EXECUTION COPY
EXHIBIT 2.0
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT ("Agreement") is made and
entered into this 30th day of November, 2001 by and between CHECK TECHNOLOGY
CANADA LTD. ("Buyer"), an Ontario corporation, CHECK TECHNOLOGY CORPORATION
("Check"), a Minnesota corporation, DELPHAX SYSTEMS ("Delphax Canada"), a
Massachusetts general partnership, and DELPHAX SYSTEMS, INC. ("Delphax US"), a
Delaware corporation (Delphax Canada and Delphax US being hereinafter
collectively called "Seller");
WHEREAS, Seller designs, manufactures and supplies high-speed
electron beam imaging digital printing systems and related parts, supplies and
maintenance services (the "Business"); and
WHEREAS, Buyer desires to purchase from Seller, and Seller
desires to sell to Buyer, substantially all of the assets relating to the
Business owned by Seller, on the terms and conditions set forth below.
NOW, THEREFORE, in consideration of the mutual promises
contained in this Agreement, the parties hereto agree as follows:
1. SALE AND PURCHASE OF ASSETS
(a) Purchased Assets. Subject to the terms and conditions of this
Agreement and in reliance on the representations, warranties
and agreements of Seller contained herein, Buyer will purchase
from Seller at the Closing, and Seller will sell, assign,
transfer, convey and deliver to Buyer at the Closing, all of
the assets and properties of every kind, character and
description, whether tangible, intangible, personal or mixed,
and wherever located, which are owned by Seller or in which
Seller has any right, title or interest, and which are used or
held for use by Seller solely in the conduct of the Business,
including but not limited to the following:
(i) Inventory and Supplies. All of the inventory, supplies
and marketing materials of Seller produced or used in
the operation of the Business including, without
limitation, all 900/1300 printing systems
("Inventory").
(ii) Fixed Assets. All of the furniture, fixtures,
improvements, equipment, machinery, materials,
vehicles, tools, implements, appliances and other
tangible personal property of every kind, character and
description owned by Seller and used solely in
connection with the Business and located at the
facility in ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ or any other
location, all of which are summarized as at June 30,
2001 in Section 1(a)(ii) of the disclosure schedule
attached hereto (the "Disclosure Schedule").
(iii) Intangible Assets. All of the goodwill relating solely
to the Business, as well as the Delphax name, all
telephone and fax
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numbers, vendor lists and files, all books and records
relating to the Business, client lists and files, and
the specific intellectual property owned by Seller
relating to the Business which is listed in Section
1(a)(iii) of the Disclosure Schedule (such specific
intellectual property being referred to as the
"Transferred Intellectual Property"), subject to any
rights granted by Seller with respect to the
Transferred Intellectual Property as set forth in
Section 1(a)(iii) of the Disclosure Schedule.
(iv) Leases. Seller's right, title and interest in and to
the real and personal property leases set forth in
Section 1(a)(iv) of the Disclosure Schedule ("Leases").
(v) Prepaid Expenses and Deposits. Any and all prepaid
expenses relating to the Business as well as any
security or other deposits relating to any leases which
are to be assumed by Buyer under this Agreement.
(vi) Accounts Receivable. Any and all accounts receivable of
Seller relating to the Business, excluding those
balances and receivables referred to in Section 1(b)(v)
below ("Accounts Receivable").
(vii) Contracts. All of Seller's rights in and to the
contracts relating to the Business listed in Section
1(a)(vii) of the Disclosure Schedule (each, a
"Contract" and collectively, the "Contracts"), and all
rights and privileges in favor of Seller relating to
such contracts.
(viii) Other Assets. Any and all other assets and properties
of Seller used solely in connection with the Business,
except to the extent that any of the foregoing are or
relate to Excluded Assets (as defined below). The said
assets and properties, excluding the Excluded Assets,
are referred to herein as the "Purchased Assets".
(b) Excluded Assets. There shall be excluded from the purchase and
sale of property and assets herein contemplated the following
(the "Excluded Assets"), all of which shall remain the
property of Seller:
(i) cash on hand or in banks or other depositories;
(ii) term deposits and similar cash items of, owned or held
by or for the account of Seller;
(iii) all insurance policies relating to the operation of the
Business, rights arising from any refunds due with
respect to insurance premium payments and all insurance
proceeds receivable by Seller;
(iv) tax returns, tax and financial records and reports and
other documents and records pertaining to Seller's
operation of the Business that Seller is required by
law to retain or that will be necessary or advisable
for Seller to retain, in its reasonable
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discretion, for tax or related purposes, other than
those referred to in Section 4(b)(iv) to be maintained
by Buyer as provided therein; provided that Buyer shall
have the right to inspect such documents and records
and make copies thereof as may be reasonably necessary
for the ongoing operation of the Business, subject to
receipt of Seller's prior written consent, such consent
not to be unreasonably withheld;
(v) all accounts receivable relating to the Business that
are not billed and collected by Delphax Canada
administration personnel in Mississauga, Ontario and
all inter-company balances, including receivables,
between Seller, on the one hand, and Xerox Corporation
and its affiliates (collectively, "Xerox"), on the
other hand;
(vi) all intellectual property of Seller which is not
Transferred Intellectual Property as listed in Section
1(a)(iii) of the Disclosure Schedule. Without limiting
the generality of the foregoing, there shall be
excluded from the sale to Buyer: (a) all intellectual
property to be assigned or licensed to Check pursuant
to the intellectual property assignment and license
agreement attached hereto as Exhibit 7(g) (the "IP
Agreement"); (b) all intellectual property referred to
in Section 2.3 of the IP Agreement; (c) the tradenames
and trademarks "Docuprint" and "Xerox"; (d) any other
tradenames and trademarks which do not contain the name
"Delphax"; (e) any tradenames, trademarks, service
marks and logos related to such excluded tradenames and
trademarks; and (f) all applications and registrations
therefor;
(vii) all service contracts entered into by Xerox with
customers of the Business, as listed in Section
1(b)(vii) of the Disclosure Schedule, together with the
associated assets (including parts and inventory) owned
by Xerox's subsidiary Continua, as referred to in
Section 1(b)(vii) of the Disclosure Schedule;
(viii) any contracts, agreements and arrangements not set
forth in Section 1(a)(vii) of the Disclosure Schedule,
including, without limitation, any supply arrangements
pursuant to which Xerox supplies parts or materials to
Seller;
(ix) all of the shares in the capital stock of Delphax
Systems (UK) Limited (United Kingdom), Delphax GMBH
(Germany), Delphax OY (Finland) and Delphax SARL
(France) and all assets of such companies and all books
and records relating thereto;
(x) any assets of the Business which are not located in
Canada or the United States;
(xi) all books, records and files relating to any Excluded
Assets; and
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(xii) all other assets of Seller not related solely to the
Business.
2. PURCHASE PRICE, ADJUSTMENTS AND ASSUMPTION OF CERTAIN
LIABILITIES
(a) Purchase Price. The total purchase price (the "Purchase
Price") to be paid by Buyer to Seller in respect of the
Purchased Assets shall be $14,000,000, subject to adjustment
as provided in Section 2(b) below. The Purchase Price shall be
payable as follows:
(i) the sum of $420,000 (the "Deposit") shall be payable,
contemporaneously with the execution of this Agreement,
by a wire transfer of same day funds into a commercial
bank account to be designated by Delphax Canada. On
Closing, the Deposit shall be credited to Buyer on
account of the Purchase Price. If the Closing is not
completed as herein contemplated solely by reason of
the non-fulfillment of the condition set forth in
Section 6(i), then the Deposit shall be retained by
Seller and Buyer shall have no further liability or
obligation to Seller. If the Closing is not completed
as herein contemplated by reason of: (A) the default of
Buyer or Check in the performance of its obligations
hereunder; or (B) the refusal of Buyer or Check to
complete the transaction notwithstanding the
fulfillment of the conditions set forth in Sections
6(a) to (h) or 6(j), then the Deposit shall be retained
by Seller, but shall be without prejudice to any and
all other rights and remedies available to Seller in
respect of such failure to close. If the Closing is not
completed as herein contemplated for any other reason
whatsoever, then the Deposit shall be immediately
returned by Seller to Buyer, but such return shall be
without prejudice to any and all other rights and
remedies available to Seller or Buyer in respect of
such failure to close; and
(ii) the balance of the Purchase Price shall be payable in
full at the Closing by a wire transfer of same day
funds into a commercial bank account to be designated
by Seller.
The Purchase Price shall be allocated among the entities
comprising Seller in such manner as they may direct and as set
out by Seller in Exhibit 2(c).
(b) Adjustments to Purchase Price.
(i) The Purchase Price is based on the estimated Net
Working Capital (as hereinafter defined) as of the
Closing Date being equal to $16,078,000 (the "Target").
For purposes of this Agreement, "Net Working Capital"
shall mean the amount by which, as of the date in
question (being June 30, 2001 or the Closing Date, as
the case may be), the aggregate of: (i) the Accounts
Receivable referred to in Section 1(a)(vi) (less normal
reserves recorded for the Business, but with no reserve
for any receivable from Check, and excluding that
portion of the receivable from Check which is the
subject of a
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dispute with Seller, which the parties agree is
$295,000 as at June 30, 2001 and $692,000 as at the
Closing Date); (ii) the Inventory referred to in
Section 1(a)(i), excluding all inventory relating to
the 900/1300 printing systems, and the Inventory being
calculated on gross values only with no deduction for
reserves; and (iii) the prepaid expenses and deposits
relating to the Business referred to in Section
1(a)(v); is in excess of (iv) the accounts payable and
accrued liabilities of the Business; and (v) the
cancellation fees referred to in Section 2(g). The
parties acknowledge that attached hereto as Exhibit
2(b) is a calculation of the Net Working Capital of the
Business as at June 30, 2001 (the "June 30th
Statement"). The parties acknowledge that the
calculation of Net Working Capital on the June 30th
Statement was prepared solely for purposes of the
Purchase Price adjustment herein contemplated and
excludes the 900/1300 printing systems from the
inventory figures.
