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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 24, 1996
THE CERPLEX GROUP, INC.
------------------------------
(Exact name of registrant as specified in charter)
Delaware 0-23602 33-0411354
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
1382 Bell Avenue, Tustin, California 92680
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(Address of principal executive offices) (Zip Code)
(714) 258-5600
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(Registrant's telephone number including area code)
Not applicable
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(Former name or former address, if changed since last report.)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
(a) On May 24, 1996 The Cerplex Group, Inc., a Delaware
corporation ("Cerplex" or the "Company") and its wholly-owned
subsidiary, Cerplex Limited, an English company ("Cerplex Limited"),
acquired one hundred percent (100%) of the shares of Cerplex S.A.S., a
French company ("Cerplex SAS"), from Rank Xerox-The Document Company
SA, a French company ("RXSA"), and Rank Xerox Limited, an English
company ("RXL"). Cerplex SAS is the legal successor to Rank Xerox et
Compagnie, which was transformed immediately prior to the acquisition
from a societe en nom collectif (a type of partnership) into a societe
par actions simplifee (a form of limited liability company), at which
time its name was changed to Cerplex SAS. The Company acquired
289,999 shares of Cerplex SAS and Cerplex Limited acquired one share.
The acquisition of Cerplex SAS was made in accordance with
the terms of a Stock Purchase Agreement and a Contract of Warranty,
each between the Company and Cerplex Limited, on the one hand, and
RXSA and RXL, on the other hand, and dated as of May 24, 1996. The
total purchase price for the acquisition was 25,268,000 French Francs
(approximately $4,830,000). In addition, the Company paid 2,728,000
French Francs (approximately $520,000) in acquisition-related taxes
and registration fees. The purchase price for the shares of Cerplex
SAS was based upon the estimated net book value of the assets of
Cerplex SAS as of May 24, 1996. If an audit subsequent to May 24, 1996
shows the net book value of the Cerplex SAS assets to be higher or
lower than the purchase price paid at closing, there will be an
adjustment to such purchase price. The funds used to purchase the
shares of Cerplex SAS were generated internally from the operations
of Cerplex and its subsidiaries.
(b) The assets of Cerplex SAS include an equipment repair and
remanufacturing facility of approximately 335,000 square feet on a
38-acre site in Neuville-en-Ferrain, near Lille in northern France.
The facility has been used since 1974 by Rank Xerox as a site for the
assembly and refurbishment of Rank Xerox office systems, laser-based
copiers and printers and paper-handling equipment. Cerplex plans to
continue to operate the facility substantially as it has been operated
in the past by Rank Xerox. Under a Supply and Services Agreement among
Cerplex, Cerplex SAS, RXL and RXSA, which has an initial four-year
term, Cerplex SAS will continue to repair and remanufacture products
and components for Rank Xerox at the facility. In addition to the
services to be provided to Rank Xerox, Cerplex SAS intends to
introduce product repair, remanufacturing and logistics services at
the site for other multinational customers.
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ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS.
(a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED.
At the time of the filing of this Current Report on Form 8-K,
it is impracticable for the Company to provide the required
financial statements. Such financial statements will be filed
as soon as practicable, but in no case later than sixty (60)
days from the filing date of this Current Report.
(b) UNAUDITED PRO FORMA FINANCIAL DATA.
At the time of the filing of this Current Report on Form 8-K,
it is impracticable for the Company to provide the required
pro forma financial information. Such pro forma financial
information will be filed as soon as practicable, but in no
case later than sixty (60) days from the filing date of this
Current Report.
(c) EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS METHOD OF FILING
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<S> <C> <C>
2.1 Stock Purchase Agreement dated as of Filed herein.
May 24, 1996, by and among The Cerplex
Group, Inc., Cerplex Limited, Rank Xerox -
The Document Company S.A. and Rank Xerox
Limited (conformed copy to original).*
2.2 Contract of Warranty dated as of May 24, Filed herein.
1996, by and among The Cerplex Group, Inc.
Cerplex Limited, Rank Xerox - The Document
Company S.A. and Rank Xerox Limited
(conformed copy to original).*
2.3 Supply and Services Agreement dated as of Filed herein.
May 24, 1996, by and among The Cerplex
Group, Inc. Cerplex Limited, Rank Xerox -
The Document Company S.A. and Rank Xerox
Limited (conformed copy to original).*
23.1 Consent of Price Waterhouse, Independent To be filed by amendment.
Public Accountants.
27.1 Financial Data Schedule To be filed by amendment.
</TABLE>
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* The Company hereby undertakes to furnish supplementally a copy of any omitted
schedule to this document to the Securities and Exchange Commission upon
request.
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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.
Date: June 7, 1996
THE CERPLEX GROUP, INC.
By: /s/ BRUCE D. NYE
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Bruce D. Nye
Chief Financial Officer
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INDEX TO EXHIBITS
Sequentially
Numbered
Exhibit Description Page
- ------- ----------- ------------
2.1 Stock Purchase Agreement dated as of May 24, 1996,
by and among The Cerplex Group, Inc., Cerplex
Limited, Rank Xerox - The Document Company S.A.
and Rank Xerox Limited (conformed copy to
original).*
2.2 Contract of Warranty dated as of May 24, 1996, by
and among The Cerplex Group, Inc. Cerplex Limited,
Rank Xerox - The Document Company S.A. and Rank
Xerox Limited (conformed copy to original).*
2.3 Supply and Services Agreement dated as of May 24,
1996, by and among The Cerplex Group, Inc. Cerplex
Limited, Rank Xerox - The Document Company S.A.
and Rank Xerox Limited (conformed copy to
original).*
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* The Company hereby undertakes to furnish supplementally a copy of any omitted
schedule to this document to the Securities and Exchange Commission upon
request.
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EXHIBIT 2.1
STOCK PURCHASE AGREEMENT
Agreement made as of the 24th day of May, 1996 by and among The Cerplex
Group, Inc., a Delaware corporation ("CPLX") and Cerplex Limited, an English
company ("CPLX Ltd."), on the one hand, and Rank Xerox - The Document Company
SA, a French societe anonyme ("RXSA"), and Rank Xerox Limited, an English
company ("RXL"), on the other hand. CPLX and CPLX Ltd. are sometimes referred
to collectively in this Agreement as the "Buyers", and RXSA and RXL are
sometimes referred to collectively in this Agreement as the "Sellers".
The Sellers together own all of the shares representing the capital
stock of Cerplex SAS, a French societe par actions simplifiee, being the legal
successor to Rank Xerox et Compagnie, a French societe en nom collectif (the
"Company"), with a capital stock of Twenty-Nine Million French Francs
(29,000,000FF) divided into 290,000 shares with a nominal value of 100FF each
(collectively, the "Shares").
The Buyers desire to purchase, and RXSA and RXL desire to sell, the
Shares for the consideration set forth below, subject to the terms and
conditions of this Agreement.
In consideration of the mutual promises made in this Agreement, and in
consideration of the representations, warranties and covenants contained in
this Agreement and in the Contract of Warranty entered into by the Buyers and
the Sellers on today's date (the "Contract of Warranty"), the parties agree as
follows:
1. Purchase and Sale of the Shares
1.01 Purchase of the Shares. Subject to and upon the
terms and conditions of this Agreement and the Contract of Warranty, at the
closing of the transactions contemplated by this Agreement (the "Closing"), the
Sellers shall sell to the Buyers, and the Buyers shall purchase from the
Sellers, all of the Shares. At the Closing, the Sellers shall deliver to CPLX
the share register of the Company together with executed share transfer forms
representative of all the Shares owned by each such Seller. CPLX shall be
responsible for allocating to CPLX Ltd. a portion of the Shares.
1.02 Purchase Price for the Shares. The purchase price to
be paid by the Buyers for the Shares shall be Twenty-Nine Million French Francs
(29,000,000FF) (the "Purchase Price"). The Purchase Price shall be payable at
Closing by wire transfer of Twenty-Nine Million French Francs (29,000,000FF) in
immediately available funds net of any charges and commissions from Wells Fargo
Bank NA (the sending bank) to Societe Generale La Defense (the receiving bank).
RXSA shall be responsible for allocating and paying to RXL its pro rata portion
of the Purchase Price.
1.03 Registration Taxes and Associated Fees. The Buyers
and the Sellers shall each pay one-half of any registration taxes and
associated fees paid in connection with the purchase and sale of the Shares.
Payment shall be effected through an adjustment at Closing in accordance with
Section 2.04.
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1.04 Closing. The Closing shall take place at the offices
of RXL, Parkway, Marlow, Buckinghamshire at 10:00 a.m., British Summer Time, on
May 22, 1996 or at such other place, time or date as may be mutually agreed
upon in writing by the parties (the "Closing Date").
2. Covenants
2.01 Delivery of Balance Sheets. At the Closing, the
Company shall deliver a provisional balance sheet of the Company (the
"Provisional Balance Sheet") reflecting the Company's anticipated assets and
liabilities as at May 24, 1996 (the "Balance Sheet Date"). The Buyers
acknowledge that the Provisional Balance Sheet is subject to adjustments. As
promptly as possible after the Closing but in any case not later than June 24,
1996, the Company shall deliver to CPLX the final balance sheet of the Company
(the "Balance Sheet") as at the Balance Sheet Date, certified by the chief
financial officer of the Company to the effect that:
(a) the Balance Sheet indicates as of the Balance
Sheet Date the financial condition, retained earnings, assets and liabilities
of the Company and has been prepared in accordance with French generally
accepted accounting principles, consistently applied, and fairly presents the
financial condition of the Company as of the date thereof; and
(b) the amounts shown as accrued for current and
deferred income and other taxes, customs duties and charges are in the
aggregate sufficient for the payment of all accrued and unpaid income and other
taxes, charges, customs duties, interest, penalties, assessments or
deficiencies applicable to the Company and its legal predecessors, whether
disputed or not, for the period then ended and periods prior thereto.
The Balance Sheet shall show that as of the Balance
Sheet Date the Company had (a) equity capital of 29,000,000FF, (b) cash and
current accounts receivable sufficient in the aggregate to satisfy all current
and long-term liabilities and provisions (excluding the provision for
diminution in value of fixed assets) shown in the Balance Sheet, (c) fixed
assets (excluding goodwill and land and buildings) having a net book value,
prior to any provision for diminution in value, of not less than 38,666,667FF
on a US GAAP basis, and (d) a provision for diminution in value of fixed assets
such that the net book value of all fixed assets (including goodwill and land
and buildings) is 29,000,000FF.
2.02 Post Closing Adjustments. As promptly as possible
following delivery of the Balance Sheet, the Buyers shall cause Price
Waterhouse, independent public accountants for the Buyers (the "Buyers'
Auditors"), to conduct an audit of the Balance Sheet. The Buyers' Auditors
shall have the right to review the work papers of the Company utilized in
preparing the Balance Sheet, and shall have full access to the books, records,
properties and personnel of the Company for purposes of verifying the accuracy
and fairness of the presentation of the Balance Sheet. The Sellers shall work
in good faith and cooperate with the Buyers and the Buyers' Auditors in the
audit of the Balance Sheet and the resolution of any dispute in connection
therewith. The values or
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amounts for all items reflected on the Balance Sheet shall be binding upon the
Buyers unless CPLX gives written notice within 60 days after receipt of the
Balance Sheet of disagreement with any of the values or amounts shown on the
Balance Sheet, specifying as to each such item in reasonable detail the nature
and extent of such disagreement (the "Dispute Notice"). If the Buyers and the
Sellers are unable to resolve any such disagreement within 30 days after the
date of the Dispute Notice, the disagreement shall be submitted to arbitration
in accordance with the provisions of Section 6 hereof. If as a result of the
resolution of any disputes (by agreement of the parties or by arbitration) any
amount shown in the Balance Sheet is determined to be erroneous, such erroneous
amount shall be deleted from the Balance Sheet and the correct amount shall be
inserted in lieu thereof. The Balance Sheet, as so corrected, shall constitute
the Balance Sheet for purposes of this Agreement.
