PURCHASE AND SALE AGREEMENT
By and Between
Bell & Howell Company
(a Delaware corporation)
and
Eastman Kodak Company
(a New Jersey corporation)
Dated as of October 27, 2000
TABLE OF CONTENTS
ARTICLE I PURCHASE AND SALE OF STOCK AND ASSETS...............................1
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1.1 Purchase and Sale Transactions...................................1
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1.2 Purchase Price...................................................4
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1.3 Payments.........................................................5
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1.4 Purchase Price Allocation........................................5
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1.5 Contemporaneous Delivery.........................................5
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ARTICLE II CLOSING 5
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2.1 Time and Place of Closing........................................5
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2.2 Deliveries by Seller.............................................5
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2.3 Deliveries by Buyer..............................................6
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2.4 Deliveries by both Buyer and Seller..............................6
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2.5 Inability to Obtain Consents and Approvals.......................7
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2.6 Name Change and Transitional Trademark License...................8
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2.7 Staged Closings; Excluded Countries..............................8
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ARTICLE III WORKING CAPITAL ADJUSTMENT........................................9
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3.1 Closing Payment..................................................9
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3.2 Working Capital Closing Adjustment Payment......................10
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3.3 Intercompany Account............................................10
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ARTICLE IV REPRESENTATIONS AND WARRANTIES OF SELLER..........................11
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4.1 Organization and Qualification..................................11
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4.2 Authority Relative to this Agreement............................11
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4.3 Consents and Approvals; No Violations...........................13
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4.4 Financial Statements............................................13
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4.5 [Intentionally omitted.]........................................15
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4.6 No Default......................................................15
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4.7 Title to and Condition of Tangible Assets.......................15
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4.8 Intellectual Property...........................................16
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4.9 Material Commitments............................................20
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4.10 Arrangements with Affiliates...................................22
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4.11 Litigation and Claims..........................................22
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4.12 Non-Income Tax Matters.........................................22
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4.13 Employee Benefit Plans.........................................23
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4.14 Environmental Matters..........................................28
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4.15 Labor Matters..................................................28
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4.16 Absence of Certain Developments................................30
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4.17 Certain Interests..............................................31
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4.18 Insurance Policies.............................................32
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4.19 Banks..........................................................32
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4.20 Accounts Receivable............................................32
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4.21 Books and Records..............................................32
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4.22 [Intentionally omitted.].......................................32
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4.23 No Misrepresentation...........................................32
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4.24 Brokers and Finders............................................33
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4.25 Canadian Limited Partnership...................................33
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4.26 Insolvency of Seller's UK Subsidiary...........................33
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4.27 UK Taxation....................................................34
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4.28 Other UK Subsidiaries..........................................35
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4.29 Disclaimer.....................................................35
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ARTICLE V REPRESENTATIONS AND WARRANTIES OF BUYER............................35
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5.1 Corporate Organization; Etc.....................................35
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5.2 Authority Relative to this Agreement............................35
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5.3 Consents and Approvals; No Violations...........................36
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5.4 Financing.......................................................36
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5.5 Brokers and Finders.............................................36
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ARTICLE VI COVENANTS OF THE PARTIES..........................................37
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6.1 Conduct of the Business.........................................37
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6.2 Access to Information...........................................39
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6.3 Requisite Consents..............................................40
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6.4 Reasonable Efforts..............................................40
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6.5 Public Announcements............................................41
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6.6 Employee Matters................................................41
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6.7 Competition Filings.............................................56
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6.8 Transition Services.............................................56
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6.9 Noncompetition..................................................56
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6.10 Nonsolicitation of Employees...................................58
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6.11 Exclusivity....................................................59
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6.12 Pre-Closing Inventory Count....................................59
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6.13 [Intentionally omitted.].......................................59
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6.14 License of Certain Intellectual Property.......................59
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ARTICLE VII CONDITIONS TO CONSUMMATION OF THE TRANSACTION....................59
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7.1 Conditions to Each Party's Obligations..........................59
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7.2 Further Conditions to Seller's Obligations......................60
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7.3 Further Conditions to Buyer's Obligations.......................60
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ARTICLE VIII TERMINATION AND ABANDONMENT.....................................60
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8.1 Termination.....................................................60
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8.2 Procedure and Effect of Termination.............................61
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ARTICLE IX SURVIVAL AND INDEMNIFICATION......................................61
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9.1 Survival Periods and Indemnification............................61
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9.2 Indemnification.................................................62
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9.3 Indemnification Amounts.........................................62
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9.4 Claims..........................................................62
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9.5 Exclusive Remedy................................................64
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9.6 Miscellaneous...................................................64
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ARTICLE X MISCELLANEOUS PROVISIONS...........................................65
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10.1 Amendment and Modification.....................................65
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10.2 Extension; Waiver..............................................65
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10.3 No Waivers.....................................................65
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10.4 Entire Agreement; Assignment...................................65
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10.5 Validity.......................................................66
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10.6 Notices........................................................66
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10.7 Schedules; Due Diligence.......................................67
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10.8 Governing Law..................................................67
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10.9 Descriptive Headings...........................................68
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10.10 Counterparts..................................................68
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10.11 Expenses......................................................68
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10.12 Other Rules of Construction...................................68
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10.13 Authorship....................................................68
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10.14 Parties in Interest...........................................69
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10.15 Specific Performance..........................................69
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10.16 Accounting Principles.........................................69
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ANNEXES
A Glossary
B Working Capital Value Computation
C [intentionally omitted]
D Disclosure Annex
ATTACHMENTS
I Income Tax Disaffiliation Agreement
II Transitional Trademark License Agreement
III Scanner Supply Agreement
IV Transition Services Agreement
SCHEDULES OF THE DISCLOSURE ANNEX
1.1(b)(i)(a) Foreign Assets: UK and Ireland
1.1(b)(i)(b) Foreign Assets: France
1.4 Purchase Price Allocation
4.1(d) Qualifications - Imaging
4.3(b) Noncontravention
4.4(a)(i) Consolidated Balance Sheets for 1999 and 2000
4.4(a)(ii) Consolidated Statements of Operations for 1998 and 1999
4.4(a)(iii) Consolidated Statements of Operations for 2000
4.4(a)(iv) Consolidated Cash Flow Statements for 2000
4.4(a)(v) Consolidated Cash Flow Statement for 1998 and 1999
4.4(a)(vi) Reference Balance Sheet
4.4(b) Financial Statements: Exceptions
4.4(c)(i) Accounts Receivable: Exceptions
4.4(c)(ii) Accounts Receivable Reserves: Exceptions
4.4(d) Inventory Matters
4.7(a) Assets Not Being Transferred
4.7(b) Certain Tangible Assets
4.8(a)(i) Intellectual Property: Patents, Etc.
4.8(a)(ii) Intellectual Property: Trademarks, Etc.
4.8(a)(iii) Intellectual Property: Copyrights, Etc.
4.8(b) Business Software
4.8(c)(i) Licensed-In Intellectual Property
4.8(c)(ii) Licensed-Out Intellectual Property
4.8(e) Intellectual Property Ownership Exceptions
4.8(g) Intellectual Property Legal Proceedings
4.8(i) Intellectual Property License Exceptions
4.8(k) Software Exceptions
4.8(n) Trademark Registration Exceptions
4.9 Material Commitments
4.10 Arrangements with Affiliates
4.11(a) Pending or Threatened Litigation and Claims (Imaging Group)
4.11(b) Pending or Threatened Litigation and Claims (Seller)
4.12 Tax Matters
4.13 Employee Benefit Plans
4.13(a)-(o) Employee Benefit Plan Exceptions
4.14 Environmental Matters
4.15(a) Labor Matters
4.16 Absence of Certain Developments
4.17 Certain Interests
4.18 Insurance Policies
4.19 Banking Matters
6.1 Conduct of Business
6.1(c)(vi) PCI Assets
6.6(q) UK Actuary's Letter
PURCHASE AND SALE AGREEMENT
This PURCHASE AND SALE AGREEMENT is dated as of October 27, 2000 ("Agreement"),
by and between Bell & Howell Company, a Delaware corporation ("Seller"), and
Eastman Kodak Company, a New Jersey corporation ("Buyer"). Capitalized terms
used in this Agreement shall, unless otherwise defined herein, have the meanings
ascribed to them in the Glossary attached as Annex A hereto.
WHEREAS, Seller, through and in conjunction with certain wholly-owned
subsidiaries, collectively referred to herein as the Imaging Group (including,
for the purpose of this paragraph, PCI), is engaged in (i) the sale and
distribution of microfilm and micrographic cameras, readers, reader printers,
duplicators, and 16mm film scanners, (ii) the development, manufacture or
assembly, sale and distribution of document imaging scanners and microfilm
jackets, together with supply items and spare parts, (iii) the provision of
maintenance and support services for all of the aforementioned, as well as
certain maintenance and support services of other manufacturers' equipment, and
(iv) the development, licensing and support of certain Software products
commonly known as Ivory and ISWIN and digital conversion utilities
(collectively, the "Business");
WHEREAS, Seller owns all right, title and Beneficial Interest in and to the
stock of Bell & Howell Imaging Company, a Delaware corporation ("Imaging");
WHEREAS, Seller owns directly or indirectly all right, title and interest in and
to the capital stock of the following Persons (collectively, the "Foreign
Subsidiaries"): Bell & Howell Limited, a corporation organized and existing
under the laws of the UK ("Seller's UK Subsidiary"), Bell & Howell France S.A.,
a corporation organized and existing under the laws of France ("Seller's France
Subsidiary"), and Bell & Howell Ltd., a corporation organized and existing under
the laws of Canada ("Seller's Canadian Subsidiary");
WHEREAS, Seller desires to assign, transfer, convey, license and lease to Buyer,
and Buyer desires to purchase, license, lease and assume from Seller, the stock
of Imaging; and
WHEREAS, Seller desires to cause the Foreign Subsidiaries to assign, transfer,
convey, license and lease to Buyer (or Buyer's Subsidiaries) certain assets and
liabilities of the Foreign Subsidiaries, and Buyer (or Buyer's Subsidiaries)
desire to purchase, license, lease and assume such assets and liabilities
(collectively, the "Foreign Transfer"), all upon the terms and subject to the
conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and the representations,
warranties, covenants and agreements contained herein, the parties hereto
mutually agree as follows:
ARTICLE I
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PURCHASE AND SALE OF STOCK AND ASSETS
1.1 Purchase and Sale Transactions.
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a. At the Closing, Seller agrees to sell, transfer, assign and deliver
to Buyer, and Buyer agrees to purchase and accept, all right, title and
interest in and to all of the outstanding capital stock of Imaging (the
"Stock").
b. At the Closing, Seller and Buyer agree to, and/or to cause their
respective Affiliates to, consummate the Foreign Transfer to the extent
and in the manner permitted under applicable laws, pursuant to the
terms and conditions of bills of sale, assignments, transfer documents
and assumption of obligations agreements in form and substance as the
parties shall mutually agree (collectively, the "Foreign Transfer
Documents"), subject to the further provisions of this Section 1.1(b).
(i) The Foreign Transfer Documents shall provide for Buyer or
any of its Affiliates to purchase the following assets
(collectively, the "Foreign Assets"):
(a) all of the assets owned by Seller's UK
Subsidiary, or any of its Subsidiaries, that are used
in or arise out of the conduct of the UK Business as
of the Closing Date (the "UK Assets"), including (i)
those assets of Seller's UK Subsidiary reflected on
the Closing Balance Sheet consistent with the
Reference Balance Sheet and (ii) those assets set
forth on Schedule 1.1(b)(i)(a);
(b) all of the assets owned by Seller's France
Subsidiary, or any of its Subsidiaries, that are used
in or arise out of the conduct of the France Business
as of the France Closing Date (the "France Assets"),
including (i) those assets of Seller's France
Subsidiary reflected on the Closing Balance Sheet
consistent with the Reference Balance Sheet and (ii)
those assets set forth on Schedule 1.1(b)(i)(b); and
(c) the entire limited partnership interest of Seller
or Seller's Canadian Subsidiary in BHC Limited
Partnership (now known as DocuCom Limited
Partnership), a Canadian limited partnership (the
"Limited Partnership");
provided, however, that in no event will the Foreign Assets
include cash, the assets set forth on Schedule 4.7(a), or
(except as provided by Section 1.1(b)(i)(c)) equity interests
in other Persons.
(ii) The Foreign Transfer Documents shall provide for Buyer or
any of its Affiliates to assume only the following liabilities
and obligations, and no others (collectively, the "Foreign
Liabilities"):
(a) those liabilities and obligations of Seller's UK
Subsidiary (but not of any of such Subsidiary's
Subsidiaries) that are incurred in the ordinary
course and are reflected on the Closing Balance Sheet
consistent with the Reference Balance Sheet, but
expressly excluding:
(i) liabilities and obligations for income
taxes, litigation and Claims, employee
retention incentives, or restructuring
charges;
(ii) liabilities and obligations (x) related
to employees of the UK Business and (y)
arising either prior to Closing or out of
the obligations of Seller or Seller's UK
Subsidiary to any such employees in
connection with the transactions
contemplated hereby;
(iii) liabilities and obligations arising at
any time prior to Closing under the Assumed
UK Leases, including those arising out of
conditions, including dilapidations,
existing prior to Closing;
(iv) liabilities and obligations arising at
any time under any lease, sublease or
similar Commitment with respect to real
property which is not an Assumed UK Lease;
and
(v) any other categories of liabilities and
obligations which by the terms of this
Agreement are not intended to be the
liability or obligation of Buyer or any of
its Affiliates after Closing
(subject to such exclusions, the "UK Liabilities");
and
(b) those liabilities and obligations of Seller's
France Subsidiary (but not of any of such
Subsidiary's Subsidiaries) that are incurred in the
ordinary course and are reflected on the Closing
Balance Sheet consistent with the Reference Balance
Sheet, but expressly excluding:
(i) liabilities and obligations for income
taxes, litigation and Claims, employee
retention incentives, or restructuring
charges;
(ii) liabilities and obligations (x) related
to employees of the France Business and (y)
arising either prior to Closing or out of
the obligations of Seller or Seller's France
Subsidiary to any such employees in
connection with the transactions
contemplated hereby;
(iii) liabilities and obligations arising at
any time under any lease, sublease or
similar Commitment with respect to real
property; and
(iv) any other categories of liabilities and
obligations which by the terms of this
Agreement are not intended to be the
liability or obligation of Buyer or any of
its Affiliates after Closing
(subject to such exclusions, the "France
Liabilities").
c. Notwithstanding any other provision hereof to the contrary:
(i) Seller shall cause Seller's UK Subsidiary to sell with
full title guarantee (as construed in accordance with the Law
of Property (Miscellaneous Provisions) Act 1994), and Buyer
shall cause one or more of its Affiliates to purchase, the UK
Assets and the UK Liabilities as a going concern free with
effect from Closing.
(ii) Title to all UK Assets that can be transferred by
delivery shall pass on delivery, and such delivery shall be
deemed to take place in the UK on Closing. Seller's UK
Subsidiary shall be a trustee for Buyer in respect of all of
the UK Assets until the same shall have been actually
delivered and/or, in the case of UK Assets that cannot be
transferred by delivery in the UK, formally transferred or
assigned to Buyer.
(iii) It is expressly understood and agreed that the
undertaking of the parties with respect to the transfer and
sale of the France Assets and the France Liabilities is
subject to the conclusion of a "Contrat de cession de fonds de
commerce" (agreement for the transfer for going business) and
the satisfaction of all legal formalities in that regard
required by French law.
d. It is expressly understood and agreed that neither Buyer nor any of
its Affiliates will assume, nor will any of them be liable for, any
liability of any of the Foreign Subsidiaries or of their Subsidiaries,
of any kind or nature, at any time existing or asserted, howsoever
arising, whether or not accrued, whether fixed, contingent or
otherwise, whether known or unknown, liquidated or unliquidated, due or
to become due, and whether or not recorded on the books and records of
any Person, unless such liability is expressly within the definition of
Foreign Liabilities under Section 1.1(b)(ii). All liabilities that are
not expressly within the definition of Foreign Liabilities under
Section 1.1(b)(ii) are referred to collectively as the "Excluded
Liabilities."
1.2 Purchase Price.
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The Purchase Price for the Stock and the Foreign Assets shall be the assumption
of the Foreign Liabilities plus an amount equal to One Hundred Forty-Nine
Million Five Hundred Thousand Dollars ($149,500,000) (such cash amount being the
"Stated Value") adjusted:
a. by adding thereto the positive change (including any decrease in a
negative amount) in Working Capital Value between the date of the
Reference Balance Sheet and the Closing Date, or
b. by subtracting therefrom the negative change (including any increase
in a negative amount) in Working Capital Value between the date of the
Reference Balance Sheet and the Closing Date.
All amounts expressed in this Agreement as payable by Buyer are expressed
exclusive of any VAT which may be chargeable thereon. Buyer undertakes that upon
Closing it shall use the Foreign Assets in relation to the Business to carry on
the same kind of business (whether or not as part of any existing business of
Buyer) as that carried on by Seller in relation to the Foreign Assets before
Closing. Buyer will be responsible for the payment of any VAT due on the Foreign
Transfer which is recoverable by Buyer with reasonable effort. If the Purchase
and Sale Transaction qualifies for an exemption from any such VAT, then Buyer
will be responsible for all liability (including taxes, penalties and interest)
for any subsequent audit on VAT imposed on the Foreign Transfer (exclusive of
any VAT liability incurred by Seller or its Affiliates prior to Closing). Seller
will be responsible for the payment of any VAT due on the Foreign Transfer which
is not recoverable by Buyer with reasonable effort. The cost of all other
registration fees, taxes, duties, or charges (including sales, use, excise,
transfer and stamp taxes) that may be due in connection with the registration of
title to the Foreign Assets in any jurisdiction or with any Government Authority
shall be borne by Buyer and Seller in equal portions.
1.3 Payments.
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a. At the Closing, Buyer agrees to pay (or to cause its Affiliates to
pay) to Seller and, to the extent of their respective interests as
provided on Schedule 1.4, Seller's Affiliates, the Closing Payment
computed in accordance with Section 3.1.
b. Following Closing, Buyer and Seller agree to make the Working
Capital Closing Adjustment Payment in accordance with the provisions of
Section 3.2.
1.4 Purchase Price Allocation.
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The consideration for the Stock and the Foreign Assets shall be allocated by
Seller and Buyer in accordance with Schedule 1.4.
1.5 Contemporaneous Delivery.
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Contemporaneously with the execution and delivery of this Agreement, the parties
have executed and delivered the Income Tax Disaffiliation Agreement, in the form
of Attachment I hereto.
ARTICLE II
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CLOSING
2.1 Time and Place of Closing.
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Subject to the satisfaction or waiver of the conditions set forth in Article VII
of this Agreement, and except as otherwise provided by Section 2.7, the Closing
(i.e., the consummation of the Purchase and Sale Transaction contemplated by
Section 1.1 of this Agreement) will take place at the offices of McDermott, Will
& Emery, 227 West Monroe Street, Chicago, Illinois 60606-5096, at 9:30 a.m. on
or as of the last Business Day of the month in which all of the conditions to
each party's obligations hereunder have been satisfied or waived, or at such
other place or time as the parties may mutually agree. The date in the U.S. on
which the Closing actually occurs and the Purchase and Sale Transaction becomes
effective with respect to the Business as conducted in the U.S. and the UK
Business is referred to herein as the "Closing Date."
2.2 Deliveries by Seller.
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Except as otherwise provided by Section 2.7, at the Closing, Seller will deliver
the following to Buyer:
a. certificates evidencing the Stock properly endorsed or with stock
powers executed in blank or otherwise in form suitable for transfer;
b. by-laws, minute book, stock record book and corporate seal for
Imaging;
c. certificate of Incorporation, including all amendments thereto, of
Imaging, certified as of a recent date by the Secretary of State of
Delaware;
d. certificates of Good Standing as of a recent date with respect to
Imaging from the Secretaries of State (or other appropriate
governmental official) for each jurisdiction listed in Schedule 4.1(d);
e. duly executed resignations of all officers and directors of Imaging;
f. the items designated as "Deliveries by Seller" in the Foreign
Transfer Documents, taking into account all applicable registration,
notice and other provisions of applicable law;
g. evidence satisfactory to Buyer of the discharge of all securities
over the UK Business and the UK Assets from the holders of such
securities and all consents necessary in relation to such sale; and
h. such other instruments or documents, in form and substance
reasonably acceptable to Buyer, as may be necessary to effect Closing
or reasonably requested by Buyer.
2.3 Deliveries by Buyer.
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Except as otherwise provided by Section 2.7, at the Closing, Buyer will deliver
the following to Seller:
a. by wire transfer, immediately available funds in the full amount of
the Closing Payment, to the following account:
Bankers Trust New York
New York, New York
ABA 021 001 033
A/C Bell & Howell Company General Account
A/C # 00-224-338
b. the items designated as "Deliveries by Buyer" in the Foreign
Transfer Documents.
2.4 Deliveries by both Buyer and Seller.
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At the Closing, Seller and Buyer will execute and deliver the following
agreements:
a. except as otherwise provided by Section 2.7, the Foreign Transfer
Documents, taking into account all applicable registration, notice and
other provisions of applicable law;
b. Transitional Trademark License Agreement, in the form of Attachment
II hereto;
c. Scanner Supply Agreement, in the form of Attachment III hereto;
d. Transition Services Agreement, in the form of Attachment IV hereto;
e. the agreement contemplated by Section 6.1(c)(vii) hereof; and
f. the agreement contemplated by Section 6.1(c)(viii) hereof.
2.5 Inability to Obtain Consents and Approvals.
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a. Both prior and subsequent to Closing, the parties will use their
commercially reasonable efforts, and cooperate with each other, to
obtain promptly all Requisite Consents and all other consents,
approvals, waivers, authorizations, novations, notices and filings
which are necessary for the effectiveness after Closing of any Material
Commitment or the effective transfer to Buyer of any Foreign Asset. All
filing, recordation and similar fees and taxes payable to Governmental
Authorities will be paid by the party obligated by law to pay such
amounts.
b. To the extent that:
(i) any Requisite Consent or other consent, approval, waiver,
authorization, novation, notice or filing which is necessary
for the effectiveness after Closing of any Material Commitment
or the effective transfer to Buyer of any Foreign Asset cannot
be obtained or made and, as a result thereof, the full
benefits of such Material Commitment, Foreign Asset cannot be
provided to the Buyer following Closing; and
(ii) Buyer elects to close the Purchase and Sale Transaction
notwithstanding the failure to receive the same;
then, if Buyer so requests, Buyer and Seller, through their respective
Affiliates, as appropriate, will cooperate with each other and enter
into such mutually agreeable, reasonable and lawful arrangements
(including subcontracting, subleasing or sublicensing, if permitted) to
provide to the parties the economic (taking into account all burdens
and benefits, including tax costs and benefits) and operational
equivalent, to the extent permitted, of providing for the Buyer the
full benefit of such Material Commitment or Foreign Asset, and the
performance by the Buyer of all obligations under such Material
Commitment; provided, however, that Buyer and Seller will not enter
into such an arrangement with respect to any Material Commitment which
is no longer in full force and effect; and provided further that such
economic and operational equivalent does not include the provision of
lost revenues or profits in the event that any Person terminates a
Material Commitment or other prior relationship with the Seller by
reason of the consummation of the transactions contemplated hereby.
Seller will, or will cause its Affiliates to, pay to Buyer, when
received, all income, proceeds and other monies received by Seller from
third parties, including insurance proceeds received from third party
insurers, to the extent related to the intended rights of Buyer and its
Affiliates (including Imaging) in any such Material Commitment or
Foreign Asset, as contemplated by this Section 2.5.
2.6 Name Change and Transitional Trademark License.
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Seller shall file an amendment to the Certificate of Incorporation of Imaging,
effective on the Closing Date, deleting the words "Bell & Howell" from Imaging's
corporate name; provided, however that at Closing, Seller shall grant to Buyer
and its Affiliates, on the terms and conditions provided by the Transitional
Trademark License Agreement in the form of Attachment II, a license to certain
limited rights to use the name "Bell & Howell" and other related tradenames and
trade dress.
2.7 Staged Closings; Excluded Countries.
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a. Notwithstanding anything to the contrary contained herein, in the
event that all of the conditions to Closing set forth in Article VII
have been satisfied (or waived) with respect to the Business as
conducted in the U.S. and with respect to the UK Business, but not with
respect to one or more other countries (collectively, the "Deferred
Countries"), then:
(i) Closing will nevertheless be effected with respect to the
Stock and that portion of the Foreign Assets, the Foreign
Liabilities, the Business and the ARD Employees relating to
the Business as conducted in the U.S., the UK Business, and
the Business as conducted in each other country in which all
of the conditions to Closing have been satisfied (or waived)
(collectively, the "Closing Countries");
(ii) notwithstanding any other provision hereof to the
contrary, the Purchase Price and the Closing Payment shall be
reduced:
(a) by $3,000,000 if France is a Deferred Country,
and
(b) by an aggregate of $100,000 if one or more other
countries are Deferred Countries; and
(iii) Closing with respect to each such Deferred Country will
be deferred as provided by this Section 2.7; in which event
the deliveries at Closing on the Closing Date required by
Sections 2.2, 2.3 and 2.4 will only be required to be
satisfied to the extent that they relate to the Closing
Countries.
b. One or more subsequent Closings will occur as soon as practicable
following satisfaction (or waiver) of all of the conditions to Closing
with respect to each Deferred Country and, in connection therewith, the
applicable Purchase Price with respect to such Deferred Country (that
being a portion of the Purchase Price reduction provided by Section
2.7(a)(ii)) will be paid to Seller, and the deliveries at Closing
required by Sections 2.2, 2.3 and 2.4 will only be required to be
satisfied to the extent that they relate to such Deferred Country.
c. In the event that a subsequent Closing does not occur with respect
to any Deferred Country on or before June 30, 2001, either Buyer or
Seller may, at any time thereafter and so long as such party is not in
breach of any of its material obligations under this Agreement, elect
not to consummate the Foreign Transfer with respect to such Deferred
Country (in the event of such election, an "Excluded Country").
d. [Intentionally omitted.]
e. In the event that one or more elections contemplated by Sections
2.7(c) or 2.7(d) are made:
(i) the Foreign Transfer will not be effected with respect to
the Excluded Country;
(ii) the Purchase Price will be reduced by the amount of the
applicable Purchase Price with respect to the Excluded Country
(that being a portion of the Purchase Price reduction provided
by Section 2.7(a)(ii)); and
(iii) if the Excluded Country is France, Buyer and Seller
shall, directly or indirectly, enter into one or more supply
arrangements with respect to the France Business on terms as
they shall mutually agree.
f. With respect to each Excluded Country, and unless and until Closing
occurs with respect to any Deferred Country, the provisions of Section
6.9 shall not apply to the Business as conducted on the date hereof in
such Excluded Country or such Deferred Country, as the case may be.
