EXHIBIT 2.1
Confidential Treatment Requested
Under 17 C.F.R. (S)(S) 200.80(B)(4),
200.83 and 240.24B-2
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PARTNERSHIP PURCHASE AGREEMENT
by and among
ADP, INC.
a Delaware corporation;
ADP FINANCIAL INFORMATION SERVICES, INC.
a Delaware corporation; and
COMPUTER CARE,
a New York general partnership;
and
NEWGEN RESULTS CORPORATION,
a Delaware corporation; and
NGR ACQUISITION CORP.,
a Delaware corporation
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Dated as of October 22, 1999
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1. SALE AND PURCHASE OF PARTNERSHIP INTERESTS..........................1
1.1 Sale and Purchase of Partnership Interests.................1
1.2 Purchase Price.............................................1
1.3 Purchase Price Adjustment Amount...........................4
1.4 Sales Taxes................................................4
1.5 Closing....................................................4
2. REPRESENTATIONS AND WARRANTIES OF THE PARTNERS......................4
2.1 Due Organization...........................................4
2.2 Ownership Interest.........................................5
2.3 Financial Statements.......................................5
2.4 Absence of Changes.........................................5
2.5 Title to Assets............................................7
2.6 Bank Accounts..............................................8
2.7 Customers; Distributors....................................8
2.8 Equipment, Etc.............................................9
2.9 Real Property..............................................9
2.10 Partnership Proprietary Assets.............................9
2.11 Contracts.................................................10
2.12 Liabilities...............................................10
2.13 Compliance with Legal Requirements........................10
2.14 Governmental Authorizations...............................11
2.15 Tax Matters...............................................11
2.16 Employee and Labor Matters................................12
2.17 Benefit Plans; ERISA......................................13
2.18 Insurance.................................................14
2.19 Proceedings; Orders.......................................14
2.20 Authority; Binding Nature Of Agreements...................15
2.21 Non-Contravention.........................................15
2.22 Solvency..................................................16
2.23 Environmental Matters.....................................16
2.24 Brokers...................................................16
1.
2.25 Full Disclosure...........................................16
2.26 Knowledge.................................................16
3. REPRESENTATIONS AND WARRANTIES OF BUYERS...........................16
3.1 Due Organization..........................................17
3.2 Proceedings; Orders.......................................17
3.3 Authority; Binding Nature of Agreements...................17
3.4 Full Disclosure...........................................17
3.5 Knowledge.................................................17
4. COVENANTS OF THE PARTIES...........................................17
4.1 Access and Investigation..................................17
4.2 Operation of Business.....................................18
4.3 Filings and Consents......................................19
4.4 Notification; Updates to the Schedules....................19
4.5 No Negotiation............................................20
4.6 Confidentiality...........................................20
4.7 Best Efforts..............................................20
5. ADDITIONAL AGREEMENTS OF THE PARTIES...............................20
5.1 Further Actions...........................................20
5.2 Accounts Receivable.......................................20
5.3 Non-Compete...............................................22
5.4 Employees.................................................24
5.5 Use of ADP Name and Logo..................................26
5.6 Use of Computer Care Name and Logo........................26
5.7 Mail......................................................27
5.8 Tax Matters...............................................27
5.9 Post-Closing Audited Financial Statements.................27
5.10 Data Conversion...........................................28
6. CONDITIONS PRECEDENT TO BUYERS' OBLIGATION TO CLOSE................28
6.1 Accuracy of Representations...............................28
6.2 Closing Deliveries........................................29
6.3 Performance of Covenants..................................29
2.
6.4 No Material Adverse Change................................29
6.5 HSR Act...................................................29
6.6 No Restraints.............................................29
6.7 No Litigation.............................................29
7. CONDITIONS PRECEDENT TO THE PARTNERS' OBLIGATION TO CLOSE..........29
7.1 Accuracy of Representations...............................29
7.2 Closing Deliveries........................................30
7.3 Performance of Covenants..................................30
7.4 No Material Adverse Change................................30
7.5 HSR Act...................................................30
7.6 No Restraints.............................................30
7.7 No Litigation.............................................30
8. TERMINATION........................................................30
8.1 Termination Events........................................30
8.2 Termination Procedures....................................31
8.3 Effect of Termination.....................................31
8.4 Nonexclusivity of Termination Rights......................31
9. INDEMNIFICATION....................................................32
9.1 Survival of Representations, Warranties and Covenants.....32
9.2 Indemnification by the Partners...........................32
9.3 Indemnification by Buyers.................................33
9.4 Remedies Exclusive........................................34
9.5 Indemnification of Third-Party Claims.....................34
9.6 Payment...................................................35
10. CLOSING DELIVERIES.................................................36
10.1 The Partners' Obligations at Closing......................36
10.2 Buyers' Obligations at Closing............................37
10.3 Further Documents.........................................37
11. GENERAL PROVISIONS.................................................37
11.1 Joint and Several Liability...............................37
11.2 Fees and Expenses.........................................38
3.
11.3 Attorneys' Fees...........................................38
11.4 Notices...................................................38
11.5 Headings; Construction....................................39
11.6 Governing Law.............................................40
11.7 Successors and Assigns; Parties in Interest...............40
11.8 Remedies Cumulative; Specific Performance.................40
11.9 Waiver....................................................40
11.10 Amendments................................................41
11.11 Severability..............................................41
11.12 Entire Agreement..........................................41
11.13 Counterparts..............................................41
4.
PARTNERSHIP PURCHASE AGREEMENT
THIS PARTNERSHIP PURCHASE AGREEMENT is entered into as of October 22,
1999 (the "AGREEMENT"), by and among: ADP, INC., a Delaware corporation ("ADP"),
ADP FINANCIAL INFORMATION SERVICES, INC., a Delaware corporation ("ADP
FINANCIAL") (collectively, ADP and ADP Financial are referred to as the
"PARTNERS"), and COMPUTER CARE, a New York general partnership (the
"PARTNERSHIP"); and NEWGEN RESULTS CORPORATION, a Delaware corporation
("NEWGEN") and NGR ACQUISITION CORP., a Delaware corporation ("ACQUISITION
SUB"), (collectively, Newgen and Acquisition Sub are referred to as the
"BUYERS"). The Partners, the Partnership and Buyers are referred to collectively
as the "PARTIES." Certain capitalized terms used in this Agreement are defined
in Exhibit A.
RECITALS
A The Partners are the sole partners of the Partnership.
B. The Partnership is in the business of providing customer
retention and support services to manufacturers and dealers of automobiles
through communications to their customers that relate to the servicing, repair
and maintenance of such customers' automobiles.
C. The Partners desire to provide for the sale of all of their
respective interests as general partners of the Partnership to the Buyers, and
the Buyers desire to purchase all of such interests in the Partnership from the
Partners, on the terms set forth in this Agreement.
AGREEMENT
In consideration of the foregoing premises, mutual agreements and
covenants contained herein, the Parties to this Agreement, intending to be
legally bound, agree as follows:
1. SALE AND PURCHASE OF PARTNERSHIP INTERESTS.
1.1 SALE AND PURCHASE OF PARTNERSHIP INTERESTS. At the Closing, each
Partner shall sell, assign, transfer, convey and deliver to the Buyers all of
such Partner's rights, title and interests as a general partner in the
Partnership, including without limitation, such Partner's rights in specific
Partnership property (including the Assets as defined in Section 2.5(b) below),
interests in the Partnership and all rights to participate in the management of
the Partnership (collectively, the "PARTNERSHIP INTERESTS") free and clear of
any Encumbrances. In connection with the sale and purchase of the Partnership
Interests, (i) ADP shall sell, assign, transfer, convey and deliver to
Acquisition Sub its Partnership Interest (representing 99% of the total
Partnership Interests), and (ii) ADP Financial shall sell assign, transfer,
convey and deliver to Newgen its Partnership Interest (representing 1% of the
total Partnership Interests).
1.2 PURCHASE PRICE. As consideration for the sale, assignment,
transfer, conveyance and delivery to the Buyers of the Partnership Interests,
subject to the limitations set forth herein, Buyers
1.
shall pay to the Partners the following (the aggregate amount of all payments
made to the Partners under this Section 1.2 shall be referred to herein as the
"PURCHASE PRICE"):
(a) CASH PAYMENT. At the Closing, the Buyers shall pay to the Partners,
in cash in immediately available funds, an amount equal to (i) eleven million
one hundred seventy-five thousand dollars ($11,175,000) less (ii) the Purchase
Price Adjustment Amount (as defined in Section 1.3), if any (the "CLOSING CASH
PAYMENT"). The Closing Cash Payment shall be paid to the Partners as follows:
(A) 99% of the Closing Cash Payment shall be paid to ADP, and (B) 1% of the
Closing Cash Payment shall be paid to ADP Financial.
(b) CATEGORY 1 EARN-OUT PAYMENT. Within [***] after the Closing Date,
Buyers shall pay to the Partners as the Partners shall instruct in writing at
least five (5) days prior to the date payment is to be sent, in cash in
immediately available funds, an amount equal to the Category 1 Earn-Out Payment.
Subject to the limitations set forth herein, the "Category 1 Earn-Out Payment"
shall be an amount equal to [***].
(c) CATEGORY 2 EARN-OUT PAYMENT. Within [***] after the Closing Date,
Buyers shall pay to the Partners as the Partners shall instruct in writing at
least five (5) days prior to the date payment is to be sent, in cash in
immediately available funds, an amount equal to the Category 2 Earn-Out Payment.
Subject to the limitations set forth herein, the "Category 2 Earn-Out Payment"
shall be an amount equal to [***].
(d) Notwithstanding the obligations of Buyers under Sections 1.2(b) and
1.2(c) to make any payments to the Partners, in no event shall the sum of all
amounts paid under Sections 1.2(b) and 1.2(c) exceed $9,000,000.
(e) For the purposes of this Section 1.2, the terms set forth below
shall have the following meanings:
(i) "CATEGORY 1 CUSTOMERS" shall mean the following corporations
and manufacturers that are customers of the Partnership or the Buyers
including authorized dealers of such corporations and manufacturers (other
than those authorized dealers set forth on Schedule 1.2(e)(i) provided by
Buyers to the Partners on the date hereof; PROVIDED, HOWEVER, that any
authorized [***] to be delivered by the Partners to the Buyers on or prior
to the Closing Date shall be deemed to be [***].
(ii) "CATEGORY 1 REVENUE" shall be an amount equal to [***]. For
the purposes of calculating Category 1 Revenue, Revenue shall [***]. For
the purpose of illustration, Category 1 Revenue shall [***].
(iii) "CATEGORY 2 CUSTOMERS" shall mean the [***] to be provided
by the Partnership to the Buyers on the date hereof.
(iv) "CATEGORY 2 REVENUE" shall mean an amount equal to [***]
after the Closing Date and ending on [***] after the Closing Date, [***].
For the purposes of determining Category 2 Revenue, Revenue shall [***].
*** CONFIDENTIAL TREATMENT REQUESTED
2.
(v) "REVENUE" shall mean, with respect to a given time period,
the [***] after the Closing Date; [***].
(f) Within [***], Buyers will supply the Partners with calculations of
the total amount of Category 1 Revenue and Category 2 Revenue generated during
[***], following the Closing Date. In addition, upon the payment by Buyers of
any amounts due to the Partners under Sections 1.2(b) or 1.2(c), Buyers shall
provide therewith a report (each an "EARN OUT REPORT") showing the calculation
of such payment in sufficient detail to permit the Partners to confirm the
accuracy thereof. The Partners shall have [***] from the date on which an Earn
Out Report is delivered to review such report (the "REVIEW PERIOD"). If the
Partners dispute the calculations shown in the Earn Out Report they may, on or
prior to the last day of the Review Period, deliver a notice to the Buyers
setting forth, in reasonable detail, the basis for such dispute (the "DISPUTE
NOTICE"). If a Dispute Notice is not delivered on or prior to the last day of
the Review Period, the Earn Out Report shall be deemed accepted by the Partners
with respect to all such calculations and such calculations shall be final,
binding and conclusive on them for all purposes of this Agreement. Following
Buyers' receipt of a Dispute Notice, the Partners and the Buyers shall attempt
to resolve any dispute relating to the calculations in the Earn Out Report. If
all such disputes are not so resolved within [***] after Buyers' receipt of the
Dispute Notice, the Partners and Buyers shall jointly retain a Big Five
accounting firm as may be agreed to (the "EARN OUT ARBITRATOR") to resolve such
disputes and the Partners and Buyers shall each pay one-half of the fees and
expenses of the Earn Out Arbitrator. The determination of the Earn Out
Arbitrator shall be final, binding and conclusive on the Partners and Buyers.
The Earn Out Arbitrator shall, prior to being permitted access to any records of
the Partnership, the Buyers or their respective Affiliates, agree in writing
that all information subject to review under this Section 1.2(f) shall be deemed
confidential information and shall not be disclosed to any Person.
1.3 PURCHASE PRICE ADJUSTMENT AMOUNT. On the Closing Date, the Partners
shall prepare and deliver to the Buyers an estimated unaudited balance sheet of
the Partnership, dated as of the Closing Date (the "CLOSING BALANCE SHEET"). The
Closing Balance Sheet shall be prepared in accordance with GAAP applied on a
basis consistent with the preparation of the Financial Statements (as defined in
Section 2.3). In the event [***] being referred to herein as the "PURCHASE PRICE
ADJUSTMENT AMOUNT"), the Closing Cash Payment due to the Partners under Section
1.2(a) shall be reduced by the Purchase Price Adjustment Amount, as set forth in
Section 1.2(a).
1.4 SALES TAXES. The Buyers shall each bear and pay, and shall reimburse
the Partners for, any and all sales taxes, use taxes, transfer taxes,
documentary charges, recording fees or similar taxes, charges, fees or expenses
that may become payable as a direct result of the sale of the Partnership
Interests to the Buyers or as a direct result of any of the other Transactions.
1.5 CLOSING. The closing of the sale and purchase of the Partnership
Interests to Buyers (the "CLOSING") shall take place at the offices of Xxxxxx
Godward LLP at 0000 Xxxxxxxxx Xxxxx, Xxxxx 0000, in Xxx Xxxxx, Xxxxxxxxxx 00000,
at 10:00 a.m. on the later to occur of (i) November 15, 1999, or (ii) the second
business day following the satisfaction or waiver of all of the conditions to
the obligations of the Parties to consummate the transactions contemplated
hereby set forth in Sections 6 and 7 of this Agreement, or at such other time or
on such other date as the Parties shall mutually
*** CONFIDENTIAL TREATMENT REQUESTED
3.
agree upon in writing (the day on which the Closing takes place being referred
to herein as the "CLOSING DATE"). The documents, instruments and other items to
be delivered at the Closing shall be as set forth in Section 10 hereof.
2. REPRESENTATIONS AND WARRANTIES OF THE PARTNERS.
The Partners, jointly and severally, represent and warrant to and for the
benefit of Buyers, as follows:
2.1 DUE ORGANIZATION. Each Partner is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation. The Partnership is a general partnership founded under and
governed by the laws of the State of New York. The Partnership has never
conducted any business under or otherwise used, for any purpose or in any
jurisdiction, any fictitious name, assumed name, trade name or other name, other
than the name "Computer Care." The Partners have all of the necessary corporate
power and authority to transfer, assign, convey, sell and deliver the
Partnership Interests. The Partnership is not required to be qualified,
authorized, registered or licensed to do business as a foreign partnership in
any jurisdiction (domestic or foreign) other than those jurisdictions identified
on Schedule 2.1; and except as disclosed on Schedule 2.1, the Partnership is in
good standing as a foreign partnership in each of the jurisdictions so
identified.
2.2 OWNERSHIP INTEREST. Schedule 2.2 sets forth the complete and accurate
percentage ownership interest in the Partnership that each Partner holds. The
Partners, collectively, own and have good, valid and marketable title to all of
the Partnership Interests, free and clear of any Encumbrances. The Partners are,
and will be as of the Closing Date, the sole owners of the Partnership Interests
and shall have all powers and approvals necessary or appropriate to transfer the
Partnership Interests to the Buyers. Except with respect to this Agreement, the
Partners have never assigned, conveyed, transferred or encumbered or agreed to
assign, convey, transfer or encumber in any manner any of the Partnership
Interests.
