EXHIBIT 2.1
STOCK PURCHASE AGREEMENT
BY AND BETWEEN
MID-AMERICA BANCORP,
AS SELLER,
AND
MONEYGRAM PAYMENT SYSTEMS, INC.,
AS BUYER
August 4, 1997
TABLE OF CONTENTS
1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
ADVERSE CONSEQUENCES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
AFFILIATE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
AFFILIATED GROUP. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
AGENT AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
APPLICABLE RATE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
ANNUAL TRANSACTION VOLUME . . . . . . . . . . . . . . . . . . . . . . . . . . .1
ASSIGNMENT DOCUMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
BASIS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
BUYER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
BUYER'S DISCLOSURE SCHEDULE . . . . . . . . . . . . . . . . . . . . . . . . . .2
CAUSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
CLOSING DATE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
CLOSING DOCUMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
CODE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
CONFIDENTIAL INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . . .2
CONTROLLED GROUP OF CORPORATIONS. . . . . . . . . . . . . . . . . . . . . . . .2
EMPLOYEE BENEFIT PLAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
EMPLOYEE PENSION BENEFIT PLAN . . . . . . . . . . . . . . . . . . . . . . . . .2
EMPLOYEE WELFARE BENEFIT PLAN . . . . . . . . . . . . . . . . . . . . . . . . .2
ENCUMBRANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
ENVIRONMENTAL, HEALTH, AND SAFETY LAWS. . . . . . . . . . . . . . . . . . . . .3
ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
EXCESS LOSS ACCOUNT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
EXCHANGE ACT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
EXTREMELY HAZARDOUS SUBSTANCE . . . . . . . . . . . . . . . . . . . . . . . . .3
FACILITY SHARING AGREEMENT. . . . . . . . . . . . . . . . . . . . . . . . . . .3
FIDUCIARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
FINANCIAL STATEMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
FORM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
GAAP. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
GIFT CERTIFICATE SERVICES AGREEMENT . . . . . . . . . . . . . . . . . . . . . .3
HART-SCOTT-RODINO ACT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
INDEMNIFIED PARTY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
INDEMNIFYING PARTY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
INTELLECTUAL PROPERTY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
INTERIM FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . 4
JOINT SERVICES AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
KNOWLEDGE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
LIABILITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
LICENSE AGREEMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
MADPI. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
MAJOR AGENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
MALL/RETAIL GIFT CERTIFICATE BUSINESS. . . . . . . . . . . . . . . . . . . . . 4
MAMO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
MAMO SHARES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
MOST RECENT BALANCE SHEET. . . . . . . . . . . . . . . . . . . . . . . . . . . 5
MOST RECENT BALANCE SHEET DATE . . . . . . . . . . . . . . . . . . . . . . . . 5
MOST RECENT FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . 5
MOST RECENT FISCAL MONTH END . . . . . . . . . . . . . . . . . . . . . . . . . 5
MOST RECENT FISCAL YEAR END. . . . . . . . . . . . . . . . . . . . . . . . . . 5
MULTIEMPLOYER PLAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
ORDINARY COURSE OF BUSINESS. . . . . . . . . . . . . . . . . . . . . . . . . . 5
PARTY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
PARTIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
PBGC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
PERMISSIBLE INVESTMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
PERSON . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
PROCESSING AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
PROHIBITED TRANSACTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
PURCHASE PRICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
REPORTABLE EVENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
RETAIL GIFT CERTIFICATE BUSINESS . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 338(H)(10) ELECTION. . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 338 COST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECURITIES ACT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SELLER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SELLER'S DISCLOSURE SCHEDULE . . . . . . . . . . . . . . . . . . . . . . . . . 6
SUBLEASE AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SUBSIDIARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
TAX. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
TAX RETURN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
THIRD PARTY CLAIM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
YEAR 2000 COMPLIANT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2. DESCRIPTION OF TRANSACTION 7
(a) PURCHASE AND SALE OF MAMO SHARES . . . . . . . . . . . . . . . . . . . . . 7
(b) PURCHASE PRICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(c) THE CLOSING. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(d) DELIVERIES AT THE CLOSING. . . . . . . . . . . . . . . . . . . . . . . . . 8
(e) REVENUE GUARANTEE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(f) POST-CLOSING OPERATIONS OF MAMO. . . . . . . . . . . . . . . . . . . . . . 9
3. SELLER'S REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . 10
(a) ORGANIZATION OF SELLER . . . . . . . . . . . . . . . . . . . . . . . . . .10
(b) AUTHORIZATION OF TRANSACTION . . . . . . . . . . . . . . . . . . . . . . .10
(c) NONCONTRAVENTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
-ii-
(d) BROKERS' FEES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
(e) MAMO SHARES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
4. REPRESENTATIONS AND WARRANTIES CONCERNING MAMO. . . . . . . . . . . . . . . . . 11
(a) ORGANIZATION OF QUALIFICATION AND CORPORATE POWER. . . . . . . . . . . . .11
(b) CAPITALIZATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
(c) NONCONTRAVENTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
(d) BROKERS' FEES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
(e) TITLE TO ASSETS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
(f) SUBSIDIARIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
(g) FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . .12
(h) EVENTS SUBSEQUENT TO MOST RECENT FISCAL YEAR END . . . . . . . . . . . . .13
(i) LICENSES AND AUDITS. . . . . . . . . . . . . . . . . . . . . . . . . . . .15
(j) UNDISCLOSED LIABILITIES. . . . . . . . . . . . . . . . . . . . . . . . . .15
(k) LEGAL COMPLIANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
(l) TAX MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16
(m) INTELLECTUAL PROPERTY. . . . . . . . . . . . . . . . . . . . . . . . . . .17
(n) TANGIBLE ASSETS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20
(o) INVENTORY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20
(p) PREPAID EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20
(q) CONTRACTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20
(r) NOTES AND ACCOUNTS RECEIVABLE. . . . . . . . . . . . . . . . . . . . . . .22
(s) POWERS OF ATTORNEY . . . . . . . . . . . . . . . . . . . . . . . . . . . .22
(t) INSURANCE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22
(u) LITIGATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23
(v) EMPLOYEES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23
(w) EMPLOYEE BENEFITS. . . . . . . . . . . . . . . . . . . . . . . . . . . . .23
(x) GUARANTIES.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24
(y) ENVIRONMENT, HEALTH, AND SAFETY. . . . . . . . . . . . . . . . . . . . . .24
(z) CERTAIN BUSINESS RELATIONSHIPS WITH SELLER . . . . . . . . . . . . . . . .24
(aa) TERMINATION OF BUSINESS SUPPLIERS . . . . . . . . . . . . . . . . . . . .25
(bb) MONEY ORDER AND GIFT CERTIFICATE AGENTS . . . . . . . . . . . . . . . . .25
(cc) YEAR 2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25
(dd) DISCLOSURE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25
5. BUYER'S REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . . . . . . . . 25
(a) ORGANIZATION OF BUYER. . . . . . . . . . . . . . . . . . . . . . . . . . .25
(b) AUTHORIZATION OF TRANSACTION . . . . . . . . . . . . . . . . . . . . . . .25
(c) NONCONTRAVENTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26
(d) BROKERS' FEES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26
(e) INVESTMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26
6. PRE-CLOSING COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
(a) GENERAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26
-iii-
(b) NOTICES AND CONSENTS . . . . . . . . . . . . . . . . . . . . . . . . . . .26
(c) OPERATION OF BUSINESS. . . . . . . . . . . . . . . . . . . . . . . . . . .26
(d) PRESERVATION OF BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . .27
(e) FULL ACCESS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .27
(f) NOTICE OF DEVELOPMENTS . . . . . . . . . . . . . . . . . . . . . . . . . .27
(g) EXCLUSIVITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .27
(h) REVIEW OF FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . .27
(i) COMMITMENT TO SUPPORT. . . . . . . . . . . . . . . . . . . . . . . . . . .28
(j) FORMATION OF GIFT CERTIFICATE SUBSIDIARY . . . . . . . . . . . . . . . . .28
7. POST-CLOSING COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
(a) GENERAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28
(b) LITIGATION SUPPORT . . . . . . . . . . . . . . . . . . . . . . . . . . . .28
(c) TRANSITION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28
(d) CONFIDENTIALITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .29
(e) EMPLOYEES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .29
(f) COVENANT NOT TO COMPETE. . . . . . . . . . . . . . . . . . . . . . . . . .29
8. CONDITIONS TO OBLIGATION TO CLOSE . . . . . . . . . . . . . . . . . . . . . . . 30
(a) CONDITIONS TO OBLIGATION OF BUYER. . . . . . . . . . . . . . . . . . . . .30
(b) CONDITIONS TO OBLIGATION OF SELLER . . . . . . . . . . . . . . . . . . . .32
9. REMEDIES FOR BREACHES OF THIS AGREEMENT AND INDEMNIFICATION . . . . . . . . . . 33
(a) SURVIVAL OF REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . .33
(b) INDEMNIFICATION PROVISIONS FOR BENEFIT OF THE BUYER. . . . . . . . . . . .33
(c) INDEMNIFICATION PROVISIONS FOR BENEFIT OF THE SELLER . . . . . . . . . . .34
(d) MATTERS INVOLVING THIRD PARTIES. . . . . . . . . . . . . . . . . . . . . .34
(e) DETERMINATION OF ADVERSE CONSEQUENCES. . . . . . . . . . . . . . . . . . .35
(f) OTHER INDEMNIFICATION PROVISIONS . . . . . . . . . . . . . . . . . . . . .35
10. TAX MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
(a) TAX SHARING AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . .36
(b) RETURNS FOR PERIODS THROUGH THE CLOSING DATE . . . . . . . . . . . . . . .36
(c) AUDITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .36
(d) CARRYBACKS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .36
(e) POST-CLOSING ELECTIONS . . . . . . . . . . . . . . . . . . . . . . . . . .36
(f) SECTION 338(H)(10) ELECTION. . . . . . . . . . . . . . . . . . . . . . . .37
11. TERMINATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
(a) TERMINATION OF AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . .38
(b) EFFECT OF TERMINATION. . . . . . . . . . . . . . . . . . . . . . . . . . .38
-iv-
12. EMPLOYMENT MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
(a) TRANSFER OF EMPLOYEES. . . . . . . . . . . . . . . . . . . . . . . . . . .38
(b) HEALTH INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . .38
(c) TRANSITION DATA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .39
(d) SERVICE CREDIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .39
13. MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
(a) PRESS RELEASES AND PUBLIC ANNOUNCEMENTS. . . . . . . . . . . . . . . . . .39
(b) NO THIRD PARTY BENEFICIARIES . . . . . . . . . . . . . . . . . . . . . . .39
(c) ENTIRE AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . .39
(d) SUCCESSION AND ASSIGNMENT. . . . . . . . . . . . . . . . . . . . . . . . .39
(e) COUNTERPARTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .39
(f) HEADINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .40
(g) NOTICES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .40
(h) GOVERNING LAW. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .41
(i) AMENDMENTS AND WAIVERS . . . . . . . . . . . . . . . . . . . . . . . . . .41
(j) SEVERABILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .41
(k) EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .41
(l) CONSTRUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .42
(m) EXHIBITS AND SCHEDULES . . . . . . . . . . . . . . . . . . . . . . . . . .42
(n) SPECIFIC PERFORMANCE . . . . . . . . . . . . . . . . . . . . . . . . . . .42
(o) TIME OF ESSENCE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .43
EXHIBITS:
EXHIBIT A -- Financial Statements
EXHIBIT B -- List of Employees to be Transferred to MAMO Immediately upon
Closing
EXHIBIT C -- List of Key Employees
EXHIBIT D -- List of Average Monthly Transaction Volume for Major Agents
EXHIBIT E -- Processing Agreement Terms
EXHIBIT F -- Software Applications
EXHIBIT G -- Mid-America Money Order Company Transition Data
SELLER'S DISCLOSURE SCHEDULE
BUYER'S DISCLOSURE SCHEDULE
-v-
STOCK PURCHASE AGREEMENT
Agreement entered into on August 4, 1997, by and between Mid-America
Bancorp, a Kentucky corporation ("SELLER"), and MoneyGram Payment Systems, Inc.,
a Delaware corporation ("BUYER"). Seller and Buyer are referred to collectively
herein as the "PARTIES".
The Seller owns all of the outstanding capital stock of Mid-America Money
Order Company, a Kentucky corporation ("MAMO"). This Agreement contemplates a
transaction in which Buyer will purchase from the Seller, and the Seller will
sell to Buyer, all of the outstanding capital stock of MAMO in return for cash.
Now, therefore, in consideration of the premises and the mutual promises
herein made, the Parties, intending to be legally bound hereby, agree as
follows:
1. DEFINITIONS.
"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, Encumbrances, losses, expenses,
and fees, including court costs and reasonable attorneys' fees and expenses.
"AFFILIATE" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Exchange Act.
"AFFILIATED GROUP" means any affiliated group within the meaning of Code
Section 1504(a) or any similar group defined under a similar provision of state,
local, or foreign law.
"AGENT AGREEMENT" means any Money Order Trust Agreement or similar
agreement entered into between MAMO and any other party regarding the issuance
of money orders or gift certificates.
"APPLICABLE RATE" means for each month the prime rate published in the WALL
STREET JOURNAL - Money Rates as of the first business day of that month.