2.03 Payment of Adjustments. To the extent that the
Balance Sheet, as adjusted if necessary pursuant to Section 2.02, shows any
deficit in the net book value of the Company's fixed assets required to be
shown in the Balance Sheet in accordance with Section 2.01, then within 30 days
after demand therefor from the Buyers, RXSA shall promptly pay to CPLX, by wire
transfer to CPLX's account, the full amount of such deficit, based upon the net
book value of fixed assets (excluding goodwill and land and buildings) being
29,000,000FF.
2.04 Payment at Closing in Respect of Anticipated
Adjustment. If the Provisional Balance Sheet delivered on the Closing Date
indicates that there is likely to be a deficit in the net book value of the
Company's assets resulting in a payment to CPLX in accordance with Section 2.03
above, then at the Closing the Sellers shall pay to the Buyers, in cash or by
way of an adjustment to the Buyers' payment at the Closing, an amount equal to
the deficit shown in the Provisional Balance Sheet. In the event of such a
payment at Closing, or in the event of the payment by the Buyers or the Sellers
of registration taxes and associated fees by way of an adjustment at Closing
pursuant to Section 1.03 above, a final adjustment shall be made in the amount
payable to the Buyers (if any) in accordance with Section 2.03 when the Balance
Sheet has been delivered by the Company and agreed to by the Buyers in
accordance with Section 2.01, and the Sellers or the Buyers, as the case may
be, shall promptly pay to the other party the amount required to correct such
overpayment or underpayment.
3. Closing Deliveries.
3.01 Closing Deliveries by the Sellers. At or
before the Closing, the Sellers shall deliver to CPLX each of the following
items:
(a) the share register and share
transfer forms representing the Shares owned by each of the Sellers, duly
executed by the appropriate Seller;
(b) a certificate executed by the
Company Secretary of RXL and a certificate executed by the Company Secretary
(or equivalent officer) of RXSA, in each case certifying the adoption by such
Seller of all corporate resolutions necessary to approve the execution and
delivery of this Agreement and the Contract of
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Warranty and the other agreements contemplated by this Agreement, and the
performance by such Seller of its obligations under this Agreement, the
Contract of Warranty and such other agreements, and attaching copies of all
such resolutions;
(c) a copy of the statuts of the
Company, as in effect on the Closing Date and as submitted for recordation;
(d) a copy of the Contract of Warranty
executed by each of the Sellers;
(e) a copy of a Supply and Services
Agreement among the Company, CPLX, RXSA and RXL (the "Supply and Services
Agreement"), executed by RXSA, RXL and the Company;
(f) evidence that the Company has fully
funded, off of its balance sheet, all accrued end of service costs with respect
to its employees in an amount not less than the audited actuarial valuation of
such end of service costs as at December 31, 1995, and has made a similar
contribution or accrual with respect to the first five months of 1996 and that
it has invested such funds with a recognized financial institution;
(g) deeds evidencing that the Company is
the sole legal owner of (a) the fonds de commerce representing the business at
the Lille site and (b) the land and buildings and appurtenances thereto at the
Lille site, as described in Section 2.09 of the Disclosure Schedule to the
Contract of Warranty (the "Real Property");
(h) all of the consents to the
transaction referred to in Section 2.04 of the Disclosure Schedule to the
Contract of Warranty, none of which consents shall contain any uncustomary
condition that is unduly burdensome to the Buyers or the Company;
(i) the payment, if any, made to the
Buyers in accordance with Section 2.04;
(j) the written resignation of the
Company's statutory auditors;
(k) the original corporate minute books
of the Company; and
(l) a cross-receipt executed by the
Sellers.
3.02 Closing Deliveries by the Buyers. At or
before the Closing, the Buyers shall deliver to RXSA each of the following
items:
(a) the Purchase Price, in accordance
with Section 1.02, evidenced by the receiving bank;
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(b) a certificate executed by the
Secretary of CPLX and a certificate executed by the Company Secretary of CPLX
Ltd., in each case certifying the adoption by such Buyer of all corporate
resolutions necessary to approve the execution and delivery of this Agreement
and the Contract of Warranty and the other agreements contemplated by this
Agreement and the performance by such Buyer of its obligations under this
Agreement, the Contract of Warranty and such other agreements, and attaching
copies of all such resolutions;
(c) a copy of the Contract of Warranty
executed by each of the Buyers;
(d) a copy of the Supply and Services
Agreement, executed by CPLX;
(e) a certificate from the Chief
Financial Officer of CPLX certifying that, as of the Closing Date, CPLX had not
received notice from Wells Fargo Bank or any other bank that has extended
credit to CPLX to the effect that such bank intends to terminate such bank's
credit facilities extended to CPLX;
(f) a letter from Wells Fargo Bank, NA
(on its own behalf and as Administrative Agent for the other banks under the
credit agreement between CPLX and such banks (the "Credit Agreement")),
evidencing:
(i) its consent to the acquisition
by CPLX and CPLX Ltd. of all of the shares of the Company and the other
transactions contemplated by this Agreement;
(ii) its consent to the payment by
CPLX of FFr 29,000,000 (as adjusted pursuant to Sections 2.02, 2.03 and 2.04 of
this Agreement) for the Shares;
(iii) its agreement that the Company
shall not be required to execute a guaranty of the obligations of CPLX under
the Credit Agreement or to grant to the Administrative Agent a security
interest in any of its assets (provided that CPLX and CPLX Ltd. shall pledge
the shares of the Company to the Bank pursuant to Section 6.10 of the Credit
Agreement); and
(iv) its consent to the restrictions
on payments from the Company to the Buyers set forth in Section 4.02 of this
Agreement; and
(g) a cross-receipt executed by the
Buyers.
4. Post-Closing Agreements
4.01 Confidential Information. Each of the Sellers agrees
that from and after the Closing Date, it and each of its subsidiaries shall
hold in confidence and shall use their best efforts to have all officers,
directors and personnel who continue after the
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Closing to be employed by such Seller or any such subsidiary to hold in
confidence all knowledge and information of a secret or confidential nature
with respect to the business of the Company and not to disclose the same
without the consent of CPLX, except to the extent that such information shall
have become public knowledge other than by breach of this Agreement by either
Seller.
4.02 CPLX Financial Covenants. CPLX agrees that, (a) for
a period of four years after the Balance Sheet Date, it will not take any
action to reduce the equity capital of the Company below Twenty Million French
Francs (20,000,000FF); (b) for a period of two years after the Balance Sheet
Date, it will not permit the Company to pay any dividends to its shareholders
or to make payments in the nature of corporate charges to CPLX and its
Affiliates (as such term is defined in the United States Securities Act of
1933, as amended) except as provided in Section 4.03 below; (c) during the
period beginning two years after the Balance Sheet Date and ending four years
after the Balance Sheet Date, CPLX shall not permit the aggregate amount of
dividends and payments in the nature of corporate charges paid by the Company
to CPLX and its Affiliates to exceed the financing costs of CPLX's equity
contribution to, and its additional investment in, the Company; (d) for a
period of two years after the Balance Sheet Date, CPLX will not permit the
Company to make or to guarantee any loan to CPLX or any of its Affiliates
(including any future Affiliates); (e) during the period beginning two years
after the Balance Sheet Date and ending four years after the Balance Sheet
Date, CPLX shall ensure that the current ratio (current assets/current
liabilities) of the Company is equal to or greater than 1; and (f) for a period
of four years after the Balance Sheet Date, CPLX shall guarantee any loan by a
third party to the Company, subject to the provisions of CPLX's own senior and
subordinated debt; provided that, for the purposes of clauses (b) and (c)
above, costs and expenses incurred by CPLX or its Affiliates specifically for
the benefit of the Company may be reimbursed by the Company to CPLX or such
Affiliate and such reimbursements shall not be deemed to be corporate charges.
The foregoing covenants shall terminate in their entirety upon (i) any
voluntary transfer of ownership by the Company of substantially all of its
assets (in a transaction that complies with Section 5 below) to any party other
than CPLX or one of its Affiliates or (ii) any voluntary transfer by the Buyers
of the Shares (in a transaction that complies with Section 5 below) to any
party other than an Affiliate of CPLX. For purposes of the foregoing sentence,
the term "voluntary transfer" shall not include a transfer by a secured lender
which has executed upon a pledge of the Shares or the Company's assets and
transfers those Shares or assets to another party unless such lender has
complied with the provisions of Section 5 below as if it were standing in the
place of the Buyers.
4.03 Royalty Fee; Dividends. During the two-year period after the
Balance Sheet Date:
(a) The Company may pay a quarterly royalty fee
to CPLX equal to 2% of the Company's gross revenues (excluding purchased
materials). The royalty fee shall be paid at the end of each fiscal quarter
(the first such payment to be made in October 1996 with respect to the period
from the Closing through September 30, 1996) into a United States escrow
account and held subject to the rights of the banks who are parties to the CPLX
senior credit agreement (the "Lender Banks"). In the event of a default by
CPLX under its senior credit agreement, the escrowed funds will be available
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to the Lender Banks to satisfy CPLX's obligations under such agreement. At the
end of the second Contract Year (as defined in the Supply and Services
Agreement), the escrow balance will be released to CPLX, and CPLX will reinvest
one-half of such amount into the Company by way of a long-term loan repayable
after the end of the four-year term of the Supply and Services Agreement;
(b) The Company may pay annual dividends to its
shareholders equal to up to 10% of the Buyers' equity contribution to, and
their additional investment in, the Company, provided that such dividends shall
be paid only if and to the extent that the after-tax profits of the Company
exceed the budgeted after-tax profits for such Contract Year. Any capital
gains from a sale of land and buildings shall not be included in the
calculation of after-tax profits. The RXL contract manager will agree with the
Buyers as to the dividends payable with respect to the Company's fiscal year to
account for the difference between the Company's fiscal years and the Contract
Years.
4.04 On-going Cooperation. Each of the Buyers agrees that
in the event of a complaint, action, suit, proceeding, hearing or investigation
involving the Sellers, or the activities of the Company prior to the Closing,
the Buyers shall cause the Company to provide all information, documents and
assistance that the Sellers may reasonably request. Without limiting the
generality of the foregoing sentence, each of the Buyers agrees to cause the
Company to grant access to the Real Property at all reasonable times to
employees or agents of the Sellers or of any governmental authorities as may be
required in order to take remedial actions with respect to environmental
problems on or adjacent to the Real Property.
5. RXL Right of First Refusal.
5.01 Grant of Right of First Refusal. In the event that
the Buyers (a) intend to transfer any shares in the Company ("Company Shares")
to a party that is not an Affiliate of CPLX or (b) intend to permit the Company
to sell, transfer or otherwise dispose (other than in the ordinary course of
business) of any asset or assets of the Company at the Lille site that formed
part of the assets of the Company on the Balance Sheet Date and that have an
aggregate value of at least 2,500,000FF (prior to the provision for diminution
in value) ("Assets") to a party that is not an Affiliate of CPLX, then RXL
shall have a right of first refusal to purchase all (but not less than all) of
the Company Shares or the Assets proposed to be transferred. In such case,
CPLX shall first deliver written notice (the "Notice") to RXL, in the manner
prescribed in Section 8 of this Agreement, to the effect that the Buyer(s)
intend(s) to dispose of Company Shares or the Company intends to dispose of the
Assets, as the case may be. The Notice must specify: (i) the name and address
of the party to which the Company Shares or Assets are proposed to be
transferred (the "Offeror"), (ii) the Company Shares or Assets proposed to be
transferred, (iii) the total consideration to be given for the Company Shares
or Assets and (iv) all other material terms and conditions of the proposed
transaction.