2.3 FINANCIAL STATEMENTS. The Partners have delivered to Buyers the
following financial statements of the Partnership (collectively, the "FINANCIAL
STATEMENTS"): (a) the unaudited balance sheets of the Partnership for the fiscal
years ended June 30, 1997, June 30, 1998 and June 30, 1999, and the related
statements of income for the years then ended, together with the notes thereto;
and (b) the unaudited balance sheet of the Partnership as of September 30, 1999
(the "UNAUDITED INTERIM BALANCE SHEET"), and the related statements of income
for the three-month period then ended. The Financial Statements are accurate and
complete in all material respects, are consistent with the books and records of
the Partnership, have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis throughout the periods
covered (except as set forth on Schedule 2.3), and present fairly the financial
position of the Partnership as of the respective dates thereof and the results
of operations of the Partnership for the periods covered thereby. The Closing
Balance Sheet, when delivered to the Buyers on the Closing Date, will have been
prepared in accordance with GAAP applied on a basis consistent with the
preparation of the Financial Statements (except as set forth on Schedule 2.3
hereto), and will present fairly the financial position of the Partnership as of
the Closing Date.
4.
2.4 ABSENCE OF CHANGES. Except as set forth on Schedule 2.4, since June 30,
1999, there has not been, individually or in the aggregate, any material adverse
change in and no event has occurred that might individually or in the aggregate
have a material adverse effect on the business, financial condition, operations,
net income or results of operations of the Partnership or of the Partnership
Interests or Assets. Without limiting the generality of the foregoing, since
June 30, 1999:
(a) except in the Ordinary Course of Business, there has not been any
material loss, damage or destruction to, or any interruption in the use of,
any of the Assets used in the conduct or operations of the Partnership and
its business (whether or not covered by insurance);
(b) except in the Ordinary Course of Business, the Partnership and the
Partners (with respect to the Partnership) have not purchased or otherwise
acquired any asset from any other Person, except for supplies acquired by
the Partnership in the Ordinary Course of Business;
(c) except in the Ordinary Course of Business, the Partnership has not
sold or otherwise transferred or encumbered, or leased or licensed, any of
the Assets to any other Person;
(d) the Partners have not sold, assigned or otherwise transferred or
encumbered any of the Partnership Interests to any other Person;
(e) except in the Ordinary Course of Business, the Partnership has not
established any reserve with respect to indebtedness of the Partnership;
(f) the Partnership has not made any loan or advance to any other
Person, or incurred or guaranteed any indebtedness or obligation of any
other Person;
(g) the Partnership has not (i) established or adopted any employee
pension benefit plan (as defined in Section 3(2) of ERISA) or other
employee benefit plan;
(h) except as disclosed on Schedule 2.4, no Contract by which the
Partnership, the Partnership Interests or any of the Assets is or was
subject or bound, or under which the Partnership has or had any rights or
interest, has been amended or terminated, which amendment or termination
(taking into account any and all Contracts amended or terminated) would
reasonably be expected to have a material adverse effect on the business,
financial condition, operations, net income or results of operations of the
Partnership or of the Partnership Interests or Assets;
(i) the Partnership has not incurred, assumed or otherwise become
subject to any Liability, other than accounts payable (of the type required
to be reflected as current liabilities in the "liabilities" column of a
balance sheet prepared in accordance with GAAP) incurred by the Partnership
in bona fide transactions entered into in the Ordinary Course of Business
and consistent with past practice;
5.
(j) the Partnership has not discharged any Encumbrance or discharged or
paid any indebtedness or other Liability, except for accounts payable that
(i) are reflected as current liabilities in the "liabilities" column of the
Financial Statements or have been incurred by the Partnership since June
30, 1999, in bona fide transactions entered into in the Ordinary Course of
Business and consistent with past practice, and (ii) have been discharged
or paid in the Ordinary Course of Business and consistent with past
practice;
(k) the Partnership has not forgiven any debt or otherwise released or
waived any right or claim;
(l) the Partnership has not changed any of its methods of accounting or
accounting practices in any respect;
(m) the Partnership has not commenced or settled any Proceeding;
(n) except as set forth on Schedule 2.4, the Partnership has not
entered into any transaction or taken any other action outside the Ordinary
Course of Business;
(o) there has not been any material adverse change in and no event has
occurred that might have a material adverse effect on the business,
condition, assets, liabilities, operations, financial performance or net
income of the Partnership; and
(p) neither the Partnership nor the Partners on behalf of the
Partnership have agreed, committed or offered (in writing or otherwise) to
take any of the actions referred to in clauses "(b)" through "(o)" above.
2.5 TITLE TO ASSETS.
(a) The Partnership has good, valid and marketable title to, or in the
case of leased or subleased Assets valid and subsistence leasehold interests in,
all of the Assets. Schedule 2.5 hereto lists all of the Assets of the
Partnership with an individual book value in excess of $10,000. Other than as
set forth in Schedule 2.5, no assets or property used in the operation of the
business of the Partnership is owned by or in the name of any Partner or any
other Person. Schedule 2.5 identifies all of the Assets that are being leased or
licensed to the Partnership. Except as set forth in Schedule 2.5, all of the
Assets are owned by or leased or licensed to the Partnership free and clear of
any Encumbrances.
(b) "ASSETS" shall mean and include all of the properties, rights,
interests and assets (whether tangible or intangible, real or personal, or
mixed) of the Partnership (wherever located, whether or not required to be
reflected on any balance sheet or financial statement) including any assets
acquired by the Partnership during the Pre-Closing Period, in each case that are
used in the conduct of the business of the Partnership. Without limiting the
generality of the foregoing, the definition of "Assets" shall include:
(i) except for the Retained Receivables, all rights to collect
from customers (and to retain) all fees and other amounts payable,
6.
or that may become payable, to the Partnership with respect to services
that relate, directly or indirectly, to the Partnership and its business;
(ii) all equipment, materials, prototypes, tools, supplies,
furniture, fixtures, improvements and other tangible assets of the
Partnership or used in connection with the Partnership and its business;
(iii) all advertising and promotional materials possessed by the
Partnership that relate to the Partnership and its business;
(iv) all rights and interests to the Partnership Proprietary
Assets (defined in Section 2.10(a));
(v) all claims (including claims for past infringement of
Proprietary Assets) and causes of action of the Partnership against other
Persons (regardless of whether or not such claims and causes of action have
been asserted by the Partnership), and all rights of indemnity, warranty
rights, rights of contribution, rights to refunds, rights of reimbursement
and other rights of recovery possessed by the Partnership (regardless of
whether such rights are currently exercisable) to the extent any of such
relate, directly or indirectly, to the Partnership and its business;
(vi) all rights and interests of the Partnership under and to the
Partnership Contracts;
(vii) all rights and interests of the Partnership in and to the
(a) bank accounts set forth on Schedule 2.6; and
(viii) all books, records, files and data (whether tangible or
intangible, electronic or paper form, or mixed) of the Partnership (other
than those books, records, files and data that relate solely to the
accounts receivable of the Partnership as of the Closing Date), including,
all data and other information relating, directly or indirectly, to the
customer base and customers being serviced in conducting the business of
the Partnership.
Notwithstanding anything to the contrary contained herein, Buyers
acknowledge and agree that the Assets do not include any of ADP's data
collection assets located in Florence, KY or any other assets located outside of
the Partnership's Amityville, NY location.
7.
2.6 BANK ACCOUNTS. Schedule 2.6 accurately sets forth, for each account
maintained by or for the benefit of the Partnership at any bank or other
financial institution: (a) the name and location of the institution at which
such account is maintained; (b) the name in which such account is maintained and
the account number of such account; (c) a description of such account and the
purpose for which such account is used; and (d) the names of all individuals
authorized to draw on or make withdrawals from such account. No Person has any
rights of setoff or similar rights against any such account.
2.7 CUSTOMERS; DISTRIBUTORS. Schedule 2.7 accurately identifies, and
provides an accurate and complete breakdown of the revenues received from, each
customer or other Person that (together which such customer's or other Person's
Affiliates) accounted for more than $50,000 of the gross revenues of the
Partnership in fiscal years ended June 30, 1997, June 30, 1998, and June 30,
1999. Except as set forth in Schedule 2.7, neither the Partnership nor any
Partner has received any written notice or other written communication, and none
of the individuals listed in Section 2.27 hereto has received any other
information, indicating that any customer or other Person identified or required
to be identified in Schedule 2.7 would reasonably be expected to cease dealing
with the Partnership or the Partners (with respect to the Partnership), or would
reasonably be expected to otherwise reduce the volume of business transacted by
such Person with the Partnership below current levels. Since June 30, 1999 the
Partnership has not instituted any official rebate or chargeback program that is
not otherwise reflected in the Financial Statements or which could reasonably be
expected to have a material adverse effect on the business of the Partnership.
2.8 EQUIPMENT, ETC. Except as set forth in Schedule 2.8, all equipment,
materials, prototypes, tools, supplies, vehicles, furniture, fixtures,
improvements and other tangible assets owned by the Partnership or used in the
conduct of the business of the Partnership (i) is structurally sound, free of
defects and deficiencies and in good condition and repair (ordinary wear and
tear excepted); and (ii) complies in all material respects with, and is being
operated and otherwise used in full compliance with, all applicable Legal
Requirements.
2.9 REAL PROPERTY. The Partnership does not own any real property.
Schedule 2.9 sets forth all real property leasehold interests of the
Partnership.
2.10 PARTNERSHIP PROPRIETARY ASSETS.
(a) Schedule 2.10 identifies and provides a brief description of
all Proprietary Assets owned by or licensed to the Partnership and that relate
to the Partnership or used in the conduct of the business of the Partnership
(collectively, the "PARTNERSHIP PROPRIETARY ASSETS"). The Partnership has good
and valid title to all of the Partnership Proprietary Assets identified in
Schedule 2.10, free and clear of any Encumbrances, and has a valid right to use
and otherwise exploit, and to license others to use and otherwise exploit, all
Partnership Proprietary Assets identified in Schedule 2.10. The Partnership and
the Partners have taken all reasonable measures and precautions necessary to
protect and maintain the confidentiality and secrecy of all Partnership
Proprietary Assets (except Partnership Proprietary Assets whose value would be
unimpaired by public disclosure) and otherwise to maintain and protect the value
of all Partnership Proprietary Assets. All trademarks, service marks and
copyrights that are registered with any Governmental Body and held by the
Partnership,
8.
or used in the business of the Partnership are valid and subsisting. None of the
Partnership Proprietary Assets infringe or conflict with any Proprietary Asset
owned or used by any other Person. The Partnership is not infringing,
misappropriating or making any unlawful use of, and the Partnership has not at
any time since the time any Partner or any Affiliate of any Partner acquired,
owned or otherwise held any interest in the Partnership (or any predecessor of
the Partnership), infringed, misappropriated or made any unlawful use of, or
received any notice or other communication of any actual, alleged, possible or
potential infringement, misappropriation or unlawful use of, any Proprietary
Asset owned or used by any other Person. To the Knowledge of the Partners, no
other Person is infringing, misappropriating or making any unlawful use of, and
no Proprietary Asset owned or used by any other Person infringes or conflicts
with, any Partnership Proprietary Asset.
(b) The Partnership has not licensed any of the Partnership
Proprietary Assets to any Person on an exclusive basis. The Partnership has not
entered into any covenant not to compete or Contract limiting its ability to
exploit fully any of the Partnership Proprietary Assets or to transact business
in any market or geographical area or with any Person. The Partnership has, and
Buyers will acquire at the Closing, the right to use the name "Computer Care"
and variations thereof used on the Closing Date.
(c) Other than as specifically set forth in the Contracts of the
Partnership which have been delivered to the Buyers, the Partnership has not
entered into and is not bound by any Contract under which any Person has the
right to distribute or license any Partnership Proprietary Asset.
2.11 CONTRACTS. Schedule 2.11 sets forth all Contracts of the Partnership
that are material to the operations of the Partnership business (the
"PARTNERSHIP CONTRACTS"). The Partners have delivered to the Buyers accurate and
complete copies of all Partnership Contracts, including all amendments thereto.
Each Partnership Contract is valid and in full force and effect and is
enforceable in accordance with its terms. The Partnership has not violated or
breached any Partnership Contract in any manner that could give any third party
the right to terminate such Partnership Contract or that could result in the
incurrence of any Damages under such Partnership Contract. The Partnership has
not declared or committed any default under any Partnership Contract and no
event has occurred, and to the Knowledge of the Partners and the Partnership, no
circumstance or condition exists, that would be reasonably expected to (with or
without notice or lapse of time) (A) result in a violation or breach of any of
the provisions of any Partnership Contract, (B) give any Person the right to
declare a default or exercise any remedy under any Partnership Contract, (C)
give any Person the right to accelerate the maturity or performance of any
Partnership Contract, or (D) give any Person the right to cancel, terminate or
modify any Partnership Contract. Neither the Partnership nor any Partner has
received any written notice or other communication regarding any actual,
alleged, possible or potential violation or breach of, or default under, any
Partnership Contract, and neither the Partnership nor the Partners have waived
any right under any Partnership Contract. The performance of the Partnership
Contracts by the Buyers in accordance with their terms will not result in any
violation of or failure to comply with any Legal Requirement. Schedule 2.11 sets
forth a list of all Partnership Contracts which require the Partnership or any
9.
Partner to obtain the consent of any third party to effectuate the Transactions
contemplated herein (the "REQUIRED CONSENTS").
2.12 LIABILITIES. Except for those Liabilities set forth on Schedule 2.12,
the Partnership has no Liabilities, except for (i) liabilities identified as
such in the "liabilities" column of the Unaudited Interim Balance Sheet, (ii)
liabilities not reflected on the Unaudited Interim Balance Sheet that were
incurred in the Ordinary Course of Business, and (iii) obligations under (A)
Partnership Contracts, and (B) other Contracts of the Partnership which
obligations, in the aggregate, are not material, in each case of clauses (A) and
(B) to the extent that the existence of such obligations is ascertainable solely
by reference to such contracts (the "CONTRACT LIABILITIES"). As of the Closing,
the Partnership will have no Liabilities except for (i) Liabilities identified
as such in the "liabilities" column of the Closing Balance Sheet (as defined in
Section 1.3), (ii) liabilities not reflected on the Closing Balance Sheet that
were incurred in the Ordinary Course of Business and that in the aggregate do
not exceed $2,000, and (iii) the Contract Liabilities.
2.13 COMPLIANCE WITH LEGAL REQUIREMENTS. The Partnership is in full
compliance and to the Partners' Knowledge has at all times since the time any
Partner or any Affiliate of any Partner acquired, owned or otherwise held any
interest in the Partnership (or any predecessor of the Partnership), been in
full compliance with each Legal Requirement that is or was applicable to it or
to the conduct of the business of the Partnership or the ownership or use of any
of the Assets. No event has occurred, and no condition or circumstance exists,
that would reasonably be expected to (with or without notice or lapse of time)
constitute or result in a violation by the Partnership of, or a failure on the
part of the Partnership to comply with, any Legal Requirement; and the
Partnership and Partners have not received, at any time since the time any
Partner or any Affiliate of any Partner acquired, owned or otherwise held any
interest in the Partnership (or any predecessor of the Partnership), any written
notice or other communication from any Governmental Body or any other Person
regarding any actual, alleged or potential violation of, or failure to comply
with, any Legal Requirement. No Governmental Body has initiated any legal action
that (i) may have an adverse effect on the Partnership Interests, the Assets or
the business, financial condition, operations, results of operations or
Liabilities, of the Partnership or on the ability of the Partners or the
Partnership to comply with or perform any covenant or obligation under any of
the Transactional Agreements, or (ii) may have the effect of preventing,
delaying, making illegal or otherwise interfering with any of the Transactions.
2.14 GOVERNMENTAL AUTHORIZATIONS. The Partnership is in full compliance
with all of the terms and requirements of any Governmental Authorization; and no
event has occurred, and no condition or circumstance exists, that would
reasonably be expected to (with or without notice or lapse of time): (A)
constitute or result in a violation of or a failure to comply with any term or
requirement of any Governmental Authorization, or (B) result in the revocation,
withdrawal, suspension, cancellation, termination or modification of any
Governmental Authorization. Since the time any Partner or any Affiliate of any
Partner acquired, owned or otherwise held any interest in the Partnership (or
any predecessor of the Partnership), the Partnership has not received any
written notice or other communication from any Governmental Body or any other
Person regarding (A) any actual, alleged or potential violation of or failure to
comply with any term or requirement of any Governmental Authorization, or (B)
any actual, proposed, possible or potential revocation,
10.
withdrawal, suspension, cancellation, termination or modification of any
Governmental Authorization. Each application required to be filed for renewal of
any Governmental Authorization and each notice or filing required to have been
given or made with respect to such Governmental Authorizations by the
Partnership has been duly made or given on a timely basis with the appropriate
Governmental Body. The Partnership has all Governmental Authorizations necessary
(i) to enable the Partnership to conduct the Partnership business in the manner
in which such business is currently being conducted, (ii) to permit the
Partnership to own and use the Assets of the Partnership in the manner in which
they are currently owned and used, and (iii) to permit the Partners to own the
Partnership Interests.