Within 45 days after the Closing Date, Seller shall
deliver to Check and to Check's independent public
auditors a statement (the "Closing Date Statement"),
which Closing Date Statement shall set forth the Net
Working Capital as of the Closing Date (the "Closing
Date Net Working Capital") and the amount by which the
Closing Date Net Working Capital is greater than or
less than the Target. The parties agree that the
Closing Date Statement shall be prepared solely in
accordance with the following provisions:
A. the methods and practices to be used in preparing
the Closing Date Statement, including the reserve
policies for Accounts Receivable, will be
consistent with the methods, practices and
policies used in preparing the June 30th
Statement, including those described in the notes
to the June 30th Statement (the "June 30th
Methods, Practices and Policies");
B. the Closing Date Statement shall reflect only
changes in the Net Working Capital from June 30,
2001 to the Closing Date, based upon the
application of the June 30th Methods, Practices
and Policies, and shall not reflect any changes
in valuation of the Net Working Capital from the
numbers set forth on the June 30th Statement;
C. the Closing Date Statement shall be prepared on
the assumption that the Business will continue to
be operated in the ordinary course in a manner
consistent with that in which it was operated
prior to Closing; and
D. there will be no accrued liability in the Closing
Date Statement for any roof repairs required for
the leased premises at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇.
6.
The Closing Date Statement shall be accompanied
by working papers setting forth the calculations
showing the basis for the determination of such
sums.
(ii) Check, Buyer and Seller agree that each of them
will, and will respectively cause their
respective auditors to cooperate and assist in
the preparation or review of the Closing Date
Statement and the calculation of the Closing Date
Net Working Capital and in the conduct of the
audits, reviews, inventories and inspections to
be undertaken in connection with the preparation
of the Closing Date Statement, including but not
limited to making available such books and
records, work papers, facilities and personnel as
may be necessary.
(iii) In the event that Check, in good faith, disputes
the Closing Date Statement or the calculation of
the Closing Date Net Working Capital, Check shall
notify Seller in writing (the "Dispute Notice")
setting forth in detail the items, amount, nature
and basis of such dispute, within sixty (60)
business days after delivery of the Closing Date
Statement. In the event of such dispute, Seller
and Check shall first use their diligent good
faith efforts to resolve such dispute between
themselves. If the parties are unable to resolve
any items in dispute within twenty (20) business
days after delivery of the Dispute Notice, then
such unresolved items in dispute shall be
submitted to an independent nationally recognized
accounting firm with no material relationship to
either Seller or Check, such firm to be mutually
agreed upon by Seller and Check or, if Seller and
Check fail to agree upon or refuse to select such
a firm within ten (10) calendar days after
written request therefor by either of them, such
an independent nationally recognized accounting
firm shall be selected by Seller and Check in
accordance with the rules of the American
Arbitration Association then in effect (such
accounting firm shall be referred to as the
"Arbitrator"). Within forty-five (45) business
days, the Arbitrator shall determine the
remaining disputed items and report to the Seller
and Check in writing with respect to such items.
The Arbitrator shall, in connection with the
resolution of any such dispute, have access to
all books and records, documents, records, work
papers, facilities and personnel necessary to
perform its functions as arbitrator. The
Arbitrator's decision shall be in writing and
shall be final, conclusive and binding on all
parties. A judgment on the determination made by
the Arbitrator pursuant to this clause (iii) may
be entered into and enforced by any court of
appropriate jurisdiction.
(iv) The Purchase Price shall be increased or
decreased on a dollar for dollar basis by the
amount by which the Closing Date Net Working
Capital, as determined in accordance with the
foregoing provisions, is greater than or less
than the Target; provided that no
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adjustment will be made if the difference between
the Closing Date Net Working Capital and the
Target is less than $25,000. If the Closing Date
Net Working Capital exceeds the Target (the
"Excess") and the amount of the Excess is more
than $25,000, Buyer shall forthwith pay to Seller
the Excess, together with interest on the Excess
calculated from the Closing Date to and including
the date of payment at an interest rate per annum
equal to the prime rate of Citibank (New York) on
the Closing Date as published in The Wall Street
Journal, by wire transfer of good funds into a
commercial bank account to be designated by
Seller. If the Closing Date Net Working Capital
is less than the Target (the "Shortfall") and the
amount of the Shortfall is more than $25,000,
then Seller shall forthwith pay to Buyer the
Shortfall, together with interest at the
aforesaid rate from the Closing Date to and
including the date of payment, by wire transfer
of good funds into a commercial bank account to
be designated by Buyer.
(c) Allocation of Purchase Price. The purchase price shall
be allocated in accordance with Exhibit 2(c) attached
hereto. The allocation set forth in Exhibit 2(c) shall
be adopted by the parties hereto for all purposes,
including federal, state and provincial income tax
purposes. Buyer and Seller shall each prepare and file
in a timely manner all appropriate information and
forms required in respect of this sale and purchase of
the Purchased Assets under the Income Tax Act (Canada)
(the "Act") and the Internal Revenue Code. In the event
there is any adjustment of the Purchase Price pursuant
to Section 2(b) of this Agreement, any adjustment shall
be applied first to Inventories, then to any other
assets acquired; provided, however, that any adjustment
attributable to: (i) a shortfall in Accounts Receivable
shall be allocated against Accounts Receivable, to the
extent thereof, and (ii) an Inventory shortfall shall
be allocated against Inventory, to the extent thereof.
Seller (through its general partners with authority to
act on behalf of the partnership and all of the
partners thereof) and Buyer agree, in a timely manner,
to elect under Section 22 of the Act and any similar
provisions of any applicable provincial legislation, as
to the sale of Accounts Receivable forming part of the
Purchased Assets and contemplated in Section 22 of the
Act and to designate in such election an amount equal
to the portion of the Purchase Price allocated to such
assets as set forth in Exhibit 2(c) as consideration
paid by Buyer therefor and to file such election in
accordance with the provisions of Section 22 of the Act
and any applicable provincial legislation.
(d) Sales Tax. The Purchase Price is exclusive of taxes.
Buyer shall be solely responsible for the payment of
any and all sales, transfer, value-added, goods and
services, stamp duty and/or similar taxes or
assessments (excluding taxes on the net income of
Seller) which may be imposed by authorities in the
United States, Canada or any other country and/or any
jurisdictions therein and thereof as a result of, or as
a requirement prior to, the consummation of the
transactions contemplated by this Agreement. Buyer will
pay to Seller all such taxes (i) in respect of the
Purchase Price,
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on Closing; (ii) in respect of an adjustment to the Purchase
Price under Section 2(b), at the time that a determination of
the final Purchase Price is made, if an amount is then due
from Buyer to Seller; and (iii) in respect of all other
amounts or transactions, at the time such amount is paid by
Buyer to Seller. Seller will accept properly completed and
valid exemption certificates where applicable. For purposes of
Ontario sales tax, a valid vendor permit number must be
included in the purchase exemption certificate.
The parties hereby agree that they shall elect jointly
pursuant to the provisions of subsection 167(1) of the Excise
Tax Act (Canada) (the "Excise Act") by completing at or prior
to closing all prescribed forms and related documents in such
manner as is prescribed, so that for purposes of the Excise
Act, no goods and services tax will be payable in respect of
the purchase and sale of the Purchased Assets (the "Joint
Election"). Buyer hereby covenants that after the Closing
Date, it will file the Joint Election with Canada Customs and
Revenue Agency in a manner and within the time prescribed by
the Excise Act, and will provide Seller with written
confirmation of such filing.
In the event that an election under subsection 167(1) of the
Excise Act cannot be validly made by the parties, or Canada
Customs and Revenue Agency does not accept in whole or in part
such election by the parties, Buyer: (a) shall pay to Seller,
in addition to any amounts payable by Buyer under this
Agreement, all goods and services tax payable pursuant to the
Excise Act in respect of the property and services supplied
hereunder including, without limitation, such tax calculated
on or in respect of the value of the consideration paid or
payable by Buyer under this Agreement; and (b) shall pay and
shall indemnify and save harmless Seller from any penalties
and interest which may be payable by or assessed against
Seller under the Excise Act due to the supplies made under
this Agreement not being eligible for the subsection 167(1)
election.
(e) Assumption of Lease and Contract Obligations. In addition to
the payments provided for above, Buyer shall assume at the
Closing all obligations of Seller from and after the Closing
under the Leases and the Contracts.
