EXHIBIT 2.1
Execution Copy
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ACQUISITION AGREEMENT
by and between
COMDISCO, INC.,
as Seller,
and
SUNGARD DATA SYSTEMS INC.
as Purchaser
Dated effective as of July 15, 2001
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
ARTICLE I
PURCHASE AND SALE OF ASSETS 2
Section 1.1 Acquired Assets 2
Section 1.2 Excluded Assets 6
Section 1.3 Assumed Liabilities 8
Section 1.4 Excluded Liabilities 8
Section 1.5 Purchase Price 9
Section 1.6 Purchase Price Adjustment 11
Section 1.7 Allocation of Purchase Price for Tax Purposes 13
Section 1.8 Escrow Agreement 13
Section 1.9 Title Insurance; Title Matters 14
Section 1.10 Trademarks and Tradenames 14
Section 1.11 Assignment of the Purchaser's Rights 14
Section 1.12 Transition Services 15
Section 1.13 King of Prussia Facility 15
ARTICLE II
THE CLOSING 15
Section 2.1 Closing 15
Section 2.2 Deliveries at Closing 15
Section 2.3 Optional Delay of Closing for Comdisco France 17
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLER 18
Section 3.1 Organization 18
Section 3.2 Capitalization of Business Subs 18
Section 3.3 Authority Relative to this Agreement 19
Section 3.4 Consents and Approvals 19
Section 3.5 Financial Statements 20
Section 3.6 No Violations 20
Section 3.7 No Default; Compliance with Applicable Laws; Permits. 21
Section 3.8 Books and Records 21
Section 3.9 Title to Property 22
Section 3.10 Ability to Conduct Business 22
Section 3.11 Conduct of Business 22
Section 3.12 No Undisclosed Liabilities 22
i
Section 3.13 Taxes 23
Section 3.14 Property Leases 25
Section 3.15 Owned Real Property 25
Section 3.16 Real Property 25
Section 3.17 Litigation 28
Section 3.18 Environmental Compliance 28
Section 3.19 Intellectual Property 29
Section 3.20 Contracts 33
Section 3.21 Employment and Labor Matters 33
Section 3.22 Employee Benefits 35
Section 3.23 Brokers 38
Section 3.24 Accuracy 38
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER 38
Section 4.1 Organization 38
Section 4.2 Authority Relative to this Agreement 39
Section 4.3 Consents and Approvals 39
Section 4.4 No Violations 39
Section 4.5 Brokers 40
Section 4.6 Financing 40
ARTICLE V
COVENANTS 40
Section 5.1 Bankruptcy Actions 40
Section 5.2 Intentionally Left Blank 41
Section 5.3 Compliance With Bidding Procedures Process; Maintenance of
Confidentiality 41
Section 5.4 Conduct of Business by the Seller Pending the Closing 42
Section 5.5 Access and Information 45
Section 5.6 Approvals and Consents; Cooperation; Notification 45
Section 5.7 Additional Matters 47
Section 5.8 Employment of Business Employees 47
Section 5.9 Termination of Consent Decree. 50
Section 5.10 Books and Records 50
Section 5.11 Termination of Intercompany Agreements 51
Section 5.12 Nominal Shareholders of Comdisco France 51
Section 5.13 Capital Expenditures 51
Section 5.14 Release of Guarantees 51
Section 5.15 Maintenance of Properties 52
ii
Section 5.16 Joinder of Selling Subs 52
Section 5.17 Insurance 52
Section 5.18 Web Hosting Reduction in Force 52
Section 5.19 Real Estate Credits and Prorations 53
Section 5.20 Confidentiality 53
ARTICLE VI
CONDITIONS PRECEDENT 53
Section 6.1 Conditions Precedent to Obligation of the Seller and the
Purchaser 53
Section 6.2 Conditions Precedent to Obligation of the Seller 55
Section 6.3 Conditions Precedent to Obligation of the Purchaser 56
ARTICLE VII
TERMINATION, AMENDMENT, AND WAIVER 56
Section 7.1 Termination by Mutual Consent 56
Section 7.2 Termination by Either the Purchaser or the Seller 57
Section 7.3 Termination by the Purchaser 57
Section 7.4 Effect of Termination and Abandonment 58
ARTICLE VIII
GENERAL PROVISIONS 58
Section 8.1 Indemnification 58
Section 8.2 Transfer Taxes; Section 338 Election 65
Section 8.3 Notices 66
Section 8.4 Descriptive Headings 67
Section 8.5 Entire Agreement; Assignment 67
Section 8.6 Governing Law 67
Section 8.7 Expenses 67
Section 8.8 Amendment 68
Section 8.9 Waiver 68
Section 8.10 Counterparts; Effectiveness 68
Section 8.11 Severability; Validity; Parties in Interest 68
Section 8.12 Bulk Sales 68
Section 8.13 Transfers Not Effected as of Closing 68
ARTICLE IX
DEFINITIONS 69
iii
TABLE OF SCHEDULES*
- ------------------
Schedule A Transferred Subs
Schedule B Business Subs
Schedule 1.1(b)(ii)(A) Customer Contracts
Schedule 1.1(b)(ii)(B) Vendor and Service Contracts
Schedule 1.1(b)(ii)(D) Other Contracts
Schedule 1.1(b)(iii) Tangible Personal Property
Schedule 1.1(b)(iv) Acquired Intellectual Property
Schedule 1.1(b)(vi)(A) Owned Real Property
Schedule 1.1(b)(vi)(B) Property Leases
Schedule 1.1(b)(vii) Permits
Schedule 1.1(b)(viii) Other Equity Interests
Schedule 1.1(b)(ix) Bank Accounts and Lockbox Arrangements
Schedule 1.1(b)(x) Prepaid Items
Schedule 1.1(b)(xvi) Other Acquired Assets
Schedule 1.2(d) Excluded Contracts
Schedule 1.2(i) Other Excluded Assets
Schedule 1.2(l) Excluded Corporate Services and Assets
Schedule 1.3 Assumed Liabilities
Schedule 1.3(ii) Property Lease Guarantees or Letters of Credit
Schedule 5.10 Intercompany Agreements
Schedule 5.12 Capital Expenditure Plan
TABLE OF EXHIBITS*
- -----------------
Exhibit A Form of Bill of Sale
Exhibit B Form of Assignment and Assumption Agreement
Exhibit C Form of Transition Services Agreement
Exhibit D (Intentionally omitted)
Exhibit E Form of Section 363/365 Order
Exhibit F Form of Trademark License Agreement
Exhibit G Form of Escrow Agreement
Exhibit H Bidding Procedures
Exhibit I Form of Joinder
* Omitted. The registrant agrees to furnish supplementally a copy of any
omitted document to the Commission upon request.
iv
ACQUISITION AGREEMENT
THIS ACQUISITION AGREEMENT (the "Agreement"), dated effective as of
July 15, 2001 (the "Effective Date") and executed as of October 12, 2001 (the
"Execution Date"), is made by and between Comdisco, Inc., a Delaware corporation
(the "Seller"), and SunGard Data Systems Inc., a Delaware corporation (the
"Purchaser"). Capitalized terms used herein and not otherwise defined shall
have the meanings set forth in Article IX.
WHEREAS, the Seller is engaged (either directly or indirectly through
one or more wholly-owned direct or indirect subsidiaries) in, among other
businesses not subject to this Agreement, the business of providing availability
and continuity solutions, including continuity and disaster recovery services
for information technology and data, software products, related consulting
services and managed web hosting services in the United States, Canada, France
and the United Kingdom and elsewhere pursuant to strategic alliances (excluding
the business conducted by the Excluded Subs, the "Business");
WHEREAS, the Seller, along with certain of its Affiliates, has filed
voluntary petitions (the "Petitions") for relief commencing cases
(collectively, the "Chapter 11 Case") under Chapter 11 of Title 11 of the United
States Code (the "Bankruptcy Code") in the United States Bankruptcy Court for
the Northern District of Illinois (the "Bankruptcy Court");
WHEREAS, the Purchaser desires to purchase and acquire and the Seller
desires to sell, convey, assign and transfer, or cause to be sold, conveyed,
assigned and transferred, to the Purchaser, the Acquired Assets and the
Purchaser is willing to assume, and the Seller desires to assign and delegate to
the Purchaser, the Assumed Liabilities, all in the manner and subject to the
terms and conditions set forth herein and in accordance with Sections 105, 363
and 365 of the Bankruptcy Code;
WHEREAS, the Seller and certain of its subsidiaries intend to continue
in the management and possession of their assets and businesses as debtors-in-
possession in the Chapter 11 Case pursuant to Sections 1107 and 1108 of the
Bankruptcy Code and subject to the terms and conditions of this Agreement; and
WHEREAS, the Purchaser desires to purchase and acquire, and the Seller
desires to sell and transfer, or cause to be sold and transferred, to the
Purchaser all of the equity interests directly or indirectly owned by the Seller
(the "Interests") in
the subsidiaries of the Seller set forth on Schedule A (each a "Transferred Sub"
and collectively, the "Transferred Subs") in the manner and subject to the terms
and conditions set forth herein and in accordance with Sections 105, 363 and 365
of the Bankruptcy Code (together with the sale and purchase of the Acquired
Assets and the assignment and assumption of the Assumed Liabilities, the
"Acquisition").
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants, and agreements set forth herein, the
parties hereto agree as follows:
ARTICLE I
PURCHASE AND SALE OF ASSETS
Section 1.1 Acquired Assets. On the terms and subject to the
conditions set forth in this Agreement and subject to approval of the Bankruptcy
Court pursuant to Sections 105, 363 and 365 of Bankruptcy Code, at the Closing
the Seller shall sell, assign, transfer, convey, and deliver, and cause its
Affiliates (including any Selling Sub) to sell, assign, transfer, convey and
deliver, to the Purchaser, free and clear of all liens, claims, and encumbrances
of any nature except for Permitted Exceptions, and the Purchaser shall purchase
and accept from the Seller and the Selling Subs:
(a) all right, title and interest of the Seller and of each
Selling Sub in and to the Interests;
(b) all right, title, and interest of the Seller and its
Affiliates in and to any and all assets of every kind and description, whether
tangible or intangible, real, personal or mixed, wherever situated, owned, held
or used by the Seller or its Affiliates (including any Selling Sub) or in which
the Seller or its Affiliates (including any Selling Sub) has any right, title or
interest that is owned, directly or indirectly, leased or otherwise held
primarily for use in the Business, except for Excluded Assets, (collectively,
the "Acquired Assets"). Without limiting the foregoing, the Acquired Assets
shall include:
(i) all billed and unbilled accounts receivable
(including income earned in advance), notes receivable and other evidences
of indebtedness of any Person (other than the Seller or any subsidiary of
the Seller) and rights to receive payments from any Person (other than the
Seller or any subsidiary of the Seller), includ-
2
ing without limitation any rights or claims with respect to third-party
collection procedures to the extent arising out of the operation of the
Business (the "Accounts Receivable");
(ii) all rights and incidents of interest of the Seller
and of each Selling Sub to:
(A) all of the master technology services
agreements, master agreements, master business continuity agreements,
professional services agreements, web hosting agree ments, software licensing
agreements, schedules and supplements thereto, oral or written (the "Customer
Contracts"), between the Seller (or one of the Selling Subs) and a customer
primarily relating to the Business, including without limitation such of the
foregoing as are listed or described on Schedule 1.1(b)(ii)(A);
(B) all of the agreements, contracts and
arrangements, oral or written, between the Seller (or one of the Selling Subs)
and a vendor or other third party providing goods or services including
strategic alliances primarily relating to the Business ("Vendor Agreements"),
including without limitation such of the foregoing as are listed or described on
Schedule 1.1(b)(ii)(B) , but excluding those Vendor Agreements to the extent
they relate solely to the leased real property at King of Prussia, PA, 480
Carlstadt, NJ, E Rutherford NJ, Fremont, CA and Newark, NJ ("Excluded
Facilities"), regardless of whether listed or described on Schedule
1.1(b)(ii)(B); and
(C) all of the agreements, contracts and
arrangements between the Seller (or one of the Selling Subs) and the past and
current employees but only to the extent relating to confidentiality,
assignment of invention or non-competition relating to the Business and to the
extent assignable;
(iii) all Tangible Personal Property owned by, or on
order to be delivered to, the Seller or a Selling Sub, that is used
primarily in the operation of the Business including, without limitation,
(a) Tangible Personal Property located on, or to be delivered to, any
Owned Real Property or premises subject to the Property Leases or premises
of a customer of the Business or at an Excluded Facility and (b) such of
the foregoing as are listed or described on Schedule 1.1(b)(iii);
3
(iv) all Intellectual Property used primarily in the
operation of the Business, including without limitation the Intellectual
Property listed or described in Schedule 1.1(b)(iv) and all causes of
action resulting from any infringement or violation thereof (together with
all Intellectual Property of the Transferred Subs, the "Acquired
Intellectual Property"); provided that, Purchaser hereby grants to the
Seller as of the Closing Date a perpetual, royalty-free license to the
Contract Admin software and the Prosper software on an "as is" basis with
no warranty, for internal purposes;
(v) all rights and claims relating primarily to the
Business, including rights and claims under all warranties, representations
and guarantees made by suppliers, manufacturers and contractors in
connection with the Acquired Assets;
(vi) (A) land described on Schedule 1.1(b)(vi)(A) and all
buildings, other improvements and fixtures thereon and all easements,
rights and appurtenances relating thereto (the "Owned Real Property"), (B)
the real property leases and subleases used primarily in the operation of
the Business that are listed or described in Schedule 1.1(b)(vi)(B) (the
"Property Leases"); (C) the leases and subleases that are listed and
described on Schedule 1.1(b)(vi)(C) and (D) the service agreements
primarily relating to the Real Property;
(vii) to the extent transferrable, all Permits issued
to Seller or a Selling Sub by any Governmental Entity primarily relating
to the operation of the Business, including without limitation such of the
foregoing as are listed or described on Schedule 1.1(b)(vii), and all
Permits relating to the ownership, use, operation and construction of the
Owned Real Property and the property that is the subject of any of the
Property Leases;
(viii) the preferred and common stock, warrants and
other equity interests or investments that are listed or described on
Schedule 1.1(b)(viii);
(ix) the bank accounts and lockbox arrangements
primarily relating to the Business that are listed or described on Schedule
1.1(b)(ix) (excluding all rights or incidents of interest with
4
respect to the cash or cash equivalents in such bank accounts or lock box
arrangements prior to and as of the Closing Date);
(x) all prepaid items or deposits (including without
limitation real property security deposits for real property included in
the Acquired Assets whether or not listed or described on Schedule
1.1(b)(x)) existing on the Effective Date relating to the Business that are
listed or described on Schedule 1.1(b)(x) or that relate primarily to the
Business arising in the ordinary course after the Effective Date;
(xi) all goodwill primarily related to the Business;
(xii) all books and records of the Seller and the
Selling Subs primarily relating to the operation of the Business and
reasonably required by the Seller for the operation of the Business, and
which do not pertain to areas of the Seller's business other than the
Business, including without limitation all employment records (with respect
to the Transferred Employees and subject to applicable privacy laws), sales
and business records, customer and supplier lists, advertising and
promotional materials, files, indices, market research studies, analyses
and similar information, marketing brochures and materials and other
nonproprietary printed or written materials in any form or medium relating
to the ownership or operation of the Business that the Seller is not
required by law to retain (of which the Seller may retain duplicates), and
duplicates of any such materials that the Seller is required by law to
retain;
(xiii) all other assets reflected on the Financial
Statements (other than assets disposed of since the date thereof in the
ordinary course and as permitted under this Agreement) and all other assets
obtained since the date of the latest Financial Statements that would have
been reflected in the Financial Statements had they been owned at the time
of such Financial Statements;
(xiv) all documents, plans, data, books, records,
software and other similar items relating to the Real Property in the
possession or control of the Seller, including, without limitation, (i) all
as built plans, specifications and drawings for the Real Property, (ii) all
manuals, diagrams, shop drawings, warranties and
5
related data concerning the Real Property and the use, maintenance and
operation of the systems and facilities related thereto, (iii) keys to the
improvements on the Real Property, (iv) security codes, passwords and
identification numbers pertaining to the operation of the Real Property,
(v) books and records of the Seller pertaining to the operation, ownership,
leasing, maintenance and use of the Real Property, including, without
limitation, books and records with respect to payment and reconciliation of
additional rent paid by tenants or subtenants under any of the Leases and
paid by the Seller, as tenant or subtenant, under any of the Property
Leases; and (vi) all computer software and computer files required to
operate the building systems and security systems for Real Property;
(xv) all Databases owned or leased by the Seller or a
Selling Sub that are used primarily in the Business;
(xvi) all the rights, properties or assets that are
listed or described on Schedule 1.1(b)(xvi);
(xvii) all rights of subrogation in respect of the
Assumed SIP Guarantees (the "Transferred Subrogation Rights"); and
(xviii) all intercompany accounts receivable (A) owed
by a Transferred Sub to the Seller or its Affiliate or (B) owed by a
division of Seller to another division of Seller arising from the operation
of the Business.
Section 1.2 Excluded Assets. Notwithstanding anything contained in
this Agreement to the contrary, the following rights, properties and assets
(collectively, the "Excluded Assets") will not be included in the Acquired
Assets:
(a) all cash, cash equivalents, checks which have been
received but not cleared or marketable securities of the Seller and the Selling
Subs, other than prepaid items or deposits that are Acquired Assets;
(b) all of the Accounts Receivable that have been satisfied or
discharged prior to the Closing;
(c) all of the agreements, contracts and arrangements that have
terminated or expired prior to the Closing by their terms and in the ordinary
6
course other than agreements, contracts and arrangements under which Seller or
the Selling Subs have rights thereunder that survive termination or expiration
(e.g. confidentiality provisions);
(d) any agreement, contract or arrangement or portion thereof that is
listed or described on Schedule 1.2(d) (the "Excluded Contracts");
(e) any avoidance actions or other similar causes of action arising
solely under Sections 544 through 553, inclusive, of the Bankruptcy Code;
(f) any Tangible Personal Property or other tangible personal property
or equipment listed on Schedule 1.1(b)(xvi) transferred or disposed of in the
ordinary course and as permitted under this Agreement;
(g) the company seal, minute books, charter documents, stock or equity
record books and such other books and records as pertain to the organization,
existence or capitalization of the Seller and each Selling Sub as well as any
other records or materials relating to the Seller or any Selling Sub generally
and not involving or related to the Acquired Assets, the Interests or the
operations of the Business;
(h) all contracts of insurance;
(i) any right, property or asset that is listed or described on
Schedule 1.2(i);
(j) the word and name "Comdisco" and the Seller's monograms, logos,
trademarks, trade names or any variations or combinations thereof including such
word or name;
(k) any right the Seller or a Selling Sub has with respect to Tax
refunds, claims for Tax refunds and Tax attributes;
(l) the corporate services and assets described on Schedule 1.2(l);
(m) all Seller Plans subject to U.S. jurisdiction (including all bonus
and commission plans) and all Seller Plans which are stock option plans and all
agreements related thereto, including all agreements related to the
administration of any Seller Plan;
7
(n) all rights of subrogation in respect of the SIP Guarantees other
than the Transferred Subrogation Rights; and
(o) the quotas or equity interests of Comdisco Continuity Services
Deutchland GmbH and the Comdisco Espana S.L. (the "Excluded Subs") (and, by
extension, all of the rights, assets and properties of the Excluded Subs).