ARTICLE III
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WORKING CAPITAL ADJUSTMENT
3.1 Closing Payment.
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a. From and after the date hereof until Closing, Seller shall deliver
to Buyer on a monthly basis a Working Capital Value Computation,
computed as of the end of each monthly accounting period not more than
25 days following the end of each such monthly accounting period
prepared in the same format and on the same basis as the Working
Capital Value Computation attached as Annex B hereto.
b. In the event that the Working Capital Value as so determined in
accordance with the provisions of Subsection 3.1(a) reflected on the
most recently delivered Working Capital Value Computation theretofore
delivered to Buyer no later than noon (Chicago time) on the second
Business Day preceding the Closing Date (the "Preliminary Working
Capital Value") is:
(i) an amount more than the Working Capital Value computed
based on the Reference Balance Sheet ($20,700,000), the
Closing Payment shall be equal to the Stated Value plus the
amount of such increase; or
(ii) an amount less than the Working Capital Value computed
based on the Reference Balance Sheet ($20,700,000), the
Closing Payment shall be equal to the Stated Value less the
amount of such decrease.
3.2 Working Capital Closing Adjustment Payment.
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a. Within 45 days following Closing, Seller shall prepare and deliver
to Buyer an unaudited consolidated balance sheet of the Imaging Group
as of the Closing Date, excluding all Excluded Assets and Excluded
Liabilities, all Indemnified Liabilities and all reserves for any of
the foregoing (the "Closing Balance Sheet"), prepared in a manner
consistent with the Reference Balance Sheet (except that the Closing
Balance Sheet shall not reflect the GAAP exceptions listed on Schedule
4.4(b) and identified as items 1, 3, 4, 5, 6 and 7), together with a
computation of the Working Capital Value Computation as of the Closing
Date based on such Closing Balance Sheet prepared in the same format
and on the same basis as the Working Capital Value Computation attached
as Annex B hereto.
b. Buyer shall have the right within 60 days following the delivery of
the Closing Balance Sheet to object to the Working Capital Value
Computation based thereon. If Buyer does so object, Seller and Buyer
shall cooperate with each other to reach a mutual agreement thereon or,
failing such agreement within 30 days, the determination shall be made
by the Accountant, the cost of which shall be shared equally by Seller
and Buyer. Seller and Buyer shall deliver to the Accountant copies of
any schedules or documentation which may be reasonably required by the
Accountant to make its determination. Seller and Buyer shall use their
best efforts to cause the Accountant to promptly complete such
determination. The determination of the Accountant shall be final and
binding on the parties.
c. In the event that the actual Working Capital Value as of the Closing
Date as so determined, and as adjusted by a positive $300,000, is
greater or less than the Preliminary Working Capital Value used in the
calculation of the Closing Payment pursuant to Subsection 3.1(b) then:
(i) if greater, Buyer shall pay to Seller the amount of such
increase;
(ii) if less, Seller shall pay to Buyer the amount of such
decrease.
d. Upon determination of the Working Capital Value Computation in
accordance with Subsection 3.2(b), such Working Capital Closing
Adjustment Payment shall be made by check or wire transfer within ten
(10) days.
3.3 Intercompany Account.
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a. The Intercompany Account-Nontrade shall not be treated as part of
Working Capital and shall not be taken into account in the computation
of Working Capital Value. The Intercompany Account Payable-Nontrade
shall be capitalized by Seller at the Closing without payment or other
transfer of assets by the Imaging Group, and all liabilities and
obligations of Seller to the Imaging Group (other than as reflected as
Intercompany Account-Trade) shall be extinguished except as provided
for by Article IX or in the Ancillary Agreements.
b. The Intercompany Account-Trade will be treated as a current
receivable and payable and shall be taken into account in the
computation of Working Capital Value. The Intercompany Account-Trade
shall be paid in the ordinary course in accordance with customary
terms.
ARTICLE IV
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REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Buyer as follows:
4.1 Organization and Qualification.
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a. Seller is a corporation validly existing and in good standing under
the laws of the State of Delaware and has all requisite power and
authority to own the Stock. The Seller is the sole stockholder of
Imaging.
b. The total authorized capital stock of Imaging consists of 1,000
shares of common stock, par value $0.01 per share, all of which shares
are issued and outstanding. All of the shares of the Stock have been
duly authorized and validly issued and are fully paid and
non-assessable. Seller owns all of the issued and outstanding shares of
the Stock, free and clear of all Liens (except for Liens in favor of
creditors which will be released at Closing). There are no preemptive
or other outstanding rights, options, warrants, conversion rights or
other Commitments (other than this Agreement) to issue or sell any
shares of capital stock of Imaging or any securities or obligations
convertible into or exchangeable for, or giving any Person a right to
subscribe for or acquire, any shares of capital stock or other equity
interests in Imaging.
c. Imaging is a corporation validly existing and in good standing under
the laws of the State of Delaware and, prior to Closing, had all
requisite power and authority to own, lease and operate its properties
and to carry on its business as conducted.
d. Imaging is duly qualified or licensed and in good standing to do
business in each jurisdiction where such qualification is required and
as listed on Schedule 4.1(d).
e. Imaging has no Subsidiaries.
4.2 Authority Relative to this Agreement.
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a. Seller has full power and authority to execute and deliver this
Agreement and the Income Tax Disaffiliation Agreement, and to
consummate the transactions contemplated hereby and thereby. The
execution and delivery of this Agreement and the Income Tax
Disaffiliation Agreement, and the consummation of the transactions
contemplated hereby and thereby, have been duly and validly authorized
by all requisite corporate action (including, if requisite, shareholder
or similar action) on the part of Seller, and no other proceedings on
its part are necessary to authorize this Agreement and the Income Tax
Disaffiliation Agreement or to consummate the transactions contemplated
hereby or thereby. This Agreement and the Income Tax Disaffiliation
Agreement have been duly and validly executed and delivered by Seller
and, assuming this Agreement and the Income Tax Disaffiliation
Agreement have been duly authorized, executed and delivered by Buyer,
constitutes valid and binding agreements of Seller, enforceable against
Seller in accordance with their respective terms.
b. Upon Closing of each stage of the Foreign Transfer, each Foreign
Subsidiary involved in such Closing will have full power and authority
to execute and deliver the Foreign Transfer Documents then deliverable
and to consummate the Foreign Transfer at such Closing, the execution
and delivery of such Foreign Transfer Documents and consummation of the
Foreign Transfer at such Closing will have been duly and validly
authorized by all requisite corporate action (including, if requisite,
shareholder or similar action) on the part of such Foreign Subsidiary,
and no other proceedings on its part will be necessary to authorize
such Foreign Transfer Documents or to consummate the Foreign Transfer
at such Closing. Upon Closing of each stage of the Foreign Transfer,
each Foreign Transfer Document then deliverable will have been duly and
validly executed and delivered by the Foreign Subsidiary party thereto
and, assuming due authorization, execution and delivery of the same by
Buyer, will constitute a valid and binding agreement of such Foreign
Subsidiary, enforceable against such Foreign Subsidiary in accordance
with its terms.
c. PCI has full power and authority to consummate the transactions
contemplated by Section 6.1(c)(vi), and the consummation of such
transactions have been duly and validly authorized by all requisite
corporate action (including, if requisite, shareholder or similar
action) on the part of PCI, and no other proceedings on its part are
necessary to consummate such transactions. At Closing, the transactions
contemplated by Section 6.1(c)(vi) will have been validly consummated
and enforceable against PCI.
d. MMT has full power and authority to execute and deliver this
Agreement (solely with respect to Section 6.9) and to consummate the
transactions contemplated by Section 6.9. The execution and delivery of
this Agreement (solely with respect to Section 6.9) and the
consummation of the transactions contemplated by Section 6.9 have been
duly and validly authorized by all requisite corporate action
(including, if requisite, shareholder or similar action) on the part of
MMT, and no other proceedings on its part are necessary to authorize
this Agreement (solely with respect to Section 6.9) or to consummate
the transactions contemplated by Section 6.9. This Agreement has been
duly and validly executed (solely with respect to Section 6.9) and
delivered by MMT and, assuming it has been duly authorized, executed
and delivered by Buyer, constitutes a valid and binding agreement of
MMT, solely with respect to Section 6.9, enforceable against MMT in
accordance with its terms.
e. At Closing, Seller and each of Seller's Affiliates party thereto
will have full power and authority to execute and deliver each
Ancillary Agreement and to consummate the transactions contemplated
thereby. At Closing, the execution and delivery of each Ancillary
Agreement and the consummation of the transactions contemplated thereby
will have been duly and validly authorized by all requisite corporate
action (including, if requisite, shareholder or similar action) on the
part of Seller and each of Seller's Affiliates party thereto, and no
other proceedings on their part will be necessary to authorize each
Ancillary Agreement or to consummate the transactions contemplated
thereby. At Closing, each Ancillary Agreement will have been duly and
validly executed and delivered by and Seller and each of Seller's
Affiliates party thereto, assuming it has been duly authorized,
executed and delivered by Buyer or Buyer's Affiliates, will constitute
a valid and binding agreement of Seller and each of Seller's Affiliates
party thereto, enforceable against them in accordance with its terms.
4.3 Consents and Approvals; No Violations.
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a. Except for applicable requirements of the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), and
applicable foreign requirements, no filing with, and no permit,
authorization, consent or approval of, any public body or authority,
domestic or foreign, is necessary for the consummation by Seller or any
Foreign Subsidiary of the transactions contemplated by this Agreement.
b. Neither the execution and delivery of this Agreement by Seller nor
the consummation by Seller or any Foreign Subsidiary of the
transactions contemplated hereby or by any Foreign Transfer Document,
nor compliance by Seller or any Foreign Subsidiary with any of the
provisions hereof or thereof will:
(i) conflict with or result in any breach of any provision of
the certificate of incorporation or by-laws of such Person;
(ii) except as set forth in Schedule 4.3(b), conflict with, or
result in the breach of, or constitute a default under, or
result in the termination, cancellation, or acceleration
(whether after the filing of notice or the lapse of time or
both) of any right or obligation of the Business under, or a
loss of any benefit to which the Business is entitled under,
any Material Commitment or any Foreign Asset, Foreign
Liability or PCI Asset, or result in the creation of any Lien
(other than a Permitted Lien) upon any asset of the Business,
any Foreign Asset or PCI Asset; or
(iii) assuming that the filings referred to in Subsection
4.3(a) are duly and timely made, and assuming that all
applicable waiting periods under competition laws have expired
and all applicable approvals under competition laws have been
received, violate any order, writ, injunction, decree,
statute, treaty, rule or regulation applicable to the
Business;
except in the case of (ii) or (iii) for violations, breaches or
defaults which, in the aggregate, do not have a Material Adverse Effect
or prevent or delay the consummation of the transactions contemplated
hereby.
4.4 Financial Statements.
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a. Seller has heretofore delivered to Buyer the following financial
statements for the Imaging Group (the "Financial Statements") and
copies thereof are attached hereto as Schedule 4.4(a):
(i) Consolidated Balance Sheets as of January 3, 1999, January
1, 2000, July 1, 2000 and October 1, 2000;
(ii) Consolidated Statements of Operations for fiscal years
1998 and 1999;
(iii) Consolidated Statements of Operations for the six-month
period ended July 1, 2000 and the nine-month period ended
October 1, 2000;
(iv) Consolidated Cash Flow Statements for the six-month
period ended July 1, 2000 and the nine-month period ended
October 1, 2000;
(v) Consolidated Cash Flow Statements for the fiscal years
1998 and 1999; and
(vi) the Reference Balance Sheet, which excludes all Excluded
Assets and Excluded Liabilities, all Indemnified Liabilities
and all reserves for any of the foregoing.
b. Except as set forth on Schedule 4.4(b), each of such balance sheets
included in the Financial Statements fairly presents the consolidated
financial position of the Imaging Group as of the respective dates
thereof, and each of the other related statements included in the
Financial Statements fairly present the results of operations and the
cash flows of the Imaging Group for the respective periods indicated
therein, in accordance with GAAP consistently applied (except for the
absence of footnotes and, in the case of the Reference Balance Sheet,
the absence of an accrual for Indemnified Liabilities and excluding the
Excluded Assets and Excluded Liabilities).
c. Except as set forth on Schedule 4.4(c)(i), the amounts reflected as
accounts and notes receivable on the Working Capital Value Computation
attached as Annex B hereto arose only from bona fide transactions which
have been recorded in accordance with GAAP consistently applied and the
related reserves for bad debt and trade allowances have been
established in accordance with GAAP consistent with past practice.
Except as set forth on Schedule 4.4(c)(ii), nothing has occurred
subsequent to the date of the Reference Balance Sheet to require any
adjustment to the method by which such reserves are established or
calculated.
d. The amounts reflected as inventory and the valuation reserves on the
Working Capital Value Computation attached as Annex B hereto are valued
using valuation methods and costing standards as used in the Reference
Balance Sheet, and except as stated on Schedule 4.4(d), such methods
and standards are in accordance with GAAP. Nothing has occurred
subsequent to the date of the Reference Balance Sheet, other than
normal price fluctuation and operational efficiencies and other changes
which normally are reflected in year end adjustments, to require any
interim write-offs or write-downs or adjustment of standards.
e. [Intentionally omitted.]
f. The Business does not have any liability or obligation of any nature
that is not reflected or reserved against on the Reference Balance
Sheet, except for:
(i) liabilities and obligations that were incurred in the
ordinary course since July 1, 2000 and are of a nature similar
to those reflected or reserved against on the Reference
Balance Sheet;
(ii) liabilities and obligations of any nature (other than
those required by this Agreement to be disclosed on any
Schedule) that are neither required by GAAP nor by Seller's
ordinary course accounting policies to be so reflected or
reserved against;
(iii) liabilities and obligations disclosed on any Schedule;
and
(iv) the Excluded Liabilities and the Indemnified Liabilities
and reserves therefor.
4.5 [Intentionally omitted.]
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4.6 No Default.
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Neither the Imaging Group, nor Seller or any of its Affiliates with respect to
the Business, is in default or violation (and no event has occurred which with
notice or the lapse of time or both would constitute such a default or
violation) of any material term, condition or provision of:
a. its respective certificate of incorporation or by-laws;
b. any Material Commitment; or
c. any order, writ, injunction, decree, statute, rule or regulation
applicable to it.
4.7 Title to and Condition of Tangible Assets.
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a. Imaging has, and at the Closing will have, good title to its
tangible assets (including, at Closing, the PCI Assets), free and clear
of any Liens, and each of the Foreign Subsidiaries has, and at the
Closing will have, good title to its respective tangible Foreign
Assets, free and clear of any Liens, except in each case for Permitted
Liens. The current tangible assets of Imaging (including, at Closing,
the PCI Assets), together with the tangible Foreign Assets, are all of
the tangible assets used to carry on the Business as presently
conducted, except for those tangible assets listed on Schedule 4.7(a).
The assets listed on Schedule 4.7(a) either (i) are not material to or
primarily related to the conduct of the Business or (ii) will be
provided to Buyer pursuant to the Transition Services Agreement.
b. A list of all tangible assets for which some value is reflected on
the Reference Balance Sheet is attached as Schedule 4.7(b), together
with an identification of the Person which owns such assets. Except as
disclosed on such Schedule 4.7(b), all such tangible assets which are
material to the conduct of the Business are (i) maintained in the
ordinary course, (ii) in normal operating condition, (iii) to the
Knowledge of Seller, structurally sound, and (iv) suitable for the
purposes for which they are now being used, in each case subject to
normal wear and tear consistent with their age and prior use.
4.8 Intellectual Property.
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a. For purposes hereof, "Intellectual Property" means any and all of
the following:
(i) U.S., international, and foreign patents, patent
applications and statutory invention registrations,
(ii) trademarks, service marks, trade names, trade dress,
slogans, logos, and Internet domain names, including
registrations and applications for registration thereof,
(iii) copyrights, including registrations and applications for
registration thereof, and
(iv) confidential and proprietary information, including trade
secrets and know-how.
Schedules 4.8(a)(i) through 4.8(a)(iii) set forth, respectively, true
and complete lists of all such Intellectual Property listed in
subsections (i) through (iii) above, which are in each case either (w)
owned by Imaging, or (x) owned by Seller or Seller's Affiliates and
primarily related to the Business, or (y) included in the Foreign
Assets, or (z) included in the PCI Assets and will be owned by Imaging
on the Closing Date. For purposes hereof, "Owned Intellectual Property"
shall mean all of the Intellectual Property so listed on such three
Schedules, together with common law trademarks, unregistered copyrights
and confidential and proprietary information, including trade secrets
and know-how, each as used in the Business.
b. For purposes hereof, "Business Software" means all computer Software
and Software Documentation in any and all forms (object code, source
code, computer manuals, and all other forms) developed by or on behalf
of the Imaging Group, PCI or the Business or licensed by a third-party
provider, that is necessary for conducting the Business, including
without limitation, all Software products, Software used in the
operation of products, diagnostic Software, CAD files, and all computer
Software and databases operated or used on web sites or used in
connection with processing customer orders or storing customer
information. Schedule 4.8(b) sets forth a true and complete list of all
of the Business Software other than off-the-shelf mass market Software.
Schedule 6.1(c)(vi) sets forth a true and complete list of all of the
PCI Software other than off-the-shelf mass market Software.
c. Schedule 4.8(c)(i) sets forth a true and complete list of all
licenses, sublicenses, and other Commitments pertaining to Intellectual
Property or Software owned by third parties and used in the Business,
whether entered into on behalf of the Business by the Imaging Group or
by Seller or Seller's Affiliates ("Licensed-In Intellectual Property").
Schedule 4.8(c)(ii) sets forth a true and complete list of all
licenses, sublicenses, and other Commitments pertaining to Owned
Intellectual Property or Software licensed to third parties by the
Imaging Group or by Seller or Seller's Affiliates ("Licensed-Out
Intellectual Property"), except for licenses granted in the ordinary
course in connection with the sale of products.
d. The use by the Business in the ordinary course of the Owned
Intellectual Property and, to the Knowledge of Seller, the Business
Software, the PCI Software and the Licensed-In Intellectual Property,
does not infringe upon or misappropriate the valid Intellectual
Property rights, privacy rights, or right of publicity of any third
party. No written communication has been received by the Business that
the use in the ordinary course of the Owned Intellectual Property, the
Business Software, the PCI Software, the Licensed-In Intellectual
Property or the Licensed-Out Intellectual Property does or may infringe
upon or misappropriate the Intellectual Property rights, right of
privacy or right of publicity of any third party. The Business's use of
the Licensed-In Intellectual Property complies with the terms of each
license or sublicense thereof.
e. Except as set forth in Schedule 4.8(e), the Imaging Group are, and
at Closing will be, the owners of the entire and unencumbered right,
title and interest in and to each item of the Owned Intellectual
Property, the Business Software and the PCI Software (except for Liens
in favor of creditors which will be released at Closing and except for
rights in the Licensed-Out Intellectual Property created by Material
Commitments), and the Business is, and at Closing will be, entitled to
use the Owned Intellectual Property, the Business Software, the PCI
Software and the Licensed-In Intellectual Property in the ordinary
course. Except as set forth in Schedule 4.8(e), the Owned Intellectual
Property, the Business Software, the PCI Software and the Licensed-In
Intellectual Property (i) comprise all of the Intellectual Property
used to carry on the Business as presently conducted, and (ii)
immediately upon Closing will be owned or available for use by Imaging,
Buyer or any of Buyer's Affiliates which is a transferee thereof,
without the payment of any additional amounts to any third party
(except as may be required subsequent to Closing by the express terms
of any license covering Transferred-In Intellectual Property). The
intangible assets listed on Schedule 4.8(e) either (i) are not material
to or primarily related to the conduct of the Business or (ii) will be
provided to Buyer pursuant to the Transition Services Agreement.
f. Except for the Seller's tradename and the Software to be used by
Seller in the performance of services under the Transition Services
Agreement, the Owned Intellectual Property, the Business Software, the
PCI Software and the Licensed-In Intellectual Property include all of
the Intellectual Property and Software used in the ordinary day-to-day
conduct of the Business, and there are no other items of Intellectual
Property or Software that are necessary for such ordinary day-to-day
conduct of the Business. The Owned Intellectual Property, the Business
Software, the PCI Software and, to the Knowledge of Seller, the
Licensed-In Intellectual Property, is subsisting, valid and
enforceable, and has not been adjudged invalid or unenforceable in
whole or part.
g. Except as set forth on Schedule 4.8(g), no Proceedings have been
asserted, are pending or, to the Knowledge of Seller, are threatened
against the Imaging Group, Seller, or Seller's Affiliates:
(i) based upon or challenging or seeking to deny or restrict
the use by the Business of any of the Owned Intellectual
Property, the Business Software, the PCI Software or the
Licensed-In Intellectual Property,
(ii) alleging that any services provided by, processes used
by, or products manufactured, sold or offered for sale by the
Business infringe upon or misappropriate any Intellectual
Property right of any third party,
(iii) alleging that any Intellectual Property licensed under
the Licensed-In Intellectual Property or Licensed-Out
Intellectual Property infringes upon any Intellectual Property
right of any third party or is being licensed or sublicensed
in conflict with the terms of any license or other Commitment,
or
(iv) challenging the ownership of the Owned Intellectual
Property, the Business Software or the PCI Software.
h. To the Knowledge of Seller, no Person is engaging in any activity
that infringes upon the Owned Intellectual Property, the Business
Software or the PCI Software. Except as in the ordinary course or as
set forth in Schedules 4.8(c)(i) or 4.9(a)(xi), neither Seller nor any
of its Affiliates has, with respect to the Business, granted any
license or other right to any third party with respect to the Owned
Intellectual Property or the Licensed-In Intellectual Property. The
consummation of the transactions contemplated by this Agreement will
not result in the termination or impairment of title of any of the
Owned Intellectual Property.
i. The Seller has delivered or made available to Buyer correct and
complete copies of all the licenses and sublicenses of the Licensed-In
Intellectual Property and the Licensed-Out Intellectual Property. With
respect to each such license and sublicense (other than licenses and
sublicenses to off-the-shelf mass market Software):
(i) such license or sublicense is valid and binding and in
full force and effect and represents the entire agreement
between the respective licensor and licensee with respect to
the subject matter of such license or sublicense;
(ii) except as set forth on Schedule 4.8(i), such license or
sublicense will not cease to be valid and binding and in full
force and effect on terms identical to those currently in
effect as a result of the consummation of the transactions
contemplated by this Agreement, nor will the consummation of
the transactions contemplated by this Agreement constitute a
breach or default under such license or sublicense or
otherwise give the licensor or sublicensor a right to
terminate such license or sublicense;
(iii) the Seller has not received any notice of termination or
cancellation under such license or sublicense;
(iv) the Seller has not received any notice of a breach or
default under such license or sublicense, which breach has not
been cured;
(v) the Seller has not granted to any other third party any
rights, adverse or otherwise, under such license or sublicense
that would constitute a breach of such license or sublicense;
and
(vi) neither Seller nor any of its Affiliates, nor any other
party to such license or sublicense, is in breach or default
in any material respect and, to the Knowledge of Seller, no
event has occurred that, with notice or lapse of time would
constitute such a breach or default or permit termination,
modification or acceleration under such license or sublicense.
j. All of the Business Software and the PCI Software provides
uninterrupted millennium functionality in that it will record, store,
process and present calendar dates falling on or after January 1, 2000
in the same manner and with the same functionality as it recorded,
stored, processed and presented calendar dates falling on or before
December 31, 1999. Except for such problems that do not materially
disrupt its operation or have a material adverse impact on the
operation of other Software programs or operating systems, the Business
Software and the PCI Software are free of all viruses, worms, trojan
horses and other material known contaminants. The Imaging Group and PCI
have obtained all approvals necessary for exporting the Business
Software and the PCI Software outside the United States or Canada and
importing the Business Software and the PCI Software into any country
in which the same is now sold or licensed for use, and all such export
and import approvals in the United States and Canada and throughout the
world are valid, current, outstanding and in full force and effect. No
rights in the Business Software or the PCI Software have been
transferred to any third party except to the customers of the Business
in the ordinary course.
k. Except as listed on Schedule 4.8(k), the Imaging Group, the Seller
or Seller's Affiliates have the right to use all Software development
tools, image processing tools, library functions, compilers, and other
third party Software that is necessary for the Business or that is
required to operate or modify the Business Software or the PCI
Software, and have the right to assign or sublicense such right to
Buyer.
l. The Internal MIS Systems used in the Business are Euro Compliant
except to the extent that the failure to be Euro Compliant could not
reasonably be expected to have a Material Adverse Effect on the
Business. For purposes hereof, "Euro Compliant" means that the Internal
MIS Systems will record, store, process and present currency
denominated in Euros, in the same manner, and with the same
functionality, as the Internal MIS Systems record, store, process and
present currencies denominated in U.S. Dollars and major European
currencies.
m. The Imaging Group, Seller, and Seller's Affiliates have taken
reasonable steps in accordance with normal industry practice to
maintain the confidentiality of the trade secrets and other
confidential information contained in the Intellectual Property. To the
Knowledge of Seller:
(i) there has been no misappropriation of any material trade
secrets or other material confidential information contained
in the Owned Intellectual Property by any Person,
(ii) no employee, independent contractor or agent of the
Business has misappropriated any trade secrets of any other
Person in the course of such performance as an employee,
independent contractor or agent of the Business, and
(iii) no employee, independent contractor or agent of the
Business is in default or breach of any term of any employment
agreement, non-disclosure agreement, non-compete obligation,
assignment of invention agreement or similar Commitment
relating in any way to the protection, ownership, development,
use or transfer of Intellectual Property.
n. Except as set forth on Schedule 4.8(n), the Imaging Group's
trademarks have been duly registered with, filed in or issued by, as
the case may be, the United States Patent and Trademark Office or such
other appropriate filing offices in which business is done, whether
domestic or foreign, and such registrations, filings, issuances and
other actions remain in full force and effect, are current and
unexpired.
