EXHIBIT 2.1
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ASSET PURCHASE AGREEMENT
between
ALLTELL INFORMATION SERVICES, INC.,
EURONET USA INC.
and
EFT NETWORK SERVICES, LLC
Dated as of January 4, 2002
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TABLE OF CONTENTS
Page
Section 1. Definitions .................................................. 1
Section 2. Basic Transaction ............................................ 6
(a) Purchase and Sale of Assets .................................. 6
(b) Assumption of Liabilities .................................... 6
(c) Excluded Liabilities ......................................... 6
(d) Preliminary Purchase Price ................................... 7
(e) Preparation of Net Working Capital Statements ................ 7
(f) The Closing .................................................. 9
(g) Deliveries at the Closing .................................... 9
(h) Allocation ................................................... 9
Section 3. Representations and Warranties of Seller ..................... 9
(a) Organization ................................................. 10
(b) Authorization of Transaction ................................. 10
(c) Noncontravention ............................................. 10
(d) Brokers' Fees ................................................ 11
(e) Title to Assets .............................................. 11
(f) Financial Statements ......................................... 11
(g) Events Subsequent to December 31, 2000 ....................... 11
(h) Undisclosed Liabilities ...................................... 12
(i) Legal Compliance ............................................. 13
(j) Tax Matters .................................................. 13
(k) Real Property ................................................ 14
(l) Intellectual Property ........................................ 15
(m) Condition and Sufficiency of Assets .......................... 19
(n) Contracts .................................................... 19
(o) Notes and Accounts Receivable ................................ 20
(p) Powers of Attorney ........................................... 21
(q) Insurance .................................................... 21
(r) Litigation ................................................... 21
(s) Product Warranty ............................................. 21
(t) Guaranties ..................................................... 21
(u) Environmental, Health and Safety Matters ....................... 22
(v) Certain Business Relationships With Parent ..................... 22
(w) Employees ...................................................... 22
(x) Settlement Accounts ............................................ 22
(y) Networks ....................................................... 23
Section 4. Representations and Warranties of Buyer ........................ 23
(a) Organization of Buyer .......................................... 23
(b) Authorization of Transaction ................................... 23
(c) Noncontravention ............................................... 23
(d) Brokers' Fees .................................................. 24
Section 5. Post-closing Covenants ......................................... 24
(a) General ........................................................ 24
(b) Litigation Support ............................................. 24
(c) Transition; Sales Referrals .................................... 25
(d) Confidentiality ................................................ 25
(e) Solicitation of Transferred Employees .......................... 25
(f) Recruiting of Employees ........................................ 25
(g) Relocation of Facilities ....................................... 25
Section 6. Remedies for Breaches of This Agreement ........................ 26
(a) Survival of Representations and Warranties ..................... 26
(b) Indemnification Provisions for Benefit of Buyer ................ 26
(c) Indemnification Provisions for Benefit of Seller ............... 27
(d) Matters Involving Third Parties ................................ 27
(e) Determination of Adverse Consequences .......................... 28
(f) Other Indemnification Provisions ............................... 28
Section 7. Miscellaneous .................................................. 28
(a) Public Announcements and Disclosures ........................... 28
(b) No Third-party Beneficiaries ................................... 29
(c) Entire Agreement ............................................... 29
(d) Succession and Assignment ...................................... 29
(e) Counterparts ................................................... 29
(f) Headings ....................................................... 29
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(g) Notices ........................................................ 29
(h) Governing Law .................................................. 30
(i) Amendments and Waivers ......................................... 30
(j) Severability ................................................... 30
(k) Expenses ....................................................... 30
(l) Construction ................................................... 30
(m) Incorporation of Exhibits and Schedules ........................ 31
(n) Specific Performance ........................................... 31
(o) Employment of Seller Employees ................................. 31
(p) Bulk Transfer Laws ............................................. 32
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT entered into as of January 4, 2002 by
and between ALLTEL Information Services, Inc., an Arkansas corporation (the
"Buyer"), Euronet USA Inc., an Arkansas corporation (the "Parent"), and EFT
Network Services, LLC d/b/a DASH Network, an Arkansas limited liability company
(the "Seller"). Buyer, Parent and Seller are referred to collectively herein as
the "Parties."
WHEREAS, Seller wishes to sell, and Buyer wishes to purchase,
substantially all of the assets of Seller on the terms and subject to the
conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and the mutual
promises herein made and in consideration of the representations, warranties and
covenants herein contained, the Parties agree as follows.
Section 1. Definitions.
"Acquired Assets" means (1) all right, title and interest in and to all
of the following assets owned by Seller: (a) all tangible personal property
(including the personal computers and other equipment, furniture, and other
tangible personal property listed in Section 3(e) of the Disclosure Schedule),
(b) all Intellectual Property, including goodwill associated therewith, licenses
and sublicenses granted and obtained with respect thereto and rights thereunder,
remedies against infringements thereof and rights to protection of interests
therein under the laws of all jurisdictions (including the Intellectual Property
listed in Section 3(l)(i)(A) of the Disclosure Schedule, except for the Parent
Intellectual Property and Third Party Intellectual Property), (c) the specific
agreements, contracts, leases and licenses listed in Section 3(n) of the
Disclosure Schedule, (d) all accounts, notes and other receivables, (e) all
securities, (f) claims, deposits, prepayments, refunds, causes of action, rights
of recovery, rights of set off and rights of recoupment (including any such item
relating to the payment of Taxes) relating to any of the Acquired Assets, (g)
all franchises, approvals, permits, licenses, orders, registrations,
certificates, variances and similar rights obtained from governments and
governmental agencies, (h) all books, records, ledgers, files, documents,
correspondence, lists, plats, architectural plans, drawings and specifications,
creative materials, advertising and promotional materials, studies, reports and
other printed or written materials, (i) all Cash and (j) all memberships, and
all interests and rights related thereto, in the Networks; provided, however,
that the Acquired Assets shall not include (A) certificates of organization,
qualifications to conduct business as a foreign limited liability company,
arrangements with registered agents relating to foreign qualifications, taxpayer
and other identification numbers, seals, minute books, stock or membership
interest transfer books, blank stock or membership interest certificates and
other documents relating to the organization, maintenance and existence of
Seller as a limited liability company or (B) the Parent Receivable, and (2) the
assets listed in Exhibit D hereto. The Acquired Assets shall include the assets
described in subparagraphs (1)(d), (e) and (i) above only in an aggregate amount
equal to that indicated on the Net Working Capital Statement;.
"Adverse Consequences" means all actions, suits, proceedings, hearings,
investigations, charges, complaints, claims, demands, injunctions, judgments,
orders, decrees, rulings, damages, dues, penalties, fines, costs, amounts paid
in settlement, Liabilities, obligations, Taxes, liens, losses, expenses and
fees, including court costs and reasonable attorneys' fees and expenses.
"Affiliate" means, with respect to any Party, any other Person that
controls, is controlled by, or is under common control with, such Party.
"Affiliated Group" means any affiliated group within the meaning of
Code ss. 1504(a) or any similar group defined under a similar provision of
state, local or foreign law.
"Assumed Liabilities" means the meaning set forth in Section 2(b)
below.
"Basis" means any past or present fact, situation, circumstance,
status, condition, activity, practice, plan, occurrence, event, incident,
action, failure to act or transaction that forms or could form the basis for any
specified consequence.
"Buyer" has the meaning set forth in the preface above.
"Cash" means cash and cash equivalents (including marketable securities
and short-term investments) calculated in accordance with GAAP applied on a
basis consistent with the preparation of the Financial Statements.
"Closing" has the meaning set forth in Section 2(f) below.
"Closing Date" has the meaning set forth in Section 2(f) below.
"Code" means the Internal Revenue Code of 1986, as amended.
"Confidential Information" means any information concerning the
businesses and affairs of Seller that is not already generally available to the
public.
"Disclosure Schedule" has the meaning set forth in Section 3 below.
"Embedded Third Party Intellectual Property" has the meaning set forth
in Section 3(l)(i) below.
"Environmental, Health and Safety Requirements" shall mean all federal,
state, local and foreign statutes, regulations, ordinances and other provisions
having the force or effect of law, all judicial and administrative orders and
determinations, all contractual obligations and all common law concerning public
health and safety, worker health and safety and pollution or protection of the
environment, including, without limitation, all those relating to the presence,
use, production, generation, handling, transportation, treatment, storage,
disposal, distribution, labeling, testing, processing, discharge, release,
threatened release, control or cleanup of any hazardous materials, substances or
wastes, chemical substances or mixtures, pesticides, pollutants, contaminants,
toxic chemicals, petroleum products or byproducts, asbestos, polychlorinated
biphenyls, noise or radiation, each as amended and as now or hereafter in
effect.
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"Escrow Agent" means J.P. Morgan Trust Company, National Association.
"Escrow Agreement" means the Escrow Agreement executed by Buyer, the
Sellers and the Escrow Agent concurrently herewith.
"Escrow Fund" has the meaning set forth in Section 2(d)(ii).
"Escrow Obligations" has the meaning set forth in the Escrow Agreement.
"Estimated Net Working Capital Statement" has the meaning set forth in
Section 2(e) below.
"Excluded Liabilities" shall have the meaning set forth in Section
2(c) below.
"Financial Statement" has the meaning set forth in Section 3(f) below.
"GAAP" means U.S. generally accepted accounting principles as in effect
from time to time.
"Including" shall mean "including, but not limited to."
"Indemnifiable Claim" has the meaning set forth in the Escrow
Agreement.
"Indemnified Party" has the meaning set forth in Section 6(d) below.
"Indemnifying Party" has the meaning set forth in Section 6(d) below.
"Intellectual Property" means the following: (i) all inventions,
discoveries, improvements, ideas, know-how, methodology, processes, and other
proprietary technology (whether or not patentable), as well as all United States
and foreign patents and patent applications (including all reissues,
continuations, continuations-in-part, divisions, renewals or extensions
thereof); (ii) all software, algorithms, source code, object code, data
structures, data models, data bases and flowcharts, any versions, updates,
customizations, and modifications of the foregoing; (iii) all copyrights and
copyrightable works, including but not limited to mask works, writings, designs,
or other original works of authorship and derivative works thereof (including
those for which registration has been applied, which are registered, or which
are unregistered); (iv) all U.S., state and foreign trademarks, service marks,
trade dress, trade names and other names, slogans and logos embodying
indications of origin, and all goodwill associated therewith (including those
for which registration has been applied, which are registered, or which are
unregistered); (v) all trade secrets including confidential and other non-public
information for which there exists a right in any jurisdiction to limit the use
or disclosure thereof; (vi) all Internet web sites, domain names, and
registrations or applications for registration thereof; (vii) all licenses,
covenants not to sue and the like relating to any of the foregoing; and (viii)
all documents, books and records describing, recording or otherwise used in
connection with any of the foregoing.
