EXHIBIT 2.1
PURCHASE AGREEMENT
BY AND AMONG
RISK MANAGEMENT ALTERNATIVES PARENT CORP.,
RISK MANAGEMENT ALTERNATIVES HOLDINGS, INC.,
RISK MANAGEMENT ALTERNATIVES INTERNATIONAL LIMITED,
RESOURCE RECOVERY CONSULTANTS, INC.,
RMA INTERMEDIATE HOLDINGS CORPORATION,
RMA MANAGEMENT SERVICES, INC.,
RISK MANAGEMENT ALTERNATIVES INTERNATIONAL CORP. CANADA,
NATIONAL REVENUE CORPORATION,
RISK MANAGEMENT ALTERNATIVES, INC.,
RISK MANAGEMENT ALTERNATIVES PORTFOLIO SERVICES, LLC,
RMA HOLDINGS LLC,
PURCHASED PAPER LLC,
RISK MANAGEMENT ALTERNATIVES SOLUTIONS LLC
AND
NCOP CAPITAL RESOURCE, LLC
Dated July 6, 2005
TABLE OF CONTENTS
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ARTICLE I DEFINED TERMS...........................................................................................2
1.1 Definitions............................................................................................2
1.2 Certain Rules of Construction..........................................................................2
ARTICLE II PURCHASE AND SALE OF ASSETS............................................................................2
2.1 Acquired and Excluded Assets...........................................................................2
2.2 Assumed and Excluded Liabilities.......................................................................3
2.3 Purchase Price.........................................................................................3
2.4 Purchase Price Adjustments.............................................................................4
2.5 Allocation of Purchase Price...........................................................................8
2.6 Transfer Taxes.........................................................................................8
2.7 Reconciliation and Allocations.........................................................................9
2.8 Payment of Sale Proceeds to Bank Agent.................................................................9
ARTICLE III CONDITIONS TO CLOSING.................................................................................9
3.1 Conditions Precedent to Obligations of the Seller Parties and Purchaser................................9
3.2 Conditions Precedent to the Obligations of Purchaser..................................................10
3.3 Conditions Precedent to Obligations of the Seller Parties.............................................11
ARTICLE IV THE CLOSING...........................................................................................11
4.1 Closing...............................................................................................12
4.2 Deliveries by Seller Parties at Closing...............................................................12
4.3 Deliveries by Purchaser at Closing....................................................................13
ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE SELLER PARTIES...................................................13
5.1 Organization; Standing and Power......................................................................13
5.2 Capital Structure.....................................................................................14
5.3 Authority.............................................................................................14
5.4 Non-Contravention.....................................................................................15
5.5 Corporate Records; Financial Statements; No Adverse Changes...........................................15
5.6 Accounts Receivable...................................................................................16
5.7 Tangible and Intangible Property......................................................................16
5.8 Software and Other Intangibles........................................................................17
5.9 Compliance; Permits...................................................................................18
5.10 Questionable Payments.................................................................................18
5.11 Brokers' and Finders' Fees............................................................................18
5.12 Employees and Independent Contractors.................................................................18
5.13 Environmental Matters.................................................................................19
5.14 Contracts.............................................................................................20
5.15 Real Estate...........................................................................................21
5.16 Clients...............................................................................................22
5.17 Proceedings and Judgments.............................................................................22
5.18 Seller Parties' Obligations...........................................................................22
5.19 Client Trust Accounts Sufficient......................................................................23
5.20 True Copies...........................................................................................23
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5.21 Taxes.................................................................................................23
5.22 No Knowledge of Breach................................................................................23
5.23 Affiliate Transactions................................................................................23
5.24 Portfolio of Accounts.................................................................................23
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF PURCHASER...........................................................24
6.1 Organization..........................................................................................24
6.2 Agreement.............................................................................................24
6.3 Brokers' and Finders' Fees............................................................................24
6.4 Available Funds.......................................................................................24
6.5 No Knowledge of Breach................................................................................25
ARTICLE VII SURVIVAL OF REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS....................................25
7.1 Survival..............................................................................................25
7.2 Interpretation of Representations and Warranties......................................................25
ARTICLE VIII INDEMNIFICATION.....................................................................................25
8.1 Seller Parties' Indemnification.......................................................................25
8.2 Purchaser's Indemnification...........................................................................26
8.3 Payment; Procedure for Indemnification................................................................26
8.4 Limitation on Liabilities.............................................................................27
8.5 Limitation on Indemnification Amount..................................................................27
8.6 Exclusive Remedies....................................................................................28
ARTICLE IX COVENANTS.............................................................................................28
9.1 Access................................................................................................28
9.2 Conduct and Preservation of the Acquired Assets.......................................................28
9.3 Restrictions on Certain Actions of the Seller Parties.................................................29
9.4 Notification..........................................................................................30
9.5 Antitrust and Other Authorizations and Consents.......................................................30
9.6 Publicity.............................................................................................31
9.7 Procedural Orders and Motions.........................................................................31
9.8 Advice of Changes.....................................................................................34
9.9 Confidentiality.......................................................................................34
9.10 Employment Matters....................................................................................35
9.11 WARN Act..............................................................................................38
9.12 2004 Audited Financial Statements.....................................................................38
9.13 Guidelines and Procedures.............................................................................38
9.14 Additional Matters and Further Assurances.............................................................38
ARTICLE X TERMINATION............................................................................................39
10.1 Termination...........................................................................................39
10.2 Procedure and Effect of Termination...................................................................40
ARTICLE XI GENERAL PROVISIONS....................................................................................41
11.1 Notices...............................................................................................41
11.2 Interpretation........................................................................................42
11.3 Counterparts; Facsimile...............................................................................42
11.4 Entire Agreement......................................................................................42
11.5 Severability..........................................................................................42
11.6 Amendments; Waivers...................................................................................43
11.7 Specific Performance..................................................................................43
11.8 Governing Law; Jurisdiction...........................................................................43
11.9 Submission to Jurisdiction............................................................................43
11.10 Rules of Construction.................................................................................43
11.11 Assignment............................................................................................43
11.12 Waiver of Jury Trial..................................................................................44
11.13 Fees and Expenses.....................................................................................44
11.14 Third Party Beneficiary...............................................................................44
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PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT, dated July 6, 2005 (this "Agreement"), is made
among NCOP Capital Resource, LLC, a newly formed Nevada limited liability
company and a wholly owned, indirect subsidiary of NCO Group, Inc.
("Purchaser"), Risk Management Alternatives Parent Corp., a Delaware corporation
("Parent"), and the Subsidiaries, as defined in Annex A hereto. Parent and the
Subsidiaries are referred to herein sometimes individually as a "Seller Party"
and collectively as the "Seller Parties." Each Seller Party and Purchaser, are
referred to herein sometimes individually as a "Party" and collectively as the
"Parties."
RECITALS
WHEREAS, following the execution of this Agreement, the Seller Parties
(other than the Foreign Subsidiaries) will file a voluntary petition for relief
under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court
for the District of Ohio, Youngstown Division (the "Bankruptcy Court"); each
Seller Party (other than the Foreign Subsidiaries) contemplates continuing to
operate its business as a debtor-in-possession;
WHEREAS, Purchaser desires to purchase certain assets and business
operations of Seller Parties as set forth below and assume certain liabilities
from Seller Parties in connection therewith, and Seller Parties desire to sell,
convey, assign and transfer to Purchaser certain of their respective assets
together with certain specified liabilities relating thereto pursuant to the
terms and conditions of this Agreement, including receipt of an order approving
such sale under Sections 105, 363, 365 and 1146 of the Bankruptcy Code;
WHEREAS, Purchaser is a wholly owned, indirect subsidiary of NCO Group,
Inc., a Pennsylvania corporation ("NCO"), and NCO has executed and delivered the
NCO Guarantee in connection with Purchaser's Obligations hereunder, which NCO
Guarantee the Seller Parties are relying upon in connection with their execution
of this Agreement;
WHEREAS, to partially finance the acquisition described herein, NCO has
entered into a financing arrangement with one of the Seller Party's current
creditors, CFSC Capital Corp. XXIV ("CFSC") (or an affiliate thereof), and, in
consideration for the benefits anticipated to inure to CFSC (or an affiliate
thereof) as a result of such arrangement with NCO (or an affiliate thereof),
CFSC is willing to forego a substantial portion of the claim that it would
otherwise have against such Seller Party as a result of the consummation of the
transactions described herein (such settlement by CFSC representing a
substantial economic value to the Seller Parties and their other creditors); and
WHEREAS, as part of the transactions described herein, Purchaser (or,
if directed by Equifax Credit Information Services LLC ("Equifax"), an Affiliate
of Purchaser) shall assume the NEX Lease (as defined herein) and the RMA
Holdings Guaranty (as defined herein), and, in consideration for the benefits
anticipated to inure to Equifax as a result of such assumption, Equifax is
willing to transfer its membership interest in RMA Holdings LLC ("RMA Holdings")
to Parent (such transfer by Equifax representing a substantial economic value to
the Seller Parties and their creditors).
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NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants, and agreements set forth herein, and
intending to be legally bound, the Parties hereto agree as follows:
ARTICLE I
DEFINED TERMS
1.1 Definitions. Capitalized terms used in this Agreement shall have
the meanings set forth in Annex B hereto.
1.2 Certain Rules of Construction.
(a) Any term defined herein in the singular form shall have a
comparable meaning when used in the plural form, and vice versa.
(b) When used herein, unless the context requires otherwise,
the words "hereof," "herein" and "hereunder" and words of similar import shall
refer to this Agreement as a whole and not to any particular provision of this
Agreement.
(c) References to Preambles, Articles, Sections, Schedules,
Exhibits and other subdivisions refer to the Preambles, Articles, Sections,
Schedules, Exhibits and other subdivisions of this Agreement, unless otherwise
expressly provided.
(d) When used herein, the word "includes" and "including" and
their syntactical variants mean "includes, but is not limited to" and
"including, without limitation," and corresponding syntactical variant
expressions.
(e) Unless the context requires otherwise, derivative forms of
any term defined herein shall have a comparable meaning to that of such term.
ARTICLE II
PURCHASE AND SALE OF ASSETS
2.1 Acquired and Excluded Assets.
(a) Subject to the terms and conditions set forth herein, at
the Closing, the Seller Parties shall sell, assign, transfer, convey and deliver
to Purchaser, free and clear of all Liens other than Permitted Liens, and
Purchaser shall purchase and accept from the Seller Parties, free and clear of
all Liens other than Permitted Liens, all of such Seller Parties' right, title
and interest in and to all of the Seller Parties' assets and properties
(including the assets and properties listed in Schedule 2.1(a)(1) and the
Assigned Contracts and Leases set forth in Schedule 2.1(b)), wherever located,
whether real, personal or mixed, and whether a Tangible Property or Intangible
Property (the "Acquired Assets"), other than the assets and properties listed on
Schedule 2.1(a)(2) (the "Excluded Assets"). The Parties expressly agree and
understand that the Seller Parties shall not sell, assign, transfer, convey or
deliver to Purchaser any of the Excluded Assets.
(b) Schedule 2.1(b) sets forth a list of Contracts that
Purchaser wishes to assume and the applicable Seller Party wishes to assign to
Purchaser at Closing ("Assigned Contracts and Leases"); provided, however,
Purchaser may add or remove Contracts (other than the (i) KERP Letters, (ii)
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agreements described in items 4 and 5 of Section 5.5(d) of the Seller Disclosure
Letter, (iii) NEX Lease, (iv) RMA Holdings Guaranty and (v) Xxxxxxxxxx
Agreement, none of which can be removed) from the list of Assigned Contracts and
Leases on Schedule 2.1(b) until a date which is the earlier of (A) three (3)
days before the date of the Auction or (B) five (5) days before the date of the
hearing to consider the Sale Order ("Contract Commitment Date").
(c) If after the Contract Commitment Date, but prior to the
Closing, any Party becomes aware of any Contract that is not an Assigned
Contract and Lease and does not appear on the list of Other Contracts (an
"Undisclosed Contract"), the discovering Party shall within two (2) Business
Days notify the other Parties of such Undisclosed Contract, and Purchaser may
elect, no later than two (2) Business Days prior to the Closing, to include such
Undisclosed Contract as an Assigned Contract and Lease. Notwithstanding the
foregoing, and subject to the Bankruptcy Code, if any Undisclosed Contract is
entered into after the date of the Bidding Procedures Order and such Undisclosed
Contract contains language allowing the applicable Seller Party to assign the
contract to Purchaser, then such Undisclosed Contract may be assigned without
the entry of a Bankruptcy Court order.
2.2 Assumed and Excluded Liabilities. Subject to the terms and
conditions set forth herein, at the Closing, Purchaser shall assume from the
Seller Parties, and thereafter pay, perform, or discharge in accordance with
their terms, the liabilities set forth on Schedule 2.2. The liabilities to be
assumed pursuant to the preceding sentence shall be referred to herein as the
"Assumed Liabilities" and all other liabilities and Obligations of the Seller
Parties shall be referred to herein as the "Excluded Liabilities."
Notwithstanding anything contained in this Agreement to the contrary, Purchaser
is not assuming or agreeing to pay, satisfy, discharge or perform, and shall not
be deemed by virtue of the execution and delivery of this Agreement or any
document delivered at the Closing pursuant to this Agreement, or as a result of
the consummation of the transactions contemplated by this Agreement, to have
assumed, or to have agreed to pay, satisfy, discharge or perform, any liability,
Obligation or indebtedness of any Seller Party, whether primary or secondary,
direct or indirect, other than the Assumed Liabilities. Seller Parties shall
retain all of the Excluded Liabilities. Without limiting the foregoing, the
Seller Parties shall be responsible for paying any and all Cure-Amounts
necessary to assume and assign the Assigned Contracts and Leases to Purchaser.
2.3 Purchase Price.
(a) In consideration for the transfer of the Acquired
Business, Purchaser shall pay an amount equal to $118,800,000 (the "Base
Amount") plus or minus any adjustments to the Base Amount made pursuant to this
Agreement (such amount, together with the Assumed Liabilities, the "Purchase
Price"). The Base Amount, as adjusted, shall be payable by Purchaser as follows:
(i) within one (1) Business Day after the Bidding Procedures Order has been
entered, provided such Bidding Procedure Order shall not have been, and shall
not then remain, stayed, Purchaser shall pay an amount equal to $7,500,000 (the
"Deposit Amount") by wire transfer of immediately available funds into an escrow
account (the "Escrow Account") pursuant to an escrow agreement to be entered
into by Purchaser and Parent in connection therewith and substantially in the
form of Exhibit 2.3 attached hereto (the "Escrow Agreement"); (ii) on the
Closing Date, Purchaser and Parent shall cause $2,500,000 (plus any interest
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accrued on the Deposit Amount) from the Escrow Account to be remitted in
immediately available funds to Parent, or as otherwise directed by Parent (as
agent for both Parent and the Subsidiaries); and (iii) on the Closing Date,
Purchaser shall pay by wire transfer of immediately available funds to Parent,
or as otherwise directed by Parent (as agent for both Parent and the
Subsidiaries) (A) the remainder of the Base Amount (i.e., the Base Amount less
the Deposit Amount (and any interest accrued on the Deposit Amount)), (B) plus
or minus the Estimated WC Adjustment in accordance with the provisions set forth
in Section 2.4(b)(ii) hereof, (C) minus the Estimated Revenue Adjustment Amount,
if any, and (D) minus the Portfolio Collections Amount, if any (the aggregate
result of the foregoing, the "Closing Payment").
(b) Prior to the Closing Date, the Deposit Amount shall be
retained in the Escrow Account in accordance with the terms of this Agreement
and the Escrow Agreement. After the Closing, $5,000,000 of the Deposit Amount
(the "Post-Closing Escrow Amount") shall be retained in the Escrow Account in
accordance with the terms of the Escrow Agreement. After the adjustments, if
any, pursuant to Sections 2.4(b), 2.4(c) and 2.4(d) are final in accordance with
the terms herein, $4,000,000 of the Post-Closing Escrow Amount (the "PPA
Amount"), or, if any amounts are due Purchaser pursuant to any of Sections
2.4(b), 2.4(c) or 2.4(d), then $4,000,000 less any such amounts paid Purchaser,
shall be released to the Seller Parties in accordance with the terms of the
Escrow Agreement. After the application of the foregoing sentence, the remaining
$1,000,000 of the Post-Closing Escrow Amount (the "Indemnity Amount") shall be
retained in the Escrow Account until the date that is six (6) months following
the Closing Date. After the date that is six (6) months following the Closing
Date, Indemnity Amount will be released to the Seller Parties in accordance with
the terms of the Escrow Agreement.
2.4 Purchase Price Adjustments.
(a) Portfolio Collections Adjustment. In the event the Closing
Date shall be on or after August 1, 2005, the Purchase Price shall be reduced,
dollar for dollar, for all portfolio collections received in respect of the
Accounts by any Seller Parties on or after August 1, 2005, net of (i) related
servicing fees charged by any Seller Parties pursuant to agreements set forth on
Schedule 2.4(a) to the Seller Disclosure Letter and consistent with past
practice and (ii) other administrative costs incurred consistent with past
practice (such result, the "Portfolio Collections Amount"). Any reduction to the
Purchase Price in accordance with this Section 2.4(a) shall be made, to the
extent then determinable, at the Closing as an adjustment to the Closing
Payment, or to the extent not determinable as of the Closing, promptly following
the determination thereof, with such payments paid by the Seller Parties to
Purchaser. In connection with the foregoing, the books and records of the Seller
Parties shall be closed as of July 31, 2005 in a manner consistent with past
practice.
(b) Working Capital Adjustment.
(i) Prior to Closing, Parent shall prepare and
deliver to Purchaser an estimated statement of the Working Capital as of the
Closing Date (the "Pre-Closing Statement"). The Pre-Closing Statement shall be
prepared by Seller Parties in good faith.
(ii) Based upon the Pre-Closing Statement, the amount
paid to the Seller Parties at Closing shall be: (A) decreased, dollar for
dollar, by the amount by which Working Capital in the Pre-Closing Statement
("Estimated WC") is less than the Minimum WC, or (B) increased, dollar for
dollar, by the amount by which the Estimated WC is more than the Minimum WC (the
adjustment provided for by clauses (A) and (B) is referred to as the "Estimated
WC Adjustment"). The "Minimum WC" shall equal Ten Million One Hundred Forty
Three Thousand Dollars ($10,143,000).
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(iii) Within sixty (60) Business Days after Closing,
Parent shall prepare and deliver to Purchaser a statement (the "Closing
Statement") of Working Capital as of the Closing Date. The Closing Statement
shall be prepared by Parent in good faith.
(iv) After receipt of the Closing Statement,
Purchaser (including its advisors), shall have ten (10) Business Days to review
it together with the work papers used in the preparation thereof. Unless
Purchaser delivers written notice to Parent on or prior to the tenth Business
Day after Purchaser's receipt of the Closing Statement stating that it has
objections thereto, Purchaser shall be deemed to have accepted and agreed to the
Closing Statement. If, however, Purchaser notifies Parent of objections to the
Closing Statement on or prior to the tenth Business Day after Purchaser's
receipt of the Closing Statement, Purchaser and Parent shall, within twenty (20)
Business Days (or such longer period as may be agreed in writing) following such
notice (the "Resolution Period"), attempt in good faith to resolve their
differences with respect to such objections, and any resolution by them as to
any disputed amounts shall, subject to the provisions of the Bankruptcy Code, be
final, binding and conclusive.
