EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
BY AND AMONG
EFUNDS GOVERNMENT SERVICES, INC.,
EFUNDS INTERNATIONAL LTD.,
EFUNDS CORPORATION,
CLEARCOMMERCE CORPORATION,
CLEARCOMMERCE EUROPE LTD.
AND
THE STOCKHOLDERS
JANUARY 11, 2005
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TABLE OF CONTENTS
ARTICLE I TRANSFER OF ASSETS; ASSUMPTION OF LIABILITIES ....................1
1.01. Transfer of U.S. Assets to Buyer .............................1
1.02. Transfer of UK Assets to eFunds UK ...........................3
1.03. Excluded Assets ..............................................4
1.04. Assumption of Liabilities ....................................5
1.05. No General Assumption ........................................5
ARTICLE II CLOSING .........................................................5
2.01. Closing ......................................................5
2.02. General Procedure ............................................6
ARTICLE III PURCHASE PRICE .................................................6
3.01. Amount of Purchase Price .....................................6
3.02. Estimated Purchase Price .....................................6
3.03. Hold-Back ....................................................7
3.04. Earn-Out Payment .............................................7
3.05. Purchase Price Adjustment ....................................7
3.06. Manner of Payment of the Estimated Purchase Price ............9
3.07. Allocation of Purchase Price .................................9
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF SELLERS ......................10
4.01. Incorporation and Corporate Power ...........................10
4.02. Execution Delivery; Valid and Binding Agreement .............10
4.03. Authority; No Breach ........................................11
4.04. Financial Statements ........................................11
4.05. Absence of Undisclosed Liabilities ..........................11
4.06. No Material Adverse Effect...................................12
4.07. Absence of Certain Developments .............................12
4.08. Properties ..................................................14
4.09. Tax Matters .................................................15
4.10. Contracts and Commitments ...................................17
4.11. Intellectual Property Rights ................................18
4.12. Litigation ..................................................22
4.13. Warranties ..................................................22
4.14. Employees ...................................................23
4.15. Employee Benefit Plans ......................................23
4.16. ClearCommerce UK Remuneration and Employees .................25
4.17. Affiliate Transactions ......................................25
4.18. Customers and Suppliers .....................................25
4.19. Compliance with Laws; Permits ...............................26
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4.20. Environmental Matters .........................................26
4.21. Returns and Complaints ........................................27
4.22. Brokerage .....................................................27
4.23. Bank Debt and Debentures ......................................28
4.24. Required Authorizations .......................................28
4.25. Bad Debt Reserves .............................................28
ARTICLE V REPRESENTATIONS AND WARRANTIES OF BUYER AND PARENT ...............28
5.01. Incorporation and Corporate Power .............................28
5.02. Execution, Delivery; Valid and Binding Agreement ..............28
5.03. No Breach .....................................................29
5.04. Brokerage .....................................................29
5.05. Sufficient Funds ..............................................29
ARTICLE VI COVENANTS OF SELLERS ............................................29
6.01. Conduct of the Business .......................................29
6.02. Conduct related to Contract Hold-Back .........................30
6.03. Access to Books and Records ...................................30
6.04. Conditions ....................................................30
6.05. Exclusive Dealings ............................................30
6.06. Preparation of Books and Records ..............................31
6.07. Employment Agreements .........................................31
6.08. Stockholders Agreements .......................................31
ARTICLE VII COVENANTS OF PARENT AND BUYER ..................................31
7.01. Conditions ....................................................31
7.02. Conduct of Business After Closing .............................31
7.03. Conduct with respect to Contract Hold-Back ....................32
7.04. Change of Control .............................................32
7.05. Conduct with Respect to Third Party Confidential Information ..32
ARTICLE VIII CONDITIONS TO CLOSING .........................................33
8.01. Conditions to Buyer's Obligations .............................33
8.02. Conditions to Sellers' Obligations ............................36
ARTICLE IX ADDITIONAL AGREEMENTS ...........................................37
9.01. Name Change / Withdrawal of Qualifications to Do Business
as a Foreign Corporation ......................................37
9.02. Noncompetition Covenant .......................................37
9.03. Taxes .........................................................37
9.04. Intentionally Omitted .........................................39
9.05. Employee Matters ..............................................39
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9.06. Employee Non-Competes............................................40
9.07. Services.........................................................40
ARTICLE X TERMINATION ........................................................41
10.01. Termination......................................................41
10.02. Effect of Termination............................................41
ARTICLE XI SURVIVAL; INDEMNIFICATION..........................................41
11.01. Survival ........................................................41
11.02. Damages..........................................................41
11.03. Indemnification by Sellers and the Stockholders..................42
11.04. Conditions of Sellers Indemnification............................43
11.05. Indemnification Claims...........................................44
11.06. Indemnification by Buyer.........................................45
11.07. Conditions of Buyer Indemnification..............................45
11.08. Legal Proceedings and Method of Asserting Claims ................46
ARTICLE XII INDEMNIFICATION REPRESENTATIVE ...................................46
12.01. Acceptance; Relationships........................................46
12.02. Appointment......................................................47
12.03. Authority........................................................47
12.04. Duties of the Representative.....................................47
12.05. Indemnity........................................................47
12.06. Other Agreements ................................................48
12.07. Instructions and Fees............................................48
12.08. Limitation of Liability..........................................48
12.09. Uncertainty of Duties ...........................................48
12.10. Resignation and Replacement of the Representative ...............48
12.11. Agents...........................................................49
12.12. Reliance ........................................................49
12.13. Defense of Claims................................................49
12.14. Limitations......................................................49
12.15. Duties of Stockholders...........................................49
ARTICLE XIII MISCELLANEOUS....................................................50
13.01. Arbitration......................................................50
13.02. Press Releases and Announcements ................................50
13.03. Expenses.........................................................50
13.04. Further Assurances ............................................. 50
13.05. Amendment and Waiver.............................................50
13.06. Notices .........................................................51
13.07. Assignment.......................................................52
13.08. Severability.....................................................52
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13.09. Complete Agreement .....................................52
13.10. Counterparts ...........................................52
13.11. Governing Law ..........................................52
13.12. Third Party Beneficiaries ..............................53
13.13. Sellers' Knowledge .....................................53
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EXHIBITS AND SCHEDULES
Xxxxxxx X- 0, Xxxx of Sale (Section 2.02)
Exhibit A-2, UK Asset Xxxx of Sale (Section 2.02)
Exhibit B, Assignment and Assumption Agreements (Section 2.02)
Exhibit C, Purchase Price Allocation (Section 3.07)
Exhibit D, Form of Proxy (Section 6.08)
Schedule A, Stockholders (Preamble)
Schedule B, Contracts (Section 1.01(d))
Schedule C-1, Personal Property Leases (Section 1.01(e))
Schedule C-2, UK Personal Property Leases (Section 1.02(a))
Schedule D, Real Property Leases (Section 1.01(e))
Schedule E, Permits, Assignable (Section 1.01(f))
Schedule F, Fixed Assets (Section 1.01(p))
Schedule 1.02(b), Assets Located in the United Kingdom (Section 1.02(b))
Schedule G, Excluded Permits and Sellers Agreements (Section 1.03(b))
Schedule 3.02, Estimated Closing Date Working Capital Example (Section 3.02)
Schedule 3.03(b), Contract Hold-Back (Section 3.03(b))
Schedule 3.04, Earn-Out (Section 3.04)
Disclosure Schedule (Article IV)
Schedule H, Non-Assignable Permits and Contracts (Section 4.10(c))
Schedule I(i)-I(iv), Customers, Certain Persons, etc. (Sections 4.10(d)
Schedules J(i)-J(vii), Relating to Intellectual Property Rights (Section 4.11)
Schedule K-1, Employee Benefit Plans (Section 4.15(a))
Schedule K-2, Compensation Policies (Section 4.15(b))
Schedule 6.07, Transferred Employees to Sign Noncompetition Agreements
(Section 6.07)
Schedule M, Required Consents (Section 8.01(d))
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TABLE OF DEFINED TERMS
Term Section Page
---- ------- ----
Agreement ................................. Preamble ................ 1
Assets ........................................ 1.01 ................ 1
Assignment and Assumption Agreement ........... 2.02 ................ 6
Assumed Liabilities .......................... 11.04 ................ 5
Authorization ................................. 4.24 ............... 28
Balance Sheet Date ............................ 4.04 ............... 11
Balance Sheet ................................. 4.04 ............... 11
Xxxx of Sale .................................. 2.02 ................ 6
Business .................................. Recitals ................ 1
Buyer Indemnified Persons .................... 11.03 ............... 42
Buyer ..................................... Preamble ................ 1
BuyerExempted Claims ...................... 11.04(a) ............... 44
Claim ..................................... 11.08(a) ............... 00
XxxxxXxxxxxxx Xxxxxxx ...................... 1.01(d) ................ 4
ClearCommerce UK .......................... Preamble ................ 1
ClearCommerce ............................. Preamble ................ 1
Closing Date ................................. 22.01 ................ 5
Closing ....................................... 2.01 ................ 5
COBRA regulations ............ ..............9.05(h) ............... 40
Code ...........................................3.07 ................ 9
Comerica Debt ..................................4.23 ............... 28
Compensation Policies .......................4.15(b) ............... 24
Contaminant ................................ 4.11(1) ............... 22
Contract Escrow Amount ......................3.03(b) ................ 7
Contracts ...................................1.01(d) ................ 2
Damages .......................................11.02 ............... 41
Deferred Revenues ...........................3.05(a) ................ 8
Disabling Code ..............................4.11(1) ............... 22
Disclosure Schedule ......................Article IV ............... 10
Disputed Items ............................. 3.05(b) ................ 8
Earn-Out Amount ....................... ....... 3.04 ................ 7
eFunds UK ..................................Preamble ................ 1
Employee Benefit Plans ..................... 4.15(a) ............... 23
Environmental, Health and Safety Laws ...... 4.20(a) ............... 26
ERISA ....................................4.15(f)(i) ............... 24
Escrow Agent ................................3.03(a) ................ 7
Escrow Agreement ............................3.03(a) ................ 7
Escrow Amount ...............................3.03(a) ................ 7
Estimated Closing Balance Sheet ................3.02 ................ 6
Estimated Closing Date Working Capital ........ 3.02 ................ 6
Estimated Purchase Price ...................... 3.02 ................ 6
Excluded Assets ............................... 1.03 ................ 4
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Excluded Employees ............................ 9.05(a) ............ 39
Extremely Hazardous Substance ................. 4.20(a) ............ 27
Fees .......................................... 1.01(d) ............. 5
Final Closing Balance Sheet .................. 33.05(a) ............. 7
Final Closing Date Working Capital ............ 3.05(a) ........ .... 7
Financial Records ................................ 4.04 ............ 11
Financial Statements ............................. 4.04 ............ 11
GAAP ........... .................................3.02 ..............6
Goodwill ....................... ...............1.01(j) ............. 2
Governmental Body ................................ 4.03 ............ 11
Governmental Regulation .......................... 4.03 ............ 11
Hazardous Material ....... ..................... 4.20(a) ............ 27
Indemnified Party ............................... 11.08 ............ 46
Indemnifying Party .............................. 11.08 ............ 46
Insiders ......................................... 4.17 ............ 25
Intellectual Property Rights ................ 4.11(a)(i) ............ 18
Latest Financial Statements ...................... 4.04 ............ 11
Licensed-In Intellectual Property Rights ... 4.11(a)(ii) ............ 19
Liens ............................................ 4.03 ............ 11
Majority Stockholders ............ ..............12.02 ............ 47
Material Adverse Effect .......................... 4.01 ............ 10
Material Customer ................................ 4.18 ............ 25
Notifying Party ................................. 11.08 ............ 46
Objection Notice ............................... 3.05(b) ............. 8
Owned Intellectual Property Rights .........4.11(a)(iii) ............ 19
Parent ........................................ Preamble ............. 1
Permits ........................................ 1.01(f) ............. 2
Permitted Liens ................................ 4.07(b) ............ 12
Person ..................................... 4.11(a)(iv) ............ 19
Personal Property Leases ....................... 1.01(d) ............. 2
Post-Closing Tax Period ........................ 9.03(c) ............ 38
Pre-Closing Tax Period ......................... 9.03(c) ....... .... 38
Products .................................... 4.11(a)(v) ............ 19
Proposed Transferred Employees ................. 9.05(a) ............ 39
Purchase Price Allocation ......................... 3.07 ............ 9
Purchase Price .................................... 3.01 ............ 6
Real Property Holdings ......................... 4.20(b) ............ 27
Real Property Leases ........................... 1.01(e) ............ 2
Real Property .................................. 4.08(a) ............ 14
Records ........................................ 1.01(g) ............ 2
Registered Intellectual Property Rights .... 4.11(a)(vi) ............ 19
Related Agreements ............................. 8.01(j) ............ 34
Representative ................................... 12.02 ............ 47
Retained Liabilities .............................. 1.04 ............ 5
Returns ........................................ 4.08(a) ............ 15
Seller Agreements .............................. 4.10(a) ............ 17
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Seller Indemnified Persons ............................... 11.06 ....... 45
Seller Indemnifying Parties ............................ 11.03 ....... 42
Seller Indemnifying Party ............................... 11.03 ........ 42
Seller .............................. ................. Preamble ........ 1
Sellers Exempted Claims ................................. 11.067 ....... 45
Software .......................................... 4.11(a)(viii) ...... 19
Stockholders .......................................... Preamble ........ 1
Target Working Capital .................................... 3.01 .........6
Tax Affiliate ........................................... 408(a) ........15
Tax Affiliates.......................................... 4.08(a) ....... 15
Taxes .................................................. 1.03(d) .........4
Termination or Exhaustion of the Escrow Amount ........ 11.05(a) ....... 44
Third Party Confidential Information ...................... 7.05 ....... 33
Third-Party Intellectual Property Rights .......... 4.11(a)(viii) ...... 19
Transferred Employees .................................. 9.05(b) ........39
UK Asset Xxxx of Sale ............................. .... 1.01(d)......... 6
UK Assets .............................................. 1.01(d) ....... .3
UK Leases .............................................. 1.01(d) .........3
VAT .................................................... 4.09(h) ........16
VATA ................................................... 4.09(k) ........16
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ASSET PURCHASE AGREEMENT
This asset purchase agreement (this "Agreement"), dated as of January 11,
2005, is made and entered into by and among eFunds Government Services, Inc., a
Delaware corporation ("Buyer"): eFunds International Ltd., a corporation
organized under the laws of the United Kingdom ("eFunds UK"); eFunds
Corporation, a Delaware corporation and the sole shareholder of U.S. Buyer and
eFunds UK ("Parent"); ClearCommerce Corporation, a Delaware corporation
("ClearCommerce"); ClearCommerce Europe Ltd., a corporation organized under the
laws of the United Kingdom and a wholly owned subsidiary of ClearCommerce
("ClearCommerce UK"); and, for the purposes of Sections 6.05, 6.08, 7.02, 8.01
(b), 13.07 and 13.12 and Articles XI and XII only, the stockholders of
ClearCommerce listed on Schedule A hereto (the "Stockholders"). The term
"Sellers" means each of ClearCommerce and ClearCommerce UK individually and both
of them collectively, and the term Seller includes the singular as well as the
plural.
WHEREAS, Sellers are engaged in the business of providing fraud prevention
and electronic payment solutions, and related software, for electronic and other
forms of commerce to financial institutions, financial service companies and
retailers (as currently conducted and as currently proposed by Sellers to be
conducted without giving effect to the transactions contemplated by this
Agreement, the "Business");
WHEREAS, Sellers desire to sell to Buyer, and Buyer desires to purchase
from Sellers, on the terms and subject to the conditions set forth in this
Agreement, substantially all of the assets of Sellers; and
WHEREAS, Sellers desire to assign to Buyer and Buyer desires to assume
from Sellers, on the terms and subject to the conditions set forth in this
Agreement, certain of the liabilities of Sellers specifically identified herein.
NOW, THEREFORE, in consideration of the mutual covenants, representations,
warranties and agreements and the conditions set forth in this Agreement, and
intending to be legally bound hereby, Parent, Buyer, Sellers and the
Stockholders hereby agree as follows:
ARTICLE I
TRANSFER OF ASSETS; ASSUMPTION OF LIABILITIES
1.01. Transfer of U.S. Assets to Buyer. On the terms and subject to the
conditions set forth in this Agreement, Sellers shall, at the Closing (as
hereinafter defined), sell, transfer and assign to U.S. Buyer and U.S. Buyer
shall, except as provided in Section 1.03, purchase and acquire from Sellers,
all of Sellers' right, title and interest as of the Closing Date (as hereinafter
defined) in and to all of the following assets (collectively, the "Assets"):
(a) All of Sellers' Intellectual Property Rights (as hereinafter
defined) and all tangible representations thereof, and all of the Products
(as hereinafter defined);
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(b) All of Sellers' product plans, information on product costs, product
prices, and business opportunities, including without limitation those relating
to the Products;
(c) All of Sellers' rights under any proprietary information and invention
assignment agreements, or any agreement similar in nature thereto, with all past
and present employees of, consultants to or contractors, wherever located;
(d) All of Sellers' claims and rights under all agreements, contracts and
other executory commitments described in subsections (v), (ix), (x), (xii),
(xiii), (xiv), (xv) (xvi) and (xvii) of Section 4.10(a), including without
limitation, the items listed on Schedule B hereto (the "Contracts");
(e) All of Sellers' rights and incidents of interest as of the Closing
Date in and to all personal and real property leases, including without
limitation, those Personal property leases listed on Schedule C-l hereto (the
"Personal Property Leases") and the real property leases listed on Schedule D
hereto(the "Real Property Leases"), together with all of their interest as at
the Closing Date in all of the structures, fixtures and improvements located on
the real property covered by the Real Property Leases;
(f) All franchises, licenses, permits, consents, authorizations,
certificates and approvals of any Governmental Body (as hereinafter defined)
issued to or held by Sellers which are necessary, related or incidental to the
Business and which are assignable or transferable, including without limitation
those listed on Schedule E hereto (collectively referred to herein as
"Permits");
(g) All originals or complete copies of all of their customer and supplier
lists and files, including addresses, drawings, files, sales and promotional
literature, sales order log books, samples, customer files, papers, personnel
files for all Transferred Employees (as hereinafter defined) and all other books
and records (the "Records");
(h) All rights, if any, under express or implied warranties from their
suppliers and vendors which are transferable;
(i) All of Sellers' causes of action, judgments and claims or demands of
whatever kind or description against third parties except for such matters
related to the assets described in Section 1.03 or with respect to the
liabilities or obligations of Sellers not assumed by Buyer;
(j) All goodwill associated with the Business (the "Goodwill");
(k) All marketing plans and materials, training materials, office manuals,
any technical or reference manuals and similar items associated with the
Business;
(1) All of their interests as of the Closing Date in (i) all office
telephone and telex numbers used primarily in the Business and (ii) all listings
relating primarily to the Business in all telephone books and directories;
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(m) Subject to Section 1.03 and except with respect to liabilities of
Sellers not assumed by Buyer, all such other assets, properties, interest in
properties and rights owned by them as at the Closing Date, including their
current bank accounts, cash, cash equivalents, receivables, inventory, prepaid
expenses, restricted cash that are or should be reflected in the Closing Date
Balance Sheet (as hereinafter defined) (or not so reflected as a result of being
fully amortized or depreciated as of the Balance Sheet Date (as hereinafter
defined) or in the Financial Records (as hereinafter defined));
(n) All of their trade accounts and accounts receivable (excluding the
portion of the receivable attributed to the Sellers' Tax refunds and credits but
only to the extent the Seller retains the corresponding Tax liability);
(o) All of Sellers' rights in and to any motor vehicles owned or leased by
them;
(p) All manufacturing, production, maintenance, packaging, testing and
other machinery, equipment (including all computer equipment, servers and
related peripherals), tools, furniture, fixtures, office equipment and supplies
and other tangible personal property (together with all spare and maintenance
parts), including without limitation, those items listed on Schedule F hereto
located or used primarily in the Business;
(q) All rights of Sellers in the domain names used in the conduct of the
Business, including "xxxxxxxxxxxxx.xxx.," "xxxxxxxxxxxxx.xxx,"
"xxxxxxxxxxxxx.xxxx," "xxxxxxxxxxxxx.xx" and "xxxxxxxxxxxxx.xx.xx";
(r) All of Sellers' right, title and interest in the name ClearCommerce;
and
(s) All other assets of any kind whatsoever which are owned by Sellers
except for the Excluded Assets (as hereinafter defined).
