Exhibit 2.9
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement ("Agreement") is entered into as of the
24th day of January, 2002, by and among NELnet, Inc., a Nevada corporation (the
"Buyer") and Xxxxxxx Xxxxxxxxxxx, individually (the "Seller").
RECITALS
A. Seller owns title and beneficial ownership interest in 100.0%
of all of the issued and outstanding capital stock (the "Stock") of Idaho
Financial Associates, Inc., an Idaho corporation (the "Company");
B. The parties desire that Seller sells to Buyer and Buyer
purchases from Seller upon the terms and conditions hereinafter set forth all of
the Stock representing a 100.00% equity interest in the Company immediately
after all transactions contemplated or referenced in this Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and in
consideration of and in reliance upon the representations, warranties and
obligations in this Agreement, the parties agree as follows:
ARTICLE I
PURCHASE OF STOCK
1.1 Definition Reference. Certain capitalized terms are defined in
Section 8.1.
1.2 Purchase of Stock. Subject to the terms of this Agreement,
Seller agrees to sell, transfer and assign (or cause to be sold, transferred and
assigned) to Buyer free of all Liens, and Buyer agrees to purchase, the Stock
representing 100.00% of the equity ownership and authorized and issued shares of
stock of the Company (the "Purchased Stock").
ARTICLE II
CONSIDERATION
2.1 Purchase Price. In consideration of the Purchased Stock, Buyer
will pay Seller the aggregate purchase price of $16.8 million Dollars
($16,800,000.00) (the "Purchase Price"), payable as set forth below.
2.1.1 Closing Payment. At the Closing, Buyer will pay
Seller in immediately available funds the amount of the Purchase Price.
1
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer, with respect to the Company
and each of the Subsidiaries (which subsidiaries, for the purpose of this
Article III shall be included in the term "Company" except where otherwise
noted), as of the date of this Agreement and as of Closing, as follows:
3.1 Ownership of Stock. Seller is, as of the date of this
Agreement, the record title and beneficial owner of the Stock, and will be the
record title and beneficial owner of the Stock as of Closing, free and clear
from all Liens of any nature, and upon the delivery to the Buyer of the endorsed
Stock certificates the Buyer will be the title and beneficial owner of the
Purchased Stock, which shall constitute 100.00% of the issued and outstanding
stock of the Company, which shall be free and clear from all Liens of any
nature.
3.2 Authorization; Organization and Standing; Non-Contravention.
Seller has the necessary power and authority to execute and deliver this
Agreement and to perform the obligations to be performed by Seller hereunder,
and this Agreement is valid and binding upon Seller and enforceable in
accordance with its terms. The execution and delivery of this Agreement by
Seller do not, and the consummation of the transactions contemplated hereby and
the performance by Seller of the terms of this Agreement will not (a) violate
any Law, (b) conflict with, result in a breach of, constitute a default under,
result in the acceleration of, create in any Person the right to accelerate,
modify or cancel, or require any notice under any contract to which the Company
is a party or by which the Company is bound or which any of its assets are
subject, (c) violate provisions of the Company's articles of incorporation or
bylaws, or (d) result in acceleration of any obligation under, or constitute an
event of default under any order, judgment or decree to which the Company or
Seller are bound. No approval, authorization, license, permit or other action
by, or filing with, any Governmental Authority or non-governmental third party,
or of the directors of the Company is required that has not been obtained in
connection with the execution and delivery of this Agreement by Seller or the
consummation by Seller of the transactions contemplated hereby.
3.3 Intellectual Property. Schedule 3.3 attached hereto sets forth
a complete list of all patents, pending patent applications and registration
certificates (including a brief description of the subject matter thereof, the
jurisdiction, the date of issue or filing and the patent or application number),
all trade names, trade marks and service marks and applications therefor, all
copyright registrations, all copyrights not registered, all internet domain name
registrations of the Company, and all source codes used in the business and
operations of the Company and the Subsidiaries as presently conducted
(collectively, the "Intellectual Property." The Company is the sole and
exclusive owner of the entire right, title and interest in and to the
Intellectual Property, free of any and all Liens, and there are no pending, or
to the Seller's knowledge, threatened proceedings or litigation or other adverse
claims affecting or with respect to the Intellectual Property. No Person is
infringing, to Seller's knowledge, the Intellectual Property, and none of the
Intellectual Property is infringing upon the intellectual property rights of any
other Persons.
2
3.4 Organization and Standing of the Company.
(a) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Idaho, its
state of incorporation, and is legally qualified to transact business
and is in good standing in every jurisdiction in which the nature of
the business conducted by it or the character or location of properties
owned or leased by it makes such qualification necessary, except in
such jurisdiction where failure to be so duly qualified would not have
a material adverse effect upon the Company. The Company is qualified to
transact business only in the State of Idaho.
(b) Seller has delivered to Buyer a true and complete
copy of the Company's articles of incorporation and bylaws, and any
amendments thereto, presently in effect. The minute books of the
Company are in good order, true, complete, correct and up-to-date, and
with all necessary signatures, setting forth all meetings and actions
taken by the shareholders and directors of the Company. The stock
transfer books and stock ledgers of the Company are in good order,
true, complete, correct and up-to-date, with all necessary signatures,
and set forth all stock certificates issued, transferred and
surrendered. The Company is not in default under or in violation of any
provision of its articles of incorporation or bylaws.
(c) The Company's authorized capital stock consists of
common stock, $0 par value per share, of which 400,000 shares are
issued and outstanding and owned by Seller as of the date of this
Agreement and will be owned by Seller as of the Closing Date. The
Purchased Stock is duly authorized, validly issued, fully paid,
non-assessable and free of preemptive rights, and are subject to no
restrictions with respect to transferability. There are no outstanding
or authorized stock appreciation, phantom stock, profit participation
or similar rights with respect to the Company. There are no voting
trusts, proxies or other agreements or understandings with respect to
the voting of the Purchased Stock. There are no outstanding
subscriptions, options, warrants, calls, contracts, demands,
commitments, convertible securities rights of first refusal or other
agreements or arrangements of any nature whatsoever under which the
Seller or the Company are or may become obligated to issue, assign or
transfer any shares of the capital stock of the Company.