2.15 TAX MATTERS. Except as set forth on Schedule 2.15, all Tax Returns
required to be filed by the Partnership have been accurately prepared in all
material respects and have been timely filed. All Taxes required to have been
paid, or claimed by any Governmental Body to be payable, or for which the
Partnership may be held liable as a result of the operations of the Partnership
business, has been duly paid in full on a timely basis. Any Tax required to have
been withheld by the Partnership as a result of the operations of the
Partnership business, including but not limited to, Taxes arising as a result of
payments (or amounts allocable) to foreign persons or entities or to employees
of the Partnership, has been duly withheld, and (to the extent required) each
such Tax has been paid to the appropriate Governmental Body. The Partners have
delivered to Buyers accurate and complete copies of all audit reports and
similar documents relating to any Partnership Tax Returns filed since July 1,
1996. Except as set forth in Schedule 2.15 hereto, no claim, Liability or other
Proceeding is pending or is threatened against the Partnership or any Partner
(specifically with respect to the Partnership) as a result of the operations of
the Partnership business. There are no unsatisfied Liabilities for Taxes
(including liabilities for interest, additions to tax and penalties thereon and
related expenses) with respect to any notice of deficiency or similar document
received by any Partner for Taxes arising from the operations of the Partnership
business. There are no Tax liens upon any of the property of the Partnership
except for liens for current Taxes not yet due and payable. None of the
Partnership's payroll, property or receipts or other factors used in a
particular state's apportionment or allocation formula as reflected on the
Partnership's income tax or informational returns results in an apportionment or
allocation of business income to any state other than those states set forth on
Schedule 2.15, and the Partnership has no non-business income that is allocated,
apportioned or otherwise sourced in any state other than those states set forth
on Schedule 2.15. There is no agreement, plan, arrangement or other Contract
covering any current or former employee or independent contractor of the
Partnership that, individually or collectively, could give rise directly or
indirectly to any amount that would not be deductible pursuant to Section 280G
or Section 162 of the Code. The Partnership is not a party to or bound by any
tax indemnity agreement, tax sharing agreement, tax allocation agreement or
similar Contract. The Partners have delivered to Buyers accurate and complete
copies of all the Partnership's federal income Tax Returns that have been filed
on behalf of or with respect to the Partnership for the Tax periods ended June
30, 1997 and June 30, 1998. The information contained in such Tax Returns or
informational returns is accurate and complete in all material respects. Neither
the Partnership nor the Buyers shall incur or become subject to any sales or use
tax Liability with respect to transactions of the Partnership occurring prior to
the Closing.
11.
2.16 EMPLOYEE AND LABOR MATTERS.
(a) Schedule 2.16(a) sets forth with respect to each employee of the
Partnership (including any employee who is on a leave of absence or on layoff
status) (the "EMPLOYEE") the name of such Employee and his or her job title.
(b) Except as set forth in Schedule 2.16(b), the Partnership is not a
party to or bound by any employment agreement or any union contract, collective
bargaining agreement or similar Contract.
(c) Except as set forth in Schedule 2.16(c), the employment of each of
the Employees is terminable by the Partnership at will. The Partners have
delivered to Buyers accurate and complete copies of all employee manuals and
handbooks, disclosure materials, policy statements and other materials relating
to the employment of the Employees.
(d) To the Knowledge of the Partners:
(i) except as disclosed on Schedule 2.16 (d), no Employee listed on
Schedule 2.16(d) intends to terminate his or her employment;
(ii) no Employee listed on Schedule 2.16(d) has received an offer to
join a business that may be competitive with the Partnership business; and
(iii) no Employee is a party to or is bound by any confidentiality
agreement, non-competition agreement or other Contract with any Person
(other than the Partnership or Automatic Data Processing, Inc.) that may
have an adverse effect on (A) the performance by such Employee of any of
his or her duties or responsibilities as an Employee, or (B) the
Partnership business or operations.
(e) The Partnership is not engaged and since January 1, 1995 has not
been engaged in any unfair labor practice of any nature. Since January 1, 1995,
there has not been any slowdown, work stoppage, labor dispute or union
organizing activity, or any similar activity or dispute, affecting the
Partnership or any of the Employees. There is not now pending, and no Person has
threatened to commence, any such slowdown, work stoppage, labor dispute or union
organizing activity or any similar activity or dispute. No event has occurred,
and no condition or circumstance exists, that might give rise to or provide a
basis for the commencement of any such slowdown, work stoppage, labor dispute or
union organizing activity or any similar activity or dispute. The Partnership
and the Partners have no knowledge of any facts that would cause it to believe
that the consummation of the Transactions will have an adverse effect on the
Partnership's relationship with its Employees.
(f) There are no pending, or to the Knowledge of the Partners or
Partnership, threatened Claims or Liabilities against the Partnership which have
been brought by any Employee, including any former Employee, and to the
Knowledge of the Partners and the Partnership, no such employee intends to bring
any Claim or Liability.
12.
(g) Schedule 2.16(g) identifies each Employee who is not fully
available to perform work because of disability or other leave and sets forth
the basis of such leave and the anticipated date of return to full service.
2.17 BENEFIT PLANS; ERISA.
(a) Schedule 2.17 accurately sets forth each salary, bonus, deferred
compensation, incentive compensation, commission compensation, fringe benefit or
any other form of compensation, stock purchase, stock option, severance pay,
termination pay, hospitalization, medical, life or other insurance, supplemental
unemployment benefits, profit-sharing, pension or retirement plan, program or
agreement, or any other employee benefit of any kind and nature (collectively,
the "PLANS") sponsored, maintained, contributed to or required to be contributed
to by the Partnership for the benefit of any Employee.
(b) The Partnership maintains, sponsors or contributes only to those
employee welfare benefit plans (as defined in Section 3(1) of ERISA, whether or
not excluded from coverage under specific Titles or Merger Subtitles of ERISA)
for the benefit of Employees which are described on Schedule 2.16(a) (the
"WELFARE PLANS"), none of which is a multiemployer plan (within the meaning of
Section 3(37) of ERISA).
(c) The Buyers will not incur or be subject to any Liabilities with
respect to any Person covered by, or otherwise in connection with, the Plans or
the Welfare Plans.
(d) The Partnership has never been a member of an "affiliated service
group" within the meaning of Section 414(m) of the Code. The Partnership has
never made a complete or partial withdrawal from a multi-employer plan, as such
term is defined in Section 3(37) of ERISA, resulting in "withdrawal liability,"
as such term is defined in Section 4201 of ERISA (without regard to subsequent
reduction or waiver of such liability under either Section 4207 or 4208 of
ERISA).
(e) The Partnership does not have any plan or commitment to create any
additional Welfare Plan or any other Plan, or to modify or change any existing
Welfare Plan or any other Plan (other than to comply with applicable law) in a
manner that would affect any Employee.
(f) No Welfare Plan provides death, medical or health benefits
(whether or not insured) with respect to any current or former Employee after
any such Employee's termination of service (other than (i) benefit coverage
mandated by applicable law, including coverage provided pursuant to Section
4980B of the Code, (ii) deferred compensation benefits accrued as liabilities on
the Unaudited Interim Balance Sheet, and (iii) benefits the full cost of which
are borne by current or former Employees (or the Employees' beneficiaries)).
(g) With respect to each of the Welfare Plans constituting a group
health plan within the meaning of Section 4980B(g)(2) of the Code, the
provisions of Section 4980B of the Code ("COBRA") have been complied with in all
respects.
13.
(h) Each of the Plans intended to be qualified under Section 401(a) of
the Code has received a favorable determination from the Internal Revenue
Service, and the Partners are not aware of any reason why any such determination
letter should be revoked.
(i) All Plans shall terminate with respect to the Partnership on the
Closing Date.
2.18 INSURANCE. Schedule 2.18 sets forth each insurance policy maintained
by or at the expense of, or for the direct or indirect benefit of, the
Partnership (collectively, the "POLICIES"). Each of the Policies is valid,
enforceable and in full force and effect and no notice has been received by any
Partner or the Partnership regarding any cancellation or invalidation, in whole
or in part, of any such Policies. Except as set forth in Schedule 2.18, there is
no pending claim with respect to the Partnership under or based upon any of the
Policies, and no event has occurred, and no condition or circumstance exists,
that would be reasonably expected to (with or without notice or lapse of time)
give rise to or serve as a basis for any such claim. All Polices shall terminate
as of the Closing Date.
2.19 PROCEEDINGS; ORDERS. There is no pending Proceeding, and to the
Knowledge of the Partners and Partnership, no Person has threatened to commence
any Proceeding: (i) that involves the Partnership or that otherwise relates to
or might affect the Partnership Interests, the Partnership business or any of
the Assets (whether or not the Partnership or any Partner is named as a party
thereto); or (ii) that challenges, or that may have the effect of preventing,
delaying, making illegal or otherwise interfering with, any of the Transactions.
No event has occurred, and no claim, dispute or other condition or circumstance
exists, that would reasonably be expected to give rise to or serve as a basis
for the commencement of any such Proceeding. To the Knowledge of the Partners
and the Partnership, since the time any Partner or any Affiliate of any Partner
acquired, owned or otherwise held any interest in the Partnership (or any
predecessor of the Partnership), no Proceeding has ever been commenced by or
against the Partnership. There is no Order to which the Partnership, the
Partners (with respect to operating the Partnership), or any of the Partnership
Interests or the Assets, is subject; and none of the Partners is subject to any
Order that relates to the Partnership business or to any of the Partnership
Interests or Assets. To the Knowledge of the Partners and the Partnership, there
is no proposed Order that, if issued or otherwise put into effect, (i) may have
an adverse effect on the Partnership business, the Partnership Interests, the
Assets, the Liabilities or on the ability of any Partner or the Partnership to
comply with or perform any covenant or obligation under any of the Transactional
Agreements, or (ii) may have the effect of preventing, delaying, making illegal
or otherwise interfering with any of the Transactions.
2.20 AUTHORITY; BINDING NATURE OF AGREEMENTS. The Partnership and each of
the Partners have the absolute and unrestricted right, power and authority to
enter into and to perform its obligations under each of the Transactional
Agreements to which it is or may become a party; and the execution, delivery and
performance by each of the Partners of the Transactional Agreements to which it
is or may become a party has been duly authorized by all necessary action on the
part of each Partner and its respective shareholders, board of directors and
officers. This Agreement constitutes the legal, valid and binding obligation of
the Partners, enforceable against each Partner in accordance with its terms
subject to (i) laws of general application relating to bankruptcy, insolvency
and the relief of debtors and (ii) rules of law governing specific performance,
injunctive relief and other equitable remedies. Upon the execution of each of
the other Transactional
14.
Agreements at the Closing, each of such other Transactional Agreements to which
each Partner is a party will constitute the legal, valid and binding
obligation of the Partner and will be enforceable against the Partner in
accordance with their terms, subject to (i) laws of general application relating
to bankruptcy, insolvency and the relief of debtors and (ii) rules of law
governing specific performance, injunctive relief and other equitable remedies.
2.21 NON-CONTRAVENTION. Neither the execution and delivery of any of the
Transactional Agreements, nor the consummation or performance of any of the
Transactions, will:
(a) except as disclosed on Schedule 2.21, contravene, conflict with or
result in a violation of or, except with respect to the HSR Act, give any
Governmental Body or other Person the right to challenge any of the
Transactions or to exercise any remedy or obtain any relief under, any
Legal Requirement or any Order to which any of the Partners or the
Partnership, the Partnership business, the Partnership Interests or any
Asset, is subject;
(b) contravene, conflict with or result in a violation of any of the
terms or requirements of, or give any Governmental Body the right to
revoke, withdraw, suspend, cancel, terminate or modify, any Governmental
Authorization that is to be included in the Partnership Interests or
Assets, or is held by the Partnership or any Employee;
(c) except as set forth on Schedule 2.21, contravene, conflict with or
result in violation or breach of or default under any Partnership Contact,
or give any Person the right to (i) declare a default or exercise any
remedy under any Partnership Contract, (ii) accelerate the maturity or
performance of any Partnership Contract, or (iii) cancel, terminate or
modify any Partnership Contract; or
(d) result in the imposition or creation of any Encumbrance upon or
with respect to any of the Partnership Interests or Assets.
2.22 SOLVENCY. The sale of the Partnership Interests by the Partners will
not render either Partner insolvent as contemplated under Section 6901 of the
Code and Section 3439 of the California Civil Code.
2.23 ENVIRONMENTAL MATTERS.
(a) Since the time any Partner or any Affiliate of any Partner
acquired, owned or otherwise held any interest in the Partnership (or any
predecessor of the Partnership), neither the Partners nor the Partnership has
ever received any notice or other communication (in writing or otherwise)
relating to the business of the Partnership from any Governmental Body or other
Person regarding any actual, alleged, possible or potential Liability arising
from or relating to the presence, generation, manufacture, production,
transportation, importation, use, treatment, refinement, processing, handling,
storage, discharge, release, emission or disposal of any Hazardous Material.
Since the time any Partner or any Affiliate of any Partner acquired, owned or
otherwise held any interest in the Partnership (or any predecessor of the
Partnership), no Person has ever commenced or threatened to commence any
contribution action or other Proceeding against the Partnership in connection
with any such actual, alleged, possible or potential Liability.
15.
2.24 BROKERS. Neither the Partnership nor any Partner has agreed or become
obligated to pay, or has taken any action that might result in any Person
claiming to be entitled to receive, any brokerage commission, finder's fee or
similar commission or fee in connection with any of the Transactions.
2.25 FULL DISCLOSURE. None of the Transactional Agreements contain or will
contain any untrue statement of a material fact; and none of the Transactional
Agreements omit or will omit to state any material fact necessary to make any of
the representations, warranties or other statements or information contained
therein not misleading. All of the information set forth in the Schedules to
this Agreement is accurate and complete.
2.26 KNOWLEDGE As used in this Section 2 and in Section 4.4(c), the term
"Knowledge" or "knowledge" of or "Known to" the Partners or the Partnership or
terms of similar meaning shall mean the actual knowledge of Xxx Xxxxxxx, Xxxx
Xxxxxx, Xxx Xxxxxx, Xxxxxxx Xxxxxx, Xxxx Xxxx, Xxxxxx Xxxx and Xxx Xxxxxxx, and
any knowledge such individuals would reasonably be expected to possess in the
proper performance of their respective duties for the Partners or the
Partnership.
3. REPRESENTATIONS AND WARRANTIES OF BUYERS.
The Buyers, jointly and severally, represent and warrant to and for the
benefit of the Partners, as follows:
3.1 DUE ORGANIZATION. Each Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware. The
Buyers have all necessary corporate power and authority to purchase the
Partnership Interests.
3.2 PROCEEDINGS; ORDERS. There is no pending Proceeding, and to the
Knowledge of the Buyers, no Person has threatened to commence any Proceeding
against Buyers that challenges, or that may have the effect of preventing,
delaying, making illegal or otherwise interfering with, any of the Transactions.
To the Knowledge of the Buyers, there is no proposed Order that, if issued or
otherwise put into effect, (i) may have a material adverse effect on the ability
of Buyers to comply with or perform any covenant or obligation under any of the
Transactional Agreements, or (ii) may have the effect of preventing, delaying,
making illegal or otherwise interfering with any of the Transactions.
3.3 AUTHORITY; BINDING NATURE OF AGREEMENTS. Each Buyer has the absolute
and unrestricted right, power and authority to enter into and perform its
obligations under this Agreement, and the execution and delivery of this
Agreement by Buyers has been duly authorized by all necessary action on the part
of each Buyer and their respective board of directors. Upon the execution and
delivery, this Agreement will constitute the legal, valid and binding
obligations of the Buyers, enforceable against Buyers in accordance with its
terms, subject to (i) laws of general application relating to bankruptcy,
insolvency and the relief of debtors, and (ii) rules of law governing specific
performance, injunctive relief and other equitable remedies.
