UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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) April 2, 1999
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ANIXTER INTERNATIONAL INC.
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(Exact Name of Registrant as Specified in Charter)
Delaware 1-5989 94-1658138
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(State or Other (Commission (IRS Employer
Jurisdiction of File Number) Identification No.)
Incorporation)
4711 Golf Road, Skokie, Illinois 60076
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (847) 677-2600
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On April 2, 1999, the Registrant completed the sale of its North
American Network Integration business to Ameritech Corporation for
approximately $195,000,000, subject to certain post-closing purchase
price adjustments. The sale was effected pursuant to an Asset
Purchase Agreement, dated as of February 22, 1999, as amended, among
Ameritech and two of its wholly owned subsidiaries, as purchasers, and
the Registrant and two of its wholly owned subsidiaries, as sellers.
The purchase price and other terms of the Asset Purchase Agreement
were determined through arm's length negotiations between
representatives of the Registrant and Ameritech. The Registrant will
use the proceeds from the sale initially to reduce borrowings under
its revolving credit agreement and will reborrow funds as necessary in
connection with its ongoing share repurchase program. As a result of
this sale and the sale of the Registrant's European Network
Integration business in the fourth quarter of 1998, the Registrant is
no longer in the business of providing services for the design,
deployment and support of network infrastructures, except for a small
business in the Pacific rim which it intends to sell. Accordingly,
the Registrant has reflected all of its network operations as
discontinued operations for financial reporting purposes.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS.
(B) PRO FORMA FINANCIAL INFORMATION.
The Registrant's European and North American Network Integration
businesses have already been reflected as discontinued operations in
the audited consolidated financial statements contained in the
Registrant's Annual Report on Form 10-K for the fiscal year ended
January 1, 1999. Accordingly, the PRO FORMA financial information
regarding the sale described in Item 2 above has been previously
reported.
(C) EXHIBITS.
2.1 Asset Purchase Agreement, dated as of February 22,
1999, by and among ORC ACQUISITION CORP., 3026186 Nova
Scotia Company, Ameritech Corporation, Anixter Inc.,
Anixter Canada Inc. and Anixter International Inc.
2.2 First Amendment to Asset Purchase Agreement, dated as
of March 29, 1999, by and among ORC ACQUISITION CORP.,
3026186 Nova Scotia Company, Ameritech Corporation,
Anixter Inc., Anixter Canada Inc. and Anixter
International Inc.
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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.
ANIXTER INTERNATIONAL INC.
(Registrant)
Date: April 12, 1999 By: /s/ Dennis J. Letham
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Dennis J. Letham
Senior Vice President -
Finance and
Chief Financial Officer
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EXHIBIT INDEX
EXHIBIT
NO. DESCRIPTION
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2.1 Asset Purchase Agreement, dated as of February 22, 1999, by
and among ORC ACQUISITION CORP., 3026186 Nova Scotia
Company, Ameritech Corporation, Anixter Inc., Anixter Canada
Inc. and Anixter International Inc.
2.2 First Amendment to Asset Purchase Agreement, dated as of
March 29, 1999, by and among ORC ACQUISITION CORP., 3026186
Nova Scotia Company, Ameritech Corporation, Anixter Inc.,
Anixter Canada Inc. and Anixter International Inc.
EXHIBIT 2.1
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EXECUTION COPY
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ASSET PURCHASE AGREEMENT
by and among
ORC ACQUISITION CORP.
("U.S. Purchaser"),
3026186 Nova Scotia Company
("Canadian Purchaser"),
Ameritech Corporation
("Purchasers' Parent"),
Anixter Inc.
("U.S. Seller"),
Anixter Canada Inc.
("Canadian Seller"),
and
Anixter International Inc.
("Sellers' Parent")
Dated as of February 22, 1999
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TABLE OF CONTENTS
PAGE
ARTICLE I
DEFINITIONS . . . . . . . . . . . . -1-
1.1 DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . -1-
1.2 INTERPRETATION . . . . . . . . . . . . . . . . . . . . -16-
ARTICLE II
SALE AND PURCHASE OF ASSETS;
ASSUMPTION OF ASSUMED OBLIGATIONS . . . . . . . . . . . . . -17-
2.1 PURCHASED ASSETS . . . . . . . . . . . . . . . . . . . -17-
2.2 ASSIGNMENT OF CONTRACTS AND PERMITS . . . . . . . . . . -20-
(a) EXCLUDED ASSETS . . . . . . . . . . . . . . . . . . . . -23-
2.3 ASSUMED OBLIGATIONS . . . . . . . . . . . . . . . . . . -25-
2.4 NO OTHER LIABILITIES ASSUMED . . . . . . . . . . . . . -27-
ARTICLE III
PURCHASE PRICE AND PAYMENT . . . . . . . . . . . . . . . . . -28-
3.1 PAYMENT OF PURCHASE PRICE . . . . . . . . . . . . . . . -28-
3.2 ADJUSTMENT TO PURCHASE PRICE . . . . . . . . . . . . . -28-
3.3 PRORATIONS . . . . . . . . . . . . . . . . . . . . . . -31-
3.4 ALLOCATION OF CONSIDERATION . . . . . . . . . . . . . . -33-
3.5 CANADIAN TAX ELECTION . . . . . . . . . . . . . . . . . -34-
3.6 COLLECTION OF ACCOUNTS RECEIVABLE . . . . . . . . . . . -34-
3.7 GST/QST ELECTIONS . . . . . . . . . . . . . . . . . . . -35-
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLERS . . . . . . . . . -36-
4.1 DUE INCORPORATION, ETC . . . . . . . . . . . . . . . . -36-
4.2 DUE AUTHORIZATION . . . . . . . . . . . . . . . . . . . -36-
4.3 CONSENTS AND APPROVALS; NO CONFLICTS, ETC . . . . . . . -37-
4.4 FINANCIAL STATEMENTS; NO UNDISCLOSED LIABILITIES . . . -38-
4.5 NO ADVERSE EFFECTS OR CHANGES . . . . . . . . . . . . . -38-
4.6 TITLE AND SUFFICIENCY OF ASSETS . . . . . . . . . . . . -41-
4.7 CONDITION OF ASSETS . . . . . . . . . . . . . . . . . . -41-
4.8 INVESTMENT CANADA ACT . . . . . . . . . . . . . . . . . -41-
4.9 LEASED PROPERTY . . . . . . . . . . . . . . . . . . . . -42-
4.10 EQUIPMENT; VEHICLES; PERSONAL PROPERTY . . . . . . . . -44-
4.11 INVENTORY . . . . . . . . . . . . . . . . . . . . . . . -44-
4.12 ACCOUNTS RECEIVABLE . . . . . . . . . . . . . . . . . . -45-
4.13 INTELLECTUAL PROPERTY . . . . . . . . . . . . . . . . . -45-
4.14 CONTRACTS . . . . . . . . . . . . . . . . . . . . . . . -46-
4.15 PERMITS . . . . . . . . . . . . . . . . . . . . . . . . -49-
4.16 INSURANCE . . . . . . . . . . . . . . . . . . . . . . . -49-
4.17 EMPLOYEE BENEFIT PLANS AND EMPLOYMENT AGREEMENTS . . . -50-
4.18 EMPLOYMENT AND LABOR MATTERS . . . . . . . . . . . . . -51-
4.19 CAPITAL IMPROVEMENTS . . . . . . . . . . . . . . . . . -52-
4.20 TAXES . . . . . . . . . . . . . . . . . . . . . . . . . -52-
4.21 NO DEFAULTS OR VIOLATIONS . . . . . . . . . . . . . . . -53-<PAGE>
4.22 ENVIRONMENTAL MATTERS . . . . . . . . . . . . . . . . . -54-
4.23 LITIGATION . . . . . . . . . . . . . . . . . . . . . . -55-
4.24 CUSTOMERS AND SUPPLIERS . . . . . . . . . . . . . . . . -56-
4.25 INFORMATION AND RECORDS . . . . . . . . . . . . . . . . -57-
4.26 NO OTHER AGREEMENT . . . . . . . . . . . . . . . . . . -58-
4.27 PRODUCT OR SERVICE WARRANTIES . . . . . . . . . . . . . -58-
4.28 BROKERS . . . . . . . . . . . . . . . . . . . . . . . . -58-
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PURCHASERS . . . . . . . . -59-
5.1 DUE INCORPORATION . . . . . . . . . . . . . . . . . . . -59-
5.2 DUE AUTHORIZATION . . . . . . . . . . . . . . . . . . . -59-
5.3 CONSENTS AND APPROVALS; NO CONFLICTS, ETC . . . . . . . -60-
5.4 LITIGATION . . . . . . . . . . . . . . . . . . . . . . -60-
5.5 BROKERS . . . . . . . . . . . . . . . . . . . . . . . . -60-
5.6 GST/QST REGISTRATION STATUS . . . . . . . . . . . . . . -61-
5.7 EMPLOYMENT AGREEMENTS . . . . . . . . . . . . . . . . . -61-
ARTICLE VI
COVENANTS OF SELLER . . . . . . . . . . . . . . . . . . . . -61-
6.1 IMPLEMENTING AGREEMENT . . . . . . . . . . . . . . . . -61-
6.2 CONSENTS AND APPROVALS . . . . . . . . . . . . . . . . -61-
6.3 PRESERVATION OF BUSINESS . . . . . . . . . . . . . . . -62-
6.4 ACCESS TO INFORMATION AND FACILITIES . . . . . . . . . -67-
6.5 SUPPLEMENTAL INFORMATION . . . . . . . . . . . . . . . -67-
6.6 CONFIDENTIALITY . . . . . . . . . . . . . . . . . . . . -68-
6.7 TAX MATTERS . . . . . . . . . . . . . . . . . . . . . . -69-
6.8 COOPERATION . . . . . . . . . . . . . . . . . . . . . . -69-
6.9 NON-COMPETITION. . . . . . . . . . . . . . . . . . . . -70-
6.10 SERVICE WARRANTIES . . . . . . . . . . . . . . . . . . -73-
6.11 COOPERATION . . . . . . . . . . . . . . . . . . . . . . -74-
6.12 PERSONNEL RECORDS . . . . . . . . . . . . . . . . . . . -74-
6.13 SENIOR EMPLOYEES . . . . . . . . . . . . . . . . . . . -74-
6.14 MEMPHIS WAREHOUSE . . . . . . . . . . . . . . . . . . . -74-
6.15 PAYROLL SERVICES . . . . . . . . . . . . . . . . . . . -74-
ARTICLE VII
COVENANTS OF PURCHASERS . . . . . . . . . . . . . . . . . . -75-
7.2 CONSENTS AND APPROVALS . . . . . . . . . . . . . . . . -75-
7.3 CONFIDENTIALITY . . . . . . . . . . . . . . . . . . . . -75-
7.4 TAX MATTERS . . . . . . . . . . . . . . . . . . . . . . -76-
7.5 CONTACTS WITH CUSTOMERS AND SUPPLIERS . . . . . . . . . -77-
7.6 RESTRICTIONS RELATING TO EMPLOYEES. . . . . . . . . . -77-
7.7 COOPERATION . . . . . . . . . . . . . . . . . . . . . . -79-
7.8 PRODUCT WARRANTIES . . . . . . . . . . . . . . . . . . -79-
7.9 CONSENT PAYMENTS . . . . . . . . . . . . . . . . . . . -79-
ARTICLE VIII
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CONDITIONS PRECEDENT
TO OBLIGATIONS OF PURCHASERS . . . . . . . . . . . . . . . . -79-
8.1 WARRANTIES TRUE AS OF BOTH PRESENT DATE AND CLOSING
DATE . . . . . . . . . . . . . . . . . . . . . . . . . -79-
8.2 COMPLIANCE WITH AGREEMENTS AND COVENANTS. . . . . . . . -79-
8.3 HART-SCOTT-RODINO . . . . . . . . . . . . . . . . . . . -80-
8.4 COMPETITION ACT . . . . . . . . . . . . . . . . . . . . -80-
8.5 CONSENTS AND APPROVALS . . . . . . . . . . . . . . . . -80-
8.6 NO MATERIAL ADVERSE CHANGE . . . . . . . . . . . . . . -80-
8.7 ACTIONS OR PROCEEDINGS . . . . . . . . . . . . . . . . -80-
8.8 ESTOPPEL CERTIFICATES AND NON-DISTURBANCE AGREEMENTS . -81-
8.9 CERTAIN EMPLOYMENT AGREEMENTS . . . . . . . . . . . . . -81-
8.10 PURCHASE INVESTIGATION . . . . . . . . . . . . . . . . -81-
8.11 INFORMATION SERVICES LICENSE AND SUPPORT AGREEMENT . . -82-
ARTICLE IX
CONDITIONS PRECEDENT
TO OBLIGATIONS OF SELLERS . . . . . . . . . . . . . . . . . -82-
9.1 WARRANTIES TRUE AS OF BOTH PRESENT DATE AND CLOSING
DATE . . . . . . . . . . . . . . . . . . . . . . . . . -82-
9.2 COMPLIANCE WITH AGREEMENTS AND COVENANTS . . . . . . . -82-
9.3 HART-SCOTT-RODINO . . . . . . . . . . . . . . . . . . . -83-
9.4 COMPETITION ACT . . . . . . . . . . . . . . . . . . . . -83-
9.5 ACTIONS OR PROCEEDINGS . . . . . . . . . . . . . . . . -83-
9.6 INFORMATION SERVICES LICENSE AND SUPPORT AGREEMENT . . -83-
9.7 CONSENTS . . . . . . . . . . . . . . . . . . . . . . . -83-
ARTICLE X
EMPLOYEES AND BENEFIT PLANS . . . . . . . . . . . . . . . . -84-
10.1 EMPLOYEES . . . . . . . . . . . . . . . . . . . . . . . -84-
10.2 LIABILITIES UNDER BENEFIT PLANS . . . . . . . . . . . . -86-
10.3 NO THIRD PARTY BENEFICIARIES . . . . . . . . . . . . . -87-
ARTICLE XI
CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . -87-
11.1 CLOSING . . . . . . . . . . . . . . . . . . . . . . . . -87-
11.2 DELIVERIES BY U.S. SELLER . . . . . . . . . . . . . . . -87-
11.3 DELIVERIES BY CANADIAN SELLER . . . . . . . . . . . . . -89-
11.4 DELIVERIES BY SELLERS' PARENT . . . . . . . . . . . . . -91-
11.5 DELIVERIES BY U.S. PURCHASER . . . . . . . . . . . . . -91-
11.6 DELIVERIES BY CANADIAN PURCHASER . . . . . . . . . . . -92-
ARTICLE XII
TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . -93-
12.1 TERMINATION . . . . . . . . . . . . . . . . . . . . . . -93-
12.2 EFFECT OF TERMINATION . . . . . . . . . . . . . . . . . -94-
-iii-<PAGE>
ARTICLE XIII
INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . -94-
13.1 SURVIVAL . . . . . . . . . . . . . . . . . . . . . . . -94-
13.2 INDEMNIFICATION BY SELLERS . . . . . . . . . . . . . . -94-
13.3 INDEMNIFICATION BY PURCHASERS . . . . . . . . . . . . . -96-
13.4 LIMITATIONS ON INDEMNIFICATION . . . . . . . . . . . . -96-
13.5 CLAIMS . . . . . . . . . . . . . . . . . . . . . . . . -97-
13.6 NOTICE OF THIRD PARTY CLAIMS; ASSUMPTION OF DEFENSE . . -97-
13.7 SETTLEMENT OR COMPROMISE . . . . . . . . . . . . . . . -98-
13.9 EFFECT ON PURCHASE PRICE OF INDEMNITY PAYMENTS . . . . -98-
13.10 INFORMATION SERVICES LICENSE AND SUPPORT AGREEMENT -99-
ARTICLE XIV
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . -99-
14.1 EXPENSES . . . . . . . . . . . . . . . . . . . . . . . -99-
14.2 AMENDMENT . . . . . . . . . . . . . . . . . . . . . . . -99-
14.3 NOTICES . . . . . . . . . . . . . . . . . . . . . . . . -99-
14.4 EFFECT OF INVESTIGATION . . . . . . . . . . . . . . . -103-
14.5 PAYMENTS IN DOLLARS . . . . . . . . . . . . . . . . . -104-
14.6 WAIVERS . . . . . . . . . . . . . . . . . . . . . . . -104-
14.7 ASSIGNMENT . . . . . . . . . . . . . . . . . . . . . -104-
14.8 NO THIRD PARTY BENEFICIARIES . . . . . . . . . . . . -104-
14.9 PUBLICITY . . . . . . . . . . . . . . . . . . . . . . -104-
14.10 FURTHER ASSURANCES . . . . . . . . . . . . . . . -105-
14.11 SEVERABILITY . . . . . . . . . . . . . . . . . . -105-
14.12 REMEDIES . . . . . . . . . . . . . . . . . . . . -105-
14.13 ENTIRE UNDERSTANDING . . . . . . . . . . . . . . -105-
14.14 APPLICABLE LAW . . . . . . . . . . . . . . . . . -105-
14.15 WAIVER OF JURY TRIAL . . . . . . . . . . . . . . -106-
14.16 COUNTERPARTS . . . . . . . . . . . . . . . . . . -106-
14.17 OTHER DISCUSSIONS . . . . . . . . . . . . . . . -106-
14.18 REMITTANCES . . . . . . . . . . . . . . . . . . -106-
14.19 BULK SALES. . . . . . . . . . . . . . . . . . . -107-
14.20 CERTAIN PATENTS. . . . . . . . . . . . . . . . . -107-
ARTICLE XV
GUARANTIES . . . . . . . . . . . . . . . . . . . . . . . . -107-
15.1 GUARANTY OF SELLERS' PARENT . . . . . . . . . . . . . -107-
15.2 GUARANTY OF PURCHASERS' PARENT . . . . . . . . . . . -108-
-iv-<PAGE>
EXHIBITS
Exhibit A-1 Form of Assignment and Assumption Agreement (U.S.)
Exhibit A-2 Form of Assignment and Assumption Agreement (Canada)
Exhibit B Information Services Support Principles
Exhibit C-1 Form of Shared Facilities Agreement (U.S.)
Exhibit C-2 Form of Shared Facilities Agreement (Canada)
Exhibit D Form of Temporary Trademark Agreement
Exhibit E-1 Form of Transition Services Agreement (U.S.)
Exhibit E-2 Form of Transition Services Agreement (Canada)
Exhibit E-3 Form of Warehouse Services Agreement
Exhibit F-1 Form of Bill of Sale (U.S.)
Exhibit F-2 Form of Bill of Sale (Canada)
Exhibit G-1 Form of Opinion of Counsel for U.S. Seller
Exhibit G-2 Form of Opinion of Counsel for Canadian Seller
Exhibit H-1 Form of Opinion of Counsel for U.S. Purchaser
Exhibit H-2 Form of Opinion of Counsel for Canadian Purchaser
Exhibit 3.2(a) Example of Net Working Capital Calculation
-v-<PAGE>
ASSET PURCHASE AGREEMENT
------------------------
THIS ASSET PURCHASE AGREEMENT is made as of the 22nd day of
February, 1999, by and among ORC ACQUISITION CORP., a Delaware
corporation ("U.S. PURCHASER"), 3026186 Nova Scotia Company, a Nova
Scotia company ("CANADIAN PURCHASER")(each of U.S. Purchaser and
Canadian Purchaser a "PURCHASER" and collectively, the "PURCHASERS"),
Ameritech Corporation, a Delaware corporation ("PURCHASERS' PARENT"),
Anixter Inc., a Delaware corporation ("U.S. SELLER"), Anixter Canada
Inc., a Canadian corporation ("CANADIAN SELLER") (each of U.S. Seller
and Canadian Seller a "SELLER" and collectively, the "SELLERS"), and
Anixter International Inc., a Delaware corporation ("SELLERS'
PARENT"). Certain capitalized terms used herein are defined in
Article I.
W I T N E S E T H:
WHEREAS, Purchasers desire to purchase from Sellers and Sellers
desire to sell to Purchasers all of the Purchased Assets (as
hereinafter defined), and Purchasers are willing to assume all of the
Assumed Obligations (as hereinafter defined), all upon the terms and
conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the foregoing and the mutual
warranties, representations, covenants and agreements herein
contained, the parties agree as follows:
ARTICLE I
DEFINITIONS
1.1 DEFINITIONS.
"Accounts Receivable" shall mean all accounts receivable,
trade receivables, notes receivable and other receivables (whether
billed or unbilled), which in any case are payable as a result of
goods sold, licensed or leased or services provided by Sellers in
connection with the Business, and all accounts receivable-sundry (of
the types set forth on SCHEDULE 1.1(A)) of Sellers arising in
connection with the Business. In calculating the amount of any
Accounts Receivable due from a Person, such amount shall be calculated
net of any credit memoranda issued by a Seller to such Person in
connection with the Business prior to the Closing and unused prior to
the Closing.
"Administrative Employees" shall have the meaning provided
in SECTION 4.18.
"Affected Employees" shall have the meaning provided in
SECTION 4.18.<PAGE>
"Affiliate" shall mean, with respect to any specified
Person, any other Person which, directly or indirectly, owns or
controls, is under common ownership or control with, or is owned or
controlled by, such specified Person. A Person shall be deemed to
"own" another Person if it beneficially owns (within the meaning of
the Rule 13d-3 promulgated under the Securities Exchange Act of 1934,
as amended) more than 50% of the capital stock, other equity interests
or voting interests of such other Person. "Control" (including the
terms "controlling," "controlled by" and "under common control with")
shall mean the possession, direct or indirect, of the power to direct
or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract or
otherwise. For purposes of this Agreement, (i) no shareholder (as of
the date of this Agreement) of Sellers' Parent or Purchasers' Parent
shall be deemed an Affiliate of Sellers' Parent or Purchasers' Parent,
as the case may be, or any of their respective subsidiaries unless and
until such shareholder owns Sellers' Parent or Purchasers' Parent, as
the case may be, or any of their respective subsidiaries and (ii) the
position of officer or director of a Person, and rights and
responsibilities exercised in such role, shall not be deemed to
constitute control of such Person.
"Agreement" shall mean this Asset Purchase Agreement,
including all exhibits and schedules hereto, as it may be amended from
time to time in accordance with its terms.
"Applicable Laws" shall have the meaning provided in
SECTION 4.17.
"Assets" shall mean the Purchased Assets and the Leased
Assets.
"Assignment and Assumption Agreement (U.S.)" shall mean an
assignment and assumption agreement between U.S. Purchaser and U.S.
Seller to be dated the Closing Date, in the form attached hereto as
EXHIBIT A-1.
"Assignment and Assumption Agreement (Canada)" shall mean an
assignment and assumption agreement between Canadian Purchaser and
Canadian Seller to be dated the Closing Date, in the form attached
hereto as EXHIBIT A-2.
"Assumed Obligations" shall have the meaning provided in
SECTION 2.4(B).
"Benefit Plans" shall have the meaning provided in SECTION
4.17.
"Business" shall mean the business of assessing, planning,
designing, installing, repairing, sourcing (meaning purchasing,
selling, leasing and licensing goods and services), deploying,
implementing and/or supporting data networking products and providing
-2-<PAGE>
related services (including the provision of simple network
management protocol and related management and monitoring services,
internet protocol configuring services and route configuring services)
in the United States and Canada, as conducted by Sellers at any time
prior to the Closing Date, but excluding the business of assessing,
planning, designing, sourcing (meaning purchasing, selling, leasing
and licensing goods and services), deploying, implementing and
supporting passive cabling infrastructure.
"Business Day" shall mean any day of the year other than
(i) any Saturday or Sunday or (ii) any other day on which banks
located in Chicago, Illinois or Toronto, Canada generally are closed
for business.
"Business Financial Statements" shall mean (i) the audited
financial statements of the Business as of January 2, 1998 and (ii)
the unaudited financial statements of the Business as of April 3,
1998, July 3, 1998, October 2, 1998 and January 1, 1999, each of which
are attached hereto as SCHEDULE 4.4(A), consisting of the combined
balance sheets of the Business at such dates and the related combined
statements of operations and cash flows of the Business for the fiscal
year ended January 2, 1998, the thirteen-week period ended April 3,
1998, the thirteen and twenty-six week periods ended July 3, 1998, the
thirteen and thirty-nine week periods ended October 2, 1998 and the
fiscal year ended January 1, 1999.
"Canadian Customer Contracts" shall have the meaning
provided in SECTION 2.2(B)(III).
"Canadian Employee Programs" shall have the meaning provided
in SECTION 4.17.
"Canadian Equipment" shall have the meaning provided in
SECTION 2.1(B)(I).
"Canadian Information and Records" shall have the meaning
provided in SECTION 2.1(B)(IV).
"Canadian Intellectual Property Licenses" shall have the
meaning provided in SECTION 2.2(B)(V).
"Canadian Inventory" shall have the meaning provided in
SECTION 2.1(B)(III).
"Canadian Owned Intellectual Property" shall have the
meaning provided in SECTION 2.1(B)(V).
"Canadian Personal Property Leases" shall have the meaning
provided in SECTION 2.2(B)(II).
"Canadian Purchase Contracts" shall have the meaning
provided in SECTION 2.2(B)(IV).
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"Canadian Purchaser" shall have the meaning provided in the
PREAMBLE.
"Canadian Real Property Leases" shall have the meaning
provided in SECTION 2.2(B)(I).
"Canadian Seller" shall have the meaning provided in the
PREAMBLE.
"Canadian Transferred Permits" shall have the meaning
provided in SECTION 2.2(B)(VII).
"Canadian Vehicles" shall have the meaning provided in
SECTION 2.1(B)(II).
"Cash" shall mean all cash, certificates of deposits, bank
deposits and other cash equivalents, together with all accrued but
unpaid interest thereon, of Sellers.
"Closing" shall mean the consummation of the transactions
contemplated herein in accordance with ARTICLE XI.
"Closing Date" shall mean the date on which the Closing
occurs or is to occur.
"Closing Date Purchased Receivables Amount" shall have the
meaning provided in SECTION 3.5(A).
"Code" shall mean the United States Internal Revenue Code of
1986, as amended.
"Computer Equipment" shall mean any and all computer and
computer-related equipment including computing devices (including
mainframe computers, midrange computers, workstations, servers,
personal computers, portable computers, laptop computers and hand-held
devices), input devices, output devices (including printers, monitors
and similar devices), data storage devices (including disk drives,
tape drives and similar devices), network equipment (including cables,
connectors, terminators, routers, repeaters, modems, CSU/DSUs and
similar devices), electrical equipment (including battery back-up
packs, generators, UPS's and similar devices) and associated items
(including racks, chassis, bolts, harnesses and similar assets).
"Computer Purchase Agreements" shall mean any Contract
pursuant to which any part of the Computer System was obtained.
"Computer System" shall mean all Computer Equipment,
software, firmware, microcode, embedded microprocessors and other
information technology used, held for use, owned, leased or licensed
by a Seller in connection with the Business, including any related
documentation.
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"Confidential Information" shall mean all Information and
Records and Owned Intellectual Property and Licensed Intellectual
Property that are not and have not become ascertainable or obtainable
from public or published information.
"Contested Adjustments" shall have the meaning provided in
SECTION 3.2(B).
"Contract" shall mean any contract, lease, commitment,
understanding, sales order, purchase order, agreement, arrangement,
indenture, mortgage, note, bond, right, warrant, instrument or plan,
whether written or verbal, which is intended or purports to be binding
and enforceable.
"Critical Property" shall mean any Leased Property leased
under any U.S. Real Property Lease set forth on SCHEDULE 8.8(A) and
any Canadian Real Property Lease set forth on SCHEDULE 8.8(X).
"Current Assets" shall mean the sum of (i) Accounts
Receivable (without any reserve) (ii) Inventory (net of any related
reserve) and (iii) prepaid expenses (of the types set forth on
SCHEDULE 2.1(A)(VIII)), in each case which are included in the
Purchased Assets, each as of the Closing Date.
"Current Liabilities" shall mean (i) the accounts payable-
trade, accounts payable-sundry (of the types set forth on SCHEDULE
2.4(A)(II)) and accrued expenses (of the type set forth on SCHEDULE
2.4(A)(III)), incurred by each Seller in the ordinary course of
business of the Business which are assumed by U.S. Purchaser pursuant
to SECTIONS 2.4(A)(II) and (III) and by Canadian Purchaser pursuant to
SECTIONS 2.4(B)(II) and (III) plus (ii) the amount of deferred
revenues of the Business (calculated in accordance with the procedures
used to determine the amount of deferred revenues in the Business
Financial Statements), each as of the Closing Date.
"Customer Contracts" shall have the meaning provided in
SECTION 2.2(B)(III).
"Data Processing Services" shall mean the information
technology services performed by or for one or both Sellers prior to
Closing to support, directly or indirectly, the operations of the
Business (including those portions of the operations of the Business
currently integrated with operations of Sellers not related to the
Business), including data processing services, report generation,
maintenance services, supplier contract management, decision support,
root cause analysis, on-line transaction processing, enterprise
resource planning and other information technology services related
to, or provided in connection with, sales management, order entry,
electronic data interchange, proposal generation, marketing, internet
support, help desk management, customer service, invoicing, shipping,
services management, billing, credit issuance, sales analysis,
accounts receivable processing, accounts payable processing,
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collections processing, cash management, vendor pricing, purchasing,
inventory management, general ledger, financial reporting, fixed
assets, human resources management and disaster recovery.
"Documentation" shall mean, with respect to a computer
program or Computer Equipment, all information, in printed or
electronic form, necessary or (to the extent available) desirable to
use, administer, maintain and support effectively all features and
functionality of such computer program or Computer Equipment, as well
as to train users, development Personnel and support Personnel on the
same, including programming, user and system documentation, functional
specifications, methods and procedures, user manuals, flow diagrams
and file descriptions.
"Dollars" or numbers preceded by the symbol "$" shall mean
amounts in United States Dollars unless otherwise specified.
"Employees" shall have the meaning provided in SECTION 4.18.
"Environmental Law" shall mean any Law which relates to or
otherwise imposes liability or standards of conduct concerning
discharges, emissions, releases or threatened releases of noises,
odors or any pollutants, contaminants or hazardous or toxic wastes,
substances or materials, whether as matter or energy, into ambient
air, water or land, or otherwise relating to the manufacture,
processing, generation, distribution, use, treatment, storage,
disposal, cleanup, transport or handling of pollutants, contaminants
or hazardous or toxic wastes, substances or materials, including the
Comprehensive Environmental Response, Compensation and Liability Act
of 1980, as amended, the Superfund Amendments and Reauthorization Act
of 1986, as amended, the Resource Conservation and Recovery Act of
1976, as amended, the Toxic Substances Control Act of 1976, as
amended, the Federal Water Pollution Control Act Amendments of 1972,
the Clean Water Act of 1977, as amended, any so-called "Superfund" or
"Superlien" Law (including those already referenced in this
definition) and any other Law having a similar subject matter.
"Environmental Permit" shall mean any Permit required by or
pursuant to any applicable Environmental Law.
"Environmental Warranties" shall mean the representations
and warranties in SECTION 4.22.
"Equipment" shall have the meaning provided in SECTION
2.1(B)(I).
"ERISA" shall mean the Employee Retirement Income Security
Act of 1974, as amended.
"Excluded Assets" shall have the meaning provided in SECTION
2.3.
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"Excluded Contracts" shall have the meaning provided in
SECTION 2.3(B).
"Excluded Obligations" shall have the meaning provided in
SECTION 2.5.
"Excluded Real Property Leases" shall have the meaning
provided in SECTION 2.3(E).
"First Anniversary Payment" shall have the meaning provided
in SECTION 3.6(C).
"First Anniversary Purchased Receivables Amount" shall have
the meaning provided in SECTION 3.6(B).
"GAAP" shall mean U.S. generally accepted accounting
principles at the time in effect.
"goods" or "products" includes tangible products and assets
as well as intangible products and assets (including data and
software).
"Governmental Authority" shall mean the government of the
United States or Canada or any other foreign country or any state,
province, territory, municipality or political subdivision thereof and
any entity, body or authority exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to
government.
