EXHIBIT 2.1
EXECUTION COPY
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ASSET PURCHASE AGREEMENT
BY AND BETWEEN
ACCESS CASH INTERNATIONAL L.L.C.
AND
HANCO SYSTEMS, INC.
DATED AS OF
JANUARY 31, 2002
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TABLE OF CONTENTS
ARTICLE I TRANSFER OF ASSETS; ASSUMPTION OF LIABILITIES..................... 1
1.01 Transfer of Assets............................................ 1
1.02 Excluded Assets............................................... 3
1.03 Assumption of Liabilities..................................... 4
1.04 Retained Liabilities.......................................... 4
ARTICLE II PURCHASE PRICE................................................... 4
2.01 Amount; Manner of Payment..................................... 4
2.02 Allocation of Purchase Price.................................. 5
ARTICLE III CLOSING......................................................... 5
3.01 Closing....................................................... 5
3.02 Closing Procedure............................................. 6
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF SELLER......................... 7
4.01 Incorporation and Corporate Power............................. 8
4.02 Execution and Delivery; Valid and Binding Agreement........... 8
4.03 Governmental Authorities; Consents............................ 8
4.04 Noncontravention.............................................. 9
4.05 Subsidiaries.................................................. 9
4.06 Financial Statements.......................................... 9
4.07 Absence of Undisclosed Liabilities............................ 10
4.08 No Material Adverse Effect.................................... 10
4.09 Absence of Certain Developments............................... 10
4.10 Real Property................................................. 11
4.11 Assets........................................................ 11
4.12 Inventory..................................................... 12
4.13 Customers..................................................... 12
4.14 Suppliers..................................................... 12
4.15 Tax Matters................................................... 12
4.16 Contracts and Commitments..................................... 14
4.17 Intellectual Property Rights.................................. 14
4.18 Litigation; Orders............................................ 14
4.19 [Reserved].................................................... 15
4.20 Employees; Labor Matters...................................... 15
4.21 ERISA Matters................................................. 16
4.22 Compliance with Laws; Permits................................. 16
4.23 Environmental Matters......................................... 16
4.24 Books and Records............................................. 17
4.25 Brokerage..................................................... 17
4.26 Disclosure.................................................... 17
Article V REPRESENTATIONS AND WARRANTIES OF BUYER........................... 17
5.01 Organization and Power........................................ 17
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5.02 Execution, Delivery; Valid and Binding Agreement.............. 17
5.03 Governmental Authorities; Consents............................ 18
5.04 Noncontravention.............................................. 18
5.05 Brokerage..................................................... 18
ARTICLE VI POST-CLOSING COVENANTS........................................... 18
6.01 Transfer and Sales Taxes...................................... 18
6.02 Merchant Contracts; Payment of Retained Liabilities........... 18
6.03 Further Assurances............................................ 19
6.04 Cooperation with Proceedings.................................. 19
6.05 Access to Records............................................. 19
6.06 Restrictions on Seller Dissolution and Distributions.......... 20
6.07 Customer and Other Business Relationships..................... 20
6.08 Accounts Receivable........................................... 20
6.09 Use of Seller's Name and Marks, etc........................... 20
6.10 Purchase of Certain ATMs...................................... 21
ARTICLE VII OTHER AGREEMENTS................................................ 21
7.01 Employment and Employee Benefit Matters....................... 21
7.02 Noncompetition, Nonsolicitation and Nondisparagement.......... 23
7.03 Expenses...................................................... 24
7.04 Pro-Ration of Certain Taxes................................... 24
7.05 Proposed Termination of MAS/Concord Agreement................. 25
7.06 Remittance of Payments........................................ 25
ARTICLE VIII SURVIVAL; INDEMNIFICATION...................................... 25
8.01 Survival of Representations and Warranties.................... 25
8.02 Indemnification by Seller..................................... 26
8.03 Indemnification by Buyer...................................... 26
8.04 Time Limitations.............................................. 27
8.05 Limitations on Amount......................................... 27
8.06 Application of Indemnification Holdback Amount................ 28
8.07 Method of Asserting Claims.................................... 28
8.08 Indemnification Exclusive Remedy.............................. 31
8.09 Subrogation................................................... 31
ARTICLE IX MISCELLANEOUS.................................................... 31
9.01 Amendment and Waiver.......................................... 31
9.02 Notices....................................................... 31
9.03 Assignment.................................................... 33
9.04 Severability.................................................. 33
9.05 Complete Agreement............................................ 33
9.06 Counterparts.................................................. 33
9.07 Governing Law................................................. 33
9.08 No Third Party Beneficiaries.................................. 33
9.09 Bulk Sales Laws............................................... 34
9.10 Interpretation................................................ 34
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EXHIBITS
Exhibit A Allocation of Purchase Price
Exhibit B Form of Xxxx of Sale and Assignment
Exhibit C Form of Transition Services Agreement
Exhibit D Form of Hanco Realty, LLC Guaranty
Exhibit E Form of Headquarters Lease
Exhibit F Form of Individual Noncompetition Agreements
Exhibit G Form of Legal Opinion of Seller's Counsel
Exhibit H Form of eFunds Corporation Guaranty
Exhibit I Form of Employment Agreement for Xxxx Xxxxxx
Exhibit J Form of Employment Agreement for X.X. Xxxxxx
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ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (this "Agreement"), dated as of January 31,
2002, is made and entered into by and between Access Cash International L.L.C.,
a Delaware limited liability company ("Buyer"), and Hanco Systems, Inc., a
Georgia corporation ("Seller").
WHEREAS, Seller is engaged, among other things, in the business of
providing electronic funds transfer services and marketing, selling, leasing and
servicing automated teller machines in the United States (such business is
referred to herein as the "Business"); and
WHEREAS, Seller desires to sell and assign to Buyer, and Buyer desires to
purchase and assume from Seller, pursuant to the terms of this Agreement,
certain assets and liabilities of Seller used or held for use in connection with
the Business.
NOW, THEREFORE, in consideration of the mutual covenants, representations,
warranties and agreements and the conditions set forth in this Agreement, the
parties agree as follows:
ARTICLE I
TRANSFER OF ASSETS; ASSUMPTION OF LIABILITIES
1.01 Transfer of Assets.
Pursuant to the terms of this Agreement, at the Closing (as defined in
Section 3.01 of this Agreement) Seller shall sell, transfer and assign to
Buyer, and Buyer shall purchase and acquire from Seller, all of Seller's
right, title and interest in and to the following properties, assets and
rights of Seller (collectively, except for the excluded assets set forth
in Section 1.02 hereof, but including any intellectual and/or proprietary
rights of Seller that are embodied in the following assets, the "Assets"):
(a) all contracts, agreements, commitments, promises or undertakings to
which Seller is a party, whether oral or written ("Contracts"),
including any pending Contracts, for the provision of electronic
funds transfer services to Seller's customers ("Customer Processing
Contracts"), which Contracts are expressly set forth in Section
1.01(a) of the Disclosure Memorandum (as defined in the preamble to
Article IV of this Agreement);
(b) the Money Access Service Processing Agreement, dated as of June 4,
2001, between Seller and Money Access Service Inc., as amended to
date (the "MAS/Concord Agreement"), and the Principal Distributor
Agreement, dated as of July 1, 1999 (the "Xxxx Agreement"), by and
between Seller and Xxxx Systems, Inc. ("Xxxx"), subject, in the case
of the MAS/Concord Agreement, to any required consent of Money
Access Service Inc. or its successor;
(c) all of the other Contracts expressly set forth in Section 1.01(c) of
the Disclosure Memorandum, including all of Seller's Contracts or
pricing schedules with the
twelve independent sales representatives and five distributors
listed in Section 1.01(c) of the Disclosure Memorandum;
(d) all automated teller machines ("ATMs") owned by Seller as of the
Closing Date and located at any customer location or otherwise used
or held for use in connection with the Business, the three service
vans used by Seller's service representatives (subject to leases on
two such vans and the consent of the lessor, or the payoff of such
leases by Buyer), the test ATMs used by Seller's help desk and the
tools and equipment used by Seller's service personnel, all as used
by, or in connection with, the Business and the Assets, and all as
expressly set forth or described in Section 1.01(d) of the
Disclosure Memorandum (collectively, the "Fixed Assets");
(e) all inventories of ATM parts, testing and service tools for ATMs,
decals and signage used or held for use in connection with the
Business and all inventories of advertising materials, as expressly
set forth in Section 1.01(e) of the Disclosure Memorandum (the
"Inventory");
(f) originals, or where appropriate, true and complete copies of all
books, records and other documents and information (whether in
documentary, electronic or other form) relating to the Assets and/or
the Assumed Liabilities;
(g) all accounts receivable, existing at or arising after the Closing
Date and on the Seller's books and records as assets of Seller or
charged off by Seller within ten (10) days prior to the Closing
Date, generated in connection with the Business or the Assets
(including ATM transactions) before and after the Closing Date;
(h) all claims of Seller against third parties relating to the Assets or
the ownership or operation of the Assets, whether xxxxxx or
inchoate, known or unknown, contingent or not contingent;
(i) all guarantees, warranties, indemnities and similar rights in favor
of Seller with respect to any Asset, to the extent these are
assignable; and
(j) all rights of Seller to receive refunds, returns, reimbursements,
credits or similar rights with respect to the Assets or the Assumed
Liabilities, whether arising before or after the Closing Date.
Seller shall transfer all of the Assets free and clear of all Liabilities
(as defined in Section 4.07 of this Agreement) and Liens of every kind or
nature, excepting only the Assumed Liabilities, and except only such
Liens, if any, as disclosed in Sections 1.01(a)-(j) of the Disclosure
Memorandum. For purposes of this Agreement, the term "Lien" means any
mortgage, pledge, lien, hypothecation, encumbrance, security interest or
other adverse claim or title defect of any nature whatsoever.
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1.02 Excluded Assets.
Notwithstanding the terms of Section 1.01 of this Agreement, Seller is not
selling, transferring or assigning to Buyer any of its assets other than
the Assets specifically described in Section 1.01 of this Agreement and
Sections 1.01(a)-(j) of the Disclosure Memorandum ("Excluded Assets").
