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Exhibit 10.40
ASSET PURCHASE AGREEMENT
BETWEEN
NATIONAL PROCESSING COMPANY
("Seller")
AND
INVESTMENT SERVICES
INTERNATIONAL CO., LLC
("Buyer")
Dated As Of February __, 1999
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TABLE OF CONTENTS
1. Rules of Construction and Definitions.................................1
2. Assets
2.1 Assets to be Sold to Buyer............................... 7
2.2 Excluded Assets...........................................9
2.3 Non-Assignable Assets.....................................9
2.4 Further Assurances.......................................10
2.5 Sale at Closing Date.....................................10
2.6 Transfer of Bank Accounts and Freight Payment Accounts...11
2.7 Seller's Records.........................................11
2.8 Non-Disclosure, Non-Hire and Non-Compete Covenants.......11
3. Liabilities
3.1 Assumed Liabilities......................................12
3.2 Excluded Liabilities.....................................12
4. Consideration
4.1 Initial Determination of Cash at Closing.................13
4.2 Allocation...............................................13
5. Closing
5.1 Initial Closing..........................................13
5.2 Post-Closing Adjustments.................................13
6. Representations and Warranties of Seller
6.1 Organization.............................................14
6.2 Authorization............................................14
6.3 Consents and Defaults....................................15
6.4 Absence of Certain Changes...............................15
6.5 Litigation...............................................16
6.6 Compliance with Law......................................16
6.7 Options to Purchase......................................16
6.8 Good Title...............................................16
6.9 Customer Contracts.......................................17
6.10 Operations Agreements....................................17
6.11 Intellectual Property....................................17
6.12 Non-Compete, Non-Hire and Non-Disclosure Agreement.......18
6.13 Permits, Licenses and Other Authorizations...............18
6.14 Accounts Receivable......................................18
6.15 Freight Payment Accounts.................................19
6.16 Bank Accounts............................................19
6.17 Premises.................................................19
6.18 Books and Records........................................19
6.19 Environmental Matters....................................20
6.20 Taxes....................................................20
6.21 Misstatements or Omissions of Facts......................21
6.22 Commissions to Third Parties.............................21
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6.23 Insolvency Proceedings...................................21
6.24 Employment Matters.......................................22
6.25 Insurance................................................22
6.26 Employee Benefit Plans...................................22
6.27 Year 2000................................................23
7. Representations and Warranties of Buyer
7.1 Organization.............................................23
7.2 Authorization............................................23
7.3 Consents ................................................23
7.4 Litigation...............................................24
7.5 Fund Availability........................................24
7.6 Commissions to Third Parties.............................24
8. Indemnifications
8.1 Seller's Indemnification of Buyer........................24
8.2 Buyer's Indemnification of Seller........................25
8.3 Notice of Claims.........................................25
8.4 Defense of Claims........................................25
8.5 Cooperation of the Parties...............................27
9. Conduct of Seller Pending Closing
9.1 Material Breach..........................................27
9.2 Consents, Waivers, Approvals and Authorizations..........27
9.3 Material Changes.........................................27
9.4 Access & Information.....................................30
9.5 HSR Act Notification.....................................30
9.6 Publicity................................................30
9.7 Cooperation and Standard of Performance..................30
9.8 Notice...................................................30
10. Conditions to Closing
10.1 Conditions to Buyer's Closing............................31
10.2 Conditions to be Satisfied by Buyer......................32
11. Post-Closing Covenants
11.1 Transition...............................................33
11.2 Sales/Transfer Taxes.....................................33
11.3 Transition Services Agreement............................33
12. Termination .........................................................33
13. Miscellaneous
13.1 Expenses.................................................34
13.2 Notices..................................................34
13.3 Confidentiality..........................................35
13.4 Survival.................................................36
13.5 Entire Agreement.........................................36
13.6 Assignment...............................................36
13.7 Successors and Assigns...................................36
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13.8 Severability.............................................37
13.9 Waiver...................................................37
13.10 Alternative Dispute Resolution...........................37
13.11 Governing Law............................................40
13.12 Captions; Construction...................................40
13.13 Counterparts.............................................41
13.14 Schedules................................................41
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MASTER SCHEDULE LIST
EXHIBIT A - Transition Services Agreement
EXHIBIT B Escrow Agreement
SCHEDULE 1.10 - Bank Account(s)
SCHEDULE 1.21 - Customer List
SCHEDULE 2.1.5 - Excluded Trademarks
SCHEDULE 2.2 - Excluded Assets
SCHEDULE 3.1.3 - Limited Liabilities
SCHEDULE 6.3 - Consents and Defaults
SCUEDLUE 6.4 - Changes
SCHEDULE 6.5 - Litigation and Other Actions
SCHEDULE 6.8 - Encumbrances on Title (Good Title)
SCHEDULE 6.9 - Customer Contracts
SCHEDULE 6.10 - Operations Agreements
SCHEDULE 6.11 - Intellectual Property
SCHEDULE 6.12 - Non-Compete, Non-Hire and Non-Disclosure
Agreement
SCHEDULE 6.13 - Permits, Licenses and Other Authorizations
SCHEDULE 6.14 - Accounts Receivable
SCHEDULE 6.15 - Freight Payment Accounts
SCHEDULE 6.16 - Bank Accounts
SCUEDULE 6.17 - Leases
SCHEDULE 6.18 - Books and Records
SCHEDULE 6.20 - Tax Returns (Taxes)
SCHEDULE 6.24 - Employees
SCHEDULE 6.26 - Employee Benefit Plans
SCHEDULE 6.27 - Year 2000 Compliance
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT is made and entered into as of this _____
day of February __, 1999, by and between National Processing Company, a Kentucky
corporation ("Seller") and Investment Services International Co., LLC, a
District of Columbia limited liability company ("Buyer").
W I T N E S S E T H:
WHEREAS, Seller desires to sell, and Buyer desires to acquire certain
selected assets of Seller used in the Business and all rights to continue the
Services on the terms and conditions set forth in this Agreement;
NOW, THEREFORE, for valuable consideration paid and each and every
covenant and agreement as set forth below, and the performance thereof, it is
agreed by and between the parties as follows:
1. Rules of Construction and Definitions. All references to any specific law,
act, statutes, regulation, or rule in this Agreement shall mean such law, act,
statute, regulation, or rule of the United States of America and, where
applicable, the laws of its states, territories, foreign jurisdictions,
protectorates and local laws. For purposes of this Agreement, the following
terms shall have the meanings indicated:
1.1. "Accountants" see Section 5.22.
1.2. "Accounts Payable" shall mean any account or note payable in
accordance with GAAP.
1.3. "Acquired Breaching Affiliate" see Section 2.8.
1.4. "Accounts Receivable" shall mean any account, advance or note
receivable in accordance with GAAP.
1.5. "Adjustment Amount" see Section 5.2.1.
1.6. "Affiliate(s)" shall mean any corporation or business organization
which is a member of a controlled group of corporations (as defined in Section
414(b) of the Internal Revenue Code), a controlled group of trades or businesses
(as defined in Section 414(c) of the Internal Revenue Code), an affiliated
service group (as defined in Section 414(m) of the Internal Revenue Code), or
any other arrangement (as defined in Section 414(c) of the Internal Revenue
Code) which includes Seller. An "NCC Affiliate" shall mean any
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Affiliate that is not wholly-owned, directly or indirectly, by Seller. A "Seller
Affiliate" shall mean any Affiliate other than an NCC Affiliate.
1.7. "Agreement" shall mean this agreement, together with all attachments,
exhibits and appendices.
1.8. "Associates" shall mean Northwest Traffic Associates, Inc., a
Washington corporation.
1.9. "Balance Sheet Net Assets" see Section 4.
1.10. "Bank Account(s)" shall mean bank, thrift or money market accounts
related to the Business, as identified on Schedule 1.10.
1.11. "B.& L." shall mean B. & L. Consultants, Inc., a Massachusetts
corporation.
1.12. "Business" shall mean all the business activities and operations of
the Seller and all Subsidiaries related to the provision of Services, including
those described in the NPC Memorandum, the NPC Corporate Payables Confidential
Memorandum and the NPC Freight Audit and Payment Services Confidential
Memorandum, each dated December 1998.
1.13. "Cash at Closing" see Section 4.
1.14. "Claim(s)" shall mean any legal proceeding(s), claim(s), or
demand(s) instituted or asserted by any Person in respect to which any party to
this Agreement is entitled to indemnification pursuant to this Agreement.
1.15. "Closing" shall mean the closing of the transactions contemplated by
this Agreement.
1.16. "Closing Balance Sheet" see Section 5.2.2.
1.17. "Closing Date" shall mean a date selected by the parties hereto
within ten days following the receipt of all applicable approvals, consents,
expiration or earlier termination of all applicable waiting periods and
satisfaction or waiver of all other conditions precedent to Closing, or on such
other date as the parties shall mutually agree in writing.
1.18. "Code" see Section 6.26.
1.19. "Current Period" shall mean (a) any taxable year or other period
ending on or before the Closing Date for which a Tax Return is not required to
be filed on or before the Closing Date and (b) in the case of a taxable year or
other period beginning before and ending after the Closing Date, that portion of
such taxable year or other period that ends on and includes the Closing Date.
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1.20. "Current Period Tax" shall mean the total Tax due for a Current
Period (as if no estimated payments had been made). Any Tax attributable to the
Current Period described in clause (b) of the definition of Current Period shall
be deemed to be a Current Period Tax only to the extent of the amount of such
Tax that would have been incurred if the taxable year or other period had ended
on the close of business on the Closing Date, with the basis for such tax being
determined (a) in the case of real and personal property Taxes, intangible
Taxes, ad valorem or value added Taxes, and the like, by allocating the Tax on a
daily basis, and (b) in the case of all other Taxes for such period, by closing
the books and records as of the close of business on the Closing Date:
1.21. "Customer(s)" shall mean customers and prospects of the Business as
of Closing as listed in Schedule 1.21.
1.22. "Customers Contract(s)" shall mean letters of intent, contracts,
agreements (oral or written), standing purchase orders and any other similar
documents for Services between Seller or any Subsidiary, on the one hand, and
Customers, on the other, including those identified in Schedule 6.9.
1.23. "Defense" shall mean the defense, settlement, or other disposition
of any Claim.
1.24. "Documents of Conveyance" shall mean deeds, bills of sale,
assignment and assumption agreements, endorsements, and other instruments of
transfer and conveyance together with any consents required for the same,
including any required consent to the assignment of Customer Contracts, Leases
and Operational Agreements, all in form and substance satisfactory to Buyer.
1.25. "Effective Time" shall mean 8:00 a.m. on the Closing Date, if the
last day of a calendar month, or otherwise as of the last day of the calendar
month next preceding the month during which the Closing Date occurs.
1.26. "Employee Benefit Plan" shall mean any employee benefit plan within
the meaning of Section 3(3) of ERISA or any Local Law (excluding any Local Law
applicable to Persons employed by Seller in Juarez, Mexico or Barbados.)
1.27. "Employee" means the individuals employed by Seller or any
Subsidiary as of the Closing Date who are engaged in the Business (excluding
those individuals so employed in Juarez, Mexico or Barbados).
1.28. "Environmental Law" shall mean any foreign or domestic federal,
state or local law, statute, ordinance, rule, regulation, code, license, permit,
authorization, approval, consent, order, determination, judgment, decree,
injunction or agreement with any Governmental Authority, or any Local Law,
relating to (a) the health, protection, preservation or restoration of the
environment including air, water vapor, surface water, groundwater, drinking
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water supply, surface soil, subsurface soil, wetlands, plant and animal life or
any other natural resource, conservation and/or (b) the use, storage, recycling,
treatment, generation, transportation, processing, handling labeling,
production, release or disposal of Hazardous Substances. The term Environmental
Law includes (a) the Comprehensive Environmental Response, Compensation and
Liability Act, as amended, 42 U.S.C. Section 9601, et seq; the Clean Air Act, as
amended, 42 U.S.C. section 7401, et seq; the Federal Water Pollution Control
Act, as amended by the Clean Water Act, 33 U.S.C. Section 1251, et seq; the
Toxic Substances Control Act, as amended, 15 U.S.C. Section 9601, et seq.; the
Emergency Planning and Community Right to Know Act, 42 U.S.C. Section 11001, et
seq; the Safe Drinking Water Act, 42 U.S.C. Section 300f, et seq; and all
comparable state, local and foreign laws; (b) any common law (including common
law that may impose strict liability) that may impose liability for injuries or
damages due to the release of any Hazardous Substance.
1.29. "ERISA" shall mean the Employee Retirement Income Security Act of
1974, 29 U.S.C. 1,001, et seq., as amended.
1.30. "Escrow Agent" shall mean NationsBank NA or such other signatory to
the Escrow Agreement as may be selected by Buyer with the consent of Seller,
such consent not to be unreasonably withheld, conditioned or delayed, to hold,
invest and apply the Escrow Funds in accordance with the terms of the Escrow
Agreement.