16.
3.4 FULL DISCLOSURE. None of the Transactional Agreements contain or will
contain any untrue statement of fact; and none of the Transactional Agreements
omit or will omit to state any fact necessary to make any of the
representations, warranties or other statements or information contained therein
not misleading. All of the information set forth in the Schedules to this
Agreement, and all other information that has been furnished by Buyers to the
Partners is accurate and complete.
3.5 KNOWLEDGE. As used in this Section 3, the phrase "to the Knowledge of
the Buyers" shall mean the actual knowledge of Xxx Xxxxxx, Les Silver, Xxx
Xxxxx, Xxx Xxxxxxxxxx or Xxxxx Xxxxxxxx, and any knowledge such individuals
would reasonably be expected to possess in the proper performance of their
respective duties for the Buyers.
4. COVENANTS OF THE PARTIES.
4.1 ACCESS AND INVESTIGATION. The Partners shall cause and ensure that, at
all times from the date of this Agreement through the Closing Date (the
"PRE-CLOSING PERIOD"): (a) the Partners and their Representatives provide Buyers
and their Representatives with free and complete access to the Partners, and to
all existing assets, books, records, Partnership Tax Returns, work papers and
other documents and information (and provide copies thereto to Buyers) relating
to the Partnership Interests, Assets, the Partnership and its business; and (b)
the Partners and their Representatives shall provide Buyers and their
Representatives with such additional financial, operating and other data and
information relating to the Partnership and the Partnership business as Buyers
may request in good faith. All review of such documents of the Partnership shall
be conducted during normal business hours and with reasonable notice to the
Partners. Notwithstanding the foregoing, Buyers agree that they shall have no
right to visit the physical operations of the Partnership or to communicate with
any employee or customer of the Partnership or third party to any Partnership
Contract without the prior consent of the Partners. Prior to the Closing, the
Partners and the Buyers will cooperate in good faith in facilitating the
introduction to, and subsequent communication by, the Buyers with
representatives of [***].
4.2 OPERATION OF BUSINESS. Unless the Buyers give prior written consent to
the Partners, the Partnership shall, and the Partners shall cause and ensure
that, during the Pre-Closing Period:
(a) Except for the transfer of the Retained Receivables to the
Partners, neither the Partnership nor any Partner, directly or indirectly,
sells or otherwise transfers, or agrees, commits or offers (in writing or
otherwise) to sell or otherwise transfer, any of the Partnership Interests
or, except in the Ordinary Course of Business, Assets, or any interests in
or rights relating thereto;
(b) neither the Partnership nor any Partner permits, or agrees,
commits or offers (in writing or otherwise) to permit, the Partnership
Interests or any of the Assets to become subject, directly or indirectly,
to any Encumbrance or to be bound by any Contract;
(c) the Partnership conducts its operations exclusively in the
Ordinary Course of Business and in all material respects in the same manner
as such operations have been conducted prior to the date of this Agreement
and does not take any action outside the Ordinary Course of Business;
*** CONFIDENTIAL TREATMENT REQUESTED
17.
(d) the Partnership (i) preserves intact its current business
organization, and use its best efforts to (ii) maintain relations and
goodwill with all suppliers, customers, landlords, creditors, licensors,
licensees, Employees, independent contractors and other Persons having
business relationships with the Partnership;
(e) the Partnership keeps in full force and effect all the Policies
and maintains adequate liability protection that is standard and customary
in the industry;
(f) the Partnership does not effect or become a party to any
Acquisition Transaction and the Buyers are notified immediately in writing
of any inquiry, proposal or offer from any Person relating to any
Acquisition Transaction;
(g) the Partnership and the Partners use their best efforts to cause
the Partnership to operate profitably and to maximize its revenues and net
income, in a manner consistent with the Partnership's long term objectives
for its business;
(h) except with respect to the Proceeding described on Schedule 2.15
hereto, the Partnership does not commence or settle any Proceeding without
the written consent of the Buyers;
(i) the Partnership does not enter into any transaction or take any
other action of the type referred to in Section 2.4;
(j) the Partnership and the Partners do not enter into any transaction
or take any other action that would reasonably be expected to cause or
constitute a breach of any representation or warranty made by the Partners
in this Agreement; and
(k) the Partnership and the Partners do not agree, commit or offer (in
writing or otherwise) to take any of the actions described in clauses "(a)"
through "(j)" of this Section 4.2.
4.3 FILINGS AND CONSENTS. The Parties shall cause and ensure that: (a) as
soon as possible after the date of this Agreement, the Parties file with the
appropriate Governmental Bodies the notification form required to be filed by
the Parties under the HSR Act with respect to the Transactions, together with a
request for early termination of the applicable waiting period; and (b) all
Required Consents (other than with respect to Mitsubishi) required to be
obtained from any third party in order to consummate the Transactions are made,
given and obtained on a timely basis.
4.4 NOTIFICATION; UPDATES TO THE SCHEDULES.
(a) During the Pre-Closing Period, each Party shall promptly notify
the other Parties in writing of: (i) the discovery of any event, condition, fact
or circumstance that occurred or existed on or prior to the date of this
Agreement and that caused or constitutes a breach of any representation or
warranty made by the Parties in this Agreement; (ii) any event, condition, fact
or circumstance that occurs, arises or exists after the date of this Agreement
and that would cause or constitute a breach of any representation or warranty
made by the Parties in this Agreement if
18.
(1) such representation or warranty had been made as of the time of the
occurrence, existence or discovery of such event, condition, fact or
circumstance, or (2) such event, condition, fact or circumstance had occurred,
arisen or existed on or prior to the date of this Agreement; (iii) any breach of
any covenant or obligation of any Party; and (iv) any event, condition, fact or
circumstance that would reasonably be expected to make the timely satisfaction
of any condition set forth in Section 6 or Section 7 impossible or unlikely.
(b) If any event, condition, fact or circumstance that is required to
be disclosed pursuant to this Section 4.4 requires any change in the Schedules
to this Agreement to make such Schedules true, complete and accurate, or if any
such event, condition, fact or circumstance would require such a change assuming
the Schedules were dated as of the date of the occurrence, existence or
discovery of such event, condition, fact or circumstance, then the Party
originally providing the information for any such Schedule shall promptly
deliver to the other Party an update to such Schedules specifying such change.
(c) No notice provided pursuant to Section 4.4(a) and no update to the
Schedules provided pursuant to Section 4.4(b) shall be deemed to supplement or
amend the Schedules for the purpose of (i) determining whether any condition set
forth in Section 6 or Section 7 has been satisfied, or (ii) determining the
accuracy of any representation or warranty made by any of the Parties in this
Agreement; PROVIDED, HOWEVER, that, except with respect to any such update to
the Schedules after the date hereof that relates to or arises out of any event,
fact, circumstance or condition Known to the Partnership or the Partners prior
to the date hereof, by consummating the Transactions (i) the non-supplementing
parties shall be deemed to have waived any such inaccuracy in the representation
or warranty and the failure to satisfy such closing condition and (ii) the
updated Schedule shall be deemed to have been amended for purposes of Section 9
hereunder by such update.
4.5 NO NEGOTIATION. The Partners shall ensure that, during the Pre-Closing
Period, neither the Partnership nor any Partner, nor any Representative of any
Partner or of the Partnership, directly or indirectly: (a) solicits or
encourages the initiation of any inquiry, proposal or offer from any Person
(other than Buyers) relating to any Acquisition Transaction; (b) participates in
any discussions or negotiations with, or provides any information to, any Person
(other than Buyers) relating to any proposed Acquisition Transaction; or (c)
considers the merits of any unsolicited inquiry, proposal or offer from any
Person (other than Buyers) relating to any Acquisition Transaction.
4.6 CONFIDENTIALITY. The Parties agree that, during the Pre-Closing Period
and after the Closing: (a) no Party shall issue or disseminate any press release
or other publicity or otherwise make any disclosure of any nature (to any
supplier, customer, landlord, creditor, employee, or to any other Person)
regarding any of the Transactions or the existence or terms of this Agreement
without the written consent of the other Parties, except to the extent such
Party is required by applicable law to make any such disclosure, and (b) if a
Party is required by applicable law to make any disclosure regarding the
Transactions, such Party uses reasonable efforts to advise the other Parties, at
least three (3) days before making such disclosure.
19.
4.7 BEST EFFORTS. The Parties agree that, during the Pre-Closing Period,
each Party shall use their best efforts to cause the conditions set forth in
Section 6 and Section 7 to be satisfied on a timely basis. The Partners
acknowledge that Buyers intend to issue a press release as promptly as
practicable after the execution of this Agreement and shall make all public
filings (including the filing of a Current Report on Form 8-K with the
Securities and Exchange Commission) reasonably deemed necessary by Buyer in
connection with the transactions contemplated hereby. Buyers agree to allow the
Partners to review any such press release prior to its issuance.
5. ADDITIONAL AGREEMENTS OF THE PARTIES.
5.1 FURTHER ACTIONS. From and after the Closing Date, the Partners shall
cooperate with Buyers and Buyers' Affiliates and Representatives, and shall
execute and deliver and cause the Partnership to execute and deliver such
documents and take such other actions as Buyers may reasonably request, for the
purpose of evidencing the Transactions and putting Buyers in possession and
control of all of the Partnership Interests.
5.2 ACCOUNTS RECEIVABLE.
(a) All accounts receivable of the Partnership existing on the Closing
Date (the "RETAINED RECEIVABLES") shall, immediately prior to the Closing, be
transferred to and shall be the property of, the Partners. "Accounts receivable"
shall mean all rights to receive payment for work completed prior to the Closing
Date by the Partnership for a customer whether or not a xxxx, invoice or other
evidence of the completion of such work exists as of the Closing Date and
nothing in this Agreement shall prevent the Partners from billing any customer
of the Partnership after the Closing Date with respect to any Retained
Receivable. At the Closing, the Partners shall provide the Buyers with a
detailed list of each individual account receivable contained within the
Retained Receivables in order to assist Buyer in identifying amounts that may be
received by Buyer in respect of the Retained Receivables. Buyers shall promptly
remit to the Partners, in accordance with the procedures set forth below, any
payments received by the Buyers that are made in respect of the Retained
Receivables; PROVIDED, however that in no event shall Buyer or the Partnership
have any obligation to engage in any collection effort in respect of the
Retained Receivables and neither Buyers nor the Partnership shall have any
liability to the Partners for the failure of any person or entity to satisfy any
Retained Receivable.
(b) The Partners and the Buyers acknowledge that, after the Closing,
the Partnership may receive payments from customers that relate to the Retained
Receivables or that relate to the accounts receivable of the Partnership for
services rendered to such customers by the Partnership on or after the Closing
Date (the "PARTNERSHIP RECEIVABLES"). Accordingly, the Parties agree that,
during the six-month period after the Closing, all payments received by the
Partnership shall be applied in accordance with the following procedures:
(i) Any payments received by the Partnership that (1) bear an
invoice number related to the Retained Receivables, (2) are for the exact
amount of a Partnership invoice issued prior to the Closing Date, (3)
bear an invoice number related to the Partnership Receivables but are
for an exact amount of a Partnership invoice issued prior to
20.
the Closing Date, or (4) are for an amount that does not correspond to the
exact amount of a Partnership Receivable or a Retained Receivable, shall,
in each case, be deemed to be payment in respect of a Retained
Receivable and shall, as soon as reasonably practicable, be remitted to
the Partners and applied to reduce the balance of the Retained
Receivables; PROVIDED, HOWEVER, that if the Partnership receives a payment
from a customer that has no balance reflected on the Retained Receivables
(whether such payment satisfies the criteria under any of clauses (1)
through (4) of this Section 5.2(b)), but owes a balance with respect to a
Partnership Receivable, such payment shall be retained by the Partnership
and applied to the reduction of the Partnership Receivables; and
(ii) Any payments received by the Partnership that (1) bear an
invoice number related to the Partnership Receivables (except as set forth
in subsection (b)(i)(3) above) or, (2) are for the exact amount of a
Partnership invoice issued on or after the Closing Date, shall, in each
case, be deemed to be payment in respect of a Partnership Receivable and
shall be retained by the Partnership and applied to reduce the balance of
the Partnership Receivables; PROVIDED, HOWEVER, that if the Partnership
receives a payment from a customer that has no balance reflected on the
Partnership Receivables but still owes a balance with respect to the
Retained Receivables, such payment shall be remitted to the Partners as
soon as practicable.
(c) Notwithstanding anything to the contrary contained in Section
5.2(b) above, the Partners agree to keep an accounting of all monies that are
applied to the Partnership Receivables in accordance with Section 5.2(b) above
but with respect to which the client informs either Partner that the money
should instead be applied to the Retained Receivables (the "DISPUTED
RECEIVABLES"). If, on the one year anniversary of the Closing Date, the Disputed
Receivables total more than $50,000 Buyers agree to pay the Partners an amount
equal to 50% of the Disputed Receivables.
(d) In order to facilitate the foregoing allocation of payments on
accounts receivable, (i) the Partners shall, no later than five (5) days after
the end of each calendar month, provide the Partnership and the Buyers with a
monthly report reflecting, on a customer-by-customer basis, the current balance
of the Retained Receivables (the "RETAINED RECEIVABLES REPORT"), and (ii) the
Buyers shall, no later than fifteen (15) days after the end of each calendar
month, provide the Partners with a monthly report reflecting, on a
customer-by-customer basis for each customer of the Partnership existing on the
Closing Date, all payments received and their application to the Partnership
Receivables or their payment to the Partners. Notwithstanding the foregoing, in
the event that the Partnership (i) receives any payment from a customer that no
longer has a balance reflected in the Retained Receivables Report, or (ii)
receives a payment that is in excess of the balance reflected in the Retained
Receivables Report, then, in each case, the Partnership shall be entitled to
retain such payment (or the excess of such payment, as the case may be) and
apply such payment to the Partnership Receivables. All payments received by the
Partnership after the date that is six months after the Closing, shall be
retained by the Partnership and applied to reduce the balance of the Partnership
Receivables and the Partnership shall have no further obligation to the Partners
with respect to the Retained Receivables
5.3 NON-COMPETE.
21.
(a) GENERAL. In order to induce Buyers to purchase the Partnership
Interests pursuant to this Agreement, each Partner hereby covenants and agrees
that during the three year period following the Closing Date it, and its
Affiliates, will not compete in the following lines of business with respect to
motor vehicle dealers in the United States of America or Canada (collectively,
the "COMPUTER CARE BUSINESS"):
(i) traditional service reminder postal mailings;
(ii) telephone follow up calls relating to service reminder letters;
(iii) CSI telephone calls; and
(iv) fully outsourced telephone based service appointment
scheduling/upsell services;
PROVIDED, HOWEVER, that in no event shall either Partner or any of their
Affiliates (an "ADP PARTY") be precluded in any way from providing, (1) any
service or product provided by them on the date hereof even if such service or
product competes with the Computer Care Business, (2) any technology based
products even if such products compete with the Compute Care Business, and (3)
any products or services offered over the Internet or any other means of
electronic commerce even if such products or services compete with the Computer
Care Business.
(b) BUYER PROVISION OF E-SERVICE REMINDER SERVICES. Notwithstanding
anything to the contrary in the foregoing, in the event any ADP Party wishes to
sell E-Service Reminders to automobile dealers in the United States of America
or Canada, it will not enter into any agreement with any third party relating to
the provision to an ADP Party of support services (other than data collection)
relating to the provision of E-Service Reminders ( the "E-SERVICE REMINDER
SERVICES") without first presenting to Buyers (i) the specifications for the
E-Service Reminder Services (the "E-SERVICE REMINDER SPECIFICATIONS") and (ii)
allowing the Buyers to present a written offer (a "BUYER OFFER") specifying in
reasonable detail the terms of their proposed provision of E-Service Reminder
Services, including but not limited to, the nature of their E-Service Reminder
Services and the price for such services. Buyers agree that they will present
each Buyer Offer within 10 business days of the receipt of an ADP Party's
E-Service Reminder Specifications. The ADP Parties agree that if a Buyer Offer
meets all of the E-Service Reminder Specifications and is equal or superior (in
the ADP Party's reasonable judgment taking into account price, timing and all
other terms of the Buyer Offer and any third party offers) to any third party
offer to provide E-Service Reminder Services, then the ADP Party will accept the
Buyer Offer. If an ADP Party wishes to provide E-Service Reminder Services from
its own resources or from an Affiliate of such ADP Party, such ADP Party shall
first provide Buyers with the E-Service Reminder Specifications relevant to such
Services. Buyers shall then have five (5) business days to provide such ADP
Party with a Buyer Offer. ADP shall then have five (5) business days from its
receipt of such Buyer Offer to either accept the Buyer Offer or to let the
Buyers know the price they need to match in order to provide the E-Service
Reminder Services to such ADP Party. If such ADP Party gives the Buyers a price
they must match, Buyers shall then have five (5) business days to agree to such
price (and agree to meet all of the E-Service Reminder Specifications).
