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EXHIBIT 2.2
STOCK PURCHASE AGREEMENT
by and between
ACCESS CASH INTERNATIONAL L.L.C.
and
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
effective as of
May 1, 2002
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TABLE OF CONTENTS
ARTICLE I SALE OF SHARES AND CLOSING ...................................... 1
1.01 Purchase and Sale of Shares .................................... 1
1.02 Purchase Price; Payment of Indemnification Holdback Amount ..... 1
1.03 The Closing .................................................... 1
ARTICLE II REPRESENTATIONS AND WARRANTIES OF SELLER ....................... 3
2.01 Valid and Binding Agreement .................................... 3
2.02 No Breach; Consents ............................................ 4
2.03 Incorporation and Corporate Power .............................. 4
2.04 Capitalization ................................................. 4
2.05 Subsidiaries ................................................... 5
2.06 Financial Statements ........................................... 5
2.07 Absence of Undisclosed Liabilities ............................. 5
2.08 Absence of Certain Developments ................................ 6
2.09 Real Property .................................................. 7
2.10 Assets ......................................................... 7
2.11 Inventory ...................................................... 8
2.12 Accounts Receivable ............................................ 8
2.13 Customers ...................................................... 8
2.14 Suppliers ...................................................... 8
2.15 Tax Matters .................................................... 9
2.16 Contracts and Commitments ...................................... 10
2.17 Insurance ...................................................... 13
2.18 Intellectual Property Rights ................................... 13
2.19 Litigation; Orders ............................................. 13
2.20 Products and Services .......................................... 14
2.21 Employees; Labor Matters ....................................... 15
2.22 Employee Benefit Plans ......................................... 16
2.23 Compliance with Laws; Governmental Authorizations .............. 17
2.24 Environmental Matters .......................................... 17
2.25 Books and Records .............................................. 18
2.26 Brokerage ...................................................... 18
2.27 Disclosure ..................................................... 18
ARTICLE III REPRESENTATIONS AND WARRANTIES OF BUYER ....................... 19
3.01 Incorporation and Corporate Power .............................. 19
3.02 Execution, Delivery; Valid and Binding Agreement ............... 19
3.03 No Breach, Consents ............................................ 19
3.04 Brokerage ...................................................... 20
3.05 Investment Intent .............................................. 20
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ARTICLE IV COVENANTS ...................................................... 20
4.01 Conduct of the Company ......................................... 20
4.02 Notice of Developments ......................................... 21
4.03 Access ......................................................... 21
4.04 Conditions ..................................................... 21
4.05 Consents and Authorizations .................................... 21
4.06 No Sale ........................................................ 22
4.07 Further Assurances ............................................. 22
4.08 Cooperation with Proceedings ................................... 22
4.09 Customer and Other Business Relationships ...................... 22
4.10 Expenses ....................................................... 23
4.11 Earnout ........................................................ 23
4.12 Release of Newcourt Encumbrance ................................ 23
ARTICLE V CONDITIONS TO CLOSING ........................................... 23
5.01 Conditions to Buyer's Obligations .............................. 23
5.02 Conditions to Seller's Obligations ............................. 24
ARTICLE VI TERMINATION .................................................... 25
6.01 Termination .................................................... 25
6.02 Effect of Termination .......................................... 25
ARTICLE VII SURVIVAL; INDEMNIFICATION ..................................... 26
7.01 Survival of Representations and Warranties ..................... 26
7.02 Indemnification by Seller ...................................... 26
7.03 Indemnification by Buyer ....................................... 27
7.04 Time Limitations ............................................... 27
7.05 Limitations on Amount .......................................... 28
7.06 Setoff Against Indemnification Holdback Amount ................. 29
7.07 Method of Asserting Claims-Third Party Actions ................. 29
7.08 Method of Asserting Claims-Other Actions ....................... 30
7.09 Miscellaneous Indemnification Provisions ....................... 31
ARTICLE VIII MISCELLANEOUS ................................................ 32
8.01 Definitions .................................................... 32
8.02 Press Releases and Announcements ............................... 35
8.03 Amendment and Waiver ........................................... 35
8.04 Notices ........................................................ 36
8.05 Assignment ..................................................... 37
8.06 Severability ................................................... 37
8.07 Complete Agreement ............................................. 37
8.08 Counterparts ................................................... 37
8.09 Governing Law .................................................. 37
8.10 No Third Party Beneficiaries ................................... 38
8.11 Specific Performance ........................................... 38
8.12 Jurisdiction ................................................... 38
8.13 WAIVER OF JURY TRIAL ........................................... 38
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8.14 Interpretation ................................................. 39
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ANNEX, EXHIBITS AND SCHEDULES
Exhibit A Form of Individual Noncompetition Agreement
Exhibit B Form of Release
Exhibit C Form of Spousal Consent
Exhibit D Form of Lease Agreement
Exhibit E Form of Legal Opinion of Seller's Counsel
Exhibit F Balance Sheet Qualifications
Exhibit G Earnout Provision
Disclosure Schedule
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STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (this "Agreement"), dated as of May 14,
2002, but effective as of May 1, 2002, (the "Effective Date") is made and
entered into by and between Access Cash International L.L.C., a Delaware limited
liability company ("Buyer"), and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, a Washington resident
("Seller").
WHEREAS, Seller owns all of the outstanding capital stock of Samsar ATM
Co., Inc. (the "Company") and also serves as the sole director and an officer of
the Company; and
WHEREAS, Seller desires to sell to Buyer, and Buyer desires to purchase
from Seller, all of the outstanding capital stock of the Company pursuant to the
terms of this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth in this Agreement, the parties agree as follows:
ARTICLE I
SALE OF SHARES AND CLOSING
1.01 Purchase and Sale of Shares.
Pursuant to the terms and subject to the conditions of this Agreement,
Seller will sell to Buyer, and Buyer will purchase from Seller, all of
Seller's right, title and interest in and to all of the issued and
outstanding capital stock of the Company (the "Shares").
1.02 Purchase Price; Payment of Indemnification Holdback Amount.
(a) The total consideration for the Shares (the "Purchase Price") is
$3,262,500. Buyer will pay $2,262,500 of the Purchase Price (the
"Initial Payment") at the Closing as provided in Section 1.03(b)(ii)
and will withhold $1,000,000 (the "Indemnification Holdback Amount")
as security for Seller's indemnification obligations under this
Agreement.
(b) To the extent not claimed by Buyer pursuant to Section 7.06, Buyer
will pay the Indemnification Holdback Amount to Seller within 30
days following the second anniversary of the Closing Date, plus
simple interest thereon at a rate of 2% per annum from the Closing
Date through the date of payment.
1.03 The Closing.
(a) The closing of the transactions contemplated by this Agreement (the
"Closing") will take place at the offices of ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP,
U.S. Bank Centre, ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, commencing at 10:00 a.m. local time, on May 14, 2002, or on
such other date as the parties may agree (the "Closing Date"). The
Closing will be deemed effective as of 12:00 a.m. Pacific Daylight
Time on the Effective Date.
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(b) At the Closing:
(i) Seller will deliver or cause to be delivered to Buyer all of
the following:
(A) certificates representing the Shares, free and clear of
all Encumbrances, duly endorsed or accompanied by duly
executed stock powers with requisite stock transfer tax
stamps, if any, attached;
(B) a duly executed noncompetition agreement substantially
in the form attached as Exhibit A and a duly executed
release substantially in the form attached as Exhibit B,
from Seller and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇;
(C) a duly executed spousal consent, substantially in the
form attached as Exhibit C, from ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇;
(D) a duly executed lease agreement, substantially in the
form attached as Exhibit D, from Seller;
(E) a certificate of Seller dated the Closing Date stating
that the conditions set forth in Section 5.01 have been
satisfied;
(F) original releases of, or written authorizations from the
Company's creditors to release, all Encumbrances on the
Company's assets other than the Permitted Encumbrances
and the Newcourt Encumbrance, subject to Section 4.12;
(G) an opinion of Seller's counsel substantially in the form
attached as Exhibit E;
(H) the Company's minute books, stock transfer records,
corporate seal (if any) and other materials related to
the Company's corporate administration;
(I) written resignations, effective as of the Closing Date,
from each of the Company's officers and directors;
(J) written evidence satisfactory to Seller, in its sole
discretion, documenting (1) the full and complete
discharge of all liabilities and obligations of the
Company as of the Effective Date other than the Retained
Liabilities and (2) the distribution or other
disposition of all of the Excluded Assets; and
(K) such other certificates, documents and instruments as
Buyer may reasonably request related to the transactions
contemplated hereby.
(ii) Buyer will deliver or cause to be delivered all of the
following:
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(A) the Initial Payment by (1) paying to the appropriate
creditors the unpaid balance of the Company's
indebtedness (plus all accrued interest thereon) as of
the Closing Date with respect to the Ford Expeditions
that are included in the Excluded Assets and (2) paying
to Seller the remaining balance of the Initial Payment
by wire transfer in immediately available funds to an
account designated in writing by Seller;
(B) to Seller, a certificate of Buyer dated the Closing Date
stating that the conditions set forth in Section 5.02
have been satisfied; and
(C) to Seller, such other certificates, documents and
instruments as Seller may reasonably request related to
the transactions contemplated hereby.
(c) All items delivered by the parties at the Closing shall be deemed to
have been delivered simultaneously, and no items shall be deemed
delivered or waived until all have been delivered.
(d) The Confidentiality Agreement will terminate effective as of the
Closing.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer that, except as set forth in the
Disclosure Schedule delivered to Buyer on the date hereof, each of the
statements set forth in this Article II are correct and complete on the date
hereof and on the Closing Date (as though then made and as though the Closing
Date were substituted for the date of this Agreement). The Disclosure Schedule
sets forth the exceptions to the representations and warranties contained in
this Article II under sections and subsections that correspond to the sections
and subsections hereof; provided, however, that the mere listing (or inclusion
of a copy) of a document or other item therein shall not be deemed adequate to
disclose an exception to a representation or warranty made herein, unless the
representation or warranty addresses only the existence of the document or other
item itself.
2.01 Valid and Binding Agreement.
This Agreement has been duly executed and delivered by Seller and
constitutes the valid and binding obligation of Seller, enforceable
against Seller in accordance with its terms. The Ancillary Agreements,
when executed and delivered by or on behalf of Seller, will constitute the
valid and binding obligations of Seller, enforceable against Seller in
accordance with their terms. Seller has the absolute and unrestricted
right, power, authority and capacity to execute and deliver this Agreement
and the Ancillary Agreements and to perform his obligations hereunder and
thereunder.
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2.02 No Breach; Consents.
