EXHIBIT 2.1
PARTNERSHIP INTEREST PURCHASE AGREEMENT
THIS PARTNERSHIP INTEREST PURCHASE AGREEMENT (the "AGREEMENT") is made
as of May 22, 2001, among Xxxxxxxx Corporation, a Delaware corporation
("BUYER"), Check Consultants Company of Tennessee, Inc., a Tennessee corporation
("CCCT"), IPSS Corporation, a New York corporation ("IPSS") (CCCT and IPSS are
each individually a "SELLER" and collectively are the "SELLERS"), International
Business Machines Corporation, a New York corporation ("IBM"), First Tennessee
Bank National Association, a national banking association with principal offices
in Memphis, Tennessee ("FTB"), and Check Consultants, Incorporated, a Tennessee
corporation ("CCI").
RECITALS
A. Check Solutions Company, a New York general partnership
("Check Solutions"), currently operates a check and image processing software
development and installation business (the "BUSINESS").
X. Xxxxxxx are the sole partners of Check Solutions. CCCT owns a
sixty percent (60%) interest and IPSS owns forty (40%) percent interest in the
general partnership interest in Check Solutions.
C. It is anticipated that CCCT will merge with CCI prior to the
closing of the transaction contemplated by this Agreement. If such merger
occurs, CCI as the surviving corporation will own the sixty percent (60%)
interest in Check Solutions that is currently owned by CCCT.
X. Xxxxxxx wish to sell to Buyer, and Buyer wishes to purchase
from Sellers, all of Sellers' outstanding partnership interests in Check
Solutions for certain consideration.
For and in consideration of the premises, of the mutual
representations, warranties, covenants and agreements contained herein and of
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and upon the terms and subject to the conditions
hereinafter set forth, the parties hereby agree as follows:
AGREEMENT
ARTICLE I.
PURCHASE AND SALE
1.1 PURCHASE OF PARTNERSHIP INTERESTS. On the Closing Date (as
defined below), Buyer agrees to purchase from each of the Sellers, and each of
the Sellers agrees to sell to Buyer, the outstanding partnerships interests
specified below:
Name of Seller Partnership Interest in Check Solutions
-------------- ---------------------------------------
CCCT All of CCCT's general partnership interest in Check
Solutions (the "CCCT INTEREST");
IPSS All of IPSS' general partnership interest in Check
Solutions (the "IPSS INTEREST");
1.2 PURCHASE PRICE. The aggregate purchase price (the "PURCHASE
PRICE") for the CCCT Interest and the IPSS Interest (collectively, the
"INTERESTS") shall be $109,500,000. The Closing Date Payments shall be made by
Buyer at the Closing by wire transfer of immediately available funds to the
accounts designated by Sellers. Buyer shall pay the Purchase Price to the
Sellers at the Closing in the amount and form of consideration set forth below:
(a) CCCT. In consideration of the CCCT Interest, Buyer
shall pay CCCT $65,700,000 in the form of cash (the "CCCT
PAYMENT");
(b) IPSS. In consideration of the IPSS Interest, Buyer
shall pay IPSS $43,800,000 in the form of cash (the "IPSS
PAYMENT") (the CCCT Payment and the IPSS Payment are,
collectively, the "CLOSING DATE PAYMENTS").
1.3 EMPLOYEE OBLIGATIONS. Upon closing, Buyer shall own the IPSS
Interest and the CCCT Interest in Check Solutions and shall assume all
liabilities and obligations of the Sellers with regard to their partnership
interests in Check Solutions, including but not limited to all Employee
Obligations as defined in this Section and in addition, amounts payable as a
result of the transaction contemplated by this Agreement, pursuant to
"Compensation After Qualifying Termination," "Termination of Employment," and
any other obligation under the Executive Employment Agreements described below.
"EMPLOYEE OBLIGATIONS" shall mean the following: (i) all payments due Xxx Xxxxxx
and Xxxx Xxxxxxxxxxx as of the Closing Date as a result of the transactions
contemplated by this Agreement pursuant to the "Compensation Upon Change in
Control" Section of their Executive Employment Agreements and (ii) all payments
due to the employees of Check Solutions as of the Closing Date as a result of
the transactions contemplated by this Agreement as a result of the termination
of the Check Solutions Partnership Appreciation Rights (PARs) Plan, as amended,
in accordance with Section H thereof.
1.4 EFFECT OF MERGER OF CCCT AND CCI. It is anticipated that CCCT
will merge with CCI prior to the Closing Date and that CCI will be the surviving
corporation. If such merger occurs, then on and after the effective time of the
merger, (a) CCI shall automatically be substituted for CCCT as a Seller under
this Agreement, and (b) all references to CCCT in this Agreement shall be deemed
to refer to CCI. If the merger does not occur, CCI shall have no obligation
under this Agreement.
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ARTICLE II.
REPRESENTATIONS AND WARRANTIES OF SELLERS
The Sellers each represent and warrant to Buyer as follows, joined in
such representations and warranties by IBM and FTB only with respect to the
portions of SECTION 2.1 and the portions of SECTION 2.2(d) that apply to FTB or
IBM, respectively. Each Seller's representations and warranties contained in
Sections 2.1, 2.2, 2.3, 2.4, and 2.6 extend only to matters pertaining to itself
and Check Solutions and not to matters pertaining to the other Seller.
2.1 AUTHORIZATION. This Agreement has been duly authorized,
executed and delivered by each of the Sellers, IBM and FTB and constitutes the
valid and binding obligation of each of such parties, enforceable in accordance
with its terms, except that (i) such enforcement may be subject to bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights generally, or, as to FTB, the rights of creditors of depository
institutions the accounts of which are insured by the Federal Deposit Insurance
Corporation, (ii) the remedies of specific performance and injunctive relief are
subject to certain equitable defenses and to the discretion of the court before
which any proceedings may be brought and (iii) rights to indemnification
hereunder may be limited under applicable securities laws (the "EQUITABLE
EXCEPTIONS").
2.2 ORGANIZATION, EXISTENCE AND GOOD STANDING.
(a) CHECK SOLUTIONS. Check Solutions is a general partnership duly
organized, validly existing and in good standing under the laws of the
state of its organization with all requisite general partnership power
and authority to own, lease and operate its properties and to carry on
its business as now being conducted, except where the failure to be so
duly qualified or licensed would not have a material adverse effect on
the business of Check Solutions. Check Solutions is duly qualified or
licensed as a foreign general partnership and is in good standing in
each jurisdiction in which the character or location of the property
owned, leased or operated by it or the nature of the business conducted
by it makes such qualification necessary, except where the failure to
be so duly qualified or licensed would not have a material adverse
effect on the business of Check Solutions. A true, complete and correct
copy of the Partnership Agreement of Check Solutions is attached hereto
as Exhibit A. (the "CHECK SOLUTIONS PARTNERSHIP AGREEMENT").
(b) CCCT. CCCT is a corporation duly organized, validly existing
and in good standing under the laws of the state of its incorporation
with all requisite corporate power and authority to own, lease and
operate its properties (including ownership of the CCCT Interest) and
to carry on its business as now being conducted.
(c) IPSS. IPSS is a corporation duly organized, validly existing
and in good standing under the laws of the state of its organization
with all requisite corporate power and authority to own, lease and
operate its properties (including ownership of the IPSS Interest) and
to carry on its business as now being conducted.
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(d) OWNERSHIP OF CCCT AND IPSS. CCCT is a wholly owned subsidiary
of CCI., a Tennessee corporation. CCI is a wholly owned subsidiary of
FTB. IPSS is a wholly owned subsidiary of IBM.
