STOCK PURCHASE AGREEMENT
Made the 10th day of February, 1998
TABLE OF CONTENTS
PAGE NO.
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ARTICLE 1 - INTERPRETATION .............................................. 2
1.1 Definitions .................................................... 2
1.2 Construction ................................................... 8
1.3 Schedules and Exhibits ......................................... 9
ARTICLE 2 - PURCHASE AND SALE OF PURCHASED SHARES ....................... 10
2.1 Purchase and Sale of Purchased Shares .......................... 10
2.2 Purchase Price and Allocation .................................. 10
ARTICLE 3 - CLOSING ARRANGEMENTS ........................................ 10
3.1 Place of Closing ............................................... 10
3.2 Delivery of Certificates ....................................... 10
3.3 Payment of the Purchase Price .................................. 11
3.4 Other Closing Deliveries of Sellers ............................ 11
3.5 Other Closing Deliveries of Purchaser .......................... 11
ARTICLE 4 - REPRESENTATIONS AND WARRANTIES .............................. 11
4.1 Representations and Warranties of the Sellers .................. 11
4.2 Representations and Warranties of the Purchaser ................ 28
4.3 Survival of Sellers' Representations and Warranties ............ 30
4.4 Survival of Purchaser's and United's Representations and
Warranties ..................................................... 30
ARTICLE 5 - COVENANTS OF THE PARTIES PRIOR TO CLOSING ................... 31
5.1 Operations before Closing ...................................... 31
5.2 Approvals and Consents ......................................... 33
5.3 Competitive Information ........................................ 33
5.4 Confidential Information ....................................... 34
5.5 Consultant Opinions ............................................ 34
5.6 New Competitive Information .................................... 35
5.7 Transitional Services .......................................... 35
ARTICLE 6 - CONDITIONS PRECEDENT TO THE PERFORMANCE
BY THE PARTIES OF THEIR OBLIGATIONS UNDER THIS AGREEMENT ....... 35
6.1 Conditions for the Benefit of the Purchaser .................... 35
6.2 Conditions for the Benefit of the Sellers ...................... 38
6.3 Termination by Purchaser ....................................... 39
6.4 Termination by Sellers ......................................... 39
ARTICLE 7 - COVENANTS OF THE PARTIES FOLLOWING CLOSING .................. 40
7.1 Closing Date Balance Sheet ..................................... 40
7.2 Adjustments .................................................... 41
7.3 Income Statement for Stub Period ............................... 41
7.4 Confidentiality ................................................ 42
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7.5 Employees ...................................................... 42
7.6 Non-Competition ................................................ 42
7.7 Non-Solicitation ............................................... 43
7.8 Access to Records .............................................. 43
7.9 Mexican Foreign Investment Notice .............................. 44
7.10 Recording Transfer of Azerty Mexico Shares ..................... 44
7.11 Change of Name ................................................. 44
ARTICLE 8 - INDEMNIFICATION ............................................. 45
8.1 Indemnification by Sellers ..................................... 45
8.2 Indemnification by the Purchaser ............................... 45
8.3 Procedure for Indemnification .................................. 46
8.4 Additional Rules and Procedures ................................ 47
8.5 Limits to Claims ............................................... 48
8.6 Amounts Recovered .............................................. 49
8.7 Non-Monetary Rights ............................................ 49
8.8 Purchase Price Adjustment ...................................... 49
8.9 Certain Tax Matters ............................................ 49
8.10 Transfer Taxes ................................................. 51
ARTICLE 9 - GENERAL ..................................................... 51
9.1 Public Notice .................................................. 51
9.2 Expenses ....................................................... 51
9.3 Further Assurances ............................................. 51
9.4 Time of the Essence ............................................ 52
9.5 Benefit of the Agreement ....................................... 52
9.6 Entire Agreement ............................................... 52
9.7 Waiver ......................................................... 52
9.8 Notices ........................................................ 52
9.9 Assignment ..................................................... 54
9.10 Severability ................................................... 54
9.11 Counterparts ................................................... 54
9.12 Governing Law .................................................. 54
9.13 Dispute Resolution ............................................. 54
9.14 United Guarantee ............................................... 54
9.15 Service ........................................................ 55
9.16 Waiver of Jury Trial and Punitive Damages ...................... 55
STOCK PURCHASE AGREEMENT
THIS AGREEMENT made the 10th day of February, 1998.
A M O N G:
ABITIBI-CONSOLIDATED INC., a corporation
incorporated under the federal laws of
Canada ("ACI")
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ABITIBI-CONSOLIDATED SALES
CORPORATION, a corporation incorporated
under the laws of the State of Delaware ("ACSC")
(ACI and ACSC being collectively referred to
herein as the "Sellers")
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AZERTY INCORPORATED, a corporation
incorporated under the laws of the State of
Delaware ("Azerty")
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POSITIVE ID WHOLESALE INC., a corporation
incorporated under the laws of the State of
Delaware ("ID")
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AP SUPPORT SERVICES INCORPORATED, a
corporation incorporated under the laws of the
State of Delaware ("APSS")
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AZERTY DE MEXICO, S.A. DE C.V., a
corporation incorporated under the laws of the
federal district of Mexico ("Azerty Mexico")
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UNITED STATIONERS SUPPLY CO., a
corporation incorporated under the laws of
the State
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of Illinois (the "Purchaser")
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UNITED STATIONERS INC., a corporation
incorporated under the laws of the State of
Delaware ("United")
WHEREAS on the date hereof ACSC is, and on the Closing Date
(as hereinafter defined) ACSC will be, the registered and beneficial owner of
all of the issued and outstanding shares in the capital of Azerty, ID and
APSS;
AND WHEREAS on the date hereof ACI and Azerty are, and on
the Closing Date ACI and Azerty will be, the registered and beneficial owners
of 99% and 1% of all of the issued and outstanding shares in the capital of
Azerty Mexico, respectively;
AND WHEREAS the Sellers wish to sell to the Purchaser and
the Purchaser wishes to purchase from the Sellers all of the issued and
outstanding shares in the capital of the Corporations (as hereinafter
defined);
NOW THEREFORE in consideration of the premises and the
mutual covenants and agreements herein contained, the parties hereto hereby
covenant and agree as follows:
ARTICLE 1 - INTERPRETATION
1.1 DEFINITIONS. In this Agreement, or in any amendments hereto,
unless there is something in the subject matter or context inconsistent
therewith, the following terms shall have the following meanings,
respectively:
(a) "ADJUSTED CLOSING DATE BALANCE SHEET" has the meaning
attributed thereto in Schedule 7.1;
(a.1) "ADJUSTMENT DATE" means the date which is five Business Days
after the date on which the Closing Date Balance Sheet is
final and binding on the parties, as contemplated by Article 7
or, should there be an Adjusted Closing Date Balance Sheet in
the circumstances contemplated by Section 7.1 and Schedule
7.1, such date which is five Business Days after the date on
which such Adjusted Closing Date Balance Sheet is final and
binding on the parties, as contemplated by Article 7;
(b) "AFFILIATE" of a Person shall mean a Person that directly, or
indirectly through one or more intermediaries, controls or is
controlled by, or is under common control with, such Person;
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(c) "AGREEMENT" means this Agreement and includes all Exhibits and
Schedules attached thereto;
(d) "AUTHORITY" means any governmental authority, body, agency,
division or department, whether federal, state or local,
including without limitation such Persons in Canada, the
United States and Mexico;
(e) "AXIDATA" means Axidata Inc., a corporation incorporated under
the federal laws of Canada;
(f) "BUSINESS" means the distribution of computer consumables,
peripherals, data storage products, accessories and automated
identification equipment, and the provision of logistics and
marketing services, including telemarketing, currently carried
on by the Corporations, as reflected in the December 31
Financial Statements;
(g) "BUSINESS DAY" means every day except a Saturday, Sunday or a
day on which principal commercial banks are not open for
business in the City of New York, New York;
(h) "CLAIMS" means any and all losses (excluding loss of profits),
damages, Taxes, expenses, liabilities (whether accrued,
actual, contingent or otherwise), claims, demands, actions, of
whatever nature or kind, including legal fees and expenses on
a solicitor/attorney and client basis and other professional
fees and disbursements.
(i) "CLOSING" means the completion of the transactions described
in this Agreement;
(j) "CLOSING DATE" or "DATE OF CLOSING" means March 27, 1998 or
such other date as the Purchaser and the Sellers may agree
upon and on which the Closing occurs;
(k) "CLOSING DATE BALANCE SHEET" means, collectively, the audited
combined (including the elimination of all significant
inter-company transactions and balances) balance sheet
including each of the Corporations as at the Closing Date,
prepared in accordance with GAAP and the procedures set forth
in Schedule 7.1;
(l) "COMPETITIVE INFORMATION" means competitively sensitive
information of the Sellers or Corporations, or any of them,
including customer lists, pricing, volumes and specific
product mix by customer or region, and supplier information
relating to specific contract terms such as rebates and co-op
advertising terms and pricing;
(m) "CONFIDENTIAL INFORMATION" means any information, the
disclosure of which would result in the violation of any
confidentiality covenant to which any of the Sellers or the
Corporations is a party;
(n) "CONSENT" means the consent or approval of the landlord of a
Location, any other
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party to a Material Contract with any of the Sellers or the
Corporations or any Authority to the completion of the
transactions contemplated by this Agreement, the execution
of this Agreement and the Closing or the performance of any
terms hereof;
(o) "CORPORATIONS" means, collectively, Azerty, ID, APSS and
Azerty Mexico, and "CORPORATION" means any one of them;
(p) "DEBT" means all current liabilities and long term debt of any
of the Corporations as disclosed or required to be disclosed
(or with respect to current liabilities and long-term debt
incurred subsequent to December 31, 1997, which would be
required to be so disclosed if such Debt had been outstanding
on such date) in accordance with GAAP in the December 31
Balance Sheet;
(q) "DECEMBER 31 BALANCE SHEET" means, collectively, the audited
combined (including the elimination of all significant
inter-company transactions and balances) balance sheet
including each of the Corporations as at December 31, 1997;
(r) "DECEMBER 31 FINANCIAL STATEMENTS" means the audited combined
financial statements (including the elimination of all
significant inter-company transactions and balances) including
each of the Corporations for the fiscal year ended December
31, 1997 consisting of the December 31 Balance Sheet, a
statement of income (loss) and a statement of cash flows and
all notes and schedules thereto, which have been prepared in
accordance with GAAP and as described in Section 4.1(f),
copies of which are annexed as Schedule 1.1(r) hereto;
(s) "EMPLOYEES" has the meaning attributed thereto in section
4.1(s);
(t) "ENVIRONMENTAL LAWS" means all foreign, federal, municipal or
local laws, statutes, rules, regulations, ordinances, orders,
directives (to the extent legally binding) and other
requirements of any Authority (having the force of law) and in
force as of the date hereof without regard to any changes
thereto following the date hereof relating to environmental or
occupational health matters, including legislation governing
the labelling, use and storage of Hazardous Substances;
(u) "ENVIRONMENTAL ORDERS" means applicable orders or decisions
rendered by any Authority under or pursuant to any
Environmental Laws;
(v) "ENVIRONMENTAL PERMITS" means all permits, certificates,
registrations, licenses and other approvals issued by any
Authority and or required for the operation by the
Corporations or any of them of their Locations in compliance
with all Environmental Laws or Environmental Orders;
(w) "ERISA" shall mean the United States Employee Retirement
Income Security Act of 1974, as amended (including any
successor act), and the rules and regulations
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promulgated thereunder;
(x) "ERISA AFFILIATE" shall mean any Person under common control
with the Corporations or who is treated as a single employer
with any of the Corporations under Section 414(b), (c), (m),
or (o) of the U.S. Tax Code;
(y) "ESTIMATED PURCHASE PRICE" has the meaning attributed thereto
in section 2.2;
(z) "FINANCIAL STATEMENTS" has the meaning attributed thereto in
section 4.1(f);
(aa) "GAAP" means generally accepted accounting principles as set
forth in the handbook published by the Canadian Institute of
Chartered Accountants or interpretations and general practice
thereof;
(bb) "HAZARDOUS SUBSTANCES" means any material substance or waste
that is prohibited, controlled, regulated or which forms the
basis of liability under any Environmental Laws, including
PCBs, asbestos, urea formaldehyde foam insulation, petroleum
or petroleum by-products;
(cc) "HSR ACT" has the meaning attributed thereto in section
4.1(b)(iii)(A);
(dd) "INTELLECTUAL PROPERTY AGREEMENT" means an agreement
substantially in the form of the agreement annexed hereto
as Schedule 1.1(ad);
(ee) "KNOWLEDGE" means the actual knowledge, after due inquiry
within ACI and the Corporations, of the Person charged with
knowledge; and in the case of the Sellers or the Corporations
includes the actual knowledge of any officer or director of
the Sellers or the Corporations;
(ff) "LAW" means any statute, law, ordinance, regulation, rule or
other legally binding promulgation of an Authority;
(gg) "LIEN" means any lien, mortgage, pledge, assessment, easement,
right of way, encroachment, security interest, restriction,
lease, sublease, tenancy, adverse claim, levy or charge or
other encumbrance of any kind or any contract or agreement to
enter into any of the foregoing;
(hh) "LOCATION" means any premises utilized in the Business which
is owned or subject to a lease, sublease or license entered
into by a Corporation;
(ii) "LUCAS" means The Lucas Group, consultants retained by the
Purchaser;
(jj) "MATERIAL ADVERSE EFFECT" means, where used in relation to the
Corporations, a material adverse effect on the business,
operations, assets, condition (financial or otherwise) or
prospects of the Corporations considered as a whole;
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(kk) "MATERIAL CONTRACT" means any agreement, written or oral, to
which any Corporation is a party or otherwise relating to the
Business having a term in excess of one year and involving an
amount, in the aggregate, in excess of $50,000 or having a
term which does not exceed one year and involving payments or
loans by any party thereunder in excess of $100,000 in the
aggregate;
(ll) "NET TANGIBLE ASSETS" has the meaning attributed thereto in
Section 7.1(e);
(mm) "OPD" means the office products division of ACI which includes
the Corporations, which corporations are being sold hereunder,
and Axidata, Eurozerty B.V., ISFO B.V. and AP Support Services
B.V., which corporations are not being sold hereunder;
(am.1) "OFFICE PRODUCTS LONG TERM INCENTIVE PLAN" means the existing
Amended and Restated Office Products Long Term Incentive Plan
of ACI;
(nn) "PENSION AUTHORITIES" means the applicable foreign, federal
and state pension regulatory authorities, including, without
limitation, the United States Internal Revenue Service;
(oo) "PENSION LEGISLATION" means the applicable foreign, federal or
state pension benefits legislation and, where applicable, the
U.S. Tax Code;
(pp) "PERMITTED LIENS" has the meaning attributed thereto in
section 4.1(k);
(qq) "PERSON" means an individual, partnership, unincorporated
association, organization, syndicate, corporation, trust and a
trustee, executor, administrator or other legal or personal
representative;
(rr) "PLAN TERMS" means the terms and conditions of all Plan texts
and amendments thereto;
(ss) "PLANS" means, with respect to the Corporations and their
ERISA Affiliates, "employee benefit plans" as defined in
Section 3(3) of ERISA, stock bonus, stock ownership, stock
option, stock purchase, stock appreciation rights, phantom
stock, and other stock plans (whether qualified or
non-qualified), and all other pension, welfare, severance,
retirement, bonus, deferred compensation, incentive
compensation, insurance (whether life, accident and health,
or other and whether key man, group, workers compensation,
or other), profit sharing, disability, thrift, day care, legal
services, leave of absence, layoff, and supplemental or excess
benefit plans, in each case existing on or before the Closing
Date which any of the Corporations maintains or sponsors and
which cover some or all of the present or former officers,
directors, employees, agents, consultants, or other similar
representatives providing services to or for any of the
Corporations or their ERISA
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Affiliates but for greater certainty does not include the
Office Products Long Term Incentive Plan;
(tt) "PRIME RATE" means the rate of interest from time to time
announced by The Chase Manhattan Bank at its principal office
in New York, New York at its prime commercial lending rate;
(uu) "PURCHASED SHARES" means the issued and outstanding common
shares and, in the case of Azerty Mexico, Class 1 and Class 2
shares in the capital of the Corporations described in
Schedule 1.1(au) together with any additional shares issued to
the Sellers after the date hereof in connection with
capitalization of inter-company debt;
(vv) "PURCHASE PRICE" has the meaning attributed thereto in
section 2.2;
(ww) "REAL PROPERTY" means any real property, whether owned or
leased, and used for the conduct of the Business or previously
used for such purpose;
(xx) "REGULATORY APPROVALS" means all necessary approvals, permits,
sanctions, rulings, orders or consents from any Authority or
self-regulatory organization within or outside of the U.S.A.
and/or Mexico with respect to the transactions contemplated by
this Agreement;
(yy) "REMEDIAL REQUIREMENT" means any demand, directive or order of
any Authority having jurisdiction (if legally binding) or any
requirement or obligation under Environmental Laws to
investigate, remediate, clean-up or otherwise address
Hazardous Substances in order for the Business to be in
compliance with Environmental Laws, having regard to the
operations of the Business and the use of the Real Property as
at the Closing Date and without regard to any changes thereto
after the Closing Date;
(zz) "SELLERS" means, collectively, ACI and ACSC and "SELLER" means
either of them.