(v) If Purchaser and Parent are unable to resolve any
such disputed items within the Resolution Period, then such Parties shall submit
the remaining disputed items (and only those items) for determination and
resolution to (x) FTI Consulting Inc. or (y) in the event FTI Consulting Inc. is
no longer in the financial analysis business at such time, a mutually acceptable
consulting firm with expertise in financial analysis. If FTI Consulting Inc. is
no longer in the financial analysis business at such relevant time and Purchaser
and Parent are unable to agree on the choice of a consulting firm with expertise
in financial analysis, they will select a nationally or regionally recognized
consulting firm with expertise in financial analysis by lot after each of
Purchaser and Parent have submitted two proposed firms, and then excluded one
firm selected by the other. FTI Consulting Inc. (or any other firm selected
pursuant to the foregoing) shall be referred to herein as the "Arbiter." The
Arbiter shall be instructed to determine the disputed items and report to
Purchaser and Parent within thirty (30) days after such submission. Upon
determination by the Arbiter of the disputed items, its report shall be final,
binding and conclusive on the Parties with respect to such matter. The fees and
expenses of the Arbiter shall be allocated between Purchaser and Parent based on
the percentage which the portion of the contested amount not awarded to each
Party bears to the amount actually contested by such Party. For example, if
Parent claims Working Capital is $1,000 greater than the amount determined by
Purchaser, and Purchaser contests only $500 of the amount claimed by Parent, and
if the Arbiter ultimately resolves the dispute by awarding the Seller Parties
$300 of the $500 contested, then the costs and expenses of the Arbiter will be
allocated 60% (i.e., 300 / 500) to Purchaser and 40% (i.e., 200 / 500) to
Parent.
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(vi) Within two (2) Business Days of the Closing
Statement being finalized in accordance with this Section 2.4(b) (as so
finalized, the "Final Closing Statement"), Purchaser shall prepare and deliver
to the Seller Parties a statement ("Statement of Adjustments") which details the
Working Capital based on the Final Closing Statement (the "Final WC") and any
amounts due by the Parties pursuant to Sections 2.4(b)(vii) through (x) hereof.
(vii) If the Final WC is less than the Estimated WC
and the Estimated WC was less than Minimum WC, then Purchaser shall submit a
claim for the amount by which the Final WC is less than the Estimated WC against
the PPA Amount, if any, then being held pursuant to the Escrow Agreement. If the
PPA Amount is insufficient to cover the amounts due under this Section
2.4(b)(vii), then the Seller Parties shall pay to Purchaser such amounts due
under this Section 2.4(b)(vii) and not covered by the PPA Amount. Any payment
under this Section 2.4(b)(vii) shall be made within two (2) Business Days after
the Statement of Adjustments is delivered to Parent in accordance with this
Section 2.4(b).
(viii) If the Final WC is less than the Estimated WC
and the Estimated WC was more than Minimum WC, then Purchaser shall submit a
claim for the amount by which the Final WC is less than the Estimated WC against
the PPA Amount, if any, then being held pursuant to the Escrow Agreement. If the
PPA Amount is insufficient to cover the amounts due under this Section
2.4(b)(viii), then the Seller Parties shall pay to Purchaser such amounts due
under this Section 2.4(b)(viii) and not covered by the PPA Amount. Any payment
under this Section 2.4(b)(viii) shall be made within two (2) Business Days after
the Statement of Adjustments is delivered to Parent in accordance with this
Section 2.4(b).
(ix) If the Final WC is more than the Estimated WC
and the Estimated WC was less than Minimum WC, then Purchaser shall pay to
Seller Parties an amount equal to the amount by which the Final WC is more than
the Estimated WC. Any payment under this Section 2.4(b)(ix) shall be made within
two (2) Business Days after the Statement of Adjustments is delivered to Parent
in accordance with this Section 2.4(b).
(x) If the Final WC is more than the Estimated WC and
the Estimated WC was more than Minimum WC, then Purchaser shall pay to Seller
Parties an amount equal to the amount by which the Final WC is more than the
Estimated WC. Any payment under this Section 2.4(b)(x) shall be made within two
(2) Business Days after the Statement of Adjustments is delivered to Parent in
accordance with this Section 2.4(b).
(xi) During the preparation of the Pre-Closing
Statement and Closing Statement and the period of any review or dispute within
the contemplation of this Section 2.4(b), each of the Parties shall (i) provide
the other and their authorized representatives (including their respective
auditors) with reasonable access at reasonable times, and in a manner so as not
to interfere in any material respect with normal business operations, to all
relevant books, records, work papers, information and employees, and (ii)
cooperate fully for the preparation, calculation and reviews of the Pre-Closing
Statement and Closing Statement or for the resolution of any dispute relating
thereto.
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(c) Revenue Adjustment.
(i) Prior to Closing, Parent shall prepare and
deliver to Purchaser a good faith estimate of the Revenue Adjustment Amount as
of the Closing Date (the "Estimated Revenue Adjustment Amount").
(ii) Within sixty (60) Business Days after Closing,
Parent shall prepare and deliver to Purchaser a good faith calculation of the
Revenue Adjustment Amount (the "Revenue Calculation").
(iii) After Purchaser's receipt of the Revenue
Calculation, the Revenue Adjustment Amount shall be finalized by utilizing the
same procedures and mechanics used to finalize Working Capital pursuant to
Sections 2.4(b)(iv) and (v) above.
(iv) If the Revenue Adjustment Amount as finally
determined is more than the Estimated Revenue Adjustment Amount, then Purchaser
shall submit a claim for such excess against the PPA Amount, if any, then being
held pursuant to the Escrow Agreement. If the PPA Amount is insufficient to
cover the amounts due under this Section 2.4(c)(iv), then the Seller Parties
shall pay to Purchaser such amounts due under this Section 2.4(c)(iv) and not
covered by the PPA Amount. Any payment under this Section 2.4(c)(iv) shall be
made within two (2) Business Days after the claim therefor is delivered to
Parent in accordance with this Section 2.4(c)(iv).
(v) If the Revenue Adjustment Amount as finally
determined is less than the Estimated Revenue Adjustment Amount, then Parent
shall submit a claim to Purchaser for the amount equal to the amount by which
the Estimated Revenue Adjustment Amount is more than the Revenue Adjustment
Amount. Any payment under this Section 2.4(c)(v) shall be made within two (2)
Business Days after the claim therefor is delivered to Purchaser in accordance
with this Section 2.4(c)(v).
(vi) During the preparation of the Revenue
Calculation and the period of any review or dispute within the contemplation of
this Section 2.4(c), each of the Parties shall (i) provide the other and their
authorized representatives (including their respective auditors) with reasonable
access at reasonable times, and in a manner so as not to interfere in any
material respect with normal business operations, to all relevant books,
records, work papers, information and employees, and (ii) cooperate fully for
the preparation, calculation and reviews of the Revenue Calculation or for the
resolution of any dispute relating thereto.
(d) Excess Trust Cash.
(i) Within seven (7) Business Days after the Closing
Date, Purchaser shall pay to Parent its good faith estimate of the Excess Trust
Cash as of the Closing Date (the "Estimated Excess Trust Cash").
(ii) Within sixty (60) Business Days after Closing,
Purchaser shall prepare and deliver to Parent a good faith calculation of actual
Excess Trust Cash (the "Excess Trust Cash Calculation").
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(iii) After Parent's receipt of the Excess Trust Cash
Calculation, the amount of Excess Trust Cash shall be finalized by utilizing the
same procedures and mechanics used to finalize Working Capital pursuant to
Sections 2.4(b)(iv) and (v) above (although the roles of Parent and Purchaser
described therein shall be reversed for this purpose).
(iv) If the Excess Trust Cash as finally determined
is less than the Estimated Excess Trust Cash, then Purchaser shall submit a
claim for such difference against the PPA Amount, if any, then being held
pursuant to the Escrow Agreement. If the PPA Amount is insufficient to cover the
amounts due under this Section 2.4(d)(iv), then the Seller Parties shall pay to
Purchaser such amounts due under this Section 2.4(d)(iv) and not covered by the
PPA Amount. Any payment under this Section 2.4(d)(iv) shall be made within two
(2) Business Days after the claim therefor is delivered to Parent in accordance
with this Section 2.4(d)(iv).
(v) If the Excess Trust Cash as finally determined is
more than the Estimated Excess Trust Cash, then Parent shall submit a claim to
Purchaser for the amount equal to the amount by which the Excess Trust Cash is
more than the Estimated Excess Trust Cash. Any payment under this Section
2.4(d)(v) shall be made within two (2) Business Days after the claim therefor is
delivered to Purchaser in accordance with this Section 2.4(d)(v).
(vi) During the preparation of the Excess Trust Cash
Calculation and the period of any review or dispute within the contemplation of
this Section 2.4(d), each of the Parties shall (i) provide the other and their
authorized representatives (including their respective auditors) with reasonable
access at reasonable times, and in a manner so as not to interfere in any
material respect with normal business operations, to all relevant books,
records, work papers, information and employees, and (ii) cooperate fully for
the preparation, calculation and reviews of the Excess Trust Cash Calculation or
for the resolution of any dispute relating thereto.
2.5 Allocation of Purchase Price. The Purchase Price and Assumed
Liabilities shall be allocated among the Acquired Assets for tax purposes in
accordance with an allocation schedule to be mutually agreed between the Seller
Parties and Purchaser after the Closing Date; provided that Purchaser shall,
after consultation with the Seller Parties have the discretion to determine the
allocation to the Accounts; provided further that, if the Seller Parties and
Purchaser are unable to agree on such allocation schedule in accordance with
Section 1060 of the Code and regulations promulgated thereunder (other than with
respect to Purchaser's allocation to the Accounts), such disagreement shall be
submitted to a third party arbiter for resolution. Purchaser and the Seller
Parties, on behalf of themselves and their respective Affiliates, hereby agree
to file within 90 days after the Closing Date IRS Form 8594 based on the
allocations set forth in such schedule, and if an adjustment is made with
respect to the Purchase Price the allocation schedule shall be adjusted in
accordance with Section 1060 of the Code and regulations promulgated thereunder
and as mutually agreed by Purchaser and the Seller Parties and Purchaser and
Seller Parties agree to file any additional information return required to be
filed pursuant to Section 1060 of the Code.
2.6 Transfer Taxes. The Seller Parties and Purchaser shall each pay
one-half of any sales, use, transfer, recording or similar Taxes with respect to
real or personal property due as a result of the transactions provided for
herein. The Parties will reasonably cooperate in timely making all filings,
returns, reports and forms necessary or appropriate to comply with the
provisions of all applicable laws in connection with the payment of such Taxes
and to minimize such Taxes, including requesting that the provisions of Section
1146(c) of the Bankruptcy Code apply to the transactions provided for herein.
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2.7 Reconciliation and Allocations.
(a) Beginning on the Closing Date, all payments received by
the Seller Parties on account of Accounts Receivable and all other payments
received by the Seller Parties which are properly allocable to the conduct of
the Acquired Business, other than relating to Excluded Assets, shall be held in
trust for Purchaser and shall be promptly paid to Purchaser. On the last day of
each month during the six (6) month period beginning on the Closing Date, the
Seller Parties shall report to Purchaser the amounts of such payments and the
amount shall be paid promptly by the Seller Parties to Purchaser. After such six
(6) month period, the Seller Parties shall cooperate with Purchaser to allocate
and remit to Purchaser any Account Receivables collected, and shall continue to
hold such payments in trust for Purchaser and remit them periodically as
received.
(b) Beginning on the Closing Date, all payments received by
Purchaser on account of any Excluded Asset shall be held in trust for the Seller
Parties and shall be promptly paid to Parent.
2.8 Payment of Sale Proceeds to Bank Agent.
To the extent provided in any debtor-in-possession financing order (the "DIP
Financing Order"), the Sale Order, or any other order entered by the Bankruptcy
Court, any and all amounts payable to any of or all of the Seller Parties
pursuant to this Agreement, the Escrow Agreement, or any other agreement,
instrument or document executed in connection herewith shall (notwithstanding
that this Agreement or any of the above-referenced agreements, instruments or
documents specifies such payment is to be made to any or all of the Seller
Parties) be remitted directly to Xxxxxx Financial, Inc. ("Bank Agent"), as Agent
pursuant to, and as defined in, that certain Amended and Restated Credit
Agreement dated as of September 25, 2002, as amended, by and among certain
Seller Parties, Xxxxxx Financial, Inc., in its individual capacity as a Lender
and as Bank Agent for all Lenders, and the other financial institutions parties
thereto as Lenders (the "Loan Agreement"), for application to the "Obligations"
(as defined therein), and each of the Seller Parties hereby authorizes and
directs Purchaser to remit any and all such payments directly to the Bank Agent.
ARTICLE III.
CONDITIONS TO CLOSING
3.1 Conditions Precedent to Obligations of the Seller Parties and
Purchaser. The respective obligations of each Party to effect the transactions
contemplated by this Agreement shall be subject to the satisfaction or waiver at
or prior to the Closing of the following conditions precedent:
(a) The Bankruptcy Court shall have entered the Bidding
Procedures Order and such order shall be a Final Order;
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(b) The Bankruptcy Court shall have entered the Sale Order and
such order shall be a Final Order;
(c) Any waiting periods (and any extensions thereof)
applicable to this Agreement and the transactions contemplated hereby under the
HSR Act shall have expired or been terminated;
(d) no action, suit or Proceeding (including any Proceeding
over which the Bankruptcy Court or any other court that has jurisdiction) shall
be pending by any Governmental Body to enjoin, restrain, prohibit or obtain
substantial damages or significant equitable relief in respect of or related to
the transactions contemplated by this Agreement, or that would be reasonably
expected to prevent or make illegal the consummation of the transactions
contemplated by this Agreement; and
(e) there shall not be in effect any Law of any Governmental
Body of competent jurisdiction restraining, enjoining or otherwise preventing
consummation of the transactions contemplated by this Agreement.
If the Closing occurs, all closing conditions set forth in
this Section 3.1 which have not been fully satisfied as of the Closing shall be
deemed to have been fully waived by the Seller Parties and Purchaser.
3.2 Conditions Precedent to the Obligations of Purchaser. The
obligation of Purchaser to effect the transactions contemplated by this
Agreement shall be subject to the satisfaction or waiver at or prior to the
Closing of the following additional conditions precedent:
(a) The representations and warranties of the Seller Parties
contained in this Agreement shall be true and correct at and as of the Closing
Date (without giving any effect to any materiality or Material Adverse Effect
qualifications contained therein), except for changes permitted by this
Agreement and except for those representations and warranties that address
matters as of particular dates which shall be true and correct at and as of such
particular dates (without giving any effect to any materiality or Material
Adverse Effect qualifications contained therein), except where the failure of
such representations and warranties to be so true and correct would not have a
Material Adverse Effect;
(b) All of the covenants and agreements to be complied with or
performed by the Seller Parties on or prior to the Closing Date shall have been
complied with or performed in all material respects;
(c) Purchaser shall have received each of the certificates,
agreements, instruments and other documents set forth in Section 4.2 hereof;
(d) Except as set forth on Schedule 3.2(d), all Liens (except
Permitted Liens) on the stock or assets of the Foreign Subsidiaries shall have
been discharged (including for this purpose any Liens of the Bank Agent) by each
Foreign Subsidiary, as appropriate, or by the Person in whose favor such Liens
exist, at no expense to Purchaser; provided that, for purposes of this
condition, Liens the existence of which would not have a Material Adverse Effect
shall be disregarded; and
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(e) Since the date hereof, no Material Adverse Effect shall
have occurred.
If the Closing occurs, all closing conditions set forth in
this Section 3.2 which have not been fully satisfied as of the Closing shall be
deemed to have been fully waived by Purchaser.
3.3 Conditions Precedent to Obligations of the Seller Parties. The
obligation of the Seller Parties to effect the transactions contemplated by this
Agreement shall be subject to the satisfaction or waiver at or prior to the
Closing of the following additional conditions precedent:
(a) The representations and warranties of Purchaser contained
in this Agreement shall be true and correct in all material respects at and as
of the Closing Date as if made at and as of such date, except for changes
permitted by this Agreement and except for any such representation and warranty
which is itself qualified as to material adverse effect, materiality or similar
qualifier, in which case such representation or warranty must be true and
correct in all respects (provided that any representation and warranty that
addresses matters only as of a certain date shall be so true and correct as of
that certain date);
(b) All of the covenants and agreements to be complied with
and performed by Purchaser on or prior to the Closing Date shall have been
complied with or performed in all material respects;
(c) Risk Management Alternatives Portfolio Services, LLC
("RMAPS") shall have received a payoff letter from CFSC pursuant to which, among
other customary provisions, CFSC shall evidence RMAPS' full satisfaction of all
of the obligations owed by RMAPS to CFSC; provided that the payoff portion of
the amount contained in such letter relating to the full satisfaction of any
"Contingent Payments" owed to CFSC shall not exceed $4,000,000;
(d) RMA Holdings shall have entered into a settlement
agreement with Equifax pursuant to which Equifax shall transfer to Parent, on or
prior to the Closing Date all of its Class B Membership Interest in RMA
Holdings; and
(e) Purchaser (or, if directed by Equifax, an Affiliate of
Purchaser) shall have assumed the NEX Lease and the RMA Holdings Guaranty.
(f) The Seller Parties shall have received each of the
certificates, agreements, instruments and other documents set forth in Section
4.3 hereof.
If the Closing occurs, all closing conditions set forth in
this Section 3.3 which have not been fully satisfied as of the Closing shall be
deemed to have been fully waived by the Seller Parties.
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ARTICLE IV
THE CLOSING
4.1 Closing. Subject to the satisfaction or waiver of the conditions
set forth in this Agreement, the consummation of the transactions contemplated
hereby (the "Closing") shall take place at the offices of Blank Rome LLP, Xxx
Xxxxx Xxxxxx, Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000 at 10:00 a.m., Philadelphia time
one (1) Business Day following the satisfaction or waiver of all conditions
precedent to the Closing (the "Closing Date"). Notwithstanding anything
contained herein to the contrary, the Closing shall be effective for all
purposes as of 12:01 a.m. Philadelphia time, on the Closing Date.
4.2 Deliveries by Seller Parties at Closing. At the Closing, the Seller
Parties shall deliver to Purchaser:
(a) one or more mutually agreeable and customary bills of sale
and assignment (the "Bills of Sale") with respect to the Acquired Assets to be
conveyed by the Seller Parties at the Closing, duly executed by Parent and each
Subsidiary, as applicable;
(b) one or more mutually agreeable and customary assignment
and assumption agreements (the "Assignment and Assumption Agreements") with
respect to the Assigned Contracts and Leases (including those specifically
identified by name in Section 2.1(b) above), security deposits and prepaid rents
related to the Acquired Leased Real Property, duly executed by Parent and each
Subsidiary, as applicable;
(c) a certificate executed on behalf of Parent and each of the
Subsidiaries by the secretary, assistant secretary or other authorized signatory
of each entity, as applicable, dated the Closing Date, certifying and attaching
(i) good standing certificates for each of Parent and the Subsidiaries, dated no
earlier than 15 days before the Closing Date, from its respective jurisdiction
of incorporation, (ii) authorizing resolutions of each entity's respective board
of directors (or equivalent) associated with the approval of the transactions
contemplated hereby and (iii) specimen signatures of the officers or other
authorized signatories of each entity authorized to execute the agreements and
documents contemplated hereby, on behalf of each such entity;
(d) a certificate, dated the Closing Date, in form and
substance reasonably satisfactory to Purchaser, executed on behalf of each
Seller Party by an authorized executive officer or other authorized signatory of
each such entity, certifying that the conditions specified in Section 3.2(a) and
Section 3.2(b) have been fulfilled;
(e) all outstanding stock certificates of Risk Management
Alternatives International Limited and Risk Management Alternatives
International Corp. Canada (collectively, the "Foreign Subsidiaries") which are
being sold hereunder together with duly executed stock powers in blank;
(f) a Transition Services Agreement, substantially in the form
set forth on Exhibit 4.2(f) ("Transition Services Agreement"), dated the Closing
Date, and duly executed by Parent and the Subsidiaries;
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(g) an affidavit executed by the Seller Parties (other than
the Foreign Subsidiaries) of non-foreign status that complies with Section 1445
of the Internal Revenue Code of 1986, as amended;
(h) Purchaser shall have received all third party Consents, if
any, necessary for the transfer of the capital stock of the Foreign
Subsidiaries; and
(i) an unaudited consolidated balance sheet of Parent and the
Subsidiaries as of June 30, 2005 and the related statement of income for the
six-month period then ended.