1.31. "Escrow Agreement" shall mean that certain agreement by and between
Buyer, Seller and the Escrow Agent, dated as of the Closing Date and executed
and delivered at Closing, relating to the deposit and application of the Escrow
Funds, such agreement to be substantially the same in form and content as
Exhibit B attached hereto.
1.32. "Escrow Funds" shall mean the initial deposit of three million
dollars ($3,000,000) into the Escrow Account, plus all earnings with respect to
the Escrow Account and minus (a) all losses, costs and expenses (including fees
and expenses of the Escrow Agent and any indemnity payments to the Escrow Agent)
and (b) any distributions made to Buyer from time to time in accordance with the
Escrow Agreement.
1.33. "Excluded Assets" shall mean those assets set forth in Section 2.2
of this Agreement.
1.34. "Freight Payment Account" shall mean each account established for
the receipt of Customers' funds and the payment of Customers' freight invoices.
1.35. "GAAP" shall mean U. S. generally accepted accounting principles.
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1.36. "Governmental Authority" shall mean any government or political
subdivision, whether federal, state, local or foreign, or any agency or
instrumentality thereof, or any federal, state, local or foreign court,
arbitrator or other tribunal.
1.37. "Hazardous Substance" shall mean (a) any hazardous wastes, toxic
chemicals, materials, substances or wastes as defined by or for the purposes of
any Environmental Law or Local Law; (b) any "oil", as defined by the Clean Water
Act, as amended from time to time, and regulations promulgated thereunder
(including crude oil or any fraction thereof and any petroleum products or
derivatives thereof) or any Local Law; (c) any substance, the presence of which
is prohibited, regulated or controlled by any applicable federal, state, local
or foreign laws, regulations, statutes or ordinances now in force or hereafter
enacted or any Local Law relating to waste disposal or environmental protection
with respect to the exposure to, or manufacture, possession, presence, use,
generation, storage, transportation, treatment, release, emission, discharge,
disposal, abatement, cleanup, removal, remediation or handling of any such
substance; (d) any asbestos or asbestos-containing materials, polychlorinated
biphenyls ("PCBs") in the form of electrical equipment, fluorescent light
fixtures with ballasts, cooling oils or any other form, urea formaldehyde or
atmospheric radon; (e) any solid, liquid, gaseous or thermal irritant or
contaminant, such as smoke, vapor, soot, fumes, alkalis, acids, chemicals,
pesticides, herbicides, sewage, industrial sludge or other similar wastes; (f)
industrial, nuclear or medical by-products; (g) any lead based paint or coating
and (h) any underground storage tank(s).
1.38. "HSR Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
1976, as amended.
1.39. "Internal Revenue Code" shall mean the United States Internal
Revenue Code of 1986, as amended.
1.40. "Intellectual Property" shall mean letters patent, patents, patent
applications, patent licenses, patent renewals and extensions, Software,
software licenses, know-how, licenses, trade names, brand names, trademarks,
trade secrets, copyrights, service marks, trademark registrations and
applications, service ▇▇▇▇ registrations and applications, copyright
registrations and applications and all other intangible property rights owned or
issued by the Seller or any Subsidiary in the Business.
1.41. "Lease(s)" shall mean all leasehold rights and uses and all
licenses, easements, hereditaments, tenements and appurtenances belonging or
appertaining thereto relating to any premises used or held for use in the
Business.
1.42. "Local Law" shall mean any act, statute, regulation, rule,
ordinance, order, precedent or similar law in any non-federal jurisdiction that
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is similar in form, substance or intent to the United States act, statute,
regulation, rule, ordinance, order, or similar law mentioned in the particular
context.
1.43. "Material Adverse Effect" shall mean an event, change or occurrence
that has a material negative impact on the condition (financial or otherwise),
business, results of operations of the Business or the Subject Assets or the
Buyer as the case may be, the ability of Seller, any Subsidiary or Buyer, as the
case may be, to consummate the transactions contemplated hereby, the validity or
enforceability of this Agreement or that would delay the consummation of the
transactions contemplated hereunder.
1.44. "Multiemployer Plan" shall mean any multiemployer plan within the
meaning of Section 3(37) of ERISA or any Local Law.
1.45. "Net Assets" shall mean (i) total Subject Assets conveyed less (ii)
the sum of (A) total liabilities assumed and (B) Accounts Receivable more than
90 days old as of the Closing Date.
1.46. "NTA" shall mean NTA, Inc., a Washington corporation.
1.47. "Operations Agreements" shall mean software and computer equipment
licenses and maintenance agreements, other equipment service agreements, rental,
finance and lease agreements for personal property and all other agreements,
oral or written, other than Customer Contracts or Leases, applicable to the
Business.
1.48. "Person" shall mean any individual, sole proprietorship,
partnership, corporation, limited liability company, unincorporated society or
association, trust, estate, union, Governmental Authority or other entity.
1.49. "Prior Period" shall mean any taxable year or other period ending
before the Closing Date for which a Tax Return is required to be filed on or
before the Closing Date.
1.50. "Restricted Area" shall mean within the United States of America,
Mexico and Canada.
1.51. "Services" shall mean (i) the freight ▇▇▇▇ auditing, processing and
paying of freight ▇▇▇▇ invoices issued by common carriers to Customers and the
preparation of various reports for Customers by Seller and (ii) the accounts
payable payment processing services involving capturing Customers' accounts
payable data, matching and verifying the accuracy of Customer's purchase orders
against vendors' invoices, receiver documents and other supporting paperwork,
making payments from the Customers' account invoices and other ancillary
services such as related data entry and check printing services.
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1.52. "Software" shall mean all computer programs, materials, tapes,
know-how, object and source codes, code techniques, other written materials in
the possession or control of Seller or any Subsidiary or to which, and to the
extent to which, Seller or any Subsidiary has access and processes developed by
or on behalf of Seller or any Subsidiary for the provision of Services,
including all documentation therefor.
1.53. "Subject Assets" shall mean all assets, rights, properties and
businesses of every kind and description, whether tangible or intangible, real,
personal or mixed, owned directly or indirectly by the Seller or any Subsidiary
and used in the Business as currently conducted or pertaining to the Business or
necessary to carry on the business and operations of the Business as currently
conducted, including those assets set forth in Section 2.1 of this Agreement and
the Schedules referenced therein, together with additions thereto acquired in
the ordinary course of business prior to the Closing Date but excluding the
Excluded Assets.
1.54. "Subsidiary" shall mean any of Associates, B. & L. or NTA, and
"Subsidiaries" shall mean all of them together.
1.55. "System" shall mean any Software, hardware, databases, information
systems, interfaces or embedded control systems (microprocessor controlled,
robotic or other device).
1.56. "Tax(es)" shall mean income, gross receipts, property, sales, use,
license, excise, unitary business franchise, employment, social security,
unemployment, compensation, disability, governmental pension or insurance,
withholding or similar taxes or contributions, assessments, charges, duties,
fees or levies of any kind whatsoever (whether or not requiring the filing of
returns), together with any assessments, interest, additions, or penalties with
respect thereto and any interest in respect of such additions or penalties.
1.57. "Tax Return" shall mean any return, report, declaration, statement,
certificate, schedule, or other document required to be filed with or provided
to the Internal Revenue Service of the United States federal government, any
other federal, state, foreign or municipal agency, department, commission or
other Governmental Authority, or any other party in connection with any Tax,
including any federal, state, local or foreign income tax return, excise tax
return, franchise tax return, sales or use tax return, property tax return,
information return, stamp tax return, ad valorem or valued added tax return,
documentary tax return, gross receipts tax return, earned surplus tax return and
the like.
1.58. "Year 2000 Compliant" and its cognates means that any System (a)
shall accurately process, provide and/or receive date data (including
calculating, comparing and sequencing) within, from, into and between centuries
(including the twentieth and twenty-first centuries), including leap
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year calculations; and (b) neither the performance nor the functionality of a
System will be affected by dates prior to, on, after, or spanning January 1,
2000 or September 9, 1999. In particular, but without limitation: (i) no value
for current data will cause any error, interruption or decreased performance in
the operation of a System, (ii) all manipulations of date-related data
(including calculating, comparing, sequencing, processing and outputting) will
produce correct results for all valid dates, including when used in combination
with other products; (iii) date elements in interfaces and data storage will
specify the correct century to eliminate date ambiguity without human
intervention, including leap year calculations; (iv) where any date element is
represented without a century, the correct century will be unambiguous for all
manipulations involving that element; and (v) authorization codes, passwords and
zaps (purge functions) should function normally and in the same manner prior to,
on, after, and spanning January 1, 2000, and September 9, 1999, including the
manner in which they function with respect to expiration dates and CPU serial
numbers.
2. Assets.
2.1 Assets to be Sold to Buyer. Subject to and in reliance upon the
covenants, representations, warranties and agreements set forth herein, and
subject to the conditions in this Agreement, the Seller shall (or shall cause
its Subsidiaries to, as applicable) sell, convey, transfer, assign and deliver
to the Buyer, and the Buyer shall purchase, acquire and accept from the Seller
or such Subsidiaries on the Closing Date the Subject Assets, free and clear of
any encumbrance, lien or impediment to title, including the following:
2.1.1 Tangible Assets. All furniture, fixtures, vehicles, machinery,
communications, computer, data processing and other equipment, Software,
operating supplies, spare parts and other inventories used or held, and/or
located at any premises used or held, by Seller or any Subsidiary in connection
with the Business;
2.1.2 Customer Contracts. All Customer Contracts and work in
progress for Services;
2.1.3 Operations Agreements. All rights to and interests in
Operations Agreements;
2.1.4 Proprietary Information. All proprietary information,
including procedures, market information, surveys, listings (including telephone
numbers) used in the Business and other such proprietary information and other
intangible assets relating to the Business;
2.1.5 Intellectual Property. All rights in Intellectual Property and
all goodwill, whether of Seller or any Subsidiary, used in the Business
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therewith (excluding all names, trademarks, and service marks used by Seller for
or in connection with any of Seller's other businesses as set forth in Schedule
2.1.5);
2.1.6 Personnel Agreements. All rights (but no obligations), if any,
to all employment agreements (whether written or oral) and any non-compete,
non-hire and non-disclosure agreements with any Employee currently or formerly
associated with Seller or any Subsidiary, including each such written agreement
as described in Schedule 6.12, including all rights of enforcement thereunder
(and Seller will cooperate with Buyer at Buyer's expense in the enforcement of
any such rights, including bringing any action in its own name but under the
control of Buyer to the extent required for the effective enforcement thereof);
2.1.7 Contract Rights. All rights to and interests in or under any
written or oral contract, agreement, Lease, plan, instrument, registration,
license, franchise, certificate of occupancy, other permit or approval of any
nature, or other document, commitment, arrangement, undertaking, practice or
authorization and any intangible property rights associated with or constituting
a part of the Business;
2.1.8 Accounts Receivable. All rights, title and interest to and in
any Accounts Receivable derived from the Business (including amounts past due,
plus interest thereon) whose payment has not been received and posted as of the
Effective Time;
2.1.9 Cash and Accounts. All cash or cash equivalents on hand or in
the Bank Accounts, the Freight Payment Accounts, all marketable securities and
all prepaid items, such as utility and security deposits and the like;
2.1.10 Records. Copies of all corporate tax records and other
corporate records of the Seller and the Subsidiaries relating primarily to the
Subject Assets or the Business, and originals of all records, files,
correspondence, data, memoranda, notes, plans, contracts, recorded knowledge and
information (including lists of Customers and suppliers with respect to the
Business and Customer and sales correspondence and other files) used in
connection with or required to continue the Business as it is currently being
conducted;
2.1.11 Tax Agreements. All agreements with taxing authorities or
Governmental Authorities conveying any tax benefits, credits, exemptions,
exclusions, deductions or similar benefits to Seller or any Subsidiary with
respect to the Subject Assets or the Business;
2.1.12 Choses in Action. All rights or choses-in-action arising out
of occurrences before or after the Closing, including all rights under
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express or implied warranties in favor of the Seller or any Subsidiary, if any,
relating to the Subject Assets or the Business;
2.1.13 Certificates and Authorizations. Any and all certificates of
title and, to the extent available as a matter of law, any and all
authorizations and licenses and the like issued to Seller or any Subsidiary by
any Governmental Authority relating to the Subject Assets, the Services or the
Business;
2.1.14 Other Assets. All other assets, rights and properties of any
nature used or held for use in the Business, other than those otherwise excluded
pursuant to Section 2.2 of this Agreement.
