EXHIBIT 2.1
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INTEREST PURCHASE AGREEMENT
BY AND BETWEEN
EFUNDS CORPORATION
AND
ATM HOLDING, INC.
DATED AS OF AUGUST 31, 2001
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INTEREST PURCHASE AGREEMENT ("Agreement"), dated effective as of August
31, 2001 ("Effective Date"), by and between eFunds Corporation, a Delaware
corporation ("eFunds"), and ATM Holding, Inc., a Minnesota corporation ("ATM").
WHEREAS, capitalized terms used without definition in this Agreement shall
have the meanings assigned as of the Effective Date hereof to such terms in that
certain Limited Liability Company Agreement, effective as of March 1, 2000 (the
"LLC Agreement"), of Access Cash International L.L.C., a Delaware limited
liability company (the "Company"); and
WHEREAS, ATM has agreed to sell all of the Class A Interests in the
Company to eFunds on the terms and conditions hereinafter set forth and eFunds
has agreed to purchase such Interests on such terms and conditions.
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. The Interests. ATM is, or at the Closing will be, the owner of
6,490,654.07 Units of Class A Interests (the "ATM Interests"). The ATM Interests
constitute all of the outstanding Class A Interests in the Company.
2. Transfer of the Interests.
2.01 Sale of Interests. Subject to the terms and conditions of this
Agreement (including without limitation Article 10), at the closing (the
"Closing") of the transactions contemplated hereby, ATM agrees to sell the ATM
Interests to eFunds, and eFunds agrees to pay an aggregate of $43,858,468 (the
"Purchase Price") to ATM for such Interests. The Purchase Price shall be paid in
cash by eFunds. Following the Closing, eFunds shall own all of the outstanding
Interests in the Company.
2.02 Assignment of Interests. ATM hereby irrevocably assigns and
transfers to eFunds all of its right, title and interest in and to the ATM
Interests as of the Closing Date subject to the terms and conditions of this
Agreement. ATM and eFunds agree that the Capital Account of ATM as of the
Closing Date will be transferred to eFunds. From and after the Closing Date the
portion of the profits and losses of the Company and the portions of all other
items of income, gain, loss, deduction, or credit allocable to the ATM Interests
on or after such date shall be credited or charged, as the case may be, to
eFunds and not to ATM. eFunds shall be entitled to all distributions or payments
with respect to the ATM Interests that are made on or after the Closing Date,
regardless of the source of those distributions or payments or when they were
earned or received by the Company. Nothing herein will affect the allocation to
ATM pursuant to the LLC Agreement of profits, losses and other items of income,
gain, loss, deduction, or credit allocable to the ATM Interests and attributable
to any period before the Closing Date or any distribution or payments made to
ATM pursuant to the LLC Agreement in respect of the ATM Interests before the
Closing Date.
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3. Closing Date; Delivery; ▇▇▇▇▇▇▇ Payment; Transactional
Expenses; Allocation of Purchase Price.
3.01 Closing Date. The Closing will be held at the offices of the
Company, ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇. ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, at 10:00 a.m., on October 2,
2001, or at such other time and place as eFunds and ATM may agree (the date of
the Closing is hereinafter referred to as the "Closing Date").
3.02 Delivery. At the Closing, (i) the Company will make the
appropriate notations in the Register to evidence the transfer of the ATM
Interests acquired by eFunds hereunder, and (ii) eFunds will transfer the
consideration described in Schedule I to ATM.
3.03 ▇▇▇▇▇▇▇ Payment. Upon the execution of this Agreement by
eFunds and ATM, eFunds shall make an ▇▇▇▇▇▇▇ money payment to ATM in the sum of
seven hundred fifty thousand dollars ($750,000) [the "▇▇▇▇▇▇▇ Payment"].
(a) In the event that the Closing occurs by October 31,
2001, the ▇▇▇▇▇▇▇ Payment shall be credited in full toward the Purchase Price at
Closing as if such payment were made as part of the Purchase Price payment at
that time; and
(b) In the event that the Closing does not occur by October
31, 2001 due to: (i) the failure of any Closing condition set forth in Section
7.01 to be satisfied by such date (excluding Section 7.01(j) other than with
respect to ▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇; and excluding Section 7.01(n); but
subject to Section 7.01 (o)); or (ii) a failure of any Closing condition set
forth in Section 7.03(a) or 7.03(b) herein to be satisfied by such date; or
(iii) any material misrepresentation, breach of warranty or breach of covenant
on the part of ATM of any representation, warranty or covenant made by ATM in
this Agreement; or (iv) any act, event or omission occurring after the Effective
Date and giving rise to or which is reasonably likely to give rise to a Material
Adverse Effect; then eFunds shall have the right and option, in its sole
discretion, to either:
(A) demand the return of the ▇▇▇▇▇▇▇ Payment from ATM,
in which case the ▇▇▇▇▇▇▇ Payment shall be refunded to eFunds immediately
thereafter and this Agreement shall terminate; or
(B) allow ATM to retain one hundred and fifty thousand
dollars ($150,000) of the ▇▇▇▇▇▇▇ Payment and demand the return of the $600,000
balance of the ▇▇▇▇▇▇▇ Payment, in which case $600,000 of the ▇▇▇▇▇▇▇ Payment
shall be immediately refunded to eFunds and $150,000 of the ▇▇▇▇▇▇▇ Payment
shall be retained by ATM as a non-refundable payment by eFunds to ATM, in which
case this Agreement shall remain in effect through December 31, 2001 and such
$150,000 retained by ATM shall be credited toward the Purchase Price upon any
closing of the Transactions contemplated by this Agreement that occurs on or
before December 31, 2001; and
(c) In the event that the Closing does not occur by October
31, 2001 due to any other reason, the ▇▇▇▇▇▇▇ Payment shall be retained by ATM
as a non-
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refundable payment by eFunds to ATM, in which case this Agreement shall remain
in effect through December 31, 2001 and the ▇▇▇▇▇▇▇ Payment shall be credited
toward the Purchase Price upon any closing of the Transactions contemplated by
this Agreement that occurs on or before December 31, 2001.
3.04 Signing Fee. Provided that this Agreement is executed by the
parties by August 31, 2001, eFunds shall make a one-time, non-refundable payment
to ATM upon execution of this Agreement in the amount of one hundred and fifty
thousand dollars ($150,000), which payment shall be in addition to and not
applicable to the Purchase Price.
3.05 Transactional Expenses. Each party will pay the fees and
expenses of their respective attorneys and advisors in connection with the
Transactions. The Company will not pay any of such fees and expenses. Nothing
herein obligates ATM or eFunds to pay any fees or expenses incurred by Company
in the normal course of the Business and Company shall pay any such of its own
fees and expenses so incurred.
3.06 Allocation of Purchase Price. The parties agree that the
Transaction may be governed by Section 1060 of the Code. eFunds and ATM agree to
timely file a mutually agreed upon Form 8594 with their respective income tax
returns for the 2001 taxable year. Accordingly, the parties agree that the
Purchase Price, adjusted for liabilities assumed by eFunds as part of the
Transactions, will be allocated among the Company Assets as agreed upon by the
parties in an appropriate schedule within thirty (30) days of Closing.
4. Definitions; Rules of Construction.
4.01 Definitions. Unless the context clearly requires otherwise,
the terms defined in this Article 4 shall have the meanings herein specified for
all purposes of this Agreement. Certain other capitalized terms used herein are
defined elsewhere in this Agreement. Capitalized terms used without definition
in this Agreement, including but not limited to "Budget," "Business," "Capital
Account," "Class A Interests," "Code," "Company Assets" and "Interests" shall
have the meanings assigned as of the date hereof to such terms in the LLC
Agreement.
"ACI-Canada" is defined in Section 5.24.
"ATM Canada" is defined in Section 5.24.
"Acquisition Transaction" means any transaction: (i) similar to the
Transactions, which, if consummated, could result in a Change in Control of the
Company; (ii) involving the sale of any Interests or any rights, options,
warrants or other instruments or agreements exercisable or exchangeable for or
convertible into any Interests; (iii) involving the sale, exchange, transfer or
other disposition of all or a substantial part of the Company Assets; or (iv)
involving the acquisition of any equity interest in or all or substantially all
of the assets of any other business or enterprise.
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"Asset Contribution Agreement" means that certain Asset Contribution
Agreement, effective as of March 1, 2000, by and between ATM and the Company.
"ATM" means ATM Holding, Inc., a Minnesota corporation.
"ATM Interests" is defined in Section 1.
"Audited Financial Statements" is defined in Section 5.02(a).
"Balance Sheet Date" is defined in Section 5.02(a).
"Bank Accounts" is defined in Section 5.02(b).
"Bankruptcy Laws" is defined in Section 5.25.
"Buyers Losses" is defined in Section 10.1(a).
"Card" means a debit, credit, stored value or prepaid card that is
issued by a financial institution or other Person to a Cardholder and that
enables the Cardholder to perform certain Terminal Transactions at Terminals.
"Cardholder" means any Person to whom a Card has been issued by a
financial institution or other Person.
"Change in Control" means (i) the sale of all or substantially all
of the assets or membership Units of the Company, or (ii) the sale of more than
50% of the voting power of the Company in a single transaction or in a series of
related transactions, or (iii) a merger or consolidation of the Company
resulting in more than 50% of the voting power of the Company or of the
surviving entity being vested in Persons other than the Persons who own 50% or
more of the voting power of the Company on the date of this Agreement, or (iv) a
merger or consolidation of the Company resulting in the Persons constituting the
Board of Governors of the Company prior to the consummation of such transaction
not constituting a majority of the members serving on the Board of Governors (or
similar governing body) of such surviving resulting entity. The consummation of
the Transactions shall constitute a Change in Control.
"Closing" is defined in Section 2.01.
"Closing Date" is defined in Section 3.01.
"Commission" means the Securities and Exchange Commission.
"Confidential Information" means any non-public information about
the Company or the Proprietary Assets, including, but not limited to concepts;
business plans; trade secrets; forecasts; customer, prospect and employee names;
and distribution or similar arrangements. Without limiting the foregoing,
"Confidential Information" shall also include the Budget. Information shall not
be deemed "Confidential Information" insofar as and to the extent that it is (i)
or becomes part of the public
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domain without violation of this Agreement; (ii) lawfully obtained from a third
party without restriction on its further disclosure; or (iii) furnished to
others by the Company without restrictions as to the further use or disclosure
thereof.
"Confidentiality Period" means the period commencing on the
Effective Date hereof and ending on the second anniversary of the Closing Date;
except that, with respect to any information constituting a trade secret, such
period shall continue for so long as such information constitutes a trade
secret.
"Contract" means any agreement, contract, confidentiality agreement,
sales invoice, license, purchase or sales order, or other executory commitment
to which a Person is a party or by which such Person's assets are bound.
"Current Forecast" is defined in Section 5.05.
"Derivative Security" means any Contract entitling any Person to
acquire an Interest in the Company or any option, warrant or similar right
exercisable or convertible into or exchangeable for any Interests.
"Disclosure Schedule" is defined in the first paragraph of
Article 5.
"Effective Date" means August 24, 2001.
"Employee Benefit Plan" means every plan, fund, contract, program
and arrangement (whether written or not) which is maintained or contributed to
by the Company for the benefit of any present or former employees or with
respect to which the Company otherwise has current or potential liability,
including any arrangement intended to provide: (i) medical, surgical, health
care, hospitalization, dental, vision, workers' compensation, life insurance,
death, disability, legal services, severance, sickness accident or cafeteria
plan benefits (whether or not defined in Section 3(1) of ERISA), (ii) pension,
profit sharing, stock qualified and whether or not defined in Section 3(2) of
ERISA), (iii) bonus, incentive or equity-based forms of compensation or Change
in Control benefits or (iv) salary continuation, unemployment, supplemental
unemployment, termination pay, vacation or holiday benefits (whether or not
defined in Section 3(3) of ERISA).
"Environmental Laws" is defined in Section 5.22.
"ERISA" means the Employment Retirement Income Security Act of 1974,
as amended.
"ERISA Affiliate" means any (a) corporation that is a member of the
same "controlled group of corporations" (within the meaning of Section 414(b) of
the Code) as the Company or ATM, as appropriate, (b) partnership or other trade
or business under "common control" (within the meaning of Section 414(c) of the
Code) with the Company or ATM, as appropriate, and (c) member of the same
"affiliated service group" (within the meaning of Section 414(m) of the Code) as
the Company, ATM, any corporation
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described in clause (a) or any partnership or other trade or business described
in clause (b).
"Final Balance Sheet" is defined in Section 8.10 (a).
"Formation Date" means the date of the closing of the transactions
contemplated by the Asset Contribution Agreement.
"GAAP" means generally accepted accounting principles in the United
States.
"General Holdback" is defined in Section 10.02 (b).
"Governmental Body" means any foreign, federal, state, county, city
or local governmental authority or court, agency or administrative or regulatory
body.
"Governmental Regulation" means all laws, regulations, ordinances,
codes, rules, orders, writs, injunctions, awards, decrees or other requirements
issued, enacted or promulgated by any Governmental Body.
"Indebtedness" shall mean, with respect to any Person, (i)
indebtedness for borrowed money, (ii) indebtedness for the deferred purchase
price of property or services (other than inventory and services purchased in
the ordinary course of business), (iii) indebtedness evidenced by bonds,
debentures, notes or other similar instruments (other than performance, surety
or other similar bonds arising in the ordinary course of business), (iv)
obligations and liabilities secured by a Lien upon property owned by such
Person, whether or not owed by such Person and even though such Person has not
guaranteed the payment thereof, (vi) obligations and liabilities directly or
indirectly guaranteed by such Person and (vii) obligations or liabilities
created or arising under any conditional sales contract or title retention
agreement with respect to property used or acquired by such Person, even if the
rights and remedies of the lessor, seller or lender thereunder are limited to
repossession of such property.
"Indemnitee" is defined in Section 10.06 (a).
"Indemnifying Party" is defined in Section 10.06 (a).
"Interchange Fee" means the fee paid to the Terminal Transaction
acquirer by the Card issuer for a Terminal Transaction, as established by the
applicable Network from time to time.
"Latest Financial Statements" is defined in Section 8.10 (a).
"Latest Preliminary Financial Statements" is defined in
Section 5.02 (a).
"Lien" means any mortgage, deed of trust, pledge, lien, security
interest, charge or other encumbrance or security arrangement of any nature
whatsoever and any
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assignment, deposit arrangement or lease intended as, or having the effect of,
security for any outstanding Indebtedness or other or liability.
"Material Adverse Effect" means a material adverse effect on the (a)
Business, Company Assets, Proprietary Programs, or the results of operations,
condition (financial or otherwise) or prospects of the Company or (b) ability of
ATM to perform its obligations under or with respect to the Transaction
Documents or to consummate the Transactions.