4.9 Material Commitments.
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a. Schedule 4.9 contains a true and complete list, as of the date
stated in Schedule 4.9, of each of the following Commitments (whether
written or oral) of the Imaging Group, including all Commitments
included in the Foreign Assets or the PCI Assets (collectively,
"Material Commitments"):
(i) each Commitment having a value or consideration of $25,000
or more for the purchase or lease of personal property, with
any supplier, or for the furnishing of services to the Imaging
Group;
(ii) any Commitment that compensates any Person based on any
sales by the Imaging Group;
(iii) each Commitment for the sale of products or services
having a value or consideration of $30,000 or more (hard copy
of which has heretofore been provided to Buyer);
(iv) each lease and sublease of real property to which the
Imaging Group is a party or by which the Business is
obligated;
(v) each Commitment relating to indebtedness, other than trade
indebtedness, of the Imaging Group;
(vi) each Commitment with any Government Authority other than
standard form end-user licenses;
(vii) each Commitment that limits or purports to limit the
ability of the Imaging Group to compete in any line of
business or with any Person or in any geographic area or
during any period of time;
(viii) each Commitment containing confidentiality requirements
(including all nondisclosure Commitments, but excluding all
Commitments containing confidentiality restrictions entered
into in the ordinary course which do not restrict the conduct
of the Business as currently conducted);
(ix) each Commitment relating to domain name registration;
(x) each Commitment to which the Business will be bound after
Closing relating to employment, consulting, severance or
similar issues with any current or former employee, consultant
or agent of the Imaging Group;
(xi) each license and sublicense of the Licensed-In
Intellectual Property and the Licensed-Out Intellectual
Property; and
(xii) each other Commitment, whether or not made in the
ordinary course, which is material to the Imaging Group.
b. Each Material Commitment:
(i) is valid and binding on a member of the Imaging Group and,
to the Knowledge of Seller, on the other parties thereto, and
is in full force and effect, subject to bankruptcy and
equitable remedies qualifications (and except for those
Material Commitments that have expired by their terms or been
performed in full); and
(ii) upon consummation of the transactions contemplated by
this Agreement, shall, subject to bankruptcy and equitable
remedies and qualifications, continue in full force and effect
for the benefit of Imaging, Buyer or Buyer's Affiliates
without penalty or other adverse consequence.
No rights or benefits of any Person party to a Material Commitment have
been (or will be) accelerated or increased, nor will any party to a
Material Commitment be entitled to cancel, suspend or terminate or
diminish the rights of the Imaging Group (or its successor) under any
Material Commitment, as a result of the consummation of the
transactions contemplated by this Agreement. The Imaging Group is not
in breach of, or default under, any Material Commitment and, to the
Knowledge of Seller, no other party to any Material Commitment is in
breach thereof or default thereunder.
c. As used herein, "Small Service Contracts" means all outstanding
Commitments of the Business for the sale of services having a value or
consideration of less than $30,000 each. Seller has heretofore
delivered to Buyer a true and complete list of all Small Service
Contracts as October 11, 2000, including for each the customer name,
dollar value, and entitlements. Each of the Small Service Contracts was
incurred in the ordinary course. To the Knowledge of Seller, no Small
Service Contract has been terminated as of October 11, 2000.
4.10 Arrangements with Affiliates.
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Except as set forth in Schedule 4.10, and except for the Ancillary Agreements
and the services to be provided thereunder:
a. there are no Commitments between members of the Imaging Group, on
one hand, and Seller or any of Seller's other Affiliates, on the other
hand; and
b. all of the assets used by the Imaging Group in the conduct of the
Business are:
(i) in the case of assets other than Foreign Assets, owned by
Imaging (including, at Closing, the PCI Assets), and
(ii) in the case of Foreign Assets, will be transferred to
Buyer at Closing.
4.11 Litigation and Claims.
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a. Except as set forth on Schedule 4.11(a):
(i) there is no Proceeding pending or, to the Knowledge of
Seller, threatened, and no written (or, to the Knowledge of
Seller, unwritten) Claim has been asserted, against the
Imaging Group, any of Imaging's properties, any Foreign Asset
or any PCI Asset; and
(ii) neither the Imaging Group nor any of Imaging's
properties, nor any Foreign Asset nor any PCI Asset is subject
to any order, writ, judgment, award, injunction or decree of
any Government Authority of competent jurisdiction or any
arbitrator.
b. Except as set forth on Schedule 4.11(b), there is no Proceeding
pending or, to the Knowledge of Seller, threatened, and no written (or,
to the Knowledge of Seller, unwritten) Claim has been asserted, against
Seller except for those that would not prevent consummation of the
Purchase and Sale Transaction or materially impair the ability of
Seller and the Imaging Group to perform their obligations hereunder.
Seller is not subject to any order, writ, judgment, award, injunction
or decree of any Government Authority of competent jurisdiction or any
arbitrator, except for those that would neither prevent consummation of
the Purchase and Sale Transaction nor materially impair the ability of
Seller or the Imaging Group to perform its obligations hereunder.
4.12 Non-Income Tax Matters.
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Except as set forth in Schedule 4.12:
a. For purposes of this Section 4.12, "Tax" or "Taxes" means taxes of
any nature excluding all taxes measured by income, but including profit
taxes not measured by income and franchise, alternative, or add on or
minimum sales, use, payroll, withholding, occupation, property or
excise taxes imposed by any Government Authority, whether federal,
state, local, foreign, or other levies and assessments imposed federal,
state, local or foreign taxing authority, including but not limited to
all sales, use, ad valorem, value added, franchise, net or gross
proceeds, withholding, payroll, employment, excise, property, single
business, business license, and business occupation taxes, together
with any interest thereon, any penalties, additions to taxes or
traditional amounts applicable thereto, and any contractual or other
obligation to indemnify or reimburse any Person with respect to any
such taxes.
b. The Imaging Group (and each affiliated, unitary or combined group of
which the Imaging Group is or has been a member) has timely filed, or
has timely filed for an extension for the filing of, all material tax
returns that are required to be filed by it on or before the date
hereof, and all Taxes owed by the Imaging Group (whether or not shown
on any tax return) and due on or before the date hereof have been paid.
The Reference Balance Sheet reflects an adequate accrual, based on the
facts and circumstances existing as of the date thereof, for all Taxes
payable by the Imaging Group through the date thereof.
c. There are no deficiencies for any Taxes proposed, asserted or
assessed against the Imaging Group, no requests for waivers of the time
to assess any Taxes are pending, and no power of attorney with respect
to any Taxes has been executed or filed with any taxing authority.
d. The Imaging Group has complied with all laws relating to the payment
and withholding of employment Taxes and has withheld and paid all Taxes
required to have been withheld and paid in connection with amounts paid
or owing to any employee, independent contractor or other Person.
e. There are no Liens for Taxes (other than for current Taxes not yet
due and payable) on the assets of Imaging, any Foreign Assets or any
PCI Assets.
f. The Imaging Group is not bound by any Commitment (either with any
Person or with any taxing authority) with respect to Taxes that will be
binding on Imaging, Buyer or any of Buyer's Affiliates after Closing.
g. No audit or other Tax Proceedings are pending with respect to Taxes
of the Imaging Group and no notice thereof has been received. No issue
has been raised by any taxing authority in any presently pending or
prior audit that could be material and adverse to the Imaging Group for
any period after the Closing.
h. Seller's representations and warranties with respect to taxes
measured by income are set forth in the Income Tax Disaffiliation
Agreement.
4.13 Employee Benefit Plans.
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Schedule 4.13 lists each Employee Benefit Plan covering Affected Employees.
Except as set forth in Schedule 4.13:
a. Each such Employee Benefit Plan covering Affected Employees (and
each related trust, insurance contract, or fund) substantially complies
in form and in operation in all material respects with the applicable
requirements of ERISA, the Code, and other applicable laws, and has
been administered in all material respects in accordance with: (i) the
terms of all applicable governing documents and (ii) the terms of all
applicable employment, collective bargaining agreements and other
Commitments.
b. All required reports and descriptions (including Form 5500 annual
reports, summary annual reports, and summary plan descriptions) have
been filed or distributed appropriately with respect to each such
Employee Benefit Plan covering Affected Employees.
c. The requirements of Part 6 of Subtitle B of Title I of ERISA and of
Code Sec. 4980B have been substantially satisfied with respect to each
such Employee Benefit Plan covering Affected Employees which is an
Employee Welfare Benefit Plan.
d. All contributions (including all employer contributions and employee
salary reduction contributions) which are due have been paid to each
such Employee Benefit Plan covering Affected Employees which is an
Employee Pension Benefit Plan and all contributions for any period
ending on or before the Closing Date which are not yet due have been
paid to each such Employee Pension Benefit Plan covering Affected
Employees or accrued in accordance with the past custom and practice of
the Seller.
e. All premiums or other payments for all periods ending on or before
the Closing Date have been paid or accrued or will be paid in
accordance with past custom and practice of Seller with respect to each
such Employee Benefit Plan covering Affected Employees which is an
Employee Welfare Benefit Plan.
f. Each such Employee Benefit Plan which is an Employee Pension Benefit
Plan covering Affected Employees and which is described on Schedule
4.13 as meeting the requirements of Code Sec. 401(a) meets the
requirements of a "qualified plan" under Code Sec. 401(a) and has
either received a favorable determination letter from the Internal
Revenue Service or has requested such a letter within the remedial
amendment period of Code Sec. 401(b).
g. Seller has delivered or will prior to Closing deliver to the Buyer
correct copies of the plan documents and summary plan descriptions that
are in effect as of the Closing Date, the most recent determination
letter received from the Internal Revenue Service (if applicable), the
most recent Form 5500 annual report (if applicable), and all related
trust agreements, insurance contracts, and other funding Commitments
(if applicable) which implement each such Employee Benefit Plan
covering Affected Employees and which are currently in effect as of the
Closing Date, to the extent such documents exist.
h. With respect to each Employee Benefit Plan that is an Employee
Pension Benefit Plan or an Employee Welfare Benefit Plan that the
Seller, and the Controlled Group of Corporations which includes the
Seller, maintains or has maintained since 1988 on behalf of Affected
Employees or to which any of them contributes, has contributed, or has
been required to contribute since 1988 on behalf of Affected Employees:
(i) Except as set forth on Schedule 4.13(h), no such Employee
Benefit Plan which is an Employee Pension Benefit Plan subject
to Title IV of ERISA has been completely or partially
terminated and no reportable event notice has been filed with
the PBGC with respect to such Employee Pension Benefit Plan.
No Proceeding by the PBGC to terminate any such Employee
Pension Benefit Plan has been instituted or threatened.
(ii) There have been no prohibited transactions with respect
to any Employee Benefit Plan that is an Employee Pension
Benefit Plan or an Employee Welfare Benefit Plan, and no
fiduciary has incurred any liability for breach of fiduciary
duty or any other failure to act or comply in connection with
the administration or investment of the assets of any such
Employee Benefit Plan that is an Employee Pension Benefit Plan
or an Employee Welfare Benefit Plan.
(iii) No action, suit, Proceeding, hearing, or investigation
with respect to the administration or the investment of the
assets of any such Employee Benefit Plan that is an Employee
Pension Benefit Plan or an Employee Welfare Benefit Plan
(other than routine claims for benefits) is pending.
(iv) Imaging has not incurred any liability to the PBGC (other
than PBGC premium payments) or otherwise under Title IV of
ERISA (including any withdrawal liability) or under the Code
with respect to any such Employee Benefit Plan which is an
Employee Pension Benefit Plan.
i. Except as set forth on Schedule 4.13(i), since 1988 Imaging has not
contributed or been required to contribute to any Multiemployer Plan,
and has no liability (including withdrawal liability) as of the Closing
Date under any Multiemployer Plan.
j. Except as set forth on Schedule 4.13(j), Imaging does not (as of the
Closing Date) maintain or contribute to any Employee Welfare Benefit
Plan providing medical, health or life insurance benefits to current
Affected Employees, former U.S. employees of Imaging, or their spouses,
or their dependents beyond their retirement or other termination of
employment (other than in accordance with Code Sec. 4980B).
k. To the Knowledge of the Seller, except as set forth on Schedule
4.13(k), there have been no statements or communications made or
materials provided to any current Affected Employees, or former U.S.
employees of Imaging, by any Person which constitute a Commitment or
other binding obligation of Imaging to provide for any pension or
welfare benefits to any such employee or former employee, whether
before or after retirement, other than benefits under the Employee
Benefit Plans.
l. Except as set forth on Schedules 4.13(l)(i) or 4.13(l)(ii), no
Affected Employee will become entitled to any bonus, severance, job
security or similar benefit or any enhanced benefit (including
acceleration of vesting or exercise of an incentive award) solely as a
result of the transactions contemplated hereby.
m. Except as set forth on Schedule 4.13(m), there are no unfunded
liabilities with respect to any Affected Employee arising under an
Employee Benefit Plan.
n. With respect to Seller's UK Pension Plan:
1. DEFINITIONS
1.1 In this Section 4.13(n):
"Members" shall mean the employees, directors and
officers of Seller's UK Subsidiary who are acquired
by or transferred to Buyer or Buyer's UK Subsidiary
pursuant to this Agreement and who are entitled to
benefit under the Seller's UK Pension Plan and all
those Persons who are spouses, children and
dependants thereof;
"OPAS" means the Occupational Pensions Advisory
Service in the UK;
"OPRA" means the Occupational Pensions Regulatory
Authority in the UK;
"PSO" means the Pension Schemes Office of the Inland
Revenue in the UK;
1.2 All references to any enactment in this Section
4.13(n) shall include all other legislation having
the effect of re-enacting, consolidating, amending or
repealing the same.
1.3 All definitions used in Section 6.6(q) shall have
the same meanings in this Section 4.13(n).
2. DISCLOSURE OF INFORMATION
Details of Seller's UK Pension Plan have been disclosed to
Buyer prior to the date of this Agreement and all information
which has been made available to Buyer or its advisers on or
before the date of this Agreement is true, accurate and
complete.
3. ESTABLISHMENT
3.1 Seller's UK Pension Plan is established under
irrevocable trusts and in respect of the Members
complies with all material primary and secondary
legislation relative to occupational pension schemes
including laws of equal treatment of men and women in
terms of access to and benefits from the Seller's UK
Pension Plan (except in relation to Guaranteed
Minimum Pensions) and, so far as Seller and Seller's
UK Subsidiary are aware, has been operated in
accordance with the trust deed and rules governing
the Seller's UK Pension Plan at the Closing Date and
the requirements of the PSO, the Occupational
Pensions Board (for the period ended 5th April 1997)
and the Department of Social Security (for the period
6th April 1997 to date).
3.2 Seller's UK Pension Plan is contracted-out of the
State Earnings Related Pension Scheme in the UK in
accordance with the provisions of the 1993 Act and
Seller's UK Subsidiary is named on a valid
contracting-out certificate.
3.3 Seller's UK Pension Plan is exempt approved under
Chapter 1 of Part XIV of the 1988 Act for the
purposes of the PSO and, so far as the Seller and
Seller's UK Subsidiary are aware, there is no ground
on which such approval may be withdrawn or cease to
apply.
4. FINANCE AND INVESTMENT
4.1 All contributions due as at the date of this
Agreement to Seller's UK Pension Plan in respect of
the Members have been paid within the prescribed
period under the 1995 Act.
4.2 Seller's UK Pension Plan complies with Section 56
of the 1995 Act relating to the Minimum Funding
Requirement described in that section.
5. INSURANCE
Any benefits payable on the death of a Member whilst in
employment (other than a return of the Member's own
contributions and contributions paid in respect of him) during
a period of sickness or disability are insured, and all
premiums due to the insurance company have been paid, and each
Member has been covered for such insurance at normal rates and
on normal terms.
6. DISPUTES
There are no complaints in respect of Members under the
trustees' internal dispute resolution procedure (details of
which have been disclosed to the Members), or arbitrations,
claims to OPAS, Pension Ombudsman complaints, complaints to
OPRA, actions, suits or claims (other than routine claims for
benefits) in progress, or pending by any of the Members.
7. OTHER PENSION PLANS
Except for Seller's UK Pension Plan, Seller's UK Subsidiary is
not contributing to any retirement benefits pension or life
assurance plan or arrangement (including any personal pension
approved under Chapter IV of Part XIV of the 1988 Act) in
respect of the Members and, except as heretofore disclosed to
Buyer in writing, it is not under any legal, moral or other
obligation to provide any retirement, death, disability,
accident, or sickness pension or payment to or in respect of
any of the Members.
o. Except as set forth on Schedule 4.13(o), there are no contractual or
other arrangements or Commitments of any kind binding Seller's French
Subsidiary in particular with respect to pensions whereby the French
ARD Employees are or would be granted benefits in excess of benefits
legally required or benefits disclosed to the Buyer in writing prior to
the date hereof. A complete and accurate list of all Employees Benefit
Plans covering French ARD Employees is included in Schedule 4.13.
4.14 Environmental Matters.
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Except as set forth in Schedule 4.14:
a. the Imaging Group holds, and is in compliance in all material
respects with, all permits, licenses and government authorizations
required for the Imaging Group to hold its assets (including the PCI
Assets) and to conduct the Business under local, state, federal and
foreign laws and regulations relating to pollution and the discharge of
materials into the environment ("Environmental Law");
b. Seller and its Affiliates are, with respect to the Business, in
compliance in all material respects with all applicable Environmental
Law;
c. neither Seller nor any of its Affiliates has, with respect to the
Business, received any written request for information, or been
notified that it is a potentially responsible party, under the federal
Comprehensive Environmental Response, Compensation, and Liability Act
or any similar local, state or foreign law with respect to any on-site
or off-site location;
d. neither Seller nor any of its Affiliates has, with respect to the
Business, entered into or agreed to any consent decree or order, and is
not subject to any judgment, decree or judicial order relating to
compliance with, or the cleanup of regulated substances under, any
applicable Environmental Law;
e. the products sold by the Business shall as of Closing be in
compliance in all material respects with all applicable EU regulations
concerning harmonics and flicker which take effect on January 1, 2001;
and
f. there are no Environmental Conditions existing on any of the real
property of or used by the Business.
4.15 Labor Matters.
- -------------------
a. Except as set forth on Schedule 4.15(a):
(i) neither Seller nor any of its Affiliates is, with respect
to the Business, a party to any collective bargaining
agreement;
(ii) There is no unfair labor practice complaint or other
Proceeding against Seller or any of its Affiliates with
respect to the Business pending before the National Labor
Relations Board or, in the case of the UK Business, the
Central Arbitration Committee;
(iii) There is no labor strike, work stoppage or arbitration
Proceeding pending or involving or, to the Knowledge of
Seller, threatened against Seller or any of its Affiliates
with respect to the Business.
(iv) To the Knowledge of Seller, there are no organizing
efforts by any union or other group seeking to represent the
employees of Seller or any of its Affiliates with respect to
the Business.
b. To the Knowledge of Seller:
(i) the Imaging Group, PCI and the Business are and have been
in compliance in all respects with all applicable laws
respecting employment and employment practices, terms and
conditions of employment and wages and hours, including,
without limitation, the Americans with Disabilities Act, the
Immigration Reform and Control Act, the Worker Adjustment and
Retraining Notification Act, any such laws respecting
employment discrimination, disability rights or benefits,
equal opportunity, plant closure issues, affirmative action,
workers' compensation, employee benefits, severance payments,
data protection, Implementing Laws, labor relations, employee
leave issues, wage and hour standards, occupational safety and
health requirements and unemployment insurance and related
matters, and is not engaged in and has not engaged in any
unfair labor practice; and
(ii) no investigation or review by or before any Government
Authority concerning any possible conflicts with or violations
of any such applicable laws is pending, nor is any such
investigation threatened, nor has any such investigation
occurred during the last three years, and no Governmental
Authority has provided any notice to the Seller, the Imaging
Group or PCI or otherwise asserted an intention to conduct any
such investigation or review.
c. Each ARD Employee is a bona fide employee of a Foreign Subsidiary
who regularly performs at least 80 percent of his services for the
Business. The representation and warranty contained in this Section
4.15(c) may be amended by mutual agreement of the parties after
completion of due diligence.
d. With respect to Seller's French Subsidiary and the French ARD
Employees:
(i) Seller's French Subsidiary has complied with all
applicable social and tax related laws concerning the French
ARD Employees.
(ii) All returns or declarations concerning the French ARD
Employees have been duly filed in accordance with applicable
laws for periods ending on or prior to the France Closing
Date.
(iii) For time periods not time barred by applicable statutes
of limitation, all social and tax related contributions have
been paid when due by Seller's French Subsidiary and all
social and tax related contributions for any period ending on
or prior to the France Closing Date which accrued but are not
yet due have been reserved in accordance with applicable
accounting principles.
4.16 Absence of Certain Developments.
- -------------------------------------
Except as expressly contemplated by this Agreement, or except as set forth in
Schedule 4.16, since July 1, 2000:
a. there has been no adverse change in the Business, or in the
operation or financial condition thereof, except such changes which, in
the aggregate, have not had a Material Adverse Effect;
b. neither Seller nor any of its Affiliates has, with respect to the
Business, taken any actions which would, if taken after the date
hereof, violate Section 6.1 hereof;
c. there has not been any damage, destruction or loss, whether or not
covered by insurance, with respect to the property and assets of
Imaging, the Foreign Assets or the Business having a replacement cost
of more than $25,000 for any single loss or $50,000 for all such
losses;
d. there has not been any grant of any stock option or right to
purchase the shares of the stock of Imaging;
e. there has not been any declaration, setting aside or payment of any
non-cash dividend or other distribution in respect of any shares of
capital stock of Imaging or (other than for cash) any repurchase,
redemption or other acquisition of any outstanding shares of capital
stock or other securities of, or other ownership interest in, Imaging;
f. the Imaging Group and PCI have not awarded or paid any bonuses to
any of its employees, or entered into any employment, deferred
compensation, severance or similar Commitment (nor amended any such
Commitment) or agreed to increase the compensation payable or to become
payable by it to any of its directors, officers, employees, agents or
representatives, or agreed to increase the coverage or benefits
available under any severance pay, termination pay, vacation pay,
company awards, salary continuation for disability, sick leave,
deferred compensation, bonus or other incentive compensation,
insurance, pension or other employee benefit plan, payment or
arrangement made to, for or with such directors, officers, employees,
agents or representatives (other than (i) normal increases in the
ordinary course that in the aggregate have not resulted in a material
increase in the benefits or compensation expense of the Imaging Group,
(ii) increases which constitute Indemnified Liabilities, or (iii)
increases which would reduce the Working Capital Value);
g. there has not been any change by the Imaging Group in accounting or
tax reporting principles, methods or policies;
h. the Imaging Group has not entered into any transaction or Commitment
or conducted the Business other than in the ordinary course;
i. the Imaging Group has not failed to pay and discharge promptly
current liabilities except where disputed in good faith by appropriate
proceedings;
j. the Imaging Group has not made any loans, advances or capital
contributions to, or investments in, any Person or paid any fees or
expenses to Seller or to any Affiliate of Seller (other than the
payment of trade payables in the ordinary course);
k. the Imaging Group has not mortgaged, pledged or subjected to any
Lien any of its assets, or acquired any assets or sold, assigned,
transferred, conveyed, leased or otherwise disposed of any of its
assets, except for assets acquired or sold, assigned, transferred,
conveyed, leased or otherwise disposed of in the ordinary course;
l. the Imaging Group has not discharged or satisfied any Lien, or paid
any obligation or liability (fixed or contingent), except (i) in the
ordinary course, or (ii) those which relate only to Excluded Assets, or
(iii) those which are Excluded Liabilities or Indemnified Liabilities;
m. the Imaging Group has not cancelled or compromised any debt or claim
or amended, canceled, terminated, relinquished, waived or released any
Commitment or right except in the ordinary course and which, in the
aggregate, would not be material to the Imaging Group;
n. the Imaging Group has not made or committed to make any capital
expenditures or capital additions or betterments in excess of $100,000
individually;
o. the Imaging Group has not instituted or settled any material
litigation, suit, claim, action, Proceeding or investigation of any
kind; and
p. the Imaging Group has not agreed to do anything set forth in this
Section 4.16.
4.17 Certain Interests.
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Except as set forth on Schedule 4.17, neither Seller nor, to the Knowledge of
Seller, any Affiliate of Seller, officer or director of the Imaging Group or any
immediate relative or spouse who resides with, or is a dependent of, any such
officer or director:
a. owns, directly or indirectly, in whole or in part, or has any other
interest in, any tangible or intangible property which the Imaging
Group uses or has used in the conduct of the Business or otherwise
(except for any such ownership or interest resulting from the ownership
of securities in a public company);
b. has outstanding any indebtedness to the Imaging Group; or
c. is a party to any Commitment with the Imaging Group, or is owed by
the Imaging Group any obligation of any nature whatsoever, except for
the payment of employee compensation, the advancement of expenses or
indemnification obligations, and the payment of trade payables, in each
case in the ordinary course.