(d) The Company has all licenses, permits and
authorizations necessary to carry on the businesses in which it is
engaged and to own and use the properties owned and used by it. None of
the licenses, permits and authorizations of the Company will be
terminated or are terminable due to consummation of the transaction
provided for herein.
(e) The Company is and, from and after May 1, 1987, the
Company has been a duly qualified "S" corporation under the Code, and
the Seller is qualified to be a shareholder of an "S" corporation in
accordance with the provisions of the Code.
3.5 Good Title to Assets. The Company is the sole and
unconditional owner of, and has good and marketable title, free and clear of any
Liens, to the properties and assets used by it, located on its premises, or
shown in the most recent financial statements. The properties and assets owned
by the
3
Company as of the Closing Date shall permit the Company to continue and carry on
business and operations in the ordinary course of business.
3.6 Material Contracts. Schedule 3.6 attached hereto is a true and
complete schedule of all of the agreements which are binding upon the Company,
and which individually involve purchases, sales, transfers or services
aggregating in excess of $10,000, with respect to any benefit plans, for the
purchase of materials, supplies, services or equipment, for the borrowing of
money, for the acquisition of a business or asset, with respect to transfers of
licenses of software, or other existing agreements pertaining to or affecting
the Company. True, correct and complete copies of all documents referred to in
Schedule 3.6 have been delivered to Buyer. To the knowledge of Seller, no Person
has claimed that any of such agreements listed in Schedule 3.6 are invalid or
unenforceable or in default. The Company shall continue to receive all benefits
of all of the agreements into which it has entered, and none of such agreements
contain any provision which will or could result in termination or modification
of any term upon change in control of the Company. With respect to each of the
agreements listed in Schedule 3.6, such agreement is legal, valid, binding,
enforceable and in full force and effect and/or continue to be so following
consummation of the transaction contemplated hereby, and no party is in breach
or default and no event has occurred which with notice or lapse of time, would
constitute a breach or default, or permit termination, modification or
acceleration under such agreement.
3.7 Subsidiaries. The Company has no Subsidiary.
3.8 Litigation. There are no actions, claims, proceedings,
litigation, state or federal equal employment opportunity commission proceedings
or, to Seller's knowledge, investigations pending or threatened against the
Company with respect to its business, that could reasonably be expected to have,
directly or indirectly, individually or in aggregate, a material adverse effect
upon the Company. All pending litigation is identified in Schedule 3.8 attached
hereto.
3.9 Compliance with Laws. The Company has complied in all material
respects and is complying in all material respects with all Laws, and the
Company has not received notice of violation of any applicable Law.
3.10 Compensation of Employees. Seller has furnished to Buyer a
true, correct and complete list of the names and job titles of all persons who
are employees of the Company, together with annual base salaries, bonuses and
commissions of such employees, attached hereto as Schedule 3.10. There are no
arrearages in the payment of wages or salaries to such employees. Other than the
employment agreements as summarized in Schedule 3.10A attached hereto, the
Company has no employment agreements, compensation or deferred compensation
arrangements or consulting agreements with any employee or other person or
entity which is in writing or which is not terminable at will. The information
contained in Schedule 3.10 will be accurate and shall not have been modified as
of the Closing Date.
3.11 Taxes. All material tax returns required to be filed prior to
the Closing Date have been filed in a timely manner and are true, complete and
correct in all material respects. All material taxes relating to the Company due
on or before the Closing Date have been timely and fully paid. The charges,
accruals and
4
reserves for taxes due, or accrued but not yet due, relating to the Company for
any tax period prior to the Closing Date as reflected on the books of the
Company are adequate to cover such taxes. No penalties or other charges of any
nature are or will become due with respect to the late filing of any tax returns
required to be filed on or before the Closing Date. All material taxes that the
Company is required by Law to withhold or collect have, in all respects, been
duly withheld or collected and have been timely paid over to the extent due and
payable. The Company has no Liabilities related to Taxes arising from any
deferred income. There has been no IRS examination or audit of the Company
within the past ten years. There are no sales Taxes imposed by the State of
Idaho and which arise from the transactions contemplated by this Agreement.
There are no tax sharing agreements to which the Company is now or ever has been
a party. The Company is not a party to any agreement that would result,
separately or in the aggregate, in the payment of any "excess parachute
payments" within the meaning of Section 280G of the Internal Revenue Code of
1986, as amended (the "Code"). The Company is not a party to any joint venture,
partnership or other arrangement or contract that could be treated as a
partnership for federal income tax purposes. The gain generated by the election
under Section 338(h)(10) of the Code will be reported on the final tax return of
the Company and the Federal and state income tax resulting therefrom will be
paid by Seller.
3.12 Employee Benefit Plans. Except as identified and described in
the 401k plan furnished by Seller, the Company does not have "employee benefit
plans" as that term is defined in the Employee Retirement Income Security Act of
1974, as amended, that currently are maintained by, sponsored in whole or in
part by or contributed to, by or on behalf of the Company as applicable, for the
benefit of the respective employees, retirees, dependents, spouses, directors,
independent contractors or other beneficiaries. Schedule 3.12 consists of a
true, correct and complete copy of the employee handbook in effect with respect
to the Company's employees as of the date hereof, which handbook contains true
and complete copies or summaries of all material pension, retirement,
profit-sharing, deferred compensation, stock option, employee stock ownership,
severance pay, vacation, bonus or other material incentive plans, all other
material written employee programs, arrangements or agreements, whether arrived
at through collective bargaining or otherwise, all material medical, vision,
dental or other health plans, all life insurance plans and all other material
employee benefit plans or fringe benefit plans, including, without limitation,
all "employee benefit plans" as that term is defined in Section 3(3) of the
Employee Retirement Income Security act of 1974, as amended ("ERISA"), currently
adopted, maintained by, sponsored in whole or in part by, or contributed to by,
or on behalf of, the Company for the benefit of its employees, retirees,
dependents, spouses, directors, independent contractors or other beneficiaries
who are eligible to participate therein (the "Benefit Plans"). Neither Seller,
the Company nor any ERISA affiliate of the Seller (which for purposes of this
Agreement shall mean any entity required to be aggregated with Seller or the
Company under Code Sections 414(b), (c), (m) or (o) which maintains or has
maintained any multi-employer plan within the meaning of Section 3(37) of ERISA.