"ANNUAL TRANSACTION VOLUME" shall mean the total number of money order and
gift certificate transactions (except for transactions associated with the
Mall/Retail Gift Certificate Business) generated by any agent of MAMO as
indicated opposite that agent's name on EXHIBIT D multiplied by twelve (12).
"ASSIGNMENT DOCUMENTS" has the meaning set forth in Section 2(f) 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.
"BUYER'S DISCLOSURE SCHEDULE" has the meaning set forth in Section 5 below.
"CAUSE" has the meaning set forth in Section 12(e) below.
"CLOSING" has the meaning set forth in Section 2(c) below.
"CLOSING DATE" has the meaning set forth in Section 2(c) below.
"CLOSING DOCUMENTS" means, collectively, the other documents to be executed
and delivered in connection with the Closing under this Agreement.
"CODE" means the Internal Revenue Code of 1986, as amended.
"CONFIDENTIAL INFORMATION" means any information concerning the businesses
and affairs of MAMO that is not already generally available to the public,
provided, however, that Confidential Information shall not include information
concerning the business and affairs of the Mall/Retail Gift Certificate Business
of MAMO.
"CONTROLLED GROUP OF CORPORATIONS" has the meaning set forth in Code
Section 1563.
"EMPLOYEE BENEFIT PLAN" means any (a) nonqualified deferred compensation or
retirement plan or arrangement which is an Employee Pension Benefit Plan, (b)
qualified defined contribution retirement plan or arrangement which is an
Employee Pension Benefit Plan, (c) qualified defined benefit retirement plan or
arrangement which is an Employee Pension Benefit Plan (including any
Multiemployer Plan), or (d) Employee Welfare Benefit Plan or material fringe
benefit plan or program.
"EMPLOYEE PENSION BENEFIT PLAN" has the meaning set forth in ERISA Section
3(2).
"EMPLOYEE WELFARE BENEFIT PLAN" has the meaning set forth in ERISA Section
3(1).
"ENCUMBRANCE" means any mortgage, easement, right of way, charge, claim,
equitable interest, lien, option, pledge, security interest, right of first
refusal, preferential right to purchase, prior assignment, irregularity, burden,
defect, limitation or restriction or other encumbrance of any kind, including
any restriction on use, voting, transfer, receipt of income, or exercise of any
other attribute of ownership.
"ENVIRONMENTAL, HEALTH, AND SAFETY LAWS" means the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, the Resource
Conservation and Recovery Act of 1976, and the Occupational Safety and Health
Act of 1970, each as amended, together with all other 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) concerning pollution or protection of the environment, public
health and safety, or employee health and safety, including laws relating to
emissions, discharges, releases, or threatened releases of pollutants,
contaminants, or chemical, industrial, hazardous, or toxic materials or wastes
into ambient air, surface water, ground water, or lands or otherwise relating to
the manufacture, processing, distribution, use, treatment, storage, disposal,
transport, or handling of pollutants, contaminants, or chemical, industrial,
hazardous, or toxic materials or wastes.
2
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"EXCESS LOSS ACCOUNT" has the meaning set forth in Reg. Section 1.1502-19.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"EXTREMELY HAZARDOUS SUBSTANCE" has the meaning set forth in Section 302 of
the Emergency Planning and Community Right-to-Know Act of 1986, as amended.
"FACILITY SHARING AGREEMENT" has the meaning set forth in Section 2(f)
below.
"FIDUCIARY" has the meaning set forth in ERISA Section 3(21).
"FINANCIAL STATEMENTS" has the meaning set forth in Section 4(g) below.
"FORM" has the meaning set forth in Section 10(f) below.
"GAAP" means United States generally accepted accounting principles as in
effect from time to time.
"GIFT CERTIFICATE SERVICES AGREEMENT" has the meaning set forth in Section
2(f) below.
"HART-SCOTT-RODINO ACT" means the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended.
"INDEMNIFIED PARTY" has the meaning set forth in Section 9(d) below.
"INDEMNIFYING PARTY" has the meaning set forth in Section 9(d) below.
"INTELLECTUAL PROPERTY" means (a) all inventions (whether patentable or
unpatentable and whether or not reduced to practice), all improvements thereto,
and all patents, patent applications, and patent disclosures, together with all
reissuances, continuations, continuations-in-part, revisions, extensions, and
reexaminations thereof, (b) all trademarks, service marks, trade dress, logos,
trade names, and corporate names (including the name "Mid-America Money Order
Company"), together with all translations, adaptations, derivations, and
combinations thereof and including all goodwill associated therewith, and all
applications, registrations, and renewals in connection therewith, (c) all
copyrightable works, all copyrights, and all applications, registrations, and
renewals in connection therewith, (d) all trade secrets and confidential
business information (including research and development, know-how, formulas,
compositions, manufacturing and production processes and techniques, technical
data, designs, drawings, specifications, customer and supplier lists, pricing
and cost information, and business and marketing plans), (e) all computer
software (including data and related documentation), (f) all other proprietary
rights, and (g) all copies and tangible embodiments thereof (in whatever form or
medium).
"INTERIM FINANCIAL STATEMENTS" has the meaning set forth in Section 6(h)
below.
3
"JOINT SERVICES AGREEMENT" has the meaning set forth in Section 2(f) below.
"KNOWLEDGE" means, in the case of an entity, the knowledge of all senior
and executive officers and directors of the entity, together with the knowledge
of any employees with primary responsibility in connection with a particular
subject matter.
"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.
"LICENSE AGREEMENT" has the meaning set forth in Section 2(f) below.
"MADPI" has the meaning set forth in Section 2(g) below.
"MAJOR AGENTS" means the ten agents of MAMO who are responsible for the
highest Annual Transaction Volume among MAMO's agents who are listed on EXHIBIT
D attached hereto.
"MALL/RETAIL GIFT CERTIFICATE BUSINESS" means the gift certificate
business presently conducted by MAMO (i) pursuant to agreements between MAMO
and any management or operator of any shopping mall to enable MAMO or its
agents to provide gift certificates to customers for use interchangeably
among the participating tenants of the shopping mall and (ii) pursuant to
agreements between MAMO and any retail shopping establishment to enable MAMO
or its agents to provide gift certificates to customers of such
establishments; PROVIDED THAT Mall/Retail Gift Certificate Business shall not
include the gift certificate business presently conducted by MAMO pursuant to
agreements between MAMO and any other Person that provides money transfer or
money order services, including, without limitation, any check-cashing
establishments or any grocery or convenience store, such as Giant Eagle.
"MAMO" has the meaning set forth in the preface above.
"MAMO SHARES" means any share of the common stock, no par value per share,
of MAMO.
"MOST RECENT BALANCE SHEET" means the balance sheet contained within the
Most Recent Financial Statements.
"MOST RECENT BALANCE SHEET DATE" means June 30, 1997.
"MOST RECENT FINANCIAL STATEMENTS" has the meaning set forth in Section
4(g) below.
"MOST RECENT FISCAL MONTH END" has the meaning set forth in Section 4(g)
below.
"MOST RECENT FISCAL YEAR END" has the meaning set forth in Section 4(g)
below.
"MULTIEMPLOYER PLAN" has the meaning set forth in ERISA Section 3(37).
"ORDINARY COURSE OF BUSINESS" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity and
frequency).
4
"PARTY" means either of the Parties.
"PARTIES" has the meaning set forth in the preface above.
"PBGC" means the Pension Benefit Guaranty Corporation.
"PERMISSIBLE INVESTMENTS" means those investments allowed to be maintained
by a licensee under any state sale of checks and/or money order laws.
"PERSON" means an individual, a general or limited partnership, a
corporation, a limited liability company or partnership, an association, a joint
stock company, a trust, a joint venture, an unincorporated organization, a
governmental entity (or any department, agency, or political subdivision
thereof) or any other type of entity.
"PROCESSING AGREEMENT" has the meaning set forth in Section 2(f) below.
"PROHIBITED TRANSACTION" has the meaning set forth in ERISA Section 406 and
Code Section 4975.
"PURCHASE PRICE" has the meaning set forth in Section 2(b) below.
"REPORTABLE EVENT" has the meaning set forth in ERISA Section 4043.
"RETAIL GIFT CERTIFICATE BUSINESS" means the gift certificate business
presently conducted by MAMO pursuant to agreements between MAMO and any retail
shopping establishment or chain of affiliated retail shopping establishments to
enable MAMO or its agents to provide gift certificates to customers of such
establishments for use solely at such retail establishment or chain of
affiliated retail shopping establishments: PROVIDED, HOWEVER, that Retail Gift
Certificate Business shall not include gift certificates that are designed
primarily to be used interchangeably among the participating tenants of a
shopping mall or other facility comprised of multiple retail shopping
establishments.
"SECTION 338(H)(10) ELECTION" has the meaning set forth in Section 10(f)
below.
"SECTION 338 COST" has the meaning set forth in Section 10(f) below.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SELLER" has the meaning set forth in the preface above.
"SELLER'S DISCLOSURE SCHEDULE" has the meaning set forth in Section 3
below.
"SUBLEASE AGREEMENT" has the meaning set forth in Section 2(f) 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.
5
"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 Section 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 9(d) below.
"YEAR 2000 COMPLIANT" means that, with respect to any software
applications, such software applications: (i) will completely and accurately
address, present, produce, store and calculate data involving dates beginning
with January 1, 2000 and will not produce abnormally ending or incorrect results
involving such dates as used in any forward or regression date based functions;
and (ii) will provide that all "date"-related functionalities and data fields
contained in such software applications include the indication of century and
millennium, and will perform calculations that involve a four-digit (or larger)
year field or the functional equivalent thereto.
2. DESCRIPTION OF TRANSACTION.
(a) PURCHASE AND SALE OF MAMO SHARES. On and subject to the terms and
conditions of this Agreement, the Buyer agrees to purchase from Seller, and
Seller agrees to sell, transfer, convey, and deliver to Buyer, all of the issued
and outstanding capital stock of MAMO at the Closing for the Purchase Price
specified below in this Section 2.
(b) PURCHASE PRICE. The Buyer agrees to pay to the Seller at the
Closing the purchase price (the "PURCHASE PRICE") by delivery of cash in the
amount of (i) the net book value of MAMO determined in accordance with GAAP
consistently applied and as of the end of the most recent month ended prior to
the Closing, plus (ii) $5.514 million payable by wire transfer or delivery of
other immediately available funds. The operations of MAMO's business from the
most recent month ended prior to the Closing through the Closing shall be for
the benefit of Seller, and the net income, after Taxes excluding those Taxes
being paid directly by Seller, for such period shall be paid to Seller in cash
or immediately available funds within 30 days following the end of such month
based on the following formula:
6
X
y X a
where:
"x" equals the number of days of that month up to but not including the Closing
Date;
"y" equals the actual number of days in such month; and
"a" equals the actual net income, after Taxes excluding those Taxes being paid
directly by Seller, of MAMO for such month as determined in accordance with GAAP
and on a basis consistent with MAMO's past practice, excluding any expenses
resulting from Buyer's post-Closing activities which are significant and unusual
or significant and out of MAMO's Ordinary Course of Business.
(c) THE CLOSING. The closing of the transactions contemplated by this
Agreement (the "CLOSING") shall take place at the offices of Wyatt, Tarrant &
Combs in Louisville, Kentucky or such other location as the Parties may agree,
commencing at 10:00 a.m., Louisville, KY time, not later than seven days after
the date on which all conditions to the obligations of the Parties to consummate
the transactions contemplated hereby (other than conditions with respect to
actions the respective Parties will take at the Closing itself) shall have been
satisfied or waived as noticed by either Party to the other; or such other date
as the Parties may mutually determine, but not later than January 31, 1998 (the
"CLOSING DATE").
(d) DELIVERIES AT THE CLOSING. At the Closing, (i) the Seller will
deliver to the Buyer the various certificates, instruments, and documents
referred to in Section 8(a) below; (ii) the Buyer will deliver to the Seller
various certificates, instruments, and documents referred to in Section 8(b)
below; (iii) the Seller will deliver to the Buyer stock certificates
representing all of the issued and outstanding capital stock of MAMO, endorsed
in blank or accompanied by duly executed assignment documents, and (iv) the
Buyer will deliver to the Seller the Purchase Price specified in Section 2(b)
above.
(e) REVENUE GUARANTEE. If, at any time before the ten month
anniversary of the Closing Date, any of the Major Agents terminates its Agent
Agreement with MAMO for any reason or MAMO terminates such Agent Agreement for
cause, the Seller will pay the Buyer an amount equal to:
$0.10 x (Annual Transaction Volume) x (D - 60)
--------
360
where D equals the number of days remaining between the date of cancellation and
the one-year anniversary of the Closing Date; provided, however, that in no
event shall the amount payable by Seller to Buyer under this revenue guarantee
for termination of any Agent Agreements exceed $375,000 in the aggregate. If
MAMO contracts with a new agent (other than an existing Buyer agent) prior to
the Closing Date or at any time following the Closing Date until the ten month
anniversary of the Closing Date (provided that MAMO is in negotiations with such
agent prior to the Closing and identifies such prospective agent to Buyer in
writing at the Closing) and not as a result of the efforts or introduction of
Buyer, the Seller shall be allowed to set off the transaction volume actually
generated by the new agent prior to the ten month anniversary against the Annual
Transaction Volume used in the calculation set forth above; PROVIDED THAT the
transaction volume of the new agent averages not less than 10,000 transactions
monthly over a three-month period. All payments to be made by Seller to Buyer
under this Section 2(e) shall be paid in cash or immediately available funds on
or before the tenth (10th) day
7
following demand thereof by Buyer. In addition, with respect to any termination
prior to the Closing, the Buyer shall be entitled to withhold the applicable
revenue guarantee amount from the Purchase Price, subject to adjustment post
Closing for set off described above.
