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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): November 30, 1998
Imation Corp.
(Exact name of registrant as specified in its charter)
-----------------
DELAWARE 1-14310 41-1838504
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification Number)
1 IMATION PLACE
OAKDALE, MINNESOTA 55128
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (651) 704-4000
None
(Former name or former address, if changed since last report)
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<PAGE>
Item 2. Acquisition or Disposition of Assets.
Imation Corp. ("Imation" or the "Company") announced on August 3,
1998 that it had entered into an agreement with Eastman Kodak Company
("Kodak") for Kodak to acquire Imation's worldwide medical imaging
businesses (the "Transaction"). On December 1, 1998, the Company announced
that a closing with respect to the Transaction occurred on November 30,
1998 (the "Closing"). In connection with the Closing, Kodak acquired the
assets and assumed the liabilities of Imation's medical imaging businesses
in North America, Latin America and Asia, including manufacturing
facilities in Oregon, Minnesota and California and all the outstanding
common shares of Cemax-Icon, Inc., a wholly-owned subsidiary of Imation
("Cemax-Icon"). The closings of the sale of Imation's medical imaging
businesses in Europe (the "European Businesses") to Kodak are scheduled to
occur on a country-by-country basis as the businesses are integrated into
Kodak's accounting and information systems through April 1, 1999 and in any
event not later than May 31, 1999. Under the terms of the Asset Purchase
Agreement (as defined below), following the Closing, Kodak is entitled to
the operating results and cash flows of the European Businesses.
Under the terms of the Asset Purchase Agreement dated as of July
31, 1998 and amended and restated as of November 30, 1998, between Imation
and Kodak (as amended and restated, the "Asset Purchase Agreement"), Kodak
paid Imation approximately $371 million in cash, which included
approximately $341 million for Imation's medical imaging businesses other
than the European Businesses (including reimbursement of Imation for
certain payments made by Imation to the former shareholders of Cemax-Icon)
and a $30 million prepayment for the European Business in Italy. At the
Closing, Kodak also paid Imation $18 million in cash representing a
nonrefundable deposit under the Ferrania Supply Agreement (as defined
below). Imation is entitled to receive in cash additional proceeds of
approximately $143 million upon the closings of the European Businesses. At
the Closing, Imation entered into a Distribution Agreement dated as of
November 30, 1998 with Kodak under which Imation will act as Kodak's
exclusive distributor for the European Businesses during the period from
the Closing through the closings of each of the European Businesses.
The closings of the European Businesses are subject to certain
limited closing conditions, including the condition that there be no
injunction prohibiting the acquisition of such European Businesses at the
time of such acquisition. Antitrust clearance of the Transaction in Europe
has been received from the European Union.
Imation management estimates, on a preliminary basis, that the
Company will have an after-tax gain on the Transaction, which is to be
recognized in the fourth quarter of 1998, of approximately $65-75 million,
net of estimated transaction costs.
<PAGE>
Approximately 1,600 Imation employees worldwide will transfer to
Kodak in connection with the completion of the Transaction, including
Kodak's acquisition of the European Businesses. Under a transitional
services agreement, for a period of up to two years and on a
country-by-country basis, Imation will provide Kodak with certain services
needed to support the acquired businesses while they are being integrated
into Kodak. These services include information technology, logistics,
finance, telecommunications, office space, human resources and site
services. Kodak will reimburse the Company on a fully burdened cost basis
for these services.
Imation will retain its manufacturing facility in Ferrania,
Italy, where the Company will manufacture x-ray and wet laser medical
imaging film for Kodak for a minimum of two years under a supply agreement
which became effective on November 30, 1998 (the "Ferrania Supply
Agreement"). Under the terms of the Asset Purchase Agreement, Kodak is
obligated to make a cash payment to Imation of up to $25 million no later
than the date the Ferrania Supply Agreement terminates. Under a separate
supply agreement, Kodak will supply document imaging products to Imation
from its White City, Oregon manufacturing facility for up to five years.
The Company intends to use its sale proceeds to pay down
outstanding debt and certain lease obligations totaling approximately $360
million at November 30, 1998 and expects to establish a new credit facility
by the end of 1998. The Company anticipates it will also utilize a portion
of the sale proceeds to repurchase its common stock from time to time in
the open market or through private transactions. Imation has authorization
for the repurchase of up to 3.5 million shares out of the approximately 39
million shares of its common stock currently outstanding.
In addition, upon the Closing, the civil litigation between
Imation, Kodak and Minnesota Mining & Manufacturing Company ("3M") and
their respective subsidiaries relating to the alleged disclosure to Imation
and 3M of Kodak trade secrets by Harold Worden, a former employee of Kodak,
was dismissed in the United States and Italy.
Principal products included in the medical imaging businesses
are: DryView(TM) laser imaging systems and film, wet laser imaging systems
and film, Imation chest system, Trimax(TM) x-ray films, conventional x-ray
film processing systems and film, and Cemax-Icon digital picture-archiving
and communication systems (PACS) products. In addition to the medical
imaging assets, Kodak also acquired Imation's DryViewTM Imagesetting Film
business in the graphic arts industry and the document imaging sales and
service business in Germany.
The Asset Purchase Agreement is attached hereto as Exhibit 2.1.
The press releases issued by Imation and Kodak on December 1, 1998 with
respect to the
<PAGE>
Transaction are attached hereto as Exhibits 99.1 and 99.2, respectively,
which are incorporated by reference herein.
Item 7. Financial Statements and Exhibits
Pro forma unaudited financial statements for the Company giving
effect to the Transaction, including pro forma unaudited statements of
operations for the year ended December 31, 1997 and for the nine month
period ended September 30, 1998 and a pro forma unaudited balance sheet as
of September 30, 1998 are attached hereto as Exhibit 3.1, which is
incorporated by reference herein.
Exhibit Description
2.1 Asset Purchase Agreement dated as of July 31, 1998 and amended
and restated as of November 30, 1998, between Imation Corp. and
Eastman Kodak Company
3.1 Pro Forma Unaudited Financial Statements
99.1 Imation Press Release dated December 1, 1998
99.2 Kodak Press Release dated December 1, 1998
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
IMATION CORP.
(Registrant)
Date: December 15, 1998 By:
--------------------------
Robert L. Edwards
Senior Vice President,
Strategy, Planning, Chief
Financial Officer and Chief
Administrative Officer
<PAGE>
EXHIBIT INDEX
Exhibit Description
2.1 Asset Purchase Agreement dated as of July 31, 1998 and amended
and restated as of November 30, 1998, between Imation Corp. and
Eastman Kodak Company
3.1 Pro Forma Unaudited Financial Statements
99.1 Imation Press Release dated December 1, 1998
99.2 Kodak Press Release dated December 1, 1998
EXHIBIT 2.1
EXECUTION COPY
===========================================================================
AMENDED AND RESTATED
ASSET PURCHASE AGREEMENT
Dated as of November 30, 1998,
Between
IMATION CORP.
And
EASTMAN KODAK COMPANY
===========================================================================
<PAGE>
2
TABLE OF CONTENTS
Page
ARTICLE I
Purchase and Sale; Ferrania Facility Payment
SECTION 1.01. Purchase and Sale of Acquired Assets.......................1
SECTION 1.02. Acquired Assets and Excluded Assets........................4
SECTION 1.03. Assumption of Certain Liabilities.........................11
SECTION 1.04. Nonassignability of Assets................................16
SECTION 1.05. Additional Acquisitions...................................17
SECTION 1.06. Closing Working Capital...................................18
ARTICLE II
The Closings; Post-Closing Payments
SECTION 2.01. Initial Closing Date and European
Closing Dates...........................................21
SECTION 2.02. Transactions To Be Effected at the
Initial Closing and the European
Closings................................................23
SECTION 2.03. Cemax-Icon Payments .....................................25
SECTION 2.04. Ferrania Facility Payment.................................27
SECTION 2.05. Conduct of European Businesses Pending
European Closings.......................................27
SECTION 2.06. Changes in Net Assets in European
Businesses During the Period From
the Initial Closing Date to the
Final Closing Date......................................28
SECTION 2.07. Review of ERA Payments and Net Asset
Payments................................................32
ARTICLE III
Representations and Warranties of Seller
SECTION 3.01. Organization, Standing and Power..........................34
SECTION 3.02. Authority; Execution and Delivery;
Enforceability..........................................35
SECTION 3.03. No Conflicts; Consents....................................35
SECTION 3.04. Financial Statements .....................................37
SECTION 3.05. Assets Other than Real Property
Interests...............................................38
SECTION 3.06. Real Property.............................................38
SECTION 3.07. Intellectual Property.....................................39
SECTION 3.08. Contracts.................................................40
SECTION 3.09. Cemax-Icon Shares.........................................44
SECTION 3.10. Investments...............................................44
<PAGE>
2
SECTION 3.11. Permits...................................................44
SECTION 3.12. Insurance.................................................45
SECTION 3.13. Sufficiency of Acquired Assets............................45
SECTION 3.14. Taxes.....................................................46
SECTION 3.15. Proceedings...............................................48
SECTION 3.16. Benefit Plans.............................................49
SECTION 3.17. Compliance with Laws .....................................52
SECTION 3.18. Employee and Labor Matters................................53
SECTION 3.19. Brokers or Finders........................................54
SECTION 3.20. Absence of Certain Changes................................54
SECTION 3.21. Products..................................................55
SECTION 3.22. Customers.................................................58
SECTION 3.23. Suppliers.................................................58
SECTION 3.24. No Territorial Restrictions...............................58
ARTICLE IV
Limitations on Representations and Warranties of Seller
SECTION 4.01. LIMITATIONS AND EXCLUSIONS TO
REPRESENTATIONS, WARRANTIES, ETC........................58
SECTION 4.02. NO ADDITIONAL REPRESENTATIONS.............................59
ARTICLE V
Representations and Warranties of Purchaser
SECTION 5.01. Organization, Standing and Power..........................60
SECTION 5.02. Authority; Execution and Delivery;
Enforceability..........................................60
SECTION 5.03. No Conflicts; Consents....................................60
SECTION 5.04. Litigation................................................61
SECTION 5.05. Availability of Funds.....................................61
SECTION 5.06. Brokers or Finders........................................61
ARTICLE VI
Covenants
SECTION 6.01. Covenants of Seller, Seller Subs and
Cemax-Icon Relating to Conduct of
Businesses..............................................62
SECTION 6.02. No Solicitation...........................................65
SECTION 6.03. Access to Information.....................................66
SECTION 6.04. Confidentiality...........................................67
SECTION 6.05. Antitrust.................................................67
SECTION 6.06. Best Efforts..............................................68
SECTION 6.07. Fees and Expenses.........................................69
SECTION 6.08. Notices of Certain Events.................................70
SECTION 6.09. Employee Matters; WARN Act................................71
SECTION 6.10. Post-Closing Cooperation..................................77
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3
SECTION 6.11. Publicity.................................................78
SECTION 6.12. Records...................................................78
SECTION 6.13. Agreement Not To Compete..................................79
SECTION 6.14. Bulk Transfer Laws........................................80
SECTION 6.15. Further Assurances........................................81
SECTION 6.16. Purchase Price Allocation.................................81
SECTION 6.17. Supplies..................................................83
SECTION 6.18. Insurance.................................................83
SECTION 6.19. Cemax-Icon................................................84
SECTION 6.20. European Closing in Italy.................................85
SECTION 6.21. [INTENTIONALLY OMITTED]...................................85
SECTION 6.22. Insurance Proceeds........................................85
SECTION 6.23. CB Coater.................................................86
ARTICLE VII
Conditions Precedent
SECTION 7.01. Conditions to Each Party's Obligation.....................86
SECTION 7.02. Conditions to Obligation of Purchaser.....................87
SECTION 7.03. Conditions to Obligation of Seller and
Seller Subs.............................................89
SECTION 7.04. Frustration of Initial Closing
Conditions..............................................90
SECTION 7.05. No Conditions to European Acquisitions....................90
ARTICLE VIII
Termination, Amendment and Waiver
SECTION 8.01. Termination Prior to Initial Closing......................91
SECTION 8.02. Effect of Termination.....................................92
SECTION 8.03. Termination of European Acquisitions....................92
SECTION 8.04. Amendments and Waivers....................................96
ARTICLE IX
Indemnification
SECTION 9.01. Indemnification by Seller.................................96
SECTION 9.02. Indemnification by Purchaser..............................101
SECTION 9.03. Calculation of Losses; No Punitive
Damages, etc............................................103
SECTION 9.04. Termination of Indemnification............................103
SECTION 9.05. Procedures Relating to Indemnification....................104
SECTION 9.06. Procedures Relating to Tax
Indemnification.........................................108
SECTION 9.07. Survival of Representations...............................109
<PAGE>
4
ARTICLE X
Tax Matters
SECTION 10.01. Preparation and Filing of Tax Returns
and Amendments.........................................109
SECTION 10.02. Cooperation..............................................110
SECTION 10.03. Refunds and Credits......................................111
SECTION 10.04. Transfer Taxes; Value Added Taxes........................113
SECTION 10.05. Purchaser Activity on Initial Closing
Date...................................................113
SECTION 10.06. Purchaser Activity Post-Closing..........................113
SECTION 10.07. Tax Sharing Agreements...................................114
SECTION 10.08. Employee Withholding and Reporting
Matters................................................114
SECTION 10.09. Seller's Obligations with Respect to
Cemax-Icon Payments....................................114
SECTION 10.10. Seller's Obligations with Respect to
R&D Credit Information.................................114
SECTION 10.11. Italian Tax Certificates.................................115
ARTICLE XI
General Provisions
SECTION 11.01. Assignment...............................................115
SECTION 11.02. No Third-Party Beneficiaries.............................115
SECTION 11.03. Notices..................................................116
SECTION 11.04. Interpretation; Exhibits and Schedules;
Certain Definitions....................................116
SECTION 11.05. Counterparts.............................................129
SECTION 11.06. Entire Agreement.........................................129
SECTION 11.07. Severability.............................................129
SECTION 11.08. Consent to Jurisdiction..................................129
SECTION 11.09. Dispute Resolution; Pre-Closing Waiver
of Consequential and Punitive
Damages................................................130
SECTION 11.10. Governing Law............................................133
<PAGE>
5
SCHEDULES [UPDATE TO REFLECT NEW SCHEDULES]
Schedule 1.02(a)(i) - Acquired Assets--US/MOW Real
Property
Schedule 1.02(a)(viii) - Acquired Assets--US/MOW Contracts
Schedule 1.02(a)(ix) - Acquired Assets--US/MOW
Investments
Schedule 1.02(b)(i) - Acquired Assets - European Real
Property
Schedule 1.02(b)(viii) - Acquired Assets - European
Contracts
Schedule 1.02(b)(ix) - Acquired Assets - European
Investments
Schedule 1.02(c)(i) - Excluded Assets--Real Property
Schedule 1.02(c)(iii) - Excluded Assets--3M Machinery,
Equipment and Tools
Schedule 1.02(c)(xi) - Excluded Assets--Others
Schedule 1.03(b)(xviii) - Excluded Liabilities--Others
Schedule 3.03(a) - Conflicts or Consents
Schedule 3.03(b) - Governmental Consents or Permits
Schedule 3.04(a) - Financial Statements
Schedule 3.04(b) - Undisclosed Liabilities--GAAP
Schedule 3.04(c) - Undisclosed Liabilities--Others
Schedule 3.05 - Liens
Schedule 3.06 - Real Property
Schedule 3.07(a) - Patents and Trademarks
Schedule 3.07(b) - Restrictions on Seller or Seller
Sub Intellectual Property
Schedule 3.07(c) - Restrictions on Cemax-Icon
Intellectual Property
Schedule 3.07(d) - Infringement or Misappropriation
Schedule 3.07(e) - Infringement or Misappropriation
of Transferred Intellectual
Property
Schedule 3.08 - Contracts
Schedule 3.09(a) - Cemax-Icon Shares
Schedule 3.09(b) - Liens on Options and Warrants on
Cemax-Icon Shares
Schedule 3.10 - Investments
Schedule 3.11 - Permits
Schedule 3.12 - Insurance
Schedule 3.13 - Sufficiency of Acquired Assets
Schedule 3.14 - Taxes
Schedule 3.15 - Proceedings
Schedule 3.16 - Benefit Plans
Schedule 3.17(a) - Compliance with Laws
Schedule 3.17(b) - Environmental Matters
Schedule 3.18 - Employee and Labor Matters
Schedule 3.20 - Absence of Certain Changes
Schedule 3.21 - Products Liability
Schedule 3.22 - Customers
<PAGE>
6
Schedule 3.23 - Suppliers
Schedule 3.24 - No Territorial Restrictions
Schedule 6.01 - Conduct of Businesses
Schedule 6.06(b) - Commercially Reasonable Efforts
Procedures
Schedule 6.09 - Eligible Employees
Schedule 6.09(a)(ii) - Stay Bonus Program
Schedule 6.13(c) - No-Hire
Schedule 6.16 - Purchase Price Allocation
Schedule 6.18 - Seller Existing CGL Policies
Schedule 7.02(d) - Required Consents
EXHIBITS
Exhibit A-1 - Form of Opinion of Cravath, Swaine & Moore
Exhibit A-2 - Form of Opinion of Richards, Layton & Finger
Exhibit A-3 - Form of Opinion of Seller's General Counsel
Exhibit B-1 - Form of Opinion of Sullivan & Cromwell
Exhibit B-2 - Form of Opinion of Purchaser's General
Counsel
Exhibit C - Forms of Shared Facilities Agreements
Exhibit D - Form of Transition Services Agreement
Exhibit E - Form of Private Label Supply Agreement
Exhibit F - Form of Seller Intellectual Property
Agreement
Exhibit G - Form of License Agreement
Exhibit H - Form of X-ray/ Wet Laser Supply Agreement
Annex A Calculation of Economic Result Amount
Annex B Secured Loan Facility Term Sheet
<PAGE>
AMENDED AND RESTATED ASSET PURCHASE AGREEMENT
dated as of November 30, 1998, between IMATION CORP.,
a Delaware corporation ("Seller"), and EASTMAN KODAK
COMPANY, a New Jersey corporation ("Purchaser").
Seller desires to sell, assign, transfer, convey, license and
lease to Purchaser, and Purchaser desires to purchase, license, lease and
assume from Seller, the assets and liabilities (other than the Excluded
Assets and the Excluded Liabilities) of the following businesses currently
operated or owned by Seller and Seller Subs: (i) the medical DryView(TM)
laser imaging systems businesses, (ii) the conventional x-ray systems and
wet laser imaging systems businesses, (iii) the medical imaging services
businesses for the medical DryView(TM) laser imaging systems businesses,
the conventional x-ray systems business and the wet laser imaging systems
business, (iv) the dry imagesetting equipment and film business, (v) the
document imaging sales and servicing business in Germany, (vi) all contract
manufacturing services being performed for business units of Minnesota
Mining and Manufacturing Company ("3M") or other persons by Seller at its
manufacturing facility in White City, Oregon and (vii) the picture
archiving businesses, communication systems businesses, teleradiology
systems businesses and all other businesses of Cemax-Icon (such businesses
described in clauses (i) through (vii) above, collectively, the
"Businesses"), upon the terms and subject to the conditions of this
Agreement.
Accordingly, in consideration of the premises and the mutual
representations, warranties, covenants and undertakings contained herein,
and for other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereby agree as follows:
ARTICLE I
Purchase and Sale; Ferrania Facility Payment
SECTION 1.01. Purchase and Sale of Acquired Assets. (a) On the
terms and subject to the conditions of this Agreement, at the Initial
Closing, Seller and Seller Subs shall sell, assign, transfer, convey,
license and lease to Purchaser and/or one or more Purchaser Buyers, as
designated by Purchaser in accordance with and subject to the provisions of
Section 1.05, and Purchaser shall, and shall cause any Purchaser Buyers so
designated to, purchase,
<PAGE>
2
license, lease and assume from Seller and Seller Subs all the right, title
and interest, as of the Initial Closing, of Seller and Seller Subs in, to
and under the US/MOW Acquired Assets, for (i) an aggregate purchase price
equal to the sum of (x) $328,361,000 (the "Initial Closing Date Purchase
Price"), payable as set forth in Section 2.02(a), (y) the amount of the
1998 Payment and (z) the amount of the 1999 Payment (as each such term in
(y) and (z) is defined in the Cemax-Icon Merger Agreement), (collectively,
the "Cemax-Icon Payments"), payable as set forth in Section 2.03 (the
Initial Closing Date Purchase Price and the Cemax-Icon Payments are
hereinafter sometimes referred to collectively as the "Initial Purchase
Price"), and (ii) the assumption of the US/MOW Assumed Liabilities. The
purchase and sale of the US/MOW Acquired Assets and the assumption of the
US/MOW Assumed Liabilities is referred to in this Agreement as the "Initial
Acquisition".
(b) On the terms and subject to the conditions of this Agreement,
at the various European Closings, Seller and Seller Subs shall sell,
assign, transfer, convey, license and lease to Purchaser and/or one or more
Purchaser Buyers, as designated by Purchaser in accordance with and subject
to the provisions of Section 1.05, and Purchaser shall, and shall cause any
Purchaser Buyers so designated to, purchase, license, lease and assume from
Seller and Seller Subs all the right, title and interest, in each case as
of the applicable European Closing, of Seller and Seller Subs in, to and
under the European Acquired Assets, for (i) an aggregate purchase price
equal to $172,939,000 (the "European Purchase Price"), payable as set forth
in Sections 2.02(a) and 2.02(b) (the European Purchase Price and the
Initial Purchase Price are hereinafter sometimes referred to collectively
as the "Purchase Price"), and (ii) the assumption of the European Assumed
Liabilities. The purchase and sale of the European Acquired Assets and the
assumption of the European Assumed Liabilities are referred to in this
Agreement as the "European Acquisitions", and the Initial Acquisition and
the European Acquisitions are sometimes referred to collectively as the
"Acquisition".
(c) Ferrania Facility Payment. Upon termination of the X-ray/Wet
Laser Supply Agreement, if Seller has not prior to that date sold or
otherwise transferred the Ferrania Facility, Purchaser shall pay to Seller
an amount equal to $25,000,000. If Seller sells or otherwise transfers the
Ferrania Facility prior to the termination of the X-ray/Wet Laser Supply
Agreement then (i) in the event that Seller shall have received from such
sale or other transfer less than $25,000,000 in Net Proceeds, Purchaser
shall deliver to Seller, at the time of consummation of such sale or other
transfer, payment in an amount equal to the difference between $25,000,000
and the Net Proceeds received
<PAGE>
3
by Seller and (ii) in the event that Seller shall have received from such
sale or other transfer more than $25,000,000 in Net Proceeds, Seller shall
deliver to Purchaser, at the time of consummation of such sale or other
transfer, payment in an amount equal to 50% of the difference between the
Net Proceeds received by Seller and $25,000,000. If Seller sells or
otherwise transfers the Ferrania Facility after termination of the
X-ray/Wet Laser Supply Agreement but before the fifth anniversary of the
Initial Closing and Purchaser shall have made to Seller the $25,000,000
payment referred to in the first sentence of this Section 1.01(c), then (i)
in the event that Seller shall have received from such sale or other
transfer less than $25,000,000 in Net Proceeds, Seller shall deliver to
Purchaser, at the time of consummation of such sale or other transfer,
payment in an amount equal to such Net Proceeds and (ii) in the event that
Seller shall have received from such sale or other transfer more than
$25,000,000 in Net Proceeds, Seller shall deliver to Purchaser, at the time
of consummation of such sale or other transfer, payment in an amount equal
to the sum of $25,000,000 and 50% of the difference between the Net
Proceeds received by Seller and $25,000,000. Any payment required to be
made under this Section 1.01(c) shall be referred to as a "Ferrania
Facility Payment". For purposes of this Section 1.01(c), "Net Proceeds"
means the gross value of all consideration received by Seller and its
subsidiaries for the sale or other transfer of the Ferrania Facility
(whether such value is paid directly with respect to the sale of the
Ferrania Facility or indirectly through other payments from the Purchaser
to the Seller or any of its subsidiaries) less the sum of (i) the fees,
expenses and out-of-pocket disburse ments of outside advisors and experts
paid by Seller and its subsidiaries, (ii) ordinary closing costs and fees
(including filing, registration and similar fees) paid by Seller and its
subsidiaries and (iii) any transaction- related Taxes (other than income
Taxes and other than any interest, penalties, additions to tax or
additional amounts due with respect to the underlying Taxes) paid by Seller
and its subsidiaries. In calculating any U.S. Dollar amount for purposes of
this Section 1.01(c), all non-U.S. currency values shall be converted to
U.S. Dollar values at the rate of exchange for foreign currencies per U.S.
Dollar on the date of consummation of sale or other transfer, as reported
in the Wall Street Journal (Eastern Edition). For purposes of the
calculation of Net Proceeds, Seller shall, within a reasonable time (but
not later than 30 days) following execution of any agreement for the sale
or other transfer of the Ferrania Facility, disclose to Purchaser the gross
value of all consideration to be received by Seller and its subsidiaries
for the sale or other transfer of the Ferrania Facility and all other
material economic terms of all agreements entered into contemporaneously
therewith between Seller and the purchaser of the Ferrania Facility;
provided,
<PAGE>
4
however, that Seller and its subsidiaries may elect, for any valid reason,
not to disclose the material economic terms of all such agreements, and in
such event Purchaser shall appoint an independent third party, reasonably
acceptable to Seller, to which Seller shall disclose, subject to a
confidentiality agreement acceptable to Seller, all other material economic
terms; provided, further, however, that such independent third party's
review shall be limited to reviewing all such documents and information as
are reasonably necessary to verify the calculation of the amount of Net
Proceeds and disclosing to Purchaser Net Proceeds. Seller also shall
provide Purchaser with reasonably detailed documentation supporting the
fees, costs, expenses, disbursements and Taxes required to be taken into
account in computing Net Proceeds.
SECTION 1.02. Acquired Assets and Excluded Assets. (a) The term
"US/MOW Acquired Assets" means all the properties, assets, goodwill and
rights of Seller and Seller Subs of whatever kind and nature, real,
personal or mixed, tangible or intangible, that are owned, leased or
licensed by Seller or any Seller Sub on the Initial Closing Date and which
are Related to the Businesses, other than the European Acquired Assets and
Excluded Assets, including:
(i) all real property, leaseholds and other interests in real
property of Seller or any Seller Sub listed in Schedule 1.02(a)(i), in
each case together with Seller's and Seller Subs' right, title and
interest in all buildings, improvements and fixtures thereon and all
other appurtenances thereto (the "US/MOW Premises");
(ii) all raw materials, work-in-process, supplies, finished
goods, parts, spare parts and other inventories of Seller or any
Seller Sub, held at any location or facility of Seller or any Seller
Sub (including jumbo rolls located at the Ferrania Facility that (A)
have been sensitized and (B) are in transit or ready for shipment to
Seller's White City, Oregon facility or Florida Facility pursuant to a
purchase order issued by either such facility prior to the Initial
Closing), in transit to Seller or any Seller Sub, or on consignment or
in the possession of any third party on the Initial Closing Date, in
each case that are Related to the Businesses (the "US/MOW Inventory");
(iii) all machinery, equipment, tools, furniture, furnishings,
vehicles, computers and other tangible personal property of Seller or
any Seller Sub, held at any location or facility of Seller or any
Seller Sub or any other person on the Initial Closing Date, in each
<PAGE>
5
case that are Related to the Businesses (the "US/MOW Personal
Property");
(iv) all trade accounts and notes receivable and other
miscellaneous receivables of Seller or any Seller Sub (including
post-dated checks) on the Initial Closing Date arising out of the sale
or other disposition of goods or services Related to the Businesses or
otherwise arising out of the operation or conduct of the Businesses,
including amounts owing to Seller or any Seller Sub on the Initial
Closing Date from any Non-European Transferred Employee (the "US/MOW
Receivables");
(v) subject to and on the terms and conditions set forth in the
Intellectual Property Agreements, all claims of patents (including all
reissues, divisions, continuations and extensions thereof), patent
applications, patent rights, trademarks, trademark registrations,
trademark applications, servicemarks, trade names, trade dress,
business names, brand names, copyrights, copyright registrations,
works of authorship, designs, design registrations, mask work,
computer software, programs, documentation and databases and all
rights to any of the foregoing ("Intellectual Property") of Seller or
any Seller Sub that are used, or held primarily for use, on the
Initial Closing Date, in the operation or conduct of the Businesses
(such Intellectual Property being the "Transferred Intellectual
Property");
(vi) subject to and on the terms and conditions set forth in the
Intellectual Property Agreements, all trade secrets, inventions,
know-how, formulae, processes, procedures, research records, records
of inventions, test information, databases, market surveys and
marketing know-how ("Technology") of Seller or any Seller Sub that are
used, or held primarily for use, on the Initial Closing Date, in the
operation or conduct of the Businesses (the "Transferred Technology");
(vii) to the extent transferable, all Permits of Seller or any
Seller Sub that are Related to the Businesses (the "US/MOW Assigned
Permits");
(viii) all contracts, leases, subleases, indentures, licenses,
agreements, commitments and all other legally binding arrangements,
whether oral or written ("Contracts"), to which Seller or any Seller
Sub is a party or by which Seller or any Seller Sub is bound that are
listed in Schedule 1.02(a)(viii), all Contracts, bids, quotes,
proposals, purchase orders and sales orders in part Related to the
Businesses and in part related to other businesses of Seller or any
<PAGE>
6
Seller Sub but only to the extent such Contracts, bids, quotes,
proposals, purchase orders and sales orders are Related to the
Businesses, and all other Contracts, bids, quotes, proposals, purchase
orders and sales orders to which Seller or any Seller Sub is a party
or by which Seller or any Seller Sub is bound that are Related to the
Businesses or to which the US/MOW Acquired Assets are subject,
including those expired or terminated Contracts with continuing rights
and/or obligations (collectively, the "US/MOW Assigned Contracts");
provided, however, that, in the case of those Contracts that have been
entered into on or before the Spin-Off Date, the US/MOW Assigned
Contracts shall include only those Contracts that have been
transferred to Seller or any Seller Subs; provided, further, however,
that in the case of Assigned Contracts that are in part Related to the
Businesses and in part Related to the European Businesses, only the
portion of such Assigned Contracts Related to the European Businesses
shall be considered European Assigned Contracts;
(ix) all partnership interests or any other equity interest in
any corporation, company, limited liability company, partnership,
joint venture, trust or other business association ("Investments")
listed in Schedule 1.02(a)(ix)("US/MOW Investments"), including all
the issued and outstanding shares of common stock, par value $0.001
per share, of Cemax-Icon (the "Cemax- Icon Shares") and all other
Investments that are Related to the Businesses;
(x) all rights in and to products or goods sold or leased
(including products returned after the Initial Closing and rights of
rescission, replevin and reclamation) in the operation or conduct of
the Businesses;
(xi) all credits, prepaid expenses, deferred charges (other than
any charges relating to Taxes), advance payments, security deposits
and prepaid items that are Related to the Businesses;
(xii) all rights, claims, credits, Proceedings and Judgments to
the extent relating to any US/MOW Acquired Asset or any US/MOW Assumed
Liability, including any such items arising under guarantees,
warranties, indemnities and similar rights in favor of Seller or
Seller Subs in respect of any US/MOW Acquired Asset or any US/MOW
Assumed Liability;
(xiii) subject to Section 6.12, all books of account, ledgers,
claim files (whether open or closed, but if such files have been
closed before the Spin-Off Date,
<PAGE>
7
only to the extent such files are in the possession of Seller or any
Seller Sub), financial, accounting and tax records and all general and
personnel records, files, invoices, customers' and suppliers' lists,
other distribution and mailing lists, price lists, reports, plans,
advertising materials, catalogues, billing records, sales and
promotional literature, manuals, customer and supplier correspondence
(in all cases, in any form or medium), of Seller or any Seller Sub
that are Related to the Businesses (the "US/MOW Records");
(xiv) all goodwill generated by, associated with or attributable
to the Businesses;
(xv) (A) all assets of the Benefit Plans sponsored by Cemax-Icon
and (B) the portion of the assets of any Non-European Benefit Plan
that becomes the obligation of Purchaser pursuant to Section
6.09(d)(i), in each case net of any loans to Non-European Transferred
Employees; and
(xvi) except as otherwise provided herein, assets to satisfy any
unfunded liabilities under Non-European Benefit Plans that become the
obligation of Purchaser pursuant to Section 6.09(d)(i).
(b) The term "European Acquired Assets" means all the properties,
assets, goodwill and rights of Seller and Seller Subs of whatever kind and
nature, real, personal or mixed, tangible or intangible, that are owned,
leased or licensed by Seller or any Seller Sub which are Related to the
European Businesses other than the Intellectual Property and Technology
Related to the European Businesses which shall be transferred to Purchaser
on the Initial Closing Date subject to and on the terms and conditions set
forth in the Intellectual Property Agreements and other than Excluded
Assets, including:
(i) all real property, leaseholds and other interests in real
property of Seller or any Seller Sub listed in Schedule 1.02(b)(i), in
each case together with Seller's and Seller Subs' right, title and
interest in all buildings, improvements and fixtures thereon and all
other appurtenances thereto (the "European Premises, and together with
the US/MOW Premises, the Premises");
(ii) all raw materials, work-in-process, supplies, finished
goods, parts, spare parts and other inventories of Seller or any
Seller Sub, held at any location or facility of Seller or any Seller
Sub, in transit to Seller or any Seller Sub, or on consignment or in
the possession of any third party on the applicable European Closing
Date, in each case that are
<PAGE>
8
Related to the European Businesses (the "European Inventory", and
together with the US/MOW Inventory, the "Inventory");
(iii) all machinery, equipment, tools, furniture, furnishings,
vehicles, computers and other tangible personal property of Seller or
any Seller Sub, held at any location or facility of Seller or any
Seller Sub or any other person on the applicable European Closing
Date, in each case that are Related to the European Businesses (the
"European Personal Property", and together with the US/MOW Personal
Property, the "Personal Property");
(iv) all trade accounts and notes receivable and other
miscellaneous receivables of Seller or any Seller Sub on the
applicable European Closing Date arising out of the sale or other
disposition of goods or services Related to the European Businesses or
otherwise arising out of the operation or conduct of the Businesses,
including amounts owing to Seller or any Seller Sub on the applicable
European Closing Date from any Transferred Employee (the "European
Receivables", and together with the US/MOW Receivables, the
"Receivables");
(v) [INTENTIONALLY OMITTED]
(vi) [INTENTIONALLY OMITTED]
(vii) to the extent transferable, all Permits of Seller or any
Seller Sub that are Related to the European Businesses, (the "European
Assigned Permits", and together with the US/MOW Assigned Permits, the
"Assigned Permits");
(viii) all Contracts to which Seller or any Seller Sub is a party
or by which Seller or any Seller Sub is bound that are listed in
Schedule 1.02(b)(viii), all Contracts, bids, quotes, proposals,
purchase orders and sales orders in part Related to the European
Businesses and in part related to other businesses of Seller or any
Seller Sub but only to the extent such Contracts, bids, quotes,
proposals, purchase orders and sales orders are Related to the
European Businesses, and all other Contracts, bids, quotes, proposals,
purchase orders and sales orders to which Seller or any Seller Sub is
a party or by which Seller or any Seller Sub is bound that are Related
to the European Businesses or to which the European Acquired Assets
are subject, including those expired or terminated Contracts with
continuing rights and/or obligations (collectively, the "European
Assigned Contracts", and together with the US/MOW Assigned Contracts,
the "Assigned Contracts");
<PAGE>
9
provided, however that, in the case of those Contracts that have been
entered into on or before the Spin-Off Date, the European Assigned
Contracts shall include only those Contracts that have been
transferred to Seller or any Seller Subs; provided, further, however,
that in the case of Assigned Contracts that are in part Related to the
Businesses and in part Related to the European Businesses, the portion
of such Assigned Contracts Related to the European Businesses shall be
considered European Assigned Contracts;
(ix) all Investments listed in Schedule 1.02(b)(ix), and all
other Investments that are Related to the European Businesses
("European Investments");
(x) all rights in and to products or goods sold or leased
(including products returned after the applicable European Closing and
rights of rescission, replevin and reclamation) in the operation or
conduct of the European Businesses;
(xi) all credits, prepaid expenses, deferred charges (other than
any charges relating to Taxes), advance payments, security deposits
and prepaid items that are Related to the European Businesses;
(xii) all rights, claims, credits, Proceedings and Judgments to
the extent relating to any European Acquired Asset or any European
Assumed Liability, including any such items arising under guarantees,
warranties, indemnities and similar rights in favor of Seller or
Seller Subs in respect of any European Acquired Asset or any European
Assumed Liability;
(xiii) subject to Section 6.12, all books of account, ledgers,
claim files (whether open or closed, but if such files have been
closed before the Spin-Off Date, only to the extent such files are in
the possession of Seller or any Seller Sub), financial, accounting and
tax records and all general and personnel records, files, invoices,
customers' and suppliers' lists, other distribution and mailing lists,
price lists, reports, plans, advertising materials, catalogues,
billing records, sales and promotional literature, manuals, customer
and supplier correspondence (in all cases, in any form or medium), of
Seller or any Seller Sub that are Related to the European Businesses
(the "European Records", and together with the US/MOW Records, the
"Records");
(xiv) all goodwill generated by, associated with or attributable
to the European Businesses;
<PAGE>
10
(xv) the portion of the assets of any European Benefit Plan that
becomes the obligation of Purchaser pursuant to Section 6.09(d)(i),
net of any loans to European Transferred Employees; and
(xvi) except as otherwise provided herein, assets to satisfy any
unfunded liabilities under European Benefit Plans that become the
obligation of Purchaser pursuant to Section 6.09(d)(i).
(c) The term "Excluded Assets" means:
(i) (A) the Ferrania Facility, (B) the Florida Facility, (C) the
real property, leaseholds and other interests in real property listed
on Schedule 1.02(c) (i) (the real property interests referred to in
clauses (A), (B) and (C); collectively, the "Retained Premises"),
including all Seller's and Seller Subs' right, title and interest in
all buildings, improvements and fixtures on the Retained Premises and
all other appurtenances to the Retained Premises and all Personal
Property located at the Retained Premises;
(ii) all raw materials, work-in-process, supplies, finished
goods, parts, spare parts and other inventories located at the
Ferrania Facility (other than jumbo rolls transferred at the Initial
Closing pursuant to Section 1.02(a)(ii));
(iii) the machinery, equipment and tools owned by 3M or any
affiliate of 3M and located at Seller's manufacturing facility in
White City, Oregon for use in contract manufacturing services being
performed for certain business units of 3M by Seller listed on
Schedule 1.02(c)(iii);
(iv) except as and to the extent provided in the Intellectual
Property Agreements, (A) all trade names, business names and trade
dresses incorporating "Imation" and Imation logos and (B) all
Intellectual Property and Technology retained by Seller and the Seller
Subs under the Intellectual Property Agreements, including the
Excluded Intellectual Property and any Proceedings or Judgments
related thereto;
(v) all cash and cash equivalents of Seller or any Seller Sub;
(vi) all rights, claims, credits, Proceedings and Judgments of
Seller or any Seller Sub to the extent relating to any Excluded Asset
or any Excluded Liability, including any such items arising under
insurance policies and all guarantees, warranties, indemnities and
similar rights in favor of Seller or
<PAGE>
11
any Seller Sub in respect of any Excluded Asset or any Excluded
Liability;
(vii) except as provided in Section 6.18 and Section 6.22, all
insurance policies and insurance contracts insuring the Businesses or
the Acquired Assets, together with any claim, action or other right
Seller or any of its subsidiaries may have for insurance coverage
under any past and present policies and insurance contracts insuring
the Businesses or the Acquired Assets, in each case including any
proceeds received from any such policy or contract after the Initial
Closing or in the case of the European Businesses and the European
Acquired Assets, the relevant European Closing, as applicable;
(viii) (A) subject to Section 6.12, all Records of Seller or any
Seller Sub which Seller or any Seller Sub is required by Law to
retain, (B) all Records prepared in connection with the sale of the
Businesses to Purchaser and (C) subject to Section 6.12, all financial
and tax Records relating to the Businesses that either (1) form part
of Seller's general ledger or (2) relate to the Pre-Closing Tax Period
(other than copies of any portion of such records relating to
Cemax-Icon);
(ix) all the assets of any Seller U.S. Pension Plan unless the
sponsorship of such Seller U.S. Pension Plan is assumed by Purchaser;
(x) all rights of Seller or any Seller Sub under any Transaction
Document; and
(xi) all assets and businesses identified on Schedule
1.02(c)(xi).