(a) Except as set forth in Section 2.02(a) of the Disclosure Schedule,
neither the execution and delivery of this Agreement or any
Ancillary Agreement nor the consummation or performance of any of
the transactions contemplated hereby or thereby, will directly or
indirectly (with or without notice or lapse of time):
(i) conflict with or violate any provision of the Company's
articles of incorporation, bylaws or other organizational
documents;
(ii) conflict with or violate, or give any Governmental Authority
or other Person the right to challenge any of the transactions
contemplated by this Agreement or the Ancillary Agreements or
to exercise any remedy or obtain any relief under, any Legal
Requirement, Order or Governmental Authorization applicable to
Seller or the Company;
(iii) conflict with, breach any provision of, constitute a default
under, give any Person the right to declare a default or
exercise any remedy under, or result in the termination,
amendment, modification, abandonment or acceleration of the
maturity or performance (or any right to effect such a result)
of any Material Contract; or
(iv) impose any Encumbrance upon or with respect to any of the
Company's assets or the Shares.
(b) Except as set forth in Section 2.02(b) of the Disclosure Schedule,
neither Seller nor the Company is required to give any notice or
obtain any Consent or Governmental Authorization in connection with
the execution and delivery of this Agreement or the Ancillary
Agreements or the consummation of the transactions contemplated
hereby or thereby.
2.03 Incorporation and Corporate Power.
The Company is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of Washington and has all
requisite corporate power and authority necessary to carry on the
Company's business as now being conducted and to own, lease and operate
the Company's assets. The Company is qualified to do business as a foreign
corporation and is in good standing in each jurisdiction where the nature
of its business or its ownership of property requires it to be qualified.
Seller has delivered to Buyer correct and complete copies of the Company's
articles of incorporation, bylaws and other organizational documents as in
effect on the Closing Date.
2.04 Capitalization.
(a) The authorized capital stock of the Company consists solely of
100,000 shares of common stock, no par value per share, of which
51,000 shares are issued and
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outstanding and constitute all of the Shares. Seller owns all of the
Shares of record and beneficially, free and clear of any
Encumbrances. At the Closing, Buyer will obtain good and valid title
to the Shares, of record and beneficially, free and clear of any
Encumbrances.
(b) The Shares are duly authorized, validly issued, fully paid and
nonassessable, free of preemptive rights or any third party rights
and in certificated form, and have been offered, sold and issued by
the Company in compliance with applicable securities and corporate
laws and in compliance with any preemptive rights, rights of first
refusal or similar rights. The rights and privileges of the Shares
are set forth in the Company's organizational documents. There are
no options, warrants, calls, subscriptions, convertible securities,
rights (including preemptive rights), commitments or agreements of
any character to which the Company is a party or by which it is
bound obligating the Company to issue, exchange, transfer, sell,
repurchase, redeem or otherwise acquire any shares of capital stock
of the Company or obligating the Company to grant, extend,
accelerate the vesting of or enter into any such subscription,
option, warrant, equity security, call, right, commitment or
agreement. There are no outstanding or authorized stock
appreciation, phantom stock or similar rights with respect to the
Company.
2.05 Subsidiaries.
The Company does not hold any equity or other ownership interest in any
other Person.
2.06 Financial Statements.
Seller has delivered to Buyer the unaudited balance sheet of the Company
(the "Balance Sheet") as of December 31, 2001 (the "Balance Sheet Date").
The Balance Sheet (a) was prepared using the accrual basis of accounting
and accounting principles consistently applied, (b) is based upon the
information contained in the Company's books and records, (c) was prepared
in good faith, and (d) fairly presents the Company's financial condition
as of the date thereof, subject to Exhibit F.
2.07 Absence of Undisclosed Liabilities.
The Company does not have any liabilities (whether accrued, absolute,
contingent, unliquidated or otherwise, whether due or to become due,
whether known or unknown, and regardless of when asserted) and the Company
is not a party to or bound by any agreement of guarantee, support,
indemnification, assumption or endorsement of, or any similar commitment
with respect to the obligations, liabilities (contingent or otherwise) or
indebtedness of any Person, arising out of transactions or events entered
into on or prior to the Closing Date, or any action or inaction, or any
state of facts existing, with respect to or based upon transactions or
events occurring on or prior to the Closing Date, except (a) as reflected
or reserved against in the Balance Sheet, (b) current liabilities which
have arisen since the Balance Sheet Date in the ordinary course of
business (none of which is a liability for breach of contract, breach of
warranty, tort, infringement, claim or lawsuit), or (c) as otherwise set
forth in Section 2.07 of the Disclosure Schedule.
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2.08 Absence of Certain Developments.
Except as set forth in Section 2.08 of the Disclosure Schedule, since the
Balance Sheet Date:
(a) no event has occurred and no circumstance has arisen which has had,
or may with the passage of time be reasonably expected to have, a
Material Adverse Effect;
(b) the Company has not sold, leased, assigned or transferred (including
transfers to any employees, affiliates or shareholders) any tangible
assets in whole or in part, except sales of inventory for a fair
consideration in the ordinary course of business;
(c) the Company has not licensed, sold, leased, assigned or transferred
(including transfers to any employees, affiliates or shareholders)
any Intellectual Property or other intangible assets in whole or in
part;
(d) no Encumbrance has been placed on or arisen with respect to any of
the Company's assets;
(e) the Company has not borrowed any amount (including advances on
existing credit facilities) or incurred or become subject to any
liability, except (i) current liabilities incurred in the ordinary
course of business and (ii) liabilities under Contracts entered into
in the ordinary course of business;
(f) the Company has not delayed, postponed or accelerated the payment of
accounts payable or other liabilities or the receipt of accounts
receivable;
(g) the Company has not canceled any debts or claims of any material
nature or of any material amount;
(h) the Company has not waived any rights of material value or suffered
any extraordinary losses or adverse changes in collection loss
experience, whether or not in the ordinary course of business;
(i) the Company has not declared, set aside or paid any dividend or made
any distribution with respect to its capital stock (whether in cash
or in kind) or redeemed, purchased or otherwise acquired any of its
capital stock or split, combined or reclassified any outstanding
shares of its capital stock;
(j) the Company has not experienced any material theft, damage,
destruction or loss of or to any property it owns or uses, whether
or not covered by insurance;
(k) the Company has not entered into any employment Contract, written or
oral, modified the terms of any such existing Contract or modified
the base compensation or other employment terms of any of its
directors, officers or employees except in the ordinary course of
business;
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(l) the Company has not made any capital expenditures or commitments
therefor in excess of $10,000 in the aggregate;
(m) the Company has not made any loans or advances to, or guarantees for
the benefit of, any Person;
(n) the Company has not made any change in accounting principles or
practices from those utilized in the preparation of the Balance
Sheet;
(o) neither the Company's board of directors nor its shareholders have
taken any action to amend the Company's articles of incorporation,
bylaws or other organizational documents; or
(p) the Company has not taken any action or entered into any agreement
not described in subsections (a) through (o) above that is material
to the Company or agreed or committed, whether orally or in writing,
to do any of the foregoing.
2.09 Real Property.
The Company does not own any real property. The real property subject to
the Headquarters Lease constitutes the only real property which the
Company has leased or otherwise used through the Closing Date. Seller has
delivered to Buyer a complete and accurate copy of the Headquarters Lease.
The Headquarters Lease has been terminated effective as of the Effective
Date and the Company has no obligations or liabilities of any kind or
nature thereunder.
2.10 Assets.
(a) The Company has, and will immediately after the Closing continue to
have, good and marketable title to, or a valid leasehold interest
in, all of the assets (whether tangible or intangible) that it uses,
that are located on its premises or that are shown on the Balance
Sheet (excluding only the Excluded Assets), free and clear of any
Encumbrances other than (i) the Permitted Encumbrances and (ii) the
Newcourt Encumbrance. The Company has distributed, written off or
otherwise disposed of the Excluded Assets, and Seller and the
Company have taken all actions necessary to discharge or otherwise
satisfy all of the Company's liabilities and obligations as of the
Closing Date other than the Retained Liabilities.
(b) The Company owns, or leases under valid leases, all tangible assets
necessary for Buyer's continued conduct of the Company's business as
presently conducted. All of the Company's tangible assets are in
good repair and operating condition (subject to normal wear and
tear) and are usable in the ordinary course of business. Each such
asset is suitable for the purposes for which it is presently used or
is presently proposed to be used, to Seller's Knowledge is free from
material defects (patent and latent), and has been maintained in
accordance with normal industry practice.
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2.11 Inventory.
All items of inventory are of good, usable and merchantable quality and,
except as set forth in Section 2.11 of the Disclosure Schedule, (a) are
not obsolete or discontinued, (b) are of such quality as to meet the
quality control standards of the Company and any applicable Legal
Requirements, (c) with respect to finished goods, are saleable as current
inventories at the current prices thereof in the ordinary course of
business, (d) are recorded on the Company's books at the lower of cost or
market value and (e) no write-down in inventory has been made or should
have been made during the past two years. Section 2.11 of the Disclosure
Schedule sets forth a correct and complete list of all inventory and the
location thereof.
2.12 Accounts Receivable.
All notes and accounts receivable of the Company are reflected properly on
its books and records using the accrual basis of accounting, are valid,
and have arisen from bona fide transactions in the ordinary course of
business, subject to no setoffs or counterclaims. Such notes and accounts
receivable are collectible in accordance with their terms at their
recorded amounts, subject only to the reserve for bad debts set forth on
the face of the Balance Sheet as adjusted for the passage of time through
the Closing Date in accordance with the past custom and practice of the
Company.
2.13 Customers.
Section 2.13 of the Disclosure Schedule sets forth (a) the names and
addresses of the top 20 Customer Contracts, based on the gross surcharge
and interchange revenue generated for the Company during the twelve-month
period ended December 31, 2001, and (b) the aggregate amount of such
revenue generated by each such Customer Contract during such period. The
Company has not received any notice or otherwise have any Knowledge that
any significant customer (x) has ceased, or will cease, to use the
products, goods or services of the Company, (y) has substantially reduced
or will substantially reduce its use of the products, goods or services of
the Company or (z) has sought, or is seeking, to materially reduce the
price it will pay for the products, goods or services of the Company,
including in each case after the consummation of the transactions
contemplated hereby. To Seller's Knowledge, no significant customer has
otherwise threatened to take any action described in the immediately
preceding sentence due to the consummation of the transactions
contemplated by this Agreement or any of the Ancillary Agreements.
2.14 Suppliers.
Section 2.14 of the Disclosure Schedule sets forth (a) the names and
addresses of all suppliers from which the Company ordered materials,
supplies, merchandise and other goods and services with an aggregate
purchase price for each such supplier of $5,000 or more during the
twelve-month period ended December 31, 2001 (each a "Significant
Supplier") and (b) the amount for which each Significant Supplier invoiced
the Company during such period. Seller has not received any notice and
does not have any Knowledge
8
of any material increase in the price of such materials, supplies,
merchandise or other goods or services, or that any Significant Supplier
will not sell materials, supplies, merchandise and other goods or services
to Buyer at any time after the Closing on terms and conditions
substantially the same as are in effect immediately prior to the Closing,
subject to price increases in the ordinary course of business consistent
with past practice. To Seller's Knowledge, no Significant Supplier has
otherwise threatened to take any action described in the preceding
sentence due to the consummation of the transactions contemplated by this
Agreement or the Ancillary Agreements.
2.15 Tax Matters.
(a) Definitions.