"Hazardous Substance" shall mean any material or substance
which (i) constitutes a hazardous substance, toxic substance,
deleterious substance, contaminant or pollutant (as such terms are
defined by or pursuant to any Environmental Law) or (ii) is regulated
or controlled as a hazardous substance, toxic substance, pollutant,
deleterious substance, contaminant or other regulated or controlled
material, substance or matter pursuant to any Environmental Law.
"Hired Employee" shall have the meaning provided in SECTION
10.1(A).
"Holdback Amount" shall mean $5,000,000.
"HSR Act" shall mean the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.
"Identified Contracts" shall have the meaning set forth in
SECTION 4.14.
"Indemnified Person" shall mean the Person or Persons
entitled to, or claiming a right to, indemnification under ARTICLE
XIII.
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"Indemnifying Person" shall mean the Person or Persons
claimed by the Indemnified Person to be obligated to provide
indemnification under ARTICLE XIII.
"Independent Accountants" shall have the meaning provided in
SECTION 3.2(B).
"Information and Records" shall have the meaning provided in
SECTION 2.1(B)(IV).
"Information Services Support Principles" shall have the
meaning set forth in SECTION 8.11.
"Information Services License and Support Agreement" shall
mean the Information Services License and Support Agreement by and
among Purchasers and U.S. Seller to be dated the Closing Date.
"Intellectual Property" shall mean all United States,
Canadian and foreign patents (including continuations, continuations-
in-part, divisionals, reissues and re-examinations thereof) and patent
applications (including continuations, continuations-in-part, reissues
and re-examinations thereof); United States, Canadian and foreign
registered and unregistered trade names, trademarks, service names and
service marks (and applications for registration of the same) and all
goodwill associated therewith; United States, Canadian and foreign
copyrights and copyright registrations (and applications for the
same); trade secrets; United States, Canadian and foreign industrial
designs and integrated circuit topographies (and applications for
same); computer data (including formulations and analyses), computer
software (in source code and object code form) and all related
programming, user and systems documentation; inventions, processes and
designs (whether or not patentable or reduced to practice); know-how,
show how and formulae; and all other similar intangible assets,
properties and rights.
"Intellectual Property Licenses" shall have the meaning
provided in SECTION 2.2(B)(V).
"Inventory" shall have the meaning provided in SECTION
2.1(B)(III).
"IRS" shall have the meaning provided in SECTION 4.17.
"Knowledge of Sellers" shall mean the actual knowledge,
after reasonable inquiry, of any or all of the following individuals:
any or all of the Senior Employees, any or all of the Senior Vice
Presidents, Robert Moreton, Michael Mulligan, John Jeromin, Rod
Shoemaker, John Dul, Dennis Letham, James Knox, Patricia Garland, Alan
Drizd, James Wahout, Craig Costantino, Corinne Corcoran, Mark Kurkul,
David Lemme, Bradd Easton, Robert Grubbs, Terry Bender, Steve Dengate
and Deborah Bronge.
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"Law" shall mean any law (including common law), statute,
regulation, ordinance, rule, order, decree, judgment, consent decree,
settlement agreement or requirement enacted, promulgated, entered
into, agreed or imposed by any Governmental Authority.
"Leased Assets" shall mean all assets leased or licensed to
a Seller pursuant to any of the Real Property Leases, Personal
Property Leases or Intellectual Property Licenses.
"Leased Property" shall have the meaning provided in SECTION
4.9(A).
"Licensed Intellectual Property" shall have the meaning
provided in SECTION 4.13.
"Lien" shall mean any mortgage, lien (except for any lien
for Taxes not yet due and payable), charge, restriction, pledge,
security interest, option, lease or sublease, claim, right of any
third party, easement, encroachment or encumbrance.
"Logistics Services" shall have the meaning provided in
SECTION 6.9(A).
"Loss" or "Losses" shall mean any and all liabilities,
losses, costs, claims, damages (excluding consequential damages),
penalties and expenses (including attorneys' fees and expenses and
costs of investigation and litigation). In the event any of the
foregoing are indemnifiable hereunder, the terms "Loss" and "Losses"
shall also include any and all reasonable attorneys' fees and expenses
and costs of investigation and litigation incurred by the Indemnified
Person in enforcing such indemnity.
"Major Customers" shall have the meaning provided in SECTION
4.24(A)(II).
"Major Suppliers" shall have the meaning provided in SECTION
4.24(A)(III).
"Material Adverse Change" shall mean a change in the
business, operations, assets, liabilities, results of operations, cash
flows or condition (financial or otherwise) of the Business or the
Assets that is material and adverse.
"Material Adverse Effect" shall mean an effect on the
business, operations, assets, liabilities, results of operations, cash
flows or condition (financial or otherwise) of the Business or the
Assets that is material and adverse.
"Net Working Capital" shall mean Current Assets minus
Current Liabilities.
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"Net Working Capital Excess Amount" shall have the meaning
provided in SECTION 3.2(C).
"Net Working Capital Shortfall Amount" shall have the
meaning provided in SECTION 3.2(C).
"Net Working Capital Statement" shall have the meaning
provided in SECTION 3.2(A).
"Non-Competition Period" shall have the meaning provided in
SECTION 6.9(A).
"Offered Employees" shall have the meaning provided in
SECTION 10.1(A).
"Outstanding Purchased Receivables" shall have the meaning
provided in SECTION 3.6(B).
"Other Canadian Contracts" shall have the meaning provided
in SECTION 2.2(B)(VI).
"Other Contracts" shall have the meaning provided in SECTION
2.2(B)(VI).
"Other U.S. Contracts" shall have the meaning provided in
SECTION 2.2(A)(VI).
"Owned Intellectual Property" shall have the meaning
provided in SECTION 2.1(B)(V).
"Permits" shall mean permits, tariffs, authorizations,
licenses, certificates, variances, interim permits, approvals,
franchises, notices and rights under any Law or otherwise required or
granted by any Governmental Authority and any applications for the
foregoing.
"Person" shall mean any individual, corporation,
proprietorship, firm, partnership, limited partnership, limited
liability partnership, limited liability company, trust, association
or other entity.
"Personal Property Leases" shall have the meaning provided
in SECTION 2.2(B)(II).
"Personnel" shall mean, with respect to a party, employees,
subcontractors, outsourcers, agents and representatives of such party.
"Primary Customers" shall have the meaning provided in
SECTION 4.24(A)(I).
"Purchase Contracts" shall have the meaning provided in
SECTION 2.2(B)(IV).
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"Purchase Price" shall have the meaning provided in SECTION
3.1.
"Purchase Investigation" shall have the meaning provided in
SECTION 6.4.
"Purchased Assets" shall have the meaning provided in
SECTION 2.1(B).
"Purchased Contracts and Permits" shall have the meaning
provided in SECTION 2.2(B).
"Purchased Receivables" shall have the meaning provided in
SECTION 3.6(A).
"Purchaser" or "Purchasers" shall have the meaning provided
in the PREAMBLE.
"Purchaser Employee" shall have the meaning provided in
SECTION 6.9(A)(II).
"Purchaser Indemnified Party" shall have the meaning
provided in SECTION 13.2.
"Purchaser Party" shall mean U.S. Purchaser, Canadian
Purchaser and Purchasers' Parent.
"Purchasers' Accountants" shall mean Arthur Andersen LLP.
"Purchaser's Authorization Warranties" shall mean the
representations and warranties in SECTIONS 5.1 and 5.2.
"Purchasers' Consents" shall have the meaning provided in
SECTION 5.3(A).
"Purchasers' Parent" shall have the meaning provided in the
PREAMBLE.
"Real Property Leases" shall have the meaning provided in
SECTION 2.2(B)(I).
"Related Agreement" shall mean any of the (i) Assignment and
Assumption Agreement (U.S.), (ii) Assignment and Assumption Agreement
(Canada), (iii) Shared Facilities Agreement (U.S.), (iv) Shared
Facilities Agreement (Canada), (v) Information Services License and
Support Agreement, (vi) Temporary Trademark Agreement, (vii)
Transition Services Agreement (U.S.), (viii) Transition Services
Agreement (Canada), (ix) Warehouse Services Agreement, (x) Bill of
Sale (U.S.) delivered by U.S. Seller to U.S. Purchaser pursuant to
SECTION 11.2(B), (xi) Bill of Sale (Canada) delivered by Canadian
Seller to Canadian Purchaser pursuant to SECTION 11.3(B), (xii)
certificate, dated the Closing Date, of U.S. Seller certifying as to
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compliance by U.S. Seller with SECTIONS 8.1 and 8.2, (xiii)
certificate, dated the Closing Date, of Canadian Seller certifying as
to compliance by Canadian Seller with SECTIONS 8.1 and 8.2, (xiv)
certificate, dated the Closing Date, of U.S. Purchaser certifying as
to compliance with SECTIONS 9.1 and 9.2, and (xv) certificate, dated
the Closing Date, of Canadian Purchaser certifying as to compliance
with SECTIONS 9.1 and 9.2. The Related Agreements executed by a
specified Person shall be referred to as "such Person's Related
Agreements," "its Related Agreements" or another similar expression.
"Retained Business" shall mean the business conducted by
Sellers at the date of this Agreement other than the Business in the
Territory.
"Restricted Activities" shall mean the sale or lease, direct
or indirect, of wire and cable products and passive connectivity
products (E.G., jacks, patch panels) to (i) Persons who install such
sold or leased products (such Persons, "installers"), (ii) Persons who
sell such sold or leased products, directly or indirectly, to
installers or (iii) end-users who purchase or lease such sold or
leased products in conjunction with the purchase of installation
services for such sold or leased products from an installer pursuant
to an arrangement between the seller or lessor of such products and
such installer; PROVIDED, that Restricted Activities do not include
the sale or lease of such products incidental to the sale, licensing,
leasing or providing of other products or services (e.g., network
integration services).
"Seller" or "Sellers" shall have the meaning provided in the
PREAMBLE.
"Seller Employee" shall have the meaning provided in
SECTION 7.6(A)(II).
"Seller Indemnified Party" shall have the meaning provided
in SECTION 13.3.
"Seller Party" shall mean U.S. Seller, Canadian Seller and
Sellers' Parent.
"Seller Proprietary System Software" shall mean all software
and related materials (in source code and object code form) that are
owned by one or both Sellers and were used at any time by or for one
or both Sellers in connection with the Business or to provide Data
Processing Services, including computer programs and related
Documentation developed by or for one or both Sellers, and all
enhancements, modifications, versions and derivative works of the
same.
"Sellers' Accountants" shall mean Ernst & Young LLP.
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"Sellers' Consents" shall have the meaning provided in
SECTION 4.3(A).
"Sellers' Parent" shall have the meaning provided in the
PREAMBLE.
"Senior Employees" shall mean Scott Wilson, Michael Duncan,
James Serenbetz, Kevin Burns, Robert DeBolt, and William Collins.
"Senior Vice Presidents" shall mean William Henis, Craig
Stevens, William Galvin, Michael Reeves, Michael Luther, William
McCarthy, Robert Eck, Terrence Bender, and James Nyhan.
"Shared Facilities Agreement (Canada)" shall mean the Shared
Facilities Agreement (Canada) between Canadian Purchaser and Canadian
Seller to be dated the Closing Date, in the form attached hereto as
EXHIBIT C-2.
"Shared Facilities Agreement (U.S.)" shall mean the Shared
Facilities Agreement (U.S.) between U.S. Purchaser and U.S. Seller to
be dated the Closing Date, in the form attached hereto as EXHIBIT C-1.
"Sufficiency Warranties" shall mean the representations and
warranties in SECTION 4.6(B).
"System Software" shall mean the Seller Proprietary System
Software and the Third-Party System Software.
"Tax Return" shall mean any report, return, declaration or
other information or filing required to be supplied to a Governmental
Authority in connection with any Taxes or in connection with any other
provision in any domestic or foreign, federal, provincial, municipal,
state, territorial or other Tax Law.
"Tax Statute of Limitations Date" shall mean the close of
business on the 90th day after the expiration of (i) the applicable
statute of limitations with respect to Taxes, or (ii) in the case of
Canada, the period of time during which a Governmental Authority is
permitted to reassess Taxes, interest or penalties, including, in any
such case, any extensions thereof other than any such extension after
the date hereof that arises by virtue of an Indemnified Person waiving
a limitation date without the prior consent of an Indemnifying Person
(or if any such date is not a Business Day, the next Business Day).
"Tax Warranties" shall mean the representations and
warranties in SECTIONS 4.17 and 4.20.
"Taxes" shall mean all taxes, imposts, charges, fees, duties
(including customs duties), levies or other assessments, including
income, gross receipts, net proceeds, ad valorem, turnover, real and
personal property (tangible and intangible), sales, use, franchise,
excise, value added, stamp, leasing, lease, user, transfer, fuel,
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excess profits, occupational, interest equalization, windfall profits,
license, payroll, environmental, capital stock, disability, severance,
employee's income withholding, other withholding, unemployment,
employment and Social Security payments or taxes, and any other taxes,
fees, assessments or similar charges in the nature of a tax including
Canada Pension Plan or provincial pension plan contributions and
workers compensation premiums, together with any installments with
respect thereto, which are imposed by any Governmental Authority, and
such term shall include any interest, penalties, fines or additions to
tax attributable thereto, whether disputed or not.
"Temporary Trademark Agreement" shall mean the Temporary
Trademark Agreement by and among Purchasers and U.S. Seller to be
dated the Closing Date for the use of certain trademarks, in the form
attached hereto as EXHIBIT D.
"Territory" shall have the meaning provided in SECTION
6.9(A).
"Third-Party System Software" shall mean all software and
related materials (other than the Seller Proprietary System Software)
that are used or accessed at any time after January 2, 1998 by or for
one or both Sellers in connection with the Business or to provide Data
Processing Services, including computer programs and related
Documentation owned by third parties and used by one or both Sellers,
and all enhancements, modifications, versions and derivative works of
the same provided to one or both Sellers.
"Title and Authorization Warranties" shall mean the
representations and warranties in SECTIONS 4.1, 4.2 and 4.6(a).
"Transferred Permits" shall have the meaning provided in
SECTION 2.2(B)(VII).
"Transition Services Agreement (Canada)" shall mean the
Transition Services Agreement (Canada) between Canadian Purchaser and
Canadian Seller to be dated the Closing Date for the provision of
certain administrative services by Canadian Seller to Canadian
Purchaser, in the form attached hereto as EXHIBIT E-2.
"Transition Services Agreement (U.S.)" shall mean the
Transition Services Agreement (U.S.) between U.S. Purchaser and U.S.
Seller to be dated the Closing Date for the provision of certain
administrative services by U.S. Seller to U.S. Purchaser, in the form
attached hereto as EXHIBIT E-1.
"U.S. Customer Contracts" shall have the meaning provided in
SECTION 2.2(A)(III).
"U.S. Equipment" shall have the meaning provided in SECTION
2.1(A)(I).
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"U.S. Information and Records" shall have the meaning
provided in SECTION 2.1(A)(IV).
"U.S. Intellectual Property Licenses" shall have the meaning
provided in SECTION 2.2(A)(V).
"U.S. Inventory" shall have the meaning provided in SECTION
2.1(A)(III).
"U.S. Owned Intellectual Property" shall have the meaning
provided in SECTION 2.1(A)(V).
"U.S. Personal Property Leases" shall have the meaning
provided in SECTION 2.2(A)(II).
"U.S. Purchase Contracts" shall have the meaning provided in
SECTION 2.2(A)(IV).
"U.S. Purchaser" shall have the meaning provided in the
PREAMBLE.
"U.S. Real Property Leases" shall have the meaning provided
in SECTION 2.2(A)(I).
"U.S. Seller" shall have the meaning provided in the
PREAMBLE.
"U.S. Transferred Permits" shall have the meaning provided
in SECTION 2.2(A)(VII).
"U.S. Vehicles" shall have the meaning provided in SECTION
2.1(A)(II).
"Vehicles" shall have the meaning provided in SECTION
2.1(B)(II).
"Warehouse Services Agreement" shall mean the Warehouse
Services Agreement between Canadian Purchaser and Canadian Seller to
be dated the Closing Date, in the form attached hereto as EXHIBIT E-3.
"Year 2000 Compliant" means the ability to process correctly
date data (including producing, calculating, comparing and sequencing
date data) from, into and between the twentieth and twenty-first
centuries (or any period prior to and any period after midnight on
December 31, 1999) without degradation in performance or unusual
intervention, including correct and continuous processing during the
transition between the years 1999 and 2000 and correct processing of
leap year dates.
1.2 INTERPRETATION. The headings preceding the text of Articles
and SECTIONs included in this Agreement and the headings to Schedules
attached to this Agreement are for convenience only and shall not be
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deemed part of this Agreement or be given any effect in interpreting
this Agreement. The use of the masculine, feminine or neuter gender
or the singular or plural form of words herein shall not limit any
provision of this Agreement. The use of the terms "including" or
"include" shall in all cases herein mean "including, without
limitation" or "include, without limitation," respectively. Reference
to any Person includes such Person's successors and assigns to the
extent such successors and assigns are permitted by the terms of any
applicable agreement, and reference to a Person in a particular
capacity excludes such Person in any other capacity or individually.
Reference to any agreement (including this Agreement), document or
instrument means such agreement, document or instrument as amended or
modified and in effect from time to time in accordance with the terms
thereof and, if applicable, the terms hereof. Reference to any Law
means such Law as amended, modified, codified, replaced or re-enacted,
in whole or in part, including rules, regulations, enforcement
procedures and any interpretations promulgated thereunder.
Underscored references to Articles, SECTIONs, clauses, Exhibits or
Schedules shall refer to those portions of this Agreement, and any
underscored references to a clause shall, unless otherwise identified,
refer to the appropriate clause within the same SECTION in which such
reference occurs. The use of the terms "hereunder," "hereof,"
"hereto" and words of similar import shall refer to this Agreement as
a whole and not to any particular Article, SECTION or clause of or
Exhibit or Schedule to this Agreement.
ARTICLE II
SALE AND PURCHASE OF ASSETS;
ASSUMPTION OF ASSUMED OBLIGATIONS
2.1 PURCHASED ASSETS.
(a) Subject to the terms and conditions of this Agreement,
at and as of the Closing, U.S. Seller shall sell, assign, convey,
transfer and deliver to U.S. Purchaser, and U.S. Purchaser shall
purchase, acquire and take assignment and delivery of, all of
U.S. Seller's right, title and interest in and to, all of the
assets (wherever located) that are used or held for use in, or
relate to, in whole or in part, the Business, including all of
U.S. Seller's right, title and interest in and to the following:
(i) EQUIPMENT. All machinery, equipment, fixed
assets, plant-under-construction, furniture, tools, spare
parts, maintenance equipment, materials, Computer Equipment
and other items of personal property of every kind and
description that are used or held for use in, or relate to,
in whole or in part, the Business (excluding the U.S.
Vehicles and U.S. Inventory) (collectively, the "U.S.
EQUIPMENT"), including the U.S. Equipment set forth on
SCHEDULE 2.1(A)(I);
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(ii) VEHICLES. All automobiles, service trucks,
delivery trucks, tractors, trailers and other vehicles that
are used or held for use in, or relate to, in whole or in
part, the Business (collectively, the "U.S. VEHICLES"),
including the U.S. Vehicles set forth on SCHEDULE
2.1(A)(II);
(iii) INVENTORY. All supplies, materials and other
inventories that are used or held for use in, or relate to,
in whole or in part, the Business (collectively, the "U.S.
INVENTORY");
(iv) INFORMATION AND RECORDS. All books, records,
files, databases, plans, specifications, technical
information, confidential information, price lists,
promotional materials, advertising copy and data, marketing
research and information, competitive analysis, sales
records, service records, customer lists and files, other
customer information, plans and designs of buildings,
structures, fixtures and equipment, environmental control,
monitoring and test records and all other proprietary
information that is used or held for use in, or relates to,
in whole or in part, the Business, other than Intellectual
Property, including copies of the following papers and
records in U.S. Seller's care, custody or control or
otherwise available to it: all financial records and files
of the Business, records relating solely to Taxes of the
Business and, to the extent permitted by Law, personnel and
labor relations records and employee benefits and
compensation plans and records with respect to Hired
Employees (collectively, the "U.S. INFORMATION AND
RECORDS");
(v) INTELLECTUAL PROPERTY. All Intellectual Property
owned by U.S. Seller that relates to other Assets or is used
or held for use in, or relates to, in whole or in part, the
Business (the "U.S. OWNED INTELLECTUAL PROPERTY"), including
the U.S. Owned Intellectual Property set forth on SCHEDULE
2.1(A)(V);
(vi) OTHER INTANGIBLES. All customer relationships
arising in conjunction with the Business and goodwill, if
any, of the Business;
(vii) ACCOUNTS RECEIVABLE. All Accounts
Receivable; and
(viii) OTHER ASSETS. All other assets of U.S.
Seller that are used or held for use in, or relate to, in
whole or in part, the Business, including prepaid expenses
(of the types set forth on SCHEDULE 2.1(A)(VIII)) and lease,
utility and similar deposits of U.S. Seller, claims and
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rights to insurance proceeds and awards relating to other
Assets or Assumed Obligations, and any and all other
deposits, prepayments, guaranties, letters of credit, bonds,
claims and rights of or for the benefit of U.S. Seller that
are used or held for use in, or relate to, in whole or in
part, the Business.
(b) Subject to the terms and conditions of this Agreement,
at and as of the Closing, Canadian Seller shall sell, assign,
convey, transfer and deliver to Canadian Purchaser, and Canadian
Purchaser shall purchase, acquire and take assignment and
delivery of, all of Canadian Seller's right, title and interest
in and to, all of the assets (wherever located) that are used or
held for use in, or relate to, in whole or in part, the Business,
including all of Canadian Seller's right, title and interest in
and to the following:
(i) EQUIPMENT. All machinery, equipment, fixed
assets, plant-under-construction, furniture, tools, spare
parts, maintenance equipment, materials, Computer Equipment
and other items of personal property of every kind and
description that are used or held for use in, or relate to,
in whole or in part, the Business (excluding the Canadian
Vehicles and Canadian Inventory) (collectively, the
"CANADIAN EQUIPMENT", and together with the U.S. Equipment,
the "EQUIPMENT"), including the Canadian Equipment set forth
on SCHEDULE 2.1(B)(I);
(ii) VEHICLES. All automobiles, service trucks,
delivery trucks, tractors, trailers and other vehicles that
are used or held for use in, or relate to, in whole or in
part, the Business (collectively, the "CANADIAN VEHICLES",
and together with the U.S. Vehicles, the "VEHICLES"),
including the Canadian Vehicles set forth on SCHEDULE
2.1(B)(II);
(iii) INVENTORY. All supplies, materials and other
inventories that are used or held for use in, or relate to,
in whole or in part, the Business (collectively, the
"CANADIAN INVENTORY", and together with the U.S. Inventory,
the "INVENTORY");
(iv) INFORMATION AND RECORDS. All books, records,
files, databases, plans, specifications, technical
information, confidential information, price lists,
promotional materials, advertising copy and data, marketing
research and information, competitive analysis, sales
records, service records, customer lists and files, other
customer information, plans and designs of buildings,
structures, fixtures and equipment, environmental control,
monitoring and test records and all other proprietary
information that is used or held for use in, or relates to,
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in whole or in part, the Business, other than Intellectual
Property, including copies of the following papers and
records in Canadian Seller's care, custody or control or
otherwise available to it: all financial records and files
of the Business, records relating solely to Taxes of the
Business and, to the extent permitted by Law, personnel and
labor relations records and employee benefits and
compensation plans and records with respect to Hired
Employees (collectively, the "CANADIAN INFORMATION AND
RECORDS," and together with the U.S. Information and
Records, the "INFORMATION AND RECORDS");
(v) INTELLECTUAL PROPERTY. All Intellectual Property
owned by Canadian Seller that relates to other Assets or is
used or held for use in, or relates to, in whole or in part,
the Business (the "CANADIAN OWNED INTELLECTUAL PROPERTY,"
and together with the U.S. Owned Intellectual Property, the
"OWNED INTELLECTUAL PROPERTY"), including the Canadian Owned
Intellectual Property set forth on SCHEDULE 2.1(B)(V);
(vi) OTHER INTANGIBLES. All customer relationships
arising in conjunction with the Business and goodwill, if
any, of the Business;
(vii) ACCOUNTS RECEIVABLE. All Accounts
Receivable; and
(viii) OTHER ASSETS. All other assets of Canadian
Seller that are used or held for use in, or relate to, in
whole or in part, the Business, including prepaid expenses
(of the types set forth on SCHEDULE 2.1(A)(VIII)) and lease,
utility and similar deposits of Canadian Seller, claims and
rights to insurance proceeds and awards relating to other
Assets or Assumed Obligations, and any and all other
deposits, prepayments, guaranties, letters of credit, bonds,
claims and rights of or for the benefit of Canadian Seller
that are used or held for use in, or relate to, in whole or
in part, the Business.
All of the foregoing assets described in SECTION 2.1(A) and this
SECTION 2.1(B), together with the Purchased Contracts and Permits, are
referred to herein collectively as the "PURCHASED ASSETS."
2.2 ASSIGNMENT OF CONTRACTS AND PERMITS.
(a) Subject to the terms and conditions of this Agreement,
at and as of the Closing, U.S. Seller shall assign and transfer
to U.S. Purchaser all of U.S. Seller's right, title and interest
in and to, and U.S. Purchaser shall take assignment of, (i) all
of the Contracts to which U.S. Seller is a party and which relate
to, in whole or in part, other Assets or which are used in or
held for use in, or which relate to, in whole or in part, the
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Business and (ii) all of the Permits of U.S. Seller which relate
to, in whole or in part, other Assets or which are used or held
for use in, or relate to, in whole or in part, the Business and
which are transferable, including the following:
(i) REAL PROPERTY LEASES. The leases to or by U.S.
Seller of real property set forth on SCHEDULE 2.2(A)(I)
(collectively, the "U.S. REAL PROPERTY LEASES");
(ii) PERSONAL PROPERTY LEASES. All leases to or by
U.S. Seller of personal property that relates to, in whole
or in part, other Assets or are used or held for use in, or
relate to, in whole or in part, the Business (collectively,
the "U.S. PERSONAL PROPERTY LEASES"), including the U.S.
Personal Property Leases set forth on SCHEDULE 2.2(A)(II);
(iii) CUSTOMER CONTRACTS. All customer contracts,
equipment leases, purchase orders and other Contracts for
the sale, lease or provision by U.S. Seller of goods or
services or pursuant to which U.S. Seller is granted any
franchise or license to sell, lease or provide goods or
services that relate to, in whole or in part, other Assets
or are used or held for use in, or relate to, in whole or in
part, the Business (collectively, the "U.S. CUSTOMER
CONTRACTS"), including the U.S. Customer Contracts set forth
on SCHEDULE 2.2(A)(III);
(iv) PURCHASE CONTRACTS. All purchase orders and other
Contracts for the purchase by U.S. Seller of goods or
services that relate to, in whole or in part, other Assets
or are (or are to be) used or held for use in, or relate to,
in whole or in part, the Business (collectively, the "U.S.
PURCHASE CONTRACTS");
(v) INTELLECTUAL PROPERTY LICENSES. All agreements for
the license to or by U.S. Seller of any Intellectual
Property that relates to, in whole or in part, other Assets
or is used or held for use in, or relates to, in whole or in
part, the Business (collectively, the "U.S. INTELLECTUAL
PROPERTY LICENSES"), including the U.S. Intellectual
Property Licenses set forth on SCHEDULE 2.2(A)(V);
(vi) OTHER U.S. CONTRACTS. All other Contracts of U.S.
Seller that relate to, in whole or in part, other Assets or
are used or held for use in, or relate to, in whole or in
part, the Business (collectively, the "OTHER U.S.
CONTRACTS"); and
(vii) TRANSFERRED PERMITS. All Permits of U.S.
Seller which relate to, in whole or in part, other Assets or
are used or held for use in, or relate to, in whole or in
part, the Business and which are transferable (collectively,
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the "U.S. TRANSFERRED PERMITS"), including the U.S.
Transferred Permits set forth on SCHEDULE 2.2(A)(VII).
(b) Subject to the terms and conditions of this Agreement,
at and as of the Closing, Canadian Seller shall assign and
transfer to Canadian Purchaser all of Canadian Seller's right,
title and interest in and to, and Canadian Purchaser shall take
assignment of, (i) all of the Contracts to which Canadian Seller
is a party and which relate to, in whole or in part, other Assets
or which are used in or held for use in, or which relate to, in
whole or in part, the Business and (ii) all of the Permits of
Canadian Seller which relate to, in whole or in part, other
Assets or which are used or held for use in, or relate to, in
whole or in part, the Business and which are transferable,
including the following:
(i) REAL PROPERTY LEASES. The leases to or by
Canadian Seller of real property set forth on SCHEDULE
2.2(B)(I) (collectively, the "CANADIAN REAL PROPERTY
LEASES," and together with the U.S. Real Property Leases,
the "REAL PROPERTY LEASES");
(ii) PERSONAL PROPERTY LEASES. All leases to or by
Canadian Seller of personal property that relates to, in
whole or in part, other Assets or are used or held for use
in, or relate to, in whole or in part, the Business
(collectively, the "CANADIAN PERSONAL PROPERTY LEASES," and
together with the U.S. Personal Property Leases, the
"PERSONAL PROPERTY LEASES"), including the Canadian Personal
Property Leases set forth on SCHEDULE 2.2(B)(II);
(iii) CUSTOMER CONTRACTS. All customer contracts,
equipment leases, purchase orders and other Contracts for
the sale, lease or provision by Canadian Seller of goods or
services or pursuant to which Canadian Seller is granted any
franchise or license to sell, lease or provide goods or
services that relate to, in whole or in part, other Assets
or are used or held for use in, or relate to, in whole or in
part, the Business (collectively, the "CANADIAN CUSTOMER
CONTRACTS," and together with the U.S. Customer Contracts,
the "CUSTOMER CONTRACTS"), including the Canadian Customer
Contracts set forth on SCHEDULE 2.2(B)(III);
(iv) PURCHASE CONTRACTS. All purchase orders and other
Contracts for the purchase by Canadian Seller of goods or
services that relate to, in whole or in part, other Assets
or are (or are to be) used or held for use in, or relate to,
in whole or in part, the Business (collectively, the
"CANADIAN PURCHASE CONTRACTS," and together with the U.S.
Purchase Contracts, the "PURCHASE CONTRACTS");
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(v) INTELLECTUAL PROPERTY LICENSES. All agreements
for the license to or by Canadian Seller of any Intellectual
Property that relates to, in whole or in part, other Assets
or is used or held for use in, or relates to, in whole or in
part, the Business (collectively, the "CANADIAN INTELLECTUAL
PROPERTY LICENSES," and together with the U.S. Intellectual
Property Licenses, the "INTELLECTUAL PROPERTY LICENSES"),
including the Canadian Intellectual Property Licenses set
forth on SCHEDULE 2.2(B)(V);
(vi) OTHER CANADIAN CONTRACTS. All other Contracts of
Canadian Seller that relate to, in whole or in part, other
Assets or are used or held for use in, or relate to, in
whole or in part, the Business (collectively, the "OTHER
CANADIAN CONTRACTS," and together with the Other U.S.
Contracts, the "OTHER CONTRACTS"); and
(vii) TRANSFERRED PERMITS. All Permits of Canadian
Seller which relate to, in whole or in part, other Assets or
are used or held for use in, or relate to, in whole or in
part, the Business and which are transferable (collectively,
the "CANADIAN TRANSFERRED PERMITS", and together with the
U.S. Transferred Permits, the "PERMITS"), including the
Canadian Transferred Permits set forth on SCHEDULE
2.2(B)(VII) .
All of the foregoing Contracts and Permits described in SECTION
2.2(A) and this SECTION 2.2(B) are referred to herein collectively as
the "PURCHASED CONTRACTS AND PERMITS." Anything in this Agreement to
the contrary notwithstanding, this Agreement shall not constitute an
agreement to assign any Contract or Permit or any claim or right or
any benefit or obligation thereunder or resulting therefrom if an
assignment thereof, without the consent of a third party thereto,
would constitute a breach or violation thereof and if such a consent
is not obtained at or prior to the Closing, in which case the
provisions of SECTION 6.2 shall apply, provided that this sentence
shall not limit or otherwise affect the terms of SECTIONS 4.3, 5.3 or
8.5.
