EXHIBIT 10.1
STOCK PURCHASE AGREEMENT
AMONG
FLEET NATIONAL BANK
FLEET HOLDING CORP.
AND
AFFILIATED COMPUTER SERVICES, INC.
RELATING TO THE PURCHASE AND SALE OF ALL OF
THE OUTSTANDING SHARES OF CAPITAL STOCK
OF AFSA DATA CORPORATION
dated
May 16, 2002
TABLE OF CONTENTS
ARTICLE I DEFINITIONS.................................................................................1
Section 1.1 General Provisions..............................................................................1
Section 1.2 Definitions.....................................................................................2
ARTICLE II PURCHASE AND SALE OF SHARES.................................................................8
Section 2.1 Purchase and Sale of Shares.....................................................................8
Section 2.2 Purchase Price..................................................................................9
Section 2.3 Amount Payable at Closing.......................................................................9
Section 2.4 Final Closing Balance Sheet.....................................................................9
Section 2.5 Adjustment to Purchase Price...................................................................11
Section 2.6 Payment and Interest...........................................................................11
ARTICLE III THE CLOSING................................................................................11
Section 3.1 Time and Place of Closing......................................................................11
Section 3.2 Deliveries at Closing..........................................................................12
ARTICLE IV REPRESENTATIONS AND WARRANTIES REGARDING THE SELLER AND SELLER PARENT......................13
Section 4.1 Organization...................................................................................13
Section 4.2 Authorization of Transaction...................................................................13
Section 4.3 Noncontravention...............................................................................14
Section 4.4 Consents.......................................................................................14
Section 4.5 Brokers' Fees..................................................................................15
Section 4.6 The Company Shares.............................................................................15
ARTICLE V REPRESENTATIONS AND WARRANTIES REGARDING THE COMPANY.......................................15
Section 5.1 Organization, Qualification, and Corporate Power...............................................15
Section 5.2 Capitalization and Subsidiary..................................................................16
Section 5.3 Noncontravention with respect to the Company...................................................17
Section 5.4 Brokers' Fees..................................................................................17
Section 5.5 Title and Related Matters......................................................................17
Section 5.6 Insurance......................................................................................18
Section 5.7 Financial Statements...........................................................................18
Section 5.8 Absence of Undisclosed Liabilities.............................................................18
Section 5.9 Events Subsequent to December 31, 2001.........................................................18
Section 5.10 Legal Compliance...............................................................................18
Section 5.11 Intellectual Property..........................................................................18
Section 5.12 Contracts......................................................................................18
Section 5.13 Servicing......................................................................................18
Section 5.14 Litigation.....................................................................................18
Section 5.15 Licenses, Registrations or Permits............................................................18
Section 5.16 Labor Relations................................................................................18
Section 5.17 Affiliate Transactions.........................................................................18
Section 5.18 Bank Accounts; Lock Boxes......................................................................18
Section 5.19 Officers and Directors.........................................................................18
Section 5.20 Books and Records..............................................................................18
Section 5.21 Environmental Compliance.......................................................................18
Section 5.22 Accounts Receivable............................................................................18
ARTICLE VI REPRESENTATIONS AND WARRANTIES REGARDING THE BUYER.........................................18
Section 6.1 Organization...................................................................................18
Section 6.2 Authorization of Transaction...................................................................18
Section 6.3 Noncontravention...............................................................................18
Section 6.4 Consents.......................................................................................18
Section 6.5 Brokers' Fees..................................................................................18
Section 6.6 Investment.....................................................................................18
Section 6.7 Financing......................................................................................18
ARTICLE VII INTERIM COVENANTS..........................................................................18
Section 7.1 Notices and Consents...........................................................................18
Section 7.2 Assignment of Contracts, Approvals, Etc........................................................18
Section 7.3 Full Access....................................................................................18
Section 7.4 Conduct of Business Prior to Closing...........................................................18
Section 7.5 Control of Business............................................................................18
Section 7.6 Insurance; Indemnity Obligations...............................................................18
Section 7.7 Intercompany Borrowings........................................................................18
Section 7.8 Public Announcements...........................................................................18
Section 7.9 Schedule Supplements...........................................................................18
Section 7.10 Exclusivity....................................................................................18
Section 7.11 Corporate Names................................................................................18
Section 7.12 The Trust......................................................................................18
Section 7.13 Transition Services............................................................................18
Section 7.14 Outsourcing Agreement..........................................................................18
Section 7.15 Sublease.......................................................................................18
Section 7.16 Trademark Assignment Agreement.................................................................18
Section 7.17 Loan Servicing Agreements......................................................................18
Section 7.18 Closing........................................................................................18
ARTICLE VIII POST-CLOSING COVENANTS.....................................................................18
Section 8.1 General........................................................................................18
Section 8.2 Litigation Support.............................................................................18
Section 8.3 Non-Competition Agreement......................................................................18
Section 8.4 Nonsolicitation of the Buyer's Employees.......................................................18
Section 8.5 Nondisclosure..................................................................................18
Section 8.6 Reformation....................................................................................18
Section 8.7 Relief.........................................................................................18
Section 8.8 Special Post-Effective Date, Pre-Closing Interim Covenant......................................18
Section 8.9 Treatment of Certain Accounts Receivable.......................................................18
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ARTICLE IX TAXES.....................................................................................18
Section 9.1 Tax Representations............................................................................18
Section 9.2 Section 338 Elections and Forms................................................................18
Section 9.3 Tax Indemnity by Seller........................................................................18
Section 9.4 Tax Indemnity by Buyer.........................................................................18
Section 9.5 Allocation of Certain Taxes....................................................................18
Section 9.6 Filing Responsibility..........................................................................18
Section 9.7 Refunds........................................................................................18
Section 9.8 Cooperation and Exchange of Information........................................................18
Section 9.9 Tax Sharing Agreements.........................................................................18
Section 9.10 Payments.......................................................................................18
Section 9.11 Other Taxes....................................................................................18
Section 9.12 Survival Periods...............................................................................18
ARTICLE X EMPLOYEES AND EMPLOYEE MATTERS.............................................................18
Section 10.1 Employee Benefit Plans.........................................................................18
Section 10.2 Establishment of Company Group Health Plans....................................................18
Section 10.3 Employment of Transferred Employees............................................................18
Section 10.4 401(k) Matching Contribution...................................................................18
Section 10.5 Transferred Employee Benefit Matters...........................................................18
Section 10.6 Vacation Benefits..............................................................................18
Section 10.7 No Third Party Rights..........................................................................18
Section 10.8 Warn Act Requirements..........................................................................18
Section 10.9 Special Provisions for Certain Employees.......................................................18
ARTICLE XI CONDITIONS TO CLOSING......................................................................18
Section 11.1 Conditions to Obligation of the Buyer..........................................................18
Section 11.2 Conditions to Obligations of the Seller and Seller Parent......................................18
ARTICLE XII SURVIVAL, INDEMNIFICATION..................................................................18
Section 12.1 Survival of Representations and Warranties, Covenants and Agreements...........................18
Section 12.2 Indemnification................................................................................18
Section 12.3 Limitations....................................................................................18
Section 12.4 Remedies Exclusive.............................................................................18
Section 12.5 Mitigation.....................................................................................18
Section 12.6 Treatment of Payments..........................................................................18
ARTICLE XIII TERMINATION................................................................................18
Section 13.1 Termination of Agreement.......................................................................18
Section 13.2 Effect of Termination..........................................................................18
ARTICLE XIV MISCELLANEOUS..............................................................................18
Section 14.1 No Third-party Beneficiaries...................................................................18
Section 14.2 Entire Agreement...............................................................................18
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Section 14.3 Succession and Assignment......................................................................18
Section 14.4 Counterparts...................................................................................18
Section 14.5 Headings.......................................................................................18
Section 14.6 Notices........................................................................................18
Section 14.7 Governing Law..................................................................................18
Section 14.8 Waiver Of Jury Trial...........................................................................18
Section 14.9 Amendments and Waivers.........................................................................18
Section 14.10 Severability...................................................................................18
Section 14.11 Expenses.......................................................................................18
Section 14.12 Construction...................................................................................18
Section 14.13 Incorporation of Exhibits and Disclosure Schedules and Confidentiality Agreement...............18
Section 14.14 Disclaimer of Warranties.......................................................................18
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SELLER'S DISCLOSURE SCHEDULE
Schedule 5.1 Organization, Qualification and Corporate Power
Schedule 5.3 Noncontravention with Respect to the Company
Schedule 5.5(b) Leases
Schedule 5.5(d) Property Exceptions
Schedule 5.6 Insurance
Schedule 5.7 Financial Statements
Schedule 5.9 Events Subsequent to December 31, 2001
Schedule 5.11(a) Intellectual Property - Owned Intangible Property
Schedule 5.11(b) Intellectual Property - Licensed Intangible Property
Schedule 5.11(c) Exceptions to Intellectual Property
Schedule 5.12 Contracts
Schedule 5.14 Litigation
Schedule 5.15 Licenses, Permits and Exemptions
Schedule 5.16 Labor Relations
Schedule 5.17 Affiliate Transactions
Schedule 5.18 Bank Accounts
Schedule 5.19 Officers and Directors
Schedule 5.22 Accounts Receivable Exceptions
Schedule 7.3(b) Representatives of Seller
Schedule 7.4(a) Conduct of Business Prior to Closing
Schedule 7.6(c) Guaranties
Schedule 7.16 Trademarks to be Assigned
Schedule 9.1 Taxes
Schedule 10.1(a) Employee Benefits
Schedule 10.1(d) Change of Control Agreements
Schedule 10.1(e) Financial Accounting Standards Number 112
Schedule 10.1(g) Retiree Medical Benefits
Schedule 10.3(a) Employment Agreements
BUYER'S DISCLOSURE SCHEDULE
Schedule 7.4(c) Representatives of Buyer
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EXHIBITS
Exhibit A Outsourcing Agreement Terms
Exhibit B Education Lending Employees
Exhibit C Company Severance Plan
Exhibit C-1 Subsidiary Severance Plan
Exhibit D Loan Servicing Agreement Amendments Terms
Exhibit E Monthly Plan
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STOCK PURCHASE AGREEMENT
This Agreement is entered into as of May 16, 2002 (the "Agreement"), by
and among Affiliated Computer Services, Inc., a
Delaware corporation (the
"Buyer"), Fleet Holding Corp., a Rhode Island corporation (the "Seller"), and
Fleet National Bank, a national banking association (the "Seller Parent").
WHEREAS, the Seller is the owner of 100 shares of common stock,
constituting all of the issued and outstanding shares of capital stock of AFSA
Data Corporation, a
Delaware corporation (the "Company"); and
WHEREAS, this Agreement contemplates a transaction in which the Buyer
will purchase from the Seller, and the Seller will sell to the Buyer, all of the
issued and outstanding shares of capital stock of the Company held by the Seller
for the consideration and on the terms and conditions set forth herein; and
WHEREAS, the parties will make an election under Section 338(h)(10) of
the Internal Revenue Code.
NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein, and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto agree as follows.
ARTICLE I
DEFINITIONS
Section 1.1 General Provisions. For all purposes of this Agreement,
except as otherwise expressly provided:
(a) The terms defined in this Article I have the meanings assigned to
them in this Article I and include the plural as well as the singular.
(b) All accounting terms used herein have the meanings assigned to them
under GAAP, except to the extent otherwise provided herein.
(c) All references herein to designated "Articles," "Sections" and
other subdivisions and to "Exhibits" and "Disclosure Schedules" are to the
designated Articles, Sections and other subdivisions of the body of this
Agreement and to the exhibits and other schedules to this Agreement.
(d) Pronouns of either gender or neuter shall include, as appropriate,
the other pronoun forms.
(e) The words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any particular
Article, Section or other subdivision.
(f) All references herein to the Seller's "knowledge" or "knowledge of
Seller" shall mean the actual personal knowledge of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇
▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇▇▇.
(g) On or prior to the date hereof, the Seller, on the one hand, and
the Buyer, on the other, have delivered to each other schedules (respectively,
its "Disclosure Schedule") setting forth, among other things, items the
disclosure of which is necessary or appropriate either (i) in response to an
express informational requirement contained in a provision hereof or (ii) as an
exception to one or more representations, warranties or covenants contained in a
section of this Agreement. The inclusion of an item on a Disclosure Schedule in
response to a disclosure obligation or as an exception to a representation or
warranty shall not be deemed an admission by the disclosing party that such item
represents a material exception or fact, event or circumstance or that such item
is reasonably likely to result in a Material Adverse Effect on the disclosing
party.
(h) "Previously Disclosed" means information set forth in a Disclosure
Schedule, whether in response to an express informational requirement or as an
exception to one or more representations, warranties or covenants. An item
disclosed in one section of a Disclosure Schedule shall be deemed to be
disclosed both under such section and under any other section to which such
disclosure reasonably relates for all purposes under the Agreement. To the
extent information is Previously Disclosed pursuant to the foregoing, the
applicable representation, warranty or covenant shall be deemed to be modified
by such Previously Disclosed information and references herein to such
applicable representation, warranty or covenant shall be deemed to be references
to such representation, warranty or covenant as so modified.
Section 1.2 Definitions. As used in this Agreement, except as may be
otherwise stated herein or in an Exhibit or Disclosure Schedule hereto, the
following capitalized terms shall have the meanings set forth below:
"Action" means any action, suit, petition, arbitration, inquiry,
proceeding or investigation, whether civil or criminal, in law or in equity, by
or before any arbitrator or Governmental Entity.
"Affiliate" (and, with a correlative meaning, "Affiliated") means, with
respect to any Person, any other Person that directly, or indirectly through one
or more intermediaries, controls, or is controlled by, or is under common
control with, such first Person. As used in this definition, "control"
(including, with correlative meanings, "controlled by" and "under common control
with") shall mean possession, directly or indirectly, of power to direct or
cause the direction of management or policies (whether through ownership of
securities or partnership or other ownership interests, by contract or
otherwise).
"Agreement" has the meaning set forth in the preface above.
"Allocation Agreement" has the meaning set forth in Section 9.2(c)
hereof.
"Applicable Law" means any domestic federal, state or local statute,
law, ordinance, rule, administrative interpretation, regulation, order, writ,
injunction, directive, judgment, decree,
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policy, administrative or judicial doctrine, guideline or other requirement
applicable to the Buyer, the Seller Parent, the Seller, the Company or the
Subsidiary, as the case may be.
"Assets of the Company" means the assets owned by the Company at any
given time.
"Business Day" means any day other than a Saturday, Sunday or a day on
which the banks in Massachusetts or Texas are authorized by law or executive
order to be closed.
"Buyer" has the meaning set forth in the preface above.
"Buyer's Representatives" has the meaning set forth in Section 7.4(c)
hereof.
"Buyer Savings Plan" has the meaning set forth in Section 10.5(a)
hereof.
"Buyer Welfare Plans" has the meaning set forth in Section 10.5(b)(i)
hereof.
"Closing " has the meaning set forth in Section 3.1 hereof.
"Closing Date" has the meaning set forth in Section 3.1 hereof.
"COBRA" has the meaning set forth in Section 10.1(g) hereof.
"Code" means the Internal Revenue Code of 1986, as amended, and any
successor thereto.
"Company" has the meaning set forth in the preface above.
"Company Benefit Plans" has the meaning set forth in Section 10.1(a)
hereof.
"Company Employees" means the employees of the Company or the
Subsidiary at any given time from the date hereof through the Effective Time.
"Company Shares" means 100 shares of common stock, par value $10.00 per
share, of the Company held by the Seller.
"Company Severance Plan" has the meaning set forth in Section
10.4(b)(v) hereof.
"Confidentiality Agreement" means that certain letter agreement dated
as of March 26, 2002 by and between Buyer and Ultimate Parent.
"Current Company Employees" has the meaning set forth in Section 10.3
hereof.
"Damages" means all costs, damages, disbursements or expenses
(including, but not limited to interest and reasonable legal, accounting and
other professional fees and expenses incurred in the investigation, collection,
prosecution and defense of claims and amounts paid in settlement) that are
actually imposed or otherwise actually incurred or suffered by the indemnified
person, but shall not include incidental, consequential or other special
damages.
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"Disclosure Schedule" has the meaning set forth in Section 1.1(g)
hereof.
"Effective Time" means 11:59 PM (Eastern Time) on the last day of the
month prior to the month in which the Closing occurs.
"Effective Time Receivables" has the meaning set forth in Section 8.9
hereof.
"Environmental Claim" means any written notice, claim, demand, action,
suit, complaint, proceeding or other written communication by any Person
alleging liability or potential liability under or relating to any Environmental
Laws.
"Environmental Laws" means all federal, state and local statutes, laws
and regulations relating to pollution or protection of human health or the
environment (including air, surface water, ground water, land surface and
subsurface strata), including laws and regulations that create duties or
obligations regarding the discharge or release, collection, storage,
transportation for disposal, treatment or disposal of wastes, materials or
substances in the interest of protecting human health or the environment.
"Environmental Permits" means any license, permit, franchise,
certificate of authority or order, or any extension, modification, amendment or
waiver of the foregoing, required to be issued by any Governmental Entity
pursuant to any applicable Environmental Laws.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and any rules and regulations thereunder.
"ERISA Plans" shall have the meaning set forth in Section 10.1(a)
hereof.
"Estimated Net Book Value" has the meaning set forth in Section 2.3(b)
hereof.
"Evaluation Materials" has the meaning set forth in the Confidentiality
Agreement.
"Final Closing Balance Sheet" has the meaning set forth in Section
2.4(b) hereof.
"Financial Statements" has the meaning set forth in Section 5.7 hereof.
"FSA" has the meaning set forth in Section 10.5(b)(iv) hereof.
"GAAP" means United States generally accepted accounting principles and
practices as in effect from time to time and applied consistently by the Company
and the Subsidiary throughout the periods involved.
"Governmental Entity" means any government or any agency, bureau,
board, commission, court, department, official, political subdivision, tribunal,
or other instrumentality of any government, whether federal, state or local,
domestic or foreign.
"Guaranties" has the meaning set forth in Section 7.6(c) hereof.
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"▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976, as amended, and the related regulations and published
interpretations.
"Leases" has the meaning set forth in Section 5.5(b) hereof.
"Liabilities" means any and all debts, losses, liabilities, offsets,
claims, damages, fines, obligations, payments and accounts payable (including,
without limitation, those arising out of any award, demand, assessment,
settlement, judgment or compromise relating to any Action), and accruals for
out-of-pocket costs and expenses (including, without limitation, reasonable
attorneys' fees and expenses incurred in investigating, preparing or defending
any Action).
"Licensed Intangible Properties" has the meaning set forth in Section
5.11 hereof.
"Lien" means any lien, pledge, security interest, mortgage, deed of
trust, claim, encumbrance, easement, servitude, encroachment, charge or similar
right of any other Person of any kind or nature whatsoever, other than those
that customarily arise under securities laws in private transactions.
"Loan Servicing Agreement Amendments" has the meaning set forth in
Section 7.17 hereof.
"LOA Employee" has the meaning set forth in Section 10.3 hereof.
"LTD Recipient" has the meaning set forth in Section 10.9 hereof.
"Material Adverse Effect" means (a) with respect to the Company, any
change, effect, event or occurrence resulting in a material adverse effect on
the business, financial condition or results of operations of the Company and
the Subsidiary, taken as a whole, other than any change, effect, event or
occurrence relating to (i) the announcement of the transactions contemplated by
this Agreement, or (ii) the breach, default under, acceleration, modification,
or amendment or the creation in any Person of a right to accelerate, modify or
amend United States Government Contract No. PM94017001, as amended, modified or
extended, by and between the United States Department of Education and ACS
Government Services, Inc. (as successor to Computer Data Systems, Inc.) and any
related subcontracts, or (b) with respect to the Seller or Seller Parent, any
change, effect, event or occurrence resulting in a material adverse effect on
Seller's or Seller Parent's ability to consummate the transactions contemplated
hereby on a timely basis; and (c) with respect to Buyer, any change, event or
occurrence resulting in a material adverse effect on Buyer's ability to
consummate the transactions contemplated hereby on a timely basis.
"Material Contracts" has the meaning set forth in Section 5.12 hereof.
"Material Governmental Consent" has the meaning set forth in Section
7.2(c) hereof.
"Maximum Indemnification Amount" has the meaning set forth in Section
12.3(a) hereof.
"Monthly Plan" shall have the meaning set forth in Section 8.8 hereof.
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"Names" has the meaning set forth in Section 7.11 hereof.
"Net Book Value" means the book value of all Assets of the Company
minus the book value of all Liabilities of the Company as reflected on the books
and records of the Company as of the Effective Time, all as determined in
accordance with GAAP (except no current or deferred income taxes, whether
payable or receivable shall be included).
"Neutral Auditors" means Ernst & Young, LLP.
"Ordinary Course of Business" means the ordinary course of business of
a Person consistent with past customs and practice.
"Other Taxes" has the meaning set forth in Section 9.11 hereof.
"Outsourcing Agreement" has the meaning set forth in Section 7.14
hereof.
"Owned Intangible Properties" has the meaning set forth in Section 5.11
hereof.
"Parent 401(k) Plan" has the meaning set forth in Section 10.4 hereof.
"Parent LTD Plan" has the meaning set forth in Section 10.9 hereof.
"Parent Savings Plans" has the meaning set forth in Section 10.5(a)
hereof.
"Parent Welfare Plans" has the meaning set forth in Section 10.5(b)(i)
hereof.
"Permitted Liens" means all imperfections of title or Liens (a) that
are reflected or reserved against or disclosed on the Financial Statements of
the Company, (b) that arise out of Taxes not in default and payable without
penalty or interest, (c) of carriers, warehousemen, mechanics, materialmen and
other similar Persons or otherwise imposed by law incurred in the Ordinary
Course of Business for sums not yet delinquent, (d) that relate to deposits made
in the Ordinary Course of Business in connection with workers' compensation,
unemployment insurance and other types of social security, (e) in connection
with Licensed Intangible Property and Owned Intangible Property the grant of a
non-exclusive license for use or other grant of rights with respect to the use
of any property under agreements, contracts, leases, licenses, instruments and
other arrangements, which grants do not interfere with the current operation or
use of the property subject to such Lien, or (f) that are not filed of record
and are not material in amount either individually or when aggregated with other
Permitted Liens.
"Person" means an individual, a partnership (limited or general), a
corporation, an association, a company, a trust, a joint venture, an
unincorporated organization, a private agency or a Governmental Entity.
"Policies" has the meaning set forth in Section 5.6 hereof.
"Post-Effective Time Receivables" has the meaning set forth in Section
8.9 hereof.