2.3 PARTNERSHIP INTERESTS OF CHECK SOLUTIONS.
(a) The Interests constitute all of the outstanding partnership
interests of Check Solutions; (ii.) the Interests have been validly
issued; (iii.) the Interests are fully paid and non-assessable and no
individual, corporation, partnership, joint venture, trust, business
association or other entity (a "PERSON") is entitled to any preemptive
rights or pro rata rights of first refusal, and (iv.) there are no
outstanding conversion or exchange rights, subscriptions, options,
warrants or other arrangements or commitments obligating Check
Solutions to issue any partnership interests or other securities or to
purchase, redeem or otherwise acquire any partnership interests or
other securities, or to make any distribution in respect thereof.
(b) CCCT (i) owns of record and beneficially good and marketable
title to the CCCT Interest free and clear of any and all liens,
mortgages, security interests, encumbrances, pledges, charges, adverse
claims, options, rights or restrictions of any character whatsoever
other than standard state and federal securities law private offering
restrictions (collectively, the "LIENS") and (ii) has the right to vote
the CCCT Interest on any matters to which any of the CCCT Interest is
entitled to be voted under the laws of the state of organization of
Check Solutions and Check Solutions Partnership Agreement, free of any
right of any other Person.
(c) IPSS (i) owns of record and beneficially good and marketable
title to the IPSS Interest, free and clear of any and all Liens and
(ii) has the right to vote the IPSS Interest on any matters as to
which any of the IPSS Interest is entitled to be voted under the laws
of the state of organization of Check Solutions and Check Solutions
Partnership Agreement, free of any right of any other Person.
2.4 BROKERS AND AGENTS: None of CCCT, IPSS, FTB or IBM has employed,
retained or otherwise engaged any broker or agent in connection with the
transactions contemplated by this Agreement and each of them agrees to indemnify
and hold harmless the Buyer against all loss, cost, damages or expense arising
out of claims for fees or commissions of brokers employed, retained or otherwise
engaged, or alleged to have been employed, retained or otherwise engaged by such
indemnifying party.
2.5 LITIGATION: There are no claims, actions, suits, arbitrations or
other proceedings or investigations pending, or to the knowledge of either
Seller, threatened against that Seller, relating to the transaction contemplated
by this agreement.
2.6 TAX MATTERS. Except as disclosed on Schedule 2.6, Sellers have
filed or caused to be filed, with respect to Check Solutions, all income tax
returns required to be filed by Sellers and all returns of other Taxes (as
defined below) required to be filed by Sellers and have paid or provided for all
Taxes shown to be due on such returns and all such returns are accurate and
correct
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in all respects as of the date hereof. No action or proceeding for the
assessment or collection of any Taxes (as relating to Check Solutions) is
pending, or to Sellers' knowledge threatened, against Sellers. No deficiency,
assessment or other formal claim for any Taxes (as relating to Check Solutions)
has been asserted or made against Sellers that has not been fully paid or
finally settled. No issue has been raised by any taxing authority in connection
with an audit or examination of any return of Taxes. Except as disclosed on
Schedule 2.6, no federal, state or foreign income tax returns or returns of
other taxes of Sellers (as relating to Check Solutions) have been examined, and
there are no outstanding agreements or waivers extending the applicable
statutory periods of limitation for such Taxes for any period. All Taxes (as
relating to Check Solutions) that Sellers have been required to collect or
withhold have been duly withheld or collected and, to the extent required, have
been paid to the proper taxing authority. For purposes of this Agreement,
"Taxes" shall mean all taxes, charges, fees, levies or other assessments
including, without limitation, income, excise, property, withholding, sales, use
and franchise taxes, imposed by the United States, or any state, county, local
or foreign government or subdivision or agency thereof, and including any
interest, penalties or additions attributable thereto.
2.7 NO VIOLATIONS. The execution, delivery and performance of this
Agreement and the other agreements and documents contemplated hereby by Sellers
and the consummation of the transactions contemplated hereby will not violate
(a) the articles or bylaws of a Seller, (b) any provision of the Check Solutions
Partnership Agreement, or (c) any statute, rule, regulation, order or decree of
any public body or authority by which Sellers or either of them or their
respective properties or assets are bound.
2.8 CONSENTS. Except as indicated in Section 4.6, no consent, approval
or authorization of, or declaration, filing or registration with, any
governmental or regulatory authority or Sellers is required to be made or
obtained by Sellers in connection with the execution delivery, and performance
of this Agreement and the consummation of the transaction contemplated hereby.
2.9 DISCLOSURE. Sellers represent that Exhibits A, C, D, and E are true
and accurate copies of the Partnership Agreement as amended, Executive
Employment Agreement with Xxx Xxxxxx, Executive Employment Agreement with Xxxx
Xxxxxxxxxxx, and the Partnership Appreciation Rights Plan, as amended. Sellers
also represent that to the knowledge of Sellers, no other Executive Employment
Agreement, Partnership Appreciation Rights Plan, or any other such plan similar
in scope, size, terms and conditions is effective against the rights and
interests of Check Solutions at or immediately prior to Closing, which has not
been disclosed to Buyer.
2.10 EXCEPT AS EXPRESSLY PROVIDED HEREIN, THE PARTNERSHIP INTERESTS ARE
SOLD AND OTHERWISE TRANSFERRED HEREUNDER "AS IS" WITHOUT WARRANTY OF ANY KIND,
EXPRESS OR IMPLIED, AND, WITHOUT LIMITATION, SELLERS SHALL NOT HAVE ANY
LIABILITY IN RESPECT OF ANY INFRINGEMENT OF ANY INTELLECTUAL PROPERTY RIGHTS OF
THIRD PARTIES DUE TO THE BUYERS' USE OF THE INTERESTS. EXCEPT AS EXPRESSLY SET
FORTH ABOVE IN THIS ARTICLE II SELLERS MAKE NO WARRANTIES, WHETHER WRITTEN,
ORAL, STATUTORY, EXPRESSED OR IMPLIED, TO BUYER.
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ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Sellers as follows:
3.1 ORGANIZATION AND AUTHORIZATION. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the state of
its incorporation with all requisite corporate power and authority to own, lease
and operate its properties and to carry on its business as now being conducted.
Buyer has all requisite corporate power, capacity and authority to execute and
deliver this Agreement and all other agreements and documents contemplated
hereby. The execution and delivery by Buyer of this Agreement and such other
agreements and documents contemplated hereby to be executed and delivered by
Buyer and the consummation by Buyer of the transactions contemplated hereby have
been duly authorized by Buyer and no other corporate action on the part of Buyer
is necessary to authorize the transactions contemplated hereby. This Agreement
has been duly executed and delivered by Buyer and constitutes the valid and
binding obligation of Buyer, enforceable in accordance with its terms, subject
to the Equitable Exceptions.
3.2 NO VIOLATIONS. The execution and delivery by Buyer of this
Agreement and the other agreements and documents contemplated hereby and the
consummation by Buyer of the transactions contemplated hereby will not (a)
violate any provision of the certificate of incorporation or bylaws of Buyer, or
(b) violate any statute, rule, regulation, order or decree of any public body or
authority by which Buyer or its properties or assets are bound.
3.3 CONSENTS AND APPROVALS: Except as indicated in Section 4.6, no
consent, approval or authorization of, or declaration, filing or registration
with, any governmental or regulatory authority or Buyer is required to be made
or obtained by Buyer in connection with the execution, delivery and performance
of this Agreement and the consummation of the transaction contemplated hereby.