(i) "Affiliated Group" means any affiliated group within the
meaning of Code Section 1504(a) or any similar group defined
under a similar provision of any state, local or foreign law.
(ii) "Tax" means any federal, state, local or foreign tax, charge,
fee, levy or other assessment of every kind or nature,
including all net income, gross income, gross receipts, sales,
use, ad valorem, value added, transfer, franchise, profit,
windfall profit, capital stock, environmental, license,
withholding, payroll, employment, unemployment, social
security, disability, excise, estimated, severance, stamp,
registration, occupation, premium, personal or real property,
alternative or add-on minimum, or other taxes, customs duties,
fees, assessments, or charges of any kind or nature, including
all interest and penalties thereon and additions to tax or
additional amounts imposed by any taxing authority, domestic
or foreign.
(iii) "Tax Return" means any return, declaration, report, claim for
refund, or information return or statement relating to Taxes,
including any schedule or attachment thereto, and including
any amendment thereof.
(b) The Company has filed all Tax Returns that it was required to file.
All such Tax Returns were correct and complete in all respects. All
Taxes owed by the Company (whether or not shown on any Tax Return)
have been paid. The Company is not currently the beneficiary of any
extension of time within which to file any Tax Return. No claim has
ever been made by an authority in a jurisdiction where the Company
does not file Tax Returns that the Company is or may be subject to
taxation by that jurisdiction. There are no Encumbrances on any of
the Company's assets that arose in connection with any failure (or
alleged failure) to pay any Tax.
(c) The Company has withheld and paid all Taxes required to have been
withheld and paid in connection with amounts paid or owing to any
employee, independent contractor, creditor, stockholder, or other
third party.
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(d) No Governmental Authority will assess, is expected to assess or has
threatened to assess any additional Taxes for any period for which
Tax Returns have been filed. There is no dispute or claim concerning
any Tax liability of the Company either (i) claimed or raised by any
Governmental Authority in writing or (ii) of which Seller has
Knowledge. Section 2.15(d) of the Disclosure Schedule lists all
federal, state, local, and foreign income and sales and use Tax
Returns filed by the Company for taxable periods ended on or after
December 31, 1999, indicates those Tax Returns that have been
audited, and indicates those Tax Returns that currently are the
subject of audit. Seller has delivered to Buyer correct and complete
copies of all federal income Tax Returns, examination reports and
statements of deficiencies assessed against or agreed to by the
Company since December 31, 1999.
(e) The Company has not waived any statute of limitations in respect of
Taxes or agreed to any extension of time with respect to a Tax
assessment or deficiency.
(f) The Company has not made any payments, is not obligated to make any
payments, and is not a party to any agreement that under certain
circumstances could obligate it to make any payments that will not
be deductible under Code Section 280G. The Company has disclosed on
its federal income Tax Returns all positions taken therein that
could give rise to a substantial understatement of federal income
Tax within the meaning of Code Section 6662. The Company is not a
party to any Tax allocation or sharing agreement. The Company (i)
has not been a member of an Affiliated Group filing a consolidated
federal income Tax Return or (ii) has no liability for the Taxes of
any Person under Reg. Section 1.1502-6 (or any similar provision of
state, local, or foreign law), as a transferee or successor, by
Contract, or otherwise.
(g) The unpaid Taxes of the Company (i) did not, as of December 31,
2001, exceed the reserve for Tax liability (other than any reserve
for deferred Taxes established to reflect timing differences between
book and Tax income) set forth on the face of the Balance Sheet
(other than in any notes thereto) and (ii) do not exceed that
reserve as adjusted for the passage of time through the Closing Date
in accordance with the past custom and practice of the Company in
filing its Tax Returns.
2.16 Contracts and Commitments.
(a) Section 2.16(a) of the Disclosure Schedule contains an accurate and
complete list of each of the following Contracts to which the
Company is a party or is subject or bound (each, a "Material
Contract"):
(i) each Contract relating to the provision of electronic funds
transfer services to the Company's customers (collectively,
the "Customer Contracts"), specifying in each case the name of
the customer, effective date, termination date, location of
the ATM, processor type, terminal identification number and
whether the Customer Contract provides for the
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payment of a minimum monthly or other periodic minimum payment
to the Customer;
(ii) each Contract relating to the provision of electronic funds
transfer services to the Company, specifying in each case the
name of the provider, the title of the Contract, the gross
services revenue (total fees collected by the provider)
generated during the 12 month period ended February 28, 2002,
and total fee residuals (residuals paid by the provider to the
Company) generated during the 12 month period ended February
28, 2002;
(iii) each Contract relating to the maintenance or installation of
ATMs or otherwise relating to the help desk and service
related functions of the Company;
(iv) each Contract relating to the borrowing of money or to
mortgaging, pledging or otherwise placing an Encumbrance on
any of the Company's assets;
(v) each Contract or group of related Contracts wherein the
Company is a lessee of, or holds or operates any property,
real or personal, owned by any other party;
(vi) each Contract or group of related Contracts wherein the
Company is a lessor of, or permits any third party to hold or
operate, any property, real or personal;
(vii) each Contract relating to the payment of a commission or other
form of remuneration in connection with the sale or lease of
goods, materials or services or to the distribution of goods
or materials (collectively, the "Dealer Contracts");
(viii) each Contract or group of related Contracts (other than
Contracts covered by the other subsections of this Section
2.16(a)) which continue over a period of more than six months
from the date or dates thereof and are not terminable by the
Company on 30 days' or less notice without any payment
obligation or other liability;
(ix) each Contract containing exclusivity, noncompetition or
nonsolicitation covenants or that would otherwise purport to
restrict in any manner and to any extent the Company's right
to freely engage in business anywhere in the world or solicit
the employees or contractors of any Person;
(x) each employment, agency or consulting Contract; each Employee
Benefit Plan; each Contract providing for severance,
termination or similar payments (including upon a change of
control or otherwise); each union, collective bargaining or
similar Contract with labor representatives; and each stock
purchase, stock option or similar equity incentive plan;
11
(xi) each Contract containing confidentiality or nondisclosure
covenants;
(xii) each Contract relating to Intellectual Property Rights;
(xiii) each power of attorney that is currently effective; and
(xiv) each Contract (other than Contracts covered by the other
subsections of this Section 2.16(a)) which is either material
to the Company or was not entered into in the ordinary course
of business.
(b) Except as set forth in Section 2.16(b) of the Disclosure Schedule,
with respect to each Material Contract: (i) such Contract is in full
force and effect and is valid and enforceable against each party
thereto in accordance with its terms; (ii) to Seller's Knowledge,
such Contract, if it relates to the Company's provision of goods or
services, can be performed at a profit and without unusual
expenditures of time or money; (iii) all parties thereto are and at
all times have been in compliance with all applicable terms and
conditions of such Contract; and (iv) Seller has no Knowledge of any
actual, alleged, threatened, possible or potential violation or
breach of or default under any such Contract by any party thereto.
(c) Except as specified in Section 2.16(a)(i) of the Disclosure
Schedule, no Customer Contract provides for the payment of a minimum
monthly or other periodic minimum payment to any of the Company's
customers. Each contract to which the Company has been a party
(other than Customer Contracts listed in Section 2.16(a)(i) of the
Disclosure Schedule) which provided for such a minimum payment has
either been (i) terminated such that the Company has no liabilities
or obligations thereunder or (ii) terminated and superseded in its
entirety by a Customer Contract that does not provide for such a
minimum payment.
(d) Except as set forth in Section 2.16(d) of the Disclosure Schedule,
the Company does not have any vault cash or similar obligation in
connection with any Customer Contract.
(e) Except pursuant to the Dealer Contracts, no Person has any right to
a commission or other form of remuneration in connection with the
Customer Contracts. Each Dealer Contract is terminable upon no more
than 30 days' prior written notice and without penalty or payment of
any kind or nature. Following any such termination, the Company will
have no liability or obligation under the terminated Dealer Contract
other than liabilities and obligations which have accrued prior to
the effective date of such termination.
(f) The Company has not undertaken any liability or obligation to any
third-party lessor with respect to ATMs leased by the Company's
customers.
(g) Prior to the date of this Agreement, Buyer has been supplied with or
given access to a correct and complete copy of each written
Contract, and a written description of each oral Contract, together
with all amendments, waivers or other changes thereto.
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2.17 Insurance.
The Company has at all times maintained insurance relating to its business
and covering property, fire, casualty, liability, workers' compensation
and all other forms of insurance customarily obtained by businesses in the
same industry. Such insurance (a) is in full force and effect; (b) is
sufficient for compliance with all applicable Legal Requirements and
Material Contracts; (c) is valid, outstanding and enforceable; (d) insures
against risks of the kind customarily insured against and in amounts
customarily carried by businesses similarly situated; and (e) provides
adequate insurance coverage for the activities of the Company. Section
2.17 of the Disclosure Schedule lists by year for the current policy year
and each of the two preceding policy years a summary of the loss
experience under each policy in excess of $10,000, setting forth (x) the
name of the claimant, (y) a description of the policy by insurer, type of
insurance and period of coverage and (z) the amount and a brief
description of the claim.
2.18 Intellectual Property Rights.
Section 2.18 of the Disclosure Schedule list and describes all
Intellectual Property owned by, licensed to or otherwise controlled by the
Company or used in, developed for use in or necessary to the conduct of
the Company's business as now conducted or proposed to be conducted. The
Company owns and possesses all right, title and interest, or holds a valid
license, in and to such Intellectual Property Rights. The Company has
taken all necessary action to protect such Intellectual Property Rights.
Seller has not received any notice of, nor does he otherwise have any
Knowledge of any facts which indicate a likelihood of, any infringement or
misappropriation by or conflict from any third party with respect to such
Intellectual Property Rights. No claim by any third party contesting the
validity of any such Intellectual Property Rights has been made, is
currently outstanding or, to Seller's Knowledge, is threatened. Seller has
not received any notice of any infringement, misappropriation or violation
by the Company of any intellectual property rights of any third parties
and the Company has not infringed, misappropriated or otherwise violated
any such intellectual property rights. No infringement, illicit copying,
misappropriation or violation has occurred or will occur with respect to
products currently being sold by the Company or with respect to the
conduct of the Company's business as now conducted or proposed to be
conducted. The Company is the exclusive owner of all Intellectual Property
Rights developed by its current and former officers, directors, employees,
agents, independent contractors or consultants, and no such Person has any
claim with respect to any Intellectual Property Rights.
2.19 Litigation; Orders.
(a) Except as set forth in Section 2.19(a) of the Disclosure Schedule
(which also identifies the parties to and briefly describes the
basis for each pending, threatened or potential Proceeding),
(i) there is no pending or, to Seller's Knowledge, threatened
Proceeding against the Company or Seller;
13
(ii) there is no pending or, to Seller's Knowledge, threatened
Proceeding that challenges or that may have the effect of
preventing, delaying, making illegal or otherwise interfering
with any of the transactions contemplated by this Agreement or
the Ancillary Agreements;
(iii) Seller has no Knowledge of any event or circumstance that is
reasonably likely to give rise to or serve as a basis for the
commencement of any Proceeding described in subparagraphs (i)
or (ii) of this Section 2.19(a).