1.02. Transfer of UK Assets to eFunds UK. On the terms and subject to
the conditions set forth in this Agreement, Sellers shall, at the Closing, sell,
transfer and assign to eFunds UK, and eFunds UK shall, except as provided in
Section 1.03, purchase and acquire from Sellers, all of Sellers' right, title
and interest as of the Closing Date in and to all of the following assets of
Sellers of every kind and description, whether tangible or intangible, real,
personal or mixed (collectively, the "UK Assets"), including:
(a) All rights and incidents of interest of Sellers as of the
Closing Date in and to all personal property leases for property located
in the United Kingdom, including without limitation, those personal
property leases listed on Schedule C-2 hereto (the "UK Leases") and which
relate to property located in the United Kingdom;
(b) The assets listed on Schedule 1.02(b).
THE PARTIES HERETO EXPRESSLY AGREE THAT THE BUYER IS NOT ASSUMING ANY OF THE
LIABILITIES, OBLIGATIONS OR UNDERTAKINGS RELATING TO THE FOREGOING ASSETS,
EXCEPT FOR THE LIABILITIES
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ASSUMED BY BUYER AND WHICH ARE SPECIFICALLY DESCRIBED IN SECTION 1.04 HEREOF.
1.03. Excluded Assets. Notwithstanding the terms of Sections 1.01 and
1.02, the following assets (the "Excluded Assets") shall be retained by Sellers
and shall not be sold, transferred or assigned to Buyer in connection with the
purchase of the Assets:
(a) All corporate certificates of authority and corporate minute
books and the corporate stock records or registers of Sellers;
(b) Such Permits and agreements which are identified in Schedule G;
(c) Except as otherwise provided in Section 9.05(c), all rights of
Sellers with respect to its Employee Benefit Plans (as hereinafter
defined) and any insurance policies maintained by Sellers;
(d) All claims or rights of Sellers to any refunds of any "Taxes"
paid by Sellers in respect of the activities and operation of the Business
prior to the Closing, including, without limitation, the benefits
associated with any net operating losses and tax credits or refunds
arising in connection with research and development activities. For
purposes of this Agreement, the term "Taxes" means all taxes, however
denominated, charges, fees, levies, or other assessments, including,
without limitation, all income (including without limitation federal,
state and local income taxes), gross income, gross receipts, sales, goods
and services, use, value added, ad valorem, environmental, transfer,
franchise, profits, business license, withholding, payroll and employee
withholding, employment, workers' compensation, social security, Pension
Benefit Guarantee Corporation, employment or unemployment insurance,
excise, estimated, severance, stamp, occupation, real and personal
property, excess war profits tax, branch profits tax, Indian R&D Cess,
Texas Earned Surplus Tax and Ohio Tier Three Litter Tax or other taxes,
customs duties, fees, assessments, or charges of any kind whatsoever,
including, without limitation, all interest and penalties thereon, and
additions to tax of additional amounts imposed by any taxing authority,
domestic or foreign;
(e) All of the common or like kind equity interests of ClearCommerce
UK and ClearCommerce Germany Gmbh, a corporation organized under the laws
of Germany and a wholly owned subsidiary of ClearCommerce ("ClearCommerce
Germany"), owned directly or indirectly by ClearCommerce Corporation. This
exclusion does not apply to the assets owned directly or indirectly by
ClearCommerce UK;
(f) All of Sellers' claims and obligations under any contracts
agreements or executory commitments described in subsections (i), (ii),
(iii), (iv), (vi), (vii) and (xi) of Section 4.10(a) unless specifically
noted otherwise on Schedule B; and
(g) All of Sellers' accounting software, accounting records, stock
tracking records and personnel files for employees that are not
Transferred Employees.
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1.04. Assumption of Liabilities. In accordance with the provisions of the
Assignment and Assumption Agreement (as hereinafter defined) Buyer shall assume,
pay, perform in accordance with their terms or otherwise satisfy, from and after
the Closing Date only the following obligations and liabilities (the "Assumed
Liabilities"): (i) those liabilities of Sellers reflected as "Current
Liabilities" on the Closing Balance Sheet, which does not include: (A) current
liabilities and obligations with respect to the Excluded Assets, (B) liabilities
and obligations of Sellers incurred in connection with the payment of legal,
accounting, investment banking and other fees and expenses incurred by Sellers
in connection with the transactions contemplated by this Agreement (including
without limitation any fee described in Sections 4.22 and 13.03 hereto)
(collectively, "Fees"). (C) the current portion of the Comerica Debt, (D) those
liabilities of Sellers arising from any severance obligations to Excluded
Employees (as hereinafter defined) and (E) the current portion of any
liabilities and obligations specifically retained by Sellers in this Agreement
(the liabilities referenced in clauses (A) through (E) of this Section 1.04
being herein referred to as the "Retained Liabilities") and (ii) obligations and
liabilities arising under the Permits, Contracts (excluding those described in
Section 4.10(a)(xvi)), the Real Property Leases and the Personal Property Leases
to be assigned to Buyer pursuant to Section 1.01 and the UK Leases and the other
obligations and liabilities arising from the UK Assets to be assigned to Buyer
in Section 1.02; provided, however, that Buyer shall not assume any liabilities
or obligations of Sellers with respect to the Comerica Debt.
For further clarity and for the avoidance of doubt, Buyer and Sellers
agree that any liability incurred by Buyers (including any liability,
obligation, or the costs of defense, in respect of any resulting litigation) as
a result of a breach by Sellers of their obligations under any Permits or to its
vendors, customers or the other parties to such Contracts, Real Property Leases,
Personal Property Leases and UK Leases arising out of a breach of the
representations and warranties of Sellers contained in Article IV hereof shall
constitute Damages (as herein defined) for which Buyer shall be entitled to
indemnification pursuant to Article XI hereof.
1.05. No General Assumption. Other than as specifically set forth in
Section 1.04, Sellers shall retain, and Buyer shall not assume, and nothing
contained in this Agreement shall be construed as an assumption by Buyer of, any
liabilities, obligations or undertakings of Sellers of any nature whatsoever,
whether accrued, absolute, fixed or contingent, known or unknown, due or to
become due, unliquidated or otherwise.
ARTICLE II
CLOSING
2.01. Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") will take place at the offices of Xxxxxx & Xxxxxxx
LLP, Suite 0000,00 Xxxxx Xxxxx Xxxxxx, Xxxxxxxxxxx, XX 00000. Upon the
satisfaction or waiver of the conditions set forth in Article VIII, the Closing
shall occur on the earlier of (i) two business days following such satisfaction
or waiver or (ii) January 31,2005 or on such earlier date as is mutually
agreeable to Buyer and Sellers and will be effective as of 12:01 a.m. on the
date of Closing. The date on which the Closing occurs is referred to herein as
the "Closing Date".
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2.02. General Procedure. At the Closing, Parent shall make or shall cause
Buyer to make the payments described in Section 3.06 hereof and each party shall
deliver to the party entitled to receipt thereof the documents required to be
delivered pursuant to Article VIII hereof. The conveyance, transfer, assignment
and delivery of: (a) the Assets shall be effected by Sellers' execution and
delivery to Buyer of bills of sale and assignments substantially in the form
attached hereto as Exhibit A-l (the "Xxxx of Sale"); (b) the UK Assets shall be
effected by Seller's execution and delivery to eFunds UK of bills of sale and
assignments substantially in the form attached hereto as Exhibit A-2 (the "UK
Asset Xxxx of Sale"); (c) such other instruments of conveyance, transfer,
assignment and delivery as Buyer shall reasonably request to cause Sellers to
transfer, convey, assign and deliver the Assets to Buyer and (d) the assignment
and assumption of the Assumed Liabilities by Buyer shall be effected by
Sellers', Parent's and Buyer's execution of an assignment and assumption
agreement substantially in the form attached hereto as Exhibit B (the
"Assignment and Assumption Agreement").
ARTICLE VIII
PURCHASE PRICE
3.01. Amount of Purchase Price. The aggregate consideration to be paid by
Buyer for the Assets (the "Purchase Price") shall be (A) an amount equal to
Nineteen Million Four Hundred Thousand Dollars ($19,400,000), plus the amount,
if any, by which the Final Closing Date Working Capital (as defined in Section
3.05(a)) exceeds Nine Hundred and Seventy Thousand Dollars ($970,000) (the
"Target Working Capital") or reduced by the amount, if any, by which the Final
Closing Date Working Capital is less than the Target Working Capital, plus (B)
the Earn-Out Amount (as defined in Section 3.04), plus (C) the assumption by
Buyer of the Assumed Liabilities pursuant to the Assignment and Assumption
Agreement.
3.02. Estimated Purchase Price. At least five business days prior to the
Closing Date, Sellers shall deliver to Buyer an estimated consolidated balance
sheet (the "Estimated Closing Balance Sheet") for Sellers as of the close of
business on the Closing Date (determined on a pro forma basis as though the
transactions contemplated by this Agreement had not occurred and in accordance
with United States generally accepted accounting principles ("GAAP") applied on
a basis consistent with the preparation of the Financial Statements (as
hereinafter defined). The Estimated Closing Balance Sheet will include a
determination of the Estimated Closing Date Working Capital as of the close of
business on the Closing Date. The "Estimated Closing Date Working Capital" means
the amount equal to (A) the current assets (excluding any current assets to the
extent they reflect the Excluded Assets but including any current asset
classified as "restricted cash" pursuant to the Comerica Debt to the extent that
such cash shall cease to be restricted immediately after the Comerica Debt is
paid in full) minus (B) the current liabilities as reflected on the Estimated
Closing Balance Sheet (excluding from the current liabilities (1) the Retained
Liabilities and (2) the deferred revenues, in each case as reflected in the
Estimated Closing Balance Sheet). If Buyer objects to the Estimated Closing
Balance Sheet, then the Estimated Closing Date Working Capital at the Closing
shall be an amount that Buyer reasonably deems appropriate after consultation
with Sellers and sets forth in a written notice delivered to Sellers prior to
the Closing Date. "Estimated Purchase Price" means an amount equal to Nineteen
Million Four Hundred Thousand Dollars ($ 19,400,000) plus the amount, if any, by
which the Estimated Closing Date Working Capital exceeds the Target Working
Capital
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or minus the amount, if any, by which the Target Working Capital exceeds the
Estimated Closing Date Working Capital. For further clarity, it is contemplated
by the parties that the Estimated Closing Date Working Capital will be
calculated in a manner consistent with the example set forth on Schedule 3.02
hereto (which uses the Sellers' balance sheet as of September 30, 2004).
3.03. Hold-Back.
(a) General Hold-Back. A portion of the Estimated Purchase Price
equal to One Million Nine Hundred and Forty Thousand Dollars ($ 1,940,000)
(the "Escrow Amount") to be used to satisfy, in part, Sellers' and
Stockholders' indemnification obligations to Buyer Indemnified Persons (as
hereinafter defined) pursuant to Article XI of this Agreement will be
deposited by Buyer with JPMorgan Chase Bank, N. A. (the "Escrow Agent") to
be held in escrow by the Escrow Agent in accordance with the terms of an
escrow agreement to be mutually agreed upon by Buyer and Sellers (the
"Escrow Agreement"). To the extent the Escrow Amount is not subject to any
pending claims and has not been distributed to Buyer or other Buyer
Indemnified Persons pursuant to this Agreement or the Escrow Agreement,
the Escrow Agreement shall provide that the Escrow Agent shall distribute
the Escrow Amount together with interest earned thereon to Sellers on or
before the fifth business day following the first anniversary of the
Closing Date.
(b) Contract Hold-Back. An additional portion of the Estimated
Purchase Price equal to One Million Seven Hundred and Sixty Thousand
Dollars ($1,760,000) (the "Contract Escrow Amount") will be deposited with
the Escrow Agent in accordance with the provisions of Schedule 3.03(b) to
this Agreement.
3.04. Earn-Out Payment. As a part of the Purchase Price Parent shall
distribute or cause Buyer to distribute an amount not to exceed Eleven Million
Dollars ($ 11,000,000) to be determined in the manner described in Schedule 3.04
(the "Earn-Out Amount") to Sellers in accordance with the provisions of Schedule
3.04 to this Agreement.
3.05. Purchase Price Adjustment.
(a) Within 90 days after the Closing Date, Buyer shall prepare and
deliver to Sellers the proposed final consolidated balance sheet (the
"Final Closing Balance Sheet"). The Final Closing Balance Sheet shall be
prepared on a pro forma basis as though the transactions contemplated by
this Agreement had not occurred and in accordance with GAAP applied on a
basis consistent with the preparation of the Financial Statements. The
Final Closing Balance Sheet will include a determination of the Final
Closing Date Working Capital as of the close of business on the Closing
Date. The "Final Closing Date Working Capital" means the amount equal to
(A) current assets (excluding any current assets to the extent they
reflect the Excluded Assets but including any current asset classified as
"restricted cash" pursuant to the Comerica Debt to the extent that such
cash shall cease to be restricted immediately after the Comerica Debt is
paid in full) minus (B) the current liabilities as reflected on the Final
Closing Balance Sheet (excluding from the current liabilities (1) the
Retained Liabilities and (2) the deferred
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revenues, in each case as reflected in the Final Closing Balance Sheet) on the
Closing Date (the "Deferred Revenues").
(b) Within 30 days after the receipt by Sellers of the Final Closing
Balance Sheet, Sellers shall review the Final Closing Balance Sheet and shall
deliver to Buyer a written description (the "Objection Notice") of its
objections, if any to any item (the "Disputed Items") appearing on the Final
Closing Balance Sheet. Buyer and Sellers will attempt in good faith to resolve
any Disputed Items. If Buyer and Sellers do not reach a resolution of all
Disputed Items within 30 days after Buyer has received the Objection Notice,
Buyer and Sellers will engage the chairman of the Technology, Communications and
Entertainment practice group leader of Ernst & Young LLP (or his successor or
designee) within 10 days to resolve any remaining objections. If Ernst & Young
LLP is unavailable, Buyer and Sellers will select a nationally recognized
accounting firm by lot (after excluding the regular outside accounting firms of
Parent and Sellers). The accounting firm (whether Ernst & Young LLP or a
substitute accounting firm selected by lot) will resolve any such objections and
determine on a pro forma basis as though the transactions contemplated by this
Agreement had not occurred and in accordance with GAAP applied on a basis
consistent with the preparation of the Financial Statements, the amounts to be
included in the Final Closing Balance Sheet and the Final Closing Date Working
Capital. The parties will provide the accounting firm, within 10 days of its
selection, with a definitive statement of the position of each party with
respect to each Disputed Item and will advise the accounting firm that the
parties accept the accounting firm as the appropriate person to interpret this
Agreement for all purposes relevant to the resolution of the Disputed Items.
Buyer will provide the accounting firm access to the books and records of
Sellers. The accounting firm will have 30 days to carry out a review of the
Disputed Items and prepare a written statement of its determination regarding
each Disputed Item. The determination of any accounting firm so selected will be
set forth in writing and will be conclusive and binding upon the parties. Buyer
will revise the Final Closing Balance Sheet and the determination of the Final
Closing Date Working Capital as appropriate to reflect the resolution of any
Disputed Items to the Final Closing Balance Sheet pursuant to this Section
3.05(b).
(c) If Buyer and Sellers submit any Disputed Items to an accounting firm
for resolution as provided in Section 3.05(b), the party whose determination of
Final Closing Date Working Capital (calculated based on such party's position
regarding the Final Closing Balance Sheet) is furthest from the Final Closing
Date Working Capital determined by the accounting firm (based on its resolution
of the Disputed Items submitted for determination) will bear its own costs and
expenses, the fees and expenses of the accounting firm and the out-of-pocket
costs and expenses (including reasonable legal fees and costs) of the other
party.
(d) Within five (5) business days after the date on which the Final
Closing Date Working Capital is finally determined pursuant to this Section
3.05:
(i) If the Final Closing Date Working Capital exceeds the Estimated
Closing Date Working Capital, Parent will pay or cause Buyer to pay to
Sellers by wire transfer of immediately available funds an amount equal to
the amount by
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which the Final Closing Date Working Capital exceeds the Estimated Closing
Date Working Capital.
(ii) If the Final Closing Date Working Capital is less than the
Estimated Closing Date Working Capital, the Escrow Agent shall release
from the Escrow Amount and deliver to Buyer an amount equal to the amount
by which the Final Closing Date Working Capital is less than the Estimated
Closing Date Working Capital.
3.06. Manner of Payment of the Estimated Purchase Price. At Closing Parent
shall or shall cause Buyer to:
(a) remit on behalf of Sellers the Fees to the parties owed such
amounts by wire transfer according to written instructions as are received
by Buyer from Sellers;
(b) remit on behalf of Sellers the amount of the Comerica Debt
outstanding as of the Closing Date by wire transfer according to written
instructions as are received by Buyer from Sellers;
(c) deposit the Escrow Amount with the Escrow Agent as described in
Section 3.03(a);
(d) deposit the Contract Escrow Amount with the Escrow Agent as
described in Section 3.03(b); and
(e) pay the portion of the Estimated Purchase Price remaining after
the payments and deposits described in Section 3.06(a)-(d) above to the
Sellers by wire transfer according to written instructions as are received
by Buyer from Sellers.
