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FORM 8-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
November 14, 1997
Commission File No.: 0-14685
GENICOM CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 51 - 0271821
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
14800 CONFERENCE CENTER DRIVE
SUITE 400, WESTFIELDS
CHANTILLY, VIRGINIA 20151
(Address of principal executive (Zip Code)
offices)
Registrant's telephone number, including area code: (703) 802-9200
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GENICOM CORPORATION AND SUBSIDIARIES
FORM 8-K INDEX
Item 2. Acquisition Activities
On November 14, 1997, the registrant purchased selected
assets of Novadyne Computer Systems, Inc. for
approximately $12 million including the assumption of
certain liabilities (the "Acquisition"). The transaction
was financed through the registrant's credit facility with
NationsBank of Texas, N.A., as agent for a group of lenders.
The registrant published a press release regarding the
transaction on November 17, 1997. A copy of such press
release is included herein as Exhibit 99.1.
Item 5. Other Items
Effective November 14, 1997, the registrant amended its
credit agreement with NationsBank of Texas, N.A., as
agent for a group of lenders. The amendment restated the
registrant's financial covenants and provided for the
Acquisition.
Item 7. Financial Statements and Exhibits
(a) Financial statements of business acquired:
The registrant has concluded that it is currently
impracticable to file the required financial statements
for this acquisition within this Form 8-K filing. The
omitted required information will be filed in an amendment
to this Form 8-K filing on or before January 28, 1998.
(b) Pro forma financial information:
The registrant has concluded that it is currently
impracticable to file the required pro forma financial
information for this acquisition within this Form 8-K
filing. The omitted required information will be filed
in an amendment to this Form 8-K filing on or before
January 28, 1998.
(c) Exhibits
2.1 Asset Purchase Agreement dated November 14, 1997
among Genicom Corporation, Heller Financial, Inc.,
Novadyne Computer Systems, Inc. and Novadyne Acquisition
Company, Inc.
2.2 Asset Purchase Agreement dated November 14, 1997 among
Genicom Canada Inc., Novadyne Computer Systems (Canada),
Inc., Novadyne Computer Systems, Inc. and Heller Financial,
Inc.
10.1 First Amendment to Credit and Security Agreement
dated as of October 31, 1997
99.1 Press release dated November 17, 1997, published by the
Registrant
Signatures
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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 thereunto duly authorized.
GENICOM Corporation
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Registrant
Date: December 1, 1997
/s/James C. Gale
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Signature
James C. Gale
Senior Vice President Finance and
Chief Financial Officer
(Mr. Gale is Chief Financial
Officer and has been duly
authorized to sign on behalf of
the Registrant)
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EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
AMONG
GENICOM CORPORATION,
HELLER FINANCIAL, INC.
NOVADYNE COMPUTER SYSTEMS, INC.,
AND
NOVADYNE ACQUISITION COMPANY, INC.
DATED AS OF NOVEMBER 14, 1997
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ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (the "Agreement"), dated as of November
14, 1997, is made among Heller Financial, Inc., a Delaware corporation
("Seller"), Genicom Corporation, a Delaware corporation ("Buyer"), Novadyne
Computer Systems, Inc., a Delaware corporation ("Borrower") and Novadyne
Acquisition Company, Inc., a Delaware corporation ("Parent").
RECITALS
WHEREAS, Borrower has conducted and presently conducts certain
Information Technology and Network Services, Hardware Maintenance Services and
Legacy operations (the "Business").
WHEREAS, Seller, as a senior secured lender, has extended to Borrower
certain loans and credit to finance the operations of the Business (the
"Loans").
WHEREAS, Seller obtained as collateral for the Loans a perfected first
priority security interest in certain assets of the Borrower, including without
limitation the Assets, used in the conduct of the Business (the "Collateral").
WHEREAS, the Loans have been for an extended period and are presently
in payment default.
WHEREAS, Borrower has retained Trenwith Securities, Inc. to identify
third parties interested in acquiring the Assets or the Business.
WHEREAS, through these efforts Borrower (along with Trenwith and
Seller) identified and negotiated with several third parties interested in
acquiring some or all of the Collateral and the Business, none of whom would
agree to enter into a business combination or similar transaction for an amount
of consideration which would allow Borrower to pay in full the amount of the
Loans giving rise to Seller's senior secured lender status.
WHEREAS, of the third parties identified as potential purchasers of
the Assets and with whom Borrower (along with Trenwith and Seller) negotiated
for the sale of the Assets ("Potential Purchasers"), none offered total
consideration for such Assets in excess of that offered by Buyer.
WHEREAS, Seller, as a senior secured party, has the right under
Section 9-504(3) of the Uniform Commercial Code ("Section 9-504"), or any other
similar applicable state law, to sell, lease or otherwise dispose of the
Collateral in satisfaction of all or part of the Loans outstanding and desires
to exercise such right by selling to Buyer certain of the Collateral pursuant
to Section 9-504(3).
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WHEREAS, Buyer is interested in acquiring the Business and in
connection therewith desires to purchase from Seller certain of the Collateral
and to assume or incur certain liabilities related thereto.
WHEREAS, Borrower desires that Buyer enter into the transactions
contemplated by this Agreement, and as an inducement thereto, makes the
representations and warranties and agreements contained herein.
WHEREAS, Borrower's wholly owned subsidiary, Novadyne Computer Systems
(Canada), Inc. ("Subsidiary"), has conducted and presently conducts certain
Information Technology and Network Services, Hardware Maintenance Services and
Legacy operations in Canada (the "Canadian Business").
WHEREAS, Buyer, Seller and Subsidiary are entering into an Asset
Purchase Agreement simultaneously herewith for the purchase by Buyer, or an
Affiliate of Buyer, of certain assets of the Subsidiary used in the Canadian
Business, on the terms and conditions set forth therein (the "Canadian
Acquisition").
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties and agreements herein contained, the parties agree
as follows:
ARTICLE I
DEFINITIONS
1.1 DEFINITIONS. The following terms, as used herein, have the
following meanings:
"Affiliate" of a Person means a Person who controls directly or
indirectly through one or more intermediaries, is controlled by, or is under
common control with, such Person.
"Agreement" means this Asset Purchase Agreement.
"Allocation Arbiter" shall have the meaning set forth in Section 7.3.
"Asset Form" has the meaning set forth in Section 7.3.
"Assets" has the meaning set forth in Section 2.1.
"Assumed Liabilities" has the meaning set forth in Section 2.3.
"Annual Financial Statements" has the meaning set forth in Section
4.9.
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"Books and Records" has the meaning set forth in Section 2.1(h).
"Borrower" has the meaning set forth in the Recitals above.
"Business" has the meaning set forth in the Recitals above.
"Business Contracts" has the meaning set forth in Section 2.1(a).
"Buyer" has the meaning set forth in the first paragraph of this
Agreement.
"Closing" has the meaning set forth in Section 11.1.
"COBRA" means the rights and obligations established under Internal
Revenue Code Sec. 4980B and Sections 601-608 of ERISA.
"Collateral" has the meaning set forth in the Recitals.
"Common Stock" has the meaning set forth in Section 4.3.
"Disclosing Party" has the meaning set forth in Section 7.7(a).
"Encumbrances" means all present liens, mortgages, charges on title,
security interests or other defects in title to the Assets and all future
liens, mortgages, charges on title, security interests or other defects in
title to the Assets that arise out of any claims asserted against Borrower or
its Affiliates.
"Environmental Permits" means governmental licenses, permits, and
approvals and authorizations, whether federal, state or local, domestic or
foreign, which relate to the environment or to public health and safety or
worker health and safety as they may be affected by the environment.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"First Anniversary" has the meaning set forth in Section 12.5.
"Governmental Unit" means United States, State, Commonwealth,
District, Territory, Municipality, foreign state, or department, agency or
instrumentality thereof.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.
"Information" has the meaning set forth in Section 7.7(a).
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"Intellectual Property" has the meaning set forth in Section 2.1(f).
"Interim Financial Statements" has the meaning set forth in Section
4.9.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended.
"Inventory" has the meaning set forth in Section 2.1(c).
"Legal Action" has the meaning set forth in Section 12.4(b).
"Licenses and Permits" means governmental licenses, permits, approvals
and authorizations, whether federal, state or local, domestic or foreign, other
than Environmental Permits.
"Loans" has the meaning set forth in the Recitals.
"Losses" means any and all losses, damages (compensatory, punitive,
treble or otherwise), injuries, deficiencies, demands, obligations,
liabilities, causes of action, accusations, allegations, claims, awards,
assessments, amounts paid in settlement, judgments, orders, decrees, fines,
penalties, and other sanctions, costs and expenses (including, without
limitation, legal costs and expenses and costs and expenses of collection).
"Material Contracts" has the meaning set forth in Section 4.13.
"New Hires" has the meaning set forth in Section 8.1.
"Nonassumed Liabilities" has the meaning set forth in Section 2.3.
"Operating Equipment" has the meaning set forth in Section 2.1(d).
"Other Equipment" has the meaning set forth in Section 2.1(e).
"PBGC" means the Pension Benefit Guarantee Corporation.
"Pension Plans" has the meaning set forth in Section 4.29(a).
"Person" means an individual, a corporation, a partnership, an
association, a labor union, a trust or any other entity or organization,
including a government, a governmental body, a political subdivision or an
agency or instrumentality thereof.
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"Purchase Price" has the meaning set forth in Section 2.4.
"Qualified Beneficiaries" means the individuals described in Internal
Revenue Code Sec.4980B(g)(1) or Section 607(3) of ERISA.
"Recipient" has the meaning set forth in Section 7.7(a).
"Section 9-504" has the meaning set forth in the Recitals.
"Seller" has the meaning set forth in the first paragraph of this
Agreement.
"Subsidiary" has the meaning set forth in the Recitals above.
"Subordinate Liens" has the meaning set forth in Section 5.8.
"Tax" means any federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental (including taxes under Internal
Revenue Code Sec. 59A), customs duties, capital stock, franchise, profits,
withholding, social security (or similar), unemployment, disability, real
property, personal property, sales, use, transfer, registration, value added,
alternative or add-on minimum, estimated, or other tax of any kind whatsoever,
including any interest, penalty, or addition thereto, whether disputed or not.
"Tax Return" means any return, declaration, report, claim for refund,
or information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"Trenwith" means Trenwith Securities, Inc.
"UCC-9 Sale" has the meaning set forth in Section 2.1.
"WARN Act" means the Workers Adjustment and Retraining Notification
Act (29 U.S.C.Sec.Sec. 2101 et seq.), as amended.
"Welfare Plans" has the meaning set forth in Section 4.29(a).
ARTICLE II
PURCHASE AND SALE OF ASSETS
2.1 PURCHASE AND SALE OF ASSETS. Seller hereby sells to Buyer and
Buyer hereby purchases from Seller, pursuant to a sale conducted in accordance
with Section 9-504 (the "UCC-9 Sale"),
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those assets of the Borrower used in the conduct of the Business which are set
forth below (the "Assets"):
(a) all right, title and interest of Borrower in, to and
under all of the contracts listed on Schedule 2.1(a) hereto (the "Business
Contracts");
(b) all accounts receivable of the Business;
(c) the inventory of the Business, including without
limitation, spare parts, repairables, consumables and expendables, wherever
located (the "Inventory"), except that such does not include i) rights in and
title to inventory held on consignment by the Business except to the extent
such rights transfer to Buyer as part of the Business Contracts, ii) all items
comprising the collateral (the "Cerplex Collateral") securing Borrower's
obligations and liabilities to the Cerplex Group, Inc. or its Affiliates
("Cerplex") and iii) parts held under parts leases.
(d) all test, maintenance and other operating equipment used
or employed in the Business, wherever located (the "Operating Equipment"), and
any warranties related thereto, to the extent assignable;
(e) all office furniture and other equipment used in the
Business, wherever located, including without limitation, computers (personal
or otherwise), software, printers, cellular telephones, pagers, calculators and
books (the "Other Equipment");
(f) all of the trademarks (including all goodwill of the
Borrower associated therewith), service marks and trade names (including
without limitation, "Novadyne") and pending applications therefor and the
related common law rights and all of the copyrights, inventions, trade secrets,
processes, formulae, software, designs and know-how used in the Business,
including without limitation those items set forth on Schedule 2.1(f) hereto,
whether owned by Borrower or licensed by Borrower from others (the
"Intellectual Property");
(g) all information, books and records of Borrower related to
the Assets (including, without limitation all tax records relating to the
Assets), excluding Borrower's corporate organization documents and records and
Borrower's personnel files (the "Books and Records"); and
(h) except as specifically excluded in this Section 2.1, all
other assets listed on Borrower's balance sheet at Closing which are not set
forth above in this Section 2.1 (the "Balance Sheet Assets").
To the extent that any Assets are not conveyed by Seller to Buyer
pursuant to the UCC-9 Sale contemplated hereby, Borrower hereby sells, conveys
and assigns all of its right, title and interest in such Assets to Buyer.
Seller will sell, assign and transfer to Buyer certain of Borrower's trademarks
and tradenames pursuant to a Trademark and Tradename Assignment in the form
attached as Exhibit 11.2(ii) hereto.
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2.2 EXCLUDED ASSETS. Notwithstanding anything to the contrary
provided for in this Agreement, the Assets shall not include the following
assets of Borrower: i) deferred financing costs, ii) goodwill (except for the
goodwill associated with the trademarks included within the Intellectual
Property as described in Section 2.1(f) above), iii) the stock of the
Subsidiary, and (iv) all the leased personal property set forth on Schedule
4.12(b) to this Agreement.
2.3 ASSUMED AND NONASSUMED LIABILITIES. In connection with the
transactions contemplated by this Agreement, Buyer assumes or will incur only
those liabilities and obligations of Borrower, or which arise as a consequence
of the transactions contemplated hereby, which are set forth on Schedule 2.3
hereto (the "Assumed Liabilities"). Notwithstanding anything to the contrary
provided for in this Agreement, Buyer does not assume and will not incur any
liabilities or obligations of Borrower, or which arise as a consequence of the
transactions contemplated hereby, which are not set forth on Schedule 2.3,
which such non-scheduled liabilities and obligations are referred to herein as
"Nonassumed Liabilities." Notwithstanding anything to the contrary provided
for in this Agreement, Seller does not assume and will not incur any
liabilities or obligations of Borrower or which arise as a consequence of the
transactions contemplated hereby. Buyer shall not have any liability or
obligation with respect to any Business Contract for which the consent to
assignment thereto is required but is not obtained.
2.4 PURCHASE PRICE. In consideration of the sale and conveyance
to Buyer of the Assets hereby, Buyer agrees to pay to or on behalf of Seller an
aggregate cash amount equal to $11,156,048 (the "Purchase Price"). To the
extent that the Borrower has any claim to all or any portion of the Purchase
Price, it instructs Buyer to pay the Purchase Price to Seller and it instructs
Seller to apply the Purchase Price to reduce the indebtedness due and owing on
the Loans or to make payments to third parties as otherwise contemplated
herein.
2.5 CERTAIN MATTERS REGARDING REPRESENTATIONS AND WARRANTIES OF
BORROWER AND PARENT. Borrower and Parent make no representations or warranties
to Buyer or Seller, expressed or implied, including without limitation
warranties of merchantability or fitness for intended purpose, other than those
set forth in Article IV of this Agreement. Buyer and Seller acknowledge and
agree that, absent fraud or willful misconduct on the part of any Individual
Affiliates, all such representations, warranties, covenants and agreements of
Borrower and Parent made herein are without recourse against the directors,
officers, employees, shareholders, attorneys, accountants, agents and
fiduciaries of Borrower who are natural persons ("Individual Affiliates") and
that, absent fraud or willful misconduct on the
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part of any Individual Affiliates, the Individual Affiliates shall have no
personal liability to Buyer or Seller or any of their respective officers,
directors, shareholders, affiliates, employees, attorneys, accountants, agents,
successors or assigns for any breach of such representations, warranties,
covenants and agreements.
2.6 CERTAIN MATTERS REGARDING REPRESENTATIONS AND WARRANTIES OF
SELLER. Seller makes no representations or warranties to Buyer, except as and
only to the extent set forth in Articles V, VII and XII of this Agreement,
including without limitation representations and warranties as to:
(a) non-infringement of any of the trademarks or tradenames
owned by the Borrower;
(b) the existence on the Closing Date of any specific items
constituting the Assets or the quantity or quality thereof; or
(c) the condition, quality, suitability, value,
merchantability or fitness for a particular purpose of any of the Assets or of
the Borrower or any aspect of the Borrower's financial condition, business,
prospects, or operations.
THE BUYER ACKNOWLEDGES AND AGREES THAT EXCEPT AS AND ONLY TO THE EXTENT SET
FORTH ARTICLES V, VII AND XII OF THIS AGREEMENT: (A) THE SALE OF ASSETS
HEREUNDER IS: WITHOUT RECOURSE TO THE SELLER; WITHOUT ANY REPRESENTATIONS OR
WARRANTIES AS TO ITEMS, CONDITION, QUANTITY OR ANY OTHER MATTERS WHATSOEVER;
(B) THE SELLER IS SELLING TO BUYER ALL ACCOUNTS RECEIVABLE WITHOUT RECOURSE TO
THE SELLER WITH RESPECT TO THE CREDITWORTHINESS OF ANY OBLIGOR WITH RESPECT TO
SUCH ACCOUNTS RECEIVABLE; THE SELLER MAKES NO REPRESENTATION AS TO THE VALUE,
IF ANY, OF THE ASSETS BEING TRANSFERRED HEREBY; AND THE SELLER MAKES NO
REPRESENTATION OR WARRANTY CONCERNING THE POSSIBLE INFRINGEMENT OF ANY
TRADEMARKS, TRADENAMES OR PATENTS ARISING OUT OF THE USE BY THE BUYER OR ANY OF
THE ASSETS; (C) THE SELLER MAKES NO REPRESENTATIONS OR WARRANTIES THAT ALL OR A
PORTION OF THE ASSETS ARE MERCHANTABLE (IN THE SENSE OF AN IMPLIED WARRANTY OF
MERCHANTABILITY UNDER THE UCC OR OTHERWISE) OR FIT FOR A PARTICULAR PURPOSE;
AND (D) THE SOLE REPRESENTATIONS AND WARRANTIES OF THE SELLER REGARDING THE
SUBJECT ASSETS ARE THOSE SPECIFICALLY PROVIDED IN ARTICLE V OF THIS AGREEMENT.
Notwithstanding the foregoing, it is the Seller's intent, under Section 9-504,
to transfer all of the Borrower's right, title and interest in the Assets to
Buyer for value. The foregoing provisions of this Section 2.6 do not limit or
effect the provisions of Article V, Article VII or Article XII of this
Agreement. Seller expressly affirms its agreements set forth in Article VII of
this Agreement, the representations and warranties set forth in Article V of
this Agreement and Seller's agreements set forth in Article XII of this
Agreement.
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ARTICLE III
NOT USED
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BORROWER AND PARENT
Borrower and Parent jointly and severally represent and warrant the
following to Buyer:
4.1 ORGANIZATION; QUALIFICATION. Borrower and Parent are
corporations duly organized, validly existing and in good standing under the
laws of the State of Delaware, and have corporate power and authority to own,
lease and operate their property and to carry on the Business as it is
presently being conducted. Borrower is duly qualified and in good standing to
do business in each jurisdiction in which the conduct of the Business makes
such qualification necessary. Borrower has heretofore delivered to Buyer
complete and correct copies of its Articles of Incorporation and Bylaws
currently in effect.
4.2 SELLER'S RIGHT TO CONDUCT SECTION 9-504 SALE. Seller has a
perfected security interest in all of the Assets in which a security interest
may be created under Article 9 of the UCC as in effect in applicable
jurisdictions. The security interest is first in priority to the extent
priority is measured by the time of the filing of UCC financing statements with
filing officers in the states of California and Virginia. The Loans are
currently in default and Seller has the right pursuant to Section 9-504 to
sell, lease or otherwise dispose of the Assets and to apply the proceeds
therefrom in accordance with Section 9-504. Notice to the Borrower of the sale
or disposition of the Assets required by Section 9-504 or otherwise has by the
Borrower's execution of this Agreement, been waived. Borrower consents to
Seller's sale of the Assets hereby to Buyer and agrees that such sale satisfies
the provisions of and is in accordance with Section 9-504 and that Borrower has
no right to oppose such sale.
4.3 CAPITALIZATION. Schedule 4.3 hereto sets forth separately for
each of the Borrower, the Parent and the Subsidiary, as of the date hereof, the
authorized and outstanding capital stock of Borrower, Parent and Subsidiary,
the holders of each class of their respective capital stock and the number of
shares of their respective capital stock held by each holder thereof. Except
as set forth on Schedule 4.3 hereto, the Borrower, Parent and Subsidiary have
no commitment to issue or sell any shares of their capital stock or any
securities or obligations convertible into or exchangeable for, or giving any
Person the right to acquire from them, any shares of their
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capital stock and no such securities or obligations are issued or outstanding.
4.4 SUBSIDIARIES. Schedule 4.4 sets forth the name and
jurisdiction of incorporation of each subsidiary, direct or indirect, of the
Borrower.
4.5 AUTHORITY RELATIVE TO THIS AGREEMENT. Borrower and Parent
have corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution, delivery and
performance by Borrower and Parent of this Agreement and the consummation by
them of the transactions contemplated hereby, have been duly authorized by
their Boards of Directors, and shareholders to the extent required by law, and
no other corporate proceedings on the part of Borrower and Parent are necessary
with respect thereto. This Agreement has been duly executed and delivered by
Borrower and Parent and this Agreement constitutes the valid and binding
obligation of Borrower and Parent enforceable against Borrower and Parent in
accordance with its terms.
