Document:

EXHIBIT 10.12

 

 

 

 

 

 

STOCK PURCHASE AGREEMENT

dated as of

November 27, 2002

between

JAFCO MBO

CO., LTD. as Buyer,

 

JAFCO CO., LTD. as Buyer Guarantor,

 

BTC INTERNATIONAL HOLDINGS, INC. as Seller

and

BANCTEC,

INC. as Seller Guarantor

relating to the purchase and sale

of

100% of

the Common Stock

of

BANCTEC

JAPAN, INC.

 

 

 

TABLE OF CONTENTS

 

	

  Article 1
Definitions

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

  Section 1.01.  Definitions

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

  Article 2

  Purchase and Sale

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

  Section 2.01.  Purchase and Sale

  	

   

  	

   

  
	

  Section 2.02.  Closing

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

  Article 3

  Representations and Warranties of Seller

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

  Section 3.01.  Corporate Existence and

  Power

  	

   

  	

   

  
	

  Section 3.02.  Corporate Authorization

  	

   

  	

   

  
	

  Section 3.03.  Governmental

  Authorization

  	

   

  	

   

  
	

  Section 3.04.  Noncontravention

  	

   

  	

   

  
	

  Section 3.05.  Capitalization

  	

   

  	

   

  
	

  Section 3.06.  Ownership of Shares

  	

   

  	

   

  
	

  Section 3.07.  Subsidiaries

  	

   

  	

   

  
	

  Section 3.08.  Financial Statements

  	

   

  	

   

  
	

  Section 3.09.  Books and Records

  	

   

  	

   

  
	

  Section 3.10.  Absence of Certain

  Changes

  	

   

  	

   

  
	

  Section 3.11.  No Undisclosed Material

  Liabilities

  	

   

  	

   

  
	

  Section 3.12.  Intercompany Accounts

  	

   

  	

   

  
	

  Section 3.13.  Material Contracts

  	

   

  	

   

  
	

  Section 3.14.  Litigation

  	

   

  	

   

  
	

  Section 3.15.  Compliance with Laws and

  Court Orders

  	

   

  	

   

  
	

  Section 3.16.  Properties

  	

   

  	

   

  
	

  Section 3.17.  Intellectual Property

  	

   

  	

   

  
	

  Section 3.18.  Customers And Suppliers

  	

   

  	

   

  
	

  Section 3.19.  Taxes

  	

   

  	

   

  
	

  Section 3.20.  Insurance Coverage

  	

   

  	

   

  
	

  Section 3.21.  Finders’ Fees

  	

   

  	

   

  
	

  Section 3.22.  Employee Benefit Plans

  	

   

  	

   

  
	

  Section 3.23.  Employee Restrictions

  	

   

  	

   

  
	

  Section 3.24.  Labor Relations; Employment Law Compliance

  	

   

  	

   

  

 

 

i

 

	

  Article 4

  Representations and Warranties of Buyer

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

  Section 4.01.  Corporate Existence and

  Power

  	

   

  	

   

  
	

  Section 4.02.  Corporate Authorization

  	

   

  	

   

  
	

  Section 4.03.  Governmental

  Authorization

  	

   

  	

   

  
	

  Section 4.04.  Noncontravention

  	

   

  	

   

  
	

  Section 4.05.  Financing

  	

   

  	

   

  
	

  Section 4.06.  Purchase for Investment

  	

   

  	

   

  
	

  Section 4.07.  Litigation

  	

   

  	

   

  
	

  Section 4.08.  Finders’ Fees

  	

   

  	

   

  
	

  Section 4.09.  Inspections; No Other

  Representations

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

  Article 5

  Covenants of Seller

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

  Section 5.01.  Conduct of the Company

  	

   

  	

   

  
	

  Section 5.02.  Access To Information.

  	

   

  	

   

  
	

  Section 5.03.  Notices of Certain Events

  	

   

  	

   

  
	

  Section 5.04.  No

  Negotiation

  	

   

  	

   

  
	

  Section 5.05. 

  Resignations

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

  Article 6

  Covenants of Buyer

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

  Section 6.01. 

  Access

  	

   

  	

   

  
	

  Section 6.02.  Trademarks; Tradenames

  	

   

  	

   

  
	

  Section 6.03.  Appointment of Replacement Statutory Auditor

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

  Article 7

  Covenants of Buyer and Seller

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

  Section 7.01.  Reasonable Best Efforts; Further Assurances

  	

   

  	

   

  
	

  Section 7.02. 

  Certain

  Filings

  	

   

  	

   

  
	

  Section 7.03.  Public Announcements

  	

   

  	

   

  
	

  Section 7.04.  Intercompany Accounts

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

  Article 8
Conditions

  to Closing

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

  Section 8.01.  Conditions to Obligations

  of Buyer and Seller

  	

   

  	

   

  
	

  Section 8.02.  Conditions to Obligation of Buyer

  	

   

  	

   

  
	

  Section 8.03.  Conditions to Obligation of Seller

  	

   

  	

   

  

 

 

ii

 

	

  Article 9

  Survival; Indemnification

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

  Section 9.01.  Survival

  	

   

  	

   

  
	

  Section 9.02.  Indemnification

  	

   

  	

   

  
	

  Section 9.03.  Procedures

  	

   

  	

   

  
	

  Section 9.04.  Calculation of Damages

  	

   

  	

   

  
	

  Section 9.05.  Assignment of Claims

  	

   

  	

   

  
	

  Section 9.06.  Exclusivity

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

  Article 10

  Termination

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

  Section 10.01.  Grounds for Termination

  	

   

  	

   

  
	

  Section 10.02.  Effect of Termination

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

  Article 11
Guarantees

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

  Section 11.01.  Buyer Guarantor

  	

   

  	

   

  
	

  Section 11.02.  Seller Guarantor

  	

   

  	

   

  
	

  Section 11.03.  Guaranty Unconditional

  	

   

  	

   

  
	

  Section 11.04.  Waivers Of The Guarantors

  	

   

  	

   

  
	

  Section 11.05.  Discharge Only Upon Performance In Full; Reinstatement In Certain

  Circumstances

  	

   

  	

   

  
	

  Section 11.06.  Subrogation

  	

   

  	

   

  
	

  Section 11.07.  Guarantor Representations And Warranties

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

  Article 12
Miscellaneous

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

  Section 12.01.  Notices

  	

   

  	

   

  
	

  Section 12.02.  Amendments and Waivers

  	

   

  	

   

  
	

  Section 12.03.  Expenses

  	

   

  	

   

  
	

  Section 12.04.  Successors and Assigns

  	

   

  	

   

  
	

  Section 12.05.  Governing Law

  	

   

  	

   

  
	

  Section 12.06.  Dispute Resolution

  	

   

  	

   

  
	

  Section 12.07.  WAIVER OF JURY TRIAL

  	

   

  	

   

  
	

  Section 12.08.  Counterparts; Third Party Beneficiaries

  	

   

  	

   

  
	

  Section 12.09.  Entire Agreement

  	

   

  	

   

  
	

  Section 12.10.  Captions

  	

   

  	

   

  
	

  Section 12.11.  Disclosure Schedules

  	

   

  	

   

  

 

 

iii

 

STOCK PURCHASE AGREEMENT

 

                AGREEMENT dated as of November 27, 2002 between JAFCO MBO Co., Ltd., a

Japanese corporation (“Buyer”),

JAFCO Co., Ltd., a Japanese corporation (“Buyer Guarantor”), BTC International

Holdings, Inc., a Delaware corporation (“Seller”), and BancTec, Inc., a Delaware

corporation (“Seller Guarantor”).

 

W 

I  T  N  E  S  S  E 

T  H :

 

                WHEREAS, Seller is the record and beneficial owner of the Shares (as

defined below) and desires to sell the Shares to Buyer, Buyer desires to

purchase the Shares from Seller, and Buyer Guarantor and Seller Guarantor wish

to guarantee the obligations of Buyer and Seller, respectively, hereunder, in

each case upon the terms and subject to the conditions hereinafter set forth;

 

                The parties hereto agree as follows:

 

ARTICLE

1

DEFINITIONS

 

Section 1.01.  Definitions.  (a)   The following terms, as used herein, have the following meanings:

 

                “Affiliate” means, with

respect to any Person, any other Person directly or indirectly controlling,

controlled by, or under common control with such Person; provided that the Company shall not be

considered an Affiliate of Seller.

 

                “Ancillary Agreements”

means the Master Know-How Agreement, the Trademark License Agreement, the

Hardware License/Distribution Agreement, and the Software Reseller Agreement.

 

                “Balance Sheet” means the

unaudited balance sheet of the Company as of the Balance Sheet Date.

 

                “Balance Sheet Date” means

September 30, 2002.

 

                “BTI

Limited Partnership” means BTI Technologies, L.P., a Texas limited

partnership and an Affiliate of Seller.

 

                “Closing Date” means the

date of the Closing.

 

                “Common Stock” means the

common stock of the Company.

 

 

 

                “Company” means BancTec

Japan, Inc., a Japanese corporation, with registered office at Arco Tower 8F,

8-1, Shimo-meguro 1-chome, Meguro-ku, Tokyo 153-0064.

 

                “Guarantor”

means the Buyer Guarantor or the Seller Guarantor.

 

                “Hardware License/Distribution

Agreement” means the Agreement for Purchase of Units and Spare Parts

Products dated as of the date hereof between the Company and BTI Limited

Partnership.

 

                “Intellectual Property Right”

means any trademark, service mark, trade name, mask work, invention, patent,

trade secret, copyright, know-how (including any registrations or applications

for registration of any of the foregoing) or any other similar type of

proprietary intellectual property right.

 

                “Japanese

Patent License Agreement” means the Japanese Patent License

Agreement dated as of the date of the Closing between the Company and BTI

Limited Partnership.

 

                “Knowledge of Seller”, “Seller’s knowledge” or any other similar knowledge

qualification in this Agreement means to the actual knowledge of any of the

following officers of Seller: Craig Crisman, Brian Stone, Weston Hebert, Mark

Fairchild or Morten Jacobsen.

 

                “Lien” means, with respect

to any property or asset, any mortgage (teitou-ken),

lien, pledge (shichi-ken), charge

(jouto-tanpo-ken), security

interest or encumbrance in respect of such property or asset.

 

                “Master Know-How Agreement”

means the Master Know-How Agreement dated as of the date hereof between the

Company and BTI Limited Partnership.

 

                “Material Adverse Effect”

means a material adverse effect on the business, assets or results of

operations of the Company, except any such effect resulting from or arising in

connection with (i) this Agreement or the transactions contemplated hereby,

(ii) changes or conditions generally affecting companies engaged in similar

businesses or (iii) changes in economic, regulatory or political conditions

generally.

 

                “Person” means an

individual, corporation, partnership, limited liability company, association,

trust or other entity or organization, including a government or political

subdivision or an agency or instrumentality thereof.

 

                “Shares” means the 203

shares of outstanding Common Stock that are owned by Seller.

 

 

2

 

                 “Software Reseller Agreement” means the Software Reseller

Agreement dated as of the date hereof between the Company and BTI Limited

Partnership.

 

                “Trademark License Agreement”

means the Trademark License Agreement dated as of the date hereof between the

Company and BTI Limited Partnership.

 

                (b)           Each of the

following terms is defined in the Section set forth opposite such term:

 

	

  Term

  	

   

  	

  Section

  
	

  Buyer Obligations

  	

   

  	

  11.01

  
	

  Claim

  	

   

  	

  9.03

  
	

  Closing

  	

   

  	

  2.02

  
	

  Company Intellectual Property Rights

  	

   

  	

  3.17

  
	

  Company Securities

  	

   

  	

  3.05

  
	

  Damages

  	

   

  	

  9.02

  
	

  Indemnified Party

  	

   

  	

  9.03

  
	

  Indemnifying Party

  	

   

  	

  9.03

  
	

  Permitted Liens

  	

   

  	

  3.16

  
	

  Potential Contributor

  	

   

  	

  9.05

  
	

  Purchase Price

  	

   

  	

  2.01

  
	

  Seller Obligations

  	

   

  	

  11.02

  
	

  Third Party Claim

  	

   

  	

  9.03

  
	

  Warranty Breach

  	

   

  	

  9.02

  

 

ARTICLE 2

PURCHASE AND SALE

 

Section

2.01.  Purchase

and Sale. 

Upon the terms and subject to the conditions of this Agreement, Seller

agrees to sell to Buyer, and Buyer agrees to purchase from Seller, the Shares

at the Closing.  The purchase price for

the Shares (the “Purchase Price”)

is -6,500,000,000

in cash.  The Purchase Price shall be

paid as provided in Section 2.02.

 

Section 2.02.  Closing.  The closing (the “Closing”) of the purchase and sale of the Shares hereunder

shall take place at the offices of Baker & McKenzie, 410 Aoyama Building,

2-3, Kita Aoyama 1-chome, Minato-ku, Tokyo 100-8694, Japan, as soon as

possible, after satisfaction of the conditions set forth in Article 8, or at

such other time or place as Buyer and Seller may agree.  All actions to be taken at the Closing will

be deemed to have taken place simultaneously, and no delivery or payment will

be considered to have been made until all transactions to be taken at the

Closing have been completed.  At the

Closing:

 

 

3

 

(a)        Buyer shall deliver to Seller the

Purchase Price in immediately available funds by wire transfer to the following

account: “Other Deposit/Non-Resident Account” account number

0042507-0040-JPY-001-TOK at Deutsche Bank, Tokyo Branch, for the further credit

of BTC International Holdings, Inc., or such other account with a bank in

Tokyo, Japan designated by Seller, by notice to Buyer, which notice shall be

delivered not later than two business days prior to the Closing Date.

 

(b)        Seller shall deliver to Buyer

certificates for the Shares.