All Benefit Plans are in compliance in all material respects with the applicable
terms of ERISA, the Code and any other applicable laws, rules and regulations.
No Benefit Plan which is a Defined Benefit Pension Plan (within the meaning of
ERISA) has any "unfunded current liability," as that term is defined in Section
302(d)(8)(A) of ERISA, and the present fair market value of the assets of any
such plan exceeds the plan's "benefit liabilities," as that term is defined in
Section 4001(a)(16) of ERISA, when determined under actuarial factors that would
apply if the plan terminated in accordance with all applicable legal
requirements. No Benefit Plan has an "accumulated funding deficiency" as defined
in Code Section 412. No event has occurred with respect to a Benefit Plan
5
that could subject the Company to liability under Title IV of ERISA. No Benefit
Plan has been funded or administered in a manner that would result in Liability
for any Tax or penalty for overfunding or prohibited transactions under
applicable law.
3.13 Absence of Certain Events. Since the date of the most recent
financial statements of the Company, there has not been:
(a) an amendment to the Company's articles of
incorporation or bylaws, or merger with or into or consolidation with
any Person, change or agreement to change any agreements to which the
Company is a party or the character or the business of the Company;
(b) any dividends declared or paid or other distributions
of any kind to the Company's shareholders declared or made, or any
direct or indirect redemption, purchase, retirement or other
acquisition of any of the Stock, without the prior written consent of
Buyer in its discretion;
(c) any loan or advance made to any of the Company's
officers, directors, employees, consultants, agents, shareholders or
any other loan or advance made otherwise than in the ordinary course of
business;
(d) any change in the financial condition, properties,
business or operations of the Company or any event or circumstance
which is, or may result in, singly or in the aggregate, a material
adverse effect on the Company;
(e) any loss affecting any asset of the Company, unless
such loss could not reasonably be expected to result in a material
adverse effect upon the Company;
(f) any strike or other labor trouble or dispute has
resulted in or may result in a material adverse effect upon the
Company;
(g) any loss of any permit, license, qualification or
certificate of authority held by the Company;
(h) any indebtedness, Liability or obligation incurred by
the Company or any transaction entered into by the Company, other than
in the ordinary course of business, or any guarantee by the Company of
any indebtedness, Liability or obligation of any other Person;
(i) any obligation, Liability or Lien, paid, discharged
or satisfied by or on behalf of the Company other than the current
Liabilities reflected in the most recent financial statement;
6
(j) any sale, transfer or other disposition of any asset
of the Company having a book value in excess of $10,000 in a single
instance and $25,000 in the aggregate, or any cancellation of any debt
or claim of the Company having a book value in excess of $10,000 in a
single instance and $25,000 in the aggregate, except in the ordinary
course of business;
(k) any material change in, or any contract to materially
change, the compensation or other direct or indirect remuneration
payable to any officer, employee or agent of the Company or any bonus,
incentive or deferred compensation, profit sharing, retirement,
pension, group insurance, death benefit or other fringe benefit plan,
or any employment or consulting agreement, granted, entered into or
materially amended or altered, other than in the ordinary course of
business or as required pursuant to an existing employment agreement;
(l) any capital expenditure, addition or improvement made
or committed to be made by or on behalf of the Company in excess of
$10,000 with respect to any single expenditure, addition or improvement
of the Company;
(m) any termination or failure to renew, or receipt of a
threat (that was not subsequently withdrawn) by a third party to
terminate or fail to renew any material agreement to which the Company
is a party;
(n) any material failure to maintain the books and
records of the Company in the usual, regular and ordinary manner,
consistent with past practice, or any material change in the accounting
principle or practice of the Company; or
(o) any write-off as uncollectible of any receivables, or
any portion thereof; or
(p) any adverse change in the business, financial
condition, operations, results of operations or future prospects of the
Company.
3.14 Financial Statements. Schedule 3.14 attached hereto contains
an accurate and complete balance sheet of the Company as of, and profit and loss
statements relating to the Company (collectively, the "Financial Statements")
for: December 31, 1998; December 31, 1999; December 31, 2000; and December 31,
2001. Such information fairly presents the financial condition and results of
operation of the Company as of and for such periods, have been prepared on a
consistent basis throughout the periods covered thereby, are correct and
complete, and are consistent with the books and records of the Company. All of
the Financial Statements prior to December of 2001 are audited statements
prepared in accordance with GAAP on a consistent basis throughout the periods
covered thereby. The interim Financial Statement for the period ended December
31, 2001, shall be supplemented by independent auditors as of the Closing Date.
Other than dividends summarized in Schedule 3.14A attached hereto, there have
been no dividends or distributions of any nature by the Company since January 1,
2001.
7
3.15 Absence of Undisclosed Liabilities. The Company does not have
any direct or indirect, primary or secondary, Liability of any type, whether
accrued, absolute or contingent, liquidated or unliquidated, matured or
unmatured, or otherwise that will have, or is reasonably likely to have,
individually or in the aggregate, a material adverse effect upon the Company,
except for the Liabilities which are accrued or reserved against and reflected
upon the Financial Statements of the Company.