Otherwise, such ADP Party may provide the E-Service Reminder Services from its
own resources or from an Affiliate. The ADP Parties agree that, in light of the
significant ongoing relationships between the parties contemplated by this
Agreement and the other Transactional Agreements, the ADP Parties will use
commercially
22
reasonable efforts to ensure that Buyers and the Partnership are provided the
same or better opportunity to make a proposal for E-Service Reminder Services
as is given to any other proposed supplier of such services.
(c) LICENSE TO LETTER LOGIC. Buyers acknowledge and agree that ADP,
Inc. shall retain a copy of the source code for the software used by the
Partnership to generate Traditional Service Reminder Postal Mailings (the
"Letter Logic") after the Closing Date. The Partnership hereby grants to ADP,
Inc. a perpetual, worldwide, non-exclusive and non-transferable (except to
another ADP Party or any entity providing E-Service Reminder Services to any ADP
Party) license to the Letter Logic (the "License"); PROVIDED, HOWEVER, that ADP,
Inc. agrees not to use its License to the Letter Logic in commerce unless and
until an ADP Party selects, in accordance with subsection (b) above, another
entity to provide E-Service Reminder Services or an ADP Party decides, in
accordance with the terms of subsection (b) above, to provide E-Service Reminder
Services from its own resources; and, provided further, that ADP, Inc. shall pay
the Partnership a one-time only license fee of [***] for the License prior to
the use of the Letter Logic in commerce.
(d) MOST FAVORED CUSTOMER. The Buyers agree that if at any time in the
future they or any of their Affiliates provide E-Service Reminder Services (or
any application substantially similar services) to any other entity with fee or
other arrangements more advantageous than those provided to the Partners or any
of their Affiliates (taking into account volume considerations), then, at the
option of the Partners, the terms of the provision of E-Service Reminder
Services by the Buyers to the Partners or their Affiliates will be changed to
match the provisions contained in the other agreement.
(e) TERMINATION. Notwithstanding anything to the contrary contained
herein, the provisions of this Section 5.3 shall terminate in the event that
Buyers fail to make the Category 1 Earn-Out Payment or Category 2 Earn-Out
Payment, if any, when due and payable in accordance with Sections 1.2(b), 1.2(c)
and 1.2(f). Such termination shall occur on the 5th business day after the
Partners deliver to the Buyers written notice (the "SECTION 5.3 TERMINATION
NOTICE") that the Partners intend to terminate their obligations under Section
5.3 as a result of nonpayment of any amounts owed to the Partners under Sections
1.2(b) and 1.2(c); PROVIDED, HOWEVER, that no such termination shall occur if
the Buyers pay to the Partners all amounts then owed (which amounts are not in
dispute) under Sections 1.2(b) and 1.2(c) within five business days of the
receipt of the Section 5.3 Termination Notice.
(f) DEFINITIONS. For the purposes of this Section 5.3, the following
terms shall have the following meanings:
"E-SERVICE REMINDERS" shall mean an e-mail or other electronic
communication over the Internet to a motor vehicle owner that reminds the owner
that his/her vehicle is due for manufacturer or dealer recommended service based
on (i) that vehicle's estimated odometer reading , (ii) the time since that
vehicle's last manufacturer or dealer recommended service or (iii) other
manufacturer mandated criteria.
*** CONFIDENTIAL TREATMENT REQUESTED
23.
"TRADITIONAL SERVICE REMINDER POSTAL MAILINGS" shall mean a paper
based letter correspondence to a motor vehicle owner that reminds the owner that
his/her vehicle is due for manufacturer or dealer recommended service based on
(i) that vehicle's estimated odometer reading , (ii) the time since that
vehicle's last manufacturer or dealer recommended service or (iii) other
manufacturer mandated criteria.
"CSI TELEPHONE CALLS" shall mean telephone calls and other
communications related to collecting survey information made to consumers on
behalf of a manufacturer or dealer and made in connection with Traditional
service reminder postal mailings or other manufacturer mandated criteria.
5.4 EMPLOYEES.
(a) The Partners each covenant and agree that for a period of one (1)
year following the Closing Date, neither it nor any of its Affiliates or their
respective Representatives shall, without the prior written consent of the
Buyers, hire or solicit (directly or indirectly) for employment any person
listed on Schedule 2.16(d) hereto; PROVIDED, HOWEVER, that with respect to [***]
such covenant not to hire or solicit for employment shall terminate five
business days after the Closing Date. For a period of 120 days after the Closing
Date, none of the Partners or their Affiliates or Representatives shall, without
the prior written consent of the Buyers, hire or solicit (directly or
indirectly) for employment any person listed on Schedule 5.4(a).
(b) On the day after the Closing Date, the Buyers shall provide notice
to all persons listed on Schedule 2.16(a) hereto who (i) are not also listed on
Schedule 2.16 (d) hereto and (ii) are employed by the Partnership on the Closing
Date that their employment with the Partnership will be terminated effective on
the date that is 60 days from the day after the Closing Date. Such notice shall
be in compliance with all applicable Legal Requirements, including without
limitation the Worker Adjustment and Retraining Notification Act of 1988, as
amended (the "WARN Act"). In the event that the Buyers terminate the employment
of any person listed on Schedule 2.16(d), the Buyers shall provide such persons
with any notice required to be provided under applicable Legal Requirements,
including without limitation the WARN Act and make any payments, if any,
required under the WARN Act to such persons. Any such payments made to any
persons set forth on Schedule 2.16(d) shall not be subject to reimbursement by
the Partners. Buyers agree to make on a timely basis all filings required to be
made by the WARN Act with any Governmental Body.
(c) Subject to Section 5.4(d), all costs related to the employment of
the employees of the Partnership ("Partnership Employees") on and after the
Closing Date (including without limitation costs of salaries, vacation time and
other benefits) whether such costs are the result of or arise out of the WARN
Act, any other Legal Requirements, contractual obligations or otherwise shall be
paid by Buyers.
(d) The Partners shall provide to the Buyers on the Closing Date a
list of the severance benefits associated with each Partnership Employee as of
the Closing Date (each a "Severance Amount"). The Buyers covenant and agree with
respect to any Partnership Employee not listed on Schedule 2.16(d) terminated
for any reason by the Partnership (or any successor to the
*** CONFIDENTIAL TREATMENT REQUESTED
24.
Partnership) prior to the sixth month anniversary of the Closing Date that it
will pay each such Partnership Employee, in addition to any amount it may owe
such employee (including costs associated with benefits accrued since the
Closing Date or any retention bonus the Buyers or the Partnership (or its
successor) has agree to pay such Partnership Employee) for days worked after the
Closing Date, an amount equal to the greater of (i) the amount required to be
paid, if any, by the WARN Act or (ii) such Partnership Employee's Severance
Amount (collectively, the "WARN/Severance Costs"). Notwithstanding the
foregoing, in the event Buyer is required to pay a terminated Partnership
Employee the Severance Amount applicable to such employee pursuant to clause
(ii) of the preceding sentence, then Buyers agree to pay such employee that
amount only upon receipt from such employee of a general release of claims
against the Partnership, the Buyers, the Partners and their respective
Affiliates and Representatives (a "Release"). Such Release shall be in a form
reasonably acceptable to the Buyers and the Partners. If any such terminated
employee refuses to execute and deliver a Release, then Buyers shall only be
obligated to pay such employees any amounts required to be paid to such employee
under the WARN Act. For purposes of this Section 5.4 any requirement that a
Partnership Employee relocate from Amityville, NY in order to remain employed by
the Partnership (or any successor), and such Partnership Employee's refusal to
do so, shall be considered as a termination of such Partnership Employee. Within
fifteen (15) business days of the end of each regular pay period of the
Partnership (or any successor), the Buyers shall submit to the Partners in
writing a notice of accounting of all WARN/Severance Costs incurred during such
pay period. Within five (5) business days of the receipt of such notice, the
Partners shall reimburse the Buyers for any and all WARN/Severance Costs;
PROVIDED, HOWEVER, that the Partners shall not be obligated to reimburse the
Buyers for any Severance Amounts paid to any terminated employee from which the
Buyers did not receive a Release.
(e) To the extent permitted under the applicable employee Benefit
Plans of the Buyers, (i) all Partnership Employees shall be entitled to receive
all of the benefits provided by the standard benefit plans of the Buyers,
subject to the terms and conditions of such benefit plans, that are available to
employees of a similar job and classification, title and pay grade, and (ii)
each Partnership Employee shall be eligible to receive medical benefits under
the medical plans of the Buyers, which medical plans shall not exclude coverage
for pre-existing medical conditions. The Closing Date shall be the applicable
date for purposes of determining benefit credit under the pension plans of the
Buyers. For purposes of calculating service dates with respect to benefits under
the Buyers' dental plan, pension plan (as to vesting requirements only) or
401(k) plan (as to vesting requirements only), and with respect to vacation,
sick leave, insurance and all other employee benefits offered by the Buyers or
their Affiliates to its employees, the length of service of each Partnership
Employee shall be counted as if such Partnership Employee set forth on Schedule
2.16(d) or any Partnership Employee set forth on Schedule 5.4(a) that accepts
employment with the Buyers or the Partnership at a location specified by the
Buyers or the Partnership had been an employee of the Buyers or such Affiliate
during such time such Partnership Employee was employed by the Partnership or
either Partner prior to the Closing Date; PROVIDED, HOWEVER, that the Buyers
shall not be responsible for any unused vacation or sick time that has accrued
prior to the Closing Date.
5.5 USE OF ADP NAME AND LOGO. The Buyers hereby agree that the Assets
of the Partnership do not include the ADP name, logo, trademark or tradename and
Buyers shall use their commercially reasonable efforts to cease all use of the
ADP name, logo, trademark and tradename
25.
by the Partnership and its Affiliates as soon as practicable after the Closing
Date, and in any event by no later than the two (2) month anniversary of the
Closing Date. The cessation of the use of the ADP name, logo, trademark and
tradename shall include, without limitation, (i) all use on any documentation of
the Partnership, including letterhead, (ii) any use of such on the telephone
answering system, and (iii) any use of such on the signage for the premises used
by the Partnership.
5.6 USE OF COMPUTER CARE NAME AND LOGO. The Partners hereby agree that
the Assets of the Partnership include the name "Computer Care" and any logos,
trademark or tradenames associated therewith, and Partners shall use their
commercially reasonable efforts to cease all use of the Computer Care name,
logo, trademark and tradename by the Partners and their Affiliates as soon as
practicable after the Closing Date, and in any event by no later than the two
(2) month anniversary of the Closing Date. The cessation of the use of the
Computer Care name, logo, trademark and tradename shall include, without
limitation, (i) all use on any documentation of the Partners, including
letterhead, (ii) any use of such on the telephone answering system, and (iii)
any use of such on the signage for the premises used by the Partners.
5.7 MAIL. The Parties hereby agree that from and after the Closing Date,
Buyers will promptly forward to ADP all mail and other communications addressed
to ADP or the Partnership that do not relate to the Partnership or the
Partnership Interests, and, except with respect to mail relating to the Retained
Receivables, the Partners will promptly forward to Newgen all mail,
correspondence, documents and other communications received by either Partner on
and after the Closing Date that is addressed to the Partnership and that relates
to the Partnership or Partnership Interests.
5.8 TAX MATTERS.
(a) After the Closing, the Buyers shall notify the Partners in writing
within five (5) business days of the receipt by Buyers or the Partnership of any
notice of the commencement of any Tax audit or administrative or judicial
proceeding that would reasonably be expected to affect the Partners. Each such
notice shall include copies of such notice received from any taxing authority in
respect of any such asserted Tax liability. If (i) the Buyers fail to give the
Partners notice within five (5) business days of the receipt by Buyers or the
Partnership of any such notice of the commencement of any Tax audit or
administrative or judicial proceeding, and (ii) the Partners are precluded from
contesting an asserted Tax liability in both administrative and judicial forums
solely as the result of Buyers failure to provide the notice to the Partners
within five (5) business days of the receipt of such notice by the Buyers, then
the Partners shall not have any obligation to indemnify for any loss or damage
arising out of any resulting Tax liability.
(b) The Partners may direct, through counsel of their own choosing and
at their own expense, any audit, claim for refund and administrative or judicial
proceeding involving any asserted Tax liability with respect to which indemnity
may be sought under Section 9 (any such audits, claims for refund or proceedings
relating to an asserted Tax liability are referred to herein collectively as a
"CONTEST"). If the Partners elect to direct a Contest of an asserted Tax
liability, neither the Buyers nor the Partnership may settle or compromise any
asserted Tax liability without the consent of the Partners, which consent shall
not be unreasonably withheld.
26.
(c) The Partners and the Buyers will provide each other with such
cooperation and information as such parties reasonably may request in filing any
Tax Return, determining any liability for Taxes and participating in or
conducting any audit or other proceeding in respect of Taxes. Such cooperation
and information shall include providing copies of relevant Tax Returns or
portions thereof, together with accompanying schedules, related work papers and
documents. Each party shall retain all Tax Returns, schedules and work papers,
records and other documents in its possession relating to Tax matters of the
Partners and the Partnership for each taxable period until the expiration of the
statute of limitations. Any information obtained under this section shall be
kept confidential, except as may be otherwise necessary in connection with the
filing of Tax Returns or claims for refund or in conducting an audit or other
Proceeding.
5.9 POST-CLOSING AUDITED FINANCIAL STATEMENTS. The Partners agree to engage
the services of a Big Five accounting firm to provide the Buyers within 45 days
of the Closing Date with such audited financial statements (the "Audited
Financial Statements") of the Partnership (prepared in accordance with generally
accepted accounting principles) that are required to be filed by Buyers with a
Current Report on Form 8-K filed with the Securities and Exchange Commission
under the Securities Exchange Act of 1934, as amended, in connection with the
transactions contemplated by this Agreement. The Audited Financial Statements
shall not include the accounts receivable for the Partnership for the periods
covered thereby and the provision of the Audited Financial Statements shall not
be deemed to create, on their own, any breach by the Partners of any warranty,
representation or covenant under this Agreement. The Partners sole obligation
under this Section 5.9 shall be to engage such Big Five accounting firm to
prepare the Audited Financial Statements and to cooperate with such firm in
their preparation. The Partners make no representation or warranty whatsoever
with respect to the Audited Financial Statements or their contents. In addition,
notwithstanding anything to the contrary contained herein, in no event shall
either Partner be liable for any damages suffered by Buyers with respect to the
contents of the Audited Financial Statements or for any failure by such
accounting firm to provide such financial statements to Buyers. Subject to
Section 11.2(a), the Partners shall bear all fees, costs and expenses incurred
in connection with the preparation of the Audited Financial Statements.
5.10 DATA CONVERSION. The parties acknowledge and agree that certain of the
data being purchased by the Buyers in connection with the Transactions
contemplated by this Agreement [***] in providing customer retention and support
services to automobile manufacturers and dealers. Accordingly, the Partners
agree to use commercially reasonable efforts to timely convert the data mutually
identified by the parties to a format that is compatible with [***], if the
Partners are successful in their efforts, to provide such converted data to
Buyers after the Closing Date. Subject to Section 11.2(a), all fees, costs and
expenses incurred in connection with the conversion of any data to be provided
to the Buyers hereunder shall be borne solely by the Partners.
6. CONDITIONS PRECEDENT TO BUYERS' OBLIGATION TO CLOSE.
Buyers' obligation to purchase the Partnership Interests and the Assets and
to take the other actions required to be taken by Buyers at the Closing is
subject to the satisfaction, at or prior to the Closing, of each of the
following conditions (any of which may be waived by Buyers, in whole or in part,
in writing):
*** CONFIDENTIAL TREATMENT REQUESTED
27.