3.4 BROKERS OR AGENTS: Buyer represents that it has not employed,
retained, otherwise engaged any broker or agent in connection with the
transactions contemplated by this Agreement other than Xxxxxxxx & Associates and
agrees to indemnify and hold harmless the other parties against all loss, cost,
damages or expense arising out of claims for fees or commissions of Xxxxxxxx &
Associates or any other brokers employed, retained or otherwise engaged or
alleged to have been employed, retained or otherwise engaged by Buyer.
3.5 LITIGATION: There are no claims, actions, suits, arbitrations
or other proceedings or investigations pending, or to the knowledge of Buyer,
threatened against Buyer, relating to the transaction contemplated by this
agreement.
3.6 STATUS OF BUYER: Buyer has such knowledge and experience in
business and financial matters that it is capable of evaluating the risks and
merits of the investment represented by this Agreement. Buyer is able to bear
the economic risk of the purchase of the Interests made pursuant to this
Agreement.
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3.7 ACQUISITION FOR INVESTMENT. Buyer is purchasing the Interests
for its own account and not with a present view to a distribution or resale of
any such Interests.
3.8 SUFFICIENT FUNDS. Buyer represents and warrants that it will
have sufficient immediately available funds at Closing to satisfy the
obligations set forth in Section 1.2 of this Agreement.
ARTICLE IV.
COVENANTS OF THE PARTIES
4.1 COURSE OF CONDUCT BY CHECK SOLUTIONS. From the date hereof
through and until the Closing Date, except as approved in writing by Buyer or as
otherwise permitted or contemplated by this Agreement:
(a) ORDINARY COURSE. Sellers shall cause Check Solutions
to operate the Business in the usual, regular and ordinary
course and in substantially the same manner as it did prior to
the date of this Agreement. Sellers shall cause Check
Solutions to use commercially reasonable efforts to (i)
preserve intact Check Solutions' present business
organization, and (ii) preserve Check Solutions' relationships
with customers, suppliers and others having business dealings
with Check Solutions in such a way that the goodwill and
ongoing business of Check Solutions will be no less valuable
at the Closing Date as they are on the date of this Agreement.
(b) NO OTHER BIDS. Sellers shall not, and shall not
authorize any of their affiliates or agents, Xxx Xxxxxx or
Xxxx Xxxxxxxxxxx to directly or indirectly solicit, initiate
or participate in negotiations with any person other than
Xxxxxxxx with respect to a disposition of, or business
combination in connection with, the business or assets of
Check Solutions not in the ordinary course of business, nor
shall they or any of their affiliates or agents provide any
information concerning such assets or business to any person
for such purpose. If anyone should solicit, attempt to
initiate negotiations or make inquiries regarding such
business or assets, then each of IBM, FTB, IPSS, and CCCT
agrees to immediately notify Xxxxxxxx thereof in writing.
(c) DISPOSITIONS. Prior to the month end immediately
preceding the Closing Date Check Solutions may make a final
partnership distribution to Sellers in an amount not to exceed
$4,000,000. Notwithstanding the preceding sentence, if the
Closing Date is on a month end, Check Solutions may make such
final partnership distribution on or prior to the Closing
Date. Sellers shall not sell, lease or otherwise dispose of,
or agree to sell, lease or otherwise dispose of, any of the
assets of Check Solutions, except in the ordinary course of
business consistent with prior practice.
(d) NOTIFICATION OF CHANGES. Sellers shall notify Buyer
promptly, orally and in writing, of any change or event
occurring between execution of this agreement and Closing, of
which Sellers have actual knowledge, which constitutes a CHECK
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SOLUTIONS MATERIAL ADVERSE EFFECT. "Check Solutions Material
Adverse Effect" means any state of facts, change, development,
effect or occurrence, from the date of this Agreement to the
date of Closing, that is, or is reasonably likely to be,
materially adverse to the business, assets, financial
condition or results of operations of Check Solutions, taken
as a whole; provided, however, that no state of facts, change,
development, effect or occurrence shall be deemed,
individually or in the aggregate, to constitute a Check
Solutions Material Adverse Effect to the extent:
i. relating to or resulting from the financial
services industry generally, the U.S.
economy as a whole or the international
economy as a whole or any political,
economic or social instability in any such
economy, including any recession or economic
slowdown;
ii. relating to or resulting from U.S. or
international securities markets in general;
or
iii. arising specifically and directly as a
result of this Agreement or the transactions
contemplated hereby or the announcement
thereof, including one or more of the
following:
1. the bookings, revenues, gross
margins, operating margins of Check
Solutions;
2. any delay of, reduction in or
cancellation or change in the term
or timing of client engagements,
subscriptions, orders or project
implementations by customers of
Check Solutions;
3. any attrition of Check Solutions
employees; or
4. any termination, delay or
modification of any existing
contract (or negotiations with
respect thereto) between the Check
Solutions and any of its customers.
(e) APPROVALS AND CONSENTS. Buyer and Sellers shall use
their respective commercially reasonable efforts to obtain
promptly and to comply with all requisite statutory,
regulatory or court approvals, third party releases and
consents and other requirements necessary for the valid and
legal consummation of the transactions contemplated hereby.
Such approvals, releases and consents are listed on
Schedule 4.1(e) hereto.
(f) ACCESS TO CHECK SOLUTIONS. Sellers shall continue to
cause Check Solutions to provide Buyer and its representatives
and agents such access to the books and records of Check
Solutions and furnish to Buyer such financial and operating
data and other information with respect to the businesses and
property of Sellers (as it pertains to Check Solutions) and of
Check Solutions as it may reasonably request from time to
time, and permit Buyer and its representatives and agents to
make
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such inspections of Check Solutions' real and personal
properties as they may reasonably request. Sellers shall
promptly arrange for Buyer and its representatives and agents
to meet with such directors, officers, employees and agents of
Check Solutions as requested.
4.2 RECORDS PERTAINING TO CHECK SOLUTIONS.
(a) RETENTION OF RECORDS. Sellers shall neither dispose of nor
destroy any of the records or files of Sellers that pertain to
Check Solutions tax matters until the applicable statute of
limitations has expired.
(b) ASSISTANCE WITH RECORDS. From and after the Closing Date,
Buyer shall make available to Seller, upon written request, (i)
personnel of Check Solutions to assist Sellers in locating and
obtaining records and files maintained by Check Solutions, and (ii)
any of the personnel of Buyer, whose assistance or participation is
reasonably required by Sellers in anticipation of, or preparation
for, any existing or future third party actions, Tax or other
matters in which Check Solutions or any of its past, present or
future Affiliates is involved and which relate to the business of
Check Solutions.
(c) ASSISTANCE WITH RECORDS. From and after the Closing Date,
Sellers shall make available to Buyer, upon written request, (i)
personnel of Sellers to assist Buyer in locating and obtaining
records and files relating to Check Solutions, if any, maintained by
Sellers, and (ii) any of the personnel of Sellers, whose assistance
or participation is reasonably required by Buyer in
anticipation of, or preparation for, any existing or future third
party actions, Tax or other matters in which Sellers or any of their
past or present Affiliates is involved and which relate to the
business of Check Solutions.
4.3 INTENTIONALLY OMITTED.
4.4 INTENTIONALLY OMITTED.
4.5 TAXES. No new elections with respect to Taxes or any changes
in current elections with respect to Taxes affecting Check Solutions shall be
made (or cause to be made) by Sellers after the date of this Agreement without
prior written consent of Buyer. Any and all Taxes assessed with respect to Check
Solutions for the period up to the Closing Date shall be the responsibility of
Sellers. Any and all Taxes assessed with respect to Check Solutions for the
period after the Closing Date shall be the responsibility of Buyer.