4.18 Insurance Policies.
- ------------------------
Schedule 4.18 sets forth a true and complete list and description (including
face amount of policy, name of insured, carrier, premium, expiration date and
whether it is a "claims made" or an "occurrence" policy) of all insurance
policies held by Imaging or covering the Business. All premiums due to the date
hereof on such policies have been paid. Except as set forth on Schedule 4.18,
there are no pending claims related to the Business that are covered by
insurance. Requisite notice (or presentment) of any claims under such policies
has been given (or made), except where such failure would neither prejudice the
ability to make a claim thereunder nor result in a Material Adverse Effect. Such
insurance to the date hereof has (i) been maintained in full force and effect
and (ii) not been canceled or changed, except to extend the maturity dates
thereof.
4.19 Banks.
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Schedule 4.19 sets forth the name of each bank in which Imaging has an account,
lockbox or safe deposit box, and the names of all Persons authorized to draw
thereon or have access thereto.
4.20 Accounts Receivable.
- -------------------------
The accounts receivable shown in the Reference Balance Sheet arose in the
ordinary course. The allowances for doubtful accounts and returns set forth
therein have been prepared in the ordinary course. The accounts receivable of
Imaging, and the accounts receivable that are Foreign Assets, arising after July
1, 2000 and prior to Closing arose or will arise in the ordinary course. None of
such accounts receivable is subject to any material asserted claim of offset or
recoupment or counterclaim and to the Knowledge of Seller there are no specific
facts that would be reasonably likely to give rise to any such claim. No
material amount of accounts receivable is contingent upon the future performance
by the Imaging Group of any obligation not accrued or reserved for on the
Reference Balance Sheet or otherwise reflected as deferred income and no
Commitment for deduction or discount has been made with respect to any material
amount of accounts receivable.
4.21 Books and Records.
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The minute books and other similar records of Imaging contain true and complete
registers of the shareholders and records of all actions taken at any meetings
of shareholders, boards of directors or any committee thereof and all written
consents executed in lieu of the holding of any such meetings. The accounting
books and records of the Imaging Group accurately reflect in all material
respects the assets, liabilities, business, financial condition and results of
operations of the Imaging Group.
4.22 [Intentionally omitted.]
- ----
4.23 No Misrepresentation.
- --------------------------
The representations and warranties of Seller contained in this Agreement and in
the Ancillary Agreements and the documents to be delivered by Seller at Closing
taken together do not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements contained herein or
therein not misleading.
4.24 Brokers and Finders.
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Other than Donaldson, Lufkin & Jenrette Securities Corporation, whose fees will
be paid by Seller and not by Imaging, the Buyer or any of Buyer's Affiliates,
neither Seller nor any of its Affiliates has employed any broker or finder or
incurred any liability for any investment banking fees, brokerage fees,
commissions or finders' fees in connection with the transactions contemplated by
this Agreement.
4.25 Canadian Limited Partnership.
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a. Seller's Canadian Subsidiary is a party to the BHC Limited
Partnership Agreement made as of the 1st day of November, 1996 (the
"Limited Partnership Agreement") with BHC Documents Inc. (now known as
DocuCom Imaging Solutions Inc.) (the "General Partner") to form the
Limited Partnership.
b. The Limited Partnership Agreement is in full force and effect,
unamended as of the date hereof.
c. Seller's Canadian Subsidiary, as the limited partner of the Limited
Partnership, is not in default or violation (and no event has occurred
which with notice or the lapse of time or both would constitute such a
default or violation) of any term, condition or provision of the
Limited Partnership Agreement and, in particular, it has not exceeded
the limitations on its authority as specified in section 3.2 of the
Limited Partnership Agreement.
d. The liability of Seller's Canadian Subsidiary for the debts,
liabilities, obligations and losses of the Limited Partnership is
limited to the capital contribution of Seller's Canadian Subsidiary
plus its pro rata share of the undistributed income of the Limited
Partnership, and Seller's Canadian Subsidiary has no further liability
for any debts, liabilities, obligations or losses of the Limited
Partnership and shall not be liable for any calls or assessments or
further contributions to the Limited Partnership.
e. To the Knowledge of Seller, the General Partner, as the general
partner of the Limited Partnership, has conducted the business and
affairs of the Limited Partnership in such a manner that the liability
of Seller's Canadian Subsidiary is limited to its capital contribution
and share of its undistributed income.
f. To the Knowledge of Seller, there is no Proceeding pending or
threatened, and no written or unwritten Claim has been asserted,
against the Limited Partnership, and the Limited Partnership is not
subject to any order, writ, judgment, award, injunction or decree of
any Government Authority of competent jurisdiction or any arbitrator.
4.26 Insolvency of Seller's UK Subsidiary.
- ------------------------------------------
a. No order has been made or petition presented, meeting convened or
resolution passed for the winding up of Seller's UK Subsidiary nor has
any receiver been appointed or any distress, execution or other process
been levied in respect of the UK Business or the UK Assets or any of
them.
b. No composition in satisfaction of the debts of Seller's UK
Subsidiary or scheme of arrangement of its affairs or compromise or
arrangement between it and either or both of its creditors or members
or any class of either or both of its creditors or members has been
proposed, sanctioned or approved.
c. No distress, distraint, charging order, garnishee order, execution
or other process has been levied or applied for in respect of the whole
or any part of the UK Business or the UK Assets.
d. No event has occurred causing, or which upon intervention or notice
by any third party may cause, any floating charge created by Seller's
UK Subsidiary to crystallise over the UK Business or the UK Assets or
any of them or any charge created by it to become enforceable over the
UK Business or the Assets or any of them nor has any such
crystallisation occurred nor is such enforcement in process.
4.27 UK Taxation.
- -----------------
a. There is no Inland Revenue charge over any of the UK Assets pursuant
to section 237 Inheritance Tax Act 1984 and no circumstances exist
whereby any power under section 212 Inheritance Tax Act 1984 could be
exercised in relation to any of the UK Assets.
b. All stamp duty and stamp duty reserve tax payable in relation to the
UK Assets has been paid and there is no liability to any penalty in
respect of such duty or tax.
c. The Seller is not in any dispute with the Inland Revenue, HM Customs
& Excise or other taxation authority concerning any matter in any way
affecting either the UK Business or any of the UK Assets.
d. Neither the Inland Revenue, nor Customs & Excise or any other
taxation authority has agreed to operate any special arrangement (being
an arrangement which is not based on a strict application of the
relevant legislation) in relation to the UK Business whether in respect
of benefits provided to its employees, the valuation of stocks or
depreciation of assets or in respect of any administrative or other
matter whatsoever.
e. The Seller has not participated in or operated any payroll deduction
scheme as defined in section 202 Income and Corporation Taxes Act 1988
which extends to any employees of the Business.
f. There is not and has not at any time been a profit related pay
scheme approved, or for which approval has been or is to be sought
under Chapter III Part V Income and Corporation Tax Act 1988 which
extends to employees of the UK Business and the Seller has no proposals
to introduce such a scheme.
4.28 Other UK Subsidiaries.
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Neither Paragon Kember Limited nor Repair Link Limited owns or uses any assets
whatsoever in relation to the Business.
4.29 Disclaimer.
- ----------------
The representations and warranties set forth in this Article IV are the only
representations and warranties made by Seller with respect to the Business and
the Foreign Assets.
ARTICLE V
---------
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller that the following statements are
true and correct in all material respects:
5.1 Corporate Organization; Etc.
- --------------------------------
Buyer is a corporation duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation and has all requisite
power and authority to own, lease and operate its properties and to carry on its
business as now being conducted, except where the failure to have such power or
authority is not, in the aggregate, reasonably likely to have a Material Adverse
Effect.
5.2 Authority Relative to this Agreement.
- -----------------------------------------
a. Buyer has all requisite corporate authority and power to execute and
deliver this Agreement and the Income Tax Disaffiliation Agreement and
to consummate the transactions contemplated hereby and thereby. The
execution and delivery of this Agreement and the Income Tax
Disaffiliation Agreement and the consummation of the transactions
contemplated hereby and thereby by Buyer have been duly and validly
authorized by all required corporate action on the part of Buyer and no
other corporate proceedings on the part of Buyer are necessary to
authorize this Agreement and the Income Tax Disaffiliation Agreement or
to consummate the transactions contemplated hereby or thereby. This
Agreement and the Income Tax Disaffiliation Agreement have been duly
and validly executed and delivered by Buyer and, assuming this
Agreement and the Income Tax Disaffiliation Agreement have been duly
authorized, executed and delivered by Seller, constitute valid and
binding agreements of Buyer, enforceable against Buyer in accordance
with their respective terms.
b. At Closing, Buyer and each of Buyer's Affiliates party thereto will
have full power and authority to execute and deliver each Ancillary
Agreement and to consummate the transactions contemplated thereby. At
Closing, the execution and delivery of each Ancillary Agreement and the
consummation of the transactions contemplated thereby will have been
duly and validly authorized by all requisite corporate action
(including, if requisite, shareholder or similar action) on the part of
Buyer and each of Buyer's Affiliates party thereto, and no other
proceedings on their part will be necessary to authorize each Ancillary
Agreement or to consummate the transactions contemplated thereby. At
Closing, each Ancillary Agreement will have been duly and validly
executed and delivered by and Buyer and each of Buyer's Affiliates
party thereto, assuming it has been duly authorized, executed and
delivered by Seller or Seller's Affiliates, will constitute a valid and
binding agreement of Buyer and each of Buyer's Affiliates party
thereto, enforceable against them in accordance with its terms.
5.3 Consents and Approvals; No Violations.
- ------------------------------------------
a. Except for applicable requirements of the HSR Act, and applicable
foreign requirements, no filing with, and no permit, authorization,
consent or approval of, any public body or authority is necessary for
the consummation by Buyer of the transactions contemplated by this
Agreement.
b. Neither the execution and delivery of this Agreement by Buyer nor
the consummation by Buyer of the transactions contemplated hereby nor
compliance by Buyer with any of the provisions hereof will:
(i) conflict with or result in any breach of any provision of
the charter or by-laws of Buyer;
(ii) result in a violation or breach of, or constitute (with
or without due notice or lapse of time or both), a default (or
give rise to any right of termination, cancellation or
acceleration) under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, license,
Commitment or other instrument or obligation to which Buyer or
any of its subsidiaries is a party or by which any of them or
any of their properties or assets may be bound, or
(iii) assuming that the filings referred to in Subsection
5.3(a) are duly and timely made, and assuming that all
applicable waiting periods under competition laws have expired
and all applicable approvals under competition laws have been
received, violate any order, writ, injunction, decree,
statute, rule or regulation applicable to Buyer, any of its
subsidiaries or any of their properties or assets;
except, in the case of (ii) and (iii) for violations, breaches or
defaults which are not in the aggregate reasonably likely to have a
Material Adverse Effect or prevent or delay the consummation of the
transactions contemplated hereby.
5.4 Financing.
- --------------
Buyer, either itself or from funding sources unconditionally available to Buyer,
has sufficient funds available to pay the Purchase Price in the manner and at
the times provided for herein.
5.5 Brokers and Finders.
- ------------------------
Neither Buyer nor any of its subsidiaries has employed any investment banker,
broker or finder or incurred any liability for any investment banking fees,
brokerage fees, commissions or finders, fees in connection with the transactions
contemplated by this Agreement.
ARTICLE VI
----------
COVENANTS OF THE PARTIES
6.1 Conduct of the Business.
- ----------------------------
a. Except as contemplated by this Agreement, or done consistent with the
restructuring charges already taken by the Imaging Group and reflected on
the Financial Statements, or as set forth in Schedule 6.1, or done with
the prior express consent of Buyer, during the period from the date of
this Agreement to the Closing Date (or, as applicable, the date Closing is
effected with respect to a Deferred Country), Seller will use all
reasonable efforts to cause the Imaging Group:
(i) to conduct the Business in the ordinary course consistent
with past practice, except in connection with the transactions
contemplated hereby;
(ii) to preserve intact the present organization of the
Business and preserve its relationships with customers,
suppliers, employees and others having significant business
dealings with it, in each case in the ordinary course
consistent with past practice; and
(iii) to maintain coverage under all insurance policies
covering current and prior periods, including insurance
policies covering Persons divested or acquired for which Buyer
may, by virtue of this Agreement, assume liabilities
("Seller's Insurance").
b. Without limiting the generality of the foregoing, and except as
otherwise provided in this Agreement or with Buyer's prior approval,
Seller will not permit any of the following in connection with or on
behalf of the Business:
(i) incurring any indebtedness for borrowed money or issue any
long-term debt securities or assume, guarantee or endorse the
obligations of any other Persons, to the extent that such
would be a liability, except for indebtedness incurred in the
ordinary course consistent with past practice; or
(ii) except in the ordinary course consistent with past
practice,
(a) acquiring or disposing of any real property or
other material assets;
(b) mortgaging or encumbering any real property or
other material assets;
(c) changing the strategy or current business plan
for the Business;
(d) increasing the salary or any other form of
compensation of any employee of the Business;
(e) entering into any Commitments that would
constitute Material Commitments, other than those
made in the ordinary course of the Business
consistent with past practice;
(f) engaging in any transactions with, or enter into
any Commitments with, Seller or its Affiliates,
except relating to the Excluded Assets and Excluded
Liabilities or required by this Agreement;
(g) entering into, adopting, amending or terminating
any Commitment relating to the compensation or
severance of any employee of the Business other than
in the ordinary course or relating solely to the
Excluded Assets and Excluded Liabilities, except to
the extent required by law or any existing
Commitments which have been disclosed to Buyer; or
(h) agreeing to take any of the foregoing actions.
c. Between the date of this Agreement and Closing, Seller shall:
(i) [intentionally omitted]
(ii) cause the current leases for the Lincolnwood and
Arlington Heights facilities to be fully assigned by Imaging
to Seller or another Seller Affiliate, with Imaging being
released from all obligation and liability thereunder;
(iii) neither transfer, nor permit any of Seller's Affiliates
to transfer, any employee of the Business into any other
business of the Seller, or any employee of another business of
the Seller into the Business, except in each case as otherwise
expressly agreed to by the parties;
(iv) take, or cause any of Seller's Affiliates to take, the
actions necessary to discharge or to release Imaging from
(and, therefore, to remove from the Closing Balance Sheet) any
and all liabilities related to any employees who are not
Affected Employees;
(v) to the extent such payment is required by applicable local
law, pay to the Affected Employees any accrued and unpaid
calendar year 2000 vacation which is outstanding on the
Closing Date;
(vi) cause PCI to transfer, assign and deliver to Imaging,
without payment or other transfer of assets by Imaging, all
right, title and interest in and to the following assets of
PCI, as more fully described on Schedule 6.1(c)(vi)
(collectively, the "PCI Assets"):
(a) all computer Software and Software Documentation
in any and all forms (object code, source code,
computer manuals, and all other forms), that relate
to Ivory, ISWIN or digital conversion utilities,
including without limitation all Software products,
Software used in the operation of products,
diagnostic Software, and CAD files (collectively, the
"PCI Software"), as well as all other Intellectual
Property incident thereto;
(b) all rights to royalty payments arising on or
after the Closing Date out of the licensing of Ivory
or ISWIN;
(c) all software support Commitments relating to
Ivory or ISWIN; and
(d) PCI's digital conversion lab, together with all
dedicated tools and tangible assets;
(vii) directly or indirectly, enter into a non-exclusive
agreement with Buyer, effective for a period of two years from
the Closing Date, to distribute in the territory of Japan,
under Buyer's standard terms for such distribution in such
territory, all products currently distributed by Bell & Howell
Japan KK; and
(viii) directly or indirectly, enter into a supply agreement
with Buyer, effective for a period of two years from the
Closing Date, for the requirements of Bell & Howell Ltd. for
the purchase of products identified in Section 6.9(a) hereof,
under Buyer's standard terms for such supply.
6.2 Access to Information.
- --------------------------
a. From the date of this Agreement to the Closing, Seller will, or
cause its Subsidiaries to:
(i) give Buyer and its authorized representatives reasonable
access to the documents in the Data Room and, for the sole
purpose of enabling Buyer to develop a transition plan in
connection with Buyer's succession to the Business, to the
books, records, offices and other facilities and properties of
the Business except relating to the Excluded Assets and
Excluded Liabilities;
(ii) permit Buyer in the company of Seller's representative to
make reasonable inspections of the books, records and
facilities of the Business, except relating to the Excluded
Assets and Excluded Liabilities, including but not limited to:
(a) facilitating Buyer's access to and review of all
known environmental documentation concerning the
Lincolnwood facility, including, but not limited to,
the 1999 Phase I and Phase II environmental studies;
(b) all known OSHA documentation concerning any or
all Imaging Group sites;
(c) any and all documentation concerning any removal
of underground storage tanks at the Lincolnwood
facility from 1989 to the date hereof; and
(d) appropriate drain testing and indoor air quality
monitoring at the Zion facility including, if
necessary, the completion of a Phase II environmental
assessment; and
(iii) cause its officers and other key employees to meet with
Buyer and its authorized representatives and to furnish to
them, either verbally or in documented format, such financial
and operating data and other information with respect to the
Business as Buyer may from time to time reasonably request in
connection with the development of its transition plan;
provided, however, that any such access shall be conducted at
a reasonable time and in such a manner as not to interfere
with the operation of the Business and in all cases shall be
coordinated with Dwight Mater or Don Deegan, and no
information shall be furnished to or requested by Buyer except
through them, or either of them; and provided further that all
such information and access shall be subject to the terms and
conditions of the Confidentiality Agreement between Buyer and
Seller.
b. Following the Closing Date, and for a period not to exceed seven
years, each party shall grant to the other party and its
representatives, at the latter party's reasonable request, reasonable
access to and the right to make copies at its expense of those records
and documents, including insurance records and documents, covering any
period prior to the Closing related to the Imaging Group, the Business,
the Foreign Assets or the PCI Assets as may be reasonably necessary for
litigation, preparation of financial statements and the Closing Balance
Sheet, tax returns and audits or other valid business purposes. For
this same time period and for these same purposes, Buyer shall grant to
Seller reasonable access to the accountants and employees of the
Business who are involved in the preparation of financial statements
for the Business, for which accommodation Seller shall reimburse Buyer
its related costs actually incurred.
6.3 Requisite Consents.
- -----------------------
Prior to the Closing and thereafter, Buyer and Seller shall fully cooperate with
each other to obtain, at Seller's cost and expense, all Requisite Consents;
provided, however, that Buyer shall pay its own costs and expenses incurred in
connection with obtaining all Consents of Government Authorities that constitute
Requisite Consents.
6.4 Reasonable Efforts.
- -----------------------
a. Subject to the terms and conditions herein provided, each of the
parties hereto agrees to use all reasonable efforts to take, or cause
to be taken, all action, and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this
Agreement, including, without limitation, making all required filings
and applications and complying with or responding to any requests by
Government Authorities.
b. If at any time after the Closing Date any further action is
necessary or desirable to carry out the provisions of this Agreement
(including transferring any assets and rights which should have been
owned by the Imaging Group but are not part of the Excluded Assets and
Excluded Liabilities, but were not, or which should not have been owned
by the Imaging Group but are not part of the Excluded Assets and
Excluded Liabilities, but were, or transferring any mail or payments on
accounts receivable which should have been delivered to the other party
hereunder), the parties hereto shall take or cause to be taken all such
necessary action, including, without limitation, the execution and
delivery of such further instruments and documents as may be reasonably
requested by the other party for such purposes or otherwise to
consummate and make effective the transactions contemplated hereby.
c. After Closing, Seller shall retain, and provide Buyer with
reasonable access to, copies of all insurance policies and other
insurance information reflecting Seller's Insurance, and shall make,
and diligently pursue, claims under Seller's Insurance for all
liabilities incurred prior to Closing. After Closing, Seller shall
maintain, and shall not take any steps to cancel or materially change,
buy-out or remove the Imaging Group or Seller as a named insured or as
an additional insured, from any of Seller's Insurance with respect to
any events, occurrences or matters covered by such policies that occur
prior to Closing. Nothing in this Agreement shall be construed to
eliminate Seller's rights to coverage and to make claims under Seller's
Insurance for any events, occurrences or matters which, except for this
Agreement, would have been covered by Seller's Insurance.
6.5 Public Announcements.
- -------------------------
Seller and Buyer will consult with each other before issuing any press release
or otherwise making any public statements with respect to the transactions
contemplated by this Agreement, and shall not issue any such press release or
make any such public statement prior to such consultation, except as may be
required by law or by obligations pursuant to any listing agreement with any
national securities exchange. Seller and Buyer shall make reasonable efforts to
make all press releases jointly and to cooperate in the making of any other
public announcements contemplated hereunder.
6.6 Employee Matters.
- ---------------------
As used in this Section 6.6, the term "Buyer" shall mean Buyer or one or more of
its U.S. or non-U.S. Subsidiaries or Affiliates, including Imaging, that will
employ Affected Employees or ARD Employees.
a. Compensation and Benefits for Affected Employees. Buyer shall
provide the Affected Employees and their dependents, beginning at the
Transfer Time, with the same compensation and employee benefit plans,
including without limitation pension benefits, health, life insurance
and other welfare and fringe benefit plans and programs, provided from
time to time by Eastman Kodak Company to its other similarly situated
employees and their dependents (or, for a period not to exceed one year
following Closing, if Buyer determines to maintain the Affected
Employees as employees of Imaging, Buyer may, in the alternative,
provide such Affected Employees with the same employee compensation and
benefits, including pension benefits, health, life insurance and other
welfare benefits, provided by Imaging immediately prior to Closing and
as disclosed in Schedule 4.13).
b. Defined Contribution Plans. Effective as of the day immediately
preceding the Transfer Time, all Affected Employees will cease to
actively participate in the Bell & Howell Profit Sharing Retirement
Plan, and effective at the Transfer Time and subject to Section 6.6(a),
will be eligible to participate in the Buyer's Savings & Investment
Plan (SIP) and Cash Balance Plus Retirement Plan.
c. Welfare Plans.
-------------
(i) Except as provided otherwise in this Section 6.6,
effective as of the day immediately preceding the Transfer
Time, Affected Employees and their dependents who participate
in the Bell & Howell Company Long Term Disability Plan, the
Bell & Howell Company Short Term Disability Plan, the Bell &
Howell Company Group Benefits Program, the Bell & Howell
Company Group Term Life Insurance Plan, the Bell & Howell
Company Accidental Death and Dismemberment Plan, the Bell &
Howell Company Business Travel Accident Insurance Plan, the
Bell & Howell Company Medical Plan, the Bell & Howell Company
Dental Plan, the Bell & Howell Company Vision Plan and any
other Employee Welfare Benefit Plan maintained by Seller, will
cease to participate in those plans, and effective at the
Transfer Time and subject to Section 6.6(a), Affected
Employees and their dependents will become eligible to
participate in Buyer's Employee Welfare Benefit Plans. Buyer
shall waive any waiting period, pre-existing condition and
actively-at-work requirements to the same extent that such
period, conditions and/or requirements are not applicable to
or have been satisfied by such Affected Employees and their
dependents before the Transfer Time under the Seller's
medical, dental and vision plans. Seller shall remain liable
for all expenses incurred by the Affected Employees and their
dependents prior to the Transfer Time, whether or not such
claims are reported on or after such date. Buyer shall be
liable for all expenses incurred by the Affected Employees and
their dependents on and after the Transfer Time.
(ii) If the Closing Date occurs on or before December 31,
2000, the administrator of the health care spending account
offered under the Bell & Howell Company Group Benefits Program
will offer participants in such account who are Affected
Employees the opportunity to participate in such health care
spending account on an after-tax basis for the portion of
calendar year 2000 that follows the Closing Date.
d. COBRA. Notwithstanding the foregoing, Seller shall provide COBRA
continuation coverage for those qualified COBRA beneficiaries in the
U.S. who are receiving COBRA continuation coverage or who are eligible
to elect COBRA continuation coverage under the Bell & Howell Company
Medical Plan as of the day immediately preceding the Closing Date, for
so long as such individuals are eligible for COBRA coverage.
e. Severance Payments by Buyer. In the event Buyer terminates the
employment of any Affected Employee within twelve (12) months after the
Closing Date, Buyer will provide each such Affected Employee with
severance benefits that are no less in the aggregate than the severance
benefits that such Affected Employee would have been entitled to
receive in the aggregate under the Bell & Howell Company and
Subsidiaries Separation Benefits Plan as in effect on the Closing Date;
provided, however, that Buyer shall calculate severance payments, and
provide health benefits, in accordance with the terms of such plan
during the 12-month period following the Closing Date.
f. Service. Except as otherwise provided by Section 6.6(e), Affected
Employees' service with Seller, Imaging and their Subsidiaries and
Affiliates shall be recognized for purposes of eligibility (including
without limitation eligibility for retiree health benefits),
participation and level of benefits under all Employee Benefit Plans
maintained by Buyer or a Subsidiary thereof, as applicable, provided
that no such service shall be credited for vesting or benefit accrual
purposes under Buyer's defined benefit pension plans.
g. Vacation. Affected Employees shall transfer to Buyer with the same
level of vacation time as such Affected Employees had with the Business
prior to Closing, provided, however, that subsequent to Closing, the
Affected Employees' vacation shall be subject to Buyer's vacation
plans. Notwithstanding anything contained herein, Affected Employees'
service with Seller, Imaging and their Subsidiaries and Affiliates
shall be recognized for purposes of determining such employees'
entitlement to vacation under the vacation policies of Buyer. If the
Closing Date occurs prior to December 31, 2000, (i) Seller will pay, in
cash, the Affected Employees' accrued vacation if such payment is
required by state law, and (ii) except for the accrued vacation
contemplated by the foregoing clause (i), Buyer will honor Affected
Employees' accrued vacation as accrued through the Closing Date under
Seller's vacation plan.
h. Other Arrangements. Certain of the Affected Employees are owners of
shares of stock of Bell & Howell Company and are subject, with respect
thereto, to the provisions of a certain Shareholders Agreement between
Seller and such Affected Employees (referred to herein as the "Equity
Employees"). All matters related thereto shall be settled at or prior
to the Closing Date between Seller and such Equity Employees without
cost or charge to Imaging, Buyer or Buyer's Affiliates. Certain of the
Affected Employees are parties to Commitments with Seller or Imaging
providing certain compensation and other benefits to them from Seller
or Imaging in the event the Purchase and Sale Transaction is closed.
