ASSET PURCHASE AGREEMENT among eFunds Corporation, Chex Systems, Inc., National Check Protection Service Business Trust, National Data Verification Service Business Trust and The Shareholders made as of May 3, 2005
Exhibit 10.1
among
eFunds Corporation,
Chex Systems, Inc.,
National Check Protection Service Business Trust,
National Data Verification Service Business Trust
and
The Shareholders
made as of
May 3, 2005
Table of Contents
I. Definitions | 2 | |||||||||
II. Purchase of Acquired Assets and Closing | 2 | |||||||||
2.1 | Purchase and Sale of Acquired Assets | 2 | ||||||||
2.2 | Excluded Assets | 4 | ||||||||
2.3 | Assumption of Assumed Liabilities | 5 | ||||||||
2.4 | Retained Liabilities | 5 | ||||||||
2.5 | Purchase Price | 7 | ||||||||
2.6 | Estimated Purchase Price | 7 | ||||||||
2.7 | Retained Amounts | 7 | ||||||||
2.8 | The Closing | 10 | ||||||||
2.9 | Post-Closing Adjustment to Purchase Price | 12 | ||||||||
2.10 | Unobtained Consents | 14 | ||||||||
2.11 | Sellers’ Representative | 15 | ||||||||
2.12 | Further Assurances | 16 | ||||||||
III. Representations and Warranties Regarding Sellers, NCPS and NDVS | 16 | |||||||||
3.1 | Incorporation; Power and Authority | 16 | ||||||||
3.2 | Valid and Binding Agreement | 16 | ||||||||
3.3 | No Breach; Consents | 17 | ||||||||
3.4 | Capitalization | 17 | ||||||||
3.5 | Subsidiaries | 18 | ||||||||
3.6 | Financial Statements | 18 | ||||||||
3.7 | Absence of Undisclosed Liabilities | 18 | ||||||||
3.8 | Books and Records | 18 | ||||||||
3.9 | Absence of Certain Developments | 19 | ||||||||
3.10 | Property | 21 | ||||||||
3.11 | Accounts Receivable | 22 | ||||||||
3.12 | Tax Matters | 22 | ||||||||
3.13 | Intellectual Property Rights | 24 | ||||||||
3.14 | Material Contracts | 26 | ||||||||
3.15 | Litigation | 28 | ||||||||
3.16 | Insurance | 28 | ||||||||
3.17 | Compliance with Laws; Governmental Authorizations | 28 | ||||||||
3.18 | Environmental Matters | 30 | ||||||||
3.19 | Warranties | 30 | ||||||||
3.20 | Employees | 30 | ||||||||
3.21 | Employee Benefits | 32 | ||||||||
3.22 | Customers | 34 | ||||||||
3.23 | Suppliers | 34 | ||||||||
3.24 | Affiliate Transactions | 34 | ||||||||
3.25 | Brokerage | 34 | ||||||||
3.26 | Availability of Documents | 34 | ||||||||
3.27 | Solvency | 34 | ||||||||
3.28 | Disclosure | 35 |
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IV. Representations and Warranties of Buyer | 35 | |||||||||
4.1 | Incorporation; Power and Authority | 35 | ||||||||
4.2 4.3 |
Valid and Binding Agreement No Breach; Consents | 35 36 |
||||||||
4.4 | Brokerage | 36 | ||||||||
V. Agreements of Sellers and the Shareholders | 36 | |||||||||
5.1 | Conduct of the Business | 36 | ||||||||
5.2 | Notice of Developments | 37 | ||||||||
5.3 | Pre-Closing Access | 37 | ||||||||
5.4 | Pre-Closing Mergers | 37 | ||||||||
5.5 | Conditions | 37 | ||||||||
5.6 | Consents and Authorizations; Regulatory Filings | 38 | ||||||||
5.7 | No Sale | 38 | ||||||||
5.8 | Post-Closing Access | 38 | ||||||||
5.9 | Litigation Support | 38 | ||||||||
5.10 | Nondisparagement | 38 | ||||||||
5.11 | Non-Hire | 38 | ||||||||
5.12 | Confidentiality | 38 | ||||||||
5.13 | Assignment of Confidentiality Agreements | 39 | ||||||||
5.14 | Covenant Not to Compete | 40 | ||||||||
5.15 | Change of Business Name | 40 | ||||||||
5.16 | Release of Claims | 41 | ||||||||
5.17 | Termination of 401(k) Plan | 41 | ||||||||
5.18 | Termination; Payment of Wages; Plans | 41 | ||||||||
5.19 | COBRA | 42 | ||||||||
5.20 | Tax Elections | 42 | ||||||||
5.21 | Payment of Taxes by Sellers | 42 | ||||||||
5.22 | Payment of Other Retained Liabilities | 42 | ||||||||
5.23 | Restrictions on Seller Dissolution and Distributions | 43 | ||||||||
VI. Agreements of Buyer | 43 | |||||||||
6.1 | Conditions | 43 | ||||||||
6.2 | Books and Records; Access | 43 | ||||||||
6.3 | Employee Matters | 43 | ||||||||
VII. Conditions to Closing | 45 | |||||||||
7.1 | Conditions to Buyer’s Obligations | 45 | ||||||||
7.2 | Conditions to Sellers’ Obligations | 47 | ||||||||
VIII. Termination | 47 | |||||||||
8.1 | Termination | 47 | ||||||||
8.2 | Effect of Termination | 48 | ||||||||
IX. Indemnification | 48 | |||||||||
9.1 | Indemnification by Sellers and Shareholders | 48 | ||||||||
9.2 | Indemnification by Buyer and Parent | 50 | ||||||||
9.3 | Third-Party Actions | 51 | ||||||||
9.4 | Sole and Exclusive Remedy | 52 |
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9.5 | Tax Adjustment | 53 | ||||||||
9.6 | Indemnification in Case of Strict Liability or Indemnitee Negligence | 53 | ||||||||
X. General | 53 | |||||||||
10.1 | Press Releases and Announcements | 53 | ||||||||
10.2 | Expenses | 53 | ||||||||
10.3 | Amendment and Waiver | 54 | ||||||||
10.4 | Notices | 54 | ||||||||
10.5 | Assignment | 55 | ||||||||
10.6 | No Third-Party Beneficiaries | 56 | ||||||||
10.7 | Severability | 56 | ||||||||
10.8 | Complete Agreement | 56 | ||||||||
10.9 | Schedules | 56 | ||||||||
10.10 | Signatures; Counterparts | 56 | ||||||||
10.11 | Governing Law | 56 | ||||||||
10.12 | Specific Performance | 57 | ||||||||
10.13 | Jurisdiction | 57 | ||||||||
10.14 | Waiver of Jury Trial | 57 | ||||||||
10.15 | Construction | 57 | ||||||||
10.16 | Time of Essence | 58 | ||||||||
Signatures | 59 | |||||||||
Exhibit A—Shareholders | ||||||||||
Exhibit B—Defined Terms | ||||||||||
Exhibit C—Transition Services Agreement | ||||||||||
Exhibit D—Xxxx of Sale | ||||||||||
Exhibit E—Assignment and Assumption Agreement | ||||||||||
Exhibit F—Form of Opinion of Counsel for Seller |
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This ASSET PURCHASE AGREEMENT (this “Agreement”) is made as of May 3, 2005, among Chex
Systems, Inc., a Minnesota corporation (“Buyer”), eFunds Corporation, a Delaware corporation and
the sole shareholder of Buyer (“Parent”), National Check Protection Service Business Trust, a
Massachusetts business trust (“NCPS Business Trust”), National Data Verification Service Business
Trust, a Massachusetts business trust (“NDVS Business Trust”), Xxxxxx X. Xxxxxxx, Xx. (“Sellers’
Representative”) and the shareholders of NCPS Business Trust and NDVS Business Trust listed on
Exhibit A (the “Shareholders”). NCPS Business Trust and NDVS Business Trust are referred to in
this Agreement together as “Sellers” and each as “Seller.”
Recitals
WHEREAS, NCPS Business Trust owns all of the outstanding capital stock of National Check
Protection Service, Inc., a Massachusetts corporation (“NCPS”).
WHEREAS, NDVS Business Trust owns all of the outstanding capital stock of National Data
Verification Service, Inc., a Massachusetts corporation (“NDVS”).
WHEREAS, NCPS and NDVS are currently engaged in the business of providing new account
verification and employment screening services for financial institutions (the “Business”).
WHEREAS, the Shareholders together own all of the outstanding shares of beneficial interest in
NCPS Business Trust and NDVS Business Trust.
WHEREAS, the trustees of Sellers have authorized the sale of substantially all of the assets
of NCPS and NDVS to Buyer pursuant to the terms of this Agreement.
WHEREAS, Sellers desire to sell, and Buyer desires to buy, substantially all of the assets of
NCPS and NDVS on the terms and subject to the conditions set forth in this Agreement.
WHEREAS, prior to closing the transactions contemplated by this Agreement, Sellers and the
Shareholders will procure the merger of NCPS with and into NCPS Business Trust and the merger of
NDVS with and into NDVS Business Trust.
NOW, THEREFORE, in consideration of the mutual representations, warranties and agreements
contained in this Agreement, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
I. Definitions
All capitalized terms used in this Agreement have the meanings set forth in Exhibit B to this
Agreement.