4.3 Deliveries by Purchaser at Closing. At the Closing, Purchaser shall
deliver to the Seller Parties:
(a) the Closing Payment in accordance with Section 2.3(a) by
wire transfer of immediately available funds to an account or accounts
designated by Parent;
(b) a certificate executed on behalf of Purchaser by the
secretary or assistant secretary of Purchaser, dated the Closing Date,
certifying and attaching (i) good standing certificates for Purchaser, dated no
earlier than 15 days before the Closing Date, from its jurisdiction of
incorporation, (ii) authorizing resolutions of Purchaser's board of directors
associated with the approval of the transactions contemplated hereby and (iii)
specimen signatures of the officers of Purchaser authorized to execute the
agreements and documents contemplated hereby, on behalf of Purchaser;
(c) a certificate, dated as of the Closing Date, executed on
behalf of Purchaser by an authorized executive officer of Purchaser, certifying
that the conditions specified in Section 3.3(a) and Section 3.3(b) have been
fulfilled;
(d) the Assignment and Assumption Agreements, duly executed by
Purchaser; and
(e) a Transition Services Agreement, dated the Closing Date,
and duly executed by Purchaser.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE SELLER PARTIES
Knowing that Purchaser is relying thereon, Parent and the Subsidiaries,
jointly and severally, represent and warrant to Purchaser, except as otherwise
set forth in writing in the disclosure letter supplied by the Seller Parties to
Purchaser dated as of the date hereof which disclosure letter shall provide an
exception to or otherwise qualify the representations or warranties of Parent
and the Subsidiaries (the "Seller Disclosure Letter"), as follows:
5.1 Organization; Standing and Power. Parent and each of the
Subsidiaries is a corporation or other organization duly organized, validly
existing and in good standing under the laws of the jurisdiction of their
respective states of incorporation or organization. Parent and the Subsidiaries
possess the full power and authority: (i) to own, lease and use their assets and
properties in the manner in which such assets are currently owned and used, and
(ii) to conduct their businesses as such businesses are currently being
conducted. Parent and the Subsidiaries are duly qualified or registered to do
business in each jurisdiction where such qualification or registration is
required by applicable Law. Parent and the Subsidiaries are in good standing in
each of the jurisdictions where they are required by law to be qualified or
registered to do business. Other than the Subsidiaries, Parent does not own any
securities in any corporation or other organization, whether incorporated or
unincorporated.
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5.2 Capital Structure.
(a) Section 5.2 of the Seller Disclosure Letter sets forth the
authorized capital stock of each Foreign Subsidiary, including the type of
shares authorized, the par value per share and the number of each type of shares
that are issued and outstanding. Section 5.2 of the Seller Disclosure Letter
contains an accurate and complete list of: (i) the full names of all holders of
the capital stock of each Foreign Subsidiary and (ii) the numbers of shares,
type of shares owned of record by such stockholders identified in (i) above. For
each of the stockholders identified in (i) above, (A) he, she or it is the sole
record owner of his, her or its shares of capital stock as set forth in Section
5.2 of the Seller Disclosure Letter next to such stockholder's name (the
"Shares"); (B) the Shares are the only shares of the capital stock of the
applicable Foreign Subsidiary held of record by such stockholder; (C) such
stockholder has the ability to vote all of the Shares at any meeting of the
stockholders of the applicable Foreign Subsidiary, or by written consent in lieu
of any such meeting; and (D) such stockholder has not appointed or granted any
proxy or entered into any agreement, contract, commitment or understanding with
respect to any of the Shares.
(b) All of the outstanding shares of capital stock of the
Foreign Subsidiaries are validly issued. There are no options, preemptive
rights, calls, subscriptions, commitments, warrants, convertible securities,
stockholder agreements or other instruments, understandings, or agreements
outstanding giving any Person the right to acquire any shares of capital stock
of the Foreign Subsidiaries, nor are there any commitments to issue or execute
any of the foregoing.
(c) Except as set forth in Section 5.2 of the Seller
Disclosure Letter, all of the issued shares of capital stock of the Foreign
Subsidiaries are owned directly by Holdings, free and clear of all Liens. None
of the outstanding shares of capital stock of the Foreign Subsidiaries has been
issued in violation of any preemptive rights of any security holder or in
violation of the Securities Act of 1933, as amended, applicable state securities
laws or other Law.
5.3 Authority. Parent and the Subsidiaries have all requisite power and
authority to enter into this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
by all necessary action on the part of Parent and the Subsidiaries and no other
proceedings on the part of Parent or the Subsidiaries are necessary to authorize
the execution and delivery of this Agreement or to consummate the transactions
contemplated hereby. This Agreement has been duly executed and delivered by
Parent and the Subsidiaries and, assuming the due authorization, execution and
delivery by the other parties hereto, constitutes the legal, valid and binding
obligation of Parent and the Subsidiaries, enforceable against such parties in
accordance with its terms.
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5.4 Non-Contravention. Assuming the satisfaction of the conditions set
forth in Article III, no Consent of, or filing with or notification to, any
Governmental Body is required to be made or obtained by Parent or the
Subsidiaries in connection with the execution, delivery, and performance of this
Agreement and the consummation of the transactions contemplated hereby except
(i) approvals of the Bankruptcy Court, and (ii) where the failure to obtain such
Consents, approvals, authorizations or permits, or to make such filings or
notifications would not prevent or materially delay the consummation by Parent
and the Subsidiaries of the transactions contemplated by this Agreement. With
respect to each Seller Party, except as set forth in Section 5.4 of the Seller
Disclosure Letter, neither the execution, delivery, or performance of this
Agreement by such entity, nor the consummation of the transactions contemplated
hereby by such entity, nor compliance with any of the provisions hereof by such
entity, will (A) conflict with or result in any breach of any provisions of the
certificate of incorporation or bylaws of such entity, (B) result in a violation
or breach of, or constitute (with or without due notice or lapse of time) a
default (or give rise to any right of termination, cancellation, acceleration,
vesting, payment, exercise, suspension, or revocation) under any of the terms,
conditions, or provisions of any Material Contract, bond, security interest,
indenture, plan, or other instrument or obligation to which such entity is a
party or by which such entity or its properties or assets may be bound or
affected (other than (i) as a result of the proceedings before the Bankruptcy
Court, (ii) any violation, breach or default relating to any anti-assignment
clause that is unenforceable in the Seller Parties' bankruptcy cases or (iii)
any violation, breach or default that will be cured in connection with the
assumption and assignment of such agreement or other document to Purchaser), (C)
violate in any material respect any order, writ, injunction, decree, statute,
rule, or regulation applicable to such entity or its properties or assets or (D)
result in the creation or imposition of any Lien on any asset of such entity.
The Foreign Subsidiaries make the representations in the prior sentence,
however, the qualifying term "in any material respect" in Clause C shall not
apply to the representations made by each Foreign Subsidiary.
5.5 Corporate Records; Financial Statements; No Adverse Changes.
(a) Except as set forth in Section 5.5(a) of the Seller
Disclosure Letter, the books and records of Parent and the Subsidiaries are and
have been properly prepared and maintained in all material respects in form and
substance adequate for preparing audited financial statements in accordance with
GAAP. Section 5.5(a) of the Seller Disclosure Letter 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 Client Trust Accounts are maintained and the names of all
officers, employees or other individuals who have access thereto or who are
authorized to make withdrawals therefrom or dispositions thereof.
(b) Attached to Section 5.5(b) of the Seller Disclosure Letter
are accurate and complete copies of the following audited consolidated financial
statements ("Audited Financial Statements") of Parent and the Subsidiaries on a
consolidated basis: a balance sheet as of the fiscal years ended December 31,
2003 and December 31, 2002 and related statements of income for the fiscal years
then ended, and notes thereto. Attached to Section 5.5(b) of the Seller
Disclosure Letter are accurate and complete copies of all the following
15
unaudited consolidated financial statements ("Unaudited Financial Statements")
of Parent and the Subsidiaries: (i) a balance sheet as of the fiscal year ended
December 31, 2004 and the related statement of income for the fiscal year then
ended and (ii) a balance sheet as of April 30, 2005 and the related statement of
income for the four-month period then ended. All of the Audited Financial
Statements (A) were prepared in accordance with GAAP; (B) fairly present in all
material respects the financial condition and results of operations of Parent
and the Subsidiaries (taken as a whole) as of the dates and for the periods
indicated; and (C) were audited by independent auditors, whose reports thereon
are without qualification or explanatory paragraphs. Except as set forth in
Section 5.5(b) of the Seller Disclosure Letter, all of the Unaudited Financial
Statements (I) were prepared in accordance with GAAP except for the absence of
full footnote disclosure and year-end adjustments and (II) fairly present in all
material respects the financial condition and results of operations of Parent
and the Subsidiaries as of the dates and for the periods indicated. Except as
set forth in Section 5.5(b) of the Seller Disclosure Letter, none of Parent or
any of the Subsidiaries guarantee any Obligation of any Person.
(c) Except as and to the extent reflected on or fully reserved
against in, the consolidated balance sheet of Parent and the Subsidiaries at
April 30, 2005, or as set forth on Section 5.5(c) of the Seller Disclosure
Letter, the Foreign Subsidiaries have no liabilities or Obligations, whether
direct or indirect, matured or unmatured, contingent or otherwise, in each case
of the type required to be reflected on, or reserved against in, the
consolidated balance sheet of Parent and the Subsidiaries in accordance with
GAAP, except for liabilities or Obligations that were incurred consistently with
past business practice in or as a result of the normal and ordinary course of
business of such Foreign Subsidiaries since April 30, 2005.
(d) Operations Since January 1, 2005. From January 1, 2005 to
the date of this Agreement, except as set forth in Section 5.5(d) of the Seller
Disclosure Letter, the Seller Parties have conducted their businesses in the
ordinary course of its business consistent with past practices. From January 1,
2005 to the date of this Agreement, except as set forth in Section 5.5(d) of the
Seller Disclosure Schedule, none of Parent or the Subsidiaries have (i) created
or assumed any Lien (other than any Permitted Lien) upon any of the Acquired
Assets, (ii) purchased, leased, sold, abandoned or otherwise acquired or
disposed of any part of the Acquired Business or the Acquired Assets; (iii)
waived any material right or canceled any material debt or claim on behalf of or
relating to the Acquired Business; (iv) assumed or entered into any Contract on
behalf of or relating to the sale of the Acquired Business other than with
Purchaser; or (v) 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 Acquired Business.
5.6 Accounts Receivable. All Accounts Receivable of Parent and each of
the Subsidiaries arose in the ordinary course of business. Except as set forth
in Section 5.6 of the Seller Disclosure Letter, there are no refunds, discounts,
rights of setoff or assignments affecting any such Accounts Receivable. Proper
amounts of deferred revenues appear on the books and records of Parent and each
of the Subsidiaries, in accordance with GAAP, with respect to all of Parent's
and the Subsidiaries' (i) billed but unearned Accounts Receivable; (ii)
previously billed and collected Accounts Receivable still unearned; and (iii)
unearned customer deposits. The outstanding, aged Accounts Receivables of the
Seller Parties, as of April 30, 2005 are listed in Section 5.6 of the Seller
Disclosure Letter.
5.7 Tangible and Intangible Property.
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(a) Except as set forth in Section 5.7 of the Seller
Disclosure Letter, all of the Tangible Property of Parent and each of the
Subsidiaries is located at their respective offices or facilities (other than
laptop computers and other portable assets of a personal nature) and Parent and
the Subsidiaries have the full and unqualified right to require the immediate
return of any of their Tangible Property which is not located at their
respective offices or facilities.
(b) Upon entry and effectiveness of the Sale Order, other than
with respect to the Intellectual Property Assets of the Seller Parties the
subject of anti-assignment clauses that are enforceable in the Seller Parties'
bankruptcy cases, the Parent and the Subsidiaries (i) shall have the power and
the right to sell, convey, transfer, assign and deliver to Purchaser the
Acquired Business (including the Acquired Assets) and (ii) on the Closing Date
shall sell, convey, transfer, assign and deliver the Acquired Business
(including the Acquired Assets) free and clear of all Liens, except for and
subject to Permitted Liens and the Assumed Liabilities.
5.8 Software and Other Intangibles.
Section 5.8 of the Seller Disclosure Letter sets forth an accurate and complete
list and description of all Software programs owned or under development by
Parent or the Subsidiaries and used in the Acquired Business. Except as
explained in Section 5.8 of the Seller Disclosure Letter, Parent and the
Subsidiaries have good and marketable title to all Intellectual Property Assets
listed in Section 5.8 of the Seller Disclosure Letter and to all Specified
Software and has the full right to use all of the Specified Software and
Intellectual Property Assets listed in Section 5.8 of the Seller Disclosure
Letter, free and clear of any Lien. Except as set forth in Section 5.8 of the
Seller Disclosure Letter, all Specified Software and all Copyrights purported to
be owned or under development by Parent or the Subsidiaries were created as
works for hire (as defined under U.S. copyright law) or are otherwise owned by
Parent or the Subsidiaries. With respect to any "shrinkwrap" or other
third-party Software licensed or used by any Seller Party, such Software has
been properly licensed and all related fees have been paid. With respect to the
Specified Software: (i) Parent and the Subsidiaries maintain 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 Parent and the
Subsidiaries; (ii) the machine-readable copy substantially conforms to the
corresponding source code listing; and (iii) such Specified Software operates
substantially in accordance with the user manual therefor without material
operating defects. To the Knowledge of Parent or the Subsidiaries, none of the
Specified Software or any Seller Party's corporate name is, and none of their
respective current uses thereof is, violating or infringing upon, any software,
patent, copyright, trade secret or other Intangible Property of any Person.
Except as set forth in Section 5.8 of the Seller Disclosure Letter, to the
Knowledge of Parent or the Subsidiaries, no Person is violating or infringing
upon, or has violated or infringed upon at any time, any of the Specified
Software or Intellectual Property Assets owned by Parent of or one of the
Subsidiaries. Except as set forth in Section 5.8 of the Seller Disclosure
Letter, none of the Specified Software or Intellectual Property Assets set forth
in Section 5.8 of the Seller Disclosure Letter is owned by or registered in the
name of any current or former stockholder, partner, director, executive,
officer, employee, salesman, agent, client, representative or contractor of
Parent or any of the Subsidiaries nor does any such Person have any interest
therein or right thereto, including the right to royalty payments.
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5.9 Compliance; Permits.
(a) Compliance With Laws. (i) Parent and the Subsidiaries are
in material compliance with each Judgment and with each Law that is applicable
to them or to the conduct of the Acquired Business or the ownership or use of
any of the Acquired Assets; (ii) Parent and the Subsidiaries have at all times
during the applicable statute of limitations been in material compliance with
each Judgment or Law (except for Environmental Laws which are the subject of
Section 5.13 hereof) that is or was applicable to them or to the conduct of the
Acquired Business or the ownership or use of any of the Acquired Assets; and
(iii) Parent and the Subsidiaries have not received, at any time, any written
notice from any Governmental Body or any other Person regarding (A) any actual,
alleged, possible or potential violation of, or failure to comply with, any
Judgment or Law, or (B) any actual, alleged, possible or potential obligation on
the part of Parent or any of the Subsidiaries to undertake, or to bear all or
any portion of the cost of, any cleanup or any remedial, corrective or response
action of any nature. There are no currently outstanding orders or consent
decrees issued by the Federal Trade Commission involving or related to Parent or
the Subsidiaries, or the Acquired Business or Acquired Assets.
(b) Permits. Except as set forth in Section 5.9 of the Seller
Disclosure Letter, Parent and the Subsidiaries have obtained and hold all
Permits required for the lawful operation of the Acquired Assets and Acquired
Business as and where such Acquired Assets and Acquired Business is presently
conducted. All material Permits held by Parent and the Subsidiaries are listed
in Section 5.9 of the Seller Disclosure Letter, and accurate and complete copies
of such Permits have been delivered or made available to Purchaser or its
representatives.
5.10 Questionable Payments. None of the current or former partners,
owners, stockholders, directors, executives, officers, representatives, agents
or employees of Parent or the Subsidiaries (when acting in such capacity or
otherwise on behalf of Parent or the Subsidiaries or any of their predecessors:
(i) have used or are using any corporate funds for any illegal contributions,
gifts, entertainment or other unlawful expenses relating to political activity;
(ii) have used or are using any corporate funds for any direct or indirect
unlawful payments to any foreign or domestic government officials or employees;
(iii) have violated or are violating any provision of the Foreign Corrupt
Practices Act of 1977; (iv) have established or maintained, or are maintaining,
any unlawful or unrecorded fund of corporate monies or other properties; (v)
have made at any time since January 1, 1995, any false or fictitious entries on
the books and records of Parent and/or the Subsidiaries for the purposes of
committing a fraud; (vi) have made a bribe, rebate, payoff, influence payment,
kickback or other unlawful payment of any nature using corporate funds or
otherwise on behalf of Parent and/or the Subsidiaries; or (vii) have made any
material favor or gift that is not deductible for federal income tax purposes
using corporate funds or otherwise on behalf of Parent and/or the Subsidiaries.
5.11 Brokers' and Finders' Fees. Other than fees disclosed in Section
5.11 of the Seller Disclosure Letter, Parent and the Subsidiaries have not
incurred, nor will they incur, directly or indirectly, any liability for
brokerage or finders' fees or agents' commissions or any similar charges in
connection with this Agreement or the transactions contemplated hereby.
5.12 Employees and Independent Contractors.
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(a) Section 5.12(a) of the Seller Disclosure Letter contains
an accurate and complete list of all of the current employees (other than any
temporary employee) of Parent and the Subsidiaries (including any employee of
Parent or the Subsidiaries who is on a leave of absence) and (i) such current
employees' titles, (ii) such current employees' dates of hire, (iii) such
current employees' current salaries or wages, (iv) any Permit that is held by
such current employees and that relates to or is useful in connection with any
of the businesses of Parent and the Subsidiaries and (v) if exceeding $10,000 in
the aggregate, any outstanding loans or advances made by any Seller Party to
such current employees (other than pursuant to the terms of any 401(k) plan).
(b) Section 5.12(b) of the Seller Disclosure Letter contains
an accurate and complete list of all non-employee sales representatives and
independent contractors engaged by Parent and/or the Subsidiaries and, except as
set forth in Section 5.12(b) of the Seller Disclosure Letter, there are no
Contracts in effect with any such Persons with respect to the marketing,
distribution, licensing or promotion of the Acquired Business.
(c) Parent has delivered or made available to Purchaser or its
representatives, accurate and complete copies of all employee manuals and
handbooks of any Seller Party.
(d) Parent and the Subsidiaries have 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 Parent and/or the
Subsidiaries.
(e) Since the incorporation or formation date of Parent and
each of the Subsidiaries, as applicable, neither Parent nor the Subsidiaries
have experienced any labor problem that was or is material to them.
(f) Except as set forth in Section 5.12(f) of the Seller
Disclosure Letter, none of Parent or the Subsidiaries sponsor, maintain or
contribute to, or have any ongoing obligations with respect to, any Employee
Benefit Plan. Copies of all Employee Benefit Plans listed in Section 5.12(f) of
the Seller Disclosure Letter and any current summary plan descriptions of such
plans have been made available to Purchaser.
(g) Except as set forth in Section 5.12(g) of the Seller
Disclosure Letter, the transactions contemplated by this Agreement will not
result (either alone or in combination with any other event) in (i) any payment
of, or increase in, remuneration or benefit, to any individual; (ii) the
acceleration of any payment or benefit to any individual; or (iii) the vesting
of any payment or benefit to any individual, in each case, which would result in
any obligation or liability to Purchaser.