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"Knowledge of Seller" means the actual knowledge of any of Kenneth L.
Kerr, Ron Ferguson, Leslie Wheelock, and Mike Brown.
"Liability" means any liability (whether known or unknown, whether
asserted or unasserted, whether absolute or contingent, whether accrued or
unaccrued, whether liquidated or unliquidated and whether due or to become due),
including any liability for Taxes.
"Most Recent Balance Sheet" means the balance sheet contained within
the Most Recent Financial Statements.
"Most Recent Financial Statements" has the meaning set forth in Section
3(f) below.
"Most Recent Fiscal Month End" has the meaning set forth in Section
3(f) below.
"Net Working Capital Statement" has the meaning set forth in Section
2(e) below.
"Net Working Capital Adjustment" has the meaning set forth in Section
2(e) below.
"Network" has the meaning set forth in Section 3(y).
"Operating Rules" has the meaning set forth in Section 3(y).
"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity and
frequency).
"Parent" has the meaning set forth in the preface above.
"Parent Contractor" has the meaning set forth in Section 3(l)(vii)
below.
"Parent Contractor Agreements" has the meaning set forth in Section
3(l)(vii) below.
"Parent Intellectual Property" has the meaning set forth in Section
3(l)(i).
"Parent Receivable" means the aggregate amount due to Seller from
Parent in respect of Cash distributions made from time to time by Seller to
Parent.
"Party" has the meaning set forth in the preface above.
"Person" means an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization or a governmental entity (or any department, agency or political
subdivision thereof).
"Products" has the meanings set forth in Section 3(l)(i)(D).
"Purchase Price" has the meaning set forth in Section 2(e) below.
"Security Interest" means any mortgage, pledge, lien, encumbrance,
charge or other security interest, other than (a) mechanic's, materialmen's and
similar liens, (b) liens for Taxes
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not yet due and payable, or (c) purchase money liens and liens securing rental
payments under capital lease arrangements.
"Seller" has the meaning set forth in the preface above.
"Seller Contractor" has the meaning set forth in Section 3(l)(vii)
below.
"Seller Contractor Agreements" has the meaning set forth in Section
3(l)(vii) below.
"Seller Intellectual Property" has the meaning set forth in Section
3(l)(i) below.
"Seller Real Property" has the meaning set forth in Section 3(k)(iii).
"Settlement Accounts" has the meaning set forth in Section 3(x) below.
"Subsidiary" means any corporation with respect to which a specified
Person (or a Subsidiary thereof) owns a majority of the common stock or has the
power to vote or direct the voting of sufficient securities to elect a majority
of the directors.
"Tax" means any federal, state, local or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental (including taxes under Code (S) 59A),
customs duties, capital stock, franchise, profits, withholding, social security
(or similar), unemployment, disability, real property, personal property, sales,
use, transfer, registration, value added, alternative or add-on minimum,
estimated or other tax of any kind whatsoever, including any interest, penalty
or addition thereto, whether disputed or not.
"Tax Return" means any return, declaration, report, claim for refund or
information return or statement relating to Taxes, including any schedule or
attachment thereto and including any amendment thereof.
"Third Party Claim" has the meaning set forth in Section 6(d) below.
"Third Party Intellectual Property" has the meaning set forth in
Section 3(l)(i) below.
"Transferred Employees" has the meaning set forth in Section 7(o)
below.
Section 2. Basic Transaction.
(a) Purchase and Sale of Assets.
(i) On and subject to the terms and conditions of
this Agreement, on the Closing Date, Buyer agrees to purchase
from Seller, and Seller agrees to sell, transfer, convey and
deliver to Buyer, all of the Acquired Assets (other than the
assets listed in Exhibit D hereto) at the Closing free and
clear of all Security Interests.
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(ii) On and subject to the terms and conditions of
this Agreement, on January 6, 2002, Buyer agrees to purchase
from Parent, and Parent agrees to sell, transfer, convey and
deliver to Buyer, all of the assets listed in Exhibit D hereto
free and clear of all Security Interests.
(b) Assumption of Liabilities. On the terms and subject to the
conditions set forth in this Agreement, on the Closing Date, Buyer
agrees to assume pay, perform and discharge the following (the "Assumed
Liabilities"): (i) the liabilities and obligations of Seller to be
performed and paid after the Closing Date under the agreements,
contracts, leases and licenses included in the Acquired Assets, other
than any of the foregoing that is an Excluded Liability, and (ii)
accounts payable and accrued expenses of Seller as of the Closing Date
incurred in the Ordinary Course of Business, other than any of the
foregoing that is an Excluded Liability, in an aggregate amount not
more than the aggregate amount of accounts payable and accrued expenses
set forth in the Net Working Capital Statement.
(c) Excluded Liabilities. Buyer will not assume or have any
responsibility with respect to any Liability of Seller not specifically
included within the definition of Assumed Liabilities (such liabilities
and obligations not being assumed being herein called the "Excluded
Liabilities"). Notwithstanding anything to the contrary contained in
this Agreement or any disclosure contained in the Disclosure Schedules,
none of the following shall constitute or be deemed to be Assumed
Liabilities for purposes of this Agreement, but shall instead
constitute Excluded Liabilities:
(i) any Liability of Seller in respect of any (A)
accounts payable or accrued expenses of Seller attributable to
any period (or portion thereof) ending on or before the
Closing (irrespective of whether any invoice, statement or
bill for such amounts is received by Seller or Buyer or due
after the Closing) in an amount in excess of the aggregate
amount of accounts payable and accrued expenses set forth in
the Estimated Net Working Capital Statement, (B) Seller's
compensation and benefits for its employees, including wages,
incentives, commissions, bonuses, vacation pay, paid days off,
pension and retirement through the Closing Date and all prior
calendar years, (C) amounts payable by Seller to any employee
that is not a Transferred Employee or employee of Seller
accruing as a result of the execution and delivery of this
Agreement or the performance of the transactions contemplated
hereby, (D) any bank or third party debt, (E) any tort or
violation of law committed by Seller or any of its directors,
officers, employees or agents (including any noncompliance
with any federal, state or local law respecting employment or
employment practices, terms and conditions), (F) any breach of
any representation, warranty or covenant occurring prior to
the Closing under any agreement, license or lease included in
the Acquired Assets, (G) any litigation, claim, cause of
action, suit, investigation or proceeding pending or asserted
against Seller, or accruing or occurring, before the Closing
(including any claim of wrongful discharge, claim of
employment discrimination or claim of sexual harassment
pending or asserted against Seller, or accruing or occurring,
before the Closing), and (H) any actual or threatened demand,
suit, action or proceeding which involves a claim of
infringement or
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misappropriation of any Intellectual Property
right (including without limitation patent, copyright, trade
mark, and trade secret rights) of any third party,
(ii) any Liability of Seller for unpaid Taxes for
periods prior to the Closing,
(iii) any Liability of Seller for income Taxes
arising in connection with the consummation of the
transactions contemplated hereby,
(iv) any obligation of Seller to indemnify any
Person by reason of the fact that such Person was a director,
officer, employee or agent of Seller or was serving at the
request of Seller as a partner, trustee, director, officer,
employee or agent of another entity (whether such
indemnification is for judgments, damages, penalties, fines,
costs, amounts paid in settlement, losses, expenses or
otherwise and whether such indemnification is pursuant to any
statute, charter document, bylaw, agreement or otherwise), and
(v) any Liability of Seller for costs and expenses
incurred in connection with this Agreement and the
transactions contemplated hereby.
(d) Preliminary Purchase Price. Subject to the terms and
conditions of this Agreement:
(i) Buyer agrees to pay to Seller at the Closing
$6,142,592 [$5,850,000 plus $292,592] less or plus, as the
case may be, the Estimated Net Working Capital Adjustment, if
any, by delivery of cash payable by wire transfer or delivery
of other immediately available funds.
(ii) In order to secure Seller's obligations
hereunder and to indemnify Buyer pursuant to this Agreement,
Buyer shall deposit on the Closing Date with the Escrow Agent
an amount equal to $650,000 by wire transfer to a separate
account specified in writing by the Escrow Agent (the "Escrow
Fund"), which amount the Escrow Agent shall hold for the
benefit of Buyer and Seller pursuant to the terms of this
Agreement and the Escrow Agreement.
The aggregate amount paid by Buyer pursuant to Sections
2(d)(i) and (ii) is referred to herein as the "Preliminary Purchase
Price." The Preliminary Purchase Price shall be subject to adjustment
as set forth in Section 2(e) below.
(e) Preparation of Net Working Capital Statements.
(i) On the day prior to the Closing Date, Buyer and
Seller shall prepare and attach to this Agreement as Exhibit A
a draft statement (the "Estimated Net Working Capital
Statement") of the Estimated Net Working Capital (as defined
below). The "Estimated Net Working Capital" shall mean the
difference between the book value of the Acquired Assets that
are current assets and the book value of the Assumed
Liabilities that are current liabilities, in each case
determined as of the close of business on the day before the
Closing Date on
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a pro forma basis as though the Parties had not consummated
the transactions contemplated by this Agreement. Subject to
the foregoing, the Estimated Net Working Capital shall be
calculated in accordance with generally accepted accounting
principles applied on a basis consistent with the
preparation of Buyer's financial statements; provided,
however, that (i) no amounts shall be excluded from such
calculation solely because such amounts are or would be
deemed to be immaterial under generally accepted accounting
principles, and (ii) assets, liabilities, gains, losses,
revenues, and expenses in interim periods or as of dates
other than year-end (which normally are determined through
the application of so-called interim accounting conventions
or procedures) will be determined through full application
of the procedures used in preparing Buyer's year end financial
statements.
(ii) If the amount of the Estimated Net Working
Capital is less than $400,000, then the amount by which it is
less than $400,000 shall be deducted from the Preliminary
Purchase Price. If the amount of the Estimated Net Working
Capital is greater than $400,000, then the amount by which it
is greater than $400,000 shall be added to the Preliminary
Purchase Price.
