AMENDED AND RESTATED ASSET PURCHASE AGREEMENT
(Electronics)
This is an Agreement, dated as of April 10, 2002 but effective
as of January 23, 2002, between General Electric Capital Corporation, a Delaware
corporation ("Purchaser"), and Comdisco, Inc., a Delaware corporation
("Seller"), each of which agrees as follows:
Recitals
WHEREAS, Seller and certain of its affiliates, have filed
voluntary petitions (the "Petitions") for relief commencing cases (the "Chapter
11 Cases") under Chapter 11 of Title 11 of the United States Code (the
"Bankruptcy Code") in the United States Bankruptcy Court for the Northern
District of Illinois (the "Bankruptcy Court");
WHEREAS, pursuant to the Order Under 11 U.S.C.ss.ss.105(A)
and Fed. R. Bankr. P. 2002, 6004, 6006 and 9014 Approving (A) Bidding Procedures
and (B) The Form of Asset Purchase Agreement (Leasing) issued in the Chapter 11
Cases (the "Bidding Procedures Order"), Purchaser submitted a bid on November 8,
2001 to purchase the Purchased Assets (as hereinafter defined) pursuant to the
terms of an Asset Purchase Agreement dated as November 8, 2001, which was signed
by Purchaser (as subsequently amended pursuant to an Amended and Restated Asset
Purchase Agreement submitted on December 12, 2001, the "Original Purchase
Agreement");
WHEREAS, Purchaser and Seller entered into that certain Asset
Purchase Agreement (Electronics) dated as of January 23, 2002 (the "January
Purchase Agreement"), which amended, restated and replaced the Original Purchase
Agreement and which was approved by the Bankruptcy Court;
WHEREAS, Purchaser and Seller entered into that certain First
Amendment to Asset Purchase Agreement (Electronics), dated as of March 28, 2002
(the "First Amendment");
WHEREAS, Purchaser and Seller wish to amend and restate the
January Purchase Agreement, as amended by the First Amendment, to provide for a
"Cut-Off Date" (as hereinafter defined), for the purpose of determining certain
components of the Purchase Price (as hereinafter defined) and to provide for a
subsequent Closing (as hereinafter defined) of the transactions contemplated
thereby;
WHEREAS, this Agreement amends, restates and replaces the
January Purchase Agreement as so amended; and
WHEREAS, Purchaser and the Purchaser Affiliates (as
hereinafter defined) desire to purchase and acquire, and Seller desires to sell,
convey, assign and transfer, or cause to be sold, conveyed, assigned and
transferred, to Purchaser and the Purchaser Affiliates, the Purchased Assets (as
hereinafter defined), and Purchaser and the Purchaser Affiliates are willing to
assume, and Seller desires to assign and delegate to Purchaser and the Purchaser
Affiliates, or cause each Assigning Subsidiary (as hereinafter defined) to
assign and delegate to Purchaser and the Purchaser Affiliates, the Assumed
Liabilities (as hereinafter defined), all in the manner and subject to the terms
and conditions set forth herein and in accordance with Sections 105, 363 and 365
of the Bankruptcy Code, where applicable.
NOW THEREFORE, in consideration of the mutual promises and
covenants contained herein and intending to be legally bound, Purchaser and
Seller do hereby agree as follows:
Agreement
ARTICLE I
DEFINITIONS
Capitalized terms used in this Agreement shall have the
following meanings:
1.1 Definitions.
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"Accepting Employees" shall mean Accepting US Employees and
Accepting Foreign Employees.
"Accepting Foreign Employees" shall mean (i) Seller Employees
located in jurisdictions outside of the United States who, after the effective
date hereof, have been offered employment by Purchaser or one of the Purchaser
Affiliates and have accepted such offer of employment, in each case contingent
upon the Closing, (ii) those Seller Employees (if any) whose employment shall
transfer to Purchaser or a Purchaser Affiliate by operation of applicable law as
a consequence of the Closing, as to whom Purchaser or a Purchaser Affiliate has
determined to continue their employment (and who have agreed to continue such
employment) following the Closing and (iii) Deutschland Transferred Employees.
"Accepting US Employees" shall mean Seller Employees located
in the United States who, after the effective date hereof, have been offered
employment by Purchaser or one of the Purchaser Affiliates, and who have
accepted such offer of employment, in each case, contingent upon the Closing.
"Accounting Principles" shall mean the accounting principles
(including accounting methods, practices and procedures) set forth on Schedule
1.1A. When the accounting principles (including accounting methods, practices
and procedures) set forth on Schedule 1.1A do not specifically address a
particular matter necessary to prepare the Cut-Off Date Schedule of Assets
Acquired and Liabilities Assumed, then the accounting principles (including
accounting methods, practices and procedures) set forth on Schedule 1.1A shall
be supplemented in accordance with United States generally accepted accounting
principles applied consistently with the past practices and procedures of the
applicable member of the Seller Group in connection with the Purchased Assets or
the Assumed Liabilities (as applicable), but only to the extent necessary to
address such matter. To the extent that an accounting principle, method,
practice or procedure set forth on Schedule 1.1A is not in accordance with
generally accepted accounting principles as applicable in the United States,
such accounting principle, method, practice or procedure set forth on Schedule
1.1A shall be disregarded for purposes of preparing the Cut-Off Date Schedule of
Assets Acquired and Liabilities Assumed but shall be treated as a Special
Adjustment.
"Additional Allocation Statement" shall have the meaning given
to such terms in Section 5.3(a)(ii).
"Adjusted Cut-Off Date Schedule of Assets Acquired and
Liabilities Assumed" shall mean a schedule of assets acquired and liabilities
assumed, prepared by adjusting the Cut-Off Date Schedule of Assets Acquired and
Liabilities Assumed to the Special Adjustments, which shall be described in
reasonable detail therein.
"Adjustment Factor" shall mean an amount equal to the sum of
(i) all of the obligations of Seller or any of its Affiliates under the
agreements set forth on Schedule 1.1R as of the Cut-Off Date, which amount for
the purpose of calculating the Estimated Payment shall be deemed to equal to
$11,050,000 and (ii) $2,340,000.
"Advance Payment" shall mean, in respect of any Purchased
Financing Contract, any security deposit or other payment that was received as
collateral or security, or any advance rent received that would be reflected as
"deferred income" on a balance sheet of Seller prepared in accordance with the
Accounting Principles, by any member of the Seller Group on or prior to the
Cut-Off Date in respect of such Purchased Financing Contract.
"Affiliate" shall mean, with respect to any Person, any other
Person that directly or indirectly through one or more intermediaries, controls,
or is controlled by, or is under common control with, such Person. With respect
to Purchaser, Affiliate shall include, without limitation, General Electric
Capital Services, Inc. and any Person that directly or indirectly through one or
more intermediaries, controls, or is controlled by, or is under common control
with, General Electric Capital Services, Inc.
"Agreement" shall mean this Asset Purchase Agreement,
including the Schedules attached hereto and made a part hereof, as the same may
be amended, restated or otherwise modified from time to time in accordance with
the provisions hereof.
"Allocation Statement" shall have the meaning given to such
term in Section 5.3(a).
"Approval Order" shall have the meaning given to such term in
Section 5.12(a)(i).
"Assigning Subsidiary" shall mean each of the direct or
indirect Subsidiaries of Seller listed on Schedule 1.1B.
"Assumed Liabilities" shall mean, solely with respect to each
member of the Seller Group, (i) all liabilities and obligations relating to
Credit Enhancements, excluding any Credit Enhancements that are Advance
Payments, required to be paid or performed from and after the Closing, (ii) all
obligations under the Purchased Other Contracts arising from and after the
Closing, (iii) all obligations under the Purchased Discounted Financing
Agreements required to be paid or performed from and after the Closing and any
such obligations required to be paid prior to Closing, to the extent such
obligation relates to a rental payment that is past due with respect to a
Purchased Financing Contract, except obligations arising out of a breach by any
member of the Seller Group thereunder, (iv) all accounts payable related to the
Purchased Financing Contracts required to be paid from and after the Closing,
(v) all obligations (including, without limitation, residual sharing
obligations) under the Purchased Financing Contract required to be paid or
performed from and after the Closing, (vi) any obligations as a lessor to any
Obligor under any Purchased Financing Contracts purchased from Comdisco France
S.A. arising from and after the Closing, and (vii) any obligations required to
be paid or performed from and after the Title Date with respect to the Portfolio
Property subject to any Excluded Financing Contract which Portfolio Property has
been effectively transferred and assigned to Purchaser or a Purchaser Affiliate
pursuant to the terms hereof, except obligations arising out of a breach by any
member of the Seller Group thereunder or with respect thereto. For the avoidance
of doubt, Assumed Liabilities shall not include any other obligations or
liabilities of any member of the Seller Group (including, without limitation,
any cure amounts payable to other parties to the agreements, contracts, and
commitments referenced in this definition of Assumed Liabilities).
"Authorization" shall mean any domestic or foreign, federal,
state, provincial, local or other governmental or other quasi-governmental
consent, license, permit, grant, authorization or approval, including but not
limited to any consent, license, permit, grant, authorization or approval of any
agency, instrumentality or subdivision of the foregoing, which is used in or
necessary (i) to the ownership, use, lease or operation of any of the Purchased
Assets or (ii) to permit each member of the Seller Group to own or lease the
Purchased Assets.
"Bankruptcy Code" shall have the meaning given to such term in
the Recitals of this Agreement.
"Bankruptcy Court" shall have the meaning given to such term
in the Recitals of this Agreement.
"Bankruptcy Exception" shall mean, in respect of any
agreement, contract or commitment, any limitation thereon imposed by any
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or
similar law affecting creditors' rights and remedies generally and, with respect
to the enforceability of any agreement, contract or commitment, by general
principles of equity, including principles of commercial reasonableness, good
faith and fair dealing (regardless of whether enforcement is sought in a
proceeding at law or in equity).
"Base Purchase Price" shall have the meaning given to such
term in Section 2.7.
"Bidding Procedures Order" shall have the meaning given to
such term in the Recitals of this Agreement.
"Bundled Contracts" shall mean Financing Contracts that
contain service, warranty or similar obligations (except remarketing
obligations) of any member of the Seller Group or any of their Affiliates.
"Business Days" shall mean a day other than a Saturday, Sunday
or other day on which commercial banks in New York City, New York are authorized
or required by law to close.
"Chapter 11 Cases" shall have the meaning given to such term
in the Recitals of this Agreement.
"Closing" shall mean the consummation of the transfer by the
Seller Group of the Purchased Assets to Purchaser or any of the Purchaser
Affiliates pursuant to the terms of this Agreement, and "day of the Closing" and
"Closing Date" shall be deemed to mean such day and, for the avoidance of doubt,
the term Closing shall refer to the initial Closing and any subsequent Closing,
including the Second Closing, pursuant to the terms of this Agreement.
"COBRA" shall mean the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended.
"Code" shall mean the Internal Revenue Code of 1986, as
amended, and the regulations promulgated thereunder.
"Contingent Payment" shall have the meaning given to such term
in Section 2.7.
"CPR" shall have the meaning given to such term in Section
5.4(q)(ii).
"Credit Enhancement" shall mean any (i) Advance Payment, (ii)
investment certificate, certificate of deposit, authorization to hold funds,
hypothecation, pledge or charge of account or like instrument, (iii) letter of
credit, repurchase agreement, agreement of indemnity, guarantee, lease guarantee
bond or postponement agreement, (iv) recourse agreement, (v) security agreement,
(vi) Property, (vii) certificate representing shares or the right to purchase
capital of or interests in, any Person, (viii) agreement, contract or
arrangement designed to enhance the creditworthiness of an Obligor, or (ix) bond
or debenture, in each case pledged, assigned, mortgaged, charged, hypothecated,
made, delivered or transferred as security for the performance of any obligation
under or with respect to any Purchased Financing Contract.
"Cut-Off Date" shall mean 11:59 p.m. local time in Chicago,
Illinois, on March 31, 2002; provided, however, that if the initial Closing
hereunder shall not have occurred on or before April 30, 2002, the definition of
"Cut-Off Date" under this Agreement shall be deemed to mean 11:59 p.m. local
time in Chicago, Illinois, on the Closing Date.
"Cut-Off Date Initial Payment Interest" shall means the amount
of accrued interest on the Initial Payment calculated at the Settlement Rate, as
in effect on the Closing Date, for the period from the Cut-Off Date to, but not
including, the Closing Date (calculated on the basis of the actual number of
days elapsed in a year of 365 or 366 days, as the case may be).
"Cut-Off Date Portfolio Tape" shall mean the computer disk,
computer tape or other computer format delivered to Purchaser pursuant to
Section 5.24 setting forth, as of the Cut-Off Date, the Portfolio Information
set forth in the same level of detail for each Purchased Financing Contract, and
with the same column headings, as is set forth in each of the March Portfolio
Tape and the June Portfolio Tape.
"Cut-Off Date Schedule of Assets Acquired and Liabilities
Assumed" shall mean the schedule of assets acquired and liabilities assumed
reflecting the Purchased Assets, the Assumed Liabilities and the Adjustment
Factor, and the respective amounts thereof, in each case determined as of the
Cut-Off Date, and the notes and schedules, if any, thereto, and which shall be
prepared in accordance with the provisions of Section 5.5. (it being agreed and
understood that any amounts reflected on the Cut-Off Date Schedule of Assets
Acquired and Liabilities Assumed that are denominated in a currency other than
U.S. dollars shall be deemed to be converted into U.S. dollars at the applicable
exchange rate on the Cut-Off Date in accordance with SFAS No. 52).
"Damages" shall mean any and all losses, claims, damages,
liabilities, obligations, judgments, equitable relief granted, settlements,
awards (including back pay awards), demands, offsets, defenses, counterclaims,
actions or proceedings, reasonable out-of-pocket costs, reasonable expenses and
reasonable legal or attorneys' fees (including any such reasonable costs,
reasonable expenses and reasonable legal or attorneys' fees incurred in
enforcing any right of indemnification against any Indemnitor or with respect to
any appeal), interest and penalties, if any. With respect to Purchaser or any of
its Affiliates, Damages shall also be deemed to include, without limitation, any
and all losses resulting from the failure of Purchaser or any of its Affiliates
to receive any amounts payable with respect to any Purchased Financing Contract.
For the avoidance of doubt, nothing in this definition shall be deemed to
entitle Purchaser, any Purchaser Affiliate or any other Purchaser Indemnified
Party or Seller or any other Seller Indemnified Party to recover any amounts
that it is not otherwise entitled to under Section 5.4.
"Delinquency Contracts" shall mean all Financing Contracts for
electronics equipment (i) under which any interim or periodic rental payment due
thereunder for equipment, including, without limitation, any deferred
maintenance costs and prepaid sales tax, is outstanding 60 days or more after
the first date on which payment of such amount was required pursuant to the
terms of such Financing Contract or (ii) under which there exists a default
(other than a payment default) of the Obligor or any provider of a Credit
Enhancement relating thereto that would give the lessor a right of acceleration
thereunder.
"Deutschland Transferred Employee" shall mean any employee of
Comdisco Deutschland GmbH whose employment will transfer by operation of law as
a result of Purchaser's or a Purchaser Affiliate's offer of employment to any
other employee of Comdisco Deutschland GmbH.
"Discounted Financing Agreements" shall mean all agreements,
instruments, certificates and other documents, which are listed on Schedule 1.1O
to the extent related to the Purchased Financing Contract, relating to the
issuance of non-recourse loans to any member of the Seller Group, as borrower,
whether or not the borrower grants, pursuant thereto, a security interest in the
Financing Contract or underlying Portfolio Property related to the specified
Financing Contract owned by such borrower. For the avoidance of doubt,
Discounted Financing Agreements shall include lease agreements, which are listed
on Schedule 1.1O, with French financial institutions as financial lessors.
"Discounted Lender Consent" shall mean with respect to each
Discounted Financing Agreement a written consent of the lender in respect of
such financing to the assignment of such agreement to Purchaser or any Purchaser
Affiliate or such other consent otherwise required by the applicable Discounted
Financing Agreement; ; provided, however, that with respect to each Discounted
Financing Agreement for which Purchaser, a Purchaser Affiliate or any Affiliate
of Purchaser is the lender or financing source, Purchaser hereby agrees on
behalf of Purchaser and any applicable Purchaser Affiliate or any Affiliate of
Purchaser that no separate written consent shall be required for any such
Discounted Financing Agreement and that by the execution of this Agreement, such
lender's consent shall be deemed obtained by Seller upon the assignment of such
agreements to Purchaser or any Purchaser Affiliate; provided further, that no
Discounted Lender Consent from a financial institution organized in the United
States shall be required with respect to each Discounted Financing Agreement to
which a member of the Seller Group that is a party to the Chapter 11 Cases is a
party and which Discounted Financing Agreement which may be transferred pursuant
to this Agreement without such consent under Section 365 of the Bankruptcy Code
as provided for in the Approval Order.
"Disposition Agreement" shall mean any agreement, contract or
other arrangement (other than this Agreement) pursuant to which any interest in
any Purchased Financing Contract or any payment due under any Purchased
Financing Contract or related Credit Enhancement or with respect to any
Portfolio Property has been sold, used as collateral, transferred to or
otherwise disposed of to any Person or Persons by any member of the Seller
Group.
"Dispute" shall have the meaning given to such term in Section
5.4(q).
"Document" shall mean any book, record, file, paper, computer
tape, computer disk, microfilm, information storage device of any type and any
other document.
"Documentation" shall mean forms of leases, sales and
conditional sales contracts, notes, security agreements, guarantees, financing
statements, purchase agreements, purchase orders and other documents or
instruments necessary for, or used in connection with, the conduct of the
business of any member of the Seller Group.
"Earn Out Assets" shall have the meaning given to such terms
in the definition of "Electronics Rental Payments."
"Electronics Collections" shall mean Electronics Rental
Payments and Electronics Residual Collections.
"Electronics Collections Statement" shall have the meaning set
forth in Section 2.8(a).
"Electronics Rental Payments" shall mean the aggregate amount
of proceeds with respect to lease rental payments scheduled as of the Cut-Off
Date pursuant to the Purchased Financing Contracts actually received by
Purchaser or any Purchaser Affiliate with respect to the categories of Purchased
Assets set forth in Section 2.1(a)(i), (ii) and (vi) hereunder (such Purchased
Assets, the "Earn Out Assets"), less any amount required to be remitted pursuant
to the terms of a related Discounted Financing Agreement and less reasonable and
unreimbursed out-of-pocket expenses owed to third parties incurred by Purchaser
or any Purchaser Affiliate during such period in connection with the servicing,
collection, defense, protection and/or enforcement of such Purchased Assets (not
including any amounts payable under the Transitional Services Agreement).
Purchaser and Purchaser Affiliates shall not accept any non-cash consideration
in satisfaction of lease rental payments under the Purchased Financing Contracts
unless the Purchaser and Seller agree on the valuation thereof for purposes of
this Agreement. Any Electronics Rental Payments payable in currency other than
U.S. dollars shall be deemed to be converted into U.S. dollars based upon a
currency exchange methodology set forth in Section 5.28. For the avoidance of
doubt, no amount received by Purchaser or a Purchaser Affiliate with respect to
agreements listed as items 1 and 2 on Schedule 1.1Q shall be deemed an
Electronics Rental Payment.
"Electronics Residual Collections" shall mean (with respect to
the Earn Out Assets) the aggregate amount of proceeds received by Purchaser or
any Purchaser Affiliate with respect to the Residual interest in the related
Portfolio Property, whether due to (i) the exercise of a purchase option by the
Obligor, (ii) a sale of such Portfolio Property to a third party, (iii) the
Obligor's continued rental of such Portfolio Property on a month-to-month basis
or (iv) the subsequent lease, conditional sale or secured financing of the
Portfolio Property or other similar transaction, less any amount required to be
remitted pursuant to the terms of a related Discounted Financing Agreement and
less reasonable and unreimbursed out-of-pocket expenses owed to third parties
incurred by Purchaser or any Purchaser Affiliate during such period in
connection with the servicing, collection, defense, protection, remarketing
and/or enforcement of such Portfolio Property (not including any amounts payable
under the Transitional Services Agreement). "Lump Sum Residual Collections"
shall mean (A) the aggregate amounts realized pursuant to clauses (i) and (ii)
above and (B) in the event of the occurrence of the events set forth in clauses
(iii) and (iv) above and upon an agreement of Seller and Purchaser as to a lump
sum amount for purposes of calculating the Electronics Residual Collections that
corresponds to the present value of future payments to be received and related
Residual Value, the aggregate amount of proceeds received shall be deemed to
equal such agreed upon amount. Purchaser and Purchaser Affiliates shall not
accept any non-cash consideration with respect to a Residual Interest unless the
Purchaser and Seller agree on the valuation thereof for purposes of this
Agreement. Any Electronics Residual Collections payable in currency other than
U.S. dollars shall be deemed to be converted into U.S. dollars based upon a
currency exchange methodology set forth in Section 5.28. For the avoidance of
doubt, any amount of (i) loan proceeds (including any interest payments)
received by Purchaser or any of the Purchaser Affiliates pursuant to the
agreements listed as items 1 and 2 on Schedule 1.1Q and (ii) proceeds received
by Purchaser or any of the Purchaser Affiliates in connection with disposition
of Property subject to the agreements listed as items 1 and 2 on Schedule 1.1Q
shall be deemed Electronics Residual Collections.
"Electronics Segment" shall mean the segment of any member of
the Seller Group's equipment solutions business known as the "Electronics"
segment, which primarily engages in the business of leasing electronics
equipment.
"Electronics Threshold Amount" shall mean the U.S. dollar
amount equal to the product of 115% multiplied by the Purchase Price, which
shall include for this purpose the Contingent Payment, to the extent such
payment was made by Purchaser, plus the additional payment of the Two Closing
Premium payable to Seller pursuant to Section 2.2, to the extent such payment
was made by Purchaser.
"Electronics Trigger Event" shall have the meaning given to
such term in Section 2.8.
"Encumbrance" shall mean any title defect, conflicting or
adverse claim of ownership, mortgage, hypothecation, security interest, lien,
pledge, claim, right of first refusal, option, charge, covenant, reservation,
lease, order, decree, judgment, stipulation, settlement, attachment,
restriction, objection or any other encumbrance of any nature whatsoever,
whether or not perfected.
"Environmental Costs and Liabilities" means, with respect to
any Person, all liabilities, obligations, responsibilities, Remedial Actions,
losses, damages, punitive damages, consequential damages, treble damages, costs
and expenses (including, but not limited to, all reasonable fees, disbursements
and expenses of counsel, experts and consultants and costs of investigation),
fines, penalties, sanctions and interest incurred as a result of any claim or
demand by any other Person, whether based in contract, tort, implied or express
warranty, strict liability, criminal or civil statute, including any thereof
arising under any Environmental Law, Environmental Permit, order or agreement
with any Governmental Entity or other Person, which relate to any environmental,
health or safety condition or a Release or threatened Release.
"Environmental Law" means any applicable federal, state,
provincial, local, or foreign law (including common law), statute, code,
ordinance, rule, regulation or other legal requirement relating to the
environment, natural resources, or public or employee health and safety.
"Environmental Permit" shall mean, with respect to each member
of the Seller Group, all Authorizations required by Environmental Laws to use
the Purchased Assets.
"Environmental Report" shall have the meaning given to such
term in Section 3.20.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended.
"ERISA Affiliate" shall mean any trade or business (whether or
not incorporated) which is or has been under common control, or which is or has
ever been, treated as a single employer with Seller, the Assigning Subsidiaries
or any of their Affiliates under Sections 414(b), (c), (m) or (o) of the Code.
"Estimated Closing Date" shall mean April 23, 2002 or such
other date as may be mutually agreed upon by Seller and Purchaser; provided,
however, that if the initial Closing hereunder shall not have occurred on or
before April 30, 2002, the definition of "Estimated Closing Date" shall be
deemed to mean the Closing Date.
"Estimated Payment" shall mean a dollar amount equal to the
estimated Purchase Price (including the Adjustment Factor) mutually agreed to
between Purchaser and Seller calculated (i) if the initial Closing shall occur
on or prior to April 30, 2002, as of the Cut-Off Date using the methodology set
forth in Section 2.2 and (ii) if the initial Closing shall occur after April 30,
2002, as of the end of the month immediately prior to the Closing using the
methodology set forth in Section 2.2 and adjusted for estimated Purchased
Financing Contract payments, estimated early terminations of the Purchased
Financing Contracts and estimated Line Adds for the Purchased Financing
Contracts after the end of such month through the Closing.
"Excess Amount" shall have the meaning given to such term in
Section 2.4(a)(ii).
"Excess Electronics Collections" shall mean any Electronics
Collections received by Purchaser or any Purchaser Affiliate after they have
received the Electronics Threshold Amount.
"Excluded Assets" shall mean all assets of any member of the
Seller Group other than those included in the definition of Purchased Assets.
Excluded Assets shall include, without limitation, (i) any interest in owned or
leased real property, except Seller's leasehold interest in the San Diego
Facility, (ii) equipment (other than equipment described in Section 2.1(a)(v));
(iii) any Intellectual Property of any member of the Seller Group, (iv) any
assets that would be reflected on a balance sheet of Seller prepared in
accordance with the Accounting Principles as "deferred commissions," (v) any
assets that would be reflected on a balance sheet of Seller prepared in
accordance with the Accounting Principles as "deferred lease costs" or "deferred
costs" except assets that would be reflected on such balance sheet as "deferred
maintenance costs," or "prepaid sales tax" or any other accounts to which
payments owed by an Obligor under a Purchased Financing Contract are associated,
(vi) cash associated with Advance Payments, (vii) all capital stock, partnership
interests, and other equity interests owned by any member of the Seller Group,
(viii) any assets that would be reflected on a balance sheet of Seller prepared
in accordance with the Accounting Principles as "ventures settled equity" or
"income taxes", (ix) all rights arising under contracts, arrangements or
agreements to the extent that such contracts, arrangements or agreements are
Excluded Liabilities, (x) any Seller Plans or any assets related thereto, except
to the extent that Purchaser incurs any liability with respect to such Seller
Plans pursuant to applicable law, (xi) any contracts of insurance, except (A)
the rights of any member of the Seller Group as an additional insured or loss
payee on any insurance contract of an Obligor under a Purchased Financing
Contract, and (B) residual value insurance covering Portfolio Property subject
to any Purchased Financing Contract, if any, (xii) any intercompany agreements,
contracts or commitments, including agreements in respect of intercompany
indebtedness and including, without limitation, those agreements, contracts, and
commitments listed on Schedule 1.1D, (xiii) any claim, right or cause of action
arising under Sections 544 through 553, inclusive, of the Bankruptcy Code, (xiv)
any member of the Seller Group's company seal, minute books, charter documents,
stock or equity record books and such other books and records as pertain to the
organization, existence or capitalization of such member of the Seller Group as
well as any other records or materials relating to such member of the Seller
Group and not involving or related to any of the Purchased Assets or Assumed
Liabilities, and (xv) any right that Seller or any Assigning Subsidiary has with
respect to Tax refunds, claims for Tax refunds and Tax attributes.
"Excluded Financing Contracts" shall mean the Financing
Contracts listed on Schedule 1.1P.
"Excluded Liabilities" shall mean any liability or obligation
(whether known or unknown, contingent or absolute, or arising before, on or
after the Closing Date) of any member of the Seller Group other than the Assumed
Liabilities. Excluded Liabilities shall include, without limitation, (i) any
Environmental Costs and Liabilities arising from, related to or otherwise
attributable to (A) the operation by any member of the Seller Group or any of
their Affiliates or any predecessors thereof of any real property owned,
operated or leased by any member of the Seller Group or any of their Affiliates
prior to Closing, including, without limitation, noncompliance with or liability
under Environmental Laws and Remedial Action obligations, (B) any Excluded
Asset, or (C) the operations of any member of the Seller Group or any of their
Affiliates on, prior to or after the Closing, (ii) any obligation under this
Agreement of any member of the Seller Group, (iii) any rights or obligations
under any agreements, contracts, commitments or guaranties in respect of any
indebtedness for borrowed money other than the Purchased Discounted Financing
Agreements, (iv) Seller Employee Liabilities, (v) any liability or obligation of
any member of the Seller Group or any Affiliate thereof (or any predecessor
thereto) relating to Taxes (including with respect to the Purchased Assets or
otherwise) for all periods, or portions thereof, ending on or prior to the
Closing Date, and (vi) any liability of any member of the Seller Group related
to any Excluded Asset.
"Exemption Certificate" shall mean a form or statement from an
Obligor indicating that the transaction covered by a Financing Contract is
exempt from any sales, use or similar Tax.
"Exempt Transaction" shall have the meaning given to such term
in Section 5.3(c).
"Final Order" shall mean an order or judgment the operation or
effect of which is not stayed, and as to which order or judgment (or any
revision, modification or amendment thereof), the time to appeal or seek review
or rehearing has expired, and as to which no appeal or petition for review or
motion for rehearing or reargument has been taken or made.
"Final Tax Determination" shall mean (i)(A) a decision,
judgment, decree or other order by any court of competent jurisdiction, which
decision, judgment, decree or other order has become final after all allowable
appeals by either party to the action have been exhausted or the time for filing
such appeals has expired or, (B) in any case where judicial review shall at the
time be unavailable, a decision, judgment, decree or other order of an
administrative official or agency of competent jurisdiction, which decision,
judgment, decree or other order has become final after all allowable appeals by
either party to the action have been exhausted or the time for filing such
appeals has expired; (ii) a closing agreement entered into pursuant to Section
7121 of the Code or any other settlement agreement entered into in connection
with an administrative or judicial proceeding which settlement agreement is
final and binding on the parties thereto; (iii) the expiration of the time for
instituting a claim for refund, or if such a claim was filed, the expiration of
the time for instituting suit with respect thereto; or (iv) the expiration of
the time for instituting suit with respect to the claimed deficiency.
"Financial Statements" shall mean (i) the audited consolidated
balance sheets of Seller as of September 30, 1999 and September 30, 2000 and the
related consolidated statements of income, stockholders' equity and cash flows
of Seller for the fiscal years ended September 30, 1999 and September 30, 2000,
(ii) the unaudited consolidated balance sheet of Seller as of March 31, 2001 and
the related statements of income, stockholders' equity and cash flows of Seller
for the 6-month period ended Xxxxx 00, 0000, (xxx) the unaudited consolidated
balance sheet of Seller as of June 30, 2001 and the related statements of
income, stockholders' equity and cash flows of Seller for the 9-month period
ended June 30, 2001, and (iv) the items listed on Schedule 1.1M to this
Agreement.
"Financing Contract" shall mean any contract, including any
schedule or amendment thereto or assignment, assumption, renewal or novation
thereof (and delivery, acceptance or installation certificates, landlord or
mortgagee waivers, intercreditor or subordination agreements, incumbency
certificates, purchase orders, purchase order assignments, and sale and
leaseback agreements, each relating thereto), in the form of (i) a lease of or
rental agreement with respect to Property, (ii) a sale contract (including an
installment sale contract or conditional sale agreement) arising out of the sale
of Property, or (iii) a secured financing of Property, and in each case, which
with respect thereto: (A) any member of the Seller Group is the lessor, seller,
secured party or obligee (whether initially or as an assignee), or (B) is
between an Obligor, on the one hand, and a lessor, seller, obligee, secured
party or assignee of any of the foregoing, on the other hand, and (1) which
would be a Financing Contract if any member of the Seller Group were the lessor,
seller, obligee, secured party or assignee of any of the foregoing thereunder
and (2) with respect to which any member of the Seller Group is an assignee of
the revenues or claims with respect thereto.
"First Amendment" shall have the meaning given to such term in
the Recitals of this Agreement.
"Foreign Plan" shall mean each Seller Plan that is not subject
to United States Law.
"Foreign Transfer Agreement" shall mean the transfer agreement
or other transfer documents between each applicable Assigning Subsidiary and the
applicable Purchaser Affiliate in the form mutually agreed to between Purchaser
and Seller for the transfer of Purchased Assets between the applicable Assigning
Subsidiary and Purchaser Affiliate, containing such provisions as may be
required or necessary under applicable law to transfer such Purchased Assets,
including, without limitation, with regard to France, (i) an undertaking of the
French entities that are Assigning Subsidiaries to make such disclosures and
representations to Purchaser or such Purchaser Affiliate as Purchaser may
identify for such purpose, as are required under French law, in particular
Article L141-1 of the New Commercial Code, where the present Agreement is
considered to constitute the sale of an activity or going concern ("cession de
fonds de commerce") and (ii) escrow provisions for the purpose of Seller making
a deposit required by Article L141-15 of the New Commercial Code where any
opposition of the Purchase Price to the applicable Assigning Subsidiary in
respect of the sale of assets belonging to one or more French Assigning
Subsidiaries has been duly presented in accordance with the requirements of
French law.
"Good Faith Deposit" shall have the meaning given to such term
in Section 2.3(a).
"Governmental Entity" shall mean a federal, state, provincial,
local, county or municipal government, governmental, regulatory or
administrative agency, department, commission board, bureau, court or other
authority or instrumentality, domestic or foreign.
"GST" shall have the meaning given to such term in Section
5.3(d)(i).
"Hazardous Material" shall mean any material, substance or
waste that is classified, regulated or otherwise characterized under any
Environmental Law as hazardous, toxic, a contaminant or a pollutant or by other
words of similar meaning or regulatory effect, including any petroleum or
petroleum-derived substance or waste, asbestos and polychlorinated biphenyls.
"HSR Act" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended.
"HST" shall have the meaning given to such term in Section
5.3(d)(i).
"Indemnifiable Loss" shall have the meaning given to such term
in Section 5.4(p).
"Indemnification Event" shall mean any event, action,
proceeding or claim for which a Person is entitled to indemnification under this
Agreement.