(f) Assumption of Liabilities. Except as specifically provided for
in this Agreement, Buyer shall not assume or take title to the
Purchased Assets subject to, or in any way be liable or
responsible for, any liabilities or obligations of Seller or
the Business or otherwise, except for:
(i) Seller's liabilities for accounts payable, accrued
expenses and other liabilities of the Business, to
the extent reflected on the June 30th Statement or
the Closing Date Statement;
(ii) all liabilities and obligations in respect of any
purchases for the Business for which orders were made
by Seller in the ordinary course of business prior to
the date of this Agreement and in
9.
respect of purchases for which orders were made by
Seller in the ordinary course of business after the
date of this Agreement but prior to the Closing Date;
in each case which orders are still outstanding as at
the Closing Date,
(iii) property and use taxes accrued on or before Closing
and reflected on the June 30th Statement or the
Closing Date Statement;
(iv) all obligations to be assumed by Buyer pursuant to
clause (e) above with respect to the Leases and
Contracts;
(v) all liabilities and obligations to employees of the
Business that are expressly assumed by Buyer and
Check pursuant to Section 4(b)(ii);
(vi) all liabilities and obligations under Seller's
standard equipment warranties (described in Section
2(f)(vi) of the Disclosure Schedule) for products of
the Business which have been sold or leased by Seller
before the Closing and regardless of where such
products are located or by whom such products are
serviced, as well as all service warranty obligations
contained in the service contracts being assumed by
Buyer as listed in Section 1(a)(vii) of the
Disclosure Schedule (the "Assumed Service
Contracts");
(vii) all liabilities and obligations of Seller for
customer support and services (including liabilities
and obligations to customers whose purchased products
are no longer covered by warranty), either pursuant
to the "Xerox Total Satisfaction Guarantee" for the
Business described in Section 2(f)(vi) of the
Disclosure Schedule or pursuant to the obligations of
Seller under the Assumed Service Contracts;
(viii) all liabilities, obligations and expenses of Seller
related to those items of pending litigation listed
in Section 3(c) of the Disclosure Schedule; provided
that Buyer will have no liability for the Delphax UK
litigation referred to in number 2 of such Section
3(c);
(ix) all liabilities and obligations assumed pursuant to
Section 2(h) with respect to the Delphax pension
plan; and
(x) the Cancellation Fees (as defined in Section 2(g))
for those purchase orders which have been cancelled
prior to the date of this Agreement as listed in
Section 2(g) of the Disclosure Schedule;
(the liabilities and obligations referred to in clauses (i) to
(x), inclusive, being hereinafter collectively called the
"Assumed Liabilities").
Except as specifically included in the definition of Assumed
Liabilities above, Buyer shall have no responsibility for any
agreements, liabilities or
10.
obligations of Seller of any nature whatsoever, whether
existing or hereafter arising, and whether known or unknown to
Buyer or Seller (the "Excluded Liabilities"). To the extent
Buyer becomes liable to pay or perform any such Excluded
Liability, Seller agrees to indemnify Buyer with respect
thereto pursuant to the provisions of Section 9 of this
Agreement.
(g) Cancellation Fees. The parties acknowledge and agree that the
purchase orders listed in Section 2(g) of the Disclosure
Schedule (the "Cancelled Orders") have been cancelled prior to
June 30, 2001 and that the amount of the cancellation fees in
respect of such Cancelled Orders are set forth in Section 2(g)
of the Disclosure Schedule (the "Cancellation Fees"). The
parties agree that the Cancellation Fees will be reflected as
a current liability for purposes of calculating the Net
Working Capital in both the June 30th Statement and (to the
extent still unpaid as at the Closing Date), the Closing Date
Statement. In the event that the Cancellation Fees are not
paid by Buyer or if the actual Cancellation Fees paid by Buyer
are less than those reflected in the Closing Date Statement
(the amount of such excess being hereinafter called the
"Excess Liability"), Buyer shall forthwith pay to Seller the
full amount of any such Excess Liability, the intention being
that Buyer shall only be entitled to an adjustment for the
lesser of the Cancellation Fees set forth in the Closing Date
Statement and the actual Cancellation Fees paid by Buyer.
Buyer shall provide such evidence as Seller may require with
respect to the Cancelled Orders and the amount paid by Buyer
with respect to such Cancelled Orders.
(h) Assumption of Pension Plan. Effective as of the Closing,
Delphax Canada shall assign to Buyer and Buyer shall assume
from Delphax Canada, all of the rights and obligations of
Delphax Canada in respect of its sponsorship and
administration of the Registered Pension Plan for Employees of
Delphax Systems (the "Pension Plan"), including without
limitation, all rights and obligations of Delphax Canada under
Policy GA 5509-1-RPP, issued by The Mutual Life Insurance
Company of Canada (now Clarica Life Insurance Company), and
any other contracts or agreements relating to the funding,
administration or investment of the Pension Plan. In order to
effect such assignment and assumption, Delphax Canada and
Buyer shall cooperate to prepare and execute such documents
and to take such steps or carry out such actions which are
necessary or required under Applicable Law and by the
appropriate regulatory authorities.
3. REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby warrants and represents to Buyer that, as of the
date hereof, and except as set forth in the Disclosure Schedule:
(a) Organization and Standing of the Business. Each of the
entities comprising Seller is duly organized, validly existing
and in good standing, and qualified to operate the Business
under the laws of the United States, Canada and all other
countries, all appropriate jurisdictions therein, and other
locations as required by law in which the Business is
conducted.
11.
Seller has full power and authority to carry on the Business
as now conducted and to own and operate the Business as well
as its assets and properties. A true, correct and complete
copy of Seller's partnership agreement has been provided or
made available to Check.
(b) Compliance. This Agreement has been duly executed and
delivered by Seller and is binding upon and enforceable
against Seller, except as enforceability may be limited or
affected by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors' rights
generally and by general principles of equity (regardless of
whether enforceability is considered in a proceeding in equity
or at law). Seller has obtained all internal and Xerox
consents and approvals which are necessary in order for Seller
to enter into this Agreement and has obtained or will obtain
prior to Closing all other necessary consents and approvals
required to consummate this transaction as contemplated
herein. The consummation of the transactions contemplated
hereby will not result in the breach of any of the terms,
provisions or conditions of, or constitute a default under or
violate, as the case may be, Seller's partnership agreement,
or any other agreement, lease, license or other document or
undertaking, oral or written, to which Seller is bound
(subject to obtaining the necessary consents thereunder), or
by which any of the Purchased Assets may be affected.
(c) Litigation and Regulation. There is no litigation, suit or
governmental proceeding, administrative or judicial, pending,
nor to the knowledge of Seller threatened, against Seller with
respect to the Business and/or the Purchased Assets which
might materially affect the Business or the Purchased Assets.
Neither Seller (with respect to the Business) nor the Business
is subject to, or in material violation or default in any
material respect of, any order, writ, injunction or decree of
any court, administrative agency or Governmental Authority and
both Seller (with respect to the Business) and the Business
are in material compliance with all laws, rules, regulations
and orders applicable to the Business and are in possession of
all material governmental licenses necessary to the conduct of
the Business, and such licenses are valid and in full force
and effect. There are no unresolved complaints pending against
the Business before any Governmental Authority.
(d) Title to Properties; Liens and Encumbrances. Seller has (or
will have, as at Closing) good and marketable title to all of
the Purchased Assets being conveyed to Buyer under this
Agreement, subject to no mortgage, pledge, lien, encumbrance
or charge. On Closing, Seller will be the only Xerox entity
with any interest in the assets of the Business located in
North America, other than the Excluded Assets. On Closing, the
Purchased Assets will be conveyed to Buyer free and clear of
any mortgage, pledge, lien, encumbrance or charge, save and
except for those which secure the liabilities to be assumed by
Buyer pursuant to Section 2(f), those listed in Section
1(a)(iii) of the Disclosure Schedule, and as otherwise agreed
to by Buyer.
12.
(e) Due Performance. Seller is not in default or to the knowledge
of Seller, alleged to be in default in any respect under, or
in violation in any respect of, any material provision of any
agreement, lease or contract which is being assumed by Buyer
pursuant to this Agreement or by which Seller (with respect to
the Business) or any of the Purchased Assets may be affected,
and to the knowledge of Seller, no other party is in default
thereunder, and to the knowledge of Seller, there exists no
condition or event which after notice or lapse of time or both
would constitute a default by any party thereto.
(f) Liabilities. The Business has no material liability or
obligation of any nature, whether due or to become due,
absolute, contingent or otherwise, except to the extent fully
reflected as a liability on the June 30th Statement or the
Closing Date Statement, the Assumed Liabilities to be assumed
by Buyer pursuant to Section 2(f), and the Excluded
Liabilities not being assumed by Buyer.
(g) Documents. Seller has made or will make available to Buyer
prior to Closing true and correct copies of each of the
Contracts in its possession and of each of the Leases. Section
1(a)(vii) of the Disclosure Schedule indicates which of the
Contracts are not in Seller's possession.
(h) Employees. Section 3(h) of the Disclosure Schedule contains a
detailed list of all of the employees of Seller as at the date
set forth therein, as well as their compensation, benefits and
titles, and details of any written employment agreements. The
employees of Seller are not represented by any union or
subject to any collective bargaining agreement and to the
knowledge of Seller, none of such employees are engaged in any
organizational activities. No notice has been received by
Seller of any complaint filed with any Governmental Authority
or other body alleging against Seller unfair labour practices,
human rights violations, employment discrimination charges, or
the like, and, to the knowledge of Seller, there are no
existing facts which would lead to any such charge. For the
past three (3) years, there have not occurred any work
stoppages, walkouts or strikes. No notice has been received by
Seller of any pending claim asserting any failure to comply
with any Applicable Law relating to employment of labour,
wages, hours, collective bargaining, withholding taxes on
employee compensation, or employee health and benefits.
(i) Listing of Inventory and Fixed Assets. Section 3(i) of the
Disclosure Schedule contains a listing of the costs associated
with the Inventory and fixed assets of the Business as at June
30, 2001.
