attorneys,
consultants, accountants and lenders reasonable access
during normal business hours to all of the properties,
books, contracts, documents, records and personnel of Seller
relating to the Business and shall furnish to Purchaser such
information as Purchaser may at any time and from time to
time reasonably request.
(b) Seller shall use reasonable efforts and make every
good faith attempt (and Purchaser shall cooperate with
Seller) to obtain the consents to the assignment of, or
alternate arrangements satisfactory to Purchaser with
respect to, those contracts, leases, or other instruments,
which are enumerated in Exhibit A attached hereto (the
"Material Consents").
(c) Seller shall use reasonable efforts and make every
good faith attempt (and shall cooperate with Seller) to
obtain the consents to the assignment of, or the issuance to
Purchaser of a replacement Permit with respect to those
Permits which are enumerated in Exhibit B attached hereto
(the "Material Permits").
(d) Seller shall carry on the Business in the usual
and ordinary course of business, consistent with past
practices other than the practices described in the
penultimate sentence of Section 4.3(j).
(e) Seller shall cooperate with Purchaser and any
Affiliate of Purchaser to (i) engage in such discussions
with the customers, resellers, agents and vendors of the
Business, as Purchaser may reasonably request, relating to
the transactions contemplated hereby and (ii) as Purchaser
may reasonably request, facilitate the smooth transition of
ownership of the business to Purchaser.
(f) Seller shall use reasonable efforts and make every
good faith attempt (and Purchaser shall cooperate with
Seller) to obtain the consents (the "Bank Consents")
required pursuant to that certain Credit Agreement (the
"Credit Agreement") dated as of December 5, 1996 among DBS,
Dankalux Sarl & Co. SCA, Holdings, NationsBank, National
Association and the other banks signatory thereto
(collectively with NationsBank, National Association, the
"Banks"), as amended with respect to the consummation of the
transactions contemplated hereby.
(g) Without the prior written consent of Purchaser,
and without limiting the generality of any other provision
of this Agreement, Seller shall not, with respect to the
conduct of the Business:
(i) incur or commit to incur any capital
expenditures in connection with the Business not set
forth in the Disclosure Schedule in excess of $50,000
in the aggregate;
(ii) prepay any material obligations of the
Business;
(iii) establish, adopt, enter into or amend any
collective bargaining agreement, increase the
compensation payable to any employee employed in the
conduct of the Business except in the ordinary course
of business consistent with past practice, increase
compensation payable to any officer of the Business,
enter into any employment, deferred compensation,
termination, severance or other similar agreement (or
any amendment to any such existing agreement) with any
director, officer or employee engaged in the Business,
increase the benefits payable under any existing
severance or termination pay policies or agreements or
adopt any new employee benefit or pension plan;
(iv) other than in the ordinary course of business
consistent with past practice, transfer any employee of
the Business to any other business of Seller or any
Affiliate, or transfer any employee of any other
business of Seller or any Affiliate to the Business;
(v) sell, transfer, assign or otherwise dispose
of any material asset or property of the Business
except for sales of inventory in the usual and ordinary
course of business and except for cash applied in
payment of liabilities of the Business in the usual and
ordinary course of business; or
(vi) change any method of accounting or accounting
practice.
5.3 Purchaser's Obligations. The following are Purchaser's
obligations:
(a) Purchaser shall comply with its obligations under
that certain letter agreement, dated December 2, 1998
between DBS and Purchaser 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 Purchaser is not
assignable, and Purchaser needs such Permit or Environmental
Permit in order to operate the Business, Purchaser shall use
its reasonable efforts and make every good faith attempt
(and Seller shall cooperate with Purchaser) to obtain such
Permit or Environmental Permit at Seller's expense.
(c) Purchaser shall (i) use its reasonable efforts and
make every good faith attempt to obtain for the benefit of
Seller unconditional releases of Seller's obligations and
liabilities, and substitute and replace itself for Seller,
under each surety, performance, fidelity or similar bond and
other similar obligation with respect to the Business in
each case listed in Schedule 5.3(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, obtain a back-up bond or
insurance over each such unreleased and/or unreplaced Bond,
by issuers and in amounts reasonably satisfactory to Seller,
in order to assure Seller that it will have no obligations
or liabilities under the Bonds. Nothing herein contained
shall relieve Purchaser of its liability hereunder to duly
and fully perform all obligations for which the Bonds were
given as security.
5.4 Joint Obligations. The following shall apply with
equal force to Seller and Purchaser:
(a) Without implication that such laws apply to the
transaction contemplated hereby, except as specifically
provided in Section 5.4(b), none of Seller, Holdings or
Purchaser shall comply with the provisions of any laws
relating to bulk sales.
(b) Seller and Purchaser 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 assets
purchased under this Agreement. 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. If the party contesting the applicability of
the Tax is not the party responsible for such Tax under
Section 12.2, such contesting party shall be solely
responsible for the cost of obtaining such opinion. The
party or parties liable for such Taxes under section 12.2
shall indemnify, defend and hold the other party hereto and
its Affiliates harmless from, against and in respect of any
loss imposed on, sustained, incurred or suffered by or
asserted against the other, directly or indirectly relating
to or arising out of or resulting from the failure to
withhold or pay any such Taxes at the Closing. The
limitations contained in Article X shall not apply to the
indemnity provided hereunder.
(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
contemplated hereby.
(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 Seller, 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. Without limitation of the generality
of the immediately preceding sentence, each of the parties
agrees that it will negotiate in good faith with respect to
the Transition Services Agreement, the Supply Agreement and
the Sub-Sublease, in each case, as described in Section 8.8.
(f) The parties shall forthwith make all filings and
perform all acts required by them respectively under the
Xxxx-Xxxxx-Xxxxxx Act; and, in addition to the conditions
set forth in Article VI, Seller's and Purchaser's obligation
under this Agreement shall each be conditional upon the
expiration or early termination of the waiting period set
forth in the Xxxx-Xxxxx-Xxxxxx Act and the rules promulgated
thereunder.
(g) If any objections are asserted with respect to the
transactions contemplated hereby under any United States
antitrust or similar law or if any suit is instituted by any
governmental entity or any private party challenging any of
the transactions contemplated hereby as violative of any
such law, each of Purchaser and Seller and their Affiliates
shall use its reasonable efforts (including, if but only if
so determined by Purchaser, agreeing to hold separate or
divest, or enter into a consent decree or licensing or other
arrangement with respect to, any of the businesses,
operations or assets of Purchaser or any of its Affiliates,)
as may be required in order to resolve any such objections
or challenge as such governmental entity or private party
may have to such transactions under such law so as to permit
consummation of the transactions contemplated by this
Agreement; provided, however, that notwithstanding anything
to the contrary set forth in this Agreement, neither
Purchaser and its Affiliates nor Seller and its Affiliates
shall be required to sell, hold separate, otherwise dispose
of or license or conduct their business in a specified
manner, or agree to sell, hold separate, otherwise dispose
of or license or conduct their business in a specified
manner, or permit the sale, holding separate, other
disposition or licensing of, any assets of Purchaser, Seller
or their respective Affiliates or the conduct of their
business in a specified manner (whether as a condition to
obtaining any approval from a governmental entity or any
other Person or for any other reason) (i) if such sale,
holding separate, other disposition or licensing or the
conduct of their business in a specified manner is not
conditioned on the Closing or (ii) unless Purchaser
determines otherwise; and provided further, however that,
except as set forth in the immediately preceding proviso,
(i) Purchaser shall control all decisions with respect to
this Section 5.4(g) and, in particular, Seller shall not,
without the prior written consent of Purchaser, agree, but
shall, if so directed by Purchaser, agree to, in so far as
the Business is concerned, hold separate or divest any of
its businesses or operations or assets used therein or enter
into a consent decree or licensing or other arrangement with
respect to any such businesses or operations or assets used
therein. In addition, nothing contained herein will require
Purchaser or its Affiliates to agree (and Seller shall not
agree in so far as the Business and employees engaged
therein are concerned unless directed to do so by Purchaser
or its Affiliates, in which event they shall agree) to any
matter with trade unions or worker councils or similar
bodies in connection with the consummation of the
transactions contemplated hereby.
ARTICLE VI
Conditions to Closing
6.1 Conditions to Seller's Obligations. In addition to the
condition set forth in Section 5.4(f), the obligation of Seller
to sell the Purchased Assets 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
Seller's option, be terminated pursuant to and with the effect
set forth in Article XI:
(a) The representations and warranties made by
Purchaser shall be true and correct in all respects as if
originally made on and as of the Closing Date except for
such failures of representations or warranties to be true
and correct (without regard to any materiality qualifiers
therein) which in the aggregate do not have any adverse
effect on Purchaser's obligations hereunder or under
Purchaser's Ancillary Documents.