All amounts due under such arrangements in excess of the amounts due
under Section 6.6(e) shall be the obligation of Seller, without any
cost or charge to Imaging, Buyer or Buyer's Affiliates.
i. Participation in Seller Plans. If Imaging has adopted any Employee
Pension Benefit Plans or Employee Welfare Benefit Plans sponsored by
Seller, it will take any action necessary to terminate its
participation in such Employee Pension Benefit Plans or Employee
Welfare Benefit Plans, effective as of the Closing Date.
j. Profit Sharing Contribution. For the period ending on the Closing
Date, employees of Imaging are participants in the Bell & Howell Profit
Sharing Retirement Plan. On behalf of such employees, certain employer
contributions have been accrued by Imaging, which contributions are
ordinarily made as soon as administratively possible after the last day
of each plan year. The Bell & Howell Profit Sharing Retirement Plan
will, for purposes of such employees, be amended to treat the Closing
Date as the last day of a plan year for purposes of allocating employer
contributions, and Buyer will pay such contributions, to the extent
accrued on the Closing Balance Sheet consistent with the Reference
Balance Sheet, to the trust under the Bell & Howell Profit Sharing
Retirement Plan as soon as practicable after the Closing Date.
k. Payment of MIB and Other Bonuses. Imaging has accrued certain
amounts which relate to the payment of bonuses to employees of Imaging.
For purposes of entitlement to bonus payments, the Closing Date will be
treated as the date as of which such bonus amounts are finally
determined and payable. Buyer will make such bonus payments, to the
extent accrued on the Closing Balance Sheet consistent with the
Reference Balance Sheet, to all eligible employees as soon as
practicable after the Closing Date.
l. Short-Term and Long-Term Disability. Any Affected Employee who is
not actively employed on the Closing Date and who is then receiving
short-term disability benefits from Seller will, on and after the
Closing Date, continue to be covered by disability benefits under the
applicable plan of Buyer or a Subsidiary thereof in accordance with
Section 6.6(a). Any employee or former employee of Imaging or PCI who
is receiving benefits under Seller's long-term disability plan as of
the Closing Date, or who satisfied all requirements for long-term
disability benefits as of the Closing Date, or who has been on
short-term disability for more than six months, will continue to be
covered by the long-term disability plan maintained by Seller.
m. Retention Bonuses. Certain employees of Imaging are to receive
retention bonuses if their employment continues through a specified
date. Seller will retain the obligation to pay these retention bonuses.
n. Severance Payments by Seller. With the exception of Affected
Employees who become entitled to benefits under a severance plan of
Buyer or a Subsidiary thereof, Seller will retain the obligation to pay
benefits (including severance and medical benefits), under the Bell &
Howell Company and Subsidiaries Separation Benefits Plan to all
employees of Imaging or PCI.
o. Tuition Reimbursement. Buyer will pay all tuition reimbursement
expenses of Affected Employees with respect to courses in progress on
the date hereof that have been approved under the Bell & Howell Company
Tuition Reimbursement Plan as of the date hereof, up to an aggregate
amount of $55,000.
p. ARD Employees.
-------------
(i) Buyer and Seller confirm their understanding that the sale
and purchase of the Business to the extent located in a member
state of the EU or other jurisdictions with similar laws will
constitute the transfer of an undertaking or business for the
purposes of the Acquired Rights Directive and Implementing
Laws. As a result, contracts of employment or employment
relationships of the ARD Employees will, as of the Transfer
Time, automatically transfer to Buyer in accordance with the
Acquired Rights Directive and Implementing Laws. Seller and
Buyer shall, and shall cause their respective Subsidiaries to,
cooperate to send notification of the proposed transfer to the
ARD Employees prior to Closing and appropriate confirmation of
the transfer of employment to the ARD Employees as soon as
reasonably practicable after the Transfer Time. In connection
with the ARD Employees, Seller and Buyer shall, and shall
cause their respective Subsidiaries to, each comply with all
applicable laws, including the Acquired Rights Directive and
Implementing Laws.
(ii) From and after the date hereof, Seller will, and will
cause its Subsidiaries to, use commercially reasonable efforts
in a timely manner to notify and consult with the respective
works councils or other employee representative bodies
relating to the ARD Employees as and to the extent required by
local law with respect to the transfers of ARD Employees
contemplated by this Agreement. In the event that Seller or
any of its Subsidiaries is required under law in any country
or Commitment to provide information to its works councils or
other employee representative bodies concerning Buyer or its
Affiliates, or any measures that Buyer anticipates will be
taken after the Transfer Time with respect to the Business,
Buyer will immediately upon Seller's request provide all such
information as is required for such purposes and will
otherwise cooperate fully with Seller in connection with such
consultations.
q. UK Pension Plan.
---------------
1. INTERPRETATION
1.1 In this Section 6.6(q):
"1988 ACT" means the UK Income and Corporation Taxes
Act 1988.
"1993 ACT" means the UK Pension Schemes Act 1993.
"1995 ACT" means the UK Pensions Act 1995.
"ACTUARY" means a Person who is a Fellow of the
Institute of Actuaries in the UK or a Fellow of the
Faculty of Actuaries in Scotland.
"ACTUARY'S LETTER" means the letter from the Seller's
Actuary to the Buyer's Actuary, a copy of which is
attached as Schedule 6.6(q).
"ASSUMPTIONS" means the actuarial assumptions and
methods set out in the Actuary's Letter.
"AVC FUND" means a fund comprising those voluntary
contributions, or any investments or moneys
representing them and any income derived from them,
in respect of which the entitlements of Members who
have paid them are not related to earnings but are
based on the parts of that fund which are
respectively attributable to those Members.
"BUYER'S ACTUARY" means the Actuary or firm of
Actuaries appointed by the Buyer or Buyer's UK
Subsidiary for the purposes of this Section 6.6(q).
"BUYER'S UK PENSION PLAN" means the Kodak Pension
Plan (or, if the context so requires, the trustees of
that plan).
"BUYER'S UK SUBSIDIARY" means the Person that is the
principal or primary employer under the Buyer's UK
Pension Plan from time to time prior to the Payment
Date.
"EMPLOYEES" means the employees, officers and
directors of Seller or Seller's UK Subsidiary
employed in the UK Business immediately prior to the
Closing Date.
"JOINING MEMBERS" means those Members who have
elected to join the Buyer's UK Pension Plan with
effect from the Closing Date for future service
pursuant to paragraph 2.1.
"MEMBERS" means those Employees at the Closing Date
who are at that date members of the Seller's UK
Pension Plan and are under Plan Age.
"PAST SERVICE RESERVE" means the actuarial values as
at the Closing Date (calculated in accordance with
the Assumptions) of the aggregate of the benefits
(excluding any payable on death in service which are
insured), whether immediate, prospective or
contingent, payable under the Seller's UK Pension
Plan (excluding any rights to guaranteed minimum
pensions payable under the Seller's UK Pension Plan)
to and in respect of each Transferring Member, his
spouse and dependants, by reference to pensionable
service before the Closing Date but allowing (on the
basis of the Assumptions) for the projected increases
in the rate of Pensionable Salary of each
Transferring Member from the Closing Date to Plan Age
(or earlier assumed date of exit in accordance with
the Assumptions) and increases pursuant to a legal
obligation in pensions in payment and deferred
pensions.
Any limitation arising from the UK Finance
Act 1989 on the amount of a Transferring Member's
earnings shall apply for the purpose of determining
his Pensionable Salary under (a) above.
"PAYMENT DATE" means the fifth working date after the
date on which the Transfer Sum is determined and
agreed under paragraph 3 (or decided under paragraph
7).
"PENSIONABLE SALARY" has the meaning given to the
phrase in the trust deed and rules governing the
Seller's UK Pension Plan immediately prior to the
Closing Date.
"PLAN AGE" means, in relation to a Member, his Normal
Retiring Date as defined in the trust deed and rules
governing the Seller's UK Pension Plan immediately
prior to the Closing Date.
"REVENUE" means the Board of Inland Revenue in the
UK.
"SELLER'S ACTUARY" means the Actuary or firm of
Actuaries appointed by the Seller or Seller's UK
Subsidiary for the purposes of this Section 6.6(q).
"SELLER'S UK PENSION PLAN" means the Bell & Howell
Limited 1971 Pension and Death Benefits Plan
established by an Interim Trust Deed dated 17th
November 1971 and currently governed by a Definitive
Trust Deed dated 17th February 1977, as amended by a
supplemental Definitive Deed dated 10th May 1995 or,
if the context requires, the trustees of that Plan.
"SELLER'S UK SUBSIDIARY" means Bell & Howell Limited.
"TIMING ADJUSTMENT" shall have the meaning given to
that phrase in the Actuary's Letter.
"TRANSFER SUM" means a sum determined by the Seller's
Actuary and agreed by the Buyer's Actuary under
paragraph 3.3 (or decided under paragraph 7) as being
equal to the Past Service Reserve with Timing
Adjustment for the period from and including the
Closing Date to and excluding the Payment Date.
"TRANSFERRING MEMBERS" means those Joining Members
who pursuant to paragraph 3.3 elect or consent in
such form as the Seller may reasonably require, such
form to include a discharge and indemnity in favor of
the Seller and the Seller's UK Pension Plan for any
liability to or in respect of the Transferring
Members to provide any further benefits in respect of
their accrued rights (other than accrued rights to
guaranteed minimum pensions which are to be retained
by the Seller's UK Pension Plan) under the Seller's
UK Pension Plan to a payment (in cash or in assets)
being made by the Seller's UK Pension Plan to the
Buyer's UK Pension Plan in lieu of their accrued
rights under the Seller's UK Pension Plan who do not
withdraw that election or consent..
1.2 References in this Section 6.6(q) to employees
include directors.
1.3 Words and expressions used in Chapter 1 of Part
XIV of the 1988 Act or in the 1993 Act shall have the
same meanings in this Section 6.6(q).
1.4 References in this Section 6.6(q) to any statute
or statutory provisions shall include any statute or
statutory provision which amends, extends,
consolidates or replaces it.
1.5 References in this Section 6.6(q) to paragraphs
are references to provisions of this Section 6.6(q).
2. BUYER'S UK PENSION PLAN
2.1 The Buyer shall procure that immediately after
the Closing Date it will offer all Members membership
of the Buyer's UK Pension Plan with effect from the
Closing Date on terms which have been disclosed to
the Seller prior to the date of this Agreement.
2.2 The Buyer warrants that the Buyer's UK Pension
Plan is an "exempt approved scheme" (as defined in
the 1988 Act) and will use its reasonable endeavors
to procure that it remains an exempt approved scheme
as at the Payment Date.
3. CALCULATION OF TRANSFER SUM AND NOTIFICATION TO
MEMBERS
3.1 The Seller's Actuary will calculate the potential
Transfer Sum in respect of all Joining Members within
six weeks of being provided by the Buyer with:
(a) a list of all the Joining Members; and
(b) full information and data in relation to
the Joining Members as may be reasonably
requested by the Seller's Actuary.
The Buyer's Actuary will then verify and agree the
potential Transfer Sum in respect of all Joining
Members (and in default of agreement, paragraph 7
will apply).
3.2 Within one month of the verification and
agreement under paragraph 3.1 above, the Buyer's
Actuary will then calculate the benefits to be
granted to Joining Members in the Buyer's UK Pension
Plan should they become Transferring Members under
this paragraph 3. The benefits will be calculated as
at the Closing Date on the basis of the assumptions
applicable on that date for the calculation of the
Minimum Funding Requirement in the Buyer's UK Pension
Plan pursuant to Sections 56 and 57 of the 1995 Act
and regulations made thereunder. The Buyer's Actuary
will disclose to and agree with the Seller's Actuary
the benefits to be offered to Joining Members, and
which will be granted to those Joining Members who
become Transferring Members, under this paragraph.
3.3 Immediately following the agreement in paragraph
3.2 above, Joining Members will be notified by the
Buyer of the benefits calculated under this paragraph
3 that will be provided to them under the Buyer's UK
Pension Plan in lieu of their benefits under the
Seller's UK Pension Plan subject to their becoming
Transferring Members, and will be offered the
opportunity of electing that the Seller's UK Pension
Plan transfers to the Buyer's UK Pension Plan their
individual share of the Transfer Sum, representing
the value of those rights pursuant to the provisions
of this Section 6.6(q).
3.4 Immediately following the elections of all
Joining Members made pursuant to paragraph 3.2 above,
the Buyer's Actuary will provide the Seller's Actuary
with a list of all the Transferring Members together
with such additional information and data as the
Seller's Actuary may reasonably require. The Seller's
Actuary will then promptly calculate and agree the
Transfer Sum with the Buyer's Actuary and notify the
Seller's UK Pension Plan and the Seller's UK
subsidiary of the Transfer Sum immediately following
such agreement.
3.5 The Seller and the Buyer shall each use their
respective reasonable endeavors to procure that:
(a) all information in the possession or
control of the Seller's UK Subsidiary or the
Buyer's UK Subsidiary which the Seller's
Actuary or the Buyer's Actuary may
reasonably request for the purpose of
calculating the Transfer Sum shall be made
available promptly to that Actuary; and
(b) all information made available under (a)
above shall be true, complete and accurate
in all material respects.
3.6 The Seller and the Buyer shall respectively
procure that the Seller's UK Subsidiary and the
Buyer's UK Subsidiary will each use their respective
reasonable endeavors to expedite the determination
and agreement of the Transfer Sum by the Seller's
Actuary and the Buyer's Actuary respectively.
4. PAYMENT OF TRANSFER SUM
4.1 The Seller's obligations under this paragraph 4
are conditional upon the Buyer's obligations under
paragraph 2 being performed before the Payment Date
and agreement of the Seller's Actuary and the Buyer's
Actuary on the benefits to be offered to Members
under the Buyer's UK Pension Plan pursuant to
paragraphs 3.1 through 3.3 above.
4.2 Subject to paragraph 4.1, the Seller shall
procure that the Seller's UK Subsidiary will request
the trustees of the Seller's UK Pension Plan (to the
extent that it can lawfully do so) to pay the
Transfer Sum on the Payment Date to the Buyer's UK
Pension Plan as set out in paragraph 4.3.
4.3 The Transfer Sum may be paid:
(a) in cash;
(b) in assets whose mid-market value on the
day before the Payment Date is equal (as
certified by the Seller's Actuary and agreed
by the Buyer's Actuary to the Transfer Sum;
and
(c) by a combination of (a) and (b) above.
4.4 If on the Payment Date less than the Transfer Sum
has been transferred from the Seller's UK Pension
Plan to the Buyer's UK Pension Plan, the Seller shall
within ten working days of a demand by the Buyer pay
in cash by way of repayment of an equivalent amount
of the Purchase Price to the Buyer the amount which
is equal to the Transfer Sum less the amount which on
the Payment Date has been transferred from the
Seller's UK Pension Plan to the Buyer's UK Pension
Plan with Timing Adjustment in respect of the period
from and including the Payment Date to and excluding
the date of final payment under this paragraph.
4.5 If on the Payment Date more than the Transfer Sum
has been transferred from the Seller's UK Pension
Plan to the Buyer's UK Pension Plan, the Buyer shall
within ten working days of a demand from the Seller
pay in cash to the Seller by way of an addition to
the Purchase Price the amount which is equal to the
amount which on the Payment Date has been transferred
from the Seller's UK Pension Plan to the Buyer's UK
Pension Plan less the Transfer Sum, with Timing
Adjustment in respect of the period from and
including the Payment Date to and excluding the date
of final repayment under this paragraph.
5. AVC FUND
5.1 Any AVC Fund within the Seller's UK Pension Plan
and:
(a) the benefits payable from it;
(b) the contributions payable to it; and
(c) any transfer payment made from it;
shall be disregarded for all preceding provisions of
this Section 6.6(q).
5.2 Regardless of paragraph 5.1, the Seller will
procure that the Seller's UK Subsidiary will make a
request the trustees of the Seller's UK Pension Plan
that the part of any AVC Fund attributable to the
Transferring Members in accordance with the
provisions of the Seller's UK Pension Plan is
transferred to the Buyer's UK Pension Plan on the
Payment Date.
6. TRANSFER SUM TO PURCHASE BENEFITS FOR TRANSFERRING MEMBERS
Subject to payment of the Transfer Sum, the Buyer shall and
will procure that the Buyer's UK Subsidiary shall procure that
the Transfer Sum will be used in its entirety to provide
relevant benefits for the Transferring Members in the Buyer's
UK Pension Plan equivalent in value of the Transfer Sum on the
basis that:
(a) the benefits provided to Transferring Members
shall be calculated and agreed in accordance with
paragraph 3 (or in default of agreement, pursuant to
paragraph 7); and
(b) the value of the accrued rights and entitlements
offered to each Transferring Member will not be
reduced in any way under the Buyer's UK Pension Plan.
7. DISPUTES
7.1 Any dispute between the Seller's Actuary and the
Buyer's Actuary concerning the determination or
agreement of:
(a) the Transfer Sum; or
(b) any other matters to be determined or
agreed by them for the purposes of this
Section 6.6(q);
shall, in the absence of agreement between them, be
referred to an independent Actuary to be nominated
jointly by the Seller's UK Subsidiary and the Buyer's
UK Subsidiary or, failing such nomination, to be
nominated by the President for the time being of the
Institute of Actuaries in the UK at the instance of
the party first applying to him.
7.2 In relation to an Actuary appointed under
paragraph 7.1:
(a) he shall act as an expert and not an
arbitrator;
(b) his decision shall be final and binding;
and
(c) his costs shall be borne as he shall
direct.
r. Other UK Employee Benefit Matters.
---------------------------------
(i) Seller agrees to pay all premiums (and any other costs) to
cover the provision of medical care to all UK ARD Employees
under any private medical insurance arrangements in place up
to and including the Closing Date.
(ii) Seller agrees to make payment of any employee retention
incentives promised to any UK ARD Employee by the Seller (or
any of the Seller's Affiliates) prior to Closing (even if
payable after Closing) and to ensure that any commitment to
any UK ARD Employee that options will vest within a period
from Closing are fulfilled.
(iii) Without limiting the generality of any other provision
of this Agreement, the following liabilities associated with
the UK ARD Employees are Excluded Liabilities:
(a) all liabilities arising out of Claims made by any
employee, former employee, or dependent or
representative thereof, in connection with the
transfer of the employment of the UK ARD Employees,
or as a result of the subsequent expiry of notice
given to any UK ARD Employee by the Seller or its
Affiliates, or arising from the termination of any
Person's employment before Closing, or arising from
any act or omission of the Seller or any of its
Affiliates prior to Closing (whether such Claim shall
be for wrongful or unfair dismissal, statutory gross
redundancy payment, contractual or other redundancy
payment, compensation for failure to consult or
inform, pay in lieu of notice, dismissal at common
law or otherwise);
(b) in the event that the employment of any of S.
Adams, G. Winsbarrow, A. Gardner, T. Crean, R. Root,
B. Carbine, C. Hibbert, V. Veinschagen, M. Foster and
J. Chapman is terminated within six months of
Closing, all liability for statutory redundancy pay,
company redundancy pay, pay in lieu of notice or any
other severance package offered to such employees
prior to Closing by the Seller or any of its
Affiliates;
(c) except for the Buyer's continuing obligations in
relation to the ARD Employees pursuant to the terms
and conditions of employment by Buyer, all
liabilities which the Buyer or its Affiliates
acquires by virtue of the operation of the Transfer
of Undertakings (Protection of Employment)
Regulations 1981, as amended; and
(d) all liabilities for any income tax and/or
national insurance contributions which may arise by
virtue of the exercise by the Persons referenced in
Section 6.6(r)(ii) of any option or other right to
acquire shares of the Seller or any of its Affiliates
and for which the Buyer or its Affiliates may be
liable to account under the UK "pay as you earn"
system, including any interest or penalties which may
arise by virtue of any failure to deduct and account
for any such income tax and/or national insurance
contributions.
s. France Pension Plan and Benefits. Seller and Buyer acknowledge that
to the extent that such pensions and employee benefits are:
(i) required by applicable French law,
(ii) required by applicable collective bargaining agreement,
or
(iii) required by applicable contract transferred to Buyer
hereunder (but only to the extent of the minimum period
required by such contract),
Buyer will be obligated under French law to replicate and maintain the
same level of pensions and employee benefits, including the same level
of contributions, as those previously paid by Seller in respect of ARD
Employees employed in France, subject only to change by applicable
French statute and laws. Seller acknowledges that it will be liable for
all such contributions accrued and unpaid in respect of the period
prior to the France Closing Date, and Buyer acknowledges that it will
be liable for all such contributions due in respect of the period after
the France Closing Date.
t. Offers of Employment. Buyer will offer employment to each U.S.
employee of PCI who is on the date hereof dedicated to digital
conversion utilities and support for Ivory. Each such offer shall
comply with the terms of Section 6.6(a) hereof and shall provide the
employee at least five days in which to accept or reject Buyer's offer
of employment.
u. Irish Pension Matters.
---------------------
1. INTERPRETATION
1.1 In this Section 6.6(u):
"1988 ACT" means the UK Income and Corporation Taxes
Act 1988.
"1997 ACT" means the Irish Taxes Consolidation Act
1997.
"ACTUARY" means a Person who is a Fellow of the
Institute of Actuaries in the UK or Ireland or a
Fellow of the Faculty of Actuaries in Scotland.
"AVC FUND" means a fund comprising those voluntary
contributions, or any investments or moneys
representing them and any income derived from them,
in respect of which the entitlements of Irish Members
who have paid them are not related to earnings but
are based on the parts of that fund which are
respectively attributable to those Irish Members.
"BUYER'S ACTUARY" means the Actuary or firm of
Actuaries appointed by the Buyer or Buyer's Irish
Pension Subsidiary for the purposes of this Section
6.6(u).
"BUYER'S IRISH PENSION PLAN" means the Irish section
of the Buyer's UK Pension Plan (as defined in
paragraph 1.1 of Section 6.6(q)) or the equivalent
Irish pension arrangement operated by the Buyer for
Irish employees which provides broadly similar
benefits to the Buyer's UK Pension Plan (or, if the
context so requires, the trustees of that plan).
"BUYER'S IRISH PENSION SUBSIDIARY" means the Person
that is the principal or primary employer under the
Buyer's Irish Pension Plan from time to time prior to
the Payment Date.
"IRISH EMPLOYEES" means the employees, officers and
directors of Seller or Seller's Subsidiaries and
Affiliates employed in the UK Business other than
Employees to whom Section 6.6(q) applies immediately
prior to the Closing Date.
"IRISH MEMBERS" means those Irish Employees at the
Closing Date who are at that date members of the
Seller's Irish Pension Plan and are under Plan Age.
"PLAN AGE" means, in relation to an Irish Member, his
Normal Retiring Date as defined in the trust deed and
rules governing the Seller's Irish Pension Plan
immediately prior to the Closing Date.
"REVENUE" means the Board of Inland Revenue in
Ireland.
"REVENUE COMMISSIONERS" means the Irish Revenue
Commissioners.
"SELLER'S IRISH PENSION PLAN" means the Bell & Howell
Limited Irish Pension and Life Assurance Scheme
established with effect from 6 April 1994 and secured
by a policy with Irish Life Assurance Company Limited
under Group Policy Number 609049 (or, if the context
so requires, the trustees of that plan).
"TRANSFERRING IRISH MEMBERS" means those Irish
Members who join the Buyer's Irish Pension Plan with
effect from the Closing Date under paragraph 2.1 and
who elect or consent in such form as the Seller may
reasonably require (such form to include a discharge
and indemnity in favor of the Seller and the Seller's
Irish Pension Plan for any liability to or in respect
of the Transferring Irish Members to provide any
further benefits in respect of their accrued rights)
to a payment (in cash or in assets) being made by the
Seller's Irish Pension Plan to the Buyer's Irish
Pension Plan in lieu of their accrued rights under
the Seller's Irish Pension Plan who do not withdraw
that election or consent.
"TRANSFER SUM" means the amount standing to the
credit of a Transferring Irish Member under the
Seller's Irish Pension Scheme which arises from
contributions made by or in respect of the Irish
Member (including any transfer payments received or
augmentations made) being the investments and moneys
representing those sums and any income derived
therefrom and for the purposes of determining the
Transfer Sum the Seller shall procure that the
benefits attributable to employer contributions shall
be treated as having vested immediately
notwithstanding any qualifying service requirement
which would otherwise apply under the provisions of
the Seller's Irish Pension Plan.
1.2 References in this Section 6.6(u) to employees
include directors.
1.3 Words and expressions used in Part 30, Chapter 1
of the 1997 Act, or in Chapter 1 of Part XIV of the
1988 Act as the context requires, shall have the same
meanings in this Section 6.6(u).
1.4 References in this Section 6.6(u) to any statute
or statutory provisions shall include any statute or
statutory provision which amends, extends,
consolidates or replaces it.
1.5 Unless the context requires otherwise, references
in this Section 6.6(u) to paragraphs are references
to the provisions of this Section 6.6(u).
2. BUYER'S IRISH PENSION PLAN
2.1 The Buyer shall procure that immediately after
the Closing Date it will offer all Irish Members
membership of the Buyer's Irish Pension Plan with
effect from the Closing Date on terms which, after
allowing for differences which arise from differing
statutory requirements between the Irish and UK
jurisdictions, are in all material respects the same
as those disclosed to the Seller in accordance with
paragraph 2.1 of Section 6.6(q) prior to the date of
this Agreement.
2.2 The Buyer warrants that the Buyer's Irish Pension
Plan is either an "exempt approved scheme" (as
defined in the 1988 Act) which has "reciprocal
approval" for the purposes of the Revenue and the
Revenue Commissioners or is an "exempt approved
scheme" (as defined in the 1997 Act), and will use
its reasonable endeavors to procure that it remains
such a scheme as at the Payment Date (as defined in
Section 6.6(q)).