4.6 ANTITRUST LAWS COMPLIANCE. Buyer and First Tennessee National
Corporation, a Tennessee corporation, and ultimate parent of FTB, each have made
filings as required under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended, and the rules, regulations and policies adopted thereunder.
The transfer of the Interests hereunder is expressly conditioned upon the
waiting period relating to any such filings having duly expired or been duly
terminated by the appropriate Agencies without the commencement of any action by
any such agencies to restrain or postpone the transactions contemplated hereby.
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4.7 ROYALTY OBLIGATIONS. No royalties shall accrue to IBM and/or
IPSS after the Closing Date under the Statement Interface Program and the Large
Table Maintenance Program, PROVIDED THAT; any royalties accruing prior to the
Closing Date are paid in full no later than sixty (60) days from the Closing
Date. Except as amended in this section 4.7, all other terms and conditions with
respect to the Statement Interface Program and the Large Table Maintenance
Program shall remain and continue in full force and effect. The above terms and
conditions are more fully described in the Amendment to Agreements document
between IBM and Check Solutions dated as of March 19, 1992 (pertains to
Statement Interface Program) and the IBM/OEM Software Agreement, Base Agreement:
4999S10037 and related Transaction Document Number 001 between IBM and Check
Solutions dated March 1999 (pertains to Large Table Maintenance Program).
4.8 MAINTENANCE OF PROGRAMS. Buyer agrees, for a period of at
least five (5) years from the Closing Date, to not terminate the agreements on
Schedule 4.8, provided that FTB remains current on their obligations under such
agreements.
4.9 IBM PARTNERWORLD PROGRAM. Check Solutions currently has an
advanced level membership in the IBM Partnerworld for Developers program. IBM
agrees that such membership may be assigned by Check Solutions to Buyer, however
Buyer must meet annual standard requirements of the program in order to continue
membership. Notwithstanding any other provisions of this Agreement, the
assignment of Check Solutions' advanced level membership in the IBM Partnerwold
for Developers program will apply only to those Check Solutions Products
presently qualifying for that program and will not extend to other products of
Buyer or of Check Solutions.
4.10 3897 IMAGE CAMERA INFORMATION. The parties acknowledge that
IBM presently manufactures its Model 3890XP reader sorter and Model 3897 image
camera, and that such camera, is an integral part of the IBM image capture
process. IBM acknowledges that certain rights were granted to Check Solutions
under the Transfer and Reservation Agreement dated March 15, 1998, as amended.
No further rights, or interest are granted hereunder. However, IBM agrees that,
for a period of the lesser of i.) 36 months after the date of this Agreement or
ii.) the date when IBM no longer markets or sells such product, or iii.) IBM
sells its ownership of the 3890XP reader sorter/3897 camera system, it will use
commercially reasonable efforts to promptly provide upon Buyer and/or Check
Solutions' request (and, if applicable, any person(s) designated by them in
writing) publicly available 3897 image camera interface specifications and
disclose under appropriate confidentiality agreement, any changes to the
interface specifications that are intended for future public disclosure. Without
limiting the foregoing, IBM also agrees to notify Buyer and Check Solutions
(and, if applicable, their designee(s)) of any contemplated, proposed or
implemented phase-out, end of service announcement or discontinuance of the
manufacture of its Model 3897 image camera, under an appropriate confidentiality
agreement, prior to public announcement.
4.11 CHECK PROCESSING CONTROL SYSTEM. The parties acknowledge that
IBM owns, markets and provides maintenance and other support for the United
States and International versions of its "Check Processing Control System"
("CPCS"), a check reader sorter and code line
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capture system. IBM agrees that, for a period of the lesser of i.) 36 months
after the date of this Agreement or ii.) the date when IBM no longer markets
or sells such product, or iii.) IBM sells its ownership of the CPCS, it will
use commercially reasonable efforts to promptly provide upon Buyer and/or
Check Solutions' request (and, if applicable, any persons(s) designated by
them in writing) information pertaining to (in each case in a manner at least
as favorable to Buyer and Check Solutions as is consistent with customary
practices between IBM and Check Solutions prior to the date hereof), timely
access to CPCS updates (i.e., the so-called "PTFs" for Check Solutions
testing). Without limiting the foregoing, IBM agrees to provide Buyer and
Check Solutions with timely, regular strategic briefings, presented by IBM's
CPCS development team, regarding contemplated, proposed or implemented
modifications of CPCS, (in each case in a manner at least as favorable to
Buyer and Check Solutions as is consistent with customary practices between
IBM and Check Solutions prior to the date hereof) under appropriate
confidentiality agreement. Without limiting the foregoing, IBM agrees to also
notify Buyer and Check Solutions (and, if applicable, their designee(s)) of
any contemplated, proposed or implemented phase-out or discontinuance of CPCS
under appropriate confidentiality agreement, prior to public announcement.
4.12 XP CONTROL PROGRAM. The parties acknowledge that IBM provides,
with each 3890XP reader sorter it manufactures/markets, microcode known as its
XP Control Program ("XPCP"). The parties also acknowledge that certain rights
were granted to Check Solutions under the Transfer and Reservation Agreement
dated March 15, 1998, as amended. The parties also acknowledge that Check
Solutions was previously granted a license to a version of the XPCP solely for
the NCR7780. No further rights, or interest are granted hereunder. However,
during a period of the lesser of i.) 36 months after the date of this Agreement
or ii.) the date when IBM no longer markets or sells such product, or iii.) IBM
sells its ownership of the XPCP, IBM will make commercially reasonable efforts
to continue to enable this previously licensed version of XPCP as a valid usable
interface to CPCS.
4.13 CHECK SOLUTIONS SOFTWARE PRODUCTS. The Parties acknowledge
that Check Solutions and Buyer, market and provide maintenance and other support
for various Check related application software products. The Buyer agree that
for a period of the lesser of i.) 36 months after the date of this Agreement or
ii.) the date when Buyer and/or Check Solutions no longer market or sell such
product, or iii.) Buyer and/or Check Solutions sells its ownership of such
products, Buyer and/or Check Solutions will provide IBM under appropriate
confidentiality agreements, timely regular strategic briefings presented by
Check Solutions or Buyer's development team, regarding contemplated changes to
these check related application software products.
4.14 PERIODIC MEETINGS. IBM, and Buyer agree to meet from time to
time to discuss matters of mutual interest, including but not limited to those
identified in Sections 4.10, 4.11, 4.12, 4.13.
4.15 ONDEMAND. IBM acknowledges that Check Solutions's archive and
delivery solution, consisting of, but not limited to, image capture, storage,
bulk and ad hoc retrieval, etc, is built on several IBM "middleware" products,
including, but not limited to, OnDemand, which products provide storage
management, image indexing, and operating system support for various
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hardware storage devices. IBM acknowledges that Check Solutions uses special
interfaces ("APIs") within OnDemand to achieve Check Solutions's necessary
throughput and retrieval performances currently being documented, and that
the relationship between OnDemand and Check Solutions is critical to Check
Solutions. IBM and Buyer acknowledge that IBM personnel responsible for
OnDemand and Check Solutions personnel are now (and for several weeks prior
to the date of this Agreement have been) in the process of defining, through
collaborative discussions, the relationship model (under the IBM Software
Investment Initiative program) most appropriate and efficient between IBM and
Check Solutions in connection with OnDemand, including, but not limited to,
with respect ongoing support for the APIs, code defect resolution, strategic
direction/overlap, performance expectations, and sales channel harmony. If
such discussions are not complete by the date hereof, then IBM agrees to
continue such discussions with Buyer and Check Solutions (or, if applicable,
any person(s) designated by them in writing) with respect to OnDemand and
other relevant IBM "middleware" products in a good faith attempt to achieve a
mutually agreeable relationship model.
