EXHIBIT 2.2
EXECUTION COPY
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ASSET PURCHASE AGREEMENT
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BY AND AMONG
HELLER FINANCIAL CANADA,
AN ONTARIO PARTNERSHIP,
AND
IKON OFFICE SOLUTIONS, INC.,
AN ONTARIO CORPORATION,
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DATED MARCH 31, 2004
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ARTICLE I Definitions..................................................1
Section 1.01. Certain Defined Terms..............................1
Section 1.02. Interpretation and Rules of Construction...........1
ARTICLE II Purchase and Sale............................................1
Section 2.01. Purchased Assets...................................1
Section 2.02. The Purchase Price.................................2
Section 2.03. The Closing........................................2
Section 2.04. Closing Deliveries and Payments....................2
Section 2.05. Settlement Payments................................3
Section 2.06. Post-Closing Amounts Received and Paid.............3
Section 2.07. Consents; Administration Pending Consent...........4
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE
SELLER ...................................................6
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE
PURCHASER....................................................6
ARTICLE V CONDUCT AND TRANSACTIONS PRIOR TO CLOSING;
COVENANTS; INDEMNITIES.......................................6
Section 5.01. Investigations; Operation of the Business..........6
Section 5.02. Pending or Threatened Litigation...................8
Section 5.03. Tax Matters........................................8
Section 5.04. Indemnifications, Assumptions of Liability and
Related Matters...................................10
Section 5.05. Preparation of Closing Date Schedule and Final
Adjusted Closing Date Schedule....................19
Section 5.06. Insurance; Risk of Loss...........................22
Section 5.07. Delivery of Portfolio Tape........................22
Section 5.08. Ancillary Agreements..............................23
Section 5.09. Intellectual Property and Technology for Transition
Services Agreement................................23
Section 5.10. Wind-Down of Conduit Facility.....................24
Section 5.11. Further Assurances................................24
Section 5.12. Payment of Brokers' or Finders' Fees..............24
Section 5.13. Supplements to Schedules..........................25
Section 5.14. Employee Matters..................................25
Section 5.15. [Intentionally Omitted]...........................25
Section 5.16. Records...........................................25
Section 5.17. Bulk Transfer Laws................................25
Section 5.18. Access to Facilities..............................26
Section 5.19. Delivery of Chargeback and Delinquency Reports....26
Section 5.20. Delivery of Closing Portfolio Tape................26
Section 5.21. Enforcement of Liens..............................26
Section 5.22. [Intentionally Omitted]...........................26
Section 5.23. [Intentionally Omitted]...........................26
Section 5.24. [Intentionally Omitted]...........................26
Section 5.25. Allocations.......................................26
Section 5.26. [Intentionally Omitted]...........................26
Section 5.27. Recourse Obligations..............................27
Section 5.28. [Intentionally Omitted]...........................27
Section 5.29. [Intentionally Omitted]...........................27
Section 5.30. [Intentionally Omitted]...........................27
Section 5.31. [Intentionally Omitted]...........................27
Section 5.32. Specified PPSA Registrations......................27
ARTICLE VI CONDITIONS TO CLOSING; ABANDONMENT OF THE
TRANSACTION.................................................27
Section 6.01. Conditions to the Obligations of the Purchaser....27
Section 6.02. Conditions to the Obligations of the Seller.......29
Section 6.03. Termination of Agreement and Abandonment of
Transactions......................................31
ARTICLE VII TERMINATION OF OBLIGATIONS AND WAIVER OF
CONDITIONS..................................................31
ARTICLE VIII GENERAL.....................................................32
Section 8.01. Amendments........................................32
Section 8.02. Integrated Contract...............................32
Section 8.03. Governing Law.....................................32
Section 8.04. Notices...........................................32
Section 8.05. No Assignment.....................................33
Section 8.06. Headings..........................................34
Section 8.07. Counterparts......................................34
Section 8.08. Announcements.....................................34
Section 8.09. Severability......................................34
Section 8.10. Binding Effect....................................34
Section 8.11. Waiver of Jury Trial..............................34
Section 8.12. Exclusive Jurisdiction............................35
Section 8.13. No Third Party Beneficiary........................35
Section 8.14. Expenses..........................................35
Section 8.15 Currency..........................................35
TABLE OF EXHIBITS
Exhibit Definitions
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Exhibit B Representations and Warranties of the Seller
Exhibit C Representations and Warranties of the Purchaser
Exhibit D Form of Bill of Sale, Assignment and Assumption Agreement
Exhibit E [Intentionally Omitted]
Exhibit F Employee Matters
Exhibit G Canadian Accounting Principles for Use in Preparing the Closing
Date Schedule and the Final Adjusted Closing Date Schedule
Exhibit H Form of Program Agreement
Exhibit I Required Consents
Exhibit J Additional Special Adjustments
Exhibit K Form of GE Guaranty
Exhibit L Form of IKON Guaranty
DISCLOSURE SCHEDULE
Schedule 1.01(a) Excluded Assets
Schedule 1.01(b) Knowledge
Schedule 1.01(d) Excluded Liabilities
Schedule 1.01(f) Excluded Assets
Schedule 1.01(j) Employees
Schedule 1.01(j)(A) Certain Employee Information
Schedule 1.01(k) Prohibited Assignees
Schedule 3.01(a) Organization and Good Standing
Schedule 3.01(b) Organization and Good Standing
Schedule 3.03(a) No Conflicts
Schedule 3.03(b) No Conflicts
Schedule 3.04 Consents
Schedule 3.05(a) No Violations of Law
Schedule 3.06(a) Financial Statements; Reports
Schedule 3.06(c) Financial Statements; Reports
Schedule 3.06(d) Financial Statements; Reports
Schedule 3.07(a) Absence of Certain Changes
Schedule 3.08(a) Employee Benefit Plans, Etc.
Schedule 3.09(b) Taxes
Schedule 3.13 Litigation and Liabilities
Schedule 3.15 Insurance
Schedule 3.18(b) Financing Contracts
Schedule 3.18(d) Financing Contracts
Schedule 3.18(f) Financing Contracts
Schedule 3.18(g) Financing Contracts
Schedule 3.19(a) Portfolio Property
Schedule 3.19(d) Portfolio Property
Schedule 5.19(a) Form of Monthly Chargeback Report
Schedule 5.19(b) Form of Monthly Delinquency Report
Schedule 6.01(e) Certificates Closing Deliveries
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT, dated March 31, 2004, is between
HELLER FINANCIAL CANADA, an Ontario partnership (the "Purchaser"), and IKON
OFFICE SOLUTIONS, INC., an Ontario corporation (the "Seller"), each of which
agrees as follows:
ARTICLE I
DEFINITIONS
Section 1.01. CERTAIN DEFINED TERMS. Capitalized terms used in this
Agreement shall have the meanings specified in Exhibit A to, or elsewhere in,
this Agreement.
Section 1.02. INTERPRETATION AND RULES OF CONSTRUCTION. In this
Agreement, except to the extent that the context otherwise requires:
(a) when a reference is made in this Agreement to an article,
section, exhibit or schedule, such reference is to an Article or Section of,
or an Exhibit or a Schedule to, this Agreement unless otherwise indicated;
(b) whenever the words "include", "includes" or "including" are used
in this Agreement, they are deemed to be followed by the words "without
limitation";
(c) the words "hereof", "herein" and "hereunder" and words of
similar import, when used in this Agreement, refer to this Agreement as a
whole and not to any particular provision of this Agreement; and
(d) the definitions contained in this Agreement are applicable to
the singular as well as the plural forms of such terms.
ARTICLE II
PURCHASE AND SALE
Section 2.01. PURCHASED ASSETS.
(a) Purchased Assets. Upon the terms and subject to the conditions
set forth in this Agreement, at the Closing the Purchaser shall purchase (or
shall cause one or more Acquiring Entities to purchase) from the Seller, and
the Seller shall sell, assign, transfer and convey (or shall cause one or more
of its Affiliates to sell, assign, transfer and convey) to the Purchaser (or
one or more Acquiring Entities) the Purchased Assets.
(b) Excluded Assets. The Seller shall not sell, assign, transfer or
convey (or cause any Affiliate to sell, assign, transfer or convey) to the
Purchaser or any Acquiring Entity, and neither the Purchaser nor any Acquiring
Entity shall purchase, any Excluded Assets.
(c) Assumed Liabilities. Upon the terms and subject to the
conditions set forth in this Agreement, effective as of the Closing, the
Seller shall assign and delegate to the Purchaser (or one or more Acquiring
Entities), and the Purchaser shall (or shall cause one or more Acquiring
Entities to) assume and be obligated to pay when due, perform, or otherwise
discharge, only the Assumed Liabilities.
(d) Excluded Liabilities. Neither the Purchaser nor any Acquiring
Entity shall assume or otherwise become liable for any Excluded Liabilities.
Section 2.02. THE PURCHASE PRICE. The purchase price to be paid by
the Purchaser for the Purchased Assets shall be an amount equal to (a) the
aggregate amount of the Purchased Assets minus (b) the aggregate amount of the
Assumed Liabilities, in each case, as reflected on the Final Adjusted Closing
Date Schedule plus (c) the Additional Amount (the "Purchase Price").
Section 2.03. THE CLOSING. The Closing of the sale of the Purchased
Assets and the assumption of the Assumed Liabilities hereunder shall (subject
to the terms and conditions set forth in this Agreement) be held at the City
of Toronto offices of Davies Ward Phillips & Vineberg LLP, or such other
location as the parties may mutually agree upon, at 10:00 a.m. (Toronto time)
on the last calendar day of the month in which the conditions set forth in
Article VI are satisfied (or, to the extent permitted, waived by the party
entitled to the benefit thereof) or, if such day is not a Business Day, the
next succeeding Business Day, or at such other time, date and place as the
parties may mutually agree.
Section 2.04. CLOSING DELIVERIES AND PAYMENTS.
(a) At the Closing, the Seller shall deliver or cause to be
delivered to the Purchaser:
(i) one or more bills of sale and assignment and assumption
agreements, each substantially in the form attached hereto as Exhibit D
(the "Bills of Sale"), duly executed by the Seller and each of its
Affiliates that has any right, title or interest in the Purchased Assets,
pursuant to which (A) the Purchaser (or one or more Acquiring Entities)
shall acquire all of their right, title and interest in, to and under the
Purchased Assets, and (B) the Seller or its applicable Affiliate shall
delegate, transfer, assign and allocate to the Purchaser (or one or more
Acquiring Entities) the Assumed Liabilities;
(ii) a receipt or receipts for the Initial Payment; and
(iii) the certificates and other documents required to be delivered
pursuant to Section 6.01.
(iv) [Intentionally Omitted]
(b) At the Closing:
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(i) the Purchaser shall (and/or shall cause one or more Acquiring
Entities to) pay to the Seller the Initial Payment by wire transfer of
immediately available funds to an account designated to the Purchaser in
writing by the Seller prior to the Closing Date; and
(ii) the Purchaser shall deliver or cause to be delivered to the
Seller:
(A) one or more Bills of Sale providing for the assumption of the
Assumed Liabilities, duly executed by the Purchaser (or one or more
Acquiring Entities), pursuant to which the Purchaser (or one or more
Acquiring Entities) shall accept the Purchased Assets and assume the
Assumed Liabilities; and
(B) the certificates and other documents required to be delivered
pursuant to Section 6.02.
(c) On the last Business Day of the month immediately following the
month of the Closing, the Purchaser shall pay to the Seller the GST and QST
exigible on the Initial Payment by wire transfer of immediately available
funds to the account to which the Initial Payment was wire transferred.
Section 2.05. SETTLEMENT PAYMENTS. On the Settlement Date, the
following amounts shall be paid, by wire transfer of immediately available
funds, to an account designated in writing prior to the Settlement Date by the
recipient thereof to the party required to make such payment:
(a) if the Purchase Price exceeds the Initial Payment, the Purchaser
shall (and/or shall cause the applicable Acquiring Entity to) pay to the
Seller an amount equal to the Settlement Payment plus the Settlement Interest
in respect thereof; or
(b) if the Initial Payment exceeds the Purchase Price, the Seller
shall pay to the Purchaser (and/or one or more Acquiring Entities, as directed
by the Purchaser) an amount equal to the Settlement Payment plus the amount in
respect of GST and QST on the Settlement Payment previously paid by the
Purchaser to the Seller plus the Settlement Interest in respect thereof.
If a Settlement Payment is made pursuant to Section 2.05(a), then on the last
Business Day of the month immediately following the month of the Settlement
Date, the Purchaser shall pay to the Seller the GST and QST exigible on the
Settlement Payment made pursuant to Section 2.05(a) by wire transfer of
immediately available funds to the account to which the Purchase Price was
wire transferred.
Section 2.06. POST-CLOSING AMOUNTS RECEIVED AND PAID. After the
Closing Date, all amounts which are received by the Seller or any of its
Affiliates in respect of any of the Purchased Assets shall be received by such
Person as agent, in trust for and on behalf of the Purchaser, and following
the Closing the Seller shall, on a weekly basis, pay, or cause to be paid to
the Purchaser, by wire transfer of immediately available funds (in the same
currency such amounts are received) to an account designated by the Purchaser
to the Seller in writing two days prior to the Closing Date (or such other
account as the Purchaser may, from time to time, designate upon no less than
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five Business Days' written notice to the Seller), all such amounts received
by or paid to the Seller or any of its Affiliates, and shall provide the
Purchaser information as to the nature and source of all such payments,
including any invoice related thereto. After the Closing Date, all amounts
which are received by the Purchaser or any of its Affiliates in respect of any
of the Excluded Assets shall be received by such Person as agent, in trust for
and on behalf of the Seller, and the Purchaser shall, on a weekly basis, pay,
or cause to be paid to the Seller, by wire transfer of immediately available
funds (in the same currency such amounts are received) to an account
designated by the Seller to the Purchaser in writing two days prior to the
Closing Date (or such other accounts as the Seller may, from time to time,
designate upon no less than five Business Days' written notice to the
Purchaser), all such amounts received by or paid to the Purchaser or any of
its Affiliates, and shall provide the Seller information as to the nature and
source of all such payments, including any invoice relating thereto.
Section 2.07. CONSENTS; ADMINISTRATION PENDING CONSENT.
(a) (i) Notwithstanding anything in this Agreement to the contrary,
this Agreement shall not constitute an agreement to transfer or assign
any Purchased Asset or any claim or right or any benefit arising under or
resulting from such Purchased Asset that is included in the Purchased
Assets but is not assignable or transferable without the consent of any
Person (other than the Purchaser or any of its Affiliates, or the Seller
or any of its Affiliates) or for which assignment without such consent
would constitute a breach thereunder, to the extent that such consent
shall not have been obtained prior to the Closing; provided, however,
that subject to Section 2.07(a)(ii), the Seller shall use all
commercially reasonable efforts to obtain all necessary consents to the
assignment thereof and, upon obtaining the requisite third party consents
thereto, such Purchased Asset or any claim or right or any benefit
arising under or resulting from such Purchased Asset shall be transferred
and assigned to the Purchaser or the applicable Acquiring Entity
hereunder in accordance with Section 2.04(a)(i), at no additional
consideration from the Purchaser or such Acquiring Entity.
(ii) At any time following a reasonable determination by the
Purchaser that the Seller has failed to obtain any consent pursuant to
Section 2.07(a)(i) with respect to a Purchased Financing Contract, the
Purchaser or any of its Affiliates shall have the right, exercisable by
delivering to the Seller a Repurchase Notice with respect to such
Purchased Financing Contract, to require the Seller to purchase, on the
Specified Settlement Date, any such Purchased Financing Contract for a
price equal to the Repurchase Price set forth in the Repurchase Notice.
(iii) The closing of each repurchase of a Purchased Financing
Contract pursuant to Section 2.07(a)(ii) shall take place on the related
Specified Settlement Date. Upon each repurchase of a Purchased Financing
Contract pursuant to Section 2.07(a)(ii), (A) the Seller shall pay, or
shall cause any of its Affiliates to pay, to the Purchaser or its
Affiliates, by wire transfer of immediately available funds to an account
designated in writing by the Purchaser, the aggregate Repurchase Price
with respect to such Purchased Financing Contract to be sold at
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such closing, and (B) the Purchaser shall assign, or shall cause any of
its Affiliates to assign, to the Seller or any of its Affiliates on an
"AS-IS, WHERE IS" basis, without representation, warranty or recourse of
any kind (other than Agreed Warranties (as defined in the Program
Agreement)), all of the Purchaser's or its Affiliate's right, title and
interest in (1) the Purchased Financing Contract described in the related
Repurchase Notice and for which the Seller or its Affiliates had paid the
Repurchase Price as provided in the foregoing clause (A), and (2) the
Portfolio Property, if any, that is subject to or governed by such
Purchased Financing Contract to the extent that such Portfolio Property
shall not theretofore have been (x) transferred or sold to an Obligor
under such Purchased Financing Contract (or its Affiliate or assignee),
(y) foreclosed upon or repossessed and remarketed, or (z) sold or
re-leased following termination of such Purchased Financing Contract.
(iv) Each Repurchase Notice shall specify the Purchased Financing
Contract as to which the Purchaser or its Affiliate is exercising a
Repurchase Option, a description of the failure to receive the consent
pursuant to which such Repurchase Option is being exercised and the
Repurchase Price in respect of such Purchased Financing Contract
(together with (x) a summary showing in reasonable detail the manner in
which such Repurchase Price was calculated and (y) a duly executed
certificate of the Purchaser certifying the calculation of such
Repurchase Price). Delivery of a Repurchase Notice by the Purchaser or
its Affiliate shall be irrevocable and, upon delivery thereof to the
Seller, the Seller shall be bound to pay to the Purchaser, on the related
Specified Settlement Date, the Repurchase Price with respect to the
Purchased Financing Contract identified in such Repurchase Notice,
subject only to the condition that the Purchaser or its Affiliate assign
such Purchased Financing Contract at the closing of such repurchase on
the terms described above in Section 2.07(a)(iii).
(b) With respect to any Purchased Asset or any claim or right or any
benefit arising under or resulting from such Purchased Asset included in the
Purchased Assets that is not assigned to the Purchaser or an Acquiring Entity
at the Closing by reason of Section 2.07(a), after the Closing and until the
applicable requisite consents are obtained and the foregoing sold and assigned
to the Purchaser or the applicable Acquiring Entity, the Seller shall provide
in any lawful and reasonable manner to the Purchaser or the applicable
Acquiring Entity, in accordance with this Section 2.07(b), the benefits under
each such Purchased Asset or right or any benefit arising under or resulting
from such Purchased Asset (with the Purchaser responsible for all Assumed
Liabilities thereunder to the extent it would be liable under the applicable
Purchased Asset if the requisite consent had been obtained and such Purchased
Asset or right had been assigned to the Purchaser). In particular, in the
event that any requisite consent is not obtained prior to Closing, then the
Purchaser or the applicable Acquiring Entity and Seller shall enter into such
lawful and reasonable arrangements (including sublicensing, subleasing or
subcontracting, if permitted) to provide to the Purchaser or such Acquiring
Entity the economic and operational equivalent of obtaining such requisite
consent and assigning such Purchased Asset or right, including enforcement for
the benefit of the Purchaser or such Acquiring Entity of all claims or rights
arising thereunder, and the performance by the Purchaser or such Acquiring
Entity of the obligations thereunder. The Seller shall
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take all actions reasonably requested by the Purchaser or the applicable
Acquiring Entity to enforce the rights of the Purchaser or such Acquiring
Entity under any such Purchased Assets, including the assertion and
enforcement of any right, claim, presentation, demand or draw under or
with respect to any such Purchased Assets. Upon the Closing, the Seller
authorizes the Purchaser and the Acquiring Entities, to the extent
permitted by applicable Law, at the Purchaser's expense to (x) perform
all of the Assumed Liabilities under each of the contracts and agreements
that comprise the Purchased Assets but that are not assigned to the
Purchaser or an Acquiring Entity after giving effect to Section 2.07(a)
and (y) amend, modify or waive any such contract or agreement in the
Seller's name and in such manner as the Purchaser or the applicable
Acquiring Entity may reasonably desire. On the Closing Date, or as
requested from time to time after the Closing Date, the Seller shall
provide to the Purchaser and the Acquiring Entities such powers of
attorney as the Purchaser may reasonably request in order to enable the
Purchaser and the Acquiring Entities to effectuate the foregoing
provisions; provided, however, that any and all liabilities or
obligations incurred by the Seller arising out of, resulting from, based
upon, in connection with or relating to any action taken by the Purchaser
or the applicable Acquiring Entity pursuant to any such power of attorney
shall be Assumed Liabilities.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller makes the representations and warranties set forth on
Exhibit B to the Purchaser on the date hereof and on the Closing Date, other
than those representations and warranties that speak as of a date other than
the Closing Date, which are made as of such date. Reference in this Agreement
or in any of the Schedules or Exhibits hereto to any of Sections 3.01 through
3.22 shall be deemed to be references to the corresponding Sections of Exhibit
B.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser makes the representations and warranties set forth on
Exhibit C to the Seller on the date hereof and on the Closing Date. Reference
in this Agreement or in any of the Schedules or Exhibits hereto to any of
Sections 4.01 through 4.08 shall be deemed to be references to the
corresponding Sections of Exhibit C.