3.07. Allocation of Purchase Price. On or before the date the Final
Closing Date Working Capital is finally determined pursuant to Section 3.05,
then Buyer and Sellers will use commercially reasonable efforts to allocate the
Purchase Price (the "Purchase Price Allocation") among the Assets in a mutually
agreed upon manner. If Buyer and Sellers are able to mutually agree to the
Purchase Price Allocation, such allocation shall be attached as Exhibit C to
this Agreement and Buyer and Sellers shall file all tax returns that may be
required with respect to the transactions provided for herein pursuant to the
Internal Revenue Code of 1986, as amended (the "Code"), any Treasury Regulations
promulgated thereunder and any other applicable law or regulation relating to
Taxes on a basis that is consistent with such allocation as adjusted to take
into account payments pursuant to Sections 3.03, 3.04 and 3.05 and, without
duplication, Article XI. Exhibit C shall remain blank if Buyer and Sellers are
unable to mutually agree upon the Purchase Price Allocation.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLERS
Sellers hereby represent and warrant to Buyer that, except as set forth in
the Disclosure Schedule delivered by Sellers to Buyer on the date of this
Agreement (the "Disclosure Schedule"):
4.01. Incorporation and Corporate Power. ClearCommerce is a corporation
duly incorporated, validly existing and in good standing under the laws of the
State of Delaware. ClearCommerce UK is a corporation duly incorporated, validly
existing and in good standing under the laws of the United Kingdom. Other than
ClearCommerce Germany and ClearCommerce UK, ClearCommerce has no subsidiaries
and does not own or control, directly or indirectly, any shares of capital stock
of any other corporation or any interest in any partnership, joint venture,
limited liability company, professional association or other business
enterprise. Sellers have not agreed to make nor are obligated to make nor are
bound by any written or oral agreement, contract, understanding, negotiable
instrument, commitment or undertaking of any nature, in effect as of the date of
this Agreement or as may hereafter be in effect, under which any of them may
become obligated to make, any future investment in or capital contribution to
any other entity. Sellers have all requisite corporate power and authority and
all authorizations, licenses, permits and certifications necessary to carry on
the Business as now being conducted and to own, lease, license and operate its
Assets. Sellers are qualified as foreign corporations to do business in every
jurisdiction in which the nature of the Business or their ownership of property
requires any of them to be qualified and in which the failure to be so qualified
would have or could reasonably be expected to have a material adverse effect (a
"Material Adverse Effect") on the aggregate Assets, or the financial condition,
operating results or condition of the Business, together taken as a whole;
provided, however, none of the following shall be deemed in themselves, either
alone or in combination, to constitute, and none of the following shall be taken
into account in determining whether there has been or will be, a Material
Adverse Effect on Sellers: (A) any adverse change that results from or is
attributable to conditions affecting the industries in which either of Sellers
participate or the United States economy as a whole or (B) any adverse change in
the business relationship with either Linkpoint International Inc., First Data
Corporation or one of its affiliates or Experian E-Commerce Solutions that
results from or is primarily attributable to the public announcement or pendency
of the transactions contemplated hereby.
4.02. Execution Delivery; Valid and Binding Agreement. The execution,
delivery and performance of this Agreement by Sellers and the consummation of
the transactions contemplated hereby have been duly and validly authorized by
the Boards of Directors and stockholders of each of the Sellers and no other
proceedings on their part are necessary to authorize the execution, delivery and
performance of this Agreement. This Agreement has been duly executed and
delivered by Sellers and constitutes the valid and binding obligation of each of
the Sellers enforceable in accordance with its terms, except to the extent that
such enforcement may be limited by (i) bankruptcy, insolvency, reorganization,
fraudulent conveyance, moratorium and similar laws now or hereafter in effect
reflecting to or affecting creditors' rights generally and (ii) equitable
considerations and other limitations on the availability of the remedies of
specific performance and injunctive and other forms of equitable relief.
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4.3. Authority; No Breach. Each of the Sellers has the requisite corporate
power and authority to execute and deliver this Agreement and to perform its
obligations hereunder. The execution, delivery and performance of this Agreement
by Sellers and the consummation of the transactions contemplated hereby do not
conflict with or result in any breach or violation of any of the provisions of
or constitute a default (or event which, with notice or lapse of time or both,
would constitute a breach or default), or result in the creation of any lien,
security interest, charge, mortgage or other encumbrance (collectively, "Liens")
on the Assets (except in favor of Buyer or Parent) or require any of the Sellers
to obtain any authorization, consent, approval, exemption or other action by or
notice to any Governmental Body (as hereinafter defined) under the provisions of
the certificates of incorporation or bylaws of Sellers, the Contracts or any
indenture, mortgage, lease, loan agreement or other material agreement or
instrument by which any of the Sellers or the Assets are bound, or any
Governmental Regulation (as hereinafter defined) to which any of the Sellers or
the Assets are subject. For purposes of this Agreement, "Governmental Body"
means any nation or government, any state, province or other political
subdivision thereof and any entity, authority or body exercising executive,
legislative, judicial, regulatory or administrative functions of government,
including any governmental authority, agency, department, board, commission or
instrumentality which has jurisdiction over the Assets or the Business, or any
political subdivision thereof or any court, legally constituted tribunal or
arbitrator and "Governmental Regulation" means all laws, regulations, ordinances
codes, rules, orders, treaties, decrees and other requirements issued, enacted,
adopted or promulgated by any Governmental Body having the force of law.
4.4. Financial Statements. Sellers have delivered to Buyer copies of (i)
an unaudited balance sheet (the "Balance Sheet") as of November 30, 2004 (the
"Balance Sheet Date"), of Sellers and the unaudited consolidated statements of
income, changes in stockholders' equity and cash flows of Sellers for the
eleven-month period ended on the Balance Sheet Date (such statements and the
Balance Sheet being herein referred to as the "Latest Financial Statements"),
and (ii) the unaudited consolidated balance sheet, as of December 31, 2003, the
audited consolidated balance sheets, as of December 31, 2002 and December 31,
2001, of Sellers, the unaudited statements of income, stockholders' equity and
cash flows, including the notes, of Sellers, for the year ended December 31,
2003 and the audited statements of income, stockholders' equity and cash flows,
including the notes, of Sellers, for each of the years ended December 31, 2002
and December 31, 2001 (collectively with the Latest Financial Statements, the
"Financial Statements"). The Financial Statements are based upon the information
contained in Sellers' books of account, general ledgers, accounts payable and
receivable and payroll records, tax returns and supporting schedules (the
"Financial Records"). The Financial Statements have been prepared in accordance
with GAAP consistently applied during the periods indicated and fairly present
in all material respects the financial position, results of operation and cash
flows of Sellers at the respective dates and for the respective periods
indicated, except that the Latest Financial Statements may not contain all notes
and are subject to year end adjustments, none of which will be material to the
Business.
4.05. Absence of Undisclosed Liabilities. None of the Sellers has any
liabilities (whether accrued, absolute, fixed or contingent, known or unknown,
due or to become due, unliquidated or otherwise, and regardless of when
asserted) arising out of transactions or events heretofore entered into, or any
action or inaction, or any state of facts existing, with respect to or
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based upon transactions or events heretofore occurring, except (i) as reflected
in the Balance Sheet, (ii) liabilities which have arisen after the Balance Sheet
Date in the ordinary course of business and which will be accurately reflected
in the Final Closing Balance Sheet or disclosed in the notes thereto, (iii)
liabilities that are Retained Liabilities or (iv) liabilities with respect to
the Excluded Assets.
4.06. No Material Adverse Effect. Since the Balance Sheet Date, no event
or circumstance has occurred or developed that has resulted or could reasonably
be expected to result in a Material Adverse Effect.
4.07. Absence of Certain Developments. Since the Balance Sheet Date, none
of the Sellers has:
(a) incurred or become subject to any liability except (i) current
liabilities incurred in the ordinary course of the Business and (ii)
liabilities under Contracts entered into in the ordinary course of the
Business;
(b) subjected any of the Assets to any Lien except (i) Liens for
taxes not yet due and payable, (ii) Liens incurred or deposits made to
secure workers' compensation, employment insurance or other social
security obligations, surety or appeal bonds when required by law; (iii)
Liens granted to a public utility or any Governmental Body when required
by such utility or Governmental Body; (iv) any mechanic's, laborer's,
materialman's or repairman's statutory or other similar Lien arising in
the ordinary course of business or out of the construction, repair or
improvement of any assets of Sellers or arising out of the furnishing of
materials or supplies therefor, provided that such Liens are related to
obligations not due or delinquent, are not registered against title to any
of the Assets or in respect of which adequate holdbacks are being
maintained as required by applicable law; or (v) any Liens in any personal
property granted by Sellers in the ordinary course of business in
connection with the lease or purchase of such personal property (the Liens
referred to in the foregoing clauses (i) through (v) being hereinafter
referred to as "Permitted Liens");
(c) discharged or satisfied any Lien or paid any liability other
than current liabilities paid in the ordinary course of the Business;
(d) sold, assigned, licensed or otherwise transferred (including,
without limitation, transfers to any employees, affiliates or
stockholders) any tangible or intangible assets of Sellers or canceled any
debts or claims, except in each case, in the ordinary course of the
Business;
(e) sold, assigned, licensed or otherwise transferred any rights in
or to the Assets, except in the ordinary course of the Business;
(f) disclosed to any Person (as hereinafter defined) other than (i)
Buyer, (ii)Parent, (iii) professional advisors of Buyer and Sellers and
(iv) Sellers' officers, directors and stockholders, any proprietary
confidential information related to the Business or the
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Assets except in the ordinary course of business and pursuant to a written
non-disclosure agreement;
(g) waived any rights of material value or suffered any
extraordinary losses or adverse changes in collection loss experience,
whether or not in the ordinary course of the Business or consistent with
past practice;
(h) other than in the ordinary course of the Business and in
accordance with past custom and practice, taken any other action or
entered into any other material transaction in connection with the
Business with any Insider (as hereinafter defined), other than the
transactions contemplated by this Agreement;
(i) suffered any material theft, damage, destruction or loss of or
to any property or properties owned or used by Sellers in the Business,
whether or not covered by insurance;
(j) other than as contemplated or required by this Agreement, made
any material change in or amendment to or terminated any existing Employee
Benefit Plan or adopted any new Employee Benefit Plan or provisioned to do
any of the foregoing or made any commitment or incurred any liability to
any labor union or employee association;
(k) terminated the employment of any officer or key employee or
received any notice of any impending resignation by any such Person;
(l) other than advances for business expenses made in the ordinary
course of business, made any loans or advances to, or guarantees for the
benefit of, any Person or acquired any material assets of any other
Person;
(m) made any modification, waiver, change, amendment, release,
rescission, accord and satisfaction or termination of, or with respect to,
any term, condition or provision of any Sellers Agreements that could
reasonably be expected to have a Material Adverse Effect, other than any
satisfaction by performance in accordance with the terms thereof in the
usual and ordinary course of the Business;
(n) suffered any labor disputes or disturbances including, without
limitation, the filing of any petition or charge of unfair labor practices
with the National Labor Relations Board, or like body in any jurisdiction
in which the Business is carried on;
(o) to the knowledge of Sellers, other than adverse changes in
relationships that may be incurred as a result of the pendency of this
transaction or the transactions contemplated by this Agreement, suffered
any adverse change in its relationships with its vendors or customers;
(p) Except as described in the schedules to this Agreement (i)
entered into or modified any employment, severance or similar agreements
or arrangements with, or granted any bonuses, salary increases, severance
or termination pay to, any Insiders or consultants or (ii) in the case of
employees, officers or consultants who earn in excess of
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$75,000 per year, taken any action with respect to the grant of any
bonuses, salary increases, severance or termination pay or with respect to
any other increase in employment related benefits;
(q) disposed of or abandoned any of its Intellectual Property
Rights; or
(r) entered into any contract, agreement, understanding or other
commitment to do or undertake to do any of the foregoing (other than this
Agreement).
4.08. Properties.
(a) None of the Sellers owns any real property. The real property
(the "Real Property") demised by the Real Property Leases described in
Schedule D constitutes substantially all of the real property used or
occupied by Sellers. The Real Property is sufficient for the conduct of
the Business as now conducted by Sellers.
(b) The Real Property Leases and the Personal Property Leases are in
full force and effect in all material respects, and, in each case, one of
the Sellers holds a valid and existing leasehold interest under each of
the Real Property Leases for the term set forth in Schedule D or Schedules
C-1 and C-2, as applicable. Sellers have delivered to Buyer complete and
accurate copies of each of the Real Property Leases and the Personal
Property Leases, and none of the Real Property Leases or Personal Property
Leases has been modified in any material respect, except to the extent
that such modifications are disclosed by the copies delivered to Buyer.
None of the Sellers is in default in any material respect, and no
circumstances exist which, if unremedied, would, either with or without
notice or the passage of time or both, result in such default under any of
the Real Property Leases or Personal Property Leases. To the knowledge of
Sellers, no other party to any of the Real Property Leases or Personal
Property Leases is in default thereof.
(c) Sellers are the owner of all right, title and interest in and to
the Assets, including each of the properties and assets reflected on the
Balance Sheet or acquired since the Balance Sheet Date, free and clear of
all Liens other than Permitted Liens.
(d) Schedule F sets forth a complete and accurate list of all the
Assets which constitute equipment (including computer equipment and
related peripherals), machinery, motor vehicles, furniture, fixtures,
furnishings and leasehold improvements. All of the buildings, machinery,
equipment and other tangible assets used by Sellers in the conduct of the
Business are to the knowledge of the Sellers, in good condition and
repair, ordinary wear and tear excepted, and are usable in the ordinary
course of business. Sellers own, or lease under valid leases, all
machinery, equipment and other tangible Assets necessary for the conduct
of the Business.
(e) The fees payable pursuant to the Regus Business Center Service
Agreement, dated December 20, 2004 between ClearCommerce UK and Regus UK
Limited will not exceed (pound)80 per day excluding value added taxes and
telecommunications and similar connectivity charges.
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(f) No Seller is in violation of any applicable zoning ordinance or
other Governmental Regulation relating to the Real Property that has
resulted or could reasonably be expected to result in a Material Adverse
Effect, and no Seller has received any written notice of any such
violation, or the existence of any condemnation proceeding with respect to
any of the Real Property, except violations of the potential consequences
of which have not had and could not reasonably be expected to have a
Material Adverse Effect.
4.09. Tax Matters.
(a) Sellers and any subsidiary, any affiliated, combined or unitary
group of which the Business or any subsidiary is or was a member, any
employee benefit plans (as defined in Section 3(3) of ERISA), as the case
may be (each, a "Tax Affiliate" and, collectively, the "Tax Affiliates"),
have: (i) timely filed (or has had timely filed on their behalf) all
returns, declarations, reports, estimates, informational returns,
statements or other similar tax documentation ("Returns") required to be
filed or sent by it in respect of any Taxes or required to be filed or
sent by it by any taxing authority having jurisdiction; (ii) timely and
properly paid (or has had paid on its behalf) all Taxes shown to be due
and payable on such Returns; (iii) established on its Latest Balance
Sheet, in accordance with generally accepted accounting principles,
reserves that are adequate for the payment of any Taxes not yet due and
payable; (iv) complied with all applicable laws, rules, and regulations
relating to the withholding of Taxes and the payment thereof (including,
without limitation, withholding of Taxes under Sections 1441 and 1442 of
the Code, or similar provisions under any foreign laws), and timely and
properly withheld from individual employee wages, and as may be
applicable, contract workers and paid over to the proper governmental
authorities all amounts required to be so withheld and paid over under all
applicable laws, except in the case of each (i), (ii), (iii) and (iv) to
the extent that the failure of those representations and warranties to be
true would not adversely impact Parent, Buyer, the Assets or Buyer's use
of the Assets or operation of the Business.
(b) There are no liens for Taxes upon any of the Assets, except
liens for Taxes not yet due.
(c) Except to the extent that the failure of these representations
and warranties to be true would adversely impact Parent, Buyer, the Assets
or Buyer's use of the Assets or operation of the Business, (i) no
deficiency for any Taxes has been proposed, asserted or assessed against
any Seller or a Tax Affiliate that has not been resolved and paid in full;
(ii) no waiver, extension or comparable consent given by any Seller or any
Tax Affiliate regarding the application of the statute of limitations with
respect to any Taxes or Returns is outstanding, nor is any request for any
such waiver or consent pending; or (iii) there is no Tax audit or other
administrative proceeding or court proceeding with regard to any Taxes or
Returns, nor has there been any such written notice to any Seller by any
Taxing authority regarding any such Tax, audit or other proceeding.
(d) No Seller or any Tax Affiliate is a party to any agreement,
contract or arrangement that would in connection with the transactions
contemplated by this Agreement result, separately or in the aggregate, in
the payment of any "excess parachute
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payments" within the meaning of Section 280G of the Code and the
consummation of the transactions contemplated by this Agreement will not
be a factor causing payments to be made by any Seller or any Tax Affiliate
that are not deductible (in whole or in part) under Section 280G of the
Code.
(e) Sellers or their nominee shall comply with Section 6043A of the
Code, as added by the American Job Creation Act of 2004.
(f) Sellers' United States federal employer identification number is
00-0000000.
(g) No Asset is property that any Seller or any Tax Affiliate is or
will be required to treat as being owned by another person under the
provisions of Section 168(f)(8) of the Code (as in effect prior to
amendment by the Tax Reform Act of 1986) or is "tax-exempt use property"
within the meaning of Section 168 of the Code.
(h) Sellers have complied in all material respects with all
statutory provisions, rules, regulations, orders and directions in
relation to the Business concerning Value Added Tax ("VAT"), PAYE and
United Kingdom National Insurance Contributions including the making on
time of accurate returns and payments and the proper maintenance and
preservation of records, and the Sellers have not been given any penalty,
notice or warning regarding the same.
(i) All documents (other than those which have ceased to have any
legal effect) to which a Seller is a party and which relate to the UK
Assets and in the enforcement of which the Buyer may be interested, have
been duly stamped.
(j) None of the UK Assets agreed to be sold under this agreement is
a capital item, the input tax on which could be subject to adjustment in
accordance with the provisions of Part XV of the Value Added Tax
Regulations 1995.
(k) Neither a Seller nor any relevant associate (as defined in
paragraph 3(7) of Schedule 10 to the Value Added Tax Act ("VATA")) has
elected to waive exemption or will before the Closing Date elect to waive
exemption for VAT purposes in relation to the UK Assets.
(l) None of the UK Assets is a building or engineering work falling
within item 1(a) of Group 1 of Schedule 9 to VATA.
(m) ClearCommerce UK is registered for VAT and is a taxable person
for the purposes of the VATA.
(n) All value added tax payable upon the importation of goods, and
all excise duties payable to Customs payable in respect of the Assets,
have been paid in full, and none of the Assets is liable to confiscation,
forfeiture or distress.
(o) No Asset will qualify as a long life asset for the purposes of
Chapter 10 (long-life assets) of the Capital Allowances Act of 2001.
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16
4.10. Contracts and Commitments.
(a) Except for this Agreement or as described in the schedules to
this Agreement, no Seller is a party to nor are the Assets bound by or
subject to any of the following agreements: (i) collective bargaining
agreements or contracts with any labor union; (ii) bonus, pension, profit
sharing, retirement or other forms of deferred compensation plans, other
than as those described in Section 4.15 and the schedules contemplated by
Section 4.15; (iii) hospitalization insurance or other welfare benefit
plan or practice, whether formal or informal other than as described in
Section 4.15 and the schedules contemplated by Section 4.15; (iv) contract
for the employment of any officer, employee, contractor or other Person on
a full-time or consulting basis or relating to severance pay for any such
Person (other than contracts with employees that provide for "at will"
employment and do not provide for severance or change of control
payments); (v) confidentiality agreement; (vi) agreement or indenture
relating to the borrowing of money or placing a Lien on any of the Assets;
(vii) guaranty of any obligation for borrowed money or otherwise; (viii)
lease or agreement under which it is lessee of, or holds or operates any
property, real or personal, owned by any other party relating to the
Business, other than as described on Schedules C-1 and C-2 or Schedule D;
(ix) lease or agreement under which it is lessor of, or permits any third
party to hold or operate, any property, real or personal relating to the
Business extending for a period of time longer than 3 months or involving
expenditures by Sellers in the aggregate in excess of $50,000; (x)
contract or group of related contracts for the purchase, licensing or sale
of products or services (whether as licensor, licensee, buyer or seller);
(xi) contract which prohibits it from freely engaging in business anywhere
in the world; (xii) contract for the distribution of any of the Products
(as hereinafter defined) of the Business (including any distributor,
master distributor, sales representative, agency, value-added resellers,
sales and original equipment manufacturer contract); (xiii) franchise
agreement; (xiv) license agreement or agreement providing for the payment
or receipt of royalties or other compensation by or to Sellers, including
any contract related to Licensed-In Intellectual Property Rights or Owned
Intellectual Property Rights; (xv) contract or commitment for capital
expenditures with respect to the Business after the date of this
Agreement; (xvi) agreement for the sale of any capital asset; or (xvii)
other agreement (not covered by (i) through (xvi) above) which (X) (A)
does not relate solely to the equity or debt capital structure of a Seller
or (B) does not solely relate to an equity or debt financing of a Seller,
and (Y) is either material to the Business or was not entered into in the
ordinary course of the Business.