5.13 Environmental Matters.
(a) With respect to the Acquired Assets and the Acquired
Business, the Subsidiaries have complied and are in compliance with all
applicable Environmental Laws in all material respects. Parent has made
available to Purchaser all environmental inspections, investigations, studies,
audits, tests, reviews or other analyses relating to the Acquired Assets or the
Acquired Business that are in the possession, custody or control of Parent.
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(b) No Hazardous Substance has been released at the Acquired
Leased Real Property in such a manner as would require remediation by the
operator of the Acquired Business under any applicable Environmental Law, except
as would not reasonably be expected to have a Material Adverse Effect. No
employee of the Acquired Business has brought a claim, or, to the Knowledge of
Parent or the Subsidiaries, threatened to bring a claim, against Parent or the
Subsidiaries that he was harmed by workplace exposure to a Hazardous Substance,
except as would not reasonably be expected to have a Material Adverse Effect.
(c) To the Knowledge of Parent or the Subsidiaries, (i) no
polychlorinated biphenyls or equipment containing polychlorinated biphenyls are
or have been present at the Acquired Leased Real Property; (ii) no building
materials containing asbestos are or have been present at the Acquired Leased
Real Property; (iii) no radioactive materials or wastes are or have been present
at the Acquired Leased Real Property; and (iv) no underground or above ground
storage tanks are or have been present at the Acquired Leased Real Property.
(d) Neither Parent nor the Subsidiaries have been notified by
any Governmental Body or third party of any violation by Parent and/or the
Subsidiaries or liability of any of such entities under any Environmental Law,
in each case relating to the Acquired Business or the Acquired Assets, except as
would not reasonably be expected to have a Material Adverse Effect. There are no
pending, or to the Knowledge of Parent or the Subsidiaries, threatened, civil,
criminal, or administrative Proceedings against Parent and/or the Subsidiaries
under any Environmental Law arising out of or relating to the condition of the
Acquired Leased Real Property or any of the activities of Parent and/or the
Subsidiaries thereon, except as would not reasonably be expected to have a
Material Adverse Effect.
(e) Neither Parent nor the Subsidiaries, with respect to the
Acquired Business have treated or disposed of regulated quantities of Hazardous
Substances nor has Parent contracted with any third party for the treatment or
disposal of regulated quantities of Hazardous Substances, except as would not
reasonably be expected to have a Material Adverse Effect.
(f) To the Knowledge of Parent or the Subsidiaries, there are
no facts or circumstances relating to the Acquired Leased Real Property or the
Acquired Business conducted by the Parent and the Subsidiaries that would
reasonably be expected to result in environmental claims, liabilities or
responsibilities being ascribed against Parent, its Subsidiaries or Purchaser
and, to the Knowledge of Parent or the Subsidiaries, the Seller Parties have not
retained or assumed by Contract, operation of law or otherwise, any liability or
responsibility for any existing environmental claim or environmental condition
that would reasonably be expected to result in liability to the Purchaser or its
Affiliates under Environmental Laws.
5.14 Contracts.
(a) The Material Contracts are valid and enforceable in
accordance with their terms. Each of the Material Contracts is in full force and
effect and, other than (i) as a result of the proceedings before the Bankruptcy
Court, (ii) any other event of default relating to any anti-assignment clause
that is unenforceable in the Seller Parties' bankruptcy cases, or (iii) any
other event of default that will be cured in connection with the assumption and
assignment of such Material Contract to Purchaser, no event has occurred which
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with or without the giving of notice or lapse of time, or both, would constitute
a default thereunder. Except as set forth in Section 5.14(a) of the Seller
Disclosure Letter, none of Parent or the Subsidiaries has received written
notice nor has any senior management of any of the Seller Parties been informed
that any of the Material Contracts will be terminated with or without cause.
Other than (i) in connection with the commencement of the Seller Parties'
Chapter 11 Cases, and entry of the Sale Order and (ii) as set forth in Section
5.14(a) of the Seller Disclosure Letter, none of the Material Contracts requires
the Consent of any party to its assignment in connection with the transactions
contemplated hereby. Section 5.14(a) of the Seller Disclosure Letter sets out a
complete and accurate list as of the date hereof of all executory contracts,
unexpired leases and license agreements relating to the Acquired Business other
than the Assigned Contracts and Leases (the "Other Contracts"). There are no
oral Material Contracts. True and correct copies of each of the Assigned
Contracts and Leases have been delivered or made available to Purchaser.
(b) Except as set forth in Section 5.14(b) of the Seller
Disclosure Letter, no Person is currently renegotiating with any Seller Party
any amount paid or payable to such Seller Party under any of the Assigned
Contracts and Leases or any other term or provision of any of the Assigned
Contracts and Leases.
(c) Except as set forth in Section 5.14(c) of the Seller
Disclosure Letter, there are no currently outstanding written proposals or
offers submitted by Parent and/or the Subsidiaries to any client, prospect,
supplier or other Person which, if accepted, would result in a legally binding
Contract of such Seller Party involving an amount or commitment exceeding
$50,000 in any single case or an aggregate amount or commitment exceeding
$200,000 in the aggregate.
5.15 Real Estate.
(a) Neither Parent nor the Subsidiaries has ever owned or
currently own any Real Property. Section 5.15 of the Seller Disclosure Letter
contains an accurate and complete list of all Real Property leased or otherwise
used by Parent and/or each of the Subsidiaries in the operation of the Acquired
Business, showing location of each such site. All Acquired Leased Real Property
is in working condition, ordinary wear and tear excepted. No such Acquired
Leased Real Property, nor the occupancy, maintenance or use thereof, is in
violation of, or breach or default under, any Contract or Law, and no written
notice or written threat from any lessor, Governmental Body or other Person has
been received by Parent or any of the Subsidiaries claiming any material
violation of, or breach, default or liability under, any Contract or Law.
(b) Except as set forth in Section 5.15(b) of the Seller
Disclosure Letter, (i) no portion of the Acquired Leased Real Property is within
an identified flood plain or other designated flood hazard area as established
under any Law or otherwise by any governmental authority; (ii) all of the
Acquired Leased Real Property has direct legal access to, abuts, and is served
by a publicly dedicated and maintained road, which road does and shall provide a
valid means of ingress and egress thereto and therefrom, without additional
expense; and (iii) all necessary utilities, including water, gas, telephone,
electricity, sanitary and storm sewers, are currently available to all of the
Acquired Leased Real Property, and are currently reasonably adequate to serve
the Acquired Leased Real Property in connection with the current use thereof.
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5.16 Clients. Section 5.16 of the Seller Disclosure Letter contains an
accurate and complete list of each of the top 15 largest clients of the Seller
Parties, taken as a whole (measured by gross revenue on a trailing twelve-month
basis for the period ending May 31, 2005) (the "15 Largest Clients"). Except as
set forth in Section 5.16 of the Seller Disclosure Letter, since January 1,
2005, (i) none of the 15 Largest Clients have given written notice to the Seller
Parties that (A) it will or intends to terminate or not renew its Contract with
the Seller Parties before the scheduled expiration date (including any
maintenance and/or support Contracts), (B) it will otherwise terminate its
relationship with the Seller Parties, or (C) it may otherwise materially reduce
the volume of business transacted with the Seller Parties below historical
levels; and (ii) none of the 15 Largest Clients has made a complaint in writing
to Parent or the Subsidiaries in connection with the provision of the Seller
Parties' services. The relationship of Parent and the Subsidiaries with the 15
Largest Clients is currently on a good and normal basis, and neither Parent nor
the Subsidiaries have experienced any material problems with such clients since
January 1, 2005.
5.17 Proceedings and Judgments.
(a) Except as set forth in Section 5.17 of the Seller
Disclosure Letter (i) no material Proceeding is currently pending or, to the
Knowledge of Parent or the Subsidiaries, threatened in writing, nor has any
material Proceeding occurred at any time since December 31, 2002, against Parent
and/or the Subsidiaries; and (ii) no Judgment is currently outstanding, nor has
any Judgment been outstanding at any time since December 31, 2002, having
specific application against Parent and/or the Subsidiaries.
(b) As to each matter described in Section 5.17 of the Seller
Disclosure Letter, accurate and complete copies of all pertinent pleadings,
judgments, orders and other legal documents have been delivered or made
available to Purchaser or its representatives.
(c) To the Knowledge of Parent or the Subsidiaries, no officer
or employee of Parent and/or any Subsidiary is subject to any Judgment that
prohibits such officer or employee from engaging in or continuing any conduct,
activity or practice relating to any of the businesses of Parent and/or the
Subsidiaries.
(d) To the Knowledge of Parent or the Subsidiaries, there is
no proposed Judgment that, if issued or otherwise put into effect, (i) would be
reasonably expected to have a Material Adverse Effect or (ii) would be
reasonably likely to have the effect of preventing, delaying, making illegal or
otherwise interfering with any of the transactions contemplated by this
Agreement.
5.18 Seller Parties' Obligations. All amounts due to clients of Parent
or any of the Subsidiaries for collections made by the Seller Parties as of the
date hereof have either been remitted to the proper clients or have been
deposited in escrow accounts ("Client Trust Accounts") maintained by Parent or a
Subsidiary, the rights of Parent and the Subsidiaries, as applicable in respect
of which Client Trust Accounts are being transferred to Purchaser on the date
hereof.
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5.19 Client Trust Accounts Sufficient. The cash assets held in Client
Trust Accounts are sufficient to satisfy the customer accounts payable and as of
the Closing Date all of Seller Parties' customers will have been paid in full or
the cash assets held in Client Trust Accounts will be sufficient to satisfy all
customer accounts payable as of the Closing Date.
5.20 True Copies. The copies of the agreements attached as schedules to
this Agreement or listed on such schedules (and previously delivered or made
available to Purchaser) are accurate and complete, in all material respects, and
are not missing any amendments or waivers in respect thereof.
5.21 Taxes. Parent and the Subsidiaries have timely paid all state and
local property Taxes required to be paid by it under applicable Law. Except as
set forth in Section 5.21 of the Seller Disclosure Letter (i) there are no Liens
for Taxes upon any of the Acquired Assets, including the Foreign Subsidiaries'
assets, and (ii) none of Parent nor the Subsidiaries are a foreign person (other
than the Foreign Subsidiaries) within the meaning of Section 1445 of the Code.
5.22 No Knowledge of Breach. None of Parent or the Subsidiaries has
knowledge of any breach by Purchaser of its representations and warranties
herein.
5.23 Affiliate Transactions. Section 5.23 of the Seller Disclosure
Letter lists and fully describes each Contract, transaction or series of
transactions pursuant to which Parent or any of the Subsidiaries is, or, at any
time during the previous five years has been, a party or otherwise bound with
any Affiliate of any stockholder or Parent, excluding intercompany Contracts or
transactions (a "Seller Affiliate Transaction"). Each Seller Affiliate
Transaction (i) has been entered into the normal and ordinary course of business
and pursuant to the reasonable requirements thereof, and (ii) is based upon fair
and reasonable terms no less favorable to Parent or the Subsidiaries than it
could have obtained in a comparable arm's-length transaction with an
unaffiliated Person.
5.24 Portfolio of Accounts.
(a) The CD provided to Purchaser prior to the date hereof
contains, as of June 30, 2005, an accurate and complete list of Seller Parties'
Accounts and the status of each Account, except with respect to ordinary course
of business delays in reporting. The Accounts to be transferred hereunder
constitute all of the Accounts.
(b) To the Knowledge of Parent or the Subsidiaries, the CD
provided to Purchaser prior to the date hereof accurately reflects, in all
material respects, all payment activities (or other reductions in value) on the
Accounts during the period from July 1, 2004 through June 30, 2005, except with
respect to ordinary course of business delays in reporting.
(c) From the period commencing on March 1, 2005, with respect
to Accounts owned as of March 1, 2005, the Seller Parties have not sold any such
Accounts, have not settled any such Accounts outside of the ordinary course of
business, have operated in the ordinary course with respect to such Accounts and
have made appropriate adjustments in the data base in which entries on such
Accounts are made in the ordinary and normal course of its business, consistent
with its past practices.
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(d) Except as set forth in Section 5.24 of the Seller
Disclosure Letter, the Seller Parties (i) have good and valid title to each
Account and corresponding Account Documents and are the sole owner thereof, (ii)
subject to complying with applicable notice requirements, have full right to
transfer and sell such Accounts and related Account Documents, and (iii) are
transferring and selling, all of their right, title and interest in and to the
Accounts and Account Documents to Purchaser, free and clear of any Liens.
(e) Seller Parties have no knowledge of any defect with
respect to the legality, validity or binding nature of the Accounts; provided,
however, that no representation, warranty or covenant is made herein as to the
collectability or enforceability of any particular Account or Accounts.
(f) Seller Parties have instructed all servicers of the
Accounts to not settle amounts owed with respect to the Accounts below
prescribed guidelines.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Knowing that the Seller Parties are relying thereon, Purchaser
represents and warrants to the Seller Parties as follows:
6.1 Organization. Purchaser is a limited liability company that is duly
organized, validly existing and in good standing under the Laws of its
jurisdiction of formation. Purchaser possesses 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.
6.2 Agreement. The execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated by this
Agreement by Purchaser, (i) have been duly authorized by all necessary limited
liability company actions by its sole member; (ii) do not constitute a violation
of or default under its organization documents; (iii) do not constitute a
default or breach (immediately or after the giving of notice, passage of time or
both) under any Contract to which Purchaser is a party or by which it is bound;
(iv) do not constitute a violation of any Law or Judgment that is applicable to
it or to its businesses or Assets, or to the transactions contemplated by this
Agreement; and (v) does not require the Consent of any Person. This Agreement
constitutes the valid and legally binding agreement of Purchaser, enforceable
against it in accordance with its terms.
6.3 Brokers' and Finders' Fees. Purchaser has not incurred and will not
incur, directly or indirectly, any liability for brokerage or finders' fees or
agents' commissions or any similar charges in connection with this Agreement or
any transaction contemplated hereby.
6.4 Available Funds. NCO has or has available to it, and will make
available to Purchaser, all funds necessary to satisfy all of Purchaser's
obligations under this Agreement. In particular, to finance its purchase of the
Accounts, NCO has entered into a financing arrangement with CFSC (or an
affiliate thereof), and Purchaser has no reason to believe that such financing
will not be provided on the Closing Date.
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6.5 No Knowledge of Breach.
Purchaser has no knowledge of any breach by the Seller Parties of their
representations and warranties herein.
ARTICLE VII
SURVIVAL OF REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS.
7.1 Survival. Subject to the other provisions of this Section 7.1, none
of the representations, warranties, agreements and covenants set forth in this
Agreement or in any agreement, document, instrument, certificate or other item
furnished by any Party pursuant hereto or thereto or in connection with the
transactions contemplated by this Agreement shall survive the Closing Date.
Notwithstanding the foregoing, the representations and warranties set forth in
Section 5.19 hereof (collectively, the "Sufficiency of Trusts Rep") shall
survive for six (6) months following the Closing Date and those covenants and
agreements to be performed subsequent to the Closing Date shall survive the
Closing in accordance with their terms. The Sufficiency of Trusts Rep and those
covenants and agreements to be performed subsequent to the Closing will continue
to survive if an Indemnity Notice or a Claim Notice (as applicable) shall have
been given in good faith based on facts reasonably expected to establish a valid
claim under Article VIII on or prior to the date on which such Sufficiency of
Trusts Rep, covenant or agreement would have otherwise terminated in accordance
with the terms of the preceding sentence, until the related claim for
indemnification has been satisfied or otherwise resolved as provided in Article
VIII. Any representation or warranty contained in this Agreement made by any
Party that was made by such Party fraudulently shall indefinitely survive the
Closing. The right to indemnification based upon such representations,
warranties, covenants or agreements shall not be affected by any investigation
conducted with respect to, or any knowledge acquired (or capable of being
acquired) at any time, whether before or after the execution and delivery of
this Agreement or the Closing Date, with respect to the accuracy or inaccuracy
of or compliance with any such representation, warranty, covenant or agreement.
7.2 Interpretation of Representations and Warranties. Each
representation, warranty, covenant and agreement contained herein is independent
of all other representations, warranties, covenants and agreements contained
herein and must be independently and separately complied with and satisfied.
ARTICLE VIII
INDEMNIFICATION
8.1 Seller Parties' Indemnification. Seller Parties shall, solely out
of the Escrow Account (except as otherwise expressly provided in Article II
above with respect to certain purchase price adjustments), indemnify and hold
harmless Purchaser, NCO, each of their respective Affiliates and each of their
respective shareholders, directors, officers, employees, agents, successors and
assigns (collectively, the "Purchaser Group"), from and against all
Indemnifiable Losses incurred by any of them resulting from, related to, or
arising out of any breach of the Sufficiency of Trusts Rep or non-fulfillment of
any agreement or covenant to be performed subsequent to the Closing Date by any
of the Seller Parties under this Agreement or any agreement, document,
instrument, certificate or other item furnished to Purchaser or its Affiliates
pursuant hereto or thereto or in connection with the transactions contemplated
by this Agreement.
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8.2 Purchaser's Indemnification. Purchaser shall indemnify and hold
harmless the Seller Parties, each of their respective Affiliates and each of
their respective directors, officers, employees, agents, successors and assigns,
from and against all Indemnifiable Losses incurred by any of them resulting
from, related to, or arising out of any non-fulfillment of any agreement or
covenant to be performed subsequent to the Closing Date by Purchaser under this
Agreement or any agreement, document, instrument, certificate or other item
furnished to any Seller Party or its Affiliates pursuant hereto or thereto or in
connection with the transactions contemplated by this Agreement.
8.3 Payment; Procedure for Indemnification.
(a) In the event that the Person seeking indemnification under
this Article VIII (the "Indemnified Party") shall suffer an Indemnifiable Loss,
he, she or it shall, promptly after acquiring actual knowledge of any such
Indemnifiable Loss, give written notice to the party from whom indemnification
under this Article VIII is sought (the "Indemnifying Party") of the amount of
the Indemnifiable Loss, together with reasonably sufficient information to
enable the Indemnifying Party to determine the accuracy and nature of the
claimed Indemnifiable Loss (the "Indemnity Notice"). The failure of any
Indemnified Party to promptly give the Indemnifying Party the Indemnity Notice
shall not release the Indemnifying Party of liability under this Article VIII
unless the failure to give such notice materially and adversely prejudices such
Indemnifying Party. Within ten (10) days after the receipt by the Indemnifying
Party of the Indemnity Notice, the Indemnifying Party shall either (i) pay (in
immediately available funds) to the Indemnified Party an amount equal to the
Indemnifiable Loss or (ii) object to such claim, in which case the Indemnifying
Party shall give written notice to the Indemnified Party of such objection
together with the reasons therefor, it being understood that the failure of the
Indemnifying Party to so object shall preclude the Indemnifying Party from
asserting any claim, defense or counterclaim relating to the Indemnifying
Party's failure to pay any Indemnifiable Loss. If the Indemnifying Party fails
to object as aforesaid, then the Indemnifying Party shall conclusively be deemed
to be obligated to pay the amount of the Indemnifiable Loss to the Indemnified
Party within the ten (10) day period after the Indemnifying Party's receipt of
the Indemnity Notice. The Indemnifying Party's objection shall not relieve the
Indemnifying Party from its obligations under this Article VIII. If there shall
be a dispute as to the amount or manner of indemnification under this Article
VIII, the Indemnifying and Indemnified Party shall seek to resolve such dispute
through negotiations and, if such dispute is not resolved within twenty (20)
days following the receipt of such written objection notice by the Indemnified
Party, the Indemnified Party may pursue whatever legal remedies may be available
for recovery of the damages claimed from any Indemnifying Party. If any
Indemnifying Party fails to pay all or part of any indemnification obligation
when due, then such Indemnifying Party shall also be obligated to pay to the
applicable Indemnified Party interest compounded monthly on the unpaid amount
for each day during which the obligation remains unpaid at an annual rate equal
to the prime rate of interest as reported in The Wall Street Journal from time
to time. If the Indemnifying Party disputes its liability for any Indemnifiable
Loss asserted by the Indemnified Party, and the Indemnifying Party is the
prevailing party in any Proceeding initiated to resolve such dispute, then the
Indemnified Party shall promptly pay all of the reasonable attorneys' fees and
expenses incurred by the Indemnifying Party in connection with such dispute or
such Proceeding.
