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EXHIBIT 2.1
PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT (this "AGREEMENT") is made and entered
into this 30th day of June, 2000, by and among AFFILIATED COMPUTER SERVICES,
INC., a Delaware corporation ("PARENT"), ACS/ECG Holdings, LLC, a Delaware
limited liability company and subsidiary of Parent ("SELLER") and Genpass, Inc.,
a Delaware corporation ("BUYER").
WHEREAS, Parent has engaged in the business of providing ATM (as
defined in Section 5.12) processing services, including ATM terminal driving,
card authorization services, settlement and gateway services, debit card
transaction processing, and cash replenishment (the "ECG Business") and the
business of providing terminal maintenance and repair (the "SERVICE SOLUTIONS
BUSINESS") (the ECG Business and Service Solutions Business are collectively
referred to herein as the "BUSINESS");
WHEREAS, ECG ASSETS, LLC, a Delaware limited liability company
(collectively with Service Solutions (as defined below), "ECG") is an indirect
wholly owned affiliate of Parent, and Parent has pursuant to a capital
contribution agreement attached hereto as Exhibit A (the "ECG CONTRIBUTION
AGREEMENT") transferred to ECG Assets, LLC the assets and certain of the
liabilities of the ECG Business in exchange for all of the equity interest in
ECG Assets, LLC (the "ECG INTEREST");
WHEREAS, ECG SERVICE SOLUTIONS, LLC, a Delaware limited liability
company ("SERVICE SOLUTIONS") is an indirect wholly owned affiliate of Parent,
and Parent has pursuant to a capital contribution agreement, attached hereto as
Exhibit B (the "SERVICE SOLUTIONS CONTRIBUTION AGREEMENT", and collectively with
the ECG Contribution Agreement, the "CONTRIBUTION AGREEMENTS") transferred to
Service Solutions certain of the assets and certain of the liabilities of the
Service Solutions Business in exchange for all of the equity interest in Service
Solutions (the "SERVICE SOLUTIONS INTEREST") (such transfers to ECG,
collectively, being referred to as the "CONTRIBUTION", the assets included in
the Contribution being referred to as the "CONTRIBUTED ASSETS" and the
liabilities included in the Contribution being referred to as the "CONTRIBUTED
LIABILITIES");
WHEREAS, Parent has by way of a capital contribution contributed the
ECG Interest to Seller and has by way of a capital contribution contributed the
Service Solutions Interest to Seller and Seller has contributed the Service
Solutions Interest to ECG Assets, LLC; and
WHEREAS, Buyer desires to purchase from Seller, and Seller desires to
sell to Buyer, all of the ECG Interest, subject to the terms and conditions set
forth herein, including structuring the transaction as an asset sale and
purchase for purposes of federal income tax laws;
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NOW, THEREFORE, in consideration of the covenants and agreements set
forth herein, and for other good and valuable consideration, the parties hereto
agree as follows:
ARTICLE I
PURCHASE AND SALE
1.1 Purchase and Sale. At the Closing, Seller shall sell and transfer
to Buyer, and Buyer shall purchase from Seller, the ECG Interest free and clear
of all Liens for the Purchase Price provided in Section 1.2.
1.2 Purchase Price. The aggregate purchase price for the ECG Interest
and the covenant set forth in Section 5.12 shall be $179,815,727 (the "PURCHASE
PRICE").
1.3 Settlement of Cash. Buyer and Parent will take the actions set
forth on Schedule 1.3 with respect to the settlement of ATM and vault cash.
1.4 Treatment of Transaction. The parties intend that, for purposes of
state contract law, the transaction contemplated hereby shall be treated as a
sale of Seller's ECG Interest and, for federal income tax purposes, the
transaction contemplated hereby shall be treated as a sale of certain assets of
Seller and the assumption of certain liabilities of Seller as described in
Revenue Ruling 99-5.
ARTICLE II
FUNDING
2.1 Funding. The funding of the transactions contemplated by this
Agreement (the "FUNDING") shall take place at the offices of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, commencing at 10:00 a.m. on
the third business day following the satisfaction or waiver of all conditions to
the obligations of the parties to consummate the transactions contemplated
hereby (other than conditions with respect to actions the respective parties
will take at the Funding itself), or at such other place or on such other date
as may be mutually agreeable to Buyer and Seller; provided that in any event, if
Buyer's senior lenders require that the Funding take place at the offices of
their attorneys, the parties agree that the Funding shall take place at such
offices. The date of the Funding is herein referred to as the "FUNDING Date."
Upon consummation, the Funding shall be deemed to be effective for Tax,
financial and accounting purposes as of the end of business on June 30, 2000
(the "EFFECTIVE DATE").
2.2 Deliveries by Buyer. At the Funding, Buyer shall deliver to Seller
the following:
(a) An amount equal to the Purchase Price in immediately available
funds payable by wire transfer; and
(b) The opinions, certificates and other documents and instruments
required to be delivered by or on behalf of Buyer under Article VI below.
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2.3 Deliveries by Seller. At the Funding, Seller shall deliver to Buyer
the following:
(a) An agreement transferring to Buyer the ECG Interest
substantially in the form of Exhibit C attached hereto; and
(b) The opinions, certificates and other documents and instruments
required to be delivered by or on behalf of Seller, Parent or ECG under Article
VI below.
2.4 Funding Agreements. At the Funding, the appropriate parties shall
execute, acknowledge and deliver the following:
(a) The Support Services Agreement by and among Buyer, Seller and
ECG substantially in the form of Exhibit D attached hereto (the "SUPPORT
SERVICES AGREEMENT");
(b) A lease by and among ECG, Parent and 2828 North ▇▇▇▇▇▇▇, Inc.
in a form as reasonably agreed to by Buyer, Parent and 2828 North ▇▇▇▇▇▇▇, Inc.
relating to facilities at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ and at ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ (the "LEASE"), 4 subleases by and between ECG
and the appropriate sublessor in a form as reasonably agreed to by Buyer and
Parent and relating to facilities at ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇ Pala
Drive, Garden Grove, California, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇. ▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ (collectively,
the "SUBLEASES") and the other contracts identified on Schedule 3.21; and
(c) Such other instruments or documents as may be reasonably
necessary or reasonably appropriate to carry out the transactions contemplated
hereby.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Parent and Seller hereby jointly and severally represent and warrant to
Buyer as follows:
3.1 Authority; Capitalization and Ownership. (a) Parent and Seller each
have all requisite power and authority to execute and deliver the Transaction
Documents to which it is a party, to perform its obligations hereunder and
thereunder, and to consummate the transactions contemplated hereby and thereby.
The board of directors of Parent and the sole member of Seller have each duly
approved the Transaction Documents to which it is a party and have duly
authorized the execution and delivery of the Transaction Documents to which it
is a party and the consummation of the transactions contemplated thereby. No
other corporate proceedings on the part of Parent or member action on the part
of Seller are necessary to approve and authorize the execution and delivery of
the Transaction Documents to which it is a party and the consummation of the
transactions contemplated thereby.
(b) Seller is the sole member of ECG Assets, LLC. All of the issued
and outstanding Capital Stock of ECG Assets, LLC (as defined in the recitals
above, the "ECG INTEREST") have been duly authorized, are validly issued, fully
paid, and nonassessable, and are
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held of record and owned beneficially by Seller, free and clear of all Liens,
and are not subject to, nor were they issued in violation of, any preemptive
rights or rights of first refusal. Seller has the full right, power and
authority to transfer the ECG Interest. There are no outstanding or authorized
options, warrants, rights, contracts, calls, puts, rights to subscribe,
conversion rights, or other agreements or commitments of any kind obligating ECG
Assets, LLC, contingently or otherwise, to issue, dispose or sell any interest
thereto or any securities or obligations convertible into, or exchangeable for
any interest therein. There are no outstanding or authorized stock appreciation,
phantom stock, or similar rights with respect to ECG Assets, LLC. There are no
voting trusts, proxies, or any other agreements or understandings with respect
to the voting of the ECG Interest. ECG Assets, LLC is not subject to any
obligation (contingent or otherwise) to repurchase or otherwise acquire or
retire any units of its Capital Stock. ECG Assets, LLC does not have, directly
or indirectly, any equity interest in any other corporation, joint venture,
partnership, limited liability company or other entity other than Service
Solutions.
(c) ECG Assets, LLC is the sole member of ECG Service Solutions,
LLC. All of the issued and outstanding Capital Stock of Service Solutions, LLC
(the "SERVICE SOLUTIONS INTEREST") have been duly authorized, are validly
issued, fully paid, and nonassessable, and are held of record and owned
beneficially by ECG Assets, LLC, free and clear of all Liens, and are not
subject to, nor were they issued in violation of, any preemptive rights or
rights of first refusal. There are no outstanding or authorized options,
warrants, rights, contracts, calls, puts, rights to subscribe, conversion
rights, or other agreements or commitments of any kind obligating Service
Solutions, LLC contingently or otherwise, to issue, dispose or sell any interest
thereto or any securities or obligations convertible into, or exchangeable for
any interest therein. There are no outstanding or authorized stock appreciation,
phantom stock, or similar rights with respect to Service Solutions, LLC. There
are no voting trusts, proxies, or any other agreements or understandings with
respect to the voting of the Service Solutions Interest. Service Solutions, LLC
is not subject to any obligation (contingent or otherwise) to repurchase or
otherwise acquire or retire any units of its Capital Stock. Service Solutions,
LLC does not have, directly or indirectly, any equity interest in any other
corporation, joint venture, partnership, limited liability company or other
entity.
3.2 Validity. This Agreement has been, and the other Transaction
Documents to which Parent or Seller is a party as of Funding will be, duly
executed and delivered by Parent or Seller, as the case may be, and constitute
lawful, valid and binding obligations of Parent and Seller, enforceable against
Parent and Seller in accordance with their respective terms, except as
enforcement may be limited by applicable bankruptcy, reorganization, insolvency,
moratorium and other laws affecting creditors' rights generally and by general
equitable principles.
3.3 Absence of Conflicts. Except as set forth on Schedule 3.3, the
execution, delivery and performance of the Transaction Documents and the
consummation of the transactions contemplated thereby by Parent and Seller
(including without limitation the Contribution and the other transactions
referred to in the recitals to this Agreement) (i) do not and will not result in
the creation of any Lien upon the ECG Interest or the Contributed Assets, and
(ii) are not prohibited by, do not violate or conflict with any provision of,
and do not constitute a default under or a breach of or create in any party the
right to accelerate, terminate, modify, or cancel or require any notice under
(a) the articles of incorporation or bylaws of Parent or the organizational
documents of Seller or ECG, (b) any material note, bond, indenture, contract,
agreement, permit,
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lease, license or other instrument to which Parent, Seller or ECG is a party or
by which Parent, Seller, ECG or any of their respective assets is bound, (c) any
order, writ, constitution, statute, injunction, decree, ruling, charge or
judgment of any court or governmental agency, or (d) any law, rule or regulation
applicable to Parent, Seller or ECG. Except with respect to the HSR Act or as
set forth on Schedule 3.3, no approval, authorization, registration, consent,
order or other action of or filing with any court, administrative agency or
other governmental authority, is required for the execution and delivery by
Parent and Seller of this Agreement or the consummation by Parent and Seller of
the transactions contemplated hereby.
3.4 Due Organization and Qualification. (a) Parent is a corporation
validly existing and in good standing under the laws of Delaware, with full
organizational power and authority to conduct its business as it is now being
conducted, to own or use the properties and assets that it purports to own or
use, and to perform all its obligations under the contracts to which it is
party. Each of Seller and ECG is a limited liability company validly existing
and in good standing under the laws of the State of Delaware and has full
organizational power and authority. ECG has all requisite rights, licenses,
permits and franchises to own, lease and operate the Contributed Assets, to
carry on the Business and to perform its obligations under the contracts to
which it is a party. ECG is qualified to do business as a foreign organization
and is in good standing under the laws of each state or other jurisdiction in
which either the ownership or use of the Contributed Assets, or the nature of
the Business requires it to be so qualified, except to the extent the failure to
so qualify would not have a Material Adverse Effect.
(b) On or before the Funding, Seller has delivered to Buyer correct
and complete copies of the certificate of formation and limited liability
company agreement (or equivalent governing documents) for ECG, which documents
reflect all amendments made thereto at any time before the date hereof. Correct
and complete copies of the minute books containing the records of meetings of
the members and managers (or equivalent parties), the membership certificate
books, and the membership record books of ECG have been furnished to Buyer on or
before the Funding. ECG is not in default under or in violation of any provision
of its certificate of formation or limited liability company agreement (or
equivalent governing documents).
3.5 Title to Assets. The Contributed Assets include, but are not
limited to, the list of assets described in Schedule 3.5. ECG is the owner of
all right, title and interest in, and has good, valid and marketable title to or
a valid leasehold interest in, all of the Contributed Assets free and clear of
all Liens other than Permitted Liens. Except as set forth on Schedule 3.5 or on
Schedule 3.8 or used pursuant to the Support Services Agreement, neither Parent
nor Seller nor any of their Affiliates (other than ECG) owns any properties or
assets (whether real, personal, or mixed and whether tangible or intangible)
which are used in the Business.
3.6 Intellectual Property.
(a) Schedule 3.6 attached hereto sets forth a complete and correct
list of all of the following that are material to ECG's conduct of the Business
and owned by ECG, Parent or Seller (in each case, identifying the owner):
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(i) patented or registered Proprietary Rights, pending patent
applications, and other applications for registrations of Proprietary
Rights;
(ii) unregistered trademarks, unregistered service marks, trade
names, corporate names, and Internet domain names; and
(iii) computer software (other than commercially available
off-the-shelf software), including software licensed to Parent, Seller or
ECG and material to the Business.
(b) Except as set forth on Schedule 3.6:
(i) ECG owns and possesses all right, title and interest in and to
all of the Proprietary Rights set forth on Schedule 3.6 and owns and
possesses all, right, title and interest in and to, or has a valid and
enforceable license to use pursuant to a written license agreement set
forth on Schedule 3.6, all Proprietary Rights necessary for the operation
of the Business as presently conducted;
(ii) ECG's Proprietary Rights are not subject to any liens,
security interests or other encumbrances other than Permitted Liens, and
are not subject to any restrictions or limitations regarding use or
disclosure other than pursuant to a written license agreement set forth on
Schedule 3.5;
(iii) Neither Parent nor Seller nor any of Parent's Affiliates
(excluding ECG) owns any Proprietary Rights used in the Business as
currently conducted;
(iv) Neither Parent, Seller or ECG has infringed, misappropriated
or otherwise conflicted with, and the operation of the Business as
currently conducted does not infringe, misappropriate or otherwise conflict
with, any Proprietary Rights of any third party. Neither Parent, Seller or
ECG is aware of any facts which indicate a likelihood of any of the
foregoing and neither Parent, Seller or ECG has received any notices
regarding any of the foregoing (including, without limitation, any demands
or offers to license any Proprietary Rights from any third party);
(v) Parent and Seller have taken all reasonably necessary actions
to maintain and protect all of Parent's, Seller's and ECG's Proprietary
Rights used in the Business as currently conducted and will continue to
maintain and protect all of Parent's, Seller's and ECG's Proprietary Rights
used in the Business as currently conducted prior to the Funding so as not
to adversely affect the validity or enforceability thereof;
(vi) To the Knowledge of Parent, Seller and ECG, the owners of any
Proprietary Rights licensed to ECG have taken all necessary and desirable
actions to maintain and protect such Proprietary Rights;
(vii) To the Knowledge of Parent, Seller and ECG, no third party
has infringed, misappropriated or otherwise conflicted with any of ECG's
Proprietary Rights and
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neither Parent, Seller or ECG is aware of any facts that indicate a
likelihood of any of the foregoing;
(viii) All of ECG's Proprietary Rights are valid and enforceable,
and none of ECG's Proprietary Rights has been misused, no claim by any
third party contesting the validity, enforceability, use or ownership of
any of ECG's Proprietary Rights has been made, is currently outstanding or
is threatened;
(ix) No loss or expiration of any of ECG's Proprietary Rights is
threatened, pending or reasonably foreseeable, except for patents,
registered trademarks and registered service marks expiring at the end of
their statutory terms (and not as a result of any act or omission by the
Parent or Seller including, without limitation, a failure by Parent or
Seller to pay any required maintenance fees); and
(x) Other than in the Ordinary Course of Business, neither Parent
nor Seller has agreed to provide any material indemnity to any third party
for or against any interference, infringement, misappropriation or other
conflict with respect to any of ECG's Proprietary Rights.
