EXHIBIT 2.1
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PURCHASE AGREEMENT
Dated as of October 1, 2003
Among
FIRST AMERICAN REAL ESTATE SOLUTIONS LLC
as Buyer
TRANSAMERICA FINANCE CORPORATION
as Parent
and
▇▇▇▇▇ HOLDINGS, INC.
as Seller
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TABLE OF CONTENTS(1)
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SECTION 1. DEFINITIONS AND INTERPRETATIONS............................1
1.1 Defined Terms..............................................1
1.2 Principles of Construction................................10
SECTION 2. REPRESENTATIONS OF THE SELLER AND PARENT..................10
2.1 Existence and Good Standing...............................10
2.2 Binding Effect; Authorization; Capacity...................11
2.3 Capitalization............................................11
2.4 Subsidiaries and Investments..............................12
2.5 Financial Statements......................................12
2.6 Books and Records.........................................12
2.7 Title to Properties; Encumbrances.........................13
2.8 Owned Real Property.......................................13
2.9 Leases....................................................13
2.10 Material Contracts........................................14
2.11 Restrictive Documents.....................................16
2.12 Litigation................................................16
2.13 Taxes.....................................................16
2.14 Insurance.................................................17
2.15 Intellectual Properties...................................18
2.16 Compliance with Laws......................................20
2.17 Governmental Licenses.....................................20
2.18 Labor Matters.............................................21
2.19 Employee Benefit Plans....................................22
2.20 Interests in Clients, Suppliers, Etc......................27
2.21 No Changes Since Balance Sheet Date.......................27
2.22 Consents and Approvals; No Violations.....................28
2.23 Certain Agreements Affected by the Closing................28
2.24 Broker's or Finder's Fees.................................29
2.25 Copies of Documents.......................................29
2.26 Environmental Matters.....................................29
2.27 Claims History............................................29
SECTION 3. REPRESENTATIONS OF THE BUYER..............................29
3.1 Binding Effect; Authorization; Power......................29
3.2 Litigation................................................30
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1 This Table of Contents is provided for convenience only and does not form a
part of this Purchase Agreement.
(i)
3.3 Restrictive Documents.....................................30
3.4 Consents and Approvals; No Violations.....................30
3.5 Financing.................................................30
3.6 Broker's or Finder's Fees.................................31
SECTION 4. THE TRANSACTION...........................................31
4.1 Sale of Interests.........................................31
4.2 Purchase Price............................................32
4.3 Determination of Accounting Differential..................32
4.4 Closing...................................................33
4.5 Allocation of Purchase Price..............................33
4.6 Corporate Matters.........................................34
SECTION 5. CERTAIN COVENANTS.........................................34
5.1 Conduct of the Companies' Businesses Prior to Closing.....34
5.2 Conduct of the Buyer's Business Prior to Closing..........35
5.3 Exclusive Dealing.........................................35
5.4 Due Diligence; Further Assurances.........................36
5.5 Reasonable Best Efforts...................................36
5.6 Employee Matters..........................................37
5.7 Tax Covenants.............................................39
5.8 Domain Names..............................................40
5.9 Estimation of Accounting Differential.....................40
5.10 Inter-Company Debt........................................41
5.11 Transamerica Name and ▇▇▇▇................................41
5.12 Control of the Seller.....................................42
5.13 Assistance in Proceedings.................................42
SECTION 6. CONDITIONS PRECEDENT......................................43
6.1 Conditions of all Parties.................................43
6.2 Conditions of the Buyer...................................43
6.3 Conditions of Parent and the Seller.......................45
SECTION 7. TERMINATION...............................................45
7.1 Events of Termination.....................................45
7.2 Effect of Termination.....................................46
SECTION 8. SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION..............46
8.1 Survival of Representations...............................46
8.2 General Indemnification...................................47
8.3 Tax and Flood Claims......................................48
8.4 ALLTEL Agreements.........................................48
8.5 Vesting Under AEGON Plans.................................48
8.6 Indemnification Procedure.................................49
(ii)
SECTION 9. TAX MATTERS...............................................50
9.1 Tax Returns...............................................50
9.2 Payment of Taxes..........................................51
9.3 Controversies.............................................51
9.4 Transfer Taxes............................................52
9.5 Amended Returns...........................................52
9.6 Prior Tax Agreements......................................52
9.7 Indemnification...........................................53
9.8 Post-Closing Access and Cooperation.......................53
SECTION 10. MISCELLANEOUS.............................................54
10.1 Knowledge.................................................54
10.2 Expenses..................................................54
10.3 Confidentiality; Public Announcements; Tax Treatment......55
10.4 Governing Law.............................................55
10.5 Notices...................................................56
10.6 Parties in Interest.......................................57
10.7 Counterparts..............................................57
10.8 Entire Agreement..........................................57
10.9 Amendments................................................57
10.10 Third Party Beneficiaries.................................57
SELLER DISCLOSURE LETTER
EXHIBITS
Exhibit A........................Calculation of Accounting Differential
Exhibit B........................Form of Guarantee
Exhibit C........................Form of Noncompete Agreement
Exhibit D........................Form of Transition Services Agreement
(iii)
PURCHASE AGREEMENT
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This PURCHASE AGREEMENT (as the same may be amended, modified and
supplemented, this "Agreement") dated as of October 1, 2003 among FIRST AMERICAN
REAL ESTATE SOLUTIONS LLC, a California limited liability company (the "Buyer"),
TRANSAMERICA FINANCE CORPORATION, a Delaware corporation (the "Parent"), and
▇▇▇▇▇ HOLDINGS, INC., a Delaware corporation (the "Seller"; the Buyer, Parent
and the Seller each, a "Party" and, collectively, the "Parties").
W I T N E S S E T H :
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WHEREAS, immediately prior to the Conversion (as defined below), the
Seller owned all of the issued and outstanding shares of capital stock of
Transamerica Real Estate Tax Service, Inc., a Delaware corporation ("TRETS"),
and Transamerica Flood Hazard Certification, Inc., a Delaware corporation
("TFHC"; TRETS and TFHC each, a "Company" and collectively, the "Companies");
WHEREAS, on September 30, 2003, the Seller caused each of the Companies
to be converted to a Delaware limited liability company in accordance with
Section 18-214 of the Delaware Limited Liability Company Act (the "Conversion");
WHEREAS, after giving effect to the Conversion, the Seller owns all of
the issued and outstanding membership interests (the "Interests") in the
Companies;
WHEREAS, the Seller desires to sell to the Buyer, and the Buyer desires
to purchase from the Seller, the Interests pursuant to the terms and conditions
of this Agreement;
WHEREAS, it is the intention of the Parties that, upon consummation of
the purchase and sale of the Interests pursuant to this Agreement, the Buyer or
its designee shall own all of the issued and outstanding equity interests in the
Companies; and
WHEREAS, the Seller is a wholly-owned subsidiary of Parent;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants, representations, warranties and agreements herein contained, the
Parties agree as follows:
SECTION 1.
DEFINITIONS AND INTERPRETATIONS
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1.1. Defined Terms. In this Agreement the following words and expressions
shall have the following meanings (such meaning to be equally applicable to both
the singular and plural forms of the terms defined):
"Accounting Differential" shall mean, as of any date, the difference
resulting from the subtraction of (i) the aggregate of the accounts payable and
accrued liabilities (as determined in accordance with GAAP) and Claims Loss
Reserves of the Companies as of such date from (ii) the aggregate of the
accounts receivable (as determined in accordance with GAAP and which,
for the avoidance of doubt, is net of the allowance for doubtful accounts) of
the Companies as of such date (excluding accounts receivable that are more than
180 days past due and which are not included in the computation of the allowance
for doubtful accounts) and the amount of the Two-Day Compensation, calculated in
accordance with Exhibit A.
"Affiliate" shall mean, with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under common control with,
such Person; provided that, for the purposes of this definition, "control"
(including, with correlative meanings, the terms "controlled by" and "under
common control with"), as used with respect to any Person, shall mean the
ownership of fifty percent (50%) or more of the equity interest of such Person
or the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise.
"Agreed Claims" shall have the meaning provided in Section 8.6(d).
"Agreement" shall have the meaning provided in the introductory
paragraph.
"ALLTEL" shall mean ALLTEL Information Services, Inc., an Arkansas
corporation, and its successors and assigns.
"ALLTEL Alliance Agreement" shall mean that certain Alliance Agreement
dated as of November 30, 1998 between ALLTEL and Transamerica Real Estate Tax
Service, a division of Transamerica Corporation, as amended by Amendment No. 1
to Alliance Agreement dated as of January 27, 2003 between ALLTEL and the
Companies (as successors to Transamerica Real Estate Tax Service, a division of
Transamerica Corporation), and as otherwise amended, modified and supplemented
through the date of this Agreement.
"ALLTEL Software License Agreement" shall mean that certain Software
License Agreement dated as of November 30, 1998 between ALLTEL and Transamerica
Real Estate Tax Service, a division of Transamerica Corporation, as amended by
Amendment No. 1 to Software License Agreement dated as of January 27, 2003
between ALLTEL and the Companies (as successors to Transamerica Real Estate Tax
Service, a division of Transamerica Corporation), and as otherwise amended,
modified and supplemented through the date of this Agreement.
"Arbitrator" shall have the meaning provided in Section 4.3(b)(i).
"Assumed Benefit Plans and Arrangements" shall mean those Employee
Benefit Plans and Employee Benefit Arrangements maintained by a Company that are
identified on Schedule 5.6(a).
"Balance Sheets" shall mean the unaudited balance sheets of the
Companies as of the Balance Sheet Date.
"Balance Sheet Date" shall mean June 30, 2003.
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"Business Day" shall mean any day, other than a Saturday, Sunday or a
day on which banks located in Los Angeles, California or Chicago, Illinois shall
be authorized or required by law to close.
"Buyer" shall have the meaning provided in the introductory paragraph.
"Buyer Flexible Benefit Plan" shall have the meaning provided in
Section 5.6(d).
"Buyer Taxes" shall mean, except as otherwise provided in Section 9.4,
all Taxes payable with respect to the properties, income and operations of the
Companies for Post-Closing Periods (other than Taxes described in (ii) and (iii)
of the definition of Seller Taxes) and Excess Conversion Taxes.
"Certificate" shall have the meaning provided in Section 8.6(a).
"Claims Loss Reserves" shall mean claims loss reserves as determined in
accordance with the policy described on Schedule 1.1.
"Closing" shall have the meaning provided in Section 4.4.
"Closing Date" shall have the meaning provided in Section 4.4.
"Closing Date Accounting Differential" shall have the meaning provided
in Section 4.3(a).
"COBRA" shall have the meaning provided in Section 2.19(d).
"Code" shall mean the Internal Revenue Code of 1986, as amended, and
the rules and regulations promulgated thereunder.
"Company" and "Companies" shall have the meaning provided in the
recitals. All references to the Companies herein shall include, where
applicable, the resulting limited liability companies into which the Companies
have been converted pursuant to the Conversion.
"Company Intellectual Property" shall mean all Intellectual Property
owned by a Company; provided that "Company Intellectual Property" shall not
include (except as set forth in Section 5.12) any rights whatsoever relating to
the Transamerica Marks.
"Confidentiality Agreements" shall mean, collectively, the (i) letter
agreement dated May 5, 2003, as amended by the letter of intent dated August 15,
2003, among The First American Corporation, the Buyer and Transamerica
Corporation, and (ii) letter agreement dated August 26, 2003 between Parent and
The First American Corporation.
"Contracts" means any note, bond, mortgage, indenture, guarantee,
license, franchise, permit, agreement, understanding, arrangement, contract,
commitment, lease, franchise agreement or other instrument or obligation
(whether oral or written), each including all amendments, supplements and other
modifications thereto.
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"Conversion" shall have the meaning provided in the recitals.
"Designated Individuals" shall mean, (i) with respect to the Buyer, the
following individuals: ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇; and (ii) with respect to the Seller, the following individuals:
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇.
"Employee" shall mean each individual employed by one of the Companies
on the Closing Date (including any individual then on sick leave, short-term
disability, leave of absence or vacation).
"Employee Benefit Arrangements" shall mean any benefit arrangement,
obligation, custom or practice (other than an Employee Benefit Plan), whether or
not legally enforceable, to provide benefits, other than salary, as compensation
for services rendered, to present or former directors, officers, employees, or
agents, including employment agreements, severance agreements, compensation
arrangements, (including stock options or other equity-based compensation,
incentive programs or arrangements, sick leave, vacation pay, salary
continuation for short-term disability, severance pay policies or other
compensation arrangements) workers compensation, bonus, tuition reimbursement,
employee discounts, any plans providing dependent care benefits and any plans
providing benefits or payments in the event of a change of control, change in
ownership or sale of a substantial portion (including all or substantially all)
of the assets of any business or part thereof, in each case provided or
maintained by the Seller, Parent, the Companies or any of their Affiliates for
the benefit of Employees or former employees, directors or agents of the
Companies.
"Employee Benefit Plans" shall have the meaning provided in Section
2.19(a).
"Encumbrances" shall mean all liens, security interests, options,
rights of first refusal, claims, easements, mortgages, charges, indentures,
deeds of trust, rights of way, restrictions on the use of real property,
encroachments, licenses to third parties, leases to third parties, security
agreements, or any other encumbrances and other restrictions or limitations on
use of real or personal property.
"Entity" shall mean any Person that is not a natural person.
"Environmental Law" shall mean any law, order or other requirement of
law, including any principle of common law, relating to the protection of human
health or the environment, or to the manufacture, use, transport, treatment,
storage, disposal, release or threatened release of petroleum products,
asbestos, urea formaldehyde insulation, polychlorinated biphenyls or any
substance listed, classified or regulated as hazardous or toxic, or any similar
term, under such Environmental Law.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended, and the rules and regulations promulgated thereunder.
"Estimated Accounting Differential" shall have the meaning provided in
Section 5.9(a).
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"Excess Conversion Taxes" means all Taxes payable by Parent, the Seller
and/or the Companies as a result of, or with respect to, the Conversion and the
sale of the Companies pursuant to this Agreement, but only to the extent that
the aggregate amount of such Taxes payable by Parent, the Seller and/or the
Companies exceeds the aggregate amount of Taxes that would have been payable by
Parent, the Seller and/or the Companies had the sale of the Companies to the
Buyer pursuant to this Agreement been structured as a sale of the stock of the
Companies without the Conversion, and had an election under Section 338(h)(10)
of the Code (and any corresponding provision of all applicable state and local
taxing jurisdictions) been made with respect to such sale.
"Existing Stock" shall have the meaning provided in Section 5.11.
"Financial Statements" shall mean the Balance Sheets, the related
unaudited consolidated statements of income, cash flows and changes in
stockholders' equity of the Companies for and as of the six months ended June
30, 2003 and the unaudited consolidated balance sheets and statements of income,
cash flows and changes in stockholders' equity of the Companies for and as of
the fiscal years ended December 31, 2000, December 31, 2001 and December 31,
2002, in each case together with any explanatory notes thereto.
"Flood Claims" shall mean claims (including claims in respect of
alleged diminution in value of real property) or settlement of such claims
(including such settlements made for the purpose of preserving customer
goodwill) arising from actual or alleged erroneous flood zone determinations by
a Company.
"GAAP" shall mean, at any time or during any period, United States
generally accepted accounting principles as in effect at such time or during
such period (or if no period is specified, as of the date of this Agreement),
applied on a consistent basis.
"Governmental Entity" shall mean (i) any national government, political
subdivision thereof or local jurisdiction therein and (ii) any instrumentality,
board commission, court or agency of any of the foregoing, however constituted.
"Guarantee" shall mean the guarantee made by AEGON USA, Inc. in favor
of the Buyer in the form of Exhibit B.
"HSR Act" shall mean the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act
of 1976, as amended.
"HSR Filings" shall have the meaning provided in Section 2.22.
"HSR Termination" shall have the meaning provided in Section 2.22.
"HSR Waiting Period" shall have the meaning provided in Section 2.22.
"Indebtedness" of any Person shall mean and include (i) indebtedness
for borrowed money or indebtedness issued or incurred in substitution or
exchange for indebtedness for borrowed money, (ii) amounts owing as deferred
purchase price for property or services, including all stockholder notes and
"earn-out" payments, (iii) indebtedness evidenced by any
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note, bond, debenture, mortgage or other debt instrument or debt security, (iv)
commitments or obligations by which such Person assures a creditor against loss
(including contingent reimbursement obligations with respect to letters of
credit), (v) indebtedness secured by an Encumbrance on assets or properties of
such Person, (vi) obligations or commitments to repay deposits or other amounts
advanced by and owing to third parties (other than amounts received by TRETS
from a customer for the payment of real property taxes on behalf of such
customer in the Ordinary Course), (vii) obligations under any interest rate,
currency or other hedging agreement or (viii) guarantees or other contingent
liabilities (including so-called take-or-pay or keep-well agreements) with
respect to any indebtedness, obligation, claim or liability of any other Person
of a type described in clauses (i) through (vii) above. Indebtedness shall not,
however, include accounts payable to trade creditors and accrued expenses
arising in the Ordinary Course and shall not include the endorsement of
negotiable instruments for collection in the Ordinary Course.
"Indemnified Party" shall have the meaning provided in Section 8.6(a).
"Indemnifying Party" shall have the meaning provided in Section 8.6(a).
"Intellectual Property" shall mean all domestic and foreign: (i)
patents, patent applications (including all continuations,
continuations-in-part, divisionals, reexaminations and reissues) and invention
disclosures (collectively, "Patents"), (ii) trademarks and service marks
(whether or not registered) and registrations and applications therefor,
corporate and business names, trade names, trade dress, brand names, other
indicia of origin and all goodwill associated therewith (collectively,
"Trademarks"), (iii) copyrights (whether or not registered), all registrations
and applications therefor and all rights of renewal thereof, and computer
software programs and object codes (collectively, "Copyrights"), (iv) Internet
domain names, applications and reservations therefor, uniform resource locators
("URLs") and the Internet sites (collectively, the "Sites") corresponding
thereto, and (v) confidential information, technical data, customer lists,
know-how, formulae, designs, processes, procedures, source codes, databases,
data collections, inventions, methods and other trade secrets, proprietary
information or material of any type, whether recorded or unrecorded
(collectively, "Trade Secrets"), and all derivatives, improvements and
refinements of, any of the foregoing.
"Interests" shall have the meaning provided in the recitals.
"IRS" shall mean the Internal Revenue Service.
"Knowledge" shall have the meaning provided in Section 10.1.
"Licensed Company Intellectual Property" shall mean all Intellectual
Property (other than Company Intellectual Property or "off the shelf" or other
software widely available on generally standard terms and conditions) licensed
to a Company pursuant to a Contract currently in effect and used or held for use
in the operation of the Companies' respective businesses in the manner in which
such businesses are presently operated or contemplated to be operated.
"Licenses" shall have the meaning provided in Section 2.17.
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"Losses" shall mean all losses, liabilities, obligations, damages,
costs and expenses, including reasonable attorney fees; provided that Losses
shall not include any special, consequential, indirect or punitive damages
suffered by an Indemnified Party, but shall include, for the avoidance of doubt,
out-of-pocket losses, liabilities, obligations, damages, costs or expenses
(including reasonable attorney fees) incurred by an Indemnified Party in
connection with special, consequential, indirect or punitive damages suffered by
a third party.
"Mandatory Closing Cash Balance" shall have the meaning provided in
Section 5.9(c).
"Mandatory Termination" shall have the meaning provided in Section
5.10.