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(b) In the event the facts giving rise to the claim for
indemnification under this Article VIII shall involve any action, claim or
demand by any third party against the Indemnified Party, the Indemnified Party,
within the earlier of, as applicable, fifteen (15) days after receiving notice
of the filing of a lawsuit or sixty (60) days after receiving notice of the
existence of a claim or demand giving rise to the claim for indemnification,
shall send written notice of such claim to the Indemnifying Party (the "Claim
Notice"). The failure of the Indemnified Party to give the Indemnifying Party
the Claim Notice shall not release the Indemnifying Party of liability under
this Article VIII unless the failure to give such notice materially and
adversely prejudices such Indemnifying Party. The Indemnifying Party shall be
entitled to defend such claim in the name of the Indemnified Party at the
Indemnifying Party's own expense and through counsel (reasonably acceptable to
the Indemnified Party) of its own choosing. The Indemnifying Party shall give
the Indemnified Party notice in writing within ten (10) days after receiving the
Claim Notice from the Indemnified Party in the event of litigation, or otherwise
within thirty (30) days, of its intent to do so. The Indemnified Party may
elect, by notice in writing to the Indemnifying Party, to continue to
participate through its own counsel, at its own expense, but the Indemnifying
Party shall have the right to control the defense of the claim or the
litigation. Notwithstanding any other provision contained in this Agreement, the
party controlling the defense of the claim or the litigation shall not settle
any such claim or litigation without the written consent of the other party;
provided, that if such proposed settlement contains terms that are reasonable
under the circumstances, then the other party shall not withhold or delay the
giving of such consent.
8.4 Limitation on Liabilities. Notwithstanding anything in this
Agreement to the contrary, an Indemnifying Party shall not have any liability to
an Indemnified Party in respect of any claim for indemnification for the breach
of any representation, warranty, covenant or other agreement contained herein
unless a claim with respect thereto is delivered to the Indemnifying Party prior
to the termination of the survival period for such representation, warranty,
covenant or other agreement set forth in Article VII hereof.
8.5 Limitation on Indemnification Amount. Notwithstanding anything to
the contrary contained in this Article VIII, no Person that would otherwise be
entitled to be an Indemnified Party under this Article VIII shall be entitled to
indemnification pursuant to this Article VIII, unless and until the aggregate
amount of such Person's Indemnifiable Loss with respect to an individual matter
exceeds $50,000 or with respect to all matters exceeds $250,000 (the "Threshold
Amount"). If and when the aggregate amount of such Person's Indemnifiable Loss
exceeds the Threshold Amount, such Person shall be entitled to be indemnified
for the full amount of such Indemnifiable Loss, without regard to the Threshold
Amount. Further, except as otherwise expressly provided in Article II above with
respect to certain purchase price adjustments, the maximum aggregate amount of
indemnification that the Purchaser Group may recover under this Article VIII
shall in no event exceed the remaining funds in the Escrow Account and recourse
for such amount shall be limited solely to offsets against the Escrow Account in
accordance with this Agreement and the Escrow Agreement (it being understood
that any portion of the indemnification claims of the Purchaser Group against
any or all of the Seller Parties that remain unsatisfied after application of
the funds in the Escrow Account shall be deemed forever waived, discharged and
released).
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8.6 Exclusive Remedies. Except as otherwise expressly provided in this
Agreement, the indemnification rights of the Parties under this Article VIII are
the exclusive rights and remedies of the Parties with respect to the
transactions contemplated by this Agreement, at law or in equity or otherwise.
ARTICLE IX
COVENANTS
9.1 Access.
(a) Between the date hereof and the Closing, Parent and the
Subsidiaries shall: (i) give Purchaser and its authorized representatives
reasonable access, during regular business hours and upon reasonable advance
notice, to senior management employees, the Acquired Assets, and such books and
records of such entity, as are reasonably necessary to allow Purchaser and its
representatives to make such inspections as they may reasonably require relating
to the transactions contemplated by this Agreement and the consummation thereof;
(ii) preserve in all material respects all books and records relating to the
operation or ownership of the Acquired Assets and any other material information
related to the Acquired Business and the Acquired Assets on or before the
Closing Date consistent with such entities' ordinary course of business; (iii)
cause officers of each entity to furnish Purchaser and its representatives with
such financial and operating data and other information with respect to such
entity, to the extent prepared by such entity in the ordinary course of
business, as Purchaser may from time to time reasonably request relating to the
transactions contemplated by this Agreement and the consummation thereof; (iv)
give Purchaser and its authorized representatives access to senior management
employees of each Seller Party to discuss the transactions contemplated by this
Agreement and the consummation thereof; and (v) give Purchaser and its
authorized representatives access to third parties who have entered into
Contracts with the Seller Parties to enable Purchaser to negotiate with such
third parties prior to Purchaser making a final decision in accordance with the
terms herein as to whether or not it should assume such Contracts.
(b) On and after the Closing Date, Purchaser will afford
promptly to Parent and its counsel, financial advisers and other agents
reasonable access during normal business hours to its properties, books and
records, employees, auditors and counsel to the extent necessary for financial
reporting and accounting matters, employee benefits matters, the preparation and
filing of any Tax Returns, reports or forms, the defense of any Tax audit, claim
or assessment and other matters relating to the winding-up of any Seller Party's
estate, or to permit Parent to determine any matter relating to the rights and
obligations of any Seller Party hereunder or any other reasonable business
purpose related to the Excluded Assets or Excluded Liabilities; provided,
however, that any such access by Parent shall not unreasonably interfere with
the conduct of the business of Purchaser. Purchaser shall preserve and maintain
the books and records acquired at Closing for a period of three years after the
Closing Date.
9.2 Conduct and Preservation of the Acquired Assets. Except (i) as
provided in this Agreement, (ii) consented to by Purchaser, which consent shall
not be unreasonably withheld or delayed or (iii) approved by the Bankruptcy
Court, during the period from the date hereof to the Closing, the Seller Parties
shall use their Commercially Reasonable Efforts to cause the Acquired Business
to be conducted in the ordinary course of business consistent with its practice,
including with respect to the operation and maintenance of the Acquired Assets,
and shall use its Commercially Reasonable Efforts to (A) preserve the present
business operations, organization and goodwill of the Acquired Business; (B)
preserve, maintain, and protect the assets, rights, and properties of the
Acquired Business and the Acquired Assets; (C) comply in all material respects
with all post-petition contractual and other obligations applicable to the
operation of the Acquired Business and the Acquired Assets; and (D) comply in
all material respects with applicable Laws, insofar as they relate to the
Acquire Business or the Acquired Assets.
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9.3 Restrictions on Certain Actions of the Seller Parties.
(a) Without limiting the generality of Section 9.2, and except
as (w) set forth on Schedule 9.3, (x) otherwise provided in this Agreement, (y)
otherwise required in order for any Seller Party to comply with its duties and
responsibilities as a debtor in possession under the Bankruptcy Code, or (z)
approved by the Bankruptcy Court, prior to the Closing, to the extent relating
to the Acquired Business or the Acquired Assets, none of the Seller Parties,
shall, without the prior written consent of Purchaser, which shall not be
unreasonably withheld or delayed:
(i) sell, lease, transfer, or otherwise dispose of,
directly or indirectly, any assets relating to or forming part of the Acquired
Business or the Acquired Assets with an aggregate value greater than $75,000,
provided, however, that no sales of the Accounts shall occur nor shall
settlement offers with respect thereto be made outside of the ordinary course
consistent with past practices.
(ii) acquire for the Acquired Business (by merger,
consolidation, or acquisition of stock or assets or otherwise) any corporation,
partnership, or other business organization or division thereof;
(iii) amend, modify, or change in any material
respect or reject under Section 365 of the Bankruptcy Code any Assigned
Contracts and Leases;
(iv) enter into any joint venture, strategic
alliance, partnership or similar business relationship with a third party that
affects or is binding upon the Acquired Business or the Acquired Assets;
(v) enter into any agreement that contains a covenant
or other provision restricting in any material respect the ability of the
Acquired Business or the Acquired Assets (or which, following the Closing, would
restrict the ability of Purchaser) to compete with any Person in any geographic
area or to engage in any activity or business, or pursuant to which any benefit
is required to be given or is lost as a result of so competing or engaging;
(vi) enter into any lease of real property, except
any renewal of an existing lease in accordance with its terms;
29
(vii) mortgage, pledge or subject to any Liens any of
the Acquired Assets;
(viii) fail to maintain in full force and effect
insurance policies covering the Acquired Assets, in form and amount consistent
with past practice;
(ix) hire any, or make any commitment to hire any,
additional employees outside of the ordinary course of business with respect to
the Acquired Business or the Acquired Assets; provided that nothing contained
herein shall restrict Parent or any of the Subsidiaries from terminating the
employment of any employees;
(x) grant any increase in the compensation of any
employees, promote any employees, or, except to the extent required by
applicable law, amend or modify any benefit plan or make any change in the
amount or the manner in which the employees are compensated, or any provision of
additional or supplemental benefits for employees, or establish any new benefit
plan with respect to employees; provided that nothing above shall restrict
normal periodic increases, promotions, hiring or changes effected in the
ordinary course of business, the payment of stay bonuses to senior executives of
the Seller Parties, or the payment of any other stay bonus not resulting in an
obligation or liability to Purchaser, in any case of which Purchaser shall be
notified;
(xi) change any current election with respect to
Taxes affecting the Acquired Assets; or
(xii) enter into any agreement to do any of the
foregoing.
9.4 Notification. Seller Parties shall promptly notify Purchaser, and
Purchaser shall promptly notify the Seller Parties, of any Proceeding pending
or, to their knowledge, threatened against, any Seller Party or Purchaser, as
the case may be, which, if successful, would prevent or materially delay the
transactions contemplated hereby.
9.5 Antitrust and Other Authorizations and Consents.
(a) Filings. Each Party shall use its Commercially Reasonable
Efforts to obtain, and to cooperate with the other Party in obtaining, all
Consents of any Governmental Body that may be or become necessary in connection
with the consummation of the transactions contemplated by this Agreement, and to
undertake Commercially Reasonable Efforts to avoid the entry of any Order by any
Governmental Body prohibiting the consummation of the transactions contemplated
hereby, and shall furnish to the other all such information in its possession as
may be necessary for the completion of the notifications or applications to be
filed by the other. No Party shall withdraw any such filing or submission prior
to the termination of this Agreement without the written consent of the other
Parties.
(b) HSR Act. Without limiting the generality of Section
9.5(a), to the extent required by the HSR Act, each Party shall (i) file or
cause to be filed, as promptly as practicable after the entry of the Bidding
Procedures Order, but in no event later than the fifth Business Day thereafter,
with the United States Federal Trade Commission and the United States Department
of Justice, all reports and other documents required to be filed by such Party
under the HSR Act concerning the transactions contemplated hereby and (ii)
promptly comply with or cause to be complied with any requests by the United
30
States Federal Trade Commission or the United States Department of Justice for
additional information concerning such transactions, in each case so that the
waiting period applicable to this Agreement and the transactions contemplated
hereby under the HSR Act shall expire as soon as practicable. Each Party agrees
to request, and to cooperate with the other Party in requesting, early
termination of any applicable waiting period under the HSR Act. Purchaser shall
pay the filing fees payable in connection with the filings by the Parties
required by the HSR Act.
(c) Third Party Consents. Unless otherwise provided by Order
of the Bankruptcy Court, without limiting the generality of Section 9.5(a),
Purchaser shall (i) use its Commercially Reasonable Efforts to assist Parent and
the Subsidiaries in obtaining any Consents of third parties to the extent
required under Section 9.7(b), including providing to such third parties such
financial statements and other publicly available financial information with
respect to Purchaser as such third parties may reasonably request and (ii) take
all actions necessary to satisfy the requirements of Section 365(f)(2) of the
Bankruptcy Code relating to adequate assurance of future performance, including
by providing required witnesses, financial statements and other financial
information.
9.6 Publicity.Prior to the filing with the Bankruptcy Court of the
motion seeking entry of the Bidding Procedures Order, no Party shall issue any
press release or otherwise make any public statement with respect to this
Agreement or the transactions contemplated hereby without the prior approval of
each other Party, except as may be required by applicable laws or, as applicable
to NCO, by any listing agreement with, or the policies of, The Nasdaq Stock
Market, Inc. or any other quotation system on which NCO's securities are then
listed or quoted (in which case the Parties shall use their best efforts to
consult with each other regarding the content of any such press release or
statement prior to its release).
9.7 Procedural Orders and Motions.Between the date of this Agreement
and the Closing:
(a) General; Bankruptcy Court Filings. It is the Parties'
intention to consummate the transactions contemplated by this Agreement pursuant
to a Bankruptcy Court approved sale of the Acquired Assets under Sections 105,
363 and 1146 and other applicable provisions of the Bankruptcy Code and the
assignment and assumption of the Assigned Contracts and Leases under Sections
105, 363 and 365 of the Bankruptcy Code. Within one (1) Business Day after this
Agreement is executed, the Seller Parties (other than the Foreign Subsidiaries)
shall file a petition for relief under Chapter 11 in the Bankruptcy Court (the
"Filing Date"), and within five (5) days following the Filing Date, the Seller
Parties (other than the Foreign Subsidiaries) shall file one or more motions
(the "Motion") with the Bankruptcy Court:
(i) seeking entry, by no later than twenty (20) days
after the Filing Date, of the Bidding Procedures Order (to include approval of
the Break-Up Fee and Expense Reimbursement Fee provided for herein and in the
Bidding Procedures Order) (the "Outside Bidding Procedures Order Date");
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(ii) establishing bidding procedures governing the
transactions contemplated by this Agreement and the Bidding Procedures Order
(including bulk bidding (the motion(s) referenced in Section 9.7(a)(i) and (ii)
shall be collectively referred to as the "Bidding Procedures Motion"));
(iii) scheduling a hearing on approval of the sale to
be held in no event later than the date that is forty-five (45) days after the
date on which the Bidding Procedures Order is entered;
(iv) seeking approval of the form, manner and notice
to be given of the sale;
(v) setting the deadline for filing objections to the
sale;
(vi) seeking approval of assignment and assumption of
the Assigned Contracts and Leases; and
(vii) seeking approval of the Sale Order no later
than forty-five (45) days after the entry of the Bidding Procedures Order.
(b) Approvals, Consents and Notice. Within five (5) Business
Days after entry of the Bidding Procedures Order, the Seller Parties shall
promptly give notice of the entry of such order (i) to all third parties to all
Assigned Contracts and Leases, (ii) to all parties entitled to receive notice
under the Bankruptcy Code and the Bankruptcy Rules, for the purpose of obtaining
the written Consent of such Persons whose Consent is necessary pursuant to
Section 365 of the Bankruptcy Code, and (iii) to all Persons who assert any
Cure-Amounts with respect to the assignments by Parent and/or the Subsidiaries
to Purchaser of such Assigned Contracts and Leases. The Seller Parties and
Purchaser shall use their respective Commercially Reasonable Efforts to obtain
all required Consents of all third parties to the Assigned Contracts and Leases,
whose Consent is required under Section 365 of the Bankruptcy Code to validly
assign such Assigned Contracts and Leases to Purchaser on the Closing Date;
provided however that the Seller Parties shall not be obligated to provide any
monetary or non-monetary consideration to obtain such Consents.
(c) Competing Proposals and Overbids.
(i) In the event that Parent, the Subsidiaries (other
than the Foreign Subsidiaries) or any of their representatives shall receive a
Qualified Bid from a Qualified Bidder, subject to and in accordance with the
Bidding Procedures Order, the Seller Parties shall provide a copy of the
Qualified Bid to Purchaser within one (1) day thereafter and afford Purchaser an
opportunity to participate in an Auction to be held in accordance with the terms
of the Bidding Procedures Order and as noticed at the offices of bankruptcy
counsel for the Seller Parties (other than the Foreign Subsidiaries). Subject to
the terms of the Bidding Procedures Order, at any Auction so held, bidding shall
proceed with the highest Qualified Bid and subsequent bids must include
additional consideration of at least $500,000 over the previous bid. Subject to
the terms of the Bidding Procedures Order, in the event no Potential Bidder
makes the submissions required by the Bidding Procedures Order, or in the event
Parent, the Subsidiaries or any of their representatives fails to receive a
timely Qualified Bid in accordance with the Bidding Procedures Order, then no
Auction shall be held, and Parent and the Subsidiaries shall request the
Bankruptcy Court at the sale hearing to enter the Sale Order authorizing and
approving the transactions set forth herein.
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(ii) The Bankruptcy Court sale hearing (the "Sale
Hearing") to confirm the highest or best offer shall be held not later than
three (3) Business Days after the conclusion of the Auction, and in no event
later than the date that is forty-five (45) days after the date on which the
Bidding Procedures Order is entered (the "Outside Sale Order Date").
(d) Payment of Break-Up Fee and Expense Reimbursement Costs.
(i) If (x) this Agreement shall be terminated prior
to the Closing Date pursuant to (I) Section 10.1(c), (II) Section 10.1(d) as a
result of a breach that is intentional or (III) Section 10.1(i) and (y) in the
case of a termination pursuant to Section 10.1(c) or Section 10.1(d), an
Alternative Transaction is consummated, or in the case of a termination pursuant
to Section 10.1(i), the plan of reorganization or liquidation referenced in
Section 10.1(i) is consummated, then the Seller Parties shall pay to Purchaser
an amount equal to $3,500,000 (the "Break-Up Fee") in the following timeframe:
(A) not later than two (2) Business Days
after the consummation of an Alternative Transaction if this Agreement is
terminated pursuant to (x) Section 10.1(c) or (y) Section 10.1(d) as a result of
a breach that is intentional; or
(B) not later than two (2) Business Days
after the consummation of a plan of reorganization or liquidation referenced in
Section 10.1(i) if this Agreement is terminated pursuant to such Section
10.1(i).
(ii) If (x) this Agreement shall be terminated prior
to the Closing Date pursuant to (I) Section 10.1(c), (II) Section 10.1(d) as a
result of a breach that is intentional or (III) Section 10.1(i), and (y) in the
case of a termination pursuant to Section 10.1(c) or Section 10.1(d), an
Alternative Transaction is consummated, or in the case of a termination pursuant
to Section 10.1(i), the plan of reorganization or liquidation referenced in
Section 10.1(i) is consummated, then upon presentation of a statement setting
forth with specificity the nature and amount thereof, the Seller Parties shall
reimburse Purchaser for reasonable out-of-pocket expenses actually incurred by
Purchaser in connection with this Agreement in an aggregate amount not to exceed
$1,600,000 (the "Expense Reimbursement Fee") without further order of the
Bankruptcy Court, in the following timeframe:
(A) not later than two (2) Business Days
after the consummation of an Alternative Transaction if this Agreement is
terminated pursuant to (x) Section 10.1(c) or (y) Section 10.1(d) as a result of
a breach that is intentional; or
(B) not later than two (2) Business Days
after the consummation of a plan of reorganization or liquidation referenced in
Section 10.1(i) if this Agreement is terminated pursuant to such Section
10.1(i).
33
(iii) Seller Parties' obligation to pay the Break-Up
Fee and the Expense Reimbursement Fee shall be subject to the Bidding Procedures
Order.