(aaa) "SEPTEMBER 30 BALANCE SHEET" means, collectively, the
unaudited balance sheets of each of the Corporations as at
September 30, 1997, copies of which are attached hereto as
Schedule 1.1(ba);
(ba.1) "SIDE AGREEMENT" means the agreement dated of even date
herewith between the Sellers and the Purchaser;
(bbb) "TAXES" shall mean all taxes, charges, fees, levies, duties
or other similar assessments, reassessments or liabilities,
including without limitation (a) income, gross receipts, ad
valorem, premium, excise, real property, personal property,
asset, sales, use, transfer, withholding, employment, payroll,
profit sharing, medicare, and franchise taxes imposed by the
United States of America, Mexico, or by any state, local, or
foreign government, or any subdivision, agency, or other
similar
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Person of the United States, Mexico or any such government;
and (b) any interest, fines, penalties, assessments, or
additions to taxes resulting from, attributable to, or
incurred in connection with any Tax or any contest, dispute,
or refund thereof;
(ccc) "TAX RETURNS" shall mean any report, return, or statement
required to be supplied to a taxing authority in connection
with Taxes;
(ddd) "TIME OF CLOSING" means 10:00 a.m. (New York time) on the
Closing Date or such other time as the Purchaser and the
Sellers may agree upon;
(eee) "U.S. GAAP" means United States generally accepted accounting
principles; and
(fff) "U.S. TAX CODE" means the United States Internal Revenue Code
of 1986, as amended.
1.2 CONSTRUCTION. In this Agreement, unless the context
requires otherwise or is otherwise expressly provided:
(a) words denoting the singular include the plural and vice versa
and words denoting any gender include all genders;
(b) the words "including", "include", and "includes" shall mean
"including without limitation", "include, without limitation"
and "includes, without limitation", respectively;
(c) all references to Articles or sections are references to
Articles of sections of this Agreement;
(d) any reference to a statute shall mean the statute in force as
at the date hereof and any regulation in force thereunder,
unless otherwise expressly provided;
(e) the use of headings is for convenience of reference only and
shall not affect the construction of this Agreement;
(f) when calculating the period of time within which or following
which any act is to be done or step taken, the date which is
the reference day in calculating such period shall be
excluded. If the last day of such period is not a Business
Day, the period shall end on the next Business Day;
(g) all dollar amounts are expressed in U.S. funds; and
(h) any tender of documents or money under this Agreement may be
made upon the parties or their respective counsel and money
may be tendered by bank draft or wire transfer drawn upon a
U.S. or Canadian chartered bank or by negotiable cheque
payable in U.S. funds and certified by a U.S. or Canadian
chartered bank.
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1.3 SCHEDULES AND EXHIBITS. The following are the schedules and
exhibits annexed hereto and incorporated by reference herein and deemed to be
part of this Agreement:
Schedule 1.1(r) - December 31 Financial Statements
Schedule 1.1(ad) - Intellectual Property Agreement
Schedule 1.1(au) - Purchased Shares
Schedule 1.1(ba) - September 30 Balance Sheet
Schedule 2.1 - Sellers and Purchased Shares
Schedule 3.4(c) - Form of Opinion of Counsel to the Sellers
Schedule 3.5(c) - Form of Opinion of Counsel to the Purchaser
Schedule 3.5(d) - Form of Opinion of General Counsel to the Purchaser
Schedule 4.1(b)(i)A - Regulatory Approvals
Schedule 4.1(b)(iii) - Sellers' or Corporations' Required Filings
Schedule 4.1(f) - Exceptions to GAAP in Preparation of Financial
Statements
Schedule 4.1(h) - Liabilities
Schedule 4.1(i) - Tax Matters
Schedule 4.1(j) - Material Changes
Schedule 4.1(k) - Encumbrances on Title to Assets
Schedule 4.1(n) - Leased Real Property
Schedule 4.1(m) - Location of Records
Schedule 4.1(o) - Owned Real Property
Schedule 4.1(q) - Litigation
Schedule 4.1(r) - Material Contracts
Schedule 4.1(s) - Employment Matters
Schedule 4.1(t) - Benefit plans
Schedule 4.1(u) - Insurance
Schedule 4.1(v) - Intellectual property
Schedule 4.1(x) - Non arm's-length contracts
Schedule 4.1(z) - Environmental Matters
Schedule 4.1(ac) - Year 2000 Compliance
Schedule 4.2(b)(iii) - Purchaser's Required Filings
Schedule 6.1(c) - Consents
Schedule 7.1 - Basis of Presentation of Closing Date Balance Sheet
Schedule 9.13 - Mediation Procedures
ARTICLE 2 - PURCHASE AND SALE OF PURCHASED SHARES
2.1 PURCHASE AND SALE OF PURCHASED SHARES. Subject to the terms and
conditions of this Agreement, at the Time of Closing, each of the Sellers
shall sell to the Purchaser and the Purchaser shall purchase from such
Seller, free and clear of all Liens, the Purchased Shares set out opposite
such Seller's name on Schedule 2.1.
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2.2 PURCHASE PRICE AND ALLOCATION. The purchase price payable by the
Purchaser for the Purchased Shares shall be U.S.$109,000,000.00 (the
"Estimated Purchase Price"), subject to adjustment, if any, in accordance
with Article 7 (the Estimated Purchase Price as adjusted is the "Purchase
Price") and shall be allocated initially among the Purchased Shares as
follows, subject to final adjustment:
PURCHASED ESTIMATED PERCENTAGE OF
SHARES PURCHASE PRICE PURCHASE PRICE
------------- ---------------- ----------------
Azerty $93,800,000 86.1%
ID $6,000,000 5.5%
APSS $1,200,000 1.1%
Azerty Mexico $8,000,000 7.3%
---------------- ----------------
Total $109,000,000 100%
ARTICLE 3 - CLOSING ARRANGEMENTS
3.1 PLACE OF CLOSING. The closing shall take place at the Time of
Closing at the offices of Goodman Phillips & Vineberg, 430 Park Avenue, 10th
Floor, New York, New York, 10022, or at such other place and time as may be
agreed upon by the Purchaser and the Sellers.
3.2 DELIVERY OF CERTIFICATES. The Sellers shall transfer and deliver
to the Purchaser at the Time of Closing share certificates of each
Corporation representing, in the aggregate, the Purchased Shares duly
endorsed in blank for transfer, or accompanied by irrevocable stock transfer
powers of attorney duly executed in blank (provided that in the case of
Azerty Mexico, certificates shall be duly endorsed not in blank but in the
name of the Purchaser), and shall take such steps as shall be necessary to
cause the Corporations to issue to the Purchaser share certificates
representing the Purchased Shares.
3.3 PAYMENT OF THE PURCHASE PRICE. The Estimated Purchase Price shall
be paid and satisfied by the Purchaser at the Time of Closing in full by
certified cheque, bank draft or wire transfer in such amount made payable to
the Sellers, or as they may otherwise direct in writing. Any additional
amount on account of the Purchase Price shall be paid by the Purchaser in
accordance with Article 7 and any reduced amount shall be paid by the Sellers
in accordance with Article 7. All of such amount shall be payable to ACSC
except for that portion of the Estimated Purchase Price that is allocated to
Azerty Mexico pursuant to Section 2.2, which such portion shall be payable to
ACI.
3.4 OTHER CLOSING DELIVERIES OF SELLERS. On the Closing Date, the
Sellers shall deliver to the Purchaser the following:
(a) the officer's certificates described in section 6.1(a);
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(b) Certificates of Good Standing or their equivalents, issued by the
respective jurisdictions of organization of each of the
Corporations, dated as close to the Closing Date as is reasonably
possible; and
(c) an opinion of Goodman Phillips & Vineberg, counsel to the Sellers,
and of Rubio Villegas y Associados, S.C., Mexican counsel to the
Sellers, substantially in the form attached hereto as Schedule
3.4(c)
3.5 OTHER CLOSING DELIVERIES OF PURCHASER. On the Closing Date, the
Purchaser shall deliver to the Sellers the following:
(a) the officer's certificates described in section 6.2(a);
(b) Certificates of Good Standing of the Purchaser and United issued by
the Secretaries of State of the States of Illinois and Delaware
respectively and dated as close to the Closing Date as is
reasonably possible;
(c) an opinion of Weil, Gotshal & Manges LLP, counsel to the Purchaser
and United, substantially in the form attached hereto as Schedule
3.5(c); and
(d) an opinion of Otis H. Halleen, General Counsel to the Purchaser and
United, substantially in the form attached hereto as Schedule
3.5(d).
ARTICLE 4 - REPRESENTATIONS AND WARRANTIES
4.1 REPRESENTATIONS AND WARRANTIES OF THE SELLERS. The Sellers jointly
and severally represent and warrant to the Purchaser (and acknowledge that the
Purchaser is relying on such representations and warranties in completing the
transactions contemplated herein) that:
(a) CORPORATE - Each of the Corporations is a corporation duly
organized and validly existing under the laws of its jurisdiction
of incorporation and has the requisite corporate power and
authority to own its properties and assets and to carry on that
portion of the Business as currently conducted by it. Each of the
Corporations is duly qualified or admitted to do business and is in
good standing as a foreign corporation in all jurisdictions in
which the ownership, use or leasing of its assets or the conduct of
its business makes such qualification or admission necessary,
except where the failure to be so qualified or admitted and in good
standing, individually or in the aggregate, would not have a
Material Adverse Effect. Schedule 4.1(a) sets forth each
jurisdiction in which the Corporations are qualified or admitted to
do business as a foreign corporation. Each of the Sellers is a
corporation duly organized and validly existing under the laws of
its jurisdiction and has the requisite corporate power and
authority to enter into this Agreement, the Side Agreement and the
Intellectual Property Agreement and perform its obligations
hereunder and thereunder. Except as set forth in Schedule 4.1(a),
none of the Corporations owns,
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of record or beneficially, directly or indirectly, any equity or
other proprietary interest, or right to acquire any such interests,
contingent or otherwise, in any Person.
(b) ENFORCEABILITY - The execution and delivery of this Agreement, the
Side Agreement and the Intellectual Property Agreement by each of
the Sellers and the performance by such Seller of its obligations
hereunder and thereunder have been (or, in the case of ACSC, on the
Closing Date will be) duly and validly authorized by all necessary
corporate and stockholder action on its part, (such stockholder
approval being required only in respect of Azerty Mexico). Each of
this Agreement, the Side Agreement and the Intellectual Property
Agreement constitutes a legal, valid, and binding obligation of the
Sellers, enforceable against each of them in accordance with its
terms (subject to bankruptcy, reorganization, insolvency,
moratorium, and other laws relating to or affecting creditors'
rights generally and subject to the availability of equitable
remedies). The execution and delivery of this Agreement, the Side
Agreement and the Intellectual Property Agreement by the Sellers,
the consummation of the transactions contemplated hereby and
thereby and the fulfilment by the Sellers of the terms, conditions
and provisions hereof and thereof will not:
(i) contravene or violate or result in the breach in any
material respect (with or without the giving of notice or
lapse of time, or both) or acceleration of any obligations of
the Sellers or the Corporations under:
(A) any Laws applicable to the Sellers or the Corporations
except for the Regulatory Approvals set forth on
Schedule 4.1(b)(i)(A);
(B) any judgment, order, writ, injunction or decree of any
court which is applicable to the Sellers or the
Corporations;
(C) the articles, by-laws or any resolutions of the Sellers
or the Corporations or any amendments thereto or
restatements thereof; or
(D) the provisions of any Material Contract to which any
Seller or Corporation is a party or by which any of them
are bound;
(ii) result in the creation or imposition of any Lien upon any of
the assets of the Corporations or any of them which,
individually or in the aggregate, would have a Material
Adverse Effect; or
(iii) require any of the Sellers or the Corporations to obtain any
consent, approval or action of, or make any filings with or
give any notice to, any Person, except:
(A) the filing of a premerger notification report under the
HART-SCOTT-
- 13 -
RODINO ANTITRUST IMPROVEMENTS ACT OF 1976, as amended
(the "HSR Act"),
(B) as disclosed in Schedule 4.1(b)(iii), and
(C) those the failure of which to obtain, make or give,
individually or in the aggregate, would not have a
Material Adverse Effect or a material adverse effect on
the validity or enforceability of this Agreement, the
Side Agreement or the Intellectual Property Agreement or
on the ability of the Sellers to perform their
respective obligations under this Agreement, the Side
Agreement or the Intellectual Property Agreement.
(c) LICENCES, PERMITS AND AUTHORIZATIONS - The Corporations have
conducted the Business in compliance with, and the Corporations
hold all licenses, permits and authorizations (except for
Environmental Permits which are dealt with in Section 4.1(z))
necessary for the lawful operation of the Business, pursuant to all
applicable statutes and regulations of all Authorities having
jurisdiction over the Corporations or over any part of the
Business, except where the absence of such license, permit or
authorization would not have a Material Adverse Effect.
(d) CAPITALIZATION - The authorized, issued and outstanding capital
stock of each of the Corporations are as follows:
Corporation Authorized Share Capital Number of Issued and Shareholder
Outstanding Shares
---------------- ---------------------------- ---------------------------- --------------
Azerty 1,000 common shares 542.857 common shares ACSC
125 preferred shares
ID 1,000 common shares 100 common shares ACSC
125 preferred shares
APSS 1,000 common shares 100 common shares ACSC
125 preferred shares
Azerty Mexico 100 Class 1 shares 99 Class 1 shares ACI
unlimited Class 2 shares 990 Class 2 shares
1 Class 1 share Azerty
10 Class 2 shares
All of the issued and outstanding shares of capital stock of each
of the Corporations are owned, beneficially and of record, by the
Persons and in the amounts shown above and have been validly
issued, are fully paid and non-assessable and have not been issued
in violation of any pre-emptive or similar rights. Save and except
for inter-company indebtedness to be capitalized prior to or at
Closing, there are no outstanding securities convertible into or
exchangeable or exercisable for any shares of the capital stock of
any Corporation, nor does any Corporation have outstanding any
rights to subscribe for or to purchase, or any options or warrants
for the purchase of, or any agreements providing for the issuance
of, any shares of its
- 14 -
capital stock or any securities convertible into or exchangeable or
exercisable for any shares of its capital stock. The Sellers shall
cause any and all shares of capital stock in the Corporations that
result from the capitalization of inter-company indebtedness and
that are issued to the Sellers after the date hereof to be included
in the Purchased Shares. There are no bonds, debentures, notes or
other indebtedness of any of the Corporations having the right to
vote on any matters on which holders of the capital stock of any of
the Corporations may vote. On the Closing Date, the Purchased
Shares shall constitute all the issued and outstanding shares in
the capital stock of each Corporation, save and except for Azerty
Mexico, of which all of the issued and outstanding shares not
included in the Purchased Shares are owned by Azerty, free and
clear of all Liens. On the Closing Date, there will be no
outstanding stock appreciation, phantom stock or similar rights
based on the equity appreciation of any of the Corporations. On the
Closing Date, there will be no voting trusts, proxies or other
agreements with respect to voting any capital stock of any
corporation.
(e) OWNERSHIP OF SHARES - Each of the Sellers is (and will at the Time
of Closing be) the sole legal and beneficial owners of the
Purchased Shares, as set forth in Section 4.1(d), free and clear of
any liens, charges, encumbrances or rights of others (other than
the rights of the Purchaser hereunder). There is no contract,
option or other right of another binding upon or which at any time
in the future may become binding upon the Sellers or the
Corporations or any of them, to sell, transfer, assign, pledge,
charge, mortgage or in any other way dispose of or encumber any of
the Purchased Shares, other than pursuant to this Agreement.
(f) FINANCIAL STATEMENTS - The Sellers (i) have delivered to the
Purchaser copies of the December 31 Financial Statements, and (ii)
will, prior to the Closing Date, deliver to the Purchaser (x)
copies of the audited combined (including the elimination of all
significant inter-company transactions and balances) balance sheets
of the Corporations as of December 31, 1995 and 1996, together with
the related audited combined (including the elimination of all
significant inter-company transactions and balances) statements of
income and cash flows for the fiscal years ended December 31, 1995
and 1996, and the notes and schedules thereto, accompanied by the
report thereon of the applicable firm of independent public
accountants (the "1995-1996 Financial Statements" and, collectively
with the December 31 Financial Statements, the "Financial
Statements") and (y) whatever is necessary for the December 31
Financial Statements to comply with clause (D) below of this
Section 4.1(f). The Financial Statements, including the notes and
schedules thereto, (A) were or will be prepared in accordance with
GAAP throughout the periods covered thereby, except as otherwise
disclosed on Schedule 4.1(f), (B) present or will present fairly in
all material respects the combined financial position, results of
operations and changes in cash flows of the Corporations as of such
dates and for the periods then ended, (C) have or will have been
audited in accordance with generally accepted auditing standards in
Canada, and (D) include or will include all schedules necessary to
conform such Financial Statements with U.S. GAAP and the
information required
- 15 -
by Regulation S-X promulgated under the UNITED STATES SECURITIES
ACT of 1933 and the SECURITIES EXCHANGE ACT of 1934, each as
amended to the date hereof. The Purchaser acknowledges and accepts
the changes in respect of policies respecting reserves in
connection with the December 31, 1997 Balance Sheet and the
December 31, 1997 Financial Statements, as such specified reserves
are described in Schedule 7.1.
(g) INVENTORY - The inventory of the Corporations consists only of
items of an age, quality and quantity useful or saleable, as of the
Closing Date, in the ordinary course of business of the
Corporations, and net of reserves as described in Schedule 7.1.