II. Purchase of Acquired Assets and Closing
2.1 Purchase and Sale of Acquired Assets. At the Closing and on the terms and subject
to the conditions set forth in this Agreement, Sellers agree to sell to Buyer, and Buyer agrees to
buy from Sellers, free and clear of all Encumbrances except Permitted Encumbrances, all right,
title and interest in and to all of the assets that relate to, have been developed for use in
connection with, arise from the conduct of, are used or held for use in connection with or are
necessary for the conduct of the Business as currently conducted and as currently proposed by
Sellers to be conducted without giving effect to the transactions contemplated by this Agreement
(the “Acquired Assets”), including the following with respect to each Seller (but excluding the
Excluded Assets):
(a) leasehold interests in all of the real property leased or otherwise used or
occupied by Seller, including the Real Property listed on Schedule 3.10, including all
improvements and fixtures thereon and all rights and easements appurtenant thereto;
(b) all equipment, tools, furniture, office equipment, computer hardware, supplies,
materials, vehicles and other items of tangible personal property of every kind owned or
leased by Seller (wherever located and whether or not carried on Seller’s books), together
with any express or implied warranty by the manufacturers, sellers or lessors of any item or
component part thereof, rights of return, rebate rights, over-payment recovery rights and
any other rights of Seller relating to these items (the “Tangible Personal Property”);
(c) all (i) accounts receivable and other rights to payment from customers of Seller
for goods sold or services rendered and the full benefit of all security for such accounts
or rights to payment, (ii) other accounts or notes receivable of Seller and the full benefit
of all security for such accounts or notes and (iii) Seller’s rights related to any of the
foregoing;
(d) all rights with respect to deposits, prepaid expenses, claims for refunds and
rights to offset, including rights relating to the prior payment of Taxes and interest
payable with respect to any of the foregoing;
(e) all (i) Contracts to which Seller is a party or a third party beneficiary,
including Contracts that are included in the other items listed in this Section 2.1(e),
Contracts under which Seller has rights with respect to any of the other Acquired Assets and
Contracts listed on Schedule 3.14, but not including the Excluded Contracts, (ii)
outstanding offers or solicitations made by or to Seller to enter into any such Contract and
(iii) rights of Seller related to any of the foregoing (the “Acquired Contracts”);
(f) all Governmental Authorizations that are held by Seller and may be assigned to
Buyer, including all pending applications or renewals;
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(g) all written materials, data and records of Seller (in whatever form or medium),
including to the extent they exist: (i) client, customer, prospect, supplier, dealer and
distributor lists and records, (ii) information regarding referral sources, (iii) product
catalogs and brochures, (iv) sales and marketing, advertising and promotional materials, (v)
research and development materials, reports and records, (vi) production reports and
records, (vii) equipment logs, (viii) service, warranty and claim records, (ix) maintenance
records and other documents relating to the Real Property and the Tangible Personal
Property, (x) purchase orders and invoices, (xi) sales orders and sales order log books,
(xii) material safety data sheets, (xiii) price lists, (xiv) quotations and bids, (xv)
operating guides and manuals, (xvi) correspondence, (xvii) books, records, journals and
ledgers, (xviii) product ideas and developments and (xix) plans and specifications, plats,
surveys, drawings, blueprints and photographs;
(h) all Owned Intellectual Property Rights, including the items listed on Schedule
3.13, and all rights that Seller may have to institute or maintain any action to protect the
same and recover damages for any infringement thereof;
(i) all Software licensed to Seller, including all such items listed on Schedule 3.13;
(j) all Licensed-In Intellectual Property Rights (other than Software), including all
such items listed on Schedule 3.13, and all rights that Seller may have to institute or
maintain any action to protect the same and recover damages for any infringement thereof
(such Intellectual Property Rights, together with the Intellectual Property Rights described
in Sections 2.1(h) and 2.1(i), the “Acquired Intellectual Property”);
(k) all of Seller’s other intangible rights and property, including (i) going concern
value, (ii) goodwill, (iii) directory, telecopy and e-mail names, numbers, addresses and
listings and (iv) domain names, and all rights that Seller may have to institute or maintain
any action to protect the same and recover damages for any misappropriation or misuse
thereof;
(l) all insurance benefits, including rights and proceeds, arising from or relating to
the Acquired Assets or the Assumed Liabilities prior to the Closing Date;
(m) cash equal to (x) the proceeds from the sale of Tangible Personal Property, other
than in the Ordinary Course of Business, after the date of this Agreement and prior to the
Closing Date and (y) the amount of any payments received by Seller prior to the Closing Date
related to any performance under any Contract after the Closing Date;
(n) all of Seller’s claims against third parties related to the Acquired Assets,
whether xxxxxx or inchoate, known or unknown, contingent or noncontingent; and
(o) all other rights, properties and assets of every kind, character and description,
tangible or intangible, of Seller, whether or not similar to the items specifically listed
above.
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The foregoing description of the Acquired Assets assumes that the Mergers will have been completed
prior to the Closing in accordance with Section 5.4.
2.2 Excluded Assets. Notwithstanding anything to the contrary contained in Section
2.1 or elsewhere in this Agreement, the following assets of each Seller (the “Excluded Assets”) are
not part of the sale and purchase contemplated by this Agreement, are excluded from the Acquired
Assets and will be retained by such Seller and remain the property of such Seller following the
Closing:
(a) all rights of Seller under this Agreement and any other agreements between Seller
and Buyer entered into on or after the date of this Agreement;
(b) Seller’s records relating to the organization, maintenance, existence and good
standing of Seller as a business trust and NCPS and NDVS as corporations, namely Seller’s
and NCPS’ and NDVS’ (i) charter documents, (ii) qualifications to conduct business as a
foreign corporation, (iii) taxpayer and other identification numbers, (iv) minute books, (v)
stock records, (vi) tax records, (vii) books of account and (vii) corporate seals;
(c) any records that Seller is required by Law to retain in its possession (provided,
that copies of any such records that are not “Excluded Assets” by another provision of this
Section 2.2 will, to the extent permitted by Law, be provided to Buyer at the Closing);
(d) those Governmental Authorizations and pending applications or renewals of
governmental obligations that are nonassignable in accordance with their terms, all of which
are listed on Schedule 2.2(d);
(e) subject to Section 2.1(l), all insurance policies and rights thereunder;
(f) those Contracts listed in Schedule 2.2(f) (the “Excluded Contracts”) and those
Contracts entered into after the date of this Agreement not in accordance with the
provisions of this Agreement other than those that Buyer expressly agrees to assume;
(g) any shares of capital stock of Seller, NCPS and NDVS;
(h) all securities owned by or on behalf of Seller;
(i) except as provided in Section 2.1(m), Seller’s cash and cash equivalents (including
marketable securities and short-term investments);
(j) all accounts receivable from any Insider;
(k) those rights relating to deposits, prepaid expenses, claims for refunds and rights
to offset listed on Schedule 2.2(k), including rights relating to the payment of interest
payable with respect to any of the foregoing;
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(l) all rights in connection with, and with respect to the assets associated with, any
Plan;
(m) the assets listed on Schedule 2.2(m); and
(n) any other assets specified by Buyer upon notice to Sellers not less than one day
prior to Closing.
2.3 Assumption of Assumed Liabilities. At the Closing and on the terms and subject to
the conditions set forth in this Agreement, Buyer agrees to assume only the following Liabilities
of Sellers (the “Assumed Liabilities”):
(a) all executory Liabilities arising or to be performed after the Closing under all
(i) Acquired Contracts listed on Schedule 3.13 or 3.14 as in existence on the date of this
Agreement as the same have been provided to Buyer or counsel to Buyer, but not including the
Excluded Contracts, (ii) Acquired Contracts not required to be listed pursuant to Section
3.14, as in existence on the date of this Agreement and entered into in the Ordinary Course
of Business prior to the date of this Agreement, (iii) Acquired Contracts described in (i)
or (ii) to the extent the same are amended after the date of this Agreement in accordance
with this Agreement, (iv) Acquired Contracts entered into after the date of this Agreement
in accordance with the provisions of this Agreement and (v) those Acquired Contracts entered
into after the date of this Agreement not in accordance with the provisions of this
Agreement that Buyer expressly agrees to assume, in each case other than any Liability
arising out of or relating to a breach that occurred prior to the Closing; and
(b) all of Sellers’ accounts payable for goods and services incurred in the Ordinary
Course of Business that are either reflected on the Latest Balance Sheets or relating to the
Business and incurred by a Seller, NCPS or NDVS in the Ordinary Course of Business between
the date of the Latest Balance Sheets and the Closing (other than accounts payable to
Insiders or Affiliates of either Seller), and that remain unpaid at the Closing without
having given rise to a breach.