The term "Acquired Assets" shall mean the US/MOW Acquired Assets
and the European Acquired Assets collectively. For the avoidance of doubt,
the term "Acquired Assets" does not include any property, asset, goodwill
or right of Cemax-Icon of whatever kind or nature (it being understood and
agreed, however, that all properties, assets, goodwill and rights of
Cemax-Icon shall be sold, assigned, transferred, conveyed, licensed and
leased to Purchaser and purchased, licensed, leased and assumed by Seller
in accordance with Section 1.01 through the acquisition by Purchaser of the
Cemax-Icon Shares).
SECTION 1.03. Assumption of Certain Liabilities. (a) Upon the
terms and subject to the conditions of this Agreement, Purchaser shall
assume, effective as of the Initial Closing, and from and after the Initial
Closing, Purchaser shall pay, perform and discharge when due, all
<PAGE>
12
liabilities, obligations and commitments of Seller and any Seller Sub of
any nature whatsoever, whether known or unknown, asserted or unasserted,
whether due or to become due ("liabilities") Related to the Businesses,
other than any European Assumed Liabilities and any Excluded Liabilities
(the "US/MOW Assumed Liabilities"), including:
(i) all liabilities of Seller or any Seller Sub under the US/MOW
Assigned Contracts;
(ii) all accounts payable of Seller or any Seller Sub to the
extent Related to the US/MOW Businesses;
(iii) all liabilities in respect of any and all products, goods
or services sold by the US/MOW Businesses at any time, including
liabilities for refunds, adjustments, allowances, repairs, exchanges,
returns and warranty, merchantability and other claims;
(iv) all liabilities to the extent arising as a result of at any
time being the owner or occupant of, or the operator of the activities
conducted at, the US/MOW Premises included in the US/MOW Acquired
Assets or any other real property owned or leased at any time by
Seller or any Seller Sub for use primarily in the US/MOW Businesses,
including all liabilities relating to personal injury, property
damage, the environment and on-site or off-site waste disposal;
(v) all liabilities relating to the employment or termination of
employment of any Non-European Transferred Employee or any former
employee of Cemax- Icon at any time, including any payroll or
employment taxes, unused vacation time and liabilities under corporate
credit cards issued to any Non-European Transferred Employee;
(vi) all liabilities for Taxes (A) attributable to the US/MOW
Acquired Assets (other than Excluded Taxes), (B) of Cemax-Icon for any
taxable period (other than Excluded Taxes) and (C) attributable to a
US/MOW Purchaser Tax Act;
(vii) all liabilities in respect of Proceedings, pending or
threatened, whether or not presently asserted, that are Related to the
US/MOW Businesses; and
(viii) (x) all liabilities under any Benefit Plan sponsored by
Cemax-Icon and (y) any Non-European Benefit Plan liability that
becomes the obligation of Purchaser under Section 6.09.
<PAGE>
13
(b) Upon the terms and subject to the conditions of this
Agreement, Purchaser shall assume, effective in each European Territory
upon the consummation of the European Closing with respect to such European
Territory, and from and after the European Closing with respect to such
European Territory, Purchaser shall pay, perform and discharge when due,
all liabilities Related to the European Businesses conducted in and from
such European Territory other than any Excluded Liabilities (the "European
Assumed Liabilities"), including:
(i) all liabilities of Seller or any Seller Sub under the
European Assigned Contracts;
(ii) all accounts payable of Seller or any Seller Sub to the
extent Related to the European Businesses (including any liabilities
under the White City Supply Agreement);
(iii) all liabilities in respect of any and all products, goods
or services sold by the European Businesses at any time, including
liabilities for refunds, adjustments, allowances, repairs, exchanges,
returns and warranty, merchantability and other claims;
(iv) all liabilities to the extent arising as a result of at any
time being the owner or occupant of, or the operator of the activities
conducted at, the European Premises included in the European Acquired
Assets or any other real property owned or leased at any time by
Seller or any Seller Sub for use primarily in the European Businesses,
including all liabilities relating to personal injury, property
damage, the environment and on-site or off-site waste disposal;
(v) all liabilities relating to (A) the employment or termination
of employment of any European Transferred Employee at any time,
including any payroll or employment taxes, unused vacation time and
liabilities under corporate credit cards issued to any European
Transferred Employee and (B) all liabilities relating to the
employment or termination of employment of any European Eligible
Employee who terminates employment for any reason after the Initial
Closing;
(vi) all liabilities for Taxes (A) attributable to the European
Acquired Assets (other than Excluded Taxes) and (B) attributable to a
European Purchaser Tax Act;
(vii) all liabilities in respect of Proceedings, pending or
threatened, whether or not presently asserted, that are Related to the
European Businesses; and
<PAGE>
14
(viii) any European Benefit Plan liability that becomes the
obligation of Purchaser under Section 6.09.
The term "Assumed Liabilities" shall mean the US/MOW Assumed
Liabilities and the European Assumed Liabilities collectively. For the
avoidance of doubt, the term "Assumed Liabilities" does not include any
liability of Cemax-Icon (it being understood and agreed that all
liabilities of Cemax-Icon shall be assumed by Purchaser as a result of the
acquisition by Purchaser of the Cemax-Icon Shares).
(c) Notwithstanding any other provision of this Agreement,
Purchaser shall not assume or be responsible for, and Seller or the
respective Seller Sub shall retain and be responsible for, the following
liabilities of Seller and Seller Subs (the "Excluded Liabilities"):
(i) any liability of Seller or any Seller Sub, arising out of the
operation or conduct by Seller or any of its affiliates of any
business other than the Businesses;
(ii) any liability of Seller or any Seller Sub that relates to,
or that arises out of, any Excluded Asset;
(iii) any liability for Excluded Taxes;
(iv) any Pre-Closing Environmental Liabilities;
(v) any liability related to the Transferred Employees that is
specifically retained by Seller or any Seller Sub pursuant to Section
6.09;
(vi) all liabilities to any employees of Seller or any Seller Sub
(other than Cemax-Icon) other than (A) Transferred Employees, or (B)
Eligible Employees with respect to liabilities arising from
Purchaser's breach of Section 6.09;
(vii) all liabilities to employees of Seller or any Seller Sub
with respect to options to acquire the common stock of Seller or any
Seller Sub;
(viii) all liabilities (a) under any Benefit Plan (other than
those of Cemax-Icon), whether arising from violation of any Law or
otherwise, except as otherwise required by applicable Law or this
Agreement; or (b) for collection of COBRA premiums or compliance with
COBRA notice requirements for any Transferred Employee (other than
those of Cemax-Icon) who does not accept employment with Purchaser;
<PAGE>
15
(ix) other than with respect to employees or former employees of
Cemax-Icon, any claims by any employee of Seller or any Seller Sub for
benefits incurred (as defined in Section 6.09) before the Initial
Closing;
(x) any indebtedness (whether as obligor, guarantor or otherwise)
to third parties for borrowed money (other than accounts payable
incurred in the ordinary course of business), whether or not Related
to the Businesses, other than any indebtedness described under items 1
and 2 of clause (a)(ix)(B) of Schedule 3.08;
(xi) (A) any direct cost or expense incurred before or after the
Initial Closing Date to the extent arising out of, resulting from or
incurred in connection with any of the following actions taken by
Seller or any of its subsidiaries but only to the extent such actions
take place prior to the Initial Closing: (1) any restructuring of
Seller or any of its subsidiaries (whether corporate-wide or with
respect to European operations, Ferrania operations, Cemax-Icon or
otherwise); (2) any termination of any European distributors; and (3)
termination of the dry imagesetting program and (B) any direct cost or
expense incurred during the period from the Initial Closing Date to
the Final Closing Date to the extent arising out of, resulting from or
incurred in connection with any of the following actions taken by
Seller or any of its subsidiaries (other than Cemax-Icon) but only to
the extent such actions take place prior to the Final Closing Date:
any restructuring of Seller or any of its subsidiaries (other than
Cemax-Icon) (whether corporate-wide or with respect to European
operations, Ferrania operations or otherwise);
(xii) any direct cost or expense arising out of, resulting from
or incurred in connection with any of the following: (A) closure of
the Florida Facility; and (B) subject to Section 1.01(c), sale or
transfer of the Ferrania Facility;
(xiii) any direct cost or expense arising out of, resulting from
or incurred in connection with the termination of the Consulting
Agreement dated January 14, 1997, as amended, between Seller and
Itasca Ventures, LLC;
(xiv) any liability (A) for checks drawn on bank accounts of
Seller and its subsidiaries not located in the European Territories,
in each case that have been issued but not cleared as of the Initial
Closing Date and (B) for any checks drawn on bank accounts of Seller
and its subsidiaries located in the European Territories, in each case
that have been issued but not
<PAGE>
16
cleared as of the consummation of the European Closing with respect to
each such European Territory;
(xv) any liability under Seller's Success Sharing Plan for
Transferred Employees to the extent (x) attributable to the corporate
performance component of such Success Sharing Plan and (y) incurred,
arising or relating to services performed prior to the Initial
Closing;
(xvi) any liability to Seller or any Seller Sub, including
liabilities of Cemax-Icon payable to Seller or any Seller Sub, except
in any case liabilities incurred, arising or relating to goods or
services sold or provided by Seller or any Seller Sub to the
Businesses in the ordinary course of business consistent with past
practice;
(xvii) other than with respect to employees of Cemax- Icon on the
Initial Closing Date, any worker's compensation liability with respect
to any actual or alleged work-related injury, disease or illness to
any Transferred Employee or European Eligible Employee which is
determined to have occurred prior to the Initial Closing Date; and
(xviii) any liability of Seller or any Seller Sub identified on
Schedule 1.03(c)(xviii).
SECTION 1.04. Nonassignability of Assets. (a) Notwithstanding
anything in this Agreement to the contrary, this Agreement shall not
constitute an agreement to sell, assign, transfer, convey, license or lease
any asset if such sale, assignment, transfer, conveyance, license or lease
is prohibited by any applicable Law or would require the Consent of any
Governmental Entity or other person and such Consent is not obtained prior
to (i) the Initial Closing, with respect to any US/MOW Acquired Asset, or
(ii) the applicable European Closing, with respect to any European Acquired
Asset, shall proceed without the sale, assignment, transfer, conveyance,
license or lease of such asset; provided, however, if such failure causes a
failure of any of the conditions to the Purchaser's obligations as set
forth in Section 7.02(d), the Initial Closing shall proceed only if
Purchaser shall waive such condition, in its sole discretion. In the event
that the Initial Closing or the applicable European Closing, as the case
may be, proceeds without the sale, assignment, transfer, conveyance,
license or lease of any such asset, then following the Initial Closing or
the applicable European Closing, as the case may be, the parties shall use
their reasonable best efforts, and cooperate with each other, to obtain
promptly such Consents; provided, however, that none of Seller, the Seller
Subs, Cemax-Icon, Purchaser
<PAGE>
17
or any Purchaser Buyer shall be required to pay any consideration for such
Consent other than filing, recordation or similar fees which, except as
expressly provided in Section 10.04 of this Agreement or Section 3.2 or
10.3 of the Seller Intellectual Property Agreement, shall be paid by the
party who is required by applicable Law or course of dealing to do so.
Pending receipt of such Consent, the parties shall cooperate with each
other in any mutually agreeable, reasonable and lawful arrangements
designed to provide to Purchaser or the Purchaser Buyers, as the case may
be, the benefits of use of such asset and to Seller or the Seller Subs the
benefits, including any indemnities, that they would have obtained had the
asset been conveyed to Purchaser or the Purchaser Buyers, as the case may
be, at the Initial Closing or the applicable European Closing, as the case
may be. Once Consent for the sale, assignment, transfer, conveyance,
license or lease of any such asset not sold, assigned, transferred,
conveyed, licensed or leased at the Initial Closing or the applicable
European Closing, as the case may be, is obtained, Seller shall or shall
cause a Seller Sub to sell, assign, transfer, convey, license and lease
such asset to Purchaser or the Purchaser Buyers, as the case may be, at no
additional cost to Purchaser or the Purchaser Buyers (subject, however, to
Section 1.05). To the extent that any such asset cannot be provided to
Purchaser or the Purchaser Buyers, as the case may be, following the
Initial Closing or the applicable European Closing, as the case may be,
pursuant to this Section 1.04, the Purchaser and Seller shall enter into
such arrangements (including subleasing, sublicensing or subcontracting) to
provide to the parties the economic (taking into account Tax costs and
benefits) and operational equivalent, to the extent permitted, of obtaining
such Consent and the performance by Purchaser or the Purchaser Buyers, as
the case may be, of the obligations thereunder. Seller and the Seller Subs
shall hold in trust for and pay to Purchaser or the Purchaser Buyers, as
the case may be, promptly upon receipt thereof, all income, proceeds and
other monies received by Seller or any Seller Subs in connection with its
use of any asset (net of the net Tax and any other costs imposed upon
Seller or any Seller Subs) in connection with the arrangements under this
Section 1.04 and Purchaser and the Purchaser Buyers shall indemnify Seller
and Seller Subs for (i) the net Tax and any other costs imposed upon Seller
and Seller Subs in connection with its use of any such asset.
SECTION 1.05. Additional Acquisitions. (a) Notwithstanding
anything to the contrary contained in this Agreement, Purchaser may elect
to have any or all of the Acquired Assets transferred, assigned, conveyed,
licensed and leased to, or any of the Assumed Liabilities assumed by, one
or more of the Purchaser Buyers; provided, however, that no such election
shall result in any net
<PAGE>
18
greater cost or obligation (including net greater costs arising from (i)
exchange risks and transfer restrictions on the movement of funds imposed
by countries in which particular Purchaser Buyers are domiciled and (ii)
the imposition of any additional Taxes) than Seller or any of the Seller
Subs would otherwise have had such assets or liabilities been transferred
to Purchaser or to a Purchaser Buyer domiciled within the jurisdiction in
which such assets or liabilities are located, whichever is greater;
provided, further, however, that no such election shall relieve Purchaser
of any of its obligations to Seller and its affiliates hereunder with
respect to the Assumed Liabilities or otherwise.
(b) Subject to Section 1.05(a), if mutually agreed by Seller and
Purchaser, any transfer made pursuant to the foregoing clause (a) may be
effected pursuant to separate Local Asset Purchase Agreements.
Notwithstanding the foregoing, if a Local Asset Purchase Agreement is to be
executed in any country where notification of or consulta tion with a works
council or similar entity is required, then such Local Asset Purchase
Agreement shall not become binding upon the parties until such time as such
notification or consultation is completed.
SECTION 1.06. Closing Working Capital. (a)(i) Except with the
express prior written consent of Purchaser and other than as set forth on
Schedule 6.01, Seller agrees that, between July 31, 1998 and the Initial
Closing Date, it will, and will cause the Seller Subs and Cemax-Icon to,
conduct the Businesses in accordance with Seller's ordinary course of
business consistent with past practice with respect to the components of
Working Capital, including those practices relating to (A) collection of
trade receivables (it being understood that none of Seller, any Seller Sub
or Cemax-Icon shall factor, sell or engage in any similar practice with
respect to trade receivables), (B) payment of trade accounts payables, (C)
terms of sale, including price, discounts, rebates, equipment loans,
allowances and warranties (except in accordance with current industry
practice or in response to changes in market prices or other terms of sale
offered by competitors of Seller), (D) return, credit or trade practices
and (E) inventory levels.
(ii) Notwithstanding the foregoing, this Section 1.06(a) shall
not be deemed to have been breached by Seller, any Seller Sub or Cemax-Icon
because of any of the actions or conduct set forth in Schedule 1.06.
(iii) The term "Working Capital" means (A) the sum of (1) all
trade Receivables (net of allowances for doubtful accounts, returns and
allowances, cash discounts, and sales rebates) and (2) all Inventories
(other than raw
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19
materials, work-in-process and supplies located at the Ferrania Facility)
minus (B) all trade accounts payable, in each case of the Businesses.
(b) If it is determined pursuant to the procedures set forth in
this Section 1.06 that Seller shall not have complied with Section 1.06(a)
in one or more instances (whether such failure to comply results in an
increase or a decrease in Working Capital) and that the net impact of all
such failures to comply, taken as a whole, results in a net reduction in
the amount of Working Capital transferred to Purchaser as of the Initial
Closing (the amount of such net reduction, to the extent resulting from
such failures to comply, a "Working Capital Shortfall"), Seller shall,
within 30 days following the date the amount of the Working Capital
Shortfall, if any, shall become final and binding upon Seller and Purchaser
pursuant to Section 1.06(e), pay to the Purchaser the total amount of such
Working Capital Shortfall, if any, in immediately available funds, plus
interest on such net amount at LIBOR from the Initial Closing Date to the
date of payment.
(c) Within 60 days after the Initial Closing Date (the "Initial
60-Day Period"), Purchaser may give written notice to Seller (the "Working
Capital Election Notice") of Purchaser's intent to conduct an in-depth
investigation to determine whether Seller has complied with Section
1.06(a). If Purchaser does not deliver a Working Capital Election Notice
within the Initial 60-Day Period, Seller shall have no liability under this
Section 1.06. If Purchaser delivers a Working Capital Election Notice
within the Initial 60-Day Period, Purchaser shall complete its
investigation within 90 days following expiration of the Initial 60-Day
Period. In connection with Purchaser's right under this Section 1.06,
Purchaser and its independent public accountants will be permitted to
review the accounting records of the Seller and such additional financial
information as Purchaser or Purchaser's independent public accountants
shall reasonably request for the purpose of determining whether Seller has
complied with Section 1.06(a). In connection with any such investigation,
Seller and Purchaser and their respective independent public accountants
shall cooperate with each other.
(d) If during the 90-day period following the Initial 60-Day
Period (the "Investigation Period") Purchaser determines that it has reason
to believe that Seller did not comply with Section 1.06(a), Purchaser may
give Seller a written notice to such effect at any time prior to the
expiration of the Investigation Period (the "Notice of Working Capital
Breach"). If such Notice of Working Capital Breach is not delivered to
Seller prior to the expiration of the Investigation Period, Seller will not
have any liability under this Section 1.06. The Notice of Working Capital
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20
Breach shall (i) include a statement (the "Statement") setting forth the
Working Capital as of the close of business on the Initial Closing Date
prepared in accordance with GAAP on a basis consistent with the Seller
Financial Statements, (ii) specify in reasonable detail the basis for the
Purchaser's belief that the Seller has failed to comply with Section
1.06(a), (iii) specify the Working Capital Shortfall, including a
reasonably detailed calculation thereof, and (iv) specify in reasonable
detail the basis for the Purchaser's belief that the Working Capital
Shortfall resulted from the Seller's breach of Section 1.06(a). The Notice
of Working Capital Breach shall be accompanied by a report of Purchaser's
independent public accountants, without exception or qualification, to the
effect that (x) the Statement has been prepared in accordance with the
provisions of this Section 1.06, and (y) it concurs with each of the
positions taken by Purchaser in the Notice of Working Capital Breach,
provided that it is understood and agreed that this provision shall not be
deemed or construed to require Purchaser's independent public accountants
to audit the Statement.
(e) During the 90-day period following Seller's receipt of the
Notice of Working Capital Breach, Seller and its independent public
accountants shall be permitted to review the working papers of Purchaser
and Purchaser's independent public accountants relating to the Notice of
Working Capital Breach and any other information reasonably requested by
Seller or Seller's independent public accountants. The amount of the
Working Capital Shortfall shall become final and binding upon the parties
on the 90th day following delivery thereof, unless Seller gives written
notice of its disagreement with the Notice of Working Capital Breach (a
"Notice of Disagreement") to Purchaser prior to such date. Any Notice of
Disagreement shall specify in reasonable detail the nature of any
disagreement so asserted and, to the extent practicable, the adjustments to
the amount of the Working Capital Shortfall which Seller believes should be
made. If a Notice of Disagreement is received by Purchaser in a timely
manner, then the amount of the Working Capital Shortfall (as revised in
accordance with this sentence) shall become final and binding upon Seller
and Purchaser on the earlier of (A) the date Seller and Purchaser resolve
in writing any differences they have with respect to the matters specified
in the Notice of Disagreement and (B) the date any disputed matters are
finally resolved in writing by the Accounting Firm. During the 60-day
period following the delivery of a Notice of Disagreement, Seller and
Purchaser shall seek in good faith to resolve in writing any differences
that they may have with respect to the matters specified in the Notice of
Disagreement. At the end of such 60-day period, Seller and Purchaser shall
submit to an independent accounting firm (the "Accounting Firm") for
arbitration any and all matters
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21
that remain in dispute and were properly included in the Notice of
Disagreement. The Accounting Firm shall be mutually agreed upon by the
parties hereto in writing. Seller and Purchaser shall agree to use
reasonable efforts to cause the Accounting Firm to render a decision
resolving the matters submitted to the Accounting Firm within 30 days
following submission. Judgment may be entered upon the determination of the
Accounting Firm in any court having jurisdiction over the party against
which such determination is to be enforced. The cost of any arbitration
(including the fees and expenses of the Accounting Firm and reasonable
attorney fees and expenses of the parties) pursuant to this Section 1.06
shall be borne by Purchaser and Seller in inverse proportion as they may
prevail on matters resolved by the Accounting Firm, which proportionate
allocations shall also be determined by the Accounting Firm at the time the
determination of the Accounting Firm is rendered on the merits of the
matters submitted. The fees and disbursements of Seller's independent
public accountants incurred in connection with their review of any Notice
of Disagreement shall be borne by Seller, and the fees and disbursements of
Purchaser's independent public accountants incurred in connection with
their certification of the Statement and review of any Notice of
Disagreement shall be borne by Purchaser.
(f) Following the Initial Closing, Purchaser shall take no
actions with respect to the accounting books and records of the Businesses
for the period on or prior to the Initial Closing Date on which the Notice
of Working Capital Breach is to be based that would obstruct or prevent the
preparation of the Notice of Disagreement and the determination of the
Working Capital as of the Initial Closing Date.
ARTICLE II
The Closings; Post-Closing Payments
SECTION 2.01. Initial Closing Date and European Closing Dates.
(a) The closing of the Initial Acquisition (the "Initial Closing") shall
take place at the offices of Cravath, Swaine & Moore, 825 Eighth Avenue,
New York, New York 10019, at 10:00 a.m. on November 30, 1998, or, if on
such day any condition set forth in Section 7.01, 7.02 or 7.03 has not been
satisfied (or, to the extent permitted, waived by the party entitled to the
benefit thereof), as soon as practicable after all the conditions set forth
in Sections 7.01, 7.02 and 7.03 have been satisfied (or, to the extent
permitted, waived by the parties entitled to the benefits thereof), or at
such other places, times and dates as shall be agreed between Seller and
Purchaser. The date
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22
on which the Initial Closing occurs is referred to in this Agreement as the
"Initial Closing Date".
(b) (i) The closings of the European Acquisitions (each, a
"European Closing") shall take place on a European
Territory-by-European Territory basis on one or more days at the
offices of Cravath, Swaine & Moore, 825 8th Avenue, New York, New
York, 10019 and at such additional locations as may be specified in
the applicable European Closing Documents or as may be agreed between
the parties, at 10:00 a.m., New York City time in each case on the
last business day of a calendar month; provided, however, that if on
any such day, any condition set forth in Section 7.05 has not been
satisfied (or waived by both parties), such European Closing shall
take place as soon as practicable after all the conditions set forth
in Section 7.05 shall have been satisfied (or waived by both parties).
The date or dates on which the European Closings occur are each
referred to in this Agreement as a "European Closing Date".
(ii) The European Closing Date with respect to each European
Territory shall be the date specified for the effectiveness of the
European Closing Documents in the European Closing Documents
pertaining to each such European Territory (each such date a
"Specified Closing Date"); provided, however, that the European
Closing Date for any of the European Territories may be extended under
the conditions set forth in clause (iii) of this Section 2.01(b).
(iii) Subject to the proviso in clause (i) above, Purchaser and
Seller agree that all European Closings will occur on or prior to
March 31, 1999; provided, however, that the parties agree to meet no
later than January 30, 1999, to discuss the progress made toward
preparation for such European Closings, and that upon written request
from Purchaser delivered in each case, at least one week prior to the
Specified Closing Date applicable to each European Territory and based
on Purchaser's failure after attempting in good faith to achieve the
ability to close all European Territories on or before their
respective Specified Closing Dates, the European Closing Dates with
respect to one or more of the European Territories may be extended for
up to two months beyond the Specified Closing Date applicable to each
such European Territory; provided, however, that in no event shall the
Final Closing Date be extended later than May 31, 1999. The European
Closing that occurs with respect to the last European Territory to
close is referred to herein as the "Final Closing", and the date upon
which the Final Closing occurs is referred to as the "Final Closing
Date".
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23
SECTION 2.02. Transactions To Be Effected at the Initial Closing
and the European Closings. (a) At the Initial Closing:
(i) Seller and Seller Subs shall deliver to Purchaser or a
Purchaser Buyer, as the case may be, such appropriately executed
quit-claim deeds (in recordable form), bills of sale, assignments and
other instruments of transfer (including one or more separate bills of
sale, assignments and other instruments of transfer with respect to
transfers in the United States and each other country where assets are
being transferred) relating to the US/MOW Acquired Assets (other than
the Cemax-Icon Shares) in form and substance reasonably satisfactory
to Purchaser and its counsel;
(ii) Seller shall deliver to Purchaser certificates representing
the Cemax-Icon Shares, duly endorsed in blank or accompanied by stock
powers duly endorsed in blank in proper form for transfer, with
appropriate transfer stamps, if any, affixed;
(iii) Seller shall deliver to Purchaser evidence of the obtaining
of or the filing with respect to, each Consent required to be obtained
pursuant to Section 7.02(d) or which otherwise was obtained by Seller
or any Seller Sub or Cemax-Icon in connection with consummation of the
Initial Acquisition;
(iv) Seller and the Seller Subs, as the case may be, shall
deliver to Purchaser the certificates, opinions and other documents
and agreements to be delivered pursuant to Section 7.02;
(v) Purchaser and any Purchaser Buyers, as the case may be, shall
deliver to Seller the certificates, opinions and other documents and
agreements to be delivered pursuant to Section 7.03;
(vi) Purchaser and any Purchaser Buyers, as the case may be,
shall deliver to Seller or Seller Subs, as the case may be, (A)
payment, by one or more wire transfers to such bank accounts
designated in writing by Seller (such designation to be made at least
two business days prior to the Initial Closing Date) in immediately
available funds in an amount equal to the sum of (X) the Initial
Closing Date Purchase Price, (Y) all 1998 Payments and all 1999
Payments made or deposited in escrow by Seller prior to the Initial
Closing as provided in Section 2.03 and (Z) $30,000,000, representing
a prepayment of $30,000,000 with respect to the portion of the
European Purchase Price allocated to the European Territory of
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24
Italy (the amount of such prepayment, the "Italian Prepayment
Amount"); provided, however, the funding of the portion of the Initial
Closing Date Purchase Price attributable to the countries listed in
Schedule 2.02(a)(iv) as set forth on Schedule 2.02(a) shall occur on
December 1, 1998; provided, further, however, that if any such payment
is to be made to an account outside the United States pursuant to the
mutual agreement of Seller and Purchaser or because such payment shall
be required by applicable Law, such payment shall be made to an
account in the relevant country where the assets being transferred are
located in U.S. Dollars or, if mutually agreed by Seller and Purchaser
or required by applicable Law, in the relevant local currency and (B)
such appropriately executed assumption agreements and other
instruments of assumption (including one or more assumption agreements
and other instruments of assumption with respect to transfers in the
United States and each other country where assets are being
transferred) providing for the assumption of the US/MOW Assumed
Liabilities in form and substance reasonably satisfactory to Seller
and its counsel; and
(vii) Purchaser and any Purchaser Buyers, as the case may be, and
Seller or Seller Subs, as the case may be, shall deliver the executed
European Closing Documents pertaining to the Primary European
Territories (and the parties agree that the European Closing Documents
pertaining to the remaining European Territories shall be executed and
delivered as promptly as practicable thereafter).
(b) at each European Closing:
Purchaser and any Purchaser Buyers, as the case may be, shall
deliver to Seller or Seller Subs, as the case may be, payment, by one
or more wire transfers to such bank accounts designated in writing by
Seller (such designation to be made at least two business days prior
to the applicable European Closing Date) in immediately available
funds in an amount equal to the portion of the European Purchase Price
allocated to the European Territory or Territories for which such
European Closing is occurring in Schedule 6.16 hereto (except that,
with respect to the European Closing for the European Territory of
Italy, the amount payable on the relevant European Closing Date shall
be reduced by the Italian Prepayment Amount); provided, however, that
if any such payment is to be made to an account outside the United
States pursuant to the mutual agreement of Seller and Purchaser or
because such payment shall be required by applicable Law, such payment
shall be made to an account in the relevant country where the assets
<PAGE>
25
being transferred are located in U.S. Dollars or, if mutually agreed
by Seller and Purchaser or required by applicable Law, in the relevant
local currency.
SECTION 2.03. Cemax-Icon Payments. (a) On August 24, 1998, Seller
delivered to Purchaser a certificate (the "1998 Cemax-Icon Certificate")
setting forth (x) the amount of the undisputed portion of the 1998 Payment
to be paid, and the disputed portion of the 1998 Payment to be deposited
into escrow, (y) a reasonably detailed description of the calculation
thereof and (z) the date on which such payment and/or deposit was made,
which was August 24, 1998 (the "1998 Payment Date"). On the 1998 Payment
Date, Seller delivered the amounts set forth in the 1998 Cemax-Icon
Certificate to the Holders and into escrow as set forth in the 1998
Cemax-Icon Certificate.
(b) Purchaser shall deliver to Seller on the Initial Closing Date
as contemplated by Section 2.02(a)(vi) payment, by wire transfer to a bank
account to be designated in writing by the Seller (such designation to be
made at least two business days prior to the Initial Closing Date), in U.S.
Dollars in immediately available funds in an amount equal to the 1998
Payment made and deposited on such 1998 Payment Date as set forth in
Section 2.03(a) above. If all or any portion of any 1998 Payment (or
portion thereof) paid to Seller by Purchaser in accordance with this
Section 2.03(b) is released from escrow and returned to Seller, Seller
shall promptly and in any event within five business days deliver such
returned amount (including, to the extent returned or released to Seller,
all earnings and other amounts added thereto) to Purchaser.
(c) If the Initial Closing Date occurs on or prior to July 14,
1999, Purchaser shall comply with all obligations of Seller with respect to
the 1999 Payment, the 1999 Earn-Out Statement and the 1999 Earn-Out under
the Cemax-Icon Merger Agreement in accordance with the terms thereof,
including calculation of the amount of 1999 Payment (it being agreed that
all references to Seller therein shall be deemed to be references to
Purchaser).
(d) If the Initial Closing Date shall not have occurred on or
prior to July 14, 1999, not later than five business days prior to the date
on which (i) any portion of the 1999 Payment which is not in dispute is
required to be paid and/or (ii) any portion of the 1999 Payment which is in
dispute is required to be deposited into escrow, in each case as provided
in the Cemax-Icon Merger Agreement, Seller shall deliver to Purchaser a
certificate (a "1999 Cemax-Icon Certificate") setting forth (x) the amount
of such undisputed portion of the 1999 Payment to be paid and/or such
disputed portion of the 1999 Payment to be deposited into escrow, as the
case may be, (y) a reasonably detailed
<PAGE>
26
description of the calculation thereof and (z) the date on which such
payment and/or deposit is required to be made (a "1999 Payment Date").
(e) In the case of any 1999 Payment Date that occurs prior to the
Initial Closing Date, subject to clause (i) below, Purchaser shall deliver
to Seller on the Initial Closing Date as contemplated by Section
2.02(a)(vi) payment, by wire transfer to a bank account to be designated in
writing by the Seller (such designation to be made at least two business
days prior to the Initial Closing Date), in U.S. Dollars in immediately
available funds in an amount equal to the relevant portion of the 1999
Payment made or deposited on such 1999 Payment Date as set forth in such
1999 Cemax-Icon Certificate. If all or any portion of any 1999 Payment (or
portion thereof) paid to Seller by Purchaser in accordance with this
Section 2.03(e) is released from escrow and returned to Seller, Seller
shall promptly and in any event within five business days deliver such
returned amount (including, to the extent returned or released to Seller,
all earnings and other amounts thereto) to Purchaser.
(f) In the case of any 1999 Payment Date that occurs on or after
the Initial Closing Date, subject to clause (i) below, Purchaser shall pay
or deposit any such amount required to be paid or deposited on such 1999
Payment Date, as set forth in such 1999 Cemax-Icon Certificate, directly
to, or for the account of, the Holders in accordance with the terms and
conditions applicable to such payment or deposit set forth in the
Cemax-Icon Merger Agreement.
(g) Seller shall be responsible for all objec tions, disputes and
arbitration proceedings in connection with or relating to the amount of any
1998 Payment or any 1999 Payment, any Earn-Out Statement or any Earn-Out.
Purchaser shall cooperate with Seller, and shall cause its officers,
employees, agents, auditors and representatives to cooperate with Seller,
in connection with any objection, dispute or arbitration proceedings in
connection with or relating to any 1998 Payment, any 1999 Payment, any
Earn-Out Statement or any Earn-Out, including affording Seller and any
accountants, counsel or financial advisors retained by Seller reasonable
access to all accounting books, working papers and records of Purchaser and
its affiliates relevant to the calculation of 1999 Gross Revenues and
executing and delivering or causing to be executed and delivered all such
documents and instruments as Seller may reasonably deem necessary in
connection with such objection, dispute or arbitration proceedings.
(h) Purchaser acknowledges that under the terms of the Cemax-Icon
Merger Agreement Seller is obligated to
<PAGE>
27
make the Cemax-Icon Payments (or portions thereof) in cash or Common Stock,
at the election of each of the Holders.
For purposes of this Section 2.03:
(A) with respect to the amount of any Cemax-Icon Payment (or
portion thereof) to be paid by Purchaser to Seller pursuant to clause
(e) of this Section 2.03 on the Initial Closing Date, such amount will
be calculated based on the assumption that all Holders elected to
receive cash with respect to such Cemax-Icon Payment (or portion
thereof); and
(B) with respect to the amount of any Cemax-Icon Payment (or
portion thereof) to be paid or deposited by Purchaser pursuant to
clause (f) of this Section 2.03, if any Holder elects to receive
Common Stock with respect to such Cemax-Icon Payment (or portion
thereof) (1) Seller shall issue and deliver the relevant number of
shares of Common Stock to each such Holder as provided for in the
Cemax-Icon Merger Agreement, and (2) the full amount of such
Cemax-Icon Payment to be paid or deposited in cash shall be calculated
as if all Holders had elected to receive cash and such amount shall be
paid or deposited directly by Purchaser pursuant to clause (f).
(i) For purposes of this Section 2.03 and Sections 2.02(a)(vi)
and 9.02, capitalized terms used herein but not defined herein shall have
the respective meanings assigned to such terms in the Cemax-Icon Merger
Agreement.
SECTION 2.04. Ferrania Facility Payment. In accordance with
Section 1.01(a), Purchaser or Seller, as applicable, upon the earlier of
the termination of the X-ray/ Wet Laser Supply Agreement and the time of
consumma tion of the sale of the Ferrania Facility, shall deliver to the
other the Ferrania Facility Payment, by wire transfer to a bank account
designated in writing by Seller or Purchaser, as applicable (such
designation to be made at least two business days prior to the relevant
date of payment), in U.S. Dollars in immediately available funds.
SECTION 2.05. Conduct of European Businesses Pending European
Closings. (a) On the Initial Closing Date, Seller and Purchaser shall enter
(i) into the Loan Agree ment, which provides, among other things, that upon
satisfaction of the funding condition set forth in the Loan Agreement Kodak
BV shall lend Imation BV an amount equal to the European Purchase Price and
(ii) the Distribution Agreement, which provides, among other things, that
the European Businesses in each European Territory will be conducted at the
direction (subject to certain limitations set forth in the Distribution
Agreement) and for the benefit
<PAGE>
28
of Purchaser during the period beginning on the Initial Closing Date and
ending on the relevant European Closing.
(b) For each calendar month (each such month, a "Payment Period")
during the period beginning on the Initial Closing Date and ending on the
Final Closing Date, Seller shall deliver to Purchaser a written notice (an
"ERA Notice") not later than the fortieth day after the end of such Payment
Period setting forth: (i) the ERA (as defined in Annex A) for such Payment
Period; (ii) the Interest Amount for such Payment Period and (iii) the
Payment Amount for such Payment Period and whether such Payment Amount is
payable by the Seller or the Purchaser. "Interest Amount" with respect to
any Payment Period shall mean the sum of (A) the Interest (as defined in
the Loan Agreement) payable with respect to the Loan for such Payment
Period and (B) with respect to any Payment Period that includes any period
prior to the funding of the Loan under the Loan Agreement, an amount equal
to the Interest that would have accrued on the Loan had the initial
Principal Amount of the Loan been outstanding during the period from and
including the first day of such Payment Period up to and excluding the
earlier of (A) the last day of such Payment Period and (B) the Loan Date.
"Payment Amount" shall mean, with respect to each Payment Period, the ERA
for such Payment Period minus the Interest Amount for such Payment Period.
(c) If the Payment Amount for a particular Payment Period is
positive, then the Seller shall pay Purchaser the Payment Amount for such
Payment Period; if the Payment Amount for a particular Payment Period is
negative, then the Purchaser shall pay Seller the Payment Amount for such
Payment Period (in either case, an "ERA Payment"). Each ERA Payment will be
due and payable on the forty-fifth day (or on the next following business
day if such day is not a business day) after the end of the Payment Period
to which such ERA Payment relates. All payments under this Section 2.05(c)
shall be made by wire transfer of immediately available funds to a bank
account in the United States designated in writing by the party entitled to
receive such payment at least two business days prior to such payment.
SECTION 2.06. Changes in Net Assets in European Businesses During
the Period From the Initial Closing Date to the Final Closing Date. (a)
Changes in the Net Assets (as defined in Annex A) of the European
Businesses in each of the European Territories during the period beginning
on the Initial Closing Date and ending on the European Closing Date
applicable to each such European Territory each such period for each
European Territory will be payable by Purchaser to Seller (in the case of
any increase in Net Assets for such European Territory during the Interim
Period) or by Seller to Purchaser (in the case of any
<PAGE>
29
decrease in Net Assets for such European Territory during the Interim
Period) as provided in this Section 2.06.
(b) Seller shall deliver to Purchaser a written notice (a "Net
Asset Notice") not later than the fortieth day after the end of each
Payment Period setting forth the following: (i) the Change in Net Assets
(as defined in Annex A),(A) as of the last day of such Payment Period for
each Ongoing European Territory (as defined in Annex A) included in such
Payment Period for purposes of the calculation of the ERA for such Payment
Period and (B) as of the last day of such Payment Period and as of the last
day of the second immediately preceding Payment Period for each Terminated
Territory; (ii) the aggregate net Change in Net Assets as of the last day
of such Payment Period for all such Ongoing European Territories for which
a European Closing did not occur on the last day of such Payment Period
(the "Continuing Territories"); (iii) the aggregate net Change in Net
Assets as of the last day of such Payment Period for all such Ongoing
European Territories for which a European Closing did occur on the last day
of such Payment Period (the "Closing Territories") and (iv) the aggregate
net Change in Net Assets as of the last day of such Payment Period and as
of the last day of the second immediately preceding Payment Period for all
such Ongoing European Territories with respect to which this Agreement
shall have been terminated in accordance with the provisions of Section
8.03(a) during the Payment Period immediately following the Payment Period
to which such Net Asset Notice relates (the "Terminated Territories").
(c)(i) If the aggregate net Change in Net Assets for the
Continuing Territories reflected in any Net Asset Notice is an increase,
the following shall occur:
(A) If such aggregate net increase is less than $5,000,000 and:
(1) as of the last day of the Payment Period to which such
Net Asset Notice relates there was not any principal amount
outstanding under the Secured Loan Facility, no action shall be
required of either Purchaser or Seller; or
(2) as of the last day of the Payment Period to which such
Net Asset Notice relates there was any principal amount
outstanding under the Secured Loan Facility, Seller shall repay
such principal amount in full.
<PAGE>
30
(B) If such aggregate net increase exceeds $5,000,000 (the amount
of such excess, the "Excess Amount") and:
(1) as of the last day of the Payment Period to which such
Net Asset Notice relates, there was not any principal amount
outstanding under the Secured Loan Facility, then not later than
five days after delivery of such Net Asset Notice to Purchaser,
Purchaser shall make a loan to Seller under the Secured Loan
Facility in an amount equal to the Excess Amount; or
(2) as of the last day of the Payment Period to which such
Net Asset Notice relates, there was any principal amount
outstanding under the Secured Loan Facility (after giving effect
to the provi sions of Section 2.06(e)), then, not later than five
days after the delivery of such Net Asset Notice to Purchaser,
either (x) if the Excess Amount exceeds such outstanding
principal amount, Purchaser shall make an additional loan to
Seller under the Secured Loan Facility in an amount equal to the
excess of the Excess Amount over such outstanding principal
amount or (y) if the Excess Amount is less than such outstanding
principal amount, Seller shall make a repayment with respect to
the amount outstanding under the Secured Loan Facility in an
amount equal to the excess of such outstanding principal amount
over the Excess Amount.