"Preliminary Closing Balance Sheet" has the meaning set forth in
Section 2.4(a) hereof.
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"Purchase Price" has the meaning set forth in Section 2.2 hereof.
"Regulated Substance" means (a) any "hazardous substance" or
"pollutant" or "contaminant," as such terms are defined in the Comprehensive
Environmental Response, Compensation and Liability Act (Title 42 United States
Code Section 9601 et seq.), or Title 40 Code of Federal Regulations Part 302,
(b) any toxic or hazardous substance, material or waste (whether solid, liquid
or gaseous), (c) "petroleum," as that term is defined in the Resource
Conservation and Recovery Act, as amended (Title ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ Code Section
6691 et seq.), or Title 40 Code of Federal Regulations Section 280.1, or (d) any
other substance or waste which is regulated under any applicable Environmental
Laws with respect to its discharge or release, collection, storage,
transportation for disposal, treatment or disposal.
"Returns" means any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any schedule or
attachment thereto.
"Section 338 Elections" means an election under Section 338 of the Code
or any comparable election under other applicable Tax Laws.
"Section 338 Forms" means all Returns, documents, statements, and other
forms that are required to be submitted to any federal, state, county or other
local Taxing Authority in connection with a Section 338 Election. Section 338
Forms shall include, without limitation, any "statement of Section 338 election"
and Internal Revenue Service Form 8023 (together with any schedules or
attachments thereto) that are required pursuant to Treasury Regulation Section
1.338-1 or Treasury Regulation Section 1.338(h)(10)--1.
"Section 338(h)(10) Election" means an election described in Section
338(h)(10) of the Code with respect to the Seller's sale of the Company Shares
to the Buyer pursuant to this Agreement. Section 338(h)(10) Election shall
include any corresponding election under any other relevant Tax Laws for which a
separate election is permissible with respect to the Buyer's acquisition of the
Company Shares from the Seller under this Agreement.
"Securities Act" means the Securities Act of 1933, as amended.
"Seller" has the meaning set forth in the preface above.
"Seller Parent" has the meaning set forth in the preface above.
"Seller Representatives" has the meaning set forth in Section 7.3(b)
hereof.
"Specified Receivable Trigger Date" has the meaning set forth in
Section 8.9 hereof.
"Specified Receivables" has the meaning set forth in Section 8.9(a)
hereof.
"Straddle Period" has the meaning set forth in Section 9.5(b) hereof.
"Sublease" has the meaning set forth in Section 7.15 hereof.
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"Subsidiary" means Concera Corporation, an Oregon corporation.
"Subsidiary Severance Plan" has the meaning set forth in Section
10.5(b)(v) hereof.
"Tax Audit" has the meaning set forth in Section 9.8(d) hereof.
"Tax Laws" means the Code, U.S. federal, state, county or local, or
foreign laws relating to Taxes, and any regulations or official administrative
pronouncements released thereunder.
"Taxes" means (a) all taxes (whether U.S. federal, state or local or
foreign) based upon or measured by income and any other tax whatsoever,
including, without limitation, gross receipts, profits, capital, sales, use,
occupation, value added, ad valorem, transfer, franchise, withholding, payroll,
social security, disability, employment, excise, asset, severance, documentary,
stamp, or property taxes, duties and similar governmental charges, assessments,
fees or levies imposed by or on behalf of any Governmental Entity together with
any interest, penalties or additions to tax imposed with respect thereto, (b)
any obligations under any agreements or arrangements with respect to any Taxes
described in clause (a), and (c) any transferee or secondary liability or joint
or several liability in respect of any amounts described in clause (a) imposed
by law or as a result of being a member of any affiliated, consolidated,
combined, unitary or similar group.
"Taxing Authority" means any federal, state, local or foreign
governmental authority, quasi-governmental authority, instrumentality or
political or other subdivision, department or branch of any of the foregoing,
with the legal authority to impose, assess or collect Taxes.
"Threshold" has the meaning set forth in Section 12.3(a) hereof.
"Trademark Assignment Agreement" has the meaning set forth in Section
7.16 hereof.
"Transferred Employees" has the meaning set forth in Section 10.3
hereof.
"Trust" shall mean AFSA Data Corporation Trust.
"TSA" has the meaning set forth in Section 7.13 hereof.
"Ultimate Parent" means FleetBoston Financial Corporation, a Rhode
Island corporation.
"Unresolved Changes" has the meaning set forth in Section 2.4(c)(iii)
hereof.
ARTICLE II
PURCHASE AND SALE OF SHARES
Section 2.1 Purchase and Sale of Shares. Upon the terms and subject to
the conditions of this Agreement, at the Closing the Buyer shall purchase,
acquire and accept from the Seller, and the Seller shall sell, convey, transfer,
assign and deliver to the Buyer, the Company Shares, for the consideration
specified herein.
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Section 2.2 Purchase Price. The total purchase price (the "Purchase
Price") payable to the Seller by the Buyer for all of the Company Shares shall
be Four Hundred Ten Million Dollars ($410,000,000); provided, however, that if
the Net Book Value reflected in the notice given pursuant to Section 2.3(b) or
on the Final Closing Balance Sheet exceeds Ninety-Three Million Six Hundred
Twelve Thousand Five Hundred Dollars ($93,612,500), then the Purchase Price
shall be adjusted upward "dollar for dollar" in an amount equal to such excess,
and if such Net Book Value is less than Ninety-Three Million Six Hundred Twelve
Thousand Five Hundred Dollars ($93,612,500) then the Purchase Price shall be
adjusted downward "dollar for dollar" in an amount equal to such shortfall.
Section 2.3 Amount Payable at Closing.
(a) At the Closing, the Buyer shall pay to Seller Parent, as agent for
the Seller, Four Hundred Ten Million Dollars ($410,000,000).
(b) No later than two (2) Business Days prior to the Closing Date, the
Seller shall prepare and deliver to the Buyer a notice setting forth the
Seller's good faith estimate of the Net Book Value (the "Estimated Net Book
Value") as of the Effective Time, together with a schedule setting forth in
detail the calculations supporting the Seller's computation thereof. At Closing,
if the Estimated Net Book Value exceeds Ninety-Three Million Six Hundred Twelve
Thousand Five Hundred Dollars ($93,612,500), then Purchaser shall pay to Seller
an amount equal to such excess, and if Estimated Net Book Value is less than
Ninety-Three Million Six Hundred Twelve Thousand Five Hundred Dollars
($93,612,500), then the Seller shall pay to the Purchaser the amount of such
shortfall.
(c) All amounts payable pursuant to this Section 2.3 shall be paid by
wire transfer of immediately available funds to such account as has been
designated by Seller Parent to the Buyer at least two (2) Business Days prior to
the Closing Date.
Section 2.4 Final Closing Balance Sheet.
(a) Not later than sixty (60) days after the Closing Date, the Seller
shall cause the consolidated balance sheet of the Company to be prepared as of
the Effective Time in accordance with GAAP (however, no current or deferred
income taxes, payable or receivable, shall be reflected on such balance sheet),
and shall deliver such balance sheet to the Buyer (the "Preliminary Closing
Balance Sheet"). The Seller shall also prepare and deliver to the Buyer with the
Preliminary Closing Balance Sheet a schedule setting forth its calculation of
Net Book Value based on the Preliminary Closing Balance Sheet as of the
Effective Time.
(b) If, within thirty (30) days following its receipt of the
Preliminary Closing Balance Sheet, the Buyer does not dispute the Preliminary
Closing Balance Sheet and/or the Seller's calculation of Net Book Value, such
balance sheet shall be deemed to be the closing balance sheet of the Company
(the "Final Closing Balance Sheet") for all purposes under this Agreement.
(c) In the event the Buyer has any dispute with regard to the
calculation of Net Book Value, such dispute shall be resolved in the following
manner.
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(i) The Buyer shall notify the Seller in writing within thirty
(30) days after the Buyer's receipt of the Preliminary Closing Balance Sheet,
which notice shall specify in reasonable detail the nature of the dispute.
(ii) During the thirty (30) day period following the Seller's
receipt of such notice, the Buyer and the Seller shall attempt to resolve such
dispute and to determine the final calculation of Net Book Value.
(iii) If, at the end of the thirty (30) day period specified
in subsection (c) (ii) above, the Buyer and the Seller shall have failed to
reach a written agreement with respect to all or a portion of such dispute
(those items that remain in dispute at the end of such period are the
"Unresolved Changes"), the matter shall be referred to the Neutral Auditors
within ten (10) days of the end of such period.
(iv) Each party hereto agrees to execute, if requested by the
Neutral Auditors, a reasonable engagement letter. All fees and expenses relating
to the work, if any, to be performed by the Neutral Auditors shall be borne pro
rata by the Seller and the Buyer in proportion to the allocation of the dollar
amount of the Unresolved Changes, in the aggregate, between the Buyer and the
Seller made by the Neutral Auditors such that the party with whom the Neutral
Auditors agree more closely pays a lesser proportion of the fees and expenses.
The Neutral Auditors shall act as an arbitrator to determine, based solely on
the provisions of this Agreement and the presentations by the Seller and the
Buyer, or representatives thereof, and not by independent review, only the
resolution of the Unresolved Changes. The Neutral Auditors' resolution of the
Unresolved Changes, which for each of the Unresolved Changes shall be within the
range of values of the amount claimed by either party as to any of the
Unresolved Changes, shall be made within thirty (30) days of the submission of
the Unresolved Changes to the Neutral Auditors, shall be set forth in a written
statement delivered to the Seller and the Buyer and shall be deemed to be
mutually agreed upon by the Buyer and the Seller for all purposes of this
Agreement. Any changes to the Preliminary Closing Balance Sheet resulting from
such resolution of the Unresolved Changes shall be made, and such Preliminary
Closing Balance Sheet, as so changed shall be the Final Closing Balance Sheet.
(d) During the preparation of the Preliminary Closing Balance Sheet and
the period of any dispute within the contemplation of this Section 2.4, the
Buyer shall, and shall cause the Company to, (i) provide the Seller and the
Seller's authorized representatives with full access to the books, records,
facilities and employees of the Company and the Subsidiary, (ii) provide the
Seller, within ten (10) Business Days after the Closing Date, with month-end
financial information as of the Effective Time, including any information on
magnetic tape or diskette requested by the Seller (such information to be
consistent with that prepared by the Company in the Ordinary Course of Business
prior to the Closing), (iii) cooperate fully with the Seller and the Seller's
authorized representatives, including providing, on a timely basis, all
information necessary or useful in preparing the Preliminary Closing Balance
Sheet, and require Company Employees who become employees of the Buyer to assist
the Seller and the Seller's authorized representatives in the preparation of the
Preliminary Closing Balance Sheet.
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Section 2.5 Adjustment to Purchase Price. If, pursuant to the Final
Closing Balance Sheet, Net Book Value exceeds Estimated Net Book Value, the
Buyer shall pay the Seller, as an adjustment to the Purchase Price, in a manner
and with interest as provided in Section 2.6, the amount of such excess. If,
pursuant to the Final Closing Balance Sheet, Estimated Net Book Value exceeds
Net Book Value, the Seller shall pay to the Buyer, as an adjustment to the
Purchase Price, in a manner and with interest as provided in Section 2.6, the
amount of such excess.
Section 2.6 Payment and Interest.
(a) Any payments pursuant to Section 2.5 and this Section 2.6 shall be
made within five (5) days after Net Book Value has been finally determined, by
wire transfer to the Buyer or the Seller, as the case may be, of immediately
available funds from such party to a designated account of such other party.
(b) The amount of any payment pursuant to Section 2.5 shall bear
interest from and including the day on which the Effective Time occurs but
excluding the date of payment at a rate per annum equal for each day during such
period to the federal funds effective rate as published daily by the Federal
Reserve System.
ARTICLE III
THE CLOSING
Section 3.1 Time and Place of Closing. The closing of the transactions
contemplated by this Agreement (the "Closing") shall take place at the offices
of ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇,
commencing at 10:00 a.m. local time on the second (2nd) Business Day following
the date on which all conditions to the obligations of the parties to consummate
the transactions contemplated hereby (other than conditions with respect to
actions the respective parties will take at the Closing itself) are satisfied,
or on such other date as the Buyer and the Seller may mutually determine (the
"Closing Date"). Upon consummation, except as specifically provided for herein,
the Closing shall be deemed to be effective for all purposes, including without
limitation, for tax, accounting, financial, risk allocation and liability
purposes at the Effective Time and each of Seller Parent, Seller and Buyer
hereby agree to take such action and to execute such documents as may be
reasonably required to effect such intent.
Section 3.2 Deliveries at Closing.
(a) At the Closing, the Seller shall deliver to the Buyer:
(i) Certificates representing all of the Company Shares, duly
endorsed in blank or accompanied by duly executed stock powers, together with
the certificates representing the Subsidiary shares, minute books, stock record
books and other corporate documents relating to the Company and the Subsidiary;
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(ii) Written tenders of resignation of the Chief Executive
Officer of the Company, of each director of each of the Company and the
Subsidiary, and of the Secretary of each of the Company and the Subsidiary and
of the persons listed on Exhibit B hereto;
(iii) The closing documents described in Sections 11.1(c) and
(g) hereof;
(iv) The Sublease;
(v) The Outsourcing Agreement;
(vi) The Trademark Assignment Agreement;
(vii) The Loan Servicing Agreement Amendments;
(viii) The TSA;
(ix) An opinion of counsel of Seller Parent and Seller, dated
as of the Closing Date, in form and substance reasonably satisfactory to Buyer
to the effect that: (1) Each of Seller Parent, Seller, the Company and the
Subsidiary is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation or formation; (2) Each of Seller
Parent and Seller has the corporate power and authority to enter into and
perform its obligations under this Agreement; (3) This Agreement and the other
closing documents delivered and executed by any of the Seller Parent or Seller
have been duly and validly authorized, executed and delivered by each of Seller
Parent and Seller and (assuming due authorization, execution and delivery by
Buyer) are legal, valid and binding obligations of each of Seller Parent and
Seller to the extent it is a party thereto, enforceable against each of Seller
Parent and Seller in accordance with their respective terms, except as
enforcement may be limited by receivership, conservatorship, and supervisory
powers of bank regulatory agencies generally as well as bankruptcy, insolvency,
reorganization, moratorium or other laws of general applicability relating to or
affecting creditor's rights, or the limiting effect of rules of law governing
specific performance, equitable relief and other equitable remedies or the
waiver of rights or remedies; and
(x) All other documents, instruments and writings required to
be delivered by Seller at or prior to the Closing Date pursuant to this
Agreement or otherwise reasonably requested by Buyer in connection herewith.
(b) At the Closing, the Buyer shall deliver to Seller Parent, as agent
for the Seller:
(i) The closing documents described in Section 11.2(c) and (f)
hereof;
(ii) The Sublease;
(iii) The Outsourcing Agreement;
(iv) The Loan Servicing Agreement Amendments;
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(v) The TSA;
(vi) An opinion of counsel of Buyer, dated as of the Closing
Date, in form and substance reasonably satisfactory to Seller to the effect
that: (1) Buyer is duly organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation; (2) Buyer has the corporate
power and authority to enter into and perform its obligations under the
Agreement; (3) This Agreement and the other closing documents delivered and
executed by Buyer have been duly and validly authorized, executed and delivered
by Buyer and (assuming due authorization, execution and delivery by Buyer) are
legal, valid and binding obligations of Buyer, enforceable against Buyer in
accordance with their respective terms, except as enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or other laws of general
applicability relating to or affecting creditor's rights, or the limiting effect
of rules of law governing specific performance, equitable relief and other
equitable remedies or the waiver of rights or remedies; and
(vii) All other documents, instruments and writings required
to be delivered by Buyer at or prior to the Closing Date pursuant to this
Agreement or otherwise reasonably requested by Seller in connection herewith.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES REGARDING THE SELLER AND SELLER PARENT
As a material inducement to the Buyer to enter into this Agreement,
Seller Parent and the Seller hereby represent and warrant to the Buyer as
follows:
Section 4.1 Organization. The Seller is a corporation and Seller Parent
is a national banking association, each of which is duly organized, validly
existing and in good standing under the laws of their respective jurisdictions
of incorporation.
Section 4.2 Authorization of Transaction. The Seller and Seller Parent
each has the necessary corporate power and authority to execute and deliver this
Agreement and the other documents and instruments to be executed by each of them
hereunder, to perform its respective obligations hereunder and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement,
the performance by the Seller and Seller Parent of their respective obligations
hereunder and the consummation of the transactions contemplated hereby have been
duly and validly authorized by all necessary corporate action on the part of the
Seller and Seller Parent. No other corporate action or proceeding on the part of
the Seller or Seller Parent is necessary to authorize this Agreement or the
other documents and instruments to be executed and delivered by the Seller or
Seller Parent pursuant hereto or the consummation by the Seller or Seller Parent
of the transactions contemplated hereby. When fully executed and delivered, this
Agreement and each of the other documents and instruments to be executed and
delivered by the Seller or Seller Parent pursuant hereto will constitute valid
and binding agreements of the Seller and Seller Parent, enforceable against each
of them in accordance with their respective terms, subject to the effect of
receivership, conservatorship or supervisory
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powers of bank regulatory agencies and subject to the effect of bankruptcy,
insolvency, reorganization, moratorium or similar laws now or hereafter in
effect relating to or affecting the enforcement of creditors' rights generally
and subject to general principles of equity (regardless of whether enforcement
is sought in a proceeding at law or in equity).
Section 4.3 Noncontravention. Neither the execution and the delivery of
this Agreement, nor the consummation of the transactions contemplated hereby,
will directly or indirectly (with or without notice, lapse of time or both) (a)
violate any injunction, judgment, order, decree, ruling or other restriction of
any Governmental Entity to which the Seller or Seller Parent is subject or any
provision of Applicable Law or the charter or bylaws of the Seller or Seller
Parent, (b) conflict with, result in a breach of, constitute a default under, or
result in the acceleration of, create in any party the right to accelerate,
terminate, modify or cancel, or require any notice or consent under any
agreement, contract, lease, license, instrument, or other arrangement to which
the Seller or Seller Parent is a party or by which it is bound, except where any
such violation, conflict, breach, default, acceleration, termination,
modification, cancellation or failure to give notice or obtain consent would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on the Seller or Seller Parent, or (c) result in the imposition
of any Lien against the Company Shares or any Lien (other than Permitted Liens)
against any of the Assets of the Company or any of the assets of the Subsidiary.
Section 4.4 Governmental Consents. In connection with the consummation
of the sale of the Company Shares by the Seller to the Buyer, no registrations,
filings, applications, notices, consents, approvals, orders, qualifications or
waivers are required to be made, filed, given or obtained by the Seller or any
of its Affiliates, to or from any Governmental Entity, except for those (a) that
become applicable solely as a result of the specific regulatory status of the
Buyer or its Affiliates, (b) in connection with the applicable requirements, if
any, of the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act, (c) pursuant to requirements of any
agreement, contract, lease, instrument or other arrangement that Seller or any
of its Affiliates (other than the Company or the Subsidiary) are party to, (d)
except as set forth on Sections 5.3 and 5.15 of Seller's Disclosure Schedule,
pursuant to state registration, licensing or notice requirements that may apply
to the Company or the Subsidiary in connection with the sale of the Company
Shares by the Seller to the Buyer or (e) that the failure to make, file, give or
obtain would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on the Seller, the Seller Parent or the
Company. As of the date hereof, neither Seller Parent nor the Seller is aware of
any reason why any consent, approval or waiver necessary to permit consummation
of the transactions contemplated by this Agreement, including without limitation
all consents, approvals or waivers of any Governmental Entities, will not be
received on a timely basis.
Section 4.5 Brokers' Fees. Except for ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co., whose fees
and expenses Seller Parent agrees will be paid by Seller Parent, neither the
Seller nor Seller Parent has any liability or obligation to pay any fees or
commissions to any broker, finder, or agent with respect to the transactions
contemplated by this Agreement for which the Buyer, the Company or the
Subsidiary, could become liable or obligated.
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Section 4.6 The Company Shares.
(a) The Seller holds of record and owns beneficially all of the issued
and outstanding shares of capital stock of the Company, free and clear of all
Liens. Other than such capital stock, there are no outstanding equity securities
of the Company. The Seller is not a party to any option, warrant, purchase
right, or other contract or commitment that could require the Seller to sell,
transfer, or otherwise dispose of any of the Company Shares (other than this
Agreement) or requiring the Seller to repurchase, redeem or otherwise acquire,
or requiring the registration for sale of any of the capital stock of the
Company or the Subsidiary. The Seller is not a party to any voting trust, proxy,
or other agreement or understanding with respect to the voting of any of the
Company Shares.
(b) The delivery at the Closing by Seller to Buyer of the certificates
representing the Company Shares, duly endorsed for transfer or accompanied by
duly endorsed stock ▇▇▇▇▇▇, ▇▇▇▇ vest Buyer on the Closing Date with good and
marketable title to all of the Company Shares, free and clear of all Liens,
other than Liens created by the Buyer or its Affiliates. Seller has the full
power, right and authority to vote and transfer the Company Shares and, on the
Closing Date, Seller will have the full power, right and authority to vote and
transfer the Company Shares. At the Closing, the Company will have good and
marketable title to all of the shares of capital stock of the Subsidiary, free
and clear of all Liens, other than Liens created by Buyer or its Affiliates.
ARTICLE V
REPRESENTATIONS AND WARRANTIES REGARDING THE COMPANY
As a material inducement to the Buyer to enter into this Agreement, the
Seller Parent and the Seller hereby represent and warrant to the Buyer as
follows:
Section 5.1 Organization, Qualification, and Corporate Power. Each of
the Company and the Subsidiary is a corporation duly organized, validly
existing, and in good standing under the laws of the jurisdiction of its
incorporation. Each of the Company and the Subsidiary is duly authorized to
conduct business and is in good standing under the laws of each jurisdiction
where such qualification is required, except where the lack of such
authorization, qualification or good standing would not reasonably be expected
to have, individually or in the aggregate, a Material Adverse Effect on the
Company. Each of the Company and the Subsidiary has full corporate power and
authority to carry on the businesses in which it is currently engaged and to own
and use the properties currently owned and used by each in the conduct of its
respective businesses. Section 5.1 of Seller's Disclosure Schedule lists each of
the states where each of the Company and the Subsidiary is qualified to do
business as of the date of this Agreement.
Section 5.2 Capitalization and Subsidiary.