(j) Books and Records. All of the books and records of Seller
relating to the Purchased Assets and the Assumed Liabilities
are substantially complete and correct and have been
maintained in accordance with good business practice and all
Applicable Law; provided that no representation or warranty is
being made by Seller that any of such books and records have
been prepared or maintained in accordance with generally
accepted accounting principles.
13.
(k) Insurance. Section 3(k) of the Disclosure Schedule contains a
complete and correct list of all currently active policies of
insurance of which Seller is the owner, insured or beneficiary
with respect to the Business, or covering any of the Purchased
Assets. Section 3(k) of the Disclosure Schedule also contains
a list of any pending claims under each such policy or
predecessor policy with respect to the Business or the
Purchased Assets. All policies set forth are outstanding and
in full force and effect, and there are no outstanding unpaid
and overdue premiums thereunder. No notice of cancellation or
non-renewal with respect to, or disallowance of any claim with
respect to the Business or the Purchased Assets under, any
such policy has been received by Seller.
(l) Intellectual Property. For purposes of the representations and
warranties contained in this Section 3(l) only, the term
"Transferred Intellectual Property" is deemed to include the
DELPHAX INTELLECTUAL PROPERTY GROUP A which is being assigned
to Check pursuant to Section 2.1 of the IP Agreement. Section
3(l) of the Disclosure Schedule lists all of the intellectual
property which is owned or licensed by Seller and used in the
conduct of the Business. There is no pending litigation or
other legal action with respect to any of the Transferred
Intellectual Property to be sold to Buyer, and no order,
holding, decision or judgment has been rendered by any
authority, and no agreement consent or stipulation exists to
which Seller is a party or of which it has knowledge, which
would prevent Seller, or after the Closing, Buyer, from using
any of such Transferred Intellectual Property (subject to
obtaining all necessary consents thereunder). The Transferred
Intellectual Property is free of any liens or encumbrances.
Seller has not received any notice or inquiry indicating or
claiming that the current or previous activities of Seller in
connection with the Business infringe upon the intellectual
property rights of any third party. The Transferred
Intellectual Property, together with the intellectual property
to be assigned or licensed to Buyer pursuant to the IP
Agreement, the software license agreement contemplated therein
and the intellectual property listed in Section 3(l) of the
Disclosure Schedule, constitutes all of the intellectual
property necessary to conduct the Business as it is now being
conducted. Seller is not subject to any right to compensation
belonging to former or current employees for any of the
Transferred Intellectual Property. There are no agreements
relating to or affecting the Transferred Intellectual Property
or the use or ownership of any Transferred Intellectual
Property by Seller in the Business, including, but not limited
to, confidentiality and non-disclosure agreements, assignments
or agreements to assign, development agreements or settlement
agreements, other than those entered into with customers of
the Business as listed in Section 1(a)(vii) of the Disclosure
Schedule or those which are incidental to the supply of
products to customers, the third party rights and
cross-licenses listed in Sections 1(a)(iii) and 3(l) of the
Disclosure Schedule, and confidentiality and non-disclosure
agreements with prior prospective purchasers of the Business.
14.
(m) Hazardous Substances. The Business is being operated in
material compliance with all Applicable Law, including those
applicable to Hazardous Substances. There are no orders,
rulings or directives issued or pending against Seller with
respect to the Business pursuant to any environmental laws
requiring any work, repairs or capital expenditures. No notice
has been received by Seller of any pending environmental
investigation or proceeding with respect to the operation of
the Business.
(n) Residence of Delphax Canada. The only partners of Delphax
Canada are Xerox Canada Inc. and Xerox Canada Ltd. as at the
date hereof. Each of these partners and the Delphax Canada
partnership is not a non-resident of Canada within the meaning
of the Act.
(o) 900/1300 Printing Systems. The 900/1300 printing systems in
Inventory and fixed assets are being sold to Buyer on an "as
is where is" basis. No representation or warranty is made with
respect to such 900/1300 printing systems (including, without
limitation, any representation or warranty as to the
merchantability of the systems) and no representation or
warranty contained in this Agreement shall be construed as
having any application to the 900/1300 printing systems. The
representation and warranty in this Section 3(o) will not be
construed as expanding the scope of the Assumed Liabilities
with respect to the 900/1300 printing systems as set forth in
Section 2(f) hereof.
(p) Material Contracts. All material contracts presently used to
operate the Business are listed or cross-referenced in Section
3(p) of the Disclosure Schedule, including the following:
(i) any contract relating to the employment of any person
by Seller, or any bonus, deferred compensation,
pension, profit sharing, stock option, employee stock
purchase, retirement or other similar employee benefit
plan;
(ii) any loan or advance to, or investment in any other
person or any contract relating to the making of any
such loan, advance or investment;
(iii) any guarantee or other contingent liability with
respect of any indebtedness of any other person;
(iv) any management, service, consulting or any other
similar arrangement, or any noncompetition agreement;
(v) any agreement which by its terms involves the payment
after the Closing Date by or to Seller of an amount
equivalent to $25,000 or more;
(vi) any contract limiting the freedom of Seller to engage
in any line of business or to compete with any other
person;
15.
(vii) any contract for the purchase of raw materials or
supplies for, or the furnishing of services to, the
Business, (i) for which comparable goods or services
are not readily available in the ordinary course of
business, at prices at or similar to those which
Seller has agreed to pay under such contract, or (ii)
the quantities of which are in excess of the normal
operating practices of the Business;
(viii) any distributor, sales representative or agency
agreements to which Seller is a party, regardless of
amounts involved;
(ix) any material contract not entered into in the ordinary
course of business which is not cancelable without
penalty within 30 days;
(x) any power of attorney granted by or to Seller, other
than a power of attorney which is incidental to any
contract already listed; and
(xi) any lease, conditional sales or other agreement
pursuant to which Seller leases, has purchased or
holds possession of, but not title to, any real or
material personal property, whether as lessor, lessee,
purchaser, seller, bailee, pledgee or the like.
Each Contract listed in Section 1(a)(vii) of the Disclosure
Schedule is (i) as to Seller, in full force and effect and
there exists no material default or violation by Seller of any
such Contract or any event, occurrence, condition or act
(including the Closing of the purchase of the Purchased
Assets, subject to obtaining any necessary consents
thereunder) now or at Closing which constitutes, or with the
giving of notice or the lapse of time or both would become, a
material default thereunder by Seller, and (ii) as to the
other party or parties to such Contracts, each such Contract
in full force and effect as to such other party or parties
and, to the knowledge of Seller, there exists no material
default or violation by the other party or parties or event,
occurrence, condition or act (including the Closing of the
purchase of the Purchased Assets) now or at Closing which
constitutes, or with the giving of notice or the lapse of time
or both would become, a material default thereunder by the
other party or parties. Seller has not incurred and will incur
no cost, expense, liability or obligation under any Contract
which is not expressly contemplated in such Contract. Seller
either has delivered to Buyer or made available for inspection
by Buyer a true, correct and complete copy of each Contract,
or will do so prior to Closing.
(q) Warranty or Other Claims. No warranty has been provided by
Seller to its customers other than the standard equipment
warranties described in Section 2(f)(vi) of the Disclosure
Schedule and any warranties provided pursuant to service
contracts. Seller's liabilities and obligations to provide
customer support and services to customers of the Business
after Closing arise only pursuant to (i) service contracts
with customers; (ii) the standard equipment warranties
described in Section 2(f)(vi) of the Disclosure Schedule; and
(iii) the "Xerox Total Satisfaction Guarantee" described in
16.
Section 2(f)(vi) of the Disclosure Schedule. Section 3(q) of
the Disclosure Schedule sets forth a list of the products of
the Business which are being serviced by Seller pursuant to
warranty claims as at the date of this Agreement.
(r) Leased Real Estate. Seller does not own any real property. The
only real property used in connection with the Business is the
real property leased by Seller pursuant to the Leases listed
in Section 1(a)(iv). Each such Lease is (i) as to Seller, in
full force and effect and there exists no material default or
violation by Seller of any Lease or any event, occurrence,
condition or act (including the Closing of the purchase of the
Purchased Assets, subject to obtaining any necessary consents
thereunder) now or at Closing which constitutes, or with the
giving of notice or the lapse of time or both would become, a
material default thereunder by the Seller, and (ii) as to the
other party or parties to such Leases, each such Lease in full
force and effect as to such other party or parties and, to the
knowledge of Seller, there exists no material default or
violation by the other party or parties or event, occurrence,
condition or act (including the Closing of the purchase of the
Purchased Assets) now or at Closing which constitutes, or with
the giving of notice or the lapse of time or both would
become, a material default thereunder by the other party or
parties. Seller has not incurred and will incur no cost,
expense, liability or obligation under any Lease which is not
expressly contemplated in such Lease. Seller has delivered to
Buyer or made available for inspection by Buyer a true,
correct and complete copy of each Lease. No representation or
warranty is made by Seller concerning the condition of the
leased property or the building, fixtures, structures or
improvements situated thereon.
4. COVENANTS BY THE PARTIES
(a) Seller.
(i) Carrying on Business. Seller agrees that, from the
date hereof to the Closing:
A. Except for the matters referred to in Exhibit
4(a), it will conduct the Business and its
affairs only in the manner in which they are
being conducted immediately prior to the date of
this Agreement.