(b) All material obligations of Purchaser to be
performed hereunder through, and including on, the Closing
Date (including, without limitation, all material
obligations which Purchaser 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) Purchaser shall have delivered to Seller the
written opinions of Skadden, Arps, Slate, Xxxxxxx & Xxxx,
LLP and Xxxxxx Xxxxxx, Associate General Counsel of Xerox
Corporation, addressed to Seller, dated as of the Closing
Date, in substantially the forms contained in Exhibit C
attached hereto.
(e) The Bank Consent shall have been obtained.
6.2 Conditions to Purchaser's Obligations. In addition to
the condition set forth in Section 5.4(f), the obligation of
Purchaser to purchase the Purchased Assets 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 Purchaser's option, be terminated pursuant to
and with the effect set forth in Article XI:
(a) The representations and warranties made by Seller
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 last sentence of paragraphs (n), (r) and (v) of
Section 4.3) which, individually or in the aggregate, are
not having and are not reasonably expected to have, a
Material Adverse Effect.
(b) All material obligations of Seller to be performed
hereunder through, and including on, the Closing Date
(including, without limitation, all material obligations
which Seller 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 Purchaser, or a replacement
Permit with respect thereto shall have been issued to
Purchaser.
(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) Seller shall have delivered to Purchaser the
written opinion of Altheimer & Xxxx, counsel to Seller,
addressed to Purchaser, dated as of the Closing Date, in
substantially the form of Exhibit D attached hereto.
(f) Seller shall have delivered to Purchaser the
written opinion of Xxxxxxxx Chance, solicitor for DBS,
substantially in the form of Exhibit E attached hereto.
(g) Danka Group B.V. shall have agreed to sell and
assign to Purchaser the Intellectual Property owned by Danka
Group B.V. which is used primarily in the Business.
ARTICLE VII
Closing
7.1 Form of Documents. At the Closing, the parties shall
deliver the documents, and shall perform the acts, which are set
forth in this Article VII. All documents which Seller shall
deliver shall be in form and substance reasonably satisfactory to
Purchaser and Purchaser's counsel. All documents which Purchaser
shall deliver shall be in form and substance reasonably
satisfactory to Seller and Seller's counsel.
7.2 Purchaser's Deliveries at the Closing. Subject to the
fulfillment or written waiver of the conditions set forth in
Sections 5.4(f) and 6.2, Purchaser shall execute and/or deliver
to Seller and Holdings all of the following:
(a) the DOIC Cash Amount to Seller, the Holdings Cash
Amount to Holdings and $2,000 to Danka Group B.V. in
consideration for the Intellectual Property being sold by
Danka Group B.V.;
(b) a certified copy of Purchaser's Certificate of
Incorporation and By-laws;
(c) certificates of good standing of Purchaser, issued
not earlier than ten (10) days prior to the Closing Date by
the Secretaries of State of Texas and New York;
(d) an incumbency and specimen signature certificate
with respect to the officers of Purchaser executing this
Agreement and Purchaser's Ancillary Documents on behalf of
Purchaser;
(e) a certified copy of resolutions of Purchaser's
board of directors, authorizing the execution, delivery and
performance of this Agreement and Purchaser's Ancillary
Documents;
(f) a closing certificate executed by the President of
Purchaser (or any other officer of Purchaser specifically
authorized to do so), on behalf of Purchaser, pursuant to
which Purchaser represents and warrants to Seller that: (i)
Purchaser's representations and warranties to Seller 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 Purchaser on or before the
Closing Date, to the extent not waived in writing by Seller,
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
Purchaser and delivered at the Closing have been executed by
duly authorized officers of Purchaser;
(g) an assumption agreement, duly executed by
Purchaser, under which Purchaser assumes the Assumed
Liabilities;
(h) each of the Transition Services Agreement, the
Supply Agreement and the Sub-Sublease described in Section
8.8;
(i) a certificate of insurance, reflecting the
coverages set forth in Section 8.7;
(j) valid resale certificates with respect to the
Purchased Assets where applicable; and
(k) such other documents from Purchaser as may
reasonably be required in order to effectuate the Closing,
which documents are contemplated (i) hereby and (ii) by the
Purchaser's Ancillary Documents.
7.3 Seller's, DBS's and Holdings' Deliveries at the
Closing. Subject to the fulfillment or written waiver of the
conditions set forth in Sections 5.4(f) and 6.1, Seller, DBS and
Holdings, as applicable, shall deliver to Purchaser physical
possession of all tangible Purchased Assets, and shall execute
(where applicable in recordable form) and/or deliver or cause to
be executed and/or delivered to Purchaser all of the following:
(a) certified copies of each of Seller's, DBS's and
Holdings' Certificate of Incorporation and By-laws or
equivalent organizational documents, as applicable;
(b) certificates of good standing or equivalent
documents of each of Seller, DBS and Holdings, issued not
earlier than ten (10) days prior to the Closing Date by the
Secretaries of State of Delaware and Texas;
(c) an incumbency and specimen certificate with
respect to the officers of DBS executing the DBS Guaranty on
behalf of DBS, an incumbency and specimen signature
certificate with respect to the officers of Seller executing
this Agreement and Seller's Ancillary Documents on behalf of
Seller, and an incumbency and specimen signature certificate
with respect to the officers of Holdings executing this
Agreement and Seller's Ancillary Documents on behalf of
Holdings;
(d) certified copies of resolutions of (i) Seller's
board of directors and of Holdings' board of directors,
authorizing the execution, delivery and performance of this
Agreement and Seller's Ancillary Documents and (ii) DBS's
board of directors authorizing the execution, delivery and
performance of the DBS Guaranty;
(e) a xxxx of sale, in such form as Purchaser
reasonably requests, executed by Seller, conveying all of
the tangible personal property included in the Purchased
Assets to Purchaser;
(f) an assignment, in such form as Purchaser
reasonably requests, to Purchaser, executed by Seller
assigning to Purchaser all of the Purchased Assets (other
than tangible personal property), along with the original
instruments (if any) representing, evidencing or
constituting such Purchased Assets. To the extent necessary
in the reasonable opinion of Purchaser's counsel, Seller
shall also execute and deliver (in recordable form where
required) separate assignments of any of such Purchased
Assets, and where applicable, in the form reasonably
required by the applicable governmental agencies, insurance
companies, customers, lessors, and other parties with whom
the assignments must be filed;
(g) assignments, in such form as Purchaser reasonably
requests, to Purchaser assigning to Purchaser all of the
Intellectual Property (including any such Intellectual
Property owned directly by Holdings or Danka Group B.V.) To
the extent necessary in the reasonable opinion of
Purchaser's counsel, Seller, Holdings and/or Danka Group
B.V., as applicable, shall also execute and deliver (in
recordable form where required) separate assignments of any
of such Intellectual Property and the goodwill associated
therewith, where applicable, in the form reasonably required
by the applicable governmental agencies with whom the
assignments must be filed;
(h) a closing certificate duly executed by the
President of Seller (or any other senior officer of Seller
specifically authorized to do so), on behalf of Seller,
pursuant to which Seller represents and warrants to
Purchaser that: (i) Seller's representations and warranties
to Purchaser 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
respects, specifying the respects in which the same are
untrue; (ii) all covenants required by the terms hereof to
be performed by Seller on or before the Closing Date, to the
extent not waived in writing by Purchaser, have been so
performed (or, if any such covenant has not been so
performed, indicating that such covenant has not been
performed); and (iii) all documents to be executed and
delivered by Seller at the Closing have been executed by
duly authorized officers of Seller;
(i) the Bank Consent, together with releases of all
liens in the Purchased Assets, the Holdings Intellectual
Property or the Real Estate, held by the Banks pursuant to
the Credit Agreement;
(j) a bargain and sale deed with covenants against
grantor's acts with respect to the Real Estate, executed by
Holdings, together with any necessary transfer declarations;
(k) copies of the Material Consents which have been
obtained;
(l) each of the Transition Services Agreement, the
Supply Agreement and the Sub-Sublease described in Section
8.8;
(m) the schedule of terminated employees described in
Section 2.3(g);
(n) certificates of title or origin (or like
documents) with respect to all vehicles included in the
Purchased Assets and other Equipment for which a certificate
of title or origin is required in order for title thereto to
be transferred to Purchaser; and
(o) such other documents as may reasonably be required
from Seller and/or Holdings in order to effectuate the
Closing, which documents are contemplated (i) hereby and
(ii) by the Seller's Ancillary Documents.
ARTICLE VIII
Post-Closing Agreements
8.1 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 VIII.
8.2 Inspection of Records.
(a) Seller shall make its books and records (and shall
use reasonable efforts to make available work papers in the
possession of its accountants, and other than books and
records delivered to Purchaser hereunder) available for
inspection by Purchaser, or by its 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
8.3, 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 Assumed Liabilities.
Such records shall be made available at Seller's executive
office. As used in this Section 8.2, the right of
inspection includes the right to make extracts or copies.