Section 1.3 Assumed Liabilities. On the terms and subject to the
conditions set forth in this Agreement, at the Closing, the Purchaser shall
assume from the Seller and its Affiliates and thereafter pay, perform or
otherwise discharge in accordance with their terms, and shall hold the Seller
and its Affiliates harmless from all of the liabilities and obligations (of any
nature or kind, and whether based in common law or statute or arising under
written contract or otherwise, known or unknown, fixed or contingent, accrued or
unaccrued, liquidated or unliquidated, real or potential) of the Seller and its
Affiliates only the liabilities that are specified in this paragraph: (i) with
respect to, arising out of or relating to, the ownership, possession or use of
the Acquired Assets, including without limitation, the agreements, contracts
and arrangements included in the Acquired Assets from and after the Closing, and
the operation of the Business from and after the Closing; (ii) in connection
with the guarantees or letters of credit related to property leases as listed or
described in Schedule 1.3(ii) other than Property Leases relating to Real
Property located in the United States; (iii) with respect to all intercompany
payables (A) owed or payable to any Transferred Sub or (B) owed or payable to a
division of Seller or its Affiliates arising from the operation of the Business
(which includes only the payables in connection with the accounts receivable
acquired pursuant to Section 1.1(b)(xviii)); (iv) with respect to the Assumed
SIP Guarantees and (v) as listed or described in Schedule 1.3 (collectively, the
"Assumed Liabilities").
Section 1.4 Excluded Liabilities. The Purchaser shall not assume or
agree to pay, perform or otherwise discharge any liabilities, obligations or
expenses of the Seller or its Affiliates (other than the Transferred Subs) other
than the Assumed Liabilities (the "Excluded Liabilities"). Without limiting
the generality of the foregoing, the Seller shall pay any and all liabilities
for the cure, compensation and reinstatement costs and expenses of or relating
to the assumption and assignment of the contracts, leases and other agreements
included in the Acquired Assets assumed by and assigned to the Purchaser
hereunder pursuant to Section 365 of the Bankruptcy Code and the Purchaser
shall have no liability for or obligation in respect of:
(i) the Seller's professional fees and expenses for its
advisers, including without limitation, advisers retained pursuant to an
order of the Bankruptcy Court;
8
(ii) the Chapter 11 Expenses;
(iii) obligations, liabilities or amounts payable to any security
holder of the Seller;
(iv) obligations of any nature arising under any Property Lease,
Lease or service agreement relating to leased property prior to the Closing
Date on which such lease is assumed by the Seller and assigned to the
Purchaser; provided, however, notwithstanding the foregoing, but subject
to Section 5.15, neither the Seller, nor any Selling Sub, shall be liable
or responsible for the performance of any repairs or maintenance whatsoever
required under any lease from and after the Closing Date (regardless of
whether the need for such repairs or maintenance arose prior to the Closing
Date);
(v) obligations or liabilities of the Transferred Subs, which
shall remain obligations and liabilities of such Transferred Subs;
(vi) the Seller's or its Affiliates' obligations or liabilities
arising under Environmental Laws relating to the Owned Real Property or the
real property subject to the Property Leases arising during the Seller's or
its Affiliate's ownership or use thereof;
(vii) trade payables or general unsecured claims or any other
liability not expressly assumed under this Agreement;
(viii) except as provided in Section 5.8, any compensation,
severance or benefit expense accruing prior to Closing with respect to
Transferred Employees and Mismatched Employees, including, without
limitation, under the Incentive Plans; and
(ix) any liability relating to any Excluded Asset.
Section 1.5 Purchase Price. (a) In consideration for the Acquired
Assets and the Interests, the Purchaser shall, in addition to the assumption of
the Assumed Liabilities, pay to the Seller at the Closing in cash by wire
transfer of immediately available funds to an account or accounts designated by
the Seller the
9
Estimated Cash Purchase Price less sixty million dollars ($60,000,000) (the
"Escrow Amount"), which the Purchaser shall deposit into the Escrow Account and
which shall be held in accordance with the terms of the Escrow Agreement. The
"Unadjusted Cash Purchase Price" under this Agreement shall be eight hundred
twenty-five million dollars ($825,000,000), provided that, the following occur:
(i) the Official Committee of Unsecured Creditors in
the Chapter 11 Case (The "Creditor's Committee") and the Official Equity
Committee in the Chapter 11 Case (the "Equity Committee") shall have
confirmed on the record at the auction held on October 11, 2001 their
support for this Agreement and the adequacy of the purchase price and
terms of this Agreement;
(ii) the offer in this Agreement shall have been
declared the highest or otherwise best offer following the conclusion of
the auction held on October 11, 2001, with the support and approval of the
Seller's board of directors; and
(iii) the Creditor's Committee, the Equity Committee
and the Seller shall not have withdrawn their support before the conclusion
of the Sale Hearing scheduled for October 23, 2001, shall have advised the
Bankruptcy Court that this Agreement should be approved by the Bankruptcy
Court and shall use reasonable best efforts to obtain such approval.
If the events or actions set forth in Sections 1.5(a)(i), 1.5(a)(ii) and
1.5(a)(iii) shall not have occurred, the Unadjusted Cash Purchase Price under
this Agreement shall be eight hundred million dollars ($800,000,000). The
Unadjusted Cash Purchase Price as it may be adjusted pursuant to Section 1.6,
shall be the "Cash Purchase Price" under this Agreement.
(b) The Seller shall deliver to the Purchaser prior to the Closing
Date, and shall use its reasonable best efforts to make such delivery not less
than five days prior to the scheduled Closing Date, a notice setting forth the
Seller's good faith calculation of the Working Capital of the Business as of a
date not more than 10 days prior to the Closing Date and certifying to such
estimates. If such estimate reflects a Working Capital Deficiency, the amount
of such Working Capital Deficiency shall be subtracted from the Unadjusted Cash
Purchase Price and if such estimate reflects a Working Capital Surplus, the
amount of such Working Capital Surplus shall be added to the Unadjusted Cash
Purchase Price. The Unadjusted Cash Purchase Price as so adjusted shall be the
"Estimated Cash Purchase Price."
10
Section 1.6 Purchase Price Adjustment. (a) The Unadjusted Cash
Purchase Price shall be adjusted following the Closing as follows:
(i) if the amount of the Working Capital of the
Business (determined in accordance with this Section 1.6) as of the Closing
Date is less than thirty six million, one hundred thousand dollars
($36,100,000), the Unadjusted Cash Purchase Price shall be decreased by an
amount equal to such difference (the "Working Capital Deficiency") and the
Unadjusted Cash Purchase Price, as so adjusted, will be the Cash Purchase
Price;
(ii) if the amount of the Working Capital of the
Business (determined in accordance with this Section 1.6) as of the Closing
Date is greater than thirty six million, one hundred thousand dollars
($36,100,000), the Unadjusted Cash Purchase Price shall be increased by an
amount equal to such difference (the "Working Capital Surplus") and the
Unadjusted Cash Purchase Price, as so adjusted, will be the Cash Purchase
Price; and
(iii) if the amount of the Working Capital of
Business (determined in accordance with this Section 1.6) as of the Closing
Date is equal to thirty six million, one hundred thousand dollars
($36,100,000), the Unadjusted Cash Purchase Price will be the Cash Purchase
Price.
The Purchaser shall pay the Seller the amount of any positive difference between
the Cash Purchase Price and the Estimated Cash Purchase Price. The Seller shall
return to the Purchaser the amount of any positive difference between the
Estimated Cash Purchase Price and the Cash Purchase Price. Any amounts required
to be paid or returned pursuant to this Section 1.6(a) (i) by the Purchaser
shall be paid by wire transfer of immediately available funds to the accounts
specified by the Seller and (ii) by the Seller shall be paid to the Purchaser
from the Escrow Account, in each case within five business days after the amount
of Working Capital is agreed to by the Seller and the Purchaser or any remaining
disputed items are ultimately determined by the Accountants.
(b) As used herein, the term "Working Capital" shall mean, as
reflected on the Working Capital Statement, the sum of cash held by the
Transferred Subs, accounts receivable (excluding that portion of accounts
receivable which is aged more than 120 days as of the Closing Date), and earned
in advance of
11
billing minus deferred revenue and accounts payable with respect to the
Transferred Subs, but, with respect to such of the foregoing as are related to
the Seller or a Selling Sub (and not a Transferred Sub), only to the extent such
accounts receivable constitute Acquired Assets; it being understood that cash
held by the Seller and the Selling Subs are not Acquired Assets and should not
be included in Working Capital but that cash held by a Transferred Sub should be
included in Working Capital. The term "Working Capital Statement" shall mean the
statement of Working Capital of the Business to be prepared by the Seller as of
the Closing Date in accordance with this Section 1.6 and to be delivered to the
Purchaser as promptly as practicable and in any event within 30 days after the
Closing Date. The Working Capital Statement shall be prepared by the Seller
using the same accounting principles, procedures, policies and methods that were
used to prepare the Balance Sheet, and the Seller shall certify in writing to
the Purchaser on the delivery date of the Working Capital Statement that the
Working Capital Statement was so prepared.
(c) During the preparation of the Working Capital Statement and the
period of any dispute within the contemplation of this Section 1.6, to the
extent reasonably necessary for the preparation of the Working Capital
Statement, the Purchaser shall and shall cause the Transferred Subs and any
other Affiliates of the Purchaser to (i) provide the Seller and the Seller's
authorized representatives with reasonable access to the books, records,
facilities and employees of the Business, (ii) provide the Seller as promptly as
practicable after the Closing Date (but in no event later than 10 business days
after the Closing Date) with financial information consistent with the Seller's
existing financial reporting requirements for the Business for the period
ending on the Closing Date and (iii) cooperate fully with the Seller and the
Seller's authorized representatives, including the provision on a timely basis
of all information necessary or useful in preparing the Working Capital
Statement.
(d) The Working Capital Statement shall be final and binding on the
parties unless, within 15 days after delivery to the Purchaser, written notice
is given by the Purchaser to the Seller and the Escrow Agent of its objection
setting forth in reasonable detail the Purchaser's basis for objection. The
Purchaser may dispute items reflected on the Working Capital Statement only on
the basis that such items were not arrived at in conformity with the accounting
principles, procedures, policies and methods that were used to prepare the
Balance Sheet. If notice of objection is given, the parties shall consult with
each other with respect to the objection. Any amount that is not in dispute
will promptly be paid by the party obligated to make such payment hereunder to
the party entitled to receive such payment hereunder. If the parties are unable
to reach agreement within 15 days after the notice of objection has been given,
the dispute shall be submitted, as promptly as practicable, for resolution to
Deloitte & Touche (the "Accountants"). Each party
12
agrees to execute, if requested by the Accountants, a reasonable engagement
letter. The Accountants will make a determination, based solely on presentations
by the Seller and the Purchaser and not by independent review, as to (and only
as to) each of the items in dispute, which determination will be (i) in writing,
(ii) furnished to each of the parties hereto as promptly as practicable after
the items in dispute have been referred to the Accountants, (iii) made in
accordance with this Agreement and (iv) conclusive and binding upon each of the
parties hereto. In connection with their determination of the disputed items,
the Accountants will be entitled to rely on the accounting records and similar
materials prepared in connection with the preparation of the Working Capital
Statement, and the fees and expenses of the Accountants will be paid one-half by
the Purchaser and one-half by the Seller. Each of the Purchaser and the Seller
will use reasonable efforts to cause the Accountants to render their decision as
soon as reasonably practicable (but in no event later than 30 days following the
expiration of the 15-day period provided above for the Purchaser and the Seller
to resolve disputes prior to submission to the Accountants), including without
limitation by promptly complying with all reasonable requests by the Accountants
for information, books, records and similar items.
Section 1.7 Allocation of Purchase Price for Tax Purposes. The
parties agree that, for all Tax and other reporting purposes, the Purchaser
shall provide the Seller with an allocation of the Cash Purchase Price and the
Assumed Liabilities among the Acquired Assets, Assumed Liabilities and the
Interests within 90 days after the Closing Date in accordance with Section 1060
of the Code. The Seller shall have the right to propose changes to such
allocations, provided that the Purchaser shall have ultimate discretion to
reject any such proposals unless such rejection would be unreasonable. The
Seller and the Purchaser shall be bound by such allocation (and if necessary,
any adjusted allocation), and shall file, or cause to be filed, a Form 8594 and
all applicable federal, state, local, provincial and foreign income, franchise
and excise Tax Returns in a manner that is consistent with such allocation. If
the allocation is disputed by any Taxing Authority, the party receiving notice
of such dispute shall promptly notify the other party hereto concerning the
existence of such dispute and the parties shall consult with each other with
respect to all issues related to the allocation in connection with such dispute.
If the IRS proposes a different allocation, either party may file amended
returns based on such allocation.
Section 1.8 Escrow Agreement. At the Closing, the Seller, the
Purchaser and a financial institution in the United States to be mutually agreed
upon by the parties within ten days of the Execution Date (the "Escrow Agent"),
will enter into an escrow agreement in form and substance customary in similar
transactions and substantially in the form attached hereto as Exhibit G (the
"Escrow Agreement").
13
The Escrow Amount will be held and disposed of by the Escrow Agent pursuant to
the terms and conditions of the Escrow Agreement (the "Escrow Account"). All
reductions to the Unadjusted Cash Purchase Price in accordance with Section 1.6
and all obligations and liabilities of the Seller pursuant to Article VIII shall
be made or satisfied exclusively from the Escrow Account. Delivery of funds by
the Escrow Agent to the applicable parties shall be made pursuant to the terms
of the Escrow Agreement and all earnings thereon shall be distributed on a
monthly basis to the Seller.
Section 1.9 Title Insurance; Title Matters. The Seller shall provide
to the Purchaser within 20 business days of the parties' execution of this
Agreement a commitment for ALTA owner's policies of title insurance (or if ALTA
policies are not issued in the applicable jurisdiction, the most comprehensive
policy that may be lawfully issued) in customary form (collectively the "Title
Policies") with respect to each parcel of the Owned Real Property located in the
United States issued by a reputable title insurance company (the "Title
Company") which commits the Title Company to issue a Title Policy for each such
owned Real Property as of the Closing Date in the amount corresponding to the
value for the particular property set forth on Schedule 1.9 attached hereto
which insures the Purchaser (or its subsidiary) and its successors and assigns
that the Purchaser or its applicable subsidiary owns fee title to such Owned
Real Property, subject only to Permitted Exceptions. The Seller shall pay the
cost of the title examinations and the Purchaser shall pay at Closing the cost
of the premium for the Title Policies. The Seller shall deliver to the
Purchaser any surveys of the Real Property in its possession.
Section 1.10 Trademarks and Tradenames. It is expressly agreed that
the Purchaser is not purchasing, acquiring or otherwise obtaining any right
title or interest in and to the name Comdisco or any trade names, trademarks,
identifying logos or service marks related thereto or employing the word
Comdisco or any part or variation of any of the foregoing or any confusingly
similar trade names, trademark or logo. Notwithstanding the foregoing, the
Seller shall, enter into a Trademark License Agreement with the Purchaser (the
"Trademark License Agreement"), substantially in the form of Exhibit F attached
hereto.
Section 1.11 Assignment of the Purchaser's Rights. The Purchaser
shall have the right to assign, in whole or in part, any or all of its rights to
purchase the Interests, Acquired Assets and Business to one or more directly or
indirectly wholly-owned subsidiaries and to effect the Acquisition in whole or
in part through such subsidiaries; provided that prior to effecting any such
assignment, the Purchaser shall have unconditionally guaranteed the obligations
of the applicable subsidiary.
14
Section 1.12 Transition Services. The Seller shall provide to the
Purchaser the services currently provided to the Business, directly or
indirectly, by the Seller and listed or described in the Transition Services
Agreement or the schedules thereto, and the services provided at the Excluded
Facilities directly or indirectly, by the Seller on the Effective Date for a
period up to 6 months on the terms and subject to the conditions set forth in
the Transition Services Agreement.
Section 1.13 King of Prussia Facility. At the Closing, the Purchaser
shall pay to the Seller, in cash by wire transfer of immediately available funds
to an account or accounts designated by the Seller, one million five hundred
thousand dollars ($1,500,000) for certain of the estimated costs to the Seller
of Purchaser not acquiring the Excluded Facility in King of Prussia,
Pennsylvania.
ARTICLE II
THE CLOSING
Section 2.1 Closing. The consummation of the transactions
contemplated by this Agreement (the "Closing") shall take place at the offices
of Skadden, Arps, Slate, Meagher & Flom (Illinois), 333 West Wacker Drive,
Chicago, Illinois 60606 at 10:00 a.m. on the later of (i) as soon as reasonably
practicable after the entry by the Bankruptcy Court of the Section 363/365 Order
and (ii) at such other time, date, and place as shall be fixed by written
agreement between the parties (the date of the Closing being herein referred to
as the "Closing Date").
Section 2.2 Deliveries at Closing. (a) At the Closing, the Seller
shall deliver or cause to be delivered to the Purchaser:
(i) duly executed instruments or other evidence
sufficient to transfer to the Purchaser the unencumbered legal and
beneficial ownership of the Interests and all books and records of the
Transferred Subs, including evidence of transfer of any nominal director
shares, transfer forms and any local transfer agreements in applicable
jurisdictions outside the United States;
(ii) a duly executed bill of sale (the "Bill of
Sale"), substantially in the form of Exhibit A attached hereto,
transferring the Acquired Assets to the Purchaser;
(iii) all other duly executed conveyance documents
reasonably necessary to transfer to the Purchaser the
15
Acquired Assets, including (A) a special warranty deed with covenant
against grantor's acts for each Owned Real Property purchased by the
Purchaser in a form which is recordable and customary for the jurisdiction
in which the applicable Owned Real Property is located, (B) an affidavit of
title with respect to each Owned Real Property acquired by the Purchaser
in form satisfactory to the Title Company and (C) such other affidavits
with respect to each Owned Real Property as customarily and reasonably
required by the Title Company;
(iv) the Acquired Assets by making the Acquired
Assets available to the Purchaser at their present locations;
(v) the assignment and assumption agreement to
be entered into between the Seller and the Purchaser (the "Assignment and
Assumption Agreement"), substantially in the form of Exhibit B attached
hereto, duly executed by the Seller evidencing the assignment and
assumption by the Purchaser of the Assumed Liabilities;
(vi) the Mutual Release duly executed by Seller;
(vii) the transition services agreement to be
entered into between the Seller and the Purchaser (the "Transition Services
Agreement"), substantially in the form of Exhibit C attached hereto, duly
executed by the Seller;
(viii) customary instruments of assignment or
transfer, in form suitable for recording in the applicable office or
bureau, with respect to each trademark, copyright, or other item of
Acquired Intellectual Property requiring such an assignment and transferred
to the Purchaser hereunder;
(ix) the Trademark License Agreement, duly executed
by the Seller;
(x) the Escrow Agreement, duly executed by the
Seller;
16
(xi) a certificate of an officer of the Seller as
to the matters set forth in Section 6.3 (a), (b) and (c) of this Agreement;
and
(xii) resignations from each director of each
Transferred Sub.
(b) At the Closing, the Purchaser shall deliver to the
Seller:
(i) the Estimated Cash Purchase Price by
wire transfer in immediately available funds to an account or accounts
designated by the Seller, less the Escrow Amount;
(ii) the Assignment and Assumption Agreement
duly executed by the Purchaser;
(iii) the Transition Services Agreement duly
executed by the Purchaser;
(iv) the Trademark License Agreement, duly
executed by the Purchaser;
(v) the Escrow Agreement, duly executed by
the Purchaser; and
(vi) the Mutual Release duly executed by
Purchaser;
(vii) a certificate of an officer of the
Purchaser as to the matters set forth in Section 6.2 (a) and (b) of this
Agreement and all other previously undelivered certificates and other
documents required to be delivered by the Purchaser to the Seller at or
prior to the Closing Date in connection with the Acquisition.
(c) At the Closing, the Purchaser shall deliver to the
Escrow Agent the Escrow Amount by wire transfer in immediately available funds
to an account or accounts designated by the Escrow Agent.