Without limiting the generality of the immediately preceding sentence,
Seller is retaining all of the following assets:
(a) all assets, if any, that are listed in Section 1.02(a) of the
Disclosure Memorandum;
(b) [Reserved];
(c) the names and marks "Hanco", "Hanco Systems, Inc.," "Xxxxxx" and any
name or xxxx derived therefrom, and all corporate certificates of
authority, corporate minute books, tax returns, corporate records
and the corporate stock record or register of Seller;
(d) such licenses, permits or other certificates of authority that are
not assignable or transferable or are not related to the Assets;
(e) all rights of Seller to receive refunds, returns, reimbursements,
credits or similar rights with respect to any Taxes, Excluded Assets
or any other Retained Liabilities of Seller relating to the
operation or ownership of the Business or Assets, whether arising
on, prior to or after the Closing Date;
(f) the EFT Services and Data Processing Services Agreement, dated as of
November 16, 1998, between Seller and M&I Data Services;
(g) the warehouse lease (the "Warehouse Lease") on warehouse space at
000 Xxxxxxxx Xxxxx, Xxxxx 000, Xxxxxxxxx Xxxx, Xxxxxxx (the
"Warehouse");
(h) all of Seller's catalogs, stationery and other materials bearing the
Seller's name, tradenames, marks, logos or images, and all of
Seller's training manuals, tapes and any other material that is used
by Seller or its affiliates outside the United States of America;
(i) all Contracts of Seller (including all independent sales
representative and distributor Contracts) not specifically conveyed
to Buyer pursuant to Section 1.01 of this Agreement;
(j) any payments from and all of Hanco's rights to payment of any
interchange, residuals or other amounts ("collectively, "Residuals")
with respect to all periods ending on the Closing Date from Xxxx,
M&I Data Services, a division of Xxxxxxxx & Xxxxx Corporation and
Money Access Service Inc. and their respective successors and
assigns; and
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(k) any books, records and other documents and information (whether in
documentary, electronic or other form) not relating to the Assets
and/or the Assumed Liabilities.
1.03 Assumption of Liabilities.
Pursuant to the terms of this Agreement, at the Closing, Buyer shall
assume and shall pay, perform, honor and discharge when due all of the
following Liabilities of Seller (collectively, except for the Retained
Liabilities set forth in Section 1.04 of this Agreement, the "Assumed
Liabilities"): all Liabilities related to the Assets or the performance of
Contracts included in the Assets, but excluding any Liability arising from
Seller's ownership or operation of the Assets or performance of the
Contracts (including any breach of any Contracts) prior to the Closing
Date.
1.04 Retained Liabilities.
Notwithstanding Section 1.03 or any other provision of this Agreement or
any schedule or exhibit hereto, including the Disclosure Memorandum, and
regardless of any disclosure to Buyer, Buyer shall not assume or in any
way be responsible for, and the term "Assumed Liabilities" shall not
include, any Liabilities of Seller other than the Assumed Liabilities (the
"Retained Liabilities"). Without limiting the generality of the
immediately preceding statement, Retained Liabilities shall also include
any accounts payable of Seller existing on the Closing Date and any
Liabilities of Seller with respect to any Contracts of Seller not
specifically conveyed to Buyer pursuant to Section 1.01 of this Agreement.
ARTICLE II
PURCHASE PRICE
2.01 Amount; Manner of Payment.
The total consideration for the Assets (the "Purchase Price") shall be
$11,375,000, plus the accounts receivable (excluding Residuals) and
associated reserve for doubtful accounts, if any, of the Business as of
the close of business on the Closing Date, as calculated by Seller in
conformity with generally accepted accounting principles ("GAAP") applied
on a basis consistent with the Audited Financial Statements, and as shown
on a statement (the "Statement") prepared by Seller, which shall include
the respective obligors and amounts owed by such obligors on such accounts
receivable, plus the Buyer's assumption of the Assumed Liabilities. Buyer
shall pay all of the cash portion of the Purchase Price (the "Initial
Payment") to Seller at the Closing, except as set forth in the immediately
following paragraph.
Buyer shall withhold $300,000 of the cash portion of the Purchase Price
(the "Indemnification Holdback Amount") as security for Seller's
indemnification obligations under this Agreement. Buyer shall pay the
Indemnification Holdback Amount to Seller in accordance with Section 8.06.
The Indemnification Holdback Amount shall bear interest at a floating rate
of interest equal to the three month LIBOR rate, as published in
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the "Money Rates" table in the Eastern Edition of The Wall Street Journal,
adjusted quarterly, but in no event less than 4.00%. Such interest shall
be compounded annually and paid to Seller together with the
Indemnification Holdback Amount when it becomes due to Seller.
Buyer shall have the right, by written notice (the "Receivables Notice")
to Seller given on or after 180 days following the Closing Date (the
"Repurchase Date"), to require Seller to repurchase for cash and without
recourse, and Buyer shall sell, transfer and convey to Seller within ten
days of the date of the Receivables Notice, all of the accounts receivable
of Seller on the Statement that are at the Repurchase Date uncollected,
notwithstanding all commercially reasonable efforts by Buyer to collect
such accounts receivable consistent with customary industry practices.
Seller shall repurchase from Buyer all such uncollected accounts
receivable for a purchase price equal to their aggregate face value. Buyer
and Seller shall execute, deliver and file all documents, instruments and
agreements to properly effect and evidence any such transfer of accounts
receivable from Buyer to Seller.
2.02 Allocation of Purchase Price.
Buyer and Seller agree to allocate the Purchase Price among the Assets in
accordance with an allocation schedule to be agreed upon by Seller and
Buyer and to be set forth in Exhibit A. Buyer and Seller agree to use
their reasonable best efforts to prepare and agree upon such allocation
schedule no later than 60 days after the Closing Date. Buyer and Seller
shall prepare and file all of the Tax Returns (as defined in Section 4.15)
that may be required with respect to the transaction provided for herein
pursuant to Section 1060 of the Internal Revenue Code of 1986, as amended
(the "Code"), any Treasury regulations promulgated thereunder, any other
similar provision of the Code and any other similar, applicable foreign,
state or local tax law or regulation consistent with the mutually agreed
amounts under Exhibit A. Seller and Buyer shall provide each other with
information that may be reasonably requested by the other for the purpose
of preparing its Tax Returns.
ARTICLE III
CLOSING
3.01 Closing.
The closing of the transactions contemplated by this Agreement (the
"Closing") will take place at the offices of Xxxxxx & Bird, 0000 Xxxx
Xxxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxx 00000-0000, commencing at 10:00 a.m.
local time, on the date hereof (the "Closing Date"). The Closing will be
effective as of the close of business on the Closing Date.
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3.02 Closing Procedure.
Seller and Buyer agree to consummate all of the following closing
transactions on the Closing Date, each of which shall be deemed to have
occurred simultaneously:
(a) Seller will deliver or cause to be delivered to Buyer all of the
following:
(i) with respect to those Assets, a Xxxx of Sale and Assignment
substantially in the form attached as Exhibit B (the "Xxxx of
Sale"), duly executed by Seller;
(ii) [Reserved];
(iii) the Transition Services Agreement substantially in the form
attached as Exhibit C (the "Transition Services Agreement");
(iv) the guaranty of Hanco Realty, LLC ("Hanco Realty")
substantially in the form attached as Exhibit D (the "Hanco
Realty Guaranty") and the Headquarters Lease substantially in
the form attached hereto as Exhibit E, both duly executed by
Hanco Realty;
(v) noncompetition agreements substantially in the form attached
as Exhibit F (the "Individual Noncompetition Agreements"),
duly executed by each of the following individuals: Xxx
Xxxxxx, Xx., Xxx Xxxxxx, Xx., Xxxxx Xxxxxx, Xxxx Xxxxxx, Xxx
Xxxxxx, Xxxxxxx Xxxxxx, Xxxx Xxxxxx, Xxxxxx Xxxxxx and Xxxx
Xxxxxx;
(vi) original releases of, or written authorizations from Bank of
Georgia and Regions Bank to release, all Liens on the Assets;
(vii) a copy of the text of the resolutions adopted by the board of
directors and shareholders of Seller authorizing the
execution, delivery and performance of this Agreement and the
consummation of all of the transactions contemplated by this
Agreement, together with a certificate or certificates of
Seller's corporate secretary or other appropriate officer
certifying to Buyer that each such copy is correct and
complete, and that such resolutions were duly adopted and have
not been amended or rescinded in any respect;
(viii) incumbency certificates executed on behalf of Seller and
Hanco Realty certifying the signature and office of each
officer executing this Agreement, any of the Ancillary
Agreements (as defined in Section 4.02 of this Agreement) and
the Hanco Realty Guaranty;
(ix) a copy of the certificate or articles of incorporation of
Seller, duly certified as of a recent date by the Secretary of
State of the State of Georgia;
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(x) an opinion of Seller's counsel substantially in the form
attached as Exhibit G; and
(xi) such other certificates, documents and instruments as Buyer
may reasonably request related to the transactions
contemplated hereby.
(b) Buyer will deliver or cause to be delivered to Seller all of the
following:
(i) the Initial Payment by wire transfer in immediately available
funds to an account designated in writing by Seller;
(ii) the Assignment and Assumption Agreement, duly executed by
Buyer;
(iii) the guaranty (the "eFunds Guaranty") of eFunds Corporation
("eFunds") substantially in the form attached as Exhibit H,
duly executed by eFunds Corporation;
(iv) a copy of the text of the resolutions adopted by the board of
directors of Buyer authorizing the execution, delivery and
performance of this Agreement and the consummation of all of
the transactions contemplated by this Agreement, along with a
certificate or certificates executed on behalf of Buyer by its
corporate secretary certifying to Seller that such copy is
correct and complete, and that such resolutions were duly
adopted and have not been amended or rescinded;
(v) incumbency certificates executed on behalf of Buyer and eFunds
certifying the signature and office of each officer executing
this Agreement, any of the Ancillary Agreements or the eFunds
Guaranty; and
(vi) such other certificates, documents and instruments as Seller
may reasonably request related to the transactions
contemplated hereby.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer that, except as set forth in the
Disclosure Memorandum delivered by Seller to Buyer on the date hereof in
connection with the execution of this Agreement (the "Disclosure Memorandum"),
each of the statements set forth in this Article IV are correct and complete.
The Disclosure Memorandum sets forth the exceptions to the representations and
warranties contained in this Article IV under parts that correspond to the
Sections hereof; provided, however, that the mere listing of a document or other
item therein without a brief explanation shall not be deemed adequate to
disclose an exception to a representation or warranty made herein, unless the
representation or warranty addresses only the existence of the document or other
item itself. For purposes of this Agreement, a party will be deemed to have
"Knowledge" of a particular fact or other matter if (i) any individual who is
serving as an officer of such party is, or at any time was, actually aware of
such fact or other matter, or (ii) any individual who is serving as an officer
of such party reasonably should have been aware of such fact or other matter in
the course of performing his or her duties as an officer.