2.2 Excluded Assets. Notwithstanding anything to the contrary
contained in Section 2.1, Seller is not selling or causing to be sold, and Buyer
is not purchasing, any of the following Excluded Assets:
(i) all rights, properties and assets which have been sold,
transferred, conveyed, assigned, delivered or otherwise
disposed of by the Seller or any Subsidiary prior to the
Closing in transactions permitted or contemplated by this
Agreement;
(ii) marketable securities, life insurance policies, insurance
policies of any other type or rights to any insurance coverage
under any of Seller's or any Subsidiary's existing policies
and any prepaid insurance premiums;
(iii) any Employee Benefit Plan and all amendments, all documents
and financial statements relating thereto or associated trust
maintained by Seller or any Subsidiary;
(iv) any rights (including tax and other refunds and claims
relating thereto) relating to the liabilities not assumed by
Buyer;
(v) any goodwill reported on the balance sheet of Seller except
for the goodwill used in the Business which is being
transferred to the Buyer pursuant to Section 2.1.5 of this
Agreement;
(vi) originals of any corporate minute books or stock records, and
any tax records and other corporate records of Seller or any
Subsidiary that are not primarily related to the Subject
Assets or the operations of the Business;
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(vii) any Hazardous Substances;
(viii) any right, property or asset used by Seller in Seller's other
businesses and listed in Schedule 2.2; and
(ix) the capital stock of the Subsidiaries.
2.3 Non-Assignable Assets. Notwithstanding anything contained in this
Agreement to the contrary, this Agreement shall not constitute an agreement or
an attempted agreement to transfer or assign any contract, license, lease,
commitment, sales or purchase order or any other agreement or any claim, right
or benefit arising thereunder or resulting therefrom, including Customer
Contracts, Leases and Operations Agreements (each for purposes of this Section
2.3, an "agreement"), if the transfer or assignment (attempted or actual) of any
such agreement without notice to or the consent of any other party thereto would
constitute a breach thereof or would in any way adversely affect the rights of
Buyer, Seller or any Subsidiary, as applicable, thereunder, unless such notice
has been timely delivered or such consent timely obtained. Seller has exercised,
at Seller's expense, (and, if requested by Buyer, after the Closing Date will
exercise, at Seller's expense) commercially reasonable efforts to timely provide
such notices and to timely obtain the consent of any party or parties to those
agreements listed on Schedule 6.3 with respect to the transfer or assignment
thereof by Seller to Buyer wherever such notice or consent is required and on
terms and conditions reasonably satisfactory to Buyer. If any such consent is
not obtained, or if an attempted assignment of an agreement would be ineffective
or would affect the rights of Buyer, Seller or any Subsidiary, as applicable,
thereunder such that Buyer would not in fact receive all rights transferred
hereunder, Seller shall use its commercially reasonable efforts to perform or
cause to be performed such agreement for the account of Buyer or otherwise
cooperate with Buyer in any arrangement reasonably necessary or desirable to
provide for Buyer the benefits and the corresponding obligations of any such
agreement, including enforcement for the benefit of Buyer of any and all rights
of Seller or any Subsidiary, as applicable, against the other party thereto
arising out of the breach, termination or cancellation of such agreement by such
other party or otherwise. To the extent Seller performs or cause the performance
under any permit or license for the benefit of Buyer pursuant to this Section
2.3 and Buyer ultimately obtains such permit or license for itself, Seller
shall, on demand by Buyer, relinquish or cause its Subsidiary to relinquish its
rights under such permit or license with respect to the Business. The parties
acknowledge and agree that Seller's undertaking pursuant to this Section 2.3
shall not render ineffective or be deemed a waiver of the condition precedent
set forth in Section 10.1.6 hereof.
2.4 Further Assurances. From time to time after the Closing, Seller will
execute and deliver or cause its Subsidiaries to execute and deliver to Buyer
such additional Documents of Conveyance, instruments of sale, transfer,
conveyance, assignment and delivery, and such consents, assurances, powers
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of attorney and other instruments as may be reasonably requested by Buyer or its
counsel in order to vest in Buyer all right, title and interest of Seller or
such Subsidiaries, as applicable, in and to the Subject Assets in order to carry
out the purpose and intent of this Agreement. Seller shall promptly transfer and
deliver or cause to be transferred and conveyed to Buyer any cash or other
property received by Seller or any Subsidiary, directly or indirectly, at any
time after the Closing Date in respect of or relating to any Subject Assets or
from the operations of the Business from and after the Effective Time. Seller
shall use its commercially reasonably efforts from and after the date hereof to
assist Buyer in obtaining extensions and renewals from Customers whose Customer
Contracts have been terminated or expired on or after December 31, 1998, or
whose Customer Contracts terminate or expire on or before July 31, 1999.
2.5 Sale at Closing Date. The sale, transfer, assignment and delivery by
the Seller and its Subsidiaries of the Subject Assets to the Buyer shall be
consummated as of the Effective Time on the Closing Date by Documents of
Conveyance.
2.6 Transfer of Bank Accounts and Freight Payment Accounts. Seller shall
cause the financial institutions in which the Bank Accounts and Freight Payment
Accounts are located to transfer the beneficial ownership of the Bank Accounts
and Freight Payment Accounts, by retitling, assignment or otherwise, to Buyer,
so that (a) as of the Closing Date, Buyer will have sole and exclusive use of,
and access to, such Bank Accounts and Freight Payment Accounts, and (b) there
will be no disruption of payments made from the accounts or deposits to such
accounts. Buyer will designate a representative to assist in coordinating the
transfer of such accounts.
2.7 Seller's Records. Buyer shall be entitled to inspect any and all
records retained by Seller or any Subsidiary and obtain copies, at the cost of
Seller, of same (or originals if reasonably requested by Buyer) at reasonable
times and locations and in the manner agreed to by Buyer and Seller. Seller
agrees either to retain all such records for a period of at least six (6) years
after the Closing Date, or, at Seller's option, to deliver such records to Buyer
prior to such time.
2.8 Non-Disclosure, Non-Hire and Non-Compete Covenants. Seller agrees that
(y) for a period of five (5) years from the Closing Date, neither Seller nor any
Seller Affiliate shall, and (z) for a period of three (3) years from the Closing
Date, no NCC Affiliate shall, nor shall any of such Persons cause a third party
to, directly or indirectly: (a) canvass, solicit or accept any business
involving or competing with any Services within the Restricted Area; (b) request
or advise any of the Customers, suppliers, potential Customers or suppliers or
other business contacts of Buyer within the Restricted Area to avoid doing
business with Buyer or to transfer, withdraw, curtail or cancel any of their
business relating to Services with Buyer; (c) induce or attempt to induce any
Person who at the time of the Closing Date is, or within 12 months prior to the
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Closing Date was, an employee of Seller or any Subsidiary or an independent
contractor engaged to provide services in connection with the Business or any of
the Services to terminate their relationships with, refuse to enter into a
relationship with or breach their agreements with Buyer or any of its
Affiliates; (d) employ any of Buyer's personnel engaged in providing Services
while employed by Buyer or, except for personnel performing solely clerical
functions for Buyer, for one (1) year after termination of such employment with
Buyer, without Buyer's prior written consent; (e) divulge, transmit or otherwise
disclose or cause to be divulged, transmitted or otherwise disclosed, or use any
information acquired by such Person, whether before or after the Closing Date,
regarding the Services within the Restricted Area; (f) either as an agent,
partner, officer, director, shareholder, member, advisor, consultant, lender,
guarantor, investor or in any other capacity, participate in, engage in or have
a financial interest in, any business which is engaged in any Services in the
Restricted Area, provided, however, that any NCC Affiliate may so act as a
consultant, advisor, lender or guarantor without breaching this clause (f) of
Section 2.8. The passive ownership of a minority interest (10% or less) in a
Person even though such Person may be a competitor of Buyer, shall not be deemed
a financial interest for purposes of clause (f) of this Section 2.8.
Notwithstanding anything set forth in the immediately preceding sentence,
it shall not be a violation of clause (f) of this Section 2.8 if any NCC
Affiliate shall acquire an interest of whatever magnitude in any bank holding
company that owns an interest in a Person whose activities would otherwise
constitute a breach of such clause ( an "Acquired Breaching Affiliate"),
provided, however, that the net income of such Acquired Breaching Affiliate may
not constitute more than five percent (5%) of the consolidated net income of
such acquired bank holding company. In the event that any NCC Affiliate shall so
acquire any Acquired Breaching Affiliate and later determine to sell or
otherwise transfer ownership of such Person or all or substantially all of its
assets, then (y) such NCC Affiliate shall so notify Buyer and offer it a
reasonable opportunity to participate in any bidding or other negotiation for
the purchase of such Person or its assets, and (z) such NCC Affiliate shall
provide Buyer with the last opportunity to bid on such purchase, providing Buyer
with a reasonable opportunity to review the penultimate bid and to enter its
final bid with respect thereto.
3. Liabilities.
3.1 Assumed Liabilities. On the Closing Date, simultaneously with the
transfer of the Subject Assets, Buyer shall assume and thereafter pay, or cause
to be paid, or otherwise satisfy or discharge those obligations and liabilities
of Seller and its Subsidiaries, if any, described below:
3.1.1 Customer Contracts. Obligations to provide Services to the
Customers pursuant to the Customer Contracts listed on Schedule 6.9 arising on
and after the Closing Date;
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3.1.2 Leases. Payment obligations for goods and services provided in
respect of the Business, the Services or any of the Subject Assets after the
Effective Time under any Leases listed on Schedule 6.17 or Operations Agreements
listed on Schedule 6.10.
3.1.3 Specified Liabilities. Those specific limited liabilities set
forth on Schedule 3.1.3 attached hereto.
3.2 Excluded Liabilities. It is specifically agreed and understood by all
parties that neither Buyer, nor any assignee, is assuming, nor shall any such
Person have any responsibility whatsoever for, any liabilities other than those
specifically identified in Section 3.1, including (a) liabilities incurred or
accrued prior to the Effective Time under or in connection with any Lease,
Customer Contract or Operations Agreement, or (b) liabilities incurred or
accrued at any time under or in connection with an Employee Benefit Plan, policy
or practice, or any employment agreement, collective bargaining agreement, or
severance or incentive compensation arrangement of Seller or any Affiliate .
Buyer is not, and shall not be, a successor employer to Seller or any Affiliate
with respect to any Employee Benefit Plan, policy or practice maintained by
Seller or such Affiliate. Seller shall remain fully liable with respect to all
such Employee Benefit Plans, policies or practices, and Buyer does not and will
not be required to assume any liability arising out of any Employee Benefit
Plan, policy or practice of Seller or such Affiliate. Buyer shall not be liable
to any Employee for any employee benefits except those employee benefits
provided under an Employee Benefit Plan, policy or practice of Buyer that
becomes available as a result of employment with Buyer. Buyer will, however,
provide severance benefits to Employees employed by Buyer for six (6) months
following the Closing Date that are no less beneficial than the severance
benefits currently being offered by Seller to the Employees.
4. Consideration.
4.1 Initial Determination of Cash at Closing. In consideration for the
sale and transfer of the Subject Assets and other commitments, representations,
warranties and restrictions made and agreed to by Seller, Buyer will (a) pay
Seller at Closing an amount equal to the book value of the Net Assets as of
December 31, 1998, as reflected on Seller's unaudited balance sheet referred to
in Section 6.18.1 ("Balance Sheet Net Assets"), plus a premium of twenty one
million dollars ($21,000,000) payable in immediately available funds via wire
transfer at Closing ("Cash at Closing"), (b) deposit into the Escrow Fund
pursuant to the Escrow Agreement the sum of three million dollars ($3,000,000)
and (b) assume the assumed liabilities as provided in Section 3.1.
4.2 Allocation. The Cash at Closing, as adjusted pursuant to Section 5.2,
shall be allocated among the Subject Assets in accordance with their
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respective fair market values as determined in good faith by the Buyer. Each of
the Seller and Buyer agrees (i) to jointly complete and separately file Form
8594 with their federal income tax return for the tax year in which the Closing
occurs and (ii) neither the Seller nor Buyer will take a position on any income,
transfer or gains tax return filed with any Governmental Authority charged with
the collection of any such tax that is in any manner inconsistent with the terms
of any such allocation without the written consent of the other party.
5. Closing.
5.1 Initial Closing. The initial Closing shall take place via exchange of
executed facsimile copies of the Documents of Conveyance and any other documents
required by this Agreement and shall be deemed to occur at the offices of
Seller, ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ on the Closing Date. For all
accounting, tax and other financial purposes, to the extent permitted by law,
Closing shall be deemed to occur at the Effective Time. Risk of loss on the
Subject Assets shall pass from Seller and its Subsidiaries to Buyer upon the
Effective Time.
5.2 Post-Closing Adjustment.
5.2.1 Adjustment Amount. The amount (as determined pursuant to
Section 5.2.2) by which (i) the book value of the Net Assets of Seller and its
Subsidiaries as of the Closing Date exceed or are less than the Balance Sheet
Net Assets shall be referred to as the "Adjustment Amount" and shall be treated
as an increase or decrease (whichever is applicable) to the purchase price paid
hereunder.