(b) Purchaser shall make available to Seller the books
and records delivered by Seller to Purchaser in connection
with the Closing, subject to the same terms and conditions
as those set forth in Section 8.2(a) with respect to books
and records of Seller.
(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, Seller or Purchaser, 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 Seller or Purchaser, as the case may be,
for purposes of investigation, depositions and testimony.
In addition, Purchaser shall give reasonable assistance to
Seller, through Purchaser's employees and without cost to
Seller, in order for Seller to record entries relating to
the closing of Seller's books relating to the Business, to
prepare and file Tax returns related to the Business and to
reconcile Intercompany Accounts.
8.3 Certain Tax Matters.
(a) Seller and Holdings shall make a good-faith
estimate of the total amount of the Property Taxes, the
Assumed Taxes and excess of the Property Taxes over the
Assumed Taxes (such excess being referred to as the
"Retained Property Tax," and such estimated excess being
referred to as the "Estimated Retained Property Tax"), all
as of the Closing Date, based on the most recent
ascertainable financial information of the Business. No
later than three (3) days prior to the Closing Date, Seller
and Holdings shall provide to Purchaser a schedule setting
forth such estimates, together with sufficient background
information to allow Purchaser to determine how such amounts
were determined. Such estimates shall be subject to
reasonable review by Purchaser. At the Closing, Seller and
Holdings shall deliver to Purchaser amounts in cash equal to
the Estimated Retained Property Taxes. Following the
Closing, from time to time as the actual amount of each of
the Retained Property Taxes becomes known, if (x) the
Estimated Retained Property Tax exceeds the actual Retained
Property Tax with respect thereto, Purchaser shall forthwith
pay the excess to Seller or Holdings, as applicable, and (y)
if the actual Retained Property Tax with respect to any such
Tax exceeds the Estimated Retained Property Tax, Seller or
Holdings, as applicable, shall forthwith pay the excess to
Purchaser.
(b) With respect to Property Taxes, Purchaser shall
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 Seller, Holdings and Purchaser shall be in full and
prompt compliance with law, and shall pay all Property Taxes
shown on such returns as due and payable. Purchaser shall
upon the request of Seller forthwith provide to Seller proof
of its compliance with the foregoing. Except as set forth
above, Seller shall be responsible for filing all returns
for Taxes relating to the Purchased Assets, the Assumed
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) Purchaser 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,
including Taxes relating to the Unassigned Assets
(Purchaser shall be treated as the owner of the
Unassigned Assets for tax purposes), (B) the Assumed
Taxes, (C) sales, use and other transfer Taxes included
in invoices issued to Seller pertaining to Assumed
Trade Debts or included in accrued vendor payables in
Section 2.2(b), (D) employment Taxes reflected in
Accrued Employee Expenses, and (E) the sales and
transfer Taxes to the extent provided in Section 12.2.
(ii) Except as set forth in Section 8.3(c)(i) and
Section 12.2, Seller and Holdings shall be responsible
for all Taxes arising out of the ownership and
operation of the Business up to and including the
Closing Date. Without limiting the generality of the
foregoing, Seller and Holdings shall be responsible for
sales, use and other transfer Taxes included in
Accounts Receivable that are Purchased Assets.
Seller's and Holdings' 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
Seller or Holdings.
(iii) The party responsible for any Tax pursuant
to Section 8.3(c)(i) and (ii) shall be entitled to all
credits for and deposits and refunds of such Tax.
8.4 Use of Trademarks; References to Seller. Seller 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 deceptively similar to any of the
trademarks or service marks which constitute Purchased Assets
hereunder. Except as provided in Section 1.4(p), nothing set
forth in this Agreement shall prevent Seller from using or
licensing to use the name and xxxx "Danka" and any name or xxxx
incorporating the name "Danka". Purchaser may refer to the
Business as formerly being Seller's for a period of one year
following the Closing.
8.5 Payments of Accounts Receivable. In the event Seller
shall receive any instrument of payment of any of the accounts
receivable of the Business, Seller shall deliver it to Purchaser,
endorsed where necessary, without recourse, in favor of Purchaser
and, pending such delivery, shall hold it in trust for Purchaser.
8.6 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 X,
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.
8.7 Products Liability Insurance.
(a) Seller will provide Purchaser 30 days prior to
closing, a schedule of insurance relating to the business,
assets or operations of Seller. 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. Seller is
responsible for all claims that relate to the Purchased
Assets and that occurred prior to the Closing.
(b) Purchaser will provide Seller 30 days prior to
closing, a schedule of insurance relating to the business,
assets or operations of Purchaser relating to the Purchased
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. Purchaser is responsible for all claims that relate
to the Purchased Assets and that occur after the Closing.
8.8 Post Closing Services.
(a) If requested by Purchaser, for a period of one
year following the Closing Date, Seller shall continue to
provide Purchaser with headquarters administrative services
of the type presently provided to the Business, as requested
by Purchaser (excluding tax (other than reporting on sales
and property Taxes), legal, internal audit, treasury, human
resources (other than payroll services) and insurance
services) and shall cooperate with Purchaser in
transitioning the services of service providers, all
pursuant to a transition services agreement (the "Transition
Services Agreement") with such terms and conditions as shall
be mutually reasonably agreeable to the parties.
(b) For a period of three months following the Closing
Date, Purchaser shall have the right to continue to occupy
the sales offices which the Business presently shares with
other divisions of DBS or Seller and which are located in
Denver, Colorado, Irvine, California, Portland, Oregon,
Woodland Hills, California, Birmingham, Alabama, Charlotte,
North Carolina, Jacksonville, Florida, Memphis, Tennessee,
Nashville, Tennessee, Raleigh, North Carolina, San Antonio,
Texas, West Palm Beach, Florida, Chicago, Illinois,
Columbus, Ohio, Detroit, Michigan, Indianapolis, Indiana,
Kansas City, Missouri, Louisville, Kentucky, Minneapolis,
Minnesota, St. Louis, Missouri, Boston, Massachusetts, New
York, New York, Philadelphia, Pennsylvania, Stamford,
Connecticut and Washington, D.C. In connection therewith,
Seller shall pursuant to the Transition Services Agreement
charge Purchaser amounts for rent and other costs determined
based on the proportion of each such property used by the
Business.
(c) For a period of two (2) years following the
Closing pursuant to a supply agreement to be reasonably
agreed upon by the parties prior to the Closing Date, Seller
shall continue to purchase from Purchaser certain parts and
supplies and Purchaser shall sell to Seller parts and
supplies, it being agreed that the terms of such supply
agreement (the "Supply Agreement") shall provide, among
other commercially reasonable terms, that purchases of such
parts and supplies shall total $10,000,000 over the two (2)
year period, and that if such amount is not purchased during
that period, Seller shall pay to Purchaser an amount in cash
at the end of such period equal to twenty percent (20%) of
the amount by which $10,000,000 exceeds the amount of parts
and supplies purchased thereunder.
(d) Seller shall sub-sublease to Purchaser the real
property commonly known as 0000 Xxxxxx Xxxx, Xxxxxx, Xxxxx
and currently subleased by Seller, and improvements thereon,
subject to Seller obtaining any required consents for such
sublease (as to which Seller shall use its reasonable
efforts to obtain all such required consents promptly
following the Execution Date), pursuant to a sub-sublease
(the "Sub-Sublease") to be mutually reasonably agreeable to
the parties prior to the Closing Date, it being agreed that
the terms of the Sub-Sublease shall provide, among other
commercially reasonable terms, for two (2) year term at a
monthly rent of $63,000 and that Seller shall have the right
to sell the property that is subject to the lease
thereunder. In connection therewith, Seller shall use its
reasonable efforts without cost to Seller to deliver, or
cause to be delivered, to Purchaser (i) a non-disturbance
agreement in form reasonably satisfactory to Purchaser
providing in substance that First Security Bank of Utah
(Owner Trustee under Danka Trust 1995-1) (the "Trust") will
not name or join Purchaser or Seller as a party defendant or
otherwise in any suit, action or proceeding to enforce any
rights granted to the Trust under the Ground Lease (the
"Prime Lease") dated June 13, 1994 between the Trust, as
lessor, and Holdings, as lessee, and to the further effect
that if either (A) the Prime Lease shall terminate or be
terminated by reason of Holdings' default thereunder or (B)
the Prime Lease shall terminate by reason of Holdings'
voluntary surrender thereof, then the Trust shall recognize
Seller as the direct tenant of the Trust on the terms and
conditions contained in the Sublease Agreement (the
"Sublease") dated March 31, 1998 between Holdings, as
sublessor, and Seller, as sublessee; and (ii) a non-
disturbance agreement in form reasonably satisfactory to
Purchaser providing in substance that Holdings will not name
or join Purchaser as a party defendant or otherwise in any
suit, action or proceeding to enforce any rights granted to
Holdings under the Sublease, and to the further effect that
if either (A) the Sublease shall terminate or be terminated
by reason of Seller's default thereunder or (B) the Sublease
shall terminate by reason of Seller's voluntary surrender
thereof, then Holdings shall recognize Purchaser as the
direct tenant of Holdings on the terms and conditions
contained in the sub-sublease to be entered into between
Seller and Purchaser pursuant to this Section 8.8(d).