Buyer has been provided with correct and complete copies of all
pleadings, correspondence and other documents and materials relating
to each Proceeding described in Section 2.19(a) of the Disclosure
Schedule, and no Proceeding listed or required to be listed therein
could have a Material Adverse Effect.
(b) Except as set forth in Section 2.19(b) of the Disclosure Schedule,
no Order is in effect that relates to or that may affect in any
manner the Company or the Shares.
2.20 Products and Services.
(a) Buyer has been furnished with correct and complete copies of the
standard terms and conditions of sale or lease for each of the
products or services of the Company (containing applicable guaranty,
warranty and indemnity provisions). Except as set forth in Section
2.20(a) of the Disclosure Schedule:
(i) no product manufactured, sold, leased or delivered by, or
service rendered by or on behalf of, the Company is subject to
any guaranty, warranty or other indemnity, express or implied,
beyond such standard terms and conditions; and
(ii) each product manufactured, sold, leased or delivered by, or
service rendered by or on behalf of, the Company has been in
conformity with all applicable contractual commitments and all
express and implied warranties.
(b) Except as set forth in Section 2.20(b) of the Disclosure Schedule,
the Company has not been subject to any liability or obligation of
any nature (whether known or unknown, accrued, absolute, contingent
or otherwise, and whether due or to become due), whether based on
strict liability, negligence, breach of warranty (express or
implied), breach of contract or otherwise, in respect of any
product, component or other item sold by or on behalf of the Company
prior to the Closing, or service rendered by or on behalf of the
Company prior to the Closing, that (i) is not fully and adequately
covered by policies of insurance or by indemnity, contribution, cost
sharing or similar agreements or arrangements by or with other
Persons, and (ii) is not otherwise fully and adequately reserved
against as reflected in the Balance Sheet.
(c) Except as set forth in Section 2.20(c) of the Disclosure Schedule,
the Company has not entered into, or offered to enter into, any
Contract (whether written or
14
oral) pursuant to which the Company is or would be obligated to make
any rebates, discounts, promotional allowances or similar payments
or arrangements to any customer (collectively, "Rebate
Obligations"). All Rebate Obligations are reflected in the Balance
Sheet or have been incurred after the date thereof in the ordinary
course of business.
2.21 Employees; Labor Matters.
(a) Section 2.21(a) of the Disclosure Schedule sets forth a correct and
complete list of the following information for each employee or
director of the Company, including each employee on leave of absence
or layoff status: name; job title; current compensation paid or
payable and any change in compensation since December 31, 2001;
vacation accrued; and service credited for purposes of vesting and
eligibility to participate under the Company's Employee Benefit
Plans.
(b) Except as set forth in Section 2.21(b) of the Disclosure Schedule:
(i) No employee of the Company is bound by any Contract that
purports to limit his or her ability (A) to engage in or
continue to perform any conduct, activity, duties or practice
relating to the Company or (B) to assign to the Company or to
any other Person any rights to any Intellectual Property;
(ii) The Company has operated in compliance with all applicable
contractual terms and Legal Requirements relating to
employment and the termination of employment, including all
applicable Legal Requirements relating to wages, hours,
benefits, equal employment opportunity, nondiscrimination,
sexual harassment, immigration, occupational safety and
health, plant closing, collective bargaining and the payment
of social security and other Taxes;
(iii) The Company does not have any liability or obligation under
any Contract or Legal Requirement to any terminated employee,
and neither the sale of the Shares nor the consummation of the
transactions contemplated by this Agreement will cause the
Company to incur or suffer any liability relating to, or
obligation to pay, severance, termination or other payments to
any Person; and
(iv) There is no collective bargaining agreement to which the
Company is a party, no collective bargaining agreement is
currently being negotiated or proposed and no Person is making
any attempt or effort to form a labor union.
15
2.22 Employee Benefit Plans.
(a) Except as set forth in Section 2.22(a) of the Disclosure Schedule,
(i) the Company does not maintain or contribute to any nonqualified
deferred compensation or retirement plan, Contract or arrangement,
(ii) the Company does not maintain or contribute to any qualified
defined contribution plans (as defined in ERISA Section 3(34)), or
Code Section 414(i)), (iii) the Company does not maintain or
contribute to any qualified defined benefit plans (as defined in
ERISA Section 3(35) or Code Section 414(j)) and (iv) the Company
does not maintain or contribute to any employee welfare benefit
plans (as defined in ERISA Section 3(1)). Section 2.22(a) of the
Disclosure Schedule sets forth the identity of each corporation,
trade or business (separately for each category below that applies):
(w) which is under common control with the Company within the
meaning of Code Section 414(b) or (c), (x) which is in an affiliated
service group with the Company within the meaning of Code Section
414(m), (y) which is the legal employer of Persons providing
services to the Company as leased employees within the meaning of
Code Section 414(n) or (z) with respect to which the Company is a
successor employer for purposes of group health or other welfare
plan continuation rights (including ERISA Section 601 et seq.) or
the Family and Medical Leave Act.
(b) To the extent required (either as a matter of law or to obtain the
intended tax treatment and tax benefits), all Employee Benefit Plans
which the Company maintains or to which it contributes comply in all
material respects with the requirements of ERISA, the Code and any
other applicable Legal Requirements. With respect to each such
Employee Benefit Plan, (i) all required contributions which are due
have been made and a proper accrual has been made for all benefits
accrued and contributions due as of the Closing Date, (ii) there are
no actions, suits or claims pending, other than routine uncontested
claims for benefits and (iii) there have been no prohibited
transactions (as defined in ERISA Section 406 or Code Section 4975).
(c) For purposes of this Section 2.22(c), the Company shall refer to the
Company and any corporation, trade, or business under common control
with the Company as described in Section 2.22. The Company does not
contribute (and has not ever contributed) to any multi-employer plan
(as defined in ERISA Section 3(37)). The Company has no actual or
potential liabilities (under Title IV of ERISA or otherwise) for any
complete or partial withdrawal from a multi-employer plan. The
Company has no actual or potential liability for death or medical
benefits after separation from employment, other than health care
continuation benefits described in Code Section 4980B or group life
insurance continuation benefit under applicable state law.
(d) Neither the Company nor any of its directors, officers, employees or
other fiduciaries (as defined in ERISA Section 3(21)), has committed
any breach of fiduciary responsibility imposed by ERISA or any other
applicable law with respect to the
16
Employee Benefit Plans which would subject the Company, Buyer,
Buyer's subsidiaries or any of their respective directors, officers,
employees or affiliates to any liability under ERISA or any
applicable law.
(e) Except as set forth in Section 2.22(e) of the Disclosure Schedule,
there are no former employees of the Company (or spouses, former
spouses or dependents of former employees) currently receiving
health care continuation benefits described in Code Section 4980B or
other applicable law under a group health plan sponsored by the
Company.
2.23 Compliance with Laws; Governmental Authorizations.
(a) The Company and its officers, directors, agents and employees have
complied in all material respects with all applicable Legal
Requirements, and no claims have been filed against the Company
alleging a violation of any Legal Requirements. The Company is not
relying on any exemption from or deferral of any applicable Legal
Requirement that would not be available to the Company after Buyer
acquires the Shares.
(b) The Company has, in full force and effect, all Governmental
Authorizations necessary to conduct its business and own and operate
its assets. A correct and complete list of such Governmental
Authorizations is set forth in Section 2.23(b) of the Disclosure
Schedule, together with a description of each Governmental
Authorization's relationship to the Company's business and whether
such Governmental Authorization is assignable to Buyer. The Company
has conducted its operations in compliance with all terms and
conditions of each such Governmental Authorization.
2.24 Environmental Matters.
The Company is now and at all times has been in compliance with all
applicable Legal Requirements and Orders relating to pollution,
contamination or the protection of the environment (collectively,
"Environmental Laws"), including Legal Requirements and Orders concerning
air pollution, water pollution, noise control or the on-site or off-site
handling, shipping, discharge, disposal or recovery of any dangerous,
toxic or hazardous pollutant, contaminant, chemical, waste, material or
substance as defined in or governed by any Environmental Law
(collectively, "Hazardous Materials"). The Company is not, and has not
been alleged to be, responsible for any release of Hazardous Materials or
any costs arising under or any violation of Environmental Laws. No
Hazardous Materials have been generated, treated, contained, handled,
located, used, manufactured, processed, buried, incinerated, deposited,
stored, or released on, under or about any portion of any real property
owned, leased or otherwise used by the Company, and no such real property
or any improvements thereon has ever contained any asbestos, urea,
formaldehyde, radon at levels above natural background, polychlorinated
biphenyls or pesticides. In addition, no portion of such real property has
ever been used as a gasoline service station or as a facility for selling,
dispensing, storing, transferring, disposing or handling petroleum
17
and/or petroleum products and no aboveground or underground storage tanks
have ever been located on, under or about such real property.
2.25 Books and Records.
The books of account and other financial records of the Company, all of
which have been made available to Buyer, are materially complete and
correct and represent actual, bona fide transactions and have been
maintained in accordance with sound business practices. The minute books
of the Company, all of which have been made available to Buyer, contain
accurate and complete records of all meetings held of, and corporate
action taken by, the shareholders, the board of directors and committees
of the board of directors of the Company, and no meeting of any such
shareholders, board of directors or committee has been held for which
minutes have not been prepared or are not contained in such minute books.
2.26 Brokerage.
No third party shall be entitled to receive any brokerage commissions,
finder's fees, fees for financial advisory services or similar
compensation in connection with the transactions contemplated by this
Agreement based on any arrangement or agreement made by or on behalf of
Seller or the Company.
2.27 Disclosure.
(a) Buyer has been provided with correct and complete copies of all
documentation, and with correct and complete descriptions of all
information that is not in written form, that it has requested in
connection with its due diligence review of the Company.
(b) Neither this Agreement nor any of the exhibits hereto nor any of the
documents delivered by or on behalf of Seller pursuant to Section
1.03(b), nor the Disclosure Schedule nor any of the financial
statements referred to in Section 2.06, taken as a whole, contain
any untrue statement of a material fact or omission regarding the
Company or any of the other matters dealt with in this Article II
relating to Seller, the Company or the transactions contemplated by
this Agreement. This Agreement, the exhibits hereto, the documents
delivered to Buyer pursuant to 1.03(b), the Disclosure Schedule and
the financial statements referred to in Section 2.06, taken as a
whole, do not omit any material fact necessary to make the
statements contained herein or therein, in light of the
circumstances in which they were made, not misleading, and there is
no fact which has not been disclosed to Buyer of which Seller has
Knowledge which has had, or is reasonably likely to have, a Material
Adverse Effect.
18
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller that:
3.01 Incorporation and Corporate Power.
Buyer is a limited liability company duly formed, validly existing and in
good standing under the laws of the State of Delaware, with the requisite
power and authority to enter into this Agreement and the Ancillary
Agreements and to perform its obligations hereunder and thereunder.