3.16 Brokers and Finders. Seller has not employed any broker or
finder or incurred any Liability for any financial advisory fees, or brokerage
fees, commissions or finder's fees in connection with this Agreement.
3.17 Conflicts of Interest. No officer or director of the Company
(or any member of any family of such officer or director) has any direct or
indirect interest in any creditor, competitor, supplier, customer or agent of
the Company.
3.18 Customers. No licensee which engages the services of or
acquires Intellectual Property from the Company has terminated or, to the
knowledge of Seller or the Company, threatened to terminate or decrease its
relationship with the Company. As of the Closing Date, the Company is not
required to provide any bonding or other financial security arrangements in
connection with any transactions with any customers or suppliers.
3.19 Real Estate. Schedule 3.19 attached hereto is a true and
complete schedule of all leases of real estate to which the Company is a party
and all parcels of real estate in which the Company holds a title or leasehold
interest. All such leases are in full force and effect, the Company shall have
the quiet and peaceful possession of the properties covered thereby, and none of
the lessors thereunder are in material default under any of the terms thereof.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
4.1 Organization and Power. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of Nevada.
Buyer has full corporate power to execute, deliver and perform this Agreement
and all other agreements and documents to be executed and delivered by it in
connection herewith.
4.2 Authority; Noncontravention. Buyer has the necessary corporate
powers and authority to execute and deliver this Agreement and to perform the
obligations to be performed by Buyer hereunder, and this Agreement is valid and
binding upon Buyer and enforceable in accordance with its terms. The execution
and delivery of this Agreement will not (a) violate any Law, (b) conflict with,
result in a breach of, constitute a default under, result in acceleration of,
create in any Person the right to accelerate, modify or cancel, or require any
notice under any contract to which Buyer is a party or by which Buyer is bound
or which any of its assets are subject, (c) violate the articles of
incorporation or bylaws of Buyer, or
8
(d) result in acceleration of any obligation under, or constitute an event of
default under, any order, judgment or decree to which Buyer is bound. Except as
specifically set forth in this Agreement, no approval, authorization, license,
permit or other action by, or filing with, any Governmental Authority or
non-governmental third party, or of the shareholders or directors of Buyer is
required that has not been obtained in connection with the execution and
delivery of this Agreement by Buyer or the consummation by Buyer of the
transactions contemplated hereby.
4.3 Brokers and Finders. Buyer has not employed any broker or
finder or incurred any Liability for any brokerage fees, commissions or finder's
fees in connection with this Agreement.
ARTICLE V
CLOSING
5.1 Closing. If the conditions to the parties' obligations
enumerated below in Sections 5.2 and 5.3 are satisfied, consummation of the
transactions contemplated hereby (the "Closing") shall take place on January 24,
2002 (the "Closing Date"), by delivery or facsimile copies of documents, or on
such other date or at such other location as the parties may agree. The
transfers and deliveries herein contemplated will be mutually interdependent and
regarded as occurring simultaneously; and no such transfer or delivery will
become effective until all of the transfers and deliveries provided for in
Sections 5.2 and 5.3 have been consummated. Notwithstanding the date of Closing,
the transactions consummated herein shall be effective as of January 2, 2002.
5.2 Conditions to Buyer's Obligations. The obligation of Buyer to
perform this Agreement is subject to satisfaction (or written waiver by Buyer in
Buyer's sole discretion) of the following conditions at or before the Closing,
it being an explicit condition that all agreements and documents to be delivered
to Buyer which are not attached as Schedules (and therefore deemed satisfactory
to Buyer) must be in form and substance reasonably satisfactory to Buyer:
5.2.1 Agreements Performed. Seller shall have performed all
of the obligations under this Agreement to be performed by him at or before the
Closing, and Buyer shall have received a certificate to such effect, executed by
the Seller and dated as of the Closing Date;
5.2.2 Representations Accurate. The representations and
warranties of Seller contained herein will continue to be accurate in all
material respects just as if made as of the Closing, without giving effect to
any supplemental disclosure, update or modification of any Schedule hereto, and
Buyer shall have received a certificate to such effect, executed by the Seller
and dated as of the Closing Date;
5.2.3 No Change. There will have been no material adverse
changes in the financial condition, results of operations, assets, business or
prospects of the Company;
5.2.4 Legal Action. There will be no pending or threatened
legal action or inquiry which challenges the validity or legality of or seeks or
could reasonably be expected to prevent, delay or impose conditions on the
consummation of the transactions contemplated by this Agreement;
9
5.2.5 Stock Certificates. Buyer will have received stock
certificates either duly endorsed in blank or with stock powers so endorsed and
attached thereto ready for immediate transfer into Buyer's name, representing
the transfer of the Purchased Stock to Buyer, free of all Liens, as well as all
other documents to be delivered pursuant to Section 5.5.1 hereof;
5.2.6 Access to Records. Buyer shall have been afforded an
opportunity to review all books and records of the Company and its Subsidiaries;
5.2.7 Due Diligence. Buyer will have completed its due
diligence review with respect to the Company and the results thereof shall have
been to the satisfaction of Buyer in its sole discretion;
5.2.8 Consulting Agreement. Buyer will have received an
employment agreement and a Consulting Agreement between the Company and Seller
as collectively shown in Schedule 5.2.8, attached hereto, executed by Seller;
5.2.9 338(h)(10) Election. Buyer will have received forms
executed by Seller making an election under Section 338(h)(10) of the Code under
Section 6.9 hereof; and
5.2.10 Others. Buyer will have received each other document
required to be delivered to Buyer hereunder.