4.6 NO VIOLATION. The execution and delivery by Borrower and
Parent of this Agreement and the consummation of the transactions contemplated
hereby, will not (i) violate or result in a breach of any provision of their
Certificates of Incorporation or Bylaws, or (ii) to the knowledge of Borrower,
violate any material law or regulation, or any judgment, order or decree of any
court, governmental body, commission, agency or arbitrator applicable to the
Borrower, Parent or any of the Assets or the Business.
4.7 CONSENTS AND APPROVALS. Except a filing with and approval
from the Federal Trade Commission (the "FTC") and /or the Antitrust Division of
the Department of Justice ("Antitrust Division") pursuant to the HSR Act and
except as set forth in Schedule 4.7, there is no requirement applicable to
Borrower or Parent to make any filing with or to obtain any consent or approval
from any Governmental Unit as a condition to the consummation of the
transactions contemplated by this Agreement.
4.8 COMPLIANCE WITH LAWS. To the best knowledge of Borrower,
Borrower has operated the Business in compliance with all laws and regulations,
federal, state or local applicable to the Assets or the Business, including,
without limitation, those related to (i) antitrust and trade matters, (ii)
civil rights, (iii) zoning and building codes, (iv) public health and safety,
(v) worker health and safety, (vi) labor, employment and discrimination in
employment and (vii) environmental matters, except for such violations thereof
as do not and cannot reasonably be expected to have a material adverse effect
on the Assets or the earnings, financial condition, operations or prospects of
the Business.
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4.9 FINANCIAL STATEMENTS. Borrower has previously furnished Buyer
with true and complete copies of (i) the audited consolidated financial
statements of Borrower for the year ending December 31, 1994 together with the
reports on such statements of the Borrower's auditors and unaudited
consolidated financial statements of Borrower for the years ending December 31,
1996 and 1995, including the notes thereto (the "Annual Financial Statements"),
and (ii) unaudited financial statements for the Business for the eight month
period ending August 31, 1997 (the "Interim Financial Statements"). Such
financial statements present fairly the consolidated financial position of the
Borrower and of the Business, respectively, as of such dates and the results of
their operations and changes in their financial position for such periods and
have been prepared in accordance with generally accepted accounting principles
applied on a consistent basis.
4.10 LABOR AND EMPLOYMENT MATTERS. Borrower is not a party to any
collective bargaining agreements. Schedule 4.10 sets forth a complete and
correct list of each employment agreement to which Borrower is a party or by
which Borrower is obligated. There are no controversies, claims or grievances
pending or threatened in writing, between Borrower and any employees or former
employees of the Business. Copies of each of the aforementioned agreements
have been delivered to Buyer.
4.11 LITIGATION. Except as set forth in Schedule 4.11, there are
no actions, suits, claims, investigations or proceedings pending or, to the
knowledge of Borrower, threatened against Borrower before any court,
governmental body, commission, agency or arbitrator, domestic or foreign, or
which (i) seek to prevent, restrict or delay the consummation of the
transactions contemplated by this Agreement, (ii) seek to limit, in any manner,
the right of Buyer to control the Business after the consummation of the
transactions contemplated by this Agreement, or (iii) which have had or can
reasonably be expected to have a material adverse effect on the Business.
Furthermore, there are no judgments, orders or decrees of any such court,
governmental body, commission, agency or arbitrator which have or can
reasonably be expected to have any such effect.
4.12 TITLE TO ASSETS; LEASES. Borrower owns no real property. All
of the real property used in the conduct of the Business is held by Borrower
under lease. Except as set forth in Schedule 4.12(a), Borrower has good, valid
and merchantable title to all of its personal property (including the Assets)
tangible or intangible, owned by it, free and clear of Encumbrances that are
senior in priority to any Encumbrances of Seller, including, without
limitation, the Intellectual Property. All properties held under lease by
Borrower are held under valid and enforceable leases. Schedule 4.12(b) sets
forth a complete list of each
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lease into which Borrower has entered, whether as lessor or lessee, which
relates to personal property used in the Business or constituting part of the
Assets.
4.13 MATERIAL CONTRACTS. Schedule 4.13 contains a list of all
customer, value-added reseller, original equipment manufacturer or OEM, vendor,
subcontractor, distributor and similar contracts and other contracts,
agreements, leases and other obligations of Borrower (the "Material
Contracts"). Except as set forth on Schedule 4.13, neither the Borrower nor
any other party thereto is in default under or has breached any Material
Contract.
4.14 INTELLECTUAL PROPERTY. Schedule 4.14 sets forth a list of all
the Borrower's registered trademarks, tradenames, servicemarks and copyrights.
Borrower owns or has the valid right to use the Intellectual Property being
assigned or licensed to Buyer. To the best knowledge of Borrower, the
Intellectual Property is not subject to any claims or demands of any other
Person, or of any proceedings commenced or threatened which challenge
Borrower's rights in respect of the Intellectual Property. None of the rights
constituting the Intellectual Property is subject to any outstanding order,
decree, ruling, charge, injunction, judgment or stipulation. To Borrower's
best knowledge, no Person has infringed upon or is infringing upon any of the
Intellectual Property. To Borrower's best knowledge, Borrower's use of the
Intellectual Property does not infringe upon the intellectual property rights
of any third party.
4.15 INVENTORY. The Inventory is (i) generally sufficient but not
excessive in kind or amount for the conduct of the Business as it is presently
being conducted and (ii) carried on the books of Borrower at an amount which
reflects values in total not in excess of the lower of cost or market
determined in accordance with generally accepted accounting principles applied
on a consistent basis. Schedule 4.15(a) sets forth the location of Inventory
and the type, quantity and original cost of such Inventory at each such
location as of November 12, 1997. Schedule 4.15(b) sets forth the inventory
held on consignment.
4.16 ENVIRONMENTAL MATTERS.
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(a) Borrower has obtained all Environmental Permits required
to conduct the operations of the Business as it is presently being conducted
including, without limitation, those relating to (i) emissions, discharges, or
threatened discharges of pollutants, contaminants, hazardous or toxic
substances or petroleum into the air, surface water, ground water, or the ocean
or on or into the land and (ii) the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of pollutants,
contaminants, hazardous or toxic substances or petroleum. Schedule 4.16
contains a complete list of all such Environmental Permits, all of which are in
full force and effect.
(b) Borrower has operated the Business in compliance with all
laws and regulations relating to pollution control and environmental
contamination and the provisions of its Environmental Permits, except for such
violations thereof as do not and cannot reasonably be expected to have a
material adverse effect on the Assets or the earnings, financial condition,
operations or prospects of the Business.
(c) Borrower is not currently obligated, by itself or jointly
with others, to clean up, remedy or otherwise restore to its former condition
any building, contaminated surface water, ground water, soil or any natural
resource associated therewith.
(d) No investigation or review is pending with respect to any
alleged failure of Borrower to comply with any of the aforementioned laws or
regulations or the terms and conditions of any of its Environmental Permits,
and, to the knowledge of Borrower, no event has occurred or condition exists
which can reasonably be expected to give rise to such an allegation or cause
Borrower to be obligated to take any action described in paragraph (c).
4.17 ACCOUNTS RECEIVABLE. The accounts receivable of the Business
as of the date hereof have arisen in the ordinary course of the Business. Each
such receivable is free of Encumbrances that are senior in priority to the
Encumbrances of Seller.
4.18 EQUIPMENT MAINTENANCE. The tangible personal property which
is used in the conduct of the Business, including without limitation, the
Equipment is useable in the ordinary course of the Business as it is presently
being conducted.
4.19 SUFFICIENCY OF ASSETS. The Assets include all properties and
rights of Borrower that have been used in the conduct of the Business as it has
been conducted over the last six (6) months prior to the date hereof.
4.20 RELATIONSHIPS WITH CUSTOMERS ETC. Except as set forth on
Schedule 4.20, Borrower's relations with its customers producing gross revenues
to Borrower of $250,000.00 or more during the last twelve (12) months are good.
Except as set forth on Schedule 4.20, Borrower is not aware of any action taken
by
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its licensors, suppliers, dealers, customers and others having business
relationships with the Business that could reasonably be expected to have a
material adverse effect on the Assets or the earnings, financial condition,
operations or prospects of the Business.
4.21 TAX MATTERS.
(a) Borrower has filed in a timely manner all federal, state,
local and foreign Tax Returns that are required to be filed in connection with
the Assets. All such Tax Returns are correct and complete in all material
respects. Borrower has paid all Taxes that are due before the Closing (whether
or not shown on any Tax Return) and has appropriately provided on its books and
records for all current Taxes that are not yet due. Borrower is not currently
the beneficiary of any extension of time within which to file any Tax Return.
(b) No claim has ever been made by an authority in a
jurisdiction where Borrower does not file Tax Returns that Borrower is or may
be subject to taxation by that jurisdiction. Except as set forth on Schedule
4.21(b) hereto, Borrower has not waived any statute of limitations in respect
of Taxes or agreed to any extension of time with respect to a Tax assessment or
deficiency. Borrower has not received any assessment for unpaid Taxes, knows
of no reason why any such assessment might be made nor is Borrower a party to
any agreement providing an extension of time for the assessment of Taxes.
Borrower has not received any notice of examination from the Internal Revenue
Service or any state, local or foreign tax authority and no Tax Returns are
currently under audit.
(c) Borrower has withheld and paid over all Taxes that it is
required to have withheld and paid over in connection with any payments made or
owing to any employee, independent contractor, stockholder or other third
party. The transactions contemplated by this Agreement are not subject to any
Tax withholding other than sales or use tax.
(d) None of the Assets is subject to any Encumbrance
arising in connection with any failure or alleged failure to pay any Tax.
4.22 INSIDER INTERESTS. Except as set forth in Schedule 4.22 or as
the holder of less than 5% of the stock of a publicly traded company, no
officer, director or holder of more than 5% of the common stock of Borrower or
an Affiliate of Borrower (i) competes with, is involved with or has any direct
or indirect interest in any business entity which competes with the Business,
(ii)has any agreement of any type with Borrower or (iii) has any interest,
direct or indirect, in any property, real or personal, tangible or intangible,
including, without limitation, Intellectual Property, used in or pertaining to
the Business, except as a stockholder or employee of Borrower.
4.23 EMPLOYEE BENEFIT PLANS.
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(a) Schedule 4.23 lists all of the employee benefit plans and
programs including, without limitation, all retirement, savings and other
pension plans ("Pension Plans"), all health, severance, insurance, disability
and other employee welfare plans ("Welfare Plans") and all incentive, vacation
and other similar plans that are maintained by Borrower with respect to
employees of the Business or to which Borrower has contributed or is now
contributing on behalf of the employees of the Business. Borrower is not a
party to any multi-employer plan as defined in Section 3(37) of ERISA.
(b) As to each of the Pension Plans, Borrower has complied,
in all material respects, with all applicable laws and regulations in
administering such plans, including specifically the provisions of ERISA and
the qualification provisions of Section 401 of the Internal Revenue Code. No
prohibited transaction, as defined in Section 4975 of the Internal Revenue
Code, has occurred with respect to any of the Pension Plans and none of the
Pension Plans has incurred any accumulated funding deficiency, as defined in
Section 412 of the Internal Revenue Code, whether or not waived. There has not
been, with regard to any such plan, any reportable event, as defined in Section
4043(b) of ERISA, that is required to be reported to the PBGC by law or
regulation. The fair market value of the assets of each of the Pension Plans
equals or exceeds the present value of all benefits accrued under such plan,
whether or not vested, based on the actuarial assumptions that would be used by
the PBGC if the plan were terminated as of the date of this Agreement.
(c) As to each of the Welfare Plans and other employee
benefit plans and programs, Borrower has complied with all applicable laws and
regulations in the administration thereof including, without limitation, the
provisions of ERISA.
(d) Borrower has not terminated any Pension Plan or incurred
any liability to the PBGC under Section 4001, et seq. of ERISA and, to the
knowledge of Borrower, no condition exists that could reasonably be expected to
cause Buyer to incur any such liability. All premiums payable to the PBGC have
been paid when due.
(e) No compensation or benefit that is or will be payable as
a result of the transactions contemplated by this Agreement will be
characterized as an "excess parachute payment" within the meaning of Section
280G of the Internal Revenue Code.
4.24 FULL DISCLOSURE. Neither the representations and warranties
made in this Article nor any information, instrument or document furnished by
or on behalf of Borrower to Buyer in connection with the transactions
contemplated by this Agreement contains any untrue statement of a material fact
or omits to state a material fact necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
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4.25 BROKERS. Except for Trenwith Securities, Inc., no broker,
finder, investment banker or similar Person is entitled to any brokerage,
finder's or other fee or commission in connection with the transactions
contemplated by this Agreement.
4.26 POTENTIAL PURCHASERS. None of the Potential Purchasers
offered total consideration for the Assets in excess of that offered by Buyer.
4.27 CERPLEX COLLATERAL. Schedule 5.7 hereto sets forth a true,
complete and accurate list of the Cerplex Collateral. At Closing, all items
listed on Schedule 5.7 are clearly marked or identified to indicate that they
are the items comprising the Cerplex Collateral and are physically segregated
from the tangible personal property comprising the Assets. Except for a letter
received in October 1997, there have been no written communications either to
or from Cerplex relating to Borrower's obligations and liabilities to Cerplex
or to the Cerplex Collateral since March 10, 1997.
4.28 BULK SALES ACT. This Agreement and the transactions
contemplated hereby are not subject to the bulk sales laws of any jurisdiction
in the United States.
4.29 NEGOTIATIONS RELATING TO THIS AGREEMENT. Borrower is acting
in good faith in connection with this Agreement and has no basis to believe
that the representation and warranty of Seller contained in Section 5.12 is not
true and correct or that the representation and warranty of Buyer contained in
Section 6.5 is not true and correct.
4.30 BORROWER'S ACKNOWLEDGMENT. Borrower acknowledges:
(i) this Agreement and the transactions provided for herein are in the
best interests of Borrower, its creditors, and all other parties in interest;
(ii) it does not have the financial capacity to continue its business
or to take any actions after Closing other than to go out of business.
Borrower may find it necessary to file bankruptcy or some other type of
insolvency relief;
(iii) the Agreement and the transactions provided for herein represent
the best recovery for Borrower and its creditors; and
(iv) there are no other actions it could have taken to produce any
larger recovery for its creditors or to obtain a better price for the Assets.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SELLER
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Seller represents and warrants to Buyer the following:
5.1 ORGANIZATION; AUTHORITY. Seller is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Seller has corporate power and authority to execute, deliver and
perform this Agreement and to consummate the transactions contemplated hereby.
The execution and delivery by Seller of this Agreement and the consummation by
it of the transactions contemplated hereby, have been duly authorized by all
required corporate action of Seller and no other corporate proceedings on the
part of Seller are necessary with respect thereto. This Agreement has been
duly executed and delivered by Seller and constitutes the valid and binding
obligation of Seller, enforceable in accordance with its terms.
5.2 CONSENTS AND APPROVALS. Except as may be required pursuant to
Section 9-504 or except a filing by Seller with and approval from the FTC and
/or the Antitrust Division pursuant to the HSR Act, there is no requirement
applicable to Seller to make any filing with, to provide notice to, or to
obtain any consent or approval of any Person as a condition to the consummation
of the transactions contemplated by this Agreement.
5.3 NO VIOLATION. The execution and delivery by Seller of this
Agreement does not, and the consummation of the transactions contemplated
hereby, will not (i) violate or result in a breach of any provision of its
Certificate of Incorporation or Bylaws, (ii) result in a default, or give rise
to any right of termination, modification or acceleration or otherwise
adversely affect any rights under, or result in the imposition of an
Encumbrance on or forfeiture of any of the Assets, or require any
authorization, consent or approval under the terms or provisions of any
agreement or other instrument or obligation to which Seller is a party or by
which Seller may be bound, or (iii) violate any law or regulation, or any
judgment, order or decree of any court, governmental body, commission, agency
or arbitrator applicable to Seller, any of the Assets or the Business.
5.4 RIGHT TO CONDUCT 9-504 SALE. As security for the Loans,
Seller has a perfected first priority security interest in the Collateral. The
Loans have been for an extended period and are presently in payment default.
Buyer's entering into this Agreement results from the efforts of Seller and
Borrower, through Trenwith or otherwise, to identify third parties interested
in acquiring the Assets or the Business. Seller has the right under Section
9-504 to sell, lease or otherwise dispose of the Collateral in satisfaction of
all or part of the Loans outstanding.
5.5 TITLE TO ASSETS. Buyer will receive good, valid and
marketable title to all of the Assets, free and clear of any Encumbrances;
provided, however, that for purposes of this
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representation and warranty and the indemnity set forth in Article XII hereof,
"Assets" shall not include (a) Balance Sheet Assets and (b) Intellectual
Property or Business Contracts to the extent any consent to assignment thereof
is required to vest title in Buyer and is not obtained.
5.6 AGREEMENTS. Schedule 5.6 sets forth a true and complete list
of all agreements, understandings and other arrangements between or among
Seller and Borrower and any affiliate of Borrower as well as a true and
complete description of the Collateral.
5.7 CERPLEX COLLATERAL. Schedule 5.7 hereto sets forth a true,
complete and accurate list of the Cerplex Collateral. Seller expressly
disclaims any interest in the Cerplex Collateral. Seller has disclosed to
Buyer all communications, and the contents thereof, by Seller or in Seller's
possession which are material to Borrower's obligations and liabilities to
Cerplex or to the Cerplex Collateral or the resolution of such obligations and
liabilities.
5.8 SUBORDINATE LIENS. There are no Encumbrances on the Assets
that are not subordinate to Seller's Encumbrances thereon except statutory
liens that are not, to Seller's knowledge, material. Schedule 5.8 lists all
Encumbrances on the Assets reflected in the public records other than the
Encumbrances of Seller thereon (the "Subordinate Liens"). All of the
Subordinate Liens, except statutory liens that are not, to Seller's knowledge,
material, will be extinguished upon the sale of the Assets to Buyer pursuant to
the UCC-9 Sale. The information contained in Schedule 5.8 shall not be deemed
to limit in any way the representation and warranty contained in Section 5.5.
The provisions of, and the protection afforded to Buyer in Section 5.5 hereof
shall expressly apply to all Encumbrances, including without limitation,
statutory liens and any Encumbrances not reflected in the public records.
5.9 POTENTIAL PURCHASERS. None of the Potential Purchasers
offered total consideration for the Assets in excess of that offered by Buyer.
5.10 FULL DISCLOSURE. None of the representations and warranties
made in this Article contains any untrue statement of a material fact or omits
to state a material fact necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading.
5.11 BULK SALES ACT. This Agreement and the transactions
contemplated hereby are not subject to the bulk sales laws of any applicable
jurisdiction in the United States.
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5.12 NEGOTIATIONS RELATING TO THIS AGREEMENT. Seller is acting in
good faith in connection with this Agreement and has no reason to believe that
the representation and warranty of Borrower contained in Section 4.29 is not
true and correct or that the representation and warranty of Buyer contained in
Section 6.5 is not true and correct.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer covenants, represents and warrants to Seller the following:
6.1 ORGANIZATION; AUTHORITY. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Buyer has corporate power and authority to execute, deliver and
perform this Agreement and to consummate the transactions contemplated hereby.
The execution and delivery by Buyer of this Agreement and the consummation by
it of the transactions contemplated hereby have been duly authorized by the
Board of Directors of Buyer and no other corporate proceedings on the part of
Buyer are necessary with respect thereto. This Agreement has been duly
executed and delivered by Buyer, and this Agreement constitutes the valid and
binding obligation of Buyer, enforceable in accordance with its terms except as
its terms may be limited by (i) bankruptcy, insolvency, or similar laws
affecting creditors' rights generally or (ii) general principles of equity,
whether considered in a proceeding in equity or at law.
6.2 CONSENTS AND APPROVALS. Except a filing with and approval
from the FTC and /or the Antitrust Division pursuant to the HSR Act or approval
pursuant to Buyer's credit facilities, there is no requirement applicable to
Buyer to make any filing with, or to obtain any consent or approval of any
Person as a condition to the consummation of the transactions contemplated by
this Agreement.
6.3 NO VIOLATION. The execution and delivery by Buyer of this
Agreement does not and will not (i) violate or result in a breach of any
provision of the Articles of Incorporation or Bylaws of Buyer, (ii) result in a
default, or give rise to any right of termination, modification or acceleration
under the terms, conditions or provisions of any agreement or other instrument
or obligation to which Buyer is a party or by which Buyer may be bound, or
(iii) violate any law or regulation, or judgment, order or decree of any court,
governmental body, commission, agency or arbitrator applicable to Buyer.
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6.4 BROKERS. Buyer has not retained, utilized or been represented
by any broker or finder in connection with the transactions contemplated by the
Agreement.
6.5 NEGOTIATIONS RELATING TO THIS AGREEMENT. Buyer is acting in
good faith in connection with this Agreement and has no reason to believe that
the representation and warranty of Borrower contained in Section 4.29 is not
true and correct or that the representation and warranty of Seller contained in
Section 5.12 is not true and correct.
ARTICLE VII
ADDITIONAL AGREEMENTS
7.1 REGULATORY AND OTHER AUTHORIZATIONS. Buyer and Seller will
make any and all filings and submissions to, and use commercially reasonable
efforts to obtain all authorizations, consents, orders and approvals of all
federal, state, and foreign governmental and regulatory Persons that may be or
become necessary for the performance of the obligations pursuant to this
Agreement and will cooperate fully with the other in promptly seeking to obtain
all such authorizations, consents, orders and approvals. Seller and Buyer will
not intentionally take, or omit to take, any action that will have the effect
of delaying, impairing or impeding the receipt of any required approval.