3.02 Execution, Delivery; Valid and Binding Agreement.
Buyer's execution, delivery and performance of this Agreement and the
Ancillary Agreements and Buyer's consummation of the transactions
contemplated hereby and thereby have been duly and validly authorized by
all requisite corporate action, and no other corporate proceedings on its
part are necessary to authorize their execution, delivery or performance
of this Agreement or the Ancillary Agreements. This Agreement has been
duly executed and delivered by Buyer and constitutes the valid and binding
obligation of Buyer, enforceable against Buyer in accordance with its
terms. The Ancillary Agreements, when executed and delivered by or on
behalf of Buyer, will constitute the valid and binding obligations of
Buyer, enforceable against Buyer in accordance with their terms.
3.03 No Breach, Consents.
(a) Neither the execution and delivery of this Agreement or any
Ancillary Agreement nor the consummation or performance of any of
the transactions contemplated hereby or thereby, will directly or
indirectly (with or without notice or lapse of time):
(i) conflict with or violate any provision of Buyer's articles of
organization, operating agreement or other organizational
documents; or
(ii) conflict with or violate, or give any Governmental Authority
or other Person the right to challenge any of the transactions
contemplated by this Agreement or the Ancillary Agreements or
to exercise any remedy or obtain any relief under, any Legal
Requirement, Order or Governmental Authorization applicable to
Buyer.
(b) Buyer is not required to give any notice or obtain any Consent or
Governmental Authorization in connection with the execution and
delivery of this Agreement or the Ancillary Agreements or the
consummation of the transactions contemplated hereby or thereby.
19
3.04 Brokerage.
No third party shall be entitled to receive any brokerage commissions,
finder's fees, fees for financial advisory services or similar
compensation in connection with the transactions contemplated by this
Agreement based on any arrangement or agreement made by or on behalf of
Buyer.
3.05 Investment Intent.
Buyer is purchasing the Shares for its own account for investment
purposes, and not with a view to the distribution thereof.
ARTICLE IV
COVENANTS
4.01 Conduct of the Company.
Seller will cause the Company to comply with the following provisions
through and including the Closing Date:
(a) The Company will conduct its business only in, and the Company shall
not take any action except in, the ordinary course of business and
in accordance with applicable Legal Requirements;
(b) The Company will not amend or modify any Material Contract or enter
into any Contract that would have been a Material Contract if such
Contract had been in effect on the date of this Agreement, except
that the Company may enter into Contracts with vendors or customers
in the ordinary course of business;
(c) The Company will (i) use its best efforts to preserve its business
organization and goodwill and maintain satisfactory relationships
with vendors, customers and others having business relationships
with the Company, (ii) confer with representatives of Buyer to
report operational matters and the general status of ongoing
operations as requested by Buyer and (iii) not take any action that
would render, or which reasonably may be expected to render, any
representation or warranty it makes in this Agreement untrue at the
Closing, including any actions referred to in Section 2.08;
(d) The Company will not change any of its methods of accounting in
effect on the Balance Sheet Date;
(e) The Company will not cancel or terminate its current insurance
policies or allow any of the coverage thereunder to lapse, unless
simultaneously with such termination, cancellation or lapse
replacement policies providing coverage equal to or greater than the
coverage under the canceled, terminated or lapsed policies for
substantially similar premiums are in full force and effect; and
20
(f) The Company will not (i) make or rescind any express or deemed
election or take any other discretionary position relating to Taxes
(ii) amend any Tax Return, (iii) settle or compromise any Proceeding
relating to Taxes or (iv) change any of its methods of reporting
income or deductions for federal or state income Tax purposes from
those employed in the preparation of the last filed federal or state
income Tax Returns.
4.02 Notice of Developments.
Seller will notify Buyer of any emergency or material change in the
ordinary course of the Company's business or the commencement or threat of
any Proceeding. Seller will promptly notify Buyer in writing if Seller
discovers that any representation or warranty made by Seller in this
Agreement was when made, or has subsequently become, untrue in any
respect. No disclosure pursuant to this Section 4.02 will be deemed to
amend or supplement the Disclosure Schedule or to prevent or cure any
inaccuracy, misrepresentation, breach of warranty or breach of agreement.
4.03 Access.
From the date of this Agreement through the Closing Date, Seller will
cause the Company to afford to Buyer and its authorized representatives
full access at all reasonable times and upon reasonable notice to the
facilities, offices, properties, technology, processes, books, business
and financial records, officers, employees, business plans, budget and
projections, customers, suppliers and other information of the Company,
and the work papers of the Company's independent accountants and otherwise
provide such assistance as Buyer may reasonably request in connection with
its continuing evaluation of the Company and transition preparation. In
addition, Seller will cause the Company and its officers and employees to
cooperate fully (including providing introductions where necessary) with
Buyer to enable Buyer to contact third parties, including suppliers,
customers and prospective customers of the Company. The Confidentiality
Agreement will apply with respect to information obtained by Buyer under
this Section 4.03.
4.04 Conditions.
Seller will use his best efforts to cause the conditions set forth in
Section 5.01 to be satisfied as soon as reasonably possible and in any
event prior to the Closing Date. Buyer will use its best efforts to cause
the conditions set forth in Section 5.02 to be satisfied as soon as
reasonably possible and in any event prior to the Closing Date.
4.05 Consents and Authorizations.
Seller will obtain, or will cause the Company to obtain, all Consents and
Governmental Authorizations required for the consummation of the
transactions contemplated by this Agreement or which could, if not
obtained, adversely affect the Company's operations as presently
conducted. Seller will keep Buyer reasonably advised of the status of
obtaining such Consents and Governmental Authorizations.
21
4.06 No Sale.
Seller will not sell, pledge, transfer or otherwise place any Encumbrance
on any Shares.
4.07 Further Assurances.
(a) If at any time after the Closing any further action by Seller is
necessary to carry out the purposes of this Agreement, Seller will
take such further action (including the execution and delivery of
such further instruments and documents) as Buyer may reasonably
request, at Buyer's sole cost and expense (unless Buyer is entitled
to indemnification therefor under Article VII).
(b) If at any time after the Closing any further action by Buyer is
necessary to carry out the purposes of this Agreement, Buyer will
take such further action (including the execution and delivery of
such further instruments and documents) as Seller may reasonably
request, at Seller's sole cost and expense (unless Seller is
entitled to indemnification therefor under Article VII).
4.08 Cooperation with Proceedings.
(a) In the event and for so long as Buyer is contesting or defending
against any Proceeding in connection with (i) any transaction
contemplated by this Agreement or the Ancillary Agreements or (ii)
any fact, situation, circumstance, status, condition, activity,
practice, plan, occurrence, event, incident, action, failure to act,
or transaction on or prior to the Closing Date involving Seller,
Seller will cooperate with Buyer and its counsel in the contest or
defense, make himself available, and provide such testimony and
access to his books and records as shall be necessary in connection
with the contest or defense, all at Buyer's sole cost and expense
(unless Buyer is entitled to indemnification therefor under Article
VII).
(b) In the event and for so long as Seller is contesting or defending
against any Proceeding in connection with (i) any transaction
contemplated under this Agreement or (ii) any fact, situation,
circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act, or transaction
on or prior to the Closing Date involving Seller, Buyer will
cooperate with the contesting or defending party and its counsel in
the contest or defense, make available its personnel, and provide
such testimony and access to its books and records as shall be
necessary in connection with the contest or defense, all at Seller's
sole cost and expense (unless Seller is entitled to indemnification
therefor under Article VII).
4.09 Customer and Other Business Relationships.
For a period of one year following the Closing, Seller will cooperate with
the Company and Buyer in their efforts to continue and maintain for the
benefit of the Company those business relationships of the Company
existing prior to the Closing and relating to the
22
business to be operated by the Company after the Closing, including
relationships with lessors, employees, regulatory authorities, licensors,
customers, suppliers and others. From and after the Effective Date, Seller
will refer to the Company and Buyer all inquiries relating to such
business, and Seller shall not take any action that would tend to diminish
the value of or interfere with the Company's business.
4.10 Expenses.
Except as otherwise expressly provided for herein, Seller and Buyer will
pay all of their own expenses, including attorneys' and accountants' fees,
in connection with the negotiation of this Agreement, the performance of
their respective obligations hereunder and the consummation of the
transactions contemplated by this Agreement (whether consummated or not).
Seller agrees that the Company will not bear any of the expenses which he
incurs in connection with the transactions contemplated by this Agreement.
4.11 Earnout.
Buyer agrees to pay to Seller the Earnout Amount, if any, in accordance
with and subject to the terms and conditions set forth in Exhibit G.
4.12 Release of Newcourt Encumbrance.
Within thirty (30) days of the Closing Date, Seller will (a) obtain the
release and termination of the Newcourt Encumbrance to the satisfaction of
Buyer and (b) provide written confirmation to Buyer of the release and
termination of any and all financing statements, security agreements or
other documents relating to the Newcourt Encumbrance.
ARTICLE V
CONDITIONS TO CLOSING
5.01 Conditions to Buyer's Obligations.
Buyer's obligation to take the actions it is required to take at the
Closing is subject to the satisfaction or waiver, in whole or in part, in
Buyer's sole discretion (but no such waiver shall waive any rights or
remedy otherwise available to Buyer), of each of the following conditions
at or prior to the Closing:
(a) The representations and warranties set forth in Article II shall be
true and correct (without taking into account any supplemental
disclosures after the date of this Agreement by Seller or the
Company or the discovery of information by Buyer);
(b) Seller shall have performed and complied with each of his covenants
and obligations set forth in this Agreement;
(c) Each Consent or Governmental Authorization required for the
consummation of the transactions contemplated by this Agreement or
which could, if not obtained,
23
adversely affect the Company's operations as presently conducted,
shall have been obtained and shall be in full force and effect;
(d) No Proceeding shall be pending or threatened (i) challenging or
seeking to prevent or delay consummation of the transactions
contemplated by this Agreement, (ii) asserting the illegality of or
seeking to render unenforceable any provision of this Agreement or
any of the Ancillary Agreements, (iii) seeking to prohibit direct or
indirect ownership, combination or operation by Buyer of any portion
of the business or assets of the Company, or to compel Buyer or any
of its subsidiaries or the Company to dispose of, or to hold
separately, or to make any change in any portion of the business or
assets of Buyer and its subsidiaries or of the Company, as a result
of the transactions contemplated by this Agreement, or incur any
burden, (iv) seeking to require direct or indirect transfer or sale
by Buyer of, or to impose limitations on the ability of Buyer to
exercise full rights of ownership of, any of the Shares or (v)
imposing or seeking to impose damages or sanctions directly arising
out of the transactions contemplated by this Agreement on Buyer or
the Company or any of their respective officers or directors;
(e) No Legal Requirement or Order shall have been enacted, entered,
enforced, promulgated, issued or deemed applicable to the
transactions contemplated by this Agreement by any Governmental
Authority that would reasonably be expected to result, directly or
indirectly, in any of the consequences referred to in Section
5.01(d); and
(f) No Person shall have asserted or threatened that, other than as set
forth in the Disclosure Schedule, such Person (i) is the owner of,
or has the right to acquire or to obtain ownership of, any capital
stock of, or any other voting, equity or ownership interest in, the
Company or (ii) is entitled to all or any portion of the Purchase
Price.