For greater certainty, the Sellers are not responsible for any
diminution of saleable inventory after the Closing Date in excess
of such reserves. The inventories reflected on the December 31
Balance Sheet are, and the inventories on the Closing Date Balance
Sheet will be, valued at the lower of cost or net realizable value
(determined on a first-in, first-out (FIFO) basis).
(h) ABSENCE OF UNDISCLOSED LIABILITIES - Except to the extent reflected
or reserved against in the December 31 Financial Statements
(including disclosure in the notes thereto) or incurred subsequent
to December 31, 1997 and disclosed in Schedule 4.1(h) and except
for normal trade debt payable and other operating liabilities
(including, without limitation, overshipments from suppliers) in
the ordinary and normal course of business consistent with past
practices, which shall be dealt with in accordance with Section 7.1
and Schedule 7.1, none of the Corporations has any outstanding
indebtedness or any liabilities or obligations (whether accrued,
absolute, contingent or otherwise) nor any outstanding commitments
or obligations of any kind whether or not such obligations or
commitments are presently considered liabilities of any of the
Corporations under GAAP that would render the December 31 Financial
Statements materially and adversely incomplete or inaccurate.
(i) TAX MATTERS -
(i) Each of the Corporations has duly filed all Tax Returns it
was required to file, and has paid (or there has been paid on
its behalf) all Taxes that are due or adequate provision has
been made by the Corporations in the December 31 Balance
Sheet in accordance with GAAP for any Taxes due and unpaid at
the date of the December 31 Balance Sheet, or for the payment
of any Tax instalments due in respect of the current taxation
year of the Corporations. Each of the Corporations has made
(or there has been made on its behalf) all required estimated
or advance Tax payments sufficient to avoid any underpayment
penalties. Except to the extent reflected or reserved
against in the December 31 Balance Sheet or as will be
reflected or reserved against on the Closing Date Balance
Sheet (with respect to Taxes that became due after December
31, 1997 and relate to a taxable period ending at or on the
Closing Date or are allocable to such date by Section
8.9(f)), none of the Corporations is liable for any Taxes.
Except as disclosed in Schedule 4.1(i)
- 16 -
the Tax Returns of each of the Corporations and of each
affiliated, combined or consolidated group which includes or
has included any of the Corporations have not been audited or
examined by a taxing authority and the statute of limitations
for all periods through the respective periods specified in
Schedule 4.1(i) has not expired. None of the Corporations has
effected any unauthorized accounting method changes. Except
as disclosed in Schedule 4.1(i), there are no actions, suits,
assessments, audits, investigations, claims or other
proceedings pending or, to the knowledge of the Sellers,
threatened against any of the Corporations with respect to
any Taxes;
(ii) Each of the Corporations has on a timely basis filed (or
there has been filed on its behalf) all Tax returns required
to be filed by it, or with respect to, it. To the knowledge
of the Sellers, no such Tax Return contains any material
misstatement or omitted any statement of any material fact
that should have been included therein or is otherwise not
correct in all material respects;
(iii) Each of the Corporations has withheld and remitted to the
proper taxing authority, or where permitted by law provided
security for, on a timely basis and in a form required under
the appropriate Tax legislation, all Taxes required to be
withheld or remitted in connection with any amounts paid or
owing to any employee, creditor, independent contractor or
other third party;
(iv) Except as provided in Schedule 4.1(i), there is no contract,
agreement, plan or arrangement covering any person that,
individually or collectively, could give rise to the payment
of any amount that would not be deductible by any of the
Corporations by reason of Section 28OG of the U.S. Tax Code;
(v) Except as provided in Schedule 4.1(i), there are no
outstanding agreements, waivers, or arrangements extending
the statutory period of limitation applicable to any claim
for, or the period for the collection or assessment of, Taxes
due from or with respect to any of the Corporations for any
taxable period, and no power of attorney granted by or with
respect to any of the Corporations with respect to Taxes is
currently in force. No closing agreement pursuant to Section
7121 of the U.S. Tax Code (or any predecessor provision) or
any similar provision of any state, local, or non-U.S. law
has been entered into by or with respect to any of the
Corporations. There are no advance pricing agreements
pursuant to Section 482 of the U.S. Tax Code (or any similar
or analogous law) relating to the Corporations and policies
regarding the transfer or sale of goods between the
Corporations are set forth in Schedule 4.1(i);
(vi) None of the Corporations has agreed (and no agreement has
been made on any of the Corporations' behalf) to make any
adjustment pursuant to Section
- 17 -
481(a) of the U.S. Tax Code (or any predecessor provision) by
reason of any change in any accounting method, and there is
no application pending with any taxing authority requesting
permission for any changes in any accounting method of any of
the Corporations. No election under Section 338 of the U.S.
Tax Code has been made or filed by or with respect to any of
the Corporations. No consent to the application of Section
341(f)(2) of the U.S. Tax Code (or any predecessor provision)
has been made or filed by or with respect to any of the
Corporations or any of their assets;
(vii) ACSC is not a "foreign person" within the meaning of Section
1445(b)(2) of the U.S. Tax Code. None of the Corporations is
or has been during the preceding five years a United States
real property holding corporation for purposes of Section
1445(b)(3) of the U.S. Tax Code. No withholding Taxes are
applicable to the payment of the Purchase Price hereunder;
(viii) There are no deferred gains with respect to intercompany
transactions for purposes of United-States Treasury
Regulation Section 1.1502-13 (and any predecessor regulation)
with respect to Azerty, ID or APSS;
(ix) Each of Azerty, ID and APSS is a member (and will be a member
through the Closing Date) of an affiliated group for purposes
of Section 1504(a) of the U.S. Tax Code which properly files
consolidated United States federal income Tax Returns; and
(x) Schedule 4.1(i) accurately sets forth any net operating loss,
capital loss or credit carryforwards with respect to each of
the Corporations from the most recently filed Tax Returns of
the Corporations.
(j) ABSENCE OF CHANGES - Except as contemplated by this Agreement or
as set forth on Schedule 4.1(j), since December 31, 1997 or as
otherwise disclosed to the Purchaser in writing (except that no
such disclosure shall be required to the extent such disclosure
would breach any Law including, without limitation, the HSR Act),
the Business has been carried on in the ordinary course and there
has not been:
(i) any damage, destruction, loss, labour trouble or any other
event, (whether or not covered by insurance), which has
occurred and which would have a Material Adverse Effect;
(ii) any issuance, sale or disposition by the Corporations of any
of their respective shares of capital stock (other than as
contemplated by this Agreement) or any grant of options,
warrants or preemptive or other rights to acquire (including
upon conversion or exercise) any shares of its capital stock,
but subject to the issuance of shares on the capitalization
of inter-company indebtedness;
- 18 -
(iii) any material Lien created on any of the assets of the
Corporations, other than those created in the ordinary course
of business consistent with past practices;
(iv) any sale, transfer or conveyance of any material assets used
or useful in the Business other than in the ordinary course
of business consistent with past practices;
(v) any transaction or arrangement under which any of the
Corporations paid, loaned or advanced any amount to or in
respect of, or sold, transferred or leased any of its assets
or any services to (1) the Sellers, (2) any officer, director
or employee of any of the Corporations, (3) any affiliate of
the Corporations, or any officer, director of employee of any
such affiliate, or (4) any business or other Person in which
any of the Sellers, the Corporations or any such officer,
director, employee or affiliate has a material interest (or
agreed or committed to do any of the foregoing), except (A)
payments of salaries, wages and benefits to officers,
directors and employees of the Corporations in the ordinary
course of business consistent with past practices, (B)
advances made to, or reimbursements of, officers, directors
and employees of the Corporations in reasonable amounts in
the ordinary course of business consistent with company
policies and past practices, and (C) transactions made
pursuant to agreements with affiliates on terms no more
favourable than would be afforded to third parties;
(vi) any commitments or agreements for capital expenditures
involving an amount, in the aggregate, in excess of $50,000;
(vii) any material amendment, modification or termination of any
Material Contract, except for terminations in accordance with
the terms thereof;
(viii) any capital investment in, loan to or acquisition of the
securities or assets of any Person involving more than
$100,000;
(ix) any change made or authorized in any of their respective
certificates of incorporation or other organizational
instruments or by laws;
(x) the execution of any agreement with any director, officer or
employee of any of the Corporations, providing for his or her
employment or other services, or any increase in compensation
or in severance or termination benefits payable or to become
payable by any Corporation to its directors, officers or
employees, or any increase in benefits under any collective
bargaining agreements or in benefits under any Plans, except
in any case in the ordinary course of business consistent
with past practices and except as contemplated by the Side
Agreement;
- 19 -
(xi) any change by any of the Corporations in its financial or tax
accounting principles, practices or methods, except insofar
as required by GAAP or applicable Law or as is contemplated
in Section 7.1 or Schedule 7.1;
(xii) any declaration, setting aside or payment of any dividend
(whether in cash, stock or property) in respect of any of the
Corporations' capital stock or equity interests but subject
to the ability to repay or capitalize inter-company
indebtedness;
(xiii) any redemption, repurchase or retirement by any Corporation
of any of such Corporation's capital stock or equity
interests;
(xiv) any payment, prepayment, discharge or satisfaction by the
Corporations of any Debt or material Lien other than Debts or
Liens that were paid, discharged or satisfied in the ordinary
course of business consistent with past practices but subject
to the ability to repay or capitalize inter-company
indebtedness;
(xv) any cancellation of any liability or indebtedness owed to the
Corporations by any other Person except substantially in
accordance with past practices; or
(xvi) any commitment to do any of the foregoing except as
contemplated by this Agreement.
(k) TITLE TO PROPERTIES - Except as disclosed in the December 31, 1997
Balance Sheet or in Schedule 4.1(k), the Corporations have good and
marketable title to all property and assets, including rights under
leases, owned by the Corporations (except as since transferred,
sold or otherwise disposed of in the ordinary course of business
consistent with past practices), free and clear of all Liens except:
(i) statutory Liens securing payments not yet delinquent or
other statutory Liens, the validity of which are being
contested in good faith by appropriate actions;
(ii) purchase money Liens arising in the ordinary course;
(iii) Liens for taxes not yet delinquent;
(iv) Liens reflected in the Financial Statements (which have not
been discharged); or
(v) Liens which in the aggregate do not materially detract from
the value or materially impair the present and continued use
of the properties or assets subject thereto in the usual and
normal conduct of the Business,
- 20 -
(the Liens referred to in clauses (i) through (v) being
"Permitted Liens").
(l) ACCOUNTS RECEIVABLE - The accounts receivable reflected on the
December 31 Balance Sheet are, and the accounts and notes
receivable of the Corporations created from and after December 31,
1997 will be, free and clear of any Liens (except for Permitted
Liens). Subject to the treatment of reserves for accounts
receivable as described in Schedule 7.1, all accounts receivable of
the Corporations which will be outstanding on the Closing Date:
(i) will have arisen from bona fide sales of goods or services in
the ordinary course of business and consistent with past
practices;
(ii) are accurately and fairly reflected on the December 31
Balance Sheet or, with respect to accounts receivable created
after December 31, 1997 and through the date of this
Agreement, will have been accurately and fairly reflected in
the books and records of the Corporation and will be
accurately reflected on the Closing Date Balance Sheet; and
(iii) are fully collectible, net of reserves, as at the Closing
Date to the knowledge of the Sellers. For greater certainty,
absent such knowledge the Sellers are not responsible for bad
debts or uncollectible accounts following the Closing Date to
the extent that they exceed such reserves.
(m) BOOKS AND RECORDS - Except for the financial records in respect of
Azerty Mexico maintained by Zarate, Vega y Assoc., S.C. (a Mexican
accounting firm), which records shall, if so requested by the
Purchaser prior to Closing, be delivered to Azerty Mexico at the
Time of Closing, and except as set forth in Schedule 4.1(m), all of
the records, data, information, information services, systems and
controls maintained, operated or used by the Corporations or in
connection with the conduct, accounting or administration of the
Business (including all means of access thereto and therefrom) are
located at the Locations and are under the exclusive ownership or
direct control of the Corporations.
(n) LEASES OF REAL PROPERTY -
(i) Other than the leases and subleases referred to in Schedule
4.1(n) which expire on the dates set out in Schedule 4.1(n),
none of the Corporations is a party to or bound by any lease
or sublease relating to Real Property.
(ii) Neither any of the Corporations nor, to the knowledge of the
Sellers, any other party thereto, is in default or breach in
any material respect of any lease or sublease referred to in
Schedule 4.1(n).
(o) REAL PROPERTY - Except as set out in Schedule 4.1(o), none of the
Corporations owns any Real Property or, except for the leases
referred to in Schedule 4.1(n), any
- 21 -
interest in Real Property. Schedule 4.1(o) sets out the registered
owner and the municipal address and full legal description of each
such property. Except as set out in Schedule 4.1(o), on the
Closing Date the Corporations will have good and marketable title
in fee simple to all of such Real Property free and clear of all
Liens (other than Permitted Liens). Except as set out in Schedule
4.1(o), none of the Corporations has granted to any Person any
right of first refusal, right of first opportunity, option or
similar rights to purchase such Real Property or any interest
therein or part thereof. To the knowledge of the Sellers, except
as set out in Schedule 4.1(o), there is no material violation of
any health, safety, zoning, subdivision or building statute or
ordinance affecting such Real Property.
(p) CONDITION OF ASSETS - Subject to the usual maintenance and
replacement practices of the Corporations, all material fixed
assets of the Corporations used in or in connection with the
Business or any part thereof are in good condition, repair and
(where applicable) proper working order, having regard to the use
and age thereof, subject to ordinary wear and tear. All of the
assets that are used in the Business as conducted in the ordinary
course consistent with past practice are owned or leased by the
Corporations, free and clear of all Liens except for Permitted
Liens. The costs of such assets are adequately reflected in the
Financial Statements in accordance with GAAP.
(q) LITIGATION - Except as disclosed in Schedule 4.1(q), there is no
suit, action, dispute, civil or criminal litigation, claim,
arbitration or legal, administrative or other proceeding or
governmental investigation, including appeals and applications for
review (collectively, "Proceedings"), pending or, to the knowledge
of the Sellers, threatened against the Corporations or any of them
or affecting any of their respective assets or properties or the
Business, which if determined adversely to the Corporations, or any
of them, would have a Material Adverse Effect or would affect the
validity or enforceability of this Agreement with respect to the
Sellers or the Corporations, or any of them, or the consummation of
the transactions contemplated hereby. There are no facts or
circumstances known to the Sellers which are likely to give rise to
any such Proceedings. Except as disclosed in Schedule 4.1(q), there
is not presently outstanding against any Corporation any judgment,
execution, decree, injunction, rule or order of any court,
Authority, administrative agency or arbitrator that would have a
Material Adverse Effect.
(r) MATERIAL CONTRACTS - Schedule 4.1(r) sets forth a true and complete
list of each Material Contract to which any of the Corporations is
a party. Each of the Material Contracts set forth or required to
be set forth on such schedule to which any of the Corporations is a
party is a valid and binding obligation of the Corporation which is
a party thereto, and is in full force and effect without amendment
or modification. Each of the Corporations and, to the knowledge of
the Sellers, each other party to such Material Contracts, has
performed in all material respects the obligations required to be
performed by it under such Material Contracts and is not (with or
without the lapse of time or the giving of notice or both) in
breach or default in any
- 22 -
material respect thereunder. Schedule 4.1(r) identifies whether
the consent of the other party or parties to any such Material
Contract is required in order for such Material Contract to
continue in full force and effect upon the consummation of the
transactions contemplated by this Agreement.
(s) EMPLOYMENT MATTERS -
(i) The Purchaser has been provided with a complete and accurate
list in all material respects of all employees of each
Corporation as at December 31, 1997 (collectively, the
"Employees"), their respective positions, dates of hire with
such Corporation, or any predecessors of such Corporation,
current salaries, benefits and other remunerations, and dates
of last salary increases, and indicates which employees are
parties to a written agreement of employment (including
confidentiality and non-competition agreements). No other
employees, other than senior executive employees of the
Sellers having general oversight obligations over the
Corporations, are utilized in the operations of the
Corporations.
(ii) Save and except as disclosed in Schedule 4.1(s) or in the
Side Agreement, none of the Corporations or the Sellers is a
party to any agreements with past or present employees,
agents or independent contractors of the Corporations
providing for annual salary and bonuses or other payments in
excess of $100,000. There are no oral contracts of
employment entered into with any employees employed by the
Corporations which are not terminable in accordance with
applicable Law and except as set forth in Schedule 4.1(s) or
in such Side Agreement, none of the Corporations has entered
into any agreements with such employees with respect to the
termination of employment.
(iii) Save and except in respect of the Office Products Long Term
Incentive Plan (but subject to the Sellers' indemnification
responsibility in respect thereof set forth in Section
8.1(e)) and subject to the severance obligations that are in
place as described in Schedule 4.1(s) or in the Side
Agreement, all liabilities in respect of employees have or
shall have been accrued for to the Closing Date, including
income tax and any other employment related legislation,
accrued wages, Taxes, salaries, commissions, vacation pay and
employee benefit and post-retirement and post-employment
benefit plan payments.
(iv) None of the Corporations has made any agreements, whether
directly or indirectly, with any labour union, employee
association or other similar entity or made commitments to or
conducted negotiations with any labour union or employee
association or similar entity with respect to any future
agreements. No trade union, employee association or other
similar entity has any bargaining rights acquired by either
certification or voluntary
- 23 -
recognition with respect to the employees of the
Corporations. None of the Corporations is aware of any
current attempts to organize or establish any other labour
union, employee association or other similar entity.