17
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLER
Except as disclosed in the written statement delivered by the Seller
to the Purchaser at or prior to the execution of this Agreement (the "Seller
Disclosure Schedule"), the Seller represents and warrants to the Purchaser as
follows:
Section 3.1 Organization. The Seller and each Business Sub is
validly existing and in good standing (or its equivalent) under the laws of the
jurisdiction of its incorporation or organization and has the requisite power
and authority to own, lease and operate its properties and to carry on its
business as it is now being conducted, except where the failure to be so
existing and in good standing or to have such power and authority could not be
reasonably likely to have a Material Adverse Effect. The jurisdiction of
incorporation or organization of each Transferred Sub is set forth on Schedule
A. Each of the Seller and each Business Sub is duly qualified or licensed to do
business as a foreign corporation and is in good standing in each jurisdiction
in which the nature of the business conducted by it makes such qualification or
licensing necessary, except where the failure to be so duly qualified, licensed
and in good standing could not be reasonably likely to have a Material Adverse
Effect. Attached to the Seller Disclosure Schedule is a complete and correct
copy of the organizational documents of the Seller and each Business Sub, as
currently in effect.
Section 3.2 Capitalization of Business Subs. (a) The authorized and
outstanding equity interests of each Transferred Sub are set forth on Schedule
A. The authorized and outstanding equity interests of each Selling Sub are set
forth on Schedule B. All of the equity interests of each Business Sub are owned
beneficially and of record by the Seller or a direct or indirect wholly-owned
subsidiary of the Seller as set forth on Schedule A or Schedule B. There are no
existing (i) options, warrants, calls, subscriptions or other rights,
convertible securities, agreements or commitments of any character obligating a
Business Sub to issue, transfer or sell any equity interests in such Business
Sub or securities convertible into or exchangeable for such equity interests,
(ii) contractual obligations of a Business Sub to repurchase, redeem or
otherwise acquire any equity interests in such Business Sub or (iii) voting
trusts or similar agreements to which a Business Sub is a party with respect to
the voting of equity interests in such Business Sub. At the Closing, except as
set forth on Schedule A or Schedule B, none of the Business Subs will hold any
equity interest in any other entity.
(b) At the Closing, the company books of the Transferred Subs will
show the beneficial owners of all the issued shares in the Transferred Subs as
the registered holders of such shares.
18
Section 3.3 Authority Relative to this Agreement. The Seller has the
corporate power and authority to enter into this Agreement and each Ancillary
Agreement and to carry out its obligations hereunder and thereunder. The
execution, delivery, and performance of this Agreement and each Ancillary
Agreement by the Seller and the consummation by the Seller of the transactions
contemplated hereby and thereby, including, but not limited to, the transfer of
the Interests by the Selling Subs, have been duly authorized by all requisite
corporate action. This Agreement has been duly and validly executed and
delivered by the Seller, and upon the entry of the Section 363/365 Order
(assuming this Agreement constitutes a valid and binding obligation of the
Purchaser), will constitute a valid and binding agreement of the Seller,
enforceable against the Seller in accordance with its terms, subject to
applicable bankruptcy, reorganization, insolvency, moratorium and other laws
affecting creditors' rights generally from time to time in effect and to general
equitable principles. At the Closing, each Ancillary Agreement executed and
delivered by the Seller will have been duly and validly executed and delivered
by the Seller and upon the entry of the Section 363/365 Order (assuming each
such Ancillary Agreement constitutes a valid and binding obligation of the
Purchaser or its permitted designee), each such Ancillary Agreement will
constitute a valid and binding agreement of the Seller, enforceable against it
in accordance with its terms, subject to applicable bankruptcy, reorganization,
insolvency, moratorium and other laws affecting creditors' rights generally from
time to time in effect and to general equitable principles.
Section 3.4 Consents and Approvals. Upon the entry of the Section
363/365 Order, no consent, approval, or authorization of, or declaration,
filing, or registration with, any Governmental Entity will be required to be
made or obtained by the Seller or any Business Sub in connection with the
execution, delivery, and performance of this Agreement and the consummation of
the Acquisition, except (a) for consents, approvals, or authorizations of, or
declarations or filings with, the Bankruptcy Court, (b) for filings pursuant to
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), and pursuant to similar antitrust or competition legislation in any other
applicable jurisdiction, (c) those already obtained and (d) for consents,
approvals, authorizations, declarations, filings, or registrations, which, if
not obtained, could not be reasonably likely to have a Material Adverse Effect.
Upon the entry of the Section 363/365 Order, no consent, approval, waiver or
authorization of any Person (other than a Governmental Entity) will be required
in connection with the execution, delivery, and performance of this Agreement
and the consummation of the Acquisition, other than those already obtained and
those, which, if not obtained, could not be reasonably likely to have a Material
Adverse Effect.
19
Section 3.5 Financial Statements.
(a) Schedule 3.5 contains a true, complete and correct
copy of the combining and combined unaudited balance sheet of the Business as of
March 31, 2001 and June 30, 2001, and in each case, the related combining and
combined unaudited income statement for the period then ended (such financial
statements being collectively referred to herein as the "Financial Statements").
The Financial Statements have been prepared on the basis of the information
contained in the books and records of the Seller and the Transferred Subs. The
Financial State ments have been prepared, in all material respects, in
accordance with U.S. generally accepted accounting principles ("GAAP"). The
Financial Statements fairly present in all material respects the financial
position and the results of operations of the Business for the respective fiscal
periods as of the respective dates therein set forth.
(b) The Accounts Receivable and all accounts receivable
of any Transferred Sub at the Closing will have arisen from bona fide sales
transactions in the ordinary course of business consistent with past practice
and are payable on ordinary trade terms.
Section 3.6 No Violations. Assuming that the consents, approvals,
authorizations, declarations, and filings referred to in Section 3.4 have been
made or obtained and shall remain in full force and effect and the conditions
set forth in Article VI shall have been satisfied, at the Closing neither the
execution, delivery, or performance of this Agreement or the Ancillary
Agreements by the Seller, nor the consummation by the Seller of the transactions
contemplated hereby or thereby, nor compliance by the Seller with any of the
provisions hereof or thereof will (a) conflict with or result in any breach of
any provisions of the certificate of incorporation or bylaws of the Seller or
the organizational documents of the Business Subs, (b) result in a violation, or
breach of, or constitute (with or without due notice or lapse of time) a default
(or give rise to any right of termination, cancellation, vesting, payment,
exercise, acceleration, suspension or revocation) under any of the terms,
conditions or provisions of any contract, agreement or arrangement that is
included as an Acquired Asset or any material note, bond, mortgage, deed of
trust, security interest, indenture, license, contract, agreement, plan or other
instrument or obligation to which the Seller or one of the Business Subs is a
party or by which the Acquired Assets, the Interests or any of the Transferred
Subs' properties or assets related to the Business may be bound or affected or
(c) violate any order, writ, injunction, decree, statute, rule or regulation
applicable to the Seller, the Business Subs, the Interests or the Acquired
Assets, except in the case of clauses (b) or (c) for violations, breaches,
defaults, terminations, cancellations, accelerations, creations, impositions,
suspensions or revocations that (i) could not be reasonably likely to have a
Material
20
Adverse Effect or (ii) are excused by or unenforceable as a result of the filing
of the Petitions or as a result of the entry of the Section 363/365 Order.
Section 3.7 No Default; Compliance with Applicable Laws; Permits.
(a) Neither the Seller nor any Business Sub is in
default or violation of any term, condition or provision of (i) its articles of
incorporation, bylaws or other organizational documents or (ii) any statute,
law, rule, regulation, judgment, decree, order, arbitration award, concession,
grant, franchise, permit or license or other governmental authorization or
approval applicable to the Seller or a Business Sub by which their respective
assets and properties are bound or to the Interests or the Acquired Assets, but
excluding from the foregoing clause (ii), defaults or violations which could not
be reasonably likely to have a Material Adverse Effect or which become
applicable as a result of the business or activities in which the Purchaser is
or proposes to be engaged or as a result of any acts or omissions by, or the
status of any facts pertaining to, the Purchaser. Notwithstand ing the
foregoing, this Section 3.7 shall not apply to Environmental Laws, which are
exclusively the subject of the representations and warranties in Section 3.18.
(b) Except as could not be reasonably likely to have a
Material Adverse Effect, each of the Seller and each Business Sub currently
holds all permits, licenses, authorizations, certificates, exemptions and
approvals of Governmental Entities (collectively, "Permits") necessary or
proper for the current use, occupancy and operation of the Acquired Assets held
by the Seller or a Selling Sub (or in the case of the Transferred Subs, the
assets held by the Transferred Subs) and the conduct of the Business, and all
such Permits are in full force and effect. Except as could not be reasonably
likely to have a Material Adverse Effect, as of the Effective Date, neither the
Seller nor any Business Sub has received any written notice from any
Governmental Entity and no proceeding is pending, or, to the knowledge of the
Seller or a Transferred Sub, threatened, revoking, modifying or refusing to
renew any Permit or providing notice of violations under any Permit.
Section 3.8 Books and Records. The books, records and accounts of
the Seller and each Business Sub maintained with respect to the Business
accurately and fairly reflect, in reasonable detail, the transactions and the
assets and liabilities of the Seller and the Business Subs with respect to the
Business. The Seller has not engaged in any transactions with respect to the
Business, maintained any bank account for the Business or used any of the funds
of Seller or any Business Sub in the conduct of the Business except for
transactions, bank accounts and funds which have been and are reflected in the
normally maintained books and records of the Seller or a Business Sub.
21
Section 3.9 Title to Property. Upon the entry of the Section 363/365
Order, at the Closing the Seller and each of the Selling Subs will have the
power and right to sell, or assign, transfer and deliver, as the case may be, to
the Purchaser the Acquired Assets and the Interests and on the Closing Date will
sell, assign, transfer and deliver the Acquired Assets and the Interests free
and clear of all liens, claims, encumbrances and security interests other than
Permitted Exceptions, and the Purchaser will receive good and marketable title
to, or a valid leasehold interest in, each of the Acquired Assets and Interests
and each of the Transferred Subs will hold all of its assets and properties free
and clear of all claims, liens and encumbrances, except for Permitted
Exceptions.
Section 3.10 Ability to Conduct Business. The (i) Acquired Assets,
(ii) Excluded Assets, (iii) tangible and intangible assets currently leased or
owned by the Transferred Subs and (iv) the assets and rights made available
pursuant to the Transition Services Agreement and the Trademark License
Agreement, taken together, constitute substantially all of the tangible and
intangible assets that are required to conduct the Business as of the Effective
Date (it being understood and agreed that nothing set forth in this Section 3.10
constitutes a representation or warranty that the Business can or will be
operated at the existing performance levels following the Closing Date) or are
otherwise used primarily in the Business. The Acquired Assets and the tangible
assets currently leased or owned by the Transferred Subs are in good operating
condition and repair, ordinary wear and tear excepted.
Section 3.11 Conduct of Business. From the date of the Balance Sheet
to the Effective Date, neither the Seller nor any Business Sub has taken any
action that, if taken after the Effective Date, would violate Section 5.4
hereof.
Section 3.12 No Undisclosed Liabilities. Except (a) for liabilities
and obligations incurred in the ordinary course after the date of the applicable
portion of the combining Balance Sheet; (b) for liabilities and obligations
disclosed, reflected or fully reserved for in the applicable portion of the
combining Balance Sheet; and (c) for liabilities and obligations incurred in
connection with the actions contemplated by Section 5.18, from the date of the
Balance Sheet to the Effective Date, no Transferred Sub has incurred any
material liabilities or obligations of any nature that would either (i) be
required to be reflected or provided for in a balance sheet of the applicable
Transferred Sub prepared in accordance with the policies, procedures and methods
used to prepare the Balance Sheet or (ii) constitute an extraordinary contingent
liability or financing transaction not reflected on the applicable balance sheet
of each of the Transferred Subs as of June 30, 2001 with
22
respect to which the related costs or charges have not been reflected in the
Financial Statements.
Section 3.13 Taxes.
(a) Each Transferred Sub has (i) properly completed and
timely filed (or will timely file) all Tax Returns required to be filed by such
Transferred Sub through the Closing Date (taking into account applicable
extensions) and (ii) paid or accrued (in accordance with generally accepted
accounting principles in the applicable jurisdiction) all Taxes shown to be due
on such Tax Returns other than such Taxes as are being contested in good faith
by such Transferred Sub and are so described on Schedule 3.13. As of the time of
filing, the foregoing Tax Returns correctly reflected the facts regarding the
income, business, assets, operations, activities, status or other matters of the
Transferred Sub or any information required to be shown thereon.
(b) There are no ongoing or to the Seller's knowledge,
threatened, pending or expected, federal, state, local, provincial or foreign
audits, investigations or examinations of any Tax Return of any Transferred Sub
including any jurisdiction where the Transferred Sub does not file Tax Returns.
(c) There are no outstanding written requests, agreements,
consents or waivers to extend the statutory period of limitations applicable to
the assessment of any Taxes against any Transferred Sub.
(d) No Transferred Sub is a party to or bound by any
agreement providing for the allocation or sharing of Taxes.
(e) There are no liens for Taxes upon the Acquired Assets
or assets of any Transferred Sub which are not provided for in the Balance
Sheet, except liens for Taxes not yet due and payable and for liens for Taxes
that are being contested in good faith and that are described on Schedule 3.13.
(f) There are no outstanding rulings of, or requests for,
rulings with any Taxing Authority addressed to the Transferred Subs that are, or
if issued, would be binding on the Transferred Subs.
(g) None of the Acquired Assets is property which is
required to be treated as being owned by any other person pursuant to the so-
called "safe harbor lease" provisions of former Section 168(f)(8) of the Code.
None of the Acquired Assets directly or indirectly secures any debt the interest
on which is tax
23
exempt under Section 103(c) of the Code. None of the Acquired Assets is
"tax-exempt use property" within the meaning of Section 168(h) of the Code.
(h) No Transferred Sub has participated in an international
boycott as defined in Section 999 of the Code.
(i) Prior to Closing, the Seller shall provide the
Purchaser with a clearance certificate or similar document(s) which may be
required by any state or foreign taxing authority in order to relieve the
Purchaser of any obligation to withhold any portion of the Purchase Price.
(j) Prior to Closing, the Seller shall furnish the
Purchaser an affidavit stating, under penalty of perjury, the transferor's
United States taxpayer identification number and that the transferor is not a
foreign person, pursuant to Section 1445(b)(2) of the Code.
(k) With respect to Comdisco Services (Canada) Ltd., such
corporation has withheld from each payment made to any of its past or present
employees, officers or directors and to any non-resident of Canada, the amount
of all Taxes and other deductions required to be withheld therefrom including,
without limitation, all employee and employer portions for Workers'
Compensation, Canada Pension Plan and Unemployment Insurance and has paid the
same to the proper Tax or other receiving officers within the time required
under any applicable legislation. Comdisco Services (Canada) Ltd. has remitted
to the appropriate Tax Authority when required by law to do so, all amounts
collected by it on account of sales Taxes including GST.
(l) "Taxes" shall mean any and all taxes, fees, levies,
compulsory pension contributions or other assessments, including, without
limitation, federal, state, local, or foreign income, corporate gross receipts,
excise, real or personal property, sales, withholding, social security,
occupation, use, service, value added, license, net worth, payroll, franchise,
severance, stamp, transfer, registration, premium, windfall, profits,
environmental, customs duties, capital stock, capital duty profits,
unemployment, disability, alternative or add-on minimum, estimated or any
similar taxes imposed by any Taxing Authority together with any interest,
penalties or additions to tax and additional amounts imposed with respect
thereto, (including any fee or assessment or other charge in the nature of or in
lieu of any tax) in each case, whether or not disputed and including any
transferee or secondary liability in respect of any tax (whether imposed by law,
contractual agreement or otherwise) and any liability in respect of any tax as a
result of being a member of any Affiliated, consolidated, combined, unitary or
similar group. "Taxing Authority" shall mean
24
any Governmental Entity responsible for the imposition or collection of any
Taxes. "Tax Return" shall mean any report, return, document, declaration or
other information or filing required to be supplied to any Taxing Authority or
jurisdiction (foreign or domestic) with respect to Taxes.
Section 3.14 Property Leases.
(a) Upon the entry of the Section 363/365 Order, the
Seller will sell, transfer and assign to the Purchaser a valid leasehold
interest with respect to each of the Property Leases which is a lease (as
opposed to a sublease) and a valid subleasehold interest with respect to each of
the Property Leases which is a sublease free and clear of all liens, claims,
encumbrances and security interests other than Permitted Exceptions. Schedule
1.1(b)(vi)(B) and Schedule 3.14 identifies instruments through which the Seller
derives its leasehold and subleasehold interest in the Property Leases
(including all amendments thereto).
(b) Set forth on Schedule 1.1(b)(vi)(B) and Schedule 3.14
is a complete and correct list of all Property Leases and all real property
leased by a Transferred Sub, setting forth the address, landlord and tenant for
each such Property Lease. Complete and correct copies of the Property Leases
(including all documents supplemental or ancillary thereto) have been delivered
to, or made available for inspection by, the Purchaser and, except as disclosed
to the Purchaser in writing, none of the Property Leases have been modified in
any material respect.
(c) Subject to the provisions of the applicable Property
Leases and all real property leased by a Transferred Sub, each Property Lease
and each real property leased by a Transferred Sub grants the tenant under such
lease the exclusive right to use and occupy the premises demised thereunder.
Each of the Seller and each Business Sub enjoys peaceful and undisturbed
possession under each of the Property Leases and all real property leased by a
Transferred Sub under which it is a tenant.
Section 3.15 Owned Real Property. Set forth on Schedule 1.1(b)(vi)
(A) and Schedule 3.15 is a complete and correct list of all Owned Real Property
and real property owned by the Transferred Subs setting forth the address and
legal and beneficial owner of each such parcel of property. Each parcel included
on these Schedules is assessed for real property tax purposes as a wholly
independent tax lot, separate from adjoining land or improvements not
constituting a part of that parcel. No rights of reversion or forfeiture apply
to these properties.
Section 3.16 Real Property.
25
(a) To the knowledge of the Seller, the use and operation of the Owned
Real Property and the real property that is the subject of the Property Leases
(for the purposes of this Section 3.16, together with any material real prop
erty owned or leased by a Transferred Sub (and to the extent applicable,
referred to collectively as, the "Real Property") by the Seller and the
Transferred Subs does not violate any instrument of record or agreement
affecting the Real Property.
(b) To the knowledge of the Seller, (i) no certificate, permit or
license or any agreement, easement or other right which is necessary to permit
the lawful use and operation of the buildings and improvements on any of the
Real Property or which is necessary to permit the lawful use and operation of
all driveways, roads and other means of egress and ingress to and from any of
the Real Property has not been obtained and is not in full force and effect, and
there is no pending threat of modification or cancellation of any of the same,
(ii) there is no written notice issued by any Governmental Entity of any
violation of any federal, state, municipal, provincial or local law, ordinance,
order, regulation or requirement with respect to the Real Property, (iii) there
are no material structural defects relating to any Real Property, (iv) there is
no Real Property the working condition of whose building improvements is such as
could be reasonably likely to have a Material Adverse Effect and (v) since
January 1, 2000, no casualty has occurred with respect to any Real Property for
which there is no insurance in effect covering the cost of the restoration.
(c) Neither the Seller nor any Business Sub has received any written
notice that (i) any condemnation proceeding is pending or threatened with
respect to any Real Property or (ii) any zoning, building or similar law, code,
ordinance, order or regulation is or will be violated by the continued
maintenance, operation or use of any buildings or other improvements on any Real
Property or by the continued maintenance, operation or use of the parking areas
on any Real Property.
(d) No current use by the Seller or any Business Sub of the Real
Property is dependent on a nonconforming use or other governmental approval the
absence of which would materially limit the use of such properties or assets
held for use in connection with, necessary for the conduct of, or otherwise
material to, the Business.
(e) Schedule 3.16(e) includes a list of all the land and buildings
owned, controlled, occupied or used by any Transferred Sub or in relation to
which any Transferred Sub has any right, interest or liability.
26
(f) The Seller has not entered into any contract for sale or
other disposition of any interest in the Real Property.
(g) As of the Effective Date, except for any amounts currently
subject to an audit by the Seller in the ordinary course, the Seller is current
with respect to the payment of any rent, service charge, insurance rent, rates,
taxes or other expenses in respect of any of the Real Property.