"Indemnification Rate" as of any date shall mean an interest
rate equal to the LIBOR Rate on such date, plus 50 basis points, compounded
annually.
"Indemnitor" shall mean the indemnifying person in the case of
any obligation to indemnify pursuant to the terms of this Agreement.
"Indemnity Payment" shall have the meaning given to such term
in Section 5.4(p).
"Information" shall have the meaning given to such term in
Section 5.1(g).
"Initial Payment" shall mean an amount equal to 90% of the
Estimated Payment.
"Insolvent Subsidiary" shall mean an Assigning Subsidiary, not
a debtor in the Chapter 11 Cases, that will be "insolvent" immediately before or
immediately after giving effect to the purchase and sale of the Purchased Assets
and the consummation of the transactions contemplated hereby. For purposes of
this definition, the term "insolvent" shall be defined by reference to the
bankruptcy, insolvency, fraudulent conveyance or similar laws of the
jurisdiction applicable to such Subsidiary.
"Intellectual Property" shall mean any patents, patent
applications, trade names, trademarks, service marks, trade dress, logos, domain
names, symbols and slogans, together with the goodwill associated therewith,
including trademark registrations and applications, service xxxx registrations
and applications, trade secrets, copyrights, computer software, including source
codes and documentation related thereto, copyright registrations and
applications, and rights to any of the foregoing under license (in all cases
except as set forth in Section 2.1(a)(v)).
"Inventory" has the meaning given to such term in Section
5.26.
"IRS" shall mean the United States Internal Revenue Service.
"ITA" shall have the meaning given to such term in Section
3.8(d).
"January Purchase Agreement" shall have the meaning given to
such term in the Recitals of this Agreement.
"Japanese NEC Lease" shall mean the Financing Contracts
identified as the "NEC Leveraged Leases" in tab "Xxxxxx" of file
"electronics-asia-6-30-01.xls" of the June Portfolio Tape (i) in which NEC
Hiroshima or NEC Yamagata is the Obligor, (ii) in which a Japanese special
purpose entity, is the lessor to NEC Hiroshima or NEC Yamagata, as the case may
be, and holds legal title in the Portfolio Property and (iii) in connection
therewith, Comdisco Equipment Solutions, Inc. (Japan) is a party with a Japanese
special purpose entity to an asset management agreement, a subordinated loan
purchase agreement, a Tokumei Kumiai agreement and an equipment purchase
(option) agreement; provided, however, the Purchased Assets listed on Schedule
1.1Q shall not be deemed a Japanese NEC Lease.
"June Portfolio Tape" shall mean the computer disk, computer
tape or other computer format delivered to Purchaser prior to the effective date
hereof containing certain information as of June 30, 2001 (it being agreed and
understood that any amounts reflected on the June Portfolio Tape that are
denominated in a currency other than U.S. dollars have been deemed to be
converted into U.S. dollars as of June 30, 2001 in accordance with SFAS No. 52).
"Lab & Scientific Agreement" shall mean that certain Asset
Purchase Agreement dated as of January 23, 2002 between Purchaser and Seller, as
may be amended, restated or otherwise modified from time to time, relating to
the purchase by Purchaser of certain assets of Seller's laboratory and
scientific leasing segment, subject to the terms and conditions set forth
therein.
"Lease File" shall have the meaning given to such term in
Section 5.1(a).
"LIBOR Rate" on any date shall mean the rate of interest
identified as the three month "London Interbank Offered Rate (LIBOR)" in the
"Money Rate" section of the Wall Street Journal published on such date (or, if
such publication is not published on such date, as published on the most
recently preceding date).
"Line Adds" shall mean an addition of equipment to a Financing
Contract that results in an increase in the periodic rental payment due
thereunder without extending the term of the Financing Contract.
"Lump Sum Residual Collections" shall have the meaning given
to such terms in the definition of "Electronics Residual Collections"
"March Portfolio Tape" shall mean the computer disk, computer
tape or other computer format delivered to Purchaser prior to the effective date
hereof containing certain information as of Xxxxx 00, 0000 (xx being agreed and
understood that any amounts reflected on the March Portfolio Tape that are
denominated in a currency other than U.S. dollars have been deemed to be
converted into U.S. dollars as of March 31, 2001 in accordance with SFAS No.
52).
"Material Adverse Effect" shall mean a material adverse effect
on the ownership, collection, enforcement, value or administration of the
Purchased Assets taken as a whole; provided, however, a Material Adverse Effect
shall not include (i) the filing of the Chapter 11 Cases, (ii) any event,
condition or matter that is generally applicable to the industries and markets
in which the Seller Group operates with respect to the Purchased Assets, or
(iii) any event, condition or matter that relates to foreign currency exchange
rate or interest rate fluctuations.
"Material Contract" shall mean any agreement, contract or
commitment (other than a Financing Contract) which calls for the payment by or
on behalf of any member of the Seller Group of $500,000 or more, or the delivery
by any member of the Seller Group of goods or services with a fair market value
of $500,000 or more, or provides for any member of the Seller Group to receive
any payments of, or any Property (other than Portfolio Property) with a fair
market value of, $500,000 or more, or which otherwise is material to the
Purchased Assets.
"Multiemployer Plan" shall have the meaning provided in
Section 3(37) of ERISA.
"Multiple Employer Plan" shall mean any Seller Plan which is
or has been subject to Sections 4063 or 4064 of ERISA.
"NEC Transactions" shall mean the agreements set forth on
Schedule 1.1Q.
"Net Book Value" with regard to any Purchased Financing
Contract shall be determined as follows:
(i) for each such Purchased Financing Contract treated in
accordance with the Accounting Principles as a finance lease for U.S. accounting
purposes, Net Book Value of such Purchased Financing Contract at any date shall
be equal to (A) the sum of (1) gross receivables with respect to such Purchased
Financing Contract at such date and (2) the Residual, if any, at such date less
(B) unearned income with respect to such Purchased Financing Contract at such
date;
(ii) for each Purchased Financing Contract treated in
accordance with the Accounting Principles as a loan or conditional sales
contract for U.S. accounting purposes, Net Book Value of such Purchased
Financing Contract at any date shall be equal to (A) gross receivables with
respect to such Purchased Financing Contract at such date less (B) unearned
income with respect to such Purchased Financing Contract at such date; and
(iii) for each Purchased Financing Contract treated in
accordance with the Accounting Principles as an operating lease for U.S.
accounting purposes, Net Book Value of such Purchased Financing Contract at any
date shall be equal to (A) the Original Equipment Cost of the Portfolio Property
subject to such Purchased Financing Contract at such date less (B) accumulated
depreciation with respect to such Purchased Financing Contract at such date.
In each case above, gross receivables, unearned income and
accumulated depreciation shall be determined in accordance with the Accounting
Principles.
With regard to all Purchased Assets other than Purchased
Financing Contracts, "Net Book Value" shall mean the net book value of such
Purchased Assets determined in accordance with the Accounting Principles.
"Non-Assumable Claim" shall mean any claim, action or
proceeding (i) involving any Governmental Entity, (ii) seeking injunctive
relief, (iii) involving a class action, (iv) involving allegations of criminal
activities or (v) involving allegations of violations of any domestic, foreign
or state law governing the extension of credit or of RICO, any domestic or
foreign federal or state securities laws or regulations, any domestic or foreign
federal or state antitrust laws or any laws pertaining to usury, installment or
conditional sales and financing, truth in lending, equal opportunity, credit
reporting or debt collection.
"Non-Terminable or Modifiable Financing Contracts" shall have
the meaning given to such term in Section 5.1(d)(K).
"Obligor" shall mean any Person that is an obligor, borrower
or lessee under any Financing Contract.
"Original Equipment Cost" shall mean, with respect to any item
of Portfolio Property, the original cost of such Portfolio Property as recorded
in the books and records of any member of the Seller Group in accordance with
the Accounting Principles.
"Original Purchase Agreement" shall have the meaning given to
such term in the Recitals of this Agreement.
"Permitted Encumbrance" shall mean (i) any Encumbrance for
Taxes not yet due and payable, (ii) any mechanic's or materialmen's lien, which
an Obligor under a Financing Contract is required to remove and which does not
materially affect the value of the Portfolio Property subject to such lien,
(iii) any Encumbrance pursuant to the Purchased Discounted Financing Agreements,
(iv) any Encumbrance on any Portfolio Property which is specifically permitted
in accordance with the terms of the related Financing Contract and which does
not materially affect the value of the Portfolio Property subject to such
Encumbrance, or (v) any Encumbrance resulting from the terms of the applicable
Financing Contract that is reflected on the books and records of any member of
the Seller Group in accordance with the Accounting Principles.
"Person" shall mean any individual, partnership, corporation,
trust, limited liability company, unincorporated organization, government or
department or agency thereof and any other entity.
"Petitions" shall have the meaning given to such term in the
Recitals of this Agreement.
"Portfolio Information" shall mean, with respect to any
Purchased Financing Contract, the following information (which information is
required to appear, and which appears, on the March Portfolio Tape and the June
Portfolio Tape, and, which will appear, on the Cut-Off Date Portfolio Tape): (i)
the name of the Obligor under such Purchased Financing Contract, (ii) the
account schedule number of such Purchased Financing Contract, (iii) a
description of each item of Portfolio Property relating to such Purchased
Financing Contract, (iv) the Original Equipment Cost for each item of Portfolio
Property relating to such Purchased Financing Contract, which is referred to by
Seller as the "inception cost", (v) the stated contractual end of term thereof,
(vi) the date of the last scheduled payment under such Purchased Financing
Contract, (vii) the scheduled payments due in the next 20 quarters under such
Purchased Financing Contract set forth on a quarterly basis, whether billed or
unbilled, (viii) the terms of any purchase options in favor of the Obligor or
any other Person, (ix) the proper accounting classification thereof on the books
of Seller, (x) the "leasing corp code" of such Purchased Financing Contract,
(xi) the billing frequency of such Purchased Financing Contract, (xii) the
Residual amount of such Purchased Financing Contract, (xiii) the country in
which the Portfolio Property of such Financing Contract is currently located,
(xiv) the net present value of such Purchased Financing Contract, which is
referred to by Seller as the "net book value", and (xv) whether such Purchased
Financing Contract is a month-to-month Financing Contract. Portfolio Information
shall also include the following information which is not required to appear on
the March Portfolio Tape or the June Portfolio Tape, and which will not be
required to appear on the Cut-Off Date Portfolio Tape: (A) the amount of any
Advance Payment thereunder, (B) to the extent available, the tax basis,
remaining tax depreciation term and tax depreciation method elected by Seller in
the case of any Purchased Financing Contract under which any member of the
Seller Group is treated as the owner of the Portfolio Property subject to or
governed by such Purchased Financing Contract, for Tax purposes (other than
Federal income Tax) relevant for any member of the Seller Group, (C) any type of
service, and payment terms for such service, required to be performed in
connection with such Purchased Financing Contract, (D) whether such Purchased
Financing Contract is subject to a Discounted Financing Agreement, and, if so,
the lender for such financing, the interest rate for such financing, and whether
or not the applicable lender is currently located in the United States, and (E)
a delinquency report in the form attached as Schedule 1.1I.
"Portfolio Property" shall mean (i) Property with respect to
which any member of the Seller Group is the lessor, seller or secured party, as
the case may be, pursuant to the terms of a Purchased Financing Contract
(whether initially or as an assignee), (ii) Property which is intended to be the
subject of a Purchased Financing Contract or (iii) Property subject to the
Excluded Financing Contracts.
"Proceedings" shall have the meaning given to such term in
Section 3.13.
"Property" shall mean all property and assets of whatsoever
nature including but not limited to personal property, whether tangible or
intangible, and whether leased or owned, and claims, rights and choses in
action.
"Public Sector Financing Contract" shall mean any Purchased
Financing Contract (including any amendment thereto or any renewal, assignment,
assumption or novation thereof) to which any Governmental Entity is a party.
"Purchase Price" shall mean the amount to be paid by Purchaser
or a Purchaser Affiliate to Seller or any Assigning Subsidiary in accordance
with Section 2.2.
"Purchase Price Certificate" shall have the meaning given to
such term in Section 5.5(a)(iv).
"Purchased Assets" shall have the meaning given to such term
in Section 2.1.
"Purchased Discounted Financing Agreements" shall mean the
Discounted Financing Agreements which are secured by any Purchased Financing
Contracts as to which a Discounted Lender Consent has been obtained or as to
which a Discounted Lender Consent is not required as the result of the provisos
to the definition of Discounted Lender Consent.
"Purchased Financing Contracts" shall mean all Financing
Contracts listed on June Portfolio Tape for the Electronics Segment (including
Financing Contracts securing Discounted Financing Agreements), together with (x)
any Portfolio Property owned in connection with such Financing Contracts, (y)
all rights of any member of the Seller Group with respect to Portfolio Property,
and (z) all payments due or to become due thereunder (including, without
limitation, all accounts receivable attributable thereto), in each case to the
extent that both the Obligor is domiciled, and the Portfolio Property relating
to such Financing Contracts are located, in either the United States, Canada,
the Czech Republic, Japan, Ireland, Singapore, Mexico, the Netherlands, Germany,
Austria, France, Italy, the United Kingdom, Thailand, Brazil, Belgium, Malaysia,
Romania, Estonia, Taiwan, Hungary, Finland, the Peoples Republic of China or
Sweden; provided, however, that Purchased Financing Contracts shall not include
any Financing Contract (or the Portfolio Property related thereto) (A) listed on
Schedule 5.21 hereof to the extent that Seller does not transfer such Financing
Contract from Comdisco Equipment Solutions Ltd. (Cayman Island) to Comdisco
Deutschland GmbH; (B) with any Obligor, or a provider of a Credit Enhancement,
that is subject to a United States or foreign bankruptcy, insolvency or similar
proceeding; (C) [Intentionally Omitted]; (D) with any Obligor, or a provider of
a Credit Enhancement, that is in litigation (whether as a plaintiff or
defendant) with any member of the Seller Group; (E) that is a Required Consent
Financing Contract of any member of the Seller Group for which the requisite
third party consent, and novation, if required, has not been obtained prior to
the Closing so as to permit the applicable member of the Seller Group to assign
such Required Consent Financing Contract to Purchaser or the applicable
Purchaser Affiliate; (F) that is a Delinquency Contract as of the Cut-Off Date;
(G) [Intentionally Omitted]; (H) as to which Purchaser has (x) not received at
the Closing the original master lease, applicable schedules and Credit
Enhancements thereto (excluding, for purposes of receiving such original master
leases, any Financing Contract which is the subject of a Purchased Discounted
Financing Agreement, copies of which, certified as true, correct and complete by
an officer of Seller, may be provided in lieu of originals), (y) not received at
the Closing a confirmation in the form specified pursuant to Section 5.14 or a
facsimile copy thereof (confirming the validity of information set forth on such
confirmation) from the Obligor, provided that if such confirmations are received
with respect to both (1) Financing Contracts with an aggregate Net Book Value
equaling at least 75% of the aggregate Net Book Value of all Purchased Financing
Contracts otherwise conforming to the requirements hereof, and (2) at least 75%
by number of such Financing Contracts of all Purchased Financing Contracts
otherwise conforming to the requirements hereof, then no Financing Contracts
shall be excluded from purchase pursuant to this clause (H)(y) due to the fact
that such a confirmation was not received, or (z) reasonably determined,
applying the standard with respect to a given jurisdiction that a prudent
purchaser would customarily apply, that the representations and warranties
contained in this Agreement with respect to such Financing Contract are not true
and correct in all respects and as to which Purchaser has provided written
notice at or prior to Closing; (I) that is a Japanese NEC Lease; (J) which
secures a Discounted Financing Agreement for which a Discounted Lender Consent
has not been obtained unless a Discounted Lender Consent is not required as a
result of the provisos to the definition of "Discounted Lender Consent"; (K)
that are Bundled Contracts; (L) excluded pursuant to Section 2.1(e); or (M) that
is an Excluded Financing Contract.
"Purchased Other Contracts" shall have the meaning given to
such term in Section 2.1.
"Purchaser" shall have the meaning given to such term in the
Recitals.
"Purchaser Affiliates" means any one or more Affiliates of
Purchaser that Purchaser may permit (i) to purchase all or certain Purchased
Assets, (ii) to assume all or certain Assumed Liabilities, (iii) to exercise any
of Purchaser's rights under Section 8.5, or (iv) to employ all or certain
Accepting Employees, subject to satisfaction of the requirements of Section 365
of the Bankruptcy Code including the provision of adequate assurances for future
performance; provided, that Purchaser shall not be relieved of its obligations
under this Agreement; provided, further, that nothing in this Agreement shall
require Purchaser, on its own behalf in lieu of a Purchaser Affiliate, to assume
any Discounted Financing Agreements or purchase any Portfolio Property or
Financing Contracts securing any Discounted Financing Agreements.
"Purchaser Indemnified Parties" shall have the meaning given
to such term in Section 5.4(a).
"Purchaser Plans" shall have the meaning given to such term in
Section 5.11(d).
"Purchaser Related Documents" shall have the meaning given to
such term in Section 5.4(h).
"Purchaser's Accountants" shall mean PricewaterhouseCoopers or
any public accounting firm with nationally recognized auditing expertise, as
selected by Purchaser.
"QST" shall have the meaning given to such term in Section
5.3(d)(i).
"Release" means, with respect to any Person, any release,
spill, emission, leaking, pumping, injection, deposit, disposal, discharge,
dispersal, leaching or migration of Hazardous Material through or in the air,
soil, surface water, ground water or property.
"Remedial Action" means all actions required to (a) clean up,
remove, treat or in any other way address any Hazardous Material in the indoor
or outdoor environment, (b) prevent the Release or threat of Release or minimize
the further Release so that a Hazardous Material does not migrate or endanger or
threaten to endanger public health or welfare or the indoor or outdoor
environment or (c) perform pre-remedial studies and investigations and
post-remedial monitoring and care.
"Required Consent Financing Contract" shall mean any Financing
Contract which requires consent (by contract or applicable law), or novation, of
the Obligor or another third party to be transferred by any member of the Seller
Group to Purchaser or any Purchaser Affiliate; provided, however, that Required
Consent Financing Contracts shall not include (i) Financing Contracts that are
excluded from the definition of Purchased Financing Contracts for a reason other
than the fact that they would be Required Consent Financing Contracts and (ii)
Financing Contracts which may be transferred pursuant to this Agreement without
such consent under Section 365 of the Bankruptcy Code as provided for in the
Approval Order.
"Residual" shall mean, with respect to any item of Portfolio
Property, its estimated value upon expiration of the Financing Contract to which
it is subject, as determined by the applicable member of the Seller Group,
established on its books and records at the inception of such Financing Contract
and referred to by the Seller Group on such books and records as "NBV at Term."
"San Diego Facility" shall mean the facility of any member of
the Seller Group located in San Diego, California, at 0000 Xxxxx Xxxxx, Xxxxx
000, Xxx Xxxxx, Xxxxxxxxxx.
"Second Closing" shall have the meaning given to such term in
Section 6.1(b).
"Selected Accounting Firm" shall mean a public accounting firm
with nationally recognized auditing expertise, which shall be selected by
Purchaser's Accountants and Seller's Accountants to resolve a dispute arising
pursuant to Section 5.3 or 5.5 hereof.
"Seller" shall have the meaning given to such term in the
Recitals.
"Seller Claims" shall have the meaning given to such term in
Section 5.6(a).
"Seller Employee" shall mean any current or former employee of
any member of the Seller Group that provides or provided services for or on
behalf of the Purchased Assets.
"Seller Employee Liabilities" shall mean any liability or
obligation in respect of (i) any Seller Plans (other than as provided in Section
5.11(h) hereof), employment, retention, severance, termination costs, accrued
vacation, change of control, or other agreements, contracts or commitments by
any member of the Seller Group covering the Seller Employees, and (ii) any
liability for any action by or obligation to any Seller Employee or any employee
of any Assigning Subsidiary, including individuals whose employment shall
transfer to Purchaser or a Purchaser Affiliate by operation of law and whom
Purchaser or a Purchaser Affiliate has not identified as a Seller Employee who
will continue employment with Purchaser or a Purchaser Affiliate; provided,
however, that Seller Employee Liabilities in respect of Accepting Employees
shall be deemed to include only those liabilities which arise or are incurred on
or prior to Closing. For the avoidance of doubt, any Seller Employee Liabilities
that may pass to Purchaser or any Purchaser Affiliate by operation of law,
statute, common law or otherwise which are not expressly assumed by Purchaser or
a Purchaser Affiliate under this Agreement, shall be subject to indemnification
by Seller in accordance with Section 5.4 hereof.
"Seller Group" shall mean, individually or collectively,
Seller and each of the Assigning Subsidiaries, each of which shall be deemed a
member of the Seller Group. References to each member of the Seller Group shall
be a reference to each member of the Seller Group individually and to each
member of the Seller Group in the aggregate.
"Seller Indemnified Parties" shall have the meaning given to
such term in Section 5.4(h).
"Seller Plans" shall mean each material employee benefit plan,
as defined in Section 3(3) of ERISA, and all other material employee benefit
arrangements or payroll practices, including, without limitation, bonus plans,
employment, consulting or other compensation arrangements, incentive, equity or
equity-based compensation, deferred compensation arrangements, change in
control, termination or severance plans or arrangements, stock purchase,
severance pay, sick leave, vacation pay, salary continuation, disability,
hospitalization, medical insurance, life insurance and scholarship plans and
programs maintained by Seller or any Assigning Subsidiary for the benefit of
Seller Employees; provided, however, that for purposes of Sections 3.8(a) and
3.8(b) hereof, "Seller Plans" shall not include: any benefits or contributions
for benefits imposed or required in accordance with applicable law, statute or
regulation.
"Seller Related Documents" shall have the meaning given to
such term in Section 5.4(a).
"Seller's Accountants" shall mean KPMG LLP or any public
accounting firm with nationally recognized auditing expertise, as selected by
Seller.
"Seller's Insurance Policies" shall have the meaning given to
such term in Section 5.6(a).
"Seller's Knowledge" or any similar expression shall mean the
knowledge which any individual set forth on Schedule 1.1G has or should
reasonably be expected to have in the prudent exercise of that individual's
duties, after inquiry.
"Settlement Date" shall mean the fifth Business Day following
the date of delivery of the final Special Procedures Report of Assets Acquired
and Liabilities Assumed and final Purchase Price Certificate as provided in
Section 5.5(a)(vi).
"Settlement Interest" shall mean the amount of accrued
interest on the Settlement Payment calculated at the Settlement Rate, as in
effect on the Settlement Date, for the period from the Cut-Off Date to, but not
including, the date upon which the Settlement Payment is made (calculated on the
basis of the actual number of days elapsed in a year of 365 or 366 days, as the
case may be).
"Settlement Payment" shall mean an amount, which shall be
expressed as a positive amount, equal to the difference between (i) the Initial
Payment and (ii) the Purchase Price.
"Settlement Rate" shall mean, on any date, the "Target"
federal funds rate reported in the "Money Rates" Section of the eastern edition
of The Wall Street Journal published for such date. In the event The Wall Street
Journal ceases publication of the federal funds rate or fails on any particular
date to publish the federal funds rate, the federal funds rate shall refer to
the rate for the last transaction in overnight federal funds arranged prior to
such date by The Chase Manhattan Bank (National Association).
"Special Adjustments" shall mean such adjustments to the
Cut-Off Date Schedule of Assets Acquired and Liabilities Assumed as shall be
necessary to (i) reflect all assets or liabilities, which, as of the Cut-Off
Date, were assets or liabilities (as the case may be) of any member of the
Seller Group of a type properly to have been reflected on the Cut-Off Date
Schedule of Assets Acquired and Liabilities Assumed, but which were not in fact
reflected on the Cut-Off Date Schedule of Assets Acquired and Liabilities
Assumed, including any asset or liability which was not reflected on the Cut-Off
Date Schedule of Assets Acquired and Liabilities Assumed because such asset or
liability was not deemed to be material, (ii) remove any asset or liability
which should not have been reflected on the Cut-Off Date Schedule of Assets
Acquired and Liabilities Assumed but was in fact reflected thereon irrespective
of whether such asset or liability is deemed not to be material, (iii) give
effect to each accounting principle, method, practice or procedure that is to be
treated as a Special Adjustment pursuant to the last sentence of the definition
of "Accounting Principles," (iv) eliminate any Excluded Assets and any Excluded
Liabilities reflected on the Cut-Off Date Schedule of Assets Acquired and
Liabilities Assumed and (v) reflect the Assumed Liabilities calculated as of the
Cut-Off Date. In addition, the Special Adjustments shall include the following:
(a) the Net Book Value of Financing Contracts with associated Advance Payments
which are flagged as "Z" in the "Billing Frequency" column of the June Portfolio
Tape, shall be equal to the net present value of the Residual and the discount
rate used in determining the net present value is 12%, and (b) the Net Book
Value of Financing Contracts with associated Advance Payments which are not
flagged as "Z" in the "Billing Frequency" column of the June Portfolio Tape,
shall be equal to the Net Book Value minus the amount of any "deferred income"
with respect to such Financing Contract.
"Special Procedures Report of Assets Acquired and Liabilities
Assumed" shall mean the Cut-Off Date Schedule of Assets Acquired and Liabilities
Assumed and the Adjusted Cut-Off Date Schedule of Assets Acquired and
Liabilities Assumed, as to which the special procedures have been performed in
the manner provided for in Section 5.5(a)(iii).
"Special Representations" shall mean the representations or
warranties in Sections 3.6(c), 3.8, 3.9, 3.18, 3.19 and 3.20.
"State and Local Governmental Entity" shall mean a state,
province, territory or possession of the United States or a foreign country, or
fully constituted political subdivision or agency of any of the foregoing, or
the District of Columbia or a Governmental Entity in Canada.
"Subsidiary" shall mean a Person (other than an individual) of
which another Person owns or controls directly or indirectly more than 50% of
the stock, capital or other equity interests or more than 50% of the voting
power providing the holders thereof, ordinarily and generally in the absence of
contingencies, the right to vote for the election of directors, managers or
Persons having similar rights and duties.
"Tax" (and, in the plural, "Taxes") shall mean any domestic or
foreign federal, state, provincial or local taxes, charges, fees, levies,
imposts, duties and governmental fees or other like assessments or charges of
any kind whatsoever, together with any interest or penalty, addition to Tax or
additional amount imposed with respect thereto or any Tax Return, whether
payable by reason of contract, assumption, transferee liability, operation of
law or otherwise (including, but not limited to, any income, net income, gross
income, receipts, windfall profit, severance, property, inventory and
merchandise, business privilege, production, sales, use, license, excise,
registration, franchise, employment, payroll, withholding, alternative or add-on
minimum, intangibles, ad valorem, transfer, gains, stamp, estimated,
transaction, title, capital, paid-up capital, profits, occupation, premium,
value-added, recording, real property, personal property, federal highway use,
commercial rent or environmental tax).
"Tax Benefit" shall have the meaning given to such term in
Section 5.4(p).
"Tax-Exempt Public Sector Financing Contract" shall mean a
Public Sector Financing Contract in respect of which the interest income
received by any member of the Seller Group is treated on its books and records
as exempt from federal income tax pursuant to Section 103 of the Code or any
predecessor thereof.
"Tax Liability" shall have the meaning given to such term in
Section 5.4(p).
"Tax Return" shall mean any return, report or statement
required to be filed with respect to any Tax (including any attachments thereto,
and any amendment thereof) including, but not limited to, any information
return, claim for refund, amended return or declaration of estimated Tax, and
including, where permitted or required, combined, unitary or consolidated
returns for any group of entities that includes any member of the Seller Group
or their Affiliates.
"Third Party Beneficiary" shall have the meaning given to such
term in Section 8.12.
"Title Date" with respect to each item of Portfolio Property
described in Section 2.1(a)(xi), shall mean the date that is one Business Day
prior to the termination of the Financing Contract to which such Portfolio
Property is subject.
"Title IV Plans" shall have the meaning given to such term in
Section 3.8(e).
"Transfer Taxes" shall have the meaning given to such term in
Section 5.3(c).
"Transitional Services Agreement" shall mean an agreement
among Purchaser, Seller and each Purchaser Affiliate, whereby Seller provides
certain services to Purchaser and each Purchaser Affiliate from and after the
Closing with respect to the Purchased Assets, substantially in the form attached
hereto as Exhibit B.
"Two Closing Premium" shall have the meaning given to such
term in Section 2.2.
"Value Added Tax" shall mean any taxes imposed by a
jurisdiction on the supply of goods and services pursuant to legislation
implemented within the European Union under the EC Sixth Council Directive
(77/388/EEC) and related legislation or similar legislation implemented outside
the European Union which is substantially similar in effect, including, without
limitation, Goods and Services Tax under the laws of Singapore and National
Consumption Tax under the law of Japan.
"WARN Act" shall mean the Workers Adjustment and Retraining
Notification Act, 29 X.X.X.xx.xx. 2101 et seq., and any comparable state or
local laws and regulations.
ARTICLE II
PURCHASE OF ASSETS
2.1 Purchased Assets.
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(a) Purchased Assets. Upon the terms and subject to the conditions of this
Agreement, at the Closing (subject to Section 2.1(f)), Purchaser, or any
Purchaser Affiliate, shall purchase from Seller and the Assigning Subsidiaries,
and Seller shall, and shall cause each Assigning Subsidiary to, sell, assign,
transfer and convey to Purchaser, or any Purchaser Affiliate, good, valid and
marketable title (free and clear of all Encumbrances other than Permitted
Encumbrances) to the following in existence on the Closing Date (subject to
Sections 5.1(j) and 6.2(c), the "Purchased Assets"):
(i) all Purchased Financing Contracts;
(ii) all Credit Enhancements (except cash associated with Advance Payments)
related to the Purchased Financing Contracts;
(iii) (x) (A) all alliance agreements, service provider agreements,
consulting agreements, purchase orders, residual value insurance
covering Portfolio Property or Purchased Financing Contracts, if any,
and other agreements, contracts or commitments, in each case in this
clause (x) (A) listed on Schedule 2.1(a)(iii) or (B) listed in the
supplemental Schedules delivered by Seller pursuant to Section 5.9 and
identified by Purchaser in writing as a Purchased Other Contract, in
each case among any member of the Seller Group and an Obligor of, or
otherwise related to, a Purchased Financing Contract, and (y) all
remarketing agreements from the Electronics Segment with an Obligor of
any Purchased Financing Contract if Purchaser or a Purchaser Affiliate
acquires such of the Financing Contracts of such Obligor pursuant to
the terms of this Agreement that, in the aggregate, have a Net Book
Value which is greater than one-half of the Net Book Value of all of
the Financing Contracts in the Electronics Segment of such Obligor
(each agreement and commitment referred to in clauses (x) and (y) above
being referred to as a "Purchased Other Contract") and all accounts
receivable attributable thereto;
(iv) the leasehold interest in the San Diego Facility;
(v) (x) all equipment, furniture, vehicles and all other tangible personal
property both used in the Electronics Segment and located at the San
Diego Facility of the type used in those facilities on May 31, 2001,
except for inventory and (y) all personal computers and laptops (but
not the computer software, source code or documentation related thereto
except to the extent that such assets can be transferred to Purchaser
or a Purchaser Affiliate without causing any member of the Seller Group
to incur any additional cost, liability or obligation) used by
Accepting Employees and all accessories thereto;
(vi) to the extent transferable, all rights under manufacturers' and
vendors' warranties relating to the Purchased Assets and all similar
rights against third parties relating to the Purchased Assets;
(vii) all Authorizations, to the extent transferable, related to the
Purchased Assets;
(viii) all the books and records of each member of the Seller Group relating
to any of the Purchased Assets, Assumed Liabilities or Accepting
Employees who have signed a release permitting the transfer of such
personnel records, including, without limitation, all books and records
relating to the purchase of materials, supplies and services, all
financial, accounting and operational matters relating to any of the
Purchased Assets and Assumed Liabilities, all customer and vendor lists
relating to the Purchased Assets and Assumed Liabilities and all files
and documents (including credit information) relating to customers and
vendors relating to any of the Purchased Assets and Assumed
Liabilities, and all manuals, handbooks and Documents relating to
policies and/or procedures related to any of the Purchased Assets,
Assumed Liabilities or Accepting Employees;
(ix) [Intentionally Omitted];
(x) any assets related to the Purchased Financing Contract that would be
reflected on a balance sheet of Seller prepared in accordance with
generally accepted accounting principles as "deferred maintenance
costs" or "prepaid sales taxes" and any other accounts to which
payments owed by an Obligor under a Purchased Financing Contract are
associated;
(xi) a right to purchase Portfolio Property subject to the Excluded
Financing Contracts on the Title Date, provided, however, that in the
event the Obligors thereunder exercise their purchase option with
respect to such Portfolio Property in accordance with the terms of the
applicable Excluded Financing Contracts, the proceeds of such exercise
of such purchase option; and
(xii) NEC Transactions.
(b) Excluded Assets. No member of the Seller Group shall sell, assign, transfer
or convey to Purchaser or any Purchaser Affiliate, nor shall Purchaser or any
Purchaser Affiliate purchase any member of the Seller Group's right, title or
interest in and to any Excluded Assets.
(c) Liabilities Assumed by Purchaser. Upon the terms and subject to the
conditions of this Agreement, effective as of the Closing Date, Purchaser or any
Purchaser Affiliate shall assume and be obligated to pay when due, perform, or
discharge only the Assumed Liabilities.
(d) Excluded Liabilities. Neither Purchaser nor any Purchaser Affiliate
shall assume or otherwise become liable for any Excluded Liabilities.
(e) Insolvent Subsidiaries. Notwithstanding any provisions of this
Agreement, neither Purchaser nor any Purchaser Affiliate shall be
required to purchase any assets or assume any liabilities of any
Insolvent Subsidiary.