7.2 CONFIDENTIALITY.
(a) Seller and Buyer shall exercise, and shall cause their
respective representatives to exercise, the same degree of care to prevent
disclosure of Information (as hereinafter defined) received by or disclosed to
Seller or Buyer pursuant to this Agreement as it takes to preserve and
safeguard its own confidential information, data, technology or know-how but,
in any event, no less than a reasonable degree of care. As used herein,
"Information" means all documents and information concerning the other party
and the affiliates thereof furnished to a party, its affiliates or
representatives (in any case, a "Recipient") by such other party or its
representatives (in any case, the "Disclosing Party") in connection with the
transactions contemplated by this Agreement. Each Recipient shall not use any
of such Information except as permitted by this Agreement or release or
disclose such Information to any other Person, except its auditors, attorneys,
financial advisors, bankers and other consultants and advisors in connection
with this Agreement.
(b) Information shall be safeguarded by the Recipient for not
less than three (3) years from the date hereof and any documentary Information
(including all copies thereof) not relating to the Business or the Assets shall
be returned to the Disclosing Party promptly at its request and other
Information shall be maintained in confidence subject to the terms of this
Section.
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(c) The restrictions of this Section shall not apply to any
Information received by a Recipient (a) which such Recipient already possessed
at the time of receipt as shown by written records; (b) which was at the time
of receipt or subsequently becomes, publicly available through no fault of such
Recipient or any of its affiliates or representatives; (c) which such Recipient
rightfully received from a third party which the Recipient neither knows nor
has reason to know is prohibited from disclosing such information by a
contractual, legal or fiduciary obligation; (d) which is furnished to the
Recipient by a third party without a similar restriction on the third party's
rights; or (e) which is required to be disclosed pursuant to law; provided
that, if practicable, the Recipient shall notify the Disclosing Party prior to
disclosing any Information pursuant to this clause (e) and shall cooperate with
the Disclosing Party in making reasonable efforts to resist such disclosure, if
the Disclosing Party so requests. Information shall not be deemed to be within
the foregoing exceptions merely because such Information is embraced by more
general information in the public domain or in a Recipient's possession. In
addition, any combination of features shall not be deemed to be within the
foregoing exceptions merely because individual features are in the public
domain or in a Recipient's possession, but only if the combination itself and
its principle of operation are in public domain or in Recipient's possession.
(d) Each Recipient shall limit access to Information to those
of its representatives who have a need to know in order to effectuate this
Agreement and who have been advised to maintain the confidentiality principles
of this Section.
(e) In the event of a breach of any of the obligations stated
above in this Section, the Disclosing Party may proceed against the breaching
Recipient in law or in equity for such damages or other relief as a court may
deem appropriate. Nothing herein contained shall be construed as prohibiting
the Disclosing Party from pursuing, in addition, any other remedy for such
breach or threatened breach. The confidentiality restrictions set forth in
this Section supersede those contained in the Letter of Intent between the
parties dated September 29, 1997.
7.3 ALLOCATION OF PURCHASE PRICE. (a) Within 60 days after the
Closing Date, Buyer will provide to Seller copies of IRS Form 8594 and any
required exhibits thereto (the "Asset Form") with Buyer's proposed allocation
of the Purchase Price (together with any assumed liabilities). Within 15 days
after the receipt of such Asset Form, Seller will propose to Buyer any changes
to such Asset, (and in the event no such changes are proposed in writing to
Buyer within such time period, the Seller will be deemed to have agreed to, and
accepted, the Asset Form). Buyer and Seller will endeavor in good faith to
resolve any differences with respect to the Asset Form, within 15 days after
Buyer's receipt of written notice of objection from Seller.
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(b) Subject to the provisions of the following sentence
of this paragraph (b), the Purchase Price (together with any assumed
liabilities) will be allocated in accordance with the Asset Form provided by
Buyer to Seller pursuant to paragraph (a) above, and subject to the
requirements of applicable tax law or election, all Tax returns and reports
filed by Buyer and Seller will be prepared consistently with such allocation.
If Seller withholds its consent to the allocation reflected in the Asset Form,
and Buyer and Seller have acted in good faith to resolve any differences with
respect to items on the Asset Form and thereafter are unable to resolve any
differences that, in the aggregate, are material in relation to the Purchase
Price, then any remaining disputed matters will be finally and conclusively
determined by an independent accounting firm of recognized national standing
(the "Allocation Arbiter") selected by Buyer and Seller, which firm shall not
be the regular accounting firm of Buyer or Seller. Promptly, but not later
than 15 days after its acceptance of appointment hereunder, the Allocation
Arbiter will determine (based solely on presentations by Seller and Buyer and
not by independent review) only those matters in dispute and will render a
written report as to the disputed matters and the resulting allocation of
Purchase Price (together with any assumed liabilities), which report shall be
conclusive and binding upon the parties. Buyer and Seller shall, subject to
the requirements of any applicable tax law or election, file all Tax returns
and reports consistent with the allocation provided in the Asset Form or, if
applicable, the determination of the Allocation Arbiter.
7.4 EXPENSES. Pursuant to Borrower's request (as evidenced by its
execution hereof) and concurrent with the receipt of funds from Buyer, Seller
shall immediately advance for Borrower's account and promptly pay those
liabilities and expenses set forth on Schedule 7.4. Seller shall pay all costs
and expenses incurred by Seller in connection with this Agreement and the
transactions contemplated hereby. In no event will the Buyer be obligated to
pay any of such expenses of Borrower or Seller. Buyer shall pay all costs and
expenses incurred by Buyer in connection with this Agreement and the
transactions contemplated hereby. In no event shall Seller be obligated
hereunder to pay any expenses of Borrower or Buyer except as specifically set
forth herein.
7.5 FURTHER ACTION. Seller and Buyer shall execute such documents
and take such further actions as may be reasonably required or desirable to
carry out the provisions of this Agreement and the transactions contemplated
hereby. Upon the terms and subject to the conditions hereof, Borrower, Seller
and Buyer shall use commercially reasonable efforts to take, or cause to be
taken, all actions and to do, or cause to be done, all other things necessary,
proper or advisable to consummate and make effective as promptly as practicable
the transactions
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contemplated by this Agreement and shall cooperate in good faith with respect
thereto.
7.6 FURTHER ACTION. Buyer agrees that it shall maintain the Books
and Records in accordance with its policies relating to retention of its
financial and other corporate records and that Buyer shall provide Borrower and
its representatives reasonable access to the Books and Records for the
preparation of such reports and returns as may be required by Governmental
Units. Buyer shall provide to Borrower, without charge, reports and other
information with respect to the Assets and the Business to enable Borrower to
file with Governmental Units tax returns and such other reports as required by
law.
7.7 LOCK BOX/PAYMENTS AND COLLECTIONS. All payments made to or
received within any lock box to which customers of the Business are directed to
remit funds, whether such lock boxes are held in the name of Borrower, Seller
or otherwise (the "Lock Boxes"), are to be received for the benefit of Buyer,
are not to be deposited into any account held by or for Borrower and/or Seller
and are to be promptly remitted to Buyer in kind within one day after receipt
in the Lock Boxes. Borrower and Seller hereby assign to Buyer all amounts
received in the Lock Boxes after Closing. Borrower and Seller agree that Buyer
shall have the irrevocable right to endorse in the name of the Borrower, all
checks and any other payments of any nature to or for the benefit of Borrower
and that, subject to the limitation set forth below in this Section 7.7, all
such funds constitute Assets under this Agreement. Borrower and Seller also
agree that Buyer shall have the right to notify all customers of Borrower and
all other Persons, that Buyer chooses to notify, that all amounts due and owing
to the Borrower constitute Assets under this Agreement and should be paid to
Buyer. Borrower hereby grants Buyer an irrevocable power of attorney to take
all actions necessary to accomplish the provisions of this Section 7.7,
including, without limitation, the endorsement of checks and the execution of
any other documents in the name of Borrower. To the extent any signature is
required of Seller to fully remit, deliver and turn over any checks or other
property to Buyer, Seller shall provide such signature to Buyer. All
collections in the Lock Boxes through November 14, 1997 shall be and remain the
property of Borrower, subject to Seller's lien. All collections in the Lock
Boxes subsequent to November 14, 1997 shall constitute Assets under this
Agreement, and Seller shall promptly turn over all such funds to Buyer, and
provide Buyer with copies of the checks deposited and the Lock Box account
statements. Seller hereby irrevocably assigns to Buyer all of Seller's right,
title and interest in the Lock Boxes and to all funds in the Lock Boxes subject
to the limitation that all collections in the Lock Box through November 14,
1997 shall be and remain the property of Borrower, subject to Seller's lien.
All collections deposited into the Lock Box subsequent to November 14, 1997
shall
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constitute Assets under this Agreement. Seller and Borrower agree to execute
at Closing and deliver to Crestar Bank, and any other Lock Box depositories, a
letter terminating the Crestar Lock Box and instructing Crestar, and any other
Lock Box depositories, to comply with the provisions of this Section 7.7.
ARTICLE VIII
EMPLOYEES AND EMPLOYEE MATTERS
8.1 EMPLOYMENT WITH BUYER. Borrower has delivered to Buyer a list
of all of the employees of Borrower who are employed by the Business as of the
most recent date for which such information is available. With Borrower's
permission, Buyer has extended offers of employment to such persons whose
skills Buyer, in its sole discretion, has determined are necessary to the
conduct of the Business after Closing, at salaries and benefits determined by
Buyer. Such employees who accept Buyer's offer of employment with the
reasonable expectation that such employment shall be for a limited period are
referred to herein as "Term Employees" and shall be deemed to have become
employees of Buyer as of the time of the Closing. Such employees who accept
Buyer's offer of employment with the reasonable expectation that such
employment shall be indefinite are referred to herein as "New Hires" and shall
be deemed to have become employees of Buyer as of the time of the Closing.
Such employees of Borrower to whom Buyer does not extend offers of employment
and such employees of Borrower who do not accept an offer of employment from
Buyer are referred to herein as "Nonhired Individuals".
8.2 NONHIRED EMPLOYEES. Buyer will not incur any liability or
obligation with respect to Nonhired Individuals arising from or relating to the
termination of the Nonhired Individuals' employment with Borrower or otherwise,
including without limitation any severance obligation or any obligation arising
from, under or pursuant to ERISA, the WARN Act, COBRA or any contract or
agreement of employment that any Nonhired Individual may have with Borrower,
except as set forth in this Section 8.2. Buyer agrees to provide and to pay
certain costs related to providing health insurance coverage for Nonhired
Individuals and their Qualified Beneficiaries under COBRA. With respect
thereto, Buyer agrees to pay all costs associated with the provision to
Nonhired Individuals and their Qualified Beneficiaries of health insurance
coverage pursuant to COBRA, except for the premiums to be charged Nonhired
Individuals and their Qualified Beneficiaries for such coverage the cost of
which premiums shall be borne by the respective Nonhired Individuals or
Qualified Beneficiary.
8.3 NEW HIRES. Buyer will not incur any liability or obligation
with respect to New Hires arising from or relating to the termination of the
New Hires' employment with Borrower or otherwise, including without limitation
any severance obligation
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or any obligation arising from, under or pursuant to ERISA, the WARN Act, COBRA
or any contract or agreement of employment that any Nonhired Individual may
have with Borrower, except as set forth in this Section 8.3. Buyer agrees to
assume the total vacation liability accrued by Borrower as of the Closing for
the New Hires as set forth on Schedule 2.3 hereto and included in Assumed
Liabilities. New Hires shall accrue benefits under plans and programs covering
employees of Buyer based solely on their service with Buyer after the Closing.
Buyer will waive the pre-existing condition limitations of Buyer's health
insurance plans for New Hires. Buyer will also waive its drug screening
requirements for New Hires upon the initiation of their employment with Buyer.
8.4 TERM EMPLOYEES. Buyer will not incur any liability or
obligation with respect to Term Employees arising from or relating to the
termination of the Term Employees' employment with Borrower or otherwise,
including without limitation any severance obligation or any obligation arising
from, under or pursuant to ERISA, the WARN Act, COBRA or any contract or
agreement of employment that any of the Term Employees may have with Borrower,
except as set forth in this Section 8.4. Buyer agrees to assume the total
vacation liability accrued by Borrower as of the Closing for the Term Employees
as set forth on Schedule 2.3 hereto and included in Assumed Liabilities. Buyer
agrees to assume the total severance liability accrued by Borrower as of the
Closing for the Term Employees as set forth on Schedule 2.3 hereto and included
in Assumed Liabilities. Term Employees shall be entitled to health insurance
coverage under Buyer's health insurance programs. Buyer agrees to provide and
to pay certain costs related to providing health insurance coverage for Term
Employees under COBRA. With respect thereto, Buyer agrees to pay all costs
associated with the provision to Term Employees and their Qualified
Beneficiaries of health insurance coverage pursuant to COBRA, except for the
premiums to be charged Term Employees and their Qualified Beneficiaries for
such coverage the cost of which premiums shall be borne by the respective Term
Employees or their Qualified Beneficiaries. Buyer will waive its drug
screening requirements for Term Employees upon the initiation of their
employment with Buyer.
8.5 EMPLOYEE BENEFIT PLANS. No assets or liabilities with respect
to Term Employees or New Hires shall be transferred as a result of this
Agreement, from any of Borrower's employee benefit plans applicable to
Borrower's employees to any plan maintained or established by Buyer.
8.6 WORKERS[X] COMPENSATION. Buyer will assume the responsibility
for all workers[X] compensation claims made by New Hires and Term Employees
arising from events occurring after the
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Closing. Buyer does not assume any other responsibilities for workers'
compensation claims made by employees of Borrower.
8.7 OTHER LIABILITIES RELATING TO EMPLOYEES. Except to the extent
set forth in this Article or in Article VII, neither Buyer nor Seller will
assume or incur any liabilities or obligations with respect to or arising under
(i) ERISA, (ii) any pension plan, welfare plan or other employee benefit plan
or program relating to any present, former or retired employees of Borrower,
(iii) any termination, severance or separation obligation which may result from
the consummation of the transactions contemplated by this Agreement or (iv) any
liability or obligation with respect to any employees of Borrower not hired by
Buyer, including without limitation, any liability or obligations arising under
the WARN Act or COBRA.
8.8 SELLER NOT EMPLOYER. Borrower and Buyer agree that Seller is
not and shall not be deemed to have any time been the employer of any employees
of Borrower as a result of the transactions contemplated hereby.
ARTICLE IX
NOT USED
ARTICLE X
NOT USED
ARTICLE XI
CLOSING
9.1 TIME AND PLACE OF CLOSING. The closing (the "Closing") shall
take simultaneously with the execution by all parties hereto of this Agreement
on this 14th day of November, 1997 (the "Closing Date") at the offices of
McGuire, Woods, Battle & Boothe, L.L.P. in McLean, Virginia. The Closing and
all of the transactions contemplated by this Agreement shall be deemed to have
occurred simultaneously and become effective as of 12:01 a.m. on the Closing
Date.
9.2 DELIVERIES BY SELLER. At the Closing Seller is delivering or
is causing to be delivered to Buyer the following:
(i) a Bill of Sale and Assignment in the form
attached as Exhibit 11.2(i) hereto;
(ii) a Trademark and Tradename Assignment in the
form attached as Exhibit 11.2(ii) hereto;
(iii) a Certificate of an authorized officer of
Seller to the effect that each of the representations and warranties
of Seller contained in this Agreement are true
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and correct as of the Closing and that Seller has complied with all of
its obligations under this Agreement; and
(iv) a certificate of an authorized officer of
Trenwith in the form attached as Exhibit 11.2(iv) hereto.
9.3 DELIVERIES BY BUYER. At Closing Buyer is delivering to Seller
the following (except for item (ii) which is being delivered to the Borrower):
(i) the Purchase Price in same day funds;
(ii) an instrument of assumption of liabilities, in
the form attached as Exhibit 11.3(ii) hereto; and
(iii) a certificate signed by the Assistant Secretary
of Buyer in the form attached as Exhibit 11.3(iii) hereto.
9.4 DELIVERIES BY BORROWER. At Closing, Borrower is delivering to
Buyer the following:
(i) a Bill of Sale and Assignment in the form
attached as Exhibit 11.4(i) hereto;
(ii) a Trademark and Tradename Assignment in the
form attached as Exhibit 11.4(ii) hereto;
(iii) a Reaffirmation Agreement in the form attached
as Exhibit 11.4(iii) hereto;
(iv) a Certificate signed by the Chief Financial
Officer and Chief Executive Officer of Borrower to the effect that
each of the representations and warranties of Borrower contained in
this Agreement are true and correct as of the Closing and that
Borrower has complied with all of its obligations under this
Agreement;
(v) evidence of corporate authorization of this
Agreement and the transactions contemplated hereby by Borrower.
ARTICLE XII
INDEMNIFICATION
12.1 INDEMNIFICATION BY SELLER.
(a) Subject to the limitations contained in this Article,
Seller will indemnify and hold Buyer or any of its Affiliates harmless from
Losses arising out of, under or pursuant to:
(i) any breach (or any allegation by any third
party of facts, which if true as alleged, would constitute such a
breach) of any representation or warranty made by Seller in this
Agreement;
(ii) any breach or violation of the agreements of
Seller contained in Article VII of this Agreement;
(iii) any claim or assertion by any Person with
respect to Buyer's title to the Assets, however asserted, including,
without limitation, any such claim or assertion seeking or resulting
in the payment of additional
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consideration for any Asset, any claim or assertion that Buyer did not
acquire title to any Asset and any claim or assertion involving any
Encumbrance or alleged Encumbrance with respect to Buyer's title to
the Assets;
(iv) any claim or assertion by any Person for any
state law fraudulent conveyance or fraudulent transfer action with
respect to the Assets;
(v) any claim or assertion by any Person in any way
related to the Assets by any Person arising under Title 11 of the
United States Code in a bankruptcy case of Borrower or any Affiliate
of Borrower, including, without limitation, any claim or assertion of
fraudulent conveyance, equitable subordination or preferential
transfer or any similar theory;
(vi) any claim or assertion by any Person, however
asserted or framed, the result of which is that the transactions
contemplated by this Agreement, as a whole, are reversed or set aside.
For purposes of this Section 12.1 (vi) and Section 12.2(b) only, the
Canadian Acquisition shall be deemed not to be a transaction
contemplated by this Agreement.
12.2 LIMITATIONS ON INDEMNIFICATION.
(a) Notwithstanding any other provisions of this Agreement
and except as noted in Sections 12.2(b) and 12.8 below, Seller shall be liable
to Buyer under this Article up to [$3.8 million] in the aggregate and Seller
shall have no other liability to Buyer under this Agreement or in connection
with the transactions contemplated hereby.
(b) Notwithstanding the provisions of Section 12.2(a) above,
in the event of any claim or assertion by any Person, however asserted or
framed, the result of which is that the transactions contemplated by this
Agreement, as a whole, are reversed or set aside, Seller shall be liable to
indemnify and hold Buyer harmless in an amount equal to $8,377,310.00 (the "Net
Purchase Price Proceeds"). For purposes of this Section 12.2(b) and Section
12.1 (vi) only, the Canadian Acquisition shall be deemed not to be a
transaction contemplated by this Agreement.
(c) All damages to which Buyer may be entitled pursuant to
the provisions of this Article shall be net of any insurance coverage with
respect thereto. Insurance proceeds received shall be first applied to any
Loss which is not indemnified.
12.3 THIRD PARTY CLAIMS. The rights of Buyer under the provisions
of this Article with respect to claims resulting from the assertion of
liability by Persons not parties to this Agreement (including governmental
claims for penalties, fines and assessments) shall be subject to the following
terms and conditions:
(a) Buyer shall give prompt written notice to Seller of any
assertion of liability by a third party which might give
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rise to a claim for indemnity based on the foregoing provisions of this Article
XII, which notice shall state the nature and basis of the assertion and the
amount thereof, to the extent known. Delay on the part of Buyer in giving
notice shall not release Buyer's right to indemnity hereunder.
(b) If any action, suit or proceeding (a "Legal Action") is
brought against Buyer with respect to which Buyer has a right to indemnity
under the provisions of this Article, Seller shall have the right to assume the
defense of the Legal Action with counsel reasonably acceptable to Buyer and
such defense shall include all proceedings for appeal or review which counsel
for the Buyer shall deem appropriate.
(c) Notwithstanding the provisions of the previous subsection
of this Agreement, until the Seller shall have assumed the defense of any such
Legal Action, the defense shall be handled by the Buyer. Furthermore, if (A)
the Seller fails to assume the defense of such Legal Action at least five
business days before the date on which the first defensive pleading is due, or
(B) the Legal Action involves other than money damages and seeks injunctive or
other equitable relief, the Seller shall not be entitled to assume the defense
of the Legal Action and the defense shall be handled by the Buyer. If the
defense of the Legal Action is handled by Buyer under the provisions of this
subsection, Buyer shall have a right to be promptly and periodically reimbursed
by Seller for legal and other expenses reasonably incurred by Buyer in
conducting such defense.
(d) In any Legal Action initiated by a third party and
defended by Seller: (A) Buyer shall have the right to be represented by
separate co-counsel and accountants, at its own expense, (B) Seller shall keep
Buyer fully informed as to the status of such Legal Action at all stages
thereof, whether or not Buyer is represented by its own counsel, (C) Seller
shall make available to Buyer and its attorneys, accountants and other
representatives, all nonprivileged documents (or privileged documents for which
there exists a joint defense privilege between Buyer and Seller) of Seller
relating to such Legal Action, and (D) Buyer and Seller shall render to each
other such assistance as may be reasonably required in order to ensure the
proper and adequate defense of such Legal Action.
(e) In any Legal Action initiated by a third party and
defended by the Seller, Seller shall not make any nonmonetary settlement of any
claim without the written consent of Buyer, which consent shall not be
unreasonably withheld provided, however, that Seller may not make any monetary
settlement without Buyer's consent if any portion of the monetary settlement is
required to be paid by the Buyer. Without limiting the generality of the
foregoing, it shall not be deemed unreasonable to withhold consent to a
settlement involving injunctive or other equitable relief against Buyer or its
assets, employees or business.