B. Except as otherwise required by law, it shall
afford to the officers, counsel, accountants and
other representatives of Buyer and Check full and
free access to Seller's personnel, properties,
records and books of account at all reasonable
times, and to furnish such officers and
representatives all such documents and copies of
documents and information as Buyer and Check may
reasonably request. The documents, copies and
information so furnished to Buyer and Check are
solely for the purposes of this Agreement and are
to be kept strictly confidential until the
Closing,
17.
and Buyer and Check shall not disclose the same
prior to the Closing to anyone other than their
respective authorized officers, employees,
agents, counsel and accountants, who shall be
advised of these provisions. The foregoing
provisions are in addition to those contained in
the letter agreement respecting confidentiality
between Xerox and Check dated November 20, 2000.
(ii) Matters requiring Buyer's Consent. Other than the
matters referred to in Exhibit 4(a), Seller shall not,
in connection with the operation of the Business from
the date hereof to the Closing Date, without the prior
written consent of Buyer, which will not be
unreasonably withheld:
A. Increase the rate or form of compensation or
fringe benefits to or for the benefit of any
agent or employee outside the ordinary course of
its business;
B. Make any commitments for capital expenditures nor
sell, transfer, invalidate or dispose of any of
the assets of the Business, except in the
ordinary course of its business; or
C. Incur any indebtedness except in the ordinary
course of business, cause any material adverse
change to be made in its financial affairs, or
allow any tax or other liability to be extended
by waiver of the statutes of limitation or
otherwise.
(iii) Payment of Monies. To the extent Seller receives any
monies after the Closing Date which are otherwise due
and payable to Buyer pursuant to the terms of this
Agreement, Seller will pay such monies to Buyer
promptly following Seller's receipt thereof.
(iv) Change of Name. Seller shall take all actions
necessary to change its and its affiliates' respective
corporate, business or trade names within sixty (60)
days of the Closing Date so that such names do not
include the name "Delphax" or any derivative thereof.
(b) Buyer and Check.
(i) Buyer Compliance with Agreement. Check hereby
covenants and agrees with Seller that it will cause
Buyer to comply with all of its covenants, agreements
and obligations under this Agreement, including,
without limitation, completing the purchase of the
Purchased Assets, payment of the Purchase Price and
assumption of the Assumed Liabilities upon the terms
and conditions herein contained, as fully and to the
same extent as if Check were the buyer of the
Purchased Assets and had signed this Agreement in the
place of Buyer, and Check agrees that it will be
jointly and
18.
severally liable with Buyer for compliance with all of
such covenants, agreements and obligations.
(ii) Employees. Buyer and Check jointly and severally
covenant and agree with Seller that on the Closing
Date, Buyer shall offer employment to each of the
employees of the Business whose names are set forth in
Section 3(h) of the Disclosure Schedule and who are
still employed with Seller on the Closing Date, on the
same terms and conditions as are in effect on the
Closing Date including, without limitation, those
relating to compensation and benefits (described in
Section 3(h) of the Disclosure Schedule); Buyer and
Check will further provide to the long term disability
employees identified in Section 3(h) of the Disclosure
Schedule (the "LTD Employees") the same or equivalent
benefits and insurance coverage as are being received
by, or to which the LTD Employees are entitled,
immediately prior to the Closing Date. In addition to
their indemnity obligations pursuant to Section 9(b)
hereof, Buyer and Check shall assume and jointly and
severally indemnify Seller from and against all
losses, damages, costs, expenses and deficiencies
suffered, incurred or sustained by Seller, including
reasonable attorneys' fees and expenses, as a result
of: (a) any and all obligations with respect to any
such employees who accept Buyer's offer of employment,
for all purposes including, without limitation,
compensation, benefits, and severance and termination
obligations required by applicable law, as if they had
been employed by Buyer since their individual dates of
hire by Seller; (b) any and all severance and
termination costs incurred by Seller pursuant to
applicable law or Seller's normal severance and
termination policies with respect to any such
employees who do not accept Buyer's offer of
employment for any reason whatsoever; and (c) any and
all costs and obligations with respect to the
provision of the aforesaid benefits and insurance
coverage for the LTD Employees, as well as any and all
severance and termination obligations required by
applicable law with respect to the LTD Employees and
any obligations pursuant to the Pension Plan and
insurance policies referred to in Section 2(b) with
respect to the LTD Employees. The parties acknowledge
and agree that it is their intention that Seller have
no liability for any severance or termination costs
pursuant to applicable law or Seller's normal
severance and termination policies with respect to any
employees of the Business listed in Section 3(h) of
the Disclosure Schedule, under any circumstances
whatsoever, and that Buyer and Check will have sole
liability for all such severance and termination
costs. Buyer and Check shall have no liability for any
bonuses paid or payable to senior management of the
Business which relate solely to the successful
completion of the within sale transaction.
(iii) Bulk Sales. Buyer and Check hereby waive compliance
with all applicable bulk sales legislation.
19.
(iv) Record Retention. After the Closing, Buyer and Check
shall retain all books and records required to be
retained pursuant to obligations imposed by any
Applicable Law in respect of the pre-closing
operations of Seller, specifically including any
income tax returns and books and records required to
prepare such tax returns. Except as provided in the
immediately preceding sentence, to the extent any
Applicable Law requires a longer retention period,
Buyer and Check will retain all books and records for
a period of seven years after the Closing. After the
end of such seven-year period (or any greater period
provided by law), before disposing of any such books
and records, Buyer and Check will give notice to such
effect to Seller and give Seller at its sole cost and
expense, an opportunity to remove and retain all or
any part of such records as Seller may elect.
(v) Post-Closing Access. After the Closing, upon
reasonable notice, each party to this Agreement will
give, or cause to be given, to the representatives,
employees, counsel and accountants of the other
parties to this Agreement access, during normal
business hours, to books and records of the Business
relating to periods prior to or including the Closing,
and will permit such persons to examine and copy such
books and records to the extent reasonably requested
by the other parties in connection with tax and
financial reporting matters, audits, legal
proceedings, governmental investigations and other
business purposes; provided, however, that nothing in
this Agreement will obligate any party to take actions
that would unreasonably disrupt the normal course of
its business, violate the terms of any contract to
which it is a party or to which it or any of its
assets is subject or grant access to any of its
proprietary, confidential or classified information or
information that is privileged or similarly protected
from disclosure. Buyer and Check will provide or make
available to Seller access to, and assistance from,
employees of Buyer and Check for the purposes of, and
with the limitations described in, the preceding
sentence. Buyer, Check and Seller will cooperate with
each other in the conduct of any tax audit, claim for
refund of taxes, or similar proceedings involving or
otherwise relating to the Business (or the income
therefrom or assets therefor) with respect to any tax
as may be necessary to carry out the intent of this
paragraph. Buyer will prepare on a timely basis for
filing by Seller all sales tax returns and all goods
and services tax returns of Seller relating to periods
prior to the Closing Date which are due to be filed
with the tax authorities on a date that is after the
Closing Date.
(vi) Acknowledgement re Competition. Buyer and Check hereby
acknowledge and agree that except as provided in the
non-competition agreement referred to in Section
6(e)(viii), nothing in this Agreement or this
transaction shall in any way limit the ability of
Seller or Xerox to carry on business following the
Closing in
20.
such manner as Seller and Xerox shall determine from
time to time.
(vii) Payment of Service Contract Revenues. Buyer and Check
agree that all revenues from the software and usage
contracts of Seller referred to in the note to Section
1(b)(vii) of the Disclosure Schedule will be paid to
Xerox promptly upon receipt thereof by Buyer or Check.
5. REPRESENTATIONS AND WARRANTIES OF BUYER AND CHECK
Buyer and Check jointly and severally represent and warrant to
Seller that, as of the date hereof, and as of the date of Closing:
(a) Organization and Standing of Buyer and Check. Buyer is a
corporation duly organized, validly existing and in good
standing under the laws of the Province of Ontario. Check is a
corporation duly organized, validly existing and in good
standing under the laws of the State of Minnesota. Each of
Buyer and Check is qualified to operate its business under the
laws of each jurisdiction in which its business is conducted.
Each of Buyer and Check has full power and authority to carry
on its business as now conducted and to own and operate its
business as well as its assets and properties.
(b) Authorization. The execution and delivery of this Agreement by
Buyer and Check and the performance of the transactions
contemplated hereby have been duly and validly authorized by
the board of directors of Buyer and Check, and this Agreement
is binding upon and enforceable against Buyer and Check,
except as enforceability may be limited or affected by
applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting creditors' rights generally and by
general principles of equity (regardless of whether
enforceability is considered in a proceeding in equity or at
law).
(c) Compliance. The execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby will
not result in the breach of any of the terms or conditions of,
or constitute a default under or violate, as the case may be,
the articles of incorporation or by-laws of Buyer or Check, or
any agreement, lease, mortgage, note, bond, indenture, license
or other document or undertaking, oral or written, to which it
may be bound, or by which any of its property or assets may be
adversely affected.
(d) Legal Proceedings. There is no legal proceeding in progress,
pending or threatened against Buyer or Check and no judgment,
decree, injunction or award of any court or tribunal
outstanding against Buyer or Check which might adversely
affect the ability of Buyer or Check to enter into this
Agreement or perform its obligations hereunder or thereunder.
21.
(e) Investment Canada Act; GST Status. Buyer is a non-Canadian
within the meaning of the Investment Canada Act (Canada).
Buyer is or will be registered for purposes of the Excise Tax
Act (Canada) and its GST number will be furnished to Seller at
least 10 business days prior to Closing.
6. CONDITIONS TO BUYER'S AND CHECK'S OBLIGATIONS
The obligations of Buyer and Check to consummate this
Agreement shall be subject to and shall be conditioned upon each of the
following conditions, any one or more of which may be waived by Buyer or Check:
(a) No Breach or Omission. Buyer and Check shall not have
discovered any material error, misstatement or omission in any
of the representations or warranties made by Seller in this
Agreement, and all of the terms, covenants and conditions of
this Agreement to be complied with or performed by Seller on
or before the Closing shall have been complied with and
performed in all material respects.