6.1 ACCURACY OF REPRESENTATIONS. The representations and warranties made by
the Partners in this Agreement shall have been accurate in all material respects
as of the date of this Agreement (without giving double effect to any
materiality qualifications, or any similar qualifications, contained in such
representations and warranties), and shall be accurate in all material respects
as of the Closing Date as if made on the Closing Date (without giving double
effect to any materiality qualifications, or any similar qualifications,
contained in such representations and warranties), except to the extent such
representations and warranties refer to a specific date, in which case they
shall be true and correct in all material respects as of such date, without
giving effect to any update to any Schedules hereto.
6.2 CLOSING DELIVERIES. Each of the documents and instruments required to
be delivered to the Buyers pursuant to Section 10.1 shall have been duly
executed and delivered to the Buyers.
6.3 PERFORMANCE OF COVENANTS. All of the covenants and obligations that the
Partners and the Partnership are required to comply with or to perform at or
prior to the Closing shall have been duly complied with and performed in all
material respects.
6.4 NO MATERIAL ADVERSE CHANGE. There shall have been no material adverse
change in the Partnership Interests, Assets or in the business, condition,
Liabilities, operations, financial performance, revenues or net income of the
Partnership since the date of this Agreement, and no event shall have occurred
and no condition or circumstance shall exist that could reasonably be expected
to give rise to any such material adverse change within one year from the date
of the occurrence of such event, condition or circumstance.
6.5 HSR ACT. The waiting period applicable to the consummation of the
Transactions under the HSR Act shall have expired or been terminated.
6.6 NO RESTRAINTS. No temporary restraining order, preliminary or permanent
injunction or other order preventing the consummation of the Transactions shall
have been issued by any court of competent jurisdiction and remain in effect,
and there shall not be any Legal Requirement enacted or deemed applicable to the
Transactions that makes consummation of the Transactions illegal.
6.7 NO LITIGATION. There shall not be pending or threatened any Proceeding
in which there is a reasonable possibility of an outcome that could have a
material adverse effect on the Partnership Interests, Assets or in the business,
condition, Liabilities, operations, financial performance, revenues or net
income of the Partnership, which would affect adversely the rights of the Buyers
or their Affiliates to own the Partnership Interests and operate the business of
the Partnership as such business is currently being conducted.
7. CONDITIONS PRECEDENT TO THE PARTNERS' OBLIGATION TO CLOSE.
The Partners' obligation to sell the Partnership Interests and to take the
other actions required to be taken by the Partners at the Closing is subject to
the satisfaction, at or prior to the Closing, of each of the following
conditions (any of which may be waived by the Partners, in whole or in part, in
writing):
28.
7.1 ACCURACY OF REPRESENTATIONS. The representations and warranties made by
Buyers in this Agreement shall have been accurate in all material respects as of
the date of this Agreement (without giving double effect to any materiality
qualifications, or any similar qualifications, contained in such representations
and warranties) and shall be accurate in all material respects as of the Closing
Date as if made on the Closing Date (without giving double effect to any
materiality qualifications, or any similar qualifications, contained in such
representations and warranties), except to the extent such representations and
warranties refer to a specific date, in which case they shall be true and
correct in all material respects as of such date, without giving effect to any
update to any Schedules hereto.
7.2 CLOSING DELIVERIES. Each of the documents and instruments required to
be delivered to the Partners, pursuant to Section 10.2 shall have been duly
executed and delivered to the Partners.
7.3 PERFORMANCE OF COVENANTS. All of the covenants and obligations that the
Buyers are required to comply with or to perform at or prior to the Closing
shall have been complied with and performed in all material respects.
7.4 NO MATERIAL ADVERSE CHANGE. There shall have been no material adverse
change in the business, condition or operations of the Buyers since the date of
this Agreement, and no event shall have occurred and no condition or
circumstance shall exist that could reasonably be expected to give rise to any
such material adverse change, which in each case, would affect the ability of
the Buyers to fulfill its obligations to the Partners contained in this
Agreement within one year from the date of the occurrence of such event,
condition or circumstance.
7.5 HSR ACT. The waiting period applicable to the consummation of the
Transactions under the HSR Act shall have expired or been terminated.
7.6 NO RESTRAINTS. No temporary restraining order, preliminary or permanent
injunction or other order preventing the consummation of the Transactions shall
have been issued by any court of competent jurisdiction and remain in effect,
and there shall not be any Legal Requirement enacted or deemed applicable to the
Transactions that makes consummation of the Transactions illegal.
7.7 NO LITIGATION. There shall not be pending or threatened any Proceeding
in which there is a reasonable possibility of an outcome that could have a
material adverse effect on the Buyers' ability to fulfill their obligations to
the Partners contained in this Agreement.
7.8 RETAINED RECEIVABLES. The Retained Receivables shall have been assigned
to ADP, Inc.
8. TERMINATION.
8.1 TERMINATION EVENTS. This Agreement may be terminated prior to the
Closing:
(a) by the Buyers if there is a material breach of any covenant or
obligation of the Partnership or the Partners contained in this Agreement and
such breach shall not have been cured within twenty (20) days after the delivery
of notice thereof to the Partners;
29.
(b) by the Partners if there is a material breach of any covenant or
obligation of the Buyers contained in this Agreement and such breach shall not
have been cured within twenty (20) days after the delivery of notice thereof to
Buyers;
(c) by either the Buyers or the Partners if the Closing has not taken
place on or before December 31, 1999 (other than as a result of any failure on
the part of the terminating Party to comply with or perform its covenants and
obligations under this Agreement);
(d) by the mutual written consent of the Parties;
(e) by either the Buyers or the Partners if a court of competent
jurisdiction or other Governmental Body shall have issued a final and
non-appealable order, decree or ruling, or shall have taken any other action,
having the effect of permanently restraining, enjoining or otherwise prohibiting
the consummation of the Transactions;
(f) by Buyers if the Partners' representations and warranties
contained in this Agreement shall have been materially inaccurate as of the date
of this Agreement or shall have become materially inaccurate as of any
subsequent date (as if made on such subsequent date); PROVIDED, HOWEVER, that
Buyers may not terminate this Agreement under this Section 8.1(f) on account of
an inaccuracy in the representations and warranties of the Partners that is
curable by the Partners unless the Partners fail to cure such inaccuracy or
breach within twenty (20) days after receiving written notice from Buyers of
such inaccuracy or breach; or
(g) by the Partners if any of Buyers' representations and warranties
contained in this Agreement shall have been materially inaccurate as of the date
of this Agreement or shall have become materially inaccurate as of any
subsequent date (as if made on such subsequent date); PROVIDED, HOWEVER, that
the Partners may not terminate this Agreement under this Section 8.1(g) on
account of an inaccuracy in Buyers' representations and warranties that is
curable by Buyers unless Buyers fail to cure such inaccuracy or breach within
twenty (20) days after receiving written notice from the Partners of such
inaccuracy or breach.
8.2 TERMINATION PROCEDURES. If any Party wishes to terminate this Agreement
pursuant to Section 8.1, such Party shall deliver to the other Parties a written
notice stating that such Party is terminating this Agreement and setting forth a
brief description of the basis on which such Party is terminating this
Agreement.
8.3 EFFECT OF TERMINATION. If this Agreement is terminated pursuant to
Section 8.1, all further obligations of the Parties under this Agreement shall
terminate; PROVIDED, HOWEVER, that: (a) no Party shall be relieved of any
obligation or other Liability arising from any willful breach by such Party of
any provision of this Agreement; (b) the Parties shall, in all events, remain
bound by and continue to be subject to the provisions set forth in Section 11;
and (c) the parties hereto shall, in all events, remain bound by and continue to
be subject to Section 4.6 and shall cause the Partnership to be bound by and
subject to Section 4.6.
8.4 NONEXCLUSIVITY OF TERMINATION RIGHTS. The termination rights provided
in Section 8.1 shall not be deemed to be exclusive. Accordingly, the exercise by
any Party of its right
30.
to terminate this Agreement pursuant to Section 8.1 shall not be deemed to be
an election of remedies and shall not be deemed to prejudice, or to constitute
or operate as a waiver of, any other right or remedy that such Party may be
entitled to exercise (whether under this Agreement, under any other Contract,
under any statute, rule or other Legal Requirement, at common law, in equity
or otherwise).
9. INDEMNIFICATION.
9.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS.
(a) The representations and warranties made by the Partners (including
the representations and warranties set forth in Section 2 and the
representations set forth in the Partners' Compliance Certificate) shall survive
the Closing and, other than the representations and warranties contained in
Section 2.15 of this Agreement, shall expire on the one (1) year anniversary of
the Closing Date; PROVIDED, HOWEVER, that if, at any time prior to the one (1)
year anniversary of the Closing Date, any Buyer Indemnitee (acting in good
faith) delivers to the Partners a written notice alleging the existence of an
inaccuracy in or a breach of any of the representations and warranties made by
the Partners (and setting forth in reasonable detail the basis for such Buyer
Indemnitee's belief that such an inaccuracy or breach may exist) and asserting a
claim for recovery under Section 9.2 based on such alleged inaccuracy or breach,
then the claim asserted in such notice shall survive the one (1) year
anniversary of the Closing Date until such time as such claim is fully and
finally resolved. The representations and warranties contained in Section 2.15
of this Agreement shall survive the Closing and shall expire on the 30th day
following the expiration of the applicable statute of limitations with respect
to any Tax matters in question (giving effect to any waiver, mitigation or
extension thereof).
(b) The representations and warranties made by the Buyers (including
the representations and warranties set forth in Section 3 and the
representations set forth in the Buyers' Compliance Certificate) shall survive
the Closing and shall expire on the one (1) year anniversary of the Closing
Date; PROVIDED, HOWEVER, that if, at any time prior to the one (1) year
anniversary of the Closing Date, any Seller Indemnitee (acting in good faith)
delivers to the Buyers a written notice alleging the existence of an inaccuracy
in or a breach of any of the representations and warranties made by the Buyers
(and setting forth in reasonable detail the basis for such Seller Indemnitee's
belief that such an inaccuracy or breach may exist) and asserting a claim for
recovery under Section 9.3 based on such alleged inaccuracy or breach, then the
claim asserted in such notice shall survive the one (1) year anniversary of the
Closing Date until such time as such claim is fully and finally resolved.
(c) The representations, warranties, covenants and obligations of the
Partners and Partnership, and the rights and remedies that may be exercised by
the Buyer Indemnitees, shall not be limited or otherwise affected by or as a
result of any information furnished to, or any investigation made by or
knowledge of, any of the Buyer Indemnitees or any of their Representatives.
(d) For purposes of this Agreement, each statement or other item of
information set forth in the disclosure Schedules or in any update to the
disclosure Schedules shall be deemed
31.
to be a representation and warranty made by the Party preparing and delivering
any such disclosure Schedule or in any update to a disclosure Schedule in this
Agreement.
9.2 INDEMNIFICATION BY THE PARTNERS.
(a) Subject to Section 9.1(a), the Partners, jointly and severally,
shall hold harmless and indemnify each of the Buyers, the Partnership and their
Affiliates and their respective directors, officers, employees, agents,
partners, Representatives and any successors and assigns of the foregoing
Persons (collectively, the "BUYER INDEMNITEES") from and against, and shall
compensate and reimburse each of the Buyer Indemnitees for, any Damages that are
suffered or incurred by any of the Buyer Indemnitees or to which any of the
Buyer Indemnitees may otherwise become subject at any time (regardless of
whether or not such Damages relate to any third-party claim) and which arise
from or as a result of, or are connected with:
(i) any inaccuracy in or breach of any representation or warranty
made by any Partner set forth in this Agreement, in the Partners'
Compliance Certificate or in any other Transactional Agreement;
(ii) any breach of any covenant or obligation of any Partner and
the Partnership (including the covenants set forth in Sections 4 and 5, but
specifically excluding the covenant contained in Section 5.9) contained in
this Agreement;
(iii) except as set forth in Section 1.4 hereto, any Taxes owed
by the Partners or the Partnership that relate to any period prior to or as
of the Closing Date; and
(iv) any Proceeding commenced by any Buyer Indemnitee for the
purpose of enforcing any of its rights under this Section 9.2.
(b) The Partners' indemnification obligation under this Section 9.2
shall be effective only when the aggregate amount of all Damages to the Buyer
Indemnitees equals or exceeds the threshold amount of $250,000, in which case
the Partners shall be liable for the entire amount of such Damages to the Buyer
Indemnitees and not merely the portion that exceeds $250,000; PROVIDED, that in
no event shall the Partners be liable under this Section 9.2 for Damages that in
the aggregate exceed an amount equal to the Purchase Price. No Buyer Indemnitee
shall be entitled to assert any right of indemnification under this Section 9.2
after the one (1) year anniversary of the Closing Date (other than claims for
indemnification for Damages suffered or incurred as a result of an inaccuracy or
breach of the representations and warranties contained in Section 2.15 of this
Agreement, which claims may be brought until the 30th day after the expiration
of the applicable statute of limitations (including any waiver, mitigation or
extension thereof)); PROVIDED, HOWEVER, that if there shall be any pending claim
for indemnification for which any Buyer Indemnitee has given notice to the
Partners on or prior to the one (1) anniversary of the Closing Date, such Buyer
Indemnitee shall continue to have the right to be indemnified with respect to
such matter.
32.
9.3 INDEMNIFICATION BY BUYERS.
(a) The Buyers, jointly and severally, shall hold harmless and
indemnify the Partners and their respective directors, officers, employees,
agents and representatives and any Person controlling or controlled by or under
common control with, the Partners and any successors and assigns of the
foregoing Persons (collectively, the "SELLER INDEMNITEES") from and against, and
shall compensate and reimburse each of the Seller Indemnitees for, any Damages
that are directly or indirectly suffered or incurred by any Seller Indemnitee or
to which any Seller Indemnitee may otherwise become subject at any time
(regardless of whether or not such Damages relate to any third-party claim) and
that arise directly or indirectly from or as a direct or indirect result of, or
are directly or indirectly connected with:
(i) any inaccuracy in or breach of any representation or warranty made
by any Buyer set forth in this Agreement, in the Buyers' Compliance
Certificate or in any other Transactional Agreement;
(ii) any breach of any covenant or obligation of any Buyer (including
the covenants set forth in Sections 4 and 5) contained in this Agreement;
(iii) any obligation arising under the Amityville Lease (as defined in
Section 10.1(i)) after the Closing Date; and
(iv) any Proceeding commenced by any Seller Indemnitee for the purpose
of enforcing any of its rights under this Section 9.3.
(b) The Buyers' indemnification obligation under this Section 9.3
shall be effective only when the aggregate amount of all Damages to the Seller
Indemnitees equals or exceeds the threshold amount of $250,000, in which case
Buyers shall be liable for the entire amount of such Damages to the Seller
Indemnitees and not merely the amount that exceeds $250,000; PROVIDED, that in
no event shall Buyers be liable under this Section 9.3 for Damages that in the
aggregate exceed an amount equal to the Purchase Price. No Seller Indemnitee
shall be entitled to assert any right of indemnification under this Section 9.3
after the one (1) year anniversary of the Closing Date; PROVIDED, HOWEVER, if
there shall be any pending claim for indemnification for which any Seller
Indemnitee has given notice to Buyers on or prior to the one (1) year
anniversary of the Closing Date, such Seller Indemnitee shall continue to have
the right to be indemnified with respect to such matter.
9.4 REMEDIES EXCLUSIVE. The indemnification remedies provided in this
Section 9 shall be the sole and exclusive remedy of any Buyer Indemnitee or
Seller Indemnitee, as the case may be, with respect to all claims described in
Sections 9.2 and 9.3 hereof, except in cases of fraud or willful
misrepresentation.
9.5 INDEMNIFICATION OF THIRD-PARTY CLAIMS. The obligations and liabilities
of any party to indemnify any other under this Section 9 with respect to Claims
relating to third parties shall be subject to the following terms and
conditions:
33.
(a) NOTICE AND DEFENSE. The party or parties to be indemnified
(whether one or more, the "INDEMNIFIED Party") will give the party from whom
indemnification is sought (the "INDEMNIFYING PARTY") written notice of any such
Claim, and the Indemnifying Party will undertake the defense thereof by counsel
reasonably satisfactory to the Indemnified Party; PROVIDED, HOWEVER, that the
Indemnified Party shall at all times also have the right to participate fully in
the defense at its own expense. Failure to give such notice shall not affect the
Indemnifying Party's duty or obligations under this Section 9, except to the
extent the Indemnifying Party is prejudiced thereby. So long as the Indemnifying
Party is defending any such Claim actively and in good faith, the Indemnified
Party shall not settle such Claim. The Indemnified Party shall make available to
the Indemnifying Party or its representatives all records and other materials
required by them and in the possession or under the control of the Indemnified
Party, for the use of the Indemnifying Party and its representatives in
defending any such Claim, and shall in other respects give reasonable
cooperation in such defense.