5.02. RXL Option to Purchase. RXL shall have the first
option to purchase all (but not less than all) of the Company Shares or Assets
proposed to be
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transferred for the consideration and on the terms and conditions specified in
the Notice. RXL must exercise such option, no later than 30 days after such
Notice is deemed under Section 8 hereof to have been delivered to it, by
written notice to CPLX. To the extent that the consideration proposed to be
paid by the Offeror for the Company Shares or the Assets consists of property
other than cash or a promissory note, the consideration required to be paid by
RXL may consist of cash equal to the value of such property, as determined in
good faith by agreement of CPLX and RXL. If RXL does not exercise its option
to purchase all of the Company Shares on offer or the Assets within the 30-day
period set forth above, then its option to purchase the Company Shares on offer
or the Assets shall lapse with respect to such Company Shares or the Assets and
such Company Shares or the Assets may be sold to the Offeror upon terms and
conditions not less favorable to the Buyer(s) or the Company, as the case may
be, than those set forth in the Notice. If the transfer of the Company Shares
or the Assets to the Offeror is not consummated, then the right of first
refusal of RXL with respect to such Company Shares or the Assets shall be
reinstated.
5.03 Consummation of Sale Upon Exercise of Option. In the
event that RXL duly exercises its option to purchase Company Shares or the
Assets, the closing of such purchase shall take place not later than 30 days
after the date of the exercise by RXL of its option.
5.04. No Transfer of Rights. The rights of RXL under this
Section 5 may not be transferred or assigned by RXL; provided, however, that if
RXL exercises the option to purchase Company Shares or the Assets, the purchase
may be effected through one or more Affiliates of RXL.
5.05 Application of Right of First Refusal. Any sale or
other disposition by the Buyers of Company Shares or by the Company of Assets,
other than in compliance with Section 5 of this Agreement, shall be void.
Notwithstanding the foregoing, (a) the Buyers shall be free to pledge the
Company Shares to a third-party lender as security for a loan, and (b) the
Company shall be free to grant a security interest in, or otherwise pledge, its
assets or any portion thereof to a third-party lender as security for a loan by
such lender to the Company. In the event of such a pledge of the Company
Shares or Company assets, the Buyers shall notify the lender that the Company
Shares or assets are subject to the right of first refusal contained in this
Section 5 and to the covenants contained in Section 4.02 above. Any such lender
to a Buyer or the Company may execute upon the Company Shares or the assets of
the Company, as the case may be, in accordance with such security interest or
pledge of assets, without the Buyer or the Company, as the case may be, having
to comply with the right of first refusal provision set forth in this Section
5. This Section 5 shall not apply to any sale or transfer of Company Shares or
of assets of the Company to an Affiliate of CPLX, provided that such Affiliate
agrees to be bound by this right of first refusal in favor of RXL.
5.06 Best Efforts. In the event that Company Shares or
Assets are seized by or on behalf of a creditor or creditors of the Buyers or
the Company, the Buyers and/or the Company shall use best efforts to cause the
party having possession of such Company Shares or Assets to offer such Company
Shares or Assets for sale to RXL as though the right of first refusal set forth
in this Section 5 continued to apply to such
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Company Shares or Assets; provided, however, that the Buyers or the Company, as
the case may be, may purchase the Company Shares or Assets from the relevant
creditor(s) without complying with this Section 5.06. In the event of such a
purchase by the Buyers or the Company, the right of first refusal provisions in
this Section 5 shall continue to apply to any further transfer of Company
Shares or Assets.
5.07 Termination. The provisions of this Section 5 shall
lapse and be of no further force or effect after May 23, 2000.
6. Dispute Resolution.
6.01 General. In the event that any dispute should arise
between the parties hereto with respect to any matter covered by this
Agreement, the parties (with RXL acting in all cases on its own behalf and on
behalf of RXSA, and CPLX acting in all cases on its own behalf and on behalf of
CPLX Ltd.) shall resolve such dispute in accordance with the procedures set
forth in this Section 6.
6.02 Consent of the Parties. In the event of any dispute
between the parties with respect to any matter covered by this Agreement, CPLX
and RXL shall first use their best efforts to resolve such dispute between
themselves. If they are unable to resolve the dispute within 30 calendar days
after the commencement of efforts to resolve the dispute, the dispute will be
submitted to arbitration in accordance with Section 6.03 hereof.
6.03 Arbitration. All disputes arising in connection with
this Agreement shall be finally settled by binding arbitration conducted in
English under the Rules of Conciliation and Arbitration of the International
Chamber of Commerce by one or more arbitrators appointed in accordance with
such Rules. Any arbitration conducted pursuant to this Section 6.03 will be
conducted in London, England. The arbitrators may proceed to an award
notwithstanding the failure of one party to participate in the proceedings.
The determination of the arbitrators as to the resolution of any dispute shall
be binding and conclusive upon all parties hereto. The prevailing party in any
arbitration shall be entitled to an award of reasonable attorneys' fees
incurred in connection with the arbitration. The non-prevailing party shall
pay such fees, together with the fees of the arbitrators and the costs and
expenses of the arbitration. Any arbitration award may be entered in and
enforced by any court having jurisdiction thereover and the parties hereby
consent and commit themselves, solely for purposes of the enforcement of any
arbitration award, to the jurisdiction of the courts of England.
7. Brokers. Each of the Sellers represents and warrants that,
other than D.M.L. & Associes, no person, firm or corporation has acted in the
capacity of broker or finder on its behalf to bring about the negotiation of
this Agreement. The Sellers agree to pay all fees, expenses and other
compensation owed to D.M.L. & Associes, and agree to indemnify and hold
harmless the Buyers against any claims or liabilities asserted against them by
D.M.L. & Associes in relation to this Agreement or by any other person acting
or claiming to act as a broker or finder on behalf of the Sellers and their
Affiliates. Each of the Buyers represents and warrants that no person, firm or
corporation has acted in the capacity of broker or finder on its behalf to
bring about the negotiation of this
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Agreement. The Buyers agree to indemnify and hold harmless the Sellers against
any claims or liabilities asserted against it by any person acting or claiming
to act as a broker or finder on behalf of CPLX or its Affiliates.
8. Notices. Any notices or other communications required or
permitted hereunder shall be sufficiently given if delivered personally or sent
by international courier, addressed as follows, or to such other address of
which the parties may have given notice:
To the Buyers: The Cerplex Group, Inc.
1383 Bell Avenue
Tustin, CA 92680 USA
Attn: President, International Operations
With a copy to: Brobeck Hale and Dorr International
Veritas House
125 Finsbury Pavement
London EC2A 1NQ United Kingdom
Attn: David M. Ayres
To the Sellers: Rank Xerox - The Document Company SA
7, rue Touzet Gaillard
93586 Saint Ouen Cedex, France
Attn: Director of Legal Services
With a copy to: Rank Xerox Limited
Parkway
Marlow, Buckinghamshire
SL7 1YL, United Kingdom
Attn: Director of Legal Services
Unless otherwise specified herein, such notices or other communications shall
be deemed received (a) on the date delivered, if delivered personally, or (b)
two business days after being sent, if sent by international courier.
9. Miscellaneous.
9.01 Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns. This Agreement and the rights and
obligations of the parties hereunder may not be assigned without the prior
written consent of the other parties hereto. Any assignment in contravention
of this provision shall be void.
9.02 Entire Agreement; Amendments; Attachments.
This Agreement and the Contract of Warranty, and all Schedules and Exhibits
hereto and thereto, and all agreements and instruments delivered by the parties
simultaneously herewith and pursuant to the Contract of Warranty, represent the
entire understanding and agreement between
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the parties hereto with respect to the subject matter hereof and supersede all
prior oral and written commitments and understandings between such parties.
This Agreement may be amended only by a written instrument executed by the
Buyers and the Sellers. If the provisions of the Contract of Warranty or of
any Schedule or Exhibit to this Agreement or to the Contract of Warranty are
inconsistent with the provisions of this Agreement, the provisions of this
Agreement shall prevail. The Exhibits and Schedules attached hereto or to be
attached hereafter are hereby incorporated as integral parts of this Agreement.
9.03 Severability. Any provision of this Agreement
which is invalid, illegal or unenforceable in any jurisdiction shall, as to
that jurisdiction, be ineffective to the extent of such invalidity, illegality
or unenforceability, without affecting in any way the remaining provisions
hereof in such jurisdiction or rendering that or any other provision of this
Agreement invalid, illegal or unenforceable in any other jurisdiction.
9.04 Expenses. Except as otherwise expressly provided
herein, each of the parties will pay all of its own fees and expenses
(including, without limitation, legal and accounting fees and expenses) in
connection with the transactions contemplated hereby. In no event will any of
the fees or expenses incurred in connection with this transaction by the
Sellers or any of their Affiliates be billed to or paid by the Company after
the Closing except as specifically accrued at Closing and set forth in the
Provisional Balance Sheet.
9.05 Governing Law. This Agreement shall be governed by
and construed in accordance with English law.
9.06 Section Headings. The section headings are for the
convenience of the parties and in no way alter, modify, amend, limit or
restrict the contractual obligations of the parties.
9.07 Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall be deemed to be an original, but
all of which shall be one and the same document.
This Agreement has been duly executed by the parties as of the date
set forth above.
THE CERPLEX GROUP, INC.
By: __________________________
Title: _______________________
CERPLEX LIMITED
By: ___________________________
Title: ________________________
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<PAGE> 12
RANK XEROX - THE DOCUMENT
COMPANY SA
By: __________________________
Title: _______________________
RANK XEROX LIMITED
By: __________________________
Title: _______________________
12
<PAGE> 1
EXHIBIT 2.2
CONTRACT OF WARRANTY
Agreement made as of the 24th day of May, 1996 by and among The
Cerplex Group, Inc., a Delaware corporation ("CPLX"), and Cerplex Limited, an
English company ("CPLX Ltd."), on the one hand, and Rank Xerox - The Document
Company SA, a French societe anonyme ("RXSA"), and Rank Xerox Limited, an
English company ("RXL"), on the other hand. CPLX and CPLX Ltd. are sometimes
referred to collectively in this Agreement as the "Buyers" and RXSA and RXL are
sometimes referred to collectively in this Agreement as the "Sellers".
The Sellers together own all of the shares representing the capital
stock of Cerplex SAS, a French societe par actions simplifiee, being the legal
successor to Rank Xerox et Compagnie, a French societe en nom collectif (the
"Company"), with a capital stock of Twenty-Nine Million French Francs
(29,000,000FF) divided into 290,000 shares with a nominal value of 100FF each
(collectively, the "Shares"). This Agreement is being entered into in
connection with a transaction in which the Buyers will purchase from the
Sellers all of the Shares. A Stock Purchase Agreement among the Buyers and the
Sellers, dated the date of this Agreement (the "Stock Purchase Agreement"),
sets forth the terms and conditions upon which the Buyers will purchase the
Shares from the Sellers.
In consideration of the mutual promises made in this Agreement, and in
consideration of the representations, warranties and covenants contained in
this Agreement and in the Stock Purchase Agreement, the parties agree as
follows:
1. Representations and Warranties of the Sellers. Each of the
Sellers, severally and not jointly, represents and warrants to the Buyers that
the statements made by such Seller in this Section 1 are true and correct.
Attached to this Agreement is a schedule of exceptions to the representations
and warranties of the Sellers set forth in Sections 1 and 2 of this Agreement
(the "Disclosure Schedule"). The Disclosure Schedule is arranged in paragraphs
corresponding to the numbered and lettered paragraphs contained in this Section
1 and in Section 2, and the disclosures in any paragraph of the Disclosure
Schedule shall qualify only the corresponding paragraph in this Section 1 or in
Section 2, as the case may be.
1.01 Shares. Such Seller owns or has the power to
transfer the number of Shares set forth opposite such Seller's name in Section
1.01 of the Disclosure Schedule, free and clear of any restrictions on transfer
(other than any restrictions contained in the statuts of the Company, all of
which have been or will be waived prior to Closing (as defined in the Stock
Purchase Agreement)), liens, charges, encumbrances, options or adverse claims
or rights. Such Seller is not a party to any option, warrant, contract or
other arrangement or commitment providing for the disposition or acquisition of
any capital stock of the Company (other than the Stock Purchase Agreement).