(b) No Material Changes. The representations and warranties made
by Seller in Section 3 above and in the Disclosure Schedule
shall be correct in all material respects on and as of the
Closing with the same force and effect (except as affected by
the transactions contemplated herein or otherwise approved in
writing by Buyer and Check) as though such representations had
been made on and as of the Closing (provided that information
given as of a specific date will continue to be given as of
that date), and none of the covenants contained in Section
4(a) above shall have been breached in any material respect as
of the Closing.
(c) Governmental Regulation. No consent, approval, authorization
or order of any court or Governmental Authority or
administrative body not obtained and in effect on the Closing
Date shall be required for the consummation of the
transactions contemplated by this Agreement, and no
regulation, claim, proceeding, investigation or litigation,
either administrative or judicial, shall be threatened or
pending against Seller, or Buyer, or Check or applicable to
any of them, which, in the opinion of counsel for Buyer and
Check, presents a reasonable probability that the transactions
contemplated by this Agreement would be enjoined or prevented,
or that the Business of Seller would be materially and
adversely affected. At the Closing, there shall exist no
violations of any federal, state or local law, ordinance or
regulation materially affecting the Purchased Assets or the
Business.
(d) Payment of Liens and Encumbrances. On or before the Closing
Date, Seller shall make any and all payments required to
remove the liens and encumbrances on the Purchased Assets in
accordance with the second sentence of Section 3(d) hereof.
(e) Items To Be Delivered By Seller. At the Closing, Seller shall
deliver to Buyer, in form and substance satisfactory to Buyer,
the following:
22.
(i) A ▇▇▇▇ of sale conveying the Purchased Assets to be
conveyed by Seller under this Agreement. Buyer and
Check acknowledge that such Purchased Assets will be
conveyed to Buyer at the location in which they are
situated as at the Closing Date.
(ii) Assignments of the Leases, Contracts and Transferred
Intellectual Property described in Sections 1(a)(iv),
(vii) and (iii), respectively, of the Disclosure
Schedule, including Seller's interest in any and all
security and other deposits.
(iii) A certificate, executed and sworn to by Seller
confirming that (i) as of the Closing, all of the
warranties and representations set forth in this
Agreement are true and correct in all material
respects, and all covenants and agreements set forth
in this Agreement have been satisfied in all material
respects, and (ii) Seller has delivered original
Leases, Contracts and other agreements assumed by
Buyer pursuant to this Agreement and all amendments
thereto, to the extent same are in the possession of
Seller.
(iv) Certified copies of all actions and/or resolutions
executed by the appropriate parties pursuant to
Section 3(b) herein.
(v) Discharges or partial discharges, as applicable, of
any mortgage, pledge, lien, encumbrance or charge
required to ensure that the representation and
warranty set forth in the second sentence of Section
3(d) is true and correct as at the Closing Date.
(vi) Such other documents, instruments and certificates
required of Seller as are contemplated herein to
effect and complete the Closing.
(vii) Exhibits and Disclosure Schedule updated to reflect
any material changes thereto from the date of this
Agreement to the Closing Date; provided that
information given as of a specific date will continue
to be given as of such date and such date will not be
further updated.
(viii) A non-competition agreement from Xerox and Seller in
the form attached as Exhibit 6(e)(viii).
(ix) Termination of any cross-license agreements between
Xerox and Seller with respect to the Transferred
Intellectual Property and the DELPHAX INTELLECTUAL
PROPERTY GROUP A to be assigned to Check pursuant to
the IP Agreement.
(f) Consents. All parties to the Leases specifically identified in
Exhibit 6(f) shall have consented to the transactions
contemplated hereby or have waived the preferential or other
rights they would otherwise have by reason of such
transactions.
23.
(g) Competition Filings. (i) The Commissioner shall have issued an
Advance Ruling Certificate under Section 102 of the
Competition Act (Canada) (the "Competition Act") in respect of
the transactions contemplated herein; or (ii)(A) the
applicable time period under Section 123 of the Competition
Act shall have expired; and (B) the Commissioner shall have
advised Buyer and Check (on terms and in form satisfactory to
them) that he does not oppose the transactions under this
Agreement or intend to apply to the Competition Tribunal for
an order under Section 92 of the Competition Act in respect of
the transactions, or (iii)(A) the Commissioner shall have
provided the parties a waiver from complying with Part IX of
the Competition Act; and (B) the Commissioner shall have
advised Buyer and Check (on terms and in form satisfactory to
them) that he does not oppose the transactions or intend to
apply to the Competition Act in respect of the transactions.
Buyer and Check agree make the filings required by the
Competition Act promptly after the execution of this
Agreement.
(h) Parts Supply Agreement. Xerox shall have executed a Parts
Supply Agreement in the form attached hereto as Exhibit 6(h).
(i) Financing. Buyer shall have obtained financing for the
transactions pursuant to this Agreement on terms acceptable to
Buyer.
(j) IP Agreement. Xerox and Seller shall have executed the IP
Agreement.
7. CONDITIONS TO SELLER'S OBLIGATIONS
The obligations of Seller to consummate this Agreement shall
be subject to and shall be conditioned upon each of the following conditions,
any one or more of which may be waived by Seller:
(a) No Breach or Omission. Seller shall not have discovered any
material error, misstatement or omission in any of the
representations or warranties made by Buyer and Check in this
Agreement, and all of the terms, covenants and conditions of
this Agreement to be complied with or performed by Buyer and
Check on or before the Closing shall have been complied with
and performed in all material respects.
(b) Performance. The representations and warranties made by Buyer
and Check in Section 5 above shall be correct in all material
respects on and as of the Closing with the same force and
effect (except as affected by the transactions contemplated
herein or otherwise approved in writing by Seller) as though
such representations had been made on and as of the Closing,
and none of the covenants contained in Section 4(b) above
shall have been breached in any material respect as of the
Closing.
(c) Governmental Regulation. No consent, approval, authorization
or order of any court or Governmental Authority or
administrative body not obtained and in effect on the Closing
Date shall be required for the consummation of the
transactions contemplated by this Agreement, and no
regulation, claim, proceeding, investigation or litigation,
either administrative or
24.
judicial, shall be threatened or pending against Seller, or
Buyer, or Check or applicable to any of them, which, in the
opinion of counsel for Seller, presents a reasonable
probability that the transactions contemplated by this
Agreement would be enjoined or prevented.
(d) Items to be Delivered by Buyer and Check. At the Closing,
Buyer and Check shall deliver to Seller, in form and substance
satisfactory to Buyer, the following:
(i) Certified copies of all actions and/or resolutions
executed by the appropriate parties pursuant to
Section 5(b) herein.
(ii) A certificate, executed and sworn to by Buyer and
Check confirming that as of the Closing, all of the
warranties and representations set forth in this
Agreement are true and correct in all material
respects, and all covenants and agreements set forth
in this Agreement have been satisfied.
(iii) An acknowledgement and release by Buyer and Check of
all claims whatsoever with respect to any and all
current or prior agreements between Seller or Xerox
and Check or its affiliates (other than this
Agreement).
(iv) Such other documents, instruments and certificates
required of Buyer and Check as are contemplated herein
to effect and complete the Closing.
(e) Consents. All parties to the Leases specifically identified in
Exhibit 6(f) shall have consented to the transactions
contemplated hereby or have waived the preferential or other
rights they would otherwise have by reason of such
transactions.
(f) Competition Filings. (i) The Commissioner shall have issued an
Advance Ruling Certificate under Section 102 of the ompetition
Act in respect of the transactions contemplated herein; or
(ii)(A) the applicable time period under Section 123 of the
Competition Act shall have expired; and (B) the Commissioner
shall have advised Buyer and Check (on terms and in form
satisfactory to them) that he does not oppose the transactions
under this Agreement or intend to apply to the Competition
Tribunal for an order under Section 92 of the Competition Act
in respect of the transactions, or (iii)(A) the Commissioner
shall have provided the parties a waiver from complying with
Part IX of the Competition Act; and (B) the Commissioner shall
have advised Buyer and Check (on terms and in form
satisfactory to them) that he does not oppose the transactions
or intend to apply to the Competition Act in respect of the
transactions. Seller agrees to provide any cooperation with
Buyer which is reasonably necessary as to Buyer's filing under
the Competition Act and to make any filing thereunder on the
part of the Seller which reasonably becomes necessary.
(g) IP Agreement. Check shall have executed the IP Agreement.
25.
(h) Service and Support Agreement. Buyer and Check shall have
executed a service and support agreement with Xerox in the
form attached hereto as Exhibit 7(h).
8. CLOSING; TERMINATION
The closing of the transaction contemplated by this Agreement
("Closing") shall take place on any business day specified by Buyer in a written
notice to Seller delivered at least ten business days prior to the specified
closing date (the "Closing Date") (except that the Closing Date shall be not
more than 35 calendar days after the execution and delivery of this Agreement),
at 10:00 a.m., at the offices of Messrs. Fraser ▇▇▇▇▇▇ Casgrain LLP, 1 First
Canadian Place, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇, or at such
other place or time as the parties may mutually agree, and all transactions
contemplated hereunder shall be effective as of such date. Seller, Buyer and
Check agree to use their best efforts to bring about the satisfaction of the
conditions for Closing specified in this Agreement, but if any condition so
specified is not satisfied and such condition is not waived in writing by the
party for the benefit of whom or which such condition is stated, such party may
terminate this Agreement by notice in writing to the other parties, provided
that: (a) neither party is entitled to terminate this Agreement if such party's
willful breach of this Agreement has prevented the completion of the
transactions contemplated by this Agreement; (b) the provisions of Section
2(a)(i) shall apply upon any such termination; and (c) the terminating party
reserves all rights and remedies available to it if such termination was as a
result of a material misrepresentation or breach of a warranty or covenant on
the part of the other party. Any such conditions not so waived in writing shall
nevertheless be deemed to have been waived by the party for the benefit of whom
or which such condition is stated, if such party shall not so terminate this
Agreement.