(b) FAILURE TO DEFEND. If the Indemnifying Party fails to defend such
Claim actively and in good faith within (10) ten days of receiving notice of
such Claim, the Indemnified Party will (upon further notice) have the right to
undertake the defense, compromise or settlement of such Claim or consent to the
entry of a judgment with respect to such Claim, on behalf of and for the account
and risk of the Indemnifying Party, and the Indemnifying Party shall thereafter
have no right to challenge the Indemnified Party's defense, compromise,
settlement or consent to judgment.
(C) INDEMNIFIED PARTY'S RIGHTS. Anything in this Section 9.5 to the
contrary notwithstanding, (i) if there is a reasonable probability that a Claim
may adversely affect Buyers other than as a result of money damages or other
money payments for such Claim, or if the amount of the Claim being asserted
exceeds (in Buyers' judgment) by more than $25,000 the insurance coverage which
has been admitted by the applicable insurance carriers, Buyers shall have the
right to defend, compromise or settle such Claim with legal counsel that is
reasonably acceptable to the Partners, and shall be entitled to recover from the
Partners for such amounts, (ii) the Indemnifying Party shall not, without the
written consent of the Indemnified Party, settle or compromise any Claim or
consent to the entry of any judgment which does not include as an unconditional
term thereof the giving by the claimant or the plaintiff to the Indemnified
Party of a release of the Indemnified Party from all liability in respect of
such Claim, and (iii) Buyers shall have the right to defend and settle breach of
warranty claims for products or services other than portions of such Claims
which seek recovery for personal injury. The parties shall cooperate with each
other with respect to any claim for which indemnification is sought hereunder
and to cooperate in the defense of any claim.
9.6 PAYMENT. The Indemnifying Party shall promptly pay the Indemnified
Party any amount due under this Section 9, which payment may be accomplished in
whole or in part, at the option of the Indemnified Party, by the Indemnified
Party setting off any amount owed to the Indemnifying Party by the Indemnified
Party. To the extent set-off is made by an Indemnified Party in satisfaction or
partial satisfaction of an indemnity obligation under this Section 9 that is
disputed
34.
by the Indemnifying Party, upon a subsequent determination by final judgment
not subject to appeal that all or a portion of such indemnity obligation was
not owed to the Indemnified Party, the Indemnified Party shall pay the
Indemnifying Party the amount which was set off and not owed together
with interest from the date of set-off until the date of such payment at an
annual rate equal to the average annual rate in effect as of the date of the
set-off, on those three maturities of United States Treasury obligations having
a remaining life, as of such date, closest to the period from the date of the
set-off to the date of such judgment. Upon judgment, determination, settlement
or compromise of any third party Claim, the Indemnifying Party shall pay
promptly on behalf of the Indemnified Party, and/or to the Indemnified Party in
reimbursement of any amount theretofore required to be paid by it, the amount so
determined by judgment, determination, settlement or compromise and all other
Claims of the Indemnified Party with respect thereto, unless in the case of a
judgment an appeal is made from the judgment. If the Indemnifying Party desires
to appeal from an adverse judgment, then the Indemnifying Party shall post and
pay the cost of the security or bond to stay execution of the judgment pending
appeal. Upon the payment in full by the Indemnifying Party of such amounts, the
Indemnifying Party shall succeed to the rights of such Indemnified Party, to the
extent not waived in settlement, against the third party who made such third
party Claim.
10. CLOSING DELIVERIES.
10.1 THE PARTNERS' OBLIGATIONS AT CLOSING. At the Closing, the
Partners shall deliver or cause to be delivered to Buyers:
(a) a xxxx of sale reasonably satisfactory to the Buyers (the "XXXX OF
SALE") duly executed by the Partners and transferring the Partnership Interests
to the Buyers;
(b) the Data Services Agreement reasonably satisfactory to the Buyers
and the Partners (the "DATA SERVICES AGREEMENT"), duly executed by ADP, Inc.;
(c) a Mailing Services Agreement reasonably satisfactory to the Buyers
and the Partners (the "MAILING SERVICES AGREEMENT"), duly executed by ADP
Financial Information Services, Inc.;
(d) a certificate signed by each of the Partners certifying that each
of the conditions set forth in Sections 6.1, 6.3, 6.4, 6.6 and 6.7 has been
satisfied (the "PARTNERS' COMPLIANCE CERTIFICATE");
(e) copies of the Required Consents (other than Mitsubishi), which
consents shall be valid and in full force and effect and shall not have been
withdrawn or modified;
(f) an opinion of the general counsel for the Partners dated as of the
Closing Date in substantially the form of Exhibit B;
(g) the Closing Balance Sheet;
(h) an Assignment and Assumption Agreement reasonably satisfactory to
the Buyers and the Partners (the "NY ASSIGNMENT AND ASSUMPTION AGREEMENT") with
respect to the
35.
lease of premises located at 000 Xxxxx Xxxxxx, Xxxxxxxxxx, XX (the "AMITYVILLE
LEASE"), duly executed by the Partners;
(i) a Transition Services Agreement reasonably satisfactory to the
Buyers and Partners (the "TRANSITION SERVICES AGREEMENT"), duly executed by the
Partners;
(j) Evidence reasonably satisfactory to the Buyers of the assignment
to the Partnership of those contracts listed in Schedule 2.5 II (f);
(k) the listing of severance benefits required by Section 5.4(d)
hereof; and
(l) a copy of Schedule 1.2(e)(i)-1.
10.2 BUYERS' OBLIGATIONS AT CLOSING. At the Closing, Buyers shall deliver,
or cause to be delivered, to the Partners:
(a) the Closing Cash Payment;
(b) the Data Services Agreement duly executed by the Buyers;
(c) the Mailing Services Agreement duly executed by the Buyers;
(d) the NY Assignment and Assumption Agreement, duly executed by the
Buyers;
(e) a certificate signed by an authorized officer of Buyers certifying
that each of the conditions set forth in Sections 7.1, 7.3, 7.4, 7.6 and 7.7 has
been satisfied (the "BUYERS' COMPLIANCE CERTIFICATE");
(f) an opinion of Xxxxxx Godward LLP, dated as of the Closing Date, in
substantially the form of Exhibit C;
(g) the Transition Services Agreement, duly executed by the Buyers.
10.3 FURTHER DOCUMENTS. The Partners, at any time before or after the
Closing, will execute, acknowledge, and deliver any further deeds, assignments,
conveyances, and other assurances, documents, and instruments of transfer
reasonably requested by the Buyers and will take any other action consistent
with the terms of this Agreement that may reasonably be requested by the Buyers
for the purpose of assigning, transferring, granting, conveying and confirming
to Buyers, or reducing to possession, the Partnership Interests and the Assets.
11. GENERAL PROVISIONS.
11.1 JOINT AND SEVERAL LIABILITY.
(a) Each Partner agrees that it shall be jointly and severally liable
with the other Partner for the due and timely compliance with and performance of
each of the covenants and
36.
obligations of the Partners as set forth in the Transactional Agreements. Each
Partner's obligations and liability under any Transactional Agreement shall not
be limited in any way by: (i) any failure on the part of Buyers or any other
Buyer Indemnitee to exercise any right or assert any claim against the Partners;
(i) the dissolution or insolvency of, or the appointment of any receiver,
conservator or liquidator for, or the commencement of any bankruptcy,
reorganization, moratorium, arrangement or other proceeding by, against or with
respect to, the Partners or the Partnership; or (iii) any merger or
consolidation of the Partners with or into any other Entity.
(b) Each Buyer agrees that it shall be jointly and severally liable
with the other Buyer for the due and timely compliance with and performance of
each of the covenants and obligations of the Buyers as set forth in the
Transactional Agreements. Each Buyer's obligations and liability under any
Transactional Agreement shall not be limited in any way by: (i) any failure on
the part of the Partners or any other Seller Indemnitee to exercise any right or
assert any claim against the Buyers; (i) the dissolution or insolvency of, or
the appointment of any receiver, conservator or liquidator for, or the
commencement of any bankruptcy, reorganization, moratorium, arrangement or other
proceeding by, against or with respect to the Buyers; or (iii) any merger or
consolidation of the Buyers with or into any other Entity.
11.2 FEES AND EXPENSES.
(a) The Partners shall each bear and pay all fees, costs and expenses
(including all legal fees and expenses) that have been incurred or that are in
the future incurred by, on behalf of or for the benefit of the Partners in
connection with: (i) the negotiation, preparation and review of any letter of
intent or similar document relating to any of the Transactions; (ii) the
furnishing of information to Buyers in connection with Buyers' investigation and
review of the Partnership and the Partnership business; (iii) the negotiation,
preparation and review of this Agreement (including the Schedules hereto), the
other Transactional Agreements and all bills of sale, assignments, certificates,
opinions and other instruments and documents delivered or to be delivered in
connection with the Transactions; (iv) the obtaining of any Consent required to
be obtained in connection with any of the Transactions; and (v) the consummation
and performance of the Transactions; PROVIDED, HOWEVER, that if this Agreement
terminates for any reason, the Buyers agree to reimburse the Partners for all
costs and expenses incurred prior to termination by either Partner with respect
to the Audited Financial Statements or its efforts to provide converted data
provision of the Partnership to Buyers.
(b) Buyers shall bear and pay all fees, costs and expenses (including
all legal fees and expenses) that have been incurred or that are in the future
incurred by or on behalf of Buyers in connection with: (i) the negotiation,
preparation and review of any letter of intent or similar document relating to
any of the Transactions; (ii) the investigation and review conducted by Buyers
with respect to the Partnership and the Partnership business; (iii) the
negotiation, preparation and review of this Agreement, the other Transactional
Agreements and all bills of sale, assignments, certificates, opinions and other
instruments and documents delivered or to be delivered in connection with the
Transactions; and (iv) the consummation and performance of the Transactions.
Regardless of whether or not the Closing takes place, Buyers shall bear and pay
for the amount of any filing fee payable under the HSR Act in connection with
the Transactions.
37.
11.3 ATTORNEYS' FEES. If any legal action or other legal proceeding
relating to any of the Transactional Agreements or the enforcement of any
provision of any of the Transactional Agreements is brought against any party to
this Agreement, the prevailing party shall be entitled to recover reasonable
attorneys' fees, costs and disbursements (in addition to any other relief to
which the prevailing party may be entitled).
11.4 NOTICES. Any notice or other communication required or permitted to be
delivered to any Party under this Agreement shall be in writing and shall be
deemed properly delivered, given and received when delivered (by hand, by
registered mail, by courier or express delivery service of a reputable
nationwide courier or service, or by facsimile) to the address or facsimile
telephone number set forth beneath the name of such Party below (or to such
other address or facsimile telephone number as such Party shall have specified
in a written notice given to the other Parties hereto):
if to the Partners:
ADP, Inc.
0000 Xxxxxxx Xxxx
Xxxxxxx Xxxxxx, Xxxxxxxx 00000
Attention: President
Facsimile: (000) 000-0000
with a copy to:
ADP, Inc.
Xxx XXX Xxxx.
Xxxxxxxx, Xxx Xxxxxx 00000
Attention: General Counsel
Facsimile: (000) 000-0000
if to Buyers:
Newgen Results Corporation
00000 Xxxx Xxxxx Xxxxx, Xxxxx 000
Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxx Xxxxxx, Vice President and CEO
Facsimile: (000) 000-0000
with a copy to:
Xxxxxx Godward, LLP
0000 Xxxxxxxxx Xxxxx, Xxxxx 0000
Xxx Xxxxx, XX 00000
Attn: Xxxx X. Xxxxxxx, Esq.
Facsimile: (000) 000-0000
38.
11.5 HEADINGS; CONSTRUCTION. The underlined headings contained in this
Agreement are for convenience of reference only, shall not be deemed to be a
part of this Agreement and shall not be referred to in connection with the
construction or interpretation of this Agreement. For purposes of this
Agreement, the words "hereof," "herein," "hereby" and other words of similar
import refer to this Agreement as a whole unless otherwise indicated. Whenever
the words "include," "includes," or "including" are used in this Agreement, they
shall be deemed to be followed by the words "without limitation." Whenever the
singular is used, the same shall include the plural, and whenever the plural is
used, the same shall include the singular, where appropriate.
11.6 GOVERNING LAW. This Agreement shall be construed in accordance with,
and governed in all respects by, the internal laws of the State of California
(without giving effect to principles of conflicts of laws).
11.7 SUCCESSORS AND ASSIGNS; PARTIES IN INTEREST.
(a) This Agreement shall be binding upon and inure to the benefit of
the Partnership and its successors and assigns (if any); each Partner and such
Partner's Representatives, executors, administrators, estate, heirs, successors
and assigns (if any); and each Buyer and its respective successors and assigns
(if any).
(b) No Party hereto shall be permitted to assign any of its rights or
delegate any of its obligations under this Agreement without the other Party's
prior written consent; PROVIDED, HOWEVER, that Buyers shall be permitted to
assign any of its rights or obligations under this Agreement to any Affiliate.
(c) Except for the provisions of Section 9 hereof, none of the
provisions of this Agreement is intended to provide any rights or remedies to
any Person other than the Parties to this Agreement and their respective
successors and assigns (if any). Without limiting the generality of the
foregoing, (i) no employee of the Partnership and no employee of any Partner
shall have any rights under this Agreement or under any of the other
Transactional Agreements, and (ii) no creditor of the Partnership and no
creditor of any Partner shall have any rights under this Agreement or any of the
other Transactional Agreements.
11.8 REMEDIES CUMULATIVE; SPECIFIC PERFORMANCE. The rights and remedies of
the Parties hereto shall be cumulative (and not alternative). The Parties agree
that: (a) in the event of any breach or threatened breach by any Party of any
covenant, obligation or other provision set forth in this Agreement, the
non-breaching Party shall be entitled (in addition to any other remedy that may
be available to it) to (i) a decree or order of specific performance or mandamus
to enforce the observance and performance of such covenant, obligation or other
provision, and (ii) an injunction restraining such breach or threatened breach;
and (b) no Party, or Buyer Indemnitee or Seller Indemnitee, as the case may be,
shall be required to provide any bond or other security in connection with any
such decree, order or injunction or in connection with any related action or
Proceeding.
39.
11.9 WAIVER.
(a) No failure on the part of any Person to exercise any power, right,
privilege or remedy under this Agreement, and no delay on the part of any Person
in exercising any power, right, privilege or remedy under this Agreement, shall
operate as a waiver of such power, right, privilege or remedy; and no single or
partial exercise of any such power, right, privilege or remedy shall preclude
any other or further exercise thereof or of any other power, right, privilege or
remedy.
(b) No Person shall be deemed to have waived any claim arising out of
this Agreement, or any power, right, privilege or remedy under this Agreement,
unless the waiver of such claim, power, right, privilege or remedy is expressly
set forth in a written instrument duly executed and delivered on behalf of such
Person; and any such waiver shall not be applicable or have any effect except in
the specific instance in which it is given.
11.10 AMENDMENTS. This Agreement may not be amended, modified, altered or
supplemented other than by means of a written instrument duly executed and
delivered on behalf of the Buyers and Partners.
11.11 SEVERABILITY. In the event that any provision of this Agreement, or
the application of any such provision to any Person or set of circumstances,
shall be determined to be invalid, unlawful, void or unenforceable to any
extent, the remainder of this Agreement, and the application of such provision
to Persons or circumstances other than those as to which it is determined to be
invalid, unlawful, void or unenforceable, shall not be impaired or otherwise
affected and shall continue to be valid and enforceable to the fullest extent
permitted by law.
11.12 ENTIRE AGREEMENT. The Transactional Agreements set forth the entire
understanding of the Parties relating to the subject matter thereof and
supersede all prior agreements and understandings among or between any of the
Parties relating to the subject matter thereof.
11.13 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, all of which shall be deemed an original and all of which taken
together, shall constitute one and the same instrument.
[THIS SPACE INTENTIONALLY LEFT BLANK]
40.
The Parties to this Agreement have caused this Agreement to be executed
and delivered as of the date first above written.
ADP, INC.,
a Delaware corporation
By: /s/ Signature Illegible
---------------------------
Title: President
------------------------
ADP FINANCIAL INFORMATION SERVICES, INC.,
a Delaware corporation
By: /s/ Signature Illegible
---------------------------
Title: President
------------------------
COMPUTER CARE,
a New York general partnership
By: ADP, Inc.