1.02 Authorization of the Transaction. Such Seller has
the full right, power and authority to enter into this Agreement and the Stock
Purchase Agreement and to perform its obligations under this Agreement and the
Stock Purchase Agreement. The execution and delivery by such Seller of this
Agreement and the Stock Purchase Agreement and the consummation by such Seller
of all transactions contemplated by this
<PAGE> 2
Agreement and the Stock Purchase Agreement have been duly authorized by all
requisite corporate action on the part of such Seller. This Agreement and the
Stock Purchase Agreement have been duly executed by such Seller and each
constitutes a valid and legally binding obligation of such Seller, enforceable
against such Seller in accordance with its terms.
1.03 Organization. Such Seller is a societe anonyme duly
organized, and validly existing under the laws of the Republic of France, in
the case of RXSA, and a company duly organized and validly existing under the
laws of England and Wales and not in liquidation, in the case of RXL.
1.04 Non-Contravention. Such Seller is not a party to,
subject to or bound by any agreement or any judgment, order, writ, prohibition,
injunction or decree of any court or other governmental body which would
prevent the execution, delivery or performance of this Agreement or the Stock
Purchase Agreement by such Seller. Neither the execution and delivery of this
Agreement or the Stock Purchase Agreement, nor the consummation of the
transactions contemplated by this Agreement or the Stock Purchase Agreement,
will conflict with or violate any provision of the corporate charter documents
of such Seller.
1.05 Broker's Fees. Except as set forth in Section 7 of
the Stock Purchase Agreement, no broker or finder has acted for such Seller in
connection with the transactions contemplated by this Agreement or the Stock
Purchase Agreement.
1.06 Disclosure. No representation or warranty by such
Seller in this Agreement or the Stock Purchase Agreement, and no statement
contained in the Disclosure Schedule or any other document, certificate or
other instrument delivered or to be delivered by or on behalf of such Seller or
the Company or any of their respective Affiliates pursuant to this Agreement or
the Stock Purchase Agreement, contains or will contain any untrue statement of
a material fact or omits or will omit to state any material fact necessary to
make the statements contained herein or therein, in light of the circumstances
in which they were or will be made, not false or misleading. For purposes of
this Agreement, "Affiliate" shall have the meaning ascribed to such term in the
United States Securities Act of 1933, as amended.
2. Representations of the Sellers Regarding the Company. Each of
the Sellers, jointly and severally, represents and warrants to the Buyers that
the statements made in this Section 2 are true and correct. For purposes of
this Agreement, any statement that is made "to the knowledge" or "to the best
knowledge" of the Sellers shall be deemed to include facts and circumstances
known, or that should have been known, to any of the managers of the Company
immediately prior to the Closing.
2.01 Organization. The Company is a societe par actions
simplifiee duly organized, validly existing and in good standing under the laws
of the Republic of France, and has all requisite power and authority (corporate
and other) to own its properties, to carry on its business as now being
conducted, to execute and deliver the agreements contemplated by Section 3.01
of the Stock Purchase Agreement, and to consummate the transactions
contemplated thereby. Neither the conduct of the Company's business nor its
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<PAGE> 3
ownership or leasing of property requires it to be qualified to do business in
any jurisdiction other than France. A copy of the statuts of the Company have
been previously delivered to the Buyers, are complete and correct, and no
amendments have been made thereto or have been authorized since the date of
such copy. The Company is not in violation of any provision of its statuts.
2.02 Capitalization. The Company's capital stock is as
set forth in Section 2.02 of the Disclosure Schedule. All of the shares of the
Company's capital stock have been, and on the Closing Date will be, validly
issued and fully paid, and no other shares or other securities have been
authorized for issuance for any purpose. There are no outstanding or
authorized options, warrants, rights, contracts, rights to subscribe,
conversion rights or other agreements or commitments to which the Company is a
party or by which the Company is bound providing for the issuance, disposition
or acquisition of any of the Company's capital stock.
2.03 Subsidiaries. The Company owns no equity interest
in any other legal entity.
2.04 Authorization. The execution and delivery by the
Company of the agreements contemplated by Section 3.01 of the Stock Purchase
Agreement, and the consummation by the Company of the transactions contemplated
thereby, have been duly authorized by all requisite corporate action, and such
agreements, when executed and delivered by the Company, will constitute valid
and legally binding obligations of the Company. The execution, delivery and
performance by the Company of such agreements will not, with or without the
giving of notice or the passage of time or both: (a) violate the provisions of
any law, rule or regulation applicable to the Company; (b) violate the
provisions of the statuts of the Company; (c) violate any judgment, decree,
order or award of any court, governmental body or arbitrator to which the
Company is a party or by which it is bound; or (d) conflict with or result in
the breach or termination of any term or provision of, or constitute a default
under, or cause any acceleration under, or cause the creation of any lien,
charge or encumbrance upon the properties or assets of the Company pursuant to,
any indenture, mortgage, deed of trust or other instrument or agreement to
which the Company is a party or by which the Company or any of its properties
is or may be bound. Section 2.04 of the Disclosure Schedule sets forth a true,
correct and complete list of all consents and approvals of third parties that
are required in connection with the consummation by the Company of the
transactions contemplated by this Agreement and the Stock Purchase Agreement.
2.05 Absence of Undisclosed Liabilities. Except as and to
the extent reflected and reserved against in the Provisional Balance Sheet
delivered in accordance with Section 2.01 of the Agreement, as of the Balance
Sheet Date (as defined in the Agreement), the Company had no liability or
obligation, secured or unsecured, whether accrued, absolute, contingent,
unasserted or otherwise, which was material as of the Balance Sheet Date to the
condition (financial or otherwise) of the assets, properties, business or
prospects of the Company, and, since the Balance Sheet Date, the Company has
not assumed or otherwise incurred any such material liability other than the
liabilities set forth in Section 2.05 to the Disclosure Schedule. For purposes
of this Section 2.05, "material" means any amount in excess of 500,000FF in the
aggregate.
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<PAGE> 4
2.06 Litigation. Except as set forth in Section 2.06 of
the Disclosure Schedule, the Company is not (a) subject to any unsatisfied
judgment, order, decree, stipulation or injunction, (b) a party (either as a
plaintiff or defendant) to any pending complaint, action, suit, proceeding,
hearing or investigation or (c) threatened to be made a party to any complaint,
action, suit, proceeding, hearing or investigation. There is no basis for any
such complaint, action, suit, proceeding, hearing or investigation.
2.07 Personal Property. The list of the Company's fixed
assets delivered to CPLX simultaneously with the Disclosure Schedule sets forth
(i) a true, correct and complete list of all items of tangible personal
property owned by the Company as of April 19, 1996; or not owned by the Company
but in the possession of and used by the Company, including without limitation
all tooling (collectively, the "Personal Property"); and (ii) a description of
the owner of, and any agreement relating to the use of, each item of Personal
Property not owned by the Company. Except as disclosed in Section 2.07 of the
Disclosure Schedule: (a) as of the Closing, the Company owns each item of
Personal Property free and clear of all liens, leases, encumbrances or claims,
other than items, not material in aggregate amount, disposed of by the Company
in the ordinary course of business since April 19, 1996; (b) each item of
Personal Property owned by the Company is in good operating condition and
repair, normal wear and tear excepted, and normal maintenance has been
consistently performed with respect to it; and (c) the Company owns or
otherwise has the right to use all of the Personal Property now used or useful
in the operation of its business or the use of which is necessary for or useful
in the performance of any material contract to which it is a party.
2.08 Intangible Property. Section 2.08 of the Disclosure
Schedule sets forth, as of the Closing Date, (i) a true, correct and complete
list or description of all items of intangible personal property, including,
but not limited to, trade secrets, know-how, any other confidential
information, patents, trade names, trademarks, trade name and trademark
registrations, copyrights and copyright registrations, and applications for any
of the foregoing ("Intangible Property") owned or used by the Company in its
business, specifying which items of Intellectual Property are owned by the
Company and which items are owned by a third party; and (ii) a true, correct
and complete list of all licenses or similar agreements or arrangements to
which the Company is a party, either as licensee or licensor, with respect to
the Intangible Property. Except as otherwise disclosed in Section 2.08 of the
Disclosure Schedule:
(a) the Company is the sole and exclusive owner
of all right, title and interest in and to the Intangible Property, free and
clear of all liens, security interests, charges, encumbrances, equities or
other adverse claims;
(b) the Company has the right and authority to
use, and to continue to use in perpetuity after the Closing, the Intangible
Property in connection with the conduct of its business in the manner presently
conducted, and such use or continuing use does not and will not conflict with,
infringe upon or violate any rights of any other person, corporation or entity;
(c) there are no outstanding, nor to the best
knowledge of the Sellers, any threatened disputes or other disagreements with
respect to any licenses or
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<PAGE> 5
similar agreements or arrangements described in Section 2.08 of the Disclosure
Schedule or with respect to infringement by a third party of any of the
Intangible Property; and
(d) the Company has taken all steps reasonably
necessary to protect its right, title and interest in and to the Intangible
Property owned by it and the continued use of the Intangible Property owned by
third parties.
provided, however, that RXL reserves a free, perpetual, worldwide,
non-exclusive license, with right to sublicense Xerox Corporation and its
subsidiaries and affiliates, under any know-how and trade secrets transferred
by Xerox Corporation or its subsidiaries or affiliates to the Company, or
developed by the Company, prior to the Closing.
2.09 Real Property; Environmental Matters. Section 2.09
of the Disclosure Schedule contains a true, correct and complete list of (i)
the address and legal description of all real property owned by the Company
(the "Real Property") and (ii) all liabilities, liens, encumbrances, easements,
restrictions, reservations, rights, tenancies, agreements or other obligations
(collectively, "Exceptions") affecting the Real Property. On the Closing Date,
the Company has good, clear, record and marketable title to the Real Property,
free and clear of all Exceptions, other than those described in Section 2.09 of
the Disclosure Schedule. The transactions contemplated by this Agreement and
the Stock Purchase Agreement will not conflict with or give rise to any third
party preemptive right or right of first refusal. The Company is neither the
lessor nor the lessee of any real property. Except as set forth in Section
2.09 of the Disclosure Schedule:
(a) there is no pending or threatened
condemnation proceeding or seizure by public authorities with respect to the
Real Property;
(b) all of the buildings, fixtures and other
improvements located on the Real Property are in good operating condition and
repair, normal wear and tear excepted;
(c) the Real Property complies with the
requirements of all building, zoning, health, safety, environmental, pollution
control, waste products, sewage control and other similar applicable statutes,
laws, codes, ordinances, rules, orders, regulations and decrees (collectively,
the "Governmental Regulations") of all governmental agencies having
jurisdiction over the Real Property;
(d) no environmentally hazardous substance
(including without limitation any asbestos) has been discharged or otherwise
introduced onto the Real Property by the Company or any third party, and
neither the Company nor any of its affiliates has ever commissioned any study
or report from outside consultants with respect to any such hazardous
substances on the Real Property; and
(e) the Company is not in violation of any law,
ruling, order, decree, regulation, permit, or other environmental or hazardous
waste requirement applicable to the Company or the Real Property, relating to
health, safety, pollution,
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<PAGE> 6
hazardous waste, environmental or other similar matters, which has not been
entirely corrected or which is in the process of being corrected and which will
be corrected promptly and at the expense of the Sellers.
2.10 Tax Matters. The Company has filed all tax
returns required to be filed and paid all taxes, interest, penalties,
assessments and deficiencies which have become due or which have been claimed
to be due, including without limitation income, franchise, real estate, capital
gains, registration, VAT and customs duties. All taxes that the Company is or
was required to withhold or collect (including without limitation VAT and
withholding taxes on employee wages) have been duly collected and, to the
extent required, paid to the proper governmental authority. Except as set
forth in Section 2.10 of the Disclosure Schedule, the Company is not currently
the subject of any tax or customs investigation or proceeding nor is any
investigation or proceeding threatened.