 

ARTICLE 3

REPRESENTATIONS AND WARRANTIES OF SELLER

 

                Except as set forth in the disclosure schedules, Seller represents and

warrants to Buyer as of the date hereof and as of the Closing Date that:

 

Section

3.01.  Corporate

Existence and Power.  Each of Seller and the Company is a

corporation duly incorporated, validly existing and (in the case of Seller) in

good standing under the laws of its jurisdiction of incorporation and has all

corporate powers and all governmental licenses, authorizations, permits,

consents and approvals required to carry on its business as now conducted,

except for those licenses, authorizations, permits, consents and approvals the

absence of which would not have a Material Adverse Effect.  The Company is duly qualified to do business

as a foreign corporation and is in good standing in each jurisdiction where

such qualification is necessary, except for those jurisdictions where failure

to be so qualified would not, individually or in the aggregate, have a Material

Adverse Effect.

 

Section

3.02.  Corporate

Authorization.  The execution, delivery and performance by Seller of this

Agreement and the consummation of the transactions contemplated hereby are within

Seller’s corporate powers and have been duly authorized by all necessary

corporate action on the part of Seller. 

This Agreement constitutes a valid and binding agreement of Seller.

 

Section

3.03.  Governmental

Authorization.  The execution, delivery and performance by Seller of this

Agreement and the consummation of the transactions contemplated hereby require

no action by or in respect of, or filing with, any governmental body, agency or

official other than any such action or filing as to which the failure to make

or obtain would not have a Material Adverse Effect.

 

Section 3.04.  Noncontravention.  The execution, delivery and

performance by Seller of this Agreement and the consummation of the 

 

 

4

 

transactions

contemplated hereby do not and will not (i) violate the certificate of

incorporation or bylaws of Seller or the articles of incorporation (teikan) of the Company, (ii) violate any

applicable law, rule, regulation, judgment, injunction, order or decree, except

for any such violations which would not reasonably be expected to have a

Material Adverse Effect, (iii) except as disclosed in Schedule 3.04 or as to

matters which would not reasonably be expected to have a Material Adverse

Effect, require any consent or other action by any Person under, constitute a

default under, or give rise to any right of termination, cancellation or

acceleration of any right or obligation of Seller or the Company or to a loss

of any benefit to which Seller or the Company is entitled under any provision

of any agreement or other instrument binding upon Seller or the Company or (iv)

result in the creation or imposition of any Lien on any asset of the Company,

except for any Permitted Liens.

 

Section

3.05.  Capitalization. (a) 

The authorized capital stock of the Company consists of 800 shares of

Common Stock.  As of the date hereof,

there are outstanding 203 shares of Common Stock.

 

(b)           All outstanding shares of Common

Stock have been duly authorized and validly issued and are fully paid and

non-assessable.  Except as set forth in

this Section 3.05, there are no outstanding (i) shares of capital stock or

voting securities of the Company, (ii) securities of the Company convertible

into or exchangeable for shares of capital stock or voting securities of the

Company or (iii) options or other rights to acquire from the Company, or other

obligation of the Company to issue, any capital stock, voting securities or

securities convertible into or exchangeable for capital stock or voting

securities of the Company (the items in clauses (i) through (iii) of this

paragraph being referred to collectively as the “Company Securities”). 

There are no outstanding obligations of the Company to repurchase,

redeem or otherwise acquire any Company Securities.

 

Section

3.06.  Ownership

of Shares. 

Seller is the record and beneficial owner of the Shares, free and clear

of any Lien (other than as disclosed on Schedule 3.06), and will transfer and

deliver to Buyer at the Closing valid title to the Shares free and clear of any

Lien.

 

Section

3.07.  Subsidiaries.  The Company has no subsidiaries.

 

Section

3.08.  Financial

Statements.  The unaudited balance sheet as of December 31, 2001 and the

related unaudited statements of income and cash flows for the year ended

December 31, 2001 and the unaudited interim balance sheet as of September 30,

2002 and the related unaudited interim statements of income and cash flows for

the nine months ended September 30, 2002 of the Company fairly present, in

conformity with U.S. generally accepted accounting principles applied on a

consistent basis (except as may be indicated in the notes thereto), the

financial position of the Company as of the dates thereof and its 

 

 

5

 

results of

operations and cash flows for the periods then ended (subject to normal

year-end adjustments in the case of any unaudited interim financial

statements).

 

Section

3.09.  Books

and Records.  Except as disclosed on Schedule 3.09, the books of account,

minute books and equity record books of the Company, all of which were made

available to Buyer upon request, are complete and correct in all material

respects, and have been maintained in accordance with sound business practices

and applicable legal requirements.

 

Section

3.10.  Absence

of Certain Changes.  Except as disclosed in Schedule 3.10 or as

contemplated by this Agreement, since the Balance Sheet Date, the business of

the Company has been conducted in the ordinary course consistent with past practices

and there has not been:

 

(a)        any event, occurrence or development

which has had a Material Adverse Effect;

 

(b)        any declaration, setting aside or

payment of any dividend or other distribution with respect to any shares of

capital stock of the Company, or any repurchase, redemption or other

acquisition by the Company of any outstanding shares of capital stock or other

securities of the Company;

 

(c)        any amendment of any material term of

any outstanding security of the Company;

 

(d)        any incurrence, assumption or guarantee

by the Company of any indebtedness for borrowed money other than in the

ordinary course of business consistent with past practices;

 

(e)        any making of any loan, advance or

capital contributions to or investment in any Person other than loans, advances

or capital contributions to or investments made in the ordinary course of

business consistent with past practices;

 

(f)         any transaction or commitment made, or

any contract or agreement entered into, by the Company relating to its assets

or business, in either case, material to the Company, other than transactions

and commitments in the ordinary course of business consistent with past

practices and those contemplated by this Agreement; or

 

(g)        any material change in any method of

accounting or accounting practice by the Company except for any such change

required by reason of a concurrent change in U.S. generally accepted accounting

principles.

 

 

6

 

Section

3.11.  No

Undisclosed Material Liabilities.  There are no liabilities of the Company of

any kind, other than:

 

(a)        liabilities provided for in the

September 30, 2002 interim unaudited balance sheet of the Company or disclosed

in the notes thereto or in the notes to the September 30, 2002 interim

unaudited financial statements of the Company;

 

(b)        liabilities not required under generally

accepted accounting principles to be shown on the September 30, 2002 interim

unaudited balance sheet of the Company or in the notes to the September 30,

2002 interim unaudited financial statements of the Company for reasons other

than the contingent nature thereof or the difficulty of determining the amount

thereof;

 

(c)        liabilities disclosed on Schedule 3.11;

 

(d)        liabilities disclosed in, related to or

arising under any agreements, instruments or other matters disclosed in this

Agreement or any Schedule hereto;

 

(e)        liabilities incurred in the ordinary

course of business since the Balance Sheet Date; or

 

(f)         other undisclosed liabilities which,

individually or in the aggregate, are not material to the Company.

 

Section

3.12.  Intercompany

Accounts. 

Schedule 3.12 contains a complete list of all intercompany balances as

of September 30, 2002 between Seller and its Affiliates, on the one hand, and

the Company, on the other hand.  From

September 30, 2002 to the date hereof there has not been any accrual of

liability by the Company to Seller or any of its Affiliates or other

transaction between the Company and Seller and any of its Affiliates, except in

the ordinary course of business of the Company consistent with past practice or

as disclosed in Schedule 3.12.

 

Section

3.13.  Material

Contracts. 

Except as disclosed in Schedule 3.13, the Company is not a party to or

bound by:

 

(a)        any lease (whether of real or personal

property) providing for annual rentals of -35,000,000

or more that cannot be terminated on not more than 60 days’ notice without

payment by the Company of any material penalty;

 

(b)        any agreement for the purchase of

materials, supplies, goods, services, equipment or other assets providing for

either (i) annual payments by the Company of -35,000,000

or more or (ii) aggregate payments by the Company of -35,000,000

or more, in each case that cannot be terminated on not more than 60 days’

notice without payment by the Company of any material penalty;

 

 

7

 

(c)        any sales, distribution or other similar

agreement providing for the sale by the Company of materials, supplies, goods,

services, equipment or other assets that provides for annual payments to the

Company of -35,000,000

or more;

 

(d)        any material partnership, joint venture

or other similar agreement or arrangement;

 

(e)        any agreement relating to the

acquisition or disposition of any material business (whether by merger, sale of

stock, sale of assets or otherwise);

 

(f)         any agreement relating to indebtedness

for borrowed money or the deferred purchase price of property (in either case,

whether incurred, assumed, guaranteed or secured by any asset), except any such

agreement (i) with an aggregate outstanding principal amount not exceeding -35,000,000

or (ii) entered into subsequent to the date of this Agreement as permitted by

Section 3.10(d);

 

(g)        any material agreement that limits the

freedom of the Company to compete in any line of business or with any Person or

in any area;

 

(h)        any material agreement with Seller or

any of its Affiliates or any director or officer of Seller or any of its

Affiliates; or

 

(i)         any other agreement, commitment,

arrangement or plan not made in the ordinary course of business that is

material to the Company.

 

Section 3.14.  Litigation.  Except as set forth in Schedule 3.14, there

is (i) no action, suit, investigation or proceeding pending against, or, to

Seller’s knowledge, threatened against or affecting, Seller or any of its

properties or (ii) to the best knowledge of Seller, no action, suit,

investigation or proceeding pending against, or threatened against or

affecting, the Company or any of its properties, in each case before any court

or arbitrator or any governmental body, agency or official which is reasonably

likely to have a Material Adverse Effect or which in any manner challenges or

seeks to prevent, enjoin, alter or materially delay the transactions

contemplated by this Agreement.

 

Section

3.15.  Compliance

with Laws and Court Orders.  Except as set forth in Schedule 3.15, to

Seller’s knowledge the Company is not in violation of any applicable law, rule,

regulation, judgment, injunction, order or decree, except for violations that

have not had and would not reasonably be expected to have, individually or in

the aggregate, a Material Adverse Effect.

 

Section 3.16.  Properties.  The Company has good title to, or in the

case of leased property and assets has valid leasehold interests in, all

property and assets (whether real, personal, tangible or intangible) reflected

on the September 30, 2002 unaudited interim balance sheet of the Company or

acquired after the 

 

 

8

 

Balance Sheet

Date, except for properties and assets sold or disposed of since Balance Sheet

Date in the ordinary course of business consistent with past practices or where

the failure to have such good title or valid leasehold interests would not have

a Material Adverse Effect.  None of such

property or assets is subject to any Lien, except:

 

(a)        Liens disclosed on Schedule 3.16;

 

(b)        Liens disclosed on the September 30,

2002 unaudited interim balance sheet of the Company or notes thereto or

securing liabilities reflected on the September 30, 2002 unaudited interim

balance sheet of the Company or notes thereto;

 

(c)        Liens for taxes, assessments and similar

charges that are not yet due or are being contested in good faith;

 

(d)        mechanic’s, materialman’s, carrier’s,

repairer’s and other similar Liens arising or incurred in the ordinary course

of business or that are not yet due and payable or are being contested in good

faith;

 

(e)        Liens incurred in the ordinary course of

business since the Balance Sheet Date; or

 

(f)         other Liens which would not have a

Material Adverse Effect (paragraphs (a)-(f) of this Section 3.16 are,

collectively, the “Permitted Liens”).

 

Section

3.17.  Intellectual

Property. 

(a)  Schedule 3.17 contains a

list of all material Intellectual Property Rights owned or licensed and used or

held for use by the Company (“Company

Intellectual Property Rights”), specifying as to each, as

applicable: (i) the nature of such Intellectual Property Right, (ii) the owner

of such Intellectual Property Right, (iii) whether Company Intellectual

Property Rights owned by Seller or the Company have been issued or registered

in the United States, Japan, Korea, the People’s Republic of China or Taiwan,

the Republic of China (or alternatively whether an application for such issuance

or registration has been filed in any such jurisdictions), and the

corresponding registration or application numbers and (iv) the termination or

expiration dates.

 

(b)        To Seller’s knowledge, the Company

Intellectual Property constitutes in all material respects all of the

Intellectual Property Rights used in the business of the Company as presently

conducted.  Except as disclosed on

Schedule 3.17, no Company Intellectual Property Right is subject to any outstanding

judgment, injunction, order, decree or agreement restricting the use thereof by

the Company or restricting the licensing thereof by the Company to any Person,

except for any judgment, injunction, order, decree or agreement which would not

reasonably be expected to have a Material Adverse Effect. To 

 

 

9

 

Seller’s

knowledge, no Intellectual Property Right of any other Person infringes any

Company Intellectual Property Rights and no Company Intellectual Property Right

infringes the Intellectual Property Right of any other Person, in each case

except as would not be reasonably expected to have a Material Adverse Effect.

 

Section 3.18.  Customers And Suppliers.  Schedule 3.18 sets forth a true

and complete list of the names and addresses of the 20 largest customers and

the 10 largest suppliers (measured in each case by yen volume of purchases or

sales during the year ended December 31, 2001) of the Company, and the yen

amount of purchases or sales which each such customer or supplier represented during

the years ended December 31, 2000 and December 31, 2001, respectively.  Except as disclosed on Schedule 3.18, Seller

has no knowledge of any actual or threatened termination, cancellation or

material limitation of, or any material change in, the business relationship of

the Company with any customer, supplier, group of customers or group of

suppliers listed therein, except as would not be reasonably expected to have a

Material Adverse Effect.  Except as

disclosed on Schedule 3.18, to Seller’s knowledge no customer of the Company

has any right to any credit or refund for products sold or services rendered or

to be rendered by the Company pursuant to any contract, understanding or

practice of the Company other than pursuant to the normal course return policy

of the Company.

 

Section 3.19. 

Taxes. 

To Seller’s knowledge and except as set forth in the

September 30, 2002 unaudited interim financial statements of the Company

(including the notes thereto) or on Schedule 3.19: (i) the Company has filed on

a timely basis all material tax returns as required by applicable legal

requirements; (ii) each such tax return is true, correct and complete in all

material respects; (iii) all taxes shown as due and payable on all such tax

returns have been paid; (iv) the Company has not requested an extension of time

within which to file any material tax return in respect of any taxable year

which has not since been filed;  (v) the prepaid expenses, charges,

accruals and reserves for taxes with respect to the Company reflected on the

books of the Company are adequate to cover material tax liabilities accruing

through the end of the last period for which the Company ordinarily records

items on its books.