Its: General Partner
By: /s/ Signature Illegible
--------------------------
Title: President
NEWGEN RESULTS CORPORATION,
a Delaware corporation
By: /s/ Xxx Xxxxxx
---------------------------
Title: SVP & Chief Financial Officer
NGR ACQUISITION CORP.,
a Delaware corporation
By: /s/ Xxx Xxxxxx
---------------------------
Title: Chief Financial Officer & Secretary
EXHIBIT A
CERTAIN DEFINITIONS
For purposes of the Agreement (including this Exhibit A):
ASSETS. "Assets" is defined in Section 2.5(b).
ACQUISITION TRANSACTION. "Acquisition Transaction" shall mean any
transaction involving: (a) the sale, lease, transfer, assignment, pledge,
hypothecation or other disposition of all or any portion of the Partnership
business, the Partnership Interests or the Assets; or (b) any merger, business
combination, sale or assignment of any portion of the business of the
Partnership, the Partnership Interests or the Assets, or similar transaction
involving the Partnership.
AFFILIATE. "Affiliate" shall mean, with respect to any Person, any
other Person that directly or indirectly controls, is controlled by or is under
direct or indirect common control with such Person.
XXXX OF SALE. "Xxxx of Sale" is defined in Section 10.1(a).
CERCLA. "CERCLA" shall mean the Comprehensive Environmental Response,
Compensation and Liability Act.
CLAIM. "Claim" shall mean all demands, claims, suits, actions, costs
of investigation, causes of action, proceedings and assessments, whether or not
ultimately determined to be valid.
CLOSING. "Closing" is defined in Section 1.5.
CLOSING DATE. "Closing Date" is defined in Section 1.5.
CLOSING CASH PAYMENT. "Closing Cash Payment" is defined in Section
1.2(a).
CODE. "Code" shall mean the Internal Revenue Code of 1986, as amended.
CONSENT. "Consent" shall mean any approval, consent, ratification,
permission, waiver or authorization (including any Governmental Authorization).
CONTRACT. "Contract" shall mean any written agreement, contract,
understanding, arrangement, instrument, note, guaranty, indemnity,
representation, warranty, deed, assignment, power of attorney, certificate,
purchase order, work order or insurance policy.
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DAMAGES. "Damages" shall include any loss, damage, injury, Liability,
Claim, demand, settlement, judgment, award, fine, penalty, Tax, fee (including
any reasonable legal fee, expert fee, accounting fee or advisory fee), charge,
cost (including any cost of investigation) or expense.
ENCUMBRANCE. "Encumbrance" shall mean any lien, pledge, hypothecation,
charge, mortgage, security interest, encumbrance, equity, trust, equitable
interest, claim, preference, right of possession, lease, tenancy, license,
encroachment, covenant, infringement, interference, Order, proxy, option, right
of first refusal, preemptive right, community property interest, legend, defect,
impediment, exception, reservation, limitation, impairment, imperfection of
title, condition or restriction of any nature (including any restriction on the
transfer of any asset, any restriction on the receipt of any income derived from
any asset, any restriction on the use of any asset and any restriction on the
possession, exercise or transfer of any other attribute of ownership of any
asset).
ENTITY. "Entity" shall mean any corporation (including any non-profit
corporation), general partnership, limited partnership, limited liability
partnership, joint venture, estate, trust, cooperative, foundation, society,
political party, union, company (including any limited liability company or
joint stock company), firm or other enterprise, association, organization or
entity.
ERISA. "ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended.
FINANCIAL STATEMENTS. "Financial Statements" is defined in Section
2.3.
GAAP. "GAAP" shall mean generally accepted accounting principles.
GOVERNMENTAL AUTHORIZATION. "Governmental Authorization" shall mean
any: (a) permit, license, certificate, franchise, concession, approval, consent,
ratification, permission, clearance, confirmation, endorsement, waiver,
certification, designation, rating, registration, qualification or authorization
issued, granted, given or otherwise made available by or under the authority of
any Governmental Body or pursuant to any Legal Requirement; or (b) right under
any Contract with any Governmental Body.
GOVERNMENTAL BODY. "Governmental Body" shall mean any: (a) nation,
principality, state, commonwealth, province, territory, county, municipality,
district or other jurisdiction of any nature; (b) federal, state, local,
municipal, foreign or other government; (c) governmental or quasi-governmental
authority of any nature (including any governmental division, subdivision,
department, agency, bureau, branch, office, commission, council, board,
instrumentality, officer, official, representative, organization, unit, body or
Entity and any court or other tribunal); (d) multi-national organization or
body; or (e) individual, Entity or body exercising, or entitled to exercise, any
executive, legislative, judicial, administrative, regulatory, police, military
or taxing authority or power of any nature.
HAZARDOUS MATERIAL. "Hazardous Material" shall include: (a) any
petroleum, waste oil, crude oil, asbestos, urea formaldehyde or polychlorinated
biphenyl; (b) any waste, gas or other
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substance or material that is explosive or radioactive; (c) any "hazardous
substance," "pollutant," "contaminant," "hazardous waste," "regulated
substance," "hazardous chemical" or "toxic chemical" as designated, listed or
defined (whether expressly or by reference) in any statute, regulation or other
Legal Requirement (including CERCLA, any other so-called "superfund" or
"superlien" law, the Resource Conservation Recovery Act, the Federal Water
Pollution Control Act, the Toxic Substances Control Act, the Emergency Planning
and Community Right-to-Know Act and the respective regulations promulgated
thereunder); (d) any other substance or material (regardless of physical form)
or form of energy that is subject to any Legal Requirement which regulates or
establishes standards of conduct in connection with, or which otherwise relates
to, the protection of human health, plant life, animal life, natural resources,
property or the enjoyment of life or property from the presence in the
environment of any solid, liquid, gas, odor, noise or form of energy; and (e)
any compound, mixture, solution, product or other substance or material that
contains any substance or material referred to in clause "(a)", "(b)", "(c)" or
"(d)" above.
HSR ACT. "HSR Act" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended.
LEGAL REQUIREMENT. "Legal Requirement" shall mean any federal, state,
local, municipal, foreign or other law, statute, legislation, constitution,
principle of common law, resolution, ordinance, code, edict, decree,
proclamation, treaty, convention, rule, regulation, ruling, directive,
pronouncement, requirement, specification, determination, decision, opinion or
interpretation issued, enacted, adopted, passed, approved, promulgated, made,
implemented or otherwise put into effect by or under the authority of any
Governmental Body.
LIABILITY. "Liability" shall mean any debt, obligation, or liability
of any nature (including any known, unknown, disclosed, undisclosed, mature,
unmatured, accrued, unaccrued, asserted, unasserted, liquidated, unliquidated,
contingent, indirect, conditional, implied, vicarious, derivative, joint,
several or secondary liability), regardless of whether such debt, obligation, or
liability would be required to be disclosed on a balance sheet prepared in
accordance with generally accepted accounting principles and regardless of
whether such debt, obligation, or liability is immediately due and payable,
including any Liability for Taxes.
ORDER. "Order" shall mean any: (a) order, judgment, injunction, edict,
decree, ruling, pronouncement, determination, decision, opinion, verdict,
sentence, subpoena, writ or award issued, made, entered, rendered or otherwise
put into effect by or under the authority of any court, administrative agency or
other Governmental Body or any arbitrator or arbitration panel; or (b) Contract
with any Governmental Body entered into in connection with any Proceeding.
ORDINARY COURSE OF BUSINESS. "Ordinary Course of Business" shall mean
an action taken by the Partnership that is (a) recurring in nature, consistent
with the Partnership's past practices, (b) taken in the ordinary course of the
Partnership's normal day-to-day operations, and (c) taken in accordance with
sound and prudent business practices.
PARTNERSHIP CONTRACTS. "Partnership Contracts" shall mean any Contract
(a) to which
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the Partnership is a party; (b) by which the Partnership, the Partnership
Interests or any of the Assets is or may become bound or under which
the Partnership has, or may become subject to any obligations; (c) under which
the Partnership has or may acquire any right or interest.
PARTNERSHIP PROPRIETARY ASSETS. "Partnership Proprietary Assets" is
defined in Section 2.10(a).
PERSON. "Person" shall mean any individual, Entity or Governmental
Body.
PRE-CLOSING PERIOD. "Pre-Closing Period" is defined in Section 4.1.
PROCEEDING. "Proceeding" shall mean any action, suit, litigation,
arbitration, proceeding (including any civil, criminal, administrative,
investigative or appellate proceeding and any informal proceeding), prosecution,
contest, hearing, inquiry, inquest, audit, examination or investigation
commenced, brought, conducted or heard by or before, or otherwise involving, any
Governmental Body or any arbitrator or arbitration panel.
PROPRIETARY ASSET. "Proprietary Asset" shall mean any patent, patent
application, trademark (whether registered or unregistered and whether or not
relating to a published work), trademark application, trade name, fictitious
business name, service xxxx (whether registered or unregistered), service xxxx
application, copyright (whether registered or unregistered), copyright
application, maskwork, maskwork application, trade secret, know-how, customer
list, franchise, system, computer software, invention, design, blueprint,
engineering drawing, proprietary product, technology, proprietary right or other
intellectual property right or intangible asset.
REPRESENTATIVES. "Representatives" shall mean officers, directors,
employees, agents, attorneys, accountants, advisors and representatives.
TAX. "Tax" shall mean any tax (including any income tax, franchise
tax, capital gains tax, estimated tax, gross receipts tax, value-added tax,
surtax, excise tax, ad valorem tax, transfer tax, stamp tax, sales tax, use tax,
property tax, business tax, occupation tax, inventory tax, occupancy tax,
withholding tax or payroll tax), levy, assessment, tariff, impost, imposition,
toll, duty (including any customs duty), deficiency or fee, and any related
charge or amount (including any fine, penalty or interest), that is, has been or
may in the future be (a) imposed, assessed or collected by or under the
authority of any Governmental Body, or (b) payable pursuant to any tax-sharing
agreement or similar Contract.
TAX RETURN. "Tax Return" shall mean any return (including any
information return), report, statement, declaration, estimate, schedule, notice,
notification, form, election, certificate or other document or information that
is, has been or may in the future be filed with or submitted to, or required to
be filed with or submitted to, any Governmental Body in connection with the
determination, assessment, collection or payment of any Tax or in connection
with the administration, implementation or enforcement of or compliance with any
Legal Requirement relating to any Tax.
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TRANSACTIONAL AGREEMENTS. "Transactional Agreements" shall mean: (a)
the Agreement; (b) the Xxxx of Sale; (c) the Data Services Agreement; (d) the
Mailing Services Agreement; (e) the NY Assignment and Assumption Agreement, (f)
the Transition Services Agreement, and (g) all other documents delivered by the
Parties pursuant to Section 10.
TRANSACTIONS. "Transactions" shall mean (a) the execution and delivery
of the respective Transactional Agreements and (b) all of the transactions
contemplated by the respective Transactional Agreements, including: (i) the sale
of the Partnership Interests by the Partners to Buyers in accordance with the
Agreement; (ii) the performance by the Partnership, the Partners and Buyers of
their respective obligations under the Transactional Agreements, and (iii) the
exercise by the Partnership, the Partners and Buyers of their respective rights
under the Transactional Agreements.
UNAUDITED INTERIM BALANCE SHEET. "Unaudited Interim Balance Sheet" is
defined in Section 2.3.
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EXHIBIT B
FORM OF ADP LEGAL OPINION
[PLEASE NOTE THAT WE WILL NOT OPINE AS TO THE ENFORCEABILITY OF THE NONCOMPETE
PROVISION CONTAINED IN THE AGREEMENT. WE WILL ADD THE NECESSARY QUALIFYING
LANGUAGE TO THE PREAMBLE OF OUR OPINION]
1. Each of the Partners has been duly incorporated and is a validly existing
corporation in good standing under the laws of the State of Delaware. The
Partnership is a validly existing general partnership under the laws of the
State of New York.
2. Each of the Partners has the requisite corporate power to own or lease its
property and assets and to conduct its business as it is currently being
conducted. The Partnership has the requisite power to own or lease its property
and assets and to conduct its business as it is currently being conducted Each
of the Partners has all necessary corporate power and authority to enter into
the Agreement and the other Transactional Agreements to which it is a party, to
carry out its obligations thereunder and to consummate the transactions
contemplated thereby. The Partnership has all necessary power and authority to
enter into the Agreement and the other Transactional Agreements to which it is a
party, to carry out its obligations thereunder and to consummate the
transactions contemplated thereby.
3. The Agreement has been duly and validly authorized, executed and delivered by
the Partners and the Partnership and constitutes a valid and binding agreement
of the Partnership and the Partners enforceable against the Partners and the
Partnership in accordance with its terms, except as rights to indemnity under
Section 9 of the Agreement may be limited by applicable laws and except as
enforcement may be limited by applicable bankruptcy, insolvency, reorganization,
arrangement, moratorium or other similar laws affecting creditors' rights, and
subject to general equity principles and to limitations on availability of
equitable relief, including specific performance.
4. The execution and delivery of the Agreement by the Partners (i) do not
violate, conflict with or result in any breach of any provision of their
Certificates of Incorporation or Bylaws, and (ii) do not violate or contravene
(A) any governmental statute, rule or regulation, applicable to either of them
or (B) any order, writ, judgment, injunction, decree, determination or award
which has been entered against either of them and of which I am aware, the
violation of which would materially and adversely affect either Partner, and
their respective assets, financial condition or operations. The execution and
delivery of the Agreement by the Partnership (i) do not violate, conflict with
or result in any breach of any provision of its partnership agreement, and (ii)
do not violate or contravene (A) any governmental statute, rule or regulation,
applicable to the Partnership or (B) any order, writ, judgment, injunction,
decree, determination or award which has been entered against the Partnership
and of which I am aware, the violation of which would materially and adversely
affect the Partnership, and its assets, financial condition or operations.
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5. To my knowledge, there is no action, proceeding or investigation pending or
overtly threatened against the Partners or the Partnership before any court or
administrative agency that questions the validity of the Agreement or the
transactions contemplated thereby.
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EXHIBIT C
FORM OF XXXXXX GODWARD LEGAL OPINION
[PLEASE NOTE THAT WE WILL NOT OPINE AS TO THE ENFORCEABILITY OF THE NONCOMPETE
PROVISION CONTAINED IN THE AGREEMENT. WE WILL ADD THE NECESSARY QUALIFYING
LANGUAGE TO THE PREAMBLE OF OUR OPINION]
1. Each of the Company [and Company Acquisition Sub] has been duly incorporated
and is a validly existing corporation in good standing under the laws of the
State of Delaware.
2. Each of the Company [and Company Acquisition Sub] has the requisite corporate
power to own or lease its property and assets and to conduct its business as it
is currently being conducted. Each of the Company [and Company Acquisition Sub]
has all necessary corporate power and authority to enter into the Agreement and
the other Transactional Agreements to which it is a party, to carry out its
obligations thereunder and to consummate the transactions contemplated thereby.
3. The Agreement has been duly and validly authorized, executed and delivered by
the Company [and Company Acquisition Sub] and constitutes a valid and binding
agreement of the Company [and Company Acquisition Sub] enforceable against the
Company [and Company Acquisition Sub] in accordance with its terms, except as
rights to indemnity under Section 9 of the Agreement may be limited by
applicable laws and except as enforcement may be limited by applicable
bankruptcy, insolvency, reorganization, arrangement, moratorium or other similar
laws affecting creditors' rights, and subject to general equity principles and
to limitations on availability of equitable relief, including specific
performance.
4. The execution and delivery of the Agreement by the Company [and Company
Acquisition Sub] (i) do not violate, conflict with or result in any breach of
any provision of the Company's [or Company Acquisition Sub's ] respective
Certificates of Incorporation or Bylaws, and (ii) do not violate or contravene
(A) any governmental statute, rule or regulation, applicable to the Company or
(B) any order, writ, judgment, injunction, decree, determination or award which
has been entered against the Company [and Company Acquisition Sub] and of which
we are aware, the violation of which would materially and adversely affect the
Company [and Company Acquisition Sub], and their respective assets, financial
condition or operations.
5. To our knowledge, there is no action, proceeding or investigation pending or
overtly threatened against the Company [or Company Acquisition Sub] before any
court or administrative agency that questions the validity of the Agreement or
the transactions contemplated thereby.
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