(a) EXCLUDED ASSETS. Notwithstanding the terms of SECTIONS 2.1
and 2.2, the following assets of a Seller shall be retained by such
Seller, are not being sold or assigned to either Purchaser hereunder
and do not constitute Purchased Assets (all of the following are
referred to herein collectively as the "EXCLUDED ASSETS"):
(a) CASH. All Cash and marketable securities;
(b) EXCLUDED CONTRACTS. All Contracts of a Seller listed
on SCHEDULE 2.3(B) (the "EXCLUDED CONTRACTS");
(c) EMPLOYEE ASSETS. All assets of any Benefit Plan or
related trust;
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(d) ORIGINALS. Originals of a Seller's financial records
and files, records relating solely to Taxes, personnel and labor
relations records and employee benefits and compensation plans
and records;
(e) REAL PROPERTY LEASES. The leases to or by a Seller
of real property set forth on SCHEDULE 2.3(E) (collectively, the
"EXCLUDED REAL PROPERTY LEASES");
(f) ADVANCES TO AFFILIATES AND CERTAIN EMPLOYEES. All
receivables owing to a Seller from (i) Affiliates of either
Seller and (ii) employees of a Seller that do not become Hired
Employees;
(g) CONTRACTS NOT CONFORMING TO THIS AGREEMENT. Unless
Purchasers elect otherwise by notice to Sellers, (i) any Contract
not disclosed pursuant to SECTION 4.14 that should have been
disclosed pursuant thereto and that (A) either (x) requires a
payment after the Closing by any party in excess of, or a series
of payments which in the aggregate exceed, $100,000 or provides
for the delivery of goods or performance of services, or any
combination thereof, after the Closing having a value in excess
of $100,000 or (y) has a term, or requires the performance of any
obligations of a Seller or any other party over a period, in
excess of six (6) months after the Closing and imposes any
material obligation on either Seller or (B) is otherwise material
to the Business and (ii) any Contracts entered into in violation
of SECTION 6.3;
(h) FINANCING AGREEMENTS. All Contracts relating to the
borrowing of funds by a Seller, except for extensions of credit
in the ordinary course of business of the Business for purchases
of goods and services;
(i) ANIXTER TRADEMARK. The trademark "Anixter" and all
derivations thereof;
(j) EMPLOYEE CONTRACTS. All Contracts between a Seller and
any of its officers, directors, employees and consultants,
including all such Contracts relating to the sale of the
Business;
(k) EXCLUDED PERMITS. The Permits of a Seller relating
exclusively to authority to transact business as a foreign or
extra-provincial corporation and similar Permits required
exclusively in connection with the conduct of a Seller's business
generally and not the Business in particular (including taxpayer
and employer identification numbers and accounts);
(l) COLLECTIVE BARGAINING AGREEMENTS. All collective
bargaining Contracts and other union or collective bargaining
unit Contracts;
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(m) OTHER EXCLUDED ASSETS. The assets of a Seller listed on
SCHEDULE 2.3(M);
(n) ACQUISITION AGREEMENTS. Acquisition Agreement, dated
September 2, 1998, between U.S. Seller and Persetel Q Data Holdings
Limited and all Contracts entered into in connection with such
agreement;
(o) CERTAIN CONTRACT RIGHTS. All rights under Purchased
Contracts and Permits (excluding any Permits) to the extent related to
any Excluded Obligations; and
(p) EXCLUDED INFORMATION AND RECORDS. All Information and
Records related exclusively to any of the assets described in SECTIONS
2.3(A) - (O).
2.3 ASSUMED OBLIGATIONS.
(a) At the Closing, U.S. Purchaser shall assume, and agree
to pay, perform, fulfil and discharge, the following obligations
of U.S. Seller:
(i) CONTRACT OBLIGATIONS. The obligations of U.S.
Seller which are required to be performed, and become
performable, after the Closing Date under the Purchased
Contracts and Permits (but not, except as otherwise provided
in SECTION 2.4(A)(IV), any warranty obligations of U.S.
Seller or any liabilities of U.S. Seller in respect of a
breach by U.S. Seller of or default by U.S. Seller under any
of the Purchased Contracts and Permits or any liabilities or
obligations arising on or prior to the Closing Date), to the
extent such Contracts and Permits, and all rights of U.S.
Seller thereunder, are effectively assigned to U.S.
Purchaser on the Closing Date pursuant to SECTION 2.2(A) or
6.2, but excluding any Contract constituting an Excluded
Asset;
(ii) ACCOUNTS PAYABLE. The accounts payable-trade and
accounts payable-sundry (of the types set forth on SCHEDULE
2.4(A)(II)) incurred by U.S. Seller in the ordinary course
of business of the Business which are set forth on (and only
in the amounts set forth on) the Net Working Capital
Statement, excluding, in any event, any accounts payable-
trade and accounts payable-sundry owing by U.S. Seller to an
Affiliate of either Seller;
(iii) ACCRUED EXPENSES. The accrued expenses (of
the types set forth on SCHEDULE 2.4(A)(III)) accrued by U.S.
Seller in the ordinary course of business of the Business
which are set forth on (and only in the amounts set forth
on) the Net Working Capital Statement; and
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(iv) CERTAIN WARRANTIES. Notwithstanding the
limitations in SECTION 2.4(A)(I), the obligations of U.S.
Seller in respect of service warranties arising under U.S.
Customer Contracts, to the extent such U.S. Customer
Contracts, and all rights of U.S. Seller thereunder, are
effectively assigned to U.S. Purchaser on the Closing Date
pursuant to SECTION 2.2(A) or 6.2, but excluding any
Customer Contract constituting an Excluded Asset, PROVIDED,
that neither U.S. Purchaser nor any of its Affiliates shall
assume or otherwise be liable in respect of, or be deemed to
have assumed or otherwise be liable in respect of, (1) any
service warranty obligations relating to any services
performed by U.S. Seller more than 90 days prior to the
Closing Date, (2) any service warranty obligations asserted
more than 90 days after the Closing Date, (3) any service
warranty obligations in an amount in excess of (x) $100,000
with respect to any single service project performed by U.S.
Seller and (y) $1,500,000 (less the amount of service
warranty obligations performed by Canadian Purchaser
pursuant to SECTION 2.4(B)(IV)) in the aggregate (it being
understood that for purposes of this clause (3) the amount
of service warranty obligations shall be calculated as the
price U.S. Purchaser would charge third party customers for
the services needed to perform such obligations and it being
further understood that U.S. Purchaser shall have the sole
discretion to select which service warranty obligations it
shall perform if such obligations exceed the foregoing
limits), (4) liabilities of U.S. Seller (other than the
service warranty obligations assumed pursuant to this
SECTION 2.4(A)(IV)) in respect of a breach by U.S. Seller of
or default by U.S. Seller under any Customer Contract, (5)
any obligation or liability of U.S. Seller relating to the
failure or potential failure of any product or service
provided by U.S. Seller (including any computer software) to
be Year 2000 Compliant or (6) any other product warranty
obligations.
(b) At the Closing, Canadian Purchaser shall assume, and
agree to pay, perform, fulfil and discharge, the following
obligations of Canadian Seller:
(i) CONTRACT OBLIGATIONS. The obligations of Canadian
Seller which are required to be performed, and become
performable, after the Closing Date under the Purchased
Contracts and Permits (but not, except as otherwise provided
in SECTION 2.4(B)(IV), any warranty obligations of Canadian
Seller or any liabilities of Canadian Seller in respect of a
breach by Canadian Seller of or default by Canadian Seller
under any of the Purchased Contracts and Permits or any
liabilities or obligations arising on or prior to the
Closing Date), to the extent such Contracts and Permits, and
all rights of Canadian Seller thereunder, are effectively
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assigned to Canadian Purchaser on the Closing Date pursuant
to SECTION 2.2(B) or 6.2, but excluding any Contract
constituting an Excluded Asset;
(ii) ACCOUNTS PAYABLE. The accounts payable-trade and
accounts payable-sundry (of the types set forth on SCHEDULE
2.4(A)(II)) incurred by Canadian Seller in the ordinary
course of business of the Business which are set forth on
(and only in the amounts set forth on) the Net Working
Capital Statement, excluding, in any event, any accounts
payable-trade and accounts payable-sundry owing by Canadian
Seller to an Affiliate of either Seller;
(iii) ACCRUED EXPENSES. The accrued expenses (of
the types set forth on SCHEDULE 2.4(A)(III)) accrued by
Canadian Seller in the ordinary course of business of the
Business which are set forth on (and only in the amounts set
forth on) the Net Working Capital Statement; and
(iv) CERTAIN WARRANTIES. Notwithstanding the
limitations in SECTION 2.4(B)(I), the obligations of
Canadian Seller in respect of service warranties arising
under Canadian Customer Contracts, to the extent such
Canadian Customer Contracts, and all rights of Canadian
Seller thereunder, are effectively assigned to Canadian
Purchaser on the Closing Date pursuant to SECTION 2.2(B) OR
6.2, but excluding any Customer Contract constituting an
Excluded Asset, PROVIDED, that neither Canadian Purchaser
nor any of its Affiliates shall assume or otherwise be
liable in respect of, or be deemed to have assumed or
otherwise be liable in respect of, (1) any service warranty
obligations relating to any services performed by Canadian
Seller more than 90 days prior to the Closing Date, (2) any
service warranty obligations asserted more than 90 days
after the Closing Date, (3) any service warranty obligations
in an amount in excess of (x) $100,000 with respect to any
single service project performed by Canadian Seller and
(y) $1,500,000 (less the amount of service warranty
obligations performed by U.S. Purchaser pursuant to SECTION
2.4(A)(IV)) in the aggregate (it being understood that for
purposes of this clause (3) the amount of service warranty
obligations shall be calculated as the price Canadian
Purchaser would charge third party customers for the
services needed to perform such obligations and it being
further understood that Canadian Purchaser shall have the
sole discretion to select which service warranty obligations
it shall perform if such obligations exceed the foregoing
limits), (4) liabilities of Canadian Seller (other than the
service warranty obligations assumed pursuant to this
SECTION 2.4(B)(IV)) in respect of a breach by Canadian
Seller of or default by Canadian Seller under any Customer
Contract, (5) any obligation or liability of Canadian Seller
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relating to the failure or potential failure of any product
or service provided by Canadian Seller (including any
computer software) to be Year 2000 Complaint or (6) any
other product warranty obligations.
All of the foregoing obligations described in SECTION 2.4(A) and
this SECTION 2.4(B) are referred to herein collectively as the
"ASSUMED OBLIGATIONS."
2.4 NO OTHER LIABILITIES ASSUMED. Anything in this Agreement to
the contrary notwithstanding, except as specifically set forth in
SECTION 2.4 or SECTION 6.2, neither Purchasers nor any of their
respective Affiliates shall assume or otherwise be liable in respect
of, or be deemed to have assumed or otherwise be liable in respect of,
any debt, claim, obligation or other liability of a Seller or any of
its Affiliates whatsoever, including (i) any obligation or liability
of a Seller or any of its Affiliates relating to the failure of any
product or service provided by such Seller or Affiliate (including any
computer software) to be Year 2000 Compliant and (ii) all obligations
and liabilities for Taxes of a Seller or any of its Affiliates, to the
extent not included on the Net Working Capital Statement
(collectively, the "EXCLUDED OBLIGATIONS").
ARTICLE III
PURCHASE PRICE AND PAYMENT
3.1 PAYMENT OF PURCHASE PRICE. On the Closing Date, in
consideration for the sale of the Purchased Assets by each Seller,
Purchasers shall (a) assume the Assumed Obligations as provided in
SECTION 2.4 and (b) pay an aggregate purchase price (as it may be
adjusted pursuant to SECTION 3.2, the "PURCHASE PRICE") of Two Hundred
Million Dollars ($200,000,000) as follows: (i) U.S. Purchaser shall
pay to U.S. Seller One Hundred Eighty Five Million Dollars
($185,000,000), less (1) the Holdback Amount and less or plus (2) the
net amount of prorations owing to or payable by U.S. Purchaser
pursuant to SECTION 3.3 (to the extent ascertainable on or prior to
the Closing Date), payable to U.S. Seller by electronic transfer to
such account or accounts as U.S. Seller shall specify to U.S.
Purchaser in writing prior to the Closing Date and (ii) Canadian
Purchaser shall pay to Canadian Seller Fifteen Million Dollars
($15,000,000), less or plus the net amount of prorations owing to or
payable by Canadian Purchaser pursuant to SECTION 3.3 (to the extent
ascertainable on or prior to the Closing Date), payable to Canadian
Seller by electronic transfer to such account or accounts as Canadian
Seller shall specify to Canadian Purchaser in writing prior to the
Closing Date.
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3.2 ADJUSTMENT TO PURCHASE PRICE.
(a) As soon as practicable, but within 60 days after the
Closing Date, Sellers and Sellers' Accountants shall prepare and
deliver to Purchasers a statement of Net Working Capital (the
"NET WORKING CAPITAL STATEMENT") as at the close of business on
the Closing Date, setting forth the Current Assets, Current
Liabilities and Net Working Capital as at such date, determined
in accordance with GAAP applied on a basis consistent with the
Business Financial Statements and converting Canadian dollars to
United States Dollars at the exchange rate as of the Closing Date
as quoted in The Wall Street Journal, Final Eastern Edition, on
the Closing Date, except that assets (such as non-transferable
utility deposits, non-refundable prepaid insurance premiums and
similar assets) which cannot be fully transferred to a Purchaser
at the Closing, or the benefits of which cannot be made available
to a Purchaser pursuant to SECTION 6.2, shall not be included in
the Current Assets or otherwise reflected on the Net Working
Capital Statement. EXHIBIT 3.2(A) provides an example of the
calculation of Net Working Capital as at the close of business on
October 2, 1998. The Net Working Capital Statement shall be
certified as presenting fairly the Net Working Capital,
determined in accordance with GAAP consistently applied, by the
Chief Financial Officer of each Seller and by Sellers'
Accountants. In connection with the preparation of the Net
Working Capital Statement, Sellers and Sellers' Accountants shall
take a physical inventory of all of the Inventory as of the close
of business on the day prior to the Closing Date, and Purchasers
and Purchasers' Accountants shall be entitled to observe such
physical inventory at each location at which it is conducted.
(b) Upon receipt of the Net Working Capital Statement,
Purchasers and Purchasers' Accountants shall have a period of 30
days to review such Net Working Capital Statement and propose any
adjustments thereto. If Purchasers propose no adjustments within
such period, the Net Working Capital Statement will become final
and binding. All adjustments proposed by Purchasers shall be set
out in a written statement delivered to Sellers and shall be
incorporated into the Net Working Capital Statement, and the Net
Working Capital Statement as so modified shall become final and
binding, except as to those proposed adjustments as to which
Sellers shall object in writing within 15 days of delivery by
Purchasers of such proposed adjustments. If Sellers do object in
writing within 15 days to any such proposed adjustment (the
proposed adjustment or adjustments to which Sellers object are
referred to herein as the "CONTESTED ADJUSTMENTS"), Sellers and
Purchasers shall use reasonable efforts to resolve their dispute
regarding the Contested Adjustments, but if a final resolution
thereof is not obtained within 10 days after Sellers deliver to
Purchasers Sellers' written objection to the Contested
Adjustments, Sellers and Purchasers shall promptly retain KPMG
Peat Marwick LLP or another nationally recognized independent
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accounting firm acceptable to both Sellers and Purchasers (the
"INDEPENDENT ACCOUNTANTS") to resolve any remaining disputes
concerning the Contested Adjustments to the Net Working Capital
Statement. Either Sellers or Purchasers may retain the
Independent Accountants on behalf of Sellers and Purchasers upon
the expiration of such 10-day period, except that if the
Independent Accountants are other than KPMG Peat Marwick LLP, the
written agreement of both Sellers and Purchasers shall be
required to retain the Independent Accountants. If Independent
Accountants are retained, then Sellers and Purchasers shall each
submit to the Independent Accountants in writing within 15 days
after the Independent Accountants are retained their respective
proposals with respect to the Contested Adjustments, together
with such supporting documentation as they deem necessary or as
the Independent Accountants request (provided that if any
documentation requested by the Independent Accountants cannot be
obtained by either Sellers or Purchasers within such 15-day
period (acting in good faith and in a diligent manner), then such
15-day period shall be extended for such period of time as is
reasonably necessary for such information to be obtained). The
Independent Accountants shall be instructed to resolve such
disputes within 30 days after receiving the proposals of both
Sellers and Purchasers and all supplementary supporting
documentation requested by the Independent Accountants. The
resolution of disputes by the Independent Accountants shall be
set forth in writing and shall be final and binding upon Sellers
and Purchasers. The Net Working Capital Statement, as modified
by agreement of Sellers and Purchasers or by such resolution of
disputes by the Independent Accountants, shall become final and
binding upon the date of such agreement or resolution. The fees
and expenses of the Independent Accountants shall be apportioned
by the Independent Accountants based on the degree to which
Purchasers' and Sellers' claims were unsuccessful and shall be
paid by the parties in accordance with the determination. For
example, if pursuant to this SECTION 3.2(b), Sellers submitted an
objection affecting the Purchase Price in the amount of $100,000
and prevailed as to 45% of the amount, then Sellers would bear
55% of the fees and expenses of the Independent Accountants.
(c) Within five (5) Business Days after the Net Working
Capital Statement has become final and binding upon both Sellers
and Purchasers pursuant to SECTION 3.2(b), (i) if the Net Working
Capital as shown on the Net Working Capital Statement is less
than $85 million (the amount by which the Net Working Capital as
shown on the Net Working Capital Statement is less than $85
million being the "NET WORKING CAPITAL SHORTFALL AMOUNT"), then
the Purchase Price shall be reduced by the Net Working Capital
Shortfall Amount, U.S. Purchaser shall retain the amount of such
reduction from the Holdback Amount and U.S. Purchaser shall pay
to U.S. Seller the Holdback Amount less the amount of such
reduction, PROVIDED that if such reduction exceeds the Holdback
Amount, U.S. Purchaser shall retain all of the Holdback Amount
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and U.S. Seller shall pay to U.S. Purchaser the amount of such
excess, (ii) if the Net Working Capital as shown on the Net
Working Capital Statement is greater than $95 million (the amount
by which the Net Working Capital as shown on the Net Working
Capital Statement is greater than $95 million being the "NET
WORKING CAPITAL EXCESS AMOUNT"), then the Purchase Price shall be
increased by the Net Working Capital Excess Amount, and U.S.
Purchaser shall pay to U.S. Seller the Holdback Amount plus the
Net Working Capital Excess Amount and (iii) if, based on the Net
Working Capital Statement, there is neither a Net Working Capital
Shortfall Amount nor a Net Working Capital Excess Amount, U.S.
Purchaser shall pay to U.S. Seller the Holdback Amount and the
Purchase Price shall not be adjusted pursuant to this
SECTION 3.2. Any amounts payable under this SECTION 3.2(c) shall
(x) be made by electronic transfer of immediately available funds
to such account or accounts as the party being paid shall specify
to the paying party and (y) bear interest from the Closing Date
through the date of payment at the three-month London interbank
offered rate as in effect on the Closing Date and reported in The
Wall Street Journal (such interest rate to be adjusted on each
date falling three (or a multiple of three) months after the
Closing Date to equal the three-month London interbank offered
rate then in effect).
(d) In addition to the payment contemplated by SECTION
3.2(c), within five (5) Business Days after the Net Working
Capital Statement has become final and binding upon Sellers and
Purchasers pursuant to SECTION 3.2(B), U.S. Seller shall pay to
U.S. Purchaser the amount, which amount shall constitute a
reduction in the Purchase Price equal to (i) two percent (2%) of
the Accounts Receivable set forth on the Net Working Capital
Statement less (ii) the amounts owing after the Closing in
respect of payments to six former employees of U.S. Seller as
described on SCHEDULE 3.2(D).
(e) Any adjustment made to the Purchase Price pursuant to
this SECTION 3.2 shall be appropriately allocated between the
portion of the Purchase Price payable to U.S. Seller and the
portion of the Purchase Price payable to Canadian Seller
consistent with the allocation schedule referred to in SECTION
3.4.
3.3 PRORATIONS.
(a) U.S. Seller and U.S. Purchaser agree that all of the
items listed below relating to the Business and the Purchased
Assets will be prorated as of the Closing Date to the extent that
such items are not otherwise covered in the Net Working Capital
Statement, with U.S. Seller liable or entitled to the extent such
items relate to any time period up to and including the Closing
Date and U.S. Purchaser liable or entitled to the extent such
items relate to periods subsequent to the Closing Date:
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(i) Personal property, real estate, occupancy and
other Taxes, if any, payable by U.S. Seller or U.S.
Purchaser with respect to the Purchased Assets;
(ii) Rents, Taxes, royalties and other items which in
any case are payable periodically by or to U.S. Seller or
U.S. Purchaser under any of the U.S. Real Property Leases,
Personal Property Leases or Intellectual Property Licenses;
(iii) The amount of any fees and charges which in any
case are payable periodically by U.S. Seller or U.S.
Purchaser pursuant to any of the Contracts set forth on
SCHEDULE 3.3(A)(III);
(iv) The amount of any fees and charges which in any
case are payable periodically to U.S. Seller or U.S.
Purchaser pursuant to any of the Contracts set forth on
SCHEDULE 3.3(A)(IV);
(v) The amount of any fees or charges which in any
case are payable by U.S. Seller or U.S. Purchaser
periodically with respect to any of the Transferred Permits;
and
(vi) The amount of sewer rents and charges for water,
electricity and other utilities and fuel.
Each of U.S. Seller and U.S. Purchaser agrees to furnish the
other with such documents and other records as the other
reasonably requests in order to confirm all adjustment and
proration calculations made pursuant to this SECTION 3.3(a).
Final payments with respect to prorations contemplated by this
SECTION 3.3(a) that are not ascertainable on or before the
Closing Date shall be settled between the parties as soon as
practicable after they are ascertainable.
(b) Canadian Seller and Canadian Purchaser agree that all
of the items listed below relating to the Business and the
Purchased Assets will be prorated as of the Closing Date to the
extent that such items are not otherwise covered in the Net
Working Capital Statement, with Canadian Seller liable or
entitled to the extent such items relate to any time period up to
and including the Closing Date and Canadian Purchaser liable or
entitled to the extent such items relate to periods subsequent to
the Closing Date:
(i) Personal property, real estate, occupancy and
other Taxes, if any, payable by Canadian Seller or Canadian
Purchaser with respect to the Purchased Assets;
(ii) Rents, Taxes, royalties and other items which in
any case are payable periodically by or to Canadian Seller
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or Canadian Purchaser under any of the Canadian Real
Property Leases, Personal Property Leases or Intellectual
Property Licenses;
(iii) The amount of any fees and charges which in any
case are payable periodically by Canadian Seller or Canadian
Purchaser pursuant to any of the Contracts set forth on
SCHEDULE 3.3(B)(III);
(iv) The amount of any fees and charges which in any
case are payable periodically to Canadian Seller or Canadian
Purchaser pursuant to any of the Contracts set forth on
SCHEDULE 3.3(B)(IV);
(v) The amount of any fees or charges which in any
case are payable by Canadian Seller or Canadian Purchaser
periodically with respect to any of the Transferred Permits;
and
(vi) The amount of sewer rents and charges for water,
electricity and other utilities and fuel.
Each of Canadian Seller and Canadian Purchaser agrees to furnish
the other with such documents and other records as the other
reasonably requests in order to confirm all adjustment and
proration calculations made pursuant to this SECTION 3.3(B).
Final payments with respect to prorations contemplated by this
SECTION 3.3(B) that are not ascertainable on or before the
Closing Date shall be settled between the parties as soon as
practicable after they are ascertainable.
3.4 ALLOCATION OF CONSIDERATION. The aggregate consideration
for the Purchased Assets, being the amount of the Assumed Obligations
(but only to the extent that such Assumed Obligations constitute a
liability for federal income Tax purposes) plus the Purchase Price for
the Purchased Assets, shall be allocated among the Purchased Assets in
accordance with SECTION 1060 of the Code and the regulations
promulgated thereunder in respect of the assets purchased by U.S.
Purchaser, and as reasonably agreed to by the parties in respect of
the assets purchased by Canadian Purchaser, in each case as evidenced
by a schedule prepared by Purchasers (in reasonable cooperation with
Sellers) and delivered to Sellers prior to the latest of (i) one-
hundred-twenty (120) days after the Closing Date, (ii) five (5)
Business Days after the Net Working Capital Statement has become final
and binding upon Sellers and Purchasers pursuant to SECTION 3.2(B),
and (iii) thirty (30) days after Purchasers obtain an independent
appraisal of the fair market value of the Purchased Assets, if such
appraisal is commenced within 120 days after the Closing Date and
obtained within six (6) months after the Closing Date. Such allocation
shall contain separate schedules for Purchased Assets sold by U.S.
Seller and Canadian Seller. Following the Closing, Purchasers and
Sellers and their respective Affiliates, in connection with their
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respective U.S. and Canadian federal, state, provincial, territorial,
municipal or local and foreign income Taxes and Tax Returns (including
Internal Revenue Service Form 8594), shall not take any position
inconsistent with such allocation. Any adjustment to the Purchase
Price shall be allocated as provided by Temp. Treas. Reg. Section
1.1060-1T(f) in respect of the assets purchased by U.S. Purchaser,
and as reasonably agreed to by the parties in respect of the assets
purchased by the Canadian Purchaser.
3.5 CANADIAN TAX ELECTION. Canadian Purchaser and Canadian
Seller shall , assuming that Canadian Purchaser and Canadian Seller
jointly determine that such an election is available under applicable
Law based on a reasonable review of the relevant facts, execute
jointly an election in prescribed form under SECTION 22 of the INCOME
TAX ACT (Canada) and the corresponding provisions of any other
applicable Tax Law, in respect of the Canadian Seller's Accounts
Receivable and shall file such election with their respective income
Tax Returns for their respective taxation years that include the
Closing.
3.6 COLLECTION OF ACCOUNTS RECEIVABLE.
(a) Purchasers agree to use reasonable commercial efforts
to collect the Accounts Receivable which are sold by Sellers to
Purchasers on the Closing Date (such Accounts Receivable being
the "PURCHASED RECEIVABLES" and the aggregate amount of the
Purchased Receivables on the Closing Date being the "CLOSING DATE
PURCHASED RECEIVABLES AMOUNT"). If either Purchaser, in its sole
discretion, determines that a Purchased Receivable is not readily
collectible then such Purchaser may place the Purchased
Receivable for collection with a third party.
(b) If any Purchased Receivables have not been collected in
full (either through (i) the receipt of cash, (ii) return of
goods (within the contractual rights of a customer or otherwise
accepted by a Purchaser, it being understood and agreed that such
return of goods shall be counted as collections only to the
extent of the net realizable value of such goods) or (iii) vendor
credit (it being understood that Purchasers shall exercise
reasonable efforts to obtain vendor credits, but not through
counterclaim or set-off not accepted by the vendor) by the close
of business on the first anniversary of the Closing Date (such
uncollected Purchased Receivables being the "OUTSTANDING
PURCHASED RECEIVABLES"), Purchasers will (within 30 days after
such first anniversary) provide Sellers with a notice identifying
each such Outstanding Purchased Receivable and setting forth the
aggregate amount of such Outstanding Purchased Receivables (such
amount being the "FIRST ANNIVERSARY PURCHASED RECEIVABLES
AMOUNT"). In preparing such notice of Outstanding Purchased
Receivables, Purchasers will take into account all partial
collections of Purchased Receivables. If a Purchaser has placed
a Purchased Receivable for collection with a third party, only
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eighty percent (80%) of the net amount actually collected by
Purchasers in respect of such Purchased Receivable shall be
deemed collected for purposes of calculating the amount of
Outstanding Purchased Receivables.
(c) Purchasers shall make available to Sellers, and Sellers
will have thirty (30) days to review, the collection records for
any Purchased Receivable included in the notice of Outstanding
Purchased Receivables. Promptly following the review period,
Sellers will pay to Purchasers the amount equal to the First
Anniversary Purchased Receivables Amount LESS (i) 3% of the
Closing Date Purchased Receivables Amount and LESS (ii) the
lesser of (x) one-half of the amount by which the First
Anniversary Purchased Receivables Amount exceeds 3% of the
Closing Date Purchased Receivables Amount and (y) one-half of 1%
of the Closing Date Purchased Receivables Amount (the amount to
be so paid by Sellers being the "FIRST ANNIVERSARY PAYMENT").
(d) If Purchasers collect any Outstanding Purchased
Receivables after Sellers have paid to Purchasers the First
Anniversary Payment, Purchasers will reimburse Sellers for all or
a portion of the First Anniversary Payment by paying to Sellers,
from amounts so collected by Purchasers, (i) all amounts so
collected by Purchasers until the aggregate remaining outstanding
amount of Outstanding Purchased Receivables equals four percent
(4%) of the Closing Date Purchased Receivables Amount and
thereafter (ii) one-half of all amounts so collected by
Purchasers until the aggregate amount of Outstanding Purchased
Receivables equals three percent (3%) of the Closing Date
Purchased Receivables Amount; PROVIDED, that Purchasers shall not
be required to make such reimbursement payments with respect to
collections on any Outstanding Purchased Receivable of $250,000
or less (determined as of the close of business on the second
anniversary of the Closing Date) that are received after the
second anniversary of the Closing Date. Purchasers agree to
provide Sellers with such information as Sellers may reasonably
request from time to time to determine the status of collections
and collection efforts with respect to the Outstanding Purchased
Receivables. All payments between Sellers and Purchasers
pursuant to this SECTION 3.6 shall be treated by Sellers and
Purchasers as an adjustment to the Purchase Price.
3.7 GST/QST ELECTIONS. On or before the Closing Date, Canadian
Seller and Canadian Purchaser shall execute jointly an election under
section 167 of the EXCISE TAX ACT (Canada) to have the sale of the
Purchased Assets take place on a GST-free basis under Part IX of the
EXCISE TAX ACT (Canada) and shall execute jointly an election under
section 75 of the QUEBEC SALES TAX ACT to have the sale of the
Purchased Assets take place on a QST-free basis under the QUEBEC SALES
TAX ACT and Canadian Purchaser shall file such elections with its GST
and QST returns for the reporting period in which the sale of the
Purchased Assets takes place.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLERS
Sellers, jointly and severally, represent and warrant to
Purchasers as follows:
4.1 DUE INCORPORATION, ETC.
(a) U.S. Seller is a corporation duly organized, validly
existing and in good standing under the laws of the State of
Delaware, with all requisite corporate power and authority to
own, lease and operate its properties and to carry on the
Business as they are now owned, leased, operated and carried on.
U.S. Seller is licensed or qualified to do business and is in
good standing as a foreign corporation in each jurisdiction where
the nature of the properties owned, leased or operated by it and
the businesses transacted by it require such licensing or
qualification. Except for Canadian Seller, no assets used or
held for use in the Business are owned by or held through any
subsidiary or other Affiliate of U.S. Seller. All of the issued
and outstanding voting capital stock of U.S. Seller is owned by
Sellers' Parent.
(b) Canadian Seller is a corporation duly organized,
validly existing and in good standing under the laws of Canada,
with all requisite corporate power and authority to own, lease
and operate its properties and to carry on the Business as they
are now owned, leased, operated and carried on. Canadian Seller
is licensed or qualified to do business and is in good standing
as an extra-provincial corporation in each jurisdiction where the
nature of the properties owned, leased or operated by it and the
businesses transacted by it require such licensing or
qualification. Except for U.S. Seller, no assets used or held
for use in the Business are owned by or held through any
subsidiary or other Affiliate of Canadian Seller. All of the
issued and outstanding voting capital stock of Canadian Seller is
owned by U.S. Seller.