(v) All vacation pay, bonuses (other than bonuses under the
Office Products Long Term Incentive Plan, but subject to the
Sellers' indemnification responsibility in respect thereof
set forth in Section 8.1(e)), commissions and other
emoluments relating to the Employees are accurately reflected
in all material respects and have been accrued in the
financial records of each Corporation in each case in
accordance with U.S. GAAP. There are no post-retirement
benefits offered by the Corporations.
(vi) Save and except in respect of the Office Products Long Term
Incentive Plan (but subject to the Sellers' indemnification
responsibility in respect thereof set forth in Section
8.1(e)) and subject to the Side Agreement, there are no
agreements with any Employee wherein compensation payable to
such Employee is triggered by the transactions contemplated
by this Agreement and payable by any Corporation.
(t) PENSION AND BENEFIT MATTERS - To the knowledge of the Sellers:
(i) Schedule 4.1(t) contains a complete and accurate list of all
Plans. Except as disclosed in Schedule 4.1(t), no Plan has
been terminated or partially terminated and all Plans are
still in force and effect.
(ii) A correct and complete copy of each of the following
documents have been provided to the Purchaser with respect to
each Plan, as applicable: the Plan document; the most recent
actuarial valuation; the most recent summary Plan
description; and the most recent determination letter from
the Internal Revenue Service or other Pension Authority.
(iii) Each Plan intended to qualify under Section 401 of the U.S.
Tax Code, and each related trust intended to qualify under
Section 501 of the U.S. Tax Code, are designed to be in
compliance with the applicable requirements of the U.S. Tax
Code.
(iv) Each Plan intended to qualify under Section 401 of the U.S.
Tax Code and each related trust intended to qualify under
Section 501 of the U.S. Tax Code has received a determination
letter from the Internal Revenue Service that the Plan and
related trust are designed in accordance with applicable
sections of the U.S. Tax Code, or has pending with the
Internal Revenue Service an application for such a
determination.
(v) The Corporations have made all material filings in connection
with the Plans required by the Pension Authorities and
Pension Legislation. The Plans and
- 24 -
all investments held by such Plans comply in all material
respects with all applicable Pension Legislation and have
been maintained and administered in compliance with the Plan
Terms.
(vi) All required contributions or premiums to be paid under the
Plans have been fully paid to the date hereof in a timely
fashion in accordance with the applicable Pension Legislation
and Plan Terms. No unfunded liability, solvency deficiency,
unpaid special payment or experience deficiency, whether due
or not exists with respect to the Plans.
(vii) There are no outstanding liabilities under the U.S. Tax Code
or other Tax liabilities with respect to the Plans.
(viii) There are no outstanding actions or claims with respect to
the Plans, other than claims for benefits submitted by
members or beneficiaries in the normal course; there are no
requests for documents; and there is no litigation, legal
action, suit, investigation, claim, counterclaim or
proceeding pending or, to the knowledge of the Sellers,
threatened against or affecting any Plan which could have a
Material Adverse Effect on the Sellers, any Corporation or on
any Plan maintained as of the Closing Date.
(ix) Except as disclosed in Schedule 4.1(t), there is not now and
on the Closing Date there will not be any benefit plans
established by or for the Corporations for any of their
respective employees.
(u) INSURANCE - The Corporations have all of their assets, property and
undertaking and the Business insured against loss or damage by all
insurable hazards or risks on a replacement cost basis and such
insurance coverage will be continued in full force and effect (with
all premiums paid) up to and including the Closing Date. Schedule
4.1(u) sets forth a true and complete list of all insurance
policies maintained by or on behalf of the Corporations, together
with a description of the annual premiums thereon paid by the
Corporations in respect of any policies that are not blanket
policies issued to ACI. To the knowledge of the Sellers, no event
has occurred which limits or impairs the rights of any of the
Corporations under any such insurance policies. Excluding
insurance policies that have expired and been replaced in the
ordinary course of business, no insurance policy has been cancelled
by any of the Corporations within the two years prior to the date
of this Agreement.
(v) INTELLECTUAL PROPERTY - Schedule 4.1(v) lists all material
inventions, patents, trade-marks, copyrights, service marks,
industrial designs, business names and other intellectual property,
whether or not registered, that are owned by or licensed to each
Corporation (collectively, the "Intellectual Property") and, with
respect to licensed Intellectual Property, lists the owner thereof.
The Intellectual Property is free and clear of any claims,
encumbrances or charges. Except as disclosed in Schedule 4.1(v),
there has been no material infringement or violation of any
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Corporation's rights in and to the Intellectual Property, nor any
claim of adverse ownership, invalidity or other opposition to or
conflict with any of the Intellectual Property which in any case
would have a Material Adverse Effect. To the knowledge of the
Sellers, none of the Corporations has infringed or violated or is
currently infringing or violating any rights under any material
inventions, patents, trademarks, copyrights, service marks,
industrial designs, business names or any other intellectual
property. The Sellers in operating the Business have used the
"Four Square logo" in the Business in the United States for a
period of time in excess of 10 years and none of the Corporations
has received any notice of infringement from the registered owner
thereof; other than providing such representation and warranty as
to no such notice having been received, the Sellers make no
representation and warranty in respect of such logo.
(w) COMPLIANCE WITH LAWS - Each of the Corporations is in compliance in
all material respects with, and will at the Closing Date have filed
all reports or returns required under, all Laws applicable to it
(except for Environmental Laws, which are covered in Section
4.1(z)), except where non-compliance would not have a Material
Adverse Effect.
(x) CONTRACTS WITH AFFILIATES - Except as set forth in Schedule 4.1(x),
there are no existing Material Contracts to which any Corporation
is a party in which any of the Sellers, any director or officer of
such Corporation or any other Person not dealing at arm's length
with the Sellers, the Corporations or any of their respective
directors or officers has an interest, whether directly or
indirectly, including arrangements for the payment of management or
consulting fees. Schedule 4.1(x) sets forth a description of all
management, consulting, services and other similar arrangements of
any kind between any of the Corporations, on the one hand, and the
Sellers or any of their respective affiliates, on the other hand,
(but excluding the purchase and sale of inventory between the
Corporations, the Seller and their respective affiliates) including
a description of the services provided and the amount of payments
or other consideration provided by either party in respect of such
arrangements for the 1997 year.
(y) CORPORATE RECORDS - The minute books of each Corporation contain,
and will contain at the Closing Date, accurate and complete minutes
of all meetings and resolutions of its directors and shareholders.
(z) ENVIRONMENTAL MATTERS - Except as disclosed in Schedule 4.1(z):
(i) The Business has been and is being carried on in compliance
with all applicable Environmental Laws, Environmental Orders
and Environmental Permits, except where non-compliance would
not have a Material Adverse Effect. The Sellers do not know
of any fact which would give rise to a notice of
non-compliance with any Environmental Laws or Environmental
Orders except where non-compliance would not have a Material
Adverse Effect.
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(ii) The Corporations possess all Environmental Permits necessary
for their continued operations, except for those
Environmental Permits, the absence of which would not result
in the inability of the Corporations to operate the Business
as it is presently conducted. Schedule 4.1(z) contains a list
of all of the material Environmental Permits held by the
Corporations. All such Environmental Permits are valid in all
material respects.
(iii) None of the Corporations has ever been cited, found liable,
convicted or otherwise held responsible for any material
non-compliance with any Environmental Law in connection with
the Business or received any written notice of any Remedial
Requirement in connection with the Real Property and, to the
knowledge of the Sellers, no facts, circumstances or
conditions exist that would reasonably be expected to give
rise to a Remedial Requirement.
(iv) The Corporations have maintained and continue to maintain in
all material respects environmental records relating to the
Business in the manner and for the time periods required by
Environmental Laws.
(v) No judicial or administrative proceedings are pending or, to
the knowledge of the Sellers, threatened against the
Corporations or the Sellers relating to the Business or the
Real Property that allege the violation of or seek to impose
liability pursuant to any Environmental Law and, there are no
investigations pending or, to the knowledge of the Sellers,
threatened against the Real Property or the Sellers or the
Corporations with respect to the Business, which in any case
could give rise to Remedial Requirements.
(vi) Other than in compliance with Environmental Laws, there is
not now, nor, to the knowledge of the Sellers, has there been
in the past, on, in or under any of the Real Property owned,
leased or used by any of the Corporations (A) any
asbestos-containing materials, (B) any polychlorinated
biphenyls; or (C) any radioactive substances.
(vii) To the knowledge of Sellers, there exists no facts,
circumstances or conditions relating to the Business or the
Real Property that could reasonably be expected to give rise
to material liabilities under Environmental Laws or an
obligation to perform Remedial Requirements.
(viii) The Sellers have provided the Purchaser with copies of all
environmentally related audits, assessments, studies,
reports, analyses, and results of investigations of the Real
Property or the Business that are in the Sellers' possession,
custody or control.
The Purchaser and United acknowledge that they have reviewed the
executive
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summaries of the Phase I environmental reports relating
to work performed on their behalf in respect of the Real Property
and that there is nothing contained therein which has led either
the Purchaser or United at this time to conclude either (i) that
any work needs to be performed in connection with the Real Property
in order for the Sellers' representation and warranty contained in
Section 4.1(z) to be true and correct or (ii) that there is
presently a Remedial Requirement entitling the Purchaser to
indemnification pursuant to Section 8.1(d); provided, however, that
notwithstanding the foregoing, the Sellers acknowledge and agree
that (i) the executive summaries of the Phase I assessments by
their terms do not purport to be complete in all material respects,
(ii) as of the date of this Agreement, neither United nor the
Purchaser has received the final completed Phase I assessments
relating to the Real Property, and (iii) certain potential
asbestos-containing building materials and adjacent property
underground storage tank removals are referenced in such executive
summaries, and nothing contained in this paragraph shall otherwise
limit the Purchaser's right to indemnification relating to the
matters described in such summaries or for Remedial Requirements
that may be outside the knowledge of the Purchaser or United as of
the date of this Agreement or that may hereinafter become necessary.
(aa) BUSINESS - Save and except for the systems storage division and
paper operations of Axidata and its subsidiaries, ACI does not
carry on any business that competes with or is similar to the
Business in the United States or Mexico other than through the
Corporations.
(bb) FINDER'S OR BROKER'S FEES - Other than Nesbitt Burns Inc. (whose
fees and expenses shall be paid by and be the sole obligation of
the Sellers), no broker or finder has acted directly or indirectly
for or on behalf of the Sellers or the Corporations, nor have the
Sellers or the Corporations incurred any other obligation to pay
any brokerage, finder's fee or other commission in connection with
the transactions contemplated by this Agreement.
(cc) YEAR 2000 COMPLIANCE - Except as set forth on Schedule 4.1(ac), to
the knowledge of Sellers (after due inquiry of the IT Director of
Azerty), all of the computer software programs used in the Business
in the United States and Mexico operate accurately in the manner in
which they were intended with regard to date-related operations
when given a valid date containing century, year, month and day.
For the purposes of this Section 4.1(ac), the accurate operation of
the software shall require (i) that calculations using dates must
execute using a four digit year; (ii) that all functions, including
but not limited to entry, inquiry, maintenance, storage, update and
transmission of information, must support four digit year
processing; (iii) that interfaces and reports must support four
digit year processing; (iv) successful translation into year 2000
with the correct system date (e.g. 1/1/2000) without human
intervention; (v) processing with a four digit year after
transition to and beyond the year 2000 without human intervention;
and (vi) providing correct results in forward and backward date
calculations spanning century boundaries. The
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Sellers make no representation and warranty in respect of the
hardware used in the Business in the United States or Mexico.
(dd) BUSINESS PURCHASE PRACTICES - To the knowledge of Sellers, the
Corporations have not in the last three years sold any inventory of
the Business that was stolen or counterfeit. To the extent that the
Corporations acquire inventory for resale from sources other than
the manufacturer, such alternate sourcing arrangements do not cause
the Corporations to be in breach of their agreements with vendors.
4.2 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. The Purchaser and
United hereby jointly and severally represent and warrant to the Sellers (and
acknowledges that the Sellers are relying on the representations and
warranties in completing the transactions contemplated hereby) that:
(a) CORPORATE - Each of the Purchaser and United is a corporation duly
organized and validly existing under the laws of its jurisdiction
of incorporation and has the requisite corporate power and
authority to enter into this Agreement, the Side Agreement and the
Intellectual Property Agreement and to perform its respective
obligations hereunder and thereunder.
(b) ENFORCEABILITY - The execution and delivery of this Agreement, the
Side Agreement and the Intellectual Property Agreement by the
Purchaser and by United and the performance by the Purchaser and by
United of its respective obligations hereunder and thereunder have
been duly and validly authorized by all necessary corporate and
stockholder action on the part of the Purchaser and United. Each
of this Agreement, the Side Agreement and the Intellectual Property
Agreement constitutes a legal, valid and binding obligation of the
Purchaser and United, enforceable against the Purchaser and United
in accordance with its terms (subject to bankruptcy,
reorganization, insolvency, moratorium, and other laws relating to
or affecting creditors' rights generally and subject to the
availability of equitable remedies). The execution and delivery of
this Agreement, the Side Agreement and the Intellectual Property
Agreement by the Purchaser and United, the consummation of the
transactions contemplated hereby and thereby and the fulfilment by
the Purchaser and United of the terms, conditions and provisions
hereof and thereof will not:
(i) contravene or violate or result in the breach in any material
respect (with or without the giving of notice or lapse of
time, or both) or acceleration of any obligations of the
Purchaser or United under:
(A) any Laws applicable to the Purchaser or United, subject
to receipt of any required Regulatory Approvals;
(B) any judgment, order, writ, injunction or decree of any
court which is presently applicable to the Purchaser or
United;
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(C) the articles, by-laws or any resolutions of the
Purchaser or United or any amendments thereto or
restatements thereof; or
(D) the provisions of any material agreement to which the
Purchaser or United is a party or by which either the
Purchaser or United is bound that would have a material
adverse effect on the Purchaser's or United's ability to
consummate its respective obligations hereunder (except
for those under which consent shall be obtained at or
prior to Closing).
(ii) result in the creation or imposition of any Lien upon any of
the assets of the Purchaser or United, which, individually or
in the aggregate, would have a material adverse effect on the
Purchaser's or United's ability to consummate its respective
obligations hereunder; or
(iii) require the Purchaser or United to obtain any consent,
approval, or action of, or make any filings with or give any
notice to, any Person, except:
(A) the filing of a premerger notification report under the
HSR Act,
(B) as disclosed in Schedule 4.2(b)(iii), and
(C) those which the failure to obtain, make, or give,
individually or in the aggregate, would not have a
material adverse effect on the validity or
enforceability of this Agreement or on the ability of
the Purchaser or United to perform its respective
obligations under this Agreement.
4.3 SURVIVAL OF SELLERS' REPRESENTATIONS AND WARRANTIES. The
representations and warranties of the Sellers contained in this Agreement
(and, if applicable, in the Side Agreement and the Intellectual Property
Agreement) shall survive the Closing for the benefit of the Purchaser as
follows:
(a) as to the representations and warranties contained in section
4.1(i) and section 4.1(t)(iii) and (vii), until the date following
expiration of the applicable Tax statute of limitations with
respect to the relevant taxable period (including all periods of
extension, whether automatic or permissive);
(b) as to the representations and warranties contained in sections
4.1(d) and 4.1(e), indefinitely;
(c) as to the representations and warranties contained in section
4.1(z), for a period of five years, unless a BONA FIDE notice of a
claim shall have been made in writing before the expiry of that
period, in which case the representation and warranty to
- 30 -
which such notice applies shall survive in respect of that claim
until the final determination or settlement of the claim;
(d) as to all other matters, for a period of two years unless a BONA
FIDE notice of a specific claim shall have been given in writing
before the expiry of that period, in which case the representation
and warranty to which such notice applies shall survive in respect
of that claim until the final determination or settlement of that
claim.
4.4 SURVIVAL OF PURCHASER'S AND UNITED'S REPRESENTATIONS AND
WARRANTIES. The representations and warranties of the Purchaser and United
contained in this Agreement (and if applicable, in the Side Agreement and
the Intellectual Property Agreement) shall survive the Closing for the
benefit of the Sellers for a period of two years, unless a BONA FIDE notice
of specific claim shall have been made in writing before the expiry of that
period, in which case the representation and warranty to which such notice
applies shall survive in respect of that claim until the final determination
or settlement of that claim.