(f) (i) Notwithstanding the foregoing, at the Closing, Seller shall and shall
cause each Assigning Subsidiary, as applicable to, sell, assign, transfer and
convey to Purchaser or any Purchaser Affiliate (A) as of the Title Date, good,
valid and marketable title (free and clear of all Encumbrances other than
Permitted Encumbrances) to the Portfolio Property subject to the Excluded
Financing Contracts, subject to the purchase options of the Applicable Obligors
with respect to such Portfolio Property pursuant to the terms of such Excluded
Financing Contracts and (B) in the event an Obligor thereunder exercises such
purchase option in accordance with such Excluded Financing Contract, the
proceeds of the exercise of such purchase option.
(ii) At the Closing, Seller shall and shall cause
each Assigning Subsidiary, as applicable, to grant a security interest in the
Purchased Assets listed in Section 2.1(a)(xi), subject only to Permitted
Encumbrances, which grant shall be evidenced by a pledge and security agreement
in a form mutually agreed upon by Seller and Purchaser.
2.2 The Purchase Price. The aggregate purchase price to be paid by Purchaser and
Purchaser Affiliates (provided that Purchaser shall not be relieved of its
obligation to pay the Purchase Price hereunder to the extent any Purchaser
Affiliate fails to pay its allocable portion of the Purchase Price pursuant to
this Agreement) for the Purchased Assets (the "Purchase Price") shall be an
amount equal to, in the case of clauses (a)(i) and (b) below, as reflected on
the Adjusted Cut-Off Date Schedule of Assets Acquired and Liabilities Assumed,
the sum of (a)(i) 67% of the Net Book Value of all Purchased Assets (other than
the Purchased Assets described in Sections 2.1(a)(v) and 2.1(a)(xi)), including,
without limitation, (A) the Purchased Financing Contracts assigned to Purchaser
or any Purchaser Affiliate by any member of the Seller Group, and (B) assets
related to the Purchased Financing Contracts that would be reflected on a
balance sheet of Seller prepared in accordance with the Accounting Principles as
"deferred maintenance costs," "prepaid sales taxes" and any other account to
which payments owed by an Obligor under a Purchased Financing Contract are
associated, (ii) with respect to the Purchased Assets described in Section
2.1(a)(v), $200,000, and (iii) with respect to the Purchased Assets described in
Section 2.1(a)(xi), $2,340,000, minus (b)(i) 100% of the Assumed Liabilities,
and (ii) 100% of the Adjustment Factor. In addition to the Purchase Price at the
initial Closing, Purchaser and Purchaser Affiliates shall pay to Seller and
Assigning Subsidiaries a single additional payment in the aggregate amount of
$10,000,000 (the "Two Closing Premium").
2.3 Initial Payment.
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(a) Subject to Section 2.6 hereof, at the Closing, Purchaser or Purchaser
Affiliates shall pay to Seller or Assigning Subsidiary, as applicable, an
aggregate amount equal to the Initial Payment, minus an aggregate amount equal
to the sum of (A) $19,000,000 of the good faith deposit submitted by Purchaser
in connection with the Original Purchase Agreement (the "Good Faith Deposit")
and (B) interest accrued thereon from November 8, 2002 to, but excluding the
Closing Date, in accordance with the Bidding Procedures Order, by wire transfer
or transfers of immediately available funds to accounts designated to Purchaser
in writing by Seller prior to the Closing Date. Prior to Closing, Purchaser and
Seller shall mutually agree upon an allocation of the Purchase Price for the
Purchased Assets among the Seller and the respective Assigning Subsidiaries, and
the amount payable at the Closing pursuant to this Section 2.3 and pursuant to
Sections 2.4, 2.5, 2.6 and 2.7 shall be allocated and paid accordingly by
Purchaser and the Purchaser Affiliates, respectively; provided, however, that
Purchaser shall not be relieved of its obligation to pay the Purchase Price
hereunder to the extent any Purchaser Affiliate fails to pay its allocable
portion of the Purchase Price pursuant hereto. Seller and each Assigning
Subsidiary shall be paid a portion of the aggregate Purchase Price equal to the
Purchase Price of the Purchased Assets transferred by Seller or such Assigning
Subsidiary, as the case may be, after taking into consideration the Assumed
Liabilities of any of Seller or such Assigning Subsidiary. Purchaser shall pay
Seller by wire transfer the portion of the Initial Payment allocable to the
Purchased Assets transferred by Seller prior to any wire transfers of amounts to
Assigning Subsidiaries with respect to the balance of the Initial Payment. Upon
receipt by Seller of such wire transfer, Seller shall remit by wire transfer to
each Assigning Subsidiary as a capital contribution the amount, if any,
necessary to prevent such Assigning Subsidiary from becoming an Insolvent
Subsidiary as a result of the sale of the Purchased Assets transferred by such
Assigning Subsidiary pursuant to the terms hereof; provided, however, that
Seller shall not be obligated to remit any amounts to an Assigning Subsidiary in
excess of the difference between (i) 100% of the Net Book Value of the Purchased
Assets to be transferred by such Assigning Subsidiary and (ii) 67% of the Net
Book Value of the Purchased Assets to be transferred by such Assigning
Subsidiary. Concurrently, Purchaser shall pay to each Assigning Subsidiary the
portion of the Purchase Price allocable to the Purchased Assets transferred by
such Assigning Subsidiary by wire transfer at such time as Purchaser receives
confirmation that any wire transfer from Seller to such Assigning Subsidiary
required by the preceding sentence has been received. In the event the Two
Closing Premium is payable, Seller and each Assigning Subsidiary shall be
allocated and paid a portion of the Two Closing Premium equal to Purchase Price
payable to Seller or such Assigning Subsidiary, as the case may be and as
provided in the preceding sentence, divided by the total Purchase Price
hereunder.
(b) If the Closing shall have occurred on or prior to April 30, 2002, in
addition to the Initial Payment, Purchaser and Purchaser Affiliates shall pay to
Seller and Assigning Subsidiaries an aggregate amount equal to the Cut-Off Date
Initial Payment Interest.
(c) Notwithstanding anything to the contrary in this Section 2.3 or elsewhere in
this Agreement, with respect to Assigning Subsidiaries that, in the ordinary
course of business, maintain balance sheets denominated in other than U.S.
dollars, any payments to be made by Purchaser or a Purchaser Affiliate to any
such Assigning Subsidiary pursuant to this Section 2.3 (to the extent related to
a Purchased Financing Contract) shall, in the sole discretion of such Assigning
Subsidiary, be converted for the purposes of making such payment into the
currency in which payments due under such Purchased Financing Contract are
denominated using the exchange rate for such currency established in a bona
fide, arms-length transaction by Purchaser or a Purchaser Affiliate on customary
market terms with a currency exchange broker/market maker that is otherwise not
an Affiliate of the Purchaser or a Purchaser Affiliate in effect three (3)
Business Days prior to the applicable Closing Date; provided, however, neither
Purchaser nor any Purchaser Affiliate shall be obligated to make payments
hereunder in currency other than U.S. dollars, Japanese Yen, Euros or Pounds
Sterling. Not later than three (3) Business Days prior to the Estimated Closing
Date, Purchaser shall provide Seller with written notice of the following: (i)
the name of Purchaser and each Purchaser Affiliate (including the country/state
of incorporation and VAT/GST registration status) that will be acquiring
Purchased Assets from a member of the Seller Group at Closing and (ii) the name
of Purchaser and each Purchaser Affiliate that desires to make foreign currency
payments to any member of the Seller Group in accordance with this Section
2.3(c); and (iii) the specific type of foreign currency that such Purchaser or
Purchaser Affiliate desires to utilize for such foreign currency payments.
2.4 Settlement Payments. On the Settlement Date, the following amounts
shall be paid, by wire transfer
(a) of immediately available funds to an account designated in writing by the
recipient thereof to the other party prior to the Settlement Date, as follows:
(i) if the Purchase Price exceeds the Initial Payment, Purchaser shall pay,
or cause any Purchaser Affiliate to pay, to Seller or any Assigning
Subsidiary, as applicable, an aggregate amount equal to the sum of (A)
the Settlement Payment, and (B) the Settlement Interest; or
(ii) if the Initial Payment exceeds the Purchase Price, Seller shall pay,
or cause the Assigning Subsidiaries to pay, to Purchaser or Purchaser
Affiliate, as applicable, an aggregate amount equal to the sum of (A)
(i) the excess amount of the Initial Payment over the Purchase Price
(the "Excess Amount") plus (ii) interest on the Excess Amount
calculated at the Settlement Rate, as in effect on the Settlement Date,
for the period from the Closing Date to, but not including, the
Settlement Date (calculated on the basis of the actual number of days
elapsed in a year of 365 or 366 days, as the case may be) plus (B) (i)
the amount equal to the product of (X) the Excess Amount divided by the
Initial Payment and (Y) the Cut-Off Date Initial Payment Interest plus
(ii) interest on the amount calculated in clause (B)(i) at the
Settlement Rate, as in effect on the Settlement Date, for the period
from the Closing Date to, but not including, the Settlement Date
(calculated on the basis of the actual number of days elapsed in a year
of 365 or 366 days, as the case may be).
(b) Notwithstanding anything to the contrary in this Section 2.4 or elsewhere in
this Agreement, with respect to Assigning Subsidiaries that, in the ordinary
course of business, maintain balance sheets denominated in other than U.S.
dollars, all payments to be made by Purchaser or a Purchaser Affiliate to any
such Assigning Subsidiary pursuant to this Section 2.4 (to the extent related to
a Purchased Financing Contract) shall, in the sole discretion of such Assigning
Subsidiary, be converted for the purposes of making such payment into the
currency in which payments due under such Purchased Financing Contract are
denominated using the exchange rate for such currency established in a bona
fide, arms-length transaction by Purchaser or a Purchaser Affiliate on customary
market terms with a currency exchange broker/market maker that is otherwise not
an Affiliate of the Purchaser or a Purchaser Affiliate in effect five (5)
Business Days prior to the applicable Settlement Date; provided, however, that
neither Purchaser nor any Purchaser Affiliate shall be obligated to make
payments hereunder in currency other than U.S. dollars, Japanese Yen, Euros or
Pounds Sterling. Not later than three (3) Business Days prior to the Settlement
Date, Purchaser shall provide Seller with written notice of the following: (i)
the name of Purchaser and each Purchaser Affiliate that desires to make foreign
currency payments to any member of the Seller Group in accordance with this
Section 2.4(b) and (ii) the specific type of foreign currency that such
Purchaser or Purchaser Affiliate desires to utilize for such foreign currency
payments.
2.5 Prorations. Seller and the Assigning Subsidiaries shall bear all property
and ad valorem tax liability with respect to the Purchased Assets if the lien or
assessment date (the date on which the liability becomes fixed or assignable to
the Purchased Assets) arises on or prior to the Cut-Off Date irrespective of the
reporting and payment dates of such Taxes. Seller and the Assigning Subsidiaries
shall be responsible for all other Taxes as levied by any foreign, federal,
state or local taxing authority in any jurisdiction with respect to the
ownership, use or leasing of the Purchased Assets for all periods (or portions
thereof) on or prior to the Closing Date, and Purchaser shall be responsible for
all such Taxes with respect to the ownership, use or leasing of the Purchased
Assets for all periods (or portions thereof) after the Closing Date.
Notwithstanding the foregoing sentence, any property and ad-valorem tax
liability not subject to the first sentence of this Section 2.5 or any sales,
use or similar Tax liability shall be allocated between the Seller and the
Assigning Subsidiaries and the Purchaser and the Purchaser Affiliates as of the
Cut-Off Date. All payments to be made by Seller and the Assigning Subsidiaries
in accordance with this Section 2.5 shall be made, to the extent then
determinable, at the Closing with such payments deposited into escrow until due,
or, to the extent not determinable as of the Closing, promptly following the
determination thereof, with such payments deposited into escrow pursuant to
Section 2.6 until due. Purchaser shall have the right of review and approval of
each member of the Seller Group's property Tax Returns and assessments and the
right to contest any assessment for which Purchaser may be adversely affected.
Seller shall cause each Assigning Subsidiary to cooperate with Purchaser to
advance any contest.
2.6 Tax Escrow. The amount of any personal property, ad valorem, sales, use,
transfer, recording or similar Tax liability, or any other Taxes required to be
withheld by any taxing authority, relating to the Purchased Assets for which
Seller and the Assigning Subsidiaries are responsible pursuant to Section 2.5
and Section 5.3(c)(i) and which are unpaid or not yet due and payable as of the
Closing Date shall be estimated in good faith by the mutual agreement of Seller
and Purchaser and a portion of the Purchase Price which is no less than such
amount shall be put by Seller into escrow at Closing and such amount shall be
held and used for the sole purpose of discharging and releasing any such Taxes
with respect to the Purchased Assets pursuant to Section 5.13; provided, however
that if Purchaser and Seller have not agreed on the portion of the Purchase
Price to be deposited into escrow pursuant to this Section 2.6 at least three
(3) Business Days prior to the Closing, such dispute will be resolved by KPMG
LLP or any other public accounting firm with nationally accepted auditing
experience as mutually agreed upon by Purchaser and Seller. The escrow to be
established pursuant to this Section 2.6 shall be established pursuant to, an
escrow agreement mutually acceptable to Purchaser or Seller or such other
arrangement as may be mutually agreed by Purchaser and Seller prior to the
Closing. The escrow shall not include any unpaid Taxes which are reimbursable or
payable by an Obligor under any Purchased Financing Contract except to the
extent that the relevant member of the Seller Group previously collected such
Taxes from the Obligor.
2.7 Contingent Payment. Purchaser's and Purchaser Affiliates' obligation to pay
Seller and Assigning Subsidiaries the Contingent Payment is conditioned on the
Closing hereunder. The "Purchase Price" set forth in the Section 2.2 of this
Agreement shall be considered the "Base Purchase Price" for purposes of this
Section 2.7 and the aggregate "Purchase Price" for all other purposes of this
Agreement shall be the sum of the Base Purchase Price and an additional amount
to be paid by Purchaser for the Purchased Assets (such additional amount, the
"Contingent Payment") which shall be an amount equal to 5% of the following:
(a) the aggregate scheduled lease rental payments under the terms of the
Purchased Financing Contracts (without considering payments for deferred
maintenance costs, prepaid sales taxes or any other account to which payments
owed by an Obligor under such a contract are associated) which are contractually
due and payable from Obligors prior to the expiration of the current term of
such contract and due on or after the Cut-Off Date; minus
(b) the aggregate principal and interest payments with respect to the Discounted
Financing Agreements related to the Purchased Financing Contracts due to lenders
first becoming due on or after the Cut-Off Date; plus
(c) the aggregate of the related Residual with respect to each Purchased
Financing Contract, as set forth in this Agreement; plus
(d) the Net Book Value of the agreements listed as items 1 and 2 on
Schedule 1.1Q.
On the Closing Date, Purchaser and Purchaser Affiliates shall
make an initial payment in U.S. dollars to the Seller and Assigning Subsidiaries
with respect to the Contingent Payment in an amount equal to 90% of the
Contingent Payment, using the methodology set forth in the definition of
Estimated Payment as applied to the Contingent Payment component of the Purchase
Price calculated as of the Cut-Off Date. Thereafter (i) the definition of
"Estimated Payment" under this Agreement shall be deemed to include the
aggregate of the estimated Base Purchase Price and the estimated Contingent
Payment attributable to the assets purchased under Agreement, and (ii) the
"Initial Payment" under this Agreement, for purposes of calculating the
"Settlement Amount", shall be deemed to include (in addition to the Initial
Payment based on 90% of the estimated Base Purchase Price) the portion of the
estimated Contingent Payment paid on the Closing Date. On the Closing Date,
"Portfolio Information" shall also include the aggregate principal and interest
payments with respect to the Discounted Financing Agreements referred to in (b)
above. On and after such Closing Date, the procedures set forth in Section 5.5
shall be amended so that the "Cut-Off Date Schedule of Assets Acquired and
Liabilities Assumed" and "Adjusted Cut-Off Date Schedule of Assets Acquired and
Liabilities Assumed" shall differentiate the assets among those described in
Section 2.7(a), (b) and (c) as applicable for purposes of calculating the
Contingent Payment. After the Closing Date, Seller shall use its commercially
reasonable efforts to complete, and deliver to Seller's Accountants, the
schedules referred to in Section 5.5(a)(i) within 30 days following the Closing
Date, and "Settlement Interest" with respect to the Contingent Payment portion
of the aggregate Purchase Price shall be calculated from the Closing Date.
In addition, Seller and each Assigning Subsidiary shall be
allocated and paid a pro rata share of the Contingent Payment, to the extent it
is payable, based on the portion of the aggregate Purchase Price paid to Seller
or such Assigning Subsidiary, as the case may be.
2.8 Excess Electronics Collections. (a) Purchaser's and Purchaser Affiliates'
obligation to pay amounts with respect to Excess Electronics Collections is
conditioned on both (i) the Closing hereunder having occurred and (ii) the
aggregate amount of Electronics Collections arising on and after the Cut-Off
Date hereunder exceeding the Electronics Threshold Amount (the collective
occurrence of (i) and (ii), the "Electronics Trigger Event").
(b) No later than 45 days following the last day of each calendar quarter ending
after the Cut-Off Date (which is no event shall be prior to the Closing Date),
Purchaser shall deliver to Seller a statement summarizing Electronics
Collections for such calendar quarter (the "Electronics Collections Statement").
Each statement delivered pursuant to this Section 2.8 shall be subject to a
reasonable quarterly review right by Seller at Seller's expense. Purchaser shall
cooperate with Seller to answer questions regarding the Electronics Collections
Statement and to respond to Seller's request for additional information.
(c) No later than 45 days following the last day of each calendar quarter ending
after the Electronics Trigger Event (which in no event shall be prior to the
Closing Date), Purchaser and Purchaser Affiliates shall pay in U.S. dollars to
Seller and Assigning Subsidiaries, an amount equal to 90% of the Electronics
Rental Payments received by the Purchaser or any Purchaser Affiliate during such
calendar quarter that are Excess Electronics Collections and, in addition to the
Electronics Collections Statement, Purchaser shall deliver to Seller a summary
statement summarizing the calculation of such amounts.
(d) No later than 45 days following the last day of each calendar quarter ending
after the Electronics Trigger Event (which in no event shall be prior to the
Closing Date), Purchaser and Purchaser Affiliates shall pay in U.S. dollars to
Seller and Assigning Subsidiaries, as applicable,(i) to the extent that
aggregate Electronics Residual Collections that are Lump Sum Residual
Collections in such calendar quarter are less than or equal to 70% of the
aggregate Residuals of the Purchased Financing Contracts with respect to which
Electronics Residual Collections that are Lump Sum Collections occur in such
calendar quarter, 45% of the amount of such Lump Sum Residual Collections that
are Excess Electronics Collections during such calendar quarter and (ii) to the
extent that aggregate Electronics Residual Collections that are Lump Sum
Residual Collections exceed 70% of the aggregate Residuals of the Purchased
Financing Contracts with respect to which Electronics Residual Collections that
are deemed to be Lump Sum Collection occur in such calendar quarter, Purchaser
shall make the payment provided for in the preceding clause (i) and 100% of such
excess over the 70% referred to in clause (i) will be retained by Purchaser and
Purchaser Affiliates. Solely for purposes of the preceding sentence of this
Section 2.8(d), to the extent that the Electronics Trigger Event occurs prior to
the date that is eighteen (18) months after the Cut-Off Date, none of the
Electronics Residual Collections occurring prior to the date that is eighteen
(18) months after the Cut-Off Date shall constitute Excess Electronics
Collections. Purchaser in addition to the Electronics Collections Statement,
shall deliver to Seller a summary statement summarizing the calculation of such
amounts.
(e) No later than 45 days following the last day of each calendar quarter ending
after the Electronics Trigger Event (which in no event shall be prior to the
Closing Date), Purchaser and Purchaser Affiliates shall pay in U.S. dollars to
Seller and the Assigning Subsidiaries, as applicable, (i) to the extent that
Electronics Residual Collections that are not Lump Sum Residual Collections in
such calendar quarter with respect to the Residual interest in a specific item
of Portfolio Property are (when taken together with the aggregate amount of
Electronics Residual Collections received after the Cut-Off Date with respect to
such Residual interest) are less than or equal to 70% of the applicable
Residual, 45% of the amount of such Electronics Residual Collections during such
calendar quarter and (ii) to the extent that Electronics Residual Collections
with respect to the Residual interest in a specific item of Portfolio Property
that are not Lump Sum Residual Collections (when taken together with the
aggregate amount of Electronics Residual Collections received after the Cut-Off
Date with respect to such Residual interest) exceed 70% of the applicable
Residual, Purchaser shall make the payment provided for in the preceding clause
(i) and 100% of such excess over the 70% referred to in clause (i) will be
retained by Purchaser and Purchaser Affiliates and Purchaser, in addition to the
Electronics Collections Statement, shall deliver to Seller a summary statement
summarizing the calculation of such amounts. Solely for purposes of the
preceding sentence of this Section 2.8(e), to the extent that the Electronics
Trigger Event occurs prior to the date that is eighteen (18) months after the
Cut-Off Date, none of the Electronics Residual Collections occurring prior to
the date that is eighteen (18) months after the Cut-Off Date shall constitute
Excess Electronics Collections. For purposes of this Section 2.8, in the quarter
in which the Electronics Trigger Event occurs, the aggregate amount of
Electronics Collections arising in excess of the Electronics Threshold Amount
shall be deemed to have arisen in the same proportion as Electronics Rental
Payments and Electronics Residual Collections constitute Electronics Collections
arising in such quarter. Upon payment by Purchaser or Purchaser Affiliate to
Seller or Assigning Subsidiary of any Electronics Residual Collections that are
Lump Sum Residual Collections, neither Seller nor any Assigning Subsidiary shall
be entitled to any further proceeds with respect to the related Portfolio
Property.
(f) Purchaser or any Purchaser Affiliate shall not adversely discriminate with
respect to the advertising, promotion or pricing between Portfolio Property
related to Purchased Financing Contracts and like equipment being sold or leased
for the account of Purchaser or any Purchaser Affiliate in the disposition
(whether pursuant to a sale, lease, conditional sale, secured financing or
similar transaction) of any Portfolio Property related to Purchased Financing
Contracts, and, upon the request of Seller, Purchaser or any Purchaser Affiliate
shall promptly provide Seller with information concerning like equipment sold or
released (whether pursuant to a sale, lease, conditional sale, secured financing
or similar transaction) by Purchaser or any Purchaser Affiliate during the
period in which such Portfolio Property is held by Purchaser or any Purchaser
Affiliate.
(g) Without the written consent of Seller, which consent may not be unreasonably
withheld, Purchaser or any Purchaser Affiliate shall not (i) consent to a
reduction or other modification of any of the Obligor's payment obligations with
respect to a Purchased Financing Contract, (ii) postpone or modify any date
fixed for any payment of principal or interest or other sums under the Purchased
Financing Contracts or agree to any extension of the term thereof, or (iii)
restructure any Purchased Financing Contract or release, subordinate or
substitute any Portfolio Property related to a Purchased Financing Contract
during the original term of such Purchased Financing Contract.
(h) If Purchaser and Seller are not able to agree upon a lump sum amount in
respect of a Residual interest in the circumstances described in clause (iv) of
the definition of "Electronics Residual Collections," then Seller shall have the
option to require Purchaser or a Purchaser Affiliate to sell the related
Portfolio Property in lieu of entering into an arrangement for a subsequent
lease, conditional sale, secured financing or similar transaction.
Seller and each Assigning Subsidiary shall be allocated and
paid a pro rata share of Excess Electronics Collections based on the portion of
Excess Electronics Collections relating to Purchased Assets sold by Seller and
each Assigning Subsidiary, with such payment made by the Purchaser or Purchaser
Affiliate that acquired the Purchased Assets. In the event of a dissolution or
liquidation of any Assigning Subsidiary after the Closing Date all payments to
be made pursuant to this Section 2.8 to such Assigning Subsidiary shall be made
to either (i) the successor-in-interest to such Assigning Subsidiary, if any,
timely identified by Seller to Purchaser or (ii) Seller in the event that no
such successor-in-interest has been identified by Seller to Purchaser.
2.9 [Intentionally Omitted]
2.10 No Additional Obligation. Notwithstanding the terms of Sections 2.7 and
2.8, nothing in this Agreement shall impose any additional obligation on
Purchaser to close the transactions contemplated by the Lab & Scientific
Agreement. The obligation of Purchaser to close the transactions remains subject
to the terms and conditions set forth in the Lab & Scientific Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby makes as of the effective date of this
Agreement, and at the Closing will and will cause each Assigning Subsidiary to,
make (on a several basis, and solely to the extent applicable to such Assigning
Subsidiary), the following representations and warranties to Purchaser:
3.1 Organization and Good Standing. Each member of the Seller Group (i) is duly
organized, validly existing and in good standing (or its equivalent) under the
laws of its state, province and country of incorporation or organization, (ii)
has the corporate or other applicable power to own and lease the Purchased
Assets owned or leased by it and to carry on its business as now being conducted
and (iii) is duly qualified or authorized to conduct business and is in good
standing (or its equivalent) as a foreign corporation in all jurisdictions in
which the character or location of the Purchased Assets owned or leased by it
requires such qualification or authorization, except, in the case of clause
(iii), where the failure to be so qualified or authorized has not and would not
have a Material Adverse Effect.
3.2 Corporate Authority. (a) Each member of the Seller Group has all requisite
corporate or other applicable power and authority to execute and deliver, and to
perform its obligations under, this Agreement, the Transitional Services
Agreement and the other documents to be executed and delivered by such member of
the Seller Group party thereto pursuant hereto or thereto. Each of this
Agreement, the Ancillary Agreements and the other documents to be executed and
delivered by a member of the Seller Group pursuant hereto or thereto has been or
will be, as the case may be, duly authorized by all necessary corporate,
stockholder or other required action on the part of such member and holders of
voting interests of such member and has been (or, with respect to the documents
to be executed and delivered after the effective date hereof, will be at the
Closing) duly executed and delivered by such member of the Seller Group party
thereto and is (or, with respect to the documents to be executed and delivered
after the effective date hereof, will be at the Closing), subject to the entry
of the Approval Order, the valid and binding obligation of such member of the
Seller Group party thereto, enforceable against such member of the Seller Group
in accordance with its terms, except, in case of members of the Seller Group who
are not party to the Chapter 11 Cases, as enforcement thereof may be limited by
the Bankruptcy Exception.
(b) Notwithstanding anything to the contrary contained herein, no provision of
this Agreement is binding upon any member of the Seller Group unless and until
the January Purchase Agreement is approved by the Bankruptcy Court; provided,
however, modifications set forth in this Agreement are not deemed by Seller to
be material modifications to the January Purchase Agreement.
3.3 No Conflicts. Except as set forth on Schedule 3.3, neither the execution and
delivery by any member of the Seller Group of this Agreement, the Transitional
Services Agreement or any other document to be executed and delivered by any
member of the Seller Group in connection herewith or therewith nor compliance by
any member of the Seller Group with the terms and provisions hereof or thereof
nor the consummation by any member of the Seller Group of the transactions
contemplated hereby or thereby will conflict with or result in a breach of any
of the terms, conditions or provisions of (i) the certificate of incorporation
(or equivalent document) or by-laws (or equivalent document including articles
of association) of any member of the Seller Group, (ii) any judgment, order,
injunction, decree or ruling of any court or of any other Governmental Entity or
any law, statute or regulation to which any member of the Seller Group or any of
its Properties is subject and which is related to the Purchased Assets or the
Assumed Liabilities or (iii) any agreement, contract or commitment to which any
member of the Seller Group is a party or to which any member of the Seller Group
or any of its Properties is subject and which is related to the Purchased Assets
or the Assumed Liabilities (including, without limitation, any agreement,
contract or commitment included in the Purchased Assets), except in the case of
clause (ii) above, only as it relates to any law, statute or regulation, and
clause (iii) above, for such conflicts or breaches that would not be likely to
have a Material Adverse Effect; nor will such execution, delivery and compliance
result in acceleration in the time for performance of any obligation of any
member of the Seller Group relating to or affecting any of the Purchased Assets
or Assumed Liabilities or in the creation of any Encumbrance on any of the
Purchased Assets.
3.4 Consents. Except as set forth on Schedule 3.4 and other than the filing of
notifications pursuant to the HSR Act and any corresponding anti-trust,
competition or similar legislation in any other jurisdictions (including,
without limitation, the Competition Act (Canada)), and the Approval Order issued
or to be issued by the Bankruptcy Court, no material notices, reports or other
filings are required to be made by any member of the Seller Group with, nor are
any material consents, licenses, permits, Authorizations or approvals required
to be obtained by any member of the Seller Group from, (i) any Governmental
Entity or (ii) except where the failure to make such notices, reports or other
filings or obtain such consents or approvals would not have a Material Adverse
Effect, any other Person in connection with the execution and delivery by Seller
of this Agreement or the consummation by Seller Group of the transactions
contemplated hereby.
3.5 No Violations of Law. Except as set forth on Schedule 3.5 or as would not be
likely to have a Material Adverse Effect, (i) each member of the Seller Group
owns and operates, and at all times has owned and operated, each of the
Purchased Assets and acted with respect to the Assumed Liabilities in compliance
with all laws enacted, and all regulations promulgated or issued, by any
Governmental Entity, including, but not limited to, Environmental Laws and laws
pertaining to usury, installment or conditional sales and sales financing, truth
in lending, equal credit opportunity, credit reporting or debt collection, (ii)
neither the billing and collection nor enforcement of any Purchased Financing
Contract or Credit Enhancement in accordance with the terms thereof has resulted
or will result in the violation of any laws enacted by or regulations
promulgated or issued by any Governmental Entity, (iii) each member of the
Seller Group has had at all times all Authorizations required to own, operate,
lease and/or service the Purchased Assets and has owned and operated its
Properties at all times in compliance with all laws enacted by or regulations
promulgated or issued by any Governmental Entity and all such Authorizations,
and (iv) no member of the Seller Group has received any written notice of
violation of any law or regulation from any Governmental Entity relating to any
of the Purchased Assets or the ownership or operation thereof. Except as set
forth on Schedule 3.5, no member of the Seller Group is subject to any judgment,
writ, decree, injunction or order of any federal, state or local court (domestic
or foreign) or Governmental Entity relating to the acquisition, collection,
administration or enforcement of any Purchased Financing Contract or Credit
Enhancement or the foreclosure, acquisition or disposition of any Portfolio
Property or, in each case, any transactions or activities incidental thereto.
3.6 Financial Statements; Reports.
-----------------------------
(a) True and complete copies of the Financial Statements are set forth on
Schedule 3.6(a). The Financial Statements were prepared from the books and
records of each member of the Seller Group, and the balance sheets included in
the Financial Statements fairly present, in all material respects, the financial
position, as it relates to the Purchased Assets and the Assumed Liabilities, of
such member of the Seller Group as of the dates thereof, and the statements of
income and cash flows of such member of the Seller Group included in the
Financial Statements fairly present, in all material respects, the results of
income and cash flows, as the case may be, as they relate to the Purchased
Assets and Assumed Liabilities, of such member of the Seller Group for the
periods set forth therein (subject, in the case of unaudited statements, to
normal year-end audit adjustments which will not be material in amount or
effect), in each case in accordance with generally accepted accounting
principles applied on a basis consistent with the Accounting Principles, except
as may be noted therein or as set forth on Schedule 3.6(a) and except that
statutory financial statements are prepared in accordance with applicable
statutory accounting principles.
(b) Except in connection with debtor-in-possession financing, no member of the
Seller Group has indebtedness, obligations or liabilities of any kind (whether
accrued, absolute, contingent or otherwise, and whether due or to become due)
related to the Purchased Assets or Assumed Liabilities which are not reflected
or adequately reserved against on the applicable balance sheet dated as of June
30, 2001 included in the Financial Statements other than such indebtedness,
obligations or liabilities as were incurred in the ordinary course of business
consistent with past practices since June 30, 2001 and which either will be
repaid or discharged prior to the Cut-Off Date or reflected on the Cut-Off Date
Schedule of Assets Acquired and Liabilities Assumed.
(c) Except as set forth on Schedule 3.6(c), all of the Portfolio Information and
the other data set forth in the June Portfolio Tape with regard to the Purchased
Financing Contracts and each Purchased Discounted Financing Agreement is true,
correct, complete and accurate in all material respects as of June 30, 2001. All
of the Portfolio Information delivered to Purchaser prior to, at or after
Closing shall be true, correct, complete and accurate in all material respects
as of its date.
(d) With respect to each Purchased Financing Contract, the Portfolio Information
described in clause (xiv) of such definition with respect to such Purchased
Financing Contract that is set forth on the June Portfolio Tape and the Cut-Off
Date Portfolio Tape is the Net Book Value of such Purchased Financing Contract.
(e) At the Closing, no Assigning Subsidiary will be an Insolvent
Subsidiary.
3.7 Absence of Certain Changes.
--------------------------
(a) Except as set forth on Schedule 3.7(a), since June 30, 2001, there has not
occurred any effect, result, occurrence, event, fact, set of facts or change
that constitutes a Material Adverse Effect, or any development or combination of
developments of which, to Seller's Knowledge, is reasonably likely to result in
any Material Adverse Effect.