(a) The entire authorized capital stock of the Company consists of 100
shares of common stock, par value $10.00 per share, of which 100 shares are
issued and outstanding and zero shares are held in treasury. All of the issued
and outstanding shares of capital stock of the Company have been duly
authorized, are validly issued, fully paid and nonassessable. None of
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the Company Shares has been issued in violation of any Applicable Law or
preemptive right. There are no outstanding or authorized options, warrants,
purchase rights, subscription rights, conversion rights, exchange rights, or
other contracts or commitments that could require the Company to issue, sell, or
otherwise cause to become outstanding any of its capital stock. There are no
outstanding or authorized stock appreciation, phantom stock, or similar rights
with respect to the capital stock of the Company. The Company is not under any
obligation to repurchase, redeem or otherwise acquire or requiring registration
for sale of any of the capital stock of the Company or the Subsidiary. There are
no preemptive rights in respect of any of the capital stock of the Company.
(b) The entire authorized capital stock of the Subsidiary consists of
100,000 shares of common stock, par value $1.00 per share, of which 32,380
shares are issued and outstanding and zero shares are held in treasury. Other
than such capital stock, there are no outstanding equity securities of the
Subsidiary. All of the issued and outstanding shares of capital stock of the
Subsidiary have been duly authorized and are validly issued, fully paid and
nonassessable and are held of record and owned beneficially by the Company free
and clear of all Liens. None of the outstanding shares of capital stock of the
Subsidiary has been issued in violation of any Applicable Law or preemptive
right. There are no outstanding or authorized options, warrants, purchase
rights, subscription rights, conversion rights, exchange rights, or other
contracts or commitments that could require the Subsidiary to issue, sell, or
otherwise cause to become outstanding any of its capital stock. There are no
outstanding or authorized stock appreciation, phantom stock, or similar rights
with respect to the capital stock of the Subsidiary. The Subsidiary is not under
any obligation to repurchase, redeem or otherwise acquire or requiring
registration for sale of any of the capital stock of the Subsidiary. There are
no voting trusts, proxies, or other agreements or understandings with respect to
the voting of any of the capital stock of the Subsidiary. There are no
preemptive rights in respect of any capital stock of the Subsidiary.
(c) The Company does not own (or have any agreement to acquire),
directly or indirectly, any beneficial interest (except as creditor in the
Ordinary Course of Business) in any Person other than in the Subsidiary and the
Trust. The Subsidiary does not own (or have any agreement to acquire), directly
or indirectly, any beneficial interest (except as creditor in the Ordinary
Course of Business) in any Person.
Section 5.3 Noncontravention with respect to the Company. Neither the
execution and the delivery of this Agreement, nor the consummation of the
transactions contemplated hereby, will directly or indirectly (with or without
notice, lapse of time or both) (a) violate any injunction, judgment, order,
decree, or ruling, of any Governmental Entity to which the Company or the
Subsidiary is subject or any provision of Applicable Law or the respective
charters or bylaws of the Company or of the Subsidiary, (b) except as set forth
in Section 5.3 of Seller's Disclosure Schedule, conflict with, result in a
breach of, constitute a default under, or result in the acceleration of, create
in any party the right to accelerate, terminate, modify or terminate, cancel, or
require any notice or consent under any material agreement, contract, lease,
license, instrument, or other arrangement to which the Company or the Subsidiary
is a party or by which any of them are bound, or (c) result in the imposition of
any Lien against any of the Assets of the Company or any of the assets of the
Subsidiary (other than a Permitted Lien).
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Section 5.4 Brokers' Fees. Neither the Company nor the Subsidiary has
any liability or obligation to pay any fees or commissions to any broker,
finder, or agent with respect to the transactions contemplated by this
Agreement.
Section 5.5 Title and Related Matters.
(a) With the exception of properties disposed of in the Ordinary Course
of Business since December 31, 2001, the Company or the Subsidiary has good
title to, or holds by valid and existing lease or license, free and clear of all
Liens other than Permitted Liens, each piece of real and personal property
reflected on the Financial Statements and each piece of real and personal
property acquired by the Company or the Subsidiary since December 31, 2001.
Neither the Company nor the Subsidiary owns any real property.
(b) Section 5.5(b) of Seller's Disclosure Schedule sets forth a list of
all leases (including subleases) of real property to which the Company or the
Subsidiary is a party (the "Leases"). The Leases are in full force and effect in
all material respects and, as of the date hereof, neither the Company nor the
Subsidiary has received a notice of default or termination with respect to any
of the Leases. Except as set forth in Section 5.5(b) of Seller's Disclosure
Schedule, there has not occurred any event which would constitute a material
breach by the Company or the Subsidiary of, or material default by the Company
or the Subsidiary in, the performance of any covenant, agreement or condition
contained in any Lease, and to the Seller's knowledge, no lessor under a Lease
is in material breach or default in the performance of any covenant, agreement
or condition contained in such Lease. The Company or the Subsidiary has paid all
rents and other charges to the extent due under the Leases.
(c) With respect to material personal property used by the Company and
the Subsidiary in its respective businesses and leased by the Company or the
Subsidiary, the Company or the Subsidiary is not in default under the terms of
any such lease.
(d) The material tangible personal property used by the Company and the
Subsidiary are adequate to conduct their respective businesses in all material
respects as currently conducted. Except as set forth in Section 5.5(d) of
Seller's Disclosure Schedule, to Seller's knowledge, the material items of
tangible personal property owned or leased by the Company or the Subsidiary, and
the improvements and structures (and the fixtures and appurtenances thereto)
located on the real property subject to the Leases are generally in good working
order, reasonable wear and tear excepted, and at all times during the past two
years have been.
(e) The Company and the Subsidiary have good and marketable title to or
other right to use, free and clear of all Liens other than Permitted Liens, all
tangible assets and property that are material to the business and operations of
each of the Company and the Subsidiary as currently conducted.
Section 5.6 Insurance. As of the date hereof, the Company and the
Subsidiary are, and at all times during the past two years have been, covered by
valid and currently effective insurance policies issued in favor of the Seller,
Seller Parent and/or the Company and the Subsidiary that, in the judgment of the
Seller, are customary for companies of similar size in the
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industry and locale in which the Company or the Subsidiary operate. Section 5.6
of Seller's Disclosure Schedule sets forth a complete and accurate list of all
insurance policies issued in favor of the Ultimate Parent, Seller, Seller Parent
and/or the Company and the Subsidiary in connection with the business and
operations of the Company and the Subsidiary (the "Policies"). None of the
Ultimate Parent, Seller, Seller Parent, the Company or the Subsidiary is in
material default with respect to the Policies, and none of the Ultimate Parent,
Seller, Seller Parent, the Company or the Subsidiary has received any notice of
a cancellation with respect to any of the Policies and, within the last year,
none of the Ultimate Parent, Seller, Seller Parent, the Company or the
Subsidiary has been refused any insurance coverage sought or applied for with
respect to the business of the Company or the Subsidiary.
Section 5.7 Financial Statements. Set forth in Section 5.7 of Seller's
Disclosure Schedule are true and complete copies of the following: The audited
consolidated balance sheets of the Company as of December 31, 2001 and the
related consolidated statements of income and cash flows for the years ended
December 31, 2001, together with the notes thereto, and the unaudited
consolidated balance sheets of the Company as of March 31, 2002 and the related
consolidated statements of income for the year 2002 through March 31, 2002
(collectively, the "Financial Statements"). The Financial Statements (a) are
based on the books and records of the Company and the Subsidiary and (b) present
fairly in all material respects the consolidated financial position and results
of operations of the Company and the Subsidiary for the period or as of the date
set forth therein, in each case, in accordance with GAAP consistently applied
(except as otherwise indicated therein and except that the March 31, 2002
statements are not accompanied by notes or other textual disclosure required by
GAAP). The balance sheets included in the Financial Statements do not reflect
any material write-up or revaluation not separately identified increasing the
book value of any assets other than write-ups or revaluations made in the
Ordinary Course of Business, nor have there been any transactions since December
31, 2001 giving rise to any such material special or nonrecurring income or any
such material write-up or revaluation other than those made in the Ordinary
Course of Business.
Section 5.8 Absence of Undisclosed Liabilities. Neither the Company nor
the Subsidiary has any Liabilities in excess of $750,000, individually or in the
aggregate, that would be required to be recorded under GAAP except Liabilities
(a) that are reflected or disclosed on the Financial Statements, (b) that are
disclosed in or contemplated by this Agreement, or (c) that were incurred after
March 31, 2002 in the Ordinary Course of Business, and that individually or in
the aggregate, would not reasonably be expected to cause a Material Adverse
Effect.
Section 5.9 Events Subsequent to December 31, 2001. Since December 31,
2001, there have been no events that, individually or in the aggregate, have had
or would be reasonably expected to have a Material Adverse Effect on the Company
nor has there been any sale, assignment or transfer of any of the material
Assets of the Company, or material assets of the Subsidiary, other than sales,
assignments or transfers of assets in the Ordinary Course of Business. Except
with respect to activities undertaken in connection with the transactions
contemplated by this Agreement, including the public announcement of the sale of
the Company, since December 31, 2001 each of the Company and the Subsidiary has
carried on its respective business in all material respects in the Ordinary
Course of Business. Except as set forth in Section 5.9 of Seller's Disclosure
Schedule, since December 31, 2001, the Company and the
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Subsidiary have not suffered any material loss, damage, destruction or other
casualty to any of the Assets of the Company or assets of the Subsidiary that
were not replaced or covered by insurance.
Section 5.10 Legal Compliance. Each of the Company and the Subsidiary
has complied in all material respects with all Applicable Laws, except where
noncompliance would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on the Company. It is the intent of the
parties that this representation and warranty not apply to matters relating to
student loan servicing, Taxes or employees, which are the subjects of Sections
5.13, 9.1 and 10.1, respectively.
Section 5.11 Intellectual Property. Set forth in Section 5.11(a) of
Seller's Disclosure Schedule hereto is a true and complete listing of all
material intangible assets and properties owned by the Company and the
Subsidiary as of the date hereof (the "Owned Intangible Properties"). Set forth
in Section 5.11(b) of Seller's Disclosure Schedule is a true and complete
listing of all material intangible assets and properties which the Company or
the Subsidiary licenses or otherwise has the right to use from third parties
(the "Licensed Intangible Properties"). The Owned Intangible Properties and the
Licensed Intangible Properties constitute all material intangible assets and
properties used or necessary in connection with the conduct of the businesses of
the Company and the Subsidiary. Except as set forth in Section 5.11(c) of
Seller's Disclosure Schedule, the Company or the Subsidiary has good and
marketable title to the Owned Intangible Properties, free and clear of all
Liens, other than Permitted Liens. Except as set forth in Section 5.11(c) of
Seller's Disclosure, either the Company or the Subsidiary has the valid and
enforceable right to use the Licensed Intangible Properties in the manner the
Licensed Intangible Properties are used in connection with the business of the
Company or the Subsidiary as currently conducted, free and clear of all Liens,
other than Permitted Liens, except where the failure to have such valid and
enforceable rights would not result in a Material Adverse Effect on the Company.
To Seller's knowledge, none of the Owned Intangible Properties, nor the
Company's or the Subsidiary's use of the Licensed Intangible Properties,
violates or infringes against the rights of any third party, except where such
violations or infringements would not reasonably be expected to have,
individually or in the aggregate a Material Adverse Effect on the Company. To
Seller's knowledge, no third party is violating or infringing upon the Owned
Intangible Properties. Neither the Company nor the Subsidiary has specifically
agreed to indemnify any Person against any charge of infringement with respect
to the Owned Intangible Properties or the Licensed Intangible Properties, other
than (a) subcontractors, customers, persons granted the right to use such
property and software developers engaged by the Company or the Subsidiary, (b)
employees, officers and directors of the Company or the Subsidiary, or (c) as
set forth in any written agreement granting the Company or the Subsidiary the
right to use the Licensed Intangible Properties.
Section 5.12 Contracts. Section 5.12 of Seller's Disclosure Schedule
hereto lists all oral and written agreements to which the Company or the
Subsidiary is a party:
(a) That generated annual revenue in excess of $200,000 during
the year 2001 or that are expected to generate revenue in excess of $200,000 and
have been entered into since January 1, 2002;
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(b) That commit the Company or the Subsidiary to expend in
excess of $200,000 during the year 2002 (but excluding agreements that are
dependent upon the volume or number of transactions or services processed or
delivered, unless such agreement contains a commitment to expend a minimum
amount in excess of $200,000);
(c) Limits or restricts the ability of the Company or the
Subsidiary to compete or otherwise to conduct its business in any material
manner or place;
(d) Involves an obligation for borrowed money, a capitalized
lease, or provides for a guaranty or surety by the Company or the Subsidiary in
respect of any Person other than the Company or the Subsidiary;
(e) Contains restrictions with respect to payment of dividends
or any other distribution in respect of capital stock;
(f) Relates to any loan or advance to, or investment in, any
Person by the Company or the Subsidiary or to the making of any such loan,
advance or investment in each case involving an amount in excess of $50,000; or
(g) Effecting a divestiture or acquisition of any Person or
any material Assets of the Company or material assets of the Subsidiary where
the agreement provides that the Company or the Subsidiary is subject to
indemnity obligations or obligations to perform material services (but excluding
all such agreements relating to outsourcing, servicing, servicing acquisition or
similar agreements entered into in the Ordinary Course of Business).
The agreements set forth in Section 5.12 of Seller's Disclosure Schedule are
referred to herein as the "Material Contracts". Except as set forth in Section
5.12 of Seller's Disclosure Schedule, each Material Contract is valid and in
full force and effect according to its terms and the Company or the Subsidiary,
as applicable, has duly performed in all material respects all its obligations
under each Material Contract to the extent that such obligations to perform have
accrued, and no breach or default, or, to the Seller's knowledge, alleged breach
or default or event which would (with the passage of time, notice or both)
constitute a breach or default by the Company or the Subsidiary thereunder, or,
to the Seller's knowledge, any other party or obligor with respect thereto, has
occurred (and neither the Company or the Subsidiary has received any formal cure
notice or written allegation of any intention to terminate or cancel any
Material Contract, other than those that have been rescinded). True copies of
each of the written agreements identified in Section 5.12 of Seller's Disclosure
Schedule, including all substantive amendments, waivers and modifications
thereto have been made available to Buyer.
Section 5.13 Servicing. The Company is in compliance with Applicable
Laws relating to the servicing of student loans, except where noncompliance
would not have a Material Adverse Effect on the Company.
Section 5.14 Litigation. Except as set forth in Section 5.14 of
Seller's Disclosure Schedule, there are no Actions pending or, to the Seller's
knowledge, threatened against the Company or the Subsidiary or against any Asset
of the Company or asset of the Subsidiary, that
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(a) would reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect on the Company, (b) enjoins or seeks to enjoin any
significant activity of the Company or the Subsidiary or (c) involves a claim of
liability against the Company or the Subsidiary in excess of $250,000. To
Seller's knowledge, there does not exist any fact or circumstance that would be
reasonably expected to give rise to any such Action. There are no judgments or
outstanding orders, injunctions, decrees, stipulations or awards (whether
rendered by a court or administrative agency, or by arbitration) against the
Company or the Subsidiary. There is no actual or, to the Seller's knowledge,
threatened Action which presents a claim to restrain, condition or prohibit the
transactions contemplated herein.
Section 5.15 Licenses, Registrations or Permits. Each of the Company
and the Subsidiary hold all material licenses, registrations or permits (or
exemptions therefrom) necessary to conduct the business and operations of the
Company and the Subsidiary as presently conducted. Section 5.15 of Seller's
Disclosure Schedule sets forth all licenses, registrations or permits held by
the Company or the Subsidiary. Each such material license, registration and
permit is in full force and effect. No Action is pending, or to the Seller's
knowledge, is threatened, seeking the revocation, cancellation, suspension or
limitation of any such license registration, permit or exemption.
Section 5.16 Labor Relations. There is no organized labor strike,
dispute, slowdown or stoppage, or collective bargaining or unfair labor practice
claim pending, or to the Seller's knowledge, threatened against or affecting the
Company or the Subsidiary. Neither the Company nor the Subsidiary is a party to
a collective bargaining agreement or other similar contract or agreement or
understanding with any labor organization, group or association. To the Seller's
knowledge, no labor organization, collective bargaining representative or group
of employees claims to represent a majority of the employees of the Company or
the Subsidiary in an appropriate unit of the Company and the Subsidiary. Except
as set forth in Section 5.16 of the Seller's Disclosure Schedule, within the
last two (2) years prior to the date hereof, neither the Company nor the
Subsidiary has been the subject to any representational campaign by any union or
other organization or group seeking to become the collective bargaining
representative of any of the employees of the Company or of the Subsidiary or
been subject to, or to the Seller's knowledge, threatened with any strike or
other concerted labor activity or dispute. Each of the Company and the
Subsidiary is in material compliance with all Applicable Laws respecting
employment practices, terms and conditions of employment and wages and hours and
has not engaged in any unfair labor practices.
Section 5.17 Affiliate Transactions. Except as set forth in Section
5.17 of Seller's Disclosure Schedule or in the Financial Statements, (a) none of
the Seller or any of its Affiliates (other than the Company and the Subsidiary)
provides or causes to be provided to the Company or the Subsidiary any material
assets, services or facilities and (b) none of the Company or the Subsidiary
provides or causes to be provided to the Seller or any of its Affiliates (other
than the Company and the Subsidiary) any material assets, services or
facilities, in either the case of (a) or (b) other than administrative and
corporate services such as financial reporting, treasury, tax compliance, risk
management, payroll, cash management, human resources and benefits
administration, legal, information technology, corporate sponsored training,
group purchasing and other similar services provided by a parent company to its
operating subsidiaries. Other than
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as provided for by this Agreement, the consummation of the transactions
contemplated hereby will not (either alone, or upon the occurrence of any act or
event, or with the lapse of time, or both) result in any payment arising or
becoming due from the Company or the Subsidiary to Seller or any of its
Affiliates (other than the Company or the Subsidiary).
Section 5.18 Bank Accounts; Lock Boxes. Section 5.18 of Seller's
Disclosure Schedule sets forth a list of all banks or other financial
institutions with which the Company or the Subsidiary have an account or
maintain a lock box or safe deposits box, showing the type and account number of
each such account, lock box and safe deposit box.
Section 5.19 Officers and Directors. Section 5.19 of Seller's
Disclosure Schedule lists all of the current directors and senior officers of
each of the Company and the Subsidiary.
Section 5.20 Books and Records. The minute books and records of the
Company and the Subsidiary contain true, complete and correct records of all
actions taken at all meetings and by all written consents in lieu of meetings of
the Board of Directors, or any committees thereof, and stockholders of the
Company and the Subsidiary since January 1, 2001.
Section 5.21 Environmental Compliance. The Company and the Subsidiary
have obtained all Environmental Permits required to carry on their respective
businesses as now conducted, are in compliance with the terms and conditions of
all such Environmental Permits and are in compliance with all applicable
Environmental Laws, except for any of the foregoing as would not reasonably be
expected to result, individually or in the aggregate, in material liability
under or relating to the Environmental Laws. Neither the Company nor the
Subsidiary has received any Environmental Claim and neither the Company nor the
Subsidiary is aware of any Environmental Claim that has been threatened in
writing. Neither the Company nor the Subsidiary has entered into, has agreed to,
or is subject to as a party any Environmental Claim that has been received by
the Company or the Subsidiary, any material order of any Governmental Entity
received by the Company or the Subsidiary, or any material order of any
Governmental Entity issued to Company or the Subsidiary under or relating to any
Environmental Laws. To the knowledge of the Seller, except as would not
reasonably be expected to result, individually or in the aggregate, in material
liability under or relating to Environmental Laws, Regulated Substances have not
been generated, transported, treated, stored, disposed of, arranged to be
disposed of, released or threatened to be released by the Company or the
Subsidiary at, on, from or under any of the properties or facilities currently
or formerly (within the past two years) owned or leased by the Company or the
Subsidiary, in material violation of, or in a manner to a location that would
reasonably be expected to give rise to material liability to the Company or the
Subsidiary under or relating to, any Environmental Laws.
Section 5.22 Accounts Receivable. Except as set forth in Section 5.22
of Seller's Disclosure Schedule, all of the accounts receivable that are
recorded on the books of the Company or the Subsidiary are bona fide and
represent amounts validly due; provided, however, that this representation shall
not apply to any accounts receivables or any other amounts due from Buyer or its
Affiliates to the Company or its Subsidiary.
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ARTICLE VI
REPRESENTATIONS AND WARRANTIES REGARDING THE BUYER
As a material inducement to the Seller and Seller Parent to enter into
this Agreement, the Buyer hereby represents and warrants to the Seller and
Seller Parent as follows:
Section 6.1 Organization. The Buyer is a corporation duly organized,
validly existing and in good standing under the laws of its jurisdiction of
incorporation.
Section 6.2 Authorization of Transaction. The Buyer has the necessary
corporate power and authority to execute and deliver this Agreement and the
other documents and instruments to be executed by it hereunder, to perform its
obligations hereunder and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement, the performance by the Buyer of
its obligations hereunder and the consummation of the transactions contemplated
hereby have been duly and validly authorized by all necessary corporate action
on the part of the Buyer. No other corporate action or proceeding on the part of
the Buyer is necessary to authorize this Agreement or the other documents and
instruments to be executed and delivered by the Buyer pursuant hereto or the
consummation by the Buyer of the transactions contemplated hereby. When fully
executed and delivered, this Agreement and each of the other documents and
instruments to be executed and delivered by the Buyer pursuant hereto will
constitute valid and binding agreements of the Buyer, enforceable against it in
accordance with their respective terms, subject to the effect of applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws now or
hereafter in effect relating to or affecting the enforcement of creditors'
rights generally and subject to general principles of equity (regardless of
whether enforcement is sought in a proceeding at law or in equity).
Section 6.3 Noncontravention. Neither the execution and the delivery of
this Agreement, nor the consummation of the transactions contemplated hereby,
will directly or indirectly (with or without notice, lapse of time or both) (a)
violate any injunction, judgment, order, decree, ruling or other restriction of
any Governmental Entity to which the Buyer is subject or any provision of
Applicable Law or the charter or bylaws of the Buyer or (b) conflict with,
result in a breach of, constitute a default under, or result in the acceleration
of, create in any party the right to accelerate, terminate, modify or cancel, or
require any notice or consent under any agreement, contract, lease, license,
instrument, or other arrangement to which the Buyer is a party or by which it is
bound, except where any such violation, conflict, breach, default, acceleration,
termination, modification, cancellation or failure to give such notices or
obtain such consents would not reasonably be expected to have a Material Adverse
Effect on the Buyer.