 

Section

3.20.  Insurance

Coverage. 

Seller has made available to Buyer a list of, and true and complete

copies of, all insurance policies and fidelity bonds relating to the assets,

business, operations, employees, officers or directors of the Company.  There are no material claims by the Company

pending under any of such policies or bonds as to which coverage has been

questioned, denied or disputed by the underwriters of such policies or bonds or

in respect of which such underwriters have reserved their rights.

 

Section 3.21.  Finders’

Fees. 

Except for Deutsche Securities Limited, there is no investment banker,

broker, finder or other intermediary which has been 

 

 

10

 

retained by or

is authorized to act on behalf of Seller or the Company who might be entitled

to any fee or commission in connection with the transactions contemplated by

this Agreement.

 

Section

3.22.  Employee

Benefit Plans.  The Company has made available to Buyer a list of and copies of

each material employee benefit plan, each employment, severance or similar

contract, plan arrangement or policy and each other plan or arrangement

(written or oral) providing for compensation, bonuses, profit-sharing, stock

option or other stock related rights or other forms of incentive or deferred

compensation, vacation benefits, insurance (including any self-insured

arrangements), health or medical benefits, employee assistance program,

disability or sick leave benefits, workers’ compensation, supplemental

unemployment benefits, severance benefits and post-employment or retirement benefits

(including compensation, pension, health, medical or life insurance benefits)

which is maintained, administered or contributed to by the Company and covers

any employee or former employee of the plans (and, if applicable, related trust

or funding agreements or insurance policies).

 

Section 3.23.  Employee Restrictions.  To Seller’s knowledge, except as

disclosed in Schedule 3.23, no employee or director of the Company is a party

to, or is otherwise bound by, any contract, including any confidentiality,

noncompetition or proprietary rights agreement, with any other Person that in

any way adversely affects or will affect (x) the performance of his or her

duties for the Company, (y) his or her ability to assign to the Company rights

to any invention, improvement, discovery or information relating to the

business of the Company, or (z) the ability of the Company to conduct its

business, in each case except as would not be reasonably expected to have a

Material Adverse Effect.  To Seller’s

knowledge, as of the date of this Agreement no director, key employee or group

of employees of the Company intends to terminate his or their employment with

the Company within the next year except as disclosed in Schedule 3.23.

 

Section 3.24.  Labor Relations; Employment Law Compliance.  To Seller’s knowledge, except as

disclosed in Schedule 3.24:

 

(a)           The Company has complied in all

material respects with all legal requirements relating to employment practices,

terms and conditions of employment, equal employment opportunity,

nondiscrimination, immigration, wages, hours, benefits and collective

bargaining.  The Company is not liable

for the payment of any material fines, penalties or other amounts, however

designated, for failure to comply with any of the foregoing legal requirements.

 

(b)           The Company has not been, nor is now, a party to any

collective bargaining agreement or other labor contract.  The Company is not a party to any other

material agreement, arrangement or understanding with any employee union,

employee organization or trade union in respect of any employee.  No 

 

 

11

 

application or petition for an election of or

for certification of a collective bargaining agent representing the Company’s

employees is pending.

 

(c)           As of the date of this Agreement, there has not been at

any time, there is not presently pending or existing, nor threatened, any

strike, slowdown, picketing, work stoppage or material employee grievance

process involving the Company, and no event has occurred or circumstance exists

that may provide the basis for any work stoppage or other material labor

dispute involving the Company that might have a Material Adverse Effect.

 

(d)           As of the date of this Agreement, there is not pending or

threatened any material proceeding against or involving the Company relating to

the alleged material violation of any legal requirement pertaining to labor

relations or employment matters, nor any organizational activity or other labor

dispute, labor grievance or arbitration proceeding against or involving the

Company that might have a Material Adverse Effect.

 

ARTICLE 4

REPRESENTATIONS AND WARRANTIES OF BUYER

 

                Buyer represents and warrants to Seller as of the date hereof and as of

the Closing Date that:

 

Section 4.01.  Corporate

Existence and Power.  Buyer is a corporation duly incorporated and

validly existing under the laws of Japan and has all corporate powers and all

material governmental licenses, authorizations, permits, consents and approvals

required to carry on its business as now conducted.

 

Section

4.02.  Corporate

Authorization.  The execution, delivery and performance by Buyer of this

Agreement and the consummation of the transactions contemplated hereby are

within the corporate powers of Buyer and have been duly authorized by all

necessary corporate action on the part of Buyer.  This Agreement constitutes a valid and binding agreement of

Buyer.

 

Section

4.03.  Governmental

Authorization.  The execution, delivery and performance by Buyer of this

Agreement and the consummation of the transactions contemplated hereby require

no material action by or in respect of, or material filing with, any

governmental body, agency or official.

 

Section 4.04.  Noncontravention.  The execution, delivery and

performance by Buyer of this Agreement and the consummation of the transactions

contemplated hereby do not and will not (i) violate the articles of

incorporation (teikan) of Buyer, (ii) violate any applicable law, rule,

regulation, 

 

 

12

 

judgment,

injunction, order or decree, (iii) require any consent or other action by any

Person under, constitute a default under, or give rise to any right of

termination, cancellation or acceleration of any right or obligation of Buyer

or to a loss of any benefit to which Buyer is entitled under any provision of

any agreement or other instrument binding upon Buyer or (iv) result in the

creation or imposition of any material Lien on any asset of Buyer.

 

Section 4.05.  Financing.  Buyer has, sufficient cash, available lines

of credit or other sources of immediately available funds to enable it to make

payment of the Purchase Price and any other amounts to be paid by it hereunder.

 

Section

4.06.  Purchase

for Investment.  Buyer is purchasing the Shares for investment for its own account

and not with a view to, or for sale in connection with, any distribution

thereof.  Buyer (either alone or

together with its advisors) has sufficient knowledge and experience in

financial and business matters so as to be capable of evaluating the merits and

risks of its investment in the Shares and is capable of bearing the economic

risks of such investment.

 

Section 4.07.  Litigation.  There is no action, suit, investigation or

proceeding pending against, or to the knowledge of Buyer threatened against or

affecting, Buyer before any court or arbitrator or any governmental body,

agency or official which in any manner challenges or seeks to prevent, enjoin,

alter or materially delay the transactions contemplated by this Agreement.

 

Section 4.08.  Finders’

Fees. 

There is no investment banker, broker, finder or other intermediary

which has been retained by or is authorized to act on behalf of Buyer who might

be entitled to any fee or commission from Seller or any of its Affiliates upon

consummation of the transactions contemplated by this Agreement.

 

Section

4.09.  Inspections;

No Other Representations.  Buyer is an informed and sophisticated

purchaser, and has engaged expert advisors, experienced in the evaluation and

purchase of companies such as the Company as contemplated hereunder.  Buyer has undertaken such investigation and

has been provided with and has evaluated such documents and information as it

has deemed necessary to enable it to make an informed and intelligent decision

with respect to the execution, delivery and performance of this Agreement.  Buyer acknowledges that Seller has given

Buyer complete and open access to the key employees, documents and facilities

of the Company.  Buyer will undertake

prior to Closing such further investigation and request such additional

documents and information as it deems necessary.  Buyer agrees to accept the Shares and the Company in the

condition they are in on the Closing Date based upon its own inspection,

examination and determination with respect thereto as to all matters, and

without reliance upon any express or implied representations or warranties of

any nature made by or on behalf of or imputed to Seller, except as expressly

set 

 

 

13

 

forth in this

Agreement.  Without limiting the

generality of the foregoing,  Buyer

acknowledges that Seller makes no representation or warranty with respect to

(i) any projections, estimates or budgets delivered to or made available to Buyer

of future revenues, future results of operations (or any component thereof),

future cash flows or future financial condition (or any component thereof) of

the Company or the future business and operations of the Company or (ii) any

other information or documents made available to Buyer or its counsel,

accountants or advisors with respect to the Company or its businesses or

operations, except as expressly set forth in this Agreement.

 

ARTICLE 5

COVENANTS OF SELLER

 

                Seller agrees that:

 

Section

5.01.  Conduct

of the Company.  From the date hereof until the Closing Date, Seller shall cause

the Company to conduct its business in the ordinary course consistent with past

practice and to use its reasonable best efforts to preserve intact its business

organizations and relationships with third parties and to keep available the

services of its present directors and employees.  Without limiting the generality of the foregoing, from the date

hereof until the Closing Date, except as disclosed on Schedule 5.01 Seller will

not permit the Company to:

 

(a)        adopt or propose any change in its

articles of incorporation (teikan);

 

(b)        merge or consolidate with any other

Person or acquire a material amount of assets from any other Person;

 

(c)        sell, lease, license or otherwise

dispose of any material assets or property except (i) pursuant to existing

contracts or commitments or (ii) otherwise in the ordinary course consistent

with past practice; or

 

(d)        agree or commit to do any of the

foregoing.

 

Section 5.02.  Access To

Information.  (a)  From the date hereof until the Closing Date,

Seller will (i) give, and will cause the Company to give, Buyer, its counsel,

financial advisors, auditors and other authorized representatives reasonable

access to the offices, properties, books and records of the Company and to the

books and records of Seller relating to the Company, (ii) furnish, and will

cause the Company to furnish, to Buyer, its counsel, financial advisors,

auditors and other authorized representatives such financial and operating data

and other information relating to the Company as such Persons may reasonably

request and (iii) instruct the employees, counsel and financial advisors of

Seller or the Company to cooperate with Buyer in its investigation of the

Company. Any 

 

 

14

 

investigation

pursuant to this Section shall be conducted in such manner as not to interfere

unreasonably with the conduct of the business of Seller or the Company.  Notwithstanding the foregoing, Buyer shall

not have access to personnel records of the Company relating to individual

performance or evaluation records, medical histories or other information which

in Seller’s good faith opinion is sensitive or the disclosure of which could

subject the Company to risk of liability.

 

(b)        On and after the Closing Date, Seller

will afford promptly to Buyer and its agents reasonable access to its books of

account, financial and other records (including, without limitation,

accountant’s work papers), information, employees and auditors to the extent

necessary or useful for Buyer in connection with any audit, investigation,

dispute or litigation or any other reasonable business purpose relating to the

Company; provided that any such access by Buyer shall not unreasonably

interfere with the conduct of the business of Seller.

 

Section

5.03.  Notices

of Certain Events.  Seller shall promptly notify Buyer upon

becoming aware of:any notice or other communication from any Person alleging

that the consent of such Person is or may be required in connection with the

transactions contemplated by this Agreement; any notice or other communication

from any governmental or regulatory agency or authority in connection with the

transactions contemplated by this Agreement; and

 

(c)        any actions, suits, claims,

investigations or proceedings commenced relating to Seller or the Company that,

if pending on the date of this Agreement, would have been required to have been

disclosed pursuant to Section 3.14.

 

Section 5.04.  No

Negotiation.  Other than discussions with

Buyer regarding the transactions contemplated hereby, Seller shall not, from

the date hereof until such time, if any, as this Agreement is terminated,

directly or indirectly, make, solicit, initiate, encourage or entertain

submission of any proposal or offer from any Person relating to any acquisition

or purchase of all or a material portion of the Shares or the Company’s

business.

 

Section 5.05.  Resignations.  Seller shall cause Mark Fairchild and Paul

Weston Hebert to resign as director and statutory auditor, respectively, of the

Company effective as of the Closing Date.

 

ARTICLE 6

COVENANTS OF BUYER

 

                Buyer agrees that:

 

Section 6.01.  Access.  Buyer will cause the Company, on and after

the Closing Date, to afford promptly to Seller and its agents reasonable access

to its 

 

 

15

 

properties,

books, records, employees and auditors to the extent necessary or useful (i) to

permit Seller to determine any matter relating to its rights and obligations

hereunder or to any period ending on or before the Closing Date or (ii) for

Seller in connection with any audit, investigation, dispute or litigation or

any other reasonable business purpose relating to the Company; provided that any such access by Seller

shall not unreasonably interfere with the conduct of the business of Buyer.

 

Section 6.02.  Trademarks; Tradenames.  Buyer shall not permit the Company to use

any of the marks or names set forth on Schedule 6.02 other than as specifically

permitted under the terms of the Trademark License Agreement.

 

Section

6.03.  Appointment of Replacement Statutory

Auditor. 

Promptly following the Closing, Buyer shall cause the Company to convene

and hold an extraordinary general meeting and cause the appointment of a

replacement statutory auditor to replace Paul Weston Hebert with immediate

effect.

 

ARTICLE 7

COVENANTS OF BUYER AND SELLER

 

                Buyer and Seller agree that:

 

Section 7.01.  Reasonable Best Efforts; Further Assurances.  Subject to the terms and conditions of this

Agreement, Buyer and Seller will use their reasonable best efforts to take, or

cause to be taken, all actions and to do, or cause to be done, all things

necessary or desirable under applicable laws and regulations to consummate the

transactions contemplated by this Agreement. 

Seller and Buyer agree, and Seller, prior to the Closing, and Buyer,

after the Closing, agree to cause the Company, to execute and deliver such

other documents, certificates, agreements and other writings and to take such

other actions as may be necessary or desirable in order to consummate or

implement expeditiously the transactions contemplated by this Agreement.

 

Section 7.02.  Certain Filings.  Seller and Buyer shall cooperate with one

another (i) in determining whether any action by or in respect of, or filing

with, any governmental body, agency, official or authority is required, or any

actions, consents, approvals or waivers are required to be obtained from

parties to any material contracts, in connection with the consummation of the

transactions contemplated by this Agreement and (ii) in taking such actions or

making any such filings, furnishing information required in connection

therewith and seeking timely to obtain any such actions, consents, approvals or

waivers.