2.4 Retained Liabilities. The parties acknowledge that Buyer is not agreeing to
assume any Liability of a Seller, NCPS or NDVS, whether related to the Acquired Assets, the
Business or otherwise, other than the Assumed Liabilities, and that nothing in this Agreement,
including this Section 2.4, will be construed as an agreement otherwise. Notwithstanding anything
to the contrary contained in Section 2.3 or elsewhere in this Agreement, the following Liabilities
of each Seller (the “Retained Liabilities”) are not part of the sale and purchase contemplated by
this Agreement, are excluded from the Assumed Liabilities and will be retained by such Seller and
remain the sole responsibility of such Seller following the Closing:
(a) any Liability arising out of or relating to the Excluded Assets;
(b) any Liability not reflected on the Final Closing Date Balance Sheet arising out of
or relating to the operations of the Business prior to the Closing and to products or
services of Seller, NCPS or NDVS to the extent sold or rendered prior to the Closing;
5
(c) any Liability under any Contract assumed by Buyer pursuant to Section 2.3 that
arises prior to the Closing or arises after the Closing but that arises out of or relates to
a Breach that occurred prior to the Closing;
(d) any Liability for Taxes, including (i) any Taxes arising as a result of the
Business or ownership of the Acquired Assets prior to the Closing and (ii) any Taxes that
will arise, as a Liability of Seller, NCPS or NDVS, as a result of the sale of the Acquired
Assets pursuant to this Agreement;
(e) any Liability listed on Schedule 2.4(e);
(f) any Liability arising under any Environmental Law in connection with the operation
of the Business prior to the Closing or leasing, ownership or operation of real property by
Seller, NCPS or NDVS;
(g) any Liability under any Plan;
(h) any Liability arising out of or relating to the disposition of an application for
employment, the employment of any employee or the termination of the employment of any
employee by Seller, NCPS or NDVS, whether or not the affected employee is hired by Buyer;
(i) any Liability of Seller, NCPS or NDVS to any Insider or Affiliate;
(j) any Liability to distribute to any of Seller’s shareholders or otherwise apply all
or any part of the consideration received by Seller under this Agreement;
(k) any Liability to indemnify, reimburse or advance amounts to any officer, director,
employee or agent of Seller, NCPS or NDVS;
(l) any Liability arising out of any Litigation (i) pending as of the Closing or (ii)
commenced after the Closing and arising out of or relating to any occurrence, happening or
situation existing prior to the Closing, including the Litigation listed on Section 3.15 of
the Disclosure Schedule;
(m) any Liability arising out of or resulting from the compliance or non-compliance
with any Law, Governmental Authorization or Governmental Order by Seller, NCPS or NDVS;
(n) any Liability of Seller under this Agreement, the Transition Services Agreement or
any other Contract between Seller, NCPS or NDVS and Buyer;
(o) a payment obligation for goods or services provided to Seller, NCPS or NDVS before
the Closing Date (except to the extent assumed pursuant to Section 2.3(b));
(p) except as expressly provided in Section 2.3, any obligation under any Contract
required to be disclosed in the Disclosure Schedule that is not so disclosed;
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(q) any Liability based upon Seller’s acts or omissions occurring after the Closing;
(r) any obligations to hire any Person as an employee, but not including Buyer’s
obligations arising from any employment offer made by Buyer to any employee of a Seller,
NCPS or NDVS; and
(s) any other contingent Liability not expressly assumed by Buyer.
2.5 Purchase Price. The aggregate consideration for the Acquired Assets (the
“Purchase Price”) shall not exceed $20,000,000 plus the amount, if any, by which the Final Closing
Date Working Capital (as defined in Section 2.9(a)) exceeds zero (the “Target Working Capital”) or
reduced by the amount, if any, by which the Final Closing Date Working Capital is less than the
Target Working Capital.
2.6 Estimated Purchase Price. At least five business days prior to the Closing Date,
Sellers shall deliver to Buyer an estimated consolidated balance sheet (the “Estimated Closing
Balance Sheet”) for the Business as of the close of business on the Closing Date (determined on a
pro forma basis as though the transactions contemplated by this Agreement had not occurred and in
accordance with GAAP applied on a basis consistent with the preparation of the Latest Financial
Statements. The Estimated Closing Balance Sheet will include a determination of the Estimated
Closing Date Working Capital as of the close of business on the Closing Date. The “Estimated
Closing Date Working Capital” means the amount equal to (A) the current assets minus (B) the
current liabilities as reflected on the Estimated Closing Balance Sheet. If Buyer objects to the
Estimated Closing Balance Sheet, then the Estimated Closing Date Working Capital at the Closing
shall be an amount that Buyer reasonably deems appropriate after consultation with Seller and sets
forth in a written notice delivered to Seller prior to the Closing Date. “Estimated Purchase
Price” means an amount equal to $20,000,000 plus the amount, if any, by which the Estimated Closing
Date Working Capital exceeds the Target Working Capital or minus the amount, if any, by which the
Target Working Capital exceeds the Estimated Closing Date Working Capital. For further clarity, it
is contemplated by the parties that the Estimated Closing Date Working Capital will be calculated
in a manner consistent with the example set forth on Schedule 2.6 hereto (which uses the balance
sheets of NCPS and NDVS as of December 31, 2004).
2.7 Retained Amounts.
(a) Buyer will withhold from the Purchase Price and retain $2,000,000 (the “Retained Amount”).
Buyer will keep the Retained Amount in a segregated bank account and will maintain complete and
accurate records of the account and provide statements of the account upon the
request of Sellers’ Representative. Following the Closing, in the event that Buyer is
entitled to a payment under Section 2.9 or Article IX or has a claim for indemnification against
Seller pursuant to Article IX, Buyer may deduct the amount of such claim or payment from the
Retained Amount. On the first Business Day following the second anniversary of the Closing Date,
but in no event before the final determination of any adjustment to the Purchase Price or any
set-offs or claims by Buyer, Buyer shall deliver any remaining portion of the Retained Amount,
together with simple interest at the rate of 2% per annum, to Sellers’ Representative.
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(b) Contract Retained Amount.
(i) Buyer will withhold from the Purchase Price and retain an additional $2,500,000
(the “Contract Retained Amount”). Buyer will keep the Contract Retained Amount in a
segregated bank account and will maintain complete and accurate records of the account and
provide statements of the account upon the request of Sellers’ Representative.
(ii) Recognizing that both Buyer and Sellers provide new account verification services
to Bank of America, N.A. (“B of A”) and that the intent of the Contract Retained Amount is
to compensate Sellers to the extent that B of A account verification transaction volumes for
the Buyer after the Closing are the same as Sellers experienced in an equivalent period
before Closing, the amount of the Contract Retained Amount to be paid by Buyer to Sellers
(the “Contract Retained Amount Payment”) shall be determined by multiplying (A) the Contract
Retained Amount by the lesser of (B) one and (C) a fraction (1) the numerator of which is
equal to the sum of (i) the number of account verification transactions performed by Sellers
for B of A during the period from May 1, 2005 to the Closing Date plus (ii) the
number of account verification transactions performed by Buyer for B of A at the B of A
locations (the “B of A Locations”) serviced by Seller prior to the Closing Date during the
period beginning on the Closing Date and ending on April 30, 2006 and (2) the denominator of
which is equal to 1,296,204 (such amount being equal to the number of account verification
transactions performed by both Sellers and Buyer in respect of the B of A Locations during
the period beginning on May 1, 2004 and ending on April 30, 2005). Notwithstanding the
foregoing, if there is a decline in B of A transaction volume greater than 30 percent over
the reference periods described above, the Contract Retained Amount will be retained by
Buyer and will not be paid to Sellers. The amount to be distributed under this Section
2.7(b) shall in no event exceed the Contract Retained Amount.
(iii) Within 30 days of each of July 31, 2005, October 31, 2005 and January 31, 2006,
Buyer shall deliver to Sellers a list setting forth the number of those transactions that it
believes qualify as account verification transactions in respect of the B of A Locations
that will be included in calculating the Contract Retained Amount Payment.
(iv) As a material inducement to Buyer to enter into the Agreement, Sellers and Buyer
agree that from and after the Closing Date, the Business shall be operated and managed in
compliance with the ordinary and customary policies and procedures of Buyer. Sellers
further understand and agree that the transactions contemplated by this
Agreement constitute a transfer of control to Buyer, and accordingly, Buyer and its
representatives will exercise its and their business judgment regarding the operations of
the Business or its successors in a manner consistent with its and their duties to the
shareholders of Buyer. From and after the Closing Date, Buyer, consistent with its duties
and obligations set forth in the preceding sentence, shall use commercially reasonable
efforts to operate and manage the Business in such a manner as to provide a reasonable
opportunity for the Business to maintain the level of transactions with Bank of America,
N.A.
8
(v) On or before June 30, 2006, Buyer shall deliver a statement (the “Statement”) to
Sellers setting forth the amount of the Contract Retained Amount Payment payable to Sellers.
Buyer will make the work papers and back-up materials used in preparing the Statement
available to Sellers’ Representative and Sellers’ Representative’s accountants and other
representatives at reasonable times and upon reasonable notice during (i) the review by
Sellers’ Representative of the Statement and (ii) the resolution by Buyer and Sellers’
Representative of any objections to the Statement.
(vi) Sellers’ Representative may object to the Statement on the basis that the number
of transactions with Bank of America, N.A. was not calculated in accordance with the terms
of this Agreement or that the calculation contains mathematical errors. If Sellers’
Representative has any objections to the Statement, Sellers’ Representative will deliver a
detailed statement describing such objections to Buyer within 30 days after receiving the
Statement. Buyer and Sellers’ Representative will attempt in good faith to resolve any such
objections. If Buyer and Sellers’ Representative do not reach a resolution of all
objections within 30 days after Buyer has received the statement of objections, Buyer and
Sellers’ Representative will retain BDO Xxxxxxx, LLP to resolve any remaining objections.