2.11 Contracts and Commitments.
(a) Section 2.11 of the Disclosure Schedule
contains a true, complete and correct list and description, as of the Closing
Date, of the following contracts and agreements, whether written or oral
(collectively, the "Contracts"):
(i) all loan agreements, indentures,
mortgages, guaranties, pledges, conditional sale, title retention or security
agreements to which the Company is a party or by which the Company or any of
its property is bound;
(ii) all collective bargaining
agreements, employment and consulting agreements, executive compensation plans,
bonus plans, deferred compensation agreements, retirement plans and other
plans, agreements, arrangements or commitments with respect to employee
benefits to which the Company is a party or by which the Company or any of its
property is bound;
(iii) all agency or similar agreements to
which the Company is a party;
(iv) all contracts, agreements or other
understandings or arrangements between the Company and the Sellers or any of
their Affiliates directly affecting the business of the Company after the
Closing; and
(v) all other material contracts,
agreements, commitments, purchase orders or other understandings or
arrangements to which the Company is a party.
(b) Except as set forth in Section 2.11 of the
Disclosure Schedule:
(i) each Contract is a valid and binding
agreement of the Company, enforceable in accordance with its terms;
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(ii) the Company is not in breach of or
default under any Contract, and no event has occurred which with the passage of
time or giving of notice or both would constitute such a default, result in a
loss of rights or result in the creation of any lien, charge or encumbrance,
thereunder or pursuant thereto; and
(iii) to the best knowledge of the
Company, each Contract will remain in force after the Closing, and the
transactions contemplated by this Agreement and the Stock Purchase Agreement
shall not automatically terminate any Contract or give the other party thereto
the right to terminate any Contract.
(c) There are no accrued and unfunded liabilities
with respect to any Contract which liability relates to any period prior to the
Closing Date.
(d) True, correct and complete copies of all
Contracts have previously been delivered or made available by the Company or
the Sellers to the Buyers.
2.12 Permits. The Company has all requisite governmental
licenses, permits and certificates necessary to conduct its business and own
and operate its assets (collectively, the "Permits"). Section 2.12 of the
Disclosure Schedule sets forth a true, correct and complete list of all such
Permits, copies of which have previously been delivered by the Company or the
Sellers to the Buyers.
2.13 Employee Relations. The Company is in compliance
with all applicable laws respecting employment and employment practices, terms
and conditions of employment, and wages and hours, and there are no arrears in
the payment of wages or social security taxes. The Company has no continuing
obligation for health, life, medical insurance or other similar fringe benefits
to any former employee of the Company. The Company has no accrued or unfunded
liabilities with respect to employees who have been terminated or given notice
of termination prior to the Closing Date. The Company has provided to the
Buyers a true, correct and complete list of the payroll of the Company as at
the Closing Date, including the job descriptions and salary or wage rates of,
and bonuses payable to, each of its employees. Except as set forth in Section
2.13 of the Disclosure Schedule, there is no strike, walkout or other labor
disruption under way or threatened against the Company.
2.14 Absence of Threatened Changes or Events. The Sellers
have no knowledge of any existing or threatened occurrence, event or
development which, as far as can be reasonably foreseen, could have a material
adverse effect on the business, properties, assets, condition (financial or
otherwise) or prospects of the Company or prevent it from continuing its
business after the Closing substantially as conducted prior to the Closing,
except as specifically contemplated by this Agreement, the Stock Purchase
Agreement and the other agreements contemplated hereby and thereby.
2.15 Customers and Suppliers. The Company has provided to
the Buyers a true, correct and complete list of the names and addresses of (a)
each customer of the Company as at the Closing Date and (b) each supplier of
the Company as at the Closing Date, other than suppliers that are affiliates of
RXSA. Except as set forth in Section 2.15 of the Disclosure Schedule, the
Company is not more than 30 days in arrears in any trade
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accounts payable or other payments owing to any supplier. Section 2.15 of the
Disclosure Schedule sets forth all prepayments and deposits which have been
received by the Company as of the date hereof from customers for products to be
shipped, or services to be performed, after the Closing Date.
2.16 Banking Facilities. Section 2.16 of the Disclosure
Schedule sets forth a true, correct and complete list of each financial
institution in which the Company has an account or safety deposit box and the
numbers of the accounts or safety deposit boxes maintained by the Company at
such financial institution and the names of all persons authorized to draw on
each such account or to have access to any such safety deposit box facility.
2.17 Powers of Attorney; Suretyships. Except as set forth
in Section 2.17 of the Disclosure Schedule, the Company has no general or
special powers of attorney outstanding (whether as grantor or grantee thereof)
nor any obligation or liability (whether actual, accrued, accruing, contingent
or otherwise) as guarantor, surety, co-signer, endorser, co-maker, indemnitor
or otherwise in respect of the obligation of any person or legal entity.
2.18 Disclosure. The information concerning the Company
set forth in this Agreement, the Stock Purchase Agreement, the Disclosure
Schedule, and any document, statement or certificate furnished to the Buyers by
or on behalf of the Sellers or the Company or any of their respective
Affiliates pursuant to this Agreement or the Stock Purchase Agreement, does not
contain any untrue statement of a material fact nor does it omit to state any
material fact necessary to make the statements contained herein or therein, in
light of the circumstances in which they were made, not false or misleading.
3. Representations of the Buyers. Each of the Buyers, severally
and not jointly, represents and warrants to the Sellers that the statements
made by such Buyer in this Section 3 are true and correct:
3.01 Authorization of the Transaction. Such Buyer has the
full right, power and authority to enter into this Agreement and the Stock
Purchase Agreement and to perform its obligations under this Agreement and the
Stock Purchase Agreement. The execution and delivery by such Buyer of this
Agreement and the Stock Purchase Agreement and the consummation by such Buyer
of all transactions contemplated by this Agreement and the Stock Purchase
Agreement have been duly authorized by all requisite corporate action on the
part of such Buyer. This Agreement and the Stock Purchase Agreement have been
duly executed by such Buyer and each constitutes a valid and legally binding
obligation of such Buyer, enforceable against it in accordance with its terms.
3.02 Organization. CPLX represents and warrants that it
is a corporation duly organized, validly existing and in good standing under
the laws of the State of Delaware, USA. CPLX Ltd. represents and warrants that
it is a company duly organized and validly existing under the laws of England
and Wales and that it is not in liquidation.
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3.03 Non-Contravention. Such Buyer is not a party to,
subject to or bound by any agreement or any judgment, order, writ, prohibition,
injunction or decree of any court or other governmental body which would
prevent the execution, delivery or performance of this Agreement or the Stock
Purchase Agreement by such Buyer. Neither the execution and delivery of this
Agreement or the Stock Purchase Agreement, nor the consummation of the
transactions contemplated by this Agreement or the Stock Purchase Agreement,
will conflict with or violate any provision of the organizational documents of
such Buyer or of any agreement with its bankers.
3.04 Broker's Fees. No broker or finder has acted for
such Buyer in connection with the transactions contemplated by this Agreement
or the Stock Purchase Agreement.
3.05 Disclosure. No representation or warranty by such
Buyer in this Agreement or the Stock Purchase Agreement, and no statement
contained in any other document, certificate or other instrument delivered by
or on behalf of such Buyer pursuant to this Agreement or the Stock Purchase
Agreement, contains any untrue statement of a material fact or omits to state
any material fact necessary to make the statements contained herein or therein,
in light of the circumstances in which they were made, not false or misleading.
3.06 Employee Severance Pay. The Buyers shall cause the
Company to be solely responsible for any severance cost relating to or
resulting from termination after the Closing Date of any employment contract of
the Company's employees.
4. Indemnification
4.01 Indemnification By Sellers. Each of the Sellers,
jointly and severally, hereby indemnifies and holds harmless each of the Buyers
and, if the Closing occurs, the Company, from and against all claims, damages,
losses, liabilities, and direct and indirect costs and expenses (including,
without limitation, settlement costs and any reasonable legal, accounting or
other expenses for defending any actions or threatened actions) (collectively,
the "Losses") in connection with each and all of the following:
(a) any material misrepresentation or breach of
any representation or warranty made by such Seller in this Agreement or in the
Stock Purchase Agreement;
(b) any material breach of any covenant,
agreement or obligation of such Seller or the Company contained in this
Agreement, the Stock Purchase Agreement or any other agreement, instrument or
document contemplated by this Agreement or the Stock Purchase Agreement;
(c) any misrepresentation contained in any
statement, certificate or schedule furnished by such Seller or the Company
pursuant to this Agreement or the Stock Purchase Agreement or in connection
with the transactions contemplated by this Agreement or the Stock Purchase
Agreement;
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<PAGE> 10
(d) any violation by the Company (or by RXSA,
while it was owner of the Real Property) of, any failure by the Company (or
RXSA) to comply with, or any other liability of the Company (or RXSA, as owner
or former owner of the Real Property) under any law, ruling, order, decree,
regulation or zoning, environmental or permit requirement applicable to the
Company (or RXSA, as owner or former owner of the Real Property), its assets or
its business, regardless of when issued, which violation or failure occurred
prior to the Closing, whether or not any such violation or failure to comply
has been disclosed to the Buyers, including any costs incurred by the Buyers or
the Company (A) in order to bring the Company into compliance with applicable
environmental laws (including without limitation remediation of the surface and
subsurface soil and groundwater on or adjacent to the Real Property) or (B) in
order to remove all asbestos from the Real Property and to monitor the physical
state of the asbestos prior to completion of such removal, and to compensate
any third parties for injuries sustained as a result of exposure to such
asbestos;
(e) any warranty claim or product liability claim
relating to (i) products manufactured or sold by the Company prior to the
Closing Date or (ii) the Company's business or operation prior to the Closing
Date;
(f) except as otherwise provided in the Stock
Purchase Agreement, in Section 3.06 of this Agreement or agreed in writing
between the parties, any tax, social payment or customs liabilities of the
Company arising from this transaction or from actions prior to the Closing
Date;
(g) all damages, costs and expenses incurred by
the Company in connection with the pending legal action by ITO; and
(h) all fees, costs, expenses and claims by
contractors, sub-contractors or other service providers incurred in connection
with refurbishing portions of the Real Property formerly leased from Danzas.
4.02 Indemnification By Buyers. Each of the Buyers,
jointly and severally, hereby indemnifies and holds harmless each of the
Sellers and, if the Closing does not occur, the Company, from and against all
Losses in connection with each and all of the following:
(a) any material misrepresentation or breach of
any representation or warranty made by such Buyer in this Agreement or in the
Stock Purchase Agreement;
(b) any material breach of any covenant,
agreement or obligation of such Buyer contained in this Agreement, the Stock
Purchase Agreement or any other agreement, instrument or document contemplated
by this Agreement or the Stock Purchase Agreement; or
(c) any misrepresentation contained in any
statement, certificate or schedule furnished by such Buyer pursuant to this
Agreement or the Stock Purchase Agreement or in connection with the
transactions contemplated by this Agreement or the Stock Purchase Agreement.
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<PAGE> 11
4.03 Claims for Indemnification. Whenever any claim shall
arise for indemnification under this Section 4, the party seeking
indemnification (the "Indemnified Party") shall promptly notify the party
required to provide indemnification (the "Indemnifying Party") of the claim
and, when known, the facts constituting the basis for such claim and, upon
request, give access to the Indemnifying Party to all relevant records and
documents in the possession or control of the Indemnified Party and any part of
the Company premises pertaining to the claim. In the event of any such claim
for indemnification hereunder resulting from or in connection with any claim or
legal proceedings by a third party, the notice shall specify, if known, the
amount or an estimate of the amount of the liability arising therefrom. The
Indemnified Party shall not settle or compromise any claim by a third party for
which it is entitled to indemnification hereunder without the prior written
consent, which shall not be unreasonably withheld, conditioned or delayed, of
the Indemnifying Party; provided, however, that if suit shall have been
instituted against the Indemnified Party and the Indemnifying Party shall not
have taken control of such suit after notification thereof as provided in
Section 4.04 of this Agreement, the Indemnified Party shall have the right to
settle or compromise such claim upon giving notice to the Indemnifying Party as
provided in Section 4.04; and provided further, that if such suit shall cause a
disruption in the business of the Company (whether as a result of an injunction
or otherwise), then the Indemnified Party shall have the right to take all
actions, including without limitation the right to settle or compromise such
claim, necessary in the sole judgment of the Indemnified Party to eliminate
such business disruption.