ARTICLE 5 - COVENANTS OF THE PARTIES PRIOR TO CLOSING
5.1 OPERATIONS BEFORE CLOSING. Except as otherwise contemplated or
permitted by this Agreement (and except to the extent that Sellers reasonably
believe upon advice of counsel that compliance with the following would
breach applicable Law including, without limitation, the HSR Act), during the
period from the date of this Agreement to the Time of Closing, the Sellers
shall, and shall cause the Corporations to:
(a) promote the interest and maintain the goodwill of the Corporations,
and of all persons having business relations with the Corporations
and shall continue to operate the Business in the ordinary course
consistent with past practice, including paying and satisfying all
Debts and obligations of the Corporations as such Debts and
obligations mature;
(b) not, without the prior written consent of the Purchaser, perform or
make any material act or decision to enter into any contract,
commitment or transaction not in the ordinary course of business
and which would have a Material Adverse Effect, or which would
constitute a breach of the covenants, representations or warranties
of the Sellers contained in this Agreement or which would cause
such covenants, representations and warranties to be untrue in any
material respect at the Time of Closing, including without
limitation:
(i) entering into commitments, acquiring or initiating new
businesses or undertakings or assuming any material
commitment or obligation (by written agreement or otherwise)
or selling, encumbering or otherwise disposing or
distributing any material assets except in the ordinary
course of business consistent with past practice. For
purposes hereof, a commitment, obligation or asset will be
deemed to be material if, among other things, it
- 31 -
alone has a value in excess of $50,000 or all such
commitments, obligations and assets have a value of more than
$500,000 in the aggregate;
(ii) entering into or amending any employment, labour, consulting
or service contracts or Plan except in the ordinary course of
business consistent with past practice;
(iii) terminating any employment agreements or giving notice of
termination except in the ordinary course of business
consistent with past practice;
(iv) initiating any litigation to which the Corporations may be or
may become a party;
(v) entering into any transaction with any Person or Persons with
whom they are not acting at arm's length;
(vi) incurring any additional Debt (other than current liabilities
incurred in the normal course of operations consistent with
past practise) or guarantees of such Debt which, in the
aggregate, exceeds $500,000;
(vii) amending, revising, renewing or terminating any material
lease, licence or any other Material Contract to which the
Corporations or any of them may be a party or which may
affect the Business; or
(viii) authorizing, agreeing or otherwise becoming committed to do
any of the foregoing,
(c) continue to maintain in full force and effect all policies of
insurance (or replacement policies) currently in effect in respect
of the Business and give all notices and present all claims under
all policies of insurance in a due and timely fashion;
(d) use their commercially reasonable efforts to ensure that there will
not be any material adverse change in the condition (financial or
otherwise) or operations of the business or assets of the
Corporations other than changes in the ordinary and normal course
of business;
(e) ensure that, save and except for capitalizing inter-company loans,
none of the Corporations will:
(i) issue, sell or declare a dividend or make a distribution
(whether in cash, stock or other property) with respect to
any shares in its capital stock, or issue or sell any
warrants, bonds, debentures or other securities of the
Corporations or issue, grant or deliver any right, option or
other commitment for the issuance of any such other
securities;
- 32 -
(ii) suffer a loss, or waive any rights of substantial value, or
enter into any commitment or transaction, in all cases not in
the ordinary and normal course of business consistent with
past practice;
(iii) amend or change or take any action to amend or change its
constituent documents or by-laws;
(iv) merge or consolidate with any other Person;
(v) make any settlement or compromise any Tax liability, change
any Tax election or make any new Tax election or Tax method
of accounting;
(vi) except as required by GAAP or applicable Law, or except as
contemplated by this Agreement, change any of the material
accounting principles or practices used by it; or
(vii) authorize or agree or otherwise become committed to do any of
the foregoing; and
(f) shall cause the Corporations to pay all accounts payable and
collect all accounts receivable in a timely manner in the ordinary
course of business consistent with past practice.
5.2 APPROVALS AND CONSENTS.
(a) The Sellers shall forthwith use commercially reasonable efforts to
obtain as of the Time of Closing all Consents and Regulatory Approvals.
(b) The Purchaser shall forthwith file the notices, take all steps
reasonably necessary and in the Purchaser's control and use commercially
reasonable efforts to obtain as of the Time of Closing all Regulatory
Approvals and all consents disclosed in Schedule 4.2(b)(iii).
(c) The fees and expenses incurred by each party in connection with
obtaining any Consents and Regulatory Approvals necessary for the
consummation of the transactions contemplated by this Agreement shall be the
sole responsibility of the party incurring such fees and expenses, except
that the filing fees and expenses (excluding legal fees but including the
fees and expenses of any other consultants or experts mutually engaged to
assist in the preparation, negotiation or defense of the filing under the HSR
Act) incurred in connection with the filing of a premerger notification under
the HSR Act shall be borne equally between the Sellers, on the one hand, and
the Purchaser, on the other hand.
5.3 COMPETITIVE INFORMATION. The Sellers represent and warrant that
save and except for the Not Yet Delivered Competitive Information (within the
meaning of Section 5.6), the Sellers have made available all documents which
the Sellers view as containing Competitive Information to Lucas and Ernst &
Young LLP ("E&Y"). The Purchaser acknowledges that Lucas and E&Y have
- 33 -
reviewed such Competitive Information and that such Competitive Information
is subject, in the case of Lucas, to the terms of the confidentiality
agreement dated as of August 5, 1997 between ACI and Lucas and, in the case
of E&Y, to a confidentiality agreement dated May 5, 1997 between the
Purchaser and ACI and which requires the Purchaser's representatives
including E&Y to maintain confidentiality (collectively the "Confidentiality
Agreements"). Notwithstanding the provisions of the Confidentiality
Agreements, each of Lucas and E&Y shall be permitted to discuss and provide
the substance of its analysis of the Competitive Information (including the
Not Yet Delivered Competitive Information) to the Purchaser, on a "no names"
basis and in compliance with all applicable Law (including, without
limitation, the HSR ACT) as advised by counsel, subject to the prior review
of the Sellers of any specific Competitive Information (including the Not Yet
Delivered Competitive Information) to be shared by Lucas or E&Y and further
subject to the consent of the Sellers, acting reasonably, as to whether to
allow such information to be shared prior to the receipt of all required
Regulatory Approvals. Once all required Regulatory Approvals have been
obtained, the Sellers shall grant access to and a reasonable opportunity to
review the Competitive Information (including the Not Yet Delivered
Competitive Information) only to (i) Randall W. Larrimore, Daniel H. Bushell,
Steven R. Schwarz and Mike Rowsey (together with those of their reports who
have specialized expertise in the area under consideration and whose input is
reasonably required by such named individuals in respect of such area under
consideration), (ii) Frederick B. Hegi, Jr., Daniel J. Good and Gary G.
Miller, being members of the Executive Committee of United and (iii) Otis H.
Halleen, General Counsel of United and the Purchaser (all of such named
individuals and such reports are collectively the "Specified Individuals") on
behalf of the Purchaser for a period of five Business Days prior to the
Closing Date. The Purchaser shall cause such the Specified Individuals not to
share such Competitive Information with any other employee, officer, director
or shareholder of the Purchaser or any other Person prior to Closing.
5.4 CONFIDENTIAL INFORMATION. The Purchaser acknowledges that the
Sellers and the Corporations have delivered to the Purchaser and to Lucas and
E&Y a list of material documents of the Corporations which have not been
disclosed to the Purchaser or its representatives on the grounds that the
Sellers view them as containing Confidential Information (save and except for
Confidential Information included in the Not Yet Delivered Competitive
Information). In the event that the Not Yet Delivered Competitive Information
contains Confidential Information, the Sellers shall deliver to the Purchaser
a revised list of Confidential Information, on or before February 13, 1998,
at the same time as it delivers the Not Yet Delivered Competitive
Information. The Sellers in preparing such list jointly and severally
represent and warrant that they have disclosed such information regarding the
subject matter and substance of such agreements as in their opinion could
reasonably be disclosed without violating any applicable confidentiality
covenant. Upon the request of the Purchaser for a document set out in such
list, the Sellers shall use commercially reasonable efforts to obtain the
consent of the third party in favour of whom the Confidential Information
covenant operates to disclose such Confidential Information to the Purchaser,
and the Specified Individuals on behalf of the Purchaser shall have a period
of five Business Days prior to the Closing Date to review all such
Confidential Information. The Purchaser shall cause such Specified
Individuals not to share such Confidential Information with any other
employee, officer, director or shareholder of the Purchaser or any other
Person prior to Closing.
5.5 CONSULTANT OPINIONS. The Purchaser and United jointly and severally
represent
- 34 -
and warrant to the Sellers that Lucas and E&Y have advised the Purchaser that
they have reviewed and analyzed the Competitive Information (other than the
Not Yet Delivered Competitive Information) and that, based on such review and
analysis by Lucas and E&Y, the Purchaser and United are of the view (subject
to Section 6.1(f)) that nothing contained therein would constitute or result
in a Material Adverse Effect or would constitute or result in a material
impediment to the integration of the Business into the business of the
Purchaser or the prospects of such combined business.
5.6 NEW COMPETITIVE INFORMATION. Notwithstanding anything to the
contrary contained in this Agreement, Sellers advise that they have not to
date provided to E&Y or to Lucas certain agreements included in the
Competitive Information (the "Not Yet Delivered Competitive Information").
Sellers covenant to deliver to Lucas all agreements included in the Not Yet
Delivered Competitive Information not later than February 13, 1998 as well as
copies thereof with the Competitive Information removed therefrom to Weil,
Gotshal & Manges LLP. Not later than February 20, 1998, the Purchaser and
United shall determine whether they can confirm in writing to the Sellers
that Lucas has reviewed and analyzed the Not Yet Delivered Competitive
Information and that, based on such review and analysis by Lucas, the
Purchaser and United are of the view (subject to Section 6.1(f)) that nothing
contained therein would constitute or result in a Material Adverse Effect or
would constitute or result in a material impediment to the integration of the
Business into the business of the Purchaser or the prospects of such combined
business. The Purchaser and United shall act reasonably in reaching such
determination. Should the Purchaser and United not provide such confirmation
by such date, their only remedy shall be to terminate the Agreement and the
Side Letter with no party being liable to any other party in respect thereof.
5.7 TRANSITIONAL SERVICES. The Sellers have proposed a form of
transitional services agreement in respect of the services of Bruce
McGroarty. The Purchaser and United shall have until February 20, 1998 to
settle the form of such transitional services agreement with the Sellers and
agree that they shall negotiate in good faith the terms thereof. If the
parties are unable to settle such transitional services agreement by such
date, the services of Bruce McGroarty shall not be provided to the Purchaser
or the Corporations following the Closing Date. The parties acknowledge that
neither the execution and delivery of such a transitional services agreement
nor the provision by the Sellers to the Purchaser or the Corporations of the
services of Bruce McGroarty are a condition precedent to Closing.
ARTICLE 6 - CONDITIONS PRECEDENT TO THE PERFORMANCE
BY THE PARTIES OF THEIR OBLIGATIONS UNDER THIS AGREEMENT
6.1 CONDITIONS FOR THE BENEFIT OF THE PURCHASER. The obligation of the
Purchaser to complete the purchase of the Purchased Shares hereunder shall be
subject to the satisfaction of, or compliance with, at or before the Time of
Closing, each of the following conditions (each of which is hereby
acknowledged to be inserted for the exclusive benefit of the Purchaser):
(a) REPRESENTATIONS AND WARRANTIES - All representations and warranties
of the Sellers made in or pursuant to this Agreement (and, if
applicable, the Side Agreement) shall be true and correct in all
material respects with the same force and effect as if made
- 35 -
at and as of the Time of Closing, and the Sellers shall have
delivered to the Purchaser at the Time of Closing a certificate
dated the Closing Date, duly executed by a senior officer of each
of the Sellers confirming to his or her knowledge, information and
belief, the truth and accuracy of such representations and
warranties at the Time of Closing.
(b) PERFORMANCE OF OBLIGATIONS - The Sellers shall have performed or
complied with, in all material respects, all of their obligations,
covenants and agreements in this Agreement and the Side Agreement
which are to be performed or complied with by the Sellers at or
prior to the Time of Closing.
(c) APPROVALS AND CONSENTS -
(i) All Regulatory Approvals required in connection with the
completion of any of the transactions contemplated by this
Agreement, the Side Agreement or the Intellectual Property
Agreement shall have been obtained and complied with on or
before the Time of Closing.
(ii) All Consents, being those described in Schedule 6.1(c), shall
have been obtained.
(iii) The Purchaser and the Sellers and any other Person in such
party's group required in connection with the transactions
contemplated by this Agreement to file a Notification and
Report Form with the United States Department of Justice and
the Federal Trade Commission pursuant to the HSR Act shall
have made such filing. All applicable waiting periods with
respect to such filing shall have expired or been terminated,
and no actions shall have been instituted challenging or
seeking to enjoin the consummation of the transactions
contemplated by this Agreement.
(d) NO ACTION TO RESTRAIN - No action or proceeding shall be pending or
threatened by any Authority or any other Person to restrain or
prohibit the completion of the transactions contemplated by this
Agreement.
(e) NO MATERIAL ADVERSE CHANGE - Except as has been specified in this
Agreement, since the date of this Agreement there shall not have
been any change in the business of the Corporations or any other
event or circumstance that would have a Material Adverse Effect.
(f) DUE DILIGENCE - All Confidential Information and Competitive
Information shall have been provided to the Purchaser and its
representatives for review in accordance with the terms of this
Agreement. In addition, the Purchaser shall have confirmed, acting
reasonably, that nothing contained in the Competitive Information
or Confidential Information would constitute or result in a
Material Adverse Effect or would constitute or result in a material
impediment to the integration of the Business
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into the business of the Purchaser or the prospects of such
combined businesses, having regard to the following provisions of
this Section 6.1(f). For purposes of the foregoing, the Purchaser
acknowledges that, as described in Section 5.3 and Section 5.5,
certain of its representatives already have had access to the
Competitive Information and have analyzed it and given the
Purchaser their views as to the condition in this Section 6.1(f)
having been satisfied and that the Purchaser's review of that
Competitive Information shall be confirmatory only of the
completeness of such review and analysis. Should the Purchaser wish
not to close the transactions in reliance on this Section 6.1(f),
it shall provide the Sellers with a written statement explaining
(i) with respect to the Competitive Information; why it does not
agree with the analysis of Lucas and E&Y, and/or (ii) with respect
to Confidential Information, the reasons that the Purchaser,
following its and its representatives' review and analysis of such
Confidential Information, acting reasonably has concluded that
information contained in such Confidential Information would
constitute or result in a Material Adverse Effect or would
constitute or result in a material impediment to the integration of
the Business with the business of the Purchaser or the prospects of
such combined businesses, and each such statement shall contain
sufficient detail in order that the Sellers shall have the
opportunity to challenge the Purchaser's conclusion. The Purchaser
shall also promptly provide to the Sellers (or, to the extent
required by applicable Law, to a representative designated by the
Sellers and to be bound by a confidentiality agreement in form and
substance similar to the Confidentiality Agreement executed and
delivered by Lucas) full access to the information used, analysis
conducted and all reports prepared by Lucas and E&Y and all
information and analysis completed by the Purchaser that form the
basis of the Purchaser's conclusion that it is entitled not to
close in reliance on the conditions contained in this Section
6.1(f).
(g) INTELLECTUAL PROPERTY AGREEMENT - The Intellectual Property
Agreement shall have been executed and delivered by ACI and
Eurozerty B.V. (and , if necessary, ACSC).
(h) CLOSING DELIVERIES - The Purchaser shall have received all stock
certificates, instruments and other documents required to be
delivered by the Sellers pursuant to Article 3.
(i) FINANCING - The Purchaser shall have received the proceeds of the
financing from such Person who agrees to finance the acquisition by
the Purchaser of the Purchased Shares (the "Purchaser's Lender"),
provided that, notwithstanding the foregoing, if the Purchaser has
not received such proceeds, this provision shall apply so as to
entitle the Purchaser not to close only if the Purchaser fails to
secure financing for the transaction as a result of any of the
following: (i) the Purchaser's Lender becomes aware after the date
hereof of any information or other matter that is not known to the
Purchaser as at the date hereof and in the reasonable judgment of
Purchaser's Lender has resulted or could result in any change in
the business of the Corporations that would have a Material Adverse
Effect; (ii) there shall have been
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any litigation commenced or threatened which challenges the
financing or which, if successful, would in the reasonable judgment
of the Purchaser's Lender have a Material Adverse Effect; (iii)
other than in the ordinary course of business, there shall have
been a material increase in the liabilities of the Corporations,
liquidated or contingent, whether or not reflected on the Closing
Date Balance Sheet, or a material decrease in their assets; (iv)
there shall have been a suspension in the trading in any equity
securities of United Stationers Inc. by the Securities and Exchange
Commission or the Nasdaq National Market (other than any such
suspension initiated at the request of or otherwise caused by
actions of United Stationers Inc.) or trading in securities
generally shall have been suspended on any principal United States
stock exchange; (v) there shall have declared a banking moratorium
by the United States or any state banking authority; or (vi) there
shall have occurred a material disruption of or material adverse
change in financial, banking or capital market conditions that
materially impairs the ability of the Purchaser's Lender to
syndicate the applicable credit facilities.
(j) INTERCOMPANY INDEBTEDNESS - All intercompany indebtedness
(including deferred tax accounts as shown on internal management
reporting statements) between either of the Sellers or any of their
affiliates, on the one hand, and any of the Corporations, on the
other hand, shall have been paid in full to affiliates or
capitalized as additional shares issued only to one or both of the
Sellers and included in the Purchased Shares and the Sellers and
their respective affiliates, as applicable, shall have executed and
delivered to Purchaser a release in respect thereof in form and
substance reasonably satisfactory to Purchaser.
(k) TAX MATTERS - On the Closing Date, Sellers shall cause the
termination and cancellation of any duties and obligations of each
of the Corporations under any tax sharing, tax allocation, tax
indemnity or other similar agreement and shall cause the release of
each of the Corporations from any liabilities with respect to any
such agreement. Purchaser shall have received reasonably
satisfactory substantiation that no withholding Taxes are
applicable to any payments under this Agreement (including
affidavits pursuant to Section 1445(b)(2) or Section 1445(b)(3) of
the U.S. Tax Code).