(c) Sellers' Parent is a corporation duly organized,
validly existing and in good standing under the laws of the State
of Delaware, with all requisite corporate power and authority to
own, lease and operate its properties and to carry on its
business as they are now owned, leased, operated and carried on.
4.2 DUE AUTHORIZATION. Each Seller Party has full power and
authority to execute, deliver and perform this Agreement and its
Related Agreements and to consummate the transactions contemplated
hereby and thereby. The execution, delivery and performance by each
Seller Party of this Agreement and its Related Agreements and the
consummation by each Seller Party of the transactions contemplated
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hereby and thereby have been duly and validly approved by each Seller
Party's board of directors and, to the extent required by applicable
Law, by the stockholders of each Seller Party and each Affiliate of
each Seller Party entitled to vote thereon, and no other actions or
proceedings on the part of any Seller Party are necessary to authorize
the execution, delivery and performance by each Seller Party of this
Agreement, its Related Agreements or the transactions contemplated
hereby and thereby. Each Seller Party has duly and validly executed
and delivered this Agreement and has duly and validly executed and
delivered (or prior to or at the Closing will duly and validly execute
and deliver) its Related Agreements. This Agreement constitutes a
legal, valid and binding obligation of each Seller Party, and each
Seller Party's Related Agreements upon execution and delivery by such
Seller Party will constitute legal, valid and binding obligations of
such Seller Party, in each case, enforceable in accordance with their
respective terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, moratorium, reorganization or
similar laws in effect which affect the enforcement of creditors'
rights generally, by equitable limitations on the availability of
specific remedies and by principles of equity. Canadian Seller is not
an insolvent person within the meaning of the Bankruptcy and
Insolvency Act (Canada) and will not become an insolvent person as a
result of the transactions contemplated hereby or by its Related
Agreements.
4.3 CONSENTS AND APPROVALS; NO CONFLICTS, ETC.
(a) Except for the consents set forth on SCHEDULE 4.3 (the
"SELLERS' CONSENTS"), no consent, authorization or approval of,
filing or registration with, or waiver of any right of first
refusal or first offer from, any Governmental Authority or any
other Person not a party to this Agreement is necessary in
connection with the execution, delivery and performance by each
Seller Party of this Agreement and its Related Agreements or the
consummation by each Seller Party of the transactions
contemplated hereby or thereby.
(b) Except as set forth on SCHEDULE 4.3, the execution,
delivery and performance by each Seller Party of this Agreement
and its Related Agreements and the consummation by each Seller
Party of the transactions contemplated hereby and thereby do not
and will not (i) violate any Law applicable to a Seller Party,
the Business or any of the Assets; (ii) violate or conflict with,
result in a breach or termination of, constitute a default or
give any third party any additional right (including a
termination right) under, permit cancellation of, result in the
creation of any Lien upon any of the Assets under, or result in
or constitute a circumstance which, with or without notice or
lapse of time or both, would constitute any of the foregoing
under, any of the Permits or any Contract to which a Seller Party
is a party or by which a Seller Party or any of its assets are
bound; (iii) permit the acceleration of the maturity of any
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indebtedness of any Seller Party or indebtedness secured by any
of the Assets; or (iv) violate or conflict with any provision of
any of the articles of incorporation, bylaws or similar
organizational instruments of any Seller Party.
4.4 FINANCIAL STATEMENTS; NO UNDISCLOSED LIABILITIES.
(a) Attached hereto as SCHEDULES 4.4(A) are true, accurate
and complete copies of the Business Financial Statements. The
Business Financial Statements present fairly, in all material
respects, and fully the combined financial position of the
Business as of the dates thereof and the results of operations
and cash flows of the Business for the periods covered thereby,
in each case in conformity with GAAP applied consistently during
such periods in accordance with the past accounting practices of
Sellers, except (i) as set forth in the footnotes thereto or on
SCHEDULE 4.4(A), (ii) any unaudited financial statements included
in the Business Financial Statements are subject to normal year-
end audit adjustments consistent with past accounting practices
and the audited financial statements of the Business as of
January 2, 1998 and made in conformance with GAAP and (iii) the
unaudited Business Financial Statements do not contain notes as
required by GAAP.
(b) To the Knowledge of Sellers, there are no material
liabilities, debts, obligations or claims (including pending
claims and potential claims), whether accrued, absolute,
contingent or otherwise (including "off balance sheet"
liabilities), whether due or to become due, that relate to the
Business or the Assets, except for any such liabilities, debts,
obligations or claims (i) set forth in the balance sheets
included in the Business Financial Statements, (ii) disclosed on
SCHEDULE 4.4(B) or any other Schedule to this Agreement,
(iii) that have arisen in the ordinary course of business of the
Business under Contracts not required to be set forth on
SCHEDULE 4.14 or (iv) that have arisen in the ordinary course of
business of the Business and are substantially the same type and
size as have historically arisen in the ordinary course of
business of the Business.
(c) The Business Financial Statements are in
accordance with the books and records of Sellers and do not
reflect any transactions that are not bona fide transactions.
4.5 NO ADVERSE EFFECTS OR CHANGES. Except as set forth
on SCHEDULE 4.5, since January 2, 1998, each Seller has conducted the
Business in all respects only in the ordinary course and consistent
with past practices. Without limiting the foregoing, except as set
forth on SCHEDULE 4.5, since January 2, 1998, neither Seller has with
respect to the Business or the Assets:
(a) suffered any Material Adverse Change;
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(b) suffered any material damage, destruction or loss to
any of its assets (whether or not covered by insurance);
(c) taken any action, or entered into or authorized any
Contract or transaction or any amendment or modification to any
Contract or transaction, other than in the ordinary course of
business of the Business and consistent with past practice;
(d) sold, transferred, conveyed, assigned or otherwise
disposed of any of its assets having a fair market value in
excess of $20,000 individually or $125,000 in the aggregate,
except sales of inventory in the ordinary course of business of
the Business and consistent with past practice;
(e) acquired or leased any assets, other than in the
ordinary course of business of the Business and consistent with
past practice;
(f) waived, released or cancelled any claims against third
parties or debts owing to it or any rights which have any value,
other than in the ordinary course of business of the Business and
consistent with past practice;
(g) made any changes in its accounting systems, policies,
principles or practices;
(h) made any borrowing, incurred any debt (other than trade
payables in the ordinary course of business of the Business and
consistent with past practice) or assumed, guaranteed, endorsed
(except for the negotiation or collection of negotiable
instruments in transactions in the ordinary course of business of
the Business and consistent with past practice) or otherwise
become liable (whether directly, contingently or otherwise) for
the obligations of any other Person, or made any payment or
repayment in respect of any indebtedness (other than trade
payables and accrued expenses in the ordinary course of business
of the Business and consistent with past practice);
(i) suffered or permitted the creation of any Lien over any
of the Assets other than in the ordinary course of business of
the Business and consistent with past practice;
(j) made any loan, advance or capital contribution to, or
investment in, any other Person, except extensions of credit to
customers and travel advances and relocation loans to employees,
in each case in the ordinary course of business of the Business
and consistent with past practice;
(k) entered into, adopted, amended or terminated any bonus,
profit sharing, compensation, termination, stock option, stock
appreciation right, restricted stock, performance unit, pension,
retirement, deferred compensation, employment, severance or other
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employee benefit agreement, trust, plan, fund or other
arrangement for the benefit or welfare of any director, officer,
consultant or employee, or increased in any manner the
compensation or fringe benefits of any director, officer,
consultant or employee other than increases in the ordinary
course of business of the Business and consistent with past
practices or paid any benefit not required by any existing plan
and arrangement or entered into any Contract or arrangement to do
any of the foregoing;
(l) made any Tax election or settled or compromised any
federal, state, provincial, territorial, municipal, local or
foreign Tax liability, or waived or extended (i) the statute of
limitations, or (ii) in the case of Canada, the period of time
during which a Governmental Authority is permitted to reassess
Taxes, interest or penalties, in respect of any such Taxes if
such election, settlement or other action referred to in this
clause (l) would bind a Purchaser or otherwise affect the value
of the Purchased Assets or the Business;
(m) paid any amount, performed any obligation or agreed to
pay any amount or perform any obligation, in settlement or
compromise of any suits or claims of liability against it, or any
of its respective directors, officers, employees or agents,
except for any payment to or performance for the benefit of
customers of or vendors to the Business in the ordinary course of
business of the Business and consistent with past practice;
(n) made any payments to customers or vendors other than as
required by Law or any Contract, nor made any gifts or charitable
contributions (other than gifts and charitable contributions in
the ordinary course of business of the Business and consistent
with past practice and not in excess of $50,000 in the
aggregate);
(o) terminated the employment of or transferred to any of
its respective Affiliates any of its employees who devoted a
majority of his or her working time to the Business and who
received annual base compensation of $50,000 or more during the
12 months immediately prior to such termination or transfer;
(p) entered into any transaction or arrangement of any kind
with any Affiliate of either Seller, or any director, officer or
employee of either Seller or any of the respective Affiliates of
such individuals, other than in the ordinary course of business
of the Business and consistent with past practice;
(q) solicited an order from, or sold or leased products or
provided services to, any customer other than in the ordinary
course of business of the Business, the result of which would be
to decrease purchases by such customer subsequent to the Closing
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from amounts which such customer would otherwise have purchased
in the ordinary course; or
(r) other than as will be reflected as deferred revenues on
the Net Working Capital Statement, sold or leased any products,
or provided services, so as to give a Purchaser the obligation to
deliver any such products or provide such services and so as to
give either Seller the right to any cash, account receivable or
other consideration arising from such sale or lease.
4.6 TITLE AND SUFFICIENCY OF ASSETS.
(a) Except as set forth on SCHEDULE 4.6, Sellers have good
and marketable title to, and are the lawful owners of, the
Purchased Assets, free and clear of any Lien. Subject to the
receipt of the Sellers' Consents, Sellers have the full right to
sell, convey, transfer, assign and deliver the Purchased Assets
to Purchasers, and, at and as of the Closing, Sellers will convey
the Purchased Assets to Purchasers by bills of sale, certificates
of title and instruments of assignment and transfer effective to
vest in Purchasers good and marketable title to all of the
Purchased Assets, free and clear of all Liens.
(b) The Assets constitute all the assets, properties and
rights (except for the Excluded Assets) that are currently used,
or held for use, by Sellers in connection with, or that are
required for, the conduct of the Business as it is presently
conducted and has been conducted since January 2, 1998.
4.7 CONDITION OF ASSETS. Except as set forth on SCHEDULE 4.7,
all of the tangible Assets, whether real or personal, owned or leased,
have been well maintained and are in good operating condition and
repair (with the exception of normal wear and tear), and, assuming
such tangible Assets are maintained after the Closing in accordance
with the manufacturer's maintenance schedules, neither Seller is aware
of any reasonably likely to occur condition or event that could
reasonably be expected to result in any Asset not being in good
operating condition and repair prior to the first anniversary of the
Closing Date.
4.8 INVESTMENT CANADA ACT. Canadian Seller is a "WTO Investor"
for purposes of the Investment Canada Act and the regulations
thereunder and the value of the Assets, calculated for purposes of
SECTION 14.1(2) of the Investment Canada Act and the regulations
thereunder, does not exceed Cdn. $184 million.
4.9 LEASED PROPERTY.
(a) SCHEDULE 4.9 sets forth a true, accurate and complete
list of all of the leases of real property to which a Seller is a
party and which provide for the lease to or by a Seller of any
real property used or held for use in, or related to, in whole or
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in part, the Business (all such real property leased to a Seller,
collectively, the "LEASED PROPERTY") and the street addresses and
current uses of all of the Leased Property. Sellers have
delivered to Purchasers or made available to Purchasers at
Sellers' due diligence room at the executive offices of Sellers'
Parent in Skokie, Illinois true, correct and complete copies of
the Real Property Leases and all amendments and modifications
thereof. None of the real property used or held for use in, or
related to, in whole or in part, the Business is owned by a
Seller or any of its Affiliates. To the Knowledge of Sellers,
there are no easements, rights of way and similar interests of a
Seller and its Affiliates used or held for use in, or related to,
in whole or in part, the Business. The Leased Property
constitutes all of the land, other real property and real
property interests which are used or held for use by Sellers in,
or related to, in whole or in part, the Business. Sellers have
delivered or made available to Purchasers at Sellers' due
diligence room at the executive offices of Sellers' Parent in
Skokie, Illinois true, accurate and complete copies of all
material reports (if any) of any insurance companies, engineers,
environmental consultants, insurance consultants or other
consultants in the possession of either Seller or any of its
respective Affiliates relating to any of the Leased Property.
(b) To the Knowledge of Sellers, the activities carried on
at the Leased Property and the activities carried on by a Seller
in all buildings, plants, facilities, installations, fixtures and
other structures or improvements included as part of the Leased
Property or otherwise used by a Seller and, with respect to each
Critical Property, the buildings, plants, facilities,
installations, fixtures and other structures or improvements
themselves, are not in violation of, or in conflict with, any
applicable zoning, building or health regulations or ordinance or
any other similar Law (other than Environmental Laws, which are
covered by SECTION 4.22). Any operations on or uses of the Leased
Property that constitute non-conforming operations or uses are
legal non-conforming operations or uses which have been conducted
with sufficient continuity so as to preserve the right to
continue the existing operations and uses and any similar
operations and uses for the Leased Property in the Business in
the future.
(c) The Leased Property has adequate parking and is
adequately serviced by all utilities necessary for the effective
operation of the Business and has not, since January 2, 1998,
experienced any material interruption in the delivery of adequate
quantities of any utilities (including electricity, natural gas,
potable water, water for cooling or similar purposes and fuel
oil) or other public services (including sanitary and storm sewer
services) required to operate the Business.
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(d) To the Knowledge of Sellers, no Leased Property is
subject to any Lien, easement, right-of-way, building or use
restriction, exception, variance, reservation, special permit or
limitation or is a non-conforming operation or use, as might in
any material respect interfere with or impair the present and
continued use thereof in the usual and normal conduct of the
Business.
(e) Except as set forth on SCHEDULE 4.9, to the Knowledge
of Sellers, there is no pending, threatened or proposed
proceeding or governmental action to modify the zoning
classification of, or to condemn or take by the power of eminent
domain (or to purchase in lieu thereof), or to classify as a
landmark, or to impose special assessments on, or otherwise to
take or restrict in any way the right to use, develop or alter,
all or any part of the Leased Property. All special assessments
imposed on the Leased Property have been paid.
(f) Except as set forth on SCHEDULE 4.9, no work has been
performed or is in progress at, and no materials have been
furnished for use at, any of the Leased Property that may give
rise to any mechanic's, materialmen's or other Lien against the
Leased Property.
(g) No commitment has been made by either Seller to any
Governmental Authority, utility company or any other Person which
imposes upon either Seller an obligation to make any contribution
of land or to construct, install, pay for or maintain any
improvements of a public or private nature on the Leased
Property.
(h) Neither Seller has received any notice of any, and, to
the Knowledge of Sellers, there exists no, dispute, claim, event
of default or event which constitutes or would constitute (with
notice or lapse of time or both) a default under any easement
relating to the Leased Property.
(i) All of the Real Property Leases are in full force and
effect, and are valid and enforceable in accordance with their
respective terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, moratorium, reorganization or
similar laws in effect which affect the enforcement of creditors'
rights generally, by equitable limitations on the availability of
specific remedies and by principles of equity.
(j) Neither Seller has received any notice of any, and
there exists no, event of default or event which constitutes or
would constitute (with notice or lapse of time or both) a default
by a Seller under any Real Property Lease. Neither Seller has
received any notice of any, and, to the Knowledge of Sellers
there exists no, dispute, claim, event of default by a Person
other than a Seller or event which constitutes or would
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constitute (with notice or lapse of time or both) a default by a
Person other than a Seller under any Real Property Lease. All
rent and other amounts due and payable with respect to the Real
Property Leases have been paid.
(k) To the Knowledge of Sellers, all buildings and
improvements (and components thereof) located on the Leased
Property are in good working order (with the exception of normal
wear and tear) with no structural defects and, assuming such
buildings, improvements and components are maintained consistent
with past practice, neither Seller is aware of any reasonably
likely to occur condition or event that could reasonably be
expected to result in any such building, improvement or component
not being in good working order (with the exception of normal
wear and tear) with no structural defects prior to the first
anniversary of the Closing Date.
4.10 EQUIPMENT; VEHICLES; PERSONAL PROPERTY. SCHEDULES 2.1(A)(I)
and 2.1(B)(I) collectively set forth a true, accurate and complete
list of all of the Equipment having an original acquisition cost of
$2,000 or more, other than items acquired by a Seller in the ordinary
course of business of the Business from the date hereof through the
Closing Date (and each Seller will identify in writing to Purchasers,
prior to the Closing, each item so acquired having an original
acquisition cost of $2,000 or more). SCHEDULES 2.1(A)(II) and
2.1(B)(II) collectively set forth a true, accurate and complete list
of all of the Vehicles. SCHEDULES 2.2(A)(II) and 2.2(B)(II)
collectively set forth a true, complete and accurate list of all of
the Personal Property Leases. All of the Equipment and all of the
personal property leased by a Seller under the Personal Property
Leases is presently utilized by such Seller in the ordinary course of
business of the Business.
4.11 INVENTORY. The Inventory as of the dates of the Business
Financial Statements is reflected in the Business Financial Statements
at the lower of cost or market on a first-in, first-out basis, and the
Inventory as of the Closing Date will be valued at the lower of cost
or market on a first-in, first-out basis. All Inventory is of
merchantable quality and is usable in the ordinary course of business
of the Business, except for amounts which have been reserved by a
Seller in the ordinary course of business of the Business. Except as
set forth on SCHEDULE 4.11, none of such Inventory is held by a
Seller on assignment or consignment. SCHEDULE 4.11 sets forth a true,
accurate and complete description of the nature, amount and location
of the Inventory as of February 15, 1999.
4.12 ACCOUNTS RECEIVABLE. The Accounts Receivable arose in the
ordinary course of business of the Business and, except for customary
rights of return, warranty rights and project completion obligations,
in each case of a type and size consistent with past experience, are
not subject to set-off or counterclaims.
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4.13 INTELLECTUAL PROPERTY. SCHEDULES 2.1(A)(V) and 2.1(B)(V)
collectively set forth a true, accurate and complete list of all Owned
Intellectual Property. SCHEDULES 2.2(A)(V) and 2.2(B)(V) collectively
set forth a true, accurate and complete list of all Intellectual
Property Licenses. SCHEDULE 4.13 sets forth a complete list of all
Intellectual Property licensed to a Seller under the Intellectual
Property Licenses (the "LICENSED INTELLECTUAL PROPERTY"). Except as
set forth on SCHEDULE 4.13:
(a) all right, title and interest in and to the Owned
Intellectual Property is owned solely by a Seller, free and clear
of all Liens, and is not subject to any license, royalty or other
agreement, and neither Seller has granted any license or agreed
to pay or receive any royalty in respect of any Owned
Intellectual Property or, except as provided in the Intellectual
Property Licenses, any Licensed Intellectual Property;
(b) none of the Owned Intellectual Property or, to the
Knowledge of Sellers, the Licensed Intellectual Property, has
been or is the subject of any pending or, to the Knowledge of
Sellers, threatened litigation or claim of infringement or
misappropriation, there is no basis for making any such claim
with respect to the Owned Intellectual Property and, to the
Knowledge of Sellers, there is no basis for making any such claim
with respect to the Licensed Intellectual Property;
(c) no Intellectual Property License is in breach or
default by any party thereto or the subject of any notice of
termination given or threatened;
(d) neither Seller has made or threatened to make any,
and, to the Knowledge of Sellers, there exists no, claim that any
product or service sold or provided by any Person, or any
process, method, part, design, material or Intellectual Property
employed by any Person, or any marketing or use by any Person of
any such product or service, infringes or misappropriates any
Owned Intellectual Property or Licensed Intellectual Property or
industrial or confidential or proprietary rights of either
Seller;
(e) each product and service sold, leased or provided by a
Seller, each process, method, part, design, material and other
Intellectual Property (including all Intellectual Property to be
licensed to Purchasers pursuant to the Information Services
License and Support Agreement and the Temporary Trademark
Agreement but excluding Licensed Intellectual Property and goods
purchased by such Seller for re-sale) and, to the Knowledge of
Sellers, all Licensed Intellectual Property and goods purchased
by such Seller for re-sale, and the marketing and use by a Seller
of any product, service and other Intellectual Property
(including all Intellectual Property to be licensed to Purchasers
pursuant to the Information Services License and Support
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Agreement and the Temporary Trademark Agreement but excluding
Licensed Intellectual Property and goods purchased by such Seller
for re-sale) and, to the Knowledge of Sellers, all Licensed
Intellectual Property and goods purchased by such Seller for re-
sale, in each case in connection with the Business, does not
infringe or misappropriate any Intellectual Property or
industrial or confidential or proprietary rights of another
Person, and neither Seller has received any notice making or
threatening to make any claim of infringement or misappropriation
of any Intellectual Property of another Person or contesting its
right to market or use any such product, service, process,
method, part, design, material or other Intellectual Property
(including Owned Intellectual Property and Licensed Intellectual
Property) and there is no basis for making such a claim; and
(f) Sellers currently are the sole owners of or possess
adequate rights in and to all Intellectual Property necessary to
conduct the Business as presently conducted.
4.14 CONTRACTS. SCHEDULE 4.14 sets forth a true, accurate and
complete list of all Contracts of the following types to which a
Seller is a party or by which a Seller is bound and which relate to,
in whole or in part, the Assets or which or are used or held for use
in, or relate to, in whole or in part, the Business, or to which any
of the Assets is subject (excluding the Contracts described in
SECTIONS 2.3(B), (E), (F), AND (H)):
(a) any collective bargaining agreement;
(b) any Contract with any director, officer, stockholder or
employee of a Seller or any of the respective Affiliates of such
individuals, and any Contract with any Affiliate of a Seller,
other than a Benefit Plan;
(c) (i) any Contract with any Major Supplier, (ii) any
Contract with any Person for the sale, lease or license of goods
or services by such Person to a Seller (including sales, leases
and licenses of goods to a Seller for re-sale, lease or license
by such Seller to an end-user customer) that provides for a
payment by any party in excess of, or a series of payments which
in the aggregate exceed, $100,000 or provides for the delivery of
goods or performance of services, or any combination thereof,
having a value in excess of $100,000 and (iii) as of a date
specified in SCHEDULE 4.14 that is no earlier than 10 Business
Days prior to the date of this Agreement, a computer run of open
purchase orders pursuant to which a Seller obtains or seeks to
obtain goods or services;
(d) (i) any Contract (other than a sales order) with any
Major Customer, (ii) any Contract with any Person for the sale,
lease or license of goods or services by a Seller to such Person
that provides for a payment by any party in excess of, or a
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series of payments which in the aggregate exceed, $100,000 or
provides for the delivery of goods or performance of services, or
any combination thereof, having a value in excess of $100,000 and
(iii) as of a date specified in SCHEDULE 4.14 that is no earlier
than 10 Business Days prior to the date of this Agreement, a
computer run of open sales orders pursuant to which a Person
acquires, or seeks to acquire, goods or services from a Seller;
(e) any Contract pursuant to which a Seller grants or is
granted any license or other rights to use any of the Assets or
any rights of joint use with respect to any of the Assets (other
than any Real Property Lease, Personal Property Lease or
Intellectual Property License);
(f) any other Contract that provides for a payment by
any party in excess of, or a series of payments which in the
aggregate exceed, $100,000 or provides for the delivery of goods
or performance of services, or any combination thereof, having a
value in excess of $100,000, excluding any Contract entered into
in the ordinary course of business of the Business and consistent
with past practice between a Seller and a supplier or customer of
the Business;
(g) any Contract not otherwise disclosed on SCHEDULE 4.14
to act on behalf of or for a Seller as a sales representative,
manufacturer's representative, distributor, dealer, broker, sales
agency, advertising agency or other Person engaged in sales,
distributing or promotional activities, or any Contract pursuant
to which a Seller acts as one of the foregoing on behalf of any
Person;
(h) any Contract pursuant to which a Seller has made or
will make loans or advances, or has or will have incurred debts
or become a guarantor or surety or pledged its credit on or
otherwise become responsible with respect to any undertaking of
another Person (except for the negotiation or collection of
negotiable instruments in transactions in the ordinary course of
business of the Business);
(i) any indenture, credit agreement, loan agreement, note,
mortgage, security agreement, lease of real property or personal
property (other than the Real Property Leases and Personal
Property Leases), loan commitment or other Contract relating to
the borrowing of funds or an extension of credit or financing
(except for extensions of credit in the ordinary course of
business of the Business for purchases of goods and services);
(j) any Contract involving a partnership, joint venture or
other cooperative undertaking;
(k) any Contract involving any restrictions with respect to
(i) the geographical area of operations or scope or type of
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business of a Seller or (ii) the hiring of any person or the
solicitation of any person for hire;
(l) any power of attorney or agency agreement with any
Person pursuant to which such Person is granted the authority to
act for or on behalf of a Seller, or a Seller is granted the
authority to act for or on behalf of any Person;
(m) any Contract not made in the ordinary course of
business of the Business and consistent with past practice that
is to be performed in whole or in part at or after the date of
this Agreement, including any Contract relating to the sale or
other disposition of the Business or any of the Assets of a
Seller;
(n) any Contract that requires a Seller to purchase its
requirements of any goods or services; and
(o) any Contract not specified above that is material to
the Business.
Sellers have either delivered to Purchasers or made available to
Purchasers at Sellers' due diligence room at the executive office of
Sellers' Parent in Skokie, Illinois (i) true, accurate and complete
copies of each document set forth on SCHEDULE 4.14 as amended or
modified and each of the Contracts included in the Purchased Contracts
and Permits as amended or modified (collectively, the "IDENTIFIED
CONTRACTS") and (ii) a written description of each oral arrangement so
listed on SCHEDULE 4.14. Except as set forth on SCHEDULE 4.14, each
such Identified Contract and arrangement has been entered into by U.S.
Seller or Canadian Seller, as the case may be, in the ordinary course
of business of the Business and is on terms that are no less favorable
to such Seller than the terms which could be obtained from an
unrelated third party. Sellers have either delivered to Purchasers or
made available to Purchasers at Sellers' due diligence room at the
executive office of Sellers' Parent in Skokie, Illinois true, accurate
and complete copies of each standard form of agreement that has been
used in the Business. There is no Contract to which a Seller is a
party or by which a Seller is bound pursuant to which a Seller leases
goods to any Person or Persons.
4.15 PERMITS. SCHEDULE 4.15 sets forth a true, accurate and
complete list of all Permits held by either Seller with respect to the
Assets or the Business. All such Permits are in full force and
effect, and neither Seller has received any notice to the contrary.
Except for the Permits set forth on SCHEDULE 4.15, there are no
Permits, whether federal, state, provincial, municipal, local or
foreign, which are necessary for the lawful ownership or use of the
Assets or operation of the Business. SCHEDULES 2.2(A)(VII) and
2.2(B)(VII) collectively set forth a true, accurate and complete list
of all Permits held by Sellers with respect to the Assets or the
Business that are transferable to Purchasers.
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4.16 INSURANCE.
(a) SCHEDULE 4.16 sets forth a true, accurate and complete
list of all policies of fire and casualty, liability, workmen's
compensation (except with respect to Canada which is governed by
statute), title and other forms of insurance held by a Seller or
its Affiliates and applicable to any Asset or the Business. All
such policies are in full force and effect, all premiums with
respect thereto covering all periods up to and including the
Closing Date have been paid (or will be paid by such Seller prior
to the due dates therefor), and no notice of cancellation or
termination has been received with respect to any such policy.
Such policies are sufficient for compliance with (i) all
requirements of Law and (ii) all Contracts to which a Seller is a
party, and are valid, outstanding and enforceable policies.
Except as set forth on SCHEDULE 4.16, neither Seller has been
refused any insurance with respect to the Assets or the
operations of the Business, and its coverage with respect thereto
has not been limited by any insurance carrier to which it has
applied for any such insurance or with which it has carried
insurance, during the last three (3) years. Except as set forth
on SCHEDULE 4.16, there are no outstanding requirements or
recommendations made by or on behalf of any insurance company
that issued a policy with respect to the Assets or the operations
of the Business requiring or recommending the taking of any
action with respect to the Assets or the operations of the
Business, except for any such action which if not taken could not
reasonably be expected to result in any termination, cancellation
or increase in premiums of any insurance policy.
(b) SCHEDULE 4.16 sets forth a true, accurate and complete
list of all claims which have been made by a Seller within the
past three (3) years under any Canadian workmen's compensation
statute or any workmen's compensation, general liability,
property or other insurance policy held by such Seller or its
Affiliates with respect to the Assets or the operations of the
Business, other than routine claims under health, life and
disability insurance policies. Except as set forth on SCHEDULE
4.16, there are no pending or, to the Knowledge of Sellers,
threatened claims under any insurance policy with respect
thereto. Such claim information includes the following
information with respect to each accident, loss, or other event:
(i) the identity of the claimant; (ii) the date of the
occurrence; (iii) the status as of the report date and (iv) the
amounts paid or expected to be paid or recovered.
4.17 EMPLOYEE BENEFIT PLANS AND EMPLOYMENT AGREEMENTS. SCHEDULE
4.17 sets forth a true, accurate and complete list of all "employee
welfare benefit plans" or "employee pension benefit plans" as those
terms are respectively defined in sections 3(1) and 3(2) of ERISA, and
all retirement or deferred compensation plans, incentive compensation
plans, stock plans (including "phantom stock" plans), unemployment
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compensation plans, vacation pay, severance pay, bonus or benefit
arrangements, insurance or hospitalization programs or any other
fringe benefit arrangements (whether pursuant to Contract, custom or
informal understanding) which do not constitute "employee benefit
plans" (as defined in section 3(3) of ERISA) and all employment
agreements, covering any Affected Employee (collectively, the "BENEFIT
PLANS"). Sellers have provided to Purchasers (a) true and complete
copies or descriptions of all Benefit Plans; (b) the most recent
annual actuarial evaluation, if any, prepared for each Benefit Plan;
(c) the most recent annual report (series 5500), if any, required
under ERISA with respect to each Benefit Plan; (d) the most recent
determination letter received from the Internal Revenue Service (the
"IRS"), if any, for each Benefit Plan; and (e) the most recent Summary
Plan Description, if any, required under ERISA with respect to each
Benefit Plan. Except as set forth on SCHEDULE 4.17, (i) with respect
to each Benefit Plan that is intended to be qualified under SECTION
401(a) of the Code and is maintained by a Seller for any of its
employees (x) such Seller has obtained a favorable determination
letter from the IRS, (y) such plan has been operated in compliance
with ERISA and in accordance with the provisions of, and the rules and
the regulations covering, such plan, and (z) such Seller is not, and,
to the Knowledge of Sellers, no other Person is, engaged in a
transaction prohibited by SECTION 4975 of the Code or SECTION 406 of
ERISA which would result in liability to either Seller; (ii) each
Benefit Plan which is subject to Part III of Subtitle I of ERISA or
SECTION 412 of the Code has been maintained in compliance with the
minimum funding standards of ERISA and the Code; and (iii) no
reportable event, within the meaning of SECTION 4043 of ERISA, which
is subject to Title IV of ERISA has occurred with respect to any
Benefit Plan, other than reportable events with respect to which
notice has been waived by the Pension Benefit Guaranty Corporation.