4.04 Defense by the Indemnifying Party. In connection with
any claim which may give rise to indemnity hereunder resulting from or arising
out of any claim or legal proceeding by a person other than the Indemnified
Party, the Indemnifying Party, at its sole cost and expense, may, upon written
notice to the Indemnified Party, assume the defense of any such claim or legal
proceeding if the Indemnifying Party acknowledges to the Indemnified Party in
writing the obligation of the Indemnifying Party to indemnify the Indemnified
Party with respect to all elements of such claim. If the Indemnifying Party
assumes the defense of any such claim or legal proceeding, the Indemnifying
Party shall select counsel reasonably acceptable to the Indemnified Party to
conduct the defense of such claim or legal proceeding and at the sole cost and
expense of the Indemnifying Party shall take all steps necessary in the defense
or settlement thereof. The Indemnifying Party shall not consent to a
settlement of, or the entry of any judgment arising from, any such claim or
legal proceeding, without the prior written consent of the Indemnified Party
(which consent shall not be unreasonably withheld, conditioned or delayed).
The Indemnified Party shall be entitled to participate in (but not control) the
defense of any such action, with its own counsel and at its own expense. If
the Indemnifying Party does not assume the defense of any such claim or
litigation resulting therefrom within 30 days after the date notice of such
claim is delivered to the Indemnifying Party: (a) the Indemnified Party may
defend against such claim or litigation in such manner as it may deem
appropriate, including, but not limited to, settling such claim or litigation,
after giving notice of the same to the Indemnifying Party, on such terms as the
Indemnified Party may deem appropriate, and (b) the Indemnifying Party shall be
entitled to participate in (but not control) the defense of such action, with
its counsel and at its own
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<PAGE> 12
expense. If the Indemnifying Party thereafter seeks to question the manner in
which the Indemnified Party defended such third party claim or the amount or
nature of any such settlement, the Indemnifying Party shall have the burden to
prove by a preponderance of the evidence that the Indemnified Party did not
defend or settle such third party claim in a reasonably prudent manner.
4.05 Payment of Indemnification Obligation. All
indemnification payments by the Indemnifying Party hereunder shall be made
within thirty (30) days after (a) such claim is accepted by the Indemnifying
Party or (b) final judgment is rendered thereon by an arbitration tribunal or
court of competent jurisdiction, and shall be effected by payment of cash or
delivery of a cashier's or certified check in the amount of the indemnification
liability. Payment shall be made to the Indemnified Party making such claim,
provided that, if the Buyers are the Indemnified Party, they may elect to have
payment made to the Company.
4.06 Survival of Representations; Claims for
Indemnification. All representations and warranties made by the Sellers and
the Buyers in this Agreement or the Stock Purchase Agreement, or in any
instrument or document furnished in connection with this Agreement or the Stock
Purchase Agreement or the transactions contemplated hereby or thereby, shall
survive the Closing and any investigation at any time made by or on behalf of
the Indemnified Party for a period of six (6) years. All such representations
and warranties shall expire on the sixth anniversary of the Closing Date,
except for claims, if any, (a) asserted in writing prior to such sixth
anniversary identified as a claim for indemnification pursuant to this Section
4, or (b) which are based upon fraud by any of the Buyers or the Sellers, which
shall survive until finally resolved and satisfied in full.
5. Miscellaneous. The provisions contained in Sections 6, 8 and
9 of the Stock Purchase Agreement shall apply with equal force and effect to
this Agreement as if set forth in this Agreement. References in Section 9.02
of the Stock Purchase Agreement to the "Contract of Warranty" shall be deemed
for purposes of this Agreement to be references to the Stock Purchase
Agreement, except that the provisions of the Stock Purchase Agreement shall
always govern in the event of any inconsistency between this Agreement and the
Stock Purchase Agreement.
This Agreement has been duly executed by the parties as of the date
set forth above.
THE CERPLEX GROUP, INC.
By: __________________________
Title: _______________________
CERPLEX LIMITED
By: __________________________
Title: _______________________
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<PAGE> 13
RANK XEROX - THE DOCUMENT
COMPANY SA
By: ___________________________
Title: ________________________
RANK XEROX LIMITED
By: ___________________________
Title: ________________________
13
<PAGE> 1
EXHIBIT 2.3
SUPPLY AND SERVICES AGREEMENT
Agreement made as of the 24th day of May, 1996 by and among The Cerplex
Group, Inc., a Delaware corporation ("CPLX"), Cerplex S.A.S., a French societe
par actions simplifiee (the "Company"), Rank Xerox - The Document Company S.A.,
a French societe anonyme ("RXSA"), and Rank Xerox Limited, an English company
("RXL").
CPLX and its wholly-owned subsidiary Cerplex Limited, an English
company("CPLX Ltd") have, simultaneously with the execution of this Agreement,
agreed to purchase from RXSA and RXL all of the issued shares of the Company.
The execution and delivery of this Agreement by the parties hereto is a
condition to the obligations of all of the parties to the agreement under which
CPLX and CPLX Ltd. will purchase the shares of the Company.
The Company owns and operates a plant in Lille, France (the
"Facility"), which has been operated as a Rank Xerox assembly plant. RXL
wishes to continue to have the Company carry on certain manufacturing, repair,
refurbishment and assembly functions for RXL for the period and upon the terms
and conditions set forth in this Agreement, and CPLX and the Company desire
that the Company perform such functions for RXL. RXSA has agreed to perform
certain functions on behalf of RXL in coordinating the arrangements hereunder
between RXL and the Company.
This Agreement and the attached Schedules set forth the terms and
conditions upon which the Company will manufacture, repair, refurbish and
assemble products for RXL during the first four Contract Years (as defined in
Section 1.01 below), as well as describing the procedures and underlying
principles to be followed by the parties in carrying out their respective
obligations hereunder. Schedule 4.0 hereto (and its various sections numbered
4.1 to 4.20) sets out specific procedures and general principles to be followed
by the parties hereto in carrying out their respective obligations under this
Agreement.
In consideration of the mutual promises made in this Agreement, the
parties agree as follows:
1. PURCHASE OF MANUFACTURING SERVICES BY RXL.
1.01 Minimum Commitment. During the term of this Agreement,
RXL agrees to purchase from the Company the services described herein and in
Schedule 4.0 hereto (collectively, the "Manufacturing Services") involving the
manufacture, repair, refurbishment and assembly of the products listed in
Schedule 1.01 hereto, as it may be amended from time to time ("Products") and
the related purchasing and inventory management functions. RXL agrees to
purchase Products in quantities sufficient to guarantee certain minimum levels
of manufacturing and assembly activity at the Facility (based upon Earned
Standard Hours, or "ESHs", worked by employees at the Facility). The agreed
defined number of ESHs per Product are set forth on Schedule 1.01 as per the
RXL Control Plan standards. The parties may agree in writing at any time to
amend Schedule 1.01 to add Products or delete Products or to change the number
of ESHs
<PAGE> 2
defined for any Product. The price of Manufacturing Services for each Product
ordered by RXL shall be determined by multiplying the number of defined ESHs
for such Product shown on Schedule 1.01 by the agreed hourly rate to be charged
per ESH (the "Hourly Rate"). The Hourly Rate during each of the four years of
this Agreement (each a "Contract Year") shall be agreed by RXL and the Company
in advance of such Contract Year. The first Contract Year shall begin as of
May 24, 1996 and each subsequent Contract Year shall commence as of May 24 of
such year. For the first Contract Year the Hourly Rate shall be FFr 362.65.
In the second Contract Year, the Hourly Rate will be FFr 355.40. In addition,
during the first two Contract Years, cost savings or penalties associated with
offsite storage (basis being FFr 14,386,000) and systems costs (basis being FFr
13,600,000), in each case relating to the Manufacturing Services provided
hereunder, will be passed back or charged to RXL without markup. In subsequent
Contract Years, the Hourly Rate shall be determined by the negotiation of the
Company and RXL, taking into account the overall volume of Manufacturing
Services ordered by RXL, the productivity and labor mix requested by RXL and
the simplification of the RXL Product mix over time.
1.02 Earned Standard Hours. The minimum number of ESHs
guaranteed by RXL during each of the four Contract Years is set forth on
Schedule 1.02 hereto. Section 1 of Schedule 4.1 also indicates the allocation
by fiscal quarter of the guaranteed ESHs for the four quarters of the first
Contract Year ("Contract Quarters"). The guaranteed ESHs during subsequent
Contract Years will be phased on a declining basis to meet the total minimum
committed ESHs for such Contract Year and the number of working days in each
Contract Quarter. Allocation of ESHs by Contract Quarter is to be used solely
to determine the amount and timing of payments, if any, by RXL to the Company,
in accordance with Section 1.04 below, for deficiencies in the quantities of
Manufacturing Services ordered, and to determine the amount of payments, if
any, for manufacturing cost variances in accordance with Section 1.07 below.
The numbers and types of Products that RXL may order the Company to manufacture
to meet RXL's commitment of guaranteed ESHs during any period shall be in the
sole discretion of RXL, but with due consideration to minimizing labor churning
and training required to meet the orders submitted by RXL, provided that it
complies with the provisions of this Agreement.
1.03 Forecasts and Orders. To assist the Company with
planning its personnel requirements and to comply with its raw materials
ordering obligations on behalf of RXL under this Agreement, RXL shall furnish
to the Company order forecasts in accordance with Schedule 4.1 and such orders
shall become firm orders in accordance with Schedule 4.1.
1.04 Allocation of ESHs; Deficiency Payments. For each
Product ordered by RXL to be manufactured by the Company, the number of ESHs
stated in Schedule 1.01 for such Product shall be credited towards the minimum
number of ESHs guaranteed by RXL for the Contract Quarter in which such Product
is ordered. A Product shall be deemed "ordered" in the Contract Quarter in
which shipment is scheduled to occur.
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<PAGE> 3
1.04.1 If RXL orders Manufacturing Services in any
Contract Quarter in excess of the amount required to be ordered during such
Contract Quarter, then such excess orders shall be allocated to the next
subsequent three Contract Quarters, if any, during the same Contract Year,
solely for purposes of determining whether RXL meets its guaranteed order
commitments. No such allocation shall be made to any subsequent Contract Year,
except as a result of the Company's delivering early. Notwithstanding any such
allocation, Products shall be manufactured and delivered at the times
determined in accordance with the orders covering their manufacture and
delivery and in compliance with the terms and conditions set forth in Schedule
4.0.
1.04.2 If Manufacturing Services ordered by RXL in
any Contract Quarter (including Manufacturing Services ordered during previous
Contract Quarters but allocated for minimum ESH commitment purposes to such
Contract Quarter in accordance with Subsection 1.04.1) are less than the amount
required to be ordered during such Contract Quarter, then the Company shall be
entitled to compensation from RXL for the entire amount of such shortfall. The
payment shall be equal to (a) the amount by which the number of ESHs for such
Contract Quarter that were guaranteed by RXL exceeds the number of ESHs
represented by Manufacturing Services actually ordered by RXL during such
Contract Quarter (including Manufacturing Services ordered during earlier
Contract Quarters and allocated to such Contract Quarter), times (b) the
applicable Hourly Rate. The Company shall invoice RXL at the end of such
Contract Quarter for any such deficiency payment in accordance with the
standard invoicing procedures set forth in Schedule 4.13.
1.05 Manufacturing Cost Risks on the Company. The
Company shall be entirely responsible for the manufacture of Products ordered
by RXL and shall be entitled to all of the benefits, and, except as provided in
Section 1.07 below shall bear all of the costs, if the actual number of ESHs
required to manufacture the Products is higher, in the one case, or lower, in
the other case, than the amount agreed between the parties. If additional
products are to be added from time to time to the list included in Schedule
1.01, the Company and RXL shall agree upon the number of ESHs defined to be
required to manufacture any such additional product(s) as defined by the RXL
MTM process. If the Company and RXL are unable to reach agreement on the
number of ESHs defined to be required to manufacture any such additional
product(s), then an independent arbitration will be commissioned by a qualified
MTM analyst.