3.7. Real Property.
(a) Owned Properties. ECG does not own any real property and
except as set forth on Schedule 3.7, there is no real property owned by Parent
or Seller that is used in the operation of the Business.
(b) Leased Properties. Schedule 3.7 sets forth a list of all of
the leases and subleases ("LEASES") and each leased and subleased parcel of real
property in which ECG has a leasehold and subleasehold interest (the "LEASED
REAL PROPERTY"). Each of the Leases is in full force and effect, and ECG holds a
valid and existing leasehold or subleasehold interest under each of the Leases.
Seller has delivered to Buyer true, correct, complete and accurate copies of
each of the Leases described in Schedule 3.7. With respect to each of the Leases
listed on Schedule 3.7: (i) it is valid, binding, and enforceable in accordance
with its terms, except as enforcement may be limited by applicable bankruptcy,
reorganization, insolvency, moratorium and other laws affecting creditors'
rights generally and by general equitable principles; (ii) it will continue to
be valid, binding, and enforceable following the Funding in accordance with its
terms, except as enforcement in each instance may be limited by applicable
bankruptcy, reorganization, insolvency, moratorium and other laws affecting
creditors' rights generally and by general equitable principles; (iii) neither
ECG nor, to the Knowledge of Parent, Seller or ECG, any other party to such
lease is in breach or default, and no event has occurred which, with notice or
lapse of time, would constitute such a breach or default or permit termination,
modification or acceleration under such lease; (iv) to the Knowledge of Parent,
Seller or ECG, no party to such lease has repudiated any provision thereof; (v)
there are no disputes, oral agreements, or forbearance programs in effect as to
such lease; (vi) such lease has not been modified in any respect, except to the
extent that such modifications are disclosed by the documents delivered to
Buyer; (vii) ECG has not assigned, transferred, conveyed, mortgaged, deeded in
trust or encumbered any interest in such lease; and (viii) except as disclosed
on
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Schedule 3.3, none of the Leases requires the consent of any landlord,
sublandlord, or other person as a result of the transaction contemplated by this
Agreement.
(c) Condition and Operation of Improvements. All of the premises
and other improvements included within the Leased Real Property (the
"IMPROVEMENTS") are in good condition and repair and adequate to operate such
facilities as currently used. To the Knowledge of Parent, Seller and ECG, there
are no facts or conditions affecting any of the Improvements which would,
individually or in the aggregate, interfere in any significant respect with the
use, occupancy or operation thereof as currently used, occupied or operated. All
water, gas, electrical, steam, compressed air, telecommunication, sanitary and
storm sewage lines and systems and other similar systems serving the Leased Real
Property are installed and operating and are sufficient to enable the Leased
Real Property to continue to be used and operated in the manner currently being
used and operated. Each parcel of Leased Real Property has direct access to a
public street adjoining the Leased Real Property on which it is situated over
the driveways and accessways currently being used in connection with its use and
operation.
3.8 Sufficiency of Assets. The Contributed Assets are sufficient for
ECG to conduct the Business in the same manner as conducted by Parent
immediately prior to the Contribution, except as may result from exclusion of
the Excluded Assets (which Excluded Assets are set out on Schedule 3.8) from the
assets transferred to ECG and the services to be provided by Seller pursuant to
the Support Services Agreement. The Contributed Assets are operated in
conformity in all material respects with all material applicable laws and
regulations, are free from defects (patent and latent), have been maintained in
accordance with normal industry practice, are in a good state of repair and
operating condition, reasonable wear and tear excepted, and are usable in the
Ordinary Course of Business. Since the time of the Contribution there have been
no additions to or reductions in the Contributed Assets except in the Ordinary
Course of Business.
3.9 Financial Statements. Schedule 3.9 sets forth the following
financial statements of the Business (collectively, the "FINANCIAL STATEMENTS"):
(i) unaudited profit and loss statements for the fiscal year ended June 30,
1999, and (ii) unaudited balance sheets and profit and loss statements for the
eleven (11) months ended May 31, 2000. The Financial Statements were prepared
from the books and records of Parent in accordance with past accounting
principles and practices consistently applied, which principles and practices
depart from generally accepted accounting principles only in the manner
described in Schedule 3.9 set forth therein and except for the fact that they do
not include normal footnote disclosures and are subject to immaterial normal
year-end adjustments, and present fairly the financial position and the results
of operations of the Business as of the dates and for the periods indicated
therein.
3.10 Events Subsequent to May 31, 2000. Except as expressly
contemplated by this Agreement, since May 31, 2000, there has not been any
material adverse change in the business, financial condition, operations, or
results of operations of the Business. Without limiting the generality of the
foregoing, since that date, none of Parent, Seller and ECG individually or
collectively, have with respect to the Business:
(a) suffered any change that has had or could reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect or
suffered any theft, damage,
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destruction, or casualty loss in excess of $100,000, to its assets, whether or
not covered by insurance, or suffered any substantial destruction of books and
records;
(b) subjected any portion of the Contributed Assets to any Lien
(other than Permitted Liens);
(c) sold, leased, assigned, or transferred a portion of the
Contributed Assets except in the Ordinary Course of Business, or canceled
without fair consideration any material debts or claims owing to or held by it;
(d) sold, assigned, licensed, or transferred (including, without
limitation, transfers to Seller or any Insider) any Proprietary Rights or
disclosed any material confidential information (other than pursuant to
agreements requiring the disclosure to maintain the confidentiality of and
preserving all rights of ECG in such confidential information) or received any
material confidential information of any third party to Parent's, Seller's or
ECG's Knowledge, in violation of any obligation of confidentiality;
(e) suffered any extraordinary losses or waived any rights of
material value;
(f) entered into, amended, or terminated any material lease,
contract, agreement, or commitment, or taken any other action or entered into
any other transaction other than in the Ordinary Course of Business;
(g) entered into any other material transaction, or materially
changed any business practice;
(h) paid or increased any bonuses, salaries, or other compensation
to any stockholder, director, or (except in the Ordinary Course of Business)
officer or employee or entered into any employment, severance, or similar
contract or agreement with any director, officer, or employee;
(i) adopted, or materially increased the payments to or benefits
under, any profit sharing, bonus, deferred compensation, savings, insurance,
pension, retirement, or other employee benefit plan for or with any employees of
ECG;
(j) modified its cash management customs and practices (including,
without limitation, with respect to collection of accounts receivable, purchases
of supplies, repairs and maintenance, payment of accounts payable and accrued
expenses, levels of capital expenditures and operation of cash management
practices generally);
(k) made any capital expenditures or commitments for capital
expenditures except in the Ordinary Course of Business or failed to make capital
expenditures at levels at least equal to those set forth in the board approved
budget;
(l) made a change in its accounting methods; or
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(m) made or committed to make any payments or other transfers in
connection with, or in contemplation of, the transactions contemplated by this
Agreement or the other Transaction Documents.
3.11 Contracts.
(a) Except as expressly contemplated by this Agreement, the
Support Services Agreement or as set forth in Schedule 3.11, neither Parent
(with respect to the Business), Seller (with respect to the Business), nor ECG
is a party to or bound by any written or oral:
(i) pension, profit sharing, stock option, employee stock
purchase or other plan or arrangement providing for deferred or other
compensation to employees or any other employee benefit plan or
arrangement, or any collective bargaining agreement or any other
contract with any labor union, or severance agreements, programs,
policies or arrangements;
(ii) contract for the employment of any officer, individual
employee or other Person on a full-time, part-time, consulting or other
basis providing annual compensation in excess of $100,000 or contract
relating to loans to officers, directors or Affiliates;
(iii) contract under which Seller or ECG has advanced or
loaned any other Person amounts in the aggregate exceeding $25,000,
other than trade credit extended in the Ordinary Course of Business;
(iv) agreement or indenture relating to borrowed money or
other Indebtedness or the mortgaging, pledging or otherwise placing a
Lien on any asset or group of assets;
(v) guaranty of any obligation;
(vi) lease or agreement under which Parent, Seller or ECG is
the lessee of or holds or operates any property, real or personal,
owned by any other party, except for any lease or agreement for real or
personal property under which the aggregate annual payments do not
exceed $100,000;
(vii) lease or agreement under which Parent, Seller or ECG is
the lessor of or permits any third party to hold or operate any
property, real or personal, owned or controlled by Parent, Seller or
ECG;
(viii) contract or group of related contracts with the same
party or group of affiliated parties the performance of which involves
aggregate annual payments in excess of $300,000;
(ix) assignment, license, indemnification or agreement with
respect to any intangible property (including, without limitation, any
Proprietary Rights);
(x) distribution or franchise agreement;
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(xi) other than as disclosed in this Section or on Schedule
3.5, agreement with a term of more than six months, which is not
terminable by Parent, Seller or ECG upon less than 90 days' notice
without penalty or which involves more than $100,000 annually;
(xii) contract or agreement prohibiting Parent, Seller or ECG
from freely engaging in the Business anywhere in the world; or
(xiii) any other agreement, other than in the Ordinary Course
of Business, which is material to its operations and business prospects
or involves a consideration in excess of $100,000 annually.
(b) All of the contracts, agreements and instruments set forth on
Schedule 3.11(a) are valid, binding and enforceable in accordance with their
respective terms and immediately after the Funding will be valid, binding and
enforceable in accordance with their respective terms, except as enforcement in
each instance may be limited by applicable bankruptcy, reorganization,
insolvency, moratorium and other laws affecting creditors' rights generally and
by general equitable principles. Parent, Seller and ECG have each performed all
material obligations required to be performed by it and, except as set forth in
Schedule 3.11(b), within the past two (2) years neither Parent nor Seller has
been notified of any alleged breach or default, is not, and to the Knowledge of
Parent, Seller and ECG, none of the parties to such contract is, in breach of,
violation of, or in default under the terms of any such contract, agreement or
instrument set forth on Schedule 3.11(a). No event has occurred which with
notice or passage of time or both would result in a breach, violation, default
or event of noncompliance by Parent, ECG or Seller or, to Parent's, Seller's and
ECG's Knowledge, any other party under the terms of any of such contracts,
agreements or instruments set forth on Schedule 3.11(a). Except as set forth on
Schedule 3.11(b) or Schedule 3.3, the consummation of the transactions
contemplated hereby, without notice to or consent or approval of any party, will
not constitute a breach of, violation of, or default under any provision of any
of such contracts, agreements or instruments. Except as set forth on Schedule
3.11(b), (x) neither Seller, Parent nor ECG has received written or oral notice
of the intention of any party to cancel or terminate any contract, agreement or
instrument required to be set forth on Schedule 3.11(a) and (y) to Parent's,
Seller's and ECG's Knowledge, there has not been any breach or anticipated
breach by the other parties to any such contract, agreement or instrument.
(c) Parent or Seller has provided Buyer with, or provided Buyer
with access to, a true and correct copy of all written contracts which are
required to be disclosed on Schedule 3.11(a), in each case together with all
amendments, waivers, or other changes thereto (all of which are disclosed on
Schedule 3.11(a)). Schedule 3.11(c) contains an accurate and complete
description of all material terms of all oral contracts referred to therein.
3.12 Employee Matters. Schedule 3.12 sets forth a list of all employees
of Parent or Seller principally employed in the Business and as of the Funding
the Transferred Employees (as defined in Section 5.9) will be employees of ECG.
No collective bargaining agreement is applicable to any Transferred Employee.
Neither Parent nor Seller has received notice from any Transferred Employee
identified on Schedule 5.9 as a key employee that such employee plans to
terminate his or her employment with ECG. Parent or Seller has paid or made
provision for the
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payment of all wages accrued to or for the benefit of the employees of the
Business. Parent and Seller have complied in all material respects with all
applicable laws, rules, and regulations relating to the employment of labor,
including those relating to wages, hours, collective bargaining, and the payment
and withholding of taxes. Parent and Seller have in all material respects
withheld and paid to the appropriate governmental authority, or Parent or Seller
is holding for the payment not yet due to the authority, all amounts required by
law or agreement to be withheld from the salaries or wages of the employees of
the Business.
3.13 Compliance with Laws. Except as set forth on Schedule 3.13, each
of Parent and Seller and their respective officers, directors, agents (in their
capacity as such), employees, predecessors and Affiliates have complied with and
are in compliance in all material respects with all applicable laws (including
rules, regulations, codes, plans, injunctions, judgments, orders, decrees,
rulings, and charges thereunder) of federal, state, local, and foreign
governments (and all agencies thereof) which are applicable to the Business or
the Contributed Assets, and no action, suit, proceeding, hearing, investigation,
charge, complaint, claim, demand, or notice has been filed or commenced against
any of them alleging any failure so to comply.
3.14 Insurance. Schedule 3.14 contains a list of each insurance policy
maintained by Parent, Seller or ECG with respect to the Business or the
Contributed Assets.
3.15 Legal Proceedings. Except as set forth on Schedule 3.15, none of
Parent, Seller, ECG or any part of the Business is engaged in or a party to or,
to the Knowledge of Parent, Seller, or ECG, threatened to be made a party to any
action, suit, proceeding, complaint, charge, hearing, investigation or
arbitration relating to the Business or the Contributed Assets. Except as set
forth on Schedule 3.13, neither Parent nor Seller has received written notice of
any investigation threatened or contemplated by any foreign, federal, state or
local governmental or regulatory authority relating to the Business or the
Contributed Assets. With respect to the Business, neither Parent, Seller, ECG,
nor the Contributed Assets is subject to any material judgment, order, writ,
injunction, stipulation or decree of any court or any governmental agency or any
arbitrator.
3.16 Guaranties. As of the Funding, ECG will not be a guarantor or
otherwise liable for any Liability or obligation (including indebtedness) of any
other Person or entity.
3.17 Licenses and Permits. Schedule 3.17 hereto contains a complete
list of each material business or governmental license, permit, certificate,
certificate of occupancy, approval, exemption, registration or authorization,
including any pending applications therefor, used in the Business (collectively,
the "LICENSES AND PERMITS"). The Licenses and Permits are in all material
respects valid and in full force and effect and there are no pending, nor, to
the Knowledge of Parent, Seller and ECG, threatened, any material proceedings
which could result in the termination, suspension, modification, revocation,
limitation or impairment of any License or Permit. Neither Parent, Seller nor
ECG has received written notice or has Knowledge of any material violation with
respect to any Licenses and Permits. Except as indicated on Schedule 3.17, ECG
owns or possesses such right in and to all Licenses which are necessary to
conduct the Business as presently conducted. Seller has delivered or made
available complete and correct copies of all the Licenses and Permits to Buyer.