ARTICLE V
CONDUCT AND TRANSACTIONS PRIOR TO CLOSING;
COVENANTS; INDEMNITIES
The Seller agrees and covenants with the Purchaser as follows:
Section 5.01. INVESTIGATIONS; OPERATION OF THE BUSINESS. Between the
date of this Agreement and the Closing:
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(a) The Seller shall give or cause to be given to the Purchaser and
its representatives and agents reasonable access, upon reasonable notice, to
all the premises, personnel and books and records (wherever located) of the
Seller, including all accounting books and records, all financial records and
statements, and all Tax Returns and tax records, in each case pertaining to
any Purchased Financing Contract, any Portfolio Property, any Assumed
Liability, or any other Purchased Asset; provided, however, that such
investigation shall be conducted during normal business hours and in such
manner as not to interfere unreasonably with the business of the Seller.
(b) [Intentionally Omitted]
(c) Except as otherwise expressly provided in this Agreement, the
Seller shall use commercially reasonable efforts consistent with past
practices to preserve substantially intact the Business and the Purchased
Assets and shall use commercially reasonable efforts to preserve its present
business relationships consistent with past practices, including relationships
with (x) each Transferred Employee, (y) each Person that has a business
relationship which is advantageous to the Business and (z) Obligors under
Purchased Financing Contracts, in each case, where the discontinuance of such
relationships would reasonably be expected to have a material adverse effect
on the Purchased Assets or the billing, collection, administration or
servicing thereof. Nothing in this Section 5.01(c) shall prevent the Seller
from applying the Risk Management Policy For Leasing in a manner consistent
with Section 5.01(d).
(d) Except as otherwise expressly required by this Agreement, the
Seller shall conduct the Business in the ordinary and usual course consistent
with its past practices, maintain its books, accounts and records with respect
to the Purchased Assets in the usual, regular and ordinary manner, cause such
books, accounts and records to be true and complete in all material respects
and comply with the provisions set forth in the remainder of this Section
5.01(d). Except as otherwise expressly required by this Agreement, with
respect to the Business, the Seller shall not: (i) waive or commit to waive
any right that would reasonably be expected to have a Material Adverse Effect;
(ii) modify, replace or supersede the Risk Management Policy For Leasing or
write down or write-off any Financing Contract other than in accordance with
Seller's write-off policy in effect on the date hereof; (iii) modify, replace
or supersede any credit, underwriting or collection practices of the Seller
with respect to, or in any way modify the payment schedule, payment terms or
any other term or condition of, any Purchased Financing Contract, or make any
advance, extension, novation or other accommodation to any lessee or Obligor
under any Purchased Financing Contract, except, in each case, for
modifications, replacements, supersessions, advances, extensions, novations or
other accommodations made or entered into in the ordinary course of business,
consistent with the past practices and with the Risk Management Policy For
Leasing, and reflected, to the extent applicable, in the books and records of
the Seller; (iv) except for Permitted Encumbrances, mortgage, pledge, or
otherwise encumber any Purchased Assets; (v) sell, lease, transfer or
otherwise dispose of any of the Purchased Assets, other than any of the
following entered into in the ordinary course of business consistent with the
past practices of the Seller: (A) leases or conditional sales of equipment
that is subject to Financing Contracts, (B) sales, leases, transfers or other
disposals of Portfolio Property following (or concurrently with) the
expiration or termination of the relevant Purchased
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Financing Contract and (C) sales, leases, transfers or other disposals of
obsolete tangible personal Property that is no longer used in the Business;
(vi) take any action that would breach any of the Seller's representations,
warranties or covenants contained in this Agreement if such representation,
warranty or covenant were made at the time of the action; or (vii) enter into
any agreement, contract or commitment (other than this Agreement) to do any of
the things prohibited by the foregoing clauses (i) through (vii); provided,
however, that nothing contained in this Agreement shall prohibit (A) the
Seller from granting Encumbrances to secure borrowings that will be repaid at
or prior to Closing or (B) the Seller from complying with the Conduit Facility
Document or continuing the Conduit Facility in compliance with such Conduit
Facility Document, subject to satisfaction of the condition precedent set out
in Section 6.01(p), in each case in the ordinary course of business consistent
with past practices.
(e) The Purchaser shall not (i) take any action that would breach
any of the Purchaser's representations, warranties or covenants contained in
this Agreement if such representation, warranty or covenant were made at the
time of the action; or (ii) enter into any agreement, contract or commitment
(other than this Agreement) to do any of the things prohibited by the
foregoing clause (i).
Section 5.02. PENDING OR THREATENED LITIGATION. Between the date of
this Agreement and the Closing, the Seller and the Purchaser shall inform each
other, promptly upon obtaining Knowledge thereof, of any pending or threatened
Action which reasonably could be anticipated to (a) render inaccurate in any
material respect any representation or warranty made by the Seller or the
Purchaser (as the case may be); or (b) prohibit or restrain or materially and
adversely affect the consummation of the transactions contemplated hereby or
the performance by the Seller or the Purchaser of its respective obligations
hereunder.
Section 5.03. TAX MATTERS.
(a) Allocation of Purchase Price. As soon as practicable following
the signing of this Agreement, but in no event later than 120 days following
the Closing Date, the Purchaser shall provide to the Seller a draft purchase
price allocation schedule and any required exhibits thereto with the
Purchaser's proposed allocation of the Purchase Price, including the Assumed
Liabilities, among the Purchased Assets. Within 60 days after the receipt of
such draft purchase price allocation schedule, the Seller shall propose to the
Purchaser any changes to such draft purchase price allocation schedule or
shall indicate its concurrence therewith. The failure by the Seller to propose
any such change or to indicate its concurrence within such 60 days shall be
deemed to be an indication of its concurrence with such draft purchase price
allocation schedule. The Purchaser and the Seller shall file, and shall cause
their Affiliates to file, all Tax Returns and statements, forms and schedules
in connection therewith in a manner consistent with such allocation of the
Purchase Price and shall take no position contrary thereto unless required to
do so by applicable Tax Laws. Any disputes with respect to the items on the
draft purchase price allocation schedule which the Purchaser and the Seller,
acting in good faith, are unable to resolve shall be resolved pursuant to
Section 5.05(b). Each of the parties to this Agreement shall be bound by the
decision rendered in accordance with Section 5.05(b).
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(b) [Intentionally Omitted].
(c) Cooperation with Respect to Tax Returns. The Purchaser and the
Seller agree to furnish or cause to be furnished to each other, and each at
its own expense, in a timely manner, such information (including access to
books and records) and assistance, including making employees available on a
mutually convenient basis to provide additional information and explanations
of any material provided relating to the Purchased Assets as is reasonably
necessary for the filing of any Tax Return, for the preparation for any audit,
and for the prosecution or defense of any claim or Action relating to any
adjustment or proposed adjustment with respect to Taxes or any appraisal of
the Purchased Assets. The Seller shall retain in its possession all Tax
Returns and Tax records relating to the Purchased Assets that might be
relevant to any Taxable period ending on or prior to the Closing Date until
the relevant statute of limitations has expired. After such time, the Seller
may dispose of such materials; provided, however, that prior to such
disposition the Seller shall give the Purchaser a reasonable opportunity to
take possession of such materials, at the Purchaser's expense.
(d) Erroneous Tax Payments. If the Purchaser determines that any
Taxes in respect of any Purchased Financing Contract are due and the Seller
erroneously paid such Taxes at the inception of such Purchased Financing
Contract and the Purchaser is unable to collect such Taxes from the Obligor
under such Purchased Financing Contract, at the Purchaser's request the Seller
shall initiate a timely and proper refund claim for the relevant Taxes. The
Seller shall promptly pay any such refund and the interest actually received
thereon to the Purchaser upon receipt thereof by the Seller, net of any
reasonable out of pocket expenses incurred by the Seller in connection with
such refund claim. For the avoidance of doubt, the Seller shall be deemed to
actually receive a refund to the extent that the making of a claim for a
refund results in a reduction of any Tax liability of the Seller.
(e) Income Tax Election. The Purchaser (and any Acquiring Entity
resident in Canada) and the Seller agree to elect jointly in the prescribed
form under section 22 of the Tax Act as to the sale of all of the Purchased
Assets that are accounts receivable and described in section 22 of the Tax Act
and to designate in such election an amount equal to the portion of the
Purchase Price allocated to such assets pursuant to Section 5.03(a) as the
consideration paid by the Purchaser (and any Acquiring Entity resident in
Canada) therefor.
(f) GST Input Tax Credit Supporting Documentation. The Seller will
promptly provide the Purchaser with "supporting documentation" within the
meaning of and in compliance with the Input Tax Credit Information (GST/HST)
Regulation in respect of all purchases made by the Purchaser under this
Agreement.
(g) Tax Exemption Certificates. The Purchaser shall deliver on
Closing an exemption certificate or certificates, executed by the Purchaser
(and any Acquiring Entity whose purchase of Purchased Assets is subject of any
provincial sales tax) as required, which provide the Purchaser (and any
Acquiring Entity whose purchase of Purchased Assets is subject of any
provincial sales tax) is exempt from tax under the Retail Sales Tax Act
(Ontario) and the equivalent legislation in the other Canadian
9
provinces in relation to the sale of the Purchased Assets to the Purchaser
(and any Acquiring Entity whose purchase of Purchased Assets is subject of any
provincial sales tax).
Section 5.04. INDEMNIFICATIONS, ASSUMPTIONS OF LIABILITY AND RELATED
MATTERS.
(a) Indemnification by the Seller for Breach. Following the Closing,
the Seller shall indemnify and hold harmless each of the Purchaser, its
Partners, their Affiliates, and their respective directors, officers,
employees and agents (collectively, the "Purchaser Indemnified Parties"), from
and against and in respect of any and all Damages suffered or incurred by any
of them resulting from, arising out of, based on or relating to (i) any breach
of any representation or warranty made by the Seller in this Agreement that,
as of the Closing, has not been cured by the Seller or waived by the Purchaser
in accordance with Section 8.01; (ii) any failure to perform any covenant,
agreement or undertaking on the part of the Seller contained in this
Agreement; or (iii) any breach of a representation or warranty in or omission
of information included in any certificate delivered by or on behalf of the
Seller pursuant to Section 5.19 or Section 6.01(a)(iii)(A). For purposes of
this Section 5.04(a), a breach of a representation or warranty contained in
this Agreement (other than in Section 3.07(a)) shall be deemed to exist either
if such representation or warranty is actually inaccurate or breached or if
such representation or warranty would have been breached or been inaccurate if
such representation or warranty had not contained any limitation or
qualification as to materiality, Material Adverse Effect, knowledge or
Knowledge in any such representation or warranty or any limitation expressed
as a monetary amount contained in Section 3.13 or Section 3.20, it being the
intention of the parties hereto that the Purchaser Indemnified Parties shall
be indemnified and held harmless from and against any and all Damages suffered
or incurred by any of them resulting from, arising out of, based upon or
relating to the failure of any such representation or warranty to be true,
correct and complete in any respect, determined in each case without regard to
any qualification as to materiality, Material Adverse Effect, knowledge or
Knowledge in any such representation or warranty or any limitation expressed
as a monetary amount contained in Section 3.13 or Section 3.20 with respect
thereto.
(b) Limitation on Liability.
(i) Each Purchaser Indemnified Party entitled to indemnification for
any Damages suffered or incurred by such Person resulting from, arising
out of, based on or relating to (A) a breach of any representation or
warranty in Sections 3.01, 3.02, 3.03, 3.16, 3.18(b)(iii)(B), 3.19(a),
3.20 and 3.22 (individually a "Seller Special Representation" and
collectively, the "Seller Special Representations"), or (B) a failure to
perform any covenant, agreement or undertaking of the Seller shall be
entitled to such indemnification for the full amount of such Damages
regardless of the amount of the Damages.
(ii) Each Purchaser Indemnified Party entitled to indemnification
under Section 5.04(a)(i) or Section 5.04(a)(iii) for any Damages suffered
or incurred by such Person resulting from, arising out of, based on or
relating to a
10
breach of any representation or warranty made by the Seller in this
Agreement other than a Seller Special Representation or a breach of a
representation or warranty in or omission of information included in any
certificate delivered by or on behalf of the Seller pursuant to Section
5.19 or Section 6.01(a)(iii)(A), shall be entitled to indemnification
from the Seller for the full amount of all such Damages in excess of the
amount which is 10% of the Purchase Price; provided, however, that in no
event shall the Seller's indemnification obligations in respect of
Damages resulting from, arising out of, based on or relating to any such
breach of representation or warranty exceed the amount of the Purchase
Price.
(iii) With respect to any breach of the agreements and covenants
contained in Section 5.01(a) and Section 5.02, to the extent that the
Damages claimed by a Purchaser Indemnified Party in respect of any such
breach result from, arise out of or are based on or relate to facts,
events and circumstances that would give rise to a claim for
indemnification under Section 5.04(a)(i) for a breach of representation
or warranty that is not a Special Representation, such claim for breach
of Section 5.01(a) and 5.02 shall be subject to the limitation on
liability set forth in Section 5.04(b)(ii) to the same extent, if any, as
a claim for breach of such representation or warranty. Subject only to
the foregoing sentence, in the event that a claim or demand for
indemnification may be made under more than one provision of this Section
5.04, the Person making such claim or demand shall have the right to
elect the provision of this Section 5.04 pursuant to which such claim or
demand for indemnification is made.
(iv) In calculating the amount of Taxes that are indemnifiable for
Damages resulting from a breach of a representation for the purposes of
Section 5.04(a)(i), Section 5.04(b)(i) or Section 5.04(b)(ii), the amount
of such Damages shall be an amount equal to the excess of (i) the Tax
liability actually incurred by the Purchaser, its Partners and their
Affiliates over (ii) the Tax liability that the Purchaser and its
Affiliates would have incurred if such representation was true and
correct (the "Tax Differential"). The Tax director of the Purchaser's
Vendor Financial Services business unit (the "Tax Director") shall make a
good faith effort to establish the Tax Differential and shall certify
such amount and the rationale for such calculation to the Seller (the
"Tax Certification"). The Seller shall pay such Tax Differential to the
Purchaser within 30 days of receipt of the Tax Certification. In the
event that any item giving rise to the Tax Differential will reverse
itself in future years or otherwise result in any Tax savings to the
Purchaser, its Partners and their Affiliates in future years, the Tax
Certification shall provide the Tax Director's best estimate of when the
Tax Differential will reverse itself. In addition, the Tax Director shall
make a good faith effort to calculate the actual amount of such Tax
benefit and shall certify such amount and the rationale for such
calculation to the Seller within 30 days of the filing of any of its Tax
Returns which reflect the realization of any such Tax benefit, and shall
pay such amount to the Seller at the time of such certification.
(v) [Intentionally Omitted]
11
(vi) The Purchaser acknowledges that the Program Documentation shall
provide that the remedies available thereunder in respect of an IKON
Servicing Breach (as such term is defined in the Program Agreement) would
apply to the exclusion of any indemnification remedy under this Agreement
for Damages arising out of the failure of an Obligor to make one or more
payments under a Purchased Financing Contract as a consequence of an
actual (or asserted) IKON Servicing Breach.
(c) Survival of Representations and Warranties of the Seller.
(i) The Seller Special Representations and indemnifications with
respect to their breach shall survive until 60 days after the expiration
of the applicable statute of limitations; provided that the
representations and warranties in Section 3.20 shall survive until the
expiration of 5 years after the Closing.
(ii) The representations and warranties of the Seller in this
Agreement which are not Seller Special Representations shall survive the
Closing until the expiration of 18 months after the Closing.
(iii) The representations and warranties of the Seller which are
contained in Section 3.09 shall survive until 60 days after the
expiration of the applicable statute of limitations.
(d) Seller Benefit Plan Indemnification. Following the Closing, the
Seller shall indemnify and hold harmless all Purchaser Indemnified Parties
from and against any and all Damages suffered or incurred by any of them
resulting from, arising out of, based on or relating to:
(i) any Seller Benefit Plan, maintained or contributed to, at any
time, by the Seller, or to which the Seller is obligated to contribute at
any time;
(ii) the employment or termination of employment, including a
constructive termination or failure to employ, by the Seller of any
individual (including any employee of the Seller) attributable to any
actions or inactions prior to the Closing;
(iii) any claims by any employee of the Business or any Governmental
Entity against the Purchaser for any statutory violation in respect of
its hiring practices based upon any exclusion by the Seller of any
employee of the Business from Schedule 1.01(j) to the US Asset Purchase
Agreement or Schedule 1.01(j);
(iv) any claims by any employee of the Seller for workers'
compensation and/or related medical benefits made or asserted after the
Closing, but which result from, arise out of, are based on or relate to
an injury or illness that occurred prior to the Closing; or
(v) any statutory or common law or civil law notice, severance pay,
termination pay in lieu thereof or Damages arising as a result of the
termination or dismissal (including constructive termination or
dismissal), by the Seller of any or
12
all employees of the Business on or prior to the Closing, provided that
the Seller shall be deemed not to be in breach of this covenant to the
extent that any such requirements result solely from the aggregation of
the termination or dismissal (including constructive termination or
dismissal) of Transferred Employees by the Purchaser following the
Closing with the termination or dismissal (including constructive
termination or dismissal) of employees of the Business by the Seller on
or prior to the Closing.
(e) Additional Indemnification by the Seller. Following the Closing,
the Seller shall indemnify and hold harmless all Purchaser Indemnified Parties
from and against any and all Damages suffered or incurred by any of them
resulting from, arising out of, based on or relating to:
(i) any of the Excluded Assets or the ownership, operation,
servicing, lease or use thereof, or any action taken with respect
thereto, by the Seller or any other Person;
(ii) any of the Excluded Liabilities or the Specified Liabilities;
(iii) the failure of Purchaser to receive any amounts due from an
Obligor pursuant to a Purchased Financing Contract due to the misconduct
or misrepresentation by the Seller in the sourcing, negotiation,
documentation, credit analysis, underwriting of a Purchased Financing
Contract or otherwise in connection with the origination of such
Purchased Financing Contract, including misrepresentations by any
employee, representative or agent of the Seller to an Obligor or
customer;
(iv) the failure of the Seller to comply with the provisions of any
applicable "bulk sales" or "bulk transfer" or similar Laws of any
jurisdiction that may be applicable to the sale or transfer of any or all
of the Purchased Assets to the Purchaser;
(v) the provision, administration or servicing of collateral
protection insurance to an Obligor in respect of the related equipment
under a Financing Contract;
(vi) any Environmental Loss; or
(vii) any claim by a Person (other than the Purchaser, the Seller or
any of their respective Affiliates) relating to the failure of the Seller
or its Affiliates to obtain any consent, approval or Authorization
necessary to sell, assign, transfer and convey any Purchased Asset or any
claim, right or benefit arising under or resulting from such Purchased
Asset; provided, however, that the Damages suffered or incurred by any
Purchaser Indemnified Party in respect of any such claim shall be
calculated as net of any Repurchase Price paid by the Seller in respect
of such Purchased Asset.