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4.01 Incorporation and Corporate Power.
Seller is a corporation validly existing and in good standing under the
laws of the State of Georgia and has all requisite corporate power and
authority necessary to carry on the Business as now being conducted and to
own, lease and operate the Assets. Seller is qualified to do business as a
foreign corporation in each jurisdiction where the nature of its business
or its ownership of property requires it to be qualified except where the
failure to be so qualified would not have a Material Adverse Effect.
4.02 Execution and Delivery; Valid and Binding Agreement.
Seller has all requisite corporate power and authority and all necessary
approvals, permits and orders of Governmental Authorities to execute and
deliver this Agreement and all agreements attached as exhibits to which it
is a party, or otherwise entered into in connection with the transactions
contemplated hereby (collectively, the "Ancillary Agreements"). Without
limiting the generality of the foregoing, Seller's execution, delivery and
performance of this Agreement and the Ancillary Agreements to which it is
a party, and Seller's consummation of the transactions contemplated hereby
and thereby, have been duly and validly authorized by all requisite action
of Seller's board of directors and shareholders, and no other proceedings
or actions are necessary to authorize Seller's execution, delivery and
performance of this Agreement or the Ancillary Agreements. This Agreement,
and the Ancillary Agreements to which it is a party, have been duly
executed and delivered by Seller and constitute the valid and binding
obligations of Seller, enforceable in accordance with their respective
terms, subject to applicable bankruptcy, insolvency, reorganization or
similar laws affecting creditors' rights generally and to general
principles of equity and to limitations on the rights to indemnification
and contribution that exist, by virtue of public policy (the "Bankruptcy
and Equity Exception").
4.03 Governmental Authorities; Consents.
Seller is not required to submit any application, notice, report or other
filing with any Governmental Authority (other than Tax Returns) in
connection with its execution, delivery or performance of this Agreement
or the Ancillary Agreements to which it is a party or the consummation of
the transactions contemplated hereby and thereby. Except as set forth in
Section 4.03 of the Disclosure Memorandum (collectively, the "Required
Seller Consents"), Seller is not required to obtain any consent, approval,
authorization, waiver, permit, grant, license, franchise, concession,
agreement, license or exemption (each, a "Consent") of any Governmental
Authority or any other party or person in connection with its execution,
delivery or performance of this Agreement or the Ancillary Agreements to
which it is a party or the transactions contemplated hereby and thereby.
For purposes of this Agreement, the term "Governmental Authority" means
any domestic or foreign nation or government, any state or other political
subdivision thereof, and any domestic or foreign entity or authority
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
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4.04 Noncontravention.
Except as set forth in Section 4.04 of the Disclosure Memorandum, neither
Seller's execution and delivery of this Agreement or any Ancillary
Agreement to which it is a party nor Seller's consummation or performance
of any of the transactions contemplated hereby or thereby, will directly
or indirectly (with or without notice or lapse of time):
(a) conflict with or result in a breach of any provision of Seller's
articles of incorporation, bylaws or other organizational documents;
(b) conflict with or violate any federal, state, local, municipal or
foreign constitution, law, ordinance, code, regulation or statute
(each a "Legal Requirement") applicable to the Business or the
Assets;
(c) conflict with or violate any order, injunction, judgment, decree,
ruling, assessment or arbitration award of any Governmental
Authority or arbitrator (each an "Order") applicable to the Business
or the Assets;
(d) breach any provision of, constitute a default under or give any
person the right to declare a default, or to accelerate the maturity
or performance of, or payment under, or to cancel, terminate or
modify, any agreement or instrument by which any of the Assets are
bound or affected; or
(e) result in the imposition or creation of any Lien upon or with
respect to any of the Assets.
4.05 Subsidiaries.
Seller has conducted the Business using the Assets only through itself and
not through any other legal entity.
4.06 Financial Statements.
(a) Seller has delivered to Buyer the audited financial statements of
Seller as of and for the periods ended December 31, 2000 (the
"Audited Balance Sheet Date") and December 31, 1999, together with a
report thereon by Seller's auditors (the "Audited Financial
Statements") and the unaudited financial statements of Seller as of
and for the period ended September 30, 2001 (the "Unaudited
Financial Statements"), including in each case a balance sheet,
statements of income and retained earnings and a statement of cash
flows.
(b) The Audited Financial Statements and the Unaudited Financial
Statements are based upon the information contained in Seller's
books and records and fairly present Seller's financial condition as
of the dates thereof and results of operations for the periods
referred to therein. The Audited Financial Statements (including the
notes thereto) have been prepared in accordance with GAAP applied on
a consistent basis throughout the periods covered thereby, except
for changes required by GAAP or as disclosed in the notes to such
Audited Financial
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Statements. The Unaudited Financial Statements have been prepared on
a basis consistent with the Audited Financial Statements and in
accordance with GAAP applicable to unaudited interim financial
statements (and thus may not contain all notes and may not contain
prior period comparative data which are required to be prepared in
accordance with GAAP), and reflect all adjustments necessary to
fairly present the results for the interim period(s) presented
(except for normally recurring year-end and audit adjustments).
4.07 Absence of Undisclosed Liabilities.
Seller has no Liabilities that are reasonably likely to have, individually
or in the aggregate, a Material Adverse Effect, except (a) Liabilities
which are accrued or reserved against in the Audited Financial Statements
or the Unaudited Financial Statements or reflected in the notes thereto,
(b) current liabilities which have arisen after the date of the Unaudited
Financial Statements (the "Unaudited Balance Sheet Date") in the ordinary
course of business (none of which is a material liability for breach of
contract, breach of warranty, tort, infringement, claim or lawsuit), (c)
liabilities incurred under this Agreement, the Ancillary Agreements or in
connection with the transactions contemplated hereby or thereby, or (d) as
otherwise set forth in Section 4.07 of the Disclosure Memorandum.
"Liability" shall mean any direct or indirect, primary or secondary,
liability, indebtedness, duty, commitment, obligation, penalty, cost or
expense (including costs of investigation, collection and defense), claim,
deficiency, guaranty or endorsement of or by any person or entity (other
than endorsements of notes, bills, checks, and drafts presented for
collection or deposit in the ordinary course of business) of any type,
whether accrued, absolute or contingent, liquidated or unliquidated,
matured or unmatured, or otherwise.
4.08 No Material Adverse Effect.
Except as set forth in Section 4.08 of the Disclosure Memorandum, since
the Audited Balance Sheet Date, no event has occurred and no circumstance
has arisen which has had, or may with the passage of time be reasonably
likely to have, a material adverse effect on Seller's Business,
operations, financial condition or results of operations with respect to
the Assets (any one or more of the foregoing, a "Material Adverse
Effect").
4.09 Absence of Certain Developments.
Except as set forth in Section 4.09 of the Disclosure Memorandum and
except for this Agreement, the Ancillary Agreements, and the transactions
contemplated hereby and thereby, since the Audited Balance Sheet Date,
Seller has conducted the Business only in the ordinary course of business
and has not:
(a) mortgaged, pledged or subjected to any Lien any of the Assets;
(b) sold, assigned, transferred or granted (including transfers to any
employees, affiliates or shareholders) any Customer Processing
Contracts or any Intellectual Property;
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(c) waived any rights of value or suffered any losses or changes in
collection loss experience that has had a Material Adverse Effect,
whether or not in the ordinary course of business or consistent with
past practice;
(d) taken any other action or entered into any other transaction other
than in the ordinary course of the Business, other than the
Agreement, the Ancillary Agreements and the transactions
contemplated pursuant hereto and thereto;
(e) suffered any theft, damage, destruction or loss of or to any
property or properties owned or used by it that has had a Material
Adverse Effect;
(f) taken any action or entered into any agreement not described in
subsections (a) through (e) above that has had a Material Adverse
Effect;
(g) changed in any material respect its practices with respect to the
payment of accounts payable and other liabilities; or
(h) taken any action or entered into any agreement not described in
subsections (a) through (g) above related to the Assets or outside
the ordinary course of the Company's conduct of the Business.
4.10 Real Property.
Seller does not own any real property. The real property subject to the
Warehouse Lease and the office building leased from Hanco Realty
constitutes all of the real property that Seller leases or subleases in
connection with the Business (together, the "Leased Real Property").
Seller has delivered to Buyer complete and accurate copies of the
Warehouse Lease, which has not been modified in any respect except to the
extent that such modifications are disclosed by the copies delivered to
Buyer.
4.11 Assets.
(a) Seller has, and will convey, transfer and assign to Buyer at the
Closing, good, valid and marketable title to the Assets, whether
tangible or intangible, free and clear of all Liens, except only
such Liens as disclosed in Sections 1.01(a)-(j) of the Disclosure
Memorandum.
(b) The Assets comprise all assets required for Buyer's continued
conduct of the Business as it is now being conducted.
(c) All Fixed Assets are in reasonably good repair and operating
condition (subject to normal wear and tear) and, to the Knowledge of
Seller, there are no defects, facts or conditions affecting the
Assets which could, individually or in the aggregate, have a
Material Adverse Effect.
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4.12 Inventory.
Sections 1.01(d) and (e) of the Disclosure Memorandum sets forth a correct
and complete list of all Inventory and the location thereof. All Inventory
is sold to Purchaser "WHERE IS, AS IS."
4.13 Customers.
Section 4.13 of the Disclosure Memorandum sets forth (a) the names and
addresses of the top 50 customers of Seller, based on the dollar amount
paid to Seller during the twelve-month period ended December, 31, 2001
(each, a "Significant Customer"), and (b) the aggregate amount of fees
generated by each Significant Customer during such period. Seller has not
received any notice or otherwise has Knowledge that any Significant
Customer (x) has ceased, or will cease, to use the products, goods or
services of the Business, (y) has substantially reduced or will
substantially reduce its use of the products, goods or services of the
Business or (z) has sought, or is seeking, to materially reduce the price
it will pay for the products, goods or services of the Business.
4.14 Suppliers.
Section 4.14 of the Disclosure Memorandum sets forth (a) the names and
addresses of all suppliers from which the Business ordered materials,
supplies, merchandise and other goods and services with an aggregate
purchase price for each supplier of $5,000 or more during the twelve month
period ended December 31, 2001 (each a "Significant Supplier") and (b) the
amount for which each Significant Supplier invoiced the Business during
such period. Seller has not received any notice and does not have any
Knowledge of any material increase in the price of such materials,
supplies, merchandise or other goods and services, or that any Significant
Supplier will not sell materials, supplies, merchandise and other goods
and services to Buyer at any time after the Closing on terms and
conditions substantially the same as are in effect immediately prior to
the Closing, subject to price increases in the ordinary course of business
consistent with past practices.