SCHEDULE 4.17(A) sets forth all the employee benefit, health,
welfare, supplemental unemployment benefit, bonus, pension, profit
sharing, deferred compensation, stock compensation, stock purchase,
retirement, hospitalization insurance, medical, dental, legal,
disability and similar plans or arrangements or practices relating to
the Affected Employees in Canada which are currently maintained or
were maintained, at any time in the last five calendar years (the
"Canadian Employee Programs"). All of the Canadian Employee Programs
are and have been established, registered, qualified, invested and
administered, in all respects, in accordance with all laws,
regulations, orders or other legislative, administrative or judicial
promulgations applicable to the Canadian Employee Programs
("Applicable Laws") and in accordance with all Contracts with the
Affected Employees in Canada. All current obligations existing at the
date of this Agreement or at Closing regarding the Canadian Employee
Programs have been satisfied, there are no outstanding defaults or
violations by any party thereto and no Taxes, penalties or fees are
owing or exigible under any of the Canadian Employee Programs. No
Canadian Employee Program, nor any related trust or other funding
medium thereunder, is, to the Knowledge of a Seller, subject to any
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pending investigation, examination or other proceeding, action or
claim initiated by any Governmental Authority, or by any other Person
(other than routine claims for benefits), and there exists no state of
facts which after notice or lapse of time or both could reasonably be
expected to give rise to any such investigation, examination or other
proceeding, action or claim or to affect the registration of any
Canadian Employee Program required to be registered. All
contributions or premiums required to be made under the terms of each
Canadian Employee Program or by Applicable Laws have been made in a
timely fashion in accordance with Applicable Laws and none of the
Sellers has any liability (other than liabilities accruing after the
Closing Date) with respect to any of the Canadian Employee Programs.
Sellers have furnished to Purchasers true, correct and complete copies
of all the Canadian Employee Programs as amended as of the date hereof
together with all related documentation. Each Canadian Employee
Program (other than any bonus plan) is fully funded or fully insured
on both an ongoing and solvency basis. Except as disclosed in
SCHEDULE 4.17(A), none of the Canadian Employee Programs provides
benefits to retired employees or to the beneficiaries or dependants of
retired employees.
4.18 EMPLOYMENT AND LABOR MATTERS. SCHEDULE 4.18 sets forth, as
of a date specified in SCHEDULE 4.18 that is no more than 10 calendar
days prior to the date of this Agreement, a true, accurate and
complete list of the names, titles or job descriptions, length of
service, locations, base salaries and 1999 target bonuses for (i) each
employee of each Seller who devotes a majority of his or her working
time to the Business other than Administrative Employees (the
"EMPLOYEES"), (ii) each employee of each Seller who performs
administrative services for the Business and who is to be offered
employment by Purchasers in accordance with SECTION 10.1 (the
"ADMINISTRATIVE EMPLOYEES" and collectively with the Employees, the
"AFFECTED EMPLOYEES") (SCHEDULE 4.18 separately identifies all
Administrative Employees) and (iii) each consultant of each Seller
with respect to the Business. Except for the employees performing the
types of functions described on SCHEDULE 4.18, the Affected Employees
constitute all of the employees necessary to operate, or involved in
the conduct of, the Business. Except as set forth on SCHEDULE 4.18,
there is no employee of any Affiliate of either Seller who works in
the Business. Since October 1, 1998, the aggregate number of
employees of each Seller who devote a majority of his or her working
time to the Business has not changed by more than 50 employees. Each
Seller has and currently is conducting the Business in material
compliance with all Laws relating to employment and employment
practices, terms and conditions of employment, wages and hours and
nondiscrimination in employment. Except as set forth on SCHEDULE
4.18, each Seller's relationship with its Affected Employees is good
and there is, and during the past three (3) years there has been, no
labor strike, dispute, slow-down, work stoppage or other labor
difficulty actually pending or, to the Knowledge of Sellers,
threatened involving the Business. None of the Affected Employees is
covered by any collective bargaining agreement, no collective
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bargaining agreement is currently being negotiated and, to the
Knowledge of Sellers, no attempt is currently being made or during the
past three (3) years has been made to organize any of its respective
employees to form or enter into any labor union or similar
organization. Neither Seller performs or has performed, directly or
through contractors or other third parties, work on jobs or projects
that are, or were, subject to federal, state, provincial, territorial,
municipal or local prevailing wage Laws.
4.19 CAPITAL IMPROVEMENTS. SCHEDULE 4.19 sets forth a true,
accurate and complete list of all of the capital improvements and
capital purchases and other capital expenditures to which either
Seller has committed with respect to the Business or for which it has
contracted with respect to the Business and which in any event have
not been completed prior to the date hereof and the cost and expense
reasonably estimated to complete such work and purchases.
4.20 TAXES.
(a) All federal, state, provincial, territorial, municipal,
local and foreign income, corporation and other Tax Returns have
been filed for each Seller (or will be filed or made on or prior
to the due dates therefor) for all periods through and including
the Closing Date as required by applicable Law. All Taxes shown
as due on all such Tax Returns have been paid (or will be paid on
or prior to the due dates therefor). Each such Tax Return is
true, accurate and complete, and neither Seller has, nor will
have, any additional liability for Taxes with respect to any Tax
Return heretofore filed or which was required by Law to be filed,
other than as reflected as liabilities on the Business Financial
Statements. There are no Tax Liens (other than Liens for current
Taxes not yet due and payable) upon any of the Assets. All Taxes
that either Seller is required by Law to withhold or collect,
including sales and use taxes, and amounts required to be
withheld for Taxes of employees and other withholding taxes, have
been duly withheld or collected and, to the extent required, have
been paid over to the proper Governmental Authorities within the
prescribed times or are held in separate bank accounts for such
purpose. Except as set forth on SCHEDULE 4.20, no material Tax
Return of a Seller is under audit or examination by any taxing
authority, and no written notice of such an audit or examination
has been received by a Seller. Each material deficiency
resulting from any audit or examination relating to Taxes by any
taxing authority has been paid, except for deficiencies being
contested in good faith.
(b) U.S. Seller is not a "foreign person" as defined in
SECTION 1445(f)(3) of the Code. None of the assets of Canadian
Seller constitute United States real property interests as
defined in SECTION 897(c) of the Code.
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(c) Except as set forth on SCHEDULE 4.20, none of the
Assets constitutes a joint venture, partnership or other
arrangement or contract which is treated as a partnership for
Federal income tax purposes.
(d) Except as set forth on SCHEDULE 4.20, none of the
Purchased Assets constitutes tax-exempt bond financed property or
tax-exempt use property within the meaning of SECTION 168 of the
Code, and none of the Purchased Assets is subject to a lease,
safe harbor lease or other arrangement as a result of which U.S.
Seller or Canadian Seller, as the case may be, is not treated as
the owner for federal income tax purposes.
(e) Canadian Seller is not a non-resident of Canada within
the meaning of SECTION 116 of the INCOME TAX ACT (Canada).
(f) Canadian Seller is registered under Part IX of the
EXCISE TAX ACT (CANADA) and the QUEBEC SALES TAX ACT.
4.21 NO DEFAULTS OR VIOLATIONS. Except as set forth on SCHEDULE
4.21:
(a) Neither Seller has breached any provision of, nor is
either Seller in default under the terms of, any Identified
Contract and, to the Knowledge of Sellers, no other party to any
Identified Contract has breached any provision of, or is in
default under the terms of, any Identified Contract.
(b) The Business and each of the Assets is in material
compliance with, and no material violation exists under, any and
all Laws applicable to the Business and the Assets.
(c) No notice from any Governmental Authority has been
received by either Seller with respect to the Business claiming
any violation of any Law (including any building, zoning or other
ordinance) or requiring any work, construction or expenditure, or
asserting any Tax, assessment or penalty.
4.22 ENVIRONMENTAL MATTERS. Except as set forth on SCHEDULE
4.22:
(a) Each Seller is in full compliance with all
Environmental Laws with respect to the Assets (including the
Leased Property) and the Business, and no condition exists or
event has occurred which, with or without notice or the passage
of time or both, would constitute a violation of, or give rise to
any liability or obligation of either Seller under, any
Environmental Law or give rise to any Lien on any of the Assets
under any Environmental Law;
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(b) There are no Environmental Permits required for the use
or ownership of the Purchased Assets or the conduct or operation
of the Business (or any part thereof);
(c) There are no, and neither Seller has used or stored
any, Hazardous Substances in, on, or at any Leased Property,
except in each case for inventories of substances or products set
forth on SCHEDULE 4.22, which are (or are to be) used or sold in
the ordinary course of business of the Business and consistent
with past practices and stored, used and sold in accordance with
all applicable Environmental Laws and Environmental Permits,
including all so-called "Right To Know Laws";
(d) Neither Seller has received any notice from any
Governmental Authority or any other Person that any aspect of the
Business or the operation thereof or any of the Assets (including
the Leased Property) is in violation of any Environmental Law or
Environmental Permit, or that either Seller is responsible (or
potentially responsible) for the cleanup or remediation of any
substances at any location;
(e) Neither Seller has deposited or incorporated any
Hazardous Substances into, on, beneath or adjacent to any Leased
Property or any other property ever owned or leased by either
Seller and used in the Business;
(f) Neither Seller is subject to any pending or, to the
Knowledge of Sellers, threatened litigation or proceedings in any
forum, judicial or administrative, involving a demand for
damages, injunctive relief, penalties, or other potential
liability with respect to any Environmental Law concerning any of
the Assets (including the Leased Property) or the Business;
(g) Each Seller has timely filed all reports and
notifications required to be filed with respect to all of the
Assets (including the Leased Property) and the Business and has
generated and maintained all required records and data concerning
the Assets (including the Leased Property) and the Business under
all applicable Environmental Laws; and
(h) No condition has existed or event has occurred with
respect to any property used in the Business by either Seller, or
by any direct or indirect subsidiary that was at any time owned
by either Seller, any predecessor to either Seller or any Person
that is or was an Affiliate of either Seller (including any
property or subsidiary that has been sold, transferred or
disposed of or for which any lease has terminated) that in any
case could, with or without notice, passage of time or both, give
rise to any present or future liability or obligation of either
Seller pursuant to any Environmental Law.
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4.23 LITIGATION.
(a) Except as set forth on SCHEDULE 4.23, there are no
actions, suits, mediations, arbitrations, regulatory proceedings
or other litigation, proceedings or governmental investigations
pending or, to the Knowledge of Sellers, threatened against or
affecting either Seller or any of its respective officers,
directors, employees, agents or stockholders in their capacity as
such with respect to the Business or any of the Assets, and,
other than with respect to warranty claims, arising in the
ordinary course of business of the Business and consistent with
past experience, for products or services provided by a Seller,
neither Seller is aware of any facts or circumstances which may
give rise to any of the foregoing. Except as set forth on
SCHEDULE 4.23, all of the proceedings pending or threatened
against either Seller with respect to the Business or any of the
Assets are fully covered by insurance policies (or other
indemnification agreements with third parties) and are being
defended by the insurers (or such third parties), subject to such
deductibles as are set forth on such Schedule. Except as set
forth on SCHEDULE 4.23, neither Seller is subject, in connection
with the Business or any of the Assets, to any order, judgment,
decree, injunction, stipulation or consent order of or with any
court or other Governmental Authority. Neither Seller has
entered into any agreement to settle or compromise any proceeding
pending or threatened against it with respect to the Business or
any of the Assets which has involved any obligation other than
the payment of money or for which either Seller has any
continuing obligation.
(b) There are no claims, actions, suits, proceedings or
investigations pending or, to the Knowledge of Sellers,
threatened by or against any Seller Party with respect to this
Agreement or any of the Related Agreements, or in connection with
the transactions contemplated hereby or thereby, and neither
Seller has any reason to believe there is a valid basis for any
such claim, action, suit, proceeding, or investigation.
4.24 CUSTOMERS AND SUPPLIERS.
(a) SCHEDULE 4.24(A) sets forth a true, accurate and
complete list:
(i) of the fifty (50) largest customers of the
Business in terms of revenue earned during each of the two
(2) most recently completed fiscal years (collectively, the
"PRIMARY CUSTOMERS"), showing the total revenue earned in
each such period from each such customer;
(ii) of the twenty (20) largest purchasers of services
of the Business (excluding from such determination purchases
and leases of products of the Business) in terms of revenue
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earned during the two (2) most recently completed fiscal
years (collectively with the Primary Customers, the "MAJOR
CUSTOMERS"); and
(iii) of the twenty (20) largest suppliers of the
Business in terms of purchases during the two (2) most
recently completed fiscal years (collectively, the "MAJOR
SUPPLIERS"), showing the total purchases in each such period
from each such supplier.
(b) Since January 2, 1998, except as set forth on SCHEDULE
4.24(B), there has not been any material adverse change in the
business relationship, and there has been no material dispute,
between either Seller and any Major Customer or Major Supplier.
(c) Each Seller has made written inquiry of each of its key
suppliers and vendors as to whether the operations of such
Persons will, on a timely basis, be Year 2000 Compliant in all
material respects and has either delivered to Purchasers or made
available to Purchasers at Sellers' due diligence room at the
executive office of Sellers' Parent in Skokie, Illinois copies of
all responses received. Except as set forth on SCHEDULE 4.24(C),
on the basis of such inquiry and other information of which
Sellers are aware, nothing has come to the attention of either
Seller that causes either Seller to believe that (i) the
operations of any such Person will not be Year 2000 Compliant,
(ii) any such Person will not be able to perform its obligations
under any Contract with a Seller as a result of its operations
not being Year 2000 Compliant or (iii) any such Person will not
be able to continue to supply and support the Business consistent
with past practice as a result of its operations not being Year
2000 Compliant. For purposes of this section, "key suppliers and
vendors" refer to those suppliers and vendors of a Seller that
would, with reasonable probability, result in a Material Adverse
Change should such suppliers or vendors be unable to meet their
obligations to a Seller as required pursuant to any Contract or
custom or practice with such Seller.
(d) Except as set forth on SCHEDULE 4.24(D), neither Seller
has received notice of any claim or threatened claim from any
customer of the Business based on the failure of any good or
service sold, provided or to be provided by the Business to be
Year 2000 Compliant. Except as set forth on SCHEDULE 4.24(D), on
the basis of information provided to Sellers by vendors and
suppliers to the Business and other information of which Sellers
are aware, neither Seller has any reason to believe that any
material portion of the products or services sold or provided by
a Seller on or after January 1, 1998 is not Year 2000 Compliant.
(e) All work-in-process (including ongoing service
projects) of the Business is set forth on SCHEDULE 4.24(E). All
such work-in-process has been performed in accordance with the
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designs and plans therefor (and such designs and plans are Year
2000 Compliant), satisfies the requirements of applicable
Contracts and is capable of being completed within the cost and
time guidelines originally established in connection with the
designs and plans therefor.
4.25 INFORMATION AND RECORDS.
(a) The U.S. Information and Records are true, accurate and
complete in all material respects and, at U.S. Seller's expense,
will be transferred to U.S. Purchaser at or after the Closing
promptly at U.S. Purchaser's request in the form and format in
which they are customarily kept (provided that at U.S. Seller's
expense U.S. Seller may, and at U.S. Purchaser's request shall,
desegregate such data from other data of U.S. Seller). At or
after the Closing, at U.S. Purchaser's expense, U.S. Seller shall
also promptly provide the U.S. Information and Records to U.S.
Purchaser in any other form or format as U.S. Purchaser
reasonably requests.
(b) The Canadian Information and Records are true, accurate
and complete in all material respects and, at Canadian Seller's
expense, will be transferred to Canadian Purchaser at or after
the Closing promptly at Canadian Purchaser's request in the form
and format in which they are customarily kept (provided that at
Canadian Seller's expense Canadian Seller may, and at Canadian
Purchaser's request shall, desegregate such data from other data
of Canadian Seller). At or after the Closing, at Canadian
Purchaser's expense, Canadian Seller shall also promptly provide
the Canadian Information and Records to Canadian Purchaser in any
other form or format as Canadian Purchaser reasonably requests.
4.26 NO OTHER AGREEMENT. Except for sales of assets in the
ordinary course of business of the Business, neither Seller nor any of
their Affiliates has any Contract with respect to the sale or other
disposition of the Business or any of the Assets, except as set forth
in this Agreement.
4.27 PRODUCT OR SERVICE WARRANTIES. Sellers have no historical
records concerning claims against or liability of a Seller (or any
predecessor or Affiliate of a Seller) on account of product or service
warranties relating to the Business. No such claim has been asserted
against either Seller and, to the Knowledge of Sellers, no such
liability of either Seller exists other than such claims and
liabilities which have arisen in the ordinary course of business of
the Business and are of a type and size consistent with past
experience of the Business. There is no Contract pursuant to which
either Seller has provided a warranty (i) with respect to any product
sold, licensed or provided by such Seller, where such warranty
contains any terms or conditions different from the warranty that such
Seller received from the vendor or supplier that sold, licensed or
provided the product to such Seller or (ii) that any products or
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services sold, licensed or provided or to be sold, licensed or
provided are Year 2000 Compliant. In each of the past two years,
warranty claims relating to the Business have not been material to the
Business. During the past two (2) years, there have been no material
delinquencies in performance or payment, or failures to perform or
make payment, with respect to any product warranty by any vendor of
products sold, leased, licensed or provided by a Seller in the
Business. Except as disclosed on SCHEDULE 4.27, to the Knowledge of
Sellers, there exist no quality problems or other matters with respect
to the products and services of the Business (whether previously sold,
leased, licensed or provided or to be sold, leased, licensed or
provided) that could reasonably be expected to lead to a product
recall (whether voluntarily or involuntarily), recurring claims
relating to a particular defect or other claims (either in quantity or
type of claim) that would be outside the ordinary course of business
of the Business.
4.28 BROKERS. Other than Merrill, Lynch & Co., neither Seller
nor any of their respective Affiliates has used any broker or finder
in connection with the transactions contemplated hereby, and neither
Purchaser nor any of their respective Affiliates has or shall have
any liability or otherwise suffer or incur any Loss as a result of or
in connection with any brokerage or finder's fee or other commission
of any Person retained by either Seller or any of its respective
Affiliates (including Merrill, Lynch & Co.) in connection with any of
the transactions contemplated by this Agreement or either Seller's
Related Agreements.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PURCHASERS
Purchasers, jointly and severally, represent and warrant to
Sellers as follows:
5.1 DUE INCORPORATION.
(a) U.S. Purchaser is a corporation duly organized, validly
existing and in good standing under the laws of the State of
Delaware, with all requisite corporate power and authority to
own, lease and operate its properties and to carry on its
business as they are now owned, leased, operated and carried on.
(b) Canadian Purchaser is a company duly organized, validly
existing and in good standing under the laws of the Province of
Nova Scotia, with all requisite corporate power and authority to
own, lease and operate its properties and to carry on its
business as they are now owned, leased, operated and carried on.
(c) Purchasers' Parent is a corporation duly organized,
validly existing and in good standing under the laws of the State
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of Delaware, with all requisite corporate power and authority to
own, lease and operate its properties and to carry on its
business as they are now owned, leased, operated and carried on.
5.2 DUE AUTHORIZATION. Each Purchaser Party has full power and
authority to execute, deliver and perform this Agreement and its
Related Agreements and to consummate the transactions contemplated
hereby and thereby. The execution, delivery and performance by each
Purchaser Party of this Agreement and its Related Agreements and the
consummation by each Purchaser Party of the transactions contemplated
hereby and thereby have been duly and validly approved by each
Purchaser Party's board of directors (or in the case of U.S.
Purchaser, its sole shareholder), and no other actions or proceedings
on the part of any Purchaser Party are necessary to authorize the
execution, delivery and performance by each Purchaser Party of this
Agreement, its Related Agreements or the transactions contemplated
hereby and thereby. Each Purchaser Party has duly and validly
executed and delivered this Agreement and has duly and validly
executed and delivered (or prior to or at the Closing will duly and
validly execute and deliver) its Related Agreements. This Agreement
constitutes a legal, valid and binding obligation of each Purchaser
Party, and each Purchaser Party's Related Agreements upon execution
and delivery by such Purchaser Party will constitute legal, valid and
binding obligations of such Purchaser Party, in each case, enforceable
in accordance with their respective terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
moratorium, reorganization or similar laws in effect which affect the
enforcement of creditors' rights generally, by equitable limitations
on the availability of specific remedies and by principles of equity.
5.3 CONSENTS AND APPROVALS; NO CONFLICTS, ETC.
(a) Except for the consents set forth on SCHEDULE 5.3 (the
"PURCHASERS' CONSENTS"), no consent, authorization or approval
of, or filing or registration with, any Governmental Authority or
any other Person not a party to this Agreement is necessary in
connection with the execution, delivery and performance by each
Purchaser Party of this Agreement and its Related Agreements or
the consummation by each Purchaser Party of the transactions
contemplated hereby or thereby.
(b) Except as set forth on SCHEDULE 5.3, the execution,
delivery and performance by each Purchaser Party of this
Agreement and its Related Agreements and the consummation by each
Purchaser Party of the transactions contemplated hereby and
thereby do not and will not (i) violate any Law applicable to a
Purchaser Party or any of its properties or assets; (ii) violate
or conflict with, result in a breach or termination of,
constitute a default or give any third party any additional right
(including a termination right) under, permit cancellation of,
result in the creation of any Lien upon any of the assets or
properties of a Purchaser Party under, or result in or constitute
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a circumstance which, with or without notice or lapse of time or
both, would constitute any of the foregoing under, any Contract
to which a Purchaser Party is a party or by which a Purchaser
Party or any of its assets are bound; (iii) permit the
acceleration of the maturity of any indebtedness of any Purchaser
Party or indebtedness secured by any of its assets or properties;
or (iv) violate or conflict with any provision of the certificate
of incorporation, bylaws or similar organizational instruments of
any Purchaser Party.
5.4 LITIGATION. There are no claims, actions, suits,
proceedings or investigations pending or, to the knowledge of
Purchasers, threatened by or against either Purchaser with respect to
this Agreement or any of the Related Agreements, or in connection with
the transactions contemplated hereby or thereby, and neither Purchaser
has any reason to believe there is a valid basis for any such claim,
action, suit, proceeding or investigation.
5.5 BROKERS. Neither Purchaser nor any of their respective
Affiliates has used any broker or finder in connection with the
transactions contemplated hereby, and neither Seller nor any of their
respective Affiliates has or shall have any liability or otherwise
suffer or incur any Loss as a result of or in connection with any
brokerage or finder's fee or other commission of any Person retained
by either Purchaser or any of its respective Affiliates in connection
with any of the transactions contemplated by this Agreement or either
Purchaser's Related Agreements.
5.6 GST/QST REGISTRATION STATUS. On or prior to the Closing
Date, Canadian Purchaser will be registered under Part IX of the
EXCISE TAX ACT (Canada) and under the QUEBEC SALES TAX ACT.
5.7 EMPLOYMENT AGREEMENTS. U.S. Purchaser or an Affiliate of
U.S. Purchaser has entered into an employment agreement with each
Senior Employee, that becomes effective as of Closing.
ARTICLE VI
COVENANTS OF SELLERS
Each Seller agrees to perform each of the following covenants:
6.1 IMPLEMENTING AGREEMENT. Subject to the terms and conditions
hereof, each Seller shall take all action required of it to fulfil its
obligations under the terms of this Agreement and shall otherwise use
all commercially reasonable efforts to facilitate the consummation of
the transactions contemplated hereby. Except as otherwise expressly
permitted hereby, each Seller agrees that it will not take any action
that would have the effect of preventing or impairing its performance
of its obligations under this Agreement.
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6.2 CONSENTS AND APPROVALS. Each Seller shall use all
commercially reasonable efforts to obtain all consents, approvals,
certificates and other documents required in connection with the
performance by it of its obligations under this Agreement and its
Related Agreements and the consummation by it of the transactions
contemplated hereby and thereby, including all such consents and
approvals by each party to any of the Contracts included in the
Purchased Contracts and Permits; PROVIDED, that no contact will be
made by either Seller (or any representative of either Seller) with
any third party to obtain any such consent or approval except in
accordance with a plan previously agreed to by Purchasers; and,
PROVIDED FURTHER that neither Seller shall be required to make any
payment or payments to a Person for the purpose of obtaining any
consent or approval of such Person, except with respect to the consent
of each licensor under each Intellectual Property License set forth on
SCHEDULE 2.2(A)(V) or SCHEDULE 2.2(B)(V) which is marked with an
asterisk, in which case Sellers shall make any such payments. If a
consent or approval is required by any party under any of the
Contracts included in the Purchased Contracts and Permits and is not
obtained on or before the Closing or if an attempted assignment is
ineffective, then Sellers shall cooperate with Purchasers at Sellers'
expense in any reasonable arrangement requested by Purchasers to
provide for the appropriate Purchaser the benefits under any such
Contract and to impose on such Purchaser the obligations and burdens
of such Contract, and, upon receipt of the necessary consents or
approvals to assign such Contract, such Contract shall be assigned to
such Purchaser and shall be treated as included in the Purchased
Contracts and Permits. Without limiting the foregoing, each Seller
shall use all commercially reasonable efforts to obtain all required
consents and approvals (if any) to assign and transfer the Permits to
Purchasers at Closing and, to the extent that one or more of the
Permits are not transferable, to obtain replacements therefor. If
certain Permits are not transferable or replacements therefor are not
obtainable on or before the Closing, but such Permits are transferable
or replacements therefor are obtainable after the Closing, then
Sellers shall continue to use such efforts at Sellers' expense in
cooperation with Purchasers after the Closing as may be required to
obtain all required consents and approvals to transfer, or obtain
replacements for, such Permits after Closing and, upon receipt of the
necessary consents or approvals to assign and transfer such Permits,
such Permits shall be assigned and transferred to the appropriate
Purchaser and treated as included in the Purchased Contracts and
Permits. Each Seller shall make, or cause to be made, all filings,
notices, applications, statements and reports to all Governmental
Authorities and other Persons that are required to be made prior to
the Closing Date by or on behalf of a Seller or any of its Affiliates
pursuant to any applicable Law or Contract in connection with this
Agreement and its Related Agreements and the transactions contemplated
hereby and thereby and shall cooperate with Purchasers in making all
such filings, notices, applications, statements and reports that are
required to be made prior to the Closing Date by or on behalf of a
Purchaser or any of its Affiliates pursuant to any applicable Law in
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connection with this Agreement and its Related Agreements and the
transactions contemplated hereby and thereby.
6.3 PRESERVATION OF BUSINESS.
(a) Except as set forth on SCHEDULE 6.3 or as otherwise
required by this Agreement, until the Closing, each Seller shall
incur and pay costs and otherwise operate the Business only in
the usual, regular and ordinary course and in a manner consistent
with past practice, and shall use commercially reasonable efforts
to (i) preserve intact the present business organization and
personnel of the Business and (ii) preserve the goodwill and
advantageous relationships of the Business with customers,
suppliers, independent contractors, employees and other Persons
material to the operation of the Business.
(b) Without limiting the generality of CLAUSE (A), until
the Closing, except as set forth on SCHEDULE 6.3 or as otherwise
required by this Agreement or with the prior written consent of a
Purchaser, each Seller will not, and will not permit any of its
Affiliates to, with respect to the Business or any of the Assets:
(i) do any act or omit to do any act which would cause
a material breach of any of the Purchased Contracts and
Permits or any other Contract or obligation the breach of
which could have a Material Adverse Effect,
(ii) take any action, or enter into or authorize any
Contract or transaction or any amendment or modification to
any Contract or transaction, other than in the ordinary
course of business of the Business and consistent with past
practice,
(iii) sell, transfer, convey, assign or otherwise
dispose of any of its assets, except sales of inventory in
the ordinary course of business of the Business and
consistent with past practice,
(iv) except for capital improvements, purchases and
expenditures permitted by CLAUSE (V), acquire or lease any
assets other than in the ordinary course of business of the
Business and consistent with past practice or any assets
that are material to the Business,
(v) except as set forth on SCHEDULE 4.19, authorize or
make any capital improvements, capital purchases or other
capital expenditures that individually are in excess of
$25,000 or in the aggregate are in excess of $150,000,
(vi) waive, release or cancel any claims against third
parties or debts owing to it, or any rights which have any
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value, other than in the ordinary course of business of the
Business and consistent with past practice,
(vii) make any change in its accounting systems,
policies, principles or practices used in calculating the
items set forth in the Business Financial Statements or make
any other material change in its accounting systems,
policies, principles or practices,
(viii) make any borrowing, incur any debt (other than
trade payables in the ordinary course of business of the
Business and consistent with past practice), or assume,
guarantee, endorse (except for the negotiation or collection
of negotiable instruments in the ordinary course of business
of the Business and consistent with past practice) or
otherwise become liable (whether directly, contingently or
otherwise) for the obligations of any other Person, or make
any payment or repayment in respect of any indebtedness
(other than trade payables and accrued expenses in the
ordinary course of business of the Business and consistent
with past practice),
(ix) suffer or permit the creation of any Lien over
any of the Assets other than in the ordinary course of
business of the Business and consistent with past practice,
(x) make any loan, advance or capital contribution to,
or investment in, any other Person, except extensions of
credit to customers and travel advances and relocation loans
to employees, in each case in the ordinary course of
business of the Business and consistent with past practice,
(xi) enter into, adopt, amend or terminate any bonus,
profit sharing, compensation, termination, stock option,
stock appreciation right, restricted stock, performance
unit, pension, retirement, deferred compensation,
employment, severance or other employee benefit agreement,
trust, plan, fund or other arrangement for the benefit or
welfare of any Affected Employee, or increase in any manner
the compensation (except for raises of up to eight percent
(8%) above an employees most recent annual base pay if such
raises are made in the ordinary course of business of the
Business consistent with past practice on the individual
employee's hire date anniversary) or fringe benefits of any
Affected Employee or pay any benefit to any Affected
Employee not required by any existing plan and arrangement
or enter into any Contract or arrangement to do any of the
foregoing,
(xii) make any Tax election or settle or compromise
any federal, state, provincial, territorial, municipal,
local or foreign Tax liability, or waive or extend (i) the
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statute of limitations, or (ii) in the case of Canada, the
period of time during which a Governmental Authority is
permitted to reassess Taxes, interest or penalties, in each
such case in respect of any such Taxes, if such election,
settlement or other action referred to in this clause (xii)
would bind a Purchaser or otherwise affect the value of the
Purchased Assets or the Business,
(xiii) pay any amount, perform any obligation or agree
to pay any amount or perform any obligation, in settlement
or compromise of any suits or claims of liability against
either Seller or any of its respective directors, officers,
employees or agents (except for payments of up to $50,000 in
the aggregate to such employees and agents), except for any
payment to or performance for the benefit of customers of or
vendors to the Business in the ordinary course of business
of the Business and consistent with past practice,
(xiv) make any payments to customers or vendors other
than as required by Law or any Contract, nor make any gifts
or charitable contributions (other than gifts and charitable
contributions in the ordinary course of business of the
Business and consistent with past practice and not in excess
of $10,000 in the aggregate),
(xv) other than in the ordinary course of business of
the Business and consistent with past practice, terminate,
rescind, modify, amend or otherwise alter or change any of
the terms or provisions of any of the Purchased Contracts
and Permits, or reduce, discount, waive or forego any
material payment or right thereunder, or agree to any
compromise or settlement with respect thereto,
(xvi) terminate the employment of any Affected
Employee other than a termination for cause in the ordinary
course of business of the Business and consistent with past
practice, or transfer, or permit the transfer of, any
Affected Employee from either Seller to any of its
respective Affiliates,
(xvii) enter into any Contract of any kind with any
director, officer or employee of either Seller or any of the
respective Affiliates of such individuals, or any Contract
of any kind with any Affiliate of either Seller,
(xviii) enter into any Contract with any Person for
the sale, lease or license of goods or services by such
Person to a Seller (including sales, leases and licenses of
goods to a Seller for re-sale, lease or license by such
Seller to end-user customers), other than in the ordinary
course of business of the Business and consistent with past
practice,
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(xix) enter into any Contract with any Person for the
sale, lease or license of goods or services to such Person,
other than in the ordinary course of business of the
Business and consistent with past practice,
(xx) enter into any Contract pursuant to which either
Seller grants or is granted any license or other right to
use any asset or any right of joint use with respect to any
asset,
(xxi) enter into any material Computer Purchase
Agreement,
(xxii) incur any obligation or enter into any Contract
that requires a payment by any party in excess of, or a
series of payments which in the aggregate exceed, $50,000 or
provides for the delivery of goods or performance of
services, or any combination thereof, having a value in
excess of $50,000, other than any Contract entered into in
the ordinary course of business of the Business and
consistent with past practice with a supplier or customer of
the Business,
(xxiii) enter into any Contract with a sales
representative, manufacturer's representative, distributor,
dealer, broker, sales agency, advertising agency or other
Person engaged in sales, distributing or promotional
activities, or any Contract to act as one of the foregoing
on behalf of any Person,
(xxiv) solicit an order from, or sell or lease
products or provide services to, any customer other than in
the ordinary course of business of the Business, the result
of which would be to decrease purchases by such customer
subsequent to the Closing from amounts which such customer
would otherwise have purchased in the ordinary course, or
(xxv) other than as will be reflected as deferred
revenues on the Net Working Capital Statement, sell or lease
any products, or provide services, so as to give a Purchaser
the obligation to deliver any such products or provide such
services and so as to give either Seller the right to any
cash, account receivable or other consideration arising from
such sale or lease.