(f) POST-CLOSING OPERATIONS OF MAMO. In connection with the Buyer's
acquisition of the MAMO Shares from the Seller, and to facilitate the continuity
of MAMO's operations upon the Closing of the transactions contemplated by this
Agreement, the Parties hereby agree to negotiate in good faith and enter into,
or cause the appropriate party to enter into, the following agreements on or
before the Closing Date:
(i) MAMO, Mid-America Data Processing Inc. ("MADPI"), a wholly-owned
subsidiary of the Seller, and Seller shall execute and deliver a processing
and clearing, programming and software development agreement in a form
mutually acceptable to Buyer and Seller (the "PROCESSING AGREEMENT") that
will provide, INTER ALIA, those terms set forth on EXHIBIT E attached
hereto.
(ii) Except for software applications used in the provision of the
services contemplated by the Processing Agreement, the Seller and its
Affiliates, including MADPI, shall assign, cause to be assigned, or
license, as appropriate, to MAMO those software applications used in the
business of MAMO or used by the Seller, its Affiliates (including MADPI) or
any other Person to assist MAMO in conducting its business that were
internally developed by the Seller or any of its Affiliates or Subsidiaries
or third parties, but which are not assets of MAMO, including, without
limitation, those software applications set forth on EXHIBIT F attached
hereto, and the Buyer shall assume such software applications pursuant to
the assignment and assumption agreements in forms mutually acceptable to
Buyer and Seller (the "Assignment Documents").
(iii) MAMO, MADPI and Seller shall execute and deliver a sublease
agreement regarding the use of office space currently used by MAMO in its
operations at a pro rata cost of Seller's lease expenses, based on space
usage, for such space in a form mutually acceptable to Buyer and Seller
(the "SUBLEASE AGREEMENT").
(iv) MAMO, MADPI and the Seller shall execute and deliver an
appropriate facility sharing agreement relating to, among other things,
the use of the phone switch and alarm system at the Data Center, in a form
mutually acceptable to Buyer and Seller (the "FACILITY SHARING AGREEMENT").
(v) To the extent that Buyer and Seller determine that it would be
necessary or desirable to do so, MAMO, the Seller and MADPI, to the extent
possible, shall execute and deliver an agreement relating to their joint
purchase of certain services and products, including without limitation,
(A) financial paper from Standard Register and (B) telecommunications
services from MCI or another acceptable long distance carrier in a form
mutually acceptable to Buyer and Seller (the "JOINT SERVICES AGREEMENT").
(vi) MAMO, MADPI and the Seller shall execute and deliver a mall gift
certificate service agreement in a form mutually acceptable to Buyer and
Seller to address the details of
8
processing and servicing gift certificates on behalf of Seller (or its
Affiliate who will take over this business from MAMO) and related costs (the
"GIFT CERTIFICATE SERVICES AGREEMENT").
(vii) MAMO and Seller or Seller's Affiliate, as applicable, shall
execute and deliver an appropriate non-exclusive license agreement which
will provide (i) for a non-assignable, limited use license to Seller for
certain software owned by MAMO and to be developed (a) by MAMO or its
Affiliates and related to the business of MAMO as conducted at the Closing
or (b) jointly by MAMO or its Affiliates and Seller or Seller's Affiliates
and (ii) for a perpetual non-exclusive license to MAMO for all required
software used by MAMO but not being transferred to MAMO in connection with
this Agreement (the "LICENSE AGREEMENT").
3. SELLER'S REPRESENTATIONS AND WARRANTIES. The Seller represents and
warrants to Buyer that, except as set forth in the disclosure schedule of Seller
accompanying this Agreement and initialed by the Parties as evidence of receipt
thereof ("SELLER'S DISCLOSURE SCHEDULE"), 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 (as though made then and as though
the Closing Date were substituted for the date of this Agreement throughout this
Section 3). Seller's Disclosure Schedule will be arranged in paragraphs
corresponding to the lettered and numbered paragraphs contained in Sections 3
and 4 of this Agreement.
(a) ORGANIZATION OF SELLER. Seller is a corporation duly organized,
validly existing, and in good standing under the laws of Kentucky. The Seller
is qualified to do business in each of the jurisdictions identified on Section
3(a) of Seller's Disclosure Schedule.
(b) AUTHORIZATION OF TRANSACTION. The Seller has and will have as of
the Closing Date full power and authority (including full corporate power and
authority) to execute and deliver this Agreement and each other agreement and
document to be executed in connection herewith, and to perform its obligations
hereunder and thereunder. Without limiting the generality of the foregoing, the
Seller's board of directors has duly authorized the execution, delivery, and
performance of this Agreement by the Seller and no approval of the Seller's
stockholders is required. Assuming this Agreement and the other agreements and
documents constitute valid and binding agreements of the Buyer pursuant to
Section 5(b) below, this Agreement constitutes, and each of the other agreements
and documents to be executed by Seller or MADPI in connection herewith will
constitute when executed, the legal, valid and binding obligation of Seller,
enforceable against Seller in accordance with its terms.
(c) NONCONTRAVENTION. Neither the execution and the delivery of this
Agreement or the other agreements or documents to be executed in connection
herewith, nor the consummation of the transactions contemplated hereby, 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 the Seller is subject or any provision of
the charter or bylaws of the Seller or (ii) to the Knowledge of Seller, 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 the Seller is a party or by which it
is bound or to which any of its assets is subject (or result in the imposition
of any Encumbrance upon any of its assets). Except for (i) all consents or
approvals expressly contemplated by this Agreement and (ii) the governmental
approvals or consents as specifically set forth on Sections 3(c) and 4(c) of the
Seller's Disclosure Schedule, the Seller does not need to give any notice to,
make any filing
9
with, or obtain any authorization, consent, or approval of any Person in order
for the Parties to consummate the transactions contemplated by this Agreement.
(d) BROKERS' FEES. The Seller 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 Buyer could become liable
or obligated.
(e) MAMO SHARES. The Seller holds of record and owns beneficially the
number of MAMO Shares set forth next to its name in Section 4(b) of the Seller's
Disclosure Schedule (which constitutes all of the capital stock of MAMO) free
and clear of any restrictions on transfer (other than any restrictions under the
Securities Act and state securities laws), Taxes, Encumbrances, options,
warrants, purchase rights, contracts, commitments, equities, claims, and
demands. The Seller is not a party to any option, warrant, purchase right, or
other contract or commitment that could require the Seller to sell, transfer, or
otherwise dispose of any capital stock of MAMO (other than this Agreement). The
Seller is not a party to any voting trust, proxy, or other agreement or
understanding with respect to the voting of any capital stock of MAMO.
4. REPRESENTATIONS AND WARRANTIES CONCERNING MAMO. The Seller represents
and warrants to Buyer that, except as set forth in Seller's Disclosure Schedule,
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).
(a) ORGANIZATION OF QUALIFICATION AND CORPORATE POWER. MAMO is a
corporation duly organized, validly existing, and in good standing under the
laws of the jurisdiction of its incorporation. MAMO is qualified to do business
in each of the jurisdictions identified on Section 4(a) of Seller's Disclosure
Schedule. MAMO has and will have as of the Closing Date full corporate power
and authority and all licenses, permits and authorizations necessary to carry on
the businesses in which it is engaged and in which it presently proposes to
engage and to own and use the properties owned and used by it. Section 4(a) of
the Seller's Disclosure Schedule lists the directors and officers of MAMO. The
Seller has delivered to the Buyer correct and complete copies of the charter and
bylaws of MAMO (as amended to date). The minute books (containing the records
of meetings of the stockholders, the board of directors, and any committees of
the board of directors), the stock certificate books, and the stock record books
of MAMO are correct and complete and have been made available to Buyer. MAMO is
not in default under or in violation of any provision of its charter or bylaws.
(b) CAPITALIZATION The entire authorized capital stock of MAMO
consists of 1,000 MAMO Shares, of which 100 MAMO Shares are issued and
outstanding and no MAMO Shares are held in treasury. All of the issued and
outstanding MAMO Shares have been duly authorized, are validly issued, fully
paid, and nonassessable, and are held of record by the Seller as set forth in
Section 4(b) of the Seller's Disclosure Schedule. There are no outstanding or
authorized options, warrants, purchase rights, subscription rights, conversion
rights, exchange rights, or other contracts or commitments that could require
MAMO to issue, sell, or otherwise cause to become outstanding any of its capital
stock. There are no outstanding or authorized stock appreciation, phantom
stock, profit participation, or similar rights with respect to MAMO. There are
no voting trusts, proxies, or other agreements or understandings with respect to
the voting of the capital stock of MAMO.
10
(c) NONCONTRAVENTION. Neither the execution and the delivery of this
Agreement, the other agreements or documents contemplated in connection
herewith, nor the consummation of the transactions contemplated hereby or
thereby, 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 MAMO is subject or any
provision of the charter or bylaws of MAMO or (ii) to the Knowledge of Seller,
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 MAMO is a party or by which it is
bound or to which any of its assets is subject (or result in the imposition of
any Encumbrance upon any of its assets). Except for (i) all consents or
approvals expressly contemplated by this Agreement and (ii) the governmental
approvals or consents as specifically set forth on Section 4(c) of the Seller's
Disclosure Schedule, MAMO does not need to give any notice to, make any filing
with, or obtain any authorization, consent, or approval of any Person in order
for the Parties to consummate the transactions contemplated by this Agreement.
(d) BROKERS' FEES. MAMO 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 Buyer could become liable
or obligated.
(e) TITLE TO ASSETS. MAMO has good and marketable title to, or a
valid leasehold interest in, the properties and assets reflected on its Most
Recent Balance Sheet or acquired after the date thereof, free and clear of all
Encumbrances, except for properties and assets disposed of in the Ordinary
Course of Business since the Most Recent Balance Sheet Date.
(f) SUBSIDIARIES. MAMO does not control directly or indirectly or
have any direct or indirect equity participation in any corporation, trust.
partnership or other business association. Prior to the Closing, Seller will
cause MAMO to transfer to an Affiliate of Seller all rights related to the
operations of the Mall/Retail Gift Certificate Business as contemplated in
Section 6(j) below.
(g) FINANCIAL STATEMENTS. Attached hereto as EXHIBIT A are the
following financial statements (collectively, the "FINANCIAL STATEMENTS"): (i)
audited balance sheets and statements of income, and cash flow as of and for the
fiscal years ended December 31, 1993, December 31, 1994, December 31, 1995, and
December 31, 1996 (the "MOST RECENT FISCAL YEAR END") for MAMO, and (ii)
unaudited balance sheets and statements of income (the "MOST RECENT FINANCIAL
STATEMENTS") as of and for the 6 months ended June 30, 1997 (the "MOST RECENT
FISCAL MONTH END") for MAMO. The Financial Statements (including the notes
thereto) have been prepared in accordance with GAAP applied on a consistent
basis throughout the periods covered thereby, present fairly the financial
condition of MAMO as of such dates and the results of operations of MAMO for
such periods, and are consistent with the books and records of MAMO (which books
and records are correct and complete), subject, in the case of the Most Recent
Financial Statements, to normal recurring year end adjustments, none of which
are expected to have a material adverse effect on the information contained in
the Most Recent Financial Statements.
(h) EVENTS SUBSEQUENT TO MOST RECENT FISCAL YEAR END. Since the Most
Recent Fiscal Year End, there has not been any material adverse change in the
business, financial condition, operations,
11
results of operations, or future prospects of MAMO. Without limiting the
generality of the foregoing, since that date:
(i) MAMO has not sold, leased, transferred, or assigned any of its
assets, tangible or intangible, other than for a fair consideration in the
Ordinary Course of Business;
(ii) MAMO has not entered into any agreement, contract, lease, or
license (or series of related agreements, contracts, leases, and licenses)
either involving more than $25,000 or outside the Ordinary Course of
Business;
(iii) no party (including MAMO) or any of its agents has accelerated,
terminated, modified, or canceled any agreement, contract, lease, or
license (or series of related agreements, contracts, leases, and licenses)
involving more than $25,000 to which MAMO is a party or by which it is
bound;
(iv) MAMO has not imposed any Encumbrance upon any of its assets,
tangible or intangible;
(v) MAMO has not made any capital expenditure (or series of related
capital expenditures) either involving more than $25,000 or outside the
Ordinary Course of Business;
(vi) Except as provided by Sections 4(f) and 6(j) of this Agreement,
MAMO has not made any capital investment in, any loan to, or any
acquisition of the securities or assets of, any other Person (or series of
related capital investments, loans, and acquisitions) either involving more
than $25,000 or outside the Ordinary Course of Business;
(vii) MAMO has not issued any note, bond, or other debt security or
created, incurred, assumed, or guaranteed any indebtedness for borrowed
money or capitalized lease obligation either involving more than $25,000
singly or $50,000 in the aggregate;
(viii) MAMO has not delayed or postponed the payment of accounts
payable and other Liabilities outside the Ordinary Course of Business;
(ix) MAMO has not canceled, compromised, waived, or released any right
or claim (or series of related rights and claims) involving more than
$25,000 or outside the Ordinary Course of Business;
(x) MAMO has not granted any license or sublicense of any rights under
or with respect to any Intellectual Property;
(xi) There has been no change made or authorized in the charter or
bylaws of MAMO;
(xii) MAMO has not issued, sold otherwise disposed of any of its
capital stock, or granted any options, warrants or other rights to purchase
or obtain (including upon conversion, exchange or exercise) any of its
capital stock;
12
(xiii) MAMO has not declared, set aside or paid any dividend or made
any distribution with respect to its capital stock (whether in cash or in
kind) or redeemed, purchased or otherwise acquired any of its capital
stock;
(xiv) MAMO has not experienced any material damage, destruction, or
loss (whether or not covered by insurance) to its property;
(xv) MAMO has not made any loan to, or entered into any other
transaction with, any of the directors, officers, and employees of MAMO,
its agents or the Seller;
(xvi) MAMO has not entered into any employment contract or collective
bargaining agreement, written or oral, or modified the terms of any
existing such contract or agreement;
(xvii) MAMO has not granted any increase in the base compensation of
any of its directors, officers, and employees;
(xviii) MAMO has not adopted, amended, modified, or terminated any
bonus, profit-sharing, incentive, severance, or other plan, contract, or
commitment for the benefit of any of its directors, officers, and
employees, or taken any such action with respect to any other Employee
Benefit Plan;
(xix) MAMO has not made any other change in employment terms for any
of its directors, officers, and employees;
(xx) MAMO has not made or pledged to make any charitable or other
capital contribution;
(xxi) There has not been any other material occurrence, event,
incident, action, failure to act, or transaction involving MAMO;
(xxii) MAMO has not entered into any Agent Agreements and neither MAMO
nor any other party has terminated or provided any notice with respect to
termination of any Agent Agreement or made any material modification with
respect to any Agent Agreement, except as such termination or modification
relates solely to the Mall/Retail Gift Certificate Business and except for
Agent Agreements which are entered into subsequent to the date hereof in
the ordinary course of business and after consultation with Buyer; and
(xxiii) MAMO has not committed to any of the foregoing.