12.4 PAYMENT OF CLAIMS.
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(a) In the event that Buyer asserts a claim against Seller
for indemnity under this Article XII it shall promptly send to Seller a written
notice of such claim, setting forth (a) a demand for payment of a specified
amount if practicable and (b) a description of the asserted claim and the basis
therefor. Such notice of claim may be supplemented from time to time with a
written notice of claim for reimbursement of legal and other expenses
reasonably incurred in conducting the defense of such claim sent by Buyer to
Seller, setting forth (a) a demand for payment of a specified amount if
practicable and (b) a description of the asserted claim and the basis therefor.
(b) If Buyer delivers to the Seller a notice of claim in
accordance herewith and Seller does not object thereto within 14 days following
its receipt thereof, then Seller shall forthwith pay to the claimant, or to
Buyer if Buyer previously made payment therefore to claimant, the amount of
such claim in accordance with the terms of the demand set forth in such notice
of claim, subject to the limitations set forth in Section 12.2 hereof.
(c) If Buyer delivers to the Seller a notice of claim
pursuant hereto to which Seller objects in writing prior to the expiration of
the 14 day period specified above, and Buyer and Seller are unable to resolve
such disputed claim within sixty (60) days after the expiration of such 14 day
period, then either Buyer or Seller may submit the determination of the amount
of indemnification under this Article XII for Losses related to such claim for
resolution to a mutually acceptable arbitrator (the "Arbitrator"). The
Arbitrator shall be instructed to determine the amount of indemnification under
this Article XII that it believes is needed to indemnify Buyer to the extent
provided in this Article XII with respect to reasonably foreseeable Losses
related to such claim using a methodology that assigns risk weightings to the
foreseeable range of possible losses. The Arbitrator that hears and resolves
such dispute shall be instructed as to the limits of indemnification available
with respect to such claim under this Article XII and that its award may not
exceed such limits. The amount of such indemnification awarded by the
Arbitrator shall be final and binding on Buyer and Seller, which amount Seller
shall promptly pay to the claimant, or if Buyer has already paid the claimant,
to Buyer after determination thereof, subject to the limitations set forth in
Section 12.2 hereof.
12.5 SURVIVAL; INVESTIGATION. The representations and warranties
of Seller and of Borrower and Parent contained in this Agreement shall survive
any investigation by Buyer and shall not terminate until one year after Closing
(the "First Anniversary") at which time they shall lapse. Notwithstanding the
provisions of the preceding sentence, the representations and warranties of
Borrower and Parent set forth in Sections 4.17 Environmental Matters, 4.22 Tax
Matters and 4.29 Bulk Sales Act and of Seller set forth in Section 5.11 Bulk
Sales Act shall survive any
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investigation by Buyer and shall not terminate until two months after the
expiration of the respective statute of limitation applicable to the matters to
which each such section is addressed. Notwithstanding any other provision of
this Agreement, any representation or warranty in respect of which
indemnification may be sought under this Article shall survive its applicable
expiration date if written notice, given in good faith, of a breach thereof is
given to Seller prior to or on such expiration date, whether or not liability
has actually been incurred.
12.6 INDEMNIFICATION BY BORROWER AND PARENT. Borrower and Parent
will, jointly and severally, indemnify and hold Buyer or any of its Affiliates
harmless from Losses arising out of, under or pursuant to:
(i) any breach (or any allegation by any third
party of facts, which if true as alleged, would constitute such a
breach) of any representation or warranty made by Borrower and Parent
in this Agreement;
(ii) any breach or violation of any agreement of
Borrower or Parent contained in this Agreement; and
(iii) any claim or assertion by any Person relating
to any of the Nonassumed Liabilities.
12.7 INDEMNIFICATION BY BUYER. Buyer will indemnify and hold
Seller or any of its Affiliates harmless from any Losses arising from or
relating to the use by Buyer of the Assets or the operation by Buyer of the
Business after Closing, exclusive of any Loss (i) for which Buyer receives
indemnification from Seller pursuant to Section 12.1 above or for which Buyer
would be entitled to receive indemnification from Seller pursuant to Section
12.1 above except for the fact that such Loss, or any part thereof, when
aggregated with other Losses for which Buyer has received indemnification from
Seller pursuant to Section 12.1 above exceeds the limitations on
indemnification set forth in Section 12.2 above, and (ii) arising from or
relating to any of the Business Contracts for which any consent to assignment
thereof is required to vest title in Buyer and is not obtained. Seller and
Buyer shall follow the procedures set forth in Sections 12.3 and 12.4 with
respect claims for indemnity made by Seller pursuant to this Section 12.7.
12.8 SELLER'S DISGORGEMENT. To the extent any action ("Insolvency
Action") is brought against Buyer by any Person in any bankruptcy case,
receivership, assignment for the benefit of creditors or similar proceeding of
Borrower or any Affiliate of Borrower (collectively, "Insolvency Proceeding"),
arising out of this Agreement or any of the transactions related thereto or
relating to the Assets or the Intellectual Property or Business Contracts
excluded from the definition of Assets in Section 5.5 hereof, and Seller is
entitled to receive a cash distribution from the Insolvency Proceeding as a
creditor of Borrower or any
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Affiliate of Borrower, Seller shall remit to Buyer upon the receipt of any cash
distributions from the Insolvency Proceeding all cash distributions that Seller
receives that can be fairly allocated to any recovery from Buyer in the
Insolvency Action.
ARTICLE XIII
GENERAL PROVISIONS
13.1 NOTICES. All notices and other communications given hereunder
shall be in writing. Notices shall be effective when delivered, if delivered
personally. Otherwise, they shall be effective when sent to the parties at the
addresses or numbers listed below, as follows: (i) on the business day
delivered (or the next business day following delivery if not delivered on a
business day) if sent by a local or long distance courier, prepaid telegram,
telefax or other facsimile means, or (ii) three days after mailing if mailed by
registered or certified U.S. mail, postage prepaid and return receipt
requested.
If to Borrower to:
Robert B. Laurence
2709 Silkwood Court
Oakton, Virginia 22124
Telefax No.: (703) 476-0854
with a copy to:
Gibson, Dunn & Crutcher, L.L.P.
4 Park Plaza - 17th Floor
Irvine, California 92614
Attention: Walter L. Schindler, Esq.
Telefax No.: (714) 475-4662
If to Buyer to:
Genicom Corporation
14800 Conference Center Drive
Suite 400
Chantilly, Virginia 20151
Attention: Paul T. Winn
Telefax No.: (703) 802-9200
with a copy to:
McGuire, Woods, Battle & Boothe, L.L.P.
One James Center
901 East Cary Street
Richmond, Virginia 23219
Attention: Jane Whitt Sellers, Esq.
Telefax No.: (804) 698-2170
If to Seller to:
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Heller Financial, Inc.
500 W. Monroe Street
Chicago, Illinois 60661
Attention: Patrick Pesch
Telefax No.: (312) 441-7236
with a copy to:
Latham & Watkins
Sears Tower, Suite 5800
Chicago, Illinois 60606
Attention: David S. Heller, Esq.
Telefax No.: (312) 993-9767
Any Person may change the address or number to which notices are to be
delivered to him, her or it by giving the other Persons named above notice of
the change in the manner set forth above.
13.2 GOVERNING LAW. This Agreement shall be governed in all
respects by the laws of the Commonwealth of Virginia without regard to its
choice of law rules.
13.3 SCHEDULES. The information contained in any schedule which is
referred to in any section of this Agreement shall be deemed to have been
disclosed in connection with, and to be incorporated into, that particular
section only, and shall not be deemed a part of any other section.
13.4 HEADINGS. The headings contained in this Agreement are for
reference purposes only and shall not affect the meaning or interpretation of
the Agreement.
13.5 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
13.6 MISCELLANEOUS. This Agreement (i) constitutes the entire
agreement and supersedes all other prior agreements and understandings, both
written and oral, between the parties with respect to the subject matter
hereof; (ii) is not intended to and shall not confer upon any Person, other
than the parties hereto, any rights or remedies; and (iii) shall not be
assigned by operation of law or otherwise (except that Buyer may assign its
rights hereunder to an affiliate of Buyer.
13.7 THIRD PARTY BENEFICIARIES. No provision of this Agreement
shall inure to the benefit of, or be enforceable by, any third party.
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IN WITNESS WHEREOF the parties hereto have caused this Agreement to be
executed and their corporate seals to be hereto affixed and attested by their
duly authorized officers.
GENICOM CORPORATION
By /s/ James C. Gale
--------------------------------
Title Chief Financial Officer
-----------------------------
HELLER FINANCIAL, INC.
By /s/ Patrick Pesch
--------------------------------
Title Senior Vice President
-----------------------------
NOVADYNE COMPUTER SYSTEMS, INC.
By /s/ Robert B. Laurence
--------------------------------
Title President
-----------------------------
NOVADYNE ACQUISITION COMPANY, INC.
By /s/ Robert B. Laurence
--------------------------------
Title President
-----------------------------
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EXHIBIT 2.2
ASSET PURCHASE AGREEMENT
AMONG
GENICOM CANADA INC,
NOVADYNE COMPUTER SYSTEMS (CANADA), INC.,
NOVADYNE COMPUTER SYSTEMS, INC.
HELLER FINANCIAL, INC
Dated as of November 14, 1997
<PAGE> 2
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (the "Agreement"), is made as of
November 14, 1997, among Genicom Canada Inc., GST Registration No. 890279656, a
Canadian corporation ("Buyer"), Novadyne Computer Systems, Inc., a Delaware
corporation ("Parent") and Novadyne Computer Systems (Canada), Inc. GST
Registration No. 133404343 a Canadian corporation ("Canadian Borrower") and
wholly owned subsidiary of Parent (and together with Parent, the "Borrowers")
and Heller Financial, Inc. ("Seller")
RECITALS
WHEREAS the Canadian Borrower, has conducted and presently conducts
certain Information Technology and Network Services, Hardware Maintenance
Services and Legacy operations in Canada (the "Business").
WHEREAS, Seller is a senior secured lender to Parent and has extended
to Parent certain loans and credit to finance the operations of the Parent's
business (the "Loans")
WHEREAS Canadian Borrower has guaranteed payment of the Loans to
Seller pursuant to a guarantee dated October 1991 (the "Guarantee") and has
granted to Seller as collateral for the Guarantee a perfected first priority
security interest in certain assets of Canadian Borrower, including without
limitation the Assets, used in the conduct of the Business (the "Collateral"),
pursuant to a general security agreement dated October 9, 1991 which security
interest has been registered under the Ontario Personal Property Security Act
("PPSA").
WHEREAS, the Loans have been for an extended period and are presently
in payment default, the Seller has demanded payment of the Loans under the
Guarantee and the Canadian Borrower has not repaid the Loans and all
obligations of the Canadian Borrower to Seller under the Guarantee ("the
Indebtedness") are now due and payable.
WHEREAS, Parent has retained Trenwith Securities, Inc. to identify
third parties interested in acquiring the Assets or the Business.
WHEREAS, through these efforts Parent (along with Trenwith and Seller)
identified and negotiated with several third parties interested in acquiring
some or all of the Collateral and the Business, none of whom would agree to
enter into a business combination or similar transaction for an amount of
consideration which would allow Parent to pay in full the amount of the Loans
giving rise to Seller's senior secured lender status.
WHEREAS, of the third parties identified as potential purchasers of
the Assets and with whom Parent (along with Trenwith and Seller) negotiated for
the sale of the Assets
<PAGE> 3
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("Potential Purchasers"), none offered total consideration for such Assets in
excess of that offered by Buyer.
WHEREAS, Seller, as a senior secured party, has the right under the
PPSA to sell, lease or otherwise dispose of the Collateral in satisfaction of
all or part of the Indebtedness outstanding and desires to exercise such right
by selling to Buyer certain of the Collateral pursuant to the provisions of the
PPSA.
WHEREAS, Buyer is interested in acquiring the Business and in
connection therewith desires to purchase from Canadian Borrower certain of the
Collateral of the Business and to assume or incur certain liabilities related
thereto.
WHEREAS Canadian Borrower wishes to join in such sale to ensure that
Buyer acquires good and marketable title to such assets.
NOW THEREFORE, in consideration of the foregoing and the
representations, warranties and agreements herein contained, the parties agree
as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. Terms defined in this Section 1.1 or in the
recitals hereto, have the respective meanings set forth herein or in the
recitals hereto:
"Affiliate" of a Person means a Person who controls directly or
indirectly through one or more intermediaries, is controlled by, or is
under common control with, such Person.
"Agreement" means this Asset Purchase Agreement.
"Allocation" has the meaning set forth in Section 7.4(a).
"Arbiter" has the meaning set forth in Section 7.4(a).
"Arbitrator" has the meaning set forth in Section 12.4(c).
"Assets" has the meaning set forth in Section 2.1.
"Assumed Liabilities" has the meaning set forth in Section 2.3.
"Annual Financial Statements" has the meaning set forth in Section
4.6.
<PAGE> 4
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"Benefit Plans" means all bonus, deferred compensation, incentive
compensation, share purchase, share appreciation and share option,
severance or termination pay, hospitalization or other medical
benefits, life or other insurance, dental, disability, salary
continuation, vacation, supplemental unemployment benefits,
profit-sharing, mortgage assistance, employee loan, employee
assistance, pension, retirement or supplemental retirement plan or
agreement (including without limitation any defined benefit or defined
contribution pension plan and any group registered retirement savings
plan), and each other employee benefit plan or agreement (whether oral
or written, formal or informal, funded or unfunded) sponsored,
maintained or contributed to or required to be contributed to by
Canadian Borrower for the benefit of any of the employees of Canadian
Borrower, whether or not insured and whether or not subject to any
applicable law, except that the term "Benefit Plans" shall not include
any statutory plans with which Canadian Borrower is required to
comply, including without limitation the Canada/Quebec Pension Plan or
plans administered pursuant to applicable provincial health tax,
workers' compensation and unemployment insurance legislation.
"Books and Records" has the meaning set forth in Section 2.1(h).
"Borrowers" has the meaning set forth in the Recitals above.
"Business" has the meaning set forth in the Recitals above.
"Business Contracts" has the meaning set forth in Section 2.1(a).
"Buyer" means Genicom Canada Inc.
"Closing" has the meaning set forth in Section 11.1.
"Disclosing Party" has the meaning set forth in Section 7.2(a).
"Encumbrances" means all present liens, mortgages, charges on title,
security interests or other defects in title to the Assets and all
future liens, mortgages, charges on title, security interests or other
defects in title to the Assets that arise out of any claims asserted
against Canadian Borrower or its Affiliates.
"Environmental Permits" means governmental licenses, permits, and
approvals and authorizations, whether federal, provincial or local,
domestic or foreign, which relate to the environment or to public
health and safety or worker health and safety as they may be affected
by the environment.
"Financial Statements" means the Annual Financial Statements and the
Interim Financial Statements.
"First Anniversary" has the meaning set forth in Section 12.5.
<PAGE> 5
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"Governmental Authority" means any domestic or foreign government
whether federal, provincial, state or municipal and any governmental
agency, governmental authority, governmental tribunal or governmental
commission of any kind whatever.
"GST" means all goods and service taxes, sales taxes levied by the
federal government of Canada, value added taxes or multi-stage taxes
and all provincial sales taxes integrated with such federal taxes,
assessed, rated or charged upon the Buyer or payable by the Buyer in
respect of the Closing.
"Seller" means Heller Financial, Inc.
"Information" has the meaning set forth in Section 7.2(a).
"Intellectual Property" has the meaning set forth in Section 2.1(f).
"Interim Financial Statements" has the meaning set forth in Section
4.6.
"Inventory" has the meaning set forth in Section 2.1(c)
"Legal Action" has the meaning set forth in Section 12.3(b).
"Licenses and Permits" means governmental licenses, permits, approvals
and authorizations, whether federal, provincial or local, domestic or
foreign, other than "Environmental Permits".
"Losses" means any and all losses, damages (compensatory, punitive or
otherwise), injuries, deficiencies, demands, obligations, liabilities,
causes of action, accusations, allegations, claims, awards,
assessments, amounts paid in settlement, judgments, orders, decrees,
fines, penalties, and other sanctions, costs and expenses (including,
without limitation, legal costs and expenses and costs and expenses of
collection).
"Material Contracts" has the meaning set forth in Section 4.11.
"New Hires" has the meaning set forth in Section 8.1.
"Nonassumed Liabilities" has the meaning set forth in Section 2.3.
"Operating Equipment" has the meaning set forth in Section 2.1(d).
"Other Equipment" has the meaning set forth in Section 2.1(e).
"Parent" has the meaning set forth in the Recitals above.
"Pension Plan" means each of the Benefit Plans that is a "Registered
Pension Plan" as that term is defined in subsection 248(1) of the
Income Tax Act (Canada);
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"Person" means an individual, a corporation, a partnership, an
association, a labor union, a trust or any other entity or
organization, including a government, a governmental body, a political
subdivision or an agency or instrumentality thereof.
"Purchase Price" has the meaning set forth in Section 2.4.
"PPSA" means the Personal Property Security Act, R.S.O. 1990, c. P-10
as amended
"PPSA Sale" has the meaning set forth in Section 2.1.
"Recipient" has the meaning set forth in Section 7.2(a).
"Security" means a guarantee dated October 1991 given by a predecessor
of Canadian Borrower in favour of Seller and a general security
agreement dated October 9, 1991 given by a predecessor of Canadian
Borrower to Seller to secure the obligations of Canadian Borrower
under such guarantee.
"Canadian Borrower" means Novadyne Computer Systems (Canada), Inc.
"Tax" means any federal, provincial, local or foreign, income, gross
receipts, license, payroll, GST, employment, excise, severance, stamp,
occupation, premium, windfall profits, environmental, customs duties,
capital stock, franchise, profits, withholding, social security,
Canada pension plan, unemployment, disability, real property, personal
property, sales, use, transfer, registration, value added, alternative
or add-on minimum, estimated, or other tax or contribution of any kind
whatsoever, including any interest, penalty, or addition thereto,
whether disputed or not.
"Tax Return" means any return, declaration, report, claim for refund,
or information return or statement relating to Taxes, including any
schedule or attachment thereto, and including any amendment thereof.
ARTICLE II
PURCHASE AND SALE OF ASSETS
2.1 PURCHASE AND SALE OF ASSETS. Seller and Canadian Borrower
hereby sell, convey, transfer assign and deliver to Buyer all of their
respective right, title and interest in, to and under, and Buyer hereby
purchases from Canadian Borrower and Seller, those assets of the Canadian
Borrower used in the conduct of the Business which are set forth below (the
"Assets"); the sale by Seller hereunder is made pursuant to the Security and
Article V of the PPSA (the "PPSA Sale");
(a) all of the contracts listed on Schedule 2.1(a) hereto (the
"Business Contracts");
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(b) all accounts receivable of the Business including those set
forth in Schedule 2.1(b);
(c) the inventory of the Business, including without limitation,
spare parts, repairables, consumables and expendables,
wherever located including the inventory set forth on Schedule
2.1(c) hereto (the "Inventory"), except that such does not
include i) rights in and title to inventory held on
consignment by the Business except to the extent such rights
transfer to Buyer as part of the Business Contracts; ii) parts
held under parts leases; and (iii) all items comprising
collateral (the "Cerplex Collateral") securing Canadian
Borrower's obligations to the Cerplex Group, Inc. or its
Affiliates ("Cerplex");
(d) all test, maintenance and other operating equipment used or
employed in the Business wherever located including those set
forth on Schedule 2.1(d) hereto (the "Operating Equipment"),
and any warranties related thereto, to the extent assignable;
(e) all office furniture and other equipment used in the Business,
wherever located, including those set forth on Schedule 2.1(d)
hereto including without limitation, computers (personal or
otherwise), software, printers, cellular telephones, pagers
calculators and books (the "Other Equipment") but excluding
any phone or voicemail systems on which The Municipal Trust
Company or The Municipal Savings & Loan Corporation, has a
security interest registered under the PPSA or on which
Cerplex has security interest;
(f) all of the trademarks (including all goodwill of the Canadian
Borrower associated therewith), service marks and trade names
(including without limitation, "Novadyne") and pending
applications therefor and the related common law rights and
all of the copyrights, inventions, trade secrets, processes,
formulae software, designs and know-how used in the Business,
including without limitation those items set forth on Schedule
2.1(f) hereto whether owned by Canadian Borrower or licensed
by Canadian Borrower from others (the "Intellectual
Property");
(g) all information, books and records of Canadian Borrower
related to the Assets including without limitation, all tax
records relating to the Assets, but excluding Canadian
Borrower's corporate documents and records and Canadian
Borrower's personnel records, (the "Books and Records"); and
(h) all assets listed on Canadian Borrower's balance sheet at
Closing which are not set forth above in this Section 2.1 (the
"Balance Sheet Assets").
To the extent (but only to the extent) that any Assets are not conveyed by
Seller to Buyer pursuant to the PPSA Sale, Canadian Borrower hereby sells,
conveys and assigns, all of its right, title and interest in such Assets to
Buyer. Seller will (to the extent possible under the
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PPSA Sale) sell, assign and transfer to Buyer certain of Canadian Borrower's
trademarks and tradenames pursuant to a trademark and tradename assignment as
contemplated by Section 11.2 and to the extent necessary to permit registration
of such transfer under the Canadian Trade Marks Act, Canadian Borrower will
execute and deliver the trademark and tradename assignment.
2.2 EXCLUDED ASSETS. Notwithstanding anything to the contrary
provided for in this Agreement, the Assets shall not include the following
assets of Canadian Borrower: i) deferred financing costs, and ii) goodwill
(except for the goodwill associated with the trademarks included as part of the
Intellectual Property as described in Section 2.1(f) above); and (iii) any
leases of real or personal property. Seller hereby releases any security
interest or other interest of whatever nature or kind it may have or may be
deemed to have in connection with such real or personal property leases.