If BDO Xxxxxxx, LLP is unavailable, Buyer and Sellers’ Representative will select a
nationally recognized accounting firm by lot (after excluding the regular outside accounting
firms of Parent and Sellers). The accounting firm (whether BDO Xxxxxxx, LLP or a substitute
accounting firm selected by lot) will resolve any such objections and determine on a pro
forma basis the number of account verification transactions to be included in the
calculation of the Contract Retained Amount Payment and the amount of the Contract Retained
Amount Payment. The parties will provide the accounting firm, within 30 days of its
selection, with a definitive statement of the position of each party with respect to each
unresolved objection and will advise the accounting firm that the parties accept the
accounting firm as the appropriate Person to interpret this Agreement for all purposes
relevant to the resolution of the unresolved objections. Buyer will provide the accounting
firm access to the books and records of NCPS and NDVS. The accounting firm will have 30
days to carry out a review of the unresolved objections and prepare a written statement of
its determination regarding each unresolved objection. The determination of any accounting
firm so selected will be set forth in writing and will be conclusive and binding upon the
parties.
(vii) If Buyer and Sellers’ Representative submit any unresolved objections to an
accounting firm for resolution as provided in Section 2.7(b)(vi), the party whose
determination of the Contract Retained Amount Payment (calculated based on such
party’s position regarding the Statement) is furthest from the Contract Retained Amount
Payment determined by the accounting firm (based on its resolution of the parties’
objections submitted for determination) will bear its own costs and expenses, the fees and
expenses of the accounting firm and the reasonable out-of-pocket costs and expenses
(including legal fees and costs) of the other party.
(viii) Within 10 business days after the date on which the Contract Retained Amount
Payment is finally determined pursuant to this Section 2.7(b), Buyer shall pay to Sellers
the Contract Retained Amount Payment, together with simple interest at the rate
9
of 2% per
annum, by wire transfer of immediately available funds to the account designated by Sellers’
Representative.
(ix) Judgment upon the award rendered by the accounting firm may be entered in any
court of competent jurisdiction.
2.8 The Closing.
(a) The closing of the transactions contemplated by this Agreement (the “Closing”) will take
place at the offices of Xxxxxx & Xxxxxxx LLP, 00 Xxxxx Xxxxx Xxxxxx, Xxxxxxxxxxx, Xxxxxxxxx at 9:00
a.m. on Friday, May 6, 2005 or as soon thereafter as reasonably possible following satisfaction of
the conditions set forth in Article VII (the “Closing Date”) or at such other place and on such
other date as may be mutually agreed by Buyer and Sellers’ Representative, in which case Closing
Date means the date so agreed. The failure of the Closing will not ipso facto result in
termination of this Agreement and will not relieve any party of any obligation under this
Agreement.
(b) Subject to the conditions set forth in this Agreement, on the Closing Date:
(i) Sellers will deliver to Buyer:
(A) a certificate of each Seller dated the Closing Date stating that the
conditions set forth in subsections (a) and (b) of Section 7.1 have been satisfied;
(B) the text of the resolutions adopted by the trustees of each Seller
authorizing the execution, delivery and performance of this Agreement, certified by
an appropriate officer of such Seller;
(C) a copy of the certificates of merger from the Secretary of State of the
State of Massachusetts and such other documentation as shall reasonably be requested
by Buyer to confirm that the Mergers have been consummated in accordance with
Section 5.4;
(D) a transition services agreement in the form of Exhibit C (the “Transition
Services Agreement”), duly executed by Sellers;
(E) all Required Consents, duly executed by all appropriate parties;
(F) a xxxx of sale for the Acquired Assets that are Tangible Personal Property
in the form of Exhibit D, duly executed by each Seller;
(G) an assignment of the Acquired Assets that are intangible rights and
property (including Contracts) in the form of Exhibit E, duly executed by each
Seller, which assignment shall also contain Buyer’s assumption of the Assumed
Liabilities (the “Assignment and Assumption Agreement”);
(H) appropriate instruments of transfer for the Acquired Assets subject to
certificate of title, duly executed by each Seller;
10
(I) assignments and assumptions or other appropriate documents for the Real
Property and other Acquired Assets under leases accompanied by estoppel certificates
acceptable to Buyer, duly executed by each Seller and any other appropriate parties;
(J) funds sufficient to pay all Taxes necessary for the transfer, filing or
recording of the Acquired Assets or otherwise required by this Agreement;
(K) any other instruments of transfer reasonably requested by Buyer, duly
executed by the appropriate Seller;
(L) executed copies of all agreements, instruments, certificates and other
documents necessary or appropriate, in the reasonable opinion of Buyer’s counsel, to
release any and all Encumbrances against the assets of Seller, NCPS or NDVS, other
than Permitted Encumbrances;
(M) an amendment to the Organizational Documents of each Seller changing its
name in accordance with Section 5.15;
(N) such other certificates, documents and instruments that Buyer reasonably
requests for the purpose of (1) evidencing the accuracy of Sellers’ representations
and warranties, (2) evidencing the performance and compliance by each Seller with
the agreements contained in this Agreement, (3) evidencing the satisfaction of any
condition referred to in Section 7.1 or (4) otherwise facilitating the consummation
of the transactions contemplated by this Agreement; and
(O) a written opinion from Sellers’ counsel, dated as of the Closing Date and
addressed to Buyer in the form set forth in Exhibit F.
All actions to be taken by each Seller in connection with the consummation of the transactions contemplated by this Agreement and all certificates, opinions, instruments and other documents required to effect the transactions contemplated by this Agreement will be in form and substance satisfactory to Buyer and Buyer’s counsel in their reasonable determination. |
(ii) Buyer will deliver to Sellers:
(A) the Estimated Purchase Price less (i) the Retained Amount and (ii) the
Contract Retained Amount by wire transfer of immediately available funds to the
account designated by Sellers’ Representative to Buyer prior to the Closing;
(B) a certificate of an appropriate officer of Buyer dated the Closing Date
stating that the conditions set forth in subsections (a) and (b) of Section 7.2 have
been satisfied;
11
(C) the text of the resolutions adopted by the board of directors of Buyer
authorizing the execution, delivery and performance of this Agreement, certified by
an appropriate officer of Buyer;
(D) the Assignment and Assumption Agreement, duly executed by Buyer;
(E) if not contained in the Assignment and Assumption Agreement, assumptions of
leases or other appropriate documents for Real Property, computer equipment and
other Acquired Assets under leases, duly executed by Buyer;
(F) the Transition Services Agreement, duly executed by Buyer; and
(G) such other certificates, documents and instruments that Seller reasonably
requests for the purpose of (1) evidencing the accuracy of Buyer’s representations
and warranties, (2) evidencing the performance and compliance by Buyer with the
agreements contained in this Agreement, (3) evidencing the satisfaction of any
condition referred to in Section 7.2 or (4) otherwise facilitating the consummation
of the transactions contemplated by this Agreement.
(c) All items delivered by the parties at the Closing will be deemed to have been delivered
simultaneously, and no items will be deemed delivered or waived until all have been delivered.
(d) Notwithstanding any investigation made by or on behalf of any of the parties to this
Agreement or the results of any such investigation and notwithstanding the fact of, or the
participation of such party in, the Closing, the representations, warranties and agreements in this
Agreement will survive the Closing.
(e) The Confidentiality Agreement will terminate effective as of the Closing Date.
(f) Any sales, use, transfer, vehicle transfer, stamp, conveyance, value added or other
similar Tax that may be imposed by any Governmental Entity, and all recording or filing fees,
notarial fees and other similar costs of Closing with respect to the purchase and sale of the
Acquired Assets, or otherwise on account of this Agreement or the transactions contemplated by this
Agreement, will be paid by Seller and will not be part of the Assumed Liabilities or shown on the
Closing Date Balance Sheet.
2.9 Post-Closing Adjustment to Purchase Price.
(a) Buyer will promptly prepare and deliver within 60 days after the Closing Date, to Sellers’
Representative a balance sheet (the “Final Closing Date Balance Sheet”) for the Business as of the
close of business on the Closing Date (determined on a pro forma basis as though the transactions
contemplated by this Agreement had not occurred and in accordance with GAAP applied on a basis
consistent with the preparation of the Latest Financial Statements). The Final Closing Date
Balance Sheet will include a determination of the Closing Date Working Capital of the Business as
of the close of business on the Closing Date. “Closing Date Working Capital” means the excess of
the current assets over current liabilities shown on the Final Closing Date Balance Sheet. Buyer
will make the work papers and back-up materials
12
used in preparing the Final Closing Date Balance
Sheet available to Sellers’ Representative and Sellers’ Representative’s accountants and other
representatives at reasonable times and upon reasonable notice during (i) the review by Sellers’
Representative of the Final Closing Date Balance Sheet and (ii) the resolution by Buyer and
Sellers’ Representative of any objections to the Final Closing Date Balance Sheet.
(b) Sellers’ Representative may object to the Final Closing Date Balance Sheet on the basis
that it was not prepared in accordance with GAAP applied on a basis consistent with the preparation
of the Latest Financial Statements or that the calculation of Closing Date Working Capital contains
mathematical errors. If Sellers’ Representative has any objections to the Final Closing Date
Balance Sheet or the Closing Date Working Capital, Sellers’ Representative will deliver a detailed
statement describing such objections to Buyer within 30 days after receiving the Final Closing Date
Balance Sheet. Buyer and Sellers’ Representative will attempt in good faith to resolve any such
objections. If Buyer and Sellers’ Representative do not reach a resolution of all objections
within 30 days after Buyer has received the statement of objections, Buyer and Sellers’
Representative will retain BDO Xxxxxxx, LLP to resolve any remaining objections. If BDO Xxxxxxx,
LLP is unavailable, Buyer and Sellers’ Representative will select a nationally recognized
accounting firm by lot (after excluding the regular outside accounting firms of Parent and
Sellers). The accounting firm (whether BDO Xxxxxxx, LLP or a substitute accounting firm selected
by lot) will resolve any such objections and determine on a pro forma basis as though the
transactions contemplated by this Agreement had not occurred and, in accordance with GAAP applied
on a basis consistent with the preparation of the Latest Financial Statements, the amounts to be
included in the Final Closing Date Balance Sheet and the Closing Date Working Capital. The parties
will provide the accounting firm, within 30 days of its selection, with a definitive statement of
the position of each party with respect to each unresolved objection and will advise the accounting
firm that the parties accept the accounting firm as the appropriate Person to interpret this
Agreement for all purposes relevant to the resolution of the unresolved objections. Buyer will
provide the accounting firm access to the books and records of NCPS and NDVS. The accounting firm
will have 30 days to carry out a review of the unresolved objections and prepare a written
statement of its determination regarding each unresolved objection. The determination of any
accounting firm so selected will be set forth in writing and will be conclusive and binding upon
the parties. Buyer will revise the Final Closing Date Balance Sheet and the determination of the
Closing Date Working Capital as
appropriate to reflect the resolution of any objections to the Final Closing Date Balance
Sheet pursuant to this Section 2.9(b).
(c) If Buyer and Sellers’ Representative submit any unresolved objections to an accounting
firm for resolution as provided in Section 2.9(b), the party whose determination of Closing Date
Working Capital (calculated based on such party’s position regarding the Closing Date Balance
Sheet) is furthest from the Closing Date Working Capital determined by the accounting firm (based
on its resolution of the parties’ objections submitted for determination) will bear its own costs
and expenses, the fees and expenses of the accounting firm and the reasonable out-of-pocket costs
and expenses (including legal fees and costs) of the other party.
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(d) Within 10 business days after the date on which the Closing Date Working Capital is
finally determined pursuant to this Section 2.9:
(i) If the Closing Date Working Capital exceeds the Estimated Closing Date Working
Capital (the amount of such excess, the “Excess Working Capital”), (A) Buyer will pay to
Sellers an aggregate amount equal to the Excess Working Capital.
(ii) If the Closing Date Working Capital is less than the Estimated Closing Date
Working Capital, an amount equal to such deficiency (the amount of such deficiency, the
“Working Capital Shortfall”) will be deducted from the Total Retained Amount.
(e) All payments to be made to Buyer or Sellers pursuant to Section 2.9(b) will be made by
wire transfer of immediately available funds to the accounts designated by Buyer or Sellers, as
applicable, no later than 10 business days after the date on which the Closing Date Working Capital
is finally determined, and all such payments (and any deductions from the Total Retained Amount)
will include simple interest thereon at the annual rate of 2% from the Closing Date to the date of
payment or deduction.
(f) Any payment made pursuant to this Section 2.9 will not preclude any remedy provided in
this Agreement or otherwise for any breach of representation, warranty or agreement, and the remedy
provided in this Agreement for any breach of representation, warranty or agreement or otherwise
will not preclude the adjustment provided in this Section 2.9.
(g) Judgment upon the award rendered by the accounting firm may be entered in any court of
competent jurisdiction.
2.10 Unobtained Consents. In the event that any Required Consent has not been
obtained as of the Closing and Buyer, in its sole discretion, chooses to waive the closing
condition as to the obtaining of such Required Consents, then, notwithstanding anything to the
contrary contained in Section 2.1, Section 2.3 or elsewhere in this Agreement:
(a) with respect to any Contract, Governmental Authorization or other item included in
the Acquired Assets with respect to which such Required Consent was not obtained (each a
“Restricted Asset”), Buyer may elect either (i) to exclude such Restricted
Asset from the Acquired Assets, in which event, unless and until the applicable
Required Consent is obtained after the Closing, neither this Agreement nor any instrument
delivered at the Closing will constitute an assignment or transfer of such Restricted Asset
or any interest arising thereunder or resulting therefrom or (ii) to accept the assignment
or transfer of such Restricted Asset notwithstanding the failure to obtain the applicable
Required Consent;
(b) regardless of which election Buyer makes pursuant to Section 2.10(a), Seller will
continue to use its best efforts to obtain all such Required Consents after the Closing;
(c) with respect to any Restricted Asset that Buyer has elected to exclude from the
Acquired Assets pursuant to Section 2.10(a)(i), if the applicable Required Consent is
obtained following the Closing Date, such Restricted Asset shall immediately be deemed
14
to be
included in the Acquired Assets, and an appropriate instrument of transfer substantially in
the form that would have been used to convey such Restricted Asset pursuant to Section
2.8(b) had such Restricted Asset been acquired by Buyer at the Closing will be promptly
executed and delivered by and to the appropriate Persons; and
(d) with respect to any Restricted Asset that Buyer has elected to have transferred and
assigned pursuant to Section 2.10(a)(ii), if the applicable Required Consent is subsequently
obtained, any instrument delivered at the Closing will constitute an assignment or transfer
of such Restricted Asset and all interests arising thereunder or resulting therefrom in
their entirety.
2.11 Sellers’ Representative.
(a) Each Seller and Family Shareholder appoints Xxxxxx X. Xxxxxxx, Xx. (or any Person
appointed as a successor Sellers’ Representative pursuant to Section 2.11(b)) as its representative
and agent under this Agreement.
(b) Until all obligations under this Agreement have been discharged (including all
indemnification obligations under Article IX), Sellers may, from time to time upon written notice
to Sellers’ Representative and Buyer, remove Sellers’ Representative or appoint a new Sellers’
Representative upon the death, incapacity, resignation or removal of Sellers’ Representative. If,
after the death, incapacity, resignation or removal of Sellers’ Representative, a successor
Sellers’ Representative has not been appointed by Sellers within 15 business days after a request
by Buyer, Buyer will have the right to appoint a Sellers’ Representative to fill any vacancy so
created by written notice of such appointment to Sellers.
(c) Each Seller and Family Shareholder authorizes Sellers’ Representative to take any action
and to make and deliver any certificate, notice, consent or instrument required or permitted to be
made or delivered under this Agreement or under the documents referred to in this Agreement, to
waive any requirements of this Agreement or to enter into one or more amendments or supplements to
this Agreement that Sellers’ Representative determines in Sellers’ Representative’s sole and
absolute discretion to be necessary, appropriate or advisable. The authority of Sellers’
Representative includes the right to hire or retain, at the sole expense of
Sellers, such counsel, investment bankers, accountants, representatives and other professional
advisors as Sellers’ Representative determines in Sellers’ Representative’s sole and absolute
discretion to be necessary, appropriate or advisable in order to perform this Agreement. Any party
will have the right to rely upon any action taken by Sellers’ Representative, and to act in
accordance with such action without independent investigation.
(d) Buyer will have no liability to any Seller or Shareholder or otherwise arising out of the
acts or omissions of Sellers’ Representative or any disputes among Sellers or with Sellers’
Representative. Buyer may rely entirely on its dealings with, and notices to and from, Sellers’
Representative to satisfy any obligations it might have under this Agreement or any other agreement
referred to in this Agreement or otherwise to a Seller.
(e) Each Seller and Family Shareholder covenants and agrees to indemnify, defend, protect and
hold harmless Sellers’ Representative from and against all claims, damages, actions,
15
suits,
proceedings, demands, assessments, adjustments, costs and expenses (including specifically, but
without limitations, reasonable attorneys’ fees and expenses of investigations) incurred by
Sellers’ Representative as a result of or incident to any indemnification claims brought by the
Buyer, or any claim, loss, cost, damage or expenses suffered or incurred by the Sellers’
Representative in the course of his status as such as contemplated herein.
(f) Sellers’ Representative accepts the appointment made by this Section 2.11 and agrees to
abide by the provisions of this Section 2.11.
2.12 Further Assurances. On and after the Closing Date, each Seller will take all
appropriate action and execute any documents, instruments or conveyances of any kind that may be
reasonably requested by Buyer to carry out any of the provisions of this Agreement. Effective upon
the Closing, each Seller appoints Buyer, in its name, place and stead, to take all actions and to
do such things as may be necessary or appropriate to carry out any of the provisions of this
Agreement.
III. Representations and Warranties Regarding Sellers, NCPS and NDVS
Each Seller and Family Shareholder, jointly and severally, represents and warrants to Buyer
that, except as described in the Disclosure Schedule, as of the date of this Agreement and as of
the Closing Date (as though made then and as though the Closing Date were substituted for the date
of this Agreement):
3.1 Incorporation; Power and Authority.
(a) Each Seller (i) is a business trust duly organized, validly existing and in good standing
under the laws of the State of Massachusetts; (ii) has all necessary power and authority to
execute, deliver and perform this Agreement and the Transition Services Agreement; and (iii) is in
full compliance with all provisions of its Organizational Documents.
(b) Each of NCPS and NDVS is a corporation duly organized, validly existing and in good
standing under the laws of the State of Massachusetts, and has all necessary power and authority
necessary to own, lease and operate its assets and to carry on its business as conducted and
proposed to be conducted. Each of NCPS and NDVS is duly qualified to do business as a foreign
corporation in each jurisdiction in which the nature of its business or its ownership of property
requires it to be so qualified except where failure could not reasonably be expected to result in a
Material Adverse Effect. Each of NCPS and NDVS is in full compliance with all provisions of its
Organizational Documents.
3.2 Valid and Binding Agreement. The execution, delivery and performance of this Agreement
and the Transition Services Agreement by each Seller have been duly and validly authorized by all
necessary action of that Seller’s trustees or shareholders. This Agreement has been duly executed
and delivered by each Seller and constitutes the valid and binding obligation of that Seller,
enforceable against it in accordance with its terms, subject to the Remedies Exception. The
Transition Services Agreement, when executed and delivered by or on behalf of each Seller, will
constitute the valid and binding obligation of that Seller, enforceable against that Seller in
accordance with its terms, subject to the Remedies Exception. Each Seller’s trustees have
determined this Agreement and the transactions contemplated by this Agreement to
16
be advisable and fair to and in the best interest of that Seller and the holders of beneficial interests in that
Seller and have approved this Agreement in accordance with its Organizational Documents and
applicable Law, and no such declaration or approval has been changed, withdrawn or revoked.
3.3 No Breach; Consents. The execution, delivery and performance of this Agreement
and the Transition Services Agreement will not (a) contravene any provision of its Organizational
Documents; (b) violate or conflict with any Law, Governmental Order or Governmental Authorization;
(c) conflict with, result in any breach of any of the provisions of, constitute a default (or any
event that would, with the passage of time or the giving of notice or both, constitute a default)
under, result in a violation of, increase the burdens under, result in the termination, amendment,
suspension, modification, abandonment or acceleration of payment (or any right to terminate) or
require a Consent under any Contract that is either binding upon or enforceable against a Seller,
NCPS or NDVS or any Governmental Authorization that is held by any of them; (d) result in the
creation of any Encumbrance upon the Business, a Seller, NCPS or NDVS or any of their respective
assets; (e) require any Governmental Authorization; (f) to Sellers’ Knowledge, give any
Governmental Entity or other Person the right to challenge any of the contemplated transactions
or to exercise any remedy or obtain any relief under any Law, Governmental Order or
Governmental Authorization; or (g) result in any shareholder of a Seller, NCPS or NDVS having the
right to exercise dissenters’ appraisal rights.
3.4 Capitalization.
(a) The entire beneficial interest in NCPS Business Trust is represented by 1,000 shares of
beneficial interest, which are evidenced by transferable share certificates without par value and
known as “Shares of Beneficial Interest,” all of which are issued and outstanding. NCPS Business
Trust has no securities outstanding that would be entitled to vote on the approval of transactions
contemplated by this Agreement. Schedule 3.4(a) lists the names and addresses of each record
holder of the Shares of Beneficial Interest in NCPS Business Trust and the number of shares held by
each holder.
(b) The entire beneficial interest in NDVS Business Trust is represented by 1,000 shares of
beneficial interest, which are evidenced by transferable share certificates without par value and
known as “Shares of Beneficial Interest,” all of which are issued and outstanding. NDVS Business
Trust has no securities outstanding that would be entitled to vote on the approval of transactions
contemplated by this Agreement. Schedule 3.4(b) lists the names and addresses of each record
holder of the Shares of Beneficial Interest in NDVS Business Trust and the number of shares held by
each holder.
(c) The authorized capital stock of NCPS consists solely of 200,000 shares of common stock, of
which 100 shares are issued and outstanding, all of which are held by NCPS Business Trust. NCPS
has no other securities outstanding that would be entitled to vote on the approval of transactions
contemplated by this Agreement.
(d) The authorized capital stock of NDVS consists solely of 200,000 shares of common stock, of
which 100 shares are issued and outstanding, all of which are held by NDVS Business
17
Trust. NDVS
has no other securities outstanding that would be entitled to vote on the approval of transactions
contemplated by this Agreement.
3.5 Subsidiaries. NCPS is the only Subsidiary of NCPS Business Trust. NDVS is the
only Subsidiary of NDVS Business Trust. Neither NCPS nor NDVS has any Subsidiary.
3.6 Financial Statements.
(a) The unaudited balance sheets as of January 31, 2005 (“Latest Balance Sheet Date”) of NCPS
and NDVS (the “Latest Balance Sheets”) and the unaudited statements of income and cash flows of
NCPS and NDVS for the one-month period then ended (such statements and the Latest Balance Sheets,
the “Latest Financial Statements”) and the audited balance sheet, as of December 31, 2004 (the
“Last Fiscal Year End”) and for each of the prior fiscal year ends, of
NCPS and NDVS and the audited statements of income and cash flows, including the notes, of
NCPS and NDVS for each of the three years ended on the Last Fiscal Year End (collectively, the
“Annual Financial Statements”) are based upon the books and records of NCPS and NDVS, have been
prepared in accordance with GAAP consistently applied during the periods indicated and present
fairly the financial position, results of operations and cash flows of NCPS and NDVS at the
respective dates and for the respective periods indicated, except that the Latest Financial
Statements may not contain all notes and are subject to normal year-end adjustments, none of which
will be material.
(b) The Latest Balance Sheets do not include any material asset or liability which is not
intended to form part of the Business, the Acquired Assets or Assumed Liabilities after giving
effect to the transactions contemplated hereby. The statements of income and cash flow included in
the Latest Financial Statements do not reflect the operations of any entity or business not
intended to constitute the Business after giving effect to the transactions contemplated hereby and
reflect all costs that historically have been incurred by the Business.
(c) Without giving effect to the Mergers, Sellers have no assets other than the shares of NCPS
and NDVS, any cash in their respective bank accounts and this Agreement, and Sellers have no
Liabilities other than their respective obligations under this Agreement.
3.7 Absence of Undisclosed Liabilities. Except as reflected or expressly reserved
against in the Latest Balance Sheets, none of Sellers, NCPS or NDVS has any Liability relating to
the Business, and to Sellers’ Knowledge, there is no basis for any present or future Litigation,
charge, complaint, claim, assessment or demand against any of them giving rise to any Liability,
except (a) a Liability that has been incurred after the date of the Latest Balance Sheets in the
Ordinary Course of Business and that is not a Liability for breach of Contract, breach of warranty,
tort, infringement, Litigation or violation of Governmental Order, Governmental Authorization or
Law or (b) obligations under any Contract listed on a schedule to this Agreement or under a
Contract not required to be listed on such a schedule, which, in the case of both (a) and (b),
individually or in the aggregate, are not material to the financial condition of the Business.
3.8 Books and Records. The books of account of the Business are complete and correct
and have been maintained in accordance with sound business practices and the Law. Each
18
transaction is properly and accurately recorded on the books and records of the Business, and each document
upon which entries in the books and records of the Business are based is complete and accurate in
all material respects. Sellers, NCPS and NDVS each maintain a system of internal accounting
controls adequate to insure that it maintains no off-the-book accounts and that its assets are used
only in accordance with its management directives. The minute books and stock or equity records of
Sellers, NCPS and NDVS, all of which have been made available to Buyer, are complete and correct.
The minute books of Sellers, NCPS and NDVS contain accurate records of all meetings held and
actions taken by the holders of stock or equity interests, the boards of directors and committees
of the boards of directors or other governing body of Sellers, NCPS and NDVS during the last three
years, and, to Sellers’ Knowledge, no meeting of any such
holders, boards of directors or other governing body or committees has been held for which
minutes are not contained in such minute books. At the Closing, all books and records of the
Business will be in the possession of Sellers, NCPS and NDVS and, with the exception of books and
records that are Excluded Assets, will be delivered to Buyer.
3.9 Absence of Certain Developments. Since the Last Fiscal Year End, there has not
been any Material Adverse Effect and:
(a) neither of Sellers nor NCPS or NDVS has sold, leased, licensed, transferred or
assigned any of their assets, tangible or intangible (including their Intellectual Property
Rights), other than for a fair consideration in the Ordinary Course of Business;
(b) neither of Sellers nor NCPS or NDVS has amended, modified or entered into any
Material Contract except for Contracts with vendors or customers in the Ordinary Course of
Business;
(c) no party (including Sellers, NCPS and NDVS) has accelerated, suspended, terminated,
modified or canceled any Contract to which a Seller, NCPS or NDVS is a party or by which any
of them is bound that would have been a Material Contract at the time of any such action;
(d) no Encumbrance has been imposed on any assets of the Business except Permitted
Encumbrances;
(e) neither of Sellers nor NCPS or NDVS has made any capital expenditure (or series of
related capital expenditures) either involving more than $25,000 or outside the Ordinary
Course of Business;
(f) neither of Sellers nor NCPS or NDVS has any capital investment in, any loan to, or
any acquisition of the securities or assets of, any other Person or acquired (by merger,
exchange, consolidation, acquisition of stock or assets or otherwise) any Person, except as
contemplated by Section 5.4;
(g) neither of Sellers nor NCPS or NDVS has issued any note, bond or other debt
security or created, incurred, assumed or guaranteed any indebtedness for borrowed money
(including advances on existing credit facilities) or Capital Lease;
19
(h) neither of Sellers nor NCPS or NDVS has delayed, postponed or accelerated the
payment of accounts payable or other Liability or the receipt of any accounts receivable, in
each case outside the Ordinary Course of Business;
(i) neither of Sellers nor NCPS or NDVS has canceled, compromised, waived or released
any right or claim (or series of related rights or claims) outside the Ordinary Course of
Business;
(j) except incidental to the sale of products or services in the Ordinary Course of
Business, neither of Sellers nor NCPS or NDVS has granted any license or sublicense of any
rights under or with respect to any Intellectual Property Rights;
(k) there has been no change made or authorized in the Organizational Documents of a
Seller, NCPS or NDVS except for purposes of completing the Mergers;
(l) neither of Sellers nor NCPS or NDVS has experienced any damage, destruction or loss
(whether or not covered by insurance) to its property involving an amount greater than
$25,000;
(m) neither of Sellers nor NCPS or NDVS has entered into any employment or collective
bargaining agreement, written or oral, or modified the terms of any such existing agreement;
(n) neither of Sellers nor NCPS or NDVS has granted any increase in the base
compensation or made any other change in employment terms of any of its directors, officers
or employees outside of the Ordinary Course of Business;
(o) neither of Sellers nor NCPS or NDVS has adopted, amended, modified or terminated
any Plan (or taken any such action with respect to any Plan);
(p) neither of Sellers nor NCPS or NDVS has discharged or satisfied any Encumbrance or
paid any liability other than current liabilities paid in the Ordinary Course of Business;
(q) neither of Sellers nor NCPS or NDVS has disclosed to any Person other than Buyer
and authorized representatives of Buyer any proprietary confidential information, other than
pursuant to a confidentiality agreement prohibiting the use or further disclosure of such
information, which agreement is listed on Schedule 3.9 and is in full force and effect;
(r) neither of Sellers nor NCPS or NDVS has made any change in accounting principles or
practices from those utilized in the preparation of the Annual Financial Statements;
(s) neither of Sellers nor NCPS or NDVS has (i) made or rescinded any express or deemed
election or taken any other discretionary position relating to Taxes, (ii) amended any
Return, (iii) settled or compromised any Litigation relating to Taxes or (iv) changed any of
their methods of reporting income or deductions for federal or state
20
income Tax purposes
from those employed in the preparation of the last filed federal or state Returns;
(t) neither of Sellers nor NCPS or NDVS has changed any of its methods of accounting in
effect on the Latest Balance Sheet Date, other than changes required by GAAP;
(u) neither of Sellers nor NCPS or NDVS has cancelled or terminated their current
insurance policies or allowed any of the coverage thereunder to lapse, unless simultaneously
with such termination, cancellation or lapse replacement policies providing coverage equal
to or greater than the coverage under the canceled, terminated or lapsed policies for
substantially similar premiums were in full force and effect; and
(v) neither of Sellers nor NCPS or NDVS has committed to take any of the actions
described in this Section 3.9.
3.10 Property.
(a) Neither of Sellers nor NCPS or NDVS owns any real property. The real properties demised by
the leases listed on Schedule 3.10 constitute all of the real property leased (whether or not
occupied and including any leases assigned or leased premises sublet for which a Seller, NCPS or
NDVS remains liable), used or occupied by the Business.
(b) The leases of real property listed on Schedule 3.10 as being leased by each Seller, NCPS
or NDVS (the “Real Property”) are in full force and effect, and a Seller, NCPS or NDVS holds a
valid and existing leasehold interest under each of the leases for the term listed on Schedule
3.10. Except as provided in the lease documentation and to Sellers’ Knowledge, the Real Property
is not subject to any ground lease, master lease, mortgage, deed of trust or other Encumbrance or
interests that would entitle the holder thereof to interfere with or disturb use or enjoyment of
the Real Property or the exercise by the lessee of its rights under such lease so long as the
lessee is not in default under such lease.
(c) Each parcel of Real Property has access sufficient for the conduct of the business as
conducted or as proposed to be conducted by the Business on such parcel of Real Property to public
roads and to all utilities, including electricity, sanitary and storm sewer, potable water, natural
gas, telephone, fiberoptic, cable television and other utilities used in the operation of the
business at that location. Neither of Sellers nor NCPS or NDVS is, to Sellers’ Knowledge, in
violation of any applicable zoning ordinance or other Law relating to the Real Property, and
neither of Sellers nor NCPS or NDVS has received any notice of any such violation or the existence
of any condemnation or other proceeding with respect to any of the Real Property.
(d) There are no improvements made or, to Sellers’ Knowledge, contemplated to be made by any
Governmental Entity, the costs of which are to be assessed as assessments, special assessments,
special Taxes or charges against any of the Real Property, and there are no present assessments,
special assessments, special Taxes or charges.
(e) Each of Sellers, NCPS and NDVS has good and marketable title to, or a valid leasehold
interest in, the buildings, machinery, equipment and other tangible assets and
21
properties used by it, located on its premises or shown in the Latest Balance Sheets or acquired after the date
thereof, free and clear of all Encumbrances, except for Permitted Encumbrances, Encumbrances listed
on Schedule 3.10 and properties and assets disposed of in the Ordinary Course of Business since the
date of the Latest Balance Sheets.
(f) The buildings, improvements, building systems, machinery, equipment and other tangible
assets and properties used in the conduct of the Business are in good condition and repair,
ordinary wear and tear excepted, and are usable in the Ordinary Course of Business. Each such
asset is suitable for the purposes for which it is used and is proposed to be used, is free from
defects (patent and latent), and has been maintained in accordance with normal industry practices.
(g) The fixed asset listing attached as Schedule 3.10(g) includes all buildings, machinery,
equipment and other tangible assets and properties of Sellers, NCPS and NDVS as of the date of the
Latest Balance Sheets.
(h) Each of Sellers, NCPS and NDVS owns or leases all of the assets, tangible and intangible,
of any nature whatsoever, necessary to operate the Business as presently conducted.
(i) The Acquired Assets constitute all of the assets, tangible and intangible, of any nature
whatsoever, necessary to operate the Business in the matter operated by Sellers, NCPS and NDVS and
include all of the operating assets of Sellers, NCPS and NDVS used in the Business.
3.11 Accounts Receivable. All notes and accounts receivable of the Business are
reflected properly on its books of account, are valid, have arisen from bona fide transactions in
the Ordinary Course of Business, are subject to no setoff or counterclaim, and are current and
collectible. Such notes and accounts receivable will be collected in accordance with their terms
(none of which is beyond 60 days) at their recorded amounts, subject only to the reserve for bad
debts on the face of the Latest Balance Sheets as adjusted in the books of account of the Business
for the passage of time through the Closing Date in the Ordinary Course of Business.
3.12 Tax Matters.
(a) Each Seller, NCPS, NDVS and any Tax Affiliate has (i) timely filed (or has had timely
filed on its behalf) each Return required to be filed or sent by it in respect of any Taxes or
required to be filed or sent by it by any Governmental Entity, each of which was correctly
completed and accurately reflected any liability for Taxes of such Seller, NCPS, NDVS and any Tax
Affiliate covered by such Return, (ii) timely and properly paid (or had paid on its behalf) all
Taxes due and payable for all Tax periods or portions thereof whether or not shown on such Returns,
(iii) established in the books of account of such Seller, NCPS or NDVS, in accordance with GAAP and
consistent with past practices, adequate reserves for the payment of any Taxes not then due and
payable and (iv) complied with all applicable Laws relating to the withholding of Taxes and the
payment thereof.
(b) There are no Encumbrances for Taxes upon any assets of a Seller, NCPS, NDVS or any Tax
Affiliate, except Encumbrances for real estate Taxes not yet due.
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(c) No deficiency for any Taxes has been proposed, asserted or assessed against a Seller,
NCPS, NDVS or any Tax Affiliate that has not been resolved and paid in full. No waiver,
extension or comparable consent given by a Seller, NCPS, NDVS or any Tax Affiliate regarding
the application of the statute of limitations with respect to any Taxes or any Return is
outstanding, nor is any request for any such waiver or consent pending. There has been no Tax
audit or other administrative proceeding or court proceeding with regard to any Taxes or any Return
for any Tax year subsequent to the year ended 1997, nor is any such Tax audit or other proceeding
pending, nor has there been any notice to a Seller, NCPS, NDVS or any Tax Affiliate by any
Governmental Entity regarding any such Tax, audit or other proceeding, or, to Sellers’ Knowledge,
is any such Tax audit or other proceeding threatened with regard to any Taxes or Returns.
(d) Neither Seller, NCPS, NDVS nor any Tax Affiliate has any liability for Taxes in a
jurisdiction where it does not file a Return, nor has a Seller, NCPS, NDVS or any Tax Affiliate
received notice from a taxing authority in such a jurisdiction that it is or may be subject to
taxation by that jurisdiction.