5.3 Conditions to Seller's Obligations. The obligation of Seller
to perform this Agreement is subject to satisfaction (or written waiver of
Seller in Seller's sole discretion) of the following conditions at or before the
Closing, it being an explicit condition that all agreements and documents to be
delivered to Seller which are not attached as Schedules (and therefore deemed
satisfactory to Seller) must be in form and substance reasonably satisfactory to
Seller:
5.3.1 Agreements Performed. Buyer will have performed all
of the obligations under this Agreement to be performed by it at or before the
Closing;
5.3.2 Representations Accurate. The representations and
warranties of Buyer contained herein will continue to be accurate in all
material respects just as if made as of the Closing without giving effect to any
supplemental disclosure, update or modification of any Schedule hereto pursuant
to Section 5.4.3 hereof;
5.3.3 Legal Action. There will be no pending or threatened
legal action or inquiry which challenges the validity or legality of or seeks or
could reasonably be expected to prevent, delay or impose conditions on the
consummation of the transactions contemplated by this Agreement;
5.3.4 Closing Payment. Seller will have received
immediately available funds by wire transfer in the amount of the Purchase Price
and each of the other documents required to be delivered pursuant to Section
5.5.2 hereof;
10
5.3.5 Option Agreement. Seller will have received an Option
Agreement in the form shown in Schedule 5.3.5, attached hereto, executed by
Buyer;
5.3.6 Others. Seller and the Company will have received
each other document required to be delivered to them hereunder.
5.4 Closing Covenants.
5.4.1 Supplemental Disclosure. Until the Closing, the
parties hereto will immediately notify the other party of any event or
circumstance that:
(a) makes it necessary to correct any
representation and warranty in Article III or IV that has been
rendered inaccurate thereby; or
(b) arises hereafter and which, had it existed
on or prior to the date hereof, would have resulted in an
inaccuracy in a representation and warranty in Article III or
IV.
5.4.2 Termination. This Agreement may be terminated:
(a) by written agreement of Buyer and Seller, or
if Buyer determines to terminate after due diligence
investigation by Buyer is not satisfactory in Buyer's
discretion; or
(b) by the Buyer, if there has been a material
breach by Seller or the Company or its Subsidiaries of any of
the Seller's representations, warranties, covenants or
agreements set forth in this Agreement which breach cannot be
cured promptly by the Seller or the Company or its
Subsidiaries.
If this Agreement is terminated pursuant to paragraph (a) of this Section, all
provisions of this Agreement will become void without any liability on the part
of any party. If this Agreement is terminated pursuant to paragraph (b) of this
Section, all rights and remedies of each party hereunder and all other
provisions hereof related thereto will survive termination to the extent
required so that any party responsible for any breach or nonperformance of its
obligations hereunder prior to termination will remain liable for the damages
resulting therefrom. All rights and remedies of each party hereunder and all
other provisions hereof related thereto will survive termination to the extent
required so that any party responsible for any breach or nonperformance of its
obligations hereunder prior to termination will remain liable for the damages
resulting therefrom.
5.5 Closing Deliveries. At the Closing, the parties hereto will
make the transfers and deliveries hereinafter set forth. The transfers and
deliveries herein contemplated will be mutually interdependent and regarded as
occurring simultaneously; and no such transfer or deliver will become effective
until all of the transfers and deliveries provided for hereunder have been
consummated. The transfers and deliveries herein
11
contemplated will be deemed to have occurred and the Closing will be effective
as of the close of business on the Closing Date.
5.5.1 Deliveries from Seller to Buyer. At the Closing,
Seller shall deliver or cause to be delivered the following to Buyer:
(a) certificates representing all of the
Purchased Stock duly endorsed by Seller, fully registered in
the name of Buyer and duly recorded on the stockholder and
transfer records of the Company, free of all Liens and
assessments;
(b) an employment agreement and a Consulting
Agreement in the form of Schedule 5.2.8 attached hereto and
executed by Seller and the Company;
(c) the books and records of the Company
including, without limitation, the stock books, stock ledgers,
minute books, corporate seal and operating contracts;
(d) election forms, consents or returns executed
by Seller, providing for the Code Section 338(h)(10) election
as provided under Section 6.9 hereof, together with the
allocation of Purchase Price as provided under Section 6.10
hereof;
(e) employment agreements incorporating
noncompete covenants executed by and between the Company and
key employees identified by Buyer in the form approved by
Buyer;
(f) resignations executed by each member of the
board of directors of the Company; and
(g) each other document reasonably requested to
be delivered to Buyer hereunder.
5.5.2 Deliveries from Buyer to Seller. At the Closing,
Buyer shall deliver or cause to be delivered the following to Seller:
(a) evidence of wire transfer of the Purchase
Price;
(b) an Option Agreement in the form of Schedule
5.3.5 attached hereto and executed by Buyer;
(c) each other document reasonably requested to
be delivered to Seller hereunder.
12
ARTICLE VI
COVENANTS
6.1 Miscellaneous Covenants.
6.1.1 Publicity. All public announcements relating to this
Agreement or the transactions contemplated hereby will be made only as may be
authorized mutually by Buyer and Seller or as required by Law.
6.1.2 Expenses. Except to the extent otherwise specifically
provided herein, each party will pay all of its own respective expenses incident
to the transactions contemplated by this Agreement which are incurred by such
party or its representatives.
6.1.3 No Assignment. Except as provided in Article IX, no
assignment of any part of this Agreement or any right or obligation hereunder
may be made without the prior written consent of all other parties, and any
assignment attempted without that consent will be void.