Section 6.4 Governmental Consents. In connection with the consummation
of the purchase of the Company Shares by the Buyer from the Seller, no
registrations, filings, applications, notices, consents, approvals, orders,
qualifications or waivers are required to be made, filed, given or obtained by
the Buyer or any of its Affiliates, to or from any Governmental Entity except
for those (a) that become applicable solely either as a result of the specific
regulatory status of the Seller or its Affiliates, (b) in connection with the
applicable requirements, if any, of the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act, or (c) the
failure to make, file, give or obtain would not
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have a Material Adverse Effect on the Buyer. As of the date hereof, the Buyer is
not aware of any reason why any consent, approval or waiver necessary to permit
consummation of the transactions contemplated by this Agreement, including
without limitation all consents, approvals or waivers of any Governmental
Entities, will not be received on a timely basis.
Section 6.5 Brokers' Fees. Except for ▇▇▇▇▇▇▇, Sachs & Co., whose fees
and expenses will be paid by the Buyer, the Buyer has no liability or obligation
to pay any fees or commissions to any broker, finder, or agent with respect to
the transactions contemplated by this Agreement for which the Seller or Seller
Parent could become liable or obligated.
Section 6.6 Investment. The Buyer is acquiring the Company Shares for
investment and not with a view toward or for sale in connection with any
distribution thereof, or with any present intention of distributing or selling
the Company Shares. The Buyer agrees that the Company Shares may not be sold,
transferred, offered for sale, pledged, hypothecated or otherwise disposed of
without registration under the Securities Act, except pursuant to an exemption
from such registration available under such act, and without compliance with
state securities laws, in each case, to the extent applicable.
Section 6.7 Financing. The Buyer has immediate access to all funds
necessary to pay the Purchase Price and related fees and expenses, and the Buyer
has the financial capacity to perform all of its other obligations under this
Agreement.
ARTICLE VII
INTERIM COVENANTS
The parties agree as follows with respect to the period between the
time of execution of this Agreement and the Closing.
Section 7.1 Notices and Consents.
(a) From the date hereof through the Closing, subject to the terms and
conditions herein provided, including Section 7.2, each of the Seller, Seller
Parent, and the Buyer agrees to use its reasonable best efforts to take, or
cause to be taken, all actions and to do, or cause to be done, all things
necessary, proper or advisable to consummate and make effective as promptly as
practicable the transactions contemplated by this Agreement and to cooperate in
good faith with the other in connection with the foregoing, including using its
reasonable best efforts (i) to obtain all consents, approvals and authorizations
that are required to be obtained under any Applicable Law, (ii) to lift or
rescind any injunction or restraining order or other order adversely affecting
the ability of the parties hereto to consummate the transactions contemplated
hereby, (iii) to effect all necessary registrations and filings, including, but
not limited to, filings under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act and submissions of
information requested by Governmental Entities, and (iv) to fulfill all
conditions to this Agreement.
(b) In addition to the foregoing, and not in limitation thereof, each
of the Seller, Seller Parent and Buyer covenants and agrees to file the notices
required to be filed with any Person in connection with the transactions
contemplated hereby within five (5) Business Days of the date
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hereof, including but not limited to, filing premerger notification under the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act (which shall be filed within two (2) Business Days of the
date hereof and each party shall request early termination of the waiting
period) and all other notices, registrations, applications or other filings that
may be required with any other Governmental Entities. The Seller, Seller Parent,
and the Buyer further covenant and agree, with respect to a threatened or
pending preliminary or permanent injunction or other order, decree or ruling or
statute, rule, regulation or executive order that would adversely affect the
ability of the parties hereto to consummate the transactions contemplated
hereby, to use their respective reasonable best efforts to prevent the entry,
enactment or promulgation thereof, as the case may be. Further, each of Buyer
and Seller will be given notice of and a reasonable opportunity to participate
in contacts with any Governmental Entity regarding antitrust or merger control
matters. To the extent permitted by Applicable Law, Buyer and Seller shall
provide the other the opportunity to make copies of all material correspondence,
filings or communications (or memoranda setting forth the substance thereof)
between such party or its representatives, on the one hand, and any Governmental
Entity, on the other hand, with respect to this Agreement or the transactions
contemplated by this Agreement, except for documents filed pursuant to Item 4(c)
of the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Notification and Report Form or communications
regarding the same or documents or information submitted in response to any
request for additional information or documents pursuant to the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act which reveal Seller's or Buyer's negotiating objectives or
strategies or purchase price expectations. Buyer and Seller acknowledge that all
such information provided pursuant to the foregoing sentence shall be subject to
the terms of the Confidentiality Agreement.
(c) Buyer and Seller shall notify and keep the other advised as to (i)
any material communication from the Federal Trade Commission, the United States
Department of Justice or any other Governmental Entity regarding any of the
transactions contemplated hereby and (ii) any Action pending and known to such
party or, to its knowledge, threatened, which challenges the transactions
contemplated hereby. Except as provided herein, Buyer, Seller and Seller Parent
shall not take any action inconsistent with their obligations under this
Agreement which would materially hinder or delay the consummation of the
transactions contemplated by this Agreement.
(d) All documents required to be filed by any of Buyer or Seller or any
of their respective Affiliates with any Governmental Entity in connection with
this Agreement or the transactions contemplated by this Agreement will comply in
all material respects with the provisions of Applicable Law.
Section 7.2 Assignment of Contracts, Approvals, Etc.
(a) Anything in this Agreement to the contrary notwithstanding, this
Agreement shall not constitute an agreement to assign any contract or permit, or
any claim, right or benefit arising thereunder or resulting therefrom, if
pursuant to the terms of such contract or permit the purchase and sale of the
Company Shares would constitute an attempted assignment thereof, that without
the consent of a third party thereto, would constitute a breach or other
contravention thereof, be ineffective with respect to any party thereto, or in
any way adversely affect the rights of the Buyer, the Company, the Subsidiary or
the Seller thereunder.
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(b) With respect to any contract or permit that by its terms requires
the consent of a third party to the purchase and sale of the Company Shares,
subject to the provisions of Section 7.2(c) the Seller and the Buyer will use
reasonable good faith efforts to obtain as expeditiously as possible the written
consent of the other party or parties to such contract or permit.
(c) It is, and the Buyer acknowledges that it shall be, the obligation
of the Seller (and not the Buyer) to obtain all required consents with respect
to any agreement, contract, lease, instrument, arrangement or permit, but that
the Seller shall not be obligated to pay any money to any Person or to offer or
grant other financial or other accommodations to any Person in connection with
obtaining any consent, waiver, confirmation, novation or approval with respect
to any contract or permit. The Buyer will use reasonable good faith efforts to
assist the Seller in obtaining the required consents. Notwithstanding the
foregoing, the failure by the parties to obtain any required consent (other than
the failure to obtain any material non-contractual consent to the transfer of
the Shares from any Governmental Entity possessing competent regulatory
jurisdiction over the Seller or the Seller Parent to the transfer of the Company
Shares from Seller to Buyer (the "Material Governmental Consents") and other
than the expiration of the waiting period under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act),
waiver, confirmation, novation or approval with respect to any agreement,
contract, lease, instrument, arrangement or permit shall not relieve either
party from its obligation to consummate at the Closing the transactions
contemplated by this Agreement. In addition, no action taken by any third party
amending, modifying, terminating or altering performance under any agreement,
contract, lease, instrument, arrangement or permit or indicating an intention of
doing any of the foregoing shall relieve either party from its obligation to
consummate at the Closing the transactions contemplated by the Agreement.
(d) For one hundred eighty (180) days following the Closing Date, the
Buyer and Seller shall continue to use their commercially reasonable efforts,
and shall cooperate with each other, to obtain the aforementioned consents,
however, Seller shall not be obligated to pay any money to any Person or to
offer or grant other financial or other accommodations to any Person in
connection with obtaining any consent, waiver, confirmation, novation or
approval with respect to any contract or permit.
Section 7.3 Full Access.
(a) From the date hereof through the Closing Date, the Seller will
permit and will cause the Company and the Subsidiary to permit, representatives
of the Buyer to have full access during normal business hours, upon two (2)
Business Days' prior notice and in a manner so as not to interfere with the
normal business operations of the Company and the Subsidiary, to all premises,
properties, personnel, books, records, contracts, and documents of or pertaining
to the Company and the Subsidiary, provided, however, that under no
circumstances shall the Seller be required to provide to the Buyer and its
representatives access to, nor shall any of them have rights to make copies of,
(i) tax returns filed by any of the Seller's Affiliates (other than the Company
and the Subsidiary), (ii) any information or materials subject to
confidentiality agreements with third parties or required to be kept
confidential by law, or (iii) any privileged attorney-client communication or
document. The Buyer (i) will treat and hold any information it
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receives from the Seller, the Company, or the Subsidiary in the course of the
reviews contemplated by this Section 7.3 as Evaluation Materials in accordance
with, and subject to the terms of the Confidentiality Agreement, which is hereby
incorporated in this Section 7.3(a) as though fully set forth herein, (ii) will
not use any of the Evaluation Materials except in connection with this
Agreement, and, (iii) if this Agreement is terminated for any reason whatsoever,
upon the written request of the Seller will return to Seller Parent all copies
of such Evaluation Materials which are in its possession. The Seller shall not
be required to permit any such access or provide any such information to the
extent such access or the disclosure of such information in the sole judgment of
Seller unreasonably interferes with the Seller, the Company or the Subsidiary or
would, in the sole judgment of the Seller, violate or prejudice the rights of
the borrowers (including, but not limited to, privacy rights) or other third
parties, jeopardize any attorney-client privilege of the Seller or any of its
Affiliates, including the Company or the Subsidiary, or contravene any law,
rule, regulation, order, judgment or decree binding upon, or any agreement,
contract or other arrangement, entered into by, the Seller or any of its
Affiliates, the Company or the Subsidiary or jeopardize the Company's or the
Subsidiary's rights under any such agreement, contract or other arrangement.
(b) All requests for access to the offices, plants, properties, books,
and records relating to the business and the affairs of the Company and the
Subsidiary shall be made to the representatives of the Seller set forth on the
date hereof in Section 7.3(b) of Seller's Disclosure Schedule or to such other
representatives as the Seller shall designate in writing to the Buyer (the
"Seller Representatives"), who shall be solely responsible for coordinating all
such requests and all access permitted hereunder. It is further understood and
agreed that neither the Buyer nor its authorized representatives shall contact
any of the employees, customers, suppliers, contractors of the Seller or the
Company or the Subsidiary or any of the borrowers or anyone else with whom the
Company or the Subsidiary has a business relationship in connection with the
transactions contemplated hereby, whether in person or by telephone, mail or
other means of communication, without the prior authorization of the Seller
Representatives.
Section 7.4 Conduct of Business Prior to Closing.
(a) From the date hereof until the Closing, except as set forth on the
date hereof in Section 7.4(a) of Seller's Disclosure Schedule, Seller shall
cause the Company and the Subsidiary to carry on their respective businesses in
the Ordinary Course of Business and shall use commercially reasonable efforts to
preserve intact their current business organization, maintain their assets in
good working order (reasonable wear and tear excepted), keep available the
services of their current officers and employees and maintain existing relations
and goodwill with their suppliers, brokers, customers, landlords, creditors,
employees and agents having business relationships with any of them. Without
limiting the generality of the foregoing, except as otherwise specifically
provided by this Agreement, without the prior consent of the Buyer, Seller will
not permit the Company or the Subsidiary to, and neither the Company nor the
Subsidiary will, do (nor will any of them authorize or propose or enter into any
contract, agreement, commitment or arrangement to do) any of the following:
(i) Authorize any direct or indirect redemption or acquisition
of any shares of its capital stock;
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(ii) Split, combine or reclassify any capital stock or issue
any other security in respect of, in lieu of or in substitution for shares of
capital stock or repurchase, redeem or otherwise acquire any shares of capital
stock;
(iii) Issue, deliver, pledge, encumber, sell, or purchase any
shares of capital stock or securities convertible into, or rights, warrants or
options to acquire, any shares of capital stock or other convertible securities;
(iv) Acquire or agree to acquire by merging or consolidating
with, or by purchasing any portion of the capital stock or assets of, or by any
other manner, any business, corporation, partnership, association or other
business organization, or any division thereof;
(v) Amend its Articles of Incorporation or By-laws;
(vi) Grant any increase in the compensation or benefits of, or
pay any bonus to, any officer or employee (whether general or otherwise) other
than those committed to, by contract or otherwise (other than in the Ordinary
Course of Business);
(vii) Enter into any employment or compensation agreement with
any officer or employee (other than in connection with the hiring of new
employees in the Ordinary Course of Business), or terminate the employment of
any officer or employee (other than in the Ordinary Course of Business);
(viii) Except as provided in Section 10.2 hereof relating to
the establishment of group health plans for Company Employees, modify, cancel or
establish any Company Benefit Plan in regard to any of its current employees
except to the extent required by any Applicable Law;
(ix) Except in the Ordinary Course of Business or as required
by their terms, amend or terminate any Material Contract;
(x) Terminate or fail to use reasonable efforts to renew or
preserve any license, permit or registration except where the failure to hold
any such license, permit or registration would not reasonably be likely to have,
individually or in the aggregate, a Material Adverse Effect;
(xi) Sell, transfer, lease, license, mortgage, encumber or
otherwise dispose of any assets, rights or liabilities, except (A) in the
Ordinary Course of Business, (B) for dispositions of property not greater than
$100,000 individually or $500,000 in the aggregate, or (C) as contemplated in
connection with this Agreement;
(xii) Change any financial or Tax accounting methods,
principles, practices or policies, except as required by GAAP; provided, that
notwithstanding anything to the contrary herein, no adjustments shall be made to
any accruals or reserves reflected in the Financial Statements in contemplation
of the transactions contemplated hereby;
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(xiii) Make any capital expenditure, or commitments with
respect thereto, except for capital expenditures that do not exceed $250,000
individually (other than in furtherance of projects already commenced or planned
or in the Ordinary Course of Business);
(xiv) Incur, assume or guarantee any indebtedness (except for
borrowings from the Seller, Seller Parent or any of its Affiliates) or capital
leases, or create or permit to become effective any Lien or charge of any kind
upon its assets (except pursuant to borrowings from the Seller, Seller Parent or
any of its Affiliates) (other than in the Ordinary Course of Business);
(xv) (A) Pay, discharge, settle or satisfy any claims,
liabilities, obligations or litigation, where such payment, discharge,
settlement or satisfaction would have an adverse effect on the Company's
financial condition in excess of $250,000, other than the payment, discharge,
settlement or satisfaction, in the Ordinary Course of Business or in accordance
with their terms, of liabilities reflected or reserved against in the Financial
Statements (or the notes thereto) or incurred since the date of such financial
statements in the Ordinary Course of Business, or (B) waive any claims or rights
of substantial value; or
(xvi) Agree to or make any commitment to take any actions
prohibited by this Section 7.4.
(b) Notwithstanding the provisions of this Section 7.4, nothing in this
Agreement shall be construed or interpreted to prevent the Seller, the Company
or the Subsidiary from (1) paying or making any cash dividends, (2) making or
accepting intercompany or intracompany advances to, from or with the Seller or
any of its Affiliates, or (3) engaging in any transaction incident to the normal
cash management procedures of the Seller and its Affiliates in the Ordinary
Course of Business.
(c) Buyer hereby designates the two officers of Buyer or its Affiliates
listed on Section 7.4(c) of Buyer's Disclosure Schedule, or such other officers
as Buyer may designate upon written notice to Sellers (the "Buyer's
Representatives"), to be responsible for determining whether consent to any
action prohibited by this Section 7.4 shall be given by Buyer. The Seller
Representatives may contact Buyer Representatives with any requests for consent
to any action prohibited by this Section 7.4. The Buyer Representatives shall
respond promptly in writing to any request for consent to the taking of any
action under this Section 7.4. If the Buyer Representatives do not respond to
any request within five (5) Business Days of its delivery, such consent will be
deemed to have been given. Seller may rely on any consent given in writing by
any of the Buyer Representatives. The time periods within which the Buyer
Representatives must respond shall commence on the date on which either of the
Buyer Representatives is delivered a written request for consent.
Section 7.5 Control of Business. Nothing in this Agreement shall give
Buyer, directly or indirectly, the right to control or direct the Company's or
the Subsidiary's operations prior to Closing.
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Section 7.6 Insurance; Indemnity Obligations.
(a) Seller Parent and its Affiliates shall maintain in effect until the
Closing Date all casualty and liability insurance policies in connection with
the Company's business (or comparable replacement policies). Effective at 12:00
a.m. eastern time on the day after the Closing Date, all insurance coverage and
self-insurance maintained by Seller Parent and its Affiliates (excluding the
Company and the Subsidiary) under which the Company and the Subsidiary are
insured or self-insured, including any and all bonds or other indemnity
obligations (other than Guaranties), shall be cancelled and terminated (except
to the extent that they may not, by their terms, be so cancelled or terminated).
All premium refunds paid to Seller Parent or its Affiliates (excluding the
Company and the Subsidiary) relating to insurance covering the Company and the
Subsidiary for all periods ending prior to the Effective Time shall be the
property of Seller Parent or its Affiliates, as the case may be, whether such
refunds are paid on, before or after the Effective Time. All premium refunds
paid to Seller Parent or its Affiliates (excluding the Company or the
Subsidiary) relating to insurance covering the Company or the Subsidiary for all
periods beginning after the Closing Date shall be the property of the Company
whether such refunds are paid on, before or after the Closing Date. From and
after the Closing Date, Seller Parent and the Buyer shall cooperate in
connection with the adjustment and administration of claims under all such
insurance coverage.
(b) From the date hereof through the Closing Date, the Buyer and Seller
Parent shall cooperate to ensure that no certificate of insurance indicating
coverage by Seller Parent or its Affiliates shall be issued after the Closing
Date and that all such insurance certificates which are outstanding as of the
Closing Date are promptly returned to Seller Parent or its Affiliates, as
applicable. Except to the extent indemnifiable by the Seller Parent in
accordance with Article IX, Article X or Article XII of this Agreement, in the
event that Seller Parent or any of its Affiliates is unable to cancel or
terminate any such coverage as of the Closing Date, and Seller Parent or any of
its Affiliates thereafter receives a claim or purported claim under any such
coverage, the Buyer shall be responsible for all Liabilities incurred by Seller
Parent or any of its Affiliates in respect of the same, to the extent that such
claim relates to an insurable event which occurs after the Closing Date.
(c) From the date hereof until the date that is 150 days after the
Closing Date, Seller, Seller Parent and Buyer shall cooperate for the purpose of
causing Buyer or one of its Affiliates to be substituted (or such other Person
as may be acceptable to the obligee thereunder) in respect of all obligations of
the Seller or any of its Affiliates under each of the guaranties, bonds, letters
of credit, letters of comfort and other indemnity obligations (the "Guaranties")
set forth in Section 7.6(c) of Seller's Disclosure Schedule which by its terms
may not be terminated or cancelled, for the Seller or its Affiliates, as the
case may be, and to cause the Seller and its Affiliates to be forever released
from all liability under such Guaranties for events which occur after the
Closing Date. The Seller or its Affiliates will terminate or cancel as of the
Closing Date all guaranties, bonds, letters of credit, letters of comfort and
other indemnity obligations which by their terms may be terminated or cancelled,
so long as such termination or cancellation does not result in a termination or
cancellation of the related contract or agreement.
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(d) In the event that Buyer fails to obtain the unconditional release
of Seller or any of its Affiliates from all obligations under the Guaranties as
of the Closing Date, Buyer shall either (i) promptly deposit with an escrow
agent reasonably acceptable to Seller an amount in cash equal to the aggregate
principal or stated amount, as may be applicable, of the Guaranties not so
released, which monies shall be held pursuant to an escrow agreement in form and
substance reasonably acceptable to Buyer and Seller, or (ii) provide back-up
letters of credit issued by one or more commercial banks reasonably satisfactory
to Seller, payable to Seller in such aggregate principal or stated amount and
otherwise in form and substance reasonably satisfactory to Seller with respect
to such Guaranties. Seller shall use its commercially reasonable efforts to keep
in place, and Seller will not waive any requirements of or agree to amend any
such Guaranty in any material respect without the prior written consent of Buyer
which consent shall not be unreasonably withheld, for so long as monies are held
in escrow or letters of credit are posted. Any cash deposited in accordance with
clause (i) of this Section 7.6(d) shall be held in a segregated interest-bearing
account and shall be used solely to satisfy Seller's payment obligations in
respect of such Guaranties, and the unused portion of any cash deposit relating
to a Guaranty shall be returned to Buyer promptly following the release of
Seller or its Affiliates with respect to, or any other termination of, the
Guaranties.
Section 7.7 Intercompany Borrowings. Prior to Closing, (a) Seller and
its Affiliates (other than the Company and the Subsidiary) will pay to the
Company the amount owed by Seller or any such Affiliate in respect of any funds
borrowed by Seller or such Affiliate from the Company or the Subsidiary and (b)
the Company and the Subsidiary will pay to Seller and its Affiliates (other than
the Company and the Subsidiary) the amount owed by the Company and the
Subsidiary in respect of any funds borrowed by the Company and/or the Subsidiary
from the Seller or any of its Affiliates (other than the Company and the
Subsidiary).
Section 7.8 Public Announcements. Except as otherwise required by law,
regulations or rules of any national stock exchange, the parties hereto shall
each furnish to the other the text of all public notices and communications,
written or oral, proposed to be sent by the furnishing party regarding the
transactions contemplated hereby. Except as otherwise required by law,
regulations or rules of any national stock exchange, the furnishing party shall
not send or transmit such notices or communications or otherwise make them
public unless and until the consent of the other party is received, which
consent shall not be unreasonably withheld or delayed.
Section 7.9 Schedule Supplements. From the date hereof through the
fifth (5th) day prior to the Closing Date, the Seller may, by written notice to
the Buyer, supplement its Disclosure Schedule (other than Section 7.4(a) of
Seller's Disclosure Schedule) to reflect any change or event that occurs after
the date of this Agreement or to otherwise correct or amend its Disclosure
Schedule; provided, however, that no such supplemental disclosure shall be
deemed to cure any breach of any of the Seller's representations or warranties
for purposes of Section 11.1 or for purposes of Seller Parent's indemnification
obligations under this Agreement.
Section 7.10 Exclusivity. From the date hereof until the Closing Date,
Seller Parent and the Seller will not (and the Seller will not cause or permit
the Company and the Subsidiary to) solicit, initiate, encourage the submission
of, respond to or agree to any proposal or offer from any Person relating to the
acquisition of all or substantially all of the capital stock or assets of the
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Company and the Subsidiary (including any acquisition structured as a merger,
consolidation, or share exchange).