"Major Merchant" means any Merchant that has fifty (50) or more
Terminal Sites.
"Merchant" means any retail or other merchant customer of Company,
or such merchant customer's successor in interest, which has a valid and binding
agreement with Company for certain Terminal operating services.
"Network" means any Terminal network in which Company and other
Persons participate as Terminal Transaction acquirers, including, without
limitation, "Cirrus," "CO-OP," "Novus," "Plus," "Mastercard," and "Visa," and
which transmits electronic messages to (a) effect Terminal Transactions, and (b)
provide movement of funds between Network participants in accordance with
applicable Network rules ("Settlement").
"Non-Competition, Release and Indemnity Agreement" means the
agreement in substantially the form attached hereto as Exhibit B to be entered
into by eFunds, ATM, the Principals and ▇▇▇▇▇▇ ▇. ▇▇▇▇ at the Closing.
"Operations Processes" means the operational processes and
procedures used by the Company in the conduct of the Business for the following:
Terminal deployment and management; Terminal tracking and activations; technical
support and call center; processing services (i.e. adjustments, surcharges);
cash management; project management; installations and maintenance; and vendor
management.
"Permit" is defined in Section 5.19.
"Permitted Liens" means Liens (i) for Taxes that are not yet due and
payable, or (ii) in respect of Taxes that are being contested in good faith by
the Company through appropriate proceedings diligently conducted.
"Person" means any natural person, corporation, limited liability
company, association, partnership (whether general or limited), joint venture,
proprietorship, Governmental Body, trust, estate, association, custodian,
nominee or any other individual or entity, whether acting in an individual,
fiduciary, representative or other capacity.
"Preliminary Balance Sheet" is defined in Section 5.02 (a).
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"Preliminary Financial Statements" is defined in Section 5.02 (a).
"Principals" means ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇., ▇▇▇▇▇▇▇ ▇. ▇▇▇▇ and ▇▇▇▇▇▇▇▇
▇. ▇▇▇▇.
"Processing Services" means those services which are necessary to
operate a Terminal in accordance with Network rules, including, without
limitation, Terminal Transaction processing, Settlement, Network access,
Cardholder dispute or error resolution, Terminal support, Terminal Transaction
reporting to Networks, electronic authorization, links to Networks, Terminal
Transaction switching, and/or other support services accessed when Cards perform
Terminal Transactions.
"Processing Services Contracts" is defined in Section 5.15 (a)
(xvi).
"Proprietary Assets" means all inventions, discoveries,
specifications, prototypes, engineering and manufacturing data, algorithms,
security procedures and approaches, trade secrets, formulae, processes,
technical data, art works, schematic drawings, engineering drawings, proprietary
rights, proprietary knowledge, proprietary processes, know-how, computer
software and programming know-how (including source code, object code, on-line
files, documentation, testing materials, reports, etc.), product plans, product
designs, information on product costs, product prices, product names, research
and development, software development tools, marks, trademarks, names, symbols,
service marks, trade names, logos, slogans, copyrights, patents and other
industrial and intellectual property rights and all applications therefore,
registrations thereof and licenses in respect thereof necessary to or used in
the design, use, distribution, manufacture, sale, or maintenance of the
Company's products and services or otherwise used or useful in the conduct of
the Business. Without limiting the generality of the foregoing, the Proprietary
Assets shall include all of the Company's right, title and interest in and to
the Proprietary Programs.
"Proprietary Information Agreements" is defined in Section 5.09 (c).
"Proprietary Programs" is defined in Section 5.13 (f).
"Purchase Price" is defined in Section 2.01.
"Reconciliation Holdback" is defined in Section 10.02 (c).
"Requisite Rights" is defined in Section 5.13 (b).
"Revised Current Forecast" is defined in Section 8.10 (b).
"Securities Act" means the Securities Act of 1933, as amended from
time to time, and the rules and regulations promulgated thereunder.
"Sellers Losses" is defined in Section 10.05.
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"Subsidiary" means any corporation, association, limited liability
company or other business entity more than a majority (by number of votes) of
the voting interests in which is owned or controlled, directly or indirectly, by
the Company or one or more of its Subsidiaries or both.
"Surcharge" means a fee charged to a Cardholder by the Terminal
owner or operator for the Cardholder's use of the Terminal in connection with
the Cardholder's receipt of a cash withdrawal or cash advance from the Terminal.
"Taxes" means all taxes, however denominated, charges, fees, levies,
or other assessments, including, without limitation, all income (including
without limitation federal and state income taxes), gross income, gross
receipts, sales, use, ad valorem, environmental, transfer, franchise, profits,
business license, withholding, payroll and employee withholding, employment,
workers' compensation, social security, Pension Benefit Guarantee Corporation
assessments, unemployment insurance, excise, estimated, severance, stamp,
occupation, real and personal property or other taxes, customs, duties, fees,
assessments, or charges of any kind whatsoever, including without limitation all
interest, penalties and other additions thereto, imposed by any Governmental
Body.
"Tax Returns" means any return, report, declaration, information
statement, estimate or other information filed, relating to or required to be
supplied to any taxing authority in connection with any Taxes, including
information returns or reports with respect to backup withholding or other
payments to third parties.
"Telecommunications Network" means all computer and communications
hardware and software comprising the voice and data communications
infrastructure of the Company and used in the conduct of the Business, including
but not limited to all internal (i.e. LAN) and external (i.e. WAN) connectivity.
"Terminal" means any Cardholder activated, non-staffed electronic
automatic Transaction machine ("ATM"), cash dispensing machine, or other
electronic machine that performs cash withdrawals, funds transfers, or other
Terminal Transactions initiated by a Cardholder through the use of a Card.
"Terminal Listing" is defined is Section 7.01 (f).
"Terminal Site" means the real estate location, or facilities at
such location(s), of a Merchant or Company and on which a Terminal owned or
operated by Company is or will be located.
"Terminal Transaction" means a cash withdrawal, funds transfer or
other transaction that is initiated at a Terminal through the use of a Card and
that is routed through a Network.
"Transaction Documents" means this Agreement and the Non-
Competition, Release and Indemnity Agreement.
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"Transactions" means the transactions contemplated by the
Transaction Documents.
"Updated Balance Sheet" is defined in Section 8.10 (a).
"Updated Preliminary Financial Statements" is defined in Section
8.10 (a).
"Vault Cash" means any money, currency or funds (i) located in a
Terminal, or (ii) in transit to or from a Terminal, and shall include (A) any
currency withdrawals from any bank account for the purpose of depositing the
same in a Terminal from the moment such currency is withdrawn by a cash provider
or its authorized agents (including couriers) until it is deposited in such
account, and (B) any currency removed or retrieved from a Terminal (other than
by a Cardholder) by a cash provider or its authorized agents; provided, however,
that Vault Cash shall not include any money, currency or funds withdrawn from a
Terminal by a Cardholder making a Terminal Transaction.
"Vault Cash Holdback" is defined in Section 10.02 (d).
4.02 Rules of Construction. When the phrase "to the knowledge of
ATM," "to the best of ATM's knowledge," or words of like construction are used
herein, items within the actual knowledge of any of the Principals or ▇▇▇▇▇▇ ▇.
▇▇▇▇ shall be imputed to ATM. All pronouns and any variations thereof shall be
deemed to refer to the masculine, feminine, neuter, singular or plural, as the
identity of the person or entity may require. Article and Section headings
contained in this Agreement are inserted for convenience of reference only,
shall not be deemed to be a part of this Agreement for any purpose, and shall
not in any way define or affect the meaning, construction or scope of any of the
provisions hereof.
5. Representations and Warranties by ATM. Except as specifically
disclosed in the Disclosure Schedule attached hereto as Exhibit A (the
"Disclosure Schedule"), ATM represents and warrants to eFunds that:
5.01 Organization and Standing. The Company is a limited liability
company duly organized, validly existing and in good standing under the laws of
the State of Delaware and has the requisite corporate power and authority to
carry on the Business as now conducted and presently proposed to be conducted.
The Company is and has been at all times duly qualified to do business as a
foreign corporation in all jurisdictions in which the failure to do so could
reasonably be expected to result in a Material Adverse Effect. ATM is a
corporation duly organized, validly existing and in good standing under the laws
of the state of Minnesota and has the requisite corporate power and authority to
carry on its business as presently conducted and presently proposed to be
conducted. ATM is and has been at all times duly qualified to do business as a
foreign corporation in all jurisdictions in which the failure to do so could
reasonably be expected to result in a Material Adverse Effect.
5.02 Financial Matters; Bank Accounts.
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(a) As of the Effective Date, the Company has delivered to
eFunds copies of (1) its preliminary unaudited consolidated balance sheet (the
"Preliminary Balance Sheet"), as of June 30, 2001, (the "Balance Sheet Date")
and the preliminary unaudited consolidated statements of earnings of the Company
for the six-month period ended on the Balance Sheet Date (such statement of
earnings and the Preliminary Balance Sheet being herein referred to as the
"Latest Preliminary Financial Statements"), and (2) its audited consolidated
balance sheet, as of December 31, 2000 and its audited consolidated statements
of earnings, members equity and cash flows for the period from March 1, 2000
through December 31, 2000 (the "Audited Financial Statements" and, collectively
with the Latest Preliminary Financial Statements, the "Preliminary Financial
Statements"). The Preliminary Financial Statements are based upon the
information contained in the books and records of the Company and fairly present
in all material respects the financial condition of the Company as of the dates
thereof and results of operations for the periods referred to therein. The
Audited Financial Statements have been prepared in accordance with GAAP.
(i) Except as set forth in the Preliminary Financial
Statements, the Company has no Indebtedness or other liabilities, whether
absolute, accrued, contingent or otherwise, other than (i) liabilities (other
than Indebtedness) incurred in the ordinary course of the Business since the
Balance Sheet Date and (ii) obligations under Contracts entered into in the
ordinary course of the Business and not required under GAAP to be reflected in
the Latest Financial Statements (none of which is an uninsured liability for
breach of Contract, breach of warranty, tort, infringement or similar claim or
results from any lawsuit or similar proceeding), which, in the case of both (i)
and (ii), individually or in the aggregate, are not material to the financial
condition of the Company or the Business.
(ii) The Company has continued to pay its accounts
payable in the ordinary course of the Business since the Balance Sheet Date.
(iii) All Interchange Fee income is properly recognized
and accounted for in the Preliminary Financial Statements in accordance with
GAAP.
(iv) All Company Assets are properly recorded and
reflected in the Audited Financial Statements. The Audited Financial Statements
accurately reflect all Terminals as either (A) inventory or fixed assets, and
(B) owned or leased assets.
(b) Section 5.02 (b) of the Disclosure Schedule accurately
sets forth, with respect to each account maintained by the Company or for its
benefit or for the benefit of its customers at any bank or other financial
institution ("Bank Accounts"):
(i) the name and location of the institution at which
such account is maintained;
(ii) the name in which such account is maintained and
the account number of such account;
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(iii) a description of such account and the purpose for
which such account is used;
(iv) the current balance in such account as of July 31,
2001;
(v) the rate of interests being earned on the funds in
such account; and
(vi) the names of all individuals authorized to draw on
or make withdrawals from such account.
(c) There are no safe deposit boxes or similar arrangements
maintained by or for the benefit of the Company.
(d) All funds received or processed by the Company that are
required to be remitted to its customers have been so remitted in a timely
fashion. The Company has not retained any funds received or processed by the
Company from or for its customers in excess of the fees the Company is
authorized to retain pursuant to written Contracts between the Company and the
applicable customers. The Bank Accounts contain sufficient funds to meet the
Company's remittance obligations to customers under the Company's existing
Contracts.
(e) All existing accounts receivable of the Company
(including those accounts receivable reflected on the Balance Sheet that have
not yet been collected and those accounts receivable that have arisen since the
Balance Sheet Date and have not yet been collected):
(i) represent valid obligations of customers of the
Company arising from bona fide transactions entered into in the ordinary course
of the Business; and
(ii) are current assets and, in the aggregate, will to
the knowledge of ATM, be collected in full (without any counterclaim or setoff),
net of reserves, on or before ninety (90) days from the date such receivables
are contractually due to Company.
(f) Section 5.02 (f) of the Disclosure Schedule accurately
identifies, and provides an accurate and complete breakdown of the revenues
received from each of the ten (10) largest customers of the Company (measured by
revenue received by the Company from the customer or under and pursuant to a
Contract with the customer) during the period from January 1, 2001 through June
30, 2001.
5.03 No Material Adverse Changes. Since the Balance Sheet Date, no
event has occurred that has resulted or could reasonably be expected to result
in a Material Adverse Effect.
5.04 Absence of Certain Developments. Since the Balance Sheet Date,
the Company has not:
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(a) taken any action which requires the approval of the
Board of Governors pursuant to Section 7.18 or Section 7.19 of the LLC
Agreement, unless Company has obtained the approval required by such Sections of
the LLC Agreement and/or this Agreement, as applicable;
(b) discharged or satisfied any Indebtedness or other
liability, other than current liabilities paid in the ordinary course of the
Business;
(c) waived any rights of material value;
(d) suffered any material theft, damage, destruction or loss
of or to any Company Assets, whether or not covered by insurance;
(e) made any material modification, waiver, change,
amendment, release, rescission, accord and satisfaction or termination of, or
with respect to, any material term, condition or provision of any Contract,
other than (i) in the usual and ordinary course of the Business and that could
not reasonably be expected to result in a Material Adverse Effect, or (ii) any
satisfaction by performance in accordance with the terms thereof in the usual
and ordinary course of the Business;
(f) suffered any labor disputes or disturbances including,
without limitation, the filing of any petition or charge of discrimination with
the Equal Employment Opportunity Commission (or any State equal employment
opportunity Governmental Body) or any petition or charge of unfair labor
practices with the National Labor Relations Board;
(g) suffered any material adverse change in its
relationships with its equipment lessors, vendors, processors, re-sellers,
distributors, dealers, independent sales agents, maintenance service providers,
customers or Vault Cash providers;
(h) entered into or modified any employment, severance or
similar agreements or arrangements with, or granted any bonuses, salary
increases, severance or termination pay to, any of its officers, employees or
consultants or taken any action with respect to the granting of any bonuses,
salary increases, severance or termination pay or with respect to any other
increase in employment related benefits;
(i) changed any of its methods of accounting or accounting
practices in any respect; or
(j) entered into any Contract to do or undertake to do any
of the foregoing (other than the Transaction Documents).
5.05 Current Forecast. As of the Effective Date, the Company has
delivered to eFunds a copy of the actual 4+8 forecast and the preliminary 6+6
forecast (collectively, the "Current Forecast") for the Company's fiscal year
ending December 31, 2001. The Current Forecast represents the Company's best
current estimate as of the
14
Effective Date of its financial and operating performance for January through
June, 2001 and for the balance of 2001.