4.15 Tax Matters.
(a) Definitions.
(i) "Affiliated Group" means any affiliated group within the
meaning of Code Section 1504(a) or any similar group defined
under a similar provision of any state, local or foreign law.
(ii) "Tax" means any federal, state, local or foreign tax, charge,
fee, levy or other assessment of every kind or nature,
including all net income, gross income, gross receipts, sales,
use, ad valorem, value added, transfer, franchise, profit,
windfall profit, capital stock, environmental, license,
withholding, payroll, employment, unemployment, social
security, disability, excise, estimated, severance, stamp,
registration, occupation, premium, personal or real property,
alternative or add-on minimum, or other taxes, customs duties,
fees, assessments, or charges of any kind or
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nature, including all interest and penalties thereon imposed
by any Governmental Authority.
(iii) "Tax Return" means any return, declaration, report, claim for
refund, or information return or statement relating to Taxes,
including any schedule or attachment thereto, and including
any amendment thereof.
(b) With respect to the year ended December 31, 2000 and all prior
years, Seller has filed all Tax Returns that it was required to file
or has been granted an extension of time to file such Tax Returns.
All such Tax Returns were correct and complete in all material
respects to Seller's Knowledge. All Taxes owed by Seller shown on
any Tax Return have been paid. Seller is not currently the
beneficiary of any extension of time within which to file any Tax
Return. No claim has been made by an authority in a jurisdiction
where Seller does not file Tax Returns that Seller is or may be
subject to taxation by that jurisdiction. There are no Liens on any
of the Assets that arose in connection with any failure (or alleged
failure) to pay any Tax.
(c) Seller has withheld and paid all Taxes required to have been
withheld and paid in connection with amounts paid or owing to any
employee, independent contractor, creditor, stockholder, or other
third party except where noncompliance is not reasonably expected to
have a Material Adverse Effect.
(d) No Governmental Authority has made an assessment of, or given the
Seller notice of an assessment of, any additional Taxes for any
period for which Tax Returns have been filed. There is no dispute or
claim concerning any Tax liability of Seller either (i) claimed or
raised by any Governmental Authority in writing, or (ii) of which
Seller has Knowledge. Section 4.15(d) of the Disclosure Memorandum
lists all federal, state, local, and sales and use Tax Returns filed
by Seller for taxable periods ended on or after December 31, 1999,
indicates those Tax Returns that have been audited, and indicates
those Tax Returns that currently are the subject of audit. Seller
has delivered to Buyer correct and complete copies of all federal
income Tax Returns, examination reports and statements of
deficiencies assessed against or agreed to by Seller since December
31, 1999.
(e) Seller has not waived any statute of limitations in respect of Taxes
or agreed to any extension of time with respect to a Tax assessment
or deficiency.
(f) Seller has validly elected to be treated as an S corporation under
the Code at all times during its existence and Seller will continue
to elect to be treated as an S corporation under the Code up to and
including the Closing Date. Seller is not a party to any Tax
allocation or sharing agreement. Seller (i) has not been a member of
an Affiliated Group filing a consolidated federal income Tax Return
(other than a group the common parent of which was Seller), and (ii)
has no Liability for the Taxes of any person (other than Seller and
its subsidiaries) under Reg. Section 1.1502-6
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(or any similar provision of state, local, or foreign law), as a
transferee or successor, by contract, or otherwise.
(g) The provision for any Taxes due or to become due by Seller for the
period or periods through and including the date of the Unaudited
Financial Statements that has been made and is reflected on such
Unaudited Financial Statements is sufficient to cover all such
Taxes, and since the date of such Unaudited Financial Statements,
Seller has accrued and/or reserved for Taxes consistent with its
past practices.
4.16 Contracts and Commitments.
(a) Sections 1.01(a) and (c) of the Disclosure Memorandum collectively
contain an accurate and complete list of all Contracts of such
nature held by Seller.
(b) Except as set forth in Section 4.16(b) of the Disclosure Memorandum,
with respect to each Contract of Seller that is being assigned to or
assumed by Buyer pursuant to this Agreement:
(i) such Contract of Seller included in the Assets is in full
force and effect and is valid and enforceable against Seller
in accordance with its terms subject to the Bankruptcy and
Equity Exception and the Seller is not in breach or default
thereunder, and to Seller's Knowledge, the other parties to
such Contract of Seller included in the Assets are not in
default or breach thereunder; and
(ii) such Contract of Seller is assignable to Buyer without the
consent of any party thereto.
(c) Prior to the date of this Agreement, Buyer has been supplied with or
given access to a correct and complete copy of each written Contract
of Seller of the type referenced in Sections 1.01(a) and (c) of the
Disclosure Memorandum.
4.17 Intellectual Property Rights.
Seller has not received any notice and has no Knowledge of any
infringement, misappropriation or violation by Seller of any intellectual
property or proprietary rights of any third parties in the Assets.
4.18 Litigation; Orders.
(a) Except as set forth in Section 4.18(a) of the Disclosure Memorandum
(which also identifies the parties to and briefly describes each
pending or, to the Knowledge of Seller, threatened Proceeding),
(i) there is no pending or, to the Knowledge of Seller, threatened
Proceeding by or against the Seller that relates to the
Business or any of the Assets; and
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(ii) there is no pending or, to the Knowledge of Seller, threatened
Proceeding by or against the Seller that challenges or that
may have the effect of preventing, delaying, making illegal or
otherwise interfering with any of the transactions
contemplated by this Agreement or the Ancillary Agreements.
Buyer has been provided with or given access to all pleadings and
other documents and materials relating to each Proceeding described
in Section 4.18(a) of the Disclosure Memorandum, and no Proceeding
has had or is reasonably likely to have a Material Adverse Effect.
Such disclosure has been made pursuant to the Confidentiality
Agreement between the Purchase and the Seller dated November 15,
2001, and Seller waives no rights or privileges with respect to such
matters or disclosures. For purposes of this Agreement, the term
"Proceeding" means any action, claim, arbitration, demand,
proceeding, subpoena or audit by any Governmental Authority,
hearing, investigation, litigation or suit, whether civil, criminal,
administrative, judicial or investigative, whether formal or
informal, whether public or private, commenced, brought, conducted
or heard by or before, or otherwise involving, any Governmental
Authority or private arbitrator or mediator, to which the Seller is
a party.
(b) Except as set forth in Section 4.18(b) of the Disclosure Memorandum,
no Order is in effect that has had a Material Adverse Effect on the
Business or any of the Assets.
4.19 [Reserved].
4.20 Employees; Labor Matters.
Except as set forth in Section 4.20 of the Disclosure Memorandum:
(a) No Offered Employee (as defined in Section 7.01 of this Agreement)
is bound by any contract or agreement that purports to limit his or
her ability to engage in or continue or perform any conduct,
activity, duties or practice relating to the Business; provided each
such Offered Employee will agree to confidentiality, nondisclosure
and nonsolicitation provisions with respect to Seller's and its
affiliates' businesses that are not part of the Assets and/or the
Business;
(b) Seller has operated the Business in compliance with all Legal
Requirements relating to the employment of labor;
(c) there is no collective bargaining agreement to which Seller is a
party and no collective bargaining agreement is currently being
negotiated or proposed; and
(d) Seller is the exclusive owner of all intellectual property and
proprietary rights developed by its current and former officers,
directors, employees, agents, independent contractors or
consultants, and no such person has any claim with respect to any
intellectual property and/or proprietary rights.
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4.21 ERISA Matters.
No steps have been taken by Seller to terminate any employee benefit plan
(as defined in Section 3(3) of ERISA the assets of which are not
sufficient to satisfy all of its benefit liabilities (as determined under
Title IV of ERISA), no contribution failure has occurred with respect to
any employee benefit plan sufficient to give rise to a lien under Section
302(f) of ERISA, and each of Seller's employee benefit plans has been
administered in all material respects in compliance with its terms and
applicable provision of ERISA and the Code. To Seller's Knowledge, no
prohibited transaction (as defined in Section 406 of ERISA or Section 4975
of the Code) has occurred under any employee benefit plan of Seller.
"ERISA" means the Retirement Income Security Act of 1974, as amended.
4.22 Compliance with Laws; Permits.
(a) Seller is not in breach, violation or default of any applicable
Legal Requirements to which Seller is subject, and no claims are
pending or, to Seller's Knowledge, threatened against Seller
alleging a violation of any such Legal Requirements.
(b) Seller has all permits, licenses and approvals of Governmental
Authorities necessary to operate the Business, except for those
permits, licenses and approvals the absence of which would not have
a Material Adverse Effect.
4.23 Environmental Matters.
The Seller has not stored, handled or used any Hazardous Materials in the
properties subject to the Warehouse Lease or the Headquarters Lease
("Leased Properties"). To the Seller's Knowledge, the Leased Properties
are, and have been, in compliance with all Environmental Laws, except for
violations which are not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect. "Environmental Laws" shall mean all
Legal Requirements relating to pollution or the protection of human health
or the environment (including ambient air, surface water, ground water,
land surface, or subsurface strata) and which are administered,
interpreted, or enforced by the United States Environmental Protection
Agency and state and local agencies with jurisdiction over, pollution or
protection of the environment, including the Comprehensive Environmental
Response Compensation and Liability Act, as amended, 42 U.S.C. 9601 et
seq., the Resource Conservation and Recovery Act, as amended, 42 U.S.C.
6901 et seq., and other Legal Requirements relating to emissions,
discharges, releases, or threatened releases of any Hazardous Material, or
otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport, or handling of any Hazardous
Material. "Hazardous Material" shall mean (i) any hazardous substance,
hazardous material, hazardous waste, regulated substance, or toxic
substance (as those terms are defined by any applicable Environmental
Laws) and (ii) any chemicals, pollutants, contaminants, petroleum,
petroleum products, or oil (and specifically shall include asbestos
requiring abatement, removal, or encapsulation pursuant to the
requirements of Governmental Authorities and any polychlorinated
biphenyls).
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4.24 Books and Records.
The books of account and other financial records of Seller, to the extent
they relate to the Business or the Assets, all of which have been made
available to Buyer, are complete and correct in all material respects and
represent actual, bona fide transactions and have been maintained in
accordance with customary business practices in the industry for
non-public companies.