Section 7.11 Corporate Names. The Buyer and the Buyer's Parent
acknowledge that, from and after the Closing Date, the Ultimate Parent, Seller,
Seller's Parent and their Affiliates shall have the absolute and exclusive
proprietary right to all names, marks, trade names and trademarks (collectively,
the "Names") incorporating "Fleet", by itself or in combination with any other
Name, including, without limitation, the corporate design logo associated with
the Ultimate Parent or any of its Affiliates (other than that specifically of
the Company or the Subsidiary to the extent it does not incorporate "Fleet"),
and that none of the rights thereto or goodwill represented thereby or
pertaining thereto are being transferred hereby or in connection herewith. The
Buyer and the Buyer's Parent agree that they will not, nor will they permit any
of their Affiliates (including the Company and the Subsidiary) to, use any Name,
phrase or logo incorporating "Fleet" or the corporate design logo of Ultimate
Parent or any of its Affiliates (other than that specifically of the Company or
the Subsidiary to the extent it does not incorporate "Fleet") in or on any of
their literature, sales materials or products or otherwise in connection with
the sale of any products or services. Notwithstanding the foregoing, for a
transitional period of 180 days following the Closing Date, the Company and the
Subsidiary shall be permitted to use the design logo of Ultimate Party (but not
its name) only to the extent that such logo is incorporated with the Company's
or Subsidiary's name or logo as displayed on existing stationery, business forms
and signage.
Section 7.12 The Trust. Prior to Closing, Seller Parent shall resign as
trustee of the Trust as of the Closing Date and Buyer shall have secured a
successor trustee and such trustee shall have agreed to commence acting as such
as of the Closing Date.
Section 7.13 Transition Services. At Closing, Buyer and Seller shall
have entered into a transition services agreement ("TSA") relating to Seller and
its Affiliates providing for the continuation of certain services, including
information technology, human resources, tax, accounting and such other services
as the parties may agree upon, currently provided to the Company and the
Subsidiary, and upon such terms as are mutually acceptable to the Buyer and
Seller.
Section 7.14 Outsourcing Agreement. At Closing, Seller and/or its
Affiliates and Buyer and/or the Company shall have entered into an outsourcing
agreement (the "Outsourcing Agreement") upon the terms set forth in Exhibit A,
which Outsourcing Agreement shall also contain such other terms that are
mutually acceptable to Buyer and Seller. Also, prior to Closing, the employment
of those employees of the Company's education lending business unit whose names
are set forth on Exhibit B will be transferred from the Company to Seller or an
Affiliate of Seller at Seller's expense.
Section 7.15 Sublease. Prior to Closing , Seller Parent shall assign
its obligations under the lease for the premises located at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇ to the Company pursuant to an assignment agreement that
is reasonably acceptable to each of Buyer and Seller. Also prior to Closing,
Seller Parent (or one of its Affiliates) shall enter into a sublease (the
"Sublease") pursuant to which Seller Parent (or its Affiliate) shall sublease
from the Company
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the space subject to the aforementioned lease that is not occupied by the
Company on the same economic and other terms as are contained in the lease
assigned to the Company; provided, however, that such Sublease will not obligate
the subtenant beyond the end of the current lease term, and which Sublease shall
also contain such other terms as are mutually acceptable to Buyer and Seller
Parent.
Section 7.16 Trademark Assignment Agreement. At Closing, Ultimate
Parent and Buyer or the Company and/or the Subsidiary shall enter into a
trademark assignment agreement ("Trademark Assignment Agreement") pursuant to
which Ultimate Parent shall assign to the Company and/or the Subsidiary the
trademarks and other items listed in Section 7.16 of Seller's Disclosure
Schedule upon terms that are mutually acceptable to Buyer and Seller.
Section 7.17 Loan Servicing Agreements. At Closing, Seller and/or its
Affiliates and Buyer and/or the Company shall have entered into agreements (the
"Loan Servicing Agreement Amendments") amending Seller's and/or its Affiliates'
student loan servicing agreements containing the terms set forth on Exhibit D
and such other terms as are mutually acceptable to Buyer and Seller.
Section 7.18 Closing. Buyer and Seller shall use their respective best
efforts to close the transactions contemplated hereby by June 28, 2002.
ARTICLE VIII
POST-CLOSING COVENANTS
The parties agree as follows with respect to the period following the
Closing:
Section 8.1 General. Without limiting the provisions of Sections
12.1(b) and (d) and 12.3, following the Closing Date, if any further action is
necessary to carry out the purposes of this Agreement, all of the parties hereto
will take such further action (including the execution and delivery of such
further instruments and documents) as any other party reasonably may request,
all at the sole cost and expense of the requesting party (unless the requesting
party is entitled to indemnification therefor under the provisions of this
Agreement).
Section 8.2 Litigation Support.
(a) After the Closing Date, upon Seller's reasonable request and
without necessity of subpoena, Buyer will cause the Company and the Subsidiary
and their representatives and counsel to cooperate fully with Seller and their
representatives and counsel for purposes of permitting Seller to address and
respond to matters involving Seller or its Affiliates that arise as a result of
or otherwise relate to Seller's prior ownership of the Company and the
Subsidiary, whether or not related to this Agreement (other than claims by Buyer
against Seller), including relating to assets, liabilities or other matters
related to the Company or the Subsidiary that are retained by Seller and any
claims made by or against Seller or any of its Affiliates, whether involving any
Governmental Entity or third party.
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(b) After the Closing Date, upon Buyer's reasonable request and without
necessity of subpoena, Seller and its Affiliates and their representatives and
counsel will cooperate with the Company and its representatives and counsel for
purposes of permitting Buyer to address and respond to any matters that involve
Buyer or the Company or the Subsidiary that arise as a result of or otherwise
related to Seller's or its Affiliates' prior affiliation with the Company and
the Subsidiary, whether or not related to this Agreement, including any claims
made by or against the Company or the Subsidiary, or Buyer or any of its
Affiliates, whether involving any Governmental Entity or third party.
(c) Such cooperation under Section 8.2(a) and 8.2(b) shall include (i)
reasonable access during normal business hours and upon reasonable notice to the
appropriate party's and its Affiliates' officers, directors, employees,
auditors, counsel, representatives, properties, books, records and operating
instructions and procedures, (ii) providing reasonable assistance to the other
party in connection with any Actions, including preparation for any Actions such
as discovery, depositions and similar activities, and (iii) the right to make
and retain copies of all pertinent documents and records relating to any such
matters other than (A) tax returns filed by any of such party's Affiliates
(other than the Company and the Subsidiary), (B) any information or materials
subject to confidentiality agreements with third parties or required to be kept
confidential by law or by agreement with borrowers, or (C) any privileged
attorney-client communication or document. Buyer's and Seller's obligations
under this Section 8.2 are in addition to Buyer's and Seller's other obligations
to cooperate with each other contained in this Agreement. Any cooperation
hereunder shall be given at the sole cost and expense of the requesting party
(unless the requesting party is entitled to indemnification therefor under the
provisions of this Agreement).
Section 8.3 Non-Competition Agreement.
(a) From the Closing Date through December 31, 2006, the Seller and
Seller Parent shall not, and shall not permit any of its Affiliates to, in any
state in the United States (i) directly or indirectly, either as a principal,
partner, agent, manager, stockholder, director, officer or in any other
capacity, enter into, or expand any existing business into, the business of (A)
servicing student loans or (B) providing management and administrative services
to federal, state and local health and human services government agencies, or
(C) providing workforce development programs to state and local governments
designed to meet the needs of under or unemployed people; provided, however,
that ownership of less than 15% of the voting stock of any corporation engaged
in servicing student loans or providing management and administrative services
to federal, state and local health and human services government agencies or
providing workforce development programs to state and local governments designed
to meet the needs of under or unemployed people shall not constitute a violation
hereof. Nothing contained in this Section 8.3 shall prohibit Seller or its
Affiliates from servicing student loans that are held by Seller or its
Affiliates.
(b) Nothing contained in Section 8.3(a) shall prohibit activities of
any Person with which the Seller or any of its Affiliates, including but not
limited to Seller Parent, enters into an acquisition, merger or other business
combination, so long as the capabilities acquired with respect to servicing
student loans or providing management and administrative services to
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federal, state and local health and human services government agencies or
providing workforce development programs to state and local governments designed
to meet the needs of under or unemployed people by the Seller or any of its
Affiliates does not individually account for 20% of the gross revenue of such
Person, following the consummation of any such acquisition, merger or other
business combination with any such Person.
Section 8.4 Nonsolicitation of the Buyer's Employees. (a) For a period
of four (4) years following the Closing Date, neither the Seller nor any of its
Affiliates shall, directly or indirectly, offer to hire or entice away (whether
as an employee or consultant) or in any other manner persuade or attempt to
persuade any officer or employee with a title of senior vice president or
greater of the Buyer, the Company or the Subsidiary and, in each case, who were
employed by the Company or the Subsidiary at the Effective Time to discontinue
his or her relationship with the Buyer; and (b) for a period of two (2) years
following the Closing Date, neither the Seller nor any of its Affiliates shall,
directly or indirectly, offer to hire or entice away (whether as an employee or
consultant) or in any other manner persuade or attempt to persuade any officer
or employee with a title of vice president of the Buyer, the Company or the
Subsidiary, and, in each case, who were employed by the Company or the
Subsidiary at the Effective Time to discontinue his or her relationship with the
Buyer, the Company or the Subsidiary; provided, however, that this Section 8.4
shall not apply (x) if any such officer or employee has been terminated by the
Buyer, the Company or the Subsidiary for any reason, or (y) if such officer or
employee is hired as a result of a general solicitation for employment not
specifically targeted to employees of the Buyer or any or its Affiliates.
Section 8.5 Nondisclosure. (a) From the Closing Date through September
30, 2007, except as required by Applicable Law or as otherwise permitted under
this Agreement and upon reasonable advance notice to Buyer, Seller, and its
Affiliates shall not, and Seller shall cause each of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. and
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, LLP not to, at any time, make use of, divulge or otherwise
disclose, directly or indirectly, any material information related to the direct
student lending business of the Company that has not been or is not made
generally available to the public by the Company or the Subsidiary prior to the
Closing Date, and (b) for a period of two (2) years following the Closing Date,
except as required by Applicable Law or as otherwise permitted under this
Agreement and upon reasonable advance notice to Buyer, Seller, and its
Affiliates shall not, and Seller shall cause each of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. and
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, LLP not to, at any time, make use of, divulge or otherwise
disclose, directly or indirectly, any material information related to the
business of the Company (other than with respect to the direct student lending
business) or the Subsidiary that has not been or is not made generally available
to the public by the Company or the Subsidiary prior to the Closing Date, unless
in either case such information: (u) is or becomes generally available and known
to the public (other than pursuant to disclosure by Seller, its Affiliates and
their respective officers, employees or agents); (v) is rightfully received by
Seller or any of its representatives, agents or Affiliates from any Person after
the Closing Date without restriction on use or disclosure and without breach of
any obligation to Buyer; (w) is independently developed after the Closing Date
by or for Seller or any of its Affiliates; (x) is disclosed by Buyer or its
Affiliates following the Closing Date or (y) is the subject of prior written
approval of Buyer.
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Section 8.6 Reformation. The following provisions shall apply to
Section 8.3 and Section 8.4:
(a) The necessity of protection against competition from Seller and its
Affiliates and the nature and scope of such protection has been carefully
considered by the parties to this Agreement based upon the consultation with and
advice from their respective legal counsel. The parties agree and acknowledge
(i) that the duration, scope and geographic areas applicable to the covenants
contained in Section 8.3 and Section 8.4 are fair, reasonable and necessary, and
do not impose a greater restraint than is necessary to protect the goodwill or
other business interest of the Company and Buyer's investment therein and its
business goodwill, (ii) that adequate compensation has been received by Seller
for such obligations, and (iii) that these obligations do not prevent Seller and
Affiliates from earning a livelihood or conducting its remaining businesses.
(b) If any provision of Section 8.3 or Section 8.4 is held to be
illegal, invalid or unenforceable under present or future laws effective during
the terms specified in the applicable section, in lieu of such illegal, invalid
or unenforceable provision, there shall be added automatically as a part of the
applicable section a provision as similar in terms to such illegal, invalid or
unenforceable provision as may be possible and be legal, valid and enforceable,
but no such added provision shall be broader or result in a greater limitation
of the activities of Seller than is provided in Section 8.3 or 8.4, as
applicable, on the date hereof.
(c) If the automatic reformation provision contained in the preceding
subsection for any reason fails or is held to be illegal, invalid or
unenforceable, the parties request that the Governmental Entity making such
determination interpret, alter, amend and modify the terms of Section 8.3 or
Section 8.4, as applicable, to include as much of the scope, time period and
geographic area specified therein as may be possible without rendering any
provision of Section 8.3 or 8.4, as applicable, illegal, invalid or
unenforceable, but no such modified term shall be broader or result in a greater
limitation of the activities of Seller and its Affiliates than is provided in
Section 8.3 or 8.4, as applicable, on the date hereof.
(d) If any provision of Section 8.3 or Section 8.4 is held to be
illegal, invalid or unenforceable under present or future laws during the term
of Section 8.3 or Section 8.4, as applicable, the legality, validity and,
enforceability of the remaining provisions of this Agreement shall not in any
way be affected or impaired.
Section 8.7 Relief.
(a) Seller acknowledges and agrees that damages at law may be
insufficient for breach by Seller of any of the covenants in Section 8.3,
Section 8.4 or Section 8.5 and Buyer may be entitled to equitable relief in the
form of an injunction to prevent irreparable injury without the necessity to
post any bond therefor.
(b) Nothing in this section shall be construed as prohibiting the Buyer
or the Company from pursuing any other remedies, including damages, for breach
of Section 8.3,
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Section 8.4 or Section 8.5. The remedies of Buyer and the Company under this
Agreement are cumulative, not exclusive, and may be exercised alternatively,
successively or concurrently. The existence of any claim or cause of action of
Seller or Seller Parent against Buyer based upon this Agreement shall not
constitute a defense to the enforcement of the obligations of Seller under
Section 8.3, Section 8.4 or Section 8.5.
Section 8.8 Special Post-Effective Date, Pre-Closing Interim Covenant.
In addition to the provisions contained in Section 7.4 hereof relating to the
operations of the Company between the date hereof and the Closing Date, Seller
and Seller Parent agree that (i) no dividend will be taken from the Company
following the Effective Time, (ii) all intercompany indebtedness between Seller
or Seller Parent and the Company shall be repaid immediately prior to the
Effective Time, and (iii) they will not alter the application of Seller or
Seller Parent's policies relating to intercompany charges which were taken into
consideration in the preparation of the Company's Monthly Plan (the "Monthly
Plan") attached hereto as Exhibit E for each month between the Effective Date
and the Closing Date, which policies will be applied consistently with such
Monthly Plan between the date hereof and the Closing Date. Promptly after the
end of the month in which the Closing Date occurs, if the Company's net income
before income taxes for such month is less than the Company's projected net
income before income taxes for such month as contained in the applicable Monthly
Plan (adjusted for the loss of interest income attributable to the foregoing
debt repayment), the Buyer will cause the Company to reconcile the Company's
actual net income before taxes for such month with such projected net income
before income taxes for such month based on such Monthly Plan (adjusted for the
loss of interest income attributable to the foregoing debt repayment), and to
the extent that any shortfall variances are attributable to violations of the
provisions hereof or any other provision of this Agreement, then Seller Parent
shall pay promptly an amount in cash to the Company equal to such shortfall
variances plus interest as provided in Section 2.6(b) from the end of the month
in question. Any disputes arising out of such reconciliation shall be resolved
in accordance with the same principles applied to determine the Final Closing
Balance Sheet contained in Section 2.4 hereof. As provided in Section 7.7
hereof, prior to the Closing all inter-company indebtedness then outstanding
between Seller or Seller Parent and the Company shall be repaid. In addition,
Seller or Seller Parent and the Company shall settle all intercompany prepaid
and refund items on a pro-rata basis based on the number of days elapsed.
Section 8.9 Treatment of Certain Accounts Receivable.
(a) In the event that (i) any of the accounts receivable that were
recorded on the books of the Company and the Subsidiary as of the Effective Time
(the "Effective Time Receivables") are not collected in full within 210 days
after the Effective Time, or (ii) any of the accounts receivable that were, in
accordance with the Company's past practices, reported as "unbilled" accounts
receivable on the books of the Company or the Subsidiary at the Effective Time
and are billed by the Company or the Subsidiary within 30 days after the
Effective Time (the "Post-Effective Time Receivables" and, together with the
Effective Time Receivables, the "Specified Receivables") are not collected in
full after application of all accounts receivable reserves within 210 days after
the Effective Time, then, notwithstanding any other provision of this Agreement
to the contrary, the sole remedy of Buyer shall be to cause Seller to purchase
any such Specified
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Receivables at the net book amount thereof (after taking into account any
accounts receivable reserves in effect as of the Closing Date and any payments
on such Specified Receivables made after the Effective Time) and no claim may be
made based on inaccuracy of any representation or warranty resulting therefrom.
If any Specified Receivable is not expected to be collectible until more than
210 days after the Effective Time, as applicable, because payment is not
expected to be made under the underlying contract giving rise to such receivable
until after the occurrence of a particular event or circumstance (such as
conclusion of an audit or achievement of a milestone), then such 210 day period
shall not commence until the occurrence of such event; provided that any such
period shall not commence later than the first anniversary of the Effective
Time. The day on which Seller's obligation to purchase any Specified Receivable
is referred to as such Specified Receivable's "Specified Receivable Trigger
Date." If Buyer elects to cause Seller to purchase any such Specified
Receivables, notice of such election must be received by Seller prior to the
30th day after the applicable Specified Receivable Trigger Date or Buyer will be
deemed to have waived any rights with respect to such Specified Receivable. Such
notice shall (i) identify a closing date not less than five days nor more than
thirty days after such notice is received by Seller upon which the closing of
the sale shall occur and (ii) state the purchase price for the Specified
Receivable, together with such supporting detail as may be requested by Seller
(which may be audited by Seller from time to time upon reasonable advance
notice). Seller shall not be obligated to purchase the Specified Receivable
unless the Parties, acting reasonably and in good faith, agree on the amount of
the receivable outstanding. At the closing, Buyer shall deliver to Seller such
instruments of transfer as may be reasonably requested by Seller to evidence the
transfer of the Specified Receivable to Seller, and Seller shall pay the
purchase price by wire transfer in immediately available funds.
(b) Prior to the purchase of any Specified Receivable by Seller, Buyer
shall cause the Company or the Subsidiary (as applicable) to diligently pursue
collection of such Specified Receivable consistent with the Company's customary
past practices. In circumstances where (x) (i) a single account debtor is
obligated on more than one Specified Receivable and/or accounts receivable that
are not Specified Receivables and (ii) such account debtor makes a single lump
sum payment on such receivables without identifying specifically to which
receivables such payment relates, such payments shall be allocated to satisfy in
full the receivables in order of the dates such receivables were billed or (y)
less than the full amount of a Specified Receivable shall have been paid by the
account debtor, any payment received relating to the Specified Receivable shall
be credited to the Specified Receivable.
(c) The Effective Time Receivables shall be identified in a schedule
prepared by Seller within five (5) Business Days after the Closing Date and
delivered to Buyer, and the Post-Effective Time Receivables shall be identified
in a schedule prepared by Buyer within 30 days after the Closing Date and
delivered to Seller. Each such schedule will identify the Specified Receivables
in reasonable detail, including identifying the account obligor, the outstanding
account balance and any reserves related thereto, the aging of the Specified
Receivable and the applicable Specified Receivable Trigger Date for each
Specified Receivable.
(d) In the event that any Specified Receivable is purchased by Seller,
if requested by Seller, Buyer shall cause the Company or the Subsidiary to act
as collection agent for Seller with
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respect to such Specified Receivables. In such capacity, Buyer shall cause the
Company or the Subsidiary to (i) diligently pursue collection of such Specified
Receivables as if such receivables were owned by the Company or the Subsidiary,
(ii) remit monies received by the Company or the Subsidiary in such capacity to
Seller within three Business Days of receipt and (iii) upon Seller's request,
commence litigation to collect such Specified Receivables, if commencing
litigation is consistent with the Company's or the Subsidiary's Ordinary Course
of Business, the cost of which litigation shall be borne by Seller and shall be
subject to Seller's direction. As a fee for acting as collection agent
hereunder, the Company may retain 5% of any payments received on such
receivables.
(e) It is understood that no receivable due from Buyer or any of its
Affiliates is or will be a Specified Receivable.
(f) Notwithstanding the provisions of Section 8.9(a) it is understood
that the obligation of Seller to purchase Specified Receivables shall not be
subject to the Threshold and the Maximum Indemnification Amount contained in the
Agreement, provided, however, that the Seller shall be entitled to elect to have
the amount of any Specified Receivable put to Seller by Buyer pursuant to
Section 8.9(a) treated as a claim for indemnification under Article XII, and
charged against the Threshold and counted toward the determination of the
Maximum Indemnification Amount at its option in lieu of purchasing such
Specified Receivable.
(g) It is understood that if the Buyer or any of its Affiliates
(including the Company and the Subsidiary) receive any payment related to an
account receivable that was charged off by the Company or the Subsidiary prior
to Effective Time, the amount recovered shall be added to the accounts
receivable reserve to be utilized to reduce Seller Parent's exposure under
Section 8.9(a).
(h) It is understood that if the Company or any of its Affiliates
receives any payment in respect of any accounts receivable purchased by Seller
pursuant to this Section 8.9, the Company or such Affiliate shall pay the amount
of such payment to Seller within ten (10) Business Days of the receipt of such
payment by wire transfer of immediately available funds.
ARTICLE IX
TAXES
Section 9.1 Tax Representations. Except as set forth in Section 9.1 of
Seller's Disclosure Schedule, Seller represents and warrants that:
(a) All Returns required to be filed for taxable periods ending on or
prior to the Effective Time by, or with respect to any activities of, the
Company or any Subsidiary thereof have been or will be accurately prepared and
timely filed in accordance with all Applicable Law, and all Taxes required to be
paid on or before the Effective Time with respect to the activities of the
Company or any Subsidiary have been or will be paid.
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(b) Within the last seven (7) years neither the Company nor any
Subsidiary thereof has ever been a member of a consolidated federal income tax
group of which Ultimate Parent was not the common parent.
(c) The Seller is not a "foreign person" under Treasury Regulations
Section 1.1445-2(b)(2).
(d) There are no pending audits, actions, proceedings, investigations,
disputes or claims with respect to any Taxes payable by or asserted against the
Company or the Subsidiary and, there is no basis on which any claim for material
Taxes can be asserted with respect to the Company or the Subsidiary. Neither the
Company nor the Subsidiary has received written notice from any Taxing authority
of its intent to examine or audit any of its Tax Returns.