6.2 Confidentiality.
6.2.1 Confidentiality Obligation. Except for a Required
Disclosure (as defined below) each party hereto agrees not to disclose or use,
directly or indirectly, any Confidential Information, at any time after
execution of this Agreement, and the Closing. In the event of a contemplated
Required Disclosure of Confidential Information by a party, such party agrees to
use his or its best efforts to provide the other party and the Company an
opportunity to object to the disclosure and as much prior written notice as is
possible under the circumstances. For purposes of this Section 6.2.1,
"Confidential Information" means (i) all information belonging to, used by, or
which is in the possession of any party hereto relating to the Company's or its
Subsidiaries' or another party hereto's business to the extent such information
is not intended to be disseminated to the public or is otherwise not generally
known to competitors of the Company or its Subsidiaries, including, but not
limited to, information relating to the Company's or its Subsidiaries' products,
services, strategies, pricing, customers, representatives, suppliers,
distributors, technology, finances, employee compensation, computer software and
hardware, inventions, developments, or trade secrets and (ii) all information
relating to the acquisition of the Purchased Stock by Buyer hereunder,
including, without limitation, all strategies, negotiations, discussions, terms,
conditions and other information relating to this Agreement and each other
document and agreement delivered in connection herewith. Each party hereto
acknowledges that following the Closing all of the Confidential Information will
be the exclusive proprietary property of the Company or of the appropriate other
parties hereto, as the case may be, whether or not prepared in whole or in part
by any party hereto and whether or not disclosed to or entrusted to the custody
of any party hereto. Nothing herein shall require any party to withhold from
disclosure of any Confidential Information hereunder where disclosure is
required by Law, required to be included in either party's financial statements
or required for the preparation and submission of any report for any agency,
commission or board requiring such information in connection with such party's
business (a "Required Disclosure"). Notwithstanding any other provision
contained in this Agreement to the
13
contrary, the Buyer may furnish information (including Confidential Information)
to third Persons who are agents or employees of the Buyer.
6.3 Covenants with Respect to the Company. At Closing, Buyer, as
sole shareholder, shall vote its shares in support of action by the Company to
enter into and execute the employment agreement and Consulting Agreement with
Seller in the form of Schedule 5.2.8 attached hereto, which shall have been
executed by Seller and delivered at Closing, together with employment agreements
with key employees. If the employment of any of the employees is terminated, the
bonus payments (above regular compensation) provided for in agreements dated
January 24, 2002, with such terminated employee shall be paid to the Xxxxx and
Xxxxx Xxxxxxxxxxx Honors College Scholarship Fund at Boise State University,
Boise, Idaho. Nelnet Loan Services, Inc. shall guarantee the employee
compensation as provided in this Section 6.3. Buyer, as sole shareholder, shall
vote its shares in support of action by the Company not to require employees
located as of Closing in Boise, Idaho, to relocate for a period of three years
following the Closing Date. At Closing, Seller shall execute and deliver
acknowledgment and approval forms with respect to amounts paid to employees
hereunder as reasonably requested by Buyer pursuant to regulations promulgated
under Section 1.280-G of the Code.
6.4 Access to Information. Upon reasonable notice and subject to
applicable Laws relating to the exchange of information, Seller shall afford to
the officers, employees, accountants, counsel and other representatives of Buyer
access, during normal business hours during the period prior to the Closing
Date, to all of the properties of the Company and, during such period, the
Company shall make available to Buyer all information and Books and Records
concerning the Company and its properties, business and employees as Buyer may
reasonably request.
6.5 Conduct of Business. Seller agrees that, from the date hereof
through the Closing, except to the extent otherwise permitted by this Agreement
or consented to in writing by Buyer, Seller shall cause the Company to:
(a) operate its business only in the Ordinary Course of
Business;
(b) not enter into or assume any material agreement,
contract or instrument relating to the Company or enter into or permit
any material amendment, supplement, waiver or other modification in
respect thereof;
(c) pay accounts payable and other obligations of the
Company when they become due and payable in the ordinary course of
business;
(d) use its reasonable efforts to preserve its business
organizations intact, to retain the services of its employees and to
preserve its goodwill and relationships with customers, suppliers,
creditors and others having business relationships with it;
(e) take such action as may be reasonably necessary to
preserve its properties and assets and to maintain its permits and
licenses;
14
(f) maintain its insurance policies in full force and
effect;
(g) comply with any applicable Law;
(h) promptly advise Buyer in writing of any material
adverse effect on the Company or its business, financial condition or
properties and of any event or circumstance which will, or with
reasonable certainty will, result in such a material adverse effect on
the Company or which will, or with reasonable certainty will,
constitute a violation or breach of any representation, warranty or
covenant contained in this Agreement;
(i) review with Buyer all decisions regarding new
contracts or extensions or amendments of existing contracts, equipment
purchases and sales and other operational decisions involving
individually or in the aggregate more than $10,000.00;
(j) except as required by applicable Law or contract, not
make or commit to make any salary or wage increase with respect to any
officer, employee or agent or enter into, amend or alter any Benefit
Plan, trust agreement or arrangement or any employment or consulting
contract, unless consented to by Buyer;
(k) not pay, discharge or satisfy any Liability or Lien
other than current Liabilities reflected in the most recent financial
statements of the Company, and current Liabilities incurred since the
date of the most recent financial statements of the Company in the
ordinary course of business;
(l) not sell, transfer or otherwise dispose of or
encumber any of its cash, assets or properties, or engage in any
activity in connection with any securitization of assets owned by the
Company or its Subsidiaries;
(m) not declare or pay any dividend or make any
distribution with respect to the Stock, or redeem, purchase or
otherwise acquire any of its capital stock;
(n) not modify or amend any of the terms of any of the
contracts to which the Company is a party;
(o) not make any contract or understanding to take any
action referred to in Sections 6.4(a) through 6.4(n) above; and
(p) not take any affirmative action, or fail to take any
reasonable action within its control, which would result in any of the
changes or events listed in Sections 3.13(a) through 3.13(p).
6.6 Officers and Employees. Without incurring any Liability with
respect to the Company, Seller shall use best efforts to cause all officers and
employees of the Company to remain with the
15
Company after the Closing Date. Prior to the Closing Date, the Company shall
enter into employment agreements with key employees identified by Buyer (with
assistance of Seller) under terms as designated or requested by Buyer, including
noncompete covenants.