6.2 CONDITIONS FOR THE BENEFIT OF THE SELLERS. The obligation of the
Sellers to complete the sale of the Purchased Shares hereunder shall be
subject to the satisfaction of, or compliance with, at or before the Time of
Closing, each of the following conditions (each of which is hereby
acknowledged to be inserted for the exclusive benefit of the Sellers):
(a) REPRESENTATIONS AND WARRANTIES - All representations and warranties
that the Purchaser and United made in or pursuant to this Agreement
(and, if applicable, the Side Agreement) shall be true and correct
in all material respects with the same force and effect as if made
at and as of the Time of Closing, and each of the Purchaser and
United shall have delivered to the Sellers at the Time of Closing
its certificate dated the Closing Date, duly executed by a senior
officer of the Purchaser
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or United, as applicable, confirming to his or her knowledge,
information and belief, the truth and accuracy of such
representations and warranties at the Time of Closing.
(b) PERFORMANCE OF OBLIGATIONS - The Purchaser and United shall have
performed or complied with, in all material respects all of its
obligations, covenants and agreements in this Agreement and the
Side Agreement which are to be performed or complied with by the
Purchaser or United at or prior to the Time of Closing.
(c) NO ACTION TO RESTRAIN - No action or proceeding shall be pending or
threatened by any Authority or any other Person to restrain or
prohibit the completion of the transactions contemplated by this
Agreement.
(d) INTELLECTUAL PROPERTY AGREEMENT - The Intellectual Property
Agreement shall have been executed and delivered by the Purchaser.
(e) CLOSING DELIVERIES - The Sellers shall have received the Purchase
Price and other documents required to be delivered by the Purchaser
pursuant to Article 3.
6.3 TERMINATION BY PURCHASER. If any of the conditions set forth in
section 6.1 have not been fulfilled, performed or satisfied at or prior to
the Closing Date, the Purchaser may, by written notice to the Sellers
terminate all of its obligations hereunder and the Purchaser and United shall
be released from all their obligations under this Agreement. Any of such
conditions may be waived in whole or in part by the Purchaser by instrument
in writing given to the Sellers without prejudice to any of the Purchaser's
rights of termination in the event of non-performance of any other condition,
obligation or covenant in whole or in part. Notwithstanding anything in this
section 6.3 to the contrary, the Purchaser shall not have the right to
terminate this Agreement in accordance with this section 6.3 in the event
that the Purchaser's or United's material breach of any provision hereof
causes or results in the failure of any of the conditions set forth in
section 6.1.
6.4 TERMINATION BY SELLERS. If any of the conditions set forth in
section 6.2 have not been fulfilled, performed or satisfied at or prior to
the Closing, the Sellers may, by written notice to the Purchaser, terminate
all of their obligations hereunder and the Sellers shall be released from all
their obligations under this Agreement. Any of such conditions may be waived
in whole or in part by the Sellers by instrument in writing to the Purchaser,
without prejudice to any of the Sellers' rights of termination in the event
of non-performance of any other condition, obligation or covenant in whole or
in part. Notwithstanding anything in this section 6.4 to the contrary, the
Sellers shall not have the right to terminate this Agreement in accordance
with this section 6.4 in the event that the Sellers' material breach of any
provision hereof causes or results in the failure of any of the conditions
set forth in section 6.2.
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ARTICLE 7 - COVENANTS OF THE PARTIES FOLLOWING CLOSING
7.1 CLOSING DATE BALANCE SHEET.
(a) The parties acknowledge that the Estimated Purchase Price was
established based on the Net Tangible Assets reflected on the September 30
Balance Sheet. Within 60 days following the Closing, the Purchaser on behalf
of the Corporations shall prepare and deliver to each of the Sellers the
combined balance sheet including each of the Corporations audited by Price
Waterhouse ("PW") as of the Closing Date (as so audited, the "Closing Date
Balance Sheet"). The Closing Date Balance Sheet shall be prepared and audited
in accordance with GAAP consistent with the accounting policies, practices
and procedures for the Corporations used in connection with preparation of
the September 30 Balance Sheet and the December 31 Balance Sheet, except as
may otherwise be required pursuant to this Article 7 or Schedule 7.1 and
shall be audited in accordance with Canadian generally accepted auditing
standards and accompanied by a written opinion thereon. Each of the Purchaser
and the Sellers shall have the right to consult, at reasonable times and with
reasonable notice, with PW and appropriate representatives of the
Corporations during the preparation and audit of the Closing Date Balance
Sheet. The Closing Date Balance Sheet (x) shall be prepared without regard to
(A) any effect from the Closing of the transactions contemplated hereby or
any financing relating thereto, (B) the Purchaser's existing or future plans
to modify or adjust the business, operations or accounting practices of the
Corporations after Closing or (C) adjustments relating to the recording of
the acquisition by the Purchaser and (y) shall reflect all proposed audit
adjustments determined by PW to be necessary in order that the Closing Date
Balance Sheet will comply with GAAP on a basis consistent with such prior
accounting policies, practices and procedures but subject to this Article 7
and Schedule 7.1.
(b) The Closing Date Balance Sheet shall reflect the basis of
presentation of the Closing Date Balance Sheet that is described in Schedule
7.1, together with the report of PW setting forth a calculation of Net
Tangible Assets of the Corporations on a combined basis, as determined from
the Closing Date Balance Sheet. If PW cannot deliver the opinion required by
Section 7.1(a) solely because of the adjustments required by Schedule 7.1,
then PW also shall prepare and deliver with its report the Adjusted Closing
Date Balance Sheet and, in such case, the calculation of Net Tangible Assets
shall be based on the Adjusted Closing Date Balance Sheet.
(c) Following the delivery of the Closing Date Balance Sheet (and, if
applicable, the Adjusted Closing Date Balance Sheet) to the Sellers and the
Purchaser, the Purchaser shall cause the Corporations to provide E&Y on
behalf of the Purchaser with access to the working papers of PW relating
thereto.
(d) In the event that the Purchaser, as a result of E&Y's review,
objects in writing (stating with reasonable specificity the reasons for its
objections) within 10 Business Days following receipt of the Closing Date
Balance Sheet and PW's report as to the amount of the Net Tangible Assets,
(and, if applicable, the Adjusted Closing Date Balance Sheet) then E&Y and
the Purchaser, on the one hand, and PW and the Sellers, on the other hand,
shall in good faith attempt to agree upon the amount of Net Tangible Assets
(and, if applicable, the Adjusted Closing Date Balance Sheet); PROVIDED, that
if the Purchaser and E&Y, on the one hand, and PW and the Sellers, on the
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other hand, are unable to so agree within 25 Business Days after delivery to
the Sellers of the Closing Date Balance Sheet and the PW report as to the Net
Tangible Assets (and, if applicable, the Adjusted Closing Date Balance
Sheet), then the Sellers and the Purchaser shall retain the independent
chartered accounting firm of Deloitte & Touche LLP (the "Neutral Auditors")
to resolve the differences on specific points of disagreement and to provide
an opinion on a revised Closing Date Balance Sheet (and, if applicable, the
Adjusted Closing Date Balance Sheet), together with a report of the Neutral
Auditors setting forth a revised calculation of Net Tangible Assets, in each
case prepared in accordance with the principles set forth in this Section 7.1
and Schedule 7.1. The fees of the Neutral Auditors shall be shared equally
between the Sellers, on the one hand, and the Purchaser, on the other hand,
and the decision of the Neutral Auditors shall be conclusive, final and
binding upon the Sellers and the Purchaser. The fees and expenses of PW shall
be the sole responsibility of the Sellers and the fees and expenses of E&Y
shall be the sole responsibility of the Purchaser.
(e) As used in this Agreement, "Net Tangible Assets" means, as of the
Closing Date and immediately prior to the consummation of the transactions
contemplated hereby, as derived from the Closing Date Balance Sheet (or, if
applicable, the Adjusted Closing Date Balance Sheet), an amount equal to
total assets minus goodwill, minus total current liabilities, minus long-term
debt and other long-term liabilities.
7.2 ADJUSTMENTS. If the Net Tangible Assets of the Corporations as
shown on the Closing Date Balance Sheet (or, as applicable, the Adjusted
Closing Date Balance Sheet) is more or less than $39,121,360, being the Net
Tangible Assets of the Corporations set out in the September 30 Balance
Sheet, the Purchase Price shall be decreased by an amount equal to the
difference if the Net Tangible Assets reflected on the Closing Date Balance
Sheet (or, as applicable, the Adjusted Closing Date Balance Sheet) are less
than $39,121,360, (the difference being referred to herein as the "Net Asset
Difference") or shall be increased by an amount equal to the Net Asset
Difference if the Net Tangible Assets reflected on the Closing Date Balance
Sheet (or, as applicable, the Adjusted Closing Date Balance Sheet) are
greater than $39,121,360. If the Purchase Price is to be so decreased, the
Sellers shall pay to the Purchaser on the Adjustment Date an amount in cash
equal to the Net Asset Difference. If the Purchase Price is to be so
increased, the Purchaser shall pay to the Sellers on the Adjustment Date an
amount in cash equal to the Net Asset Difference. In either case, payment of
the Net Asset Difference shall be made with interest thereon at the Prime
Rate, compounded monthly, from and including the Closing Date to and
excluding the Adjustment Date. The amount, if any, of an adjustment to the
Purchase Price in accordance with this section 7.2, shall be allocated to
each Corporation on the basis of the difference between the Net Tangible
Assets of each Corporation reflected in the September 30 Balance Sheet and
the Closing Date Balance Sheet (or, as applicable, the Adjusted Closing Date
Balance Sheet) for such Corporation.
7.3 INCOME STATEMENT FOR STUB PERIOD. The Purchaser shall also cause
the Corporations to prepare an income statement for the period from January
1, 1998 to the Closing Date (and PW shall audit such income statement in
connection with its audit of the Closing Date Balance Sheet) to be used in
the preparation by the parties of Tax Returns in respect of the period that
includes the stub period.
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7.4 CONFIDENTIALITY. From and after the Closing, the Sellers shall, and
shall cause each of its affiliates and its directors, officers, employees,
agents and representatives to, (i) use all non-public information and
documents relating to the Business in the United States and Mexico in their
possession solely and exclusively in connections with the transactions
contemplated by this Agreement and to file all Tax Returns required to be
filed by them, and (ii) keep all such information and documents confidential,
unless any such information or documents is or becomes generally available to
the public other than as a result of a disclosure by the Sellers or any other
such Person in violation of this section 7.4, or unless compelled to be
disclosed by Law or the rules and regulations of any national stock exchange
pursuant to which the Sellers or such Person is bound.
7.5 EMPLOYEES.
(a) Except for Claims that result from a breach of any of its
obligations in this Agreement by either the Sellers or the Purchaser, as the
case may be, the Purchaser agrees to indemnify and save harmless the Sellers,
in accordance with section 8.2, with respect to any Claims (including claims
for severance, notice of termination, breach of contract, constructive
dismissal or damages in connection therewith) relating to the employment of
any of the Employees by the Purchaser or the termination of the employment of
any of the Employees by the Purchaser, which Claims arise from facts after
12:00 (noon), Eastern Standard Time on the Closing Date, including the
continuation, discontinuation or provision to any Employee of any of the
employment policies, benefit plans or other benefits previously provided by
any of the Sellers other than benefits pursuant to the Office Products Long
Term Incentive Plan as it may be amended from time to time.
(b) The Sellers, jointly and severally, agree to indemnify and hold
harmless the Purchaser, in accordance with section 8.1, with respect to any
Claims (including claims for severance, notice of termination, breach of
contract, constructive dismissal or damages in connection therewith) relating
to the employment of any Employees of the Corporation, which Claims arise
from facts occurring prior to the Closing Date including any benefits payable
under the Office Products Long Term Incentive Plan.
(c) The Purchaser shall cause the Corporations, following the Closing
Date, to honour all obligations due to employees of the Corporations, or any
of them, of whatsoever nature, including normal compensation and severance
arrangements and the IPO/Sale severance arrangements described in the Side
Agreement.
7.6 NON-COMPETITION. For a period of five years after the Closing Date,
neither the Sellers nor any of their respective affiliates shall, directly or
indirectly, own, manage, operate, control, invest or acquire any equity
interest in any business (a "Competitive Operation") which directly competes
with the Business of the Corporations in the United States or Mexico as
currently conducted; provided, however, that ownership of not more than 3% of
the securities of any class of a Competitive Operation that are
publicly-traded shall not be deemed a violation of this section 5.6; provided
further, that should an arm's length third party acquire the business
conducted by Axidata and/or Eurozerty B.V. ("Eurozerty") prior to the
expiration of such five year period, the provisions of this section 5.6 shall
not thereafter apply to Axidata and/or Eurozerty (and such third party
- 42 -
acquirors), as the case may be. Notwithstanding the foregoing, if, following
the Closing, there is a change of control of ACI (i.e. any Person or group of
Persons (the "New Owner") not dealing at arm's length with each other
acquires at least 50.01% of the issued and outstanding voting shares in the
capital of ACI), the New Owner as an affiliate of the Sellers shall, to the
extent that it already carries on a Competitive Operation, not be required to
divest itself of or cease to carry on such Competitive Operation. In
addition, the Sellers shall not thereby be deemed to be in breach of this
Section 7.6 as long as the New Owner does not (i) integrate such Competitive
Operation with that portion of the OPD retained, directly or indirectly, by
ACI or (ii) use or disclose the knowledge, know-how, assets, marketing
strategies and information or other trade secrets of the Business in the
conduct of such Competitive Operation or in such other business that would
directly or indirectly compete with the Business. In addition,
notwithstanding anything to the contrary contained herein, Axidata shall be
entitled to continue to carry on in the United States the business of paper
and systems storage.
7.7 NON-SOLICITATION.
(a) From the date of this Agreement until the earlier of (i) nine
months after any sale of all of the shares in the capital of or substantially
all of the assets of Axidata, and (ii) eighteen months after the Closing Date
(the earlier of such dates being herein referred to as the "Trigger Date"),
neither the Sellers, or either of them, nor the Purchaser (or any of their
respective affiliates) shall hire any employee of the other party (or their
respective subsidiaries or affiliates) without the prior written consent of
the other party; and
(b) From the Closing Date until twelve additional months following the
Trigger Date, neither the Sellers nor the Purchaser (or any of their
respective affiliates) shall, directly or indirectly, solicit the employment
of any employee of the other party (or their respective subsidiaries or
affiliates) for employment; provided, however, that this Agreement shall not
prohibit (i) any advertisement or general solicitation that is not
specifically targeted at any such employees, (ii) from and after the Trigger
Date, the employment of any such employee who first contacts the Sellers or
the Purchaser or any of their respective affiliates on his or her own
initiative, or (iii) the employment of any hourly employee who initiates an
application for employment in the United States.
7.8 ACCESS TO RECORDS. Following the Closing Date and on reasonable
prior notice during regular business hours, Sellers shall be entitled to
access to the books and records and other information referred to in Section
4.1(m) to the extent that such access is restricted to information that
relates to periods prior to the Closing Date only and such access is
reasonably required by the Sellers.
7.9 MEXICAN FOREIGN INVESTMENT NOTICE. After the Closing Date, the
Purchaser shall give notice of the transaction to the applicable Mexican
Authority in the manner required by Mexican Law.
7.10 RECORDING TRANSFER OF AZERTY MEXICO SHARES. The Purchaser shall
take all steps necessary after the Closing Date to record on the stock
register of Azerty Mexico the transfer of the
- 43 -
applicable Purchased Shares.
7.11 CHANGE OF NAME. Within three months following the Closing, ACI
shall cause AP Support Services B.V., a corporation organized under the laws
of the Netherlands and an indirect wholly-owned subsidiary of ACI ("APSS
Europe"), to file an amendment to its articles of association and to take all
other actions necessary to change APSS Europe's name (for any and all uses,
whether internal or external, wherever used and for any and all purposes
whatsoever) to a name that is not similar to, nor includes any words or
expressions that may be deemed to be similar to or cause confusion with, "AP
Support Services," and ACI shall deliver to Purchaser a copy of the amendment
to APSS Europe's articles of association effecting such name change.
7.12 UNIZERTY NAME. Neither the Purchaser nor United nor any of their
affiliates of either such party shall use the name "Unizerty" in Canada prior
to July 31, 1999. Except for the agreement in the immediately prior sentence,
ACI agrees that neither it nor any of its affiliates has any right, title or
interest to or in the name "Unizerty," and ACI agrees that except and only to
the extent of a breach by United, the Purchaser or any of their affiliates of
such agreement in this section 7.12, neither ACI nor any of its affiliates
shall make any claim of right, title or interest with respect to the name
"Unizerty" or bring any infringement or other action against United,
Purchaser or any of their affiliates as a result of United, Purchaser or any
such affiliates using the name "Unizerty" anywhere in the world or in any
manner whatsoever.
7.13 EUROZERTY NAME. Nothing contained in this Agreement or in any
document delivered in connection herewith (including, without limitation, the
Intellectual Property Agreement), shall prohibit the Sellers or any of their
affiliates from using the name "Eurozerty" in Europe on an exclusive basis
after the date hereof or from transferring such rights to any successor owner
of the European portion of the OPD. The Purchaser and United agree that
neither they nor any of their affiliates has any right, title or interest to
or in the name "Eurozerty" and that none of the Purchaser, United or any of
their affiliates shall make any claim of right, title or interest with
respect to the name "Eurozerty" or bring any infringement or other action
against Sellers or any of their affiliates or any successor owner of the
European portion of the OPD as a result of any of them using the name
"Eurozerty" in Europe in any manner whatsoever.