(iii) Within 60 days after the Closing Date, Buyer
will prepare and deliver to Seller a statement (the "Net
Working Capital Statement") of the Net Working Capital. The
"Net Working Capital" shall mean the difference between the
book value of the Acquired Assets that are current assets and
the book value of the Assumed Liabilities that are current
liabilities, in each case determined as of the close of
business on the Closing Date on a pro forma basis as though
the Parties had not consummated the transactions contemplated
by this Agreement. Subject to the foregoing, the Net Working
Capital shall be calculated in accordance with generally
accepted accounting principles applied on a basis consistent
with the preparation of Buyer's financial statements;
provided, however, that (i) no amounts shall be excluded from
such calculation solely because such amounts are or would be
deemed to be immaterial under generally accepted accounting
principles, and (ii) assets, liabilities, gains, losses,
revenues, and expenses in interim periods or as of dates other
than year-end (which normally are determined through the
application of so-called interim accounting conventions or
procedures) will be determined through full application of the
procedures used in preparing Buyer's year end financial
statements.
(iv) If Seller has any objection to the Net Working
Capital Statement, it will deliver a detailed statement
describing its objections to Buyer within 30 days after
receiving the Net Working Capital Statement. If Seller does
not give notice of an objection within such time period, then
the Seller shall be deemed to have agreed to and accepted the
Net Working Capital Statement. If Seller has any objections to
the Net Working Capital Statement, Buyer and Seller will use
reasonable efforts to resolve any such objections. Buyer will
revise the Net Working Capital Statement as appropriate to
reflect the actual Net Working Capital, as determined by the
Parties upon resolution of any objections raised by Seller.
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(v) If the Final Net Working Capital, as determined
pursuant to Section 2(e)(iv) above, is more than the Estimated
Net Working Capital, then Buyer shall pay to Seller an amount
equal to the difference by wire transfer or delivery of other
immediately available funds within three business days after
the date on which the Net Working Capital Statement finally is
determined pursuant to Section 2(e)(iv) above. If the Final
Net Working Capital, as determined pursuant to Section
2(e)(iv) above, is less than the Estimated Net Working
Capital, then Seller shall pay to Buyer an amount equal to
the difference by wire transfer or delivery of other
immediately available funds within three business days after
the date on which the Net Working Capital Statement finally
is determined pursuant to Section 2(e)(iv) above; provided,
however, in the event Buyer has an Indemnifiable Claim which
has not been finally resolved pursuant to the terms of the
Escrow Agreement and the amount of the Indemnifiable Claim
exceeds the Escrow Fund or is not known or determinable by
Buyer, then any amount otherwise payable by Buyer to Seller
pursuant to the terms of this Section 2(e)(v) shall be
delivered to Escrow Agent to hold in escrow, as security and
collateral for the Escrow Obligations, pursuant to the terms
and conditions of the Escrow Agreement.
(vi) The Preliminary Purchase Price as adjusted by
Section 2(e)(v) is referred to as the "Purchase Price."
(f) The Closing. The closing of the transactions contemplated
by this Agreement (the "Closing") shall take place at the offices of
Buyer in Little Rock, Arkansas on the date of this Agreement (the
"Closing Date").
(g) Deliveries at the Closing. At the Closing, (i) Seller,
Buyer and/or Parent will each execute and deliver a Bill of Sale and
Assignment and Assumption Agreement, a Trademark Assignment Agreement,
a Software License Agreement, an Escrow Agreement, a Transition
Services Agreement, and a Bill of Sale; (ii) Euronet Worldwide, Inc.
(an Affiliate of Parent and Buyer) and Buyer will each execute and
deliver a Sublease Agreement; (iii) Buyer will deliver to Seller the
consideration specified in Section 2(d)(a) above; and (iv) Buyer will
deliver to the Escrow Agent the consideration specified in Section
2(d)(b) above.
(h) Allocation. The Parties agree to allocate the Purchase
Price (and all other capitalizable costs) among the Acquired Assets for
tax purposes in accordance with the allocation schedule attached hereto
as Exhibit B.
Section 3. Representations and Warranties of Seller. Each of Parent and
Seller jointly and severally represent and warrant to Buyer that the statements
contained in this Section 3 are correct and complete as of the date of this
Agreement and will be correct and complete as of the Closing Date, except as set
forth in the disclosure schedule accompanying this Agreement (the "Disclosure
Schedule"). The Disclosure Schedule will be arranged in paragraphs corresponding
to the lettered and numbered paragraphs contained in this Section 3. Nothing in
the Disclosure Schedule shall be deemed adequate to disclose an exception to a
representation or warranty made herein unless the Disclosure Schedule identifies
the exception
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with particularity and describes the relevant facts in detail. Without limiting
the generality of the foregoing, the mere listing (or inclusion of a copy) of a
document or other item shall not be deemed adequate to disclose an exception to
a representation or warranty made herein (unless the representation or warranty
has to do with the existence of the document or other item itself).
(a) Organization.
(i) Seller is a limited liability company duly
organized, validly existing and in good standing under the
laws of the jurisdiction of its organization. Seller is duly
authorized to conduct business and is in good standing under
the laws of each jurisdiction where such qualification is
required. Seller has full limited liability company power and
authority and all licenses, permits and authorizations
necessary to carry on the businesses in which it is engaged
and to own and use the properties owned and used by it. Seller
has no Subsidiaries.
(ii) Parent is a corporation duly organized, validly
existing and in good standing under the laws of the
jurisdiction of its incorporation. Parent owns all of the
membership interests in Seller.
(b) Authorization of Transaction. Each of Parent and Seller
has full power and authority (including as applicable full corporate or
limited liability company power and authority) to execute and deliver
this Agreement and to perform its respective obligations hereunder.
Without limiting the generality of the foregoing, the members of Seller
and the board of directors of Parent have duly authorized the
execution, delivery and performance of this Agreement by Seller. This
Agreement constitutes the valid and legally binding obligation of
Parent and Seller, enforceable in accordance with its terms and
conditions.
(c) Noncontravention. Neither the execution and the delivery
of this Agreement, nor the consummation of the transactions
contemplated hereby (including the assignments and assumptions referred
to in Section 2 above), will (i) violate any constitution, statute,
regulation, rule, injunction, judgment, order, decree, ruling, charge
or other restriction of any government, governmental agency or court to
which Parent or Seller is subject or any provision of the certificate
of organization or membership agreement of Seller or the charter or
bylaws of Parent or, (ii) except as set forth on Section 3(c) of the
Disclosure Schedule, conflict with, result in a breach of, change the
pricing of, constitute a default under, result in the acceleration of,
create in any party the right to accelerate, terminate, modify or
cancel or require any notice or consent under any agreement, contract,
lease, license, instrument or other arrangement to which Seller or
Parent is a party or by which either or them is bound or to which any
of their respective assets is subject (or result in the imposition of
any Security Interest upon any of their respective assets). Neither
Parent nor Seller needs to give any notice, make any filing with
(except under the US securities laws) or obtain any authorization,
consent or approval of any government or governmental agency in order
for the Parties to consummate the transactions contemplated by this
Agreement (including the assignments and assumptions referred to in
Section 2 above).
10
(d) Brokers' Fees. Neither Seller nor Parent has any Liability
or obligation to pay any fees or commissions to any broker, finder or
agent with respect to the transactions contemplated by this Agreement
for which Buyer could become liable or obligated.
(e) Title to Assets. Seller has good and marketable title to
the Acquired Assets (other than the assets listed in Exhibit D), free
and clear of all Security Interests. Parent has or will have on January
6, 2002 good and marketable title to the Acquired Assets listed in
Exhibit D, free and clear of all Security Interests. Section 3(e) of
the Disclosure Schedule and Exhibit D collectively list all fixed
assets used by Seller in the conduct of its business as presently
conducted. Without limiting the generality of the foregoing, Seller has
good and marketable title to all of the tangible Acquired Assets listed
in Section 3(e) of the Disclosure Schedule, free and clear of any
Security Interest or restriction on transfer.
(f) Financial Statements.
(i) Attached hereto as Exhibit C are the following
financial statements for Seller (collectively, the "Financial
Statements"): (i) unaudited balance sheets and statements of
income as of and for the fiscal year ended December 31, 2000;
(ii) unaudited balance sheets and statements of income (the
"Most Recent Financial Statements") as of and for the eleven
months ended November 30, 2001 (the "Most Recent Fiscal Month
End"). The Financial Statements have been prepared in
accordance with GAAP (except that footnotes are not included)
applied on a consistent basis throughout the periods covered
thereby, present fairly the financial condition of Seller as
of such dates and the results of operations of the Acquired
Assets and Seller for such periods, are correct and complete
and are consistent with the books and records of Seller (which
books and records are correct and complete). Section 3(f)(i)
of the Disclosure Schedule sets forth each item of revenue,
expense, asset or liability recorded in any of the Financial
Statements arising from any business arrangement or
relationship with Seller, on the one hand, and Parent and its
other Subsidiaries, on the other hand.
(ii) Section 3(f)(ii) of the Disclosure Schedule
includes a list of all banks and other financial institutions
which Seller maintains an account or safe deposit box, showing
the account number for all such accounts and the names of the
persons authorized as signatories thereon or to act or deal in
connection therewith.
(g) Events Subsequent to December 31, 2000. Since December 31,
2000, there has not been any adverse change in the business, financial
condition, operations, results of operations or future prospects of
Seller. Without limiting the generality of the foregoing, since that
date:
(i) Seller has not sold, leased, transferred or assigned
any of its assets, tangible or intangible (including
Intellectual Property) except in the Ordinary Course of
Business;
11
(ii) no party (including Seller) has accelerated, terminated,
modified or cancelled any agreement, contract, lease or license that
involves payments or compensation in excess of $10,000 (or series of
related agreements, contracts, leases and licenses that in the
aggregate involve payments or compensation in excess of $10,000) (nor
provided notice to the other party thereto of its intention to take
any such action);
(iii) Seller has not imposed any Security Interest upon any of
its assets, tangible or intangible;
(iv) Seller has not cancelled, compromised, waived or released
any right or claim (or series of related rights and claims) in excess
of $50,000;
(v) Seller has not granted or acquired any license or
sublicense of any rights under or with respect to any Intellectual
Property;
(vi) there has been no change made or authorized in the
membership agreement of Seller;
(vii) Seller has not paid any amount in settlement of a claim or
prospective Liability in excess of $50,000 or initiated any dispute
resolution proceedings, arbitration or litigation with respect to any
disputed claim or prospective Liability in excess of $50,000;
(viii) Seller has not experienced any damage, destruction,
casualty or loss (whether or not covered by insurance) to its property
of the Acquired Assets in excess of $50,000;
(ix) Seller has not made any loan to or entered into any other
transaction with, any of its directors, officers and employees outside
the Ordinary Course of Business;
(x) Seller has not granted any increase in or otherwise
modified the base compensation, bonus, commission, severance or other
contract or commitment for the benefit of any of the Transferred
Employees;
(xi) there has not been any other material occurrence, event,
incident, action, failure to act or transaction outside the Ordinary
Course of Business; and
(xii) Seller has not committed to do any of the foregoing.
