EXHIBIT 10.1
Execution Copy
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER is dated as of May 9, 2006
("AGREEMENT") by and among GlobalTech Acquisition, LLC, a Delaware limited
liability company ("COMPANY"), GlobalTech Leasing, Inc., a California
corporation ("MERGER CO"), and International Card Establishment, Inc., a
Delaware Corporation ("ICE").
WITNESSETH:
WHEREAS, Merger Co owns and operates a credit card terminal
equipment leasing business (the "Business"); and
WHEREAS, ICE is the sole shareholder of Merger Co.
WHEREAS, ICE and the Company desire to transfer the Business
and substantially all of the assets of the Merger Co pursuant to a merger (the
"Merger") of Merger Co with and into the Company.
NOW, THEREFORE, in consideration of the premises and
respective covenants contained herein, the parties hereto, intending to be
legally bound hereby, agree as follows:
ARTICLE 1
THE MERGER
1.1 THE MERGER. Upon the terms and subject to the conditions
set forth herein, an in accordance with the Delaware General Corporation Law, as
amended (the "DGCL"), at the Effective Time, Merger Co shall be merged with and
into the Company. At the Effective Time, the separate corporate existence of
Merger Co shall cease and the Company shall continue as the surviving
corporation of the Merger (the "Surviving Corporation") and shall succeed to and
assume all the rights and obligations of Merger Co in accordance with the DGCL
and applicable California law.
1.2 ASSUMED LIABILITIES. ICE hereby assumes and agrees to pay,
perform and discharge when due, all of the liabilities and obligations of Merger
Co at the Effective Time (the "ICE Assumed Liabilities") except for assumption
of obligations arising after Closing under the Contracts which are specifically
designated by the Company and Merger Co. Without limiting the foregoing, ICE
hereby assumes any liabilities relating to or arising out of:
(a) Any wages, salaries and benefits accrued or payable to
employees of Merger Co at any time prior to the Closing, including any
contributions to or other obligations arising under the Plans (as hereinafter
defined);
(b) All Taxes assessed, accrued or attributable for
periods prior to the Closing Date and related penalties and interest, if any;
(c) Any complaint, suit, action, arbitration or
regulatory, administrative or governmental proceeding or investigation which
relates to any business of Merger Co conducted on or prior to the Closing Date
including, without limitation, the items of litigation set forth on SCHEDULE 3.9
attached hereto;
(d) Any liability of the Merger Co for borrowed funds,
capital leases, and notes payable, provided further that the parties agree that
any leases being assigned to and/or assumed by the Company pursuant hereto shall
not be deemed to be capital leases;
(e) Accounts payable, wages, benefits and severance costs;
(f) Any liability of Merger Co incurred outside of the
ordinary course of business;
(g) Any other liability, debt, obligation or rebate; and
(h) Any liability or obligation of ICE
1.3 MERGER CONSIDERATION. At the Effective Time, by virtue of
the Merger and without any action on the part of Merger Co, the Company or ICE,
all of the issued and outstanding shares of ICE common stock shall be cancelled
and shall be converted automatically into the right to receive the merger
consideration payable as follows:
(a) $626,443 payable at Closing in immediately available
funds by wire transfer to an account designated by ICE;
(b) Execution of an amended and restated promissory note
payable to Neos Liquidating, LLC ("NEOS"), (the "AMENDED AND RESTATED NOTE"), in
the original principal amount of $1,691,057, and unconditional release of ICE
from any obligations thereunder;
(c) $45,000 payable six months after the Closing Date in
immediately available funds by wire transfer to an account designated by ICE,
subject to the provisions of Article 9. Notwithstanding the above, the the
Company shall be entitled to offset from such $45,000 any claims of the Company
arising from ICE Assumed Liabilities;
(d) An amount equal to the difference between (i) $62,500
and (ii) any ICE Assumed Liabilities that the Company and ICE agree shall be
paid or assumed by the Company during the first 30 days following the Closing
Date (subject to credit for any receivables which are paid in respect of such
ICE Assumed Liabilities) (the "Excess Cash Payment"). On or before June 15,
2006, the Company and ICE shall agree on a reconciliation of the amount of the
Excess Cash Payment and the Company shall pay ICE the amount of such Excess Cash
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Payment. Nothing contained in this Section 1.3 (d) shall relieve ICE from its
obligations with respect to ICE Assumed Liabilities which the Company does not
agree to pay within thirty days of the Closing.
1.4 ALLOCATION OF MERGER CONSIDERATION. The Merger
Consideration shall be allocated among the assets of Merger Co in accordance
with an agreed allocation statement (the "ALLOCATION STATEMENT") prepared by the
Company
1.5 NO ENCUMBRANCES; EXCLUDED ASSETS. The assets of Merger Co
at the Effective Time shall be free and clear of all mortgages, security
interests, charges, encumbrances, liens, assessments, covenants, claims, title
defects, pledges, encroachments and burdens of every kind or nature whatsoever
(collectively "LIENS) and any obligations in respect of Liens on the assets
shall be ICE Assumed Liabilities for purposes of this Agreement. The Company
acknowledges and agrees that the books and records, financial information,
minute books and other corporate records of ICE shall be retained by ICE and
shall not be transferred to the Company pursuant to this Agreement; provided
however, that ICE shall provide the Company with access to such excluded assets
to the extent such assets relate to the business and operations of the Company
after the Closing.
1.6 TRANSFER TAXES. ICE shall pay at Closing any and all
applicable transfer, sales, use and bulk sales taxes, ad valorem and property
taxes and similar assessments arising from the transactions contemplated hereby
or based upon or measured by Merger Co's ownership of its assets.
ARTICLE 2
CLOSING DATE; DELIVERIES AT CLOSING.
2.1 CLOSING. The closing of the Merger and the other
transactions contemplated hereby (the "CLOSING") shall take place at 9:00a.m.
EST on May 10, 2006, or as otherwise agreed by the parties (the "CLOSING DATE").