2.3 ASSUMED AND NONASSUMED LIABILITIES. In connection with the
transactions contemplated by this Agreement, Buyer assumes only those
liabilities and obligations of Canadian Borrower which are set forth on
Schedule 2.3 hereto (the "Assumed Liabilities"). Notwithstanding anything to
the contrary provided for in this Agreement, Buyer does not assume and will not
incur any liabilities or obligations of Canadian Borrower or which arise as a
consequence of the transactions contemplated hereby, which are not set forth on
Schedule 2.3. Such non-scheduled liabilities and obligations are referred to
herein as "Nonassumed Liabilities". Buyer shall not assume any liabilities
under a Business Contract unless the consent of any other parties required to
the assignment of such Business Contract is obtained, unless the Buyer waives
the requirement for such consent in writing. Notwithstanding anything to the
contrary provided for in this Agreement, Seller does not assume and will not
incur any liabilities or obligations of Canadian Borrower or which arise as a
consequence of the transactions contemplated hereby.
2.4 PURCHASE PRICE. In consideration of the sale and conveyance
to Buyer of the Assets hereby, Buyer agrees to pay an aggregate cash amount
equal to US$1,093,044 (the "Purchase Price"). To the extent that Parent or
Canadian Borrower has any claim to all or any portion of the Purchase Price,
Parent and Canadian Borrower instructs Buyer to pay the Purchase Price to
Seller and they instruct Seller to apply the Purchase Price to reduce the
indebtedness due and owing on the Indebtedness or to make payments to third
parties as otherwise contemplated herein.
2.5 CERTAIN MATTERS REGARDING REPRESENTATIONS AND WARRANTIES OF
CANADIAN BORROWER AND PARENT. Canadian Borrower and Parent make no
representations or warranties to Buyer or Seller, expressed or implied,
including without limitation warranties of merchantability or fitness for
intended purpose, other than those set forth in Article IV of this Agreement.
Buyer and Seller acknowledge and agree that, absent fraud or willful misconduct
on the part of any Individual Affiliates, (as hereinafter defined) all such
representations, warranties, covenants and agreements of Canadian Borrower and
Parent made herein are without recourse against the directors, officers,
employees, shareholders, attorneys, accountants, agents and fiduciaries of
Canadian Borrower who are natural persons ("Individual
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Affiliates") and that, absent fraud or willful misconduct on the part of any
Individual Affiliates, the Individual Affiliates shall have no personal
liability to Buyer or Seller or any of its officers, directors, shareholders,
affiliates, employees, attorneys, accountants, agents, successors or assigns
for any breach of such representations, warranties, covenants and agreements.
2.6 CERTAIN MATTERS REGARDING REPRESENTATIONS AND WARRANTIES OF
SELLER. Seller makes no representations or warranties to Buyer, except as and
only to the extent set forth in Articles V, VII and XII of this Agreement
including without limitation representations and warranties as to:
(a) non-infringement of any of the trademarks or tradenames owned
by Canadian Borrower;
(b) the existence on the date of Closing of any specific items
constituting the Assets or the quantity or quality thereof; or
(c) the condition, quality, suitability, value, merchantability or
fitness for a particular purpose of any of the Assets or of
the Canadian Borrower or any aspect of Canadian Borrower's
financial condition, business, prospects, or operations.
THE BUYER ACKNOWLEDGES AND AGREES THAT EXCEPT AS AND ONLY TO THE EXTENT SET
FORTH IN ARTICLES V, VII AND XII OF THIS AGREEMENT:
(A) THE SALE OF ASSETS HEREUNDER IS WITHOUT RECOURSE TO SELLER;
WITHOUT ANY REPRESENTATIONS OR WARRANTIES AS TO ITEMS,
CONDITION, QUALITY OR ANY OTHER MATTERS WHATSOEVER;
(B) SELLER IS SELLING TO BUYER ALL ACCOUNTS RECEIVABLE WITHOUT
RECOURSE TO SELLER WITH RESPECT TO THE CREDITWORTHINESS OF ANY
OBLIGOR WITH RESPECT TO SUCH ACCOUNTS RECEIVABLE; SELLER MAKES
NO REPRESENTATION AS TO THE VALUE, IF ANY, OF THE ASSETS BEING
TRANSFERRED HEREBY; AND SELLER MAKES NO REPRESENTATION OR
WARRANTY CONCERNING THE POSSIBLE INFRINGEMENT OF ANY
TRADEMARKS, TRADENAMES OR PATENTS ARISING OUT OF THE USE BY
THE BUYER OR ANY OF THE ASSETS;
(C) SELLER MAKES NO REPRESENTATIONS OR WARRANTIES THAT ALL OR A
PORTION OF THE ASSETS ARE MERCHANTABLE (IN THE SENSE OF AN
IMPLIED WARRANTY OF MERCHANTABILITY UNDER THE SALE OF GOODS
ACT (ONTARIO) OR OTHERWISE) OR FIT FOR A PARTICULAR PURPOSE;
AND
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(D) THE SOLE REPRESENTATIONS AND WARRANTIES OF SELLER REGARDING
THE SUBJECT ASSETS ARE THOSE SPECIFICALLY PROVIDED IN ARTICLE
V OF THIS AGREEMENT.
Notwithstanding the foregoing, it is Seller's intent, under the PPSA, to
transfer all of the Canadian Borrower's right, title and interest in the Assets
to Buyer for value. The foregoing provisions of this Section 2.6 do not limit
or effect the provisions of Article V, VII or XII of this Agreement. Seller
expressly affirms its agreements set forth in Article VII of this Agreement,
the representations and warranties set forth in Article V of this Agreement and
Seller's agreements set forth in Article XII of this Agreement.
ARTICLE III
NOT USED
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF CANADIAN BORROWER AND PARENT
Parent and Canadian Borrower jointly and severally represent and
warrant the following to Buyer.
4.1 ORGANIZATION; QUALIFICATION. Canadian Borrower is a
corporation duly organized, validly existing and in good standing under the
laws of the Canada, and has the corporate power and authority to own, lease and
operate its properties and to carry on the Business as it is presently being
conducted. Canadian Borrower is duly qualified and in good standing to do
business in each jurisdiction in which the conduct of the Business makes such
qualification necessary. Canadian Borrower has heretofore delivered to Buyer
complete and correct copies of its Articles of Incorporation and Bylaws
currently in effect. Canadian Borrower has no subsidiaries.
4.2. SELLER'S RIGHT TO CONDUCT PPSA SALE. To the knowledge of the
Canadian Borrower Seller has a perfected security interest in all of the Assets
in which a security interest may be created under the PPSA. The security
interest is first in priority to the extent priority is measured by the time of
the filing under PPSA in Ontario. The Indebtedness is currently in default and
Seller has the right pursuant to the PPSA to sell, lease or otherwise dispose
of the Assets and to apply the proceeds therefrom in accordance with the PPSA.
Notice to Canadian Borrower of the sale or disposition of the Assets required
by Article V of the PPSA or otherwise has been given and Canadian Borrower by
its execution of this Agreement,consents to the immediate disposition of the
Assets. Canadian Borrower consents to Seller's sale of the Assets hereby to
Buyer and agrees that such sale satisfies the provisions of and is in
accordance with the PPSA and that Canadian Borrower has no right to oppose such
sale.
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4.3 AUTHORITY RELATIVE TO THIS AGREEMENT. Canadian Borrower and
Parent have the corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby. The
execution, delivery and performance by Canadian Borrower and Parent of this
Agreement and the consummation by them of the transactions contemplated hereby,
have been duly authorized by their Boards of Directors, and shareholders to the
extent required by law, and no other corporate proceedings on the part of
Canadian Borrower and Parent are necessary with respect thereto. This
Agreement has been duly executed and delivered by Canadian Borrower and Parent
and this Agreement constitutes the valid and binding obligation of Canadian
Borrower and Parent enforceable against Canadian Borrower and Parent in
accordance with its terms, except as its terms may be limited by (i)
bankruptcy, insolvency, or similar laws affecting creditors' rights generally
or (ii) general principles of equity, whether considered in a proceeding in
equity or at law.
4.4 NO VIOLATION. The execution and delivery by Canadian Borrower
and Parent of this Agreement and the consummation of the transactions
contemplated hereby, will not (i) violate or result in a breach of any
provision of their Certificates of Incorporation or Bylaws, or (ii) to the
knowledge of Parent or Canadian Borrower, violate any material law or
regulation, or any judgment, order or decree of any court, governmental body,
commission, agency or arbitrator applicable to the Canadian Borrower or Parent,
any of the Assets or the Business.
4.5 CONSENTS AND APPROVALS. Except as set forth in Schedule 4.4
or as required pursuant to the term of any Business Contract, there is no
requirement applicable to Canadian Borrower or Parent to make any filing with,
or to obtain any consent or approval from any Person, as a condition to the
consummation of the transactions contemplated by this Agreement.
4.6 COMPLIANCE WITH LAWS. To the best knowledge of Canadian
Borrower, Canadian Borrower has operated the Business in compliance with all
laws and regulations, federal, provincial or local applicable to the Assets or
the Business, including, without limitation, those related to (i) competition
law and trade matters, (ii) civil rights, (iii) zoning and building codes, (iv)
public health and safety, (v) worker health and safety, (vi) labour, employment
and discrimination in employment and (vii) environmental matters, except for
such violations thereof as do not and cannot reasonably be expected to have a
material adverse effect on the Assets or the earnings, financial condition,
operations or prospects of the Business.
4.7 FINANCIAL STATEMENTS. Canadian Borrower has previously
furnished Buyer with true and complete copies of (i) the audited consolidated
financial statements of Canadian Borrower for the year ending December 31, 1994
together with the reports on such statements of the Canadian Borrower by the
auditor of Canadian Borrower and unaudited consolidated financial statements of
the Canadian Borrower for the years ending December 31, 1996 and 1995,
including the notes thereto (the "Annual Financial Statements") and (ii)
unaudited financial statements for the Business for the nine month period
ending October 31, 1997 (the "Interim Financial Statements"). Such financial
statements present fairly the consolidated
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financial position of the Canadian Borrower and of the Business, respectively,
as of such dates and the results of their operations and changes in their
financial position for such periods and have been prepared in accordance with
Canadian generally accepted accounting principles applied on a consistent
basis.
4.8 LABOUR AND EMPLOYMENT MATTERS. Canadian Borrower is not a
party to any collective bargaining agreements. Schedule 4.8 sets forth a
complete and correct list of each employment agreement to which Canadian
Borrower is a party or by which Canadian Borrower is obligated. There are no
controversies, claims or grievances pending, or threatened in writing between
Canadian Borrower and any employees or former employees of the Business.
Copies of each of the aforementioned agreements have been delivered to Buyer.
4.9 LITIGATION. Except as set forth in Schedule 4.9, there are no
actions, suits, claims, investigations or proceedings pending or, to the
knowledge of Canadian Borrower or Parent, threatened against Canadian Borrower
before any court, governmental body, commission, agency or arbitrator, domestic
or foreign, or which (i) seek to prevent, restrict or delay the consummation of
the transactions contemplated by this Agreement, (ii) seek to limit, in any
manner, the right of Buyer to control the Business after the consummation of
the transactions contemplated by this Agreement, or (iii) which have had or can
reasonably be expected to have a material adverse effect on the Business.
Furthermore, there are no judgments, orders or decrees of any such court,
governmental body, commission, agency or arbitrator which have or could
reasonably be expected to have any such effect.
4.10 TITLE TO ASSETS; LEASES. Canadian Borrower does not own any
real property. All of the real property used in the conduct of the Business is
held by Canadian Borrower under lease. Except as set forth in Schedule 4.10,
Canadian Borrower has good, valid and merchantable title to all of its personal
property (including the Assets) tangible or intangible, owned by it, free and
clear of Encumbrances that are senior in priority to any Encumbrances of
Seller, including, without limitation, the Intellectual Property. All
properties held under lease by Canadian Borrower are held under valid and
enforceable leases. Schedule 4.10 sets forth a complete list of each lease
into which Canadian Borrower has entered, whether as lessor or lessee, which
relates to personal property used in the Business or constituting part of the
Assets.
4.11 MATERIAL CONTRACTS. Schedule 4.11 contains a list of all
material customer value-added reseller, original equipment manufacturer or
OEM, vendor, subcontractor, distributor and similar contracts and other
contracts, agreements, leases and other obligations of Canadian Borrower (the
"Material Contracts"). Except as set forth on Schedule 4.11, none of Canadian
Borrower nor any other party thereto is in default under or has breached any
Material Contract.
4.12 INTELLECTUAL PROPERTY. Schedule 4.12 sets forth a list of all
Canadian Borrower's registered trademarks, tradenames, service marks and
copyrights. Canadian Borrower owns or has the valid right to use the
Intellectual Property being assigned or licensed to Buyer. To the best
knowledge of Canadian Borrower, the Intellectual Property is not
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subject to any claims or demands of any other Person, or of any proceedings
commenced or threatened which challenge Canadian Borrower's rights in respect
of the Intellectual Property. None of the rights constituting the Intellectual
Property is subject to any outstanding order, decree, ruling, charge,
injunction, judgment or stipulation. To Canadian Borrower's best knowledge, no
Person has infringed upon or is infringing upon any of the Intellectual
Property. To Canadian Borrower's best knowledge, Canadian Borrower's use of
the Intellectual Property does not infringe upon the intellectual property
rights of any third party.
4.13 INVENTORY. The Inventory is (i) generally sufficient but not
excessive in kind or amount for the conduct of the business as it is presently
being conducted and (ii) carried on the books of Canadian Borrower at an amount
which reflects values in total not in excess of the lower of cost or market
determined in accordance with generally accepted accounting principles applied
on a consistent basis. Schedule 2.1(c) sets forth the location of Inventory
and the type, quantity and original cost of such Inventory at each such
location as of November 12, 1997. No inventory is held on consignment.
4.14 ENVIRONMENTAL MATTERS.
(a) Canadian Borrower has obtained all Environmental Permits
required to conduct the operations of the Business as it is
present being conducted including, without limitation, those
relating to (i) emissions, discharges, or threatened
discharges of pollutants, contaminants, hazardous or toxic
substances or petroleum into the air, surface water, ground
water, or the ocean or on or into the land and (ii) the
manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of pollutants,
contaminants, hazardous or toxic substances or petroleum.
Schedule 4.14 contains a complete list of all such
Environmental Permits, all of which are in full force and
effect.
(b) Canadian Borrower has operated the Business in compliance with
all laws and regulations relating to pollution control and
environmental contamination and the provisions of its
Environmental Permits, except for such violations thereof as
do not and cannot reasonably be expected to have a material
adverse effect on the Assets or the earnings, financial
condition, operations or prospects of the Business.
(c) Canadian Borrower is not obligated, by itself or jointly with
others, to clean up, remedy or otherwise restore to its former
condition any building, contaminated surface water, ground
water, soil or any natural resource associated therewith.
(d) No investigation or review is pending with respect to any
alleged failure of Canadian Borrower to comply with any of the
aforementioned laws or regulations or the terms and conditions
of any of its Environmental Permits, and, to the knowledge of
Canadian Borrower, no event has occurred or condition exists
which can reasonably be expected to give rise to such an
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allegation or cause Canadian Borrower to be obligated to take
any action described in paragraph (c).
4.15 ACCOUNTS RECEIVABLE. The accounts receivable of the Business
as of the date hereof have arisen in the ordinary course of the Business. Each
such receivable is and as of the Closing, will be, free of Encumbrances that
are senior in priority to Seller's security interests.
4.16 EQUIPMENT MAINTENANCE. The tangible personal property which
is used in the conduct of the Business, including without limitation, the
Equipment is useable in the ordinary course of the Business as it is presently
being conducted.
4.17 SUFFICIENCY OF ASSETS. The Assets include all properties and
rights of Canadian Borrower that have been used in the conduct of the Business
as it has been conducted over the last six (6) months prior to the date hereof.
4.18 RELATIONSHIPS WITH CUSTOMERS ETC. Except as set forth on
Schedule 4.18, Canadian Borrower's relations with its customers producing gross
revenues to Canadian Borrower of $250,000.00 or more during the last twelve
(12) months are good. Except as set forth on Schedule 4.18, Canadian Borrower
is not aware of any action taken by its licensors, suppliers, dealers,
customers and others having business relationships with the Business that could
reasonably be expected to have a material adverse effect on the Assets or the
earnings, financial condition, operations or prospects of the Business.
4.19 TAX MATTERS.
(a) Canadian Borrower has filed in a timely manner all federal,
provincial, local and foreign Tax Returns that are required to
be filed in connection with the Assets. All such Tax Returns
are correct and complete in all material respects. Canadian
Borrower has paid all Taxes that are due before the Closing
(whether or not shown on any Tax Return) and has appropriately
provided on its books and records for all current Taxes not
yet due. Canadian Borrower currently is not the beneficiary
of any extension of time within which to file any Tax Return.
(b) No claim has ever been made by an authority in a jurisdiction
where Canadian Borrower does not file Tax Returns that
Canadian Borrower is or may be subject to taxation by that
jurisdiction. Canadian Borrower has not waived any statute of
limitations in respect of Taxes or agreed to any extension of
time with respect to a Tax assessment or deficiency. Canadian
Borrower has not received any assessment for unpaid Taxes,
does not know of any reason why any such assessment might be
made nor is it a party to any agreement providing an extension
of time for the assessment of Taxes. Canadian Borrower has
not received any notice of examination from the Revenue
Canada, Customs, Excise
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and Taxation or any provincial, local or foreign tax authority
and no Tax Returns are currently under audit.
(c) Canadian Borrower has withheld and paid over all Taxes that
it is required to have withheld and paid over in in connection
with any payments made or owing to any employee, independent
contractor, stockholder or other third party. The transactions
contemplated by this Agreement are not subject to any Tax
withholding, other than sales or use tax.
(d) None of the Assets is subject to any Encumbrances arising in
connection with any failure or alleged failure to pay any Tax.
4.20 INSIDER INTERESTS. Except as set forth in Schedule 4.20 or as
the holder of less than 5% of the stock of a publicly traded company, no
officer, director or holder of more than 5% of the common stock of Canadian
Borrower or an Affiliate of Canadian Borrower (other than the Parent) (i)
competes with, is involved with or has any direct or indirect interest in any
business entity which competes with the Business, (ii) has any agreement of any
type with Canadian Borrower or (iii) has any interest, direct or indirect, in
any property, real or personal, tangible or intangible, including, without
limitation, Intellectual Property, used in or pertaining to the business,
except as a stockholder or employee of Canadian Borrower.
4.21 EMPLOYEE BENEFIT PLANS.
BENEFIT PLANS
(a) Except as set forth in Schedule 4.21, Canadian
Borrower is not a party to or bound by, nor does
Canadian Borrower have any liability or contingent
liability with respect to, any Benefit Plans that are
material to the Business and that impose any binding
legal obligation on Canadian Borrower . Schedule
4.21 contains a true and complete list of each
Benefit Plan. Schedule 4.21 also identifies each of
the Benefit Plans that is a Pension Plan. The
Canadian Borrower has no formal plan or commitment,
whether legally binding or not, to create any
additional Benefit Plan or to modify or change any
existing Benefit Plan that would affect any Employee
or former employee of the Business, except such
modification or amendment as may be required to be
made to secure the continued registration of any
existing Benefit Plan with each applicable
Governmental Authority.
(b) With respect to each of the Benefit Plans, Canadian
Borrower has delivered to the Buyer true and complete
copies of each of the following documents:
(i) a copy of the Benefit Plan (including all
amendments thereto);
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(ii) a copy of all employee communications
relating to the Benefit Plan, whether or not
such communications have been, or are
required to be, filed with any applicable
Governmental Authority;
(iii) if the Benefit Plan is funded through a trust
or any third party funding arrangement, a
copy of the trust or other funding agreement
(including all amendments thereto) and the
latest financial statements thereof;
(iv) all contracts relating to the Benefit Plans
with respect to which Canadian Borrower may
have any liability, including insurance
contracts, investment management agreements,
administration agreements, monitoring
agreements, subscription and participation
agreements and record keeping agreements;
(v) a copy of the annual information return filed
in respect of the Pension Plan with any
applicable Governmental Authority for each of
the last two completed years;
(vi) a copy of the two most recently completed
actuarial reports filed in respect of the
Pension Plan with any applicable Governmental
Authority;
(vii) a copy of the most recent financial
statements filed in respect of each Pension
Plan with any Governmental Authority;
(viii) a copy of the most recent letter of
confirmation of registration of the Pension
Plan pursuant to the applicable provincial
pension legislation and the Income Tax Act
(Canada); and
(ix) a copy of any statement of investment
policies and goals prepared in respect of the
Pension Plan, whether or not such statement
has been filed with any applicable
Governmental Authority.
(c) None of the Pension Plans is a multi-employer pension
plan as defined under the provisions of any
Applicable Law.
(d) No Benefit Plan provides benefits, including death or
medical benefits (whether or not insured), with
respect to employees of Canadian Borrower or former
employees of the Business beyond retirement or other
termination of service, other than:
(i) coverage required by applicable law,
(ii) death or retirement benefits under any
Pension Plan,
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(iii) deferred compensation benefits accrued as
liabilities in the Financial Statements, or
(iv) benefits the full cost of which is borne by
the employee or former employee (or his
beneficiary).
(e) There are no pending, threatened or anticipated
claims by or on behalf of any of the Benefit Plans,
including claims by or on behalf of any of the
Benefit Plans against any Person (other than routine
claims for benefits).
(f) With respect to each Benefit Plan that is funded
wholly or partially through an insurance policy,
there will be no liability of Canadian Borrower as of
the Closing, under any such insurance policy or
ancillary agreement with respect to such insurance
policy in the nature of a retroactive rate
adjustment, loss sharing arrangement or other actual
or contingent liability arising wholly or partially
out of events occurring prior to Closing. With
respect to each Benefit Plan not funded through an
insurance policy, Canadian Borrower has either fully
funded such Benefit Plan through a trust or has made
appropriate provision for all of Canadian Borrower's
liability thereunder in the Financial Statements.