Notwithstanding the foregoing, Buyer agrees that, for purposes of this
Agreement, the termination of any one or more Agent Agreements representing
in the aggregate less than 40% of the annual transaction volume of MAMO's
agents for the 12 months prior ended on April 30, 1997 would not be deemed
a material adverse change in the business, financial condition, operations,
results of operations or future prospects of MAMO.
13
(i) LICENSES AND AUDITS.
(i) Section 4(i)(i) of Seller's Disclosure Schedule sets forth
the states and other jurisdictions in which MAMO is licensed to conduct its
business and the surety for each such jurisdiction. The Seller has
delivered, or has caused MAMO to deliver, correct and complete copies of
the licenses issued by the licensing authorities in the states and
jurisdictions set forth on Section 4(i)(i) of Seller's Disclosure Schedule,
as well as all filings made by the Seller or MAMO with such licensing
authorities since January 1, 1996, including, without limitation, copies of
all reports concerning Permissible Investments.
(ii) Section 4(i)(ii) of Seller's Disclosure Schedule sets forth
the states and other jurisdictions whose licensing authorities conducted an
audit of MAMO since January 1, 1994. At the completion of each such audit,
the respective licensing authority found no violation of any law, statute,
regulation or rule and no reply by MAMO to the audit was required. The
Seller has delivered, or has caused MAMO to deliver, correct and complete
copies of the cover letters for all audits conducted since January 1, 1994.
There are no pending fines assessments or responses relating to any such
audit. Except as set forth on Section 4(i)(ii) of Seller's Disclosure
Schedule, the directors, officers and employees with responsibility for
state licensing matters of each of the Seller and MAMO have no Knowledge of
any pending or currently scheduled audits.
(j) UNDISCLOSED LIABILITIES. MAMO has no material Liability (and
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
material Liability), except for (i) Liabilities set forth on the face of the
Most Recent Balance Sheet (rather than in any notes thereto) 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).
(k) LEGAL COMPLIANCE. MAMO has complied with and is currently in
compliance with (and Seller and its Affiliates with respect to MAMO's business
have complied with and are currently in compliance with) in all material
respects 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. Without limiting the generality of the foregoing, MAMO
has complied with and is currently in compliance with (and Seller and its
Affiliates with respect to MAMO's business have complied with and are currently
in compliance with) in all material respects all applicable banking and money
transfer laws including, without limitation, laws related to Permissible
Investments and the Bank Secrecy Act.
(l) TAX MATTERS.
(i) Seller and MAMO have filed all Tax Returns that they were
required to file. To Seller's Knowledge, all such Tax Returns were correct
and complete in all material respects and all Taxes owed by MAMO and Seller
(whether or not shown on any Tax Return) have been
14
paid. Neither Seller nor MAMO is currently subject to any extension of
time within which to file any Tax Return. No claim has ever been made in
writing, or, to the best of Seller's Knowledge, orally, by an authority in
a jurisdiction where MAMO does not file Tax Returns that it or Seller is or
may be subject to taxation by that jurisdiction. There are no Encumbrances
on any of the assets owned, used or useful by MAMO that arose in connection
with any failure (or alleged failure) to pay any Tax.
(ii) Seller and MAMO have withheld and paid all Taxes required to
have been withheld and paid in connection with amounts paid or owing to any
employee, independent contractor, agent, creditor, stockholder, or other
third party.
(iii) The Seller does not expect any authority to assess any
additional Taxes with respect to MAMO or for which MAMO may be liable for
any period for which Tax Returns have been filed. There is no dispute or
claim concerning any Tax of MAMO claimed or raised by any authority in
writing, or, to the Knowledge of Seller, orally. Section 4(l)(iii) of
Seller's Disclosure Schedule lists all federal, state, local, and foreign
income Tax Returns filed with respect to MAMO for taxable periods ended on
or after December 31, 1993, indicates those Tax Returns that have been
audited, and indicates those Tax Returns that currently are the subject of
audit. The Seller has delivered to Buyer correct and complete copies of
all separate state tax returns of MAMO since December 31, 1993. In
addition, the Seller shall deliver to Buyer copies of any schedules or
exhibits to Seller's federal income Tax Returns that separately state MAMO
related information since December 31, 1993, redacted to exclude all non-
MAMO related information.
(iv) MAMO has not waived any statute of limitations in respect of
Taxes or agreed to any extension of time with respect to a Tax assessment
or deficiency.
(v) MAMO has not filed a consent under Code 341(f) concerning
collapsible corporations. MAMO has made no payments, is not obligated to
make any payments, and 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 Section 280G. MAMO has not been a United States real
property holding corporation within the meaning of Code Section 897(c)(2)
during the applicable period specified in Code Section 897(c)(1)(A)(ii).
MAMO is not a party to any Tax allocation or sharing agreement. MAMO has
not been a member of an Affiliated Group filing a consolidated federal
income Tax Return other than a group, the common parent of which is the
Seller.
(vi) Section 4(l)(vi) of the Seller's Disclosure Schedule sets
forth the following information with respect to MAMO as of the most recent
practicable date (as well as on an estimated pro forma basis as of the
Closing giving effect to the consummation of the transactions contemplated
hereby): (A) the tax basis of MAMO for its material assets; (B) the amount
of any net operating loss, net capital loss, unused investment or other
credit, unused foreign tax, or excess charitable contribution allocable to
MAMO; and (C) the amount of any deferred gain or loss allocable to MAMO
arising out of any Deferred Intercompany Transaction (as such term is
defined in Section 1.1502-13 of the regulations adopted under the Code).
(vii) The unpaid Taxes of MAMO (A) did not, as of the Most Recent
Fiscal Month End, exceed the reserve for Tax Liability (rather than any
reserve for deferred Taxes
15
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 MAMO in filing its Tax Returns.
(viii) Each Affiliated Group has filed all income Tax Returns
that it was required to file for each taxable period during which MAMO was
a member of the group. To the Knowledge of each member of the Affiliated
Group, all such Tax Returns were correct and complete in all material
respects. All income Taxes owed by any Affiliated Group (whether or not
shown on any Tax Return) have been paid for each taxable period during
which MAMO was a member of the group.
(ix) The Seller does not expect any authority to assess any
additional income Taxes against any Affiliated Group for any taxable period
during which MAMO was a member of the group. There is no dispute or claim
concerning any income Tax Liability of any Affiliated Group for any taxable
period during which MAMO was a member of the group claimed or raised by any
authority in writing or , to the Knowledge of Seller, orally. Except as
disclosed on Section 4(l)(ix) of the Seller's Disclosure Schedule, no
Affiliated Group has waived any statute of limitations in respect of any
income Taxes or agreed to any extension of time with respect to a income
Tax assessment or deficiency for any taxable period during which MAMO was a
member of the group.
(x) MAMO has no Liability for the Taxes of any Person other than
MAMO (A) under Reg. Section 1.1502-6 (or any similar provision of state,
local, or foreign law), (B) as a transferee or successor, (C) by contract
or (D) otherwise.
(m) INTELLECTUAL PROPERTY.
(i) MAMO owns or has the right to use, pursuant to license,
sublicense, agreement, or permission, all Intellectual Property necessary
for the operation of its business as presently conducted and as
contemplated by the Processing Agreement free and clear of Encumbrances.
Each item of Intellectual Property owned or used by MAMO immediately prior
to the Closing hereunder will be owned or licensed by MAMO on identical
terms and conditions immediately subsequent to the Closing hereunder.
Section 4(m)(i) of Seller's Disclosure Schedule sets forth a true and
correct list of all of MAMO's assets that consist of Intellectual Property,
whether such Intellectual Property is leased, licensed or owned and, if
leased or licensed, a description of such lease or license.
(ii) MAMO has not interfered with, infringed upon,
misappropriated, or otherwise come in to conflict with any Intellectual
Property rights of third parties, and, except as set forth on Section
4(m)(ii) to Seller's Disclosure Schedule, the Seller has never received any
charge, complaint, claim, demand, or notice alleging any such interference,
infringement, misappropriation, or violation (including any claim that MAMO
must license or refrain from using any Intellectual Property rights of any
third party). To the Knowledge of the Seller, no third party has
interfered with, infringed upon, misappropriated, or otherwise come into
conflict with any Intellectual Property rights of MAMO.
16
(iii) Section 4(m)(iii) of the Disclosure Schedule identifies
each patent or registration which has been issued to MAMO with respect to
any of its Intellectual Property, identifies each pending patent
application or application for registration which MAMO has made with
respect to any of its Intellectual Property, and identifies each license,
agreement, or other permission which MAMO has granted to any third party
with respect to any of its Intellectual Property (together with any
exceptions). The Seller has delivered, or has caused MAMO to deliver, to
the Buyer correct and complete copies of all such patents, registrations,
applications, licenses, agreements, and permissions (as amended to date)
and have made available to the Buyer correct and complete copies of all
other written documentation evidencing ownership and prosecution (if
applicable) of each such item. Section 4(m)(iii) of the Disclosure
Schedule also identifies each trade name or unregistered trademark used by
MAMO in connection with any of its businesses. With respect to each item
of Intellectual Property required to be identified in Section 4(m)(iii)of
the Disclosure Schedule:
(A) MAMO possesses all right, title, and interest in and to the
item, free and clear of any Encumbrance, license, or other
restriction;
(B) the item is not subject to any outstanding injunction,
judgment, order, decree, ruling, or charge;
(C) no action, suit, proceeding, hearing, investigation, charge,
complaint, claim, or demand is pending or , to the Knowledge of
Seller, is threatened which challenges the legality, validity,
enforceability, use, or ownership of the item; and
(D) MAMO has never agreed to indemnify any Person for or against
any interference, infringement, misappropriation, or other conflict
with respect to the item.
(iv) Section 4(m)(iv) of the Disclosure Schedule identifies each
item of Intellectual Property that any third party owns and that MAMO uses
pursuant to license, sublicense, agreement, or permission. The Seller has
delivered to the Buyer correct and complete copies of all such licenses,
sublicenses, agreements, and permissions (as amended to date). With
respect to each item of Intellectual Property required to be identified in
Section 4(m)(iv) of the Disclosure Schedule:
(A) the license, sublicense, agreement, or permission covering
the item is legal, valid, binding, enforceable, and in full force and
effect;
(B) the license, sublicense, agreement, or permission will
continue to be legal, valid, binding, enforceable, and in full force
and effect on identical terms following the Closing;
(C) no party to the license, sublicense, agreement, or permission
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;
17
(D) no party to the license, sublicense, agreement, or permission
has repudiated any provision thereof;
(E) with respect to each sublicense, the representations and
warranties set forth in subsections (A) through (D) above are true and
correct with respect to the underlying license;
(F) the underlying item of Intellectual Property is not subject
to any outstanding injunction, judgment, order, decree, ruling, or
charge;
(G) no action, suit, proceeding, hearing, investigation, charge,
complaint, claim, or demand is pending or , to the Knowledge of the
Seller, is threatened which challenges the legality, validity, or
enforceability of the underlying item of Intellectual Property; and
(H) MAMO has not granted any sublicense of similar right with
respect to the license, sublicense, agreement, or permission.
(v) To the Knowledge of the Seller, MAMO will not interfere with,
infringe upon, misappropriate, or otherwise come into conflict with, any
Intellectual Property rights of third parties as a result of the continued
operation of its businesses as presently conducted and as presently
proposed to be conducted.