8.9 Non-Assignment. Notwithstanding any provision to the
contrary contained herein, in the event and to the extent that
Seller is unable to obtain any required consent, approval or
amendment required to assign any contract, agreement, lease,
license, permit or approval constituting part of the Purchased
Assets (the "Unassigned Assets"):
(a) the Unassigned Assets shall not constitute
Purchased Assets except as provided in Section 8.3(c)(i) and
to the extent provided below;
(b) Seller shall, at the direction of Purchaser and at
Purchaser's sole cost and with full indemnification from
Purchaser, use their reasonable efforts to (x) provide or
cause to be provided to Purchaser the benefits of any
Unassigned Assets, (y) cooperate in any arrangement,
reasonable and lawful as to Seller, as Purchaser may
request, which is designed to provide such benefits to
Purchaser and (z) enforce for the account of Purchaser any
rights of Seller arising from such Unassigned Assets,
including the right to elect to terminate in accordance with
the terms thereof on the advice of Purchaser; and
(c) Purchaser shall use its reasonable efforts to
perform the obligations of Seller arising under such
Unassigned Assets, to the extent that, by reason of the
transactions consummated pursuant to this Agreement,
Purchaser has control over the resources necessary to
perform such obligations.
(d) Purchaser shall indemnify and hold harmless Seller
and its representatives from and against any damages arising
out of or resulting from Purchaser's 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 Seller at the direction of Purchaser
pursuant to this Section 8.9.
Seller shall, without further consideration therefor, pay and
remit to Purchaser 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, Seller
shall promptly assign and novate all rights and obligations
thereunder to Purchaser without the payment of further
consideration and Purchaser shall, without the payment of any
further consideration therefor, assume such rights and
obligations and Seller 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 Purchased Assets or Assumed Liabilities. Subject to
the adjustments required by Section 3.6, 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 Purchased Asset and the liabilities arising
thereunder constituted Assumed Liabilities to the same extent as
provided in Section 2.2(c). In the event that any contracts to
which Seller and one or more of its Affiliates are jointly
parties (or pursuant to which goods and/or services are provided
to Seller and one or more of its Affiliates) are assigned or
transferred pursuant to this Agreement, then from and after the
Closing Purchaser shall, if and to the extent requested by
Seller, take such action as is necessary to, and cooperate with
Seller in its efforts to, remove such Affiliate as a party to
such contract. It is expressly agreed that Seller's only
obligation with respect to any contract with any governmental
agency or instrumentality shall be to reasonably cooperate with
Purchaser and to use reasonable efforts in obtaining any consents
or novations necessary to effect the transfer of such contract to
Purchaser. Nothing contained in any transfer document required
to be executed by Seller in connection with the transfer of any
such governmental contract shall alter or in any manner affect
the status of such contract as a Purchased Asset and/or an
Assumed Liability hereunder or relieve Purchaser of its
obligations or liabilities with respect thereto or in connection
therewith, including pursuant to Article X hereof.
8.10 Use of Seller's Trademarks. Purchaser 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 Seller's or its Affiliates'
trademarks or service marks which are not included in the
Purchased Assets or the Intellectual Property, as long as
Purchaser shall affix thereto a sticker or stamp indicating
Purchaser's ownership of the Business.
8.11 Non-Solicitation. In furtherance of the sale of the
Purchased Assets and the Business to Purchaser hereunder by
virtue of the transactions contemplated hereby, Seller covenants
and agrees that none of Seller nor any of its Affiliates will
(nor will Seller 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, induce or attempt to persuade
any customer of the Business as of the Closing Date to
terminate or fail to renew or continue such business
relationship with the Business to any location at which the
Business sells products as of the Closing Date with respect
to such customer (a "Customer Location"); or
(b) for a period ending on the first anniversary of
the Closing Date, 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 Key
Employee (as herein defined) of Seller with respect to the
Business or any person who is an officer or Key Employee of
Purchaser whose primary employment duties are with respect
to Purchaser's operation of the Business while such person
is in the employ of Purchaser or its Affiliates.
Except as provided in Article IX, Purchaser covenants and
agrees that, without implication that the contrary would
otherwise be true, until the first anniversary of the Closing
Date neither Purchaser nor any of its Affiliates shall solicit
the employment of or hire or engage in any discussion with any
person who is an officer or Key Employee of Seller while such
person is in the employ of Seller. 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. Seller and Purchaser acknowledge
that the provisions of this Section 8.11, 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 8.11 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 8.11 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 8.11
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 8.11, the term of such
covenant will be extended by the period of the duration of such
breach. This Section 8.11 will be binding on (i) Seller and any
successor of Seller if Seller is acquired by, or enters into any
business combination with any entity or (ii) any purchaser of all
or part of the assets of Seller's business. Seller agrees that
it will use reasonable efforts to 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 to comply with the provisions of clause
(a) of the first sentence of this Section 8.11 as if applicable
to it in the same manner as it is applicable to the Seller, and
to deliver a written copy of such agreement to the Purchaser.
Nothing herein shall be deemed to prevent Seller and its
Affiliates from, directly or indirectly, selling or seeking to
sell office equipment at any Customer Locations or continuing to
conduct their respective businesses, other than the Business, as
such businesses are being conducted as of the Closing Date. As
used herein, "Key Employee" shall mean with respect to the
Seller, all Field Sales employees, Sales Management employees,
and Service Technicians, and with respect to Purchaser, any
person with a job classification at or above the Site Manager job
classification (Salary Band D), Business Development Managers,
Account Managers, and all employees with an Information
Management or Information Technology area of specialization.
8.12 Further Assurances. The parties shall execute such
further documents, and perform such further acts, as may be
necessary or reasonably requested by Purchaser to transfer and
convey the Purchased Assets to Purchaser, on the terms herein
contained, and to otherwise comply with the terms of this
Agreement and consummate the transaction contemplated hereby.
ARTICLE IX
Employees and Employee Benefit Plans
9.1 Employment of Seller's Employees. On the Closing Date,
Purchaser shall offer to employ or to continue to employ as of
the Closing Date each of Seller's employees (whether active or,
for a period of less than 90 days, inactive) employed in the
conduct of the Business (each an "Affected Employee") in
positions, at compensation, with benefits and upon terms and
conditions which are each separately no less favorable to the
Affected Employee than the position, compensation, benefits or
terms or conditions applicable to similarly situated employees of
Seller as in effect on the date hereof. Subject to the express
provision of Section 2.3(g), Purchaser shall not take any action
which would result in Seller having any liability under the WARN
Act or any similar state or local law. Each Affected Employee
who has actually commenced employment with Purchaser (whether
active or, for a period of less than 90 days, inactive) is
hereinafter referred to individually as a "Transferred Employee"
and collectively as the "Transferred Employees." Except for
voluntary resignations and deaths, Purchaser shall 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.
9.2 Welfare Benefits. From and after the Closing Date,
Purchaser shall be solely liable for all claims and liabilities
under welfare plans which are incurred on or following the
Closing Date. From and after the Closing Date, Purchaser shall,
at no expense to Seller, provide the benefits, if any, required
pursuant to section 4980B of the Code or Part 6 of subtitle B of
Title I of ERISA for any person who is or becomes entitled to
such continuation with respect to the Business from Seller or
Purchaser at any time. Purchaser shall 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. Purchaser shall
contribute or pay with respect to incentive bonus plans or
arrangements for the plan year in which the Closing occurs an
amount which is no less than the amount accrued for the period up
to the Closing on the books and records of Seller and its
Affiliates for a contribution to such plan for such plan year and
shall cause benefits to be provided to each participant in such
plan in an amount which is no less than the amount which is
accrued for the period up to the Closing with respect to such
participant on the books and records of Seller and its Affiliates
for such plan year. All payments under this paragraph (b) shall
be made within seven (7) days of the determination of such
eligibility or contribution by Purchaser, as the case may be.
9.3 401(k) Plan. As soon as practicable after the Closing
Date, Purchaser 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 ("Purchaser's 401(k)
Plan") which shall cover the Transferred Employees. As soon as
practicable following the Closing Date, Purchaser shall deliver
to Seller (a) a copy of a letter issued by the Internal Revenue
Service in which the Internal Revenue Service makes a favorable
determination as to the qualification of Purchaser's 401(k) Plan
under the Code or (b) an opinion of counsel that Purchaser's
401(k) Plan satisfies the qualification requirements of the Code.
Upon receipt of the foregoing, each Transferred Employee who is a
participant in the Danka Corporation 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 Purchaser's
401(k) Plan, subject to and in accordance with the provision of
such plans and applicable law.