(g) The Canadian Borrower has delivered to the Buyer
acceptable evidence that such Pension Plan and all of
the amendments thereto have been accepted for
registration by the Department of National Revenue
and any provincial Governmental Authority having
jurisdiction over such Pension Plans. Each Pension
Plan remains duly registered and in good standing
under, and has been administered in compliance in all
material respects with, all applicable federal and
provincial statutory and regulatory requirements.
(h) With respect to each Pension Plan that is a defined
benefit plan, all contributions required to the date
hereof in order for such Pension Plans to comply with
the minimum funding standards imposed by applicable
federal or provincial statutory and regulatory
requirements have been made or properly accrued, and
each such Pension Plan is fully funded on both a
"solvency" and a "going concern" basis, as determined
in accordance with the actuarial assumptions and
methods described and used in the most recent
actuarial report filed with (and accepted for filing
by) the applicable Governmental Authorities in
respect of each such Pension Plan. With respect to
each Pension Plan that is a defined contribution
pension plan, all employer contributions required to
the date hereof have been made or properly accrued.
All employee contributions to the Pension Plans to
the date hereof have been properly withheld by
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Canadian Borrower and have been fully paid into the
funding arrangements for the respective Pension Plan.
(i) There has been no withdrawal by Canadian Borrower of
assets from any Pension Plan and no application for
approval of a withdrawal of assets has been made to
any Governmental Authority. Any application of
surplus assets in any of the Pension Plans to offset
required employer contributions to such Pension Plans
has been permitted by law and was permitted under the
terms of the relevant Pension Plan and associated
funding agreement.
(j) Nothing has occurred which would result in the
revocation of the registration of any Pension Plan
under the Income Tax Act, Canada and any applicable
provincial pension legislation. All amounts paid by
Canadian Borrower under the provisions of the Pension
Plans will be deductible for income tax purposes.
4.22 FULL DISCLOSURE. Neither the representations and warranties
made in this Article nor any information, instrument or document furnished by
or on behalf of either Borrower to Buyer in connection with the transactions
contemplated by this Agreement contains any untrue statement of a material fact
or omits to state a material fact necessary in order to make the statements
therein, in light of the circumstances under which they were made not
misleading.
4.23 BROKERS. Except for Trenwith Securities, Inc., no broker,
finder, investment banker or similar Person is entitled to any brokerage,
finder's or other fee or commission in connection with the transactions
contemplated by this Agreement.
4.24 BULK SALES ACT. To the extent that the sale of the Assets is
made pursuant to the PPSA Sale, this Agreement and the transactions
contemplated hereby are not subject to the bulk sales laws of any jurisdiction
in Canada.
4.25 NEGOTIATIONS RELATING TO THIS AGREEMENT. Canadian Borrower
is acting in good faith in connection with this Agreement and has no basis to
believe that the representation and warranty of Seller contained in Section 5.7
is not true and correct or the representation and warranty of Buyer contained
in Section 6.6 is not true and correct.
4.26 GST REGISTRATION. The Canadian Borrower is registered for
purposes of Part IX of the Excise Tax Act (Canada). The Canadian Borrower's
GST Registration Number is 133404343.
4.27 CANADIAN BORROWER'S ACKNOWLEDGMENT. Canadian Borrower
acknowledges:
(i) this Agreement and the transactions provided for herein are in
the best interests of Canadian Borrower, its creditors and all
other parties in interest;
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(ii) this Agreement and the transactions provided for herein
represent the best recovery for Canadian Borrower and its
creditors; and
(iii) there are no other actions Canadian Borrower could have taken
to produce any larger recovery for its creditors or to obtain
a better price for the Assets.
4.28 POTENTIAL PURCHASERS. None of the Potential Purchasers
offered total consideration for the Assets in excess of that offered by Buyer.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as follows:
5.1 ORGANIZATION; AUTHORITY. Seller is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Seller has corporate power and authority to execute, deliver and
perform this Agreement and to consummate the transactions contemplated hereby.
The execution and delivery by Seller of this Agreement and the consummation by
it of the transactions contemplated hereby, have been duly authorized by all
required corporate action of Seller and no other corporate proceedings on the
part of Seller are necessary with respect thereto. This Agreement has been
duly executed and delivered by Seller, and constitutes the valid and binding
obligation of Seller, enforceable in accordance with its terms except as its
terms may be limited by (i) bankruptcy, insolvency, or similar laws affecting
creditors' rights generally or (ii) general principles of equity, whether
considered in a proceeding in equity or at law.
5.2 CONSENTS AND APPROVALS. Other than has been obtained or
given, there is no requirement applicable to Seller to make any filing with, to
provide notice to, or to obtain any other consent or approval of any Person as
a condition to the consummation of the transactions contemplated by this
Agreement.
5.3 NO VIOLATION. The execution and delivery by Seller of this
Agreement does not, and the consummation of the transactions contemplated
hereby, will not (i) violate or result in a breach of any provision of its
Certificate of Incorporation or By-laws, (ii) result in a default, or give rise
to any right of termination, modification or acceleration or otherwise
adversely affect any rights under, or result in the imposition of an
Encumbrance on or forfeiture of any of the Assets, or require any
authorization, consent or approval under the terms or provisions of any
agreement or other instrument or obligation to which Seller is a party or by
which Seller may be bound , or (iii) violate any law or regulation, or any
judgment, order or decree of any court, governmental body, commission, agency
or arbitrator applicable to Seller, any of the Assets or the Business.
5.4 TITLE TO ASSETS. On Closing, Buyer will receive good and
marketable title to the Assets free and clear of all Encumbrances; provided,
however, that for purposes of this
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representation and warranty and the indemnity set forth in Article XII hereof,
"Assets" shall not include (a) Balance Sheet Assets and (b) Intellectual
Property or Business Contracts to the extent any consent to assignment thereof
is required to vest title in Buyer and is not obtained. Seller has no
Encumbrances against Canadian Borrower or on any of the Assets or the Business
which will not be discharged on Closing. For greater certainty, real property
leases to which the Canadian Borrower is a party form part of the Excluded
Assets.
5.5 SUBORDINATE LIENS. There are no Encumbrances on the Assets
that are not subordinate to Seller's Encumbrances thereon except statutory
liens that are not, to Seller's knowledge, material. Schedule 5.5 lists all
Encumbrances on the Assets reflected in the public records other than the
Encumbrances of Seller thereon (the "Subordinate Liens"). All of the
Subordinate Liens, except statutory liens that are not, to Seller's knowledge,
material, will be extinguished upon the sale of the Assets to Buyer pursuant to
the PPSA Sale. The information contained in Schedule 5.5 shall not be deemed
to limit in any way the representation and warranty contained in Section 5.4.
The provisions of, and the protection afforded to Buyer in Section 5.4 hereof
shall expressly apply to all Encumbrances, including without limitation,
statutory liens and any Encumbrances not reflected in the public records.
5.6 FULL DISCLOSURE. None of the representations and warranties
made in this Article V contains any untrue statement of a material fact or
omits to state a material fact necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
5.7 NEGOTIATIONS RELATING TO THIS AGREEMENT. Seller is acting in
good faith in connection with this Agreement and has no basis to believe that
the representation and warranty of either Borrower contained in Section 4.25 is
not true and correct or the representation and warranty of Buyer contained in
Section 6.6 is not true and correct.
5.8 POTENTIAL PURCHASERS. None of the Potential Purchasers
offered total consideration for the Assets in excess of that offered by Buyer.
5.9 RIGHT TO CONDUCT PPSA SALE. As security for the Guarantee,
Seller has a perfected first priority security interest in all of the Assets.
The Loans have been for an extended period and are presently in payment
default. Payment has been demanded by the Seller from the Canadian Borrower
under the Guarantee and has not been made. All obligations of the Canadian
Borrower to Seller under the Guarantee are now due and payable. Buyer's
entering into this Agreement results from the efforts of Seller and Parent,
through Trenwith or otherwise, to identify third parties interested in
acquiring the Assets or the Business. Seller has the right under Part V of the
PPSA to sell, lease or otherwise dispose of the Assets in satisfaction of all
or part of the Indebtedness which is outstanding.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF BUYER
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Buyer covenants, represents and warrants to Canadian Borrower and
Seller the following:
6.1 ORGANIZATION; AUTHORITY. Buyer is a corporation duly
organized validly existing and in good standing under the laws of Canada.
Buyer has corporate power and authority to execute, deliver and perform this
Agreement and to consummate the transactions contemplated hereby. The
execution and delivery by Buyer of this Agreement and the consummation by it of
the transactions contemplated hereby have been duly authorized by the board of
directors of Buyer and no other corporate proceedings on the part of Buyer are
necessary with respect thereto. This Agreement has been duly executed and
delivered by Buyer and constitutes the valid and binding obligation of Buyer,
enforceable in accordance with its terms except as its terms may be limited by
(i) bankruptcy, insolvency, or similar laws affecting creditors' rights
generally or (ii) general principles of equity, whether considered in a
proceeding in equity or at law.
6.2 CONSENTS AND APPROVALS. There is no requirement applicable to
Buyer to make any filing with, or to obtain any consent or approval of any
Person as a condition to the consummation of the transactions contemplated by
this Agreement.
6.3 NO VIOLATION. The execution and delivery by Buyer of this
Agreement does not and will not (i) violate or result in a breach of any
provision of the Articles of Incorporation or By-laws of Buyer, (ii) result in
a default, or give rise to any right of termination, modification or
acceleration under the terms, conditions or provisions of any agreement or
other instrument or obligation to which Buyer is a party or by which Buyer may
be bound, or (iii) violate any law or regulation, or judgment order or decree
of any court, governmental body, commission, agency or arbitrator applicable to
Buyer.
6.4 BROKERS. Buyer has not retained, utilized or been represented
by any broker or finder in connection with the transactions contemplated by the
Agreement.
6.5 GST REGISTRATION. The Buyer is registered for purposes of
Part IX of the Excise Tax Act (Canada). The Buyer's GST Registration Number is
890279656.
6.6 NEGOTIATIONS RELATING TO THIS AGREEMENT. Buyer is acting in
good faith in connection with this Agreement and has no reason to believe that
the representation and warranty of either Borrower contained in Section 4.25 is
not true and correct or that the representation and warranty of Seller
contained in Section 5.7 is not true and correct.
ARTICLE VII
ADDITIONAL AGREEMENTS
7.1 REGULATORY AND OTHER AUTHORIZATIONS. Canadian Borrower, Buyer
and Seller will make any and all filings and submissions to, and use
commercially reasonable efforts to obtain all authorizations, consents, orders
and approvals of all federal, provincial, and foreign
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governmental and regulatory Persons that may be or become necessary for the
performance of the obligations pursuant to this Agreement and will cooperate
fully with the other in promptly seeking to obtain all such authorizations,
consents, orders and approvals. Canadian Borrower, Seller and Buyer will not
intentionally take, or omit to take, any action that will have the effect of
delaying, impairing or impeding the receipt of any required approval.
7.2 CONFIDENTIALITY.
(a) Seller and Buyer shall exercise, and shall cause their
respective representatives to exercise, the same degree of
care to prevent disclosure of Information (as hereinafter
defined) received by or disclosed to Seller or Buyer pursuant
to this Agreement as it takes to preserve and safeguard its
own confidential information, data, technology or know-how
but, in any event, no less than a reasonable degree of care.
As used herein, "Information" means all documents and
information concerning the other party and the affiliates
thereof furnished to a party, its affiliates or
representatives (in any case, a "Recipient") by any such other
party or its representatives (in any case, the "Disclosing
Party") in connection with the transactions contemplated by
this Agreement. Each Recipient shall not use any of such
Information except as permitted by this Agreement or release
or disclose such Information to any other Person, except its
auditors, attorneys, financial advisors, bankers and other
consultants and advisors in connection with this Agreement.
(b) Information shall be safeguarded by the Recipient for not less
less than three (3) years from the date hereof and any
documentary Information (including all copies thereof) not
relating to the Business or the Assets shall be returned to
the Disclosing Party promptly at its request and other
Information shall be maintained in confidence subject to the
terms of this Section.
(c) The restrictions of this Section shall not apply to any
Information received by a Recipient (a) which such Recipient
already possessed at the time of receipt as shown by written
records; (b) which was at the time of receipt or subsequently
becomes, publicly available through no fault of such Recipient
or any of its affiliates or representatives; (c) which such
Recipient rightfully received from a third party which the
Recipient neither knows nor has reason to know is prohibited
from disclosing such information by a contractual, legal or
fiduciary obligation; (d) which is furnished to the Recipient
by a third party without a similar restriction on the third
party's rights; or (e) which is required to be disclosed
pursuant to law; provided that, if practicable, the Recipient
shall notify the Disclosing Party prior to disclosing any
Information pursuant to this clause (e) and shall cooperate
with the Disclosing Party in making reasonable efforts to
resist such disclosure, if the Disclosing Party so requests.
Information shall not be deemed to be within the foregoing
exceptions merely because such information is embraced by more
general information in the public domain or in a Recipient's
possession. In addition, any combination of features shall
not be
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deemed to be within the foregoing exceptions merely because
individual features are in the public domain or in a
Recipient's possession, but only if the combination itself and
its principle of operation are in the public domain or in the
Recipient's possession.
(d) Each Recipient shall limit access to Information to those of
its representatives who have a need to know in order to
effectuate this Agreement and who have been advised to
maintain the confidentiality principles of this Section.
(e) In the event of a breach of any of the obligations stated
above in this Section, the Disclosing Party may proceed
against the breaching Recipient in law or in equity for such
damages or other relief as a court may deem appropriate.
Nothing herein contained shall be construed as prohibiting the
Disclosing Party from pursuing, in addition, any other remedy
for such breach or threatened breach. The confidentiality
restrictions set forth in this Section supersede those
contained in the Letter of Intent between certain of the
parties dated September 29, 1997.
7.3 ALLOCATION OF PURCHASE PRICE.
(a) Within 60 days of the Closing Date, Buyer will provide to
Seller, Buyer's proposed allocation ("Allocation") of the
Purchase Price. Within 15 days after the receipt of such
Allocation, Seller will propose to Buyer any changes to such
Allocation (and in the event no such changes are proposed in
writing to Buyer within such time period, Seller will be
deemed to have agreed to, and accepted, the Allocation).
Buyer and Seller will endeavor in good faith to resolve any
differences with respect to the Allocation, within 15 days
after Buyer's receipt of written notice of objection from
Seller.
(b) Subject to the provisions of the following sentence of this
paragraph (b), the Purchase Price will be allocated in
accordance with the Allocation provided by Buyer to Seller
pursuant to paragraph (a) above, and subject to the
requirements of applicable tax law or election, all Tax
returns and reports filed by Buyer and Seller will be prepared
consistently with the Allocation. If Seller withholds its
consent to the allocation reflected in the Allocation and
Buyer and Seller have acted in good faith to resolve any
differences with respect to items on the Allocation and
thereafter are unable to resolve any differences that, in the
aggregate, are material in relation to the Purchase Price,
then any remaining disputed matters will be finally and
conclusively determined by an independent accounting firm of
recognized national standing (the "Arbiter") selected by Buyer
and Seller, which firm shall not be the regular accounting
firm of Buyer or Seller. Promptly, but not later than 15 days
after its acceptance of appointment hereunder, the Arbiter
will determine (based solely on presentations by Seller and
Buyer and not by independent review) only those matters in
dispute and will render a written report as to the disputed
matters and
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the resulting allocation of Purchase Price which report shall
be conclusive and binding upon the parties. Buyer and Seller
shall, subject to the requirements of any applicable tax law
or election, file all Tax returns and reports consistent with
the allocation provided in the Allocation or, if applicable,
the determination of the Arbiter.
7.4 EXPENSES. Pursuant to Canadian Borrower's request (as
evidenced by its execution hereof) and concurrent with the receipt of funds
from Buyer, Seller shall immediately advance for Canadian Borrower's account
and promptly pay those liabilities and expenses set forth on Schedule 7.4 and
all costs and expenses incurred by Parent and Canadian Borrower in connection
with this Agreement and the transactions contemplated hereby including, without
limitation, all legal and accounting expenses, to a maximum amount of US
$100,000. In no event will the Buyer be obligated to pay any of such expenses
of the Parent, Canadian Borrower or Seller. Buyer shall pay all costs and
expenses incurred by Buyer in connection with this Agreement and the
transactions contemplated hereby. In no event shall Seller be obligated
hereunder to pay any expenses of Canadian Borrower or Buyer except as
specifically set forth herein.
7.5 FURTHER ACTION. Canadian Borrower, Seller and Buyer shall
execute such documents and take such further actions as may be reasonably
required or desirable to carry out the provisions of this Agreement and the
transactions contemplated hereby. Upon the terms and subject to the conditions
hereof, Seller, Canadian Borrower and Buyer shall use commercially reasonable
efforts to take, or cause to be taken, all actions and to do, or cause to be
done, all things necessary, proper or advisable to consummate and make
effective as promptly as practicable the transactions contemplated by this
Agreement and shall cooperate in good faith with respect thereto.
7.6 FURTHER ACTION - BUYER. Buyer agrees that it shall hold the
Books and Records in accordance with its policies relating to retention of its
financial and other corporate records and that Buyer shall provide Seller and
its representatives reasonable access to the Books and Records for the
preparation of such reports and returns as may be required by Governmental
Authorities. Buyer shall provide to Seller, without charge, reports and other
information with respect to the Assets and the Business to enable Seller to
file with Governmental Authorities any tax returns and such other reports as
required by law in connection with the transactions contemplated hereby.
7.7 PARENT WAIVER. Parent irrevocably and absolutely waives in
favour of Buyer all of its rights as a creditor of Canadian Borrower under any
applicable law which could (i) result in the transactions provided for in this
Agreement being reversed or set aside or (ii) which could result in Parent
having any rights in or to the Assets or any of them.
7.8 LOCK BOX/PAYMENTS AND COLLECTIONS. All payments made to or
received within any lock box to which customers of the Business are directed to
remit funds, whether such lock boxes are held in the name of Canadian Borrower,
Seller or otherwise (the "Lock Boxes"), and to be received for the benefit of
Buyer are not to be deposited into any account
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held by or for Canadian Borrower and/or Seller and are to be promptly remitted
to Buyer in kind within one day after receipt in the Lock Boxes. Canadian
Borrower and Seller hereby assign to Buyer all amounts received in the Lock
Boxes after November 14, 1997. Canadian Borrower and Seller agree that Buyer
shall have the irrevocable right to endorse in the name of the Canadian
Borrower, all cheques and any other payments of any nature to or for the
benefit of Canadian Borrower and that, subject to the limitation set forth
below in this Section 7.8, all such funds constitute Assets under this
Agreement. Canadian Borrower and Seller also agree that Buyer shall have the
right to notify all customers of Canadian Borrower and all other Persons, that
Buyer chooses to notify, that all amounts due and owing to Canadian Borrower
constitute Assets under the this Agreement and should be paid to Buyer.
Canadian Borrower hereby grants Buyer an irrevocable power of attorney to take
all actions necessary to accomplish the provisions of this Section 7.8,
including, without limitation, the endorsement of cheques and the execution of
any other documents in the name of Canadian Borrower. To the extent any
signature is required of Seller to fully remit, deliver and turn over any
checks or other property to Buyer, Seller shall provide such signature to
Buyer. All collections in the Lock Boxes through November 14, 1997 shall be
and remain the property of Canadian Borrower, subject to Seller's security
interests. All collections in the Lock Boxes subsequent to November 14, 1997
shall constitute Assets under this Agreement, and Seller shall promptly turn
over all such funds to Buyer, and provide Buyer with copies of the cheques
deposited and the Lock Boxes account statements. Seller hereby irrevocably
assigns to Buyer all of Seller's right, title and interest in the Lock Boxes
and to all funds in the Lock Boxes subject to the limitation that all
collections in the Lock Boxes through November 14, 1997 shall be and remain the
property of Canadian Borrower, subject to Seller's security interests. All
collections deposited into the Lock Boxes subsequent to November 14, 1997 shall
constitute Assets under this Agreement. Canadian Borrower and Seller agree to
execute at Closing and deliver to Crestar Bank, and any other Lock Boxes
depositories, a letter terminating the Crestar Lock Boxes and instructing
Crestar, and any other Lock Boxes depositories, to comply with the provisions
of this Section 7.8.
ARTICLE VIII
EMPLOYEES AND EMPLOYEE MATTERS
8.1 NEW HIRES. Canadian Borrower has delivered to Buyer a list of
all of the employees of Canadian Borrower who are employed by the Business as
of the most recent date for which such information is available. With Canadian
Borrower's permission, Buyer has extended offers of employment to such persons
whose skills as Buyer, in its sole discretion, has determined are necessary to
the conduct of the Business after the Closing at salaries and benefits
determined by Buyer. Such employees who accept Buyer's offer of employment are
hereinafter referred to as "New Hires" and shall be deemed to have become
employees of Buyer as of the time of the Closing. Any employees of Canadian
Borrower to whom Buyer does not extend an offer of employment or who do not
accept an offer of employment made by Buyer are herein called "Nonhired
Individuals".
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8.2 NONHIRED INDIVIDUALS. Buyer will not incur any liability
or obligation with respect to Nonhired Individuals arising from or relating to
the termination of the Nonhired Individuals' employment with Canadian Borrower
or otherwise, including without limitation any severance obligation or any
obligation arising from, under or pursuant to any applicable laws or
regulations or any contract or agreement of employment that any Nonhired
Individual may have with Canadian Borrower, except as set forth in this Section
8.2.