5.02 Conditions to Seller's Obligations.
Seller's obligation to take the actions he is required to take at the
Closing is subject to the satisfaction or waiver, in whole or in part, in
Seller's sole discretion (but no such waiver shall waive any right or
remedy otherwise available under this Agreement), of each of the following
conditions at or prior to the Closing:
(a) The representations and warranties set forth in Article III shall be
true and correct;
(b) Buyer shall have performed and complied with each of its covenants
and obligations set forth in this Agreement; and
(c) No Legal Requirement or Order shall have been enacted, entered,
enforced, promulgated, issued or deemed applicable to the
transactions contemplated by this Agreement by any Governmental
Authority that prohibits the Closing.
24
ARTICLE VI
TERMINATION
6.01 Termination.
This Agreement may be terminated prior to the Closing:
(a) by the mutual written consent of Buyer and Seller;
(b) by Seller, if
(i) Buyer has breached any of its representations, warranties or
agreements contained in this Agreement;
(ii) the transactions contemplated by this Agreement have not been
consummated on or before June 30, 2002; provided, that Seller
will not be entitled to terminate this Agreement pursuant to
this Section 6.01(b)(ii) if Seller's failure to comply fully
with his obligations under this Agreement has prevented the
consummation of the transactions contemplated by this
Agreement;
(iii) any of the conditions set forth in Section 5.02 have become
impossible to satisfy;
(c) by Buyer, if
(i) Seller has breached any of his representations, warranties or
agreements contained in this Agreement;
(ii) the transactions contemplated by this Agreement have not been
consummated on or before June 30, 2002; provided, that Buyer
will not be entitled to terminate this Agreement pursuant to
this Section 6.01(c)(ii) if Buyer's failure to comply fully
with its obligations under this Agreement has prevented the
consummation of the transactions contemplated by this
Agreement;
(iii) any of the conditions set forth in Section 5.01 have become
impossible to satisfy; or
(iv) after the date of this Agreement, there shall have occurred
any Material Adverse Effect.
6.02 Effect of Termination.
The right of termination under Section 6.01 is in addition to any other
rights Buyer or Seller may have under this Agreement or otherwise, and the
exercise of a right of termination shall not constitute an election of
remedies and shall not preclude an action for breach of this Agreement. If
this Agreement is terminated, all continuing obligations
25
of the parties under this Agreement will terminate except that Sections
4.10 (expenses), 8.02 (press releases), 8.09 (governing law), 8.12
(jurisdiction) and 8.13 (waiver of jury trial) will survive indefinitely
unless sooner terminated or modified by the parties in writing.
ARTICLE VII
SURVIVAL; INDEMNIFICATION
7.01 Survival of Representations and Warranties.
All representations, warranties, covenants and obligations in this
Agreement, the Disclosure Schedule, the certificates delivered at the
Closing and any other certificate or document delivered pursuant to this
Agreement shall survive the Closing and the consummation of the
transactions contemplated hereby, subject to Section 7.04. The right to
indemnification, reimbursement or other remedy based upon such
representations, warranties, covenants and obligations shall not be
affected by any investigation conducted with respect to, or any Knowledge
acquired (or capable of being acquired) at any time, whether before or
after the execution and delivery of this Agreement or the Closing Date,
with respect to the accuracy or inaccuracy of or compliance with any such
representation, warranty, covenant or obligation. The waiver of any
condition based upon the accuracy of any representation or warranty, or on
the performance of or compliance with any covenant or obligation, will not
affect the right to indemnification, reimbursement or other remedy based
upon such representations, warranties, covenants and obligations.
7.02 Indemnification by Seller.
Seller will indemnify in full Buyer, the Company and their respective
officers, directors, managers, employees, agents, members, affiliates and
subsidiaries (collectively, the "Buyer Indemnified Parties") and hold them
harmless from and against any loss, liability, deficiency, diminution in
value, damage, expense or cost (including interest, penalties, costs of
investigation and defense, and reasonable legal and other professional
fees and expenses), whether or not involving a Third Party Action, which
any of the Buyer Indemnified Parties may suffer, sustain or become subject
to, as a direct or indirect result of, or arising from or in connection
with any of the following (collectively, "Buyer Losses"):
(a) any breach or inaccuracy in any of the representations and
warranties of Seller contained in this Agreement, the Ancillary
Agreements, or in any exhibits, schedules, certificates or other
documents delivered or to be delivered by or on behalf of Seller
pursuant to the terms hereof or thereof or otherwise referenced or
incorporated in this Agreement (collectively, the "Seller Related
Documents");
(b) any breach of, or failure to perform, any covenant, obligation or
agreement of Seller contained in this Agreement or any of the Seller
Related Documents;
26
(c) any liability or obligation to the extent it arises from or relates
to (i) the operation of the Company prior to the Effective Date
(including any liability or obligation for Taxes), other than the
Retained Liabilities, or (ii) the operation of the Company outside
of the ordinary course of business (including any liability or
obligation for Taxes) from the Effective Date through and including
the Closing Date;
(d) the Proceedings and Orders listed in Section 2.19 of the Disclosure
Schedule; and
(e) any product or component thereof manufactured or shipped, or any
services provided, by the Company (i) in whole or in part prior to
the Effective Date, or (ii) outside the ordinary course of business
from the Effective Date through and including the Closing Date.
7.03 Indemnification by Buyer.
Buyer will indemnify in full Seller and his heirs, personal
representatives and executors (collectively, the "Seller Indemnified
Parties") and hold them harmless from and against any loss, liability,
deficiency, diminution in value, damage, expense or cost (including
interest, penalties, costs of investigation and defense, and reasonable
legal and other professional fees and expenses), whether or not involving
a Third Party Action, which any of the Seller Indemnified Parties may
suffer, sustain or become subject to, as a direct or indirect result of,
or arising from or in connection with any of the following (collectively,
"Seller Losses"):
(a) any breach or inaccuracy in any of the representations and
warranties of Buyer contained in this Agreement, the Ancillary
Agreements, or in any exhibits, schedules, certificates or other
documents delivered or to be delivered by or on behalf of Buyer
pursuant to the terms hereof or thereof or otherwise referenced or
incorporated in this Agreement (collectively, the "Buyer Related
Documents");
(b) any breach of, or failure to perform, any covenant, obligation or
agreement of Buyer contained in this Agreement or any of the Buyer
Related Documents; or
(c) any liability or obligation to the extent it arises from or relates
to the operation of the Company on or after the Effective Date
(except to the extent that any such liability or obligation arises
from or relates to the operation of the Company outside the ordinary
course of business from the Effective Date through and including the
Closing Date); provided, however, that nothing in this Section
7.03(c) will limit or restrict in any manner or to any extent
Buyer's right to indemnification pursuant to Section 7.02(a).
7.04 Time Limitations.
(a) If the Closing occurs, Seller will have no liability (for
indemnification or otherwise) with respect to a claim under this
Article VII (other than claims under Section 7.02(a) relating to
Sections 2.01, 2.03, 2.04, 2.10, 2.22, 2.24, 2.26 and
27
4.12, which may be made through the applicable statute of
limitations), unless, on or before the second anniversary of the
Closing Date, Buyer notifies Seller of such claim specifying the
factual basis thereof in reasonable detail to the extent then known
by Buyer.
(b) If the Closing occurs, Buyer will have no liability (for
indemnification or otherwise) with respect to a claim under this
Article VII (other than claims under Section 7.03(a) relating to
Sections 3.01, 3.02 and 3.04, as to which a claim may be made
through the applicable statute of limitations), unless, on or before
the second anniversary of the Closing Date, Seller notifies Buyer of
such claim specifying the factual basis thereof in reasonable detail
to the extent then known by Seller.
(c) Notwithstanding anything to the contrary herein, with respect to any
specific representation, warranty, covenant, obligation or agreement
under which a party has made a claim for indemnification hereunder
and as to which such claim has not been completely and finally
resolved prior to the expiration of the applicable time period
above, such representation or warranty shall survive for the period
of time beyond such time period sufficient to resolve, completely
and finally, the claim relating to such representation or warranty.
7.05 Limitations on Amount.
(a) Except for fraud or willful misrepresentations or as otherwise
provided below, (i) Seller shall have no liability (for
indemnification or otherwise) with respect to claims under Sections
7.02(a), 7.02(b), 7.02(c), 7.02(d), or 7.02(e) until the total of
all Buyer Losses with respect to such matters exceeds $50,000 (the
"Basket"), in which case Seller shall be liable for the total amount
of all Buyer Losses in excess of the Basket, and (ii) the aggregate
liability of Seller with respect to claims under Sections 7.02(a),
7.02(b), 7.02(c), 7.02(d), and 7.02(e) shall not exceed $1,000,000
(the "Cap"). Notwithstanding the foregoing, (A) the Basket shall not
apply to breaches of or inaccuracies in representations and
warranties set forth in Sections 2.01, 2.03, 2.04, 2.10(a), 2.15,
2.26 or 4.12; (B) the Cap shall not apply to breaches of or
inaccuracies in representations and warranties set forth in Sections
2.01, 2.03, 2.04, 2.10(a), 2.26 or 4.12; and (C) any liability of
Seller to Buyer for breach of or inaccuracy in representations or
warranties set forth in Section 2.15 shall not be considered in any
determination of whether the Basket has been satisfied.
(b) Except for fraud or willful misrepresentations or as otherwise
provided below, (i) Buyer shall have no liability (for
indemnification or otherwise) with respect to claims under Section
7.03(a), 7.03(b) or 7.03(c) until the total of all Seller Losses
with respect to such matters exceeds the Basket, in which case Buyer
shall be liable for the total amount of all Seller Losses in excess
of the Basket, and (ii) the aggregate liability of Buyer with
respect to claims under Section 7.03(a), 7.03(b) and 7.03(c) shall
not exceed the Cap. Notwithstanding the foregoing, neither the
28
Basket nor the Cap shall apply to breaches of or inaccuracies in
representations and warranties set forth in Sections 3.01, 3.02 or
3.04.
7.06 Setoff Against Indemnification Holdback Amount.
Upon notice to Seller specifying in reasonable detail the basis therefor,
Buyer may set off any amount to which it may be entitled under this
Article VII against the Indemnification Holdback Amount and all accrued
interest thereon. Buyer's exercise of its right of set off under this
Section 7.06 in good faith, whether or not ultimately determined to be
justified, will not constitute an event of default under this Agreement.
Neither the exercise of nor the failure to exercise such right of setoff
will constitute an election of remedies or limit Buyer in any manner in
the enforcement of any other remedies that may be available to Buyer.