(e) Neither the Company nor the Subsidiary is or has been subject to
Tax or conducted business in any country other than the United States.
(f) No agreements relating to allocation or sharing of, or liability or
indemnification for, Taxes exist between either the Company or the Subsidiary
and any other Person.
(g) All taxes required to be withheld, collected or deposited by the
Company or the Subsidiary (including, but not limited to, amounts required to be
withheld, collected or deposited with respect to amounts paid or owing to any
employee, creditor, independent contractor or other Person) have been timely
withheld, collected or deposited and, to the extent required, have been timely
paid to the relevant taxing authority. All persons characterized as independent
contractors, and not as employees, were properly so characterized for all
purposes under all Applicable Laws, including, without limitation, their
characterization as independent contractors for income and employment tax
withholdings and payments.
(h) Neither the Company nor the Subsidiary has made any payments, is
obligated to make any payments, and is a party to any agreement that will
obligate it to make any payments that will not be deductible under Section 280G
of the Code.
(i) There are no outstanding agreements or waivers that would extend
the statutory period in which a taxing authority may assess or collect a Tax
against the Company or the Subsidiary.
(j) No closing agreements or settlement agreements pursuant to any
provision of any Tax Law have been entered into with any taxing authority by or
with respect to the Company or the Subsidiary which requires the Company or the
Subsidiary to include any item of income in, or exclude any item of deduction
from, any Tax Return for any taxable period ending after the Effective Time.
Section 9.2 Section 338 Elections and Forms.
(a) The Seller and the Buyer shall jointly make all available Section
338(h)(10) Elections in accordance with applicable Tax Laws and as set forth
herein and shall execute Forms 8023 and such other forms as may be necessary to
effect such elections consistent with the
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periods contained in Section 9.2(c). For federal income tax purposes, the Seller
represents that its sale of the Company Shares is eligible for, and the Buyer
represents that it is qualified to make, such elections.
(b) The Buyer and the Seller shall be jointly responsible for the
preparation and filing of all Section 338 Forms in accordance with applicable
Tax Laws and the terms of this Agreement. The Seller and the Buyer shall execute
and deliver to one another such documents or forms as are reasonably requested
and are required by any Tax Laws properly to complete the Section 338 Forms.
(c) In connection with the Section 338 Elections, the Buyer shall
reasonably determine, and Seller shall accept if reasonable, the fair market
values of the assets deemed purchased for purposes of the computation of the
Aggregate Deemed Sale Price (as defined under applicable Treasury Regulations)
of the Company's assets and the allocation of such Aggregate Deemed Sale Price
among such assets (the "Allocation Agreement") in accordance with Section 338 of
the Code. Such Allocation Agreement shall reflect the value assigned to assets
of the Company. The Buyer and the Seller agree that they shall use their
reasonable best efforts to revise the Allocation Agreement to the extent
necessary to reflect the differences, if any, between the Preliminary Closing
Balance Sheet and the Final Closing Balance Sheet no later than sixty (60) days
before the last date on which the Section 338(h)(10) Election may be filed. If,
sixty (60) days before the last date on which the Section 338(h)(10) Election
may be filed, the Buyer and the Seller have not finalized the Allocation
Agreement as described above, any disputed aspects of the Allocation Agreement
or such revision shall be resolved by the Neutral Auditors twenty (20) days
before the last date on which the Section 338(h)(10) Election may be filed. The
costs, expenses and fees of the Neutral Auditors shall be borne equally by the
Buyer and the Seller. The Buyer and the Seller agree to act in accordance with
the allocations contained in the Allocation Agreement in any relevant Returns or
similar filings.
(d) The Seller and the Buyer agree that, except as required by a final
determination with any tax authority, they will report the transfers under this
Agreement consistent with the Section 338(h)(10) Elections and will not take, or
cause to be taken, any action in connection with the filing of any Return on
behalf of the Seller, the Buyer, or their Affiliates or otherwise that would be
inconsistent with or prejudice the Section 338(h)(10) Elections or the
Allocation Agreement, and they will take all steps necessary to obtain
comparable treatment, where applicable, for state income Tax purposes.
Section 9.3 Tax Indemnity by Seller Parent. Seller Parent shall be
liable for, and shall indemnify and hold the Buyer, the Company and any
successor corporations thereto or Affiliates thereof harmless from and against
the following:
(a) Any and all Taxes for any taxable period ending (or deemed,
pursuant to Section 9.5, to end) on or before the Effective Time due or payable
by the Company or the Subsidiary, including without limitation, any Taxes
resulting from the Company or the Subsidiary ceasing to be a member of Seller's
consolidated group and any income Taxes incurred as a result of making the
Section 338(h)(10) Election;
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(b) Any and all Taxes that are imposed on the Company or the Subsidiary
pursuant to any obligation to contribute to the payment of a Tax determined on a
consolidated, combined or unitary or other group basis with respect to a group
of corporations that includes or included the Company or the Subsidiary at any
time on or before the Effective Time, including, without limitation, any such
obligation arising under Treasury Regulations Section 1.1502-6 or under any
similar provision of state, local or foreign law;
(c) Any and all Taxes of Seller or any Affiliate (excluding the Company
and the Subsidiary);
(d) Any Liability (including Taxes) of the Buyer, the Company, or the
Subsidiary in connection with or arising from any breach of any representation,
agreement, or covenant relating to Taxes made by Seller in this Article IX of
this Agreement; and
(e) Any lost Tax benefits (based on the present value of such lost
benefits, assuming a 15 year reference period and 7% discount factor) resulting
from an invalid Section 338 Election caused solely by the failure of the Seller
to fulfill its agreements pursuant to Section 9.2 hereof.
Section 9.4 Tax Indemnity by Buyer. The Buyer shall be liable for, and
shall indemnify and hold Seller and its Affiliates harmless from and against any
and all Taxes for any taxable period beginning (or deemed, pursuant to Section
9.5, to begin) after the Effective Time, due or payable by the Buyer, the
Company or the Subsidiary and for all Other Taxes (as defined in Section 9.11).
Section 9.5 Allocation of Certain Taxes.
(a) If the Company is permitted but not required under applicable U.S.
state or local Tax Laws to treat the day on which the Effective Time occurs as
the last day of a taxable period, the Buyer and the Seller shall treat, and
shall cause the Company and the Subsidiary to treat, such day as the last day of
a taxable period.
(b) Any Taxes for a taxable period beginning before the Effective Time
and ending after the Effective Time (a "Straddle Period") shall be apportioned
between the Seller and the Buyer based on the actual operations of the Company
and the Subsidiary during the portion of such period ending on the day on which
the Effective Time occurs and the portion of such period beginning on the day
following the day on which the Effective Time occurs, and, for purposes of the
provisions of Sections 9.3, 9.4, 9.5 and 9.7, each portion of such period shall
be deemed to be a taxable period (whether or not it is in fact a taxable
period). Notwithstanding the foregoing sentence, (i) any Taxes for any Straddle
Period that are calculated on an annual basis, such as real and personal
property taxes, shall be apportioned between Seller and the Buyer based on (a)
the number of days in the taxable periods ending on the day on which the
Effective Time occurs and (b) the number of days beginning after the day on
which the Effective Time occurs and (ii) any transaction with respect to the
Company or the Subsidiary (other than any deemed sale of assets resulting from
any actual or deemed Section 338 Election) outside the Ordinary Course of
Business occurring and after the Effective Time shall be treated for purposes of
Sections 9.3, 9.4, 9.5 and 9.7 as occurring at the beginning of the day
following the day on which the Effective
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Time occurs. To the extent (a) estimated Taxes have been paid prior to the
Effective Time with respect to a Straddle Period and are not reflected as an
asset on the Final Closing Balance Sheet or (b) are reflected as an accrued
liability on the Final Closing Balance Sheet, the Seller's liability with
respect thereto shall be reduced by that amount; provided further, that, if such
payment or accrued liability for Taxes exceeds the Seller's liability as
calculated pursuant to this Section 9.5, the Buyer shall pay the Seller the
amount of such excess within ten (10) days after the filing of the Return to
which such Taxes relate. Upon timely notice from the Buyer, the Seller shall pay
to the Buyer, at least ten (10) days prior to the date any payment for Taxes as
described in this Section 9.5 is due, the Seller's share of such Taxes as
described in this Section 9.5.
Section 9.6 Filing Responsibility.
(a) The Seller shall prepare and file or shall cause the Company to
prepare and file the following Returns with respect to the Company:
(i) All income, franchise, gross receipts and similar Tax
Returns for any taxable period ending on or before the Effective Time other than
Returns referred to in Section 9.5;
(ii) All other returns with respect to Taxes (other than
income Taxes) required to be filed (taking into account extensions) on or prior
to the Effective Time; and
(iii) Notwithstanding Section 9.1(a), the Seller shall cause
the Company to file all Returns and pay out of the Assets of the Company all
Taxes for periods after the Effective Time through the Closing Date.
(b) The Buyer and the Company shall, subject to the provisions of
Section 9.6(c), make all filings with respect to the Company other than those
described in Section 9.6(a).
(c) Except as provided in Section 9.6(a)(iii), with respect to any U.S.
state or local Return for taxable periods beginning before the Effective Time
and ending after the Effective Time, the Buyer shall prepare any such Returns in
a manner consistent with past practice unless otherwise required by applicable
law, and the Buyer shall submit Returns to the Seller not later than thirty (30)
days prior to the due date for filing of such Returns (or if such due date is
within forty-five (45) days following the Closing Date, as promptly as
practicable following the Closing Date). The Seller shall have the right to
review such Returns and to review all work papers and procedures used to prepare
any such Return. If the Seller, within ten (10) business days after delivery of
any such Return, notifies the Buyer in writing that it objects to any of the
items in such Return, the Buyer and Seller shall attempt in good faith to
resolve the dispute and, if they are unable to do so, the disputed items shall
be resolved (within a reasonable time, taking into account the deadline for
filing such Return) by the Neutral Auditors. Upon resolution of all such items,
the relevant Return shall be filed on that basis. The costs, fees and expenses
of the Neutral Auditors shall be borne equally by the Buyer and the Seller.
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Section 9.7 Refunds.
(a) The Seller shall be entitled to any refunds or credits of Taxes
attributable to or arising in taxable periods ending (or deemed, pursuant to
Section 9.5, to end) on or before the Effective Time that are not reflected as
assets on the Final Closing Balance Sheet.
(b) The Buyer or the Company shall be entitled to any refunds or
credits of Taxes attributable to or arising in taxable periods beginning (or
deemed, pursuant to Section 9.5, to begin) after the Effective Time and those
refunds reflected as assets on the Final Closing Balance Sheet.
(c) The Buyer shall cause the Company promptly to report to and forward
to Seller or to reimburse the Seller for any refunds or credits due the Seller
(pursuant to the terms of this Article IX) after receipt thereof, and the Seller
shall promptly report to and forward to the Buyer or reimburse the Buyer for any
refunds or credits due the Buyer (pursuant to the terms of this Article IX)
after receipt thereof.
Section 9.8 Cooperation and Exchange of Information.
(a) As soon as practicable, but in any event within thirty (30) days
after request therefor, from and after the Closing Date, each of Seller and the
Buyer shall (and shall cause their respective Affiliates to) provide the other
with such cooperation and deliver to the other such information and data to
enable each of Seller and the Buyer to complete and file all Returns that it may
be required to file with respect to the operations and business of the Company
or to respond to audits by any Taxing Authorities with respect to such
operations and to otherwise enable each of Seller and the Buyer to satisfy its
internal accounting, tax and other legitimate requirements and to enable the
Buyer to comply with its obligations set forth in Section 9.6 of this Agreement.
Such cooperation and information shall include, without limitation, provision of
powers of attorney for the purpose of signing Returns and defending audits and
promptly forwarding copies of appropriate notices and forms or other
communications received from or sent to any Taxing Authority that relate to the
Company and providing copies of all relevant Returns, together with accompanying
schedules and related work papers, documents relating to rulings or other
determinations by any Taxing Authority and records concerning the ownership and
tax basis of property, which Seller, the Buyer or the Company may possess. The
Seller, the Buyer and the Company shall make their employees and facilities
available on a mutually convenient basis to provide explanation of any documents
or information provided hereunder.
(b) For a period of six (6) years after the Effective Time, the Buyer
shall, and shall cause the Company to, retain all Returns, books and records
(including computer files) of, or with respect to the activities of, the Company
for all taxable periods ending on or prior to the Effective Time. Thereafter, at
the request of Seller, the Buyer shall not dispose of any such Returns, books or
records, unless it first offers such Returns, books and records to Seller and
Seller fails to accept such offer within sixty (60) days of its being made.
However, the Buyer may dispose of such records prior to that time with the prior
written consent of Seller, which consent shall not be unreasonably withheld.
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(c) The Buyer and the Seller and their respective Affiliates shall
cooperate in the preparation of all Returns relating in whole or in part to
taxable periods ending on or before or including the Effective Time that are
required to be filed after such date. Such cooperation shall include, but not be
limited to, furnishing prior years' Returns or return preparation packages
illustrating previous reporting practices or containing historical information
relevant to the preparation of such Returns, and furnishing such other
information within such party's possession requested by the party filing such
Returns as is relevant to their preparation. In the case of any U.S. state or
local or foreign joint, consolidated, combined, unitary or group relief system
Returns, such cooperation shall also relate to any other taxable periods in
which one party could reasonably require the assistance of the other party in
obtaining any necessary information.
(d) Seller shall have the right, at its own expense, to control any
audit or examination by any Taxing Authority ("Tax Audit"), initiate any claim
for refund (including by filing an amended Return), contest, resolve and defend
against any assessment, notice of deficiency, or other adjustment or proposed
adjustment relating to any and all Taxes for any taxable period ending on or
before the Effective Time with respect to the Company, provided that the Seller
shall not be entitled to settle, either administratively or after the
commencement of litigation, any claim for Taxes which would adversely affect the
liability for Taxes of the Buyer or the Company or any Subsidiary for any period
after the Effective Time to any extent (including, but not limited to, the
imposition of income Tax deficiencies, the reduction of asset basis or cost
adjustments, the lengthening of any amortization or depreciation periods, the
denial of amortization or depreciation deductions, or the reduction of the loss
or credit carry forwards) without the prior written consent of the Buyer, which
consent shall not be unreasonably withheld, and such consent shall not be
necessary to the extent that the Seller has indemnified the Buyer against the
effect of any such settlement. If litigation is required due to the Buyer's
failure to reasonably consent, then the Buyer shall be responsible for one-half
of the litigation costs incurred by the Seller. The Buyer shall have the right,
at its own expense, to control any other Tax Audit, initiate any other claim for
refund, and contest, resolve and defend against any other assessment, notice of
deficiency, or other adjustment or proposed adjustment relating to Taxes with
respect to the Company, provided that, with respect to any U.S. state and local
Taxes for any Straddle Period, the Buyer shall not be entitled to settle, either
administratively or after the commencement of litigation, any claim regarding
such Taxes that would adversely affect the liability for Taxes of the Seller for
any period ending on or prior to the Effective Time without the prior written
consent of the Seller, which consent shall not be unreasonably withheld and
shall not be required to the extent that Buyer has indemnified Seller against
the effects of such settlement. If litigation is required due to the Seller's
failure to reasonably consent, then the Seller shall be responsible for one-half
of the litigation costs incurred by the Buyer. Where consent to a settlement is
withheld by the Seller pursuant to this Section, the Seller may continue or
initiate any further proceedings at its own expense, provided that the liability
of the Buyer, after giving effect to this Agreement, shall not exceed the
liability that would have resulted from the settlement or amended return. Seller
shall furnish the Buyer and the Company with its cooperation in a manner
comparable to that described in Section 9.8(a) to effect the purposes of this
Section 9.8(d).
(e) If either the Buyer or the Seller (or their respective Affiliates)
fails to provide any information requested by the other in the time specified
herein, or if no time is specified pursuant
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to this Section 9.8, within a reasonable period, or otherwise fails to do any
act required of it under this Section 9.8, then the failing party shall be
obligated, notwithstanding any other provision of this Agreement, to indemnify
the other and shall hold the other harmless from and against any and all costs,
claims or damages, including, without limitation, all Taxes or deficiencies
thereof, payable as a result of such failure, or in the event of a claim for
refund, the value of such refund.
Section 9.9 Tax Sharing Agreements. Any Tax allocation or sharing
agreement or arrangement, whether or not written, that may have been entered
into by Seller or any Affiliate of Seller and the Company shall be terminated as
to the Company at or prior to the Closing Date, effective as of the Effective
Time, and no payments which are owed by or to the Company or any Subsidiary
pursuant thereto shall be made thereunder.
Section 9.10 Payments. Any payment made pursuant to this Article IX,
Article X or Article XII shall be treated by the Seller and the Buyer as an
adjustment to the Purchase Price and Seller and the Buyer agree not to take any
position inconsistent therewith for any purpose.
Section 9.11 Other Taxes. The Buyer agrees to assume liability for and
to pay all sales, transfer, stamp, real property transfer and similar Taxes
incurred as a result of the sale of the Company Shares ("Other Taxes").
Section 9.12 Survival Periods. The survival periods with regard to
representations set forth in Section 9.1 hereof shall be to the expiration of
the applicable statutes of limitations.
ARTICLE X
EMPLOYEES AND EMPLOYEE MATTERS
Section 10.1 Employee Benefit Plans.
(a) Section 10.1(a) of Seller's Disclosure Schedule lists as of the
date hereof (i) each "employee pension benefit plan" as that term is defined in
Section 3(2) of ERISA, (ii) each "employee welfare benefit plan" as that term is
defined in Section 3(1) of ERISA (such plans being hereinafter referred to
collectively as the "ERISA Plans"), and (iii) each material other incentive
compensation, bonus, stock option, stock purchase, severance pay, unemployment
benefit, vacation pay, health, life or other insurance (including Section 125
cafeteria plans or flexible benefit plans), fringe benefit, or other employee
benefit plan, program, agreement or arrangement, maintained or contributed to as
of the date hereof by the Seller Parent or its Affiliates, the Company or the
Subsidiary in respect of or for the benefit of any Company Employee or any
former employee, director, independent contractor or leased employee with
respect to service for the Company or the Subsidiary (and their eligible
dependents and beneficiaries) (collectively, together with the ERISA Plans,
referred to hereinafter as the "Company Benefit Plans").
(b) With respect to the ERISA Plans:
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(i) Neither the Company or the Subsidiary, any of the ERISA
Plans, any trust created thereunder, or any trustee or administrator thereof,
has engaged in any transaction as a result of which the Company or the
Subsidiary would reasonably be expected to be subject to any material liability
pursuant to Section 409 of ERISA or to either a civil penalty assessed pursuant
to Section 502(i) or (l) of ERISA or a tax imposed pursuant to Section 4975 of
the Code; and
(ii) No liability under Title IV of ERISA has been incurred by
the Company or the Subsidiary (other than liability for premiums due to the
Pension Benefit Guaranty Corporation) unless such liability has been, or prior
to the Closing Date will be, satisfied in full and no amendment has occurred
which has required or could require the Company, the Subsidiary or the Buyer to
provide security to any such plan; and
(iii) Each of such ERISA Plans has been operated and
administered in substantial compliance with all material provisions of the
governing documents and with all material provisions of Applicable Law; and
(iv) Each of such ERISA Plans that is intended to be
"qualified" within the meaning of Section 401(a) of the Code has been determined
by the IRS to be so qualified by issuance and receipt of a favorable
determination letter or reliance upon an opinion letter which states that the
ERISA Plan meets all requirements under the Code and that any trust(s)
associated with such ERISA Plan is tax exempt under Section 501(a) of the Code.
Nothing has occurred since the date of the most recent such determination (other
than the effective date of certain amendments to the Code the remedial amendment
period for which has not yet expired) that would adversely affect the qualified
status of such ERISA Plans; and
(v) No actual or threatened disputes, lawsuits, claims (other
than routine claims for benefits), investigations, audits or complaints to, or
by, any person or governmental entity have been filed with respect to the ERISA
Plans or the Company or the Subsidiary in connection with any ERISA Plans or the
fiduciaries responsible for such ERISA Plans, and no facts or conditions exist
which could subject the Buyer, the Company or the Subsidiary to any liability
(other than routine claims for benefits) under the terms of the ERISA Plans or
Applicable Law.
(c) None of the ERISA Plans is a "multiemployer plan" as that term is
defined in Section 3(37) of ERISA.
(d) Except as set forth in Section 10.1(d) of Seller's Disclosure
Schedule, neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (i) result in any
material payment (including without limitation, severance, unemployment
compensation, golden parachute or otherwise) becoming due from the Company or
the Subsidiary under any Company Benefit Plan; (ii) materially increase any
benefits otherwise payable under any Company Benefit Plan; or (iii) accelerate
the time of payment or vesting, or increase the amount of, any compensation due
to any Company Employee. The only severance agreements or severance policies
applicable to the Company or the Subsidiary in the
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event of a change in control of the Company are the agreements and policies
specifically referred to in Section 10.1(d) of Seller's Disclosure Schedule.
(e) No booked or unbooked liability exists which is, or should be,
accounted for by the Company in accordance with Financial Accounting Standards
Number 106. No unbooked liability exists which is, or should be, accounted for
by the Company in accordance with Financial Accounting Standards Number 112
except for such amounts disclosed in Section 10.1(e) of Seller's Disclosure
Schedule.
(f) There are no agreements which will provide payments to any officer,
employee or highly compensated individual which will be "parachute payments"
under Section 280G or Section 4999 of the Code for which the Buyer or the
Company would have withholding liability or that would result in loss of tax
deductions under Section 280G of the Code.
(g) All ERISA Plans that are "employee welfare benefit plans" including
health care flexible spending accounts have been operated in substantial
compliance with the group health plan continuation coverage requirements of
Section 4980B of the Code to the extent the requirements are applicable. Except
for liability to provide coverage under the continuation of coverage provisions
of Section 4980B of the Code, Sections 601-608 of ERISA ("COBRA") and applicable
state continuation of coverage statutes, except as set forth in Section 10.1(g)
of the Seller's Disclosure Schedule, neither the Seller Parent or its Affiliates
or the Company or the Subsidiary has made any commitments prior to the Closing
Date relating to present or future retiree medical benefits with respect to any
Transferred Employee or is required to provide retiree medical benefits to any
Transferred Employee. In addition no present or future liability whatsoever
shall exist for the Buyer, the Company or the Subsidiary relating to any program
described in Section 10.1(g) of the Seller's Disclosure Schedule.