3. BENEFITS FOR TRANSFERRING MEMBERS
Subject to receipt of the Transfer Sum from the Seller's Irish
Pension Scheme, the Buyer shall and shall procure that the
Buyer's Irish Pension Subsidiary shall procure that the
Transfer Sum will be used in its entirety to provide relevant
benefits for the Transferring Members in the Buyer's Irish
Pension Plan equivalent in value to the Transfer Sum
calculated by the Actuary to the Buyer's Scheme using the
actuarial assumptions currently in force in the Buyer's Irish
Pension Scheme at the date of receipt of the Transfer Sum.
4. AVC FUND
4.1 Any AVC Fund within the Seller's Irish Pension
Plan and:
(a) the benefits payable from it;
(b) the contributions payable to it; and
(c) any transfer payment made from it;
shall be disregarded for all preceding provisions of
this Section 6.6(u).
4.2 Regardless of paragraph 4.1, the Seller will use
its reasonable endeavors to procure that the part of
any AVC Fund attributable to the Transferring Irish
Members in accordance with the provisions of the
Seller's Irish Pension Plan is transferred to the
Buyer's Irish Pension Plan on the Payment Date.
6.7 Competition Filings.
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As promptly as possible (but in any event not later than (a) 10 Business Days
after the execution hereof in the case of the U.S., or (b) 15 Business Days
after the execution hereof in the case of the UK, or (c) 30 Business Days after
the execution hereof in the case of all other countries) Buyer and Seller shall
each file or cause to be filed by their respective Affiliates, notification of
the Transaction proposed hereunder as required by all applicable competition
laws. In connection therewith, Buyer and Seller shall, and shall cause their
respective Affiliates to, furnish promptly to each appropriate Government
Authority any additional information requested by such Government Authority in
connection with such filings and shall diligently take, or cooperate in the
taking of, all steps that are necessary or desirable and proper to expedite the
termination of any waiting period under such competition law. Notwithstanding
the foregoing, nothing contained in this Agreement will obligate any party to
agree to any disposition of assets, separate management Commitment or any other
restriction or limitation on its current or future business or activity.
6.8 Transition Services.
- ------------------------
After Closing, Seller shall cause the following transition services to be
provided to Imaging, Buyer or Buyer's Affiliates, in accordance with the terms
of the applicable agreement:
a. Pursuant to and in accordance with the terms of the Transition
Services Agreement, Seller shall provide Buyer with the services
described in the Transition Services Agreement.
b. Pursuant to and in accordance with the terms of the Transition
Services Agreement, Seller shall license to Buyer occupancy and use of
(i) the facilities located in the UK that are currently used in the
operation of the Business, (ii) the facilities located at 6800
McCormick, Chicago, Illinois that are currently used in the operation
of the Business, and (iii) certain of the facilities located in Monroe,
North Carolina that are currently used in the operation of the business
of PCI.
c. Pursuant to and in accordance with the terms of the Transition
Services Agreement, Buyer will provide to Seller maintenance services
on a transition service basis for equipment maintained by MMT in
locations in France where service coverage is provided prior to Closing
by an Imaging Group field representative, and from time to time Buyer
may request from Seller maintenance services on a transition service
basis for equipment maintained by the Imaging Group in locations in
France where service coverage is provided prior to Closing by an MMT
field representative.
d. Pursuant to and in accordance with the terms of the Scanner Supply
Agreement, MMT shall manufacture certain equipment for Buyer.
6.9 Noncompetition.
- -------------------
a. In order to protect the value of the Business, each of Seller and
MMT agrees, for itself and for each of its Subsidiaries, for a period
of five (5) years from the Closing Date in the U.S. and Canada, and
three (3) years from the Closing Date elsewhere in the world, not to
engage, directly or indirectly, whether as owner, principal,
stockholder, employee, consultant or in any other capacity, anywhere in
the world in any of the following activities:
(i) the development or manufacturing or sale or distribution
of document imaging scanners or document imaging scanning
supplies or spare parts used in the maintenance of document
imaging scanners;
(ii) the development or sale or distribution of Ivory, ISWIN
or Software embedded in or sold as part of a scanner described
in the foregoing clause (i);
(iii) the development or sale of products or services for
digital-to-digital conversion of stored document images;
(iv) the sale or distribution of micrographics cameras,
readers, reader-printers, or duplicators, 16mm film scanners
or microfilm processors or spare parts used in the maintenance
of any of the foregoing;
(v) the sale or distribution of microfilm, microfilm jackets
or micrographic supply items; or
(vi) the provision of maintenance or support services, or the
sale of spare parts in connection therewith, for other
manufacturers' micrographic products, document imaging systems
or components thereof, optical storage systems or components
thereof, or desktop branch item processing systems similar to
Ivory (or successors to Ivory);
except for:
(x) maintenance and support services for equipment and
Software owned or leased for its own use by Seller and its
Subsidiaries;
(y) products and services identified in this Section 6.9(a):
(a) to the extent that such products and services are
offered on the date hereof by Seller and its
Subsidiaries for use in the applications of
electronic publishing, micropublishing and the
microfilm subscription business, including such
business as carried on by Bell & Howell Information
and Learning Company, Bell & Howell Publishing
Services Company, Bell & Howell Ltd.'s Micromedia
business unit or MMT; or
(b) that are optical storage systems or components
thereof that are directly related to an MMT-supplied
or similar mail processing system; and
(z) services and/or products provided to Buyer or its
Affiliates pursuant to this Agreement of any Ancillary
Agreement.
b. Each of Seller and MMT acknowledges and agrees that the current
market for the Business and its products extends throughout the entire
world and that it is therefore reasonable to prohibit Seller, MMT and
their Subsidiaries from so competing with Buyer and its Affiliates
anywhere in the world.
c. If any court of competent jurisdiction determines that the
restrictive covenant contained in this Section 6.9, or any part
thereof, is invalid or unenforceable for any reason, the remainder of
the restrictive covenant will not thereby be affected and will be given
full force and effect, without regard to the invalid portion or
portions. If any such court determines that the restrictive covenant
contained in this Section 6.9, or any part thereof, is unenforceable
because of the duration or scope of such covenant, such court will have
the power to reduce such duration or scope and, in its reduced form,
such covenant will then be enforceable and will be given full force and
effect.
d. Each of Seller and MMT acknowledges and agrees that the provisions
of this Section 6.9, as they apply to it and its Subsidiaries, are
reasonable and supported by adequate consideration, that Buyer would
not have entered into this Agreement without having received the
benefit of the provisions of this Section 6.9, and that any breach of
the provisions of this Section 6.9 would result in substantial and
irreparable harm to Buyer, Imaging and their Affiliates and, therefore,
that Buyer and Imaging will be entitled to an injunction to prohibit
any such breach or anticipated breach, without the necessity of posting
a bond, cash or otherwise, in addition to all of their other legal and
equitable remedies, including other remedies provided by this
Agreement.
e. The provisions of this Section 6.9 shall also be binding upon each
successor, whether by merger, consolidation, reorganization, sale and
purchase or otherwise, to any material portion of the business of each
of Seller and MMT.
f. Application of the provisions of this Section 6.9 shall be subject
to the provisions of Section 2.7(f).
6.10 Nonsolicitation of Employees.
- ----------------------------------
Seller shall not, without Buyer's prior written consent, and for the period
commencing on the Closing Date and ending on the second anniversary of the
Closing Date, employ, or solicit or seek to employ, any Person who is an
employee of Buyer; provided, however, this provision shall not apply to:
a. any employee who voluntarily, and independently of Seller,
terminates his or her employment with Buyer and six months have lapsed
since such employee terminated his or her employment with Buyer; and
b. any employee of Buyer who is terminated by Buyer.
6.11 Exclusivity.
- -----------------
Unless this Agreement is terminated as provided by Section 8.1, Seller will not,
directly or indirectly, solicit, initiate, negotiate or assist any proposal or
offer from any Person to acquire all or any substantial part of the Stock, the
Foreign Assets, the PCI Assets or the Business.
6.12 Pre-Closing Inventory Count.
- ---------------------------------
At Buyer's option, after the date hereof but prior to the Closing Date, Seller,
at its expense, will conduct and complete a physical inventory count of the
inventory of the Business located in Lincolnwood, Stockton, Aylesbury and Espace
Clichy (the "Pre-Closing Inventory Count"). Buyer will have the right to
observe, at its own expense, each aspect of the Pre-Closing Inventory Count;
provided that, in so doing, Buyer will use reasonable efforts to minimize any
interference with the ongoing operations of the Business.
6.13 [Intentionally omitted.]
- ----
6.14 License of Certain Intellectual Property.
- ----------------------------------------------
Subject to licenses previously granted by the Imaging Group, Seller, or Seller's
Affiliates, to the extent not otherwise covered hereunder, and to the extent the
Imaging Group, Seller, or Seller's Affiliates have the necessary rights, as of
the Closing, the Imaging Group, Seller, or Seller's Affiliates grant to Buyer a
fully-paid worldwide, non-exclusive license and/or sublicense, without the right
to sublicense third parties, except to Persons licensed as users or distributors
of products of the Business, under any issued U.S. and foreign patents not
included in the Owned Intellectual Property that were filed on or before the
Closing, and other Intellectual Property rights, owned or sublicensable by the
Imaging Group, Seller, or Seller's Affiliates, to make, have made, copy, use,
make derivative works, sell, import, export and/or distribute current and future
derivative products of the Business to the extent such patents contain claims
that cover, and to the extent such other Intellectual Property covers, the
current products and future derivative products of the Business.
ARTICLE VII
-----------
CONDITIONS TO CONSUMMATION OF THE TRANSACTION
7.1 Conditions to Each Party's Obligations.
- -------------------------------------------
The respective obligations of each party to consummate the Purchase and Sale
Transaction is subject to the satisfaction of the following conditions:
a. No statute, rule, regulation, executive order, decree, or injunction
shall have been enacted, entered, promulgated or enforced by any court
or Government Authority which prohibits or restricts the consummation
of the Purchase and Sale Transaction;
b. All waiting periods or approvals applicable to the Closing of the
Purchase and Sale Transaction under the any law contemplated by Section
6.7 hereof, and all notification or consultation periods contemplated
by Section 6.6(p) hereof, shall have terminated or expired or been
obtained, as the case may be;
c. All Requisite Consents shall have been obtained except where the
failure to obtain such Consents would not in the aggregate constitute a
Material Adverse Effect; and
d. No event shall have occurred which shall have resulted in a Material
Adverse Effect.
7.2 Further Conditions to Seller's Obligations.
- -----------------------------------------------
The obligations of Seller to consummate the Purchase and Sale Transaction are
further subject to satisfaction or waiver of the following conditions:
a. The representations and warranties of Buyer contained herein shall
be true and correct in all material respects as of the date when made,
and Seller will have received a certificate to such effect dated the
Closing Date and executed by a duly authorized officer of the Buyer;
and
b. Buyer shall have performed and complied in all material respects
with all agreements, obligations and covenants required by this
Agreement to be performed or complied with by it on or prior to the
Closing, and Seller will have received a certificate to such effect
dated the Closing Date and executed by a duly authorized officer of the
Buyer.
7.3 Further Conditions to Buyer's Obligations.
- ----------------------------------------------
The obligations of Buyer to consummate the Purchase and Sale Transaction are
further subject to the satisfaction or waiver of the following conditions:
a. The representations and warranties of Seller contained herein shall
be true and correct in all material respects as of the date when made,
and Buyer will have received a certificate to such effect dated the
Closing Date and executed by a duly authorized officer of the Seller;
and
b. Seller shall have performed and complied in all material respects
with all agreements, obligations and covenants required by this
Agreement to be performed or complied with by it on or prior to the
Closing, and Buyer will have received a certificate to such effect
dated the Closing Date and executed by a duly authorized officer of the
Seller.
ARTICLE VIII
------------
TERMINATION AND ABANDONMENT
8.1 Termination.
- ----------------
This Agreement may be terminated at any time prior to the Closing Date:
a. by mutual written consent of Seller and Buyer;
b. by Seller or Buyer at any time after February 15, 2001 if the
Closing shall not have occurred by such date; or
c. by Seller or by Buyer, if any Government Authority of competent
jurisdiction shall have issued an order, decree or ruling or taken
other action restraining, enjoining or otherwise prohibiting the
transactions contemplated hereby and such order, decree, ruling or
other action shall have become final and nonappealable.
8.2 Procedure and Effect of Termination.
- ----------------------------------------
In the event of termination of this Agreement and abandonment of the
transactions contemplated hereby by the parties, this Agreement shall forthwith
become null and void and of no further effect, without any liability on the part
of any party or its directors, officers, employees, agents or stockholders,
other than the provisions of Section 6.2 concerning confidentiality and the
provisions of the Confidentiality Agreement. Nothing in this Section 8.2 shall
relieve any party from any liability for any willful breach of this Agreement.
ARTICLE IX
----------
SURVIVAL AND INDEMNIFICATION
9.1 Survival Periods and Indemnification.
- -----------------------------------------
a. All representations and warranties of the parties contained in this
Agreement shall survive the Closing until 24 months after the Closing
Date; provided, however, that the representations and warranties
contained in Sections 4.1(a), 4.1(b), 4.1(c), 4.7(a), 4.8(e), 4.12,
4.13, and 4.14, and in the Income Tax Disaffiliation Agreement, shall
survive for the period of the applicable statute of limitations.
b. The covenants and agreements of the parties hereto shall survive the
Closing in accordance with their terms.
c. From and after the Closing, Seller hereby agrees to indemnify and
hold harmless Buyer, Imaging and Buyer's Affiliates, in accordance with
the terms of this Article IX, against any Damages incurred by Buyer,
Imaging or Buyer's Affiliates as a result of:
(i) any breach of any representation or warranty of Seller
made herein;
(ii) any breach of any covenant or agreement of Seller made
herein; or
(iii) any Indemnified Liability.
d. From and after the Closing, Buyer hereby agrees to indemnify and
hold harmless Seller and Seller's Affiliates, in accordance with the
terms of this Article IX, against any Damages incurred by Seller or
Seller's Affiliates as a result of:
(i) any breach of any representation or warranty of Buyer made
herein;
(ii) any breach of any covenant or agreement of Buyer made
herein;
(iii) any obligation or liability of Imaging arising after the
Closing Date (or, as applicable, the date Closing is effected
with respect to a Deferred Country), except for:
(a) any obligation or liability contemplated by
Section 9.1(c)(iii), and
(b) any obligation or liability with respect to
which, and to the extent that, there was a failure or
breach of any representation or warranty, or a breach
or nonfulfillment of any covenant or agreement, of
Seller contained herein; and
(iv) any Claim brought by any UK ARD Employee to the extent of
the Buyer's failure to comply with its information and
consultation obligations described in Regulation 10 of the
Transfer of Undertakings (Protection of Employment)
Regulations 1981, as amended, and/or to the extent of the
Buyer's acts or omissions prior to the Closing Date.
e. No party providing indemnification pursuant to this Article IX (an
"Indemnifying Party") shall be obligated to provide such
indemnification with respect to representations and warranties to the
other party (the "Indemnified Party") unless the Indemnifying Party
shall have received written notice specifying any breach in reasonable
detail within the applicable survival period set forth in Subsections
9.1(a) and 9.1(b) with respect to the matter for which indemnification
is sought.
9.2 Indemnification.
- --------------------
Subject to the other provisions of this Article IX, from and after the Closing,
the Indemnifying Party shall indemnify and hold harmless the Indemnified Party
from and against any and all Damages, whether incurred directly by the
Indemnified Party or owed by the Indemnified Party to a third party, to the
extent they are the result of any of the matters set forth in Section 9.1.
9.3 Indemnification Amounts.
- ----------------------------
Notwithstanding any provision to the contrary contained in this Agreement, and
except with respect to Seller's obligations set forth in Section 9.1(c)(iii),
the Indemnifying Party shall not be obligated to indemnify the Indemnified Party
for any Damages with respect to a breach of any representation or warranty
unless and until the amount of all such Damages shall equal in the aggregate
$1,500,000, and then the Indemnified Party will be entitled to indemnification
for all such Damages in an aggregate amount in excess of $750,000; provided,
however, that in no event will Seller's aggregate liability for Damages referred
to in Sections 9.1(c)(i) or 9.1(c)(ii), or Buyer's aggregate liability for all
Damages, exceed $75,000,000.
9.4 Claims.
- -----------
a. If an Indemnified Party intends to seek indemnification pursuant to
this Article IX, such Indemnified Party shall promptly notify the
Indemnifying Party in writing of such claim describing such claim in
reasonable detail; provided, that the failure to provide such notice
shall not affect the obligations of the Indemnifying Party unless it is
actually prejudiced thereby, subject, however, to the time periods
specified in Section 9.1 hereof. In the event that such claim involves
a claim by a third party against the Indemnified Party, the
Indemnifying Party shall have 30 days after receipt of such notice to
decide whether it will undertake, conduct and control, through counsel
of its own choosing and at its own expense, the settlement or defense
thereof, and if it so decides, the Indemnified Party shall cooperate
with it in connection therewith; provided, that the Indemnified Party
may participate in such settlement or defense through counsel chosen by
it; and provided further, that the fees and expenses of such counsel
shall be borne by the Indemnified Party.
b. The Indemnifying Party shall not, without the written consent of the
Indemnified Party, settle or compromise any action in any manner, other
than a settlement consisting solely of monetary damages.
c. If the Indemnifying Party does not notify the Indemnified Party
within 30 days after the receipt of the Indemnified Party's notice of a
claim of indemnity hereunder that it elects to undertake the defense
thereof, the Indemnified Party shall have the right to conduct and
control, through counsel of its own choosing and at the Indemnifying
Party's expense, the contest, settlement or compromise of the claim,
but the Indemnified Party shall not thereby waive any right to
indemnity therefor pursuant to this Agreement.
d. As long as the Indemnifying Party is contesting any such claim in
good faith, the Indemnified Party shall not pay or settle any such
claim. Notwithstanding the foregoing, the Indemnified Party shall have
the right to pay or settle any such claim, provided that (i) as long as
the Indemnifying Party is contesting such claim in good faith, any such
settlement shall include as an unconditional term thereof the delivery
by the claimant or plaintiff to the Indemnifying Party of a duly
executed written release of the Indemnifying Party from all liability
and obligation in respect of such action, (ii) in such event
Indemnified Party shall waive any right to indemnity therefor by the
Indemnifying Party; and (iii) the Indemnified Party shall provide the
Indemnifying Party reasonable advance notice of any proposed settlement
or payment and shall not pay or settle any claim if the Indemnifying
Party shall reasonably object.
e. The Indemnified Party shall cooperate fully in all aspects of any
investigation, defense, pretrial activities, trial, compromise,
settlement or discharge of any claim in respect of which indemnity is
sought pursuant to Article IX, including, but not limited to, by
providing the other party with reasonable access to employees and
officers (including as witnesses) and other information.
f. As to any Tax not based upon or measured with reference to income,
for Tax periods that include (but do not end on) the Closing Date (or,
as applicable, the date Closing is effected with respect to a Deferred
Country), the amount of Seller's indemnification obligation hereunder
for that Tax period shall equal the full amount of such Tax for the
entire Tax period multiplied by a fraction, the numerator of which is
the number of days from January 1, 2000 and ending on the Closing Date
(or, as applicable, the date Closing is effected with respect to a
Deferred Country), and the denominator of which is 366; provided,
however, that the parties' indemnification obligations hereunder shall
be adjusted appropriately to reflect the actual proportionate period of
property ownership during the applicable Tax period for any such
non-income Taxes imposed with respect to the ownership of specific
items of property held by an Affiliate of Seller during any Tax period
which includes the Closing Date (or, as applicable, the date Closing is
effected with respect to a Deferred Country).
g. Notwithstanding any other provision of this Section 9.4 to the
contrary, in the case of any tax audit, the Indemnifying Party shall
have the right to conduct and control, through counsel of its own
choosing and at its own expense, the contest, settlement or compromise
of the claim, but the Indemnifying Party shall not settle any such
claim without prior consultation with the Indemnified Party.
9.5 Exclusive Remedy.
- ---------------------
a. The indemnification provisions of this Article IX shall be the sole
and exclusive remedy following the Closing for any breaches or alleged
breaches of any representation, warranty or other provision of this
Agreement or the transactions contemplated hereby; provided, however,
that equitable relief, including the remedies of specific performance
and injunction, will be available with respect to any actual or
attempted breach of this Agreement occurring before Closing or with
respect to the breach of any covenant or agreement to be performed
after Closing insofar as and to the extent that such relief would be
available under any law. Notwithstanding the foregoing, the remedies
and means of recourse between the parties with respect to the subject
matter of each Ancillary Agreement is provided by such Ancillary
Agreement and not by this Agreement. Buyer shall have no right to
set-off against any payments to be made by Buyer pursuant to this
Agreement or otherwise.
b. Each of the parties hereto, on behalf of itself and its officers,
directors, employees, shareholders, partners, affiliates, agents or
representatives (collectively, such party's "Representatives") agrees
not to bring any actions or Proceedings, at law, equity or otherwise,
against any other party or its Representatives, in respect of any
breaches or alleged breaches of any representation, warranty or other
provision of this Agreement, in a manner inconsistent with the
provisions of Section 9.5(a).
c. The parties hereby agree that no party has made any representations
and warranties, express or implied, with respect to this Agreement or
the matters contemplated hereby, except as explicitly set forth in this
Agreement.
9.6 Miscellaneous.
- ------------------
The Indemnifying Party shall have no liability to the extent arising from
actions taken or not taken by the Indemnified Party or its Affiliates after the
Closing Date (or, as applicable, the date Closing is effected with respect to a
Deferred Country). To the extent that the Indemnifying Party discharges any
claim for indemnification hereunder, the Indemnified Party shall be subrogated
to all rights of the Indemnifying Party against third parties.
ARTICLE X
---------
MISCELLANEOUS PROVISIONS
10.1 Amendment and Modification.
- --------------------------------
This Agreement may be amended or modified at any time by the parties hereto
pursuant to an instrument in writing signed by both parties.
10.2 Extension; Waiver.
- -----------------------
a. At any time, the party entitled to the benefit of any respective
term or provision hereof may:
(i) extend the time for the performance of any of the
obligations or other acts of the other party hereto;
(ii) waive any inaccuracies in the representations and
warranties contained herein or in any document, certificate or
writing delivered pursuant hereto, or
(iii) waive compliance with any obligation, covenant,
agreement or condition contained herein.
b. Any agreement on the part of either party to any such extension or
waiver shall be valid only if set forth in an instrument in writing
signed by the party entitled to the benefits of such extended or waived
term or provision.
10.3 No Waivers.
- ----------------
Except as otherwise expressly provided herein, no failure to exercise, delay in
exercising, or single or partial exercise of any right, power or remedy by any
party, and no course of dealing between the parties, shall constitute a waiver
of any such right, power or remedy. No waiver by either party of any default,
misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent such
occurrence. No waiver shall be valid unless in writing and signed by the party
against whom such waiver is sought to be enforced.
10.4 Entire Agreement; Assignment.
- ----------------------------------
This Agreement constitutes the entire agreement between the parties hereto with
respect to the subject matter hereof and supersedes all other prior Commitments
and understandings, both written and oral, between the parties hereto with
respect to the subject matter hereof (other than the Confidentiality Agreement),
and shall not be assigned, by operation of law or otherwise by either party
hereto, without the prior written consent of the other party, and any attempted
assignment in contravention hereof shall be null and void. Notwithstanding the
foregoing, Buyer may assign any and all of its rights or obligations under this
Agreement to one or more Affiliates of Buyer (including, after the Closing,
Imaging); provided, however, that such assignment shall not relieve Buyer of any
liability or obligation to Seller or its Affiliates hereunder.
10.5 Validity.
- --------------
The invalidity or unenforceability of any term or provision of this Agreement in
any situation or jurisdiction shall not affect the validity or enforceability of
the other terms or provisions hereof or the validity or enforceability of the
offending term or provision in any other situation or in any other jurisdiction.
10.6 Notices.
- -------------
Unless otherwise provided herein, all notices and other communications hereunder
shall be in writing and shall be deemed given, if given by hand delivery upon
personal receipt, by the intended recipient or, if given otherwise, upon
delivery to the intended recipient by confirmed facsimile transmission and
overnight carrier delivery with return receipt, at the following addresses or
facsimile numbers:
if to Seller, to
Bell & Howell Company
c/o Bell & Howell Company
5215 Old Orchard Road
Skokie, Illinois 60077
Facsimile: 847-470-9425
Attention: Nils Johansson
with a copy to each of:
Bell & Howell Company
c/o Bell & Howell Company
5215 Old Orchard Road
Skokie, Illinois 60077
Facsimile: 847-470-7881
Attention: General Counsel
McDermott, Will & Emery
227 West Monroe Street
Chicago, Illinois 60606
Facsimile: 312-984-7700
Attention: Grant A. Bagan, P.C.
if to Buyer, to
Eastman Kodak Company
343 State Street
Rochester, New York 14650
Facsimile: 716-724-2443
Attention: President, Document Imaging Division
with a copy to each of
Eastman Kodak Company
343 State Street
Rochester, New York 14650-0218
Facsimile: 716-724-9549
Attention: General Counsel
Harter, Secrest & Emery LLP 700 Midtown Tower Rochester, New York 14604-2070
Facsimile: 716-232-2152
Attention: Susan Mascette Brandt, Esq.
10.7 Schedules; Due Diligence.
- ------------------------------
a. Each Schedule and certificate provided hereunder and written
disclosure required hereby is incorporated by reference into this
Agreement and will be considered a part hereof as if set forth herein
in full; provided, however, that information set forth on any Schedule,
certification or written disclosure constitutes a representation and
warranty of the party providing the same, and not the mutual agreement
of the parties as to the facts therein stated. The contents of the
Schedules will not vary, change or alter the language or substance of
the representations and warranties contained in this Agreement. Each
Schedule is annexed hereto on the date hereof and, if Buyer consents,
will be updated as necessary or amended on or before the Closing Date
(or, as applicable, the date Closing is effected with respect to a
Deferred Country).
b. Buyer's rights to indemnification or other remedies provided hereby
based on any breach by Seller of its representations, warranties,
covenants and agreements will not be affected by any investigation
conducted with respect to, or any knowledge acquired (or capable of
being acquired) by Buyer at any time, whether before or after the
execution and delivery of this Agreement or the Closing Date (or, as
applicable, the date Closing is effected with respect to a Deferred
Country), with respect to the accuracy or inaccuracy of or compliance
with, any such representation, warranty, covenant or agreement. The due
diligence review conducted by Buyer and its representatives will not
relieve Seller of any duties concerning its representations,
warranties, covenants or agreements contained in this Agreement or any
Ancillary Agreement.