 

 

16

 

Section 7.03.  Public Announcements.  The parties agree to consult with each other

before issuing any press release or making any public statement with respect to

this Agreement or the transactions contemplated hereby and, except for any

press releases and public announcements the making of which may be required by

applicable law or any listing agreement with any national securities exchange,

will not issue any such press release or make any such public statement prior

to such consultation.

 

Section 7.04.  Intercompany Accounts.  All intercompany accounts between the Seller

or its Affiliates, on the one hand, and the Company, on the other hand, as of

the Closing shall be settled (irrespective of the terms of payment of such

intercompany accounts) in the manner provided in this Section.  At least two business days prior to the

Closing, Seller shall prepare and deliver to Buyer a statement setting out in

reasonable detail the calculation of all such intercompany account balances

expected to be paid at Closing as provided in the following sentence based upon

the latest available financial information as of such date and, to the extent

requested by Buyer, provide Buyer with supporting documentation to verify the

underlying intercompany charges and transactions.  All such intercompany account balances shall be paid in full in

cash on or prior to the Closing, other than trade accounts payable in the

ordinary course of business which have been outstanding 90 days or less, which

shall be subject to settlement in accordance with the terms stipulated in

relevant invoices, distributor agreements or other relevant documentation.

 

ARTICLE 8

CONDITIONS TO CLOSING

 

Section

8.01.  Conditions

to Obligations of Buyer and Seller.  The obligations of Buyer and Seller to

consummate the Closing are subject to the satisfaction of the following

conditions:

 

(a)           No provision of any applicable law or

regulation and no judgment, injunction, order or decree shall prohibit the

consummation of the Closing.

 

(b)           All actions by or in respect of or

filings with any governmental body, agency, official or authority required to

permit the consummation of the Closing shall have been taken, made or obtained,

except for any such actions or filings the failure to take, make or obtain

would not reasonably be expected to have a Material Adverse Effect.

 

(c)           The Company and BTI Limited

Partnership shall have entered into the Ancillary Agreements on or before the

Closing Date.

 

 

17

 

(d)           The Company and BTI Limited

Partnership shall have entered into the Japanese Patent License Agreement on or

before the Closing Date.

 

Section 8.02.  Conditions to Obligation of Buyer.  The obligation of Buyer to consummate the

Closing is subject to the satisfaction of the following further conditions:

 

(a)           (i) 

Seller shall have performed in all material respects all of its

obligations hereunder required to be performed by it on or prior to the Closing

Date, (ii) the representations and warranties of Seller and Seller Guarantor

contained in this Agreement and in any certificate or other writing delivered

by Seller pursuant hereto shall be true at and as of the Closing Date, as if

made at and as of such date, with only such exceptions as would not in the

aggregate reasonably be expected to have a Material Adverse Effect and (iii)

Buyer shall have received certificates signed by respective executive officers

of Seller, Seller Guarantor and, with respect to the Company, by the President

of the Company to the foregoing effect.

 

(b)           Buyer shall have received all

documents it may reasonably request relating to the existence of Seller, Seller

Guarantor and the Company and the authority of Seller and Seller Guarantor for

this Agreement, all in form and substance reasonably satisfactory to Buyer.

 

(c)           Mark Fairchild and Paul Weston Hebert

shall have submitted signed resignations, effective as of the Closing, from

their positions as director and statutory auditor, respectively, of the Company.

 

Section 8.03.  Conditions to Obligation of Seller.  The obligation of Seller to consummate the

Closing is subject to the satisfaction of the following further conditions:

 

(a)           (i) 

Buyer shall have performed in all material respects all of its obligations

hereunder required to be performed by it at or prior to the Closing Date, (ii)

the representations and warranties of Buyer and Buyer Guarantor contained in

this Agreement and in any certificate or other writing delivered by Buyer or

Buyer Guarantor pursuant hereto shall be true in all material respects at and

as of the Closing Date, as if made at and as of such date and (iii) Seller

shall have received certificates signed by the respective executive officers of

Buyer and Buyer Guarantor to the foregoing effect.

 

(b)           Seller shall have received all

documents it may reasonably request relating to the existence of Buyer and

Buyer Guarantor and the authority of Buyer and Buyer Guarantor for this

Agreement, all in form and substance reasonably satisfactory to Seller.

 

 

18

 

(c)           (i) 

Buyer shall have paid the Purchase Price to Seller in cash and (ii) the

Company shall have paid the up-front fees amounting to ¥4,000,000,000 in

aggregate to BTI Limited Partnership in consideration for BTI Limited

Partnership entering into the Ancillary Agreements.

 

ARTICLE 9

SURVIVAL; INDEMNIFICATION

 

Section 9.01.  Survival.  The covenants, agreements, representations

and warranties of the parties hereto contained in this Agreement or in any

certificate or other writing delivered pursuant hereto or in connection

herewith shall survive the Closing until eighteen (18) months following the

Closing Date; provided that the

covenants, agreements, representations and warranties contained in Sections

4.09, 6.01, 6.02, and Article 9 shall survive indefinitely.  Notwithstanding the preceding sentence, any

covenant, agreement, representation or warranty in respect of which indemnity

may be sought under this Agreement shall survive the time at which it would

otherwise terminate pursuant to the preceding sentence, if notice of the

inaccuracy or breach thereof giving rise to such right of indemnity shall have

been given to the party against whom such indemnity may be sought prior to such

time.

 

Section

9.02.  Indemnification.  (a) 

Seller hereby indemnifies Buyer and its Affiliates against and agrees to

hold each of them harmless from any and all damage, loss, liability and expense

(including, without limitation, reasonable expenses of investigation and

reasonable attorneys’ fees and expenses in connection with any action, suit or

proceeding whether involving a third party claim or a claim solely between the

parties hereto) (“Damages”)

incurred or suffered by Buyer or any of its Affiliates arising out of any

misrepresentation or breach of warranty (each such misrepresentation and breach

of warranty a “Warranty Breach”)

or breach of covenant or agreement made or to be performed by Seller pursuant

to this Agreement; provided that

with respect to indemnification by Seller for any Warranty Breach pursuant to

this Section, (i) Seller shall not be liable unless the aggregate amount of

Damages with respect to such Warranty Breaches exceeds -50

million and then only to the extent of such excess and (ii) Seller’s maximum

liability for all such Warranty Breaches shall not exceed -1.2

billion.

 

(b)           Buyer hereby indemnifies Seller and

its Affiliates against and agrees to hold each of them harmless from any and

all Damages incurred or suffered by Seller or any of its Affiliates arising out

of any Warranty Breach or breach of covenant or agreement made or to be

performed by Buyer pursuant to this Agreement; provided

that with respect to indemnification by Buyer for any Warranty Breach pursuant

to this Section, (i) Buyer shall not be liable unless the 

 

 

19

 

aggregate

amount of Damages with respect to such Warranty Breaches exceeds -50

million and then only to the extent of such excess and (ii) Buyer’s maximum

liability for all such Warranty Breaches shall not exceed -1.2

billion.

 

Section 9.03.  Procedures.  (a) 

The party seeking indemnification under Section 9.02 (the “Indemnified Party”) agrees to give prompt

notice to the party against whom indemnity is sought (the “Indemnifying Party”) of the assertion of

any claim, or the commencement of any suit, action or proceeding (“Claim”) in respect of which indemnity may

be sought under such Section and will provide the Indemnifying Party such

information with respect thereto that the Indemnifying Party may reasonably

request. The failure to so notify the Indemnifying Party shall not relieve the

Indemnifying Party of its obligations hereunder, except to the extent such

failure shall have adversely prejudiced the Indemnifying Party.

 

(b)           The Indemnifying Party shall be

entitled to participate in the defense of any Claim asserted by any third party

(“Third Party Claim”) and, subject

to the limitations set forth in this Section, shall be entitled to control and

appoint lead counsel for such defense, in each case at its expense.

 

(c)           If the Indemnifying Party shall

assume the control of the defense of any Third Party Claim in accordance with

the provisions of this Section 9.03, (i) the Indemnifying Party shall obtain

the prior written consent of the Indemnified Party (which shall not be

unreasonably withheld) before entering into any settlement of such Third Party

Claim, if the settlement does not release the Indemnified Party from all

liabilities and obligations with respect to such Third Party Claim or the

settlement imposes injunctive or other equitable relief against the Indemnified

Party, and (ii) the Indemnified Party shall be entitled to participate in the

defense of such Third Party Claim and to employ separate counsel of its choice

for such purpose.  The fees and expenses

of such separate counsel shall be paid by the Indemnified Party.

 

(d)           Each party shall cooperate, and cause

their respective Affiliates to cooperate, in the defense or prosecution of any

Third Party Claim and shall furnish or cause to be furnished such records,

information and testimony, and attend such conferences, discovery proceedings,

hearings, trials or appeals, as may be reasonably requested in connection

therewith.

 

(e)           Each Indemnified Party shall use

reasonable efforts to collect any amounts available under insurance coverage,

or from any other Person alleged to be responsible, for any Damages payable

under Section 9.02.

 

Section 9.04.  Calculation of Damages.  (a) 

The amount of Damages payable under Section 9.02 by the Indemnifying

Party shall be net of any (i) amounts recovered or recoverable by the

Indemnified Party under applicable 

 

 

20

 

insurance

policies or from any other Person alleged to be responsible therefor, (ii) tax

cost incurred by the Indemnified Party arising from the receipt of indemnity

payments and (iii) tax benefit realized by the Indemnified Party arising from

the incurrence or payment of any such Damages. 

In computing the amount of any such tax cost or tax benefit, the

Indemnified Party shall be deemed to fully utilize, at the highest marginal tax

rate then in effect, all tax items arising from the receipt of any indemnity

payment hereunder or the incurrence or payment of any indemnified Damages.  If the Indemnified Party receives any

amounts under applicable insurance policies, or from any other Person alleged

to be responsible for any Damages, subsequent to an indemnification payment by

the Indemnifying Party, then such Indemnified Party shall promptly reimburse

the Indemnifying Party for any payment made or expense incurred by such

Indemnifying Party in connection with providing such indemnification payment up

to the amount received by the Indemnified Party, net of any expenses incurred

by such Indemnified Party in collecting such amount.

 

(b)           The Indemnifying Party shall not be

liable under Section 9.02  for any (i)

incidental, indirect, consequential, exemplary or punitive Damages or (ii)

Damages for lost profits.

 

(c)           Notwithstanding any other provision

of this Agreement to the contrary, if on the Closing Date the Indemnified Party

knows of any information that would cause one or more of the representations

and warranties made by the Indemnifying Party to be inaccurate as of the date

made, the Indemnified Party shall have no right or remedy after the Closing

with respect to such inaccuracy and shall be deemed to have waived its rights

to indemnification in respect thereof.

 

Section

9.05.  Assignment

of Claims. 

If the Indemnified Party receives any payment from an Indemnifying Party

in respect of any Damages pursuant to Section 9.02 and the Indemnified Party

could have recovered all or a part of such Damages from a third party (a “Potential Contributor”) based on the

underlying Claim asserted against the Indemnifying Party, the Indemnified Party

shall assign such of its rights to proceed against the Potential Contributor as

are necessary to permit the Indemnifying Party to recover from the Potential

Contributor the amount of such payment.

 

Section 9.06.  Exclusivity.  Except as specifically set forth in this

Agreement, effective as of the Closing Buyer waives any rights and claims Buyer

may have against Seller, whether in law or in equity, relating to the Company

or the Shares or the transactions contemplated hereby.  The rights and claims waived by Buyer

include, without limitation, claims for contribution or other rights of

recovery arising out of or relating to any, claims for breach of contract,

breach of representation or warranty, negligent misrepresentation and all other

claims for 

 

 

21

 

breach of

duty.  After the Closing, Section 9.02

will provide the exclusive remedy for any misrepresentation, breach of

warranty, covenant or other agreement (other than those contained in Sections

5.02(a), 6.01 and 6.02) or other claim arising out of this Agreement or the

transactions contemplated hereby.

 

ARTICLE

10

TERMINATION

 

Section

10.01.  Grounds

for Termination.  This Agreement may be terminated at any time prior to the

Closing:

 

(a)           by mutual written agreement of Seller

and Buyer;

 

(b)           by either Seller or Buyer if the

Closing shall not have been consummated on or before December 15, 2002; or

 

(c)           by either Seller or Buyer if

consummation of the transactions contemplated hereby would violate any

nonappealable final order, decree or judgment of any court or governmental body

having competent jurisdiction.

 

The

party desiring to terminate this Agreement pursuant to clauses 10.01(b) or

10.01(c) shall give notice of such termination to the other party.

 

Section

10.02.  Effect

of Termination.  If this Agreement is terminated as permitted by Section 10.01,

such termination shall be without liability of either party (or any

stockholder, director, officer, employee, agent, consultant or representative

of such party) to the other party to this Agreement; provided that if such termination shall result from the

willful (i) failure of either party to fulfill a condition to the performance

of the obligations of the other party, (ii) failure to perform a covenant of

this Agreement or (iii) breach by either party hereto of any representation or

warranty or agreement contained herein, such party shall be fully liable for

any and all Damages incurred or suffered by the other party as a result of such

failure or breach.  The provisions of

Sections 12.03, 12.05 and 12.06 and of the confidentiality agreement referred

to in Section 12.09  shall survive any

termination hereof pursuant to Section 10.01.

 

ARTICLE

11

GUARANTEES

 

Section 11.01.  Buyer Guarantor.  Buyer Guarantor hereby

irrevocably and unconditionally guarantees to Seller the prompt and full

discharge by Buyer of all of Buyer’s covenants, agreements, obligations and

liabilities under this 

 

 

22

 

Agreement

including, without limitation, the due and punctual payment of all amounts

which are or may become due and payable by Buyer hereunder when and as the same

shall become due and payable (collectively, the “Buyer Obligations”), in accordance with the terms hereof.  Buyer Guarantor acknowledges and agrees

that, with respect to all Buyer Obligations to pay money, such guaranty shall

be a guaranty of payment and performance and not of collection and shall not be

conditioned or contingent upon the pursuit of any remedies against Buyer.  If Buyer shall default in the due and

punctual performance of any Buyer Obligation, including the full and timely

payment of any amount due and payable pursuant to any Buyer Obligation, Buyer

Guarantor will forthwith perform or cause to be performed such Buyer Obligation

and will forthwith make full payment of any amount due with respect thereto at

its sole cost and expense.