"Material Adverse Effect" shall mean with respect to any Person, a
material adverse change in or effect on (i) the validity or enforceability of
this Agreement, (ii) the ability of such Person to perform its obligations under
this Agreement or any other Related Document to which such Person is a party or
(iii) the business, assets, financial condition or results of operations of such
Person and its Subsidiaries, taken as a whole; provided, however, that the term
"Material Adverse Effect" shall not include any adverse change, event,
circumstance or effect that results from or arises in connection with (a)
changes or conditions generally affecting the industries or segments in which
the Companies operate, (b) changes in general economic, market or political
conditions or changes in market interest rates or (c) the negotiation or
execution of this Agreement or the announcement of the transactions contemplated
hereby, including the impact thereof on relationships with customers and
employees of the Companies.
"Noncompete Agreement" shall mean the Noncompete Agreement between the
Buyer and AEGON USA, Inc. in the form of Exhibit C.
"Nonconforming Tax Return" shall mean any Tax Return required to be
filed by the Buyer after the Closing Date with respect to Taxes imposed or
assessed by a jurisdiction, if, for purposes of such Tax, such jurisdiction does
not treat the Conversion as a liquidation of the Companies or does not treat the
sale transaction contemplated by this Agreement as a sale of assets of the
Companies.
"Notice of Objection" shall have the meaning provided in Section
4.3(b).
"Ordinary Course" shall mean, with respect to a Company, the ordinary
course of commercial operations customarily engaged in by such Company,
consistent with past practices (including with respect to quantity and
frequency).
"Overlap Period" shall mean any taxable year or other taxable period
beginning on or before the Closing Date and ending after the Closing Date.
"Parent" shall have the meaning provided in the introductory paragraph.
"Party" or "Parties" shall have the meaning provided in the
introductory paragraph.
"Patents" shall have the meaning provided in the definition of
"Intellectual Property."
"Permitted Encumbrances" shall have the meaning provided in Section
2.7.
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"Person" shall mean and include any individual, partnership, joint
venture, association, joint stock company, corporation, trust, limited liability
company, unincorporated organization, a group and a government or other
department, agency or political subdivision thereof.
"Pre-Closing Bonuses" shall have the meaning provided in Section
5.9(c).
"Post-Closing Period" shall mean all taxable years or other taxable
periods ending after the Closing Date including the portion of the Overlap
Period beginning on the day immediately following the Closing Date.
"Pre-Closing Period" shall mean all taxable years or other taxable
periods that end on or prior to the Closing Date and, with respect to any
Overlap Period, the portion of such Overlap Period ending on, and including, the
Closing Date.
"Purchase Price" shall have the meaning provided in Section 4.2.
"Related Documents" shall mean this Agreement, the Noncompete
Agreement, the Guarantee and the Services Agreement.
"Seller" shall have the meaning provided in the introductory paragraph.
"Seller Disclosure Letter" shall mean the disclosure letter prepared
and delivered by the Seller to the Buyer and attached to this Agreement.
"Seller Flexible Benefit Plan" shall have the meaning provided in
Section 5.6(d).
"Seller Taxes" shall mean, except as otherwise provided in Section 9.4,
(i) all Taxes payable with respect to the properties, income and operations of
the Companies for all Pre-Closing Periods, (ii) all Taxes attributable to
consummation of the Transactions, (iii) all Taxes arising as a result of the
Mandatory Termination and any Voluntary Termination and (iv) all Taxes (other
than Buyer Taxes) payable by Parent and/or the Seller for all periods; provided,
however, that in no event shall Seller Taxes include any Excess Conversion
Taxes.
"Services Agreement" shall mean the Transition Services Agreement among
the Buyer, AEGON USA, Inc. and Parent in the form of Exhibit D.
"Sites" shall have the meaning provided in the definition of
"Intellectual Property."
"Subsidiary" shall mean, with respect to any Person, (a) any
corporation more than 50% of whose stock of any class or classes having by the
terms thereof ordinary voting power to elect a majority of the directors of such
corporation (irrespective of whether or not at the time stock of any class or
classes of such corporation shall have or might have voting power by reason of
the happening of any contingency) is at the time owned by such Person and/or one
or more Subsidiaries of such Person and (b) any Entity (other than a
corporation) in which such Person and/or one more Subsidiaries of such Person
has more than a 50% equity interest at the time or otherwise controls the
management and affairs of such Entity (including the power to veto any material
act or decision).
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"Tax Claims" shall mean claims made or settlements entered into with
respect to penalties, fines or other similar fees for real property taxes as a
result of an error or omission, or an alleged error or omission, of any Company,
net of related recoveries of previously paid claims from property owners, taxing
jurisdictions and lenders.
"Taxes" shall mean all taxes, assessments, charges, duties, fees,
levies or other governmental charges, including all Federal, state, local,
foreign and other income, franchise, profits, gross receipts, capital gains,
capital stock, transfer, property, sales, use, value-added, occupation, excise,
severance, windfall profits, stamp, license, payroll, social security,
withholding and other taxes, assessments, charges, duties, fees, levies or other
governmental charges of any kind whatsoever (whether payable directly or by
withholding and whether or not requiring the filing of a Tax Return), all
estimated taxes, deficiency assessments, additions to tax, penalties and
interest and shall include any liability for such amounts as a result either of
being a member of a combined, consolidated, unitary or affiliated group or of a
contractual obligation to indemnify any Person.
"Tax Matter" shall have the meaning provided in Section 9.3(a).
"Tax Returns" shall have the meaning provided in Section 2.13(a).
"Termination Date" shall mean December 31, 2003.
"TFHC" shall have the meaning provided in the recitals.
"Trademarks" shall have the meaning provided in the definition of
"Intellectual Property."
"Trade Secrets" shall have the meaning provided in the definition of
"Intellectual Property."
"Transamerica Marks" shall mean (a) the word "Transamerica" or "AEGON,"
(b) the stylized pyramid logo of Transamerica Corporation, (c) any
representation or likeness of the Transamerica Building located at ▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, (d) any trademark or service ▇▇▇▇
owned by the Seller, Parent or an Affiliate thereof using or otherwise
incorporating the prefix "Trans," (e) any trademark, trade name or service ▇▇▇▇
owned by the Seller, Parent or an Affiliate thereof using or otherwise
incorporating the word "pyramid" and (f) any trademark, trade name or service
▇▇▇▇ owned by the Seller, Parent or an Affiliate thereof using or otherwise
incorporating the acronyms "TFHC," "TRETS" or "TA."
"TREIC" shall mean TREIC Joint Venture LLC, a Delaware limited
liability company.
"TRETS" shall have the meaning provided in the recitals.
"TVMC" shall mean Transamerica Vendor Management and Consulting LLC, a
Delaware limited liability company.
"24/7" shall have the meaning provided in Section 2.15(l).
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"Two-Day Compensation" shall have the meaning provided in Section
5.6(h).
"URLs" shall have the meaning provided in the definition of
"Intellectual Property."
"VEBA" shall have the meaning provided in Section 2.19(a).
"Voluntary Termination" shall have the meaning provided in Section
5.10.
"WARN" shall have the meaning provided in Section 2.18(k).
1.2 Principles of Construction.
(a) All references to Articles, Sections, subsections, Exhibits
are to Articles, Sections, subsections, Exhibits in or to this Agreement unless
otherwise specified. All references to Schedules are to Schedules in the Seller
Disclosure Letter unless otherwise specified. The words "hereof," "herein" and
"hereunder" and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement. The term "including" is not limiting and means "including without
limitation."
(b) All accounting terms not specifically defined herein shall be
construed in accordance with GAAP.
(c) In the computation of periods of time from a specified date to
a later specified date, the word "from" means "from and including"; the words
"to" and "until" each mean "to but excluding"; and the word "through" means "to
and including."
(d) The Section headings herein are for convenience only and shall
not affect the construction hereof.
(e) This Agreement is the result of negotiations among and has
been reviewed by each Party's counsel. Accordingly, this Agreement shall not be
construed against any Party merely because of such Party's involvement in its
preparation.
SECTION 2.
REPRESENTATIONS OF THE SELLER AND PARENT
----------------------------------------
Each of Parent and the Seller represents, warrants and agrees in favor of
the Buyer, as of the date of this Agreement and as of the Closing Date, as
follows:
2.1 Existence and Good Standing. Immediately prior to the effectiveness
of the Conversion, each of the Companies was a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
As of the Closing Date, each of the Companies is a limited liability company
duly formed, validly existing and in good standing under the laws of the State
of Delaware. Each of the Companies has all requisite power and authority to own,
lease and operate its properties and to carry on its business as now being
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conducted, except to the extent that the failure of a Company to have such power
or authority arises as a result of the Conversion. Each of the Companies is duly
qualified or licensed to conduct its business, and is in good standing in each
jurisdiction listed on Schedule 2.1, which are the only jurisdictions in which
the character or location of the property owned, leased or operated by such
Company or the nature of the business conducted by such Company makes such
qualification necessary (except where the failure to be so qualified or licensed
or in good standing (i) would not, individually or in the aggregate, have a
Material Adverse Effect on any Company or (ii) arises as a result of the
Conversion). The Seller has delivered to the Buyer a true and correct copy of
the certificate of incorporation and bylaws of each Company as in effect
immediately prior to the Conversion. Immediately prior to the effectiveness of
the Conversion, none of the Companies, Parent or the Seller was in violation of
any of the provisions of the certificate of incorporation or bylaws of any
Company.
2.2 Binding Effect; Authorization; Capacity. Each of Parent and the
Seller is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware. Each of Parent and the Seller has the
requisite organizational power and authority to execute and deliver this
Agreement and to perform its obligations hereunder. The execution, delivery and
performance of this Agreement by each of Parent and the Seller has been duly
authorized and approved by all its necessary corporate action. This Agreement
has been duly executed and delivered by each of Parent and the Seller and,
assuming the due execution of the Buyer, constitutes the valid and binding
agreement of each of Parent and the Seller, enforceable against each of Parent
and the Seller in accordance with its terms, except as such enforceability may
be limited by bankruptcy, insolvency or similar laws and equitable principles
relating to or affecting the rights of creditors generally from time to time in
effect.
2.3 Capitalization.
(a) Immediately prior to the effectiveness of the Conversion, the
authorized capital stock of TRETS consisted of 1,000 shares of common stock,
$1.00 par value per share, of which 100 shares were issued and outstanding, and
the authorized capital stock of TFHC consisted of 1,000 shares of common stock,
$1.00 par value per share, of which 100 shares were issued and outstanding.
Immediately prior to the effectiveness of the Conversion, all such outstanding
shares had been duly authorized and validly issued, were fully paid and
nonassessable and were not issued in violation of any preemptive rights. After
giving effect to the Conversion, the authorized capital of each Company consists
solely of membership interests, all of which have been issued to the Seller in
accordance with the terms and conditions of this Agreement. There are no
outstanding options, warrants, rights, calls, commitments, conversion rights
(except for the Conversion), rights of exchange, plans or other agreements of
any character (except for this Agreement) providing for the purchase, issuance
or sale of any securities or other equity interest in any Company or its
business, and none of the foregoing will arise as a result of the execution or
performance of this Agreement or the transactions contemplated herein. There are
no irrevocable proxies and no voting agreements with respect to any shares of
capital stock of, or other equity or voting interest in, any Company. There are
no outstanding or authorized stock appreciation, phantom stock, profit
participation or similar rights with respect to the capital stock of, or other
equity or voting interest in, any Company. No Company has any authorized or
outstanding bonds, debentures, notes or other Indebtedness, the holders of which
have the right
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to vote (or convertible into, exchangeable for, or evidencing the right to
subscribe for or acquire securities having the right to vote) with the equity
holders of any Company on any matter. There are no Contracts to which any
Company is a party or by which any Company is bound to (i) repurchase, redeem or
otherwise acquire any shares of capital stock of, or other equity or voting
interest in, any Company or any other Person or (ii) vote or dispose of any
shares of capital stock of, or other equity or voting interest in, any Company.
(b) Immediately prior to the effectiveness of the Conversion, the
Seller was the lawful owner, beneficially and of record, of all of the issued
and outstanding shares of capital stock of each Company, and after giving effect
to the Conversion, but immediately prior to the Closing, will be the lawful
owner, beneficially and of record, of all of the issued and outstanding
membership interests in each Company, in each case free and clear of all
Encumbrances.
(c) At the Closing, the Seller will have delivered to the Buyer
(or its designee) good title to the Interests, free and clear of all
Encumbrances. Immediately following the Closing, the Buyer (or its designee)
will own 100% of the issued and outstanding membership interests in each
Company.
(d) The parties intend that, for U.S. federal income tax purposes,
the Conversion and sale transaction as contemplated hereunder shall be treated
as a liquidation of each Company under Section 332 of the Code followed by a
sale of assets of each Company.
2.4 Subsidiaries and Investments. Except as set forth in Schedule 2.4,
neither Company has any Subsidiaries. Neither Company owns, directly or
indirectly, any capital stock of, or other equity, ownership, proprietary or
voting interest in, any Person.
2.5 Financial Statements. Schedule 2.5 contains a copy of each of the
Financial Statements. Except as specifically disclosed therein, each of the
Financial Statements has been prepared in accordance with GAAP. The Financial
Statements fairly present, in all material respects, with respect to each
Company, the financial position of such Company at the dates thereof and reflect
all claims against and all debts and liabilities, fixed or contingent, of such
Company as at the dates thereof and the statements of income, shareholders'
equity and cash flows fairly present, in all material respects, the results of
the operations of such Company and the changes in cash flows of such Company for
the periods indicated therein. The Financial Statements are consistent, in all
material respects, with the books and records of the Companies, subject to
normal year-end audit adjustments. Except as set forth in Schedule 2.5, the
Companies own or otherwise have the legal right to use all of the assets
necessary for the maintenance and operation of the businesses of the Companies
substantially in the manner in which such businesses are presently conducted.
The revenue reflected on the Financial Statements is only attributable to the
provision of flood determinations, tax reporting and payment services and
related data products and services, in each case substantially with respect to
real property.
2.6 Books and Records. The respective minute books of each Company
contain in all material respects accurate records of all meetings of, and
corporate or other organizational action
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taken by (including action taken by written consent), the stockholders, members,
directors and/or managers, as the case may be, of such Company. Except as set
forth in Schedule 2.6, no Company has any material records, systems, controls,
data or information recorded, stored, maintained, operated or otherwise wholly
or partly dependent upon or held by any means (including any electronic,
mechanical or photographic process, whether computerized or not) which
(including all means of access thereto and therefrom) are not under the
exclusive ownership and direct control of a Company.
2.7 Title to Properties; Encumbrances. Except (x) as otherwise indicated
in Sections 2.9 and 2.15 and (y) for properties and assets reflected on the
Balance Sheets or acquired since the Balance Sheet Date which have been sold or
otherwise disposed of in the Ordinary Course, each of the Companies has good and
valid title to (a) all of its properties and assets (real and personal, tangible
and intangible), including all of the properties and assets reflected in the
Balance Sheets, except as indicated in the notes thereto and (b) all of the
properties and assets purchased by such Company since the Balance Sheet Date; in
each case subject to no Encumbrance, except for (i) Encumbrances reflected on
the Balance Sheet, (ii) Encumbrances consisting of zoning or planning
restrictions, easements, permits and other restrictions or limitations on the
use of real property or irregularities in title thereto which do not materially
detract from the value of, or impair the use of, such property by such Company
in the operation of its business, (iii) liens for current taxes, assessments or
governmental charges or levies on property not yet due and delinquent, (iv)
Encumbrances which were incurred in the Ordinary Course and do not in the
aggregate materially detract from the value of the properties and assets of any
Company and (v) Encumbrances described on Schedule 2.7 (Encumbrances of the type
described in clauses (i), (ii), (iii) and (iv) above are hereinafter sometimes
referred to as "Permitted Encumbrances").
2.8 Owned Real Property. Neither Company owns, directly or indirectly,
in whole or in part, any interest in any real property.
2.9 Leases. Schedule 2.9 contains an accurate and complete list of each
personal property lease for which total rent payments for any 12-month period
equal or exceed $50,000 and each real property lease to which any Company is a
party (as lessee or lessor). Each lease set forth (or required to be set forth)
on Schedule 2.9 is in full force and effect and all rents and additional rents
due to date on each such lease have been paid. In the case of each such lease,
(a) the lessee is not in default thereunder, (b) no waiver, indulgence or
postponement of the lessee's payment or other material obligations thereunder
has been granted by the lessor, (c) except for a default or event of default
under the leases listed on Schedule 2.22 caused by the Conversion or the
purchase and sale of the Interests hereunder, there exists no default or event
of default or event, occurrence, condition or act (including the Conversion and
the purchase and sale of the Interests hereunder) which, with the giving of
notice, the lapse of time or the happening of any further event or condition,
would become a default or event of default thereunder and (d) no Company has
violated any of the terms or conditions thereunder in any material respect and,
to the Knowledge of the Seller, all of the covenants to be performed by any
other party thereunder have been fully performed. The tangible personal property
leased by each Company, taken as a whole, is in a state of good maintenance and
repair, reasonable wear and tear excepted.
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2.10 Material Contracts.
(a) Except as set forth on Schedule 2.10(a), no Company is bound
by any (i) Contract relating to the employment of any Person by such Company or
any bonus, deferred compensation, pension, profit sharing, stock option,
employee stock purchase, retirement or other employee benefit plan, (ii)
Contract that contains restrictions with respect to payment of dividends or any
other distribution in respect of its capital stock or other equity interests,
(iii) Contract relating to future capital expenditures in excess of $100,000 per
individual item or $250,000 in the aggregate, (iv) Contract concerning any
Indebtedness of any Company, (v) loan or advance to, or investment in, any
Person or any Contract relating to the making of any such loan, advance or
investment, other than loans to employees that are not, individually or in the
aggregate, material, (vi) guarantee or other contingent liability in respect of
any Indebtedness or obligation of any Person other than a Company (other than
the endorsement of negotiable instruments for collection in the Ordinary
Course), (vii) Contract to provide management, consulting or similar services,
(viii) Contract limiting the ability of any Company to engage in any line of
business or to compete with any Person, (ix) Contract concerning any joint
venture, partnership or business alliance (including any such joint venture,
partnership or business alliance (1) a major purpose of which is to develop
electronic systems or other intellectual property or (2) in connection with
which any Company provides a product or service to such joint venture,
partnership or business alliance or other party and such joint venture,
partnership or business alliance or other party, as the case may be, acts as the
provider of record for such products and/or services), (x) Contract under which
any Company agrees to pay fees to any Person for access to an electronic network
used for the delivery (whether or not exclusively) of any Company's products or
services, (xi) Contract under which any Company sells products and/or services
to any Person that resells such products and/or services to end users, (xii) any
Contract that apportions or allocates liability between, or otherwise modifies
the respective liabilities of, any Company and any of its current or former
customers with respect to products or services purchased by such customer from
such Company and is entered into upon or in connection with the termination of
such Company's relationship with such customer, (xiii) Contract the operation or
termination of which would have a Material Adverse Effect on any Company (other
than Contracts listed on Schedule 2.10(b)(i), Schedule 2.10(c) or Schedule
2.15(b) or, with respect to clauses (i) through (xii) or clause (xiv) of this
Section 2.10(a), otherwise listed on Schedule 2.10(a)) or (xiv) Contract not
entered into in the Ordinary Course which involves $50,000 or more and is not
cancelable without penalty within 30 days.
(b) Schedule 2.10(b)(i) contains an accurate and complete list of
(A) each Contract between TRETS and any active customer of TRETS that accounted
for sales in excess of $500,000 during the 12-month period ending August 31,
2003 and (B) each Contract between TFHC and any active customer of TFHC that
accounted for sales in excess of $250,000 during the 12-month period ending
August 31, 2003, including with respect to each such customer the total sales
attributable to such customer during such 12-month period and the current
expiration date of each such Contract. Schedule 2.10(b)(ii) contains an accurate
and complete list of (X) each Contract between TRETS and any customer of TRETS
that accounted for sales in excess of $500,000 during the 12-month period ending
August 31, 2003 and (Y) each Contract between TFHC and any customer of TFHC that
accounted for sales in excess of $250,000 during the 12-month period ending
August 31, 2003, including with respect to each such customer the total
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sales attributable to such customer during such 12-month period and the current
expiration date of each such Contract. Except as noted on Schedule 2.10(b)(i),
as of the date of this Agreement, the relationship of such Company with each
customer set forth (or required to be set forth) on Schedule 2.10(b)(i) is an
ongoing commercial relationship, and no such customer has canceled, failed to
renew or otherwise terminated, or, to the Seller's Knowledge, threatened to
cancel, fail to renew or otherwise terminate or otherwise advised in writing
that it may cancel, fail to renew or otherwise terminate, its relationship with
such Company. Except as noted on Schedule 2.10(b)(i), from the later of August
31, 2002 and the most recent contract renewal date for any customer set forth
(or required to be set forth) on Schedule 2.10(b)(i), none of the Seller, Parent
and the Companies has received any written notice that any such customer may
cancel or otherwise materially and adversely modify its relationship with any
Company or limit its usage or purchase of the services and products of any
Company either as a result of the transactions contemplated hereby or otherwise.
Except as set forth on Schedule 2.10(b)(i), no Company has experienced a
decrease in the total sales attributable to any customer set forth (or required
to be set forth) on Schedule 2.10(b)(i) during the 12-month period ending August
31, 2003 in excess of 10% when compared to the total sales attributable to such
customer during the 12-month period ending August 31, 2002.
(c) Schedule 2.10(c) contains an accurate and complete list of
each Contract between any Company and any supplier of such Company that
accounted for more than 0.25% of the total purchases of such Company during the
12-month period ending August 31, 2003. None of the Seller, Parent and the
Companies has received any written notice that any such supplier may cancel or
otherwise materially and adversely modify its relationship with any Company or
limit its services, supplies or materials to any Company either as a result of
the transactions contemplated hereby or otherwise. No supplier of data to any
Company, including any Governmental Entity, has terminated or given written
notice that it may terminate its relationship with any Company or has otherwise
denied any Company access to data that is required for such Company to conduct
its business in the Ordinary Course, except where such data is available from
other suppliers.
(d) Each Contract set forth (or required to be set forth) on
Schedule 2.10(a), Schedule 2.10(b)(i), Schedule 2.10(c) and Schedule 2.15(b) is
in full force and effect and there exists no (i) default or event of default by
any Company or, to the Knowledge of the Seller, any other party to any such
Contract with respect to any material term or provision of any such Contract or
(ii) event, occurrence, condition or act (including the consummation of the
transactions contemplated hereby) which, with the giving of notice, the lapse of
time or the happening of any other event or condition, would become a default or
event of default by any Company or, to the Knowledge of the Seller, any other
party thereto, except in the case of Contracts a default or event of default
under which would not in the aggregate reasonably be expected to have a Material
Adverse Effect on any Company. Except for the Contracts listed on Schedule 2.22,
the consummation of the transactions contemplated by this Agreement would not
cause a default or require the giving of notice and/or consent under any of the
Contracts set forth (or required to be set forth) on Schedule 2.10(a), Schedule
2.10(b)(i), Schedule 2.10(c) and Schedule 2.15(b). The Seller has made available
to the Buyer true and complete copies, including all amendments and supplements
thereto, of each Contract set forth (or required to be set forth) on Schedule
2.10(a) and Schedule 2.10(b)(i).
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2.11 Restrictive Documents. None of the Companies, Parent and the Seller
is subject to, or a party to, any charter, bylaw, mortgage, lien, lease,
license, permit, contract, instrument, law, rule, ordinance, regulation, order,
judgment or decree, or any other restriction of any kind or character that (a)
by its own operation and not by the breach or violation, as the case may be,
thereof has or would reasonably be expected to have a Material Adverse Effect on
any Company, (b) would restrict the ability of any Company to own its property
or conduct its business as presently conducted or (c) excluding provisions of
Delaware law that are applicable to Delaware corporations and limited liability
companies generally, would restrict the ability of any Company to make
distributions or pay dividends to its stockholders or members, as the case may
be.
2.12 Litigation. Except as set forth on Schedule 2.12, there is no
action, suit, proceeding at law or in equity, arbitration or administrative or
other proceeding by or before (or to the Knowledge of the Seller any
investigation by) any Governmental Entity or other instrumentality or agency,
pending, or, to the Knowledge of the Seller, threatened, against or affecting
any Company or any of its properties or rights which would reasonably be
expected to materially and adversely affect the right or ability of any Company
to carry on its business as now conducted, or which would reasonably be expected
to, individually or in the aggregate, have a Material Adverse Effect on any
Company or the Interests, and to the Knowledge of the Seller, no fact or
circumstance exists that would reasonably be expected to form the basis
therefor. None of the Companies, Parent and the Seller is subject to any
judgment, order or decree entered in any lawsuit or proceeding which would
reasonably be expected to, individually or in the aggregate, have a Material
Adverse Effect on any Company or the Interests.
2.13 Taxes.
(a) Tax Returns. Each of the Companies has timely filed or caused
to be timely filed (or has obtained valid extensions of time in which to file)
with the appropriate taxing authorities all material tax returns, statements,
forms and reports (including elections, declarations, disclosures, schedules,
estimates and information tax returns) for Taxes ("Tax Returns") that are
required to be filed by, or with respect to the income, property or operations
of, such Company on or prior to the Closing Date. The Tax Returns filed by, or
with respect to the income, property or operations of, the Companies have
accurately reflected in all material respects all liability for Taxes of the
Companies for the periods covered thereby.
(b) Payment of Taxes. All material Taxes and Tax liabilities due
by, or with respect to the income, assets or operations of, the Companies for
all Pre-Closing Periods have been timely paid or will be timely paid in full on
or prior to the Closing Date or accrued and adequately disclosed and fully
provided for on the books and records of the Companies in accordance with GAAP.
(c) Other Tax Matters.
(i) Except as set forth in Schedule 2.13(c)(i), there is no
current or pending (nor has Parent, Seller or any Company received written
notice relating to any proposed) federal or applicable state or foreign or other
audits or examinations of Taxes involving Parent,
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Seller or any Company, the adverse determination of which would materially
affect the tax liability of any Company.
(ii) Except as set forth in Schedule 2.13(c)(ii), none of
Parent, the Seller or any Company, as of the Closing Date, (A) has entered into
an agreement or waiver or been requested to enter into an agreement or waiver
extending any statute of limitations relating to the payment or collection of
any material Taxes with respect to the income, property or operations of any
Company, or (B) is presently contesting any material Tax liability with respect
to the income, property or operations of any Company before any court, tribunal
or agency.
(iii) Except as set forth in Schedule 2.13(c)(iii), no Company
has been included in any "consolidated," "unitary" or "combined" Tax Return
provided for under the law of the United States, any foreign jurisdiction or any
state or locality with respect to Taxes for any taxable period for which the
statute of limitations has not expired (other than a group of which the
Companies are the only members).
(iv) All material Taxes that any Company is (or was) required
by law to withhold or collect in connection with amounts paid or owing to any
employee, independent contractor, creditor, stockholder or other third party
have been duly withheld or collected, and have been timely paid over to the
proper authorities to the extent due and payable.
(v) Within the past five (5) years, no Company has received
a written claim made by any taxing authority in a jurisdiction where any Company
does not file Tax Returns that any Company is or may be subject to taxation by
that jurisdiction.
(vi) As of the Closing Date, there will be no tax sharing,
allocation, indemnification or similar agreements in effect as between any
Company or any predecessor or Affiliate thereof and any other party (including
Parent, the Seller and any predecessors or Affiliates thereof) under which any
Company or the Buyer or any Affiliate of the Buyer, could be liable for any
Taxes or other claims of any Person.
(vii) The Seller is not a "foreign person" within the meaning
of Section 1445 of the Code.
(viii) Schedule 2.13(c)(viii) sets forth each and every taxing
jurisdiction in which Tax Returns have actually been filed (or will be filed) on
or before the Closing Date by, or with respect to the income, assets or
operations of, any Company within the past two years.
(ix) Neither Company has made any election under U.S.
Treasury Regulation Section 301.7701-3 to be treated for U.S. federal income tax
purposes as anything other than its default classification as a disregarded
entity after giving effect to the Conversion.
2.14 Insurance.
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(a) Set forth on Schedule 2.14(a) is an accurate and complete list
of each insurance policy that covers any Company and/or its respective business,
properties, assets or employees (including deductibles, if any, and policy
limits), which list specifies the insurance policies as to which a Company is a
policyholder. Such policies are in full force and effect and all premiums
thereon have been paid. There has been no act or omission by any Company that
would invalidate any of the insurance policies set forth (or required to be set
forth) on Schedule 2.14(a).
(b) With respect to each insurance policy set forth (or required
to be set forth) on Schedule 2.14(a) as to which a Company is a policyholder (i)
each of the Companies is in compliance in all material respects with the terms
and provisions of such policy, (ii) no Company is in default under such
insurance policy and there exists no event, occurrence, condition or act
(including the Conversion and the purchase and sale of the Interests hereunder)
that, with the giving of notice, the lapse of time or the happening of any other
event or condition, would become a default thereunder, (iii) no Company has
received any notice of cancellation or non-renewal of any such policy nor, to
the Knowledge of the Seller, has the termination of any such policy been
threatened, and there exists no event, occurrence, condition or act (including
the Conversion and the purchase of the Interests hereunder) which, with the
giving of notice, the lapse of time or the happening of any other event or
condition, would entitle any insurer to terminate or cancel such policy and (iv)
set forth on Schedule 2.14(b) is an accurate and complete list of all claims
made on any such policy during the 36-month period ending on the date of this
Agreement.
2.15 Intellectual Properties.
(a) Schedule 2.15(a) is an accurate and complete list of all
Company Intellectual Property that is registered or the subject of an
application for registration, and other material Company Intellectual Property
(excluding Trade Secrets), and indicates whether each item listed has been duly
registered in, filed in or issued by the United States Patent and Trademark
Office, United States Copyright Office, a duly accredited and appropriate domain
name registrar, the appropriate offices in the various states of the United
States or the appropriate offices of other jurisdictions (foreign and domestic),
and each such registration, filing and issuance remains in full force and
effect.
(b) Schedule 2.15(b) is an accurate and complete list of all
Contracts currently in effect granting to a Company any right under or with
respect to any Licensed Company Intellectual Property. No written notice of a
material default has been sent or received by any Company under any Contract
listed (or required to be listed) on Schedule 2.15(b) which remains uncured and
the execution, delivery or performance of this Agreement and the transactions
contemplated hereby (including the purchase and sale of the Interests) will not
result in such a default. Each Contract listed (or required to be listed) on
Schedule 2.15(b) is a legal, valid and binding obligation of such Company and,
to the Knowledge of the Seller, each of the other parties thereto, enforceable
by such Company in accordance with the terms thereof.
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(c) The Companies own all of the Company Intellectual Property and
hold their respective rights to the Licensed Intellectual Property, free and
clear of any Encumbrances (except Permitted Encumbrances), without obligation to
pay any royalty or any other fees with respect thereto, other than to the
applicable governmental agencies responsible for the collection of renewal or
maintenance fees for Company Intellectual Property. No Company Intellectual
Property has been cancelled, abandoned or otherwise terminated except for such
cancellation, abandonment or termination that would not have a Material Adverse
Effect on any Company, and all renewal and maintenance fees, if any, in respect
of Company Intellectual Property have been duly paid. Except as set forth on
Schedule 2.15(c), there are no actions that must be taken or payments that must
be made by any Company within 180 days following the Closing Date with respect
to any Company Intellectual Property that, if not taken, will have a Material
Adverse Effect on any Company. Each Company has the exclusive right to file,
prosecute and maintain all applications and registrations with respect to its
respective Company Intellectual Property.
(d) The use by the Companies of the Company Intellectual Property
does not violate, infringe or misappropriate any third party rights. No Company
has received any written notice or claim from any third party challenging the
right of any Company to use any of the Company Intellectual Property or the
Licensed Company Intellectual Property, which claim is still pending. Except as
set forth on Schedule 2.15(d), the Company Intellectual Property and the
Licensed Company Intellectual Property constitutes all of the Intellectual
Property necessary to operate each Company's respective business as of the
Closing Date in the manner in which it is presently operated or contemplated to
be operated.
(e) No Company has made any claim in writing of a violation,
infringement, misuse or misappropriation by any third party (including any
employee or former employee of any Company) of its rights to, or in connection
with, any Company Intellectual Property, which claim is still pending. No
Company has entered into any agreement to indemnify any other Person against any
charge of infringement of any Intellectual Property, other than indemnification
provisions contained in purchase orders, contracts or agreements arising in the
Ordinary Course.
(f) Except as set forth on Schedule 2.12, there are no pending or,
to the Knowledge of the Seller, threatened claims by any third party of a
violation, infringement, misuse or misappropriation by any Company of any
Intellectual Property owned by any third party, or of the invalidity of any
Company Intellectual Property. Except with respect to a Company's infringement,
misuse or misappropriation of a business process Patent that the Seller can
demonstrate that the Buyer or any Subsidiary thereof also infringes, misuses or
misappropriates as of the date of this Agreement, no valid basis exists for any
claim of a violation, infringement, misuse or misappropriation by any Company of
any Intellectual Property owned by any third party, or of the invalidity of any
Company Intellectual Property.
(g) There are no interferences or other contested proceedings,
either pending or, to the Knowledge of the Seller, threatened, in the United
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▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ Patent and Trademark Office or any
governmental authority (foreign or domestic) relating to any pending application
with respect to the Company Intellectual Property.
(h) Each Company has taken all commercially reasonable steps to
protect and preserve the confidentiality of all such Company's Trade Secrets
included in the Company Intellectual Property. No Company has breached any
agreements of non-disclosure or confidentiality, except for such breaches that
would not, individually or in the aggregate, have a Material Adverse Effect on
any Company.
(i) No Company has entered into any agreements, understandings or
other arrangements with the Seller, Parent or any Affiliate of the Seller or
Parent concerning any portion of the Company Intellectual Property.
(j) Each of the material computer software programs used or held
for use in the businesses of the Companies operates and runs in a commercially
reasonable business manner, conforms in all material respects to the
specifications thereof and, with respect to each of such computer software
programs owned (solely or jointly) by any Company, the applications can be
compiled from their associated source code in a commercially reasonable manner.
(k) For the 12-month period ending on the Closing Date, the active
Internet domain names and URLs of the Companies listed on Schedule 2.15(a)
direct and resolve to the appropriate Internet protocol addresses and are and
have been accessible to Internet users on those certain computers used by a
Company to make the Sites (as defined in the definition of Intellectual
Property) so accessible substantially twenty-four hours per day, seven days per
week, excluding periods of downtime necessary to perform maintenance in the
Ordinary Course consistent with standard industry practice ("24/7") and are and
have been operational in accordance with their intended functionalities
substantially on a 24/7 basis.
2.16 Compliance with Laws. Each of the Companies is in compliance with
all applicable laws, regulations, orders, judgments and decrees, except where
the failure to so comply would not, individually or in the aggregate, have a
Material Adverse Effect on any Company.
2.17 Governmental Licenses. Each of the Companies has all governmental
licenses, permits, franchises, approvals and other authorizations of, and has
made all registrations and/or filings with, all Governmental Entities (the
"Licenses"), necessary to own, lease and operate its respective material
properties and to enable it to carry on its respective business as presently
conducted, except to the extent the failure of any such Licenses to be in full
force and effect arises as a result of the Conversion. All such Licenses held by
the Companies are in full force and effect. Any applications for the renewal of
any such License that are due prior to the Closing Date will be timely made or
filed by a Company prior to the Closing Date. None of the Companies has received
notice of any proceeding for suspension or revocation of, or similar proceedings
with respect to, any such License and to the Knowledge of the Seller, no fact or
circumstance exists that could form the basis for any such proceedings. No
jurisdiction has
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demanded or requested that any Company qualify or become licensed as a foreign
corporation in any jurisdiction in which such Company is not currently so
qualified or licensed.
2.18 Labor Matters.
(a) Each of the Companies is in compliance with all federal, state
or other applicable laws, domestic or foreign, respecting employment and
employment practices, terms and conditions of employment and wages and hours,
and has not and is not engaged in any unfair labor practice, except in each case
as would not, individually or in the aggregate, have a Material Adverse Effect
on any Company.
(b) No unfair labor practice complaint against any Company is
pending before the National Labor Relations Board or, to the Knowledge of the
Seller, threatened.
(c) There is no labor strike, dispute, slowdown or stoppage
actually pending or, to the Knowledge of the Seller, threatened against or
involving any Company.
(d) No union is currently certified, and, to the Knowledge of the
Seller, there is no union representation question and no union or other
organizational activity that would be subject to the National Labor Relations
Act (20 U.S.C. ss.151 et. seq.) existing or threatened with respect to the
operations of any Company.
(e) No grievance which would, individually or in the aggregate,
have a Material Adverse Effect on any Company exists, no arbitration proceeding
arising out of or under any collective bargaining agreement is pending and no
claim therefor has been asserted.
(f) No Company is subject to or bound by any collective bargaining
or labor union agreement applicable to any Person employed by any Company and no
collective bargaining or labor union agreement is currently being negotiated by
any Company.
(g) No Company has experienced any material labor difficulty or
work stoppage during the last three years.
(h) Except as set forth on Schedule 2.18(h), no Company has any
Equal Employment Opportunity Commission charges or other claims of employment
discrimination pending or, to the Knowledge of the Seller, threatened against
it.
(i) No wage and hour department investigation is ongoing or, to
the Knowledge of the Seller, pending or threatened against any Company.
(j) There are no occupational health and safety claims ongoing or,
to the Knowledge of the Seller, pending or threatened against any Company.
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(k) Since the enactment of the Worker Adjustment and Retraining
Notification Act ("WARN"), no Company has effected either (i) a "plant closing"
(as defined in WARN) affecting any site of employment or one or more facilities
or operating units within any site of employment or facility of any Company or
(ii) a "mass layoff" (as defined in WARN) affecting any site of employment or
facility of any Company, except any such plant closing or mass layoff that would
not, individually or in the aggregate, result in any material liability of any
Company under WARN. No Company has been affected by any transaction or engaged
in layoffs or employment terminations sufficient in number to trigger
application of any similar law and none of the employees of the Companies has
suffered an "employment loss" (as defined in WARN) during the six months prior
to the date of this Agreement.
(l) Each of the Companies is in material compliance with the terms
and provisions of the Immigration Reform and Control Act of 1996, as amended,
and all related regulations promulgated thereunder, and all other applicable
immigration laws and regulations.
(m) Set forth on Schedule 2.18(m) is an accurate and complete list
containing the names of all Persons employed by any Company on the date of this
Agreement, together with each such Person's (i) current title or position held,
(ii) date of hire, (iii) current annual salary, (iv) most recent bonus paid, (v)
current bonus target, (vi) job code and (vii) number of accrued and unused
vacation days, "AEGON Wellness" days and personal holidays as of the date of
this Agreement, and indicating such Persons, if any, that were employed by, or
whose compensation was allocated to, charged to or paid by in whole or in part
to, any Affiliate (other than a Company) of any Company during the 18-month
period ending on the date of this Agreement.
2.19 Employee Benefit Plans.
(a) List of Plans. Set forth on Schedule 2.19(a) is an accurate and
complete list of all (i) "employee benefit plans," within the meaning of Section
3(3) of ERISA; (ii) bonus, stock option, stock purchase, restricted stock,
incentive, fringe benefit, "voluntary employees' beneficiary associations" under
Section 501(c)(9) of the Code ("VEBA"), profit-sharing, pension or retirement,
medical, life insurance, disability, accident, salary continuation, severance,
accrued leave, vacation, sick pay, sick leave and unemployment benefit plans,
programs, arrangements, commitments and/or practices (whether or not insured);
(iii) employment, consulting, termination, and severance contracts or
agreements, whether or not any such plans, programs, arrangements, commitments,
contracts, agreements and/or practices (referred to in (i), (ii) or (iii) above)
are in writing or are otherwise exempt from the provisions of ERISA, that have
been established, maintained or contributed to (or with respect to which an
obligation to contribute has been undertaken), in each case for active, retired
or former employees or directors of the Companies, or with respect to which any
actual, contingent, secondary or potential liability is borne by any Company
(such plans, programs, arrangements, commitments, contracts, agreements and
practices referred to in (i), (ii) and (iii) above, the "Employee Benefit
Plans"); and (iv) Employee Benefit Arrangements.
(b) Status of Plans. Each Employee Benefit Plan (including any related
trust) complies in form with the requirements of all applicable laws, including
ERISA and the Code,
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and has at all times been maintained and operated in substantial compliance with
its terms and the requirements of all applicable laws, including ERISA and the
Code. Neither of the Companies has any commitment, intention or understanding to
create, modify or terminate any Employee Benefit Plan. No condition or
circumstance exists that would prevent the amendment or termination of any
Employee Benefit Plan. No event has occurred and no condition or circumstance
has existed that could result in a material increase in the benefits under or
the expense of maintaining any Employee Benefit Plan from the level of benefits
or expense incurred for the most recent fiscal year ended thereof.
(c) No Pension Plans of More than One Employer; No Title IV or Minimum
Funding Liability. Neither of the Companies has ever maintained or contributed
to, or had any obligation to contribute to (or borne any liability with respect
to) any "multiple employer plan" (within the meaning of the Code or ERISA) or
any "multiemployer plan" (as defined in Section 4001(a)(3) of ERISA). Neither of
the Companies has ever maintained or sponsored any (a) employee pension benefit
plan that is or was subject to Section 412 or 418B of the Code or Section 302 or
Title IV of ERISA or (b) VEBA. None of the Seller, Parent and the Companies has
incurred, and no event has occurred and no condition or circumstance currently
exists that could result, directly or indirectly, in, any unsatisfied liability
(including, without limitation, any indirect, contingent, secondary or potential
liability) of the Seller, Parent or any Company under Title IV of ERISA or
Section 412 or 418B of the Code or Section 302 of ERISA arising in connection
with any employee pension benefit plan covered or previously covered by Title IV
of ERISA or such sections of the Code or ERISA.
(d) Liabilities. No asset of any Company is subject to any lien arising
under Section 302(f) of ERISA or Section 412(n) of the Code, and no event has
occurred and no condition or circumstance has existed that could give rise to
any such lien. Neither of the Companies has been required to provide any
security under Section 307 of ERISA or Section 401(a)(29) or 412(f) of the Code,
and no event has occurred and no condition or circumstance has existed that
could give rise to any such requirement to provide any such security. Neither of
the Companies maintains any Employee Benefit Plan which is (i) a "group health
plan" (as such term is defined in Section 607(1) of ERISA or Section 5000(b)(1)
of the Code) that has not been administered and operated in all respects in
compliance with the applicable requirements of Part 6 of Subtitle B of Title I
of ERISA and Section 4980B of the Code ("COBRA") or (ii) a "group health plan"
(as defined in 45 Code of Federal Regulations Section 160.103) that has not been
administered and operated in all respects in compliance with the applicable
requirements of the Health Insurance Portability and Accountability Act of 1996
and the regulations promulgated thereunder, except for any failure to so comply
that would not result in a material liability of any Company, and neither of the
Companies is subject to any material liability, including additional
contributions, fines, taxes, penalties or loss of tax deduction as a result of
such administration and operation. No Employee Benefit Plan that is such a group
health plan is a "multiple employer welfare arrangement," within the meaning of
Section 3(40) of ERISA. Each Employee Benefit Plan that is intended to meet the
requirements of Section 125 of the Code meets such requirements, and each
program of benefits for which employee contributions are provided pursuant to
elections under any Employee Benefit Plan meets the requirements of the Code
applicable thereto. Neither of the Companies maintains any Employee Benefit Plan
which is an "employee welfare benefit plan" (as such term is defined in Section
3(1) of ERISA) that has
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provided any "disqualified benefit" (as such term is defined in Section 4976(b)
of the Code) with respect to which an excise tax could be imposed.
Except as set forth in Schedule 2.19(d) or as required by Part 6 of
Subtitle B of Title I of ERISA and Section 4980B of the Code, neither of the
Companies maintains any Employee Benefit Plan (whether qualified or
non-qualified under Section 401(a) of the Code) providing for post-employment or
retiree health, life insurance and/or other welfare benefits and having unfunded
liabilities, and neither of the Companies has any obligation to provide any such
benefits to any retired or former employees or active employees following such
employees' retirement or termination of service. Neither of the Companies has
any unfunded liabilities pursuant to any Employee Benefit Plan that is not
intended to be qualified under Section 401(a) of the Code. No Employee Benefit
Plan holds as an asset any interest in any annuity contract, guaranteed
investment contract or any other investment or insurance contract, policy or
instrument issued by an insurance company that, to the Knowledge of the Seller,
is or may be the subject of bankruptcy, conservatorship, insolvency,
liquidation, rehabilitation or similar proceedings.
Neither of the Companies has incurred any liability for any tax or
excise tax arising under Chapter 43 of the Code, and no condition or
circumstance currently exists that could give rise to any such liability.
There are no actions, suits, claims or disputes pending, or, to the
Knowledge of the Seller, threatened, anticipated or expected to be asserted
against or with respect to any Employee Benefit Plan or the assets of any such
plan (other than routine claims for benefits and appeals of denied routine
claims). No civil or criminal action brought pursuant to the provisions of Title
I, Subtitle B, Part 5 of ERISA is pending, threatened, anticipated or expected
to be asserted against any of the Companies or, to the Knowledge of the Seller,
any fiduciary of any Employee Benefit Plan, in any case with respect to any
Employee Benefit Plan. No Company Employee Benefit Plan has been the direct or
indirect subject of an audit, investigation or examination by any governmental
or quasi-governmental agency.
(e) Contributions. Full payment has been timely made of all
amounts that any of the Companies is required, under applicable law or under any
Employee Benefit Plan or any agreement relating to any Employee Benefit Plan to
which any of the Companies is a party, to have paid as contributions or premiums
thereto as of the last day of the most recent fiscal year of such Employee
Benefit Plan ended prior to the date hereof. All such contributions and/or
premiums have been fully deducted for income tax purposes and, to the Knowledge
of the Seller, no such deduction has been challenged or disallowed by any
governmental entity, and to the Knowledge of the Seller no event has occurred
and no condition or circumstance has existed that could give rise to any such
challenge or disallowance. Each of the Companies has made adequate provision for
reserves to meet contributions and premiums and any other liabilities that have
not been paid or satisfied because they are not yet due under the terms of any
Employee Benefit Plan, applicable law or related agreements. Benefits under all
Employee Benefit Plans are as represented and have not been increased subsequent
to the date as of which documents have been provided.
-24-
(f) Tax Qualification. Each Employee Benefit Plan intended to be
qualified under Section 401(a) of the Code has received from the IRS a favorable
determination letter, dated on or after January 1, 2002, on the tax qualified
status of the applicable Employee Benefit Plan. Each trust established in
connection with any Employee Benefit Plan which is intended to be exempt from
Federal income taxation under Section 501(a) of the Code has, as currently in
effect, been determined to be so exempt by the IRS. To the Knowledge of the
Seller, since the date of each most recent determination referred to in this
paragraph (f), no action or condition has occurred which would result in the
loss of such qualification.
(g) Transactions. None of the Companies and their respective
directors, officers, managers, employees or, to the Knowledge of the Seller,
other persons who participate in the operation of any Employee Benefit Plan or
related trust or funding vehicle, has engaged in any transaction with respect to
any Employee Benefit Plan or breached any applicable fiduciary responsibilities
or obligations under Title I of ERISA that would subject the Buyer or any of its
Affiliates (including, after the Closing, the Companies) to a material tax,
penalty or liability for prohibited transactions or breach of any obligations
under ERISA or the Code or would result in any claim being made against the
Buyer or any of its Affiliates (including, after the Closing, the Companies)
under, by or on behalf of any such Employee Benefit Plan by any party with
standing to make such claim.
(h) Triggering Events.
(i) Except as disclosed on Schedule 2.19(h)(i), the
execution of this Agreement and the consummation of the transactions
contemplated hereby, do not constitute a triggering event under any Employee
Benefit Plan, policy, arrangement, statement, commitment or agreement, whether
or not legally enforceable, which (either alone or upon the occurrence of any
additional or subsequent event) will or may result in any payment (whether of
severance pay or otherwise), "parachute payment" (as such term is defined in
Section 280G of the Code), acceleration, vesting or increase in benefits to any
employee or former employee or director or manager of any of the Companies.
Neither the Buyer nor any Affiliate thereof (including, after the Closing, the
Companies) will have any liability for any such payment, parachute payment,
acceleration, vesting or increase in benefits disclosed on Schedule 2.19(h)(i).
(ii) Except as disclosed on Schedule 2.19(h)(ii), no Employee
Benefit Plan provides for the payment of severance, termination, change in
control or similar-type payments or benefits. Neither the Buyer nor any
Affiliate thereof (including, after the Closing, the Companies) will have any
liability under any Employee Benefit Plan listed (or required to be listed) on
Schedule 2.19(h)(ii) other than Assumed Benefit Plans and Arrangements.
(iii) Schedule 2.19(h)(iii) contains an accurate and complete
description of each severance policy by which any of the Companies is bound or
which is applicable to the employees of any of the Companies set forth (or
required to be set forth) on Schedule 2.18(m), together with the identity of the
Persons to whom each such policy applies and the compensation on which amounts
payable thereunder are based. Since August 15, 2003, neither of the
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Companies has amended or otherwise modified any severance policy set forth (or
required to be set forth) on Schedule 2.19(h)(iii).
(i) Documents. The Seller has made available to the Buyer true and
complete copies of all current position descriptions, and all material documents
in connection with each Employee Benefit Plan in which Employees of any of the
Companies participate, including (where applicable): (i) all Employee Benefit
Plans as in effect on the date hereof, together with all amendments thereto,
including, in the case of any Employee Benefit Plan not set forth in writing, a
written description thereof; (ii) all current summary plan descriptions,
summaries of material modifications, and material communications; (iii) the most
recent IRS determination letter obtained with respect to each Employee Benefit
Plan intended to be qualified under Section 401(a) of the Code or exempt under
Section 501(a) of the Code; and (iv) with respect to all Assumed Benefit Plans
and Arrangements, to the extent applicable, (A) all current trust agreements,
declarations of trust and other documents establishing other funding
arrangements (and all amendments thereto and the latest financial statements
thereof); (B) the annual report on IRS Form 5500 series for each of the last
three years for each Assumed Benefit Plan and Arrangement required to file such
form; (C) the most recently prepared financial statements for each Assumed
Benefit Plan and Arrangement for which such statements are required; (D) all
minutes with respect to the meetings of each Assumed Benefit Plan and
Arrangement's administrative committee and/or plan administrator; and (E) all
contracts and agreements relating to each Assumed Benefit Plan and Arrangement,
including service provider agreements, insurance contracts, annuity contracts,
investment management agreements, subscription agreements, participation
agreements, recordkeeping agreements and collective bargaining agreements.
(j) Employee Benefit Arrangements. Each Employee Benefit
Arrangement complies in form with the requirements of all applicable laws and
has at all times been maintained and operated in compliance with its terms and
the requirements of all applicable laws, except for any failure to so comply
that would not reasonably be expected to result in a material liability of any
Company. Neither of the Companies has any commitment, intention or understanding
to create, modify or terminate any Employee Benefit Arrangement. No condition or
circumstance exists that would prevent the amendment or termination of any
Employee Benefit Arrangement. No event has occurred and no condition or
circumstance has existed that could result in a material increase in the
benefits under or the expense of maintaining each Employee Benefit Arrangement
from the level of benefits or expense incurred for the most recent fiscal year
ended thereof (other than the payment or accrual of bonuses pursuant to the
terms of the applicable Employee Benefit Arrangement). There are no actions,
suits, claims or disputes pending, or, to the Knowledge of the Seller,
threatened, anticipated or expected to be asserted against or with respect to
any Employee Benefit Arrangement (other than routine claims for benefits and
appeals of denied routine claims). Full payment has been timely made of all
amounts that any of the Companies is required to have paid under any Employee
Benefit Arrangement, applicable law or any related agreement. All such payments
have been fully deducted for income tax purposes and, to the Knowledge of the
Seller, no such deduction has been challenged or disallowed by any governmental
entity, and to the Knowledge of the Seller no event has occurred and no
condition or circumstance has existed that could give rise to any such challenge
or disallowance. Each of the Companies has made adequate provision for
-26-
reserves to meet any liabilities under the Employee Benefit Arrangements that
have not been paid or satisfied because they are not yet due, to the extent
consistent with applicable law, the provisions of the applicable Employee
Benefit Arrangement documents or prior practice. Except as disclosed on Schedule
2.19(h)(i), the execution of this Agreement and the consummation of the
transactions contemplated hereby do not constitute a triggering event under any
Employee Benefit Arrangement which (either alone or upon the occurrence of any
additional or subsequent event) will or may result in any payment (whether of
severance pay or otherwise), "parachute payment" (as such term is defined in
Section 280G of the Code), acceleration, vesting or increase in benefits to any
employee or former employee or director or manager of any of the Companies.
Except as disclosed on Schedule 2.19(h)(ii), no Employee Benefit Arrangement
provides for the payment of severance, termination, change in control or
similar-type payments or benefits. Neither the Buyer nor any Affiliate thereof
(including, after the Closing, the Companies) will have any liability under an
Employee Benefit Arrangement listed (or required to be listed) on Schedule
2.19(h)(ii) other than the Assumed Benefit Plans and Arrangements. The Seller
has made available to the Buyer true and complete copies of all documents in
connection with each Employee Benefit Arrangement in which Employees of any of
the Companies participate.
2.20 Interests in Clients, Suppliers, Etc. None of (i) Parent and its
Subsidiaries, (ii) the stockholders, officers and directors of the Companies and
(iii) to the Knowledge of the Seller, the employees of Parent, the Seller and
the Companies, either (a) is or (b) possesses, directly or indirectly, any
financial interest in or (c) is a director, officer, member, manager or employee
of, any Person which is, a client of, supplier to, customer of, lessor to,
lessee of or competitor or potential competitor of any Company. No Company is a
party to any transaction, agreement, arrangement or understanding with any
Affiliate, officer, director or employee of any Company. Ownership of securities
of a company whose securities are registered under the Securities Exchange Act
of 1934, as amended, of less than 5% of any class of such securities shall not
be deemed to be a financial interest for purposes of this Section. No Company is
indebted to any stockholder, director, officer, member, manager, employee or
agent of any Company (except for amounts due as normal compensation and in
reimbursement of ordinary expenses), and no such person is indebted to any
Company. Schedule 2.20 sets forth a true, accurate and complete list of all
products and services provided to an Affiliate of any Company by any Company and
all products and services provided to any Company by any Affiliate of any
Company, in each case together with the fees payable in connection therewith.
2.21 No Changes Since Balance Sheet Date. Except as set forth on Schedule
2.21 or as expressly permitted or contemplated by this Agreement, since the
Balance Sheet Date no Company has (a) incurred any material liability or
obligation of any nature (whether accrued, absolute, contingent or otherwise),
except in the Ordinary Course, (b) permitted any of its material assets to be
subjected to any Encumbrance other than Permitted Encumbrances, (c) sold,
transferred or otherwise disposed of any assets except in the Ordinary Course,
(d) made any capital expenditure or commitment therefor, except in the Ordinary
Course, (e) made any distribution to its stockholders or members or declared or
paid any dividend or made any distribution on any shares of its capital stock or
other equity interests, (f) redeemed, purchased or otherwise acquired any shares
of its capital stock or other equity interests, (g) granted or issued any
option, warrant or other right to purchase or acquire any shares of its capital
stock or other equity interests, (h) made any bonus or profit sharing
distribution or payment of any kind, except
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in the Ordinary Course, (i) increased its Indebtedness for borrowed money or
made any loan to any Person, (j) written off as uncollectible any notes or
accounts receivable, except write-offs in the Ordinary Course charged to
applicable reserves, none of which individually or in the aggregate is material
to such Company, (k) granted any increase in the rate of wages, salaries,
bonuses or other remuneration of any employee, except in the Ordinary Course,
(l) canceled or waived any claims or rights of material value, (m) made any
change in any method of accounting or auditing practice, except as required by
applicable law or GAAP, (n) otherwise conducted its business or entered into any
material transaction, except in the Ordinary Course or (o) agreed, whether or
not in writing, to do any of the foregoing.
2.22 Consents and Approvals; No Violations. Except as set forth in
Schedule 2.22, assuming (i) all necessary filings and other requirements under
the HSR Act in connection with the transactions contemplated by this Agreement
(the "HSR Filings") are made or satisfied, (ii) all requests of or conditions
imposed by any Governmental Entity in connection with the transactions
contemplated by this Agreement have been satisfied, (iii) the applicable waiting
period under the HSR Act (the "HSR Waiting Period") has expired or been
terminated (the "HSR Termination") and (iv) all filings, notices, consents or
approvals required in connection with the Conversion have been made or obtained,
the execution and delivery of this Agreement and the other instruments and
agreements to be executed and delivered by Parent and the Seller and the
consummation of the transactions contemplated hereby and thereby by Parent, the
Seller and the Companies will not (a) violate any provision of the certificate
of incorporation or bylaws of any Company as in effect immediately prior to the
Conversion, (b) violate any statute, ordinance, rule, regulation, order or
decree of any court or any Governmental Entity or regulatory body, agency or
authority applicable to any Company, other than any such violations to the
extent resulting from the Conversion, (c) require any filing by Parent, the
Seller or any Company with, permit, consent or approval of, or the giving of any
notice by Parent, the Seller or any Company to, any Governmental Entity or
regulatory body, agency or authority or (d) result in a violation or breach of,
conflict with, constitute (with or without due notice or lapse of time or both)
a default (or give rise to any right of termination, cancellation, payment or
acceleration) under, or result in the creation of any Encumbrance upon any of
the properties or assets of the Companies under any of the terms, conditions or
provisions of any Contract to which any Company is a party, or by which any
Company or any of their respective properties or assets may be bound, excluding
from the foregoing clauses (b), (c) and (d) above, any violations, breaches,
conflicts, defaults and Encumbrances which, and filings, consents, permits,
approvals and notices the absence of which would not, individually or in the
aggregate, (x) have a Material Adverse Effect on any Company or (y) prevent the
effectiveness of the Conversion, the purchase and sale of the Interests or the
consummation of the other transactions contemplated by this Agreement and the
other Related Documents.
2.23 Certain Agreements Affected by the Closing. Except as disclosed in
Schedule 2.19(h)(ii) and Schedule 2.19(h)(iii), neither the execution and
delivery of this Agreement nor the consummation of the transactions contemplated
hereby, will (a) result in any payment that is payable by any Company to any of
its directors or employees (including severance, unemployment compensation,
golden parachute, bonus or otherwise) becoming due, (b) materially increase any
benefits otherwise payable by any Company to any of its directors or
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employees or (c) result in the acceleration of any of the types of payments
referenced in clause (a) above or accelerated vesting of any of the benefits
referenced in clause (b) above.
2.24 Broker's or Finder's Fees. No agent, broker, person or firm acting
on behalf of any Company, Parent or the Seller is, or will be, entitled to any
commission or broker's or finder's fees from any of the Parties or any Affiliate
thereof, in connection with any of the transactions contemplated by this
Agreement.
2.25 Copies of Documents. Subject to the terms of the Confidentiality
Agreements, the Seller has caused to be made available, to the extent the Buyer
has so requested, for inspection and copying by the Buyer and its advisers,
true, complete and correct copies of all documents referred to in this Section 2
or in any Schedule or Exhibit attached hereto.
2.26 Environmental Matters.
(a) Each of the Companies is in material compliance with all
applicable Environmental Laws, and has obtained, and is in material compliance
with, all Permits required of it under applicable Environmental Laws.
(b) There are no claims, proceedings, investigations or actions by
any Governmental Entity or other Person pending, or, to the Knowledge of the
Seller, threatened, against any Company under any Environmental Law.
(c) There are no facts, circumstances or conditions relating to
the past or present business or operations of any Company (including the
disposal of any wastes, hazardous substances or other materials) or to any past
or present real property and improvements owned (directly, indirectly or
beneficially), leased, used, operated or occupied by any Company that would give
rise to any claim, proceeding or action, or to any liability, under any
Environmental Law.
2.27 Claims History. Schedule 2.27 sets forth (a) a complete and accurate
list of all pending claims for each Company that involve amounts in excess of
$1,000; (b) TRETS' monthly penalty reports for March 2002 through August 2003;
(c) a listing of TFHC claims for September 2001 through August 2003 sorted by
state; and (d) TRETS claims paid by manual check, sorted by month, for the
24-month period ended August 31, 2003.
SECTION 3.
REPRESENTATIONS OF THE BUYER
----------------------------
The Buyer represents, warrants and agrees in favor of Parent and the
Seller, as of the date of this Agreement and as of the Closing Date, as follows:
3.1 Binding Effect; Authorization; Power. The Buyer is a limited
liability company duly organized, validly existing and in good standing under
the laws of the State of California.
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The Buyer has the requisite organizational power and authority to execute and
deliver this Agreement and to perform its obligations hereunder. The execution,
delivery and performance of this Agreement by the Buyer has been duly authorized
and approved by all necessary company action of the Buyer. This Agreement has
been duly executed and delivered by the Buyer and, assuming the due execution of
Parent and the Seller, constitutes the Buyer's valid and binding agreement,
enforceable against the Buyer in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency or similar laws and
equitable principles relating to or affecting the rights of creditors generally
from time to time in effect.
3.2 Litigation. There is no action, suit, proceeding at law or in
equity, arbitration or administrative or other proceeding by or before (or to
the Knowledge of the Buyer any investigation by) any Governmental Entity or
other instrumentality or agency, pending, or, to the Knowledge of the Buyer,
threatened, against or affecting the Buyer which could materially and adversely
affect the right or ability of the Buyer to enter into this Agreement and to
purchase the Interests hereunder and to the Knowledge of the Buyer no fact or
circumstance exists that could reasonably be expected to form the basis
therefor. The Buyer is not subject to any judgment, order or decree entered in
any lawsuit or proceeding which may materially and adversely affect the right or
ability of the Buyer to enter into this Agreement and to purchase the Interests
hereunder.
3.3 Restrictive Documents. Neither the Buyer nor any Affiliate thereof
is subject to, or a party to, any charter, bylaw, mortgage, lien, lease,
license, permit, contract, instrument, law, rule, ordinance, regulation, order,
judgment or decree, or any other restriction of any kind or character, which by
its own operation and not by the breach or violation, as the case may be,
thereof would prevent the purchase and sale of the Interests or the consummation
of the other transactions contemplated by this Agreement and the other Related
Documents.
3.4 Consents and Approvals; No Violations. Assuming (i) the HSR Filings
are made or satisfied, (ii) all requests of or conditions imposed by any
Governmental Entity in connection with the transactions contemplated by this
Agreement have been satisfied, (iii) the HSR Waiting Period has expired or been
terminated and (iv) all filings, notices, consents or approvals required in
connection with the Conversion have been made or obtained, the execution and
delivery of this Agreement and the other instruments and agreements to be
executed and delivered by the Buyer and the consummation of the transactions
contemplated hereby and thereby by the Buyer will not (a) violate any provision
of the articles of organization or operating agreement of the Buyer, (b) violate
any statute, ordinance, rule, regulation, order or decree of any court or any
Governmental Entity applicable to the Buyer or (c) require any filing by the
Buyer with, permit, consent or approval of, or the giving of any notice to, any
Governmental Entity having authority over the Buyer.
3.5 Financing. At the Closing, the Buyer will have sufficient funds
available (through existing credit arrangements or otherwise) to enable it to
consummate the transactions contemplated by this Agreement.
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3.6 Broker's or Finder's Fees. No agent, broker, person or firm acting
on behalf of the Buyer is, or will be, entitled to any commission or broker's or
finder's fees for which Parent, the Seller or any Affiliate thereof will be
liable, in connection with any of the transactions contemplated by this
Agreement.
SECTION 4.
THE TRANSACTION
---------------
4.1 Sale of Interests.
(a) Upon the terms and subject to the conditions set forth in this
Agreement, the Seller agrees to sell, assign, transfer and deliver to the Buyer
or its designee on the Closing Date, and the Buyer agrees to purchase, the
Interests.
(b) The certificates, if any, representing the Interests shall be
duly endorsed in blank, or accompanied by transfer powers duly executed in
blank, by the Seller, with all necessary transfer tax and other revenue stamps,
to be paid as set forth in Section 9.4, affixed and cancelled. If the Interests
are not certificated as of the Closing Date, the Seller will execute and deliver
to the Buyer such instrument(s) evidencing transfer of the Interests as the
Buyer shall reasonably request.
(c) After the Closing, Parent will cause TREIC to give written
notice to ValuAmerica TA Member, LLC and ValuAmerica Consulting, LLC exercising,
effective 59 days after the Closing Date (the "Put Exercise"), TREIC's option to
transfer its membership interest in TVMC in accordance with Section 11.3 of the
Limited Liability Company Agreement of TVMC, and providing that such notice of
exercise may be withdrawn at any time prior to the 59th day after the Closing
Date. During the 58-day period commencing on the Closing Date, the Buyer shall
have the option, exercisable by written notice to Parent, to cause, without
additional consideration, Parent to cause (i) TREIC to withdraw the Put Exercise
by written notice to ValuAmerica TA Member, LLC and ValuAmerica Consulting, LLC
prior to the 59th day after the Closing Date, (ii) all right, title and interest
in and to 100% of the outstanding membership interests in TREIC to be
transferred to a Company, free and clear of all Encumbrances and (iii) TREIC
Enterprises, Inc. to assign to a Company all of its rights and benefits under
that certain Project Agreement dated as of April 7, 2003 among TREIC
Enterprises, Inc., ValuAmerica Consulting LLC and TVMC in form and substance
reasonably satisfactory to the Buyer; provided that prior to such withdrawal,
transfer and assignment the Buyer shall have obtained for the benefit of Parent
the written consent of ValuAmerica Consulting LLC to the assignment referred to
in clause (iii) above. Until the end of the 58-day period commencing on the
Closing Date, Parent shall not cause or permit TREIC to transfer its membership
interest in TVMC to any Person. In connection with the Buyer's option provided
in this Section 4.1(c), Parent shall cause the Buyer to have such access to the
books and records of TREIC and/or TVMC as the Buyer shall reasonably request,
and Parent shall provide to the Buyer true, correct and complete copies of
TREIC's and TVMC's unaudited consolidated balance sheets and statements of
income for and as of the partial fiscal year ending on the last day of the
then-preceding calendar month to
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the extent available (and if not so available, the most recently available
balance sheets and statements of income).
4.2 Purchase Price. In consideration for the purchase by the Buyer of
the Interests, the Buyer shall pay to the Seller on the Closing Date cash, by
wire transfer of immediately available funds to the account designated in
Schedule 4.2, in an amount equal to $400,000,000 (the "Purchase Price").
4.3 Determination of Accounting Differential.
(a) Within eight months after the Closing Date, the Buyer shall
prepare and deliver to the Seller a statement of the Accounting Differential of
the Companies as of the Closing Date (the "Closing Date Accounting
Differential"), which shall be in the form set forth as Exhibit A, specifying
and quantifying in reasonable detail as set forth in Exhibit A the items
constituting the Closing Date Accounting Differential. The Closing Date
Accounting Differential shall be prepared in accordance with GAAP, except to the
extent otherwise provided in the definition of "Accounting Differential" herein.
Upon delivery of such statement by the Buyer, the Buyer shall provide the Seller
and its representatives with reasonable access during business hours to the
books and records and relevant personnel of the Companies in order to allow the
Seller and its representatives to verify the accuracy of the determination by
the Buyer of the Closing Date Accounting Differential.
(b) In the event that the Seller objects to the determination by
the Buyer of the Closing Date Accounting Differential, the Seller shall deliver
a written notice of objection (a "Notice of Objection") to the Buyer within 20
Business Days after the statement referred to in Section 4.3(a) is given to the
Seller, which Notice of Objection shall describe in reasonable detail the
Seller's proposed adjustments to the Closing Date Accounting Differential. If
the Seller does not deliver a Notice of Objection in accordance with the
preceding sentence within such 20 Business Day period, the Closing Date
Accounting Differential shall be deemed final and binding. If the Seller
delivers a Notice of Objection to the Buyer within such 20 Business Day period,
then any dispute shall be resolved as follows:
(i) The Parties shall promptly endeavor in good faith to
agree upon the determination of the Closing Date Accounting Differential. In the
event that a written agreement determining the amount of the Closing Date
Accounting Differential has not been reached within 10 Business Days after the
Notice of Objection is given by the Seller to the Buyer, the Buyer's
determination of the Closing Date Accounting Differential and the Seller's
proposed adjustments thereto shall be submitted to an independent accounting
firm (other than accountants for the Buyer, any Company, Parent, the Seller or
any Affiliate thereof) jointly selected by the Seller and the Buyer (the
"Arbitrator").
(ii) Within thirty (30) days after the submission of any
dispute concerning the determination of the Closing Date Accounting Differential
to the Arbitrator, the Arbitrator shall render a decision in accordance with
this Section 4.3(b) along with a statement of reasons therefor. The decision of
the Arbitrator shall be final and binding upon the Parties.
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(iii) In the event the Parties submit any unresolved disputes
to the Arbitrator for resolution, the Parties shall share responsibility for the
fees and expenses of the Arbitrator as follows:
(A) if the Arbitrator resolves all of the remaining
objections in favor of the Buyer's position, then Parent and the
Seller shall be jointly and severally responsible for all of the
fees and expenses of the Arbitrator;
(B) if the Arbitrator resolves all of the remaining
objections in favor of the Seller's position, then the Buyer shall
be responsible for all of the fees and expenses of the Arbitrator;
and
(C) if the Arbitrator neither resolves all of the remaining
objections in favor of the Buyer's position nor resolves all of the
remaining objections in favor of the Seller's position, the
responsibility for payment of the fees and expenses of the
Arbitrator shall be shared equally between Parent and the Seller
jointly and severally, on the one hand, and the Buyer, on the other.
(c) If the Closing Date Accounting Differential is less than the
Estimated Accounting Differential, then Parent and the Seller jointly and
severally agree to pay to the Buyer the amount of any such shortfall within
three Business Days after the determination of the Closing Date Accounting
Differential by wire transfer of immediately available funds to an account in
the Continental United States designated in writing by the Buyer. If the Closing
Date Accounting Differential is greater than the Estimated Accounting
Differential, then the Buyer shall pay to the Seller the amount of any such
excess within three Business Days after the determination of the Closing Date
Accounting Differential by wire transfer of immediately available funds to an
account in the Continental United States designated in writing by the Seller.
4.4 Closing. Subject to the satisfaction or waiver of the conditions
precedent described in Section 6, the closing of the purchase and sale of the
Interests hereunder (the "Closing") shall take place at 10:00 a.m. local time on
October 1, 2003 at the offices of White & Case LLP, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ (or such other place, date and/or time as the
Parties may mutually agree) (the "Closing Date"). The effective time of the
Closing shall be deemed to be 11:59 p.m. on the Closing Date.
4.5 Allocation of Purchase Price. The Seller and the Buyer agree to
allocate the aggregate Purchase Price to be paid for the Interests (including
any liabilities deemed to be assumed by the Buyer) among the assets of the
Companies in accordance with Section 1060 of the Code and Treasury Regulations
thereunder. The Seller and the Buyer agree that the Buyer shall prepare and
provide to the Seller a draft allocation of the Purchase Price among such assets
within ninety (90) days after the Closing Date. The Seller shall notify the
Buyer within thirty (30) days of receipt of such draft allocation of any
objection the Seller may have thereto. The Seller and the Buyer agree to resolve
any disagreement with respect to such allocation in good faith. In addition, the
Seller and the Buyer hereby undertake and agree to file timely any information
that may be required to be filed pursuant to Treasury Regulations promulgated
under Section 1060(b) of the Code, and shall use the allocation determined
pursuant to this Section 4.5
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in connection with the preparation of IRS Form 8594 (including any amendments
thereto) as such form relates to the transactions contemplated by this
Agreement. Unless required to do so by applicable law, no Party shall file any
Tax Return or other document or otherwise take any position that is inconsistent
with the allocation determined pursuant to this Section 4.5; provided, however,
that to the extent any disagreement between the Buyer and Seller with respect to
such allocation of Purchase Price cannot be resolved in good faith (as provided
herein), the Seller and the Buyer may file IRS Form 8594 (including any
amendments thereto) with each of the Buyer and the Seller reporting differing
purchase price allocations. Any adjustments to the Purchase Price shall be
allocated in accordance with this Section 4.5. For the avoidance of doubt, the
provisions of this Section 4.5 shall apply for Tax purposes only.
4.6 Corporate Matters. On or before the Closing Date, the Seller shall
deliver to the Buyer (a) the resignation as a director of each member of the
board of directors of each of the Companies, such resignations to be effective
upon consummation of the Closing, and (b) the original corporate record books,
stock record books, limited liability company record books or equivalent
organizational records, of each of the Companies.
SECTION 5.
CERTAIN COVENANTS
-----------------
5.1 Conduct of the Companies' Businesses Prior to Closing. Except as
otherwise contemplated by this Agreement (including the transactions
contemplated by the Conversion), during the period from the date of this
Agreement to the Closing Date, the Seller shall cause the Companies to (i)
conduct their respective operations only according to the Ordinary Course, (ii)
maintain their respective accounting and financial books, records and accounts
in accordance with GAAP and (iii) use commercially reasonable efforts to
preserve intact their respective business organizations, keep available the
services of their respective key officers and employees and maintain
relationships existing as of the date of this Agreement with material licensors,
suppliers, distributors, customers, landlords, employees, agents and others
having business relationships with them. Notwithstanding the immediately
preceding sentence, prior to the Closing Date, except as may be first approved
in writing by the Buyer, the Seller shall cause the Companies to: (a) except as
contemplated by this Agreement, refrain from amending or modifying their
respective certificate of incorporation and bylaws (or equivalent organizational
documents) from their respective forms on the date of this Agreement, (b)
refrain from increasing any bonus plan, salaries or other compensation to any
director, officer, employee, manager, member or stockholder or entering into or
amending any employment, severance, retention or similar agreement with any
director, officer or employee, except increases in the Ordinary Course, (c)
refrain from adopting or increasing any profit sharing, bonus, deferred
compensation, savings, insurance, pension, retirement or other employee benefit
plan for or with any of their respective employees, except for retention plans
under which neither the Buyer nor any Affiliate (including any Company) thereof
will have any liability after the Closing, (d) refrain from hiring any employee
that was employed by any Affiliate (other than a Company) of a Company, (e)
refrain from entering into any Contract (other than Contracts that are,
individually or in the aggregate, not material) except in the Ordinary Course,
(f) refrain from materially amending or modifying, or consenting to any waiver
of any material right or value, under any Contract set forth (or required to be
set forth) on Schedule 2.10(a) or Schedule
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2.10(b)(i), (g) refrain from increasing, or changing the pricing or payment
terms of, any Indebtedness for borrowed money, (h) refrain from canceling or
waiving any claim or right which individually or in the aggregate is material,
(i) refrain from paying any dividends or distributions to stockholders or
members or otherwise redeeming, purchasing or acquiring any of its securities,
except as expressly contemplated by this Agreement, (j) refrain from making any
change in any method of accounting or auditing practice, except as required by
law or GAAP, (k) refrain from issuing or selling any shares of capital stock or
membership interests, as the case may be, or any other securities or issuing any
security, or issuing any securities convertible into, or options, warrants or
rights to purchase or subscribe to, or entering into any agreement with respect
to the issue and sale of, any interest in itself or any other securities, or,
except as contemplated by this Agreement, making any other changes in its
capital structure, (l) refrain from selling, leasing or otherwise disposing of
any asset or property other than in the Ordinary Course, (m) refrain from making
any capital expenditure or commitment therefor, except in the Ordinary Course or
to the extent a Company is bound as of the date hereof under any Contract set
forth (or required to be set forth) on Schedule 2.10(a) to make such
expenditure, (n) refrain from writing off as uncollectible any notes or accounts
receivable, except write-offs in the Ordinary Course charged to applicable
reserves or as required by GAAP, (o) except in the Ordinary Course, refrain from
hiring any employee to whom a Company will be required to pay severance pursuant
to any severance policy of a Company in effect as of the Closing Date (provided
that the aggregate of the annual salaries payable to the employees of the
Companies as of the Closing Date does not exceed the aggregate of the annual
salaries payable to the employees of the Companies as of the Balance Sheet Date,
except as a result of merit-based increases in employee compensation made in the
Ordinary Course), (p) to the extent not included in clauses (a) through (o)
above, refrain from taking any of the actions described in Section 2.21 and (q)
refrain from agreeing in writing, or otherwise, to do any of the foregoing.
5.2 Conduct of the Buyer's Business Prior to Closing. During the period
from the date of this Agreement to the Closing Date, the Buyer will, and will
cause its Affiliates to, use reasonable best efforts to refrain from using the
pendency of the transactions contemplated by this Agreement and the other
Related Agreements to achieve any competitive advantage with respect to a
Company or Subsidiary thereof.
5.3 Exclusive Dealing. During the period from the date of this Agreement
to the date, if any, on which this Agreement terminates or is terminated in
accordance with its terms, neither Parent nor the Seller shall permit any
Company to take any action or to authorize or permit any officer, director or
employee of, or any financial advisor, attorney, accountant or other advisor or
representative retained by, any Company, Parent or the Seller, as the case may
be, to, directly or indirectly, encourage, initiate or engage in discussions or
negotiations with, or provide any information to, any Person, other than the
Buyer and its representatives and advisers, concerning the sale or exchange of
the Interests or any other equity interest in any Company or any merger,
consolidation, sale of substantial assets or similar transaction involving any
Company or its operations; provided, however, that nothing contained in this
Section 5.3 shall restrict or prohibit any disclosure that is otherwise required
under applicable law.
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5.4 Due Diligence; Further Assurances.
(a) Subject to the terms of the Confidentiality Agreements and the
terms of this Agreement and the other Related Agreements, the Buyer may, prior
to the date, if any, on which this Agreement terminates in accordance with its
terms, directly or through its representatives and advisers, review the
properties, books and records of the Companies and their respective financial
and legal condition to the extent the Buyer deems necessary or advisable to
familiarize itself with such properties and other matters; such review shall
not, however, affect the representations and warranties made by Parent and the
Seller in this Agreement or the remedies of the Buyer for breaches of those
representations and warranties. Upon the Seller's prior consent (which shall not
be unreasonably withheld), the Buyer and its representatives shall have
reasonable access to the premises and to all the books and records of the
Companies and the Seller shall cause the officers of the Companies to furnish
the Buyer with such financial and operating data and other information with
respect to the businesses and properties of the Companies at reasonable times
during normal business hours as the Buyer shall from time to time reasonably
request. Any such access and review shall be conducted in cooperation with the
officers and other key management personnel of the Companies in such a manner as
to reasonably minimize any disruption or interference with the normal business
operations of the Companies.
(b) In the event of the termination of this Agreement, the Buyer
shall keep confidential any material information obtained from any Company,
Seller or Parent concerning the properties, operations and business (unless
readily ascertainable from public or published information or trade sources) of
any Company (until the same becomes so ascertainable) and, at the request of any
Company, Seller, Parent or the Seller, shall return to the applicable Company,
Seller or Parent all written information obtained in connection therewith or,
lieu thereof, shall destroy all such written information and provide the
applicable Company or the Seller with a certificate to such effect. The
provisions of this Agreement relating to confidentiality supplement, and not
supercede, the Confidentiality Agreements, which remain in full force and
effect.
(c) On and after the Closing Date, each of Parent and the Seller
shall, at the Buyer's request, execute, acknowledge and deliver all such
documents and instruments as may be reasonably necessary or appropriate to fully
and effectively carry out the transactions contemplated by this Agreement.
5.5 Reasonable Best Efforts. Until such time, if any, as this Agreement
is terminated, the Parties shall, and the Seller shall cause the Companies to,
cooperate and use their respective commercially reasonable best efforts to take,
or cause to be taken, all appropriate action, and to make, or cause to be made,
all filings necessary, proper or advisable under applicable laws and regulations
to consummate and make effective the transactions contemplated by this
Agreement, including the Parties' cooperation and respective commercially
reasonable best efforts to obtain, prior to the Closing Date, all licenses,
permits, consents, approvals, authorizations, qualifications and orders of
Governmental Entities and parties to agreements with any Company as are
necessary for consummation of the transactions contemplated by this Agreement
and to fulfill
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the conditions to the transactions contemplated hereby, except to the extent
that delivery of any such licenses, permits, consents, approvals,
authorizations, qualifications or orders is waived by the Buyer.
5.6 Employee Matters.
(a) Subject to the requirements, if any, of applicable law and
obtaining approvals, if any, of Governmental Entities, prior to the Closing
Date, the Seller shall cause the Companies to take all actions necessary to
provide for the cancellation or termination, effective immediately prior to the
Closing, of (i) all employee stock options to purchase shares of the capital
stock, or other equity interests, if any, of any Company, and (ii) at the
request of the Buyer, any Employee Benefit Plan maintained by any Company other
than the Assumed Benefit Plans and Arrangements set forth on Schedule 5.6(a).
For a period of 12 months after the Closing, the Buyer will cause the Companies
to maintain and provide (x) severance benefits that are the same as those
provided under Section 5.3 of the severance policies of the Companies set forth
(or required to be set forth) on Schedule 2.19(h)(iii), as each such policy was
in effect as of August 15, 2003, and (y) severance terms that are the same as
those provided under the severance policies of the Companies set forth (or
required to be set forth) on Schedule 2.19(h)(iii), as each such policy was in
effect as of August 15, 2003; provided that Parent and the Seller shall be
jointly and severally responsible for, and shall jointly and severally indemnify
and hold the Buyer harmless from and against, all amounts due under the
Transamerica Finance Corporation 2002-2004 DAP ▇▇▇ Bonus Plan and all
obligations to pay bonuses, commissions, success fees or similar fees payable to
the Employees and the former employees of the Companies as a result of the
consummation of the transactions contemplated by this Agreement, including those
obligations listed (or required to be listed) on Schedule 2.19(h)(i) and
Schedule 2.19(h)(ii) (excluding Assumed Benefit Plans and Arrangements). The
Buyer will not assume any of the Companies', Parent's or the Seller's
obligations to former employees of any Company receiving COBRA benefits as of
the Closing Date. Nothing contained herein shall limit the Buyer's or its
Affiliates' rights to amend or terminate any of their respective employee
benefit plans or arrangements at any time after the Closing.
(b) Parent, the Seller and their respective Affiliates (other than
the Companies) shall retain responsibility under employee welfare benefit plans
sponsored or maintained by Parent, the Seller or any of their respective
Affiliates (other than the Companies) for all amounts payable by reason of
claims incurred by Employees and former employees of the Companies and their
Affiliates, and their dependents, on or prior to the Closing Date, and the Buyer
and its Affiliates shall be responsible under the welfare benefit plans of the
Buyer and its Affiliates for all amounts payable by reason of claims incurred by
Employees and their dependents after the Closing Date; provided, however, that
Parent and the Seller shall be jointly and severally responsible for paying and
providing (and shall indemnify and hold the Buyer and its Affiliates harmless
from all Losses related to) long-term disability and life insurance benefits
with respect to any Employee (and any individual formerly employed by a Company
or its Affiliates) who is on long-term disability as of the Closing Date or on
short-term disability as of the Closing Date and thereafter qualifies for
long-term disability for the same or a related condition. Parent and the Seller
shall jointly and severally indemnify and hold harmless the Buyer and its
Affiliates from and against any and all Losses arising out of, or relating to,
(i) any
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Employee Benefit Plan or Employee Benefit Arrangement sponsored or maintained by
Parent, the Seller or any Affiliate thereof (other than the Companies),
including, without limitation, long-term disability, life insurance, severance
or retention pay or other benefits thereunder, (ii) any employee pension benefit
plan subject to Section 412 or 418B of the Code or Section 302 or Title IV of
ERISA or any VEBA maintained or contributed to, or required to be contributed
to, by Parent, the Seller or their respective Affiliates or any employer
(whether or not incorporated) that would be treated together with Parent, the
Seller or their respective Affiliates as a single employer within the meaning of
Section 414 of the Code and (iii) any tax or excise tax arising under Chapter 43
of the Code with respect to any Employee Benefit Plan sponsored or maintained by
Parent, the Seller or any Affiliate thereof (other than the Companies).
(c) Following the Closing Date, (i) for purposes only of
determining eligibility to participate and vesting in employee benefit plans
provided by the Buyer for Employees, such Employees will be credited with their
years of service with a Company to the same extent recognized under similar
employee benefit plans of Parent or the Seller immediately prior to the Closing,
(ii) the Buyer shall cause the eligibility of any Employee under any employee
welfare benefit plan (except any long-term disability plan) of the Buyer not to
be subject to any exclusion for any pre-existing condition or waiting periods if
such Employee had met the participation requirements under a similar plan of
Parent or the Seller immediately prior to the Closing, (iii) eligible expenses
incurred by any Employee up to and including the Closing Date shall be taken
into account for purposes of satisfying applicable deductible provisions, if
any, under employee welfare plans of the Buyer in which such Employee is
eligible to participate and (iv) for each Employee's unused vacation days,
"AEGON Wellness" days and personal holidays set forth on Schedule 2.18(m) and
accrued under policies applicable to Employees prior to the Closing Date, the
Buyer shall credit such Employee with corresponding vacation days, sick days and
floating holidays in accordance with the applicable policies of the Buyer and
its Affiliates.
(d) Effective as of the Closing Date, the Seller shall transfer,
or cause to be transferred, to the Buyer an amount, in cash, equal to each
Employee's calendar year 2003 contributions to the Seller's health care spending
account plan and the dependent care spending account plan (the "Seller Flexible
Benefit Plan"), net of calendar year 2003 reimbursements (but not less than
zero). The Buyer shall cause such amounts to be credited to each Employee's
accounts under the Buyer's corresponding health care and dependent care spending
account plans (the "Buyer Flexible Benefit Plan") in which such Employees
participate following the Closing Date, and all claims for reimbursement which
have not been submitted for payment under the Seller Flexible Benefit Plan as of
transfer to the Buyer Flexible Benefit Plan shall be paid pursuant to and under
the terms of the Buyer Flexible Benefit Plan.
(e) Except as may be required by applicable law or as otherwise
required by this Agreement, the Seller shall cause, as of the Closing Date, all
Employees who become employees of the Buyer: to be fully vested in their accrued
benefits under the AEGON USA, Inc. Pension Plan, AEGON USA, Inc. Profit Sharing
Plan, AEGON USA, Inc. Executive Profit Sharing Plan and AEGON USA, Inc. Excess
Restoration Plan (collectively, the "AEGON Pension Plans"). Effective as of the
Closing Date, in accordance with the provisions of Section 401(k)(2) of the
Code, the Seller's Affiliates shall cause Employees transferring to the Buyer to
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be treated as having severance from employment for purposes of the AEGON USA,
Inc. Profit Sharing Plan. Seller or its Affiliates shall make contributions to
the AEGON Pension Plans on behalf of Employees transferring to Buyer without
regard to the fact that such employees will not be employed by Seller or one of
its Affiliates on the last day of the respective plan year, if applicable. In
addition, Seller's Affiliates shall treat all Employees as terminated for
purposes of any non-qualified deferred compensation plan maintained by Seller or
its Affiliates. For the avoidance of doubt, neither the Buyer nor any Affiliate
thereof (including, after the Closing, the Companies) shall have any liability
under or in connection with this Section 5.6(e).
(f) Employee Communications. Any communication proposed to be
delivered prior to the Closing by the Buyer or any Affiliate thereof to the
Employees regarding (i) matters contained in or relating to the transactions
contemplated under this Agreement, or (ii) otherwise respecting any changes or
potential changes in employee benefit plans, practices or procedures or
employment that may or will occur in connection with the transactions
contemplated by this Agreement, shall be subject to prior approval of the
Seller, which approval shall not be unreasonably withheld. Any communication
proposed to be delivered prior to or after the Closing by Parent, the Seller or
any Affiliate thereof to the Employees regarding (i) matters contained in or
relating to the transactions contemplated under this Agreement, or (ii)
otherwise respecting any changes or potential changes in employee benefit plans,
practices or procedures or employment that may or will occur in connection with
the transactions contemplated by this Agreement, shall be subject to prior
approval of the Buyer, which approval shall not be unreasonably withheld.
(g) Transition Matters. Prior to the Closing, Parent and the
Seller will cooperate in good faith with the Buyer concerning any changes or
potential changes in employee benefit plans, practices or procedures or
employment with respect to the employees of the Companies that may or will occur
in connection with the transactions contemplated by this Agreement.
(h) Payroll Adjustments and Reimbursements. Parent and the Seller
jointly and severally agree to pay or to cause to be paid to each Employee
immediately following the Closing Date an amount equal to such Employee's
compensation through the Closing Date plus an amount equal to such Employee's
pro rata compensation for two additional work days based upon normal scheduled
hours for each such Employee (the "Two-Day Compensation"). The Buyer agrees to
pay or to cause to be paid to each Employee promptly after Closing any amounts
due to such Employee as a result of adjustments in compensation (including
overtime and paycheck corrections) for the period from September 21, 2003
through and including the Closing Date.
5.7 Tax Covenants. From and after the date of this Agreement and until
the Closing Date, the Seller shall, and shall cause the Companies to, (a)
prepare all Tax Returns in a manner that is consistent with the past practices
of the Companies with respect to the treatment of items on such Tax Returns
except to the extent that any inconsistency would not materially increase the
Tax liability of the Buyer, any Company for any Post-Closing Period, (b) refrain
from incurring any material liability for Taxes with respect to the income,
property or operations of
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any Company other than in the Ordinary Course other than a Tax that is imposed
on Parent or the Seller and for which neither any Company nor the Buyer would be
liable after the Closing Date under applicable law, (c) refrain from entering
into any settlement or closing agreement with a taxing authority that would
materially increase any Tax liability of any Company with respect to the income,
property or operations of any Company for any Post-Closing Period and (d)
refrain from filing or causing to be filed any amended Tax Returns or claims for
refund with respect to the income, property or operations of any Company except
to the extent that any inconsistency would not materially increase the Tax
liability of the Buyer, any Company for any Post-Closing Period; in each case,
without the consent of the Buyer, which consent shall not be unreasonably
withheld, conditioned or delayed.
5.8 Domain Names. At all times during the one-year period commencing on
the Closing Date, Parent shall, or shall cause an Affiliate to, cause (a) each
of the domain names listed on Schedule 2.15(d) containing the word "tax" to
redirect Internet traffic to the website located at ▇▇▇▇://▇▇▇.▇▇▇▇▇▇▇.▇▇▇/▇▇▇
(or to such other URL as the Buyer may designate in writing) and (b) each of the
domain names listed on Schedule 2.15(d) containing the word "flood" to redirect
Internet traffic to the website located at ▇▇▇▇://▇▇▇.▇▇▇▇▇▇▇.▇▇▇/▇▇▇▇▇ (or to
such other URL as the Buyer may designate in writing). As soon as practicable,
and in any event within 60 days, after the Closing Date, Parent shall, (x) cause
all right, title and interest in and to the domain names listed on Schedule
2.15(a) and not owned by any Company to be assigned and transferred to a Company
in a manner reasonably satisfactory to the Buyer and (y) to the extent it or an
Affiliate thereof has the legal right to do so, cause all right, title and
interest in and to the domain name "▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇" to be assigned and
transferred to a Company in a manner reasonably satisfactory to the Buyer.
5.9 Estimation of Accounting Differential.
(a) At least five days prior to the Closing Date, the Seller shall
cause the Companies to prepare and deliver to the Buyer an estimate of the
Accounting Differential (and the related worksheets, working papers, notes and
schedules thereto) of the Companies as of the Closing Date (such estimate, as it
may be adjusted pursuant to clause (b) below, the "Estimated Accounting
Differential"), which shall be in the form set forth as Exhibit A, specifying
and quantifying in reasonable detail as set forth in Exhibit A the items
constituting such Accounting Differential. The statement of Estimated Accounting
Differential shall be prepared in accordance with GAAP.
(b) If the Estimated Accounting Differential provided by the
Seller under clause (a) above is greater than 110% of the Accounting
Differential of the Companies as of the Balance Sheet Date (as determined by
reference to the Balance Sheets), the Buyer may, at its option, after written
notice to the Seller within five days after the Buyer's receipt of the Estimated
Accounting Differential, submit the determination of such Estimated Accounting
Differential to an independent accounting firm (other than accountants for the
Buyer, any Company, Parent, the Seller or any Affiliate thereof) jointly
selected by the Seller and the Buyer. Within thirty (30) days after such
submission, such accounting firm shall render a determination of the Estimated
Accounting Differential along with a statement of reasons therefor. The
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decision of such accounting firm, and any resulting adjustment to the Estimated
Accounting Differential, shall be final and binding upon the Parties. The
responsibility for payment of the fees and expenses of such accounting firm
shall be shared equally between Parent and the Seller jointly and severally, on
the one hand, and the Buyer, on the other hand. The Closing shall be delayed
during the pendency of any determination submitted pursuant to this clause (b)
and the Termination Date shall be extended by the number of days required to
make such determination.
(c) Immediately prior to the Closing, the aggregate cash balances
of the Companies shall equal or exceed the sum (such sum, the "Mandatory Closing
Cash Balance") of (i) the sum of (x) $25,000,000 and (y) $4,500,000 minus the
Estimated Accounting Differential and (ii) to the extent not otherwise included
in the calculation of the Estimated Accounting Differential and not already paid
prior to the Closing, the pro rata portion of the aggregate of all salaries and
bonuses payable by the Companies to employees for services rendered prior to the
Closing, which bonuses shall be pro rated for the portion of the calendar year
in which the Closing occurs that elapses prior to the Closing (the "Pre-Closing
Bonuses"). To the extent that Parent or the Seller pays, or causes the Companies
to pay, Pre-Closing Bonuses prior to the Closing, the Seller will, or will cause
the Companies to, expressly inform the recipients of the Pre-Closing Bonuses
that such payments are made in respect of salaries and bonuses payable by the
Companies for services rendered prior to the Closing. To the extent that neither
Parent nor the Seller pays, and the Seller does not cause the Companies to pay,
Pre-Closing Bonuses prior to the Closing, the Buyer agrees to pay such
Pre-Closing Bonuses in the amounts and on the terms set forth in, and otherwise
in accordance with, Schedule 5.9(c), but only to the extent that the Companies'
liability for the payment of such amounts is included in the calculation of the
Estimated Accounting Differential and the Closing Date Accounting Differential.
5.10 Inter-Company Debt. Prior to the Closing, the Seller (a) shall cause
all Indebtedness owed by any Company to Parent, the Seller or any Affiliate
thereof (other than a Company) to be discharged, forgiven, satisfied or
otherwise terminated in full (the "Mandatory Termination") and (b) may cause all
Indebtedness owed to any Company by Parent, the Seller or any Affiliate thereof
(other than a Company) to be discharged, forgiven, satisfied or otherwise
terminated in full (the "Voluntary Termination"). Prior to the Closing, the
Seller may cause the Companies to dividend or distribute to the Seller all
assets that represent all inter-company loans made by the Companies to Parent,
the Seller and their respective Affiliates.
5.11 Transamerica Name and ▇▇▇▇. As promptly as commercially practicable
but in no event later than 90 days after the Closing, the Buyer shall completely
and permanently obliterate, mask or remove all Transamerica Marks from all
assets used by the Companies (it being understood and agreed that
notwithstanding the foregoing, (i) in the event that any properties of the
Companies are in the possession of third parties, the Buyer's obligations
hereunder with respect to obliteration, masking and/or removal of Transamerica
Marks shall commence on the first day that such properties are returned to the
dominion and control of the Buyer or the Companies, and (ii) in no event shall
Buyer have any obligation to obliterate or mask any Transamerica Marks from any
documents related to existing Contracts in existence immediately prior to the
Closing). From and after the Closing, except as set forth in this Section 5.11,
the Buyer shall not permit any Company to (a) use any acronym based on, or any
logo incorporating, any such Transamerica ▇▇▇▇, (b) in any way represent that it
is, or otherwise hold
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itself out as being, affiliated with Parent, the Seller or any Affiliate thereof
or (c) except as provided in the following sentence otherwise use any
Transamerica ▇▇▇▇. Notwithstanding the foregoing, for a period of not more than
180 days after the Closing in connection with transition arrangements, Buyer
shall be entitled to (x) use or disseminate any equipment, software, invoices,
purchaser orders, sales orders, labels, letterhead, envelopes, signage, business
cards, displays, product packaging, websites, e-mail addresses, promotional
materials, shipping documents or other documentation used by the Companies and
existing on the Closing Date (the "Existing Stock") that bear any Transamerica
▇▇▇▇ where the removal, erasure, deletion or obliteration of the Transamerica
▇▇▇▇ on such Existing Stock would be impractical and (y) to the extent any
Company name, prior to closing, contained any Transamerica ▇▇▇▇, use such
Transamerica ▇▇▇▇ to indicate that the respective Company was formerly known by
such name. Except as set forth in this Section 5.11, the Buyer shall not be
entitled to use any Transamerica Marks together with any of the Buyer's
trademarks, servicemarks, trade dress or logos on any stationery or advertising
or in any other form or documentation. As soon as practicable after the Closing
Date and not later than 60 days thereafter, the Buyer shall cause each of the
Companies to take all commercially reasonable actions reasonably necessary to
change its corporate name and any other names under which it conducts business
to names that do not use any Transamerica ▇▇▇▇ or any name confusingly similar
to a Transamerica ▇▇▇▇. Following the Closing, Parent shall not, and shall not
cause or permit any Affiliate thereof to, sell, transfer, license, use or renew
any of the following Trademarks: TransFlood(R), ▇▇ ▇▇▇▇▇(R), TFHC(R) and
TransTax(R).