For purposes of this Agreement, the term "material adverse change" shall
not include any reduction in the revenues or business activity of the
Seller that is the result of or related to general economic conditions in
the markets in which the Seller operates.
(h) Undisclosed Liabilities. Seller has no Liabilities (and, to the
Knowledge of Seller, there is no Basis for any present or future action,
suit, proceeding, hearing, investigation, charge, complaint, claim or
demand against Seller giving rise
12
to any Liabilities), except for (i) Liabilities set forth on the face
of the Most Recent Balance Sheet (including any notes thereto included
in Section 3(f) of the Disclosure Schedule) and (ii) Liabilities which
have arisen after the Most Recent Fiscal Month End in the Ordinary
Course of Business (none of which results from, arises out of, relates
to, is in the nature of or was caused by any breach of contract,
breach of warranty, tort, infringement or violation of law).
(i) Legal Compliance. Seller has complied in all material
respects with all applicable laws (including rules, regulations,
codes, plans, injunctions, judgments, orders, decrees, rulings and
charges thereunder) of federal, state, local and foreign governments
(and all agencies thereof) and no action, suit, proceeding, hearing,
investigation, charge, complaint, claim, demand or notice has been
filed or commenced against any of them alleging any failure so to
comply.
(j) Tax Matters.
(i) Seller has filed all Tax Returns that it was required
to file. All such Tax Returns were correct and complete in all
respects. All Taxes owed by Seller (whether or not shown on any
Tax Return) have been paid. Seller currently is not the
beneficiary of any extension of time within which to file any Tax
Return. No claim has ever been made by an authority in a
jurisdiction where Seller does not file Tax Returns that it is or
may be subject to taxation by that jurisdiction.
(ii) Seller has withheld and paid all Taxes required to
have been withheld and paid in connection with amounts paid or
owing to any Transferred Employee or any independent contractor,
creditor, stockholder or other third party associated in any way
with the Acquired Assets.
(iii) No officer of Seller (or employee responsible for Tax
matters) expects any authority to assess any additional Taxes
with respect to Seller for any period for which Tax Returns have
been filed. To the Knowledge of the Seller, there is no dispute
or claim concerning any Tax Liability of Seller claimed or raised
by any authority in writing.
(iv) Seller has not made any payments, is not obligated to
make any payments or is not a party to any agreement that under
certain circumstances could obligate it to make any payments that
will not be deductible under Code (S) 280G. Seller has disclosed
on its federal income Tax Returns all positions taken therein
that could give rise to a substantial understatement of federal
income Tax within the meaning of Code (S) 6662. Seller is not a
party to any Tax allocation or sharing agreement, but is required
to allocate income taxes in accordance with the Code. Seller has
no Liability for the Taxes of any Person (other than Seller)
under Reg. (S) 1.1502-6 (or any similar provision of state, local
or foreign law), as a transferee or successor, by contract or
otherwise.
13
(v) The unpaid Taxes of Seller (A) did not, as of the Most Recent
Fiscal Month End, exceed the reserve for Tax Liability (rather than
any reserve for deferred Taxes established to reflect timing
differences between book and Tax income) set forth on the face of the
Most Recent Balance Sheet (rather than in any notes thereto) and (B)
do not exceed that reserve as adjusted for the passage of time through
the Closing Date in accordance with the past custom and practice of
Seller in filing its Tax Returns.
(k) Real Property.
(i) Seller does not own and has never owned any real property.
(ii) Seller does not lease or sublease, and has never leased or
subleased, any real property.
(iii) Section 3(k)(iii) of the Disclosure Schedule lists and
describes briefly all real property used or occupied by Seller (the
"Seller Real Property"). With respect to each parcel of Seller Real
Property which is leased or subleased by Parent up to and including
the date on which the Acquired Assets are moved out of the Seller Real
Property by the Seller:
(A) the lease or sublease is in writing and is legal,
valid, binding, enforceable and in full force and effect;
(B) the lease or sublease will continue to be legal, valid,
binding, enforceable and in full force and effect on identical
terms following the consummation of the transactions contemplated
hereby;
(C) no party to the lease or sublease is in breach or
default and no event has occurred which, with notice or lapse of
time, would constitute a breach or default or permit termination,
modification or acceleration thereunder;
(D) no party to the lease or sublease has repudiated any
provision thereof;
(E) there are no disputes, oral agreements or forbearance
programs in effect as to the lease or sublease;
(F) Parent has the right to sublease the Seller Real
Property to Buyer without creating a breach of, default under, or
right to accelerate, terminate, modify or cancel, or any notice
or consent obligation under, the lease or sublease;
(G) with respect to each sublease, the representations and
warranties set forth in subsections (A) through (E) above are
true and correct with respect to the underlying lease;
14
(H) Neither Seller nor Parent has assigned, transferred,
conveyed, mortgaged, deeded in trust or encumbered any interest in the
Seller Real Property;
(I) all facilities leased or subleased thereunder have received
all approvals of governmental authorities (including licenses and
permits) required in connection with the operation thereof and have
been operated and maintained in accordance with applicable laws, rules
and regulations;
(J) all facilities leased or subleased thereunder are supplied
with utilities, an uninterruptible power source and other services
necessary for the operation of said facilities;
(K) to the Knowledge of Seller, there are no environmental
problems or conditions on or relating to the Seller Real Property; and
(l) Intellectual Property.
(i) Except for the Operating System 400 Software licensed by Parent
from IBM, Seller owns or has valid license to all Intellectual Property
required in the Ordinary Course of Business of the Seller as such business
currently operates ("Seller Intellectual Property"). Seller has taken
commercially reasonable measures to protect the proprietary nature of each
item of Seller Intellectual Property considered confidential, and to
maintain in confidence all trade secrets and confidential information
related to Seller Intellectual Property that it presently owns, possesses
or uses.
(A) Section 3(l)(i)(A) of the Disclosure Schedule lists, as of
the date hereof, all Seller Intellectual Property (including, without
limitation, the tradename "DASH", all derivatives thereof, and the
application for registration thereof with the U.S. Patent and
Trademark Office) that is not Third Party Intellectual Property or
Parent Intellectual Property (each as defined below).
(B) Section 3(l)(i)(B) of the Disclosure Schedule lists, as of
the date hereof, all written licenses, sublicenses and other
agreements to which Seller is a party and pursuant to which any Person
is authorized or licensed to use any Seller Intellectual Property
rights. Such list includes the name of the licensee and Seller
Intellectual Property licensed or sublicensed. Such list also
identifies all agreements or other arrangements under which Seller has
provided or agreed to provide source code of any Seller Intellectual
Property or any other Product.
(C) Section 3(l)(i)(C)(1) of the Disclosure Schedule lists, as of
the date hereof, all Intellectual Property to be licensed from Parent
to Buyer under that certain Software License Agreement dated the date
15
hereof between Buyer and Parent ("Parent Intellectual Property")
and all licenses, sublicenses and other agreements (whether
written or unwritten) to which Seller is a party and pursuant to
which Seller acquired any rights from Parent or any other
Affiliate of Seller to any Intellectual Property used by Seller
in the Ordinary Course of Business of Seller. Except as set forth
in Section 3(l)(i)(C)(2) of the Disclosure Schedule, Parent
Intellectual Property includes all Intellectual Property
currently licensed to Seller from Parent or any other Affiliate
of Seller.
(D) Section 3(l)(i)(D) of the Disclosure Schedule lists, as
of the date hereof, all licenses, sublicenses and other
agreements (whether written or unwritten) to which Parent or
Seller is a party and pursuant to which Seller uses or acquired
any rights to any third party Intellectual Property other than
Parent Intellectual Property that are required in the Ordinary
Course of Business of the Seller as such business currently
operates ("Third Party Intellectual Property"). Such schedule
separately identifies any Third Party Intellectual Property which
is incorporated in or an essential component of ("Embedded Third
Party Intellectual Property") any existing software, data base,
hardware, product or service of Seller and any software,
database, hardware, product or service currently under
development by Seller that, in each case, is required in the
Ordinary Course of Business of the Seller as such business
currently operates (collectively with the Parent Intellectual
Property, the "Products"). Such list includes the names of the
licensee and licensors and identifies the subject Third Party
Intellectual Property.
(ii) With respect to each item of Seller Intellectual Property
that is not Parent Intellectual Property or Third Party Intellectual
Property, (i) such item is not subject to any outstanding judgment,
order, decree, stipulation or injunction; and (ii) Seller has the sole
and exclusive right to bring actions for infringement or unauthorized
use of such item and to the Knowledge of Seller, there is no Basis for
any such action. Seller is not a party to any oral license, sublicense
or agreement which, if reduced to written form, would be required to
be listed in Section 3(l)(i)(B) of the Disclosure Schedule.
(iii) With respect to each item of Parent Intellectual Property,
(i) such item is not subject to any outstanding judgment, order,
decree, stipulation or injunction, (ii) Parent owns or has all
applicable rights to license the Parent Intellectual Property,
including all applicable Intellectual Property rights inherent
therein, and neither the license nor use by Buyer as permitted under
the Software License Agreement between Parent and Buyer dated the date
hereof will constitute an infringement or other violation of any
United States trademark, copyright, patent, trade secret or other
intellectual property right of any third party or any foreign
trademark, copyright, patent, trade secret or other intellectual
property right of any third party in a country where Parent has
licensed the Parent Intellectual Property, and (iii) Parent has the
sole and exclusive right to bring actions for infringement or
unauthorized use of such item and to the Knowledge
16
of Seller, there is no Basis for any such action. Parent and Seller
are not parties to any oral license, sub-license or agreement which,
if reduced to written form, would be required to be listed in Section
3(l)(i)(C) of the Disclosure Schedule.