8.3 OBLIGATIONS RE NEW HIRES. Buyer will not incur any liability
or obligation with respect to New Hires arising from or relating to the
termination of the New Hires' employment with Canadian Borrower or otherwise,
including without limitation any severance obligation or any obligation arising
from, under or pursuant to any applicable laws or regulations or any contract
or agreement of employment that any New Hire may have with Canadian Borrower,
except as set forth in this Section 8.3. Buyer agrees to assume the total
vacation liability accrued by Canadian Borrower as of the Closing for the New
Hires as set forth on Schedule 8.3 hereto and included in Assumed Liabilities.
New Hires shall accrue benefits under plans and programs covering employees of
Buyer based solely on their service with Buyer after the Closing. Buyer will
waive the pre-existing condition limitations of Buyer's health insurance plans
for New Hires. Buyer will also waive its drug screening requirements for New
Hires upon the initiation of their employment with Buyer.
8.4 EMPLOYEE BENEFIT PLANS. No assets or liabilities with
respect to New Hires shall be transferred as a result of this Agreement, from
any of Canadian Borrower's Benefit Plans applicable to Canadian Borrower's
employees to any plan maintained or established by Buyer.
8.5 WORKERS' COMPENSATION. Buyer will assume the responsibility
for all workers' compensation claims made by New Hires arising from events
occurring after the Closing. Buyer does not assume any other responsibilities
for workers' compensation claims made by employees of Canadian Borrower.
8.6 OTHER LIABILITIES RELATING TO EMPLOYEES. Except to the extent
set forth in this Article, neither Buyer nor Seller will assume or incur any
liabilities or obligations with respect to (i) any Benefit Plan relating to any
present, former or retired employees of Canadian Borrower, or (ii) any
termination, severance or separation obligation which may result from the
consummation of the transactions contemplated by this Agreement or (iii) any
liability or obligation with respect to any employees of Canadian Borrower not
hired by Buyer.
8.7 SELLER NOT EMPLOYER. Canadian Borrower and Buyer agree that
Seller is not and shall not be deemed to have any time been the employer of any
employees of Canadian Borrower as a result of the transactions contemplated
hereby.
ARTICLE IX
NOT USED
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ARTICLE X
NOT USED
ARTICLE XI
CLOSING
11.1 TIME AND PLACE OF CLOSING. The closing (the "Closing") shall
take simultaneously with the execution by all parties hereto of this Agreement
on the 14th day of November, 1997 (the "Closing Date") at the offices of
McGuire, Woods, Battle and Boothe L.L.P, Tysons Corner Office, Virginia. The
Closing and all of the transactions contemplated by this Agreement shall be
deemed to have occurred simultaneously and become effective as of 12:01 a.m. on
the Closing Date.
11.2 DELIVERIES BY SELLER. At the Closing, Seller is delivering or
is causing to be delivered to Buyer the following:
(i) a Trademark and Tradename Assignment in such form as is
acceptable to the Buyer, acting reasonably;
(ii) a Certificate of an authorized officer of Seller to the effect
that each of the representations and warranties of Seller
contained in this Agreement are true and correct as of the
Closing and that Seller has complied with all of its
obligations under this Agreement;
(iii) a Certificate of an authorized officer of Seller to the effect
that the Indebtedness is in payment default.
11.3 DELIVERIES BY BUYER. At Closing Buyer is delivering the
following:
(i) the Purchase Price in same day funds;
(ii) an election under Section 22 of the Income Tax Act (Canada);
and
(iii) a Certificate of an authorized officer of Buyer to the effect
that each of the representations and warranties of Buyer
contained in this Agreement are true and correct as of the
Closing and that Buyer has complied with all of its
obligations under this Agreement.
11.4 DELIVERIES BY CANADIAN BORROWER. At Closing Canadian Borrower
is delivering to Buyer the following:
(i) a Trademark and Tradename Assignment in the form acceptable to
the Buyer acting reasonably;
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(ii) a Certificate signed by the officers of Canadian Borrower to
the effect that each of the representations and warranties of
Canadian Borrower contained in this Agreement are true and
correct as of the Closing and that Canadian Borrower has
complied with all of its obligations under this Agreement; and
(iii) evidence of corporate authorization of this Agreement and the
transactions contemplated hereby by Canadian Borrower
(iv) a Certificate of an authorized officer of Parent to the effect
that each of the representations and warranties of Parent
contained in this Agreement are true and correct as of the
Closing and that Parent has complied with all of its
obligations under this Agreement;
(v) a certificate of status issued under the Business Corporations
Act (Ontario) with respect to Canadian Borrower as of the most
recent date obtainable; and
(vi) an election under Section 22 of the Income Tax Act (Canada).
ARTICLE XII
INDEMNIFICATION
12.1 INDEMNIFICATION BY SELLER.
(a) Subject to the limitations contained in this Article, Seller
will indemnify and hold Buyer and any of its Affiliates
harmless from all Losses arising out of, under or pursuant to:
(i) any breach (or any allegation by any third party of
facts, which if true as alleged, would constitute
such a breach) of any representation or warranty made
by Seller in this Agreement;
(ii) any breach or violation of the agreements of Seller
contained in Article VII of this Agreement;
(iii) any claim or assertion by any Person with respect to
Buyer's title to the Assets, however asserted,
including without limitation, any such claim or
assertion seeking or resulting in the payment of
additional consideration for any Asset, any claim or
assertion that Buyer did not acquire title to any
Asset or any claim or assertion involving any
Encumbrance or alleged Encumbrance with respect to
Buyer's title to the Assets;
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(iv) any claim or assertion by any Person under any
provincial law fraudulent conveyance or fraudulent
transfer action with respect to the Assets;
(v) any claim or assertion by any Person in any way
related to the Assets by any Person arising under any
bankruptcy or insolvency legislation involving
Canadian Borrower or any Affiliate of Canadian
Borrower including, without limitation, any claim or
assertion of fraudulent conveyance, equitable
subordination, or preferential transfer or similar
theory; and
(vi) any claim or assertion by any Person, however
asserted or framed, the result of which is that the
transactions contemplated by this Agreement, as a
whole, are reversed or set aside including any
reversal or setting aside made pursuant to any
applicable bulk sales laws.
12.2 LIMITATIONS ON INDEMNIFICATION.
(a) Notwithstanding any other provisions of this Agreement and
except as noted in Sections 12.2(b) and 12.8 below, Seller
shall be liable to Buyer under this Article up to US$200,000
in the aggregate and Seller shall have no other liability to
Buyer under this Agreement or in connection with the
transactions contemplated hereby.
(b) Notwithstanding the provisions of Section 12.2(a),
(i) in the event of any claim or assertion made by any
unpaid supplier of goods or services to Canadian
Borrower under any applicable bulk sales laws; or
(i) in the event of any claim or assertion by any Person,
however asserted or framed, the result of which is
that the transactions contemplated by this Agreement,
as a whole, are reversed or set aside whether under
applicable bulk sales laws or otherwise,
Seller shall be liable to indemnify and hold Buyer harmless in
an amount equal to US$993,044 (the "Net Purchase Price
Proceeds").
(c) All damages to which Buyer may be entitled pursuant to the
provisions of this Article shall be net of any insurance
coverage with respect thereto. Insurance proceeds received
shall be first applied to any Loss which is not indemnified.
12.3 THIRD PARTY CLAIMS. The rights of Buyer under the provisions
of this Article with respect to claims resulting from the assertion of
liability by Persons not parties to this Agreement (including governmental
claims for penalties, fines and assessments) shall be subject to the following
terms and conditions:
<PAGE> 30
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(a) Buyer shall give prompt written notice to Seller of any
assertion of liability by a third party which might give rise
to a claim for indemnity based on the foregoing provisions of
this Article XII, which notice shall state the nature and
basis of the assertion and the amount thereof, to the extent
known. Delay on the part of Buyer in giving notice shall not
release Buyer's right to indemnity hereunder.
(b) If any action, suit or proceeding (a "Legal Action") is
brought against Buyer with respect to which Buyer has a right
to indemnity under the provisions of this Article, Seller
shall have the right to assume the defense of the Legal Action
with counsel reasonably acceptable to Buyer and such defense
shall include all proceedings for appeal or review which
counsel for the Buyer shall deem appropriate.
(c) Notwithstanding the provisions of the previous subsection of
this Agreement, until Seller shall have assumed the defense of
any such Legal Action, the defense shall be handled by the
Buyer. Furthermore, if (A) Seller fails to assume the defense
of such Legal Action at least five business days before the
date on which the first defensive pleading is due, or (B) the
Legal Action involves other than money damages and seeks
injunctive or other equitable relief, Seller shall not be
entitled to assume the defense of the Legal Action and the
defense shall be handled by the Buyer. If the defense of the
Legal Action is handled by the Buyer under the provisions of
this subsection, Buyer shall have the right to be promptly and
periodically reimbursed by Seller for legal and other expenses
reasonably incurred by Buyer in conducting such defense.
(d) In any Legal Action initiated by a third party and defended by
Seller: (A) Buyer shall have the right to be represented by
separate co-counsel and accountants, at its own expense, (B)
Seller shall keep Buyer fully informed as to the status of
such Legal Action at all stages thereof, whether or not Buyer
is represented by its own counsel, (C) Seller shall make
available to Buyer and its attorneys, accountants and other
representatives, all nonprivileged documents (or privileged
documents for which there exists a joint defense privilege
between Buyer and Seller) of Seller relating to such Legal
Action, and (D) Buyer and Seller shall render to each other
such assistance as may be reasonably required in order to
ensure the proper and adequate defense of such Legal Action.
(e) In any Legal Action initiated by a third party and defended by
Seller, Seller shall not make any nonmonetary settlement of
any claim without the written consent of Buyer, which consent
shall not be unreasonably withheld, provided however, that
Seller may not make any monetary settlement without Buyer's
consent if any portion of the monetary settlement is required
to be paid by Buyer. Without limiting the generality of the
foregoing, it shall not be deemed
<PAGE> 31
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unreasonable to withhold consent to a settlement involving
injunctive or other equitable relief against Buyer or its
assets, employees or business.
12.4 PAYMENT OF CLAIMS.
(a) In the event that Buyer asserts a claim against Seller for
indemnity under this Article XII it shall promptly send to
Seller a written notice of such claim, setting forth (a) a
demand for payment of a specified amount if practicable and
(b) a description of the asserted claim and the basis
therefor. Such notice of claim may be supplemented from time
to time with a written notice of claim for reimbursement of
legal and other expenses reasonably incurred in conducting the
defence of such claim sent by Buyer to Canadian Borrower,
setting forth (a) a demand for payment of a specified amount
if practicable and (b) a description of the asserted claim and
the basis therefor.
(b) If Buyer delivers to Seller a notice of claim in accordance
herewith and Seller does not object thereto within 14 days
following its receipt thereof, then Seller shall forthwith pay
to the claimant, or to Buyer if Buyer previously made payment
therefore to claimant, the amount of such claim in accordance
with the terms of the demand set forth in such notice of
claim, subject to the limitation set forth in Section 12.2
hereof.
(c) If Buyer delivers to Seller a notice of claim pursuant hereto
to which Seller objects in writing prior to the expiration of
the 14 day period specified above, the Buyer and Seller are
unable to resolve such disputed claim within sixty (60) days
after the expiration of such 14 day period, then either Buyer
or Seller may submit the determination of the amount of
indemnification under this Article XII for Losses related to
such claim for resolution to a mutually acceptable arbitrator
(the "Arbitrator"). If the parties fail to agree upon an
Arbitrator, then the Arbitrator shall be appointed pursuant to
the Arbitrations Act (Ontario). The Arbitrator, shall be
instructed to determine the amount of indemnification under
this Article XII, that it believes is needed to indemnify
Buyer to the extent provided in this Article XII with respect
to reasonably foreseeable Losses related to such claim using a
methodology that assigns risk weightings to the foreseeable
range of possible losses. The Arbitrator that hears and
resolves such dispute shall be instructed as to the limits of
indemnification available with respect to such claim under
this Article XII and that its award may not exceed such
limits. The amount of such indemnification awarded by the
Arbitrator shall be final and binding on Buyer and Seller,
which amount shall be final and binding on Buyer and Seller,
which amount Seller shall promptly pay to the claimant, or if
Buyer has already paid the claimant, to Buyer after
determination thereof, subject to the limitations set forth in
Section 12.2 hereof.
12.5 SURVIVAL; INVESTIGATION. The representations and warranties
of Seller and of Canadian Borrower and Parent contained in this Agreement shall
survive any investigation by
<PAGE> 32
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Buyer and shall not terminate until one year after Closing (the "First
Anniversary") at which time they shall lapse. Notwithstanding the provisions
of the preceding sentence, the representations and warranties of Canadian
Borrower and Parent set forth in Sections 4.14 Environmental Matters, 4.19 Tax
Matters and 4.24 Bulk Sales Act, shall survive any investigation by Buyer and
shall not terminate until two months after the expiration of the respective
statute of limitation applicable to the matters to which each such section is
addressed. Notwithstanding any other provision of this Agreement, any
representation or warranty in respect of which indemnification may be sought
under this Article shall survive its applicable expiration date if written
notice, given in good faith, of a breach thereof is given to Canadian Borrower
prior to or on such expiration date, whether or not liability has actually been
incurred.
12.6 INDEMNIFICATION BY CANADIAN BORROWER AND PARENT. Canadian
Borrower and Parent will, jointly and severally, indemnify and hold Buyer and
Seller and any of their Affiliates harmless from Losses arising out of, under
or pursuant to:
(i) any breach (or any allegation by any third party of
facts, which if true as alleged, would constitute
such a breach) of any representation or warranty made
by Canadian Borrower and Parent under this Agreement;
(ii) any breach or violation of any agreement of Canadian
Borrower or Parent contained in this Agreement; and
(iii) any claim or assertion by any Person relating to any
of the Nonassumed Liabilities.
12.7 INDEMNIFICATION BY BUYER. Buyer will indemnify and hold
Seller or any of its Affiliates harmless from any Losses arising from or
relating to the use by Buyer of the Assets or the operation by Buyer of the
Business after Closing, exclusive of any Loss
(i) for which Buyer receives indemnification from Seller pursuant
to Section 12.1 above or for which Buyer would be entitled to
receive indemnification from Seller pursuant to Section 12.1
above except for the fact that such Loss, or any part thereof,
when aggregated with other Losses for which Buyer has received
indemnification from Seller pursuant to Section 12.1 above
exceeds the limitations on indemnification set forth in
Section 12.2 above, and
(ii) arising from or relating to any of the Business Contracts for
which any consent to assignment thereof is required to vest
title in Buyer and is not obtained. Seller and Buyer shall
follow the procedures set forth in Sections 12.3 and 12.4 with
respect to claims for indemnity made by Seller pursuant to
this Section 12.7.
12.8 SELLER'S DISGORGEMENT. To the extent any action ("Insolvency
Action") is brought against Buyer by any Person in any bankruptcy case,
receivership, assignment for the
<PAGE> 33
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benefit of creditors or similar proceeding of Canadian Borrower or any
Affiliate of Canadian Borrower (collectively, "Insolvency Proceeding"), arising
out of this Agreement or any of the transactions related thereto or relating to
the Assets or the Intellectual Property or Business Contracts excluded from the
definition of assets in Section 5.5 hereof, and Seller is entitled to receive a
cash distribution from the Insolvency Proceeding as a creditor of Canadian
Borrower or any Affiliate of Canadian Borrower, Seller shall remit to Buyer
upon the receipt of any cash distributions from the Insolvency Proceeding all
cash distributions that Seller receives that can be fairly allocated to any
recovery from Buyer in the Insolvency Action.
ARTICLE XIII
GENERAL PROVISIONS
13.1 NOTICES. All notices and other communications given hereunder
shall be in writing. Notices shall be effective when delivered, if delivered
personally. Otherwise, they shall be effective when sent to the parties at the
addresses or numbers listed below, as follows: (i) on the business day
delivered (or the next business day following delivery if not delivered on a
business day) if sent by a local or long distance courier, prepaid telegram,
telefax or other facsimile means, or (ii) three days after mailing if mailed by
registered or certified U.S. mail, postage prepaid and return receipt
requested.
If to Canadian Borrower or Parent, to:
Robert B. Laurence
2709 Silkwood Court
Oakton, Virginia 22124
Telefax No.: (703) 476-0854
with a copy to:
Gibson, Dunn & Crutcher, L.L.P.
4 Park Plaza - 17th Floor
Irvine, California 92614
Attention: Walter L. Schindler, Esq.
Telefax No.: (714) 475-4662
If to Buyer to:
Genicom Canada Inc.
c/o Genicom Corporation
14800 Conference Center Drive
Suite 400
Chantilly, Virginia 20151
Attention: Paul T. Winn
Telefax No.: (703) 802-9200
<PAGE> 34
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with a copy to:
McGuire, Woods, Battle & Booths, L.L.P.
One James Center
901 East Cary Street
Richmond, Virginia 23219
Attention: Jane Whitt Sellers, Esq.
Telefax No.: (804) 698-2170
If to Seller to:
Heller Financial, Inc.
500 W. Monroe Street
Chicago, Illinois 60661
Attention: Patrick Pesch
Telefax No.: (312) 441-7236
with a copy to:
Latham & Watkins
Sears Tower, Suite 5800
Chicago, Illinois 60606
Attention: David S. Heller, Esq.
Telefax No.: (312) 993-9767
Any Person may change the address or number to which notices are to be
delivered to him, her or it by giving the other Persons named above notice of
the change in the manner set forth above.
13.2 GOVERNING LAW. This Agreement shall be governed in all
respects by the laws of the Province of Ontario without regard to its choice of
law rules. Each party hereto attorns to the non-exclusive jurisdiction of the
courts of Ontario with respect to any matter arising hereunder or related
hereto. The parties expressly exclude the application of the United Nations
Convention on Contracts for the International Sale of Goods.
13.3 SCHEDULES. The information contained in any schedule which is
referred to in any section of this Agreement shall be deemed to have been
disclosed in connection with, and to be incorporated into, that particular
section only, and shall not be deemed a part of any other section.
13.4 HEADINGS. The headings contained in this Agreement are for
reference purposes only and shall not affect the meaning or interpretation of
the Agreement.
<PAGE> 35
- 35 -
13.5 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
13.6 FACSIMILE EXECUTION To evidence the fact that it has executed
this Agreement, a party may send a copy of its executed counterpart to all
other parties by facsimile transmission. That party shall be deemed to have
executed this Agreement on the date it sent such facsimile transmission. In
such event, such party shall forthwith deliver to the other party the
counterpart of this Agreement executed by such party.
13.7 MISCELLANEOUS. This Agreement (i) constitutes the entire
agreement and supersedes all other prior agreements and understandings, both
written and oral, between the parties with respect to the subject matter
hereof; (ii) is not intended to and shall not confer upon any Person, other
than the parties hereto, any rights or remedies; and (iii) shall not be
assigned by operation of law or otherwise (except that Buyer may assign its
rights hereunder to an Affiliate of Buyer. Unless specified otherwise, all
statements of or references to dollar amounts in this Agreement are to lawful
money of Canada.
13.8 THIRD PARTY BENEFICIARIES. No provision of this Agreement
shall inure to the benefit of, or be enforceable by, any third party.
13.9 CURRENCY. Unless specified otherwise, all statements of or
references to dollar amounts in this Agreement are to lawful money of Canada.
If, for the purposes of obtaining or enforcing judgment in any court in any
jurisdiction, it becomes necessary to convert into the currency of the
jurisdiction giving such judgment (the "Judgment Currency") an amount due
hereunder in any other currency (the "Original Currency"), then the date on
which the rate of exchange for conversion is selected by that court is referred
to herein as the "Conversion Date." If there is a change in the rate of
exchange between the Judgment Currency and the Original Currency between the
Conversion Date and the actual receipt by Party (the "First Party") of the
amount due hereunder or under such judgment, the other Party (the "Second
Party") shall, notwithstanding such judgment, pay all such additional amounts
as may be necessary to ensure that the amount received by the First Party in
the Judgment Currency, when converted at the rate of exchange prevailing on the
date of receipt, will produce the amount due in the Original Currency. The
Second Party's liability hereunder constitutes a separate and independent
liability which shall not merge with any judgment or any partial payment or
enforcement of payment of sums due under this Agreement. The term "rate of
exchange," as used in this Section, includes any premiums or costs payable in
connection with the currency conversion then being effected.
IN WITNESS WHEREOF the parties hereto have caused this agreement to be
executed and their corporate seals to be hereto affixed and attested their duly
authorized officers.
GENICOM CANADA INC.
<PAGE> 36
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By: /s/James C. Gale seal
Title: Chief Financial Officer
HELLER FINANCIAL, INC.
By: /s/Patrick Pesch seal
Title: Senior Vice President
NOVADYNE COMPUTER SYSTEMS, INC.
By:/s/ Robert B. Laurence seal
Title: President
NOVADYNE COMPUTER SYSTEMS (CANADA), INC.
By: /s/ Robert B. Laurence seal
Title: President
<PAGE> 1
EXHIBIT 10.1
FIRST AMENDMENT TO CREDIT AGREEMENT AND SECURITY AGREEMENT
THIS FIRST AMENDMENT TO CREDIT AGREEMENT AND SECURITY AGREEMENT (this
"Amendment"), dated as of October 31, 1997, is by and among Genicom Corporation
(the "Borrower"), the subsidiaries of the Borrower identified on the signature
pages hereto (the "Guarantors"), the several lenders identified on the
signature pages hereto (each a "Lender" and, collectively, the "Lenders") and
NationsBank of Texas, N.A., as agent for the Lenders (in such capacity, the
"Agent"). Capitalized terms used herein which are not defined herein and which
are defined in the Credit Agreement shall have the same meanings as therein
defined.
W I T N E S S E T H
WHEREAS, the Borrower, the Guarantors, the Lenders and the Agent
entered into that certain Amended and Restated Credit Agreement dated as of
September 5, 1997 (the "Existing Credit Agreement").