5.12 Control of the Seller. Parent agrees to take all appropriate action
to cause the Seller to perform and comply with each of the covenants and
agreements contained in this Agreement that are required to be performed or
complied with by Seller.
5.13 Assistance in Proceedings.
(a) Subject to Section 9.8, after the Closing, Buyer will use
commercially reasonable efforts to cooperate with Seller and Parent and their
respective counsel (at Parent's expense with respect to Buyer's out-of-pocket
costs) in the contest or defense of, and make reasonably available its personnel
(including Employees) and provide any testimony and reasonable access to its
books and records in connection with, any proceeding, action, arbitration,
audit, investigation, litigation or suit involving or relating to (i) any
transaction contemplated by this Agreement or the other Related Agreements or
(ii) any action, failure to act, circumstance, condition, conduct, activity,
event or transaction on or before the Closing Date involving Seller, Parent, any
Company or their respective businesses.
(b) Subject to Section 9.8, after the Closing, Seller and Parent
will use commercially reasonable efforts to cooperate with Buyer and its counsel
(at Buyer's expense with respect to Seller's and Parent's out-of-pocket costs)
in the contest or defense of, and make reasonably available its personnel and
provide any testimony and reasonable access to its books and records in
connection with, any proceeding, action, arbitration, audit, investigation,
litigation or suit involving or relating to (i) any transaction contemplated by
this Agreement or the other Related Agreements or (ii) any action, failure to
act, circumstance, condition, conduct, activity,
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event or transaction on or before the Closing Date involving any Company or
their respective businesses.
SECTION 6.
CONDITIONS PRECEDENT
--------------------
6.1 Conditions of all Parties. The obligations of each of the Parties to
consummate the transactions contemplated by this Agreement and the other Related
Agreements are subject to the satisfaction or waiver by such Party on or before
the Closing, of the following conditions precedent:
(a) Injunction. No preliminary or permanent injunction or other
order shall have been issued by any court or by any Governmental Entity which
prohibits or makes illegal the consummation of the transactions contemplated by
this Agreement and the other Related Documents and which is in effect on the
Closing Date; provided, however, that the Parties shall use commercially
reasonable efforts to have any such injunction or order vacated.
(b) Statutes; Governmental Approvals. No statute, rule,
regulation, executive order, decree or order of any kind shall have been
enacted, entered, promulgated or enforced by any court or other Governmental
Entity which prohibits the consummation of the transactions contemplated by this
Agreement and the other Related Documents; all governmental and other consents
and approvals (including the HSR Termination), if any, necessary to permit the
consummation of the transactions contemplated by the Related Documents shall
have been received and shall be in full force and effect as of the Closing Date.
(c) No Litigation. As of the Closing Date, no action or proceeding
shall have been instituted and shall be pending before a court or other
Governmental Entity to restrain or prohibit the consummation of the transactions
contemplated by this Agreement and the other Related Documents, which action or
proceeding would reasonably be expected to be successful.
6.2 Conditions of the Buyer. The obligation of the Buyer to consummate
the transactions contemplated hereby and in the other Related Documents is
additionally subject to the satisfaction or waiver on or before the Closing Date
of the following conditions precedent:
(a) Truth of Representations and Warranties. The representations
and warranties of the Seller and Parent contained herein shall be true and
accurate in all material respects, in each case at and as of the date of this
Agreement and as of the Closing Date (except to the extent a representation or
warranty speaks specifically as of an earlier date).
(b) Performance of Agreements. All of the agreements of the
Seller, Parent and the Companies to be performed pursuant to this Agreement at
or prior to the Closing shall have been duly performed in all material respects.
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(c) Good Standing and Other Certificates. The Seller shall have
delivered to the Buyer (i) copies of each Company's certificate of incorporation
as in effect immediately prior to the Conversion and each Company's certificate
of conversion and certificate of formation as in effect upon the Conversion,
including all amendments thereto, in each case certified by the Secretary of
State of the State of Delaware, (ii) a certificate from the Secretary of State
of the State of Delaware to the effect that each Company is in good standing or
subsisting in the State of Delaware and listing all formation documents of such
Company on file, (iii) a certificate, dated prior to the Conversion, from the
Secretary of State or other appropriate official in each State in which each of
the Companies is qualified to do business to the effect that such Company is in
good standing in such State and (iv) a copy of the bylaws or limited liability
company agreement, as the case may be, of each of the Companies, certified by
the Secretary or Assistant Secretary of such Company as being true and correct
and in effect on the Closing Date.
(d) No Material Adverse Effect. As of the Closing Date there shall
have been no Material Adverse Effect on any Company and there shall not have
occurred any change or development that would reasonably be expected to have a
Material Adverse Effect on any Company.
(e) Proceedings. As of the Closing Date, all corporate or limited
liability company, as the case may be, proceedings of the Companies, Parent and
the Seller, if any, to be taken in connection with the transactions contemplated
by this Agreement, the other Related Documents and all documents incident
thereto shall be reasonably satisfactory in form and substance to the Buyer, and
the Buyer shall have received copies of all such documents and other evidences
as it may reasonably request in order to establish the taking of all such
proceedings in connection with the consummation of such transactions.
(f) Related Documents. Each of the Noncompete Agreement, the
Guarantee and the Services Agreement shall have duly executed and delivered by
the parties (other than the Buyer or any Affiliate thereof) thereto.
(g) Termination of Plans. The Companies shall have canceled or
terminated all employee options to purchase shares of the capital stock or other
equity interests, if any, of the Companies and any other Employee Benefit Plans
or Employee Benefit Arrangements maintained by a Company designated to the
Seller in writing by the Buyer, and the Buyer shall have received copies of all
such documents and other evidences as it may reasonably request in order to
establish such cancellation or termination.
(h) FIRPTA Compliance. The Buyer shall have received a non-foreign
person affidavit from the Seller dated the Closing Date as required by Section
1445 of the Code.
(i) Conversion. The Conversion shall have occurred with the effect
provided in Section 18-214 of the Delaware Limited Liability Company Act.
(j) Inter-Company Debt. The Mandatory Termination shall have
occurred.
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6.3 Conditions of Parent and the Seller. The obligations of Parent and
the Seller to consummate the transactions contemplated hereby and in the other
Related Documents is additionally subject to the satisfaction or waiver on or
before the Closing Date of the following conditions precedent:
(a) Truth of Representations and Warranties. The representations
and warranties of the Buyer contained herein shall be true and accurate in all
material respects, in each case at and as of the date of this Agreement and as
of the Closing Date (except to the extent a representation or warranty speaks
specifically as of an earlier date).
(b) Performance of Agreements. All of the agreements of the Buyer
to be performed pursuant to this Agreement at or prior to the Closing shall have
been duly performed in all material respects.
(c) Good Standing and Other Certificates. The Buyer shall have
delivered to the Seller (i) a copy of the Buyer's articles of organization,
including all amendments thereto, certified by the Secretary of the State of
California as being true and correct and in effect on the Closing Date, and a
copy of the Buyer's operating agreement, including all amendments thereto,
certified by the Secretary or an Assistant Secretary of the Buyer as being true
and correct and in effect on the Closing Date and (ii) a certificate from the
Secretary of State of California to the effect that the Buyer is in good
standing in such jurisdiction and listing all formation documents of the Buyer
on file.
(d) Proceedings. As of the Closing Date, all limited liability
company proceedings of the Buyer, if any, to be taken in connection with the
transactions contemplated by this Agreement, the Related Documents and all
documents incident thereto shall be reasonably satisfactory in form and
substance to the Seller, and the Seller shall have received copies of all such
documents and other evidences as it may reasonably request in order to establish
the taking of all such proceedings in connection with the consummation of such
transactions.
SECTION 7.
TERMINATION
-----------
7.1 Events of Termination. This Agreement may be terminated as follows:
(a) at any time by mutual written agreement of the Parties;
(b) by Buyer upon written notice to Parent, if (i) the conditions
set forth in Section 6.1 and Section 6.2 shall not have been satisfied on or
before the Termination Date and (ii) Buyer shall not have materially breached
any of its representations, warranties, covenants or agreements contained
herein;
(c) by Seller or Parent upon written notice to Buyer, if (i) the
conditions set forth in Section 6.1 and Section 6.3 shall not have been
satisfied on or before the Termination
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Date and (ii) neither Parent nor Seller shall have materially breached any of
its representations, warranties, covenants or agreements contained herein;
(d) by Seller or Parent upon written notice to Buyer or by Buyer
upon written notice to Parent, if a court of competent jurisdiction or other
Governmental Entity shall have issued a final, non-appealable order, decree or
ruling, or taken any other action, having the effect of permanently restraining,
enjoining or otherwise prohibiting the transactions contemplated by this
Agreement;
(e) by the Buyer, by written notice to Parent, if, as a condition
to receiving the approval of the transactions contemplated by this Agreement by
any Governmental Entity, the Buyer or any of its Affiliates shall be required
to, or required to agree to, (i) divest, sell or hold separate or agree to
license to any Person, before or after the Closing Date, any material portion of
the Buyer's, any of its Affiliates' or any of the Companies' businesses, product
lines, properties or assets, as the case may be, (ii) make any material changes
or accept material restrictions in the operation of such businesses, product
lines, properties or assets or (iii) make any material changes or accept any
material restrictions to this Agreement or the transactions contemplated hereby;
and
(f) by Seller or Parent upon written notice to Buyer or by Buyer
upon written notice to Parent if at any time the representations and warranties
made by the non-terminating Party or Parties in this Agreement fail to be true
and correct in all material respects and such failure is either (x) not capable
of being cured or (y) is not cured within 30 days after such failure first
occurs.
7.2 Effect of Termination. In the event that this Agreement shall be
terminated pursuant to Section 7.1, all further obligations of the Parties
hereto under this Agreement (other than pursuant to Sections 5.4(b), 10.2 and
10.3, which shall continue in full force and effect) shall terminate without
further liability or obligation of any Party to any other Party hereunder;
provided that no Party shall be released from liability hereunder if this
Agreement is terminated and the transactions abandoned by reason of (a) willful
failure of such Party to have performed its obligations hereunder or (b) any
knowing misrepresentation made by such Party of any matter set forth herein.
SECTION 8.
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION
--------------------------------------------
8.1 Survival of Representations. The representations and warranties of
the Parties contained in Sections 2 and 3 (including the Schedules) are made
only as of the date of this Agreement and as of the Closing Date. Such
representations and warranties shall survive the Closing until April 30, 2005;
provided that the representations and warranties contained in Sections 2.2, 2.3,
2.4 and 2.24 shall survive indefinitely and the representations and warranties
contained in Sections 2.13(c)(iii), (vi) and (viii) and, solely to the extent
that such representations and warranties relate to pre-Closing compliance with
ERISA and the Code, Section 2.19 shall
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survive until 120 days after the expiration of the applicable statute of
limitations period (after giving effect to any waivers and extensions thereof).
8.2 General Indemnification.
(a) The Seller and Parent jointly and severally agree to indemnify
and hold the Buyer and its Affiliates (including, after the Closing, the
Companies) and their respective officers, directors, managers, stockholders,
members and any successors (solely by operation of law) thereto harmless, on an
after-tax basis, from any and all Losses incurred or paid as a result of or
arising out of the failure of any representation or warranty made by the Seller
and Parent in Section 2 of this Agreement, other than representations and
warranties made in Section 2.13, to be true and correct (determined without
regard to any limitation or qualification by materiality) as of the date hereof
and as of the Closing Date.
(b) The Buyer agrees to indemnify and hold the Seller, Parent and
their respective Affiliates and their respective officers, directors,
stockholders and any successors (solely by operation of law) thereto harmless,
on an after-tax basis, from any and all Losses incurred or paid as a result of
or arising out of the failure of any representation or warranty made by the
Buyer in Section 3 of this Agreement to be true and correct (determined without
regard to any limitation or qualification by materiality) as of the date hereof
and as of the Closing Date.
(c) The sole recourse and remedy of the Buyer for any inaccuracy
in any representation or warranty, other than representations and warranties
made in Section 2.13, made by Parent and the Seller in this Agreement shall be
under the provisions of and to the extent provided in this Section 8. The Buyer
shall not assert any inaccuracy or seek any recourse or remedy in respect
thereof other than under the provisions of this Section 8.
(d) The sole recourse and remedy of Parent and the Seller for any
inaccuracy in any representation or warranty made by the Buyer in this Agreement
shall be under the provisions of and to the extent provided for in this Section
8. Neither Parent nor the Seller shall assert any such inaccuracy or seek any
recourse or remedy in respect thereof other than under the provisions of this
Section 8.
(e) The obligations to indemnify and hold harmless pursuant to
this Section 8.2 shall survive the consummation of the transactions contemplated
by this Agreement for the time periods set forth in Section 8.1, except for
claims for indemnification asserted in accordance with this Agreement prior to
the end of such periods, which claims shall survive until final resolution
thereof.
(f) The obligations of the Seller and Parent to indemnify and hold
harmless pursuant to this Section 8.2 and Section 8.4 and to make the payment
required in Section 8.3, on the one hand, and the obligation of the Buyer to
indemnify and hold harmless pursuant to this Section 8.2, on the other hand,
shall each be limited to an aggregate amount of $135,000,000, and no Indemnified
Party shall be entitled to recovery for Losses from the Seller and Parent
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pursuant to this Section 8.2 or to payment of amounts pursuant to Section 8.3,
on the one hand, or to recovery for Losses from the Buyer pursuant to this
Section 8.2, on the other hand, until the total amount of Losses indemnifiable
and, in the case of Section 8.3, amounts payable (but for the limitations
contained in this Section 8.2(f)) by the Seller and Parent or the Buyer, as the
case may be, hereunder exceeds $2,000,000 (in which case the Indemnified Party
shall be entitled to recover the amount of such Losses that exceeds $2,000,000);
provided that the limitations set forth in this Section 8.2(f) shall not apply
to Losses that arise from a breach of any of the representations and warranties
contained in Sections 2.2, 2.3, 2.4, 2.13(c)(iii), (vi) and (viii) and 2.24 and,
solely to the extent that such representations and warranties relate to
pre-Closing compliance with ERISA and the Code, Section 2.19.
(g) For the avoidance of doubt, any claim for indemnification in
respect of Losses that arise from a breach of any of the representations and
warranties contained in Section 2.13 shall be governed solely by Section 9.7.
8.3 Tax and Flood Claims. The Seller and Parent jointly and severally
agree to pay to the Buyer, in a single payment on November 3, 2008, the
aggregate amount of all (i) Tax Claims made or incurred during the five-year
period commencing on the Closing Date to the extent the aggregate amount of such
Tax Claims exceeds the amount of the Claims Loss Reserve of TRETS reflected on
the Balance Sheets and (ii) Flood Claims made or incurred during the five-year
period commencing on the Closing Date to the extent the aggregate amount of such
Flood Claims exceeds $100,000; provided that the Buyer shall have caused any
such Tax Claim or Flood Claim to be processed in the Ordinary Course and in any
event in a manner no less advantageous, in any material respect, to any Company
than the manner in which similar claims are processed by Affiliates (other than
the Companies) of the Buyer.
8.4 ALLTEL Agreements. In addition to the indemnification provided in
Section 8.2(a), 8.3 and 8.5, the Seller and Parent jointly and severally agree
to indemnify and hold the Buyer and its Affiliates (including, after the
Closing, the Companies) and their respective officers, directors, managers,
stockholders, members and any successors (solely by operation of law) thereto
harmless, on an after-tax basis, from any and all Losses incurred or paid as a
result of or arising out of the failure to obtain ALLTEL's consent under the
ALLTEL Alliance Agreement and/or the ALLTEL Software License Agreement to the
transactions contemplated by this Agreement. The Seller's and Parent's
obligations to indemnify and hold harmless pursuant to this Section 8.4 shall
terminate 49 months after the Closing Date, except for claims for
indemnification asserted prior to the end of such period, which claims shall
survive until final resolution thereof.
8.5 Vesting Under AEGON Plans. In addition to the indemnification
provided in Section 8.2(a), 8.3 and 8.4, the Seller and Parent jointly and
severally agree to indemnify and hold the Buyer and its Affiliates (including,
after the Closing, the Companies) and their respective officers, directors,
managers, stockholders, members and any successors (solely by operation of law)
thereto harmless, on an after-tax basis, from any and all Losses incurred or
paid as a result of or arising out of Section 5.6(e) and any actions taken
thereunder. The Seller's and
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Parent's obligations to indemnify and hold harmless pursuant to this Section 8.5
shall survive indefinitely.
8.6 Indemnification Procedure.
(a) Promptly after incurring Losses, including any claim by a
third party described in Section 8.6(c) that might give rise to indemnification
hereunder, any Party or other Person entitled to indemnification under this
Section 8 (each, an "Indemnified Party") shall promptly deliver a certificate
containing the information described below (a "Certificate") to the Party that
is required to indemnify such Indemnified Party under Section 8 (such
indemnifying party, the "Indemnifying Party"). Such Certificate shall:
(i) state that the Indemnified Party has paid or properly
accrued Losses or reasonably anticipates that it will incur liability for Losses
for which such Indemnified Party is entitled to indemnification pursuant to this
Agreement; and
(ii) specify in reasonable detail each individual item of
Loss included in the amount so stated, the date such item was paid or properly
accrued, the basis for any anticipated liability and the nature of the
misrepresentation, inaccuracy or claim to which each such item is related and
the computation of the amount to which such Indemnified Party claims to be
entitled under this Section 8.
(b) In case the Indemnifying Party shall object to the
indemnification of an Indemnified Party in respect of any claim or claims
specified in any Certificate, the Indemnifying Party shall, within 30 days after
receipt by the Indemnifying Party of such Certificate, deliver to the
Indemnified Party a written notice to such effect and the Indemnifying Party and
the Indemnified Party shall, within the 30-day period beginning on the date of
receipt by the Indemnified Party of such written objection, attempt in good
faith to agree upon the rights of the Parties with respect to each of such
claims to which the Indemnifying Party shall have so objected. If the
Indemnified Party and the Indemnifying Party shall succeed in reaching agreement
on their respective rights with respect to any of such claims, the Indemnified
Party and the Indemnifying Party shall promptly prepare and sign a memorandum
setting forth such agreement. Should the Indemnified Party and the Indemnifying
Party be unable to agree as to any particular item or items or amount or
amounts, then such dispute shall be settled by binding arbitration in accordance
with Section 10.4.