5.06 Tax Matters.
(a) All Tax Returns required to be filed or filed by the
Company in connection with any Taxes have been accurately prepared and duly and
timely filed or extended. All Taxes shown to be due or payable on any Tax Return
filed by the Company, whether disputed or not, have been paid in full on a
timely basis and no other Taxes are payable by the Company with respect to items
or periods covered by such Tax Returns. The Company has withheld and paid over
all Taxes required to have been withheld and paid over, and complied with all
information reporting and backup withholding requirements, including maintenance
of required records with respect thereto, in connection with amounts paid or
owing to any employee, creditor, independent contractor or other third party.
The Company is not delinquent in the payment of any Tax which could result in
the imposition of a Lien on the Company Assets and the Company does not have a
Tax deficiency or claim outstanding, proposed or assessed against it.
(b) There are no Liens for Taxes upon the Company Assets,
except for Permitted Liens.
(c) The Company has not received any written notice of
deficiency or assessment from any Governmental Body with respect to any Taxes
which has not been paid or finally settled or is not being contested in good
faith. The Company's liability for unpaid Taxes for all periods ending on or
before the Balance Sheet Date does not, in the aggregate, exceed the amount of
the liability accruals for Taxes (excluding reserves for deferred Taxes)
reported in the Preliminary Balance Sheet.
(d) The Company has furnished eFunds with true and complete
copies of (i) the relevant portions of income Tax audit reports, statements of
deficiencies, closing or other agreements received by the Company or entered
into on behalf of, the Company relating to Taxes and (ii) all of the Company's
Tax Returns for all periods ending after the Formation Date. The Company does
not do taxable business in or derive taxable income from and has not done
taxable business in or derived taxable income from any state, local, territorial
or foreign Taxing jurisdiction other than those for which all related Tax
Returns of the Company have been furnished to eFunds.
(e) The Tax Returns of the Company have never been audited
by a Governmental Body nor is any such audit in process, pending or threatened
(either in writing or verbally, formally or informally). No deficiencies exist
or have been asserted (either in writing or informally) or are expected to be
asserted with respect to Taxes of the Company and the Company has not received
notice (either in writing or verbally, formally or informally) nor does it
expect to receive notice that it has not filed a Tax Return or paid Taxes
required to be filed or paid by it. The Company is neither a party to any action
or proceeding for assessment or collection of Taxes, nor has such an action or
proceeding been asserted or threatened (either in writing or verbally, formally
or
15
informally) against the Company or any of the Company Assets. No waiver or
extension of any statute of limitations is in effect with respect to Taxes or
Tax Returns of the Company.
(f) ATM is not delinquent in the payment of any Tax which
could result in the imposition of a Lien on the Company Assets or the ATM
Interests transferred hereunder and ATM does not have a Tax deficiency or claim
outstanding, proposed or assessed against it with respect to which the Company
could have any obligation or liability or that could adversely affect the ATM
Interests transferred hereunder. ATM has not received any written notice of
deficiency or assessment from any Governmental Body with respect to any Taxes
which has not been paid or finally settled or is not being contested in good
faith. ATM is neither a party to any action or proceeding for assessment of
collection of Taxes, nor has such an action or proceeding been asserted or
threatened (either in writing or verbally, formally or informally) against ATM,
the ATM Interests transferred hereunder, or any of the Company Assets. No waiver
or extension of any statute of limitations is in effect with respect to Taxes or
Tax Returns of ATM. ATM is not a "foreign person" within the meaning of Section
1445 of the Code.
(g) Any sales or other transfers of Terminals or other
Company Assets by Company to ACI-Canada (or, as applicable, to any distributor
or customer in Canada) have complied with all applicable "arms-length" transfer
pricing requirements of the Code. To the extent the Company or ACI Canada has
not complied with the "arms-length" transfer pricing requirements of the Code,
there is no actual or potential liability to Company or ACI Canada for any such
non-compliance.
5.07 Title to Properties and Liens.
(a) The Company has good and marketable title to all of the
Company Assets, subject to no Liens other than Permitted Liens. The Company does
not own any real property.
(i) Except for Terminals listed in the Terminal
Listing, Section 5.07 (a)(i) of the Disclosure Schedule accurately identifies
all equipment, automobiles, furniture, fixtures, improvements and other tangible
assets either (A) owned by the Company with an original cost in excess of
$1,000, or (B) leased by the Company, and sets forth such information as the
Company has about the original cost and book value of each of said assets.
(ii) Company has neither (A) placed any Terminal owned
by Company at a Terminal Site for which a Terminal is leased by a Merchant from
a Person other than Company, nor (B) sold or otherwise conveyed any Terminal
leased by Company to any Merchant or other Person.
(b) The Company Assets, including all personal property
owned or leased by the Company, are in good operating condition and repair
(except for (i) ordinary wear and tear, and (ii) those Terminals identified in
the Terminal Listing as
16
being comprised of component parts and used or to be used for Terminal repair
and maintenance in the ordinary course of the Business, which are estimated to
be no more than thirty (30) Terminals as of the Effective Date), are sufficient
for the operation of the Business as presently conducted and proposed to be
conducted and are maintained in conformity in all material respects with all
applicable Governmental Regulations relating thereto, except where such failure
to conform could not reasonably be expected to have a Material Adverse Effect.
The Company enjoys peaceful and undisturbed possession of all properties leased
by it and such properties are not subject to any encroachments, building or use
restrictions, exceptions, reservations or limitations which in any material
respect interfere with or impair the present and continued use thereof in the
usual and normal conduct of the Business.
5.08 Litigation and Claims.
(a) There are no legal actions, suits, arbitrations or other
legal, administrative or governmental proceedings involving the Company or the
Company Assets pending, or to the knowledge of ATM, threatened by or before any
Governmental Body and ATM is not aware of any facts which might result in or
form the basis for any such action, suit, arbitration or other proceeding. The
Company is not subject nor in default with respect to any judgment, injunction,
award, order or decree of any Governmental Body. The Company has not been
subject to any civil or criminal litigation or bankruptcy proceedings since the
Formation Date. No Principal has been subject to any bankruptcy proceeding
during the three year period ending on the Effective Date.
(b) There are no legal actions, suits, arbitrations or other
legal, administrative, bankruptcy, or governmental proceedings that (i) would
reasonably be expected to have a Material Adverse Affect on the Business, and
(ii) involve the Principals, ▇▇▇▇▇▇ ▇. ▇▇▇▇, ATM or the ATM Interests pending
or, to the knowledge of ATM, threatened by or before any Governmental Body and
ATM is not aware of any facts which might result in or form the basis for any
such action, suit, arbitration or other proceeding.
5.09 Employees.
(a) The Company is not delinquent in payments to any of its
employees for any wages, salaries, commissions, bonuses or other direct
compensation for any services performed by them or amounts required to be
reimbursed to such employees. The Company is in compliance in all material
respects with all applicable Governmental Regulations respecting labor,
immigration, employment and employment practices, equal opportunity employment,
terms and conditions of employment and wages and hours. To the knowledge of ATM,
no salaried employees have any present plans to terminate their employment with
the Company.
(b) The Company is not a party to any Contract of employment
or other similar agreement or arrangement with any of its officers or employees.
The Company is not a party to any employment or consulting agreement or any
other
17
Employee Benefit Plan providing for severance payments or which provides for
severance or other benefits following a Change in Control. No employee of or
consultant to the Company is a party to any secrecy or non-competition agreement
or restriction of any kind that would impede in any way the ability of such
employee or consultant to carry out fully all of their activities in furtherance
of the Business. The employment of each employee of the Company is terminable at
will without the incurrance of any liability, other than salaries, wages and
accrued vacation pay earned by the employee prior to the date of termination.
The Latest Preliminary Financial Statements accurately reflect the Company's
total liability for accrued vacation, personal time off, or other pay for time
off. The Company has never been a party to any union contract or collective
bargaining agreement. There is no former employee (or spouse or dependant of a
former employee) of the Company who is receiving or is scheduled to receive any
benefits (whether from the Company or otherwise) relating to such employee's
former employment with the Company.
(c) No current or former employee, consultant or contractor
of or to the Company has any claim with respect to the Proprietary Assets
associated with the Business. Substantially all of the current or former
employees, consultants and contractors of or to the Company are or were subject
to valid and binding confidentiality agreements prohibiting them from disclosing
any of such Proprietary Assets to any third Persons and have signed appropriate
agreements ("Proprietary Information Agreements") validly transferring to the
Company all right, title and interest in and to any Proprietary Assets relating
to any inventions, discoveries or creations conceived or first reduced to
practice by them in the course of their duties to the Company.
(d) Section 5.09 (d) of the Disclosure Schedule accurately
sets forth (i) the name of each employee of the Company and their original hire
date, (ii) each employee's position and (iii) the aggregate dollar amount of
compensation received by such employee in 2000 and the employee's current base
salary and budgeted 2001 bonus.
(e) Section 5.09 (e) of the Disclosure Schedule accurately
sets forth all of the Company's Employee Benefit Plans by name and brief
description identifying: (i) the type of Plan, including a specific reference to
any Plan which provides benefits (or increased benefits or vesting) as a result
of a Change in Control of the Company and (ii) the participating employees in
the Plan.
(f) The Company is not engaged, and has never been engaged,
in any unfair labor practice. There has never been any union organizing activity
associated with the Company.
(g) No current or former employee, consultant or contractor
of or to ATM has any claim with respect to the Proprietary Assets associated
with the Business. All right, title and interest in and to any Proprietary
Assets relating to any inventions, discoveries or creations conceived or first
reduced to practice by any current or former employees, consultants and
contractors of ATM has been validly transferred to Company.
18
5.10 Employee Benefit Plans.
(a) The Company does not presently nor has it ever
maintained or contributed to any of the following types of Employee Benefit
Plans: (i) a nonqualified deferred compensation plan, (ii) a qualified defined
contribution plan (as defined in Section 3(34) of ERISA or Section 414(i) of the
Code); (iii) a qualified defined benefit plan (as defined in Section 3(35) of
ERISA or Section 414(j) of the Code); (iv) an employee welfare benefit plan (as
defined in Section 3(1) of ERISA) or (v) a multi-employer plan (as defined in
Section 3(37) of ERISA). The Company does not have any actual or potential
liability under Section 4210 of ERISA for any complete or partial withdrawal
from any multi-employer plan.
(b) To the extent required (either as a matter of law or to
obtain the intended Tax treatment benefits), all of the Company's Employee
Benefit Plans comply in all material respects with the requirements of ERISA and
the Code. With respect to the Company's Employee Benefit Plans, (i) all required
contributions that are due have been made and a proper accrual has been made for
all contributions due in the current fiscal year, (ii) the Company has no
liability with respect to any Employee Benefit Plan (either directly or as a
result of any indemnification obligation) for (and the Transactions will not
cause any liability for) any excise taxes, penalties, damages or equitable
relief as a result of any prohibited transaction, breach of fiduciary duty or
other violation of ERISA, the Code or any other applicable Governmental
Regulation. The Company does not have any actual or potential liability for
death or medical benefits after separation from employment (including any health
care continuation benefits described in Section 4980B of the Code). ATM, without
any independent investigation, is not aware of any liability to eFunds that
would result from any amendment, termination, or other discontinuance of any of
Company's Employee Benefit Plans.
(c) Except for the Excluded Liabilities (as defined in the
Asset Contribution Agreement), there is not presently nor was there ever any
Employee Benefit Plan of ATM that was not transferred to and assumed by Company
pursuant to the Asset Contribution Agreement. For purposes of this paragraph
(c), "Employee Benefit Plan" means an Employee Benefit Plan as defined in
Article 4, except that the word "ATM" shall be substituted for the phrase "the
Company" each time it appears in that definition.
(d) The Company has no employees or other Persons currently
receiving or otherwise entitled to receive any short-term disability or
long-term disability payments or other benefits from the Company.
5.11 Compliance with Other Instruments and Laws. The Business has
been and is being conducted in compliance with all applicable Governmental
Regulations, except for such violations as have not resulted or could not
reasonably be expected to result in a Material Adverse Effect. Neither the
execution or delivery of nor compliance with the Transaction Documents, nor the
consummation of the Transactions, will, with or without the giving of notice or
passage of time, result in any breach of, or constitute a default under, any
Contract to which the Company is a party or by which any of the Company Assets
are bound or affected, except for such breach or default as could
19
not reasonably be expected to result in a Material Adverse Effect. Neither the
execution or delivery of nor compliance with the Transaction Documents, nor the
consummation of the Transactions, will, with or without the giving of notice or
passage of time, result in the imposition of any Lien upon any Company Asset
pursuant to any Contract to which the Company is a party or by which any of the
Company Assets are bound or affected. The Company is not in violation of any
Contract to which it is a party or by which it or the Company Assets may be
bound, except for such violations as have not resulted or could not reasonably
be expected to result in a Material Adverse Effect.
5.12 Securities Laws. Except for the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act, and
based in part upon the representations and warranties of eFunds contained in
Article 6 hereof, no consent, authorization, approval, permit or order of, or
filing with any Governmental Body is required under current Governmental
Regulations in connection with (i) the execution and delivery of the Transaction
Documents by ATM or (ii) transfer of the ATM Interests pursuant to the
Transactions. Under the circumstances contemplated by the Transaction Documents,
the transfer of the ATM Interests at the Closing will not under current
Governmental Regulations require compliance with the prospectus delivery or
registration requirements of the Securities Act or any applicable state
securities laws.
5.13 Intellectual Property Rights.
(a) No Person other than Company has any right, title or
interest in or to any Proprietary Assets owned by the Company (including without
limitation the Proprietary Programs), other than pursuant to license agreements
entered into by the Company in the ordinary course of the Business. Section 5.13
(a) of the Disclosure Schedule sets forth each state and federal trademark,
trade name, service ▇▇▇▇ (registered or unregistered), registered copyright, and
patent, and all applications therefore, that are owned by the Company.
(b) The Company owns or has the right to use all Proprietary
Assets necessary for the conduct of the Business as presently conducted or as
presently proposed to be conducted (collectively, the "Requisite Rights"). The
execution and delivery of the Transaction Documents and the consummation of the
Transactions will not cause the forfeiture of any of the Requisite Rights or
give rise to a right of termination of any license to such rights in favor of
any other Person.
(c) The Company does not and can not be required to pay any
royalties, honoraria or other fees (other than license fees paid by Company to
third party software providers for commercially available software used in the
ordinary course of the Business) to any other Person by reason of the ownership
or use of the Requisite Rights in the conduct of the Business as presently
conducted and as presently proposed to be conducted. No Person pays any
royalties, honoraria or other fees (except for fees paid to Company for services
received from Company in the ordinary course of the Business) to the Company for
the right to use any Proprietary Assets owned or controlled by the Company. To
the knowledge of ATM, no other Person and no Proprietary Asset owned or used by
any other Person infringes or conflicts with any of the Proprietary Assets of
the Company.