9.4 Liabilities Accrued Prior to Closing. Except to the
extent accrued on the Closing Date Balance Sheet or as provided
in Section 9.2, all liabilities and expenses owed to Transferred
Employees, 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 Seller prior to the Closing Date or as
soon as practicable thereafter.
9.5 Vacation. Effective as of the Closing Date, Purchaser
shall grant vacation days or hours determined under the Seller's
vacation program applicable to each Transferred Employee. The
vacation days or hours granted by Purchaser hereunder shall be
provided under a program no more restrictive than the vacation
policy of Purchaser and its Affiliates.
ARTICLE X
Indemnification
10.1 General. From and after the Closing, the parties shall
indemnify each other as provided in this Article X.
10.2 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, costs and expenses
(including, without limitation, reasonable attorneys',
accountants', investigators', and experts' fees and expenses
incurred in investigating or defending a Third Party Claim)
and shall include consequential damages, damages consisting
of business interruption or lost profits (regardless of the
characterization thereof) and damages in diminution in value
of the Business, in each case as reasonably foreseeable; it
being understood that any punitive damages imposed on a
Purchaser Indemnitee in connection with a Third Party Claim
shall constitute "Damages" hereunder;
(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 X;
(c) "Indemnifying Party" shall mean, with respect to a
particular matter, a party hereto who is required to provide
indemnification under this Article X 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.
10.3 Indemnification Obligations of Seller. Subject to the
provisions of Sections 10.4 and 10.8, Seller and Holdings shall,
jointly and severally, indemnify, save and keep harmless
Purchaser and its successors and permitted assigns ("Purchaser
Indemnitees") against and from all Damages sustained or incurred
by any of them 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 Seller in this Agreement (it being
agreed by the parties hereto that such representations and
warranties shall for purposes of this Article X be deemed to
have been made again at the Closing) or in any closing
document delivered to Purchaser in connection with this
Agreement 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) any breach by Seller or Holdings of, or failure by
Seller or Holdings to comply with, any of its covenants or
obligations under this Agreement, or any breach by Seller of
any of its covenants or obligations under Seller's Ancillary
Documents (including, without limitation, its obligations
under this Article X);
(c) the failure to discharge when due any liability or
obligation of Seller or Holdings (other than the Assumed
Liabilities) including, without limitation, any and all
Excluded Liabilities;
(d) the solicitation by Seller, Holdings and their
financial and other advisors of any offers for the
acquisition of the Business or for all or any part of the
operations of DBS and its Affiliates (including, without
limitation, offers related to the current sales process in
which DBS is engaged with the assistance of WP) resulting in
claims by any third party for breach of contract, breach of
agreement in principle or tortious interference or the like
with respect to a sale of all or any portion of the Business
(either alone or together with any other operations of DBS
and its Affiliates);
The parties hereto agree that all recoveries by Purchaser
Indemnitees pursuant to this Section 10.3 shall be treated as an
adjustment to the Purchase Price under Article III.
10.4 Limitation on Seller's Indemnification Obligations.
Seller's obligations pursuant to the provisions of Section 10.3
are subject to the following limitations:
(a) (i) the Purchaser Indemnitees shall not be
entitled to recover under Section 10.3(a) until the
total amount which Purchaser Indemnitees would recover
under Section 10.3(a), but for this Section 10.4,
exceeds 1.5% of the Cash Amount, and then the Purchaser
Indemnitees shall be entitled to recover only for the
excess over 1.5% of the Cash Amount; it being
understood and agreed that any amounts which are not
recoverable by Purchaser Indemnitees pursuant to clause
(ii) of this Section 10.4(a) shall not be considered in
determining whether Purchaser Indemnitees are entitled
to recover Damages pursuant to this clause (i);
(ii) the Purchaser Indemnitees shall not be
entitled to recover under Section 10.3(a) solely by
virtue of the application of the parenthetical clause
of Section 10.3(a) until the total amount which
Purchaser Indemnitees would recover solely by virtue of
such application, but for this Section 10.4(a)(ii),
exceeds $90,000, and then the Purchaser Indemnitees
shall be entitled to recover for such matters only for
the excess over $90,000;
(b) the Purchaser Indemnitees shall not be entitled to
recover under Section 10.3(a) for any matter or any series
or group of related matters, unless the Purchaser
Indemnitees' Damages with respect thereto exceeds $10,000,
in which event such Damages shall, subject to the other
provisions of this Section 10.4, be recoverable in full
without regard to the limitation contained in this Section
10.4(b);
(c) the Purchaser Indemnitees shall not be entitled to
recover under Section 10.3(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 Seller on or prior to the Survival
Date with respect thereto, except with respect to Sections
4.3 (a), (c), (d) and (e) as to which such a claim may be
asserted at any time. "Survival Date" shall mean (i) with
respect to Sections 4.3(i) and (n), the latter of (A) six
months after the expiration of the statute of limitations
related to the subject matter thereof and (B) the fifth
anniversary of the Closing Date, (ii) with respect to
Sections 4.3(h) and (r), the fifth anniversary of the
Closing Date, and (iii) with respect to all other
representations and warranties of Seller contained herein,
the day which is 545 days after the Closing Date; 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;
(d) each basis for indemnification hereunder is
independent of, and shall not be subject to or limited by,
any limitations applicable to any other such basis;
(e) the Purchaser Indemnitees shall not be entitled to
recover under Section 10.3:
(i) with respect to punitive damages, except to
the extent punitive damages are included within the
definition of Damages, as described in Section 10.2(a);
(ii) with respect to any inaccuracy in or breach
of any representation and warranty by or of Seller
which is contained herein if Seller establishes that at
or before the Execution Date Purchaser had actual
knowledge of the inaccuracy or breach of representation
and warranty. For purposes of this Agreement, the
"knowledge" of Purchaser shall be deemed to be limited
to the actual knowledge of Xxxx Xxxxx, Xxxxx Xxxxxx,
Xxxxxx Xxxxxx, Xxxx Xxxxxxxxxxx and, to the extent not
included in the foregoing, those employees of Purchaser
and its Affiliates who have significant experience in
transactions similar to the transactions contemplated
hereby who participated in the review and/or evaluation
of the Business, and/or the transactions contemplated
hereby or who were active in negotiating any particular
portion of this Agreement or any of Purchaser's
Ancillary Documents, in each case without giving effect
to imputed knowledge;
(iii) with respect to the nonassignability or
nontransferability of any of the Purchased Assets or
Assumed 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 Purchased Assets to, or the assumption of the
Assumed Liabilities by, Purchaser;
(iv) to the extent the aggregate claims under
Section 10.3(a) and 10.3(b) of the Purchaser
Indemnitees exceed 20% of the Cash Amount;
(v) to the extent of any recovery of any
Purchaser 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 1.2(r), it being understood
that the Purchaser 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
Purchaser's insurers or third parties, as the case may
be, generally in the conduct of the business of the
Purchaser Indemnitees;
(vi) to the extent the matter in question is
reflected as a liability or in a specific reserve
therefor on the Closing Date Balance Sheet or results
in a reduction in the calculation of the Closing Date
Adjusted Stockholders' Equity;
(vii) without limiting the generality of anything
contained in Article IX hereof, with respect to any
claim by or liability to any employee employed by
Seller with respect to the Business arising as the
result of the termination of such employee's employment
with Purchaser or any action by Purchaser subsequent to
the Closing Date (and Purchaser agrees to indemnify
Seller for all such matters);
(f) the amount of any recovery by the Purchaser
Indemnitees pursuant to Section 10.3 shall be net of any
foreign, federal, state and/or local income tax benefits
inuring to the Purchaser Indemnitees as a result of the
state of facts which entitled the Purchaser Indemnitees to
recover from Seller pursuant to Section 10.3; provided,
however, that any such income tax benefit shall be netted
against such recovery only upon the actual economic
realization of such benefit to the Purchaser Indemnitees.
For purposes of this section 10.4(e), a tax benefit shall be
economically realized at the time and to the extent that
either (i) the tax cost to Purchaser is reduced by reason of
such state of facts, or (ii) Purchaser receives a tax refund
by reason of such state of facts, but only if tax counsel to
Purchaser has not concluded that the benefit of such tax
reduction or refund is subject to substantial risk.