(viii) [Intentionally Omitted]
13
(f) Indemnification by the Purchaser. Following the Closing, the
Purchaser shall indemnify and hold harmless each of the Seller, its Affiliates
and their respective directors, officers, employees and agents (collectively,
the "Seller Indemnified Parties") from and against and in respect of any and
all Damages suffered or incurred by any of them resulting from, arising out
of, based on or relating to (i) any breach of any representation or warranty
made by the Purchaser in this Agreement that, as of the Closing, has not been
cured by the Purchaser or waived by the Seller in accordance with Section
8.01; (ii) any failure to perform any covenant, agreement or undertaking on
the part of the Purchaser contained in this Agreement; (iii) any breach of a
representation or warranty in or omission of information included in any
certificate delivered by or on behalf of the Purchaser pursuant to Section
6.02(a)(iii)(A); (iv) the Assumed Liabilities; (v) subject in all respects to
the terms and conditions set forth in the Program Documentation (including the
obligations (including any standard of care) of the Purchaser and its
Affiliates, on the one hand, and the Seller and its Affiliates, on the other
hand, and the remedies for breach by a party thereto of its obligations
thereunder), Third Party Actions arising after the Closing from the ownership
by the Purchaser of the Purchased Assets; or (vi) any statutory or common law
or civil law notice, severance pay, termination pay in lieu thereof or Damages
arising as a result of the termination or dismissal (including constructive
termination or dismissal), by the Purchaser of any or all Transferred
Employees following the Closing. For purposes of this Section 5.04(f), a
breach of a representation or warranty contained in this Agreement or any
certificate delivered by the Purchaser pursuant to the terms of this Agreement
shall be deemed to exist either if such representation or warranty is actually
inaccurate or breached or if such representation or warranty would have been
breached or been inaccurate if such representation or warranty had not
contained any limitation or qualification as to materiality, material adverse
effect or knowledge, it being the intention of the parties hereto that the
Seller Indemnified Parties shall be indemnified and held harmless from and
against any and all Damages suffered or incurred by any of them or resulting
from, arising out of, based on or relating to the failure of any such
representation or warranty, to be true, correct and complete in any respect,
determined in each case without regard to any qualification as to materiality,
material adverse effect or knowledge set forth with respect thereto.
(g) Survival of Representations and Warranties of the Purchaser;
Limitation on Liability.
(i) Each Seller Indemnified Party entitled to indemnification under
Section 5.04(f)(i) and Section 5.04(f)(iii) for any Damages suffered or
incurred by such Person resulting from, arising out of, based on or
relating to a breach of any representation or warranty in Sections 4.01,
4.02, 4.03, 4.05 and 4.06 (individually a "Purchaser Special
Representation" and collectively the "Purchaser Special Representations")
shall be entitled to indemnification from the Purchaser for the full
amount of all such Damages regardless of the amount of the Damages.
(ii) Each Seller Indemnified Party entitled to indemnification under
Section 5.04(f)(i) and Section 5.04(f)(iii) for any Damages suffered or
incurred by such Person resulting from, arising out of, based on or
relating to a breach of any representation or warranty made by the
Purchaser or Acquiring Entity in this
14
Agreement other than a Purchaser Special Representation shall be entitled
to indemnification from the Purchaser for the full amount of all such
Damages in excess of 10% of the Purchase Price; provided, however, that
in no event shall the Purchaser's indemnification obligations in respect
of Damages resulting from, arising out of, based on or relating to any
such breach of representation or warranty exceed the Purchase Price.
(iii) The Purchaser Special Representations and indemnifications
with respect to their breach shall survive until 60 days after the
expiration of the applicable statute of limitations.
(iv) The representations and warranties of the Purchaser in this
Agreement which are not Purchaser Special Representations shall survive
the Closing until the expiration of 18 months after the Closing.
(v) The Seller acknowledges that the Program Documentation shall
provide that the remedies available thereunder in respect of an IKON
Servicing Breach (as such term is defined in the Program Agreement) would
apply to the exclusion of any indemnification remedy under this Agreement
for Damages arising out of the failure of an Obligor to make one or more
payments under a Purchased Financing Contract as a consequence of an
actual (or asserted) IKON Servicing Breach.
(h) Indemnification Procedure for Third Party Actions. For the
purposes of administering the indemnification provisions of this Section 5.04,
the following procedures shall apply to Third Party Actions following the
Closing Date:
(i) An Indemnitee shall notify the Indemnitor in writing within 30
days following the receipt of notice of any Third Party Action against
such Indemnitee that gives rise to a claim for indemnity pursuant to this
Section 5.04 (any 30-day notification requirement shall begin to run, in
the case of a Third Party Action which is amended so as to give rise to
an Indemnification Event, from the first day such Third Party Action is
amended to include any claim for indemnity pursuant to this Section
5.04), such notice shall describe in reasonable detail the basis of such
Third Party Action. The failure to give notice as required by this
Section 5.04(h)(i) in a timely fashion shall not result in a waiver of
any right to indemnification hereunder unless the Indemnitor's ability to
defend against such Third Party Action is materially and adversely
affected by the failure of the Indemnitee to give notice in a timely
fashion as required by this Section 5.04(h)(i).
(ii) The Indemnitor shall be entitled (but not obligated) to assume
the defense or settlement of any such Third Party Action, or to
participate in any negotiations or proceedings to settle or otherwise
eliminate any such Third Party Action, if it shall provide the Indemnitee
a written acknowledgement of its liability for the indemnity against
Damages relating to such Third Party Action. If the Indemnitor assumes
any such defense or settlement or any such negotiations, it shall pursue
such defense, settlement or negotiations in good faith. If the Indemnitor
fails to elect in writing within 15 Business Days of the notification
15
referred to above to assume the defense, the Indemnitee may engage
counsel to defend, settle or otherwise dispose of such Third Party Action
which counsel shall be reasonably satisfactory to the Indemnitor;
provided, however, that the Indemnitee shall not settle or compromise any
such Third Party Action without the prior written consent or agreement of
the Indemnitor (which consent shall not be unreasonably withheld or
delayed).
(iii) In cases where the Indemnitor has assumed the defense or
settlement with respect to a Third Party Action, the Indemnitor shall be
entitled to assume the defense or settlement thereof with counsel of its
own choosing; provided, however, that: (A) the Indemnitee (and its
counsel) shall be entitled to continue to participate at its own cost
(except as provided below) in such Third Party Action and to participate
in any negotiations or proceedings to settle or otherwise eliminate, any
such Third Party Action; (B) the Indemnitor shall not be entitled to
settle or compromise any such Third Party Action without the consent or
agreement of the Indemnitee (which consent shall not be unreasonably
withheld or delayed); provided, further, that if and only if such consent
is withheld and the settlement or compromise involves only the payment of
monetary damages and provides an unconditional release of the Indemnitee,
the Indemnitor's liability shall be limited to the amount for which the
Indemnitor agreed with the claimant to settle and the Indemnitor shall
remain responsible for its costs and attorneys' fees to the date such
settlement was rejected by the Indemnitee and the Indemnitee shall be
responsible for the attorneys' fees and disbursements in respect of such
claim thereafter; and (C) after written notice by the Indemnitor to the
Indemnitee (as provided above) of its election to assume control of the
defense or settlement of any claim, the Indemnitor shall not be liable to
such Indemnitee hereunder for any attorneys' fees and disbursements
subsequently incurred by such Indemnitee in connection therewith (except
as provided below).
(iv) In the event indemnification is requested, the relevant
Indemnitor, its representatives and agents shall have access to the
premises, books and records of the Indemnitee or parties seeking such
indemnification and their Affiliates to the extent reasonably necessary
to assist it in defending or settling any such Third Party Action;
provided, however, that such access shall be conducted in such manner as
not to interfere unreasonably with the operation of the business of the
Indemnitee or Indemnitees. Except as reasonably necessary to assist it in
defending or settling such Third Party Action, the Indemnitee shall not
be required to disclose any information with respect to itself or any of
its Affiliates (or former Affiliates) , and the Indemnitee shall not be
required to participate in the defense of any claim to be indemnified
hereunder (except as otherwise expressly set forth herein), unless
otherwise reasonably required or necessary in the defense of any claim to
be indemnified hereunder. Notwithstanding anything in this Agreement to
the contrary, in no event shall any Indemnitee be obligated to make any
disclosure, or to take or refrain from taking any action, that in its
reasonable judgment, could prejudice its position or waive any privilege
in respect of any claim for indemnification against the Indemnitor
pursuant to this Section 5.04. All costs and expenses incurred by an
Indemnitee in connection
16
with any access or cooperation requested by the Indemnitor shall be borne
by the Indemnitor. The Purchaser and the Seller shall reasonably
cooperate to attempt to resolve or mitigate Damages with respect to any
such Third Party Action; provided, however, that in no event shall a
party's compliance with the foregoing obligation to reasonably cooperate
be a basis for any claim that any such party shall have waived, limited,
relinquished or otherwise impaired, any rights such party may have
pursuant to this Agreement or be raised as a defense to any such rights.
(v) In the event the Indemnitor shall request that an Indemnitee
participate in the defense or settlement of an Indemnification Event, the
Indemnitor shall pay the costs incurred by the Indemnitee.
(vi) (A) Notwithstanding anything to the contrary in this Agreement,
the Purchaser shall, with counsel reasonably acceptable to the Seller,
have the sole right to (x) defend any Action in respect of a
Non-Assumable Claim and (y) settle or otherwise dispose of any Non-
Assumable Claim; provided, however, that the Purchaser shall conduct the
defense or settlement of Non-Assumable Claims diligently and in good
faith. With respect to any Non-Assumable Claim that the Purchaser is
defending, settling or otherwise disposing of, the Seller shall be
permitted to participate at its own expense in the defense of such Non-
Assumable Claims but shall not be entitled to assume the defense thereof.
(B) The Purchaser shall keep the Seller timely apprised of the
status of all Non-Assumable Claims and shall notify the Seller promptly
of any material developments (including any material developments
relating to settlements and proposed settlements) relating to a Non-
Assumable Claim. Without limiting the foregoing, no more frequently than
once a fiscal quarter, the Purchaser shall provide the Seller with a
written report summarizing in reasonable detail the status of any pending
Non-Assumable Claims (including a summary of any material settlement
discussions). Without limitation of the foregoing, promptly after the
receipt by the Purchaser of a Qualifying Offer relating to a
Non-Assumable Claim, the Purchaser shall promptly provide the Seller with
a copy of such Qualifying Offer or, in the case of an oral Qualifying
Offer, a written summary thereof. In the event that the Purchaser
receives a Qualifying Offer relating to a Non-Assumable Claim that (1)
includes a full, final and unconditional release of the Purchaser from
all Damages with respect thereto and (2) requires only (a) the payment of
money for which, as between the Purchaser Indemnified Parties, on the one
hand, and the Seller, on the other hand, the Seller has sole liability
under this Agreement (a "Monetary Settlement") or (b) a Monetary
Settlement and any action by the Seller or any of its Affiliates (any
such offer of compromise, a "Non-Assumable Claim Offer"), then the Seller
shall have no further liability to the Purchaser Indemnified Parties with
respect to such Non-Assumable Claim upon receipt by the Purchaser of (x)
the amount contained in such Non- Assumable Claim Offer and all other
Damages suffered or incurred by any Purchaser Indemnified Party in
respect of such Non-Assumable Claim, in the form of immediately available
funds from the Seller, (y) a fully executed
17
agreement of the Seller and its Affiliates agreeing to the terms of the
actions to be taken by the Seller or any of its Affiliates pursuant to
such Non-Assumable Claim Offer, if any, and (z) if the Purchaser has
accepted the terms of such Non-Assumable Claim Offer, a full, final and
unconditional release, as applicable, of each of the Purchaser
Indemnified Parties from all liabilities or obligations with respect
thereto, executed by each of the third party claimants in such
Non-Assumable Claim; provided, however, if the Purchaser has not accepted
the terms of such Non-Assumable Claim Offer, the Seller shall have no
further liability to the Purchaser Indemnified Parties with respect to
such Non-Assumable Claim upon receipt by the Purchaser from the Seller of
the amounts and agreements set forth in the foregoing clauses (x) and
(y).
(C) At any time during the defense by the Purchaser of a Non-
Assumable Claim, the Seller shall have the right to require the Purchaser
(1) to proffer to the third party claimants under such Non- Assumable
Claim, a written offer of compromise that consists solely of the payment
of money for which, as between the Purchaser Indemnified Parties, on the
one hand, and the Seller, on the other hand, the Seller has sole
liability under this Agreement and/or any action by the Seller or any of
its Affiliates in exchange for a full, final and unconditional release
from such claimants of the Purchaser from all Liability with respect
thereto, and (2) if such offer of compromise is accepted by such third
party claimants, to settle such Non-Assumable Claim on the terms
contained in such offer of compromise, including the full, final and
unconditional release of the Purchaser from all liabilities and
obligations with respect thereto.
(i) Any payments under Section 5.04 shall be treated by the parties
hereto for federal, state, provincial, territorial and municipal income Tax
purposes (whether foreign or domestic) as a non-taxable reimbursement or
purchase price adjustment, except to the extent that a contrary treatment is
required by Law.
(j) Exclusive Remedy. Except with respect to claims based on fraud
and/or claims seeking non-monetary equitable remedies, the indemnification
remedies set forth in this Agreement (including the repurchase rights in
respect of Section 2.07 and Section 5.04(b)(v)), shall constitute the sole and
exclusive monetary remedies of the parties hereto after the Closing with
respect to any breach of representation, warranty or obligation under this
Agreement. Except for the representations and warranties contained in Exhibit
B, Exhibit C and the Program Documentation, none of the Purchaser or any of
its Affiliates or the Seller or any of its Affiliates makes or has made any
representations or warranties, whether express or implied, oral or written,
with respect to the Business, the Purchased Assets, the Assumed Liabilities or
the transactions contemplated by this Agreement.
(k) GST and QST. If the Seller and the Purchaser, acting reasonably,
determine that any payment made in respect of a claim for indemnification
pursuant to this Section 5.04 (in this Section, a "Loss Payment") is subject
to GST or is deemed by section 182 (or any other provision) of the Excise Tax
Act (Canada) to be inclusive of GST or subject to QST, to the extent the GST
or QST, as the case may be, is not recovered or recoverable, the Indemnitor
agrees to pay to the Indemnitee, GST or QST,
18
as the case may be, in addition to the Loss Payment. If the Loss Payment is
deemed by section 182 (or any other provision) of the Excise Tax Act (Canada)
to be inclusive of GST or deemed to be inclusive of QST the Indemnitor agrees
to disclose to the Indemnitee the amount of GST or QST, as the case may,
included in the Loss Payment.
(l) Agency for Certain Indemnified Parties. The indemnities in this
Agreement in favour of: (i) the Purchaser Indemnified Parties (other than the
Purchaser) are accepted by the Purchaser as agent and trustee for such
Purchaser Indemnified Parties; and (ii) the Seller Indemnified Parties (other
than the Seller) are accepted by the Seller as agent and trustee for such
Seller Indemnified Parties. Each party hereto agrees that the other party may
enforce an indemnity in favour of any of the other Purchaser Indemnified
Parties or the other Seller Indemnified Parties, as the case may be, on its
behalf.
Section 5.05. PREPARATION OF CLOSING DATE SCHEDULE AND FINAL
ADJUSTED CLOSING DATE SCHEDULE.
(a) Preparation of Closing Date Schedule.
(i) As soon as practicable following the Closing, the Purchaser
shall prepare, with the cooperation and assistance of the Seller, a draft
of the Closing Date Schedule. The Closing Date Schedule shall reflect the
Purchased Assets and the Assumed Liabilities. The draft of the Closing
Date Schedule shall be prepared in accordance with the Accounting
Principles. Notwithstanding the foregoing, (A) if the Accounting
Principles do not specifically address a particular matter necessary to
prepare the Closing Date Schedule, then the Accounting Principles shall
be supplemented in accordance with GAAP, applied consistently with the
past practices and procedures of the Seller, but only to the extent
necessary to address such matter and (B) to the extent that any
accounting principle, method, practice or procedure included in the
Accounting Principles is not in accordance with GAAP, such accounting
principle, method, practice or procedure shall be disregarded for
purposes of preparing the Closing Date Schedule but shall be treated as a
Special Adjustment for purposes of preparing the Final Adjusted Closing
Date Schedule. The Purchaser and the Seller shall each use their
respective commercially reasonable efforts to cause the draft of the
Closing Date Schedule to be completed within 60 days following the
Closing Date and, upon completion, such draft schedule shall promptly be
provided to the Purchaser's Accountants, the Seller and the Seller's
Accountants.
(ii) Immediately following the preparation and distribution of the
draft of the Closing Date Schedule, the Purchaser shall cause the
Purchaser's Accountants to audit the draft Closing Date Schedule, and
such audit shall be conducted in accordance with United States generally
accepted auditing standards and shall be sufficient to permit the
Purchaser's Accountants to deliver a special report certifying that the
Closing Date Schedule fairly presents the Purchased Assets and Assumed
Liabilities as of the Closing in accordance with the Accounting
Principles, qualified only to the extent, if any, that the Purchaser's
Accountants deem such qualification necessary on account of any dispute
19
between the Purchaser's Accountants and the Seller's Accountants that is
resolved by the conflict resolution mechanism set forth in Section
5.05(b) or agreed by the Purchaser and the Seller, in either case, in a
manner that in the Purchaser's Accountants' sole judgment precludes the
Purchaser's Accountants from issuing an unqualified certification. The
Purchaser shall use reasonable efforts to cause the Purchaser's
Accountants to deliver the draft audited Closing Date Schedule to each of
the Seller, the Seller's Accountants and the Purchaser within 60 days
following the date of their receipt of the draft of the Closing Date
Schedule.
(iii) Concurrently with the preparation and delivery to the
Purchaser, the Seller and the Seller's Accountants of the draft of the
audited Closing Date Schedule, the Purchaser shall cause the Purchaser's
Accountants to prepare (after consultation with the Purchaser, the Seller
and the Seller's Accountants), and to deliver to the Purchaser, the
Seller and the Seller's Accountants, a draft of the adjusted Closing Date
Schedule that reflects the Special Adjustments. The Special Adjustments
shall be applied in creating the draft of the adjusted Closing Date
Schedule, whether or not the Seller's Accountants or the Purchaser's
Accountants believe the Special Adjustments are or are not in accordance
with GAAP or are or are not in accordance with the historic practices of
the Business. During the 30 day period following their receipt of each of
the draft audited Closing Date Schedule and the draft adjusted Closing
Date Schedule reflecting the Special Adjustments (collectively, the
"Draft Closing Statements"), both the Purchaser (in consultation with the
Purchaser's Accountants) and the Seller (in consultation with the
Seller's Accountants) shall have the opportunity to review the Draft
Closing Statements (together with the Purchaser's Accountants' working
papers, including any portion thereof pertaining to any proposed
adjustment) and, during such 30 day period, the Seller, the Purchaser and
the Seller's Accountants shall have the right to propose to the
Purchaser's Accountants those changes to the Draft Closing Statements
that the Seller, the Purchaser or the Seller's Accountants determine to
be appropriate in order to cause the Draft Closing Statements to conform,
in all respects, to the standards set forth in Section 5.5(a)(i) and
5.5(a)(iii), as applicable.
(iv) In the event of any dispute between the Seller and the Seller's
Accountants, on the one hand, and the Purchaser and the Purchaser's
Accountants, on the other hand, regarding any of the adjustments proposed
by the Seller or the Seller's Accountants, on the one hand, or the
Purchaser or the Purchaser's Accountants, on the other hand, with respect
to any item of the Draft Closing Statements, which the Seller and the
Seller's Accountants, on the one hand, and the Purchaser and the
Purchaser's Accountants, on the other hand, cannot resolve within 45 days
after the receipt thereof, as the case may be, either the Seller or the
Purchaser shall have the right, upon delivery of written notice to the
other party, to require that such dispute be resolved in accordance with
the provisions set forth in Section 5.05(b). Promptly following the
resolution of any disputes with respect to any proposed adjustments to
the Draft Closing Statements, the Purchaser shall cause the Purchaser's
Accountants to prepare and deliver to the Seller and the Purchaser the
final audited Closing Date Schedule and the Final Adjusted Closing Date
Schedule (collectively, the "Final Closing Statements"), each of which
20
shall reflect all adjustments thereto which have been agreed upon by the
Seller and the Seller's Accountants, on the one hand, and the Purchaser
and the Purchaser's Accountants, on the other hand, or which have been
resolved pursuant to Section 5.5(b), together with the Purchaser's
Accountants' special report on each Final Closing Statement.
(v) Each of the Purchaser, the Seller, the Purchaser's Accountants
and the Seller's Accountants shall have full access to all relevant
accounting, financial and other records and personnel reasonably
requested by it in connection with the preparation, confirmation or
review of the Draft Closing Statements, as well as to the Purchaser's
Accountants' working papers with respect thereto and special report
thereon.