(ii) If the aggregate net Change in Net Assets for the Continuing
Territories reflected in any Net Assets Notice is a decrease, the following
shall occur:
(A) If such aggregate net decrease is less than $5,000,000 and:
(1) as of the last day of the Payment Period to which such
Net Asset Notice relates there was not any principal amount
outstanding under the Secured Loan Facility, no action shall be
required of either Purchaser or Seller; or
(2) as of the last day of the Payment Period to which such
Net Asset Notice relates there was any principal amount
outstanding under the Secured Loan Facility (after giving effect
to the provi sions of Section 2.06(e)), then, not later than five
days after the delivery of such Net Asset Notice to Purchaser,
Seller shall repay in full such outstanding principal amount.
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(B) If such net decrease exceeds $5,000,000 (the amount of such
excess, the "Deficiency Amount"), then not later than five days after
the delivery of such Net Asset Notice to Purchaser, Seller shall:
(1) make a payment to Purchaser in an amount equal to the
Deficiency Amount; and
(2) repay in full any principal amount outstanding under the
Secured Loan Facility as of the last day of the Payment Period to
which such Net Asset Notice relates.
(d)(i) If the aggregate Change in Assets for the Closed European
Territories reflected in any Net Asset Notice is a net increase, then, not
later than five days after delivery of such Net Asset Notice to Purchaser,
Purchaser shall pay the amount of such net increase to Seller.
(ii) If the aggregate Change in Assets for the Closed European
Territories reflected in any Net Asset Notice is a net decrease, then, not
later than five days after delivery of such Net Asset Notice to Purchaser,
Seller shall pay the amount of such net decrease to Purchaser.
(e) Notwithstanding anything to the contrary set forth in this
Section 2.06, if the aggregate Change in Assets for the Terminated
Territories as of the last day of the second immediately preceding Payment
Period reflected in any Net Asset Notice is a net increase and as of the
last day of the Payment Period to which such Net Asset Notice relates there
was any principal amount outstanding under the Secured Loan Facility, then
an amount equal to the lesser of (i) such aggregate net increase and (ii)
such outstanding principal amount shall be forgiven.
(f) Seller and Purchaser agree that they will each use their best
efforts to enter into mutually satis factory arrangements for the Secured
Loan Facility on the terms set forth in the term sheet attached as Annex B
not later than January 15, 1999.
(g) All payments required under this Section 2.06 (including any
required funding of a loan under the Secured Loan Facility) shall be made
by wire transfer of immediately available funds to an account designated by
the party entitled to such payment in writing at least two business days
prior to such payment.
(h) Any payment required under this Section 2.06 (including any
required funding of a loan under the Secured Loan Facility) is hereinafter
sometimes referred to as a "Net Asset Payment".
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32
Section 2.07. Review of ERA Payments and Net Asset Payments. (a)
During the period beginning on the first day following the receipt by
Purchaser of the ERA Notice relating to the Payment Period ending on the
Final Closing Date and ending 45 days later, Purchaser and its independent
public accountants shall be permitted upon the request of Purchaser to
review the working papers of Seller, the European Subsidiaries and Seller's
independent public accountants relating to the calculation of the ERA
Payments and Net Asset Payments for each Payment Period and any other
information reasonably requested by Purchaser and Purchaser's independent
public accountants with respect to such calculations, in order to determine
whether or not such calculations were made in accordance with the terms set
forth in Annex A hereto. The ERA Payments and any Net Asset Payments made
with respect to each Payment Period shall become final and binding upon the
parties on the seventy- fifth day following the Final Closing Date, unless
Purchaser gives written notice of its disagreement with the ERA Payments or
the Net Asset Payments for one or more Payment Periods (a "Section 2.07
Notice of Disagreement") to Seller prior to such date. Any Section 2.07
Notice of Disagreement shall specify in reasonable detail the nature of any
disagreement so asserted and, to the extent practicable, the adjustments to
the amount of the relevant ERA Payment or ERA Payments or the Net Asset
Payment or Net Asset Payments which Purchaser believes should be made. If a
Section 2.07 Notice of Disagreement is received by Seller in a timely
manner, then the amount of each ERA Payment and/or Net Asset Payment with
respect to which the Section 2.07 Notice of Disagreement is received (as
revised in accordance with this sentence) shall become final and binding
upon Purchaser and Seller on the earlier of: (A) the date Seller and
Purchaser resolve in writing any differences they have with respect to the
ERA Payment or ERA Payments or the Net Asset Payment or the Net Asset
Payments specified in the Section 2.07 Notice of Disagreement; and (B) the
date any disputed matters are finally resolved in writing by the Accounting
Firm (as defined below). During the 30 day period following the delivery of
a Section 2.07 Notice of Disagreement, Purchaser and Seller shall seek in
good faith to resolve in writing any differences that they may have with
respect to the matters specified in the Section 2.07 Notice of
Disagreement. At the end of such 30 day period, Purchaser and Seller shall
submit to an independent accounting firm jointly selected by Purchaser and
Seller (the "Section 2.07 Accounting Firm") for arbitration any and all
matters that remain in dispute and were properly included in the Section
2.07 Notice of Disagreement. Purchaser and Seller shall agree to use
reasonable efforts to cause the Section 2.07 Accounting Firm to render a
decision resolving the matters submitted to the Section 2.07 Accounting
Firm within 30 days following submission. Judgment may be entered upon the
determination of the Section 2.07
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33
Accounting Firm in any court having jurisdiction over the party against
which such determination is to be enforced. The cost of any arbitration
(including the fees and expenses of the Section 2.07 Accounting Firm and
reasonable attorney fees and expenses of the parties) pursuant to this
Section 2.07(a) shall be borne by Purchaser and Seller in inverse
proportion as they may prevail on matters resolved by the Section 2.07
Accounting Firm, which proportionate allocations shall also be determined
by the Section 2.07 Accounting Firm at the time the determination of the
Section 2.07 Accounting Firm is rendered on the merits of the matters
submitted. The fees and disbursements of Purchaser's independent public
accountants incurred in connection with their preparation and review of any
Section 2.07 Notice of Disagreement shall be borne by Purchaser, and the
fees and disbursements of Seller's independent public accountants incurred
in connection with their review of any Section 2.07 Notice of Disagreement
shall be borne by Seller.
(b) (i) If it is determined pursuant to the procedures set forth
in this Section 2.07 that the aggregate ERA Payments payable to Purchaser
pursuant to Section 2.05(c) exceed (or are less than) the actual aggregate
ERA Payments made to Purchaser under Section 2.05(c), then Seller shall pay
the amount of such excess to Purchaser or Purchaser shall pay the amount of
such deficiency to Seller, as the case may be, within five days following
the date the aggregate amount of such ERA Payments shall become final and
binding upon Seller and Purchaser pursuant to Section 2.07(a).
(ii) If it is determined pursuant to the procedures set forth in
this Section 2.07 that the aggregate ERA Payments payable to Seller
pursuant to Section 2.05(c) exceed (or are less than) the actual aggregate
ERA Payments made to Seller under Section 2.05(c), then Purchaser shall pay
the amount of such excess to Seller or Seller shall pay the amount of
deficiency to Purchaser, as the case may be, within five days following the
date the aggregate amount of such ERA Payments shall become final and
binding upon Seller and Purchaser pursuant to Section 2.07(a).
(iii) If it is determined pursuant to the procedures set forth in
this Section 2.07 that the aggregate Net Asset Payments payable to
Purchaser pursuant to Section 2.06(d) exceed (or are less than) the actual
aggregate Net Asset Payments made to Purchaser under Section 2.06(d), then
Seller shall pay the amount of such excess to Purchaser, or Purchaser shall
pay the amount of such excess to Seller, as the case may be, within five
days following the date the aggregate amount of such Net Asset Payments
shall have become final and binding upon Seller and Purchaser pursuant to
Section 2.07(a).
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34
(iv) If it is determined pursuant to the procedures set forth in
this Section 2.07 that the aggregate Net Asset Payments payable to Seller
pursuant to Section 2.06(d) exceed (or are less than the actual aggregate
Net Asset Payments made to Seller under Section 2.06(d), then Purchaser
shall pay the amount of such excess to Seller, or Seller shall pay the
amount of such deficiency to Purchaser, as the case may be, within five
days following the date the aggregate amount of such Net Asset Payments
shall have become final and binding upon Seller and Purchaser pursuant to
Section 2.07(a).
(v) All payments pursuant to this Section 2.07(b) shall be made
by wire transfer in immediately available funds to the bank account
designated by the party entitled to such payment at least two business days
prior to such payment.
(vi) All payments due from Seller to Purchaser, or Purchaser to
Seller, as the case may be, under the terms of this Section 2.06(b) shall
be aggregated and netted against each other so that only one payment shall
be made pursuant to this Section 2.06(b).
(c) Following the Initial Closing Date, neither Seller nor
Purchaser shall take any actions with respect to the accounting books and
records of the European Businesses for the period on or prior to the Final
Closing Date on which the calculation of the ERA's and Changes in Net
Assets are to be based that would obstruct or prevent the prepara tion of
the Notice of Disagreement or response thereto and the determination of the
ERA or Changes in Net Assets with respect to any Payment Period.
ARTICLE III
Representations and Warranties of Seller
Seller represents and warrants to Purchaser as of July 31, 1998
and as of the Initial Closing Date as follows:
SECTION 3.01. Organization, Standing and Power. Each of Seller,
each Seller Sub and Cemax-Icon is duly organized, validly existing and in
good standing under the laws of the jurisdiction in which it is organized
and has full corporate power and authority and possesses all govern mental
franchises, licenses, permits, authorizations and approvals necessary to
enable it to own, lease or otherwise hold its properties and assets and to
conduct the Businesses and its other businesses as presently conducted,
other than such franchises, licenses, permits, authorizations and approvals
the lack of which, individually or in the aggregate, have not had and are
not reasonably likely to
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35
have a material adverse effect on the Acquired Assets or the business,
financial condition or results of operations of the Businesses, taken as a
whole, that results or is reasonably likely to result in a Loss of
$2,000,000 or more or a material adverse effect on Seller's ability to
consummate the transactions contemplated by this Agreement (a "Seller
Material Adverse Effect"). Each of Seller, each Seller Sub and Cemax-Icon
is duly qualified to do business as a foreign corporation in each
jurisdiction where the character of the Acquired Assets held by it or the
nature of the Businesses make such qualification necessary for it to
conduct the Businesses as currently conducted by it except for such
failures that, individually or in the aggregate, have not had and are not
reasonably likely to have a Seller Material Adverse Effect. Seller has
delivered to Purchaser true and complete copies of the respective
certificates of incorporation and by-laws of Seller, Seller Subs and
Cemax-Icon, in each case as amended through July 31, 1998; the certificate
of incorporation and by-laws of Cemax-Icon so delivered are in full force
and effect.
SECTION 3.02. Authority; Execution and Delivery; Enforceability.
Each of Seller and each Seller Sub has full corporate power and authority
to execute this Agreement and the Transaction Documents to which it is, or
is specified to be, a party and to consummate the Acquisition and the other
transactions contemplated hereby and thereby. The execution and delivery by
Seller of this Agreement and by each of Seller and each Seller Sub of the
Transaction Documents to which it is, or is specified to be, a party and
the consum mation by each of Seller and each Seller Sub of the Acquisition
and the other transactions contemplated hereby and thereby have been duly
authorized by all necessary corporate action and no other corporate action
is required on the part of Seller, any Seller Sub or Cemax-Icon in order to
authorize the execution, delivery and performance of this Agreement or any
of the Transaction Documents. Seller has duly executed and delivered this
Agreement and prior to the Initial Closing, each of Seller and each Seller
Sub will have duly executed and delivered each Transaction Document to
which it is, or is specified to be, a party, and this Agreement
constitutes, and each other Transaction Document to which it is, or is
specified to be, a party will after the Initial Closing constitute, its
legal, valid and binding obligation, enforceable against it in accordance
with its terms.
SECTION 3.03. No Conflicts; Consents. (a) Except as provided in
Schedule 3.03(a), the execution and delivery by Seller of this Agreement do
not, the execu tion and delivery by Seller and each Seller Sub of each
other Transaction Document to which it is, or is specified to be, a party
will not, and the consummation of the Acquisition and the other
transactions contemplated hereby
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36
and thereby and compliance by Seller and Seller Subs with the terms hereof
and thereof will not result in any violation of or default (with or without
notice or lapse of time, or both) under, or give rise to a right of termina
tion, cancelation or acceleration of any obligation or to loss of a
material benefit under or result in the creation of any Lien upon any of
the properties or assets of Seller or any of its subsidiaries under, any
provision of (i) the certificate of incorporation or by-laws of Seller, any
Seller Sub or Cemax-Icon, (ii) any Contract to which Seller, any Seller Sub
or Cemax-Icon is a party or by which any of their respective properties or
assets is bound or (iii) any judgment, order, injunction, writ, award,
decree, ruling or other restriction of any court ("Judgment") or statute,
law, ordinance, rule or regulation ("Law") applicable to Seller, any Seller
Sub or Cemax-Icon or their respective properties or assets, other than, in
the case of clauses (ii) and (iii) above, any such items that, individually
or in the aggregate, have not had and are not reasonably likely to have a
Seller Material Adverse Effect.
(b) Except as provided in Schedule 3.03(b), no consent, approval,
license, permit, order or authorization ("Consent") of, or registration,
declaration or filing with, any Federal, state, local or foreign government
or any court of competent jurisdiction, administrative agency or commis
sion or other governmental or regulatory authority or instrumentality,
domestic or foreign (a "Governmental Entity") is required to be obtained or
made by or with respect to Seller, any Seller Sub or Cemax-Icon in connec
tion with the execution, delivery and performance of this Agreement or any
other Transaction Document or the consummation of the Acquisition or the
other transactions contemplated hereby and thereby, other than (I)
compliance with and filings under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and the rules and regulations
thereunder (the "HSR Act"), the European Union Merger Control Regulation
and under the antitrust or competition laws of any applicable country
outside the United States of America (collectively, the "Non-U.S.
Competition Laws"), (II) compliance with and filings under Section 13(a) of
the Securities Exchange Act of 1934, as amended, and the rules and
regulations thereunder (the "Exchange Act"), (III) those that may be
required solely by reason of Purchaser's (as opposed to any other third
party's) participation in the Acquisition and the other transactions
contemplated hereby and by the other Transaction Documents, (IV) those that
may be required by the rules and regulations of the works councils
governing the relationships of those Seller Subs domiciled in Europe with
their employees and (V) those the failure of which to obtain or make,
individually or in the aggregate, are not reasonably likely to have a
Seller Material Adverse Effect.
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37
SECTION 3.04. Financial Statements. (a) Schedule 3.04(a) sets
forth a consolidated balance sheet of the Businesses as of December 31,
1997 (the "Balance Sheet"), and a consolidated statement of operating
revenues and expenses of the Businesses for the year ended December 31,
1997 (the "Statement of Operating Revenues and Expenses" and, together with
the Balance Sheet and the notes to the Balance Sheet and the Statement of
Operating Revenues and Expenses, "Businesses Financial Statements"). The
Businesses Financial Statements (i) have been prepared on the basis of
presentation described in the notes to the Businesses Financial Statements,
(ii) are derived from the audited consolidated financial statements of
Seller and its subsidiaries as of and for the year ended December 31, 1997
(the "Seller Financial Statements"), (iii) fairly present in all material
respects the financial position of the Businesses as of the date of such
Businesses Financial Statements and the results of operations of the
Businesses for the periods covered by the Businesses Financial State ments
and (iv) have been prepared in conformity with GAAP applied on a consistent
basis with the Seller Financial Statements, except in the case of clauses
(iii) and (iv), (A) as described in the notes to the Businesses Financial
Statements and (B) that the Businesses Financial Statements (1) are not a
complete set of the financial statements required by GAAP, (2) do not have
full footnote disclosure required by GAAP and (3) are based on a
materiality thres hold determined for Seller and its subsidiaries, taken as
a whole, and not for the Businesses.
(b) The Businesses do not have any liabilities of a nature
required by GAAP to be reflected on a consolidated balance sheet of the
Businesses or in the notes thereto that, individually or in the aggregate,
have had or are reasonably likely to have an adverse impact on the Acquired
Assets or the business, financial condition or results of operations of the
Businesses, taken as a whole, that results or is reasonably likely to
result in a Loss of $10,000,000 or more, except (i) as disclosed, reflected
or reserved against in the Balance Sheet or the notes thereto, (ii) for
items set forth in Schedule 3.04(b), (iii) for liabilities incurred in the
ordinary course of the Businesses consistent with past practice since the
date of the Balance Sheet and not in violation of this Agreement, (iv) for
Taxes and (v) for Excluded Liabilities. This representation shall not be
deemed breached as a result of a change in Law or in GAAP after the Initial
Closing Date.
(c) To the Knowledge of Seller, the Businesses do not have any
liabilities that, individually or in the aggre gate, have had or are
reasonably likely to have an adverse impact on the Acquired Assets or the
business, financial condition or results of operations of the Businesses,
taken as a whole, that results or is reasonably likely to result
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38
in a Loss of the Acquired Assets of $10,000,000 or more, except (i) as
disclosed, reflected or reserved against in the Balance Sheet or the notes
thereto, (ii) for items set forth in Schedule 3.04(c), (iii) for
liabilities incurred in the ordinary course of the Businesses consistent
with past practice since the date of the Balance Sheet and not in violation
of this Agreement, (iv) for Taxes and (v) for Excluded Liabilities. This
representation shall not be deemed breached as a result of a change in Law
or in GAAP after the Initial Closing Date.
SECTION 3.05. Assets Other than Real Property Interests. (a)
Seller and/or Seller Subs have good and valid title to all the Acquired
Assets, in each case free and clear of all mortgages, liens, security
interests, charges, easements, leases, subleases, covenants, rights of way,
options, restrictions or encumbrances of any kind (collectively, "Liens"),
except (i) such as are set forth in Schedule 3.05, (ii) mechanics',
carriers', workmen's, repairmen's or other like Liens arising or incurred
in the ordinary course of business, (iii) Liens arising under original
purchase price conditional sales contracts and equipment leases with third
parties entered into in the ordinary course of business, (iv) Liens for
Taxes that are not due and payable and (v) other imperfections of title or
encumbrances, if any, that do not and are not reasonably likely to,
individually or in the aggregate, materially impair the continued use and
operation of the assets to which they relate in the conduct of the
Businesses as presently conducted (the Liens described above, together with
the Liens referred to in clauses (b) through (f) of Section 3.06, are
referred to collectively as "Permitted Liens").
(b) This Section 3.05 does not relate to real property or
interests in real property, such items being the subject of Section 3.06,
or to Intellectual Property, such items being the subject of Section 3.07,
or to the Cemax- Icon Shares, such items being the subject of Section 3.09.
SECTION 3.06. Real Property. Schedule 3.06 sets forth a complete
list of all real property and interests in real property owned in fee by
Seller, Seller Subs or Cemax-Icon and Related to the Businesses, other than
any such property or interest constituting an Excluded Asset (individually,
an "Owned Property"). Schedule 3.06 sets forth a complete list of all real
property and interests in real property leased or subleased by Seller or
Seller Subs and Related to the Businesses, other than any such property or
interest constituting an Excluded Asset (individually, a "Leased
Property"). Seller has good and insurable fee title to all Owned Property
and good and valid title to the lease hold estates in all Leased Property
(an Owned Property or Leased Property being sometimes referred to herein,
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39
individually, as a "Business Property"), in each case free and clear of all
Liens, except (a) Liens described in clause (ii), (iii), (iv) or (v) of
Section 3.05(a), (b) such as are set forth in Schedule 3.06, (c) leases,
subleases and similar agreements set forth in Schedule 3.08, (d) ease
ments, covenants, rights-of-way and other similar restric tions publicly
recorded or shown by a title report or other similar report or listing
provided to Purchaser by Seller prior to July 31, 1998, (e) any condition
that may be shown by a current, accurate survey or physical inspection of
any Business Property made prior to the Initial Closing and (f) (i) zoning,
building and other similar restrictions, (ii) Liens that have been placed
by any developer, landlord or other third party on property over which
Seller, any Seller Sub or Cemax-Icon has easement rights or on any Leased
Property and subordination or similar agreements relating thereto and (iii)
unrecorded easements, covenants, rights-of-way and other similar
restrictions. None of the items set forth in clauses (d), (e) or (f) above,
individually or in the aggregate, materially impairs or is reasonably
likely materially to impair the continued use and operation of the property
to which they relate in the conduct of the Businesses as presently
conducted or have had or are reasonably likely to have a Seller Material
Adverse Effect.
SECTION 3.07. Intellectual Property. (a) Schedule 3.07(a) sets
forth a true and complete list of all patents, patents applications,
trademarks, trademark applications and trademark registrations that
constitute Transferred Intellectual Property or Cemax-Icon Intellectual
Property other than those that, individually and in the aggregate, are not
material to the operation or conduct of the Businesses as presently
conducted (the "Section 3.07 Intellectual Property"). With respect to all
Section 3.07 Intellectual Property that is registered or subject to an
application for registration, Schedule 3.07(a) sets forth a list of all
jurisdictions in which Section 3.07 Intellectual Property is registered or
registrations have been applied for and all registration and application
numbers.
(b) Except as set forth in Schedule 3.07(b) and except as
provided in the Intellectual Property Agreements, Seller or the relevant
Seller Sub is the owner or licensee of, and Seller and Seller Subs have the
right to assign or license, as applicable, the Transferred Intellectual
Property to Purchaser on the terms and conditions set forth in the
Intellectual Property Agreements, and the consumma tion of the Acquisition
and the other transactions contemplated hereby does not and will not
conflict with, alter or impair any such rights.
(c) Except as set forth in Schedule 3.07(c), Cemax-Icon is the
owner, licensee of or has the right to
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license all Cemax-Icon Intellectual Property, and the consummation of the
Acquisition and the other transactions contemplated hereby does not and
will not conflict with, alter or impair any such rights.
(d) Except as set forth in Schedule 3.07(d), as of July 31, 1998,
since the Relevant Date (to the Knowledge of Seller, with respect to the
period prior to the Spin-Off Date) none of Seller, any Seller Sub or
Cemax-Icon has received written notice of a Proceeding that is pending,
and, to the Knowledge of Seller, there is no Proceeding threatened, nor to
the Knowledge of Seller is there a reasonable basis therefor, which is
material to the Businesses that (a) challenges the rights of Seller or any
Seller Sub in respect of any Transferred Intellectual Property or
Cemax-Icon Intellectual Property or (b) asserts that with respect to the
Businesses, Seller, any Seller Sub or Cemax-Icon is infringing or
misappropriating any Intellectual Property or is, except as set forth in
Schedule 3.07(d), required to pay any royalty, license fee, charge, or
other amount with regard to any Intellectual Property. Except as set forth
in Schedule 3.07(d), as of July 31, 1998, none of the Transferred
Intellectual Property or Cemax-Icon Intellectual Property is subject to any
Judgment by or with any Governmental Entity, or has been the subject of any
litigation since the Relevant Date (to the Knowledge of Seller, with
respect to the period prior to the Spin-Off Date), whether or not resolved
in favor of Seller or any Seller Sub other than for such Judgments that,
individually and in the aggregate, have not had and are not reasonably
likely to have a Seller Material Adverse Effect.
(e) To the Knowledge of Seller, none of the Transferred
Intellectual Property or Cemax-Icon Intellectual Property is being
infringed upon, misappropriated or otherwise violated in any material
respect by any other person except as set forth in Schedule 3.07(e).
(f) For purposes of this Section 3.07, "Cemax- Icon Intellectual
Property" means all Intellectual Property used, or held by Cemax-Icon for
use, in the operation or conduct of the businesses of Cemax-Icon.
(g) Notwithstanding anything to the contrary in this Agreement or
in the Seller Intellectual Property Agreement, the Seller does not make any
representation or warranty relating to the Intellectual Property referred
to in Section 2.3 of the Seller Intellectual Property Agreement or to
intellectual property rights being provided directly by 3M pursuant to
Sections 3.1 and 4.1 of the 3M Intellectual Property Agreement.
SECTION 3.08. Contracts. (a) Except as set forth in Schedule
3.08, as of July 31, 1998, (x) no Contract
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41
that constitutes an Acquired Asset and (y) Cemax-Icon is not a party or
bound by any Contract that, in each case is:
(i) a written employment agreement or employment contract that
has an aggregate future liability in excess of $300,000 and is not
terminable by Seller by notice of not more than 60 days for a cost of
less than $300,000;
(ii) a collective bargaining agreement or other Contract with any
labor organization, union or association;
(iii) or contains a covenant not to compete (other than pursuant
to any radius restriction contained in any lease, reciprocal easement
or development, construction, operating or similar agreement) that
materially limits the conduct of the Businesses as presently conducted
or that would be applicable following the Initial Closing to the
conduct or operation of the businesses of Purchaser and its affiliates
(other than the Businesses);
(iv) a lease, sublease or similar Contract for an annual rent in
excess of $300,000 with any person under which Seller, any Seller Sub
or Cemax-Icon is a lessor or sublessor of, or makes available for use
to any person, (A) any Business Property or (B) any portion of any
premises otherwise occupied by Cemax-Icon;
(v) a lease, sublease or similar Contract with any person under
which (A) Seller, any Seller Sub or Cemax- Icon is lessee of, or holds
or uses, any machinery, equipment, vehicle or other tangible personal
property owned by any person or (B) Seller, any Seller Sub or
Cemax-Icon is a lessor or sublessor of, or makes available for use by
any person, any tangible personal property owned or leased by Seller,
Seller Sub or Cemax-Icon, in any such case has an aggregate future
liability or receivable, as the case may be, in excess of $300,000 and
is not terminable by Seller, any Seller Sub or Cemax-Icon by notice of
not more than 60 days for a cost of less than $300,000;
(vi) (A) a continuing Contract for the future purchase by Seller,
any Seller Sub or Cemax-Icon of materials, supplies, equipment or
services (other than purchase orders for inventory in the ordinary
course of business consistent with past practice and calling for
performance within six months of the date of such order), (B) a
management, consulting or other similar Contract for services to be
provided to Seller, any Seller Sub or Cemax-Icon or (C) an advertising
agreement or arrangement, in any such case that has an
<PAGE>
42
aggregate future liability to any person in excess of $300,000 and is
not terminable by Seller, any Seller Sub or Cemax-Icon by notice of
not more than 60 days for a cost of less than $300,000;
(vii) a material license, option or other Contract relating in
whole or in part to the Transferred Intellectual Property (including
any license or other Contract under which Seller, any Seller Sub or
Cemax- Icon is licensee or licensor of any Transferred Intellectual
Property);
(viii) (A) a Contract under which Seller, any Seller Sub or
Cemax-Icon has borrowed any money from, or issued any note, bond,
debenture or other evidence of indebtedness to, any person, in any
such case that, individually, is in excess of $300,000 or (B) any
other note, bond, debenture or other evidence of indebtedness issued
to any person, in any such case that, individually, is in excess of
$300,000;
(ix) a Contract (including any so-called take-or-pay or keepwell
agreement) under which (A) any person has directly or indirectly
guaranteed indebtedness, liabilities or obligations of Seller, any
Seller Sub or Cemax-Icon or (B) Seller, any Seller Sub or Cemax-Icon
has directly or indirectly guaranteed indebtedness, liabilities or
obligations of any other person (in each case other than endorsements
for the purpose of collec tion in the ordinary course of business), in
any such case that, individually, is in excess of $100,000;
(x) a Contract under which Seller, any Seller Sub or Cemax-Icon
has, directly or indirectly, made any advance, loan, extension of
credit or capital contri bution to, or other investment in, any person
(other than Seller, any Seller Sub or Cemax-Icon and other than
extensions of trade credit in the ordinary course of the Businesses),
in any such case that, individually, is in excess of $100,000;
(xi) a Contract granting a Lien upon any Business Property or any
other Acquired Asset;
(xii) a Contract that will be assumed by the Businesses after the
Closing with (A) Seller, any Seller Sub or any shareholder or
affiliate of Seller, or (B) any officer, director or employee of
Seller or any of its affiliates (other than employment agreements
covered by clause (i) above);
(xiii) a Contract with 3M or any of its subsidiaries that (A) has
an aggregate future liability to any person in excess of $300,000 and
is not terminable by
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43
Seller, Seller Sub or Cemax-Icon, as the case may be, by notice of not
more than 60 days for a cost of less than $300,000 or (B) involves the
provision of services, raw materials or Intellectual Property that in
each case are necessary for and essential to the operation of the
Businesses as conducted on July 31, 1998;
(xiv) a Contract for any joint venture, partnership or similar
arrangement;
(xv) a Contract providing for the services of any dealer,
distributor, sales representative, franchisee or similar
representative that are reasonably likely to involve the payment or
receipt over the life of such Contract in excess of $300,000 by
Seller, any Seller Sub or Cemax-Icon, other than customer contracts
(including with original equipment manufacturers) entered into in the
ordinary course of business and consistent with past practices;
(xvi) a Contract providing for or relating to any exchange or
hedge of risks relating to the prices or level of currencies,
commodities or interest rates; or
(xvii) a Contract other than as set forth above to which Seller,
any Seller Sub or Cemax-Icon is a party or by which it or any of its
assets or businesses is bound or subject that is material to the
Businesses or the use or operation of the Acquired Assets, other than
customer contracts (including with original equipment manufacturers)
entered into in the ordinary course of business and consistent with
past practices.
(b) Except as set forth in Schedule 3.08, to the Knowledge of
Seller, as of July 31, 1998, all Contracts listed in the Schedules are
valid, binding and in full force and effect, and except for such failures
to be valid, binding, in full force and effect that, individually or in the
aggregate, have not had and are not reasonably likely to have a Seller
Material Adverse Effect. Except as set forth in Schedule 3.08, Seller Subs
and Cemax-Icon have performed all material obligations required to be
performed by them to date under the Assigned Contracts, and they are not
(with or without the lapse of time or the giving of notice, or both) in
breach or default in any material respect thereunder and, to the knowledge
of Seller, no other party to any Assigned Contract is (with or without the
lapse of time or the giving of notice, or both) in breach or default in any
material respect thereunder, except for such noncompliance, breaches and
defaults that, individually or in the aggregate, have not had and are not
reasonably likely to have a Seller Material Adverse Effect.
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SECTION 3.09. Cemax-Icon Shares. Except as described in Schedule
3.09(a), Seller, directly or through one or more wholly owned subsidiaries,
has good and valid title to the Cemax-Icon Shares, free and clear of any
Liens. Except as described in Schedule 3.09(b), there are no outstanding or
authorized (i) shares of capital stock of Cemax-Icon other than the
Cemax-Icon Shares, (ii) securities convertible into or exchangeable for any
of the Cemax-Icon Shares or (iii) options, warrants, preemptive rights or
other rights to acquire any of the Cemax-Icon Shares. Assuming Purchaser
has the requisite power and authority to be the lawful owner of the
Cemax-Icon Shares, upon delivery to Purchaser at the Initial Closing of
certificates representing the Cemax-Icon Shares, duly endorsed by Seller
for transfer to Purchaser, and upon Seller's receipt of the Initial Closing
Date Purchase Price relating to the Cemax- Icon Shares, good and valid
title to the Cemax-Icon Shares will pass to Purchaser, free and clear of
any Liens. Other than this Agreement, the Cemax-Icon Shares are not subject
to any voting trust arrangement or other contract, agreement or arrangement
relating to the voting, dividend rights or disposition of the Cemax-Icon
Shares.
SECTION 3.10. Investments. Schedule 3.10 sets forth all
Investments (other than Investments that are Excluded Assets) owned
directly or indirectly by Seller, any Seller Sub or Cemax-Icon on July 31,
1998 that are Related to the Businesses.
SECTION 3.11. Permits. Schedule 3.11 sets forth all material
certificates, licenses, permits, authorizations and approvals ("Permits")
issued or granted to Seller, any Seller Sub or Cemax-Icon by Governmental
Entities that are Related to the Businesses. Seller, each Seller Sub and
Cemax-Icon have been issued or granted by Governmental Entities all Permits
that are necessary for the conduct of the Businesses except for such
Permits, the lack of which, individually or in the aggregate, have not had
and are not reasonably likely to have a Material Adverse Effect. Except as
set forth in Schedule 3.11, (a) all such Permits are validly held by
Seller, Seller Subs or Cemax-Icon, and Seller, relevant Seller Sub or
Cemax-Icon has complied in all material respects with all terms and
conditions thereof, other than such Permits the absence of which or such
non- compliances which, individually or in the aggregate, have not had or
are not reasonably likely to have a Seller Material Adverse Effect, (b)
since the Relevant Date (to the Knowledge of Seller, with respect to the
period prior to the Spin-Off Date), neither Seller nor any Seller Sub or
Cemax- Icon has received written notice of any Proceedings relating to the
revocation or modification of any such Permits the loss of which,
individually or in the aggregate, has had and is reasonably likely to have
a Seller Material Adverse Effect, and (c) to the Knowledge of Seller, none
of such
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45
Permits will be subject to suspension, modification, revocation or
non-renewal as a result of the execution and delivery of this Agreement or
the consummation of the Acquisition, other than such suspensions,
modifications, revocations or non-renewals which, individually or in the
aggregate, have not had or are not reasonably likely to have a Seller
Material Adverse Effect.
SECTION 3.12. Insurance. Seller, each Seller Sub and Cemax-Icon
maintain policies of fire and casualty, liability and other forms of
insurance with respect to the Businesses and the Acquired Assets in such
amounts, with such deductibles and against such risks and losses as are, in
Seller's judgment, reasonable for the Businesses. The material insurance
policies maintained by Seller, Seller Subs and Cemax-Icon with respect to
the Businesses are listed in Schedule 3.12. All policies are in full force
and effect, all premiums due and payable thereon have been paid (other than
retroactive or retrospective premium adjustments that are not yet, but may
be, required to be paid with respect to any period ending prior to the
Initial Closing Date), and no notice of cancelation or termination has been
received with respect to any such policy which has not been replaced on
substantially similar terms prior to the date of such cancelation.
SECTION 3.13. Sufficiency of Acquired Assets. (a) Except as set
forth in Schedule 3.13, the Acquired Assets (together with the Excluded
Assets and the facili ties, services and supplies to be provided pursuant
to the Shared Facilities Agreement and the Transition Services Agreement)
comprise all the assets, properties and rights primarily used or primarily
held for use by Seller or Seller Subs in connection with the Businesses.
Except as set forth in Schedule 3.13, the Acquired Assets (together with
the Excluded Assets and the facilities, services and supplies to be
provided by Seller and Seller Subs pursuant to the Shared Facilities
Agreement and the Transition Services Agreement) constitute all the assets,
properties and rights necessary for the conduct of Businesses immediately
following the Final Closing in all material respects as currently conducted
by Seller and Seller Subs.
(b) All material Acquired Assets that are classified as capital
assets on the Balance Sheet (other than any such capital assets disposed of
in the ordinary course (or as may be contemplated or permitted by Section
3.20 and Section 6.01 and the related Schedules) subsequent to the date of
the Balance Sheet and prior to the execution of this Agreement and other
than any Excluded Assets) are in satisfactory condition and working order,
except for ordinary wear and tear, for use in the Businesses in the
ordinary course of business consistent with past practices.
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46
SECTION 3.14. Taxes. (a) For purposes of this Agreement:
"Tax" means any tax, governmental fee or other like assessment or
charge of any kind whatsoever (including any tax imposed under Subtitle A
of the Code and any net income, alternative or add-on minimum tax, gross
income, gross receipts, sales, use, ad valorem, value-added, transfer,
franchise, profits, license, withholding tax on amounts paid, payroll,
employment, excise, severance, stamp, capital stock, occupation, property,
environmental or windfall profit tax, premium, custom, duty or other tax),
together with any interest, penalty, addition to tax or additional amount
due, imposed by any Governmental Entity (domestic or foreign) responsible
for the imposition of any such tax (a "Taxing Authority").
"Code" means the Internal Revenue Code of 1986, as amended.
"Tax Return" means any return, declaration, report, form, claim
for refund, information return or statement relating to Taxes, any
estimated return and any schedule or attachment to any of the foregoing,
and any amendment to any of the foregoing.
(b) Except as set forth in Schedule 3.14,
(i) all Tax Returns required to be filed on or before July 31,
1998 (taking into account applicable extensions) by or with respect to
Cemax-Icon have been duly filed and such returns are accurate and
complete;
(ii) all Taxes shown to be due on such Tax Returns or otherwise
due by or with respect to Cemax-Icon have been timely paid and
Cemax-Icon has maintained adequate provision on its books for such
Taxes that have accrued but are not yet due;
(iii) no deficiencies or claims for any Taxes have been proposed,
asserted, or assessed against or with respect to Cemax-Icon (and are
currently pending) and no such claims are reasonably anticipated;
(iv) Cemax-Icon is not currently the subject of any Tax audit or
examination and no correspondence has been received from any Taxing
Authority indicating that any such Tax audit or examination is being
proposed, planned or threatened;
(v) there are no outstanding waivers or agreements extending the
applicable statute of limitations for any period with respect to the
assessment or collection of
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47
any Taxes proposed, asserted or assessed against or with respect to
Cemax-Icon;
(vi) Cemax-Icon will not be required, as a result of (A) a change
in accounting method for a Tax period beginning on or before the
Initial Closing, to include any adjustment under Section 481(c) of the
Code (or any similar provision of state, local or foreign law) in
taxable income for any Tax period beginning on or after the Initial
Closing Date, or (B) any "closing agree ment" as described in Section
7121 of the Code (or any similar provision of state, local or foreign
Tax law), to include any item of income in or exclude any item of
deduction from any Tax period beginning on or after the Initial
Closing;
(vii) there are no Liens on any of the Acquired Assets or any of
the assets of Cemax-Icon that arose in connection with any failure (or
alleged failure) to pay any Tax;
(viii) Cemax-Icon is not obligated to make, nor is it a party to
any agreement that under certain circum stances could obligate it to
make, any payments that will not be deductible under Section 280G of
the Code (or any similar provision of state, local or foreign law) and
none of the Assumed Liabilities constitutes such a payment;
(ix) Cemax-Icon is not a party to any Tax allocation or sharing
agreement;
(x) no Acquired Asset that constitutes a "United States real
property interest" within the meaning of Section 897 of the Code is
being transferred by a person that is a "foreign person" within the
meaning of the Code or is subject to withholding under Section 1445 of
the Code;
(xi) Cemax-Icon has never been a member of an affiliated,
combined, consolidated or unitary Tax group for purposes of filing any
Tax Return, other than, for purposes of filing consolidated U.S.
Federal income tax returns, a group the common parent of which was
Seller or Cemax-Icon;
(xii) no closing agreements, private letter rulings, technical
advice memoranda or similar agreement or rulings have been entered
into or issued by any Taxing Authority with respect to Seller or any
affiliate in connection with the Businesses or with respect to
Cemax-Icon;
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48
(xiii) set forth on Schedule 3.14 is each state in which
Cemax-Icon is registered for sales tax purposes;
(xiv) none of Seller, any of Seller's affiliates, Cemax-Icon or
any predecessor to Cemax-Icon has made with respect to Seller, any
Seller Sub, Cemax-Icon, any predecessor of Cemax-Icon, or any assets
of the Businesses any consent under Section 341 of the Code;
(xv) Seller has made due inquiry, including reviewing available
Records and requesting information from the appropriate persons
(including outside service providers and advisors), and found nothing
indicating (A) that any disclosure statement pursuant to Section
6662(c)(2) of the Code or a similar provision of any state, local or
foreign law has ever been filed by Seller or any Seller Sub with
respect to the ownership or operation of the Businesses or the
Acquired Assets or by or with respect to Cemax-Icon or any entity that
is or was a member of the same consolidated, combined, affiliated or
unitary Tax group as Cemax-Icon, or (B) that any Taxing Authority has
ever claimed or asserted that Cemax-Icon may be subject to a Tax for
which it has not filed a corresponding Tax Return or that any Tax for
which no corresponding Tax Return was filed may apply to Seller or any
Seller Sub with respect to the ownership of operation of the
Businesses or the Acquired Assets;
(xvi) none of the Acquired Assets is an entity interest (or an
interest convertible or exchangeable into an equity interest) in (A) a
non-U.S. person or (B) any other person taxed in the U.S. on a
pass-thru basis (including, but not limited to, an entity taxed as a
partnership or branch);
(xvii) none of the Acquired Assets is "tax exempt use property"
within the meaning of Section 168(h) of the Code; and
(xviii) none of the Acquired Assets is a lease made pursuant to
Section 168(f)(8) of the Internal Revenue Code of 1954.