(c) Without limiting the generality of CLAUSE (A), until
the Closing, except as set forth on SCHEDULE 6.3 or as otherwise
required by this Agreement, each Seller shall:
(i) maintain its books, accounts and records in the
usual, regular and ordinary manner, and on a basis
consistent with the Business Financial Statements and past
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practices, except for changes permitted by SECTION
6.3(B)(VII),
(ii) use its best efforts to continue to carry its
existing insurance through the Closing Date,
(iii) continue to make capital investments in the
Business in the ordinary course and consistent with past
practice, and
(iv) duly comply with all Laws applicable to the
Business or the Assets or as may be required for the valid
and effective transfer and assignment of the Purchased
Assets.
(d) Any Contract which requires the prior written consent
of Purchasers pursuant to SECTION 6.3(B) and which is entered
into with the prior written consent of Purchasers shall be
included in the Purchased Contracts and Permits, and the
Schedules to this Agreement shall be deemed to have been updated
to include any such Contract. Unless Purchasers elect otherwise
by notice to Sellers, any Contract entered into in violation of
SECTION 6.3(B) shall not be included in the Purchased Contracts
and Permits, shall constitute an Excluded Obligation, and shall
not be included on any of the Schedules to this Agreement.
6.4 ACCESS TO INFORMATION AND FACILITIES` Prior to the Closing
Date, Purchasers and their representatives shall conduct an
investigation and review of the legal, business and financial history
and condition of each Seller, the Assets and the Business (the
"PURCHASE INVESTIGATION"). In connection therewith, each Seller shall
give Purchasers and Purchasers' representatives from and after the
date hereof up to the Closing Date (i) reasonable access to all
information reasonably necessary for Purchasers to evaluate the System
Software and (ii) reasonable access upon reasonable notice during
normal business hours to all of the Contracts, books and records of
the Business (including employment histories and other information
relating to employees, to the extent permitted by Law), Leased
Property and remote locations where any Information and Records are
maintained or processed or any of the Business is conducted. In
connection with the Purchase Investigation, from and after the date
hereof up to the Closing Date, each Seller shall make the officers and
employees of such Seller available to Purchasers and their
representatives as Purchasers and their representatives shall from
time to time reasonably request and shall furnish Purchasers and their
representatives with any and all information concerning the Business
and the Assets that Purchasers or their representatives reasonably
request. Without limiting the foregoing, upon reasonable notice to a
Seller and during normal business hours, such Seller shall give
Purchasers and their representatives access to the books and records
of the Business to perform auditing procedures and to the Leased
Property to perform such non-invasive environmental assessments and
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other tests as Purchasers or their representatives may reasonably
determine.
6.5 SUPPLEMENTAL INFORMATION. From time to time prior to the
Closing, Sellers shall promptly disclose in writing to Purchasers any
matter hereafter arising which, if existing, occurring or known at the
date of this Agreement would have been required to be disclosed to
Purchasers on the Schedules hereto or which would render inaccurate in
any material respect any of the representations, warranties or
statements set forth in ARTICLE IV. Any information disclosed pursuant
to this SECTION 6.5 shall reference the Schedule, representation,
warranty or statement to which it relates. Information which is
provided to Purchasers pursuant to this SECTION 6.5 within 28 calendar
days after the date of this Agreement and prior to the Closing shall
be deemed to cure any breach of any representation, warranty or
covenant in this Agreement or in any Related Agreement, other than for
purposes of SECTION 8.1, PROVIDED, that the following types of
information provided to Purchasers pursuant to this SECTION 6.5 shall
not be deemed material for purposes of SECTION 8.1: (i) information
that updates Schedules in accordance with SECTION 6.3(D) and (ii)
information disclosing the taking of any action after the date hereof
expressly authorized by this Agreement. Except as provided in the
preceding sentence, no information provided to Purchasers pursuant to
this SECTION 6.5 shall be deemed to cure any breach of any
representation, warranty or covenant in this Agreement or any Related
Agreement for any purpose. Without limiting the foregoing, Sellers
will promptly disclose in writing to Purchasers any Affected Employees
hired after the date specified in the first sentence of SECTION 4.18,
together with such other information regarding such Affected Employees
as is required to be set forth on SCHEDULE 4.18.
6.6 CONFIDENTIALITY.
(a) After the Closing until the fifth anniversary of the
date hereof, Sellers shall, and shall cause each of their
respective Affiliates to, maintain all Confidential Information
in strict confidence in accordance with the procedures they use
to protect their own information of a similar nature and not
disclose any Confidential Information to any Person or use any
Confidential Information for any purpose; PROVIDED, that such
restrictions shall not apply to (i) any Confidential Information
which becomes publicly available after the Closing Date through
no fault of Sellers or any of their respective Affiliates, (ii)
any Confidential Information which after the Closing is
legitimately received by a Seller from a third party (provided
such third party is not known by a Seller to be bound by an
obligation of secrecy) and (iii) any disclosure required by Law
or any Governmental Authority, so long as notice of such
disclosure is given to Purchasers prior to making such disclosure
and Sellers cooperate with Purchasers as Purchasers may
reasonably request to resist such disclosure.
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(b) At all times prior to and after the Closing Date,
whether or not the Closing has occurred, Sellers shall, and shall
cause their respective Affiliates to, maintain in strict
confidence all non-public or confidential information relating to
either Purchaser or any of its Affiliates obtained by a Seller or
any of its Affiliates in connection with this Agreement or the
Related Agreements or the transactions contemplated hereby or
thereby, in accordance with the procedures it uses to protect its
own information of a similar nature and not disclose to any
Person (other than its employees, attorneys, accountants and
advisors who need to know) or use (except in connection with the
transactions contemplated hereby and by the Related Agreements)
any such information; PROVIDED, that such restrictions shall not
apply to (i) any information which becomes publicly available
after the date of disclosure by a Purchaser through no fault of
Sellers or any of their respective Affiliates, (ii) any
information which prior to disclosure by a Purchaser was properly
within the legitimate possession of a Seller or any of its
Affiliates, (iii) any information which is developed
independently by a Seller or any of its Affiliates through
Persons who have not had, either directly or indirectly, access
to or knowledge of such information, (iv) any information which
is legitimately received by a Seller or any of its Affiliates
from a third party (provided such third party is not known by a
Seller or any of its Affiliates to be bound by an obligation of
secrecy to a Purchaser or any of its Affiliates) or (v) any
disclosure required by Law or any Governmental Authority, so long
as notice of such disclosure is given to Purchasers prior to
making such disclosure and Sellers cooperate with Purchasers as
Purchasers may reasonably request to resist such disclosure.
(c) If this Agreement is terminated, upon the request of
Purchasers, Sellers shall not retain any written materials they
or any of their respective Affiliates have received from a
Purchaser or its Affiliates or their representatives or employees
in connection with this Agreement or the Related Agreements or
the transactions contemplated hereby or thereby, nor any copies
of such materials made by them.
(d) Each Seller shall use its best efforts to cause its
representatives, employees, attorneys, accountants and advisors
to whom information of the type referred to in this SECTION 6.6
is disclosed pursuant to this SECTION 6.6 or otherwise to comply
with the provisions of this SECTION 6.6.
6.7 TAX MATTERS. After the Closing, each Seller shall make
available to Purchasers such records related to the Business or the
Purchased Assets as a Purchaser may reasonably require for the
preparation of any Tax Returns or other similar governmental reports
or forms required to be filed by a Purchaser and such records as a
Purchaser may require for the defense of any audit, examination,
administrative appeal or litigation of any such Tax Return or other
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similar governmental report or form. Each Seller agrees to preserve
and keep such records relating to any Taxes pertaining to the
Purchased Assets or the Business in its possession for a period of at
least five years after the Closing Date. In the event a Seller wishes
to destroy such records referred to in the preceding sentence after
the time therein specified, such Seller shall first give ninety (90)
days' prior written notice to Purchasers and Purchasers shall have the
right at their option and expense, upon prior written notice to such
Seller within the ninety (90) day period, to take possession of such
records within one hundred and eighty (180) days after the date of
such notice.
6.8 COOPERATION. Prior to the Closing, each Seller shall
cooperate with Purchasers and shall take all actions reasonably
requested by Purchasers to ensure a smooth transition of the customers
of the Business from Sellers to Purchasers, including participating in
joint marketing efforts, allowing access to communications channels
with such customers and providing information regarding such
transition to such customers.
6.9 NON-COMPETITION.
(a) Each Seller covenants and agrees that, from and after
the Closing Date until the date that is the fifth anniversary of
the Closing Date (such period being referred to herein as the
"NON-COMPETITION PERIOD"), it shall not, and shall not permit any
of its Affiliates to, directly or indirectly:
(i) engage in, or own any interest in, control,
advise, manage, operate, act as a lender or consultant to or
receive any economic benefit from any Person that engages
wholly or partly in, the Business in the Territory;
(ii) employ, solicit for employment or
encourage to leave his or her employment with a
Purchaser or any of its Affiliates any Hired
Employee or any other employee of a Purchaser or
any of its Affiliates involved in the Business as
conducted by Purchasers after the Closing (any
such Hired Employee or other employee, a
"PURCHASER EMPLOYEE"); PROVIDED, that this SECTION
6.9(A)(II) shall not apply to (1) any Purchaser
Employee who has been laid off by, or who has been
terminated by, a Purchaser or any of its
Affiliates (unless such termination involves a
simultaneous hiring of such employee by a
Purchaser or any of its Affiliates), (2) any
Purchaser Employee who has voluntarily resigned
from employment with a Purchaser or any of its
Affiliates (unless such voluntary resignation
involves a simultaneous hiring of such employee by
a Purchaser or any of its Affiliates) and such
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resignation occurred more than 180 days prior to
any such employment, solicitation or
encouragement, (3) any general solicitations for
employment such as those conducted by newspaper or
other advertisements of general circulation (but
not hirings or encouragements resulting therefrom)
and (4) any inadvertent such employment,
solicitation or encouragement of up to ten (10)
Purchaser Employees in any calendar year if such
Purchaser Employees are not officers of a
Purchaser or any of its Affiliates;
(iii) disturb or attempt to disturb any
business relationship between any third-party and
a Purchaser or any of its Affiliates in connection
with the Business; or
(iv) make any statement or perform any act
which it knows or reasonably should know would be
damaging to the reputation of a Purchaser or any
of its Affiliates in connection with the Business.
Notwithstanding anything to the contrary contained in
this SECTION 6.9(A), nothing in this SECTION 6.9(A) shall prohibit:
(1) either Seller or any of its Affiliates from
assessing, planning, designing, installing, repairing, sourcing
(meaning purchasing, selling, leasing and licensing goods and
services), deploying, implementing and supporting passive cabling
infrastructure;
(2) either Seller or any of its Affiliates from
purchasing and reselling data networking products which function in
layer one of the International Standards Organization Open System
Interconnection Model as in effect on the date of this Agreement,
provided, that such purchases and sales are made solely in connection
with, and incidental to, the ordinary course conduct of its businesses
other than the Business;
(3) either Seller or any of its Affiliates from
purchasing and reselling data networking products which function in
layer two of the International Standards Organization Open System
Interconnection Model as in effect on the date of this Agreement,
provided, that (i) such sales are not made in connection with the
provision by a Seller or any of its Affiliates of simple network
management protocol and related management or monitoring services,
internet protocol configuring services or route configuring services,
(ii) such layer two products are not purchased or otherwise acquired
by either Seller or any of its Affiliates from the manufacturer or any
manufacturer representative of such layer two products and (iii) such
sales are made solely in connection with, and incidental to, the
ordinary course conduct of its businesses other than the Business;
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(4) either Seller or any of its Affiliates from
providing Logistics Services for data communication equipment
(including purchasing such equipment from manufacturers at prices
arranged by customers of either Seller or any of its Affiliates) to
customers of either Seller or any of its Affiliates whose primary
business activity is selling communications services;
(5) any Person which after the date of this Agreement
becomes an Affiliate of a Seller (other than Sellers' Parent, Sellers
and their respective present and future subsidiaries), from competing
in the Business in the Territory if, and only if, such Person, and any
subsidiaries of such Person, do not use the name "Anixter" or any
derivation thereof in the Business in the Territory and do not use any
of the assets or personnel of either Seller or any present or future
subsidiary of either Seller in the Business in the Territory;
(6) either Seller or any of its Affiliates from
extending credit to its customers in the ordinary course of its
businesses other than the Business;
(7) either Seller or any of its Affiliates from
receiving payment for products or services it sells in the ordinary
course of its businesses other than the Business; or
(8) either Seller or any of its Affiliates from
performing any warranty obligations of a Seller (arising from sales or
other actions prior to the Closing) that a Purchaser does not perform.
For purposes of this Agreement, (i) "Territory" shall
mean the United States of America and Canada and (ii) "Logistics
Services" shall mean the procurement and warehousing of a product and
the transport of a product to an end-user customer.
(b) ENFORCEMENT. If at any time any of the
provisions of SECTION 6.9(A) shall be determined to be
invalid or unenforceable by reason of being vague or
unreasonable as to duration, area, scope of activity or
otherwise, then SECTION 6.9(A) shall be considered
divisible (with the other provisions of SECTION 6.9(A)
to remain in full force and effect) and the invalid or
unenforceable provisions shall become and be deemed to
be immediately amended to include only such time, area,
scope of activity and other restrictions as shall be
determined to be reasonable and enforceable by the
court or other body having jurisdiction over the
matter, and Purchasers and Sellers expressly agree that
SECTION 6.9(A), as so amended, shall be valid and
binding as though any invalid or unenforceable
provision had not been included therein.
(c) REMEDIES. In the event of actual or
threatened breach of any of the provisions of SECTION
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6.9(A) by either Seller or any of its Affiliates, a
Purchaser or any of its Affiliates, in addition to any
other remedies available to it for such breach or
threatened breach, including the recovery of damages,
shall be entitled to an injunction restraining such
Seller or its Affiliate from such conduct. If a bond
or, in the case of Canada, security for costs, is
required to be posted in order for a Purchaser or any
of its Affiliates to secure an injunction, the parties
agree that such bond or, in the case of Canada,
security for costs, need not exceed the sum of $1,000
(it being understood that the amount of such bond or
security for costs shall not in any way limit the
damages that may be sought by a Seller or of its
Affiliates in connection with such injunction). The
remedies provided in this SECTION 6.9(C) shall be
cumulative and shall not preclude the assertion or
exercise of any other rights or remedies available
under Law, in equity or otherwise in accordance with
this Agreement.
6.10 SERVICE WARRANTIES. Notwithstanding any failure
of a Purchaser to comply with any of the provisions of SECTION 13.6 or
SECTION 13.7 (which sections shall not apply to this SECTION 6.10
unless a lawsuit is involved), if either Purchaser, in its sole
discretion, elects to perform any service warranty obligations of a
Seller in excess of the service warranty obligations assumed by such
Purchaser pursuant to SECTION 2.4(A)(IV) or (B)(IV) or any product
warranty obligations of a Seller (including any obligations of a
Seller relating to the failure of a service or product to be Year 2000
Compliant) Sellers will, upon notice from such Purchaser (such notice
to include the name of the customer, a brief description of the work
performed and time involved and a reference to the Contract pursuant
to which the work was performed), promptly reimburse such Purchaser
for its actual costs and expenses incurred in performing any such
service or product warranty obligations. Purchasers shall provide
reasonable notice from time to time to Sellers of the type, nature and
volume of the warranty obligations that a Purchaser elects to perform,
or has decided to elect to perform, in accordance with the immediately
preceding sentence and shall, upon a Seller's reasonable request,
consult with such Seller regarding, and permit such Seller to be
reasonably involved in, the resolution of any such warranty
obligations. A Seller may request a Purchaser to perform any service
warranty obligations of a Seller in excess of the service warranty
obligations assumed by such Purchaser pursuant to SECTION 2.4(A)(IV)
or (B)(IV) and a Purchaser shall perform such obligations, PROVIDED
that (i) such Seller will, upon notice from such Purchaser, promptly
pay such Purchaser its prices (i.e., those charged to customers) for
the services performed (or to be performed) by such Purchaser in
performing such service warranty obligations and (ii) neither
Purchaser shall be obligated to perform any such service warranty
obligations which are (A) different in kind or size from those
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performed by Sellers in their conduct of the Business, (B) in an
amount (calculated in a manner consistent with the method set forth in
SECTIONS 2.4(A)(IV) and 2.4(B)(IV)) in excess of $100,000 with respect
to any single service project performed by a Seller and $1,500,000 in
the aggregate, (C) required to be performed more than one (1) year
after the Closing Date or (D) of a type described in CLAUSES (5) or
(6) of SECTION 2.4(A)(IV) or 2.4(B)(IV). Purchasers will use
reasonable efforts, in appropriate circumstances, to preserve rights
against and obtain reimbursement or credit from vendors to the
Business in circumstances where a service or product warranty
obligation gives rise to a right of recovery from such vendor.
6.11 COOPERATION. After the Closing Date, each Seller
shall use reasonable efforts to make available to Purchasers, at
Purchasers' expense, such employees of either Seller or its Affiliates
as Purchasers shall reasonably request, in a manner that does not
unduly interfere with the performance of such employees' job
responsibilities, for the purpose of providing testimony or otherwise
assisting in legal proceedings by or against third parties.
6.12 PERSONNEL RECORDS. Notwithstanding anything to
the contrary in SECTION 2.1(A)(IV) or SECTION 2.1(B)(IV), Sellers need
not provide copies of any personnel and labor relations records to
either Purchaser unless and until a Purchaser shall request copies of
any such records (which either Purchaser may do at any time and from
time to time).
6.13 SENIOR EMPLOYEES. Sellers agree that (i) the
letter agreements, dated February 19, 1999, between U.S. Seller and
each of the Senior Employees are intended to, and do, result in the
termination, as of the Closing Date, of all obligations of the Senior
Employees under the employment agreements therein referred to, and
(ii) Sellers shall not enforce, or exercise any rights under, clause
(iv) in the second to last paragraph of such letter agreements except
to the extent Sellers could enforce, or exercise rights under, the
following clause (iv): "(iv) will not disparage Anixter based on
confidential information of Anixter acquired by you while an employee
of Anixter or encourage or assist others to do so." Sellers will,
upon U.S. Purchaser's reasonable request, enter into agreements with
Senior Employees confirming and agreeing to the foregoing and amending
clause (iv) to read as set forth in this SECTION 6.13.
6.14 MEMPHIS WAREHOUSE. Prior to the Closing, U.S.
Seller, at its sole cost and expense, agrees to implement the
recommendations of Protection Mutual Insurance in its Loss Prevention
Report, dated May 7, 1997 (such recommendations referred to as
recommendations 95-8-2 and 99-8-3 in such report), concerning the
sprinkler and ventilating system at U.S. Seller's leased warehouse in
Memphis, Tennessee. The implementation of such recommendations shall
be performed to the reasonable satisfaction of U.S. Purchaser and its
insurance risk manager.
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6.15 PAYROLL SERVICES. In the event that the Purchaser
or its Affiliate which will employ Affected Employees subsequent to
the date hereof determines within fifteen days after the date hereof
that it will not be able to satisfactorily establish payroll files for
each such Affected Employee as of the Closing Date, the Seller
employing such Affected Employees will, at its own cost and expense,
reasonably assist such employing Purchaser or its Affiliate in (i)
entering into a Contract with Automated Data Processing, Inc. for
payroll services on substantially similar terms as such Seller's
Contract with Automated Data Processing, Inc. for payroll services and
(ii) transition the payroll services to the account of the employing
Purchaser or its Affiliate at Automated Data Processing, Inc.
ARTICLE VII
COVENANTS OF PURCHASERS
Each Purchaser agrees to perform each of the following
covenants:
7.1 IMPLEMENTING AGREEMENT. Subject to the terms and
conditions hereof, each Purchaser shall take all action required of it
to fulfil its obligations under the terms of this Agreement and shall
otherwise use all commercially reasonable efforts to facilitate the
consummation of the transactions contemplated hereby. Except as
otherwise expressly permitted hereby, each Purchaser agrees that it
will not take any action that would have the effect of preventing or
impairing its performance of its obligations under this Agreement.
7.2 CONSENTS AND APPROVALS. Each Purchaser shall use
all commercially reasonable efforts to obtain all consents, approvals,
certificates and other documents required in connection with the
performance by it of its obligations under this Agreement and its
Related Agreements and the consummation by it of the transactions
contemplated hereby and thereby. Each Purchaser shall make, or cause
to be made, all filings, notices, applications, statements and reports
to all Governmental Authorities and other Persons that are required to
be made prior to the Closing Date by or on behalf of a Purchaser or
any of its Affiliates pursuant to any applicable Law or Contract in
connection with this Agreement and its Related Agreements and the
transactions contemplated hereby and thereby and shall cooperate with
each Seller in making all such filings, notices, applications,
statements and reports that are required to be made prior to the
Closing Date by or on behalf of each Seller or any of its Affiliates
pursuant to any applicable Law in connection with this Agreement and
its Related Agreements and the transactions contemplated hereby and
thereby.
7.3 CONFIDENTIALITY.
(a) At all times prior to the Closing Date, and
in the event this Agreement is terminated, at all times
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thereafter until the fifth anniversary of the date
hereof, Purchasers shall, and shall cause their
respective Affiliates to, maintain in strict confidence
all non-public or confidential information relating to
either Seller or any of its Affiliates obtained by a
Purchaser or any of its Affiliates in connection with
this Agreement or the Related Agreements or the
transactions contemplated hereby or thereby, in
accordance with the procedures it uses to protect its
own information of a similar nature and not disclose to
any Person (other than its employees, attorneys,
accountants and advisors who need to know) or use
(except in connection with the transactions
contemplated hereby and by the Related Agreements) any
such information; PROVIDED, that such restrictions
shall not apply to (i) any information which becomes
publicly available after the date of disclosure by a
Seller through no fault of Purchasers or any of their
respective Affiliates, (ii) any information which prior
to disclosure by a Seller was properly within the
legitimate possession of a Purchaser or any of its
Affiliates, (iii) any information which is developed
independently by a Purchaser or any of its Affiliates
through Persons who have not had, either directly or
indirectly, access to or knowledge of such information,
(iv) any information which is legitimately received by
a Purchaser or any of its Affiliates from a third party
(provided such third party is not known by a Purchaser
or any of its Affiliates to be bound by an obligation
of secrecy to a Seller or any of its Affiliates) or (v)
any disclosure required by Law or any Governmental
Authority, so long as notice of such disclosure is
given to Sellers prior to making such disclosure and
Purchasers cooperate with Sellers as Sellers may
reasonably request to resist such disclosure.
(b) If this Agreement is terminated, upon the
request of Sellers, Purchasers shall not retain any
written materials they or any of their respective
Affiliates have received from a Seller or its
Affiliates or their representatives or employees in
connection with this Agreement or the Related
Agreements or the transactions contemplated hereby or
thereby, nor any copies of such materials made by them.
(c) Each Purchaser shall use its best efforts to
cause its representatives, employees, attorneys,
accountants and advisors to whom information of the
type referred to in this SECTION 7.3 is disclosed
pursuant to this SECTION 7.3 or otherwise to comply
with the provisions of this SECTION 7.3.
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7.4 TAX MATTERS. After the Closing, each Purchaser
shall make available to Sellers such records related to the Business
or the Purchased Assets as a Seller may reasonably require for the
preparation of any Tax Returns or other similar governmental reports
or forms required to be filed by a Seller and such records as a Seller
may require for the defense of any audit, examination, administrative
appeal or litigation of any such Tax Return or other similar
governmental report or form. Each Purchaser agrees to preserve and
keep such records relating to any Taxes pertaining to the Purchased
Assets or the Business in its possession for a period of at least five
years after the Closing Date. In the event a Purchaser wishes to
destroy such records referred to in the preceding sentence after the
time therein specified, such Purchaser shall first give ninety (90)
days' prior written notice to Sellers and Sellers shall have the right
at their option and expense, upon prior written notice given to such
Purchaser within the ninety (90) day period, to take possession of
such records within one hundred and eighty (180) days after the date
of such notice.
7.5 CONTACTS WITH CUSTOMERS AND SUPPLIERS. Prior to
the Closing, Purchasers and their representatives shall contact and
communicate with employees, customers and suppliers of the Business in
connection with the transactions contemplated hereby only with the
consent and participation of Sellers, which shall not be unreasonably
withheld.
7.6 RESTRICTIONS RELATING TO EMPLOYEES.
(a) Each Purchaser covenants and agrees that it shall
not, and shall not permit any of its Affiliates to, directly or
indirectly:
(i) during the period commencing on the Closing
Date and ending on the fifth anniversary of the Closing
Date, use any Senior Employee or Senior Vice President
to engage in, advise, manage or operate any Restricted
Activity in any calendar year in which the total
revenues of the Purchasers and their respective
Affiliates from Restricted Activities exceed $50
million per year; or
(ii) during the period commencing on the date
hereof and ending on the earlier of (A) the fifth
anniversary of the Closing Date or (B) the second
anniversary of the date of this Agreement if the
Closing does not occur, employ, solicit for employment
or encourage to leave his or her employment with a
Seller or any of its subsidiaries any employee of
either Seller or any of its subsidiaries (any such
employee, a "SELLER EMPLOYEE"), PROVIDED, that this
SECTION 7.6(A)(II) shall not apply to (1) any Seller
Employee who has been laid off by, or who has been
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terminated by, a Seller or any of its Affiliates
(unless such termination involves a simultaneous hiring
of such employee by a Seller or any of its Affiliates),
(2) any Seller Employee who has voluntarily resigned
from employment with a Seller or any of its Affiliates
(unless such voluntary resignation involves a
simultaneous hiring of such employee by a Seller or any
of its Affiliates) and such resignation occurred more
than 180 days prior to any such employment,
solicitation or encouragement, (3) any general
solicitations for employment such as those conducted by
newspaper or other advertisements of general
circulation (but not hirings or encouragements
resulting therefrom), (4) any such employment,
solicitation or encouragement of any Senior Employee,
Senior Vice President or Affected Employee as
contemplated by this Agreement (including the
provisions of SECTION 10.1) or occurring after the
Closing Date and (5) any inadvertent such employment,
solicitation or encouragement of up to ten (10) Seller
Employees in any calendar year if such Seller Employees
are not officers of a Seller or any of its Affiliates.
(b) ENFORCEMENT. If at any time any of the provisions
of SECTION 7.6(A) shall be determined to be invalid or unenforceable
by reason of being vague or unreasonable as to duration, area, scope
of activity or otherwise, then SECTION 7.6(A) shall be considered
divisible (with the other provisions of SECTION 7.6(A) to remain in
full force and effect) and the invalid or unenforceable provisions
shall become and be deemed to be immediately amended to include only
such time, area, scope of activity and other restrictions as shall be
determined to be reasonable and enforceable by the court or other body
having jurisdiction over the matter, and Purchasers and Sellers
expressly agree that SECTION 7.6(A), as so amended, shall be valid and
binding as though any invalid or unenforceable provision had not been
included therein.
(c) REMEDIES. In the event of actual or threatened
breach of any of the provisions of SECTION 7.6(A) by either Purchaser
or any of its Affiliates, a Seller or any of its Affiliates, in
addition to any other remedies available to it for such breach or
threatened breach, including the recovery of damages, shall be
entitled to an injunction restraining such Purchaser or its Affiliate
from such conduct. If a bond or, in the case of Canada, security for
costs, is required to be posted in order for a Seller or any of its
Affiliates to secure an injunction, the parties agree that such bond
or, in the case of Canada, security for costs, need not exceed $1,000
(it being understood that the amount of such bond or security for
costs shall not in any way limit the damages that may be sought by a
Purchaser or its Affiliates in connection with such injunction). The
remedies provided in this SECTION 7.6(C) shall be cumulative and shall
not preclude the assertion or exercise of any other rights or remedies
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available under Law, in equity or otherwise in accordance with this
Agreement.
7.7 COOPERATION. After the Closing Date, each
Purchaser shall use reasonable efforts to make available to Sellers,
at Sellers' expense, such of the Hired Employees as Sellers shall
reasonably request, in a manner that does not unduly interfere with
the performance of such employees' job responsibilities, for the
purpose of providing testimony or otherwise assisting in legal
proceedings by or against third parties.
7.8 PRODUCT WARRANTIES. Purchasers shall use
reasonable efforts after the Closing to facilitate product warranty
claims against vendors to the Business made by customers of the
Business with respect to products sold, leased, licensed or provided
by a Seller to such customers prior to Closing.
7.9 CONSENT PAYMENTS. After the Closing, upon notice
from a Seller, Purchasers shall reimburse Sellers for up to one-half
of the first $200,000 and one-quarter of the second $200,000 of the
aggregate payments made by Sellers to obtain any consents to the
assignment to Purchasers of any of the Intellectual Property Licenses
set forth on SCHEDULE 2.2(A)(V) or SCHEDULE 2.2(B)(V) which are marked
with an asterisk on such Schedules. Any request by a Seller for any
such reimbursement shall be accompanied by reasonable documentation of
the related payment.
ARTICLE VIII
CONDITIONS PRECEDENT
TO OBLIGATIONS OF PURCHASERS
The obligations of each Purchaser under ARTICLES II and
III of this Agreement are subject to the satisfaction or waiver by
each Purchaser of the following conditions precedent on or before the
Closing Date:
8.1 WARRANTIES TRUE AS OF BOTH PRESENT DATE AND
CLOSING DATE. The representations and warranties of each Seller
contained herein and in its Related Agreements shall have been true,
accurate and correct in all material respects on and as of the date of
this Agreement, and shall also be true, accurate and correct in all
material respects on and as of the Closing Date with the same force
and effect as though made by each Seller on and as of the Closing
Date, PROVIDED, that, for purposes of this SECTION 8.1, any
qualifications as to materiality contained in a particular
representation and warranty shall be disregarded.
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8.2 COMPLIANCE WITH AGREEMENTS AND COVENANTS. Each
Seller Party shall have performed and complied in all material
respects with all of its covenants, obligations and agreements
contained in this Agreement and in its Related Agreements to be
performed and complied with by it on or prior to the Closing Date.
8.3 HART-SCOTT-RODINO. All waiting periods under the
HSR Act shall have expired or been earlier terminated without action
by the Justice Department or the Federal Trade Commission to prevent
or materially alter the consummation of the transactions contemplated
by this Agreement and the Related Agreements.
8.4 COMPETITION ACT. If Part IX of the COMPETITION
ACT (Canada) applies to the transactions contemplated by this
Agreement, the Purchasers shall have obtained either (a) an advance
ruling certificate pursuant to SECTION 102 of the COMPETITION ACT
(Canada) to the effect that the Director of Investigation and Research
under that Act is satisfied that there would not be sufficient grounds
upon which to apply to the Competition Tribunal under SECTION 92 of
such Act with respect to the transactions contemplated by this
Agreement, or (b) written notification pursuant to SECTION 123 of the
COMPETITION ACT (Canada) that the Director of Investigation and
Research under that Act does not at that time intend to make
application to the Competition Tribunal under SECTION 92 of that Act
in respect of the transactions contemplated by this Agreement.