(b) Conflict Resolution Mechanism. Any dispute involving any
adjustment to the Draft Closing Statement proposed by the Seller, the Seller's
Accountants, the Purchaser or the Purchaser's Accountants (including any
interpretation or application of any provision of this Agreement affecting the
preparation of the Draft Closing Statement) not resolved by the Seller, the
Seller's Accountants, the Purchaser and the Purchaser's Accountants within 45
days of the relevant date of receipt thereof, shall upon the election of the
Seller or the Purchaser, be resolved by the Selected Accounting Firm. The
Selected Accounting Firm shall resolve only issues upon which the Purchaser,
the Purchaser's Accountants, the Seller and the Seller's Accountants have been
unable to agree. The Selected Accounting Firm shall be prohibited from
changing any item of the Draft Closing Statements expressly agreed among the
Purchaser, the Purchaser's Accountants, the Seller and the Seller's
Accountants. The Selected Accounting Firm (i) in resolving any issue with
respect to the Closing Date Schedule, shall apply the Accounting Principles in
all instances, including whether or not the Selected Accounting Firm believes
the Accounting Principles are or are not in accordance with the historic
practices of the Business or (subject to the Special Adjustments) are or are
not in accordance with GAAP and (ii) in resolving any issue with respect to
the adjusted Closing Date Schedule, the Selected Accounting Firm shall apply
the Special Adjustments, whether or not the Selected Accounting Firm believes
the Special Adjustments are or are not in accordance with the historic
practices of the Business or are or are not in accordance with GAAP. The
Purchaser and the Seller shall each use their reasonable best efforts to cause
the decision of such Selected Accounting Firm to be rendered within 20
Business Days after appointment of the Selected Accounting Firm. The decision
of the Selected Accounting Firm shall be submitted in writing and shall be
final and binding upon the parties. Notwithstanding the foregoing, if the
aggregate of all amounts in dispute with respect to all disputes referred to
in this Section 5.05(b) shall be less than One Hundred Thousand Dollars
($100,000), such disputes shall not be resolved by the Selected Accounting
Firm, but shall instead be resolved as follows: 50% of the aggregate of all
amounts in dispute shall be deemed to have been resolved in the Seller's favor
and 50% of the aggregate of all amounts in dispute shall be deemed to have
been resolved in the Purchaser's favor.
(c) Payment of Fees. The Purchaser shall pay all of the fees of the
Purchaser's Accountants and all expenses incurred by such firm in
connection with the tasks outlined in this Section 5.05, and the Seller
shall pay all fees of the
21
Seller's Accountants and all expenses incurred by such firm in connection
with the tasks outlined in this Section 5.05. The Purchaser and the
Seller shall each pay one-half of the fees and expenses incurred in
connection with any disputes that are resolved by the Selected Accounting
Firm pursuant to Section 5.05(b).
(ii) On the date of the delivery of the Closing Date Schedule in
accordance with Section 5.05(a), the Seller shall pay to the Purchaser an
amount equal to One Hundred Thousand Dollars ($100,000) (by wire transfer
of immediately available funds, to an account designated to the Seller in
writing by the Purchaser prior to such delivery date).
(d) Cooperation. Each of the Seller and the Purchaser shall use
their respective commercially reasonable efforts to cause the Seller's
Accountants and the Purchaser's Accountants to cooperate with each other
in connection with all of their activities undertaken in connection with
this Section 5.05.
(e) [Intentionally Omitted].
Section 5.06. INSURANCE; RISK OF LOSS.
(a) Except in the ordinary course of business, consistent with past
practices, the Seller shall neither terminate nor cause to terminate or allow
to be terminated (subject to applicable Law) any occurrence liability policies
with respect to the Purchased Assets so as to prevent the Purchaser from
recovering under such policies for losses from events occurring prior to the
Closing, to the extent that coverage for such losses was otherwise provided by
any such policy.
(b) Notwithstanding Section 5.06(a), to the extent that (i) any
insurance policies owned or controlled by the Seller (collectively, the
"Seller's Insurance Policies") cover any loss, liability, claim, damage or
expense resulting from, arising out of, based on or relating to, any Purchased
Asset (the "Seller Liabilities") and resulting from, arising out of, based on
or relating to occurrences prior to the Closing and (ii) the Seller's
Insurance Policies permit claims to be made thereunder with respect to Seller
Liabilities resulting from, arising out of, based on or relating to
occurrences prior to the Closing (the "Seller Claims"), the Seller shall
cooperate and shall cause its Affiliates to cooperate with the Purchaser, in
submitting Seller Claims (or pursuing Seller Claims previously made) on behalf
of the Purchaser under any Seller's Insurance Policies.
Section 5.07. DELIVERY OF PORTFOLIO TAPE.
(a) No later than 30 days immediately following the date hereof, the
Seller shall prepare and deliver to the Purchaser (i) the Portfolio Tape which
shall include particulars of the Financing Contracts and (ii) a statement of
Purchased Assets and Assumed Liabilities, each as of the close of business on
February 29, 2004. The Portfolio Tape and the statement of Purchased Assets
and Assumed Liabilities shall be in form and substance reasonably satisfactory
to the Purchaser and the Portfolio Tape shall include anticipated cash flows
and Financing Contract level information for the Purchased Assets as of
February 29, 2004, all of which shall reconcile or balance and shall reflect a
Net
22
Book Value of the Purchased Assets as of February 29, 2004 of not less than
$220,000,000.
(b) The Purchaser shall cooperate, at Purchaser's own expense, with
Seller in the preparation and delivery of the Portfolio Tape in the form and
manner described in Section 5.07(a) including, without limitation, causing
employees of the Purchaser or its Affiliates, as the case may be, to provide
all reasonable services in connection therewith.
Section 5.08. ANCILLARY AGREEMENTS.
(a) Program Documentation, Transition Services Agreement and
Accounting Principles. The Seller and the Purchaser shall negotiate in good
faith the execution and delivery on or prior to the Closing Date of the
following:
(i) the Program Documentation, including (A) the exhibits to the
Program Agreement (other than Exhibit J-1 to the Program Agreement as it
relates to the methodology for determining the rate card, the agreed form
of which is set out on the form of Exhibit J-1 attached to the Program
Agreement attached hereto) and (B) only those amendments, if any, to the
form of the Program Agreement attached hereto that conform to amendments
made after the date hereof to the Program Agreement contemplated by the
US Asset Purchase Agreement;
(ii) a definitive agreement for the provision by the Seller to the
Purchaser of certain services following the Closing to facilitate the
transition of the Purchased Assets onto the Purchaser's computer systems
and for the Purchaser's Own Business, which agreement shall be
substantially in the form of the Administrative Services contemplated by
the US Asset Purchase Agreement excluding the annexes thereto (the
"Transition Services Agreement"); and
(iii) certain accounting principles which shall be used in
completing adjustments contemplated by this Agreement, which accounting
principles shall be substantially in the form of the Accounting
Principles contemplated by the US Asset Purchase Agreement (the
"Accounting Principles").
(b) [Intentionally Omitted].
Section 5.09. INTELLECTUAL PROPERTY AND TECHNOLOGY FOR TRANSITION
SERVICES AGREEMENT. Following the consummation of the transactions
contemplated by this Agreement and for the duration of the Transition Services
Agreement, the Seller will utilize:
(a) all of the material Intellectual Property utilized by the Seller
in connection with the conduct and operations of the Business, other than
"shrink-wrap" software readily available in the marketplace, (the "Business
Intellectual Property") of which the Seller is a licensee, necessary to
satisfy the Seller's obligations under the Transition Services Agreement; and
23
9 (b) all of the material mainframe, telecommunication and
computer programs and software and related data necessary to perform, as
presently performed, the specific applications and operations which are
material to the operation of the Business as presently conducted (the "Business
Technology") necessary to satisfy the Seller's obligations under the Transition
Services Agreement.
Section 5.10. WIND-DOWN OF CONDUIT FACILITY. At or prior to the
Closing, the Seller shall (a) repay, redeem and discharge the obligations of
the Seller under the Conduit Facility, (b) terminate the Conduit Facility
Document and (c) cause the leases, equipment and other property that are
subject thereto to be (i) released free and clear of all Encumbrances other
than Permitted Encumbrances and (ii) repurchased by or otherwise transferred
to the Seller.
Section 5.11. FURTHER ASSURANCES.
(a) The Seller shall, whenever and as often as reasonably requested
to do so by the Purchaser, execute, acknowledge and deliver any and all such
other and further acts, assignments, endorsements, transfers and any
instruments of further assurance, approvals and consents as are necessary or
proper in order to complete, ensure and perfect (i) the sale, transfer and
conveyance of the Purchased Assets to the Purchaser or the applicable
Acquiring Entity as contemplated hereby, and (ii) the consummation of the
other transactions contemplated hereby, including without limitation preparing
and submitting jointly with the Purchaser the applications, notices and
filings necessary to obtain the Required Consents set forth on Exhibit I.
(b) The Purchaser shall, whenever and as often as reasonably
requested to do so by the Seller, do, execute, acknowledge and deliver any and
all such other and further acts, assignments, endorsements, transfers and any
instruments of further assurance, approvals and consents as are necessary or
proper in order to complete, ensure and perfect (i) assumption of the Assumed
Liabilities by the Purchaser or the applicable Acquiring Entity, and (ii) the
consummation of the transactions contemplated hereby, including without
limitation preparing and submitting jointly with the Seller the applications,
notices and filings necessary to obtain the Required Consents set forth on
Exhibit I.
(c) [Intentionally Omitted]
Section 5.12. PAYMENT OF BROKERS' OR FINDERS' FEES. The Seller shall
pay any and all brokers' or finders' fees, and any other commissions or
similar fees, payable to any Person acting on behalf of the Seller or any of
its Affiliates or under the authority of any of them, in connection with any
of the transactions contemplated herein, and the Purchaser shall pay any and
all brokers' or finders' fees, and any other commissions or similar fees,
payable to any Person acting on behalf of the Purchaser or any of its
Affiliates or under the authority of any of them, in connection with any of
the transactions contemplated hereby, in each case, regardless of whether any
claim for payment is asserted before or after the Closing, or before or after
any termination of this Agreement.
24
Section 5.13. SUPPLEMENTS TO SCHEDULES. Not earlier than ten nor
later than five Business Days prior to the Closing, the Seller and the
Purchaser will supplement or amend Schedule 1.01(j) and the other Schedules
relating to their respective representations and warranties in this Agreement
with respect to any matter, condition or occurrence hereafter arising which, if
existing or occurring at the date of this Agreement, would have been required
to be set forth or described in such Schedules or would otherwise have been
inconsistent with their representations herein. No supplement or amendment by
any party hereto shall be deemed to cure (or affect the rights of any party
with respect to) any breach of any representation or warranty made in this
Agreement or have any effect for the purpose of determining satisfaction of the
conditions set forth in Sections 6.01 and 6.02.
Section 5.14.EMPLOYEE MATTERS. With respect to employee matters, the
parties have made the agreements and covenants as set forth in Section 5.04(d)
and Exhibit F to this Agreement.
Section 5.15.[INTENTIONALLY OMITTED].
Section 5.16.RECORDS.
(a) The Purchaser recognizes that certain records may contain
incidental information relating to the Purchased Assets and that the Seller
may retain copies of the relevant portions thereof.
(b) Until the termination of the Program (as defined in the Program
Agreement) in accordance with the Program Documentation, the Seller agrees to
keep confidential all nonpublic information in its possession regarding the
Purchased Assets (including any information made available to the Seller
pursuant to Section 5.16(a)); provided, however, that the Seller shall not be
required to maintain as confidential any information that (i) is or becomes
generally available to the public other than as a result of a disclosure by
the Seller, (ii) is or becomes available to the Seller or any of its
Affiliates on a non-confidential basis from a source other than the Purchaser
or its Affiliates, provided, however, that the source of such information is
not known by the Seller or any of its Affiliates to be bound by a
confidentiality agreement with the Purchaser or any of its Affiliates or other
contractual, legal or fiduciary obligation of confidentiality to the Purchaser
or any of its Affiliates with respect to such material, (iii) has been
independently acquired or developed by the Seller or any of its
representatives without violating any of the provisions of this Agreement,
(iv) was available to the Seller or any of its Affiliates on a
non-confidential basis prior to its disclosure by the Purchaser or any of its
Affiliates or (v) is required to be disclosed pursuant to the terms of an
Order by a Governmental Entity or any other legal requirement.
(c) [Intentionally Omitted]
Section 5.17. BULK TRANSFER LAWS. The Purchaser acknowledges that
the Seller has not complied with the provisions of any "bulk transfer law" of
any jurisdiction in connection with the sale of the Purchased Assets to the
Purchaser.
25
Section 5.18. ACCESS TO FACILITIES. From and after the Closing, the
Purchaser will be given access to the facilities of the Seller such that the
Purchaser will have access to (a) the original Purchased Financing Contracts
and (b) all books, records and documents in respect of the Purchased Assets.
Section 5.19. DELIVERY OF CHARGEBACK AND DELINQUENCY REPORTS. No
later than three Business Days following the end of each month to occur
following the date hereof through the Closing Date, the Seller shall provide
the Purchaser with (i) a monthly chargeback report and a monthly delinquency
report, in each case, reflecting the Financing Contracts and substantially in
the form of Schedule 5.19(a) and Schedule 5.19(b), respectively, (ii) a
certificate signed by a duly authorized officer of the Seller setting forth
the related Chargeback Ratio and the 30+ days and 120+ days Delinquency Rates
and (iii) a certificate signed by a duly authorized officer of the Seller
certifying the truth, completeness and accuracy of the information set forth
in each chargeback report and each delinquency report, in each case, as of the
date indicated or the period covered by each such report.
Section 5.20. DELIVERY OF CLOSING PORTFOLIO TAPE. No later than
three days following the Closing Date, the Purchaser shall prepare and deliver
to the Seller the Closing Date Portfolio Tape setting forth the Portfolio
Information as of the Closing Date. The parties shall re-execute and deliver,
no later than seven days following the Closing Date, the Bills of Sale
(originally executed and delivered pursuant to Sections 6.01(e)(i)(A) and
6.02(f)(i)) with such Closing Portfolio Tape attached thereto.
Section 5.21. ENFORCEMENT OF LIENS. Neither the Seller nor any of
its Affiliates shall enforce against the Purchaser (or any of its Partners or
their Affiliates) any workers', mechanics', suppliers', carriers',
warehousemen's or other similar liens held by or for the benefit of the Seller
or its Affiliates existing as of the date hereof or the Closing Date on any
Portfolio Property.
Section 5.22. [INTENTIONALLY OMITTED].
Section 5.23. [INTENTIONALLY OMITTED].
Section 5.24. [INTENTIONALLY OMITTED].
Section 5.25. ALLOCATIONS. With respect to the periodic minimum
lease payment due to the Seller from an Obligor pursuant to any Purchased
Financing Contract, the allocation as between the amount allocable to the use
of the Portfolio Property related thereto, on the one hand, and the amount
allocable to the service and maintenance of such Portfolio Property (including
the related Equipment Service Obligations), on the other, that is reflected in
the Final Adjusted Closing Schedule shall be final and binding on the
Purchaser and the Seller for the calculation of the Purchase Price.
(a) [Intentionally Omitted]
Section 5.26. [INTENTIONALLY OMITTED].
26
Section 5.27. RECOURSE OBLIGATIONS. Upon the failure of the
Purchaser to receive any amounts due from an Obligor pursuant to a Purchased
Financing Contract set forth on Schedule 3.18(b) (each, a "Historic Exception
Contract"), the Purchaser shall have recourse to the Seller for such amount
and the Seller shall indemnify and hold harmless the Purchaser for such
amount, consistent with the past practices of the Seller with respect to such
recourse, in each case, for the term of such Historic Exception Contract.
Section 5.28. [INTENTIONALLY OMITTED].
Section 5.29. [INTENTIONALLY OMITTED].
Section 5.30. [INTENTIONALLY OMITTED].
Section 5.31. [INTENTIONALLY OMITTED].
Section 5.32 SPECIFIED PPSA REGISTRATIONS.
(a) Prior to the Closing, the Seller shall use commercially
reasonable efforts to correct the Personal Property Security Act registrations
described in Item 1 of Schedule 3.05(a) that relate to contracts with a net
book value as of the date hereof in excess of $10,000 (collectively, the
"Specified PPSA Registrations") and to obtain all necessary waivers if another
creditor has filed a Personal Property Security Act registration with respect
to any collateral that is the subject of a Specified PPSA Registration.
(b) The Seller shall indemnify the Purchaser Indemnified Parties (in
accordance with Section 5.04) for any Damages suffered or incurred by the
Purchaser Indemnified Parties as a result of the failure of the Seller to
correct any Specified PPSA Registration or the failure of Seller to obtain any
necessary waivers with respect to the Specified PPSA Registrations, in each
case as described in Section 5.32(a).
ARTICLE VI
CONDITIONS TO CLOSING;
ABANDONMENT OF THE TRANSACTION
Section 6.01. CONDITIONS TO THE OBLIGATIONS OF THE PURCHASER. The
obligations of the Purchaser to purchase the Purchased Assets and to otherwise
consummate the transactions contemplated hereby shall be subject to the
following conditions:
(a) Representations, Warranties and Covenants of Seller. Except to
the extent waived in writing by the Purchaser hereunder, (i) the
representations and warranties of the Seller contained in this Agreement shall
be true and correct in all material respects (other than such representations
and warranties which are qualified by materiality, Material Adverse Effect or
material adverse effect, which shall be true and correct in all respects) as
of the Closing with the same force and effect as if made as of the Closing
(other than such representations and warranties as are expressly made as of
27
another date, which shall be true and correct as of such other date), (ii) the
Seller shall have performed in all material respects all obligations and
complied in all material respects with all covenants required by this
Agreement to be performed or complied with by it at or prior to the Closing,
and (iii) the Seller shall have delivered to the Purchaser, in form and
substance reasonably satisfactory to the Purchaser and dated the Closing Date,
(A) a duly executed certificate of the Seller certifying the compliance with
(i) and (ii) above and (B) a duly executed certificate certifying the
compliance to all effects and the satisfaction of the other conditions set
forth in this Section 6.01.
(b) No Litigation.
(i) On the Closing Date, there shall be no Order in effect of any
nature issued by a Governmental Entity of competent jurisdiction
directing that the transactions provided for herein not be consummated as
provided herein.
(ii) No Action shall have been threatened or instituted (x) to
restrain, prohibit or otherwise challenge the sale of the Purchased
Assets or the performance of any of the material obligations of the
parties hereto or (y) that seeks any material change to the terms,
conditions or results of the transactions contemplated hereby or
substantial damages or other remedies from the Purchaser or any of its
Partners or any of their Affiliates.
(c) Required Consents. The Required Consents set forth on Exhibit I
shall have been obtained.
(d) Legal Opinions. The Purchaser shall have received from Torkin
Manes Cohen Arbus LLP, legal counsel to the Seller, a legal opinion, dated the
Closing Date, in form and substance satisfactory to the Purchaser and its
counsel, acting reasonably.
(e) Document Deliveries. At the Closing, the Seller shall (i) have
delivered to the Purchaser (A) each of the Ancillary Agreements (the form of
each of which shall have been agreed upon pursuant to Section 5.08(a) except
for the Bills of Sale, which shall be in the form of Exhibit D), executed by
the Seller and each Affiliate party thereto, (B) any and all escrows,
deposits, security, impounds, accounts or other Credit Enhancements or
additional collateral relating to any Purchased Asset, (C) each of the
certificates set forth on Schedule 6.01(e), (D) the IKON Guaranty, executed by
IKON US and (E) a letter from the party or parties (other than the Seller) to
the Conduit Facility addressed to the Purchaser or the applicable Acquiring
Entity dated as of the date of Closing, acknowledging that upon receipt of an
amount to be agreed between the Seller and such party or parties from or at
the direction of the Seller, each party (other than the Seller) shall have no
right or interest in the leases, equipment and other property that immediately
prior to the receipt of such payment were subject to the Conduit Facility; and
(ii) have executed, acknowledged and delivered such other transfer instruments
or documents as may be necessary or desirable to transfer, or evidence the
transfer, of each Purchased Financing Contract and each other Purchased Asset
to the Purchaser or the applicable Acquiring Entity, as may be reasonably
requested by the Purchaser in a form mutually agreeable to the Seller and the
Purchaser.