(e) Nonsolicitation of Alternative Transactions. During the
period between the date hereof and the Filing Date, the Seller Parties shall
not, and shall cause their respective Affiliates and representatives not to, (i)
solicit inquiries, proposals, offers or bids from, (ii) negotiate or discuss
with, (iii) respond to any request for information or due diligence inquiry of,
(iv) make the management and employees of the Acquired Business available to, or
(v) enter into any agreement or consummate any transaction with any third party
relating to an Alternative Transaction. During the Solicitation Period, the
Seller Parties and their respective Affiliates and representatives shall be
permitted, in the manner and to the extent permitted by the Bidding Procedures
Order, to (i) solicit inquiries, proposals, offers or bids from, (ii) negotiate
or discuss with, (iii) respond to any request for information or due diligence
inquiry of, and (iv) make their respective management and employees available
to, any third party in connection with the submission or proposed submission of
a Qualified Bid and may take any other affirmative action to cause, promote or
assist the purchase of all or substantially all of the Acquired Assets,
provided, however, that Parent and the Subsidiaries may only seek Bankruptcy
Court approval of a definitive agreement with the Winning Bidder made and
accepted in accordance with the Bidding Procedures Order. Without limiting and
subject to the foregoing, the Seller Parties and their respective Affiliates and
representatives shall be permitted to supply information relating to the
Acquired Business and Acquired Assets during the Solicitation Period only to
prospective purchasers that have executed in accordance with the Bidding
Procedures Order a confidentiality agreement.
9.8 Advice of Changes. Prior to the Closing, each Party shall advise
the other in writing with respect to any matter arising after the date of this
Agreement of which that Party obtains knowledge and which, if existing or
occurring on or prior to the date of this Agreement, would have been required to
be set forth in this Agreement, including any of the Schedules hereto. Parent
and the Subsidiaries, as applicable, shall, from time to time prior to the
Closing, promptly supplement or amend the Schedules to this Agreement with
respect to (i) any non-material matter that existed as of the date of this
Agreement and should have been set forth in any of the Schedules hereto, (ii)
any non-material matter hereafter arising which, if existing as of the date of
this Agreement, would have been required to be set forth in any of the Schedules
hereto in order to make any representation or warranty set forth in this
Agreement true and correct as of such date and (iii) any matter requiring
disclosure as a result of Purchaser's additions or subtractions to Schedule
2.1(b) pursuant to the terms herein. Purchaser shall promptly notify Parent and
the Subsidiaries of (A) any breach by Parent or any Subsidiary of any
representation or warranty of such entity, or (B) any other event, fact,
condition or circumstance that would excuse Purchaser from the timely
performance of its obligations hereunder, if any such information becomes aware
to Purchaser prior to the Closing.
9.9 Confidentiality. Each Party hereto acknowledges that the other
Parties have legitimate and continuing proprietary interests in the protection
of their confidential information and that the Parties have invested substantial
sums and will continue to invest substantial sums to develop, maintain and
protect such confidential information. Prior to and after the Closing, each
Party agrees not to disclose, furnish or make accessible to anyone or use for
its own benefit (other than as contemplated by this Agreement) any trade secrets
34
or other confidential or proprietary information of another Party relating to
such Party and/or their respective businesses including information obtained by
or revealed to such Party during any investigations, negotiations or review
relating to this Agreement and any other document contemplated hereby or thereby
or any past or future actions taken in connection with, pursuant to, in
accordance with, or under this Agreement, including any business plans,
marketing plans, financial information, strategies, systems, programs and
methods, provided that such protected information shall not include (i)
information required to be disclosed by law, legal or judicial process
(including a court order, subpoena or order of a Governmental Body) or the rules
of any stock exchange or quotation system, subject to prior consultation with
the other Party to the extent reasonably practicable; (ii) information that is
or becomes available to the receiving Party on a non-confidential basis from a
source other than the other Parties and not obtained in violation of this
Agreement; (iii) information that is independently developed by the receiving
party without reference to or use of any information obtained in connection with
this Agreement; and (iv) information known to the public or otherwise in the
public domain without violation of this Section 9.9, provided, further, that
this Section 9.9 shall not in any way limit the disclosure of information by
Parent, the Subsidiaries, NCO or Purchaser (a) to the extent reasonably required
in connection with the commencement and prosecution of the Seller Parties'
Chapter 11 Cases or (b) regarding Parent, the Subsidiaries and the Acquired
Business (i) to other bidders or potential bidders to the extent specifically
permitted by this Agreement or (ii) following the termination of this Agreement.
9.10 Employment Matters.
(a) Employment Offers. Purchaser, in conjunction with Parent,
shall be permitted to meet with and interview all senior management of Parent
and the Subsidiaries. Purchaser shall offer employment to all employees of
Parent or the Subsidiaries, as of the Closing Date, in connection with the
purchase of the Acquired Business, with each such offer being contingent on
completion of the Closing and subject to Purchaser's ability to terminate the
employment of any Transferred Employee (as defined below) at any time following
the Closing Date. Purchaser shall not and shall not permit any of its Affiliates
to, prior to the last day of the Auction, solicit any employees of Parent or the
Subsidiaries other than (i) with the prior written permission of Parent or (ii)
in accordance with a general plan for the recruitment of employees agreed with
Parent and the Subsidiaries. Each employee of Parent or the Subsidiaries who
accepts Purchaser's offer of employment as of the Closing shall be referred to
herein as a "Transferred Employee." Parent shall, or shall cause the applicable
Subsidiary to, terminate all Transferred Employees as of the Closing Date. In
addition to any severance obligations under the terms of the KERP or under any
other Contract specified in Schedule 5.5(d) of the Seller Disclosure Letter
between any employee and a Seller Party, Purchaser shall pay severance in an
amount determined under the terms of the Purchaser's severance pay guidelines
and procedures to any employee of Parent or the Subsidiaries who does not become
a Transferred Employee and to any Transferred Employee whose employment is
terminated without cause (as defined in Purchaser's employment guidelines and
procedures) on or prior to the first anniversary of the Closing Date.
(b) Compensation and Benefit Plans. Effective as of the
Closing Date, Purchaser will offer to all Transferred Employees compensation
packages and benefit plans equivalent to those offered to similarly situated
employees of Purchaser, except that all benefit plans shall immediately credit
service for Transferred Employees and their eligible dependents as set forth in
Section 9.10(c) regardless of whether such service crediting terms would apply
35
to similarly situated employees of Purchaser. Purchaser shall assume the
vacation and sick pay accruals of all employees of Parent and the Subsidiaries
to the extent accrued on the Final Closing Statement and shall permit each
Transferred Employee to use such accrued vacation and sick leave following the
Closing in accordance with the terms of Purchaser's vacation and sick pay
policies, and, if such Transferred Employee is terminated without cause (as
defined in Purchaser's employment guidelines and procedures)on or prior to the
first anniversary of the Closing Date, pay to each Transferred Employee the
amount of accrued vacation and sick pay not so used. As soon as the Final
Closing Statement is prepared, Purchaser shall pay to RMA Management Services,
Inc. the amount of any vacation and sick pay accruals for any employee of Parent
or the Subsidiaries who does not become a Transferred Employee to the extent
such amount is accrued on the Final Closing Statement.
(c) Credited Service. Effective as of the Closing Date,
Purchaser, for purposes of its benefit plans and other employee benefits, agrees
to immediately recognize all service of the Transferred Employees and their
eligible dependents with the Seller Parties (to the same extent as the Seller
Parties so recognized as of the Closing Date) for the purpose of determining
eligibility, entitlement and vesting, including but not limited to, Purchaser's
401(k) plan, severance and vacation policies.
(d) Health Plans. Subject to the terms of the KERP, Purchaser
shall, effective as of the Closing Date, provide Transferred Employees and their
eligible dependents with coverage under group health plans which is the same as
provided to similarly situated employees of Purchaser, except that such group
health plans shall immediately credit service for Transferred Employees and
their eligible dependents as set forth in Section 9.10(c) regardless of whether
such service crediting terms would apply to similarly situated employees of
Purchaser.
(e) Reimbursement. Within five (5) Business Days after receipt
of an invoice from any Seller Party, Purchaser shall reimburse such Seller Party
for (i) the health and dental benefits incurred on or prior to the Closing Date
and actually paid by such Seller Party on or after the Closing Date under the
terms of the Seller Parties' health and dental plans in a total amount not to
exceed the amount accrued for such health and dental benefits on the Pre-Closing
Statement (as the same may be adjusted by the Final Closing Statement) and (ii)
the cost of the monthly premium to retain in effect the stop-loss insurance
coverage associated with the Seller Parties' health and dental plans for the 12
months following the month in which the Closing Date occurs in a total amount
not to exceed $550,000 (it being agreed that, to the extent such insurance
coverage is not obtained and therefore any portion of the $550,000 is not used
as contemplated by the foregoing, then, in addition to the amounts received
under subsection (i) hereof, the Seller Parties shall be entitled to receive
such available portion to cover the health and dental benefits actually paid by
any Seller Party under the terms of the Seller Parties' health and dental
plans).
(f) COBRA. Purchaser shall be solely responsible for complying
with the requirements of COBRA for any individual who is an "M&A qualified
beneficiary" as defined in Q&A-4 of Treas. Reg. ss. 54.4980B-9 in connection
with the transactions contemplated by this Agreement.
36
(g) 401(k). Effective as of the Closing Date, Purchaser shall
either (i) assume the sponsorship of and all assets and liabilities associated
with Seller Parties' 401(k) Plan or (ii) terminate such 401(k) Plan. Effective
as of the Closing Date, Purchaser shall also assume all costs and expenses of
such termination and fully indemnify and hold harmless such Plan's Trustees with
respect to Purchaser's acts or inactions in connection with terminating the
401(k) Plan. Effective as of the Closing Date, Purchaser shall also fully
indemnify and hold harmless such Plan's current and former fiduciaries who are
or were officers, directors, or employees of Seller Parties for any liabilities
incurred by said fiduciaries as a result of any action that Purchaser takes or
fails to take in connection with the termination of the 401(k) Plan. The Parties
agree to work together in a reasonable manner to accomplish the foregoing.
(h) KERP. Purchaser acknowledges that RMA Management Services,
Inc. has implemented a Key Employee Retention Plan (as such shall be modified as
described below, the "KERP") in order to provide certain employees with an
incentive to remain committed to the business of the Seller Parties, both before
and after the Closing. Each participant under the KERP (a "KERP Participant")
has previously executed a letter agreement (individually, a "KERP Letter" and,
collectively, the "KERP Letters") wherein such KERP Participant's benefits under
the KERP are particularly described. Purchaser has previously been provided the
forms of the KERP Letters in addition to a current listing (pursuant to Section
5.4 of the Seller Disclosure Letter) of the KERP Participants. For the benefit
of the KERP Participants, Purchaser agrees and acknowledges that the KERP
Letters shall be on the list of Assigned Contracts and Leases on Schedule 2.1(b)
and Purchaser shall assume and discharge all liabilities (such liabilities to be
Assumed Liabilities hereunder) arising under the KERP, irrespective of whether
any particular KERP Participant is a Transferred Employee. Purchaser agrees
that, prior to the Closing Date, RMA Management Services, Inc. shall execute and
deliver a supplemental letter to each KERP Participant in order to effectuate a
number of clarifications and modifications to the KERP and the KERP Letters, as
follows: (i) first, the letter shall state that Purchaser agrees and
acknowledges that the consummation of the transactions contemplated by this
Agreement shall be deemed a "Sale" under the KERP Letters and shall therefore
entitle the KERP Participants to receive the retention bonuses and, to the
extent applicable, the health, welfare and severance benefits described in the
KERP Letters and, in furtherance thereof, Purchaser shall assume and discharge
all liabilities (such liabilities to be Assumed Liabilities hereunder) arising
under the KERP irrespective of whether any particular KERP Participant is a
Transferred Employee; (ii) second, the letter shall state that, after the
Closing, any resignation of a KERP Participant as a result of such KERP
Participant's refusal to relocate to a location that is either outside of a
fifty (50) mile radius of, or more than a one-hour commute from, such KERP
Participant's residential address shall, for purposes of the KERP Letters, be
considered an involuntary termination without "Cause" (as defined in the KERP
Letters); (iii) third, the letter shall state that, for the avoidance of doubt,
each KERP Participant eligible for salary continuance, and to the extent
applicable health and welfare benefits, under the KERP shall receive such salary
continuance and health and welfare benefits if such KERP Participant chooses to
separate from employment after the Closing because he or she did not retain
after the Closing both (x) the same or similar position level and (y) the same
or similar duties; and (iv) fourth, the letter shall state that, for purposes of
continuation coverage under COBRA, the COBRA event shall be deemed to occur on
the last day of the salary continuance period.
37
(i) Other Liabilities. Purchaser agrees that, prior to the
Closing Date, Parent, Holdings and Xxxxxx Xxxxxxxxxx shall execute the Third
Amendment and Acknowledgment to Senior Management Agreement (the "Third
Amendment"), substantially in the form attached hereto as Exhibit 9.10(i). The
Xxxxxxxxxx Agreement shall be on the list of Assigned Contracts and Leases on
Schedule 2.1(b) and Purchaser shall assume and discharge all liabilities arising
thereunder (such liabilities to be Assumed Liabilities hereunder). Further, for
the twelve-month period following the termination of his employment, Xxxxxx
Xxxxxxxxxx shall receive health and welfare benefits enjoyed by similarly
situated employees of Purchaser (only to the extent, however, of the accrual on
the Final Closing Statement with respect to the employer's share of the cost to
provide such health and welfare benefits).
(j) FSAs. Effective as of the Closing Date, Purchaser shall
assume the administration and termination of the Risk Management Alternatives
Holdings, Inc. Flexible Benefit Plan subject to the Final Closing Statement
providing an adequate accrual for all employee contributions thereto through the
Closing Date.
9.11 WARN Act.
(a) Purchaser shall assume all obligations and liabilities for
the provision of notice or payment in lieu of notice or any applicable penalties
under the Worker Adjustment and Retraining Notification Act (the "WARN Act") or
any similar state or local law arising as a result of the consummation of the
transactions described herein.
(b) Purchaser shall not, at any time prior to ninety (90) days
after the Closing Date, effectuate a "plant closing" or "mass layoff" as those
terms are defined in the WARN Act affecting the current employees of any Seller
Party without complying fully with WARN Act.
9.12 2004 Audited Financial Statements. Prior to the Closing, Parent
shall use Commercially Reasonable Efforts to obtain and deliver to Purchaser the
following audited consolidated financial statements of Parent and the
Subsidiaries: a balance sheet as of the fiscal year ended December 31, 2004 and
the related statement of income for the fiscal year than ended, and notes
thereto.
9.13 Guidelines and Procedures.
As soon as practicable after the date hereof, Purchaser shall provide Parent
with a true, correct and complete copy (or, if unwritten, a summary thereof) of
the severance pay guidelines and procedures referenced in Section 9.10 above,
together with a true definition of "cause" as currently defined in the
employment guidelines and procedures referenced in Section 9.10 above.
9.14 Additional Matters and Further Assurances.
(a) Upon the terms and subject to the conditions of this
Agreement, each Party shall use its Commercially Reasonable Efforts to take, or
cause to be taken, all actions, and to do, or cause to be done, all things
necessary, proper or advisable, consistent with applicable laws, to consummate
and make effective in the most expeditious manner practicable the transactions
contemplated hereby, including satisfying the conditions to consummation of such
transactions.
38
(b) In addition to the provisions of this Agreement, from time
to time after the Closing Date, the Seller Parties and Purchaser will use
Commercially Reasonable Efforts to execute and deliver such other instruments of
conveyance, transfer or assumption, as the case may be, and take such other
actions as may be reasonably requested to implement more effectively, the
conveyance, transfer and operation, as applicable, of the Acquired Assets and
Acquired Business to or by Purchaser (including the assumption by Purchaser of
the Assumed Liabilities).
ARTICLE X
TERMINATION
10.1 Termination. This Agreement may be terminated and the transactions
contemplated hereby abandoned at any time prior to the Closing in the following
manner:
(a) by mutual written consent of Parent and Purchaser;
(b) by either Parent or Purchaser (provided that such Party
(and in the case of Parent, including each Subsidiary) is not then in material
breach of any provision of this Agreement), upon written notice to the other
Parties, if the Closing shall not have occurred on or before 11:59 p.m.,
Philadelphia, Pennsylvania time, by October 7, 2005;
(c) (i) by Seller Parties (x) contemporaneously with the entry
of an order of the Bankruptcy Court approving an Alternative Transaction, or (y)
if the Alternative Transaction is being consummated through a plan of
reorganization or liquidation, at any time concurrently with or prior to the
substantial consummation (as that term is defined in the Bankruptcy Code) of
such plan of reorganization or liquidation, or (ii) by Purchaser upon the
consummation of any Alternative Transaction;
(d) by Purchaser, upon written notice to the other Parties, if
there shall have been a breach of any representation, warranty, covenant or
agreement set forth in this Agreement on the part of a Seller Party, which
breach gives rise to Purchaser's right not to close and is incapable of cure or,
if capable of cure, shall not have been cured within ten (10) days following
receipt by the breaching Party of written notice of such breach;
(e) by Purchaser or the Seller Parties (i) if the Bidding
Procedures Order is not entered on or before the Outside Bidding Procedures
Order Date, or (ii) if the Bankruptcy Court enters an order (a "Non-Conforming
Bidding Procedures Order") with respect to the bidding procedures for the sale
of all or a substantial portion of the Acquired Assets (including any break-up
fee and/or expense reimbursement provisions), which order does not meet in any
material respect the terms of the Break-Up Fee, Expense Reimbursement Fee or the
bid procedures as contemplated by Section 9.7 hereof or the Bidding Procedures
Motion, unless the circumstances described in clause (i) or (ii) were due to the
failure of the party seeking to terminate this Agreement to perform in any
material respect its obligations under this Agreement required to be performed
by it at or prior to the Outside Bidding Procedures Order Date; provided,
however, that any termination right under subsection 10.1(e)(i) must be
exercised on or before the first Business Day after the Outside Bidding
Procedures Order Date, and any termination right under subsection 10.1(e)(ii)
must be exercised on or before the conclusion of the hearing at which the
Non-Conforming Bidding Procedures Order is entered by the Bankruptcy Court;
39
(f) by Parent, upon written notice to Purchaser, if there
shall have been a breach of any representation, warranty, covenant or agreement
set forth in this Agreement on the part of Purchaser, which breach gives rise to
Parent's right not to close and is incapable of cure or, if capable of cure,
shall not have been cured within ten (10) days following receipt by Purchaser of
written notice of such breach;
(g) by Purchaser or the Seller Parties (i) if the Sale Order
is not entered on or before the Outside Sale Order Date or (ii) if the
Bankruptcy Court enters an order (a "Non-Conforming Sale Order") approving the
sale of all or any substantial portion of the Acquired Assets to Purchaser,
which sale order does not satisfy in any material respect the definition of Sale
Order set forth herein, unless the circumstances described in clause (i) or (ii)
were due to failure of the party seeking to terminate this Agreement to perform
in any material respect its obligations under this Agreement required to be
performed by it at or prior to the Outside Sale Order Date; provided, however,
that any termination right under subsection 10.1(g)(i) must be exercised on or
before the third Business Day after the Outside Sale Order Date, and any
termination right under subsection 10.1(g)(ii) must be exercised on or before
the third Business Day after the entry of the Non-Conforming Sale Order by the
Bankruptcy Court;
(h) by Purchaser, if the Bankruptcy Court converts the Seller
Parties' Chapter 11 Cases to a case under Chapter 7 of the Bankruptcy Code,
appoints a Chapter 11 trustee or dismisses the Seller Parties' Chapter 11 Cases;
or
(i) by Purchaser, if the Seller Parties (other than the
Foreign Subsidiaries) file a proposed plan of reorganization or liquidation in
the Seller Parties' Chapter 11 Cases which does not provide for the consummation
with Purchaser of the transactions set forth herein in accordance with the terms
of this Agreement.