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3.18 Environmental Matters. ECG is not required to have any material
permit, license or other authorization under applicable laws and regulations
relating to pollution control and protection of the environment to operate the
Business in the manner in which it is currently operated. There are no pending
civil or criminal actions, notices of violations or administrative proceedings
relating to pollution control or protection of the environment with respect to
the Business. ECG is, and at all times has been, in all material respects in
full compliance with, and has not been and is not in violation of or liable in
any material respects under, any Environmental Law. ECG does not have any basis
to expect, nor has it or any other Person for whose conduct it is or may be held
to be responsible received, any actual or threatened order, notice, or other
communication from (i) any Governmental Body or private citizen acting in the
public interest, or (ii) the current or prior owner or operator of any
facilities, of any actual or potential violation or failure to comply with any
Environmental Law, or of any actual or threatened obligation to undertake or
bear the cost of any Environmental, Health, and Safety Liabilities with respect
to any of the facilities or any other properties or assets (whether real,
personal, or mixed) in which ECG has had an interest, or with respect to any
property or facility at or to which Hazardous Materials were generated,
manufactured, refined, transferred, imported, used, or processed by ECG, or any
other Person or entity for whose conduct it is or may be held responsible for,
or from which Hazardous Materials have been transported, treated, stored,
handled, transferred, disposed, recycled, or received.
3.19 Brokers. Other than First Annapolis Capital, Inc., neither Parent
nor Seller has retained any broker or finder or incurred any liability or
obligations for any brokerage fees, commissions or finders' fees with respect to
this Agreement or the transactions contemplated hereby.
3.20 Accounts Receivable. All notes and accounts receivable included in
the Contributed Assets, as adjusted in the Ordinary Course of Business between
the date of the Contribution and the Effective Date, are reflected properly on
ECG's books and records, are valid receivables subject to no valid setoffs or
counterclaims, and are current and collectible subject only to the stated
allowance for doubtful accounts set forth on the face of the Financial
Statements, as adjusted in the Ordinary Course of Business between the date of
the Contribution and the Effective Date.
3.21 Liabilities. The Contributed Liabilities consist solely of (i) the
trade accounts payable and other ordinary course accrued expenses of the
Business set forth on the face of the May 31, 2000 balance sheet (but not
including Liabilities relating to the matters set forth on Schedule 3.15 or
Liabilities under Section 5.9), (ii) the trade accounts payable and other
ordinary course accrued expenses of the Business which have arisen after May 31,
2000 in the Ordinary Course of Business (none of which results from, arises out
of, relates to, is in the nature of, or was caused by any breach of contract,
breach of warranty, tort, infringement, or violation of law) other than
Liabilities of Parent or Seller under Section 5.9, and (iii) obligations of
Parent or ECG under the agreements, contracts, leases and licenses included in
the Contributed Assets to the extent such obligations arise out of events, facts
or transactions occurring after the Contribution. On the date the ECG Interest
is transferred to Buyer pursuant to this Agreement ECG shall not have any
liabilities except (a) the Contributed Liabilities, (b) trade accounts payable
and other ordinary course accrued expenses of the Business which have arisen
after the date of the Contribution in the Ordinary Course of Business (none of
which results from, arises out of, relates to, is in the nature of, or was
caused by any breach of
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contract, breach of warranty, tort, infringement, or violation of law), (c)
liabilities for inventories ordered by Seller or ECG in the Ordinary Course of
Business (none of which results from, arises out of, relates to, is in the
nature of, or was caused by any breach of contract, breach of warranty, tort,
infringement, or violation of law) prior to the Funding but not invoiced to
Seller or ECG until after the Funding Date, and (d) liabilities and obligations
arising under the Support Services Agreement, and agreements set forth on
Schedule 3.21.
3.22 Tax Matters. (a) Each of Seller and ECG has filed or has caused to
be filed on a timely basis all Tax Returns that are or were required to be filed
by them, either separately or as a member of an Affiliated Group, and all such
Tax Returns have been prepared in compliance with all applicable laws and
regulations and are true and accurate in all material respects. All Taxes due
and payable by Seller and ECG have been paid. No election has been made under
Treas. Reg. Section 301.7701-3, or any corresponding foreign, state or local
provision or administrative rule, to treat ECG as a corporation for income tax
purposes.
(b) Except as set forth in Schedule 3.22 attached hereto:
(i) the charges, accruals, and reserves for Taxes with respect
to ECG for any pre-Effective Date Tax period reflected on ECG's
Financial Statements are adequate to cover such Taxes (determined in
accordance with GAAP) and are at least equal to ECG's liability for
Taxes;
(ii) none of Seller or ECG has requested or been granted an
extension of the time for filing any Tax Return which has not yet been
filed;
(iii) none of Seller or ECG has consented to extend to a date
later than the date hereof the time in which any Tax may be assessed or
collected by any taxing authority;
(iv) there are no liens for Taxes (other than for current
Taxes not yet due and payable) upon Seller, ECG or the Contributed
Assets;
(v) the Contributed Liabilities do not include any obligation
to make any payments, and ECG has not made any payments and is not and
will not become obligated (under any contract entered into on or before
the Effective Date or Funding Date) to make any payments, that will be
nondeductible under Section 280G of the Code (or any corresponding
provision of state, local or foreign income Tax law);
(vi) no deficiency or proposed adjustment which has not been
settled or otherwise resolved for any amount of Tax has been proposed,
asserted or assessed by any taxing authority against any of Seller or
ECG;
(vii) there is no action, suit, taxing authority proceeding or
audit now in progress, pending or, to Parent's, Seller's or ECG's
Knowledge, threatened against or with respect to any of Seller or ECG;
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(viii) no claim has ever been made by a taxing authority in a
jurisdiction where any of Seller or ECG does not file Tax Returns that
any of Seller or ECG is or may be subject to Taxes assessed by such
jurisdiction;
(ix) none of Seller or ECG has been a member of an Affiliated
Group other than one in which the Parent was the common parent, or
filed or been included in a combined, consolidated or unitary income
Tax Return, other than one filed by the Parent;
(x) Seller and ECG will be released from any Tax allocation,
Tax sharing or similar agreement as of the Effective Date;
(xi) Buyer will not be required to deduct and withhold any
amount pursuant to Section 1445 of the Code upon the transfer of the
Contributed Assets or ECG Interests to Buyer; and
(xii) Seller and ECG have 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, and all Forms W-2 and 1099 required with respect thereto
have been properly completed and timely filed.
(c) Schedule 3.22 contains a list of states, territories and
jurisdictions (whether foreign or domestic) in which any of Seller or ECG is
required to file Tax Returns relating to income Taxes of Seller or ECG.
3.23 Affiliated Transactions. Except as set forth on Schedule 3.23, no
officer, director, employee, stockholder or Affiliate of Parent, Seller or ECG
or any individual related by blood, marriage or adoption to any such individual
or any entity in which any such Person or individual owns any beneficial
interest, is a party to any agreement, contract, commitment or transaction with
ECG or has any interest in any property or right used by the Business.
3.24 Disclosure. This Article III does not contain any untrue statement
of a material fact or omit to state any material fact necessary in order to make
each statement contained herein or therein not misleading.
3.25 Minimum Net Working Capital and Adjustment Net Assets. As of the
Effective Date, ECG will have Net Working Capital of at least $4.25 Million and
Adjusted Net Assets of at least $23.2 Million. "Net Working Capital" is defined
as the book value of ECG's cash and cash equivalents minus the book value of
ECG's current and noncurrent liabilities, determined on a consolidated basis in
accordance with generally accepted accounting principles, consistently applied.
"Adjusted Net Assets" means the book value of the Contributed Assets (including
the Retained Accounts Receivable) minus the book value of the sum of (i) ECG's
current and non-current Liabilities, (ii) ECG's inventory, and (iii) ECG's
prepaid expenses, determined on a consolidated basis in accordance with
generally accepted accounting principles, consistently applied.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller as follows:
4.1 Authority. Buyer has all requisite power and authority to execute
and deliver the Transaction Documents to which it is a party and to consummate
the transactions contemplated hereby and thereby. The board of directors of
Buyer has duly approved the Transaction Documents to which it is a party and has
duly authorized the execution and delivery of the Transaction Documents to which
it is a party and the consummation of the transactions contemplated thereby. No
other corporate proceedings on the part of Buyer are necessary to approve and
authorize the execution and delivery of the Transaction Documents to which it is
a party and the consummation of the transactions contemplated thereby.
4.2 Validity. All Transaction Documents to which Buyer is a party have
been duly executed and delivered by Buyer and constitute lawful, valid and
legally binding obligations of Buyer, enforceable against Buyer in accordance
with their respective terms, except as enforcement may be limited by applicable
bankruptcy, reorganization, insolvency, moratorium and other laws affecting
creditors' rights generally and by general equitable principles. The execution,
delivery and performance of the Transaction Documents and the consummation of
the transactions contemplated thereby are not prohibited by, do not violate or
conflict with any provision of, and do not constitute a default under or a
breach of (a) Buyer's certificate of incorporation or bylaws, (b) any material
note, bond, indenture, contract, agreement, permit, license or other instrument
to which Buyer is a party or by which Buyer or any of its assets is bound, (c)
any order, writ, injunction, decree or judgment of any court or governmental
agency, or (d) any law, rule or regulation applicable to Buyer.
4.3 Due Organization. Buyer is validly existing and in good standing
under the laws of the state of its incorporation, and has full power and
authority to carry on the business in which it is engaged.
4.4 Brokers. Buyer has not retained any broker or finder or incurred
any liability or obligation for any brokerage fees, commissions or finders' fees
with respect to this Agreement or the transactions contemplated hereby.
4.5 Disclosure. This Article IV does not contain any untrue statement
of a material fact or omit to state any material fact necessary in order to make
each statement contained herein not misleading.
ARTICLE V
COVENANTS OF THE PARTIES
5.1 General. Each of the parties will use its commercially reasonable
efforts to take all action and to do all things necessary in order to consummate
and make effective the
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transactions contemplated by this Agreement (including satisfaction, but not
waiver, of the closing conditions set forth in Article VI below).
5.2 Affirmative Covenants of Parent and Seller. Except as otherwise
contemplated by this Agreement, between the date hereof and the Funding, unless
Buyer otherwise agrees in writing, Parent and Seller shall, and shall cause ECG
to:
(a) operate the Business only in the Ordinary Course of Business;
(b) keep in full force and effect ECG's legal existence and all
material contracts, rights, franchises, and intellectual property relating or
pertaining to the Business and use its commercially reasonable efforts to cause
its current insurance (or reinsurance) policies not to be canceled or terminated
or any of the coverage thereunder to lapse;
(c) make capital expenditures at levels consistent with past
practice;
(d) maintain the Contributed Assets in good repair, order, and
condition (normal wear and tear excepted) consistent with current needs, replace
in accordance with prudent practices ECG's inoperable, worn out, or obsolete
assets with assets of good quality consistent with prudent practices and current
needs and, in the event of a casualty, loss, or damage to any of the Contributed
Assets before the Funding Date, either repair or replace such damaged property
or use the proceeds of such insurance in such other manner as mutually agreed
upon by Seller and Buyer;
(e) maintain the books, accounts, and records of ECG and the
Business in accordance with Parent's past accounting practices, consistent with
the custom and practice as used in the preparation of the Financial Statements;
(f) encourage the Transferred Employees to continue their
employment with ECG after the Funding;
(g) promptly (once Parent, Seller or ECG obtains actual knowledge
thereof) inform Buyer in writing of any material variances from the
representations and warranties contained in Article III or any material breach
of any covenant hereunder by Parent or Seller;
(h) cooperate with Buyer and use its commercially reasonable
efforts to cause the conditions to Buyer's obligation to close to be satisfied
(including, without limitation, the execution and delivery of all agreements
contemplated hereunder to be so executed and delivered and the making and
obtaining of all third party and governmental notices, filings, authorizations,
approvals, consents, releases, and terminations); and
(i) cooperate with Buyer in Buyer's investigation of the Business
and ECG, to permit Buyer and its employees, agents, accounting, legal, and other
authorized representatives to (i) have full access to the premises, books, and
records of the Business and ECG at reasonable hours, (ii) visit and inspect any
of the properties of ECG, and (iii) discuss the affairs, finances, and accounts
of the Business and ECG with the directors, officers, and key
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employees of ECG, and, subject to Parent's prior written approval, key
customers, key sales representatives, key suppliers, and independent accountants
of the Business and ECG.
5.3 Negative Covenants of Parent and Seller. Except as expressly
contemplated by this Agreement, between the date hereof and the Funding, unless
Buyer otherwise agrees in writing, Parent and Seller shall cause ECG to not:
(a) take any action that would require disclosure under Section
3.10;
(b) make any loans, enter into any transaction with any Insider, or
make or grant any increase in any employee's or officer's compensation or make
or grant any increase in any employee benefit plan, incentive arrangement, or
other benefit covering any of the employees of the Business, except in the
Ordinary Course of Business;
(c) establish, amend or contribute to any pension, retirement,
profit sharing, or stock bonus plan or multiemployer plan covering any of the
employees of the Business, except as required by law or in accordance with past
practice;
(d) except as specifically contemplated by this Agreement, enter
into any contract, agreement, or transaction with respect to ECG or the
Business, other than in the Ordinary Course of Business and at arm's length,
with unaffiliated Persons;
(e) declare, pay, make, or otherwise effectuate any dividends or
distributions (other than in cash), redemptions, equity repurchases, or other
transactions involving ECG's Capital Stock or equity securities;
(f) sell, transfer, contribute, distribute, or otherwise dispose of
any securities or assets (or interests in any securities or assets) of the
Business or ECG, or agree to do any of the foregoing, solicit any Person, or
negotiate or have any discussions with any Person with respect to any of the
foregoing, other than in the Ordinary Course of Business;
(g) enter into any amendments, extensions, renewals or other
modifications with respect to any of the real property leases, or enter into any
new lease, sublease, license, concession or other agreement for the use or
occupancy of real property requiring rental and other payments in excess of
$300,000 annually as averaged over the term of such lease, sublease, license,
concession or other agreement; or
(h) commit, or enter into any agreement to do, any of the
foregoing.
5.4 Consents. (a) Prior to the Funding, Parent and Seller shall use all
commercially reasonable efforts (and will cause ECG to use all commercially
reasonable efforts) to obtain all consents required to convey the Contributed
Assets to ECG and to sell and transfer the ECG Interest to Buyer and to enter
into the Subleases; provided, however, that Seller shall not have any obligation
to amend, or cause to be amended, any contract, agreement, lease or other
arrangement, to change, or cause to be changed, any permit or to make, or cause
to be made, any payment to obtain any such consent; and provided, further, that
Buyer shall cooperate and assist Seller in a commercially reasonably manner to
obtain such consents. To the extent that any such agreement to be included in
the Contributed Assets is not capable of being conveyed as a
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Contributed Asset or the ECG Interest sold pursuant to this Agreement without
the consent of the other party to such agreement, and such consent is not
obtained prior to the Funding, or if such conveyance or sale or attempted
conveyance or sale would constitute a breach thereof in the absence of obtaining
such consent, nothing in this Agreement will constitute a conveyance or sale or
an attempted conveyance or sale thereof. Each of the Buyer, Parent and the
Seller shall cooperate with each other and use reasonable efforts to obtain any
such approvals, provided, however, that Buyer shall not have any obligation to
amend, or cause to be amended, any contract, agreement, lease or other
arrangement, to change, or cause to be changed, any permit or to make or cause
to be made, any payment to obtain any such consent.
(b) In the event that such consents referred to in paragraph (a)
are not obtained then Parent and the Buyer will each use reasonable efforts to
cooperate in any reasonable and lawful arrangement to enter into a subcontract
or other agreement or arrangement mutually agreeable to Parent and Buyer.