4.16 ASSIGNMENT OF AGREEMENTS. If assignable with or without
consent of the Sellers, IBM and FTB, and if Sellers, IBM, and FTB collectively
or individually have the right to assign, then IBM, IPSS, CCCT, and FTB
acknowledge that the rights and interests in the agreements of Check Solutions
identified on Schedule 4.16 of this Agreement may be assigned by Check Solutions
to Buyer or Buyer's majority owned subsidiaries after the Closing date. Sellers,
IBM and FTB agree, on the reasonable request of the Buyer, to work in good faith
to resolve issues, if any should arise, regarding assignability of rights by
Check Solutions under the agreements listed in Schedule 4.16 to Buyer or a
majority owned subsidiary of Buyer, in the event that Buyer should elect to
dissolve the Check Solutions entity.
4.17 POST CLOSING ADJUSTMENT. Buyer and Sellers intend that as of
Closing, and prior to the payment of any of the Employee Obligations, Check
Solutions shall have:
(a) CASH ON HAND. A minimum in cash or cash equivalents
on its balance sheet ("CASH ON HAND") of $19,000,000, and
(b) NET WORTH. As of the month end prior to the Closing
Date, or on the Closing Date if Closing Date is a month end
("Net Worth Date"), a net worth after applying the effect of
an accrual, on the basis described below, of the Employee
Obligations, and after applying the effect of an accrual of
any obligation for external expenses incurred by Check
Solutions directly in connection with the transaction
contemplated by this Agreement ("Net Worth") of not less than
negative $1,500,000, collectively the "Intended Closing
Financials." As for the Employee Obligations: (i) the amount
of the accrual for the payments due to Xxx Xxxxxx and Xxxx
Xxxxxxxxxxx, excluding any payroll taxes, under the
Compensation Upon Change in Control Section of their
Executive Employment Agreements shall be determined using
the Purchase Price plus $1,500,000 as the fair market value
as set forth in such agreements, and (ii) the amount of the
accrual for the payments due to employees, excluding any
payroll taxes, as a result of the termination of the Check
Solutions Partnership Appreciation Rights (PARs) Plan, as
amended, in
12
accordance with Section H thereof, shall be made on the basis
of the formula contained in Section C.1 thereof.
Promptly following Closing, Buyer shall cause Check Solutions to engage Check
Solutions independent auditors, Xxxxxx Xxxxxxxx, applying Check Solutions'
accounting practices consistent with those utilized immediately prior to the
execution of this Agreement, to review the actual Cash on Hand at Closing Date
and perform a Balance Sheet Audit of the actual Net Worth of Check Solutions as
of the Net Worth Date ("Actual Closing Financials"), and to promptly provide a
written report ("Report") of the results of such review and audit to Check
Solutions, Buyer and Sellers. Buyer and Sellers agree that an appropriate
payment ("Post Closing Adjustment") shall be made to address any difference
between the Intended Closing Financials and the Actual Closing Financials. Not
later than two business days following receipt by Buyer and Sellers of the
Report, the Buyer and Sellers shall mutually determine the Post Closing
Adjustment, and not later than three business day following the mutual
determination of the Post Closing Adjustment, the Buyer or Sellers, as
appropriate, shall make the Post Closing Adjustment by electronic transfer of
immediately available funds. If the Sellers make a Post Closing Adjustment, then
it will be paid 40% by IPSS and 60% by CCCT. If the Buyer makes a Post Closing
Adjustment, then it will be paid 40% to IPSS and 60% to CCCT. The Post Closing
Adjustment shall be determined in the following manner:
(c) PAYMENT TO SELLERS.
i. In the event that actual Net Worth is
greater than negative $1,500,000 and
actual Cash on Hand is greater than
$19,000,000, then Buyer shall make a
Post Closing Adjustment to Sellers,
in an amount which is the lesser of:
1. the amount by which actual Net
Worth would have exceeded
negative $1,500,000, or
2. the amount by which actual Cash
on Hand would have exceeded
$19,000,000.
(d) PAYMENT TO BUYER.
i. In the event that the actual Net Worth is
less than negative $1,500,000 and the
actual Cash on Hand is not less than
$19,000,000, then Sellers shall make a
Post Closing Adjustment to Buyer, in the
amount by which actual Net Worth is less
than negative $1,500,000.
ii. In the event that the actual Cash on Hand
is less than $19,000,000 and the actual
Net Worth is not less than negative
$1,500,000, then Sellers shall make a
Post Closing Adjustment to Buyer, in the
amount by which actual Cash on Hand is
less than $19,000,000.
iii. In the event that actual Net Worth is
less than negative $1,500,000 and actual
Cash on Hand is less than $19,000,000,
then Sellers shall make a Post Closing
Adjustment to Buyer, in an amount which
is the greater of:
1. the amount by which actual Net
Worth was less than negative
$1,500,000, or
2. the amount by which actual Cash
on Hand was less than $19,000,000.
13
Exhibit F is attached for illustration purposes only of Sections
4.17(c) and 4.17(d).
ARTICLE V.
CONDITIONS TO OBLIGATIONS OF BUYER
The obligation of Buyer to purchase the Interests, and to cause the
other transactions contemplated hereby to occur at the Closing, shall be
subject, except as Buyer may waive in writing, to the satisfaction of each of
the following conditions at or prior to the Closing:
5.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Sellers shall be true and correct in all material respects as of
the Closing Date with the same effect as though such representation and warranty
had been made on and as of the Closing Date.
5.2 ABSENCE OF LITIGATION. No inquiry, action, suit or proceeding
shall have been asserted, threatened or instituted (a) in which it is sought to
restrain or prohibit the carrying out of the transactions contemplated by this
Agreement or to challenge the validity of such transactions or any part thereof,
(b) which is reasonably likely to result in any Check Solutions Material Adverse
Effect or (c) as a result of which, in the reasonable judgment of Buyer, Buyer
would be deprived of the material benefits of the ownership of the Interests.
5.3 CONSENTS AND APPROVALS. All material authorizations, consents,
approvals, waivers and releases, if any, necessary for Sellers to consummate the
transactions contemplated hereby shall have been obtained and copies thereof
shall be delivered to Buyer, and the waiting period relating to the filing made
under the Xxxx Xxxxx Xxxxxx Antitrust Improvements Act, as set forth in Section
4.6 of this Agreement, shall have duly expired or been duly terminated by the
appropriate Agencies without the commencement of any action by any such Agencies
to restrain or postpone the transactions contemplated hereby.
5.4 CERTIFICATES. The Sellers shall have delivered to Buyer (i) a
copy certified by a duly authorized partner of Check Solutions, dated the
Closing Date, of the Check Solutions Partnership Agreement (ii) copies,
certified by the Secretaries of State of both Tennessee and New York, as
applicable, as of a date not more than twenty (20) days prior to the closing
Date, of the certificate of incorporation and all amendments thereto of CCCT and
IPSS, (iii) copies, certified by the secretary of each of CCCT and IPSS, dated
the Closing Date, of the bylaws of each of CCCT and IPSS and (iv) certificates,
dated the Closing Date, of the Secretary of Check Solutions, relating to the
incumbency and partnership proceedings in connection with the consummation of
the transactions contemplated hereby.