5.2.2 Adjustment Procedure. Buyer at its expense will prepare a
balance sheet ("Closing Balance Sheet") of the Net Assets of the Business as of
the Effective Time. The Closing Balance Sheet and the calculation of Net Assets
thereon, including a determination of reserves, shall be prepared in accordance
with Seller's accounting principles as applied on a consistent basis and in
accordance with GAAP. If there is a conflict between Seller's accounting
principles and GAAP, then GAAP shall prevail. Buyer will deliver the Closing
Balance Sheet to Seller within sixty (60) days after the Closing Date. If,
within thirty (30) days following delivery of the Closing Balance Sheet, Seller
has not given Buyer notice of its objection to the Closing Balance Sheet (which
notice must contain a statement of the basis of Seller's objection(s)), then the
book value of the Net Assets in the Closing Balance Sheet will be used in
computing the Adjustment Amount. If, however, Seller timely gives such notice of
objection and the parties are unable to resolve any such objections within ten
(10) days thereafter, then the issues in dispute (and only those issues) will be
submitted to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, LLP, certified public accountants (the
"Accountants"), for resolution. If issues in dispute are submitted to the
Accountants for resolution: (i) each party will furnish to the Accountants such
work papers and other documents and information relating to the disputed
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issues as the Accountants may request and are available to that party or its
subsidiaries (or its independent public accountants), and will be afforded the
opportunity to present to the Accountants any material relating to the
determination and to discuss the determination with the Accountants; (ii) the
determination by the Accountants, as set forth in a notice delivered to both
parties by the Accountants, will be binding and conclusive on the parties; (iii)
Buyer and Seller will each bear 50% of the fees of the Accountants for such
determination; and (iv) the Accountants shall be acting as experts and not as
arbitrators.
5.2.3 Payment of Adjustment Amount. On the second business day
following the final determination of the Adjustment Amount, Buyer shall pay
Seller the Adjustment Amount if it is a positive number and Seller shall pay the
absolute value of the Adjustment Amount to Buyer if it is a negative number. All
payments will be made together with interest at 7% per annum compounded daily
beginning on and including the Closing Date and ending on but excluding the date
of payment.
6. Representations and Warranties of Seller. Seller hereby represents and
warrants to Buyer that:
6.1 Organization. Each of Seller and each Subsidiary is a corporation duly
organized, validly existing and in good standing under the laws of its state of
incorporation as set forth in the definitions of such Person. Each of Seller and
each Subsidiary is duly qualified to do business as a foreign corporation in
each jurisdiction in which its ownership or lease of property or the nature of
the business conducted by it makes such qualification necessary, except for such
jurisdictions in which the failure to be so qualified would not have a Material
Adverse Effect.
6.2 Authorization. Seller has full corporate power and authority to
execute and deliver this Agreement and to perform fully its obligations
hereunder. The execution, delivery and performance of this Agreement by Seller
has been duly authorized by all necessary corporate action of Seller. This
Agreement has been duly executed and delivered by Seller and this Agreement
constitutes a legal, valid and binding obligation of Seller, enforceable against
Seller in accordance with its terms except to the extent enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium, receivership,
conservatorship or similar laws affecting the rights of creditors generally or
equitable principles limiting the right to obtain specific performance or other
similar relief.
6.3 Consents and Defaults. Except as set forth on Schedule 6.3, neither
the execution and delivery of this Agreement by Seller nor the performance of
its obligations hereunder will (a) conflict with or result in any breach of any
provision of the certificate of incorporation or bylaws of Seller; (b) require
any consent or approval under, conflict with, result in the breach,
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termination or acceleration of, or constitute a default under any mortgage,
Lease, Operations Agreement, agreement, indenture, commitment, Customer Contract
or other instrument, oral or written, to which Seller or any Subsidiary is a
party or by which Seller, any Subsidiary or any of the properties of each are
bound; (c) constitute a violation of any law, regulation, order, writ, judgment,
injunction or decree applicable to Seller, any Subsidiary or any of its or their
properties; (d) violate, conflict with, constitute a default ( or an event
which, with notice or lapse of time or both, would constitute a default) under,
or result in termination of, or accelerate the performance required by, or
result in the creation of any lien or other encumbrance upon any of the
properties or assets of Seller or any Subsidiary under, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, deed of trust,
license, lease, agreement or other instrument or obligation to which the Seller
or such Subsidiary is a party or to which the Business or any Subject Assets are
subject, except for such violations, conflict breaches, defaults, terminations,
accelerations or creations of liens or then encumbrances, which will not have a
Material Adverse Effect; (e) require any consent, approval, authorization or
permit of or from, filing with or a notification to any court or Government
Authority, except (i) filings under the HSR Act or (ii) consents, approvals,
authorizations, permits, filings or notifications which, if not obtained or made
will not individually or in the aggregate, have a Material Adverse Effect or (f)
have any impact on Buyer's right to conduct the Business as currently being
conducted by the Seller and the Subsidiaries.
6.4 Absence of Certain Changes. Since December 31, 1998: (a) the Seller
has operated the Business in the ordinary and usual course; (b) there has not
been any change in the business, financial condition or results of operations of
the Business that has had or will have a Material Adverse Effect; (c) there has
not been any damage, destruction or loss (whether or not covered by insurance)
to the Subject Assets that has had or could reasonably be expected to have a
Material Adverse Effect; (d) other than as listed on Schedule 6.4, no Customer
has canceled, discontinued, or given written or verbal notice of its intention
to cancel, discontinue or substantially reduce its relationship with Seller that
would have an adverse effect on the Business; (e) except as otherwise set forth
on Schedule 6.4, the Seller is not in default and, to the knowledge of the
Seller, no Customer or vendor is in default, under any Customer Contract, Lease
or Operations Agreement, and each such contract (whether written agreement or
outstanding purchase order) is in full force and effect on the date hereof; (f)
other than as listed on Schedule 6.4, each such Customer Contract contains no
material changes in Seller's standard form of agreement and specifically no
deviation in warranties or limitation of Seller's liability; and (g) other than
as listed on Schedule 6.4, Seller has not made any change to the Business that,
if done between the date hereof and the Closing Date, would constitute a breach
of Section 9.3 hereof.
6.5 Litigation. Except as set forth on Schedule 6.5: (a) there is no
judicial or administrative action, proceeding or investigation pending or, to
the
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knowledge of the Seller, threatened, that questions the validity of this
Agreement or any action taken or to be taken by the Seller in connection with
this Agreement, and (b) there is no claim, litigation, action, suit, proceeding,
inquiry (whether administrative or judicial at law or equity), or investigation
pending or, to the knowledge of the Seller, threatened against or affecting, or
any judgment, award, order, injunction or decree outstanding against the Seller,
or any Subsidiary, in each case relating to the Business, or any of the Subject
Assets that, if adversely determined, would individually or in the aggregate
have a Material Adverse Effect.
6.6 Compliance with Law. All Customer Contracts, Leases and Operations
Agreements have been entered into in the ordinary course of business and not in
violation of any applicable federal, state or local law, regulation, ordinance
or other requirement of any Governmental Authority, and no written notice has
been received by the Seller alleging any such violations.
6.7 Options to Purchase. Seller does not currently have outstanding, and
will not grant, any options, rights to purchase, contracts, or any other right
entitling anyone to acquire any of the Subject Assets or the Business except as
otherwise expressly contemplated herein.
6.8 Good Title. Except for those liabilities set forth in Schedule 6.8,
which shall be paid and discharged by Seller at or prior to Closing, Seller owns
and holds good and marketable title, including the power of conveyance, to all
of the Subject Assets, tangible and intangible, free and clear of all liens,
mortgages, pledges, encumbrances, security interests, income taxes, withholding
taxes, employment taxes, sales and property taxes, restrictions, defects of
title and other impairments of title. The Subject Assets constitute all of the
assets used by Seller and the Subsidiaries to conduct the Business and all of
the assets necessary to allow Buyer to conduct the Business as it is currently
conducted by Seller and the Subsidiaries and, if tangible, are in good repair
and operating condition for their intended use in the Business. At Closing,
Seller shall convey or caused to be conveyed to Buyer good and marketable title
to the Subject Assets free and clear of all liens, encumbrances or other
impairments of title, subject, however, to any continuing obligation of Buyer
under any Lease or Operations Agreement to satisfy any conditions precedent
contained in any such agreement as to any subsequent transfer or assignment
thereof.
6.9 Customer Contracts. Seller has delivered to Buyer true, complete and
accurate copies of Customer Contracts that are identified on Schedule 6.9.
Schedule 6.9 lists all Customers as of the date of this Agreement and identifies
all Customer Contracts, and also describes all Customers obtaining Services from
Seller or a Subsidiary without a current written agreement. Each of the Customer
Contracts listed on Schedule 6.9 is in full force and effect and is unimpaired
by any breach of the Seller or any Subsidiary, as applicable, that would give
any other party thereto the right to terminate such Customer
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Contract or receive damages from the Buyer after the Closing Date (except for
breaches that, individually or in the aggregate, would not have a Material
Adverse Effect). For each Customer for which Seller or any Subsidiary provides
Services without a current written agreement, Schedule 6.9 fully describes all
terms, practices and procedures governing Seller's or such Subsidiary's
relationship with such Customer. Neither Seller nor any Subsidiary has any
obligations, written or otherwise, to any Customer other than those set forth in
the Customer Contracts or, for Customers without agreements, those set forth on
Schedule 6.9. None of Seller's or any Subsidiary's obligations to Customers,
written or otherwise, include any performance-based or other monetary penalties,
other than those explicitly set forth in the Customer Contracts. Neither Seller
nor any Subsidiary is involved in any claim, dispute or controversy with any of
its Customers that, individually or in the aggregate, could reasonably be
anticipated to have a Material Adverse Effect. Except as set forth in Schedule
6.9, there exists no oral or written termination notice indicating, and Seller
has no reason to believe, that any Customer will terminate any Customer
Contract.
6.10 Operations Agreements. Schedule 6.10 contains a true, complete and
accurate list of all Operations Agreements used in or held for the Business.
Seller has delivered or caused to be delivered to Buyer true, complete and
accurate copies of all Operations Agreements, and all Operations Agreement are
enforceable according to their terms. Each of the Operations Agreements listed
on Schedule 6.10 is in full force and effect and is unimpaired by any breach of
the Seller that would give any other party thereto the right to terminate such
Operations Agreement or receive damages from the Buyer after the Closing Date
(except for breaches that, individually or in the aggregate, would not have a
Material Adverse Effect). To the knowledge of the Seller, no other party to any
of the Operations Agreements is in material default of its obligations under
such Operations Agreement. All Operations Agreements have been entered into in
the ordinary course of business at Sellers' usual and customary rates or
practice.
6.11 Intellectual Property. Schedule 6.11 sets forth a true, complete and
accurate list of all Intellectual Property. Except as set forth in Schedule
6.11, without payment of any license fee, relicensing fee, royalty or similar
charge, Seller owns (and, after the Closing, Buyer will own) the entire right,
title and interest in and to the Intellectual Property and the trade secrets,
know-how and technology used in the operation of the Business, and Seller has
the right to use and license the same without infringement or violation of the
rights of others. To the knowledge of Seller, there are no pending or threatened
proceedings or litigation or other adverse patents, inventions, trademarks,
trade names, service marks, or claims affecting or challenging the Intellectual
Property. To the knowledge of Seller, no Person is infringing on or threatening
to infringe the Intellectual Property. Except as set forth on Schedule 6.11,
Seller has not taken or omitted to take any action that would have the effect of
waiving any rights to the Intellectual Property, the waiver of
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which would have the effect of making Buyer unable to operate the Business as
currently conducted by Seller or of allowing any other Person to compete more
effectively with Buyer than it now does with Seller.
6.12 Non-Compete, Non-Hire and Non-Disclosure Agreements. Schedule 6.12
sets forth a true, complete and accurate list of all non-compete, non-hire and
non-disclosure agreements related to the Business. Seller has delivered or
caused to be delivered to Buyer true, complete and accurate copies of all such
documents and all such documents are enforceable according to their terms.
6.13 Permits, Licenses and Other Authorizations. Schedule 6.13 sets forth
a true, complete and accurate list and description of all permits, licenses, and
other authorizations held by Seller or any Subsidiary and used in or held for
the conducting of the Business. Seller or such Subsidiary is in compliance with
the terms of such permits, licenses, and authorizations, and there are no
pending or, to the knowledge of the Seller, threatened terminations, expirations
or revocations thereof. Except for the permits, licenses, and authorizations
described in Schedule 6.13 or that, individually or in the aggregate, do not,
and, insofar as reasonably can be foreseen, in the future will not have a
Material Adverse Effect, there are no licenses, permits or other authorizations,
whether written or oral necessary or required for the use of the Subject Assets
or the conducting of the Business.