10.8 Governing Law.
- -------------------
This Agreement shall be governed by, enforced under and construed in accordance
with the laws of the State of Illinois, without giving effect to any choice or
conflict of law provision or rule thereof, except that the provisions of this
Agreement with respect to the ARD Employees shall instead be governed by,
enforced under and construed in accordance with applicable local law.
10.9 Descriptive Headings.
- --------------------------
The descriptive headings herein are inserted for convenience of reference only
and shall in no way be construed to define, limit, describe, explain, modify,
amplify, or add to the interpretation, construction or meaning of any provision
of, or scope or intent of, this Agreement nor in any way affect this Agreement.
10.10 Counterparts.
- -------------------
This Agreement may be executed in any number of counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
10.11 Expenses.
- ---------------
Whether or not this Agreement and the transactions contemplated hereby are
consummated, and except as otherwise expressly set forth herein, all costs and
expenses (including legal fees and expenses) incurred in connection this
Agreement and the transaction contemplated hereby shall be paid by the party
incurring such expenses, except as otherwise expressly provided herein.
10.12 Other Rules of Construction.
- ----------------------------------
a. References in this Agreement to sections, schedules, attachments and
exhibits are to sections of, and schedules, attachments and exhibits
to, this Agreement unless otherwise indicated.
b. Words in the singular include the plural and in the plural include
the singular.
c. The words "herein," "hereof" and "hereunder" and words of similar
import refer to this Agreement as a whole and not to any particular
provision of this Agreement.
d. References to a "party" means a party to this Agreement and include
references to such party's successors and permitted assigns.
e. References to a "third party" means a Person not party to this
Agreement.
f. The terms "dollars" and "$"means U.S. dollars.
g. The masculine pronoun includes the feminine and the neuter, and vice
versa, as appropriate in the context.
h. Wherever the word "include," "includes" or "including" is used in
this Agreement, it will be deemed to be followed by the words "without
limitation."
10.13 Authorship.
- -----------------
The parties hereto agree that the terms and language of this Agreement were the
result of negotiations between the parties and, as a result, there shall be no
presumption that any ambiguities in this Agreement shall be resolved against
either party. Any controversy over construction of this Agreement shall be
decided without regard to events of authorship or negotiation.
10.14 Parties in Interest.
- --------------------------
This Agreement shall be binding upon and inure solely to the benefit of each
party hereto and their respective successors and permitted assigns, including
any successor, whether by way of merger, acquisition, reorganization or
otherwise, to its business operations, and nothing in this Agreement, express or
implied, is intended by or shall confer upon any other Person any rights,
benefits or remedies of any nature whatsoever under or by reason of this
Agreement. Nothing herein shall affect Seller's rights to enforce the provisions
of Section 6.6 hereof on behalf of all or any of the Affected Employees or ARD
Employees.
10.15 Specific Performance.
- ---------------------------
The parties hereto agree that if any of the provisions of this Agreement were
not performed in accordance with their specific terms or were otherwise
breached, irreparable damage would occur, no adequate remedy at law would exist
and damages would be difficult to determine, and that the parties shall be
entitled to specific performance of the terms hereof and immediate injunctive
relief, in addition to any other remedy at law or equity.
10.16 Accounting Principles.
- ----------------------------
Except as otherwise specifically provided herein, the Financial Statements have
been prepared in accordance with U.S. GAAP consistently with that applied in the
Reference Balance Sheet, and all other financial statements, computations or
other accounting determinations shall be made in accordance with GAAP applicable
in the particular jurisdiction to which the application is to be made, in all
cases consistent with the accounting principles used by the Imaging Group that
are consistent with GAAP.
IN WITNESS WHEREOF, each of the undersigned has caused this Agreement to be
signed by its duly authorized officer as of the date first above written.
BELL & HOWELL COMPANY
By:
-------------------------------------
Name:
Title:
EASTMAN KODAK COMPANY
By:
-------------------------------------
Name:
Title:
This Agreement is executed by the undersigned for the sole purpose of making the
covenants set forth in Section 6.9 hereof, and for no other purpose.
BELL & HOWELL MAIL AND MESSAGING COMPANY
By:
------------------------------------------------
Name:
Title:
ANNEX A
GLOSSARY OF TERMS
-----------------
Accountant: Ernst & Young LLP, or such other
accounting firm as Buyer and Seller
may mutually agree.
Acquired Rights Directive: EU Directive No. 77/187 or any
directive replacing or amending such
directive.
Affected Employees: Both (i) active U.S. employees of
Imaging on the Closing Date,
including those on disability leave
for no more than six months prior to
the Closing Date, and (ii) those
U.S. employees of PCI who are on the
date hereof dedicated to digital
conversion utilities and support for
Ivory and who accept offers of
employment made by Buyer in
accordance with Section 6.6(t).
Affiliate: Any Person which, directly or
indirectly, controls, is controlled
by or is under common control with
such Person (excluding any trustee
under, or any commitment with
responsibility for administering,
any ERISA Plan). A Person shall be
deemed to be "controlled by" such
other Person if such other Person
possesses, directly or indirectly,
power:
(i) to vote 20% or more of
the securities (on a fully diluted
basis) having ordinary voting power
for the election of directors or
managing general partners; or
(ii) to direct or cause the
direction of the management and
policies of such Person whether by
Commitment or otherwise.
Agreement: This Purchase and Sale Agreement by
and among Bell & Howell Company and
Eastman Kodak Company, including the
Annexes, Schedules and Attachments
hereto.
Ancillary Agreements: The Income Tax Disaffiliation
Agreement, the Foreign Transfer
Documents, the Transitional
Trademark License Agreement, the
Scanner Supply Agreement, the
Transition Services Agreement, and
the agreements contemplated by
Sections 6.1(c)(vii) and
6.1(c)(viii) hereof.
ARD Employee: Each employee of the Business as of
the applicable Transfer Time who is
subject to the Acquired Rights
Directive or Implementing Laws or
who performs at least 80 percent of
his services for the Business.
Assumed UK Leases: Only the following real property
leases:
(i) Lease with
Klockner-Moeller Limited dated 27
November 1998 relating to Part of
Klockner-Moeller Complex, Gatehouse
Close, Aylesbury;
(ii) Lease with Moeller
Electric Limited dated 26 June 2000
relating to premises at Gatehouse
Close, Aylesbury;
(iii) Lease with Hibernian
Trusts Limited dated 4 July 1991
relating to premises at Westland
Square, Pearse Street, Dublin; and
(iv) Lease with Workspace 1
Limited dated 4 May 1999 relating to
Unit 1.1 Trowbray House, The
Leathermarket, London SE1.
Beneficial Interest: The right to vote, receive the
dividends and distributions on or
sell or cause the sale, transfer or
any other disposition whatsoever of,
and all other rights incident to
legal and beneficial ownership of,
the securities subject to such
interest.
Business: As defined in the preambles.
Business Day: Any day excluding Saturday, Sunday
and any other day which banks in
Chicago are permitted or authorized
to close.
Business Software: As defined in Section 4.8(b).
Buyer: Collectively, Eastman Kodak Company,
a New Jersey corporation, its
successors and permitted assigns,
and each of its Affiliates that
purchases Foreign Assets or
otherwise takes action pursuant to
this Agreement.
Claim: An asserted claim, demand, action,
suit, charge, Proceeding or Tax
Proceeding for Damages or equitable
relief.
Closing: The deliveries and performances
required by Sections 2.2 and 2.3 of
the Agreement in connection with the
Purchase and Sale Transaction.
Closing Balance Sheet: As defined in Section 3.2(a).
Closing Countries: As defined in Section 2.7(a)(i).
Closing Date: The date in the U.S. on which the
Closing actually occurs and the
Purchase and Sale Transaction
becomes effective with respect to
the Business as conducted in the
U.S. and the UK Business.
Closing Payment: The aggregate amount payable to
Seller at Closing in connection with
the Purchase and Sale Transaction,
consisting of an amount equal to the
Stated Value (i) adjusted by the
change in Working Capital Value
between that computed based on the
Reference Balance Sheet and the
Preliminary Working Capital Value at
the time of the Closing, and (ii)
subject to the provisions of Section
2.7.
Code: The Internal Revenue Code of 1986,
as amended.
Commitments: Contracts, agreements, instruments,
plans, licenses, options,
guarantees, leases and purchase or
sale orders, indentures and
mortgages, in each case whether
written or oral.
Confidentiality Agreement dated May 1, 2000 by and
Agreement: between Seller and Buyer.
Consents: Any approvals, consents,
acknowledgements, assignments or
novations required by any third
party or Government Authority.
Controlled Group of Each "controlled group of
Corporations: corporations" within the meaning of
Section 414(b) of the Code.
Damages: Actual, out-of-pocket costs, fines
and other similar direct damages
(excluding lost profits and other
incidental, consequential, special
or indirect damages) together with
related court costs, reasonable
attorneys' fees and other costs and
expenses (including those related to
investigation, audits and expert
assistance and amounts paid in
settlement), but excluding, to the
extent thereof:
(i) any insurance proceeds
actually paid to the Indemnified
Party with respect to the
indemnification claim in question;
and
(ii) any Damages already
compensated pursuant to Sections 2.5
or 3.2.
Data Room: The room at the Seller premises in
Skokie, Illinois containing
documents and material relating to
the Imaging Group and the Business.
Deferred Countries: As defined in Section 2.7(a).
Disclosure Annex: Annex D to the Agreement, which is
comprised of Schedules which set
forth certain exceptions and
modifications to the representations
and warranties set forth in Article
IV of the Agreement.
Documentation: Audio, visual, image, graphic,
digital, alpha-numeric, multimedia
and other formats for capturing,
displaying and utilizing
information.
Employee Benefit Plan: Any plan, Commitment, program or
arrangement involving direct or
indirect compensation or benefits,
whether written or oral, formal or
informal, or provided under an
employment, collective bargaining,
or other similar agreement, or in
any other manner, including without
limitation: "employee benefit plans"
within the meaning of Section 3(3)
of ERISA; insurance coverage
(including self-insured
arrangements); pension, retirement,
profit sharing, severance, vacation,
sick leave, disability, leave of
absence, educational assistance,
change in control, workers'
compensation, supplemental
unemployment, and employee fringe
benefits; deferred compensation;
bonuses; commissions; savings plans;
stock options; stock purchase,
phantom stock, stock appreciation
and any other form of equity-related
compensation or benefits; incentive
compensation and benefits of any
kind; and post-retirement
compensation and benefits.
Employee Pension Benefit Plan: Each "employee pension benefit plan"
within the meaning of Section 3(2)
of ERISA.
Employee Welfare Benefit Plan: Each "employee welfare benefit plan"
within the meaning of Section 3(2)
of ERISA.
Environmental Condition: (i) any noncompliance with any
national, state and local
environmental and anti-pollution
laws and regulations;
(ii) any duty, responsibility,
liability or obligation under any
national, state or local
environmental laws, including any
duty, responsibility, liability or
obligation for fines or penalties,
or for investigation, expense,
removal, remedial action to effect
compliance with or discharge any
duty, responsibility, liability,
obligation or claim under any such
laws;
(iii) any release or threatened
release of any Hazardous Materials
or petroleum, including crude oil or
any fraction thereof which is or was
in violation of law;
(iv) any application or disposal of
any Hazardous Materials or petroleum
in any manner which is or was in
violation of law;
(v) any disposal or treatment,
arrangement for transport for
disposal or treatment, transport, or
accepted for transport of any
Hazardous Materials to a facility,
site or location, which, pursuant to
any applicable laws:
(a) has been placed or is
proposed to be placed, on the
National Priorities List or its
national, European or state
equivalent; or
(b) is subject to a claim,
administrative order or other
request to take removal or remedial
action.
(vi) any storage, generation or
production of any Hazardous
Materials which is or was in
violation of law;
(vii) any contamination of
groundwaters, surface waters, soils
or sediments, as a result of the
manufacture, storage, processing,
loss, leak, escape, spillage,
disposal or other handling or
disposition by or on behalf of the
Imaging Group of any product or
substance on or prior to the
Closing; or
(viii) any Hazardous Materials,
tanks, containers, cylinders, drums
or cans buried, stored or deposited
in or on any property which is or
was in violation of law.
Environmental Law: As defined in Section 4.14(a).
Equity Employees: As defined in Section 6.6(i).
ERISA: Employee Retirement Income Security
Act of 1974, as amended.
EU: The European Union.
Euro Compliant: As defined in Section 4.8(l).
Excluded Assets: Those assets set forth on Schedule
4.7(a), cash of the Foreign
Subsidiaries, and (except as
provided by Section 1.1(b)(i)(c))
equity interests of the Foreign
Subsidiaries in other Persons.
Excluded Country: As defined in Sections 2.7(c) and
2.7(d).
Excluded Liabilities: As defined in Section 1.1(d).
Financial Statements: As defined in Section 4.4(a).
Foreign Assets: As defined in Section 1.1(b)(i).
Foreign Liabilities: As defined in Section 1.1(b)(ii).
Foreign Subsidiaries: As defined in the preambles.
Foreign Transfer: As defined in the preambles.
Foreign Transfer Documents: As defined in Section 1.1(b).
France ARD Employees: ARD Employees working in the France
Business at the France Closing Date.
France Assets: As defined in Section 1.1(b)(i)(b).
France Business: That portion of the Business as
conducted in France.
France Closing Date: The date Closing is effected with
respect to the Business as conducted
in France, that being either (i) the
Closing Date or (ii) if applicable,
the later date contemplated by
Section 2.7.
France Liabilities: As defined in Section 1.1(b)(ii)(b).
GAAP: Generally accepted accounting
principles, methods and practices
set forth in the opinions and
pronouncements of the Accounting
Principles Board and the American
Institute of Certified Public
Accountants, and statements and
pronouncements of the Financial
Accounting Standards Board or of
such other Person as may then be
approved by a significant segment of
the U.S. accounting profession.
General Partner: As defined in Section 4.25(a).
Glossary: This Glossary of Terms incorporated
by reference as Annex A to the
Agreement.
Government Authority: Any foreign, federal, state or local
governmental commission, board,
bureau, agency or similar regulatory
or administrative body.
Hazardous Materials: Any pollutant, contaminant or
hazardous substance or material that
has been so designated or regulated
or controlled by any Government
Authority under or by any
Environmental Law, including PCBs,
asbestos, petroleum and
urea-formaldehyde.
HSR Act: As defined in Section 4.3(a).
Imaging: Bell & Howell Imaging Company, a
Delaware corporation.
Imaging Group: Imaging and the Foreign Subsidiaries
except to the extent related to the
Excluded Assets and Excluded
Liabilities. As appropriate to the
context, the term "Imaging Group"
may mean any one or more of the
members thereof.
Implementing Laws: The laws implementing the Acquired
Rights Directive in any countries
where employees of the Business are
employed, as well as any other local
laws in any countries where
employees of the Business are
employed which provide for the
automatic transfer of employees and
their rights to a Person in the
event of the sale of a business or
other undertaking.
Income Tax Disaffiliation
Agreement: The agreement set forth as Annex I
hereto.
Indemnified Liability: Any liability or obligation:
(i) arising under the
Income Tax Disaffiliation Agreement,
including the breach of any
representation, warranty or covenant
contained therein;
(ii) [intentionally
omitted]
(iii) for any matters
listed on Schedules 4.8(g) or
4.11(a);
(iv) arising as a result of
Seller's failure to own all of the
Stock, the Foreign Subsidiaries'
failure to own all of the Foreign
Assets, or Imaging's failure to own
all of the assets contemplated by
this Agreement to be owned by it at
Closing;
(v) arising from either a
violation prior to Closing of any
Environmental Law, ERISA or other
laws or governmental regulation or
the existence at Closing of any
Environmental Condition;
(vi) related to the lease
obligations at 6800 McCormick,
Chicago, Illinois, excluding any
liabilities of Buyer with respect to
the 6800 Facility pursuant to the
Transition Services Agreement;
(vii) related to the lease
obligations at 3000 Malmo Drive,
Arlington Heights, Illinois;
(viii) arising under any
retention plan, program or
arrangement of Seller or its
Affiliates, other than as set forth
on Schedule 4.13(l)(i);
(ix) to or relating to
retired or other former employees of
the Business, arising out of or
related to Seller's Supplemental
Retirement Plan, Seller's
Replacement Benefit Plan or any
post-employment medical benefits;
(x) for which Seller
carried third party insurance prior
to Closing, but only to the extent
of the Damages covered thereby;
(xi) for professional fees
of Seller relating to the Purchase
and Sale Transaction;
(xii) for workers'
compensation and auto liability
claims of employees and former
employees of Imaging arising prior
to the Closing Date;
(xiii) arising at any time
under any lease, sublease or similar
Commitment with respect to real
property which was not provided to
Buyer on or before the date hereof;
(xiv) which is an Excluded
Liability; or
(xv) arising from Seller's
fraud in connection with the
Purchase and Sale Transaction.
Indemnified Party: Either Seller or Buyer, as the case
may be, and their respective
Affiliates, as provided in Section
9.2.
Indemnifying Party: Either Seller or Buyer, as the case
may be, as provided in Section 9.2.
Intellectual Property: As defined in Section 4.8(a).
Intercompany Account: The balance owing between the
Imaging Group and Seller and
Seller's other Subsidiaries
resulting from accrual of expenses
and cash transfers.
ISWIN: The Software product of PCI known as
ISWIN or Image Software for Windows.
Ivory: The Software product of PCI known as
Ivory.
Knowledge of Seller: The actual knowledge of any of the
following Persons: Todd Buchardt,
Don Deegan, Marty Evans, Russell
Hunt, Nils Johansson, Stuart
Lieberman, Louis Manetti, Dwight
Mater, Robert McBratney, Patricia
Nolan, Jeff Short, James Roemer and
David Webb.
Licensed-In Intellectual Property: As defined in Section 4.8(c).
Licensed-Out Intellectual Property: As defined in Section 4.8(c).
Liens: Liens, security interests, mortgages
or other title encumbrances.
Limited Partnership: As defined in Section 1.1(b)(i)(c).
Limited Partnership Agreement: As defined in Section 4.25(a).
Material Adverse Effect: A material adverse effect on the
Business as conducted at Closing by
the Imaging Group, taken as a whole.
Material Commitments: As defined in Section 4.9(a).
MMT: Bell & Howell Mail and Messaging
Company, a Delaware corporation, and
its successors and permitted
assigns, including any successor,
whether by way of merger,
acquisition, reorganization or
otherwise, to its business
operations.
Multiemployer Plan: Any multiemployer pension plan, as
defined in Section 3(37) of ERISA.
Owned Intellectual Property: As defined in Section 4.8(a).
PCI: Bell and Howell Protocorp
International, Inc., a North
Carolina corporation.
PCI Assets: As defined in Section 6.1(c)(vi).
PCI Software: As defined in Section 6.1(c)(vi)(a).
Permitted Liens: Any of the following:
(i) Liens for current taxes
not yet due and payable;
(ii) mechanics', carriers',
workers' and other similar Liens
arising or incurred in the ordinary
course consistent with past
practice;
(iii) in the case of
properties or assets acquired after
July 1, 2000, Liens securing all or
a part of the purchase price
thereof; and
(iv) Liens in favor of
creditors which will be released at
Closing.
Person: Any individual, group, partnership,
corporation, limited liability
company, association, firm, trust or
any other entity or organization.
Pre-Closing Inventory Count: As defined in Section 6.12.
Preliminary Working Capital
Value: As defined in Section 3.1(b).
Proceeding: Any civil or criminal suit or other
action, proceeding, hearing,
disclosed investigation or legal,
administrative, arbitration or other
method of settling disputes or
disagreements or governmental
investigation, other than a Tax
Proceeding, by or before any
foreign, federal, state or local
governmental or non-governmental
court, department, commission,
board, bureau, arbitrator, agency or
instrumentality.
Purchase and Sale
Transaction: The purchase and sale transaction
contemplated by Section 1.1 of the
Agreement.
Purchase Price: The amount to be paid by Buyer to
Seller for the Stock and the Foreign
Assets and the assumption of the
Foreign Liabilities, determined in
accordance with the provisions of
Section 1.2 of the Agreement,
subject to the provisions of Section
2.7 and Article III.
Reference Balance Sheet: The consolidated balance sheet of
the Imaging Group as of July 1,
2000, excluding all Excluded Assets
and Excluded Liabilities, all
Indemnified Liabilities and all
reserves for any of the foregoing.
Representatives: As defined in Section 9.5(b).
Requisite Consents: All Consents required under any
Commitments with respect to the
Business, or any Commitments
included in the Foreign Assets or
the PCI Assets, which are required
for the transfer, directly or
indirectly, thereof or of any part
of the Business, and all Consents of
Government Authorities that are
necessary for the consummation of
the transactions contemplated
hereby.
Scanner Supply Agreement: The agreement set forth as Annex III
hereto.
Schedules: The various Schedules to the
Agreement comprising the Disclosure
Annex.
Seller: Bell & Howell Company, a Delaware
corporation, and its successor and
permitted assigns.
Seller's Canadian Subsidiary: As defined in the preambles.
Seller's France Subsidiary: As defined in the preambles.
Seller's Insurance: As defined in Section 6.1(a)(iii).
Seller's UK Subsidiary: As defined in the preambles.
Small Service Contracts: As defined in Section 4.9(c).
Software: Any information in an electronically
readable format commonly known as
software including source code,
object code, machine readable code
and, in addition thereto,
Documentation thereof and manuals
and instructions with respect
thereto.
Stated Value: The amount specified as the Stated
Value in Section 1.2 of the
Agreement.
Stock: The outstanding shares of capital
stock of Imaging.
Subsidiary: A Person of which another Person
and/or their respective
Subsidiaries, as the case may be,
own directly or indirectly, such
number of shares as have more than
50% of the ordinary voting power for
the election of directors or
managers.
Taxes: As defined in Section 4.12(a).
Tax Proceeding: Any civil or criminal suit or other
action, proceeding, hearing,
disclosed investigation or legal,
administrative, arbitration or other
method of settling disputes or
disagreements or governmental
investigation, in each case with
respect to Taxes, by or before any
foreign, federal, state or local
governmental or non-governmental
court, department, commission,
board, bureau, arbitrator, agency or
instrumentality.
Transfer Time: 12:01 a.m. local time on the first
Business Day following (i) the
Closing Date, or (ii) in the case of
any subsequent Closing contemplated
by Section 2.7, the date Closing is
effected with respect to the
applicable Deferred Country.
Transitional Trademark
License Agreement: The agreement set forth as Annex II
hereto.
Transition Services Agreement: The agreement set forth as Annex IV
hereto.
UK: The United Kingdom.
UK ARD Employees: ARD Employees working in the UK
Business at the Closing Date.
UK Assets: As defined in Section 1.1(b)(i)(a).
UK Business: That portion of the Business as
conducted in the UK or Ireland.
UK Liabilities: As defined in Section 1.1(b)(ii)(a).
U.S.: The United States of America.
VAT: A value added tax, that being a tax
imposed upon the transfer of goods
or services.
Working Capital: The sum of those current assets less
the sum of those current liabilities
of the Business, excluding all
Excluded Assets and Excluded
Liabilities, all Indemnified
Liabilities and all reserves for any
of the foregoing, determined on a
consolidated basis and in a manner
consistent with Annex B.
Working Capital
Closing Adjustment Payment: The payment required by Section 3.2
of the Agreement.
Working Capital Value: Value of the consolidated Working
Capital of the Imaging Group as of
the referenced date computed on a
basis consistent with the Working
Capital Value Computation as of July
1, 2000 attached as Annex B.
Working Capital
Value Computation: Each Working Capital Value
computation, made in accordance with
Annex B, contemplated by Article III
of the Agreement.
FIRST AMENDMENT TO PURCHASE AND SALE AGREEMENT
----------------------------------------------
This First Amendment to Purchase and Sale Agreement is dated as of
January 23, 2001 ("First Amendment"), by and between Bell & Howell Company, a
Delaware corporation ("Seller"), and Eastman Kodak Company, a New Jersey
corporation ("Buyer"), and hereby amends and modifies the Purchase and Sale
Agreement dated as of October 27, 2000 ("Agreement") entered into by the
parties. Capitalized terms used in this First Amendment shall, unless otherwise
defined herein, have the meanings ascribed to them in the Agreement.
WHEREAS, Buyer and Seller entered into the Agreement and desire to
amend the Agreement as set forth herein;
NOW THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements contained herein, the
parties hereto mutually agree as follows:
1. The first recital in the Agreement is hereby deleted in its entirety
and replaced by the following:
"WHEREAS, Seller, through and in conjunction with certain
wholly-owned subsidiaries, collectively referred to herein as
the Imaging Group (including, for the purpose of this
paragraph, PCI), is engaged in (i) the sale and distribution
of microfilm and micrographic cameras, readers, reader
printers, duplicators, book and 16mm film scanners, together
with supply items and spare parts, (ii) the development,
manufacture or assembly, sale and distribution of microfilm
jackets, together with supply items and spare parts, (iii) the
development, manufacture or assembly, sale and distribution of
spare parts and supply items for document imaging scanners,
(iv) the provision of maintenance and support services for all
of the aforementioned, as well as certain maintenance and
support services of document imaging scanners and other
manufacturers' equipment, and (v) the development, licensing
and support of certain Software products commonly known as
Ivory and ISWIN and digital conversion utilities
(collectively, the "Business"); provided, however, that
neither the Business nor the Imaging Group shall include any
assets, liabilities, or employees related to the development,
manufacture or assembly, sale and distribution of document
imaging scanners;"
2. The cash portion of the Purchase Price as set forth in Section 1.2
of the Agreement is hereby reduced from One Hundred Forty-Nine Million Five
Hundred Thousand Dollars ($149,500,000) to One Hundred Thirty-Five Million
Dollars ($135,000,000).