 

Section 11.02.  Seller Guarantor.  Seller Guarantor hereby

irrevocably and unconditionally guarantees to Buyer the prompt and full

discharge by Seller of all of Seller’s covenants, agreements, obligations and

liabilities under this Agreement including, without limitation, the due and

punctual payment of all amounts which are or may become due and payable by

Seller hereunder, when and as the same shall become due and payable

(collectively, the “Seller Obligations”),

in accordance with the terms hereof. 

Seller Guarantor acknowledges and agrees that, with respect to all

Seller Obligations to pay money, such guaranty shall be a guaranty of payment

and performance and not of collection and shall not be conditioned or

contingent upon the pursuit of any remedies against Seller.  If Seller shall default in the due and punctual

performance of any Seller Obligation, including the full and timely payment of

any amount due and payable pursuant to any Seller Obligation, Seller Guarantor

will forthwith perform or cause to be performed such Seller Obligation and will

forthwith make full payment of any amount due with respect thereto at its sole

cost and expense.

 

Section 11.03.  Guaranty Unconditional.  The liabilities and obligations

of each Guarantor pursuant to this Agreement are unconditional and absolute

and, without limiting the generality of the foregoing, shall not be released,

discharged or otherwise affected by:

 

(a)           any acceleration, extension, renewal,

settlement, compromise, waiver or release in respect of any Buyer Obligation or

Seller Obligation by operation of law or otherwise;

 

(b)           the invalidity or unenforceability,

in whole or in part, of this Agreement;

 

(c)           any modification or amendment of or

supplement to this Agreement;

 

 

23

 

(d)           any change in the corporate existence,

structure or ownership of Buyer, Buyer Guarantor, Seller or Seller Guarantor or

any insolvency, bankruptcy, reorganization or other similar proceeding

affecting any of them or their assets; or

 

(e)           any other act, omission to act, delay

of any kind by any party hereto or any other Person, or any other circumstance

whatsoever that might, but for the provisions of this Section, constitute a

legal or equitable discharge of the obligations of any Guarantor hereunder.

 

Section 11.04.  Waivers Of The Guarantors.  Each Guarantor hereby waives any

right, whether legal or equitable, statutory or non-statutory, to require

Seller or Buyer to proceed against or take any action against or pursue any

remedy with respect to Seller, Buyer or any other Person or make presentment or

demand for performance or give any notice of nonperformance before Seller or

Buyer may enforce its rights hereunder against such Guarantor.

 

Section 11.05.  Discharge Only Upon Performance In Full;

Reinstatement In Certain Circumstances.  Each Guarantor’s obligations

hereunder shall remain in full force and effect until the Buyer Obligations and

Seller Obligations shall have been performed in full.  If at any time any performance by any Person of any Buyer

Obligation or Seller Obligation is rescinded or must be otherwise restored or

returned, whether upon the insolvency, bankruptcy or reorganization of Seller

or Buyer or otherwise, such Guarantor’s obligations hereunder with respect to

such Buyer Obligation or Seller Obligation shall be reinstated at such time as

though such Buyer Obligation or Seller Obligation had become due and had not

been performed.

 

Section 11.06.  Subrogation.  Upon performance by any Guarantor

of any Buyer Obligation or Seller Obligation, such Guarantor shall be subrogated

to the rights of Seller against Buyer or Buyer against Seller, as the case may

be, with respect to such Buyer Obligation or Seller Obligation; provided that

such Guarantor shall not enforce any Buyer Obligation by way of subrogation

against Seller or Buyer while any Buyer Obligation or Seller Obligation is due

and unperformed by Seller or Buyer.

 

Section 11.07.  Guarantor Representations And Warranties.  Each Guarantor represents and

warrants to each other party to this Agreement as of the date hereof and as of

the Closing Date that:

 

(a)           Such Guarantor is a corporation duly

incorporated, validly existing and (in the case of Seller Guarantor) in good

standing under the laws of its jurisdiction of incorporation and has all

corporate powers and all governmental licenses, authorizations, permits, 

 

 

24

 

consents and

approvals required to carry on its business as now conducted, except for those

licenses, authorizations, permits, consents and approvals the absence of which

would not materially and adversely affect the ability of such Guarantor to

perform its obligations under this Agreement.

 

(b)           The execution, delivery and

performance by such Guarantor of this Agreement and the consummation of the

transactions contemplated hereby are within such Guarantor’s corporate powers

and have been duly authorized by all necessary corporate action on the part of

such Guarantor.  This Agreement

constitutes a valid and binding agreement of such Guarantor.

 

(c)           The execution, delivery and

performance by such Guarantor of this Agreement and the consummation of the

transactions contemplated hereby require no action by or in respect of, or

filing with, any governmental body, agency or official; and any such action or

filing as to which the failure to make or obtain would not materially and

adversely affect the ability of such Guarantor to perform its obligations under

this Agreement.

 

(d)           The execution, delivery and

performance by such Guarantor of this Agreement and the consummation of the

transactions contemplated hereby do not and will not (i) violate the

certificate of incorporation, articles of incorporation, charter, bylaws or

similar governing documents of such Guarantor, (ii) assuming compliance with

the matters referred to in paragraph (c), violate any applicable law, rule,

regulation, judgment, injunction, order or decree, except for any such

violations which would not reasonably be expected to materially and adversely

affect the ability of such Guarantor to perform its obligations under this

Agreement, or (iii) except as to matters which would not reasonably be expected

to materially and adversely affect the ability of such Guarantor to perform its

obligations under this Agreement, require any consent or other action by any

Person under, constitute a default under, or give rise to any right of

termination, cancellation or acceleration of any right or obligation of such

Guarantor or to a loss of any benefit to which such Guarantor is entitled under

any provision of any agreement or other instrument binding upon such Guarantor.

 

ARTICLE 12

MISCELLANEOUS

 

Section 12.01.  Notices.  All notices, requests and other

communications to any party hereunder shall be in writing (including facsimile

transmission) and shall be given,

 

 

25

 

                if to Buyer, to:

 

JAFCO

MBO Co., Ltd.

8-2,

Marunouchi 1-chome

Chiyoda-ku,

Tokyo

Japan

Attention:

Tomoya Shiraishi

Fax:

813-5223-7093

 

with

a copy to:

 

Tokyo

Aoyama Aoki Law Office/Baker & McKenzie

The Prudential Tower 11F

13-10, Nagata-cho 2-chome

Chiyoda-ku, Tokyo 100-0014

Japan

Attention:

Hiroshi Kondo

Fax:

813-5157-2900

 

 

                if to Buyer Guarantor, to:

 

JAFCO

Co., Ltd.

8-2,

Marunouchi 1-chome

Chiyoda-ku,

Tokyo

Japan

Attention:

Tomoya Shiraishi

Fax:

813-5223-7093

 

with

a copy to:

 

Tokyo

Aoyama Aoki Law Office/Baker & McKenzie

The Prudential Tower 11F

13-10, Nagata-cho 2-chome

Chiyoda-ku, Tokyo 100-0014

Japan

Attention:

Hiroshi Kondo

Fax:

813-5157-2900

 

 

26

 

                if to Seller, to:

 

BTC

International Holdings, Inc.

2701 East

Grauwyler Road

Building 3

Irving, Texas

 75061

United States

of America

Attention:

Brian Stone, Chief Financial Officer

Fax:

 1-972-579-6448

 

with

a copy to:

 

James J.

Slaby, Jr., Esq.

Sheppard,

Mullin, Richter & Hampton LLC

333

South Hope Street Forty-Eighth Floor

Los

Angeles, CA 90071

Phone:

(213) 620-1780

Fax:

(213) 620-1398

 

and

an additional copy to:

 

Davis

Polk & Wardwell

Akasaka

Twin Tower East 11F

17-22,

Akasaka 2-chome

Minato-ku,

Tokyo  107-0052

Japan

Attention:

 Theodore A. Paradise

Fax:

 813-5561-4425

 

 

                if to Seller Guarantor, to:

 

BancTec, Inc.

2701 East

Grauwyler Road

Building 3

Irving, Texas

 75061

United States

of America

Attention:

Brian Stone, Chief Financial Officer

Fax:

 1-972-579-6448

 

 

27

 

with

a copy to:

 

James J.

Slaby, Jr., Esq.

Sheppard,

Mullin, Richter & Hampton LLC

333

South Hope Street Forty-Eighth Floor

Los

Angeles, CA 90071

Phone:

(213) 620-1780

Fax:

(213) 620-1398

 

and

an additional copy to:

 

Davis

Polk & Wardwell

Akasaka

Twin Tower East 11F

17-22,

Akasaka 2-chome

Minato-ku,

Tokyo  107-0052

Japan

Attention:

 Theodore A. Paradise

Fax:

 813-5561-4425

 

                All such notices, requests and other communications shall be deemed

received on the date of receipt by the recipient thereof if received prior to 5

p.m. in the place of receipt and such day is a business day in the place of

receipt.  Otherwise, any such notice,

request or communication shall be deemed not to have been received until the

next succeeding business day in the place of receipt.

 

Section 12.02.  Amendments and Waivers.  (a) 

Any provision of this Agreement may be amended or waived if, but only

if, such amendment or waiver is in writing and is signed, in the case of an

amendment, by each party to this Agreement, or in the case of a waiver, by the

party against whom the waiver is to be effective.

 

                (b)           No failure or delay

by any party in exercising any right, power or privilege hereunder shall

operate as a waiver thereof nor shall any single or partial exercise thereof

preclude any other or further exercise thereof or the exercise of any other

right, power or privilege. The rights and remedies herein provided shall be

cumulative and not exclusive of any rights or remedies provided by law.

 

Section 12.03.  Expenses.  All costs and expenses incurred in

connection with this Agreement shall be paid by the party incurring such cost

or expense.

 

Section 12.04.  Successors and Assigns.  The provisions of this Agreement shall be binding

upon and inure to the benefit of the parties hereto and their respective

successors and assigns; provided

that no party may assign, delegate or otherwise transfer any of its rights or

obligations under this Agreement without the consent of each other party

hereto.

 

Section 12.05.  Governing Law.  This Agreement shall be governed by and

construed in accordance with the law of the State of New York, without regard

to the conflicts of law rules of such state.

 

 

28

 

Section 12.06.  Dispute Resolution.  In the event of any dispute, controversy, or

claim arising out of or relating to this Agreement or the interpretation,

enforceability, performance, breach, termination or validity hereof, the

parties shall use their best efforts to settle the matter through mutual

agreement.  If the parties are unable to

reach an amicable resolution of such dispute, the matter shall be solely and

finally settled by binding arbitration. 

The arbitration proceedings shall be conducted in the English language

and any judgment issued by an arbitrator shall be in English.  Any arbitration commenced by Buyer shall be

conducted in New York, New York, in accordance with the International Arbitration

Rules then prevailing of the American Arbitration Association.  Any arbitration commenced by Seller shall be

conducted in Tokyo, Japan, in accordance with the Commercial Arbitration Rules

then prevailing of the Japan Commercial Arbitration Association.  In any such proceeding, neither party shall

be entitled under any circumstances to receive (i) incidental, indirect,

consequential, exemplary or punitive Damages or (ii) Damages for lost

profits.  Judgment of the arbitrator(s)

shall be final and binding and may be entered in, and shall be fully

enforceable by, a court of proper jurisdiction.  Notwithstanding the foregoing provisions, either party shall have

the right to institute a legal action in a court of proper jurisdiction for

injunctive relief and/or a decree for specific performance pending final

settlement by arbitration.  In the event

either party seeks injunctive relief of any provision of this Agreement, the

party against whom such relief is sought agrees to waive and hereby does waive

any requirement that the party seeking the injunctive relief post a bond or any

other security.

 

Section 12.07.  WAIVER OF JURY TRIAL.  EACH OF THE PARTIES HERETO HEREBY

IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING

ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED

HEREBY.

 

Section 12.08.  Counterparts; Third Party Beneficiaries.  This Agreement may be signed in any number

of counterparts, each of which shall be an original, with the same effect as if

the signatures thereto and hereto were upon the same instrument.  This Agreement shall become effective when

each party hereto shall have received a counterpart hereof signed by the other

party hereto.  No provision of this

Agreement is intended to confer upon any Person other than the parties hereto

any rights or remedies hereunder.

 

Section 12.09.  Entire Agreement.  This Agreement, the Ancillary Agreements,

the Japanese Patent License Agreement between BTI Limited Partnership and the

Company dated as of the date hereof, the confidentiality agreement (Himitsu Hoji

Keiyakusho) dated August 21, 2001 and the letter agreement dated

September 20, 2002 between Buyer and Seller constitute the entire agreement

between the parties with respect to the subject matter of 

 

 

29

 

this Agreement

and supersede all prior agreements and understandings, both oral and written,

between the parties with respect to the subject matter of this Agreement.

 

Section 12.10.  Captions.  The captions herein are included for

convenience of reference only and shall be ignored in the construction or

interpretation hereof.

 

Section 12.11.  Disclosure Schedules.  (a) 

Seller may revise the Schedules to this Agreement by delivering revised

Schedules to Buyer at any time prior to the Closing.  Buyer shall have the right to review the revised Schedules for a

period of five days after receipt thereof. 