(b) Except as set forth on Schedule 3.7(b), since June 30, 2001, no member of
the Seller Group has in connection with the Purchased Assets (i) made or
committed to make any capital expenditures (excluding the purchase of Portfolio
Property in connection with the origination or funding of a Purchased Financing
Contract or otherwise in the ordinary course of business) except for those not
in excess of $500,000 per capital project, (ii) waived or committed to waive any
rights which could have a Material Adverse Effect, (iii) directly or indirectly
in any way extended or otherwise restructured the payment schedule, payment
terms or any other term or condition of any Purchased Financing Contract, or
made any advance, extension, novation, modification or other accommodation to
any Obligor or provider of a Credit Enhancement thereunder (other than
extensions of the time to pay an amount due under a Purchased Financing
Contract, modification or accommodation that were granted in the ordinary course
of business by such member of the Seller Group consistent with its past
practices and that, with respect to extensions of time to pay an amount due
under a Purchased Financing Contract, did not extend the time for payment to 30
days or more after the first date on which payment of such amount was required
pursuant to the terms of such Financing Contract), (iv) suffered any damage,
destruction or casualty loss to any Purchased Assets, whether or not covered by
insurance, in excess of $100,000 in the case of any individual loss or $500,000
with respect to the aggregate of all such losses, (v) except pursuant to any
debtor-in-possession financing in the Chapter 11 Cases, permitted any
Encumbrance on any of the Purchased Assets other than Permitted Encumbrances, or
(vi) deviated from or changed in any material respect its Documentation except
for deviations or changes made in the ordinary course of business and consistent
with past practice.
(c) Except as set forth on Schedule 3.7(c), since June 30, 2001, no member of
the Seller Group has (i) through the effective date of this Agreement, made or
agreed to make any increase in the compensation payable or to become payable to
any current Seller Employee, except for regularly scheduled increases in
compensation payable or increases otherwise occurring in the ordinary and usual
course of business, consistent with past practices or as required by applicable
law and except for the change in compensation generally granted to Seller
Employees as of November 1, 2001, (ii) through the effective date of this
Agreement, adopted, amended, modified or terminated any Seller Plan, except in
cases otherwise provided for in Section 3.7(c)(i) hereof or as required by
applicable law, or (iii) entered into or amended any collective bargaining
agreement, except as required by applicable law.
3.8 Employee Benefit Plans and Employee Matters.
-------------------------------------------
(a) Schedule 3.8(a) sets forth a list of all Seller Plans.
(b) Except as set forth on Schedule 3.8(b), true, correct and complete copies of
the following documents, with respect to each of the Seller Plans, have been
made available or delivered to Purchaser by Seller, to the extent applicable:
(i) any plans, all amendments thereto and related trust documents, and
amendments thereto; (ii) the most recent Forms 5500 and all schedules thereto,
the most recent annual returns filed with the relevant Canadian or provincial
pension supervisory authority and the most recent actuarial report, if any;
(iii) the most recent IRS determination letter; (iv) summary plan descriptions
as defined under ERISA; (v) material written communications to Seller Employees
relating to the Seller Plans; and (vi) written descriptions of all non-written
agreements relating to the Seller Plans.
(c) Except as set forth on Schedule 3.8(c), the Seller Plans have been
maintained, in all material respects, in accordance with their terms and with
all provisions of ERISA, the Code (including rules and regulations thereunder)
and other applicable federal and state laws and regulations, including, without
limitation, Canadian or provincial pension legislation, and no member of the
Seller Group, or any "party in interest" or "disqualified person" with respect
to the Seller Plans has engaged in a non-exempt "prohibited transaction" within
the meaning of Section 4975 of the Code or Section 406 of ERISA. No fiduciary
has any material liability for breach of fiduciary duty or any other failure to
act or comply in connection with the administration or investment of the assets
of any Seller Plan.
(d) Each Seller Plan that is intended to qualify under Section 401(a) of the
Code is the subject of a favorable IRS determination letter that such plan is so
qualified and, to Seller's Knowledge, the trust maintained pursuant thereto is
exempt from federal income taxation under Section 501(c) of the Code. Each
Seller Plan that is intended to qualify under Section 147.1 of the Income Tax
Act (Canada) (the "ITA") is so qualified and, to Seller's Knowledge, the trust
maintained pursuant thereto is exempt from federal income taxation under Section
149 of the ITA. To Seller's Knowledge, nothing has occurred with respect to the
operation of such "qualified" Seller Plans which could, to the extent
applicable, cause the loss of such qualification under the Code or under the
ITA, as applicable, or loss of such exemption, or the imposition of any
liability, penalty or Tax under ERISA, the Code or the ITA.
(e) Neither Seller nor any ERISA Affiliate currently sponsors or contributes to
or, within the last six years, sponsored or contributed to a Seller Plan that
is: (i) an Employee Benefit Plan subject to Title IV of ERISA or Section 412 of
the Code ("Title IV Plans"); (ii) a Multiemployer Plan; or (iii) a Multiple
Employer Plan. None of the Assigning Subsidiaries currently sponsors or
maintains a "pension plan" which is required to be registered in accordance with
Canadian law.
(f) Except as set forth on Schedule 3.8(f), all contributions (including all
employer contributions and employee salary reduction contributions) required to
have been made under any of the Seller Plans or by law to any funds or trusts
established thereunder or in connection therewith have been made by the due date
thereof (including any valid extension), and all contributions for any period
ending on or before the Closing Date which are not yet due will have been paid
or accrued on the balance sheet of the applicable member of the Seller Group on
or prior to the Closing Date, to the extent required to be accrued on such
applicable balance sheet.
(g) [Intentionally Omitted.]
(h) [Intentionally Omitted.]
(i) [Intentionally Omitted.]
(j) [Intentionally Omitted.]
(k) Except as set forth on Schedule 3.8(k), there is no material violation of
ERISA, the Code, the ITA or the Canadian or provincial pension legislation with
respect to the filing of applicable reports, documents and notices regarding the
Seller Plans with the Secretary of Labor and the Secretary of the Treasury or a
Canadian or provincial pension authority or the furnishing of such documents to
the participants or beneficiaries of the Seller Plans.
(l) Except as set forth on Schedule 3.8(l), there are no pending actions, claims
or lawsuits which have been asserted or instituted against the Seller Plans, the
assets of any of the trusts under such plans or the plan sponsor or the plan
administrator, or against any fiduciary of the Seller Plans with respect to the
operation of such plans (other than routine benefit claims), and, to Seller's
Knowledge, there are no threatened actions, claims or lawsuits of such nature.
(m) [Intentionally Omitted.]
(n) [Intentionally Omitted.]
(o) Except as set forth on Schedule 3.8(o), none of the Seller Plans provide for
post-employment life or health insurance, benefits or coverage for any
participant or any beneficiary of a participant, except as may be required under
the COBRA and at the expense of the participant or the participant's
beneficiary. Each of the Seller Group, and any ERISA Affiliate which maintains a
"group health plan" within the meaning of Section 5000(b)(1) of the Code has
substantially complied with the notice and continuation requirements of Section
4980B of the Code, COBRA, Part 6 of Subtitle B of Title I of ERISA and the
regulations thereunder.
(p) [Intentionally Omitted.]
(q) Except as set forth in Schedule 3.8(q), neither the execution and delivery
of this Agreement nor the consummation of the transactions contemplated hereby
will (i) result in any payment becoming due by any member of the Seller Group to
any Seller Employee in an amount which exceeds three times such employee's
current base salary, (ii) increase any benefits otherwise payable under any
Seller Plan or (iii) result in the acceleration of the time of payment or
vesting of any such benefits under any Seller Plan.
(r) No member of the Seller Group has any contract, plan or commitment, whether
legally binding or not, to create any additional Seller Plan or to modify any
existing Seller Plan, except as required by applicable law.
(s) Except as set forth on Schedule 3.8(s), no stock or other security issued by
any member of the Seller Group forms or has formed a material part of the assets
of any Seller Plan that is subject to ERISA.
(t) With respect to any period for which any contribution to or in respect of
any Seller Plan (including workers' compensation) is due and owing, each member
of the Seller Group has made due and sufficient current accruals for such
contributions and other payments in accordance with generally accepted
accounting principles applicable in the United States, and such current accruals
through June 30, 2001 are duly and fully provided for in the balance sheet for
the period then ended.
(u) [Intentionally Omitted.]
(v) Except as set forth on Schedule 3.8(v), to Seller's Knowledge, with
respect to each Foreign Plan:
(i) all employer and employee contributions to each Foreign Plan required
by law or by the terms of such Foreign Plan have been made, or, if
applicable, accrued in accordance with normal accounting practices;
(ii) the fair market value of the assets of each funded Foreign Plan, the
liability of each insurer for any Foreign Plan funded through insurance
or the book reserve established for any Foreign Plan, together with any
accrued contributions, is sufficient to procure or provide for the
accrued benefit obligations on a going concern and a solvency basis, as
of the Closing Date, with respect to all current or former participants
in such plan according to the actuarial assumptions and valuations most
recently used to determine employer contributions to such Foreign Plan
and no transaction contemplated by this Agreement shall cause such
assets or insurance obligations to be less than such benefit
obligations; and
(iii) each Foreign Plan required to be registered has been registered and has
been maintained in good standing with applicable regulatory
authorities.
(w) Except as set forth on Schedule 3.8(w), (i) none of the Seller Employees is
represented in his or her capacity as a Seller Employee by any labor
organization; (ii) no member of the Seller Group has recognized any labor
organization nor has any labor organization been elected or certified as the
collective bargaining agent of any Seller Employees, nor has any member of the
Seller Group entered into any collective bargaining agreement or union contract
with or recognizing any labor organization as the bargaining agent of any Seller
Employees; (iii) to Seller's Knowledge, there is no union organization activity
involving any of the Seller Employees, pending or threatened, nor has there ever
been union representation involving any of the Seller Employees; (iv) there is
no works council of any of the Assigning Subsidiaries; (v) to Seller's
Knowledge, there is no picketing, pending or threatened, and there are no
strikes, slowdowns, work stoppages, other job actions, lockouts, arbitrations,
grievances or other labor disputes involving any of the Seller Employees,
pending or threatened; (vi) to Seller's Knowledge, there are no complaints,
charges or claims against any member of the Seller Group pending or, to Seller's
Knowledge, threatened which could be brought or filed, with any public or
governmental authority, arbitrator or court based on, arising out of, in
connection with, or otherwise relating to the employment or termination of
employment or failure to employ by any member of the Seller Group of any
individual that could be reasonably expected to result (either individually or
in the aggregate) in a Material Adverse Effect; (vii) to Seller's Knowledge,
each member of the Seller Group is in compliance with all United States and
foreign laws, regulations and orders relating to the employment of labor,
including all such laws, regulations and orders relating to wages, hours, the
WARN Act, collective bargaining, discrimination, civil rights, safety and
health, workers' compensation and the collection and payment of withholding
and/or social security contributions/taxes and any similar tax except for
immaterial non-compliance; and (viii) there has been no "mass layoff" or "plant
closing" as defined by WARN with respect to any member of the Seller Group
within the six (6) months prior to the effective date of this Agreement.
(x) No Seller Plan which is intended to qualify under Section 401(k) of the Code
provides for employee contributions other than pre-tax salary deferrals,
excluding Seller Plans which do not cover: (i) employees of Seller and Assigning
Subsidiary who provide services related to the Purchased Assets; and (ii)
employees of Seller and its Affiliates who provide services related to the
Purchased Assets whose employment relationship will not be transferred to
Purchaser or any Purchaser Affiliate by operation of law as a result of the
transactions contemplated by this Agreement.
3.9 Taxes.
-----
(a) Except as set forth on Schedule 3.9(a), each member of the Seller Group (i)
has timely filed (or there has been timely filed on its behalf) with the
appropriate Governmental Entities all Tax Returns required to be filed, and all
such Tax Returns are true and correct in all material respects, and (ii) has
paid (or there has been paid on its behalf) all Taxes due and payable or claimed
or asserted by any Governmental Entity to be due from it or has provided for all
such Taxes on its books and records and in accordance with the Accounting
Principles, including without limitation in the Financial Statements. With
respect to any period for which Tax Returns have not yet been filed, or for
which Taxes are not yet due or owing, each member of the Seller Group has made
due and sufficient current accruals for such Taxes on its books and records and
in accordance with the Accounting Principles, including without limitation the
Financial Statements.
(b) [Intentionally Omitted].
(c) Except as set forth on Schedule 3.9(c), no written claim has been made by a
taxing authority in a jurisdiction where any member of the Seller Group does not
file Tax Returns to the effect that such member of the Seller Group is or may be
subject to taxation by that jurisdiction with respect to any Purchased Asset.
(d) Except as set forth on Schedule 3.9(d), no audit report has been issued
prior to the effective date of this Agreement (or otherwise with respect to any
audit or investigation in progress) relating to Taxes due from or with respect
to any member of the Seller Group with respect to taxable years for which the
statute of limitations remains open or with respect to which Taxes are not yet
paid. All deficiencies asserted or assessments made as a result of any
examinations by the IRS or any other Governmental Entity of the Tax Returns of,
or covering or including any member of, the Seller Group have been fully paid,
and there are no other actions, suits, investigations, audits or claims by any
Governmental Entity in progress relating to any member of the Seller Group, nor
has any member of the Seller Group received any notice from any Governmental
Entity that it intends to conduct such an audit or investigation. Except as set
forth on Schedule 3.9(d), no issue has been raised by a Governmental Entity (i)
in any examination with respect to federal income Taxes for Tax years of any
member of the Seller Group ended 1989 through 1999 which, by application of the
same or similar principles, could reasonably be expected to result in a proposed
deficiency for any subsequent taxable period or (ii) in any examination with
respect to Taxes other than federal income Taxes of any member of the Seller
Group which, by application of the same or similar principles, could reasonably
be expected to result in a proposed deficiency of at least $500,000 for any
subsequent taxable period. Except as set forth on Schedule 3.9(d), no member of
the Seller Group is subject to any private letter ruling of the IRS or
comparable rulings or closing agreements of other Governmental Entities.
(e) Except as set forth on Schedule 3.9(e), each member of the Seller Group has
withheld and paid over to the appropriate Governmental Entity all material
amounts of Taxes required to be withheld in connection with any amounts paid or
owing to any employee, creditor, independent contractor or other third party.
(f) There are no liens for Taxes upon the Purchased Assets except for liens
arising as a matter of law relating to current Taxes not yet due and liens set
forth on Schedule 3.9(f) for Taxes that are being contested in good faith and
for which adequate reserves have been set aside.
(g) Except as set forth on Schedule 3.9(g), no property having an aggregate tax
basis in excess of $5 million owned by any member of the Seller Group that is a
United States corporation is (i) property required to be treated as being owned
by another Person pursuant to the provisions of Section 168(f)(8) of the
Internal Revenue Code of 1954, as amended and in effect immediately prior to the
enactment of the Tax Reform Act of 1986, (ii) "tax-exempt use property" within
the meaning of Section 168(h)(1) of the Code, (iii) "tax-exempt bond financed
property" within the meaning of Section 168(g) of the Code, (iv) subject to
Section 168(g)(1)(A) of the Code, or (v) "limited use property" (as the term is
used in Rev. Proc. 2001-28).
(h) No Purchased Asset is (i) a debt instrument, the interest on which is, or
purports to be, excludable, in whole or in part, from gross income for federal
income tax purposes, (ii) an interest in a taxable mortgage pool within the
meaning of Section 7701(i) of the Code, or (iii) an interest in a partnership,
trust or REMIC within the meaning of Section 7701(a) of the Code.
(i) Each partnership interest which is a Purchased Asset has in effect a valid
election pursuant to Section 754 of the Code, which election will remain in
effect for the taxable year of such partnership in which the transactions
contemplated by this Agreement occur.
(j) For federal income tax purposes, none of the allocations of income, gain,
loss or deductions in respect of any partnership interest which is a Purchased
Asset for the respective partnership taxable years in which the transactions
contemplated by this Agreement occur (or prior taxable years) are (or were)
required to be determined under Section 704(c) of the Code or the principles
thereof.
(k) None of the contracts, agreements or other arrangements included in the
Purchased Assets contains any tax sharing or similar agreement (whether or not
written) which provides an obligation to make payments after the Closing.
(l) None of the Purchased Assets is a "United States real property
interest" within the meaning of Section 897(c)(i) of the Code.
(m) [Intentionally Omitted].
(n) (i) The interest component of any payments required to be made under any
Tax-Exempt Public Sector Financing Contracts which are Purchased Assets is
specifically and separately stated in such Tax-Exempt Public Sector Financing
Contract, (ii) such interest is not includable in the gross income of the
recipient thereof for federal income tax purposes and (iii) all filings with the
IRS or other taxing authority or Governmental Entity as are necessary to
preserve the tax-exempt nature of such interest have been made, including but
not limited to Form 8038-G or Form 8038-GC.
(o) (i) Except as set forth on Schedule 3.9(o), the classification of each
Financing Contract which constitutes a Purchased Asset reflected on the books
and records of each member of the Seller Group is consistent with the manner in
which such Financing Contract has been classified on such member of the Seller
Group's Tax Returns (as a loan or as a lease for Tax purposes), (ii) such
classification (as a loan or as a lease for Tax purposes) has not been
challenged by the IRS or any other Governmental Entity in a notice of proposed
adjustments or notice of deficiency and (iii) no member of the Seller Group has
reported its status under any Financing Contract which constitutes a Purchased
Asset as that of a partner or member of any other association for Tax purposes.
(p) No borrower on, co-lender under, or Person holding a participation in a
Purchased Asset that is a debt obligation is other than a "United States person"
as such term is defined in Section 7701(a)(30) of the Code.
(q) All of the Financing Contracts which are Purchased Assets which are treated
as true leases for federal income Tax purposes without regard to Section 7701(h)
of the Code on the books and records of the Seller Group are true leases for
federal income Tax purposes without regard to Section 7701(h) of the Code.
(r) All of the Financing Contracts which are Purchased Assets that contain
terminal rental adjustment clauses are qualified motor vehicle operating
agreements within the meaning of Section 7701(h) of the Code.
(s) Each member of Seller Group has paid, or cause to be paid, any and all
license fees, stamp taxes, excise, sales, use, transfer or property taxes or
similar fees or taxes due and payable with respect to all Purchased Financing
Contracts and Portfolio Property subject thereto to the state or other
jurisdiction (or any political subdivision thereof) where required, arising out
of, pursuant to or in connection with the Financing Contracts.
(t) All Purchased Assets located in Canada will be sold by an Assigning
Subsidiary which is not a non-resident of Canada for purposes of the Income Tax
Act (Canada).
(u) There has been a Final Tax Determination with respect to Seller's federal
income Tax liability with respect to its taxable years ended 1989 through 1995,
and any deficiencies have been paid by Seller in full in cash (or by way of an
offset against a refund otherwise owing to Seller).
(v) Except as set forth on Schedule 3.9(v), Seller or the applicable Assigning
Subsidiary transferring Purchased Assets located in a jurisdiction that imposes
Value Added Tax is, where required under the Value Added Tax and related
legislation, properly registered for Value Added Tax purposes in the applicable
jurisdiction;
(w) Seller or the applicable Assigning Subsidiary located in a jurisdiction that
imposes Value Added Tax on the supply of goods and services has not made any
supplies which do not carry the right to full Value Added Tax recovery in
connection with the Purchased Assets.
(x) [Intentionally Omitted.]
(y) Seller has served written notice of its motion seeking entry of the Sales
Procedures Order (as defined in the Approval Order) on each applicable taxing
authority in each jurisdiction in which it or any of its Assigning Subsidiaries
which are debtors in the Chapter 11 Cases are subject to Tax.
3.10 [Intentionally Omitted.]
3.11 [Intentionally Omitted.]
3.12 Purchased Other Contracts.
-------------------------
(a) Except as set forth on Schedule 3.12(a), no member of the Seller Group is,
nor, to Seller's Knowledge, is any other party in material breach of or in
material default under any Purchased Other Contract and no event has occurred
which, with notice and/or lapse of time, would constitute a material default by
such member of the Seller Group or any other party thereto under any such
contracts or agreements. No member of the Seller Group has received any written
notice from or given any written notice to any other party thereto indicating
that it or such other party, as the case may be, is presently in default under
or in breach or violation of any Purchased Other Contract in any material
respect.
(b) Except as set forth on Schedule 3.12(b) or as permitted in Section 5.1(d),
as of the effective date hereof, no member of the Seller Group is party to,
bound by or subject to any Material Contract, or to any other agreement,
contract or commitment of the following kinds related to the Purchased Assets:
(i) any agreement, contract or commitment to which any member of the Seller
Group is a party relating to the disposition or acquisition of any material
portion of the Purchased Assets, (ii) any guarantee or indemnification by any
member of the Seller Group included in any of the Purchased Other Contracts
running to any Person which involves, individually or in the aggregate, a
contingent liability of such member of the Seller Group of $500,000 or more,
(iii) any material agreement, contract or commitment providing for the
collection, servicing or administration of leases, loans, conditional sales
agreements or financial instruments of a type included in the Purchased
Financing Contracts, by any member of the Seller Group on behalf of any other
Person, (iv) any agreement, contract or commitment providing for the collection,
servicing or administration by any Person of any Purchased Financing Contract,
(v) any agreement, contract or commitment by any Person to purchase Purchased
Financing Contracts, or any interests or participations therein, or any material
agreement, contract or commitment by any member of the Seller Group to sell
Purchased Financing Contracts, or any material interests or participations
therein, (vi) any agreement, contract or commitment included in the Purchased
Assets containing any covenant or provision limiting the freedom of any member
of the Seller Group to engage in any line of business or compete with any Person
in any geographic area, (vii) any agreement, contract or commitment which would,
if performed in accordance with its terms, have a Material Adverse Effect, or
(viii) any commitment to do any of the foregoing. Each agreement, contract or
commitment set forth on Schedule 3.12(b) (except those that may be referred to
in clauses (i), (ii), (vi) and (vii) and, in respect of clauses (i), (ii), (vi)
and (vii), clause (viii)) is valid, binding and enforceable against the parties
thereto in accordance with its terms except, in case of parties thereto who are
not party to the Chapter 11 Cases, to the extent the foregoing may be limited by
the Bankruptcy Exception and is in full force and effect.
3.13 Litigation and Liabilities. Except as set forth on Schedule 3.13, there are
no (i) civil, criminal or administrative actions, suits, claims, hearings,
investigations or proceedings pending (including, but not limited to, any
counterclaims and, collectively, "Proceedings") or, to Seller's Knowledge,
threatened, against any member of the Seller Group relating to or affecting any
of the Purchased Assets or Assumed Liabilities or (ii) obligations or
liabilities, whether or not accrued, contingent or otherwise, or any other fact
or circumstance to Seller's Knowledge that forms a reasonable basis for any
claim against or obligation or liability of any member of the Seller Group
relating to or affecting the Purchased Assets or Assumed Liabilities except in
the case of clauses (i) and (ii) as would not be likely to have, individually or
in the aggregate, a Material Adverse Effect. Since December 31, 2000, no member
of the Seller Group has been the subject of any Proceeding nor, to Seller's
Knowledge, have there been any investigations by or before any Governmental
Entity, in either case relating to any of the Purchased Assets or Assumed
Liabilities or liabilities that will be transferred by operation of law to
Purchaser or any Purchaser Affiliate as a result of the transactions
contemplated by this Agreement, nor to Seller's Knowledge does any valid basis
for any such investigation exist.
3.14 [Intentionally Omitted.]
3.15 [Intentionally Omitted.]
3.16 Brokers' or Finders' Fees, etc. No Person acting on behalf of any member of
the Seller Group or any of its Affiliates or under the authority of any of them
is or will be entitled to any brokers' or finders' fee or any other commission
or similar fee, directly or indirectly, from Purchaser or any of its Affiliates
in connection with any of the transactions contemplated hereby.
3.17 Conduct of Business.
-------------------
(a) Since June 30, 2001, each member of the Seller Group has with respect to the
Purchased Assets used its commercially reasonable efforts to preserve
substantially intact the business organizations of each member of the Seller
Group and to preserve the present relationships of each member of the Seller
Group with (i) the Seller Employees, except for the issuance of any WARN Act
notices, and (ii) each Person having any business relationships with any member
of the Seller Group relating to the Purchased Assets, except to the extent the
discontinuance of such relationship would likely not have a Material Adverse
Effect.
(b) Except as set forth on Schedule 3.17(b), since June 30, 2001, or, if later,
the date such assets and liabilities first became assets or liabilities, as the
case may be, of a member of the Seller Group, (i) each member of the Seller
Group has owned, operated and serviced the Purchased Assets and acted with
respect to the Assumed Liabilities only in the ordinary course consistent with
past practices and has not deviated from or changed in any respect its credit
policy or collateral eligibility standards in any material respect; and (ii) to
the extent that any member of the Seller Group has approved credit applications
with respect to Financing Contracts entered into after June 30, 2001, but prior
to the effective date of this Agreement, such member of the Seller Group has
complied with standards of evaluating, originating, underwriting and funding new
business which are in all respects consistent with its past practices.
3.18 Purchased Financing Contracts.
-----------------------------
(a) Except as set forth on Schedule 3.18(a), each Purchased Financing Contract
and Credit Enhancement (i) is valid, binding and enforceable by the member of
the Seller Group party thereto against the Obligor or provider of such Credit
Enhancement thereunder in accordance with its written terms, except as may be
limited by the Bankruptcy Exception, and (ii) constitutes and arose out of a
bona fide business transaction entered into in the ordinary and usual course of
business of such member of the Seller Group, consistent with its past practices.
(b) Except as set forth on Schedule 3.18(b), (i) each Purchased Financing
Contract and Credit Enhancement is, or as of the Closing Date will be, in full
force and effect, free and clear of Encumbrances other than Permitted
Encumbrances, and not subject to any defense, offset, claim, right of rescission
or counterclaim by the Obligor or provider of such Credit Enhancement under such
Purchased Financing Contract in the case of a Purchased Financing Contract or by
the obligor thereunder in the case of a Credit Enhancement, or any Person
claiming under any such right; (ii) no member of the Seller Group is in breach
of or default under any Purchased Financing Contract or Credit Enhancement, no
other party is in payment breach thereof or payment default thereunder and, to
Seller's Knowledge, no other event has occurred which, with notice and/or lapse
of time, would constitute a default by any member of the Seller Group or any
other party thereunder; (iii) no Obligor under any Purchased Financing Contract
(A) has acquired any Portfolio Property, any interest in any Portfolio Property
or the use of any Portfolio Property pursuant to such Purchased Finance Contract
for personal, family or household use or for agricultural purposes, or (B) is
required under any applicable law to withhold from payments on any such
Purchased Financing Contract any interest or other withholdings for the payment
of Taxes to any Governmental Entity; (iv) each applicable member of the Seller
Group has in its possession a fully executed original of any lease or note (and
an executed original or a true and correct copy of all other documents)
comprising each Purchased Financing Contract (except for Purchased Financing
Contracts that are the subject of a Discounting Financing Agreement, copies of
which shall be delivered to Purchaser at Closing) and Credit Enhancement and all
other documents required by each member of the Seller Group's credit or
investment approval with respect to each Purchased Financing Contract; (v) no
Purchased Financing Contract is terminable at the option of the Obligor
thereunder except to the extent that such Obligor is required to pay to such
member of the Seller Group a termination fee in an amount which, together with
the Residual and any payments from date of termination equals at least the Net
Book Value at such time of such Purchased Financing Contract; (vi) each member
of the Seller Group has in its possession documents sufficient to establish the
Original Equipment Cost of all Portfolio Property for purposes of determining
personal property tax liability; (vii) all payments pursuant to each Purchased
Financing Contract are made directly to the applicable member of the Seller
Group, except Purchased Financing Contracts subject to Discounted Financing
Agreements; and (viii) each member of the Seller Group has approved credit
applications and otherwise entered into commitments with respect to Purchased
Financing Contracts in a manner consistent with such member of the Seller
Group's credit policies, collateral eligibility standards and credit quality
classifications in effect at the time and otherwise complied with standards of
evaluating, originating, underwriting and funding new business which are in all
respects consistent with its past practices.
(c) Except as set forth on Schedule 3.18(c), no Purchased Financing Contract is
subject to any debt subordination agreement, participation agreement,
intercreditor agreement, owner trust agreement, purchase agreement, collateral
sharing agreement, residual sharing agreement, remarketing agreement or vendor
recourse agreement, and, except in connection with the debtor-in-possession
financing under the Chapter 11 Cases and under any Purchased Discounted
Financing Agreement, no Purchased Financing Contract is subject to any
Disposition Agreement.
(d) As of the effective date of this Agreement, Schedule 3.18(d) sets forth a
list of each Credit Enhancement constituting a Purchased Asset that is a letter
of credit, certificate of deposit or stock certificate, along with (i) the
issuer thereof, (ii) the maximum amount drawable thereunder, principal amount
thereof or number of shares represented thereby, (iii) the expiration or
maturity date thereof, if applicable and (iv) the physical location thereof.
(e) The Seller Group, through any one or more of its members, owns and has good
title to each of the Purchased Financing Contracts, free and clear of all
Encumbrances other than Permitted Encumbrances.
(f) Schedule 3.18(f) sets forth all of the Required Consent Financing
Contracts.
3.19 Portfolio Property.
------------------
(a) Except as disclosed on Schedule 3.19(a): (i) each member of the Seller Group
has, with respect to each item of Portfolio Property that such member of the
Seller Group will be transferring to Purchaser and Purchaser Affiliates pursuant
hereto, either (A) good and valid title to such Portfolio Property, free and
clear of all Encumbrances other than Permitted Encumbrances, or (B) a valid
first priority security interest on such Portfolio Property that is governed by
or subject to a Financing Contract which has been duly perfected (including but
not limited to pursuant to all appropriate Uniform Commercial Code filings);
(ii) with respect to each item of Portfolio Property, the amount of the Original
Equipment Cost with respect thereto is described accurately in the files of each
member of the Seller Group that relate to such item of Portfolio Property in the
same level of detail that such individual item of Portfolio Property is
identified in the applicable Purchased Financing Contract; (iii) none of such
Portfolio Property is a vessel, an aircraft or a vehicle; and (iv) no Person has
an option to purchase any item of such Portfolio Property at the end of the
lease term for a fixed amount less than the greater of (A) the Residual thereof
or (B) the amount set forth in the Financing Contract covering such Portfolio
Property.
(b) Except as set forth on Schedule 3.19(b), to Seller's Knowledge, (i) all
Portfolio Property has complied and now complies in all respects with all laws,
statutes, ordinances, rules and regulations applicable to such Portfolio
Property, except that Seller makes no representation as to whether the use of
Portfolio Property by the Obligor complies with such laws, statutes, ordinances,
rules and regulations; and (ii) each Financing Contract requires the Obligor
thereunder (and not a member of the Seller Group or any other Person) to provide
insurance against loss or damage with respect to the Portfolio Property subject
to or governed by such Financing Contract.
(c) Except for the Portfolio Property relating to Financing Contracts listed on
Schedule 1.1O and as described on Schedule 3.19(a), the Seller Group through at
least one of its members owns and has good title (and perfected title in
jurisdictions that have a method of perfecting title in Portfolio Property) to
all of the Portfolio Property related to the Purchased Financing Contracts, free
and clear of all Encumbrances other than Permitted Encumbrances. No member of
the Seller Group is in default in any agreement or arrangement with the third
parties which own title to the Portfolio Property related to the Financing
Contracts listed on Schedule 1.1O and as described on Schedule 3.19(a), which
default would give rise to an acceleration of payments to become due thereunder.
3.20 Environmental Matters. Except as disclosed on Schedule 3.20 (i) each member
of the Seller Group and each of the Purchased Assets is in compliance with all
Environmental Laws and Environmental Permits; (ii) there are no claims or
proceedings pending or, to Seller's Knowledge, threatened against any member of
the Seller Group with respect to the Purchased Assets alleging the violation of
or non-compliance with Environmental Laws; (iii) to Seller's Knowledge, there
are no facts, circumstances or conditions that could result in the owner or
operator of the Purchased Assets incurring liabilities under Environmental Laws;
and (iv) Seller has provided Purchaser with copies of all material
environmental, health and safety assessments, audits, investigations, analyses
and other such reports relating to the Purchased Assets (each, an "Environmental
Report") that are, as of the effective date of this Agreement, in the
possession, custody and control of each member of the Seller Group, except, in
respect of clauses (i), (ii) and (iii) hereof, that has not had or is reasonably
likely to have a Material Adverse Effect.
3.21 Transactions With State and Local Governments. With respect to each
Purchased Financing Contract for which the Obligor is a State and Local
Governmental Entity, (i) the member of the Seller Group party to such Financing
Contract has complied with all bidding requirements applicable to such
transaction and with all requirements of any applicable request for proposal,
including, without limitation, those applicable to the Portfolio Property and
all federal and state statutes and regulations governing equal employment
opportunity, affirmative action and environmental protection; (ii) such member
of the Seller Group is the Person, or assignee of the Person, named in and
subject to the request for proposal and will continue to perform or cause to be
performed any obligations arising from such Financing Contract; and (iii) such
member of the Seller Group has (or timely will) give notice to each applicable
State and Local Governmental Entity of the assignment of the rights of such
member of the Seller Group in the Purchased Assets to Purchaser and has obtained
the consent of such State and Local Governmental Entity if required by the terms
of the Financing Contract.
3.22 [Intentionally Omitted.]
3.23 [Intentionally Omitted.]
3.24 [Intentionally Omitted.]
3.25 San Diego Facility. Seller has a valid and enforceable leasehold interest,
and upon the Closing, Purchaser will have a valid and enforceable leasehold
interest, in the San Diego Facility, free and clear of all Encumbrances, other
than those of a nature that would not be likely to have a Material Adverse
Effect. The San Diego Facility, any improvements thereon, and the use by Seller
thereof conform, in all material respects, to all applicable laws, including,
but not limited to, zoning requirements and the Americans With Disabilities Act,
and all restrictive covenants, if any. As of the effective date of this
Agreement, there has not been (i) any threatened cancellation of the real
property lease on the San Diego Facility, (ii) any outstanding disputes, of a
material nature, under such lease or (iii) to Seller's Knowledge, any valid
basis for any claim of breach or default thereunder.