(iv) With respect to each item of Third Party Intellectual
Property being transferred to Buyer under this Agreement: (i) to the
Knowledge of Seller, such item is not subject to any outstanding
judgment, order, decree, stipulation or injunction; (ii) such item is
not subject to any outstanding judgment, order, decree, stipulation or
injunction involving Seller; (iii) to the Knowledge of Seller, there
is no Basis for any action for infringement or unauthorized use of
such item; (iv) there is no Basis for any action against or involving
Seller for infringement or unauthorized use of such item; (v) the
license, sublicense or other agreement covering such Third Party
Intellectual Property irrevocably grants to Seller a perpetual license
to use the Third Party Intellectual Property and is legal, valid,
binding, enforceable and in full force and effect with respect to
Seller, and, with respect to each other party thereto; (vi) Seller is
not in breach or default thereunder, and, to the Knowledge of Seller,
no other party to such license, sublicense or other agreement is in
breach or default thereunder, and no event has occurred which with
notice or lapse of time would constitute a material breach or default
by Seller or permit termination, modification or acceleration
thereunder by the other party thereto; and (vii) Seller has the
authority to transfer its interests in the Third Party Intellectual
Property without the necessity of obtaining consents or paying fees
and without adverse effect on the use by Buyer of such Third Party
Intellectual Property in the Ordinary Course of Business. Seller is
not a party to any oral license, sublicense or agreement which, if
reduced to written form, would be required to be listed in Section
3(l)(i)(D) of the Disclosure Schedule.
(v) Neither Seller nor Parent (i) is involved in any suit,
action or proceeding which involves a claim of infringement or
misappropriation of any Intellectual Property right of any third
party, or (ii) has received any written notice alleging any such claim
or possible claim or offering to license any third party Intellectual
Property in order to avoid or lessen the chance of being subject to
any such claim. The development, manufacturing, marketing, licensing,
use or sale of the Products or the performance of the services offered
in the Ordinary Course of Business by Seller do not currently
infringe, and have not infringed, upon any Intellectual Property right
of any third party. Section 3(l)(v) of the Disclosure Schedule lists
all marketing agreements or similar arrangements, including OEM,
distributor, sales agent, finder's fee or similar arrangements for the
direct or indirect marketing of any Seller Intellectual Property.
(vi) The execution and delivery of this Agreement by Seller, and
the consummation of the transactions contemplated hereby, will neither
cause Seller to be in violation or default under any agreement
relating to Intellectual Property, nor terminate nor modify nor
entitle any other party to any such license, sublicense or agreement
to terminate or modify such license, sublicense or agreement
(including any modification to pricing terms) nor result in the loss
or impairment of any Seller Intellectual Property.
17
(vii) Seller has taken commercially reasonable security measures
to safeguard and maintain the secrecy, confidentiality and value of,
and its property rights in, all Seller Intellectual Property. Parent
has taken commercially reasonable security measures to safeguard and
maintain the secrecy, confidentiality and value of, and its property
rights in, all Parent Intellectual Property.
(A) Set forth in Section 3(l)(vii)(A) of the Disclosure
Schedule is a list of all (1) agents, consultants, contractors,
and subcontractors involved in the development, support,
customization, installation, maintenance or modification of any
Seller Intellectual Property, other than Parent Intellectual
Property, on the date of this Agreement (individually a "Seller
Contractor" and collectively, the "Seller Contractors") along
with a list of his, her or its respective written or oral
agreement (individually a "Seller Contractor Agreement" and
collectively the "Seller Contractor Agreements"); and (2) agents,
consultants, contractors, and subcontractors involved in the
development, support, customization, installation, maintenance or
modification of any Parent Intellectual Property on the date of
this Agreement (individually a "Parent Contractor" and
collectively, the "Parent Contractors") along with a list of his,
her or its respective written or oral agreement (individually a
"Parent Contractor Agreement" and collectively the "Parent
Contractor Agreements"). Also set forth on Section 3(l)(vii)(A)
of the Disclosure Schedule is a true and complete list of all
written or oral Seller Contractor Agreements and Parent
Contractor Agreements which have one or more continuing
obligations as of the date hereof and as of the Closing Date by
Seller or Parent. No current or prior officers, employees,
agents, Seller Contractors or consultants of Seller has or claims
any ownership interest or similar right in any Seller
Intellectual Property as a result of having been involved in the
development of such property while employed by or consulting to
Seller, or otherwise. No current or prior officers, employees,
agents, Parent Contractors or consultants of Parent has or claims
any ownership interest or similar right in any Parent
Intellectual Property as a result of having been involved in the
development of such property while employed by or consulting to
Parent, or otherwise.
(B) All software that is included in Seller Intellectual
Property is protectable under applicable copyright law and has
not been forfeited to the public domain and has been registered
with the U.S. Copyright Office or is eligible for registration.
Seller has retained copies of all releases or separate versions
of the software included in Seller Intellectual Property (that is
not Parent Intellectual Property or Third Party Intellectual
Property) and source code thereto, so that the same may be
subject to registration in the United States Copyright Office.
(viii) Seller has not been given oral or written notice by any
customer of any (i) material defects, malfunctions or nonconformities
in the Products
18
(including, without limitation, any customization and
installation thereof); (ii) material errors in any documentation,
specifications, manuals, user guides, or promotional material
related to, associated with or used or produced in the
development, maintenance or marketing of the Products
(collectively, the "Design Documentation"). The Design
Documentation is sufficient and adequate to enable a Person of
reasonable skill and experience in the relevant art to operate
the Products. All Products are as described in the Design
Documentation and perform in all material respects in accordance
with the specifications included therein and in an integrated
manner. Section 3(l)(viii) of the Disclosure Schedule includes a
description of the functionality of the Products. Section
3(l)(viii) of the Disclosure Schedule also identifies, with
respect to each function thereof, all Embedded Third Party
Intellectual Property necessary to perform such function. Except
as disclosed in Section 3(l)(viii) of the Disclosure Schedule, no
software contained within the Products contains any timer, virus,
copy protection device, disabling code, clock, counter or other
limiting design or routine which causes such software (or any
portion thereof) to become erased, inoperable, impaired, or
otherwise incapable of being used in the full manner for which it
was designed and contemplated under this Agreement. There are no
contracts in effect for the conversion, modification or
enhancement of any Product.
(ix) Seller Intellectual Property (that is not Parent
Intellectual Property or Third Party Intellectual Property) was
developed exclusively by employees of Seller within the scope of
such employees' employment.
(x) Section 3(l)(x) of the Disclosure Schedule lists all
claims based on breach of contract or warranty (including any
pending claims) related to the Products and Seller Intellectual
Property (that is not Third Party Intellectual Property) and the
nature of such claims. Except as set forth in Section 3(l)(x) of
the Disclosure Schedule, neither Seller nor Parent has made any
material oral or written representations or warranties with
respect to the Products.
(m) Condition and Sufficiency of Assets. The Acquired Assets,
the Parent Intellectual Property, the services to be provided by
Parent and Seller to Buyer under that certain Transitional Services
Agreement dated the date hereof, and the services to be provided by
Parent to Buyer pursuant to the terms of that certain Software License
Agreement dated the date hereof between Buyer and Parent are
sufficient for the continued conduct of Seller's businesses after the
Closing in the same manner as conducted prior to the Closing. Without
limiting the generality of the foregoing, the Acquired Assets include
all production units necessary to conduct the business of Seller as
presently conducted. The Acquired Assets, the Parent Intellectual
Property are free from defects (patent and latent) which would
adversely effect their use in a production environment, have been
maintained in accordance with normal industry practice, are in good
operating condition and repair (subject to normal wear and tear) and
are suitable for the purposes for which they presently are used.
19
(n) Contracts. Section 3(n) of the Disclosure Schedule lists each
contract being assigned to Buyer under this Agreement, including,
without limitation, each agreement (or group of related agreements) of
Seller for the purchase or sale of personal property, or for the
furnishing or receipt of services, the performance of which will
extend over a period of more than one year.
(i) With respect to each agreement referred to in Section
3(n) of the Disclosure Schedule: (i) the agreement is legal,
valid, binding, enforceable and in full force and effect; (ii)
the agreement will continue to be legal, valid, binding,
enforceable and in full force and effect on identical terms
following the consummation of the transactions contemplated
hereby; (iii) Seller is not, and to the Knowledge of Seller, no
other party thereto, is in breach or default or asserted any
notice of default, and to the Knowledge of Seller, no event has
occurred which with notice or lapse of time would constitute a
breach or default or permit termination, modification,
acceleration or a change in pricing, under the agreement; (iv) no
party has repudiated any provision of the agreement; and (v)
Seller has delivered to Buyer true and complete copies of the
agreement. The relationships of Seller with the other Persons who
are parties to agreements described in Section 3(n) of the
Disclosure Schedule are satisfactory commercial working
relationships and (i) no Person within the last twelve months has
threatened to cancel or otherwise terminate, or to the Knowledge
of Seller intends to cancel or otherwise terminate the
relationship of such Person with Seller, (ii) no Person has
during the last twelve months decreased materially or threatened
to decrease or limit materially, or the Knowledge of Seller
intends to modify materially its relationship with Seller or its
usage or purchase of the services or Products from Seller.
(ii) No agreement listed in Section 3(n) of the Disclosure
Schedule, including without limitation any software license
agreement, obligates Seller to deliver future Products and
services, including without limitation any software or new
releases, upgrades, enhancements or modifications of any
software, without receiving any additional compensation
negotiated on arms length terms. No agreement listed in Section
3(n) of the Disclosure Schedule, including without limitation any
software license agreements, obligates Seller to deliver a
product or service, including without limitation any software, or
new releases, upgrades, enhancements or modifications of any
software, that (i) is not in existence, (ii) is not otherwise
owned or licensed by Seller, (iii) is not a commercially
marketable product or service of Seller as of the date hereof
with respect to each customer of Seller, and (iv) would not
satisfy all performance representations, warranties, or covenants
in such applicable agreement as of the date hereof. Section 3(n)
of the Disclosure Schedule does not list any agreement in which
Seller is behind schedule in meeting any future service or
product deliverable commitments or is reasonably likely to not
meet on a timely basis any future service or product deliverable
commitments. No agreement listed in Section 3(n) of the
Disclosure Schedule has resulted or is reasonably likely to
result in a net loss (as calculated on a fully-loaded basis,
including appropriate allocations of overhead, interest, Tax, and
employee benefit costs). On the date hereof, Seller has the
technical and
20
personnel capability, expertise, and capacity to adequately perform all of
its respective obligations under the agreements listed in Section 3(n) of
the Disclosure Schedule, in a timely, professional and workmanlike manner,
and in a manner that satisfies all of the performance representations,
warranties, standards and covenants of the agreements.