At any time within such five–day time period Buyer shall have the

right to terminate this Agreement by delivery of a notice to Seller if the revised

information would be reasonably likely to have a Material Adverse Effect.  This notice, if given, shall specify the

information forming the basis for the decision to terminate.  Seller shall have five days after receipt of

such notice to review with Buyer the information forming the basis for the

decision to terminate and to attempt to agree on corrective measures, if

any.  If the parties cannot agree on

corrective measures within such five–day period, then this Agreement

shall terminate.  If this Agreement is

not terminated as permitted by this Section, Buyer shall be deemed to have

accepted such revisions, and the Schedules attached to this Agreement as of the

date hereof shall be deemed to be superseded by the revised Schedules.

 

                (b)           The parties acknowledge

and agree that (i) the Schedules to this Agreement may include certain items

and information solely for informational purposes for the convenience of Buyer

and (ii) the disclosure by Seller of any matter in the Schedules shall not be

deemed to constitute an acknowledgment by Seller that the matter is required to

be disclosed by the terms of this Agreement or that the matter is material.

 

 

30

 

                IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be

duly executed by their respective authorized officers as of the day and year

first above written.

 

	

  JAFCO MBO CO., LTD.

  
	

   

  
	

  By:

  	

   

  
	

   

  	

  Name:

  
	

   

  	

  Title:

  

 

 

	

  BTC INTERNATIONAL HOLDINGS, INC.

  
	

   

  
	

  By:

  	

   

  
	

   

  	

  Name:

  
	

   

  	

  Title:

  

 

 

	

  JAFCO CO., LTD., as Buyer Guarantor

  
	

   

  
	

  By:

  	

   

  
	

   

  	

  Name:

  
	

   

  	

  Title:

  

 

 

	

  BANCTEC, INC., as Seller Guarantor

  
	

   

  
	

  By:

  	

   

  
	

   

  	

  Name:

  
	

   

  	

  Title:

  

 

 

31EXHIBIT 10.13

 

FOURTH AMENDMENT TO

LOAN AND SECURITY AGREEMENT

 

                THIS FOURTH AMENDMENT TO LOAN

AND SECURITY AGREEMENT (this “Amendment”) is entered

into on November 27, 2002 (the “Effective Date”), by and among BancTec,

Inc., a Delaware corporation (“BancTec”) (BancTec being hereinafter

sometimes referred to as the “Original Borrower”), and BTI Technologies

L.P., a Texas limited partnership (“BTI Tech”) (BTI Tech being

hereinafter sometimes referred to as the “Additional Borrower,” and

Original Borrower, together with Additional Borrower, being hereinafter

sometimes individually and collectively referred to as the “Borrower”),

as governed by the provisions of Section 10.19, Section 10.20 and

Section 10.21 of the Loan Agreement (as hereinafter defined), Heller

Financial, Inc., a Delaware corporation (in its individual capacity, “Heller”)

and as the Agent (“Agent”), and the financial institution(s) listed on

the signature pages hereof and their respective successors and Eligible

Assignees (Heller and each such other financial institution being hereinafter

referred to individually as a “Lender” and collectively as the “Lenders”).  Notwithstanding anything contained elsewhere

in this Amendment, this Amendment shall be effective for any purpose only upon

and subject to the completion of the BTJ Sale, as hereinafter defined.

 

RECITALS

 

A.            Original Borrower,

Agent and the Lenders entered into that certain Loan and Security Agreement,

dated May 30, 2001 (as amended from time to time, the “Loan Agreement”).

B.            Each Borrower has

requested that the Agent and the Lenders consent to the consummation of the

following activities (hereinafter, collectively the “Proposed Transaction”):

(i)            Organization by Original Borrower of

a new Subsidiary, BTC Ventures, Inc.,  a Delaware corporation (hereinafter, “Newco”),

Newco to be a wholly-owned Subsidiary of Original Borrower, with the sole asset

of Newco to be a limited partnership interest in Additional Borrower, which

limited partnership interest shall constitute a 99.9% equity interest in

Additional Borrower;

(ii)           Organization by Original Borrower of

Additional Borrower, with Original Borrower to be the sole general partner of

Additional Borrower and Newco to be the sole limited partner of Additional

Borrower;

(iii)          The sale by BTC International

Holdings, Inc. of all of its ownership interests in BancTec Japan, Inc., a

Japanese entity (hereinafter, “BTJ”), pursuant to the terms and

conditions of that certain Stock Purchase Agreement, dated as of November 27,

2002, executed by BTC International Holdings, Inc., BTJ, et al. (the “Purchase

Agreement”) for the cash price detailed in the Purchase Agreement (the “BTJ

Sale”);

 

 

(iv)          Original Borrower may make an

aggregate cash prepayment on the Senior Subordinated Notes not to exceed

$90,000,000, and Original Borrower may use the proceeds of the BTJ Sale as part

of such cash prepayment.

(v)           Transfer by Original Borrower to

Additional Borrower of the assets of Original Borrower described in the

agreements listed on Schedule I attached to this Amendment (as such agreements

are in effect on the date hereof, the “Original Borrower Transfer Agreements”)

(such transfer to be made specifically subject to the existing Lien therein of

Agent) and the license by Original Borrower to Additional Borrower of such

rights to use Intellectual Property and other assets of Original Borrower as is

described in the Original Borrower Transfer Agreements (such license to be made

specifically subject to the existing Lien of Agent in such Intellectual

Property and other assets) (such assets and rights being hereinafter referred

to as the “Additional Borrower Contribution Property”); and

(vi)          (a) Execution by Additional

Borrower of those certain agreements listed on Schedule II attached to this

Amendment (as such agreements are in effect on the date hereof, the “Additional

Borrower Ancillary Agreements”) whereby, to the extent and in the manner

described in the Additional Borrower Ancillary Agreements, Additional

Borrower sub-licenses or otherwise transfers rights in the Additional Borrower

Contribution Property to BTJ (such sub-licenses and transfers of rights to be

made specifically subject to existing Lien of Agent in the Additional

Borrower Contribution Property and in the Additional Borrower Ancillary

Agreements) and (b) the performance by Additional Borrower of its

obligations under the Additional Borrower Ancillary Agreements.

C.            Pursuant to the

terms and subject to the conditions set forth in this Amendment, (i) Agent and

the Lenders are willing to consent to the consummation of the Proposed

Transaction, (ii) each Borrower, Agent and the Lenders are willing to amend the

Loan Agreement to make Additional Borrower a party to the Loan Agreement and to

make Additional Borrower a joint and several co-obligor for obligations and

indebtedness incurred under the Loan Agreement, and (iii) each Borrower, Agent,

and the Lenders are willing to further amend the Loan Agreement as hereinafter

set forth.

                NOW, THEREFORE, in consideration

of the premises herein contained and other good and valuable consideration, the

receipt and sufficiency of which are hereby acknowledged, subject to the terms

and conditions set forth herein, the parties, intending to be legally bound,

agree as follows:

 

 

2

 

AGREEMENT

 

ARTICLE

I.

DEFINITIONS

 

SECTION 1.02       Certain

Defined Terms.  Capitalized terms

used in this Amendment are used as defined in the Loan Agreement, as amended

hereby, unless otherwise stated.

ARTICLE II.

AMENDMENT

 

SECTION 2.01       Amendment

to the definition of “Borrowing Base” contained in Section 2.1(B) of the

Loan Agreement.  Effective as of the

Effective Date, the definition of “Borrowing Base” contained in Section 2.1(B)

of the Loan Agreement is hereby amended and restated in its entirety to read as

follows:

“‘Borrowing Base’ means, as of any date of

determination, an amount equal to the sum of (a) 85.00% of Eligible Accounts

less Dilution Reserves, plus (b) 50.00% of Eligible Accrued Unbilled

Accounts less Dilution Reserves; plus (c) the lesser of (i)

$30,000,000, or (ii) 85.00% of the net orderly liquidation value of Eligible

Inventory (net orderly liquidation value to be determined in a manner and

pursuant to documentation satisfactory to Agent, in its reasonable credit

judgment) or (iii) 50.00% of Eligible Inventory, plus (d) the lesser

of (i) $40,000,000, or (ii) 100.00% of the fair market value of Eligible

Cash Collateral, and less, in each case, such reserves as Agent in its

reasonable credit judgment may elect to establish.  ‘Dilution Reserve’ means, as of any date of determination, a

reserve for the amount by which the total dilution of Accounts exceeds five

percent (5%); with dilution referring to all actual and potential offsets to an

Account, including, without limitation, customer payment and/or volume

discounts, write-offs, credit memoranda, returns and allowances, and billing

errors.  The Dilution Reserve shall be

adjusted after each field examination audit of the Collateral conducted by

Agent or any authorized representative designated by Agent.”

 

SECTION 2.02       Deletion of the Definition of

“Eligible Field Spare Parts” contained in Section 2.1(D) of the Loan

Agreement.  Effective as of the

Effective Date, the definition of “Eligible Field Spare Parts” contained in Section 2.1(D)

of the Loan Agreement is hereby deleted in its entirety.

SECTION 2.03       Amendment to Section 2.1(H)(1) of

the Loan Agreement.  Effective as of

the Effective Date, the reference to “$20,000,000.00” contained in Section

2.1(H)(1) of the Loan Agreement is hereby deleted and “$30,000,000” is

substituted in lieu thereof.

SECTION 2.04       Amendment to Section 2.3(B) of

the Loan Agreement.  Effective as of

the Effective Date, Section 2.3(B) of the Loan Agreement is hereby

deleted in its entirety and replaced with the following:

3

 

“(B)         Letter of Credit Fees.  Borrower shall pay to Agent a fee with respect to the Lender

Letters of Credit (i) for the benefit of all Lenders with a Revolving Loan

Commitment (based on their respective Pro Rata Share) (a) in the amount equal

to (x) the portion of the average daily amount of Letter of Credit Liability

outstanding during such month equal to or less than the average daily amount of

Eligible Cash Collateral (valued at fair market value) during such month, multiplied

by (y) one percent (1.00%) per annum, and (b) in the amount equal to (x)

the portion of the average daily amount of Letter of Credit Liability

outstanding during such month in excess of the average daily amount of Eligible

Cash Collateral (valued at fair market value) during such month, multiplied

by (y) the per annum percentage equal to the LIBOR Margin at such time in

effect, and (ii) for the account of Agent a fronting fee for each Letter of

Credit issued or obtained by Agent from the date of issuance to the date of

termination equal to the average daily amount of Letter of Credit Liability

with respect to such Letters of Credit outstanding during such month multiplied

by twenty-five one hundredths of one percent (0.25%) per annum.  Such fees will be calculated on the basis of

a three hundred sixty (360) day year for the actual number of days elapsed and

will be payable monthly in arrears on the first (1st) day of each

month. Borrower shall also reimburse Agent for any and all fees and expenses,

if any, paid by Agent or any Lender to the issuer of any Bank Letter of

Credit.”

SECTION 2.05       References to “Borrower” in the Loan

Agreement.  Effective as of the

Effective Date, all references in the Loan Agreement to “Borrower” shall be

deemed to include references to the Additional Borrower.

SECTION 2.06       Addition of Section 10.19 to the Loan

Agreement; “Joint and Several Liability; Rights of Contribution”.  Effective as of the Effective Date, a new Section 10.19

is added to the Loan Agreement to read in its entirety as follows:

“10.19     Joint and Several Liability; Rights of Contribution.

(A)          Each Borrower states and acknowledges that:  (i) pursuant to this Agreement, Borrowers

desire to utilize their borrowing potential on a consolidated basis to the same

extent possible if they were merged into a single organizational entity and

that this Agreement reflects the establishment of credit facilities which would

not otherwise be available to such Borrower if each Borrower were not jointly

and severally liable for payment of all of the Obligations; (ii) it has

determined that it will benefit specifically and materially from the advances

of credit contemplated by this Agreement; (iii) it is both a condition

precedent to the obligations of Agent and Lenders hereunder and a desire of the

Borrowers that each Borrower execute and deliver to Agent and the Lenders this

Agreement; and (iv) Borrowers have requested and bargained for the structure

and terms of and security for the advances contemplated by this Agreement.

4

 

(B)           Each Borrower hereby irrevocably and unconditionally:   (i) agrees that it is jointly and severally

liable to Agent and the Lenders for the full and prompt payment of the Obligations

and the performance by each Borrower of its obligations hereunder in accordance

with the terms hereof; (ii) agrees to fully and promptly perform all of its

Obligations hereunder with respect to each advance of credit hereunder as if

such advance had been made directly to it; and (iii) agrees as a primary

obligation to indemnify Agent and the Lenders on demand for and against any

loss incurred by Agent or the Lenders as a result of any of the obligations of

any one or more of the Borrowers being or becoming void, voidable,

unenforceable or ineffective for any reason whatsoever, whether or not known to

Agent or the Lenders or any Person, the amount of such loss being the amount

which Agent or the Lenders would otherwise have been entitled to recover from

any one or more of the Borrowers.

(C)           It is the intent of each Borrower that the indebtedness,

obligations and liability hereunder of either Borrower not be subject to

challenge on any basis, including, without limitation, pursuant to any

applicable fraudulent conveyance or fraudulent transfer laws. Accordingly, as

of the date hereof, the liability of each Borrower under this Section 10.19,

together with all of its other liabilities to all Persons as of the date hereof

and as of any other date on which a transfer or conveyance is deemed to occur

by virtue of this Agreement, calculated in amount sufficient to pay its

probable net liabilities on its existing Indebtedness as the same become

absolute and matured (‘Dated Liabilities’) is, and is to be, less than

the amount of the aggregate of a fair valuation of its property as of such

corresponding date (‘Dated Assets’). 