WHEREAS, the parties have agreed to amend the Existing Credit
Agreement as set forth herein.
NOW, THEREFORE, in consideration of the agreements hereinafter set
forth, and for other good and valuable consideration, the receipt and adequacy
of which are hereby acknowledged, the parties hereto agree as follows:
PART I
DEFINITIONS
SUBPART I.1 Certain Definitions. Unless otherwise defined herein or
the context otherwise requires, the following terms used in this Amendment,
including its preamble and recitals, have the following meanings:
"Amended Credit Agreement" means the Existing Credit Agreement
as amended hereby.
"Amendment No. 1 Effective Date" is defined in Subpart III.1.
SUBPART I.2 Other Definitions. Unless otherwise defined herein or
the context otherwise requires, terms used in this Amendment, including its
preamble and recitals, have the meanings provided in the Amended Credit
Agreement.
<PAGE> 2
PART II
AMENDMENTS TO EXISTING CREDIT AGREEMENT
Effective on (and subject to the occurrence of) the Amendment No. 1
Effective Date, the Existing Credit Agreement is hereby amended in accordance
with this Part II. Except as so amended, the Existing Credit Agreement and all
other Credit Documents shall continue in full force and effect.
SUBPART II.1 Amendments to Section 1.1.
(a) The following definitions are hereby added to Section
1.1 of the Existing Credit Agreement in appropriate alphabetical
order:
"Acquisition Purchase Price" means the aggregate
purchase price for an Acquisition (including any assumption of
liabilities (other than current working capital liabilities
not constituting Indebtedness) in connection therewith, but
excluding any portion of the purchase price of any such
Acquisition consisting of Capital Stock of the Borrower.
"NCS Assets" means any assets acquired by the
Borrower pursuant to the terms of the NCS Purchase Agreement.
"NCS Purchase Agreement" means (i) that certain
Purchase Agreement between Novadyne and Genicom Corporation
dated on or about November 15, 1997 (including all schedules
and exhibits thereto) and (ii) all collateral agreements
referred to in such Purchase Agreement.
"Novadyne" means Novadyne Computer Systems, Inc., a
Delaware corporation.
SUBPART II.2 Amendments to Section 6.15. Section 6.15 of the
Existing Credit Agreement is hereby amended in its entirety to read as follows:
6.15 Purpose of Loans and Letters of Credit. The proceeds
of the Loans hereunder shall be used solely by the Borrower for
general corporate purposes of the Borrower and its Subsidiaries,
including, but not limited to, (1) working capital advances, (2)
capital expenditures in the ordinary course of business, (3) Permitted
Investments (4) refinancing of existing Indebtedness and (5) the
purchase of NCS Assets pursuant to the NCS Purchase Agreement. The
Letters of Credit shall be used only for or in connection with appeal
bonds, reimbursement obligations arising in connection with
performance, surety and reclamation bonds, reinsurance, domestic or
international trade transactions and obligations not otherwise
aforementioned relating to transactions entered into by the Borrower
in the ordinary course of business.
SUBPART II.3 Amendments to Section 7.11. Subsections (a), (b) and
(c) of Section 7.11 of the Existing Credit Agreement are hereby amended in
their entireties to read as follows:
- 2 -
<PAGE> 3
7.11 Financial Covenants.
(a) Consolidated Tangible Net Worth. Consolidated
Tangible Net Worth at all times shall be no less than:
(i) as of the last day of the third fiscal quarter
for the fiscal year 1997, the sum of $12,500,000, increased by
an amount equal to 100% of the proceeds received from all
Equity Transactions occurring after the Closing Date;
(ii) as of the last day of the fourth fiscal quarter
for the fiscal year 1997 and the last day of the first fiscal
quarter for the fiscal year 1998, the sum of $6,000,000,
increased by an amount equal to (A) 50% of the Consolidated
Net Income (without deduction for any losses) for each fiscal
quarter commencing with the fourth fiscal quarter for the
fiscal year 1997 through and including the fiscal quarter then
ended, plus (B) 100% of the proceeds received from all Equity
Transactions occurring after the Closing Date;
(iii) as of the last day of the second fiscal quarter
for the fiscal year 1998, the sum of $9,000,000, increased by
an amount equal to (A) 50% of the Consolidated Net Income
(without deduction for any losses) for each fiscal quarter
commencing with the fourth fiscal quarter for the fiscal year
1997 through and including the fiscal quarter then ended, plus
(B) 100% of the proceeds received from all Equity Transactions
occurring after the Closing Date; and
(iv) as of the last day of the third fiscal quarter
for the fiscal year 1998 and the last day of each fiscal
quarter thereafter, the sum of $12,500,000, increased by an
amount equal to (A) 50% of the Consolidated Net Income
(without deduction for any losses) for each fiscal quarter
commencing with the fourth fiscal quarter for the fiscal year
1997 through and including the fiscal quarter then ended, plus
(B) 100% of the proceeds received from all Equity Transactions
occurring after the Closing Date.
(b) Consolidated Funded Debt Coverage Ratio. The
Consolidated Funded Debt Coverage Ratio at each Calculation Date shall
be no greater than the following proportions:
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
As of the last day of 5.25 to 1.00
the third fiscal quarter
of fiscal year 1997
As of the last day of the 6.50 to 1.00
fourth fiscal quarter of
</TABLE>
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<PAGE> 4
<TABLE>
<S> <C>
fiscal year 1997
As of the last day of the 6.25 to 1.00
first fiscal quarter of fiscal
year 1998 of the Borrower
and its Subsidiaries
As of the last day of 5.75 to 1.00
the second fiscal quarter
of fiscal year 1998 of
the Borrower and its
Subsidiaries
As of the last day of 4.75 to 1.00
the third fiscal quarter
of fiscal year 1998 of
the Borrower and its
Subsidiaries
As of the last day of 3.75 to 1.00
the fourth fiscal quarter
of fiscal year 1998 of
the Borrower and its
Subsidiaries
As of the last day of 3.50 to 1.00
the first fiscal quarter
of fiscal year 1999 of
the Borrower and its
Subsidiaries
As of the last day of 3.25 to 1.00
the second fiscal quarter
of fiscal year 1999 of
the Borrower and its
Subsidiaries
As of the last day of 3.00 to 1.00
the third fiscal quarter
of fiscal year 1999
of the Borrower and its
Subsidiaries and thereafter
</TABLE>
(c) Consolidated Fixed Charge Coverage Ratio. The
Consolidated Fixed Charge Coverage Ratio at each Calculation Date
shall be no less than the following proportions:
- 4 -
<PAGE> 5
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
For the period occurring 1.25 to 1.00
from the Closing Date
through the next to last
day of the third fiscal
quarter of fiscal year 1998
of the Borrower and its
Subsidiaries
For the period occurring 1.75 to 1.00
from the last day of the
third fiscal quarter of
fiscal year 1998 of the
Borrower and its
Subsidiaries and thereafter
</TABLE>
**********
SUBPART II.4 Amendments to Section 8.4. Subsection (c) of Section
8.4 of the Existing Credit Agreement is hereby amended in its entirety to read
as follows:
8.4 Consolidation, Merger, Sale or Purchase of Assets, etc.
The Borrower will not, nor will it permit any of its Subsidiaries to:
**********
(c) enter into any Acquisition transaction (in a single
transaction or a series of related transactions) except (i) for any
Acquisition having an Acquisition Purchase Price less than $5,000,000
provided that the Acquisition Purchase Price of all such Acquisitions
(including any Acquisition permitted pursuant to clauses (v) and (vi)
below) occurring during any fiscal year of the Borrower does not
exceed $20,000,000, (ii) as otherwise permitted by Section 8.4(a) and
Section 8.5, (iii) for any Acquisition with respect to which the
purchase price consists entirely of Capital Stock of the acquiring
Person, (iv) for the acquisition of Property in the ordinary course of
business for fair consideration, (v) for the purchase on or before
December 15, 1997 of the NCS Assets pursuant to the terms of the NCS
Purchase Agreement and (vi) for other Acquisitions by the Borrower or
any of its Subsidiaries, but only to the extent that, no later than 14
days prior to such Acquisition, the Agent and the Lenders shall have
received a certificate of the chief financial officer or treasurer of
the Borrower providing facts or computations in reasonable detail
demonstrating that (A) the Acquisition Purchase Price of any such
Acquisition individually does not exceed $10,000,000, (B) the
Acquisition Purchase Price of all such Acquisitions (including any
Acquisition permitted pursuant to clauses (i) and (v) above) occurring
during any fiscal year of the Borrower does not exceed $20,000,000
and (C) after giving effect on a Pro Forma Basis to such Acquisition
(including but not limited to any
- 5 -
<PAGE> 6
Indebtedness to be incurred or assumed by the Borrower or any of its
Subsidiaries in connection therewith), no Default or Event of Default
would exist hereunder.
SUBPART II.5 Amendments to Section 9.1. The "." at the end of
existing subsection (j) of Section 9.1 of the Existing Credit Agreement is
hereby deleted and a ";" and the word "or" are hereby substituted therefor and
the following new subsection (k) is hereby added to Section 9.1 of the Existing
Credit Agreement immediately succeeding such subsection (j):
9.1 Events of Default. An Event of Default shall exist upon
the occurrence of any of the following specified events (each an
"Event of Default"):
**********
(k) Purchase Price. The Acquisition Purchase
Price (including any post-closing adjustments), paid by the
Borrower and/or any of its Subsidiaries pursuant to the NCS
Purchase Agreement shall exceed $17,100,000.
PART III
CONDITIONS TO EFFECTIVENESS
SUBPART III.1 Amendment No. 1 Effective Date. This Amendment shall
be and become effective as of the date hereof (the "Amendment No. 1 Effective
Date") when all of the conditions set forth in this Subpart 3.1 shall have been
satisfied, and thereafter this Amendment shall be known, and may be referred
to, as "Amendment No. 1."
SUBPART III.1.1 Execution of Counterparts of Amendment. The
Agent shall have received counterparts (or other evidence of
execution, including telephonic message, satisfactory to the Agent) of
this Amendment, which collectively shall have been duly executed on
behalf of each of the Borrower, the Guarantors and the Required
Lenders.
SUBPART III.1.2 Pledged Collateral.
(a) The Borrower and each Domestic Subsidiary of the
Borrower will cause all of its real (whether leased or owned) property
(including any NCS Assets) located in the United States of America and
deemed to be material by the Agent or the Required Lenders in its or
their sole reasonable discretion, and all of its personal property
(including any NCS Assets) deemed to be material by the Agent or the
Required Lenders in its or their sole reasonable discretion (including
without limitation 100% of its equity ownership interest in its
Domestic Subsidiaries) to be subject at all times to first priority,
perfected and, in the case of real property (whether leased or owned),
title insured Liens in favor of the Agent pursuant to the terms and
conditions of the Collateral Documents.
- 6 -
<PAGE> 7
(b) The Agent shall have received, in a form and
substance satisfactory to the Agent:
(i) duly executed UCC financing statements for
each appropriate jurisdiction as is necessary, in the Agent's
sole discretion, to perfect the Agent's security interest in
Collateral consisting of NCS Assets;
(ii) such patent/trademark/copyright filings as
requested by the Agent in order to perfect the Agent's
security interest in Collateral consisting of NCS Assets; and
(iii) such estoppel letters, consents and waivers
as may be required by the Agent from the landlords of each
leased location of Collateral consisting of NCS Assets.
SUBPART III.1.3 Corporate Existence. The Agent shall have
received all documents it may reasonably request relating to the
existence and good standing of each of the Credit Parties, the
corporate or other necessary authority for and the validity of this
Amendment, and any other matters relevant thereto, all in form and
substance reasonably satisfactory to the Agent.
SUBPART III.1.4 Legal Opinion. The Agent shall have received
a legal opinion of McGuire, Woods, Battle & Boothe, counsel for the
Credit Parties in form and substance reasonably satisfactory to the
Agent.
SUBPART III.1.5 Officer's Certificate. The Agent shall have
received a certificate executed by the chief financial officer of the
Borrower as of the Amendment No. 1 Effective Date stating that,
immediately after giving effect to this Amendment and the transactions
contemplated hereby, (i) each of the Credit Parties is Solvent, (ii)
no Default or Event of Default exists and (iii) the representations
and warranties set forth in the Existing Credit Agreement are true and
correct in all material respects.
SUBPART III.1.6 Material Adverse Change. Except as otherwise
previously disclosed in writing to the Lenders, no material adverse
change shall have occurred since December 29, 1996 in the condition
(financial or otherwise), business or management of the Borrower or of
the Borrower and its Subsidiaries taken as a whole.
SUBPART III.1.7 NCS Purchase Agreement. The Agent shall have
received a copy, certified by the chief financial officer of the
Borrower as true and complete, of the NCS Purchase Agreement and of
each other document or instrument executed by the Borrower in
connection with the NCS Purchase Agreement, in form and substance
satisfactory to the Agent in each case as originally executed and
delivered, and, no amendment or modification thereof shall have been
entered into on or prior to the date hereof which shall not have been
approved by the Agent.
- 7 -
<PAGE> 8
SUBPART III.1.8 Consummation of NCS Purchase Agreement. The
Agent shall have received evidence satisfactory to it that (i) the NCS
Purchase Agreement shall have been consummated in compliance with
applicable law and regulatory approvals and in accordance with the
terms thereof and (ii) the Acquisition Purchase Price in connection
therewith (without giving effect to post-closing adjustments) paid by
the Borrower and/or any of its Subsidiaries for the purchase of the
NCS Assets pursuant to the NCS Purchase Agreement does not exceed
$16,100,000.
SUBPART III.1.9 Other Items. The Agent shall have received
such other documents, agreements or information which may be
reasonably requested by the Agent.
PART IV
MISCELLANEOUS
SUBPART IV.1 Representations and Warranties. Borrower hereby
represents and warrants to the Agent and the Lenders that, after giving effect
to this Amendment, (a) no Default or Event of Default exists under the Credit
Agreement or any of the other Credit Documents and (b) the representations and
warranties set forth in Section 6 of the Existing Credit Agreement are, subject
to the limitations set forth therein, true and correct in all material respects
as of the date hereof (except for those which expressly relate to an earlier
date).
SUBPART IV.2 Cross-References. References in this Amendment to any
Part or Subpart are, unless otherwise specified, to such Part or Subpart of
this Amendment.
SUBPART IV.3 Instrument Pursuant to Existing Credit Agreement. This
Amendment is a Credit Document executed pursuant to the Existing Credit
Agreement and shall (unless otherwise expressly indicated therein) be
construed, administered and applied in accordance with the terms and provisions
of the Existing Credit Agreement.
SUBPART IV.4 References in Other Credit Documents. At such time as
this Amendment No. 1 shall become effective pursuant to the terms of Subpart
3.1, all references in the Credit Documents to the "Credit Agreement" shall be
deemed to refer to the Credit Agreement as amended by this Amendment No. 1. and
all references in the Credit Documents to the "Security Agreement" shall be
deemed to refer to the Security Agreement as amended by this Amendment No. 1.
SUBPART IV.5 Counterparts. This Amendment may be executed by the
parties hereto in several counterparts, each of which shall be deemed to be an
original and all of which shall constitute together but one and the same
agreement.
SUBPART IV.6 Governing Law. THIS AMENDMENT SHALL BE DEEMED TO BE A
CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE COMMONWEALTH OF
VIRGINIA WITHOUT GIVING EFFECT TO THE CONFLICT OF LAW PRINCIPLES THEREOF.
- 8 -
<PAGE> 9
SUBPART IV.7 Successors and Assigns. This Amendment shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns.
[The remainder of this page has been left blank intentionally]
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<PAGE> 10
IN WITNESS WHEREOF the parties hereto have caused this Amendment to be
duly executed on the date first above written.
BORROWER:
--------
GENICOM CORPORATION
By /s/ James C. Gale
Title: Senior Vice President and Chief Financial Officer
GUARANTORS:
----------
GENICOM INTERNATIONAL HOLDINGS CORPORATION
By /s/ James C. Gale
Title: Senior Vice President and Chief Financial Officer
GENICOM INTERNATIONAL SALES CORPORATION
By /s/ James C. Gale
Title: Senior Vice President and Chief Financial Officer
DELMARVA TECHNOLOGIES CORPORATION
By /s/ James C. Gale
Title: Senior Vice President and Chief Financial Officer
RASTEK CORPORATION
By /s/ James C. Gale
Title: Senior Vice President and Chief Financial Officer
[Signatures Continued]
<PAGE> 11
ENTERPRISING SERVICE SOLUTIONS CORPORATION
By /s/ James C. Gale
Title: Senior Vice President and Chief Financial Officer
PRINTER SYSTEMS CORPORATION
By /s/ James C. Gale
Title: Senior Vice President and Chief Financial Officer
THE PRINTER CONNECTION, INC.
By /s/ James C. Gale
Title: Senior Vice President and Chief Financial Officer
PRINTER SYSTEMS INTERNATIONAL, LTD.
By /s/ James C. Gale
Title: Senior Vice President and Chief Financial Officer
[Signatures Continued]
<PAGE> 12
LENDERS:
-------
NATIONSBANK OF TEXAS, N.A.
By /s/ Yousuf Omar
Title: Senior Vice President
CREDITANSTALT-BANKVEREIN
By /s/Christina T. Schoen
Title: Senior Vice President
By
---------------------------------------
Title:
DEEPROCK & COMPANY
By: Eaton Vance Management,
as Investment Advisor
By /s/Payson F. Swaffield
Title: Vice President
CRESTAR BANK
By /s/ William F. Lindlaw
Title: Vice President
THE RIGGS NATIONAL BANK OF WASHINGTON, D.C.
By /s/ Jeffrey P. White
Title: Vice President
[Signatures Continued]
<PAGE> 13
FLOATING RATE PORTFOLIO
By: Chancellor LGT Senior Secured
Management, Inc., as attorney-in-fact
By /s/ Chris Bondy
Title: Managing Director
KZH HOLDING CORPORATION III
By /s/Virginia Conway
Title: Authorized Agent
MORGAN STANLEY SENIOR FUNDING, INC.
By /s/ Christopher A. Pucillo
Title: Vice President
SENIOR DEBT PORTFOLIO
By: Boston Management and Research,
as Investment Advisor
By
---------------------------------------
Title:
CERES FINANCE LTD.
By /s/David Egglishaw
Title: Director
AERIES FINANCE LTD.
By /s/ Andrew Wignall
Title: Director
[Signatures Continued]
<PAGE> 14
BANK OF SCOTLAND
By /s/Annie Chin Tat
Title: Vice President
NATIONAL CITY BANK OF KENTUCKY
By /s/Glen Nord
Title: Vice President
AGENT:
NATIONSBANK OF TEXAS, N.A.,
as Agent
By Yousuf Omar
Title: Senior Vice President
<PAGE> 1
EXHIBIT 99.1
For Further Information:
Paul T. Winn
President and CEO
703-802-9201
FOR IMMEDIATE RELEASE
==============================================================================
GENICOM ACQUIRES SELECTED ASSETS OF NOVADYNE COMPUTER SYSTEMS
BROADENS ITS INTEGRATION AND NETWORK SERVICES CAPABILITIES
CHANTILLY, VA November 17,1997-- GENICOM Corporation (Nasdaq: GECM) today
announced its acquisition of Novadyne Computer Systems. As a result of this
transaction, GENICOM will hire approximately 65 percent of Novadyne's
employees; acquire certain assets and assume selected liabilities; and obtain
rights to their customer base in North America. The Company anticipates revenue
from this asset purchase to be approximately $35 million annually.
The purchase price for this transaction is approximately $12 million including
the assumption of certain liabilities. GENICOM preliminarily estimates that
$8.5 million of goodwill will be added to its balance sheet as a result of this
transaction. GENICOM will finance the acquisition through its credit facility
with NationsBank, N.A. Start-up costs will be incurred in the remainder of
this quarter and are expected to impact fourth quarter earnings.
The acquisition will be integrated into GENICOM's Enterprising Service
Solutions (ESSC) locations in Virginia, Texas and Canada. In addition, GENICOM
will establish a new location in the Los Angeles, California area for advanced
workstation support services and a new systems migration business unit.
Paul T. Winn, President and Chief Executive of GENICOM commented, "This
acquisition is of strategic importance to our Enterprising Service Solutions
company in that it expands our capabilities and presence into the rapidly
growing telecommunications and SUN environments. We are looking forward to
serving Novadyne's extensive customer base and providing them with the combined
service expertise of these two companies. Our goal is to ensure that this
transaction is as transparent as possible to our new customers."
1
<PAGE> 2
Commenting on operations, Mr. Winn stated, "This transaction adds significant
scale to our field operations and sales coverage. It also adds strong
capabilities in providing both product and software services to the SUN
environment; broadens our professional services for help desk support, project
management and installation support; and provides new relationships that
increase our customer coverage in remote service areas."
"Additionally, we are especially pleased with the expanded set of professional
skills we are able to add to our Company. The service industry is
fundamentally driven by the attitudes and excellence of its personnel, and we
look forward to integrating Novadyne's skills at all levels in our Company."
GENICOM Corporation is an international supplier of network integration,
multivendor services and printer solutions. The Enterprising Service Solutions
company (ESSC) provides integrated network solutions that include network
integration, professional services and help desk support, in addition to, logo
and multivendor on-site and off-site product repair and express parts. The
Document Solutions company (DSC) designs and markets a wide range of computer
printer technologies for general purpose applications. Additionally, DSC is
the exclusive provider of Digital-Branded printer products. GENICOM is
headquartered within metropolitan Washington, D. C.
The discussion above contains certain forward-looking statements as such term
is defined in the Private Securities Litigation Reform Act of 1995. Company
statements that are not historical facts, including statements about
management's expectations, are forward-looking statements that involve risks
and uncertainties as detailed from time to time, in the Company's filings with
the Securities and Exchange Commission.
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