20
(d) No product, service or process manufactured, marketed,
sold, used or presently proposed to be manufactured, marketed, sold or used by
the Company violates or will violate any existing Contract between the Company
and any other Person or, to the best of ATM's knowledge infringes upon or will
infringe upon any Proprietary Asset of any other Person.
(e) The Company has not received any notice that any of the
Requisite Rights or the operation or presently proposed operation of the
Business conflicts or will conflict with the asserted Proprietary Assets of any
other Person, nor to the knowledge of ATM does there exist any basis for any
such conflict.
(f) The Company has taken commercially reasonable measures
and precautions to protect the confidentiality and value of the Proprietary
Assets owned or used in the conduct of the Business and to safeguard and
maintain the secrecy and confidentiality of, or its proprietary rights in, any
unpatented or uncopyrighted know-how, technology, proprietary processes or
programs (including without limitation the software programs [the "Proprietary
Programs"] known as Convert, CashSystem(TM), ACTRISS(TM), ALERT and Electronic
Journal Reader), formulae and other confidential information utilized or
presently proposed to be used by the Company in the conduct of the Business.
5.14 Capitalization.
Immediately prior to the Closing, the authorized capital of
the Company will consist of 9,434,060.07 Units of which 6,490,654.07 Units shall
represent Class A Interests, 2,000,000 Units shall represent Class B Interests
and 943,406 Units shall represent Class C Interests. Other than the Transaction
Documents, there are no outstanding Derivative Securities. All of the
outstanding Interests are duly and validly authorized, issued and outstanding,
fully paid, non-assessable and free and clear of all Liens. There are no
conditions or circumstances that would directly or indirectly give rise to or
provide a basis for the assertion of a claim by any Person to the effect that
such Person is entitled to acquire or receive any Interests or Derivative
Securities in or relating to the Company.
5.15 Schedule of Contracts; No Conflicts.
(a) Section 5.15 (a) of the Disclosure Schedule contains a
true and complete list of each of the following Contracts:
(i) (A) all Contracts providing for a commitment of
employment or consultation services to the Company for a specified or
unspecified term or otherwise relating to employment or the termination of
employment, and, except as otherwise listed in Section 5.09 (d) of the
Disclosure Schedule, the name, position and rate of compensation of each Person
party to such a Contract and the expiration date of each such Contract; and (B)
any written or unwritten representations, commitments, promises, communications
or courses of conduct regarding employment or consultation services, which, to
the best of ATM's knowledge, involve in the case of either clause (A)
21
or clause (B) an obligation of the Company to make payments in any year
exceeding Ten Thousand Dollars ($10,000);
(ii) all Contracts with any Person containing any
provision or covenant prohibiting or limiting the ability of the Company to
engage in any business activity or compete with any Person or prohibiting or
limiting the ability of any Person to compete with the Company, other than the
Transaction Documents;
(iii) all partnership, joint venture or other similar
contracts with any Person, except for Contracts relating only to cooperative
advertising arrangements;
(iv) all Contracts relating to any Indebtedness of the
Company;
(v) all Contracts with distributors, dealers,
independent sales agents, resellers, manufacturer's representatives, sales
agencies or franchisees ("Dealers");
(vi) all Contracts relating to the future disposition
or acquisition of any material amounts of assets and properties, other than
dispositions or acquisitions in the ordinary course of the Business;
(vii) all Contracts between or among the Company and any
Interestholder in the Company or any Insider;
(viii) all of the automobile, equipment or other
personal leases to which the Company is a party and all of the Company's real
property leases;
(ix) all guaranties by the Company of the performance,
liabilities or obligations of any other Person;
(x) all material Contracts (other than unexecuted
"shrink wrap" or "package licenses") relating to grants by the Company of any
licenses to the Proprietary Assets to third Persons;
(xi) all Contracts (other than the LLC Agreement and
the Transaction Documents) that (A) limit or contain restrictions on the ability
of the Company to declare or pay dividends on, to make any other distribution in
respect of or to issue or purchase, redeem or otherwise acquire any Interests,
to incur Indebtedness, to incur or suffer to exist any Lien, to purchase or sell
any of the Company Assets or to change the lines of business in which it
participates or (B) require the Company to maintain specified financial ratios
or levels of net worth or other indicia of financial condition that are not
described in clause (iv) above;
(xii) to the best of ATM's knowledge, any Contract the
principal purpose of which requires the Company to maintain the confidentiality
of any information given to it by any other Person;
22
(xiii) any Contract, letter of intent, memorandum of
understanding or similar instrument related to any transaction which, if
consummated, would result in the Company purchasing any equity interest in or a
substantial portion of the assets of any Person or any such Contract, letter,
memorandum or similar instrument (other than the Transaction Documents) related
to any transaction which, if consummated, would result in a Change in Control of
the Company or the sale of any Interests or a substantial part of the Company
Assets;
(xiv) any Contract to which the Company is a party or by
which the Company Assets are bound which was not entered into in the ordinary
course of the Business;
(xv) All Contracts with any Person and pursuant to
which Company purchases or receives Processing Services from such Person;
(xvi) All versions and variations of standard or form
Contracts used by Company since 1994 (including periods of use by Company) and
pursuant to which Company provides Processing Services to any Person
("Processing Services Contracts");
(xvii) A listing of all Processing Services Contracts
currently in effect between Company and any Person and for which there are
twenty (20) or more Terminal Sites; and
(xviii) all other Contracts (other than insurance
policies) that (A) involve the payment or potential payment, pursuant to the
terms of any such Contract, by or to the Company of more than Ten Thousand
Dollars ($10,000) and (B) cannot be terminated by the Company upon no more than
sixty (60) days notice without resulting in any material cost or penalty to the
Company.
(b) Company has in its possession and maintains in the
normal course of the Business accurate copies of each Contract. Each Contract is
in full force and effect and constitutes a legal, valid and binding agreement,
enforceable in accordance with its terms, except as such enforceability may be
limited by any Bankruptcy Laws or general equitable principles. Company is and
has been in compliance with all obligations of Company under its Contracts and
neither the Company nor, to the knowledge of ATM, any other party to any such
Contract is, or has received notice that it is, in violation or breach of or
default under any such Contract (or with notice or lapse of time or both, would
be in violation or breach of or default under any such Contract), except for
such violations, breaches and defaults as, individually or in the aggregate,
could not reasonably be expected to have a Material Adverse Effect. To the
knowledge of ATM, the Company has not waived any of its rights under any of its
Contracts.
(c) Prior to the Effective Date, eFunds has been provided
access to a true and correct copy of each written Contract listed in Section
5.15 (a) of the Disclosure Schedule and has been supplied a written description
of each oral Contract of which ATM is aware, together with all amendments,
waivers or other changes thereto.
23
(d) Neither the execution and delivery of the Transaction
Documents, nor the consummation or performance of any of the Transactions will
directly or indirectly (with or without notice or lapse of time):
(i) contravene, conflict with or result in a violation
of any resolution adopted by the Company's Board of Governors; or
(ii) contravene, conflict with or result in a violation
of, or give any Governmental Body or other person the right to challenge any of
the Transactions or to exercise any remedy or obtain any relief under, any
Governmental Regulation to which the Company or any of the Company Assets is
subject;
(iii) cause the Company to become subject to, or to
become liable for the payment of, any Tax;
(iv) cause any of the Company Assets to be reassessed
or revalued by any Taxing authority or other Governmental Body;
(v) contravene, conflict with or result in a violation
of any of the terms or requirements of, or give any Governmental Body the right
to revoke, withdraw, suspend, cancel, terminate or modify, any Permit issued,
granted or given to the Company or any of its employees by or under the
authority of any Governmental Body;
(vi) contravene, conflict with or result in a violation
or breach of, or result in a default under, any provision of any Contract, the
violation or breach of which or default under could reasonably be expected to
result in a Material Adverse Effect;
(vii) give any Person the right to (a) declare a default
or exercise any remedy under any Contract, (b) accelerate the maturity or
performance of any Contract or (c) cancel, terminate or modify any Contract or
the respective rights and obligations of the parties thereunder;
(viii) give any Person the right to any payment of
severance payments or other contingent obligations of any nature whatsoever; or
(ix) result in the imposition or creation of any Lien
upon or with respect to any Company Asset.
5.16 Insurance Coverage. From and after the Closing of the
transactions contemplated by the Asset Contribution Agreement, the Company has
maintained in full force policies of insurance issued by insurers of recognized
responsibility insuring the Company, the Company Assets and the Business against
such losses and risks, and in such amounts, as is required by Section 8.9 of the
LLC Agreement. Section 5.16 of the Disclosure Schedule accurately sets forth
each insurance
24
policy maintained by the Company, together with the name of the insurance
company, a contract person and phone number, a brief description of the policy,
and any claims currently pending or currently tendered for coverage under each
such policy.
5.17 No Brokers or Finders. No Person has or will have, as a result
of any act or omission of ATM or the Company, any right, interest or valid claim
against the Company, ATM or eFunds for any commission, fee or other compensation
as a finder or a broker in connection with the Transactions. The Company is not
subject to any Contract entitling any Person to participate in any future
offering or sale of its equity securities or Indebtedness.
5.18 Conflicts of Interest. No Insider has any direct or indirect
interest in (a) any Person which does business with the Company, (b) any Company
Asset or (c) any Contract other than any employment agreements described in
Section 5.15 (a) to the Disclosure Schedule.
5.19 Licenses and Permits. The Company possesses from the
appropriate Governmental Body all licenses, permits, authorizations, approvals
and rights (collectively, "Permits") that (a) are believed by it to be necessary
for it to engage in the Business as presently conducted and (b) if not possessed
by it, would reasonably be likely to result in a Material Adverse Effect. ATM
has no knowledge that would lead it to believe that the Company will not be able
to obtain all Permits that may be required for any business the Company
presently proposes to conduct. ATM has no reason to believe that any of the
Permits will be revoked, lapse or otherwise be subject to modification upon or
following the consummation of the Transactions. A true and correct list of the
Permits is contained in Section 5.19 of the Disclosure Schedule.
5.20 Warranties. There are no claims outstanding, pending or, to
the best knowledge of ATM, threatened for breach of any warranty, maintenance or
support obligations relating to any services or products sold or provided by the
Company prior to the Effective Date . There are no reserves for warranty claims
on the Balance Sheet and ATM is not aware of any warranty claims made or to be
made against any products sold or leased prior to the Balance Sheet Date.
5.21 Customers and Suppliers.
(a) No current client, Merchant, vendor, equipment lessor,
processor, Vault Cash provider or other supplier of, for or to the Company has
indicated to the Company that it will stop or decrease the amount of business
done with the Company as a result of or following the consummation of the
Transactions.
(b) Section 5.21 (b) of the Disclosure Schedule contains the
following information for each Processing Services Contract: Merchant name;
Terminal locations; Terminal IDs; and name of vendor processor providing
Processing Services.
(c) The Company has not encountered any delay in the planned
expansion of its Terminal base due to production constraints at its Terminal
suppliers and the Company does not presently anticipate any such delay as the
Business is presently
25
proposed to be conducted following the Closing. The Company has not experienced
any material disruptions in service from its processing vendors.
(d) The Company has not experienced any security breaches
in, or attempts to breach the security of, its computing systems. The Company
has not experienced any losses or incurred any liabilities due to theft,
counterfeit or other forms of fraud: (i) related to its computing systems, (ii)
related to any Terminals owned or managed by it where such loss or liability has
not been reimbursed by insurance coverage(s), or (iii) in excess of $100 arising
from courier services engaged by it to collect and distribute Vault Cash that
have not been reimbursed by the courier. The Company has in place such fraud and
virus prevention and computer security programs, procedures and devices as are
considered commercially reasonable in the industry in which it operates.
(e) The Company has not experienced the material loss of any
data or the generation of erroneous data in the operation of its central
computer system. No customer of the Company, no financial institution or
financial institution customer, nor any Vault Cash provider has brought to the
attention of the Company any instances whereby the Company has improperly
debited any account or failed to correctly credit any account in connection with
a transaction initiated through a Terminal owned or serviced by Company other
than routine clerical errors in the ordinary course of the Business and which
have been corrected by Company. The Company has previously provided eFunds with
complete, accurate and correct copies of all "error", "bug", troubleshooting or
incidence logs to the extent maintained by it and with copies of all
correspondence with any Person related to any failure or error or asserted
failure or error with respect to the Company's systems.
5.22 Environmental Matters. The Company has at all times been in
compliance in all material respects with any applicable Governmental Regulations
relating to environmental matters ("Environmental Laws"), including, but not
limited to, matters related to air pollution, water pollution or noise control
or the on-site or off-site handling, shipping, discharge, disposal or recovery
of any hazardous substance (as defined in the Comprehensive Environmental
Response, Compensation and Liability Act, as amended) or hazardous waste (as
defined in the Resource Conservation and Recovery Act, as amended) and no notice
of violation of any Environmental Laws has been received by the Company, nor, to
the knowledge of ATM, is any such notice threatened. To the best of ATM's
knowledge, no operation or other activity of Company involves the use of any
hazardous substances (as defined in the Comprehensive Environmental Response,
Comprehensive and Liability Act, as amended) or generates any hazardous waste
(as defined in the Resource Conservation and Recovery Act, as amended).
5.23 Disclosure. ATM has not intentionally or knowingly withheld
from eFunds any material facts relating to the Company Assets, Business or the
Company's financial condition or prospects. No representation or warranty
included in any of the Transaction Documents contains or will contain any untrue
statement of a material fact or omits or will omit to state any material fact
required to be stated herein or therein or necessary to make the statements
herein or therein not misleading. There exist
26
no facts or circumstances that have not been disclosed to eFunds of which ATM is
aware that has resulted or could reasonably be expect to result in a Material
Adverse Effect. Without limiting the generality of the foregoing, to the
knowledge of ATM there is no Governmental Regulation in existence or proposed to
be adopted by any Governmental Body which has, or if adopted or enacted would
have, the effect of (i) prohibiting the Company or its customers from charging
or collecting any Surcharge or Interchange Fee for the use of its or their
Terminals or (ii) limiting the permissible amount of any such Surcharge or
Interchange Fee and no national or regional Networks (including Cirrus, Plus,
VISA and MasterCard) are, to the knowledge of the Company contemplating any such
prohibition or limitation.
5.24 Subsidiaries. The Company does not have any Subsidiaries or
direct or indirect equity interest in any other Person, other than Access Cash
Canada Company ("ATM Canada") and ACI-Canada, Inc. ("ACI-Canada"). Each such
Subsidiary is wholly owned. Except as specifically disclosed in the Disclosure
Schedule, each of the representations and warranties made by ATM in Sections
5.01, 5.03, 5.04, 5.06, 5.07, 5.08, 5.09, 5.10, 5.11, 5.13, 5.15, 5.16, 5.17,
5.18, 5.19, 5.20, 5.21, 5.22, and 5.23 are true and correct in all material
respects with respect to each of ATM Canada and ACI-Canada as if they had been
substituted for the Company in such Sections.