(h) In relation to each Property Lease and each property leased by
the Transferred Subs:
(i) to the knowledge of the Seller, all covenants, conditions
agreements contained in the relevant leases, on the part of the landlord
and the tenant, have been complied with in all material respects;
(ii) the Seller has received no written notice or complaint
alleging any breach or any refusal to accept rent;
(iii) the Seller has not paid any rent or other payment more
than 30 days in advance of the due date for payment;
(iv) no tenancy is being continued after the contractual expiry
date;
(v) Schedule 1.1(b)(vi)(C) lists the agreements by which the
Seller leases or subleases, as applicable, certain portions of the Real
Property to third parties (the "Leases"). Except for the Leases, Seller
has not entered into any lease or sublease granting any Person the right to
occupy all or any portion of the Real Property, and all Leases are in full
force and have not been modified or amended except as disclosed to the
Purchaser. Neither the Seller nor any Affiliate of the Seller has granted
any option to purchase, right of first refusal, offer or other similar
rights to any tenant under any of the Leases;
(vi) such lease is in full force and effect; and
(vii) the Seller, and/or an Affiliate is the holder of the
tenant's or subtenant's interest, as the case may be, in the
27
Property Lease, Seller has not assigned its interest in the Property Lease
to any other party; and, except for the Leases, Seller has not entered into
any sublease or any other agreement granting any party any right to occupy
all or any portion of the property that is the subject of the Property
Lease.
(i) The Seller has provided or made available to the Purchaser
complete copies of all structural, mechanical, electric and environmental
reports relating to the Real Property which are in the Seller's possession or
under its control.
Section 3.17 Litigation. Except as could not be reasonably likely to
have a Material Adverse Effect:
(a) There are no Actions pending or, to the knowledge of
the Seller or the Transferred Subs, threatened, against, relating to or
affecting the Business, any Transferred Sub, any assets of Transferred Subs or
any of the Acquired Assets;
(b) The Seller has not received notice of, and to the
knowledge of the Seller, there are no, orders or decrees of a court of competent
jurisdiction outstanding against the Seller or any Business Sub that materially
restricts the operation of the Business in the ordinary course or that could be
reasonably likely to have a Material Adverse Effect.
Section 3.18 Environmental Compliance.
(a) The Seller and each Business Sub is, and has been since
January 1, 2000, in compliance with all applicable Environmental Laws,
including, but not limited to, possessing and complying with all Permits and
other governmental authorizations required for its operations under applicable
Environmental Laws except for such noncompliance as could not reasonably be
likely to have a Material Adverse Effect.
(b) There is no pending or, to the knowledge of the Seller,
threatened Action, and, to the knowledge of the Seller, there is no
investigation pending or threatened against or involving any Acquired Asset or
Transferred Sub under or pursuant to any Environmental Law except for such
Actions or investigations as could not reasonably be expected to have a
Material Adverse Effect. Neither the Seller nor any Business Sub has received
written notice from any Person, including but not limited to any Governmental
Entity, alleging that it has been or is
28
in violation in any material respect of any applicable Environmental Law or
other wise may be liable under any applicable Environmental Law, which violation
or liability is unresolved except for such violation or liability as could not
reasonably be likely to have a Material Adverse Effect.
(c) During Seller's or the Business Subs' occupancy at any of the Real
Property, to the knowledge of the Seller, there has been no deposit, burial,
disposal, release, spill or discharge of Hazardous Substances on, above,
underneath or from any of the Real Property, except for such releases, spills or
discharges as could not reasonably be likely to have a Material Adverse Effect.
(d) The representations and warranties set forth in this Section 3.18
are Seller's sole and exclusive representations and warranties related to
environmental matters.
(e) For purposes of this Agreement:
(i) "Environmental Laws" means all federal, state, local,
provincial and foreign laws; regulations, rules and ordinances relating to
pollution or protection of human health (as it relates to environmental
matters, such as toxic tort or human exposure matters, but not as it
relates to worker safety or Occupational Safety and Health Act matters), or
the environment, including, without limitation, laws relating to releases
or threatened releases of Hazardous Substances into the environment
(including, without limitation, ambient air, controlled waters, surface
water, groundwater, water in sewers or pipes or conduits, land, surface and
subsurface strata).
(ii) "Hazardous Substances" means any chemicals, materials or
substances defined as or included in the definition of "hazardous
substances," "hazardous wastes," "controlled waste," "hazardous materials,"
"hazardous constituents," "restricted hazardous materials," "extremely
hazardous substances," "toxic substances," "contaminants," "pollutants,"
"toxic pollutants," or words of similar meaning and regulatory effect under
any applicable Environmental Law including, without limitation, petroleum,
petroleum products, polychlorinated biphenyls, asbestos and any substance
(alone or in combination with any other substance) likely to cause
significant harm to the environment.
Section 3.19 Intellectual Property.
29
(a) Schedule 1.1(b)(iv) sets forth a complete and accurate list of
all material registered Acquired Intellectual Property.
(b) Except as could not be reasonably likely to have a Material
Adverse Effect:
(i) the Seller, the Selling Subs or the Transferred Subs own
or possess adequate licenses or other legal rights to use all Acquired
Intellectual Property;
(ii) any applied for or registered trademark or copyright or
issued patent owned by the Seller or any Business Sub that is included in
the Acquired Intellectual Property or, to the knowledge of the Seller,
used but not owned by the Seller or any Business Sub, has been duly
maintained, and has not been cancelled, expired, surrendered or abandoned,
except where it has been determined by the Seller or any Business Sub in
the ordinary course not to maintain, or to cancel, let expire, surrender or
abandon such Acquired Intellectual Property;
(iii) except as set forth above, all registered trademarks and
copyrights and all issued patents included in the Acquired Intellectual
Property are subsisting and in full force and effect;
(iv) no written claims or proceedings, or to the knowledge of
the Seller, written threat of claims, have been asserted by any third party
against the Seller or any Business Sub relating to the use in the conduct
of the Business of any Acquired Intellectual Property rights or challenging
or questioning the validity or effectiveness of any Acquired Intellectual
Property, and to the knowledge of the Seller, the practice or use of the
Acquired Intellectual Property does not infringe, misappropriate, violate
or dilute any Intellectual Property rights of any third party;
(v) no claims, demands or proceedings are pending by the
Seller or and Business Sub charging any third party with infringement,
misappropriation, dilution or violation of any Acquired Intellectual
Property and to the knowledge of the Seller, no
30
third party is misappropriating, infringing, diluting or violating any
Acquired Intellectual Property;
(vi) no settlement agreements, consents, judgments, orders,
forbearance to sue or similar obligations limit or restrict the Seller's or
any Business Sub's rights in and to any Acquired Intellectual Property;
and
(vii) each of the Seller and each Business Sub is and has
been in material compliance with all applicable statutes, regulations and
rules of any jurisdiction, relating to the export and sale of computer
software and technology, including, but not limited to U.S. Export
Administration Regulations.
(c) Schedule 3.19(c) lists all material agreements granting or
obtaining any right to use or practice any rights under any Acquired
Intellectual Property, as licensee or licensor thereunder, including, without
limitation, license agreements, settlement agreements and covenants not to sue
other than commercially available off-the-shelf licensed software (collectively,
the "IP License Agreements"). Each IP License Agreement is binding against the
Seller or a Business Sub and in full force and effect and will continue to be
binding against the Seller or a Business Sub and in full force and effect
immediately following the consummation of the transactions contemplated by this
Agreement except for such failure to be binding and in full force and effect
that could not reasonably be likely to have a Material Adverse Effect.
(d) The Seller and the Business Subs have taken commercially
reasonable steps to maintain the confidentiality of their trade secrets. To the
knowledge of the Seller, (i) there has been no misappropriation of any material
trade secrets or other material confidential Acquired Intellectual Property by
any Person, (ii) no employee, independent contractor or agent of the Seller or
any Business Sub has misappropriated any trade secrets of any other Person in
the course of such performance as an employee, independent contractor or agent,
and (iii) no employee, independent contractor or agent of the Seller or any
Business Sub is in default or breach of any term of any material employment
agreement, non-disclosure agreement, assignment of invention agreement or
similar agreement or contract relating in any way to the protection, ownership,
development, use or transfer of Acquired Intellectual Property.
(e) All material Software and Databases owned or leased by the Seller
or a Transferred Sub for use primarily in the Business and reasonably
31
necessary for the conduct of the Business as currently conducted are set forth
in Schedule 3.19(e); no such Software and Databases will be, by Seller or any
Business Sub: altered, redacted, truncated, rendered inoperative or less than
functional as of the Closing Date, either in whole or in part, or in any other
manner compromised by or immediately after the consummation of the transaction
contemplated hereby; and, except as contemplated by this Agreement, neither the
Seller nor any Business Sub will require access to, use of or, in any other
manner, seek to exploit or employ any of the Software and Databases, in whole or
in part, following the consummation of the transactions contemplated hereby. The
Seller or a Transferred Sub owns or is licensed to use and transfer all such
Software and Databases, and there are no other databases, programs, tools,
patches, upgrades, components, rights, permissions or any other software that
are not included in the Acquired Assets that will be required for the Purchaser
or any Transferred Sub to employ such Software and Databases in the same manner
as the Seller or any Business Sub used such Software and Databases prior to the
Closing Date, immediately following the consummation of the transaction
contemplated hereby. The Databases being transferred to the Purchaser hereunder
include all of the Databases that are fundamental to the Business.
(f) Schedule 3.19(f) sets forth all of the material information
technology (including all applications and software, hardware systems and
networking and communications assets, including databases) owned or leased by
the Seller or a Transferred Sub and used primarily in the operation of the
Business (the "Information Technology"), except for information technology
assets included among the Excluded Assets and specifically identified on
Schedule 3.19(f). All of such Information Technology is owned by, or held under
an appropriate lease or license by, the Seller or by a Transferred Sub, as the
case may be, free and clear of all liens, claims and encumbrances of any nature
(other than the terms of such leases or licenses); no material claims have been
asserted, or, to the knowledge of the Seller, threatened by any third party
against the use by the Seller or a Transferred Sub of any such Information
Technology or challenging or questioning the validity or effectiveness of any
license or lease under which such technology is held and the use of the
Information Technology by the Seller or a Transferred Sub in the Business does
not infringe, misappropriate, violate or dilute any right of a third party.
Except as set forth on Schedule 3.19(f), neither the Seller nor any Transferred
Sub currently licenses (or is obligated to license) rights in any of this
Information Technology and all licenses relating to it are enforceable in
accordance with their terms.
(g) To the knowledge of the Seller, no Acquired Intellectual
Property, including but not limited to the Databases, contains any Self-Help
Code that would be triggered by the Acquisition or any Unauthorized Code. As
used in this Agreement: "Self-Help Code" means any back door, time bomb, drop
dead
32
device, or other software routine designed to disable a computer program
automatically with the passage of time or under the positive control of a
Person other than an authorized licensee or owner of a copy of the program or
the right and title in and to the program; "Unauthorized Code" means any virus,
Trojan horse, worm, or other software routines or hardware components designed
to permit unauthorized access; or to disable, erase, or otherwise harm software,
hardware, or data.
Section 3.20 Contracts. Each of (i) the master technology services
agreements, master agreements, master business continuity agreements and
professional services agreements between a Transferred Sub and a customer,
pursuant to which such customer is obligated to pay to such Transferred Sub
$250,000 or more per year is listed on Schedule 3.20(a) and (ii) the agreements,
contracts and arrangements between a Transferred Sub and a vendor or other
third party providing goods or services including strategic alliances, pursuant
to which such Transferred Sub is obligated to pay $100,000 or more per year is
listed on Schedule 3.20(b), (x) is in full force and effect, except where the
failure to be in full force and effect could not be reasonably likely to have a
Material Adverse Effect and (y) there are no existing defaults by the
Transferred Sub, or, to the knowledge of the Seller or a Transferred Sub, any
other party thereto, thereunder, which default could be reasonably likely to
have a Material Adverse Effect.
Section 3.21 Employment and Labor Matters.
(a) To the knowledge of the Seller, the Transferred Subs or any Affiliate of
Seller's that is an employer of a Mismatched Employee (a "Mismatched Employer"),
with respect to any Business Employee:
(i) Except as set forth on Schedule 3.21, none of the
Seller, Transferred Subs or Mismatched Employers are a party to any
Collective Bargaining Agreement or other labor or union contract;
(ii) there are no unfair labor practice charges pending
or threatened against the Seller, Transferred Subs or Mismatched Employers
before the National Labor Relations Board or any similar state or foreign
agency;
(iii) there are no current questions regarding union
representation questions;
33
(iv) no union, works council, or other employee
representative body claims to represent or is recognized or accepted by the
Seller, the Transferred Subs or Mismatched Employers for purposes of
collective bargaining, negotiation or consultation;
(v) there is no grievance arising out of any
Collective Bargaining Agreement or other grievance procedure;
(vi) there have been no strikes, labor disputes,
slowdowns, work stoppages or lockouts during the past five years;
(vii) there is not any material organizational effort
currently being made or threatened;
(viii) the Seller, Transferred Subs and Mismatched
Employers have at all times been in material compliance with all applicable
laws relating to employment and employment practices, including, without
limitation, terms and conditions of employment, wages, hours of work,
occupational safety and health, collective bargaining, the payment of
social security and other payroll or similar taxes, equal employment
opportunity, employment discrimination or harassment;
(ix) none of the Seller, the Transferred Subs or
Mismatched Employers are liable for any arrears of wages or penalties for
failure to comply with any of the foregoing;
(x) none of the Seller, the Transferred Subs or
Mismatched Employers are in receipt of a notice of the intent of any
federal, state, local or foreign agency responsible for the enforcement of
labor or employment laws to conduct an investigation and no such
investigation is in progress; and
(xi) there are no Actions pending or threatened,
between the Seller, the Transferred Subs or Mismatched Employers and any
Business Employee or any current or former employee, applicants or class
thereof of the Seller, Transferred Subs or Mismatched Employers alleging
breach of any express or implied contract for employment, any law or
regulation governing employment or the termination thereof or other
discriminatory, wrongful or
34
tortious conduct in connection with the employment relationship excluding
individual Actions where potential liability is less than $250,000 provided
that such Actions excluded from Schedule 3.21 do not exceed $500,000 in the
aggregate.
(b) In the past five years, there has been no (i) "plant
closing" (as defined in the WARN Act) affecting any site of employment or one or
more facilities or operating units within any site of employment or facility
related to the Business, (ii) "mass layoff" (as defined in the WARN Act)
affecting any site of employment or facility related to the Business or (iii)
any collective redundancies, social plan, layoffs or employment terminations
sufficient in number to trigger application of any state or local law similar in
effect to the WARN Act.
(c) If requested by the Purchaser, the Seller shall under-
take to provide prior to Closing and within a reasonable period of time
following such request, a complete and accurate list (redacted where necessary
for the purposes of applicable data protection or privacy laws) of the following
information for each (i) Transferred Employee; (ii) Transferred Sub Employee;
and (iii) Mismatched Employee, including each such employee on leave of absence
or layoff status: employer; name; job title; current compensation paid or
payable and any change in compensation since March 31, 2001; accrued but unused
vacation; and service history.
(d) To the knowledge of Seller, Transferred Subs or
Mismatched Employers, no former or current (i) Transferred Employee; (ii)
Transferred Sub Employee; or (iii) Mismatched Employee is a party to or
otherwise bound by any agreement or arrangement, including any confidentiality,
non-competition or proprietary rights agreement, between such employee or
director and any other Person, including the Seller, Transferred Subs and
Mismatched Employers, that in any way adversely affected, affects, or will
affect (i) the employee's right to perform his duties as an employee of the
Business or (ii) the ability of the Purchaser to conduct the Business.
(e) All employees who are engaged primarily in the
operation of the Business in the United States are employed by Seller.
Section 3.22 Employee Benefits. (a) Schedule 3.22(a) contains a
complete and correct list of all material employee benefit plans as defined in
Section 3(3) of ERISA ("Employee Benefit Plans") and of all other material
employee arrangements and commitments, whether or not employee benefit plans
(including, without limitation, sick leave, vacation pay, severance pay, salary
continuation for
35
disability, consulting or other compensation arrangements, retirement plans,
deferred compensation plans, bonus plans, incentive compensation plans, stock
option or other stock incentive plans, equity compensation plans, employee stock
purchase plans, medical, dental and vision plans, life insurance and educational
assistance programs) sponsored or maintained by the Seller or an ERISA
Affiliate, or to which the Seller or an ERISA Affiliate contributes or is
required to contribute, or with respect to which the Seller or an ERISA
Affiliate is a party for the benefit of, or has any liability, contingent or
otherwise in relation to, any Transferred Employee, Mismatched Employee or any
employee or former employee of any of the Transferred Subs, except any
statutory plan, benefit or contribution obligation (collectively the "Seller
Plans"). As used herein, "ERISA Affiliate" shall refer to any trade or business,
whether or not incorporated, under common control with the Seller within the
meaning of Section 414(b), (c), (m) or (o) of the Code and, for the avoidance of
doubt, is to be deemed to refer to each of the Business Subs. Except as set
forth in Schedule 3.22, the Seller has made available to the Purchaser, where
applicable, complete and correct copies of (i) all Seller Plans, (ii) all
related summary plan descriptions and any subsequent summaries of material
modifications, (iii) the most recent financial statements, (iv) the most recent
annual reports (Form 5500 series in the case of Seller Plans in the United
States), (v) the most recent IRS determination letter for all plans qualified
under Code section 401(a), (vi) appropriate evidence of tax-favored or tax-
exempt status for Seller Plans outside the United States, (vii) the three most
recent actuarial reports, (viii) a copy of each trust agreement or other funding
arrangement, (ix) all material correspondence within the last three years with
governmental and regulatory authorities relating to any Seller Plan and (x) all
current material handbooks, manuals, Collective Bargaining Agreements and
similar documents governing employment policies, practices and procedures.
(b) With respect to each Employee Benefit Plan required to be listed
on Schedule 3.22(a) which is subject to the laws of the United States, to the
knowledge of Seller: (i) each Employee Benefit Plan has been operated in
material compliance with its terms and with the applicable provisions of ERISA,
the Code, applicable securities laws and all other applicable laws and the rules
and regulations promulgated thereunder; (ii) each Employee Benefit Plan which is
intended to be qualified within the meaning of Code section 401(a) is so
qualified and is, as most recently amended, the subject of a favorable
determination letter as to its qualification and nothing has occurred, whether
by action or failure to act, that could reasonably be expected to cause the loss
of such qualification; (iii) all contributions required under the terms of such
plans or under applicable law have been made within the time required by law and
the terms of the plans; (iv) there have been no "prohibited transactions" (as
described in Section 4975 of the Code or in Part 4 of Subtitle B of Title I of
ERISA) which are not exempt.
36
(c) Neither Seller nor any ERISA Affiliate has ever maintained,
contributed or been obligated to contribute to a "Multiemployer Plan" (as such
term is defined by Section 4001(a)(3) of ERISA) or to any Employee Benefit Plan
which is subject to the minimum funding requirements of Part 3 of Subtitle B of
Title I of ERISA or subject to Section 412 of the Code. None of the
Transferring Subs has, or would, as a result of ceasing to participate in one of
the Seller Plans as a result of the Acquisition, have, any special liability to
contribute to or make payments in respect of a Seller Plan in which it had
ceased to participate.
(d) None of the Seller, the Transferred Subs or any Selling Sub and,
in relation to Mismatched Employees, no Affiliate or subsidiary of Seller is
bound by any Collective Bargaining Agreement or any other agreement or legally
binding arrangement (including under custom and practice) to maintain, with
respect to any employee, any benefit plan.
(e) In respect of any Seller Plan: (i) all reports and information
required to be provided to applicable Governmental Entities, or to plan
participants and their beneficiaries with respect to that Seller Plan have been
so provided except where the failure to do so would not result in a Material
Adverse Effect; (ii) there are no inquiries, proceedings, claims or suits
pending or threatened by any Governmental Entity or by any participant or
beneficiary against any of the Seller Plans, the assets of any of the trusts of
or under such Seller Plans or the Seller Plan sponsor or the Seller Plan
administrator, or against any fiduciary of any of such Seller Plans with respect
to the design, operation or administration of the Seller Plans, other than
routine claims for benefits.