(c) Promptly after the assertion by any third party of any claim
against any Indemnified Party that, in the judgment of such Indemnified Party,
may result in the incurring by such Indemnified Party of Losses for which such
Indemnified Party would be entitled to indemnification pursuant to this
Agreement, such Indemnified Party shall deliver to the Indemnifying Party a
written notice describing in reasonable detail such claim and such Indemnifying
Party may, at its option, assume the defense of the Indemnified Party against
such claim (including the employment of counsel, who shall be reasonably
satisfactory to such Indemnified Party) and the payment of expenses. An
Indemnified Party shall have the right to employ separate counsel in any such
action or claim and to participate in the defense thereof, but
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the fees and expenses of such counsel shall not be at the expense of the
Indemnifying Party unless (x) the Indemnifying Party shall have failed, within a
reasonable time after having been notified by the Indemnified Party of the
existence of such claim as provided in the preceding sentence, to assume the
defense of such claim, (y) the employment of such counsel has been specifically
authorized in writing by the Indemnifying Party, such authorization not to be
unreasonably withheld, or (z) the named parties to any such action (including
any impleaded parties) include both such Indemnified Party and the Indemnifying
Party and such Indemnified Party shall have been advised in writing by such
counsel that there may be one or more legal defenses available to the
Indemnified Party which are not available to the Indemnifying Party, or
available to the Indemnifying Party, but the assertion of which would be adverse
to the interests of the Indemnified Party. No Indemnifying Party shall be liable
to indemnify any Indemnified Party for any settlement of any such action or
claim effected without the written consent of the Indemnifying Party, but if
settled with the written consent of the Indemnifying Party, or if there be a
final judgment for the plaintiff in any such action, the Indemnifying Party
shall indemnify and hold harmless each Indemnified Party from and against any
loss or liability by reason of such settlement or judgment.
(d) Claims for Losses specified in any Certificate to which an
Indemnifying Party shall not object in writing within 30 days of receipt of such
Certificate, claims for Losses covered by a memorandum of agreement of the
nature described in Section 8.6(b), claims for Losses the validity and amount of
which have been the subject of judicial determination as described in Section
8.6(b) and claims for Losses the validity and amount of which shall have been
the subject of a final judicial determination, or shall have been settled with
the consent of the Indemnifying party, as described in Section 8.6(c) are
hereinafter referred to as "Agreed Claims". Within ten (10) Business Days of the
determination of the amount of any Agreed Claims, the Indemnifying Party shall
pay to the Indemnified Party an amount equal to the Agreed Claim by wire
transfer in immediately available funds to the bank account or accounts
designated in writing by the Indemnified Party not less than three (3) Business
Days prior to such payment.
(e) All amounts paid in respect of any indemnification claim
pursuant to this Section 8 shall, to the extent permitted by applicable law, be
treated as an adjustment to the Purchase Price for all Tax purposes.
SECTION 9.
TAX MATTERS
-----------
9.1 Tax Returns.
(a) Parent and the Seller shall have the exclusive authority and
obligation to prepare, execute on behalf of the Companies and timely file, or
cause to be prepared and timely filed, all Tax Returns of the Companies that are
due with respect to any taxable year or other taxable period ending on or prior
to the Closing Date. Such authority shall include the determination of the
manner in which any items of income, gain, deduction, loss or credit arising out
of the income, properties and operations of the Companies shall be reported or
disclosed in
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such Tax Returns; provided, however, that, subject to the immediately succeeding
sentence, such Tax Returns shall be prepared by treating items on such Tax
Returns in a manner consistent with the past practices of the Companies with
respect to such items. With respect to any consolidated, combined or unitary Tax
Returns prepared or filed with respect to the Companies (other than
consolidated, combined or unitary Tax Returns prepared or filed with respect to
a group, the only members of which are the Companies) Parent and the Seller
shall treat items on such Tax Return in a manner consistent with the past
practices of the Companies with respect to such items, but only to the extent
that any inconsistency would or may materially increase the Tax liability of the
Buyer, any Company for any Post-Closing Period.
(b) Except as provided in Section 9.1(a), the Buyer shall have the
exclusive authority and obligation to prepare and timely file, or cause to be
prepared and timely filed, all Tax Returns of the Companies. Such authority
shall include the determination of the manner in which any items of income,
gain, deduction, loss or credit arising out of the income, properties and
operations of the Companies shall be reported or disclosed on such Tax Returns.
9.2 Payment of Taxes.
(a) Parent and the Seller shall be jointly and severally
responsible and liable for the timely payment of all Seller Taxes. The Buyer
shall be responsible and liable for the timely payment of all Buyer Taxes.
Parent and the Seller jointly and severally agree to pay to the Buyer, at least
five Business Days prior to the due date thereof, all Seller Taxes for which the
Buyer, the Companies are required to pay to the applicable taxing authority to
the extent (i) such Seller Taxes have not already been paid by Parent, the
Seller, any Company on or before the Closing Date and (ii) the amount of such
Seller Taxes are not reflected as a liability on the Closing Date Accounting
Differential statement.
(b) All Taxes and Tax liabilities with respect to the income,
property or operations of the Companies that relate to the Overlap Period shall
be apportioned between the Pre-Closing Period and the Post-Closing Period as
follows: (i) in the case of Taxes other than income, sales and use and
withholding Taxes, on a per diem basis, and (ii) in the case of income, sales
and use and withholding Taxes, as determined from the books and records of the
Companies as though the taxable year of any such Company, as the case may be,
terminated at the close of business on the Closing Date.
9.3 Controversies.
(a) The Buyer shall promptly notify the Seller upon receipt by the
Buyer or any Affiliate of the Buyer (including the Companies after the Closing
Date) of written notice of any Pre-Closing Tax Matter. For purposes of this
Section 9.3(a), "Pre-Closing Tax Matter" means any inquiry, claim, assessment,
audit or similar event with respect to Taxes relating to a taxable period ending
on or prior to the Closing Date for which Parent or the Seller may be liable
under this Agreement. Parent and the Seller, at their sole expense, shall have
the authority to represent the interests of the Companies with respect to any
Pre-Closing Tax Matter before the IRS, any other taxing authority, any other
Governmental Authority or any court and shall have
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the sole right to control the defense, compromise or other resolution of any
Pre-Closing Tax Matter, including responding to inquiries, filing Tax Returns
and contesting, defending against and resolving any assessment for additional
Taxes or notice of Tax deficiency or other adjustment of Taxes of, or relating
to, a Pre-Closing Tax Matter; provided, that none of Parent, the Seller or any
Affiliate thereof shall enter into any settlement of or otherwise compromise any
Pre-Closing Tax Matter that would or may materially increase the Tax liability
of the Buyer or any Company, or any Affiliate of the foregoing, for any
Post-Closing Period without the prior written consent of the Buyer, which
consent shall not be unreasonably withheld, conditioned or delayed.
(b) Parent or the Seller shall promptly notify the Buyer upon
receipt by Parent, the Seller or any Affiliate of Parent or the Seller of
written notice of any inquiries, claims, assessments, audit or other similar
events with respect to Taxes relating to a taxable period ending after the
Closing Date for which the Buyer may be liable under this Agreement. Except as
otherwise provided in Section 9.3(a) above, the Buyer shall have the sole right
to control any audit or examination by any taxing authority, initiate any claim
for refund or amend any Tax Return, and contest, resolve and defend against any
assessment for additional Taxes, notice of Tax deficiency or other adjustment of
Taxes of, or relating to, the income, assets or operations of the Companies for
all taxable periods; provided, that neither the Buyer nor any Affiliate thereof
shall enter into any settlement of or otherwise compromise any such inquiry,
claim, assessment, audit or similar event that would or may materially increase
the Tax liability of Parent, the Seller or any Company, or any Affiliate of the
foregoing, for any Pre-Closing Period without the prior written consent of
Parent, which consent shall not be unreasonably withheld, conditioned or
delayed.
9.4 Transfer Taxes. All transfer, sales and use, registration, stamp and
similar Taxes imposed in connection with the sale of the Interests or any other
transaction that occurs, or is deemed to occur, pursuant to this Agreement, but
specifically excluding Excess Conversion Taxes, shall be shared equally between
the Buyer, on the one hand, and Parent and the Seller jointly and severally, on
the other hand.
9.5 Amended Returns. Neither Parent nor the Seller shall file or cause
to be filed any amended Tax Return or claim for refund with respect to the
income, property or operations of the Companies without the prior written
consent of the Buyer, which consent shall not be unreasonably withheld,
conditioned or delayed; provided, however, that such Buyer consent shall not be
required for the filing of any amended consolidated, combined or unitary Tax
Return, or claim for refund relating to any consolidated, combined or unitary
Tax Return, with respect to the Companies (other than a consolidated, combined
or unitary Tax Return or claim for refund prepared or filed by, or on behalf of,
a group, the only members of which are the Companies) if the filing of such
amended Tax Return or claim for refund would not materially increase the Tax
liability of the Buyer, any Company, or any Affiliate of the foregoing, for any
Post-Closing Period.
9.6 Prior Tax Agreements. Prior to the Closing Date, Parent and the
Seller shall terminate or cause to be terminated any and all of the tax sharing,
allocation, indemnification or
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similar agreements, arrangements or undertakings in effect, written or
unwritten, as between Parent, the Seller or any predecessor or Affiliate
thereof, on the one hand, and any Company, on the other hand, for all Taxes
imposed by any government or taxing authority, and there shall be no continuing
obligation to make any payments under any such agreements, arrangements or
undertakings.
9.7 Indemnification.
(a) Notwithstanding any provision to the contrary contained in
this Agreement (but subject to Section 9.4), the Seller and Parent jointly and
severally agree to indemnify, defend and hold the Buyer, its Affiliates
(including the Companies) and the successors to the foregoing (and their
respective stockholders, members, officers, directors, managers, employees
agents, successors and assigns) harmless, on an after-tax basis, from and
against: (i) all Taxes, losses, claims and expenses resulting from, arising out
of, or incurred with respect to, any claims that may be asserted by any party
based on, attributable to, or resulting from the failure of any representation
or warranty made pursuant to Section 2.13 to be true and correct in all respects
as of the date of this Agreement and as of the Closing Date; provided, however,
that, except with respect to the representations and warranties made pursuant to
Sections 2.13(c)(iii), 2.13(c)(vi) and 2.13(c)(viii), neither the Seller nor
Parent shall have any obligation to indemnify the Buyer and its Affiliates under
this Section 9.7(a)(i) to the extent the claim for indemnity relates to a Tax
liability for Post-Closing Periods that is attributable to a breach of the
representations and warranties made pursuant to Section 2.13; (ii) all Seller
Taxes; and (iii) all Taxes imposed on the Companies as a result of the
provisions of Treasury Regulation Section 1.1502-6 or the analogous provisions
of any state, local or foreign law; provided, however, that neither the Seller
nor Parent shall have any obligation to indemnify the Buyer for a liability for
Taxes of the Companies pursuant to this Section 9.7(a) to the extent that the
amount of such Tax is reflected as a liability in the calculation of the Closing
Date Accounting Differential.
(b) Notwithstanding any provision to the contrary contained in
this Agreement (but subject to Section 9.4), the Buyer agrees to indemnify,
defend and hold the Seller, Parent and their respective Affiliates and the
successors to the foregoing (and their respective stockholders, members,
officers, directors, managers, employees agents, successors and assigns)
harmless, on an after-tax basis, from and against all Buyer Taxes.
(c) All amounts paid in respect of any indemnification claim
pursuant to this Section 9.7 shall, to the extent permitted by applicable law,
be treated as adjustments to the Purchase Price for all Tax purposes.
9.8 Post-Closing Access and Cooperation. Subject to the immediately
succeeding sentence, all books and records, including Tax Returns and other work
papers regarding Taxes with respect to the income, property or operations of the
Companies shall remain the property of the Companies. With respect to
consolidated, combined or unitary Tax Returns, and work papers related thereto,
prepared or
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filed by, or on behalf of, the Companies (other than consolidated, combined or
unitary Tax Returns, and work papers related thereto, prepared or filed by, or
on behalf of, a group, the only members of which are the Companies) the Seller
or Parent shall retain the originals thereof and shall not be required to
provide to the Buyer copies of such Tax Returns and work papers; provided,
however, that Parent and/or the Seller will provide the Buyer with reasonable
access to information that may reasonably be necessary for the purpose of
completing any Nonconforming Tax Return, but access to such information will be
limited to those periods covered by such Nonconforming Tax Return. The Buyer
shall afford the Seller and Parent, upon reasonable notice and without undo
interruption to the businesses of the Companies, reasonable access, during
normal business hours, to the books and records of the Companies, to the extent
that such books and records relate to a Pre-Closing Period, for the purpose of
enabling the Seller or Parent to (a) prepare the Tax Returns specified in
Section 9.1(a), (b) investigate or contest any Tax Matter that the Seller or
Parent has the authority to conduct under Section 9.3 and (c) evaluate any claim
for indemnification under Section 9.7. The Buyer shall, from and after the
Closing Date, preserve all books and records of the Companies relating to the
Companies prior to the Closing Date for a seven-year period after the Closing
Date, and, thereafter, not destroy or dispose of or allow the destruction or
disposal of such books and records without first having offered to deliver such
books and records to the Seller or Parent at the Seller's or Parent's expense.
If neither the Seller nor Parent requests such books and records within 30 days
after receipt of the notice described in the preceding sentence, the Buyer may
dispose of such books and records at its discretion.
SECTION 10.
MISCELLANEOUS
-------------
10.1 Knowledge. As used in any representation or warranty contained in
this Agreement, "Knowledge" means, with respect to any Person, the knowledge
that a Person's Designated Individuals have acquired in the prudent exercise of
each such individual's duties in light of this Agreement and the transactions
contemplated hereby, it being understood that such Person's Designated
Individuals have reviewed this Agreement and made reasonable inquiry into the
subject matter thereof, including the representations and warranties contained
herein.
10.2 Expenses.
(a) Except as expressly provided herein, each Party shall bear its
own (i) costs incurred as a result of the transfer of the Interests, including
payments to third parties, if any, to obtain their consent to such transfer and
(ii) professional fees and related costs (including fees and costs of investment
bankers, accountants, attorneys, benefits specialists, tax advisors and
appraisers) incurred by it in connection with the preparation, execution and
delivery of this Agreement and the other Related Documents and the transactions
contemplated hereby and thereby.
(b) Notwithstanding anything to the contrary, all legal,
accounting, investment banking and other expenses of the Companies in connection
with the transactions contemplated by this Agreement shall be the joint and
several responsibility of Parent and the Seller and shall not be, and shall not
become, liabilities of any Company, and shall not be assumed in any way
whatsoever by the Buyer or any of its Affiliates.
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10.3 Confidentiality; Public Announcements; Tax Treatment.
(a) Subject to the requirements of applicable law and the
obligations and restrictions imposed by the Confidentiality Agreements, each
Party shall maintain in confidence (i) the provisions of this Agreement and (ii)
all information received from the other Party as a result of any due diligence
investigation conducted relative to the execution of this Agreement and shall
use such information only in connection with evaluating the transactions
contemplated hereby. The obligation of confidentiality and non-use shall not
apply to any information which (x) is or becomes generally available to the
public through no fault of the receiving party, (y) is independently developed
by the receiving party or (z) is received in good faith from a third party who
is lawfully in possession of such information and has the lawful right to
disclose or use it. After the Closing, the prohibition under this Section 10.3
on the Buyer's use of information relating to the Seller and the Companies and
their business operations will terminate.
(b) Without limiting the generality of the foregoing, no Party
shall, nor shall any of their respective Affiliates, without the prior written
approval of the other Party, issue any press releases or otherwise make any
public statements with respect to the transactions contemplated by this
Agreement, except as may be required by applicable law or regulation or by
obligations pursuant to any listing agreement with any national securities
exchange so long as such Party has used commercially reasonable efforts to
obtain the approval of the other Party prior to issuing such press release or
making such public disclosure.
(c) Notwithstanding anything to the contrary contained in this
Agreement, in any other Related Document or in any document, agreement or
understanding relating to the transactions contemplated by this Agreement (the
"Transactions"), each Party (and each employee, representative or other agent of
such Party) is and has been authorized to disclose to any and all persons,
without limitation of any kind, the tax treatment and tax structure of the
Transactions and all materials of any kind (including opinions or other tax
analyses) that are provided to it relating to such tax treatment and tax
structure; provided, however, that this sentence shall not permit any disclosure
that otherwise is prohibited by this Agreement (i) until the earlier of (x) the
date of the public announcement of discussions relating to the Transactions, (y)
the date of the public announcement of the Transactions, and (z) the date of the
execution of an agreement (with or without conditions) to enter into the
Transactions; or (ii) if such disclosure would result in a violation of federal
or state securities laws; or (iii) to the extent not related to the tax aspects
of the transaction. Moreover, nothing in this Agreement shall be construed to
limit in any way any party's ability to consult any tax advisor regarding the
tax treatment or tax structure of the Transactions. For purposes of this clause
(c), the "tax treatment" of a transaction means the purported or claimed U.S.
federal income tax treatment of the transaction, and the "tax structure" of a
transaction means any fact that may be relevant to understanding the purported
or claimed U.S. federal income tax treatment of the transaction.
10.4 Governing Law. THE INTERPRETATION AND CONSTRUCTION OF THIS
AGREEMENT, AND ALL MATTERS RELATING HERETO, SHALL BE GOVERNED BY THE LAWS OF THE
STATE OF NEW YORK APPLICABLE TO AGREEMENTS
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EXECUTED AND TO BE PERFORMED SOLELY WITHIN SUCH STATE, EXCLUSIVE OF CONFLICTS OF
LAWS PRINCIPLES.
10.5 Notices. Any notice or other communication required or permitted
under this Agreement shall be sufficiently given if delivered in person or sent
by facsimile (confirmed by telephone) or by registered or certified mail,
postage prepaid, addressed as follows:
if to the Buyer, to:
First American Real Estate Solutions LLC
▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇
with a copy to:
The First American Corporation
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
and
White & Case LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇
if to the Seller or Parent, to:
Transamerica Finance Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
with a copy to:
-▇▇-
▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
or such other address or number as shall be furnished in writing by any such
Party, and such notice or communication shall, if properly addressed, be deemed
to have been given as of the date so delivered, sent by facsimile and confirmed
by telephone or five Business Days after deposit into the U.S. mail by certified
mail, return receipt requested, postage prepaid.
10.6 Parties in Interest. This Agreement may not be transferred,
assigned, pledged or hypothecated by any Party, other than by operation of law,
except that the Buyer may assign any of its rights and benefits (but not its
obligations) hereunder to any of its Affiliates. This Agreement shall be binding
upon and shall inure to the benefit of the Parties and their respective
successors and permitted assigns.
10.7 Counterparts. This Agreement may be executed in one or more
counterparts, all of which taken together shall constitute one instrument.
10.8 Entire Agreement. Except as expressly provided herein, this
Agreement, including the other Related Documents and the other documents
referred to herein and the Seller Disclosure Letter, which form a part hereof,
contains the entire understanding of the Parties with respect to the subject
matter contained herein and therein. This Agreement and such other documents
supersede all prior agreements and understandings between the Parties with
respect to such subject matter. The provisions of this Agreement relating to
confidentiality supplement (and do not supercede) the Confidentiality
Agreements, which remain in full force and effect.
10.9 Amendments. This Agreement may not be amended or modified orally,
but only by an agreement in writing signed by the Parties.
10.10 Third Party Beneficiaries. Each Party hereto intends that this
Agreement shall not benefit or create any right or cause of action in or on
behalf of any Person other than the Parties hereto.
* * *
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IN WITNESS WHEREOF, each of the Parties has caused its name to be hereunto
subscribed by its duly authorized signatory as of the day and year first above
written.
FIRST AMERICAN REAL ESTATE
SOLUTIONS LLC
By: /S/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title:
TRANSAMERICA FINANCE
CORPORATION
By: /S/ ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Executive Vice President
▇▇▇▇▇ HOLDINGS, INC.
By: /S/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Executive Vice President,
General Counsel and Secretary
D-1