SECTION 3.15. Proceedings. Schedule 3.15 sets forth a list, as of
July 31, 1998, of all pending, or to the knowledge of Seller, threatened,
suits, actions, demands, claims, hearings, investigations, or proceedings
("Proceedings") related to the Businesses or against any Acquired Asset and
that (a) relate to or involve more than $250,000, (b) seek any material
injunctive relief or (c) may give rise to any legal restraint on or
prohibition against the transactions contemplated by this Agreement. To the
Knowledge of Seller, except as set forth in Schedule 3.15,
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49
as of July 31, 1998, neither Seller nor any Seller Sub is a party or
subject to or in default under any Judgment appli cable to the conduct of
the Businesses or any Acquired Asset or Assumed Liability, other than for
such Judgments that, individually and in the aggregate, have not had and
are not reasonably likely to have a Seller Material Adverse Effect. Except
for any Proceedings set forth in Schedule 3.15, there are no Proceedings,
that, individually or in the aggregate, have had or are reasonably likely
to have an adverse impact on the Acquired Assets or the business, financial
condition or results of operations of the Businesses, taken as a whole,
that results or is reasonably likely to result in a Loss of $5,000,000 or
more.
SECTION 3.16. Benefit Plans. (a) U.S. Benefits.
(i) Schedule 3.16 contains a list of all "employee pension
benefit plans" (as defined in Section 3(2) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")), maintained or
contributed to by Seller, any Seller Sub or Cemax-Icon for the benefit
of any U.S. Eligible Employees (as amended to date, "Seller U.S.
Pension Plans") and all "employee welfare benefit plans" (as defined
in Section 3(1) of ERISA), bonus, stock option, stock purchase,
deferred compensation plans or arrangements and other employee fringe
benefit plans maintained, or contributed to, by Seller or any of its
affiliates for the benefit of any U.S. Eligible Employees (all the
foregoing, as amended to date, including Seller U.S. Pension Plans,
being herein called "Seller U.S. Benefit Plans"). Seller has made
available to Purchaser true, complete and correct copies of (1) each
Seller U.S. Benefit Plan (or, in the case of any unwritten Seller U.S.
Benefit Plans, descriptions thereof) and (2) the most recent summary
plan description for each Seller U.S. Benefit Plan for which such a
summary plan description is required.
(ii) Each Seller U.S. Benefit Plan has been administered in all
material respects in accordance with (a) its terms and (b) the
applicable provisions of ERISA, the Code, all other Laws and all
applicable collective bargaining agreements. Except as set forth in
Schedule 3.16, there are no Proceedings pending, or, to the Knowledge
of Seller, threatened against or involving any Seller U.S. Benefit
Plan and, to the Knowledge of Seller, there are no investigations by
any Governmental Entity or other claims (except routine claims for
benefits payable in the normal operation of the Seller U.S. Benefit
Plans) pending or threatened against or involving any Seller U.S.
Benefit Plan or asserting any rights to benefits under any Seller U.S.
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Benefit Plan, in each case that could result in a material liability
to the Employees.
(iii) Except as set forth on Schedule 3.16, Cemax- Icon has not
at any time been required to contribute to any Seller U.S. Pension
Plan that is (a) a "multi employer plan" within the meaning of Section
4001(a)(3) of ERISA or (b) subject to Title IV of ERISA.
(iv) Except as set forth on Schedule 3.16, none of the Seller
U.S. Benefit Plans provides post-retirement medical benefits,
post-retirement death benefits or other post-retirement welfare
benefits, except as required under Sections 601 through 609 of ERISA,
Section 4980A of the Code or other applicable Laws and neither Seller
with respect to the U.S. Eligible Employees, nor Cemax-Icon, has made
any representation to any current or former U.S. Eligible Employee
regarding such post-retirement benefits which constitutes a contract
or binding obligation other than those that they may modify or
discontinue at any time.
(v) All contributions to, and payments from, the Seller U.S.
Benefit Plans sponsored by Cemax-Icon which may have been required to
be made in accordance with such Plans and, when applicable, Section
302 of ERISA or Section 412 of the Code, have been timely made. All
such contributions to the Seller U.S. Benefit Plans sponsored by
Cemax-Icon and all payments under the Seller U.S. Benefit Plans
sponsored by Cemax-Icon, except those to a trust qualified under
Section 401(a) of the Code, for any period ending before the Initial
Closing Date that are not yet, but will be, required to be made with
respect to the U.S. Eligible Employees of the Businesses are disclosed
on Schedule 3.16. Cemax- Icon has funded or will fund each Seller U.S.
Benefit Plan sponsored by Cemax-Icon in accordance with its terms
through the Initial Closing, including the payment of applicable
premiums on any insurance contract funding a Seller U.S. Benefit Plan
sponsored by Cemax-Icon for coverage provided through the Initial
Closing.
(vi) No "prohibited transaction", as defined in Section 406 of
ERISA and Section 4975 of the Code, has occurred in respect of any
Seller U.S. Benefit Plan sponsored by Cemax-Icon which could give rise
to any material liability or tax under ERISA or the Code, and no civil
or criminal action brought pursuant to Part 5 of Title I of ERISA is
pending or, to the Knowledge of Seller, threatened in writing or
orally against any fiduciary of any Seller U.S. Benefit Plan sponsored
by Cemax-Icon.
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(vii) All of the Seller U.S. Benefit Plans sponsored by
Cemax-Icon which are intended to qualify under Section 401(a) of the
Code have received favorable determination letters from the IRS to the
effect that such plans are so qualified. No determination letter with
respect to any such Seller U.S. Benefit Plan sponsored by Cemax-Icon
has been revoked nor, to the Knowledge of Seller, has revocation of a
determination letter been threatened. No Seller U.S. Benefit Plan
sponsored by Cemax-Icon has been amended since the date of its most
recent determination letter or application therefor in any respect
which would adversely affect its qualification or materially increase
its cost, and no Seller U.S. Benefit Plan sponsored by Cemax-Icon has
been amended in a matter that would require security to be provided in
accordance with Section 401(a)(29) of the Code.
(viii) There have been no statements or communications made or
materials provided to any current or former U.S. Eligible Employee by
any person which constitutes a contract or binding obligation on
Seller to provide for any pension, welfare, or other insurance-type
benefits to any such employee or former employee, whether before or
after retirement, other than benefits under the Benefits Plans.
(b) Foreign Benefits.
(i) Schedule 3.16 contains a list of each plan, program or
arrangement maintained or contributed to by Seller, any Seller Sub or
Cemax-Icon for the benefit of any Foreign Eligible Employee that would
be considered a Seller U.S. Benefit Plan if it applied to U.S.
Eligible Employees except for any such plan, program or arrangement
mandated by statute or regulation (all of the foregoing being herein
called the "Seller Foreign Benefit Plans" and, together with the
Seller U.S. Benefit Plans, the "Benefit Plans"). All Benefit Plans
covering European Transferred Employees are referred to herein as
"European Benefit Plans" and all other Benefit Plans are referred to
herein as "Non-European Benefit Plans". Seller has made available to
Purchaser true, complete and correct copies of each Seller Foreign
Benefit Plan (or, in the case of any unwritten Seller Foreign Benefit
Plan, descriptions thereof).
(ii) Each Seller Foreign Benefit Plan has been administered in
all material respects in accordance with (a) its terms and (b) all
Laws and all applicable collective bargaining agreements. Except as
set forth in Schedule 3.16, there are no Proceedings pending or, to
the Knowledge of Seller, threatened against or involving any Seller
Foreign Benefit Plan and, to the
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52
Knowledge of Seller, there are no investigations by any Governmental
Entity or other claims (except for routine claims for benefits payable
in the normal option of the Seller Foreign Benefit Plans) pending or
threatened against or involving any Seller Foreign Benefit Plan or
asserting any rights to benefits under any Seller Foreign Benefit Plan
in each case that could result in material liability to the
Businesses.
(c) Except as set forth in Schedule 3.16 or as set forth in this
Agreement, no Transferred Employee will become entitled to any bonus,
retirement, severance, job security or similar benefit or any enhanced
benefit solely as a result of the transactions contemplated hereby.
SECTION 3.17. Compliance with Laws. (a) Except as set forth in
Schedule 3.17(a), the Businesses are in compliance in all respects with all
Laws, except for instances of noncompliance that, individually or in the
aggregate, have not had and are not reasonably likely to have a Seller
Material Adverse Effect. As of July 31, 1998, except as set forth in
Schedule 3.17(a), none of Seller and Seller Subs has received any written
communication since the Relevant Date (to the Knowledge of Seller, with
respect to the period prior to the Spin-Off Date) from a Governmental
Entity that alleges that the Businesses are not in compliance in any
material respect with any Laws. As of July 31, 1998, neither Seller nor any
Seller Sub has received any written notice since the Relevant Date (to the
Knowledge of Seller, with respect to the period prior to the Spin-Off Date)
that any investigation or review by any Governmental Entity with respect to
any Acquired Asset is pending or that any such investigation or review is
contemplated. This Section 3.17(a) does not relate to matters with respect
to (i) Taxes, which are the subject of Section 3.14, (ii) environmental
matters, which are the subject of Section 3.17(b) or (iii) benefits and
employment matters, which are the subject of Sections 3.16 and 3.18.
(b) Except as set forth in Schedule 3.17(b), and except for those
matters that, individually or in the aggregate, are not reasonably likely
to have a Seller Material Adverse Effect, (i) the Businesses are in
compliance with Environmental Laws, (ii) neither Seller nor any Seller Sub
has received any written communication since the Spin-Off Date, or to the
Knowledge of Seller, written or oral communication since the Relevant Date
from a Governmental Entity or other person that alleges that the Businesses
are not in compliance with or are subject to liability under any
Environmental Laws or that any investigation or cleanup of Hazardous
Substances is requested or demanded with respect to the Businesses under
any Environmental Law, (iii) the Businesses are not the subject of any
written claim or notice regarding potential
<PAGE>
53
responsibility for Hazardous Substance off-site disposal pursuant to the
Federal Comprehensive Environmental Response, Compensation, and Liability
Act or any other Environmental Law, (iv) to the Knowledge of Seller, no
real property currently or, since the Relevant Date, formerly owned or
operated by the Seller or Seller Subs is contaminated with any Hazardous
Substance which contamination requires investigation or remediation under
Environmental Law, and (v) Seller has delivered or made available to
Purchaser copies of all environmental reports, studies, assessments,
sampling data and other material environmental information in its
possession relating to the Business and its current or, since the Relevant
Date (to the Knowledge of Seller, with respect to the period prior to the
Spin-Off Date), former properties or operations.
The term "Environmental Laws" means all Judgments, Laws, permits,
authorizations, common law or enforceable agency requirements issued,
promulgated or entered into by any Governmental Entity, relating to: (A)
the protection, investigation or restoration of the environment, health,
safety or natural resources, (B) the handling, use, presence, disposal,
release or threatened release of any Hazardous Substance, or (C) noise,
odor, indoor air, employee exposure, wetlands, pollution, contamination or
any injury or threat of injury to persons or property relating to any
Hazardous Substance. The term "Hazardous Substances" means all explosive or
radioactive materials or substances, hazardous or toxic substances, wastes
or chemicals, petroleum (including crude oil or any fraction thereof),
asbestos or asbestos containing materials, and all other materials or
chemicals regulated pursuant to any Environmental Law.
SECTION 3.18. Employee and Labor Matters. (a) Except as set forth
in Schedule 3.18: (i) there is not any, and since the Relevant Date (to the
Knowledge of Seller, with respect to the period prior to the Spin-Off Date)
there has not been any, labor strike, work stoppage or lockout pending, or,
to the Knowledge of Seller, threatened, against the Businesses; (ii) there
are not any unfair labor practice charges or complaints against Seller or
any Seller Sub pending, or, to the Knowledge of Seller, threatened, in
connection with the conduct of the Businesses which there is a reasonable
possibility of adverse determination and that, if so determined,
individually or in the aggregate, are reasonably likely to have a Seller
Material Adverse Effect; (iii) there are not any pending, or, to the
Knowledge of Seller, threatened, union or work council grievances against
Seller or any Seller Sub in connection with the conduct of the Businesses
as to which there is a reasonable possibility of adverse determination and
that, if so determined, individually or in the aggregate, are reasonably
likely to have a Seller Material Adverse Effect; (iv) there are not
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54
any pending, or, to the Knowledge of Seller, threatened, charges in
connection with the conduct of the Businesses against the Seller or any
Seller Sub or any current or former employee of the Businesses before any
Federal, state, local or foreign agency responsible for the prevention of
unlawful employment practices which there is a reasonable possibility of
adverse determination and that, if so determined, individually or in the
aggregate, are reasonably likely to have a Seller Material Adverse Effect;
(v) Seller with respect to the Businesses and Cemax-Icon has complied in
all material respects with all labor and employment laws, including
provisions thereof relating to wages, hours, equal opportunity, collective
bargaining, the Americans With Disabilities Act, the Family and Medical
Leave Act and the payment of social security and other taxes; (vi) Seller
has heretofore made available to Buyer a list of all Eligible Employees on
short-term disability or other medical or non-medical leaves of absence
with a description of the reason for the absence and expected return date;
(vii) to the Knowledge of Seller, no Eligible Employee is subject to any
noncompetition, nondisclosure, confidentiality, employment, consulting or
similar agreement with persons other than Seller or Cemax-Icon that would
prevent the employee from working in the capacity in which he or she is
currently employed for the Businesses; (viii) there is no pending or, to
the Knowledge of Seller, threatened union organization activity by or among
any Eligible Employees; (ix) there is no charge, complaint or other action
pending against Seller with respect to the Businesses, or to the Knowledge
of Seller, any investigation commenced or threatened against Seller with
respect to the Occupational Safety and Health Act or comparable Laws of any
other Governmental Entity ("OSHA").
SECTION 3.19. Brokers or Finders. Seller represents, as to itself
and its affiliates, that no agent, broker, investment banker or other firm
or person is or will be entitled to any broker's or finder's fee or any
other commission or similar fee in connection with any of the transactions
contemplated by this Agreement, except, as to Seller and its affiliates,
Morgan Stanley & Co. Incorporated, whose fees and expenses will be paid by
Seller.
SECTION 3.20. Absence of Certain Changes. Except as disclosed on
Schedule 3.20, since the date of the Balance Sheet, Seller, the Seller Subs
and Cemax-Icon have conducted the Businesses in the ordinary course
consistent with past practice. As of July 31, 1998, except as disclosed in
Schedule 3.20, since the date of the Balance Sheet, there has not been any
event or occurrence (i) that has had or is reasonably likely to have a
Material Adverse Effect or (ii) of the type set forth in Sections 6.01(a)
(ii), (iii), (v), (vi), (vii), (viii), (ix), (x), (xi), (xii) and (xiii).
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SECTION 3.21. Products. Except as disclosed in Schedule 3.21:
(a)(i) Each of the products, goods and services Related to the
Businesses ("Products") currently produced or sold by Seller, any Seller
Sub or Cemax-Icon ("Current Products") (A) is in compliance in all material
respects with all applicable Laws and (B) except in the case of Current
Products produced or sold by Cemax-Icon, conforms in all material respects
to any promises or affirmations of fact made on the container or label or
in the product specifications for such Current Product.
(ii) To the Knowledge of Seller, each of the Products (other than
Current Products) produced or sold at any time by Seller, any Seller Sub or
Cemax-Icon (or any of their respective predecessors, including 3M and its
subsidiaries) that is currently supported and serviced by Seller, any
Seller Sub or Cemax-Icon (the "Former Products") (A) was, at the time of
its production or sale, in compliance in all material respects with all
then applicable Laws and (B) except in the case of Former Products produced
or sold by Cemax-Icon, conformed in all material respects to any promises
or affirmations of fact made on the container or label or in the product
specifications for such Former Product.
(b) To the Knowledge of Seller, there is no material design
defect with respect to any Current Product (other than any Current Product
produced or sold by Cemax- Icon).
(c)(i) Each Current Product contains warnings in accordance with
applicable Laws and current industry practice with respect to its contents
and use.
(ii) To the Knowledge of Seller, each Former Product contained,
at the time of its production or sale, warnings in accordance with then
applicable Laws and then current industry practice with respect to its
contents and use.
(d) To the Knowledge of Seller, no facts exist which would
reasonably be expected to furnish a substantial basis for the recall,
withdrawal or suspension by Seller, any Seller Sub or Cemax-Icon of any
material Current Product or material Former Product as a result of, or in
order to comply with, any U.S. federal, state or local law, regulation or
rule or order of any Governmental Entity.
(e)(i) All Current Products sold under all licenses and approvals
granted by or pending with any Governmental Entity in any country to market
any Current Product ("Product Registrations") are (A) manufactured and
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(B) to the Knowledge of Seller, in the case of Current Products sold
directly by Seller, any Seller Sub or Cemax- Icon to end-users, marketed,
in each case in all material respects in accordance with the specifications
and standards contained in the Product Registrations. Except in the case of
Current Products that are integrated into or used as a component in a
system that is produced or sold by others, (i) Seller, Seller Subs and
Cemax-Icon have the sole rights under the Product Registrations in the
United States and (ii) such registrations are in full force and effect.
(ii) To the Knowledge of Seller, all Former Products sold under
all licenses and approvals granted by or pending with any Governmental
Entity in any country to market any Former Product ("Former Product
Registrations") were manufactured and, in the case of Former Products sold
directly by Seller, any Seller Sub or Cemax-Icon to end-users, marketed in
all material respects in accordance with the specifications and standards
contained in the Former Product Registrations.
(f)(i) As of July 31, 1998, there are no pending and unsatisfied
statements, citations, warning letters, FDA Forms 483, or decisions by any
Governmental Entity that any Current Product is defective or fails to meet
any applicable standards promulgated by any such Governmental Entity. As of
July 31, 1998, there is no proceeding by the FDA or any other Governmental
Agency, including a grand jury investigation, a 405 hearing or a civil
penalty proceeding, pending, or to the Knowledge of Seller threatened,
against Seller, any Seller Sub or Cemax-Icon relating to the safety or
efficacy of the Current Products and, to the Knowledge of Seller, there is
no substantial basis for such a proceeding with respect to any material
Current Product.
(ii) As of July 31, 1998, to the Knowledge of Seller, there are
no pending and unsatisfied statements, citations, warning letters, FDA
Forms 483, or decisions by any Governmental Entity that any Former Product
is defective or fails to meet any applicable standards promulgated by any
such Governmental Entity. As of July 31, 1998, to the Knowledge of Seller,
there is no proceeding by the FDA or any other Governmental Agency,
including a grand jury investigation, a 405 hearing or a civil penalty
proceeding, pending or threatened against Seller, any Seller Sub or
Cemax-Icon relating to the safety or efficacy of the Former Products and,
to the Knowledge of Seller, there is no substantial basis for such a
proceeding with respect to any material Former Product.
(g)(i) To the Knowledge of Seller, no material Current Product
that is sold directly by Seller, any Seller Sub or Cemax-Icon to end-users
is being sold anywhere in the world without Product Registrations where the
existence of
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such Product Registrations is a prerequisite to or otherwise required in
connection with the sale of such Current Product under applicable Law.
(ii) To the Knowledge of Seller, no material Former Product that
was sold directly by Seller, any Seller Sub or Cemax-Icon to end-users was
sold anywhere in the world without Former Product Registrations where the
existence of such Former Product Registrations was, at the time of such
sale, a prerequisite to or otherwise required in connection with the sale
of such Former Product under then applicable Law.
(h) Schedule 3.21 sets forth, as of July 31, 1998, (i) all
products liability suits, actions, proceedings or claims made against
Seller, any Seller Sub or Cemax-Icon with respect to any Current Product or
Former Product since the Relevant Date (to the Knowledge of Seller, with
respect to the period prior to the Spin-Off Date) and (ii) any recall,
withdrawal or suspension by Seller, any Seller Sub or Cemax-Icon of any
Current Product or Former Product since the Relevant Date (to the Knowledge
of Seller, with respect to the period prior to the Spin-Off Date).
(i) To the Knowledge of Seller, no facts exist which would
reasonably be expected to furnish the basis for any material liability with
respect to the sale of any Current Product or Former Product (other than
any such Product produced or sold by Cemax-Icon) based upon a claim that
Seller or any Seller Sub has breached any express warranty or implied
warranty of merchantability or fitness for any particular purpose or any
similar warranty in connection with such sale in an amount that,
individually or in the aggregate, is in excess of the warranty reserve
reflected in the Businesses Financial Statements.
(j) To the Knowledge of Seller (which Knowledge shall be limited
to the period subsequent to January 1, 1995), (i) there is no material
design defect with respect to any Current Product produced or sold by
Cemax-Icon and (ii) no facts exist which would reasonably be expected to
furnish the basis for any material liability with respect to the sale of
any Current Product or Former Product produced or sold by Cemax-Icon based
upon a claim that Cemax-Icon has breached any express warranty or implied
warranty of merchantability or fitness for any particular purpose or any
similar warranty in connection with such sale in an amount that,
individually or in the aggregate, is in excess of the warranty reserve
reflected in the Businesses Financial Statements, except for any such
design defect or facts that, individually or in the aggregate, are not
reasonably likely to have a Material Adverse Effect.
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SECTION 3.22. Customers. Schedule 3.22 sets forth the 20 largest
customers of the Businesses by revenue for the year ended December 31,
1997. As of July 31, 1998, to the Knowledge of Seller, neither Seller nor
any Seller Sub has received any actual notice that any significant customer
of the Businesses (other than any customer of Cemax-Icon) (i) has ceased,
or will cease, to use the Products of the Businesses or (ii) has
substantially reduced, or will substantially reduce, the use of Products of
the Businesses.
SECTION 3.23. Suppliers. Schedule 3.23 sets forth the 20 largest
suppliers to the Businesses by purchase amount for the year ended December
31, 1997. As of July 31, 1998, to the Knowledge of Seller, none of Seller,
any Seller Sub or Cemax-Icon has received any actual notice that there has
been any material change in the price of the raw materials, supplies,
merchandise or other goods or services provided by such suppliers, or that
any such supplier will not sell raw materials, supplies, merchandise and
other goods to the Purchaser after the Initial Closing on terms and
conditions similar to those used in its current sales to Seller or any
Seller Sub.
SECTION 3.24. No Territorial Restrictions. Except as set forth on
Schedule 3.24, Seller, Seller Subs and Cemax-Icon are not restricted in any
material respect by any agreement or understanding with any other person
from carrying on the Businesses anywhere in the world.
ARTICLE IV
Limitations on Representations and Warranties of Seller
SECTION 4.01. LIMITATIONS AND EXCLUSIONS TO REPRESENTATIONS,
WARRANTIES, ETC. (A) PURCHASER ACKNOWLEDGES THAT, SHOULD THE INITIAL
CLOSING OCCUR, PURCHASER SHALL ACQUIRE THE ACQUIRED ASSETS WITHOUT ANY
REPRESENTATION OR WARRANTY AS TO MERCHANTABILITY OR FITNESS FOR ANY
PARTICULAR PURPOSE, IN AN "AS IS" CONDITION AND ON A "WHERE IS" BASIS,
EXCEPT AS REPRESENTED OR WARRANTED PURSUANT TO SECTION 3.04 WITH RESPECT TO
THE PREPARATION OF THE BUSINESSES FINANCIAL STATEMENTS IN CONFORMITY WITH
GAAP AND AS OTHERWISE EXPRESSLY REPRESENTED OR WARRANTED IN THIS AGREEMENT
AND THE OTHER TRANSACTION DOCUMENTS.
(B) NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH IN THIS
AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT, EXCEPT AS SHALL RESULT OR
ARISE OUT OF ANY WILFUL OR INTENTIONAL BREACH OF ANY OF SELLER'S OR SELLER
SUB'S COVENANTS OR AGREEMENTS CONTAINED IN THIS AGREEMENT OR ANY OTHER
TRANSACTION DOCUMENT, NO REPRESENTATION, WARRANTY, COVENANT OR AGREEMENT OF
SELLER AND SELLER SUBS CONTAINED IN
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THIS AGREEMENT (INCLUDING UNDER SECTION 7.01(E)) SHALL BE BREACHED OR
DEEMED BREACHED AS A RESULT OF, AND SELLER AND SELLER SUBS SHALL NOT HAVE
ANY LIABILITY FOR, ANY OF THE FOLLOWING: (I) ANY NEGATIVE IMPACT ON THE
BUSINESSES ARISING OUT OF OR RELATING TO ANY DISRUPTION (IN WORKFORCE,
PRODUCTION OR OTHERWISE) AT THE FERRANIA FACILITY OR ANY REDUCTION OR
CESSATION OF PRODUCTS BY ITALIAN CUSTOMERS OF PRODUCTS MANUFACTURED OR
ASSEMBLED AT THE FERRANIA FACILITY ON OR AFTER THE ANNOUNCEMENT OF THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR ANY OTHER TRANSACTION
DOCUMENT, (II) LOSS OF SELLER'S CUSTOMERS TO PURCHASER BETWEEN DECEMBER 31,
1997 AND THE FINAL CLOSING DATE AND (III) CONTRACTS TERMINATED BY THE
COUNTERPARTIES THERETO BECAUSE OF THE TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT.
(C) NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH IN THIS
AGREEMENT, NO REPRESENTATION, WARRANTY, COVENANT OR AGREEMENT IN THIS
AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT OR OTHERWISE SHALL BE DEEMED TO
HAVE BEEN MADE WITH RESPECT TO THE YEAR 2000 DATE FUNCTIONALITY COMPLIANCE
STATUS OF ANY PRODUCTS PRODUCED OR SOLD AT ANY TIME BY SELLER, ANY SELLER
SUB OR CEMAX-ICON (OR ANY OF THEIR RESPECTIVE PREDECESSORS, INCLUDING 3M
AND ITS SUBSIDIARIES), ANY INTERNAL INFORMATION TECHNOLOGY OR NON-
INFORMATION TECHNOLOGY SYSTEMS OF SELLER, ANY SELLER SUB OR CEMAX-ICON OR
ANY SUPPLIER OF GOODS OR SERVICES TO SELLER, ANY SELLER SUB OR CEMAX-ICON
OR ANY DISTRIBUTOR OR OTHER PERSON WITH WHOM SELLER, ANY SELLER SUB OR
CEMAX-ICON HAS A BUSINESS RELATIONSHIP.
(D) PURCHASER ACKNOWLEDGES THAT, (i) EACH OF THE REPRESENTATIONS
AND WARRANTIES OF SELLER CONTAINED IN ARTICLE III ARE EXPRESSLY LIMITED TO
THE PERIOD PRIOR TO THE INITIAL CLOSING, AND (ii) NONE OF SELLER, ANY
SELLER SUB OR CEMAX-ICON HAS MADE ANY REPRESENTATIONS OR WARRANTIES
WHATSOEVER WITH RESPECT TO EITHER (A) THE PERIOD BETWEEN THE INITIAL
CLOSING AND THE FINAL CLOSING OR (B) THE PERIOD SUBSEQUENT TO THE FINAL
CLOSING.
SECTION 4.02. NO ADDITIONAL REPRESENTATIONS. PURCHASER
ACKNOWLEDGES THAT NONE OF SELLER, ANY SELLER SUB, CEMAX-ICON NOR ANY OTHER
PERSON HAS MADE ANY REPRESENTATION OR WARRANTY, EXPRESSED OR IMPLIED, AS TO
THE ACCURACY OR COMPLETENESS OF ANY INFORMATION REGARDING THE BUSINESSES
AND THE ACQUIRED ASSETS FURNISHED OR MADE AVAILABLE TO PURCHASER AND ITS
REPRESENTATIVES, EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT OR THE
SCHEDULES HERETO.
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ARTICLE V
Representations and Warranties of Purchaser
Purchaser hereby represents and warrants to Seller as of July 31,
1998 and the Initial Closing Date as follows:
SECTION 5.01. Organization, Standing and Power. Purchaser is duly
organized, validly existing and in good standing under the laws of the
jurisdiction in which it is organized and has full corporate power and
authority and possesses all governmental franchises, licenses, permits,
authorizations and approvals necessary to enable it to own, lease or
otherwise hold its properties and assets and to carry on its business as
presently conducted, other than such franchises, licenses, permits,
authorizations and approvals the lack of which, individually or in the
aggregate, have not had and are not reasonably likely to have a material
adverse effect on the ability of Purchaser to consummate the Acquisition
and the other transactions contemplated hereby (a "Purchaser Material
Adverse Effect"). Purchaser has delivered to Seller true and complete
copies of the certificate of incorporation and by-laws of Purchaser, in
each case as amended through July 31, 1998.
SECTION 5.02. Authority; Execution and Delivery; Enforceability.
Purchaser has full power and authority to execute this Agreement and the
other Transaction Documents to which it is, or is specified to be, a party
and to consummate the Acquisition and the other transactions contemplated
hereby and thereby. Purchaser has full power and authority to grant to
Seller the rights set forth in the License Agreement. The execution and
delivery by Purchaser of this Agreement and the other Transaction Documents
to which it is, or is specified to be, a party and the consummation by
Purchaser of the Acquisition and the other transactions contemplated hereby
and thereby have been duly authorized by all necessary corporate action.
Purchaser has duly executed and delivered this Agreement and prior to the
Initial Closing will have duly executed and delivered each other
Transaction Document to which it is, or is specified to be, a party, and
this Agreement constitutes, and each other Transaction Document to which it
is, or is specified to be, a party will after the Initial Closing
constitute, its legal, valid and binding obligation, enforceable against it
in accordance with its terms.
SECTION 5.03. No Conflicts; Consents. (a) The execution and
delivery by Purchaser of this Agreement do not, the execution and delivery
by Purchaser of each other Transaction Document to which it is, or is
specified to be, a party will not, and the consummation of the Acquisition
and the other transactions contemplated hereby and thereby and compliance
by Purchaser with the terms hereof and
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61
thereof will not result in any violation of or default (with or without
notice or lapse of time, or both) under, or give rise to a right of
termination, cancelation or acceleration of any obligation or to loss of a
material benefit under, or result in the creation of any Lien upon any of
the properties or assets of Purchaser or any of its subsidiaries under, any
provision of (i) the certificate of incorporation or by-laws of the
Purchaser or any of its subsidiaries, (ii) any Contract to which Purchaser
or any of its subsidiaries is a party or by which any of their respective
properties or assets is bound or (iii) any Judgment or Law applicable to
Purchaser or any of its subsidiaries or their respective properties or
assets, other than, in the case of clauses (ii) and (iii) above, any such
items that, individually or in the aggregate, have not had and are not
reasonably likely to have a Purchaser Material Adverse Effect.
(b) No Consent of, or registration, declaration or filing with,
any Governmental Entity is required to be obtained or made by or with
respect to Purchaser or any of its subsidiaries in connection with the
execution, delivery and performance of this Agreement or any other
Transaction Document or the consummation of the Acquisition or the other
transactions contemplated hereby and thereby, other than (A) compliance
with and filings under the HSR Act and the Non-U.S. Competition Laws, (B)
compliance with and filings under Section 13(a) of the Exchange Act, and
(C) those that may be required solely by reason of the participation of
Seller and Seller Subs (as opposed to any other third party) in the
Acquisition and other transactions contemplated hereby and by the other
Transaction Documents).
SECTION 5.04. Litigation. There are not any (a) outstanding
Judgments against or affecting Purchaser or any of its subsidiaries, (b)
Proceedings pending or, to the knowledge of Purchaser, threatened against
or affecting Purchaser or any of its subsidiaries or (c) investigations by
any Governmental Entity that are, to the knowledge of Purchaser, pending or
threatened against or affecting Purchaser or any of its subsidiaries that,
in any case, individually or in the aggregate, have had or are reasonably
likely to have a Purchaser Material Adverse Effect.
SECTION 5.05. Availability of Funds. On the Initial Closing Date
and each European Closing Date, respectively, Purchaser shall have
sufficient funds available to enable it to consummate the Initial
Acquisition and each European Acquisition, respectively. Kodak BV shall
have sufficient funds available to it to enable it to fund the Loan in
accordance with the terms of the Loan Agreement.
SECTION 5.06. Brokers or Finders. Purchaser represents, as to
itself and its affiliates, that no agent,
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broker, investment banker or other firm or person is or will be entitled to
any broker's or finder's fee or any other commission or similar fee in
connection with any of the transactions contemplated by this Agreement,
except, as to Purchaser and its affiliates, Lehman Brothers and McKinsey &
Co., whose fees and expenses will be paid by Purchaser.
ARTICLE VI
Covenants
SECTION 6.01. Covenants of Seller, Seller Subs and Cemax-Icon
Relating to Conduct of Businesses. Except for matters set forth in Schedule
6.01 or otherwise expressly permitted by the terms of this Agreement, from
July 31, 1998 to the Initial Closing Date, Seller shall, and shall cause
Seller Subs and Cemax-Icon to, (i) conduct the Businesses in the ordinary
course, (ii) use commercially reasonable efforts to preserve the Businesses
and (iii) use commercially reasonable efforts to keep material
relationships with material customers and suppliers and with employees
intact. In addition (and without limiting the generality of the foregoing),
except as set forth in Schedule 6.01 or otherwise expressly permitted or
required by the terms of this Agreement, from July 31, 1998 to the Initial
Closing Date Seller shall not, and shall cause Seller Subs and Cemax-Icon
not to, do any of the following in connection with the Businesses without
the prior written consent of Purchaser, which consent shall not be
unreasonably withheld or delayed:
(i) adopt or amend in any material respect any Benefit Plan (or
any plan that would be a Benefit Plan if adopted) or enter into,
adopt, extend (beyond the Initial Closing Date), renew or amend any
collective bargaining agreement or other Contract with any labor
organization, union or association, except in each case as required by
Law;
(ii) grant to any executive officer or employee any increase in
compensation or benefits, except (A) in the ordinary course of
business and consistent with past practice, (B) as may be required
under existing agreements, (C) for any increases for which Seller
shall be solely obligated or (D) in connection with the Stay Bonus
Program;
(iii) except pursuant to the Bank Credit Agreements, incur or
assume any liabilities, obligations or indebtedness for borrowed money
or guarantee any such liabilities, obligations or indebtedness, in
each case in excess of $100,000;
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(iv) except pursuant to the Bank Credit Agreements, permit, allow
or suffer any Acquired Asset to become subjected to any Lien of any
nature whatsoever that would have been required to be set forth in
Schedule 3.05, 3.06 or 3.09 if existing on July 31, 1998;
(v) (A) cancel any indebtedness other than in the ordinary course
of business consistent with past practice (but in each case in an
amount not exceeding $100,000) or (B) waive any claims or rights other
than in the ordinary course of business consistent with past practice
(but in each case involving claims or rights with a value not in
excess of $250,000);
(vi) make any change in any method of accounting or accounting
practice or policy other than those required by GAAP or the applicable
Tax law;
(vii) acquire by merging or consolidating with, or by purchasing
a substantial portion of the assets of, or by any other manner, any
business or any corporation, partnership, association or other
business organization or division thereof or otherwise acquire any
assets (other than inventory) that are material, individually or in
the aggregate, to the Businesses;
(viii) except for intercompany transactions in the ordinary
course of business consistent with past practice and except for
transactions pursuant to Contracts in effect on July 31, 1998 (or any
renewal thereof permitted by the terms of this Agreement), pay, loan
or advance any amount to, or sell, transfer or lease any of its assets
to, or enter into any agreement or arrangement with, Seller or any of
its affiliates or 3M, in each case in excess of $300,000;
(ix) make or incur any capital expenditure that (i) is other than
in accordance with Seller's current capital spending plan or (ii)
individually, is in excess of $500,000 or make or incur any such
expenditures which, in the aggregate, are in excess of $1,500,000;
(x) sell, lease, license, transfer or otherwise dispose of any of
its assets except (A) inventory and obsolete or excess equipment or
other assets sold or disposed of in the ordinary course of business
and consistent with past practice, (B) any Excluded Asset described in
Section 1.02(b) or (C) other assets with an aggregate fair market
value not in excess of $3,000,000 sold in arms-length transactions;
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(xi) enter into any material lease of real property, except any
renewals of existing leases in the ordinary course of business;
(xii) enter into, renew, amend or modify any Contract with
respect to the CB coater at Seller's White City, Oregon facility,
other than any such Contract entered into on arms-length terms and
which does not provide for an initial term or any extension thereof at
the option of the counterparty thereto that extends beyond December
31, 2000;
(xiii) enter into, terminate or renew or amend or modify in any
material respect any Contract, except a Contract entered into,
terminated, renewed, amended or modified in the ordinary course of
business consistent with past practice which Contract would not have
been required to be listed on Schedule 3.08 pursuant to (A) Section
3.08(a)(i), (iii), (iv), (v) or (xiv) if such Contract had been
entered into prior to July 31, 1998, (B) Section 3.08(a)(vii) if such
Contract had been entered into prior to July 31, 1998, except, in the
case of this clause (B) for any Contract that does not affect in any
material respect the rights granted to Purchaser in the Transferred
Intellectual Property pursuant to the Seller Intellectual Property
Agreement, (C) Section 3.08(a)(vi) if such Contract had been entered
into prior to July 31, 1998 except for any such Contract entered in
connection with any trade shows sponsored by the Radiological Society
of North America Inc., (D) Section 3.08(a)(xiii) if such Contract had
been entered into prior to July 31, 1998, except in the case of this
clause (D), for any renewal of any such Contract necessary for the
continued operation and conduct of the Business, provided that any
such Contract shall not be extended for a term in excess of one year,
(E) Section 3.08(a)(xv) if such Contract had been entered into prior
to July 31, 1998 and such Contract is not terminable by Seller, any
Seller Sub or Cemax-Icon by notice of not more than 60 days for a cost
of less than $300,000 or (F) Section 3.08(a)(xvii) if such Contract,
in Seller's good faith judgment would have been required to be listed
on Schedule 3.08 if such Contract had been entered into prior to July
31, 1998 and such Contract is not terminable by Seller, any Seller Sub
or Cemax-Icon by notice of not more than 60 days for a cost of less
than $300,000;
(xiv) (A) cancel any of the insurance policies listed in Schedule
3.12 or (B) permit any of the insurance policies listed in Schedule
3.12 to expire without replacing the coverage available under any such
policy with substantively comparable coverage under
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another policy, provided that such coverage is available on
commercially reasonable terms; or
(xv) authorize any of, or commit or agree to take, whether in
writing or otherwise, to do any of, the foregoing actions.
SECTION 6.02. No Solicitation. (a) From July 31, 1998 to the
Initial Closing Date, Seller and Seller Subs shall not, nor shall any of
them authorize or permit any subsidiary, officer, director, employee,
affiliate or agent of any of them to, directly or indirectly, in any
manner, (i) solicit, initiate or encourage the submission of, any
acquisition proposal, (ii) enter into any Contract with respect to any
acquisition proposal or (iii) participate in any discussions or
negotiations regarding, or furnish to any person any information with
respect to, or take any other action to facilitate any inquiries or the
making of any proposal that constitutes, or may reasonably be expected to
lead to, any acquisition proposal. As used in this Section 6.02 (a),
"acquisition proposal" shall mean any proposal for a merger or other
business combination involving Seller or any of its subsidiaries that owns
any Acquired Assets or any proposal or offer to acquire in any manner,
directly or indirectly, an equity interest in or any voting securities of
Seller, any Seller Sub or Cemax-Icon or all or any portion of the Acquired
Assets, other than (A) the transactions contemplated by this Agreement, (B)
the sale of Inventory in the ordinary course of business, (C) the sale or
any transaction involving any Excluded Asset, (D) any sale, transfer or
other disposition in the ordinary course of business, (E) any sale or other
transaction involving the Ferrania Facility or the Florida Facility, (F)
any acquisition of voting securities of Seller under stock repurchase
programs publicly announced prior to July 31, 1998 and (G) exercises of
options for voting securities of Seller under Seller U.S. Benefit Plans.
(b) From the Initial Closing Date to the Final Closing Date,
Seller and Seller Subs shall not, nor shall any of them authorize or permit
any subsidiary, officer, director, employee, affiliate or agent of any of
them to, directly or indirectly, in any manner, (i) solicit, initiate or
encourage the submission of, any European Business acquisition proposal,
(ii) enter into any Contract with respect to any European Business
acquisition proposal or (iii) participate in any discussions or
negotiations regarding, or furnish to any person any information with
respect to, or take any other action to facilitate any inquiries or the
making of any proposal that constitutes, or may reasonably be expected to
lead to, any European Business acquisition proposal. As used in this
Section 6.02(b), "European Business acquisition proposal" shall mean any
proposal for a sale of any portion of the European
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Businesses other than (A) the transactions contemplated by this Agreement,
(B) the sale of Inventory in the ordinary course of business, (C) the sale
or any transaction involving any Excluded Asset, (D) any sale, transfer or
other disposition in the ordinary course of business, and (E) any sale or
other transaction involving the Ferrania Facility or the Florida Facility.