(f) To the knowledge of the Seller, the consummation of the
transactions contemplated herein will not, either alone or in combination with
another event, (i) entitle any Transferred Employee, Mismatched Employee or any
current or former employee, officer, director, consultant or agent of any
Transferred Sub to severance pay, unemployment compensation or any other payment
or benefit, or (ii) except as set forth in Schedule 3.22(f), accelerate the time
of payment or vesting of, or increase the amount of, compensation or benefits
due to any such individual.
(g) Other than continuation of benefit coverage under group health
plans as is required by applicable law, the cost of which is fully paid by the
former employee or his or her dependent, none of the Seller or the Business Subs
or, in relation to Mismatched Employees, any Affiliate or subsidiary of Seller
maintains retiree life or retiree health plans providing for continuing coverage
for
37
any employee or any beneficiary of an employee after the employee's termination
of employment.
(h) With respect to all of the Seller Plans which are
subject to laws other than those of the United States: (i) each such Seller Plan
is in material compliance with all applicable laws and regulatory requirements,
including relevant tax laws, and the requirement of any trust deed or other
governing document or applicable custom or practice, under which they are
established; (ii) each Seller Plan which is intended to have tax-favored or tax-
exempt status has received all necessary certificates and approvals from the
relevant tax authority and nothing has occurred, whether by action or failure to
act, that could reasonably be expected to cause the loss of such approval; (iii)
all employer and employee contributions to each such Seller Plan required by law
or by the terms of such plan have been timely made, or, if applicable, accrued
in accordance with normal accounting practices; (iv) the fair market value of
the assets of each funded plan, the liability of each insurer for any plan
funded through insurance or the book reserve established for any plan, together
with any accrued contributions, is sufficient to procure or provide for the
accrued benefit obligations, as of the Closing, with respect to all current and
former participants in such plan; (v) there have been no restricted or
prohibited transactions in relation to any Seller Plan with the Seller, any
Affiliate of the Seller or any person connected with the Seller or any of its
Affiliates.
Section 3.23 Brokers. Except for Goldman, Sachs, & Co., no Person is
entitled to any brokerage, financial advisory, finder's or similar fee or
commission payable by the Seller in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
the Seller.
Section 3.24 Accuracy. No representation or warranty made by
Seller in this Agreement or pursuant hereto (a) contains any untrue statement of
any material fact, or (b) omits to state any fact that is necessary to make the
statements made, in the context in which made, not false or misleading in any
material respect.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser represents and warrants to the Seller as follows:
Section 4.1 Organization. The Purchaser is a corporation validly
existing and in good standing under the laws of its jurisdiction of
incorporation and has the corporate power and authority and all necessary
governmental approvals to
38
own, lease and operate its properties and to carry on its business as it is now
being conducted. The Purchaser is duly qualified as a foreign corporation to do
business, and is in good standing, in each jurisdiction where the character of
its properties owned or held under lease or the nature of its activities make
such qualification necessary, except where the failure to be so qualified and in
good standing could not be reasonably likely to have a material adverse effect
on the Purchaser.
Section 4.2 Authority Relative to this Agreement. The Purchaser has
the corporate power and authority to enter into this Agreement and the Ancillary
Agreements and to carry out its obligations hereunder and thereunder. The
execution, delivery, and performance of this Agreement and each of the Ancillary
Agreements by the Purchaser and the consummation by the Purchaser of the
transactions contemplated hereby and thereby have been duly authorized by all
requisite corporate actions. This Agreement has been duly and validly executed
and delivered by the Purchaser. At the Closing, each of the Ancillary
Agreements will be duly and validly executed and delivered by the Purchaser.
Assuming this Agreement constitutes a valid and binding obligation of the
Seller, this Agreement constitutes a valid and binding agreement of the
Purchaser, enforceable against the Purchaser in accordance with its terms, and
upon the Closing (assuming each of the Ancillary Agreements will constitute a
valid and binding obligation of the Seller) each of the Ancillary Agreements
will constitute a valid and binding agreement of the Purchaser, enforceable
against the Purchaser in accordance with its respective terms, in each case
subject to applicable bankruptcy, reorganization, insolvency, moratorium and
other laws affecting creditors' rights generally from time to time in effect and
to general equitable principles.
Section 4.3 Consents and Approvals. Except for consents, approvals,
authorizations, declarations, filings or registrations which may be required
under the HSR Act or similar antitrust or competition legislation in any other
applicable jurisdiction, no consent, approval or authorization of, or
declaration, filing or registration with, any Governmental Entity is required to
be made or obtained by the Purchaser in connection with the execution, delivery
and performance of this Agreement or any of the Ancillary Agreements and the
consummation of the transactions contemplated hereby or thereby.
Section 4.4 No Violations. Neither the execution, delivery or
performance of this Agreement or the Ancillary Agreements by the Purchaser, nor
the consummation by the Purchaser of the transactions contemplated hereby or
thereby, nor compliance by the Purchaser with any of the provisions hereof or
thereof, will (a) conflict with or result in any breach of any provisions of the
articles or certificate of incorporation, as the case may be, or bylaws of the
Purchaser, (b)
39
result in a violation or breach of, or constitute (with or without due notice or
lapse of time) a default (or give rise to any right of termination,
cancellation, acceleration, vesting, payment, exercise, suspension, or
revocation) under any of the terms, conditions or provisions of any note, bond,
mortgage, deed of trust, security interest, indenture, license, contract,
agreement, plan or other instrument or obligation to which the Purchaser is a
party or by which the Purchaser or the Purchaser's properties or assets may be
bound or affected, (c) violate any order, writ, injunction, decree, statute,
rule or regulation applicable to the Purchaser or the Purchaser's properties or
assets, (d) result in the creation or imposition of any encumbrance on any asset
of the Purchaser or (e) cause the suspension or revocation of any permit,
license, governmental authorization, consent or approval necessary for the
Purchaser to conduct its business as currently conducted, except in the case of
clauses (b), (c), (d) and (e) for violations, breaches, defaults, terminations,
cancellations, accelerations, creations, impositions, suspensions or revocations
that could not individually or in the aggregate be reasonably likely to have a
material adverse effect on the Purchaser.
Section 4.5 Brokers. Except for Broadview Int'l LLC, no Person is
entitled to any brokerage, financial advisory, finder's or similar fee or
commission payable by the Purchaser in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
the Purchaser.
Section 4.6 Financing. As of the Execution Date and on the Closing
Date the Purchaser will have sufficient funds available to deliver the
Unadjusted Cash Purchase Price to the Seller and consummate the transactions
contemplated by this Agreement. Upon the consummation of the Acquisition, (i)
the Purchaser will not be insolvent, (ii) the Purchaser will not be left with
unreasonably small capital, (iii) the Purchaser will not have incurred debts
beyond its ability to pay such debts as they mature and (iv) the capital of the
Purchaser will not be impaired.
ARTICLE V
COVENANTS
Section 5.1 Bankruptcy Actions.
(a) The Seller shall promptly provide the Purchaser with
drafts of all documents, motions, orders, filings or pleadings that the Seller
or any of its subsidiaries proposes to file with the Bankruptcy Court which
relate to (i) this Agreement or the transactions contemplated hereunder; (ii)
entry of the orders described in this Section 5.1; (iii) the Section 363/365
Motion; and (iv) the Pur-
40
chaser, and will provide the Purchaser with a reasonable opportunity to review
such documents in advance of their service and filing to the extent reasonably
practicable under the circumstances. The Seller shall, and shall cause its
subsidiaries to, consult and cooperate with the Purchaser, and consider in good
faith the views of the Purchaser with respect to all such filings.
(b) The Seller shall comply (or obtain an order from the
Bankruptcy Court waiving compliance) with all requirements under the Bankruptcy
Code and Federal Rules of Bankruptcy Procedure in connection with obtaining
approval of the sale of the Interests and the Acquired Assets under this
Agreement. Notice of the Sale Hearing, the 363/365 Sale Motion, and request for
entry of the Section 363/365 Order and the objection deadline shall be served by
the Seller in accordance with Rules 2002, 6004, 6006 and 9014 of the Federal
Rules of Bankruptcy Procedure and any applicable local rules of the Bankruptcy
Court on all Persons required to receive notice in the Chapter 11 Case under
such rules, including, but not limited to, all Persons which have asserted
liens, encumbrances or other interests in the Acquired Assets, all non-debtor
parties to all Acquired Intellectual Property License Agreements, Customer
Contracts, Property Leases (including licensees and sublessees and
overlandlords), and other contracts included in the Acquired Assets, counsel to
the official committee of unsecured creditors appointed in the Bankruptcy Case
(if appropriate), the Office of the United States Trustee, all indenture
trustees for debt issued by the Seller, and each of the Seller's creditors (the
"Required Creditor Notices").
In addition, notice of the Section 363/365 Motion for the Section
363/365 Order, the Sale Hearing thereon and the objection deadline shall be
given by the Seller by publication of a notice (the "Publication Notice") in the
New York Times and the Wall Street Journal National Edition. Such notice shall
be published at the Seller's expense, and such publication notice shall be in
form and substance reasonably satisfactory to the Purchaser.
Section 5.2 [Intentionally left blank.]
Section 5.3 Compliance With Bidding Procedures Process; Maintenance
of Confidentiality. (a) The Seller shall solicit offers for the sale of the
Acquired Assets of the Business only to the extent of and as provided by the
Bidding Procedures and Overbid Procedures Order from the Effective Date until
the Closing Date.
(b) The Seller shall provide or make available to the
Purchaser any non-public material information with respect to the Seller and its
41
subsidiaries that it has provided to any third party in accordance with the
Bidding Procedures.
(c) The Seller shall not release any Person from, or waive
any provisions of, any confidentiality agreement entered into in accordance with
the Bidding Procedures.
(d) The Seller shall use its reasonable best efforts to
maintain the confidentiality of non-public information in the Seller Disclosure
Schedules. In the event any Person seeks to obtain the Seller Disclosure
Schedules without complying with the Bidding Procedures, the Seller shall use
its reasonable best efforts to seek and obtain a protective order with respect
thereto.
Section 5.4 Conduct of Business by the Seller Pending the Closing.
The Seller covenants and agrees that, except (i) as expressly contemplated by
this Agreement, (ii) as disclosed in Schedule 5.4, (iii) with the prior written
consent of the Purchaser, (iv) as required by, arising out of, relating to or
resulting from, the filing of the Petitions or otherwise approved by the
Bankruptcy Court or (v) to the extent required by the lenders in connection with
the Financing (so long as the Financing shall not encumber or otherwise impair
any Acquired Assets or assets of Transferred Subs after the Closing), after the
Effective Date and prior to the Closing Date:
(a) the Seller shall, and shall cause its Affiliates to:
(i) use commercially reasonable efforts to conduct the Business only in the
ordinary course, including continuing to pay all obligations when due,
adequately funding the Business and performing in all material respects all of
its obligations under all agreements and instruments relating to or affecting
the Business or the Acquired Assets; (ii) use good faith efforts to maintain
good relations with the customers of and vendors to the Business, and with the
employees of the Business; and (iii) maintain its good standing, or the local
equivalent in the jurisdiction of its organization and to cause each of the
Transferred Subs to meet its debts in the ordinary course; and
(b) the Seller shall not, and shall cause its Affiliates
not to, take the following actions with respect to the Transferred Subs, the
Business, the Interests and the Acquired Assets:
(i) any amendment, supplement, termination or
cancellation of the articles of incorporation or by-laws or similar
organizational documents of the Seller or a Business Sub;
42
(ii) the issuance or sale of any additional shares of, or
securities convertible into or exchangeable for, or options, warrants,
calls commitments or rights of any kind to acquire the shares of, the
capital stock or equity or membership interests of any Transferred Sub,
other than an issuance or sale of such of the foregoing to the Seller or
one of the Selling Subs;
(iii) a pledge, mortgage, acquisition, sale, lease or
disposition of any Acquired Assets, the Interests or the assets or
properties of a Transferred Sub except in the ordinary course or any
transfer of assets, properties or employees from the Seller or a
Transferred or a Selling Sub to an Excluded Sub (other than advances or
contributions to the capital of an Excluded Sub by Seller in the ordinary
course);
(iv) (A) the incurrence or assumption of any long-term or
short-term debt (including in respect of capitalized leases) or the
issuance of any debt securities by a Transferred Sub except for borrowings
under existing lines of credit or from the Seller in each case in the
ordinary course and in a manner consistent with past practice; (B) the
assumption, guarantee, endorsement or other wise becoming liable or
responsible (whether directly, contingently or otherwise) by a Transferred
Sub for the material obligations of any other Person except in the ordinary
course in an amount not material to the Business; or (C) the making by a
Transferred Sub of any material loans, advances or capital contributions
to, or investments in, any other person, in each case other than in the
ordinary course;
(v) the entering into new contracts or agreements that are
not terminable upon the Closing between a Transferred Sub on the one hand
and the Seller, a Selling Sub or an Excluded Sub or another Affiliate of
the Seller (other than a Transferred Sub) on the other hand other than in
the ordinary course and otherwise not material;
(vi) the acquisition or disposition by a Transferred Sub (by
merger, consolidation or acquisition of stock or assets) of any
corporation, partnership or other business organization or division thereof
or any equity interest therein (other than in the ordinary course);
43
(vii) any increases in, or additions to, the compensation
payable to any of the Transferred Employees, any of the Mismatched
Employees or any employees of the Transferred Subs, including pursuant to a
Seller Plan, other than in the ordinary course or pursuant to existing
Seller Plans or arrangements;
(viii) a failure to maintain books, records and accounts of the
Seller, any Transferred Sub or the Business in the ordinary course;
(ix) a material amendment to a contract included in the
Acquired Assets or any contract or agreement to which a Transferred Sub is
a party other than in the ordinary course;
(x) a change of any of the accounting methods or procedures
used by the Seller or a Business Sub unless required by GAAP or applicable
law;
(xi) bringing, settling, compromising or waiving any Action or
legal right affecting the validity or value of any Acquired Assets, the
Interests, the Business or any assets or properties of any Transferred Sub
other than in the ordinary course and if not material;
(xii) payment of any dividends or distributions or other
return of capital by any Transferred Sub;
(xiii) after October 1, 2001, make or commit to make capital
expenditures in excess of $2 million in the aggregate except in furtherance
of the capital expenditure plans described in Schedule 5.13;
(xiv) the amendment, variation, termination or waiver of any
Property Lease or rights thereunder;
(xv) the grant or acceptance of any lease in respect of the
Owned Real Property;
44
(xvi) except as provided in Section 5.18, a reduction in the
workforce of the Business of more than 20 employees;
(xvii) except in the ordinary course, enter into any lease,
sublease, license, broker agreement, service contract, management contract,
utility agreement or other agreement relating to any of the Real Property
which would be binding on the applicable property or the Purchaser after
the Closing; and
(xviii) the authorization or entering into an agreement to do
any of the foregoing.
Section 5.5 Access and Information. (a) Subject to the Bidding
Procedures, applicable law and the reasonable requirements of the Seller to
protect competitively sensitive information, the Seller shall afford to the
Purchaser and to the Purchaser's financial advisors, legal counsel, accountants,
consultants, financing sources and other authorized representatives reasonable
access during normal business hours throughout the period prior to the Closing
Date to the books, records, properties and personnel of the Seller, the Selling
Subs and the Transferred Subs and, during such period, shall furnish reasonably
promptly to the Purchaser such information as the Purchaser reasonably may
request;
(b) The Seller shall deliver to the Purchaser monthly
financial statements of the Business prepared on the same basis as the Financial
Statements (including balance sheets and income statements), on or before the
end of the following month; and
(c) The Seller shall notify the Purchaser promptly if any
of the 25 largest customers (measured by revenue) of the Business cancels or
materially modifies or terminates its contract, agreement or arrangement or
gives the Seller written notice of its assertion or intention to do any of the
foregoing.
Section 5.6 Approvals and Consents; Cooperation; Notification.
(a) The parties hereto shall use their respective
commercially reasonable efforts, and cooperate with each other, to obtain as
promptly as practicable all approvals, consents or waivers from Governmental
Entities required in order to consummate the transactions contemplated by this
Agreement; provided, however, that neither the Purchaser nor any Affiliate of
the Purchaser shall be required to divest itself of any business, operations,
assets or properties (including,
45
without limitation, those acquired hereunder) or agree to limit the freedom of
the Purchaser or its Affiliate to conduct any business or operation in
connection with or following the Closing, whether under the proceedings referred
to in Section 5.6(b) or otherwise.
(b) The Seller and the Purchaser shall take all actions necessary to
file as soon as practicable (and in any event within five business days after
the Execution Date) all notifications, filings and other documents required to
obtain all approvals, consents or waivers from Governmental Entities, including,
without limitation, under the HSR Act, and to respond as promptly as practicable
to any inquiries received from the Federal Trade Commission, the Antitrust
Division of the Department of Justice and any other Governmental Entity for
additional information or documentation and to respond as promptly as
practicable to all inquiries and requests received from any Governmental Entity
in connection therewith. The Purchaser agrees to take promptly all
commercially reasonable steps necessary to avoid or eliminate each and every
impediment under any antitrust or competition law that may be asserted by any
U.S. federal, non-U.S. national, state or local antitrust or competition
authority so as to enable the parties to expeditiously close the transactions
contemplated by this Agreement. Notwithstanding anything to the contrary in
this Agreement, the Seller may take all such actions necessary to facilitate the
filing of notifications, filings and other documents required to obtain all
approvals, consents or waivers from Governmental Entities, including without
limitation under the HSR Act, in connection with Qualified Bidders (as defined
in the Bidding Procedures).
(c) Each of the Seller and the Purchaser shall give prompt notice to
the other of the occurrence or failure to occur of an event that would, or with
the lapse of time would, cause any condition to the consummation of the
transactions contemplated hereby not capable of satisfaction.
(d) If any judicial action or proceeding is instituted (or threatened
to be instituted) by a Governmental Entity or private party challenging the
Acquisition, then (i) Purchaser shall take promptly any and all steps necessary
to prosecute and defend all such actions or proceedings; (ii) Seller shall
cooperate in all respects with Purchaser in contesting and resisting any such
action or proceeding and attempting to have vacated, lifted, reversed or
overturned any decree, judgment, injunction or other order, whether temporary,
preliminary or permanent, that is in effect and that prohibits, prevents or
restricts consummation of the Acquisition; (iii) Purchaser shall have the right
to control the defense of any such action or proceeding; (iv) Purchaser will
pay all of Seller's reasonable expenses incurred by Seller in the defense of
such action or proceeding; (v) Seller shall promptly inform Purchaser
46
of any and all oral or written communication between Seller and any third party
relating to the Acquisition including any communication with a customer,
supplier, hardware or software manufacturer, Governmental Entity, or judicial
body; and (v) Seller shall give Purchaser an opportunity to participate in the
communication if at all possible, and, in the case of communication written by
Seller, give Purchaser an opportunity to review the communication before it is
made.
Section 5.7 Additional Matters. Subject to the terms and conditions
herein provided, each of the parties hereto agrees to use all commercially
reasonable efforts to take, or cause to be taken, all action and to do, or cause
to be done, all things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the transactions contemplated by
this Agreement and to vest in the Purchaser or a Transferred Sub all rights in
and to the assets and properties of the Business (other than Excluded Assets) in
accordance with this Agreement, including, without limitation; the execution of
appropriate separate purchase agreements in any jurisdiction requiring such an
agreement to complete the transactions contemplated hereby; the subsequent
transfer of any Acquired Assets which are not transferred at the Closing; and
the execution and delivery of such further documentation as either party may
reasonably require at or after the Closing. The obligations of each of the
Purchaser and the Seller pursuant to this Article V shall be subject to any
orders entered or approvals or authorizations granted by the Bankruptcy Court
and the Bankruptcy Code.