(o) Notes and Accounts Receivable. All notes and accounts receivable of
Seller included in Acquired Assets are reflected properly on its books and
records, are valid receivables subject to no setoffs or counterclaims, are
current and collectible and will be collected in accordance with their terms at
their recorded amounts, subject only to the reserve for bad debts set forth on
the face of the Most Recent Balance Sheet as adjusted for the passage of time
through the Closing Date in accordance with the past custom and practice of
Seller.
(p) Powers of Attorney. There are no outstanding powers of attorney
executed on behalf of Seller.
(q) Insurance. Seller has been covered during the past two years by
insurance in scope and amount customary and reasonable for the businesses in
which it has engaged during the aforementioned period. Section 3(q) of the
Disclosure Schedule describes any self-insurance arrangements affecting Seller.
(r) Litigation. Section 3(r) of the Disclosure Schedule sets forth each
instance in which Seller (i) is subject to any outstanding injunction, judgment,
order, decree, ruling or charge that could affect the Acquired Assets (ii) is a
party or, to the Knowledge of Seller, is threatened to be made a party to any
action, suit, proceeding, hearing or investigation of, in or before any court or
quasi-judicial or administrative agency of any federal, state, local or foreign
jurisdiction or before any arbitrator.
(s) Product Warranty. Each product, including software, manufactured, sold,
leased or delivered by Seller under the agreements assigned as part of the
Acquired Assets has been in conformity with all applicable contractual
commitments and all express and implied warranties, and Seller has no Liability
(and, to the Knowledge of the Seller, there is no Basis for any present or
future action, suit, proceeding, hearing, investigation, charge, complaint,
claim or demand against it giving rise to any Liability) for replacement or
repair thereof or other damages in connection therewith, subject only to the
reserve for product warranty claims set forth on the face of the Most Recent
Balance Sheet as adjusted for the passage of time through the Closing Date in
accordance with the past custom and practice of Seller. No product manufactured,
sold, leased or delivered by Seller is subject to any guaranty, warranty or
other indemnity beyond the applicable standard terms and conditions of sale or
lease or the terms of any agreement under which they were sold. Section 3(s) of
the Disclosure Schedule includes copies of the standard terms and conditions of
sale or lease for each of Seller (containing applicable guaranty, warranty and
indemnity provisions).
(t) Guaranties. Seller is not a guarantor or otherwise is liable for any
Liability or obligation (including indebtedness) of any other Person.
21
(u) Environmental, Health and Safety Matters. Seller and its
respective predecessors have complied and is in compliance with all
Environmental, Health and Safety Requirements. Without limiting the
generality of the foregoing, Seller and its respective Affiliates has
obtained and complied with, and is in compliance with, all permits,
licenses and other authorizations that are required pursuant to
Environmental, Health and Safety Requirements for the occupation of its
facilities and the operation of its business.
Neither Seller nor its predecessors has received any written or oral
notice, report or other information regarding any actual or alleged
violation of Environmental, Health and Safety Requirements or any
liabilities or potential liabilities (whether accrued, absolute,
contingent, unliquidated or otherwise), including any investigatory,
remedial or corrective obligations, relating to any of them or its
facilities arising under Environmental, Health and Safety Requirements.
(v) Certain Business Relationships With Parent. Except as disclosed on
Section 3(v) of the Disclosure Schedule, none of Seller and its Affiliates
has been involved in any business arrangement or relationship with Parent
and its Affiliates within the past 12 months with respect to the business
of Seller, and none of Parent and its Affiliates owns any asset, tangible
or intangible, which is used in or necessary to conduct the business of
Seller as it is presently conducted. Neither Seller, nor any officer, agent
employee of Seller has (i) used Seller funds for unlawful contributions,
gifts, entertainment or other unlawful expenses, (ii) made any unlawful
payment to any governmental official, (iii) established or maintained any
unrecorded fund or made any false entry on the books and records of Seller,
or (iv) made any bribe, rebate, kickback or similar unlawful payment or
given a gift that is not deductible for federal income tax purposes.
(w) Employees.
(i) The employment of each of the Transferred Employees is
terminable at the will of Seller. All employees of Seller are citizens
of the United States.
(ii) Seller has complied in all material respects with all
applicable state and federal equal employment opportunity laws and
with other laws related to employment of the Transferred Employees.
There is no, and has not been any, claim against Seller or, to the
Knowledge of Seller, threatened against Seller, based on actual or
alleged race, age, sex, disability or other harassment or
discrimination, or similar tortious conduct, nor to the Knowledge of
Seller, is there any basis for any such claim. There are no pending
claims against Seller under any workers' compensation plan or policy
or for long term disability. There are no pending or threatened wage
claims against Seller and there are no other proceedings pending or,
to the Knowledge of Seller, threatened against Seller by any employee
or former employee.
22
(x) Settlement Accounts. Seller's settlement accounts used in the
Networks are listed in Section 3(x) of the Disclosure Schedule (the
"Settlement Accounts"). The Settlement Accounts have not been used for any
purpose other than the settlement of monies due the Networks. The
transactions occurring on or prior to the date of this Agreement which are
processed through the Settlement Accounts are subject to being settled by
Buyer after the Closing through the Networks in the Ordinary Course of
Business without any liability to Buyer. The Settlement Accounts are not
subject to any retroactive adjustments by the Networks for which Buyer
could become liable. Seller has done or caused to be done all things and
taken all actions necessary to transfer such accounts to Buyer and to
effect the transfer of its settlement rights and obligations with respect
to the Networks.
(y) Networks. Seller is a member in good standing of the Visa U.S.A.,
Inc. and Pulse EFT Association networks (each a "Network") and has complied
and is currently in compliance with the articles of incorporation, bylaws,
service guide, operating rules and procedures and mandates (the "Operating
Rules"), as applicable, of each Network. Seller has not been subject to any
audit by a Network which has resulted in any fine, penalty, adjustment,
deficiency or other obligation being imposed by the Network. The Acquired
Assets are, and following the Closing of the transactions contemplated by
this Agreement will be, in compliance with all applicable Operating Rules
of each Network. Seller is not, and to the Knowledge of Seller no other
party thereto, is in breach or default under any agreement between Seller
and either Network, and Seller has not asserted any notice of default or
termination (except as contemplated by this Agreement), and to the
Knowledge of Seller no event has occurred which with notice or lapse of
time would constitute a breach or default or permit termination (except as
contemplated by this Agreement) of, any agreement between Seller and either
Network. Seller has done or caused to be done all things and taken all
actions necessary to cause Buyer to become a member in good standing of
each Network and to obtain all interest and rights related thereto such
that Buyer will be able to operate the Acquired Assets and the business of
Seller as currently conducted.
Section 4. Representations and Warranties of Buyer. Buyer represents and
warrants to Seller that the statements contained in this Section 4 are correct
and complete as of the date of this Agreement and will be correct and complete
as of the Closing Date (as though made then and as though the Closing Date were
substituted for the date of this Agreement throughout this Section 4), except as
set forth in the Disclosure Schedule. The Disclosure Schedule will be arranged
in paragraphs corresponding to the lettered and numbered paragraphs contained in
this Section 4.
(a) Organization of Buyer. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of
its incorporation.
(b) Authorization of Transaction. Buyer has full power and authority
(including full corporate power and authority) to execute and deliver this
Agreement and to perform its obligations hereunder. This Agreement
constitutes the valid and legally binding obligation of Buyer, enforceable
in accordance with its terms and conditions.
23
(c) Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby
(including the assignments and assumptions referred to in Section 2 above),
will (i) violate any constitution, statute, regulation, rule, injunction,
judgment, order, decree, ruling, charge or other restriction of any
government, governmental agency or court to which Buyer is subject or any
provision of its charter or bylaws or (ii) conflict with, result in a
breach of, constitute a default under, result in the acceleration of,
create in any party the right to accelerate, terminate, modify or cancel or
require any notice under any agreement, contract, lease, license,
instrument or other arrangement to which Buyer is a party or by which it is
bound or to which any of its assets is subject. Buyer does not need to give
any notice to, make any filing with or obtain any authorization, consent or
approval of any government or governmental agency in order for the Parties
to consummate the transactions contemplated by this Agreement (including
the assignments and assumptions referred to in Section 2 above).
(d) Brokers' Fees. Buyer has no Liability or obligation to pay any
fees or commissions to any broker, finder or agent with respect to the
transactions contemplated by this Agreement for which Seller could become
liable or obligated.
Section 5. Post-closing Covenants. The Parties agree as follows with
respect to the period following the Closing.
(a) General. In case at any time after the Closing any further action
is necessary or desirable to carry out the purposes of this Agreement, each
of the Parties will take such further action (including the execution and
delivery of such further instruments and documents) as the other Party
reasonably may request, all the sole cost and expense of the requesting
Party (unless the requesting Party is entitled to indemnification therefor
under Section 6 below). Seller acknowledges and agrees that from and after
the Closing, Buyer will be entitled to possession of all documents, books,
records (including Tax records), agreements and financial data of any sort
relating to Seller. Buyer shall provide Seller with such access, during
normal working hours, to such documents, books, records (including Tax
Records) agreement and financial data as is reasonably required by Seller
in order to prepare any Tax Returns or otherwise comply with any legal
requirement applicable to the Seller after the Closing.
(b) Litigation Support. In the event and for so long as any Party
actively is contesting or defending against any action, suit, proceeding,
hearing, investigation, charge, complaint, claim or demand against a person
that is not a Party in connection with (i) any transaction contemplated
under this Agreement or (ii) any fact, situation, circumstance, status,
condition, activity, practice, plan, occurrence, event, incident, action,
failure to act or transaction on or prior to the Closing Date involving
Seller, the other Parties will cooperate with the contesting or defending
Party and its counsel in the contest or defense, make available its
personnel and provide such testimony and access to its books and records as
shall be necessary in connection with the contest or defense, all at the
sole cost and expense of the contesting or defending Party (unless the
contesting or defending Party is entitled to indemnification therefor under
Section 6 below).