9. INDEMNIFICATION
(a) By Seller. All entities comprising Seller (including, without
limitation, each of the partners of Delphax Canada) jointly
and severally agree to indemnify, reimburse and hold Buyer and
Check harmless against and from all losses, damages, costs,
expenses and deficiencies suffered, incurred or sustained by
Buyer or Check, including reasonable attorneys' fees and
expenses, as a result of (i) the untruth of any representation
or the breach of any warranty, covenant or agreement made by
Seller in this Agreement or in any document, exhibit,
agreement or certificate given in connection with this
Agreement; (ii) the untruth of any certificate required under
this Agreement to be delivered by Seller at the Closing; and
(iii) any obligations relating to the Business or the
Purchased Assets which have not been expressly assumed by
Buyer as set forth in this Agreement.
(b) By Buyer and Check. Buyer and Check hereby agree to jointly
and severally indemnify, reimburse and hold harmless Seller,
Xerox and their respective affiliates against and from all
losses, damages, costs, expenses and deficiencies suffered,
incurred or sustained by Seller, including reasonable
attorneys' fees and expenses, as a result of (i) the untruth
of any representation or the breach of any warranty, covenant
or agreement made by Buyer or Check in this Agreement or in
any document, exhibit,
26.
agreement or certificate given in connection with this
Agreement; (ii) the untruth of any certificate required under
this Agreement to be delivered by Buyer and Check at the
Closing; (iii) the failure of Buyer or Check to discharge any
of the Assumed Liabilities; or (iv) the parties not being
entitled to validly make an election under subsection 167(1)
of the Excise Act or the Canada Customs and Revenue Agency not
accepting in whole or in part such election by the parties.
(c) Limitation. Notwithstanding any other provision of this
Agreement, Buyer and Check shall not assert against Seller any
claim or claims for indemnity unless the aggregate amount of
the claim or claims asserted to date, including the claim or
claims then being asserted, is at least $350,000 (and then
only to the extent that the amount of the claim or claims
exceeds $350,000), provided that the foregoing de minimis will
not apply to any claims with respect to Seller's title to the
Purchased Assets or Buyer being required to discharge any of
the Excluded Liabilities. The amount of any Purchase Price
adjustment pursuant to Section 2(b) shall not be included in
determining whether the aforesaid limit of $350,000 has been
reached.
The obligation of Seller to indemnify Buyer and Check shall
apply only to the extent the losses, damages, costs, expenses
and deficiencies are not covered by insurance carried by Buyer
or Check.
In no event shall the aggregate liability of Seller in respect
of any claims for indemnity or for any other claims whatsoever
exceed $7,000,000.
The indemnity obligations of the parties contained herein
shall be subject to the limitation periods referred to in
Section 10(a).
(d) Procedure for Indemnification.
(i) A party claiming indemnification under this Section 9
(an "Indemnitee") shall give notice to the party
against which indemnification is claimed (an
"Indemnitor") with reasonable promptness upon becoming
aware of the claim or other facts upon which a claim
for indemnification will be based. The notice shall
set forth such information and be accompanied by such
documentation with respect thereto as is then
reasonably available to the Indemnitee.
(ii) The Indemnitor shall have the right, exercisable by
notice to the Indemnitee, given within twenty (20)
days following receipt of the aforesaid notice from
the Indemnitee, to undertake and assume control of the
defense of any such claim asserted by a third party (a
"Third Party Claim"), including the right of
compromise or settlement thereof, and the Indemnitee
shall co-operate in such defense and make available
all information and documentation requested by the
Indemnitor with respect thereto; provided, however,
that:
27.
A. the Indemnitor shall first deliver to the
Indemnitee written acceptance of liability for
indemnification with respect to any such Third
Party Claim and written consent to be joined as a
party to any Legal Proceeding relating thereto;
and
B. the undertaking and assumption of control of the
defense, compromise and/or settlement of any such
Third Party Claim shall, by its terms, be without
expense, cost or other liability to the
Indemnitee.
(iii) Upon the assumption of control by the Indemnitor as
aforesaid, the Indemnitor shall diligently proceed
with the defense, compromise or settlement of such
Third Party Claim at the Indemnitor's sole expense;
and in connection therewith, the Indemnitee shall
cooperate fully with, but at the expense of, the
Indemnitor, to make available to the Indemnitor all
pertinent information, documentation and witnesses
under the Indemnitee's control and to make such
assignments and take such other steps as in the
opinion of counsel for the Indemnitor are necessary or
desirable to enable the Indemnitor to conduct such
defense.
(iv) The final determination of any such Third Party Claim,
including all related expenses, costs and other
liabilities, shall be binding and conclusive upon the
parties hereto as to the validity or invalidity, as
the case may be, of such Third Party Claim against the
Indemnitor hereunder.
(v) In the event that the Indemnitor fails to give notice
to the Indemnitee as provided in clause (ii) above or
in the event that the Indemnitor declines to undertake
the defence of any such Third Party Claim when first
notified thereof, the Indemnitee shall keep the
Indemnitor advised as to the current status and
progress thereof, and the Indemnitor shall retain the
right to undertake the defense thereof as aforesaid
until such Third Party Claim is fully resolved. Unless
and until the Indemnitor so undertakes the defense
thereof, the Indemnitee agrees not to make any offer
of compromise or settlement thereof without first
having given ten (10) days' notice to the Indemnitor.
In the event that the Indemnitor so undertakes the
defense of any such Third Party Claim the Indemnitee
shall nevertheless be entitled to participate in (but
not control or direct) the defense, compromise or
settlement thereof with counsel of its own choice, and
the parties agree to co-operate fully with one another
in connection with the defense, compromise or
settlement thereof; provided, however, that any
decision to settle any such Third Party Claim shall be
at the Indemnitor's sole discretion. From and after
delivery of the items referred to in clauses (A) and
(B) of clause (ii) above, the Indemnitor shall be
relieved of the obligation to reimburse the Indemnitee
for any other legal, accounting or other out-of-pocket
28.
costs and expenses thereafter incurred by the
Indemnitee with respect to the defense, compromise or
settlement of such Third Party Claim notwithstanding
any participation by the Indemnitee therein.
10. MISCELLANEOUS PROVISIONS
(a) Nature and Survival of Representations, Warranties and
Agreements. All statements contained in any certificate or
other instrument expressly required to be delivered by this
Agreement, or made on behalf of any party pursuant hereto or
in connection with the transactions contemplated hereby: (i)
shall be deemed representations and warranties provided
hereunder; and (ii) shall not be affected by any knowledge or
investigation or by the acceptance of any certificate or
opinion. Any representations and warranties made by the
parties hereto (except to the extent that any such
representation and warranty is corrected or updated in writing
prior to Closing, in which case only the corrected or updated
version shall survive the Closing as herein contemplated)
shall survive the Closing for a period of eighteen (18) months
from the Closing Date and upon the expiry of such period, the
party which made such representations or warranties shall have
no further liability to the other parties except for claims
which were made prior to the expiry of such period. The
foregoing time limit shall not apply with respect to any
claims as to Seller's title to the Purchased Assets, which
claims will continue until the applicable statute of
limitations shall have barred any claim thereon and shall be
effective regardless of any investigation which may have been
made at any time by or on behalf of Buyer. There shall be no
time limit on claims for a breach of any agreement or covenant
of the parties made herein, all of which shall survive the
Closing.
(b) Assignment of Contracts. To the extent the assignment of any
agreement, contract, commitment, lease or other asset to be
assigned to Buyer shall require the consent, approval or
acknowledgement of any person, this Agreement shall not
constitute a contract to assign same if an attempted
assignment would constitute a breach thereof.
(c) Exhibits and Disclosure Schedule. Exhibits and the Disclosure
Schedule referred to in this Agreement are hereby made a part
hereof.
(d) Parties in Interest and Binding Effect. This Agreement shall
be binding upon, and inure to the benefit of, the respective
heirs, personal representatives, successors and assigns of
Seller, Buyer and Check.
(e) Assignment and Amendment of Agreement. This Agreement shall
not be assignable by any of the parties hereto except with
written consent of all other parties hereto. This Agreement
may be amended only by written agreement of all the parties
hereto.
(f) Notices. Any and all notices and other communications to
either party hereunder shall be in writing and deemed
delivered (i) upon receipt if by
29.
hand, overnight courier or telecopy (provided that in the
event of a telecopy, concurrently therewith a copy is mailed
in accordance with clause (ii) hereof), and (ii) three days
after mailing by first class, certified mail, postage prepaid,
return receipt requested, as follows:
(i) If to Seller, to:
Xerox Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇
With copies to:
Xerox Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇
- and -
Fraser ▇▇▇▇▇▇ Casgrain LLP
▇.▇. ▇▇▇ ▇▇▇, ▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇
(ii) If to Buyer or Check, to:
Check Technology Corporation
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇
Attention: Chief Financial Officer
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇ IDS Center
▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address as hereafter shall be furnished in
writing by any of the parties hereto to the other parties
hereto.