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ARTICLE 8 - INDEMNIFICATION
8.1 INDEMNIFICATION BY SELLERS. The Sellers jointly and severally
covenant and agree with the Purchaser to indemnify and save harmless the
Purchaser and its affiliates from and against any Claim which may be made or
brought against the Purchaser or its affiliates, or which the Purchaser or
its affiliates may suffer or incur in respect of, as a result of, or arising
out of:
(a) any nonfulfillment of any covenant or agreement on the part of the
Sellers, or any one or more of them, contained in this Agreement,
the Side Agreement and the Intellectual Property Agreement;
(b) any inaccuracy in or breach of any representation or warranty of
the Sellers, or any one or more of them, contained in this
Agreement, the Side Agreement and the Intellectual Property
Agreement;
(c) any debts and liabilities of the Corporations for Taxes (i) with
respect to any taxable period (or portion thereof) of any of the
Corporations (or any predecessor) ending on or before the Closing
Date; (ii) of any member of an affiliated, consolidated, combined,
or unitary group (other than the Corporations) of which any of the
Corporations (or any predecessor) is or was a member on or prior to
the Closing Date by reason of the liability of any of the
Corporations pursuant to United States Treasury Regulation Section
1.1502-6(a) or any analogous or similar state, local, Mexican or
other foreign law; and (iii) allocable to the Sellers pursuant to
Section 8.9(f), but only to the extent that such Taxes are in
excess of amounts reserved therefor in the Closing Date Balance
Sheet;
(d) any Remedial Requirement associated with the presence or migration
of any Hazardous Substance resulting from the Seller's use or
occupation of the Real Property prior to the Closing Date; or
(e) any Claims resulting from or relating to the Office Products Long
Term Incentive Plan.
8.2 INDEMNIFICATION BY THE PURCHASER. The Purchaser and United jointly
and severally covenant and agree with the Sellers to indemnify and save
harmless the Sellers and their affiliates, from and against any Claim which
may be made or brought against the Sellers or their affiliates, or one or
more of them, or which they or one or more of them may suffer or incur,
directly or indirectly, in respect of, as a result of, or arising out of:
(a) any nonfulfillment of any covenant or agreement on the part of the
Purchaser or United under this Agreement, the Side Agreement and
the Intellectual Property Agreement; and
(b) any inaccuracy in or breach of any of the Purchaser's or United's
representations or warranties contained in this Agreement, the Side
Agreement and the Intellectual
- 45 -
Property Agreement.
8.3 PROCEDURE FOR INDEMNIFICATION.
(a) CLAIMS OTHER THAN THIRD PARTY CLAIMS. Following receipt from the
Sellers or the Purchaser and their respective affiliates, as the case may be
(the "Indemnified Party"), of a written notice of a claim for indemnification
which has not arisen in respect of a Third Party Claim (as defined in section
8.3(b)), the party who is in receipt of such notice (the "Indemnifying
Party") shall have 30 days to make such investigation of the claim as the
Indemnifying Party considers necessary or desirable. For the purpose of such
investigation, the Indemnified Party shall make available to the Indemnifying
Party the information relied upon by the Indemnified Party to substantiate
the claim. If the Indemnified Party and the Indemnifying Party agree at or
prior to the expiration of such 30 day period (or any mutually agreed upon
extension thereof) to the validity and amount of the claim, the Indemnifying
Party shall immediately pay to the Indemnified Party the full agreed upon
amount of the claim. If the Indemnified Party and the Indemnifying Party do
not agree within such period (or any mutually agreed upon extension thereof),
such dispute shall be resolved as set out in section 9.13.
(b) THIRD PARTY CLAIMS. The Indemnified Party shall notify the
Indemnifying Party in writing as soon as is reasonably practicable after
being informed in writing that facts exist which may result in a claim
originating from a Person other than the Indemnified Party (a "Third Party
Claim") and in respect of which a right of indemnification given pursuant to
section 8.1 or 8.2 may apply. The Indemnifying Party shall have the right to
elect, by written notice delivered to the Indemnified Party within 10 days of
receipt by the Indemnifying Party of the notice from the Indemnified Party in
respect of the Third Party Claim, at the sole expense of the Indemnifying
Party, to participate in or assume control of the negotiation, settlement or
defence of the Third Party Claim, provided that:
(i) such will be done at all times in a diligent and BONA FIDE
manner;
(ii) the Indemnifying Party acknowledges in writing its obligation
to indemnify the Indemnified Party in accordance with the
terms contained in this Agreement in respect of that Third
Party Claim; and
(iii) the Indemnifying Party shall pay all reasonable out-of-pocket
expenses incurred by the Indemnified Party as a result of
such participation or assumption.
If the Indemnifying Party elects to assume such control, the
Indemnified Party shall cooperate with the Indemnifying Party and its counsel
and shall have the right to participate in the negotiation, settlement or
defence of such Third Party Claim at its own expense. If the Indemnifying
Party does not so elect or, having elected to assume such control, thereafter
fails to proceed with the settlement or defence of any such Third Party
Claim, the Indemnified Party shall be entitled to assume such control at the
expense of the Indemnifying Party. In such case, the Indemnifying Party shall
cooperate where necessary with the Indemnified Party and its counsel in
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connection with such Third Party Claim and the Indemnifying Party shall be
bound by the results obtained by the Indemnified Party with respect to such
Third Party Claim.
8.4 ADDITIONAL RULES AND PROCEDURES. The obligation of the parties to
indemnify each other pursuant to this Article 8 shall also be construed in
accordance with and subject to the following:
(a) should the Closing actually occur, for purposes of the
indemnification provisions of sections 8.1 and 8.2, a breach of a
representation or warranty contained in this Agreement (other than
Sections 4.1(g), 4.1(h), 4.1(l) and 4.1(ac) (collectively, the
"Excluded Representations")) shall be deemed to exist either if
such representation or warranty is actually inaccurate or breached
or would have been breached or inaccurate if such representation or
warranty had not contained any limitation or qualification as to
materiality, Material Adverse Effect or knowledge, it being the
intention of the parties hereto that an Indemnified Party shall be
indemnified and held harmless from and against any and all Claims
arising out of, based upon or with respect to the failure of any
such representations or warranties to be true, correct and complete
in any respect, determined in each case without regard to any
qualification as to materiality, Material Adverse Effect or
knowledge set forth with respect thereto. For greater certainty,
this provision shall not apply in respect of the Excluded
Representations and shall not apply so as to remove materiality as
it otherwise would apply in determining GAAP. In addition, for
greater certainty, the definition of Material Contract shall not be
deemed to be amended by this Section 8.4(a);
(b) an Indemnified Party shall only be entitled to make a claim for
indemnification pursuant to section 8.1 or 8.2, as the case be, if
written notice containing reasonable particulars of such claim is
delivered to the Indemnifying Party within the time periods
provided for in section 4.3 or 4.4, as the case may be;
(c) if any Third Party Claim is of a nature such that the Indemnified
Party is required by applicable Law to make a payment to any Person
(a "Third Party") with respect to such Third Party Claim before the
completion of settlement negotiations or related legal proceedings,
the Indemnified Party may make such payment and the Indemnifying
Party shall, forthwith after demand by the Indemnified Party,
reimburse the Indemnified Party for any such payment. If the
amount of any liability under the Third Party Claim in respect of
which such a payment was made, as finally determined, is less than
the amount which was paid by the Indemnifying Party to the
Indemnified Party, the Indemnified Party shall, forthwith after
receipt of the difference from the Third Party, pay such difference
to the Indemnifying Party together with interest thereon at the
Prime Rate from the date of payment to the date of reimbursement;
(d) except in the circumstances contemplated by section 8.4(c), and
whether or not the Indemnifying Party assumes control of the
negotiation, settlement or defence of any
- 47 -
Third Party Claim, the Indemnified Party shall not settle or
compromise any Third Party Claim except with the prior written
consent of the Indemnifying Party (which consent shall not be
unreasonably withheld). A failure by the Indemnifying Party to
respond in writing to a written request by the Indemnified Party
for consent for a period of five Business Days or more, shall be
deemed a consent by the Indemnifying Party to such request;
(e) the Indemnifying Party and the Indemnified Party shall provide each
other on an ongoing and timely basis with all information which may
be relevant to the other's liability hereunder and shall supply
copies of all relevant documentation promptly as they become
available;
(f) notwithstanding section 8.4(d), the Indemnifying Party shall not
settle any Third Party Claim or conduct any related legal or
administrative proceeding in a manner which would, in the opinion
of the Indemnified Party, acting reasonably, have a material
adverse impact on the Indemnified Party; and
8.5 LIMITS TO CLAIMS. Notwithstanding any of the provisions of
sections 8.1 and 8.2:
(a) MINIMUM THRESHOLD FOR CLAIMS. The indemnity obligations of the
Sellers pursuant to section 8.1(b) and of the Purchaser pursuant to
section 8.2(b) shall not apply: (i) unless such Claim is made
within the time period referred to in section 4.3 or 4.4, as the
case may be; and (ii) until the aggregate of all indemnifiable
Claims pursuant to section 8.1(b) or Section 8.2(b), as applicable,
exceed $750,000; provided that thereafter the Sellers and the
Purchaser, as applicable, shall be liable pursuant to sections
8.1(b) or 8.2(b), as applicable, for the full amount of such
indemnifiable Claims including the initial $750,000. For greater
certainty, the $750,000 amount with respect to Claims against the
Sellers or the Purchaser is a threshold not a deductible.
(b) APPLICATION OF THRESHOLDS. The $750,000 threshold described in
section 8.5 (a) shall not apply to nor in any way limit (i) the
ability of the Purchaser to receive 100% of all amounts to which it
is entitled in connection with any claim for indemnification in
respect of the Office Products Long Term Incentive Plan pursuant
to Section 8.1(e) or (ii) the ability of Purchaser to receive 100%
of all amounts to which it is entitled in connection with any claim
for indemnification in respect of Taxes pursuant to Section 8.1(c)
or (iii) with respect to any claim with respect to environmental
matters pursuant to Section 8.1(d). In addition, for greater
certainty, to the extent that the Purchaser is responsible under
this Agreement for amounts that exceed their applicable
corresponding reserves on the Closing Date Balance Sheet (or, as
applicable, the Adjusted Closing Date Balance Sheet) because no
representation or warranty of the Sellers shall have been breached,
as described in Sections 4.1(g), 4.1(h) and 4.1(l), the amount of
any such actual excess shall not constitute a Claim that is
included for the purposes of determining whether such threshold has
been reached.
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(c) MAXIMUM LIMITS. Notwithstanding anything else contained in this
Article 8, in no case shall either the Sellers or Purchaser be
required to indemnify the other party for an amount exceeding
$50,000,000 in the aggregate, other than (i) with respect to Claims
arising from a breach of any of the representations and warranties
contained in sections 4.1(d) or 4.1(e), in which case the maximum
amount shall be the amount of the Purchase Price or (ii) with
respect to Claims under Section 8.1 relating to Taxes or the Office
Products Long Term Incentive Plan, in which case this Section
8.5(c) shall not apply.
8.6 AMOUNTS RECOVERED. The amount of any Claim shall be determined
after giving effect to any amount actually recovered from an insurer or any
other third party, and the parties hereto agree to act in a commercially
reasonable manner in connection with making a claim against their respective
insurers or any third party or accepting a settlement.
8.7 NON-MONETARY RIGHTS. The rights of indemnification contained in
this Article are the exclusive monetary remedies with respect to the matters
covered therein but do not preclude any other non-monetary right or remedy of
the parties available to enforce this Agreement such as injunctive relief and
specific performance.
8.8 PURCHASE PRICE ADJUSTMENT. Any indemnification payment hereunder
shall be treated by the parties hereto for all Tax reporting purposes as an
adjustment to the Purchase Price.
8.9 CERTAIN TAX MATTERS.
(a) Sellers shall control the defense and settlement of any Tax audit
or administrative or court proceeding relating to taxable periods of the
Corporations ending on or prior to the Closing Date, provided, however, that
if the results of any such Tax audit or administrative or court proceeding
could result in a material tax liability for which the Purchaser is not
entitled to indemnification under this Agreement, then the Purchaser shall
review, consent and approve, which approval shall not be unreasonably
withheld, the defense and settlement of any such Tax audit or proceeding.
Sellers will promptly notify the Purchaser of the commencement of any claim,
audit, examination, or other proposed change or adjustment by any taxing
authority which is directly related to the liability of any of the
Corporations for Taxes and Sellers shall keep the Purchaser duly informed of
the progress thereof. The Purchaser will promptly notify the Sellers of the
commencement of any claim, audit, examination or other proposed charge or
adjustment by any taxing authority concerning an item directly related to a
Tax Return filed by the Sellers for a tax year ending prior to or on the
Closing Date.
(b) After the Closing Date, Sellers shall properly prepare and timely
file all consolidated, combined, affiliated or unitary Tax Returns of either
of the Sellers (or any affiliate) and which include any of the Corporations
through the Closing Date (the "Seller Returns"), and Purchaser shall properly
prepare and timely file all other Tax Returns with respect to the
Corporations (the "Purchaser Returns"). Following the Closing Date, Sellers
shall provide Purchaser with drafts of the portions of all Seller Returns
only as they relate to the Corporations not
- 49 -
later than thirty days prior to the due date for the filing thereof for
Purchaser's review, comment and approval, which approval shall not be
unreasonably withheld, and Purchaser shall provide Sellers with drafts of the
Purchaser Returns (to the extent such Tax Returns give rise to an
indemnification obligation on the part of Sellers at the time of filing) not
later than thirty days prior to the due date for the filing thereof for
Sellers' review, comment and approval, which approvals will not be
unreasonably withheld. Sellers shall not file (and shall not permit any
affiliate to file) any amended Tax Return or claim for refund which will give
rise to an obligation that is not indemnifiable under this Agreement.
(c) Sellers and the Purchaser will provide to each other full access,
at any reasonable time and from time to time, at the business location at
which the books and records are maintained, after the Closing Date, to such
Tax data relating to the Corporations as the Sellers or the Purchaser, as the
case may be, may from time to time reasonably request (including the relevant
portions of consolidated, combined, affiliated and unitary Tax Returns which
include the Corporations).
(d) In the event that any of the Corporations has a carryback of a
loss, credit or other tax attribute from a taxable period ending after the
Closing Date which may be carried back to a consolidated, combined, unitary
or affiliate Tax Return of any of the Sellers (or any affiliate), Sellers
shall within fifteen days of the receipt of a refund or confirmation by the
applicable taxing authority of a reduction in Taxes pay such amount to the
applicable Corporation. In the event that such carryback is subsequently
disallowed by the applicable taxing authority, such Corporation will repay
such refund, along with interest calculated at the statutory underpayment
rate set forth in the U.S. Tax Code, to the Sellers in the event there is a
final determination that such refund is not allowable.
(e) Any Tax refunds of the Corporations that are received by the
Purchaser or the Corporations (or their affiliates) and any amounts credited
against Tax to which the Purchaser or the Corporations (or their affiliates)
become entitled, that relate to Tax periods of the Corporations or portions
thereof ending on or before the Closing Date and that are not (i) shown as an
asset on the December 31 Balance Sheet or the Closing Date Balance Sheet or
(ii) attributable to a carryback of the Corporations from a Tax period (or
portion thereof) ending after the Closing Date shall be for the account of
the Sellers, and the Purchaser shall pay over to the Sellers any such refund
or the amount of any such credit within fifteen (15) days after the receipt
or entitlement thereto. In addition, to the extent that any amount accrued as
a liability for current Taxes on the December 31 Balance Sheet or the Closing
Date Balance Sheet is refunded or credited to the Corporations (or their
affiliates), the Purchaser shall pay such amount to the Sellers within
fifteen (15) days after receipt or entitlement thereto. The Purchaser and the
Corporations shall be entitled to retain (and the Sellers upon receipt or
credit thereof shall pay to the Purchaser within 15 days) any Tax refund or
credit which is shown as an asset on the December 31 Balance Sheet or the
Closing Date Balance Sheet or is attributable to the carryback of losses or
credits or other tax benefits from a taxable period or portion thereof ending
after the Closing Date to a taxable period or portion thereof ending before
the Closing Date. The amount of any Tax refund or credit which is payable
hereunder shall be reduced by any increase in Taxes attributable to the
receipt thereof. In the event that such refund or credit is subsequently
disallowed by the applicable taxing authority, such Sellers will repay such
refund, along with interest calculated at the statutory underpayment rate set
forth in the
- 50 -
U.S. Tax Code, to the Purchaser or the applicable Corporation in the event
there is a final determination that such refund is not allowable.
(f) For purposes of Section 8.1(c)(ii), Taxes with respect to any
separate Tax Return of the Corporations attributable to any taxable period of
the Corporations beginning before the Closing Date and ending after the
Closing Date shall be allocated (i) to the Sellers for the period up to the
Closing Date, and (ii) to the Purchaser for the period beginning after the
Closing Date to the end of the taxable period. Such allocation of Taxes
between the pre-Closing Date and post-Closing Date periods shall be
accomplished by closing the books of the Company as of the close of business
on the Closing Date or, where not susceptible to such method of allocation,
pro rata on the basis of the number of elapsed days.
(g) Sellers shall not make any election to attribute losses of any of
the Corporations to any of the Sellers (or any affiliate) pursuant to United
States Treasury Regulation Section 1.1502-20(g).