28
(f) Accounting Principles. The parties shall have agreed to the
Accounting Principles and the Special Adjustments for the preparation of the
Final Adjusted Closing Date Schedule and such Accounting Principles shall give
effect to the loss reserve calculation set forth on Exhibit G.
(g) Absence of Program Termination Event. No GE Termination Event,
as defined in the Program Agreement, shall have occurred and be continuing.
(h) Portfolio Status. (i) The average Chargeback Ratio for the three
calendar months immediately prior to the month in which the Closing would be
required to occur shall not exceed the Reference Chargeback Ratio by 10% and
the average of each of the 30+ days and 90+ days Delinquency Rates for the
three months immediately prior to the month in which the Closing would be
required to occur shall not exceed 6% for 30+ days or 1.0% for 90+ days.
(ii) Since September 30, 2003, there shall have not been any material
adverse change in any of the Seller's right or ability to own, collect,
enforce, administer or service the Purchased Assets (taken as a whole).
(i) [Intentionally Omitted].
(j) [Intentionally Omitted].
(k) [Intentionally Omitted].
(l) [Intentionally Omitted].
(m) [Intentionally Omitted].
(n) [Intentionally Omitted].
(o) [Intentionally Omitted].
(p) Wind Down of Conduit Facility. The Seller shall have fully
complied with its covenant in Section 5.10.
Section 6.02. CONDITIONS TO THE OBLIGATIONS OF THE SELLER. The
obligations of the Seller to sell the Purchased Assets and to otherwise
consummate the transactions contemplated hereby shall be subject to the
following conditions:
(a) Representations, Warranties and Covenants of the Purchaser.
Except to the extent waived in writing by the Seller hereunder, (i) the
representations and warranties of the Purchaser contained in this Agreement
shall be true and correct in all material respects (other than such
representations and warranties which are qualified by materiality or material
adverse effect, which shall be true and correct in all respects) as of the
Closing with the same force and effect as if made as of the Closing (other
than such representations and warranties as are expressly made as of another
date, which shall be true and correct as of such other date), (ii) the
Purchaser shall have performed in all material respects all obligations and
complied in all material respects with all covenants
29
required by this Agreement to be performed or complied with by it at or prior
to the Closing, and (iii) the Purchaser shall have delivered to the Seller, in
form and substance reasonably satisfactory to the Seller and dated the Closing
Date, (A) a duly executed certificate of the Purchaser certifying the
compliance with (i) above and, if an Acquiring Entity is purchasing any
Purchased Assets, the additional information contemplated by Sections 4.07 and
4.08 and (B) a duly executed certificate certifying the compliance to all
effects, and the satisfaction of the other conditions set forth in this
Section 6.02.
(b) No Litigation.
(i) On the Closing Date, there shall be no Order in effect of any
nature issued by a Governmental Entity of competent jurisdiction
directing that the transactions provided for herein not be consummated as
provided herein.
(ii) No Action shall have been threatened or instituted (x) to
restrain, prohibit or otherwise challenge the sale of the Purchased
Assets or the performance of any of the material obligations of the
parties hereto or (y) that seeks any material change to the terms,
conditions or results of the transactions contemplated hereby or
substantial damages or other remedies from the Seller or any of its
Affiliates.
(c) Required Consents. The Required Consents set forth on Exhibit I
shall have been obtained.
(d) Initial Payments. The Purchaser shall have made the payments
required pursuant to the provisions of Section 2.04(b).
(e) Legal Opinions. The Seller shall have received from in-house
counsel to the Purchaser and Davies Ward Phillips & Vineberg LLP, legal
opinions, dated the Closing Date, in form and substance satisfactory to the
Seller and its counsel, acting reasonably.
(f) Document Deliveries. At the Closing, the Purchaser shall (i)
have delivered to the Seller (A) each of the Ancillary Agreements (the form of
each of which shall have been agreed upon pursuant to Section 5.08(a) except
for the Bills of Sale, which shall be in the form set out in Exhibit D),
executed by the Purchaser and each Acquiring Entity party thereto and (B) the
GE Guaranty, executed by GE US and (ii) have executed, acknowledged and
delivered such other transfer instruments or documents as may be necessary or
desirable to transfer, or evidence the transfer, of the Assumed Liabilities to
the Purchaser or the applicable Acquiring Entity, as may be reasonably
requested by the Seller in a form mutually agreeable to the Seller and the
Purchaser.
(g) Absence of Program Termination Event. No IKON Termination Event,
as defined in the Program Agreement, shall have occurred and be continuing.
(h) Accounting Principles. The parties shall have agreed to the
Accounting Principles and the Special Adjustments for the preparation of the
Final
30
Adjusted Closing Date Schedule and such Accounting Principles shall give
effect to the loss reserve calculation set forth on Exhibit G.
(i) [Intentionally Omitted].
Section 6.03. TERMINATION OF AGREEMENT AND ABANDONMENT OF
TRANSACTIONS. Anything herein to the contrary notwithstanding, this Agreement
and the transactions contemplated hereby may be terminated in any of the
following ways at any time before the Closing and in no other manner:
(a) by mutual written consent of the Seller and the Purchaser,
executed on behalf of each by its respective duly authorized representatives;
or
(b) by either the Seller or the Purchaser, upon written notice given
to the other in the event of a breach of or default under any representation,
warranty, covenant or agreement contained in this Agreement which breach or
default (i) would result in a failure of a condition set forth in Section 6.01
(in the case of a breach by the Seller) or Section 6.02 (in the case of a
breach by the Purchaser) to be satisfied and (ii) has not been, or cannot be,
cured within 60 days after written notice of such breach or default given by
the terminating party to the breaching or defaulting party; or
(c) by either the Purchaser or the Seller, if the Closing has not
occurred on or before June 30, 2004.
ARTICLE VII
TERMINATION OF OBLIGATIONS AND WAIVER OF CONDITIONS
In the event that this Agreement shall be terminated pursuant to
Section 6.03(a) or 6.03(c), all further obligations of the parties hereto
under this Agreement shall terminate without further liability of any party to
another and each party hereto will pay all its own costs and expenses incident
to its negotiation and preparation of this Agreement and to its performance
of, and compliance with, all agreements and conditions contained herein on its
part to be performed or complied with, including the fees, expenses and
disbursements of counsel; provided, however, that the representations and
warranties of the parties in Sections 3.22 and 4.06, respectively, and the
covenants set forth in this Article VII and in Sections 8.05 and 8.14 shall
survive any such termination. Termination of this Agreement pursuant to
Section 6.03(b) shall be without prejudice to the rights and remedies
available to the respective parties under applicable Law, including the right
to recover expenses, costs and other damages, as a result of any material
breach by either party hereto of its representations, warranties or
obligations under this Agreement. If any of the conditions specified in
Section 6.01 have not been satisfied, the Purchaser may (subject to applicable
Law) nevertheless, at its election, waive any such conditions and proceed with
the transactions contemplated hereby, and, if any of the conditions specified
in Section 6.02 have not been satisfied, the Seller may (subject to applicable
Law) nevertheless, at its election, waive any such conditions and proceed with
the transactions contemplated hereby. In the event that any party waives a
condition as contemplated by the foregoing sentence, such waiver shall be
evidenced by a certificate, which shall set forth the terms and conditions
pursuant to which such
31
condition has been waived, executed on behalf of the electing party by its
duly authorized representative.
ARTICLE VIII
GENERAL
Section 8.01. AMENDMENTS. This Agreement may be amended, modified,
superseded or cancelled, and any of the terms, covenants, representations,
warranties or conditions hereof may be waived, only by an instrument in
writing signed by each of the parties hereto or, in the case of a waiver, by
or on behalf of the party waiving compliance.
Section 8.02. INTEGRATED CONTRACT. This Agreement, and any written
amendments to this Agreement satisfying the requirements of Section 8.01,
together with the Ancillary Agreements, the IKON Guaranty and the GE Guaranty:
(i) constitute the entire agreement between the Seller and the Purchaser with
respect to the subject matter hereof or thereof, and (ii) supersede and
replace all correspondence, understandings and communications between the
parties hereto with respect to the transactions contemplated by this
Agreement. In the event of any conflict between this Agreement and any
conveyancing or assumption document delivered pursuant to this Agreement, the
terms of this Agreement shall govern and control.
Section 8.03. GOVERNING LAW. This Agreement and the legal relations
between the parties hereto arising thereunder shall be governed by and
construed in accordance with the Laws of the Province of Ontario and the
federal laws of Canada applicable therein, without regard to the principles
regarding the choice of Law.
Section 8.04. NOTICES. Any notices or other communications required
or permitted hereunder shall be sufficiently given if sent by registered mail
or certified mail, postage prepaid, by overnight courier service, or by
telecopy or other written form of electronic communication:
If to the Seller at:
IKON OFFICE SOLUTIONS, INC.
5935 Airport Road, Suite 600
Mississauga, ON L4V 1W5
Facsimile: (905) 219-2090
Attention: President
with copies to:
IKON OFFICE SOLUTIONS, INC.
70 Valley Stream Parkway
Valley Forge, PA 19355
Facsimile: (610) 408-7264
Attention: General Counsel
32
- and -
TORKIN MANES COHEN ARBUS LLP
1500 - 151 Yonge Street
Toronto, ON M5C 2W7
Facsimile: (416) 863-0305
Attention: Matthew Tevlin
- and -
CRAVATH, SWAINE & MOORE LLP
825 Eighth Avenue
New York, NY 10019
Facsimile: (212) 474-3700
Attention: Richard Hall
and if to the Purchaser, at:
HELLER FINANCIAL CANADA
c/o GE VFS Canada Limited Partnership
2300 Meadowvale Boulevard
Mississauga, ON L5N 5P9
Facsimile: (905) 858-6220
Attention: Operations Counsel
with a copy to:
DAVIES WARD PHILLIPS & VINEBERG LLP
44th Floor
1 First Canadian Place
Toronto, ON M5X 1B1
Facsimile: 416. 863.0871
Attention: Kenneth G. Klassen
or to such other address as shall be furnished in writing by the Purchaser (on
the one hand) or the Seller (on the other hand), to the others, and any such
notice or communication shall be deemed to have been given as of the date so
mailed, dispatched or transmitted (except that a notice of change of address
shall not be deemed to have been given until received by the addressees).
Failure or delay in delivering any notice, demand, request, consent, approval,
declaration or other communication to any Person designated to receive a copy
thereof shall in no way adversely affect the effectiveness of such notice,
demand, request, consent, approval, declaration or other communication.
Section 8.05. NO ASSIGNMENT. This Agreement may not be assigned,
except by operation of law; provided, however, that (i) the Purchaser may
assign this Agreement to one or more of its Affiliates and (ii) the Purchaser
may assign its rights, but not its obligations, hereunder to any Person in
connection with (A) any securitization or assignment of the Purchased
Financing Contracts or (B) any other transfer or sale of any of the Purchased
Assets; provided, further, that under no circumstances shall the
33
Purchaser assign or otherwise transfer any of its rights or obligations
hereunder to any Person listed on Schedule 1.01(k) without the prior written
consent of the Seller, which consent shall not be unreasonably withheld.
Notwithstanding the foregoing, however, no assignment otherwise permitted
hereunder shall, without the written consent of the Seller, relieve the
Purchaser from any of its liabilities hereunder.
Section 8.06. HEADINGS. The descriptive headings of the several
Articles and Sections of this Agreement are inserted for convenience only and
do not constitute a part of this Agreement.
Section 8.07. COUNTERPARTS. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same
agreement, and shall become effective when one or more counterparts have been
signed by each party hereto and delivered to the other parties hereto.
Counterparts may be executed and delivered by facsimile transmission thereof
and the signature(s) printed by the receiving fax machine shall for all
purposes hereof be deemed to be the original signatures of the parties;
provided, however, that any party providing its signature in such a manner
will promptly forward to the other party an original of the signed copy of
this Agreement or any agreement, instrument or other document delivered
pursuant to this Agreement, as the case may be, which was so faxed.
Section 8.08. ANNOUNCEMENTS. The Purchaser and the Seller agree to
consult with each other prior to issuing any press release or otherwise making
any public statement with respect to the transactions contemplated hereby, and
shall not issue any such press release or make any such public statement prior
to such consultation and without the prior consent of the other parties (which
consent shall not be unreasonably withheld or delayed), except as may be
required by any Law or pursuant to any listing agreement with any securities
exchange or any stock exchange regulations.
Section 8.09. SEVERABILITY. If at any time subsequent to the date
hereof, any provision of this Agreement shall be held by any court of
competent jurisdiction to be illegal, void or unenforceable, such provision
shall be of no force and effect, but the illegality or unenforceability of
such provision shall have no effect upon, and shall not impair the
enforceability of, any other provision of this Agreement.
Section 8.10. BINDING EFFECT. This Agreement and the covenants,
terms and conditions set forth herein shall be binding upon and shall inure to
the benefit of the parties hereto and their respective successors and
permitted assigns.
Section 8.11. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF,
UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR ANY EXHIBIT HERETO, OR ANY
COURSE OF CONDUCT, COURSE OF DEALING OR STATEMENTS (WHETHER VERBAL OR WRITTEN)
RELATING TO THE FOREGOING. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE
PARTIES HERETO TO ENTER INTO THIS AGREEMENT.
34
Section 8.12. EXCLUSIVE JURISDICTION. Except as otherwise expressly
provided in this Agreement, the parties hereto agree that any Action seeking
to enforce any provision of, or based on any matter arising out of or in
connection with, this Agreement or the transactions contemplated hereby shall
be brought in the courts of competent jurisdiction in the City of Toronto,
Ontario and each of the parties hereby consents to the jurisdiction of such
courts (and of the appropriate appellate courts therefrom) in any such Action
and irrevocably waives, to the fullest extent permitted by Law, any objection
which it may now or hereafter have to the laying of the venue of any such
Action in any such court or that any such Action which is brought in any such
court has been brought in an inconvenient forum. Each party agrees that
service of process on such party as provided in Section 8.04 shall be deemed
effective service of process on such party. Notwithstanding anything to the
contrary in this Agreement or any Ancillary Agreement, each party shall submit
at all times to personal jurisdiction in the Province of Ontario.
Section 8.13. NO THIRD PARTY BENEFICIARY. This Agreement is not
intended and shall not be construed to confer upon any Person other than the
parties hereto any rights or remedies hereunder except that the parties hereto
agree and acknowledge that the agreements and covenants contained in Section
5.04 are, subject to Articles VII and VIII, intended for the benefit of the
Indemnitees referred to therein (each such Person, a "Third Party
Beneficiary"), and that, subject to Articles VII and VIII, each such
Indemnitee, although not a party to this Agreement, shall be and is hereby
constituted a direct and irrevocable third party beneficiary of the agreements
and covenants contained in Section 5.04 and shall have the right to enforce
such agreements and covenants against the applicable party thereto in all
respects fully and to the same extent as if such Third Party Beneficiary were
a party hereto. Notwithstanding the foregoing, this Agreement (including
Section 5.04) may be amended or waived by the Purchaser and the Seller at any
time and from time to time in accordance with Section 8.01 and any such
amendment or waiver shall be fully effective with respect to the rights of the
Third Party Beneficiaries under Section 5.04.
Section 8.14. EXPENSES. Whether or not the Closing takes place,
except as otherwise specifically set forth in this Agreement, the Seller and
the Purchaser will each be responsible for the payment of their own respective
costs and expenses incurred in connection with the negotiations leading up to,
and the performance of, their respective obligations pursuant to this
Agreement.
Section 8.15. CURRENCY. Unless otherwise specified herein,
references herein to "$" are to Canadian dollars and all payments contemplated
herein shall be in Canadian funds.
35
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed on its behalf by its officers or representatives
thereunto duly authorized, as of the date first above written.
HELLER FINANCIAL CANADA
By:
-----------------------------------
Name:
Title:
By:
-----------------------------------
Name:
Title:
IKON OFFICE SOLUTIONS, INC.
By:
-----------------------------------
Name:
Title:
36
EXHIBIT A
DEFINITIONS
"Accounting Principles" shall mean the accounting principles
(including accounting methods, practices and procedures) to be agreed upon
pursuant to Section 5.08.
"Acquiring Entity" shall mean any Affiliate of the Purchaser
designated by the Purchaser to acquire all or any portion of the Purchased
Assets and/or assume all or any portion of the Assumed Liabilities.
"Action" shall mean any action, complaint, investigation, petition,
suit or other proceeding, whether civil, criminal or administrative or in law
or in equity, before any arbitrator or Governmental Entity.
"Additional Amount" shall mean $2,500,000.
"Adverse Environmental Condition" shall mean any of the following:
(i) the existence, or the continuation of the existence, of a Release or
threatened Release (including sudden or non-sudden, accidental or non-
accidental Releases) into or onto the environment (including the air, ground,
subsurface water or any surface) at, in, by, from or related to any of the
Purchased Assets; (ii) damage or injury to any person, Property or the
environment in connection with the generation, handling, transportation,
storage, treatment or disposal of Hazardous Materials by or on behalf of the
Business or the Seller or any representative, contractor or agent of the
Seller, related to any of the Purchased Assets; or (iii) any violation, or
alleged violation, by the Business or the Seller, or any representative,
contractor or agent of the Seller, of any Environmental Law, or any permits or
licenses of, by or from any Governmental Entity or court relating to
environmental matters (including any penalties associated with any violations
or any alleged violations), related to any of the Purchased Assets.
"Affiliate" shall mean, with respect to any Person, any other Person
that directly or indirectly through one or more intermediaries, controls, or
is controlled by, or is under common control with, such Person. For all
purposes of this Agreement, IKON US is an Affiliate of the Seller and all
other Affiliates of the Seller.
"Agreement" shall mean this Asset Purchase Agreement, including the
Schedules and Exhibits attached hereto and made a part hereof, as the same may
be amended, restated or otherwise modified from time to time in accordance
with the provisions hereof.
"Ancillary Agreements" shall mean (i) the Program Documentation,
(ii) the Bills of Sale and (iii) the Transition Services Agreement.
"Assumed Liabilities" shall mean the liabilities and obligations of
the Seller required to be paid or performed by the Seller pursuant to (i) the
Purchased Financing Contracts and (ii) the Backlog and; provided, however,
that the liabilities and obligations described in the foregoing clause shall
be Assumed Liabilities only if they arise out of, result from, are based on or
relate to the period from and after the Closing
A-1
and do not arise out of, result from, are based on or relate to any breach or
non-compliance by the Seller or any of its predecessors under any contract or
agreement described therein.
"Authorization" shall mean any domestic or foreign, federal, state,
provincial, territorial, municipal or other governmental or other quasi-
governmental consent, license, permit, grant, authorization or approval,
including any consent, license, permit, grant, authorization or approval of
any agency, instrumentality or subdivision of the foregoing.
"Backlog" shall mean any commitment by the Seller to enter into a
financing, leasing or other transaction, which transaction (i) has not been
entered into on or prior to the Closing Date and (ii) would, had it been
entered into prior to the Closing Date, have constituted a Purchased Financing
Contract.
"Bankruptcy Exception" shall mean, in respect of any agreement,
contract or commitment, any limitation thereon imposed by any bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium or similar Law
affecting creditors' rights and remedies generally and, with respect to the
enforceability of any agreement, contract or commitment, by general principles
of equity, including principles of commercial reasonableness, good faith and
fair dealing (regardless of whether enforcement is sought in an Action at law
or in equity).
"Bills of Sale" shall have the meaning set forth in Section
2.04(a)(i).
"Business" shall mean the business, assets and operations of the
Seller that consist of providing servicing and administration of Financing
Contracts owned by the Seller and any transferees of Financing Contracts.
"Business Day" shall mean any day that is not a Saturday, a Sunday
or other day on which banks are required or authorized by Law to be closed in
the City of Toronto.
"Business Intellectual Property" shall have the meaning set forth in
Section 5.09(a).
"Business Technology" shall have the meaning set forth in Section
5.09(b).
"Capital Stock" shall mean any and all shares, interests,
participations or other equivalents (however designated) or capital of a
corporation, any and all equivalent ownership interests in a Person (other
than a corporation), and any and all warrants or options to purchase any of
the foregoing.