7.07 Method of Asserting Claims-Third Party Actions.
(a) If any Buyer Indemnified Party or Seller Indemnified Party (an
"Indemnified Party") is made a defendant in or party to any
Proceeding instituted by any third party, the liability or the costs
or expenses of which are or may be Buyer Losses or Seller Losses
(any such third party action or proceeding being referred to as a
"Third Party Action"), such Indemnified Party shall give the party
from whom indemnification is sought (the "Indemnifying Party")
prompt written notice thereof. Such written notice shall have
attached thereto the complaint or other papers pursuant to which the
third party commenced such Third Party Action. The failure promptly
to give such notice shall not affect any Indemnified Party's ability
to seek indemnification hereunder unless such failure has materially
and adversely affected the ability of the Indemnifying Party to
defend successfully the relevant Third Party Action.
(b) An Indemnifying Party shall be entitled to contest and defend any
Third Party Action provided that the Indemnifying Party has a
reasonable basis for concluding that such defense may be successful
and can diligently contest and defend the Third Party Action. The
Indemnifying Party shall give notice of its intention to so contest
and defend to the Indemnified Party within 14 days after the date it
receives the Indemnified Party's notice of such Third Party Action
(but, in all events, at least five business days prior to the date
that an answer to such Third Party Action is due to be filed). Such
contest and defense shall be conducted by reputable attorneys
retained by the Indemnifying Party.
(c) An Indemnified Party shall be entitled at any time, at its own cost
and expense (which expense shall not constitute a Buyer Loss or a
Seller Loss unless the Indemnified Party reasonably determines that
the Indemnifying Party is not adequately representing or, because of
a conflict of interest, may not adequately represent, the interests
of the Indemnified Party, and only to the extent that such expenses
are reasonable), to participate in such contest and defense and to
be represented by attorneys of its or their own choosing. If the
Indemnified Party elects to participate in such defense, the
Indemnified Party will cooperate with
29
Indemnifying Party in the conduct of such defense. The Indemnified
Party shall cooperate with the Indemnifying Party to the extent it
reasonably requests such cooperation in the contest and defense of
such Third Party Action, including providing reasonable access (upon
reasonable notice) to the books, records and employees of the
Indemnified Party if relevant to the defense of such Third Party
Action; provided, that such cooperation shall not unduly disrupt the
operations of the business of the Indemnified Party or cause the
Indemnified Party to waive any statutory or common law privileges,
breach any confidentiality obligations owed to third parties or
otherwise cause any trade secret or confidential information of such
Indemnified Party to become public.
(d) Neither the Indemnified Party nor the Indemnifying Party may
concede, settle or compromise any Third Party Action without the
consent of the other party, which consents will not be unreasonably
withheld. Notwithstanding the foregoing, (i) if a Third Party Action
seeks the issuance of an injunction, the specific election of an
obligation or similar remedy, or (ii) if the subject matter of a
Third Party Action relates to the ongoing business of any
Indemnified Party, which Third Party Action, if decided against the
Indemnified Party, would materially adversely affect the ongoing
business or reputation of the Indemnified Party, then, in each such
case, the Indemnified Party alone shall be entitled to contest,
defend and settle such Third Party Action in the first instance and,
if the Indemnified Party does not contest, defend or settle such
Third Party Action, the Indemnifying Party shall then have the right
to contest and defend (but not settle) such Third Party Action.
7.08 Method of Asserting Claims-Other Actions.
(a) If an Indemnified Party has a claim for indemnification hereunder
against an Indemnifying Party that does not involve a Third Party
Action (including a claim for indemnification with respect to a
third party claim that is not yet the subject of a Third Party
Action), the Indemnified Party shall give the Indemnifying Party
prompt written notice thereof. Such written notice shall state in
reasonable detail the factual basis for such claim to the extent
then known by the Indemnified Party and the nature of the Buyer Loss
or Seller Loss for which indemnification is sought, and it may state
the amount of the Buyer Loss or Seller Loss claimed. The failure
promptly to give such notice shall not affect any Indemnified
Party's ability to seek indemnification hereunder unless either (i)
such failure has materially and adversely affected the ability of
the Indemnifying Party to investigate such claim, or (ii) such
notice is given after the end of the period specified in Section
7.04. If such notice states the amount of the Buyer Loss or Seller
Loss claimed and the Indemnifying Party notifies the Indemnified
Party that the Indemnifying Party does not dispute the claim
described in such notice or fails to notify the Indemnified Party
within 14 days after its receipt of such notice whether the
Indemnifying Party disputes the claim described in such notice, the
Buyer Loss or Seller Loss in the amount specified in the Indemnified
Party's notice will be conclusively deemed a liability of the
Indemnifying Party to the
30
Indemnified Party, and the Indemnifying Party shall pay the amount
of such Buyer Loss or Seller Loss to the Indemnified Party.
(b) If the Indemnifying Party has timely disputed its liability with
respect to such claim, the Indemnifying Party and the Indemnified
Party will proceed in good faith to negotiate a resolution of such
dispute, and if not resolved through such negotiations within 20
days after receipt of the Indemnified Party's notice of such claim,
such dispute shall be resolved fully and finally in Seattle,
Washington, by an arbitrator selected pursuant to and an arbitration
governed by Commercial Arbitration Rules of the American Arbitration
Association, as modified herein. The parties will jointly appoint a
mutually acceptable independent arbitrator, seeking assistance in
such regard from the American Arbitration Association. The
arbitrator shall resolve the dispute based on the governing law,
without regard to its rules of evidence, and judgment upon the award
rendered by such arbitrator may be entered in any court of competent
jurisdiction. The Indemnified Party and the Indemnifying Party shall
each bear their own fees and expenses in connection with such
arbitration and shall each bear 50% of the fees and expenses of the
arbitrator.
(c) If a notice is given pursuant to this paragraph within the period
specified by Section 7.04, which does not state the amount of the
Buyer Loss or Seller Loss claimed, such omission shall not preclude
the Indemnified Party from recovering from the Indemnifying Party,
during or subsequent to such period, the amount of its Buyer Loss or
Seller Loss with respect to the claim described in such notice. If a
notice is given pursuant to this paragraph within the period
specified by Section 7.04, concerning a third party claim which is
not yet the subject of a Third Party Action and such third party
claim subsequently becomes the subject of a Third Party Action, the
Indemnified Party also shall provide the notice required by Section
7.07(a) at the time required by that section.
7.09 Miscellaneous Indemnification Provisions.
(a) Upon the determination of an Indemnifying Party's liability for a
Buyer Loss or a Seller Loss pursuant to this Article VII and the
amount of such Buyer Loss or Seller Loss (whether such determination
is made pursuant to the procedures set forth in this Article VII, by
agreement between the Indemnified Party and the Indemnifying Party,
by arbitration award or by final adjudication), the Indemnifying
Party shall pay the amount of such Buyer Loss or Seller Loss to the
Indemnified Party within 10 days following such determination.
(b) Prior to the Closing, the parties shall have available to them all
remedies available under applicable Legal Requirements, including
specific performance or other equitable remedies. After the Closing,
the rights set forth in this Article VII shall be the exclusive
remedy for breach or inaccuracy of any of the representations and
warranties contained herein on or prior to the Closing Date and
shall be in lieu of contract remedies. Notwithstanding the
foregoing, nothing in this Agreement shall prevent any party from
bringing an action based upon allegations
31
of fraud by the other party in connection with this Agreement. In
the event such action is brought, the prevailing party's attorneys'
fees and costs shall be paid by the non-prevailing party. With
respect to any breach of a covenant or other obligation contained in
this Agreement the parties shall have available to them all remedies
available under applicable Legal Requirements.
(c) To the extent permitted by applicable Legal Requirements, any
payment under this Article VII shall for Tax purposes be treated as
an adjustment to the Purchase Price.
ARTICLE VIII
MISCELLANEOUS
8.01 Definitions.
(a) "Affiliated Group" is defined in Section 2.15(a).
(b) "Agreement" is defined in the preamble to this Agreement.
(c) "Ancillary Agreements" means the noncompetition agreements,
releases, spousal consent and lease agreement to be delivered
pursuant to Section 1.03(b)(i).
(d) "ATM" means an automated teller machine.
(e) "Balance Sheet" is defined in Section 2.06.
(f) "Balance Sheet Date" is defined in Section 2.06.
(g) "Buyer" is defined in the preamble to this Agreement.
(h) "Buyer Indemnified Parties" is defined in Section 7.02.
(i) "Buyer Losses" is defined in Section 7.02.
(j) "Buyer Related Documents" is defined in Section 7.03(a).
(k) "Closing" is defined in Section 1.03(a).
(l) "Closing Date" is defined in Section 1.03(a).
(m) "Code" means the Internal Revenue Code of 1986, as amended.
(n) "Company" is defined in the first recital.
(o) "Consent" means any authorization, consent, approval, filing,
waiver, exemption or other action by or notice to any Person.
32
(p) "Contract" means any contract, agreement, commitment, promise,
undertaking or understanding, whether oral or written and whether
express or implied, which is currently in effect.
(q) "Disclosure Schedule" means the schedule delivered by Seller to
Buyer disclosing exceptions to their representations and warranties
set forth in Article II.
(r) "Effective Date" is defined in the preamble to this Agreement.
(s) "Encumbrance" means any charge, claim, community property interest,
condition, equitable interest, lien, option, pledge, security
interest, right of first refusal or restriction of any kind,
including any restriction on use, voting, transfer, receipt of
income or exercise of any other ownership attribute.
(t) "Environmental Laws" is defined in Section 2.24.
(u) "Employee Benefit Plan" means an employee benefit plan as defined in
ERISA Section 3(3).
(v) "ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
(w) "Excluded Assets" means the following assets which were recorded on
the Company's books prior to the Effective Date (i) the two Ford
Expeditions, (ii) the Ford Escort, (iii) the totaled Ford Econoline
Van, (iv) the Sea Ray boat, (v) all leasehold improvements, (vi) the
reserve for depreciation to the extent related to the foregoing
assets, (vii) the note receivable in the principal amount of
$225,000 owing from Seller to the Company and (viii) all prepaid
expenses.
(x) "Governmental Authority" means any domestic or foreign nation or
government, any state or other political subdivision thereof, and
any domestic or foreign entity or authority exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government.
(y) "Governmental Authorization" means any approval, Consent, license,
permit, waiver or other authorization of any Governmental Authority.
(z) "Hazardous Materials" is defined in Section 2.24.
(aa) "Headquarters Lease" means that certain lease pursuant to which the
Company leases office space from Seller, as amended to date.
(bb) "Indemnification Holdback Amount" is defined in Section 1.02.
(cc) "Indemnified Party" is defined in Section 7.07(a).
(dd) "Indemnifying Party" is defined in Section 7.07(a).
33
(ee) "Initial Payment" is defined in Section 1.02.
(ff) "Intellectual Property" means all rights in patents, patent
applications, trademarks, service marks, trade names, corporate
names, copyrights, mask works, trade secrets, know-how or other
intellectual property rights.
(gg) "Knowledge" means, when used with respect to Seller, (a) the actual
knowledge of Seller or any officer or director of the Company
regarding the fact or other matter at issue and (b) the knowledge
any such Person could be expected to obtain in the course of
conducting a reasonably comprehensive investigation concerning the
existence of such fact or other matter.