(vi) Section 4(m)(vi) of the Disclosure Schedule identifies each
software development agreement or similar arrangement between MAMO or any
of its Affiliates and any third party concerning the development of any
software to be used by any of MAMO's agents or used or useful by MAMO in
connection with its business. The Seller has delivered to the Buyer
correct and complete copies of all such written agreements or arrangements
(as amended to date) and summaries of any oral agreements or arrangements.
With respect to each item of Intellectual Property required to be
identified in Section 4(m)(vi) of the Disclosure Schedule:
(A) the agreement or arrangement is legal, valid, binding,
enforceable, and in full force and effect;
(B) the agreement or arrangement will continue to be legal,
valid, binding, enforceable, and in full force and effect on identical
terms following the Closing;
(C) no party to agreement or arrangement 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 agreement or arrangement has repudiated any
provision thereof;
(E) the underlying item of Intellectual Property is not subject
to any outstanding injunction, judgment, order, decree, ruling, or
charge;
18
(F) no action, suit, proceeding, hearing, investigation, charge,
complaint, claim, or demand is pending or, to the Knowledge of the
Seller, is threatened which challenges the legality, validity, or
enforceability of the underlying item of Intellectual Property; and
(H) MAMO has not granted any sublicense of similar right with
respect to the license, sublicense, agreement, or permission
concerning any Intellectual Property covered by such agreement or
arrangement.
(n) TANGIBLE ASSETS. MAMO owns, leases or has the right to use all
equipment and other tangible assets necessary for the conduct of its businesses
as presently conducted. Each such tangible asset is free from defects (patent
and latent), has been maintained in accordance with normal industry practice, is
in good operating condition and repair (subject to normal wear and tear), and is
suitable for the purposes for which it presently is used and presently is
proposed to be used.
(o) INVENTORY. The inventory of the Seller consists of supplies and
dispensers, all of which is merchantable and fit for the purpose for which it
was procured or manufactured, subject only to the reserve for inventory
writedown set forth on the face of the Most Recent Balance Sheet (rather than in
any notes thereto) as adjusted for the passage of time through the Closing Date
in accordance with the past custom and practice of the Seller.
(p) PREPAID EXPENSES. The prepaid expenses set forth in the Most
Recent Balance Sheet consisting of prepaid dispenser maintenance costs, are
reflected in the books of MAMO at the lower of cost or fair market value. The
prepaid dispenser maintenance costs are usable in the Ordinary Course of
Business.
(q) CONTRACTS. Section 4(q) of Seller's Disclosure Schedule lists the
following contracts and other agreements to which MAMO is a party:
(i) any Agent Agreement, including the name of the agent and the
term of such agreement;
(ii) any agreement (or group of related agreements) for the lease
of personal property to or from any Person providing for lease payments in
excess of $25,000 per annum;
(iii) any agreement (or group of related agreements) for the
purchase or sale of raw materials, commodities, supplies, products, or
other personal property, or for the furnishing or receipt of services, the
performance of which will extend over a period of more than one year,
result in a material loss to MAMO, or involve consideration in excess of
$25,000;
(iv) any agreement concerning a partnership or joint venture;
(v) any agreement (or group of related agreements) under which
MAMO has created, incurred, assumed, or guaranteed any indebtedness for
borrowed money, or any
19
capitalized lease obligation, in excess of $25,000 or under which it has
imposed an Encumbrance on any of its assets, tangible or intangible;
(vi) any agreement concerning confidentiality or noncompetition;
(vii) any agreement with the Seller or any of its Affiliates
(other than MAMO);
(viii) any profit sharing, stock option, stock purchase, stock
appreciation, deferred compensation, severance, or other material plan or
arrangement for the benefit of the current or former directors, officers,
and employees of MAMO;
(ix) any collective bargaining agreement;
(x) any agreement for the employment of any individual on a
full-time, part-time, consulting, or other basis other than at-will
employment or providing severance benefits;
(xi) any agreement under which MAMO has advanced or loaned any
amount to any of the directors, officers, and employees of the Seller
outside the Ordinary Course of Business;
(xii) any agreement under which the consequences of a default or
termination could have a material adverse effect on the business, financial
condition, operations, results of operations, or future prospects of MAMO;
(xiii) any other agreement (or group of related agreements) the
performance of which involves consideration in excess of $25,000; or
(xiv) any other agreement which is material to the operations of
MAMO.
Seller has delivered to Buyer a correct and complete copy of each written
agreement listed in Section 4(q) of Seller's Disclosure Schedule (as amended to
date) and a written summary setting forth the terms and conditions of each oral
agreement referred to in Section 4(q) of Seller's Disclosure Schedule. To the
Knowledge of Seller, with respect to each such agreement: (A) the agreement is
legal, valid, binding, enforceable, and in full force and effect; (B) the
agreements that are listed on Section 4(q) of Seller's Disclosure Schedule
attached hereto 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, except as otherwise provided specifically in
this Agreement with respect to modifications thereof; (C) no party 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, under the agreement; and (D) no party has repudiated any provision
of the agreement.
(r) NOTES AND ACCOUNTS RECEIVABLE. To the Knowledge of Seller, all
notes and accounts receivable of MAMO are reflected properly on its books and
records, are valid receivables subject to no setoffs or counterclaims, are
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
20
Balance Sheet (rather than in any notes thereto) as adjusted for the passage of
time through the Closing Date in accordance with the past custom and practice of
MAMO.
(s) POWERS OF ATTORNEY. There are no outstanding powers of attorney
executed on behalf of MAMO.
(t) INSURANCE. Section 4(t) of Seller's Disclosure Schedule sets
forth the following information with respect to each insurance policy (including
policies providing property, casualty, liability, and workers' compensation
coverage and bond and surety arrangements) to which MAMO has been a party, a
named insured, or otherwise the beneficiary of coverage at any time within the
past 5 years:
(i) the name, address, and telephone number of the agent;
(ii) the name of the insurer, the name of the policyholder, and the
name of each covered insured;
(iii) the policy number and the period of coverage;
(iv) the scope (including an indication of whether the coverage was on
a claims made, occurrence, or other basis) and amount (including a
description of how deductibles and ceilings are calculated and operate) of
coverage; and
(v) a description of any retroactive premium adjustments or other
loss-sharing arrangements.
With respect to each such insurance policy: (A) the policy is legal, valid,
binding, enforceable, and in full force and effect; (B) the policy 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) neither MAMO nor any other party to the policy is in breach or
default (including with respect to the payment of premiums or the giving of
notices), and no event has occurred which, with notice or the lapse of time,
would constitute such a breach or default, or permit termination, modification,
or acceleration, under the policy; and (D) no party to the policy has repudiated
any provision thereof. MAMO has been covered during the past 5 years by
insurance in scope and amount customary and reasonable for the business in which
it has engaged during the aforementioned period. Section 4(t) of Seller's
Disclosure Schedule describes any self-insurance arrangements of MAMO.
(u) LITIGATION. Section 4(u) of Seller's Disclosure Schedule sets
forth each instance in which MAMO (i) is subject to any outstanding injunction,
judgment, order, decree, ruling, or charge or (ii) is, or was within the last
five years a party or, to the Knowledge of Seller and MAMO, 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. None of the
actions, suits, proceedings, hearings, and investigations set forth in Section
4(u) of Seller's Disclosure Schedule could result in any material adverse change
in the business, financial condition, operations, results of operations, or
future prospects of MAMO. Seller and MAMO have no Knowledge or reason to
believe that any such action, suit, proceeding, hearing, or investigation may be
brought or threatened against MAMO.
21
(v) EMPLOYEES. MAMO has not employed any persons in the conduct of
its business and all employees used in the conduct of MAMO's business have been
employed by Seller or any Affiliate of Seller other than MAMO. To the Knowledge
of Seller, no executive, key employee, or group of employees listed on Section
4(v) of Seller's Disclosure Schedule has any plans to terminate employment with
Seller, any of Seller's Affiliates or MAMO following the Closing. Neither
Seller nor MAMO is a party to or bound by any collective bargaining agreement,
nor have they experienced any strikes, grievances, claims of unfair labor
practices, or other collective bargaining disputes. Neither Seller nor its
Affiliates has committed any unfair labor practice. Section 4(v) of Seller's
Disclosure Schedule contains a true and complete list of all employees employed
by Seller or Seller's Affiliates (to the extent such employee provided services
to MAMO) as of June 30, 1997 and as of the date hereof, including employees on
disability or other leave or other inactive status, and such list correctly
reflects their status and their salaries, hours, wages, accrued vacation (in
days and dollar value based on the employee's current rate of pay), sick leave
and other compensation (including all bonuses paid or accrued since December 31,
1996), dates of employment and positions, and, for employees on leave or other
inactive status, a description of their status.
(w) EMPLOYEE BENEFITS.
(i) MAMO is not the plan sponsor of, does not maintain, and is
not obligated to contribute to or make payments under any Employee Benefit
Plan (including, without limitation, contributions by virtue of a salary
reduction agreement under Section 125 or Section 401(k) of the Code).
Rather, the only Employee Benefit Plans in which employees used in the
conduct of MAMO's business have participated, are sponsored, maintained
and/or contributed to by Seller or an Affiliate of Seller other than MAMO.
Section 4(w) of Seller's Disclosure Schedule lists each Employee Benefit
Plan in which any of the employees listed on Section 4(v) of the Seller's
Disclosure Schedule participates. Seller has provided to Buyer a copy of
each such Employee Benefit Plan's summary plan description, if applicable,
or if not applicable a written description of all material terms and
conditions of each such Employee Benefit Plan. MAMO does not have any
liability or obligation to Seller or any Affiliate or otherwise with
respect to any such Employee Benefit Plan which is not fully disclosed on
the Financial Statements and will not incur any such liability or
obligation as the result of the transactions contemplated by this
Agreement.
(ii) MAMO is not subject to any liability, lien, excise tax,
penalty or other obligation with respect to any of the following: (a)
failure to make any required contribution or PBGC premium payment to or in
respect of, or a distress termination of, any Employee Pension Benefit Plan
subject to Title IV of ERISA (other than a Multiemployer Pension Plan); (b)
complete or partial withdrawal from a Multiemployer Plan; or (c) failure to
comply with provisions of Title I, Part 6 of ERISA or Section 4980B of the
Code related to continuation coverage under group medical plans
(hereinafter referred to as the "COBRA requirements").
(x) GUARANTIES. MAMO is not a guarantor or otherwise liable for any
Liability or obligation (including indebtedness) of any other Person.
(y) ENVIRONMENT, HEALTH, AND SAFETY.
22
(i) To the Knowledge of Seller, MAMO has complied with all
Environmental, Health, and Safety Laws, and no action, suit, proceeding,
hearing, investigation, charge, complaint, claim, demand, or notice has
been filed or commenced against MAMO alleging any failure so to comply.
Without limiting the generality of the preceding sentence, to the Knowledge
of Seller, MAMO has obtained and been in compliance with all of the terms
and conditions of all permits, licenses, and other authorizations which are
required under, and has complied with all other limitations, restrictions,
conditions, standards, prohibitions, requirements, obligations, schedules,
and timetables which are contained in, all Environmental, Health, and
Safety Laws.
(ii) To the Knowledge of Seller, none of MAMO, the Seller or the
Seller's Affiliates has Liability (and none of MAMO, Seller or Seller's
Affiliates has handled or disposed of any substance, arranged for the
disposal of any substance, exposed any employee or other individual to any
substance or condition, and owned or operated any property or facility in
any manner that could form the Basis for any present or future action,
suit, proceeding, hearing, investigation, charge, complaint, claim, or
demand against any of MAMO, the Seller and the Seller's Affiliates giving
rise to any Liability) for damage to any site, location, or body of water
(surface or subsurface), for any illness of or personal injury to any
employee or other individual, or for any reason under any Environmental,
Health, and Safety Law that would result in Liability for MAMO.
(iii) To Seller's Knowledge, all properties and equipment used in
the business of MAMO have been free of asbestos, PCBs, methylene chloride,
trichloroethylene, 1, 2-trans-dichloroethylene, dioxins, dibenzofurans, and
Extremely Hazardous Substances.
(z) CERTAIN BUSINESS RELATIONSHIPS WITH MAMO. Except as disclosed in
Section 4(z) of Seller's Disclosure Schedule, the Seller and its Affiliates have
not been involved in any business arrangement or relationship with MAMO within
the past 12 months, and neither the Seller nor any of its Affiliates owns any
asset, tangible or intangible, which is used in the business of MAMO.
(aa) TERMINATION OF SUPPLIERS. Since the Most Recent Fiscal Year End,
no supplier of MAMO which cannot be replaced on commercially reasonable terms
has informed MAMO of its intention to cancel or terminate its business
relationships with the Seller or MAMO. To the Knowledge of Seller, no such
supplier has any plans to cancel or terminate its business relationship with the
Seller or MAMO.
(bb) MONEY ORDER AND GIFT CERTIFICATE AGENTS. Section 4(bb) of
Seller's Disclosure Schedule lists for each of the past two (2) fiscal years of
MAMO, every agent of MAMO engaged in the sale of money orders and gift
certificates (other than those solely engaged in the Mall/Retail Gift
Certificate Business) and the transaction volume generated by each such agent
during each of such fiscal years. MAMO has a good and ongoing relationship with
each such agent, and MAMO has no Knowledge that there will be any adverse change
in any such relationship, whether as a result of the consummation of the
transactions provided for by this Agreement or otherwise or that any of the
agents intends to terminate its relationship with MAMO. No such agent has
evidenced, in writing or in a manner that would lead a prudent person to believe
that such action was likely, any intention to cancel or terminate its business
relationship with MAMO. The Sale of MAMO to Buyer as contemplated herein will
not, as a matter of
23
law or contract, cause the termination of any Agent Agreement or give any party
to such Agent Agreement the right to terminate such agreement.