10.2 Procedure and Effect of Termination. Except as set forth in this
paragraph, upon any termination of this Agreement, all rights and obligations of
the Parties hereunder shall terminate without any liability or obligation of any
Party to any other Party, provided that Sections 9.7(d), 9.9, this Section 10.2,
and Article XI shall survive such termination. In the event that this Agreement
is terminated pursuant to Section 10.1(f) above, the Deposit Amount (or an
amount equal to the Deposit Amount if such termination occurs prior to the
Purchaser's funding of the Deposit Amount as contemplated herein) and any
interest accrued thereon shall be paid to Parent and the Subsidiaries in
accordance with the Escrow Agreement (or, if such termination occurs prior to
the Purchasers' funding of the Deposit Amount, within five (5) Business Days
after such termination). In the event this Agreement is terminated pursuant to
any subsection of Section 10.1 other than subsection (f), the Deposit Amount and
any interest accrued thereon shall be paid to Purchaser in accordance with the
Escrow Agreement. The Break-Up Fee and the Expense Reimbursement Fee shall in
all events be payable under the circumstances and in accordance with the timing
set forth in Section 9.7(d). Any amounts paid to a Party under Section 9.7(d) or
this Section 10.2, including the Break-Up Fee, Expense Reimbursement Fee and the
Deposit Amount (or an amount equal to the Deposit Amount if such termination
40
occurs prior to the Purchaser's funding of the Deposit Amount as contemplated
herein), shall constitute liquidated damages, and no Party shall have any
further liability or obligation as a result of such termination. The Parties
acknowledge and agree that if this Agreement is terminated pursuant to Section
10.1, the actual damages incurred will be difficult, if not impossible, to
ascertain and accordingly, the Parties have provided for the liquidated damages
provided above. It is further agreed that this provision shall not be construed
as a penalty, but as a bona fide attempt to establish an agreed measure of
damages which Seller and the Subsidiaries or Purchaser, as the case may be, will
suffer as a result of the termination of this Agreement pursuant to such
Sections.
ARTICLE XI
GENERAL PROVISIONS
11.1 Notices. All notices and other communications hereunder shall be
in writing and shall be deemed duly given (i) on the date of delivery if
delivered personally, (ii) on the date of confirmation of receipt (or, the first
Business Day following such receipt if the date is not a Business Day) of
transmission by telecopy or telefacsimile, or (iii) on the date of confirmation
of receipt (or, the first Business Day following such receipt if the date is not
a Business Day) if delivered by a nationally recognized courier service. All
notices hereunder shall be delivered to the addressees or facsimile numbers set
forth below, or pursuant to such other instructions as may be designated in
writing by the Party to receive such notice:
(a) if to Purchaser, to:
NCO Group, Inc.
000 Xxxxxxxxxx Xxxx
Xxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
with copies to:
NCO Group, Inc.
000 Xxxxxxxxxx Xxxx
Xxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxxx Xxxxxx, Esquire
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
and
Blank Rome LLP
One Xxxxx Square
00xx xxx Xxxxxx Xxxxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxxxxx X. Xxxxxxx, Esquire
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
41
(b) if to Parent or the Subsidiaries, to:
c/o Risk Management Alternatives, Inc.
0000 Xxxxxxxxxxxx Xxxxxxxxx
Xxxxxx, XX 00000
Attention: Xxxxxx Xxxxxxxx
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
with a copy to:
XxXxxxxx Xxxxxxx Co., LPA
000 Xxxxxxxx Xxxxxx, Xxxx
Xxxxx 0000
Xxxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxx
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
11.2 Interpretation. When a reference is made in this Agreement to
Exhibits, such reference shall be to an Exhibit to this Agreement unless
otherwise indicated. When a reference is made in this Agreement to Sections,
such reference shall be to a section of this Agreement unless otherwise
indicated. The table of contents and headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
11.3 Counterparts; Facsimile. This Agreement may be executed in two or
more counterparts, including by facsimile, all of which shall be considered one
and the same agreement and shall become effective when one or more counterparts
have been signed by each of the Parties and delivered to the other Party, it
being understood that all Parties need not sign the same counterpart.
11.4 Entire Agreement. This Agreement and the documents and instruments
and other agreements entered into among the parties hereto on the date hereof or
as contemplated by or referred to herein, including the Seller Disclosure
Letter, constitute the entire agreement among the Parties with respect to the
subject matter hereof and supersede all prior agreements and understandings,
both written and oral, among the Parties with respect to the subject matter
hereof.
11.5 Severability. In the event that any provision of this Agreement or
the application thereof, becomes or is declared by a court of competent
jurisdiction to be illegal, void or unenforceable, the remainder of this
Agreement will continue in full force and effect and the application of such
provision to other Persons or circumstances will be interpreted so as reasonably
to effect the intent of the Parties hereto. The Parties further agree to replace
such void or unenforceable provision of this Agreement with a valid and
enforceable provision that will achieve, to the greatest extent possible, the
economic, business and other purposes of such void or unenforceable provision.
42
11.6 Amendments; Waivers. No alteration, modification, waiver or change
of this Agreement shall be valid except by an agreement in writing executed by
the Parties hereto and consented to in writing by the Bank Agent. Except as
otherwise expressly set forth herein, no failure or delay by any Party hereto in
exercising any right, power or privilege hereunder (and no course of dealing
between or among any of the parties) shall operate as a waiver of any such
right, power or privilege. No waiver of any default on any one occasion shall
constitute a waiver of any subsequent or other default.
11.7 Specific Performance.
The Parties shall be entitled to seek an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and provisions
hereof in any court of the United States or any state having jurisdiction.
11.8 Governing Law; Jurisdiction. This Agreement shall be governed by
and construed and enforced in accordance with (i) the laws of the Commonwealth
of Pennsylvania, without regard to conflict of laws rules or principles and (ii)
the Bankruptcy Code, to the extent applicable.
11.9 Submission to Jurisdiction. Any litigation arising hereunder or
related hereto shall be tried by the Bankruptcy Court or, if the Bankruptcy
Court does not have jurisdiction, in the courts of the Commonwealth of
Pennsylvania, or the United States District Courts, located in the City of
Philadelphia. Each Party irrevocably consents to and confers personal
jurisdiction on the courts referred to above, and irrevocably and
unconditionally waives any objection to the venue of such courts, and further
irrevocably and unconditionally waives and agrees not to plead or claim in any
such court that any lawsuit, action or other Proceeding brought in any such
court has been brought in an inconvenient forum. Each Party further consents to
service of process upon him, her or it by mailing or delivering such service to
the address set forth in Section 11.1 hereof.
11.10 Rules of Construction. The Parties hereto agree that they have
been represented by counsel during the negotiation and execution of this
Agreement and, therefore, waive the application of any law, regulation, holding
or rule of construction providing that ambiguities in an agreement or other
document will be construed against the Party drafting such agreement or
document.
11.11 Assignment. Subject to the following sentence, this Agreement
shall be binding upon and inure to the benefit of the Parties and their
successors and assigns. Neither this Agreement, nor the rights to acquire the
Acquired Assets, nor any of the rights, interests, or obligations hereunder
shall be assigned or delegated by any Party without the prior written consent of
the other Parties provided that no such written consent of any other Party shall
be required for Purchaser to (i) assign or delegate any of its rights and
obligations hereunder to one or more wholly owned, direct or indirect,
subsidiaries of NCO (provided such assignment shall not affect NCO's obligations
under the NCO Guarantee) or (ii) collaterally assign to NCO's or Purchaser's
lenders any or all of Purchaser's rights and interests hereunder; it being
agreed that, in the case of any such assignment under clause (i) or (ii),
Purchaser shall not be relieved of any of its obligations hereunder. Except as
provided in the NCO Guarantee or expressly herein, no direct or indirect holder
of any equity interests or securities of any Party (whether such holder is a
limited or general partner, member, stockholder or otherwise), nor any Affiliate
of any Party, nor any representative of each of the Parties and their respective
Affiliates, shall have any right, liability or obligation arising under this
Agreement or the transactions contemplated hereby.
43
11.12 Waiver of Jury Trial. EACH OF PURCHASER, PARENT AND THE
SUBSIDIARIES HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT
THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION ARISING OUT OF,
UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY. PURCHASER, PARENT AND THE SUBSIDIARIES EACH ACKNOWLEDGE THAT THE OTHER
PARTIES HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, INTER ALIA, THE
PROVISIONS OF THIS SECTION 11.12.
11.13 Fees and Expenses. Except as otherwise provided herein, each
Party shall pay any fees and expenses incurred by it incident to this Agreement
and in preparing to consummate and consummating the transactions provided for
herein.
11.14 Third Party Beneficiary. Unless expressly stated herein to the
contrary, no other third-party beneficiary shall have any legal or equitable
right, remedy or claim under or with respect to any provision of this Agreement.
Section 9.10(h) is intended for the benefit of, and shall be enforceable by, the
participants under the KERP.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
44
IN WITNESS WHEREOF, the Parties, intending to be legally bound hereby, have
caused this Agreement to be executed on their behalf by their officers thereunto
duly authorized, as of the date first above written.
RISK MANAGEMENT ALTERNATIVES NCOP CAPITAL RESOURCE, LLC
PARENT CORP.
By: /s/ Xxxxxx Xxxxxxxxxx By: /s/ Xxxxxxx X. Xxxxxxx
---------------------------- ----------------------------
Name: Name: Xxxxxxx X. Xxxxxxx
Title: Title: President and Chief
Executive Officer
RISK MANAGEMENT ALTERNATIVES RISK MANAGEMENT ALTERNATIVES
HOLDINGS, INC. INTERNATIONAL LIMITED
By /s/ Xxxxxx Xxxxxxxxxx By: /s/ Xxxxxx Xxxxxxxxxx
---------------------------- ----------------------------
Name: Name:
Title: Title:
RESOURCE RECOVERY CONSULTANTS, INC. RMA INTERMEDIATE HOLDINGS
CORPORATION
By: /s/ Xxxxxx Xxxxxxxxxx By: /s/ Xxxxxx Xxxxxxxxxx
---------------------------- ----------------------------
Name: Name:
Title: Title:
RMA MANAGEMENT SERVICES, INC. RISK MANAGEMENT ALTERNATIVES
INTERNATIONAL CORP. CANADA
By: /s/ Xxxxxx Xxxxxxxxxx By: /s/ Xxxxxx Xxxxxxxxxx
---------------------------- ----------------------------
Name: Name:
Title: Title:
NATIONAL REVENUE CORPORATION RISK MANAGEMENT ALTERNATIVES, INC.
By: /s/ Xxxxxx Xxxxxxxxxx By: /s/ Xxxxxx Xxxxxxxxxx
---------------------------- ----------------------------
Name: Name:
Title: Title:
[SIGNATURE PAGE TO PURCHASE AGREEMENT]
45
RISK MANAGEMENT ALTERNATIVES RMA HOLDINGS LLC
PORTFOLIO SERVICES, LLC
By: /s/ Xxxxxx Xxxxxxxxxx By /s/ Xxxxxx Xxxxxxxxxx
---------------------------- ----------------------------
Name: Name:
Title: Title:
PURCHASED PAPER LLC RISK MANAGEMENT ALTERNATIVES
SOLUTIONS LLC
By: /s/ Xxxxxx Xxxxxxxxxx By: /s/ Xxxxxx Xxxxxxxxxx
---------------------------- ----------------------------
Name: Name:
Title: Title:
[SIGNATURE PAGE TO PURCHASE AGREEMENT]
46
ANNEX A
The following entities are collectively referred to as the "Subsidiaries":
RISK MANAGEMENT ALTERNATIVES HOLDINGS, INC.
a Delaware corporation
RISK MANAGEMENT ALTERNATIVES INTERNATIONAL LIMITED
(UK)
RESOURCE RECOVERY CONSULTANTS, INC.
a Delaware corporation
RMA INTERMEDIATE HOLDINGS CORPORATION
a Delaware corporation
RMA MANAGEMENT SERVICES, INC.
an Ohio corporation
RISK MANAGEMENT ALTERNATIVES INTERNATIONAL CORP. CANADA
(Nova Scotia)
NATIONAL REVENUE CORPORATION
an Ohio corporation
RISK MANAGEMENT ALTERNATIVES, INC.
a Delaware corporation
RISK MANAGEMENT ALTERNATIVES PORTFOLIO SERVICES, LLC
a Delaware limited liability company
RMA HOLDINGS LLC
a Delaware limited liability company
PURCHASED PAPER LLC
a Delaware limited liability company
RISK MANAGEMENT ALTERNATIVES SOLUTIONS LLC
a Delaware limited liability company
X-0
XXXXX X
"00 Xxxxxxx Clients" shall have the meaning set forth in Section 5.16
hereof.
"Account" means every obligation of any obligor to pay money, whether
under a credit card arrangement, open account balance, installment sales or
payment agreement, deferred payment contract or any other arrangement, to the
extent either RMAPS or Purchased Paper LLC owns the rights to such obligation.
"Account Document" means, with respect to each Account, any
application, purchase or other agreement, billing statement, notice,
correspondence or other information in the Seller Parties' possession that
relates to an Account. An Account Document may include, without limitation,
original documents or copies thereof, whether by photocopy, microfiche,
microfilm or other reproduction process. Notwithstanding the foregoing, Account
Document shall not include any correspondence, report, information, internal
analyses, attorney-client privileged documents, internal memoranda, documents,
credit information, regulatory reports, and/or internal assessments of valuation
of such Account.
"Accounts Receivable" means (a) any right to payment for goods sold,
leased or licensed or for services rendered, whether or not it has been earned
by performance, whether billed or unbilled, and whether or not it is evidenced
by any Contract; or (b) any note receivable.
"Acquired Assets" shall have the meaning set forth in Section 2.1(a)
hereof.
"Acquired Business" means the businesses comprised by the Acquired
Assets, subject to the Assumed Liabilities.
"Acquired Leased Real Property" means all real property leased and used
or held for use by any Seller Party in the operation of the Acquired Business
and that is set forth in the list of Assigned Contracts and Leases on Schedule
2.1(b) hereto.
"Affiliates" means with respect to any Person, any other Person
controlling, controlled by or under common control with such first Person. The
term "control" (including, with correlative meaning, the terms "controlled by"
and "under common control with"), as used with respect to any Person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise.
"Agreement" means this Purchase Agreement, including all Annexes,
Exhibits and Schedules hereto, as the same may be amended from time to time in
accordance with its terms.
"Alternative Transaction" means (i) any transaction or series of
related transactions (regardless of the form thereof) involving a sale of all or
any substantial portion of the Acquired Assets (provided, however, the sale of
all, or substantially all, of the Accounts shall be deemed to be a sale of a
substantial portion of the Acquired Assets) by the Seller Parties to a purchaser
or purchasers other than Purchaser, (ii) the granting of relief from the
automatic stay provisions under Section 362 in favor of the Bank Agent, together
with the Bank Agent's subsequent foreclosure under Section 9-610 or 9-620 of the
Uniform Commercial Code (or through a state court proceeding) on all or any
substantial portion of the Acquired Assets and a related sale to a purchaser
(including a sale to the Bank Agent) or purchasers other than the Purchaser or
(iii) conversion of the case to Chapter 7, together with a subsequent sale of
all or any substantial portion of the Acquired Assets to a purchaser (including
a sale to the Bank Agent) or purchasers other than the Purchaser.
B-1
"Applicable Revenue Target" means (i) $13,934,000 if the Closing occurs
in August; (ii) $28,476,000 if the Closing occurs in September; and (iii)
$42,909,000 if the Closing occurs in October.
"Arbiter" shall have the meaning set forth in Section 2.4(b)(v) hereof.
"Assigned Contracts and Leases" shall have the meaning set forth in
Section 2.1(b) hereof.
"Assignment and Assumption Agreements" shall have the meaning set forth
in Section 4.2(b) hereof.
"Assumed Liabilities" shall have the meaning set forth in Section 2.2
hereof.
"Auction" shall have the meaning ascribed to such term in the Bidding
Procedures Order.
"Audited Financial Statements" shall have the meaning set forth in
Section 5.5(b) hereof.
"Bank Agent" shall have the meaning set forth in Section 2.8 hereof.
"Bankruptcy Code" means title 11 of the United States Code, as amended.
"Bankruptcy Court" means the United States Bankruptcy Court for the
District of Ohio, Youngstown Division.
"Base Amount" shall have the meaning set forth in Section 2.3(a)
hereof.
"Bidding Procedures Motion" shall have the meaning set forth in Section
9.7(a)(ii) hereof.
"Bidding Procedures Order" means an Order of the Bankruptcy Court
(substantially in the form of Exhibit A attached hereto) approving, among other
things, the payment of the Break-Up Fee and Expense Reimbursement Fee to
Purchaser, bidding on a bulk basis (i.e., not on a lot basis) and otherwise
establishing the procedures for noticing the approval of this Agreement and any
Auction that may be required and otherwise approving the terms of this Agreement
relating to such payment and such procedures.
"Bills of Sale" shall have the meaning set forth in Section 4.2(a)
hereof.
"Break-Up Fee" means the fee, if any, to be paid by Parent and the
Subsidiaries to Purchaser in accordance with the provisions of Sections
9.7(d)(i) and 10.2 hereof.
B-2
"Business Day" shall mean a day other than a Saturday, Sunday or other
day on which commercial banks in New York, New York are authorized or required
by Law to close.
"CFSC" means CFSC Capital Corp. XXIV.
"Claim Notice" shall have the meaning set forth in Section 8.3(b)
hereof.
"Client Trust Accounts" shall have the meaning set forth in Section
5.18 hereof.
"Closing" shall have the meaning set forth in Section 4.1 hereof.
"Closing Date" shall have the meaning set forth in Section 4.1 hereof.
"Closing Payment" shall have the meaning set forth in Section 2.3(a)
hereof.
"Closing Statement" shall have the meaning set forth in Section
2.4(b)(iii) hereof.
"COBRA" means Part 6 of Subtitle B of Title I of ERISA, Section 4980B
of the Code and any similar state Law.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commercially Reasonable Efforts" means efforts in accordance with
reasonable commercial practice for collection agencies and companies that
purchase pools of distressed debt and without the incurrence of unreasonable
expense.
"Consent" means any consent, approval or authorization of, notice to,
or designation, registration, declaration or filing with, any Person.
"Contract" means any written or material oral contract, agreement,
instrument, order or commitment of any nature, including 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.
"Contract Commitment Date" shall have the meaning set forth in Section
2.1(b) hereof.
"Xxxxxxxxxx Agreement" means the Senior Management Agreement, dated
September 20, 1996, by and between Risk Management Alternatives Holdings, Inc.
and Xxxxxx Xxxxxxxxxx, as amended by the Amendment No. 1, dated as of December
29, 1999, and the Second Amendment and Acknowledgment to Senior Management
Agreement, in each case by and among Risk Management Alternatives Holdings,
Inc., Parent and Xxxxxx Xxxxxxxxxx, as such shall be further amended pursuant to
the Third Amendment contemplated herein.
"Cure-Amounts" means all amounts required to be paid by the Seller
Parties in order to cure any pre- or post-petition monetary or other defaults
under any Assigned Contracts or Leases in accordance with the provisions of
Section 365 of the Bankruptcy Code, the Bidding Procedures Order and the Sale
Order; provided, however, Cure Amounts do not include amounts related to consent
or similar fees or any other negotiated amount in excess of the contractual
amount needed to cure any pre- or post-petition monetary or other defaults.
B-3
"Deposit Amount" shall have the meaning set forth in Section 2.3(a)
hereof.
"DIP Financing Order" shall have the meaning set forth in Section 2.8
hereof.
"Employee Benefit Plan" means any employee benefit plan as defined in
Section 3(3) of ERISA, and any other material 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, or material employee welfare or
fringe benefits of any nature; but not including employment Contracts with
individual employees.
"Environmental Laws" means all applicable Laws (including consent
decrees and administrative orders) relating to the public health and safety and
protection of the environment including those governing the use, generation,
handling, storage and disposal or cleanup of Hazardous Substances, all as
amended.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Escrow Account" shall have the meaning set forth in Section 2.3(a)
hereof.
"Escrow Agreement" shall have the meaning set forth in Section 2.3(a)
hereof.
"Estimated Excess Trust Cash" shall have the meaning set forth in
Section 2.4(d)(i) hereof.
"Estimated Revenue Adjustment Amount" shall have the meaning set forth
in Section 2.4(c)(i) hereof.