4.25 Brokerage.
No third party shall be entitled to receive any brokerage commissions,
finder's fees, fees for financial advisory services or similar
compensation ("Finder's Fees") in connection with the transactions
contemplated by this Agreement based on any arrangement or agreement made
by or on behalf of Seller.
4.26 Disclosure.
None of the documents delivered by or on behalf of Seller pursuant to
Article III, nor the Disclosure Memorandum, taken as a whole, contain any
untrue statement of a material fact or omit any material fact necessary to
make the statements contained therein, in light of the circumstances in
which they were made, not misleading.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller that:
5.01 Organization and Power.
Buyer is a limited liability company validly existing and in good standing
under the laws of the State of Delaware, with the requisite power and
authority and all necessary approvals, permits and orders of Governmental
Authorities to enter into this Agreement and the Ancillary Agreements to
which it is a party and perform its obligations hereunder and thereunder.
5.02 Execution, Delivery; Valid and Binding Agreement.
Buyer's execution, delivery and performance of this Agreement and the
Ancillary Agreements to which it is a party and Buyer's consummation of
the transactions contemplated hereby and thereby have been duly and
validly authorized by all requisite action, and no other proceedings on
its part are necessary to authorize their execution, delivery or
performance of this Agreement or the Ancillary Agreements to which it is a
party. Buyer has duly executed and delivered this Agreement and the
Ancillary Agreements to which it is a party to Seller and the other
parties thereto. This Agreement and the Ancillary Agreements to which it
is a party constitute, the valid and binding obligations of Buyer,
enforceable in accordance with their terms, subject to the Bankruptcy and
Equity Exception.
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5.03 Governmental Authorities; Consents.
Buyer is not required to submit any application, notice, report or other
filing with any Governmental Authority in connection with its execution,
delivery or performance of this Agreement or the Ancillary Agreements or
the consummation of the transactions contemplated hereby and thereby.
Buyer is not required to obtain any Consents of any Governmental Authority
or any other party or person in connection with its execution, delivery
and performance of this Agreement or the Ancillary Agreements or the
transactions contemplated hereby and thereby.
5.04 Noncontravention.
Neither Buyer's execution and delivery of this Agreement or any Ancillary
Agreement nor Buyer's consummation or performance of any of the
transactions contemplated hereby or thereby, will directly or indirectly
(with or without notice or lapse of time):
(a) conflict with or result in a breach of any provision of Buyer's
articles of organization, operating agreement or other
organizational documents;
(b) conflict with or violate any Legal Requirement applicable to Buyer;
(c) conflict with or violate any Legal Requirement or any Order
applicable to Buyer, give any person the right to contest or enjoin
this Agreement or any Ancillary Agreement or the transactions
contemplated herein or therein.
5.05 Brokerage.
No third party shall be entitled to receive any Finder's Fees, in
connection with the transactions contemplated by this Agreement based on
any arrangement or agreement made by or on behalf of Buyer.
ARTICLE VI
POST-CLOSING COVENANTS
6.01 Transfer and Sales Taxes.
Buyer shall pay all applicable transfer and sales Taxes relating to the
sale of the Assets from Seller to Buyer. Except as otherwise provided in
Section 2.02, Buyer shall prepare and timely file, and Seller shall
cooperate with Buyer in connection with their preparation and filing of,
all applicable transfer and sales Tax Returns.
6.02 Merchant Contracts; Payment of Retained Liabilities.
As contemplated by Sections 1.03 and 1.04, Seller is and shall remain
liable for, and shall pay, in full and timely, (a) all amounts due under
the Merchant Contracts with respect to ATM transactions occurring on or
prior to the Closing Date (the "Merchant Accounts Payable"), and (b) all
other Retained Liabilities properly owed, except where contested in
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good faith. Seller shall make no claim against Buyer or hold Buyer out as
having any Liability with respect to any Retained Liabilities.
6.03 Further Assurances.
(a) If at any time after the Closing any further action by Seller is
necessary to carry out the purposes of this Agreement, Seller will
take such further action (including the execution and delivery of
such further instruments and documents) as Buyer may reasonably
request, at Buyer's sole cost and expense (unless Buyer is entitled
to indemnification therefor under Article VIII).
(b) If at any time after the Closing any further action by Buyer is
necessary to carry out the purposes of this Agreement, Buyer will
take such further action (including the execution and delivery of
such further instruments and documents) as Seller may reasonably
request, at Seller's sole cost and expense (unless Seller is
entitled to indemnification therefor under Article VIII).
6.04 Cooperation with Proceedings.
(a) In the event and for so long as Buyer is contesting or defending
against any Proceedings in connection with (i) any transaction
contemplated by this Agreement or the Ancillary Agreements or (ii)
any fact, situation, circumstance, status, condition, activity,
practice, plan, occurrence, event, incident, action, failure to act,
or transaction on or prior to the Closing Date involving Seller,
Seller will cooperate with Buyer and its counsel in the contest or
defense, make available its personnel, and provide such testimony
and access to its books and records as shall be necessary in
connection with the contest or defense, all at Seller's sole cost
and expense (unless Buyer is entitled to indemnification therefor
under Article VIII).
(b) In the event and for so long as Seller is contesting or defending
against any action, suit, proceeding, hearing, investigation,
charge, complaint, claim, or demand in connection with (i) any
transaction contemplated under this Agreement or (ii) any fact,
situation, circumstance, status, condition, activity, practice,
plan, occurrence, event, incident, action, failure to act, or
transaction on or prior to the Closing Date involving Seller, Buyer
will cooperate with the contesting or defending party and its
counsel in the contest or defense, make available its personnel, and
provide such testimony and access to its books and records as shall
be necessary in connection with the contest or defense, all at
Seller's sole cost and expense (unless Seller is entitled to
indemnification therefor under Article VIII).
6.05 Access to Records.
After the Closing Date, each Party shall provide the other party and its
representatives with reasonable access to their respective books and
records with respect to the transactions contemplated hereby, the
administration of the Assets and Assumed Liabilities and such other
matters reasonably related to their respective obligations hereunder
(subject to attorney-client privilege), during normal business hours and
on at
19
least three days' prior written notice, and solely for the purposes of
this Agreement. Each party agrees to hold any information gained from such
examination strictly confidential, and use such information solely for
permissible purposes contemplated hereby.
6.06 Restrictions on Seller Dissolution and Distributions.
Seller shall not dissolve until 18 months following the Closing Date and
until Seller has paid, or made adequate provision for the payment of, its
obligations under Section 6.02 of this Agreement; and Seller shall at all
times during the 18 month period following the Closing Date maintain
stockholder's equity of at least $500,000.
6.07 Customer and Other Business Relationships.
For a transition period ending nine months after the Closing, Seller will
use commercially reasonable efforts to cooperate with Buyer in its efforts
to continue and maintain for the benefit of Buyer those Business
relationships of Seller existing prior to the Closing and relating to the
Assets purchased by Buyer, including relationships with lessors,
employees, regulatory authorities, licensors, customers, suppliers and
others. Seller will refer to Buyer all inquiries relating to such
Business. Seller shall not be required to expend any monies or devote
substantial time to such matters.
6.08 Accounts Receivable.
(a) With respect to those accounts receivable written off by Seller
prior to Closing, Buyer shall have no obligation to attempt to
collect amounts due under such accounts receivable, and Seller shall
have no right, and shall make no efforts, to collect amounts due
under such accounts receivable.
(b) With respect to those accounts receivable sold and assigned by
Seller to Buyer hereunder, Buyer shall exercise all commercially
reasonable efforts to collect amounts due under such accounts
receivable, consistent with customary industry practices.
(c) In the event that Seller is obligated to repurchase any uncollected
accounts receivable pursuant to Section 2.02(d) of this Agreement,
Buyer shall execute, deliver and file any appropriate instruments to
properly effect and evidence the sale, transfer, assignment and
conveyance of all rights and interests in such uncollected accounts
receivable to Seller.
6.09 Use of Seller's Name and Marks, etc.
Upon and following the Closing Date, Buyer shall not use any of the names,
trade names or marks, logos or other identifications of Seller, including
those described in Section 1.02(c) and any derivations thereof, and shall
in no way hold itself out in any way as Seller, or as representing Seller
or its shareholders or affiliates as their agent, representative or
independent contractor, or take any action binding upon, or purporting to
bind, Seller. As soon as reasonably practicable following the Closing
Date, Buyer shall remove all of Seller's marks, logos and other
identification on any ATMs, and shall
20
replace or sticker all sales literature previously used by Seller in the
Business to reflect that Buyer is conducting the Business as of the
Closing Date.
6.10 Purchase of Certain ATMs.
Buyer shall, upon the Closing or as soon thereafter as practicable,
purchase directly from the manufacturer all Triton ATMs held by Seller in
its Warehouse, and Seller shall release all rights in and to such ATMs
upon such purchase by Buyer and the release of all of Seller's Liabilities
to such manufacturer with respect to such ATMs and the refund to, and
receipt by, Seller of all amounts paid by Seller in respect of such ATMs.
ARTICLE VII
OTHER AGREEMENTS
7.01 Employment and Employee Benefit Matters.
(a) Promptly following the Closing Date, but subject to compliance with
Buyer's standard hiring procedures (including background checks,
drug screening and the signing of an eFunds Corporation employee
confidentiality agreement) and qualifications, Buyer will extend
offers of employment to the employees of the Business set forth in
Section 7.01(a) of the Disclosure Memorandum (the "Offered
Employees"). With respect to Xxxx Xxxxxx and X.X. Xxxxxx, , such
offers shall be substantially the terms and conditions set forth on
Exhibit I and Exhibit J hereto, respectively (the "Employment
Agreements"). With respect to any other Offered Employee, such
offers shall be made on terms and conditions as Buyer shall
determine in its sole discretion. Seller shall cooperate with and
use commercially reasonable efforts to assist Buyer in its efforts
to secure satisfactory employment arrangements with the Offered
Employees. Nothing in this Section 7.01 shall constitute an
agreement by Buyer to assume or be bound by any previous or existing
employment agreement, policy, practice or arrangement with any
employee of the Business, or a guaranty that any Offered Employee
shall be entitled to remain in the employment of Buyer for a
specified period of time. Buyer shall honor all confidentiality,
nonsolicitation and/or nondisclosure Contracts of Seller with its
employees with respect to all matters except the Business and/or the
Assets and not seek or use from any Offered Employees any
information regarding Seller that is not part of the Assets or the
Business, including information described in Section 4.20(a) of this
Agreement. An Offered Employee or other employee of Seller who
accepts an offer shall become an employee of Buyer on the day such
person reports to work for Buyer (each, a "Hired Employee"). Seller
shall not terminate its employment of the Hired Employees until the
day immediately preceding the date on which Buyer commences the
employment of such persons (each, a "Hired Employee Termination
Date").