(cc) YEAR 2000. All software applications described in Section
2(f)(ii), as discrete software deliverables, are Year 2000 Compliant.
(dd) DISCLOSURE. The representations and warranties contained in this
Section 4 do not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements and
information contained in this Section 4 not misleading.
5. BUYER'S REPRESENTATIONS AND WARRANTIES. Buyer represents and warrants to
Seller that, except as set forth in the disclosure schedule of Buyer
accompanying this Agreement and initialed by the Parties (the "BUYER'S
DISCLOSURE SCHEDULE"), the statements contained in this Section 5 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 5). The
Buyer's Disclosure Schedule will be arranged in paragraphs corresponding to the
lettered and numbered paragraphs contained in this Section 5.
(a) ORGANIZATION OF BUYER. The Buyer is a corporation duly
organized, validly existing, and in good standing under the jurisdiction of
its incorporation.
(b) AUTHORIZATION OF TRANSACTION. The Buyer has full power and
authority (including full corporate power and authority) to execute and deliver
this Agreement and the other agreements and documents to be executed and
delivered in connection herewith and to perform its obligations hereunder and
thereunder. Assuming this Agreement and the other agreements and documents
constitute valid and binding agreements of the Seller pursuant to Section 3(b)
above, this Agreement and the other agreements and documents constitute (or will
constitute) the valid and legally binding obligations of Buyer, enforceable
against Buyer in accordance with their terms and conditions.
(c) NONCONTRAVENTION. Neither the execution and the delivery of this
Agreement or the agreements and documents to be executed in connection herewith,
nor the consummation of the transactions contemplated hereby or thereby, 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 the
charter or bylaws of Buyer or (ii) to the Knowledge of Buyer, 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. Except for (i) all consents or approvals
expressly contemplated by this Agreement, and (ii) the governmental approvals or
consents as specifically set forth on Section 5(c) of the Buyer's Disclosure
Schedule, Buyer does not need to give any notice to, make any filing with, or
obtain any authorization, consent, or approval of any Person in order for the
Parties to consummate the transactions contemplated by this Agreement.
(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 the Seller could become
liable or obligated.
24
(e) INVESTMENT. The Buyer is not acquiring the MAMO Shares with a
view to or for sale in connection with any distribution thereof within the
meaning of the Securities Act.
6. PRE-CLOSING COVENANTS. The Parties agree as follows with respect to the
period between the execution of this Agreement and the Closing:
(a) GENERAL. Each of the Parties will use its best efforts to take all
action and to do all things necessary, proper, or advisable in order to
consummate and make effective the transactions contemplated by this Agreement
(including satisfaction, but not waiver, of the Closing conditions set forth in
Section 8 below).
(b) NOTICES AND CONSENTS. The Seller will give any notices to third
parties, and Seller will use its best efforts to obtain any third party
consents, that Buyer reasonably may request in connection with the matters
referred to in Section 3(c) and Section 4(c) above. The Buyer will prepare and
file, with the cooperation of the Seller and MAMO, and the Seller (where
required by law) will file, any change in control notices. Each of the Parties
will file any Notification and Report Forms and related material that it may be
required to file with the Federal Trade Commission and the Antitrust Division of
the United States Department of Justice under the Hart-Scott-Rodino Act, will
use its best efforts to obtain an early termination of the applicable waiting
period, and will make any further filings pursuant thereto that may be
necessary, proper, or advisable in connection therewith.
(c) OPERATION OF BUSINESS. The Seller will not cause or permit MAMO
to engage in any practice, take any action, or enter into any transaction
outside the Ordinary Course of Business except as contemplated in Section 6(j)
below. Without limiting the generality of the foregoing, except as set forth in
Section 6(j) below, the Seller will not cause or permit MAMO to (i) engage in
any practice, take any action, or enter into any transaction of the sort
described in Section 4(h) above which causes or reasonably would cause a
material adverse change in the business, financial condition, operations,
results or operations, or future prospects of MAMO, (ii) declare, set aside or
pay any dividend or make any distribution with respect to its capital stock or
redeem, purchase or otherwise acquire any of its capital stock or (iii) make any
changes in the compensation or benefits provided to the employees listed in
EXHIBIT B.
(d) PRESERVATION OF BUSINESS. The Seller will cause MAMO to keep its
businesses and properties substantially intact, including its present
operations, physical facilities, working conditions, and relationships with
lessors, licensors, suppliers, customers, and employees. In addition, on or
before the Closing, the Seller shall cause the employment of the persons set
forth in EXHIBIT C, and shall use its best efforts to cause the employment of
the persons set forth in EXHIBIT B, to be transferred from Seller to MAMO
effective as of the Closing Date on terms reasonably acceptable to Buyer and
with evidence of such transfer reasonably acceptable to Buyer provided at the
Closing.
(e) FULL ACCESS. The Seller will permit, and the Seller will cause
MAMO to permit, representatives of Buyer to have full access at all reasonable
times, and in a manner so as not to interfere unreasonably with the normal
business operations of MAMO and the Seller, to all premises, properties,
personnel, books, records (including Tax records), contracts, and documents of
or pertaining to MAMO.
25
(f) NOTICE OF DEVELOPMENTS. Each of the Parties will give prompt
written notice to the other of any material adverse development causing a breach
of any of its own representations and warranties in Section 3, Section 4 or
Section 5 above.
(g) EXCLUSIVITY. The Seller will not, and the Seller will not cause
or permit MAMO or any of its Affiliates to, (i) solicit, initiate, or encourage
the submission of any proposal or offer from any Person relating to the
acquisition of any capital stock or other voting Securities, or any substantial
portion of the assets of MAMO either directly or indirectly through merger
consolidation, exchange or other transaction or (ii) participate in any
discussions or negotiations regarding, furnish any information with respect to,
assist or participate in, or facilitate in any other manner any effort or
attempt by any Person to do or seek any of the foregoing. The Seller will not
vote its MAMO Shares in favor of any such acquisition structured as a merger,
consolidation or share exchange. The Seller will notify Buyer immediately if
any Person makes any proposal, offer, inquiry, or contact with respect to any of
the foregoing.
(h) REVIEW OF FINANCIAL STATEMENTS. Seller shall cause MAMO to have
prepared and delivered to Buyer on the later of Closing or 30 days after the
last quarter ended prior to Closing, copies of the balance sheet, statement of
income and cash flow for the interim period as of and for the year-to-date
ending on the last quarter ended immediately prior to the Closing (the "INTERIM
FINANCIAL STATEMENTS"), all reviewed by Seller's outside accounting firm, and a
statement to that effect by such firm. Buyer and Seller shall equally share the
cost of such review. Except for the exclusion of the Mall/Retail Gift
Certificate Business, such Financial Statements shall not materially differ in
any respect from those attached hereto as EXHIBIT A. Seller will provide a
balance sheet, income statement and related allocation assumptions for MAMO for
the above interim period that exclude the Mall/Retail Gift Certificate Business.
Such separately stated financial statements will not be reviewed by Seller's
outside accounting firm.
(i) COMMITMENT TO SUPPORT. From the date hereof until the Closing or
any termination of this Agreement in accordance with Section 11 below, the
Seller, Buyer and their officers and directors shall, and the Seller shall cause
MAMO and its officers and directors to, actively support and defend this
Agreement and use all reasonable efforts to take or cause to be taken, all
actions necessary or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement
and to satisfy the various conditions herein to their respective obligations
hereunder.
(j) FORMATION OF GIFT CERTIFICATE SUBSIDIARY. Prior to the Closing,
Seller will cause MAMO to transfer to an Affiliate of Seller all rights related
to the operations of the Mall/Retail Gift Certificate Business. In addition,
the Seller and Buyer shall negotiate in good faith the list of tangible assets
which relate solely to the Mall/Retail Gift Certificate Business and which are
to be transferred to an Affiliate of Seller prior to Closing.
7. 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
26
reasonably may request, at the sole cost and expense of the requesting Party
(unless the requesting Party is entitled to indemnification therefor under
Section 9 below). The 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
MAMO, provided, however, that Seller shall have the right to examine and copy
all such documents, books, records (including Tax records), agreements and
financial data of any sort relating to MAMO should it reasonably need to do so
for tax or other purposes and consistent with the provisions of this Agreement.
(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 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 MAMO, the other Party 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 reasonably 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 9 below).
(c) TRANSITION. The Seller will take no action that is designed or
intended to have the effect of discouraging any lessor, licensor, customer,
supplier, agent or other business associate of MAMO from maintaining the same
business relationships with MAMO after the Closing as it maintained with the
MAMO prior to the Closing. The Seller will refer all customer inquiries
relating to MAMO's business (other than the Mall/Retail Gift Certificate
Business) to Buyer from and after the Closing.
(d) CONFIDENTIALITY. The 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.
Notwithstanding anything herein to the contrary, in the event of termination of
this Agreement pursuant to Section 11, or if the Closing does not otherwise
occur, the Buyer shall treat and hold as such all of the Confidential
Information, refrain from using any of the Confidential Information, and deliver
promptly to Seller or destroy, at the request and option of Seller, all tangible
embodiments (and all copies) of the Confidential Information which are in its
possession. In the event that the Seller or Buyer (the "Disclosing Party") 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, the Disclosing Party
will notify the other Party hereto (the "Non-Disclosing Party") promptly of the
request or requirement so that the Non-Disclosing Party may seek an appropriate
protective order or waive compliance with the provisions of this Section 7(d).
If, in the absence of a protective order or the receipt of a waiver hereunder,
the Disclosing Party is, on the advice of counsel, compelled to disclose any
Confidential Information to any tribunal or else stand liable for contempt, the
Disclosing Party may disclose the Confidential Information to the tribunal;
PROVIDED, HOWEVER, that the Disclosing Party shall use its best efforts to
obtain, at the request of Non-Disclosing Party, an order or other assurance that
confidential treatment will be accorded to such portion of the Confidential
Information required to be disclosed as Non-Disclosing Party shall designate.
27
(e) EMPLOYEES. The Parties hereto agree that during the term of the
Processing Agreement, and for a period of two years thereafter, (i) MAMO or its
Affiliates shall not, directly or indirectly, on its own behalf or in
combination with others, solicit or cause to be solicited the employment of any
employee of the Seller other than programmers working on the new system project
for MAMO described in the Processing Agreement, who MAMO may offer employment to
at any time on or after July 1, 1998 and (ii) the Seller or its Affiliates shall
not, directly or indirectly, on their own behalf or in combination with others,
solicit or cause to be solicited the employment of any employee of MAMO or Buyer
or any of their Affiliates or successors in interest working in the vicinity of
Louisville, Kentucky.
(f) COVENANT NOT TO COMPETE. As an inducement for the Parties to
enter into this Agreement, the Seller and the Buyer hereby agree as follows:
(i) From and after the Closing and continuing for a period of
five years after the Closing Date, neither Seller nor any of its Affiliates
shall, directly or indirectly, on its own behalf or in combination with
others enter, engage or participate in, as an owner, partner, shareholder,
agent, consultant or (without limitation by the specific enumeration of the
foregoing) otherwise, the money order business anywhere in the continental
United States.
(ii) From and after the Closing and continuing for a period of
five years after the Closing Date, neither Buyer nor any of its Affiliates
(including MAMO) shall, directly or indirectly, on its own behalf or in
combination with others, enter, engage or participate in, as an owner,
partner, shareholder, agent, consultant or (without limitation by the
specific enumeration of the foregoing) otherwise, the Mall/Retail Gift
Certificate Business anywhere in the continental United States; PROVIDED,
HOWEVER, that (i) nothing contained herein shall prohibit or restrict Buyer
or any of its Affiliates (including MAMO) from entering into or engaging or
participating in the Retail Gift Certificate Business with any Person where
such Person has agreed with Buyer or any of its Affiliates (including MAMO)
to provide money order or money transfer services on behalf of Buyer or its
Affiliates (including MAMO) to such Person's customers and where Buyer's
primary purpose with contracting with such Person is to provide money order
or money transfer services on behalf of Buyer or its Affiliates and (ii)
nothing contained herein shall be deemed to prohibit or restrict Buyer or
any of its Affiliates from engaging in the money order or money transfer
business.
(iii) The Seller, the Buyer and their respective Affiliates
recognize that the limitations set forth in this Section are reasonable and
are required for the protection of their respective interests. In the
event that any such limitation is deemed to be unreasonable by a court of
competent jurisdiction, the Buyer, the Seller and their respective
Affiliates agree to the reduction of any such limitations to such an area,
period or scope as such court shall deem reasonable under the
circumstances. In the event of any breach of paragraphs (i)-(ii), the time
period of the breached covenant shall be extended for the period of such
breach. As set forth in Section 9 and Section 13(n) below, each Party
shall be entitled to all rights and remedies at law and in equity in
connection with any breach of this Section by the other Party.