5.5 Additional Covenants. Buyer and Parent shall make all necessary
filings, and thereafter make any other required submissions, with respect to
this Agreement required under the HSR Act and any other applicable law; provided
that Parent and Buyer shall cooperate with each other in connection with the
making of all such filings, including providing copies of all such documents to
the nonfiling party and its advisors prior to filings and, if requested, shall
accept all reasonable additions, deletions or changes suggested in connection
therewith. Parent and Buyer shall request early termination of the waiting
period under the HSR Act. Buyer is responsible for paying the application filing
fee required under the HSR Act.
5.6 Use of Affiliated Computer Services Name. In recognition of the
fact that certain of the Contributed Assets have imprinted thereon the words
"AFFILIATED COMPUTER SERVICES" and Parent's logotype and variations thereof,
Buyer shall remove, within six months after the Funding, such name or logotype
from, or render the same illegible on, all Contributed Assets on which they are
imprinted or legible or, in the alternative, shall discontinue use of such
assets. Subject to the foregoing, during the six-month period following Funding,
Buyer and ECG are granted a non-exclusive, nonassignable royalty-free license to
use all assets utilizing the words "AFFILIATED COMPUTER SERVICES," "ACS," and
Parent's logotype and variations thereof.
5.7 Exclusivity. Neither Parent nor Seller shall (and neither Parent
nor Seller shall cause or permit any Affiliate, employee, officer, director,
stockholder, agent or any other Person acting on its behalf to), discuss or
negotiate with any other Person a possible sale of all or part of the ECG
Interest or the Contributed Assets or the Business (except for dispositions of
assets in the Ordinary Course of Business), whether such transaction takes the
form of a sale of stock, merger, liquidation, dissolution, reorganization,
recapitalization, consolidation. sale of assets or otherwise (an "ACQUISITION
PROPOSAL"), or provide any information to any other Person concerning the
Business (other than information which Parent or Seller provides to other
Persons in the Ordinary Course of Business), so long as Parent and Seller have
no reason to believe that the information may be utilized to evaluate an
Acquisition Proposal. Parent, Seller and each Affiliate, employee, officer,
director, stockholder, agent or other Person acting on their behalf (a) do not
have any agreement, arrangement or understanding with respect to any Acquisition
Proposal (except this Agreement), (b) shall cease and cause to be terminated any
and all discussions with third parties regarding any Acquisition Proposal, and
(c) shall promptly notify
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Buyer if any Acquisition Proposal, or any inquiry or contact with any Person or
entity with respect thereto, is made.
5.8 Accounts Receivable.
(a) Seller shall promptly (and in any event within fifteen (15)
days) remit to Buyer any payments with respect to the accounts receivable
arising after the Effective Date which payments are received by Parent, Seller
or any Affiliate thereof after the Effective Date or any payments with respect
to accounts receivable transferred as part of the Contributed Assets and
received by Parent, Seller or any Affiliate, except in each case any payments
with respect to the accounts receivable identified on Schedule 5.8 attached
hereto (the "RETAINED ACCOUNTS RECEIVABLE"). Buyer shall cause ECG to promptly
(and in any event within fifteen (15) days) remit to Seller any payments
received by Buyer, ECG or any Affiliate thereof with respect to the Retained
Accounts Receivable.
(b) The aggregate amount of the gross accounts receivable of ECG in
existence as of the Effective Date other than the Retained Accounts Receivable
are referred to as the "ACQUIRED ACCOUNTS RECEIVABLE." On the 180th day after
the Effective Date, Seller shall pay to Buyer an amount of cash equal to the
amount of Acquired Accounts Receivable which are still uncollected by ECG if any
as of such date other than any accounts receivable in existence at the time of
Effective Date with respect to which Seller or ECG, with the consent of Buyer
(not to be unreasonably withheld), has entered into payment plans extending
beyond the 180th day following the Effective Date.
(c) With respect to each of the accounts receivable subject to such
an agreed payment plan, on the thirtieth (30) day following the date on which
the final payment is due from the obligor under such a payment plan, Seller
shall pay to Buyer an amount of cash equal to the aggregate amount uncollected
from the obligor.
(d) Buyer shall cause ECG to make reasonable efforts to collect the
Acquired Accounts Receivable and the Retained Accounts Receivable in the
Ordinary Course of Business, but ECG will not be required to retain a collection
agency, bring any suit, or take any other action out of the Ordinary Course of
Business to collect any of the Acquired Accounts Receivable or the Retained
Accounts Receivable.
(e) To the extent that ECG has not collected the full amount of the
Acquired Accounts Receivable and Buyer has been compensated therefor in
accordance with paragraphs (b) and (c) above Buyer shall cause ECG to (i)
continue its reasonable efforts to collect such uncollected Acquired Accounts
Receivable and (ii) promptly (and in any event within fifteen (15) days) remit
to Seller any payments thereafter received by Buyer, ECG or any Affiliate
thereof with respect to the Acquired Accounts Receivable, up to a maximum equal
to the amount paid by Seller to Buyer pursuant to paragraphs (b) and (c) above.
5.9 Employees. (a) Prior to the effective date of commencement of
employment with ECG, the Transferred Employees received benefits under the plans
identified on Schedule 5.9(a), and Parent will have caused to vest any unvested
Parent stock under the plans identified on Schedule 5.9(b) for the Transferred
Employees (as defined in Section 5.9(b)).
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(b) Buyer will or will cause ECG to offer employment to all of the
employees principally employed in the Business, as listed on Schedule 5.9(b)
(the "TRANSFERRED EMPLOYEES"), on substantially the same terms and base
compensation and benefits that are substantially the same in the aggregate, as
are provided by Seller to such employees immediately prior to the Contribution.
Buyer will give Transferred Employees full credit for purposes of eligibility
and vesting under any employee benefit plans or arrangements maintained by Buyer
for such Transferred Employees' service with Parent or Seller to the same extent
recognized by Parent or Seller immediately prior to the effective date of
commencement of employment with ECG. Nothing herein shall obligate Buyer or ECG
to continue to employ any Transferred Employee for any period of time after the
Funding.
(c) Seller and Parent shall be liable for all liabilities related
to compensation and employee benefit plans or arrangements with respect to
periods prior to the Effective Date, including, without limitation, (i) all
claims for medical and dental benefits that are covered and eligible for payment
under the terms of Seller's, Parent's or ECG's benefit plans and which are
incurred prior to the Effective Date (including, without limitation, claims
which are not paid or not reported, or both, prior to the Effective Date), (ii)
short-term disability benefit payments for periods prior to the Effective Date,
(iii) payment of premiums for insured coverages prior to the Effective Date,
(iv) long-term disability benefits for individuals who became disabled prior to
the Effective Date and (v) all claims for workers compensation benefits with
respect to injuries incurred prior to the Effective Date. Neither Seller nor
Parent shall be liable for any claims for medical or dental benefits that are
incurred by Transferred Employees from and after the Effective Date.
(d) On and after the Effective Date, ECG will be the plan sponsor
of the benefit plans that are identified as ECG benefit plans on Schedule 5.9.
(e) Seller and Parent shall take steps necessary to transfer to
ECG, as soon as practicable after the Effective Date, the assets and liabilities
relating to the Transferred Employees' health-care and dependent-care account
balances under the flexible benefit plan in which Transferred Employees
participated immediately prior to the Effective Date. After such transfer
occurs, ECG shall be liable for reimbursement for all eligible health-care and
dependent-care expenses that are incurred in calendar year 2000.
(f) On the Effective Date, Seller and Parent shall pay Transferred
Employees all accrued compensation and vacation pay that relate to periods prior
to the Effective Date to the extent amounts would be due under Parent's existing
compensation and benefit plans and arrangements.
(g) Seller and Parent shall take steps necessary to transfer to a
new 401(k) plan sponsored by ECG, as soon as practicable following the Effective
Date, the Transferred Employees' account balances under the 401(k) plan in which
Transferred Employees participated immediately prior to the Effective Date.
5.10 Litigation Support. In the event and for so long as any party is
actively contesting or defending against any action in connection with (a) any
transaction contemplated under this
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Agreement, or (b) any fact, situation, circumstance, status, condition,
activity, practice, plan occurrence, event, incident, action, failure to act, or
transaction on or prior to the Funding Date which relates to the Business, the
other party will cooperate with it or 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 reasonably necessary in connection with the contest or
defense, all at the sole cost and expense of the contesting or defending party
(unless, and to the extent that, the contesting or defending party is entitled
to indemnification hereunder).
5.11 Tax Matters. (a) Transfer Taxes. All transfer, documentary, sales,
use, stamp, registration and other such Taxes and recording, filing and other
fees (including any penalties and interest) incurred in connection with this
Agreement and as a result of the Contribution by Parent and Seller to ECG and
the purchase and sale of the ECG Interests by Seller to Buyer shall be paid by
Seller when due, and Seller will, at its own expense, file all necessary Tax
Returns and other documentation with respect to all such transfer, documentary,
sales, use, stamp, registration and other Taxes and fees, and, if required by
applicable law, and Buyer will join in the execution of any such Tax Returns and
other documentation.
(b) Allocation of Taxes Other than Real and Personal Property
Taxes. For purposes of allocating Taxes with respect to Section 7.2(a)(v),
except with respect to Real and Personal Property Taxes (defined in paragraph
(c) below), in the case of any Taxes that are imposed on a periodic basis and
are payable for a taxable period that begins before and ends after the Effective
Date (a "Straddle Period"), the portion of such Tax which relates to the portion
of such Tax period beginning before and ending on the Effective Date shall (i)
in the case of any Taxes other than Taxes based upon or related to income or
receipts, be deemed to be the amount of such Tax for the entire Tax period
multiplied by a fraction, the numerator of which is the number of days in the
Tax period ending on the Effective Date and the denominator of which is the
number of days in the entire Tax period and (ii) in the case of any Taxes based
upon or related to income or receipts, be deemed equal to the amount which would
be payable if the relevant Tax period ended on the Effective Date.
(c) Real and Personal Property Taxes. Seller shall indemnify and
hold Buyer harmless for the portion of any state, county or local real or
personal property tax or other similar ad valorem state, county or local tax on
the Contributed Assets or the Business (the "Real and Personal Property Taxes")
for any taxable period beginning before and ending after the Effective Date
determined by multiplying the tax liability for the entire tax period by a
fraction, the numerator of which is the number of days in such taxable period
ending on the Effective Date, and the denominator of which is the total number
of days in the entire taxable period. Buyer shall indemnify and hold Parent and
Seller harmless for the portion of any Real and Personal Property Taxes for any
taxable period beginning before and ending after the Effective Date, determined
by multiplying the tax liability for the entire tax period by a fraction, the
numerator of which is the number of days in such taxable period beginning on the
day after the Effective Date, and the denominator of which is the total number
of days in the entire taxable period. Seller shall indemnify and hold Buyer
harmless for the Real and Personal Property Taxes for any taxable period which
ends on or prior to the Effective Date regardless of when such taxes are
assessed or which party bears the legal incidence of taxation. All Real and
Personal Property Taxes which are assessed and owing prior to the Effective Date
shall be paid by Seller.
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(d) Tax Contests. If a notice of deficiency, proposed adjustment,
assessment, audit, examination or other administrative or court proceeding,
suit, dispute or other claim (a "Tax Contest") shall be delivered, sent,
commenced, or initiated to or against ECG by any Taxing authority with respect
to Taxes that results in or may result in a Loss for which indemnification may
be claimed from Seller under this Agreement, Buyer shall promptly notify Seller
in writing of such Tax Contest. Except with respect to any Straddle Period,
Seller shall have the sole right to represent ECG's interests and to employ
counsel of its choice at its expense with respect to any such Tax Contest and
Buyer shall not be responsible for any legal fees, costs or other expenses
relating to such Tax Contest but shall have the right to consult with Seller
during such proceedings at its own expense; provided that prior to assuming
control of such Tax Contest Seller acknowledge in writing its liability for the
Taxes subject to the Tax Contest. Seller shall not accept any proposed
adjustment or enter into any settlement or agreement in compromise or otherwise
dispose of any such Tax Contest in a manner that would purport to bind or would
affect the tax liability or tax attributes of ECG, the Business or the
Contributed Assets for taxable periods or portions thereof ending after the
Effective Date without the prior written consent of Buyer, which consent shall
not be unreasonably withheld. In the event that Seller does not take control of
a Tax Contest which it has the right to control hereunder, as reasonably
requested by Seller, Buyer shall keep Seller reasonably informed as to the
progress of any such Tax Contest.
(e) Tax Return Preparation and Filing. Seller shall prepare and
file all Tax Returns required to be filed with respect to ECG, the Contributed
Assets or the Business for Pre-Effective Date Periods (not including Straddle
Periods) consistent with past practice. Buyer shall prepare and file all Tax
Returns required to be filed with respect to ECG, the Contributed Assets or the
Business for Straddle periods and Post-Effective Date Periods and, except with
respect to sales and use Tax Returns described in paragraph (a) above, including
sales and use or excise Tax Returns for a taxable period that begins before and
ends on or after the Effective Date with a due date that falls in the
Post-Effective Date Period. Buyer shall deliver to Seller a copy of the Tax
Return for the Straddle Period not later than seven (7) business days prior to
the date on which Buyer has notified Seller that such Tax Return is to be filed.
Seller may make comments on such Tax Return until four (4) business days prior
to the date such Tax Return is to be filed, and Buyer will incorporate such
comments to the extent Buyer deems it to be appropriate to do so in the exercise
of its reasonable discretion. Buyer shall provide to Seller a statement which
supports the amount of Tax attributable to the Pre-Effective Date Period. Seller
shall pay to Buyer, no later than three (3) days prior to the date a Tax Return
for a Straddle Period is to be filed, the portion of the Taxes reflected on such
Tax Return which is attributable to the Pre-Effective Date Period; provided
that, appropriate credit with respect to such Taxes attributable to the
Pre-Effective Date Period shall be given to Seller for payments (a) already made
by Parent, Seller, or ECG to a taxing jurisdiction in the Pre-Effective Date
Period or to Buyer as payment for such Tax liabilities but only if and to the
extent that such payments are not included as Contributed Assets or as an asset
of ECG as of the Effective Date, or (b) accruals for such Tax liabilities that
are included as Contributed Liabilities (as long as such accruals are taken into
account in determining Net Working Capital and Adjusted Net Assets for purposes
of Section 3.25). Seller shall not file any amended Tax Return of ECG or make,
change or revoke any Tax election of ECG.
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(f) Allocation of Consideration. Buyer shall allocate the
consideration paid hereunder among the Contributed Assets, including goodwill
and other assets, in accordance with Code Section 1060 and the regulations
thereunder and any comparable provisions of state or local law, as appropriate
within sixty (60) days after the Funding Date. Such allocation, to the extent
such allocation is consistent with Code Section 1060 and the regulations
thereunder and any comparable provisions of state or local law (as appropriate),
will not allocate to accounts receivable, inventory, or fixed assets an amount
which is materially greater than net book value on the Effective Date. Buyer
shall provide Seller with a copy of the allocation schedule for Seller's review
and comment for a period of twenty (20) days after Seller's receipt of the
schedule. Buyer will incorporate such comments to the extent such changes are
reasonable and are consistent with Code Section 1060 and the regulations
thereunder and comparable provisions of state or local law, as appropriate.
Buyer and Seller and their Affiliates shall report, act and file Tax Returns
(including, but not limited to Internal Revenue Service Form 8594) in all
respects and for all purposes consistent with such allocations prepared by
Buyer. Seller shall timely and properly prepare, execute, file and deliver all
such documents, forms and other information as Buyer may reasonably request to
prepare such allocation and the amortization of goodwill and other tangible
assets for Tax purposes. Neither Buyer nor Seller shall take any position
(whether in audits, tax returns or otherwise) which is inconsistent with such
allocation unless required to do so by applicable law.