3.26 Purchased Discounted Financing Agreements. No Purchased Discounted
Financing Agreement (i) except as set forth on Schedule 3.26, provides that the
lender thereunder has recourse against any person for the payment thereunder
except the Obligor of the Financing Contract securing such indebtedness, (ii)
except as set forth on Schedule 3.26, has an amount due in excess of the
remaining rent payments under the Financing Contract securing such indebtedness,
(iii) allows the lender to retain its security interest in the Financing
Contract securing such indebtedness after the repayment of such indebtedness,
(iv) is cross collateralized to any Property other than any Purchased Financing
Contract which was discounted for such indebtedness and its underlying Portfolio
Property, (v) except as set forth on Schedule 3.26 has a lender located, or
payments due, outside of the United States, (vi) has a cross default to any
other agreement, (vii) has a representation or covenant which has been breached
by any member of the Seller Group, which would give (with the giving of notice
or passage of time or both) the lender thereunder the ability to accelerate
payment to become due thereunder, (viii) would prohibit Purchaser or any
Purchaser Affiliate from receiving payments on the Financing Contract securing
such indebtedness after such indebtedness is paid in full, or (ix) gives a right
of setoff to the lender for any amounts owed thereunder. Each Purchased
Discounted Financing Agreement is substantially in the same form as the
Discounted Financing Agreements set forth on Schedule 3.26. Schedule 3.26 sets
forth all Discounted Financing Agreements to which any Assigning Subsidiary is a
party.
3.27 Transferred European Leases. Schedule 3.27 sets forth all of the Financing
Contracts that were transferred from any Assigning Subsidiary to Comdisco
Equipment Solutions (Europe) B.V. Except where the failure to be true was cured,
or will be cured prior to Closing through the transfer by another Assigning
Subsidiary or otherwise, at no cost to Purchaser or any Purchaser Affiliate, (i)
all such Financing Contracts were validly and effectively transferred to
Comdisco Equipment Solutions (Europe) B.V. and where necessary the consent of
the Obligor or another third party to such transfer was obtained in accordance
with the terms of the relevant Financing Contract, (ii) each such Financing
Contract is valid, binding and enforceable by Comdisco Equipment Solutions
(Europe) B.V. against the Obligor thereunder in accordance with its written
terms (and in particular all applicable taxes, duties or other amounts (if any)
payable in connection with the transfer of such Financing Contracts (and the
transfer of the Portfolio Property subject to such Financing Contracts) to
Comdisco Equipment Solutions (Europe) B.V. have been paid), except as may be
limited by the Bankruptcy Exception, and (iii) no such transfers are capable of
being set aside on the grounds that they were conducted at an undervalue or
constituted fraudulent conveyance or preferential transfer or any similar
reason.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser makes, and at Closing will cause each Purchaser
Affiliate to make, the following representations and warranties to Seller:
4.1 Organization and Good Standing. Purchaser is, and each Purchaser Affiliate
will be at Closing, a duly organized entity, validly existing and in good
standing under the laws of the state of its incorporation, and Purchaser has,
and each Purchaser Affiliate will have at Closing, the corporate or other
applicable power to own and lease its Property and to carry on its business as
now being conducted.
4.2 Corporate Authority. Purchaser has, and each Purchaser Affiliate will have
at Closing, all requisite corporate or other applicable power and authority to
execute and deliver, and to perform its obligations under, this Agreement, the
Transitional Services Agreement and the other documents to be executed and
delivered by Purchaser or such Purchaser Affiliate pursuant hereto and thereto.
Each of this Agreement, the Transitional Services Agreement and the other
documents to be executed and delivered by Purchaser or any Purchaser Affiliate
pursuant hereto and thereto has been, or will be, as the case may be, duly
authorized by all necessary corporate action and has been (or, with respect to
the documents to be executed and delivered after the effective date hereof, will
be at the Closing) duly executed and delivered by Purchaser or such Purchaser
Affiliate and is (or, with respect to the documents to be executed and delivered
after the effective date hereof, will be at the Closing) the valid and binding
obligation of Purchaser or such Purchaser Affiliate, enforceable against
Purchaser or such Purchaser Affiliate in accordance with its terms, except as
enforcement thereof may be limited by the Bankruptcy Exception. The
modifications set forth in this Agreement are not deemed by Purchaser to be
material modifications to the January Purchase Agreement.
4.3 No Conflicts. Neither the execution and delivery by Purchaser or any
Purchaser Affiliate of this Agreement, the Transitional Services Agreement or
any other document to be executed and delivered by Purchaser or such Purchaser
Affiliate in connection herewith or therewith nor compliance by Purchaser or
such Purchaser Affiliate with the terms and provisions hereof or thereof nor
consummation of the transactions contemplated hereby or thereby will conflict
with or result in a breach of any of the terms, conditions or provisions of (i)
the articles of incorporation (or equivalent document) or by-laws (or equivalent
document, including Articles of Association) of Purchaser or such Purchaser
Affiliate, or (ii) any judgment, order, injunction, decree or ruling of any
court or of any Governmental Entity or any law, statute or regulation to which
Purchaser or such Purchaser Affiliate or any of its Properties is subject.
4.4 Consents. Other than the filing of notifications pursuant to the HSR Act and
any other filings pursuant to any corresponding anti-trust, competition or
similar legislation in any other jurisdictions (including, without limitation,
the Competition Act (Canada)), and the Approval Order issued by the Bankruptcy
Court, and publication by Purchaser or any Purchaser Affiliate of the sale of
assets pursuant hereto by the French entities that are Assigning Subsidiaries
where such sale is considered to be a sale of an activity or going concern
("cession de fonds de commerce"), no notices, reports or other filings are
required to be made by Purchaser or any Purchaser Affiliate with, nor are any
consents, licenses, permits, Authorizations or approvals required to be obtained
by Purchaser or any Purchaser Affiliate from, any Governmental Entity or any
other Person in connection with the execution and delivery by Purchaser or any
Purchaser Affiliate of this Agreement, the Transitional Services Agreement or
any other document to be executed and delivered by Purchaser pursuant hereto or
thereto or the consummation by Purchaser or such Purchaser Affiliate of the
transactions contemplated hereby or thereby.
4.5 Brokers' or Finders' Fees, etc No Person acting on behalf of Purchaser or
any Purchaser Affiliate or any of their Affiliates or under the authority of any
of them is or will be entitled to any brokers' or finders' fee or any other
commission or similar fee, directly or indirectly, from Seller or any of its
Affiliates in connection with any of the transactions contemplated herein.
4.6 Financing. As of the effective date hereof, Purchaser has, and on the
Closing Date, Purchaser and each Purchaser Affiliate will have, sufficient funds
available to deliver the Purchase Price to Seller and consummate the
transactions contemplated by this Agreement. Upon the Closing, (i) neither
Purchaser nor any Purchaser Affiliate will be insolvent, (ii) neither Purchaser
nor any Purchaser Affiliate will be left with unreasonably small capital, (iii)
neither Purchaser nor any Purchaser Affiliate will have incurred debts beyond
its ability to pay such debts as they mature and (iv) the capital of Purchaser
and each Purchaser Affiliate will not be impaired.
ARTICLE V
CONDUCT AND TRANSACTIONS PRIOR TO
CLOSING; COVENANTS; INDEMNITIES
Seller and Purchaser agree and covenant as follows:
5.1 Investigations; Certain Covenants. Between the date of the
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Approval Order and the Closing (or, with respect to Sections 5.1(b), 5.1(c) and
(d), during the period set forth therein):
(a) Seller shall give or cause to be given to Purchaser and its representatives
and agents reasonable access during normal business hours to all the premises,
personnel and books and records (wherever located) of each member of the Seller
Group, including, but not limited to, all accounting books and records, all
financial records and statements, and all Tax Returns and Tax records, in each
case pertaining to any Purchased Financing Contract, any Portfolio Property or
any Assumed Liability, or any other Purchased Asset. Seller shall assemble, and
at least 15 days prior to the Estimated Closing Date, Seller shall make
available for Purchaser's review, at a location or locations mutually agreeable
between Purchaser and Seller, a lease file for each Purchased Financing Contract
(each, a "Lease File"), which shall contain, to the extent available, the credit
file, the correspondence file, the document file and the documents set forth on
Schedule 5.1(a), each organized so that all such documents relating to a
specific Purchased Financing Contract are located in a single Lease File.
(b) As soon as practicable following the date of the Approval Order, each of
Purchaser and Seller shall make or cause to be made all filings required to be
made by it or on its behalf under the HSR Act and any corresponding anti-trust,
competition or similar legislation in any other jurisdictions (including,
without limitation, (i) the Competition Act (Canada) and (ii) Article 1939 of
the Mexican Federal Civil Code in connection with Article 17, section 1, of the
Regulations to the Federal Law of Economic Competition, Articles 20 and 21 of
the Federal Law of Economic Competition (Mexico), and the Mexican Federal
Commission of Competition ("Comision Federal de Competencia")) relating to the
transactions contemplated hereby and shall use its commercially reasonable
efforts to cause an early termination under the waiting period under the HSR Act
(and to obtain the requisite approvals or consents of Governmental Entities and
to cause any applicable waiting periods to expire pursuant to the laws of any
other jurisdictions) as soon as practicable. However, neither Purchaser nor any
of its Affiliates shall have any obligation to dispose of, hold separate or
otherwise restrict its enjoyment of any of its assets or properties (including,
without limitation, after the Closing, the Purchased Assets). Purchaser shall
pay the filing fees for all filings required pursuant to this Section 5.1(b).
(c) Except as otherwise expressly provided in this Agreement, between the
effective date of this Agreement and Closing, Seller shall use, and shall cause
each Assigning Subsidiary to use, commercially reasonable efforts under the
circumstances to preserve substantially intact the Purchased Assets and shall
use, and shall cause each Assigning Subsidiary to use, its commercially
reasonable efforts under the circumstances to preserve its present business
relationships, including, but not limited to, those with the Obligors under
Financing Contracts, where the discontinuance of such relationships would have a
Material Adverse Effect.
(d) Except as otherwise expressly permitted by this Agreement or consented to in
writing by Purchaser and except as prohibited by the Bankruptcy Code or the
Bankruptcy Court in the Chapter 11 Cases prior to the effective date hereof,
Seller shall, and cause each of the Assigning Subsidiaries to, between the
effective date of this Agreement and Closing:
(i) own, operate and service the Purchased Assets and act with respect to
the Assumed Liabilities, in the ordinary and usual course consistent
with past practices; provided, that, any member of the Seller Group may
prepay any of its indebtedness if such prepayment does not otherwise
violate any provision of this Agreement except that no member of the
Seller Group shall prepay any Discounted Financing Agreement related to
a Purchased Financing Contract;
(ii) maintain its books, accounts and records relating to the Purchased
Assets and employees relating to the Purchased Assets in the ordinary
course of business consistent with past practices, and cause such
books, accounts and records to be true and complete in all material
respects;
(iii) [Intentionally Omitted];
(iv) [Intentionally Omitted];
(v) use commercially reasonable efforts to keep available the services of
the present employees necessary to maintain (without deterioration in
any material respect) its business as such business relates to the
Purchased Assets; and
(vi) use commercially reasonable efforts to maintain the goodwill associated
with its business, as such business relates to the Purchased Assets,
including, without limitation, preserving the relationship of
customers, suppliers and others having business dealings with any
member of the Seller Group.
Except as otherwise expressly permitted by this Agreement,
between the effective date of this Agreement and Closing, Seller, without the
written consent of Purchaser, shall not, nor shall it permit any Assigning
Subsidiary to, with respect to any of the Purchased Assets:
(A) waive or commit to waive any right that could have, individually or in
the aggregate, a Material Adverse Effect;
(B) with respect to the Electronics Segment, modify the policies
or practices for (x) evaluating, originating, underwriting or
funding business, (y) collection, or (z) valuing Portfolio
Property;
(C) [Intentionally Omitted];
(D) make any advance, novation, modification or other
accommodation (other than those described in clause (A) above)
to any Obligor or provider of a Credit Enhancement other than
in the ordinary course of business consistent with past
practices;
(E) except as required by any debtor-in-possession financing in the Chapter
11 Cases, mortgage, pledge or otherwise encumber any assets;
(F) sell, lease (other than leases or conditional sales of
Portfolio Property pursuant to the Financing Contracts),
transfer or otherwise dispose of any assets included in the
Purchased Assets, except sales of inventory in the ordinary
course of business consistent with past practices;
(G) [Intentionally Omitted];
(H) make any change in financial or tax accounting methods,
principles or practices applicable to the Purchased Assets or
Assumed Liabilities unless permitted by the Accounting
Principles;
(I) adopt, approve, ratify or enter into any collective bargaining
agreement, side letter, memorandum of understanding or similar
agreement with any labor union covering the Seller Employees,
except as may be required under applicable law;
(J) take any action that would breach Seller's representations,
warranties or covenants contained in this Agreement if such
representation, warranty or covenant were made at the time of
the action;
(K) with respect to any Financing Contract of a type that would be included
within the definition of Purchased Financing Contracts (without
considering clauses (E), (H) or (J) of the proviso thereof) (a
"Non-Terminable or Modifiable Financing Contract"), (x) terminate, or
permit the termination of such Financing Contract prior to the
expiration of the scheduled term thereof (except for terminations,
without a violation of clause (z) below, at the election of an Obligor
as contractually permitted under such Financing Contract), (y)
directly or indirectly extend or otherwise restructure the payment
schedule or payment terms of any such Financing Contract beyond 30
days from the original due date of a payment, or extend or otherwise
restructure any other term or condition of any such Financing Contract
(except modifications or amendments to reflect equipment additions or
upgrades and lease term extensions related to such additions or
upgrades), or (z) encourage or induce an Obligor under such Financing
Contract to elect to terminate such Financing Contract prior to the
expiration of the scheduled term thereof; or
(L) enter into an agreement, contract or commitment (other than
this Agreement) to do any of the things prohibited by the
foregoing clauses (A) through (K).
(e) [Intentionally Omitted.]
(f) Seller shall, and shall cause each of the Assigning Subsidiaries to, use
commercially reasonable efforts to obtain (i) all Authorizations, consents and
approvals referred to in Section 3.4 hereof, (ii) the written consent, and any
required novation, of the required third parties to transfer the Required
Consent Financing Contracts to Purchaser, or any Purchaser Affiliate designated
by Purchaser, at the Closing, and (iii) a Discounted Lender Consent for every
Discounted Financing Agreement secured by a Financing Contract that would
otherwise be a Purchased Financing Contract but for the requirement in clause
(J) of the proviso of the definition of Purchased Financing Contracts.
(g) Prior to Closing but after the signing of the Approval Order by the
Bankruptcy Court, and for a period not to exceed four months following the
Closing Date, Seller shall, and shall cause each of the Assigning Subsidiaries
to, reasonably cooperate with Purchaser and each Purchaser Affiliate by
providing reasonable access (during normal business hours) to (subject to a
non-disclosure agreement), (i) available information regarding, and (ii)
available personnel who are knowledgeable regarding, the systems, hardware and
software used by the Seller Group to collect, service and operate the Purchased
Assets as and to the extent reasonably requested by Purchaser solely in
connection with the conversion of data with respect to the Purchased Financing
Contracts onto the systems, hardware and software of the Purchaser or applicable
Purchaser Affiliate. Effective as of the Closing Date, Seller hereby grants and
shall cause each Assigning Subsidiary to grant, to Purchaser and each Purchaser
Affiliate, to the extent owned by any of Seller or any Assigning Subsidiary, a
perpetual, royalty free, non-transferable, non-exclusive license (in the
jurisdictions in which the applicable grantor has such rights) to use all
information provided under this Section 5.1(g) (the "Information") solely for
their internal business purposes related to the Purchased Financing Contracts.
"Information" shall not include any computer programs, including, but not
limited to, any and all software implementations of algorithms, models and
methodologies in source code or object code form, databases and compilations.
Purchaser and the Purchaser Affiliates may not rent, lease, sublicense or
otherwise transfer any of the Information or provide access to the Information
to any third party. All rights in the Information not explicitly granted under
this Section 5.1(g) are reserved.
(h) Five Business Days prior to Closing, Seller shall deliver to Purchaser
listings as of such date of all Financing Contracts that fall under the
definition of Purchased Financing Contracts (without giving effect to clauses
(B), (D), (E), (F), (H)(z), (J) or (K) of the proviso in the definition thereof)
and that either (i) fall under any of clauses (B), (D), (E), (J) or (K) of the
proviso in the definition of Purchased Financing Contracts, (ii) as of the
Cut-Off Date fall under clause (i) of the definition of Delinquency Contracts or
(iii) to Seller's Knowledge, do not satisfy the representations and warranties
of Article III (which listing shall identify the breach of such representations
and warranties).
(i) Seller shall deliver to Purchaser, at least five Business Days prior to
Closing, all Environmental Reports that come to its possession, custody or
control between the effective date hereof and Closing.
(j) Within 20 days after the date of the Approval Order, Seller shall deliver to
Purchaser or the applicable Purchaser Affiliate a list of all third party
consents required to transfer each Purchased Other Contract and the lease on the
San Diego Facility. Seller shall use its commercially reasonable efforts to
obtain such consents prior to Closing. To the extent that Seller does not obtain
such consents prior to Closing for a Purchased Other Contract or lease of real
property, Purchaser may elect to exclude such Purchased Other Contract or lease
of real property from the Purchased Assets notwithstanding that it is described
as a Purchased Asset in Section 2.1.
5.2 Pending or Threatened Litigation. Between the effective date of this
Agreement and the Closing, Seller and Purchaser shall inform each other,
promptly upon obtaining knowledge thereof, of any pending or threatened
litigation which reasonably could be anticipated to (i) render inaccurate in any
material respect any representation or warranty made by Seller or Purchaser (as
the case may be); or (ii) prohibit or restrain or materially and adversely
affect the consummation of the transactions contemplated hereby or the
performance by Seller or Purchaser of their respective obligations hereunder.
5.3 Tax Matters/Allocation of Purchase Price.
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(a) (i) Within 90 days after the completion of the final determination of the
Special Procedures Report of Assets Acquired and Liabilities Assumed, Purchaser
shall provide to Seller copies of a schedule allocating the Purchase Price (and
any other items required to be treated as additional Purchase Price at such
time, including the Two Closing Premium, if any) among Seller and the respective
Assigning Subsidiaries and the Purchased Assets (the "Allocation Statement");
provided, that the Allocation Statement shall not be inconsistent with the
allocation of the Purchase Price agreed to by Purchaser and Seller pursuant to
Section 2.3, except to the extent any inconsistencies relate to or arise out of
the final determination of the Special Procedures Report of Assets Acquired and
Liabilities Assumed. Within 60 days after the receipt of such Allocation
Statement, Seller shall propose to Purchaser any changes to such Allocation
Statement or shall indicate its concurrence therewith, which concurrence shall
not be unreasonably withheld. The failure by Seller to propose any such change
or to indicate its concurrence within such 60 days shall be deemed to be an
indication of its concurrence with such Allocation Statement. Purchaser and
Seller shall file, and shall cause their Affiliates to file, all Tax Returns and
statements (including Form 8594), forms and schedules in connection therewith in
a manner consistent with such allocation of the Purchase Price and shall take no
position contrary thereto unless required to do so by applicable Tax laws. Any
disputes with respect to the items on the Allocation Statement which Purchaser
and Seller, acting in good faith, are unable to resolve shall be resolved by the
Selected Accounting Firm. Each of the parties to this Agreement shall be bound
by the decision rendered by the Selected Accounting Firm.
(ii) Treatment of Earnout. Other than
for purposes of Section 2.3, 2.4 and 2.7, Seller and Purchaser agree that any
payments made pursuant to Section 2.8 shall be treated as additional Purchase
Price. Each summary statement provided by the Purchaser shall set forth a
schedule allocating the payments among Seller and the respective Assigning
Subsidiaries and the Purchased Assets (each an "Additional Allocation
Statement"). Within 60 days of receipt of such Additional Allocation Statement,
Seller shall propose to Purchaser any changes to such Additional Allocation
Statement or shall indicate its concurrence therewith, which concurrence shall
not be unreasonably withheld. The failure by Seller to propose any such change
or to indicate its concurrence within such 60 days shall be deemed to be an
indication of its concurrence with such Additional Allocation Statement;
provided that nothing in this Section 5.3 shall preclude Seller from disputing
the amount payable pursuant to Section 2.8 at anytime. Purchaser and Seller
shall file, and shall cause their Affiliates to file, all Tax Returns and
statements (including Form 8594), forms and schedules in connection therewith in
a manner consistent with such allocation and shall take no position contrary
thereto unless required to do so by applicable Tax laws. Any disputes with
respect to the items on the Additional Allocation Statement which Purchaser and
Seller, acting in good faith, are unable to resolve shall be resolved by the
Selected Accounting Firm. Each of the parties to this Agreement shall be bound
by the decision rendered by the Selected Accounting Firm.
(b) Cooperation with Respect to Tax Returns. Purchaser and Seller agree to
furnish or cause to be furnished to each other, each at their own expense, as
promptly as practicable, such information (including access to books and
records) and assistance, including making employees available on a mutually
convenient basis to provide additional information and explanations of any
material provided relating to the Purchased Assets as is reasonably necessary
for the filing of any Tax Return, for the preparation for any audit, and for the
prosecution or defense of any claim, suit or proceeding relating to any
adjustment or proposed adjustment with respect to Taxes or any appraisal of the
Purchased Assets. Seller shall retain in its possession all Tax Returns and tax
records relating to the Purchased Assets that might be relevant to any taxable
period ending on or prior to the Closing Date (or the date of the Second Closing
with respect to Purchased Financing Contracts transferred at the Second Closing)
until the relevant statute of limitations has expired. After such time, Seller
may dispose of such materials, provided that prior to such disposition Seller
shall give Purchaser a reasonable opportunity to take possession of such
materials. Purchaser shall retain in its possession, and shall provide Seller
reasonable access to (including the right to make copies of), such supporting
books and records and any other materials that Seller may specify with respect
to Tax matters relating to any taxable period ending on or prior to the Closing
Date (or the date of the Second Closing with respect to Purchased Financing
Contracts transferred at the Second Closing) until 60 days after the relevant
statute of limitations has expired.
(c) Transfer Taxes and Value Added Tax.
(i) Transfer Taxes. Seller shall be liable for and shall pay, or shall
cause the applicable Assigning Subsidiary to pay (and Seller shall
indemnify and hold Purchaser and each Purchaser Affiliate harmless from
and against) any sales, use, transfer, stamp duty, registration duty,
recording or similar Taxes other than Value Added Tax (collectively
"Transfer Taxes") due as a result of the transactions provided herein
and agrees to file all necessary documentation (including, but not
limited to, all Tax Returns) with respect to all such Taxes in a timely
manner. Notwithstanding the foregoing, Purchaser and Seller shall, and
shall cause their respective Affiliates to, cooperate in good faith and
use commercially reasonable efforts to structure the transfer of the
Purchased Assets located in Mexico in a manner that will minimize the
amount of any customs duties, importation processing fees,
countervailing duties and other similar Transfer Taxes that are (A)
attributable to either (1) the transfer of the Purchased Assets located
in Mexico or (2) the change in the importation regime from temporary to
definitive, or (B) applicable to import-export operations including,
without limitation, the filing of "pedimentos virtuales," without
modifying the temporary importation regime, and the parties shall
equally share the costs and expenses in connection with the
structuring. Purchaser shall co-operate with Seller and otherwise shall
use its commercially reasonable efforts to obtain (at Seller's expense)
any available refunds of, or credits for, any Transfer Taxes, and to
the extent Purchaser or the applicable Purchaser Affiliate actually
receives any such refunds or credits, net of any Taxes payable with
respect thereto, Purchaser or the applicable Purchaser Affiliate shall
remit to Seller or the applicable Assigning Subsidiary the amount of
such refund (to the extent Seller or such Assigning Subsidiary
previously paid such Transfer Taxes), promptly following receipt
thereof (provided Seller has otherwise complied with its obligations
pursuant to the first sentence of this Section 5.3(c)(i)).
Notwithstanding the foregoing, the Approval Order shall contain a
provision that Seller's sale, transfer, assignment and conveyance of
the Purchased Assets to Purchaser hereunder shall be entitled to the
protections afforded under Section 1146(c) of the Bankruptcy Code.
Purchaser and Seller shall co-operate in providing each other any
applicable resale exemption certificate.
(ii) Value Added Tax.
(A) Exempt Transactions.
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(1) Seller shall consult with Purchaser in determining whether a transfer
of Purchased Assets by Seller or an Assigning Subsidiary to Purchaser
or a Purchaser Affiliate is outside of the scope of Value Added Tax as
a transfer or sale of a business as a going concern, or is otherwise
exempt from Value Added Tax or not subject to a positive rate of Value
Added Tax (an "Exempt Transaction"). Purchaser and Seller shall
co-operate in good faith and provide each other with any information
reasonably necessary to make a determination as to whether the transfer
constitutes an Exempt Transaction.
(2) Unless otherwise notified in writing by Purchaser within ten Business
Days from the date of the Approval Order (the "Notification Period"),
the Seller or the applicable Assigning Subsidiary shall apply to each
relevant taxing authority for an advance ruling addressing whether the
transfer of Purchased Assets from Seller or an Assigning Subsidiary to
Purchaser or a Purchaser Affiliate constitutes an Exempt Transaction.
Seller or the applicable Assigning Subsidiary shall not apply for any
advance rulings with respect to the transfer of Purchased Assets if
Purchaser has requested that no advance ruling be obtained. Purchaser
and Seller shall confer with each other regarding the form and content
of any request for an advance ruling, and Seller or the applicable
Assigning Subsidiary shall provide Purchaser with a copy, for
Purchaser's approval, of any document to be filed with the applicable
taxing authority. Seller or the applicable Assigning Subsidiary shall
act promptly and in good faith in preparing any advance rulings and
shall take reasonable commercial efforts to ensure that the advance
rulings are received in a timely manner. The advance rulings shall be
filed no later than twenty five days from the date of the Approval
Order; provided, however, if Purchaser notifies Seller in writing prior
to the expiration of the Notification Period that Purchaser will want
an advance ruling with respect to a particular jurisdiction, such
advance ruling shall be filed no later than 15 Business Days from the
date that Seller receives Purchaser's request. Unless the parties agree
to appeal the determination of a local taxing authority, the parties
agree to be bound by any written determination of a local taxing
authority. The costs and expenses of seeking any advance ruling shall
be shared equally by the parties.
(3) If Seller or the applicable Assigning Subsidiary has not received an
advance ruling from a taxing authority with respect to which one had
been filed at least ten Business Days prior to the Closing Date, the
transfer of the Purchased Assets shall be treated as an Exempt
Transaction until receipt of the advance ruling, unless the Seller and
Purchaser agree to treat it otherwise. For avoidance of doubt, in the
case of any jurisdiction with respect to which Seller or the applicable
Assigning Subsidiary has not requested an advance ruling, Purchaser and
Seller shall co-operate in good faith in reaching a reasonable
agreement as to whether the relevant transfer constitutes an Exempt
Transaction. If the Seller and the Purchaser cannot agree at least ten
Business Days prior to the Closing Date as to whether a transfer
constitutes an Exempt Transaction, the parties shall submit their
dispute to the Selected Accounting Firm whose resolution shall be
binding on the parties, unless the applicable taxing authority in the
relevant jurisdiction subsequently rules otherwise. Each party shall
pay one-half of the fees, costs and expenses incurred by the Selected
Accounting Firm in connection therewith.
(4) Seller or the applicable Assigning Subsidiary shall, no later than
fifteen Business Days after the Closing Date, deliver all records
relevant to the Purchased Assets which are required by law to be
preserved by Purchaser or the applicable Purchaser Affiliate for Value
Added Tax purposes, and neither Seller nor any Assigning Subsidiary
shall make a request to any taxing authority that these records be
taken out of the custody of Purchaser or the applicable Purchaser
Affiliate.
(5) If Seller or the applicable Assigning Subsidiary receives notice from a
taxing authority that Value Added Tax is chargeable on a transfer of
Purchased Assets, the Seller or the applicable Assigning Subsidiary
shall notify the Purchaser or the applicable Purchaser Affiliate within
five Business Days of receipt of such notice. Such transfer shall not
be treated as an Exempt Transaction and Value Added Tax shall be
chargeable on the transfer of the Purchased Assets in accordance with
the Value Added Tax and related legislation in the applicable
jurisdiction.
(6) Notwithstanding any disclosures set forth on Schedule 3.9(v), if Seller
or an applicable Assigning Subsidiary transferring Purchased Assets
located in a jurisdiction that imposes Value Added Tax is not properly
registered for Value Added Tax (but is required to be so registered),
Seller or such applicable Assigning Subsidiary shall apply to relevant
taxing authority for registration within 20 days from the effective
date of this Agreement.
(B) Non-Exempt Transactions.
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(1) If the transfer of Purchased Assets in a particular jurisdiction is not
an Exempt Transaction, Purchaser and Seller shall co-operate in good
faith and shall use commercially reasonable efforts to structure the
transfer of the Purchased Assets in each applicable jurisdiction in a
manner that will either result in the Purchaser or the applicable
Purchaser Affiliate being able to obtain a credit or recover in full
any Value Added Tax charged on the transfer of the Purchased Assets at
the earliest opportunity, and the parties shall equally share the costs
and expenses in connection therewith; provided, that neither Seller nor
the applicable Assigning Subsidiary shall be required to take any
action that it is not legally permitted to take under the Value Added
Tax and related legislation of the applicable jurisdiction.
(2) Purchaser and Seller shall consult with each other in good faith as to
the amount of Value Added Tax to be imposed upon the transfer of
Purchased Assets by Seller or an Assigning Subsidiary to Purchaser or a
Purchaser Affiliate. If Seller and Purchaser cannot agree at least
three (3) Business Days prior to the Closing Date as to the amount of
Value Added Tax, the parties shall submit their dispute to the Selected
Accounting Firm whose resolution shall be binding on the parties. Each
party shall pay one-half of the fees, costs and expenses incurred by
the Selected Accounting Firm in connection therewith.
(3) Seller or the applicable Assigning Subsidiary shall, no later than
fifteen Business Days after the Closing Date, deliver all records
relevant to the Purchased Assets which are required by law to be
preserved by Purchaser or the applicable Purchaser Affiliate for Value
Added Tax purposes, and neither Seller nor any Assigning Subsidiary
shall make a request to any taxing authority that these records be
taken out of the custody of Purchaser or the applicable Purchaser
Affiliate.
(C) Payment of Value Added Tax.
--------------------------
(1) If Value Added Tax is chargeable on a particular transfer of Purchased
Assets, Seller shall or shall cause the applicable Assigning Subsidiary
to deliver a tax invoice which satisfies the local requirements of the
corresponding Value Added Tax and related legislation to the Purchaser
or the applicable Purchaser Affiliate on a timely basis in accordance
with the Value Added Tax and related legislation of the applicable
jurisdiction. For the avoidance of doubt, where an advance ruling
confirming that the applicable transfer does not constitute an Exempt
Transaction has been obtained by the Seller or the applicable Assigning
Subsidiary at least ten days prior to Closing, Seller shall or shall
cause the applicable Assigning Subsidiary to deliver a tax invoice to
the Purchaser or the applicable Purchaser Affiliate on the Closing of
the transfer of Purchased Assets in each relevant jurisdiction.
(2) Seller or the applicable Assigning Subsidiary shall remit in a timely
manner the Value Added Tax payable on the transfer of Purchased Assets
to the applicable taxing authority along with any appropriate Value
Added Tax returns required to be filed therewith.
(3) If Value Added Tax is chargeable on a particular transfer of Purchased
Assets, Purchaser or the applicable Purchaser Affiliate shall reimburse
by way of cleared funds the Value Added Tax to the Seller or the
applicable Assigning Subsidiary upon the last of the following: (a) two
Business Days before the Seller or the applicable Assigning Subsidiary
is required to submit the Value Added Tax return to the relevant taxing
authority, (b) twenty Business Days after receipt by Purchaser or the
applicable Purchaser Affiliate of a tax invoice which satisfies local
requirements of the corresponding Value Added Tax and related
legislation, or (c) if an advance ruling was sought but not received
ten days prior to the Closing Date, twenty Business Days after the
receipt by Purchaser or the applicable Purchaser Affiliate of the
advance ruling confirming that the applicable transfer does not
constitute an Exempt Transaction. Notwithstanding anything to the
contrary herein, the Purchaser or the applicable Purchaser Affiliate
shall not be required to reimburse Seller or the applicable Assigning
Subsidiary for the amount of any Value Added Tax remitted by Seller or
such Assigning Subsidiary with respect to a transfer of Purchased
Assets in a particular jurisdiction (and Seller and such Assigning
Subsidiary shall be responsible and shall indemnify and hold harmless
Purchaser and the applicable Purchaser Affiliate for the amount of such
Value Added Tax, without duplication as to matters indemnified pursuant
to Section 5.4(a), Section 5.4(e) and Section 5.4(g)) if the
representations and warranties (as they relate to the transfer)
contained in Sections 3.9(v) or 3.9(w) are not true and correct or,
with respect to such transfer, Seller or the applicable Assigning
Subsidiary has failed to comply with any of the covenants contained in
this Section 5.3(c)(ii).