(b) Sellers are currently performing or have performed all
obligations required to be performed by them in connection with the
Contracts, Personal Property Leases and Real Property Leases described on
Schedules B, C-1, C-2 and D, respectively (collectively, the "Seller
Agreements") and no Seller is in receipt of any claim of breach or default
under any of the Seller Agreements. No Seller has any present expectation
or intention of not fully performing any obligation pursuant to any of the
Seller Agreements, except as a result of the consummation of the
transactions contemplated by this Agreement. No Seller has any knowledge
of any breach or anticipated breach by any other party to any of the
Seller Agreements. All amounts which are due and owing to any Seller under
Seller Agreements with customers, distributors and sales representatives
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17
have been paid to such Seller, except for accounts receivable incurred in
the ordinary course of business or as reflected in the Financial
Statements. No Seller is in breach of its obligations under any of the
Seller Agreements and no Seller anticipates breaching any of its
obligations under the Seller Agreements.
(c) Prior to the date of this Agreement, Buyer has been supplied
with a true and correct copy of all of the Seller Agreements that are in
writing and a written description of all of the Seller Agreements that are
oral, together with all amendments, waivers or other changes thereto.
Except as set forth in Schedule H, no consent, waiver, approval or
authorization is necessary or required to be obtained by any Seller to
assign or transfer any Seller Agreement or the Assets to Buyer.
(d) Schedule I(i) contains a complete and correct listing of all of
the distributors and sales representatives of Sellers. Such listing states
the amount of revenue derived by Sellers from each such relationship
during the twelve-month period ending on the Closing Date. Schedule I(ii)
contains a complete and correct listing of all of the customers of Seller.
Such listing indicates whether such customers are permitted to use source
code, which source code is available to each customer and the uses
permitted of such source code, whether such customer has purchased support
services and which Person is obligated to perform such support services
and the amount of revenue derived by Sellers from each such relationship
during the nine-month period ending on September 30, 2004, Schedule I(iii)
contains a complete and correct listing of all Persons who are the
beneficiaries of any most-favored-customer pricing (or agreements with
similar effect) applicable to Products offered by Sellers. Schedule I(iv)
also contains a complete and correct listing of any Persons who have the
exclusive right to sell, license or otherwise distribute Products in any
geographic region.
4.11. Intellectual Property Rights.
(a) Certain Intellectual Property Definitions. For the purposes of
this Agreement, the following terms have the meanings set forth below:
(i) "Intellectual Property Rights" means all (A) rights in
patents and patentable subject matter, whether or not the subject of
an application, (B) rights in trademarks, service marks, names,
trade names, trade dress, logos, slogans, symbols and other
designators of origin, registered or unregistered, (C) rights in
copyrightable subject matter including without limitation Software,
data bases, website content, manuals and all forms of associated
documentation therefor and protectable designs, registered or
unregistered, (D) trade secrets and other proprietary non-public
information, (E) rights in Internet domain names, uniform resource
locators and e-mail addresses, (F) rights in semiconductor
topographies (mask works), registered or unregistered, (G) know-how,
(H) all rights in technical data, proprietary processes, drawings,
work-in-progress, research and development, (I) all applications for
any of the foregoing, registrations thereof and all renewals or
extensions of such applications and registrations, and (J) all other
intellectual and proprietary rights of every kind and nature and
however designated, whether arising by operation of Governmental
Regulation, Contract,
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license or otherwise, and the right to prosecute past infringements
of any such rights.
(ii) "Licensed-In Intellectual Property Rights" means
Third-Party Intellectual Property Rights used or held for use by any
Seller with the permission of the owner.
(iii) "Owned" Intellectual Property Rights" means Registered
Intellectual Property Rights and Intellectual Property Rights owned
by any Seller.
(iv) "Person" means any individual, corporation (including any
non profit corporation), general or limited partnership, limited
liability company, joint venture, estate, trust, association,
organization, labor union, Governmental Body or other entity.
(v) "Products" means the services and Software products which
are or have been sold or licensed by any Seller, or any combination
of the foregoing, as part of the product offerings of the Business.
(vi) "Registered Intellectual Property Rights" means
Intellectual Property Rights that are the subject of a pending
application or an issued patent, trademark, copyright, design right
or other similar registration formalizing exclusive rights.
(vii) "Software" means computer programs (including without
limitation source code, object code, on-line files, testing
materials, development, debugging and quality assurance tools,
testing suites, reports, etc.), which may include copyrightable
and/or patentable subject matter and/or trade secrets.
(viii) "Third-Party Intellectual Property Rights" means
Intellectual Property Rights in which a Person other than one of the
Sellers has any ownership interest.
(b) Schedule J(i) lists and describes all Owned Intellectual
Property Rights, which are either Registered Intellectual Property Rights
or are the following non-Registered Intellectual Property Rights: (i)
trademarks, service marks, names, trade names, trade dress, logos, slogans
and symbols; (ii) Internet domain names; (iii) Software and (iv) Products.
Schedule J(ii) lists all Contracts relating to Licensed-In Intellectual
Property Rights other than Software. To the extent there is no written
Contract covering a Licensed-In Intellectual Property Right, Schedule
J(ii) lists the licensor. Schedule J(iii) lists all Contracts relating to
Licensed-In Intellectual Property Rights that are Software. To the extent
there is no written Contract covering any such Software, Schedule J(iii)
lists the licensor and describes the Software so licensed.
(c) The Owned Intellectual Property Rights and the Licensed-In
Intellectual Property Rights constitute all of the Intellectual Property
Rights necessary to conduct the Business as now conducted or presently
proposed by Sellers to be conducted.
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(d) Sellers own all right, title and interest in the Owned
Intellectual Property Rights free and clear of all Liens (including
royalty or other payments), except for those licenses of the Owned
Intellectual Property Rights to Persons other than Sellers, and payments
for use of the Owned Intellectual Property Rights and other Liens listed
on Schedule J(iv). Sellers are the official and sole owners of record of
all of their Registered Intellectual Property Rights. To the knowledge of
Sellers, no Owned Intellectual Property Right is infringed by any Person.
No Seller has granted a license to any of the Owned Intellectual Property
Rights or the Licensed-In Intellectual Property Rights except as specified
on Schedule J(iv), and no Seller has granted an exclusive license to any
of the Owned Intellectual Property Rights or the Licensed-In Intellectual
Property Rights except as set forth on Schedule J(iv). All current and
former personnel, including employees and independent contractors, who
have contributed to or participated in the conception or development, or
both, of the Owned Intellectual Property Rights on behalf of a Seller (1)
have been a party to "work-for-hire" or "works made in the course of
employment" arrangements or agreements with such Seller in accordance with
all applicable Governmental Regulations that has accorded such Seller
full, effective, exclusive and original ownership of all intangible
property thereby arising, or (2) have executed appropriate instruments of
assignment in favor of such Seller as assignee, that have conveyed to such
Seller effective and exclusive ownership of all intangible property
arising thereby. No current or former employee or independent contractor
of any Seller has any claim whatsoever with respect to any Owned
Intellectual Property Rights of Sellers.
(e) All Owned Intellectual Property Rights are valid and
enforceable, and no Seller has knowledge of facts showing, nor has any
Seller received any written notice from any Person asserting, that any
Owned Intellectual Property Right is invalid or not enforceable. All Owned
Intellectual Property Rights that are Registered Intellectual Property
Rights are in full force and effect, and all actions due prior to the
Closing Date or within thirty (30) days thereafter that are required to
keep such rights pending or in effect, including payment of filing,
examination, annuity, and maintenance fees and filing of renewals,
statements of use or working, affidavits of incontestability and other
similar actions, have been taken, and no such Registered Intellectual
Property Right is the subject of any interference, opposition,
cancellation, nullity, re-examination or other proceeding placing in
question the validity or scope of such rights. Seller has used
commercially reasonable efforts to xxxx all Products covered by Owned
Intellectual Property Rights or Licensed-In Intellectual Property Rights
that are Registered Intellectual Property Rights with the appropriate
patent, trademark or other proprietary rights markings that are required
to enforce such Intellectual Property Rights.
(f) The documentation relating to all source codes of Sellers'
products is current, accurate and sufficient in detail and content to
identify and explain such source codes and to allow a person of reasonable
skill in the art to fully and properly use such source codes without
reliance on the knowledge or memory of any individual. Schedule J(vi)
contains a complete and correct listing of all of the Persons other than
Sellers' current and former employees and contractors who have been
provided with any source code for Products or who are the beneficiaries of
any source code escrow
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arrangements, and a description specifying the use to which the licensee
of the source code of the Products can make of such source code. Wherever
a Seller has granted a Person the right to modify source code or object
code which code is Owned Intellectual Property Rights, such Seller owns
the resultant modifications to the code, except as described in Schedule
J(vi). Reasonable precautions have been taken to protect the secrecy,
confidentiality and value of the source codes for Products including,
without limitation, (i) the implementation and enforcement of policies
requiring each current and former employee or independent contractor that
has, or has had, access to source codes to execute agreements that protect
the confidentiality of, and Sellers' proprietary rights in and to, such
source codes, and each current and former employee and independent
contractor of Sellers has executed such an agreement, and (ii) the
enforcement of the Contracts identified in Schedule J(vi). To the
knowledge of Sellers, there has been no breach or other violation of such
proprietary information and confidentiality agreements, except as
disclosed in Schedule J(vi). Sellers have an unqualified right to use all
trade secrets and other proprietary information currently used in the
Business (and have an unqualified right to use all proprietary information
currently used in the Business), subject to any Contract relating to
Licensed-In Intellectual Property Rights. Sellers have no knowledge that
(i) any purported trade secrets or other proprietary information of any
Seller are part of the public knowledge or literature or (ii) that any
trade secret or other proprietary information has been used, divulged or
appropriated either for the benefit of any Person other than Sellers or to
the detriment of Sellers.
(g) No Seller has unreasonably taken action, or unreasonably failed
to take an action, that might have the effect of estopping or otherwise
limiting its right to enforce the Owned Intellectual Property Rights
against any Person.
(h) No Seller has a present expectation or intention of not fully
performing any obligation pursuant to any Contract relating to Owned
Intellectual Property Rights or Licensed-In Intellectual Property Rights,
and to the knowledge of Sellers there is no breach, anticipated breach or
default by any other party to any such Contract. To the knowledge of
Sellers after inquiry of Sellers' client service personnel, there are no
renegotiations of, written demands for or outstanding rights to
renegotiate any Contract involving $100,000 or more relating to Owned
Intellectual Property Rights or Licensed-In Intellectual Property Rights.
Each Contract relating to Owned Intellectual Property Rights or
Licensed-In Intellectual Property Rights has been made fully available to
Buyer except where otherwise indicated by a Seller.
(i) Each Contract for Licensed-In Intellectual Property Rights for
which a Seller has an exclusive right is in full force and effect. To the
knowledge of Sellers, no Licensed-In Intellectual Property Right that is a
Registered Intellectual Property Right and for which any Seller has an
exclusive right is the subject of any interference, opposition,
cancellation, nullity, re-examination or other proceeding placing in
question the validity or scope of such right.
(j) No Seller has received any written notice of infringement,
misappropriation or violation of any Third-Party Intellectual Property
Right by such Seller or by any licensor of any Licensed-In Intellectual
Property Rights. To the
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knowledge of Sellers, Sellers' use of Owned Intellectual Property Rights
in the Business has not and does not infringe, misappropriate or violate
any Third-Party Intellectual Property Right within the definition of
Intellectual Property Rights. To the knowledge of the Sellers, Sellers'
use of Licensed-In Intellectual Property in the Business has not and does
not infringe, misappropriate or violate any Third-Party Intellectual
Property Right. To the knowledge of Sellers, no infringement,
misappropriation or violation by Sellers of any Third-Party Intellectual
Property Right, has occurred or will occur as a result of (i) the use,
sale or other commercialization of the Products or services currently
being, or previously, sold or otherwise commercialized by Sellers; or (ii)
the conduct of the Business as now conducted by Sellers.
(k) All Software included within the Licensed-In Intellectual
Property Rights that is used by Sellers or is present at any facilities or
on any equipment of Sellers is subject to a current license agreement that
covers such use of the Software in the Business, as presently conducted.
Following the Closing, Buyer will have sufficient rights to all necessary
Software to operate the Business. Sellers are not in breach of any license
to, or license of, any such Software.
(l) The Products are free of any undisclosed program routine,
device, or other feature, including, without limitation, a time bomb,
software lock, drop-dead device, or malicious logic or, as of the time of
each delivery, any virus, worm or trojan horse, that is designed to
delete, disable, deactivate, interfere with, or otherwise harm them (a
"Disabling Code"), and to the knowledge of Sellers, free of any virus or
other intentionally created, undocumented contaminant, that may, or may be
used to, access, modify, delete, damage or disable any hardware, system or
data or that may result in damage thereto (a "Contaminant"). The
components obtained from third party suppliers are, to the knowledge of
Sellers, free of any Disabling Codes or Contaminants. To the knowledge of
Sellers, the hardware, systems and data used by Sellers are free from
Disabling Codes and Contaminants. Sellers have in place appropriate
disaster recovery plans, procedures and facilities and have taken all
reasonable steps to safeguard their hardware, systems and data and
restrict unauthorized access thereto.
(m) Schedule J(vii) sets forth a description of the physical
location of the computer server that is currently hosting the Internet
websites used in connection with the Business. Such server is validly
owned or a portion is validly leased by Seller and forms part of the
Assets. Schedule J(vii) additionally sets forth (i) the name and IP
address of the Internet websites homepage, (ii) when the domain
registration was granted and (iii) the date the next registration payment
is due.
4.12. Litigation. There are no actions, suits, proceedings, orders or
investigations pending or, to Sellers' knowledge, threatened against any Seller
or brought by any Seller against others, at law or in equity, before or by any
Governmental Body and there is no basis known to Sellers which Sellers
reasonably believe would make any of the foregoing more likely than not.
4.13. Warranties. No Seller has received written notice of any claims
outstanding, pending or, to the knowledge of Sellers, threatened for breach of
any warranty or maintenance or support obligations relating to any Products of
the Business sold or licensed by any Seller prior
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to the date of this Agreement. The description of Sellers' Product and services
warranties set forth in the Disclosure Schedule under the caption referencing
this Section 4.13 is correct and complete in all material respects. No Seller is
aware of any material warranty claims made or to be made against any Products
sold or licensed prior to the Balance Sheet Date.
4.14. Employees. There is not pending or, to the knowledge of Sellers,
threatened any labor dispute, strike or work stoppage against the Sellers which
may interfere with the continued operation of the Business. Neither the Sellers
nor any representative or employee of the Sellers has committed any unfair labor
practices in connection with the operation of the Business, and there is not
pending or threatened any charge or complaint against the Sellers by the
National Labor Relations Board or any comparable agency. The Sellers are not,
and, to the knowledge of the Sellers, will not become, liable for any
retroactive workers' compensation insurance premiums or retroactive unemployment
compensation experience ratings or charges in connection with the operation of
the Business relating to the period of time prior to the date of this Agreement.
To the knowledge of Sellers, no employee or consultant to any Seller is
subject to any secrecy or non-competition agreement or any other agreement or
restriction of any kind that would impede in any way the ability of such
employee or consultant to carry out fully all of their activities in furtherance
of the Business. Except as described in the Disclosure Schedule or the other
schedules in this Agreement, no employee employed in the Business has any
agreement as to length of notice or severance payment required to terminate his
or her employment, including on change of control, other than such as results by
law from the employment of an employee without an agreement as to notice or
severance. Sellers have previously provided Buyer with a current list of each
employee or consultant to and contractor for Sellers and to the extent permitted
by applicable privacy laws, the name, position, title, remuneration, bonus plan,
(including any terms requiring salary, bonus or remuneration increases), bonus
commissions, benefits, date of employment or retention of each such person,
status as full-time or part-time, accrued (but unused) vacation pay, and if
absent from work, the reason for such absence and return to work date, if known,
and country of residence. Each present employee, consultant and contractor of,
to or for Sellers has, or prior to the Closing will have, executed and delivered
to Sellers a proprietary information agreement, true and correct copies of which
have been delivered to Buyer prior to the Closing.
4.15. Employee Benefit Plans.
(a) Schedule K-1 contains a list of every benefit plan, program,
agreement or arrangement maintained, contributed to, or provided by
Sellers or any affiliate or Subsidiary thereof for the benefit of any of
the employees of the Business or their dependants or beneficiaries (the
"Employee Benefit Plans") including all bonus, deferred compensation,
incentive compensation, share purchase, share option, stock appreciation,
phantom stock, savings, profit sharing, severance or termination pay, sick
leave, health or other medical, life, disability or other insurance
(whether insured or self-insured), supplementary unemployment benefits,
retirement and supplementary retirement plans, programs, agreements and
arrangements.
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(b) Schedule K-2 contains a list of all compensation policies and
practices of Sellers ("Compensation Policies"), including vacation
applicable to employees of Sellers.
(c) Sellers have delivered to Buyer true, complete and up-to-date
copies of all Employee Benefit Plans and Compensation Policies and all
amendments thereto.
(d) No fact, condition or circumstance exists that would materially
affect the information contained in the documents provided pursuant to
this Section 4.15 and, in particular, no promises or commitments have been
made by any Seller to amend any Employee Benefit Plan or Compensation
Policy.
(e) Except as disclosed on the Disclosure Schedule, all Employee
Benefit Plans are duly registered where required by any Governmental
Regulation (including registration with the relevant tax authorities where
such registration is required to qualify for tax exemption or other
beneficial tax status) and are in compliance with all Governmental
Regulations.
(f) Except as disclosed on the Disclosure Schedule:
(i) Each Employee Benefit Plan, and its operation and
administration, is in compliance with all applicable Governmental
Regulations, including the requirements of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA") and the Code. No
Seller has any liabilities or obligations with respect to any of the
Employee Benefit Plans, that are not funded, insured or accrued in
accordance with GAAP. The group health plans, as defined in Section
4980B(g) of the Code, that benefit employees of Sellers are in
compliance with the continuation coverage requirements of Section
4980B of the Code. There are no outstanding violations of Section
4980B of the Code with respect to any Employee Benefit Plan, covered
employees or qualified beneficiaries.
(ii) No Seller contributes or has ever contributed to any
multi-employer plan, as defined in Section 3(37) of ERISA. No Seller
has any actual or potential liabilities under Section 4201 of ERISA
for any complete or partial withdrawal from a multi-employer plan.
No Seller has any actual or potential liability to provide coverage
for death or medical benefits after separation from employment,
other than health care continuation benefits described in Section
4980B of the Code or similar statute.