10.5 Purchaser's Indemnification Covenants. Purchaser shall
indemnify, save and keep harmless Seller and its successors and
permitted assigns (collectively, "Seller 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 Purchaser in this Agreement or in any
closing document delivered to Seller in connection with this
Agreement;
(b) any breach by Purchaser of, or failure by
Purchaser to comply with, any of its covenants or
obligations under this Agreement (including, without
limitation, its obligations under this Article X or any of
Purchaser's Ancillary Documents);
(c) Purchaser's failure to pay, discharge and perform
any of the Assumed Liabilities when due, provided, that
Seller shall not discharge or pay any such Assumed Liability
without the consent of Purchaser, which consent may not be
unreasonably withheld or delayed;
(d) other than as specifically enumerated in
paragraphs (a) through (n) of Section 2.3, any liabilities
with respect to the Business which arise in the ordinary
course of the Business, first arise or are first asserted
after the third anniversary of the Closing Date and
constitute Excluded Liabilities; provided, however, that the
obligation of Purchaser to indemnify the Seller Indemnitees
pursuant to this Section 10.5(d) shall be limited to
$180,000;
(e) subject to Section 2.3(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;
(f) acts or omissions of Purchaser after the Closing
Date, including, without limitation, Purchaser's operation
of the Business after Purchaser's acquisition thereof or
relevant portion thereof, except as set forth in Section
2.3(g); or
(g) any obligation of Seller under any Bond.
10.6 Cooperation. Subject to the provisions of Section
10.7, 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.
10.7 Third Party Claims. Except as otherwise provided in
Sections 10.8 and 10.9, 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 10.7, the Indemnifying Party
shall acknowledge its indemnification obligations as provided in
this Article X 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) Seller shall
not agree to any settlement that affects the Business or the
manner in which it is conducted following the Closing without
Purchaser's 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 X 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
10.7, 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
10.7, 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.
10.8 Environmental Indemnities. Upon any Purchaser
Indemnitee becoming aware of the occurrence of any event or the
existence of any state of facts in respect of which the Purchaser
Indemnitee will seek indemnification with respect to a claim for
breach of any of the representations and warranties contained in
Section 4.3(r) or, without limiting the generality of Section
4.3(r), an Excluded Liability under Section 2.3(k) (an
"Environmental Claim"), and thereafter:
(a) Purchaser will give to Seller prompt notice
specifying in reasonable detail the basis for the
Environmental Claim;
(b) Purchaser will promptly deliver to Seller 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) Purchaser will permit representatives of Seller
(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 Seller may reasonably desire with
respect to the Environmental Claim, all during normal
business hours and at Seller's expense;
(d) unless required to do so by applicable law, no
Purchaser 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 Seller, which consent shall not
unreasonably be withheld, and in any event the Purchaser
Indemnitee shall give Seller reasonable prior written notice
of any discussions or communications between any Purchaser
Indemnitee (or representative or advisor thereof) and any
governmental authority relating to the Environmental Claim
and Seller shall be entitled to participate in such
discussions or communications;
(e) Purchaser shall cause to be furnished to Seller
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 Seller a reasonable opportunity to comment on such
draft plans, and give due and reasonable consideration to
all changes proposed by Seller 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, Purchaser shall not undertake any remedial or other
action in respect of the Environmental Claim without the
prior written consent of Seller, which consent shall not
unreasonably be withheld.
10.9 Tax Indemnities. In the case of any indemnity relating
to Taxes, 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, Seller or any Subsidiary may opt out of settling its
share of any such settlement.
10.10 Indemnification Exclusive Remedy. Except for claims
or causes of action based on fraud or otherwise as expressly
provided herein, indemnification pursuant to the provisions of
this Article X 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 Purchaser Indemnitee or Seller Indemnitee not
a party hereto) against any other party hereto with respect to
any matter that is the subject of this Article X (including with
respect to each of the failure to discharge any Excluded
Liability or any Environmental Claim), (ii) Purchaser, for
itself and the other Purchaser 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 Purchaser Indemnitee
with respect to any Environmental Claim shall be a contract
action to enforce, or to recover Damages pursuant to this Article
X. Nothing herein contained shall limit Seller'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 Purchaser pursuant to
Section 8.7 hereof, Seller's own insurance policies or this
Article X. The pursuit of one or more of such remedies by Seller
shall not be deemed to be a waiver of the right to pursue any
other remedy.
ARTICLE XI
Effect of Termination/Proceeding
11.1 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 XI.
11.2 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 Purchaser and
Seller;
(b) by prompt notice given in accordance with
Section 12.5, by either of such parties if the Closing shall
not have occurred at or before 11:59 p.m. on July 31, 1999,
unless the waiting period under the Xxxx-Xxxxx-Xxxxxx Act
has not expired or been terminated, in which event such date
shall be extended to August 31, 1999; provided, however,
that the right to terminate this Agreement under this
Section 11.2(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 6.1 or Section 6.2 shall
become impossible to fulfill;
(d) by Purchaser if the Bank Consent shall not have
been obtained by July 31, 1999; and
(e) by Seller, if DBS has received a bona fide offer
or proposal for a merger, reorganization, consolidation,
share exchange, business combination, recapitalization,
liquidation, distribution or other transaction involving the
sale, to any person other than Purchaser or its Affiliates,
by DBS, by one or more subsidiaries of DBS or by the
stockholders of DBS, of all or substantially all of the
businesses of DBS, including the Business (including,
without limitation, through the acquisition by any person of
50% or more of the entire share capital of DBS).
The party desiring to terminate this Agreement shall give written
notice of such termination to the other party.
11.3 Certain Effects of Termination. In the event of the
termination of this Agreement by either Seller or Purchaser as
provided in Section 11.2:
(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) Seller shall pay Purchaser the sum of $2,500,000
(the "Termination Fee") if this Agreement is terminated (i)
by Purchaser pursuant to Section 11.2(d); or (ii) by Seller
pursuant to Section 11.2(e).
Any payment required to be made pursuant to Section 11.3(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 11.3(c) have been met. In no event shall more than one
Termination Fee be payable. All payments under Section 11.3(c)
shall be made by wire transfer of immediately available funds to
an account designated by the party entitled to receive payment.
This Section 11.3 shall survive any termination of this
Agreement.
11.4 Remedies. Notwithstanding any termination right
granted in Section 11.2, 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 not be deemed a waiver of each breach of
any representation, warranty or covenant and of such party's
rights and remedies with respect thereto whether or not such
party shall have actual knowledge of such breach and the
Closing shall nonetheless occur, except, however, to the
extent that Purchaser Indemnitees are not permitted to
recover Damages pursuant to Section 10.4(d)(ii);
(b) decline to close, terminate this Agreement as
provided in Section 11.2, and thereafter seek damages to the
extent permitted in Section 11.5; 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.
11.5 Right to Damages. Except as provided in Section
11.3(c), if this Agreement is terminated pursuant to Section
11.2, neither party hereto shall have any claim against the other
except, if no Termination Fee is payable pursuant to Section
11.3(c) and 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 11.2 shall not be
deemed or construed as limiting or denying any legal or equitable
right or remedy of said party.
ARTICLE XII
Miscellaneous
12.1 Fees. Seller shall pay all fees and expenses charged
by WP.
12.2 Sales and Transfer Taxes. Purchaser, on the one hand,
Seller or Holdings, on the other hand, as the case may be, shall
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 sale and transfer of the
Purchased Assets, the Real Estate and the Holdings Intellectual
Property to Purchaser pursuant to this Agreement.
12.3 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.
12.4 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, Seller and Purchaser 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 Cash Amount.
12.5 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 mail. Notices delivered by hand, by facsimile, by
nationally recognized private courier or by United States 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 Seller or Holdings
Addressed to
Danka Office Imaging Company
00000 Xxxxx Xxxxxx Xxxxx
Xx. Xxxxxxxxxx, Xxxxxxx 00000
Attention: Chief Executive Officer
and General Counsel
Telecopier: (000) 000-0000
with a copy to
Altheimer & Xxxx
00 Xxxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxxxx
Telecopier: (000) 000-0000
And, if such notice pertains to tax matters, with
an additional copy to
Danka Office Imaging Company
00000 Xxxxx Xxxxxx Xxxxx
Xx. Xxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxx Xxxxx
Telecopier: (000) 000-0000
If to Purchaser
Addressed to
Xerox Corporation
000 Xxxx Xxxxx Xxxx
Xxxxxxxx, XX 00000
Attention: Xxxx Xxxxx
Telecopier: (000) 000-0000
with a copy to
Xerox Corporation
000 Xxxx Xxxxx Xxxx
Xxxxxxxx, XX 00000
Attention: General Counsel
Telecopier: (000) 000-0000
And, if such notice pertains to tax matters, with
an additional copy to
Xerox Corporation
000 Xxxx Xxxxx Xxxx
Xxxxxxxx, XX 00000
Attention: Xxxx Xxxxxxxxxxx
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 12.5.
12.6 Expenses. Except as set forth in Articles X or XI,
each party hereto 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.
12.7 Entire Agreement. This Agreement, the Purchaser's
Ancillary Documents and Seller's Ancillary Documents (the
Purchaser's Ancillary Documents and Seller's Ancillary Documents
together being referred to herein as the "Ancillary Agreements")
and the Confidentiality Letter 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 4.3 to the extent specified
therein. Each other exhibit and schedule shall be considered
incorporated into this Agreement and the Ancillary Agreements.