24
(c) Transition; Sales Referrals. Neither Parent nor Seller will take
any action that is designed or intended to have the effect of discouraging
any lessor, licensor, customer, supplier or other business associate of
Seller from maintaining the same business relationships with Buyer after
the Closing as it maintained with Seller prior to the Closing. Subject to
any applicable confidentiality and privacy obligations of Seller, and in
accordance with Seller's business objectives, as from time to time
constituted, for a period of 3 years after the Closing, Seller will use its
reasonable efforts to provide to Buyer's employees designated in writing
from time to time by Buyer with the name, location and primary contact name
for any customer of Seller who makes an inquiry to Seller about the
products and/or services of Buyer relating to the Acquired Assets. The
provisions of this Section 5(c) shall neither require nor permit Seller to
promote or market Buyer's services or products.
(d) Confidentiality. Each of Parent and Seller will treat and hold as
such all of the Confidential Information, refrain from using any of the
Confidential Information except in connection with this Agreement and
deliver promptly to Buyer or destroy, at the request and option of Buyer,
all tangible embodiments (and all copies) of the Confidential Information
which are in its possession. In the event that either Parent or Seller is
requested or required (by oral question or request for information or
documents in any legal proceeding, interrogatory, subpoena, civil
investigative demand or similar process) to disclose any Confidential
Information, Parent or Seller, as the case may be, will notify Buyer
promptly of the request or requirement so that Buyer may seek an
appropriate protective order or waive compliance with the provisions of
this Section 5(d). If, in the absence of a protective order or the receipt
of a waiver hereunder, Parent or Seller is compelled to disclose any
Confidential Information to any tribunal or else stand liable for contempt,
Parent or Seller may disclose the Confidential Information to the tribunal;
provided, however, that Parent or Seller shall use its reasonable efforts
to obtain, at the request of Buyer, an order or other assurance that
confidential treatment will be accorded to such portion of the Confidential
Information required to be disclosed as Buyer shall designate.
(e) Solicitation of Transferred Employees. For a period of five years
commencing on the date hereof, without the prior written consent of Buyer,
none of Parent or its Affiliates will (or will assist or encourage others
to), directly or indirectly, solicit to hire (or cause or seek to cause to
leave the employ of Buyer) any of the Transferred Employees or any Persons
who may be hired by Buyer after the date hereof to work with or operate the
Acquired Assets.
(f) Recruiting of Employees. For a period of 18 months from the
Closing Date, Buyer shall notify Seller, promptly following its occurrence,
of any lay off involving more than 10 employees who, as part of their
principal job responsibility with Buyer's Integrated Financial Solutions
Division, further developed the Parent Intellectual Property, and Seller
shall notify Buyer, promptly following its occurrence, of any lay off of
more than 10 employees from Seller's software division.
(g) Covenant Not To Compete. For a period of two years after the
Closing, neither Parent nor Seller will directly or indirectly through any
Affiliate perform for any
25
DASH client (or contact, call on, solicit, or take away, or attempt to
contact, call on, solicit or take away, any DASH client of Buyer for
the purpose of performing) any ATM processing and/or related
settlement services. For purposes of applying this paragraph, a "DASH
client" is defined as an entity for whom Buyer provides ATM processing
and/or related settlement services.
(h) Relocation of Facilities. Parent and Seller will use their
reasonable best efforts to assist Buyer in relocating from the
premises to be subleased from Parent pursuant to the sublease executed
by Buyer and Parent contemporaneously with this Agreement.
Section 6. Remedies for Breaches of This Agreement.
(a) Survival of Representations and Warranties. All of the
representations and warranties of Seller contained in Sections 3(f)
through (i), Section 3(k) and Section (m) through (y) of this
Agreement shall survive the Closing and continue in full force and
effect for a period of one year following the release of Buyer's
audited financial statements including Seller's results of operations.
All of the other representations and warranties of Buyer and Seller
contained in this Agreement (including the representations and
warranties of Seller contained in Sections (a) through (e), 3(j) and
3(l) hereof) shall survive the Closing and continue in full force and
effect forever thereafter (subject to any applicable statutes of
limitations).
(b) Indemnification Provisions for Benefit of Buyer.
(i) In the event Seller breaches any of its
representations, warranties and covenants contained in this
Agreement and, if there is an applicable survival period pursuant
to Section 6(a) above, provided that Buyer makes a written claim
for indemnification against Seller within such survival period,
then Seller and Parent jointly and severally agree to indemnify
Buyer from and against the entirety of any Adverse Consequences
Buyer may suffer through and after the date of the claim for
indemnification (including any Adverse Consequences Buyer may
suffer after the end of any applicable survival period) resulting
from, arising out of, relating to, or caused by the breach (or
the alleged breach), provided, however, that Seller and Parent
shall not have any obligation to indemnify Buyer from and against
any Adverse Consequences resulting from, arising out of, relating
to, or caused by the breach (or alleged breach) of any
representation or warranty of Seller contained in Sections 3(f)
through (i) and (k) through (y) above (i) until Buyer has
suffered Adverse Consequences by reason of all such breaches (or
alleged breaches) in excess of an $75,000 aggregate threshold (at
which point Seller and Parent will be obligated to indemnify
Buyer from and against all such Adverse Consequences relating
back to the first dollar) and (ii) in excess of a dollar amount
equal to the Purchase Price (the "Indemnity Limit") and Buyer
shall have actually recovered from Seller and Parent an amount
equal to the Indemnity Limit.
26
(ii) Seller and Parent jointly and severally agree to
indemnify Buyer from and against the entirety of any Adverse
Consequences Buyer may suffer resulting from, arising out of, relating
to, in the nature of or caused by:
(A) any Liability of Seller which is not an Assumed
Liability (including any Liability of Seller that becomes a
Liability of Buyer under any bulk transfer law of any
jurisdiction, under any common law doctrine of de facto
merger or successor liability, under Environmental, Health
and Safety Requirements or otherwise by operation of law);
or
(B) any Liability of Seller for unpaid Taxes with
respect to any Tax year or portion thereof ending on or
before the Closing Date (or for any Tax year beginning
before and ending after the Closing Date to the extent
allocable to the portion of such period beginning before and
ending on the Closing Date).
(C) any Liability of Seller relating to Seller's
employment or termination of employment of any of the
Transferred Employees.
(D) any transactions occurring on or prior to the date
of this Agreement which are processed through the Settlement
Accounts and any breach or default by Seller under any
agreement between Seller and either Network.
(E) the failure of Parent to transfer on the date of
this Agreement good and marketable title to the assets
listed in Exhibit D hereto free and clear of all Security
Interests (even if title to such assets is later transferred
to Buyer on January 6, 2002 pursuant to the terms of Section
2(a)(ii) above or otherwise), including without limitation
any claim or allegation by IBM Credit Corporation or its
Affiliates or any other third party that it has or claims
any rights in or to the assets listed in Exhibit D hereto.
(F) any direct or indirect claim or allegation by IBM
Credit Corporation or its Affiliates or any other third
party resulting from or arising out of Buyer's access to
and/or use of the assets listed in Exhibit D hereto prior to
the time when title to such assets vests in Buyer free and
clear of all Security Interests.
(c) Indemnification Provisions for Benefit of Seller.
(i) In the event Buyer breaches any of its representations,
warranties and covenants contained in this Agreement and, if
there is an applicable survival period pursuant to Section 6(a)
above, provided that Seller makes a written claim for
indemnification against Buyer within such survival period, then
Buyer agrees to indemnify Seller from and against the entirety of
any Adverse Consequences Seller may suffer through and after the
date of the claim for indemnification (including any Adverse
Consequences Seller may suffer after the end of any
27
applicable survival period) resulting from, arising out of, relating to, in
the nature of or caused by the breach (or the alleged breach).
(ii) Buyer agrees to indemnify Seller from and against the entirety
of any Adverse Consequences Seller may suffer resulting from, arising out
of, relating to, in the nature of or caused by any Assumed Liability.
(d) Matters Involving Third Parties.
(i) If any third party shall notify any Party (the "Indemnified
Party") with respect to any matter (a "Third Party Claim") which may give
rise to a claim for indemnification against the other Party (the
"Indemnifying Party") under this Section 6, then the Indemnified Party
shall promptly notify the Indemnifying Party thereof in writing; provided,
however, that no delay on the part of the Indemnified Party in notifying
the Indemnifying Party shall relieve the Indemnifying Party from any
obligation hereunder unless (and then solely to the extent) the
Indemnifying Party thereby is prejudiced.
(ii) The Indemnifying Party will have the right to defend the
Indemnified Party against the Third Party Claim with counsel of its choice
satisfactory to the Indemnified Party so long as (A) the Indemnifying Party
provides the Indemnified Party with evidence acceptable to the Indemnified
Party that the Indemnifying Party will have the financial resources to
defend against the Third Party Claim and fulfill its indemnification
obligations hereunder, (B) the Third Party Claim involves only money
damages and does not seek an injunction or other equitable relief, (C)
settlement of, or an adverse judgment with respect to, the Third Party
Claim is not, in the good faith judgment of the Indemnified Party, likely
to establish a precedential custom or practice adverse to the continuing
business interests of the Indemnified Party and (D) the Indemnifying Party
conducts the defense of the Third Party Claim actively and diligently.
(iii) So long as the Indemnifying Party is conducting the defense of
the Third Party Claim in accordance with Section 6(d)(ii) above, (A) the
Indemnified Party may retain separate co-counsel at its sole cost and
expense and participate in the defense of the Third Party Claim, (B) the
Indemnified Party will not consent to the entry of any judgment or enter
into any settlement with respect to the Third Party Claim without the prior
written consent of the Indemnifying Party and (C) the Indemnifying Party
will not consent to the entry of any judgment or enter into any settlement
with respect to the Third Party Claim without the prior written consent of
the Indemnified Party.