1.06 Purchases Over Guaranteed Minimum. If during the
first Contract Year, RXL purchases Manufacturing Services in an amount
exceeding 750,000 ESHs then RXL shall be entitled to a percentage discount on
such additional Manufacturing Services purchased, as set forth in Schedule
1.06. RXL shall be entitled to similar discounts in later Contract Years,
based on the agreed RXL committed hours defined in Schedule 1.02 as long as the
Company's fixed costs are fully absorbed.
1.07 RXL Payments for Demand Fluctuation. In order to
allow for the fact that flat monthly volumes of ESHs cannot be guaranteed by
RXL given the existing fluctuations of the market demand for Products, a
monthly average 5% capacity utilization premium is included in the calculation
of direct labor costs, as part of the agreed Hourly Rate for the first Contract
Year (and shall be included in the Hourly Rate
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<PAGE> 4
in future Contract Years) to compensate for these fluctuations. This
compensation corresponds to a maximum monthly variation of +/- 5% of the
committed ESHs, provided that the total amount of committed ESHs for the year
is not affected. All reasonable manufacturing cost variances induced by volume
variations above the 5% within each Contract Quarter, resulting from RXL
business requirements or RXL supplier base performance, will be invoiced by the
Company to RXL at the end of the Contract Quarter in which such variances occur
in accordance with the standard invoicing provisions of this Agreement.
1.08 Product Substitution. If RXL wishes from time to
time to substitute or "swap" new Products for Products then listed on Schedule
1.01 (including without limitation swapping of electronic repair products for
FIC products, as contemplated by Section 2 of Schedule 4.1), then any such
swapping shall be subject to the written agreement of the Company and to
agreement by RXL and the Company on the ESHs applicable to the new Products and
as defined by MTM process.
1.09 Taxes. All prices for Manufacturing Services to be
provided by the Company are exclusive of all taxes, levies and assessments, and
RXL shall be responsible for the payment of all such taxes, levies and/or
assessments imposed on Manufacturing Services or Products purchased by RXL
hereunder, excluding taxes on the Company's net income from the transaction and
any taxes, levies and assessments relating to value added services recovered in
the ESHs charge by the Company. RXL shall be responsible for providing in a
timely manner all documentation, in the nature of exemption certificates or
otherwise, necessary to allow the Company to refrain from collections, such as
sales tax or VAT, which it would otherwise be obligated to make.
1.10 Purchasing and Customs Representative. The Company
shall act as the purchasing representative (commissionnaire a l'achat) for RXL
and, as such, shall order and purchase, on RXL's behalf and at RXL's expense,
all raw materials and supplies required to manufacture Products for RXL and
shall carry out customs procedures on behalf of RXL. The Company shall carry
out such purchasing and customs functions in accordance with an agreement
between RXL and the Company (the "Purchasing and Customs Agreement") and the
principles and procedures set forth in Schedule 4.0, which principles and
procedures are incorporated into the Purchasing and Customs Agreement. RXL
agrees to pay any and all duties, costs and charges related to the import into
and export from France of Inventories and Products, and to indemnify the
Company against any charges, levies or fines assessed by the French or other
customs authorities relating to the import or export of Inventories (as defined
in Section 2.02 below) or Products in accordance with the Purchasing and
Customs Agreement, other than any charges, levies and fines arising from the
negligence or default of the Company.
2. MANUFACTURE OF PRODUCTS AND PROVISION OF SERVICES
BY THE COMPANY
2.01 Manufacturing Obligation. During the term of this
Agreement, the Company agrees to manufacture Products ordered by RXL from time
to time and to
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<PAGE> 5
provide the Manufacturing Services in accordance with the terms of this
Agreement. Such Products shall be manufactured and delivered by the Company,
and shall meet the RXL multinational supplier Terms and Conditions (Exhibit
10-B hereto, as modified by Section 2.06 below) and Schedule 4.0. In the event
of any inconsistency between the terms set out in Exhibit 10-B and the
provisions of the Agreement, including the Schedules hereto, the terms of this
Agreement shall prevail. The Company shall bear all warranty-related repair and
replacement costs relating to faulty workmanship in the manufacture and
assembly of a Product during the three months after install or a maximum of six
months after shipment of such Product from the Company, whichever occurs first.
The Company warrants the Products to be free from Systemic Defects, where
"Systemic Defect" means an identical defect caused by faulty workmanship and
appearing in at least 5% of the Products occurring in any calendar quarter,
provided that the defect is identified by RXL within three months after install
or a maximum of six months after shipment by the Company of a Product with a
Systemic Defect, whichever occurs first. If a defect is caused by a part
purchased from an approved or currently used RX/XC supplier, all
warranty-related costs due to such defect shall be the sole responsibility of
RXL.
2.02 Ownership of Inventories and Products. All raw
materials, parts and inventories (including work-in-process) used to
manufacture Products, and all finished Products and RXL spares (collectively
"Inventories") shall at all times be and remain the property of RXL.
2.03 Maintenance of Inventories; Payment for Material and
Parts. The Company agrees to order, maintain, handle, store and maintain
variance in all Inventories in accordance with the principles and procedures
described in Schedule 4.0. Allowable variances for inventories are 2% on a
gross variance basis and 1% on a net variance basis. RXL agrees to pay, in
accordance with Schedule 4.0, for all raw materials and parts ordered by the
Company to meet its obligations to manufacture Products.
2.04 Tooling Ownership and Maintenance. All vendor
tooling for the manufacture of Products shall be owned, maintained and insured
by RXL. Assembly tooling identified as critical by RXL and listed in Schedule
2.04, as amended from time to time, shall be owned and insured by RXL and
maintained by the Company. All other assembly tooling shall be owned,
maintained and insured by the Company. In the event that RXL discontinues
Product lines, and in any event upon the expiration of this Agreement, the
assembly tooling for discontinued Products, if owned by the Company, may be
sold to RXL at the Company's discretion and upon RXL's agreement, at the
prevailing net book value thereof.
2.05 Invoicing and Payment. The Company shall invoice RXL
for Manufacturing Services provided under this Agreement, and RXL shall pay
such invoices, in accordance with the procedures set forth in Schedule 4.0.
All invoices shall be stated in French Francs.
2.06 Terms and Conditions. As stated in Section 2.01
above, the terms and conditions set forth in this Agreement, including the
Schedules hereto, shall prevail
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<PAGE> 6
over the provisions contained in Exhibit 10.B. Without limiting generality of
the foregoing the provisions of Exhibit 10.B shall be modified as follows:
(a) In Section A of Exhibit 10-B, the definitions are
excluded in their entirety and replaced by the following:
"Goods" shall mean Products.
"Specification" means the quality and reliability
specifications for Products as provided in Schedule 4.10.
"Order" means a firm order in accordance with Section 1.03.
"Buyer" means RXL or an affiliate of RXL entitled to purchase
Manufacturing Services.
"Seller" means the Company.
"Contract" means the Supply and Services Agreement of even
date herewith between the Buyer, the Seller and affiliates
of the Buyer.
(b) Section D is excluded in its entirety and replaced by
applicable provisions of Schedule 4.0 to the Agreement.
(c) Section E is excluded in its entirety and replaced by
applicable provisions of Schedule 4.0 to the Agreement.
(d) Clauses (ii), (vi), (viii) and (ix) of Section G are
excluded.
(e) Sections H and I are excluded.
(f) Clauses (ii) and (iii) of Section K are excluded.
(g) Sections L and M are excluded.
(h) Section N is excluded in its entirety and replaced by
the following:
"Seller hereby confirms that it is in
compliance with all applicable environmental, health and safety regulations".
(i) Sections Q, R, U, V and W are excluded.
3. ADDITIONAL OBLIGATIONS OF RXL
3.01 Supply of Returned Equipment. RXL agrees to
guarantee the Company an adequate supply of returned equipment (carcasses) to
enable the Company to support its obligations to manufacture Products in
accordance with orders received from RXL. Carcass modifications and
cannibalization will be dealt with in accordance with the RXL "Mods & Canns"
procedure and process referred to in Schedule 4.01 and cost impacts shall be
negotiated with the RXL Contract Manager.
3.02 Advance Payment for Product Purchases. In order to
assist the Company with meeting its working capital needs, RXL agrees to
advance to the Company
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at all times during the term of this Agreement an amount equal to one month's
advance payment for Manufacturing Services whose purchase is guaranteed under
this Agreement. For the first Contract Year, such advance payment shall equal
1/12 of the annualized ESHs for the first Contract Year times the Hourly Rate.
The amount of the advance payment shall be reduced (by applying the overage to
actual purchases by RXL of Manufacturing Services) with respect to future
contract years, to reflect the reduction in the amount of guaranteed purchases
by RXL in such future years, as shown on Schedule 1.02. If the Company is in
breach of any of its financial covenants under Section 4.02 of the Stock
Purchase Agreement of even date herewith, the advance payment may be withdrawn
and payments for Products will be made at the end of the month following the
month in which invoices are received by RXL.
3.03 Commercialization Expenses. It is the intention of
CPLX to introduce new manufacturing/repair/refurbishment/assembly activities at
the Facility during the term of this Agreement to replace the anticipated
reduction in the levels of Manufacturing Services purchased by RXL under this
Agreement. Schedule 1.02 sets forth the minimum and target number of ESHs the
Company anticipates such new activities will require in each of the Contract
Years. These additional activities may include additional manufacturing or
distribution activities by RXL or its affiliates, on which activities the
Company may be invited to submit a bid by the RXL Contract Manager. During the
first Contract Year, RXL pays CPLX in the Hourly Rate for all commercialization
expenses related to introduction of new activities, up to a total of
FFr10,000,000; a quarterly review of commercialization spending will take place
with the RXL contract manager. Any variance in spending below FFr 10 million
will be reimbursed by CPLX to RXL at the end of the first Contract Year.
Commercialization expenses include, but are not limited to, expenses incurred
for or by CPLX European sales executives, country sales teams, European
commercialization management, expensed tooling and equipment and facilities
management for new businesses and office automation specifically supporting new
business activities. In the event that, during the second Contract Year, the
additional activities introduced by the Company at the Facility (including
additional activities, if any, on behalf of RXL and its affiliates) fail to
achieve the minimum target level for such Contract Year of FFr20,400,000 of
added value, then RXL shall pay CPLX for all commercialization expenses during
the first Contract Quarter of the second Contract Year, up to a total of
FFr4,000,000. If in the second Contract Year the Company has in excess of
FFr37,200,000 of additional added value activities, RXL shall not pay any
commercialization expenses with respect to the second Contract Year. If
additional added value activities in the second Contract Year are between
FFr20,400,000 and FFr37,200,000, then RXL shall pay a percentage of the first
FFr4,000,000 of commercialization expenses for the first Contract Quarter of
the second Contract Year. Such percentage shall be determined by dividing (1)
FFr16,800,000 minus the added value of additional activities in excess of
FFr20,400,000 by (2) FFr16,800,000 and will be payable following fiscal year
end reconciliation. At the end of the second fiscal year, CPLX will invoice
RXL for commercialization expenses reasonably incurred during the Second
Contract Year, as calculated in this Section 3.03.
3.04 RX International Procurement Network. RXL shall make
the use of RXL's international procurement network available to the Company
during the term of this Agreement with respect to non-RXL procurements upon
terms and conditions to be
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agreed between the Company and RXL. In the event that the Company orders goods
through the RXL international procurement network other than for RXL, the order
shall clearly specify the principal on whose behalf it is placed.
4. INTELLECTUAL PROPERTY
4.01 Patents. RXL knows of no patent or other
intellectual property right that would apply to the Company's normal and
customary use of manufacturing or re-manufacturing tools, fixtures, and
equipment used by the Company to manufacture Products as at the date of this
Agreement, other than tools, fixtures and equipment owned by RXL.
4.02 Documentation. All RXL proprietary documentation,
drawings, software and the like pertaining to the manufacture, remanufacture,
calibration and acceptance testing of Product or components thereof remain the
property of RXL and shall be returned upon request of RXL upon termination of
the applicable Product line.