2.2 DELIVERIES BY MERGER CO AND ICE AT THE CLOSING. At the
Closing, Merger Co and/or ICE shall execute and deliver to or cause to be
delivered to the Company the following:
(a) Merchant Service Provider Agreement, in substantially
the form of EXHIBIT A (the "Merchant Service Provider Agreement");
(b) the Exclusive Supply Agreement, in substantially the
form of EXHIBIT B (the "Exclusive Supply Agreement");
(c) the Four Party Agreement, in substantially the form of
EXHIBIT C (the "Four Party Agreement");
(d) the Sublease Agreement, in substantially the form of
EXHIBIT D (the "Sublease");
(e) certificates of the Secretary of Merger Co and the
Secretary of ICE setting forth all resolutions of their respective Boards,
authorizing the execution and delivery of this Agreement and the performance by
Merger Co and ICE of the contemplated transactions hereby; and
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(f) any other documents reasonably requested by the
Company and its counsel to effectuate the transaction contemplated hereby.
2.3 DELIVERIES BY THE COMPANY AT THE CLOSING.
At the Closing, the Company shall execute and deliver to
ICE the following:
(a) payment of $626,443 (six hundred twenty six thousand,
four hundred forty three) to the Merger Co in immediately available funds by
wire transfer to an account designated by the Merger Co;
(b) payment of $75,000 (seventy five thousand dollars) to
ICE in immediately available funds by wire transfer to an account designated by
ICE in full satisfaction of Merger Co's obligation to rebate the sum of $100
(one hundred dollars) per lease to an ISO of ICE;
(c) the Merchant Program Processing Agreement, in
substantially the form of EXHIBIT A;
(d) the Exclusive Supply Agreement, in substantially the
form of EXHIBIT B;
(e) the Four Party Agreement, in substantially the form of
EXHIBIT C;
(f) the Sublease Agreement, in substantially the form of
EXHIBIT D;
(g) a certificate of the Secretary of the Company setting
forth all resolutions of the Board of Directors of the Company, authorizing the
execution and delivery of this Agreement and the performance by the Company of
the contemplated transactions hereby;
(h) any other documents reasonably requested by Merger Co
and its counsel to effectuate the transaction contemplated hereby.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF ICE
As an inducement to the Company to enter into this Agreement and
consummate the transactions contemplated hereby, ICE hereby represents and
warrants to the Company as follows as of the date hereof and as of the Closing
Date:
3.1 TITLE TO SHARES AND ASSETS. ICE is and shall be on the
Closing Date the record and beneficial owner, free and clear of all Liens, of
all of the issued and outstanding shares of capital stock of Merger Co. Upon
Closing, Merger Co shall have good, marketable and unencumbered title to all of
its assets, free and clear of all Liens.
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3.2 DUE ORGANIZATION; AUTHORITY CONCERNING THIS AGREEMENT.
Each of Merger Co and ICE is a corporation duly organized, validly existing and
in good standing under the laws of the state of its organization and has full
power and authority to carry on the Business as presently conducted, and to own,
lease and operate the property now owned, leased and operated by it, except
where the failure to have such power and authority would not have a material
adverse effect on the Assets or the Business. Each of Merger Co and ICE as the
case may be has full power and authority to execute and deliver this Agreement
and the other agreements executed in connection herewith by Merger Co and ICE,
and to consummate the transactions contemplated hereby and thereby
(collectively, "TRANSACTION AGREEMENTS").
The execution and delivery of this Transaction Agreements
have been duly and validly authorized by each of Merger Co and ICE. This
Agreement has been duly and validly executed and delivered by each of Merger Co
and ICE, and constitutes the legal, valid and binding agreement of each of
Merger Co and ICE, enforceable against each of them in accordance with its
terms, subject in each case to (i) bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating to
creditors' rights, and (ii) principles of equity. Each of the Transaction
Agreements and the other related documents shall be duly and validly executed
and delivered by each of Merger Co and ICE on the Closing Date, and shall
constitute the legal, valid and binding agreement of each of Merger Co and ICE,
enforceable against each of Merger Co and ICE in accordance with its terms,
subject in each case to (i) bankruptcy, insolvency, reorganization, moratorium
or other similar laws now or hereafter in effect relating to creditors' rights,
and (ii) principles of equity.
3.3 CONDITION OF REAL AND PERSONAL PROPERTY; LEASES. All real
property and material items of tangible personal property owned or leased by
Merger Co and used in the Business are listed and described in SCHEDULE 3.3
attached hereto. All buildings and improvements on the real property are in
reasonable operating condition and repair, subject only to normal wear and tear,
and, except as otherwise set forth in SCHEDULE 3.3, to the ICE's knowledge, all
improvements on the real property comply, in all material respects, with all
applicable ordinances, regulations, and zoning or other laws and do not encroach
on property of others. To ICE's knowledge, there are no restrictive covenants,
ordinances, regulations, or zoning or other laws that in any material way
restrict or prohibit the use of the lands, buildings or improvements owned or
leased by Merger Co with respect to the Business. As of the date hereof, to the
knowledge of Merger Co and ICE, there is no pending or threatened change of any
such ordinance, regulation, or zoning or other law affecting such property, and
there is no pending or threatened condemnation of any such property. All
machinery and equipment owned by Merger Co and used in the Business and included
in the Assets conform to all material applicable ordinances, regulations, and
zoning or other laws, except where such failure to conform would not have a
material adverse effect on the assets of Merger Co or the Business. All items of
personal property listed on SCHEDULE 3.3 are in reasonable operating condition
and repair, subject only to normal wear and tear, and are adequate to conduct
the Business as it is now being conducted.
3.4 FINANCIAL STATEMENTS; UNDISCLOSED LIABILITIES. The income
statements of Merger Co for the three months period ended March 31, 2006, and
the unaudited income statements and balance sheets for the twelve-month period
ended December 31, 2005, attached as SCHEDULE 3.4 hereto (the "LATEST FINANCIAL
STATEMENTS"), have been prepared in accordance with generally accepted
accounting principles and present fairly the financial position of Merger Co at
the dates indicated and the results of operations for the periods indicated.
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Except as set forth in SCHEDULE 3.4 attached hereto, as of the dates indicated,
Merger Co has no debt, liability or other obligation, whether accrued, absolute,
known or unknown, contingent or otherwise, with regard to the Business, not
reflected or reserved against in the Latest Financial Statements, except for
liabilities incurred in the ordinary course of business since the date of the
Latest Financial Statements.
3.5 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since December 31,
2005, (i) Merger Co has conducted the Business only in the normal and ordinary
course, in substantially the same manner as heretofore conducted and has taken
reasonable efforts consistent with normal business practices to preserve and
promote such business and to avoid any act that might have a material adverse
effect upon the value of such business as a going concern or upon the Assets;
(ii) no event has occurred to prevent Merger Co from operating in a normal and
usual manner and in substantially the same manner as heretofore operated; (iii)
Merger Co has performed all material obligations required to be performed by it
under all Contracts; and (iv) Merger Co has made reasonable efforts to preserve
the existing relationships with employees, agents, suppliers, customers and
others having business with Merger Co in a manner consistent with normal
business practices.
3.6 CONTRACTS. All Contracts of the Merger Co that are
material to the Business or the Assets are listed in SCHEDULE 3.6 attached
hereto. True and complete copies of all written Contracts have been delivered to
the Company. All such Contracts are in full force and effect and are legally
binding and enforceable by and against Merger Co, and to ICE's knowledge the
other parties thereto, subject to the express terms of such contracts and the
possibility that enforceability may be limited by (i) bankruptcy, insolvency,
reorganization, moratorium and other similar laws now or hereafter in effect
relating to creditors' rights and (ii) principles of equity, and Merger Co, nor
to the knowledge of ICE, any other party to any of such Contracts is in
violation thereof or in default thereunder.
3.7 INTELLECTUAL PROPERTY. SCHEDULE 3.7 attached hereto fully
and accurately describes all of the Intellectual Property in Merger Co's
Business. The Intellectual Property is sufficient to conduct the business and
operations of the Merger Co as they are now being conducted. Except as otherwise
described in SCHEDULE 3.7, Merger Co owns all the rights (within the respective
geographic areas where products and services of Merger Co are currently
marketed, sold and distributed) to, and property interests in, the Intellectual
Property, free and clear of liens and encumbrances. Merger Co's right, title and
interest in and to the Intellectual Property is valid and enforceable. To ICE's
knowledge, Merger Co is not infringing upon the intellectual property rights of
any third parties.
3.8 TAXES. Merger Co has filed, or caused to be filed when due
all federal, state and local tax returns required to be filed by it (including,
without limitation, income, sales, use, franchise, unemployment, payroll,
withholding, ad valorem and property taxes). Merger Co and ICE have paid or made
adequate provision for the payment of: (i) all taxes due for the periods covered
by such returns, except such accrued and unpaid taxes for which appropriate
accruals shall be reflected on the Latest Financial Statements; (ii) all
payments of estimated taxes; and (iii) all deficiencies assessed as a result of
any examination of such returns. Merger Co has not received notice of and is not
otherwise aware of an audit or examination of any tax returns. Merger Co is not
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a party to any action or proceeding by any governmental authority for assessment
or collection of taxes, excise taxes, charges, penalties or interest, nor has
any claim for such assessment or collection been asserted against Merger Co.
Merger Co is not now or nor has it in the past three years been a party to a tax
sharing agreement.
3.9 LITIGATION; CLAIMS. There are no legal, administrative,
arbitration or other proceedings or governmental investigations pending or, to
the knowledge of Merger Co or ICE, threatened against the Merger Co or its
assets.
3.10 EMPLOYEE BENEFIT PLANS; ERISA.
(A) SCHEDULE 3.10 attached hereto lists all employee
benefit plans (as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")) and each other employee benefit
arrangement, contract, agreement or policy, applicable to employees of Merger Co
(hereinafter referred to collectively as the "PLANS").
(b) To the ICE's knowledge, all Plans have complied in all
material respects with all applicable requirements of the Code, ERISA, the
health care continuation requirements of the Consolidated Omnibus Budget
Reconciliation Act of 1986 ("COBRA"), all other applicable laws and any
applicable collective bargaining agreements.
3.11 CONSENTS AND APPROVALS; NO VIOLATION. Except as set forth
in SCHEDULE 3.11 attached hereto, to the knowledge of ICE, there is no
requirement applicable to Merger Co to make any filing with, or to obtain any
permit, authorization, license, consent or approval of, any governmental or
regulatory authority or any other person as a condition to the lawful
consummation of the sale of the Assets pursuant to this Agreement and the other
transactions contemplated by this Agreement. The execution and delivery of this
Agreement and the other instruments contemplated hereby by Merger Co and the
performance by Merger Co of its obligations hereunder and thereunder shall not:
(i) conflict with or result in any breach of any provision of the charter or
bylaws of Merger Co; (ii) result in a default or give rise to any right of
termination, cancellation or acceleration under any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, agreement, commitment, lease
or other instrument or obligation to which Merger Co is a party or by which
Merger Co or any of its Assets may be bound and which is material to the
Business, except for such defaults or rights of termination, cancellation or
acceleration (A) arising under Restricted Contracts (as hereinafter defined) or
(B) as to which requisite waivers or consents have been obtained or shall be
obtained on or prior to the Closing Date and of which copies thereof have been
or shall be furnished to the Company; (iii) violate any order, writ, judgment,
injunction or decree applicable to Merger Co or its assets; or (iv) result in
the creation of any lien, charge or encumbrance upon the assets of Merger Co.
3.12 LICENSES, PERMITS AND AUTHORIZATIONS. SCHEDULE 3.12
attached hereto lists all licenses, permits and authorizations that are
currently held by Merger Co and are to the knowledge of ICE required for the
conduct of the business or operations as presently conducted. Except as set
forth in SCHEDULE 3.12 or otherwise disclosed in this Agreement or the schedules
attached hereto: (i) such licenses, permits and authorizations are not subject
to any restrictions or conditions that would limit in any material respect the
operation of the business or operations of Merger Co as presently conducted; and
(ii) there are no applications by Merger Co or complaints by others pending or,
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to the knowledge of ICE, threatened as of the date hereof before any
governmental agency relating to any licenses, permits or authorizations
involving Merger Co or its assets. Except as set forth on Schedule 3.12, no
governmental or other regulatory consents or approvals are to the knowledge of
ICE necessary for such licenses, permits and authorizations to continue in full
force and effect on behalf of the Company following consummation of the
transactions contemplated by this Agreement.
3.13 CORPORATE AND PERSONNEL DATA; LABOR RELATIONS. SCHEDULE
3.13 attached hereto lists the names and titles of all officers and directors
(or similar officials) and employees of the Merger Co. SCHEDULE 3.13 lists all
employment contracts or letters, noncompetition agreement and other agreements
between Merger Co and officers or employees of the Merger Co. True and correct
copies of information containing the names and current annual salary rates of
all persons employed by Merger Co as of the date hereof have been furnished to
the Company. Except as set forth in SCHEDULE 3.13: (i) Merger Co is in
compliance in all material respects with all applicable laws and regulations
relating to the employment of labor and employment practices, including those
related to terms and conditions of employment, wages, hours, collective
bargaining, discrimination, and the payment of FICA or similar taxes; (ii) to
ICE's knowledge, Merger Co has not and is not now engaged in any unfair labor
practice; (iii) there are no unfair labor practice claims or charges pending
involving Merger Co; (iv) Merger Co is not a party to any collective bargaining
agreement or bound by any other agreement with a labor union, and there are no
proceedings pending for certification or representation before the National
Labor Relations Board nor, to the knowledge of ICE, has there been any attempt
within the past three (3) years to organize the employees of Merger Co into a
collective bargaining unit; (v) there is no labor strike, dispute, slowdown or
stoppage actually pending or, to the knowledge of ICE, threatened against or
involving Merger Co; (vi) no labor grievance that might have an adverse effect
on Merger Co is pending and, to the knowledge of ICE, no claim therefore has
been threatened; and (vii) Merger Co has not in the past three (3) years
experienced any work stoppage or other labor difficulty or to ICE's knowledge
committed any unfair labor practice.
3.14 COMPLIANCE WITH LAWS. Except as set forth in the
schedules attached hereto and to the knowledge of ICE, Merger Co has conducted
the Business, and its assets have been held and used, in compliance with all
applicable laws and regulations and all orders of any governmental authority
having jurisdiction over it, including, without limitation, all applicable
federal, state and local laws dealing with occupational safety and health,
except for such non-compliance, which individually or in the aggregate, has not
resulted in a material adverse effect upon the Assets or the Business. Except as
set forth in the schedules attached hereto, Merger Co has not received any
complaint or notice from any governmental authority alleging that it has
violated any law, ordinance, regulation or order, and, to the knowledge of the
ICE, no such complaint or notice is threatened.
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3.15 SUBSIDIARIES; AFFILIATES. Merger Co does not own more
than one percent (1%) of the equity in any other entity. There are no amounts
payable or receivable between Merger Co and any of its officers, directors or
ICE other than amounts owed for compensation, expenses, advances and fringe
benefits or as set forth on SCHEDULE 3.15. As of the Effective Time, any
intercompany receivables or payables between ICE and Merger Co will be
extinguished, subject to ICE's obligations with respect to ICE Assumed
Liabilities.
3.16 INSURANCE. Attached as SCHEDULE 3.16 is a complete list
of all insurance policies maintained by Merger Co, together with a statement of
the name of the insurer, type of insurance and coverage limits. Merger Co
carries property damage, automobile, and general liability insurance with
respect to its properties and business. To ICE's knowledge, all policies of
insurance are in full force and effect and shall be in full force and effect as
of the Closing Date. To ICE's knowledge, Merger Co has given due and timely
notice of any claim and of any occurrence known to Merger Co or ICE which may
reasonably be expected to give rise to a claim which may be covered by such
insurance and has otherwise complied in all respects with the provisions of such
policies. To the ICE's knowledge, Merger Co is not and shall not be as of the
Closing in default under any such policy of insurance. Merger Co has not been
denied any application for insurance within the past five (5) years.
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ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to the ICE as follows:
4.1 ORGANIZATION. The Company is a limited liability company
duly incorporated, validly existing and in good standing under the laws of
Delaware and has the requisite corporate power and authority to own, lease and
operate its properties, and to carry on its business as now being conducted,
except where the failure to have such power and authority would not, in the
aggregate, have a material adverse effect on the business, operations or
financial condition of the Company.
4.2 AUTHORITY CONCERNING THIS AGREEMENT. The Company has the
corporate power and authority to execute and deliver this Agreement and the
other Transaction Agreements, and to consummate the transactions contemplated
hereby and thereby. The execution and delivery of this Agreement and all such
other agreements and documents and the consummation of the transactions
contemplated hereby and thereby have been duly and validly authorized by the
Company. This Agreement was duly and validly executed and delivered by the
Company and shall constitute the legal, valid and binding agreement of the
Company and be enforceable in accordance with its terms, subject to the
possibility that enforceability may be limited by (i) bankruptcy, insolvency,
reorganization, moratorium and other similar laws now or hereafter in effect
relating to creditors' rights, and (ii) principles of equity. Each of the
Transaction Agreements and other documents shall be duly and validly executed
and delivered by the Company on the Closing Date and shall constitute the legal,
valid and binding agreement of the Company and be enforceable in accordance with
its terms, subject to the possibility that enforceability may be limited by (i)
bankruptcy, insolvency, reorganization, moratorium and other similar laws now or
hereafter in effect relating to creditors' rights, and (ii) principles of
equity.
4.3 AVAILABILITY OF FUNDS. The Company has available and shall
have available on the Closing Date sufficient funds to enable the Company to
consummate the transactions contemplated by this Agreement. At the Merger Co's
request, the Company shall provide the Merger Co with evidence satisfactory to
the Merger Co of the availability of such funds.
ARTICLE 5
FURTHER REQUIREMENTS.
5.1 NONCOMPETITION; CONFIDENTIALITY; NONSOLICITATION.
(a) ICE agrees that it shall not, for a period of three
years from the Closing Date (the "RESTRICTION PERIOD"), anywhere in the United
States, directly or indirectly, engage in or become associated as a consultant,
partner, owner, agent, shareholder in excess of 5% of the outstanding and issued
stock, member of, or otherwise have a business relationship, with any Person or
organization (other than the Company) engaged in, or about to become engaged in
the business of credit card terminal equipment leasing similar to the Business
presently conducted by Merger Co, except as a representative of the Company as
contemplated by the Exclusive Supply Agreement.
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(b) During the Restriction Period, ICE shall not, directly
or indirectly, disclose to anyone, or use in competition with the Business, any
Confidential Information. For purposes of this Agreement, "CONFIDENTIAL
INFORMATION" shall mean all information of any kind concerning (i) the Business
or the assets of Merger Co, or (ii) the Company, to the extent disclosed to
Merger Co in the course of the negotiation of and consummation of the
transactions contemplated herein; provided, that Confidential Information shall
not be deemed to include any information which (A) is or becomes generally
available to the public other than as a result of any action taken by Merger Co,
or (B) with respect to information concerning the Company was available to
Merger Co on a nonconfidential basis prior to its disclosure to Merger Co by the
Company or becomes available to Merger Co on a nonconfidential basis from a
source other than the Company and such source is not bound by a confidentiality
agreement with, or a fiduciary obligation to, the Company.
(c) During the Restriction Period, neither ICE shall not,
directly or indirectly, solicit, encourage, facilitate or induce (other than, in
the case of ICE, in the performance of duties as a consultant to the Company)
any customer, supplier, agent, sales representative, employee, consultant, or
licensee of Merger Co or the Company to breach any agreement or contract with,
or discontinue his, her, or its business relationships with Merger Co or the
Company. ICE further covenants and agrees that during the Restriction Period,
neither ICE nor any of its affiliates shall solicit, hire or otherwise engage as
an employee, independent contractor or otherwise, any person who is or was an
employee of Merger Co's business, except with the prior written consent of the
Company.
(d) For the purpose of this Article 5,"ICE" shall include
any of its subsidiaries, parent companies, and any other affiliates.
5.2 BLUE PENCIL. The provisions contained in the above Section
5.1 as to the time periods, geographic area, and scope of activities restricted
shall be deemed severable, so that if any provision contained in this Section 5
is determined to be invalid or unenforceable, that provision shall be deemed
modified so as to be valid and enforceable to the full extent lawfully
permitted.
5.3 ACCESS TO RECORDS. the Company, Merger Co and ICE agree to
furnish or to cause to be furnished to each other upon request as promptly as
practicable, such information and assistance relating to the Assets and the
Business as is reasonably necessary for the filing of any tax return,
declaration or report, the making of any election related to Taxes, the
preparation for any audit by any taxing authority, or the prosecution or defense
of any claim, suit, or proceeding; PROVIDED, HOWEVER, that such information and
assistance shall be provided in a manner that shall not unreasonably disrupt the
business of the party providing information or assistance. Merger Co and the
Company shall cooperate fully as to and to the extent reasonably requested by
the other party, in the conduct of any audit, litigation or other proceeding to
the extent relevant to the Assets or the Business.
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5.4 LITIGATION COOPERATION. In the event that Merger Co, ICE
or the Company shall participate in any suit, action, proceeding or
investigation concerning the Business conducted on or prior to the Closing Date
(excluding any such suit, action, proceeding or investigation between Merger Co
and the Company), the parties shall, upon the request of the party involved in
such litigation, cooperate fully with such party at such party's expense in
connection therewith, except to the extent that such litigation arises from or
constitutes a breach by any such party of any representation, warranty, covenant
or agreement contained in this Agreement and the other agreements provided for
herein.
ARTICLE 6
SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
The representations and warranties made under and in
connection with this Agreement shall survive the Closing and consummation of all
the transactions contemplated hereby and shall automatically expire and
terminate two years after the Closing Date to the extent that claim for breach
thereof has not theretofore been made in writing by a party to the other party,
except that the representations and warranties contained in Section 3.1, Section
3.2, and Sections 4.1 and 4.2 shall survive without time limit.
ARTICLE 7
CONDITIONS TO THE OBLIGATIONS OF BUYER TO EFFECT THE
TRANSACTIONS CONTEMPLATED HEREBY.
The obligations of the Company to effect the transactions
contemplated hereby shall be subject to the fulfillment at or prior to the
Closing Date of the following conditions, any one or more of which may be waived
by the Company:
7.1 None of the parties hereto shall be subject on the Closing
Date to any order, decree or injunction of a court of competent jurisdiction
which enjoins or prohibits the consummation of the transactions contemplated by
this Agreement, nor shall there be pending a suit or proceeding by any
governmental authority that seeks injunctive or other relief in connection with
such transactions. All consents, approvals and waivers from third parties and
governmental agencies and authorities required to be obtained to consummate the
transactions contemplated by this Agreement to be consummated at or prior to the
Closing Date and which, either individually or in the aggregate, if not
obtained, would materially adversely affect the Business, or the Assets, shall
have been obtained.
7.2 The representations and warranties of ICE set forth in
this Agreement shall be true and correct in all material respects as of the
Closing Date as though made as of such date. Merger Co shall have performed and
complied in all material respects with all covenants and agreements contained in
this Agreement required to be performed and complied with by it at or prior to
the Closing Date.
7.3 All documents required to have been delivered by ICE to
the Company, and all actions required to have been taken by the Merger Co, shall
have been delivered or taken.
7.4 the Company shall have received from the Merger Co and ICE
copies, certified by each of their respective Secretaries, of resolutions of the
respective Boards authorizing the sale of the Assets, and execution, delivery
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and performance by the Merger Co and ICE of this Agreement, the sale of the
Assets, and all instruments and documents to be delivered in connection herewith
and therewith, and the transactions contemplated hereby and thereby.
7.5 On or prior to the Closing Date, ICE shall have entered
into theMerchant Service Provider Agreement.
7.6 On or prior to the Closing Date, ICE shall have entered
into an Exclusive Supply Agreement with the Company. According to the provisions
of such agreement, ICE will agree that any POS equipment offered by them to ISOs
and merchants for lease, will be leased from the Company and the Company will
agree to provide the same leasing terms to ICE as are currently in effect
between ICE and Merger Co. The leasing agreement will also include a most
favored nation pricing provision based on the volumes and other terms committed
by other ISOs of the Company after Closing (excluding Worldwide). ICE will pay
any rebates offered to its ISOs (whether relating to leasing agreements or
otherwise).
7.7 On or prior to the Closing Date, the Company shall have
entered into a license agreement for the use of the software known as
"LeaseManager" on terms reasonably satisfactory to the Company ("LICENSE
AGREEMENT");
7.8 On or prior to the Closing Date, Xxxxx Xxxxxx will have
entered into an employment agreement on terms mutually agreed by the Company and
Xx. Xxxxxx ("EMPLOYMENT AGREEMENT");
7.9 On or prior to the Closing Date, ICE shall have terminated
its Merchant Program Processing Agreement with First Data Merchant Services
Corporation and Banccorp South (as successor to Fleet National Bank) (the "OLD
PROCESSING AGREEMENT"). Simultaneously with such termination, the Company, ICE,
First Data Merchant Services Corporation and Banccorp South shall have entered
into Four Party Agreement.
7.10 On or prior to the Closing Date, ICE and the Company will
have entered into the Sublease.
7.11 On or prior to the Closing Date, Merger Co shall have
made reasonable efforts to obtain such consents or approvals, if any, with
respect to Restricted Contracts. If any such consent or approval is not obtained
prior to the Closing and the Company does not waive such consent or approval,
such Restricted Contract shall (at the Company's option) be excluded from the
Assets and shall not be assigned to the Company at the Closing; provided,
however, that the Merger Co shall, upon the Company's request, make further
reasonable efforts subsequent to the Closing to obtain such consent or approval
with respect to any such Restricted Contract which is material to the business
or operations of the Merger Co.
7.12 On or prior to the Closing Date, the Company and Neos
shall have executed the Amended and Restated Note payable to Neos and ICE shall
have no further obligation thereunder;
7.13 No material third-party litigation or other proceedings
will be threatened or pending as of the Closing relating to Merger Co, the
Business and the Assets, the Agreement and any related transaction; and
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7.14 the Company will have been satisfied with the results of
its due diligence investigation of Merger Co, the Assets and the Business;
ARTICLE 8
CONDITIONS TO THE OBLIGATIONS OF SELLER AND ICE TO EFFECT
THE TRANSACTIONS CONTEMPLATED HEREBY.
The obligations of the Merger Co and ICE to effect the
transactions contemplated hereby shall be subject to the fulfillment at or prior
to the Closing Date of the following conditions, any one or more of which may be
waived by Merger Co and ICE:
8.1 None of the parties hereto shall be subject on the Closing
Date to any order, decree or injunction of a court of competent jurisdiction
which enjoins or prohibits the consummation of the transactions contemplated by
this Agreement, nor shall there be pending a suit or proceeding by any
governmental authority that seeks injunctive or other relief in connection with
such transactions. All consents, approvals and waivers from third parties and
governmental agencies and authorities required to be obtained to consummate the
transactions contemplated by this Agreement to be consummated at or prior to the
Closing Date and which, either individually or in the aggregate, if not
obtained, would materially adversely affect the Business, or the Assets, shall
have been obtained.
8.2 The representations and warranties of the Company set
forth in this Agreement shall be true and correct in all material respects as of
the Closing Date as though made as of such date. the Company shall have
performed and complied in all material respects with all covenants and
agreements contained in this Agreement required to be performed and complied
with by it at or prior to the Closing Date.
8.3 All documents required to have been delivered by the
Company to Merger Co, and all actions required to have been taken by the
Company, shall have been delivered or taken.
8.4 On or prior to the Closing Date, the Merger Co shall have
made reasonable efforts to obtain such consents or approvals, if any, with
respect to those material Contracts set forth on SCHEDULE 8.4 hereto that the
Company has agreed to assume and that require the consent or approval of any
person other than the Merger Co or the Company in order to assign such material
Contract to the Company (any such material Contract requiring the consent of
third parties being hereinafter referred to as a "RESTRICTED CONTRACT"). If any
such consent or approval is not obtained prior to the Closing and the Company
does not waive such consent or approval, such Restricted Contract shall (at the
Company's option) be excluded from the Assets and shall not be assigned to the
Company at the Closing; PROVIDED, HOWEVER, that Merger Co shall, upon the
Company's request, make further reasonable efforts subsequent to the Closing to
obtain such consent or approval with respect to any such Restricted Contract
which is material to the business or operations of the Merger Co.
8.5 On or prior to the Closing Date, ICE and the Company shall
have entered into the Merchant Program Processing Agreement.
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8.6 On or prior to the Closing Date, ICE and the Company shall
have entered into the Exclusive Supply Agreement;
8.7 On or prior to the Closing Date, ICE and the Company will
have entered into the Sublease Agreement;
8.8 On or prior to the Closing Date, ICE, will terminate its
existing contract with First Data Merchant Services Corporation and Fleet
National Bank, and simultaneously with such termination, the the Company, ICE
First Data Merchant Services Corporation and BancCorp South shall have entered
into the Four Party Agreement.
8.9 On or prior to the Closing Date, the Company and Neos
shall have executed the Amended and Restated Note payable to Neos, and ICE shall
have no further obligation thereunder; and
8.10 At the Closing, the Company has paid a one-time fee in
the amount of $75,000 (seventy five thousand dollars) to ICE in full
satisfaction of Merger Co's obligation to rebate the sum of $100 (one hundred
dollars) per lease to an ISO of ICE.
ARTICLE 9
INDEMNIFICATION.
9.1 ICE shall indemnify, defend and hold the Company harmless
from and against any and all claims, losses, liabilities, costs, expenses,
investigations, obligations and damages ("DAMAGES"), sustained, incurred or paid
by the Company that: (i) would not have been sustained, incurred or paid if all
the representations, warranties, agreements and covenants of the Merger Co
hereunder had been true, correct and duly performed, in all material respects;
(ii) relate to or arise out of liabilities, transactions or occurrences
affecting Merger Co or its assets which accrue or take place on or prior to the
Closing Date; (iii) constitute ICE Assumed Liabilities; or (iv) relate to or
arise out of failure to comply with any "bulk sales" or similar laws applicable
to the transactions contemplated by this Agreement.
9.2 the Company shall indemnify, defend and hold the ICE
harmless from and against any and all Damages sustained, incurred or paid by
Merger Co that (i) would not have been sustained, incurred or paid if all the
representations, warranties, agreements and covenants of the Company hereunder
had been true, correct and duly performed, in all material respects, or (ii)
relate to or arise out of liabilities, transactions or occurrences affecting
Merger Co or its assets which accrue or take place after the Closing Date.
9.3 In the event any claim is asserted or any action, suit or
proceeding is commenced against the Company or ICE (each an "INDEMNITEE") that
may result in any liability or indemnity being imposed on the Company or ICE
(each an "INDEMNITOR"), Indemnitee shall exercise due diligence and reasonable
business judgment in defending or settling the same and shall give notice
thereof in writing to Indemnitor promptly following the assertion of the claim
or commencement of the action, suit or proceeding. Upon the receipt of such
notice, Indemnitor shall have the opportunity to participate in the defense
against such claim, action, suit or proceeding, to participate in any
negotiations with respect thereto and to take all such steps as may be necessary
or proper therein. Such participation shall not be deemed to be an admission of
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Indemnitor's liability to Indemnitee hereunder with respect to such matter.
Indemnitee shall have control of any defense or settlement, except that
Indemnitor shall have the right to assume and prosecute the defense, with
counsel reasonably satisfactory to Indemnitee, in the event Indemnitor does not
agree to a settlement proposed by Indemnitee and admits its potential liability
to Indemnitee hereunder with respect to such matter. The Indemnitee shall not
consent to the entry of any judgment or enter into any settlement with respect
to any claim without the prior written consent of the Indemnitor (not to be
withheld unreasonably).
9.4 In the event that any of the Damages for which an
Indemnitor is responsible or allegedly responsible are recoverable or
potentially recoverable against any third party, then the Indemnitee shall
assign any and all rights that it may have to recover such Damages to the
Indemnitor, or, if such rights are not assignable under applicable law or
otherwise, the Indemnitee shall attempt in good faith to collect any and all
damages and losses on account hereof from such third party for the benefit of,
and at the expense and direction of, the Indemnitor.
9.5 The Company will be entitled to deduct any portion of any
actual Damages it may incur, and for which the Company is reasonably entitled to
indemnification pursuant to this Article 9, from any amounts the Company is
obligated to pay Merger Co or ICE at any time from and after the date of this
Agreement. In addition, ICE acknowledges and agrees that FTS shall have the
right to offset and recoup any actual Damages payable against amounts payable to
ICE under the Merchant Service Provider Agreement.
ARTICLE 10
TERMINATION.
This Agreement may be terminated only as follows and in each
case only by written notice:
(a) Prior to the Closing, at any time by mutual written
consent of the Merger Co and the Company;
(b) Prior to the Closing, by Merger Co if the Company
shall be in material breach of any covenant, undertaking, representation or
warranty contained herein and such breach continues fifteen (15) business days
after written notice of the same breaching party;
(c) Prior to the Closing, by the Company if Merger Co
shall be in material breach of any covenant, undertaking, representation or
warranty contained herein and such breach continues fifteen (15) business days
after written notice of the same breaching party; or
ARTICLE 11
MISCELLANEOUS PROVISIONS.
11.1 COMMISSIONS. Each party to this Agreement represents and
warrants to the other party that it has not incurred and shall not incur any
liability for brokerage fees or agents' commissions in connection with this
Agreement and the transactions contemplated hereby. Merger Co and the Company
shall each pay all brokerage fees, commissions or finder's fees, if any,
incurred by such party, and shall indemnify and hold the other harmless from and
against any and all claims or liabilities for brokerage fees, commissions and
finder's fees incurred by reason of any action taken by such party.
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11.2 EXPENSES. Whether or not the transactions contemplated
hereby are consummated, except as otherwise provided herein, all costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such costs and
expenses; provided however, that any expenses of Merger Co in connection with
this transaction shall be paid by ICE and shall be ICE Assumed Liabilities for
purposes of this Agreement.
11.3 FURTHER ASSURANCES. The parties shall from time to time
do and perform such additional acts and execute and deliver such additional
documents and instruments as may be required or reasonably requested by any
party to establish, maintain or protect its rights and remedies or to affect the
purposes of this Agreement.
11.4 AMENDMENT AND MODIFICATION. This Agreement may be
amended, modified or supplemented at any time after the Closing Date but only by
the written agreement of all the parties hereto.
11.5 WAIVER OF COMPLIANCE; CONSENTS. Except as otherwise
provided in this Agreement, any failure of any of the parties to comply with any
obligation, representation, warranty, covenant, agreement or condition herein
may be waived by the party entitled to the benefits thereof only by a written
instrument signed by the party granting such waiver, but such waiver or failure
to insist upon strict compliance with such obligation, representation, warranty,
covenant, agreement or condition shall not operate as a waiver of, or estoppel
with respect to, any subsequent or other failure. Whenever this Agreement
requires or permits consent by or on behalf of any party hereto, such consent
shall be given in writing in a manner consistent with the requirements for a
waiver of compliance as set forth in this Article 11.6.
11.6 NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed to have been given when delivered by
hand or by facsimile transmission, when telexed or upon receipt when mailed by
registered or certified mail (return receipt requested), postage prepaid, to the
parties at the following addresses (or at such other address for a party as
shall be specified by like notice):
(a) If to Merger Co:
GlobalTech Leasing, Inc.
000 Xxxxxxx Xxx, Xxxxx X
Xxxxxxxxx, XX 00000
Attention : Xxxxxxx X. Xxxxxx
(b) If to ICE :
International Card Establishment, Inc.
000 Xxxxxxx Xxx, Xxxxx X
Xxxxxxxxx, XX 00000
Attention : Xxxxxxx Xxxxxxxx
(c) If to the Company:
GlobalTech Acquisition, LLC
0000 Xxxxx Xxxx
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxx
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11.7 ASSIGNMENT. This Agreement and all of the provisions
hereof shall be binding upon and inure to the benefit of the parties hereto and
their respective successors and permitted assigns. Except for an assignment by
the Company to an affiliate of the Company, in which case the Company and its
affiliate shall remain jointly and severally liable for the obligations of the
Company hereunder, neither this Agreement nor any of the rights, interests or
obligations under this Agreement shall be assigned by any party hereto without
the prior written consent of the other party. This Agreement is not intended to
confer upon any person other than the parties hereto any rights or remedies
hereunder.
11.8 GOVERNING LAW. This Agreement shall be governed by and
construed under the laws of the State of New York, without regard to its
conflict of laws rules.
11.9 ARBITRATION. If any controversy or claim arising out of
this Agreement or the transactions contemplated hereby cannot be settled by the
Parties, the controversy or claim shall be settled by binding arbitration in New
York, New York, in accordance with the rules of commercial arbitration of the
American Arbitration Association then in effect, and judgment on the award may
be entered in any court having jurisdiction. The Parties to such controversy or
claim shall share equally the costs and expenses of such arbitration
proceedings, but shall bear their own costs and expenses associated with such
arbitration, including legal and other professional fees and disbursements. If
the arbitrators determine that any Party pursued such controversy or claim
unreasonably or in bad faith, the arbitrators may, in the exercise of their
reasonable discretion, order such Party to pay all of the costs and expenses of
the arbitration proceedings to the prevailing Party or other Party together with
any such prevailing person's other reasonable costs and expenses associated with
such arbitration proceedings, including reasonable legal and other professional
fees and disbursements.
11.10 COUNTERPARTS. This Agreement may be executed in one or
more counterparts, none of which need contain the signatures of all parties,
each of which shall be deemed an original, and all of which together shall
constitute one and the same instrument. It shall not be necessary in making
proof of this Agreement to produce or account for more than the number of
counterparts containing the respective signatures of, or on behalf of, all of
the parties hereto.
11.11 SEVERABILITY. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void, unenforceable or against its regulatory
policy, the remainder of the terms, provisions, covenants and restrictions of
this Agreement shall remain in full force and effect and shall in no way be
affected, impaired or invalidated.
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11.12 INTERPRETATION. The descriptive headings contained in
this Agreement are for convenience of reference only and shall have no effect on
the interpretation or meaning hereof. The word "Agreement" refers to the body of
this Agreement, and all Exhibits and Schedules attached hereto or referred to
herein. "Herein," "hereof" and the like refer to this Agreement as a whole. As
used in this Agreement, the singular shall include the plural, the plural shall
include the singular and each gender shall include all genders.
11.13 ENTIRE AGREEMENT. This Agreement, including the Exhibits
and Schedules attached hereto (and any other documents contemplated hereby),
embodies the entire agreement and understanding of the parties with respect to
the transactions contemplated by this Agreement. The Exhibits and Schedules
hereto are an integral part of this Agreement and are incorporated by reference
herein. This Agreement supersedes all prior discussions, negotiations,
agreements and understandings between the parties with respect to the
transactions contemplated hereby that are not reflected or set forth in this
Agreement or the Exhibits and Schedules attached hereto. The schedules attached
hereto are incorporated herein by reference. Any information set forth on any
Exhibit or Schedule shall be deemed to have been disclosed for all purposes
hereunder.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
GLOBALTECH ACQUISITION, LLC
By: /s/ XXXXXX X. XXXX
__________________________________
Xxxxxx X. Xxxx
Title: COO
GLOBALTECH LEASING, INC.
By: /s/ XXXXXXX X. XXXXXX
___________________________________
Xxxxxxx X. Xxxxxx
Title: President
INTERNATIONAL CARD ESTABLISHMENT, INC.
By: /s/ XXXXXXX XXXXXXXX
___________________________________
Xxxxxxx Xxxxxxxx
Title: CEO
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EXHIBITS
Exhibit A Form of Merchant Program Processing Agreement
Exhibit B Form of Exclusive Supply Agreement
Exhibit C Form of Four Party Agreement
Exhibit D Form of Sublease Agreement
SCHEDULES
Schedule 3.3 Condition of Real and Personal Property; Leases
Schedule 3.4 Financial Statements; Undisclosed Liabilities
Schedule 3.6 Material Contracts
Schedule 3.7 Intellectual Property
Schedule 3.10 Employee Benefit Plans; ERISA
Schedule 3.11 Consents and Approvals; No Violation
Schedule 3.12 Licenses, Permits and Authorizations
Schedule 3.13 Corporate and Personnel Data; Labor Relations
Schedule 3.15 Subsidiaries; Affiliates
Schedule 3.16 Insurance
Schedule 8.4 Restricted Contracts
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