(iv) In the event any of the conditions in Section 6(d)(ii) above is
or becomes unsatisfied, however, (A) the Indemnified Party may defend
against and consent to the entry of any judgment or enter into any
settlement with respect to, the Third Party Claim (provided that the
Indemnified Party consults with and obtains the consent from, the
Indemnifying Party in connection therewith), (B) the Indemnifying Party
will reimburse the Indemnified Party promptly and
28
periodically for the costs of defending against the Third
Party Claim (including reasonable attorneys' fees and
expenses) and (C) the Indemnifying Party will remain
responsible for any Adverse Consequences the Indemnified
Party may suffer resulting from, arising out of, relating
to, in the nature of or caused by the Third Party Claim to
the fullest extent provided in this Section 6.
(e) Determination of Adverse Consequences. The Parties shall
take into account the time cost of money in determining Adverse
Consequences for purposes of this Section 6. All indemnification
payments under this Section 6 shall be deemed adjustments to the
Purchase Price.
(f) Other Indemnification Provisions. The foregoing
indemnification provisions and the provisions of the Escrow
Agreement are in addition to and not in derogation of, any
statutory, equitable or common law remedy any Party may have for
breach of representation, warranty or covenant (including,
without limitation, any such remedy arising under Environmental,
Health and Safety Requirements) any Party may have with respect
to Seller, the Acquired Assets or the transactions contemplated
by this Agreement.
Section 7. Miscellaneous.
(a) Public Announcements and Disclosures. No Party shall
issue any press release or make any public announcement or other
disclosure naming any other Party or relating to any other Party
or the subject matter of this Agreement without the prior written
approval of the other Party; provided, however, that any Party
may make any public disclosure it believes in good faith is
required by applicable law or any listing or trading agreement
concerning its publicly traded securities (in which case the
disclosing Party will use its reasonable best efforts to advise
the other Party prior to making the disclosure).
(b) No Third-party Beneficiaries. This Agreement shall not
confer any rights or remedies upon any Person other than the
Parties and their respective successors and permitted assigns.
(c) Entire Agreement. This Agreement (including the
documents referred to herein) constitutes the entire agreement
between the Parties and supersedes any prior understandings,
agreements or representations by or between the Parties, written
or oral, to the extent they have related in any way to the
subject matter hereof.
(d) Succession and Assignment. This Agreement shall be
binding upon and inure to the benefit of the Parties named herein
and their respective successors and permitted assigns. No Party
may assign either this Agreement or any of its rights, interests
or obligations hereunder without the prior written approval of
the other Party; provided however, that Buyer may (i) assign any
or all of its rights and interests hereunder to one or more of
its Affiliates and (ii) designate one or more of its Affiliates
to perform its obligations hereunder (in any or all of which
cases Buyer nonetheless shall remain responsible for the
performance of all of its obligations hereunder).
29
(e) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
(f) Headings. The section headings contained in this Agreement are inserted
for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(g) Notices. All notices, requests, demands, claims and other
communications hereunder will be in writing. Any notice, request, demand, claim
or other communication hereunder shall be deemed duly given if (and then two
business days after) it is sent by registered or certified mail, return receipt
requested, postage prepaid and addressed to the intended recipient as set forth
below:
If to Parent or Seller: Euronet USA Inc.
17300 Chenal Parkway
Little Rock, Arkansas 72223
Attn: President
If to Buyer: ALLTEL Information Services, Inc.
601 South Lake Destiny Road
Suite 300
Maitland, FL 32751
Attn: President
Copy to: ALLTEL Information Services, Inc.
4001 Rodney Parham Road
Little Rock, AR 72212-2496
Attention: General Counsel
Any Party may send any notice, request, demand, claim or other
communication hereunder to the intended recipient at the address set forth above
using any other means (including personal delivery, expedited courier, messenger
service, telecopy, telex, ordinary mail or electronic mail), but no such notice,
request, demand, claim or other communication shall be deemed to have been duly
given unless and until it actually is received by the intended recipient. Any
Party may change the address to which notices, requests, demands, claims and
other communications hereunder are to be delivered by giving the other Party
notice in the manner herein set forth.
(h) Governing Law. This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of Florida without giving effect
to any choice or conflict of law provision or rule (whether of the State of
Florida or any other jurisdiction) that would cause the application of the laws
of any jurisdiction other than the State of Florida.
30
(i) Amendments and Waivers. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by
Buyer and Seller. No waiver by any Party of any default, misrepresentation
or breach of warranty or covenant hereunder, whether intentional or not,
shall be deemed to extend to any prior or subsequent default,
misrepresentation or breach of warranty or covenant hereunder or affect in
any way any rights arising by virtue of any prior or subsequent such
occurrence.
(j) Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not
affect the validity or enforceability of the remaining terms and provisions
hereof or the validity or enforceability of the offending term or provision
in any other situation or in any other jurisdiction.
(k) Expenses. Each of Buyer and Parent will bear its own costs and
expenses (including legal fees and expenses) incurred in connection with
this Agreement and the transactions contemplated hereby. Seller agrees that
Seller has not borne and will not bear any of the costs and expenses of
Seller (including any of their legal fees and expenses) in connection with
this Agreement or any of the transactions contemplated hereby. Seller also
agrees that Seller has not paid any amount to any third party and will not
pay any amount to any third party, with respect to any of the costs and
expenses of Seller and Parent (including any of their legal fees and
expenses) in connection with this Agreement or any of the transactions
contemplated hereby.
(l) Construction. Any reference to any federal, state, local or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise.
The word "including" shall mean including, without limitation. The Parties
intend that each representation, warranty and covenant contained herein
shall have independent significance. If any Party has breached any
representation, warranty or covenant contained herein in any respect, the
fact that there exists another representation, warranty or covenant
relating to the same subject matter (regardless of the relative levels of
specificity) which the Party has not breached shall not detract from or
mitigate the fact that the Party is in breach of the first representation,
warranty or covenant.
(m) Incorporation of Exhibits and Schedules. The Exhibits and
Schedules identified in this Agreement are incorporated herein by reference
and made a part hereof.
(n) Specific Performance. Each of the Parties acknowledges and agrees
that the other Party would be damaged irreparably in the event any of the
provisions of this Agreement are not performed in accordance with their
specific terms or otherwise are breached. Accordingly, each of the Parties
agrees that the other Party shall be entitled to an injunction or
injunctions to prevent breaches of the provisions of this Agreement and to
enforce specifically this Agreement and the terms and provisions hereof in
any action instituted in any court of the United States or any state
thereof having jurisdiction over the Parties and the matter, in addition to
any other remedy to which it may be entitled, at law or in equity.
31
(o) Employment of Seller Employees.
(i) Buyer shall, as of the Closing Date, offer employment to
those employees of Seller as Buyer shall determine in its sole
discretion. Any such person who accepts Buyer's offer of employment
shall be referred to individually as a "Transferred Employee" and
collectively as the "Transferred Employees." All Transferred Employees
shall be "at will" employees following the Closing. At any time on or
after the Closing Date, Buyer, in its sole discretion, shall have the
right to terminate a Transferred Employee for any or no reason or
reassign a Transferred Employee to a position within Buyer or within
an Affiliate of Buyer.
(ii) Each Transferred Employee's eligibility to participate in
Buyer's vacation, group insurance and other welfare benefit plans, the
ALLTEL Corporation Profit Sharing Plan and the ALLTEL Corporation
Thrift Plan shall be determined only in accordance with the provisions
of each such plan; provided that no Transferred Employee shall be
eligible to participate in any such plan prior to January 31, 2002.
Buyer shall recognize each Transferred Employee's service with Seller
for purposes of determining eligibility to participate in each Buyer
vacation, group insurance, and welfare benefit plan, who as of the
date immediately preceding the Closing Date were covered by Seller's
group insurance and welfare benefit plans and who within 31 days after
the Closing Date enroll in Buyer's group insurance and welfare benefit
plans effective as of January 31, 2002. Furthermore, Buyer shall
recognize each Transferred Employee's service with Seller for purposes
of determining eligibility service and vesting service with respect to
the ALLTEL Corporation Profit Sharing Plan and the ALLTEL Corporation
Thrift Plan.
(iii) Any restrictions in the Buyer group insurance and welfare
benefit plans with respect to pre-existing conditions shall be waived
for Transferred Employees, to the extent that such restrictions have
been or would have been satisfied under Seller's plans, who as of the
date immediately preceding the Closing Date were covered by Seller's
group insurance and welfare benefit plans and who, within 31 days
after the Closing Date, enroll in Buyer's group insurance and welfare
benefit plans effective as of January 31, 2002. In no event shall
Buyer be liable to Seller or to Transferred Employees for benefits
incurred or accrued prior to January 31, 2002.
(iv) Seller shall comply with the requirements of COBRA, if
applicable.
(v) For purposes of this Agreement, all of Seller's
compensation and benefits for each Transferred Employee, including
wages, incentives, commissions, bonuses, vacation pay, paid days off,
pension and retirement through the Closing Date and all prior calendar
years ("Accrued Employee Expense") shall be deemed to have accrued as
of the Closing Date for each Transferred Employee. On or prior to the
Closing Date, Seller shall pay each Transferred Employee his or her
Accrued Employee Expense.
32
(vi) No provision of this Section 7(o) shall create a
third-party beneficiary relationship or otherwise confer any
benefit, entitlement, or right upon any person or entity
(including, without limitation, any Transferred Employee) other
than the parties to this Agreement.
(p) Bulk Transfer Laws. Buyer acknowledges that Seller will not
comply with the provisions of any bulk transfer laws of any
jurisdiction in connection with the transactions contemplated by this
Agreement.
(q) Sales Taxes. Buyer, Seller and Parent acknowledge and agree
that no sales, use, gross receipts, or other transaction taxes (other
than income taxes) shall arise from the consummation of the
transactions contemplated by this Agreement.
33
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on as
of the date first above written.
ALLTEL INFORMATION SERVICES, INC.:
By ___________________________________
Title_________________________________
Name__________________________________
EFT NETWORK SERVICES, LLC:
By ___________________________________
Title_________________________________
Name__________________________________
EURONET USA INC.:
By ___________________________________
Title_________________________________
Name__________________________________
34
EXHIBITS and SCHEDULES [NOT INCLUDED IN THIS 8K FILING]
EXHIBITS
EXHIBIT A Calculation of the Estimated Net Working Capital
EXHIBIT B Allocation of Preliminary Purchase Price
EXHIBIT C Historical Financial Statements
EXHIBIT D IBM Acquired Assets
Schedules
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DISCLOSURE SCHEDULE Exceptions to Representations and Warranties