(hh) "Legal Requirement" means any federal state, local, municipal,
foreign, international, multinational or other constitution, law,
ordinance, principle of common law, code, regulation, statute or
treaty.
(ii) "Material Adverse Effect" means any effect on the Company's
business, operations, assets, financial condition, results of
operations or prospects that, individually or in the aggregate with
other effects, is materially adverse.
(jj) "Material Contract" is defined in Section 2.16(a).
(kk) "Newcourt Encumbrance" means any Encumbrance evidenced by or related
to UCC 1 Financing Statement No. ▇▇-▇▇▇-▇▇▇▇ filed with the state of
Washington benefiting Newcourt Small Business Lending Corporation or
its successors and assigns.
(ll) "Order" means any order, injunction, judgment, decree, ruling,
assessment or arbitration award of any Governmental Authority or
arbitrator.
(mm) "Permitted Encumbrances" means (i) the purchase money security
interests attached to the Company's four service maintenance vans,
(ii) the leasehold interests in ATMs which the Company leases to its
customers and (iii) the ownership interests of lessors in ATMs
leased by the Company.
(nn) "Person" means any individual, corporation, general or limited
partnership, limited liability company, joint venture, estate,
trust, association, organization, labor union or other entity or
Governmental Authority.
(oo) "Proceeding" means any action, claim, arbitration, demand,
proceeding, grievance, subpoena, inquiry, audit, hearing,
investigation, litigation or suit, whether civil, criminal,
administrative, judicial or investigative, whether formal or
informal, whether public or private, commenced, brought, conducted
or heard by or before, or otherwise involving, any Governmental
Authority or private arbitrator or mediator.
(pp) "Process Agent" is defined in Section 8.11.
34
(qq) "Purchase Price" is defined in Section 1.02.
(rr) "Rebate Obligations" is defined in Section 2.20(c).
(ss) "Retained Liabilities" means the following liabilities and
obligations of the Company as of the Effective Date: (i) accounts
payable which are current as of the Effective Date and were incurred
in the ordinary course of business, (ii) notes payable in connection
with the purchase of the Company's four service maintenance vans
which are current as of the Effective Date, (iii) commissions
payable which are current as of the Effective Date and were incurred
in the ordinary course of business and (iv) the Company's executory
obligations under the Contracts to which it is a party, other than
any liability for any breach thereof occurring in whole or in part
on or prior to the Effective Date.
(tt) "Seller Indemnified Parties" is defined in Section 7.03.
(uu) "Seller Losses" is defined in Section 7.03.
(vv) "Seller Related Documents" is defined in Section 7.02(a).
(ww) "Seller" is defined in the preamble to this Agreement.
(xx) "Shares" is defined in Section 1.01.
(yy) "Significant Supplier" is defined in Section 2.14.
(zz) "Tax" is defined in Section 2.15(a).
(aaa) "Tax Return" is defined in Section 2.15(a).
(bbb) "Third Party Action" is defined in Section 7.07(a).
8.02 Press Releases and Announcements.
Any public announcement, including any announcement to employees,
customers or suppliers and others having dealings with the Company, or
similar publicity with respect to this Agreement or the transactions
contemplated by this Agreement, will be issued, if at all, at such time
and in such manner as Buyer determines and approves; Buyer will have the
right to be present for any in-person announcement. Unless consented to by
Buyer or required by applicable Legal Requirements, Seller will keep, and
Seller will cause the Company to keep, this Agreement and the transactions
contemplated by this Agreement confidential.
8.03 Amendment and Waiver.
This Agreement may not be amended or waived except in a writing executed
by the party against which such amendment or waiver is sought to be
enforced. No course of dealing between or among any Persons having any
interest in this Agreement will be deemed
35
effective to modify or amend any part of this Agreement or any rights or
obligations of any Person under or by reason of this Agreement.
8.04 Notices.
All notices, demands and other communications to be given or delivered
under or by reason of the provisions of this Agreement will be in writing
and will be deemed to have been given when personally delivered or three
business days after being mailed by first class U.S. mail, return receipt
requested, or when receipt is acknowledged, if sent by facsimile, telecopy
or other electronic transmission device. Notices, demands and
communications to Buyer and Seller will, unless another address is
specified in writing, be sent to the address indicated below:
Notices to Buyer:
Access Cash International L.L.C.
▇▇▇▇▇▇ Center II, Suite 300
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Attention: Chief Financial Officer
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and
eFunds Corporation
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Attention: Law Department
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With a copy to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
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Notices to Seller:
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With a copy to:
Aiken, St. Louis & Siljeg, P.S.
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8.05 Assignment.
This Agreement and the Ancillary Agreements, and all of the provisions
hereof and thereof, will be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns,
provided that neither this Agreement nor any of the Ancillary Agreements,
nor any of the rights, interests or obligations hereunder or thereunder,
may be assigned by any party hereto or thereto without the prior written
consent of the other party hereto, and provided further, that that Buyer
may, without Seller's consent, assign this Agreement and any Ancillary
Agreement, and any of its rights, interests or obligations hereunder or
thereunder, to any parent of Buyer, to any of such parent's subsidiaries,
and in connection with any merger, consolidation, reorganization, sale of
all or substantially all of Buyer's assets or similar transaction.
8.06 Severability.
Whenever possible, each provision of this Agreement will be interpreted in
such manner as to be effective and valid under applicable law, but if any
provision of this Agreement is held to be prohibited by or invalid under
applicable law, such provision will be ineffective only to the extent of
such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
8.07 Complete Agreement.
This Agreement, and when executed and delivered the Ancillary Agreements,
contain the complete agreement between the parties and supersede any prior
understandings, agreements or representations by or between the parties,
written or oral, which may have related to the subject matter hereof in
any way.
8.08 Counterparts.
This Agreement may be executed in one or more counterparts, any one of
which need not contain the signatures of more than one party, but all such
counterparts taken together will constitute one and the same instrument.
Delivery of an executed counterpart of a signature page to this Agreement
via facsimile will be effective as delivery of an originally executed
counterpart to this Agreement.
8.09 Governing Law.
THE INTERNAL LAW, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES, OF THE
STATE OF DELAWARE WILL GOVERN ALL QUESTIONS CONCERNING THE CONSTRUCTION,
VALIDITY AND INTERPRETATION OF
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THIS AGREEMENT AND THE PERFORMANCE OF THE OBLIGATIONS IMPOSED BY THIS
AGREEMENT.
8.10 No Third Party Beneficiaries.
This Agreement is for the sole benefit of the parties hereto and their
permitted assigns and nothing herein express or implied shall give or be
construed to give to any Person or entity, other than the parties hereto
and such permitted assigns, any legal or equitable rights hereunder.
8.11 Specific Performance.
Seller and Buyer acknowledge and agree that the subject matter of this
Agreement (including the business, assets and properties of the Company)
is unique, that the other party would be damaged irreparably in the event
any of the provisions of this Agreement are not performed in accordance
with their specific terms or otherwise are breached, and that the remedies
available at law would not be adequate to compensate the other party in
the event of a default or breach. Accordingly, Seller and Buyer agree that
the other party shall be entitled to an injunction or injunctions to
prevent breaches of the provisions of this Agreement and to enforce
specifically this Agreement and the terms and provisions of this Agreement
in addition to any other remedy to which it may be entitled, at law or in
equity. Seller and Buyer waive any defense that a remedy at law is
adequate and any requirement to post bond or provide similar security in
connection with actions instituted for injunctive relief or specific
performance of this Agreement.
8.12 Jurisdiction.
Subject to the procedures governing purchase price adjustment in Article I
and indemnification claims under Article VII, Seller and Buyer submit to
the exclusive jurisdiction of any state or federal court sitting in
Wilmington, Delaware, in any action or proceeding arising out of or
relating to this Agreement and agree that all claims in respect of the
action or proceeding may be heard and determined in any such court. Each
party also agrees not to bring any action or proceeding arising out of or
relating to this Agreement in any other court. Each of the parties waives
any defense of inconvenient forum to the maintenance of any action or
proceeding so brought and waives any bond, surety or other security that
might be required of any other party with respect thereto. Seller and
Buyer each appoint CT Corporation System (the "Process Agent ") as its
agent to receive on its behalf service of copies of the summons and
complaint and any other process that might be served in the action or
proceeding. Any party may make service on any other party by sending or
delivering a copy of the process (a) to the party to be served or (b) to
the party to be served in care of the Process Agent at the following
address: Corporation Trust Center, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇. Nothing in this Section 8.12 will affect the right of Seller or
Buyer to serve legal process in any other manner permitted by law or at
equity.
8.13 WAIVER OF JURY TRIAL.
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SELLER AND BUYER ACKNOWLEDGE AND AGREE THAT ANY CONTROVERSY THAT MAY ARISE
UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT
ISSUES, AND THEREFORE IT IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT
IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR
INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. SELLER AND BUYER EACH CERTIFY
AND ACKNOWLEDGE THAT
(a) NO REPRESENTATIVE, AGENT OR ATTORNEY OF THE OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVER;
(b) IT UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF SUCH WAIVER;
(c) IT MAKES SUCH WAIVER VOLUNTARILY; AND
(d) IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER
THINGS, THE MUTUAL WAIVER AND CERTIFICATIONS IN THIS SECTION.
8.14 Interpretation.
(a) Article titles and headings to sections herein are inserted for
convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement. The
schedules and exhibits referred to herein shall be construed with
and as an integral part of this Agreement as though set forth
verbatim herein.
(b) In this Agreement, unless a clear contrary intention appears: (i)
the terms "hereunder," "hereof," "hereto" and words of similar
import shall be deemed references to this Agreement as a whole and
not to any particular Article, Section or other provision hereof,
(ii) the term "including" means including without limiting the
generality of any description preceding such term, (iii) "or" is
used in the inclusive sense of "and/or" and (iv) references to
documents, instruments or agreements shall be deemed to refer as
well to all addenda, exhibits, schedules or amendments thereto.
[The remainder of this page has been left blank
intentionally. Signature page follows.]
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IN WITNESS WHEREOF, the parties hereto have executed this Stock Purchase
Agreement as of the day and year first above written.
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/s/ ▇. ▇▇▇▇▇▇▇▇
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ACCESS CASH INTERNATIONAL L.L.C.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ III
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Title: Chairman & CEO
Signature Page to Stock Purchase Agreement
List Identifying Contents of
Omitted Schedules
The following Exhibits and Schedules have been omitted from this Exhibit
2.2
Exhibit A Form of Individual Noncompetition Agreement
Exhibit B Form of Release
Exhibit C Form of Spousal Consent
Exhibit D Form of Lease Agreement
Exhibit E Form of Legal Opinion of Seller's Counsel
Exhibit F Balance Sheet Qualifications
Exhibit G Earnout Provision
Disclosure Schedule
The registrant will furnish supplementally a copy of any omitted Schedule
or Exhibit to the Securities and Exchange Commission upon the request of the
Commission.