8. CONDITIONS TO OBLIGATION TO CLOSE.
28
(a) CONDITIONS TO OBLIGATION OF BUYER. The obligation of Buyer to
consummate the transactions to be performed by it in connection with the Closing
is subject to satisfaction of the following conditions (any of which may be
waived by Buyer in whole or in part):
(i) the representations and warranties set forth in Section 3 and
Section 4 above shall be true and correct in all material respects at and
as of the Closing Date;
(ii) The Seller shall have performed and complied with all of its
covenants hereunder in all material respects through the Closing;
(iii) All authorizations, consents and approvals of governments
and governmental agencies and third parties specified in Section 6(b) above
(including, without limitation, any consents of regulatory authorities
including state banking departments, the consent to the sublease by NTS
Property IV and consents required by any software licensors, if applicable)
shall have been procured;
(iv) no action, suit, or proceeding shall be pending or
threatened before any court or quasi-judicial or administrative agency of
any federal, state, local, or foreign jurisdiction or before any arbitrator
wherein an unfavorable injunction, judgment, order, decree, ruling, or
charge would (A) prevent consummation of any of the transactions
contemplated by this Agreement, (B) cause any of the transactions
contemplated by this Agreement to be rescinded following consummation, or
(C) affect adversely the right of Buyer to own the MAMO Shares and to
control MAMO, or (D) affect adversely the right of MAMO to own its assets
and to operate its businesses (and no such injunction, judgment, order,
decree, ruling, or charge shall be in effect);
(v) The Seller and MAMO shall each have delivered to Buyer a
certificate signed by its president or chief executive officer to the
effect that each of the conditions specified above in Section 8(a)(i)-(iv)
is satisfied in all respects;
(vi) all applicable waiting periods (and any extensions thereof)
under the Hart-Scott-Rodino Act shall have expired or otherwise been
terminated;
(vii) MADPI and Seller shall have executed and delivered the
Processing Agreement, and all other documents required under this
Agreement, and the same shall be in full force and effect;
(viii) The Seller shall have executed and delivered, or caused to
be executed and delivered, the Assignment Documents relating to internally
developed software applications:
(ix) MADPI and Seller shall have executed and delivered the
Sublease Agreement;
(x) The Seller and MADPI shall have executed and delivered a
Facility Sharing Agreement;
29
(xi) If applicable, the Seller and MADPI shall have executed and
delivered the Joint Services Agreement;
(xii) The Seller and MAMO shall have executed and delivered the
License Agreement;
(xiii) Buyer shall have received from Seller's counsel an opinion
in form and substance reasonably acceptable to Buyer, addressed to Buyer,
and dated as of the Closing Date;
(xiv) Seller shall have delivered an incumbency certificate and
an officers certificate with respect to Seller's and MAMO's charter,
by-laws and resolutions (in the case of Seller) approving this Agreement
and other matters reasonably requested by Buyer;
(xv) Seller shall have delivered, or caused to be delivered,
written resignation letters for each of MAMO's officers and directors;
(xvi) Buyer shall be satisfied in its sole discretion that the
financial statements described in Sections 4(g) and 6(h) shall be
sufficient to meet Buyer's reporting requirements under the Exchange Act;
and
(xvii) all actions to be taken by Seller in connection with
consummation of the transactions contemplated hereby and all certificates,
opinions, instruments, and other documents required to effect the
transactions contemplated hereby will be reasonably satisfactory in form
and substance to Buyer.
(b) CONDITIONS TO OBLIGATION OF SELLER. The obligation of the Seller
to consummate the transactions to be performed by it in connection with the
Closing is subject to satisfaction of the following conditions (any of which may
be waived by Seller, in whole or in part):
(i) the representations and warranties set forth in Section 5
above shall be true and correct in all material respects at and as of the
Closing Date;
(ii) Buyer shall have performed and complied with all of its
covenants hereunder in all material respects through the Closing;
(iii) no action, suit, or proceeding shall be pending or
threatened before any court or quasi-judicial or administrative agency of
any federal, state, local, or foreign jurisdiction or before any arbitrator
wherein an unfavorable injunction, judgment, order, decree, ruling, or
charge would (A) prevent consummation of any of the transactions
contemplated by this Agreement or (B) cause any of the transactions
contemplated by this Agreement to be rescinded following consummation (and
no such injunction, judgment, order, decree, ruling, or charge shall be in
effect);
(iv) Buyer shall have delivered to Seller a certificate to the
effect that each of the conditions specified above in Section 8(b)(i)-(iii)
is satisfied in all respects;
30
(v) all applicable waiting periods (and any extensions thereof)
under the Hart-Scott-Rodino Act shall have expired or otherwise been
terminated;
(vi) Buyer shall have executed and delivered the Processing
Agreement and all other documents required under this Agreement, and the
same shall be in full force and effect; and
(vii) Buyer shall have delivered an incumbency certificate and an
officers certificate with respect to Buyer's Certificate of Incorporation,
by-laws and resolutions approving this Agreement and other matters
reasonably requested by Seller;
(viii) MAMO and Seller or Seller's Affiliate shall have executed
and delivered the License Agreement;
(ix) Seller shall have received from Buyer's counsel an opinion
in form and substance reasonably satisfactory to Seller; and
(x) all actions to be taken by Buyer in connection with
consummation of the transactions contemplated hereby and all certificates,
opinions, instruments, and other documents required to effect the
transactions contemplated hereby will be reasonably satisfactory in form
and substance to Seller.
9. REMEDIES FOR BREACHES OF THIS AGREEMENT AND INDEMNIFICATION.
(a) SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All of the
representations and warranties of the Seller contained in Sections 3 and 4 of
this Agreement shall survive the Closing (unless Buyer knew of any
misrepresentation or breach of warranty at the time of Closing because such
misrepresentation or breach had been disclosed to Buyer by Seller in writing)
and continue in full force and effect as follows: (i) with respect to all
matters concerning Taxes and licensing, audits and compliance with applicable
laws until the 60th day following the expiration of the applicable statute of
limitations, (ii) with respect to all matters covered by Section 3(e) and
Section 4(b), forever, and (iv) with respect to all other representations and
warranties of Sellers in Section 3 and 4, until the second anniversary of the
Closing Date. All of the representations and warranties of the Buyer contained
in Section 5 of this Agreement shall survive the Closing (unless Seller knew of
any misrepresentation or breach of warranty at the time of Closing because such
misrepresentation or breach had been disclosed to Seller by Buyer in writing)
and continue in full force and effect until the second anniversary of the
Closing Date.
(b) INDEMNIFICATION PROVISIONS FOR BENEFIT OF THE BUYER.
(i) In the event the Seller breaches (or in the event any third
party alleges facts that, if true, would mean the Seller has breached) any
of its representations or warranties contained in Sections 3 and 4 of this
Agreement, and, if there is an applicable survival period pursuant to
Section 9(a) above, provided that Buyer makes a written claim for
indemnification against any Seller pursuant to Section 13(g) below within
such survival period, the Seller agrees to indemnify Buyer from and against
the entirety of any Adverse Consequences the Buyer may suffer through and
after the date of the claim for indemnification (including any Adverse
Consequences the Buyer may suffer after the end
31
of any applicable survival period) resulting from, arising out of, relating
to, in the nature of, or caused by the breach (or the alleged breach);
PROVIDED, HOWEVER, that the Seller shall not have any obligation to
indemnify the Buyer from and against any Adverse Consequences resulting
from, arising out of, relating to, in the nature of, or caused by the
breach (or alleged breach) of any representation or warranty of the Seller
contained in Section 3(a)-(d) and Section 4 (a), Section 4(c)-(k) and
Section 4(m) - (cc) above until the Buyer has suffered Adverse Consequences
by reason of all such breaches (or alleged breaches) in excess of a
$100,000 aggregate threshold (at which point the Seller will be obligated
to indemnify the Buyer from and against all such Adverse Consequences in
excess of such threshold).
(ii) The Seller agrees to indemnify the Buyer from and against
the entirety of any Adverse Consequences the Buyer may suffer resulting
from, arising out of, relating to, in the nature of, or caused by any
Liability of MAMO (x) for any Taxes of MAMO 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
(determined in a manner consistent with Section 10(b)) to the portion of
such period beginning before and ending on the Closing Date), (y) for Taxes
of any Person other than MAMO (including Seller and its Affiliates) (i)
under Reg. Section 1.1502-6 (or any similar provision of state, local or
foreign law), (ii) as a transferee or successor, (iii) by contract, or (iv)
otherwise, or (z) for any violation by MAMO of any laws related to
Permissible Investments for any period prior to the Closing.
(iii) The Seller agrees to indemnify the Buyer from and against
the entirety of any Adverse Consequences the Buyer or MAMO may suffer
resulting from, arising out of, relating to, in the nature of, or caused by
any Liability of the Seller or MAMO (A) with respect to the patent
infringement suit described in Section 4(m)(iii) of Seller's Disclosure
Schedule, (B) with respect to the formation, operations and liabilities of
any kind or nature related to the Mall/Retail Gift Certificate Business
(before or after the Closing) and (C) with respect to any Employee Benefit
Plan of Seller.
(c) INDEMNIFICATION PROVISIONS FOR BENEFIT OF THE SELLER. In the
event Buyer breaches (or in the event any third party alleges facts that, if
true, would mean Buyer has breached) any of its representations or warranties
contained in Section 5 of this Agreement, and, if there is an applicable
survival period pursuant to Section 9(a) above, provided that the Seller make a
written claim for indemnification against Buyer pursuant to Section 13(g) below
within such survival period, then Buyer agrees to indemnify the Seller from and
against the entirety of any Adverse Consequences the Seller may suffer through
and after the date of the claim for indemnification (including any Adverse
Consequences the Seller may suffer after the end of any applicable survival
period) resulting from, arising out of, relating to, in the nature of, or caused
by the breach (or the alleged breach).
(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 9, 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
32
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
reasonably satisfactory to the Indemnified Party so long as (A) the
Indemnifying Party notifies the Indemnified Party in writing within 15 days
after the Indemnified Party has given notice of the Third Party Claim that
the Indemnifying Party will indemnify the Indemnified Party from and
against the entirety of 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, (B) the Indemnifying Party provides the
Indemnified Party with evidence reasonably 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, (C) the Third Party Claim involves only money
damages and does not seek an injunction or other equitable relief, (D)
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 materially adverse to the
continuing business interests of the Indemnified Party, and (E) 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 9(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 (not to be withheld
unreasonably), 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 (not
to be withheld unreasonably).
(iv) In the event any of the conditions in Section 9(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 in any manner it
reasonably may deem appropriate (and the Indemnified Party need not consult
with, or obtain any consent from, the Indemnifying Party in connection
therewith), (B) the Indemnifying Party will reimburse the Indemnified Party
promptly and 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 9.
(e) DETERMINATION OF ADVERSE CONSEQUENCES. The Parties shall take
into account the time cost of money (using the Applicable Rate as the discount
rate) in determining Adverse Consequences for purposes of this Section 9. All
indemnification payments under this Section 9 shall be deemed adjustments to the
Purchase Price
(f) OTHER INDEMNIFICATION PROVISIONS. The foregoing indemnification
provisions are exclusive of and limit any statutory, equitable, or common law
remedy any Party may have for breach of
33
representation or warranty contained in Sections 3, 4 and 5 of this Agreement.
The foregoing shall in no way limit Seller and Buyer from pursuing all
statutory, equitable or common law remedies available to any Party in connection
with any other provisions of this Agreement, including, without limitation
Section 7 of this Agreement, the Processing Agreement and the other agreements
contemplated herein. The Seller hereby agrees, on behalf of itself and its
employees, that it will not make any claim for indemnification against MAMO by
reason of the fact that its employees were directors, officers, employees, or
agents of MAMO or were serving at the request of MAMO as a partner, trustee,
director, officer, employee, or agent of another entity (whether such claim is
for judgments, damages, penalties, fines, costs, amounts paid in settlement,
losses, expenses, or otherwise and whether such claim is pursuant to any
statute, charter document, bylaw, agreement, or otherwise) with respect to any
action, suit, proceeding, complaint, claim, or demand brought by the Buyer
against the Seller (whether such action, suit, proceeding, complaint, claim, or
demand is pursuant to this Agreement, applicable law, or otherwise).
10. TAX MATTERS.
(a) TAX SHARING AGREEMENTS. Any Tax sharing agreement between the
Seller and MAMO is terminated as of the Closing Date and will have no further
effect for any taxable year (whether the current year, a future year, or a past
year).
(b) RETURNS FOR PERIODS THROUGH THE CLOSING DATE. The Seller will
include the income of MAMO (including any deferred income triggered into income
by Reg. Section 1.1502-13 and Reg. Section 1.1502-14 and any Excess Loss
Accounts taken into income under Reg. Section 1.1502-19) on the Seller's state,
local, foreign or consolidated federal income Tax Returns for all periods
through the Closing Date and pay any state, local, foreign or federal income
Taxes attributable to such income. MAMO will furnish information to the Seller
for inclusion in the Seller's consolidated income Tax Returns for the period
which includes the Closing Date in accordance with MAMO's past custom and
practice. The Seller will take no position on such returns that relate to MAMO
that would adversely affect MAMO after the Closing Date. The income of MAMO
will be apportioned to the period up to and including the Closing Date and the
period after the Closing Date by closing the books of MAMO as of the end of the
Closing Date. The Seller will provide to MAMO and Buyer all information
necessary for MAMO and Buyer to file any separate state, local or foreign Tax
Return required to be filed by MAMO for any period prior to and/or including the
Closing Date.