6.14 Accounts Receivable. Schedule 6.14 reflects a true, complete and
accurate aging of all accounts receivable of Seller (with total amounts for each
account), the name and last known address of the Person from whom such Account
Receivable is owing, any security that Seller claims collateralizes such Account
Receivable and the age of such Account Receivable, as of January 31, 1999. All
Accounts Receivable have arisen in the ordinary course of business and represent
valid obligations due the Seller. Seller has no knowledge of any facts or
circumstances generally (other than general economic conditions) that would
result in any material increase in the uncollectability of such receivables as a
class in excess of the reserves therefor set forth on the December 31, 1998
balance sheet contained in the Financial Statements. Seller has delivered to
Purchaser complete and correct copies of all instruments, documents and
agreements evidencing such receivables and of all instruments, documents or
agreements creating security therefor. Seller has valid and perfected security
interests in such security (to the extent such priority may be obtained under
applicable law by possession of such security or the filing of financing
statements or similar documents with respect thereto).
6.15 Freight Payment Accounts. Schedule 6.15 lists all Freight Payment
Accounts of Seller.
6.16 Bank Accounts. Schedule 6.16 lists all Bank Accounts used by Seller
in connection with the Business, including a list of all Persons with
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signature authority with respect thereto, and such Bank Accounts constitute all
the Bank Accounts.
6.17 Premises. Schedule 6.17 lists all Leases and Seller has delivered to
Buyer true, complete, and accurate copies of all such Leases. All Leases are in
full force and effect and are legal, valid and binding obligations of Seller and
each party thereto, and to the knowledge of the Seller, enforceable in
accordance with their terms. To the knowledge of the Seller, none of the
buildings and structures located on real property used in or held for the
Business violate any restrictive covenants or any terms of any of the Leases, or
encroach on any property owned by others which violation or encroachment has or
may have a Material Adverse Effect at the relevant location. To Seller's
knowledge, no condemnation proceeding is pending, or threatened, that would
preclude or impair in any material respect the use of the real property for the
uses for which it is currently being used.
6.18 Books and Records.
6.18.1 Financial Statements. Schedule 6.18 contains correct and
complete copies of (a) the unaudited balance sheets of the Business as of
December 31, 1997, and December 31, 1998, and the related unaudited statement of
income and cash flows for the years then ended and the reports thereon, and the
other financial information included therewith (collectively, the "Financial
Statements").
6.18.2 Accuracy of Financial Statements. The Financial Statements
(a) are accurate and complete in all material respects and are consistent with
the books and records of Seller (which are accurate and complete in all material
respects), (b) have been prepared in accordance with GAAP applied on an
historically consistent basis, and (c) fairly present the financial position,
results of operations and cash flows of the Business at the respective dates
thereof and for the periods therein indicated.
6.18.3 Records. Seller has delivered, or will deliver at Closing,
true, complete and accurate copies (or originals, where necessary or reasonably
requested by Buyer) of all records, files and other information used in
connection with or required to continue the Business as it is presently
conducted by Seller and the Subsidiaries other than minute books of the Seller.
6.18.4 No Undisclosed Liabilities. Except as and to the extent
reflected or reserved against on the face of the balance sheet as of December
31, 1998, contained in the Financial Statements, as of such date Seller had no
(i) debts, liabilities or obligations (whether absolute, accrued, contingent or
otherwise) of any nature whatsoever arising out of or relating to the Business
or (ii) any other debt, liabilities or operations relating to or arising out of
any act, omission, transaction, circumstance, sale of goods or services, state
of facts or
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other condition that occurred or existed on or before such date, whether or not
then known, due or payable, in each case in excess of $25,000.
6.19 Environmental Matters. To Seller's knowledge:
(i) The Business is not in violation of, nor has any liability,
absolute or contingent, in connection with or under any
Environmental Law or Local Law, except any such violations or
liabilities that, individually or in the aggregate, do not
have a Material Adverse Effect. To the knowledge of the
Seller, the Business is owned and operated in compliance with
all Environmental Laws;
(ii) None of the Subject Assets is in violation of any
Environmental Law or Local Law, nor is there any liability,
absolute or contingent, under any such law with respect to any
of the Subject Assets, except any such violations or
liabilities that, individually or in the aggregate, would not
have a Material Adverse Effect; and
(iii) There are no actions, suits, demands, notices, claims,
investigations or proceedings pending or threatened relating
to any of the Subject Assets, including any notices, demand
letters or requests for information from any Governmental
Authority, relating to any such liability under or violation
of Environmental Law or Local Law, which would impose a
liability upon Seller pursuant to any Environmental Law or
Local Law, except such as would not, individually or in the
aggregate, have a Material Adverse Effect.
6.20 Taxes.
(i) Except as set forth in Schedule 6.20, all of the Tax
Returns for all Prior Periods required to be filed by the
Seller or any Subsidiary have been duly and timely filed,
the Tax Returns are accurate and complete in all respects,
and the Tax shown in the Tax Return filed for each Prior
Period constitutes the full amount of the Tax that is owed
or may become owed by the Seller or any Subsidiary for any
such Prior Period and all such Taxes have been paid in full
on a timely basis;
(ii) There are not currently in force any extensions of time with
respect to the dates on which any Tax Return was or is due to
be filed by the Seller or any Subsidiary, or any waivers or
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agreements for the extension of time for the assessment or
collection of any Tax due therefrom;
(iii) There are no liens on any of the assets or properties of the
Seller or any Subsidiary that arose in connection with any
failure or alleged failure on the part of any Person to pay
any Tax;
(iv) Seller and the Subsidiaries have each withheld or paid to the
proper Governmental Authority all Taxes required to have been
withheld and paid in connection with amounts paid or owing to
any employee, independent contractor, creditor or other party;
(v) Each estimated payment for Current Period Taxes payable by
Seller or any Subsidiary has been made on or before the date
on which the payment is required under applicable law to be
made in an amount sufficient to avoid the imposition of a
penalty;
(vi) Schedule 6.20 lists each state and local jurisdiction in which
Seller or any Subsidiary has filed any income or franchise Tax
Return. No claim has ever been made by a Governmental
Authority where the Seller or the Subsidiaries do not file Tax
Returns that the Seller or any Subsidiary is or may be subject
to taxation by the Governmental Authority.
6.21 Misstatements or Omissions of Facts. No representation or warranty by
Seller in this Agreement (including the Schedules attached hereto), nor any
other certificate or document furnished by Seller, contains or will contain as
of the date hereof or as of the Closing Date any untrue statement of a fact, or
omits or will omit to state as of the date hereof or as of the Closing Date any
fact necessary to make the statements contained herein or therein not
misleading.
6.22 Commissions to Third Parties. Except for fees paid and payable to
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, Seller has neither paid nor will become obligated to pay
any fee or commission to any broker, finder or intermediary in connection with
the transactions contemplated by this Agreement.
6.23. Insolvency Proceedings. None of the Seller or any Subsidiary is the
subject of any pending or, to Seller's knowledge, threatened, insolvency
proceedings of any character, including bankruptcy, receivership,
reorganization, composition or arrangement with creditors, voluntary or
involuntary. Neither the Seller nor any Subsidiary has made an assignment for
the benefit of creditors or taken any action in contemplation of or which would
constitute a valid basis for the institution of any such insolvency proceedings.
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To Seller's knowledge, as of the date hereof, no other Person that is a party to
any Customer Contract, Lease or Operations Agreement is the subject of any such
pending or threatened insolvency proceeding. The parties hereto agree and
acknowledge that, while Seller shall be obligated to give prompt notice to Buyer
of any knowledge it may obtain prior to the Closing Date about the institution
or threatened institution of such insolvency proceedings against any such
Person, the immediately preceding sentence shall not be deemed repeated as a
representation or warranty as of Closing.
6.24. Employment Matters. Schedule 6.24 sets forth all of the full time
and part time Employees of Seller and each Subsidiary, subject to changes
between the date hereof and the Closing Date (a) in the ordinary course of
business or (b) resulting from any reduction in force or facility closing
consistent with plans previously discussed by Seller and Buyer. Seller and each
Subsidiary has complied in all material respects with all applicable laws, rules
and regulations relating to the employment and termination of Employees and
former employees, including those relating to (y) the Worker Adjustment and
Retraining Notification Act, 29 U.S.C. ▇▇.▇▇. 2101-09, as amended, and any
similar Local Law, and (z) wages, hours, collective bargaining and the payment
and withholding of Taxes, and have withheld all amounts required by law or
agreement to be withheld from the wages or salaries of its employees and is not
liable for any arrears of wages or other taxes or penalties for failure to
comply with any of the foregoing, except where the failure to so withhold would
not have a Material Adverse Effect. Except as set forth on Schedule 6.24, there
are no legal actions or proceeding pending or, to the knowledge of Seller,
threatened between the Seller and the Subsidiaries, on one hand, and any of its
Employees (or former Employees) on the other.
6.25. Insurance. Seller has in force adequate insurance covering the full
replacement value of the tangible personal property that is part of the Subject
Assets and shall cause such insurance to be maintained in full force until the
Closing Date. Seller also has in force adequate workers compensation insurance,
errors and omissions insurance and general liability insurance covering the
Business and the Subject Assets in amounts at least equal to and pursuant to
policies consistent with its industry standards for similar businesses.
6.26. Employee Benefit Plans. Schedule 6.26 sets forth a true and complete
list of each Employee Benefit Plan, including each Multiemployer Plan, if any,
under which any Employee or former Employee has any present or future right to
benefits or under which Seller or any of its Affiliates may have any present or
future liability. Seller has not incurred, and does not reasonably expect to
incur (either directly or indirectly, including as a result of any
indemnification obligation) any liability that could become a liability of Buyer
or, following the Closing, remain a liability of the Business under or pursuant
to ERISA or the penalty, excise tax or joint and several liability provisions of
the Internal Revenue Code of 1986, as amended (the "Code"), relating to Employee
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Benefit Plans, and no event, transaction or condition has occurred or exists
that could result in any such liability. To the best of Seller's knowledge, each
Employee Benefit Plan has been operated and administered in all material
respects in accordance with all requirements of law, including but not limited
to ERISA and the Code.
6.27 Year 2000 Except as set forth on Schedule 6.27, Seller has not made
any statement (written or oral) to any Customer or supplier regarding Year 2000
Compliance by any System created by or used by Seller with respect to the
Business. Seller has or uses Systems that are potentially subject to Year 2000
Compliance issues with respect to those vendors, suppliers, licensors, Customers
or other Persons identified on Schedule 6.27 (indicating which System is
associated with which Person). Seller has obtained such certifications from such
Persons with respect to such Systems as are indicated on Schedule 6.27. Copies
of all such certifications are attached to such schedule.
7. Representations and Warranties of Buyer.
7.1 Organization. Buyer is a limited liability company duly organized,
validly existing and in good standing under the laws of the District of
Columbia. Buyer is duly qualified to do business as a foreign entity in each
jurisdiction in which its ownership or lease of property or the nature of the
business conducted by it makes such qualification necessary, except for such
jurisdictions in which the failure to be so qualified would not have a Material
Adverse Effect.
7.2 Authorization. Buyer has full power and authority to execute and
perform fully its obligations hereunder this Agreement. The execution, delivery
and performance of this Agreement by Buyer has been duly authorized by all
necessary action of Buyer. This Agreement has been duly executed and delivered
by Buyer, and this Agreement constitutes a legal, valid and binding obligation
of Buyer, enforceable against Buyer in accordance with its terms, except to the
extent enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium, receivership, conservatorship or similar laws affecting the rights
of creditors generally or equitable principles limiting the right to obtain
specific performance or other similar relief.
7.3 Consents. The consummation by Buyer of the transactions contemplated
by this Agreement shall not require the consent, approval, authorization or
permit of or from, filings with or notifications to any court or Governmental
Authority except (i) filings under the HSR Act or (ii) consents, approvals,
authorizations, permits, filings or notifications which, if not obtained or made
will not, individually or in the aggregate, have a Material Adverse Effect.
Subject to the foregoing, neither the execution and delivery of this Agreement
by Buyer nor the performance of its obligations hereunder will (a) violate or
conflict with the charter documents of Buyer; or (b) constitute a
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violation of any law, regulation, order, writ, judgment, injunction or decree
applicable to Buyer or any of its properties.
7.4 Litigation. There is no judicial or administrative action, proceeding
or investigation pending or, to the knowledge of Buyer, threatened, that
questions the validity of this Agreement or any action taken or to be taken by
the Buyer in connection with this Agreement. There is no litigation, proceeding
or governmental investigation pending or, to the knowledge of Buyer, threatened,
or any order, injunction or decree outstanding, against the Buyer that, if
adversely determined, would have a Material Adverse Effect upon the Buyer's
ability to perform its obligations under this Agreement.
7.5 Fund Availability. Buyer currently has and will have at closing
adequate funding sources to pay Seller the Cash at Closing.
7.6 Commissions to Third Parties. Buyer has neither paid nor will become
obligated to pay any fee or commission to any broker, finder or intermediary in
connection with the transactions contemplated by this Agreement.