(iii) None of Sellers, or any of Sellers' directors, officers,
employees or other "fiduciaries," as such term is defined in Section
3(21) of ERISA, has committed any breach of fiduciary responsibility
imposed by ERISA or any other applicable law with respect to any
Employee Benefit Plan.
(iv) There has been no occurrence or development that has, and
the consummation of the transactions contemplated by this Agreement
will not, subject Buyer, Buyer's subsidiaries or any of their
respective directors, officers or
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employees to any liability with respect to Sellers' Employee Benefit
Plans under ERISA or any other Governmental Regulation.
(g) None of the Employee Benefit Plans (other than pension plans)
provide coverage for benefits beyond retirement or other termination of
service to employees or their beneficiaries or dependants.
(h) All contributions or premiums required to be paid by Sellers
under the terms of each Employee Benefit Plan or by law have been made in
accordance with applicable laws and the terms of the employee benefit
plans.
4.16. ClearCommerce UK Remuneration and Employees. This Section 4.16 only
applies to ClearCommerce UK's business operations. To the extent that there is a
conflict between this section and the other provisions of Article IV, this
section shall control as to matters relating to ClearCommerce UK. ClearCommerce
UK has not incurred any liabilities outside the ordinary course, except where
such liabilities shall have no effect on the Buyer, the Assets or the Assumed
Liabilities. For purposes of this Section 4.16, obligations, other than salary,
commissions and other benefits paid in the ordinary course, arising as a result
of any individual's employment or its termination occurring prior to the
Closing, including severance payment obligations, do not constitute liabilities
arising in the ordinary course of the business. Except for accrued compensation
and benefits, there are no amounts owing to any present or former officers or
employees of ClearCommerce UK in respect of the Business, none of them is
entitled to accrued holiday pay other than in respect of the Business's current
holiday year and there are no amounts owing by any of the Proposed Transferred
Employees to ClearCommerce UK. Other than as already disclosed in full to the
Parent or Buyer, there are not in existence any material contracts or
arrangements of whatsoever kind (whether legally enforceable or not) between the
Seller and any existing or former employees, including (without limitation)
contracts or arrangements for any benefit or payments of any nature to or for
the benefit of any existing or former employees or any of their" dependants.
4.17. Affiliate Transactions. No officer or director of any Seller or, to
Sellers' knowledge, any key employee of any Seller nor any member of the
immediate family of any officer, director or key employee of any Seller
(collectively, "Insiders") has any agreement with any Seller or any interest in
any property, real, personal or mixed, tangible or intangible, used in or
pertaining to the Business (other than ownership of capital stock and derivative
securities of Sellers). To the knowledge of Sellers, none of the Insiders (other
than directors that are nominees of any of the Stockholders) has any direct or
indirect interest (other than any publicly-held corporation whose stock is
traded on a national securities exchange or in the over-the-counter market and
less than one percent of the stock of which is beneficially owned by any of such
Persons) in any supplier or customer of Sellers or in any Person from whom or to
whom Sellers lease any property, or in any other Person with whom Sellers
transact business of any nature. For purposes of this Section 4.17, the members
of the immediate family of an officer, director or key employee shall consist of
their parents, spouse, siblings and children.
4.18. Customers and Suppliers. Schedule I(ii) contains a complete listing
of all of the projects and currently active end-user customers or clients of the
Business. No current customer with annual revenues to Sellers in excess of
$100,000 ("Material Customers") or supplier of the
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Business has indicated that it will or intends to stop or decrease by a
significant amount the amount of business done with the Business. Sellers are
not aware of any event, happening or fact, which would lead it to believe that
any such customer will not consent to the transfer of Sellers' rights under the
Contracts between Sellers and such customers to Buyer. Sellers consider their
commercial relationships with their Material Customers to be reasonably good.
4.19. Compliance with Laws; Permits.
(a) Each Seller is in compliance in all material respects with all
Governmental Regulations which affect the Business, the Assets, or the
Real Property, and to which such Seller may be subject, and to Sellers'
knowledge no claims have been filed against any Seller alleging a
violation of any such Governmental Regulations. Sellers have no knowledge
of any action, pending or threatened, to change the zoning or building
ordinances or any other Governmental Regulations affecting the Assets, the
Real Property or the Business. No Seller is relying on any exemption from
or deferral of any Governmental Regulation that would not be available to
Buyer after it acquires the Assets and the Real Property Leases.
(b) The Permits (including permits granted under or pursuant to any
Environmental, Health and Safety Laws (as hereinafter defined)) constitute
all of the material orders, permits, approvals, waivers, licenses or
similar authorizations of Governmental Bodies necessary for Sellers to
conduct the Business or own and operate the Assets. A true, correct and
complete list of all of the Permits is set forth in Schedule E and
Schedule X. Xxxxxxx have conducted the Business in compliance with all
material terms and conditions of the Permits. Each Permit is valid,
subsisting and in good standing, no Seller is in default of or breach of
any Permit and to the knowledge of Sellers, no proceeding is pending or
threatened to revoke or limit any Permit. All Permits are assignable to
Buyer and renewable by their terms or in the ordinary course of business
without the need for any Seller or Buyer to comply with any special rules
or procedures, agree to any materially different terms or conditions or
pay any amounts other than routine filing fees. Sellers do not have any
knowledge of any fact that would result in any Permits being revoked,
lapsing, or otherwise being subject to modification upon or following the
consummation of the transactions contemplated hereby.
4.20. Environmental Matters.
(a) For purposes of this Agreement, the following terms have the
following meanings:
"Environmental, Health and Safety Laws" means any and all
Governmental Regulations, relating to, or imposing liability or
standards of conduct relating to pollution or protection of the
environment (including, without limitation, ambient air, surface
water, groundwater, land surface or subsurface strata), public
health and safety, or employee or occupational health and safety,
concerning any Hazardous Materials or Extremely Hazardous
Substances, as such terms are defined herein or as defined under any
such Governmental Regulations.
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"Extremely Hazardous Substance" means a substance on the list
described in Section 302 (42 U.S.C. Section 11002(a)(2)) of the
Emergency ERISA Planning and Community Right to Know Act, 42 U.S.C.
Section 11001 et seq., as amended.
"Hazardous Material" means any material or substance that,
whether by its nature or use, is now or hereafter defined as a
pollutant, dangerous substance, toxic substance, hazardous waste,
hazardous material, hazardous substance or contaminant under any
Environmental, Health and Safety Laws.
(b) Sellers' operation of the Business is in compliance in all
material respects with, and no Seller is in violation of, any
Environmental, Health and Safety Laws and no notice of violation of any
Environmental, Health and Safety Laws has been received by any Seller,
nor, to the knowledge of Sellers, is any such notice threatened.
(c) To the knowledge of Sellers, (i) no Extremely Hazardous
Substance or Hazardous Material has been generated, contained, handled,
located, used, manufactured, processed, buried, incinerated, deposited,
stored, discharged or released on, under or about any part of any real
property, which any Seller has held at any time in the past or currently
holds (the "Real Property Holdings"), other than in material compliance
with all applicable Environmental, Health and Safety Laws, (ii) the
buildings and improvements located on Real Property Holdings do not
contain friable asbestos, urea, formaldehyde, radon at levels above
natural background, polychlorinated biphenyls (PCBs) or pesticides and
(iii) no aboveground or underground storage or fuel tanks are located on,
under or about the Real Property Holdings, or have been located on, under
or about the Real Property Holdings and then subsequently been removed or
filled other than in material compliance with all applicable
Environmental, Health and Safety Laws.
(d) No expenditure will be required following the Closing in order
for Buyer to comply with any Environmental, Health and Safety Laws in
connection with the operation or continued operation of the Business on
the Real Property Holdings in a manner consistent with the current
operation thereof by Sellers.
(e) Each Seller, on behalf of itself and its successors and assigns,
hereby waives, releases and agrees not to bring any claim, demand, cause
of action or proceeding, including without limitation any cost recovery
action, against Buyer under any Environmental, Health and Safety Laws in
connection with Buyer's purchase, ownership or operation of the Business,
the Assets or the Real Property.
4.21. Returns and Complaints. During the one year period preceding the
Closing Date, no Seller has received any customer complaints, other than in the
ordinary course of the Business, concerning the Products supplied by the
Business. No customer of any Seller has requested a refund of any material
amounts paid by it to such Seller in the two-year period preceding the Closing
Date.
4.22. Brokerage. Except for fees payable to Portico Holdings LLC, pursuant
to an engagement letter dated August 16, 2004, no third party shall be entitled
to receive any
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brokerage commissions, finder's fees, fees for financial advisory services or
similar compensation in connection with the transactions contemplated by this
Agreement based on any arrangement or agreement made by or on behalf of Sellers.
Subject to Parent's and Buyer's compliance with Section 3.06 of this Agreement,
all of the fees owed to Portico Holdings LLC shall be the sole and exclusive
liability of Sellers.
4.23. Bank Debt and Debentures. Except for the Liens securing
ClearCommerce's indebtedness to Comerica Bank (the "Comerica Debt") pursuant to
that certain Loan and Security Agreement by and between Imperial Bank and
Sellers dated September 18, 2000, as amended, and the Forbearance Agreement by
and between ClearCommerce and Comerica Bank, successor in interest to Imperial
Bank, dated as of November 21, 2001, as amended, there are no other Liens on the
Assets other than Permitted Liens. Other than the Comerica Debt, no Seller has
any obligation or liability, whether absolute or contingent, in respect of any
money borrowed.
4.24. Required Authorizations. There is no requirement on any Seller to
make any filing with, give any notice to, or obtain any order, permit, approval,
waiver, license or similar authorization (collectively, an "Authorization") of,
any Governmental Body as a condition to the lawful completion of the
transactions contemplated by this Agreement.
4.25. Bad Debt Reserves. Sellers' bad debt reserves are sufficient to
cover the Business's anticipated bad debts, and Sellers are not aware of any
circumstances which currently exist or may arise that would cause such reserves
to be insufficient.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER AND PARENT
Parent and Buyer hereby represent and warrant to Sellers that:
5.01. Incorporation and Corporate Power. U.S. Buyer is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware, with the requisite corporate power and authority to enter into this
Agreement and perform its obligations hereunder. eFunds UK is a corporation duly
incorporated, validly existing and in good standing under the laws of the United
Kingdom, with the requisite corporate power and authority to enter into this
Agreement and perform its obligations hereunder. Parent is a corporation duly
incorporated, validly existing and in good standing under the laws of Delaware,
with the requisite corporate power and authority to enter into this Agreement
and perform its obligations hereunder.
5.02. Execution, Delivery; Valid and Binding Agreement. The execution,
delivery and performance of this Agreement by Buyer and Parent and the
consummation of the transactions contemplated hereby have been duly and validly
authorized by all requisite corporate action, and no other corporate proceedings
on their part are necessary to authorize the execution, delivery or performance
of this Agreement. This Agreement has been duly executed and delivered by Buyer
and Parent and constitutes the valid and binding obligation of Buyer and Parent,
enforceable in accordance with its terms, except to the extent that such
enforcement may be limited by (i)
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bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium and
similar laws now or hereafter in effect reflecting to or affecting creditors'
rights generally and (ii) equitable considerations and other limitations on the
availability of the remedies of specific performance and injunctive relief.
5.03. No Breach. Buyer and Parent have the requisite corporate power and
authority to execute and deliver this Agreement and to perform their obligations
hereunder. The execution, delivery and performance of this Agreement by Parent
and Buyer and the consummation by Parent and Buyer of the transactions
contemplated hereby do not conflict with or result in any breach or violation of
any of the provisions of or constitute a default under (or event which, with
notice or lapse of time or both, would constitute a breach or default), result
in the creation of any Lien upon any assets of either Buyer or Parent, or
require any authorization, consent, approval, exemption or other action by or
notice to any Governmental Body, under the provisions of the articles of
incorporation or bylaws or other organizational documents of Buyer or Parent or
any indenture, mortgage, lease, loan agreement or other agreement or instrument
by which Buyer or Parent is bound or affected, or any Governmental Regulation to
which Buyer or Parent is subject.
5.04. Brokerage. No third party shall be entitled to receive any brokerage
commissions, finder's fees, fees for financial advisory services or similar
compensation in connection with the transactions contemplated by this Agreement
based on any arrangement or agreement made by or on behalf of either Buyer or
Parent.
5.05. Sufficient Funds. Parent will have at the Closing sufficient cash or
cash-equivalent funds to consummate the transactions, including paying or
causing Buyer to pay the amounts required under this Agreement to acquire the
Assets.
ARTICLE VI
COVENANTS OF SELLERS
6.01. Conduct of the Business. Sellers agree to observe each item set
forth in this Section 6.01 and agree that, from the date of this Agreement until
the Closing Date, unless otherwise consented to by Buyer in writing, which shall
not be unreasonably withheld:
(a) The Business shall be conducted only in, and Sellers shall not
take any action except in, the ordinary course of the Business, on
commercially reasonable terms and in accordance in all material respects
with all applicable Governmental Regulations and Sellers' past custom and
practice. Without limiting the generality of the foregoing, Sellers shall
not perform any act referenced by (or omit to perform any act which
omission is referenced by) the terms of Section 4.07.
(b) Sellers shall not, directly or indirectly, do or permit to occur
any of the following insofar as they relate to the Business or the Assets:
(i) acquire (by merger, exchange, consolidation, acquisition of stock or
assets or otherwise) any other Person or equity interest in or material
assets of any other Person; (ii) accelerate or otherwise modify its
practices with respect to the collection of accounts receivable or its
billing arrangements; or (iii) delay or otherwise modify its practices
with respect to the payment
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of accounts payable or trade or other obligations; or (iv) enter into or
propose to enter into any agreement, arrangement or understanding with
respect to any of the matters set forth in this Section 6.01(b);
(c) Sellers shall use commercially reasonable efforts to (i)
preserve intact its organization and the Goodwill of the Business, (ii)
keep available the services of its officers and key employees as a group
and maintain satisfactory relationships with its licensors, suppliers,
distributors, customers and others having business relationships with it
consistent with prudent business practices, (iii) update representatives
of Buyer from time to time regarding the general status of its ongoing
operations and the Business, (iv) notify Buyer of any emergency or other
material change in the normal course of the Business and of any complaints
outside of the ordinary course of business or investigations threatened or
commenced against it (or communications indicating that the same may be
contemplated by any Person); (v) not intentionally take any action which
would render, or which reasonably may be expected to render, any
representation or warranty made by it in this Agreement untrue at the
Closing, except where such failure to be true would not reasonably be
expected to have a Material Adverse Effect; and (vi) promptly notify Buyer
in writing if Sellers shall discover that any representation or warranty
made by it in this Agreement was when made, or has subsequently become,
untrue, except where such failure to be true would not reasonably be
expected to have a Material Adverse Effect.
(d) Sellers shall file any tax returns, elections or information
statements with respect to any liabilities for Taxes of Sellers or other
matters relating to Taxes of Sellers which affect the Assets and which
pursuant to applicable law must be filed prior to the Closing Date. If
Sellers amend any previously filed tax return in any manner that would
adversely affect or create any liability of Buyer for any Taxes, Sellers
shall indemnify Buyer pursuant to the provisions of Article XI of this
Agreement.
6.02. Conduct related to Contract Hold-Back. Sellers shall not execute any
renewal or extension of the agreement described in Schedule 3.03(b) (or enter
into any substitute of such agreement) as described in Schedule 3.03(b) prior to
the Closing Date without obtaining the prior written consent of the Buyer, which
shall not be withheld unreasonably.
6.03. Access to Books and Records. Sellers shall afford to Buyer and its
authorized representatives full access at all reasonable times and upon
reasonable notice to its respective offices, properties, financial and other
records, officers and employees and shall otherwise provide such assistance as
is reasonably requested by Buyer.
6.04. Conditions. Sellers shall take all commercially reasonable actions
necessary to cause the conditions set forth in Section 8.01 to be satisfied and
to consummate the transactions contemplated herein as soon as reasonably
possible after the satisfaction thereof. Sellers undertake to use commercially
reasonable efforts to obtain prior to the Closing Date the consents described in
Section 8.01(d).
6.05. Exclusive Dealings. Until January 31, 2005, Sellers and the
Stockholders agree not to, directly or indirectly, solicit, initiate or
encourage the submission of any proposal or offer
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from any third Person (including any of Sellers' officers, employees or
contractors) relating to (i) any acquisition, license (other than object code)
or purchase of all or a material portion of the Assets or the Business outside
the ordinary course of business, (ii) the acquisition of any equity interest in
Sellers or any of its subsidiaries or (iii) any merger, consolidation, joint
venture or partnership or other similar transaction or business combination or
acquisition involving Sellers or its subsidiaries or, unless the Board of
Directors of ClearCommerce determines in good faith after consultation with
outside counsel that it would be a violation of its fiduciary duty for failure
to do so, participate in any negotiations regarding, furnish to any other Person
any information with respect to or otherwise cooperate in any way with any
effort or attempt by any other Person to do or seek to do any of the foregoing.
Sellers shall promptly notify Buyer if any such proposal or offer, or any
inquiry from or contact with any Person with respect thereto, is made and shall
promptly provide Buyer with such information regarding such proposal, offer,
inquiry or contact as Buyer may request.
6.06. Preparation of Books and Records. Sellers agree that they will
continue to retain their outside accountants to assist with the preparation of
Sellers' books and records for preparation of the Final Closing Balance Sheet.
The fees payable to such accountants in connection with rendering such
assistance shall be paid by Sellers to the extent the same are not reflected as
current liabilities in the Estimated Closing Balance Sheet (in which event they
will be paid by Buyer following the Closing).
6.07. Employment Agreements. Sellers agree to use commercially reasonable
efforts to cause the Proposed Transferred Employees to execute Buyer's standard
employment documents. Sellers agree to use commercially reasonable efforts to
cause the individuals identified on Schedule 6.07 to sign noncompetition
agreements with Seller in substantially the form provided by Buyer to Sellers
prior to the execution of this Agreement.
6.08. Stockholders Agreements. Each of the Stockholders agrees (i) not to
sell, assign, transfer or otherwise dispose of its shares in Sellers, or any
interest therein, pending the Closing and (ii) to enter into a proxy agreement
in a form substantially similar to Exhibit D to this Agreement, whereby each
such Stockholder shall grant its agent the authority to vote its shares in favor
of the transactions contemplated hereby and in opposition to any transaction or
proposed transaction that would constitute a violation of the covenants set
forth in Section 6.05.
ARTICLE VII
COVENANTS OF PARENT AND BUYER
Parent and Buyer covenant and agree with Sellers as follows:
7.01. Conditions. Parent and Buyer shall take all commercially reasonable
actions necessary to cause the conditions set forth in Section 8.02 to be
satisfied and to consummate the transactions contemplated herein as soon as
reasonably possible after the satisfaction thereof.
7.02. Conduct of Business After Closing.
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(a) Following the Closing, Parent shall cause Buyer and its
successors to conduct the Business in a manner consistent with prudent
business practices and to maintain books and records with respect to the
Business in a manner that is reasonably sufficient to permit the
calculation of the Revenues of the Business upon which the Earn-Out
Amount is to be based.