SECTION 6.03. Access to Information. (a) Seller, the Seller Subs
and Cemax-Icon shall afford to Purchaser and its accountants, counsel and
other representatives reasonable access to all the properties, Contracts,
commitments, Tax Returns, work papers of auditors, books and records and
financial and operating data of or relating to the Businesses (other than
the Excluded Assets), during normal business hours during the period from
July 31, 1998 to the Initial Closing Date (with respect to such properties,
Contracts, commitments, work papers, books, records and data Related to the
US/MOW Businesses), and to the applicable European Closing Date (with
respect to such properties, Contracts, commitments, work papers, books,
records and data Related to the European Businesses) and, during such
periods shall furnish promptly to Purchaser any information concerning the
Businesses (other than the Excluded Assets) as Purchaser may reasonably
request and shall instruct the employees, counsel and financial advisors of
Seller and Seller Subs to cooperate with Purchaser in its investigation of
the Businesses; provided, however, that such access does not unreasonably
disrupt the normal operations of Seller or the Businesses; provided,
further, however, that prior to the Initial Closing, with respect to the
US/MOW Acquired Assets, and the applicable European Closing with respect to
the European Acquired Assets, the Purchaser shall not conduct any
environmental audit or investigation on the Businesses or the Acquired
Assets, including any Phase I or Phase II environmental assessment. No
investigation pursuant to this Section 6.03 or otherwise conducted by or on
behalf of Purchaser shall affect any representation or warranty given by
Seller hereunder.
(b) From July 31, 1998 to the Initial Closing Date, Seller shall
provide to the Purchaser management reports showing the following (and
setting forth the currency exchange rates used or assumed in the
calculation thereof):
(i) net revenues, gross margin and operating costs in deriving
operating income by commodity (DryView medical, conventional x-ray,
wet electronics, medical service, medical solutions, dry image setting
and contract manufacturing) and region (U.S., Europe and "Most of
World") for the Businesses, such reports to be delivered within 60
days after the last day of
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the quarter ended June 30, 1998, and within 45 days after the last day
of each succeeding quarter;
(ii) net revenues by commodity (DryView medical, conventional
x-ray, wet electronics, medical service, medical solutions, dry image
setting and contract manufacturing) and region (U.S., Europe and "Most
of World") for the Businesses, such reports to be delivered within 60
days after the last day of the month of June, and within 30 days after
the last day of each succeeding month; and
(iii) (A) accounts receivable; (B) inventories; and (C) accounts
payable, in each case for (x) the Businesses located in the United
States calculated and prepared in the same manner as the Businesses
Financial Statements and (y) Seller and its subsidiaries excluding the
U.S. (i.e. consolidated non-U.S. balances), such reports to be
delivered within 60 days after the last day of the quarter ended June
30, 1998, and within 45 days after the last day of each succeeding
quarter.
SECTION 6.04. Confidentiality. Purchaser acknowledges that the
information being provided to it in connection with the Acquisition and the
consummation of the other transactions contemplated hereby is subject to
the terms of a confidentiality agreement between Purchaser and Seller,
dated October 28, 1997, as amended from time to time (the "Confidentiality
Agreement"), the terms of which are incorporated herein by reference.
Effective upon, and only upon, the Initial Closing, with respect to the
Businesses other than the European Businesses, and the Final Closing with
respect to the European Businesses, the Confidentiality Agreement shall
terminate with respect to information relating solely to the Businesses
(other than the Excluded Assets); provided, however, that Purchaser
acknowledges that any and all other information provided to it by Seller or
Seller's representatives concerning Seller and its affiliates shall remain
subject to the terms and conditions of the Confidentiality Agreement after
the Final Closing.
SECTION 6.05. Antitrust. Each of Seller and Purchaser shall, (i)
as promptly as practicable, but in no event later than five business days
following the execution and delivery of this Agreement file with the United
States Federal Trade Commission (the "FTC") and the United States
Department of Justice (the "DOJ") the notification and report form pursuant
to the HSR Act, if any, required for the transactions contemplated hereby
and (ii) as promptly as practicable, make all filings under the Non-U.S.
Competition Laws of any country or the European Union under which any
clearance, consent, authorization, registration, declaration or other
action with respect to the transactions
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68
contemplated hereby is required. Each of Seller and Purchaser shall as
promptly as practicable (i) substantially comply with any request for
additional information and documents pursuant to the HSR Act and (ii)
provide any supplemental information requested pursuant to any Non-U.S.
Competition Law. Each of Purchaser and Seller shall furnish to the other
such information and assistance as the other may reasonably request in
connection with its preparation of any filing, submission or other act that
is necessary or advisable under the HSR Act and the relevant Non-U.S.
Competition Laws. Seller and Purchaser shall keep each other timely
apprised of the status of any communications with, and any inquiries or
requests for additional information from, the FTC, the DOJ and the relevant
non-U.S. antitrust or competition authorities, and shall comply promptly
with any such inquiry or request. Each of Seller and Purchaser shall use
its best efforts to obtain any clearance under the HSR Act and the relevant
Non-U.S. Competition Laws required for the consummation of the transactions
contemplated hereby. For purposes of this Section 6.05, the "best efforts"
of Purchaser shall include Purchaser's agreement to litigate any motion for
a preliminary injunction until such motion shall have been granted or
denied by a court of competent jurisdiction; provided that Purchaser shall
not be required (i) to pay any amounts of money to third parties to secure
any such clearance (other than costs incurred in connection with the
prosecution of any such litigation and the payment of any filing,
application, registration, notarial and similar fees and related expenses)
or (ii) to agree to any request or requirement of any Governmental Entity,
whether involving the Businesses or the Acquired Assets or Purchaser's
other assets or businesses, if such payment or compliance with any such
request or requirement, individually or in the aggregate, would impair or
diminish the economic value of the Businesses or the Acquired Assets and/or
of Purchaser, individually or in the aggregate, in an amount greater than
or equal to an amount that would constitute a material impairment or
diminution of the economic value of the Businesses in the aggregate
(collectively, a "Material Impairment").
SECTION 6.06. Best Efforts. (a) On the terms and subject to the
conditions of this Agreement, each party shall cooperate and use its best
efforts to take, or cause to be taken, all action, and to do, or cause to
be done, all things necessary, appropriate or advisable under Law to cause
each of the Initial Closing and each European Closing to occur, as promptly
as practicable, including taking all reasonable actions necessary to comply
promptly with all legal requirements that may be imposed on it or any of
its affiliates with respect to each of the Initial Closing and each
European Closing.
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(b) Prior to the Initial Closing, each party shall, and shall
cause its affiliates to, cooperate and use its best efforts (at its own
expense) to take all actions necessary, appropriate or advisable to secure,
as promptly as practicable, and use (i) its best efforts to obtain Consents
listed on Schedule 7.02(d) and (ii) its commercially reasonable efforts to
obtain the Consents listed on Schedules 3.03(a) and 3.03(b) and all other
Consents from Governmental Entities and other persons necessary,
appropriate or advisable to permit the transfer of the Acquired Assets to,
and the assumption of the Assumed Liabilities by, Purchaser. For purposes
of this Section 6.06(b), Seller shall be deemed to have used "commercially
reasonable efforts to obtain Consents" if it shall have complied with the
procedures set forth in Schedule 6.06(b).
(c) Notwithstanding anything to the contrary in Section 6.06(a)
or (b), (i) neither party shall be required to make any payment (other than
de minimis filing, application, registration, notarial and similar fees and
related expenses), grant any accommodation (financial or otherwise) or
initiate or defend any litigation in connection with such best efforts, and
(ii) Seller shall notify Purchaser as promptly as practicable if, after use
of such best efforts, Seller fails to obtain any Consent listed in Schedule
3.03(a) or (b) or 7.02(d) and shall cooperate with and enter into good
faith discussions with Purchaser regarding whether such Consent should
continue to be pursued and the appropriate course of action to be taken to
obtain such Consent.
(d) This Section 6.06 does not relate to antitrust matters, which
are the subject of Section 6.05. Except as provided in Section 6.05 and
this Section 6.06, Purchaser and Seller shall use their respective best
efforts to cause the Initial Closing to occur on or prior to December 31,
1998 and all European Closings to occur as soon as practical after the
Initial Closing Date, and in any event, on or prior to March 31, 1999;
provided, however, that such best efforts obligation shall not require
either Seller or Purchaser to waive any right or condition in this
Agreement or any other Transaction Document.
SECTION 6.07. Fees and Expenses. (a) Whether or not the Initial
Closing or any European Closing takes place, and except as expressly set
forth in this Agreement or any Transaction Document, all costs and expenses
incurred in connection with this Agreement and the other Transaction
Documents and the transactions contemplated hereby and thereby shall be
paid by the party incurring such expense, including all costs and expenses
incurred pursuant to Sections 1.04 and 6.05. No costs or expenses incurred
in connection with this Agreement and the other Transaction
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Documents and the transactions contemplated hereby and thereby (i) shall be
allocated by Seller to the Acquired Assets or the Businesses or (ii) shall
constitute Assumed Liabilities, except for both (i) and (ii), as otherwise
expressly agreed in this Agreement and the other Transaction Documents.
(b) If a Termination Event shall have occurred, Purchaser shall
reimburse Seller upon demand in immediately available funds Seller's
reasonable costs and expenses incurred in connection with this Agreement
and the Transaction Documents and the transactions contemplated hereby and
thereby (including all reasonable fees and expenses of counsel, investment
banking firms, accountants, experts and consultants to Seller
(collectively, the "Expenses")) in an amount not to exceed $5,000,000 in
the aggregate.
SECTION 6.08. Notices of Certain Events. From July 31, 1998 with
respect to clauses (a) and (b) below, the Final Closing Date, and with
respect to clauses (c) and (d) below, the Initial Closing Date, Seller,
Seller Subs and Cemax-Icon shall promptly notify Purchaser of, and
Purchaser shall promptly notify Seller of:
(a) any written notice or other written communication from any
person alleging that the Consent of such person is or may be required
in connection with the transactions contemplated by this Agreement
(other than notice in respect of a Consent disclosed in any Schedule);
(b) any written notice or other written communication from any
Governmental Entity in connection with the transactions contemplated
by this Agreement;
(c) any developments or changes in the status of any matter
covered by Section 3.14 or otherwise included in Schedule 3.14; and
(d) any Proceedings commenced or, to the Knowledge of Seller or
the knowledge of Purchaser, as applicable, threatened, (i) against,
relating to or involving or otherwise affecting Seller, any Seller Sub
or Cemax- Icon, that, if pending on July 31, 1998, would have been
required to have been disclosed pursuant to Section 3.15 or (ii) that
are of the type described in Section 7.01(b) or 7.02(j).
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SECTION 6.09. Employee Matters; WARN Act.
(a) Eligible Employees.
(i) Schedule 6.09 sets forth a list of all Eligible Employees and
provides the following information with respect to each such Eligible
Employee: (w) current base salary or compensation, (x) job title and
(y) country. Seller may modify the list of Eligible Employees (with
respect to Non- European Eligible Employees, only until the Initial
Closing Date) after July 31, 1998 (i) to fill vacancies created by
employment terminations, retirement, death or disability or (ii) to
identify specific individuals to fill vacant positions set forth on
Schedule 6.09; provided, however, that after each such modification
the list is comprised only of individuals who are actively employed by
Seller or Seller Subs at the Initial Closing Date and who fall into
one of the following categories (A) employees (other than customer
service, support and corporate staff) who perform at least 80% of
their services for the Businesses; (B) customer service and support
employees ("CSS Employees") who perform at least 75% of their services
for the Businesses; (C) 406 CSS Employees (minus the number of such
employees in (B), above) mutually selected by Seller and Purchaser
(taking into account the need of the Businesses to have customer
service and support employees who are geographically and functionally
dispersed) from a pool of employees who perform at least 50% of their
services for the Businesses; (D) employees of Cemax-Icon; (E) 115
contract employees who perform at least 75% of their services for the
Businesses ("Contract Employees"); (F) 11 employees employed in
Germany in the document imaging business (the "German Document Imaging
Employees") and (G) 75 corporate staff employees ("corporate staff
employees") of Seller mutually selected by Seller and Purchaser;
provided, further, however, that (i) Seller may not remove any
individual from Schedule 6.09 if, as of July 31, 1998, such individual
falls into category (A), (B), (C), (D) or (G) and (ii) the number of
Eligible Employees (after any modification by Seller to Schedule 6.09)
shall not exceed (u) 1602 employees in categories (A), (B), (C), (D)
and (G), (v) 115 Contract Employees, (w) 11 German Document Imaging
Employees, (x) 406 CSS Employees and (y) 75 Corporate Staff Employees.
Employees of Seller or Seller Subs who (a) return to active employment
within one year of the Initial Closing Date from a leave of absence
(other than a long-term disability leave of absence), (b) have a right
of reinstatement under the plan or program of Seller or Seller Subs
under which they left active service and (c) are
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capable of working in accordance with Seller's or Seller Subs'
policies, practices and procedures shall be considered Eligible
Employees if (x) they satisfied the requirements of (A), (B) or (D),
above, on the date their leave of absence commenced or (y) Purchaser
has not employed the required number of employees under (C), (E), (F)
or (G) above, and such employees satisfied the requirements of (C),
(E), (F) or (G) above, on the date their leave of absence commenced.
For purposes of the Agreement, "U.S. Eligible Employees" means
Eligible Employees primarily employed in the United States and
"Foreign Eligible Employees" means all other Eligible Employees, such
U.S. Eligible Employees and Foreign Transferred Employees being
collectively referred to herein as the "Eligible Employees". "European
Eligible Employees" means all Eligible Employees employed in the
European Territories; and "Non-European Eligible Employees" means all
Eligible Employees other than European Eligible Employees. Between
July 31, 1998 and the Initial Closing Date, a stay bonus program (the
"Stay Bonus Program") will be established, as set forth in Schedule
6.09(a)(ii). Purchaser shall bear the cost of the Stay Bonus Program.
(b) Transferred Employees.
(i) On or before the Initial Closing with respect to Non-European
Eligible Employees and the applicable European Closing with respect to
European Eligible Employees (or in both cases, if later, the date an
individual is considered an Eligible Employee), Purchaser will offer
employment to each Non-European Eligible Employee or European Eligible
Employee, as applicable, in a position substantially similar to such
Eligible Employee's current position with Seller or any Seller Sub, as
the case may be, at compensation levels no less favorable than that
provided by Seller or Seller Subs as of the Initial Closing Date or
European Closing Date, as applicable, and with pension and other
benefit arrangements that are no less favorable in the aggregate than
those in which such Eligible Employee participated as of such Initial
Closing Date or European Closing Date, as applicable; provided,
however, that Purchaser will comply with any applicable law, rules and
regulations in making employment offers to Eligible Employees. U.S.
Eligible Employees and Foreign Eligible Employees who accept
Purchaser's offer of employment together with those employees whose
employment is transferred by operation of law and all employees of
Seller Subs that are being acquired by Purchaser shall be referred to
as "U.S. Transferred Employees" and "Foreign Transferred Employees",
respectively, and shall be collectively referred to as
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"Transferred Employees". In addition, "European Transferred Employees"
means those Foreign Transferred Employees employed in Europe and
"Non-European Transferred Employees" means all other Transferred
Employees. Notwithstanding anything to the contrary contained herein,
(i) a European Eligible Employee shall be deemed to be a European
Transferred Employee as of the Initial Closing for purposes of
allocating liabilities, including, but not limited to, the liabilities
set forth in Section 1.03, Section 9.02 and this Section 6.09, between
Seller and Purchaser and (ii) a U.S. Eligible Employees shall be
deemed to be a U.S. Transferred Employee as of January 1, 1999 and the
respective duties and obligations of Seller and Purchaser with respect
to U.S. Eligible Employees from the Initial Closing Date to December
31, 1998 shall be determined in accordance with the Employee Leasing
Agreement dated as of November 30, 1998 between Seller and Purchaser
(the "Employee Leasing Agreement").
(ii) For a period of no less than one year following the Initial
Closing Date (the "Continuation Period"), Purchaser shall provide, or
cause to be provided, to each U.S. Transferred Employee (a)
compensation at levels no less favorable than that provided by Seller
or Seller Subs as of the Initial Closing Date and (b) pension and
other benefits arrangements that are no less favorable in the
aggregate than those in which such U.S. Transferred Employee
participated as of the Initial Closing Date; provided, however, that
Seller agrees that the provisions of subsection (b), above, shall be
satisfied if such U.S. Transferred Employees continue to participate
on the same terms and conditions in the applicable pension and other
benefit arrangements of Seller or Sellers Subs or they are eligible to
participate on the same terms and conditions in all plans available to
similarly situated employees of Purchaser.
(iii) Seller will not amend or terminate (other than as required
by law) any Transferred Employee's employment agreement and shall, at
Purchaser's request, assign any such agreement to Purchaser.
(c) U.S. Transferred Employees.
(i) During the Continuation Period, U.S. Transferred Employees
shall be eligible for severance benefits that are no less favorable
than those provided to similarly situated employees of Seller.
(ii) Seller shall provide, or cause to be provided, defined
benefit pension benefits and eligibility for
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retiree health care benefits to Grandfathered Employees that are
substantially similar to those that would have been provided to such
employees as a result of being considered grandfathered employees for
purposes of 3M's defined benefit pension plans ("3M Pension Plans")
and 3M's retiree health care plans ("3M Health Care Plans") if such
employees had remained employed by Seller and Seller Subs during the
period they are actually employed by Purchaser; provided that Seller
shall not be required (i) to provide, or cause to be provided, the
defined benefit pension accrual provided to employees of Seller who
are not considered Grandfathered Employees or (ii) to provide, or
cause to be provided, benefits more favorable than those available to
similarly situated employees of Seller who would be considered
Grandfathered Employees. "Grandfathered Employees" means (i) with
respect to defined benefit pension benefits, those U.S. Transferred
Employees who are considered Grandfathered Employees with respect to
benefits under 3M Pension Plans, and (ii) with respect to retiree
health care benefits, those U.S. Transferred Employees who are
considered Grandfathered Employees with respect to benefits under 3M
Health Care Plans.
(iii) Purchaser shall provide relocation benefits to U.S.
Transferred Employees, if required, in accordance with Purchaser's
employee relocation policy. U.S. Transferred Employees (other than
employees of Cemax- Icon) will be credited with accumulated service
with Seller or any Seller Sub, as the case may be, 3M and their
affiliates for eligibility, vesting and benefit purposes under all
plans or programs maintained by Purchaser and its affiliates after
December 31, 1998 (including all severance plans); provided that (a)
no such service shall be credited under Purchaser's plans providing
retiree welfare benefits and (b) no such service shall be credited for
benefits purposes under Purchaser's defined benefit pension plans.
Service recognized prior to the Initial Closing Date under Cemax-Icon
benefit programs will continue to be taken into account under such
benefit programs. For a period of four years following the Initial
Closing Date, Purchaser shall appropriately compensate each U.S.
Transferred Employee whose vacation entitlement under the applicable
programs of Purchaser is less than such U.S. Transferred Employee's
vacation entitlement under the applicable programs of Seller as of the
Initial Closing Date; it being understood that Purchaser shall either
continue to provide such greater entitlement to the affected U.S.
Transferred Employee or pay the U.S. Transferred Employee the cash
value of the difference between such vacation entitlements at
Purchaser's option.
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(iv) Seller will retain liability for (i) all unfunded pension
liabilities with respect to the U.S. Transferred Employees and (ii)
all claims under Seller's or Seller Subs' (other than Cemax-Icon)
employee benefit plans incurred with respect to the U.S. Transferred
Employees before the Initial Closing Date. Purchaser will be
responsible for (i) all claims under Benefit Plans sponsored by
Cemax-Icon and (ii) all claims incurred with respect to the U.S.
Transferred Employees (other than employees of Cemax- Icon) after
December 31, 1998 and (iii) all claims incurred with respect to
Cemax-Icon employees after the Initial Closing Date. For purposes of
this Section 6.09, (i) claims for medical, dental and vision benefits
are incurred when the relevant services are rendered, (ii) claims for
life insurance benefits are incurred on the date of death, (iii)
claims for disability benefits are incurred on each date such benefits
become payable under the terms of the applicable disability program
and (iv) all other claims are incurred upon the occurrence of the last
event giving rise to the entitlement to benefits.
(v) U.S. Transferred Employees shall be entitled to use after the
Initial Closing Date, or to receive the value of, all unused vacation
benefits earned before the Initial Closing Date.
(vi) Seller shall retain responsibility for providing group
health coverage required by Section 4980B of the Code ("Continuation
Coverage") to those U.S. Eligible Employees who do not accept
employment with Purchaser and who elected such Continuation Coverage
prior to the Initial Closing Date (other than employees of Cemax-Icon,
who shall continue to be the responsibility of Cemax-Icon). Purchaser
shall provide Continuation Coverage to U.S. Transferred Employees or
their dependents only (other than employees of Cemax-Icon) with
respect to "qualifying events" as defined in Code Section 4980B(f)(3)
which occur on and after the Initial Closing Date, to the extent
required by Applicable Law.
(d) Foreign Transferred Employees. (i) Except as provided herein,
Seller will be responsible for the portion of any liabilities (A) that
are calculated with reference to a Foreign Transferred Employee's
length of service with Seller or Seller Subs and (B) that are
attributable to service with 3M or Seller, in each case before the
Initial Closing Date (the "Foreign Service Liability"). The amount of
the Foreign Service Liability shall be equal to the sum of (i) the
Foreign Service Liability determined as of the Initial Closing Date on
an "accumulated benefit obligation" basis (the
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"ABO Amount") and (ii) 50% of the difference between the amount of the
Foreign Service Liability determined as of the Initial Closing Date on
a "projected benefit obligation" and the ABO Amount. "Accumulated
benefit obligation" and "projected benefit obligation" shall be
calculated consistently with the principles set forth in SFAS 87. In
the event any Foreign Service Liability is fully funded by dedicated
or set-aside assets (a "Funded Foreign Service Liability"), Seller
shall transfer to Purchaser (and Purchaser will assume and indemnify
Seller and Seller Subs against) such Foreign Service Liabilities along
with an equivalent amount of assets. Seller may, at its election,
satisfy any unfunded or partially funded Foreign Service Liability (an
"Underfunded Foreign Service Liability") by: (A) transferring to
Purchaser the Foreign Service Liability along with an equivalent
amount of assets, (B) retaining the Underfunded Foreign Service
Liability or (C) transferring to Purchaser the Underfunded Foreign
Service Liability and reducing the Purchase Price by an equivalent
amount; provided, however, that (x) Seller shall comply with all
applicable laws in making its election hereunder and (y) the Purchaser
and Seller shall mutually agree before the Initial Closing Date upon a
method for determining the Underfunded Foreign Service Liability.
Notwithstanding anything to the contrary contained herein, (A)
Purchaser shall assume and be fully responsible for (without
compensation, payment or transfer of assets from Seller) the severance
or leaving indemnity liabilities accrued for Foreign Transferred
Employees employed in the Carribean, South America or Latin America
that are payable under applicable Law upon such employees' termination
of service and (B) Seller shall indemnify Purchaser against any
leaving indemnity liabilities accrued as of the Initial Closing Date
(as calculated in accordance with the second sentence of Section
6.09(d)(i)) for Foreign Transferred Employees employed in Italy that
are payable under Italian Law upon such employees' termination of
service and that are customarily referred to as "TFR" payments.
(ii) The asset and liability transfers described in the Section
6.09(d)(i) (the "Transfers") shall be effected in accordance with the
following principles: (i) the Transfers shall be effected as soon as
reasonably practicable after the Initial Closing Date for Foreign
Service Liabilities attributable to Non- European Transferred
Employees and after the applicable European Closing Date for Foreign
Service Liabilities attributable to European Transferred Employees,
(ii) the actual assets to be transferred to Purchaser shall be the
appropriate proportionate share of the actual pool of assets set aside
to fund a particular Foreign
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Service Liability or cash if there is no such pool, (iii) the amount
of the assets transferred to Purchaser shall be increased (or
decreased, as appropriate) by the compound rate of return for the
period from the Initial Closing Date to the date of transfer for the
pool of assets set aside to fund a particular Foreign Service
liability or, if there is no such pool, LIBOR.
(iii) If Seller transfers dedicated or set-aside transfers in
excess of any individual Funded Foreign Service Liability, the amount
of such excess (the "Excess Assets) shall reduce, on a
dollar-for-dollar basis, Seller's obligation to transfer additional
assets equal to the aggregate Underfunded Foreign Service Liabilities
transferred to Purchaser. If the aggregate amount of Excess Assets
exceeds Seller's aggregate unfunded obligation with respect to all
Underfunded Foreign Service Liabilities transferred to Purchaser,
Purchaser shall make a cash payment to Seller in an amount equal to
such excess. Purchaser will be responsible for all (A) accrued
vacation pay for Foreign Transferred Employees and (B) liabilities
related to the Foreign Transferred Employees that are determined
without reference to such employees' length of service with Seller or
Purchaser.
(iv) Seller shall notify and consult with the works councils or
similar employee representatives as required by Law with respect to
the transfers contemplated by this Agreement.
(v) Seller (A) shall cause the benefits of all Transferred
Employees under non-U.S. defined contribution and defined benefit
pension plans to be fully vested as of the Initial Closing Date or (B)
continue to credit service with Purchaser for vesting purposes with
respect to such benefits.
(e) Seller and Purchaser agree to cooperate and consult with each
other in connection with any communications with Eligible Employees
regarding the Acquisition and the employment by Purchaser of such Eligible
Employees.
SECTION 6.10. Post-Closing Cooperation. Purchaser and Seller
shall cooperate with each other, and shall cause their officers, employees,
agents, auditors and representatives to cooperate with each other, for a
period of 90 days after the Final Closing Date and, in the case of the
services set forth in the Transition Services Agreement, until the
termination in all respects of such relevant service, to ensure the orderly
transition of the Businesses from Seller to Purchaser and to minimize any
disruption to the Businesses and the other respective businesses of Seller
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and Purchaser that might result from the transactions contemplated hereby.
After the Initial Closing and each European Closing, as the case may be,
upon reasonable written notice, Purchaser and Seller shall furnish or cause
to be furnished to each other and their employees, counsel, auditors and
representatives access, during normal business hours, to such information
and assistance relating to the US/MOW Businesses or the applicable European
Businesses, as the case may be (to the extent within the control of such
party) as is reasonably necessary for financial reporting, accounting and
Tax matters.
SECTION 6.11. Publicity. From July 31, 1998 to the Final Closing
Date, no public release or announcement concerning the transactions
contemplated hereby shall be issued by any party or any of its advisors
without the prior consent of the other parties (which consent shall not be
unreasonably withheld), except as such release or announce ment may be
required by Law of any United States or foreign securities exchange, in
which case the party required to make the release or announcement shall
allow the other party reasonable time to comment on such release or
announcement in advance of such issuance; provided, however, that each of
Seller and Purchaser may make internal announcements to their respective
employees and to 3M, bank lenders or parties to Contracts under which they
have disclosure obligations, that are consistent with the parties' prior
public disclosures regarding the transactions contemplated hereby after
reasonable prior notice to and consultation with the other party.
SECTION 6.12. Records. Seller shall deliver originals of all
Records that are part of the Acquired Assets (or, in the case of Records
relating to Cemax-Icon, including the portions of any consolidated,
combined or unitary Tax Returns that relate to Cemax-Icon or Records that
are described in Section 1.02(b)(vii) (A) or (C), copies of such Records)
to Purchaser at the locations where such Records are currently maintained
if such Records are maintained at a facility that is an Acquired Asset or
is to be leased to Purchaser under the Shared Facilities Agreement or
otherwise to Purchaser as soon as practicable but in no event later than 60
days after the Initial Closing (in the case of US/MOW Records), and each
European Closing (in the case of European Records for each European
Territory for which such European Closing has been consummated), as
applicable, at such location or locations to be mutually agreed. Purchaser
recognizes that certain Records may contain incidental information relating
primarily to subsidiaries or divisions of Seller other than the Businesses
and that Seller may retain copies of the relevant portions thereof.
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SECTION 6.13. Agreement Not To Compete. (a) Seller understands
that Purchaser shall be entitled to protect and preserve the going concern
value of the Businesses to the extent permitted by Law and that Purchaser
would not have entered into this Agreement absent the provisions of this
Section 6.13 and, therefore, for a period of seven years from the Initial
Closing, Seller shall not, and shall cause each of its subsidiaries not to,
directly or indirectly, compete against Purchaser in the Businesses in the
medical imaging market or any other line of business that competes with the
Businesses in the medical imaging market (including inkjet printing, direct
radiography, dry laser printing, dry thermal printing or any other medical
imaging equipment, interfaces, components or hard copy output or media, in
each case only to the extent used in the medical imaging market or for
medical imaging applications) ("Competitive Activities"), except (i) the
activities and businesses operated at the Ferrania Facility to the extent
contemplated by the X-ray/Wet Laser Supply Agreement and the services to be
provided by Seller to Purchaser under the Transition Services Agreement
relating to 17 particular employees at the Ferrania Facility, (ii) the
activities and businesses operated at the Ferrania Facility as contemplated
by the Intellectual Property Agreement and the License Agreement, (iii) the
manufacture and sale into the medical imaging market of Data Storage Media
sold by the businesses of Seller or any of its subsidiaries, (iv) the
manufacture and sale into the medical imaging market of any other products,
goods or services sold by the businesses of Seller or any of its
subsidiaries in existence at any time if such products, goods and services
are not either (A) promoted by Seller or any of its subsidiaries for
medical imaging uses through (1) the use of internal or external written
promotional materials or (2) paid advertisements, or (B) registered as
medical devices with the FDA or any similar regulatory body; (v) the
manufacture or sale into the medical imaging market of any products, goods
or services by Seller or any of its subsidiaries to be used as components
or parts of items sold by third parties in the medical imaging industry;
provided, however, that such products, goods or services do not contain an
Imation name, brand or logo, except for any such Imation name, brand or
logo displayed in a manner that indicates that such product, good or
service is being used as a component or supply item in another product,
good or service; (vi) the document imaging business in Germany; (vii) the
assignment, lease, sublicense or other transfer of any Intellectual
Property, Technology or other proprietary information owned or licensed by
Seller or any of its subsidiaries to any third party and (viii) Seller's
continued operation of any Terminated European Businesses subsequent to the
termination of this Agreement with respect to the European Acquisition of
such Terminated European Businesses pursuant to Section 8.03(a) to the
extent reasonably necessary to comply with or satisfy
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such European Businesses' obligations and liabilities existing at the time
of such termination. For purposes of this Section 6.13, "Data Storage
Media" means all data storage media, equipment, systems and subsystems and
related software and services, other than paper and film in each case used
for imaging purposes (including uncoated film of diagnostic quality).
(b) Section 6.13(a) shall be deemed not breached as a result of
the ownership by Seller or any of its subsidiaries of: (i) less than an
aggregate of 2% of any class of publicly traded equity securities of a
person engaged, directly or indirectly, in Competitive Activities; (ii)
less than 10% in value of any instrument of indebtedness (publicly traded
or issued in accordance with Rule 144, Rule 144A or Regulation S of the
Securities Exchange Commission) of a person engaged, directly or
indirectly, in Competitive Activities; (iii) a person that engages,
directly or indirectly, in Competitive Activities if such Competitive
Activities account for less than 10% of such person's consolidated annual
revenues or (iv) more than otherwise permitted by clauses (i), (ii) or
(iii) above if any such excess is sold within one year from the date it was
first acquired.
(c) Seller understands that Purchaser would not have entered into
this Agreement absent the provisions of this Section 6.13(c) and,
therefore, for a period of two years from the Initial Closing, Seller shall
not, and shall cause each of its subsidiaries not to, directly or
indirectly, without Purchaser's prior written consent, hire any Transferred
Employee listed on Schedule 6.13(c), or induce any Transferred Employee to
leave the employ of Purchaser.
(d) Section 6.13(a) shall not be deemed to be breached as a
direct or indirect result of any activities carried on by Seller or any
Seller Sub or any employee or agent of Seller or any Seller Sub in the
period between the Initial Closing and the Final Closing that are (i)
contemplated by the any of the Transaction Documents (including the
Distribution Agreement) or (ii) taken by Seller or any Seller Sub or any
employee or agent of Seller or any Seller Sub in response to any direct or
indirect request (written or oral) made or instruction (written or oral)
given by Purchaser or any subsidiary, affiliate or employee of Purchaser
pursuant to any Transaction Document.
SECTION 6.14. Bulk Transfer Laws. Seller and Purchaser each
hereby waives compliance by the other with the provisions of any so-called
"bulk transfer law" of any jurisdiction in connection with the sale of the
Acquired Assets to Purchaser.
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SECTION 6.15. Further Assurances. From time to time, as and when
requested by any party, each party shall execute and deliver, or cause to
be executed and delivered, all such documents and instruments and shall
take, or cause to be taken, all such further or other actions (subject to
Section 6.05 and Section 6.06), as such other party may reasonably deem
necessary to consummate the transactions contemplated by this Agreement,
including, in the case of Seller and Seller Subs, executing and delivering
to Purchaser such assignments, deeds, bills of sale, consents and other
instruments as Purchaser or its counsel may reasonably request as necessary
for such purpose.
SECTION 6.16. Purchase Price Allocation. (a) Generally. Seller
and Purchaser shall mutually determine the amount of the total
consideration transferred by Purchaser and its affiliates in exchange for
the Acquired Assets, which amount will consist of the Purchase Price plus
the amount of the Assumed Liabilities, and will not include any amount paid
pursuant to the Supply Agreement, and as provided in this Section 6.16 will
mutually determine the allocation of such total consideration among the
Acquired Assets and Assumed Liabilities in accordance with their relative
fair market values in the manner required by Section 1060 of the Code, the
regulations thereunder and any applicable provisions of any U.S. state or
local or foreign law.
(b) (i) Schedule 6.16 sets forth the amounts of the payments
(each, an "Initial Payment") which will be made by Purchaser (A) with
respect to the United States and MOW, to Seller or the applicable Seller
Sub on the Initial Closing Date pursuant to Section 2.02(a), and (B) with
respect to the European Territories, to the applicable Seller Sub or the
Seller on the applicable European Closing Date pursuant to Section 2.02(b).
(ii) Seller agrees that as soon as practicable after the Initial
Closing and each European Closing, Seller will provide Purchaser with
written notice (each, a "True Up Notice") setting forth the correct net
asset value (as adjusted for goodwill as set forth on Schedule 6.16) as of
the Initial Closing Date or the European Closing Date, as applicable, of
the Acquired Assets and Assumed Liabilities transferred to Purchaser at the
Initial Closing or the European Closing, as the case may be, for each
country. Promptly after receipt of a True Up Notice with respect to the
Initial Closing and each European Closing the appropriate adjustment
payments shall be made with respect to the United States and MOW on the one
hand, and the relevant European Territory on the other hand, as applicable.
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(iii) In the event that the amount of the Initial Payment made
with respect to a particular country (other than the United States) is
greater than the amount set forth in a True Up Notice as the correct
amount, then Seller and Purchaser agree that the excess over the correct
amount in such country shall be treated as a reduction in the Purchase
Price of the Acquired Assets in such country and an increase in the
Purchase Price of the Acquired Assets in the United States. In the event
that the amount of the Initial Payment made with respect to a particular
country (other than the United States) is less than the amount set forth in
such True Up Notice as the correct amount, then Seller and Purchaser agree
that the shortfall under the correct amount in such country shall be
treated as an increase in the Purchase Price of the Acquired Assets in such
country and a decrease in the Purchase Price of the Acquired Assets in the
United States.
(iv) Purchaser and Seller agree to act in accordance with the
allocations resulting from the Initial Payments and the adjustments, if
any, to the Purchase Price of the Acquired Assets in each country
(including any modification required to reflect any adjustments to the
Purchase Price pursuant to Section 1.06) in any relevant Tax Returns,
including any such Tax Returns required to be filed pursuant to Section
1060 of the Code, the regulations promulgated thereunder or any provisions
of local, state and foreign law (including IRS Form 8594), and to cooperate
in the preparation of any such Tax Returns and to file timely such Tax
Returns in the manner required by applicable law.
(c) The parties agree to cooperate and work together to cause all
relevant Taxing Authorities to accept the allocation agreed upon pursuant
to this Section 6.16. If the agreed upon allocation is successfully
challenged by any Taxing Authority, the parties agree to work together to
cause other Taxing Authorities to agree to conforming adjustments, to the
extent such adjustments will decrease the overall Tax costs to all parties,
and to share any Tax savings that result from any of the foregoing changes
to the allocation.
(d) The parties agree that any payments required to be made in
any country outside the United States (after the Initial Payment in the
country) to arrive at the correct amount for that country shall be made by
the applicable Purchaser Buyer if an additional amount must be paid for the
Acquired Assets, and by the applicable Seller Sub if an excess amount was
paid for the Acquired Assets. Within 90 days after the Initial Closing
Date, the parties will net the payments made in the United States and MOW
by their respective subsidiaries after the Initial Payment, and if the
result is that the total amount of the Initial Payment and adjustments
after such netting is in excess of the
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amount due with respect to the United States and MOW, then Seller shall pay
such excess to Purchaser in the United States; if the result is that the
total amount of the initial payment and adjustments after such netting is
less than the amount due with respect to the Unites States and MOW, then
Purchaser shall pay the balance due to Seller in the United States.
Promptly after the adjustment payments provided for in Section 6.16(b)(ii)
have been made with respect to each European Closing, the procedures
contained in the preceding sentence shall be performed with respect to all
European Territories that were closed at such European Closing, except to
the extent that Purchaser and Seller shall otherwise agree in writing.
SECTION 6.17. Supplies. Purchaser shall not use stationery,
purchase order forms or other similar paper goods or supplies
(collectively, the "Supplies"), that state or otherwise indicate thereon
that any Business is a division or unit of Seller or any Seller Sub more
than 90 days after the Initial Closing Date (the "Cut-Off Date") in the
United States and MOW, and not more than 15 days after the applicable
European Closing in any of the European Territories (if such 15-day period
would end after the CutOff Date), without first crossing out or marking
over such statement or indication or otherwise clearly indicating on such
Supplies that the division is no longer a division or unit of Seller or
Seller Sub, as applicable. Purchaser shall not reorder any Supplies which
state or otherwise indicate thereon that the division is a division or unit
of Seller or any Seller Sub.
SECTION 6.18. Insurance. (a) From July 31, 1998 to the Initial
Closing Date, Seller shall use its best efforts to have Purchaser named as
an additional insured party under each of the insurance policies issued to
Seller listed on Schedule 6.18 ("Seller Existing CGL Policies"), which best
efforts shall include seeking the consent, if required, of the underwriters
under each Seller Existing CGL Policy; provided, however, that (i) in
connection with seeking to have Purchaser named as an additional insured
party under Seller Existing CGL Policies, Seller shall not be required to
make any payment or grant any accommodation (financial or otherwise) to any
person or to take any action that could impair or diminish Seller rights or
benefits under Seller Existing CGL Policies and (ii) any additional cost or
expense associated with Purchaser's being named an additional insured party
under Seller Existing CGL Policies shall be borne in full by Purchaser and
(iii) Seller shall involve a representative of Purchaser in all substantive
communications (written or oral) with any underwriter with respect to
having Purchaser named as an additional insured party under any Seller
Existing CGL Policy. Seller shall not obligate Purchaser to incur or assume
any cost or expense in connection with being named an additional insured
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party without Purchaser's prior written consent hereto; provided, however,
that any decision of Purchaser not to incur or assume any such cost or
expense for whatever reason shall not result in Seller not being in
compliance with any of its obligations under this Section.
(b) For a period of three years following the Initial Closing,
Seller shall not, without the prior written consent of Purchaser, which
consent shall not be unreasonably withheld or delayed, (i) exclude the
Businesses or Acquired Assets as "divested operations" from coverage under
any Seller Existing CGL Policy, (ii) amend or waive any of its rights with
respect to the scope of coverage (including coverage exclusions), policy
limits or co-payments under any Seller Existing CGL Policy, (iii) terminate
any Seller Existing CGL Policy or (iv) increase Seller self-insured
retention or deductibles under any Seller Existing CGL Policy.
SECTION 6.19. Cemax-Icon. (a) On or prior to Initial Closing,
Seller shall cause Cemax-Icon to cancel or repay all indebtedness (whether
as obligor, guarantor or otherwise) to third parties for borrowed money
(other than accounts payable incurred in the ordinary course of business)
of Cemax-Icon outstanding on the Initial Closing Date, other than any such
indebtedness set forth in clause (a)(viii)(A) & (B) and item 3 under clause
(a)(ix)(b) of Schedule 3.08 and other than the Cemax-Icon Payments.