(b) Seller shall be solely responsible for (i) the payment of all wages,
other remuneration and benefits, including any required by
applicable Legal Requirements, due to the Hired Employees with
respect to their services as
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employees of Seller through the Hired Employee Termination Date,
except that all remuneration, benefit and welfare plan
(collectively, the "Plans") costs, and all FICA, FUTA and other
employment Taxes and withholdings with respect to any of Seller's
Offered Employees and all other Seller employees used to provide
services pursuant to, and subject to the limitations of, the
Transition Services Agreement (collectively, the "Service
Employees") from the Closing Date through the Hired Employee
Termination Date (the "Employee Transition Period") shall be paid by
Buyer to Seller as incurred pursuant to the Transition Services
Agreement, and any activities by Hired Employees during the Employee
Transition Period pursuant to this Agreement or the Transition
Services Agreement shall not be a breach or violation of Section
7.02 hereof or such Hired Employee's respective Individual
Noncompetition Agreement.
Seller will remain the common law and sole employer of all its
employees, including the Service Employees, until the Hired Employee
Termination Date occurs with respect to each respective Service
Employee, and until his or her termination of employment from
Seller. Accordingly, Seller will have sole control and authority
over all such Service Employees prior to their respective Hired
Employee Termination Dates, including location of work;
responsibilities and duties; all hiring, firing, layoff and similar
job status decisions; supervision and reporting; pay increases and
pay decreases; performance evaluation; work place discipline; work
place rules, including work hours, dress code and other personnel
policies and practices.
Seller shall permit the Hired Employees to continue to participate
in Seller's Plans following the Closing Date until their respective
Hired Employee Termination Dates. Buyer recognizes that Seller is
continuing to employ and is the sole employer of the Service
Employees, including all Offered Employees and Hired Employees prior
to the respective Hired Employee Termination Dates and to supervise
and control the employment of all such persons following the Closing
solely as an accommodation to Buyer. Accordingly, except where
Seller fails to perform its obligations under the immediately
preceding paragraph, if any Governmental Authority or arbitrator
determines that any Hired Employees are employees of Buyer instead
of Seller, and, as a result, Seller incurs any Seller Losses, as
defined in Section 8.03 of this Agreement, including any Seller
Losses directly or indirectly related to any Plans or the provisions
of services by the Hired Employees pursuant to the Transition
Services Agreement, then such Seller Losses will be indemnified and
paid by Buyer to Seller pursuant to Section 8.03 of this Agreement.
(c) Seller shall be liable for any claims made or incurred by Hired
Employees and their beneficiaries through the Hired Employee
Termination Date under the Plans, but all such amounts will be
reimbursed and paid by Seller to Buyer pursuant to the Transition
Services Agreement. For purposes of the immediately preceding
sentence, a charge will be deemed incurred, in the case of hospital,
medical or dental benefits, when the services that are the subject
of the charge are performed and, in the case of other benefits (such
as disability or life insurance), when an
22
event has occurred or when a condition has been diagnosed that
entitles the employee to the benefit.
(d) Except for Buyer's reimbursement obligations under the Transition
Services Agreement, Seller shall retain all responsibility for any
assets held and any liabilities incurred with respect to all
employee benefit plans maintained by Seller. Subject to all Legal
Requirements, all Hired Employees shall become fully vested in their
accrued benefits under Seller's employee benefit plans as of the
Hired Employee Termination Date, and Seller will so amend such plans
if necessary to achieve this result.
(e) Seller shall give any notices required by Legal Requirements and
take whatever other actions with respect to the plans, programs and
policies described in this Section 7.01 as may be necessary to carry
out the arrangements described in this Section 7.01. Buyer will
cooperate with Seller in meeting any such Legal Requirements.
7.02 Noncompetition, Nonsolicitation and Nondisparagement.
(a) For a period of two years after the Closing Date, Seller shall not
directly or indirectly:
(i) own, manage, or operate ATMs located in Canada, the United
States of America, or Mexico (collectively, "North America"),
or otherwise engage in the business of owning, selling,
leasing, installing or maintaining ATMs located in North
America, or provide or arrange for the provision of any
electronic funds transfer processing services with respect to
ATMs located in North America; provided, however, that Seller
may purchase or otherwise acquire up to (but not more than) 5%
of any class of the securities of any entity (but may not
otherwise participate in the activities of such entity) if
such securities are listed on any national or regional
securities exchange or have been registered under Section
12(g) of the Securities Exchange Act of 1934, as amended; or
(ii) cause, induce or attempt to cause or induce any customer,
supplier, licensee, licensor, franchisee, employee, consultant
or other Business relation of Seller on the Closing Date or
within the year preceding the Closing Date to cease or reduce
doing business with Buyer or in any way interfere with its
relationship with Buyer with respect to ATMs located in North
America.
(b) [Reserved].
(c) From and after the Closing Date, Seller and Buyer will not disparage
the other or any of the other party's members, managers, directors,
officers, employees or agents, representatives, subsidiaries,
affiliates or shareholders (or stockholders, as appropriate) and any
person deemed to control any of them, and for a period of two years
following the Closing Date, neither Buyer nor Seller shall hire,
retain or
23
attempt to hire or retain any employee or independent contractor
(except for Offered Employees, as and to the extent provided in
Section 7.01 of this Agreement) of the other party or in any way
interfere with the relationship between such other party and any of
its employees or independent contractors; provided that this
paragraph will not restrict either party from general advertisements
or other solicitations generally that are not directed to employees
of the other party, or from soliciting or retaining any person that
is terminated from employment by such other party.
(d) Notwithstanding any other provisions of this Agreement or the
Ancillary Agreements to the contrary, nothing in this Section 7.02
is intended to, or shall be construed to, in any way restrict or
limit any conduct, business, investment or other activity by Seller
or any of Seller's affiliates or subsidiaries outside of North
America, or any entities through or with whom Seller has an
investment, partnership, joint venture or other interest or
arrangement, outside of North America, provided that the purpose or
material effect of such conduct, business or investment is not to
compete with Buyer in North America with respect to the activities
described in Section 7.02(a)(i) of this Agreement.
(e) If a final judgment of a court or tribunal of competent jurisdiction
determines that any term or provision contained in Section 7.02(a)
through (c) is invalid or unenforceable, then the parties agree that
the court or tribunal will have the power to reduce the scope,
duration or geographic area of the term or provision, to delete
specific words or phrases or to replace any invalid or unenforceable
term or provision with a term or provision that is valid and
enforceable and that comes closest to expressing the intention of
the invalid or unenforceable term or provision. This Section 7.02
will be enforceable as so modified after the expiration of the time
within which the judgment may be appealed. The parties agree that
this Section is reasonable and necessary to protect and preserve
their respective legitimate business interests and to prevent any
unfair advantage conferred on Seller.
7.03 Expenses.
Except as otherwise expressly provided for herein, Seller and Buyer will
pay all of their own expenses, including attorneys' and accountants' fees,
in connection with the negotiation of this Agreement, the performance of
their respective obligations hereunder and the consummation of the
transactions contemplated by this Agreement (whether consummated or not).
7.04 Pro-Ration of Certain Taxes.
All state, city and local ad valorem Taxes and real estate Taxes and
special assessments which are attributable to the Assets shall be prorated
between the parties as of the Closing Date, with (a) Seller being
responsible for such Taxes allocable, on a pro rata basis, to the number
of days during the year through and including the Closing Date, and (b)
Buyer
24
being responsible for such Taxes allocable, on a pro rata basis, to the
number of days during the year thereafter.
7.05 Proposed Termination of MAS/Concord Agreement.
Seller acknowledges that Buyer intends to terminate the MAS/Concord
Agreement as soon as practicable following the Closing Date, and in no
event later than 12 months after the Closing Date. Buyer and Seller will
cooperate in connection with such termination with a view to minimizing
any charges or fees due upon such termination (the "Termination Fees"),
which shall be paid 50% by each of Buyer and Seller, when incurred.
7.06 Remittance of Payments.
If at any time after the Closing Date either party receives any payment,
correspondence or other property that properly belongs to the other party,
or to which the other party is legally entitled, then the party receiving
such payment, correspondence or other property shall hold it in trust and
promptly deliver such payment, correspondence or other property to the
other party.
ARTICLE VIII
SURVIVAL; INDEMNIFICATION
8.01 Survival of Representations and Warranties.
All representations and warranties in this Agreement shall survive the
Closing and the consummation of the transactions contemplated hereby,
subject to Section 8.04. For purposes of this Agreement, including this
Article VIII, the accuracy of the representations and warranties of Seller
and Buyer provided by this Agreement shall be assessed as of the date of
this Agreement with the same effect as though all such representations and
warranties had been made on and as of the Closing Date (provided that
representations and warranties which are confined to a specified date
shall speak only as of such date). The right to indemnification based upon
a breach of such representations and warranties shall not be affected by
any investigation conducted by Buyer.
25
8.02 Indemnification by Seller.
Seller will indemnify in full Buyer and its officers, managers, employees,
agents, representatives and members, affiliates and subsidiaries
(collectively, the "Buyer Indemnified Parties") and hold them harmless
from and against any loss, Liability, damage, expense or cost (including
interest, penalties, reasonable costs of investigation and defense, and
reasonable legal and other professional fees and expenses), as incurred
and whether or not involving a Third Party Action (as defined in Section
8.07(a) of this Agreement), which any of the Buyer Indemnified Parties may
suffer, sustain or become subject to, or arising from or in connection
with, any of the following (collectively, "Buyer Losses"):
(a) any breach or inaccuracy in any of the representations and
warranties of Seller contained in this Agreement or any Ancillary
Agreements to which it is a party (collectively, the "Seller Related
Documents");
(b) any material breach of, or failure to perform in any material
respect, any covenant, obligation or agreement of Seller contained
in this Agreement or any of the Seller Related Documents; or
(c) any Liability arising out of the ownership or operation of the
Assets or the Business on or prior to the Closing Date or the
Retained Liabilities.