8.5 CONSENTS AND APPROVALS. Each Purchaser shall have
received written evidence satisfactory to it that (a) the Sellers'
Consents and Purchasers' Consents described on SCHEDULE 8.5 have been
obtained, and no consent or approval shall contain any terms which, in
the reasonable judgment of a Purchaser, would have a Material Adverse
Effect or would have a material adverse effect on U.S. Purchaser or
both Purchasers or its or their integration or operation of the
Business after the Closing and (b) all required filings with
Governmental Authorities have been made. If either Seller updates
SCHEDULE 4.3 as permitted by SECTION 6.5, Purchasers shall be
permitted to update SCHEDULE 8.5 to add to such SCHEDULE 8.5 any
consents relating to matters added to any Schedules by a Seller after
the date of this Agreement.
8.6 NO MATERIAL ADVERSE CHANGE. No Material Adverse
Change shall have occurred and no event shall have occurred which, in
the reasonable judgment of a Purchaser, has, or could reasonably be
expected to have, a Material Adverse Effect or a material adverse
effect on the integration or operation by U.S. Purchaser or both
Purchasers of the Business after the Closing.
8.7 ACTIONS OR PROCEEDINGS. No action or proceeding
by any Governmental Authority or other Person shall have been
instituted or threatened, and no change in Law shall have occurred,
which, in the reasonable judgment of a Purchaser (a) has, or could
reasonably be expected to have, a Material Adverse Effect or a
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material adverse effect on the integration or operation by U.S.
Purchaser or both Purchasers of the Business after the Closing or (b)
could enjoin, restrain or prohibit any material provision of this
Agreement or any Related Agreement, or could result in substantial
damages in respect of any provision of this Agreement or any Related
Agreement, or could enjoin, restrain or prohibit, or could result in
substantial damages in respect of, the consummation of the trans-
actions contemplated by this Agreement or any Related Agreement or the
integration or operation of the Business by U.S. Purchaser or both
Purchasers after the Closing.
8.8 ESTOPPEL CERTIFICATES AND NON-DISTURBANCE
AGREEMENTS. U.S. Purchaser shall have received, in form and substance
satisfactory to U.S. Purchaser, (a) estoppel certificates from all
landlords under the U.S. Real Property Leases referred to on SCHEDULE
8.8(A) and (B) non-disturbance agreements from each Person holding a
mortgage on the property subject to each of the U.S. Real Property
Leases referred to on SCHEDULE 8.8(A) under which the mortgage holder
has the right to terminate the lease. Canadian Purchaser shall have
received, in form and substance satisfactory to Canadian Purchaser,
(x) estoppel certificates from all landlords under the Canadian Real
Property Leases referred to on SCHEDULE 8.8(X) and (y) non-disturbance
agreements from each Person holding a mortgage on the property subject
to each of the Canadian Real Property Leases referred to on SCHEDULE
8.8(X) under which the mortgage holder has the right to terminate the
lease.
8.9 CERTAIN EMPLOYMENT AGREEMENTS. Purchasers shall
have received evidence satisfactory to them that all employment
agreements between a Seller or any of its Affiliates and any Senior
Employee and between a Seller or any of its Affiliates and any Senior
Vice President have been terminated.
8.10 PURCHASE INVESTIGATION. Purchasers shall not have
notified Sellers within 30 days after the date of this Agreement that
Purchasers have determined, as a result of information which relates
to the Business or the Assets and is received by Purchasers after the
date of this Agreement, that (i) the Business has been conducted in a
manner which is contrary to Law and that such conduct has, or could
reasonably be expected to have, a Material Adverse Effect, (ii) either
Seller has engaged in business practices with respect to the Business
which are materially incompatible with the business practices of
Purchasers and their respective Affiliates and which, if terminated,
could, in the reasonable judgment of Purchasers, be expected to have a
Material Adverse Effect, (iii) there is any fact or circumstance which
(either alone or together with any other facts and circumstances) (x)
could reasonably be viewed as resulting in a value of the Business
which is materially less than the value of the Business which would
have been reasonably calculated by a third person (who is similarly
situated to a subsidiary of a Regional Bell Operating Company which is
similar to Purchaser's Parent) on the basis of information which
relates to the Business or the Assets and which was known to
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Purchasers prior to the date hereof or (y) could reasonably be
expected to have a material and adverse effect on the integration or
operation of the Business by U.S. Purchaser or both Purchasers after
the Closing, (iv) as a result of the consummation of the transactions
contemplated by this Agreement a Purchaser or any of its Affiliates
would or could reasonably be expected to assume or otherwise become
subject to any collective bargaining agreement or other similar union
agreement or (v) the ownership and operation of the Business after the
Closing by Purchasers could, in the reasonable judgment of Purchasers,
be expected to violate or conflict with any Law applicable to a
Purchaser or any of its Affiliates which violation or conflict cannot
be avoided without causing a Material Adverse Effect or a material
adverse effect on U.S. Purchaser or both Purchasers or any of their
respective Affiliates.
8.11 INFORMATION SERVICES LICENSE AND SUPPORT
AGREEMENT. U.S. Seller shall have entered into the Information
Services License and Support Agreement based on the principles
described in the Information Services Support Principles attached
hereto as EXHIBIT B (the "Information Services Support Principles")
and containing such other terms and conditions as U.S. Seller or
either Purchaser may reasonably request which are not inconsistent
with the principles set forth in the Information Services Support
Principles and the provisions of this Agreement.
ARTICLE IX
CONDITIONS PRECEDENT
TO OBLIGATIONS OF SELLERS
The obligations of each Seller under ARTICLE II of this
Agreement are subject to the satisfaction or waiver by each Seller of
the following conditions precedent on or before the Closing Date:
9.1 WARRANTIES TRUE AS OF BOTH PRESENT DATE AND
CLOSING DATE. The representations and warranties of each Purchaser
contained herein and in its Related Agreements shall have been true,
accurate and correct in all material respects on and as of the date of
this Agreement, and shall also be true, accurate and correct in all
material respects on and as of the Closing Date with the same force
and effect as though made by each Purchaser on and as of the Closing
Date, PROVIDED, that, for purposes of this SECTION 9.1, any
qualifications as to materiality contained in a particular
representation and warranty shall be disregarded.
9.2 COMPLIANCE WITH AGREEMENTS AND COVENANTS. Each
Purchaser Party shall have performed and complied in all material
respects with all of its covenants, obligations and agreements
contained in this Agreement and in its Related Agreements to be
performed and complied with by it on or prior to the Closing Date.
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9.3 HART-SCOTT-RODINO. All waiting periods under the
HSR Act shall have expired or been earlier terminated without action
by the Justice Department or the Federal Trade Commission to prevent
or materially alter the consummation of the transactions contemplated
by this Agreement and the Related Agreements.
9.4 COMPETITION ACT. If Part IX of the COMPETITION
ACT (Canada) applies to the transactions contemplated by this
Agreement, either (a) Purchasers have obtained either (i) an advance
ruling certificate pursuant to SECTION 102 of the COMPETITION ACT
(Canada) to the effect that the Director of Investigation and Research
under the Act is satisfied that there would not be sufficient grounds
upon which to apply to the Competition Tribunal under Section 92 of
such Act with respect to the transactions contemplated by this
Agreement, or (ii) written notification pursuant to Section 123 of the
COMPETITION ACT (Canada) that the Director of Investigation and
Research under that Act does not at that time intend to make
application to the Competition Tribunal under Section 92 of that Act
in respect of the transactions contemplated by this Agreement, or
(b) the waiting period prescribed by Section 123 of that Act shall
have expired unless within that waiting period the Director of
Investigation and Research under that Act has notified Canadian
Purchaser that he intends to make application to the Competition
Tribunal under Section 92 of that Act in respect of the transactions
contemplated by this Agreement.
9.5 ACTIONS OR PROCEEDINGS. No action or proceeding
by any Governmental Authority or other Person shall have been
instituted or threatened, and no change in Law shall have occurred,
which, in the reasonable judgment of a Seller, could enjoin, restrain
or prohibit, any material provision of this Agreement or any Related
Agreement, or could result in substantial damages in respect of any
provision of this Agreement or any Related Agreement, or could enjoin,
restrain or prohibit, or could result in substantial damages in
respect of, the consummation of the transactions contemplated by this
Agreement or any Related Agreement.
9.6 INFORMATION SERVICES LICENSE AND SUPPORT
AGREEMENT. Purchasers shall have entered into the Information
Services License and Support Agreement based on the principles
described in the Information Services Support Principles and
containing such other terms and conditions as U.S. Seller or either
Purchaser may reasonably request which are not inconsistent with the
principles set forth in the Information Services Support Principles
and the provisions of this Agreement.
9.7 CONSENTS. Each Seller shall have received written
evidence satisfactory to it that the Sellers' Consents described on
SCHEDULE 9.7 have been obtained.
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ARTICLE X
EMPLOYEES AND BENEFIT PLANS
10.1 EMPLOYEES.
(a) Each Seller shall make all of the Affected
Employees available to Purchasers for interviews and
meetings during the period after the date hereof and
prior to the Closing Date. A Purchaser or an Affiliate
of a Purchaser shall make offers of employment to all
Affected Employees other than Senior Employees
("OFFERED EMPLOYEES") conditional upon the Closing and
the passage of any drug or substance tests required by
Law and, (i) for salary, bonus and job responsibilities
substantially similar to those on which they are then
employed by a Seller (other than any employment
agreements) and (ii) with respect to benefits, on the
terms and conditions on which similarly situated
employees of Purchasers' Parent are employed. Each
Seller shall use all reasonable efforts to persuade
Offered Employees to accept such offers, shall not take
any actions that dissuade any Offered Employee from
accepting any such offer, and shall not, and shall not
permit any of its Affiliates to, solicit for employment
any Offered Employee prior to the Closing. Each
Offered Employee who accepts any such offer of
employment and who becomes an employee of a Purchaser
or any of its Affiliates shall be referred to herein as
a "HIRED EMPLOYEE." Effective as of the close of
business on the Closing Date, each Seller shall
terminate the employment of each Offered Employee who
has not otherwise terminated his or her employment with
such Seller. After the Closing and until twelve (12)
months after the Closing Date, neither Seller shall
(and neither Seller shall permit any of its Affiliates
to) employ or solicit for employment any Offered
Employee who is offered a position with a Purchaser or
one of its Affiliates which is generally comparable to
such Offered Employee's current position and who does
not become a Hired Employee. Nothing in this ARTICLE X
shall obligate either Purchaser or any of its
Affiliates to retain any Hired Employee as an employee
for any period after the Closing or to provide any
particular kind of job responsibilities or, except as
provided in SECTION 10.1(E) or SECTION 10.2(B) with
respect to recognition of past service, to maintain any
level of compensation or benefits for any Hired
Employee for any period after the Closing.
(b) With respect to all of its Affected Employees
(including Hired Employees), each Seller shall be
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responsible for and shall pay, on or prior to the
Closing Date or the first regular pay day occurring
after the Closing Date, all wages, bonuses, vacation
pay, pay for other compensated absences and other
remuneration (including mandatory or discretionary
benefits) earned or accrued by such employees as of the
close of business on the Closing Date, including any
related payroll deductions (such as FICA and any
pension or other employee benefit plan contributions
and employment Taxes) with respect thereto, regardless
of whether such amounts have been accrued on the books
of such Seller at the close of business on the Closing
Date.
(c) Sellers and Purchasers agree that they will
not apply the alternative procedure contained in
SECTION 5 of Revenue Procedure 96-60. Accordingly,
U.S. Seller acknowledges that it will be responsible
for the furnishing of a Form W-2 to each Affected
Employee in the United States, such Form W-2 to
disclose all wages and other compensation paid for the
period ending on the Closing Date, and taxes withheld
thereon. U.S. Purchaser acknowledges that it will be
responsible for the furnishing of a Form W-2 to each
Hired Employee in the United States, such Form W-2 to
disclose all wages and other compensation paid for the
period beginning on the day following the Closing Date
and ending on December 31, 1999, and taxes withheld
thereon.
(d) Each Seller shall have liability for and
shall pay all severance payments (if any) due to any of
its Affected Employees (including any Hired Employee)
as a result of the termination of their employment with
such Seller.
(e) The Purchaser or its Affiliate that employs a
Hired Employee shall have liability for and shall pay
severance payments (determined in accordance with
SCHEDULE 10.1(E)) to any Hired Employee (other than
Senior Employees) if the Purchaser or its Affiliate
terminates (as described in the second and third
paragraphs in SCHEDULE 10.1(E)) the Hired Employee's
employment with a Purchaser or its Affiliate without
cause (as described in the second paragraph in Schedule
10.1(e)) at any time within one year after the Closing
Date. No severance benefits will be required to be
paid to any Hired Employee under any plan of a
Purchaser or its Affiliates that provides severance
benefits on account of a "change in control" of a
Purchaser or one of its Affiliates, regardless of when
such change may occur. Upon notice from a Purchaser,
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Sellers shall promptly pay such Purchaser (i) the
amount (which amount, in appropriate circumstances, may
be reduced if a Seller or any of its Affiliates hires
the terminated employee) of any severance payment paid
or to be paid to any Administrative Employee (it being
understood that Purchasers shall give Sellers notice of
any proposed termination of an Administrative Employee
and a period of ten (10) Business Days for Sellers to
attempt to hire such employee before his or her
termination) and (ii) one half of the amount of any
severance payment payable in excess of the amount
determined in accordance with SCHEDULE 10.1(E) which is
payable to any of the first ten (10) terminated Hired
Employees employed by either Purchaser or any of their
Affiliates in Canada.
10.2 LIABILITIES UNDER BENEFIT PLANS.
(a) Each Seller shall retain all of its Benefit
Plans, and neither Purchaser shall purchase any assets
of, and neither Purchaser shall assume nor be deemed to
have assumed any liability or responsibility for any
obligations or liabilities under, with respect to or
arising in connection with, any Benefit Plan, whenever
arising, or any liability or responsibility of either
Seller with respect to any Affected Employee, including
Hired Employees.
(b) Subject to SECTION 10.1(E), the Purchaser or
its Affiliate that employs Hired Employees shall credit
service with a Seller and its Affiliates rendered prior
to the Closing Date to Hired Employees under such
Purchaser's or its Affiliates' employee benefit plans
and arrangements under which Hired Employees will be
covered after the Closing Date, but in no event will
such service recognition extend to (i) the accrual of
any benefits under any of such Purchaser's or its
Affiliates' pension plans (whether qualified or non-
qualified) or (ii) attainment of the "Rule of 75" for
purposes of post-retirement medical and other benefits.
(c) Subject to SECTION 10.1(E), nothing in this
Agreement shall limit or restrict in any way the rights
of Purchasers and their Affiliates to modify, amend,
terminate or establish employee benefit plans,
programs, policies or arrangements in whole or in part
at any time.
10.3 NO THIRD PARTY BENEFICIARIES. It is understood
and agreed between the parties that all provisions contained in this
Agreement with respect to employee benefit plans, employee
compensation and terms of employment are included for the sole benefit
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of the respective parties hereto and do not and shall not create any
right in any other Person, including any Hired Employee, any
participant in any benefit or compensation plan or any beneficiary
thereof.
ARTICLE XI
CLOSING
11.1 CLOSING. The Closing shall take place at the
offices of Mayer, Brown & Platt, 190 South LaSalle Street, Chicago,
Illinois 60603, at 10:00 a.m. on the date that is five (5) Business
Days after all of the closing conditions set forth in ARTICLES VIII
and IX have been satisfied, or at such other place, time and date as
Sellers and Purchasers may mutually agree. The Closing, and all
transactions to occur at the Closing or on the Closing Date, shall be
deemed to have taken place at, and shall be effective as of, the close
of business on the Closing Date.
11.2 DELIVERIES BY U.S. SELLER. At the Closing, U.S.
Seller shall deliver to U.S. Purchaser the following:
(a) The Assignment and Assumption Agreement
(U.S.) in the form set forth in EXHIBIT A-1 duly
executed by U.S. Seller.
(b) The Bill of Sale (U.S.) in the form set forth
in EXHIBIT F-1 duly executed by U.S. Seller;
(c) Originals (or true copies of any Contract
described in this SECTION 11.2(C) not assigned to a
Purchaser) of, and duly executed assignments of (to the
extent being assigned to U.S. Purchaser in connection
with this Agreement), all of the following: (i) the
U.S. Real Property Leases (such assignments shall be in
recordable form); (ii) the U.S. Personal Property
Leases (if such Leases or a memorandum thereof have
been recorded, such assignments shall be in recordable
form); and (iii) all other Purchased Contracts and
Permits to which U.S. Seller is a party;
(d) Certificates of title for all Vehicles owned
by U.S. Seller, duly endorsed for transfer to U.S.
Purchaser;
(e) An affidavit stating, under penalties of
perjury, U.S. Seller's U.S. taxpayer identification
number and that U.S. Seller is not a "foreign person,"
as defined in Section 1445 of the Code;
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(f) A written statement from each Person holding
a Lien upon any of the Purchased Assets owned by U.S.
Seller, confirming the repayment of the indebtedness
secured thereby and the release as of the Closing Date
of such Lien;
(g) Other instruments of transfer reasonably
required by U.S. Purchaser to evidence the transfer of
the Purchased Assets from U.S. Seller to U.S.
Purchaser, including assignments with respect to any
Intellectual Property registered, recorded or filed
with any Governmental Authority, in form suitable for
registration, recordation or filing with such
Governmental Authority, in each case duly executed by
U.S. Seller;
(h) A certificate, dated the Closing Date, of
U.S. Seller certifying as to the compliance by U.S.
Seller with SECTIONS 8.1 and 8.2;
(i) A certificate of the secretary of U.S. Seller
certifying resolutions of the board of directors of
U.S. Seller approving and authorizing the execution,
delivery and performance of this Agreement and its
Related Agreements and the consummation by U.S. Seller
of the transactions contemplated hereby and thereby
(together with an incumbency and signature certificate
regarding the officer(s) signing on behalf of U.S.
Seller);
(j) A long-form certificate of incorporation of
U.S. Seller certified by the Secretary of State of
Delaware, and the bylaws of U.S. Seller, certified by
the secretary of U.S. Seller;
(k) Certificates of Good Standing for U.S. Seller
from the States of Delaware and Illinois;
(l) An opinion, dated the Closing Date, of James
E. Knox, Esq., counsel for U.S. Seller and Sellers'
Parent, in form reasonably satisfactory to U.S.
Purchaser and substantially to the effect set forth on
EXHIBIT G-1;
(m) The Temporary Trademark Agreement, the
Transition Services Agreement (U.S.), and the Shared
Facilities Agreement (U.S.), duly executed by U.S.
Seller; and
(n) Such other documents and instruments as may
be required by any other provision of this Agreement or
as may reasonably be requested by U.S. Purchaser to
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consummate the transactions contemplated by this
Agreement and the Related Agreements.
11.3 DELIVERIES BY CANADIAN SELLER. At the Closing,
Canadian Seller shall deliver to Canadian Purchaser the following:
(a) The Assignment and Assumption Agreement
(Canada) in the form set forth in EXHIBIT A-2 duly
executed by Canadian Seller.
(b) The Bill of Sale (Canada) in the form set
forth in EXHIBIT F-2 duly executed by Canadian Seller;
(c) The election referred to in SECTION 3.5;
(d) The certificate or certificates referred to
in SECTION 8.13;
(e) The election or elections referred to in
SECTION 3.7;
(f) Originals (or true copies of any Contract
described in this SECTION 11.3(F) not assigned to a
Purchaser) of, and duly executed assignments of (to the
extent being assigned to Canadian Purchaser in
connection with this Agreement), all of the following:
(i) the Canadian Real Property Leases (such assignments
shall be in recordable form); (ii) the Canadian
Personal Property Leases (if such Leases or a
memorandum thereof have been registered, such
assignments shall be in registerable form); and (iii)
all other Purchased Contracts and Permits to which
Canadian Seller is a party;
(g) Certificates of title, registrations,
licenses or permits for all Vehicles owned by Canadian
Seller, duly endorsed for transfer to Canadian
Purchaser;
(h) A written statement from each Person holding
a Lien upon any of the Purchased Assets owned by
Canadian Seller, confirming the repayment of the
indebtedness secured thereby and the release as of the
Closing Date of such Lien;
(i) Other instruments of transfer reasonably
required by Canadian Purchaser to evidence the transfer
of the Purchased Assets from Canadian Seller to
Canadian Purchaser, including assignments with respect
to any Intellectual Property registered, recorded or
filed with any Governmental Authority, in form suitable
for registration, recordation or filing with such
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Governmental Authority, in each case duly executed by
Canadian Seller;
(j) A certificate, dated the Closing Date, of
Canadian Seller certifying as to the compliance by
Canadian Seller with SECTIONS 8.1 and 8.2;
(k) A certificate of the secretary of Canadian
Seller certifying resolutions of the board of directors
of Canadian Seller approving and authorizing the
execution, delivery and performance of this Agreement
and its Related Agreements and the consummation by
Canadian Seller of the transactions contemplated hereby
and thereby (together with an incumbency and signature
certificate regarding the officer(s) signing on behalf
of Canadian Seller);
(l) Certificate and Articles of Amalgamation of
Canadian Seller, issued under the laws of Canada and
the bylaws or similar instruments of Canadian Seller,
certified as true and complete copies thereof by the
secretary of Canadian Seller;
(m) Certificate of Compliance for Canadian Seller
from Industry Canada;
(n) An opinion, dated the Closing Date, of Borden
& Elliott, counsel for Canadian Seller, in form
reasonably satisfactory to Canadian Purchaser and
substantially to the effect set forth on EXHIBIT G-2;
(o) The Transition Services Agreement (Canada),
the Warehouse Services Agreement and the Shared
Facilities Agreement (Canada), duly executed by
Canadian Seller; and
(p) Such other documents and instruments as may
be required by any other provision of this Agreement or
as may reasonably be requested by Canadian Purchaser to
consummate the transactions contemplated by this
Agreement and the Related Agreements.
11.4 DELIVERIES BY SELLERS' PARENT. At the Closing,
Sellers' Parent shall deliver to Purchasers the following:
(a) A certificate of the secretary of Sellers'
Parent certifying resolutions of the board of directors
of Sellers' Parent approving and authorizing the
execution, delivery and performance of this Agreement
and the consummation by Sellers' Parent of the
transactions contemplated hereby (together with an
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incumbency and signature certificate regarding the
officer(s) signing on behalf of Sellers' Parent);
(b) A long-form certificate of incorporation of
Sellers' Parent certified by the Secretary of State of
Delaware, and the bylaws of Sellers' Parent, certified
by the secretary of Sellers' Parent; and
(c) Certificates of Good Standing for Sellers'
Parent from the States of Delaware and Illinois.
11.5 DELIVERIES BY U.S. PURCHASER. At the Closing,
U.S. Purchaser and Canadian Purchaser shall make the payments
described in SECTION 3.1 and U.S. Purchaser shall deliver to U.S.
Seller the following:
(a) The Assignment and Assumption Agreement
(U.S.) referred to in SECTION 11.2(A), duly executed by
U.S. Purchaser;
(b) A certificate, dated the Closing Date, of
U.S. Purchaser, certifying as to compliance by U.S.
Purchaser with SECTIONS 9.1 and 9.2;
(c) A certificate of the secretary of U.S.
Purchaser certifying resolutions of the board of
directors of U.S. Purchaser approving and authorizing
this Agreement and its Related Agreements and the
consummation by U.S. Purchaser of the transactions
contemplated hereby and thereby (together with an
incumbency and signature certificate regarding the
officer(s) signing on behalf of U.S. Purchaser);
(d) A long-form certificate of incorporation of
U.S. Purchaser certified by the Secretary of State of
Delaware, and bylaws of U.S. Purchaser certified by the
secretary of U.S. Purchaser;
(e) An opinion, dated the Closing Date, of
Marilyn Spracker, Esq., counsel for U.S. Purchaser and
Purchasers' Parent, in form reasonably satisfactory to
U.S. Seller and substantially to the effect set forth
on EXHIBIT H-1; and
(f) The Temporary Trademark Agreement, the
Transition Services Agreement (U.S.), and the Shared
Facilities Agreement (U.S.), duly executed by U.S.
Purchaser.
11.6 DELIVERIES BY CANADIAN PURCHASER. At the Closing,
Canadian Purchaser and U.S. Purchaser shall make the payments
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described in SECTION 3.1 and Canadian Purchaser shall deliver to
Canadian Seller the following:
(a) The Assignment and Assumption Agreement
(Canada) referred to in SECTION 11.3(A), duly executed
by Canadian Purchaser;
(b) The election referred to in SECTION 3.5;
(c) The election or elections referred to in
SECTION 3.7;
(d) A certificate, dated the Closing Date, of
Canadian Purchaser, certifying as to compliance by
Canadian Purchaser with SECTIONS 9.1 and 9.2;
(e) A certificate of the secretary of Canadian
Purchaser certifying resolutions of the board of
directors of Canadian Purchaser approving and
authorizing this Agreement and its Related Agreements
and the consummation by Canadian Purchaser of the
transactions contemplated hereby and thereby (together
with an incumbency and signature certificate regarding
the officer(s) signing on behalf of Canadian
Purchaser);
(f) Certificate of Incorporation and Memorandum
and Articles of Incorporation of Canadian Purchaser,
issued under the laws of Nova Scotia and the bylaws or
similar instruments of Canadian Purchaser, certified as
true and correct copies thereof by the secretary of
Canadian Purchaser;
(g) An opinion, dated the Closing Date, of Blake,
Cassels & Graydon, counsel for Canadian Purchaser, in
form reasonably satisfactory to Canadian Seller and
substantially to the effect set forth on EXHIBIT H-2;
and
(h) The Temporary Trademark Agreement, the
Transition Services Agreement (Canada), the Warehouse
Services Agreement and the Shared Facilities Agreement
(Canada), duly executed by Canadian Purchaser.
11.7 DELIVERIES BY PURCHASERS' PARENT. At the Closing,
Purchasers' Parent shall deliver to Sellers the following:
(a) A certificate of the secretary of Purchasers'
Parent certifying resolutions of the board of directors
of Purchasers' Parent approving and authorizing the
execution, delivery and performance of this Agreement
and the consummation by Purchasers' Parent of the
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transactions contemplated hereby (together with an
incumbency and signature certificate regarding the
officer(s) signing on behalf of Purchasers' Parent);
and
(b) A long-form certificate of incorporation of
Purchasers' Parent certified by the Secretary of State
of Delaware, and the bylaws of Purchasers' Parent,
certified by the secretary of Purchasers' Parent.
ARTICLE XII
TERMINATION
12.1 TERMINATION. This Agreement may be terminated at
any time on or prior to the Closing Date:
(a) With the mutual consent of Sellers and
Purchasers;
(b) By Purchasers, if there shall have been a
material breach of any covenant, representation or
warranty of either Seller hereunder or under any of its
respective Related Agreements, such breach would
constitute the failure to satisfy a condition precedent
specified in ARTICLE VIII if such breach was in
existence at the time of Closing and such breach shall
not have been remedied within thirty (30) days after
receipt by such Seller of a notice in writing from a
Purchaser specifying the breach and requesting such be
remedied;
(c) By Sellers, if there shall have been a
material breach of any covenant, representation or
warranty of either Purchaser hereunder or under any of
its respective Related Agreements, such breach would
constitute the failure to satisfy a condition precedent
specified in ARTICLE IX if such breach was in existence
at the time of Closing and such breach shall not have
been remedied within thirty (30) days after receipt by
such Purchaser of notice in writing from a Seller
specifying the breach and requesting such be remedied;
or
(d) By Sellers or Purchasers, if the Closing
shall not have taken place on or before May 7, 1999;
PROVIDED, that the right to terminate this Agreement
under this CLAUSE (D) shall not be available to any
party whose failure to fulfil any obligation under this
Agreement has been the cause of or resulted in the
failure of the Closing to occur on or before such date.
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In the event of any termination pursuant to this
SECTION 12.1 (other than pursuant to CLAUSE (A)), written notice
setting forth the reasons therefor shall forthwith be given by the
terminating parties to the other parties.
12.2 EFFECT OF TERMINATION. If this Agreement is
terminated pursuant to SECTION 12.1, all obligations of the parties
hereunder shall terminate, except for the obligations set forth in
SECTIONS 6.6(b), (C) and (D), 7.3, 7.6(A)(II) and 14.1, which shall
survive the termination of this Agreement, and except that no such
termination shall relieve any party from liability for any prior
wilful breach of this Agreement.
ARTICLE XIII
INDEMNIFICATION
13.1 SURVIVAL. The representations and warranties of
the parties hereto contained herein and in the Related Agreements
shall survive the Closing for a period of two (2) years, except that
(i) Tax Warranties shall survive until the Tax Statute of Limitations
Date, (ii) Sufficiency Warranties and Environmental Warranties shall
survive the Closing for a period of five (5) years, (iii) Title and
Authorization Warranties and Purchasers' Authorization Warranties
shall survive forever and (iv) the representations and warranties
contained in SECTION 4.12 shall not survive Closing.
13.2 INDEMNIFICATION BY SELLERS. Subject to SECTION
13.4, Sellers, jointly and severally, agree to indemnify each
Purchaser and its Affiliates (each a "PURCHASER INDEMNIFIED PARTY")
against, and agree to hold each of them harmless from, any and all
Losses incurred or suffered by them relating to or arising out of or
in connection with any of the following:
(a) any breach of or any inaccuracy in (or any
alleged breach of or inaccuracy in) any representation
or warranty made by either Seller in this Agreement or
any Related Agreement or any document delivered by
either Seller at the Closing; PROVIDED, that (i) except
for breaches of or inaccuracies in Tax Warranties,
Sufficiency Warranties, Environmental Warranties or
Title and Authorization Warranties, a notice of the
Purchaser Indemnified Party's claim shall have been
given to Sellers not later than the close of business
on the second anniversary of the Closing Date, (ii) in
the case of a Tax Warranty, a notice of the Purchaser
Indemnified Party's claim shall have been given to
Sellers not later than the Tax Statute of Limitations
Date, and (iii) in the case of a Sufficiency Warranty
or an Environmental Warranty, a notice of the Purchaser
Indemnified Party's claim shall have been given to
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Sellers not later than the close of business on the
fifth anniversary of the Closing Date;
(b) any breach of or failure by either Seller to
perform any covenant or obligation of either Seller set
out or contemplated in this Agreement or any Related
Agreement or any document delivered by either Seller at
the Closing;
(c) the Excluded Assets, the Excluded Obligations
and, other than the Assumed Obligations, any other
debts, claims, obligations or liabilities relating to
or arising out of or in connection with goods or
services sold, leased, licensed or otherwise provided
by a Seller on or prior to the Closing Date or
otherwise relating to or arising out of or in
connection with the ownership or operation of the
Assets or the Business on or prior to the Closing Date;
(d) any matters identified on SCHEDULE 4.22;
(e) the bulk sales Laws of any jurisdiction
applicable to the transactions contemplated herein, and
any Laws of any jurisdiction imposing liability on a
Purchaser for a Seller's Taxes, including the failure
to comply with any such Laws;
(f) any debts, claims, obligations or liabilities
relating to or arising out of or in connection with the
failure of any good or service sold, leased, licensed
or otherwise provided by a Seller or any of its
Affiliates to be Year 2000 Compliant; or
(g) any failure to obtain the consent to
assignment to Purchasers of (i) any Personal Property
Leases set forth on Schedules 2.2(A)(II) or 2.2(B)(II)
which are marked with an asterisk on either such
Schedule or (ii) any Intellectual Property Licenses set
forth on Schedules 2.2(A)(V) or 2.2(B)(V) which are
marked with an asterisk on either such Schedule (it
being understood and agreed that Losses for purposes of
this SECTION 13.2(G) shall include lost profits and
other consequential damages, net of any amounts which
Purchasers would have paid under SECTION 7.9 if such
consent had been obtained but did not pay since such
consent was not obtained).