To this end, each Borrower under this Section 10.19, (i) grants

to and recognizes in each other Borrower, ratably, rights of subrogation and contribution

in the amount, if any, by which the Dated Assets of such Borrower, but for the

aggregate of subrogation and contribution in its favor recognized herein, would

exceed the Dated Liabilities of such Borrower or, as the case may be, (ii)

acknowledges receipt of and recognizes its right to subrogation and

contribution ratably from each of the other Borrowers in the amount, if any, by

which the Dated Liabilities of such Borrower, but for the aggregate of

subrogation and contribution in its favor recognized herein, would exceed the

Dated Assets of such Borrower under this Section 10.19.  In recognizing the value of the Dated Assets

and the Dated Liabilities, it is understood that Borrowers will recognize, to

at least the same extent of their aggregate recognition of liabilities

hereunder, their rights to subrogation and contribution hereunder.  It is a material objective of this Section

10.19 that each Borrower recognizes rights to subrogation and contribution

rather than be deemed to be insolvent (or in contemplation thereof) by reason

of an arbitrary interpretation of its joint and several obligations

hereunder.  In addition to and not in

limitation of the foregoing provisions of this Section 10.19, the

Borrowers and Lender hereby agree and acknowledge that it is the intent of each

Borrower and of Lender that the obligations of each Borrower hereunder be in

all respects in compliance with, and not be voidable pursuant to, applicable

fraudulent conveyance and fraudulent transfer laws.”

5

 

SECTION 2.07       Addition of Section 10.20 to the Loan

Agreement; “Structure of Credit Facility”. 

Effective as of the Effective Date, a new Section 10.20 is added

to the Loan Agreement to read in its entirety as follows:

“10.20     Structure of Credit Facility.  Each Borrower agrees and acknowledges that

the present structure of the credit facilities detailed in this Agreement is

based in part upon the financial and other information presently known to

Lenders regarding each Borrower, the organizational structure of Borrowers, and

the present financial condition of each Borrower.  Each Borrower hereby agrees that Agent, on behalf of Lenders,

shall have the right, in its sole discretion, to require that any or all of the

following changes be made to these credit facilities:  (i) establish a separate ‘borrowing base’ for each Borrower,

(ii) advance a Revolving Advance specifically to a specific Borrower,

based on such Borrower’s availability under its own ‘borrowing base’, (iii)

restrict loans and advances between Borrowers, (iv) establish separate lockbox

and dominion accounts for each Borrower, and (v) establish such other

procedures as shall be reasonably deemed by Agent to be useful in tracking

where Loans are made under this Agreement and the source of payments received

by Agent or any Lender on such Loans.”

SECTION 2.08       Addition of Section 10.21 to the Loan

Agreement; “The Term ‘Borrower’ or ‘Borrowers.’”  Effective as of the Effective Date, a new Section 10.21 is

added to the Loan Agreement to read in its entirety as follows:

“10.21     The Term ‘Borrower’ or ‘Borrowers’.  All references to ‘Borrower’ or ‘Borrowers’

herein shall refer to and include each of the Original Borrower and the

Additional Borrower separately and all representations contained herein shall

be deemed to be separately made by each of them, and each of the covenants,

agreements and obligations set forth herein shall be deemed to be the joint and

several covenants, agreements and obligations of them (except as otherwise

specifically provided herein).  Any

notice, request, consent, report or other information or agreement delivered to

Agent or any Lender by any Borrower shall be deemed to be ratified by,

consented to and also delivered by the other Borrower.  Each Borrower recognizes and agrees that

each covenant and agreement of ‘Borrower’ or ‘Borrowers’ under this Agreement

and the other Loan Documents shall create a joint and several obligation of the

Borrowers, which may be enforced against Borrowers, jointly, or against each

Borrower separately.  Without limiting

the terms of this Agreement and the other Loan Documents, Liens granted under

this Agreement and other Loan Documents in properties, interests, assets and

collateral shall extend to the properties, interests, assets and collateral of

each Borrower.  Similarly, the term

‘Obligations’ shall include, without limitation, all obligations, liabilities

and indebtedness of such Persons, or any one of them, to Agent or Lenders,

whether such obligations, liabilities and indebtedness shall be joint, several,

joint and several or individual.”

SECTION 2.09       Amendment to Section 11.1 of the Loan

Agreement; Addition of Certain Definitions.  Effective as of the Effective Date, Section 11.1 of

the Loan Agreement is 

6

 

hereby amended by adding the

following new definitions thereto, to be inserted in their proper alphabetical

order:

“‘Additional Borrower’—

BTI Technologies, L.P., a Texas limited partnership.

‘BTJ Sale’ — has the same

meaning as in the Fourth Amendment.

‘Eligible Cash Collateral’

— shall mean such cash of Borrower and such short-term liquid investments of

Borrower as are acceptable to Agent to the extent that Agent, for the benefit

of Lenders, has a first priority perfected Lien in such cash and such liquid

investments, such Lien to be perfected in such a manner and pursuant to such

documentation as shall be satisfactory to Agent in its sole discretion.

‘Fourth Amendment’ —

that certain Fourth Amendment to Loan and Security Agreement executed by

Original Borrower, Additional Borrower, Agent and Lenders.

‘Original Borrower’ —

BancTec, Inc., a Delaware corporation.”

SECTION 2.10       Amendment to Section 11.1 of the Loan

Agreement; Deletion of Definition of “Real Property Advance Amount”.  Effective as of the Effective Date, Section

11.1 of the Loan Agreement is hereby amended by deleting therefrom the

definition of “Real Property Advance Amount.”

SECTION 2.11       Amendment to Exhibit C.  Effective as of the Effective Date, Exhibit C

to the Loan Agreement (Form of Revolving Note) is hereby deleted in its

entirety and replaced with Exhibit C attached hereto.

SECTION 2.12       Amendment to Schedule 4.1B.  Effective as of the Effective Date, Schedule 4.1B

to the Loan Agreement (Capitalization) is hereby deleted in its entirety and

replaced with Schedule 4.1B attached hereto.

SECTION 2.13       Amendment to Schedule 4.6.  Effective as of the Effective Date, Schedule 4.6

to the Loan Agreement (Names and Locations) is hereby deleted in its entirety

and replaced with Schedule 4.6 attached hereto.

SECTION 2.14       Amendment to Schedule 7.11.  Effective as of the Effective Date, Schedule 7.11

to the Loan Agreement (Subsidiaries) is hereby deleted in its entirety and

replaced with Schedule 7.11 attached hereto.

SECTION 2.15       Grant by Additional Borrower of

Security Interest in Collateral. 

Additional Borrower hereby agrees that by becoming a party to the Loan

Agreement, it is subject to all the provisions of the Loan Agreement,

including, without limitation, the grant to Agent, on behalf of Lenders, of a

continuing security interest, lien and mortgage in and to all right, title and

interest of Additional Borrower in all of Additional Borrower’s personal and  real  property,

whether now owned or existing or hereafter acquired or arising and regardless

of where located, 

7

 

as specified in Section 2.7 of the Loan

Agreement.  In accordance therewith and

in order to secure the prompt payment and performance of the Obligations,

Additional Borrower hereby grants to Agent, on behalf of Lenders, a continuing

security interest, lien, and mortgage in and to all of Additional Borrower’s

personal and real property, whether now owned or existing or hereafter acquired

or arising and regardless of where located, including, without limitation, (A)

Accounts, and all guaranties and security therefor, and all goods and rights

represented thereby or arising therefrom including the rights of stoppage in

transit, replevin and reclamation; (B) Inventory; (C) general intangibles

(as defined in the UCC); (D) documents (as defined in the UCC) or other

receipts covering, evidencing or representing goods; (E) instruments (as

defined in the UCC); (F) chattel paper (as defined in the UCC); (G) Equipment;

(H) Mortgaged Property; (I) investment property (as defined in the UCC)

including, without limitation, all securities (certificated and uncertificated)

security accounts, security entitlements, commodity contracts and commodity

accounts; (J) Intellectual Property; (K) all deposit accounts of Additional

Borrower maintained with any bank or financial institution; (L) all cash and

other monies and property of Additional Borrower in the possession or under the

control of Agent, any Lender or any participant; (M) all books, records, ledger

cards, files, correspondence, computer programs, tapes, disks and related data

processing software that at any time evidence or contain informa­tion relating

to any of the property described above or are otherwise necessary or helpful in

the collection thereof or realization thereon; and (N) proceeds and products of

all or any of the property described above, including, without limitation, the

proceeds of any insurance policies covering any of the above described property;

provided, however, the grant by Additional Borrower to Agent, on

behalf of the Lenders, of a continuing security interest, lien, and mortgage in

and to all right, title and interest of Additional Borrower in all of

Additional Borrower’s personal and real property is subject to the conditions

and limitations set forth in the last two sentences of Section 2.7

of the Loan Agreement.

SECTION 2.16       Restrictions on Transactions between

the Original Borrower and the Additional Borrower and the Original Borrower or

Additional Borrower and Newco. 

Notwithstanding anything to the contrary in the Loan Agreement and in

addition to other restrictions, covenants and agreements contained in the Loan

Agreement, effective immediately, each Borrower, Agent and the Lender hereby

agree as follows:

(a)           Unless otherwise consented to in

writing by Agent, requests for Loans shall be made by Original Borrower and the

proceeds of Loans shall be disbursed directly to Original Borrower; and

(b)           Unless otherwise consented to in

writing by Agent, Original Borrower shall not:

(i)            make any Loans or advances of money

to the Additional Borrower or Newco;

(ii)           inject any additional capital into

Additional Borrower or Newco;

(iii)          enter into any transaction with the

Additional Borrower, except (A) as part of the Proposed Transaction or

(B) in the ordinary course of and pursuant to the reasonable requirements

of Original Borrower’s business and upon 

8

 

terms which are fully

disclosed to Agent and are no less favorable to Original Borrower than it would

obtain in a comparable arm’s length transaction with a Person not an Affiliate

of Original Borrower;

(iv)          enter into any transaction with Newco

except (A) as part of the Proposed Transaction or (B) distributions by Newco to

Original Borrower to the extent permitted by Section 7.5 of the

Loan Agreement;

(v)           guarantee, assume, endorse or

otherwise, in any way, become directly or contingently liable with respect to

the Indebtedness of Additional Borrower or Newco, other than the Obligations,

and other than recourse Indebtedness of Additional Borrower for which Borrower,

as the sole general partner of Additional Borrower, is obligated as a matter of

law, and other than in connection with the Proposed Transaction; or

(vi)          transfer any assets to Additional

Borrower, except (A) the Additional Borrower Contribution Property and

(B) as permitted by (b)(iii) above; and

(c)           Unless otherwise consented to in

writing by Agent, Additional Borrower shall not:

(i)            make any Loans or advances of money

to Newco;

(ii)           enter into any transaction with Newco

other than as part of the Proposed Transaction;

(iii)          guarantee, assume, endorse or

otherwise, in any way, become directly or contingently liable with respect to

the indebtedness of Newco; or

(iv)          transfer any assets to Newco  other than distributions by Additional

Borrower to Newco to the extent permitted by Section 7.5 of the

Loan Agreement.

SECTION 2.17       Addition of New Section 7.16 to the

Loan Agreement.  Effective as of the

Effective Date, a new Section 7.16 is added to the Loan Agreement to

read in its entirety as follows:

“7.16       Minimum Availability. 

Permit the Availability on any day during the period beginning on the

first date upon which the Borrower makes any prepayment on the Senior

Subordinated Note from the cash proceeds of the BTJ Sale and continuing through

the forty-fifth (45th) day after such date to at any time be less

than $7,500,000.”

SECTION 2.18       References to “Guarantor”.  Effective as of the Effective Date, all

references in the Loan Agreement to “Guarantor” shall be deemed to also be

references to BancTec Upper-Tier Holding, LLC and to BancTec Intermediate

Holding, Inc.

SECTION 2.19       Amendment Fee.  In consideration for the agreements set

forth herein, Borrower agrees to pay Agent, for Agent’s benefit and for the

benefit of Lenders, an amendment fee of $25,000, which fee shall be (i) deemed

fully earned on the date hereof, (ii) non-refundable, and (iii) due and payable

in full on the date hereof.

9

 

ARTICLE III.

CONDITIONS PRECEDENT

 

SECTION 3.01       Condition to Effectiveness.  The effectiveness of this Amendment is

subject to the satisfaction of the following conditions precedent in a manner

and pursuant to documentation satisfactory to Agent:

(a)           The Agent shall have received all of

the following, each in form and substance satisfactory to Agent:  (i) this Amendment, duly executed by the

Original Borrower, the Additional Borrower, the Agent, and the Lenders, (ii) a

certificate of the Secretary of each Borrower acknowledging (A) that each

Borrower’s board of directors has adopted, approved, consented to and ratified

resolutions which authorize the execution, delivery and performance by each

Borrower of this Amendment, and all other Loan Documents to which each Borrower

is or is to be a party and (B) the names of the officers of each Borrower

authorized to sign this Amendment and each of the other Loan Documents to which

each Borrower is or is to be a party hereunder (including the certificates

contemplated herein), together with specimen signatures of such officers, (iii)

a guaranty from Newco guaranteeing payment of the Obligations, (iv) security

agreements from Newco whereby Newco grants Agent, for the benefit of Lenders, a

first priority Lien in all assets of Newco, including without limitation, a

first priority Lien in the partnership interest of Newco in Additional

Borrower, (v) an amended and restated pledge agreement from Original Borrower,

whereby Original Borrower grants Agent, for the benefit of Lenders, a perfected

first priority Lien in Original Borrower’s partnership interest in Additional

Borrower and capital stock in Newco, which Lien shall be in addition to the

Lien in the capital stock or equivalent ownership interest of Original Borrower

in each of its Subsidiaries previously granted by Original Borrower to Agent,

(vi) if specifically requested by Agent,a security agreement from

Additional Borrower covering the Intellectual Property of Additional Borrower,

in a form materially the same as such other intellectual property security

agreements previously executed by Original Borrower, whereby Additional

Borrower grants Agent, for the benefit of Lenders, a perfected first priority

Lien in all currently or hereafter owned Intellectual Property of Additional

Borrower, (vii) a Revolving Note in the form of Exhibit C attached

hereto, duly executed by each Borrower, (viii) satisfactory evidence of the

organization and good standing of Additional Borrower and Newco, (ix) a legal

opinion from counsel to Borrower, covering the execution of this Amendment and

the other Loan Documents executed in connection with this Amendment, the

transactions contemplated hereby, and the existence and good standing of Newco

and Additional Borrower, (x) the Consent and Ratification attached hereto, duly

executed by each existing Guarantor and by WCAS, and (xi) such additional

documents, instruments and information as the Agent may reasonably request;

(b)           The representations and warranties

contained herein and in the Loan Agreement and the Loan Documents, as each is

amended hereby, shall be true and correct in all material respects as of the

date hereof, as if made on the date hereof (except insofar as such

representations and warranties relate expressly to an earlier date);

10

 

(c)           After

giving effect to this Amendment, no Default or Event of Default shall have

occurred and be continuing; and

(d)           All corporate and partnership and

limited liability company proceedings taken in connection with the transactions

contemplated by this Amendment and all documents, instruments and other legal

matters incident thereto, shall be satisfactory to the Agent.