5.25 Due Authorization. The execution and delivery of the
Transaction Documents has been duly authorized by all requisite corporate action
on behalf of ATM and this Agreement has been duly executed and delivered by an
authorized officer of ATM. The Transaction Documents to which ATM is a party are
valid and binding obligations of ATM enforceable in accordance with their terms,
except as such enforceability may be limited by bankruptcy, insolvency,
moratorium, reorganization of other similar laws ("Bankruptcy Laws") affecting
the enforcement of creditors' rights generally and as to limitations on the
enforcement of the remedy of specific performance and other equitable remedies.
5.26 Valid Title. Upon the Closing of the Transactions contemplated
by the Transaction Documents, ATM will transfer good, valid, and marketable
title in the Class A Interests described in Schedule I as owned by it to eFunds,
free and clear of any Liens. The Interests to be so transferred consist of
6,490,654.07 Units of Class A Interests and constitute all of the outstanding
Class A Interests in the Company. ATM does not own any Derivative Securities.
5.27 Ownership. The Principals own all of the outstanding equity
interests in ATM.
5.28 No Disclosure of Contracts with eFunds Required.
Notwithstanding any provision of this Agreement, it shall not constitute a
breach by ATM of any representation contained in this Article 5 should ATM fail
to disclose in the Disclosure Schedule any Contract in effect between Company
and eFunds or between ATM and eFunds as of the Effective Date, or any obligation
or liability of either Company or ATM to eFunds under any such Contract.
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5.29 No Warranties Regarding Management Agreement. ATM does not
make hereunder, and nothing in this Agreement shall be construed as, any
representation or warranty whatsoever by ATM with respect to the Management
Agreement by and between Company and eFunds dated as of September 1, 2000
("Management Agreement") or any amendment thereto (including the Amendment and
Release dated June 30, 2001).
6. Representations and Warranties of eFunds. eFunds represents
and warrants to ATM as follows:
6.01 Investment Representations. The Interests being acquired by
eFunds pursuant to the Transaction Documents are being acquired by it for its
own account and not with the view to, or for resale in connection with, any
distribution or public offering thereof within the meaning of the Securities
Act. eFunds understands that the contemplated sale of the Interests will be
pursuant to the exemption from the registration and prospectus delivery
requirements of the Securities Act contained in Section 4(2) thereof and that
the reliance of ATM upon this exemption is predicated in part upon the
representations and warranties of the Buyers contained herein. eFunds is an
"accredited investor" (as that term is defined in regulation D promulgated under
the Securities Act) and has such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risks of the
investment to be made by it hereunder.
6.02 No Brokers of Finders. No Person has or will have, as a result
of any act of omission by eFunds, any right, interest or valid claim against the
Company or ATM for any commission, fee or other compensation as a finder or
broker, or in any similar capacity, in connection with the Transactions.
6.03 Due Execution; No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by eFunds
has been duly authorized by all requisite corporate action on behalf of eFunds
and this Agreement has been duly executed and delivered by an authorized officer
of eFunds. This Agreement is a valid and binding obligation of eFunds
enforceable in accordance with its terms, except as such enforceability may be
limited applicable Bankruptcy Laws and limitations on the enforcement of the
remedy of specific performance and other equitable remedies.
(b) Neither the execution, delivery and performance of the
Transaction Documents, nor the consummation by eFunds of the Transactions, (i)
conflicts with or violate (A) any Governmental Regulation applicable to it, (B)
its articles of incorporation or by-laws, or (C) any Contract binding on or
affecting it or any of its property, (ii) requires any consent, authorization or
approval under any Contract to which it or any of its respective property is
bound or (iii) will result in the creation or imposition of any Lien upon any of
its property.
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6.04 Organization and Standing. eFunds is a corporation duly
organized, validly existing and in good standing under the laws of the state of
Delaware and has the requisite corporate power and authority to carry on its
business as presently conducted or presently proposed to be conducted. eFunds is
and has been at all times duly qualified to do business as a foreign corporation
in all jurisdictions in which the failure to do so could reasonably be expected
to result in a Material Adverse Effect.
7. Conditions to Closing.
7.01 Conditions to eFunds' Obligation. The obligation of eFunds to
acquire the ATM Interests pursuant to the Transaction Documents is subject to
the fulfillment prior to or on the Closing Date of the following conditions, any
of which may be waived in whole or in part by agreement of eFunds:
(a) The representations and warranties of ATM made in
Article 5 shall be true in all material respects as of the Closing Date with the
same effect as though made on and as of such Closing Date;
(b) ATM shall have performed and complied in all material
respects with all agreements or conditions required by the Transaction Documents
to be performed and complied with by them prior to or as of the Closing Date;
(c) Since the Effective Date of this Agreement, no event
shall have occurred that has resulted or could reasonably be expected to result
in a Material Adverse Effect;
(d) No event shall have occurred that would require a
material adverse change in the Current Forecast, or its underlying assumptions;
(e) ATM shall have delivered to eFunds:
(i) a certificate, dated the Closing Date, executed by
ATM certifying the satisfaction of the conditions specified in Sections 7.01(a),
(b), (c), and (d) hereof;
(ii) an affidavit that satisfies the requirement of
Section 1445(b)(2) of the Code;
(iii) an opinion of counsel for ATM, dated the Closing
Date, in such form and substance as is customary for transactions of the type
contemplated by the Transaction Documents and reasonably satisfactory to eFunds;
(iv) a copy of the text of the resolutions adopted by
the Board of Directors of ATM authorizing the execution, delivery and
performance of this Agreement and the other Transaction Documents to which it is
a party; along with a certificate executed on behalf of ATM by its corporate
secretary or other authorized officer certifying to eFunds that such copy is a
true, correct and complete copy of such
29
resolutions and that such resolutions were duly adopted and have not been
amended or rescinded;
(v) incumbency certificates executed on behalf of ATM
by its corporate secretary certifying the signature and office of each officer
executing the Transaction Documents; and
(vi) such other certificates, documents and instruments
as eFunds reasonably requests related to the Transactions;
(f) Company shall have provided to eFunds an accurate and
complete listing of all Terminals owned or leased by the Company ("Terminal
Listing"), and which Terminal Listing accurately and fully sets forth the
following information for each of said Terminals: such information as the
Company has about the original cost and book value of each of said Terminals;
serial number; whether the Terminals are currently categorized by the Company as
inventory or a fixed asset; whether the Terminal is active (meaning there has
been at least one (1) Terminal Transaction initiated at the Terminal in the
three (3) month period prior to the Closing Date); whether the Terminal is an
inventory asset used or to be used for Terminal repair and maintenance in the
ordinary course of the Business; the physical location (street/city/state or
province/zip) of each Terminal; and, if leased by Company, the name of the
lessor of each Terminal.
(g) Company shall have provided to eFunds accurately and
fully completed, and fully executed (as appropriate), original written documents
in form and substance reasonably satisfactory to eFunds, as follows:
(i) Form I-9s (with required supporting documentation)
for all Company employees;
(ii) Agreements from Streamline Data and any other
Person necessary to convey to Company all right, title and interest in and to
the Proprietary Program known as ACTRISS and any associated user, reference and
technical documentation, and all proprietary and intellectual property rights in
and to any of the foregoing;
(iii) Documentation that enables the use, operation and
maintenance of the Proprietary Assets (including but not limited to the
Proprietary Programs) owned by Company, the Telecommunications Network, and the
Operations Processes as required by Section 8.13 of this Agreement;
(iv) Agreements with all couriers used by Company for
any Vault Cash services ("Couriers"), substantially in the form attached to this
Agreement as Exhibit C or such other agreement as approved by eFunds, and
insurance certificates from all such Couriers meeting the insurance policy
requirements set forth in Exhibit D and naming Company (and, for any Courier
which provides Vault Cash services for Vault Cash provided by eFunds, eFunds
Corporation) as an additional insured(s) on such policies;
30
(v) Evidence of so-called "Shipper's Insurance"
covering Vault Cash in transit or in a Courier's possession (i.e. while in a
Courier's possession, control, or facility and prior to being placed by the
Courier in a Terminal or re-deposited by the Courier in the cash provider's bank
account) with loss coverage of no less than five million dollars ($5,000,000)
per incident of loss;
(vi) Consents from all Major Merchants to the branding
of Terminals as such branding is contemplated by the Letter Agreement by and
between Company and CU Cooperative Systems, Inc dated June 4, 2001;
(vii) Consent from any Person that is a party to any
Contract of Company and which Consent is required by the terms of such Contract
prior to consummation of the Transactions (including, by way of example only and
not by way of limitation, premises leases, Terminal leases, Merchant Contracts,
Vault Cash provider agreements, and vendor processor agreements);
(viii) A settlement and release agreement with Elnos
(Canada) fully resolving and finally settling any and all claims and disputes
arising from or related to the subject matter of the Revenue Limited Plus (RLP)
insolvency in 1999; and
(h) All corporate and other proceedings and actions taken in
connection with the Transactions and all certificates, opinions, agreements,
instruments and documents referenced herein or incident to any such Transaction
shall be satisfactory in form and substance to eFunds;
(i) ATM, the Principals and ▇▇▇▇▇▇ ▇. ▇▇▇▇ shall each have
entered into the Non-Competition, Release and Indemnity Agreement and any other
agreement required by the terms thereof;
(j) ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇
▇▇▇▇▇▇, and ▇▇▇▇▇ ▇▇▇▇▇▇▇ shall have agreed to post-Closing compensation
packages acceptable to eFunds;
(k) There shall be no Class C Interests outstanding;
(l) eFunds shall not have discovered any fact or
circumstances existing as of the Closing Date regarding the Business, the
Company Assets, the condition (financial or otherwise), results of operations or
prospects of the Company that is, individually or in the aggregate with other
such facts and circumstances, materially adverse to the Company or to the value
of the Interests;
(m) Each of ATM, the Principals and ▇▇▇▇▇▇ ▇. ▇▇▇▇ shall
have executed this Agreement;
(n) eFunds shall have obtained financing from a third party
under terms and conditions satisfactory to eFunds in the amount of not less than
twenty million dollars ($20,000,000) to be applied toward payment of the
Purchase Price; and
31
(o) It is understood and agreed that, for purposes of
Sections 3.03 and 9 (b) of this Agreement, it shall not constitute a breach of
this Agreement by ATM if any Closing condition set forth in Section 7.01
(g)(iv), (g)(vi), (g)(viii), or (j) [other than with respect to ▇▇▇▇▇ ▇▇▇▇▇ and
▇▇▇▇▇ ▇▇▇▇] above is not satisfied by the Closing Date, so long as: (i) Company
has used its commercially reasonable best efforts to satisfy any such Closing
condition(s) by the Closing Date, and (ii) substantial progress has been made
toward the completion of such Closing condition(s) by the Closing Date.
7.02 Conditions to Obligations of ATM. The obligation of ATM to
sell the ATM Interests to eFunds is subject to the fulfillment prior to or on
the Closing Date of the following conditions, any of which may be waived in
whole or in part by the Company:
(a) eFunds shall have tendered payment in the aggregate
amount of $39,550,127 (inclusive of the ▇▇▇▇▇▇▇ Payment [subject to Section 3.03
of this Agreement], but exclusive of the holdbacks set forth in Section 10.02(a)
of this Agreement) to ATM;
(b) The representations and warranties of eFunds made in
Article 6 shall be true in all material respects as of the Closing Date with the
same effect as though made on and as of the Closing Date;
(c) eFunds shall have performed and complied in all material
respects with all agreements or conditions required by this Agreement to be
performed and complied with by them prior to or as of the Closing Date;
(d) eFunds shall have delivered to ATM:
(i) a certificate, dated the Closing Date, executed by
an authorized officer of eFunds certifying the satisfaction of the conditions
specified in Section 7.02(b) and (c) hereof;
(ii) a copy of the text of the resolutions adopted by
the Board of Directors of eFunds authorizing the execution, delivery and
performance of this Agreement and the other Transaction Documents to which
eFunds is a party; along with a certificate executed on behalf of eFunds by its
corporate secretary certifying to ATM that such copy is a true, correct and
complete copy of such resolutions and that such resolutions were duly adopted
and have not been amended or rescinded; and
(iii) incumbency certificates executed on behalf of
eFunds by eFunds' corporate secretary certifying the signature and office of
each officer executing the Transaction Documents;
(iv) an opinion of counsel for eFunds, dated the
Closing Date, in such form and substance as is customary for transactions of the
type contemplated by the Transaction Documents and reasonably satisfactory to
ATM; and
32
(v) such other certificates, documents and instruments
as ATM reasonably requests related to the Transactions;
(e) eFunds shall have executed this Agreement;
(f) eFunds and Company shall have each entered into the
Non-Competition, Release and Indemnity Agreement and any other agreement
required by the terms thereof;
(g) Company and ATM and the Principals shall have entered
into an indemnity agreement in such form and substance as approved by the Board
of the Company and as is mutually acceptable to ATM and eFunds ("Company
Indemnity Agreement"); and
(h) All corporate and other proceedings and actions taken in
connection with the Transactions and all certificates, opinions, agreements,
instruments and documents referenced herein or incident to any such Transaction
shall be satisfactory in form and substance to ATM.
7.03 Mutual Conditions. The obligation of any of the parties hereto
to consummate the transactions contemplated hereby is subject to the fulfillment
prior to or on the Closing Date of the following conditions, any of which may be
waived in whole or in part only by the party or parties against whom enforcement
of this Agreement is sought:
(a) All material filings, authorizations and approvals
needed from any Governmental Body (including but not limited to that required by
the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act) in connection with the consummation of the
Transactions shall have been duly made and obtained;
(b) No third party shall have threatened, instituted or
brought any action or proceeding before any Governmental Body challenging or
seeking to invalidate, make illegal, delay or otherwise directly or indirectly
restrain or prohibit the consummation of the Transactions contemplated by the
Transaction Documents or seeking to obtain material damages in connection with
such Transactions; and
(c) This Agreement shall not have been terminated pursuant
to Article 9.
8. Covenants.
8.01 Taxes. Each Seller shall be individually responsible for its
or his own respective Taxes due as a result of the consummation of the
Transactions. The Company will make tax distributions as required by the LLC
Agreement in respect of any income of the Company allocable to the period
between the Formation Date and the Closing hereunder; provided, however, that in
no event shall the Company make any tax distribution in respect of any income of
ATM or the Principals arising or resulting from
33
the consummation of the Transactions. eFunds shall be responsible for its own
respective Taxes due as a result of the consummation of the Transactions.
8.02 Access and Investigation. ATM shall ensure that, at all times
prior to the Closing Date:
(a) The Company will provide eFunds and its representatives
with free and complete access at reasonable times and with reasonable notice to
the Company's premises and to all existing books, records, Tax Returns, work
papers and other documents and information relating to the Company;
(b) The Company and its representatives shall provide eFunds
and its representatives the opportunity to meet with the Company's personnel and
parties to such of the Company's Contracts as may be selected by eFunds;
(c) The Company shall provide eFunds with such copies of
existing books, records, Tax Returns, work papers and other documents and
information relating to the Company as eFunds may reasonably request; and
(d) The Company shall compile and provide eFunds with such
additional financial, operating and other data and information regarding the
Company as eFunds may reasonably request.
8.03 Operation of Business. ATM shall ensure that at all times
prior to the Closing Date that:
(a) The Company conducts its operations exclusively in the
ordinary course of the business and in substantially the same manner as such
operations have been conducted for the twelve-month period prior to the date of
this Agreement; provided, however, that the Company shall not, without the prior
consent of eFunds, take any action or fail to take any action the result of
which is reasonably likely to: (i) materially reduce, in the short or long term,
the revenues or profitability of the Company or materially alter the composition
of the Company's revenue stream in effect as of the Effective Date; or (ii)
materially increase, in the short or long term, the expenses of the Company or
materially alter the composition of the Company's expense structure in effect as
of the Effective Date; or (iii) otherwise materially impact the overall
financial status of the company in effect as of the Effective Date, including
but not limited to altering residual payments of Surcharge fees, Interchange
Fees or other residual payments to Merchants or any other Person;
(b) The Company preserves intact its current business
organization and uses commercially reasonable efforts to keep available the
services of its current officers and employees and maintain its relations and
goodwill with all suppliers, customers, landlords, creditors, licensors, Vault
Cash providers, licensees, employees and other Persons having business
relationships with it;
(c) The Company keeps in full force all of the insurance
policies described in Section 5.16;
34
(d) The Company's officers confer regularly with eFunds
concerning operational matters and otherwise report as often as reasonably
requested by eFunds concerning the status of the Business and notify eFunds
immediately of any emergency or other change in the Business and of any
complaints or investigations commenced of threatened against the Company by any
Governmental Authority or third party (or communication indicating that the same
may be contemplated);
(e) The Company immediately notifies eFunds of any inquiry,
proposal or offer from any Person relating to any Acquisition Transaction;
(f) The Company does not undertake any Reorganization Event;
(g) The Company does not make any capital expenditure in
excess of $40,000 or outside of the ordinary course of the Business;
(h) The Company does not incur or assume any liability other
than current liabilities of the type required to be reflected in a balance sheet
prepared in accordance with GAAP incurred in the ordinary course of the
Business;
(i) The Company does not pay any bonus or make any profit
sharing or similar payment to, or increase the amount of the wages, salary,
commissions, fringe benefits or other compensation or remuneration payable to,
any of its directors, officers or employees;
(j) The Company does not change any of its methods of
accounting or accounting practices in any respect;
(k) The Company does not make any Tax election;
(l) The Company does not commence any litigation,
arbitration or other dispute resolution process, or any proceedings or the
filing of any petition seeking relief under any federal or state bankruptcy,
insolvency, or similar law;
(m) The Company does not acquire, dispose of, transfer,
lease, license any Company Asset, other than in the ordinary course of the
Business or subject any Company Asset to any Lien;
(n) The Company pays its debts and Taxes when due, subject
to good faith disputes thereof, and pays or performs its other obligations when
due;
(o) The Company does not disclose to any Person, other than
eFunds, any Confidential Information, other than to customers and potential
customers in the ordinary course of the Business, nor transfer to any Person any
Proprietary Asset, nor enter into any licensing or other agreement relating to
any Proprietary Asset other than in the ordinary course of the Business;
35
(p) The Company does not pay, discharge or satisfy any
amount where such prepayment causes the Company to incur a penalty, charge or
fee;
(q) The Company does not hire any new employee;
(r) The Company gives all notices and other information
required prior to the Closing Date to be given to the employees of the Company
and any applicable Government Authority under any applicable Government
Regulations in connection with the Transactions;
(s) The Company does not revalue any of the Company Assets,
including without limitation, writing down the value of inventory or writing off
notes or accounts receivable, except as required under GAAP and in the ordinary
course of the Business;
(t) The Company does not enter into, amend or modify any
Contract with any Insider;
(u) The Company does not enter into any Contract related to
the leasing of property or equipment other than in the ordinary course of the
Business; and
(v) The Company does not enter into any Contract to do any
of the actions outlined in (a) through (u) above.
It is expressly understood that it shall not be a breach of this Section 8.03 by
ATM should Company take any action or fail to take any action that would
constitute a breach of this Section 8.03 if Company takes such action or fails
to take such action with the express, prior consent of eFunds.
8.04 Filings, Consents and Agreements. ATM and eFunds shall ensure
that:
(a) each filing or notice required to be made or given
pursuant to any applicable Governmental Regulation, or by the Company or eFunds
in connection with the execution and delivery of the Transaction Documents, or
in connection with the consummation or of the Transactions is made or given as
soon as possible after the Effective Date of this Agreement;
(b) each consent required to be obtained pursuant to any
applicable Governmental Regulation or Contract of the Company in connection with
the execution and delivery of the Transaction Documents (including each of the
consents identified in Section 5.12 of the Disclosure Schedule) is obtained as
soon as possible after the date of this Agreement and remains in full force and
effect through the Closing Date;
(c) the Company promptly delivers to eFunds a copy of each
filing made, each notice given and each consent obtained by the Company during
the period prior to the Closing Date;
36
(d) during the period prior to the Closing Date, the Company
cooperates with eFunds and prepares and makes available such documents and takes
such other actions as eFunds may reasonably request in connection with any
filing, notice or consent that eFunds is required or elects to make, give or
obtain in connection the execution and delivery of the Transaction Documents and
the consummation of the Transactions;
(e) eFunds and ATM shall have agreed upon an appropriate
amendment to the LLC Agreement, if necessary, to be executed by them immediately
following the Closing; and
(f) eFunds and ATM enter into an appropriate assignment by
eFunds to ATM of any accounts receivable that eFunds finally recovers from the
General Holdback due to a breach of the representation made in Section 5.02
(e)(ii) of this Agreement.
8.05 Notification. During the period preceding the Closing Date,
each party shall promptly notify the others of:
(a) the discovery by them of any event, condition, fact or
circumstance that occurred or existed on or prior to the date of this Agreement
and that caused or constitutes a breach of any representation or warranty made
by such party in this Agreement;
(b) any event, condition, fact or circumstance that occurs,
arises or exists after the date of this Agreement and that would cause or
constitute a breach of any representation or warranty made by such party in this
Agreement if (i) such representation or warranty had been made as of the time of
the occurrence, existence or discovery of such event, condition, fact or
circumstance, or (ii) such extent, condition, fact or circumstance had occurred,
arisen or existed on or prior to the date of this Agreement;
(c) any breach by such party of any of their covenants under
any Transaction Document; and
(d) any event, condition, fact or circumstance that may make
the timely satisfaction of any of the conditions set forth in Article 7
impossible or unlikely.
8.06 No Negotiation. During the period preceding the Closing Date,
ATM and the Principals shall not, without the express prior consent of eFunds,
directly or indirectly:
(a) solicit or encourage the initiation of any inquiry,
proposal or offer from any Person (other than eFunds) relating to any
Acquisition Transaction;
37
(b) participate in any discussions or negotiations with, or
provide any information concerning the Company to any Person (other than eFunds)
in furtherance of any Acquisition Transaction;
(c) consider the merits of any unsolicited inquiry, proposal
or offer from any Person (other than eFunds) relating to any Acquisition
Transaction;
(d) engage in or sign any Contract (whether or not legally
enforceable) related to any Acquisition Transaction (other than the Transaction
Documents); or
(f) sell, assign, or otherwise issue or transfer any
Interests, or, except as expressly provided in the second sentence of Section
8.01 of this Agreement, declare or pay any dividend or distribution on or in
respect of any Interests.
8.07 Confidentiality.
(a) ATM, the Principals and ▇▇▇▇▇▇ ▇. ▇▇▇▇ hereby agree that
they shall (i) at all times during the period from the Effective Date until the
Closing Date, and (ii) upon Closing, at all times during the remainder of the
Confidentiality Period (A) not use any Confidential Information for any purpose
other than in connection with the Transactions, (B) use no less than a
reasonable degree of care to protect any Confidential Information in their
possession against disclosure to third parties, and (C) limit circulation of the
Confidential Information to such of their representatives as have a direct "need
to know" such Information in connection with the Transactions. This Section 8.07
(a) shall survive for the duration of the Confidentiality Period upon Closing.
(b) eFunds hereby agrees that it shall (i) at all times
during the period from the Effective Date until the Closing Date, and (ii) in
the event this Agreement is terminated prior to Closing, at all times during the
remainder of the Confidentiality Period (A) not use any Confidential Information
for any purpose other than in connection with the Transactions, except as may be
authorized pursuant to any other Contract in effect between eFunds and Company,
(B) use no less than a reasonable degree of care to protect any Confidential
Information in its possession against disclosure to third parties, and (C) limit
circulation of the Confidential Information to such of its representatives as
have a direct "need to know" such Information in connection with the
Transactions or pursuant to any other Contract between eFunds and Company. This
Section 8.07 (b) shall terminate as to eFunds upon Closing.
(c) Notwithstanding the provisions of this Section 8.07, a
Person may disclose Confidential Information if, in the view of such Person's
counsel, such disclosure is required by law or legal process; provided, however,
that the Person who is obligated to disclose the Confidential Information by
reason of any such requirement shall give reasonable advance notice to the
Company of such requirement and shall cooperate, on the Company's account for
any out-of-pocket expenses incurred by such Person, with any efforts by the
Company to limit or mitigate any such revelation
38
so as to preserve, to the extent practicable, the proprietary nature of any
Confidential Information contained therein.
(d) Nothing in this Section 8.07 shall be construed as a
grant by implication, estoppel or otherwise of a license to eFunds, ATM, the
Principals or ▇▇▇▇▇▇ ▇. ▇▇▇▇ to make, have made, use, advertise or sell any
product or service using any Confidential Information or as a license under any
Proprietary Asset now held or which may hereafter be obtained by the Company.
8.08 Severance Policy. Prior to the Closing Date, ATM and eFunds
shall cause the Company to adopt a severance plan comparable to that maintained
by eFunds for the benefit of its employees ("Plan"). Benefits shall not be
extended under such Plan to any employee of Company, ATM, ACI-Canada or ATM
Canada who has a contractual entitlement to separation payments.
8.09 Resolution of Holdback Matters. Following the Closing, eFunds
shall cause Company to take, and Company shall take at its sole cost and
expense, commercially reasonable actions to promptly resolve and bring to
conclusion those matters for which there is a Reconciliation Holdback and Vault
Cash Holdback pursuant to Sections 10.02 (c) and 10.02 (d) of this Agreement,
respectively.
8.10 Financial Statements and Revised Current Forecast. At least
three (3) business days prior to the Closing, the Company will deliver to
eFunds:
(a) copies of (i) Company's final unaudited consolidated
balance sheet (the "Final Balance Sheet") as of the Balance Sheet Date and the
final unaudited consolidated statement of earnings of the Company for the
six-month period ended on the Balance Sheet Date (such statement of earnings and
the Final Balance Sheet being herein referred to as the "Latest Financial
Statements"), and (ii) Company's preliminary unaudited consolidated balance
sheet as of August 31, 2001 (the "Updated Balance Sheet") and the preliminary
unaudited consolidated statement of earnings of the Company for the eight-month
period ended on August 31, 2001 (such statement of earnings and the Updated
Balance Sheet being referred to herein as the "Updated Preliminary Financial
Statements"). The Latest Financial Statements will be prepared in accordance
with the provisions of GAAP applicable to unaudited interim financial statements
in a manner consistent with the Audited Financial Statements and reflect all
adjustments necessary to a fair statement of the results for the interim
period(s) presented. The Updated Preliminary Financial Statements will be
prepared in a manner consistent with the Latest Financial Statements, based upon
the information contained in the books and records of the Company, and fairly
present in all material respects the financial condition of the Company as of
the dates thereof and results of operations for the periods referred to therein;
and
(b) a copy of the actual 7+5 forecast (the "Revised Current
Forecast") for the Company's fiscal year ending December 31, 2001. The Revised
Current Forecast will represent the Company's best current estimate as of the
Closing Date of its financial
39
and operating performance for January, 2001 through July, 2001 and for the
balance of 2001.
Except as set forth in the Latest Financial Statements, the Company
will have no Indebtedness or other liabilities, whether absolute, accrued,
contingent or otherwise, other than (i) liabilities (other than Indebtedness)
incurred in the ordinary course of the Business since the Balance Sheet Date and
(ii) obligations under Contracts entered into in the ordinary course of the
Business and not required under GAAP to be reflected in the Latest Financial
Statements (none of which is an uninsured liability for breach of Contract,
breach of warranty, tort, infringement or similar claim or results from any
lawsuit or similar proceeding), which, in the case of both (i) and (ii),
individually or in the aggregate, are not material to the financial condition of
the Company or the Business. All Company Assets will be properly recorded and
reflected in the Latest Financial Statements and the Updated Preliminary
Financial Statements. The Latest Financial Statements and the Updated
Preliminary Financial Statements will accurately reflect all Terminals as either
(A) inventory or fixed assets, and (B) owned or leased assets. The Company's
liability for unpaid Taxes for all periods ending on or before the Balance Sheet
Date will not, in the aggregate, exceed the amount of the liability accruals for
Taxes (excluding reserves for deferred Taxes) reported in the Final Balance
Sheet.
8.11 Release of ATM. Following the Closing, eFunds shall take and
shall cause Company to take commercially reasonable efforts to cause the release
of any and all liability of ATM and any and all personal liability of its
shareholders, officers or board members from any obligation, liability, or
financial responsibility of Company guaranteed by them in the normal course of
the Business prior to the Effective Date, including, by way of example, the
Amplicon Financial, Inc. and Newcourt Communications Finance Company Terminal
lease guarantees as in effect as of the Effective Date.
8.12 Cooperation by the Parties. Where any consent or cooperation
by either party is required for the other party to comply with any obligation
hereunder, such consent or cooperation shall not be unreasonably withheld by the
party from which it is required.
8.13 Documentation. At or before the Closing, (i) the Proprietary
Assets owned by the Company (including but not limited to the Proprietary
Programs), the Telecommunications Network, and Operations Processes will be
sufficiently documented, with written technical, operating and user
documentation, which describes in all material respects the proper procedure for
their use and provides sufficient information to enable eFunds to utilize,
operate and maintain such Proprietary Assets, Company Telecommunications Network
and Operations Processes in an efficient manner ("Documentation"), and (ii) all
such Documentation will be complete and accurate in all material respects and
the Proprietary Assets owned by the Company and the Company Telecommunications
Network will perform and operate substantially in accordance with such
Documentation.