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 Agreements. The parties make no
representations or warranties to each other, except as contained
in this Agreement and the Ancillary Agreements, 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
Agreements, it being intended that no such prior representations
or warranties shall survive the execution and delivery of this
Agreement and the Ancillary Agreements. Purchaser 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 Agreements, and in entering into this
Agreement and the Ancillary Agreements has relied solely on the
results of said investigation and on the representations and
warranties of Seller expressly contained in this Agreement and in
the Seller's Ancillary Documents delivered by Seller pursuant to
the provisions of this Agreement. In connection with Purchaser's
investigation of the Business, Purchaser has received from or on
behalf of Seller certain estimates, forecasts, plans and
financial projections. Purchaser acknowledges that there are
uncertainties inherent in attempting to make such estimates,
forecasts, plans and projections, that Purchaser is familiar with
such uncertainties, that Purchaser 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 Purchaser
shall have no claim against Seller with respect thereto.
Accordingly, Seller makes no representation or warranty with
respect to such estimates, forecasts, plans and projections
(including any such underlying assumptions).
12.8 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 11.4(a), no waiver shall be effective unless
it is in writing and signed by an authorized representative of
the waiving party.
12.9 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.
12.10 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.
12.11 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.
12.12 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.
12.13 Assignability. This Agreement shall not be
assignable by either party without the prior written consent of
the other party.
12.14 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.
12.15 Headings. The headings contained in this Agreement
are for convenience of reference only and shall not affect the
meaning or interpretation of this Agreement.
12.16 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.
12.17 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.
12.18 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."
12.19 Consent to Jurisdiction. This Agreement has been
executed and delivered in and shall be deemed to have been made
in New York. Seller and Purchaser 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 12.5, and service so made shall be deemed to
be completed when received. Seller and Purchaser 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 Seller or Purchaser to serve
legal process in any other manner permitted by law.
12.20 Definitions. The following terms are defined in the
following sections of this Agreement:
Defined Term Where Found
Accounting Firm. . . . . . . . . . . . . . . . . . . .3.5(c)(iii)
Accounts Receivable. . . . . . . . . . . . . . . . . . . . 1.2(e)
Accrued Employee Expenses. . . . . . . . . . . . . . . . . 2.2(b)
Adjusted Stockholders' Equity. . . . . . . . . . . . . . . 3.5(a)
Adjustment Date. . . . . . . . . . . . . . . . . . . . . . 3.5(b)
Affected Employee. . . . . . . . . . . . . . . . . . . . . . .9.1
Affiliate. . . . . . . . . . . . . . . . . . . . . . . . . 4.2(f)
Agreement . . . . . . . . . . . . . . . . . . . . . . . Guaranty
Ancillary Agreements . . . . . . . . . . . . . . . . . . . . 12.7
Assumed Liabilities. . . . . . . . . . . . . . . . . . . . . .2.1
Assumed Taxes. . . . . . . . . . . . . . . . . . . . . . . 2.2(e)
Assumed Trade Debts. . . . . . . . . . . . . . . . . . . . 2.2(a)
Bank Consents. . . . . . . . . . . . . . . . . . . . . . . 5.2(f)
Banks. . . . . . . . . . . . . . . . . . . . . . . . . . . 5.2(f)
Bonds. . . . . . . . . . . . . . . . . . . . . . . . . . . 5.3(c)
Business . . . . . . . . . . . . . . . . . . . . . . . . Recitals
Cash Amount. . . . . . . . . . . . . . . . . . . . . . . . . .3.1
Cleanup. . . . . . . . . . . . . . . . . . . . . . .4.3(r)(ix)(A)
Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . .3.3
Closing Date . . . . . . . . . . . . . . . . . . . . . . . . .3.3
Closing Date Adjusted Stockholders' Equity . . . . . . . . 3.5(b)
Closing Date Balance Sheet . . . . . . . . . . . . . . . . 3.5(b)
Code . . . . . . . . . . . . . . . . . . . . . . . . . .4.3(i)(i)
Confidentiality Letter . . . . . . . . . . . . . . . . . . 5.3(a)
Control. . . . . . . . . . . . . . . . . . . . . . . . . . 4.2(f)
Credit Agreement . . . . . . . . . . . . . . . . . . . . . 5.2(f)
Customer Location. . . . . . . . . . . . . . . . . . . . .8.11(a)
Damages. . . . . . . . . . . . . . . . . . . . . . . . . .10.2(a)
Date Data. . . . . . . . . . . . . . . . . . . . . . .4.3(w)(iii)
Date-Sensitive System. . . . . . . . . . . . . . . . .4.3(w)(iii)
DBS. . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
Disclosure Schedule. . . . . . . . . . . . . . . . . . . . . .4.1
Disputed Amount. . . . . . . . . . . . . . . . . . . . .3.5(c)(i)
DOIC Cash Amount . . . . . . . . . . . . . . . . . . . . . . .3.1
Environmental Claim. . . . . . . . . . . . . . . . . . . . . 10.8
Environmental Laws . . . . . . . . . . . . . . . . .4.3(r)(ix)(B)
ERISA. . . . . . . . . . . . . . . . . . . . . . . . . .4.3(n)(i)
ERISA Affiliate. . . . . . . . . . . . . . . . . . . . .4.3(n)(i)
Estimated Retained Property Tax. . . . . . . . . . . . . . 8.3(a)
Excluded Assets. . . . . . . . . . . . . . . . . . . . . . 1.1(a)
Excluded Liabilities . . . . . . . . . . . . . . . . . . 2.1, 2.3
Execution Date . . . . . . . . . . . . . . . . . . . . . Preamble
Financial Statements . . . . . . . . . . . . . . . . . . . 4.3(f)
GAAP . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2(a)
Xxxx-Xxxxx-Xxxxxx Act. . . . . . . . . . . . . . . . . . . 4.2(c)
Hazardous Substances . . . . . . . . . . . . . . . .4.3(r)(ix)(C)
Holdings . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Holdings Cash Amount . . . . . . . . . . . . . . . . . . . . .3.1
Holdings Intellectual Property . . . . . . . . . . . . . . 1.1(b)
Indemnified Party. . . . . . . . . . . . . . . . . . . . .10.2(b)
Indemnifying Party . . . . . . . . . . . . . . . . . . . .10.2(c)
Intellectual Property. . . . . . . . . . . . . . . . . . . 1.2(p)
Intellectual Property Licenses . . . . . . . . . . . . .4.3(v)(v)
Intercompany Accounts. . . . . . . . . . . . . . . . . . . 1.4(c)
Inventories. . . . . . . . . . . . . . . . . . . . . . . . 1.2(a)
Joint Claims . . . . . . . . . . . . . . . . . . . . . . . 1.2(r)
Key Employee . . . . . . . . . . . . . . . . . . . . . . . . 8.11
Knowledge. . . . . . . . . . . . . . . . . . . . . . .10.4(e)(ii)
KPMG . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.5(b)
Leased Premises. . . . . . . . . . . . . . . . . . . . . . 1.2(d)
Liens. . . . . . . . . . . . . . . . . . . . . . . . . . . 4.3(h)
Material Adverse Effect. . . . . . . . . . . . . . . . . . 4.3(b)
Material Consents. . . . . . . . . . . . . . . . . . . . . 5.2(b)
Material Contracts . . . . . . . . . . . . . . . . . . . . 4.3(k)
Material Permits . . . . . . . . . . . . . . . . . . . . . 5.2(c)
Obligations. . . . . . . . . . . . . . . . . . . . . . . Guaranty
PBGC . . . . . . . . . . . . . . . . . . . . . . . . .4.3(n)(iii)
Pension Plans. . . . . . . . . . . . . . . . . . . . . .4.3(n)(i)
Permits. . . . . . . . . . . . . . . . . . . . . . . . . . 4.3(m)
Permitted Liens. . . . . . . . . . . . . . . . . . . . . . 4.3(h)
Prepaids . . . . . . . . . . . . . . . . . . . . . . . . . 1.2(l)
Prime Lease. . . . . . . . . . . . . . . . . . . . . . . . 8.8(d)
Property Taxes . . . . . . . . . . . . . . . . . . . . . . 2.2(e)
Proprietary Software . . . . . . . . . . . . . . . . . 4.3(v)(iv)
Purchase Price . . . . . . . . . . . . . . . . . . . . . . . .3.1
Purchased Assets . . . . . . . . . . . . . . . . . . . . . 1.1(a)
Purchaser. . . . . . . . . . . . . . . . . . . . . . . . Preamble
Purchaser Indemnitees. . . . . . . . . . . . . . . . . . . . 10.3
Purchaser Material Adverse Effect. . . . . . . . . . . . . 4.2(a)
Purchaser's 401(k) Plan. . . . . . . . . . . . . . . . . . . .9.3
Purchaser's Ancillary Documents. . . . . . . . . . . . . . 4.2(b)
Real Estate. . . . . . . . . . . . . . . . . . . . . . . . 1.1(b)
Reasonable Efforts . . . . . . . . . . . . . . . . . . . . . 12.3
Reasonable Efforts to Cause. . . . . . . . . . . . . . . . . 12.3
Release. . . . . . . . . . . . . . . . . . . . . . .4.3(r)(ix)(D)
Retained Property Tax. . . . . . . . . . . . . . . . . . . 8.3(a)
Seller . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Seller Indemnitees . . . . . . . . . . . . . . . . . . . . . 10.5
Seller's Ancillary Documents . . . . . . . . . . . . . . . 4.3(c)
Software . . . . . . . . . . . . . . . . . . . . . . . 4.3(v)(xi)
Statement. . . . . . . . . . . . . . . . . . . . . . . . . 3.5(b)
Statement of the Closing Date Adjusted
Stockholders' Equity . . . . . . . . . . . . . . . . . . 3.5(b)
Sub-Sublease . . . . . . . . . . . . . . . . . . . . . . . 8.8(d)
Sublease . . . . . . . . . . . . . . . . . . . . . . . . . 8.8(d)
Supply Agreement . . . . . . . . . . . . . . . . . . . . . 8.8(c)
Survival Date. . . . . . . . . . . . . . . . . . . . . . .10.4(c)
Tax. . . . . . . . . . . . . . . . . . . . . . . . . . .4.3(i)(i)
Taxes. . . . . . . . . . . . . . . . . . . . . . . . . .4.3(i)(i)
Termination Fee. . . . . . . . . . . . . . . . . . . . . .11.3(c)
Third Party Claim. . . . . . . . . . . . . . . . . . . . .10.2(d)
Transferred Employees. . . . . . . . . . . . . . . . . . . . .9.1
Transition Services Agreement . . . . . . . . . . . . . . 8.8(a)
Trust. . . . . . . . . . . . . . . . . . . . . . . . . . . 8.8(d)
Unassigned Assets. . . . . . . . . . . . . . . . . . . . . . .8.9
WARN Act . . . . . . . . . . . . . . . . . . . . . . . . . 2.3(g)
Welfare Plans. . . . . . . . . . . . . . . . . . . . . 4.3(n)(ii)
Year 2000 Compliance . . . . . . . . . . . . . . . . .4.3(w)(iii)
IN WITNESS WHEREOF, the parties have executed this Agreement
on the date first above written.