(b) (i) During the period from July 1, 1998 until the Initial
Closing, Seller shall comply in all material respects with its obligations
under the Cemax-Icon Merger Agreement, including Section 6.08 of the
Cemax-Icon Merger Agreement. Without limiting the generality of the
foregoing, between July 1, 1998 and the Initial Closing, Seller shall spend
on a consolidated basis in connection with the objectives referenced in
Section 6.08 of the Cemax- Icon Merger Agreement an amount equal to the
product of (a) $20,000,000 and (b) the number of days from and including
July 1, 1998 to and including the Initial Closing Date divided by 365.
(ii) During the period from the Initial Closing until June 30,
1999, Purchaser shall comply with the obligations of Seller set forth in
6.08 of the Cemax-Icon Merger Agreement. Without limiting the generality of
the foregoing, between the Initial Closing and June 30, 1999, Purchaser
shall spend on a consolidated basis in connection with the objectives
referenced in Section 6.08 of the Cemax- Icon Merger Agreement an amount
equal to the product of (a) $20,000,000 and (b) the number of days from but
excluding the Initial Closing Date to and including June 30, 1999 divided
by 365.
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(c) If at any time Dominion Fund IV or any other holder of
Cemax-Icon's Senior Subordinated Convertible Promissory Note dated October
30, 1996 (or any portion thereof), shall exercise its right to convert any
portion of such Note into Warrants pursuant thereto, Purchaser shall on the
date of any such conversion pay to Seller, to an account designated in
writing by Seller, an amount in cash in U.S. dollars equal to the then
outstanding principal amount, accrued interest and other amounts owed with
respect to the applicable portion of such Note so converted. For purposes
of this paragraph (c), all capitalized terms used herein but not defined
herein shall have the respective meanings assigned to such terms in such
Note or in any of the related agreements described in item 1 of Schedule
3.09(b).
SECTION 6.20. European Closing in Italy. Purchaser and Seller
each shall use commercially reasonable best efforts to jointly develop and
implement a plan to consummate the European Closing for the European
Territory of Italy as soon as practicable. Without limiting the generality
of the foregoing, senior members of the respective Purchaser and Seller
teams with responsibility for the European Closings (including the persons
responsible for the creation and implementation of the Purchaser systems
needed to complete such European Closings) shall meet not later than
December 15, 1998, to develop a plan designed to achieve the European
Closing for the European Territory of Italy as soon as practicable. The
parties shall work together to finalize such plan not later than December
31, 1998. The obligations contained in this paragraph shall not require
Purchaser to take any action that could result in Purchaser being unable to
create and implement the Purchaser systems needed to complete the European
Closing for any European Territory other than Italy on or prior to the
Specified Closing Date for such European Territory.
SECTION 6.21. [INTENTIONALLY OMITTED]
SECTION 6.22. Insurance Proceeds. Seller shall, or shall cause
the appropriate Seller Sub to, use their respective reasonable commercial
efforts to seek any insurance proceeds to the extent covered by third-party
insurance policies with respect to events or occurrences prior to the
Initial Closing with respect to the US/MOW Acquired Assets, and the
applicable European Closing, with respect to the European Acquired Assets
(other than insurance proceeds related to Pre-Closing Environmental
Liabilities) that have destroyed or damaged or otherwise reduced the value
of any Acquired Assets having an aggregate fair market value of at least
$2,000,000 and to promptly pay over to Purchaser any such proceeds to the
extent paid to Seller or a Seller Sub.
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SECTION 6.23. CB Coater. From July 31, 1998 to the Initial
Closing Date, Seller shall use its reasonable commercial efforts to
identify, contact, solicit indications of interest from and conduct
negotiations with third parties regarding supply contracts between Seller
and such third parties pursuant to which such third parties would purchase
coated products manufactured on the CB coater located at Seller's White
City, Oregon facility following consummation of the Initial Acquisition.
ARTICLE VII
Conditions Precedent
SECTION 7.01. Conditions to Each Party's Obligation. The
obligation of the parties hereto to consummate the Initial Acquisition are
subject to the satisfaction or waiver on or prior to the Initial Closing of
the following conditions:
(a) Governmental Approvals. All material filings and approvals
set forth on Schedule 3.03(b) shall have been made or obtained, and all
relevant waiting periods under U.S. Antitrust Laws and Non-U.S. Competition
Laws if applicable to the consummation of the Acquisition, shall have
expired or been earlier terminated and any Governmental Entity that has
power under or authority to enforce such Laws, shall have approved, cleared
or decided not to intervene in respect of the such European Acquisition to
the extent such approval, clearance or decision is required to effect the
Acquisition.
(b) No Proceedings. (i) No Governmental Entity shall have
entered, enacted, issued, enforced or promulgated any Law or Judgment that
would prohibit the Acquisition and (ii) no Proceeding for such a Law or
Judgment that could have the effect set forth in subclause (i) of this
clause (b) shall have been instituted (x) by any Governmental Entity, (y)
by any person with respect to any nonfrivolous Proceeding that seeks relief
under U.S. Antitrust Laws or Non-U.S. Competition Laws or (z) by any person
with respect to any Proceeding that is reasonably likely to succeed on the
merits.
(c) Settlement Agreement. The Settlement Agreement shall remain
in full force and effect and shall not have been modified, amended or
terminated.
(d) Intellectual Property Agreements. The Intellectual Property
Agreements shall remain in full force and effect and shall not have been
terminated.
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(e) Supply Agreements. The Supply Agreements shall remain in full
force and effect and shall not have been terminated (it being agreed that
Seller's inability to perform under the X-ray/Wet Laser Supply Agreement as
a result of any disruption (in workforce, production or otherwise) at the
Ferrania Facility shall not constitute Seller's failure to comply with this
closing condition).
(f) License Agreement. The License Agreement shall remain in full
force and effect and shall not have been terminated.
SECTION 7.02. Conditions to Obligation of Purchaser. The
obligation of Purchaser to consummate the Initial Acquisition is subject to
the satisfaction (or waiver by Purchaser) on or prior to the Initial
Closing Date of the following conditions:
(a) Representations and Warranties. The representations and
warranties of Seller in this Agreement and the other Transaction Documents
that are qualified as to materiality shall be true and correct, and those
not so qualified shall be true and correct in all material respects, as of
July 31, 1998 and the Initial Closing Date as though made on the Initial
Closing Date, except (i) the extent such representations and warranties
expressly relate to an earlier date (in which case such representations and
warranties shall be true and correct in all material respects, on and as of
such earlier date) and (ii) that, for purposes of determining whether the
representations and warranties set forth in Section 3.04(c) and in the last
sentence of Section 3.15, respectively, shall be true and correct, as of
July 31, 1998 and the Initial Closing Date as though made on the Initial
Closing Date, the $10,000,000 amount set forth in Section 3.04(c) and the
$5,000,000 amount set forth in Section 3.15 each shall be deemed to be
$20,000,000. Purchaser shall have received a certificate dated the Initial
Closing Date and signed by an authorized officer of Seller to such effect.
(b) Performance of Obligations of Seller and Seller Subs. Each of
Seller and Seller Subs shall have performed or complied in all material
respects with all obligations and covenants required by this Agreement and
under the Letter Agreement dated as of July 31, 1998 between Seller and
Purchaser to be performed or complied with by Seller by the time of the
Initial Closing, and Purchaser shall have received a certificate dated the
Initial Closing Date and signed by an authorized officer of Seller to such
effect.
(c) Opinions of Seller's Counsel. Purchaser shall have received
opinions each dated the date of the Initial Closing Date of Cravath, Swaine
& Moore, Richards,
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Layton & Finger, and Seller's General Counsel, substantially in the forms
of Exhibits A-1, A-2, and A-3, respectively.
(d) Consents. There shall have been obtained (i) all Consents
listed on Schedule 7.02(d) and (ii) any other Consent from any third party
if (x) such Consent is not listed on Schedules 3.03(a) or 3.03(b) and (y)
the failure to obtain such Consent has had or is reasonably likely to have
a Seller Material Adverse Effect.
(e) Local Asset Purchase Agreements. Seller shall have executed
and delivered, or shall have caused its relevant subsidiaries to execute
and deliver, any Local Asset Purchase Agreements that Seller and Purchaser
have agreed to execute and deliver.
(f) Transition Services Agreements. Seller shall have executed
and delivered the Transition Services Agreement.
(g) Shared Facilities Agreement. Seller shall have executed and
delivered the Shared Facilities Agreement.
(h) Release of Liens. Seller shall have taken, or cause to be
taken, all steps necessary to effect a release of the Liens on the Acquired
Assets under the Bank Credit Agreements, including delivery of lien
releases in form and substance reasonably satisfactory to Purchaser's
counsel, including Forms UCC-3.
(i) FIRPTA Certificate. Seller and each Seller Sub shall have
executed and delivered a certificate to Purchaser certifying under
penalties of perjury that such person is not a foreign person, in the form
required by Treas. Regs. ss.1.1445-2(b)(2)(iii), or certifying that such
person is not transferring beneficial ownership of any asset that
constitutes a "United States real property interest" within the meaning of
Section 897 of the Code.
(j) No Material Impairment. No Governmental Entity shall have
entered, enacted, issued, enforced or promulgated any Law or Judgment that
would result in a Material Impairment.
(k) Distribution Agreement. Seller shall have executed and
delivered the Distribution Agreement.
(l) European Closing Documents. Seller or the applicable Seller
Sub shall have executed and delivered each of the European Closing
Documents pertaining to the Primary European Territories.
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(m) Loan Agreement. Imation BV (as defined in the Loan Agreement)
shall have executed and delivered the Loan Agreement.
(n) White City Supply Agreement. Seller shall have executed and
delivered the White City Supply Agreement.
(o) Employee Leasing Agreement. Seller shall have executed and
delivered the Employee Leasing Agreement.
(p) Reverse Transition Services Agreement. Seller shall have
executed and delivered the Reverse Transition Services Agreement.
SECTION 7.03. Conditions to Obligation of Seller and Seller Subs.
The obligation of Seller and the Seller Subs to consummate the Initial
Acquisition is subject to the satisfaction (or waiver by Seller) on or
prior to the Initial Closing Date of the following conditions:
(a) Representations and Warranties. The representations and
warranties of Purchaser made in this Agreement and the other Transaction
Document that are qualified as to materiality shall be true and correct,
and those not so qualified shall be true and correct in all material
respects, as of July 31, 1998 and the Initial Closing Date as though made
on the Initial Closing Date. Seller shall have received a certificate dated
the Initial Closing Date and signed by an authorized officer of Purchaser
to such effect.
(b) Performance of Obligations of Purchaser. Purchaser shall have
performed or complied in all material respects with all obligations and
covenants required by this Agreement to be performed or complied with by
Purchaser by the time of the Initial Closing, and Seller shall have
received a certificate dated the Initial Closing Date and signed by an
authorized officer of Purchaser to such effect.
(c) Opinions of Purchaser's Counsel. Seller shall have received
opinions dated the Initial Closing Date of Sullivan & Cromwell and
Purchaser's General Counsel substantially in the forms of Exhibits B-1 and
B-2.
(d) Local Asset Purchase Agreements. Purchaser shall have
executed and delivered, or shall have caused its relevant subsidiaries to
execute and deliver, any Local Asset Purchase Agreements that Purchaser and
Seller have agreed to execute and deliver.
(e) Transition Services Agreements. Purchaser shall have executed
and delivered the Transition Services Agreement.
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(f) Shared Facilities Agreement. Purchaser shall have executed
and delivered the Shared Facilities Agreement.
(g) Distribution Agreement. Purchaser shall have executed and
delivered the Distribution Agreement.
(h) European Closing Documents. Purchaser or the applicable
Purchaser Buyer shall have executed and delivered each of the European
Closing Documents pertaining to the Primary European Territories.
(i) Loan Agreement. Kodak BV (as defined in the Loan Agreement)
shall have executed and delivered the Loan Agreement.
(j) White City Supply Agreement. Purchaser shall have executed
and delivered the White City Supply Agreement.
(k) Employee Leasing Agreement. Purchaser shall have executed and
delivered the Employee Leasing Agreement.
(l) Reverse Transition Services Agreement. Purchaser shall have
executed and delivered the Reverse Transition Services Agreement.
SECTION 7.04. Frustration of Initial Closing Conditions. Neither
Purchaser nor Seller may rely on the failure of any condition set forth in
this Article VII to be satisfied if such failure was caused by such party's
failure to act in good faith or to use such efforts to cause the Initial
Closing to occur, as required by Section 6.05 or Section 6.06.
SECTION 7.05. No Conditions to European Acquisitions. The
obligation of the parties hereto to consummate each European Acquisition
are subject to the satisfaction or waiver on or prior to such European
Acquisition of the following conditions:
(a) Governmental Approvals. All material filings and approvals
set forth on Schedule 3.03(b) shall have been made or obtained, and all
relevant waiting periods under Non-U.S. Competition Laws if applicable to
the consummation of such European Acquisition, shall have expired or been
earlier terminated and any Governmental Entity that has power under or
authority to enforce such Laws, shall have approved, cleared or decided not
to intervene in respect of such European Acquisition to the extent such
European approval, clearance or decision is required to effect such
European Acquisition.
(b) No Proceedings. No Governmental Entity shall have entered,
enacted, issued, enforced or promulgated any Law or Judgment that prohibits
such European Acquisition.
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ARTICLE VIII
Termination, Amendment and Waiver
SECTION 8.01. Termination Prior to Initial Closing. (a)
Notwithstanding anything to the contrary in this Agreement, this Agreement
may be terminated and the Acquisition and the other transactions
contemplated by this Agreement abandoned at any time prior to the Initial
Closing:
(i) by mutual written consent of Seller and Purchaser;
(ii) by Seller if any of the conditions set forth in Sections
7.01 or 7.03 shall have become incapable of fulfillment, and shall not
have been waived by Seller;
(iii) by Purchaser if any of the conditions set forth in Sections
7.01 or 7.02 shall have become incapable of fulfillment, and shall not
have been waived by Purchaser; provided that if required by Section
6.07(b) Purchaser shall have fully paid the Expenses pursuant thereto;
or
(iv) by Seller or Purchaser if the Initial Closing does not occur
on or prior to the first anniversary of July 31, 1998; or
(v) by Seller or Purchaser if there shall be in effect any
preliminary Judgment (on antitrust grounds), any non-appealable
Judgment (on other than antitrust grounds) or any Law that prohibits
the Acquisition;
provided, however, that the party seeking termination pursuant to clause
(ii), (iii), (iv) or (v) is not then in breach of any of its
representations, warranties, covenants or agreements contained in this
Agreement.
(b) In the event of termination by Seller or Purchaser pursuant
to this Section 8.01, written notice thereof shall forthwith be given to
the other and the transactions contemplated by this Agreement shall be
terminated, without further action by any party. If the transactions
contemplated by this Agreement are terminated as provided herein:
(i) at Seller's request, Purchaser shall return all documents and
other material received from Seller, any Seller Sub or Cemax-Icon
relating to the transactions contemplated hereby, whether so obtained
before or after the execution hereof, to Seller; and
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(ii) all confidential information received by Purchaser with
respect to the businesses of Seller, any Seller Sub or Cemax-Icon
shall be treated in accordance with the Confidentiality Agreement,
which shall remain in full force and effect notwithstanding the
termination of this Agreement.
SECTION 8.02. Effect of Termination. (a) If his Agreement is
terminated and the transactions contemplated hereby are abandoned as
described in Section 8.01, this Agreement shall become null and void and of
no further force and effect, except for the provisions of (i) Section 6.04
relating to the obligation of Purchaser to keep confidential certain
information and data obtained by it from Seller or any Seller Sub, (ii)
Section 6.07 relating to the Expenses and certain other expenses, (iii)
Section 6.08 relating to finder's fees and broker's fees, (iv) Section 8.01
and this Section 8.02, (v) Section 6.11 relating to publicity and (vi)
Article XI to the extent applicable to the provisions in clauses (i)
through (v) of this Section 8.02.
(b) Nothing in this Section 8.02 shall be deemed to release any
party from any liability for any breach by such party of the terms and
provisions of this Agreement or to impair the right of any party to compel
specific performance by any other party of its obligations under this
Agreement.
SECTION 8.03. Termination of European Acquisitions. (a)
Notwithstanding anything to the contrary contained in this Agreement, this
Agreement may be terminated and abandoned with respect to any European
Acquisition at any time prior to the consummation of the European Closing
for such European Acquisition:
(i) by mutual written consent of Seller and Purchaser; or
(ii) by Purchaser or Seller at any time after July 31, 1999, if
any of the conditions with respect to such European Acquisition set
forth in Section 7.05 shall not have been satisfied.
(b) In the event of a termination of a European Acquisition by
Seller or Purchaser pursuant to this Section 8.03, the terminating party
shall promptly give written notice thereof (a "Termination Notice") to the
other party. Any termination of this Agreement with respect to any European
Acquisition pursuant to this Section 8.03 shall be effective (i) in the
case of a termination pursuant to Section 8.03(a)(i), on the date mutually
agreed by the parties and (ii) in the case of a termination pursuant to
Section 8.03(a)(ii), on the date that Purchaser or Seller,
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as the case may be, shall deliver a Termination Notice to the other party.
(iii) If a European Acquisition is terminated as provided herein:
(A) Not later than the forty-fifth day following the last
day of the Payment Period immediately preceding the Payment
Period during which such termination shall become effective,
Purchaser shall deliver to Seller a notice setting forth the
Initial Estimated Termination Payment and reasonably detailed
documentation supporting the calculation thereof. Not later than
five days following the delivery of such notice to Purchaser (the
"Termination Payment Date"), Purchaser shall pay the Initial
Estimated Termination Payment to Seller.
(B) On each May 31 and November 30 following the Termination
Payment Date (each such date, a "Recalculation Date") through and
including the fifth anniversary of the Termination Payment Date,
Seller shall calculate the Estimated Termination Payment as of
such Recalculation Date.
(C) Not later than 30 days after each such Recalculation
Date, Seller shall deliver to Purchaser a notice (a
"Recalculation Notice") setting forth the Estimated Termination
Payment as of such Recalculation Date and reasonably detailed
documentation evidencing the calculation thereof.
(D) If the Estimated Termination Payment in any
Recalculation Notice exceeds (or is less than) the Estimated
Termination Payment calculated as of the immediately preceding
Recalculation Date or, in the case of the initial Recalculation
Date, the Initial Estimated Termination Payment, Purchaser shall
pay to Seller the amount of such excess, or Seller shall pay to
Purchaser the amount of such deficiency, as the case may be,
within five days following delivery to Purchaser of such
Recalculation Notice.
(E) All payments required under this Section 8.03 shall be
made by wire transfer of immediately available funds to an
account designated by the party entitled to such payment in
writing at least two business days prior to such payment.
(F) Purchaser shall designate one or more persons, each of
whom shall be reasonably
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acceptable to Seller, to act as Seller's agent in liquidating in
an orderly manner and with the intention of achieving the highest
liquidation value reasonably obtainable for the Working Capital
of the Terminated European Businesses with respect to which the
European Acquisition has been terminated. Seller shall pay all
proceeds from such liquidation promptly (and in any event not
less than frequently than monthly) to Purchaser.
(G) At Seller's request, Seller and Purchaser shall
negotiate in good faith and enter into a supply agreement (A)
containing the same transfer pricing terms and substantially the
same other terms as the White City Supply Agreement and (B) for
such a term as is necessary to permit Seller to fulfill its
existing obligations to customers. The parties agree to work
together to determine the best approach for each customer with
the dual goal of allowing Seller to fulfill such obligations and
Purchaser to establish, maintain and preserve its relationships
with such customers.
(H) Purchaser and Seller each shall be entitled to retain
any and all ERA Payments made with respect to any Payment Period
prior to the Payment Period during which the Termination Notice
was delivered.
(I) If Purchaser shall provide notice at any time to Seller
that Purchaser disagrees with the computation of the Initial
Estimated Termination Payment or any Estimated Termination
Payment, Seller and Purchaser shall negotiate in good faith to
resolve such disagreement and Seller shall provide Purchaser with
reasonable access to such of Seller's books and records as shall
be relevant to the determination of the amount of such payments.
(c) For purposes of this Section 8.03:
"Allocable Purchase Price" shall mean the portion of the
European Purchase Price allocated to the European Territory with
respect to which such European Acquisition shall have been
terminated in Schedule 6.16 less if such European Territory is
Italy the Italian Prepayment Amount.
"Calculation Period" shall mean, for any date, the period
from the first day of the calendar month in which the applicable
termination
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of this Agreement with respect to such European Acquisition
became effective to such date.
"Estimated Recoverable Working Capital" shall mean as of any
date, the sum of (1) all liquida tion proceeds realized in
respect of the Working Capital of the Terminated European
Businesses during the Calculation Period and (2) an amount equal
to .7 multiplied by the net book value of all Working Capital of
the Terminated European Businesses as of such date (calculated
using the same methodology set forth in Section I of Annex A with
respect to the calculation of Net Assets).
"Estimated Termination Payment" shall mean, as of any
Recalculation Date, (A) the sum of (1) the Allocable Purchase
Price and (2) an amount equal to .5 multiplied by the Severance
Amount as of such Recalculation Date minus (B) an amount equal to
.5 multiplied by the excess, if any, of the Working Capital
Amount over the Estimated Recoverable Working Capital as of such
Recalculation Date.
"Initial Estimated Termination Payment" shall mean an amount
equal to (A) the sum of (1) the Allocable Purchase Price and (2)
an amount equal to .5 multiplied by the Severance Amount as of
the Termination Payment Date minus (B) an amount equal to .15
multiplied by the Working Capital Amount.
"Severance Amount" shall mean, as of any date, period, an
amount equal to the actual severance payments made by Seller or
any Seller Sub to Eligible Employees of the Terminated European
Businesses during the applicable Calculation Period.
"Terminated European Businesses" shall mean the European
Businesses conducted in and from European Territory, the European
Acquisition of which has been terminated in accordance with this
Section 8.03.
"Working Capital" means the accounts receivable, inventories
and equipment of the Terminated European Businesses.
"Working Capital Amount" shall mean an amount equal to the
Working Capital included in the Net Assets for such European
Territory as of the last day of the Payment Period prior to the
Payment period during which the Termination Notice was delivered.
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SECTION 8.04. Amendments and Waivers. This Agreement may not be
amended except by an instrument in writing signed on behalf of each of the
parties hereto. By an instrument in writing Purchaser, on the one hand, or
Seller, on the other hand, may waive compliance by the other party with any
term or provision of this Agreement that such other party was or is
obligated to comply with or perform. Except as otherwise expressly provided
in this Agreement, no failure or delay by any party in exercising any
right, power or privilege hereunder shall operate as a waiver thereof nor
shall any single or partial exercise thereof preclude any other or further
exercise thereof or the exercise of any other right, power or privilege.
Except as otherwise expressly provided herein, the rights and remedies
herein provided shall be cumulative and not exclusive of any rights or
remedies provided by Law or equity.
ARTICLE IX
Indemnification
SECTION 9.01. Indemnification by Seller. (a) From and after the
Initial Closing, Seller shall indemnify Purchaser and its affiliates
(including Cemax- Icon) and each of their respective officers, directors,
employees, stockholders, agents and representatives (each, a "Purchaser
Indemnified Party") against, and hold them harmless from, against and in
respect of any loss, liability, claim, damage, charge, cost or expense
(including reasonable legal fees and expenses) ("Losses"), imposed on,
sustained, incurred or suffered by any Purchaser Indemnified Party (payable
promptly upon written request), to the extent relating to, arising out of
or resulting from:
(i) any breach of any representation or warranty of Seller that
survives the Initial Closing and is contained in this Agreement or in
the certificates delivered pursuant to Section 7.02(a) or (b) hereto
or in any other certificate delivered pursuant hereto;
(ii) any breach of any covenant of Seller contained in this
Agreement (other than any covenant contained in Section 1.06);
(iii) any Excluded Liability;
(iv) any Pre-Closing Environmental Liability. The term
"Pre-Closing Environmental Liability" means any Loss relating to any
Environmental Law (in effect as of the Initial Closing) to the extent
arising out of acts or omissions occurring, or conditions existing
(whether known or unknown), at or before the Initial Closing in
connection with the ownership or operation of the
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Businesses at any time at or before the Initial Closing, including
before the Spin-Off Date, whether such Loss arises before or after the
Initial Closing and whether arising on-site or off-site, including all
Losses in connection with (A) bringing the Businesses or the Acquired
Assets into compliance with Environmental Laws (in effect as of the
Initial Closing), (B) Seller's involvement at the White City facility
in the Oregon State voluntary cleanup program and (C) the former
wastewater retention basin at the White City facility; provided,
however, that such Pre- Closing Environmental Liability shall not
include (1) any costs of investigation of the environmental quality,
condition or environmental compliance status of the Businesses (other
than the Excluded Assets) or the Acquired Assets, except for such
investigations that are in response to (x) a written request or demand
by a Governmental Entity having jurisdiction over the matter, (y)(i)
any Proceeding brought under a citizen's suit provision of any
Environmental Law to the extent it is alleged in such Proceeding that
the Businesses or the Acquired Assets were not in compliance with
Environmental Law at any time prior to the Initial Closing Date or
(ii) any notice or written communication by a third party to the
extent alleging personal injury or property damage from an alleged
release of or exposure to any Hazardous Substance arising from the
operation of the Businesses prior to the Initial Closing Date or any
condition existing with respect to the Acquired Assets as of the
Initial Closing Date (but only to the extent such Losses are
reasonably required in connection with the investigation or
remediation of a release directly related to a notice or written
communication that might reasonably be expected to result in a
Proceeding), or (z) investigations that are required pursuant to
Environmental Law, (2) any costs that are unreasonable and
inconsistent with industrial use of the applicable property as of the
Initial Closing and are not required to bring the Businesses (other
than the Excluded Assets) into compliance with Environmental Law or
the requirements of the Governmental Entity having jurisdiction over
the matter (in either case, as such may be in effect as of the Initial
Closing), or (3) any Losses related to a change in the Businesses
(other than the Excluded Assets) after the Initial Closing, including
the expansion of operations in excess of production levels as of the
Initial Closing, modification or reconfiguration of any process units
or the cessation of all or part of the operations of the Businesses
(other than the Excluded Assets), except to the extent such Losses
relate to soil, sediment or groundwater contamination in existence as
of the Initial Closing;
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(v) any fees, expenses or other payments incurred or owed by
Seller to any brokers, financial advisors or other comparable persons
retained or employed by it in connection with the transactions
contemplated by this Agreement or any Transaction Document; and
(vi) the termination of any Ferrania Employee.
(b) Seller shall not be required to indemnify any person, and
shall not have any liability:
(i) under clauses (i) and (ii) of Section 9.01(a) (other than the
representation and warranty set forth in the second sentence of
Section 3.02) unless the aggregate of all Losses for which Seller
would, but for this clause (i), be liable exceeds on a cumulative
basis an amount equal to $5,000,000, and then only to the extent of
any such excess;
(ii) under clauses (i) and (ii) of Section 9.01(a) (other than
the representation and warranty set forth in the second sentence of
Section 3.02) for any individual occurrence, event, circumstance, act
or omission where the Loss relating thereto, arising out thereof or
resulting therefrom is less than $20,000 and such Losses shall not be
aggregated for purposes of clause (i) of this Section 9.01(b) (it
being agreed, however, that the dollar value of Losses relating to,
arising out of or resulting from "individual" occurrences, events,
circumstances, acts or omissions that relate to, arise out of or
result from the same set of facts will be aggregated for purposes of
this clause (ii) of this Section 9.01(b));
(iii) under clauses (i) and (ii) of Section 9.01(a) for any
breach to the extent Section 7.04 is applicable to such breach;
(iv) under clauses (i) and (ii) of Section 9.01(a) (other than
the representation and warranty set forth in the second sentence of
Section 3.02) in excess of $150,000,000 of direct indemnity payments
from Seller to the Purchaser Indemnified Parties; provided that to the
extent the amount of any Loss for which indemnification is provided
under clause (i) or (ii) of Section 9.01(a), (x) is directly paid by
Seller to Purchaser and (y) is recovered by Seller under any Seller
Existing CGL Policy, such amount shall be excluded from the
calculation of the $150,000,000 limitation on direct payments set
forth in this clause (iv);
(v) under clauses (i) and (ii) of Section 9.01(a) (other than the
representation and warranty set forth
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in the second sentence of Section 3.02) in excess of $300,000,000 of
payments received by the Purchaser Indemnified Parties with respect to
Losses for which indemnification is provided thereunder (1) from
direct indemnity payments by Seller to any of them plus (2) insurance
proceeds payments to Purchaser or any of its affiliates or any of its
respective officers, directors, employees, stockholders, agents or
representatives under Seller Existing CGL Policies; and
(vi) under Section 9.01(a) to the extent the liability or
obligation arises as a result of any wilful or intentional breach by
Purchaser or any of its affiliates (including any of their respective
directors, officers, employees, agents and representatives) prior to
the Final Closing of any of their respective obligations under the
Confidentiality Agreement, the Exclusivity Agreement dated April 25,
1998, as amended from time to time, this Agreement or any other
Transaction Document.
(c) Purchaser shall have the right to make claims under Seller
Existing CGL Policies with respect to which Purchaser is an additional
insured party (each, a "Purchaser Claim") only in the following
circumstances:
(i) prior to making any Purchaser Claim, Purchaser shall provide
Seller with at least 30-day prior written notice of Purchaser's intent
to make a Purchaser Claim ("Purchaser Notice");
(ii) such Purchaser Claim shall relate solely to Losses to the
extent related to, arising out of or resulting from occurrences,
events, circumstances, acts or omissions prior to the Initial Closing,
to the extent covered by the applicable Existing Seller CGL Policy;
(iii) such Purchaser Claim shall relate solely to Losses related
to product liability claims (as defined in the Applicable Seller CGL
Policy) to the extent covered by the applicable Existing Seller CGL
Policy;
(iv) such Purchaser Claim shall be made solely in respect of any
Loss for which indemnification is provided under subclause (i) of
clause (a) of this Section 9.01; and
(v) such Purchaser Claim shall be subject to the limitations set
forth in clause (b) of this Section 9.01 and all limitations otherwise
set forth in any other provision of this Article IX.
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(d) In connection with any claim for indemnifica tion by
Purchaser for which Purchaser intends to make a Purchaser Claim under any
Seller Existing CGL Policy on its behalf or, if permitted by the applicable
Seller Existing CGL Policy, on behalf of the relevant Purchaser Indemnified
Party, Purchaser shall include in its Purchaser Notice a reasonable
detailed description of the Purchaser Claim, together with a statement that
Purchaser intends to make such claim together with certification that such
Purchaser Claim satisfies the conditions set forth in subclauses (ii),
(iii), (iv) and (v) of clause (c) of this Section 9.01. Within 30 days
following Seller's receipt of the Purchaser Notice, Seller shall either (1)
notify Purchaser that Seller agrees that such proposed Purchaser Claim
satisfies the conditions set forth in subclauses (ii), (iii), (iv) and (v)
of clause (c) of this Section 9.01, and that Purchaser may proceed to file
the Purchaser Claim under the applicable Seller Existing CGL Policies or
(2) notify Purchaser that Seller believes that such proposed Purchaser
Claim does not satisfy one or more of the conditions set forth in
subclauses (ii), (iii), (iv) and (v) of clause (c) of this Section 9.01,
and Seller shall describe in reasonable detail its reasons therefor. If
Seller notifies Purchaser that Seller believes that such proposed Purchaser
Claim does not satisfy one or more of the conditions set forth in
subclauses (ii), (iii), (iv) and (v) of clause (c) of this Section 9.01,
Seller and Purchaser shall proceed expeditiously to resolve such
disagreement in accordance with Section 11.08. If following completion of
the procedures set forth in subclauses (1) and (2) of this clause (d),
Purchaser files the applicable Purchaser Claim under the applicable Seller
Existing CGL Policies and is unable to recover the full amount of such
Purchaser Claim due to (x) exhaustion of the coverage limits under such
Policies or (y) denial of the Purchaser Claim by the relevant insurers on
the basis that the Purchaser Claim was time barred under the applicable
Seller Existing CGL Policies (provided, however, that such denial was not
based on the fact that Purchaser has filed the Purchaser Claim outside the
required period under the applicable Seller Existing CGL Policy) then
Seller shall pay directly to Purchaser any Losses in an amount equal to the
lesser of (x) the portion of the Purchaser Claim not paid by the insurers
because of the exhaustion of coverage limits or, subject to the proviso
above, the application of such time bar and (y) the aggregate amount paid
under the relevant Seller Existing CGL Policies to or for the benefit of
Seller with respect to claims filed by any person after the date on which
Seller shall have received the Purchaser Notice (less all amounts otherwise
payable by Seller to Purchaser pursuant to this subclause (y), which has
previously been paid by Seller to Purchaser with respect to any other
Purchaser Claims filed by Purchaser). Any direct payment from Seller to
Purchaser made pursuant to the immediately
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preceding sentence shall not be counted towards the $150,000,000 limitation
on direct payments set forth in the first clause of subclause (iv) of
clause (b) of this Section 9.01, but such direct payment shall be counted
towards the $300,000,000 limitation set forth in subclause (v) of clause
(b) of this Section 9.01.
(e) Purchaser shall have the right to seek payment of any Loss
for which indemnification is provided under subclause (i) of clause (a) of
Section 9.01 directly from Seller, subject to the limitations set forth in
clause (b) of Section 9.01, for any portion of Purchaser Claims not
satisfied by the applicable insurers or Seller's payment to Purchaser
pursuant to the penultimate sentence of clause (d) of this Section 9.01.
(f) Seller shall cooperate with Purchaser with respect to any
Purchaser Claim properly made by Purchaser under any other Existing CGL
Policy.
(g) Except as otherwise specifically provided in this Agreement
or in the Conveyance Documents, Purchaser acknowledges that its sole and
exclusive remedy after the Initial Closing with respect to any and all
claims relating to this Agreement and the Conveyance Documents, the
Acquisition and the other transactions contemplated hereby and thereby, the
Businesses, the Acquired Assets, the Assumed Liabilities and the Excluded
Liabilities (other than claims of, or causes of action arising from, fraud
or wilful breach) shall be pursuant to the indemnification provisions set
forth in this Article IX; provided, however, that the only remedy provided
for any and all claims arising under Section 1.06 is provided in Section
1.06. In furtherance of the foregoing, Purchaser hereby waives, from and
after the Initial Closing, any and all rights, claims and causes of action
(other than claims of, or causes of action arising from, fraud or wilful
breach) it may have against Seller arising under or based upon any Law
(including any relating to environmental matters) or arising under or based
upon common law or otherwise (except pursuant to the indemnification
provisions set forth in this Section 9.01).
SECTION 9.02. Indemnification by Purchaser. From and after the
Initial Closing, Purchaser shall indemnify Seller and its affiliates and
each of their respective officers, directors, employees, stockholders,
agents and representatives (each, a "Seller Indemnified Party") against,
and hold them harmless from, against and in respect of any Loss, imposed
on, sustained, incurred or suffered by any Seller Indemnified Party
(payable promptly
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upon written request), to the extent arising out of or resulting from:
(i) any breach of any representation or warranty of Purchaser
contained in this Agreement or in the certificates delivered pursuant
to Section 7.03(a) or (b) hereto or in any other certificate delivered
pursuant hereto;
(ii) any breach of any covenant of Purchaser contained in this
Agreement;
(iii) any Assumed Liability or any liability of Cemax-Icon
(except for any Pre-Closing Environmental Liability or any liability
that is an Excluded Tax);
(iv) any fees, expenses or other payments incurred or owed by
Purchaser to any brokers, financial advisors or other comparable
persons retained or employed by it in connection with the transactions
contemplated by this Agreement or any other Transaction Document;
(v) for any severance obligations other than those obligations
that are considered Excluded Liabilities arising out of any claims or
actions brought by any U.S. Transferred Employees that are (a) based
upon a constructive termination theory in connection with the amount
of compensation and pension and other benefit paid or made available
by Purchaser to such U.S. Transferred Employees or (b) attributable to
Purchaser's failure to offer employment to a U.S. Eligible Employee on
terms consistent with Section 6.09;
(vi) all severance obligations (a) mandated by local law or
collective bargaining agreements with respect to Foreign Eligible
Employees that are incurred as a result of (i) events occurring after
a Foreign Eligible Employee accepts Purchaser's offer of employment,
(ii) Purchaser's request that a Foreign Eligible Employee relocate to
a Purchaser facility that is (X) outside such Foreign Eligible
Employee's current country of employment or (Y) is not a current
Purchaser facility or (iii) Purchaser's failure to offer employment to
a Foreign Eligible Employee on terms consistent with this Agreement or
(b) referred to in clause (A) of the last sentence of Section
6.09(d)(i);
(vii) 50% of all severance obligations mandated by local law or
collective bargaining agreements with respect to Foreign Eligible
Employees who decline an offer of employment by Purchaser that is
consistent with Section 6.09(b); provided that Purchaser shall not be
responsible for any such mandatory severance
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obligations (i) that arise as a result of the transactions
contemplated by this Agreement for any reason other than those
enumerated in this Section 9.02 or (ii) with respect to any customer
service and support employees to whom Purchaser has made such an offer
of employment (which offer was declined) if Purchaser in fact hires
406 customer service and support employees as contemplated by clauses
(iii) of Section 6.09(a). Seller and Purchaser agree to cooperate in
good faith to minimize any severance liabilities mandated by local law
or collective bargaining agreement related to the Foreign Eligible
Employees; or
(viii) all liabilities of Seller with respect to the 1998 Payment
and the 1999 Payment as set forth in Section 2.03.
SECTION 9.03. Calculation of Losses; No Punitive Damages, etc.
(a) The amount of any Loss for which indemnification is provided under this
Article IX shall be net of any amounts actually recovered by the
indemnified party under insurance policies with respect to such Loss (which
amounts, however, shall be subject to subrogation by the indemnified
party's insurer) and shall be (i) increased to take account of any net Tax
cost incurred by the indemnified party arising from the receipt of
indemnity payments hereunder (grossed up for such increase) and (ii)
reduced to take account of any net Tax benefit realized by the indemnified
party arising from the incurrence or payment of any such Loss. In computing
the amount of any such Tax cost or Tax benefit, the indemnified party shall
be deemed to recognize all other items of income, gain, loss deduction or
credit before recognizing any item arising from the receipt of any
indemnity payment hereunder or the incurrence or payment of any indemnified
Loss.
(b) Notwithstanding anything to the contrary contained herein, no
indemnified party shall be entitled to indemnification from any
indemnifying party under this Article IX in respect of any punitive damages
except for indemnification for punitive damages that are recoverable Losses
and are paid by an indemnified party to a third party; provided, however,
that this Section 9.03(b) shall not be interpreted to limit the provisions
of Section 9.01(g) with respect to claims or causes of action resulting
from fraud or wilful breach.
SECTION 9.04. Termination of Indemnification. The obligations to
indemnify and hold harmless any party, (i) pursuant to Section 9.01(a)(i)
or 9.02(i), shall terminate when the applicable representation or warranty
terminates pursuant to Section 9.07, (ii) pursuant to Section 9.01(a)(iv),
shall terminate on the close of
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business on the tenth anniversary of the Initial Closing Date and (iii)
pursuant to the other clauses of Sections 9.01 and 9.02 shall not
terminate; provided, however, that such obligations to indemnify and hold
harmless shall not terminate with respect to any item as to which the
person to be indemnified shall have, before the expiration of the
applicable period, previously made a claim by delivering a notice of such
claim (in accordance with the terms of Section 9.05) to the party to be
providing the indemnification.
SECTION 9.05. Procedures Relating to Indemnifica tion. (a) In
order for a party (the "indemnified party"), to be entitled to any
indemnification provided for under this Agreement in respect of, arising
out of or involving a claim made by any person against the indemnified
party (other than a Tax Claim) (a "Third Party Claim"), such indemnified
party must notify the indemnifying party in writing (and in reasonable
detail) of the Third Party Claim promptly (but in no event more than 30
days) following receipt by such indemnified party of notice of the Third
Party Claim. The failure by any indemnified party so to notify the
indemnifying party shall not relieve the indemnifying party from any
liability that it may have to such indemnified party under Section 9.01 or
9.02, except to the extent that the indemnifying party demonstrates that it
has been actually prejudiced by such failure. Thereafter, the indemnified
party shall deliver to the indemnifying party, promptly following the
indemnified party's receipt thereof, copies of all notices and documents
(including court papers) received by the indemnified party relating to the
Third Party Claim.