(4) Upon any payment being made after the Closing Date pursuant to any
provision of this Agreement including (i) Section 2.4, 2.7 or 2.8 of
this Agreement, or (ii) in connection with the receipt of any ruling by
a relevant taxing authority as contemplated by Section
5.3(c)(ii)(A)(3), the Seller, the Assigning Subsidiaries, the
Purchaser, and the Purchaser Affiliates shall co-operate in good faith
(including, but not limited to, issuance of any additional tax
invoices, credit notes or similar documentation which satisfies the
requirements of the corresponding Value Added Tax legislation) so that
the Value Added Tax implication of such payments shall be addressed in
good faith on a timely basis and in accordance with the provisions of
this Section 5.3(c)(ii). If Seller or any Assigning Subsidiary merges,
liquidates or otherwise takes any action after the Closing Date
("Subsequent Action") which action would in and of itself result in the
Value Added Tax treatment of the payment made after the Closing Date
being greater than the Value Added Tax treatment that would have
applied to such payment if such Subsequent Action had not occurred,
Purchaser or Purchaser Affiliate will not reimburse Seller or the
applicable Assigning Subsidiary for any Value Added Tax equal to the
excess of (i) the amount of Value Added Tax that that would have been
recoverable by Purchaser or the applicable Purchaser Affiliate if no
such Subsequent Action had occurred over (ii) the amount of Value Added
Tax that is recoverable by Purchaser or Purchaser Affiliate as a result
of such Subsequent Action.
(5) If the procedures for properly accounting for Value Added Tax in a
particular jurisdiction differ from those described above, the parties
shall cooperate in good faith in properly accounting for such Value
Added Tax.
(6) This Section 5.3(c)(ii) shall not apply to any Taxes described in
Section 5.3(d)(i). Section 5.3(d)(i) shall apply to such Taxes.
(d) Canadian Tax Matters. Notwithstanding anything contained in this
Agreement to the contrary, the following shall apply to Seller,
Assigning Subsidiaries, Purchaser and Purchaser Affiliates as
applicable with respect to any Canadian Tax matters.
(i) Canadian Sales Taxes. On Closing, Seller or the applicable Assigning
Subsidiary shall invoice Purchaser or the applicable Purchaser
Affiliate the amount of any Goods and Services Tax ("GST"), harmonized
sales tax ("HST"), or Quebec Sales Tax ("QST"), as applicable, and
shall remit forthwith the invoiced amounts to the competent receiving
authorities in conjunction with the appropriate return for the period
in which the transaction closes. Purchaser or the relevant Purchaser
Affiliate shall pay the GST, HST and QST invoiced on Closing by Seller
or the applicable Assigning Subsidiary and shall claim any applicable
credits or refunds in connection with such GST, HST or QST for the
period in which the transaction closes. Assets being acquired for sale
or lease will be exempt from any applicable provincial sales tax
("PST"), other than QST, provided that Purchaser or the applicable
Purchaser Affiliate provides Seller or the applicable Assigning
Subsidiary with the applicable exemption certificate. Section 5.3(c)
shall apply in all other instances.
(ii) Purchase Price Adjustment. The parties hereto acknowledge that
Purchaser or the applicable Purchaser Affiliate shall ultimately be
responsible for the payment of GST, HST or QST in respect of the amount
of the Purchase Price as such amount may be finally adjusted by virtue
of any Settlement Payment made pursuant to Section 2.4 of this
Agreement. To that effect, the parties agree to make such adjustments
to any amounts paid hereunder, including any payments made on account
of a Settlement Payment, and to take into consideration in determining
such adjustments any GST, HST and/or QST paid in connection with the
Initial Payment and any applicable credits or refunds received or
receivable by Purchaser or Purchaser Affiliate in connection therewith.
(iii) Tax Election. The parties shall, to the extent the following elections
are available, jointly make, execute and file an election under Section
22 of the Income Tax Act (Canada), Section 184 of the Taxation Act
(Quebec) and any corresponding elections under the provisions of any
other applicable provincial statutes in respect of the sale, assignment
and transfer of the accounts receivable, in each case, on the forms and
within the delays prescribed for such purposes, and shall also prepare
and file all of their respective tax returns in a manner consistent
with any elections made as stipulated in this Section 5.3(d)(iii).
(iv) Seller shall obtain and deliver a certificate of payment issued by the
Minister of Revenue of Ontario under Section 6 of the Retail Sales Tax
Act (Ontario), a certificate of payment issued by the Commissioner of
Social Service Tax pursuant to Section 99 of the Social Service Tax Act
(British Columbia) and any equivalent certificates under any other
applicable provincial legislation as of the date of the Closing to the
effect that all requisite taxes under such Act and similar legislation
relating to the Purchased Assets (other than relating to the conveyance
and transfer of the Purchased Assets to Purchaser) have been paid by
Seller.
5.4 Indemnifications, Assumptions of Liability and Related Matters.
--------------------------------------------------------------
(a) Indemnification by Seller for Breach. Seller shall indemnify and hold
harmless, and cause each Assigning Subsidiary to indemnify and hold harmless (on
a several basis, and solely to the extent applicable to such Assigning
Subsidiary), Purchaser and its Affiliates, and in each such case their
respective directors, officers, employees and agents (collectively, the
"Purchaser Indemnified Parties"), from and against and in respect of any and all
Damages suffered or incurred by any of them resulting from, arising out of,
based on or relating to, without duplication (i) any breach of any
representation or warranty made by Seller or any Assigning Subsidiary in this
Agreement (without duplication as to matters indemnified pursuant to Section
5.4(d), Section 5.4(e) and Section 5.4(g)); or (ii) any failure to perform duly
and punctually any covenant, agreement or undertaking on the part of Seller or
any Assigning Subsidiary contained in this Agreement (without duplication as to
matters indemnified pursuant to Section 5.4(d), Section 5.4(e) and Section
5.4(g)); or (iii) any breach of a representation or warranty included in any
certificate, Schedule or other agreement, instrument or document, in each case
delivered by Seller, any Assigning Subsidiary or any of their respective
Affiliates to Purchaser pursuant to the terms of this Agreement (collectively,
the "Seller Related Documents"); provided, however, that (A) in the event
Purchaser waives in writing its condition to Closing pursuant to Section 6.2(a)
as such condition relates to a breach of the representation and warranty
contained in Section 3.7(a), Purchaser shall not be entitled after Closing to
seek indemnification from Seller in respect of such breach of the representation
and warranty contained in Section 3.7(a), (B) Purchaser shall not be entitled to
indemnification pursuant to clause (i) of this Section 5.4(a) as a result of any
breach of any representation or warranty made by Seller or any Assigning
Subsidiary in Section 3.7(a) hereof to the extent, but solely to the extent,
that a matter causing a breach of Section 3.7(a) is the subject of a specific
representation or warranty in Article III made by such member of the Seller
Group breaching Section 3.7(a), and (C) in the event that Seller notifies
Purchaser pursuant to Section 5.1(h)(iii) that a Financing Contract does not
satisfy the representations and warranties of Article III (a "Section
5.1(h)(iii) Notice") and Purchaser does not notify Seller that it is excluding
such Financing Contract from the Purchased Financing Contracts pursuant to
clause (H)(z) of the proviso of the definition thereof, Purchaser shall not be
entitled to indemnification for such Purchased Financing Contract pursuant to
clause (i) of this Section 5.4(a) with regard to the circumstances giving rise
to the breach of the representation and warranty identified in the Section
5.1(h)(iii) Notice. For purposes of this Section 5.4(a), a breach of a
representation or warranty contained in this Agreement or a Seller Related
Document shall be deemed to exist either if such representation or warranty is
actually inaccurate or breached or if such representation or warranty would have
been breached or would have been inaccurate if such representation or warranty
had not contained any limitation or qualification as to materiality, Material
Adverse Effect or Seller's Knowledge, it being the intention of the parties
hereto that the Purchaser Indemnified Parties shall be indemnified and held
harmless from and against any and all Damages suffered or incurred by any of
them resulting from, arising out of, based upon or relating to the failure of
any such representation or warranty, certificate, Schedule or other agreement,
instrument or document to be true and correct in any respect, determined in each
case without regard to any qualification as to materiality, Material Adverse
Effect or Seller's Knowledge set forth with respect thereto; provided, however,
that for the purposes of Section 5.4(a), the representations and warranties
contained in Sections 3.7(a) and 3.13(ii) hereof shall not be without regard to
any qualification as to materiality, Material Adverse Effect or Seller's
Knowledge set forth with respect thereto and; provided further, however, that
for the purposes of Section 5.4(a), the representation and warranty contained in
Section 3.19(b) hereof shall not be without regard to any qualification as to
Seller's Knowledge set forth with respect thereto. Notwithstanding anything to
the contrary contained herein, neither Seller nor any of the Assigning
Subsidiaries shall be liable in respect of any amounts or losses (of the type
described in the definition of Damages) suffered or incurred by a Purchaser
Indemnified Party resulting from, arising out of, based on or relating to
breaches of representations or warranties made by Seller or any of the Assigning
Subsidiaries to the extent that such amounts or losses are actually reflected in
the calculation of the Purchase Price, as determined pursuant to Section 2.2
hereof (whether through a decrease in the amount of the Purchased Assets or an
increase in the amount of Assumed Liabilities, in each case as reflected on the
Special Procedures Report of Assets Acquired and Liabilities Assumed).
(b) Limitation on Liability of Seller and Assigning Subsidiaries.
------------------------------------------------------------
(i) Each Purchaser Indemnified Party entitled to indemnification for any
Damages suffered or incurred by such Person resulting from, arising out
of, based on or relating to a failure to perform any covenant,
agreement or undertaking of Seller or any Assigning Subsidiary shall be
entitled to such indemnification for the full amount of such Damages
regardless of the amount of the Damages.
(ii) Each Purchaser Indemnified Party entitled to indemnification for any
Damages suffered or incurred by such Person resulting from, arising out
of, based on or relating to (A) a breach of any representation or
warranty made by Seller or any Assigning Subsidiary in this Agreement
or (B) any breach of any representation or warranty in any Seller
Related Document shall be entitled to indemnification from Seller or
the applicable Assigning Subsidiary for the full amount of all such
Damages which in the aggregate are in excess of $10,000,000; provided,
however, that the Seller and the applicable Assigning Subsidiaries will
not be liable for any such Damages to the extent, and only to the
extent, of the excess of the aggregate amount thereof over $50,000,000;
provided, further that, without limiting the liability of Seller for
such Damages, no Assigning Subsidiary will be liable for any such
Damages to the extent, and only to the extent, that the aggregate
amount thereof exceeds the portion of the Purchase Price allocated to
such Assigning Subsidiary pursuant to Section 2.3.
(c) Survival of Representations and Warranties of Seller.
----------------------------------------------------
(i) The Special Representations and indemnifications with respect to their
breach shall survive until three months after the expiration of the
applicable statute of limitations (including extensions) applicable to
Purchaser and/or the Purchaser Indemnified Parties potentially
incurring Damages arising from, or relating to, any circumstances
giving rise to any breach thereof.
(ii) The representations and warranties of Seller in (A) this Agreement
which are not Special Representations and (B) the Seller Related
Documents shall survive the Closing until the expiration of 12 months
after the Closing.
(d) ERISA and Employee Indemnification. Seller shall indemnify and hold
harmless, and shall cause each Assigning Subsidiary to indemnify and hold
harmless (on a several basis, and solely to the extent applicable to such
Assigning Subsidiary), all Purchaser Indemnified Parties from and against any
and all Damages suffered or incurred by any of them resulting from or relating
to each of the following:
(i) any Seller Plan, including any Multiemployer Plan or Title IV Plan,
maintained by, contributed to, or obligated to be contributed to, at
any time, by any member of the Seller Group or any ERISA Affiliate,
which is not sponsored by Seller (provided that this clause (i) shall
not apply to any Foreign Plan that is required to be maintained or
continued by Purchaser or a Purchaser Affiliate pursuant to applicable
non-U.S. law except to the extent excluded in Section 5.11(h));
(ii) any Seller Plan which is sponsored by any member of the Seller Group or
terminated at or prior to Closing with respect to any Damages based on
actions or inactions arising on or prior to the Closing Date (provided
that this clause (ii) shall not apply to any Foreign Plan that is
required to be maintained or continued by Purchaser or a Purchaser
Affiliate pursuant to applicable non-U.S. law except to the extent
excluded in Section 5.11(h));
(iii) the employment or termination of employment, including a constructive
termination or failure to employ, by any member of the Seller Group of
any individual (including, but not limited to, any Seller Employee) (A)
on or prior to the Closing or (B) in connection with the transactions
contemplated by this Agreement;
(iv) any claims by any Seller Employee for workers' compensation or related
medical benefits incurred after the Closing which relate to an injury
or illness originating prior to the Closing;
(v) WARN Act or any other statutory or common law or civil law pertaining
to notice, severance pay, termination pay in lieu thereof or Damages
arising as a result of the termination or dismissal (including
constructive termination or dismissal), by members of the Seller Group
of any or all Seller Employees on or prior to the Closing Date and all
Seller Employees other than the Accepting Employees after the Closing;
and
(vi) except (x) as otherwise expressly assumed by Purchaser, (y) with
respect to any liability related to the employment by Purchaser or
applicable Purchaser Affiliate of the Accepting Foreign Employees after
the Closing and (z) with respect to any liabilities for which Purchaser
agrees to indemnify Seller pursuant to Section 5.4(k)(iv), any Seller
Employee Liabilities which shall pass to the Purchaser Indemnified
Parties by operation of law in connection with the transactions
contemplated by this Agreement.
(e) Tax Indemnification. Seller shall indemnify and hold harmless, and shall
cause each Assigning Subsidiary to indemnify and hold harmless (on a several
basis, and solely to the extent applicable to the Assigning Subsidiary) all
Purchaser Indemnified Parties from and against any and all Damages suffered or
incurred by any of them resulting from, arising out of, based on or relating to:
(A) any and all sales, use or other similar Taxes required to be collected
in respect of any Purchased Financing Contract during the 12 months
following the Closing Date if (i) such Tax is not being collected by
Purchaser or the applicable Purchaser Affiliate in respect of the
Financing Contract pursuant to (x) Purchaser's or the applicable
Purchaser Affiliate's reliance on an applicable exemption from such Tax
and (y) Seller's or the applicable Assigning Subsidiary's reliance on
such exemption for periods on or prior to the Closing Date, and (ii)
such exemption from Tax is dependent upon receipt of a properly
executed Exemption Certificate; provided, that in no event shall Seller
or any Assigning Subsidiary be required to indemnify Purchaser under
this Section 5.4(e)(A) to the extent such Damage arises out of a change
in law after the Closing Date affecting Purchaser's obligation to
collect such Tax;
(B) any liability for sales, use or other similar Taxes assessed
in respect of any Purchased Financing Contract after the Cut-Off Date
where such Taxes were erroneously paid at the inception of such
Purchased Financing Contract;
(C) any claim by any Person in respect of sales, use or other similar Tax
paid on or prior to the Cut-Off Date;
(D) any Taxes for which Seller and the Assigning Subsidiaries are liable
pursuant to Section 2.5 or Section 5.3(c) hereof; and
(E) any Taxes asserted against Purchaser or any of its Affiliates
by operation of law, statute, common law or otherwise or under
successor liability or similar theories that would impose liability on
Purchaser as a result of its purchase of the Purchased Assets pursuant
hereto.
(f) [Intentionally Omitted.]
(g) Additional Indemnification by Seller. Seller shall indemnify and hold
harmless, and shall cause each Assigning Subsidiary to indemnify and hold
harmless (on a several basis, and solely to the extent applicable to such
Assigning Subsidiary), all Purchaser Indemnified Parties from and against any
and all Damages suffered or incurred by any of them resulting from, arising out
of, based on or relating to:
(i) any of the Excluded Assets or the ownership, operation, servicing,
lease or use thereof, or any action taken with respect thereto, by any
member of the Seller Group or any other Person;
(ii) the Excluded Liabilities (including, without limitation, any such
liabilities arising by operation of law, statute, common law or
otherwise or under successor liability or similar theories that would
impose liability on the Purchaser as a result of its purchase of the
Purchased Assets pursuant hereto); or
(iii) the failure to comply with any "bulk sales" or similar laws promulgated by
any Governmental Entity.
(h) Indemnification by Purchaser for Breach. Purchaser shall indemnify and hold
harmless Seller and Seller's Affiliates and their respective directors,
officers, employees and agents (collectively, "Seller Indemnified Parties") from
and against any and all Damages suffered or incurred by any of them resulting
from, arising out of, based on or relating to (i) any breach of any
representation or warranty made by Purchaser in this Agreement; or (ii) any
failure to perform duly and punctually any covenant, agreement or undertaking on
the part of Purchaser contained in this Agreement; or (iii) any breach of a
representation or warranty included in any certificate, Schedule or other
agreement, instrument or document, in each case delivered or to be delivered by
Purchaser or any Purchaser Affiliate to Seller pursuant to the terms of this
Agreement (collectively, the "Purchaser Related Documents"). For purposes of
this Section 5.4(h), a breach of a representation or warranty contained in this
Agreement or a Purchaser Related Document shall be deemed to exist either if
such representation or warranty is actually inaccurate or breached or if such
representation or warranty would have been breached or been inaccurate if such
representation or warranty had not contained any limitation or qualification as
to materiality, material adverse effect or knowledge, it being the intention of
the parties hereto that the Seller Indemnified Parties shall be indemnified and
held harmless from and against any and all Damages suffered or incurred by any
of them resulting from, arising out of, based on or relating to the failure of
any such representation, warranty, certificate, Schedule or other agreement,
instrument or document to be true and correct in any respect, determined in each
case without regard to any qualification as to materiality, material adverse
effect or knowledge set forth with respect thereto.
(i) [Intentionally Omitted.]
(j) Survival of Representations and Warranties of Purchaser. The representations
and warranties of Purchaser in this Agreement and the Purchaser Related
Documents shall survive the Closing until the expiration of 24 months after the
Closing.
(k) Additional Indemnification by Purchaser. Purchaser shall indemnify and
hold harmless all Seller Indemnified Parties from and against any and
all Damages suffered or incurred by any of them resulting from, arising
out of, based on or relating to:
(i) the Purchased Assets or the ownership, operation, servicing, lease or
use thereof, or any action taken with respect thereto after the
Closing, by Purchaser or any Purchaser Affiliate or any other Person,
other than with respect to any matter, circumstance Damage or event
which is the subject of, or gives rise to, an indemnification, payment
or similar obligation of any member of the Seller Group pursuant to
this Agreement;
(ii) the Assumed Liabilities;
(iii) any violation of the WARN Act or other statutory or common law or civil
law requirements pertaining to notice, severance pay, termination pay
in lieu thereof or damages arising as a result of the termination or
dismissal (including constructive termination or dismissal), by
Purchaser or any Purchaser Affiliate, of any Accepting Employee after
the Closing; or
(iv) any liability or obligation related to any
Purchaser Plan.
(l) Indemnification Procedure. For the purposes of administering the
indemnification provisions of this Section 5.4, the following
procedures shall apply from and after the Closing Date:
(i) An indemnified party shall notify the Indemnitor of any Indemnification
Event arising from an action or proceeding by a third party against
such Indemnitor in writing within 15 days following the receipt by any
officer or director of the indemnified party of notice of the
commencement of such action or proceeding or within 30 days of the
assertion of any claim against such indemnified party giving rise to
indemnity pursuant to this Section 5.4 (any 15 or 30 day notification
requirement shall begin to run, in the case of a claim which is amended
so as to give rise to an amended Indemnification Event, from the first
day such claim is amended to include any claim which is an
Indemnification Event hereunder). Such notice shall describe in
reasonable detail the basis of such Indemnification Event.
Notwithstanding anything to the contrary, the failure to give notice in
a timely fashion shall not result in a waiver of any right to
indemnification hereunder except to the extent that the Indemnitor's
ability to defend against the event with respect to which
indemnification is sought is adversely affected by the failure of the
indemnified party to give notice in a timely fashion.
(ii) The Indemnitor shall be entitled (but not obligated) to assume the
defense or settlement of any such action or proceeding, or to
participate in any negotiations or proceedings to settle or otherwise
eliminate any claim, if it shall provide the indemnified parties a
written acknowledgement of its liability for the indemnity against
Damages relating to such claim; provided, however, that, subject to
clause (iv) hereof, Purchaser shall have the sole right, with counsel
of its choice, to defend, settle or otherwise dispose of, in its sole
discretion, any action, claim or proceeding that constitutes a
Non-Assumable Claim, and Seller shall not be entitled to assume the
defense thereof, except that Seller shall be entitled (but not
obligated) to assume the defense, settlement or other disposition of
any Non-Assumable Claim of the type described in clause (i) of the
definition thereof that relates to Tax items of any member of the
Seller Group and does not involve Tax items of Purchaser or any
Purchaser Affiliate. If the Indemnitor assumes any such defense or
settlement or any such negotiations, it shall pursue such defense,
settlement or negotiations in good faith. If the Indemnitor fails to
elect in writing within 30 days of the notification referred to above
to assume the defense, the indemnified party may engage counsel to
defend, settle or otherwise dispose of such action or proceeding, which
counsel shall be reasonably satisfactory to the Indemnitor; provided,
however, that the indemnified party shall not settle or compromise any
such action, proceeding or claim without the prior written consent or
agreement of the Indemnitor (which consent shall not be unreasonably
withheld or delayed).
In the event the indemnified party elects to defend,
settle or otherwise dispose of a Non-Assumable Claim, it shall pursue
such defense, settlement or other disposition in good faith. Promptly
upon the reasonable request of the Indemnitor the indemnified party
shall provide the Indemnitor with information summarizing any material
developments in any Non-Assumable Claim that is being defended by the
indemnified party and shall make available a designated representative
to consult with or otherwise discuss any such Non-Assumable Claim with
the Indemnitor (at mutually convenient times). Nothing herein shall be
deemed to require the indemnified party (A) to make any disclosure
that, in its judgment, could prejudice its position or waive any
privilege or (B) to take or refrain from taking any action; it being
understood that, subject to clause (iv) hereof, the defense, settlement
or other disposition of any Non-Assumable Claim shall be conducted in
the indemnified party's sole discretion. An Indemnitor's liability for
any costs and attorneys' fees and disbursements incurred by an
indemnified party in respect of a Non-Assumable Claim shall be limited
to the amount of such costs and attorneys' fees and disbursements
incurred up to and including (i) entry of one or more judgments that,
in the aggregate, resolve all issues, claims, counter-claims, actions
or proceedings resulting from, arising out of, based on or relating to,
such Non-Assumable Claim and (ii) if an indemnified party elects to
appeal any portion of such judgment(s), the entry of one or more
judgments, rulings, opinions or other orders (that, in the aggregate,
resolve all issues, claims, counter-claims, actions or proceedings that
are appealed) by the judicial forum that conducts the first level of
appellate review of such issues, claims, counter-claims, actions or
proceedings.
(iii) In cases where the Indemnitor has assumed the defense or settlement
with respect to an Indemnification Event, the Indemnitor shall be
entitled to assume the defense or settlement thereof with counsel of
its own choosing; provided, however, that: (A) the indemnified party
(and its counsel) shall be entitled to continue to participate at its
own cost (except as provided below) in any such action or proceeding or
in any negotiations or proceedings to settle or otherwise eliminate any
claim for which indemnification is being sought; (B) the Indemnitor
shall not be entitled to settle or compromise any such action,
proceeding or claim without the consent or agreement of the indemnified
party (which consent will not be unreasonably withheld or delayed);
provided, further, that if and only if such consent is withheld and the
settlement or compromise involves only the payment of monetary damages
(as to which the Indemnitor has established to the indemnified party,
in the indemnified party's reasonable discretion, that such Indemnitor
is capable of funding) and provides an unconditional release of the
indemnified person, the Indemnitor's liability shall be limited to the
amount for which the Indemnitor agreed with the claimant to settle and
the Indemnitor shall remain responsible for its costs and attorneys'
fees to the date such settlement was rejected by the indemnified party
and the indemnified party shall be responsible for the attorneys' fees
and disbursements in respect of such claim thereafter; and (C) after
written notice by the Indemnitor to the indemnified party (as provided
above) of its election to assume control of the defense of any claim,
the Indemnitor shall not be liable to such indemnified party hereunder
for any attorneys' fees and disbursements subsequently incurred by such
indemnified party in connection therewith (except as provided below).
(iv) In the event indemnification is requested, the relevant Indemnitor, its
representatives and agents shall have access to the premises, books and
records of the indemnified party or parties seeking such
indemnification and their Affiliates to the extent reasonably necessary
(A) for the Indemnitor to determine if the indemnification claim
relates to an Indemnification Event and (B) to assist it in defending
or settling any action, proceeding or claim; provided, however, that
such access shall be conducted in such manner as not to interfere
unreasonably with the operation of the business of the indemnified
party or parties. Except as reasonably necessary (A) for the Indemnitor
to determine if the indemnification claim relates to an Indemnification
Event and (B) to assist it in defending or settling such action,
proceeding or claim, the indemnified party shall not be required to
disclose any information with respect to itself or any of its
Affiliates (or former Affiliates), and the indemnified party shall not
be required to participate in the defense of any claim to be
indemnified hereunder (except as otherwise expressly set forth herein),
unless otherwise required or reasonably necessary in the defense of any
claim to be indemnified hereunder.
(v) Notwithstanding anything to the contrary in this Section 5.4, the
Indemnitor shall continue to pay the reasonable attorneys' fees and
disbursements and other costs of separate legal counsel for the
indemnified parties (as a group) (A) relating to their participation in
the defense of any Indemnification Event (whether or not the Indemnitor
shall have assumed the defense of such Indemnification Event) to the
extent such participation relates to a claim or defense that the
Indemnitor does not have, may not assert on behalf of the indemnified
party or that the indemnified party shall have reasonably concluded
(based on advice of outside counsel) relates to a claim or defense as
to which the Indemnitor may have a conflict of interest, or (B)
relating to discovery against or testimony of such indemnified party
and for participation of such indemnified party's own counsel in such
discovery and testimony.
(vi) Any claim for indemnification hereunder that does not arise out of a
third-party claim shall be asserted by the Purchaser Indemnified Party
by delivering notice thereof to the Indemnitor. If the Indemnitor does
not respond to such notice within 45 days after receipt of notice, it
shall have no further right to contest the validity of such claim.
(vii) With respect to any Non-Assumable Claim, upon the receipt by the
indemnified party of an offer of compromise relating to such
Non-Assumable Claim that includes an unconditional release of the
indemnified party or upon entry of a final judgment with respect to
such Non-Assumable Claim (and such offer to compromise or judgment
requires only the payment of money), the Indemnitor shall have the
right to terminate its liability for subsequent legal fees and
disbursements in respect of such Non-Assumable Claim upon its
irrevocable offer to the indemnified party to pay (and establishment of
ability to pay as described in clause (iii) above) the amount contained
in such offer to compromise or judgment; upon receipt, in the form of
immediately available funds by the indemnified party of the amount
contained in such offer to compromise or judgment and payment of all
other Damages suffered or incurred by the indemnified party in respect
of such Non-Assumable Claim, the Indemnitor shall have no further
liability to the indemnified party in respect of such Non-Assumable
Claim.
(m) Any payments under Section 5.3 or 5.4 of this Agreement shall be treated by
the parties hereto for federal, state and local income tax purposes (whether
foreign or domestic) as a non-taxable reimbursement or purchase price
adjustment, except to the extent that a contrary treatment is required by law.
(n) [Intentionally Omitted.]
(o) Purchaser may satisfy any claims for the payment of liabilities on behalf of
any member of the Seller Group for which Purchaser is entitled to
indemnification pursuant to this Section 5.4 without being required to pursue a
right of subrogation against such member of the Seller Group in lieu of claiming
indemnification therefor.
(p) Notwithstanding anything to the contrary in this Agreement, the amount of
Damages which an Indemnitor is required to pay to, for or on behalf of any
indemnified party pursuant to this Section 5.4 shall be adjusted (including,
without limitation, retroactively) (i) by any insurance proceeds actually
recovered by such indemnified party in reduction of the related indemnifiable
loss (the "Indemnifiable Loss"), (ii) to take account of any net actual
reduction of Tax liability that is actually realized by such indemnified party
as a result of any Indemnifiable Loss (a "Tax Benefit") and (iii) to take into
account any actual increase in Tax liability that is imposed on the indemnified
party as a result of the receipt of the Indemnity Payment (as defined below)
pursuant to this Section 5.4 (a "Tax Liability"); provided that although an
indemnified party shall be under no obligation to seek or pursue any such
insurance recovery or Tax Benefit an Indemnitor shall be entitled to reduce
payments otherwise required pursuant to this Section 5.4 (or, as the case may
be, if such payments have been made, promptly receive reimbursement therefor) in
respect of Indemnifiable Loss to the extent insurance proceeds actually are
recovered, or a Tax Benefit is actually realized, by such indemnified party in
reduction of such Indemnifiable Loss (but only to the extent that such insurance
recovery or Tax Benefit was not already taken into account in determining the
amount of such Indemnifiable Loss); and provided, further, that the
determination as to whether an indemnified party has actually realized a Tax
Benefit or a Tax Liability, and the amount thereof, shall be determined by such
indemnified party in its sole discretion and the Indemnitor shall not have the
right to review or comment thereon. Amounts required to be paid, as reduced or
increased pursuant to this Section 5.4(p), are hereafter sometimes called an
"Indemnity Payment." If an indemnified party shall have received or shall have
had paid on its behalf an Indemnity Payment in respect of an Indemnifiable Loss
and shall subsequently receive insurance proceeds in respect of such
Indemnifiable Loss, or actually realize any Tax Benefit as a result of such
Indemnifiable Loss as determined by such indemnified party as provided above, or
actually realize any Tax Liability in respect of such Indemnity Payment, then
the indemnified party shall pay to the Indemnitor the amount of such insurance
proceeds or Tax Benefit or, if lesser, the amount of the Indemnity Payment or
the Indemnitor shall pay to the indemnified party the amount of such Tax
Liability, as the case may be. To the extent that Purchaser or any Purchaser
Affiliate may obtain recovery from any insurance policy of an Obligor for any
Damages incurred by Purchaser or any Purchaser Affiliate giving rise to an
indemnity claim hereunder, Purchaser shall use its commercially reasonable
efforts to, or to cause such Purchaser Affiliate to use its commercially
reasonable efforts to, seek such recovery from such insurance policy.
(q) Any dispute, controversy or claim arising out of or relating to this Section
5.4 (a "Dispute") shall be resolved in accordance with the procedure set forth
herein.
(i) All communications between the parties or their representatives in
connection with the attempted resolution of any Dispute shall be deemed
to have been delivered in furtherance of a Dispute settlement and shall
be exempt from discovery and production, and shall not be admissible in
evidence (whether as an admission or otherwise), in any arbitral or
other proceeding for the resolution of the Dispute.
(ii) After completion of any prior procedures required hereby, either party
may submit the Dispute for resolution by arbitration pursuant to the
Rules of the Center for Public Resources ("CPR") for Non-Administered
Arbitration of Business Disputes as in effect at the time of the
arbitration. The parties consent to a single, consolidated arbitration
for all Disputes existing at the time such Dispute arises initially for
which arbitration is permitted.
(iii) The neutral organization for purposes of the CPR rules will be the CPR.
The arbitral tribunal shall be composed of one arbitrator selected by
agreement of the parties or, in the absence of such agreement within 60
days after either party first proposes an arbitrator, by the CPR. Any
arbitration hereunder shall be conducted in Chicago, Illinois. Each
party shall be permitted to present its case, witnesses and evidence,
if any, in the presence of the other party. A written transcript of the
proceedings shall be made and furnished to the parties. The arbitrator
shall determine the Dispute in accordance with the law of Illinois,
without giving effect to any conflict of law rules or other rules that
might render such law inapplicable or unavailable, and shall apply this
Agreement according to its terms.
(iv) The parties agree to be bound by any award or order resulting from any
arbitration conducted hereunder and further agree that:
(A) any monetary award shall include preaward interest, to the
extent appropriate, and shall be made and payable in U.S.
dollars through a bank selected by the recipient of such
award, free of any withholding tax or other deduction,
together with interest thereon at the Indemnification Rate (as
of the date of such award) from the date the award is granted
to the date it is paid in full;
(B) in the context of an attempt by either party to enforce an
arbitral award or order, any defenses relating to the parties'
capacity or the validity of this Agreement or any related
agreement under any law are hereby waived; and
(C) judgment on any award or order resulting from an arbitration
conducted under this Section may be entered and enforced in
any court, in any country, having jurisdiction thereof or
having jurisdiction over any of the parties or any of their
assets.
(v) Except as expressly permitted by this Agreement, no party will commence
or voluntarily participate in any court action or proceeding concerning
a Dispute, except for enforcement as contemplated by Section
5.4(q)(iv)(C) above. For purposes of enforcement of any undisputed
obligation, the parties hereto submit to the non-exclusive jurisdiction
of the courts of the Northern District of Illinois.
(vi) In addition to the authority otherwise conferred on the arbitral
tribunal, the tribunal shall have the authority to make such orders for
interim relief, including injunctive relief, as it may deem just and
equitable.
(r) The indemnification obligations of the Seller Group pursuant to this Section
5.4 shall survive the confirmation of a plan in, or dismissal or conversion to a
case under Chapter 7 of the Bankruptcy Code of, the Chapter 11 Cases.
(s) Exclusive Remedy. The indemnification provided for in this Section 5.4 shall
be the exclusive remedy for asserting claims for monetary Damages as a result of
(i) the breach of any representation or warranty made by Seller and the
Assigning Subsidiary or Purchaser in this Agreement, the Seller Related
Documents or the Purchaser Related Documents or (ii) the failure to perform any
covenant, agreement or undertaking on the part of all such parties contained in
this Agreement, the Seller Related Documents and the Purchaser Related
Documents, in each case other than as a result of fraud or intentional
misconduct.
5.5 Preparation of Cut-Off Date Schedule of Assets Acquired and Liabilities
Assumed; Adjusted Cut-Off Date Schedule of Assets Acquired and Liabilities
Assumed; Special Procedures Report of Assets Acquired and Liabilities Assumed;
and Purchase Price Certificate.
(a) Preparation of Schedules of Assets Acquired and Liabilities Assumed.