(g) Cooperation on Tax Matters. Buyer and Seller shall cooperate
fully, as and to the extent reasonably requested by the other party, in
connection with any audit, litigation or other proceeding with respect to Taxes.
Such cooperation shall include the retention and (upon the other party's
request) the provision of records and information which are reasonably relevant
to any such audit, litigation or other proceeding and making employees available
on a mutually convenient basis to provide additional information and explanation
of any material provided hereunder. Buyer and Seller agree (A) to retain all
books and records with respect to Tax matters pertinent to ECG, the Contributed
Assets and the Business relating to any taxable period beginning before the
Effective Date until the expiration of the statute of limitations (and, to the
extent notified by Buyer or Seller, any extensions thereof) of the respective
taxable periods, and to abide by all record retention agreements entered into
with any taxing authority, and (B) to give the other party reasonable written
notice prior to transferring, destroying or discarding any such books and
records and, if the other party so requests, Buyer or Seller, as the case may
be, shall allow the other party to take possession of such books and records.
(h) Tax Sharing Agreements. All tax allocation, tax sharing and
similar agreements (other than this Agreement) with respect to or involving ECG
shall be terminated as to ECG on or prior to the Effective Date, and after such
date, neither ECG nor Buyer will not have any liability thereunder.
(i) Buyer shall not make an election under Treas. Reg. Section
301.7701-3, or any corresponding foreign, state or local provision or
administrative rule, to treat either ECG Assets, LLC or ECG Service Solutions,
LLC to be a partnership or corporation retroactive to a date prior to the
Effective Date.
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5.12 Covenant Not To Compete. (a) In consideration of Twenty Million
Dollars ($20,000,000) of the Purchase Price paid to Seller, from the Funding
Date until the fifth anniversary of the Funding Date, neither Seller nor Parent
nor any of their Affiliates shall engage (whether as an owner, operator,
manager, employee, officer, director, consultant, advisor, representative or
otherwise directly or indirectly) in any business that owns, leases or drives
ATMs or provides ATM processing services, including ATM terminal driving, ATM
card authorization services, ATM settlement and gateway services, ATM debit card
transaction processing, ATM terminal maintenance and repair and ATM cash
replenishment (the "RESTRICTED BUSINESS"). For purposes of this Section 5.12,
"ATMs" means automated teller machines that provide to a customer at the site of
the machine one or more of the following functions: (i) electronic cash
withdrawal from checking or savings accounts; (ii) balance inquiry; (iii)
account transfer; (iv) credit and/or debit card cash advances; and (v)
transaction denials. Nothing herein restricts, prohibits or in any way limits
Parent and its Affiliates from providing processing and related services for (i)
medicare, medicaid and other healthcare or welfare processing services, (ii)
government electronic benefit transfer programs, and (iii) help desk, call
centers, data base administration and other support services relating to check
cashing services.
(b) Notwithstanding the foregoing, Seller, Parent and their
Affiliates shall be permitted to (a) own, directly or indirectly, less than five
percent (5%) of any class of securities listed on a national securities exchange
or traded publicly in the over-the-counter market, (b) directly or indirectly
acquire an entity or business which engages in the Restricted Business if such
business is 5% or less (measured by net revenues in its most recent fiscal year)
of a larger business so acquired; provided that Seller, Parent and their
Affiliates shall not be permitted to expand such business as operated by such
entity in any way, or (c) acquire an entity or business which engages in the
Restricted Business if such business is more than 5% (measured by net revenues
in its most recent fiscal year) of a larger business so acquired, provided that
Parent, Seller or their Affiliate shall sell the portion of the business which
engages in the Restricted Business within sixty (60) days of the closing of such
acquisition.
(c) The Parties hereto agree that the covenant set forth in this
Section 5.12 is reasonable with respect to its duration, geographical area, and
scope. If the final judgment of a court of competent jurisdiction declares that
any term or provision of this Section 5.12 is invalid or unenforceable, the
Parties agree that the court making the determination of invalidity or
unenforceability shall have the power to reduce the scope, duration, or area of
the term or provision, to delete specific words or phrases, or to replace any
invalid or unenforceable term or provision with a term or provision that is
valid and enforceable and that comes closest to expressing the intention of the
invalid or unenforceable term or provision, and this Agreement shall be
enforceable as so modified after the expiration of the time within which the
judgment may be appealed. Notwithstanding the preceding sentence, no
modification shall be made to the compensation paid to Seller in consideration
of the covenant set forth in this Section 5.12.
5.13 Restriction on Hiring Employees. Unless Buyer and Parent otherwise
agree in writing, from the Funding Date until the third anniversary of the
Funding Date (i) neither Parent, Seller nor any of their Affiliates shall (x)
directly or indirectly contact, approach or solicit for the purpose of offering
employment to or hiring (whether as an employee, consultant, agent, independent
contractor, or otherwise) or actually hire any Person employed by Buyer or ECG
or
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any of their Affiliates, without the prior written consent of Buyer or (y)
induce or attempt to induce any customer or other business relation of ECG or
the Business into any business relationship which might materially harm ECG or
the Business and (ii) neither Buyer nor any of its Affiliates, including after
the Funding Date, ECG, shall directly or indirectly contact, approach or solicit
for the purpose of offering employment to or hiring (whether as an employee,
consultant, agent, independent contractor, or otherwise) or actually hire any
Person employed by Parent, Seller or any of their Affiliates, without the prior
written consent of Parent; provided that, Parent, Seller or any of their
Affiliates may hire any employee of Buyer or ECG who resigned or was terminated
by Buyer or ECG six (6) months or more prior to the date of hire by Parent,
Seller or their Affiliate; and provided further that Buyer or any of its
Affiliates, including, after the Funding Date, ECG, may hire any employee of
Parent or Seller who resigned or was terminated by Parent or Seller, as the case
may be, six (6) months or more prior to the date of hire by Buyer or its
Affiliates.
5.14 Confidentiality. Parent and Seller shall each treat and hold as
confidential any information used solely in operating the Business (including,
without limitation, all Proprietary Rights) that is not already generally
available to the public (the "CONFIDENTIAL INFORMATION"), refrain from using any
of the Confidential Information except in connection with this Agreement, and at
any time upon the request of Buyer deliver promptly to Buyer or destroy, at the
request and option of Buyer, all tangible embodiments (and all copies) of the
Confidential Information which are in its possession or under its control. In
the event that Parent or Seller is requested or required (by oral question or
request for information or documents in any legal proceeding, interrogatory,
subpoena, civil investigative demand, or similar process) to disclose any
Confidential Information, it shall notify Buyer promptly of the request or
requirement so that Buyer may seek an appropriate protective order or waive
compliance with the provisions of this Section 5.14. If, in the absence of a
protective order or the receipt of a waiver hereunder, Parent or Seller is, on
the advice of counsel, compelled to disclose any Confidential Information to any
tribunal or else stand liable for contempt, it may disclose the Confidential
Information to the tribunal; provided that it shall use its commercially
reasonable efforts to obtain, at the request and expense of Buyer, an order or
other assurance that confidential treatment shall be accorded to such portion of
the Confidential Information required to be disclosed as Buyer shall designate.
5.15 Post-Execution. After the date of this Agreement, Parent and
Seller shall give Buyer access to the decision making and management process,
and Buyer shall participate in same, with respect to the direction of Ordinary
Course of Business transactions, operations and decisions in the context of the
Business.
5.16 Cash Management from Effective Date to Funding Date. During the
period beginning on the day after the Effective Date and ending on the Funding
Date (the "Cash Management Period"), the Parent will monitor and account for all
collections and cause ECG to monitor and account for all collections on accounts
receivable and all other cash inflows of ECG (the "Transition Cash Inflows") and
all Transition Cash Inflows will be immediately deposited into Parent or ECG
bank accounts. During the Cash Management Period, the Parent will cause ECG to
fund all accounts payable and other cash outflows of ECG (the "Transition Cash
Outflows") through such Parent or ECG bank accounts. Parent agrees to insure
that an accounting is done with respect to the Transition Cash Inflows and the
Transition Cash Outflows and that Buyer shall receive the net cash attributable
to such accounting.
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5.17 Investment Earnings on Net Cash Position After the Effective Date.
Beginning on the day after the Effective Date and continuing so long as ECG
funds are processed over night through Parent bank accounts, ECG will be the
beneficiary of interest earnings on the daily Net Cash Position of the Business
to the extent such funds are processed over night through Parent bank accounts.
The daily Net Cash Position of the Business means, to the extent processed
overnight through Parent bank accounts, the following will be determined based
on the
(a) investable initial operating cash balances and accounts
receivable from Parent associated with the amount reported on the Effective Date
balance sheet, updated on a daily basis to the day in question,
(b) increased for the collective receipt of all collections on
accounts receivable for such day,
(c) decreased by accounts payable and payroll distributions for
such day, and
(d) increased or decreased, as appropriate, for all other cash
inflows or disbursements of the Business.
To the extent such interest earnings are due from Parent to ECG, or
from ECG to Parent the amount of earnings will be calculated using the interest
rate of the ▇▇▇▇▇ Fargo Overland Express Sweep Service and will be settled among
the parties by Parent from time-to-time (but no less often than monthly).
5.18 License Grant. For purposes of this Section 5.18 only, the terms
"Licensed Software", "Licensed Documentation" and "Intellectual Property Rights"
shall have the meaning ascribed to them in a Software Development and License
Agreement, dated April 15, 1997, between Parent and 7-Eleven, Inc. (formerly The
Southland Corporation), and a Financial Services Center Pilot Agreement, dated
January 1, 1998, between Parent and 7-Eleven, collectively such Agreements are
referred to as the "7-Eleven Agreements". The term "Licensed Intellectual
Property" shall mean, collectively, the Licensed Software, Licensed
Documentation and Intellectual Property Rights, which shall include but not be
limited to the patent application currently pending in the U.S. Patent and
Trademark Office, filed May 12, 2000, which is a continuation patent application
of Serial No. 08/934,446, filed September 9, 1997 (the "Patent Application").
Subject to the restrictions contained in this Section 5.18, effective as of the
Effective Date, Parent grants to ECG a perpetual, worldwide, fully-paid,
royalty-free, irrevocable (except as set forth in this Section),
non-transferable (except as set forth in this Section), exclusive (subject to
the license rights granted to 7-Eleven) license under any and all Licensed
Intellectual Property owned or otherwise assertable by Parent to use the
Licensed Software and Licensed Documentation ("License"). Excluded from the
License is check cashing technology and all Intellectual Property Rights related
thereto, including but not limited to United States Patent No. 6,038,553
entitled "Self Service Method of and System for Cashing Check", issued March 14,
2000. ECG shall be the owner of any modifications, enhancements and improvements
made by ECG to the Licensed Intellectual Property. No rights or licenses are
granted to ECG with respect to Licensed Intellectual Property except as
expressly set forth in this Section. The License is subject to termination by
Parent if ECG fails to meet its obligations
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under this Section 5.18 and does not cure such failure within thirty days after
receipt by ECG of written notice from Parent.
ECG may not (a) distribute to any third party copies of the Licensed
Software and Licensed Documentation (b) translate, reverse engineer, decompile,
or disassemble Licensed Software without the prior written consent of Parent or
(c) use Licensed Intellectual Property in conjunction with ATMs or other devices
at Convenience Stores if such use, if engaged in by Parent, would be prohibited
under the field of use exclusivity provisions of the 7-Eleven Agreements (i.e.,
Section 6.4 of the Software Development and License Agreement and Article 8 of
the Pilot Agreement). Prior to a change of control of Parent, ECG may not assign
or transfer the License or any rights thereunder, in whole or in part, or grant
sublicenses or subcontract thereunder, without the prior written consent of
Parent, which consent shall not be unreasonably withheld, except that ECG,
without Parent's consent, may assign the License to any purchaser of ECG or its
parent, Genpass, or any material portion of its assets (whether such sale is
structured as a sale of stock, a sale of assets, a merger or otherwise). After a
change of control of Parent, ECG may transfer, assign, sublicense and/or
subcontract the License. In no event shall any such transfer, assignment,
sublicense or subcontract relieve or modify the obligations hereunder. Parent
may not assign or transfer ownership of the Licensed Intellectual Property
Rights to an unaffiliated entity without the prior written consent of ECG,
provided that Parent, without ECG's consent, may assign the Licensed
Intellectual Property Rights to any purchaser of Parent or any material portion
of its assets (whether such sale is structured as a sale of stock, a sale of
assets, a merger or otherwise); however, in no event shall any such assignment
or transfer relieve or modify the obligations hereunder.
Parent shall exercise reasonable efforts to prosecute the Patent
Application, at its expense; provided that if Parent elects not to continue
prosecution, ECG may continue such prosecution at ECG's expense and Parent
agrees to cooperate with such effort. Parent shall have no obligation to take
any action to enforce or defend the Licensed Intellectual Property, including
but not limited to filing any legal proceeding, but Parent shall have the option
to do so at its sole discretion. If Parent does not take such enforcement action
and ECG desires to take such action, ECG may do so at its option and expense,
except ECG is prohibited from initiating suit against 7-Eleven that would
require participation by Parent as a party to such action. If ECG must name
Parent as a party to a permitted action, ECG may do so, subject to the
aforementioned prohibition. Parent agrees to reasonably cooperate with ECG in
any permitted action by ECG, at ECG's expense.
The license rights granted herein shall be deemed licenses of
"intellectual property" for purposes of the United States Code, Title 11,
Section 365(n). In the event of Parent's bankruptcy and a subsequent rejection
or disclaimer of the License by a bankruptcy trustee or by Parent as a
debtor-in-possession, whether under the law of the United States or the United
Kingdom, or in the event of a similar action under applicable law, ECG may elect
to retain its license rights, subject to and in accordance with the provisions
of the United States Code, Title 11, Section 365(n) or other applicable law.
Parent and Seller jointly represent and warrant to Buyer that (a)
Parent owns and possesses all right, title and interest in and to the Licensed
Intellectual Property, subject to the
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licenses referenced herein; and (b) to the knowledge of Parent, (i) the Licensed
Intellectual Property has not infringed, misappropriated or otherwise conflicted
with the Proprietary Rights of any third party and Parent is not aware of any
facts that indicate a likelihood of the foregoing; and (ii) no third party has
infringed, misappropriated or otherwise conflicted with the Licensed
Intellectual Property and Parent is not aware of any facts that indicate a
likelihood of the foregoing. The foregoing representations and warranties shall
for purposes of this Agreement be deemed to be as if set forth in Section 3.6
(b).
5.19 Additional Litigation Support. In the event and for so long as
Parent, Seller or any Affiliate of either is pursuing, contesting or defending
against any action in connection with the American Express contract, which
contract is covered by the subcontract referenced in Section 6.2(e)(iv), Buyer
shall (and shall cause ECG to) cooperate with such party and its counsel in the
pursuit, contest or defense, make available personnel and provide such testimony
and access to books and records as shall be reasonably necessary in connection
with the pursuit, contest or defense. Buyer (and, where appropriate, ECG) will
be reimbursed for out-of-pocket costs in connection with such cooperation. Any
recoveries under any such action will be the property of Parent, Seller or an
Affiliate, as the case may be.
ARTICLE VI
CLOSING CONDITIONS
6.1 Conditions Precedent to the Obligations of Buyer. The obligation of
Buyer to consummate the transactions contemplated by this Agreement is subject,
at the option of Buyer, to the satisfaction at or prior to the Funding Date of
each of the following conditions:
(a) Accuracy of Representations and Warranties. The representations
and warranties of Parent and Seller contained in this Agreement shall be true
and correct in all material respects with respect to those not qualified as to
materiality and shall be true and correct in all respects with respect to those
qualified as to materiality, all on and as of the Effective Date and as of the
Funding Date as though made on and as of that date (except where a
representation and warranty is by its express language stated as of a particular
date, in which case the representation and warranty continues to be made only as
of that date), and Parent and Seller shall have so certified to Buyer in
writing.
(b) Compliance with Covenants. Parent and Seller shall have
performed and complied in all material respects with all terms, agreements,
covenants, and conditions of this Agreement to be performed or complied with by
each of them at or prior to the Funding Date, and Seller shall have so certified
to Buyer in writing.
(c) Governmental Filings. All governmental filings, authorizations,
and approvals that are required for the consummation of the transactions
contemplated hereby shall have been duly made and obtained on terms reasonably
satisfactory to Buyer (without limiting the generality of the foregoing), all
applicable waiting periods (and any extensions thereof) under the HSR Act shall
have expired or otherwise been terminated.
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(d) Material Adverse Change. Since May 31, 2000, there shall have
been no material adverse effect on the business, financial condition,
operations, results of operations or future prospects of the Business.
(e) Legal Compliance. No action, suit, or proceeding shall be
pending or threatened before any court or quasi-judicial or administrative
agency of any federal, state, local, or foreign jurisdiction or before any
arbitrator wherein an unfavorable judgment, decree, injunction, order, or ruling
would prevent the performance of this Agreement or any of the transactions
contemplated hereby, declare unlawful the transactions contemplated by this
Agreement, cause such transactions to be rescinded, or materially and adversely
affect the right of Buyer to own, operate, or control the Business or ECG, and
no judgment, decree, injunction, order, or ruling shall have been entered which
has any of the foregoing effects.
(f) Legal Opinion. Seller shall have delivered to Buyer and its
lenders a legal opinion issued by ▇▇▇▇▇▇ and ▇▇▇▇, L.L.P., counsel to Parent and
Seller, with regard to the matters on Exhibit E attached hereto.
(g) Certain Deliveries. On or before the Funding Date, Seller shall
have delivered to Buyer all of the following:
(i) a certificate from an officer of Seller in a form
reasonably satisfactory to Buyer, dated the Funding Date, stating that
the preconditions specified in Sections 6.1(a) through (f) have been
satisfied;
(ii) copies of the resolutions of the boards of directors of
Parent and the sole member of Seller approving the transactions
contemplated by this Agreement, certified by an officer of Parent or
the sole member of Seller, as applicable;
(iii) certificates from the State of Parent's incorporation and
the State of Seller's formation, dated within thirty (30) days of the
Funding Date, as to the good standing and qualification to do business
of each of Parent and Seller in such jurisdiction;
(iv) a copy of the certificate of formation for ECG, certified
by the appropriate authority in the jurisdiction in which such entity
was organized;
(v) a copy of the limited liability company agreement or
equivalent document for ECG, certified by an officer of ECG;
(vi) certificates from appropriate authorities, dated within
thirty (30) days of the Funding Date, as to the good standing and
qualification to do business of ECG in each jurisdiction where it is so
qualified;
(vii) all certificates and other instruments evidencing the ECG
Interest;
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(viii) all minute books, membership interest books, ledgers and
registers, seals and other organizational records relating to the
organization, ownership and maintenance of ECG;
(ix) copies of the consents, filings, authorizations and
approvals described in Section 6.1(c) and listed on Schedule 6.1(g);
and
(x) such other documents or instruments as Buyer may reasonably
request to effect the transactions contemplated hereby;
(h) Contribution Agreements. Parent and ECG shall have entered into
the Contribution Agreements in form and substance as set forth in Exhibit A and
Exhibit B attached hereto, and the Contribution Agreements shall be in full
force and effect as of the Funding.
(i) Other Matters. All proceedings to be taken by Parent or Seller
in connection with the consummation of the transactions contemplated by this
Agreement and all certificates, opinions, instruments, and other documents
required to be delivered by Parent the Company and Seller to effect the
transactions contemplated hereby reasonably requested by Buyer shall be
reasonably satisfactory in form and substance to Buyer.
Any condition specified in this Section 6.1 may be waived by Buyer in
its sole discretion; provided that no such waiver shall be effective unless it
is set forth in a writing executed by Buyer.
6.2 Conditions Precedent to the Obligations of Parent and Seller. The
obligations of Parent and Seller under this Agreement are subject, at the option
of Parent or Seller, to the satisfaction on or prior to the Funding Date of each
of the following conditions:
(a) Accuracy of Representations and Warranties. The representations
and warranties of Buyer contained in this Agreement shall be true and correct in
all material respects with respect to those not qualified as to materiality and
shall be true and correct in all respects with respect to those qualified as to
materiality, all on and as of the Funding Date as though made on and as of that
date, and Buyer shall have so certified to Seller in writing.
(b) Compliance with Covenants. Buyer shall have performed and
complied in all material respects with all terms, agreements, covenants, and
conditions of this Agreement to be performed or complied with by it on or prior
to the Funding Date, and Buyer shall have so certified to Parent and Seller in
writing.
(c) Governmental Filings. All governmental filings, authorizations,
and approvals that are required for the consummation of the transactions
contemplated hereby shall have been duly made and obtained on terms reasonably
satisfactory to Seller (without limiting the generality of the foregoing), all
applicable waiting periods (and any extensions thereof) under the HSR Act shall
have expired or otherwise been terminated.
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(d) Legal Opinion. Buyer shall have delivered to Seller a legal
opinion issued by ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, counsel to Buyer, in a form reasonably
acceptable to Parent, with regard to corporate power to execute, deliver, enter
into and perform the Agreement and the subcontract referenced in Section
6.2(e)(iv) and, the validity and enforceability of same.
(e) Certain Deliveries. On or before the Funding Date, Buyer shall
have delivered to Seller all of the following:
(i) a certificate from an officer of Buyer in a form reasonably
satisfactory to the Seller, dated the Funding Date, stating that the
preconditions specified in Sections 6(a) through (e) have been
satisfied;
(ii) a copy of the resolutions of the board of directors of
Buyer approving the transactions contemplated by this Agreement,
certified by an officer of Buyer;
(iii) a certificate from the State of Buyer's incorporation,
dated as of or about the Funding Date, as to the good standing and
qualification to do business in such jurisdiction;
(iv) a subcontract, executed by Buyer and ECG, effective as of
the Effective Date, substantially in the form attached hereto as
Exhibit F pursuant to which Buyer will perform obligations under a
customer contract with American Express; and
(v) such other documents or instruments as Seller may
reasonably request to effect the transactions contemplated hereby.
(f) Other Matters. All proceedings to be taken by Buyer in
connection with the consummation of the transactions contemplated by this
Agreement and all certificates, opinions, instruments, and other documents
required to be delivered by Buyer to effect the transactions contemplated hereby
reasonably requested by Seller shall be reasonably satisfactory in form and
substance to Seller.
(g) Funding. No later than the date of this Agreement, Seller and
Parent shall have received from GTCR Fund VII LP a written commitment
(reasonably satisfactory in form to Parent) to provide at least $120 million in
funding to Buyer for application to the Purchase Price at Funding, subject only
to the satisfaction (or waiver by Buyer) of the conditions precedent in Section
6.1 to Buyer's obligations.
Any condition specified in this Section 6.2 may be waived by
Seller in its sole discretion; provided that no such waiver shall be effective
unless it is set forth in a writing executed by Seller.
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ARTICLE VII
INDEMNIFICATION
7.1 Survival. All representations, warranties, covenants, and
agreements set forth in this Agreement or in any writing or certificate
delivered in connection with this Agreement shall survive the Funding Date and
the consummation of the transactions contemplated hereby and shall not be
affected by any examination made for or on behalf of any party, the knowledge of
any of such party's officers, directors, stockholders, employees, or agents, or
the acceptance of any certificate or opinion. Notwithstanding the foregoing, no
party shall be entitled to recover for any Loss pursuant to Section 7.2(a)(i) or
Section 7.2(b)(i) unless written notice of a claim thereof is delivered to the
other party before the Applicable Limitation Date. For purposes of this
Agreement, the term "APPLICABLE LIMITATION DATE" shall mean the date which is
eighteen (18) months after the Funding Date; provided that the Applicable
Limitation Date with respect to the following Losses shall be as follows: (i)
with respect to any Loss arising from or related to a breach of the
representations and warranties of Parent and Seller set forth in Section 3.22
(Tax Matters), the Applicable Limitation Date shall be the date of expiration of
the statute of limitations applicable to the statute, regulation or other
authority which gave rise to such Loss, (ii) with respect to any Loss arising
from or related to a breach of the representations and warranties of Parent and
Seller set forth in Section 3.18 (Environmental Matters), the Applicable
Limitation Date shall be the date which is five years after the Funding Date,
and (iii) with respect to any Loss arising from or related to a breach of the
representations and warranties of Parent and Seller set forth in Section 3.1
(Authority; Capitalization and Ownership), Section 3.2 (Validity), Section 3.3
(Absence of Conflicts), Section 3.4 (Due Organization and Qualification),
Section 3.5 (Title to Assets) or Section 3.19 (Brokers) and with respect to any
Loss arising from or related to a breach of the representations and warranties
of Buyer set forth in Section 4.1 (Authority), Section 4.2 (Validity) or Section
4.4 (Brokers), there shall be no Applicable Limitation Date (i.e., such
representations and warranties shall survive indefinitely). The representations
and warranties described in clause (iii) of the preceding sentence are referred
to as the "FUNDAMENTAL REPRESENTATIONS AND WARRANTIES."
7.2 Indemnification.
(a) Indemnification by Parent. Parent shall indemnify and hold
harmless Buyer and each of Buyer's officers, directors, stockholders, employees,
agents, representatives, Affiliates, successors and assigns (collectively, the
"BUYER PARTIES") from and against and pay on behalf of or reimburse such Buyer
Parties in respect of any Loss which any such Buyer Party may suffer, sustain,
or become subject to as a result of, relating to, or arising out of:
(i) the breach of any representation or warranty made by
Parent or Seller contained in this Agreement or in any certificate
delivered by Parent or Seller with respect thereto in connection with
the Funding (in each case, determined without regard to any
qualifications therein referencing the terms "MATERIALITY," "MATERIAL
ADVERSE EFFECT," or other terms of similar import or effect),
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(ii) the breach of any covenant made by Parent or Seller
contained in this Agreement,
(iii) any Liabilities of ECG existing as of the Effective Date
other than the Contributed Liabilities,
(iv) any claim, action or complaint originating from the ACI
BASE 24 Version 5.1.2 Migration completed in 1999, which claim, action
or complaint is made on or before the one year anniversary of the
Funding,
(v) any liability of ECG (a) for Taxes with respect to any Tax
period or portion thereof ending on or before the Effective Date (or
for any Tax period beginning before and ending after the Effective
Date, for Taxes to the extent allocable to the portion of such period
beginning before and ending on the Effective Date), (b) for Taxes
attributable to any Tax sharing or similar agreement, as a transferee
or successor, by contract or otherwise, (c) pursuant to Treas. Reg.
Section 1.1502-6 or any analogous STATE, local or foreign law or
regulation or by reason of its having been a member of any
consolidated, combined or unitary group on or prior to the Effective
Date or (d) for Taxes imposed as result of being, or ceasing to be, a
member of the Parent's Affiliated Group or combined or unitary Tax
group,
(vi) Liabilities relating to the matters disclosed on Schedule
3.15,
(vii) any ATM Contract Termination by the other party to a
customer contract identified on Schedule 7.2(a)(vii), which ATM
Contract Termination is not solely the result of a breach of such
contract by Buyer, ECG or any Affiliate thereof subsequent to the
Effective Date (it being understood that if such other party terminates
a customer contract due to dissatisfaction or breach attributable to
the services provided by ACS to ECG under the Support Services
Agreement, such termination will not be deemed to be the result of a
breach of such contract by Buyer, ECG or any Affiliate thereof
subsequent to the Effective Date); provided, however, that this
indemnification obligation ceases with respect to any particular
contract on Schedule 7.2(a)(vii) upon the earliest of (1) the receipt
of a written consent in the form of Exhibit G attached hereto or
otherwise acceptable to Buyer with respect to such contract, (2) a
formal, written amendment of such contract executed by Buyer, ECG or
any Affiliate thereof subsequent to the Effective Date or (3) the nine
month anniversary of the Effective Date provided that no ATM Contract
Termination of such contract has occurred before such nine month
anniversary (unless such ATM Contract Termination was solely the result
of a breach of such contract after the Effective Date by Buyer, ECG or
any Affiliate thereof (subject to the Support Services Agreement
parenthetical above)), or
(viii) any ATM Contract Termination by the other party to a
customer contract identified on Schedule 7.2(a)(viii), which ATM
Contract Termination is not solely the result of a breach of such
contract by Buyer, ECG or any Affiliate
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thereof subsequent to the Effective Date (it being understood that if
such other party terminates a customer contract due to dissatisfaction
or breach attributable to the services provided by ACS to ECG under the
Support Services Agreement, such termination will not be deemed to be
the result of a breach of such contract by Buyer, ECG or any Affiliate
thereof subsequent to the Effective Date); provided, however, that this
indemnification obligation ceases with respect to any particular
contract on this Schedule 7.2(a)(viii) upon the earlier of (1) a
formal, written amendment of such contract executed by Buyer, ECG or
any Affiliate thereof subsequent to the Effective Date or (2) ATM
Contract Termination by the other party to the contract, which ATM
Contract Termination is solely the result of a breach of such contract
by Buyer, ECG or any Affiliate thereof after the Effective Date
(subject to the Support Services Agreement parenthetical above).
(b) Indemnification by Buyer. Buyer shall indemnify and hold
harmless Seller and each of Seller's officers, directors, stockholders,
employees, agents, representatives, Affiliates, successors and assigns
(collectively the "SELLER PARTIES") from and against and pay on behalf of or
reimburse such Seller Parties in respect of any Loss which any such Seller Party
may suffer, sustain or become subject to, as a result of, relating to, or
arising out of:
(i) the breach of any representation or warranty made by Buyer
contained in this Agreement or in any certificate delivered by Buyer
with respect thereto in connection with the Funding (in each case,
determined without regard to any qualifications therein referencing the
terms "MATERIALITY," "MATERIAL ADVERSE EFFECT," or other terms of
similar import or effect),
(ii) the breach of any covenant made by Buyer contained in
this Agreement,
(iii) any Liability relating to ECG or the Business after the
Effective Date, provided that this clause (iii) will not be interpreted
in a manner that vitiates the scope of the indemnification provisions
of Section 7.2(a).
(iv) Buyer's failure to continue to employ or cause ECG to
employ the Transferred Employees, including without limitation, as a
result of, relating to, or arising out of the Worker Adjustment and
Retraining Notification Act, as amended, and all applicable regulations
related thereto;
(v) any liability or obligation of ACS to Americash, Inc. or
American Express ATM Holdings, Inc. as a result of conduct, after the
Effective Date, by Buyer or ECG which is deemed to constitute a breach
of Section 5.1 (Covenant Not to Compete) of that certain Agreement,
dated as of May 3, 1999, by and among ACS, Americash, Inc. and American
Express ATM Holdings, Inc., as such section of such agreement was in
effect on May 3, 1999 (i.e., without regard to any subsequent
amendments, supplements, extensions, or modifications thereto); or
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(vi) Buyer's or ECG's use of the name "Affiliated Computer
Services", "ACS" or Parent's logo type.
7.3 Claims.
(a) With respect to each claim subject to this Article, the party
seeking indemnification (the "INDEMNIFIED PARTY") shall give prompt notice to
the indemnifying party (the "INDEMNIFYING PARTY") after receiving written notice
of any action, lawsuit, proceeding, investigation, or other claim against it (if
by a third party) or discovering the liability, obligation, or facts giving rise
to such claim for indemnification; provided that failure to give such notice
promptly shall not relieve or limit the obligations of the Indemnifying Party
except to the extent the Indemnifying Party is prejudiced thereby. In that
regard, if any action, lawsuit, proceeding, investigation, or other claim shall
be brought or asserted by any third party (a "THIRD PARTY CLAIM") which, if
adversely determined, would entitle the Indemnified Party to indemnity pursuant
to this Article VII, the Indemnified Party shall promptly notify the
Indemnifying Party of the same in writing, and the Indemnifying Party shall be
entitled to participate in the defense of such action, lawsuit, proceeding,
investigation, or other claim giving rise to the Indemnified Party's claim for
indemnification at its expense, and at its option (subject to the limitations
set forth below) shall be entitled to control and appoint lead counsel of such
defense with reputable counsel reasonably acceptable to the Indemnified Party;
provided that, as a condition precedent to the Indemnifying Party's right to
assume control of such defense, it must first agree in writing to be fully
responsible for all Losses relating to such claims and to provide full
indemnification to the Indemnified Party for all Losses relating to such claim;
and provided further that the Indemnifying Party shall not have the right to
assume control of such defense and shall pay the fees and expenses of counsel
retained by the Indemnified Party, if the claim which the Indemnifying Party
seeks to assume control (each, an "INDEMNIFIED PARTY CONTROLLED PROCEEDING") (i)
involves a claim to which the Indemnified Party reasonably believes could be
detrimental to or injure the Indemnified Party's reputation, customer or
supplier relations or future business prospects, (ii) seeks non-monetary relief
(except where non-monetary relief is merely incidental to a primary claim or
claims for monetary damages), (iii) involves criminal allegations, (iv) is one
in which the Indemnifying Party is also a party and joint representation would
be inappropriate or there may be legal defenses available to the Indemnified
Party which are different from or additional to those available to the
Indemnifying Party, or (v) involves a claim which, upon petition by the
Indemnified Party, the appropriate court rules that the Indemnifying Party
failed or is failing to vigorously prosecute or defend. Notwithstanding the
foregoing, if such claim involves a then current customer of Buyer, ECG or an
Affiliate thereof, the claim shall be treated as an Indemnified Party Controlled
Proceeding; if such claim involves a then current customer of Buyer, ECG or an
Affiliated thereof that is still a customer but has sent a notice of
termination, Buyer, Seller and Parent shall jointly share control of the
defense; and if such claim involves a former customer of Buyer, ECG or an
Affiliate thereof, either Seller or Parent may (but is not required to) assume
control of the defense in accordance with this Section 7.3(a). With respect to
actions, lawsuits, proceedings and investigations or other claims asserted by a
third party which are outstanding as of the Funding Date, if Parent or Seller is
currently defending such action, lawsuit, proceeding, investigation or other
claim, Parent shall have the right to control such defense.
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(b) If the Indemnifying Party is permitted to assume and control
the defense and elects to do so, the Indemnified Party shall have the right to
employ counsel separate from counsel employed by the Indemnifying Party in any
such action and to participate in the defense thereof, but the fees and expenses
of such counsel employed by the Indemnified Party shall be at the expense of the
Indemnified Party unless the employment thereof has been specifically authorized
by the Indemnifying Party in writing.
(c) If the Indemnifying Party shall control the defense of any such
claim, the Indemnifying Party shall obtain the prior written consent of the
Indemnified Party (which shall not be unreasonably withheld) before entering
into any settlement of a claim or ceasing to defend such claim, if pursuant to
or as a result of such settlement or cessation, injunction, or other equitable
relief will be imposed against the Indemnified Party or if such settlement does
not expressly unconditionally release the Indemnified Party from all liabilities
and obligations with respect to such claim. The parties shall cooperate in the
defense of any Third Party Claim and the relevant records of each party shall be
made available on a timely basis.
(d) Without limiting the foregoing, with respect to any claim or
defense raised by Parent or Seller that Buyer Parties should not be entitled to
indemnification by reason of any of Sections 7.2(a)(vii) or 7.2(a)(viii), the
burden of proof shall be the responsibility of Parent and Seller.
7.4 Limitations.
(a) Buyer shall not be entitled to indemnification from Parent
pursuant to Section 7.2(a)(i) (other than with respect to breaches of Sections
3.20 and 3.25) or Section 7.2(a)(ii) (with respect to breaches of Sections 5.1,
5.2, 5.3, 5.4, 5.5, and 5.6) unless and until the Buyer Parties have
collectively suffered Losses by such breaches or pursuant to such Section in
excess of One Million Dollars ($1,000,000) (the "BASKET") (at which point,
subject to the other limitations herein, Parent will be liable to the Buyer
Parties for all Losses in excess of such Basket); provided, however, that the
Basket shall not apply with respect to any Losses resulting from or relating to
breaches of any Fundamental Representations and Warranties and such Losses shall
not count towards satisfaction of the Basket. The maximum aggregate amount
recoverable from Parent pursuant to Section 7.2(a)(i) (other than with respect
to breaches of Section 3.25, for which there is no maximum) and Section
7.2(a)(ii) (with respect to breaches of Sections 5.1, 5.2, 5.3, 5.4, 5.5, 5.6
and 5.8) shall be Eighteen Million Dollars ($18,000,000) (the "CAP"); provided,
however, that the Cap shall not apply with respect to any Losses resulting from
or relating to breaches of any Fundamental Representations and Warranties and
such Losses shall not count towards satisfaction of the Cap; provided, further
that the Cap will be raised after Funding Date on a dollar-for-dollar basis for
each dollar up to $2,000,000 remitted to Seller on the Retained Accounts
Receivable (other than remittances on the American Express accounts receivable
included in the Retained Accounts Receivable).
(b) The amount recoverable from Parent pursuant to Sections
7.2(a)(vii)-(viii) shall be equal to (regardless of actual Losses), with respect
to any customer contract identified on Schedules 7.2(a)(vii)-(viii),
respectively, which is terminated, an amount determined by multiplying the
number of months remaining under such contract after the date of such ATM
Contract Termination to the expiration of the term of such contract in effect as
of the Funding as
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described on Schedule 7.2, times the average monthly revenue for such contract
as described on Schedule 7.2), which amount will be paid on or before the dates
on which such payments would otherwise have been due from the customer thereof.
(c) Neither party shall have any obligation to indemnify the other
party for such other party's consequential damages, special damages, incidental
damages, indirect damages, lost profits or similar items except to the extent
that such damages, lost profits or similar items are part of Third Party Claims
against an Indemnified Party.
(d) THE REPRESENTATIONS AND WARRANTIES CONTAINED IN THIS AGREEMENT
ARE EXCLUSIVE AND SUPERSEDE ANY OTHER REPRESENTATIONS AND WARRANTIES, EXPRESS OR
IMPLIED IN NEGOTIATIONS OR OTHERWISE, INCLUDING BUT NOT LIMITED TO THE
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. NO
REPRESENTATIONS AND WARRANTIES WHATSOEVER ARE MADE AS TO ANY FORECASTS OR
PROJECTIONS.
Notwithstanding any implication to the contrary contained in this
Agreement, so long as Buyer delivers written notice of a claim to Parent no
later than the Applicable Limitation Date, Parent shall be required to indemnify
the Buyer Parties for all Losses (subject to the other limitations herein) which
the Buyer Parties may incur in respect of the matters which are the subject of
such claim, regardless of when incurred.
7.5 Exclusive Remedy. The indemnification provisions of this Article
shall be the exclusive remedy following the Funding for any claim related to the
transactions contemplated hereby, including without limitation, any breaches or
alleged breaches of any representation, warranty or failure to fulfill any
covenants or agreement contained herein.
ARTICLE VIII
TERMINATION
8.1 Termination. This Agreement may be terminated at any time prior to
the Funding Date:
(a) by mutual written consent of Buyer, Parent and Seller;
(b) by Seller, if Buyer is not then entitled to terminate the
Agreement pursuant to Section 8.1(c), upon a material breach of any covenant or
agreement on the part of Buyer set forth in this Agreement, or if any
representation or warranty shall have become untrue in any material respect, in
either case such that the conditions set forth in Section 6.2(a) or Section
6.2(b) of this Agreement, as the case may be, would be incapable of being
satisfied by July 31, 2000; provided, that in any case, a willful breach that
has not been cured after 10 days' written notice shall be deemed to cause such
conditions to be incapable of being satisfied for purposes of this Section
8.1(b);
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(c) by Buyer, if Seller is not then entitled to terminate the
Agreement pursuant to Section 8.1(b), upon a material breach of any covenant or
agreement on the part of Seller or Parent set forth in this Agreement, or if any
representation or warranty of Seller shall have become untrue in any material
respect, in either case such that the conditions set forth in Section 6.1(a) or
Section 6.1(b) of this Agreement, as the case may be, would be incapable of
being satisfied by July 31, 2000; provided, that in any case, a willful breach
that has not been cured after 10 days' written notice shall be deemed to cause
such conditions to be incapable of being satisfied for purposes of this Section
8.1(c);
(d) by either Seller or Buyer, if the Funding shall not have been
consummated on or before July 31, 2000;
8.2 Effect of Termination. In the event of the termination of this
Agreement pursuant to Section 8.1, this Agreement shall forthwith become void,
there shall be no liability on the part of Buyer or Seller to the other and all
rights and obligations of any party hereto shall cease, except the provisions of
this Section 8.2, Section 5.14 and Article IX shall continue in full force and
effect and except that nothing herein shall relieve any party of any liability
existing prior to such termination for (i) any breach of such party's covenants
or agreements contained in this Agreement, or (ii) any willful breach of such
party's representations or warranties contained in this Agreement.
ARTICLE IX
GENERAL PROVISIONS
9.1 Amendments and Waiver. No amendment, waiver or consent with respect
to any provision of this Agreement shall in any event be effective, unless the
same shall be in writing and signed by Buyer and Seller, and then such
amendment, waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given. No course of dealing between or
among any Persons or entities having any interest in this Agreement shall be
deemed effective to modify, amend, or discharge any part of this Agreement or
any rights or obligations of any party under or by reason of this Agreement.
9.2 Notices. All notices, requests, demands and other communications
hereunder shall be in writing and shall be delivered in Person or sent by
registered or certified mail, postage prepaid, commercial overnight courier
(such as UPS, Federal Express, etc.) with written verification of receipt or by
telecopy. A notice shall be deemed given: (a) when delivered by personal
delivery (as evidenced by the receipt); (b) five (5) days after deposit in the
mail if sent by registered or certified mail; (c) one (1) business day after
having been sent by commercial overnight courier as evidenced by the written
verification of receipt; or (d) on the date of electronic confirmation if
telecopied.
(a) If to Buyer:
Genpass, Inc.
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
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▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
GTCR Fund VII, L.P.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
and
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. Perl, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
(b) If to Seller or Parent:
Affiliated Computer Services, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Fax: 214/▇▇▇-▇▇▇▇
Attn: General Counsel
With a copy to:
▇▇▇▇▇▇ & ▇▇▇▇, L.L.P.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Fax: 214/▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Any party may change its address for receiving notice by written notice given to
the others named above.
9.3 Expenses. Each party shall bear its own investment banking, legal,
accounting and administrative fees, cost and expenses in connection with the
investigation, negotiation and consummation of the transaction contemplated
hereby (collectively, the "TRANSACTION EXPENSES"). Seller shall bear the
Transaction Expenses of ECG.
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9.4 Counterparts. This Agreement may be executed simultaneously in two
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
9.5 Successors and Assigns. This Agreement shall bind and inure to the
benefit of the parties named herein and their respective successors and assigns.
Neither party may assign its rights or duties under this Agreement without the
prior written consent of the other party; provided that Buyer hereby has the
consent of Parent and Seller to assign its rights under this Agreement for
collateral security purposes to any lender providing financing to Buyer or any
of its Affiliates and any such lender may exercise all of the rights and
remedies of Buyer hereunder and after the one-year anniversary of the Funding
Date Buyer hereby has the consent of Parent and Seller to assign its rights
under this Agreement, in whole or in part, to any subsequent purchaser of Buyer
or ECG or any material portion of its assets (whether such sale is structured as
a sale of stock, a sale of assets, a merger, or otherwise); however, in no event
shall any such assignment relieve or modify Buyer's obligations hereunder.
9.6 Entire Agreement. This Agreement and the documents referred to
herein contain the entire understanding among the parties with respect to the
transactions contemplated hereby and supersedes all other agreements,
understandings and undertakings among the parties on the subject matter hereof,
except for the Confidentiality Agreement, dated March 16, 2000, by and between
GTCR ▇▇▇▇▇▇ ▇▇▇▇▇▇, LLC (which is the general partner in GTCR Fund VII, LP,
which in turn owns a majority of Buyer) and, on behalf of Parent, First
Annapolis Capital, Inc., which Confidentiality Agreement shall survive.
9.7 Applicable Law. All questions concerning the construction, validity
and interpretation of this Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, regardless of the laws that
might otherwise govern under the applicable principles of conflicts of laws.
9.8 No Strict Construction. The language used in this Agreement shall
be deemed to be the language chosen by the parties to express their mutual
intent, and no rule of strict construction shall be applied against any Person.
The parties hereto have participated jointly in the negotiation and drafting of
this Agreement. In the event of an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the parties hereto, and no presumption or burden of proof shall arise
favoring or disfavoring any party by virtue of the authorship of any of the
provisions of this Agreement.
9.9 Other Rules of Construction. References in this Agreement to
sections, schedules and exhibits are to sections of, and schedules and exhibits
to, this Agreement unless otherwise indicated. Words in the singular include the
plural and in the plural include the singular. The word "OR" is not exclusive.
The word "INCLUDING" shall mean including, without limitation. The section and
other headings contained in this Agreement are for reference purposes only and
shall not affect in any way the meaning or interpretation of this Agreement.
9.10 Press Releases and Announcements. Neither Buyer (nor any of its
Affiliates) nor Seller (nor any of its Affiliates) will issue any press release
or otherwise make a public statement with respect to this Agreement and the
transactions contemplated hereby without the prior
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consent of the other (which shall not be unreasonably withheld), unless there is
a good faith belief that such press releases are required by applicable law or
stock exchange rules, or are necessary to obtain consents required to make the
Contribution and consummate the transactions contemplated hereby.
9.11 Partial Invalidity. In the event that any provision of this
Agreement shall be held invalid or unenforceable by any court of competent
jurisdiction, such holding shall not invalidate or render unenforceable any
other provision hereof.
9.12 Parties in Interest. Except as provided in Article VII, nothing in
this Agreement, express or implied, is intended to confer on any Person, other
than the parties and their respective successors and assigns, any rights or
remedies under or by virtue of this Agreement.
9.13 Supplemental Disclosure. Parent and Seller may supplement or amend
each of the Schedules hereto with respect to any matter that arises or is
discovered after the date hereof that, if existing or known at the date hereof,
would have been required to be set forth or listed in the Schedules hereto;
provided that for purposes of determining whether a breach exists with respect
to any of the representations hereunder, or whether the condition in Section
6.1(a) is satisfied, any such supplemental or amended disclosure will not be
deemed to have been disclosed to Buyer unless Buyer otherwise consents in
writing. Notwithstanding the foregoing, Parent and Seller may amend Schedule 7.2
to remove any customer contract listed on Schedule 7.2 for which a consent is
obtained prior to the Funding.