8.03 Indemnification by Buyer.
Buyer agrees to indemnify in full Seller and its officers, directors,
employees, agents, stockholders, affiliates and subsidiaries
(collectively, the "Seller Indemnified Parties") and hold them harmless
from and against any loss, Liability, damage, expense or cost (including
interest, penalties, reasonable costs of investigation and defense, and
reasonable legal and other professional fees and expenses), as incurred
and whether or not involving a Third Party Action, which any of the Seller
Indemnified Parties may suffer, sustain or become subject to, or arising
from or in connection with, any of the following (collectively, "Seller
Losses"):
(a) any breach or inaccuracy in any of the representations and
warranties of Buyer contained in this Agreement or any Ancillary
Agreements to which it is a party (collectively, the "Buyer Related
Documents"); or
(b) any material breach of, or failure to perform in any material
respect, any covenant, obligation or agreement of Buyer contained in
this Agreement or any of the Buyer Related Documents; or
(c) any Liability arising out of the ownership or operation of the
Assets or the assumption of the Assumed Liabilities following the
Closing Date.
26
8.04 Time Limitations.
(a) Seller will have no Liability (for indemnification or otherwise)
with respect to a claim under Section 8.02(a) of this Agreement
(other than those in Section 4.25 of this Agreement, as to which a
claim may be made through the applicable statute of limitations, and
Section 4.15, as to which a claim may be made through the statute of
limitations applicable to actions by the Internal Revenue Service or
any other Governmental Authority as to Taxes (but only insofar as
such Taxes relate to Seller's operations on or prior to the Closing
Date), plus six months, unless, on or before the 18 month
anniversary of the Closing Date, Buyer notifies Seller of such claim
specifying the factual basis thereof in reasonable detail, including
the amount of the asserted Liability, to the extent then known by
Buyer, in which case such claim is subject to the other provisions
of this Article VIII.
(b) Buyer will have no Liability (for indemnification or otherwise) with
respect to a claim under Section 8.03(a) of this Agreement (other
than those in Sections 5.05 of this Agreement, as to which a claim
may be made through the applicable statute of limitations, and 7.01
of this Agreement, as to which a claim may be made through the
applicable statute of limitations applicable to actions by the
Internal Revenue Service, the Department of Labor or any other
Governmental Authority with respect to matters for which Buyer is
responsible under Section 7.01 of this Agreement), unless, on or
before the 18 month anniversary of the Closing Date, Seller notifies
Buyer of such claim specifying the factual basis thereof in
reasonable detail, including the amount of the asserted Liability,
to the extent then known by Seller, in which case such claim is
subject to the other provisions of this Article VIII.
(c) Notwithstanding anything to the contrary herein, with respect to any
specific representation, warranty, covenant, obligation or agreement
under which a party has made a claim for indemnification hereunder
and as to which such claim has not been completely and finally
resolved prior to the expiration of the applicable time period
above, such representation or warranty shall survive for the period
of time beyond such time period sufficient to resolve, completely
and finally, the claim relating to such representation or warranty.
8.05 Limitations on Amount.
(a) Except as otherwise provided below, Seller shall have no Liability
(for indemnification or otherwise) with respect to claims under
Section 8.02(a) of this Agreement until the total of all Buyer
Losses with respect to such matters exceeds $100,000 (the "Basket"),
in which case Seller shall be liable for the total amount of all
Buyer Losses in excess of $100,000, and the aggregate Liability of
Seller with respect to claims under Section 8.02(a) of this
Agreement shall not exceed $3,000,000 (the "Cap"). Notwithstanding
the foregoing, (i) neither the Basket nor the Cap shall apply to
breaches of or inaccuracies in the representations and warranties
set forth in Sections 4.01, 4.02, 4.11(a) or 4.15 of this Agreement,
and (ii) after the 18 month anniversary of the Closing Date, Buyer's
right to
27
indemnification for Buyer Losses with respect to breaches of the
representations and warranties set forth in Section 4.15 of this
Agreement shall not exceed $100,000 in the aggregate (other than the
amount of any associated Tax Liability, with respect to which there
is no such limitation). Buyer and Seller use all commercially
reasonable efforts to resolve any Tax disputes promptly, and Buyer
shall have no Liability with respect to any amounts with respect to
disputes, assessments, controversies or claims with respect to the
Business and/or the Assets arising with respect to periods prior to
the Closing Date.
(b) Except as otherwise provided below, (i) Buyer shall have no
Liability (for indemnification or otherwise) with respect to claims
under Section 8.03(a) of this Agreement until the total of all
Seller Losses with respect to such matters exceeds the Basket, in
which case Buyer shall be liable only for the total amount of all
Seller Losses in excess of the Basket, and (ii) the aggregate
Liability of Buyer with respect to claims under Section 8.03(a) of
this Agreement shall not exceed the Cap. Notwithstanding the
foregoing, neither the Basket nor the Cap shall apply to breaches of
or inaccuracies in representations and warranties set forth in
Sections 5.01 or 5.02 of this Agreement.
8.06 Application of Indemnification Holdback Amount.
Buyer may utilize the Indemnification Holdback Amount to pay any amounts
that Seller is responsible for under this Article VIII upon 10 days' prior
written notice of any claim to indemnification under Section 8.02 of this
Agreement to Seller, which notice shall specify in reasonable detail the
basis and the amount for such claim against Seller, provided Seller does
not object to such claim in good faith within such 10 days of receipt of
such notice specifying in reasonable detail the basis for any objection.
In the event of an objection to any claim by Buyer under this Section
8.06, Buyer and Seller will use all commercially reasonable efforts and
cooperate to resolve such difference and to collect any amount due from
third parties that are relate to the claim. If such matter cannot be
resolved by the Buyer and the Seller within 45 days of Seller's receipt of
the Buyer's notice of objection,, the Buyer and the Seller will resolve
such dispute fully and finally as provided in Section 8.07(b) of this
Agreement by an arbitrator selected pursuant to and an arbitration
governed by Commercial Arbitration Rules of the American Arbitration
Association, as modified herein. Within 30 days following the first
anniversary of the Closing Date, Buyer shall pay to Seller the entire
unclaimed balance of the Indemnification Holdback Amount plus interest, as
provided in Section 2.01(a) of this Agreement, from the Closing Date
through the date of payment; provided no interest shall accrue or be paid
on any amounts that it is finally determined to be properly payable to
Buyer pursuant to this Section 8.06.
8.07 Method of Asserting Claims.
(a) If any Buyer Indemnified Party or Seller Indemnified Party (an
"Indemnified Party") is made a defendant in or party to any action
or proceeding, judicial, administrative or arbitral, instituted by
any third party, the Liability or the costs or expenses of which are
or may be Buyer Losses or Seller Losses (any such third
28
party action or proceeding being referred to as a "Third Party
Action"), such Indemnified Party shall give the party from whom
indemnification is sought (the "Indemnifying Party") prompt written
notice thereof. Such written notice shall have attached thereto the
complaint or other papers pursuant to which the third party
commenced such Third Party Action. The failure promptly to give such
notice shall not affect any Indemnified Party's ability to seek
indemnification hereunder unless such failure has materially and
adversely affected the ability of the Indemnifying Party to defend
successfully the relevant Third Party Action or the Indemnifying
Party's Liabilities. The Indemnifying Party shall be entitled to
contest and defend such Third Party Action. The Indemnifying Party
shall give notice of its intention to so contest and defend to the
Indemnified Party within 14 days after the date it receives the
Indemnified Party's notice of such Third Party Action (but, in all
events, at least five business days prior to the date that an answer
to such Third Party Action is due to be filed). Such contest and
defense shall be conducted by reputable attorneys retained by the
Indemnifying Party. The Indemnified Party shall be entitled at any
time, at its own cost and expense (which expense shall not
constitute a Buyer Loss or a Seller Loss unless the Indemnified
Party reasonably determines that the Indemnifying Party is not
adequately representing or, because of a conflict of interest, may
not adequately represent, the interests of the Indemnified Party,
and only to the extent that such expenses are reasonable), to
participate in such contest and defense and to be represented by
attorneys of its or their own choosing. If the Indemnified Party
elects to participate in such defense, the Indemnified Party will
cooperate with Indemnifying Party in the conduct of such defense.
The Indemnified Party shall cooperate with the Indemnifying Party in
the contest and defense of such Third Party Action, including
providing reasonable access (upon reasonable notice) to the books,
records and employees of the Indemnified Party if relevant to the
defense of such Third Party Action; provided, that such cooperation
shall not unduly disrupt the operations of the business of the
Indemnified Party or cause the Indemnified Party to waive any
statutory or common law privileges, breach any confidentiality
obligations owed to third parties or otherwise cause any trade
secret or confidential information of such Indemnified Party to
become public. Neither the Indemnified Party nor the Indemnifying
Party may concede, settle or compromise any Third Party Action
without the consent of the other party, which consents will not be
unreasonably withheld, unless the settlement, concession or
compromise contains an unconditional release of the other party for
any Liability with respect to all matters arising from or related to
the facts at issue. Notwithstanding the foregoing, (i) if a Third
Party Action seeks the issuance of an injunction, the specific
election of an obligation or similar remedy, or (ii) if the subject
matter of a Third Party Action relates to the ongoing business of
the Indemnified Party, which Third Party Action, if decided against
the Indemnified Party, would materially adversely affect the ongoing
business or reputation of the Indemnified Party, then, in each such
case, the Indemnified Party alone shall be entitled to contest,
defend and settle such Third Party Action in the first instance and,
if the Indemnified Party does not contest, defend or settle such
Third Party Action, the Indemnifying Party shall then have the right
to contest and defend (but
29
not settle) such Third Party Action; provided the Indemnifying Party
shall not have any obligation to the Indemnified Party for any
settlement, compromise or concession thereof by the Indemnified
Party, unless the settlement, concession or compromise contains an
unconditional release of the Indemnifying Party for any Liability
with respect to all matters arising from or related to the facts at
issue.