(b) Each of the parties acknowledges that earning the Earn-Out
Amount will require effort on the part of Buyer and that the success of
Buyer can be affected, both positively and negatively, by a wide variety
of factors, including factors that are within Buyer's control, factors
that are within the control of Parent and external factors that are not
within the control of Buyer or Parent In order to ensure that the Sellers
are afforded full opportunity to receive the Earn-Out Amount, in a manner
consistent with Parent's and all of its stockholders' best interests
(provided that earning, accounting for, or payment of the Earn-Out Amount
shall not be deemed against Parent's or its stockholders' interests),
Parent and Buyer hereby expressly agree that, after the Closing Date and
during the period commencing on the Closing Date and ending December
31,2005: (i) Parent shall not and shall cause Buyer not to discontinue the
Business, (ii) Parent shall provide to Buyer, and Buyer shall expend a
reasonable amount of resources, qualified personnel and support to allow
Buyer to have a reasonable opportunity to achieve the revenue targets
required to earn the Earn-Out Amount pursuant to Section 3.04 and Schedule
3.04, and (iii) Parent shall not take, and shall not cause Buyer to take,
directly or indirectly, any action that would circumvent the purpose or
intent of the Earn-Out provisions of this Agreement, including, without
limitation, (A) directing sales of the Business's products and services to
affiliates of Parent other than Buyer or (B) transferring products,
services or product lines sold by the Business to affiliates of Parent
other than Buyer. Sellers and Stockholders acknowledge that there can be
no assurances that any Earn Out Amount will be received. The parties
hereto agree that neither Parent nor Buyer owes any fiduciary duty or
express or implied duty to the Sellers or the Shareholders, such as an
implied duty of good faith and fair dealing, but instead the parties
intend the express provisions of this Agreement (including without
limitation this Section 7.02 and Section 3.04 and Schedule 3.04 hereof) to
govern their contractual relationship.
7.03. Conduct with respect to Contract Hold-Back. In the event that the
agreement described in Schedule 3.03(b) is not renewed or extended (or a
substitute of such agreement is not executed) as described in Schedule 3.03(b)
prior to the Closing Date, Parent shall or shall cause Buyer to use commercially
reasonable efforts to renew or extend such agreement (or execute a substitute of
such agreement) prior to December 31,2005.
7.04. Change of Control. INTENTIONALLY OMITTED.
7.05. Conduct with Respect to Third Party Confidential Information. In
connection with this Agreement, the parties understand and acknowledge that
Sellers will be providing Parent and Buyer with Third Party Confidential
Information (as defined below). Each of Parent and Buyer shall keep confidential
all Third Party Confidential Information and may disclose such Third Party
Confidential Information only to those employees who both have a need to have
access to such Third Party Confidential Information and have agreed to be bound
by
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confidentiality provisions at least as protective as those contained within this
section. Each of Parent and Buyer shall use at least the same care and
discretion to preserve the Confidentiality of the Third Party Confidential
Information as used with respect to its own similar confidential information,
but in no case less than a prudent and reasonable standard of care. If either of
Parent or Buyer or either of their employees or agents breaches or threatens to
breach the confidentiality obligations or obligations relating to use of the
Third Party Confidential Information, Sellers may obtain injunctive relief from
a court of competent jurisdiction, in addition to its other remedies, inadequate
monetary damages and irreparable harm being acknowledged and without the
requirement to post bond. "Third Party Confidential Information" means
information and data, whether in electronic, written, or other form, included in
the Quickstart environment or utilized as sample data to develop and modify the
technology utilized to offer the Risk Management Services, with respect to which
Sellers have an obligation to one or more third parties to preserve the
confidentiality and/or limit the use of such information and data, other than
such information or data related to the Contracts.
ARTICLE VIII
CONDITIONS TO CLOSING
8.01. Conditions to Buyer's Obligations. The obligation of Buyer to
consummate the transactions contemplated by this Agreement is subject to the
satisfaction or waiver of the following conditions on or before the Closing
Date:
(a) Except where the failure to be true and correct would not
reasonably be expected to have a Material Adverse Effect, the
representations and warranties set forth in Article IV hereof shall be
true and correct at and as of the Closing Date as though then made and as
though the Closing Date had been substituted for the date of this
Agreement throughout such representations and warranties (without taking
into account any disclosures by Sellers of discoveries, events or
occurrences arising on or after the date of this Agreement), except that
any such representation or warranty made as of a specified date (other
than the date of this Agreement) shall only need to have been true on and
as of such date;
(b) Sellers and the Stockholders shall have performed in all
material respects all of the covenants and agreements required to be
performed and complied with by it and them under this Agreement prior to
the Closing;
(c) The stockholders of Sellers representing the number of shares
required under their respective certificates of incorporation, other
charter documents and the applicable law of the jurisdiction in which the
Sellers were incorporated or organized shall have approved the
consummation of the transactions contemplated by this Agreement;
(d) Sellers shall have obtained on substantially the terms set forth
in the form of consent provided by Buyer to Sellers prior to the date of
this Agreement each consent and approval required as described on Schedule
M;
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(e) Sellers shall have assigned to Buyer the Permits in Schedule E;
(f) Sellers shall have provided evidence reasonably satisfactory to
Buyer that Sellers are using commercially reasonable efforts to file
within 90 days after the Closing any Tax Return listed on Schedule
4.09(a);
(g) Sellers shall have paid any Taxes required to be paid pursuant
to any filed Tax Returns listed on Schedule 4.09(a);
(h) Sellers shall have (i) delivered to Buyer copies of the
unaudited consolidated balance sheet as of December 31,2004 and the
unaudited statements of income, stockholders' equity and cash flows,
including the notes, of Sellers, for the year ended December 31,2004 and
(ii) provided evidence reasonably satisfactory to Buyer that the audit of
Sellers' Financial Statements for the year ended December 31,2003 by
Sellers' independent accountants has been completed, and such audit is
reasonably satisfactory to Buyer or that such audit, when completed, will
be reasonably satisfactory to Buyer;
(i) INTENTIONALLY OMITTED;
(j) There shall not be threatened, instituted or pending any action
or proceeding, before, or any Governmental Regulation promulgated by, any
Governmental Body, (i) challenging or seeking to make illegal, or to delay
or otherwise directly or indirectly restrain or prohibit, the consummation
of the transactions contemplated hereby or seeking to obtain material
damages in connection with such transactions, (ii) seeking to prohibit
direct or indirect ownership or operation by Buyer of all or a material
portion of the Assets or the Business, or to compel Buyer to dispose of or
to hold separately all or a material portion of the Business or Assets of
Buyer and its subsidiaries, as a result of the transactions contemplated
hereby or (iii) seeking to invalidate or render unenforceable any material
provision of this Agreement or any of the other agreements attached as
exhibits hereto or executed and delivered in connection with the Closing
(collectively, the "Related Agreements");
(k) After the date of this Agreement no event having a Material
Adverse Effect shall have occurred;
(l) Buyer shall have received from counsel for Sellers a written
opinion, dated as of the Closing Date and addressed to Buyer in form and
substance reasonably satisfactory to Buyer's counsel;
(m) The Bank shall have executed a payoff letter reasonably
satisfactory to Buyer providing for the release of all Liens on the Assets
upon receipt of the payment from Parent contemplated in Section 3.06(b);
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(n) On the Closing Date, Sellers shall have delivered to Buyer all
of the following:
(i) the Xxxx of Sale and such other instruments of conveyance,
transfer, assignment and delivery as Buyer shall have reasonably
requested pursuant to Section 2.02 hereof;
(ii) the Assignment and Assumption Agreement;
(iii) certificate of officers of Sellers satisfactory to
Buyer, dated the Closing Date, stating that the conditions precedent
set forth in subsections (a) and (b) above have been satisfied;
(iv) copies of consents and approvals referred to in
subsections (c), (d) and (k) above;
(v) a copy of the text of the resolutions adopted by the Board
of Directors and stockholders, as applicable, of Sellers authorizing
the consummation of the transactions contemplated hereby; along with
a certificate executed on behalf of Sellers by its corporate
secretary certifying to Buyer that such copy is a true, correct and
complete copy of such resolutions, and that such resolutions were
duly adopted and have not been amended or rescinded;
(vi) incumbency certificates executed on behalf of Sellers by
their respective corporate secretaries certifying the signature and
office of each officer executing this Agreement or any of the
Related Agreements;
(vii) an executed copy of each of the Related Agreements; and
(viii) releases of all Liens (other than Permitted Liens) on
the Assets;
(o) Xxx Xxxxx shall have agreed to become an employee of U.S. Buyer
as of the Closing Date and shall have executed, employment,
confidentiality, noncompetition and inventions assignment agreements in
the form agreed to by Xxx Xxxxx and Buyer;
(p) Sellers shall have delivered to Buyer written instructions with
respect to the wire transfers to be effected pursuant to Sections 3.06(a),
(b) and (e); and
(q) Sellers shall have entered into an agreement, in a form mutually
agreed upon by Parent, Buyer and Sellers, that provides for the protection
of medical records and information of the Transferred Employees in
accordance with the Health Insurance Portability and Accountability Act of
1996.
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8.02. Conditions to Sellers' Obligations. The obligations of Sellers to
consummate the transactions contemplated by this Agreement are subject to the
satisfaction or waiver of the following conditions on or before the Closing
Date:
(a) The representations and warranties set forth in Article V hereof
will be true and correct in all material respects at and as of the Closing
as though then made and as though the Closing Date had been substituted
for the date of this Agreement throughout such representations and
warranties;
(b) Parent and Buyer shall have performed in all material respects
all the covenants and agreements required to be performed by them under
this Agreement prior to the Closing, including those set forth in Sections
2.02 and 3.06 of this Agreement;
(c) The conditions set forth in Sections 8.01 (c), (d), (f), and (g)
shall have been satisfied;
(d) On the Closing Date, Parent or Buyer will have delivered to
Sellers:
(i) a certificate of an officer of Parent and Buyer
satisfactory to Sellers, dated the Closing Date, stating that the
conditions precedent set forth in subsections (a) and (b) above have
been satisfied;
(ii) the Assignment and Assumption Agreement executed by Buyer
and Parent and of each of the other Related Agreements executed by
Parent and Buyer to which Parent and Buyer (or one of its
affiliates) is a party; and
(iii) an incumbency certificate executed on behalf of Buyer
and Parent by its corporate secretary certifying the signature and
office of each officer executing this Agreement or any of the
Related Agreements; and
(iv) a copy of the text of the resolutions adopted by the
Board of Directors of Parent and Buyer authorizing the consummation
of the transactions contemplated hereby; along with a certificate
executed on behalf of Parent and Buyer by their respective corporate
secretary certifying to Sellers that each such copy is a true,
correct and complete copy of such resolutions, and that such
resolutions were duly adopted and have not been amended or
rescinded;
(e) There shall not be threatened, instituted or pending any action
or proceeding, before, or any Governmental Regulation promulgated by, any
Governmental Body, (i) challenging or seeking to make illegal, or to delay
or otherwise directly or indirectly restrain or prohibit, the consummation
of the transactions contemplated hereby or seeking to obtain material
damages in connection with such transactions, (ii) seeking to prohibit
direct or indirect ownership or operation by Parent or Buyer of all or a
material portion of the Assets or the Business, or to compel Parent or
Buyer to dispose of or to hold separately all or a material portion of the
Business or Assets of Parent or Buyer and its subsidiaries, as a result of
the transactions contemplated hereby or (iii) seeking to
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invalidate or render unenforceable any material provision of this
Agreement or any of the Related Agreements; and
(f) Parent and Buyer shall have entered into an agreement, in a form
mutually agreed upon by Parent, Buyer and Sellers, that provides for the
protection of medical records and information of the Transferred Employees
in accordance with the Health Insurance Portability and Accountability Act
of 1996.
ARTICLE IX
ADDITIONAL AGREEMENTS
9.1. Name Change / Withdrawal of Qualifications to Do Business as a
Foreign Corporation. Immediately following the Closing, Sellers shall file those
documents required to change their respective corporate name to one that does
not use, alone or in combination with other words, any of the names and
trademarks transferred to Buyer pursuant to Article I. As soon as reasonably
practicable following the Closing, Sellers shall withdraw or cause to be
withdrawn their qualification to do business as foreign corporations in each
jurisdiction in which such Seller is so qualified. Sellers shall file all
clearances, returns with respect to sales/use income and franchise taxes in such
jurisdictions and shall pay all taxes relating to periods prior to the Closing
Date.
9.2. Noncompetition Covenant. During the three-year period commencing on
the Closing Date, no Seller shall directly or indirectly engage in any business
activities that are competitive with the activities conducted by the Business on
the Closing Date. Sellers understand that Buyer anticipates that Sellers will
not be conducting active operations following the Closing and acknowledges that
Buyer would not have agreed to purchase the Assets or the Business without
having received this noncompetition covenant from Sellers. Sellers acknowledge
that they have entered into this noncompetition covenant as a material
inducement to Buyer to consummate the transactions contemplated hereby.
Notwithstanding the foregoing in this Section 9.02, nothing in this Section 9.02
will restrict the stockholders of a Seller other than ClearCommerce and nothing
in this Section 9.02 will restrict Sellers other than ClearCommerce from
disposing of the shares of such Seller to a Person, or the merger or
amalgamation of a Seller with any Person, that directly or indirectly actively
engages in any business activities that are competitive with the activities
conducted by the Business. In such event, this covenant shall cease to apply to
such Seller and the Person that acquires the shares of, or merges or amalgamates
with, such Seller.
9.3. Taxes.
(a) Parent shall or cause Buyer to and Buyer shall bear and pay
Taxes that may become payable in connection with the sale of the Assets to
Buyer, save and except for any income, franchise or other Taxes based on a
measure of Sellers' Income. Parent and Buyer will be liable for, and will
indemnify, defend and hold Sellers harmless against any and all Damages
arising out of or related to Taxes payable as a result of the operation of
the Business from and after the Closing Date. After the Closing Date,
Buyer and Sellers will each make available to the other, as reasonably
requested, and to any
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Governmental Body, all information, records or documents relating to Tax
liabilities or potential Tax liabilities of or relating to the Business
for all periods prior to or including the Closing Date and will preserve
all such information, records and documents until the expiration of any
applicable statute of limitations or extensions thereof.
(b) The parties agree to furnish or cause to be furnished to each
other, upon request, as promptly as practicable, such information and
assistance relating to the Assets and the Business (including, without
limitation, access to books and records) as is reasonably necessary for
the filing of all Tax Returns, and making of any election related to
Taxes, the preparation for any audit by any taxing authority, and the
prosecution or defense of any claim, suit or proceeding relating to any
Tax Return. The parties shall retain all books and records with respect to
Taxes pertaining to the Assets and the Business until the expiration of
any applicable statute of limitations or extensions thereof. At the end of
such period, each party shall provide the other with at least ten (10)
days' prior written notice before destroying any such books and records,
during which period the party receiving such notice can elect to take
possession, at its own expense, of such books and records.
(c) All real property taxes, personal property taxes and similar ad
valorem obligations levied with respect to the Assets for a taxable period
which includes (but does not end on) the Closing Date shall be apportioned
between Sellers and Buyer as of the Closing Date based on the number of
days of such taxable period ending on the Closing Date (the "Pre-Closing
Tax Period") and the number of days of such taxable period after the
Closing Date (with respect to any such taxable period, the "Post-Closing
Tax Period"). Sellers shall be liable for the proportionate amount of such
Taxes that is attributable to the Pre-Closing Tax Period, and Parent and
Buyer shall be liable for the proportionate amount of such Taxes that is
attributable to the Post-Closing Tax Period. Upon receipt of any xxxx for
real or personal property Taxes relating to the Assets, Sellers and Buyer
shall present a statement to the other setting forth the amount of
reimbursement to which each is entitled under this Section 9.03(c)
together with such supporting evidence as is reasonably necessary to
calculate the proration amount. The proration amount shall be paid by the
party owing it to the other within twenty (20) days after delivery of such
statement. In the event that either Sellers or Buyer shall make any other
payment for which it is entitled to reimbursement under this Section
9.03(c), the other party shall make such reimbursement promptly but in no
event later than twenty (20) days after the presentation of a statement
setting forth the amount of reimbursement to which the presenting party is
entitled along with such supporting evidence as is reasonably necessary to
calculate the amount of reimbursement. Any payment required under this
Section 9.03(c) and not made within 20 days of delivery of the relevant
statement shall bear interest at the rate of 6% per annum until paid.
(d) Buyer and Sellers agree to use commercially reasonable efforts
to ensure that the sale of the Assets and the sale of the UK Assets are
treated as neither a supply of goods nor as a supply of services for
purposes of value added tax but as a transfer of a business as a going
concern.
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9.4. Intentionally Omitted.
9.5. Employee Matters.
(a) Buyer has delivered a schedule to Sellers of Sellers employees
(the "Proposed Transferred Employees") to be offered employment by Buyer
as of the Closing Date provided, however, all Proposed Transferred
Employees will be required as a condition of employment to execute
employment, confidentiality and inventions assignment agreements in a form
acceptable to Buyer and certain key employees identified by Buyer prior to
the execution and delivery of this Agreement also being required to
execute non-competition agreements and will initially contain a release in
favor of Sellers, in a form reasonably satisfactory to Sellers. All
employees of ClearCommerce UK and any employees of Sellers that are
resident outside the United States who are required to transfer with the
Assets and the Business under applicable law shall be designated as
Proposed Transferred Employees. Those employees of Sellers who are not
identified as Proposed Transferred Employees (the "Excluded Employees")
will be listed on the schedule as such and their further employment will
be terminated by Sellers. On or before the Closing Date, Sellers shall
terminate the Proposed Transferred Employees.
(b) Each Proposed Transferred Employee who accepts Buyer's offer of
employment and who actually commences working for Buyer (the "Transferred
Employees") shall be given credit for all service with Sellers prior to
the Closing to the same extent as such service was credited for such
purpose by Sellers including under all employee benefit plans of Buyer in
which he or she becomes eligible to participate except for purposes of
stock option vesting. Nothing in this Section 9.05 shall be interpreted or
construed or deemed to require the employment of any such Transferred
Employee for any particular period of time after the Closing Date.
(c) Prior to the Closing Date, Sellers shall terminate their 401(k)
Plan. After the Closing, Parent and Buyer shall allow all of the
Transferred Employees who are residents of the United States to
participate in Parent's 401(k) Plan on the same terms and conditions as
apply to other similarly situated employees of Buyer and its affiliates,
with service credit as described in Section 9.05(b). As soon as
practicable after the Closing and subject to delivery by Sellers to Buyer
of a favorable determination letter with respect to Buyer's and Sellers'
plans (or other evidence of tax qualifications satisfactory to Buyer) and
the satisfaction of any other applicable legal requirements to such
transfer, Sellers shall permit each such Transferred Employee to effect a
"direct rollover" (within the meaning of Section 401(a)(31) of the Code)
of his or her account balances under the 401(k) Plan of Sellers in
accordance with applicable law, and Parent and Buyer shall cause the
Parent's 401(k) Plan to accept such direct rollover (including promissory
notes evidencing outstanding loans with respect to Transferred Employees
who elect a direct rollover of their entire account balances).
(d) Buyer shall prepare and furnish to each of the Transferred
Employees a Form W-2 that shall reflect all wages and compensation paid to
such employee for the entire calendar year in which the Closing Date
occurs. Sellers shall furnish to Buyer the
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Forms W-4 and W-5 of each such Transferred Employee. Buyer shall send to
the appropriate Social Security Administration office a duly completed
Form W-3 and accompanying copies of the duly completed Forms W-2. It is
the intent of the parties that the obligations of Buyer and Sellers under
this Section 9.05(d) shall be carried out in accordance with Section 5 of
Revenue Procedure 2004-53.