"Chargeback Ratio" shall mean, as of a determination date, the
quotient (expressed as a percentage) of (i) the amount of the gross chargeback
calculated as the aggregate chargeback for all regions reflected on the
chargeback report for the preceding 30 days incurred by the Seller in respect
of the Financing Contracts (other than Financing
A-2
Contracts billed through the IKON US marketplaces and identified on the
Portfolio Tape) minus the credit recoveries realized by the Seller in respect
of such Financing Contracts divided by (ii) the amount of the average
marketplace portfolio balances for all regions reflected on the chargeback
report in respect of such Financing Contracts for such 30-day period, each
component of the foregoing definition calculated in a manner consistent with
past practices.
"Closing" shall mean the effective time of the sale of the Purchased
Assets, which for all purposes shall be 5:00 p.m. local time in the City of
Toronto, Ontario on the day on which the Seller transfers the Purchased Assets
to the Purchaser (and/or one or more Acquiring Entities) pursuant to the terms
of this Agreement, and "day of the Closing" and "Closing Date" shall be deemed
to mean such day.
"Closing Date Schedule" shall mean the schedule of assets acquired
and liabilities assumed reflecting the Purchased Assets and the Assumed
Liabilities and the respective amounts thereof, in each case determined as of
the Closing, and the notes and schedules, if any, thereto, prepared in
accordance with the provisions of Section 5.05, including those pertaining to
the resolution of the disputes with respect thereto.
"Closing Portfolio Tape" shall mean the computer disk, computer tape
or other computer format delivered pursuant to Section 5.20 setting forth, as
of the Closing Date, the Portfolio Information for each Purchased Financing
Contract.
"Conduit Facility" shall mean the facility established pursuant to
the Conduit Facility Documents.
"Conduit Facility Documents" shall mean the Concurrent Lease
Agreement, dated as of September 14, 1999, among the Seller, IKON Capital,
Inc., a corporation organized under the laws of Canada, IKON US and BNY Trust
Company of Canada, as trustee of the Care Trust, and (ii) all related
agreements and other documents, each such aforementioned document as amended
to date.
"Credit Enhancement" shall mean any Property pledged, assigned,
mortgaged, made, delivered or transferred as security for the performance of
any obligation under or with respect to any Purchased Financing Contract.
"Damages" shall mean any loss (including liquidated damages),
liability, judgment, settlement, award (including back-pay awards), claim,
cost, damage, deficiency, Tax, penalty, fine or expense, whether or not
arising out of third party claims (including interest, penalties, reasonable
attorneys' fees and expenses, court costs and all reasonable out-of-pocket
amounts paid in investigation, defense or settlement of any of the foregoing
and enforcement of any rights of indemnification against any Indemnitor or
with respect to any appeal). "Damages" shall not include Special Damages
(other than any Special Damages required to be paid by a Purchaser Indemnified
Party or a Seller Indemnified Party to any Person (other than to a party to
this Agreement or any of its Affiliates), which Special Damages shall be
deemed to be direct losses of the Person required to pay such Special
Damages).
A-3
"Delinquency Rate" shall mean, as of a determination date, the
quotient (expressed as a percentage) of (i) the amount of the Gross
Receivables attributable to the Financing Contracts and as to which the
Obligor thereon is delinquent for the number of days for which the Delinquency
Rate is being calculated, as a result of the failure by such Obligor to pay in
full all scheduled periodic payments due thereunder (including rent, principal
or interest) divided by (ii) the amount of the Gross Receivables attributable
to the Financing Contracts, in each case, as reflected on the monthly
delinquency report, each component of the foregoing definition calculated in a
manner consistent with past practices.
"Documentation" shall mean any forms of leases, conditional sales
contracts, notes, security agreements, guarantees, financing statements and
other documents or instruments necessary for, or used in connection with, the
conduct of the Business.
"Draft Closing Statements" shall have the meaning set forth in
Section 5.05(a)(iii).
"Encumbrance" shall mean any title defect, conflicting or adverse
claim of ownership, mortgage, security interest, lien, pledge, claim, right of
first refusal, option, charge, deed restriction, reservation, lease, order,
decree, judgment, stipulation, settlement, attachment, objection or any other
encumbrance of any nature whatsoever, whether or not perfected.
"Environmental Law" shall mean any domestic or foreign, federal,
state, provincial, territorial or municipal statute, law, rule, regulation,
ordinance, legally binding agreement with a Governmental Entity, policies
having the force of law, judgments, orders, decrees, permits, concessions,
grants, franchises, licences, agreements or governmental restrictions
pertaining to pollution and the protection of the environment, natural
resources or human health or the release of any materials into the
environment, including those related to the Release of Hazardous Substances
and to worker health and safety, in effect from time to time, all as now or
hereafter amended or supplemented, and the regulations promulgated pursuant
thereto, and judicial interpretations thereof, as well as equitable or common
law rights of action related thereto.
"Environmental Loss" shall mean (i) any loss, cost, damage,
liability, deficiency, fine, penalty or expense (including reasonable
attorneys' fees, engineering, and other professional or expert fees), (ii) the
cost of any Remedial Action (voluntarily or involuntarily incurred) and (iii)
damage to or loss of the use of any Purchased Asset (including, in each case,
Portfolio Property), in each case, resulting from, arising out of, based on or
related to any Adverse Environmental Condition which Adverse Environmental
Condition existed or occurred on or prior to the Closing. "Environmental Loss"
shall not include Special Damages (other than any Special Damages required to
be paid by a Purchaser Indemnified Party or a Seller Indemnified Party to any
Person (other than to a party to this Agreement or any of its Affiliates),
which Special Damages shall be deemed to be direct losses of the Person
required to pay such Special Damages).
A-4
"Equipment Service Obligations" shall mean any equipment or software
service, maintenance, warranty, image management commitment or other similar
obligations of the Seller contained in any Financing Contract.
"Excluded Assets" shall mean any and all assets of any nature
whatsoever of the Seller other than the Purchased Assets.
"Excluded Liabilities" shall mean the Equipment Service Obligations
and any and all other liabilities and obligations of any nature whatsoever
(accrued, contingent, matured or unmatured) of the Seller other than Assumed
Liabilities.
"Exemption Certificate" shall mean a form or statement from a
customer of the Seller indicating that the transaction covered by a Purchased
Financing Contract is exempt from any sales, use or similar Tax.
"Final Adjusted Closing Date Schedule" shall mean a schedule of
assets acquired and liabilities assumed prepared by adjusting the Closing Date
Schedule in accordance with the provisions of Sections 5.05(a)(ii) and
5.05(a)(iii) to give effect to the Special Adjustments and Section 5.05(a)(iv)
pertaining to the resolution of the disputes with respect thereto.
"Final Closing Statements" shall have the meaning set forth in
Section 5.05(a)(iv).
"Financing Contract" shall mean any contract (including any schedule
or amendment thereto or assignment, assumption, renewal or novation thereof),
any ancillary agreements relating thereto, in the form of (i) a lease of or
rental agreement with respect to Property, (ii) a sale contract (including an
installment sale contract or conditional sale agreement) arising out of the
sale of Property, (iii) a secured or unsecured financing of Property or (iv) a
secured or unsecured loan, and in each case, with respect to which: (A) the
Seller is the lessor, seller, lender, secured party or obligee (whether
initially or as an assignee) or (B) such contract is between an obligor, on
the one hand, and a lessor, seller, obligee, secured party or assignee of any
of the foregoing, on the other hand, and (1) would be a Financing Contract if
the Seller were the lessor, seller, obligee, secured party or assignee of any
of the foregoing thereunder and (2) with respect to which the Seller is an
assignee of the revenues or claims with respect thereto.
"GAAP" shall mean United States generally accepted accounting
principles and practices.
"GE US" shall mean General Electric Capital Corporation, a Delaware
corporation.
"GE Guaranty" shall mean the guaranty by GE US of the Purchaser's
obligations under this Agreement and the Program Agreement, in the form of
Exhibit K.
"Governmental Entity" shall mean any domestic or foreign federal,
state, provincial, territorial, municipal, county or municipal government,
governmental,
A-5
judicial, regulatory or administrative agency, department, commission, board,
bureau, court or other authority or instrumentality.
"Gross Receivables" at any date shall mean, with respect to any
Financing Contract, all contractual payments (including all payments of
stated, overdue or default rent or late charges) that are billed but
uncollected, and all future contractual payments that are due or to become
due, under the terms of such Financing Contract at such date, and, in each
case calculated on a consistent basis with the Seller's past practices and
reflected in the books and records of the Seller.
"GST" shall mean tax payable under Part IX of the Excise Tax Act
(Canada) and for greater certainty includes any tax imposed under subsection
165(2) of the Excise Tax Act (Canada) in respect of a taxable supply made in a
participating province.
"Hazardous Materials" shall mean any material or substance which is
defined as a "hazardous waste," "hazardous material," "hazardous substance,"
"restricted hazardous waste," "contaminant," "pollutant," "toxic waste" or
"toxic substance" or otherwise regulated pursuant to any provision of
Environmental Law.
"Historic Exception Contract" shall have the meaning set forth in
Section 5.27.
"IKON Guaranty" shall mean the guaranty by IKON US of the Seller's
obligations under this Agreement and the Program Agreement, in the form of
Exhibit L.
"IKON US" shall mean IKON Office Solutions, Inc., an Ohio
corporation.
"Indemnification Event" shall mean any Third Party Action for which
a Person is entitled to indemnification under this Agreement.
"Indemnitee" shall mean the person who is entitled to indemnity
pursuant to the terms of this Agreement.
"Indemnitor" shall mean the indemnifying person in the case of any
obligation to indemnify pursuant to the terms of this Agreement.
"Initial Payment" shall mean the amount equal to 100% of the Net
Book Value of the Purchased Assets as of February 29, 2004, plus the
Additional Amount.
"Intellectual Property" shall mean domestic or foreign rights,
whether or not registered, subject to protection under patent, copyright,
trademark, trade name, or trade secret Law or any other similar statutory
provision or common law doctrine, as well as domain names, URLs and Internet
websites.
"Knowledge", or "knowledge" or any similar expression, as it applies
to the Seller, shall mean the knowledge which any (i) director, officer, vice
president or senior vice president of the Seller or IKON US or (ii) individual
set forth on
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Schedule 1.01(b), in each case, has or ought to have in the prudent exercise
of that individual's duties, after due inquiry, as applicable.
"Law" shall mean any statute, rule, regulation, code, Order,
constitution, ordinance, common law, standard, limitation, compliance
schedule, written direction, request or treaty, whether legislatively,
judicially, administratively or otherwise promulgated, of any Governmental
Entity.
"Material Adverse Effect" shall mean a material adverse effect on
the ownership, collection, enforcement, value or administration of the
Purchased Assets, taken as a whole, or any event, circumstance or occurrence
which would reasonably be expected to have any such material adverse effect,
other than any change to the extent resulting from (i) any event, occurrence,
state of facts or development generally affecting the industries in which the
Business or the Seller operates (other than changes, effects, occurrences or
developments specifically relating to or having a disproportionate effect on
the Purchased Assets) or (ii) any actions specifically permitted or required
to be taken or omitted to be taken pursuant to the terms of this Agreement.
"Monetary Settlement" shall have the meaning set forth in Section
5.04(h)(vi)(B).
"Net Book Value" shall mean an amount equal to the aggregate of the
Purchased Assets minus the aggregate amount of the Assumed Liabilities minus
the loan loss reserve in an amount equal to $6,977,954 in respect of the
Purchased Assets, in each case as reflected on the statement of Purchased
Assets and Assumed Liabilities delivered by the Seller in accordance with
Section 5.07(a) and agreed by the Purchaser.
"Non-Assumable Claim" shall mean any Indemnification Event in which
one or more of the following legal theories have been asserted: (i) violations
by any Purchaser Indemnified Party or the Seller of (A) any criminal Law, or
(B) RICO (the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C.
{section}{section} 1961-1968) or any provincial, territorial or federal Laws
relating to securities, antitrust or competition (or any comparable foreign
Laws), or (ii) fraud by any Purchaser Indemnified Party or the Seller (with
respect to the Business or the Purchased Assets) other than allegations of
fraud by an Obligor arising out of ordinary course enforcement and collection
disputes.
"Non-Assumable Claim Offer" shall have the meaning set forth in
Section 5.04(h)(vi)(B).
"Obligor" shall mean any Person that is an obligor, borrower or
lessee under any Financing Contract.
"Old Facilities Management Contract" shall mean a single agreement
that is billed, collected and otherwise serviced by the Seller and whereby (i)
the Seller agrees to provide any equipment or software service, maintenance,
warranty, image management commitment or other similar services to a customer
and (ii) the customer agrees to lease equipment from the Seller, in
consideration for one fixed minimum monthly fee plus additional variable
charges.
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"Order" shall mean any decree, injunction, judgment, order, ruling,
assessment or writ.
"Original Equipment Cost" shall mean, with respect to any item of
Portfolio Property, the original cost of such Portfolio Property as
established on the books and records of the Seller, as applicable, at the
inception of the related Financing Contract.
"Partners" shall mean, collectively, the partners of the Purchaser
which at the date hereof are Heller Financial Canada Company and Heller Canada
Company each a Nova Scotia unlimited liability company, and "Partner" shall
mean any one of them.
"Permitted Encumbrance" shall mean (i) any Encumbrance for Taxes not
yet due and payable or any Taxes that may thereafter be paid without penalty
to the extent such Taxes have been reserved against on the Final Adjusted
Closing Date Schedule, (ii) any mechanic's or materialmen's lien on Portfolio
Property that an Obligor is required to remove (other than any such Liens in
favor of the Seller), (iii) any mechanic's or materialmen's lien on tangible
property other than Portfolio Property, (iv) in the case of any Portfolio
Property, any Encumbrance created by the related Purchased Financing Contract,
(v) any other Encumbrance on the Obligor's interest in any Portfolio Property
which is specifically permitted in accordance with the terms of the related
Purchased Financing Contract and which does not materially affect the value of
the Portfolio Property subject to such Encumbrance, (vi) at any time until,
but not including, the time of consummation of the transactions contemplated
by this Agreement (of which the delivery by the Seller to the Purchaser of the
letter contemplated by Section 6.01(e)(i)(D), is a condition precedent of the
Purchaser), any Encumbrance on any Purchased Financing Contract or Portfolio
Property established by or pursuant to the Conduit Facility Document or (vii)
any other imperfections of title, licenses or encumbrances, if any, which do
not materially impair the continued use and operation or the marketability of
the Purchased Assets (other than the Purchased Financing Contracts, the Credit
Enhancements, the Portfolio Property and the Intellectual Property of the
Business) to which they relate.
"Person" shall mean any individual, partnership, firm, corporation,
limited liability company, unlimited liability company, association, trust,
unincorporated organization, Governmental Entity or other entity, as well as
any syndicate or group that would be deemed to be a person under Section
13(d)(3) of the United States Securities Exchange Act of 1934, as amended.
"Portfolio Information" shall mean the information of the type set
forth on Schedule 3.06(d).
"Portfolio Property" shall mean Property with respect to which the
Seller (with respect to the Purchased Financing Contracts) is or, prior to
Closing, becomes the lessor, seller or secured party, as the case may be,
pursuant to the terms of a Purchased Financing Contract (whether initially or
as an assignee).
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"Portfolio Tape" shall mean the computer disk, computer tape or
other computer format to be delivered, and reasonably satisfactory, to
Purchaser pursuant to Section 5.07(a) setting forth, as of February 29, 2004,
the Portfolio Information for each Purchased Financing Contract.
"Program Agreement" shall mean the Canadian rider to the program
agreement, in the form of Exhibit H.
"Program Documentation" shall mean the definitive agreements to be
agreed and entered into by the Seller and the Purchaser in respect of a vendor
program arrangement, on terms mutually acceptable to the Seller and the
Purchaser and shall include, among others, (i) the Program Agreement, (ii) a
trademark license agreement pursuant to which the Seller, IKON US or any
Affiliate thereof licenses its or their Intellectual Property to the Purchaser
and any Affiliate of the Purchaser party to the Program Agreement as required
for the implementation of the Program Agreement and (iii) the provision of the
services in respect of such vendor program arrangement.
"Property" shall mean all property and assets of whatsoever nature
including personal property, whether tangible or intangible, and claims,
rights and choses in action.
"Purchase Price" shall mean the amount to be paid by the Purchaser
to the Seller for the Purchased Assets in accordance with Section 2.02.
"Purchased Assets" shall mean the Purchased Financing Contracts
(including any Credit Enhancements and any deposits, holdbacks and prepayments
related to the Purchased Financing Contracts), the Backlog and Portfolio
Property; provided, however, that in no event shall the Purchased Assets
include any Excluded Assets.
"Purchased Financing Contract" shall mean, collectively, (i) all
Financing Contracts identified on the Portfolio Tape, (ii) all Financing
Contracts added to the Seller's Infolease system during the period from March
1, 2004 to the Closing and (iii) all Zero Dollar NBV Financing Contracts in
existence at Closing, other than in the case of clause (i) any Financing
Contract which is accounted for on the Seller's Infolease system and deleted
therefrom during the period from March 1, 2004 to the Closing by reason only
of the expiration or run off of such Financing Contract provided that the
Obligor is no longer making payments thereon, in each case that has not been
written off by the Seller in accordance with the Seller's write-off policy in
effect as of the date hereof.
"Purchaser" shall have the meaning set forth in the Preamble.
"Purchaser Indemnified Parties" shall have the meaning set forth in
Section 5.04(a).
"Purchaser's Accountants" shall mean KPMG LLP or any chartered
accounting firm with nationally recognized auditing expertise (other than the
Seller's Accountants), as selected by the Purchaser.
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"Purchaser's Own Business" shall mean ownership and administration
of the Purchased Financing Contracts on the terms and conditions set forth in
the Program Documentation.
"Purchaser Special Representations" shall have the meaning set forth
in Section 5.04(g)(i).
"Qualifying Offer" shall mean (i) a written offer by a third party
to compromise any Non-Assumable Claims in respect of an Indemnification Event
or (ii) an oral offer by a third party to compromise any such Non-Assumable
Claims in respect of an Indemnification Event that the Purchaser, in its good
faith judgment, determines to be a credible effort by the offering party to
compromise.
"QST" shall mean the tax payable under the Sales Tax Act
(Quebec).
"Reference Chargeback Ratio" means 0.1% percent.
"Release" shall mean any release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, or leaching into the
outdoor environment of Hazardous Materials.
"Remedial Action" shall mean any action required by any Governmental
Entity or Environmental Law to (i) clean up, remove, treat or in any other way
address any Hazardous Material; (ii) prevent the Release of any Hazardous
Material so it does not endanger or threaten to endanger public health or
welfare or the indoor or outdoor environment; or (iii) perform pre- remedial
studies and investigations or post-remedial monitoring and care.
"Repurchase Notice" shall mean a written notice signed by an
authorized representative of the Purchaser or its Affiliate and delivered to
the Seller pursuant to which the Purchaser or its Affiliate elects to exercise
a Repurchase Option pursuant to Section 2.07(a)(ii).
"Repurchase Option" shall mean the option granted to the Purchaser
or its Affiliate to require the Seller to repurchase, or cause to be
repurchased by any of its Affiliates, any Purchased Asset pursuant to Section
2.07(a)(ii).
"Repurchase Price" at any date shall mean, with respect to any
Purchased Financing Contract repurchased by the Seller pursuant to Section
2.07(a)(ii) that is a Purchased Financing Contract, an amount equal to sum of
(i) all due but uncollected payments under such Purchased Finance Contract at
such date plus (ii) the net present value of all future payments not then due
thereunder, discounted at the discount rate that was initially used in respect
of such Purchased Financing Contract in computing the purchase price of the
Portfolio Property thereunder plus (iii) the net present value of the Residual
in respect of the Portfolio Property subject to such Purchased Financing
Contract, discounted at the discount rate that was initially used in respect
of such Purchased Financing Contract in computing the purchase rice of
Portfolio Property thereunder.
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"Required Consents" shall mean the consents set forth on
Exhibit I.
"Residual" shall mean, with respect to any item of Portfolio
Property, its estimated value upon expiration of the Purchased Financing
Contract to which it is subject, as determined by the Seller and set forth on
the Portfolio Tape.
"Risk Management Policy For Leasing" shall refer to the credit,
underwriting and collection policies of the Seller as set forth in
Schedule 3.19(a).