(b) If a Third Party Claim is made against an indemnified party,
the indemnifying party shall be entitled to participate in the defense
thereof and, if it so chooses, to assume the defense thereof with counsel
selected by the indemnifying party; provided, however, that such counsel is
not reasonably objected to by the indemnified party. Should the
indemnifying party so elect to assume the defense of a Third Party Claim,
the indemnifying party shall not be liable to the indemnified party for any
legal expenses subsequently incurred by the indemnified party in connection
with the defense thereof. If the indemnifying party assumes such defense,
the indemnified party shall have the right to participate in the defense
thereof and to employ counsel (not reasonably objected to by the
indemnifying party) at its own expense separate from the counsel employed
by the indemnifying party (it being understood that the indemnifying party
shall control such defense). The indemnifying party shall be liable for and
shall reimburse the indemnified party for all costs, fees and expenses
(including the fees and expenses of counsel employed by the indemnified
party) for any period during which the
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indemnifying party has not assumed the defense thereof (other than during
any period in which the indemnified party shall have failed to give notice
of the Third Party Claim as provided above). If the indemnifying party
chooses to defend or prosecute a Third Party Claim, all the indemnified
parties shall cooperate in the defense or prosecution thereof. Such
cooperation shall include the retention and (upon the indemnifying party's
request) the provision to the indemnifying party of records and information
that are reasonably relevant to such Third Party Claim, and making
employees available on a mutually convenient basis during normal business
hours to provide additional information and explanation of any material
provided hereunder. Whether or not the indemnifying party assumes the
defense of a Third Party Claim, the indemnified party shall not admit any
liability with respect to, or settle, compromise or discharge, such Third
Party Claim without the indemnifying party's prior written consent (which
consent shall not be unreasonably withheld). Whether or not the
indemnifying party assumes the defense of a Third Party Claim, the
indemnifying party shall not, without the indemnified party's prior written
consent, admit any liability with respect to, or settle, compromise or
discharge, such Third Party Claim on a basis that would result in (i) the
imposition of a Judgment that would restrict the future activity or conduct
of the indemnified party or any subsidiary or affiliate thereof, or (ii)
any monetary liability of the indemnified party that will not be paid or
reimbursed by the indemnifying party.
(c) Other Claims. In the event any indemnified party should have
a claim against any indemnifying party under Section 9.01 or 9.02 that does
not involve a Third Party Claim being asserted against or sought to be
collected from such indemnified party, the indemnified party shall deliver
notice of such claim promptly (but in no event more than 30 days) following
discovery by the indemnified party of such claim to the indemnifying party.
The failure by any indemnified party so to notify the indemnifying party
shall not relieve the indemnifying party from any liability that it may
have to such indemnified party under Section 9.01 or 9.02, except to the
extent that the indemnifying party demonstrates that it has been prejudiced
by such failure. If the indemnifying party does not notify the indemnified
party within 30 calendar days following its receipt of such notice that the
indemnifying party disputes its liability to the indemnified party under
Section 9.01 or 9.02, such claim specified by the indemnified party in such
notice shall be conclusively deemed a liability of the indemnifying party
under Section 9.01 or 9.02 and the indemnifying party shall pay the amount
of such liability to the indemnified party on demand or, in the case of any
notice in which the amount of the claim (or any portion thereof) is
estimated, on such later date when the amount of such claim (or such
portion
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thereof) becomes finally determined. If the indemnifying party has timely
disputed its liability with respect to such claim, as provided above, the
indemnifying party and the indemnified party shall proceed in good faith to
resolve such dispute in accordance with Section 11.09 hereof.
(d) Environmental Claims. (i) Without limiting the other
provisions of this Section 9.05, if Purchaser has a claim against Seller
for a Pre-Closing Environmental Liability, Seller shall have the right but
not the obligation to manage any investigation, remediation, corrective
action or other activities ("Remedial Action") required to address the
conditions giving rise to such claim. If Seller elects to manage any
Remedial Action, Seller shall (A) provide Purchaser the opportunity to
review in advance such Remedial Action to be taken or implemented and the
form and substance of any plan, report or submission to be transmitted to
any Governmental Entity regarding such Remedial Action, and (B) provide
Purchaser quarterly (or more frequently if reasonably requested by
Purchaser) written reports regarding the status of such Remedial Action,
including any correspondence with any Governmental Entity regarding such
Remedial Action. Seller and Purchaser shall negotiate in good faith to
reach an agreement as to the scope of work regarding any Remedial Action.
If Seller and Purchaser cannot agree as to such scope of work and the cost
of implementing Purchaser's desired Remedial Action is in excess of that of
Seller's desired Remedial Action, Seller shall implement Purchaser's
desired Remedial Action; provided, however, that Seller's liability
therefor shall be limited to the amount necessary to undertake and
implement Seller's desired Remedial Action; provided, however, that
Seller's Remedial Action does not materially impair the operation of the
Businesses or value of the Acquired Assets; provided, further, however,
that Remedial Actions involving reasonable engineering controls,
institutional controls or site use restrictions shall not be considered
material impairments of value (such amount, "Seller's Remedial Cost") and
Purchaser shall be liable for any and all amounts in excess of Seller's
Remedial Cost. Seller's Remedial Cost shall be determined by submitting
requests for proposals and cost estimates based upon the scope of work for
Seller's desired Remedial Action to three nationally recognized
environmental remediation consultants/contractors (as reasonably selected
by the Seller); Seller's Remedial Cost shall be the least cost alternative
based upon such competitive bidding procedure.
(ii) Purchaser and Seller shall maintain as confidential, except
as otherwise required by Law, any non-public information exchanged or
obtained in connection with any Remedial Action. Each party shall retain
and, upon the other party's request, provide the requesting party any
records and information which are reasonably relevant to
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such Remedial Action. Purchaser shall provide Seller, during normal
business hours and upon prior request, reasonable access to any area on the
Acquired Assets related to any such Remedial Action and to employees of
Purchaser to provide additional information and explanation of any material
provided hereunder.
(iii) Any Remedial Action undertaken by Seller hereunder shall
not materially interfere with the operation of the Businesses by Purchaser
and shall not materially impair the operation or value of the Acquired
Assets; provided, however, that Remedial Actions involving reasonable
engineering controls, institutional controls or site use restrictions shall
not be considered material impairments of value. Seller hereby indemnifies
and holds Purchaser harmless against any Losses associated with, resulting
from or arising out of the undertaking of any Remedial Action that Seller
controls or manages pursuant to this Section 9.05(d) including any Losses
arising out of Seller's access to or activities involving any Acquired
Asset in connection therewith.
(iv) If Seller does not elect to manage a Remedial Action,
Purchaser shall assume such obligation. Thereafter, Purchaser shall (A)
provide Seller the opportunity to approve (which approval shall not be
unreasonably withheld or delayed) in advance such Remedial Action to be
taken or implemented and the form and substance of any plan, report or
submission to be transmitted to any Governmental Entity regarding such
Remedial Action, and (B) provide Seller quarterly (or more frequently if
reasonably requested by Seller) written reports regarding the status of
such Remedial Action, including a reasonably detailed accounting of
expenditures related to such Remedial Action and any correspondence with
any Governmental Entity regarding such Remedial Action.
(e) Detailed Notice. Any claim for indemnifica tion under this
Agreement shall describe the claim in reasonable detail, include copies of
any available material written evidence thereof and indicate the estimated
amount of such claim and, in the case of a claim related to an
environmental matter, shall include details regarding the precise nature
and scope of the Loss together with any technical information such as
sampling or testing results.
(f) Mitigation. Purchaser and Seller shall cooperate with each
other with respect to resolving any claim or liability with respect to
which one party is obligated to indemnify the other party hereunder,
including by making commercially reasonable efforts to mitigate or resolve
any such claim or liability after such party becomes aware of such claim or
liability. In the event that an indemnified party shall fail to make such
commercially
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reasonable efforts to mitigate or resolve any claim or liability after such
party becomes aware of such claim or liability then notwithstanding
anything else to the contrary contained herein, the indemnifying party
shall not be required to indemnify any person for any Loss that could
reasonably be expected to have been avoided if the indemnified party had
made such efforts.
SECTION 9.06. Procedures Relating to Tax Indemnification. (a) If
a claim shall be made by any Taxing Authority, which, if successful, might
result in an indemnity payment to an indemnified party pursuant to Section
9.01 or 9.02, the party receiving such claim shall promptly notify the
other party in writing of such claim (a "Tax Claim"). If the indemnified
party receives notification of a Tax Claim and fails to notify the
indemnifying party within a sufficient period of time to allow the
indemnifying party to effectively contest such Tax Claim, or in reasonable
detail to apprise the indemnifying party of the nature of the Tax Claim, in
each case taking into account the facts and circumstances with respect to
such Tax Claim, Seller shall not be liable to the indemnified party, any of
its affiliates or any of their respective officers, directors, employees,
stockholders, agents or representatives to the extent that indemnifying
party's position is actually prejudiced as a result thereof.
(b) With respect to any Tax Claim (other than a Tax Claim
relating solely to Taxes of Cemax-Icon for either a Straddle Period or a
Post-Closing Tax Period), Seller shall control all proceedings taken in
connection with such Tax Claim (including selection of counsel) and,
without limiting the foregoing, may in its sole discretion pursue or forego
any and all administrative appeals, proceedings, hearings and conferences
with any Taxing Authority with respect thereto, and may, in its sole
discretion, either pay the Tax claimed and sue for a refund where
applicable law permits such refund suits or contest the Tax Claim in any
permissible manner; provided, however, that, in the case of a Tax Claim
that relates to Cemax-Icon, with respect to each of the foregoing matters,
Seller shall keep Purchaser informed concerning all material aspects of
such proceedings, and shall pursue resolution of the Tax Claim diligently
and in good faith, taking into account Seller's obligations under Section
9.01; and provided, further, however, that, if in the case of a Tax Claim
that relates to Cemax-Icon, Purchaser reasonably determines that any of the
foregoing conditions are not satisfied, Purchaser may at its option take
complete control of the proceedings; provided, further, however, that if
Purchaser takes control of the proceedings, Purchaser shall keep Seller
informed concerning all material aspects of such proceedings. Seller and
Purchaser shall jointly control all proceedings taken in
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connection with any Tax Claim relating solely to Taxes of Cemax-Icon for a
Straddle Period.
(c) Purchaser, Cemax-Icon and each of their respective affiliates
shall cooperate with Seller in contesting any Tax Claim, which cooperation
shall include the retention and (upon Seller's request) the provision to
Seller of records and information which are reasonably relevant to such Tax
Claim, and making their employees available on a mutually convenient basis
to provide additional reasonably relevant information or explanation of any
material provided hereunder or to testify at proceedings relating to such
Tax Claim.
(d) In no case shall Purchaser, Cemax-Icon or any of their
respective officers, directors, employees, stockholders, agents or
representatives settle or otherwise compromise any Tax Claim without
Seller's prior written consent. Neither party shall settle a Tax Claim to
the extent relating to Taxes of Cemax-Icon for a Straddle Period without
the other party's prior written consent.
SECTION 9.07. Survival of Representations. The representations
and warranties contained in this Agreement and in any document delivered in
connection herewith shall, subject to clauses (i) through (iii) below,
survive the Initial Closing solely for purposes of Article IX, (i) in the
case of the representations and warranties contained in Sections 3.02, 3.09
and 3.16, they shall terminate at the close of business on the third
anniversary of the Initial Closing Date, (ii) in the case of the
representations and warranties contained in Sections 3.14 and 3.17(b), they
shall terminate on the Initial Closing Date and (iii) in the case of all
other representations and warranties contained in this Agreement, they
shall terminate at the close of business on the second anniversary of the
Initial Closing Date.
ARTICLE X
Tax Matters
SECTION 10.01. Preparation and Filing of Tax Returns and
Amendments. (a) For any taxable period of Cemax-Icon that includes (but
does not end on) the Initial Closing Date, (i) Seller shall timely prepare
and file with the appropriate authorities all Tax Returns required to be
filed prior to the Initial Closing and shall pay all Taxes due with respect
to such Tax Returns, and (ii) Purchaser shall timely prepare and file with
the appropriate authorities all Tax Returns required to be filed after the
Initial Closing and shall pay all Taxes due with respect to such Tax
Returns; provided, however, that Purchaser shall
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reimburse Seller and Seller shall reimburse Purchaser (each in accordance
with the procedures set forth in Section 9.06) for any amount owed by
Purchaser or Seller, respectively, pursuant to Section 9.01 with respect to
the taxable periods covered by such Tax Returns. To the extent such Tax
Returns relate to Cemax-Icon, the party responsible for preparing and
filing such Tax Returns shall furnish such Tax Returns to the other party
for such other party's approval (which approval shall not be unreasonably
delayed or withheld) at least 15 calendar days prior to the due date for
filing such returns.
(b) For any taxable period of Cemax-Icon that ends on or before
the Initial Closing Date, Seller shall timely prepare and file with the
appropriate authorities all Tax Returns required to be filed, and shall pay
all Taxes due with respect to such Tax Returns; provided, however, that
Seller shall not take any position on such returns that could result in a
detriment to Purchaser or its affiliates (including Cemax-Icon after the
Initial Closing) except to the extent such position is consistent with past
practice.
(c) Purchaser and Seller agree to cause Cemax- Icon to file all
Tax Returns for the period including the Initial Closing Date on the basis
that the relevant taxable period ended as of the close of business on the
Initial Closing Date, unless the relevant Taxing Authority will not accept
a Tax Return filed on that basis.
(d) Notwithstanding any other provision in this Agreement, Seller
shall be responsible for filing any amended or consolidated, combined or
unitary Tax Returns for taxable years ending on or prior to the Initial
Closing Date (with respect to United States Acquired Assets) and the
applicable European closing Date (with respect to the European Acquired
Assets) which are required as a result of examination adjustments made by
the relevant Taxing Authority for such taxable years as finally determined.
For those jurisdictions in which separate Tax returns are filed by
Cemax-Icon, any required amended returns resulting from such examination
adjustments, as finally determined, shall be prepared by Seller and
furnished to Cemax-Icon, for its approval (which approval shall not be
unreasonably delayed or withheld), signature and filing at least 30 days
prior to the due date for filing such Tax returns.
SECTION 10.02. Cooperation. (a) Seller, Cemax- Icon and Purchaser
shall reasonably cooperate, and shall cause their respective affiliates,
officers, employees, agents, auditors and representatives reasonably to
cooperate, including maintaining and making available to each other all
records necessary, in connection with Taxes (including in connection with
preparing and filing all Tax Returns and in resolving all disputes and
audits with
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respect to all taxable periods relating to Taxes). Except as otherwise
provided herein, the party requesting assistance or cooperation shall bear
the other party's out-of-pocket expenses in complying with such request to
the extent that those expenses are attributable to fees and other costs of
unaffiliated third-party service providers.
(b) Purchaser and Seller recognize that Seller and its affiliates
will need access, from time to time, after the Initial Closing Date, to
certain accounting and Tax records and information held by Cemax-Icon to
the extent such records and information relate to the Pre-Closing Tax
Periods; therefore, subject to the following sentence, Purchaser agrees,
and agrees to cause Cemax-Icon, (i) to use their best efforts properly to
retain and maintain such records until such time as Seller reasonably
agrees that such retention and maintenance is no longer necessary and (ii)
to allow Seller and its agents and representatives (and agents or
representatives of any of its affiliates), at times and dates mutually
acceptable to the parties, to inspect, review and make copies of such
records as Seller may deem necessary or appropriate from time to time, such
activities to be conducted during normal business hours and at Seller's
expense. Purchaser and Seller recognize that after the Initial Closing
records maintained by Cemax-Icon may contain competitive proprietary
information which Purchaser will want to keep confidential from Seller and
its affiliates and, accordingly, the parties agree to work together to
provide Seller and its affiliates with information that they reasonably
require without divulging any information that Purchaser considers
competitive proprietary or confidential information.
(c) Purchaser shall retain the books and records of Seller and
Seller Subs included in the Acquired Assets for a period of seven years
after the Initial Closing (with respect to United States Acquired Assets)
and the applicable European Closing Date (with respect to the European
Acquired Assets). After the end of such applicable seven-year period and
before disposing of such books or records, Purchaser shall give notice to
such effect to Seller and give Seller, at Seller's cost and expense, an
opportunity to remove and retain all or any part of such books or records
as Seller may select.
SECTION 10.03. Refunds and Credits. Any refunds or credits of
Taxes attributable to the Acquired Assets or of Cemax-Icon for any taxable
period ending on or before the Initial Closing Date shall be for the
account of Seller to the extent that any such refund can be obtained or any
such credit utilized without considering income, loss or any other item
arising in any Post-Closing Tax Period of Cemax-Icon or any taxable period
of Purchaser or any other affiliate of Purchaser. Any refunds or credits of
Taxes
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attributable to the Acquired Assets or of Cemax-Icon for any taxable period
or portion thereof beginning after the Initial Closing Date shall be for
the account of Purchaser. Any refunds or credits of Taxes attributable to
the Acquired Assets or of Cemax-Icon for any Straddle Period shall be
equitably apportioned between Seller and Purchaser except that Seller shall
be entitled to share only in the portion of any such refund which can be
obtained or the portion of any such credit which can be utilized without
considering income, loss or any other item arising in any Post-Closing Tax
Period of Cemax-Icon. If Seller so requests and at Seller's expense,
Purchaser shall, and shall cause Cemax- Icon to, file for and obtain any
refunds or credits to which Seller is entitled under this Section 10.03;
provided, however, that Cemax-Icon will not be required to take any
position that could result in a detriment to Purchaser or its affiliates
except to the extent such position is consistent with past practice and
Seller shall indemnify Purchaser and its affiliates for any losses
resulting from Purchaser (or Cemax-Icon) taking any position, at Seller's
request under this provision, that is not consistent with past practice.
Purchaser shall permit Seller to control the prosecution of any such refund
claim and, where deemed appropriate by Seller, shall, and shall cause
Cemax-Icon to, authorize by appropriate powers of attorney such persons as
Seller shall designate to represent Purchaser or Cemax-Icon with respect to
such refund claim; provided, however, that, with respect to each of the
foregoing matters, Seller shall keep Purchaser informed concerning all
material aspects of the prosecution of the claim and all related
proceedings and shall pursue resolution of the claim diligently and in good
faith taking into account Seller's obligations under the preceding
sentence. Purchaser shall, and shall cause Cemax- Icon to forward to Seller
any such refund within 10 days after the refund is received (or reimburse
Seller for any such credit within 10 days after the credit is allowed or
applied against other Tax liability); provided, however, that any such
amounts payable to Seller shall be net of any net Tax cost to Purchaser or
any affiliate of Purchaser including Cemax-Icon attributable to the receipt
of such refund and/or the payment of such amounts to Seller. Seller and
Purchaser shall treat any payments under the preceding sentence that Seller
shall receive pursuant to this Section 10.03 as an adjustment to the
Purchase Price for United States Federal income Tax purposes, unless a
final determination (which shall include the execution of a Form 870-AD or
successor form) with respect to Purchaser or any of its affiliates causes
any such payment not to be treated as an adjustment to the Purchase Price.
For purposes of computing the net Tax cost to Purchaser or any affiliate of
Purchaser referred to above, a Tax benefit shall be taken into account only
to the extent that such person has realized an actual Tax savings which
such person would not otherwise have realized, assuming such person
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recognized all other items of income, gain, loss, deduction or credit
before recognizing any item arising from the receipt and payment of such
amounts hereunder; and for the avoidance of doubt, such savings shall not
include the Tax refund which Purchaser or its affiliate is obligated to pay
over to Seller hereunder. Notwithstanding the foregoing, the control of the
prosecution of a claim for refund of Taxes paid pursuant to a deficiency
assessed subsequent to the Closing Date as a result of an audit shall be
governed by the provisions of Section 9.06.
SECTION 10.04. Transfer Taxes; Value Added Taxes. All Transfer
Taxes applicable to the conveyance and transfer from Seller and Seller Subs
to Purchaser of the Acquired Assets in an amount not exceeding $6,000,000
shall be equally shared by Seller and Purchaser; any of the foregoing in
excess of $6,000,000 shall be borne by Seller. All Value Added Taxes
applicable to the conveyance and transfer from Seller and Seller Subs to
Purchaser of the Acquired Assets that shall not be recovered by Purchaser
or the applicable Purchaser Buyer after Purchaser shall have used
commercially reasonable best efforts to recover such Value Added Taxes
("Unrecovered Value Added Taxes") in an aggregate amount up to $2,000,000
shall be borne by Purchaser and all such Unrecovered Value Added Taxes in
excess of $2,000,000 shall be shared equally by Seller and Purchaser.
Seller shall cooperate with Purchaser in connection with Purchaser's
efforts to recover any Value Added Taxes. Each Party shall use reasonable
efforts to avail itself of any available exemptions from any such Transfer
Taxes and Value Added Taxes, and to cooperate with the other parties in
providing any information and documentation that may be necessary to obtain
such exemptions.
SECTION 10.05. Purchaser Activity on Initial Closing Date. On the
Initial Closing Date, Purchaser shall cause Cemax-Icon to conduct its
business in the ordinary course in substantially the same manner as
presently conducted and on the Initial Closing Date shall not permit
Cemax-Icon to effect any extraordinary transactions (other than any such
transactions expressly required by applicable law or by this Agreement)
that could result in Tax liability to Cemax-Icon in excess of Tax liability
associated with the conduct of its business in the ordinary course.
SECTION 10.06. Purchaser Activity Post-Closing. (a) Purchaser
shall not, with respect to any Pre-Closing Tax Period, (i) file any amended
Tax Return with respect to Cemax-Icon; (ii) carry back any loss or other
Tax attribute of Cemax-Icon; or (iii) take any position with respect to
Taxes of Cemax-Icon that would have the effect of shifting income from a
Post-Closing Tax Period to a Pre-Closing Tax Period unless, in each case,
Seller shall have consented in writing to such action by Purchaser.
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(b) Purchaser shall not make any election under Section 338 of
the Code, or other comparable election under state, local or foreign law
with respect to the acquisition by Purchaser of the Cemax-Icon Shares.
(c) Seller shall make an election under Treasury Regulation ss.
1.1502-32(b)(4) to waive all losses attribu table to Cemax-Icon which are
carried to the first taxable year of Cemax-Icon following the closing date
of the acqui sition of the stock of Cemax-Icon by Seller. Purchaser shall
make an election under Treasury Regulation ss. 1.1502-32(b)(4) to waive all
losses attributable to Cemax- Icon which are carried to the first taxable
year of Cemax- Icon following the Initial Closing Date, which shall include
a protective election to waive any of the losses referred to in the
previous sentence to the extent not effectively waived by Seller's
election; provided, that Purchaser makes no representations, warranties,
covenants or guarantees of any kind as to the effectiveness or effect of
such election (including such protective election).
SECTION 10.07. Tax Sharing Agreements. Seller shall cause the
provisions of any Tax sharing agreement between Seller and any of its
affiliates (other than Cemax- Icon), on the one hand, and Cemax-Icon, on
the other, to be terminated on or before the Initial Closing Date and no
amounts shall be due and payable thereunder.
SECTION 10.08. Employee Withholding and Reporting Matters. With
respect to the Transferred Employees, Purchaser shall, in accordance with
and to the extent permitted pursuant to Revenue Procedure 96-60, 1996-2
C.B. 399, assume all responsibility for preparing and filing Form W-2, Wage
and Tax Statement, Form W-3, Transmittal of Income and Tax Statements, Form
941, Employer's Quarterly Federal Tax Return, Form W-4, Employee's
Withholding Allowance Certificate, and Form W-5, Earned Income Credit
Advance Payment Certificate. The Seller and Purchaser agree to comply with
the procedures described in Section 5 of Revenue Procedure 96-60.
SECTION 10.09. Seller's Obligations with Respect to Cemax-Icon
Payments. Seller shall comply with all Tax information reporting and
withholding obligations in connection with any payment made by Seller
pursuant to the Cemax-Icon Merger Agreement and upon request shall provide
Purchaser, reasonably promptly, with documentary proof of such compliance.
SECTION 10.10. Seller's Obligations with Respect to R&D Credit
Information. In order for Purchaser to comply with Section 41(f)(3) of the
Code and any Treasury Regulations issued thereunder, Seller shall provide
Purchaser, reasonably promptly, with the relevant
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information, including all supporting documentation necessary for Purchaser
to establish that it has complied in all respects with such provisions;
provided, however, that Seller shall provide Purchaser with such
information at least 60 days before the relevant Tax Returns of the
Purchaser are required to be filed (taking into account all extensions
thereof).
SECTION 10.11. Italian Tax Certificates. Seller shall use
its commercially reasonable efforts to obtain, or cause to be obtained,
from the Italian taxing authorities tax certificates, relating to (i)
income taxes, (ii) value-added taxes and (iii) any other material taxes for
which such certificates may be requested, certifying that no deficiencies
or claims for taxes covered by such certificates are pending with the
applicable Italian taxing authority as of the date of such certificates;
provided, that Seller shall initially request, or cause to be requested,
such certificates promptly following the execution of this Agreement and
shall use its commercially reasonable efforts to obtain, or cause to be
obtained, such certificates through the date of the Initial Closing;
provided, further, however, that Seller makes no representations,
warranties, covenants or guarantees of any kind whatsoever as to the
effect, if any, of such certificates.
ARTICLE XI
General Provisions
SECTION 11.01. Assignment. This Agreement and the rights and
obligations hereunder shall not be assign able, transferable or delegable
by Purchaser or Seller (other than by operation of law in connection with a
merger or consolidation of Purchaser or Seller) without the prior written
consent of the other parties hereto; provided, however, that Purchaser may,
subject to the conditions set forth in Section 1.05 but otherwise in its
sole discretion, assign its rights to purchase specified Acquired Assets
and to assume specified Assumed Liabilities (it being agreed that the
specified Acquired Assets and Assumed Liabilities shall be assigned
thereafter to the same Purchaser Buyer) to any Purchaser Buyer. Any
attempted assignment in violation of this Section 11.01 shall be null and
void.
SECTION 11.02. No Third-Party Beneficiaries. Except as provided
in Article IX, this Agreement is for the sole benefit of the parties hereto
and their permitted assigns and nothing herein expressed or implied shall
give or be construed to give to any person, other than the parties hereto
and such assigns, any legal or equitable rights hereunder.
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SECTION 11.03. Notices. All notices or other communications
required or permitted to be given hereunder shall be in writing and shall
be delivered by hand or sent by facsimile or sent, postage prepaid, by
registered, certified or express mail or reputable overnight courier
service and shall be deemed given when received, as follows:
(i) if to Purchaser,
Eastman Kodak Company
345 State Street
Rochester, NY 14650-0228
Telephone: (716)724-4332
Telecopy: (716)724-9448
Attention: General Counsel
with a copy to:
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Telephone: (212)-558-4000
Telecopy: (212)-558-3588
Attention: David Kies, Esq.; and
(ii) if to Seller or any Seller Sub,
Imation Corp.
1 Imation Place
Oakdale, MN 55128
Telephone: (612)-704-7844
Telecopy: (612)-704-7845
Attention: Chief Executive Officer and
President
Imation Corp.
1 Imation Place
Oakdale, MN 55128
Telephone: (612)-704-4780
Telecopy: (612)-704-5950
Attention: General Counsel
with copies to:
Cravath, Swaine & Moore
825 Eighth Avenue
New York, New York 10019
Telephone: (212)-474-1000
Telecopy: (212)-474-3700
Attention: Susan Webster, Esq.
SECTION 11.04. Interpretation; Exhibits and Schedules; Certain
Definitions. (a) The headings contained
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in this Agreement, in any Exhibit or Schedule hereto and in the table of
contents to this Agreement are for reference purposes only and shall not
affect in any way the meaning or interpretation of this Agreement. Any
matter set forth in any provision, subprovision, section or subsection of
any Schedule shall be deemed set forth for all purposes of any other
Schedule to the extent that the context reasonably makes clear the
applicability of such matter to such other Schedule. Notwithstanding the
foregoing, no matter shall be deemed set forth for purposes of Schedule
3.03, Schedule 3.04 or Schedule 3.20 unless set forth in such Schedule. All
Exhibits and Schedules annexed hereto or referred to herein are hereby
incorporated in and made a part of this Agreement as if set forth in full
herein. Any capitalized terms used in any Schedule or Exhibit but not
otherwise defined therein, shall have the meaning as defined in this
Agreement. When a reference is made in this Agreement to a Section, Exhibit
or Schedule, such reference shall be to a Section of, or an Exhibit or
Schedule to, this Agreement unless otherwise indicated.
(b) For all purposes hereof the following defined terms have the
meanings set forth below:
"affiliate" of any person means another person that directly or
indirectly, through one or more intermediaries, controls, is controlled by,
or is under common control with, such first person.
"Bank Credit Agreements" means (A) the Credit Agreement among
Seller, the Lenders named therein and Citicorp USA, Inc., as Agent, dated
as of July 1, 1996, as amended as of September 10, 1997, as further amended
as of March 30, 1998, and (B) the Loan Agreement between Cemax-Icon and
Dominion Fund IV, a Delaware Limited Partnership, dated as of October 30,
1996, and any agreements restating, amending or refinancing either of the
foregoing.
"business day" means any day other than a Saturday, a Sunday or a
day on which banks in New York, New York are authorized or obligated by law
or executive order to close.
"Cemax-Icon" means Cemax-Icon, Inc., a Delaware corporation.
"Cemax-Icon Merger Agreement" means the Agreement and Plan of
Merger dated as of May 13, 1997, among Seller, CI Acquisition Corp., a
Delaware corporation and wholly owned subsidiary of Seller, and Cemax-Icon.
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"Commercial Documents" means the Supply Agreements, the Shared
Facilities Agreement and the Transition Services Agreement.
"Conveyance Documents" means the Intellectual Property
Agreements, the Local Asset Purchase Agreements, if any, and the separate
deeds, contracts/bills of sale, assignments and other transfer instruments
executed and delivered in accordance with Section 2.02 and in connection
with this Agreement.
"Distribution Agreement" means the Distribution Agreement dated
November 30, 1998 between the Purchaser and the Seller.
"Document Imaging Supply Agreement" means the Private Label
Supply Agreement dated as of July 31, 1998 and amended and restated as of
November 30, 1998 between Seller and Purchaser.
"European Businesses" means the Businesses conducted in and from
the European Territories.
"European Closing Documents" means (i) the Local Asset Purchase
Agreements for each of the European Territories and (ii) all other deeds,
bills of sale, assignments and other instruments of transfer or other
documents which Seller and Purchaser agree are necessary to consummate all
of the European Acquisitions.
"European Purchaser Tax Act" means any action taken (other than
any such action expressly required or permitted by this Agreement) or the
failure to take any action required under this Agreement after the Initial
Closing by Purchaser, any of its affiliates (including Cemax-Icon), or any
transferee of Purchaser or any of its affiliates, in each case with respect
to the European Businesses.
"European Territories" means Italy, France, the United Kingdom,
the Netherlands, Belgium, Germany, Spain, Denmark, Norway, Switzerland,
Austria, the United Arab Emirates, Finland, Greece and Poland. The parties
understand that the European Businesses are conducted from two separate
legal entities in the Netherlands and agree that each such entity shall be
treated as a separate European Territory for purposes of this Agreement.
The parties agree that the businesses conducted from the European
Territories in Sweden from Denmark and in Russia from the Netherlands are
included in the European Businesses.
"Excluded Intellectual Property" means U.S. Patent Nos. 5,254,480
and 5,525,527 (process for producing solid
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state radiation detectors) and any other issued patents or pending patent
applications based on U.S. Patent Applications Serial No. 839,268, filed
February 20, 1992, or claiming priority therefrom, any of their counterpart
patents and patent applications in countries outside the United States, and
any claims for infringement of the aforementioned patent rights including,
but not limited to, claims pending in Imation Corp. v. Sterling Diagnostic
Imaging, Inc., Civil No. 97-2475 PAM/JUL in the U.S. District Court,
District of Minnesota, Third Division and Sterling Diagnostic Imaging, Inc.
and Direct Radiography Corp. v. Imation Corp., Civil No. 97-637 in U.S.
District Court for the District of Delaware.
"Excluded Taxes" means (i) any Taxes imposed on or with respect
to Seller, any Seller Sub or any entity that is or was an affiliate of any
of the foregoing at any time (other than Cemax-Icon), including any Taxes
imposed pursuant to Treas. Regs. ss. 1.1502-6 or a similar provision of any
state, local or foreign income tax law imposing joint and several liability
upon the members of a consolidated, combined, affiliated or unitary group
and any liability as a result of any express or implied obligation of such
person to indemnify any other person for any Taxes, (ii) any Taxes imposed
on or with respect to Cemax-Icon (A) for or in respect of any Pre-Closing
Tax Period or (B) pursuant to Treas. Regs. ss. 1.1502-6 or a similar
provision of any state, local or foreign income tax law imposing joint and
several liability upon the members of a consolidated, combined, affiliated
or unitary group as a result of having been a member of such a group during
any Pre-Closing Period, and any liability of Cemax-Icon as a result of any
express or implied obligation to indemnify any other person for any Taxes,
(iii) any Taxes arising from or related to the ownership or operation of
the US/MOW Acquired Assets for any Pre-Closing Tax Period, and any Taxes
arising from or related to the ownership or operation of the European
Acquired Assets in each European Territory for any taxable period, or
portion thereof, ending on or before the European Closing with respect to
such European Territory, (iv) any Transfer Taxes or Value Added Taxes
attributable to the Acquisition (which shall be governed by Section 10.04)
and (v) any Taxes attributable to a Seller Tax Act. For purposes of this
definition, in the case of any Straddle Period, (i) Property Taxes for the
Pre-Closing Tax Period shall be equal to the amount of such Property Taxes
for the entire Straddle Period multiplied by a fraction, the numerator of
which is the number of days during the Straddle Period that are in the
Pre-Closing Tax Period and the denominator of which is the number of days
in the Straddle Period and (ii) Taxes (other than Property Taxes) for the
Pre-Closing Tax Period shall be computed as if such taxable period ended as
of the close of business on the Closing Date except that any exemption,
allowances, credits or deductions
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that are calculated on an annual basis shall be prorated in the same manner
as Property Taxes.
"Existing 3M Intellectual Property Agreement" means the
Intellectual Property Rights Agreement dated as of July 1, 1996, between
Seller and 3M.
"Ferrania Facility" means the facility in Ferrania, Italy owned
and operated by Imation or any affiliate of Imation.
"Florida Facility" means the facility in Florida, Argentina owned
and operated by Imation or any affiliate of Imation.
"GAAP" means generally accepted accounting principles in the
United States.
"including" means including, without limitation.
"Intellectual Property Agreements" means the Seller Intellectual
Property Agreement and the 3M Intellectual Property Agreement.
"Letter of Credit" means the Letter of Credit as defined in the
Loan Agreement.
"Knowledge" means with respect to Seller, the actual knowledge of
Messrs. William Monahan, Robert Edwards, Michael McQuade, Brad Sauer, James
Wales, Chuck Osterlein, Paul Zeller, Remy Labreuil (limited to the
Knowledge of Mr. Labreuil with respect to the Businesses in Europe), Kevin
Rubey, Gary Lyons and Cliff Pinder, and, in addition, (i) with respect to
Section 3.17(b) only, Ms. Sarah Ethier, (ii) with respect to Sections 3.16
and 3.18 only, Mr. Dennis Farmer, (iii) with respect to Section 3.07 only,
Messrs. William Bauer and William Weimar and (iv) with respect to Sections
3.04(c), 3.17(a) and 3.21 only, Messrs. Greg Wagner and Joe Huddle;
provided, however, that with respect to the period prior to the Spin-Off
Date, "Knowledge" shall mean the actual knowledge of Messrs. Cliff Pinder,
James Wales and Michael McQuade, and with respect to Section 3.17(b) only,
Ms. Sarah Ethier.
"LIBOR" means, for any month, the rate of interest per annum
(rounded upward, if necessary, to the next 1/16th of 1%) as the rate at
which deposits in U.S. dollars in the approximate amount of the Loan and
having a one month maturity are offered by Bank of America NT&SA to major
banks in London eurocurrency market at approximately 11:00 a.m. (London
time) two business days prior to the first business day of such month.
LIBOR shall be calculated on the basis of a 360-day year on the actual
number of days elapsed.
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"License Agreement" means the license agreement dated as of July
31, 1998 and amended and restated as of November 30, 1998 between Seller
and Purchaser.
"Loan Agreement" means the Loan Agreement dated as of November
30, 1998 between Imation Europe BV, a corporation established in the
Netherlands and a wholly owned subsidiary of Seller, and Kodak Nederland
BV, a corporation established in the Netherlands and a wholly owned
subsidiary of Purchaser.
"Local Asset Purchase Agreements" means the asset purchase
agreements between Seller and Purchaser (or their respective relevant
subsidiaries), the form of which shall be negotiated in good faith by the
parties, pursuant to which certain Acquired Assets shall be sold pursuant
to the terms of such agreements.
"MOW" means each of the countries in which the Businesses are
conducted other than the United States and the European Territories.
"Non-European Transferred Employee" means any Transferred
Employee not employed in Europe.
"Operating Agreement" means the Operating Agreement between 3M
and General Electric Capital Corporation dated as of December 6, 1995.
"ordinary course of business and consistent with past practices"
means the Seller's ordinary course of business after the Spin-Off Date.
"person" means any individual, firm, corporation, partnership,
limited liability company, trust, joint venture, Governmental Entity or
other entity or body.
"Portfolio Purchase Agreement" means the Portfolio Purchase
Agreement between 3M and General Electric Capital Corporation dated as of
December 6, 1995, as amended by the Agreement Relating to Portfolio
Purchase Agreement and Operating Agreement dated July 1, 1996, among
General Electric Corporation, 3M and Seller.
"Pre-Closing Tax Period" means any taxable period ending on or
before the Initial Closing Date and the portion ending on the Initial
Closing Date of any taxable period that includes (but does not end on) such
day.
"Post-Closing Tax Period" means any taxable period or a portion
thereof that is not included in a Pre-Closing Tax Period.
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"Primary European Territories" means Italy, France, the United
Kingdom, the Netherlands, Germany, Austria, Belgium, Denmark, Norway, Spain
and Switzerland.
"Property Taxes" means real, personal and intangible property
Taxes (other than any such taxes imposed in connection with a net income,
gain or franchise tax), including any penalties, interest and additions to
Tax.
"Purchaser Buyer" means any wholly owned subsidiary of Purchaser.
"Related to the Businesses" means (a) in the case of any Acquired
Assets, used primarily in, or held for use primarily in, the operation or
conduct of the Businesses as operated or conducted by Seller and Seller
Subs on the Initial Closing Date,(b) in the case of any Assumed
Liabilities, relating to or arising out of the operation or conduct of the
Businesses on the Initial Closing Date prior to, at or following the
Initial Closing. For purposes of this definition, "primarily" means at
least 50%.
"Related to the European Businesses" means (a) in the case of any
Acquired Assets, used primarily in, or held for use primarily in, the
operation or conduct of the European Businesses as operated or conducted by
Seller and Seller Subs on the applicable European Closing Date,(b) in the
case of any Assumed Liabilities, relating to or arising out of the
operation or conduct of the European Businesses on the applicable European
Closing Date prior to, at or following the applicable European Closing. For
purposes of this definition, "primarily" means at least 50%.
"Relevant Date" means July 30, 1993.
"Seller Intellectual Property Agreement" means the intellectual
property agreement dated as of July 31, 1998 and amended and restated as of
November 30, 1998 between Seller and Purchaser.
"Seller Subs" means those subsidiaries of Seller listed on
Schedule 11.04.
"Seller Tax Act" means any action (including any election made or
deemed made under Section 338 of the Code with respect to Cemax-Icon) taken
(other than any such action expressly required or permitted by this
Agreement) or the failure to take any action required under this Agreement
by Seller, any of its affiliates, or any transferee or successor of Seller
or any of its affiliates (other than Purchaser or any of its affiliates).
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"Settlement Agreement" means the release agreement dated as of
July 31, 1998 and amended and restated as of November 30, 1998 among
Seller, Purchaser and 3M.
"Shared Facilities Agreement" means the one or more shared
facilities agreements between Seller and Purchaser, which shall reflect the
terms provided for in Exhibit C and shall be substantially in the forms
included as part of Exhibit C.
"Spin-Off Agreement" means the Transfer and Distribution
Agreement between 3M and Seller dated as of June 18, 1996.
"Spin-Off Date" means the date of the spin-off of Seller from 3M
on July 1, 1996.
"Straddle Period" means any taxable period that includes (but
does not end on) the Initial Closing Date.
"subsidiary" of any person means another person, an amount of the
voting securities, other voting ownership or voting partnership interests
of which is sufficient to elect at least a majority of its Board of
Directors or other governing body (or, if there are no such voting
interests, 50% or more of the equity interests of which) is owned directly
or indirectly by such first person.
"Supply Agreements" mean the X-ray/ Wet Laser Supply Agreement
and the Document Imaging Supply Agreement.