8.10 TRANSFER TAXES. The Purchaser shall be responsible for the payment
of and shall indemnify and hold the Sellers harmless from and against any and
all sales, use, transfer, recording, stamp, documentary, real estate or other
similar Taxes attributable to the transactions contemplated by this Agreement.
ARTICLE 9 - GENERAL
9.1 PUBLIC NOTICE. No public disclosure of any kind shall be made or
permitted in respect of the subject matter of this Agreement, the Side
Agreement or the Intellectual Property Agreement by any party without
consultation with and the consent of the other parties (such consent not to
be unreasonably withheld) except for such disclosure as may be required by
Law or the rules and regulations of any stock exchange of which such party is
subject. The parties acknowledge that there will be a public announcement or
announcements as soon as is reasonably practicable following the execution
and delivery hereof and in such form as is approved by the Sellers and the
Purchaser.
9.2 EXPENSES. Except as otherwise provided in this Agreement, each
party shall be responsible for its own fees, expenses, and other costs
incurred in connection with the transactions contemplated by this Agreement.
9.3 FURTHER ASSURANCES. The parties shall do all such things and
provide all such reasonable assurances as may be required to consummate the
transactions contemplated this Agreement, and each party shall provide such
further documents or instruments required by any other party as may be
reasonably necessary or desirable to effect the purpose of this Agreement and
carry out its provisions, whether before or after the Closing.
9.4 TIME OF THE ESSENCE. Time is of the essence to every provision of
this Agreement. Extension, waiver or variation of any provision of this
Agreement shall not be deemed to affect this provision and there shall be no
implied waiver of this provision.
- 51 -
9.5 BENEFIT OF THE AGREEMENT. This Agreement shall enure to the
benefit of and be binding upon the parties hereto and their respective heirs,
executors, administrators, personal representatives, successors and permitted
assigns.
9.6 ENTIRE AGREEMENT. With respect to the subject matter of this
Agreement, this Agreement supersedes all prior understandings and
communications between the parties or any of them, oral or written, and
constitutes the entire agreement between the parties other than (i) the Side
Agreement, (ii) the Intellectual Property Agreement (when executed and
delivered) and (iii) the Confidentiality Agreement dated May 5, 1997 between
ACI and the Purchaser, which shall terminate as of Closing in respect of the
Corporations but not in respect of ACI, Axidata or ACI's European affiliates
and in respect of the Business carried on by ACI through the OPD in Canada
and Europe. Each party acknowledges that it shall have no right to rely upon
any amendment, promise, modification, statement or representation made or
occurring subsequent to the execution of this Agreement unless the same is in
writing and executed by the Purchaser and the Sellers.
9.7 WAIVER. The failure of any party to enforce at any time any of the
provisions of this Agreement or any of its rights in respect thereto or to
insist upon strict adherence to any term of this Agreement shall not be
considered to be a waiver of such provision, right or term or in any way to
affect the validity of this Agreement or deprive the applicable party of the
right thereafter to insist upon strict adherence to that term or any other
term of this Agreement. The exercise by any party of any of its rights
provided by this Agreement shall not preclude or prejudice such party from
exercising any other right it may have under this Agreement, notwithstanding
any previous action or proceeding taken by it hereunder. Any waiver by any
party of the performance of any of the provisions of this Agreement shall be
effective only if in writing and signed by a duly authorized representative
of such party.
9.8 NOTICES. All payments and communications which may be or are
required by this Agreement to be given by any party to any other party, shall
be in writing and (i) delivered personally, (ii) sent by prepaid courier
service or certified mail, or (iii) sent by telecopier or other similar means
of electronic communication to the parties at their following respective
addresses:
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(a) For the Purchaser or United:
United Stationers Inc.
2200 East Golf Road
Des Plaines, Illinois 60016
U.S.A.
ATTENTION: OTIS H. HALLEEN/RANDALL W. LARRIMORE
Telecopier: (847) 699-3193
with a copy to:
Weil, Gotshal & Manges LLP
100 Crescent Court, Suite 1300
Dallas, Texas 75201
U.S.A.
ATTENTION: MARY R. KORBY
Telecopier: (214) 746-7777
(b) For the Sellers:
Abitibi-Consolidated Inc.
800 Rene-Levesque Blvd. West
P.O. Box 69
Montreal, Quebec
H3B 1Y9
ATTENTION: ROBERT P. KANEE/PAT CROWLEY
Telecopier: (514) 394-2334
with a copy to:
Goodman Phillips & Vineberg
250 Yonge Street, Suite 2400
Toronto, Ontario
M5B 2M6
ATTENTION: STEPHEN H. HALPERIN
Telecopier: (416) 979-1234
Azerty Incorporated
13 Centre Drive
Orchard Park, New York 14127
U.S.A.
ATTENTION: PRESIDENT
Telecopier: (716) 662-0750
Any such notice so given shall be deemed conclusively to have been given and
received when so
- 53 -
personally delivered or delivered by courier or on the day on which delivery
is confirmed if sent by telecopier or other electronic communication or on
the fifth day following the sending thereof by certified mail. Any party may
from time to time change its address hereinbefore set forth by notice to the
other parties in accordance with this section.
9.9 ASSIGNMENT. Neither this Agreement nor any rights or obligations
hereunder shall be assignable by any party without the prior written consent
of each of the other parties. Any assignment without such consent shall be
null and void.
9.10 SEVERABILITY. If any provision of this Agreement is invalid or
unenforceable, such provision shall be severed and the remainder of this
Agreement shall be unaffected thereby but shall continue to be valid and
enforceable to the fullest extent permitted by law.
9.11 COUNTERPARTS. This Agreement may be executed by the parties in
separate counterparts (by original or facsimile signature) each of which when
so executed and delivered shall be an original, but all of which, when taken
together, shall together constitute one and the same instrument. This
Agreement shall not be binding upon any party until it has been executed by
each of the parties and delivered to all other parties.
9.12 GOVERNING LAW. This Agreement and the rights and obligations of the
parties hereunder shall be governed by and construed in accordance with the
laws of the State of New York, without regard to conflicts of laws principles
thereof. The parties agree that the Courts of the State of New York shall
have exclusive jurisdiction to entertain any action or other legal
proceedings based on any provisions of this Agreement. Each party does hereby
irrevocably attorn to the exclusive jurisdiction of the Courts of the State
of New York.
9.13 DISPUTE RESOLUTION. The parties shall attempt in good faith to
promptly resolve any dispute (a "Dispute") arising out of or relating to this
Agreement, the Side Agreement or the Intellectual Property Agreement (other
than a Dispute relating to the Closing Date Balance Sheet or calculation of
Net Tangible Assets, which shall be resolved exclusively in accordance with
section 7.1) by negotiations between executives or other representatives of
each party with authority to settle the Dispute. Any party may give the other
party written notice of any Dispute not resolved in the ordinary course of
business. Within 20 days of said notice, executives or other representatives
of each party to the Dispute shall meet at a mutually acceptable time and
place, and thereafter as they deem necessary, to exchange relevant
information and to attempt to resolve the Dispute. If the matter has not been
resolved within 60 days of the date of the disputing party's initial written
notice, or if the parties fail to meet within 20 days of such written notice,
either party may initiate mediation of the Dispute in accordance with the
procedures set forth on Schedule 9.13. If the Dispute cannot be resolved
after each party has adhered to the procedures for mediation set forth in
Schedule 9.13, any party may initiate litigation or other appropriate
remedial proceedings in law or equity.
9.14 UNITED GUARANTEE. United hereby irrevocably and unconditionally
guarantees and covenants to the Sellers that the Purchaser will perform,
observe and keep each and every obligation, covenant, condition and
agreement in or arising out of this Agreement and any and all
- 54 -
other agreements and other documents and instruments delivered pursuant
hereto to be performed, observed and kept by the Purchaser including, without
limitation, pursuant to the Side Agreement and the Intellectual Property
Agreement (collectively, the "Obligations"). United agrees with the Sellers
that United shall be jointly and severally bound with the Purchaser for the
fulfilment of all obligations of the Purchaser under the Obligations and in
the enforcement of its rights under the Obligations, the Sellers may proceed
against United as if it were named the obligor under the Obligations. United
hereby waives any right to require the Sellers to proceed against the
Purchaser to pursue any remedy whatsoever which may be available to the
Sellers before proceeding against United. The Sellers shall be entitled to
grant extensions or otherwise to release or discharge the Purchaser from any
liability and to accept security or other guarantees without effecting, in
any way, the Sellers's rights against United. If the Purchaser makes any
assignment for the benefit of its creditors or the Purchaser takes advantage
of any act or statute that may be in force for bankrupt or insolvent debtors,
or if the Purchaser is liquidated or wound-up, United shall nevertheless
remain liable to the Sellers for the Obligations.
9.15 SERVICE. If any party to this Agreement becomes a party (the
"ExJuris Party") to any legal action or proceeding in connection with this
Agreement commenced in the United States and upon which legal process must be
served outside of the United States, such Ex-Juris Party shall designate, in
writing, within thirty (30) days, an agent within the United States to
receive for and accept service on behalf of such Ex-Juris Party in connection
with the legal action or proceeding. Failure of the Ex-Juris Party to receive
a copy of the legal process shall not in any way affect the service of the
legal process on such Ex-juris Party, and service of legal process upon the
agent of the Ex-Juris Party shall be service on such Ex-juris Party for all
purposes. If the ExJuris Party fails to appoint an agent for service of legal
process in accordance with this section 9.14, such Ex-Juris Party will be
deemed to have irrevocably consented to service of process via registered or
certified mail, postage prepaid, to the last address designated for such
Ex-Juris Party, and service is deemed effective thirty (30) days after the
date of the mailing. Such service by mail shall be deemed personal service
and acceptance of service by the Ex-Juris Party with respect to any action or
proceeding related to this Agreement. Service in accordance with this
provision shall not preclude any other manner of service permitted by the
laws of the United States, Canada or Mexico.
9.16 WAIVER OF JURY TRIAL AND PUNITIVE DAMAGES. EACH OF THE PARTIES
HERETO KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE
TO A TRIAL BY JURY AND THE AWARD OF PUNITIVE DAMAGES IN RESPECT OF ANY
LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH,
THIS AGREEMENT, OR ANY EXHIBIT OR SCHEDULE HERETO, OR ANY DOCUMENT DELIVERED
PURSUANT TO THIS AGREEMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING OR
STATEMENTS (WHETHER VERBAL OR WRITTEN) RELATING TO THE FOREGOING. THIS
PROVISION IS A MATERIAL INDUCEMENT FOR THE PARTIES HERETO TO ENTER INTO THIS
AGREEMENT.
IN WITNESS WHEREOF the parties have duly executed this Agreement.
ABITIBI-CONSOLIDATED INC.
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Per:
----------------------------------
Authorized Signing Officer
Per:
----------------------------------
Authorized Signing Officer
ABITIBI-CONSOLIDATED SALES
CORPORATION
Per:
----------------------------------
Authorized Signing Officer
Per:
----------------------------------
Authorized Signing Officer
AZERTY INCORPORATED
Per:
----------------------------------
Authorized Signing Officer
Per:
----------------------------------
Authorized Signing Officer
POSITIVE ID WHOLESALE INC.
Per:
----------------------------------
Authorized Signing Officer
Per:
----------------------------------
Authorized Signing Officer
AP SUPPORT SERVICES INCORPORATED
Per:
----------------------------------
Authorized Signing Officer
Per:
----------------------------------
Authorized Signing Officer
AZERTY DE MEXICO, S.A. DE C.V.
Per:
----------------------------------
Authorized Signing Officer
Per:
----------------------------------
Authorized Signing Officer
UNITED STATIONERS SUPPLY CO.
Per:
----------------------------------
Authorized Signing Officer
UNITED STATIONERS INC.
Per:
----------------------------------
Authorized Signing Officer
SCHEDULE 1.1(ba)
SEPTEMBER 30 BALANCE SHEET
Attached
SCHEDULE 2.1
SELLERS
Name of Seller Corporation Number of Purchased Shares
- -------------- ----------- --------------------------
ACSC Azerty 542.857 common shares
ACSC ID 100 common shares
ACSC APSS 100 common shares
ACI Azerty Mexico 99 Class 1 shares
990 Class 2 shares
SCHEDULE 7.1
BASIS OF PRESENTATION OF CLOSING DATE BALANCE SHEET
The following shall be the basis of presentation of the Closing Date Balance
Sheet:
1. TREATMENT OF RESERVES. The parties agree that the following amounts
shall constitute the applicable reserves on the December 31 Balance
Sheet:
Type of Reserve Amount of Reserve
--------------- -----------------
(a) Accounts Receivable $750,000
(b) Inventory $800,000
(c) Accrued Payables $982,000
(d) Legals NIL
Each such reserve amount shall be the actual reserve amount for purposes
of the Closing Date Balance Sheet except to the extent that in the
period between December 31, 1997 and the date of the Closing Date
Balance Sheet there has been a material change in the corresponding area
of the Business causing the Financial Statements not to be fairly stated
in accordance with GAAP, in the judgment of PW (or, if applicable, the
Neutral Auditor), after taking into account materiality based on all of
the reserves above. In such circumstances, the Closing Date Balance
Sheet reserves will be adjusted so that the Closing Date Balance Sheet
is fairly stated in accordance with GAAP and, if the reserves on the
Closing Date Balance Sheet are less than the aggregate of the above
reserves, an adjusted Closing Date Balance Sheet (the "Adjusted Closing
Date Balance Sheet") will be prepared by PW (or, if applicable, the
Neutral Auditor) reflecting the reserves above and the Net Tangible
Assets shall be derived from such Adjusted Closing Date Balance Sheet.
2. SEVERANCE ACCRUALS. Only unpaid severance in respect of severed
employees as at the Closing Date shall be accrued in the Closing Date
Balance Sheet.
3. BOOKING OF ERRORS. All known assets and liabilities shall be booked in
preparing the Closing Date Balance Sheet including all known errors.
Items that are subjective in nature shall not be viewed as known errors
for such purposes.
4. YEAR END ACCOUNTING AND AUDIT TREATMENT AND PROCEDURES:
Co-op advertising will be recorded at Closing in accordance with the
past practices of the Corporations. For greater certainty, one quarter
of the forecast profit of the Corporations for the 1998 year shall be
recognized. Should this result in a material amount, the Closing Date
Balance Sheet will be adjusted accordingly on the Adjusted Closing Date
Balance Sheet and the Net Tangible Assets shall be derived from such
Adjusted Closing Date Balance Sheet.
- 2 -
SCHEDULE 9.13
DISPUTE RESOLUTION
The following is the exclusive means of the parties to resolve all Disputes
(other than those arising out of section 7.1, which shall be resolved
exclusively by the means set forth therein) arising out of, relating to or
resulting from this Agreement (including the Side Agreement and the Intellectual
Property Agreement) and the transactions contemplated hereby. All negotiations
pursuant to section 9.13 and this Schedule 9.13 are confidential and shall be
treated as compromise and settlement negotiations for purposes of the United
States Federal Rules of Evidence and any other applicable foreign, federal or
state rules of evidence.
1. If the dispute has not been resolved by negotiation as provided in
section 9.13, the parties shall endeavour to settle the dispute by
mediation under the then current Center For Public Resources ("CPR,)
Model Procedure for Mediation of Business Disputes. The neutral third
party will be selected from the CPR Panels of Neutrals. If the parties
encounter difficulty in agreeing on a neutral, they will seek the
assistance of CPR in the selection process.
2. The parties shall attempt in good faith to resolve by mediation any
dispute arising out of or relating to this Agreement. Any party may
initiate a mediation proceeding by a request in writing to the other
party following the negotiation procedures set forth in section 9.13.
Thereupon, both parties will be obligated to engage in a mediation. The
proceeding will be conducted in accordance with the then current CPR
Model Procedure for Mediation of Business Disputes, with the following
exceptions:
(a) if the parties have not agreed within 30 days of the request for
mediation on the selection of a mediator willing to serve, the
Center For Public Resources, upon request of any party, shall
appoint a member of the CPR Panels of Neutrals as the mediator; and
(b) efforts to reach a settlement will continue until the conclusion of
the proceeding, which is deemed to occur when: (a) a written
settlement is reached, or (b) the mediator concludes and informs
the parties in writing that further efforts would not be useful, or
(c) the parties agree in writing that an impasse has been reached.
No party may withdraw before the conclusion of the proceeding.
The parties regard this obligation to mediate an essential provision of
this Agreement and one that is legally binding on them. In case of a
violation of such obligation by any party, the other party or parties
may bring an action to seek enforcement of such obligation in any court
having jurisdiction thereof.
3. If the dispute has not been resolved by mediation as provided herein
within 60 days of the initiation of such procedure, any party may
initiate litigation upon 10 days' written notice to the other party or
parties; provided, however, that if one party has requested another
party or parties to participate in mediation and such other party or
parties has failed to participate, the requesting party may initiate
litigation before expiration of the above period.
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4. The procedures specified in section 9.13 and this Schedule 9.13 shall be
the sole and exclusive procedures for the resolution of Disputes among
the parties arising out of or relating to this Agreement; provided,
however, that a party may seek a preliminary injunction or other
provisional judicial relief if in its judgment such action is necessary
to avoid irreparable damage or to preserve the status quo. Despite such
action the parties will continue to participate in good faith in the
procedures specified in section 9.13 and this Schedule 9.13.
5. All applicable statutes of limitation and defenses based upon the
passage of time shall be tolled while the procedures specified in
section 9.13 and this Schedule 9.13 are pending. The parties will take
such action, if any, required to effectuate such tolling.