"Selected Accounting Firm" shall mean a chartered accounting firm
with nationally recognized auditing expertise, which shall be selected by
Purchaser's Accountants and Seller's Accountants to resolve a dispute arising
pursuant to Section 5.05; provided, however, that in no event shall the
Selected Accounting Firm be the same accounting firm as that of either the
Seller's Accountants or the Purchaser's Accountants.
"Seller" shall have the meaning set forth in the Preamble.
"Seller Benefit Plan" shall mean all employee benefit plans and
all other employee benefit arrangements or payroll practices, including, but
not limited to each employment, termination or severance agreement, deferred
compensation plan, incentive compensation plan, equity compensation plan,
severance pay, sick leave, vacation pay, salary continuation for disability,
hospitalization, medical insurance, life insurance, scholarship program, stock
option or restricted stock plan sponsored or maintained by Seller (whether
formal or informal, whether for the benefit of a single individual or for more
than one individual and whether for the benefit of current or former employees
or their beneficiaries).
"Seller Claims" shall have the meaning set forth in Section 5.06(b).
"Seller Indemnified Parties" shall have the meaning set forth in
Section 5.04(f).
"Seller Liabilities" shall have the meaning set forth in Section
5.06(b).
"Seller Special Representations" shall have the meaning set forth in
Section 5.04(b)(i).
"Seller's Accountants" shall mean PricewaterhouseCoopers LLP or any
chartered accounting firm with nationally recognized auditing expertise (other
than Purchaser's Accountants), as selected by the Seller.
"Seller's Insurance Policies" shall have the meaning set forth in
Section 5.06(b).
"Settlement Date" shall mean the fifth Business Day following the
date of delivery of the Final Adjusted Closing Date Schedule as provided in
Section 5.05(a)(iv).
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"Settlement Interest" shall mean, with respect to any Settlement
Payment, the sum of accrued interest on such Settlement Payment, calculated at
the Settlement Rate as from time to time in effect, for the period from the
Closing Date to and including the date upon which such Settlement Payment is
made (calculated on the basis of the actual number of days elapsed in a year
of 365 or 366 days, as the case may be).
"Settlement Payment" shall mean an amount equal to the absolute
value of the difference between (i) the Initial Payment paid pursuant to
Section 2.04(b)(i) and (ii) the Purchase Price.
"Settlement Rate" shall mean, on any date, with respect to the
Settlement Payment, the annual rate of interest (rounded upwards, if not in an
increment of 1/16th of 1%, to the next 1/16 of 1%) equal to the annual rate of
interest announced by Royal Bank of Canada and in effect as its prime rate at
its principal office in the City of Toronto, Ontario on such day for
determining interest rates on Canadian Dollar-denominated commercial loans in
Canada.
"Special Adjustments" shall mean such adjustments to the Closing
Date Schedule as shall be necessary to (i) reflect all assets or liabilities,
the existence of which are known on the date the Purchaser's Accountants
complete the procedures contemplated by Section 5.05(a)(iv), and which, as of
the Closing Date, were assets or liabilities (as the case may be) of a type
properly to have been reflected on such Closing Date Schedule in accordance
with Section 5.05(a)(i) but which were not in fact reflected on such Closing
Date Schedule, including any asset or liability which was not reflected on the
Closing Date Schedule because such assets or liabilities were not deemed to be
material, (ii) remove any asset or liability which should not have been
reflected on such Closing Date Schedule in accordance with Section 5.05(a)(i)
but was in fact reflected thereon irrespective of whether such asset or
liability is deemed not to be material, (iii) give effect to any accounting
principle, method, practice or procedure included in the Accounting Principles
that is not in accordance with GAAP, (iv) remove all intangible assets
reflected on such Closing Date Schedule, (v) eliminate any Excluded Assets or
any Excluded Liabilities reflected on such Closing Date Schedule, (vi) remove
any assets that would be reflected on a balance sheet of the Seller prepared
in accordance with the Accounting Principles as "deferred lease costs" or
"deferred costs", (vii) eliminate any deferred tax assets or deferred tax
liabilities that would be reflected on a balance sheet of the Seller prepared
in accordance with the Accounting Principles and (viii) reflect each of the
items on Exhibit J.
"Special Damages" shall mean special, exemplary, consequential or
punitive losses or damages; provided, however, that "Special Damages" shall
not include any Damages relating to the failure of any Purchaser Indemnified
Party to receive the amounts payable in accordance with the terms of any
Purchased Financing Contract.
"Specified Liabilities" shall mean any and all sales, use or other
similar Taxes required to be collected in respect of any Purchased Financing
Contract during the 120 days following the Closing Date if (A) such Tax is not
being collected by the Purchaser in respect of the Purchased Financing
Contract pursuant to its reliance on an
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applicable exemption from such Tax; (B) such exemption from Tax is dependent
upon receipt by the Seller of a properly executed Exemption Certificate; and
(C) within 120 days following the Closing, the Purchaser has notified the
Seller that a properly completed and executed Exemption Certificate is neither
in the Purchaser's existing records or files nor is obtainable from the
particular customer following reasonable commercial efforts of the Purchaser
to obtain such Exemption Certificate from the customer; provided that a Tax
shall be a Specified Liability only to the extent that the Purchaser is unable
to collect such Tax (on a current or retroactive basis) from the customer
following reasonable commercial efforts after such failed efforts to obtain an
Exemption Certificate.
"Specified Settlement Date" shall mean, with respect to any
Purchased Asset, the date that is five days immediately following the date of
delivery by the Purchaser or its Affiliate of a Repurchase Notice with respect
to such Purchased Asset.
"Subsidiary" shall mean, as to any Person, any other Person whose
shares of Capital Stock having ordinary voting power (other than Capital Stock
having such power only by reason of the happening of a contingency) to elect a
majority of the board of directors or similar governing body of such other
Person are owned, or the management of which is otherwise controlled, directly
or indirectly through one or more intermediaries, or both, by such first
Person.
"Syndication Agreements" shall mean any agreement, contract or other
arrangement (other than this Agreement, the Conduit Facility Documents and the
Financing Contracts) pursuant to which any interest in any asset, right,
interest or Property has been sold, transferred to or otherwise disposed of to
any Person or Persons by the Seller including in an asset-backed financing.
"Tax" (and, in the plural, "Taxes") shall mean any domestic or
foreign federal, state, provincial, territorial or local taxes, charges, fees,
levies, imposts, duties and governmental fees or other like assessments or
charges of any kind whatsoever, together with any interest or penalty,
addition to tax or additional amount imposed thereon, whether payable by
reason of contract, assumption, transferee liability, operation of law, or
otherwise (including any income, net income, gross income, receipts, windfall
profit, severance, property, production, sales, use, license, excise,
registration, franchise, employment, payroll, withholding, alternative or
add-on minimum, intangibles, ad valorem, transfer, gains, stamp, estimated,
transaction, title, capital, paid-up capital, profits, occupation, premium,
value-added, recording, real property, personal property, federal highway use,
commercial rent or environmental tax).
"Tax Act" shall mean the Income Tax Act (Canada).
"Tax Certification" shall have the meaning set forth in Section
5.04(b)(iv).
"Tax Differential" shall have the meaning set forth in Section
5.04(b)(iv).
"Tax Director" shall have the meaning set forth in Section
5.04(b)(iv).
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"Tax Return" shall mean any return, report or statement required to
be filed with respect to any Tax (including any attachments thereto, and any
amendment thereof) including, but not limited to, any information return,
claim for refund, amended return or declaration of estimated Tax, and
including, where permitted or required, combined or consolidated returns for
any group of entities that includes the Seller.
"Third Party Action" shall mean any Action, assertion, allegation,
complaint, cause of action, demand, suit, proceeding, notice of actual or
potential liability or responsibility, claim for reimbursement or
contribution, order, judgment, injunction, request or demand under claim of
authority to take action or refrain from taking action, Encumbrance,
proceeding in condemnation, execution upon judgment, or other claim, in each
case, by a Person (other than a Purchaser Indemnified Party or a Seller
Indemnified Party) against any Purchaser Indemnified Party or any Seller
Indemnified Party, as the case may be.
"Third Party Beneficiary" shall have the meaning set forth in
Section 8.13.
"Transferred Employee" shall have the meaning set forth in Exhibit
F.
"Transition Services Agreement" shall have the meaning set forth in
Section 5.08(a).
"US Asset Purchase Agreement" shall mean the Asset Purchase
Agreement, dated as of December 10, 2003, entered into among GE US, IKON US
and IOS Capital, LLC, a Delaware limited liability company, as amended from
time to time.
"Zero Dollar NBV Financing Contracts" shall mean any Financing
Contract set forth on the Portfolio Tape or accounted for on Seller's
Infolease system that has reached maturity, the Obligor has remained in
possession of the Portfolio Property, the Obligor pays on a month to month
basis and the Residual has been reduced on the books and records of the Seller
of $0.
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EXHIBIT B
REPRESENTATIONS AND WARRANTIES
OF
THE SELLER
Section 3.01. ORGANIZATION AND GOOD STANDING.
(a) Except as set forth in Schedule 3.01(a), the Seller (i) is duly
organized, validly existing and in good standing under the Laws of its
jurisdiction of organization, (ii) has the requisite power (x) to own and
lease its Property and (y) except for such franchises, licenses, permits,
authorizations and approvals the lack of which, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse Effect,
to carry on its business as now being conducted and (iii) is duly qualified to
conduct business and is in good standing as a foreign Person in all
jurisdictions in which the character or location of the Property owned or
leased by it or the nature of the business conducted by it requires such
authorization or qualification, except where the failure to be so qualified or
authorized has not and would not reasonably be expected to have a Material
Adverse Effect. True and correct copies of the certificate of incorporation
(or equivalent document), including all amendments thereto through the date
hereof, and the by-laws (or equivalent document), as in effect on the date
hereof, of the Seller have previously been provided to the Purchaser by the
Seller.
(b) Except as set forth in Schedule 3.01(b), IKON US (i) is duly
organized, validly existing and in good standing under the Laws of its state
of organization, (ii) has the requisite power (x) to own and lease its
Property and (y) except for such franchises, licenses, permits, authorizations
and approvals the lack of which, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect, to execute, deliver
and perform its obligations under the IKON Guaranty and (iii) is duly
qualified to conduct business and is in good standing as a foreign Person in
all jurisdictions in which the character or location of the Property owned or
leased by it or the nature of the business conducted by it requires such
qualification or authorization, except where the failure to be so qualified or
authorized has not and would not reasonably be expected to have a Material
Adverse Effect. True and correct copies of the certificate of incorporation
(or equivalent document), including all amendments thereto through the date
hereof, as in effect on the date hereof, have previously been provided to the
Purchaser by the Seller.
Section 3.02. CORPORATE AUTHORITY.
(a) The Seller has all requisite power and authority to execute and
deliver, and to perform its obligations under, this Agreement, each Ancillary
Agreement and the other documents to be executed and delivered by it pursuant
hereto or thereto. Each of this Agreement, the Ancillary Agreements and the
other documents to be executed and delivered by the Seller pursuant hereto or
thereto has been duly authorized by all necessary action and has been (or, in
the case of the Ancillary Agreements and the other documents to be delivered
at the Closing, will be at the Closing) duly executed and delivered by the
Seller and is (or will be at the Closing) the valid and binding obligation
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of the Seller, enforceable against it in accordance with its terms, except as
enforcement thereof may be limited by the Bankruptcy Exception.
(b) IKON US has all requisite power and authority to execute and
deliver, and to perform its obligations under, the IKON Guaranty and the other
documents to be executed and delivered by it pursuant hereto or thereto. Each
of the IKON Guaranty and the other documents to be executed and delivered by
IKON US pursuant hereto or thereto has been duly authorized by all necessary
action and has been (or the IKON Guaranty will be at the Closing) duly
executed and delivered by IKON US and is (or will be at the Closing) the valid
and binding obligation of IKON US, enforceable against it in accordance with
its terms, except as enforcement thereof may be limited by the Bankruptcy
Exception.
Section 3.03. NO CONFLICTS.
(a) Except as set forth on Schedule 3.03(a), neither the execution
and delivery by the Seller of this Agreement, any Ancillary Agreement or any
other document to be executed and delivered by the Seller in connection
herewith or therewith nor compliance by the Seller with the terms and
provisions hereof or thereof nor the consummation by the Seller of the
transactions contemplated hereby or thereby will result in the creation of any
Encumbrance on any of the Purchased Assets or will conflict with, constitute a
default under or result in a breach of any of the terms, conditions or
provisions of or create a right of termination or cancellation (determined
without giving effect to the provisions of Section 2.07 hereof) under (i) the
certificate of incorporation (or equivalent document) or by-laws (or
equivalent document) of the Seller, (ii) any Law to which the Seller, or any
of the Purchased Assets are subject or (iii) any contract to which the Seller
or any of its Property is subject (including any Purchased Asset), or (iv) any
other agreement, contract or commitment relating to any Purchased Asset,
except, in the case of this clause (iv), for such conflicts, defaults or
breaches that, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect.
(b) Except as set forth on Schedule 3.03(a), neither the execution
and delivery by IKON US of the IKON Guaranty or any other document to be
executed and delivered by IKON US in connection herewith or therewith nor
compliance by IKON US with the terms and provisions thereof nor the
consummation by IKON US of the transactions contemplated thereby will result
in the creation of any Encumbrance on any of the Purchased Assets or will
conflict with, constitute a default under or result in a breach of any of the
terms, conditions or provisions of or create a right of termination or
cancellation (determined without giving effect to the provisions of Section
2.07 hereof) under (i) the certificate of incorporation (or equivalent
document) or by-laws (or equivalent document) of IKON US or (ii) any Law to
which IKON US, or any of the Purchased Assets are subject.
Section 3.04. CONSENTS. Except as set forth on Schedule 3.04, the
execution and delivery by the Seller of this Agreement, any Ancillary
Agreement or any other document to be executed and delivered by the Seller
pursuant hereto or thereto or
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the consummation by the Seller of the transactions contemplated hereby or
thereby, will neither require any notices, reports or other filings to be made
by the Seller with, nor require any consents, licenses, permits,
Authorizations or approvals required to be obtained by the Seller from, (i)
any Governmental Entity or (ii) any other Person, other than the failure of
which to obtain or make in respect of this clause (ii) would not reasonably be
expected to have a Material Adverse Effect.
Section 3.05. NO VIOLATIONS OF LAW.
(a) To the Knowledge of the Seller, and except as set forth on
Schedule 3.05(a), (i) the Seller directly or indirectly owns and operates, and
since September 30, 2001 has owned and operated, each of the Purchased Assets
in compliance with all applicable Laws, (ii) neither the origination, billing
and collection of any Purchased Financing Contract nor the enforcement of any
Purchased Financing Contract or Credit Enhancement in accordance with the
terms thereof has resulted in the violation of any applicable Laws and (iii)
the Seller has not received since September 30, 2001, any written notice of
violation of any Law which if adversely determined against the Seller would
reasonably be expected to have a Material Adverse Effect. Schedule 3.05(a)
sets forth the Authorizations required for the Seller to conduct the Business
and, to the Knowledge of the Seller, no other Authorizations are required to
conduct the Business as currently conducted in all material respects in
compliance with applicable Laws.
(b) [Intentionally Omitted]
(c) Notwithstanding the foregoing, this Section 3.05 shall not apply
to (i) tax matters, which matters are solely the subject of Section 3.09 and
(ii) intellectual property matters, which are solely the subject of Section
3.14, and (iii) environmental matters, which matters are solely the subject of
Section 3.20.
Section 3.06. FINANCIAL STATEMENTS; REPORTS.
(a) [Intentionally Omitted]
(b) [Intentionally Omitted]
(c) [Intentionally Omitted]
(d) All of the Portfolio Information and other data set forth in the
Portfolio Tape and the statement of Purchased Assets and Assumed Liabilities,
when delivered in accordance with Section 5.07(a), shall be true, correct,
complete and accurate in all respects.
Section 3.07. ABSENCE OF CERTAIN CHANGES.
(a) Except as set forth on Schedule 3.07(a), from September 30,
2003, to the date of this Agreement, there has not been any material adverse
change in the Purchased Assets (other than the Purchased Financing
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Contracts), upon any of the Seller's right or ability to own the Purchased
Assets (other than the Purchased Financing Contracts), or any development or
combination of developments of which the Seller has Knowledge that is
reasonably likely to result in any such change, in each case other than any
change to the extent resulting from (i) any event, occurrence, state of facts
or development generally affecting the industries in which the Business or the
Seller operates (other than changes, effects, occurrences or developments
specifically relating to or having a disproportionate effect on the Purchased
Assets) or (ii) any actions specifically permitted or required to be taken or
omitted to be taken pursuant to the terms of this Agreement.
(b) [Intentionally Omitted]
(c) From September 30, 2003, to the date of this Agreement, the
Seller has not, with respect to any Purchased Asset, (i) waived or committed
to waive any rights (other than in the ordinary course of business consistent
with past practices with respect to the Purchased Financing Contracts), which
waiver would reasonably be expected to have a Material Adverse Effect, (ii)
directly or indirectly in any way extended or otherwise restructured the
payment schedule, payment terms or any other term or condition of any
Purchased Financing Contract, or made any advance, extension, novation,
modification or other accommodation to any lessee or Obligor thereunder (other
than in the ordinary course of business consistent with the Risk Management
Policy For Leasing), (iii) suffered any damage, destruction or casualty loss,
whether or not covered by insurance, in excess of $20,000 in the case of any
individual loss or $100,000 with respect to the aggregate of all such losses,
or (iv) changed, in any material respect, its Documentation, except for
changes made in the ordinary course of business consistent with its past
practice.
(d) The Seller has previously delivered to the Purchaser all
documents, agreements and other information (whether in writing or in
electronic format) pursuant to which the Seller has (i) made or agreed to make
any increase in the compensation payable or to become payable to any
Transferred Employee, except for regularly scheduled increases in compensation
payable or increases otherwise occurring in the ordinary and usual course of
business consistent with past practices or (ii) made or agreed to make any
material increase in any Seller Benefit Plan.
(e) Since September 30, 2003, there has been no change in the Risk
Management Policy For Leasing.
Section 3.08. EMPLOYEE BENEFIT PLANS, ETC.
(a) The Seller has previously delivered to the Purchaser a complete
and accurate list of all Seller Benefit Plans. There is no amount or payment
arising from or in connection with any Seller Benefit Plan with respect to
which any of the Purchaser or the Acquiring Entities are or will be liable to
any Person, including any Governmental Entity or any employee of any of the
Seller (other than payments of plan benefits in the ordinary course).
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(b) (i) None of the Transferred Employees is represented in his or
her capacity as an employee of the Seller by any labor organization; (ii) the
Seller, with respect to any Transferred Employee, has not recognized any labor
organization nor has any labor organization been elected as the collective
bargaining agent of any of such employees, nor has the Seller, with respect to
any Transferred Employee, entered into any collective bargaining agreement or
union contract recognizing any labor organization as the bargaining agent
thereof; (iii) there is no union organization activity involving any
Transferred Employee, pending or threatened, nor has there been union
representation involving any Transferred Employee within the last five years;
and (iv) there is no picketing, pending or threatened, and there are no
strikes, slowdowns, work stoppages or other job actions, lockouts,
arbitrations, grievances or other material labor disputes involving any
Transferred Employee, pending or threatened.
(c) [Intentionally Omitted]
Section 3.09. TAXES. Except as set forth in Schedule 3.09:
(a) The Seller (i) has timely filed (or there has been timely filed
on their behalf) with the appropriate Governmental Entities all Tax Returns
required to be filed with respect to the Purchased Assets, and all such Tax
Returns are true, correct and complete in all material respects, and (ii) have
paid (or there has been paid on their behalf) all Taxes shown as due and
payable to any Governmental Entity, relating to the Purchased Assets or have
provided for all such Taxes on their books and records and in accordance with
the Accounting Principles. With respect to the Purchased Assets, for any
period for which Tax Returns have not yet been filed, or for which Taxes are
not yet due or owing or which are being contested in good faith, the Seller
has made due and sufficient current accruals for such Taxes on their books and
records and in accordance with the Accounting Principles;
(b) To the Knowledge of the Seller, the Seller has not received any
notice from any taxing authority that it is conducting or intends to conduct
an audit or investigation with respect to the Purchased Assets. No issue has
been raised by a taxing authority in any current or prior examination which,
by application of the same or similar principles, would reasonably be expected
to result in a proposed deficiency for any post-Closing period with respect to
the Purchased Assets. There are no outstanding waivers in writing or
comparable material binding consents regarding the application of any statute
of limitations in respect of Taxes relating to any Purchased Assets. No claim
has been made by a Governmental Entity in a jurisdiction where the Seller does
not file Tax Returns to the effect that the Seller is, or may be subject to
taxation by that Governmental Entity by reason of any Purchased Asset;
(c) [Intentionally Omitted]; and
(d) There are no Encumbrances for Taxes upon the Purchased Assets,
except for Permitted Encumbrances.