8. Indemnifications.
8.1 Seller's Indemnification of Buyer.
8.1.1 Basic Seller Indemnity. Seller shall, on Buyer's demand,
defend, indemnify and hold harmless Buyer and its Affiliates, successors and
assigns and their respective directors, officers, employees, shareholders,
representatives and agents, against and in respect of any and all assessments,
claims, demands, losses, damages, expenses (including the reasonable fees and
disbursements of legal counsel and other professionals), liabilities and
judgments resulting from (a) any misrepresentation, any inaccuracy in or breach
or other violation of any of the Seller's warranties or representations, or any
nonfulfillment of any agreement on the part of Seller under this Agreement
(ignoring, for these purposes only, the parenthetical expressions set forth in
each of Section 6.9 and 6.10) except for those warranties and representations
contained in Section 6.27; (b) any obligation incurred by Seller, any Subsidiary
or any prior party in interest which is not expressly assumed by Buyer hereunder
or (c) any Excluded Asset or other businesses of Seller not being purchased as
part of the Business, provided, however, that Seller's obligation under this
Section 8.1.1 hereunder shall only arise if and when the aggregate amount of all
claims arising under this Section 8.1.l shall exceed $25,000, in which event
such obligation shall apply from the first dollar.
8.1.2 Year 2000 Indemnity. Seller shall:
(a) indemnify and hold harmless Buyer with respect to all
documented additional expenditures incurred after the Closing Date that are
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necessary, in Buyer's reasonable judgment, to render any of Buyer's Systems Year
2000 Compliant, including testing of such Systems, but only to the extent such
expenses are in excess of $50,000; and
(b) indemnify, defend and hold harmless Buyer with respect to
any loss, liability, cost or expense (including the fees and expenses of counsel
and other professionals) suffered or incurred by Buyer as a result of or with
respect to third-party claims by any Person against Buyer resulting from or
relating to any failure of any System or System interface acquired, modified,
upgraded, revised or customized by Seller on or prior to the Closing Date,
provided, however, that Seller's obligations under this Section 8.1.2(b) shall
be payable solely out of and only to the extent of the Escrow Funds.
8.1.3 Special Remedies. No obligation of Seller under this Agreement
shall be excused by reason of the failure of a System, or any portion thereof,
to be Year 2000 Compliant, nor shall any such failure be deemed to be a force
majeure event. Any statute of limitation applicable to Seller's Year 2000
Compliance warranties, representation or covenants shall not accrue or begin to
run until the later of January 1, 2000, or the time when such statute of
limitations would otherwise accrue or begin to run, and Seller shall not assert,
and expressly waives, any defense based upon laches. Seller further agrees to
provide Buyer at Closing with any methodology that Seller has used to access,
test and remediate or replace (as necessary) any of the Systems, or portions
thereof, and the results of such tests, to the extent completed.
8.2 Buyer's Indemnification of Seller. Buyer shall, on Seller's demand,
defend, indemnify and hold harmless Seller against and in respect of any and all
claims, demands, losses, damages, expenses (including the reasonable fees and
disbursements of legal counsel and other professionals), liabilities and
judgments resulting from (a) any misrepresentation, any inaccuracy in or breach
of any warranty or representation, or any nonfulfillment of any agreement on the
part of Buyer under this Agreement; or (b) any failure by Buyer after Closing to
pay or perform any liability or obligation of Seller which has been specifically
assumed by Buyer pursuant to this Agreement, provided, however, that Buyer's
obligation under this Section 8.2 shall only arise if and when the aggregate
amount of all claims arising under this Section 8.2 shall exceed $25,000, in
which event such obligation shall apply from the first dollar. .
8.3 Notice of Claims. If any Claim is instituted or asserted by any Person
in respect to which any party to this Agreement is entitled to indemnification
pursuant to this Agreement the indemnified party, after receipt by it of written
notice of the commencement or assertion of such Claim, shall promptly cause a
written notice of such Claim to be made to the party required to furnish such
indemnity; provided that failure to give such notice shall not (a) relieve the
indemnifying party of its indemnification obligations hereunder, unless and to
the extent such failure to provide notice shall have materially
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and substantially prejudiced the rights of the indemnifying party, or (b) result
in any liability of the indemnified party to the indemnifying party.
8.4 Defense of Claims. Subject to the next sentence, the indemnifying
party shall have the right, at its option and expense, to assume any Defense of
any Claim, provided that within thirty (30) days of receiving the notice with
respect to such Claim pursuant to the above notice provision (of which such
shorter period of time as an answer to or other responsive action may be
required), the indemnifying party, by notice delivered to the indemnified party,
elects to assume such Defense and the indemnifying party acknowledges in writing
its obligation hereunder to indemnify the indemnified party with respect to such
Claim and periodically thereafter provide the indemnified party with reasonably
sufficient evidence of the ability of the indemnifying party to satisfy such
claim. Notwithstanding the foregoing, the indemnifying party shall not have the
right to assume the Defense of any Claim if (a) representation of both the
indemnified party and indemnifying party by the same counsel would be prohibited
by rules or regulations governing the professional conduct of such counsel due
to actual or potential differing interests between them; (b) the indemnified
party determines in good faith that there is a significant possibility that such
Claim may materially and adversely affect it or its Affiliates other than as a
result of monetary damages; or (c) the indemnified party determines in good
faith that the indemnifying party has insufficient financial resources to
satisfy any monetary damages reasonably likely to result from such Claim.
If the indemnifying party has assumed the Defense of a Claim in accordance with
Section 8.4 hereof, then the following shall apply:
(i) except as provided in clause (v) herein, the indemnified party
shall have the right to participate and assist in, but not
control, the Defense of such Claim and to employ its own
counsel in connection therewith;
(ii) except as provided in clause (v) herein, the indemnifying
party shall not be liable to the indemnified party for the
fees or expenses of the indemnified party's counsel or other
expenses incurred by the indemnified party in connection with
participating in the Defense of such Claim, except that the
indemnifying party shall be liable for any such fees and
expenses incurred prior to the time that the indemnifying
party assumed such Defense;
(iii) counsel used by the indemnifying party in connection with the
Defense of such Claim shall be reasonably satisfactory to the
indemnified party;
(iv) except as provided in clause (v) herein, the indemnifying
party shall have no liability with respect to any compromise
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or settlement of such Claim effected without its consent, such
consent not to be unreasonably withheld, conditioned or
delayed;
(v) if the indemnifying party shall fail or omit to diligently
prosecute the Defense of such Claim, then (a) the indemnified
party shall have the right to control the Defense of such
Claim, (b) the indemnifying party shall be liable to the
indemnified party for the fees and expenses of the indemnified
party's counsel and other expenses incurred by the indemnified
party in connection with the Defense of such Claim and (c) the
indemnifying party shall be liable for any settlement of such
Claim effected by the indemnified party; and
(vi) the indemnifying party shall not effect any compromise or
settlement of such Claim without the consent of the
indemnified party, which consent shall not be unreasonably
withheld, unless such compromise or settlement includes a full
release of the indemnified party, neither the indemnified
party's business nor its name nor the business or name of any
of its Affiliates will be damaged by such settlement, and such
settlement is limited strictly to monetary damages.
If the indemnifying party does not assume the Defense of a Claim (whether
because it elects not to or has no right to) the following shall apply:
(i) the indemnifying party shall have the right, as its sole cost
and expense, to participate in, but not control, the Defense
of such Claim and to employ its own counsel in connection
therewith; and
(ii) the indemnifying party shall have no liability with respect to
any compromise or settlement of such Claim effected without
its consent, which shall not be unreasonably withheld.
8.5 Cooperation of the Parties. The parties agree to cooperate to the
fullest extent possible in connection with any Claim in respect of which
indemnification is sought under this Agreement.
9. Conduct of Seller Pending Closing.
9.1 Material Breach. The Seller shall not take any action which would
cause it to be in material breach of any representation, warranty, covenant or
agreement contained in this Agreement. The Seller shall use commercially
reasonable efforts to perform and satisfy all conditions to Closing
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to be performed or satisfied by it under this Agreement as soon as reasonably
possible, but in no event later than Closing. The Seller shall not entertain or
enter into any discussions or negotiations with, nor provide confidential
information to, any other Person, except as required by law, regarding the
Services, the Subject Assets or the Business relating to any merger,
consolidation, acquisition of securities or assets or similar capital
transaction.
9.2 Consents, Waivers, Approvals and Authorizations. Seller shall use
commercially reasonable efforts to obtain all necessary consents, waivers,
approvals and authorizations required to be obtained by Seller in connection
with the execution, delivery and performance by Seller of this Agreement. Buyer
will use its commercially reasonable efforts to assist Seller with respect
thereto, provided, however, that Seller may not assert any breach of this
undertaking by Buyer as a waiver or other basis for avoiding any of Seller's
obligations hereunder or any adjustment to Cash at Closing pursuant to Section
4.2.
9.3 Material Changes. Without the prior written consent of the Buyer,
between the date of this Agreement and the Closing Date, the Seller shall not,
except as required or expressly permitted pursuant to the terms hereof, make any
material change in the conduct of the Business or enter into any transaction
other than in the ordinary course of business consistent with past practice and
shall continue to conduct the Business in the ordinary course of business
consistent with past practice. Seller shall use commercially reasonable efforts
to preserve substantially intact the Subject Assets and the Business, to keep
available the services of its current key officers and employees, and to
preserve the goodwill of all business relationships affecting the Business.
Without limiting the generality of the foregoing:
Seller shall not (nor shall it allow any Subsidiary to),
without the prior written consent of Buyer:
(i) discount any receivable, or accelerate the collection
of any accounts receivable, demand or accept
pre-payment or accelerated payment for Services by
any Customer under any Customer Contract or
Operations Agreement contrary to prior custom or
usage with such Customer, or defer payment of any
accounts payable out of the ordinary course of
business consistent with past practice, or enter into
any understanding or agreement to do any of the
foregoing;
(ii) enter into any collective bargaining agreements;
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(iii) grant any salary increase to any Employee, except for
the implementation of Seller's annual salary
administration program determined as of February 3,
1999, and effective as of March 1, 1999, the average
raise under which did not exceed 3.0%, and salary
increases totaling $ 12,500 to ▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, effective as of March 1, 1999;
(iv) enter into any new, or amend or alter, any existing
Employee Benefit Plan or any employment or consulting
agreement (other than as may be required to comply with
applicable law);
(v) terminate any existing Employee Benefit Plan;
(vi) change its accounting methods, principles or practices
in any material respect;
(vii) pledge or use as a security interest any of the Subject
Assets as collateral for any indebtedness for borrowed
money; or
(viii) terminate, or agree to terminate, or fail to renew any
Customer Contract, Operations Agreement or Lease; and
the Seller shall (and shall cause each Subsidiary to):
(i) conduct the operations of the Business in the ordinary
course of business consistent with past practice;
(ii) keep and maintain the Subject Assets and all offices and
facilities of the Business in good condition, repair and
working order, reasonable wear and tear excepted;
(iii) use commercially reasonable efforts to maintain all
Customer Contracts, Leases, Operations Agreements,
Customers, prospect and supplier (of both goods and
services) relationships on terms and conditions not less
favorable to the Business or Buyer than those existing
prior to the execution hereof;
(iv) take no action which results in the modification of, or
the increase in benefits payable or provided under, any
Employee Benefit Plan, policy or practice maintained by
Seller or any Subsidiary;
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(v) use commercially reasonable efforts to retain the
service of its employees, agents and consultants
involved with the Business on terms and conditions not
less favorable to the Business or Buyer than those
existing prior to the execution hereof; and
(vi) conduct its activities in a manner consistent with this
Agreement.
Seller agrees to indemnify, defend, and hold Buyer harmless from and
against any claims, liabilities, losses, costs, or expenses, including
reasonable attorneys' and other professionals' fees and other expenses, that
Buyer may incur as a result of the failure of the parties to comply with the
bulk sales provisions of the Uniform Commercial Code or similar laws.
9.4 Access and Information. Seller shall deliver to Buyer promptly upon
receipt all management reports, financial reports, receivables aging reports,
new business reports and any other reports regularly prepared and delivered to
senior management of Seller with respect to the Business or the Services. Seller
will deliver to Buyer promptly upon receipt thereof copies of any written or
summaries of any oral reports made to senior management of Seller with respect
to material events occurring with respect to the Business or the Services. Upon
reasonable notice, Seller shall provide Buyer the opportunity to make or cause
to be made such investigation of the Subject Assets and their condition, the
Business and its financial and legal condition, and other access during normal
business hours throughout the period prior to the Closing Date to the books,
records, properties, personnel and to such other information as Buyer may
reasonably request; provided, however, that Seller shall not be required to
provide access to any such information if the providing of such access would be
reasonably likely to result in the loss or impairment of any privilege generally
recognized under law with respect to such information or would be precluded by
any law, ordinance, regulation, judgment, order, decree, license or permit of
any Governmental Authority.
9.5 HSR Act Notification. As promptly as practicable and no later than ten
(10) business days after the date hereof, the parties hereto shall prepare and
file all necessary notifications required to be filed pursuant to the HSR Act.