(b) In the event any Indemnified Party should have a claim for
indemnification hereunder against an Indemnifying Party that does
not involve a Third Party Action (including a claim for
indemnification with respect to a third party claim that is not yet
the subject of a Third Party Action), the Indemnified Party shall
give the Indemnifying Party prompt written notice thereof. Such
written notice shall state in reasonable detail, including the
amount of, and the factual basis for, such claim to the extent then
known by the Indemnified Party and the nature of the Buyer Loss or
Seller Loss for which indemnification is sought, and it may state
the amount of the Buyer Loss or Seller Loss claimed. The failure
promptly to give such notice shall not affect any Indemnified
Party's ability to seek indemnification hereunder unless either (i)
such failure has materially and adversely affected the ability or
cost of the Indemnifying Party to investigate such claim, or (ii)
such notice is given after the end of the period specified in
Sections 8.01, 8.02 and 8.05 of this Agreement. If such notice
states the amount of the Buyer Loss or Seller Loss claimed and the
Indemnifying Party notifies the Indemnified Party that the
Indemnifying Party does not dispute the claim described in such
notice or fails to notify the Indemnified Party within 14 days after
its receipt of such notice whether the Indemnifying Party disputes
the claim described in such notice, the Buyer Loss or Seller Loss in
the amount specified in the Indemnified Party's notice will be
conclusively deemed a Liability of the Indemnifying Party and the
Indemnifying Party shall pay (subject to the Basket Amount, to the
extent applicable), the amount of such Buyer Loss or Seller Loss to
the Indemnified Party on demand. If the Indemnifying Party has
timely disputed its Liability with respect to such claim, the
Indemnifying Party and the Indemnified Party will proceed in good
faith to negotiate a resolution of such dispute, and if not resolved
through such negotiations within 20 days after receipt of the
Indemnified Party's notice of such claim, such dispute shall be
resolved fully and finally in New York, New York by an arbitrator
selected pursuant to and an arbitration governed by Commercial
Arbitration Rules of the American Arbitration Association, as
modified herein. The parties will jointly appoint a mutually
acceptable independent arbitrator, seeking assistance in such regard
from the American Arbitration Association. The arbitrator shall
resolve the dispute based on the governing law, without regard to
its rules of evidence, and judgment upon the award rendered by such
arbitrator may be entered in any court of competent jurisdiction.
The Indemnified Party and the Indemnifying Party shall each bear
their own fees and expenses in connection with such arbitration and
shall each bear 50% of the fees and expenses of the arbitrator. If a
notice is given pursuant to this paragraph within the period
specified by Section 8.01, which does not state the amount of the
Buyer Loss or Seller Loss claimed, such omission shall not preclude
the Indemnified Party from recovering from the Indemnifying Party,
during or subsequent to such period, the amount of its Buyer
30
Loss or Seller Loss with respect to the claim described in such
notice. If a notice is given pursuant to this paragraph within the
period specified by Section 8.01, concerning a third party claim
which is not yet the subject of a Third Party Action and such third
party claim subsequently becomes the subject of a Third Party
Action, the Indemnified Party also shall provide the notice required
by Section 8.07(a) of this Agreement at the time required by that
section.
(c) Upon the determination of the Liability of an Indemnifying Party for
a Buyer Loss or a Seller Loss pursuant to this Article VIII and the
amount of such Buyer Loss or Seller Loss (whether such determination
is made pursuant to the procedures set forth in Section 8.07(b) of
this Agreement, by agreement between the Indemnified Party and the
Indemnifying Party, by arbitration award or by final adjudication),
the Indemnifying Party shall pay the amount of such Buyer Loss or
Seller Loss to the Indemnified Party within 10 days following such
determination.
8.08 Indemnification Exclusive Remedy.
Except for remedies based upon fraud and except for equitable remedies,
the remedies provided in this Article VIII constitute the sole and
exclusive remedies for recovery against a party to this Agreement based
upon the inaccuracy, untruth, incompleteness or breach of any
representation or warranty of such party, or based upon the failure of
such party to perform any covenant, agreement or undertaking required by
the terms hereof or any Ancillary Agreement to be performed by such party.
8.09 Subrogation.
In the event that the Indemnifying Party shall be obligated to indemnify
the Indemnified Party pursuant to this Article VIII, then the Indemnifying
Party shall, upon payment in full of such indemnity payment, be subrogated
to all rights and remedies of the Indemnified Party with respect to the
Liability to which such indemnification relates.
ARTICLE IX
MISCELLANEOUS
9.01 Amendment and Waiver.
This Agreement may not be amended or waived except in a writing executed
by the party against which such amendment or waiver is sought to be
enforced. No course of dealing between or among any persons having any
interest in this Agreement will be deemed effective to modify or amend any
part of this Agreement or any rights or obligations of any person under or
by reason of this Agreement.
9.02 Notices.
All notices, demands and other communications to be given or delivered
under or by reason of the provisions of this Agreement will be in writing
and will be deemed to have been given when personally delivered or three
business days after being mailed by first class U.S. mail, return receipt
requested, or when receipt is acknowledged, if sent by
31
facsimile, telecopy or other electronic transmission device. Notices,
demands and communications to Buyer and Seller will, unless another
address is specified in writing, be sent to the address indicated below:
Notices to Buyer:
Access Cash International, L.L.C.
Xxxxxx Center II, Suite 300
0000 Xxxxx Xxxxxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Attention: Chief Financial Officer
Facsimile: (000) 000-0000
and
eFunds Corporation
000 Xxxx Xxxxx Xxxxx Xxxxxxx
Xxxxxxxxx, XX 00000
Attention: Law Department
Facsimile: (000) 000-0000
With a copy to:
Xxxxxx & Xxxxxxx LLP
00 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
Attention: Xxxxxx Xxxxxxxxx
Facsimile: (000) 000-0000
Notices to Seller:
Hanco Systems, Inc.
000 Xxxxxxxx Xxxxx
Xxxxx 000
X.X. Xxx 0000
Xxxxxxxxx Xxxx, XX 00000
Attention:
Facsimile: (000) 000-0000
With a copy to:
Xxxxxx & Bird LLP
One Atlantic Center
0000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxx, XX 00000-0000
Attention: Xxxxx X. XxxXxxxxx, III
Facsimile: (000) 000-0000
32
9.03 Assignment.
This Agreement and the Ancillary Agreements, as applicable, and all of the
provisions hereof and thereof, will be binding upon and inure to the
benefit of the parties hereto and their respective successors and
permitted assigns, provided that neither this Agreement nor any of the
Ancillary Agreements, nor any of the rights, interests or obligations
hereunder or thereunder, may be assigned by any party hereto or thereto
without the prior written consent of the other party hereto; and provided
further, that that Buyer may, without Seller's consent, assign this
Agreement and any Ancillary Agreement, and any of its rights, interests or
obligations hereunder or thereunder, to any parent of Buyer, to any of
such parent's subsidiaries, and in connection with any merger,
consolidation, reorganization, sale of all or substantially all of Buyer's
assets or similar transaction; provided that any such permitted successor
or assign affirmatively assumes in writing all of Buyer's obligations
hereunder, and eFunds or any successor shall reaffirm in writing its
obligations under its Guaranty to Seller notwithstanding any such
transaction.
9.04 Severability.
Whenever possible, each provision of this Agreement will be interpreted in
such manner as to be effective and valid under applicable law, but if any
provision of this Agreement is held to be prohibited by or invalid under
applicable law, such provision will be ineffective only to the extent of
such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
9.05 Complete Agreement.
This Agreement, the Ancillary Agreements, and the exhibits and schedules
hereto contain the complete agreement between the parties and supersede
any prior understandings, agreements or representations by or between the
parties, written or oral, which may have related to the subject matter
hereof in any way.
9.06 Counterparts.
This Agreement may be executed in one or more counterparts, any one of
which need not contain the signatures of more than one party, but all such
counterparts taken together will constitute one and the same instrument.
9.07 Governing Law.
The internal law, without regard to conflicts of laws principles, of the
State of Delaware will govern all questions concerning the construction,
validity and interpretation of this Agreement and the performance of the
obligations imposed by this Agreement.
9.08 No Third Party Beneficiaries.
This Agreement is for the sole benefit of the parties hereto, the
Indemnified Parties and their permitted successors assigns, heirs, estates
and personal and legal representatives, and nothing herein express or
implied shall give or be construed to give to any person or
33
entity, other than the parties hereto and such permitted assigns, any
legal or equitable rights hereunder, whether as third party beneficiaries
or otherwise.
9.09 Bulk Sales Laws.
The parties waive compliance with the bulk transfer provisions of Article
6 of the Uniform Commercial Code or any similar Legal Requirements,
including any Legal Requirement that requires notice to creditors of any
transaction contemplated by this Agreement or the Ancillary Agreements
(collectively, the "Bulk Sales Laws"), to the extent that the Bulk Sales
Laws of any jurisdiction may be applicable to the transactions
contemplated by this Agreement or the Ancillary Agreements. Seller agrees
to indemnify and defend each Buyer Indemnified Party and hold them
harmless from and against any Buyer Losses, in accordance with the terms
of Article VIII, that any of them may suffer in connection with Seller's
noncompliance with the Bulk Sales Laws.
9.10 Interpretation.
(a) Article titles and headings to sections, subsections and paragraphs
herein are inserted for convenience of reference only and are not
intended to be part of or to affect the meaning or interpretation of
this Agreement. The schedules and exhibits referred to herein shall
be construed with and as an integral part of this Agreement as
though set forth verbatim herein.
(b) In this Agreement, unless a clear contrary intention appears: (i)
the terms "hereunder," "hereof," "hereto" and words of similar
import shall be deemed references to this Agreement as a whole and
not to any particular Article, Section or other provision hereof,
(ii) the term "including" means including without limiting the
generality of any description preceding such term, (iii) "or" is
used in the inclusive sense of "and/or" and (iv) references to
documents, instruments or agreements shall be deemed to refer as
well to all addenda, exhibits, schedules or amendments thereto.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
[THE SIGNATURES OF EACH PARTY ARE ON SEPARATE PAGES FOLLOWING THIS PAGE.]
34
HANCO SYSTEMS, INC.
By: /s/ Xxxxxx X. Xxxxxx
------------------------------
Name: Xxxxxx X. Xxxxxx
Title: President
ACCESS CASH INTERNATIONAL L.L.C.
By: /s/ Xxxxxx Xxxxx
-------------------------------
Name: Xxxxxx Xxxxx
Title: Executive ice President
LIST IDENTIFYING CONTENTS
OF OMITTED SCHEDULES
This document does not contain the following Exhibits to the original agreement:
Exhibit A Allocation of Purchase Price
Exhibit B Form of Xxxx of Sale and Assignment
Exhibit C Form of Transition Services Agreement
Exhibit D Form of Hanco Realty, LLC Guaranty
Exhibit E Form of Headquarters Lease
Exhibit F Form of Individual Noncompetition Agreements
Exhibit G Form of Legal Opinion of Seller's Counsel
Exhibit H Form of eFunds Corporation Guaranty
Exhibit I Form of Employment Agreement for Xxxx Xxxxxx
Exhibit J Form of Employment Agreement for X.X. Xxxxxx
The registrant will furnish supplementally a copy of any of the omitted Exhibits
to the Commission upon request.
2