Section 5.8 Employment of Business Employees. (a) Subject to the
agreed upon reduction in force set forth in Section 5.18, within five (5)
business days before the issuance of the Section 363/365 Order by the Bankruptcy
Court approving the Acquisition by the Purchaser, the Purchaser shall make
offers of employment, effective as of the Closing Date, to (i) substantially all
of the employees of the Seller who are primarily engaged in the operation of the
Business, including, specifically, all employees who may be subject to the
Assumed SIP Guarantees (those who accept such offers are referred to
collectively as the "Transferred Employees") and (ii) substantially all of the
employees of the Seller's Affiliates and subsidiaries (other than the
Transferred Subs) who are primarily engaged in the Business in respect of
jurisdictions where the Business is operated by a Transferred Sub and who would
not otherwise transfer to Purchaser's group or a Transferred Sub automatically
by operation of law as a result of the Acquisition and who have been identified
by Seller in a letter to Purchaser (those who accept such offers are referred to
collectively as the "Mismatched Employees"), on terms and conditions that, with
respect to retention bonus, are equivalent in all material respects to the
retention bonus currently offered to each such employee by the Seller, Trans-
47
ferred Sub and Mismatched Employer, with respect to salary, sales commissions
and annual bonus are substantially similar in all material respects to those
currently offered to similarly situated employees of Purchaser, and with respect
to other matters, are, subject to any overriding legal and regulatory
requirements, substantially similar, in the aggregate, in accordance with
Purchaser's established policies, including, but not limited to, eligibility
requirements, to those currently offered to similarly situated employees of
Purchaser. For the avoidance of doubt, Purchaser is not hereby obligated to
employ any of the Transferred Employees or Mismatched Employees for any
particular period.
Notwithstanding the foregoing, the Purchaser shall not be liable for any amount
of any sales commissions, annual bonus or retention bonus attributable to any
period prior to the Closing. The Seller shall pay all amounts accrued by any
Transferred Employee or Mismatched Employee under the Seller's Incentive
Compensation Plan, Seller's or Mismatched Employers' sales commission plans, the
Seller's Key Performance Award Plan or the Seller's Special Management
Incentive Plan (collectively, the "Incentive Plans") with respect to any full or
partial calendar month ending on or before the Closing. The provisions of the
preceding sentence shall apply only to liability to pay bonuses under the plans
described in this Section 5.8(a) and all other compensation and benefits payable
to such Transferred Employees and Mismatched Employees shall be payable to the
same by their respective employers during the respective periods of employment.
Notwithstanding any provision in this Agreement, the Purchaser shall recognize,
honor and assume the liability for each such Transferred Employees and
Mismatched Employee's accrued but unused vacation and sick time with the Seller,
Transferred Subs and Mismatched Employers, as accrued as of the Closing.
(b) With respect to each employee of the Transferred Subs
("Transferred Sub Employee"), the Purchaser agrees to cause each Transferred Sub
to provide all employees of such Transferred Sub with salary, sales commissions,
annual bonus and retention bonus, which are substantially equivalent to those
currently offered to each such employee by the Seller and Transferred Sub and
with respect to other matters, which are substantially similar, in the
aggregate, to those currently offered to each such employee by the Seller and
Transferred Sub, which terms and conditions will continue after the Closing Date
for at least as long as is required by applicable law. For avoidance of doubt,
Purchaser shall cause the Transferred Subs to be liable for any amount of sales
commissions, annual bonus and retention bonus and special management incentive
bonus accrued by any Transferred Sub Employee prior to or after the Closing.
48
(c) Seller shall use its commercially reasonable endeavors to
encourage all Mismatched Employees to accept Purchaser's offer of employment.
Seller shall indemnify and hold harmless Purchaser, its subsidiaries and
Affiliates (including the Transferred Subs) against any and all claims, losses,
damages, expenses, obligations and liabilities (including costs of collection,
attorneys' fees and other costs of defense) which the Purchaser, its
subsidiaries or Affiliates (including the Transferred Subs) may incur in
connection with any termination of employment by Seller and the respective
Mismatched Employer of any employee of Seller or a Mismatched Employee who does
not accept Purchaser's offer of employment.
(d) As used hereinafter, the term "Business Employees" shall mean,
collectively, the Transferred Employees, Mismatched Employees and Transferred
Sub Employees. Except as agreed between the Seller and Purchaser, effective as
of the Closing Date, the Business Employees shall cease participation in all of
the Seller Plans and, subject to the Purchaser's standard policies, including
but not limited to eligibility requirements, commence participation in plans
sponsored or established by the Purchaser (or the appropriate assignee for
purposes of Section 1.11) including, but not limited to health, life insurance
and disability plans ("Purchaser Plans"). The Purchaser shall recognize and
give credit for all service by each Business Employee with the Seller or any
predecessor or Affiliate of Seller for purposes of eligibility, vesting and
benefits under the Purchaser's employee benefits plans and policies, including
but not limited to, flexible time off including vacation, sick leave, personal
or family leave and retirement benefits, except for benefit accruals under any
of Purchaser's defined benefit plans and to the extent such credit would result
in duplication of benefits. Notwithstanding any provision in this Agreement,
the Purchaser shall provide or cause the Transferred Subs to provide to each
Business Employee whose employment is involuntarily terminated within six (6)
months of the Closing Date severance benefits that are equivalent to those
currently offered to each such employee by the Seller, Transferred Sub or
Mismatched Employer. Notwithstanding any provision in this Agreement, those of
the Purchaser Plans which are health benefit plans shall not, with respect to
any Business Employee or any dependents of such employee, limit or otherwise
restrict participation thereunder for reason of any pre-existing condition
limitation or waiting period in any such Purchaser Plan. Purchaser shall use its
commercially reasonable efforts to accommodate the direct rollover of eligible
rollover distributions made to any Transferred Employees, including loans, from
the Comdisco Retirement Plan to the SunGard Data Systems Inc. Savings Plan,
subject to administrative feasibility. In
49
accordance with Purchaser's policies and stock option plans, the Purchaser shall
issue stock options to key Business Employees. The Purchaser shall recognize and
give credit for medical plan deductibles paid under Seller's plans by
Transferred Employees who are subject to medical plan deductibles.
(e) The Purchaser shall indemnify and hold the Seller, the
Selling Subs and their subsidiaries and Affiliates harmless from and against any
and all claims, losses, damages, expenses, obligation and liabilities (including
costs of collection, attorneys' fees and other costs of defense) which the
Seller, the Selling Subs or their subsidiaries or Affiliates may incur in
connection with any suit or claim or violation brought against the Seller, the
Business Subs or their subsidiaries or Affiliates under the WARN Act or any
similar national, multi-national, state or local law that relates to actions
taken by the Purchaser on or after the Closing Date with regard to any site of
employment or one or more facilities or operating units within any site of
employment of the business of the Purchaser. The Seller shall indemnify and hold
harmless the Purchaser, the Transferred Subs and their respective subsidiaries
and Affiliates against any such claims losses, damages, expenses, obligations,
and liabilities referred to in the previous sentence that relates to actions
taken by the Seller or the Business Subs prior to the Closing Date.
(f) If requested by Purchaser Seller shall undertake to
provide prior to Closing and within a reasonable period of time following such
request, accurate details of all material employment practices, policies,
contracts, programs or arrangements applicable to employees and former employees
of the Transferred Subs, together with summaries of all material employment
rights and benefits applying to such individuals by virtue of custom and
practice.
(g) The Seller shall use reasonable best efforts to cause
the entry of an order approving the Incentive Plans with respect to amounts
payable to the Transferred Employees and the Mismatched Employees (the
"Retention Order"), such that the Retention Order becomes a Final Order on or
prior to the entry of the Section 363/365 Order.
Section 5.9 Termination of Consent Decree. Effective on the Closing
Date, the Seller and the Purchaser shall terminate the consent decree dated
September 1, 1988 and all litigation matters between the parties and their
affiliates, and shall exchange mutual releases with respect thereto (the "Mutual
Release").
Section 5.10 Books and Records. For a period of seven (7) years
after the Closing Date (or such longer period as may be required by any
Governmental Entity or legal proceeding):
50
(a) the Purchaser shall not dispose of or destroy any of the
business records and files of the Business transferred to it hereunder; and
(b) the Purchaser shall allow the Seller and any of its
directors, officers, employees, counsel, representatives, accountants and
auditors access to the Transferred Employees, employees of the Transferred Subs
and other employees of the Purchaser or its subsidiaries engaged in the
operation of the Business and all business records and files of the Sellers, the
Business Subs or the Business that are transferred to it in connection herewith,
which are reasonably required by the Seller for purposes related to the Chapter
11 Case, tax matters and other reasonable business purposes, during regular
business hours and upon reasonable notice and the Seller shall have the right
to make copies of any such records and files. Neither the Seller nor any of its
Affiliates shall solicit for employment or hire any Transferred Employees,
employees of the Transferred Subs or other employees engaged in the operation of
the Business to which the Purchaser allows access under this Section 5.10 for a
period of 2 years after such access is last allowed.
Section 5.11 Termination of Intercompany Agreements. On or prior to
the Closing Date, the Seller shall terminate, or shall cause to be terminated,
all of the agreements, contracts or arrangements between a Transferred Sub on
the one hand, and the Seller, a Selling Sub or any other Affiliate of the Seller
(other than a Transferred Sub) on the other hand relating to the provision of
services, cost-sharing or any other intercompany arrangement, including without
limitation, such of the foregoing as are listed or described on Schedule 5.11.
Section 5.12 Nominal Shareholders of Comdisco France. The Seller
shall cause each of the nominal director shareholders (as listed on Schedule A)
of Comdisco Continuity Services France S.A., a stock company organized under the
laws of France and one of the Transferred Subs ("Comdisco France"), to transfer
his or her respective share of stock in Comdisco France to the designee of the
Purchaser at the Closing without payment of additional consideration by the
Purchaser.
Section 5.13 Capital Expenditures. During the period between the
Effective Date and the Closing, the Seller shall continue to fund and pursue, in
all material respects, the capital expenditure projects substantially as
described in the Seller's current capital expenditure plan attached hereto as
Schedule 5.13.
Section 5.14 Release of Guarantees. With respect to any guaranty,
letter of credit of the Seller assumed by the Purchaser as an Assumed Liability,
the Purchaser shall use its commercially reasonable efforts to have the Seller
or its
51
Affiliate released from such guaranty and, if requested by the assured parties,
shall substitute a substantially similar guaranty or letter of credit, as
applicable, in its place.
Section 5.15 Maintenance of Properties. Until the Closing, the
Seller shall use its commercially reasonable efforts to cause the Real Property
and the Tangible Personal Property included in the Acquired Assets to be
maintained in substantially the same condition that it has heretofore maintained
same and shall operate the Real Property in substantially the same manner as it
has heretofore operated same, and the Seller shall promptly inform the Purchaser
in writing of any material adverse change to the ownership, use, occupancy,
leasing or operation of any Real Property, whether or not insured against.
Section 5.16 Joinder of Selling Subs. The Seller shall cause each
Selling Sub to execute and deliver at or prior to Closing, a joinder to this
Agreement substantially in the form of Exhibit I whereby such Selling Subs
agrees to transfer and sell to the Purchaser all of its rights and incidents of
interest to the Interests and the Acquired Assets.
Section 5.17 Insurance. The Seller shall use its commercially
reasonable efforts to maintain in effect all of the existing contracts or
policies of insurance to the extent relating to the Business. With respect to
any damage or destruction of any of the Acquired Assets prior to the Closing
Date for which the Seller would be entitled to assert, or cause any Affiliate or
other Person to assert, a claim for recovery under any contract or policy of
insurance maintained by or for the benefit of the Seller or any Affiliate
thereof in respect of the Acquired Assets, at the request of the Purchaser, the
Seller will use reasonable efforts to assert one or more claims under such
insurance covering such damage or destruction. In the case of any damage to or
destruction of the Acquired Assets occurring prior to the Closing Date that is
covered by insurance maintained by the Seller or any Affiliate of the Seller,
the Seller shall deliver all insurance proceeds realized therefrom to the
Purchaser at Closing or as soon thereafter as collected by the Seller or such
Affiliate.
Section 5.18 Web Hosting Reduction in Force. The Seller shall
terminate or cause the Transferred Subs to terminate the employment of 60 to 70
employees in its web services business at or prior to Closing; provided,
however, that any such employees that terminate their employment with Seller or
that have been transferred out of Seller's web services business to another open
position within the Business, shall count as terminated employees for the
purposes of this section. The termination of employment of any such employees
employed by Comdisco Continuity Services (UK) Limited at the Comdisco site in
Poole (England) or by any other Transferred Sub shall be made in accordance with
applicable law.
52
Section 5.19 Real Estate Credits and Prorations. The Seller and the
Purchaser shall prorate all rent, additional rent and other payments under the
Property Leases and the Leases (and all other similar customary adjustments) and
Taxes and assessments levied against the Owned Real Property as of 12:01 a.m. on
the Closing Date. With respect to any amounts (including Taxes) that have not
yet been billed or otherwise determined, the Seller and the Purchaser shall
prorate such amounts based on the most recent ascertainable bill. The Purchaser
and the Seller agree to prorate real estate Taxes and assessments based on when
such Taxes and assessments are due and payable, notwithstanding when such Taxes
and assessments become a lien on the Owned Real Property.
Section 5.20 Lease of Rosemont Facility. At or prior to Closing, the
Seller and the Purchaser shall enter into a lease agreement for space in the
6111 North River Road, Rosemont, Illinois building on substantially the same
terms and conditions (including price and term) on which the Seller leases space
in the 6133 North River Road, Rosemont, Illinois building.
Section 5.21 Confidentiality. Seller acknowledges that
Purchaser has legitimate and continuing interests in the protection of the
confidential information related to the Business and that Purchaser is investing
substantial sums and will continue to invest substantial sums to develop,
maintain and protect such confidential information. From and after the Closing,
Seller shall not, and shall cause each of its Affiliates not to, disclose,
furnish or make accessible to any Person or use for its own benefit or the
benefit of any other Person any trade secrets or other confidential or
proprietary information of the Business, prospects of the Business and financial
condition of the Business including without limitation any business
plans, financing plans, financial information, contract prices and other terms,
strategies, methods and computer programs of the Business; and any information
obtained by or revealed to during any negotiations or review relating to this
Agreement or any Ancillary Agreement, provided that such protected information
shall not include (i) information required to be disclosed by law, subject to
prior consultation with the Purchaser to the extent reasonably practicable, (ii)
information known to the public or otherwise available to the public without
violation of this Agreement by Seller and (iii) information of the Business that
also relates to a business of Seller other than the Business, but only to the
extent relating to such other business.
ARTICLE VI
CONDITIONS PRECEDENT
Section 6.1 Conditions Precedent to Obligation of the Seller and the
Purchaser. The respective obligations of each party to effect the transactions
53
contemplated by this Agreement shall be subject to the satisfaction of the
following conditions:
(a) The Bankruptcy Court shall have entered in the Bankruptcy Case the
Section 363/365 Order (together with any related findings of fact or conclusions
of law) approving this Agreement and the transactions contemplated hereby no
later than November 5, 2001. The Section 363/365 Order shall not have been
vacated, stayed, amended, reversed or modified. The Section 363/365 Order shall
contain (or be accompanied by) findings of fact and conclusions of law by the
Bankruptcy Court that, among other things, find and conclude that (y) the
transactions contemplated hereby are in good faith and otherwise satisfy the
provisions of Sections 363 and 365, including Section 363(m) of the Bankruptcy
Code and (z) that the Seller has complied with the notice requirements of Rules
2002, 6004, 6006 and 9014 of the Federal Rules of Bankruptcy Procedure and any
applicable rules of the Bankruptcy Court with respect to the transactions
contemplated by this Agreement.
(b) the waiting period applicable to the Acquisition, if any, under
the HSR Act shall have expired or been terminated, all necessary and expedient
foreign filings, in the reasonable opinion of the Purchaser (including pursuant
to antitrust or competition legislation in Canada or any other applicable
jurisdiction similar to the HSR Act), shall have been made, all applicable
waiting and other time periods (including any extensions thereof) under any
applicable legislation or regulation of any relevant foreign jurisdiction shall
have expired, lapsed or been terminated and all statutory or regulatory
obligations in any relevant foreign jurisdiction shall have been complied with
in each case in connection with the Acquisition, and all authorizations from any
foreign Governmental Entity considered necessary or appropriate in the
reasonable opinion of the Purchaser shall have been obtained and all such
authorizations remaining in full force and effect and there being no notice of
any intention to revoke, suspend or adversely restrict or modify any of the
same;
(c) no action, suit or proceeding (including any proceeding over
which the Bankruptcy Court has jurisdiction under 28 U.S.C. (S) 157(b) and (c))
brought by any Governmental Entity shall be pending to enjoin, restrain or
prohibit the Acquisition, or that would be reasonably likely to prevent or make
illegal the consummation of the transactions contemplated by this Agreement.
For the avoidance of doubt, the ongoing investigation by the Antitrust Division
of the U.S. Department of Justice, relating to the sale of the Business to
Purchaser, by itself, would not be deemed a "proceeding" under this Section
6.1(c); and
54
(d) no Governmental Entity shall have issued any order,
decree or ruling, and there shall not be any statute, rule or regulation,
restraining, enjoining or prohibiting the consummation of the Acquisition.
(e) Notwithstanding any provisions to the contrary
contained in this Agreement, the Section 363/365 Order shall provide and declare
that all right, title and interest of the Seller under each of the contracts
included within the Acquired Assets, including but not limited to the IP License
Agreements, Customer Contracts and Property Leases shall, upon Closing, be
transferred and assigned to and fully and irrevocably vest in the Purchaser and
remain in full force and effect, unless the Seller shall have obtained consent
to the assignment and assumption by the Purchaser of the contracts in form and
substance reasonably satisfactory to the Purchaser. The Section 363/365 Order
shall also declare and include or be accompanied by findings of fact and
conclusions of law of the Bankruptcy Court which, among other things, shall
determine and declare: (a) that each contract is in full force and effect and is
an executory contract of the Seller under Section 365 of the Bankruptcy Code;
(b) that the Seller may assume each contract in accordance with Section 365 of
the Bankruptcy Code; (c) that the Seller may assign each contract in accordance
with Sections 363 and 365 of the Bankruptcy Code and any provisions in any
contract that prohibit or condition the assignment of such contract constitute
unenforceable anti-assignment provisions which are void and of no force and
effect; (d) that all other requirements and conditions under Section 363 and 365
of the Bankruptcy Code for the assumption by the Seller and assignment to the
Purchaser of each contract have been satisfied; (e) that upon Closing, in
accordance with Sections 363 and 365 of the Bankruptcy Code, the Purchaser shall
be fully and irrevocably vested in all right, title and interest of each
contract, including but not limited to each Customer Contract, Property Leases
and licensee or sublicensee under each IP License Agreement and that following
the Closing, each contract shall remain in full force and effect; (f) the
assignments of each contract is in good faith under Section 363(b) and (m) of
the Bankruptcy Code; and (g) that the Seller gave due and proper notice of such
assumption and assignment to each landlord, licensor, sublicensor and other non-
debtor party under each contract as well as to any sublicensees, subtenants and
landlords. The Section 363/365 Order, and any related findings of fact and
conclusions of law, with respect to the matters set forth in this Section
6.1(e)) shall be in form and substance satisfactory to the Purchaser. All
liabilities and costs required to cure as required by Section 365(b) of the
Bankruptcy Code defaults under the contracts as required by Section 365(b) of
the Bankruptcy Code shall be the responsibility of the Seller.
Section 6.2 Conditions Precedent to Obligation of the Seller. The
obligation of the Seller to effect the transactions contemplated by this
Agreement
55
shall be subject to the satisfaction or waiver at or prior to the Closing Date
of the following additional conditions:
(a) the Purchaser shall have performed in all material
respects its obligations under this Agreement required to be performed by the
Purchaser at or prior to the Closing Date; and
(b) each of the representations and warranties of the
Purchaser contained in this Agreement shall be true and correct in all respects
(without regard to any materiality or knowledge exceptions or qualifications
contained therein) as of the Closing Date, except where the failure of such
representations and warranties to be so true and correct does not, and could
not be reasonably likely to have a material adverse effect on the Purchaser or
its ability to consummate the Acquisition.