4.03 Return of RXL Property. All vendor and assembly
tooling and fixtures owned by RXL and used by the Company to provide
Manufacturing Services, and all associated documentation, drawings, software
and the like for such vendor and assembly tooling and fixtures, remain the
property of RXL and shall be returned upon the request of RXL upon termination
of the applicable Product line.
4.04 Use of RXL Property. The proprietary documentation,
drawings, software and the like described in Section 4.02 and the vendor and
assembly tooling and fixtures described in Section 4.03 shall be used by the
Company only in the provision of Manufacturing Services.
5. INTELLECTUAL PROPERTY INDEMNITY. RXL shall defend and
indemnify the Company from and against any damages, liabilities, costs and
expenses (including reasonable attorneys' fees and court costs) arising out of
any claim that the Products manufactured by the Company for RXL hereunder
infringe a valid patent, trade name, trademark, service mark or copyright or
infringe a trade secret of a third party, provided that (i) the Company shall
have promptly provided RXL written notice thereof and reasonable cooperation,
information, and assistance in connection therewith, and (ii) RXL shall have
sole control and authority with respect to the defense, settlement, or
compromise thereof. Should any Products manufactured hereunder become or, in
RXL's opinion, be likely to become the subject of such a claim, RXL may, at its
option, either procure for the Company the right to continue manufacturing such
Products, or replace or modify such Products so that they become
non-infringing. In such event, the Company may withhold further shipments of
infringing or potentially infringing Products. The Company shall have no
liability or obligation to RXL hereunder with respect to any patent, copyright
or trade secret infringement or claim thereof based upon compliance with
designs, plans or specifications of RXL.
6. PROPRIETARY INFORMATION. No proprietary information disclosed
by the Company to RXL or its affiliates or by RXL and its affiliates to the
Company in connection with this Agreement shall be disclosed to any person or
entity other than the
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recipient party's employees and contractors directly involved with the
recipient party's use of such information who are bound by written agreement to
protect the confidentiality of such information, and such information shall
otherwise be protected by the recipient party from disclosure to others with
the same degree of care accorded to its own proprietary information. To be
subject to this provision, information must be delivered in writing and
designated as proprietary, confidential, private data or the like or, if
initially delivered orally, must be confirmed in writing as proprietary within
30 days after the oral disclosure, provided that the contents of any software
programs contained in any Product or to be installed therein by the Company
shall be deemed to constitute proprietary information. Information will not be
subject to this provision if it is or becomes a matter of public knowledge
without the fault of the recipient party, if it was a matter of written record
in the recipient party's files prior to disclosure to it by the other party, or
if it was or is received by the recipient party from a third person under
circumstances permitting its unrestricted disclosure by the recipient party or
it was developed by employees or agents of the recipient party independently
of, and without reference to, any disclosing party's information. Upon
termination of this Agreement, each party shall promptly deliver to the other
all proprietary information of the other party in the possession or control of
such party and all copies thereof. The obligations under this Section 6 shall
continue for both parties for a period of two (2) years after provision by the
Company to RXL of Manufacturing Services under this Agreement.
7. FURTHER DEALINGS OF THE PARTIES. This Agreement contemplates
continuing review by the parties hereto of the respective obligations of the
parties and annual or occasional reviews of pricing, commitment levels and
other essential commercial terms of the relationship contemplated hereby. The
parties agree that they will in all cases act in good faith towards the other
parties hereto with respect to the subject matter of this Agreement and use
their best efforts to reach mutually satisfactory agreement on matters arising
hereunder.
8. DEFAULT AND TERMINATION
8.01 Events of Default. The following shall constitute
events of default by the Company under this Agreement:
(i) if the Company assigns this Agreement or any of its
rights or obligations hereunder (the word "assign" shall not include a transfer
of an interest in the Company made in compliance with Section 5 of the Stock
Purchase Agreement of even date herewith); or
(ii) if there is (w) a dissolution, termination of
existence, liquidation, insolvency or business failure of the Company, or the
appointment of a custodian or receiver of any part of the Company's property,
if such appointment is not terminated or dismissed within thirty (30) days; (x)
a composition or an assignment or trust mortgage for the benefit of creditors
by the Company; (y) the commencement by the Company of any proceeding under
applicable bankruptcy, reorganization, receivership, insolvency or other
similar law affecting the rights of creditors generally; or (z) the
commencement against the Company of any proceeding under applicable bankruptcy,
reorganization,
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receivership, insolvency or other similar law affecting the rights of creditors
generally, which proceeding is not dismissed within thirty (30) days; or
(iii) (A) shares of the Company, or assets of the Company
required for it to carry out its obligations hereunder, are seized by or on
behalf of a creditor or creditors of CPLX or the Company, (B) CPLX and/or the
Company has failed in its efforts to cause the party having possession of such
Company shares or assets to offer such Company shares or assets for sale to the
Company, CPLX or RXL or RXSA, and (C) RXL determines in its sole judgment that
the party having possession of the Company shares or assets will be unable to
perform the obligations of the Company hereunder.
It shall constitute an event of default by either party under this Agreement if
such party shall neglect or fail to perform or observe any of its material
obligations to the other hereunder and if, within 30 days after notice thereof
from the other party, such party has not either (x) cured such failure or (y),
if such failure cannot be cured within 30 days using reasonable efforts,
implemented a plan to cure such failure.
8.02 Remedies. If an event of default has occurred and
notice of such event of default has been given, but such event of default has
not been cured or an agreed plan for the cure of such default been implemented,
then within 30 days after such notice, and in addition to any other remedies
either party may have at law, the non-defaulting party may terminate this
Agreement. Upon any such termination, all obligations of the terminating party
shall cease except that (i) if the Company is the terminating party, RXL shall
remain obligated to purchase and pay for all Manufacturing Services subject to
firm orders on the date of termination to the extent that such Manufacturing
Services are provided by the Company in accordance with this Agreement and (ii)
if RXL is the terminating party, the Company shall remain obligated to provide
Manufacturing Services subject to firm orders on the date of termination unless
otherwise specified by RXL.
9. DISPUTE RESOLUTION.
9.01 General. In the event that any dispute should arise
between the parties hereto with respect to any matter covered by this
Agreement, the parties (with RXL acting in all cases on its own behalf and on
behalf of RXSA, and CPLX acting in all cases on its own behalf and on behalf of
the Company) shall resolve such dispute in accordance with the procedures set
forth in this Section 9.
9.02 Consent of the Parties. In the event of any dispute
between the parties with respect to any matter covered by this Agreement, CPLX
and RXL shall first use their best efforts to resolve such dispute between
themselves. If they are unable to resolve the dispute within 30 calendar days
after the commencement of efforts to resolve the dispute, the dispute will be
submitted to arbitration in accordance with Section 9.03 hereof.
9.03 Arbitration. All disputes arising in connection with
this Agreement shall be finally settled by binding arbitration conducted in
English under the Rules of Conciliation and Arbitration of the International
Chamber of Commerce by one or more arbitrators appointed in accordance with
such Rules. Any arbitration conducted pursuant
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to this Section 9.03 will be conducted in London, England. The arbitrators may
proceed to an award notwithstanding the failure of one party to participate in
the proceedings. The determination of the arbitrators as to the resolution of
any dispute shall be binding and conclusive upon all parties hereto. The
prevailing party in any arbitration shall be entitled to an award of reasonable
attorneys' fees incurred in connection with the arbitration. The
non-prevailing party shall pay such fees, together with the fees of the
arbitrators and the costs and expenses of the arbitration. Any arbitration
award may be entered in and enforced by any court having jurisdiction thereover
and the parties hereby consent and commit themselves, solely for purposes of
the enforcement of any arbitration award, to the jurisdiction of the courts of
England.
10. NOTICES. Any notices or other communications required or
permitted hereunder shall be sufficiently given if delivered personally or sent
by international courier, addressed as follows, or to such other address of
which the parties may have given notice:
To CPLX or
the Company: The Cerplex Group, Inc.
1383 Bell Avenue
Tustin, CA 92680 USA
Attn: President, International Operations
With a copy to: Brobeck Hale and Dorr International
Veritas House
125 Finsbury Pavement
London EC2A 1NQ United Kingdom
Attn: David M. Ayres
To RXL or RXSA: Rank Xerox - The Document Company SA
7, rue Touzet Gaillard
93586 Saint Ouen Cedex, France
Attn: Director of Legal Services
With a copy to: Rank Xerox Limited
Parkway
Marlow
Buckinghamshire
SL7 1YL United Kingdom
Attn: Director of Legal Services
Unless otherwise specified herein, such notices or other communications shall
be deemed received (a) on the date delivered, if delivered personally, or (b)
two business days after being sent, if sent by international courier.
11. MISCELLANEOUS.
11.01 Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns. This
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Agreement and the rights and obligations of the parties hereunder may not be
assigned without the prior written consent of the other parties hereto. Any
assignment in contravention of this provision shall be void.
11.02 Entire Agreement; Amendments; Attachments. This
Agreement and all Schedules hereto, and all agreements and instruments to be
delivered by the parties pursuant hereto, represent the entire understanding
and agreement between the parties hereto with respect to the subject matter
hereof and supersede all prior oral and written and all contemporaneous oral
negotiations, commitments and understandings between such parties. This
Agreement may be amended only by a written instrument executed by all of the
parties hereto. If the provisions of any Schedule to this Agreement are
inconsistent with the provisions of this Agreement, the provisions of this
Agreement shall prevail. The Schedules attached hereto or to be attached
hereafter are hereby incorporated as integral parts of this Agreement.
11.03 Severability. Any provision of this Agreement
which is invalid, illegal or unenforceable in any jurisdiction shall, as to
that jurisdiction, be ineffective to the extent of such invalidity, illegality
or unenforceability, without affecting in any way the remaining provisions
hereof in such jurisdiction or rendering that or any other provision of this
Agreement invalid, illegal or unenforceable in any other jurisdiction.
11.04 Force Majeure. In the event that the Company or RXL
is prevented from performing, or is unable to perform, any of its obligations
under this Agreement due to anything beyond its reasonable control and if such
party shall have used its best efforts to avoid such occurrence and minimize
its duration and has given prompt written notice to the other party, then the
affected party's performance shall be excused and the time for performance
shall be extended for the period of delay or inability to perform due to such
occurrence.
11.05 Waiver. The waiver by the Company or RXL of a breach
or a default of any provision of this Agreement by the other party shall not be
construed as a waiver of any succeeding breach of the same or any other
provision, nor shall any delay or omission on the part of either party to
exercise or avail itself of any right, power or privilege that it has, or may
have hereunder, operate as a waiver of any right, power or privilege by such
party.
11.06 No Agency. Nothing contained in this Agreement shall
be deemed to constitute the Company or RXL as the agent or representative of
the other party, or both parties as joint venturers or partners for any
purpose. Neither the Company nor RXL shall be responsible for the acts or
omissions of the other party, and neither party will have authority to speak
for, represent or obligate the other party in any way without prior written
authority from the other party, except to the extent specifically provided
herein.
11.07 Expenses. Except as otherwise expressly provided
herein, each of the parties will pay all of its own fees and expenses
(including, without limitation, legal and accounting fees and expenses) in
connection with the transactions contemplated hereby.
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11.08 Governing Law. This Agreement shall be governed by
and construed in accordance with English law.
11.09 Section Headings. The section headings are for the
convenience of the parties and in no way alter, modify, amend, limit or
restrict the contractual obligations of the parties. Without limiting the
generality of the foregoing, any information contained in any part of Schedule
4.0 is intended to have general application to all of such Schedule 4.0 and to
all portions of this Agreement, and the section references and headings therein
Schedule 4.0 are included for purposes of conveniences only.
11.10 Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall be deemed to be an original, but
all of which shall be one and the same document.
This Agreement has been duly executed by the parties as of the date
set forth above.
THE CERPLEX GROUP, INC.
By: __________________________
Title: _______________________
CERPLEX SAS
By: ___________________________
Title: ________________________
RANK XEROX - THE DOCUMENT
COMPANY SA
By: __________________________
Title: _______________________
RANK XEROX LIMITED
By: __________________________
Title: _______________________
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