40
9. Term; Termination.
9.01 This Agreement may be terminated at any time prior to the
Closing:
(a) by the mutual consent of eFunds and ATM;
(b) by eFunds or ATM if there has been a material
misrepresentation, breach of warranty or breach of covenant on the part of
eFunds (if ATM is seeking to terminate this Agreement), or ATM (if eFunds is
seeking to terminate this Agreement), of the representations, warranties and
covenants made by it in the Agreement; or
(c) by eFunds if, after the Effective Date hereof, there
shall have occurred any act, event or omission giving rise to or which is
reasonably likely to give rise to a Material Adverse Effect.
9.02 Unless sooner terminated pursuant to Section 3.03 or Section
9.01 above, this Agreement shall automatically terminate if the Transactions
contemplated hereby have not been consummated by December 31, 2001.
10. Indemnification; Holdbacks.
10.01 Indemnification
(a) ATM will indemnify and hold eFunds harmless from and
against any and all "Buyers Losses" arising out of or related to (i) any breach
by ATM, the Principals or ▇▇▇▇▇▇ ▇. ▇▇▇▇ of any representation or warranty made
by them in any Transaction Document, (ii) any failure by it to perform or comply
with any covenant, agreement or obligation made by it in any Transaction
Document, or (iii) the Existing Claims, Reconciliation Holdback matter, and
Vault Cash Holdback matter described in Section 10.02 below. As used in the
foregoing, "Buyers Losses" means and shall include any losses, damages,
liabilities, claims, fees, royalties, legal and settlement costs (including
reasonable attorneys fees), and any external costs or expenses incurred by
eFunds from third parties, suffered or incurred by eFunds as a result of any
such breach, failure, or matter, and which, in each case, is directly
attributable to any breach by ATM, the Principals or ▇▇▇▇▇▇ ▇. ▇▇▇▇ of any of
such representations, warranties, covenants, agreements or obligations, or the
Existing Claims, Reconciliation Holdback matter, and Vault Cash Holdback matter
described in Section 10.02 below, provided, however, that (i) indemnifiable
"Buyers Losses" shall not include (A) any costs or expenses (including legal
fees and expenses) incurred by Company in resolving and bringing to conclusion
the Reconciliation Holdback matter or Vault Cash Holdback matter described in
Section 10.02 below, or (B) any loss to eFunds in excess of $1,000,000 with
respect to the Reconciliation Holdback matter or any loss to eFunds in excess of
$2,000,000 with respect to the Vault Cash Holdback matter; or (C) any loss that
would otherwise be a Buyers Loss hereunder but that is recovered by eFunds from
any applicable insurance
41
coverage; or (D) any amount owed to ATM by eFunds pursuant to Section 10.02 (e)
below; or (E) any losses, damages, or liabilities whatsoever arising from or
related to the Management Agreement; and (ii) no such indemnification shall be
available for Buyers Losses under the General Holdback unless and until the
aggregate amount of Buyers Losses subject to the General Holdback hereunder
exceeds four hundred and forty thousand dollars ($440,000) [the "Threshold
Amount"], at which point all additional Buyers Losses in excess of the Threshold
Amount under the General Holdback and up to and including the $2,000,000 General
Holdback amount shall be indemnifiable hereunder. The aggregation of Buyers
Losses subject to the General Holdback need only reach the Threshold Amount once
and after such point, eFunds may seek indemnification for all Buyers Losses in
excess of the Threshold Amount that may arise under the General Holdback up to
and including the $2,000,000 General Holdback amount. For the avoidance of
doubt, (x) the entire $2,000,000 General Holdback is available to cover Buyers
Losses after the Threshold Amount has been reached, and (y) there is no
threshold amount applicable to the Reconciliation Holdback or the Vault Cash
Holdback and all Buyers Losses subject to such holdbacks are recoverable by
eFunds in accordance with and subject to Sections 10.02 (c) and 10.02 (d),
respectively.
(b) Each of the Principals agrees to be and remain jointly
and severally liable to eFunds for any indemnification obligations of ATM
hereunder; provided, however, that the maximum aggregate amount of indemnifiable
Buyers Losses for which any Principal shall be liable shall not exceed the
amount set forth opposite the name of such Person on Schedule II and the maximum
aggregate amount of Buyers Losses against which ATM and the Principals shall be
required to indemnify eFunds shall not exceed twenty million dollars
($20,000,000), inclusive of the General Holdback amount. All indemnification
obligations payable hereunder shall be paid in cash.
(c) No claim for indemnification hereunder may be asserted
unless the Person against whom such claim is asserted shall have received
written notice of such claim, and a brief summary of the facts upon which such
claim is based, on or before the eighteenth (18th) month anniversary of the
Closing; provided, however, that (i) there shall be no limitation on the amount
of time that a claim may be asserted hereunder by eFunds against the Vault Cash
Holdback, and (ii) a claim may be asserted for any breach of any representation
or warranty made in Section 5.06 of this Agreement until the later of the
eighteenth (18th) month anniversary of the Closing or the expiration of any
applicable statute of limitation applicable thereto. So long as the indemnitor
shall have received notice of a claim prior to the expiration of such 18 month
period (or at any time with respect to the Vault Cash Holdback, or at any time
prior to the later of the eighteenth (18th) month anniversary of the Closing or
the expiration of any applicable statute of limitation for any claim arising
from a breach of any representation or warranty made in Section 5.06 of this
Agreement), the expiration of such period (and the 18 month period referenced in
Section 11.05) shall not operate to bar the ability of eFunds, ATM, any
Principal or ▇▇▇▇▇▇ ▇. ▇▇▇▇ to pursue their remedies (including through the
institution of litigation or similar proceedings) in respect of such claim.
(d) eFunds shall use commercially reasonable efforts to
mitigate Buyers Losses.
42
10.02 Holdbacks.
(a) As security for the indemnification obligations of ATM
pursuant to Section 10.01, eFunds shall hold-back four million three hundred and
eight thousand three hundred and forty one dollars ($4,308,341) of the Purchase
Price in cash as detailed below and in Schedule I:
Cash
----
General Holdback $2,000,000
Reconciliation $ 769,447
Holdback
Vault Cash Holdback $1,538,894
Total Holdback $4,308,341
(b) $2,000,000 of the Purchase Price will be held-back (the
"General Holdback"):
(i) as security for the indemnification obligations of
ATM pursuant to Section 10.01(a)(i) and 10.01(a)(ii) above; and
(ii) pending the satisfactory resolution of any claims,
liabilities, loss, cost, expense, or obligations arising out of or related to
the following matters (collectively, the "Existing Claims"):
(A) Vault Cash reconciliation issues with
First Premier Bank; and
(B) Potential write-downs resulting from Owned
or leased Terminals reflected in the Company's books and records and that cannot
be located or otherwise satisfactorily accounted for by Company as of the
Closing Date.
(c) $769,447 of the Purchase Price will be held-back (the
"Reconciliation Holdback") pending the conclusion of the ongoing Vault Cash
reconciliation process between the Company and eFunds. In the event that this
reconciliation indicates that less than $1,000,000 is actually owed by the
Company to eFunds, an amount of the Reconciliation Holdback equal to .7694468
times the amount actually owed to eFunds by Company shall be retained by eFunds
as a reduction of the Purchase Price as provided herein. By way of example,
assume that the Vault Cash reconciliation issue reflects a $1,000,000
discrepancy on the Closing Date. The
43
Reconciliation Holdback would be $769,447 (76.94468% of $1,000,000). By way of
example only, if at the conclusion of the Vault Cash reconciliation process it
is determined that only $200,000 is owed to eFunds by the Company, then (i)
$153,889.36 (76.94468% of $200,000), plus any interest earned on such amount
since the Closing Date, would be retained by eFunds as a reduction of the
Purchase Price, and (ii) $615,557.64 (the balance of the Reconciliation
Holdback), plus simple interest on such amount at the rate of six percent (6%)
per annum from the Closing Date to the date of payment, would be paid to ATM. By
way of further example only, if at the conclusion of the Vault Cash
reconciliation process it is determined that $800,000 is owed to eFunds by the
Company, then (i) $615,557.64 (76.94468% of $800,000), plus any interest earned
on such amount since the Closing Date, would be retained by eFunds as a
reduction of the Purchase Price, and (ii) $153,889.36 (the balance of the
Reconciliation Holdback), plus simple interest on such amount at the rate of six
percent (6%) per annum from the Closing Date to the date of payment, would be
paid to ATM. By way of further example only, if at the conclusion of the Vault
Cash reconciliation process it is determined that any amount greater than
$1,000,000 is owed to eFunds by the Company, eFunds would retain the entire
amount of the Reconciliation Holdback, plus any interest earned on such amount
since the Closing Date, as a reduction of the Purchase Price and as its sole
remedy against ATM or the Principals for losses due to the Vault Cash
reconciliation issue. In the event that the Vault Cash reconciliation indicates
that funds are owed by eFunds to the Company, the entire Reconciliation Holdback
shall be paid to ATM (plus simple interest at the rate of six percent (6%) per
annum from the Closing Date to the date of payment).
(i) eFunds shall provide written notice to ATM within
thirty (30) days of the date that the reconciliation contemplated by this
Section 10.02 (c) is complete, but no later than eighteen (18) months from the
Closing Date. Such notice shall specify the final amount owed to eFunds and/or
ATM as determined by eFunds and Company pursuant to the reconciliation process
and reasonable detail in support thereof. ATM may, by written notice given
within thirty (30) days of its receipt of notice from eFunds hereunder, notify
eFunds that it disputes in good faith the validity or amount of eFunds'
findings. Representatives of eFunds and ATM shall meet at the principal offices
of Company within ten (10) business days of eFunds' receipt of such notice, and
shall use their commercially reasonable best efforts to resolve any such dispute
within thirty (30) days after any such written notice is given by ATM. Any
amounts payable to ATM pursuant to this Section 10.02 (c) and not in dispute
shall be paid within the earlier of sixty (60) days of the conclusion of the
Vault Cash reconciliation process, or twenty (20) months from the Closing Date.
(d) $1,538,894 of the Purchase Price will be held-back (the
"Vault Cash Holdback") pending the conclusion of the bankruptcy proceeding of
Tri-State Armored Services, Inc. ("Tri-State"). In the event that Buyers Losses
due to the defalcation of Tri-State and/or the Tri-State bankruptcy is less than
$2,000,000, an amount of the Vault Cash Holdback equal to .7694468 times the
amount of Buyers Losses shall be retained by eFunds as a reduction of this
Purchase Price as provided herein. By way of example only, assume that the
Tri-State loss to eFunds is $2,000,000
44
on the Closing Date. The Vault Cash Holdback would be $1,538,894 (76.94468% of
$2,000,000). By way of example only, if at the conclusion of the Tri-State
bankruptcy proceedings it is determined that only $1,000,000 has been lost by
eFunds, then (i) $769,447 (76.94468% of $1,000,000), plus any interest earned on
such amount since the Closing Date, would be retained by eFunds as a reduction
of the Purchase Price, and (ii) $769,447 (the balance of the Vault Cash
Holdback), plus simple interest on such amount at the rate of six percent (6%)
per annum from the Closing Date to the date of payment, would be paid to ATM. By
way of further example only, if at the conclusion of the Tri-State bankruptcy
proceedings it is determined that $1,800,000 has been lost by eFunds, then (i)
$1,385,004 (76.94468% of $1,800,000), plus any interest earned on such amount
since the Closing Date, would be retained by eFunds as a reduction of the
Purchase Price, and (ii) $153,890 (the balance of the Vault Cash Holdback), plus
simple interest on such amount at the rate of six percent (6%) per annum from
the Closing Date to the date of payment, would be paid to ATM. By way of further
example only, if at the conclusion of the Tri-State bankruptcy proceedings it is
determined that any amount greater than $2,000,000 has been lost by eFunds,
eFunds would retain the entire amount of the Vault Cash Holdback, plus any
interest earned on such amount since the Closing Date, as a reduction of the
Purchase Price and as its sole remedy against ATM or the Principals for losses
of eFunds due to the defalcation of Tri-State and/or the Tri-State bankruptcy.
In the event that the Tri-State bankruptcy Vault Cash reconciliation indicates
that funds are owed by eFunds to the Company, the entire Vault Cash Holdback
shall be paid to ATM (plus simple interest at the rate of six percent (6%) per
annum from the Closing Date to the date of payment).
(i) eFunds shall provide written notice to ATM within
thirty (30) days of the conclusion of the Tri-State bankruptcy proceedings. Such
notice shall specify the final amount owed to eFunds and/or ATM as determined
pursuant to such proceedings and reasonable detail in support thereof. ATM may,
by written notice given within thirty (30) days of its receipt of notice from
eFunds hereunder, notify eFunds that it disputes in good faith the validity or
amount of eFunds losses. Representatives of eFunds and ATM shall meet at the
principal offices of Company within ten (10) business days of eFunds' receipt of
such notice, and shall use their commercially reasonable best efforts to resolve
any such dispute within thirty (30) days after any such written notice is given
by ATM. Any amounts that are payable to ATM pursuant to this Section 10.02(d)
and not in dispute shall be paid within sixty (60) days of the final conclusion
of the Tri-State proceedings.
(e) In the event that, (i) at the final conclusion of both
the Reconciliation Holdback and Vault Cash Holdback resolutions, on an aggregate
basis, eFunds has actually and finally recovered more than three million dollars
($3,000,000) through the resolution of both matters, and (ii) Company actually
and finally recovers more than one million five hundred thousand dollars
($1,500,000) through the resolution of the Tri-State bankruptcy with respect to
losses of vault cash provided by First Premier Bank ("FPB Vault Cash Loss"),
then an amount equal to .7694468 multiplied by the amount over $4,500,000
actually and finally recovered by eFunds and Company pursuant to resolution of
the Reconciliation Holdback, Vault Cash Holdback and FPB Vault Cash Loss issues
shall be paid to ATM, plus simple interest on such amount at the rate of six
45
percent (6%) per annum from the Closing Date to the date of payment. By way of
example only, if at the final conclusion of the Reconciliation Holdback, Vault
Cash Holdback and FPB Vault Cash Loss matters, eFunds and Company recover an
aggregate amount of $5,000,000, then $384,723 (76.94468% of $500,000), plus
simple interest on such amount at the rate of six percent (6%) per annum from
the Closing Date to the date of payment would be paid to ATM. Any amounts
payable to ATM pursuant to this Section 10.02(e) shall be paid within thirty
(30) days of the final conclusion of both the Reconciliation Holdback
reconciliation and the Tri-State proceedings.