Section 6.3 Conditions Precedent to Obligation of the Purchaser. The
obligation of the Purchaser to effect the transactions contemplated by this
Agreement shall be subject to the satisfaction or waiver at or prior to the
Closing Date of the following additional conditions:
(a) the Seller shall have performed in all material
respects its obligations under this Agreement required to be performed by the
Seller at or prior to the Closing Date;
(b) each of the representations and warranties of the
Seller contained in this Agreement shall be true and correct in all respects
(without regard to any materiality or knowledge exceptions or qualifications
contained therein) as of the Closing Date, except where the failure of such
representations and warranties to be so true and correct does not, and could not
be reasonably likely to have a Material Adverse Effect; and
(c) there shall not have occurred a Material Adverse Effect
since the Effective Date.
ARTICLE VII
TERMINATION, AMENDMENT, AND WAIVER
Section 7.1 Termination by Mutual Consent. This Agreement may be
terminated at any time prior to the Closing Date by mutual written agreement of
the Purchaser and the Seller.
56
Section 7.2 Termination by Either the Purchaser or the Seller. This
Agreement may be terminated at any time prior to the Closing Date by either the
Purchaser or the Seller if the Closing Date shall not have occurred on or before
December 5, 2001; provided however, that the right to terminate this Agreement
pursuant to this Section 7.2 shall not be available to any party whose failure
to fulfill any obligation under this Agreement shall have been the cause of the
failure of the Closing Date to have occurred on or prior to such date.
Section 7.3 Termination by the Purchaser. This Agreement may be
terminated at any time prior to Closing by the Purchaser (provided that it is
not in material breach of any representation, warranty or covenant or other
agreement contained herein) if:
(i) the Section 363/365 Order shall not have been
entered by Bankruptcy Court on or prior to November 5, 2001, and as of the
time of such termination has not been entered;
(ii) the Retention Order shall not have been entered
by the Bankruptcy Court and shall not have become a Final Order on or prior
to the entry of the Section 363/365 Order and as of the time of such
termination has not been entered and become a Final Order;
(iii) upon (x) the conversion of the Chapter 11 Case
to cases under chapter 7 of the Bankruptcy Code, (y) the filing of a plan
of reorganization by the Seller which does not provide for the sale of the
Acquired Assets to the Purchaser under this Agreement, or (z) the
appointment of a Chapter 11 trustee in the Bankruptcy Case; or
(iv) upon a willful breach of any covenant or
agreement on the part of the Seller set forth in this Agreement such that
the condition in Section 6.3(a) would not be satisfied; provided, that if
any such breach is curable prior to December 5, 2001 through the use of the
Seller's reasonable best efforts, so long as the Seller, following written
notice with respect to such breach from the Purchaser, shall be using its
reasonable best efforts to cure such breach, the Purchaser may not
terminate this Agreement pursuant to this Section 7.3(vi).
57
Section 7.4 Effect of Termination and Abandonment. In the event of
termination of this Agreement pursuant to this Article VII, written notice
thereof shall be given as promptly as practicable to the other party to this
Agreement and this Agreement shall terminate and the transactions contemplated
hereby shall be abandoned, without further action by any of the parties hereto.
If this Agreement is terminated as provided herein (a) there shall be no
liability or obligation on the part of the Seller, the Purchaser, or their
respective officers, directors and Affiliates, and all obligations of the
parties shall terminate, except (i) for the obligations of the parties pursuant
to Sections 7.4 and 8.7, and (ii) that a party that has willfully breached its
representations, warranties, covenants, or agreements set forth in this
Agreement shall be liable for damages occasioned by such breach, including
without limitation any expenses, including the reasonable fees and expenses of
attorneys, accountants and other agents incurred by the other party in
connection with this Agreement and the transactions contemplated hereby, and
Purchaser shall have the right to commence an action for specific performance in
addition to other remedies hereunder; and (b) all filings, applications and
other submissions made pursuant to the transactions contemplated by this
Agreement shall, to the extent practicable, be withdrawn from the agency or
person to which made.
ARTICLE VII
GENERAL PROVISIONS
Section 8.1 Indemnification.
(a) By the Seller. The Seller covenants and agrees to
defend, indemnify and hold harmless the Purchaser, its Affiliates (including,
from and after the Closing, the Transferred Subs) and the officers, directors,
employees, agents, advisers and representatives of each such Person
(collectively, the "Purchaser Indemnitees") from and against, and pay or
reimburse the Purchaser Indemnitees for, any and all claims, liabilities,
obligations, losses, fines, costs, royalties, proceedings, deficiencies or
damages (whether absolute, accrued, conditional or otherwise and whether or not
resulting from third party claims), including out-of-pocket expenses and
reasonable attorneys' and accountants' fees incurred in the investigation or
defense of any of the same or in asserting any of their respective right
hereunder (collectively, "Losses") resulting from or arising out of:
(i) any breach or inaccuracy of any representation
or warranty made by the Seller in Section 3.2(b), Section 3.9, Section 3.12
(but for purposes of this indemnity obligation only,
58
substituting the reference to "the Effective Date" in Section 3.12 with
"the Closing Date"), Section 3.13 or Section 3.18;
(ii) any breach by the Seller of any covenant or
agreement hereunder;
(iii) the costs reasonably incurred by the trustees
for the time being of the CDRS Pension Plan (the "Trustees") attributable
to the professional fees of advisers and administrators reasonably
appointed by the Trustees for the purpose of completing the winding up of
the CDRS Pension Plan, and any liability incurred either directly or by
virtue of any indemnity owed to the Trustees under Rule 25 of the Rules of
the CDRS Pension Plan (as amended by a deed of indemnity dated June 1,
1998) by Comdisco Continuity Services (UK) Limited in respect of the
failure by the employer of any member or former member of the CDRS Pension
Plan to pay the correct national insurance contributions in respect of any
member or former member employed by it;
(iv) all Excluded Liabilities;
(v) all TSA Losses (as defined in the Transition
Services Agreement);
(vi) the four underground storage tanks (the "USTs")
located beneath the parking lot at the 81 Sophers Lane, Poole, Dorset,
England property and the potential contamination of soil and groundwater
horizons at the premises known as Unit 1, Sterling Park, Gatwick Road,
Crawley, West Sussex (the "Crawley Premises") and identified on Schedule
3.18, including, without limitation, (A) the removal and proper disposal
of the USTs and any fuel or other substances contained within the USTs; (B)
the collection of soil and, to the extent required by applicable
Environmental Law or to the extent required by customary practice as
determined in the reasonable judgment of a qualified environmental
consultant to be selected by the Seller, groundwater samples, in order to
determine if there has been a release of Hazardous Substances into the
environment from the USTs or upon the Crawley Premises; (C) if there has
been a release of Hazardous Substances into the environment, the
delineation of the extent of any such contamination and the development of
a remedial plan with respect to such contamination; (D) implementation of
an
59
appropriate remedial plan with respect to any such release, taking into
account applicable Environmental Laws and the current use of the real
property; and (E) to the extent required by applicable Environmental Laws,
notifying the appropriate Governmental Entity regarding the removal of the
USTs and/or the environmental investigation and obtaining, if available, a
no further action letter or closure letter from said Governmental Entity
with respect to the USTs or the Crawley Premises, as applicable. The
Seller's indemnification of the Purchaser with respect to the USTs is
subject to the following conditions. The Seller shall have the right to
manage and control the aforementioned tasks with respect to the USTs and
the Crawley Premises. The Purchaser shall grant to the Seller the necessary
access to the real property to allow the Seller and its representatives to
perform the removal of the USTs and/or environmental investigation and, if
necessary, remediation associated with the USTs or the Crawley Premises,
as applicable and the Purchaser shall fully cooperate with the Seller in
the performance of this work. The Seller shall provide reasonable notice to
the Purchaser of the Seller's intent to conduct any work on the property.
The Seller shall make reasonable commercial efforts to perform the work
hereunder in a manner which will not materially disrupt the Purchaser's
operations, provided, that nothing herein shall constitute a right of the
Purchaser to interfere with the Seller's performance of said work if the
Seller is unable to perform said work without interfering with the
Purchaser's operations. The Seller shall provide copies of all
correspondence and reports received from and submitted to any Governmental
Entity and shall provide the Purchaser with a reasonable opportunity to
submit comments on the Seller's reports prior to the submission of such
reports to said Governmental Entity. The Purchaser shall have the right to
retain, at its own expense, its own attorneys, experts, and other
representatives to oversee the Seller's performance of the work and to
review any correspondence or reports generated in connection with said
work;
(vii) the employment by Comdisco Continuity Services
(France) S.A. of Francois Lukitsch and the termination of such employment;
(viii) the termination of employment of any of the
employees of Comdisco Continuity Services (UK) Limited or of any other
Transferred Sub as referred to in Section 5.18;
60
(ix) any adjustment allocable by Revenue Canada to
Comdisco Services (Canada) Limited as a result of the final determination
of the transfer pricing audit currently being conducted by Revenue Canada
with respect to tax plans 1997, 1998 and 1999;
(x) any penalties, fines, or adjustments resulting
from the final determination of the document review of the Comdisco
Retirement Plan by the U.S. Department of Labor, Pension and Welfare
Benefits Administration ("DOL") pursuant to the notice from the DOL to the
Seller dated July 9, 2001, including, without limitation, any losses
resulting from the disqualification of such plan as a result of such
review; and
(xi) each incident of a casualty loss of Acquired
Assets in excess of $500,000 per incident (and if the aggregate of all
such casualties exceeds $1,000,000, all amounts in excess of $1,000,000)
occurring prior to the Closing Date for which insurance proceeds are not
paid to the Purchaser pursuant to Section 5.17 prior to July 26, 2002.
(b) By the Purchaser. The Purchaser covenants and agrees
to defend, indemnify and hold harmless the Seller, the Selling Subs, their
Affiliates and the officers, directors, employees, agents, advisers and
representatives of each such Person (collectively, the "Seller Indemnitees")
from and against any and all Losses resulting from or arising out of:
(i) any inaccuracy of any representation or
warranty made by the Purchaser;
(ii) any breach by the Purchaser of any covenant or
agreement made or contained herein; and
(iii) the Assumed Liabilities.
(c) Indemnification Procedures. In the case of any claim
asserted by a third party against a party entitled to indemnification under this
Agreement (the "Indemnified Party"), written notice (which notice shall describe
the claim in reasonable detail, shall include all written materials related to
such claim and shall, if practicable, contain an estimate of the Losses that
have been or may be
61
sustained by the Indemnified Party) shall be given by the Indemnified Party to
the party required to provide indemnification (the "Indemnifying Party")
promptly after such Indemnified Party has actual knowledge of any claim as to
which indemnity may be sought, and the Indemnified Party shall permit the
Indemnifying Party (at the expense of such Indemnifying Party) to assume the
defense of any claim or any litigation resulting therefrom, provided that (i)
the counsel for the Indemnifying Party who shall conduct the defense of such
claim or litigation shall be reasonably satisfactory to the Indemnified Party,
(ii) the Indemnified Party may participate in such defense at such Indemnified
Party's expense, and (iii) the omission by any Indemnified Party to give notice
as provided herein shall not relieve the Indemnifying Party of its
indemnification obligation under this Agreement except to the extent that such
omission results in a failure of actual notice to the Indemnifying Party and
such Indemnifying Party is prejudiced as a result of such failure to give
notice. Except with the prior written consent of the Indemnified Party, which
shall not be unreasonably withheld or delayed, no Indemnifying Party, in the
defense of any such claim or litigation, shall consent to entry of any judgment
or order, interim or otherwise, or enter into any settlement that provides for
injunctive or other nonmonetary relief affecting the Indemnified Party or that
does not include as an unconditional term thereof the giving by each claimant or
plaintiff to such Indemnified Party of a release from all liability with
respect to such claim or litigation. In the event that the Indemnified Party
shall in good faith determine that the conduct of the defense of any claim
subject to indemnification hereunder or any\proposed settlement of any such
claim by the Indemnifying Party might be expected to affect adversely the
ability of the Purchaser to conduct its business, or that the Indemnified Party
may have available to it one or more defenses or counterclaims that are
inconsistent with one or more of those that may be available to the Indemnifying
Party in respect of such claim or any litigation relating thereto, the
Indemnified Party shall have the right at such time to take over and assume
control over the defense, settlement, negotiations or litigation relating to any
such claim at the sole cost of the Indemnifying Party; provided that if the
Indemnified Party does so take over and assume control, the Indemnified Party
shall not settle such claim or litigation without the written consent of the
Indemnifying Party, such consent not to be unreasonably withheld. In the event
that the Indemnifying Party does not accept the defense of any matter as above
provided, the Indemnified Party shall have the full right to defend against any
such claim or demand and shall be entitled to settle or agree to pay in full
such claim or demand. In any event, the Indemnifying Party and the Indemnified
Party shall cooperate in the defense of any claim or litigation subject to this
Section 8.1 and the records of each shall be available to the other with respect
to such defense.
62
(d) Indemnification Limitations. No indemnification under Section
8.1(a)(i) shall be required with respect to any individual item of Loss unless
the aggregate of all Losses of the Purchaser Indemnitees described in Section
8.1(a) of this Agreement shall exceed $3,000,000, in which case the Seller shall
be liable only for the Losses in excess of such amount. No Indemnification
under Section 8.1(a)(iii) shall be required unless the aggregate of all Losses
of the Purchaser Indemnitees shall exceed $200,000. The Purchaser Indemnitees
shall not be entitled to recover from the Seller more than $15,000,000 in the
aggregate pursuant to Section 8.1(a)(v). The Purchaser Indemnitees shall not be
entitled to recover more than $500,000 from the Seller in the aggregate with
respect to indemnification under Section 8.1(a)(vi). The Purchaser Indemnitees
shall not be entitled to recover from the Seller more than $45,000,000 in the
aggregate, pursuant to this Section 8.1.
(e) Remedies Exclusive; Limitations on Remedies in this Agreement.
The Seller's obligation to indemnify the Purchaser Indemnitees pursuant to this
Agreement shall not exceed the amount of funds held for such purpose in the
Escrow Account, and notwithstanding anything to the contrary contained in this
Agreement but subject to Article VII, the Purchaser and the Seller acknowledge
and agree (i) that the sole and exclusive monetary recourse or monetary remedy
of the Purchaser Indemnitees with respect to a breach or inaccuracy of any
representation or warranty made by the Seller hereunder, any breach by the
Seller of any covenant or agreement hereunder and all Excluded Liabilities shall
be indemnification in accordance with the provisions of this Article VIII, (ii)
that the Escrow Account is the sole source of funding for any claims for
indemnification by any Purchaser Indemnitee pursuant to this Article VIII and
(iii) that once any funds have been released out of the Escrow Account to the
Seller as expressly contemplated by this Agreement, such funds shall cease to be
subject to any claims for indemnification by any Purchaser Indemnitee pursuant
to this Agreement or the Escrow Agreement.
(f) Survival of Representations, Warranties, Covenants and
Agreements.
(i) The Seller's Representations, Warranties, Covenants and
Agreements. Except for the representations and warranties of the Seller
contained in Sections 3.2(b), 3.9, 3.12, 3.13 and 3.18, the representations
and warranties of the Seller shall not survive Closing. The
representations and warranties of the Seller contained in Sections 3.2(b),
3.9, 3.12, 3.13 and 3.18 shall survive the execution and delivery of this
Agreement, any examination by or on behalf of the parties hereto and the
completion of the transactions contemplated herein, for a period ending on
August 1, 2002 (the
63
"Expiration Date"). The covenants and agreements of the Seller set forth in
this Agreement shall survive in accordance with their terms. All claims for
indemnification for breaches by the Seller of any representations,
warranties, covenants and/or agreements under this Agreement must be
asserted in a written notice to the Seller prior to the Expiration Date and
if any such claim is not made before the Expiration Date, the Purchaser
acknowledges and agrees that it shall not be entitled to indemnification
pursuant to this Section 8.1. So long as a Purchaser Indemnitee asserts a
claim for indemnification before the Expiration Date, such Purchaser
Indemnitee shall be deemed to have preserved its rights to indemnification
pursuant to this Section 8.1 regardless of when such claim is ultimately
liquidated.
(ii) Purchaser's Representations, Warranties, Covenants and
Agreements. The representations and warranties of the Purchaser contained
in this Agreement shall not survive Closing. The covenants and agreements
of the Purchaser set forth in this Agreement shall survive in accordance
with their terms.
(g) Indemnification Adjustment. The amount of any Losses shall be
reduced by any amount received by an Indemnified Party under any insurance
coverage or from any other party alleged to be responsible therefor (net of any
cost of recovery), and such Indemnified Party shall either (i) use commercially
reasonable efforts to collect any amounts available under such insurance
coverage or from such other party alleged to have responsibility or (ii) assign
to the Indemnifying Party responsible for reimbursing such Losses all of its
rights to collect under any insurance coverage or from any other party alleged
to be responsible therefor, provided, however, that such Indemnifying Party
shall be under no obligation to accept any such assignment, if such collection
rights are non-assignable or if such Indemnifying Party reasonably determines
that the assignment of such rights would materially decrease the amount of funds
(net of any cost of recovery) that such Indemnifying Party would otherwise be
entitled to receive pursuant to this Section 8.1(g) with respect to such Losses.
If an Indemnified Party receives an amount under insurance coverage or from such
other party with respect to Losses at any time subsequent to any indemnification
provided by this Section 8.1, then such Indemnified Party shall promptly
reimburse the Indemnifying Party for any payment made to the Indemnified Party
by such Indemnifying Party (net of any cost of recovery) in connection with
providing such indemnification up to such amount received by the Indemnified
Party. In addition, no Indemnified Party shall be entitled to any duplication
of reimbursement or indemnification with respect to any Losses which constitute
64
a breach of more than one representation, warranty, covenant or agreement
contained herein.
Section 8.2 Transfer Taxes; Section 338 Election. (a) The Seller and
the Purchaser will use reasonable efforts and cooperate in good faith to exempt
the sale, conveyance, assignments, transfers and deliveries to be made to the
Purchaser hereunder from any sales, use, transfer, documentary, registration,
recording and other similar Taxes (collectively, "Transfer Taxes") payable in
connection with such sale, conveyance, assignments, transfers and deliveries, to
the extent provided by Section 1146(c) of the Bankruptcy Code. In the event
that any Transfer Taxes are assessed or are required to be paid to secure the
admissibility for any legal purpose of an instrument with respect to such sale,
conveyance, assignments, transfers or deliveries, such Transfer Taxes shall be
paid one half by the Purchaser and one half by the Seller.
(b) The Purchaser may make the election provided in Section 338
of the Code with respect to its purchase of the equity interests in one or more
of the Transferred Subs.
65
Section 8.3 Notices. All notices, claims, demands, and other
communications hereunder shall be in writing and shall be deemed given upon (a)
confirmation of receipt of a facsimile transmission, (b) confirmed delivery by a
standard overnight carrier or when delivered by hand, or (c) the expiration of
five (5) business days after the day when mailed by registered or certified mail
(postage prepaid, return receipt requested), addressed to the respective parties
at the following addresses (or such other address for a party as shall be
specified by like notice):
(a) If to the Purchaser, to
SunGard Recovery Services
1285 Drummers Lane
Wayne PA, 19087
Attention: James Simmons, President
with a copy to
SunGard Data Systems Inc.
1285 Drummers lane
Wayne PA, 19087
Attention: Lawrence A. Gross
Senior Vice President-Legal
and General Counsel
with a copy to
Blank, Rome, Comisky & McCauley LLP
One Logan Square
Philadelphia, PA 19103
Telecopy: (215) 569-5555
Attention: Samuel H. Becker, Esq.
Fred Blume, Esq.
and
(b) If to the Seller, to
Comdisco, Inc.
6111 North River Road
Rosemont, Illinois 60018
66
Telecopy: (847) 518-5088
Attention: Robert Lackey, Esq.