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13.3 INDEMNIFICATION BY PURCHASERS. Subject to SECTION
13.4, Purchasers, jointly and severally, agree to indemnify each
Seller and its Affiliates (each a "Seller Indemnified Party") against,
and agree to hold each of them harmless from, any and all Losses
incurred or suffered by them relating to or arising out of or in
connection with any of the following:
(a) any breach of or any inaccuracy in (or any
alleged breach of or inaccuracy in) any representation
or warranty made by either Purchaser in this Agreement
or any Related Agreement or any document delivered by
either Purchaser at the Closing; PROVIDED, that except
for breaches of or inaccuracies in Purchasers'
Authorization Warranties, a notice of the Seller
Indemnified Party's claim shall have been given to
Purchasers not later than the close of business on the
second anniversary of the Closing Date;
(b) any breach of or failure by either Purchaser
to perform any covenant or obligation of either
Purchaser set out or contemplated in this Agreement or
any Related Agreement or any document delivered by
either Purchaser at the Closing;
(c) the Assumed Obligations; or
(d) the failure by any Canadian taxing authority
to accept any election referred to in SECTION 3.7.
13.4 LIMITATIONS ON INDEMNIFICATION. Sellers shall not
have any liability pursuant to SECTION 13.2(A) unless and until the
aggregate amount of all Losses incurred or suffered by the Purchaser
Indemnified Parties exceeds $1,000,000, after which time the Purchaser
Indemnified Parties shall be entitled to recover all of their Losses
in excess of $1,000,000; PROVIDED, that this SECTION 13.4 shall not
apply to any breach of or inaccuracy in (or any alleged breach of or
inaccuracy in) any Title and Authorization Warranty or any
representation or warranty in SECTION 4.20, SECTION 4.22 or SECTION
4.28. Purchasers shall not have any liability pursuant to SECTION
13.3(A) unless and until the aggregate amount of all Losses incurred
or suffered by the Seller Indemnified Parties exceeds $1,000,000,
after which time the Seller Indemnified Parties shall be entitled to
recover all of their Losses in excess of $1,000,000; PROVIDED, that
this SECTION 13.4 shall not apply to any breach of or inaccuracy in
(or any alleged breach of or inaccuracy in) any representation or
warranty in SECTION 5.5.
13.5 CLAIMS. As soon as is reasonably practicable
after becoming aware of a claim for indemnification under this
Agreement not involving any claim or demand, or the commencement of
any suit, action or proceeding, of the type described in SECTION 13.6,
the Indemnified Person shall promptly give notice to the Indemnifying
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Person of such claim and the amount (to the extent then determinable)
the Indemnified Person will be entitled to receive hereunder from the
Indemnifying Person; PROVIDED, that the failure of the Indemnified
Person to give notice shall not relieve the Indemnifying Person of its
obligations under this Article XIII except to the extent (if any) that
the Indemnifying Person shall have been actually prejudiced thereby.
If the Indemnifying Person does not object in writing to such
indemnification claim within thirty (30) Business Days of receiving
notice thereof, the Indemnified Person shall be entitled to recover
promptly from the Indemnifying Person the amount of such claim, and no
later objection by the Indemnifying Person shall be permitted. If the
Indemnifying Person agrees that it has an indemnification obligation
but objects that it is obligated to pay only a lesser amount, the
Indemnified Person shall nevertheless be entitled to recover promptly
from the Indemnifying Person the lesser amount, without prejudice to
the Indemnified Person's claim for the difference.
13.6 NOTICE OF THIRD PARTY CLAIMS; ASSUMPTION OF
DEFENSE. The Indemnified Person shall give notice as promptly as is
reasonably practicable to the Indemnifying Person of the assertion of
any claim or demand, or the commencement of any suit, action or
proceeding, by any Person not a party hereto in respect of which
indemnity may be sought under this Agreement; PROVIDED, that the
failure of the Indemnified Person to give notice shall not relieve the
Indemnifying Person of its obligations under this ARTICLE XIII except
to the extent (if any) that the Indemnifying Person shall have been
actually prejudiced thereby. The Indemnifying Person may, at its own
expense (a) participate in the defense of any claim, demand, suit,
action or proceeding and (b) upon notice to the Indemnified Person and
the Indemnifying Person's delivering to the Indemnified Person of a
written agreement that the Indemnified Person is entitled to
indemnification pursuant to SECTION 13.2 or 13.3 for all Losses
arising out of such claim, demand, suit, action or proceeding, at any
time during the course of any such claim, demand, suit, action or
proceeding, assume the defense thereof; PROVIDED, that (i) the
Indemnifying Person's counsel is reasonably satisfactory to the
Indemnified Person and (ii) the Indemnifying Person shall thereafter
consult with the Indemnified Person upon the Indemnified Person's
reasonable request for such consultation from time to time with
respect to such claim, demand, suit, action or proceeding. If the
Indemnifying Person assumes such defense, the Indemnified Person shall
have the right (but not the obligation) to participate in the defense
thereof and to employ counsel, at its own expense, separate from the
counsel employed by the Indemnifying Person. If, however, the
Indemnified Person reasonably determines in its judgment that
representation by the Indemnifying Person's counsel of both the
Indemnifying Person and the Indemnified Person would present such
counsel with a conflict of interest, then such Indemnified Person may
employ separate counsel to represent or defend it in any such claim,
demand, action, suit or proceeding and the Indemnifying Person shall
pay the reasonable fees and disbursements of such separate counsel.
Whether or not the Indemnifying Person chooses to defend or prosecute
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any such claim, demand, suit, action or proceeding, all of the parties
hereto shall cooperate in the defense or prosecution thereof.
13.7 SETTLEMENT OR COMPROMISE. Any settlement or
compromise made or caused to be made by the Indemnified Person or the
Indemnifying Person, as the case may be, of any such claim, demand,
suit, action or proceeding of the kind referred to in SECTION 13.6
shall also be binding upon the Indemnifying Person or the Indemnified
Person, as the case may be, in the same manner as if a final judgment
or decree had been entered by a court of competent jurisdiction in the
amount of such settlement or compromise; PROVIDED, that no obligation,
restriction or Loss shall be imposed on the Indemnified Person as a
result of such settlement or compromise without its prior written
consent. The Indemnified Person will give the Indemnifying Person at
least thirty (30) Business Days' notice of any proposed settlement or
compromise of any claim, demand, suit, action or proceeding it is
defending, during which time the Indemnifying Person may reject such
proposed settlement or compromise; PROVIDED, that from and after such
rejection, the Indemnifying Person shall be obligated to assume the
defense of and full and complete liability and responsibility for such
claim, demand, suit, action or proceeding and any and all Losses in
connection therewith in excess of the amount of unindemnifiable Losses
which the Indemnified Person would have been obligated to pay under
the proposed settlement or compromise.
13.8 FAILURE OF INDEMNIFYING PERSON TO ACT. In the
event that the Indemnifying Person does not elect to assume
the defense of any claim, suit, action or proceeding, then any failure
of the Indemnified Person to defend or to participate in the defense
of any such claim, suit, action or proceeding or to cause the same to
be done, shall not relieve the Indemnifying Person of its obligations
hereunder.
13.9 EFFECT ON PURCHASE PRICE OF INDEMNITY PAYMENTS.
Any amounts payable under SECTION 13.2 or SECTION 13.3 shall be
treated by Purchasers and Sellers as an adjustment to the Purchase
Price of the Purchased Assets to the extent that such treatment is in
accordance with applicable Tax Law. If any party determines that any
amount payable under SECTION 13.2 or SECTION 13.3 shall be treated as
other than an adjustment to the Purchase Price, that party shall
promptly notify the other parties.
13.10 INFORMATION SERVICES LICENSE AND SUPPORT
AGREEMENT. Notwithstanding anything to the contrary in this ARTICLE
XIII, the provisions of this ARTICLE XIII shall apply to the
Information Services License and Support Agreement only to the extent
set forth therein.
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ARTICLE XIV
MISCELLANEOUS
14.1 EXPENSES. Except as otherwise provided herein,
each party hereto shall bear its own expenses with respect to the
transactions contemplated hereby. Purchasers and Sellers shall each
pay (or reimburse the other for) one-half of all sales, use, stamp,
transfer, vehicle use, service, recording, real estate and like taxes
or fees, if any, imposed by any Governmental Authority in connection
with the transfer and assignment of the Purchased Assets.
14.2 AMENDMENT. This Agreement may be amended,
modified or supplemented but only in writing signed by each Purchaser
and each Seller.
14.3 NOTICES. Any notice, request, instruction or
other document to be given hereunder by a party hereto shall be in
writing and shall be deemed to have been given (a) when received if
given in person or by courier or a courier service, (b) on the
Business Day after the date of transmission if sent by telex,
facsimile or other wire transmission (receipt confirmed) or (c) five
(5) Business Days after being deposited in the mail, certified or
registered, postage prepaid:
If to U.S. Seller, addressed as follows:
Anixter Inc.
4711 Golf Road
Skokie, Illinois 60076
Attention: President
Telephone No.: (847) 677-2600
Facsimile No.: (847) 677-8557
with a copy to:
Anixter Inc.
4711 Golf Road
Skokie, Illinois 60076
Attention: General Counsel
Telephone No.: (847) 677-2600
Facsimile No.: (847) 715-7604
and
Schiff Hardin & Waite
7300 Sears Tower
Chicago, Illinois 60606
Attention: Stuart L. Goodman, Esq.
Telephone No.: (312) 258-5500
Facsimile No.: (312) 258-5600
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If to Canadian Seller, addressed as follows:
Anixter Canada Inc.
c/o Anixter International Inc.
4711 Golf Road
Skokie, Illinois 60076
Attention: President
Telephone No.: (847) 677-2600
Facsimile No.: (847) 677-8557
with a copy to:
Anixter Canada Inc.
c/o Anixter International Inc.
4711 Golf Road
Skokie, Illinois 60076
Attention: General Counsel
Telephone No.: (847) 677-2600
Facsimile No.: (847) 715-7604
and
Schiff Hardin & Waite
7300 Sears Tower
Chicago, Illinois 60606
Attention: Stuart L. Goodman, Esq.
Telephone No.: (312) 258-5500
Facsimile No.: (312) 258-5600
and
Borden & Elliott
40 King Street West
Toronto, Ontario, Canada M5H 3Y4
Attention: Winnie Tse, Esq.
Telephone No.: (416) 367-6000
Facsimile No.: (416) 367-6749
If to Sellers' Parent, addressed as follows:
Anixter International Inc.
4711 Golf Road
Skokie, Illinois 60076
Attention: President
Telephone No.: (847) 677-2600
Facsimile No.: (847) 677-8557
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with a copy to:
Anixter International Inc.
4711 Golf Road
Skokie, Illinois 60076
Attention: General Counsel
Telephone No.: (847) 677-2600
Facsimile No.: (847) 715-7604
and
Schiff Hardin & Waite
7300 Sears Tower
Chicago, Illinois 60606
Attention: Stuart L. Goodman, Esq.
Telephone No.: (312) 258-5500
Facsimile No.: (312) 258-5600
If to U.S. Purchaser, addressed as follows:
ORC ACQUISITION CORP.
c/o Ameritech Corporation,
Custom Business Services
225 West Randolph
Chicago, Illinois 60606
Attention: President
Telephone No.: (312) 364-3300
Facsimile No.: (312) 364-3306
with a copy to:
Ameritech Corporation
30 South Wacker Drive
39th Floor
Chicago, Illinois 60606
Attention: Secretary
Telephone No.: (312) 750-5284
Facsimile No.: (312) 609-6307
and
Mayer, Brown & Platt
190 South LaSalle Street
Chicago, Illinois 60603
Attention: Frederick B. Thomas, Esq.
Telephone No.: (312) 782-0600
Facsimile No.: (312) 701-7711
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If to Canadian Purchaser, addressed as follows:
3026186 Nova Scotia Company
c/o Ameritech Corporation,
Custom Business Services
225 West Randolph
Chicago, Illinois 60606
Attention: President
Telephone No.: (312) 364-3300
Facsimile No.: (312) 364-3306
with a copy to:
3026186 Nova Scotia Company
c/o Ameritech Corporation
30 South Wacker Drive
39th Floor
Chicago, Illinois 60606
Attention: Secretary
Telephone No.: (312) 750-5284
Facsimile No.: (312) 609-6307
and
Mayer, Brown & Platt
190 South LaSalle Street
Chicago, Illinois 60603
Attention: Frederick B. Thomas, Esq.
Telephone No.: (312) 782-0600
Facsimile No.: (312) 701-7711
and
Blake, Cassels & Graydon
Box 25
Commerce Court West
Toronto, Ontario, Canada M5L 1A9
Attention: Joel Shafer
Telephone No.: (416) 863-2400
Facsimile No.: (416) 863-2653
If to Purchasers' Parent, addressed as follows:
Ameritech Corporation,
Custom Business Services
225 West Randolph
Chicago, Illinois 60606
Attention: President
Telephone No.: (312) 364-3300
Facsimile No.: (312) 364-3306
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with a copy to:
Ameritech Corporation
30 South Wacker Drive
39th Floor
Chicago, Illinois 60606
Attention: Secretary
Telephone No.: (312) 750-5284
Facsimile No.: (312) 609-6307
and
Mayer, Brown & Platt
190 South LaSalle Street
Chicago, Illinois 60603
Attention: Frederick B. Thomas, Esq.
Telephone No.: (312) 782-0600
Facsimile No.: (312) 701-7711
or to such other individual or address as a party hereto may designate
for itself by notice given as herein provided.
14.4 EFFECT OF INVESTIGATION. Any due diligence review, audit
or other investigation or inquiry undertaken or performed by or on
behalf of Purchasers or any of their respective Affiliates shall not
(i) limit, qualify, modify or amend the representations, warranties or
covenants of, or indemnities by, each Seller made or undertaken
pursuant to this Agreement or any of its Related Agreements, (ii)
limit or otherwise affect any of the rights or remedies of any
Purchaser Indemnified Party under this Agreement or any Related
Agreement or (iii) limit or otherwise affect any of the other
provisions of this Agreement, irrespective of the knowledge and
information received (or which should have been received) therefrom by
Purchasers or such Affiliates.
14.5 PAYMENTS IN DOLLARS. Except as otherwise provided herein
or in a Related Agreement, all payments pursuant hereto shall be made
in U.S. Dollars in same day or immediately available funds, without
any setoff, deduction or counterclaim whatsoever.
14.6 WAIVERS. The failure of a party hereto at any time or
times to require performance of any provision hereof shall in no
manner affect its right at a later time to enforce the same. No
waiver by a party of any condition or of any breach of any term,
covenant, representation or warranty contained in this Agreement shall
be effective unless in writing, and no waiver in any one or more
instances shall be deemed to be a further or continuing waiver of any
such condition or breach in other instances or a waiver of any other
condition or breach of any other term, covenant, representation or
warranty.
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14.7 ASSIGNMENT. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors
and assigns; PROVIDED, that no assignment of any rights or obligations
shall be made by either Seller without the written consent of each
Purchaser or by either Purchaser without the written consent of each
Seller, except that a Purchaser may assign (by merger or otherwise)
any or all of its rights and obligations hereunder without such
consent to any Affiliate of such Purchaser.
14.8 NO THIRD PARTY BENEFICIARIES. This Agreement is solely for
the benefit of the parties hereto and, to the extent provided herein,
their respective Affiliates, and no provision of this Agreement shall
be deemed to confer upon any other third parties any remedy, claim,
liability, reimbursement, cause of action or other right.
14.9 PUBLICITY. Prior to the Closing Date, except as required
by Law or the rules of any stock exchange, no public announcement or
other publicity regarding the transactions contemplated hereby shall
be made by either Purchaser or either Seller or any of their
respective Affiliates, officers, directors, employees, representatives
or agents, without the prior written consent of each Purchaser and
each Seller, which consent shall not be unreasonably withheld, in any
case, as to form, content, timing and manner of distribution or
publication; PROVIDED, that nothing in this SECTION 14.9 shall prevent
(i) such parties from discussing such transactions with those Persons
whose approval, agreement or opinion, as the case may be, is required
for consummation of such transactions or (ii) subject to the terms of
SECTION 6.8, a Purchaser from communicating with customers,
prospective customers, suppliers and prospective suppliers of the
Business regarding the transactions contemplated by this Agreement;
and, PROVIDED, FURTHER, that upon execution of this Agreement,
Purchasers and Sellers may issue press releases regarding this
Agreement and the transactions contemplated hereby in the forms agreed
upon by the parties prior to execution of this Agreement.
14.10 FURTHER ASSURANCES. Upon the reasonable request of a
Purchaser, each Seller will on and after the Closing Date execute and
deliver to such Purchaser such other documents, deeds, releases,
assignments and other instruments as may be required to effectuate
completely the transfer and assignment to such Purchaser of, and to
vest fully in such Purchaser title to, each of the Purchased Assets,
and to otherwise carry out the purposes of this Agreement. Each
Seller further agrees that, from and after the Closing Date, it will
cooperate in all reasonable efforts of a Purchaser to enforce or
preserve its rights in and to all Intellectual Property conveyed to
such Purchaser pursuant to this Agreement.
14.11 SEVERABILITY. If any provision of this Agreement
shall be held invalid, illegal or unenforceable, the validity,
legality or enforceability of the other provisions hereof shall not be
affected thereby, and there shall be deemed substituted for the
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provision at issue a valid, legal and enforceable provision as similar
as possible to the provision at issue.
14.12 REMEDIES. From and after the Closing, the sole and
exclusive remedies for Purchasers and Sellers with respect to any and
all claims for breach of any representation and warranty in this
Agreement shall be pursuant to the provisions set forth in ARTICLE XII
and ARTICLE XIII, PROVIDED that this SECTION 14.12 shall not preclude
the assertion by either Purchaser or either Seller of any rights or
remedies for fraud. Except as provided in the immediately preceding
sentence, the remedies provided in this Agreement shall be cumulative
and shall not preclude the assertion or exercise of any other rights
or remedies available under Law, in equity or otherwise.
14.13 ENTIRE UNDERSTANDING. This Agreement and the Related
Agreements set forth the entire agreement and understanding of the
parties hereto with respect to the transactions contemplated hereby
and supersede any and all prior agreements, arrangements and
understandings among the parties relating to the subject matter
hereof, including (i) the Nondisclosure Agreement, dated as of October
23, 1998, between Sellers' Parent and Ameritech Development
Corporation, which agreement is hereby terminated and (ii) the non-
binding letter of interest, dated December 8, 1998, between Sellers'
Parent and Ameritech Corporation, which letter is hereby terminated.
14.14 APPLICABLE LAW. This Agreement shall be governed by
and construed and enforced in accordance with the internal laws of the
State of Illinois without giving effect to the principles of conflicts
of law thereof. The state courts of the County of Cook, Illinois and
the United States District Court for the Northern District of Illinois
shall have the exclusive jurisdiction over any and all claims,
lawsuits and litigation relating to or arising out of this Agreement
or any Related Agreement, the subject matter hereof or thereof or the
transactions contemplated hereby or thereby. Each of the parties
hereto hereby irrevocably (a) submits to the personal jurisdiction of
such courts over such party in connection with any litigation,
proceeding or other legal action arising out of or in connection with
this Agreement or any Related Agreement, the subject matter hereof or
thereof or the transactions contemplated hereby or thereby, (b) waives
to the fullest extent permitted by Law any objection to the venue of
any such litigation, proceeding or action which is brought in any such
court and (c) agrees to the mailing of service of process to the
address specified above for such party as an alternative method of
service of process in any legal proceeding brought in any such court.
14.15 WAIVER OF JURY TRIAL. EACH PARTY HERETO WAIVES THE
RIGHT TO A TRIAL BY JURY IN ANY DISPUTE RELATING TO OR ARISING OUT OF
THIS AGREEMENT OR ANY RELATED AGREEMENT, THE SUBJECT MATTER HEREOF OR
THEREOF OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, AND AGREES
TO TAKE ANY AND ALL ACTION NECESSARY OR APPROPRIATE TO EFFECT SUCH
WAIVER.
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14.16 COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
14.17 OTHER DISCUSSIONS. Upon execution of this Agreement,
each Seller and its Affiliates and each of their respective officers,
directors, stockholders, employees, representatives and agents shall
discontinue all, and shall not commence any, discussions or
negotiations with any other Person, or, directly or indirectly,
solicit, encourage or entertain any other proposals or offers,
regarding the sale or transfer of any material portion of the Assets,
and neither Seller nor any of its Affiliates nor their officers,
directors, stockholders, employees, representatives and agents, will
provide any Person other than Purchasers and their respective
Affiliates, and their officers, directors, employees, representatives
and agents, with any information regarding such sale or transfer or
otherwise cooperate with any other Person in connection with such sale
or transfer. Each Seller agrees that it shall keep in full force and
effect and shall enforce all confidentiality agreements relating to
the Business signed with Persons other than a Purchaser and its
Affiliates.
14.18 REMITTANCES. All remittances, payments, mail and
other communications relating to the Business, the Purchased Assets or
the Assumed Obligations received by either Seller at any time after
the Closing Date shall be promptly turned over to Purchasers by such
Seller. All remittances, payments, mail and other communications
relating to the Excluded Assets or the Excluded Obligations received
by either Purchaser at any time after the Closing Date shall be
promptly turned over to Sellers by such Purchaser.
14.19 BULK SALES. The parties hereby waive compliance with
the requirements of all applicable bulk sales Laws of any jurisdiction
applicable to the transactions contemplated herein, PROVIDED, that
this waiver shall have no effect on SECTION 13.2(E).
14.20 CERTAIN PATENTS. If Sellers obtain a license that (i)
is reasonably satisfactory to Purchasers and (ii) grants to
Purchasers and their Affiliates a royalty-free, fully paid right and
license to use, in connection with the Business as operated by
Purchasers after the Closing, all patents and patent applications (1)
the subject matter of which have been used or held for use in
connection with the Business by Sellers and (2) that have been issued
or filed in the name of Jerome Lemelson and that the Lemelson Medical,
Education & Research Foundation Limited Partnership or any other
Person claims an ownership interest in, Purchasers shall pay to U.S.
Seller $175,000, PROVIDED, that such license is granted and in effect
prior to the earlier of (x) the date that is six months after the
Closing Date and (y) the date that is 20 days after the date that U.S.
Purchaser notifies U.S. Seller that (A) a Person claiming an ownership
interest in any such patents or patent applications has contacted a
Purchaser or any of its Affiliates concerning the licensing or use by
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a Purchaser or any of its Affiliates of any such patents or patent
applications in which such Person claims an ownership interest and (B)
such Purchaser or one of its Affiliates has decided to commence
negotiations with such Person regarding such matter. After the
earlier to occur of (x) and (y) in the immediately preceding
sentence, if a Purchaser or any of its Affiliates shall (i) obtain a
license to use any such patents or patent applications in connection
with the Business as operated by Purchasers after the Closing or (ii)
incur any Loss relating to or arising out of or in connection with the
use of any such patents or patent applications by a Purchaser or any
of its Affiliates in connection with the Business as operated by
Purchasers after Closing, Sellers shall, upon notice from a Purchaser,
pay to such Purchaser 80% of the cost to obtain such license or such
Loss, up to a maximum amount of $400,000 payable by Sellers.
ARTICLE XV
GUARANTIES
15.1 GUARANTY OF SELLERS' PARENT. Sellers' Parent hereby
irrevocably and unconditionally guarantees the full and prompt
performance of all the covenants and agreements made by Sellers under
this Agreement and their respective Related Agreements, and the prompt
and full payment of all the obligations and liabilities of Sellers
arising from or under this Agreement and their respective Related
Agreements, including liabilities under ARTICLE XIII. This guaranty
is a guaranty of payment (and not just of collection) and shall
continue in effect notwithstanding any extension or modification of
the terms of this Agreement or any of Sellers' Related Agreements, any
assumption of any such guaranteed obligation by any other Person, any
lack of diligence by either Purchaser or any other act or thing which
might otherwise operate as a legal or equitable discharge of a
guarantor and Sellers' Parent hereby waives all special suretyship
defenses and any requirement that a Purchaser or any representative of
a Purchaser first attempt to collect the guaranteed obligation from
Sellers. So long as any obligation of a Seller to a Purchaser under
this Agreement or any of a Seller's Related Agreements remains unpaid
or undischarged, Sellers' Parent hereby waives (but only with respect
to such Purchaser and not as to any other Persons) all rights to
subrogation arising out of any payment by Sellers' Parent under this
SECTION 15.1.
15.2 GUARANTY OF PURCHASERS' PARENT. Purchasers' Parent hereby
irrevocably and unconditionally guarantees the full and prompt
performance of all the covenants and agreements made by Purchasers
under this Agreement and their respective Related Agreements, and the
prompt and full payment of all the obligations and liabilities of
Purchasers arising from or under this Agreement and their respective
Related Agreements, including liabilities under ARTICLE XIII. This
guaranty is a guaranty of payment (and not just of collection) and
shall continue in effect notwithstanding any extension or modification
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of the terms of this Agreement or any of Purchasers' Related
Agreements, any assumption of any such guaranteed obligation by any
other Person, any lack of diligence by either Seller or any other act
or thing which might otherwise operate as a legal or equitable
discharge of a guarantor and Purchasers' Parent hereby waives all
special suretyship defenses and any requirement that a Seller or any
representative of a Seller first attempt to collect the guaranteed
obligation from Purchasers. So long as any obligation of a Purchaser
to a Seller under this Agreement or any of a Purchaser's Related
Agreements remains unpaid or undischarged, Purchasers' Parent hereby
waives (but only with respect to such Seller and not as to any other
Persons) all rights to subrogation arising out of any payment by
Purchasers' Parent under this SECTION 15.2.
* * *
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed and delivered as of the date first above
written.
ANIXTER INC.
By: /s/ Dennis J. Letham
Name: Dennis J. Letham
Title: Executive Vice Presdient and Chief
Financial Officer
ANIXTER CANADA INC.
By: /s/ John A. Dul
Name: John A. Dul
Title: Authorized Representative
ANIXTER INTERNATIONAL INC.
By: /s/ Dennis J. Letham
Name: Dennis J. Letham
Title: Executive Vice President and Chief
Financial Officer
ORC ACQUISITION CORP.
By: /s/ Deborah Lenart
Name: Deborah Lenart
Title: Vice President
3026186 NOVA SCOTIA COMPANY
By: /s/ Deborah Lenart
Name: Deborah Lenart
Title: Vice President
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AMERITECH CORPORATION
By: /s/ Deborah Lenart
Name: Deborah Lenart
Title: Vice President
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EXHIBIT 2.2
EXECUTION COPY
FIRST AMENDMENT TO ASSET PURCHASE AGREEMENT
THIS FIRST AMENDMENT TO ASSET PURCHASE AGREEMENT is made as of
the 29th day of March, 1999, by and among ORC ACQUISITION CORP., a
Delaware corporation ("U.S. PURCHASER"), 3026186 Nova Scotia Company,
a Nova Scotia company ("CANADIAN PURCHASER", and collectively with
U.S. Purchaser, the "PURCHASERS"), Ameritech Corporation, a Delaware
corporation ("PURCHASERS' PARENT"), Anixter Inc., a Delaware
corporation ("U.S. SELLER"), Anixter Canada Inc., a Canadian
corporation ("CANADIAN SELLER", and collectively with U.S. Seller, the
"SELLERS"), and Anixter International Inc., a Delaware corporation
("SELLERS' PARENT").
RECITALS
WHEREAS, Purchasers, Purchasers' Parent, Sellers and Sellers'
Parent have entered into an Asset Purchase Agreement, dated as of
February 22, 1999 (the "ASSET PURCHASE AGREEMENT"); and
WHEREAS, Purchasers, Purchasers' Parent, Sellers and Sellers'
Parent wish (i) to amend the Asset Purchase Agreement as specified and
agreed below and (ii) to waive certain conditions precedent as
specified and agreed below to the obligations of Purchasers to close
the transactions contemplated by the Asset Purchase Agreement.
NOW THEREFORE, in consideration of the foregoing and the mutual
warranties, representations, covenants and agreements herein
contained, the parties hereby agree as follows:
XV SECTION 3.1 of the Asset Purchase Agreement is hereby amended
and restated in its entirety to read as follows:
3.1 PAYMENT OF PURCHASE PRICE. On the Closing Date, in
consideration for the sale of the Purchased Assets by each Seller,
Purchasers shall (a) assume the Assumed Obligations as provided in
SECTION 2.4 and (b) pay an aggregate purchase price (as it may be
adjusted pursuant to SECTION 3.2, the "PURCHASE PRICE") of One Hundred
Ninety Five Million Dollars ($195,000,000) as follows: (i) U.S.
Purchaser shall pay to U.S. Seller One Hundred Eighty Million Three
Hundred Seventy Five Thousand Dollars ($180,375,000), less (1) the
Holdback Amount and less or plus (2) the net amount of prorations
owing to or payable by U.S. Purchaser pursuant to SECTION 3.3 (to the
extent ascertainable on or prior to the Closing Date), payable to U.S.
Seller by electronic transfer to such account or accounts as U.S.
Seller shall specify to U.S. Purchaser in writing prior to the Closing
Date and (ii) Canadian Purchaser shall pay to Canadian Seller Fourteen
Million Six Hundred Twenty Five Thousand Dollars ($14,625,000), less
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or plus the net amount of prorations owing to or payable by Canadian
Purchaser pursuant to SECTION 3.3 (to the extent ascertainable on or
prior to the Closing Date), payable to Canadian Seller by electronic
transfer to such account or accounts as Canadian Seller shall specify
to Canadian Purchaser in writing prior to the Closing Date.
XVI Purchasers hereby (i) waive any right of Purchasers under
SECTION 8.6 of the Asset Purchase Agreement not to consummate the
transactions contemplated by the Asset Purchase Agreement as a result
of facts or circumstances known to Purchasers prior to 5:00 p.m.
Chicago time on March 24, 1999, (ii) waive any right of Purchasers
under Section 8.10 of the Asset Purchase Agreement not to consummate
the transactions contemplated by the Asset Purchase Agreement, and
(iii) release and discharge all present and future claims or other
actions for any and all Losses incurred or suffered by Purchasers
relating to or arising out of or in connection with any breach of or
any inaccuracy in (or any alleged breach of or inaccuracy in) the
representation and warranty made by Sellers in SECTION 4.5(a) of the
Asset Purchase Agreement as a result of facts or circumstances known
by Purchasers prior to 5:00 p.m. Chicago time on March 24, 1999.
3. Each party represents and warrants that (i) the execution
and delivery of this First Amendment to Asset Purchase Agreement
has been duly and validly authorized and approved by its Boards
of Directors, (ii) no other proceedings (corporate or otherwise)
on its part are necessary to authorize this First Amendment to
Asset Purchase Agreement, and (iii) this First Amendment to
Asset Purchase Agreement has been duly and validly executed and
delivered by it and constitutes its valid and binding agreement,
enforceable against it in accordance with its terms.
4. Upon execution hereof, each reference in the Asset Purchase
Agreement to "this Agreement," "hereby," "hereunder," "herein,"
"hereof" or words of like import referring to the Asset Purchase
Agreement shall mean and refer to the Asset Purchase Agreement,
as amended by this First Amendment to Asset Purchase Agreement.
5. This First Amendment to Asset Purchase Agreement may be
executed in counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the
same instrument.
6. The capitalized terms used and not otherwise defined herein
shall have the meanings attributed thereto in the Asset Purchase
Agreement.
7. Except as expressly amended herein, the Asset Purchase
Agreement remains in full force and effect.
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[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK. SIGNATURE PAGE
FOLLOWS.]
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IN WITNESS WHEREOF, the parties hereto have caused this First
Amendment to Asset Purchase Agreement to be executed and delivered as
of the date first above written.
ANIXTER INC.
By: /s/ Dennis J. Letham
Name: Dennis J. Letham
Title: Executive Vice Presdient and Chief
Financial Officer
ANIXTER CANADA INC.
By: /s/ John A. Dul
Name: John A. Dul
Title: Authorized Representative
ANIXTER INTERNATIONAL INC.
By: /s/ Dennis J. Letham
Name: Dennis J. Letham
Title: Executive Vice President and Chief
Financial Officer
ORC ACQUISITION CORP.
By: /s/ Deidra D. Gold
Deidra D. Gold
Secretary
3026186 NOVA SCOTIA COMPANY
By: /s/ Deidra D. Gold
Deidra D. Gold
Secretary
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AMERITECH CORPORATION
By: /s/ Deidra D. Gold
Deidra D. Gold
Secretary
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