5.5 NO MATERIAL ADVERSE EFFECT. There shall not have been any
Check Solutions Material Adverse Effect, pursuant to this Agreement.
5.6 NO TRANSFERS TO AFFILIATES. Except as otherwise expressly
contemplated by this Agreement or in the ordinary course of business, Check
Solutions shall not have distributed or transferred any of its assets or
properties, or made any payments, to or for the benefit of Sellers, IBM and/or
FTB.
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5.7 PARTNERSHIP INTEREST CERTIFICATES. To the extent that such
certificates exist, Sellers shall have tendered certificates representing the
Interests, duly endorsed in blank or accompanied by appropriate instruments of
transfer, in proper form for transfer, with any applicable transfer taxes paid
by Buyer.
5.8 ASSIGNMENT OF PARTNERSHIP INTERESTS. Sellers shall have
executed and delivered to Buyer a Xxxx of Sale and Assignment of Partnership
Interests substantially in the form of EXHIBITS B1 AND B2.
5.9 PAYMENTS MADE. All payments or other amounts owed to Check
Solutions as of May 15, 2001, by any one or more of CCCT, IPSS, IBM or FTB shall
have been paid in full by the Closing Date, excluding payments consistent with
the ordinary course of business, in accordance with the terms of the contracts
or agreements giving rise to such payments or amounts.
5.10 TERMINATION OF THE CHECK SOLUTIONS PARTNERSHIP APPRECIATION
RIGHTS PLAN. Seller and Check Solutions shall have caused the Check Solutions
Partnership Appreciation Rights Plan to have been terminated in accordance with
Section H thereof.
ARTICLE VI.
CONDITIONS TO OBLIGATIONS OF SELLERS
The obligations of Sellers to sell the Interests and to cause the other
transactions contemplated hereby to occur at the Closing shall be subject,
except as Sellers may waive in writing, to the satisfaction of each of the
following conditions at or prior to the Closing:
6.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Buyer shall be true and correct in all material respects as of the
Closing Date with the same effect as though such representation and warranty had
been made on and as of the Closing Date.
6.2 ABSENCE OF LITIGATION. No inquiry, action, suit or proceeding
shall have been asserted, threatened or instituted a.) in which it is sought to
restrain or prohibit the carrying out of the transactions contemplated by this
Agreement or to challenge the validity of such transactions or any part thereof,
or (b) which is reasonably likely to result in any Check Solutions Material
Adverse Effect or (c) as a result of which, in the reasonable judgment of
Seller, Seller would be deprived of the material benefits of the sale of the
Interests.
6.3 CONSENTS AND APPROVALS. All material authorizations, consents,
approvals, waivers and releases, if any, necessary for Buyer to consummate the
transactions contemplated hereby shall have been obtained and copies thereof
shall be delivered to Sellers, and the waiting period relating to the filing
made under the Xxxx Xxxxx Xxxxxx Antitrust Improvements Act, as set forth in
Section 4.6 of this Agreement, shall have duly expired or been duly terminated
by the appropriate Agencies
15
without the commencement of any action by any such Agencies to restrain or
postpone the transactions contemplated hereby.
6.4 CERTIFICATES. Buyer shall have delivered to Sellers (i) a
certificate of the appropriate governmental authority, dated as of a date not
more than twenty (20) days prior to the Closing Date, attesting to the existence
and good standing of Buyer in the state of its incorporation; (ii) copies,
certified by the Secretary of State of the State of Delaware, as of a date not
more than twenty (20) days prior to the Closing Date, of the certificate of
incorporation and all amendments thereto of Buyer; (iii) a copy, certified by
the secretary of Buyer, dated the Closing Date, of the bylaws of Buyer; and (iv)
a certificate, dated the Closing Date, of the secretary of Buyer relating to the
incumbency and corporate proceedings in connection with the consummation of the
transactions contemplated hereby.
ARTICLE VII.
CLOSING
7.1 CLOSING. Unless this Agreement is first terminated as provided
in SECTION 8.1, and subject to the satisfaction or waiver of all the conditions
set forth in ARTICLES V and VI, the closing of the transactions contemplated
hereby (the "CLOSING") shall take place at the offices of Xxxxx Liddell & Xxxx
LLP, in Dallas, Texas, or such other place as is agreed to by Buyer and Seller,
on June 7, 2001, or such other date as the parties may agree upon in writing
(the "CLOSING DATE"). The Closing shall be effective as of 12:01 a.m. Central
Daylight Time on the Closing Date.
ARTICLE VIII.
TERMINATION PRIOR TO CLOSING
8.1 TERMINATION.
(a) This Agreement may be terminated and abandoned at any time
prior to the Closing:
(i) By the written mutual consent of all of the
parties hereto;
(ii) By Buyer on the Closing Date if any of the
conditions set forth in ARTICLE V shall not have been
fulfilled on or prior to the Closing Date;
(iii) By Sellers on the Closing Date if any of the
conditions set forth in ARTICLE VI shall not have been
fulfilled on or prior to the Closing Date;
(iv) By either Buyer or Sellers if the Closing
shall not have occurred on or before June 15, 2001, through no
fault of the party seeking to terminate ;
16
(v) By Buyer if either or both Sellers
materially breaches any representation, warranty, covenant or
agreement contained in or relating to this Agreement;
(vi) By Seller if Buyer materially breaches any
representation, warranty, covenant or agreement contained in
or relating to this Agreement; and
(vii) By Buyer if a Check Solutions Material
Adverse Effect occurs.
(b) Any termination pursuant to this ARTICLE VIII shall be without
prejudice to the terminating party's rights and remedies under this
Agreement by reason of any violation of this Agreement occurring prior
to such termination. In the event of a termination pursuant to this
ARTICLE VIII, each party shall bear its own costs and expenses incurred
with respect to the transactions contemplated hereby. The provisions of
SECTIONS 2.4, 3.4, 10.8, 10.9, 10.10, AND 10.11 shall survive
termination of this Agreement pursuant to this Article VIII.
ARTICLE IX.
INDEMNIFICATION
9.1 BUYER'S LOSSES.
(a) Each Seller agrees to indemnify and hold harmless Buyer and
its directors, officers, employees, representatives, agents and
attorneys from, against and in respect to Buyer's Losses (as defined
below) suffered, sustained, incurred or required to be paid by any of
them by reason of (i) any representation or warranty made by such
Seller in or pursuant to this Agreement being untrue or incorrect in
any material respect, or (ii) any failure by any such Seller to observe
or perform its covenants and agreements set forth in this Agreement.
(b) "BUYER'S LOSSES" shall mean actual damages, not to exceed
$16,000,000, but not less than $100,000, (including, without
limitation, amounts paid in settlement with the Sellers' consent, which
consent may not be unreasonably withheld), losses, obligations,
liabilities, claims, deficiencies, costs and expenses (including,
without limitation, reasonable attorneys' fees), penalties, fines,
interest and monetary sanctions, including, without limitation,
reasonable attorneys' fees and costs incurred to comply with
injunctions and other court and Agency orders, and other costs and
expenses incident to any suit, action, investigation, claim or
proceeding or to establish or enforce the rights of Buyer or such other
persons to indemnification hereunder.
9.2 SELLER LOSSES.
(a) Buyer agrees to indemnify and hold harmless Sellers, IBM and
FTB and their respective directors, officers, employees,
representatives, agents and attorneys from, against and in respect to
any and all Seller Losses (as defined below) suffered, sustained,
incurred or required to be paid by any of them by reason of (i) any
representation or warranty made by Buyer in or pursuant to this
Agreement being untrue or incorrect in any material respect
17
or (ii) any failure by Buyer to observe or perform its covenants and
agreements set forth in this Agreement or any other agreement or
document executed by it in connection with the transactions
contemplated hereby.