6.7 Final Tax Return. Buyer shall cause the Company to engage the
accounting firm of its choice to prepare the 2001 "S" Corporation and the final
"S"Corporation return for the Company following Closing. Such returns shall be
completed and shall be furnished to Xxxx X. Xxxxxxxxx for review no later than
March 1, 2002, and filed no later than March 15, 2002.
6.8 Section 338(h)(10) Election. The parties agree to join in, and
to cause the Company to join in, making a unanimous, timely, effective and
irrevocable election under Section 338(h)(10) of the Code (and any corresponding
election under state, local or foreign Tax Law) (collectively, the "Section
338(h)(10) Election") with respect to the transaction contemplated by this
Agreement and to file such Section 338(h)(10) Election in accordance with
applicable Law. Seller agrees to cooperate (and to cause the Company to
cooperate) in all respects for the purpose of effecting a timely and effective
Section 338(h)(10) Election, including without limitation, the execution and
filing of any forms, consents or returns.
6.9 Allocation of Purchase Price. As of January 2, 2002, Buyer and
Seller shall make (and Seller shall cause the Company to make) a good faith,
unanimously approved allocation of the Purchase Price among the assets of the
Company substantially as set forth in Schedule 6.9 attached hereto (the "338
Allocation") within the requirements of Treasury Regulation Section 1.338(b)-2T
with the knowledge and understanding that the 338 Allocation will be used by
Buyer, the Company and Seller for federal income Tax reporting purposes. Seller
and Buyer shall report the transactions contemplated by this Agreement for
federal income Tax purposes in accordance with the 338 Allocation. Neither Buyer
nor Seller, nor any consolidated or unitary Tax reporting group of which either
of them is a party, shall take any position inconsistent with the 338 Allocation
except with the written consent of the other parties to this Agreement. To the
extent that ordinary income of the Company in 2002, as a result solely of the
Company's and Seller's election under Section 338(h)(10) of the Code, exceeds
$400,000, Buyer shall pay to Seller and hold Seller harmless for an amount equal
to 25% of such excess; such amount will be estimated and paid on the Closing
Date with a final adjustment and payment or refund due no later than March 31,
2002. In the event of an audit by the IRS or other Taxing Authority with respect
to the 338 Allocation, Buyer agrees to defend and hold Seller harmless from any
adjustment of the 338 Allocation.
6.10 Payment of Indebtedness. On or before the Closing Date, the
full outstanding principal balance and accrued and unpaid interest with respect
to any and all outstanding indebtedness owed by Seller to the Company shall be
paid by reduction of the Purchase Price.
6.11 Permitted Dividends. The Company shall be permitted to make
distributions, including distributions previously made during 2001, of earnings
to Seller, for the purpose of offsetting such Seller's income Taxes arising from
the Company's Taxable Income from the Company's operations, in an aggregate
amount equal to 45.0% of estimated 2001 Taxable income from the Company's
operations, which shall be finally reconciled no later than March 31, 2002.
Computations of the Company's Taxable income shall exclude any element of gain
attributable to the transactions contemplated herein. To the extent
16
dividends distributed to Seller exceed the dividend permitted above, the
Purchase Price shall be reduced commensurately by the amount of such excess, and
Seller shall pay to Buyer the amount of any excess determined after the Closing.
ARTICLE VII
INDEMNIFICATION
7.1 Survival of Representations and Warranties. The
representations and warranties of Seller in Article III and Buyer in Article IV
will survive the Closing and continue to be binding regardless of any
investigation made at any time by any party.
7.2 Indemnification by Seller. Seller will indemnify Buyer and its
Affiliates (exclusive of the Company, its Subsidiaries and the Seller) and the
shareholders, directors, employees and agents of Buyer and its Affiliates
(exclusive of the Company and the Seller) (collectively, the "Buyer Indemnified
Parties") against and hold them harmless from:
(a) Representations. All Liability, loss, damage,
deficiency or cost (including without limitation reasonable attorneys
fees) resulting from or arising out of any material inaccuracy in or
breach of any representation or warranty by Seller herein or in any
other agreement, or document referred to herein and delivered by or on
behalf of Seller in connection herewith (except, and only to the
extent, that any such agreement or document provides for an
economically equivalent remedy to Buyer as is provided hereunder, the
intentions of the parties being to avoid any duplication of recovery
for any breach hereunder); provided, however, in no event shall this
subsection (a) apply to any inaccuracy or breach caused by an event
which occurs after the Closing;
(b) Covenants. All Liability, loss, damage, deficiency or
cost (including without limitation reasonable attorneys fees) from or
arising out of any breach or nonperformance of any covenant or
obligation made or incurred by Seller herein or in any other agreement
or document referred to herein and delivered by or on behalf of Seller
in connection herewith (except, and only to the extent, that any such
agreement or document provides for an economically equivalent remedy to
Buyer as is provided hereunder, the intentions of the parties being to
avoid any duplication of recovery for any breach thereunder).
7.3 Indemnification by Buyer. The Buyer will indemnify Seller and
his agents (collectively, the "Seller Indemnified Parties") against and hold
them harmless from:
(a) Representations. All Liability, loss, damage,
deficiency or cost (including without limitation reasonable attorneys
fees) from or arising out of any inaccuracy in or breach of any
representation or warranty by Buyer herein or in any other agreement,
or document referred to herein and delivered by or on behalf of Buyer
in connection herewith (except, and only to the extent, that any such
agreement or document provides for an
17
economically equivalent remedy to Seller as is provided hereunder, the
intentions of the parties being to avoid any duplication of recovery
for any breach hereunder);
(b) Covenants. All Liability, loss, damage, deficiency or
cost (including without limitation reasonable attorneys fees) resulting
from or arising out of any breach or nonperformance of any covenant or
obligation made or incurred by Buyer herein or in any other agreement
or document referred to herein and delivered by or on behalf of Buyer
in connection herewith (except, and only to the extent, that any such
agreement or document provides for an economically equivalent remedy to
Seller as is provided hereunder, the intentions of the parties being to
avoid any duplication of recovery for any breach thereunder).