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(i) As soon as practicable following each Closing, Seller shall prepare a
draft of the Cut-Off Date Schedule of Assets Acquired and Liabilities
Assumed and a draft of the Adjusted Cut-Off Date Schedule of Assets
Acquired and Liabilities Assumed with respect to the Purchased Assets
acquired at such Closing. The draft Cut-Off Date Schedule of Assets
Acquired and Liabilities Assumed shall be prepared in accordance with
the Accounting Principles and the draft Adjusted Cut-Off Date Schedule
of Assets Acquired and Liabilities Assumed shall reflect the Special
Adjustments. At a minimum, the Adjusted Cut-Off Date Schedule of Assets
Acquired and Liabilities Assumed shall differentiate the assets among
those described in Sections 2.2(a)(i), 2.2(a)(ii) and 2.2(b) for
purposes of calculating the Purchase Price. Seller shall use its
commercially reasonable efforts to cause the draft Cut-Off Date
Schedule of Assets Acquired and Liabilities Assumed and the draft
Adjusted Cut-Off Date Schedule of Assets Acquired and Liabilities
Assumed to be completed within 30 days following the applicable Closing
Date and, upon completion, such draft schedules shall promptly be
provided to Seller's Accountants.
(ii) Within 30 days following the delivery of the draft Cut-Off Date
Schedule of Assets Acquired and Liabilities Assumed and the draft
Adjusted Cut-Off Date Schedule of Assets Acquired and Liabilities
Assumed to Seller's Accountants as set forth in clause (i) above,
Seller will cause Seller's Accountants to inform Purchaser's
Accountants of the scope and nature of the special procedures that will
be performed by Seller's Accountants on the Cut-Off Date Schedule of
Assets Acquired and Liabilities Assumed and the Adjusted Cut-Off Date
Schedule of Assets Acquired and Liabilities Assumed.
(iii) Immediately following the delivery of the draft Cut-Off Date Schedule
of Assets Acquired and Liabilities Assumed and the draft Adjusted
Cut-Off Date Schedule of Assets Acquired and Liabilities Assumed to
Seller's Accountants, as set forth in clause (i) above, Seller shall
cause Seller's Accountants to perform the special procedures to review
the draft Cut-Off Date Schedule of Assets Acquired and Liabilities
Assumed and the draft Adjusted Cut-Off Date Schedule of Assets Acquired
and Liabilities Assumed, and such special procedures shall be
sufficient to permit Seller's Accountants to state that the Cut-Off
Date Schedule of Assets Acquired and Liabilities Assumed fairly
presents the Purchased Assets and Assumed Liabilities, as of the
Cut-Off Date in accordance with the Accounting Principles, and that the
Adjusted Cut-Off Date Schedule of Assets Acquired and Liabilities
Assumed accurately reflects the Special Adjustments.
(iv) Seller shall use its commercially reasonable efforts to cause Seller's
Accountants to deliver the Special Procedures Report of Assets Acquired
and Liabilities Assumed, together with its report of the special
procedures utilized to develop the Special Procedure Report of Assets
Acquired and Liabilities Assumed, to each of Seller, Purchaser and
Purchaser's Accountants within 60 days following the date of delivery
of the draft Cut-Off Date Schedule of Assets Acquired and Liabilities
Assumed and the draft Adjusted Cut-Off Date Schedule of Assets Acquired
and Liabilities Assumed to the Seller's Accountants as set forth in
clause (i) above. Concurrent with the delivery to Seller, Purchaser and
Purchaser's Accountants of the Special Procedures Report of Assets
Acquired and Liabilities Assumed, Seller shall cause Seller's
Accountants to deliver to Seller, Purchaser and Purchaser's Accountants
a certificate (the "Purchase Price Certificate") showing in reasonable
detail the calculations used to derive the Purchase Price. During the
30 days following their receipt of the Special Procedures Report of
Assets Acquired and Liabilities Assumed and Purchase Price Certificate,
Seller, Seller's Accountants, Purchaser and Purchaser's Accountants
shall have the opportunity to review the Special Procedures Report of
Assets Acquired and Liabilities Assumed and Purchase Price Certificate
(together with Seller's Accountants' working papers) and, during such
30-day period, Seller, Seller's Accountants, Purchaser and Purchaser's
Accountants shall have the right to propose those changes to the
Special Procedures Report of Assets Acquired and Liabilities Assumed
and Purchase Price Certificate the Seller, Seller's Accountants,
Purchaser or Purchaser's Accountants determine to be appropriate in
order to cause the Special Procedures Report of Assets Acquired and
Liabilities Assumed to conform to clause (iii) above and the Purchase
Price Certificate to reflect the calculation of the Purchase Price in
accordance with to Section 2.2. Items, procedures and calculations
associated with the Special Procedure Report of Assets Acquired and
Liabilities Assumed and the Purchase Price Certificate as to which no
change is proposed in the 30-day period will be deemed to have been
accepted and become final.
(v) Following the delivery of the Special Procedures Report of Assets
Acquired and Liabilities Assumed referred to in clause (iv) above,
Purchaser's Accountants shall be entitled to perform all procedures and
take any other steps that Purchaser's Accountants, in the exercise of
their professional judgment, deem appropriate to confirm that the
Special Procedures Report of Assets Acquired and Liabilities Assumed
has been prepared in accordance with clause (iii) above and the
Purchase Price Certificate reflects the calculation of the Purchase
Price in accordance with Section 2.2.
(vi) In the event of any dispute between Purchaser and Purchaser's
Accountants, on the one hand, and Seller and Seller's Accountants, on
the other hand, regarding any of the adjustments proposed by Purchaser
or Purchaser's Accountants, on the one hand, or Seller or Seller's
Accountants, on the other hand, with respect to the Special Procedures
Report of Assets Acquired and Liabilities Assumed or the Purchase Price
Certificate, which Purchaser and Purchaser's Accountants, on the one
hand, and Seller and Seller's Accountants, on the other hand, cannot
resolve within 15 days after expiration of the 30-day period referred
to in clause (iv) above, each of Seller or Purchaser shall have the
right, upon delivery of written notice to the other party, to require
that such dispute be resolved in accordance with the provisions set
forth in Section 5.5(b). Promptly following the resolution of all
disputes with respect to any proposed adjustments to the Special
Procedures Report of Assets Acquired and Liabilities Assumed and
Liabilities Assumed or the Purchase Price Certificate, Seller shall
cause Seller's Accountants to prepare and deliver to Seller, Purchaser
and Purchaser's Accountants the final Special Procedures Report of
Assets Acquired and Liabilities Assumed and the final Purchase Price
Certificate, each of which shall reflect all adjustments thereto which
have been agreed upon by Purchaser and Purchaser's Accountants, on the
one hand, and Seller and Seller's Accountants, on the other hand, and
which have been resolved pursuant to Section 5.5(b).
(vii) Each of Seller, Purchaser, Seller's Accountants and Purchaser's
Accountants shall have full access to all relevant accounting,
financial and other records reasonably requested by it in connection
with the preparation, confirmation or review of the Special Procedures
Report of Assets Acquired and Liabilities Assumed and the Purchase
Price Certificate as well as Seller's Accountants' working papers with
respect thereto, and each party shall make available to the other party
and its accountants such personnel as they may reasonably request in
connection with the preparation or confirmation of the Special
Procedures Report of Assets Acquired and Liabilities Assumed and the
Purchase Price Certificate or the review of Seller's Accountants'
report of the special procedures utilized to develop the Special
Procedure Report of Assets Acquired and Liabilities Assumed.
(b) Conflict Resolution Mechanism. Any dispute involving any of the adjustments
to the Special Procedures Report of Assets Acquired and Liabilities Assumed and
the Purchase Price Certificate proposed by Seller, Seller's Accountants,
Purchaser or Purchaser's Accountants including, without limitation, any
interpretation or application of any provision of this Agreement affecting the
preparation of the Special Procedures Report of Assets Acquired and Liabilities
Assumed, and the Purchase Price Certificate, not resolved by Seller, Seller's
Accountants, Purchaser and Purchaser's Accountants within 15 days after the
expiration of the 30-day period referred to in clause (iv) above, upon the
election of Seller or Purchaser, shall be resolved by the Selected Accounting
Firm. The Selected Accounting Firm shall resolve only issues upon which
Purchaser, Purchaser's Accountants, Seller and Seller's Accountants have been
unable to agree. The decision of such Selected Accounting Firm shall be rendered
within 45 days after appointment of the Selected Accounting Firm. The decision
of the Selected Accounting Firm shall be final and binding upon the parties.
Notwithstanding the foregoing, if the aggregate of all amounts in dispute with
respect to all disputes referred to in this Section 5.5(b) shall be less than
$1,000,000, such disputes shall not be resolved by the Selected Accounting Firm
but shall instead be resolved as follows: 50% of the aggregate of all amounts in
dispute shall be deemed to have been resolved in Seller's favor and 50% of the
aggregate of all amounts in dispute shall be deemed to have been resolved in
Purchaser's favor.
(c) Payment of Fees. Seller shall pay all of the fees of Seller's Accountants
and all expenses incurred by such firm, and Purchaser shall pay all of the fees
of Purchaser's Accountants and all expenses incurred by such firm, and each of
Seller and Purchaser shall pay one half of the fees of the Selected Accounting
Firm and all expenses incurred by such firm, each in connection with the tasks
outlined in this Section 5.5.
(d) Cooperation. Seller and Purchaser shall use their respective commercially
reasonable efforts to cause Purchaser's Accountants and Seller's Accountants to
cooperate with each other in connection with all of their activities undertaken
in connection with this Section 5.5. After delivery to Purchaser and the
Purchaser's Accountants of the Special Procedures Report of Assets Acquired and
Liabilities Assumed, Seller shall instruct Seller's Accountants to make
available to Purchaser's Accountants their work papers from the special
procedures performed on the Cut-Off Date Schedule of Assets Acquired and
Liabilities Assumed and Adjusted Cut-Off Date Schedule of Assets Acquired and
Liabilities Assumed.
5.6 Insurance; Risk of Loss.
-----------------------
(a) To the extent that any insurance policies owned or controlled by any member
of the Seller Group (collectively, the "Seller's Insurance Policies") (i) cover
any Damages as to which the Purchaser Indemnified Parties are entitled to
indemnification under Section 5.4 (subject to the limitations on indemnification
contained in Section 5.4, including Section 5.4(s)) and (ii) permit claims to be
made thereunder with respect to such Damages ("Seller Claims"), Seller shall
cooperate, and shall cause its Affiliates to cooperate, with Purchaser in
submitting Seller Claims (or pursuing Seller Claims previously made) on behalf
of the Purchaser under the Seller's Insurance Policies (subject to the
limitations on indemnification contained in Section 5.4, including Section
5.4(s)). Purchaser shall bear the out-of-pocket expenses of Seller and its
Affiliates in the preparing, submitting or pursuing such Seller Claims.
(b) In the event that (i) Purchaser files (or Seller files on Purchaser's
behalf) a claim under Seller's Insurance Policy with respect to a Seller
Employee Liability that results from, arises out of, is based on or relates to,
events or occurrences prior to the Closing and (ii) all or any portion of Seller
Employee Liability is subject to a "deductible," "self-insurance retention" or
similar risk retention element included in the applicable Seller's Insurance
Policy, Seller agrees that it is and shall remain responsible for, or shall
indemnify Purchaser against, any amounts not reimbursed under a Seller's
Insurance Policy due to such "deductible," "self insurance retention" or similar
risk-retention element (subject, however, to the limitations on indemnification
contained in Section 5.4).
5.7 Further Assurances.
------------------
(a) All amounts which are received by any member of the Seller Group in respect
of the Purchased Assets (including, without limitation, account receivable and
other payments) which are properly allocable to periods after the Cut-Off Date,
shall be received by each member of the Seller Group as agent, in trust for and
on behalf of Purchaser and Purchaser Affiliates as applicable, and, following
the Closing applicable to the Purchased Assets to which such amounts relate,
Seller shall promptly pay or cause to be paid promptly all of such amounts over
to Purchaser and shall provide to Purchaser information as to the nature, source
and classification of such payments, including any invoice relating thereto. All
amounts included in the Excluded Assets (or which are paid in respect of
Excluded Assets) received by Purchaser or any Purchaser Affiliate following the
Closing shall be received by Purchaser or such Purchaser Affiliate as agent, in
trust for and on behalf of the applicable member of the Seller Group, and
Purchaser shall promptly pay or cause to be promptly paid all of such amounts
over to such member of the Seller Group and shall provide to such member of the
Seller Group information as to the nature, source and classification of such
payments, including any invoice relating thereto.
(b) In addition to the foregoing, after the Closing, Seller will, and will cause
each other member of the Seller Group to, whenever and as often as reasonably
requested to do so by Purchaser, do, execute, acknowledge and deliver any and
all such other and further acts, assignments, transfers and any instruments of
further assurance, approvals and consents as are necessary or proper in order to
complete, ensure and perfect the sale, transfer and conveyance to Purchaser
contemplated hereby of the Purchased Assets and the consummation of the other
transactions contemplated hereby.
(c) Purchaser will, after the Closing, whenever and as often as reasonably
requested to do so by Seller, do, execute, acknowledge and deliver any and all
such other and further acts, assignments, transfers and any instruments of
further assurance, approvals and consents as are necessary or proper in order to
complete, ensure and perfect the consummation of the transactions contemplated
hereby.
5.8 Payment of Broker's or Finder's Fees. Seller shall pay any and all brokers'
or finders' fees, and any other commissions or similar fees, payable to any
Person acting on behalf of Seller or any of its Affiliates or under the
authority of any of them, in connection with any of the transactions
contemplated herein, and Purchaser shall pay any and all brokers' or finders'
fees, and any other commissions or similar fees, payable to any Person acting on
behalf of Purchaser or any of its Affiliates or under the authority of any of
them, in connection with any of the transactions contemplated herein, in each
case regardless of whether any claim for payment is asserted before or after the
Closing or before or after any termination of this Agreement.
5.9 Supplements to Schedules; Post-Signing Information. Not earlier than ten nor
later than five Business Days prior to the Closing, Seller and Purchaser will
supplement or amend the schedules relating to such party's respective
representations and warranties in this Agreement with respect to any matter,
condition or occurrence hereafter arising which, if existing or occurring at the
effective date of this Agreement, would have been required to be set forth or
described in such schedules or would otherwise have been inconsistent with such
party's representations herein. Seller shall deliver, or cause the Assigning
Subsidiaries to deliver, to Purchaser copies of any Environmental Reports
prepared between the effective date of this Agreement and the Closing Date
promptly following receipt thereof. No supplement or amendment to the schedules
hereto by either party, and no information contained in any Environmental Report
delivered pursuant hereto, shall be deemed to cure (or affect the rights of any
party with respect to) any breach of any representation or warranty made in this
Agreement or have any effect for the purpose of determining satisfaction of the
conditions set forth in Sections 6.2 and 6.3.
5.10 Base Salary and Travel. After the applicable Closing, and provided that
this Agreement shall not have been terminated pursuant to Article VII hereof,
Purchaser and Purchaser Affiliates, as applicable, shall reimburse Seller and
Assigning Subsidiaries for the costs associated with Seller's and such Assigning
Subsidiaries' payment of base salary to each of the Accepting Employees
providing services with respect to the Purchased Assets during the period
between the Cut-Off Date and Closing. The reimbursement obligation of Purchaser
and Purchaser Affiliates hereunder shall be limited solely to the payment of
base salary of each of the Accepting Employees as disclosed to Purchaser and
Purchaser Affiliates pursuant to Section 5.11(i) hereof and shall exclude any
commissions, benefits and bonuses. In addition, after the applicable Closing,
Purchaser and Purchaser Affiliate shall reimburse Seller and Assigning
Subsidiaries for reasonable travel expenses of Accepting Employees authorized by
Purchaser. Seller shall invoice the Purchaser for the foregoing amounts within
thirty (30) days following the applicable Closing Date. The Purchaser and
Purchaser Affiliates shall pay the invoiced amount by wire transfer of
immediately available funds payable to the order of Seller and Assigning
Subsidiaries, as applicable, within thirty (30) days from the date of receipt of
the invoice.
5.11 Employment.
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(a) Between the date of the Approval Order and the Closing, Seller shall
provide, and cause the other members of the Seller Group to provide, reasonable
access to meet with and/or interview, at times and locations, and using
procedures, to be mutually agreed upon, the Seller Employees to whom Purchaser
or a Purchaser Affiliate is considering making offers of employment, in each
case for the purpose of enabling Purchaser or any of its Affiliates to make
offers of employment as specified in Section 5.11(c) below and to allow for an
orderly transition of such Seller Employees' employment to Purchaser or one of
its Affiliates.
(b) [Intentionally Omitted.]
(c) No later than 15 days after the date of the Approval Order, Purchaser shall
provide to Seller a schedule of (i) those Seller Employees to whom offers of
employment will be made by Purchaser or any Purchaser Affiliate; provided that
such schedule shall name no less than 33 Seller Employees but there shall be at
least 10 Seller Employees that shall not be named on such schedule and to whom
Purchaser shall not make employment offers and (ii) those Seller Employees to
whom notices of continuation of employment will be sent by Purchaser in
accordance with applicable foreign law, which schedule shall be delivered to
Seller prior to making any offers of employment to any Seller Employee.
Purchaser shall, or shall cause a Purchaser Affiliate to, make an offer of
employment effective as of the Closing Date to each Seller Employee set forth on
the schedule delivered pursuant to the preceding sentence in accordance with
Purchaser's or its Affiliates' standard hiring procedures and in accordance with
all applicable laws, each such offer contingent upon the issuance of a Final
Order of the Bankruptcy Court and Closing. Seller and each applicable member of
the Seller Group shall remain liable for all severance and related termination
costs (including, without limitation, accrued vacation benefits) for all Seller
Employees who are not hired as of the Closing by Purchaser or who do not accept
employment as of the Closing with Purchaser. Purchaser shall indemnify and hold
harmless Seller Indemnified Parties from and against any and all Damages
suffered or incurred by any of them resulting from any action by any Seller
Employee relating to Purchaser's failure to comply with applicable laws in
making offers of employment to Seller Employees and for any liability or
obligation in respect of Accepting Employees which arise or occur after Closing.
(d) For a period of one (1) year following the Closing, or, if shorter, for such
period that such Accepting U.S. Employee is employed with the Purchaser or a
Purchaser Affiliate, such Purchaser or the Purchaser Affiliate shall provide
each Accepting U.S. Employee with salary, wages, commission target opportunities
and cash bonus target opportunities that are no less favorable than the level
thereof that such employee was receiving as of July 15, 2001. Purchaser or the
Purchaser Affiliate shall provide each such Accepting U.S. Employee with the
level of employee benefits as it provides to similarly situated employees of
Purchaser. Effective as of 12:01 am local time of the day following the Closing
Date, Accepting U.S. Employees shall cease participation in Seller Plans and, if
applicable, commence participation in such similar Plans sponsored by the
Purchaser ("Purchaser Plans").
(e) For a period of one (1) year following the Closing, or, if shorter, for such
period that such Accepting Foreign Employee is employed with the Purchaser or
Purchaser Affiliate, such Purchaser or the applicable Purchaser Affiliate shall
provide each Accepting Foreign Employee with salary, wages, commission target
opportunities and cash bonus target opportunities that are no less favorable
than the level thereof that such employee was receiving as of July 15, 2001.
Purchaser or such Purchaser Affiliate shall provide the Accepting Foreign
Employees with the level of employee benefits as required by law; provided,
however, that if applicable Law does not require the maintenance of specific
levels of benefits, Purchaser may provide the same level of employee benefits
received by the Accepting Foreign Employees immediately prior to Closing, or
such employee benefits as it provides to similarly situated employees of
Purchaser, at Purchaser's discretion. Effective as of 12:01 am local time of the
day following the Closing Date, Accepting Foreign Employees shall cease
participation in Seller Plans and, if applicable, commence participation in such
similar Purchaser Plans.
(f) For purposes of Purchaser Plans covering the Accepting Employees following
the Closing Date, Purchaser or the applicable Purchaser Affiliate shall
recognize each Accepting Employee's service with the Seller Group or any of
Seller's Affiliates prior to the Closing Date as service with Purchaser or such
Purchaser Affiliate in connection with any pension plan, 401(k) savings plan and
welfare benefit plan (including vacations and holidays) maintained by Purchaser
or such Purchaser Affiliate in which such employee elects to participate and
which is made available following the Closing Date by Purchaser or such
Purchaser Affiliate for purposes of any waiting period, vesting, eligibility and
benefit entitlement (but excluding benefit accruals other than vacation
accruals) and shall cause all applicable welfare benefit plans to waive any
preexisting condition limitation, exclusion or waiting period for the Accepting
Employees and their dependents, to the same extent such limitations, exclusions
or waiting periods were satisfied, covered or waived under similar Seller Plans;
provided, however, that with respect to any defined benefit pension plan
maintained by Purchaser or such Purchaser Affiliate in which such Accepting
Employee participates following the Closing Date, such service credit shall be
measured from the earliest date that such employee commenced participation in a
qualified pension or savings plan maintained by the Seller Group or any of
Seller's Affiliates. The Purchaser or such Purchaser Affiliate shall credit the
Accepting Employees with any amounts paid prior to the Closing Date under any
Seller Plan with respect to satisfaction of any applicable deductible amounts
and co-payment minimums under any of the Purchaser Plans which provide similar
benefits. Purchaser or Purchaser Affiliate shall also recognize each Accepting
Employee's service with the Seller Group or any Seller Affiliate prior to the
Closing as service with Purchaser or Purchaser Affiliate in connection with the
paid vacation policy of Purchaser or Purchaser Affiliate; provided, however, for
the portion of the year in which the Closing occurs, such Accepting Employees
shall be deemed to accrue vacation only for the portion of the year during which
such Accepting Employee is employed by the Purchaser or Purchaser's Affiliate.
(g) Purchaser shall provide any Accepting Employee whose employment with the
Purchaser or the applicable Purchaser Affiliate is terminated by Purchaser or
such Purchaser Affiliate (other than for "cause") during the twelve (12) month
period following the Closing, with severance pay that is no less favorable than
the severance pay such employee would have received under the applicable Seller
Plan as of July 15, 2001. For the avoidance of doubt, Purchaser shall retain no
liability with respect to the severance or termination costs of Seller Employees
that Purchaser determines not to hire or with respect to Seller Employees who
otherwise fail to become Accepting Employees, and Seller Group shall indemnify
Purchaser and its Affiliates for any such liabilities that may pass to Purchaser
or such Affiliate by operation of law, as provided under Section 5.4 hereof.
(h) To the extent the applicable non-US law requires Purchaser, or the Purchaser
Affiliate to continue or maintain a Foreign Plan, Seller shall transfer the
assets and liabilities applicable to such Foreign Plan to Purchaser or the
Purchaser Affiliate, as applicable provided, however, that any accumulated
liabilities in excess of the assets of any such Foreign Plan, as of the date of
such transfer, shall remain a Seller Employee Liability, regardless of the
foregoing, for which Purchaser or Purchaser Affiliate shall be entitled to
indemnification in accordance with Section 5.4 hereof. No later than sixty (60)
days following the Closing, Purchaser or Purchaser Affiliate shall make
available a defined contribution plan which is intended to be qualified under
Section 401(a) of the Code and maintained or sponsored by Purchaser or Purchaser
Affiliates and shall cause such plan to accept a direct rollover of any
"eligible rollover distribution" of any Accepting U.S. Employee from the
Comdisco, Inc. Retirement Plan (including any outstanding loan under the account
of any such Accepting U.S. Employee). Purchaser or Purchaser Affiliate shall
operate and administer such plan in respect of such rollovers in accordance with
the terms of such plan and applicable law. No later than twenty (20) business
days following the Closing, Seller shall furnish to Purchaser or Purchaser
Affiliate, as applicable, the years of service credited to each Accepting U.S.
Employee under the Comdisco, Inc. Retirement Plan.
(i) Within five (5) business days of the date of the Approval Order, Seller
shall provide a true and complete list (redacted as may be necessary for
purposes of applicable data protection or privacy laws) of the following
information for each (i) employee of Seller or an Assigning Subsidiary who
primarily provides services related to the Purchased Assets; (ii) employee of
Seller's Affiliates who primarily provides services related to the Purchased
Assets and whose employment relationship will not be transferred to Purchaser or
any Purchaser Affiliate by operation of law as a result of the transaction
contemplated by the Agreement; and (iii) employee of Seller's Affiliates who
primarily provides services related to the Purchased Assets and whose employment
relationship will be transferred to Purchaser or any Purchaser Affiliate by
operation of law as a result of the transaction contemplated by the Agreement:
gross monthly salary, business division, cash bonus and incentive payment and
targets, date of commencement of employment, name of employer and title.
(j) No later than 15 days after the date of the Approval Order, Purchaser shall
provide Seller schedule of the Seller Employees, if any, with respect to which
Purchaser or any Purchaser Affiliate intends to assume Seller's obligations
under the Facility and Guaranty Agreement among Comdisco, Inc., The First
National Bank of Chicago, as agent, and the Financial Institution Party thereto,
dated as of February 2, 1998, to the extent of such obligations relating to the
identified Seller Employees, if any. Purchaser and Seller will, after delivery
of such schedule, reasonably cooperate with each other to negotiate appropriate
documentation for and otherwise facilitate such assumption and the assignment of
Seller's subrogation rights in respect thereof to Purchaser.
5.12 Certain Bankruptcy Matters.
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(a) Seller shall obtain the Bankruptcy Court approval and entry of an order in
the form attached hereto as Exhibit A (with such changes thereto as Purchaser
shall approve in its reasonable discretion, the "Approval Order"). Seller agrees
to file an affidavit of service with the Bankruptcy Court within three days
thereafter that indicates the name and address of each Person upon whom notice
of the motions seeking entry of the Approval Order was served, the method of
service and includes any and all proofs of such service, including receipts and
copies of all publications of any notice of the motions seeking entry of the
Approval Order.
(b) [Intentionally Omitted.]
(c) Purchaser and Seller agree to make promptly any filings, to take all actions
and to use their reasonable best efforts to obtain entry of the Approval Order
and any and all other approvals and orders necessary or appropriate for the
consummation of the transactions contemplated hereby; provided, however neither
Purchaser nor any Purchaser Affiliate shall be required to cease operating or
divest itself of any of its businesses or assets. Seller shall provide each
applicable taxing authority in each jurisdiction in which it or any of its
Assigning Subsidiaries which are debtors in the Chapter 11 Cases are subject to
Tax with copies of any motion for entry of an Approval Order or any other order
relating to the transactions contemplated by this Agreement at least 10 days
prior to the hearing on such motion.
(d) If the Approval Order or any other orders of the Bankruptcy Court relating
to this Agreement shall be appealed by any Person (or a petition for certiorari
or motion for rehearing, reargument or stay shall be filed with respect
thereto), Seller agrees to take all steps as may be reasonable and appropriate
to defend against such appeal, petition or motion, and Purchaser agrees to
cooperate in such efforts. Each party hereto agrees to use its reasonable best
efforts to obtain an expedited resolution of such appeal, provided that nothing
herein shall preclude the parties hereto from consummating the transactions
contemplated herein if the Approval Order shall have been entered and have not
been stayed and Purchaser has waived in writing the requirement that the
Approval Order be a Final Order in which event Purchaser shall be able to assert
the benefits of Section 363(m) of the Bankruptcy Code as a consequence of which
such appeal shall become moot.
(e) In the event that any Assigning Subsidiary has made a filing under the
bankruptcy or insolvency legislation of any jurisdiction other than the United
States, Seller will cause such Assigning Subsidiary to file the necessary
proceedings and to use its reasonable best efforts to obtain an order or orders
including such provisions of the Approval Order as are available under the laws
of the jurisdiction and as are appropriate in the circumstances.
5.13 Tax Payments. From and after the Closing Date, Seller shall use that
portion of the Purchase Price placed in escrow pursuant to Section 2.6 to pay
and discharge all personal property, ad valorem and other Tax payments for which
Seller or any Assigning Subsidiary is responsible pursuant to Section 2.5 and
Section 5.3(c)(i).
5.14 Confirmations. Between the effective date of this Agreement and the
Closing, Seller shall engage an independent accounting firm, acceptable to
Purchaser, that shall attempt to obtain from each Obligor under the Financing
Contracts of the type specified in the definition of Purchased Financing
Contracts, without giving effect to clause (H)(y) of the proviso thereof, a
confirmation in the form attached hereto as Schedule 5.14 (that has been
completed with the appropriate data), or a confirmation of such information by
the Obligor verbally to the extent deemed satisfactory to Purchaser in its sole
discretion, of the validity of the data set forth in such confirmation, and
Seller shall use its commercially reasonable efforts to cooperate with such
accounting firm to obtain such confirmations; provided, however, Seller shall
not be required to request or obtain a confirmation with respect to any
Financing Contract that has reached the end of its original lease term and is
being billed on a month-to-month basis or pursuant to an extension or renewal of
the lease term which does not have a fixed renewal or extension term of more
than twelve (12) months remaining from the Cut-Off Date. Seller shall, or shall
cause such accounting firm to, deliver to Purchaser, true and correct copies of
the confirmations sent to and received from Obligors.
5.15 [Intentionally Omitted.]
5.16 [Intentionally Omitted.]
5.17 [Intentionally Omitted.]
5.18 [Intentionally Omitted.]
5.19 Schedule of Credit Enhancements. Seller shall have delivered an updated
Schedule 3.18(d) (updated as of the date of delivery thereof) not more than 10
days and not less than 3 days prior to Closing.
5.20 [Intentionally Omitted.]
5.21 Schedule 5.21 Lease. Prior to Closing, Seller shall, to the extent
permitted by applicable law, cause all right, title and interest of the lessor
under the Financing Contract listed on Schedule 5.21 hereto, and the Portfolio
Property related thereto, to be assigned from Comdisco Equipment Solutions Ltd.
(Cayman Islands) to Comdisco Deutschland GmbH.
5.22 Original Master Leases. From and after the Closing, Purchaser shall hold,
and shall cause the applicable Purchaser Affiliate to hold, all original master
lease agreements and applicable schedules and Credit Enhancements thereto
delivered to Purchaser or the applicable Purchaser Affiliate at the Closing for
the benefit of Seller and the applicable Assigning Subsidiaries solely to the
extent such original documents relate to a Financing Contract that is an
Excluded Asset. Purchaser shall permit, and shall cause the applicable Purchaser
Affiliate to permit, upon the written request of Seller or any Assigning
Subsidiary, Seller or the applicable Assigning Subsidiary to use such original
master lease agreements or applicable schedules and Credit Enhancements thereto
for the purposes of enforcing Seller's or any such Assigning Subsidiary's rights
under any Financing Contract that is an Excluded Asset. Seller shall return, and
shall cause the applicable Assigning Subsidiary to return, to Purchaser or the
applicable Purchaser Affiliate any original master lease or applicable schedules
and Credit Enhancements thereto promptly following such time as Seller or the
applicable Assigning Subsidiary no longer requires such master lease, schedule
or Credit Enhancement for the purposes described herein. In the event Purchaser
(or any Purchaser Affiliate) and Seller (or any Assigning Subsidiary) require an
original master lease agreement or schedule or Credit Enhancement thereto in
order to commence, pursue or enforce concurrent actions against a particular
Obligor or guarantor (or such Obligor's Affiliates or any provider of such
Credit Enhancement) under a Financing Contract, Purchaser and Seller shall (and
shall cause their respective Purchaser Affiliates and Assigning Subsidiaries, as
applicable) to cooperate with one another in connection with the use of such
original documents pursuant to such concurrent actions.
5.23 Purchased Discounted Financing Agreements. At the Closing, Seller
shall deliver to Purchaser all original documents evidencing the Purchased
Discounted Financing Agreements.
5.24 Cut-Off Date Portfolio Information. Within 30 days after the Closing Date,
Seller shall deliver to Purchaser the Cut-Off Date Portfolio Tape, and the
Portfolio Information, as of the Cut-Off Date, described in items (A) through
(E) of the definition of the "Portfolio Information".
5.25 Administrative Claims. All amounts to be paid to Purchaser pursuant to this
Agreement shall constitute an allowed administrative expense claim with priority
over any and all administrative expenses of the kind specified in Sections 503,
507 and 1114 of the Bankruptcy Code, and shall be, at Purchaser's option and as
otherwise permitted by this Agreement, (i) immediately payable if and when any
such obligation of Seller arises under this Agreement, or (ii) credited against
any amounts owed by Purchaser to Seller pursuant to this Agreement.
5.26 Inventory Remarketing. With respect to equipment and inventory of the
Electronics Segment owned by a member of the Selling Group as of the Cut-Off
Date or which a member of the Seller Group acquires with respect to a Financing
Contract that is not a Purchased Financing Contract during the one year period
following the Cut-Off Date consisting of electronics equipment as to which a
member of the Seller Group either (A) holds for sale or lease or (B) possesses
as a result of the expiration of the term or early termination of a Financing
Contract or the exercise by a member of the Seller Group of its rights under a
Financing Contract following a default by the Obligor thereunder ("Inventory"),
Purchaser shall on a non-exclusive basis on behalf of Seller remarket or
otherwise dispose of such Inventory, for a remarketing fee equal to 15% of the
net proceeds of any final sale of such Inventory. In the event any such
Inventory has not been disposed of by the Seller on the date that is one year
following the Cut-Off Date, Purchaser shall provide for the storage of such
Inventory at a location in Santa Xxxxx County, California at no cost to Seller
for the following one year period, and in the event that any such Inventory has
not been disposed of by the Seller on the date that is two years following the
Closing Date, Purchaser shall provide storage of such Inventory and Seller shall
pay Purchaser the fair market value of storage of such Inventory thereafter.