SELLER:
DANKA OFFICE IMAGING COMPANY
By:___________________________
Its:_______________________
HOLDINGS:
DANKA HOLDING COMPANY
By:___________________________
Its:_______________________
PURCHASER:
XEROX CORPORATION
By:___________________________
Its:_______________________
GUARANTY
In consideration of the execution by Purchaser of the
foregoing Asset Purchase Agreement between Seller and Purchaser
(the "Agreement"), the undersigned does hereby guarantee full and
prompt payment and performance of the obligations of Seller as
set forth in the Agreement, in the Ancillary Agreements, and in
the other documents executed by Seller in connection therewith,
subject in each case to the limitations set forth therein (which
obligations, subject to such limitations, are referred to herein
as the "Obligations"), in each case as if the Obligations were
direct and primary obligations of the undersigned. The guaranty
evidenced hereby is a guaranty of payment and performance and not
a guaranty of collection. The undersigned further agrees to pay
the expenses and costs (including, without limitation, reasonable
attorneys' fees and expenses) incurred by Purchaser and its
Affiliates in connection with any successful action, suit or
proceeding brought or maintained against the undersigned to
enforce this Guaranty. In addition, the undersigned (i) joins in
and agrees to be bound by Sections 6.2(g), 7.3(g), 8.11 and 12.4
of the Agreement and (ii) agrees to cause Danka Group B.V. to
sell to Purchaser the Intellectual Property owned by Danka Group
B.V. which is used primarily in the Business, for a purchase
price of $2,000.
The undersigned hereby agrees that, except as herein
provided, its obligations under this Guaranty shall be
unconditional, irrespective of (a) any change in the time, manner
or place of payment, time or manner of performance or any other
term of the Obligations or (b) any other circumstance that might
otherwise constitute a legal or equitable discharge or defense of
a guarantor, other than payment or satisfaction of the
Obligations in full.
The undersigned hereby waives diligence, presentment, demand
for payment, filing of claims with a court in the event of
receivership or bankruptcy of Seller or protest or notice with
respect to the Obligations, and all demands whatsoever (and,
except as provided in the first paragraph hereof, the undersigned
shall not require that the same be made on Seller as a condition
precedent to the undersigned's obligations hereunder), and
covenants that this Guaranty will not be discharged except by
complete performance of the Obligations and any other obligations
contained herein.
Purchaser and each of its Affiliates is hereby authorized,
without notice or demand and without affecting the liability of
the undersigned hereunder, to, from time to time: (a) extend the
time for payment of the Obligations, (b) accept partial payments
on the Obligations and (c) settle, release, compromise, collect
or otherwise liquidate the Obligations, in any manner, without
affecting or impairing the obligations of the undersigned
hereunder, provided that any such settlement, release,
compromise, collection or liquidation shall reduce the
Obligations pro tanto.
The undersigned consents and agrees that neither Purchaser
nor any of its Affiliates shall be under any obligation to
xxxxxxxx any assets in favor of the undersigned or against or in
payment of any or all of the Obligations. The undersigned
further agrees that, to the extent that Seller or any of its
Affiliates makes a payment or payments on account of the
Obligations, which payment or payments or any part thereof are
subsequently invalidated, declared to be fraudulent or
preferential, set aside or required to be repaid to Seller or
such Affiliate, its estate, trustee or receiver or any other
party, including, without limitation, the undersigned, by any
court of competent jurisdiction under any bankruptcy law, state
or federal law, common law or equitable cause, then to the extent
of such payment or repayment, the Obligation or the part thereof
that has been paid, reduced or satisfied by such amount, and the
undersigned's obligations under this Guaranty with respect
thereto, shall be reinstated and continued in full force and
effect as of the time immediately preceding such initial payment,
reduction or satisfaction.
The undersigned waives all presentments, demands for
performance, notices of nonperformance, protest, notices of
protest, notices of dishonor and notices of acceptance of this
Guaranty, except as required or permitted pursuant to the terms
of the Agreement.
The failure in any one or more instances of a party to the
Agreement or to any of the Ancillary Agreements to insist upon
performance of any one of the terms, covenants or conditions
thereof, to exercise any right or privilege conferred therein, or
the waiver by said party of any breach of any of the terms,
covenants or conditions thereof, shall not be construed as a
subsequent waiver of any of 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.
This Guaranty shall be binding upon the undersigned and upon
the successors and assigns of the undersigned and shall inure to
the benefit of Purchaser, its Affiliates, and their respective
successors, legal representatives and permitted assigns. All
references herein to Seller or any of its Affiliates shall be
deemed to include their respective successors and assigns (who
shall include, without limitation, a receiver, trustee or debtor
in possession of or for Seller or any of its Affiliates). All
references to the singular shall be deemed to include the plural
where the context so requires. Nothing in this Guaranty, express
or implied, is intended to confer on any person other than the
undersigned and the parties to the Agreement and the Ancillary
Agreements, and their respective Affiliates, and their respective
successors, legal representatives and permitted assigns, any
rights, remedies, obligations or liabilities under or by reason
of this Guaranty.
THIS GUARANTY HAS BEEN EXECUTED AND DELIVERED IN AND SHALL
BE DEEMED TO HAVE BEEN MADE IN LONDON, ENGLAND, AND SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS AND
DECISIONS OF THE STATE OF NEW YORK, AND THE UNDERSIGNED AGREES TO
THE NON-EXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT
WITHIN THE CITY OF NEW YORK, NEW YORK, WITH RESPECT TO ANY CLAIM
OR CAUSE OF ACTION ARISING UNDER OR RELATING TO THIS GUARANTY,
AND WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT, AND
CONSENTS THAT ALL SERVICES OF PROCESS BE MADE BY REGISTERED MAIL,
DIRECTED TO THE UNDERSIGNED AT THE ADDRESS INDICATED BELOW, AND
SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED WHEN RECEIVED.
THE UNDERSIGNED 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 PURCHASER TO SERVE LEGAL PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR SHALL AFFECT THE RIGHT OF PURCHASER TO BRING
ANY ACTION OR PROCEEDING AGAINST THE UNDERSIGNED OR ITS PROPERTY
IN THE COURTS OF ANY OTHER JURISDICTION.
This Guaranty shall continue until all of the terms,
covenants and conditions of the Agreement and the Ancillary
Agreements have been fully performed by Seller, but shall then be
returned to the undersigned.
Unless otherwise specifically defined herein, each term used
herein that is defined in the Agreement has the meaning assigned
to such term in the Agreement.
Dated as of June ___, 1999
Danka Business Systems, PLC
By__________________________________
(Name and Title)