(e) [Intentionally Omitted]
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(f) [Intentionally Omitted]
Section 3.10. NO REAL PROPERTY. None of the Purchased Assets is
comprised of a fee or leasehold interest in any real property.
Section 3.11. [INTENTIONALLY OMITTED].
Section 3.12. [INTENTIONALLY OMITTED].
Section 3.13. LITIGATION AND LIABILITIES. Except as set forth on
Schedule 3.13, there are no civil, criminal or administrative Actions pending
(including any counterclaims) or, to the Seller's Knowledge, threatened,
against the Seller relating to or affecting any of the Purchased Assets or
Assumed Liabilities which if adversely determined against the Seller would
reasonably be likely to result in Damages in excess of $100,000. Except as set
forth on Schedule 3.13, the Seller is not, has not been the subject of, and to
the Seller's Knowledge, has not been threatened with, any Action or Order of
any Governmental Entity nor to the Seller's Knowledge have there been any
investigations or any threat of investigation, in either case relating to any
of the Purchased Assets or Assumed Liabilities or the business practices of
the Business (including with respect to the origination, collection,
administration, enforcement or foreclosure in respect of any Purchased Assets)
from October 1, 2002, through the Closing Date.
Section 3.14. INTELLECTUAL PROPERTY. Following the consummation of
the transactions contemplated by this Agreement, the Seller will have the
right to utilize:
(a) for the uses in which it is currently employed all of the
Business Intellectual Property of which the Seller is a licensee, without the
necessity of obtaining consent from or paying a fee to another Person,
necessary to satisfy the Seller's obligations under the Transition Services
Agreement; and
(b) all of the Business Technology necessary to satisfy the Seller's
obligations under the Transition Services Agreement.
Section 3.15. INSURANCE. Set forth on Schedule 3.15 is a list of all
material liability, property, workers compensation, directors and officers'
liability and other policies of insurance that insure the Purchased Assets or
affect or relate to the ownership, use or operations of any of the Purchased
Assets as of the date hereof, all of which are in full force and effect, and
no written notice of cancellation or non-renewal has been received by the
Seller in respect of any such policies of insurance.
Section 3.16. TITLE TO PURCHASED ASSETS.
(a) Except with respect to the Portfolio Property, being the subject
of Section 3.19, (i) the Seller owns and has good title to each of the
Purchased Financing Contracts and Credit Enhancements included in the
Purchased Assets, free and clear of all Encumbrances, other than those
Encumbrances described in clause (i) of the definition of Permitted
Encumbrances.
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(b) [Intentionally Omitted]
Section 3.17. CONDUCT OF BUSINESS. Since September 30, 2003, the
Seller has used reasonable efforts to preserve substantially intact the
Business and has used commercially reasonable efforts to preserve its present
relationships consistent with past practices with (i) each Transferred
Employee and (ii) each Person having any business relationship which is
advantageous to the Business, or the discontinuance of which would reasonably
be expected to have a Material Adverse Effect. Since September 30, 2003, the
Seller has conducted business with its Affiliates only in the ordinary and
usual course and has not dealt with or entered into any contracts, commitments
or arrangements with its Affiliates on terms and conditions less favorable to
it than would be available in a comparable transaction with a Person not an
Affiliate of the Seller.
Section 3.18. PURCHASED FINANCING CONTRACTS.
(a) Each Purchased Financing Contract and Credit Enhancement (i) is
valid, binding and enforceable by the Seller against the lessee, obligor or
borrower thereunder in accordance with its written terms, except as may be
limited by the Bankruptcy Exception, and (ii) constitutes and arose out of a
bona fide business transaction entered into in the ordinary and usual course
of business of the Seller, consistent with its past practices.
(b) Except as set forth on Schedule 3.18(b), (i) each Purchased
Financing Contract and Credit Enhancement is, or as of the Closing Date will
be, in full force and effect, owned by the Seller free and clear of
Encumbrances other than Permitted Encumbrances, and not subject to any
defense, offset, claim, right of rescission or counterclaim by the Obligor
(with respect to a Purchased Financing Contract) or by the obligor thereunder
(with respect to a Credit Enhancement), or any Person claiming under any such
right, that would adversely affect the validity or enforceability of such
Purchased Financing Contract or Credit Enhancement in accordance with its
written terms; (ii) the Seller is not in breach of or default under any
Purchased Financing Contract or Credit Enhancement, and, to the Seller's
Knowledge, no other event has occurred which, with notice and/or lapse of
time, would constitute a default by the Seller; (iii) the Purchased Financing
Contracts constitute financing of commercial transactions and, to the
Knowledge of the Seller, (A) the Seller has not entered into a Purchased
Financing Contract for the purpose of enabling the Obligor under such
Purchased Financing Contract to acquire any interest in or the use of any
Portfolio Property pursuant to such Financing Contract for personal, family,
household or agricultural use or (B) no Obligor is required under any
applicable Law to withhold from payments on such Purchased Financing Contracts
any interest or other withholdings for payment of Taxes to any Governmental
Entity; (iv) except for OP Rental Financing Contracts identified by the codes
set forth on Schedule 3.18(g), no Purchased Financing Contract is terminable
at the option of the Obligor thereunder except to the extent that such Obligor
is required to pay to the Seller a termination fee in an amount not less than
the present value of all remaining scheduled payments thereunder discounted at
the implicit rate of such Purchased Financing Contract; (v) all payments
pursuant to each Purchased Financing Contract are made directly to the Seller;
(vi) the Seller has approved credit applications
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and otherwise entered into commitments with respect to Purchased Financing
Contracts (including Backlog) in a manner consistent with the Risk Management
Policy For Leasing, collateral eligibility standards, credit quality
classifications and other financing origination policies of the Seller in
effect at the time such Purchased Financing Contracts were originated; (vii)
no Purchased Financing Contract is an Old Facilities Management Contract or a
non-bifurcated Financing Contract under which the Seller has service and/or
maintenance obligations; and (viii) between the date hereof and Closing, no
Financing Contract which (A) is accounted for on the Seller's Infolease system
has been deleted therefrom except upon expiration or run off of such Financing
Contract provided that the Obligor is no longer making payments thereunder,
except in the ordinary course of the Business, consistent with past practices
and (B) would be added to the Seller's Infolease system in the ordinary course
of the Business, consistent with past practices, was not so added.
(c) No Purchased Financing Contract is subject to any debt
subordination agreement, participation agreement, intercreditor agreement,
owner trust agreement, purchase agreement, collateral sharing agreement,
residual sharing agreement, remarketing agreement or vendor recourse agreement
and no Purchased Financing Contract is subject to any Syndication Agreements,
in each case, that is not in writing and accurately reflected in the credit
and legal files for such Purchased Financing Contract.
(d) Schedule 3.18(d) sets forth a list of each Credit Enhancement
that is a letter of credit with a maximum amount drawable thereunder in excess
of $50,000, in the case of any Credit Enhancement in respect of any Financing
Contract constituting a Purchased Asset. Except as set forth on Schedule
3.18(d), the Seller has collateral monitoring systems which accurately reflect
and track the expiration dates of all Credit Enhancements in respect of the
Purchased Assets which are in the form of letters of credit.
(e) Each Purchased Financing Contract and Credit Enhancement
comprising part of the Purchased Assets is expressly governed by the Laws of a
province or territory of Canada, and each Obligor under a Purchased Financing
Contract comprising part of the Purchased Assets is located in Canada.
(f) Except as set forth on Schedule 3.18(f), the Seller maintains in
the credit and legal files for each Purchased Financing Contract: (i) all
amendments, modifications, waivers, extensions, cancellations and releases in
respect of such Purchased Financing Contract, (ii) fully executed originals of
each lease or note (and an executed original or a true and correct copy of all
other documents) comprising such Purchased Financing Contract, related Credit
Enhancements and all other Documents required by the Seller's credit or
investment approval, and (iii) documentation sufficient to establish the
Original Equipment Cost of all Portfolio Property subject to such Purchased
Financing Contract for purposes of determining personal property Tax
liability.
(g) Schedule 3.18(g) sets forth the codes in the Seller's Infolease
financial and accounting system that identify each of the following types of
Purchased
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Financing Contracts: (i) "rental leases" and (ii) "flow- through leases." The
classification of such Purchased Financing Contracts using such codes
completely and accurately identifies all such Purchased Financing Contracts.
(h) The list attached as Schedule 3.18(b) sets forth all current
outstanding Financing Contracts of the Seller which were originated despite
material noncompliance of such Financing Contract or the related Obligor with
the Seller's Risk Management Policy for Leasing in effect at the time such
Financing Contract was originated. Upon a Financing Contract being included in
the Seller's "Historic Exceptions List", such Financing Contract remains on
such list until such Financing Contract is paid (including paid upon upgrade
of the relevant equipment), written off or repurchased by the Seller.
(i) The Seller's Infolease System used in the Business has accounted
for all Zero Dollar NBV Financing Contracts that are funded.
Section 3.19. PORTFOLIO PROPERTY.
(a) (i) The Seller has, with respect to each item of Portfolio
Property, either (A) good and valid title to such Portfolio Property, free and
clear of all Encumbrances other than those Encumbrances described in clauses
(i) through (v) of the definition of Permitted Encumbrances, or (B) a valid
first priority security interest on such Portfolio Property that is governed
by or subject to a Purchased Financing Contract which has been duly perfected
(including but not limited to pursuant to all appropriate Personal Property
Security Act filings), when and as required by the Seller's written operating
procedures pertaining to such matters, a copy of which is set forth on
Schedule 3.19(a); (ii) none of the Portfolio Property is a vessel, an aircraft
or a vehicle; and (iii) no Person has an option to purchase any item of
Portfolio Property for a fixed amount less than the greater of (A) the
Residual thereof or (B) the amount set forth in the Purchased Financing
Contract covering such Portfolio Property.
(b) (i) The Seller has not taken action or failed to take any action
in respect of any Portfolio Property, which would be reasonably likely to
impair or prejudice the validity or enforceability of any manufacturer's
warranty in respect of such Portfolio Property, and the Seller has not
amended, cancelled, modified, assigned or encumbered any of such warranties
(other than as provided in the related Purchased Financing Contracts); and
(ii) except as set forth on Schedule 3.19(b), the Seller has not entered into
a Purchased Financing Contract (other than "OP Rental Financing Contracts") on
the assumption that the risk of loss in respect of the related Portfolio
Property would be borne by the Seller, and each Obligor under a Purchased
Financing Contract (and not the Seller or any other Person) is required to
provide insurance against loss or damage with respect to the Portfolio
Property subject to or governed by such Purchased Financing Contract pursuant
to (x) the terms of the standard form of the Purchased Financing Contract or
(y) the credit policies of the Business through insurance policies issued by
unaffiliated insurers or, if permitted by the terms of the applicable credit
approval, through self-insurance.
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(c) Each item of Portfolio Property is comprised exclusively of (i)
document processing and imaging goods (including all replacement parts,
additions and repairs thereto and any accessories incorporated therein and/or
affixed thereto), (ii) the right to use and transfer by license, sublease or
otherwise, any software included with any such Portfolio Property and (iii)
other office equipment and furnishings.
(d) Except as set forth on Schedule 3.19(d), each item of Portfolio
Property comprising part of the Purchased Assets was, at origination of the
related Purchased Financing Contract, and, to the Knowledge of the Seller has
been thereafter, located within Canada.
Section 3.20. ENVIRONMENTAL MATTERS. (i) There are no Actions
against the Seller under any Environmental Law that are (a) pending or to the
Seller's Knowledge, threatened, involving the Purchased Assets which, if
adversely determined against the Seller would reasonably be likely to result
in Damages in excess of $100,000 or (b) to the Seller's Knowledge, pending or
threatened, involving the Portfolio Property; (ii) to the Seller's Knowledge,
all of the Portfolio Property, is in compliance with applicable Environmental
Laws; (iii) the Seller conducts, and since September 30, 2001 has conducted,
the Business in compliance with all applicable Environmental Laws; (iv) the
Seller has all, and is in compliance with, its Authorizations required under
Environmental Laws to conduct the Business; (v) the Seller has not, since
September 30, 2001, received any written notice alleging that the Business is
in violation of, or any has any liability under any Environmental Law; (vi)
the Seller has not, since September 30, 2001, received any request for
information pursuant to the Comprehensive Environmental Response, Compensation
and Liability Act, 42 U.S.C. {section} 9601 et seq, (CERCLA) or similar state
statutes, or any notice letter under CERCLA or similar state statutes alleging
that the Seller is a potentially responsible party with respect to the
investigation or cleanup of any Release of Hazardous Material at any location;
and (vii) there have been no Releases of any Hazardous Material that could
reasonably be expected to form the basis of any claim or Action against the
Seller under any Environmental Law, which if adversely determined against the
Seller, would reasonably be likely to result in Damages in excess of $100,000,
provided, however, in the case of clauses (i) through (vii) without giving
effect to any amendment or supplement from and after the date hereof of such
Environmental Laws.
Section 3.21. [INTENTIONALLY OMITTED].
Section 3.22. BROKERS' OR FINDERS' FEES, ETC. Except as previously
disclosed to the Purchaser, no broker, finder or investment banker is entitled
to any brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of the Seller and the Purchaser is not nor shall at or after Closing
be, obligated to pay any such fees or commissions to any Person.
Section 3.23 RESIDENCY. The Seller is not a non-resident of Canada
for the purposes of the Tax Act.
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Section 3.24 GST AND QST. The Seller is registered for GST and QST
purposes and its registration numbers for such purposes are 873008189 RT 0010
and 1020908293, respectively.
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EXHIBIT C
REPRESENTATIONS AND WARRANTIES
OF
THE PURCHASER
Section 4.01. ORGANIZATION AND GOOD STANDING.
(a) The Purchaser (i) is a partnership duly formed, validly existing
and in good standing under the laws of its jurisdiction of formation and (ii)
has the requisite power (x) to own and lease its Property and (y) except for
such franchises, licenses, permits, authorizations and approvals the lack of
which, individually or in the aggregate, have not had and could not reasonably
be expected to have a material adverse effect on its ability to consummate the
transactions contemplated hereby or to carry on its business as now being
conducted. Each of the Partners (i) is duly organized, validly existing and in
good standing under the laws of its jurisdiction of establishment and (ii) has
the requisite power (x) to own and lease its Property and (y) except for such
franchises, licenses, permits, authorizations and approvals the lack of which,
individually or in the aggregate, have not had and could not reasonably be
expected to have a material adverse effect on its ability to consummate the
transactions contemplated hereby or to carry on its business as now being
conducted. The Partners are all the partners of the Partnership.
(b) GE US (i) is duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation and (ii) has the
requisite power (x) to own and lease its Property and (y) except for such
franchises, licenses, permits, authorizations and approvals the lack of which,
individually or in the aggregate, have not had and could not reasonably be
expected to have a material adverse effect on its ability to execute, deliver
and perform its obligations under the GE Guaranty.
Section 4.02. CORPORATE AUTHORITY.
(a) The Purchaser has all requisite power and authority to execute
and deliver, and to perform the Purchaser's obligations under, this Agreement,
each Ancillary Agreement and the other documents to be executed and delivered
by the Purchaser pursuant hereto or thereto. Each of this Agreement, the
Ancillary Agreements and the other documents to be executed and delivered by
the Purchaser pursuant hereto or thereto has been duly authorized by all
necessary action and has been (or, in the case of the Ancillary Agreements and
the other documents to be delivered at Closing, will be at the Closing) duly
executed and delivered by the Purchaser and is (or will be at the Closing) the
valid and binding obligation of the Purchaser, enforceable against it in
accordance with its terms, except as enforcement thereof may be limited by the
Bankruptcy Exception.
(b) GE US has all requisite power and authority to execute and
deliver, and to perform its obligations under, the GE Guaranty and the other
documents to be executed and delivered by it pursuant hereto or thereto. Each
of the GE Guaranty and the other documents to be executed and delivered by GE
US pursuant hereto or thereto has been duly authorized by all necessary action
and has been (or the GE Guaranty will be at the Closing) duly executed and
delivered by GE US and is (or will be at the Closing) the
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valid and binding obligation of GE US, enforceable against it in accordance
with its terms, except as enforcement thereof may be limited by the Bankruptcy
Exception.
Section 4.03. NO CONFLICTS.
(a) Neither the execution and delivery of this Agreement by the
Purchaser, any Ancillary Agreement or any other document to be executed and
delivered in connection herewith or therewith by the Purchaser, nor the
compliance by the Purchaser with the terms and provisions hereof or thereof,
nor the consummation by the Purchaser of the transactions contemplated hereby
or thereby will conflict with, constitute a default under, or result in a
breach of any of the terms, conditions or provisions of, or create a right of
termination or cancellation (determined without giving effect to the
provisions of Section 2.07 hereof) under, (i) the partnership agreement of the
Purchaser, (ii) any Law to which the Purchaser or any of its Property is
subject or (iii) any agreement, contract or commitment to which the Purchaser
is a party or to which any of its Property is subject, except for such
conflicts, defaults or breaches that, individually or in the aggregate, would
not reasonably be expected to have a material adverse effect on the ability of
the Purchaser to consummate the transactions contemplated herein.
(b) Neither the execution and delivery by GE US of the GE Guaranty
or any other document to be executed and delivered by GE US in connection
herewith or therewith nor compliance by GE US with the terms and provisions
thereof nor the consummation by GE US of the transactions contemplated thereby
will constitute a default under or result in a breach of any of the terms,
conditions or provisions of or create a right of termination or cancellation
(determined without giving effect to the provisions of Section 2.07) under (i)
the certificate of incorporation (or equivalent document) or by-laws (or
equivalent document) of GE US or (ii) any Law to which GE US is subject.
Section 4.04. CONSENTS. The execution and delivery of this
Agreement, any Ancillary Agreement or any other document to be executed and
delivered by the Purchaser pursuant hereto or thereto or the consummation by
the Purchaser of the transactions contemplated hereby or thereby, will neither
require any notices, reports or other filings to be made by the Purchaser
with, nor require any consents, licenses, permits, Authorizations or approvals
required to be obtained by the Purchaser from, (i) any Governmental Entity or
(ii) any other Person, other than the failure of which to obtain or make in
respect of this clause (ii) would not reasonably be expected to have a
material adverse effect.
Section 4.05. AVAILABLE FUNDS. The Purchaser has or has available to
it all funds necessary to satisfy all of its obligations hereunder, and its
ability to consummate the transactions contemplated by this Agreement is not
dependent or conditional upon the receipt of financing (whether debt or
equity) from any third party.
Section 4.06. BROKERS' OR FINDERS' FEES, ETC. No broker, finder or
investment banker is entitled to any brokerage, finder's or other fee or
commission in
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connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of the Purchaser.
Section 4.07. GST AND QST. The Purchaser is registered for GST and
QST purposes and its registration numbers for such purposes are 869583906 and
1205283150, respectively. To the extent any Acquiring Entity's purchase of any
Purchased Assets is subject of GST or QST, the Acquiring Entity shall be
registered for GST and QST, respectively, and its registration numbers
therefor shall be as set forth on a certificate to be delivered at Closing by
the Purchaser pursuant to Section 6.02(a).
Section 4.08. PROVINCIAL SALES TAX. The Purchaser is registered for
provincial sales tax in the Provinces of Ontario, British Columbia,
Saskatchewan, Manitoba and Prince Edward Island and its registration numbers
for such purposes are 8273-4755, R363033, 1958818, 054525-1 and 191867,
respectively. To the extent any Acquiring Entity's purchase of any Purchased
Assets is subject of any provincial sales tax in the Provinces of Ontario,
British Columbia, Saskatchewan, Manitoba or Prince Edward Island, the
Acquiring Entity shall be registered for provincial sales tax in such
province(s) and its registration numbers therefor shall be as set forth on the
certificate to be delivered at Closing by the Purchaser pursuant to Section
6.02(a).
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