(b) "SELLER LOSSES" shall mean actual damages, not to exceed
$16,000,000, but not less than $100,000, (including, without
limitation, amounts paid in settlement with the consent of Buyer, which
consent may not be unreasonably withheld), losses, obligations,
liabilities, claims, deficiencies, costs and expenses (including,
without limitation, reasonable attorneys' fees), penalties, fines,
interest and monetary sanctions, including, without limitation,
reasonable attorneys' fees and costs incurred to comply with
injunctions and other court and Agency orders, and other costs and
expenses incident to any suit, action, investigation, claim or
proceeding or to establish or enforce the right of Sellers or such
other persons to indemnification hereunder.
9.3 EXCLUSION OF CERTAIN DAMAGES. Under no circumstances shall any
party be responsible to another for any indirect, incidental, special, punitive,
or consequential damages whatsoever, including loss of profits, savings or
goodwill, in connection with any aspect of the transactions contemplated herein
even if advised of the possibility of such damages (it being understood that any
damages of third parties claimed against a party for which another party has an
indemnity obligation hereunder are direct damages of such indemnified party and
such damages shall not be excluded under the limitations of this Section 9.3,
but shall remain subject to the limitations of Sections 9.1.(b) and 9.2.(b)).
9.4 EXCLUSIVE REMEDY. Each of IBM, FTB, Sellers and Buyer
acknowledges and agrees that from and after the Closing (absent fraud and
subject to Applicable Law) its sole exclusive remedy (at law or equity) with
respect to any and all claims against any other party relating to this
Agreement, except in respect to Article I and Sections 2.3(b), 2.3(c), 2.4, 3.4,
2.6, 4.5 hereof, shall be made pursuant to the indemnification provisions set
forth in this Article IX; provided however, that the notice provisions of
Section 9.5 shall apply to any and all claims against any other party relating
to this Agreement.
9.5 NOTICE OF LOSS. No party to this Agreement shall have any
liability under the indemnity provisions of this Agreement with respect to a
particular matter unless a notice setting forth in reasonable detail the breach
or other matter which is asserted has been given to the Indemnifying Party (as
defined below) within the Survival Period specified in SECTION 9.8 of this
Agreement. In addition, if such matter arises out of a suit, action,
investigation, proceeding or claim, such notice shall be given promptly, but in
any event within ten (10) days after the Indemnified Party (as defined below) is
given notice of the claim or the commencement of the suit, action, investigation
or proceeding. Notwithstanding the preceding sentence, as long as notice is
given within the Survival Period, failure of the Indemnified Party to give
timely notice of such suit, action, investigation, proceeding or claim shall not
release the Indemnifying Party from its obligations under this ARTICLE IX,
except to the extent the Indemnifying Party is actually prejudiced by such
failure to give notice. With respect to Buyer's Losses, the Seller or Sellers as
applicable making the representation or covenant shall be the Indemnifying Party
and Buyer and its directors, officers, employees, representatives, agents and
attorneys shall be the Indemnified Party. With respect to Seller Losses, Buyer
shall be the Indemnifying Party and Sellers, FTB, IBM and their
18
respective directors, officers, employees, representatives, agents and
attorneys shall be the Indemnified Party.
9.6 RIGHT TO DEFEND. Upon receipt of notice of any suit, action,
investigation, claim or proceeding for which indemnification might be claimed by
an Indemnified Party, the Indemnifying Party shall be entitled to defend,
contest or otherwise protect against any such suit, action, investigation, claim
or proceeding at its own cost and expense, and the Indemnified Party must
cooperate in any such defense or other action. The Indemnified Party shall have
the right, but not the obligation, to participate at its own expense in defense
thereof by counsel of its own choosing, but the Indemnifying Party shall be
entitled to control the defense unless the Indemnified Party has relieved the
Indemnifying Party from liability with respect to the particular matter or the
Indemnifying Party fails to assume defense of the matter. In the event the
Indemnifying Party shall fail to defend, contest or otherwise protect in a
timely manner against any such suit, action, investigation, claim or proceeding,
the Indemnified Party shall have the right, but not the obligation, thereafter
to defend, contest or otherwise protect against the same and make any compromise
or settlement thereof and recover the entire cost thereof from the Indemnifying
Party including, without limitation, reasonable attorneys' fees, disbursements
and all amounts paid as a result of such suit, action, investigation, claim or
proceeding or the compromise or settlement thereof; provided, however, that the
Indemnified Party must send a written notice to the Indemnifying Party of any
such proposed settlement or compromise, which settlement or compromise the
Indemnifying Party may reject, in its reasonable judgment, within thirty (30)
days of receipt of such notice. Failure to reject such notice within such thirty
(30) day period shall be deemed an acceptance of such settlement or compromise.
The Indemnified Party shall have the right to effect a settlement or compromise
over the objection of the Indemnifying Party; provided, that if (i) the
Indemnifying Party is contesting such claim in good faith or (ii) the
Indemnifying Party has assumed the defense from the Indemnified Party, the
Indemnified Party waives any right to indemnity therefore. If the Indemnifying
Party undertakes the defense of such matters, the Indemnified Party shall not,
so long as the Indemnifying Party does not abandon the defense thereof, be
entitled to recover from the Indemnifying Party any legal or other expenses
subsequently incurred by the Indemnified Party in connection with the defense
thereof other than the reasonable costs of investigation undertaken by the
Indemnified Party with the prior written consent of the Indemnifying Party.
9.7 COOPERATION. Buyer and Sellers agree and each of their
Affiliates, successors and assigns agree, and Buyer shall cause Check Solutions
to agree to cooperate with each other in the defense of any suit, action,
investigation, proceeding or claim by a third party, IN RESPECT OF WHICH
INDEMNITY MAY BE SOUGHT UNDER ARTICLE IX, and during normal business hours,
shall afford each other access to their books and records and employees relating
to such suit, action, investigation, proceeding or claim and shall furnish each
other all such further information that they have the right and power to furnish
as may reasonably be necessary to defend such suit, action, investigation,
proceeding or claim.
19
9.8 SURVIVAL OF REPRESENTATIONS, AND WARRANTIES. All
representations and warranties made by a party under this Agreement shall
survive the Closing and shall continue in full force and effect for the
following periods ("Survival Period"): Section 2.3.b and 2.3.c shall survive for
a period of four (4) years after the Closing, Section 2.6 shall survive for the
applicable statute of limitations, and all other representations and warranties
shall survive for a period of 90 days after the Closing. Notwithstanding any
other provision of this Agreement, any party claiming indemnification under this
Agreement must give notice of such claim in writing to all Parties hereunder on
or prior to the tenth day after the expiration of the applicable Survival Period
or such claim shall be barred. Sellers, IBM and FTB are not responsible for the
accuracy of any representations, warranties, outlooks, forecasts, or
projections, made by Check Solutions to the Buyer with regard to the transaction
contemplated by this Agreement.
ARTICLE X.
MISCELLANEOUS
10.1 ENTIRE AGREEMENT. This Agreement (including the Exhibits and
Schedules hereto) along with the Confidentiality Agreement dated March 26, 2001
between Buyer and Check Solutions, the Agreement for Exchange of Confidential
Information No. HW10201 between Buyer and International Business Machines
Corporation, constitutes the entire agreement and supersedes all prior
agreements and understandings, both written and oral, between the parties hereto
with respect to the subject matter hereof and thereof, and no party shall be
liable or bound to the other in any manner by any representations or warranties
not set forth herein or therein.