(h) With respect to each Company Benefit Plan, the Seller has furnished
or made available to Buyer true, correct and complete copies of the following
(to the extent applicable); (1) the plan documents and summary plan
descriptions; (2) the most recent determination letter received from the
Internal Revenue Service; (3) the most recent annual report; (4) all related
trust agreements, insurance contracts or other funding agreements that implement
such plans; and (5) all other documents, records or other materials related
thereto reasonably requested by Buyer which would disclose any special plan
features which would adversely affect the Buyer, the Company, the Subsidiary or
Transferred Employees.
Section 10.2 Establishment of Company Group Health Plans. Not later
than the Closing Date, Seller shall cause the Company to establish, maintain and
sponsor group health plans for Company Employees employed by the Company and
their eligible dependents, which group health plans shall be substantially
similar to the group health plans offered to such Company Employees by the
Ultimate Parent.
Section 10.3 Employment of Transferred Employees. Buyer shall cause all
Current Company Employees to remain employed by the Company and the Subsidiary
as of the Closing Date (hereinafter collectively referred to as the "Transferred
Employees") in the same or
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comparable positions, and in the aggregate, at the same or comparable total
compensation (including base pay and bonus but excluding any qualified or
non-qualified defined benefit pension benefit), as are offered by the Buyer to
its current employees in similar positions and in similar geographic locations,
except as otherwise provided in this Agreement. For purposes of this paragraph,
the term "Current Company Employees" shall mean persons who are actively at work
for the Company or the Subsidiary as of the Closing Date and shall include all
full-time and part-time employees, employees on vacation or who have taken a
personal day or occasional absence day as currently defined in the Seller's, the
Company's or the Subsidiary's policies or similar short term leaves for reasons
other than illness or disability. Current Company Employees shall not include
those employees of the Company or the Subsidiary on leave of absence, including
short-term leave for illness, workers' compensation, military leave, maternity
leave, leave under the Family and Medical Leave Act of 1993, short-term
disability, salary continuation, on layoff with recall rights, and employees on
other Company or Subsidiary approved leaves of absence with a legal or
contractual right to reinstatement ("LOA Employees"). If an LOA Employee returns
to active service within six (6) months of the Closing Date, the Buyer, the
Company or the Subsidiary shall offer him or her employment at that time
effective upon return to active service. Until such time as a LOA Employee
returns to active service, such employee shall be the responsibility of the
Seller Parent and its Affiliates and not the Company, the Subsidiary or the
Buyer, for all purposes including but not limited to, benefits and compensation.
LOA Employees who do not return to active employment with the Company or the
Subsidiary within six (6) months after the Closing Date shall not become
Transferred Employees.
(a) Assumption of Employment and Other Agreements. On and after the
Closing Date, except as otherwise provided in this Agreement, the Company shall
assume all obligations under, and be bound by the provisions, of each employment
agreement or any other agreement by Seller Parent, Seller and their Affiliates
and the Company and the Subsidiary relating to conditions of employment,
employment, separation, or severance that are listed in Section 10.3 of the
Seller's Disclosure Schedule in connection with the Transferred Employees for
the term of each agreement as provided therein. Section 10.3(a) of Seller's
Disclosure Schedule is a list of such agreements (other than Company Benefit
Plans) between the Seller Parent, the Seller or its Affiliates, and the Company
or the Subsidiary and any Transferred Employee that is or could reasonably be
expected to become a liability of the Buyer, the Company or the Subsidiary.
(b) Recognition of Transferred Employee Service. On and after the
Closing Date, Buyer shall cause the Company and the Subsidiary to recognize the
service of each Transferred Employee for the Company and the Subsidiary, the
Ultimate Parent, the Seller Parent, the Seller and their Affiliates before the
Closing Date for all employment-related purposes (other than benefit accrual
under any qualified or non-qualified defined benefit pension plan) determined in
accordance with the practices and procedures of the Ultimate Parent and its
Affiliates and the Company and the Subsidiary in effect on the date hereof.
(c) No Accrual under Parent Plans. Transferred Employees shall not
accrue benefits under or remain covered under any employee benefit policies,
plans, arrangements, programs, practices, or agreements of Seller Parent or any
of its Affiliates after the Closing Date. No
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liability arising from or related to such benefit policies, plans, arrangements,
programs, practices or agreements of Seller Parent or any of its Affiliates
shall be transferred to or remain with Buyer, the Company or the Subsidiary
after the Closing Date.
(d) No Duplicate Benefits. Nothing in this Agreement shall cause
duplicate benefits to be paid or provided to or with respect to any Transferred
Employees under any employee benefit policies, plans, arrangements, programs,
practices or agreements. References herein to a benefit with respect to a
Transferred Employee shall include, where applicable, benefits with respect to
any eligible dependents and beneficiaries of such Transferred Employee under the
same employee benefit policy, plan, arrangement, program, practice or agreement.
Section 10.4 401(k) Matching Contribution. Buyer shall provide an
employer matching contribution to each Transferred Employee, who, prior to the
Closing Date, participated in the FleetBoston Financial Corporation Savings Plan
(the "Parent 401(k) Plan") and who is employed by the Buyer or the Company or
the Subsidiary on the Closing Date in an amount equal to the employer matching
contribution that such Transferred Employee would have received under the Parent
401(k) Plan for participation in the Parent 401(k) Plan for the period beginning
January 1, 2002 and ending on the Closing Date had the Transferred Employee been
an active participant in the Parent 401(k) Plan on December 31, 2002.
Section 10.5 Transferred Employee Benefit Matters.
(a) Savings Plans. Buyer shall take all action necessary and
appropriate to ensure that, as soon as practicable after the Closing Date, Buyer
or the Company maintains or adopts one or more retirement savings plans
(hereinafter referred to in the aggregate as the "Buyer Savings Plans" and
individually as a "Buyer Savings Plan") effective as of the Closing Date, and
shall cause each Transferred Employee and their eligible dependents to be
eligible to participate in the Buyer Savings Plan as soon as practicable after
the Closing Date. The terms of the Buyer Savings Plan shall provide that the
Transferred Employees employed by the Company shall have the right to make
direct rollovers to such plan of their accounts in qualified defined
contribution plans maintained by the Seller Parent and its Affiliates ("Parent
Savings Plans"), including a direct rollover of any notes evidencing loans made
to such Transferred Employees employed by the Company. Buyer shall take any and
all action necessary and appropriate to ensure that, after the Closing Date, the
Transferred Employees employed by the Subsidiary continue to participate in one
or more retirement savings plans maintained or adopted by the Subsidiary or, at
the election of the Buyer, become eligible to participate in a Buyer Savings
Plan.
(b) Welfare Benefits.
(i) After the Closing Date, the Buyer may elect to have
Transferred Employees employed by the Company continue to participate in the
group health plans established on or before the Closing Date pursuant to Section
10.2 of this Agreement and may elect to have Transferred Employees employed the
Subsidiary continue to participate in the group health and welfare plans
maintained by the Subsidiary. Alternatively, the Buyer may elect to take all
action necessary and appropriate to ensure that, as soon as practicable after
the Closing Date,
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Buyer or the Company or the Subsidiary maintains or adopts one or more employee
welfare benefit plans, including medical, health, dental, flexible spending
account, accident, life, short-term disability, and long-term disability and
other employee welfare benefit plans effective as of the Closing Date for the
benefit of the Transferred Employees (the "Buyer Welfare Plans"), and shall
cause each Transferred Employee and their eligible dependents to be eligible to
participate in the Buyer Welfare Plans as soon as practicable after the Closing
Date. For purposes of determining eligibility to participate in each Buyer
Welfare Plan, each Transferred Employee shall be credited with service,
determined under the terms of the corresponding welfare plans maintained by
Seller Parent and its Affiliates (hereinafter referred to collectively as the
"Parent Welfare Plans") and the Company or the Subsidiary on the Closing Date. A
service credit will be issued to those Transferred Employees with restrictions
on coverage for pre-existing conditions or requirements for evidence of
insurability under the Buyer Welfare Plans provided, however, that any such
service credit shall not result in greater coverage for a Transferred Employee
than the coverage such Transferred Employee was entitled to under a Parent
Welfare Plan or any other group health and welfare plans in which such
Transferred Employees participated before the Closing Date. Transferred
Employees shall receive credit under the Buyer Welfare Plans for co-payments and
payments under a deductible limit made by them and for out-of-pocket maximums
applicable to them during the plan year of the Parent Welfare Plan in accordance
with the corresponding Parent Welfare Plans. As soon as practicable after the
Closing Date, Seller Parent shall deliver to Buyer a list of the Transferred
Employees who had credited service under a Parent Welfare Plan, together with
each such Transferred Employee's service, co-payment amounts, and deductible and
out-of-pocket limits under such plan. This Agreement does not impose any
requirement on the Company, the Subsidiary or Buyer to provide any benefit to
domestic partners or adult dependents (other than spouses) of Transferred
Employees or to provide post-retirement medical or other post-retirement welfare
plan coverage to any Transferred Employee, except to the extent required under
the continuation of coverage provisions of Section 4980B of the Code and ERISA,
and any applicable state law. The Seller Parent, Seller and its Affiliates
(other than the Company or the Subsidiary) shall provide or continue to provide
retiree health and welfare benefits to retirees, their surviving spouses and
other inactive employees who are receiving or are entitled to elect to receive
retiree health and welfare benefits. The Seller Parent, Seller and its
Affiliates (other than the Company or the Subsidiary) shall indemnify the Buyer,
the Company or the Subsidiary for any claim or action arising from any such
termination of retiree health and welfare benefit program or plan in existence
prior to the Closing Date.
(ii) Buyer shall refer to Seller Parent and its Affiliates and
Seller Parent and its Affiliates shall assume responsibility for any claim under
a Parent Welfare Plan made by a Transferred Employee on or after the Closing
Date arising from a disability or loss incurred on or before the Closing Date,
except to the extent that such liability has been accrued on the Final Balance
Sheet and not paid to the Seller Parent or an Affiliate (other than the Company
or the Subsidiary) or an employee benefit plan of the Seller Parent or one of
its Affiliates (other than the Company or the Subsidiary). Nothing in this
Section 10.5(b) shall require the Seller Parent or any Affiliate, or the Parent
Welfare Plans to make any payment or to provide any benefit not otherwise
provided by the terms of the Parent Welfare Plans. For purposes of this
paragraph, a claim is deemed incurred when the services that are the subject of
the claim are performed; in the
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case of life insurance when the death occurs and in the case of long-term
disability benefits, when the disability occurs.
(iii) Seller Parent, Buyer, their respective Affiliates, and
the Parent Welfare Plans and the Buyer Welfare Plans shall assist and cooperate
with each other in the disposition of claims made under the Parent Welfare
Plans, and in providing each other with any records, documents, or other
information within its control or to which it has access that is reasonably
requested by any other as necessary or appropriate to the disposition,
settlement, or defense of such claims.
(iv) Except for the flexible spending account (the "FSA")
balances described in Section 10.5(b)(vi), nothing in this Agreement shall
require the Seller Parent or its Affiliates to transfer assets or reserves with
respect to benefits under the Parent Welfare Plans to Buyer or the Buyer Welfare
Plans.
(v) Exhibit C is a true and correct copy of the Company's
severance plan ("Company Severance Plan") and Exhibit C-1 is a true and correct
copy of the Subsidiary's severance plan ("Subsidiary Severance Plan"). The Buyer
shall be responsible for any severance benefits payable to any Transferred
Employee following the Closing Date in accordance with the following:
(A) During the period commencing on the Closing Date and
ending on the first year anniversary thereof, the Buyer shall provide
Transferred Employees of the Company with severance benefits under the
circumstances provided in, and calculated in accordance with, the
Company Severance Plan and shall provide Transferred Employees of the
Subsidiary with severance benefits under the circumstances provided in,
and calculated in accordance with, the Subsidiary Severance Plan;
provided however that for purposes of calculating benefits under each
such plan, the Buyer shall recognize each Transferred Employee's
combined service with the Company, the Subsidiary, the Ultimate Parent,
the Seller Parent, the Seller and its Affiliates and their respective
successors, predecessors and assigns prior to the Effective Time and
with the Buyer and its Affiliates.
(B) During the period beginning on the Closing Date and
ending on the first year anniversary thereof, neither the Buyer nor any
of its Affiliates shall amend any provision of the Company Severance
Plan or the Subsidiary Severance Plan, except as required by Applicable
Law.
(C) For any Transferred Employee who is terminated by
the Buyer after the first year anniversary of the Closing Date, the
Buyer shall make severance payments pursuant to the applicable
severance policy (if any such policy covering such persons is in
effect) maintained by the Buyer or its Affiliates for the benefit of
employees of the Buyer in effect on the date of termination.
(vi) As of the Closing Date, Seller Parent or its Affiliates
shall cause the portion of the FSA applicable to Transferred Employees to be
segregated into a separate
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component and all account balances of the Transferred Employees in the FSA shall
be transferred to a flexible spending account that Buyer shall cause to be
maintained for the duration of the calendar year in which the Closing Date
occurs.
(vii) Seller Parent and its Affiliates will provide COBRA
coverage after the Closing Date to any eligible employee of the Company and the
Subsidiary (and the employee's eligible dependents) who was covered by a Parent
Welfare Plan prior to the Closing Date who experienced a "qualifying event" as
defined in COBRA prior to the Closing Date and who is not employed by the
Company or the Subsidiary or by Buyer or one of its Affiliates immediately after
the Closing Date, provided such employees and/or dependents make or have made a
proper COBRA election and pay all required premiums. Buyer shall provide or
shall cause the Company or the Subsidiary to provide COBRA coverage after the
Closing Date to any Transferred Employee (and the employee's eligible
dependents) who is employed by the Company or the Subsidiary or by Buyer or one
of its Affiliates immediately after the Closing if the Transferred Employee (or
the Transferred Employee's eligible dependents) experiences a "qualifying
event," as defined in COBRA, on or after the Closing Date, provided such
employees and/or dependents make or have made a proper COBRA election and pay
all required premiums.
(c) Termination of Participation in Parent and Affiliate Plans. Prior
to Closing Date, Seller Parent and its Affiliates shall take all necessary
actions to remove the Company and the Subsidiary from participation in Company
Benefit Plans sponsored by Seller Parent and its Affiliates (other than the
Company and the Subsidiary).
Section 10.6 Vacation Benefits. On or after the Closing Date, Buyer
shall cause the Company and the Subsidiary to: (i) assume all liabilities of
Seller Parent or its Affiliates with respect to any accrued but unused vacation
time of Transferred Employees that is an accrued liability on the Company's
Final Balance Sheet; and (ii) allow Transferred Employees to receive paid time
off on or after the Closing Date for any unused vacation time accrued prior to
the Closing Date in accordance with the policies in effect prior to the Closing
Date. Seller Parent and its Affiliates shall have no liability to pay
Transferred Employees for the vacation time described in this Section 10.6. For
a one year period following the Closing Date, each Transferred Employee shall
receive vacation benefits that are equivalent to vacation benefits provided by
the Company or the Subsidiary to such employee as of the Closing Date. After the
one year anniversary of the Closing Date, Transferred Employees shall be
eligible for vacation benefits in accordance with the Buyer's vacation plan or
policy.
Section 10.7 No Third Party Rights. This Agreement is not intended, and
it shall not be construed, to create third party beneficiary rights in the
Company Employees (including any beneficiaries or dependents thereof) under or
with respect to any plan, program or arrangement described in or contemplated by
this Agreement and shall not confer upon any such employee the right to
continued employment for any period of time following the Closing Date except as
otherwise provided in Section 10.3(a) with respect to employment agreements.
Section 10.8 Warn Act Requirements. On and after the Closing Date,
Buyer shall be responsible with respect to Transferred Employees and their
beneficiaries for compliance with
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the Worker Adjustment and Retraining Notification Act of 1988 and any other
similar Applicable Law, including any requirement to provide for and discharge
any and all notifications, benefits, and liabilities to Transferred Employees
and government agencies that might be imposed thereunder as a result of the
consummation of the transactions contemplated by this Agreement.
Section 10.9 Special Provisions for Certain Employees. Any individual
employed by the Company or the Subsidiary who immediately prior to the Closing
Date either (i) is currently receiving long-term disability benefits under a
long-term disability plan sponsored by Seller Parent or its Affiliates (the
"Parent LTD Plan"), (ii) has been approved for receipt of long-term disability
benefits under the Parent LTD Plan or (iii) becomes disabled prior to the
Closing Date but is within the elimination period as of the Closing Date and
ultimately becomes entitled to long term disability benefits under the Parent
LTD Plan (collectively, an "LTD Recipient") shall be treated as a Transferred
Employee if and when the LTD Recipient recovers from his or her disabling
condition and returns to active service with Buyer or the Company or the
Subsidiary within six (6) months after the Closing Date. If any LTD Recipient
does not recover from his or her disabling condition and return to active
service within six (6) months of the Closing Date, Seller Parent and its
Affiliates shall continue to cover such LTD Recipient under a Parent LTD Plan
and the Buyer, Company and Subsidiary shall have no obligation to offer to
provide employment to such LTD Recipient. Nothing herein shall require Buyer or
the Company or the Subsidiary to reemploy, reinstate or reactivate an LTD
Recipient, except to the extent an LTD Recipient has a right to re-employment,
reinstatement or reactivation.
ARTICLE XI
CONDITIONS TO CLOSING
Section 11.1 Conditions to Obligation of the Buyer. The obligation of
the Buyer to consummate the transactions contemplated by this Agreement is
subject to satisfaction, at or prior to the Closing of each of the following
conditions unless the Buyer in its sole discretion shall have waived such
satisfaction:
(a) Each of the representations and warranties of the Seller and Seller
Parent set forth in this Agreement shall be true and correct in all respects as
of the date of this Agreement and (except to the extent such representations and
warranties speak as of an earlier date) as of the Closing Date; provided,
however, that for the purposes of this paragraph, such representations and
warranties shall be deemed to be true and correct in all respects unless the
failure or failures of such representations and warranties to be so true and
correct, either individually or in the aggregate, will have or are reasonably
likely to have a Material Adverse Effect on the Company.
(b) On or prior to the Closing Date, the Seller and Seller Parent shall
have performed and complied in all material respects with all of the covenants
to be performed or complied with by it at or prior to the Closing Date.
(c) The president or any vice president of the Seller shall have
delivered to the Buyer a certificate to the effect that each of the conditions
specified above in Sections 11.1(a) and 11.1(b) is satisfied.
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(d) There shall not be any injunction, judgment, order, decree, ruling,
or charge in effect preventing consummation of any of the transactions
contemplated by this Agreement.
(e) The applicable waiting periods under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act
shall have expired or been terminated and any Material Governmental Consent
shall have been obtained.
(f) There shall not have occurred any event that, individually or in
the aggregate, has had a Material Adverse Effect on the Company.
(g) The Buyer shall have received from the Seller certified copies of
resolutions duly adopted by the Board of Directors of the Seller authorizing the
execution and performance of this Agreement and the other documents contemplated
hereby and the transactions contemplated hereby.
(h) The Buyer shall have received the opinion of counsel referred to in
Section 3.2(a)(ix).
(i) The Seller and Seller Parent shall have executed and delivered the
TSA, the Outsourcing Agreement, the Sublease, the Trademark Assignment Agreement
and the Loan Servicing Agreement Amendments.
Section 11.2 Conditions to Obligations of the Seller and Seller Parent.
The obligations of the Seller and Seller Parent to consummate the transactions
contemplated by this Agreement is subject to satisfaction, at or prior to the
Closing, of each of the following conditions unless the Seller in its sole
discretion shall have waived such satisfaction:
(a) Each of the representations and warranties of the Buyer set forth
in this Agreement shall be true and correct in all respects as of the date of
this Agreement (except to the extent such representations and warranties speak
of an earlier date) and as of the Closing Date; provided, however, that for the
purposes of this paragraph, such representations and warranties shall be deemed
to be true and correct in all respects unless the failure or failures of such
representations and warranties to be so true and correct, either individually or
in the aggregate, will have or are reasonably likely to have a Material Adverse
Effect on the Buyer.
(b) On or prior to the Closing Date, the Buyer shall have performed and
complied in all material respects with all of its covenants to be performed or
complied with by it at or prior to the Closing Date.
(c) The president or any vice president of the Buyer shall have
delivered to the Seller a certificate to the effect that each of the conditions
specified above in Section 11.2(a) through Section 11.2(b) is satisfied.
(d) There shall not be any injunction, judgment, order, decree, ruling,
or charge in effect preventing consummation of any of the transactions
contemplated by this Agreement.
(e) The applicable waiting periods under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act
shall have expired or been terminated and any Material Governmental Consent
shall have been obtained.
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(f) The Seller shall have received from the Buyer certified copies of
resolutions duly adopted by the Board of Directors of the Buyer authorizing the
execution and performance of this Agreement and the other documents contemplated
hereby and the transactions contemplated hereby and thereby.
(g) The Seller shall have received the opinion of counsel referred to
in Section 3.2(b)(vi).
(h) The Buyer and/or the Company shall have executed and delivered the
TSA, the Sublease, the Outsourcing Agreement, the Trademark Assignment Agreement
and the Loan Servicing Agreement Amendments.
ARTICLE XII
SURVIVAL, INDEMNIFICATION
Section 12.1 Survival of Representations and Warranties, Covenants and
Agreements.
(a) All of the representations and warranties of the Seller and Seller
Parent contained in Articles IV, V, and Section 10.1 of this Agreement shall
survive the Closing hereunder and continue in full force and effect for a period
of eighteen (18) months thereafter, except that (i) the representations and
warranties set forth in Section 4.5, Section 4.6, Section 5.2(b), Section 5.4
and Section 10.1(e) hereof shall survive indefinitely, (ii) the representations
and warranties set forth in Section 5.21 shall survive until barred by the
applicable statutes of limitations, and (iii) the representations and warranties
set forth in Section 9.1 shall survive as provided for in Section 9.12. All
claims for actual fraud shall survive the Closing hereunder until barred by the
applicable statutes of limitations.
(b) Covenants and agreements of the Seller and Seller Parent contained
in this Agreement that are to be performed prior to the Closing shall survive
the Closing hereunder for a period equal to eighteen (18) months after the
Closing Date or, in the case of any covenants or agreements to be performed
after the Closing, shall survive for one (1) year after the date on which such
post-Closing covenant or agreement was required to have been performed.
(c) All of the representations and warranties of the Buyer contained in
Article VI of this Agreement shall survive the Closing hereunder and continue in
full force and effect for a period of eighteen (18) months thereafter, except
that the representations and warranties set forth in Section 6.5 shall survive
indefinitely. All claims for actual fraud shall survive the Closing hereunder
until barred by the applicable statute of limitations.