ARTICLE VIII
CONSTRUCTION
8.1 Definitions. When used in this Agreement, the following terms
in all of their tenses and cases will have the meanings assigned to them below
or elsewhere in this Agreement as indicated below:
"Affiliate" of any Person means any person directly or indirectly
controlling, controlled by, or under common control with, any such Person and
any officer, director or controlling person of such Person.
"Books and Records" means all books and records of the Company relating
to the Company's business and properties, including, but not limited to, (i) all
books and records relating to the purchase of materials and supplies, sales of
products, dealings with customers, invoices, suppliers' lists and personnel
records, (ii) all contracts, reports, opinions, maps and other documents
affecting the title to or the value of the properties of the Company, (iii) tax
returns, and (iv) all financial and operating data, files and other information
with respect to the Company's business and properties.
"Buyer" means NELnet, Inc., a Nevada corporation.
"Buyer Indemnified Parties" is defined in Section 7.2.
"Closing" and "Closing Date" are defined in Section 5.1.
"Code" is defined in Section 3.11.
"Confidential Information" is defined in Section 6.2.1.
"GAAP" means generally accepted accounting principles.
"Governmental Authority" means any federal, provincial, municipal,
state, regional or local authority, agency, body, court or instrumentality,
regulatory or otherwise, domestic or foreign, which, in
18
whole or in part, was formed by or operates under the auspices of any federal,
provincial, municipal, state, regional or local government, domestic or foreign.
"Law" means any common law and any federal, provincial, municipal,
state, regional, local or foreign law, bylaw, rule, statutes, ordinance, rule,
order or regulation.
"Liabilities" means responsibilities, obligations, duties, commitments,
claims and liabilities of any and every kind, whether known or unknown, accrued,
absolute, contingent or otherwise.
"Lien" means any security interest, lien, charge, covenant, condition,
easement, adverse claim, demand, encumbrance, limitation, security interest,
option, pledge, warrant or any other title defect or restriction of any kind.
"Person" means any individual, corporation, partnership, association or
any other entity or organization.
"Purchased Stock" means the Stock the Company acquired by Buyer at the
Closing and which at the Closing shall represent 100.00% of the issued and
outstanding equity interest in the Company.
"Purchase Price" is defined in Section 2.1.
"Seller" means Xxxxxxx Xxxxxxxxxxx, individually.
"Seller Indemnified Parties" is defined in Section 7.3.
"Stock" is defined in the Recitals.
"Subsidiaries" means: not applicable.
"Tax" means any charge or assessment by or liability to any
Governmental Authority, including, but not limited to, any deficiency, interest
or penalty.
8.2 Notices. All notices shall be in writing delivered as follows:
(a) If to Buyer:
NELnet, Inc.
Attention: Xxxx Xxxxxx
0000 Xxxxx 00xx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Telephone: 402/000-0000
Facsimile: 402/323-1286
19
with a copy to:
Xxxxxx X. Xxxxxx
Perry, Guthery, Xxxxx
& Xxxxxxxx, P.C., L.L.O.
000 Xxxxx 00xx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Telephone: 402/ 000-0000
Facsimile: 402/ 476-0094
(b) If to Seller:
Xxxxxxx Xxxxxxxxxxx
0000 Xxxx Xxxxxxxxxxx Xxxx
Xxxxx, Xxxxx 00000
Telephone: 208/ 000-0000
Facsimile: 208/ 344-3917
or to such other address as may have been designated in a prior notice. Notices
sent by registered or certified mail, postage prepaid, return receipt requested,
shall be deemed to have been given two business days after being mailed, and
otherwise notices shall be deemed to have been given when received.
8.3 Binding Effect. Except as may be otherwise provided herein,
this Agreement will be binding upon and inure to the benefit of the parties and
their respective successors and permitted assigns. Except as otherwise provided
in this Agreement, nothing in this Agreement is intended or will be construed to
confer on any Person other than the parties any rights or benefits hereunder.
8.4 Counterparts. This Agreement may be executed in multiple
counterparts, each of which will be deemed an original, and all of which
together will constitute one and the same document.
8.5 Construction. The language used in this Agreement will be
deemed to be the language chosen by the parties hereto to express their mutual
intent, and no rule of strict construction will be applied against either party.
This Agreement shall be construed to be valid and enforceable to the full extent
allowed by law. It is agreed that if any part, term or provision of this
Agreement is determined to be illegal, unenforceable or in conflict with
applicable law, the validity of the remaining terms and provisions shall not be
affected, and the rights and obligations of the parties shall be construed and
enforced as if the Agreement did not contain the term of provision held to be
invalid.
8.6 Modification. No supplement, modification or amendment of this
Agreement will be binding unless made in a written instrument which is signed by
both parties and which specifically refers to this Agreement.
20
8.7 Entire Agreement. This Agreement and the agreements and
documents referred to in this Agreement or delivered hereunder are the exclusive
statement of the agreement between the parties concerning the subject matter
hereof. All negotiations between the parties are merged into this Agreement, and
there are no representations, warranties, covenants, understandings or
agreements, oral or otherwise, in relation thereto between the parties other
than those incorporated herein and to be delivered hereunder. This Agreement
shall specifically supersede any prior negotiations, understandings or
agreements between Seller and Buyer including, without limitation, the letter of
intent executed by Seller and Buyer and dated as of December 21, 2001.
INTENDING TO BE LEGALLY BOUND, the parties have signed this Stock
Purchase Agreement as of the date first above written.
NELnet, Inc.
By: /s/ Xxxxx Xxxxxx /s/ Xxxxxxx Xxxxxxxxxxx
----------------------------- ------------------------------
Title: CFO Xxxxxxx Xxxxxxxxxxx
-----------------------------
21