(e) Except as provided in Sections 9.05(b), 9.05(c), 9.05(d) and as
otherwise provided by applicable law, Buyer shall not have any
responsibility, liability or obligation, whether to Transferred Employees,
Excluded Employees, Proposed Transferred Employees who do not become
Transferred Employees, other employees of Sellers, former employees of
Sellers, their beneficiaries or to any other person, with respect to any
Employee Benefit Plans, practices, programs or arrangements maintained by
Sellers.
(f) Buyer shall be solely responsible for all obligations and
liabilities related to the employment of the Transferred Employees of the
Business as operated by Buyer from and after the Closing Date.
(g) The Final Closing Balance Sheet shall reflect an accurate
accrual for each Transferred Employee, in accordance with GAAP, and
Sellers shall provide to Buyer all reasonably required information in
respect of the vacation entitlement of each Transferred Employee.
(h) After the Closing Date, Parent shall cause Buyer to and Buyer
shall maintain a group health plan and shall provide COBRA continuation
coverage to all "M&A qualified beneficiaries" as that term is defined by
Treas. Reg. Section 54.4980B-9 (the "COBRA regulations"), with respect to
the sale of assets. Parent shall cause Buyer to and Buyer shall maintain a
group health plan for at least the maximum period that COBRA continuation
coverage must be available to the M&A qualified beneficiaries under the
COBRA regulations.
(i) Buyer shall extend an offer of employment to Xxxxxxxx Xxxxxx on
terms substantially similar to her current employment package at
ClearCommerce. Buyer shall permit and cause Xxxxxxxx Xxxxxx to devote, at
the request of the Sellers, one to two days per week of her time for a
five (5) month period following the Closing to assisting Sellers with
their respective liquidation, dissolution, winding up and similar efforts.
9.6. Employee Non-Competes. All fees, incentives, costs, expenses or other
payments incurred in connection with the inducement of Transferred Employees to
enter into non-competition agreements in favor of Buyer will be borne solely by
Buyer. Buyer will use commercially reasonable efforts to obtain the
non-competition agreements referred to in Section 6.07.
9.7. Services. If Sellers have not obtained a consent required to assign a
Contract to Buyer, Sellers shall promptly upon receipt of payments under such
Contract remit such payments to Buyer, and Parent shall, or shall cause Buyer
to, provide all services necessary to enable
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Sellers to fulfill their obligations under such Contract as if Sellers had
assigned to Buyer all of their rights, duties and obligations under such
Contract.
ARTICLE X
TERMINATION
10.01. Termination. This Agreement may be terminated at any time prior to
the Closing:
(a) by the mutual consent of Buyer and Sellers;
(b) by either Buyer or Sellers if there has been a material
misrepresentation, breach of warranty or breach of covenant on the part of
the other of the representations, warranties and covenants made by it in
this Agreement;
(c) by either Buyer or Sellers if the transactions contemplated
hereby have not been consummated by January 31,2005 or such other date as
may be mutually agreed to by the parties hereto, acting reasonably;
provided, however, that neither of such Persons will be entitled to
terminate this Agreement pursuant to this Section 10.01(c) if the willful
breach of this Agreement by such party or one or more of its affiliates
has prevented the consummation of the transactions contemplated hereby by
such date; or
(d) by Buyer if, after the date of this Agreement, there shall have
occurred any act, event or omission which Buyer concludes has given rise
to or could reasonably be expected to give rise to a Material Adverse
Effect.
10.02. Effect of Termination. In the event of any termination of this
Agreement as provided in Section 10.01, this Agreement shall become void and
there shall be no liability on the part of either Buyer or Sellers, or their
respective stockholders, officers, or directors, except with respect to breaches
of this Agreement that occur prior to the time of such termination. In any
action based on any such breach, each party shall bear its own legal fees and
related costs.
ARTICLE XI
SURVIVAL; INDEMNIFICATION
11.1. Survival. Subject to the limitations set forth in Section 11.03 and
Section 11.06, notwithstanding any investigation made by or on behalf of any of
the parties hereto or the results of any such investigation and notwithstanding
the participation of such party in the Closing, the representations, warranties,
covenants and agreements of the parties shall survive the Closing for the
periods specified in Section 11.03 and Section 11.06. If a notice is given in
accordance with the Escrow Agreement or Section 13.06 before the expiration of
such periods, then (notwithstanding the expiration of such period) the
representation, warranty, covenant or agreement applicable to such claim shall
survive until, but only for purposes of, the resolution of such claim.
11.2. Damages. "Damages" shall mean any and all debts, obligations and
other liabilities (whether absolute, accrued, contingent, fixed or otherwise, or
whether known or
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unknown, or due or to become due or otherwise), monetary damages, fines, fees,
penalties, interest obligations, deficiencies, losses and expenses (including
without limitation amounts paid in settlement, interest, court costs, costs of
investigators, fees and reasonable expenses of attorneys, accountants, financial
advisors and other experts, and other expenses of litigation) incurred or
suffered by a party entitled to indemnification pursuant to this Article XI.
11.03. Indemnification by Sellers and the Stockholders. Subject to the
limitations set forth in Sections 11.04 and 11.05, Sellers and the Stockholders
(collectively, the "Seller Indemnifying Parties" and each a "Seller Indemnifying
Party") severally (and not jointly) shall defend and indemnify and hold harmless
Buyer, and its officers, directors, agents or representatives (the "Buyer
Indemnified Persons") in respect of, and hold the Buyer Indemnified Persons
harmless against Damages:
(a) resulting from any breach or inaccuracy of a warranty or
representation or failure to perform or comply with any covenant or
agreement of Sellers or the Stockholders under this Agreement or other
agreements or instruments to be executed and delivered at Closing by
Sellers or the other Seller Indemnifying Parties pursuant to this
Agreement;
(b) resulting from any failure of Buyer to receive good and
marketable title to the Assets, other than Seller Agreements for which
required consents have not been obtained, in accordance with this
Agreement, free and clear of all Liens (except for Permitted Liens and
Liens resulting from actions or omissions of Buyer);
(c) resulting from any claim by any holder or former holder of an
equity interest (including any derivative security) of Sellers for a
matter arising by virtue of such Person's capacity as such a holder;
(d) resulting from any Retained Liabilities or the Excluded Assets;
(e) resulting from any matter relating to the items disclosed in
paragraphs 1 or 2 of item 4.11(j) on the Disclosure Schedule;
(f) resulting from the improper classification by Sellers of the
individuals associated with the Business as contractors or independent
contractors prior to the Closing Date;
(g) subject to Sections 9.05 and 11.06, arising from or related to
claims made by or on behalf of any Transferred Employee, Excluded Employee
or Proposed Transferred Employee who does not become a Transferred
Employee or other employee or contractor of Buyer with respect to such
employee's or contractor's relationship with Sellers for periods prior to
the Closing Date by virtue of such Person's capacity as such an employee
or contractor, including without limitation:
(i) all liabilities for salary, wages, bonuses, commissions,
severance obligations, vacation pay, overtime pay and other
compensation relating to
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employment of all employees in the Business prior to the Closing
Date and all liabilities under or in respect of the Employee Benefit
Plans;
(ii) all liabilities for claims for injury, disability, death
or workers' compensation arising from employment in the Business
prior to the Closing Date;
(iii) all liabilities arising from the termination of the
employment by Seller of any of the Proposed Transferred Employees
(whether or not terminated by the giving of notice, and if by the
giving of notice, whenever that notice expires) by the Seller up to
and including the Closing Date or of any other employees of the
Seller whether before, on or after the Closing Date;
(iv) all liabilities for any act or omission of the Seller up
to and including the Closing Date in respect of the employment of
the Proposed Transferred Employees by the Seller and any claim by
any person other than a Proposed Transferred Employee relating to
that person's employment or its termination by the Seller. For the
avoidance of doubt, it is anticipated that only the Proposed
Transferred Employees shall transfer to the Buyer on the Closing
Date. In the event that any person other than a Proposed Transferred
Employee transfers to the Buyer pursuant to TUPE, it is hereby
expressly agreed between the Parties that the Buyer may terminate
such person's employment at its discretion and the Seller shall
indemnify the Buyer in full against all actions, proceedings, costs,
claims, demands, awards, fines, orders, expenses and liabilities
(including, without limitation, legal and other professional fees
and expenses) whenever arising, directly or indirectly, in
connection with such person's employment and/or its termination
(including, without limitation, indemnifying the Buyer against any
unfair dismissal claims made by such person);
(v) all liabilities arising from the failure of the Seller to
inform and consult with any appropriate representative (as defined
in TUPE) or Proposed Transferred Employee with regard to affected
employees (as defined in TUPE) or any other failure of Seller to
comply with any duty to inform and consult any independent trade
unions, employer representatives or employees (whether under TUPE or
otherwise), including, without limitation, any breach by the Seller
of Regulation 10 of TUPE, except to the extent that any such action
or claim (or any part of such action or claim) arises solely as a
result of any failure by the Buyer to give the Seller the
information required to be given by the Buyer under TUPE.
(h) notwithstanding anything to the contrary in Section 9.05,
resulting from the inaccuracy of any accrual for Transferred Employees
reflected in the Final Closing Balance Sheet.
11.04. Conditions of Sellers Indemnification.
(a) The Seller Indemnifying Parties' obligation under this Agreement
to defend, indemnify and hold harmless the Buyer Indemnified Persons shall
be subject to
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the limitations set forth in Section 11.05. In addition, except with
respect to (i) indemnification claims arising from fraudulent actions or
statements by Sellers or any Seller Indemnifying Party, (ii) claims based
upon the inaccuracy of the representations or warranties or the failure to
comply with the covenants or agreements set forth in the proviso to
Section 1.04 (Assumption of Liabilities), Sections 4.02 (Valid and Binding
Agreement), 4.09 (Tax Matters), 4.20 (Environmental Matters), 4.22
(Brokerage), 9.02 (Noncompetition Covenant), 11.03(c), (d), (e), (f) and
(g) (Indemnification by Sellers and the Stockholders) and (iii) claims
which are made by Buyer prior to one year after the Closing Date, but
which are not resolved by that date (collectively for purposes of this
Section 11.04(a), (i), (ii) and (iii) shall be referred to herein as,
"Buyer Exempted Claims"), the Seller Indemnifying Parties' indemnification
obligations shall terminate one year from the Closing Date; provided,
however, that claims based upon any Buyer Exempted Claim may be asserted
until the applicable statute of limitations, including any extensions
thereof, has expired and provided further that claims based upon the
failure to comply with Sellers' noncompetition covenant in Section 9.02
may be asserted until the third anniversary of the Closing Date. Buyer
acknowledges that Sellers may distribute and pay at any time and from time
to time all or a portion of the Purchase Price (other than the Escrow
Amount) to the Stockholders or current or former stockholders or creditors
of Sellers, and Buyer will not object to such distribution and payment.
(b) Remedies. The remedies provided for in this Article XI or
elsewhere in this Agreement shall be the exclusive monetary remedies with
respect to this Agreement, the Related Agreements and any of the
transactions contemplated in this Agreement.
11.05. Indemnification Claims.
(a) All claims by Buyer Indemnified Persons for indemnification
pursuant to this Article XI shall be satisfied first from the Escrow
Amount (never the Contract Escrow Amount) and made in accordance with the
Escrow Agreement until such time as the entire Escrow Amount has been
claimed by Buyer or other Buyer Indemnified Persons.
(b) In the event that the available Escrow Amount is insufficient to
cover any claim for indemnification pursuant to this Article XI because
the Escrow Amount or a portion thereof has been previously deducted and
released in accordance with the Escrow Agreement (after giving effect to
amounts previously paid to Buyer Indemnified Persons in respect of
resolved claims and any amounts then held in respect of unresolved Pending
Claims (as defined in the Escrow Agreement)) (a "Termination or Exhaustion
of the Escrow Amount"), claims by Buyer Indemnified Persons for
indemnification pursuant to this Article XI shall be satisfied by
offsetting the amount of such claim against the Earn-Out Amount, if any.
For further clarity and for the avoidance of doubt, it is the intent of
the parties to this Agreement that the entire Earn-Out Amount shall be
available to cover any claim for indemnification pursuant to this Article
XI if there has been a Termination or Exhaustion of the Escrow Amount.
(c) In the event that (i) there has been a Termination or Exhaustion
of the Escrow Amount, (ii) the offset against the Earn-Out Amount
described in
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Section 11.05(b) is insufficient to cover any claim for indemnification
pursuant to this Article XI and (iii) the Earn-Out Amount is less than One
Million Nine Hundred Forty Thousand Dollars ($1,940,000), claims by Buyer
Indemnified Persons for indemnification pursuant to this Article XI shall
be satisfied by payment by Seller Indemnifying Parties to Buyer via wire
transfer of immediately available funds, provided, however, that in no
event shall the aggregate amount payable by Seller Indemnifying Parties
pursuant to this Section 11.05(c) exceed an amount equal to (A) One
Million Nine Hundred Forty Thousand Dollars ($1,940,000) less (B) the
Earn-Out Amount.
(d) Notwithstanding anything herein to the contrary, (i) Seller
Indemnifying Parties will be liable to Buyer Indemnified Persons for
claims brought under this Article XI only if the aggregate amount of all
such claims exceeds Two Hundred Thousand Dollars ($200,000), in which case
Seller Indemnifying Parties will be liable for the aggregate amount of all
such claims and (ii) the Stockholders will not be obligated under this
Article XI to indemnify Buyer Indemnified Persons pursuant to Section
11.05(c) if Sellers demonstrate (by delivering to such Buyer Indemnified
Person Sellers' most recent consolidated balance sheet) that they have
sufficient unrestricted cash to cover claimed Damages.
11.06. Indemnification by Buyer. Subject to the limitations set forth in
Section 11.07, Parent shall or shall cause Buyer to defend and indemnify and
hold harmless each of Sellers, and each of their respective officers, directors,
agents or representatives (the "Seller Indemnified Persons") in respect of, and
hold the Seller Indemnified Persons harmless against, any and all Damages
incurred or suffered by the Seller Indemnified Persons:
(a) resulting from, relating to or constituting any
misrepresentation, breach or inaccuracy of a warranty or representation or
failure to perform or comply with any covenant or agreement of Parent or
Buyer under this Agreement or the Related Agreements;
(b) directly or indirectly as a result of any liability relating to
or arising out of the conduct of the Business on or after the Closing
Date, including the covenants and obligations of Parent or Buyer under
this Agreement or the Related Agreements which continue after the Closing
Date; and
(c) arising from or relating to claims in respect of the Assumed
Liabilities.
11.07. Conditions of Buyer Indemnification. Except with respect to (i)
indemnification claims arising from fraudulent actions or statements by Parent
or Buyer and claims based on Section 11.06(b) or (c) and (ii) claims which are
made by Sellers prior to one year after the Closing Date, but which are not
resolved by that date (collectively for purposes of this Section 11.07, (i) and
(ii) shall be referred to herein as, "Sellers Exempted Claims"), Parent's and
Buyer's indemnification obligations shall terminate one year from the Closing
Date; provided, however, that claims based upon any Sellers Exempted Claim may
be asserted until the applicable statute of limitations, including any
extensions thereof, has expired. In addition, Parent's and Buyer's aggregate
indemnification obligations shall not exceed the Purchase Price.
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11.08. Legal Proceedings and Method of Asserting Claims. As used herein,
an "Indemnified Party" shall refer to Buyer Indemnified Persons or Seller
Indemnified Persons, as applicable, the "Notifying Party" shall refer to the
party hereto whose Indemnified Parties are entitled to indemnification
hereunder, and the "Indemnifying Party" shall refer to the party hereto
obligated to indemnify such Notifying Party's Indemnified Parties.
(a) In the event any Person becomes involved in any legal,
governmental or administrative proceeding which may result in a claim for
indemnification pursuant to this Article XI (any such third party action
or proceeding being referred to as a "Claim"), the Notifying Party shall
promptly notify the Indemnifying Party in writing of the filing and of the
nature of any such proceeding. The Indemnifying Party may, at its or their
option and expense, elect to participate in the defense of such Claim and
shall have the right to approve any settlement of the dispute giving rise
to such proceeding for which indemnification will be sought hereunder,
provided that such approval may not be withheld unreasonably.
(b) In the event any Indemnified Party has a claim against any
Indemnifying Party that does not involve a Claim, the Notifying Party
shall deliver a notice of such claim and an estimate of the amount of the
applicable Damages (if reasonably practicable) to Buyer or the
Representative, as applicable. If Buyer or the Representative, as
applicable, notifies the Notifying Party that it does not dispute the
claim described in such notice or fails to notify the Notifying Party
within 30 days after delivery of such notice by the Notifying Party
whether the Indemnifying Party disputes the claim described in such
notice, the Damages in the amount specified in the Notifying Party's
notice will be conclusively deemed a liability of the Indemnifying Party
and the amount shall be paid in accordance with the terms and conditions
of this Article XI. 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 for a period of at least 30 days, and if such dispute is not
resolved through such negotiation prior to the expiration of such minimum
negotiation period, either party may require that such dispute be resolved
in accordance with Section 13.01.
(c) The Representative shall act on behalf of Seller Indemnifying
Parties with respect to any notices or consents required to be given or
received under this Article XI.
ARTICLE XII
INDEMNIFICATION REPRESENTATIVE
12.01. Acceptance; Relationships. Sellers, the Stockholders and the
Representative, hereby acknowledge and agree, for the benefit of Buyer, that all
of the terms and conditions contained in this Article XII: (a) relate solely to
the relationship between the Representative, the Sellers and the Stockholders,
(b) are of no concern to the Parent or Buyer, except for the fact that Parent or
Buyer will be giving notice to the Representative, and (c) do not, and shall not
be construed to, create any obligations or liabilities of any Buyer or Parent.
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12.02. Appointment. Austin Ventures V. L.P. (the "Representative") agrees
to act on the written instructions of the Stockholders entitled to a majority in
interest of the Purchase Price (the "Majority Stockholders") and to carry out
its duties in accordance with this Agreement. The Seller Indemnifying Parties
shall be bound by any and all actions taken by the Representative on the written
instructions of the Majority Stockholders. Buyer shall be entitled to rely upon
any communication or writing given or executed by the Representative. All
communications or writings to be sent to one or more of the Seller Indemnifying
Parties generally pursuant to this Agreement shall be addressed to the
Representative and any communication or writing so sent shall be deemed notice
to all such Seller Indemnifying Parties hereunder on the tenth business day
after such notice is deemed to have been given to the Representative in
accordance with Section 13.06. The Representative shall have full power to act
in each Seller Indemnifying Party's name and on each Seller Indemnifying Party's
behalf according to the terms of this Agreement on written instructions from the
Majority Stockholders, and in general to do all things and to perform all acts
which the Representative in its absolute discretion considers necessary or
advisable to give effect to such instructions, including, without limitation,
executing and delivering all agreements, certificates, receipts, instructions
and other instruments contemplated by or deemed advisable in connection with
this Agreement.
12.03. Authority. Notwithstanding any other provision herein contained,
the Representative shall at all times act upon and in accordance with the joint
written instructions of the Majority Stockholders and their successors and shall
have no independent duty to investigate or verify the compliance with any
conditions contained in, or the occurrence or non-occurrence of any events
referred to in the agreements between any or all of the parties to this
Agreement or the validity of such instructions. Such instructions may be given
in writing, by fax or by electronic communication in one or more counterparts.