"Estimated WC" shall have the meaning set forth in Section 2.4(b)(ii)
hereof.
"Estimated WC Adjustment" shall have the meaning set forth in Section
2.4(b)(ii) hereof.
"Excess Trust Cash" means the aggregate sum of the cash assets held in
the Client Trust Accounts as of the Closing for which an offsetting liability
due to such clients does not exist as of the Closing (including any such
liability arising, for example and without duplication, from unremitted client
funds or funds related to transactions that have not been consummated (e.g.,
outstanding checks or wires)), in each case as determined consistent with past
practice.
"Excess Trust Cash Calculation" shall have the meaning set forth in
Section 2.4(d)(ii) hereof.
"Excluded Assets" shall have the meaning set forth in Section 2.1(a)
hereof.
B-4
"Excluded Liabilities" shall have the meaning set forth in Section 2.2
hereof.
"Expense Reimbursement Fee" shall have the meaning set forth in Section
9.7(d)(ii) hereof.
"Filing Date" shall have the meaning set forth in Section 9.7(a)
hereof.
"Final Closing Statement" shall have the meaning set forth in Section
2.4(b)(vi) hereof.
"Final Order" means any Order of the Bankruptcy Court after all
opportunities for rehearing, reargument, petition for certiorari and appeal are
exhausted and any requests for rehearing have been denied, and that has not been
revised, stayed, enjoined, set aside, annulled, reversed, remanded, modified or
suspended, with respect to which any required waiting period has expired, and to
which all conditions to effectiveness prescribed therein or otherwise by law or
Order have been satisfied; provided, however, that no Order shall fail to be a
Final Order solely because of the possibility that a motion pursuant to Rule 60
of the Federal Rules of Civil Procedure or Bankruptcy Rule 9024 may be filed
with respect to such Order.
"Final WC" shall have the meaning set forth in Section 2.4(b)(vi)
hereof.
"Foreign Subsidiaries" shall have the meaning set forth in Section
4.2(e) hereof.
"GAAP" means generally accepted accounting principles under current
United States accounting rules and regulations, consistently applied.
"Governmental Body" means any: (i) nation, principality, republic,
state, commonwealth, province, territory, county, municipality, district or
other jurisdiction of any nature; (ii) federal, state, local, municipal, foreign
or other government; (iii) governmental or quasi-governmental authority of any
nature (including any governmental division, subdivision, department, agency,
bureau, branch, office, commission, council, board, instrumentality, officer,
official, representative, organization, unit, body or entity and any court or
other tribunal); (iv) multi-national organization or body; or (v) individual,
entity or body exercising, or entitled to exercise, any executive, legislative,
judicial, administrative, regulatory, police, military or taxing authority
(including the Bankruptcy Court).
"Hazardous Substances" means any substance, waste, contaminant,
pollutant or material that has been determined by any Governmental Body in,
under or pursuant to any Environmental Law to be capable of posing a risk of
injury or damage to health, safety, property or the environment including (a)
all substances, wastes, contaminants, pollutants and materials defined,
designated or regulated as hazardous, dangerous or toxic pursuant to any Law,
and (b) asbestos, polychlorinated biphenyls ("PCBs"), petroleum, petroleum
products and urea formaldehyde.
"Holdings" means Risk Management Alternatives Holdings, Inc., a
Delaware corporation.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Anti-Trust Improvements Act of
1976, as amended and the rules and regulations promulgated thereunder.
B-5
"Indemnifiable Losses" means all liabilities, obligations, claims,
demands, damages, penalties, settlements, causes of action, costs and expenses
actually paid or incurred, including the actual costs paid or incurred in
connection with an Indemnified Party's investigation and evaluation of any claim
or right asserted against such Indemnified Party and all reasonable attorneys',
experts' and accountants' fees, expenses and disbursements and court costs
relating thereto, including those incurred in connection with the Indemnified
Party's enforcement of this Agreement, including the indemnification provisions
of Article VIII of this Agreement.
"Indemnity Amount" shall have the meaning set forth in Section 2.3(b)
hereof.
"Indemnity Notice" shall have the meaning set forth in Section 8.3(a)
hereof.
"Indemnified Party" shall have the meaning set forth in Section 8.3(a)
hereof.
"Indemnifying Party" shall have the meaning set forth in Section 8.3(a)
hereof.
"Intangible Property" means any corporate name, fictitious name,
trademark, trademark application, service xxxx, service xxxx application, trade
name, brand name, product name, slogan, trade secret, know-how, patent, patent
application, copyright, copyright application, design, logo, formula, invention,
product right, technology or other intangible asset of any nature in use in the
Acquired Business.
"Intellectual Property Assets" means: (i) all rights in Software; (ii)
all patents, patent applications, and patent rights (collectively, "Patents");
(iii) all trade names, product names, brand names, trade dress, logos, packaging
design, slogans, registered and unregistered trademarks and service marks and
applications (collectively, "Marks"); (iv) all copyrights in both published and
unpublished works, including without limitation all compilations, databases and
computer programs, and all copyright registrations and applications, and all
derivatives, translations, adaptations and combinations of the above
(collectively, "Copyrights"); (v) all inventions and discoveries and invention
disclosures (whether or not patentable) know-how, trade secrets, confidential or
proprietary information, research in progress, algorithms, data, designs,
processes, formulae, drawings, schematics, blueprints, source code, flow charts,
models, prototypes, techniques, Beta testing procedures and Beta testing results
(collectively, "Trade Secrets"); and (vi) all goodwill associated with Marks and
claims of infringement against third parties related to the intellectual
property rights described in clauses (i) through (vi) above (to the extent such
claims are transferable) (the "Rights").
"Judgment" means any order, writ, injunction, citation, award, decree
or other judgment of any nature of any Governmental Body.
"KERP" shall have the meaning set forth in Section 9.10(h) hereof.
"KERP Letter(s)" shall have the meaning set forth in Section 9.10(h)
hereof.
"KERP Participant" shall have the meaning set forth in Section 9.10(h)
hereof.
"Knowledge" with reference to the phrases "to the Knowledge of Parent
or the Subsidiaries" means that none of the officers or directors of any of the
Seller Parties have any actual knowledge, after reasonable inquiry, that the
statement made is incorrect. The term "knowledge" is used herein as a qualifier,
not an affirmation, of the statement being made.
B-6
"Law" means any provision of any foreign, federal, state or local law,
statute, ordinance, charter, constitution, treaty, code, rule or regulation.
"Liens" means (i) with respect to real property, liens, claims,
charges, pledges, options, mortgages, deeds of trust, security interests,
claims, easements, and other encumbrances affecting title to real property and
(ii) with respect to personal property, liens, claims, charges, pledges, options
and security interests and other encumbrances, and in the case of (i) or (ii),
whether imposed by law or agreement.
"Loan Agreement" shall have the meaning set forth in Section 2.8
hereof.
"Material Adverse Effect" means any material adverse change, event,
circumstance, condition or effect on or to the financial condition, financial
performance, business or assets of Parent and the Subsidiaries taken as a whole
(but only to the extent that such material adverse change, event, circumstance,
condition or effect would continue to affect the Acquired Assets or the
Purchaser's operation of the Acquired Assets following the Closing), without
giving effect to such changes, events, circumstances, conditions or effects (i)
generally affecting the industry in which Parent and the Subsidiaries operate or
arising from changes in the general business or economic conditions in the
United States or in any jurisdiction in which the business of Parent and the
Subsidiaries is conducted, but not disproportionately affecting Parent or the
Subsidiaries; (ii) resulting from war, acts of terrorism, or the commencement or
escalation of hostilities against terrorism; (iii) resulting from any change in
GAAP or other accounting requirements or principles or any change in applicable
rules or regulations or the interpretation thereof; (iv) resulting from the
announcment, pendency or consummation of the acquisition of the Acquired
Business by Purchaser, including as a result of Purchaser's pre-Closing
communications with Seller Parties' clients; (v) resulting from the Seller
Parties' loss of any particular client if such client becomes a client of
Purchaser, NCO or any of their respective Affiliates; or (vi) affecting the
aggregate gross revenues of Holdings and its subsidiaries and, as result
thereof, taken into account (or to be taken into account) hereunder in
determining the Estimated Revenue Adjustment Amount.
"Material Contract" means any Assigned Contract and Lease (i) that is a
lease or agreement under which a Seller Party is lessee of, or holds or operates
any personal property owned by another party, for which the annual rental
exceeds $250,000, (ii) that is a contract or group of related contracts with the
same party for the purchase of products or services involving payments of more
than $500,000 per year, (iii) that is a contract or group of related contracts
with the same party for the sale of products or services involving payments of
more than $1,000,000 per year or (iv) the termination of which would reasonably
be expected to have a Material Adverse Effect; provided, however, that with
respect to the foregoing clauses (i), (ii) and (iii), as such relate to each
Foreign Subsidiary, the dollar values referenced therein shall instead be deemed
to equal $25,000, $50,000 and $100,000, respectively.
"Minimum WC" shall have the meaning set forth in Section 2.4(b)(ii)
hereof.
B-7
"Motion" shall have the meaning ascribed to such term in Section 9.7(a)
hereof.
"NEX Lease" means the Lease, dated as of December 30, 1996, between
MRSL Atlanta I, L.L.C., as landlord (including an successor thereto), and
Equifax Credit Information Services, Inc., as tenant, for the premises located
at 0000 Xxxxxxxxx Xxxxxxxxxx, Xxxxxxx, Xxxxxxx, as amended and assigned from
time to time, including by the First Amendment to Lease, dated as of November
16, 2001, by and between AMPIC Associates and Risk Management Alternatives
Solutions LLC, together with any indemnity obligations arising thereunder.
"NCO" shall have the meaning set forth in the recitals hereof.
"NCO Guarantee" means the guarantee of NCO dated as of the date hereof,
for the benefit of Seller Parties.
"Non-Conforming Bidding Procedures Order" shall have the meaning set
forth in Section 10.1(e) hereof.
"Non-Conforming Sale Order" shall have the meaning set forth in Section
10.1(g) hereof.
"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.
"Other Contracts" shall have the meaning set forth in Section 5.14(a)
hereof.
"Order" means any order, injunction, judgment, decree, ruling, writ or
assessment.
"Other Contracts" shall have the meaning set forth in Section 5.14(a)
hereof.
"Outside Bidding Procedures Order Date" shall have the meaning set
forth in Section 9.7(a)(i) hereof.
"Outside Sale Order Date" shall have the meaning set forth in Section
9.7(c)(ii) hereof.
"Parent" shall have the meaning set forth in the Preamble to this
Agreement.
"Party" or "Parties" shall have the meaning set forth in the Preamble
to this Agreement.
"Permit" means any license, permit, approval, waiver, order,
authorization, right or privilege of any nature, granted, issued, approved or
allowed by any Governmental Body.
"Permitted Liens" shall mean with respect to each Acquired Leased Real
Property: (A) mechanics liens and similar liens for labor, materials or supplies
provided with respect to such Acquired Leased Real Property incurred in the
ordinary course of business for amounts which are not delinquent and which would
not, individually or in the aggregate, have a material adverse effect on the
Acquired Business or which are being contested by appropriate proceedings and
(B) zoning, building codes and other land use Laws regulating the use or
occupancy of such Acquired Leased Real Property or the activities conducted
thereon which are imposed by any governmental authority having jurisdiction over
such Acquired Leased Real Property which are not violated by the current use or
occupancy of such Acquired Leased Real Property or the operation of the Acquired
Business, or any violation which would not have a material adverse effect on the
Acquired Business.
B-8
"Person" means any corporation, partnership, joint venture, limited
liability company, organization, entity, authority or individual.
"Portfolio Collections Amount" shall have the meaning set forth in
Section 2.4(a) hereof.
"Post-Closing Escrow Amount" shall have the meaning set forth in
Section 2.3(b) hereof.
"Potential Bidder" shall have the meaning ascribed to such term in the
Bidding Procedures Order.
"PPA Amount" shall have the meaning set forth in Section 2.3(b) hereof.
"Pre-Closing Statement" shall have the meaning set forth in Section
2.4(b)(i) hereof.
"Proceeding" means any demand, claim, suit, action, litigation,
investigation, arbitration, administrative hearing or other proceeding of any
nature by or before any Governmental Body, including any attorney general
investigations or complaints.
"Purchase Price" shall have the meaning set forth in Section 2.3(a)
hereof.
"Purchaser" shall have the meaning set forth in the Preamble to this
Agreement.
"Purchaser Group" shall have the meaning set forth in Section 8.1
hereof.
"Qualified Bid" shall have the meaning ascribed to such term in the
Bidding Procedures Order.
"Qualified Bidder" shall have the meaning ascribed to such term in the
Bidding Procedures Order.
"Real Property" means any real estate, land, building, condominium,
town house, structure or other real property of any nature, all shares of stock
or other ownership interests in cooperative or condominium associations or other
forms of ownership interest through which interests in real estate may be held,
and all appurtenant and ancillary rights thereto, including easements,
covenants, water rights, sewer rights and utility rights.
"Resolution Period" shall have the meaning set forth in Section
2.4(b)(iv) hereof.
"Revenue Adjustment Amount" means $45,346,000 multiplied by a fraction,
the numerator of which shall be the Revenue Shortfall Amount and the denominator
of which shall be the Applicable Revenue Target.
"Revenue Calculation" shall have the meaning set forth in Section
2.4(c)(ii) hereof.
B-9
"Revenue Shortfall Amount" the Applicable Revenue Target less the
aggregate gross revenues of Holdings and its subsidiaries for the period
commencing July 1, 2005 and ending on the last day of the last full month
preceding the Closing Date. The calculation of gross revenues described in the
preceding sentence shall be determined in accordance with the same accounting
methods, policies, practices and procedures, with consistent classifications,
judgments and estimation methodology, as consistent with past practices.
"RMA Holdings Guaranty" means the Guaranty, dated as of December 22,
2000, from RMA Holdings LLC to AMPIC Associates (with respect to the obligations
of the lessee under that certain Lease, dated as of December 30, 1996, between
MRSL Atlanta I, L.L.C., as landlord, and Equifax Credit Information Services,
Inc., as tenant, for the premises located at 0000 Xxxxxxxxx Xxxxxxxxxx, Xxxxxxx,
Xxxxxxx, as amended by the First Amendment to Lease, dated as of November 16,
2001, by and between AMPIC Associates and Risk Management Alternatives Solutions
LLC).
"RMAPS" shall have the meaning set forth in Section 3.3(c) hereof.
"Sale Hearing" shall have the meaning set forth in Section 9.7(c)(ii)
hereof.
"Sale Order" means an Order of the Bankruptcy Court (substantially in
the form of Exhibit B attached hereto) approving the terms and conditions of
this Agreement, including the sale of the Acquired Assets and the transfer of
the Assumed Liabilities under Sections 363 and 1146 of the Bankruptcy Code, and
the assignment, assumption and sale of the Assigned Contracts and Leases in
accordance with the provisions of Sections 105, 363 and 365 of the Bankruptcy
Code, and containing a finding that Purchaser is entering into the transactions
set forth herein in "good faith" as such term is used in Section 363(m) of the
Bankruptcy Code, and a finding that the sale price was not controlled by an
agreement among potential bidders, as set forth in Section 363(n) of the
Bankruptcy Code.
"Schedules" means the schedules hereto.
"Seller Affiliate Transaction" shall have the meaning set forth in
Section 5.23 hereof.
"Seller Disclosure Letter" shall have the meaning set forth in Article
V hereof.
"Seller Parties' Chapter 11 Cases" means the cases to be commenced by
the Seller Parties (other than the Foreign Subsidiaries) within one (1) Business
Day after the date hereof under Chapter 11 of the Bankruptcy Code.
"Seller Party" and "Seller Parties" shall have the meaning set forth in
the Preamble to this Agreement.
"Shares" shall have the meaning set forth in Section 5.2(a).
"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.
B-10
"Solicitation Period" means the period between the Filing Date and the
Closing Date.
"Specified Software" means the Software listed in Section 5.8 of the
Seller Disclosure Letter.
"Statement of Adjustments" shall have the meaning set forth in Section
2.4(b)(vi) hereof.
"Subsidiaries" means Risk Management Alternatives Holdings, Inc., Risk
Management Alternatives International Limited, Resource Recovery Consultants,
Inc., RMA Intermediate Holdings Corporation, RMA Management Services, Inc., Risk
Management Alternatives International Corp. Canada, National Revenue
Corporation, Risk Management Alternatives, Inc., Risk Management Alternatives
Portfolio Services, LLC, RMA Holdings LLC, Purchased Paper LLC, and Risk
Management Alternatives Solutions LLC.
"Sufficiency of Trusts Rep" shall have the meaning set forth in Section
7.1 hereof.
"Tangible Property" means any furniture, fixtures, leasehold
improvements, vehicles, office equipment, computer equipment, other equipment,
machinery, tools, forms, supplies or other tangible personal property of any
nature.
"Taxes" means all taxes, charges, fees, duties, levies or other
assessments, including income, gross receipts, net proceeds, ad valorem,
turnover, real and personal property (tangible and intangible), sales, use,
franchise, excise, value added, license, payroll, unemployment, environmental,
customs duties, capital stock, disability, stamp, leasing, lease, user,
transfer, fuel, excess profits, occupational and interest equalization, windfall
profits, severance and employees' income withholding and Social Security taxes
imposed by the United States or any other country or by any state, municipality,
subdivision or instrumentality of the United States or of any other country or
by any other tax authority, including all applicable penalties and interest, and
such term shall include any interest, penalties or additions to tax attributable
to such Taxes.
"Tax Return" means any report, return or other information required to
be supplied to a taxing authority in connection with Taxes.
"Third Amendment" shall have the meaning set forth in Section 9.10(i)
hereof.
"Threshold Amount" shall have the meaning set forth in Section 8.5
hereof.
"Transferred Employee" shall have the meaning set forth in Section 9.10
hereof.
"Transition Services Agreement" shall have the meaning set forth in
Section 4.2(f) hereof.
"Unaudited Financial Statements" shall have the meaning set forth in
Section 5.5(b) hereof.
B-11
"Undisclosed Contract" shall have the meaning set forth in Section
2.1(c) hereof.
"WARN Act" shall have the meaning set forth in Section 9.11(a) hereof.
"Winning Bidder" shall have the meaning ascribed to such term in the
Bidding Procedures Order.
"Working Capital" means, with respect to Holdings and its subsidiaries
as of the Closing Date, the result obtained by performing a calculation of the
same type used in deriving the working capital set forth as of April 30, 2005 on
the attached Working Capital Schedule (the "April WC Amount"). Except as
otherwise provided in the footnotes to the Working Capital Schedule, any such
calculation of Working Capital shall take into account the same components
(i.e., line items) of, and adjustments to, the working capital reflected by the
April WC Amount. Further to the preceding sentence, except as otherwise provided
in the footnotes to the Working Capital Schedule, any such calculation of
Working Capital shall be determined in accordance with the same accounting
methods, policies, practices and procedures, with consistent classifications,
judgments and estimation methodology, as were used in the preparation of the
April WC Amount (with GAAP applied in a manner consistent with GAAP applied to
the consolidated balance sheet of Parent and the Subsidiaries as of December 31,
2004). The Parties agree that the purpose of determining Working Capital
hereunder is to measure changes in working capital without the introduction
(except as otherwise provided in the footnotes to the Working Capital Schedule)
of different accounting methods, policies, practices, procedures,
classifications, judgments or estimation methodologies from those used in the
preparation of the April WC Amount. At Closing, the KERP accrual will consist of
the aggregate amount of (i) the "Retention Bonus Payments" payable under the
KERP, (ii) the employer taxes attributable to such payments and (iii) the
maximum amount of the employer's share of the cost to provide the health and
welfare benefits provided under the KERP. In addition, at Closing, the accounts
receivable balance will be reduced by any known refunds, discounts, rights of
setoff or assignments affecting such accounts receivable.
B-12