5.27 Access to Accepting Employees. For a period of 150 days following the
Closing, Purchaser shall provide, or cause to be provided, to members of the
Seller Group reasonable access, during normal business hours, to Accepting
Employees for purposes of consultation regarding any Delinquency Contracts
(regardless of whether any such Financing Contracts become Delinquency Contracts
prior to or following the Closing Date) held by any member of the Seller Group.
5.28 Conversion Methodology. For purposes of calculating the amounts payable, if
any, by Purchaser and/or a Purchaser Affiliate with respect to Excess
Electronics Collections pursuant to Section 2.8 only, Seller and Purchaser
hereby agree that any Electronics Rental Payment and Electronic Residual
Collections payable in a currency other than U.S. dollars in respect of any
calendar month shall be deemed to be converted into U.S. dollars based upon the
average of the exchange rates for such currency into U.S. dollars, as determined
by Purchaser's Treasury Department consistent with its past practices, for each
Business Day during the 30 calendar days ending (and including) the 14th day of
the immediately preceding calendar month (or, in the event such 14th day is not
a Business Day, ending on (and including) the next Business Day).
ARTICLE VI
CONDITIONS TO CLOSING;
ABANDONMENT OF THE TRANSACTION
6.1 The Closing.
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(a) Unless this Agreement has been terminated and the transactions herein
abandoned pursuant to Article 7, the Closing of the sale of the Purchased Assets
hereunder shall (subject to Sections 6.2 and 6.3) be held at the offices of
Skadden, Arps, Slate, Xxxxxxx & Xxxx (Illinois) or such other location as the
parties may mutually agree upon, (i) on the date that is five Business Days
after the conditions to Closing have been satisfied or waived (other than those
conditions that by their nature cannot be satisfied until the Closing, but
subject to all such conditions having been satisfied or waived at the time of
the Closing), (ii) if the initial Closing shall not have occurred on or prior to
April 30, 2002, on the date that is the last Business Day in the month that the
conditions to Closing have been satisfied or waived (other than those conditions
that by their nature cannot be satisfied until the Closing, but subject to all
such conditions having been satisfied or waived at the time of the Closing) or
(iii) at such other times as the parties may mutually agree. If any of the
conditions specified in Section 6.2 hereof have not been satisfied, Purchaser
may nevertheless at its election waive such conditions and proceed with the
transactions contemplated hereby, and, if any of the conditions specified in
Section 6.3 hereof have not been satisfied, Seller may nevertheless at its
election waive such conditions and proceed with the transactions contemplated
hereby. Any such election to proceed shall be evidenced by a certificate
executed on behalf of the electing party by its authorized representative.
(b) Purchaser and Seller shall hold a second closing (the "Second Closing") on
the last Business Day of the month immediately following the month in which the
initial Closing occurs or at such other date as the parties may mutually agree.
At the Second Closing, provided the conditions in Section 6.2 and 6.3 have been
satisfied or waived, the Seller Group shall transfer to Purchaser, or a
Purchaser Affiliate, such Financing Contracts that did not meet the requirements
of a Purchased Financing Contract on the Closing Date (and accordingly were not
transferred on the Closing Date) but which do meet the requirements of a
Purchased Financing Contract at such Second Closing. Notwithstanding anything to
the contrary contained in this Section 6.1(b), in the event that the Second
Closing shall not have occurred on or before May 31, 2002, either party hereto,
by written notification to the other, may terminate the obligations hereunder to
effect the Second Closing and the transactions contemplated thereby. In the
event of the termination of such obligations pursuant to this Section 6.1(b), no
party hereto shall have any liability or further obligation to any other party
to this Agreement resulting from such termination except no party waives any
claim or right against a breaching party to the extent that such termination
results from the breach by a party hereto of any of its representations,
warranties, covenants or agreements set forth in this Agreement.
6.2 Conditions to Purchaser's Obligations to Close. The obligations of
Purchaser or the Purchaser Affiliates to purchase the Purchased Assets and to
otherwise consummate the Closing shall be subject to the following conditions:
(a) Except to the extent waived in writing by Purchaser hereunder, (i) the
representations and warranties of Seller contained herein (other than the
representation and warranty contained in Section 3.7(a)) shall be true and
correct in all respects at the Closing (without giving effect to any
materiality, Seller's Knowledge or Material Adverse Effect qualifications or
exceptions contained in such representations and warranties), in each case with
the same effect as though made at and as of such time (other than
representations and warranties that are made as of a specific date, which need
be true and correct as of such date), except where the failure to be true and
correct has not had, and is not likely to have, a Material Adverse Effect and
(ii) there shall not have occurred any effect, result, occurrence, event, fact,
set of facts or change that would constitute a Material Adverse Effect between
the effective date of this Agreement and the Closing; Seller shall have
performed in all material respects all obligations and complied in all material
respects with all covenants required by this Agreement to be performed or
complied with by Seller at or prior to the Closing (except to the extent waived
hereunder in writing by Purchaser); and Seller shall have delivered to Purchaser
a certificate of Seller in form and substance reasonably satisfactory to
Purchaser, dated the Closing Date, and signed on behalf of Seller by its
authorized representative, in his (or her) respective representative capacity,
and not individually, to all such effects and certifying the satisfaction of the
conditions set forth in this Section 6.2 (except to the extent waived hereunder
in writing by Purchaser). For the avoidance of doubt, Seller and Purchaser agree
that for the purpose of determining whether representations and warranties are
true and correct in all respects at Closing, any Purchased Assets transferred to
Purchaser or any Purchaser Affiliate at a prior Closing shall not be deemed a
Purchased Asset at a subsequent Closing.
(b) (i) On the Closing Date, there shall be no injunction, writ,
preliminary restraining order or other order in effect of any nature
issued by a Governmental Entity of competent jurisdiction directing
that the transactions provided for herein or any portion thereof not be
consummated as provided herein.
(ii) (A) No action or proceeding shall have been instituted and, at what
would otherwise have been the Closing Date, remain pending before a
Governmental Entity, (1) to restrain, prohibit or otherwise challenge
the sale of the Purchased Assets to Purchaser or the performance of the
material obligations of the parties hereto, or (2) seeking substantial
damages from Purchaser or any of its Affiliates as a result of the sale
of the Purchased Assets to the Purchaser or the performance of the
material obligations of the parties hereto; provided, that, damages of
$10 million or more with respect to Taxes or any indemnities with
respect thereto shall be deemed substantial damages for purposes of
this clause (2), and (B) and no Governmental Entity shall have notified
either party to this Agreement that the consummation of the
transactions contemplated hereby would constitute a violation of the
laws of the United States or any State thereof or the laws of the
jurisdiction to which such Governmental Entity is subject and that it
intends to commence proceedings to restrain the consummation of such
transactions, to force divestiture if the same are consummated or to
materially modify the terms or results of such transactions unless such
Governmental Entity shall have withdrawn such notice, or has otherwise
indicated in writing that it will not take any action, prior to what
would otherwise have been the Closing Date; provided, further, if any
such action or proceeding shall have been instituted and, at what would
otherwise have been the Closing Date, remain pending before a
Governmental Entity, Purchaser may, at its option, elect to exclude
assets (and related liabilities) from the Purchased Assets and Assumed
Liabilities notwithstanding the definitions thereof to the extent
necessary to enable the conditions set forth in this subparagraph
(b)(ii)(B) to be satisfied.
(c) All Authorizations, consents and approvals referred to in Section 3.4 hereof
(without giving effect to any qualifications for materiality with regard to
Authorizations, consents or approvals from any Governmental Entity), shall have
been obtained and all Authorizations required for the valid consummation by
Seller and Purchaser of the transactions contemplated by this Agreement
(including, without limitation, the expiration of any applicable waiting period
under the HSR Act and similar legislation in other jurisdictions (including,
without limitation, the Competition Act (Canada)) shall have been obtained;
provided, however, if any requisite Authorizations, consents and approvals of
any Governmental Entity required for the acquisition by Purchaser or a Purchaser
Affiliate of a portion of the Purchased Assets shall not have been obtained by
the Closing, Purchaser may, at its option, elect to exclude such assets (and
related liabilities) from the Purchased Assets and Assumed Liabilities
notwithstanding the definitions thereof to the extent necessary to enable the
conditions set forth in this subparagraph (c) to be satisfied.
(d) On the Closing Date, Seller shall have (i) delivered to Purchaser or any
Purchaser Affiliate the original master lease, applicable schedules and Credit
Enhancements thereto (other than master leases, schedules and Credit
Enhancements related to any Purchased Discounted Financing Agreement to the
extent copies thereof, certified as true, correct and complete by an officer of
Seller, have been provided to Purchaser) and the documents described on Section
5.1(a) with respect to each Purchased Financing Contract that Seller has in its
possession, and any and all escrows, deposits, security, impounds, accounts or
other or additional collateral relating to each Purchased Financing Contract (in
each case that is a Purchased Asset); and (ii) executed, acknowledged and
delivered to Purchaser or any Purchaser Affiliate the Foreign Transfer
Agreements and such other transfer instruments or documents as may be necessary
to transfer, or evidence the transfer, of each Purchased Financing Contract and
each other Purchased Asset to Purchaser or any Purchaser Affiliate, all in such
form as Purchaser or its counsel may reasonably request specifically identified
to Seller by Purchaser at least 60 days prior to Closing; (iii) executed and
delivered to Purchaser or any Purchaser Affiliate UCC-1 financing statements
naming Purchaser, and/or an applicable Purchaser Affiliate, as the "purchaser"
and Seller, and/or an applicable Assigning Subsidiary, as the "seller" and
describing the Purchased Assets in the United States, to be filed with the
Secretary of State of the State of Illinois and the Secretary of State of the
State of Delaware. Delivery to Purchaser of any document described in Section
5.1(a) other than the original master lease, applicable schedules and Credit
Enhancements thereto described above shall not be a condition to Closing and
(iv) a pledge and security agreement as described in Section 2.1(f).
(e) Since the date of the Approval Order, there shall not have occurred any
effect, result, occurrence, event, fact, set of facts or change that constitutes
a Material Adverse Effect.
(f) Seller shall have executed the Transitional Services Agreement.
(g) [Intentionally Omitted.]
(h) [Intentionally Omitted.]
(i) The Approval Order and any other orders of the Bankruptcy Court with respect
to this Agreement shall have been entered, shall be in form and substance
reasonably satisfactory to Purchaser, and shall have each become a Final Order.
(j) Seller and each Assigning Subsidiary that is domiciled in the United States
shall have delivered a certificate of non-foreign status in accordance with
Section 1445 of the Code, and any similar state required documents requested by
the Purchaser.
(k) Any advance rulings required to be filed pursuant to Section 5.3(c)(ii)
(A)(2) shall have been filed.
(l) At the Closing, Seller shall provide Purchaser with (i) a copy of the
Approval Order that has been certified by the Clerk of the Bankruptcy Court and
(ii) a copy of the Bankruptcy Court's docket for the eleven-day period
subsequent to entry of the Approval Order that has been certified by the Clerk
of the Bankruptcy Court or, if the Closing has not occurred on the thirteenth
day following entry of the Approval Order on the Bankruptcy Court's docket, a
copy of the Bankruptcy Court's docket certified by the Clerk of the Bankruptcy
Court for the period commencing on and including the date of entry of the
Approval Order through and including the date that is two days before the
Closing.
6.3 Conditions to Seller's Obligations to Close. The obligations of the
Seller to sell the Purchased Assets and to otherwise consummate the Closing
shall be subject to the following conditions:
(a) Except to the extent waived in writing by Seller hereunder, the
representations and warranties of Purchaser contained herein shall be true and
correct in all material respects at the Closing, in each case with the same
effect as though made at and as of such time with the same effect as though made
at and as of such time (without giving effect to any materiality or Material
Adverse Effect qualifications or exceptions contained therein); Purchaser shall
have performed in all material respects all obligations and complied in all
material respects with all covenants required by this Agreement to be performed
or complied with by it at or prior to the Closing (except to the extent waived
hereunder in writing by Seller); and Purchaser shall have delivered to Seller a
certificate of Purchaser in form and substance reasonably satisfactory to
Seller, dated the Closing Date, and signed on its behalf by its authorized
representative, in his (or her) representative capacity, and not individually,
to all such effects and certifying the satisfaction of the conditions set forth
in this Section 6.3 (except to the extent waived hereunder in writing by
Seller).
(b) (i) On the Closing Date, there shall be no injunction, writ,
preliminary restraining order or other order in effect of any nature
issued by a Governmental Entity of competent jurisdiction directing
that the transactions provided for herein or any portion thereof not be
consummated as provided herein.
(ii) No action or proceeding shall have been
instituted and, at what would otherwise have been the Closing Date,
remain pending before a Governmental Entity to restrain, prohibit or
otherwise challenge the sale of the Purchased Assets to Purchaser or
the performance of the material obligations of the parties hereto.
(iii) Except to the extent Purchaser elects
to exercise its option set forth in Section 6.2(b)(ii), no Governmental
Entity shall have notified either party to this Agreement that the
consummation of the transactions contemplated hereby would constitute a
violation of the laws of the United States or the laws of any state
thereof or the laws of any foreign country, or the laws of the
jurisdiction to which such Governmental Entity is subject and that it
intends to commence proceedings to restrain the consummation of such
transactions, to force divestiture if the same are consummated or to
materially modify the terms or results of such transactions unless such
Governmental Entity shall have withdrawn such notice, or has otherwise
indicated in writing that it will not take any action, prior to what
would otherwise have been the Closing Date.
(c) Except to the extent Purchaser elects to exercise its option set forth in
Section 6.2(c), all Authorizations, consents and approvals of any Governmental
Entity required for the valid consummation by Seller and Purchaser of the
transactions contemplated by this Agreement in respect of the Purchased Assets
(including, without limitation, the expiration of any applicable waiting period
under the HSR Act and similar legislation in other jurisdictions (including,
without limitation, the Competition Act (Canada)) shall have been obtained, as
determined after taking into account any exclusion by Purchaser, at its option,
of assets or liabilities from the Purchased Assets and Assumed Liabilities
pursuant to Section 6.2(c).
(d) Purchaser shall have made the payments required by the provisions of
Section 2.3 hereof.
(e) [Intentionally Omitted.]
(f) [Intentionally Omitted]
(g) Purchaser (or, as applicable, the Purchaser Affiliates) shall have
executed the Transitional Services Agreement.
(h) The Approval Order shall have been entered.
(i) Purchaser and all Purchaser Affiliates shall have executed, acknowledged and
delivered to the appropriate members of the Seller Group instruments of
assumption and/or foreign instruments of assumption, as the case may be, as may
be necessary to assume, or evidence the assumption of each Assumed Liability or
other liability which Purchaser or Purchaser Affiliates have expressly agreed to
assume or be responsible for pursuant to the terms of this Agreement, all in
such form as Seller or its counsel may reasonably request.
ARTICLE VII
TERMINATION
7.1 Termination. This Agreement may be terminated and the transactions
contemplated hereby may be abandoned at any time prior to any Closing:
(a) by mutual consent of each of Seller and Purchaser; or
(b) by either of Seller or Purchaser:
(i) [Intentionally Omitted];
(ii) if a Governmental Authority shall have issued an order, decree or
ruling or taken any other action permanently restraining, enjoining or
otherwise prohibiting the transactions contemplated by this Agreement
and such order, decree, ruling or other action shall have become final
and nonappealable; or
(iii) if the initial Closing shall not have occurred on or before April 30,
2002.
7.2 Procedure and Effect of Termination. In the event of termination and
abandonment of the transactions contemplated hereby pursuant to Section 7.1,
written notice thereof shall forthwith be given to the other parties to this
Agreement and this Agreement shall terminate (subject to the provisions of this
Section 7.2) and the transactions contemplated hereby shall be abandoned,
without further action by any of the parties hereto. If this Agreement is
terminated as provided herein, no party hereto shall have any liability or
further obligation to any other party to this Agreement resulting from such
termination except (i) that the provisions of this Section 7.2, Section 5.8, and
the provisions of Article 8 hereof shall remain in full force and effect and
(ii) no party waives any claim or right against a breaching party to the extent
that such termination results from the breach by a party hereto of any of its
representations, warranties, covenants or agreements set forth in this
Agreement.
ARTICLE VIII
GENERAL
8.1 Amendments. This Agreement may only be amended, modified, superseded or
canceled and any of the terms, covenants, representations, warranties or
conditions hereof may be waived only by an instrument in writing signed by each
of the parties hereto or, in the case of a waiver, by or on behalf of the party
waiving compliance.
8.2 Integrated Contract; Schedules and Exhibits; Use of Certain Terms.
-----------------------------------------------------------------
(a) Except for the Confidentiality Agreement dated October 5, 2001, as amended,
between Purchaser and Seller, the Lab & Scientific Agreement, this Agreement and
the Exhibits and Schedules hereto, and any written amendments to this Agreement
satisfying the requirements of Section 8.1 hereof, together with the
Transitional Services Agreement (i) constitute the entire agreement among Seller
and Purchaser with respect to the subject matter hereof or thereof, and (ii)
supersede and replace all correspondence, understandings and communications
between the parties hereto with respect to the transactions contemplated by this
Agreement.
(b) Upon due execution and delivery of this Agreement by all parties hereto, (i)
the January Purchase Agreement as amended by the First Amendment shall be deemed
to be amended and restated in its entirety and shall be of no further force and
effect and (ii) all references to the January Purchase Agreement in all
documents (other than this Agreement) executed in connection with the
transactions contemplated hereby and by the January Purchase Agreement shall be
deemed to refer to the January Purchase Agreement as amended and restated by
this Agreement.
(c) The schedules and exhibits attached to the January Purchase Agreement shall,
for purposes of this Agreement, be deemed incorporated herein by reference and
Schedules 1.1P, 1.1Q and 1.1R, which are attached hereto, are deemed a part
hereof.
(d) All references in the Schedules hereto to the "Closing Date Schedule of
Assets Acquired and Liabilities Assumed" and the "Adjusted Closing Date Schedule
of Assets Acquired and Liabilities Assumed" shall be deemed to refer to the
Cut-Off Date Schedule of Assets Acquired and Liabilities Assumed and the
Adjusted Cut-Off Date Schedule of Assets Acquired and Liabilities Assumed,
respectively.
8.3 Governing Law. This Agreement and the legal relations between the parties
hereto arising thereunder shall be governed by and construed in accordance with
the laws of the State of Illinois, without regard to the principles regarding
the choice of law. The parties hereby agree that, without limitation of any
party's right to appeal any order of the Bankruptcy Court, and except as
provided in Section 5.4 hereof, (a) the Bankruptcy Court shall retain exclusive
jurisdiction to enforce the terms of this Agreement and to decide any claims or
disputes that may arise or result from, or be connected with, this Agreement,
any breach or default hereunder, or the transactions contemplated herein, and
(b) any and all claims, causes of action, suits and proceedings relating to the
foregoing shall be filed and maintained only in the Bankruptcy Court, and the
parties hereby consent and submit to the jurisdiction of the Bankruptcy Court.
8.4 Notices. Any notices or other communications required or permitted hereunder
shall be sufficiently given if sent by registered mail or certified mail,
postage prepaid, by overnight courier service, or by telecopy or other written
form of electronic communication:
If to Seller, to:
Comdisco, Inc.
0000 Xxxxx Xxxxx Xxxx
Xxxxxxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: General Counsel
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx (Illinois)
000 Xxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxx Xx. Xxxxxx, Jr., Esq.
Xxxxxxx X. Xxxxxxx, Xx., Esq.
and if to Purchaser, to:
General Electric Capital Corporation -
Commercial Equipment Financing
00 Xxx Xxxxxxxxx Xxxx
Xxxxxxx, Xxxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: General Counsel
with a copy to:
Weil, Gotshal & Xxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxx X. Xxxxxxx, Esq.
or to such other address as shall be furnished in writing by Purchaser or
Seller, as the case may be, to the other, and any such notice or communication
shall be deemed to have been given as of the date so mailed, dispatched or
transmitted (except that a notice of change of address shall not be deemed to
have been given until received by the addressees).
8.5 No Assignment. This Agreement may not be assigned, except by operation of
law; provided that (i) any obligations of Purchaser may be performed by a
Purchaser Affiliate and any rights of Purchaser may be exercised by a Purchaser
Affiliate, (ii) Purchaser may assign its rights, but not its obligations,
hereunder to any Person in connection with (A) any securitization or assignment
of the Financing Contracts or (B) any other transfer or sale of any of the
Purchased Assets. Notwithstanding the foregoing, however, no assignment
otherwise permitted hereunder shall, without the written consent of Seller,
relieve Purchaser from any of its liabilities hereunder. References to Purchaser
in this Agreement shall be deemed to include or refer to each Purchaser
Affiliate, unless the context otherwise requires.
8.6 Headings. The descriptive headings of the several Articles and Sections of
this Agreement are inserted for convenience only and do not constitute a part of
this Agreement.
8.7 Counterparts. This Agreement may be executed in one or more counterparts,
all of which shall be considered one and the same agreement, and shall become
effective when such counterparts have been signed by each party hereto and
delivered to the other party hereto.
8.8 Announcements. Purchaser and Seller agree to consult with each other prior
to issuing any press release or otherwise making any public statement with
respect to the transactions contemplated hereby, and shall not issue any such
press release or make any such public statement in such regard prior to such
consultation and without the prior consent of the other party (which consent
shall not be unreasonably withheld or delayed), except as may be required by any
law or pursuant to any listing agreement with any securities exchange or any
stock exchange regulations.
8.9 Severability. If at any time subsequent to the effective date hereof, any
provision of this Agreement shall be held by any court of competent jurisdiction
to be illegal, void or unenforceable, such provision shall be of no force and
effect, but the illegality or unenforceability of such provision shall have no
effect upon and shall not impair the enforceability of any other provision of
this Agreement.
8.10 Binding Effect. This Agreement and the covenants, terms and conditions
set forth herein shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and permitted assigns.
8.11 Waiver of Jury Trial. EACH OF THE PARTIES HERETO KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS
AGREEMENT OR ANY EXHIBIT HERETO, OR ANY COURSE OF CONDUCT, COURSE OF DEALING OR
STATEMENTS (WHETHER VERBAL OR WRITTEN) RELATING TO THE FOREGOING. THIS PROVISION
IS A MATERIAL INDUCEMENT FOR THE PARTIES HERETO TO ENTER INTO THIS AGREEMENT.
8.12 No Third Party Beneficiary. This Agreement is not intended and shall not be
construed to confer upon any Person other than the parties hereto any rights or
remedies hereunder except that the parties hereto agree and acknowledge that the
agreements and covenants contained in Section 5.4 are, subject to Articles 7 and
8 hereof, intended for the benefit of the indemnified parties referred to
therein (each such Person, a "Third Party Beneficiary"), and that, subject to
Articles 7 and 8 hereof, each such indemnified party, although not a party to
this Agreement, shall be and is hereby constituted a direct and irrevocable
third-party beneficiary of the agreements and covenants contained in Section 5.4
and shall have the right to enforce such agreements and covenants against the
applicable party thereto in all respects fully and to the same extent as if such
Third Party Beneficiary were a party hereto. Notwithstanding the foregoing, this
Agreement (including but not limited to Section 5.4 hereof) may be amended or
waived by Purchaser and Seller at any time and from time to time in accordance
with Section 8.1 hereof and any such amendment or waiver shall be fully
effective with respect to the rights of the Third Party Beneficiaries under
Section 5.4 hereof.
8.13 Conveyancing Documents. No provision contained in any conveyancing
document delivered pursuant to this Agreement shall affect in any manner
whatsoever any of the indemnification provisions contained herein.
8.14 Expenses. Except as otherwise specifically set forth in this Agreement,
Seller and Purchaser will each be responsible for the payment of their own
respective costs and expenses incurred in connection with the negotiations
leading up to and the performance of their respective obligations pursuant to
this Agreement. For the avoidance of doubt, Purchaser shall bear and be
responsible for the payment of all filing fees pursuant to the HSR Act or any
corresponding anti-trust, competition or similar legislation in any other
jurisdictions.
8.15 Currency. All of the dollar amounts mentioned in this Agreement or in
the Schedules or Exhibits annexed hereto shall be in U.S. funds.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.]
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed on its behalf by its officers or representatives
thereunto duly authorized, as of the date first above written.
GENERAL ELECTRIC CAPITAL CORPORATION, a Delaware corporation
By: /s/ Xxxxxx X. Xxxxxx
--------------------------------------------------
Name: Xxxxxx X. Xxxxxx
------------------------------------------------
Title: Attorney-in-Fact
-----------------------------------------------
COMDISCO, INC., a Delaware corporation
By: /s/ Xxxxxx X. Xxxxx, Xx.
--------------------------------------------------
Name: Xxxxxx X. Xxxxx, Xx.
------------------------------------------------
Title: Chairman and Chief Executive Officer
-----------------------------------------------
List of Schedules
Schedule 1.1A Accounting Principles
Schedule 1.1B Assigning Subsidiaries
Schedule 1.1D Excluded Intercompany Agreements, Contracts and
Commitments
Schedule 1.1G Individuals with Seller's Knowledge
Schedule 1.1I Form of Delinquency Report
Schedule 1.1M Financial Statements of Assigning Subsidiaries
Schedule 1.1O Discounted Financing Agreements
Schedule 1.1P Certain Excluded Financing Contracts
Schedule 1.1Q NEC Transactions
Schedule 1.1R Adjustment Factor Agreements
Schedule 2.1(a)(iii) Purchased Other Contracts
Schedule 3.3 Conflicts
Schedule 3.4 Required Consents
Schedule 3.5 Violations of Law
Schedule 3.6(a) Financial Statements
Schedule 3.6(c) Portfolio Tape Information
Schedule 3.7(a) Absence of Certain Changes
Schedule 3.7(b) Capital Expenditures; Waivers; Modifications
Schedule 3.7(c) Non-Ordinary Course ERISA matters
Schedule 3.8(a) Seller Plans
Schedule 3.8(b) Additional Employment Documents
Schedule 3.8(c) Disclosure Regarding Seller Plans
Schedule 3.8(f) Contributions to Seller Plans
Schedule 3.8(k) Material Violations Regarding Seller Plans
Schedule 3.8(l) Pending Claims Related to Seller Plans
Schedule 3.8(o) Post-Employment Benefits
Schedule 3.8(q) Payments to Seller Employees
Schedule 3.8(s) Securities Issued Pursuant to Seller Plans
Schedule 3.8(v) Disclosure Regarding Foreign Plans
Schedule 3.8(w) Labor Organizations
Schedule 3.9(a) Disclosures Regarding Tax Returns
Schedule 3.9(c) Taxing Authority Claims
Schedule 3.9(d) Audit Reports
Schedule 3.9(e) Tax Withholdings
Schedule 3.9(f) Tax Liens
Schedule 3.9(g) Other Tax Disclosures
Schedule 3.9(o) Consistent Tax Reporting Standards
Schedule 3.9(v) Value Added Tax Registration
Schedule 3.12(a) Disclosures Regarding Purchased Other Contracts
Schedule 3.12(b) Disclosures Regarding Material Contracts
Schedule 3.13 Litigation
Schedule 3.17(b) Conduct of Business
Schedule 3.18(a) Purchased Financing Contracts and Credit
Enhancements
Schedule 3.18(b) Additional Disclosure Regarding Purchased
Financing Contracts and Credit Enhancements
Schedule 3.18(c) Purchased Financing Contracts subject to residual
and other agreements
Schedule 3.18(d) Certain Credit Enhancements
Schedule 3.18(e) Title to Purchased Financing Contracts
Schedule 3.18(f) Required Consent Financing Contracts
Schedule 3.19(a) Title to Portfolio Property
Schedule 3.19(b) Portfolio Property - Compliance with Laws
Schedule 3.20 Environmental Matters
Schedule 3.26 Disclosures Regarding Purchased Discounted
Financing Agreements
Schedule 3.27 Transferred European Leases
Schedule 5.1(a) Required Purchased Financing Documentation
Schedule 5.14 Form of Lease Confirmation
Schedule 5.21 Financing Contracts Assigned from Lease Finance
Partnership (Cayman Islands) to Comdisco
Deutschland GmbH
Exhibit A
Approval Order
[See Attached]
NY2:\1137499\09\_DP709!.DOC\47660.2003
Exhibit B
Transitional Services Agreement
[See Attached]
TABLE OF CONTENTS
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TABLE OF CONTENTS
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ARTICLE I DEFINITIONS.....................................................................2
1.1 Definitions...........................................................................2
ARTICLE II PURCHASE OF ASSETS.............................................................24
2.1 Purchased Assets ............................................................24
2.2 The Purchase Price...................................................................26
2.3 Initial Payment......................................................................27
2.4 Settlement Payments..................................................................28
2.5 Prorations...........................................................................29
2.6 Tax Escrow...........................................................................29
2.7 Contingent Payment...................................................................30
2.8 Excess Electronics Collections.......................................................31
2.9 [Intentionally Omitted]..............................................................33
2.10 No Additional Obligation.............................................................33
ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER.......................................33
3.1 Organization and Good Standing.......................................................33
3.2 Corporate Authority..................................................................34
3.3 No Conflicts.........................................................................34
3.4 Consents.............................................................................35
3.5 No Violations of Law.................................................................35
3.6 Financial Statements; Reports........................................................35
3.7 Absence of Certain Changes...........................................................36
3.8 Employee Benefit Plans and Employee Matters..........................................37
3.9 Taxes................................................................................41
3.10 [Intentionally Omitted.].............................................................44
3.11 [Intentionally Omitted.].............................................................44
3.12 Purchased Other Contracts............................................................44
3.13 Litigation and Liabilities...........................................................45
3.14 [Intentionally Omitted.].............................................................45
3.15 [Intentionally Omitted.].............................................................45
3.16 Brokers' or Finders' Fees, etc.......................................................45
3.17 Conduct of Business..................................................................45
3.18 Purchased Financing Contracts........................................................46
3.19 Portfolio Property...................................................................47
3.20 Environmental Matters................................................................48
3.21 Transactions With State and Local Governments........................................48
3.22 [Intentionally Omitted.].............................................................48
3.23 [Intentionally Omitted.].............................................................48
3.24 [Intentionally Omitted.].............................................................49
3.25 San Diego Facility...................................................................49
3.26 Purchased Discounted Financing Agreements............................................49
3.27 Transferred European Leases..........................................................49
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PURCHASER....................................50
4.1 Organization and Good Standing.......................................................50
4.2 Corporate Authority..................................................................50
4.3 No Conflicts.........................................................................50
4.4 Consents.............................................................................50
4.5 Brokers' or Finders' Fees, etc.......................................................51
4.6 Financing............................................................................51
ARTICLE V CONDUCT AND TRANSACTIONS PRIOR TO CLOSING; COVENANTS; INDEMNITIES..............51
5.1 Investigations; Certain Covenants....................................................51
5.2 Pending or Threatened Litigation.....................................................55
5.3 Tax Matters/Allocation of Purchase Price.............................................55
5.4 Indemnifications, Assumptions of Liability and Related Matters.......................62
5.5 Preparation of Cut-Off Date Schedule of Assets Acquired and Liabilities Assumed;
Adjusted Cut-Off Date Schedule of Assets Acquired and Liabilities Assumed; Special
Procedures Report of Assets Acquired and Liabilities Assumed; and Purchase Price
Certificate..........................................................................73
5.6 Insurance; Risk of Loss..............................................................76
5.7 Further Assurances...................................................................76
5.8 Payment of Broker's or Finder's Fees.................................................77
5.9 Supplements to Schedules; Post-Signing Information...................................77
5.10 Base Salary and Travel...............................................................77
5.11 Employment...........................................................................78
5.12 Certain Bankruptcy Matters...........................................................81
5.13 Tax Payments.........................................................................82
5.14 Confirmations........................................................................82
5.15 [Intentionally Omitted.].............................................................82
5.16 [Intentionally Omitted.].............................................................82
5.17 [Intentionally Omitted.].............................................................82
5.18 [Intentionally Omitted.].............................................................82
5.19 Schedule of Credit Enhancements......................................................82
5.20 [Intentionally Omitted.].............................................................82
5.21 Schedule 5.21 Lease..................................................................82
5.22 Original Master Leases...............................................................82
5.23 Purchased Discounted Financing Agreements............................................83
5.24 Cut-Off Date Portfolio Information...................................................83
5.25 Administrative Claims................................................................83
5.26 Inventory Remarketing................................................................83
5.27 Access to Accepting Employees........................................................84
5.28 Conversion Methodology...............................................................84
ARTICLE VI CONDITIONS TO CLOSING; ABANDONMENT OF THE TRANSACTION..........................84
6.1 The Closing..........................................................................84
6.2 Conditions to Purchaser's Obligations to Close.......................................85
6.3 Conditions to Seller's Obligations to Close..........................................87
ARTICLE VII TERMINATION....................................................................89
7.1 Termination..........................................................................89
7.2 Procedure and Effect of Termination..................................................89
ARTICLE VIII GENERAL........................................................................90
8.1 Amendments...........................................................................90
8.2 Integrated Contract; Schedules and Exhibits; Use of Certain Terms....................90
8.3 Governing Law........................................................................90
8.4 Notices..............................................................................91
8.5 No Assignment........................................................................91
8.6 Headings.............................................................................92
8.7 Counterparts.........................................................................92
8.8 Announcements........................................................................92
8.9 Severability.........................................................................92
8.10 Binding Effect.......................................................................92
8.11 Waiver of Jury Trial.................................................................92
8.12 No Third Party Beneficiary...........................................................92
8.13 Conveyancing Documents...............................................................93
8.14 Expenses.............................................................................93
8.15 Currency.............................................................................93
TABLE OF CONTENTS
(continued)
Page
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AMENDED AND RESTATED ASSET PURCHASE AGREEMENT
(ELECTRONICS)
between
GENERAL ELECTRIC CAPITAL CORPORATION
and
COMDISCO, INC.
Dated as of April 10, 2002
and effective as of January 23, 2002