The filing fees in connection with such notifications shall be paid one-half by
Buyer and one-half by Seller. Each party shall otherwise bear its own expenses
in preparing and filing such form. The parties agree to diligently take and
fully cooperate in the taking of all reasonable and necessary steps and provide
any additional information reasonably requested in order to obtain promptly the
expiration or earlier termination of any required waiting period under the HSR
Act.
9.6 Publicity. Except as required by the laws of the United States,
neither Seller, nor Buyer shall furnish or disclose, either directly or
indirectly,
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any terms of this Agreement, not otherwise publicly announced, to any third
party without advance approval of the form and substance thereof by the other
party, which approval shall not be unreasonably withheld, conditioned or
delayed.
9.7 Cooperation and Standard of Performance. Seller and Buyer shall
cooperate with each other in reviewing facts and establishing implementing
procedures necessary to consummate the transactions contemplated by this
Agreement, including executing and delivering such documents as is necessary to
consummate the transactions contemplated herein. Seller and Buyer shall use
their commercially reasonable efforts to fulfill or obtain the fulfillment of
the conditions to the Closing and undertake and perform each obligation
hereunder in timely fashion and in good faith.
9.8 Notice. Seller shall promptly advise Buyer in writing of any adverse
changes in the Business's condition (financial and otherwise), business affairs,
operations, prospects or results from operations, provided, however, that no
such notice shall constitute a cure or waiver of any misrepresentation or breach
of any warranty made by Seller herein.
9.9 Powers of Attorney. Seller shall terminate at or prior to Closing all
powers of attorney granted by Seller which relate to the Subject Assets,
including signatory capacities on bank accounts, in each case other than with
respect to Employees who are continuing as employees of Buyer following the
Closing.
10. Conditions to Closing. Closing shall be subject to the following conditions.
10.1 Conditions to Buyer's Closing. The obligation of Buyer to consummate
and effect the Closing provided for herein shall be subject to the following
conditions, any of which may be waived in writing by Buyer:
10.1.1 Representations and Warranties; Covenants. The
representations and warranties of Seller set forth in this Agreement are true in
all material respects when made and as of the Closing Date as if made on and as
of such time, except as expressly contemplated or permitted by this Agreement
and except for representations and warranties relating to a time or times other
than the Closing Date, which representations and warranties shall have been true
in all material respects and will be true in all material respects at such time
or times. Seller shall have complied in all material respects with all of its
covenants, agreements and undertakings set forth herein.
10.1.2 Due Execution and Delivery. Seller duly executes and delivers
the Documents of Conveyance and any other document or instrument necessary or
advisable to vest in Buyer good and marketable title, free of lien,
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encumbrance or other impairment of title, to all of the Subject Assets, all in a
form and substance reasonably acceptable to Buyer and its counsel.
10.1.3 Opinion of Counsel. Counsel for Seller and the Subsidiaries
shall have delivered an opinion to the effect that (a) Seller is duly organized
and existing and in good standing in the Commonwealth of Kentucky, B.&L. is duly
organized and existing and in good standing in the Commonwealth of Massachusetts
and each of NTA and Associates is duly organized and existing and in good
standing in the State of Washington, (b) Seller and the Subsidiaries have full
power and authority to carry on the Business and to sell the property and assets
to be conveyed and assigned under this Agreement and to assign the liabilities
set forth in Section 3.1, (c) all corporate proceedings required to be taken by
Seller to authorize it to enter into this Agreement and any other instrument
evidencing such conveyance, assignment and assumption and to perform its
obligations hereunder have been duly and properly taken, and (d) this Agreement
and any related documents are binding obligations of Seller enforceable against
Seller in accordance with their respective terms, except as the same may be
limited by applicable bankruptcy, insolvency or similar laws affecting
creditors' rights generally or the availability of equitable remedies.
10.1.4 Bank Accounts and Freight Payment Accounts. Seller shall have
arranged to the satisfaction of Buyer for the transfer of all funds (other than
a reserve for outstanding items) from each of the Bank Accounts and the Freight
Payment Accounts.
10.1.5 Officer's Certificate. The Seller shall have delivered to
Buyer a certificate signed by the President or an Executive Vice President and
the Secretary of Seller, dated as of the Closing Date, certifying that (a) all
the representations and warranties of the Seller are true, accurate and correct
on and as of the Closing Date; and (b) the Seller has satisfied and fully
complied with all conditions necessary to make this Agreement effective.
10.1.6 Third Party Notices and Consents. All notices to, filings
with and consents, permits and approvals from all Governmental Authorities
required by law to consummate the transactions contemplated hereunder shall have
been timely delivered, filed or obtained, as applicable. All notices to, filings
with and consents, permits and approvals required from all parties to (y)
Operations Agreements and (z) Leases that are material to the conduct of the
Business, the continuation of such agreements, the conveyance of the Subject
Assets, the financial condition or results of operations of the Business by
Buyer or the prospects of the Business shall have been timely delivered, filed
or obtained, as applicable.
10.1.7 Litigation. No action, suit or proceeding shall have been
instituted and be continuing before any court or any Governmental Authority
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to restrain, modify or prevent the carrying out of the transactions contemplated
hereby, or to seek damages in connection with such transactions.
10.1.8 HSR Act. Any applicable waiting period under the HSR Act
shall have expired or been earlier terminated.
10.1.9 Insolvency. No insolvency proceedings shall have been
initiated against any Person who is a party to any material Customer Contract,
Lease or Operations Agreement or whose insolvency would otherwise cause a
Material Adverse Effect.
10.1.10 Transition Services Agreement. The parties shall have
executed and delivered to one another a Transition Services Agreement
substantially in the form of Exhibit A attached hereto.
10.2 Conditions to Seller's Closing. The obligations of Seller to
consummate and effect the Closing provided for herein shall be subject to the
following conditions:
10.2.1 Representations and Warranties; Covenants. The
representations and warranties of Buyer set forth in this Agreement are true in
all material respects when made and as of the Closing Date as if made on and as
of such time, except as expressly contemplated or permitted by the Agreement and
except for representations and warranties relating to a time or times other than
the Closing Date, which representations and warranties shall have been and will
be true in all material respects at such time or times. Buyer shall have
complied in all material respects with all of its covenants, agreements and
undertakings set forth herein.
10.2.2 Cash at Closing. The Buyer shall have tendered the Cash at
Closing as provided in Section 4 hereof.
10.2.3 Opinion of Counsel. Counsel for Buyer shall have delivered an
opinion to the effect that (a) Buyer is duly organized and existing and in good
standing in the District of Columbia (b) Buyer has full power and authority to
buy the Subject Assets to be conveyed and assigned under this Agreement and to
assume the liabilities set forth in Section 3.1, (c) all proceedings required to
be taken by Buyer to authorize it to enter into this Agreement and any other
instrument evidencing such conveyance, assignment and assumption and to perform
its obligations hereunder have been duly and properly taken, and (d) this
Agreement and any related documents are binding obligations of Buyer enforceable
against Buyer in accordance with their respective terms, except as the same may
be limited by applicable bankruptcy, insolvency or similar laws affecting
creditors' rights generally or the availability of equitable remedies.
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10.2.4 Transition Services Agreement. The parties shall have
executed and delivered to one another a Transition Services Agreement
substantially in the form of Exhibit A.
11. Post-Closing Covenants
11.1 Transition. As of the Closing Date, Buyer shall offer employment to
all Employees. The Buyer shall offer to each such Employee a package of
compensation and benefits at least equivalent to the package such Employee
currently enjoys. Buyer shall also offer severance benefits to such Employees
that are no less favorable than the Employees currently enjoy for six (6) months
following the Closing Date. Seller shall be available to consult with Buyer in
regard to the Subject Assets. Seller shall cause Seller's accounting staff to be
available as reasonably necessary to Buyer in regard to the books and records
and operations of the Business.
11.2 Sales/Transfer Taxes. Buyer and Seller agree to each pay one half of
all sales taxes, if any, due upon the transfer of the Subject Assets to Buyer.
When due, prorated as of the Effective Time, Buyer and Seller shall share the
payment of all foreign, state and local personal property taxes assessed on the
Subject Assets of Seller transferred to Buyer hereunder, except to the extent
the value of the Net Assets being acquired as of the Closing Balance Sheet
already has been reduced by an accrual therefor.
11.3 Transition Services Agreement. At Closing, the parties hereto shall
execute and delivery a transition services agreement (the "Transition Services
Agreement") in substantially the form of Exhibit A, providing for the rendition
by Seller of such transition services, including data entry and processing;
employee compensation and benefits; billing, subleasing space or personal
property; and the provision of building, computer, UPS and similar services with
respect to the Business as the Buyer may request. Such transition services shall
be provided at Seller's all-in cost, without profit. Any transition services
agreement shall allow the Buyer to terminate one or more services provided
thereunder at any time without affecting the provision of any other services by
Seller thereunder, provided, however, that in all events Seller's obligation to
provide any transition services pursuant to such transition services agreement
shall terminate not later than December 31, 1999.
12. Termination. This agreement may be terminated at any time prior to Closing:
(a) by the mutual written consent of the parties hereto; (b) by the Buyer, if
not in material default hereunder, if any of the conditions specified in Section
10.1 have not been satisfied or waived by Buyer at such time as such condition
can no longer be satisfied; (c) by the Seller, if not in material default
hereunder, if any of the conditions specified in Section 10.2 have not been
satisfied or waived by Seller at such time as such condition can no longer be
satisfied; or (d) by any party hereto not then in material default hereunder, if
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Closing shall not have occurred on or prior to June 30, 1999. In the event of
termination hereof, this Agreement shall become void and have no effect, except
that the provisions relating to confidentiality and dispute resolution shall
survive any such termination; provided, however, that no such termination shall
relieve any party from liability for the willful breach of this Agreement.
13. Miscellaneous.
13.1 Expenses.
13.1.1 Fees and Expenses. Each of the parties hereto shall pay all
of its own costs, fees and expenses relating to the acquisition, incurred prior
to Closing, including, but not limited to, costs of negotiations, legal and
accounting fees and other expenses.
13.1.2 Remedies. Notwithstanding anything contained in Section
13.1.1 to the contrary, if this Agreement is terminated by Buyer or Seller
pursuant to Section 12(b) or 12(c), respectively, because of a breach by the
other party of any representation, warranty, covenant, undertaking or
restriction contained in this Agreement, but only if the terminating party is
not itself in material breach of any representation, warranty, covenant,
undertaking or restriction contained in this Agreement, then, in the event of a
breach by the Buyer, the Buyer shall pay to the Seller an amount equal to ten
percent (10%) of the Cash at Closing as liquidated damages, which undertaking
shall be guaranteed by Cyrus ▇. ▇▇▇▇▇▇, a principal investor in Buyer, by means
of a written guaranty in form and substance reasonably satisfactory to Seller
and delivered to Seller simultaneously with the execution and delivery of this
Agreement. In the event of a breach by the Seller, the Buyer shall be entitled,
at its election, either to provable monetary damages or to specific performance
of the terms and conditions of this Agreement, the parties agreeing that the
Business is unique and therefore monetary damages would be insufficient to
compensate Buyer fully in the event of Seller's breach. The rights and remedies
herein provided are exclusive of any rights and remedies that any party may
otherwise have at law or in equity.
13.2 Notices. All notices, demands, requests, or other communications
which may be or are required to be given, served, or sent by either party to the
other party pursuant to this Agreement shall be in writing and shall be hand
delivered (including delivery by courier so long as a receipt or confirmation of
delivery is obtained), sent by a recognized overnight delivery service, mailed
by first-class, registered or certified mail, return receipt requested, postage
prepaid or transmitted by facsimile transmission (followed by delivery of the
original of such document), addressed as follows:
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If to Buyer: If to Seller:
Investment Services National Processing Company
International Co., LLC Attention: President
Attention: ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇ ▇▇▇▇▇▇, ▇.▇. ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile:(▇▇▇) ▇▇▇-▇▇▇▇ Facsimile: 502.326.7100
With a copy (which shall not With a copy (which shall not
constitute notice) to: constitute notice) to:
Attention: ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Attention: General Counsel
Title: Counsel National Processing Company
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ c/o National City Corporation
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇. ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Either party hereto may designate by notice, in the manner herein above
provided, a new address to which any notice, demand, request or communication
may thereafter be so given, served or sent. Each notice, demand, request or
communication which shall be mailed, delivered, or transmitted in the manner
described above shall be deemed sufficiently given, served, sent and received
for all purposes at such time as it is delivered to the addressee (with the
return receipt, the delivery receipt, the affidavit of messenger, or, in the
case of facsimile, electronic confirmation of reception with verbal
confirmation, being deemed conclusive evidence of such delivery) or at such time
as delivery is refused by the addressee upon presentation. Any party may change
its designated recipient for notices, address and/or facsimile number upon
written notice to the other parties of this Agreement.