(f) eFunds shall keep ATM reasonably informed (on no less
frequently than a quarterly basis) of the progress and development of the
resolution (including but not limited to any settlement or compromise efforts)
of any Holdback matter hereunder and shall furnish ATM with copies of all
relevant pleadings, correspondence and other papers. In addition, the parties to
this Agreement shall cooperate with each other, and make available to each other
and their representatives all available relevant records or other materials
required by them for their use in resolving any Holdback matter hereunder.
10.03 General Holdback Claim Notice Procedures
(a) If eFunds shall have any liquidated claim for any Buyers
Losses against the General Holdback in excess of the Threshold Amount, it shall
promptly give written notice thereof to ATM. A reserve shall thereupon be
created against the General Holdback in the amount of any such liquidated claim.
eFunds may also provide written notice to ATM of any unliquidated claim of
Buyers Losses against the General Holdback in excess of the Threshold Amount. A
reserve shall thereupon be created against the General Holdback in respect of
such unliquidated claim in the amount of such estimate. Any notice provided by
eFunds to ATM hereunder shall describe the facts and circumstances of the
liquidated or unliquidated claim in reasonable detail, and shall indicate the
amount, if known, or a commercially reasonable estimate, of the Buyers Losses
that have been or may be incurred or suffered by eFunds. ATM may, by written
notice given within thirty (30) days of its receipt of notice from eFunds
hereunder, notify eFunds that it disputes in good faith the validity or amount
of such claimed Buyers Losses. Representatives of eFunds and ATM shall meet at
the principal offices of Company within ten (10) business days of eFunds'
receipt of such notice, and shall use their commercially reasonable best efforts
to resolve any such dispute within thirty (30) days after any such written
notice is given by ATM.
(b) Within thirty (30) days of the eighteenth (18th) month
anniversary of the Closing Date (or the next succeeding Business Day), eFunds
shall pay to ATM the entire unreserved portion of the General Holdback, plus
simple interest on the amount so distributed at the rate of six percent (6%)
from the Closing Date through the date of payment.
10.04 Exclusivity of Remedies. (a) In the event that the
Transactions contemplated by this Agreement are not consummated, then each of
eFunds' and ATM's sole remedy one against the other shall be as provided in
Section 3.03 of this Agreement
46
and neither party shall be liable to the other party for any damages arising
therefrom, including but not limited to actual, consequential, incidental,
special or other damages; and (b) from and after the Closing, the
indemnification and other remedies provided for in the Transaction Documents
shall be deemed to be exclusive and none of the parties shall have any other
liability or other obligation to any of the other parties as a result of the
Transactions. Except for payment of any amount(s) owed by eFunds to ATM pursuant
to Sections 10.02 (c), 10.02 (d), or 10.02 (e) of this Agreement, the aggregate
liability of eFunds under the Transaction Documents shall not exceed (i) fifteen
million dollars ($15,000,000), plus (ii) any liability to ATM or any Principal
arising from any guarantee by ATM or such Principal in effect as of the
Effective Date of any liability, obligation or financial responsibility or
obligation of Company or any predecessor of Company under the Amplicon
Financial, Inc. and CIT/Newcourt Communications Finance Company Terminal lease
guarantees.
10.05 Indemnification by eFunds. Subject to Section 10.04 above,
eFunds will indemnify and hold ATM, the Principals and ▇▇▇▇▇▇ ▇. ▇▇▇▇ harmless
against any and all losses, damages, liabilities, claims, fees, royalties, legal
and settlement costs (including reasonable attorneys' fees) incurred by them
(hereinafter referred to as "Sellers Losses") and arising out of or related to
any of the following: (a) any breach of any representation or warranty made by
eFunds in any Transaction Document; or (b) any failure by eFunds to perform or
comply with any covenant, agreement or obligation made by eFunds in any
Transaction Documents. ATM, the Principals and ▇▇▇▇▇▇ ▇. ▇▇▇▇ shall use
commercially reasonable efforts to mitigate Sellers Losses. ATM shall provide
written notice to eFunds specifying in reasonable detail the basis and amount of
any claim, damage, loss, liability, or cost for which ATM, any Principal or
▇▇▇▇▇▇ ▇. ▇▇▇▇ believes an indemnification obligation is owed by eFunds
hereunder within thirty (30) days of becoming aware of the same. eFunds may, by
written notice given within thirty (30) days of its receipt of notice from ATM
hereunder, notify ATM that it disputes in good faith the validity or amount of
the claim. Representatives of eFunds and ATM shall meet at the principal offices
of Company within ten (10) business days of ATM's receipt of such notice, and
shall use their commercially reasonable best efforts to resolve any such dispute
within thirty (30) days after any such written notice is given by eFunds.
10.06 Notice of Third Party Claims.
(a) In the event that any third party claim ("Claim") is
hereafter asserted against any party hereto as to which such party may be
entitled to indemnification hereunder, such party (the "Indemnitee") shall
notify the party required by the terms of this Agreement to indemnify the
Indemnitee (the "Indemnifying Party") in writing thereof (the "Claims Notice")
within sixty (60) days after (i) receipt of written notice of commencement of
any third party litigation against such Indemnitee, (ii) receipt by such
Indemnitee of written notice of any third party claim pursuant to an invoice,
notice of claim or assessment against such Indemnity, or (iii) such Indemnitee
becomes aware of the existence of any other event, in respect of which
indemnification may be sought from the Indemnifying Party. The Claims Notice
shall describe the Claim and the specific facts and circumstances in reasonable
detail, and shall indicate the amount, if known, or an estimate, if reasonably
possible, of the Buyers Losses or the Sellers Losses,
47
as the case may be, that have been or may be incurred or suffered by eFunds or
ATM, the Principals or ▇▇▇▇▇▇ ▇. ▇▇▇▇, as the case may be, from such third party
claim. The failure to timely notify the Indemnifying Party of the commencement
of such actions in accordance with this Section 10.6(a) shall not relieve the
Indemnifying Party from the obligation to indemnify under this Section 10,
except to the extent the Indemnifying Party establishes by competent evidence
that it or they are directly and materially prejudiced thereby.
(b) The Indemnifying Party may elect to defend and/or
compromise any Claim, at its, his or her own expense and by its or her own
counsel. The Indemnitee may participate, at its, his or her own expense, in the
defense of any Claim assumed by the Indemnifying Party. Without the written
approval of the Indemnitee, which approval shall not be unreasonably withheld,
the Indemnifying Party shall not agree to any compromise of a Claim defended by
the Indemnifying Party which would require the Indemnitee to perform or take any
action or to refrain from performing or taking any action.
(c) If, within sixty (60) days of the Indemnifying Party's
receipt of a Claim Notice, the Indemnifying Party shall not have notified the
Indemnitee of its election to assume the defense, the Indemnitee shall have the
right to assume control of the defense and/or compromise of such Claim, and the
costs and expenses of such defense, including reasonable attorneys' fees, shall
be added to the Claim. If the Indemnitee does not elect to assume the defense of
any Claim, it, he or she may give written notice to the Indemnifying Party of
its, his or her intent not to do so, in which event the Indemnifying Party shall
assume control of the defense and/or compromise of such Claim, subject to the
right of the Indemnitee to participate, at its, his or her expense, in the
defense against or compromise of such Claim.
(d) The party assuming the defense of any Claim shall keep
the other party reasonably informed at all times of the progress and development
of its or their defense of and compromise efforts with respect to such Claim and
shall furnish the other party with copies of all relevant pleadings,
correspondence and other papers. In addition, the parties to this Agreement
shall cooperate with each other, and make available to each other and their
representatives all available relevant records or other materials required by
them for their use in defending, compromising or contesting any Claim.
(e) In the event of any conflict or inconsistency between
the terms and conditions of any other provision of Section 10 of this Agreement
and the terms and conditions of this Section 10.6, the terms and conditions of
such other provision of Section 10 of this Agreement shall prevail and control.
11. Miscellaneous.
11.01 No Disclosure. No party hereto shall issue any press release
or otherwise disclose to the general public the nature or possibility of the
Transactions contemplated by the Transaction Documents without the prior written
approval of all of
48
the other parties hereto, except as may be necessary, in the opinion of counsel
to the party seeking to make disclosure, to comply with the requirements of this
Agreement or any applicable Governmental Regulation (including the Securities
Act or the Securities Exchange Act of 1934, as amended).
11.02 Additional Actions and Documents. Each of the parties hereby
agrees to take or cause to be taken such further actions, to execute,
acknowledge, deliver and file, or cause to be executed, acknowledged, delivered
and filed such further documents and instruments, and to use all reasonable
efforts to obtain such consents, as may be necessary or as may be reasonably
requested in order to fully effectuate the purposes, terms and conditions of
this Agreement.
11.03 Notice. Any notice, demand, consent, authorization or other
communication which any party is required or may desire to give to or make upon
the other pursuant to this Agreement shall be in writing and shall be effective,
valid and duly given if mailed by overnight courier, by regular mail,
first-class postage prepaid or if sent by facsimile; if to ATM or the
Principals, to:
▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
ATM Holding, Inc.
▇▇ ▇▇▇▇▇▇▇ ▇▇.▇▇. ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address as ATM or a Principal shall notify eFunds in writing;
and if to eFunds, to:
eFunds Corporation
▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Chief Financial Officer
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address as eFunds may hereafter designate by notice in writing
to the Principals. Each notice, demand, request or communication which shall be
delivered, mailed or transmitted in the manner described above shall be deemed
sufficiently given, served, sent or received for all purposes at such time as it
is delivered to the addressee or at such time as delivery is refused by the
addressee upon presentation.
11.04 Severability. The invalidity of any one or more provisions
hereof or of any other agreement or instrument given pursuant to or in
connection with this Agreement shall not affect the remaining portions of this
Agreement or any such other agreement or instrument or any part thereof; and in
the event that one or more of the provisions contained herein or therein should
be invalid, or should operate to render this Agreement or any such other
agreement or instrument invalid, this Agreement and such other agreements and
instruments shall be construed as if such invalid provisions had not been
inserted.
49
11.05 Survival. Notwithstanding any investigation made by or on
behalf of the parties hereto or the results of any such investigation and
notwithstanding the participation of such party in the Closing, the
representations and warranties contained in Article 5 and Article 6 of this
Agreement shall survive for a period of eighteen (18) months following the
Closing; provided, however, that the representations and warranties set forth in
Section 5.06 of this Agreement shall survive until the later of eighteen (18)
months from the Closing Date or the expiration of any applicable statute of
limitation applicable thereto. The indemnification obligations set forth in
Article 10 of this Agreement shall survive in accordance with Section 10.1 (c).
Any other covenant or agreement made in this Agreement and that by its nature,
sense or context survives the execution and delivery of this Agreement shall so
survive in accordance with its terms.
11.06 Waivers. Neither the waiver by a party of a breach of or a
default under any of the provisions of this Agreement, nor the failure of a
party, on one or more occasions, to enforce any of the provisions of this
Agreement or to exercise any right, remedy or privilege hereunder shall
thereafter be construed as a waiver of any such provisions, rights, remedies or
privileges hereunder.
11.07 Exercise of Rights. No failure or delay on the part of a party
in exercising any right, power or privilege hereunder and no course of dealing
between the parties shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, power or privilege hereunder preclude any other
or further exercise thereof or the exercise of any other right, power or
privilege. The rights and remedies herein expressly provided are cumulative and
not exclusive of any other rights or remedies which a party would otherwise have
at law or in equity or otherwise.
11.08 Binding Effect. This Agreement shall be binding upon and shall
inure to the benefit of the parties and their respective successors and
permitted assigns; provided, however, that neither this Agreement nor any of the
rights, interests or obligations of the parties hereunder may be assigned by any
party hereto without the prior written consent of the other parties hereto,
except that eFunds may assign its rights hereunder to one or more of its
corporate affiliates or Subsidiaries or to any transferee of the Interests
purchased by it hereunder.
11.09 Entire Agreement. The Transaction Documents contain the entire
agreement among the parties with respect to the Transactions, and supersede all
prior oral or written agreements, commitments or understandings with respect to
the matters provided for herein or therein.
11.10 Governing Law. This Agreement, the rights and obligations of
the parties hereto, and any claims or disputes relating thereto, shall be
governed by and construed in accordance with the laws of the State of Delaware
(but not including the choice of law rules thereof).
50
11.11 Attorneys' Fees. If any legal action or other legal proceeding
relating to the enforcement of the Transaction Documents is brought against any
party hereto, the prevailing party shall be entitled to recover its reasonable
attorney's fees and disbursements in pursuing such action or proceeding (in
addition to any other relief to which the prevailing party may be entitled).
11.12 Execution in Counterparts. To facilitate execution, this
Agreement may be executed in as many counterparts as may be required; and it
shall not be necessary that the signatures of, or on behalf of, each party, or
that the signatures of all Persons required to bind any party, appear on each
counterpart; but it shall be sufficient that the signature of, or on behalf of,
each party, or that the signatures of the Persons required to bind any party,
appear on one or more of the counterparts. All counterparts shall collectively
constitute a single agreement. It shall not be necessary in making proof of this
Agreement to produce or account for more than a number of counterparts
containing the respective signatures of, or on behalf of, all of the parties
hereto.
THE REMAINDER OF THIS PAGE
INTENTIONALLY LEFT BLANK
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11.13 No Third Party Beneficiaries. Nothing in this Agreement is
intended to, and nothing in this Agreement shall be deemed or interpreted to,
create any right arising under or in connection with the terms and conditions of
this Agreement in any Person not a party to this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed
this Agreement as of the day and year first above written.
EFUNDS CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇
-----------------------------------------
Its: Executive Vice President
-----------------------------------------
ATM HOLDINGS, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------------
Its: President
-----------------------------------------
Accepted and Agreed as to
the provisions of Sections 5.08(a), 5.08(b), 5.27, 7.01(i), 7.01(m), 7.02(g),
8.01, 8.06, 8.07, and Articles 10 and 11, only:
THE PRINCIPALS
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
-----------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇
/s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
-----------------------------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Accepted and Agreed as to
the provisions of Section 5.08(a), 5.08(b), 5.27, 7.01(i), 7.01(m), 7.02(g),
8.01, 8.06, 8.07, and Articles 10 and 11, only:
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
----------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇
52
List Identifying Contents of Omitted Schedules
The Interest Purchase Agreement filed as Exhibit 2.1 to this Current Report on
Form 8-K does not contain the following Schedules:
Schedule Description
-------- -----------------------------------------------------------
Schedule I Schedule of Interests Transferred and Related Consideration
Schedule II Indemnification Limits of the Principles
Exhibit A Disclosure Schedule
Exhibit B Non-Competition, Release and Indemnity Agreement
Exhibit C Form Courier Agreement
The registrant will furnish supplementally a copy of any of the foregoing
schedules to the Commission upon request.
53