9.14 Certain Definitions. For purposes of this Agreement, the term:
(a) "Affiliate" of any particular Person means any other Person
controlling, controlled by, or under common control with such particular Person,
where "control" means the possession, directly or indirectly, of the power to
direct the management and policies of a Person whether through the ownership of
voting securities, contract, or otherwise.
(b) "Affiliated Group" means an affiliated group as defined in
Section 1504 of the Code (or any analogous combined, consolidated or unitary
group defined under state, local or foreign income Tax law) of which Seller or
ECG is or has been a member.
(c) "ATM Contract Termination" means, with respect to a customer
contract, the first to occur of (i) the actual termination of such contract by
the customer, (ii) the customer's movement of all or substantially all of the
ATM volumes under such contract to another provider, or (iii) the customer's
delivery of notice of termination or pending termination of such contract.
(d) "Capital Stock" means (i) in the case of a corporation, any
and all shares of capital stock, (ii) in the case of an association or business
entity, any and all shares, interests, participations, rights or other
equivalents (however designated) of capital stock, (iii) in the case of a
partnership or limited liability company, any and all partnership or membership
interests (whether general or limited), (iv) in any case, any other interest or
participation that confers on a Person the right to receive a share of the
profits and losses of, or distributions of assets of, the issuing Person, and
(v) in any case, any right to acquire any of the foregoing.
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(e) "Code" means the Internal Revenue Code of 1986, as amended.
(f) "Environment" means soil, land surface or subsurface strata,
surface waters (including navigable waters, ocean waters, streams, ponds,
drainage basins, and wetlands), groundwaters, drinking water supply, stream
sediments, ambient air (including indoor air), plant and animal life, and any
other environmental medium or natural resource.
(g) "Environmental, Health, and Safety Liabilities" means any
cost, damages, expense, liability, obligation, or other responsibility arising
from or under Environmental Law or Occupational Safety and Health Law and
consisting of or relating to:
(i) any environmental, health, or safety matters or conditions
(including on-site or off-site contamination, occupational safety and
health, and regulation of chemical substances or products);
(ii) fines, penalties, judgments, awards, settlements, legal
or administrative proceedings, damages, losses, claims, demands and
response, investigative, remedial, or inspection costs and expenses
arising under Environmental Law or Occupational Safety and Health Law;
(iii) financial responsibility under Environmental Law or
Occupational Safety and Health Law for cleanup costs or corrective
action, including any investigation, cleanup, removal, containment, or
other remediation or response actions ("Cleanup") required by
applicable Environmental Law or Occupational Safety and Health Law
(whether or not such Cleanup has been required or requested by any
Governmental Body or any other Person) and for any natural resource
damages; or
(iv) any other compliance, corrective, investigative, or
remedial measures required under Environmental Law or Occupational
Safety and Health Law.
The terms "removal," "remedial," and "response action" include the types of
activities covered by the United States Comprehensive Environmental Response,
Compensation, and Liability Act, 42 U.S.C. Section 9601 et seq., as amended
("CERCLA").
(h) "Environmental Law" means any legal requirement that requires
or relates to:
(i) advising appropriate authorities, employees, and the
public of intended or actual releases of pollutants or hazardous
substances or materials, violations of discharge limits, or other
prohibitions and of the commencements of activities, such as resource
extraction or construction, that could have significant impact on the
Environment;
(ii) preventing or reducing to acceptable levels the release
of pollutants or hazardous substances or materials into the
Environment;
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(iii) reducing the quantities, preventing the release, or
minimizing the hazardous characteristics of wastes that are generated;
(iv) assuring that products are designed, formulated,
packaged, and used so that they do not present unreasonable risks to
human health or the Environment when used or disposed of;
(v) protecting resources, species, or ecological amenities;
(vi) reducing to acceptable levels the risks inherent in the
transportation of hazardous substances, pollutants, oil, or other
potentially harmful substances;
(vii) cleaning up pollutants that have been released,
preventing the threat of release, or paying the costs of such clean up
or prevention; or
(viii) making responsible parties pay private parties, or
groups of them, for damages done to their health or the Environment, or
permitting self-appointed representatives of the public interest to
recover for injuries done to public assets.
(i) "Excluded Assets" means the following:
(i) The corporate books and records of Seller;
(ii) Prepaid taxes and any rights of Seller to any federal,
state or local tax refunds;
(iii) All insurance policies of Seller and all rights of
Seller arising under such insurance policies;
(iv) All leases and other assets set forth on Schedule 3.8;
(v) All rights, claims and credits relating to any Excluded
Asset or any liability other than a Contributed Liability;
(vi) All rights of Seller under this Agreement and the
agreements to be delivered in connection herewith;
(vii) All patents, patent applications and other intellectual
property rights related thereto as set forth on Schedule 3.8;
(viii) All other assets listed on Schedule 3.8, including the
IBM platform and facilities not leased from Seller by Buyer; and
(ix) All cash, cash equivalents, and bank accounts (other than
ATM cash, vault cash and settlement cash and other than such amount of
additional cash that Parent and Seller elect to contribute).
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(j) "Governmental Body" means any:
(i) nation, state, county, city, town, village, district, or
other jurisdiction of any nature;
(ii) federal, state, local, municipal, foreign, or other
government;
(iii) governmental or quasi-governmental authority of any
nature (including any governmental agency, branch, department,
official, or entity and any court or other tribunal);
(iv) multi-national organization or body; or
(v) body exercising, or entitled to exercise, any
administrative, executive, judicial, legislative, police, regulatory,
or taxing authority or power of any nature.
(k) "Hazardous Materials" means any waste or other substance that
is listed, defined, designated, or classified as, or otherwise determined to be,
hazardous, radioactive, or toxic or a pollutant or a contaminant under or
pursuant to any Environmental Law, including any admixture or solution thereof,
and specifically including petroleum and all derivatives thereof or synthetic
substitutes therefor and asbestos or asbestos-containing material.
(l) "HSR Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements
Act of 1976, as amended and the applicable regulations enacted thereunder.
(m) "Indebtedness" of any Person means, without duplication: (a)
indebtedness for borrowed money or for the deferred purchase price of property
or services in respect of which such Person is liable, contingently or
otherwise, as obligor or otherwise (other than trade payables and other current
liabilities incurred in the Ordinary Course of Business), and any commitment by
which such Person assures a creditor against loss, including contingent
reimbursement obligations with respect to letters of credit; (b) indebtedness
guaranteed in any manner by such Person, including a guarantee in the form of an
agreement to repurchase or reimburse; and (c) obligations under capitalized
leases in respect of which such Person is liable, contingently or otherwise, as
obligor, guarantor or otherwise, or in respect of which obligations such Person
assures a creditor against loss.
(n) "Insider" means, any officer, director, executive employee,
stockholder, partner or Affiliate, as applicable, of ECG or any spouse or
descendant (whether natural or adopted) of any such individual or any entity in
which any of the foregoing Persons owns a 5% or greater direct or indirect
beneficial interest.
(o) "Knowledge" means and is limited to the actual knowledge of a
Person's officers or management level employees or the knowledge that such
Person's officers or management level employees should have had in the ordinary
course of operating the business; provided that nothing herein imposes an
obligation to make any inquiries or perform other diligence.
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(p) "Liability" means any liability (whether known or unknown,
whether asserted or unasserted, whether absolute or contingent, whether accrued
or unaccrued, whether liquidated or unliquidated, and whether due or to become
due), including any liability for Taxes.
(q) "Lien" means any mortgage, pledge, security interest,
encumbrance, lien, or charge of any kind.
(r) "Loss" means, with respect to any Person, any damage,
liability, diminution in value, demand, claim, action, cause of action, cost,
damage, deficiency, Tax, penalty, fine or other loss or expense, whether or not
arising out of a third party claim, including all interest, penalties,
reasonable attorneys' fees and expenses and all amounts paid or incurred in
connection with any action, demand, proceeding, investigation or claim by any
third party (including any governmental entity or any department, agency or
political subdivision thereof) against or affecting such Person or which, if
determined adversely to such Person, would give rise to, evidence the existence
of, or relate to, any other Loss and the investigation, defense or settlement of
any of the foregoing.
(s) "Material Adverse Effect" means any material adverse effect on
the business, financial condition, operations, results of operations of the
Business.
(t) "Occupational Safety and Health Law" means any legal
requirement designed to provide safe and healthful working conditions and to
reduce occupational safety and health hazards, and any program, whether
governmental or private (including those promulgated or sponsored by industry
associations and insurance companies), designed to provide safe and healthful
working conditions.
(u) "Ordinary Course of Business" means the ordinary course of
businesses consistent with past practice (including, without limitation, with
respect to collection of accounts receivable, purchases of supplies, repairs and
maintenance, payment of accounts payable and accrued expenses, terms of sale,
levels of capital expenditures, negotiation and renegotiation of vendor and
customer contracts other than in connection with this transaction (including but
not limited to the customer contracts listed on Schedule 7.2) and operation of
cash management practices generally).
(v) "Permitted Liens" means (i) liens for current taxes and other
governmental charges and assessments which are not yet due and payable and for
which adequate reserves have been established in accordance with GAAP, (ii)
liens of landlords and liens of carriers, workmen, mechanics and materialmen and
other like liens arising in the Ordinary Course of Business for sums not yet due
and payable and for which adequate reserves have been established in accordance
with GAAP, and (iii) other immaterial liens or imperfections on property, which
does not materially impair the occupancy or use of the property for the purposes
for which it is currently used in connection with the Business.
(w) "Person" means and includes an individual, a partnership, a
joint venture, a limited liability company, a corporation or trust, an
unincorporated organization, a group, or a government or other department or
agency thereof, or any other entity.
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(x) "Proprietary Rights" means any and all (i) patents, patent
applications, patent disclosures, as well as any reissues, continuations,
continuations-in-part, divisions, extensions or reexaminations thereof, (ii)
trademarks, service marks, trade dress, trade names, internet domain names,
logos, and corporate names and registrations and applications for registration
thereof, together with all of the goodwill associated therewith, (iii)
copyrights (registered or unregistered) and copyrightable works and
registrations and applications for registration thereof, (iv) mask works and
registrations and applications for registration thereof, (v) computer software,
data, data bases, and documentation thereof, (vi) trade secrets and other
confidential information (including, without limitation, ideas, formulas,
compositions, inventions (whether patentable or unpatentable and whether or not
reduced to practice), know-how, manufacturing and production processes and
techniques, if any, research and development information, drawings,
specifications, designs, plans, proposals, technical data, financial and
marketing plans, and customer and supplier lists and information), (vii) other
intellectual property rights, (viii) copies and tangible embodiments thereof (in
whatever protectable form or medium), and (ix) license agreements related
thereto.
(y) "Post-Effective Date Period" means any period or portion
thereof ending after the Effective Date.
(z) "Pre-Effective Date Period" means any period or portion
thereof ending on or before the Effective Date.
(aa) "Tax" or "Taxes" means any (A) federal, state, local or
foreign income, gross receipts, franchise, estimated, alternative minimum,
add-on minimum, sales, use, transfer, registration, value added, excise, natural
resources, severance, stamp, occupation, premium, windfall profit,
environmental, customs, duties, real property, personal property, capital stock,
social security, unemployment, disability, payroll, license, employee or other
withholding, or other tax, of any kind whatsoever, whether computed on a
separate, consolidated, unitary or combined basis or in any other manner
including any interest, penalties or additions to tax or additional amounts in
respect of the foregoing and (B) liability of Seller or ECG for the payment of
any amounts of the type described in clause (A).
(bb) "Tax Returns" means returns, declarations, reports, claims
for refund, information returns or other documents (including any related or
supporting schedules, statements or information) filed or required to be filed
in connection with the determination, assessment or collection of Taxes of any
party or the administration of any laws, regulations or administrative
requirements relating to any Taxes.
(cc) "Transaction Documents" means this Agreement, and all other
agreements, instruments, certificates, and other documents to be entered into or
delivered by any party in connection with the transactions contemplated to be
consummated pursuant to this Agreement, including, without limitation, the
Support Services Agreement.
9.15 Cross Reference. The following terms are defined in the following
Sections of this Agreement:
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Term Section
---- -------
Adjusted Net Assets 3.25
Acquired Accounts Receivable 5.8(b)
Acquisition Proposal 5.7
Agreement Preface
American Express 7.2(b)(v)
Applicable Limitation Date 7.1
ATM 5.12
Basket 7.4(a)
Business Preface
Buyer Preface
Buyer Parties 7.2(a)
Cap 7.4(a)
Cash Management Period 5.16
Confidential Information 5.14
Contribution Agreements Preface
Contributed Assets Preface
Contributed Liabilities Preface
Contribution Preface
ECG Preface
ECG Business Preface
ECG Interest Preface
Effective Date 2.1
Financial Statements 3.9
Fundamental Representations and Warranties 7.1
Funding 2.1
Funding Date 2.1
Improvements 3.7(d)
Indemnified Party 7.3(a)
Indemnifying Party 7.3(a)
Indemnified Party Controlled Proceeding 7.3(a)
IT Agreement 7.2(b)(v)
Lease 2.4(b)
Leased Real Property 3.7(b)
Leases 3.7(b)
Licenses and Permits 3.17
Material Adverse Effect 7.2(a)(i)
Materiality 7.2(a)(i)
Net Cash Position 5.17
Net Working Capital 3.25
Parent Preface
Purchase Price 1.2
Real and Personal Property Taxes 5.11(c)
Restricted Business 5.12
Retained Accounts Receivable 5.8(a)
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Seller Preface
Seller Parties 7.2(b)
Service Solutions Preface
Service Solutions Business Preface
Service Solutions Interest Preface
Straddle Period 5.11(b)
Subleases 2.4(b)
Support Services Agreement 2.4(a)
Tax Contest 5.11(d)
Termination 7.2(a)(vii)
Third Party Claim 7.3(a)
Transaction Expenses 9.3
Transferred Employees 5.9(a)
Transition Cash Inflows 5.16
Transition Cash Outflows 5.16
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IN WITNESS WHEREOF, each of the parties has caused this Purchase and
Sale Agreement to be executed on its behalf by a duly authorized officer, all as
of the date first above written.
AFFILIATED COMPUTER SERVICES, INC. GENPASS, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------------- ----------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇ Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------- ---------------------------------------
Title: Executive Vice President Title: Chief Financial Officer
-------------------------------------- -------------------------------------
ACS/ECG HOLDINGS, LLC
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
----------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
--------------------------------------
Title: President, Chief Executive Officer
-------------------------------------
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DISCLOSURE SCHEDULES
The Disclosure Schedules contain exceptions to the representations,
warranties and covenants and certain other information of ACS/ECG Holdings, LLC
(the "Seller") related to that certain Purchase and Sale Agreement dated June
30, 2000 (the "Agreement") by and among Seller, Affiliated Computer Services,
Inc. (the "Parent") and Genpass, Inc. (the "Buyer"). Capitalized terms used and
not otherwise defined herein shall have the meanings given such terms in the
Agreement.
To the extent that any representation or warranty contained in the
Agreement is limited or qualified by the materiality of the matters to which the
representation or warranty is given, the inclusion of any matter in the
Disclosure Schedules does not constitute a determination by Seller that such
matters are necessarily material. Nor in such cases where a representation or
warranty is limited or qualified by the materiality of the matters to which the
representations or warranty is given shall the disclosure of any matter in the
Disclosure Schedules imply that any other, undisclosed matter having a great
value or other significance is not material. Any information disclosed herein
under any Schedule shall be deemed to be disclosed and incorporated into any
other Schedule where such disclosure is reasonably apparent on its face as being
applicable to such other Schedule.
Nothing in the Disclosure Schedules constitutes an admission of any
liability or obligation of the Parent or Seller to any third party, nor an
admission to a third party against the Parent's or Seller's interests.