13.3 Confidentiality. Seller and Buyer will hold and will cause their
consultants and advisers to hold in strict confidence, unless compelled to
disclose by judicial or administrative process or, in the opinion of their
counsel, by other requirements of law, all documents and information concerning
the other party furnished to them by the other party or their representatives in
connection with the Agreement or the transactions contemplated by this Agreement
(except to the extent that such information can be shown to have been (a) in the
public domain through no fault of the other party, (b) previously known by the
other party on a non-confidential basis from a source not known by such party to
be under any confidentiality restriction, (c) later lawfully acquired by the
other party from a source not known by such party to be under any
confidentiality restriction, or (d) independently developed by the
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other party without the use of information subject to this confidentiality
restriction) and neither party will release or disclose such information to any
other person, except its auditors, attorneys, financial advisers, bankers and
other consultants and advisers in connection with this Agreement. If the
transactions contemplated by this Agreement are not consummated, such confidence
will be maintained except to the extent that such information comes into the
public domain through no fault of either party and such information shall not be
used to the detriment of, or in relation to any investment in, the other party
and all such documents (including copies thereof) shall be returned to the other
party immediately on the request of either party. Both parties shall be deemed
to have satisfied their obligations to hold confidential information concerning
or supplied by the other party if it exercises the same care as it takes to
preserve confidentiality for their own similar information.
13.4 Survival. Each of the representations and warranties in this
Agreement shall be deemed represented and made at the Effective Time as if made
at such time and shall survive the Closing and the consummation of the
transactions contemplated hereby for a period of 18 months after Closing, except
that the representations and warranties made in Sections 6.8, 6.19, 6.20 and
6.26 (and any indemnity actions with respect thereto) shall survive for the
balance of any statute of limitations applicable thereto, Section 6.27 shall
survive for the term of the Escrow Agreement and any indemnity action that is
timely brought may be continued until finally concluded. All other terms and
provisions of this Agreement shall also survive the Closing and the consummation
of the transactions contemplated by this Agreement for a period of 18 months
after Closing with the exception of Sections 2.4, 2.8 and Article 13. Sections
2.4 and 2.8 shall survive for five years, and Article 13 shall survive
indefinitely.
13.5 Entire Agreement. This Agreement is the entire agreement between the
parties hereto with respect to the subject matter hereof and supersedes all
prior agreements and understandings.
13.6 Assignment. This Agreement shall not be assigned by either party
without the express written consent of the other party; provided, however, that
Buyer may assign its respective rights and obligations hereunder to an Affiliate
with the consent of Seller, such consent not to be unreasonably withheld,
conditioned or delayed, in which event Buyer shall be released from all
obligations hereunder. Any attempted assignment of this Agreement, other than by
Buyer as allowed above, shall be null and void.
13.7 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties and their respective heirs, successors and
permitted assigns when executed by all parties. Nothing in this Agreement,
express or implied, shall be construed to confer any rights or remedies upon any
party other than the parties hereto and their respective successors and
permitted assigns.
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13.8 Severability. The parties agree that construction of this Agreement
shall be in favor of its reasonable nature, legality and enforceability, and
that any construction causing unenforceability shall yield to a construction
permitting enforceability. It is agreed that the noncompetition,
nonsolicitation, nondisclosure and nonhiring covenants and provisions of this
Agreement are severable, and that if any single covenant or provision or
multiple covenants or provisions should be found unenforceable, the entire
Agreement and remaining covenants and provisions shall not fail but shall be
construed and enforceable without any severed covenant or provision in
accordance with the tenor of this Agreement. The parties specifically agree that
no covenant or provision of this Agreement shall be invalidated because of
overbreadth insofar as the parties acknowledge the scope of the covenants and
provisions contained herein to be reasonable and necessary for the protection of
Buyer and not unduly restrictive upon Seller. However, should a court or any
other trier of fact or law determine not to enforce any covenant or provision of
this Agreement as written due to overbreadth, then the parties agree that said
covenant or provision shall be enforced to the extent reasonable, with the court
or such trier to make any necessary revisions to said covenant or provision to
permit its enforceability, whether said revisions be in time, territory, or
scope of prohibited activities.
13.9 Waiver. Any agreement on the part of either party hereto to any
extension or waiver shall be valid only if in writing signed by the party
granting such waiver or extension and shall be a one-time waiver or extension
only, and any such waiver or extension or any other failure to insist on strict
compliance with any duty or obligation or any representation, warranty or other
covenant herein shall not operate as a waiver or extension of, or estoppel with
respect to, any continuing, subsequent or other failure to comply with or
fulfill any duty or obligation or any representation, warranty or other covenant
herein.
13.10 Alternative Dispute Resolution.
13.10.1 Negotiations. In the event of any other dispute, controversy
or claim between the parties hereto arising out of or relating to this
Agreement, including any dispute as to the construction, validity,
enforceability or breach of this Agreement or the arbitrability of any issue
arising hereunder (each a "dispute"), representatives of the parties shall meet
at a place mutually agreed upon by such parties as soon as reasonably possible
(but not later than ten (10) days after notice from any party hereto to the
other that the party giving notice has such a dispute) and shall enter into good
faith negotiations aimed at resolving the dispute. If they are unable to resolve
the dispute in a mutually satisfactory manner within ten (10) days from the date
of such meeting, they shall proceed as set forth below.
13.10.2 ADR. First, the parties shall endeavor to: (i) choose a
mutually acceptable alternative dispute resolution ("ADR")
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mechanism, including choosing one or more third party arbitrators; and (ii) set
forth the general framework for the ADR process. If the parties are unable to
agree to a mutually acceptable ADR mechanism within ten (10) days from the date
of the initial proposal from any party with respect thereto, the parties shall
enter into binding arbitration as set forth below.
13.10.3 Arbitration. All disputes among the parties arising out of
or relating to this Agreement that are not resolved by good faith negotiations
between the parties or by an ADR mechanism as set forth above shall be resolved
solely by binding arbitration pursuant to the United States Arbitration Act, 9
U.S.C. Section 1 et seq. Either party may commence arbitration proceedings at
any time after the fifth day after delivery of notice from one party to the
other of the inability of the parties to agree upon a mutually acceptable ADR
mechanism as set forth above.
13.10.4 Selection of Arbitrators. Any arbitration shall be conducted
in the Louisville, KY metropolitan area (or such other area mutually agreeable
to all parties) before a single arbitrator mutually selected by the parties
thereto or, in the event the parties shall fail to agree, by a three-person
panel acting pursuant to the Commercial Arbitration Rules and, if applicable at
such time, the Streamlined Arbitration Rules and Procedures then in effect of
the American Arbitration Association ("AAA"). Any three person arbitration panel
shall consist of one arbitrator selected by each disputing party within ten (10)
days of the initiation of binding arbitration, as provided herein, and one
arbitrator (who shall become the presiding arbitrator) selected by the first two
arbitrators within ten (10) days of the latter of the first two arbitrators'
acceptances to act as arbitrators. In the event that any disputing party shall
fail to appoint timely an arbitrator, or in the event that the first two
arbitrators fail to reach agreement within 10 days as to the presiding
arbitrator, any disputing party may request the AAA to appoint such arbitrator.
Before submitting a list of potential arbitrators to the parties for their
consideration, the AAA shall consult with each party to discuss the applicable
qualifications for the proposed arbitrators. Each arbitrator shall be a
currently licensed lawyer in the United States of America with at least twenty
(20) years experience in merger and acquisition practice in the United States.
13.10.5 Rules of Arbitration. Unless otherwise agreed by the
disputing parties prior to the commencement of the arbitration:
(i) The parties shall commence arbitration proceedings within
thirty (30) days of the selection of the presiding arbitrator.
(ii) The presentation of evidence and all discovery shall be
controlled by the arbitrator/panel. The arbitrators shall have the right
to employ experts to assist them in any arbitration proceeding
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(iii) The arbitrator(s) shall be and remain at all times
wholly independent and neutral.
(iv) The decision of the arbitrator/panel shall be reduced to
writing; set forth the arbitrator/panel's findings of fact and conclusions
of law and afford any such remedy as is within the scope of the Agreement
(including equitable relief).
(v) The award shall be made on an expedited basis.
(vi) The award shall include as part of the arbitrator/panel's
determination the responsibility among the parties for payment of the
arbitrator/panel's fees and expenses, and the prevailing party on any
issue in dispute shall be entitled to recover from the other party all
fees and expenses (including reasonable attorneys' and other
professionals' fees and disbursements) incurred in pursuing such issue if
the arbitrator/panel, in its discretion, determines that such an award is
warranted, but in no event shall such recovery exceed the amount paid on
its own behalf by the losing party with respect to such issue.
(vii) The award shall be final and binding upon the parties,
without any further right of appeal absent fraud or intentional
malfeasance by the arbitrator/panel, and may be entered for enforcement in
any court of competent jurisdiction or an application may be made to any
such court for a judicial acceptance of such award and an order of
enforcement, as applicable. Any award shall be promptly paid by the losing
party to the prevailing party, free of deduction or offset except as
provided for in the award, with interest thereon at the rate of 8% per
annum from the date of any breach or violation of this Agreement (as
determined as part of the award) to but not including the date of payment.
To the extent allowed by applicable law, any losing party resisting
payment of any such award shall also be responsible for reimbursing the
prevailing party for any fees and expenses incurred by such prevailing
party incident to the enforcement thereof.
13.10.6 Confidential Proceedings. Each party will participate in any
such arbitration in good faith and will (and will cause its representatives,
employees and Affiliates to, and will request each participant in any ADR
mechanism and each arbitrator to) hold the existence, content and result of any
dispute in confidence except to the extent that disclosure of any such
information is required by law.
13.10.7 No Default Award. The arbitration will proceed in the
absence of a disputing party who, after due notice, fails to answer or appear.
An award shall not be made solely upon the default of any such party, but the
arbitrator/panel shall require each party that is present to submit such
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evidence as the arbitrator/panel may determine is reasonably necessary to make
an award.
13.10.8 Arbitrator Replacement. If an arbitrator, whether sole or
part of a panel, should withdraw, die or otherwise become incapable of serving,
or should such arbitrator refuse to serve, a successor arbitrator shall be
selected and appointed in the same manner as the original arbitrator and,
subject to the rules applicable to the ADR process or arbitration applicable in
such circumstances, the dispute resolution process shall continue.
13.10.9 Exceptions to Arbitration. This Section 13.10 shall be a
complete defense to any suit, action or proceeding instituted before any court
or agency with respect to any matter resolvable hereunder, provided, however,
that, notwithstanding this provision, any party may seek interim judicial relief
in aid of ADR or arbitration, to prevent a violation of this Agreement pending
ADR or arbitration or to enforce any ADR or arbitration award.
13.11 Governing Law. This Agreement shall be governed by the laws of the
Commonwealth of Kentucky (without giving effect to any otherwise applicable
conflict of laws provisions); provided that any arbitration conducted pursuant
to this Agreement shall be governed, to the extent applicable, by the Federal
Arbitration Act (or any successor thereto).
13.12 Captions; Construction. The captions contained in this Agreement are
for reference purposes only and shall not affect the meaning or interpretation
of this Agreement. Unless the context of this Agreement clearly requires
otherwise: (a) references to the plural include the singular, the singular the
plural, and the part the whole, (b) references to one gender include all
genders, (c) "or" has the inclusive meaning frequently identified with the
phrase "and/or," (d) "including" has the inclusive meaning frequently identified
with the phrase "but not limited to" or "without limitation," (e) references to
"hereunder," "herein" or "hereof" relate to this Agreement as a whole, (f) the
terms "dollars" and "$" refer to United States dollars. Any reference herein to
any agreement, including this Agreement, shall be deemed to include such
agreement as it may be modified, varied, amended or supplemented from time to
time. Any reference herein to any Person or entity shall be deemed to include
the heirs, personal representatives, successors and permitted assigns of such
Person or entity. The parties have participated jointly in the negotiation and
drafting of this Agreement. In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the parties 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.
13.13 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be an original, but all of which together
shall constitute one and the same instrument. This Agreement may be executed by
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the parties in counterparts, each of which shall be deemed an original hereof,
and all of which shall constitute one and the same Agreement.
13.14 Schedules. The Schedules and Exhibits to the Agreement are a part of
this Agreement as if set forth in full herein.
IN WITNESS WHEREOF, Buyer and Seller have duly executed and delivered this
Agreement as of the date and year first above written.
SELLER:
NATIONAL PROCESSING
COMPANY
By: /s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------
Its: Executive Vice President
------------------------------
[For purposes of Section 2.8 only]
NATIONAL CITY CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
-----------------------------
Its: Senior Vice President and
Treasureer
------------------------------
BUYER:
INVESTMENT SERVICES INTERNATIONAL CO., LLC
By: /s/ Cyrus ▇. ▇▇▇▇▇▇
-------------------------------------
Name: Cyrus ▇. ▇▇▇▇▇▇
-----------------------------
Its: President
------------------------------
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