3. The clause "that are incurred in the ordinary course" contained in
Section 1.1(b)(ii)(a) of the Agreement is hereby deleted and replaced with the
following:
"that are incurred in the UK Business in the ordinary course"
with no amendment to the remainder of Section 1.1(b)(ii)(a) or its subsections.
4. The clause "that are incurred in the ordinary course" contained in
Section 1.1(b)(ii)(b) of the Agreement is hereby deleted and replaced with the
following:
"that are incurred in the France Business in the ordinary
course"
with no amendment to the remainder of Section 1.1(b)(ii)(b) or its subsections.
5. The Transitional Trademark License Agreement referenced as
Attachment II is hereby deleted in its entirety and replaced with the Trademark
License Agreement which is attached hereto as Attachment II (Amended).
6. All references in the Agreement to the Transitional Trademark
License Agreement are hereby changed to refer to the Trademark License
Agreement.
7. The Scanner Supply Agreement referenced as Attachment III is hereby
deleted in its entirety and replaced with the Warranty Service Agreement which
is attached hereto as Attachment III (Amended).
8. [Intentionally omitted]
9. [Intentionally omitted]
10. Section 2.1 of the Agreement is hereby deleted in its entirety and
replaced with the following:
2
"2.1 Time and Place of Closing.
------------------------------
"a. Subject to the satisfaction or waiver of the conditions
set forth in Article VII of this Agreement, and except as
otherwise provided by Section 2.7, the Closing (i.e., the
consummation of the Purchase and Sale Transaction contemplated
by Section 1.1 of this Agreement) will take place: (i) at the
offices of McDermott, Will & Emery, 227 West Monroe Street,
Chicago, Illinois 60606-5096, at 9:30 a.m. on the earlier of
February 2, 2001 or the first day of Seller's fiscal month
next following the month in which all of the conditions to
each party's obligations hereunder have been satisfied or
waived; provided, however, that if all of such conditions have
been satisfied or waived on or before the fifteenth day of any
calendar month, then the Closing shall instead take place on
such date but shall be effective as of the first day of
Seller's fiscal month in which such date occurs (the
"Effective Date"); or (b) at such other place or time as the
parties may mutually agree. The date in the U.S. on which the
Closing with respect to the Business as conducted in the U.S.
and the UK Business actually takes place is referred to herein
as the "Closing Date."
"b. Between the Effective Date (if any) and the Closing Date,
the Business as conducted in the U.S. and the UK Business will
be operated by Seller for the account of Buyer in a manner so
as to provide to the parties the economic (taking into account
all burdens and benefits, including tax costs and benefits)
and operational equivalent of the transfer of the Business as
conducted in the U.S. and the UK Business to Buyer on the
Effective Date."
11. Section 2.4(e) is hereby deleted in its entirety and replaced with
the following:
"e. the Feeder Supply Agreement, in the form of Attachment V
hereto; and"
12. The Feeder Supply Agreement is attached hereto as Attachment V.
13. The amount set forth in Sections 3.1(b)(i) and 3.1(b)(ii) is hereby
deleted and replaced with $11,100,000.
14. The Working Capital Value Computation attached as Annex B to the
Agreement is hereby deleted in its entirety and replaced with Annex B (Amended)
attached hereto.
3
15. Schedule 4.3(b) to the Agreement is hereby deleted in its entirety
and replaced with Schedule 4.3(b) (Amended) attached hereto.
16. Schedules 4.4(a)(i) through 4.4(a)(vi) to the Agreement are hereby
deleted in their entirety and replaced with Schedules 4.4(a)(i) (Amended)
through 4.4(a)(vi) (Amended), respectively, attached hereto.
17. Schedule 4.7(b) to the Agreement is hereby deleted in its entirety
and replaced with Schedule 4.7(b) (Amended) attached hereto.
18. Schedules 4.8(a)(i) through 4.8(b) to the Agreement are hereby
deleted in their entirety and replaced with Schedules 4.8(a)(i) (Amended)
through 4.8(b) (Amended), respectively, attached hereto.
19. Schedule 4.9 to the Agreement is hereby deleted in its entirety and
replaced with Schedule 4.9 (Amended) attached hereto.
20. Schedule 4.10 to the Agreement is hereby deleted in its entirety
and replaced with Schedule 4.10 (Amended) attached hereto.
21. Schedule 4.11(a) to the Agreement is hereby deleted in its entirety
and replaced with Schedule 4.11(a) (Amended) attached hereto.
22. Schedule 4.13(l) to the Agreement is hereby deleted in its entirety
and replaced with Schedule 4.13(l) (Amended) attached hereto.
23. Schedule 4.14 to the Agreement is hereby deleted in its entirety
and replaced with Schedule 4.14 (Amended) attached hereto.
24. Schedule 4.16 to the Agreement is hereby deleted in its entirety
and replaced with Schedule 4.16 (Amended) attached hereto.
25. Schedule 4.19 to the Agreement is hereby deleted in its entirety
and replaced with the Schedule 4.19 (Amended) attached hereto.
4
26. Schedule 6.1 to the Agreement is hereby deleted in its entirety and
replaced with Schedule 6.1 (Amended) attached hereto.
27. Section 6.1(c)(v) is hereby deleted in its entirety and replaced
with the following:
"(v) to the extent such payment is required by
applicable local law, pay to the Affected Employees
any accrued and unpaid calendar years 2000 and 2001
vacation which is outstanding on the Closing Date;"
28. Section 6.1(c)(vii) is hereby deleted in its entirety and replaced
with the following:
"(vii) [Intentionally Omitted]"
29. The period at the end of Section 6.1(c)(viii) is hereby deleted and
replaced with a semicolon and the word "and".
30. The following Section 6.1(c)(ix) is hereby added to the Agreement
as follows:
"(ix) cause Imaging to transfer, assign and deliver
to Seller or its Affiliates, without payment or other
transfer of assets by Imaging or the incurring by
Imaging of any liability (whether for severance or
otherwise), all right, title and interest in and to,
and all liability with respect to, the assets,
liabilities and personnel (including employees) of
Imaging related to the development, manufacture or
assembly, sale and distribution of document imaging
scanners (the "Scanner Business"), as more fully
described on Schedule 6.1(c)(ix) (collectively, the
"Scanner Assets and Liabilities"). Seller will be
responsible for all transfer Taxes associated with
the transfers contemplated by this Section
6.1(c)(ix)."
31. Schedule 6.1(c)(ix) is attached hereto.
32. Section 6.4(a) of the Agreement is hereby deleted in its entirety
and replaced by the following:
5
"6.4 Reasonable Efforts.
----------------------
"a. Subject to the terms and conditions herein provided, each
of the parties hereto agrees to use all reasonable efforts to
take, or cause to be taken, all action, and to do, or cause to
be done, all things necessary, proper or advisable under
applicable laws and regulations to consummate and make
effective the transactions contemplated by this Agreement,
including, without limitation, making all required filings and
applications and complying with or responding to any requests
by Government Authorities; provided, however, that during the
period commencing on January 15, 2001 and ending on the date
(if any) on which the U.S. Department of Justice notifies the
parties that it will not give its consent or approval to the
transactions between the parties contemplated by the First
Amendment, the parties shall not be required to use their
reasonable efforts to comply with or respond to the Second
Request."
33. Section 6.8 of the Agreement is hereby deleted in its entirety and
replaced by the following:
"6.8 Transition Services.
-----------------------
"After Closing, Seller or Buyer shall cause transition
services to be provided to the other party or its Affiliates,
as applicable, in accordance with the terms of the Transition
Services Agreement."
34. Section 6.9(a)(i) of the Agreement is hereby deleted in its
entirety and replaced with the following:
"(i) to the extent not expressly permitted by the
Warranty Service Agreement (for so long as the
Warranty Service Agreement is in effect), the sale or
provision of service training used in the maintenance
of document imaging scanners;"
35. Section 6.9(a)(w) is hereby added to the Agreement as follows:
"(w) the development or manufacturing or sale or
distribution of document imaging scanners or document
imaging scanning supplies or spare parts used in the
maintenance of document imaging scanners or, to the
extent expressly permitted by the Warranty Service
6
Agreement, service training used in the maintenance
of document imaging scanners;"
36. Section 6.10 of the Agreement is hereby deleted in its entirety and
replaced with the following:
"6.10 Nonsolicitation of Employees.
----------------------------------
"a. Seller shall not, without Buyer's prior written consent,
and for the period commencing on the Closing Date and ending
on the second anniversary of the Closing Date, employ, or
solicit or seek to employ, any Person who is an employee of
Buyer or any of its Affiliates; provided, however, this
provision shall not apply to:
"(i) any employee who voluntarily, and independently
of Seller, terminates his or her employment with
Buyer or its Affiliates and six months have lapsed
since such employee terminated his or her employment
with Buyer or its Affiliates; and
"(ii) any employee of Buyer or its Affiliates who is
terminated by Buyer or its Affiliates.
"b. Except as otherwise contemplated by this Agreement, Buyer
shall not, without Seller's prior written consent, and for the
period commencing on the Closing Date and ending on the second
anniversary of the Closing Date, employ, or solicit or seek to
employ, any Person who is an employee of Seller or one of its
Affiliates; provided, however, this provision shall not apply
to:
"(i) any employee who voluntarily, and independently
of Buyer, terminates his or her employment with
Seller or its Affiliates and six months have lapsed
since such employee terminated his or her employment
with Seller or its Affiliates;
"(ii) any employee of Seller or its Affiliates who is
terminated by Seller or its Affiliates; and
"(iii) any of the ARD Employees.
"c. Each party agrees that if the other party or its Affiliate
employs any Person in a manner that is not prohibited by this
Section 6.10, such party will not assert any rights it may
have against such Person relating to his or her employment by
the other party or its Affiliate, whether pursuant to an
7
employment agreement, covenant not to compete or other
obligation."
37. Section 6.14 of the Agreement is hereby deleted in its entirety and
replaced with the following:
"6.14 License of Certain Intellectual Property.
----------------------------------------------
"a. Subject to licenses previously granted by the Imaging
Group, Seller, or Seller's Affiliates, to the extent not
otherwise included in the assets of Imaging or the Foreign
Assets as of the Closing and covered hereunder, and to the
extent the Imaging Group, Seller, or Seller's Affiliates have
the necessary rights, as of the Closing, the Imaging Group,
Seller, or Seller's Affiliates grant to Buyer a fully-paid
worldwide, non-exclusive license and/or sublicense, with the
fully-paid right to sublicense third parties, under the Owned
Intellectual Property, the Business Software, the PCI
Software, and the Licensed-In Intellectual Property (as each
such term was defined by this Agreement prior to the
effectiveness of the First Amendment), to make, have made,
copy, use, make derivative works, sell, import, export and/or
distribute current and future derivative products of the
Business or the Scanner Business to the extent such Owned
Intellectual Property, Business Software, PCI Software, and
Licensed-In Intellectual Property cover the current products
and future derivative products of the Business or the Scanner
Business; provided, however, that such license and/or
sublicense shall be limited to Buyer's provision of
maintenance and support services to current and future
customers of the Business.
"b. Subject to licenses previously granted by the Imaging
Group, Seller, or Seller's Affiliates, to the extent not
otherwise covered hereunder, and to the extent the Imaging
Group, Seller, or Seller's Affiliates have the necessary
rights, as of the Closing, the Imaging Group, Seller, or
Seller's Affiliates grant to Buyer a fully-paid worldwide,
non-exclusive license and/or sublicense, without the right to
sublicense third parties, except to Persons licensed as users
or distributors of products of the Business or the Scanner
Business, under any issued U.S. and foreign patents not
included in the Owned Intellectual Property (as such term was
defined by this Agreement prior to the effectiveness of the
First Amendment) that were filed on or before the Closing, and
other rights in Intellectual Property and Software, owned or
sublicensable by the Imaging Group, Seller, or Seller's
Affiliates, to make, have made, copy, use, make derivative
works, sell, import, export and/or distribute current and
future derivative products of the Business or the Scanner
Business to the extent such patents contain claims that cover,
and to the extent such other Intellectual Property or Software
8
covers, the current products and future derivative products of
the Business or the Scanner Business; provided, however, that
such license and/or sublicense shall be limited to Buyer's
provision of maintenance and support services to current and
future customers of the Business."
38. Section 7.1(b) of the Agreement is hereby deleted in its entirety
and replaced with the following:
"b. All waiting periods or approvals applicable to the Closing
of the Purchase and Sale Transaction under any law
contemplated by Section 6.7 hereof (other than any waiting
period or approval conditioned upon the parties' compliance
with the Second Request), and all notification or consultation
periods contemplated by Section 6.6(p) hereof, shall have
terminated or expired or been obtained, as the case may be;"
39. The date of February 15, 2001 set forth in Section 8.1(b) of the
Agreement is hereby changed to March 4, 2001; provided, however, that if the
consent or approval of the transactions between the parties contemplated by this
First Amendment is not given by the U.S. Department of Justice on or before the
close of business, Washington, D.C. time, on February 14, 2001, then all of the
provisions of this First Amendment (other than the amendment set forth in
Paragraph 32 hereof, which will continue in full force and effect), will be
null, void and of no effect.
40. The reference in Section 8.2 of the Agreement to "Section 6.2" is
hereby deleted and replaced with the following:
"Sections 6.2 and 6.15"
41. Certain of the addresses contained in Section 10.6 of the Agreement
are hereby deleted in their entirety and replaced with the following,
respectively:
Bell & Howell Company
300 North Zeeb Road
Ann Arbor, Illinois 48103
Facsimile: 734-997-4289
Attention: President
Bell & Howell Company
300 North Zeeb Road
Ann Arbor, Illinois 48103
Facsimile: 734-997-4289
Attention: General Counsel
9
Harter, Secrest & Emery LLP
(before July 1, 2001:) 700 Midtown Tower
(on and after July 1, 2001:) 1600 Bausch & Lomb Place
Rochester, New York 14604
Facsimile: 716-232-2152
Attention: Susan Mascette Brandt, Esq.
42. Section 10.14 of the Agreement is hereby deleted in its entirety
and replaced with the following:
"10.14 Parties in Interest.
---------------------------
"This Agreement shall be binding upon and inure solely to the
benefit of each party hereto and their respective successors
and permitted assigns, including any successor, whether by way
of merger, acquisition, reorganization or otherwise, to its
business operations or to the Scanner Business or the Scanner
Assets and Liabilities. Nothing in this Agreement, express or
implied, is intended by or shall confer upon any other Person
any rights, benefits or remedies of any nature whatsoever
under or by reason of this Agreement. Nothing herein shall
affect Seller's rights to enforce the provisions of Section
6.6 hereof on behalf of all or any of the Affected Employees
or ARD Employees."
43. The following is hereby added to the Agreement as Section 1.1(e):
"e. The Excluded Assets include those portions of distribution
agreements included in the Foreign Assets, if any, that relate
solely to the Scanner Business. Both before and after Closing,
Seller will use all reasonable efforts to make effective the
partial assignment of such distribution agreements, as well as
the partial assignment of that certain Distribution Agreement
(International) dated November 1, 1996 between Bell & Howell
Document Management Products Company and BC Limited
Partnership, to the sole extent, and solely for the purpose,
necessary to permit Seller and its Affiliates to continue to
conduct the Scanner Business pursuant to all such distribution
agreements after Closing. To the extent that third party
consents are required for the effectiveness of any such
partial assignment, the parties will be governed by the
provisions of Section 2.5."
10
44. The following is hereby added to the Agreement as Section 6.15:
"6.15 Confidential Information.
------------------------------
"a. Information that is competitively sensitive material, and
not generally known to the public, including, but not limited
to, product planning information, marketing strategies, plans,
finance, operations, customer relationships, customer
profiles, sales estimates, business plans, and internal
performance results relating to past, present or future
business activities exchanged between Seller and Buyer or
otherwise made available by one party for the other in
connection with this Agreement before or after the date hereof
shall be considered a trade secret or confidential or
proprietary information ("Confidential Information");
provided, however, that as used herein, the term "Confidential
Information" shall:
"(i) include confidential or proprietary information
of third parties in the possession of one of the
parties to this Agreement and needed to be disclosed
to perform its obligations hereunder;
"(ii) in the case of Confidential Information of
Seller, mean only Confidential Information with
respect to the Scanner Business or the Scanner Assets
and Liabilities, and shall not include (A) any
Confidential Information with respect to the
Business, or (B) any written materials that are
located on the premises of Imaging on the Closing
Date;
"(iii) in all cases, mean only Confidential
Information that is in written form (in any media);
and
"(iv) in the case of Confidential Information of
Buyer, includes all Confidential Information of the
Business.
"b. Obligations. Except as expressly authorized by prior
written consent of the disclosing party, the receiving party
shall:
"(i) limit access to any Confidential Information
received by it to its employees, agents,
representatives, and consultants who are bound by
confidentiality obligations to the receiving party;
11
"(ii) advise its employees, agents and consultants
having access to the Confidential Information of the
proprietary nature thereof and of the obligations set
forth in this Section 6.15;
"(iii) safeguard all Confidential Information
received by it using a reasonable degree of care, but
not less than that degree of care used by the
receiving party in safeguarding its own similar
information or material;
"(iv) not disclose any Confidential Information
received by it to third parties;
"(v) upon the disclosing party's request in the event
of termination of this Agreement, the receiving party
shall return promptly to the disclosing party all
Confidential Information of the disclosing party in
the receiving party's possession, and certify in
writing to the disclosing party its compliance with
this Section 6.15(b)(v); and
"(vi) within two weeks after the Closing Date, Buyer
shall return to Seller all Confidential Information
of Seller in Buyer's possession, and certify in
writing to Seller its compliance with this Section
6.15(b)(vi).
"c. Exceptions to Confidentiality. Notwithstanding the
foregoing, Section 6.15(a) and Section 6.15(b) shall not apply
to any particular information of a disclosing party that the
receiving party can demonstrate: (i) was, at the time of
disclosure to it, in the public domain; (ii) after disclosure
to it, is published or otherwise becomes part of the public
domain through no fault of the receiving party; (iii) was in
the possession of the receiving party at the time of
disclosure to it without being subject to any other
confidentiality obligation; (iv) was received after disclosure
to it from a third party who had a lawful right to disclose
such information to it; (v) was received by the receiving
party pursuant to a license or other similar right; (vi) was
independently developed by the receiving party without
reference to Confidential Information of the disclosing party;
(vii) was required to be disclosed to any regulatory body
having jurisdiction over Seller or Buyer or any of their
respective customers; or (viii) as may be necessary by reason
of legal, accounting or regulatory requirements beyond the
reasonable control of the receiving party. In the case of any
disclosure pursuant to clauses (vii) and (viii) above, to the
extent practical, the receiving party shall give prior notice
to the disclosing party of the required disclosure and shall
use reasonable effort to obtain a protective order covering
such disclosure."
12
45. The following is hereby added to the Agreement as Section 6.16:
"6.16 Customer List.
------------------
"The Scanner Assets and Liabilities include Seller's MAS 90
customer list. Seller agrees that at all times following
Closing: (a) Seller and Seller's Affiliates will neither use
nor disclose the MAS 90 customer list except internally within
Seller's business organization and solely for the purpose of
operating the Scanner Business; and (b) neither Seller nor
Seller's Affiliates will sell, convey, assign or otherwise
transfer the MAS 90 customer list, or any rights thereto,
except to a purchaser of the Scanner Business."
46. The defined terms identified below are hereby deleted in their
entirety and replaced with the following in Annex A Glossary of the Agreement:
"Agreement: This Purchase and Sale
Agreement dated as of
October 27, 2000 by and
among Bell & Howell Company
and Eastman Kodak Company,
including the Annexes,
Schedules and Attachments
hereto, all as amended by
the First Amendment."
"Ancillary Agreements: The Income Tax
Disaffiliation Agreement,
the Foreign Transfer
Documents, the Trademark
License Agreement, the
Feeder Supply Agreement,
the Transition Services
Agreement, the Warranty
Service Agreement and the
supply agreement
contemplated by Section
6.1(c)(viii) hereof."
"Business: As defined in Paragraph 1
of the First Amendment."
"Closing Date: As defined in Paragraph 10
of the First Amendment."
"Excluded Assets: Those assets set forth on
Schedule 4.7(a), cash of
the Foreign Subsidiaries,
those portions of
distribution agreements, if
any, referred to in Section
1.1(e), and (except as
provided by Section
1.1(b)(i)(c)) equity
13
interests of the Foreign
Subsidiaries in other
Persons."
"Knowledge of Seller: The actual knowledge of any
of the following Persons:
Todd Buchardt, Don Deegan,
Marty Evans, Nils
Johansson, Stuart
Lieberman, Louis Manetti,
Dwight Mater, Robert
McBratney, Patricia Nolan,
Jeff Short, James Roemer
and David Webb."
"MMT: Bell & Howell Mail and
Messaging Technologies
Company, a Delaware
corporation, and its
successors and permitted
assigns, including any
successor, whether by way
of merger, acquisition,
reorganization or
otherwise, to its business
operations."
"Reference Balance Sheet: The consolidated balance
sheet of the Imaging Group
as of July 1, 2000,
excluding all Excluded
Assets and Excluded
Liabilities, all Scanner
Assets and Liabilities, all
Indemnified Liabilities and
all reserves for any of the
foregoing."
"Requisite Consents: All Consents required under
any Commitments with
respect to the Business, or
any Commitments included in
the Foreign Assets or the
PCI Assets, which are
required for the transfer,
directly or indirectly,
thereof or of any part of
the Business, and all
Consents of Government
Authorities that are
necessary for the
consummation of the
transactions contemplated
hereby (other than any
Consents conditioned upon
the parties' compliance
with the Second Request)."
47. The definition of Scanner Supply Agreement set forth in Annex A
Glossary of the Agreement is hereby deleted in its entirety.
14
48. The definition of Transitional Trademark License Agreement set
forth in Annex A Glossary of the Agreement is hereby deleted in its entirety and
replaced with the following:
"Trademark License Agreement: The agreement set forth as
Attachment II (Amended)
hereto."
49. Clauses "(xiv)" and "(xv)" of the definition of "Indemnified
Liability" set forth in Annex A Glossary of the Agreement are hereby deleted in
their entirety and replaced with the following (with no amendment to the
remainder of the definition of "Indemnified Liability" set forth such Annex A):
"(xiv) arising at any
time under or directly
related to the Scanner
Business or the Scanner
Assets and Liabilities;
"(xv) which is an
Excluded Liability; or
"(xvi) arising from
Seller's fraud in
connection with the
Purchase and Sale
Transaction."
50. The following definitions are hereby added to Annex A Glossary of
the Agreement:
"Confidential Information: As defined in Paragraph 44
of the First Amendment."
"Effective Date: As defined in Paragraph 10
of the First Amendment."
"Feeder Supply Agreement: The agreement set forth as
Attachment V to the First
Amendment."
"First Amendment: The First Amendment to
Purchase and Sale Agreement
dated January 23, 2001 by
and between Bell & Howell
Company and Eastman Kodak
Company."
"Scanner Assets and Liabilities: As defined in Paragraph 30
of the First Amendment."
"Scanner Business: As defined in Paragraph 30
of the First Amendment."
15
"Second Request: That certain second request
dated January 3, 2001 made
of the parties by the U.S.
Department of Justice."
"Warranty Service Agreement: The agreement set forth as
Attachment III to the First
Amendment."
51. The Confidentiality Agreement, as defined by the Agreement, is
hereby terminated, and all references thereto are hereby deleted from the
Agreement.
52. Seller represents and warrants to Buyer that all of the
representations and warranties contained in Article IV of the Agreement are
true, correct and complete as of the date of this First Amendment. Buyer
represents and warrants to Seller that all of the representations and warranties
contained in Article V of the Agreement are true, correct and complete as of the
date of this First Amendment. 53. Except as hereby amended, the Agreement shall
remain in full force and effect in accordance with its terms.
16
IN WITNESS WHEREOF, each of the undersigned has caused this First
Amendment to be signed by its duly authorized officer as of the date first above
written.
BELL & HOWELL COMPANY
By:
--------------------------------------
Name:
Title:
EASTMAN KODAK COMPANY
By:
--------------------------------------
Name:
Title:
This First Amendment is executed by the undersigned for the sole purpose of
agreeing to the amendments contained herein that pertain to Section 6.9 of the
Agreement.
BELL & HOWELL MAIL AND MESSAGING TECHNOLOGIES COMPANY
By:
--------------------------------------
Name:
Title:
17
SECOND AMENDMENT TO PURCHASE AND SALE AGREEMENT
-----------------------------------------------
This Second Amendment to Purchase and Sale Agreement is dated as of
February ___, 2001 ("Second Amendment"), by and between Bell & Howell Company, a
Delaware corporation ("Seller"), and Eastman Kodak Company, a New Jersey
corporation ("Buyer"), and hereby amends and modifies the Purchase and Sale
Agreement dated as of October 27, 2000, as amended by the First Amendment dated
as of January 23, 2001 ("Agreement") entered into by the parties. Capitalized
terms used in this Second Amendment shall, unless otherwise defined herein, have
the meanings ascribed to them in the Agreement.
WHEREAS, Buyer and Seller entered into the Agreement and desire to
amend the Agreement as set forth herein;
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements contained herein, the
parties hereto mutually agree as follows:
1. The definition of "Indemnified Liability" set forth in Annex A
Glossary of the Agreement is amended as follows:
a. Clauses "(xv)" and "(xvi)" are deleted in their entirety
and replaced with the following:
"(xv) arising from or related to Seller's failure to
obtain a release for Imaging, as such release is provided for
by Section 6.1(c)(ii) of the Agreement;
(xvi) which is an Excluded Liability; or
(xvii) arising from Seller's fraud in connection with
the Purchase and Sale Transaction."
2. Except as hereby amended, the Agreement shall remain in full force
and effect in accordance with its terms.
BELL & HOWELL COMPANY
By:
--------------------------------------
Name:
Title:
EASTMAN KODAK COMPANY
By:
--------------------------------------
Name:
Title: