Exhibit 2.1
ASSET ACQUISITION AGREEMENT
PARTIES: Great Lakes Collection Bureau, Inc.
a New York corporation ("Seller")
00 Xxx Xxxxxx
Xxxxxxx, Xxx Xxxx 00000
NCO Lakes, LLC
a New York limited liability company ("Buyer")
000 Xxxxxxxxxx Xxxx
Xxxxxxx, Xxxxxxxxxxxx 00000
DATE: August 19, 2002
BACKGROUND: Seller is in the business of providing collection services for
itself and for third parties with respect to delinquent consumer accounts
receivable (the "Business"). Buyer is a wholly owned subsidiary of NCO Group,
Inc. and an affiliate of NCO Financial Systems, Inc. ("NCOF"). The parties
desire that Seller sell and Buyer buy the Specified Assets of Seller (as defined
in Section 2.1.1) and that Buyer assume and satisfy in full (in accordance with
the terms thereof) the Specified Liabilities of Seller (as defined in Section
2.1.3), all on and subject to the terms and conditions of this Asset Acquisition
Agreement ("Agreement"). Simultaneously with, and subject to, the closing
hereunder, NCOP Lakes, Inc. ("NCOP Lakes"), an affiliate of Buyer, is purchasing
the Excluded Portfolio pursuant to a Portfolio Purchase Agreement by and between
NCOP Lakes and Seller, dated as of the date hereof (the "Portfolio Purchase
Agreement").
INTENDING TO BE LEGALLY BOUND, in consideration of the mutual agreements
contained herein, and subject to the satisfaction of the terms and conditions
set forth herein, the parties agree as follows:
1. DEFINED TERMS. Certain defined terms used in this Agreement and not
specifically defined in context are defined in this Section 1, as follows:
1.1 "Accounts Receivable" means those rights to payment, note receivables
and other receivables of Seller set forth on Schedule 1.1 hereto.
1.2 "Asset" means each of the properties of Seller (including, but not
limited to, Cash Assets (as defined in Section 1.3), prepayments, deposits,
escrows, Accounts Receivable (as defined in Section 1.1), Tangible Property (as
defined in Section 1.29), other than equipment, machinery and fixtures attached
or appurtenant to the real property owned by Seller, Software (as defined in
Section 1.26), Contract Rights (as defined in Section 1.6) under the Specified
Contracts (as defined in Section 4.14), Purchased Intangibles (as defined in
Section 1.22) and goodwill, and claims, defenses, causes of action and other
legal rights and remedies in respect of the foregoing).
1.3 "Cash Asset" means those cash and cash-equivalent liquid assets of
Seller set forth on Schedule 1.3 hereto.
1.4 "Consent" means any consent, approval, order or authorization of, or
any declaration, filing or registration with, or any application or report to,
or any waiver by, or any other action (whether similar or dissimilar to any of
the foregoing) of, by or with, any Person (as defined in Section 1.20), which is
necessary in order to take a specified action or actions in a specified manner
and/or to achieve a specified result.
1.5 "Contract" means any written or oral contract, agreement, instrument,
order, arrangement, commitment or understanding of any nature, including, but
not limited to, sales orders, purchase orders, leases, subleases, data
processing agreements, maintenance agreements, license agreements, sublicense
agreements, loan agreements, promissory notes, security agreements, pledge
agreements, deeds, mortgages, guaranties, indemnities, warranties, employment
agreements, consulting agreements, sales representative agreements, joint
venture agreements, buy-sell agreements, options or warrants.
1.6 "Contract Right" means any right, power or remedy of any nature under
any Contract (as defined in Section 1.5) including, but not limited to, rights
to receive property or services or otherwise derive benefits from the payment,
satisfaction or performance of another party's Obligations (as defined in
Section 1.17), rights to demand that another party accept property or services
or take any other actions, and rights to pursue or exercise remedies or options.
1.7 "Employee Benefit Plan" means any employee benefit plan as defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), or any other plan, program, policy or arrangement for or regarding
bonuses, commissions, incentive compensation, severance, vacation, deferred
compensation, pensions, profit sharing, retirement, payroll savings, stock
options, stock purchases, stock awards, stock ownership, phantom stock, stock
appreciation rights, medical/dental expense payment or reimbursement, disability
income or protection, sick pay, group insurance, self insurance, death benefits,
employee welfare or fringe benefits of any nature; but not including employment
Contracts with individual employees.
1.8 "Encumbrance" means any lien, security interest, pledge, mortgage,
easement, covenant, restriction, reservation, conditional sale, prior
assignment, or other encumbrance, claim, burden or charge of any nature.
1.9 "Environmental Laws" means all applicable Laws (including consent
decrees and administrative orders) and common laws that relate to the protection
of the environment including those governing the use, generation, handling,
storage and disposal or cleanup of Hazardous Substances (as defined in Section
1.13), as of the date of this Agreement.
1.10 "Excluded Portfolio" means the portfolios of purchased accounts
receivable of the Seller to be purchased by NCOP Lakes pursuant to the Portfolio
Purchase Agreement.
1.11 "GAAP" means generally accepted accounting principles under United
States accounting rules and regulations, consistently applied.
1.12 "Governmental Body" means any: (a) nation, principality, republic,
state, commonwealth, province, territory, county, municipality, district or
other jurisdiction of any nature; (b) federal, state, local, municipal, foreign
or other government; (c) governmental or quasi-governmental authority of any
nature (including any governmental division, subdivision, department, agency,
bureau, branch, office, commission, council, board, instrumentality, officer,
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official, representative, organization, unit, body or Person and any court or
other tribunal); (c) multi-national organization or body; or (d) individual,
Person or body exercising, or entitled to exercise, any executive, legislative,
judicial, administrative, regulatory, police, military or taxing authority or
power of any nature.
1.13 "Hazardous Substances" means any substance, waste, contaminant,
pollutant or material that has been determined by any Law or United States
federal government authority, or any state or local government authority having
jurisdiction over Seller's real property, to be capable of posing a risk of
injury or damage to health, safety, property or the environment, including, but
not limited to, (a) all substances, wastes, contaminants, pollutants and
materials defined or listed as hazardous, dangerous or toxic pursuant to any Law
of any state in which any of the Leased Real Property (as defined in Section
4.11) is located or any United States Law, and (b) asbestos in friable form,
polychlorinated biphenyls ("PCB's") in concentrations in excess of applicable
regulatory standards, petroleum, petroleum product, urea formaldehyde and toxic
mold.
1.14 "Intangibles" means any name, corporate name, fictitious name,
trademark, trademark application, servicemark, servicemark application, trade
name, brand name, product name, slogan, trade secret, know-how, patent, patent
application, copyright, copyright application, design, logo, formula, invention,
product right, or other intangible asset of any nature, whether in use, under
development or design or inactive.
1.15 "Judgment" means any order, writ, injunction, citation, award, decree
or other judgment of any nature of any foreign, federal, state or local court,
governmental body, administrative agency, regulatory authority or arbitration
tribunal.
1.16 "Law" means any provision of any foreign, federal, state or local law,
statute, ordinance, charter, constitution, treaty, rule or regulation.
1.17 "Obligation" means any debt, liability or obligation of any nature,
whether secured, unsecured, recourse, nonrecourse, liquidated, unliquidated,
accrued, absolute, fixed, contingent, ascertained, unascertained, known, unknown
or otherwise.
1.18 "Permit" means any license, permit, approval, waiver, order,
authorization, right or privilege of any nature, granted, issued, approved or
allowed by any foreign, federal, state or local governmental body,
administrative agency or regulatory authority.
1.19 "Permitted Encumbrance" means the collective reference to (i)
Encumbrances for current property Taxes, assessments and other governmental
charges not yet due and payable or delinquent or being contested in good faith
by appropriate proceedings and for which adequate reserves have been established
in accordance with GAAP and (ii) statutory liens of landlords, mechanics,
carriers, warehousemen, and other Encumbrances imposed by Law incurred in the
ordinary course of business (none of which items, individually or in the
aggregate, relate to liabilities in excess of $50,000), original purchase price
conditional sales contracts and equipment leases with third parties entered into
in the ordinary course of business.
1.20 "Person" means any individual, sole proprietorship, joint venture,
partnership, limited liability company, corporation, association, cooperative,
trust, estate, governmental body, administrative agency, regulatory authority or
other entity of any nature.
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1.21 "Proceeding" means any demand, claim, suit, action, litigation,
investigation, arbitration, administrative hearing, mediation or other
proceeding of any nature.
1.22 "Purchased Intangibles" means the Intangibles of Seller listed on
Schedule 1.22 hereto.
1.23 [Intentionally Omitted]
1.24 "Seller's Contracts" means the Contracts listed on Schedule 4.14
hereto.
1.25 "Seller's Software" means the Software listed on Schedule 4.13 hereto.
1.26 "Software" means each computer program, operating system, applications
system, firmware or software, whether operational, under development or
inactive, including all object code, source code, technical manuals, user
manuals and other documentation therefor, whether in machine-readable form,
programming language or any other language or symbols, and whether stored,
encoded, recorded or written on disk, tape, film, memory device, paper or other
media.
1.27 "Specified Contract" means each Contract of Seller listed on Schedule
4.14 and identified with an asterisk in the first column of the row in which the
description of such Contract appears.
1.28 "Specified Software" means the Software of Seller listed on Schedule
4.13 and identified with an asterisk in the first column of the row in which the
description of such Software appears.
1.29 "Tangible Property" means any furniture, fixtures, vehicles, office
equipment, computer equipment, other equipment, machinery, tools, forms,
supplies or other tangible personal property of any nature in each case, owned
or leased by Seller in connection with Seller's Business and set forth on
Schedule 1.29 hereto.
1.30 "Tax" means (a) any foreign, federal, state or local income, earnings,
profits, gross receipts, franchise, capital stock, net worth, sales, use,
occupancy, general property, real property, personal property, intangible
property, transfer, fuel, excise, payroll, withholding, unemployment
compensation, social security or other tax of any nature; (b) any foreign,
federal, state or local organization fee, qualification fee, annual report fee,
filing fee, occupation fee, assessment, sewer rent or other fee or charge of any
nature; or (c) any deficiency, interest or penalty imposed with respect to any
of the foregoing.
2. THE TRANSACTION
2.1 Sale and Purchase of Specified Assets of Seller. On the Closing Date
(as defined in Section 6.1), effective to the fullest extent possible as of the
opening of business on the Closing Date, subject to the other terms and
conditions of this Agreement, the Seller shall sell, transfer, assign and convey
to Buyer, and Buyer shall purchase, all of Seller's right, title and interest in
and to all of the Specified Assets of Seller (as defined in Section 2.1.1), and
Seller shall assign to Buyer, and Buyer shall assume and shall thereafter
satisfy in full (in accordance with the terms thereof), the Specified
Liabilities of Seller (as defined in Section 2.1.3).
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2.1.1 Specified Assets of Seller. The "Specified Assets of Seller"
means the following Assets (as defined in Section 1.2) owned by Seller and used
in or for Seller's Business immediately prior to the Closing, wherever located
and whether or not reflected on Seller's books and records (but excluding the
Assets specifically excepted below and excluding the Excluded Portfolio (as
defined in Section 1.10)):
(A) The Specified Software (as defined in Section 1.28 and listed
on Schedule 4.13) and Purchased Intangibles (as defined in Section 1.22 and
listed on Schedule 1.22).
(B) The Accounts Receivable (as defined in Section 1.1 and listed
on Schedule 1.1), Cash Assets (as defined in Section 1.3 and set forth on
Schedule 1.3) held in Customer Escrow Accounts (as defined in Section 4.7) and
Seller's prepaid expenses, but excluding (x) any payments received by Seller in
respect of the Excluded Portfolio (collectively, the "NACC Cash") or any earned
commission cash in any Customer Escrow Account and (y) any Cash Assets not held
in a Customer Escrow Account.
(C) The Tangible Property (as defined in Section 1.29 and listed
on Schedule 1.29) (other than equipment, machinery and fixtures attached or
appurtenant to the real property owned by Seller and the Excluded
Software-Specific Equipment) and, to the extent Seller has any rights therein,
all leasehold improvements and security deposits held by the related Real
Property lessors, in each case, in respect of the Leased Real Property (as
defined in Section 4.11.1)
(D) All of Seller's Contract Rights (as defined in Section 1.6)
under the Specified Contracts (as identified in Schedule 4.14), but only to the
extent that such rights relate to the performance or non-performance of the
Specified Contracts on or after the Closing Date and excluding all Contract
Rights under (1) this Agreement, the Portfolio Purchase Agreement, the
Collection Agency Agreement, or any other Contract entered into by Seller with
Buyer, NCOP Lakes or any of their respective affiliates in connection with the
transactions contemplated by this Agreement, the Portfolio Purchase Agreement or
the Collection Agency Agreement; (2) all Contracts that constitute or evidence
Employee Benefit Plans (as defined in Section 1.7) of Seller; (3) all Contracts
relating to the acquisition of Seller's Business or any of the predecessors of
Seller's Business; (4) all Specified Contracts requiring a Consent that is not
obtained on or before the Closing Date ("Non-Assigned Contracts"), provided
that, once such Consent is obtained, the Contract Rights under such Specified
Contract shall be deemed, automatically and without further action by the
parties, to be included in the Specified Assets of Seller as of the date such
Consent is delivered to Buyer; (5) all Contracts relating to indebtedness for
borrowed money of the Company; (6) all Contracts relating to employment
(collectively "Seller's Employment Contracts"), including, without limitation,
any employee retention Contracts of Seller; notwithstanding the exception set
forth in clause (3) above, the Specified Assets of Seller shall include the
Contract Rights set forth in Section 2.1.1(E) below; and (7) all licenses and
leases for the Excluded Software-Specific Equipment (as defined in Section
7.13).
(E) All of Seller's Contract Rights under any noncompetition,
nondisclosure or other restrictive covenant made for the benefit of Seller or
its affiliates in any Contract between Seller, on the one hand, and any third
party (including, without limitation, employees), on the other hand.
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(F) All of Seller's rights with respect to Seller's inbound
telephone numbers, telephone directory listings and advertisements used in
Seller's Business.
(G) All of Seller's client lists, prospect lists, supplier lists,
data bases, computer media, sales and marketing materials, invoices,
correspondence, files, books and records relating to or arising in connection
with the Specified Assets of Seller, but excluding (1) Seller's corporate minute
books and stock books; (2) Seller's files, books and records (x) relating
exclusively to Seller's Assets not included in the Specified Assets of Seller or
(y) relating to Seller's liabilities not included in the Specified Liabilities
of Seller; (3) Seller's accounting books and records, (4) Seller's human
resources and personnel files (subject to Section 7.6); (5) any of the documents
or information described in this subsection (G) which is subject to an
attorney-client or similar privilege; (6) Seller's benefit plan files and (7)
Seller's historical payroll records.
(H) All of Seller's claims, causes of action and other legal
rights and remedies, whether or not known as of the Closing Date, relating to
Seller's ownership of the Specified Assets of Seller and/or the operation of
Seller's Business, but excluding defenses, causes of action and other legal
rights and remedies of Seller (1) against the Buyer, NCOP Lakes or any of their
respective affiliates with respect to the transactions contemplated by this
Agreement, the Portfolio Purchase Agreement or the Collection Agency Agreement;
or (2) relating exclusively to Seller's Assets not included in the Specified
Assets of Seller or (3) relating to Seller's liabilities not included in the
Specified Liabilities of Seller.
2.1.2 [Intentionally Omitted].
2.1.3 Specified Liabilities of Seller. The "Specified Liabilities of
Seller" means the following specifically described liabilities of Seller as of
the Closing Date:
(A) (1) The client payables set forth on Schedule 4.7, (2) any
Obligation in respect of chargebacks against amounts in any Customer Escrow
Account to the extent arising from uncollectible or insufficient remittances by
debtors received by Seller prior to Closing, (3) any accrued but unpaid regular
compensation for the current payroll period as of the Closing Date and, to the
extent set forth in Section 2.3, any severance obligations arising in connection
with the transactions contemplated by this Agreement, accrued vacation pay, sick
time, floating holiday pay and other regular benefits as of the Closing Date
(the "Specified Employee Obligations") (all of which shall be reflected on the
Closing Balance Sheet), but only to the extent that the incurrence or existence
of any such liability does not constitute a breach or failure of, or a default
under, any representation, warranty, covenant or other provision of this
Agreement (including, but not limited to, those of Section 4.8). Notwithstanding
the foregoing, the Specified Liabilities of Seller shall not include (1) any
accounts payable, (2) any liabilities for any Taxes (other than (i) liabilities
in respect of FICA, FUTA and SUTA in respect of the Specified Employee
Obligations which are accrued for in the Closing Balance Sheet and (ii) those
Tax Obligations described in Section 2.1.3(C) below); (3) any long-term debt;
(4) any notes payable; or (5) any intercompany payables (other than in respect
of client payables in any Customer Escrow Accounts) or any guarantees of
indebtedness of Seller or any subsidiary thereof.
(B) All liabilities of Seller under the Specified Contracts (as
defined in Section 4.14), except to the extent that the incurrence or existence
of any such liability or Contract constitutes a breach or failure of, or a
default under, any representation, warranty, covenant or other provision of this
Agreement (including but not limited to, those of Section 4.8), but only to the
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extent that such liabilities arise in connection with the performance or
non-performance of the Specified Contracts on or after the Closing Date.
Notwithstanding the foregoing, the Specified Liabilities of Seller shall not
include the liabilities of Seller under (1) this Agreement, the Collection
Agency Agreement, the Portfolio Purchase Agreement, or any other Contracts
entered into by Seller, on the one hand, and Buyer, NCOP Lakes or any of their
respective affiliates, on the other hand, in connection with the transactions
contemplated by this Agreement, the Collection Agency Agreement or the Portfolio
Purchase Agreement; (2) any Contracts that constitute or evidence Employee
Benefit Plans of Seller; (3) any Contracts relating to the formation or
acquisition of Seller or any of the predecessors of Seller's Business; and (4)
any of Seller's Employment Contracts.
(C) All Obligations to pay transfer Taxes in respect of the
transfer of the tangible personal property of Seller constituting Specified
Assets of Seller to Buyer.
2.2 No Other Liabilities Assumed. Notwithstanding any other provisions of
this Agreement, Buyer shall not purchase the Specified Assets of Seller subject
to, and Buyer shall not in any manner assume or be liable or responsible for any
Obligations (as defined in Section 1.17) of Seller other than the Specified
Liabilities of Seller, and all Obligations of Seller other than the Specified
Liabilities of Seller shall remain the sole responsibility of Seller. Without
limiting the generality of the foregoing, and in addition to the liabilities
excluded from the Specified Liabilities of Seller under Section 2.1.3, Buyer
shall not in any manner assume or be liable or responsible for any of the
following Obligations of Seller, whether or not reflected on the Closing Balance
Sheet:
2.2.1 Affiliates. Except as set forth on Schedule 2.2.1 hereto and
except with respect to Obligations in respect of client payables in any Customer
Escrow Account, any Obligation to any of General Electric Capital Corporation, a
Delaware corporation ("GE Capital"), or Financial Guaranty Insurance Company, a
Delaware corporation ("FGIC"), or any current or former shareholder, partner,
director or controlling Person (as defined in Section 1.19) of any of Seller, GE
Capital or FGIC, or to any other Person affiliated with Seller, GE Capital or
FGIC, or their respective affiliates.
2.2.2 Taxes. Except as set forth in Section 2.1.3(C), any Obligation of
Seller for any Tax (other than FICA, FUTA or SUTA in respect of the Specified
Employee Obligations and which are accrued for in the Closing Balance Sheet),
including but not limited to, (a) any Tax (other than FICA, FUTA or SUTA in
respect of the Specified Employee Obligations and which are accrued for in the
Closing Balance Sheet) payable by Seller with respect to its business
operations, including without limitation, the Seller's Business; (b) any Tax
payable by Seller with respect to the ownership, possession, purchase, lease,
sale, disposition or use of any of Seller's Assets, including without
limitation, the Specified Assets of Seller.
2.2.3 Post-Closing. Any Obligation of the Seller that is incurred or
arises after the Closing Date, or that relates to any Proceeding (as defined in
Section 1.21) or other event that occurs or circumstances that exist after the
Closing Date.
2.2.4 Transaction Related. Any Obligation that was or is incurred in
connection with the negotiation, execution or performance of this Agreement and
any other Contracts entered into between or among Buyer, NCOP Lakes or any of
their respective affiliates, on the one hand, and Seller, GE Capital, FGIC or
any of their respective affiliates, on the other hand, in connection with the
transactions contemplated by this Agreement.
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2.2.5 Defaults. Any Obligation of Seller, the incurrence or existence
of which constitutes or will constitute a breach or failure of, or a default
under, any representation, warranty, covenant or other provision of this
Agreement, including, but not limited to, any Obligation, whether or not known
to Seller, that has not been disclosed to Buyer in writing in this Agreement or
the Schedules and Exhibits hereto.
2.2.6 Employees. Except (i) as provided in Section 2.3 and (ii) with
respect to Specified Employee Obligations (as defined in Section 2.1.3(A)), any
Obligation of Seller, as of the Closing Date, to any or all employees of Seller,
including, but not limited to, Obligations under Seller's Benefit Plans, and
Obligations for severance pay and other termination benefits.
2.2.7 Infringement. Any Obligation arising in connection with or
related to Seller's infringement or alleged infringement of any software or
Intangible of any Person.
2.2.8 Encumbrances. Any Encumbrance (other than any Permitted
Encumbrance (provided that for purposes of this Section 2.2.8, Permitted
Encumbrances with respect to Tangible Property shall only include Encumbrances
of the type permitted in Section 4.10)) on or affecting Seller's Assets
including, without limitation, the Specified Assets of Seller.
2.2.9 Environmental. Any liability, claim or other Obligation arising
from or related to Seller's violation or Seller's alleged violation of any
Environmental Laws.
2.2.10 Brokerage Fees. Any Obligation to any broker or finder engaged
by Seller (or any affiliate of Seller, including without limitation, GE Capital
or FGIC) (including, without limitation, Kaulkin Xxxxxxxx Company) in connection
with the transactions contemplated by this Agreement.
2.2.11 Proceedings. Any liability, claim or other Obligation arising
from or related to the Proceedings set forth on Schedule 2.2.11.
2.3 Employees.
2.3.1 Offers of Employment. Effective as of the Closing Date, Buyer or
one of its Affiliates shall offer employment to all employees of Seller or its
Affiliates who are dedicated to the business of Seller, including such employees
who are designated as part-time (collectively, the "Business Employees"), other
than those set forth on Schedule 2.3.1A, which offer shall require each such
employee to execute the authorization and release in the form as set forth on
Exhibit 2.3.1; provided, however, that Buyer shall not be required to offer
employment to persons who, as of the Closing Date are on temporary or industrial
or non-industrial leave, including persons who are on sick leave, short or long
term disability leave who are listed on Schedule 2.3.1B (the "Inactive
Employees"), until the expiration of the applicable period of leave and then
only if such persons return from such leave to employment within twelve (12)
months following the Closing or, if later, any period required by Law. Those
Business Employees offered employment by Buyer or one of its Affiliates
(including Inactive Employees) who accept employment with Buyer or one of its
Affiliates shall be referred to herein as "Transferred Employees" as of the date
they commence employment with Buyer or one of its Affiliates. Those employees
who work less than 36 hours per week with Seller and who are subsequently
offered fulltime employment with Buyer and who decline such offer of employment
shall be provided lay off benefits from Buyer in accordance with Section
2.3.1(G) below. Transferred Employees shall be offered employment by Buyer
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without any relocation greater than fifteen miles from their current location,
with positions as set forth on Schedule 2.3.1C and upon the following terms and
conditions:
(A) Salary. With respect to Transferred Employees other than
managers and supervisors, Buyer shall not, without cause, decrease the base
salary of any such Transferred Employee (excluding any applicable night shift
differential) for a period of twelve (12) months from the Closing Date. With
respect to each Transferred Employees who is a manager or supervisor, Buyer
shall provide such Transferred Employees with aggregate base salary and
incentive compensation opportunity which is not less than such Transferred
Employee's aggregate base salary and incentive compensation opportunity provided
by Seller as of the Closing Date; provided, however, that for the one month
period following the Closing Date, Buyer shall guarantee payment of each such
Transferred Employee who is a manager or supervisor, such employee's incentive
bonus opportunity at the target amount. Buyer shall provide, at Seller's
expense, (i) to any Transferred Employee who works fewer than 36 hours per week
in the Parma Heights, Ohio facility who would have been eligible for Seller's
night shift differential, such differential for a twelve month period and (ii)
for all other Transferred Employees, such differential until such time as Buyer
has changed such Transferred Employee's work schedule and no night shift
differential would be payable based on Seller's night shift differential policy,
but in no event shall Seller be responsible for reimbursement to Buyer for such
differential for any period greater than 45 days following the Closing Date.
Seller shall reimburse Buyer for the out-of-pocket cost of such night shift
differential in accordance with the provisions of Section 2.3.5 hereof. Buyer
agrees to provide each Transferred Employee with incentive compensation
opportunities for at least twelve (12) months from the Closing Date in
accordance with Buyer's incentive compensation programs for its similarly
situated employees ("Buyer Incentive Plans") as described on Schedule 2.3.1.
Buyer shall be responsible for all amounts earned by Transferred Employees under
the Buyer Incentive Plans. Seller shall be responsible for all amounts earned by
Business Employees under the incentive compensation programs maintained by
Seller for such employees. Following the Closing Date, Transferred Employees
shall be eligible for base salary merit increases at a time and in an amount
consistent with Buyer's base salary merit increase program.
(B) Benefit Plans. Except as otherwise set forth in this
Agreement, Buyer will offer to all currently participating Transferred Employees
the same benefit plans during the twelve-month period commencing September 1,
2002, including (but not limited to) any associated employee coverages and
benefit costs (such as premiums, out-of-pocket expenses and deductibles), as are
offered to similarly situated employees of Buyer, and Transferred Employees
shall be eligible to elect benefit plan coverage in accordance with Buyer's open
enrollment process to the same extent as similarly situated employees of Buyer.
(C) Credited Service. Buyer agrees to cause the benefit plans and
other employee benefits of Buyer applicable to Transferred Employees and to
their eligible dependents to recognize all previous service with Seller or any
of its Affiliates (including service with a prior employer recognized by Seller
or any of its Affiliates) for the purpose of determining eligibility,
entitlement and vesting, including but not limited to Buyer's 401(k) plan,
severance and vacation policies.
(D) Health Plans. Commencing on September 1, 2002 and for a
period of twelve (12) months thereafter, provided that Transferred Employees
continue in the employment of Buyer for such period of time, Buyer shall provide
Transferred Employees and their eligible dependents with coverage under group
health plans which are the same as provided to similarly situated employees of
Buyer ("Buyer's Health Plans"). For a period of twelve (12) months following
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September 1, 2002, each Transferred Employee, provided that such employee
continues in the employment of Buyer for such period of time, will continue to
pay premiums under Buyer's Health Plans which are not more than those in effect
under the applicable Seller group health plan with respect to such employee
immediately prior to the Closing Date. To effectuate the provision set forth
above, where any premiums under Buyer's Health Plans are greater than those
under the applicable Seller's group health plan, Buyer shall reimburse
Transferred Employees for such increase by lump sum payment on a bi-weekly basis
during such period. Buyer shall be reimbursed by Seller for such payments in
accordance with the provisions of Section 2.3.5 hereof.
(E) Pre-Existing Conditions. Buyer agrees that its or one of its
affiliates' group health plan covering Transferred Employees and their eligible
dependents shall not contain any pre-existing condition limitation or exclusion
applicable to their participation therein, provided that Seller provides to
Buyer HIPAA certification with respect to such employees.
(F) Defined Contribution Plan. Effective as of September 1, 2002,
Buyer shall amend (at GE Capital's expense up to $5,000) its 401(k) plan ("Buyer
401(k) Plan") to provide that any Transferred Employee who was eligible to
participate in Seller's 401(k) Plan as of the Closing shall be eligible to
participate in the Buyer 401(k) Plan as of September 1, 2002. On or as soon as
reasonably practicable after the Closing Date, Buyer or one of its affiliates
shall permit Transferred Employees who have outstanding loans under the Seller
401(k) plan to roll over their account balance (including such loans) to Buyer's
401(k) plan.
(G) Severance and Lay-Off. For a period beginning on the Closing
Date and ending twelve (12) months following the Closing Date, Buyer may
terminate the employment of, or lay off, any Transferred Employee, provided that
any such Transferred Employee terminated or laid-off without Cause and any
Business Employee who does not accept Buyer's offer of employment shall be
entitled to receive severance payments and severance benefits no less favorable
than the greater of the payments and benefits provided by Seller, as set forth
on Schedule 2.3.1(G)(1), or by Buyer, as set forth on Schedule 2.3.1(G)(2)
("Buyer's Severance Policy"). For purposes of this subparagraph, "Cause" shall
mean as determined in the good-faith discretion of Buyer. With respect to not
more than (i) 100 full-time and (ii) 100 part-time, Business Employees or
Transferred Employees who are eligible for benefits pursuant to this Section
2.3.1(G), Buyer shall be reimbursed by Seller for any amount associated with
severance payments and benefits in excess of the amount that would be paid under
Buyer' Severance Policy in accordance with the provisions of Section 2.3.5
hereof.
(H) Vacation and Sick Time. Buyer will allow Transferred
Employees to accrue and take their pro rata vacation and sick time entitlement
earned during 2002 and such employees will be allowed to carry over into
calendar year 2003 any accrued but not taken vacation days as of December 31,
2002. For periods beginning on and after January 1, 2003, Transferred Employees
shall earn vacation under Buyer's vacation and sick time policies to the same
extent as similarly situated employees of Buyer.
(I) Transitional Payroll and Benefits. With respect to the period
commencing on the Closing Date and ending September 30, 2002 (the "Payroll
Transition Period"), Seller shall continue to provide payroll services and
administration on behalf of Buyer with respect to the Transferred Employees.
Buyer shall reimburse Seller for all direct payroll costs, including the gross
amount of all salaries and wages and other compensation and all applicable
payroll and withholding obligations, including federal, state and local income
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tax withholding, contributions pursuant to the Federal Insurance Contribution
Act and Federal Unemployment Tax Act, workers' compensation, unemployment
insurance, other withholding or other payments required by federal, state or
local law or regulations with respect to such Transferred Employees during the
Payroll Transition Period. Seller shall provide a detailed invoice reasonably
satisfactory to Buyer as soon as reasonably practicable following the end of
each payroll period during the Transition Period, and Buyer shall pay such
invoice within 20 days thereafter. With respect to the period commencing on the
Closing Date and ending August 31, 2002 (the "Benefits Transition Period"),
Seller shall continue to provide medical and dental benefits to those
Transferred Employees (and their eligible dependents) who had elected such
coverage, and Buyer shall ensure that each Transferred Employee who had life
insurance coverage and/or long-term disability coverage under plans maintained
by Seller or one of its Affiliates shall be eligible for life insurance coverage
and/or long-term disability coverage (as applicable) under plans maintained by
Buyer or one of its Affiliates effective as of the Closing Date. Buyer shall
reimburse Seller for the cost of providing such medical and dental coverage to
Transferred Employees during the Benefits Transition Period, calculated as fifty
percent (50%) of the aggregate monthly cost charged to Seller for such coverage
with respect to those Transferred Employees. Seller shall provide a detailed
invoice reasonably satisfactory to Buyer as soon as reasonably practicable
following the end of the Benefits Transition Period, and Buyer shall pay such
invoice within 20 days thereafter.
(J) WARN. With respect to events occurring after the Closing
Date, Buyer shall be responsible for any liability and obligations under the
Worker Adjustment and Retraining Notification Act, 29 U.S.C. ss. 2101 et seq. or
any other similar federal, state or local statute, regulation or ordinance with
respect to the Business Employees and Seller shall have no liability thereunder
except as provided in Section 2.3.1(G).
(K) Third Parties. The covenants of Seller and Buyer in this
Agreement are not intended to and shall not create any right in any Transferred
Employee or in any other employee or his or her beneficiary, or any third party.
(L) Alternative Payroll Tax Procedure. Pursuant to the
"Alternative Procedure" provided in section 5 of Revenue Procedure 96-60, 1996-2
C.B. 399, (i) Buyer and Seller shall report on a predecessor/successor basis as
set forth therein, (ii) Seller will be relieved from filing a Form W-2 with
respect to Transferred Employees and (iii) Buyer will undertake to file (or
cause to be filed) a Form W-2 for each such Transferred Employee for the year
that includes the Closing Date (including the portion of such year that such
employee was employed by Seller). Seller will provide Buyer on a timely basis
with all payroll and employment-related information with respect to each such
Transferred Employee.
(M) Personnel Files. Seller shall transfer to Buyer the personnel
files, payroll records (for the 12 months prior to the Closing Date) and benefit
elections of any Transferred Employee who consents to such transfer of files and
records in writing pursuant to a release substantially in the form attached
hereto as Exhibit 2.3.1.
2.3.2 Seller Benefit Plan. Except as expressly provided in this
Agreement, Buyer assumes no liability with respect to, and receives no right or
interest in, any Seller Employee Benefit Plan and any other "employee benefit
plan" (as defined in Section 3(3) of ERISA) maintained, sponsored or to which
there is an obligation to contribute by Seller or any of its affiliates. As of
the Closing Date, all Transferred Employees shall cease active participation in
all Seller Employee Benefit Plans except with respect to benefits accrued as of,
or claims incurred by the Closing Date and with respect to any Seller Employee
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Benefit Plans which, by their terms, permit continuing participation based on
prior employment with Seller. All Transferred Employees shall be fully vested in
their benefits accrued in any "pension plan" (as defined in Section 3(2) of
ERISA) maintained by Seller as of the Closing Date.
2.3.3 Federal ID Number. With respect to Transferred Employees, from
and after the Closing Date, Buyer shall obtain and utilize a new federal
employer identification number from the IRS which is different from that used by
Seller prior to the Closing Date.
2.3.4 Cooperation. After the Closing Date, upon written consent, which
consent shall not be unreasonably withheld or delayed, Buyer shall afford Seller
reasonable access at reasonable times and upon reasonable notice to Transferred
Employees for purposes of (i) completing all obligations and meeting all
commitments in connection with the transaction contemplated hereby or (ii)
responding to or defending against any claim by or related to any Transferred
Employee or any other legal or regulatory proceeding related to any Transferred
Employee.
2.3.5 Reimbursement of Benefit Costs. With respect to any amounts
Seller owes to Buyer pursuant to Sections 2.3.1(A), 2.3.1(D) and/or 2.3.1(G),
Buyer shall provide a detailed invoice to Seller on a monthly basis reasonably
satisfactory to Seller, and Seller shall pay such invoice within thirty (30)
days thereafter.
3. PURCHASE PRICE
3.1 Purchase Price and Allocation. The total purchase price for the
Specified Assets of Seller ("Purchase Price") shall be (a) Ten Million Six
Hundred Thousand Dollars ($10,600,000) (the "Cash Purchase Price"), subject to
adjustment pursuant to Section 3.3; and (b) the assumption of the Specified
Liabilities of Seller by Buyer in accordance with Section 2.1.3. The Purchase
Price and capitalizable Specified Liabilities of Seller shall be allocated among
the Specified Assets of Seller and the non-competition and non-solicitation
covenants set forth in Sections 8.1 and 8.2 in an allocation statement to be
mutually agreed by Buyer and Seller after the Closing Date; provided that if
Buyer and Seller are unable to agree on such allocation statement, such
disagreement shall be submitted to a third party arbiter for resolution.
3.2 Closing Balance Sheet. Seller shall prepare or cause to be prepared a
balance sheet of Seller as of the Closing Date ("Closing Balance Sheet"). The
Closing Balance Sheet shall (a) be prepared in accordance with GAAP; and (b)
fairly present the financial condition of the Seller's Business as of the
Closing Date. At the request of NCOF, Seller shall review with NCOF's employees
or representatives and/or the Philadelphia office of Ernst & Young LLP ("Buyer's
Accountants") the workpapers prepared by Seller in connection with the Closing
Balance Sheet ("Workpapers") before Seller finalizes the Closing Balance Sheet.
3.2.1 Delivery of Documents. Seller shall deliver to Buyer, within
seventy-five (75) days after the Closing Date, the Closing Balance Sheet and
shall allow Buyer to examine and copy the Workpapers. On or before the date that
Seller delivers the Closing Balance Sheet and accompanying documents to Buyer,
Seller shall deliver to Buyer detailed lists ("Closing Balance Sheet Lists") of
all of the Assets and Obligations of Seller reflected on the Closing Balance
Sheet (including those Assets which have been fully depreciated or fully
amortized, and the related accumulated depreciation and amortization), by
balance sheet account, and with aggregate net balances equal to the balances on
the Closing Balance Sheet. The Closing Balance Sheet Lists shall be split
between Specified Assets of Seller and Specified Liabilities of Seller, on the
one hand, and remaining assets and remaining liabilities, on the other hand, and
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shall include, but not necessarily be limited to, detailed lists of (a) Cash
Assets held in Customer Escrow Accounts (other than NACC Cash or earned
commission cash in such Customer Escrow Accounts), itemized by client; (b)
Accounts Receivable, showing client names, individual invoice dates, individual
invoice amounts and allowances for doubtful accounts, or, in the case of earned
but not billed receivables, client names and individual dates on which the
receivables are billable; (c) Tangible Property grouped as to type, showing
cost, accumulated depreciation and net book value; (d) Software and Purchased
Intangibles, showing cost or amount capitalized, accumulated amortization and
net book value; and (e) accrued expenses related to payroll and payroll Taxes,
itemized by category and with appropriate explanation. The Closing Balance Sheet
shall be accompanied by a certificate ("CFO Certificate") signed by the chief
financial officer of Seller in which such Chief Financial Officer shall
represent and warrant to Buyer that (x) the Closing Balance Sheet was prepared
in accordance with GAAP and fairly presents the financial condition of Seller as
of the Closing Date; and (y) the Closing Balance Sheet Lists are accurate and
complete.
3.3 Purchase Price Adjustment. The Purchase Price shall be subject to
adjustment as follows:
3.3.1 Balance Sheet Adjustment. If the Actual TNW (as defined below) is
less than the Minimum TNW (as defined below), then the Purchase Price shall be
decreased by the amount by which Actual TNW is less than the Minimum TNW (the
adjustment provided for by this Section is referred to as the "TNW Adjustment").
The "Actual TNW" shall equal (a) the book value of the Specified Assets of
Seller as of the Closing Date, as reflected on the Closing Balance Sheet, minus
(b) the Specified Liabilities of Seller as of the Closing Date, as reflected on
the Closing Balance Sheet. The "Minimum TNW" shall equal Five Million Nine
Hundred Thirty-Six Thousand, Three Hundred Forty-Six Dollars ($5,936,346).
3.3.2 Statement of Adjustments. Seller shall (a) prepare a statement
("Statement of Adjustments") showing a clear and detailed calculation of the
Actual TNW and the TNW Adjustment to the Purchase Price described in this
Section 3.3; and (b) deliver the Statement of Adjustments to Buyer at the same
time as the Closing Balance Sheet and related documents are delivered to Buyer
under Section 3.2. Buyer shall notify Seller, in reasonable detail, of any
objections to the Statement of Adjustments (which may include, without
limitation, objections to the Closing Balance Sheet) within sixty (60) days
after Buyer receives the Statement of Adjustments and all of the documents
required to be delivered to Buyer under Section 3.2. If Buyer does not notify
Seller of any such objections by the end of that sixty-day period, then the
Statement of Adjustments, as prepared by the Seller, shall be considered final
on the last day of that sixty-day period. If Buyer does notify Seller of any
such objections by the end of that sixty-day period, and Buyer and Seller are
unable to resolve their differences within fifteen (15) days thereafter, then
the disputed items on the Statement of Adjustments shall be reviewed, as soon as
possible, at Buyer's expense, by Buyer's Accountants. Seller shall and Buyer
shall instruct their representatives and employees to, in good faith, use their
best efforts to resolve such disputed items to their mutual satisfaction as soon
as possible. If Seller and Buyer's Accountants are unable to resolve any such
disputed items within thirty (30) days after receiving such instructions, then
the remaining disputed items shall be submitted to another certified public
accounting firm selected by the mutual agreement of Seller and Buyer
("Arbiter"), for resolution, with the costs thereof paid fifty percent (50%) by
Seller and fifty percent (50%) by Buyer, and the Arbiter shall be instructed to
deliver a final Statement of Adjustments to Seller and Buyer as soon as
possible.
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3.4 Payment of TNW Adjustment. If the TNW Adjustment to the Purchase Price
constitutes a decrease in the Purchase Price, Seller shall pay to Buyers an
amount equal to the TNW Adjustment. Any payment under this Section shall be made
within fifteen (15) business days after the Statement of Adjustments is
finalized in accordance with Section 3.3.
3.5 Currency and Method of Payment. All dollar amounts stated in this
Agreement are stated in United States currency, and all payments required under
this Agreement shall be paid in United States currency. All payments required
under this Agreement shall be made by wire transfer of immediately available
United States federal funds.
4. REPRESENTATIONS OF THE SELLER. Knowing that Buyer is relying thereon, Seller
represents and warrants to Buyer, and covenants with Buyer, as follows:
4.1 Organization. Seller is a corporation that is duly organized, validly
existing and in good standing under the Laws of New York. Seller possesses the
full corporate power and authority to own its assets and conduct its business as
and where presently conducted. Seller possesses the full corporate power and
authority to enter into and perform this Agreement. Seller is duly qualified to
do business in each jurisdiction listed on Schedule 4.1, and Seller is not
required to be qualified in any other jurisdiction except where the failure to
be so qualified would not, individually or in the aggregate, have a material
adverse effect on Seller's Business. Seller does not own any securities of any
corporation or any other interest in any Person, except as set forth on Schedule
4.1. Other than as described on Schedule 4.1, since November 4, 1999, Seller has
not purchased or otherwise acquired all or substantially all of the assets,
equity securities and/or operations of any other Person. Schedule 4.1 states for
Seller (a) its exact legal name; (b) its date of formation; (c) its headquarters
address, telephone number and facsimile number; (d) all foreign jurisdictions in
which it is qualified or registered to do business; and (e) all fictitious,
assumed or other names of any type that are registered or used by it or under
which it has done business at any time since June 30, 2001.
4.2 Effect of Agreement. The execution, delivery and performance of this
Agreement by Seller and the consummation by Seller of the transactions
contemplated hereby (a) have been duly authorized by all necessary corporate
action by its board of directors and shareholders (in each case, to the extent
necessary); (b) do not constitute a violation of, a default under, or
termination of the certificate of incorporation or bylaws of Seller or; (c) do
not constitute a default or breach of (immediately after the giving of notice,
passage of time or both), or termination of, any Contract to which it is a party
or by which it is bound; (d) do not constitute a violation of any Law applicable
to Seller or to Seller's Business or Assets; (e) except as stated on Schedule
4.2, do not require the Consent (as defined in Section 1.4) of any Person (as
defined in Section 1.19); (f) do not accelerate or otherwise modify any
Obligation (as defined in Section 1.17) of Seller; and (g) do not result in the
creation of any Encumbrance (as defined in Section 1.8) upon, or give to any
other Person (other than Buyer) any interest in, any of Seller's Business or
Assets. There exist no rights of first refusal or other preemptive rights with
respect to Seller's Business or Assets. Subject to Section 10.19, this Agreement
constitutes the valid and legally binding agreement of Seller, enforceable
against it in accordance with its terms.
4.3 Financial and Corporate Records. Seller's books and records pertaining
to the Seller's Business are and have been properly prepared and maintained in
form and substance adequate for preparing audited financial statements in
accordance with GAAP (as defined in Section 1.11), and fairly and accurately
reflect, in all material respects, all Assets and Obligations of Seller's
Business and all Contracts and transactions to which Seller is or was a party or
by which Seller or its Assets is or were bound and which relate or pertain to
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Seller's Business. Schedule 4.3 sets forth an accurate and complete list of all
bank accounts, other accounts, certificates of deposit, marketable securities,
other investments, safe deposit boxes, lock boxes and safes where any Customer
Escrow Accounts are maintained and the names of all officers, employees or other
individuals who have access thereto or are authorized to make withdrawals
therefrom or dispositions thereof.
4.4 Litigation. There are no legal proceedings pending or, to the knowledge
of Seller, threatened that are reasonably likely to prohibit or restrain the
ability of Seller to enter into this Agreement or consummate the transaction
contemplated hereby.
4.5 Financial Statements. Schedule 4.5 lists the fiscal year end for the
Seller. Schedule 4.5 includes accurate and complete copies of the following
audited financial statements ("Audited Financial Statements") of the Seller: (a)
a balance sheet as of the end of each of the two most recently ended fiscal
years; and (b) statements of income for each of the three most recently ended
fiscal years, and notes thereto. Schedule 4.5 includes accurate and complete
copies of all the following unaudited financial statements ("Unaudited Financial
Statements") of the Seller: an unaudited balance sheet as of June 30, 2002 and a
related unaudited statement of income prepared by the management of Seller on an
ongoing basis since the beginning of the current fiscal year. All of the Audited
Financial Statements were (x) prepared in accordance with GAAP; (y) fairly
present in all material respects the financial condition and results of
operations of Seller as of the dates and for the periods indicated; and (z) were
audited by independent auditors, whose reports thereon are without qualification
or explanatory paragraphs. All of the Unaudited Financial Statements were (x)
prepared in accordance with GAAP except for the absence of full footnote
disclosure and all normal recurring adjustments have been made; and (y) fairly
present in all material respects the financial condition and results of
operations of Seller as of the dates and for the periods indicated.
4.6 Assets.
4.6.1 Except for the accounts receivable which comprise the Excluded
Portfolio, the Accounts Receivable (as defined in Section 1.1 and set forth on
Schedule 1.1 hereto) constitute all of the accounts receivable of Seller.
4.6.2 The Contracts set forth on Schedule 4.14 hereto constitute all of
the Contracts necessary to conduct Seller's Business in substantially the same
manner as was conducted by Seller immediately prior to Closing, and include all
of the client Contracts relating to Seller's Business and all contracts with
third parties for the servicing of accounts receivable.
4.6.3 The Purchased Intangibles (as defined in Section 1.22 and as set
forth on Schedule 1.22 hereto) constitute all of the Intangibles of Seller. To
the actual knowledge of Seller, the Purchased Intangibles and the Licensed
Intangibles collectively constitute substantially all of the Intangibles used by
Seller in the operation of Seller's Business immediately prior to the Closing
and material to such operation.
4.6.4 Schedule 4.13 lists all of the Software used in Seller's Business
and owned or licensed by Seller or an affiliate of Seller.
4.6.5 The Tangible Property (as defined in Section 1.29 and as listed
in Schedule 1.29 hereto) constitutes substantially all of the tangible personal
property of Seller.
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4.6.6 Seller has good and valid title to all Specified Assets of Seller
and has the right to transfer all right, title and interest in such Specified
Assets of Seller to Buyer, free and clear of any Encumbrance (as defined in
Section 1.8) other than Permitted Encumbrances (provided that for purposes of
this Section 4.6.6, Permitted Encumbrances with respect to Tangible Property
shall only include Encumbrances of the type permitted in Section 4.10).
4.7 Seller's Obligations. Schedule 4.7 is a detailed list, as of June 30,
2002, of all of Seller's accrued expenses for payroll and a pro forma estimate
of payroll Taxes and liabilities, which constitute part of the Specified
Liabilities of Seller, grouped by balance sheet account, excluding liabilities
for Taxes (other than FICA, FUTA and SUTA in respect of the Specified Employee
Obligations which are accrued for in the Closing Balance Sheet). Seller is not
insolvent, as defined in the United States Bankruptcy Code, 11 U.S.C. Section
101, et seq. and as defined under applicable state Law (including without
limitation the Uniform Fraudulent Transfer Act), and will not be rendered
insolvent by the transactions contemplated by this Agreement and the Portfolio
Purchase Agreement. All amounts due to clients of Seller for collections made by
Seller as of the date hereof have either been remitted to the proper clients or
have been deposited in escrow accounts ("Customer Escrow Accounts") maintained
by Seller, the rights of Seller in respect of which Customer Escrow Accounts are
being transferred to Buyer on the date hereof.
4.8 Operations Since December 31, 2001. From December 31, 2001, to the date
of this Agreement:
4.8.1 Except in the ordinary course of its business consistent with its
past practices, Seller has not (a) created or assumed any Encumbrance upon any
of the Seller's Business or Assets, (b) purchased, leased, sold, abandoned or
otherwise acquired or disposed of any part of the Seller's Business or Assets;
(c) waived any right or canceled any debt or claim on behalf of or relating to
Seller's Business; (d) assumed or entered into any Contract on behalf of or
relating to the sale of Seller's Business other than this Agreement or the
Portfolio Purchase Agreement (other than retention agreements entered into
between Seller and its employees which do not constitute part of the Specified
Liabilities of Seller); (e) increased, or authorized an increase in, the
compensation or benefits paid or provided to any of its directors, officers,
employees, salesmen, agents or representatives engaged in the Seller's Business;
(f) incurred any Obligation which has not, as of the Closing Date, been fully
performed; or (g) done anything else outside the ordinary course of business on
behalf of or relating exclusively to Seller's Business, whether or not
specifically described in any of the foregoing clauses.
4.8.2 There has been no material adverse change or material casualty
loss affecting Seller, the Seller's Business or Assets, the financial condition
of Seller or Seller's Business, and there has been no material adverse change in
the financial performance of Seller or the Seller's Business.
4.8.3 There have been no material changes in the Seller's accounts
receivable collection practices.
4.9 Accounts Receivable. All Accounts Receivable listed in Schedule 1.1
arose in the ordinary course of business of Seller and are proper and valid
accounts receivable. There are no refunds, discounts, rights of setoff or
assignment affecting any such Accounts Receivable. Proper amounts of deferred
revenues appear on Seller's books and records, in accordance with generally
16
accepted accounting principles, with respect to all of Seller's (a) billed but
unearned Accounts Receivable; (b) previously billed and collected Accounts
Receivable still unearned; and (c) unearned client deposits.
4.10 Tangible Property. Seller has good and valid title to all Tangible
Property owned by it and used in or for the Seller's Business, free and clear of
any Encumbrances other than (x) Encumbrances of the type described in clause (i)
of the definition of Permitted Encumbrances or (y) Encumbrances of the type
described in clause (ii) of the definition of Permitted Encumbrances, to the
extent such Encumbrances arise in respect of liabilities of Seller not in excess
of $15,000, in the aggregate. Seller has a valid leasehold interest in all
Tangible Property leased by it and used in connection with Seller's Business.
All of Seller's Tangible Property constituting part of the Specified Assets of
Seller is located at Seller's offices. All Tangible Property used by Seller or
its clients in the Seller's Business is in good condition, ordinary wear and
tear excepted.
4.11 Leased Real Property.
4.11.1 Schedule 4.11 identifies certain real property of Seller which
is leased by Seller (the "Leased Real Property"). Seller has a valid leasehold
interest in all of the Leased Real Property free and clear of any Encumbrance
other than Permitted Encumbrances. To Seller's knowledge there are no
Proceedings pending or threatened which would (i) affect the zoning or use of
any Leased Real Property, or (ii) which would result in a condemnation of any of
the Leased Real Property. To Seller's knowledge, since November 4, 1999, the
Leased Real Property has not experienced any material flood damage. To Seller's
knowledge, all utilities, including water, gas, telephone, electricity, sanitary
and storm sewers, are currently available to all of the Leased Real Property at
normal and customary rates, and are adequate to serve such Leased Real Property
for Seller's current operations and current use thereof.
4.11.2 To Seller's knowledge, Seller's possession, occupancy,
maintenance and use of its Leased Real Property is not in material violation of,
or material breach or material default under, any Contract or Law. Seller has
received no written notice from any Governmental Body, any insurer, or any other
party (i) that either the Leased Real Property or the use or operation thereof
is currently in violation of any Law and to Seller's knowledge no such notice
has been issued; (ii) that Seller is currently in violation or with the passage
of time will be in violation of any Laws or the recommendations of any insurance
carrier or board of fire underwriters affecting the Leased Real Property or that
any investigation has commenced or is contemplated regarding any such possible
violation, or (iii) asserting that Seller is required to perform work at the
Leased Real Property and to Seller's knowledge no such notices have been issued.
4.11.3 There are no parties other than Seller in possession of any
portion of the Leased Real Property as lessees, tenants, subtenants or
licensees, at sufferance or trespassers.
4.11.4 No work has been performed for Seller, and no services have been
furnished to Seller, in respect of any of the Leased Real Property for which any
mechanic's lien or similar Encumbrance in excess of $5,000, in respect of any
individual lien or Encumbrance, or in excess of $15,000 in the aggregate, in
respect of all liens or Encumbrances could be filed in the future.
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4.11.5 Seller has posted no bonds, security deposits or escrows with
any third party (other than the landlords under the Leases) respecting the use,
operation and/or maintenance of any of the Leased Real Property.
4.11.6 With respect to the Leased Property:
(A) Accurate copies of the leases under which Seller leases the
Leased Real Property, together with all amendments thereto (collectively, the
"Leases"), are set forth on Schedule 4.14 hereto;
(B) The Leases are in full force and effect and the landlord(s)
thereunder have not notified Seller of any default or noncompliance by Seller
nor is Seller aware of any such default or noncompliance, nor is any landlord
under the Leases in default of any of its obligations to Seller;
(C) All construction obligations of the landlord(s) and tenant
under the Leases have been fully performed and all work paid for and allowances
(if any) fully funded;
(D) No audit, challenge or investigation is presently pending
with regard to any charges under the Leases;
(E) No rent has been paid by Seller in advance except for the
current month;
(F) There are and have been no subleases or assignments made by
Seller;
(G) No part of the security deposit, if any, paid by Seller under
the Leases has been appropriated by the landlord(s) on account of a default or
purported default by Seller; and
(H) No condition exists whereby the use and occupancy of the
leased premises by Seller for Seller's Business purposes is subject to any
material impairment.
4.12 Environmental Matters. Except as set forth in the reports listed
on Schedule 4.12 and to the knowledge of Seller.
4.12.1 No Hazardous Substances have been, treated, discharged, disposed
of or otherwise released or threatened to be released in, on, under or from any
of Seller's Leased Real Property during Seller's period of tenancy;
4.12.2 Seller has not stored, used, generated, transported, handled or
otherwise maintained any Hazardous Substances on any of the Leased Real
Property, and no Hazardous Substances currently are stored, used, generated,
transported, handled or otherwise are present thereon, except for (i) any
concentrations or quantities that occur naturally thereon or that are present in
construction materials, office equipment or other office furnishings used in the
existing improvements thereon, and (ii) normal quantities of those Hazardous
Substances customarily used in the conduct of general administrative and
executive office activities in compliance with Environmental Laws.
Notwithstanding the foregoing exceptions, no material quantities or
concentrations of asbestos-containing materials, PCBs or urea formaldehyde are
present, in violation of Environmental Laws, in or on any of the Leased Real
Property.
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4.12.3 All of the business, operations and Leased Real Property of
Seller are operated in material compliance with applicable Environmental Laws.
There are no unpermitted Hazardous Substances or any material condition with
respect to surface soil, subsurface soil, ambient air, surface waters,
groundwaters, or similar environmental media ("Environmental Condition") on, in,
under, above, from or off any of the Leased Real Property, which (i) requires
investigation and/or remedial action on or off such Leased Real Property by
Seller and/or, (ii) results in any claim for personal injury, property damage or
natural resources damage or any other Proceeding against the Seller by any
Governmental Body or other Persons. Seller has not taken any material action or
omitted to take any material action that has caused or will cause an
Environmental Condition to exist.
4.12.4 Seller has not received any written notice that any part of the
Leased Real Property or the operations of Seller is the subject of any material
Proceeding or Judgment.
4.12.5 [Intentionally Omitted].
4.12.6 All material correspondence, reports, maps, plans, studies and
other documents relating to environmental, health and safety matters in Seller's
possession, custody or control are listed on Schedule 4.12 and have been
provided to Buyer by Seller on or prior to the date hereof.
4.12.7 No use or development restrictions have be recorded against any
of the Leased Real Property on account of any environmental condition caused by
Seller during its tenancy.
4.12.8 No information request has been issued to Seller pursuant to
Section 104 of the Comprehensive Environmental Response, Compensation and
Liability Act, as amended, 42 U.S.C. 9601 et seq. or any other Environmental
Laws with regard to the Leased Real Property.
4.12.9 Seller has not installed, removed, closed or used any
aboveground or underground storage tanks, including underground piping on the
Leased Real Property, in violation of Environmental Laws.
4.13 Software and Purchased Intangibles. Schedule 1.22 is an accurate and
complete list and description of Purchased Intangibles (as defined in Section
1.22). Schedule 4.13 is an accurate and complete list and description of all
Software owned, marketed, licensed, used or under development by Seller and used
in or for Seller's Business, and sets forth a product description, the language
in which such Software is written and the type of hardware platform(s) on which
such Software runs. Except as explained on Schedule 1.22 or 4.13 (as
applicable), Seller has good and marketable title to all Purchased Intangibles
and to all Specified Software identified as "Proprietary" on Schedule 4.13, and
has the full right to use and transfer (subject, in the case of shrinkwrap
software, to standard use and transfer restrictions in commercially available
shrinkwrap licenses) to Buyer, all of the Specified Software listed on Schedule
4.13 and Purchased Intangibles listed on Schedule 1.22, free and clear of any
Encumbrance (as defined in Section 1.8). Except as set forth on Schedule 4.13 or
1.22 (as applicable), since November 4, 1999, all Specified Software identified
as "Proprietary" on Schedule 4.13 and all Purchased Intangibles purported to be
owned or under development by Seller were created as works for hire (as defined
under U.S. copyright law). All Specified Software that is identified on Schedule
4.13 as "licensed" or "shrinkwrap" has been properly licensed and all related
fees have been paid. With respect to the Specified Software identified on
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Schedule 4.13 as "Proprietary" (a) Seller maintains machine-readable
master-reproducible copies, source code listings, technical documentation and
user manuals for the most current releases or versions thereof and for all
earlier releases or versions thereof currently being supported by Seller; (b)
the machine-readable copy substantially conforms to the corresponding source
code listing; (c) such Specified Software is written in the language set forth
on Schedule 4.13, for use on the hardware set forth on Schedule 4.13 with
standard operating systems; and (d) such Specified Software operates in
accordance with the user manual therefor without material operating defects.
None of the Specified Software identified as "Proprietary" on Schedule 4.13 or
the Seller's corporate name is, and none of their respective current uses is,
violating or infringing upon, any software, patent, copyright, trade secret or
other intangible of any Person. To the knowledge of Seller, no Person is
violating or infringing upon, or has violated or infringed upon at any time, any
of the Specified Software or Purchased Intangibles. None of the Specified
Software or Purchased Intangibles is owned by or registered in the name of any
current or former shareholder, partner, director, executive, officer, employee,
salesman, agent, client, representative or contractor of Seller nor does any
such Person have any interest therein or right thereto, including but not
limited to the right to royalty payments.
4.14 Contracts. Schedule 4.14 is an accurate and complete list of all of
the following types of Contracts to which Seller is a party or by which Seller
is bound, (x) which involve payments to or by Seller of more than $150,000 in
the aggregate or (y) which Seller and Buyer have otherwise agreed shall be
transferred and sold to Buyer at the Closing and, in either case, which relate
to the Seller's Business, grouped into the following categories and, where
applicable, subdivided by product line: (a) client Contracts; (b) Contracts for
the purchase or lease of Real Property, (c) Contracts for the purchase, lease
and/or maintenance of computer equipment and other equipment, (d) Contracts for
the purchase, license, lease and/or maintenance of Software under which Seller
is the purchaser, licensee, lessee or user, and other supplier Contracts; (e)
consulting and sales representative Contracts; (f) Contracts under which any
rights in and/or ownership of any Specified Software identified as "Proprietary"
on Schedule 4.13; (g) Contracts under which any part of the client base or
business of Seller's Business was acquired; (h) Contracts for the provision of
any maintenance, repair, security, fire detection, refuse, removal, or other
services with respect to any of the Leased Real Property; and (i) other
Contracts (excluding this Agreement, the Collection Agency Agreement and the
Portfolio Purchase Agreement and all other Contracts entered into between
Seller, on the one hand, and Buyer, NCOP Lakes or any of their affiliates, on
the other hand, in connection herewith or therewith). A description of each oral
Specified Contract is included on Schedule 4.14, and copies of each written
Specified Contract have been delivered to Buyer. Except as set forth on Schedule
4.14, with respect to each of the Specified Contracts, Seller neither is in
material default thereunder nor would be in material default thereunder with the
passage of time, the giving of notice or both. Except as set forth on Schedule
4.14, to the knowledge of the Seller, none of the other parties to any Specified
Contract is in material default thereunder or would be in material default
thereunder with the passage of time, the giving of notice or both. Except as set
forth on Schedule 4.14, Seller has not given or received any notice of default
or notice of termination with respect to any Specified Contract, and each
Specified Contract is in full force and effect. Except as set forth on Schedule
4.14, there are no currently outstanding proposals or offers submitted by Seller
to any client, prospect, supplier or other Person with respect to Seller's
Business which, if accepted, would result in a legally binding Contract of
Seller involving an amount or commitment exceeding $50,000 in any single case or
an aggregate amount or commitment exceeding $150,000.
4.15 Employees and Independent Contractors. Schedule 4.15A is a list of all
employees, non-employee sales representatives and independent contractors
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engaged in Seller's Business, their tax identification numbers (to the extent
that any employee constitutes a Transferred Employee) and states of residence,
their payment arrangements (if not set forth in a Contract listed or described
on Schedule 4.14), and a brief description of their jobs or projects currently
in progress. Except as limited by any employment Contracts listed on Schedule
4.15A and except for any limitations of general application which may be imposed
under applicable employment Laws, Seller has the right to terminate the
employment of each of its employees engaged in the Seller's Business at will and
to terminate the engagement of any of its independent contractors engaged in the
Seller's Business without payment to such employee or independent contractor
other than for services rendered through termination and without incurring any
penalty or liability other than liability for severance pay in accordance with
Seller's disclosed severance pay policy. To Seller's knowledge, Seller is in all
material respects in compliance with all Laws respecting employment practices.
Seller has never been a party to or bound by any union or collective bargaining
Contract, nor is any such Contract currently in effect or being negotiated by or
on behalf of Seller. Seller has not experienced any labor problem that was or is
material to Seller's Business. Except as indicated on Schedule 4.15B, since May
15, 2002, no employee of Seller engaged in the Seller's Business (other than any
account collector) has indicated in writing an intention to terminate his or her
employment with Seller.
4.16 Employee Benefit Plans. Except as set forth on Schedule 4.16, Seller
does not sponsor, maintain or contribute to, or have any ongoing Obligations
with respect to, any Employee Benefit Plan (as defined in Section 1.7),
including, but not limited to, any employee benefit plan as defined in Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"). Copies of all Employee Benefit Plans described on Schedule 4.16 and
summary plan descriptions of such plans have been delivered to Buyer. Except as
set forth on Schedule 4.16, Seller is not a party to any Contract to create any
additional Employee Benefit Plan or to continue, modify, change or terminate any
of its current Employee Benefit Plans.
4.17 Clients and Prospects. Except as set forth on Schedule 4.17, (i)
Seller has not received any written notice from any of its clients who are
parties to the consignment Contracts described in Schedule 4.14 and (ii) since
May 15, 2002, Seller has not received oral notice from any of its clients who
are parties to such consignment Contracts, in either case, notifying Seller of
its termination of the related consignment Contract or threatening to terminate
the related consignment Contract.
4.18 Customer Escrow Accounts Sufficient. The Cash Assets held in Customer
Escrow Accounts (other than NACC Cash or earned commission cash in such
accounts) is sufficient to satisfy the client accounts payable in respect of
such Cash Assets.
4.19 Judgments and Proceedings; Federal Trade Commission Decrees. Except as
set forth on Schedule 4.19, (a) no monetary Judgments entered against Seller or
the Business are, as of the Closing Date, unsatisfied, (b) there are no orders,
Judgments or settlements (i) entered or made since June 10, 2001 or (ii)
outstanding on the date hereof which, in either case, adversely affect the
operations of Seller's Business, other than collection Proceedings in the
ordinary course and any monetary Judgments, (c) there are no Proceedings (other
than collection Proceedings) pending by or against the Seller and, to the
knowledge of Seller, no Proceedings (other than collection Proceedings) against
Seller have been threatened, in writing, by an attorney and (d) there are no
currently outstanding orders or consent decrees issued by the Federal Trade
Commission involving or related to the Seller's Business or the Specified Assets
of the Seller.
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4.20 Compliance with Law. The operation of Seller's Business, the conduct
of Seller's Business as and where such business is presently conducted and the
ownership, possession and use of the Assets used in Seller's Business, are in
material compliance with all applicable Laws.
4.21 Questionable Payments. From the period commencing on November 4, 1999
and ending on the date hereof, and, to the knowledge of Seller, from the period
commencing on the date of incorporation of Seller and ending on the date hereof,
neither Seller nor any of Seller's current or former partners, shareholders,
directors, executives, officers, representatives, agents or employees (when
acting in such capacity or otherwise on behalf of Seller) (including North
American Capital Corp.), (a) has used or is using any corporate funds for any
illegal contributions, gifts, entertainment or other unlawful expenses relating
to political activity; (b) has used or is using any corporate funds for any
direct or indirect unlawful payments to any foreign or domestic government
officials or employees; (c) has violated or is violating any provision of the
Foreign Corrupt Practices Act of 1977, except where such violation was not, is
not and will not be material to Seller; (d) has established or maintained, or is
maintaining, any unlawful or unrecorded fund of corporate monies or other
corporate properties; (e) has made any false or fictitious entries on the books
and records of Seller; (f) has made any bribe, rebate, payoff, influence
payment, kickback or other unlawful payment of any nature using corporate funds
or otherwise on behalf of any Seller; or (g) made any material favor or gift
that is not deductible for federal income tax purposes using corporate funds or
otherwise on behalf of any of Seller.
4.22 True Copies. The copies of the agreements attached as schedules to
this Agreement or listed on such schedules (and delivered to Buyer at Closing)
are accurate and complete, in all material respects, and are not missing any
amendments or waivers in respect thereof.
4.23 Taxes. Except as set forth on Schedule 4.23, Seller has timely paid
all state and local property Taxes required to be paid by it (to the extent that
such Taxes are not reported and paid by one or more of Seller's affiliates, on a
consolidated basis with Seller).
4.24 Brokerage Fees. Except as set forth on Schedule 4.24, no Person acting
on behalf of any Seller (or any of its affiliates, including without limitation,
GE Capital or FGIC) is or shall be entitled to any brokerage or finder's fee in
connection with the transactions contemplated by this Agreement.
5. REPRESENTATIONS OF BUYER
Knowing that Seller is relying thereon, Buyer represents and warrants to Seller,
and covenants with Seller, as follows:
5.1 Organization. Buyer is a limited liability company that is duly
organized, validly existing and in good standing under the Law (as defined in
Section 1.16) of the State of New York. The Buyer has the full limited liability
company power and authority to own its assets, conduct its business as and where
such business is presently conducted, and enter into this Agreement. Buyer is a
wholly owned subsidiary of NCO Group, Inc.
5.2 Agreement. Buyer's execution, delivery and performance of this
Agreement, and its consummation of the transactions contemplated by this
Agreement, (a) have been duly authorized by all necessary corporate actions by
its board of directors; (b) do not constitute a violation of or default under
its charter or bylaws; (c) do not constitute a default or breach (immediately or
22
after the giving of notice, passage of time or both) under any Contract to which
it is a party or by which it is bound; (d) do not constitute a violation of any
Law (as defined in Section 1.16) or Judgment (as defined in Section 1.15) that
is applicable to it or to the business or assets of the Buyer, or to the
transactions contemplated by this Agreement; and (e) do not require the Consent
(as defined in Section 1.4) of any Person (as defined in Section 1.19). Subject
to Section 10.19, this Agreement constitutes the valid and legally binding
agreement of Buyer, enforceable against it in accordance with its terms.
5.3 SEC Filings. NCO Group, Inc. has filed all reports and proxy statements
required to be filed with the SEC since January 1, 2002 and prior to the date of
this Agreement ("NCO SEC Documents"). As of their respective dates, the NCO SEC
Documents complied, in all material respects with the requirements of the
Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as
amended, as the case may be, and the rules and regulations of the SEC
promulgated thereunder applicable to such NCO SEC Documents.
5.4 Permits. Buyer has all material Permits that are necessary in order to
satisfy its Obligations arising under or in respect of this Agreement, and such
Permits are in full force and effect.
5.5 Brokerage Fees. No Person acting on behalf of Buyer or any of its
affiliates is entitled to any brokerage, finder's or investment-banking fee in
connection with the transactions contemplated by this Agreement.
5.6 Litigation. There are no legal proceedings pending or, to the knowledge
of Buyer, threatened that are reasonably likely to prohibit or restrain the
ability of Buyer to enter into this Agreement or consummate the transaction
contemplated hereby. No employee of Buyer is presently a member of a collective
bargaining unit and, to the knowledge of Buyer, there are no threatened or
contemplated attempts to organize for collective bargaining purposes any of the
employees of Buyer nor, to the knowledge of Buyer, have there been any
threatened attempts at any time during the twelve (12) month period prior to the
date hereof.
6. CLOSING
6.1 Closing. The closing of the transactions contemplated by this Agreement
(the "Closing") shall be held on the date hereof (the "Closing Date"), at the
offices of Weil, Gotshal & Xxxxxx LLP, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000 unless another place is agreed by the parties hereto. Except to the extent
prohibited by Law and regardless of the actual time of Closing, the Closing
shall be considered to have been effective at the opening of business on the
Closing Date.
6.2 Obligations of Seller at Closing. At the Closing, Seller shall deliver
to the Buyer the following:
6.2.1 Specified Assets of Seller. To the extent that such Assets are
capable of being physically delivered, all of the Specified Assets of Seller and
all of the Leased Real Property and Tangible Property used in the Seller's
Business, including, but not limited to, all applicable keys, access cards and
other entry devices.
6.2.2 Documents of Transfer. Such bills of sale, assignments, deeds,
endorsements, affidavits, and other instruments and documents of sale, transfer,
assignment and conveyance as Buyer may reasonably request at or prior to the
Closing, in order to lawfully and effectively sell, transfer, assign and convey
23
to Buyer all right, title and interest in and to all of the Specified Assets of
Seller, in each case in form acceptable to Seller and Buyer, dated as of the
Closing Date, and duly executed and, if necessary, acknowledged by the Seller.
6.2.3 Incumbency and Secretary's Certificate. A certificate of the
Secretary of Seller as to the incumbency and signatures of the officers of
Seller executing this Agreement or any other agreement or document in connection
herewith, which certificate shall attach a copy of Seller's Certificate of
Incorporation, certified by the Secretary of State for the State of New York.
6.2.4 Resolutions. Copies of the resolutions duly adopted by the board
of directors and, if applicable, shareholders of Seller, authorizing Seller to
enter into and perform this Agreement, certified by proper officers as in full
force and effect on and as of the Closing Date.
6.2.5 Good Standing. A good standing certificate for Seller from its
jurisdiction of incorporation, dated no earlier than 15 days before the Closing
Date.
6.2.6 Opinion of Counsel. An opinion of counsel to Seller addressed to
the Buyer and dated the Closing Date, in the form attached hereto as Exhibit
6.2.6.
6.2.7 Collection Agency Agreement. A Collection Agency Agreement (the
"Collection Agency Agreement") in form and substance acceptable to Buyer, in its
sole discretion, between Buyer and GE Capital, dated as of the Closing Date and
duly executed by GE Capital.
6.2.8 Consents. Signed copies of all Consents listed on Schedule 4.2
and obtained by Seller prior to the Closing.
6.2.9 Name Change. A duly authorized and properly executed amendment to
Seller's Certificate of Incorporation, dated the Closing Date and duly executed
by the Seller, in form acceptable for filing with the appropriate office
changing Seller's corporate name to a name that is not similar to Seller's
current corporate name.
6.2.10 Real Estate Documents.
(A) Originals or true copies of all surveys, reports, plans,
warranties and guarantees and other data and information relating to the
physical aspects of the Leased Real Property as are in Seller's possession
(provided that Seller may deliver any of said items by allowing Buyer access to
same at Seller's offices);
(B) Xxxx(s) of sale for all Tangible Property related to the
Leased Real Property;
(C) An assignment of Seller's rights under the Leases to Buyer or
Buyer's designee (including without limitation Seller's rights in any security
deposits), together with (at the option of Buyer) a memorandum thereof
sufficient for recording, in such form as is deemed reasonably sufficient for
such purposes by Buyer's counsel;
(D) A current UCC Report showing no financing statements by
Seller as Debtor covering any property included within or related to the Leased
Real Property;
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(E) A written certification from the Landlord(s) under the
Leases, (i) consenting to the transfer of the tenant's interests and rights to
Buyer or Buyer's designee without the requirement for any payment or
modification of terms (except such payment as shall be paid solely by Seller),
(ii) stating that the tenant is not in default under the Lease(s) and setting
forth the amounts and latest dates to which rent and additional rent under the
Lease(s) have been paid; and (iii) confirming the date of the Lease(s), all
amendments thereto, as well as the commencement and expiration dates;
(F) An executed original or true copy of (i) each or the Lease,
and all amendments and modifications thereto, and (ii) all Contracts to be
transferred to Buyer or Buyer's designee relating to the Leased Real Property;
(G) Letters to the vendors or other contract parties under all
Contracts pertaining to the Leased Real Property which are transferred to Buyer
or Buyer's designee, notifying them of the change in ownership;
(H) To the extent in Seller's possession, all master and
duplicate keys and lock combinations to the locks of all doors on the Leased
Real Property, all plans and specifications, and all technical and service
manuals relating to the operation and maintenance of the Leased Real Property,
as well as all records and files of Seller pertaining to the operation and
maintenance of the Leased Real Property; provided that Seller may deliver any of
said items by allowing Buyer access to same at Seller's offices.
6.2.11 Federal Trade Commission Notices. Seller shall have notified the
Federal Trade Commission, in writing, of the transactions contemplated by this
Agreement (which notice shall be in the form attached hereto as Exhibit 6.2.11).
6.2.12 Transition Services Agreement. A Transition Services Agreement
(the "Transition Services Agreement") in form and substance acceptable to Buyer,
in its sole discretion, among Seller, Buyer and GE Capital, dated as of the
Closing Date and duly executed by each of GE Capital and Seller.
6.2.13 Closing of Portfolio Purchase Agreement. Evidence reasonably
satisfactory to Buyer that the closing under the Portfolio Purchase Agreement
has occurred or shall simultaneously occur with the Closing.
6.2.14 GE Capital Guarantee. An executed original guarantee of GE
Capital pursuant to which GE Capital guarantees the full and prompt performance
by Seller of all of Seller's obligations to Buyer under this Agreement.
6.2.15 Other Documents. All other agreements, certificates, instruments
and documents reasonably requested by the Buyer at or prior to the Closing in
order to fully consummate the transactions contemplated by this Agreement and
carry out the purposes and intent of this Agreement.
6.3 Obligations of Buyer at Closing. At the Closing, Buyer shall deliver to
Seller the following:
6.3.1 Purchase Price. A wire transfer of immediately available United
States federal funds in the amount of the Purchase Price (as defined in Section
3.1), in accordance with Seller's proper instructions as to payment.
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6.3.2 Incumbency and Secretary's Certificate. A certificate of
Secretary of Buyer as to the incumbency and signatures of the officers of Buyer
executing this Agreement or any other agreement or document in connection
herewith, which certificate shall attach a copy of Buyer's Certificate of
Formation, duly certified by the Secretary of State for the State of New York.
6.3.3 Resolutions. Copies of the resolutions duly adopted by the board
of directors of Buyer, authorizing Buyer to enter into and perform this
Agreement, certified by proper officers as in full force and effect on and as of
the Closing Date.
6.3.4 Good Standing. A good standing certificate for Buyer from its
jurisdiction of incorporation, dated no earlier than 15 days before the Closing
Date.
6.3.5 Collection Agency Agreement. The Collection Agency Agreement (as
defined in Section 6.2.7), in form and substance acceptable to Seller, in its
sole discretion, dated as of the Closing Date and duly executed by the Buyer.
6.3.6 Other Documents. All other agreements, certificates, instruments
and documents reasonably requested by Seller at or prior to the Closing in order
to fully consummate the transactions contemplated by this Agreement and carry
out the purposes and intent of this Agreement.
6.3.7 Closing of Portfolio Purchase Agreement. Evidence reasonably
satisfactory to Seller that the closing under the Portfolio Purchase Agreement
has occurred or shall occur simultaneously with the Closing.
6.3.8 NCO Group, Inc. Guarantee. An executed original guarantee of NCO
Group, Inc., pursuant to which NCO Group, Inc. guarantees the full and prompt
performance by Buyer of all of Buyer's obligations to Seller under this
Agreement.
6.3.9 Opinion of Counsel. An opinion of counsel to Buyer addressed to
the Seller and dated the Closing Date, in the form attached as Exhibit 6.3.9.
6.3.10 Transition Services Agreement. A Transition Services Agreement
in form and substance acceptable to Seller, in its sole discretion, among
Seller, Buyer and GE Capital, dated as of the Closing Date and duly executed by
Buyer.
6.3.11 Consents. A signed copy of each Consent to the assignment of the
consignment Contracts listed on Schedule 6.3.11 obtained by Buyer on or prior to
the Closing.
7. CERTAIN POST-CLOSING OBLIGATIONS
7.1 Transition and Cooperation. From and after the Closing Date, (a) Seller
shall cooperate to transfer to the Buyer the control and enjoyment of the
Specified Assets of Seller; (b) Seller shall not take any action, directly or
indirectly, alone or together with others, which obstructs or impairs the smooth
assumption by Buyer of the Specified Assets of Seller or the Specified
Liabilities of Seller; and (c) Seller shall promptly deliver to Buyer all of the
Specified Assets of Seller sold to Buyer which are described in Section 2.1.1
received by Seller or in the possession of Seller and not previously delivered
to Buyer.
7.2 Treatment of Consignment Contracts.
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7.2.1 Consent to Transfer of Certain Consignment Contracts. If, by the
date which is ninety (90) days after the Closing Date, Buyer shall fail to
deliver to Seller a Consent to the assignment and transfer of any of the
consignment Contracts listed on Schedule 6.3.11 and Seller shall not otherwise
have received such Consent by such date, then Seller shall, on and as of such
date, be entitled to terminate the related consignment Contract without any
liability to Seller.
7.2.2 Termination of Consignment Contracts. Buyer hereby agrees, in
respect of each consignment Contract which constitutes a Specified Asset of
Seller, that Buyer shall, by the date which is six (6) months after the Closing
Date, either (i) obtain a written release of Seller from each party (other than
Seller) to such consignment Contract, which release shall be in substantially
the form attached hereto as Exhibit 7.2.2, and which shall release Seller from
all of its Obligations under the applicable consignment Contract to the extent
arising from the after the date of such release, or (ii) terminate such
consignment Contract to which Seller remains liable as a signatory.
7.3 Contract Matters. After the Closing, each Non-Assigned Contract shall
be handled in accordance with the following provisions:
7.3.1 Consent. Seller shall fully cooperate with Buyer in Buyer's
efforts to obtain any required Consent to the assignment of such Non-Assigned
Contract. If and when Consent to the assignment of such Non-Assigned Contract is
obtained, such Non-Assigned Contract shall no longer be subject to the
provisions of this Section 7.3.
7.3.2 Subcontracting. Seller shall, to the fullest extent permissible
under such Non-Assigned Contract, make available to Buyer all Contract Rights
and other benefits of such Non-Assigned Contract, on a subcontract or sublease
basis or in any other manner the parties deem appropriate. In respect of any
such arrangement between Seller and Buyer, Buyer shall be deemed to be an
independent subcontractor or sublessee of Seller. In addition to and
notwithstanding the foregoing, Buyer shall be considered Seller's agent solely
for purposes of (a) collecting all amounts that may be due from the other party
or parties to such Non-Assigned Contract; and (b) negotiating or otherwise
handling all disputes and issues that relate exclusively to such Non-Assigned
Contract. Without Buyer's prior written consent, Seller shall not agree to any
amendment, modification, extension, renewal, termination or other change in the
terms of such Non-Assigned Contract, nor shall Seller exercise any Contract
Right under such Non-Assigned Contract.
7.3.3 Buyer's Instructions. To the extent permissible under such
Non-Assigned Contract, upon Buyer's request, Seller shall (a) notify the other
party or parties to such Non-Assigned Contract that Buyer is Seller's
subcontractor, sublessee or agent with respect thereto and that all further
payments, notices and other communications with respect thereto shall be
directed to Buyer; (b) exercise any Contract Right under such Non-Assigned
Contract at such time and in such manner as Buyer determines, in its sole
discretion, to be advisable.
7.3.4 Collateral Assignment. Effective as of the Closing Date, Seller
hereby collaterally assigns to Buyer (except and only to the extent that such
collateral assignment is expressly prohibited by the terms of such Non-Assigned
Contract), and grants to Buyer a security interest in, all of Seller's Contract
Rights under such Non-Assigned Contract and all cash and non-cash proceeds
thereof, as security for the prompt and timely satisfaction and performance of
Seller's obligations under this Section 7.3. Buyer shall have, and Seller shall
deliver to Buyer at the Closing, possession of the original executed copy of
such Non-Assigned Contract. Effective as of the Closing Date, Seller hereby
27
appoints Buyer as Seller's attorney to take such actions, in Seller's name and
on its behalf, as such attorney determines, in its reasonable discretion, to be
necessary or advisable to protect, perfect and continue perfected the security
interest granted hereunder, including, but not limited to, the execution and
filing of such financing statements and other instruments and documents as such
attorney determines, in its reasonable discretion, to be necessary or advisable
for such purposes.
7.4 Use of Names. Beginning immediately after the Closing Date, Seller
shall cease all use of all corporate names, fictitious names, product names and
other names used by Seller in Seller's Business at any time on or before the
Closing Date and included in the Specified Assets, except (i) as may be
necessary to perform Seller's obligations hereunder and (ii) during a period not
to exceed one year after the Closing Date, in connection with the wind-down of
Seller's business. Without the consent of Seller, for a period of six months
after the Closing Date, Buyer shall not file the amendment to Seller's
Certificate of Incorporation referred to in Section 6.2.9 and delivered by
Seller to Buyer on the Closing Date. Following such six-month period, Buyer
agrees that it shall not, without at least thirty (30) days prior written
notice, file the name change amendment to the Certificate of Incorporation of
Seller referred to in Section 6.2.9 and delivered by Seller to Buyer on the
Closing Date; provided that Seller may request that Buyer refrain from making
such filing for up to an additional six-month period to the extent necessary to
wind-down Seller's remaining business operations or to surrender its Permits to
the applicable Governmental Bodies and Buyer shall not unreasonably refuse to
agree (or delay in agreeing) to such request. Subject to the preceding sentence,
upon Buyer's request, Seller shall promptly sign all Consents and other
documents that may be necessary to allow Buyer to use or appropriate the use of
any name used by Seller at any time on or before the Closing Date.
7.5 Taxes.
(A) Except for Taxes constituting Specified Liabilities of
Seller, Seller shall pay all sales, use, stock transfer, documentary, stamp,
recording, real property transfer and similar Taxes, if any, required to be paid
by it in connection with the transactions contemplated by this Agreement).
(B) Seller and Buyer shall file all Tax Returns (including,
without limitation, Form 8594) and financial statements in a manner consistent
with the Allocation Statement, and Seller and Buyer shall not take any position
inconsistent with such Allocation Statement in the course of any tax audit, tax
review or tax litigation relating thereto. Each party shall notify the other
parties if it receives notice that the Internal Revenue Service or other
governmental agency proposes any allocation different than that set forth in the
Allocation Statement.
(C) Seller and Buyer agree to furnish or cause to be furnished to
each other, upon request, as promptly as practicable, such information and
assistance relating to the Specified Assets of Seller as is reasonably necessary
for the filing of all Tax Returns, and making of any election related to Taxes,
the preparation for any audit by any governmental authority, and the prosecution
or defense of any claim, suit or proceeding relating to any Tax Return. Seller
and Buyer shall cooperate with each other in the conduct of any audit or other
proceeding related to Taxes involving the Specified Assets of Seller.
7.6 Personnel Files. From time to time from and after the Closing Date,
Seller shall transfer and deliver to Buyer the personnel files of any
Transferred Employee who consents to such transfer of files in writing pursuant
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to a consent and release, substantially in the form attached hereto as Exhibit
2.3.1 (each, an "Employee Release"). Seller shall have no obligation to transfer
or deliver to Buyer any personnel files of any Transferred Employee unless and
until Seller receives a duly executed Employee Release from such Transferred
Employee.
7.7 Certain Reimbursement Procedures. If, during the period commencing on
the Closing Date and ending on the first anniversary thereof, Buyer incurs any
liability in respect of the Specified Liabilities of Seller described in Section
2.1.3(A)(2) hereof (an "NSF Liability"), then Buyer shall utilize its then
applicable normal procedures to attempt to collect the amount of the NSF
Liability from (i) the debtor whose payment was returned for uncollectible or
insufficient funds or (ii) the client to whom the related proceeds were
delivered. To the extent that Buyer is unable to collect the full amount of such
NSF Liability from the related debtor or the applicable client, then
notwithstanding anything to the contrary set forth in Section 9.4.1, Seller
shall be required to and shall reimburse Buyer for all such uncollected amounts
(including related commissions) within thirty (30) days of Seller's receipt of a
written request therefor from Buyer.
7.8 Intangibles License. GE Capital hereby grants to Seller, and Seller
hereby accepts, an irrevocable, non-exclusive, paid-up, royalty-free and
non-transferable license to use all Intangibles (other than the name "General
Electric", "GE Capital" or the General Electric monogram) owned by it and used
by Seller in connection with the Restricted Business (as defined in Section 8.2)
(the "License Intangibles") consistent with the manner in which such Intangibles
have previously been utilized by Seller in connection with the Restricted
Business.
7.9 Further Assurances; Access.
(A) At any time and from time to time after the Closing Date, at
either Buyer's or Seller's request (and at the requesting party's sole cost and
expense), the non-requesting party shall promptly execute and deliver all such
further agreements, certificates, instruments and documents, and perform such
further actions, as the requesting party may reasonably request in order to
fully consummate the transactions contemplated hereby and carry out the purposes
and intent of this Agreement. Without limiting the generality of the foregoing,
Seller shall timely file all Tax returns and reports required to be filed with
respect to Seller's Business, Assets and operations for all periods ending on or
before the Closing Date.
(B) Upon reasonable notice, each of Seller, on the one hand, and
Buyer, on the other hand, shall afford to the officers, employees, accountants,
counsel, financial advisors and other representatives of the other reasonable
access during normal business hours, to all of its properties, books, contracts,
files, papers and records, including, but not limited to, any computer software,
systems, hard drives or records (whether in hard copy or stored electronically),
and to its officers, employees and other personnel to the extent relating to
Seller's Business in connection with any Proceeding to which Seller (or any of
its affiliates), on the one hand, or Buyer, on the other hand, shall from time
to time become a party. The costs (including reasonable out of pocket costs) of
any such access shall be borne exclusively by the requesting party.
7.10 Post Closing Payments. During the three (3) year period beginning on
the Closing Date, all payments received by Seller on account of Accounts
Receivable in existence as of the Closing Date or arising after the Closing Date
under any Specified Contracts or Non-Assigned Contracts, and all other payments
received by Seller which are properly allocable to the conduct of Seller's
Business with respect to periods after the Closing Date, shall be held in trust
for Buyer and shall be promptly paid to Buyer.
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7.11 Maintenance of Buyer's Business. In satisfying its Obligations under
this Agreement (including, but not limited to its obligations under any
subcontract or sublease arrangement referred to in Section 7.3.2), Buyer shall
comply in all material respects with all applicable Laws.
7.12 Maintenance of Records. Buyer shall maintain all books and records,
including, but not limited to, any computer software, systems, hard drives or
records (whether in hard copy or stored electronically) transferred by Seller to
it pursuant to the terms of this Agreement for a period of six (6) years
following the Closing Date. If Buyer intends to destroy any or all of such books
and records after six (6) years of the Closing Date, Buyer will promptly notify
Seller in writing of such intent and Buyer shall deliver such books and records
to Seller, if so requested by Seller, following its receipt of such notice from
Buyer. In addition to the foregoing, Buyer shall maintain, for a period of six
(6) years from and after the Closing Date, an electronic copy of the books and
records of Seller relating to the Seller's Business as at the Closing Date (or
within a reasonable period of time thereafter) in the format maintained by
Seller immediately prior to the Closing.
7.13 Software-Specific Equipment. Notwithstanding anything herein to the
contrary the Seller will use its commercially reasonable efforts to obtain the
consent to assign the leases and software licenses set forth on Schedule
7.13(a). If any required consent or consents for any such license or lease is
not obtained within 10 days after the Closing Date, all equipment to which such
license or lease relates shall become "Excluded Software-Specific Equipment" for
purposes of Section 2 hereof. Notwithstanding anything herein to the contrary
the Seller shall promptly reimburse the Buyer for any license fees or
replacement costs incurred by Buyer (or its affiliates) with respect to the
software set forth on Schedule 7.13(b) (the "GE Core Load Software").
8. RESTRICTIVE COVENANTS OF GE CONSUMER FINANCE U.S. AND CANADA.
8.1 Nonsolicitation. For a period of two (2) years following the date
hereof (the "Nonsolicitation Period"), neither GE Consumer Finance U.S. and
Canada, a business unit of GE Capital, nor Buyer or any of Buyer's affiliates
shall solicit for employment (other than by general solicitation, such as
newspaper or media advertising) any employee of the other employed within a
000-xxxx xxxxxx xx Xxxxxxx, XX and Parma Heights, OH.
8.2 Covenant Not to Compete. During the period beginning on the date of
this Agreement and ending on the first (1st) anniversary of the Closing Date,
except with Buyer's prior written consent, GE Consumer Finance U.S. and Canada
shall not, in any capacity, at any location within the United States or Canada,
engage in the business of providing collection services for unaffiliated third
parties with respect to delinquent consumer accounts receivable (the "Restricted
Business"); provided, however, that GE Consumer Finance U.S. and Canada may (a)
acquire, directly or indirectly, (by stock purchase, asset purchase, merger or
other similar transaction) (i) any Person that is engaged in the Restricted
Business if the Restricted Business does not constitute the principal activity
of such Person or business in terms of assets, sales or earnings, or (b) engage
in a Restricted Business if it is an ancillary part of a transaction, such as a
credit card or other arrangement with any other Person, which transaction is of
a type customarily engaged in by a business such as GE Consumer Finance U.S. and
Canada, or (c) own, directly or indirectly, securities of any Person that are
traded over the counter or on a national securities exchange.
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8.3 Enforcement of Covenants. Each of parties hereto expressly acknowledges
that it would be extremely difficult to measure the damages that might result
from any breach of the non-competition or non-solicitation covenant contained in
Section 8.1 or 8.2 (as applicable), and that any breach of such non-competition
or non-solicitation covenant will result in irreparable injury to the other for
which money damages could not adequately compensate. If a breach of such
non-competition or non-solicitation covenant occurs, then the non-breaching
party shall be entitled, in addition to all other rights and remedies that it
may have at law or in equity, to have an injunction issued by any competent
court enjoining and restraining the breaching party and all other Persons
involved therein from continuing such breach. The existence of any claim or
cause of action that the breaching party may have against the non-breaching
party shall not constitute a defense or bar to the enforcement of the
non-competition or non-solicitation covenant. If the non-breaching party must
resort to litigation to enforce the non-competition or non-solicitation
covenant, then such term of such covenant shall be extended for a period of time
equal to the period during which a breach of such non-competition or
non-solicitation covenant was occurring, beginning on the date of a final court
order (without further right of appeal) holding that such a breach occurred or,
if later, the last day of the original fixed term of such non-competition or
non-solicitation covenant.
8.4 Scope of Covenants. If any portion of the non-competition or
non-solicitation covenant or the application thereof is construed to be invalid,
illegal or unenforceable, then the other portions of such covenant, or the
application thereof, shall not be affected thereby and shall be enforceable
without regard thereto. If the non-competition or non-solicitation covenant is
determined to be unenforceable because of its scope, duration, geographical area
or other factor, then the court making such determination shall have the power
to reduce or limit such scope, duration, area or other factor, and such covenant
shall then be enforceable in its reduced or limited form.
8.5 Nondisclosure Covenants.
8.5.1 At all times after the date of this Agreement, for a period of
two (2) years, except with the Buyer's prior written consent or otherwise as
required by law, Seller shall not, in any capacity, communicate, publish or
otherwise disclose to any Person, or use for the benefit of any Person, any
Buyer Confidential Information. "Buyer Confidential Information" shall mean any
Confidential Information of Buyer, and shall include, without limitation, any
information concerning the Specified Assets of Seller or the Specified
Liabilities of Seller and shall include any information concerning the business
and operations of any affiliates of Buyer.
8.5.2 At all times after the date of this Agreement, for a period of
two (2) years, except with the Seller's prior written consent or otherwise as
required by law, Buyer shall not, in any capacity, communicate, publish or
otherwise disclose to any Person, or use for the benefit of any Person, any
Seller Confidential Information. "Seller Confidential Information" shall mean
any Confidential Information of Seller, and shall include, without limitation,
any information concerning the business and operations of any affiliates of
Seller (provided that the two year period shall not terminate any of Buyer's
Obligations to affiliates of Seller to the extent that there are confidentiality
requirements in other Contracts between Buyer and affiliates of Seller or
between Seller and its affiliates, to the extent that such agreements constitute
Specified Assets of Seller) or any of the business operations of Seller which do
not constitute Specified Assets of Seller.
8.5.3 "Confidential Information" shall mean any confidential or
proprietary property, knowledge or information of the other or concerning a
party or its affiliates or any of their respective businesses, assets or
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financial conditions; provided that Confidential Information shall not include
(i) any information that is now known by or readily available to the general
public, (ii) any information that in the future becomes known by or readily
available to the general public other than as a result of any breach of the
Covenants of this Agreement, (iii) any information that is developed
independently after the Closing Date or (iv) any information lawfully acquired
on a non-confidential basis from a source that, to the recipient's knowledge at
the time, is not violating a duty of confidentiality.
8.5.4 The provisions of this Section 8.5 supersede all prior
confidentiality and other agreements and arrangements between the parties hereto
(or their respective affiliates) with respect to the transactions contemplated
by this Agreement, the Portfolio Purchase Agreement and any other agreements or
documents executed in connection herewith or therewith; provided that this
Section 8.5.4 shall not supersede any confidentiality provisions contained in
the Collection Agency Agreement.
9. INDEMNIFICATION
9.1 Seller Indemnification. From and after the Closing Date, Seller shall
indemnify and hold harmless Buyer, its affiliates, and their successors and
assigns, and their respective directors, officers, employees, agents and
representatives, from and against any and all actions, suits, claims, demands,
debts, liabilities, obligations, losses, damages, costs and expenses, including
without limitation reasonable attorney's fees and court costs, arising out of or
caused by, directly or indirectly, any of all of the following:
9.1.1 Misrepresentation. Any misrepresentation, breach or failure of
any warranty or representation made by Seller in or pursuant to this Agreement.
9.1.2 Nonperformance. Any failure or refusal by Seller to perform any
covenant contained in this Agreement required to be performed by it.
9.1.3 Non-Assumed Obligations. Any Obligation of Seller (other than any
Specified Liabilities of Seller) including, but not limited to, (a) any of the
Obligations specifically excluded from the Specified Liabilities under Section
2.2; (b) any such Obligation that may be imposed upon the Buyer as a result of
the failure by Seller to comply with any bulk sales, bulk transfer, fraudulent
conveyance or similar Law of any jurisdiction that may be applicable to some or
all of the transactions contemplated by this Agreement; and (c) any Obligation
that may be imposed upon Buyer or its affiliates as a result of any Law under
which Buyer or its affiliates may have successor liability for any Tax or other
Obligations of Seller.
9.1.4 Unasserted Claims. Any action, suit or claim arising out of,
caused by or based upon any act or omission of Seller or any of its
shareholders, partners, directors, executives, officers, employees, agents or
representatives at any time before the Closing Date.
9.1.5 Proceedings by Employees. Other than as a result of or in
connection with any breach by Buyer of its obligations under Section 2.3 hereof,
any Proceeding against Buyer by or on behalf of any employee of Seller who is
not offered employment by Buyer.
9.1.6 Environmental Claims. Any action, suit, claim or Obligation based
upon or arising out of Seller's (a) violation of any Environmental Laws with
respect to the Seller's operations at the Leased Real Property at any time prior
to the Closing Date or (b) release of any Hazardous Substances on or under the
Leased Real Property at any time during Seller's lease of such real property.
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9.2 Buyer's Indemnification. From and after the Closing Date, Buyer shall
indemnify and hold harmless Seller, its affiliates and their successors and
assigns, and their respective directors, officers, employees, agents and
representatives, from and against any and all actions, suits, claims, demands,
debts, liabilities, obligations, losses, damages, costs and expenses, including,
without limitation, reasonable attorney's fees and court costs, arising out of
or caused by, directly or indirectly, any of the following:
9.2.1 Misrepresentation. Any misrepresentation, breach or failure of
any warranty or representation made by Buyer in or pursuant to this Agreement.
9.2.2 Nonperformance. Any failure or refusal by Buyer to perform any
covenant of this Agreement required to be performed by it.
9.2.3 Specified Liabilities of Seller. Any failure or refusal of the
Buyer to perform or satisfy in full (in accordance with the terms thereof) any
of the Specified Liabilities of Seller.
9.2.4 Post Closing Acts or Omissions. Any action, suit or claim arising
out of, caused by or based upon any act or omission of Buyer or any of its
shareholders, partners, directors, executives, officers, employees, agents, or
representatives at any time after the Closing Date except to the extent that it
is the result of a breach of any representation, warranty or covenant of Seller
contained herein.
9.2.5 Employee Claims. Any claim made by any Transferred Employee with
respect to his or her employment with Buyer or any of its affiliates, including
any term or condition of employment, claims for benefits, compensation,
post-employment medical and life insurance benefits, insurance premiums or
administrative expenses, claims under any federal, state or local equal
employment opportunity or other employment or leave related statute, regulation
or ordinance; any severance claims arising with respect to or as a result of the
failure of Buyer to offer employment and employee benefits to such Transferred
Employee in accordance with this Agreement; or any other action or inaction by
Buyer with respect to any Transferred Employee (other than as requested by
Seller).
9.2.6 Certain Other Liabilities. Any Proceeding or claim arising out
of, caused by or based upon, any action of Buyer or any of its employees,
officers, directors, agents, representatives, attorneys, assignees or affiliates
taken pursuant to or in connection with Section 7.3 hereof.
9.3 Indemnification Procedures. With respect to each event, occurrence or
matter ("Indemnification Matter") as to which Buyer or Seller, as the case may
be (in either case, referred to collectively as, the "Indemnitee") is entitled
to indemnification from Seller or Buyer, as the case may be (in either case
referred to collectively as, the "Indemnitor") under this Section 9:
9.3.1 Notice. Within ten (10) days after the Indemnitee first has
actual knowledge of the Indemnification Matter, the Indemnitee shall give notice
to the Indemnitor of the nature of the Indemnification Matter and the amount
demanded or claimed in connection therewith ("Indemnification Notice"), together
with copies of any such written documents.
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9.3.2 Defense. If a third-party action, suit, claim or demand is
involved, then, upon receipt of the Indemnification Notice, the Indemnitor
shall, at its expense and through counsel of its choice, promptly assume and
have sole control over the litigation, defense or settlement (the "Defense") of
the Indemnification Matter, except that (a) the Indemnitee may, at its option
and expense and through counsel of its choice, participate in (but not control)
the Defense; (b) the Indemnitor shall not consent to any Judgment, or agree to
any settlement, without the Indemnitee's prior written consent (provided that if
the Indemnitee shall not promptly deliver written consent to a proposed monetary
settlement where Indemnitor obtains a full release of Indemnitee in connection
with such settlement, the Indemnitor shall have no further Obligation of any
nature in respect of the related Indemnification Matter other than to indemnify
the Indemnitee in respect of such Indemnification Matter in an amount up to (and
not in excess of) the amount of the proposed settlement); and (c) if the
Indemnitor does not promptly assume control over the Defense or, after doing so,
does not continue to prosecute the Defense in good faith, the Indemnitee may, at
its option and through counsel of its choice, but at the Indemnitor's expense,
assume control over the Defense. In any event, the Indemnitor and the Indemnitee
shall fully cooperate with each other in connection with the Defense, including
without limitation by furnishing all available documentary or other evidence as
is reasonably requested by the other.
9.3.3 Payments. All amounts owed by the Indemnitor to the Indemnitee
(if any) shall be paid in full within fifteen (15) business days after a final
Judgment (without further right of appeal) determining the amount owed is
rendered, or after a final settlement or agreement as to the amount owed is
executed.
9.4 Limits on Indemnification. Indemnitor's liability under this Section 9
shall be limited as follows:
9.4.1 Threshold. No amount shall be payable by the Indemnitor under
this Section 9 unless and until the aggregate amount otherwise payable by the
Indemnitor under this Section exceeds One Hundred Six Thousand Dollars
($106,000) (the "Threshold"), in which event the Indemnitor shall pay such
aggregate amount and all future amounts payable by the Indemnitor under this
Section 9.
9.4.2 Ceiling. The Indemnitor's total liability under this Section 9
shall not exceed the difference between (x) Ten Million Six Hundred Thousand
Dollars ($10,600,000) minus (y) the TNW Adjustment (if any) determined pursuant
to Section 3.3 hereof.
9.4.3 Time Periods. The Indemnitor shall have no liability with respect
to any Indemnification Matter unless the Indemnitee gives an Indemnification
Notice with respect thereto within eighteen (18) months after the Closing Date.
9.4.4 Exceptions. None of the foregoing limitations shall apply in the
case of any Indemnification Matter involving (i) recklessness, intentional
misrepresentation, fraud or criminal matters; (ii) Taxes; (iii) covenants or
obligations to be performed after Closing; (iv) any non-assumed Obligations; or
(v) any acts or omissions arising from or in connection with the collection of
client accounts receivable from and after the Closing Date.
9.5 Exclusive Remedy. Except with respect to fraud, willful misconduct or
claims in respect of which injunctive relief or specific performance is the sole
remedy sought, this Section 9 and the indemnification rights provided for herein
shall be the sole remedies of the parties hereto in connection with any dispute
or claim arising under or related to this Agreement. The parties hereby waive,
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with respect to each other, to the fullest extent permitted by law, any and all
other rights and remedies. In no event shall Seller be liable to Buyer (or any
assignee or successor in interest thereof) under this Section 9 for any punitive
damages arising hereunder.
10. OTHER PROVISIONS
10.1 Fees and Expenses. Buyer shall pay all of the fees and expenses
incurred by it, and Seller shall pay all of the fees and expenses incurred by
it, in negotiating and preparing this Agreement (and all other Contracts
executed in connection herewith or therewith) and in consummating the
transactions contemplated by this Agreement.
10.2 Notice. All notices, consents or other communications required or
permitted to be given under this Agreement shall be in writing and shall be
deemed to have been duly given (a) when delivered personally, (b) three business
days after being mailed by first class certified mail, return receipt requested,
postage prepaid, or (c) one business day after being sent by a reputable
overnight delivery service, postage or delivery charges prepaid, to the parties
at their respective addresses stated on the first page of this Agreement.
Notices may also be given by prepaid telegram or facsimile and shall be
effective on the date transmitted if confirmed within 24 hours thereafter by a
signed original sent in the manner provided in the preceding sentence. Notice to
Seller at the address specified on page one of this Agreement shall suffice as
notice to Seller, provided that a copies thereof are simultaneously sent to
Seller's ultimate parent, GE Capital, addressed to the attention of each of the
President and General Counsel of GE Consumer Finance U.S. and Canada at 0000
Xxxxxx Xxxxxx, Xxxxxxxx, Xxxxxxxxxxx 00000. Notice to Buyer at the address as
specified on page one of this Agreement, with a copy to notice to Buyer's
ultimate parent, NCO Group, Inc., addressed to the attention of the General
Counsel at 000 Xxxxxxxxxx Xxxx, Xxxxxxx, Xxxxxxxxxxxx 00000, shall suffice as
notice to Buyer. Any party may change its address for notice and the address to
which copies must be sent by giving notice of the new addresses to the other
parties in accordance with this Section 10.2, except that any such change of
address notice shall not be effective unless and until received.
10.3 Survival of Representations. All representations and warranties made
in this Agreement or pursuant hereto shall survive for a period of eighteen (18)
months after the Closing Date.
10.4 Apportionment. It is the parties intent that all revenues, expenses,
charges, liabilities, taxes and other costs related to the ownership, use or
enjoyment of the Specified Assets of Seller and the Specified Liabilities of
Seller prior to the Closing Date shall be for the account of Seller and that all
revenues, expenses, charges, liabilities, taxes and other costs related to the
ownership, use or enjoyment of the Specified Assets of Seller and the Specified
Liabilities of Seller on and after the Closing Date shall be for the account of
Buyer, irrespective of the date assessed, paid or payable. Settlement with
respect to the apportionment described in this Section shall be reflected in the
Closing Balance Sheet and shall occur in connection with the Purchase Price
adjustment described in Section 3.3.
10.5 Interpretation of Representations. Each representation and warranty
made in this Agreement or pursuant hereto is independent of all other
representations and warranties made by the same parties, whether or not covering
related or similar matters, and must be independently and separately satisfied.
Exceptions or qualifications to any such representation or warranty shall not be
construed as exceptions or qualifications to any other representation or
warranty.
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10.6 Reliance by Buyer. Notwithstanding the right of Buyer to investigate
the Seller's Business, Assets and financial condition of Seller, and
notwithstanding any knowledge determined or determinable by Buyer as a result of
such investigation, Buyer have the unqualified right to rely upon, and have
relied upon, each of the representations and warranties made by Seller in this
Agreement or pursuant hereto.
10.7 Entire Understanding. This Agreement, together with the Exhibits and
Schedules hereto, states the entire understanding among the parties with respect
to the subject matter hereof, and supersedes all prior oral and written
communications and agreements, and all contemporaneous oral communications and
agreements, with respect to the subject matter hereof, including without
limitation all confidentiality letter agreements and letters of intent
previously entered into among some or all of the parties hereto. No amendment or
modification of this Agreement shall be effective unless in writing and signed
by the party against whom enforcement is sought.
10.8 Publicity. Following the Closing Date, Seller and/or Buyer may issue a
press release concerning the transactions contemplated by this Agreement,
provided that such release is mutually acceptable to both Buyer and Seller.
Unless required by Law or stock exchange or The Nasdaq Stock Market regulation,
the parties shall not make any public announcement or issue any press release
concerning the transactions contemplated by this Agreement without the prior
written consent of the other parties, which shall not be unreasonably withheld
or delayed. With respect to any announcement that any of the parties is required
by Law or stock exchange or The Nasdaq Stock Market regulation to issue, such
party shall, to the extent possible under the circumstances, review the
necessity for and the contents of the announcement with the other parties before
issuing the announcement.
10.9 Parties in Interest. None of the parties may assign this Agreement or
any rights or obligations under this Agreement without the prior written consent
of the other parties. This Agreement shall bind, benefit, and be enforceable by
and against the parties hereto, and their respective successors and consented-to
assigns.
10.10 Waivers. Except as otherwise expressly provided herein, no waiver
with respect to this Agreement shall be enforceable unless in writing and signed
by the party against whom enforcement is sought. Except as otherwise expressly
provided herein, no failure to exercise, delay in exercising, or single or
partial exercise of any right, power or remedy by any party, and no course of
dealing between or among any of the parties, shall constitute a waiver of, or
shall preclude any other or further exercise of, any right, power or remedy.
10.11 Severability. If any provision of this Agreement is construed to be
invalid, illegal or unenforceable, then the remaining provisions hereof shall
not be affected thereby and shall be enforceable without regard thereto.
10.12 Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be an original
hereof, and it shall not be necessary in making proof of this Agreement to
produce or account for more than one counterpart hereof.
10.13 Section Headings. The section and subsection headings in this
Agreement are used solely for convenience of reference, do not constitute a part
of this Agreement, and shall not affect its interpretation.
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10.14 References. All words used in this Agreement shall be construed to be
of such number and gender as the context requires or permits. Unless a
particular context clearly requires otherwise, the words "hereof" and
"hereunder" and similar references refer to this Agreement in its entirety and
not to any specific section or subsection of this Agreement.
10.15 Controlling Law. THIS AGREEMENT IS MADE UNDER, AND SHALL BE CONSTRUED
AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
AGREEMENTS MADE AND TO BE PERFORMED SOLELY THEREIN, WITHOUT GIVING EFFECT TO
PRINCIPLES OF CONFLICTS OF LAW.
10.16 Jurisdiction and Process. In any action between or among any of the
parties, whether arising out of this Agreement or otherwise, (a) each of the
parties irrevocably consents to the jurisdiction and venue of the federal and
state courts located in the Commonwealth of Pennsylvania and the State of New
York; (b) if any such action is commenced in a state court, then, subject to
applicable law, no party shall object to the removal of such action to any
federal court located in the Commonwealth of Pennsylvania or the State of New
York; (c) each of the parties irrevocably waives the right to trial by jury; (d)
each of the parties irrevocably consents to service of process by first class
certified mail, return receipt requested, postage prepaid, to the address at
which such party is to receive notice in accordance with Section 10.2; and (e)
the prevailing parties shall be entitled to recover their reasonable attorney's
fees (including, if applicable, charges for in-house counsel) and court costs
from the other parties.
10.17 No Third-Party Beneficiaries. No provision of this Agreement is
intended to or shall be construed to grant or confer any right to enforce this
Agreement, or any remedy for breach of this Agreement, to or upon any Person
other than the parties hereto, including, but not limited to, any client,
prospect, supplier, employee, contractor, salesman, agent or representative of
Seller.
10.18 Neutral Construction. In view of the fact that each of the parties
hereto have been represented by their own counsel and this Agreement has been
fully negotiated by all parties, the legal principle that ambiguities in a
document are construed against the draftsperson of that document shall not apply
to this Agreement.
10.19 Bankruptcy Qualification. Each representation or warranty made in or
pursuant to this Agreement regarding the enforceability of any Contract shall be
qualified to the extent that such enforceability may be effected by bankruptcy,
insolvency and other similar Laws or equitable principles (but not those
concerning fraudulent conveyance) generally affecting creditors' rights and
remedies.
10.20 Knowledge of Seller. Every reference in this Agreement to the
knowledge of Seller shall refer to the knowledge of Xxxxxxx X. Xxxx (the
President of Seller), Xxxxx X. Xxxxxxx (the Chief Financial Officer of Seller)
or Xxxxx X. Xxxxxxx (the Secretary of Seller).
37
EACH PARTY HAS CAUSED THIS AGREEMENT TO BE EXECUTED ON ITS BEHALF BY A DULY
AUTHORIZED OFFICER, AS OF THE DATE FIRST STATED ABOVE.
SELLER: BUYER:
GREAT LAKES COLLECTION BUREAU, INC. NCO Lakes, LLC
By:________________________________ By:_________________________________
Title:_____________________________ Title:______________________________
ACKNOWLEDGED AND AGREED TO as of the date
first above written solely for the purposes
of Sections 7.8 and 8 of this Agreement
GENERAL ELECTRIC CAPITAL CORPORATION
By:________________________________
Title:_____________________________