ARTICLE IV.

CONSENT TO PROPOSED TRANSACTION

 

SECTION

4.01       Consent.  Subject to the satisfaction of the

conditions precedent specified in Article III of this Amendment and

the other terms, conditions, and provisions of this Amendment, each of Agent

and Lenders hereby consents to the consummation of the Proposed Transaction; provided,

however, that in addition to the satisfaction of the conditions precedent

specified above in Article III, the consent of Agent and Lenders to the

BTJ Sale, the transfer and license by Original Borrower to Additional Borrower

of the Additional Borrower Contribution Property and the Additional Borrower’s

execution of and performance under the Additional Borrower Ancillary Agreements

(collectively, the “Japanese Subsidiary Transactions”) is further

subject to the satisfaction of the following conditions precedent in a manner

and pursuant to documentation satisfactory to Agent:

(a)           Receipt by Agent of evidence

satisfactory to Agent that the Japanese Subsidiary Transactions have been

consummated consistent with the description of the Japanese Subsidiary

Transactions contained in the Recitals to this Amendment, and Agent shall have

received copies of all documents, agreements and materials executed or issued

in connection with the Japanese Subsidiary Transactions, including, without

limitation, the Purchase Agreement, all documents by which the Additional

Borrower Contribution Property is transferred or licensed to Additional

Borrower by Original Borrower, and the Additional Borrower Ancillary

Agreements, all of which documents, certificates and materials shall be in form

and substance satisfactory to Agent;

(b)           A legal opinion from counsel to

Borrower covering the Japanese Subsidiary Transactions;

(c)           The representations and warranties

contained herein and in the Loan Agreement and the Loan Documents, as each is

amended hereby, shall be true and correct in all material respects as of the

date of consummation of the Japanese Subsidiary Transactions, as if made on

such date (except insofar as such representations and warranties relate

expressly to an earlier date);

(d)           No Default or Event of Default shall

have occurred and be continuing; and

(e)           All corporate and partnership and

limited liability company proceedings taken in connection with the Japanese

Subsidiary Transactions and all documents, instruments and other legal matters

incident thereto, shall be satisfactory to the Agent.

11

 

SECTION 4.02       Limited

Nature of Consent.  Consummation of

the Proposed Transaction in accordance with the terms, provisions and

conditions of this Amendment shall not constitute a Default or Event of Default

under the Loan Agreement or any other Loan Document.  The foregoing consent described in this Article IV is

strictly limited to the Proposed Transaction as described and limited by this

Amendment and, except as otherwise specifically provided for in this Amendment,

nothing contained herein shall be construed as a waiver by Agent or any Lender

of any covenant or provision of the Loan Agreement, the other Loan Documents,

this Amendment, or any of other contract or instrument between each Borrower

and Agent and/or any Lender or as a consent by Agent or any Lender to any other

transaction involving Borrower or any Affiliate of Borrower.  In addition, the failure of Agent or any

Lender at any time or times hereafter to require strict performance by each

Borrower of any provision thereof shall not waive, affect or diminish any right

of Agent or any Lender to thereafter demand strict compliance therewith.  The Agent and each Lender hereby reserves

all rights granted under the Loan Agreement, the other Loan Documents, this

Amendment and any other contract or instrument between any Borrower and Agent

and/or any Lender.

ARTICLE V.  RATIFICATIONS,

REPRESENTATIONS AND WARRANTIES

 

SECTION 5.01       Ratifications.  The terms and provisions set forth in this

Amendment shall modify and supersede all inconsistent terms and provisions set

forth in the Loan Agreement and the other Loan Documents, and except as

expressly modified and superseded by this Amendment, the terms and provisions

of the Loan Agreement and the other Loan Documents are ratified and confirmed

and shall continue in full force and effect. 

Borrower, Agent and Lenders agree that the Loan Agreement and the other

Loan Documents, as amended hereby, shall continue to be legal, valid, binding

and enforceable in accordance with their respective terms.

SECTION 5.02       Representations and Warranties.  Each Borrower hereby represents and warrants

to Agent and Lenders that (a) the execution, delivery and performance of

this Amendment and any and all other Loan Documents executed and/or delivered

in connection herewith have been authorized by all requisite corporate and

partnership action on the part of each Borrower and will not violate the

Certificate of Incorporation or Bylaws of Original Borrower or the Certificate

of Limited Partnership or limited partnership agreement of Additional Borrower;

(b) the representations and warranties contained in the Loan Agreement, as

amended hereby, and any other Loan Document are true and correct on and as of

the date hereof and on and as of the date of execution hereof as though made on

and as of each such date; (c) no Event of Default or Default under the

Loan Agreement has occurred and is continuing, unless such Event of Default or

Default has been, or by the terms of this Amendment is, specifically waived in

writing by Lenders; (d) until the effective date of the Blocked Account

Control Agreement entered into as of November 27, 2002, to be effective as of

January 1, 2003, by and among BTC International Holdings, Inc., Agent and

JPMorgan Chase Bank, the proceeds of the BTJ Sale deposited into Deposit

Account No. 323414192 maintained at JPMorgan Chase Bank will be the only

amounts deposited into such account and no Borrower, nor any Affiliate of any

Borrower will make any other deposits to such account before such effective

date and (e) each Borrower is in full compliance with all covenants and

agreements contained in the Loan Agreement and the other Loan Documents, as

amended hereby.

12

 

ARTICLE VI.  MISCELLANEOUS

PROVISIONS

 

SECTION 6.01       Survival of Representations and

Warranties.  All representations and

warranties made in the Loan Agreement or any other Loan Document, including,

without limitation, any document furnished in connection with this Amendment,

shall survive the execution and delivery of this Amendment and the other Loan

Documents, and no investigation by Agent or any Lender nor any closing shall

affect the representations and warranties or the right of Agent or any Lender

to rely upon them.

SECTION 6.02       Reference to Loan Agreement.  Each of the Loan Documents, including the

Loan Agreement and any and all other agreements, documents or instruments now

or hereafter executed and delivered pursuant to the terms hereof or pursuant to

the terms of the Loan Agreement, as amended hereby, are hereby amended so that

any reference in such Loan Documents to the Loan Agreement shall mean a reference

to the Loan Agreement, as amended hereby.

SECTION 6.03       Expenses of Agent.  As provided in the Loan Agreement, each

Borrower agrees to promptly pay all fees, costs and expenses incurred by Agent

(including attorneys’ fees and expenses, the allocated cash of Agent’s internal

legal staff and fees of environmental consultants, accountants and other

professionals retained by Agent) incurred in connection with the review,

negotiation, preparation, documentation and execution of this Amendment.

SECTION 6.04       Severability.  Any provision of this Amendment held by a

court of competent jurisdiction to be invalid or unenforceable shall not impair

or invalidate the remainder of this Amendment and the effect thereof shall be

confined to the provision so held to be invalid or unenforceable.

SECTION 6.05       Successors and Assigns.  This Amendment is binding upon and shall

inure to the benefit of Agent and Lenders and each Borrower and their

respective successors and assigns, except no Borrower may assign or transfer

any of its rights or obligations hereunder without the prior written consent of

Agent and Lenders.

SECTION 6.06       Counterparts.  This Amendment may be executed in one or

more counterparts, each of which when so executed shall be deemed to be an

original, but all of which when taken together shall constitute one and the

same instrument.

SECTION 6.07       Effect of Waiver.  No consent or waiver, express or implied, by

Agent or any Lender to or for any breach of or deviation from any covenant or

condition by Borrower shall be deemed a consent to or waiver of any other

breach of the same or any other covenant, condition or duty.

SECTION

6.08       Headings.  The headings, captions, and arrangements

used in this Amendment are for convenience only and shall not affect the

interpretation of this Amendment.

SECTION 6.09       APPLICABLE LAW. 

THIS AMENDMENT AND ALL OTHER LOAN DOCUMENTS EXECUTED PURSUANT HERETO

SHALL BE DEEMED TO HAVE BEEN MADE AND TO BE PERFORMABLE IN AND SHALL BE 

13

 

GOVERNED

BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF ILLINOIS.

SECTION

6.10       FINAL AGREEMENT.  THE LOAN DOCUMENTS, AS AMENDED HEREBY,

REPRESENT THE ENTIRE EXPRESSION OF THE PARTIES WITH RESPECT TO THE SUBJECT

MATTER HEREOF ON THE DATE THIS AMENDMENT IS EXECUTED.  THE LOAN DOCUMENTS, AS AMENDED HEREBY, MAY NOT BE CONTRADICTED BY

EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE

PARTIES.  THERE ARE NO UNWRITTEN

AGREEMENTS BETWEEN THE PARTIES.  NO

MODIFICATION, RESCISSION, WAIVER, RELEASE OR AMENDMENT OF ANY PROVISION OF THIS

AMENDMENT SHALL BE MADE, EXCEPT BY A WRITTEN AGREEMENT SIGNED BY EACH BORROWER,

LENDERS AND AGENT.

[REMAINDER OF

THIS PAGE INTENTIONALLY LEFT BLANK]

 

 

14

 

                IN WITNESS WHEREOF, this

Amendment has been executed and is effective as of the Effective Date.

 

	

   

  	

  BANCTEC, INC.

  
	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

   

  
	

   

  	

  Name:

  	

  Brian

  R. Stone

  
	

   

  	

  Title:

  	

  Chief

  Financial Officer

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

  BTI TECHNOLOGIES,

  L.P.

  
	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

  BANCTEC, INC.,

  its General Partner

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

  By:

  	

   

  
	

   

  	

   

  	

  Name:

  	

  Brian

  R. Stone

  
	

   

  	

   

  	

  Title:

  	

  Chief

  Financial Officer

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

  HELLER FINANCIAL,

  INC.,

  
	

   

  	

  as

  Agent and Sole Lender

  
	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

   

  
	

   

  	

  Name:

  	

   

  
	

   

  	

  Title:

  	

   

  

 

 

 

CONSENT AND RATIFICATION

 

                Each of the undersigned hereby

consents to the terms of the within and foregoing Amendment, confirms and

ratifies the terms of its guaranty agreement relating to the Obligations and of

each Loan Document it has executed in connection with the Obligations

(collectively, the “Loan Documents”), agrees that each of the Loan

Documents to which it is a party shall hereafter be deemed to cover the

Obligations of Additional Borrower as well as of Original Borrower, and

acknowledges that the Loan Documents to which it is a party are in full force

and effect and ratifies the same, that it has no defense, counterclaim, set–off

or any other claim to diminish its liability under such Loan Documents, that

its consent is not required to the effectiveness of the within and foregoing

Amendment, and that no consent by it is required for the effectiveness of any

future amendment, modification, forbearance or other action with respect to the

Loans, the collateral securing the Obligations, or any of the other Loan

Documents.

 

	

   

  	

  WELSH,

  CARSON, ANDERSON & STOWE VIII, L.P.,

  a

  Delaware limited partnership

  
	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

  WCAS

  VIII ASSOCIATES, L.L.C., its General Partner

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

  By:

  	

   

  
	

   

  	

   

  	

  Name:

  	

   

  
	

   

  	

   

  	

  Title:

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

  BTC

  INTERNATIONAL HOLDINGS, INC.

  
	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

   

  
	

   

  	

  Name:

  	

  Brian

  R. Stone

  
	

   

  	

  Title:

  	

  Chief

  Financial Officer

  
	

   

  	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  BANCTEC

  (PUERTO RICO), INC.

  
	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

   

  
	

   

  	

  Name:

  	

   

  
	

   

  	

  Title:

  	

   

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  BANCTEC

  UPPER-TIER HOLDING, LLC

  
	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

   

  
	

   

  	

  Name:

  	

   

  
	

   

  	

  Title:

  	

   

  
	

   

  	

   

  
	

   

  	

   

  

 

 

 

	

   

  	

  BANCTEC

  INTERMEDIATE HOLDING, INC.

  
	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

   

  
	

   

  	

  Name:

  	

   

  
	

   

  	

  Title:

  	

   

  

 

 

 

SCHEDULE I

 

Original Borrower

Transfer Agreements

 

 

1.               Property

Transfer Agreement, dated November 27, 2002, executed by Original

Borrower, in favor of Additional Borrower.

 

2.               Hardware

Agreement, dated November 27, 2002, executed by Original Borrower and

Additional Borrower.

 

3.               Master

Know-How Agreement, dated November 27, 2002, executed by Original Borrower and

Additional Borrower.

 

4.               Trademark

License Agreement, dated November 27, 2002, executed by Original Borrower and

Additional Borrower.

 

5.               Software

Agreement, dated November 27, 2002, executed by Original Borrower and Additional

Borrower.

 

 

 

SCHEDULE II

 

Additional Borrower

Ancillary Agreements

 

1.               Master

Know-How Agreement, dated November 27, 2002, executed by Additional

Borrower and BTJ.

 

2.               Software

Reseller Agreement, dated November 27, 2002, executed by Additional

Borrower and BTJ.

 

3.               Agreement

for Purchase of Spare Parts Products, dated November 27, 2002,

executed by Additional Borrower and BTJ.

 

4.               Trademark

License Agreement, dated November 27, 2002, executed by Additional

Borrower and BTJ.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00045-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00045-of-00352.parquet"}]]