"Termination Event" means any of the following: (a) Seller or
Purchaser terminates this Agreement because a court of competent
jurisdiction issues a preliminary Judgment that prohibits the Acquisition
(or a portion thereof) on antitrust grounds, (b) at any time on or after
the one-year anniversary of July 31, 1998, all required antitrust
clearances (or similar acts) shall not have been obtained and Purchaser
terminates this Agreement or (c) at any time on or after the one-year
anniversary of July 31, 1998 (i) all required antitrust clearances (or
similar acts) shall not have been obtained, (ii) Purchaser shall not be
actively contesting any motion by any regulatory authority for a
preliminary Judgment prohibiting the Acquisition (or a portion thereof) on
antitrust grounds and (iii) Seller terminates this Agreement.
"3M Intellectual Property Agreement" means the agreement dated
July 31, 1998 and amended and restated on November 30, 1998 among 3M,
Seller and the Purchaser.
"Transaction Documents" means this Agreement, the Conveyance
Documents, the Loan Agreement, the Distribution Agreement, and the
Commercial Documents.
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"Transfer Taxes" means transfer, documentary, sales, use,
registration and other similar Taxes (including all applicable real estate
transfer Taxes and real property transfer gains Taxes) and filing or
recording fees, and related amounts (including any penalties, interest and
additions to Tax) incurred in connection with this Agreement, the
Acquisition and the other transactions contemplated hereby and thereby;
provided, that Transfer Taxes shall not include Value Added Taxes.
"Transition Services Agreement" means the Transitional Support
Services Agreement dated July 31, 1998 and amended and restated on November
30, 1998 between Seller and Purchaser.
"United States" means United States of America.
"U.S. Antitrust Laws" means and includes the Sherman Antitrust
Act, as amended, the Clayton Antitrust Act, as amended, the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, the
Federal Trade Commission Act, as amended, and all other United States
Federal and state statutes, rules, regulations, orders, decrees,
administrative and judicial doctrines, and other Laws, that are designed or
intended to prohibit, restrict or regulate actions having the purpose or
effect of monopolization, restraint of trade or lessening of competition.
"US/MOW Businesses" means the Businesses conducted in and from
the United States and MOW.
"US/MOW Purchaser Tax Act" means any action (including any
election made or deemed made under Section 338 of the Code with respect to
Cemax-Icon) taken (other than any such action expressly required or
permitted by this Agreement) or the failure to take any action required
under this Agreement after the Initial Closing by Purchaser, any of its
affiliates (including Cemax-Icon), or any transferee of Purchaser or any of
its affiliates, in each case with respect to the US/MOW Businesses .
"Value Added Tax" means any Tax imposed on the incremental value
added upon the supply of property or services (the "Supplied Property or
Services") computed as a percentage of the value or price of such Supplied
Property or Services, where by law such Tax paid by a purchaser to a
supplier is subject to recovery by a refund or a credit against the
corresponding Tax collected by such purchaser upon the subsequent supply by
such purchaser of (i) such Supplied Property or Services or (ii) any
property or services into which such Supplied Property of Services are
considered to have been input.
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"White City Supply Agreement" means the White City Supply
Agreement dated as of November 30, 1998 between Seller and Purchaser.
"X-ray/Wet Laser Supply Agreement" means the X- Ray/Wet Laser
Supply Agreement dated as of July 31, 1998 and amended and restated as of
November 30, 1998 between Imation S.p.A. and Purchaser.
(c) For all purposes hereof the following defined terms have the
meaning set forth in the relevant Section referred to below:
1998 Cemax-Icon Certificate 2.03(a)
1998 Payment Date 2.03(a)
1999 Cemax-Icon Certificate 2.03(d)
1999 Payment Date 2.03(d)
3M Preamble
3M Health Care Plans 6.09(c)(ii)
3M Pension Plans 6.09(c)(ii)
ABO Amount 6.09(d)(i)
Accounting Firm 1.06(e)
Accumulated Benefit Obligation 6.09(d)(i)
Acquired Assets 1.02(c)
Acquisition 1.01(b)
Acquisition Proposal 6.02(a)
Assigned Contracts 1.02(b)(viii)
Assigned Permits 1.02(b)(vii)
Assumed Liabilities 1.03(b)
Balance Sheet 3.04(a)
Benefit Plans 3.16(b)(i)
Best Efforts 6.05
Business Day 11.09(a)(i)
Business Property 3.06
Businesses Preamble
Businesses Financial Statements 3.04(a)
Cemax-Icon Intellectual Property 3.07(f)
Cemax-Icon Payments 1.01(a)
Cemax-Icon Shares 1.02(a)(ix)
Closed Territories 2.06(b)(ii)
Closing Agreement 3.14(b)(vi)
Code 3.14(a)
Commercially Reasonable Efforts 6.06(b)
to Obtain Consents
Competitive Activities 6.13(a)
Confidentiality Agreement 6.04
Consent 3.03(b)
Continuation Coverage 6.09(c)(vi)
Continuation Period 6.09(b)(ii)
Continuing Territories 2.06(b)(ii)
Contract Employees 6.09(a)(i)
Contracts 1.02(a)(viii)
Corporate Staff Employees 6.09(a)(i)
CSS Employees 6.09(a)(i)
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Current Products 3.21(a)(i)
Cut-Off Date 6.17
Data Storage Media 6.13(a)
Deficiency Amount 2.06(c)(ii)
Dispute 11.09(a)
Dispute Notice 11.09(a)(i)
Divested Operations 6.18(b)
DOJ 6.05
Eligible Employees 6.09(a)(ii)
Employee Leasing Agreement 6.09(b)(i)
Employee Pension Benefit Plans 3.16(a)(i)
Employee Welfare Benefit Plans 3.16(a)(i)
Environmental Laws 3.17(b)
ERA Notice 2.05(b)
ERA Payment 2.05(c)
ERISA 3.16(a)(i)
European Acquired Assets 1.02(b)
European Acquisitions 1.01(b)
European Assigned Contracts 1.02(b)(viii)
European Assigned Permits 1.02(b)(vii)
European Assumed Liabilities 1.03(b)
European Benefit Plans 3.16(b)(i)
European Business Acquisition
Proposal 6.02(b)
European Closing 2.01(b)(i)
European Closing Date 2.01(b)(i)
European Eligible Employees 6.09(a)(ii)
European Inventory 1.02(b)(ii)
European Investments 1.02(b)(ix)
European Personal Property 1.02(b)(iii)
European Premises 1.02(b)(i)
European Purchase Price 1.01(b)
European Receivables 1.02(b)(iv)
European Records 1.02(b)(xiii)
European Transferred Employees 6.09(b)(i)
Excess Amount 2.06(c)(i)
Excess Assets 6.09(d)(iii)
Exchange Act 3.03(b)(ii)
Excluded Assets 1.02(c)
Excluded Liabilities 1.03(c)
Expenses 6.07(b)
Ferrania Facility Payment 1.01(c)
Final Closing 2.01(b)(iii)
Final Closing Date 2.01(b)(iii)
Foreign Eligible Employees 6.09(a)(ii)
Foreign Person 3.14(b)(x)
Foreign Service Liability 6.09(d)(i)
Foreign Transferred Employees 6.09(b)(i)
Former Product Registrations 3.21(e)(ii)
Former Products 3.21(a)(ii)
FTC 6.05
Funded Foreign Service Liability 6.09(d)(i)
German Document Imaging Employees 6.09(a)(i)
Governmental Entity 3.03(i)
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Grandfathered Employees 6.09(c)(ii)
Hazardous Substances 3.17(b)
HSR Act 3.03(b)(i)
Imation 1.02(c)(iv)
Individual 9.01(b)
Indemnified Party 9.05(a)
Initial 60-Day Period 1.06(c)
Initial Acquisition 1.01(a)
Initial Closing 2.01(a)
Initial Closing Date 2.01(a)
Initial Closing Date Purchase Price 1.01(a)
Initial Payment 6.16(b)(i)
Initial Purchase Price 1.01(a)
Intellectual Property 1.02(a)(v)
Interest Amount 2.05(b)
Inventory 1.02(b)(ii)
Investigation Period 1.06(d)
Investments 1.02(a)(ix)
Italian Prepayment Amount 2.02(a)(vi)
Judgment 3.03(a)(iii)
Law 3.03(a)(iii)
Leased Property 3.06
Liabilities 1.03(a)
Liens 3.05(a)
Losses 9.01(a)
Material Impairment 6.05
Mediation Notice 11.09(a)(iv)
Most of World 6.03(b)(i)
Multi-employer plan 3.16(a)(iii)
Net Asset Notice 2.06(b)
Net Aset Payment 2.06(h)
Net Proceeds 1.01(c)
Non-European Benefit Plans 3.16(b)(i)
Non-European Eligible Employees 6.09(a)(ii)
Non-European Transferred Employees 6.09(b)(i)
Non-U.S. Competition Laws 3.03(b)(i)
Notice of Disagreement 1.06(e)
Notice of Working Capital Breach 1.06(d)
Officers 11.09(a)(iii)
OSHA 3.18(a)(ix)
Owned Property 3.06
Payment Amount 2.05(b)
Payment Period 2.05(b)
Permits 3.11
Permitted Liens 3.05(a)
Personal Property 1.02(b)(iii)
Pre-Closing Environmental
Liability 9.01(a)(iv)
Premises 1.02(b)(i)
Proceedings 3.15
Product Registrations 3.21(e)(i)
Products 3.21(a)(i)
Prohibited Transaction 3.16(a)(vi)
Projected Benefit Obligation 6.09(d)(i)
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Purchase Price 1.01(b)
Purchaser Preamble
Purchaser Claim 9.01(c)
Purchaser Indemnified Party 9.01(a)
Purchaser Material Adverse
Effect 5.01
Purchaser Notice 9.01(c)(i)
Qualifying Events 6.09(c)(vi)
Recalculation Date 8.03(b)
Recalculation Notice 8.03(b)
Receivables 1.02(b)(iv)
Records 1.02(b)(xiii)
Relevant Country Severance Amount 8.04(b)
Remedial Action 9.05(d)(i)
Response 11.09(a)(i)
Retained Premises 1.02(c)(i)
Section 2.07 Notice of Disagreement 2.07(a)
Section 2.07 Accounting Firm 2.07(a)
Section 3.07 Intellectual Property 3.07(a)
Seller Preamble
Seller Existing CGL Policies 6.18(a)
Seller Financial Statements 3.04(a)
Seller Foreign Benefit Plans 3.16(b)(i)
Seller Indemnified Party 9.02
Seller Material Adverse Effect 3.01
Seller U.S. Benefit Plans 3.16(a)(i)
Seller U.S. Pension Plans 3.16(a)(i)
Seller's Remedial Cost 9.05(d)(i)
Specified Closing Date 2.01(b)(ii)
Statement 1.06(d)
Statement of Operating Revenues
and Expenses 3.04(a)
Stay Bonus Program 6.09(a)(ii)
Supplies 6.17
Tax 3.14(a)
Tax Claim 9.06(a)
Tax Exempt Use Property 3.14(b)(xvii)
Tax Return 3.14(a)
Taxing Authority 3.14(a)
Technology 1.02(a)(vi)
Terminated Territories 2.06(b)(iv)
Termination Notice 8.04(b)
Termination Payment Date 8.04(b)
Third Party Claim 9.05(a)
Transferred Employees 6.09(b)(i)
Transferred Intellectual Property 1.02(a)(v)
Transferred Technology 1.02(a)(vi)
True Up Notice 6.16(b)(ii)
U.S. Eligible Employees 6.09(a)(ii)
U.S. Transferred Employees 6.09(b)(i)
Underfunded Foreign Service
Liability 6.09(d)(i)
United States real property interest 3.14(b)(x)
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Unrecovered Value Added Taxes 10.04
US/MOW Acquired Assets 1.02(a)
US/MOW Assigned Contracts 1.02(a)(viii)
US/MOW Assigned Permits 1.02(a)(vii)
US/MOW Assumed Liabilities 1.03(a)
US/MOW Inventory 1.02(a)(ii)
US/MOW Investments 1.02(a)(ix)
US/MOW Personal Property 1.02(a)(iii)
US/MOW Premises 1.02(a)(i)
US/MOW Receivables 1.02(a)(iv)
US/MOW Records 1.02(a)(xiii)
Working Capital 1.06(a)(iii)
Working Capital Election Notice 1.06(c)
Working Capital Shortfall 1.06(b)
SECTION 11.05. 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 one or more such counterparts
have been signed by each of the parties and delivered to the other party.
SECTION 11.06. Entire Agreement. This Agreement, the other
Transaction Documents, the Confidentiality Agreement and the Letter
Agreement dated as of July 31, 1998 between Seller and Purchaser, along
with the Schedules and Exhibits hereto and thereto, contain the entire
agreement and understanding between the parties hereto with respect to the
subject matter hereof and supersede all prior agreements and understandings
relating to such subject matter. Neither party shall be liable or bound to
any other party in any manner by any representations, warranties or
covenants relating to such subject matter except as specifically set forth
herein or in the other Transaction Documents or the Confidentiality
Agreement.
SECTION 11.07. Severability. If any provision of this Agreement
(or any portion thereof) or the application of any such provision (or any
portion thereof) to any person or circumstance shall be held invalid,
illegal or unenforceable in any respect by a court of competent
jurisdiction, (i) a suitable and equitable provision shall be substituted
therefore in order to carry out, so far as may be valid and enforceable,
the intent or purpose of such invalid, illegal or unenforceable provision
(or portion thereof) and (ii) such invalidity, illegality or
unenforceability shall not affect any other provision hereof (or the
remaining portion thereof) or the application of such provision to any
other persons or circumstances.
SECTION 11.08. Consent to Jurisdiction. Each of Purchaser and
Seller irrevocably submits to the jurisdiction of (a) the Supreme Court of
the State of New York, New York County or (b) the United States District
Court for the Southern District of New York, for the purposes of any suit,
<PAGE>
130
action or other proceeding arising out of this Agreement, any other
Transaction Document or any transaction contemplated hereby or thereby.
Each of Purchaser and Seller agrees to commence any such action, suit or
proceeding in (i) the United States District Court for the Southern
District of New York or (ii) if such suit, action or other proceeding may
not be brought in either such court for jurisdictional reasons, in the
Supreme Court of the State of New York, New York County. Each of Purchaser
and Seller further agrees that service of any process, summons, notice or
document by U.S. registered mail to such party's respective address set
forth in Section 11.03 hereof shall be effective service of process for any
action, suit or proceeding in New York with respect to any matters to which
it has submitted to juris diction in this Section 11.08. Each of Purchaser
and Seller irrevocably and unconditionally waives any objection to the
laying of venue of any action, suit or proceeding arising out of this
Agreement, any other Transaction Document or the transactions contemplated
hereby and thereby in (i) the Supreme Court of the State of New York, New
York County or (ii) the United States District Court for the Southern
District of New York and hereby and thereby further irrevocably and
unconditionally waives and agrees not to plead or claim in any such court
that any such action, suit or proceeding brought in any such court has been
brought in an inconvenient forum. EACH PARTY HERETO WAIVES ANY RIGHT TO
TRIAL BY JURY WITH RESPECT TO ANY ACTION RELATED TO OR ARISING OUT OF THIS
AGREEMENT, ANY OTHER TRANSACTION DOCUMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY.
SECTION 11.09. Dispute Resolution; Pre-Closing Waiver of
Consequential and Punitive Damages. (a) Except as otherwise expressly set
forth in this Agreement, all controversies, claims or disputes that arise
out of or relate to this Agreement or the construction, interpretation,
performance, breach, termination, enforceability or validity of this
Agreement, or the commercial, economic or other relationship of the parties
thereto, whether such claim is based on rights, privileges or interests
recognized by or based upon statute, contract, tort, common law or
otherwise and whether such claim existed prior to or arises on or after
July 31, 1998 (a "Dispute") shall be resolved in accordance with the
provisions of this Section 11.09.
(i) Dispute Notice and Response. A party may give another party
written notice (a "Dispute Notice") of any Dispute which has not been
resolved in the normal course of business. Within 15 Business Days (as
defined below) after delivery of the Dispute Notice, the receiving
party shall submit to the other party a written response (the
"Response"). The Dispute Notice and the Response shall each include
(A) a statement setting forth the position of the party giving such
notice, a summary of the arguments supporting such position and, if
<PAGE>
131
applicable, the relief sought and (B) the name and title of a senior
manager of such party who has authority to settle the Dispute and will
be responsible for the negotiations related to the settlement of the
Dispute (the "Senior Manager"). For purposes of this Section 11.09, a
"Business Day" shall mean any day that is not a Saturday, Sunday or a
holiday on which national banks in New York City, New York or St.
Paul, Minnesota are closed for business.
(ii) Negotiation Between Senior Managers. (A) Within 10 days
after delivery of the Response provided for in clause (i), the Senior
Managers of both parties shall meet or communicate by telephone at a
mutually acceptable time and place, and thereafter as often as they
reasonably deem necessary, and shall negotiate in good faith to
attempt to resolve the Dispute that is the subject of such Dispute
Notice. If such Dispute has not been resolved within 30 days after
delivery of the Dispute Notice, then the parties shall attempt to
settle the Dispute pursuant to clause (iii).
(B) All negotiations between the Senior Managers pursuant to
this clause (ii) shall be treated as compromise and
settlement negotiations. Nothing said or disclosed, nor any
document produced, in the course of such negotiations which
is not otherwise independently discoverable shall be offered
or received as evidence or used for impeachment or for any
other purpose in any current or future arbitration or
litigation.
(iii) Negotiation Between Senior Officers. (A) If the Dispute
Notice has been delivered and the Dispute has not been resolved by
negotiation between the Senior Managers pursuant to clause (ii), then
within 10 Business Days after the expiration of the 30 day period
provided in clause (ii), the President and Chief Operating Officer of
the Purchaser and the Chief Executive Officer of the Seller (the
"Officers") shall meet or communicate by telephone at a mutually
acceptable time and place, and thereafter as often as they reasonably
deem necessary, and shall negotiate in good faith to attempt to
resolve the Dispute that is the subject of such Dispute Notice. If
such Dispute has not been resolved within 20 Business Days after the
expiration of the 30-day period provided in clause (ii), then either
party may refer the Dispute to mediation in accordance with clause
(iv).
(B) All negotiations between the Officers pursuant to this
clause (iii) shall be treated as compromise and settlement
negotiations.
<PAGE>
132
Nothing said or disclosed, nor any document produced, in the
course of such negotiations which is not otherwise
independently discoverable shall be offered or received as
evidence or used for impeachment or for any other purpose in
any current or future arbitration or litigation.
(iv) Mediation. (A) If the Dispute Notice is delivered at or
after the Initial Closing and the Dispute has not been resolved by
negotiation between the Senior Managers pursuant to clause (ii) or the
Officers pursuant to clause (iii), then within five Business Days
after the expiration of the 20 Business Day period provided in clause
(iii), any party may initiate non-binding mediation hereunder by
giving a notice of mediation (a "Mediation Notice") to any other
party.
(B) Selection of Mediator. The mediator shall be Layn
Phillips unless either party by written notice to the other
party requests that a mediator other than Mr. Phillips be
selected. In the event that Mr. Phillips will not act as
mediator as provided in the preceding sentence, or is not
available to act as mediator, or either party objects to Mr.
Phillips as mediator, then the mediator shall be jointly
appointed by the parties; provided, however, that in the
event the parties cannot reach agreement, the mediator shall
be designated by the Center for Public Resources. The
parties intend that the mediator be independent and
impartial. To this end, the mediator shall disclose to the
parties any professional or social relationships, present or
past, with any party (or its affiliates), including any
party's (or its affiliates') directors, officers and
supervisory personnel and counsel.
(C) Location. Any non-binding mediation that takes place
pursuant to this clause (iv) shall be conducted in New York
City, New York, unless otherwise agreed.
(D) Governing Law. The Model ADR Procedures for Mediation of
Business Disputes of the Center for Public Resources, Inc.,
either as written or as modified by mutual agreement of the
parties, shall govern any non-binding mediation pursuant to
this clause (iv).
<PAGE>
133
(E) Mediation Process. (1) All non-binding mediation that
takes place pursuant to this clause (iv) shall be treated as
compromise and settlement negotiations. Nothing said or
disclosed, nor any document produced, in the course of such
non-binding mediation which is not otherwise independently
discoverable shall be offered or received as evidence or
used for impeachment or for any other purpose in any current
or future arbitration or litigation.
(2) In the mediation, each party shall be represented
by an executive officer. No party shall be obligated to
attend mediation proceedings for more than an aggregate of
five days.
(v) Disputes; Consent to Jurisdiction. (A) Except as otherwise
expressly provided in this Agreement, no party shall be entitled to
commence or maintain any action, suit or other proceeding against any
other party regarding any Dispute.
(B) Notwithstanding anything in this Agreement or this
Section 11.09 to the contrary, either party to this
Agreement may at any time seek from (i) the Supreme Court of
the State of New York, New York County or (ii) the United
States District Court for the Southern District of New York
in accordance with Section 11.08, any interim, provisional
or injunctive relief that may be necessary to protect the
rights or property of such party or maintain the status quo
before, during or after the pendency of the negotiation
process or the arbitration proceeding or any other
proceeding contemplated by this Agreement.
(b) Notwithstanding anything to the contrary in this Agreement, if the
Initial Closing shall not occur, each of the Seller and Purchaser hereby
waive the right to seek any form of punitive, special, indirect or
consequential damages against the other party or any subsidiary or
affiliate of the other party; provided, however, that the foregoing waiver
shall not apply to any party to the extent that the Initial Closing did not
occur or this Agreement was terminated primarily as a result of or based on
an intentional or wilful breach by the other party and such damages are
based upon, relate to or arise out of such intentional or wilful breach.
SECTION 11.10. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK
APPLICABLE TO
<PAGE>
134
AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE, WITHOUT
REGARD TO THE CONFLICTS OF LAW PRINCIPLES OF SUCH STATE.
IN WITNESS WHEREOF, Seller and Purchaser have duly executed this
Agreement as of the date first written above.
IMATION CORP.,
by
--------------------------
Name:
Title:
EASTMAN KODAK COMPANY,
by
--------------------------
Name:
Title:
Exhibit 3.1
Pro Forma Unaudited Financial Statements
The following pro forma unaudited financial statements of the Company make
adjustments to the consolidated balance sheet as of September 30, 1998
(unaudited) and the consolidated statements of operations for the year
ended December 31, 1997, and the nine months ended September 30, 1998
(unaudited) as if the Transaction had been completed on a worldwide basis
on September 30, 1998 for the purposes of the pro forma unaudited balance
sheet and on January 1, 1997 for purposes of the pro forma unaudited
statements of operations.
Under the terms of the Asset Purchase Agreement, Imation agreed to sell its
worldwide medical imaging businesses to Kodak. As of the Closing, Kodak
acquired the assets and assumed the liabilities of Imation's medical
imaging businesses in North America (including all the outstanding common
shares of Cemax-Icon), Latin America and Asia. The closings of the European
Businesses are scheduled to occur on a country-by-country basis as the
businesses are integrated into Kodak's accounting and information systems
through April 1, 1999 but in no event later than May 31, 1999. Under the
terms of the Asset Purchase Agreement, following the Closing, Kodak is
entitled to the operating results and cash flows of the European
Businesses.
These unaudited pro forma financial statements have been prepared based on
a variety of assumptions deemed appropriate in accordance with Article 11
of Regulation S-X. These statements do not reflect certain anticipated
benefits to the Company for planned events that have not yet occurred.
These anticipated benefits would result from additional transition services
which the Company expects to provide to Kodak in Europe and from planned
reductions in general corporate overhead globally. See the accompanying
Notes to Pro Forma Unaudited Financial Statements. The pro forma unaudited
financial statements should be read in conjunction with the historical
consolidated financial statements of the Company and the notes thereto
which are included in the Company's 1997 Annual Report on Form 10-K and the
Company's Quarterly Report on Form 10-Q for the quarter ended September 30,
1998.
The unaudited pro forma financial statements are presented for
informational purposes only and are not necessarily indicative of the
financial position or results of operations which would actually have been
reported had the Transaction occurred as assumed or which may be reported
in the future.
<PAGE>
IMATION CORP.
PRO FORMA STATEMENTS OF OPERATIONS
Year Ended December 31, 1997
(In Millions, Except Per Share Amounts)
Pro forma
Consolidated Adjustments Pro forma
Historical (Unaudited) (Unaudited)
--------------------------------------------------------
Net revenues $ 2,201.8 $(536.0) (a) $ 1,754.8
89.0 (d)
Cost of goods sold 1,431.0 (361.1) (a) 1,152.9
10.4 (b)
(3.4) (c)
76.0 (d)
--------------------------------------------------------
Gross profit 770.8 (168.9) 601.9
Operating expenses
Selling, general and
administrative 580.6 (139.6) (a) 459.9
45.6 (b)
(30.7) (c)
4.0 (d)
Research and development 194.9 (89.7) (a) 109.8
6.8 (b)
(2.2) (c)
Restructuring 170.0 170.0
--------------------------------------------------------
Total 945.5 (205.8) 739.7
Operating loss (174.7) 36.9 (137.8)
Other income and expense:
Interest expense 15.7 (15.6) (e) 0.1
Other, net 15.6 15.6
--------------------------------------------------------
Total 31.3 (15.6) 15.7
Loss before taxes (206.0) 52.5 (153.5)
Income tax benefit (25.9) 5.7 (f) (20.2)
--------------------------------------------------------
Net loss $ (180.1) $ 46.8 $ (133.3)
========================================================
Basic and diluted
(loss) per common
share $ (4.54) $ (3.36)
========================================================
These pro forma unaudited financial statements have been prepared based on
a variety of assumptions deemed appropriate in accordance with Article 11
of Regulation S-X. Refer to the accompanying notes to pro forma unaudited
financial statements for a more complete discussion of the pro forma
adjustments and other factors which are appropriate to an understanding of
these statements.
<PAGE>
IMATION CORP.
PRO FORMA STATEMENTS OF OPERATIONS
Nine Months Ended September 30, 1998
(In Millions, Except Per Share Amounts)
Consolidated Pro forma
Historical Adjustments Pro forma
(Unaudited) (Unaudited) (Unaudited)
----------------------------------------------------------
Net revenues $ 1,557.3 $ (442.6) (a) $ 1,181.2
66.5 (d)
Cost of goods sold 991.4 (279.0) (a) 773.5
6.9 (b)
(2.8) (c)
57.0 (d)
----------------------------------------------------------
Gross profit 565.9 (158.2) 407.7
Operating expenses
Selling, general and
administrative 416.2 (99.0) (a) 336.6
35.5 (b)
(19.1) (c)
3.0 (d)
Research and development 105.9 (35.0) (a) 73.1
3.6 (b)
(1.4) (c)
Restructuring (16.8) (16.8)
----------------------------------------------------------
Total 505.3 (112.4) 392.9
Operating income 60.6 (45.8) 14.8
Other income and expense:
Interest expense 16.3 (16.2) (e) 0.1
Other, net 1.3 1.3
-----------------------------------------------------------
Total 17.6 (16.2) 1.4
Income before taxes 43.0 (29.6) 13.4
Income tax provision 22.8 (8.5) (f) 14.3
------------------------------------------------------------
Net income (loss) $ 20.2 $ (21.1) $ (0.9)
============================================================
Basic and diluted
earnings (loss)
per common share $ 0.51 $ $ (0.02)
=============================================================
These pro forma unaudited financial statements have been prepared based on
a variety of assumptions deemed appropriate in accordance with Article 11
of Regulation S-X. Refer to the accompanying notes to pro forma unaudited
financial statements for a more complete discussion of the pro forma
adjustments and other factors which are appropriate to an understanding of
these statements.
<PAGE>
IMATION CORP.
PRO FORMA UNAUDITED BALANCE SHEET
September 30, 1998
(In Millions)
Consolidated Pro forma
Historical Adjustments Pro forma
(Unaudited) (Unaudited) (Unaudited)
-----------------------------------------------------------
ASSETS
Current assets
Cash and equivalents $ 37.6 $ 389.2 (a) $ 85.1
(267.2)(b)
(74.5)(c)
Accounts receivable - net 515.3 (203.6)(a) 311.7
Inventories 364.8 (111.6)(a) 253.2
Other current assets 107.3 138.0 (a) 245.3
------------------------------------------------------------
Total current assets 1,025.0 (129.7) 875.3
Property, plant and
equipment - net 313.9 (20.5)(a) 279.3
74.5 (c)
(88.6)(a)
Other assets 254.3 (46.5)(a) 179.5
(28.3)(a)
------------------------------------------------------------
Total assets $ 1,593.2 $ (239.1) $1,354.1
============================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $ 196.0 $ (35.7)(a) $ 160.3
Accrued payroll 38.9 (12.7)(a) 26.2
Short-term debt 30.8 (4.8)(b) 26.0
Other current liabilities 268.1 (1.4)(b) 249.3
(38.3)(a)
20.9 (a)
------------------------------------------------------------
Total current liabilities 533.8 (72.0) 461.8
Other liabilities 73.3 32.6 (a) 95.9
(5.7)(a)
Long-term debt 265.1 (2.5)(a) 1.6
(261.0)(b)
Commitments and contingencies
Shareholders' equity 721.0 69.5 (a) 790.5
----------------------------------------------------------
Total liabilities
and shareholders'
equity $ 1,593.2 $ (239.1) $1,354.1
==========================================================
These pro forma unaudited financial statements have been prepared based on
a variety of assumptions deemed appropriate in accordance with Article 11
of Regulation S-X. Refer to the accompanying notes to pro forma unaudited
financial statements for a more complete discussion of the pro forma
adjustments and other factors which are appropriate to an understanding of
these statements.
<PAGE>
NOTES TO PRO FORMA UNAUDITED FINANCIAL STATEMENTS
1. Pro Forma Adjustments to the Statements of Operations
(a) Adjustments represent the statement of operations for the
periods presented for the medical imaging businesses sold to
Kodak.
(b) Adjustments for general corporate expenses allocated to the
medical imaging businesses' statement of operations referred
to in (a) above for such expenses as information technology,
telecommunications, logistics, finance, legal, engineering,
facilities, and human resources which will not be
transferred to Kodak as part of the Transaction.
The Company does not allocate all corporate overhead
expenses to its business unit statements of operations thus,
the statements of operations discussed in (a) above do not
reflect all the costs of the medical imaging businesses on a
fully allocated basis.
The pro forma unaudited financial statements do not reflect
any adjustments related to the Company's plans to reduce
corporate overhead expenses to a level appropriate to its
ongoing businesses.
(c) Adjustments for the estimated reimbursements the Company
will receive from Kodak for certain services under
transition services and distribution agreements, including
information technology, logistics, finance,
telecommunications, office space, human resources and site
services that the Company has agreed to provide Kodak while
Kodak integrates the medical imaging business into its
accounting and information systems. The Company has agreed
to provide such services under the transition services
agreement for a period of up to two years following the
Closing primarily in the United States and to a lesser
extent in Asia and Latin America, and under a distribution
agreement through the dates of individual country closings
for the European Businesses.
The pro forma adjustments reflect the provision of such
services throughout the periods presented in the United
States, Asia and Latin America, and also for periods of one
to three months, depending on the country and currently
scheduled closing dates, for the European Businesses. Kodak,
at its option, may terminate the transition services
agreement with respect to individual categories of service
upon prior notice, the length of which varies according to
the nature of the service.
(d) Adjustments reflect the estimated revenue and costs related
to the Ferrania Supply Agreement whereby the Company will
manufacture x-ray and wet laser medical imaging film for
Kodak for a minimum of two years. The adjustment includes
amortization into income of $9 million and $7 million for
the year and nine months ended December 31, 1997 and
September 30, 1998, respectively, related to the $18 million
prepayment received from Kodak on November 30, 1998 with
respect to the Ferrania Supply Agreement.
(e) Adjustment reflects the reduction of interest expense
resulting from the utilization of a portion of the cash
proceeds from the sale to repay all of the Company's
borrowings under the Company's Credit Agreement and certain
international debt.
(f) Adjustment to the Company's income tax provision (benefit)
to reflect the tax effect of adjustments related to the
sale, related to the transition services, distribution and
supply agreements, and related to reduced borrowing levels.
Tax rates used for the adjustments reflect the effective tax
rate applicable to the jurisdiction to which the adjustments
relate.
2. Pro Forma Adjustments to the Balance Sheet
(a) Adjustments reflect the sale of the medical imaging
businesses to Kodak for cash proceeds of $371 million. In
addition, the adjustments reflect $18 million received as a
prepayment under the Ferrania Supply Agreement that will be
deferred and recognized as income over a two year period,
the additional proceeds receivable of $143 million recorded
in other current assets and charges related to certain asset
impairment write-downs, plant closing costs, employee
severance, pension costs and professional fees directly
related to the Transaction.
The preliminary calculation of the after tax gain on sale of
approximately $70 million, used a 30 percent tax rate based
on the global mix of taxing jurisdictions where the net
assets of the medical imaging businesses are located. In
addition, the calculation of the after tax gain on sale as
of September 30, 1998 is subject to significant estimation
of certain costs and asset impairment write-downs that have
not been finalized by the Company.
<PAGE>
The actual net after tax gain on sale is dependent upon the
net assets of the medical imaging businesses as of November
30, 1998, which fluctuate primarily due to changes in
working capital and finalization of the determination of
costs related to the Transaction and asset impairment
calculations.
(b) Adjustment reflects the utilization of a portion of the cash
proceeds from the sale to repay all of its borrowings and
related accrued interest under the Company's Credit
Agreement and certain international debt, which totaled $269
million as of September 30, 1998, and which subsequently
increased to $296 million at November 30, 1998.
(c) Adjustment reflects the utilization of a portion of the cash
proceeds from the sale to purchase corporate headquarters
facilities which the Company currently leases under
synthetic lease arrangements. The purchase will be required
to enable the release of a second security interest in all
of the Company's assets.
EXHIBIT 99.1
Contact: Brad Allen
Vice President, Corporate Communications & Investor Relations
(651) 704-5818
FOR IMMEDIATE RELEASE
Imation Corp. Outlines Plans for Use of Proceeds from
Sale of Medical Imaging Systems Business to Kodak
OAKDALE, Minn. (December 1, 1998) -- Imation Corp. (NYSE:IMN)
today announced that it intends to pay down outstanding debt and certain
lease obligations totaling approximately $360 million and expects to
establish a new credit facility. The company anticipates it will resume
open market purchase of its common stock in the first quarter of 1999. This
follows an earlier announcement of the sale of its medical imaging
businesses to Eastman Kodak Company (NYSE:EK). (See: Kodak Completes
Acquisition of Imation's Medical Imaging Business; Business Wire; December
1, 1998.)
Bill Monahan, Imation chairman and chief executive officer said:
"With the sale of our medical imaging business, we achieve significant
financial flexibility and strength with which to build shareholder value.
We will implement a more optimal capital structure and lower our coverall
cost of capital through a new credit facility by the end of this year. We
intend to resume share repurchase in the first quarter of next year. We
recognize the significant value-creating opportunity a share repurchase
program will have and view the resumption of our repurchase activity both
as a recognition of the current value of the stock and as a critical part
of our commitment to building long-term shareholder value."
The company is scheduled to report its fourth quarter financial
results in early February, and under standard regulatory guidelines would
be precluded from open market purchases until the results are released.
Therefore, the company anticipates it would likely resume share repurchase
once the fourth quarter results have been reported.
<PAGE>
Imation has authorization for the repurchase of up to 3.5 million shares
out ofapproximately 39 million shares outstanding.
The sale of Imation's medical imaging systems business was
announced August 3, 1998. Kodak is making an initial payment of $389
million in cash for the businesses in North America, Latin America, and
Asia, and over the next six months Imation will receive an additional $143
million associated with the medical imaging businesses in Europe, as these
businesses are acquired by Kodak. Imation will no longer report the
financial results of these European businesses as part of its operations.
Approximately 1,600 Imitation employees worldwide are
transferring to Kodak and Kodak has acquired Imation medical imaging
systems facilities in Minnesota, Oregon and California. Imation will retain
its Ferrania, Italy manufacturing facility. As part of the agreement,
Imation will supply conventional x-ray film and wet laser film from its
Ferrania facility to Kodak for two years.
The completion of today's transaction also settles civil
litigation concerning certain intellectual property disputes between the
companies in the United States and Italy.
Further commenting on the transaction, Monahan said: "Strategy is
about making choices and the sale of our medical imaging operations,
including our DryView laser imaging film and systems business, is a
positive and important strategic step forward. This transaction has
captured the full value of the business and enables us to concentrate our
efforts on those businesses where we have significant technological
expertise, leverageable market strength, and strong profitable growth
opportunities. We intend to sharpen our focus on future growth
opportunities in data storage, image and color management products and
solutions as well as strengthen our offerings in color proofing."
<PAGE>
Imation supplies a variety of products and services worldwide for
the information and image management industry, specializing in imaging and
data storage solutions. In 1997, the Company generated revenues of
approximately $2.2 billion. Imation employs approximately 8,400 people
worldwide and is based in Oakdale, Minnesota.
Additional information about Imation is available on the
Company's Web site at www.imation.com or by calling Imation toll-free at
1-888-466-3456. To receive recent earnings and new releases, corporate
information and related shareholder services, call Imation's toll-free
shareholder information line at 1-888-IMN-NYSE (1-888-466- 6973).
###
Certain information contained in this news release
which does not relate to historical financial
information may be deemed to constitute forward
looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995.
Such statements are subject to certain risks and
uncertainties which could cause the Company's
actual results in the future to differ materially
from its historical results and those presently
anticipated or projected. Among these factors are
the successful closing of the announced sale of
businesses, the company's ability to meet its cost
reduction or revenue growth targets, the
competitive pricing environment, foreign currency
fluctuations, and the market acceptance of newly
introduced products as well as various factors set
forth in the Company's filings with the Securities
and Exchange Commission, including its 1997 Annual
Report on Form 10-K.
EXHIBIT 99.2
Media Contacts:
Charles S. Smith Bradley D. Allen
Eastman Kodak Company Imation Corp.
716/724-4513 (voice) 651/704-5818 (voice)
716/724-0964 (fax) 651/704-4076 (fax)
[email protected] (e-mail) [email protected] (e-mail)
Kodak Completes Acquisition of
Imation's Medical Imaging Business
ROCHESTER, NY., Dec. 1--Eastman Kodak Company (NYSE:EK)
and Imation Corp.(NYSE:IMN) today announced the completion of
Kodak's acquisition of Imation's medical imaging businesses in
North America, Latin America, and Asia.
Kodak is making an initial payment of $389 million in
cash for these businesses, and over the next six months Imation
will receive an additional $143 million associated with the
medical imaging businesses in Europe, as those businesses are
acquired by Kodak. During the interim six-month period, Imation
will operate as a distributor for Kodak in Europe, and Kodak will
report the financial results as part of its operations. The total
medical imaging business is expected to contribute approximately
$510 million in sales to Kodak's Health Imaging division, and
includes net assets valued at approximately $280 million.
Approximately 1,600 Imation employees worldwide are transferring
to Kodak. In addition, Kodak has acquired Imation medical imaging
facilities in Minnesota, Oregon and California.
The completion of today's transaction also settles
civil litigation concerning certain intellectual property
disputes between the companies in the United States and Italy.
In a separate release, Imation announced its intention
to use some of the proceeds to pay down outstanding debt and
lease obligations, and to buy back the company's stock. (Editor's
Note: See Imation Corp. Outlines Plans for Use of Proceeds
<PAGE>
from Completed Sale of Medical Imaging Systems Business to Kodak;
Business Wire, Dec. 1, 1998.)
Martin M. Coyne II, vice president, Kodak, and
president, Health Imaging, noted, "We believe that there are
tremendous opportunities in health imaging which expand beyond
traditional diagnostic markets where we have competed for over a
century. This acquisition brings important technology, physical
assets and top-notch individuals needed for us to take full
advantage of those opportunities."
"The sale of our medical business is beneficial to our
customers, shareholders and employees, and an important strategic
step for Imation," said William T. Monahan, chairman and chief
executive officer, Imation Corp. "Our medical imaging customers
will continue to receive the same high-quality products and
services now supported by Kodak -- a long-time leader in the
medical marketplace. Imation customers, shareholders and
employees will benefit through Imation's increased focus on our
core opportunities in data storage and information management,
image management and color management solutions."
Imation supplies a variety of products and services
worldwide for the information and image management industry,
specializing in imaging and data storage solutions. In 1997, the
company generated revenues of approximately $2.2 billion. Imation
employs approximately 8,400 people worldwide and is based in
Oakdale, Minn.
Additional information about Imation is available on
the company's web site at www.imation.com or by calling Imation
toll-free at 1-888-466-3456. To receive recent earnings and news
releases, corporate information and related shareholder services,
call Imation's toll-free shareholder information line at
1-888-IMN-NYSE (1-888-466- 6973).
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Editor's Note: For additional information about Kodak, visit our web site
on the Internet at: www.kodak.com