Senior Vice President and Chief
Legal Officer
with a copy to
Skadden, Arps, Slate, Meagher & Flom (Illinois)
333 West Wacker Drive, Suite 2100
Chicago, Illinois 60606
Telecopy: (312) 407-0411
Attention: John Wm. Butler, Jr., Esq.
Charles W. Mulaney, Jr., Esq.
Section 8.4 Descriptive Headings. The headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
Section 8.5 Entire Agreement; Assignment. This Agreement (including
the Exhibits, Schedules and the other documents and instruments referred to
herein) (a) constitutes the entire agreement and supersedes all other prior
agreements and understandings, both written and oral, among the parties or any
of them, with respect to the subject matter hereof, including, without
limitation, any transaction between or among the parties hereto and (b) shall
not be assigned by operation of law or otherwise, except as otherwise provided
in Section 1.11.
Section 8.6 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Illinois without regard to
the rules of conflict of laws of the State of Illinois or any other
jurisdiction. The Purchaser and the Seller irrevocably and unconditionally
consent to submit to the jurisdiction of the Bankruptcy Court for any litigation
arising out of or relating to this Agreement and the transactions contemplated
hereby (and agree not to commence any litigation relating thereto except in the
Bankruptcy Court).
Section 8.7 Expenses. Whether or not the transactions contemplated
by this Agreement are consummated, all costs and expenses incurred in connection
with this Agreement and the transactions contemplated thereby shall be paid by
the party incurring such expenses, except as otherwise provided by Section 5.2
and Section 5.6.
67
Section 8.8 Amendment. This Agreement may not be amended except by
an instrument in writing signed on behalf of all the parties hereto.
Section 8.9 Waiver. At any time prior to the Closing Date, the
parties hereto may (a) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (b) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto, and (c) waive compliance with any of the
agreements or conditions contained herein. Any agreement on the part of a party
hereto to any such extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such party.
Section 8.10 Counterparts; Effectiveness. This Agreement may be
executed in two or more counterparts, each of which shall be deemed to be an
original but all of which shall constitute one and the same agreement. This
Agreement shall become effective when each party hereto shall have received
counterparts thereof signed by all the other parties hereto.
Section 8.1l Severability; Validity; Parties in Interest. If any
provision of this Agreement or the application thereof to any person or
circumstance is held invalid or unenforceable, the remainder of this Agreement,
and the application of such provision to other persons or circumstances, shall
not be affected thereby, and to such end, the provisions of this Agreement are
agreed to be sever able. Nothing in this Agreement, express or implied, is
intended to confer upon any person not a party to this Agreement any rights or
remedies of any nature whatsoever under or by reason of this Agreement.
Section 8.12 Bulk Sales. The Purchaser hereby waives compliance with
any bulk sales or other similar laws in any applicable jurisdiction in respect
of the transaction contemplated by this Agreement.
Section 8.13 Transfers Not Effected as of Closing. Nothing herein
shall be deemed to require the conveyance, assignment or transfer of any
Acquired Asset or Interest that by its terms or by operation of applicable law
cannot be freely conveyed, assigned, transferred or assumed. To the extent the
parties hereto have been unable to obtain any governmental or any third-party
consents or approvals required under applicable law for the transfer of any
Acquired Asset or Interest, and to the extent not otherwise prohibited by the
terms of the Acquired Asset or the Interests, the Seller or any of the Selling
Subs shall continue to be bound by the terms of such applicable Acquired Asset
or Interest and the Purchaser shall pay, perform and discharge fully all of the
obligations of the Seller or any of the Selling Subs, as applicable, thereunder
from and after the Closing to the extent that the
68
corresponding benefit is received. The Seller or any of the Selling Subs, as
applicable, shall, without consideration therefor, pay, assign and remit to the
Purchaser promptly all monies, rights and other consideration received in
respect of such performance. The Seller or any of the Selling Subs, as
applicable, shall exercise or exploit its rights in respect of such Acquired
Assets or Interests only as reasonably directed by the Purchaser and at the
Purchaser's expense. Subject to and in accordance with Section 5.6 hereof, for
not more than 90 days following the Closing Date, the parties hereto shall, if
requested by the Purchaser, continue to use their commercially reasonable
efforts to obtain all such unobtained consents or approvals required to be
obtained by each of them as the earliest practicable date. If and when any such
consents or approvals shall be obtained, then the Seller or any of the Selling
Subs, as applicable, shall promptly assign its rights and obligations thereunder
to the Purchaser without payment of consideration and the Purchaser shall,
without the payment of any consideration therefor, assume such rights and
obligations. The parties shall execute such instruments as may be necessary to
evidence such assignment and assumption.
ARTICLE IX
DEFINITIONS
As used herein, the terms below shall have the following meanings:
"Accountants" has the meaning set forth in Section 1.6(d).
"Accounts Receivable" has the meaning set forth in Section 1.1(b)(i).
"Acquired Assets" has the meaning set forth in Section 1.1(b).
"Acquired Intellectual Property" has the meaning set forth in
Section 1.1(b)(iv).
"Acquisition" has the meaning set forth in the Recitals.
"Action" means any claim, charge, action, suit, arbitration,
mediation, inquiry, proceeding or investigation by any private Person or
Governmental Entity before any Governmental Entity or any arbitrator or
mediator.
69
"Affiliate" of a Person means any other Person that, directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, the first mentioned Person.
"Agreement" has the meaning set forth in the Preamble.
"Ancillary Agreements" means collectively the Assignment and
Assumption Agreement, the Bill of Sale, the Transition Services Agreement and
the Trademark License Agreement.
"Assignment and Assumption Agreement" has the meaning set forth in
Section 2.2(a)(v).
"Assumed Liabilities" has the meaning set forth in Section 1.3.
"Assumed SIP Guarantees" means the SIP Guarantees to the extent they
relate to loans made to eight employees of the Seller who are primarily engaged
in the operation of the Business and who become Transferred Employees and one
employee of a Transferred Sub if he remains employed at the Closing. These
individuals will be identified to Purchaser by Seller at Closing, and the
outstanding balance of each such loan as of February 1, 2001 was: (a)
$1,349,760, (b) $843,600, (c) $337,440, (d) $337,440, (e) $843,600, (f)
$421,800, (g) $421,800, (h) $337,400 and (i) $674,880.
"Balance Sheet" means the unaudited balance sheet of the Business as
of June 30, 2001.
"Bankruptcy Code" has the meaning set forth in the Recitals.
"Bankruptcy Court" has the meaning set forth in the Recitals.
"Bidding Procedures" means the bidding procedures in the Chapter 11
Case in the form attached as Exhibit H.
"Bill of Sale" has the meaning set forth in Section 2.2(a)(ii).
"Business" has the meaning set forth in the Recitals.
"Business Employee" has the meaning set forth in Section 5.8(d).
"Business Subs" means the Transferred Subs and the Selling Subs.
70
"Cash Purchase Price" has the meaning set forth in Section 1.5.
"Chapter 11 Case" has the meaning set forth in the Recitals.
"Chapter 11 Expenses" means the costs incurred and expenses paid or
payable by the Seller or any of its subsidiaries in connection with the
administration of the Chapter 11 Case, including, without limitation, (a) fees
and expenses related to the Financing, (b) obligations to pay professionals'
fees and expenses in connection with the Chapter 11 Case (including, without
limitation, fees of attorneys, accountants, investment bankers, financial
advisors, and consultants retained by the Seller or any of its subsidiaries, the
creditors' committee or the pre-petition lenders, and any compensation for
making a substantial contribution in the Chapter 11 Case) and reimbursement of
any expenses incurred by the Seller or any of its subsidiaries prior to the
Closing Date in connection therewith (including, without limitation, any
obligations to pay any holdback of any such fees and expenses), (c) fees and
expenses payable to the United States trustee under Section 1930 of title 28,
United States Code and (d) expenses of members of the creditors' committee.
"Closing" has the meaning set forth in Section 2.1.
"Closing Date" has the meaning set forth in Section 2.1.
"Code" means the Internal Revenue Code of 1986, as amended, or any
successor statute thereof.
"Collective Bargaining Agreement" means any agreement, works council
or arrangement between, or applying to, one or more employees (whether or not
Affiliates) and a union, group of employees or an employee representative body,
for collective bargaining or other negotiating or consultation purpose.
"Customer Contracts" has the meaning set forth in Section
1.1(b)(ii)(A).
"Databases" means records, data files, input materials, reports, forms
and other data received, computed, developed, used and/or stored and all
database management system software used in connection therewith.
"Effective Date" has the meaning set forth in the Preamble.
"Execution Date" has the meaning set forth in the Preamble.
71
"Environmental Laws" has the meaning set forth in Section 3.18(e)(i).
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Escrow Account" has the meaning set forth in Section 1.8.
"Escrow Agent" has the meaning set forth in Section 1.8.
"Escrow Agreement" has the meaning set forth in Section 1.8.
"Escrow Amount" has the meaning set forth in Section 1.5.
"Estimated Cash Purchase Price" has the meaning set forth in Section
1.5(b).
"Excluded Assets" has the meaning set forth in Section 1.2.
"Excluded Contracts" has the meaning set forth in Section 1.2(d).
"Excluded Facilities" has the meaning set forth in Section
1.1(b)(ii)(B).
"Excluded Liabilities" has the meaning set forth in Section 1.4.
"Excluded Subs" has the meaning set forth in Section 1.2(o).
"Final Order" means an order of the Bankruptcy Court or other court of
competent jurisdiction: (a) as to which no appeal, notice of appeal, motion to
amend or make additional findings of fact, motion to alter or amend judgment,
motion for rehearing or motion for new trial has been timely filed or, if any of
the foregoing has been timely filed, it has been disposed of in a manner that
upholds and affirms the subject order in all respects without the possibility
for further appeal or rehearing thereon; (b) as to which the time for
instituting or filing an appeal, motion for rehearing or motion for new trial
shall have expired; and (c) as to which no stay is in effect; provided, however,
that the filing or pendency of a motion under Federal Rule of Bankruptcy
Procedure 9024(b) shall not cause an order not to be deemed a "Final Order"
unless such motion shall be filed within 10 days of the entry of the order at
issue. In the case of the Section 363/365 Order, a Final Order shall also
consist of an order as to which an appeal, notice of appeal, motion to amend or
make additional findings a fact, motion alter or amend judgment, motion for
rehearing or
72
motion for new trial has been filed, but as to which the Purchaser, in its sole
and absolute discretion, elects to proceed with Closing.
"Financial Statements" has the meaning set forth in Section 3.5.
"Financing" means the financing provided pursuant to any post-petition
credit agreement entered into among the Seller and certain of its subsidiaries
(but not including any Transferred Subs) and the lenders signatory thereto,
including any extension, renewal, refinancing, refunding or replacement (or
successive extensions, renewals, refinancings, refundings or replacements)
thereof.
"GAAP" has the meaning set forth in Section 3.5.
"Governmental Entity" means any federal, state, provincial, local,
county or municipal government, governmental, judicial, regulatory or
administrative agency, commission, board, bureau or other authority or
instrumentality, domestic or foreign.
"HSR Act" has the meaning set forth in Section 3.4.
"Intellectual Property" means all U.S. and other letters patent,
patents, patent applications, Software and know-how, trade names, trademarks,
copyrights, service marks, trademark registrations and applications, service
mark registrations and applications together with goodwill, copyright
registrations and applications, trade secrets, licenses, registered and
unregistered designs, drawings, blueprints, specifications, technology,
databases, confidential information, all other rights in and to or interests in
the same, web sites and the content thereon, internet domain names, slogans,
trade dress, inventions, methods and processes and all goodwill associated with
the foregoing.
"Interests" has the meaning set forth in the Recitals.
"IP License Agreements" has the meaning set forth in Section 3.19(c).
"Leases" has the meaning set forth in Section 3.16(h)(v).
"Material Adverse Effect" means any event, condition or matter in
respect of the operation of the Business, the Transferred Subs, the Acquired
Assets, the Interests and the Assumed Liabilities that, individually or in the
aggregate, results in or could reasonably be expected to result in a material
adverse effect on the business, assets, properties, liabilities, financial
condition or operations of the
73
Business, taken as a whole; provided, that, any event, condition or matter that
(i) is generally applicable to (A) the industries and markets in which the
Business operates or (B) the United States and global economies that does not
have a disproportionate effect on the Business or (ii) relates to foreign
currency exchange rate fluctuations, shall in each case be excluded from the
determination of Material Adverse Effect; provided, further, that any event,
condition or matter resulting from the mere filing of the Chapter 11 Case and
the announcement of the Chapter 11 Case and the other transactions contemplated
by this Agreement shall also be excluded from the determination of Material
Adverse Effect.
"Mismatched Employees" has the meaning set forth in Section 5.8(a).
"Mismatched Employer" has the meaning set forth in Section 3.21(a).
"Mutual Release" has the meaning set forth in Section 5.9.
"Owned Real Property" has the meaning set forth in Section
1.1(b)(vi)(A).
"Permitted Exceptions" means, with respect to any Person, any of the
following liens:
(a) liens on property of the Transferred Subs with respect to the
payment of Taxes, assessments or governmental charges in all cases which are not
yet due or which are being contested in good faith by appropriate proceedings
and with respect to which adequate reserves or other appropriate provisions are
being maintained to the extent required by GAAP;
(b) liens on property of the Transferred Subs of landlords arising by
statute and liens of suppliers, mechanics, carriers, materialmen, warehousemen
or workmen and other liens on property of the Transferred Subs imposed by law
created in the ordinary course of business for amounts not yet due or which are
being contested in good faith by appropriate proceedings and with respect to
which adequate reserves or other appropriate provisions are being maintained to
the extent required by GAAP;
(c) deposits made in the ordinary course in connection with worker's
compensation, unemployment insurance or other types of social security benefits
or to secure the performance of bids, tenders, sales, contracts (other than for
the repayment of borrowed money) and surety, appeal, customs or performance
bonds;
74
(d) encumbrances arising by reason of zoning restrictions easements,
licenses, reservations, covenants, rights-of-way, utility easements, building
restrictions and other similar encumbrances of record (other than monetary
encumbrances) on the use of Real Property or any other matters of record which
do not materially detract from the value of such Real Property or interfere with
the ordinary conduct of the business conducted and proposed to be conducted at
such Real Property;
(e) encumbrances arising under leases or subleases of Real Property
which do not in the aggregate materially detract from the value of such Real
Property or interfere with the ordinary conduct of the business conducted and
proposed to be conducted at such Real Property; and
(f) financing statements evidencing a lessor's rights in and to
Tangible Personal Property leased to such Person in the ordinary course of such
Person's business of a consignor's interest in good consigned to such Person in
the ordinary course of business.
"Permits" has the meaning set forth in Section 3.7(b).
"Person" means an individual, corporation, partnership, association,
limited liability company, trust, joint venture, unincorporated organization,
other entity or group (as defined in Section 13(d)(3) of the Securities Exchange
Act of 1934, as amended).
"Petitions" has the meaning set forth in the Recitals.
"Petition Date" means the date on which the Petitions are filed with
the Bankruptcy Court.
"Property Leases" has the meaning set forth in Section 1.1(b)(vi)(B).
"Purchaser" has the meaning set forth in the Preamble.
"Purchaser Plans" has the meaning set forth in Section 5.8(d).
"Qualified Bid" has the meaning set forth in the Bidding Procedures.
"Qualified Bidder" has the meaning set forth in the Bidding
Procedures.
75
"Real Property" has the meaning set forth in Section 3.16.
"Required Creditor Notice" has the meaning set forth in Section
5.1(b).
"Retention Order" has the meaning set forth in Section 5.8(g).
"Sale Hearing" means the hearing scheduled and held by the Bankruptcy
Court on the approval of the sale of the Acquired Assets under the Agreement.
"Section 363/365 Motion" means the motion filed by the Seller in the
Chapter 11 Case seeking entry of the Section 363/365 Order.
"Section 363/365 Order" means an order of the Bankruptcy Court, in
substantially the form attached hereto as Exhibit E, approving the sale of the
Acquired Assets and assumption/assignment of the executory contracts and
unexpired leases and Assumed Liabilities under this Agreement pursuant to
Sections 105, 363 and 365 of the Bankruptcy Code, that has not been reversed,
stayed, modified or amended in any material respects prior to the Closing Date.
"Seller" has the meaning set forth in the Preamble.
"Seller Disclosure Schedule" has the meaning set forth in the
introductory paragraph to Article III.
"Seller Plans" has the meaning set forth in the Section 3.22(a).
"Selling Sub" means any of (i) CDS Foreign Holdings, Inc., a Delaware
corporation, (ii) Comdisco Ireland Limited, a company organized under the laws
of Ireland, (iii) Comdisco Holdings (U.K.) Limited, a private limited company
organized under the laws of the United Kingdom, (iv) Comdisco United Kingdom
Limited, a private limited company organized under the laws of the United
Kingdom, (v) Comdisco Asia Pte., a private limited company organized under the
laws of Singapore, and (vi) Comdisco Canada Limited, a corporation organized
under the laws of Ontario and collectively, the "Selling Subs."
"SIP Guarantees" means all of the liabilities and obligations of the
Seller under the Facility and Guaranty Agreement among Comdisco, Inc., The First
National Bank of Chicago, as Agent, and the Financial Institution Party hereto,
dated as of February 2, 1998.
76
"Software" means all computer software, all physical representations
thereof (whether or not such software is complete or has been released)
including source and object code, all corrections, modifications and
enhancements to such software which are being developed by the Seller or any
Selling Sub, all options or programs marketed with or as part of or adjustment
to such software, all present and predecessor versions of such software (whether
or not actually marketed) and related source and object code, and all
specifications and documents necessary for the use and maintenance of such
software, including, but not limited to, all user guides installation guides,
narrative descriptions, file layouts, logic flow diagrams, source and local
modules, output reports, test or other data, test programs and other necessary
information that is owned, used or held in connection with the software
including, without limitation all copies of all of the foregoing.
"Tangible Personal Property" means equipment, machinery, computers,
data storage devices, furniture, furnishings, fixtures, office supplies,
vehicles, spare parts and all other tangible personal property used primarily in
the operation of the Business.
"Tax Return" has the meaning set forth in Section 3.13(l).
"Taxes" has the meaning set forth in Section 3.13(l).
"Taxing Authority" has the meaning set forth in Section 3.13(l).
"Title Company" has the meaning set forth in Section 1.9.
"Title Policy" has the meaning set forth in Section 1.9.
"Trademark License Agreement" has the meaning set forth in Section
1.10.
"Transfer Taxes" has the meaning set forth in Section 8.2.
"Transferred Employees" has the meaning set forth in the Section 5.8.
"Transferred Sub" has the meaning set forth in the Recitals.
"Transferred Sub Employee" has the meaning set forth in Section
5.8(b).
77
"Transferred Subrogation Rights" has the meaning set forth in Section
1.1(b)(xvii).
"Transition Services Agreement" has the meaning set forth in Section
2.2(a)(vii).
"TSA Losses" has the meaning set forth in the Transition Services
Agreement.
"Unadjusted Cash Purchase Price" has the meaning set forth in Section
1.5.
"Vendor Agreements" has the meaning set forth in Section
1.1(b)(ii)(B).
"WARN Act" means the Worker Adjustment and Retraining Notification
Act of 1988.
"Working Capital" has the meaning set forth in Section 1.6(b).
"Working Capital Deficiency" has the meaning set forth in Section
1.6(a)(i).
"Working Capital Statement" has the meaning set forth in Section
1.6(b).
"Working Capital Surplus" has the meaning set forth in Section
1.6(a)(ii).
78
IN WITNESS WHEREOF, the Seller and the Purchaser have caused this
Agreement to be executed on their behalf as of the Execution Date by their
officers thereunto duly authorized.
COMDISCO, INC.
By: /s/ Michael A. Fazio
----------------------------------
Name: Michael A. Fazio
Title: President and Chief Operating Officer
SUNGARD DATA SYSTEMS INC.
By: /s/ Richard C. Tarbox
----------------------------------
Name: Richard C. Tarbox
Title: Senior Vice President-Corporate
Development