10.2 SUCCESSORS AND ASSIGNS. The terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the parties hereto
and their respective successors and permitted assigns. Neither this Agreement
nor any rights, interests or obligations hereunder may be assigned by any party
hereto without the prior written consent of all other parties hereto, and any
purported assignment in violation of this SECTION 10.2 shall be null and void.
Notwithstanding the foregoing, Buyer may transfer all or a portion of its rights
and obligations hereunder to one or more direct or indirect subsidiaries of
Buyer; provided, however, that such transfer shall not relieve Buyer of its
obligations hereunder.
10.3 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall for all purposes be deemed to be an original
and all of which shall constitute the same instrument.
10.4 HEADINGS. The headings of the articles and sections of this
Agreement are inserted for convenience only and shall not be deemed to
constitute part of this Agreement or to affect the construction hereof.
10.5 CONSTRUCTION. When a reference is made in this Agreement to an
Article, a Section or a Schedule, such reference shall be to an Article, a
Section or a Schedule of this Agreement unless otherwise indicated. As used in
this Agreement, the words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any
20
particular article, section, paragraph or other subdivision. Use in this
Agreement of the word "including" shall be deemed to mean "including without
limitation."
10.6 MODIFICATION AND WAIVER. Any of the terms or conditions of
this Agreement may be waived in writing at any time by the party which is
entitled to the benefits thereof, and this Agreement may be modified or amended
by a written instrument executed by Buyer, FTB, IBM and each Seller. No
supplement, modification or amendment of this Agreement shall be binding unless
executed in writing by all of the parties hereto. No waiver of any of the
provisions of this Agreement shall be deemed or shall constitute a waiver of any
other provision hereof (whether or not similar) nor shall such waiver constitute
a continuing waiver.
10.7 NOTICES. All notices of communication required or permitted
hereunder shall be in writing and may be given by (a) depositing the same in
United States mail, addressed to the party to be notified, postage prepaid and
registered or certified with return receipt request, (b) delivering the same in
person to an officer or agent of such party or (c) sending the same via
facsimile with electronic confirmation of receipt.
(a) If to Buyer, addressed to it at:
Xxxxxxxx Corporation
0000 Xxxxxx Xxxx Xxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Facsimile No.: (000) 000-0000
Attn: Xxxxxxx Xxxxxxx
with copies to:
Xxxxxxxx Corporation
0000 Xxxxxx Xxxx Xxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Facsimile No.: (000) 000-0000
Attn: General Counsel
Xxxxx Xxxxxxx & Xxxx LLP
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Facsimile No.: (000) 000-0000
Attn: Xxxx X. Xxxxxxx
(b) If to Sellers, addressed thereto at:
IPSS or IBM:
IBM Corporation
Xxx Xxxxxxx Xxxx
Xxxxxx, XX 00000
Facsimile No.: (000) 000-0000
21
Attn: Xxxxx X. Xxxxxxx
WITH A COPY TO:
IBM Corporation
New Orchard Road
Armonk, NY
Facsimile No: (000) 000-0000
Attn: Xxx Xxxxxxxx
CCCT, CCI OR FTB:
First Tennessee Bank National Association
000 Xxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxxx, Xx.
Senior Vice President & Treasurer
With a copy to:
Xxxxx X. Xxxxxxxx, Xx.
Senior Vice President and Counsel
First Tennessee Bank National Association
000 Xxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Facsimile: (000) 000-0000
Xxxxxxx X. Xxxxxx, Esq.
Baker, Donelson, Bearman & Xxxxxxxx
000 Xxxxxxx Xxx., Xxxxx 0000
Xxxxxxx, XX 00000
Facsimile: (000) 000-0000
or to such other address or counsel as any party hereto shall specify pursuant
to this SECTION 10.7 from time to time. Any notice that is delivered personally
or by overnight delivery or facsimile in the manner provided herein shall be
deemed to have been duly given to the party to whom it is directed upon receipt
by such party. Any notice that is addressed and mailed in the manner herein
provided shall be conclusively presumed to have been given to the party to whom
it is addressed at the close of business, local time of the recipient, on the
fourth day after the day it is so placed in the mail.
10.8 CHOICE OF LAW. This Agreement shall be construed, interpreted
and the rights of the parties determined in accordance with the internal laws of
the state of New York, applicable to agreements made and to be performed
entirely within such state, without regard to the conflict of laws principles of
such state. Each Party hereby irrevocably and unconditionally submits for itself
22
and its properties, to the exclusive jurisdiction of any New York state court
sitting in the county of Westchester, any Federal Court of the United States of
America sitting in the Southern District of New York, and any appellate court
from such court in any suit, action or proceeding arising out of or relating to
this Agreement and hereby irrevocably and unconditionally waives, to the fullest
extent a Party may legally do so, any objection which it may now or hereafter
have to the laying of venue in any such court.
10.9 WAIVER OF JURY TRIAL. Each party waives, to the fullest extent
permitted by applicable law, any right it may have to a trial by jury in respect
of any action, suit, or proceeding arising out of or related to this Agreement.
10.10 PUBLICITY. Except as required (in the opinion of counsel to
the party seeking to disclose) by applicable law or by the rules of a stock
exchange on which a Party's stock is traded, no party hereto shall issue any
press release or make any public statement, in either case relating to or in
connection with or arising out of this Agreement or the matters contained
herein, without obtaining the prior written approval of the other parties to the
content and manner of presentation and publication thereof, which approval shall
not be unreasonably withheld or delayed.
10.11 EXPENSES. Sellers, Buyer, IBM and FTB shall be solely
responsible for their respective costs and expenses incurred in connection with
the transactions contemplated hereby.
10.12 THIRD PARTY BENEFICIARIES. No individual or firm, corporation,
partnership or other entity shall be a third-party beneficiary of the
representations, warranties, covenants and agreements made by any party hereto.
10.13 NUMBER AND GENDER OF WORDS. Whenever the singular number is
used, the same shall include the plural where appropriate, and words of any
gender shall include each other gender where appropriate.
10.14 FURTHER ASSURANCES. From time to time after the Closing, at
the request of any other party but at the expense of the requesting party,
Buyer, Sellers, IBM, or FTB, as the case may be, will execute and deliver any
such other instruments of conveyance, assignment and transfer, and take such
other action as the other party may reasonably request in order to consummate or
evidence the transactions contemplated hereby.
[SIGNATURE PAGE TO FOLLOW.]
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IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first above written.
XXXXXXXX CORPORATION
By:
-----------------------------------------
Name: X. X. XXXXXXXX
Title: CHAIRMAN AND CHIEF EXECUTIVE OFFICER
CHECK CONSULTANTS COMPANY OF
TENNESSEE, INC.
By:
-----------------------------------------
Name: XXXXXX X. XXXXXXXX, XX.
Title: VICE PRESIDENT
CHECK CONSULTANTS, INC.
By:
-----------------------------------------
Name: XXXXXX X. XXXXXXXX, XX.
Title: VICE PRESIDENT
IPSS CORPORATION
By:
-----------------------------------------
Name: XXXXX X. XXXXXXX
Title: PRESIDENT
INTERNATIONAL BUSINESS MACHINES
CORPORATION
By:
-----------------------------------------
Name: XXXXX X. XXXXXXX
Title: VICE PRESIDENT, CORPORATE DEVELOPMENT
FIRST TENNESSEE BANK NATIONAL
ASSOCIATION
By:
-----------------------------------------
Name: XXXXXX X. XXXXXXXX, XX.
Title: SENIOR VICE PRESIDENT
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