12.04. Duties of the Representative. The Representative shall act in
accordance with, and shall be entitled to rely upon, joint written instructions
provided in accordance with Section 12.03 herein. The Representative shall have
the duty to act with a degree of care that a reasonably prudent person acting as
a representative would give in similar circumstances. The Representative shall
have no duty or obligation hereunder other than to take such specific actions as
are required of it from time to time under the provisions hereof, and it shall
incur no liability hereunder or in connection herewith for anything whatsoever
other than as a result of its own gross negligence or willful misconduct.
12.05. Indemnity. The Seller Indemnifying Parties each, severally but not
jointly and severally, agree to indemnify, hold harmless and defend the
Representative from and against any and all losses, claims, liabilities and
expenses, including the reasonable fees of its counsel, which it may suffer or
incur hereunder, or in connection herewith, except as shall result solely and
directly from its own gross negligence or willful misconduct. Anything in this
Agreement to the contrary notwithstanding, in no event shall the Representative
be liable to Seller Indemnifying Parties for special, indirect or consequential
loss or damage of any kind whatsoever (including but not limited to lost
profits), even if the Representative has been advised of the likelihood of such
loss or damage and regardless of the form of action. The foregoing indemnities
in this paragraph shall survive the resignation of the Representative or the
termination of this Agreement.
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12.06. Other Agreements. The Representative shall not be bound in any way
by any agreement or contract between any of the Seller Indemnifying Parties or
Buyer (whether or not the Representative has knowledge thereof), other than by
its obligations set forth herein and the only duties and responsibilities of the
Representative shall be to act in accordance with Article XII. The
Representative shall have no responsibility for the validity of any agreements
referred to in this Agreement, or for the performance of any such agreements by
any other party thereto or for interpretation of any of the provisions of any
such agreements.
12.07. Instructions and Fees. The Representative shall not incur any
liability to the Seller Indemnifying Parties from acting in accordance with any
written instructions given to it hereunder and believed by it to have been
executed by the Majority Stockholders. The Representative shall be under no duty
to inquire into or investigate the validity or accuracy of any such document.
The Representative shall have no duty to solicit any payments which may be due
to it hereunder. The Representative's fees and expenses for acting as
representative hereunder shall be in accordance with the fees and disbursement
charges which it normally charges from time to time and shall be paid out of the
retainer account provided to the Representative upon it issuing its invoice to
Sellers.
12.08. Limitation of Liability. The Representative shall not be liable for
any action taken or omitted by it unless the loss to the Stockholders was
primarily caused by (a) the gross negligence or willful misconduct of the
Representative as determined by the judgment of a court of competent
jurisdiction, or (b) a breach by the Representative of any of the terms
contained in this Agreement. In acting hereunder, the Representative may execute
any of its powers and perform its duties hereunder directly or through agents or
attorneys and may consult with counsel, accountants and other skilled persons to
be selected and retained by it. The Representative shall not be liable for
anything done, suffered or omitted by it in accordance with the advice or
opinion of any such counsel, accountants or other skilled persons unless the
loss to the Stockholders was primarily caused by (a) the gross negligence or
willful misconduct of the Representative as determined by the judgment of a
court of competent jurisdiction, or (b) a breach by the Representative of any of
the terms contained in this Agreement.
12.09. Uncertainty of Duties. In the event that the Representative shall
be uncertain as to its duties or rights hereunder or shall receive instructions,
claims or demands from any party hereto or its designated representative which,
in its opinion, conflict with any of the provisions of this Agreement, it shall
be entitled to refrain from taking any action and its sole obligation shall be
to so inform the Stockholders until it shall be directed otherwise in writing by
all of the other parties hereto or by an order or judgment of a court of
competent jurisdiction.
12.10. Resignation and Replacement of the Representative. The
Representative shall be entitled to resign upon 30 days written notice to the
Stockholders for any reason whatsoever in its absolute discretion, including if
the funds remaining in its retainer account are not, or will not be in its
judgment, sufficient to pay its fees and disbursements. Upon the Majority
Stockholders receiving a notice of resignation, the Majority Stockholders shall
nominate a replacement Representative within 15 days of receipt of such
resignation notice. The Majority Stockholders shall also have the right to
require the resignation of the Representative upon written notice to the
Representative and to name a successor Representative who shall thereafter
become the Representative. The Majority Stockholders shall advise Buyer and the
other Seller Indemnifying
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Parties of such resignation or replacement of the Representative. If Buyer has
not received notice of a replacement Representative, Buyer shall assume that the
existing Representative is the Representative for all purposes of this
Agreement.
12.11. Agents. The Representative shall be entitled to engage such agents
as the Representative deems appropriate (without further consultation) to assist
the Representative in carrying out its duties pursuant to this Agreement.
12.12. Reliance. The Representative shall be protected and shall have the
fall benefit of the indemnity provided to the Representative in Section 12.05
hereof, in acting upon any written notice, request, waiver, consent, receipt or
other paper or document furnished to it, not only as to its due execution and
the validity and effectiveness of its provisions but also as to the truth and
acceptability of any information therein contained which it believes to be
genuine and what it purports to be.
12.13. Defense of Claims. The Representative shall not be required to
defend any legal proceedings which may be instituted against it in respect of or
arising out of anything herein contained.
12.14. Limitations. The Representative shall have no duties except those
which are expressly set forth herein, and it shall not be bound by any notice of
a claim or demand with respect thereto, or any waiver, modification, amendment,
termination or rescission of this Agreement.
12.15. Duties of Stockholders. The Majority Stockholders shall have the
duty and obligation to give, in their absolute discretion, such instructions to
the Representative as they reasonably believe to be in the best interests of the
Seller Indemnifying Parties as a whole from time to time under the provisions
hereof, and they shall incur no liability hereunder or in connection herewith
for anything whatsoever other than as a result of their own gross negligence or
willful misconduct. Anything in this Agreement to the contrary notwithstanding,
in no event shall the Stockholders be liable for special, indirect or
consequential loss or damage of any kind whatsoever (including but not limited
to lost profits), even if the Stockholders have been advised of the likelihood
of such loss or damage and regardless of the form of action. The foregoing
indemnity in Section 12.05 shall survive the termination of this Agreement. The
Stockholders shall not be bound in any way by any agreement or contract between
any of the Seller Indemnifying Parties or Buyer (whether or not the Stockholders
have knowledge thereof) and the only duties and responsibilities of the
Stockholders shall be to instruct the Representative in accordance with the
terms of this Agreement. The Stockholders shall have no responsibility for the
validity of any agreements referred to in this Agreement, or for the performance
of any such agreements by any other party thereto or for interpretation of any
of the provisions of any such agreements. The Stockholders shall be under no
duty to inquire into or investigate the validity or accuracy of any document.
The Stockholders shall have no duty to solicit any payments which may be due to
them hereunder. The Stockholders shall not be liable for any action taken or
omitted by any of them unless the loss to the parties hereto was primarily
caused by (a) the gross negligence or willful misconduct of the Stockholders as
determined by a court of competent jurisdiction or (b) a breach by the
Stockholders of any of the terms contained in this Agreement. In the event that
the Stockholders shall be uncertain as to their duties or rights hereunder, they
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shall be entitled to refrain from taking any action and their sole obligation
shall be to so notify the Seller Indemnifying Parties until they shall be
directed otherwise in writing by all of the Seller Indemnifying Parties or by a
final order or judgment of a court of competent jurisdiction.
ARTICLE XIII
MISCELLANEOUS
13.01. Arbitration. Except in the event of the need for immediate
equitable relief from a court of competent jurisdiction to prevent irreparable
harm pending arbitration relief, any claim or dispute of any nature between the
parties hereto arising directly or indirectly from this Agreement or the
relationship created by this Agreement shall be resolved exclusively by
arbitration conducted in the English language in San Diego, California, in
accordance with the "Expedited Procedures" as set forth in the Commercial
Arbitration Rules and Mediation Procedures (Including Procedures for Large,
Complex Commercial Disputes) as established by the American Arbitration
Association. The fees of the arbitrator(s) and other costs incurred in
connection with such arbitration (other than the legal fees and other
out-of-pocket costs of a party) shall be allocated between the parties as is
determined to be equitable by the arbitrator. The decision of the arbitrator(s)
shall be final and binding upon both parties. Judgment of the award rendered by
the arbitrator(s) may be entered in any court having jurisdiction thereof. In
the event of submission of any dispute to arbitration, each party shall, not
later than 30 days prior to the date set for hearing, provide to the other party
and to the arbitrator(s) a copy of all exhibits upon which the party intends to
rely at the hearing and a list of all persons each party intends to call at the
hearing. Each party shall bear the costs and fees of its own counsel and
advisors and other expenses incident to their participation in the arbitration.
13.02. Press Releases and Announcements. Any public announcement,
including any announcement to employees, customers or suppliers and others
having dealings with Parent, Buyer or Sellers, or similar publicity with respect
to this Agreement or the transactions contemplated by this Agreement, will be
issued, if at all, at such time and in such manner as Buyer and Sellers mutually
agree. Buyer will have the right to have representatives present for any
in-person announcement to employees of Sellers. Unless consented to by the other
parties hereto or required by Law, each party hereto will keep, and will cause
each of its subsidiaries to keep, this Agreement and the transactions
contemplated by this Agreement confidential.
13.03. Expenses. Sellers, on the one hand, and Parent and Buyer, on the
other hand, 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).
13.04. Further Assurances. Each party agrees that, on and after the
Closing Date, it shall take all appropriate action and execute any documents,
instruments or conveyances of any kind which may be reasonably necessary or
advisable to carry out any of the provisions hereof.
13.05. 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
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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 right or obligations of any Person under or by reason of this
Agreement.
13.06. Notices. All notices, demands and other communications to be given
or delivered under or by reason of the provision of this Agreement will be in
writing and be sent to the parties hereto at the addresses, as set forth below,
or at such other address of such party as such party shall have furnished to the
other parties in writing and in accordance with this Section 13.06:
If to Buyer or Parent:
c/o eFunds Corporation
Xxxxxx Center II, Ste. 300
0000 Xxxxx Xxxxxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Attention: General Counsel
Facsimile No.: (000)000-0000
With a copy to:
Xxxxxx & Whitney LLP
Suite 1500
00 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxxx
Facsimile No.: (000)000-0000
If to Sellers, the Stockholders, any Seller Indemnifying Party or
the Representative:
Austin Ventures V, L.P.
000 Xxxx 0xx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000-0000
Attention: Xxxxxx Xxxxxxx
Facsimile No.: (000)000-0000
With a copy to:
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, Professional Corporation
8911 Capital of Texas Highway
Westech 360, Suite 3350
Xxxxxx, Xxxxx 00000
Attention: Xxxx Xxxxxx
Facsimile No.: (000)000-0000
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If to Escrow Agent:
JPMorgan Chase Bank, N.A.
000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: ITS/Escrow Section
Facsimile No.: (000)000-0000
All notices and other communications shall be deemed effectively given as
to the party to whom it is addressed as of the earliest of the following times:
(i) when received, (ii) when delivered personally, (iii) one (1) business day
after being delivered by facsimile (with appropriate confirmation of receipt),
(iv) one (1) business day after being timely deposited with an overnight courier
service with instructions (and the capability) to make delivery on the next day,
(v) if sent internationally, five (5) business days after being deposited in
international mail, first class with postage prepaid, or (vi) if sent
domestically, three (3) business days after being deposited in the US mail,
first class with postage prepaid.
13.07. Assignment. This Agreement and all of the provisions hereof will be
binding upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns; provided, however, that neither this Agreement
nor any of the rights, interests or obligations hereunder may be assigned by any
party hereto without the prior written consent of the other parties hereto,
except that Parent and Buyer may assign their rights hereunder to one or more of
their affiliates provided that Parent and Buyer will continue to be bound by all
the obligations hereunder as if such assignment had not occurred and perform
such obligations to the extent that such affiliate fails to do so.
13.08. 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.
13.09. Complete Agreement. This Agreement, the Schedules hereto and the
Related Agreements 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, including any letter of intent related to the transactions
contemplated by this Agreement between Sellers and eFunds Corporation; provided,
however, the provisions of that certain Confidentiality Agreement dated on or
about December 15, 2003 between Buyer and Sellers shall still remain in effect.
13.10. 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.
13.11. Governing Law. The domestic law, without regard to conflicts of law
principles, of the state of Delaware will govern all questions concerning the
construction, validity and
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interpretation of this Agreement and the performance of the obligations imposed
by this Agreement.
13.12. Third Party Beneficiaries.
(a) Sellers and the Stockholders acknowledge to each of the Buyer
Indemnified Persons its direct rights against them under Article XI of
this Agreement. If a court determines that Article XI does not create
direct rights in favor of the Buyer Indemnified Persons, then Buyer acts
as agent on behalf of each of the Buyer Indemnified Persons in contracting
for their respective rights under Article XI. If the foregoing agency is
ineffective in procuring the rights under Article XI for any reason, then
Buyer acts as trustee on behalf of each of the Buyer Indemnified Persons
and holds for their benefit their rights under Article XI. The parties to
this Agreement reserve their right to vary or rescind the rights at any
time and in any way whatsoever, if any, granted by or under this Agreement
to any Person who is not a party to this Agreement, without notice to or
consent of that Person, including any Buyer Indemnified Person.
(b) Parent and Buyer acknowledge to each of the Seller Indemnified
Persons its direct rights against them under Article XI of this Agreement.
If a court determines that Article XI does not create direct rights in
favor of the Seller Indemnified Persons, then Sellers act as agent on
behalf of each of the Seller Indemnified Persons in contracting for their
respective rights under Article XI. If the foregoing agency is ineffective
in procuring the rights under Article XI for any reason, then Sellers act
as trustee on behalf of each of the Seller Indemnified Persons and holds
for their benefit their rights under Article XI. The parties to this
Agreement reserve their right to vary or rescind the rights at any time
and in any way whatsoever, if any, granted by or under this Agreement to
any Person who is not a party to this Agreement, without notice to or
consent of that Person, including any Seller Indemnified Person.
13.13. Sellers' Knowledge. Any statement in this Agreement expressed to be
made to "the knowledge of Sellers," "the best of Sellers' knowledge" and any
other references to the knowledge of Sellers or matters of which Sellers is
aware shall be understood to be made on the basis of Sellers' knowledge, which
shall be the actual knowledge of Xxxxxx Xxxxx, Xxxx Xxxxxx, Xxxx Xxxxx, Xxxxx
Xxxxxxxxx, Xxxxx Xxxxxx and Xxxxxxxxx Xxxxxxxxx or the knowledge that any of
them should have had after reasonable inquiry of their direct reports having
responsibility for such matters.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
SELLERS:
CLEARCOMMERCE
CORPORATION
By: /s/ X. Xxxxx
----------------------------
Its President/CEO
CLEARCOMMERCE EUROPE
LTD
By /s/ X. Xxxxx
-----------------------------
Its Director/Secretary
REPRESENTATIVE:
AUSTIN VENTURES V, L.P.
By AV Partners V, L.P.,
Its General Partner
By /s/ X X
-----------------------------
Its _________________________
BUYER:
EFUNDS GOVERNMENT
SERVICES, INC.
By /s/ Rahul
-----------------------------
Its Senior Vice President
EFUNDS INTERNATIONAL LTD.
By /s/ Xxxx X. Xxxxx
-----------------------------
Its Managing Director
PARENT:
EFUNDS CORPORATION
By /s/ Rahul
-----------------------------
Its Senior Vice President
STOCKHOLDERS (FOR
PURPOSES OF ONLY THOSE
SECTIONS ENUMERATED IN
THE PREAMBLE TO THIS
AGREEMENT):
AUSTIN VENTURES V, L.P.
By AV Partners V, L.P.,
Its General Partner
By /s/ X X
-----------------------------
Its General Partner
AUSTIN VENTURES V
AFFILIATES FUND, L.P.
By AV Partners V, L.P.,
Its General Partner
By: /s/ X X
----------------------------
General Partner
AUSTIN VENTURES VII, L.P.
By AV Partners V, L.P.,
Its General Partner
By: /s/ X X
----------------------------
General Partner
STOCKHOLDERS (FOR PURPOSES
OF ONLY THOSE SECTIONS
ENUMERATED IN THE PREAMBLE
TO THIS AGREEMENT):
NEW ENTERPRISE ASSOCIATES 8A, L.P. NEW ENTERPRISE ASSOCIATES 8A,
By NEA Partners 10, L.P. LIMITED PARTNERSHIP
Its General Partner
By /s/ Xxxxx
-----------------------------
Xxxxx X. Xxxxxxx
Its General Partner
NEW ENTERPRISE ASSOCIATES VIII,
L.P.
New Enterprise Associates VIII, L.P.
By: NEA Partners VIII, L.P.
Its General Partner By /s/ X. Xxxxxxx
-----------------------------
C. Xxxxxxx Xxxxxxxx
Its General Partner
STOCKHOLDERS (FOR
PURPOSES OF ONLY THOSE
SECTIONS ENUMERATED IN
THE PREAMBLE TO THIS
AGREEMENT):
VOYAGER CAPITAL FUND I,
L.P.
By VOYAGER CAPITAL MANAGEMENT, LLC
Its General Partner
By /s/ WHM
-----------------------------
Its Managing Director
VOYAGER CAPITAL FOUNDERS
FUND, L.P.
By VOYAGER CAPITAL MANAGEMENT, LLC
Its General Partner
By /s/ WHM
-----------------------------
Its Managing Director
List Identifying Contents of
Omitted Schedules
The following Exhibits and Schedules have been omitted from this Exhibit 2.1:
Exhibit A 1, Xxxx of Sale (section 2.02)
Exhibit A 2, UK Asset Xxxx of Sale (section 2.02)
Exhibit B, Assignment and Assumption Agreements (section 2.02)
Exhibit C, Purchase Price Allocation (section 3.07)
Exhibit D, Form of Proxy (section 6.08)
Schedule A, Stockholders (Preamble)
Schedule B, Contracts (section 1.01(d))
Schedule C 1, Personal Property Leases (section 1.01(e))
Schedule C 2, UK Personal Property Leases (section 1.02(a))
Schedule D, Real Property Leases (section 1.01(e))
Schedule E, Permits, Assignable (section 1.01(f))
Schedule F, Fixed Assets (section 1.01(p))
Schedule 1.02(b), Assets Located in the United Kingdom (section 1.02(b))
Schedule G, Excluded Permits and Sellers Agreements (section 1.03(b))
Schedule 3.02, Estimated Closing Date Working Capital Example (section 3.02)
Schedule 3.03(b), Contract Hold-Back (section 3.03(b))
Schedule 3.04, Earn-Out (section 3.04)
Disclosure Schedule (Article IV)
Schedule H, Non-Assignable Permits and Contracts (section 4.10(c))
Schedule I(i)-I(iv), Customers, Certain Persons, etc. (section 4.10(d)
Schedules J(i)-J(vii), Relating to Intellectual Property Rights (section 4.11)
Schedule K-1, Employee Benefit Plans (section 4.15(a))
Schedule K-2, Compensation Policies (section 4.15(b))
Schedule 6.07, Transferred Employees to Sign Noncompetition Agreements
(section 6.07)
Schedule M, Required Consents (section 8.01(d))
The registrant will furnish supplementally a copy of any omitted Schedule or
Exhibit to the Securities and Exchange Commission upon the request of the
Commission.