(c) AUDITS. The Seller will allow MAMO and its counsel to
participate at its own expense in any audits of the Seller's state, local,
foreign or consolidated federal income Tax Returns to the extent that such
returns relate to MAMO and affect the ongoing operations of MAMO for periods
ending after the Closing Date. Furthermore, Buyer and MAMO will allow the
Seller and its counsel to participate at its own expense in any audits of the
Buyer's state, local, foreign or federal income Tax Returns to the extent that
such returns relate to MAMO for periods ending on or before the Closing Date and
to the extent that Buyer will be requesting indemnification from Seller pursuant
to Section 9 of this Agreement. The Seller will not settle any such audit in a
manner which would adversely affect MAMO after the Closing Date and the Buyer
will not settle any such audit in a manner which would adversely affect Seller
without the prior written consent of the other Party, which consent shall not be
unreasonably withheld.
34
(d) CARRYBACKS. The Seller will immediately pay to the Buyer any
Tax refund (or reduction in Tax liability) resulting from a carryback of a
postacquisition Tax attribute of MAMO as to which MAMO cannot elect to waive
into the Seller's consolidated Tax return, when such refund or reduction is
realized by the Seller group. Notwithstanding the foregoing, the
post-acquisition tax attributes of MAMO will be considered to produce a
refund (or reduce liability) only after all tax attributes of Seller and
other members of Seller's group have been used. The Seller will cooperate
with MAMO in obtaining such refunds (or reduction in Tax Liability),
including through the filing of amended Tax returns or refund claims. The
Buyer agrees to indemnify Seller for any Taxes resulting from the
disallowance of such postacquisition Tax attribute on audit or otherwise.
(e) POST-CLOSING ELECTIONS. At the Seller's request, the Buyer will
cause MAMO to make or join with the Seller in making any election if the making
of such election does not have an adverse impact on the Buyer (or MAMO) for any
postacquisition Tax period.
(f) SECTION 338(H)(10) ELECTION. (i) Subject to the conditions set
forth hereunder, Seller agrees that Buyer may require Seller to join with the
Buyer in making an election under Section 338(h)(10) of the Code (and any
corresponding elections under state, local, or foreign tax law) (collectively, a
"SECTION 338(H)(10) ELECTION") with respect to the purchase and sale of the
stock of MAMO hereunder. If Buyer requires that a Section 338(h)(10) Election
be made, within 240 days after the Closing, Seller and Buyer shall exchange
completed and executed copies of Form 8023-A and required schedules thereto (the
"FORM") and Seller and Buyer agree to take all other action and file all other
necessary reports to elect validly pursuant to Section 338(h)(10) of the Code to
treat the transactions as a sale of assets as opposed to a sale of stock. Buyer
and Seller shall each file a copy of the Form in a timely manner and shall
provide assurance to the other party that it has done so.
(ii) If Buyer requires that a Section 338(h)(10) Election be made,
Buyer shall be obligated to pay to Seller an amount equal to (A) all Taxes or
costs that are imposed on or incurred by Seller or its Affiliates which exceed
those costs which Seller or its Affiliates would have incurred if the Section
338(h)(10) Election had not been made, including the increased Tax liability
attributable to the receipt of such payment from Buyer and (B) any state, local
or foreign tax attributable to an election under state, local or foreign law
similar to the election available under Section 338(g) of the Code (or which
results from the making of an election under Section 338(g) of the Code) with
respect to the purchase and sale of the stock of MAMO hereunder including the
increased Tax liability attributable to the receipt of such payment from Buyer
(the "SECTION 338 COST"), and (C) the costs of Seller in providing the foregoing
information to the Buyer. Upon the request of Buyer, after the execution of this
Agreement Seller shall provide Buyer reasonable access to information and
records of Seller and MAMO that will allow the Buyer to estimate the Section 338
Cost.
(iii) Seller shall deliver to Buyer within 30 business days after a
written request by the Buyer, Seller's good faith estimate of the Section 338
Cost and Seller will provide to the Buyer sufficient information and records of
Seller and MAMO supporting such estimate. Buyer shall notify Seller within 240
days after Closing whether or not Buyer will require that a Section 338(h)(10)
Election be made. Execution and delivery of the completed Form by Seller shall
be conditioned on Buyer's either (i) having paid to Seller by wire transfer of
immediately available funds to Seller's bank account, a cash amount equal to the
Section 338 Cost, or (ii) having made alternative arrangements acceptable to
Seller in its sole discretion for security for payment (e.g., standby letters of
credit) of the Section 338 Cost, as
35
estimated in good faith by Seller; provided, however, if Buyer disagrees with
Seller's good faith estimate, the Section 338 Cost payable by Buyer to Seller
shall be equal to the amount determined by an independent public accounting firm
acceptable to both Buyer and Seller, with the cost of such firm paid by Buyer.
If Seller is able to establish that the Section 338 Cost is in excess of the
amount paid by Buyer to Seller, Buyer shall reimburse Seller for such excess
when and as such excess is incurred and established by Seller to Buyer's
reasonable satisfaction. If Buyer is able to establish that the amount paid by
Buyer to Seller is in excess of the Section 338 Cost, Seller shall reimburse
Buyer for such excess when and as such excess is established by Buyer to
Seller's reasonable satisfaction.
(iv) For purposes of the Section 338(h)(10) Election, the aggregate
purchase price to be allocated among the assets of MAMO shall be determined in
accordance with Section 338 and the regulations thereunder, and any comparable
provisions of state or local law, as appropriate. The Buyer, Seller, and MAMO
shall file all Tax Returns in accordance with the allocation jointly determined
by Buyer and shall take no position in any Tax Return, Tax proceeding or Tax
audit which is inconsistent therewith. If any such determination or allocation
is disputed by any taxing authority, the party receiving notice of the dispute
shall promptly notify the other parties hereto concerning resolution of the
dispute.
11. TERMINATION.
(a) TERMINATION OF AGREEMENT. Certain of the Parties may terminate
this Agreement as provided below:
(i) The Buyer and the Seller may terminate this Agreement by
mutual written consent at any time prior to the Closing;
(ii) The Buyer may terminate this Agreement by giving written
notice to the Seller at any time prior to the Closing (A) in the event the
Seller has breached any representation, warranty, or covenant contained in
this Agreement in any material respect, or (B) if the Closing shall not
have occurred on or before the Closing Date by reason of the failure of any
condition precedent under Section 8(a) hereof (unless the failure results
primarily from Buyer itself breaching any representation, warranty, or
covenant contained in this Agreement); provided, however, that Seller shall
have a right to cure such breach or failure for a period of ten days
following delivery of such notice; or
(iii) The Seller may terminate this Agreement by giving written
notice to the Buyer at any time prior to the Closing (A) in the event the
Buyer has breached any representation, warranty, or covenant contained in
this Agreement in any material respect, or (B) if the Closing shall not
have occurred on or before the Closing Date by reason of the failure of any
condition precedent under Section 8(b) hereof (unless the failure results
primarily from the Seller's breach of any representation, warranty, or
covenant contained in this Agreement); provided, however, that Buyer shall
have a right to cure such breach or failure for a period of ten days
following delivery of such notice.
(b) EFFECT OF TERMINATION. If any Party terminates this Agreement
pursuant to Section 11(a) above, all rights and obligations of the Parties
hereunder shall terminate without any Liability of any Party to the other Party
(except for any Liability of any Party then in breach).
36
12. EMPLOYMENT MATTERS.
(a) TRANSFER OF EMPLOYEES. Effective upon the Closing, the employees
listed in EXHIBIT B will become the employees of MAMO in accordance with Section
6(d) above.
(b) HEALTH INSURANCE. Buyer and MAMO will arrange for health
insurance benefits for the employees listed on EXHIBIT B that are similar to
those provided to such employees as of the date of this Agreement. Seller will
retain in full all liability and responsibility to provide continuation
coverage, in accordance with COBRA requirements, from and after the Closing Date
to all employees or former employees (and related qualified beneficiaries) who
are not listed on EXHIBIT B and who have elected or elect such coverage.
(c) TRANSITION DATA. Seller shall provide for the employees of MAMO
in accordance with the document entitled "Mid-America Money Order Company
Transition Data," a copy of which is attached hereto as EXHIBIT G and which is
being distributed to the employees listed on EXHIBIT B.
(d) SERVICE CREDIT. Except to the extent prohibited or limited by
applicable law or government regulation, Buyer and its Affiliates (including
MAMO) will recognize all years of service of the employees listed on EXHIBIT B
with Seller or Seller's Affiliates as though such service was performed with
Buyer or one of Buyer's Affiliates for purposes of participating in all employee
benefits (including severance) to be made available to MAMO employees (but not
for purposes of determining the amount of benefits thereunder, e.g., for
purposes of accrual under any defined benefit pension plan).
13. MISCELLANEOUS.
(a) PRESS RELEASES AND PUBLIC ANNOUNCEMENTS. No Party shall issue any
press release or make any public announcement relating to the subject matter of
this Agreement prior to Closing 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 (in which case the
disclosing Party will use its 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. 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 primarily responsible for the performance of all of its obligations
hereunder).
37
(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 it is sent by
registered or certified mail, return receipt requested, postage prepaid (and
then three business days after), and addressed to the intended recipient as set
forth below:
IF TO SELLER:
Mr. Steven Small
Executive Vice President and Chief
Financial Officer
Mid-America Bancorp
500 West Broadway
Louisville, KY 40202
Telecopy No.: (502) 562-5402
COPY TO:
Robert H. Sachs, Esq.
Executive Vice President and General Counsel
Mid-America Bancorp
500 West Broadway
Louisville, KY 40201
Telecopy No.: (502) 562-5872
AND
Stewart E. Conner, Esq.
Wyatt, Tarrant & Combs
2800 Citizens Plaza
Louisville, KY 40202
Telecopy No.: (502) 589-0309
IF TO BUYER:
Mr. John M. Fowler
Executive Vice President and Chief Financial
Officer
MoneyGram Payment Systems, Inc.
Park 80 West Plaza, 4th Floor
Saddle Brook, NJ 07663
38
Telecopy No.: (201) 291-3647
COPY TO:
Andrea M. Kenyon, Esq.
General Counsel
MoneyGram Payment Systems, Inc.
Park 80 West Plaza, 4th Floor
Saddle Brook, NJ 07663
Telecopy No.: (201) 291-3647
AND
Lori L. Lasher, Esq.
Reed Smith Shaw & McClay LLP
2500 One Liberty Place
Philadelphia, PA 19103
Telecopy No.: (215) 851-1420
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 DELAWARE WITHOUT GIVING
EFFECT TO ANY CHOICE OR CONFLICT OF LAW PROVISION OR RULE (WHETHER OF THE STATE
OF DELAWARE OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF THE
LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF DELAWARE.
(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 the
Parties. 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. Except as otherwise provided herein, each of the
Parties and MAMO will bear its own costs and expenses (including legal fees
and expenses) incurred in connection with this Agreement and the transactions
contemplated hereby; PROVIDED, HOWEVER, that any filing fees in connection
39
with the Hart-Scott-Rodino Act, any change in control notices or similar filings
will be split equally between the Buyer and the Seller.
(l) CONSTRUCTION. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof shall
arise favoring or disfavoring any Party by virtue of the authorship of any of
the provisions of this Agreement. 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. Nothing in the
Disclosure Schedules shall be deemed adequate to disclose an exception to a
representation or warranty made herein unless the Disclosure Schedules identify
the exception with reasonable particularity and describes the relevant facts in
reasonable 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). 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) EXHIBITS AND SCHEDULES. The exhibits and schedules identified in
this Agreement are incorporated herein by reference and made a part hereof. The
Parties acknowledge that this Agreement refers to and does not attach various
agreements, exhibits and the Disclosure Schedules. The Seller is responsible
for preparing and submitting to Buyer the Seller's Disclosure Schedule and Buyer
is responsible for preparing and submitting to Seller the Buyer's Disclosure
Schedule with a letter that such Disclosure Schedule is the final Disclosure
Schedule and is proposed by Seller or Buyer, as the case may be, to be attached
to this Agreement. The Buyer and Seller shall each deliver their proposed final
Disclosure Schedule to the other Party no later than 30 days following the
execution of this Agreement. Upon receipt of the final Disclosure Schedule,
Buyer, in the case of Seller's Disclosure Schedule, and Seller, in the case of
Buyer's Disclosure Schedule, shall have ten (10) business days after receipt to
review the Disclosure Schedule and to determine, in its sole discretion, that
such Disclosure Schedule is acceptable to Buyer or Seller, as the case may be,
in its sole discretion. In the event that the either Party notifies the other
Party that it is not satisfied with the Disclosure Schedule on or before the
tenth day following delivery of the proposed final Disclosure Schedule, the
notifying Party may terminate this Agreement upon notice to the other party,
whereupon all Parties shall be released without liability whatsoever from any
and all claims under this Agreement. In addition, the Parties shall use their
best efforts to negotiate and finalize the remaining exhibits and other
documents which are referred to in this Agreement within 45 days from the date
hereof. In the event that the Parties are unable to agree on such exhibits or
documents within said 45 day period, either Party may terminate this Agreement
upon notice to the other Party within 10 days after expiration of the 45 day
period, whereupon all Parties shall be released without liability whatsoever
from any and all claims under this Agreement.
(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
40
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.
(o) TIME OF ESSENCE. Time is of the essence to the performance of the
obligations set forth in this Agreement.
41
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
date first above written.
MID-AMERICA BANCORP
By: /s/ Steven A. Small
------------------------------
Steven A. Small
Executive Vice President and
Chief Financial Officer
MONEYGRAM PAYMENT SYSTEMS, INC.
By: /s/ John M. Fowler
------------------------------
John M. Fowler
Executive Vice President and
Chief Financial Officer
42