(d) Covenants and agreements of the Buyer contained in this Agreement
that are to be performed prior to the Closing shall survive the Closing
hereunder for a period equal to eighteen (18) months after the Closing Date or,
in the case of any covenants or agreements to be performed after the Closing,
shall survive for one (1) year after the date on which such post-Closing
covenant or agreement was required to have been performed.
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Section 12.2 Indemnification.
(a) Subject to the provisions of this Agreement, Seller Parent agrees
to indemnify and hold the Buyer and its Affiliates (including the Company and
the Subsidiary), predecessors, successors and assigns (and their respective
officers, directors, employees and agents) harmless from and against and in
respect of all Damages resulting from or relating to:
(i) A breach by the Seller or Seller Parent of any
representation or warranty made by the Seller or Seller Parent in this
Agreement;
(ii) A breach by the Seller or Seller Parent of any covenant
or agreement made by the Seller or Seller Parent in this Agreement to be
performed (A) prior to Closing or (B) after Closing; and
(iii) Any and all Liabilities relating to pre-Effective Time
acts or omissions by the Company or the Subsidiary in connection with the
matters asserted in that certain letter dated April 12, 1997; provided, however,
that any Liabilities for post-Effective Time acts or omissions by the Company or
the Subsidiary shall be the sole responsibility of the Company and the
Subsidiary.
(b) Subject to the provisions of this Agreement, the Buyer agrees to
indemnify and hold the Seller and its Affiliates, predecessors, successors and
assigns (and their respective officers, directors, employees and agents)
harmless from and against and in respect of all Damages, resulting from or
relating to:
(i) A breach by the Buyer of any representation or warranty
made by the Buyer in this Agreement;
(ii) A breach by the Buyer of any covenant or agreement made
by the Buyer in this Agreement;
(iii) Any and all Liabilities of the Company or the Subsidiary
or any and all Liabilities arising out of or in connection with any of the
business, assets, operations or activities of the Company or the Subsidiary
(including any predecessor of the Company or the Subsidiary and any former
business, asset, operation, activity or subsidiary of the Company or the
Subsidiary), heretofore, currently or hereafter owned or conducted, as the case
may be, including, without limitation, any Liability based on negligence, gross
negligence, strict liability, intentional tort or any other theory of liability,
whether in law (whether common or statutory) or equity; provided, however,
nothing contained in this Section 12.2(b)(iii) shall impair the indemnification
obligations of Seller Parent in Section 12.2(a) hereof or make Buyer responsible
for any litigation asserted against the Seller or Seller Parent for acts or
omissions taken by Seller or Seller Parent directly, as opposed to litigation
asserted against the Seller or Seller Parent solely in its capacity as a
stockholder of the Company; and
(iv) Any and all Guaranties.
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(c) Seller Parent's and Buyer's respective indemnification obligations
with respect to Taxes are governed exclusively by Article IX; provided, however,
that the procedures outlined in Section 12.3(d) shall be followed with respect
to claims made pursuant to Article IX.
(d) Anything contained in this Agreement to the contrary
notwithstanding, Buyer shall have no right of indemnification for any loss,
Liabilities or Damages sustained by any Person as a result of the parties'
failure or inability to obtain any or all required consents, waivers,
confirmations, notifications or approvals, with respect to any requirement of
any Governmental Entity (except with respect to any Material Governmental
Consent), or any agreement, contract, lease, license, permit, instrument or
other arrangement or for any termination, amendment, modification or other
change to any of the foregoing after the date hereof. Further, any loss,
Liability or Damage sustained or incurred, as a result of the parties' failure
or inability to obtain any or all required consents, waivers, confirmations,
notifications or approvals, with respect to any requirement of any Governmental
Entity (except with respect to any Material Governmental Consent), or any
agreement, contract, lease, license, permit, instrument or other arrangement or
for any termination, amendment, modification or other change to any of the
foregoing after the date hereof shall not be counted toward determining whether
the Threshold or Maximum Indemnification Amount has been reached.
Notwithstanding the foregoing, nothing contained in this Section 12.2(d) shall
relieve Seller Parent or Seller of its obligation under Sections 7.1 or 7.2 and
any loss, Liabilities or Damages, sustained or incurred by Buyer or any of its
Affiliates solely as a result of Seller Parent's or the Seller's failure to
perform such obligations under Section 7.1 or 7.2 shall be counted toward
determining whether the Threshold or Maximum Indemnification Amount has been
reached.
(e) Seller Parent's and Buyer's respective indemnification obligations
pursuant to Sections 12.2(a)(i) and 12.2(b)(i) hereof shall be determined
without giving effect to any qualification or exception with respect to
"material", "materially", "material adverse effect", "knowledge of Seller",
"Seller's knowledge" or similar language contained in any representation or
warranty of Seller or Seller's Parent or Buyer or Buyer's Parent, respectively;
provided, however, any such qualification or exception contained in Sections
4.3, 4.4, 5.7, the first two sentences of 5.9 and 5.14 shall still be given
effect. Seller Parent's indemnification obligation pursuant to Section
12.2(a)(i), with respect to only the representation and warranty contained in
Section 5.8, shall be determined without giving effect to the dollar threshold
contained therein; provided, however, that with respect to individual
indemnification claims that are in an amount less than $20,000, Seller Parent
shall have no liability for a breach of Section 5.8 unless and until the total
of all such claims is $1,000,000, at which time all such claims shall be
indemnifiable and shall be considered in determining whether the Threshold and
the Maximum Indemnification Amount has been reached.
Section 12.3. Limitations.
(a) Anything contained in this Agreement to the contrary
notwithstanding, (i) the Buyer (on behalf of itself and any of its Affiliates)
shall not make any claim for indemnification pursuant to Section 12.2(a)(i)
and/or Section 12.2(a)(ii)(A) until the aggregate amount of all such claims
exceeds Four Million Dollars ($4,000,000) (the "Threshold") and if the Threshold
is exceeded, Seller Parent shall be required to pay only the amount of the
excess over the
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Threshold; provided, however, the Seller Parent's obligation and liability for
any and all breaches of the representations and warranties set forth in Section
4.5, Section 4.6, Section 5.2(b), Section 5.4, Section 9.1, Section 10.1(e) or
for claims for actual fraud or for claims made pursuant to Section
12.2(a)(ii)(B) or Section 12.2(a)(iii) hereof shall not be subject to the
Threshold and shall not count toward determining whether the Threshold or the
Maximum Indemnification Amount has been reached and (ii) Seller Parent shall not
be required to make indemnification payments to the extent indemnification
payments would exceed in the aggregate Forty Million Dollars ($40,000,000) (the
"Maximum Indemnification Amount"). In determining the foregoing Threshold and in
otherwise determining the amount to which any indemnified party is entitled to
assert a claim for indemnification pursuant to this Article XII, only actual
Damages, net of all Tax benefits and applicable insurance payments, and no
consequential, incidental or other special damages or losses shall be
indemnifiable. All parties hereto waive any claim to exemplary or punitive
damages. Seller Parent, the Seller and the Buyer acknowledge and agree that any
event, transaction, circumstance, or liability, whether contingent or accrued,
for which an adequate specific reserve has been established on the Final Closing
Balance Sheet, shall not be used at any time as the basis of any claim for
indemnification under Article IX or Article XII, or considered in any way in
determining whether the Threshold or the Maximum Indemnification Amount has been
reached. In addition, in connection with an alleged breach of the Seller
Parent's or Seller's representations, warranties and covenants under this
Agreement, the Buyer's Damages shall be net of all reserves established on the
Final Closing Balance Sheet specifically in connection with the particular item
or contingency in dispute (exclusive of any general corporate reserve). In no
event shall Seller Parent or Buyer be required to make any indemnification
payments to the extent that the total of all indemnification payments made
pursuant to this Agreement would exceed in the aggregate the Purchase Price.
(b) The obligation of Seller Parent to indemnify the Buyer under
Section 9.1 and Section 12.2(a) above shall expire, with respect to any
representation, warranty, covenant or agreement of the Seller or Seller Parent,
on the date on which the survival of such representation, warranty, covenant or
agreement shall expire in accordance with Section 12.1 above, except with
respect to any written claims for indemnification which the Buyer has delivered
to Seller Parent prior to such date or with respect to any breach of the
representations and warranties in Sections 4.5, Section 4.6, Section 5.2(b),
Section 5.4, Section 10.1(e) and for claims made pursuant to Section
12.2(a)(iii) for which the obligation to indemnify shall be perpetual.
(c) The obligation of Buyer to indemnify under Section 12.2(b) above
shall expire, with respect to any representation, warranty, covenant or
agreement of the Seller or Seller Parent, on the date on which the survival of
such representation, warranty, covenant or agreement shall expire in accordance
with Section 12.1 above, except with respect to written claims for
indemnification which Seller Parent has delivered to the Buyer prior to such
date or with respect to any breach of the representations and warranties of the
Buyer in Section 6.5, for which the obligation to indemnify shall be perpetual.
In determining the amount to which Seller or Seller Parent is entitled to assert
a claim for indemnification pursuant to this Article XII, only actual Damages,
net of all Tax benefits and applicable insurance payments, and no consequential,
incidental or other special damages or losses shall be indemnifiable.
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(d) Promptly after receipt by an indemnified party under this Article
XII of notice of any claim or the commencement of any action, the indemnified
party shall, if a claim in respect thereof is to be made against the
indemnifying party under this Article XII, notify the indemnifying party in
writing of the claim or the commencement of that action stating in reasonable
detail the nature and basis of such claim and a good faith estimate of the
amount thereof, provided that the failure to notify the indemnifying party shall
not relieve it from any liability which it may have to the indemnified party
unless and only to the extent such failure materially and adversely prejudices
the ability of the indemnifying party to defend against or mitigate damages
arising out of such claim. If any claim shall be brought against an indemnified
party, it shall notify the indemnifying party thereof and the indemnifying party
shall be entitled to participate therein, and to assume the defense thereof with
counsel reasonably satisfactory to the indemnified party, and to settle and
compromise any such claim or action; provided, however, that the indemnifying
party shall not agree or consent to the application of any equitable relief upon
the indemnified party without its written consent. After notice from the
indemnifying party to the indemnified party of its election to assume the
defense of such claim or action, the indemnifying party shall not be liable for
other expenses subsequently incurred by the indemnified party in connection with
the defense thereof; provided, however, that if the indemnifying party elects
not to assume such defense, the indemnified party may retain counsel
satisfactory to it and to defend, compromise or settle such claim on behalf of
and for the account and risk of the indemnifying party, and the indemnifying
party shall pay all reasonable fees and expenses of such counsel for the
indemnified party promptly as statements therefore are received; and, provided,
further, that the indemnified party shall not consent to entry of any judgment
or enter into any settlement or compromise without the written consent of the
indemnifying party which consent shall not be unreasonably withheld. The Buyer,
the Seller and Seller Parent each agree to render to each other such assistance
as may reasonably be requested in order to insure the proper and adequate
defense of any such claim or proceeding. The indemnified party shall also have
the right to select its own counsel, at its own expense, to represent the
indemnified party and to participate in the defense of such claim, as
applicable.
Section 12.4 Remedies Exclusive. Except as otherwise specifically
provided in Section 2.4, Section 8.6, Section 8.7 and Article IX, the remedies
provided in this Article XII shall be the exclusive remedies of the parties
hereto (except with respect to claims for actual fraud) from and after the
Closing in connection with any breach of a representation or warranty, or
non-performance, partial or total, of any covenant or agreement contained
herein. The provisions of this Article XII shall apply to claims for
indemnification asserted as between the parties hereto as well as to third-party
claims.
Section 12.5 Mitigation. The parties shall cooperate with each other
with respect to resolving any indemnifiable claim, including by making
commercially reasonable efforts to mitigate or resolve any such claim or
liability. Each party shall use commercially reasonable efforts to address any
claims or liabilities that may provide a basis for an indemnifiable claim such
that each party shall respond to any claims or liabilities in the same manner it
would respond to such claims or liabilities in the absence of the
indemnification provisions of this Agreement. In the event that any party shall
willfully fail to make such commercially reasonable efforts to mitigate or
resolve any claim or liability, then notwithstanding anything else to the
contrary contained herein, the other party shall not be required to indemnify
any Person for any
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indemnifiable loss that could reasonably be expected to have been avoided if
such party, as the case may be, had made such efforts.
Section 12.6 Treatment of Payments. All payments made pursuant to this
Article XII (but not pursuant of Article IX) shall be treated as an adjustment
to the Purchase Price.
ARTICLE XIII
TERMINATION
Section 13.1 Termination of Agreement. This Agreement may be terminated
as follows:
(a) By the mutual written consent of the Seller and the Buyer;
(b) Either the Seller or the Buyer if the closing contemplated by
Section 2.1 hereof has not occurred by the close of business on September 30,
2002 and if the failure to consummate the transactions contemplated hereby on or
before such date pursuant to the terms of this Agreement did not result from the
failure by the party seeking termination of this Agreement to fulfill any
undertaking or commitment provided for herein that is required to be fulfilled
prior to such closing; and
(c) Either the Seller or the Buyer if the other party has, in any
material respect, breached any representation, warranty, covenant or agreement
contained herein and such breach has not been or cannot be cured by the earlier
of (i) thirty (30) days after the date on which written notice of such breach is
given to the party committing such breach or (ii) the Closing Date.
(d) By Seller or the Buyer if any event or condition exists which would
render impossible the satisfaction of the conditions to Closing set forth in
Sections 11.1(e) and 11.2(e).
Section 13.2 Effect of Termination.
(a) If any party terminates this Agreement pursuant to Section 13.1
above, all rights and obligations of the parties hereunder shall terminate
without any liability of any party to any other party; provided, however, that
the provisions contained in (a) Section 7.3 hereof and (b) the Confidentiality
Agreement, shall survive any termination of this Agreement indefinitely
(notwithstanding any provision herein or therein to the contrary); and provided;
further that the provisions contained in Section 7.14 shall survive any
termination of this Agreement pursuant to Sections 13.1(b) and 13.1(d).
(b) A termination under Section 13.1 shall not relieve any party of any
liability for a breach of any covenant or agreement under this Agreement, or be
deemed to constitute a waiver of any available remedy (including specific
performance if available) for any such breach.
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ARTICLE XIV
MISCELLANEOUS
Section 14.1 No Third-party Beneficiaries. Except as specifically set
forth herein with respect to Company Employees, this Agreement shall not confer
any rights or remedies upon any Person other than the parties and their
respective successors and permitted assigns.
Section 14.2 Entire Agreement. This Agreement (including the documents
referred to herein) and the Disclosure Schedules and Exhibits hereto and the
Confidentiality Agreement constitutes the entire agreement among the parties
with respect to the subject matter hereof and there are no other understandings,
agreements, or representations by or among the parties, written or oral, related
in any way to the subject matter hereof.
Section 14.3 Succession and Assignment. This Agreement shall be binding
upon and inure to the benefit of the parties named herein and their respective
successors and permitted assigns. No party may assign either this Agreement or
any of its rights, interests or obligations hereunder without the prior written
approval of the other parties hereto.
Section 14.4 Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same agreement and shall become effective
when one or more counterparts have been signed by each of the parties and
delivered to the other party.
Section 14.5 Headings. The section headings contained in this Agreement
are inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
Section 14.6 Notices. All notices hereunder shall be sufficiently given
for all purposes hereunder if in writing and delivered personally, sent by
documented overnight delivery service or, to the extent receipt is confirmed,
telecopy, telefax or other electronic transmission service to the appropriate
address or number as set forth below. Notices to the Seller or Seller Parent
shall be addressed to:
Fleet National Bank
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
with copies to:
V. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
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or at such other address and to the attention of such other Person as the Seller
may designate by written notice to the Buyer. Notices to the Buyer shall be
addressed to:
Affiliated Computer Services, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Chief Executive Officer
General Counsel
Fax: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇ ▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
or at such other address and to the attention of such other Person as the Buyer
may designate by written notice to the Seller.
Section 14.7 Governing Law. This Agreement shall be governed by and
construed in accordance with the domestic laws of the State of
Delaware without
giving effect to any choice or conflict of law provision or rule (whether of the
State of
Delaware or any other jurisdiction) that would cause the application of
the laws of any jurisdiction other than the State of
Delaware.
SECTION 14.8 WAIVER OF JURY TRIAL. EACH PARTY HERETO, TO THE EXTENT IT
MAY LAWFULLY DO SO, HEREBY SUBMITS TO THE JURISDICTION OF THE COURTS OF THE
STATE OF
DELAWARE AND THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF
DELAWARE, AS WELL AS TO THE JURISDICTION OF ALL COURTS FROM WHICH AN APPEAL MAY
BE TAKEN OR OTHER REVIEW SOUGHT FROM THE AFORESAID COURTS, FOR THE PURPOSE OF
ANY SUIT, ACTION OR OTHER PROCEEDING ARISING OUT OF SUCH PARTY'S OBLIGATIONS
UNDER OR WITH RESPECT TO THIS AGREEMENT OR ANY OF THE AGREEMENTS, INSTRUMENTS OR
DOCUMENTS CONTEMPLATED HEREBY (OTHER THAN THE CONFIDENTIALITY AGREEMENT), AND
EXPRESSLY WAIVES ANY AND ALL OBJECTIONS IT MAY HAVE AS TO VENUE IN ANY OF SUCH
COURTS.
EACH PARTY HERETO HEREBY WAIVES TRIAL BY JURY IN ANY ACTION, PROCEEDING
OR COUNTERCLAIM ARISING OUT OF OR IN ANY WAY CONCERNED WITH THIS AGREEMENT OR
ANY OF THE AGREEMENTS, INSTRUMENTS OR DOCUMENTS CONTEMPLATED HEREBY. NO PARTY
HERETO, NOR ANY ASSIGNEE OR SUCCESSOR OF A PARTY HERETO SHALL
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SEEK A JURY TRIAL IN ANY LAWSUIT, PROCEEDING, COUNTERCLAIM OR ANY OTHER
LITIGATION PROCEDURE BASED UPON, OR ARISING OUT OF, THIS AGREEMENT OR ANY OF THE
AGREEMENTS, INSTRUMENTS OR DOCUMENTS CONTEMPLATED HEREBY. NO PARTY WILL SEEK TO
CONSOLIDATE ANY SUCH ACTION, IN WHICH A JURY TRIAL HAS BEEN WAIVED, WITH ANY
OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED. THE
PROVISIONS OF THIS HAVE BEEN FULLY DISCUSSED BY THE PARTIES HERETO, AND THE
PROVISIONS SHALL BE SUBJECT TO NO EXCEPTIONS. NO PARTY HAS IN ANYWAY AGREED WITH
OR REPRESENTED TO ANY OTHER PARTY THAT THE PROVISIONS OF THIS SECTION WILL NOT
BE FULLY ENFORCED IN ALL INSTANCES.
Section 14.9 Amendments and Waivers. This Agreement may not be modified
or amended except by an instrument or instruments in writing signed by the party
against whom enforcement of any such modification or amendment is sought. Either
party hereto may, only by an instrument in writing, waive compliance by the
other party hereto with any term or provision of this Agreement on the part of
such other party hereto to be performed or complied with. The waiver by any
party hereto of a breach of any term or provision of this Agreement shall not be
construed as a waiver of any subsequent breach.
Section 14.10 Severability. Any term or provision of this Agreement
that is invalid or unenforceable in any situation in any jurisdiction shall not
affect the validity or enforceability of the remaining terms and provisions
hereof or the validity or enforceability of the offending term or provision in
any other situation or in any other jurisdiction.
Section 14.11 Expenses. Except as otherwise provided herein, whether or
not the transaction contemplated hereby are consummated, each of the parties
hereto will bear its own costs and expenses (including legal fees and expenses)
incurred in connection with this Agreement and the transactions contemplated
hereby. The Buyer shall pay all filing or other fees payable to Governmental
Entities, including but not limited to filing fees due in connection with any
pre-merger notification pursuant to the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act.
Section 14.12 Construction. The parties have participated jointly in
the negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties and no presumption or burden of proof shall
arise favoring or disfavoring any party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise.
Section 14.13 Incorporation of Exhibits and Disclosure Schedules and
Confidentiality Agreement. The Exhibits, and Disclosure Schedules and
Confidentiality Agreement identified in this Agreement are incorporated herein
by reference and made a part hereof.
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Section 14.14 Disclaimer of Warranties.
(a) Except as to those matters expressly covered by the representations
and warranties in this Agreement, the Seller is selling its ownership interest
in the Company on an "as is, where is, with all faults" basis and it is the
explicit intent of each party hereto that neither the Seller nor any of its
Affiliates is making any representation or warranty whatsoever, express or
implied, beyond those expressly given in this Agreement. The Buyer acknowledges
that neither the Seller nor any of its representatives or any other Person has
made any representation or warranty, express or implied, as to the accuracy or
completeness of any memoranda, charts or summaries heretofore made available by
the Seller or their representatives to the Buyer or any other information which
is not included in this Agreement or Seller's Disclosure Schedules or Exhibits
hereto, and neither the Seller nor any of its representatives or any other
Person will have or be subject to any liability to the Buyer, any Affiliate of
the Buyer or any other Person resulting from the distribution of any such
information to, or use of any such information by, the Buyer, any Affiliate of
the Buyer or any of their agents, consultants, accountants, counsel or other
representatives. The Seller makes no representations or warranties with respect
to any estimates, projections, forecasts or forward-looking information provided
to the Buyer. There is no assurance that any estimated, projected or forecasted
results will be achieved. Neither the Seller nor any other Person shall have any
liability or indemnification obligation to Buyer or any other Person resulting
from Buyer's use of any information, projections, demands or materials made
available to Buyer in certain "data rooms", "management presentations",
"break-out" sessions, responses to questions submitted on behalf of Buyer,
whether orally or in writing, or in any other form in expectation of the
furtherance of the transactions contemplated in this Agreement.
(b) Anything contained in this Agreement to the contrary
notwithstanding, Seller makes no representations or warranties with respect to
the United States Government Contract No. PM94017001, as amended, modified or
extended, by and between the United States Department of Education and ACS
Government Services, Inc. (as successor to Computer Data Systems, Inc.), and
including to the extent any such contract, agreement, instrument or other
arrangement has been incorporated into any other contract, agreement, instrument
or other arrangement to which the Company or the Subsidiary is a party. This
provision shall not limit any other disclaimer contained in the Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first above written.
FLEET NATIONAL BANK
By:
-------------------------------------
Title:
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FLEET HOLDING CORP.
By:
-------------------------------------
Title:
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first above written.
AFFILIATED COMPUTER SERVICES, INC.
By:
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Title:
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