30.
(g) Entire Understanding. This Agreement sets forth the entire
understanding of the parties, and it shall not be changed or
terminated orally. All prior discussions between the parties
pertaining to this transaction, both written and oral, are
superseded by and merged into this Agreement.
(h) Disclaimer of Other Representations and Warranties. Seller
does not make, and has not made, any representations or
warranties relating to Seller, the Purchased Assets or the
Business or any other matter in connection with the
transactions contemplated by this Agreement, other than those
expressly set out herein and made by Seller. It is understood
that any cost estimates, projections or other predictions, any
data, any financial information or any memoranda or
presentations are not and shall not be deemed to be or include
any representation or warranty of Seller, save and except as
expressly contained herein as a representation or warranty
made by Seller. No statements made or information provided by
Seller, its employees, personnel or representatives, to Buyer,
its representatives or auditors, shall be construed as being
representations or warranties or shall have any legal force or
effect whatsoever, except to the extent expressly set forth in
this Agreement.
In addition to and without limiting the generality of the
foregoing, Buyer and Check hereby acknowledge that Seller has
or will be providing to (i) Check's independent public
auditors a letter containing information and representations
concerning the Purchased Assets and the Business; (the
"Auditors Letter"); and (ii) Check's bankers a letter from
Delphax Systems management containing information and
management's opinion with respect to the DP330 printers (the
"Bankers Letter") (collectively the "Letters"). Buyer and
Check hereby acknowledge that the Auditors Letter is being
provided to Check's auditors only, and the Bankers Letter is
being provided to Check's bankers only, and in each case, not
to Check, Buyer or any other party. Check and Buyer agree that
they shall not rely on the Letters for any purpose whatsoever
and that nothing in the Letters shall be, or shall be deemed
to be, a representation or warranty concerning Seller, the
Purchased Assets or the Business. Check and Buyer hereby
remise, release and forever discharge Seller, Xerox and their
respective affiliates from and against any and all actions,
causes of action, suits, demands, debts, dues, accounts,
bonds, covenants, contracts, liabilities, damages and all
other claims which Buyer, Check, their affiliates and their
successors and assigns, ever had, now has or may in the future
have for or by reason of or in any way arising out of the
Letters and the delivery thereof to Check's auditors and
bankers.
(i) Headings. The headings herein are inserted only as a matter of
convenience and reference, and in no way define, limit or
describe the scope of this Agreement, or the intent of any
provisions thereof.
(j) Counterparts. This Agreement may be executed simultaneously in
one or more counterparts, each of which shall be deemed an
original and all of which together shall constitute one and
the same instrument.
31.
(k) Further Acts. At the Closing and from time to time after the
Closing, at the request of Buyer and without further
consideration (except for any reasonable out-of-pocket
expenses necessarily incurred by Seller), Seller shall
promptly execute and deliver to Buyer such certificates and
other instruments of sale, conveyance, assignment and
transfer, and take such other action, as may reasonably be
requested by Buyer more effectively to confirm any obligation
assumed by Buyer pursuant to this Agreement and to sell,
convey, assign and transfer to and vest in Buyer or to put
Buyer in possession of the Purchased Assets and all benefits
related thereto. To the extent that any consents, waivers or
approvals necessary to convey the Purchased Assets to Buyer
are not obtained prior to Closing, Seller shall (a) provide to
Buyer, at the request of Buyer, the benefits of any such
asset, and hold the same in trust for Buyer; (b) cooperate in
any reasonable and lawful arrangement, approved by Buyer,
designed to provide such benefits to Buyer; and (c) enforce
and perform, at the request of Buyer, for the account of
Buyer, any rights or obligations of Seller arising from any
such Purchased Asset against or in respect of any third
person, including the right to elect to terminate any
contract, arrangement or agreement in accordance with the its
terms thereof upon the advice of Buyer.
(l) Liability. Any and all obligations or liabilities under this
Agreement by Seller shall be joint and several obligations or
liabilities of the entities comprising Seller and any and all
obligations or liabilities of Delphax Canada shall be joint
and several obligations and liabilities of the partners of
Delphax Canada. By signing this Agreement as partners of
Delphax Canada, such partners acknowledge their joint and
several liability as aforesaid. Any and all obligations or
liabilities under this Agreement by Buyer and Check shall be
joint and several and each of them guarantees the full and
faithful performance of the other as to all terms, conditions,
provisions, representations and warranties made by each of
them under this Agreement.
(m) Attorneys' Fees. In the event an action in law or in equity is
required to enforce or interpret the terms and conditions of
this Agreement, the prevailing party shall be entitled to
reasonable attorneys' fees and costs in addition to any other
relief to which that party may be entitled. The prevailing
party will be that party who, in light of the issues litigated
and the court's decision on those issues, was determined by
the court to be the more successful in the action, but need
not be the party who actually received a judgement.
(n) Governing Law; Arbitration of Disputes. This Agreement shall
be governed by and construed in accordance with the laws of
the State of New York, United States of America. Without
prejudice to each party's right to seek injunctive or
mandatory relief from a court, the parties agree that all
other disputes arising under this Agreement, or any alleged
breach hereof, shall be submitted to binding arbitration in
accordance with the Commercial Arbitration Rules of the
American Arbitration Association then in effect. Each
arbitration shall be conducted in Chicago, Illinois, and
32.
judgment on the arbitrator's award may be entered in any court
having jurisdiction. If it is determined by the arbitrator
that one party has generally prevailed on the issues, then the
other party shall bear the cost of the arbitration
proceedings, including without limitation the arbitrator's
compensation and expenses and the reasonable attorneys fees of
the prevailing party; otherwise, the cost of the arbitrator's
compensation and expenses shall be borne one-half by Buyer and
one-half by Seller.
(o) Currency. Unless otherwise indicated, all dollar amounts
referred to in this Agreement refer to lawful money of the
United States.
(p) English Language. The parties confirm that it is their wish
that this Agreement as well as any other documents relating
hereto including notices, have been and shall be drawn upon in
English only. Les parties aux presents confirment leur volonte
que cette convention de meme tous les documents, y compris
tous avis, s'y rattachment, soient rediges en anglais
seulement.
(q) Certain Definitions. The following capitalized terms shall
have the meanings indicated below:
(i) "Applicable Law" means all laws, statutes, treaties,
rules, codes, ordinances, regulations, permits,
certificates, orders and licenses of any Governmental
Authority, interpretations of any of the foregoing by
a Governmental Authority having jurisdiction or any
arbitrator or other judicial or quasi-judicial
tribunal (including without limitation those
pertaining to health, safety and the environment).
(ii) "Governmental Authority" means any supranational,
national, federal, state, departmental, county,
municipal, regional or other governmental authority,
agency, board, body, instrumentality or court in
whatever country having jurisdiction in whole or in
part over Seller or the Business.
(iii) "Hazardous Substances" means any substance, material
or waste which is as of the Closing Date regulated or,
on or before the Closing Date, is, to the knowledge of
Seller, proposed to be regulated as a contaminant,
pollutant, dangerous, hazardous, toxic or similar
description, by any Governmental Authority, including,
but not limited to, any material or substance which is
designated subject to regulation as a hazardous or
toxic substance pursuant to any Applicable Law.
(iv) "Knowledge", in the case of Seller, means the actual
knowledge of the senior management of Seller who are
actively involved in or familiar with the operations
of the Business, but without having made any
independent investigation or enquiry of the subject
matter in question.
33.
(r) Termination. This Agreement may be terminated at any time
prior to the Closing Date, as follows:
(i) by the mutual consent of Seller and Buyer;
(ii) by either Buyer or Seller if there has been a material
misrepresentation, breach of warranty or breach of
covenant on the part of the other in the
representations, warranties and covenants set forth in
this Agreement (or if pursuant to Section 10(a) the
other party requires in order to close a correction or
update of one or more of its representations or
warranties that would constitute a material change
from that representation or warranty as made at the
time of this Agreement is executed); provided that the
terminating party shall give notice to the other party
forthwith upon learning of such misrepresentation or
breach and the other party shall have a period of ten
(10) business days within which to remedy same; or
(iii) by Buyer or Seller, in accordance with the provisions
of Section 8.
34.
In the event of termination of this Agreement by either Buyer
or Seller as provided in this Section, all provisions of this Agreement shall
terminate and shall be of no further force or effect; provided, however, that
the liability of any party for any breach by such party of the representations,
warranties, covenants or agreements of such party set forth in this Agreement
occurring prior to the termination of this Agreement shall survive the
termination of this Agreement for a period of one year from the date of such
termination and, in addition, in any action for breach of contract in the event
of a termination of this Agreement, the prevailing party shall be reimbursed by
the other party to the action for reasonable attorneys' fees and expenses
relating to such action.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement the day and year first above written.
CHECK TECHNOLOGY CANADA LTD.
AN ONTARIO CORPORATION
By:________________________________________
Chief Executive Officer
CHECK TECHNOLOGY CORPORATION
A MINNESOTA CORPORATION
By:________________________________________
Chief Executive Officer
DELPHAX SYSTEMS
A MASSACHUSETTS GENERAL PARTNERSHIP
By: Xerox Canada Inc., a general partner
By: ____________________________________
Its: ___________________________________
By: Xerox Canada Ltd., a general partner
By: ____________________________________
Its: ___________________________________
DELPHAX SYSTEMS, INC.
A DELAWARE CORPORATION
By: _______________________________________
Its: ______________________________________