(e) None of the Assumed Liabilities is an obligation to make any payment that would be treated
as an “excess parachute payment” within the meaning of Section 280G of the Code.
(f) Neither of Sellers nor NCPS or NDVS has been a member of an affiliated combined or unitary
group for purposes of Taxes and has no liability for the Taxes of any Person under Treasury
Regulations Section 1.1502-6 (or any similar provision of Law), as a transferee or successor, by
Contract or otherwise.
(g) Neither Seller, NCPS, NDVS nor any Tax Affiliate has engaged in any transaction that is
subject to disclosure under present or former Treasury Regulations Sections 1.6011-4 or 1.6011-4T,
as applicable.
(h) Each of NCPS and NDVS has validly elected to be a “qualified subchapter S subsidiary”
under Section 1361(b)(3)(B) of the Code (a “QSub”) for all periods since January 1, 2001, and has
maintained its status as a QSub at all times since such date. NCPS or NDVS has also validly
elected to be a QSub in all state and local jurisdictions which recognize such status and in which
it would, absent such an election, be subject to corporate income Tax, and has maintained its
status as a QSub in each such jurisdiction at all times since the date of such election. No facts
or circumstances exist, or have existed, which would cause, or would have caused, the status of
NCPS or NDVS as a QSub under federal, state or local law to be subject to termination or
revocation.
(i) Each Seller has validly elected to be an “S corporation” within the meaning of Sections
1361 and 1362 of the Code for all periods since its inception, and has maintained its status as an
“S corporation” at all times since such date. Each Seller has also validly elected to be an “S
corporation” in all state and local jurisdictions which recognize such status with respect to such
Seller and in which it would, absent such an election, be subject to corporate income Tax, and has
maintained its status as an “S corporation” in each such jurisdiction at all times since the date
of such election. No facts or circumstances exist, or have existed, which would cause, or
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would have caused, the status of a Seller as an “S corporation” under federal, state or local law to be
subject to termination or revocation.
(j) Sellers, NCPS and NDVS have paid all Taxes associated with their employment of personnel,
whether classified as employees or contractors.
(k) Sellers, NCPS and NDVS do not expect or anticipate the assessment of any additional Taxes
on a Seller, NCPS, NDVS or any Tax Affiliate and are not aware of any unresolved questions, claims
or disputes concerning the liability for Taxes of a Seller, NCPS, NDVS or any Tax Affiliate that
would exceed the estimated reserves established on its books and records. There is no dispute or
claim concerning any Tax liability of a Seller, NCPS, NDVS or any Tax Affiliate. Each Seller,
NCPS, NDVS and each Tax Affiliate has disclosed on each federal income Tax Return all positions
taken therein that could give rise to a substantial understatement of federal income Tax within the
meaning of Section 6662 of the Code.
3.13 Intellectual Property Rights.
(a) Schedule 3.13(a)(i) lists and describes all Owned Intellectual Property Rights that are
Registered Intellectual Property Rights and all other Owned Intellectual Property Rights. Schedule
3.13(a)(ii) lists all Contracts relating to Licensed-In Intellectual Property Rights other than
Software and describes the Intellectual Property Rights covered by such Contracts; to the extent
there is no written Contract covering a Licensed-In Intellectual Property Right, Schedule
3.13(a)(ii) lists the licensor and describes the Intellectual Property Rights so licensed.
Schedule 3.13(a)(iii) lists all Contracts relating to Licensed-In Intellectual Property Rights that
are Software other than Off-the-Shelf Software and describes the Intellectual Property Rights
covered thereby; to the extent there is no written Contract covering any Software, Schedule
3.13(a)(iii) lists the licensor and describes the Software so licensed. Schedule 3.13(a)(iv) lists
and describes all materials otherwise protectable under Intellectual Property Rights used in the
Business as conducted or proposed to be conducted that are in the public domain. The Owned
Intellectual Property Rights and the Licensed-In Intellectual Property Rights constitute all
Intellectual Property Rights necessary for the Business as conducted.
(b) Either Seller, NCPS or NDVS owns all right, title and interest in the Owned Intellectual
Property Rights free and clear of all Encumbrances (including royalty or other payments), except
for those licenses of the Owned Intellectual Property Rights to Persons, payments for use of the
Owned Intellectual Property Rights and other Encumbrances listed on Schedule 3.13(b). A Seller,
NCPS or NDVS is the official and sole owner of record of all Registered Intellectual Property
Rights. No Owned Intellectual Property Right has been infringed by any Person. A Seller, NCPS or
NDVS owns all Intellectual Property Rights developed by its current and former employees and
independent contractors during the period of their employment or within the scope of their
contracting or consulting relationship, as the case may be, with a Seller, NCPS or NDVS. No
employee or former employee or independent contractor of a Seller, NCPS or NDVS has any claim with
respect to any of its Intellectual Property Rights.
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(c) The documentation relating to all trade secrets listed on Schedule 3.13(a)(i) is current
accurate and sufficient in detail and content to identify and explain such trade secrets and to
allow their full and proper use without reliance on the knowledge or memory of any individual.
All Owned Intellectual Property Rights are valid and enforceable, and no Person has asserted that
any Owned Intellectual Property Right is invalid or not enforceable. All Owned Intellectual
Property Rights that are Registered Intellectual Property Rights are in full force and effect, and
all actions required to keep such rights pending or in effect or to provide full available
protection, including payment of filing, examination, annuity, and maintenance fees and filing of
renewals, statements of use or working, affidavits of incontestability and other similar actions,
have been taken, and no such Registered Intellectual Property Right is the subject of any
interference, opposition, cancellation, nullity, re-examination or other proceeding placing in
question the validity or scope of such rights. All products covered by Owned Intellectual Property
Rights or Licensed-In Intellectual Property Rights that are Registered Intellectual Property Rights
and all usages of Owned Intellectual Property Rights or Licensed-In Intellectual Property Rights
that are Registered Intellectual Property Rights have been marked with the appropriate patent,
trademark or other marking required or desirable to maximize available damage awards.
(d) The documentation relating to all trade secrets listed on Schedule 3.13(a)(i) is current,
accurate and sufficient in detail and content to identify and explain such trade secrets and to
allow their full and proper use without reliance on the knowledge or memory of any individual. All
reasonable precautions have been taken to protect the secrecy, confidentiality and value of the
trade secrets and all other proprietary information used in the Business including the
implementation and enforcement of policies requiring each employee or independent contractor who
has access to trade secrets to execute proprietary information and confidentiality agreements
substantially in a standard form, and each current and former employee and independent contractor
of a Seller, NCPS or NDVS has executed such an agreement. There has been no breach or other
violation of such agreements. A Seller, NCPS or NDVS has an unqualified right to use all trade
secrets and other proprietary information currently used, subject to any Contract relating to
Licensed-In Intellectual Property Rights. No such trade secret or other proprietary information is
part of the public knowledge or literature, and no trade secret or other proprietary information
has been used, divulged or appropriated either for the benefit of any Person other than a Seller,
NCPS or NDVS or to the detriment of any of them.
(e) Neither of Sellers nor NCPS or NDVS has taken action, or failed to take an action, that
might have the effect of estopping or otherwise limiting its right to enforce Owned Intellectual
Property Rights against any Person.
(f) Neither of Sellers nor NCPS or NDVS has any present expectation or intention of not fully
performing any obligation pursuant to any license, and there is no breach, anticipated breach or
default by any other party to any license. There are no renegotiations of, attempts to
renegotiate, demands for or outstanding rights to renegotiate any license. To Sellers’ Knowledge,
all rights under each license will be fully available to Buyer after the Closing.
(g) Each Licensed-In Intellectual Property Right for which a Seller, NCPS or NDVS has an
exclusive right is in full force and effect, all actions required to keep such right pending or in
effect or to provide full protection, including payment of filing, examination, annuity, and
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maintenance fees and filing of renewals, statements of use or working, affidavits of
incontestability and other similar actions, have been taken. No Licensed-In Intellectual Property
Right that is a Registered Intellectual Property Right and for which a Seller, NCPS or NDVS
has an exclusive right is the subject of any interference, opposition, cancellation, nullity,
re-examination or other proceeding placing in question the validity or scope of such right.
(h) Neither of Sellers nor NCPS or NDVS has infringed, misappropriated or otherwise violated
any Third-Party Intellectual Property Right, and neither of Sellers nor NCPS or NDVS has received
any notice of any infringement, misappropriation or violation by a Seller, NCPS or NDVS of any
Third-Party Intellectual Property Right. No infringement, misappropriation or violation of any
Third-Party Intellectual Property Right has occurred or will occur with respect to products or
services sold by the Business or with respect to the products or services currently under
development or with respect to the conduct of the Business as conducted or proposed to be
conducted.
(i) All Software that is used by a Seller, NCPS or NDVS or is present at any facility or on
any equipment of a Seller, NCPS or NDVS is owned by it or is subject to a current license agreement
that covers all use of the Software in the Business as conducted or as proposed to be conducted. A
Seller, NCPS or NDVS has the right to use the Software used in the Business as it is being used,
without any conflict with the rights of others. Neither of Sellers nor NCPS or NDVS is in breach
of any license to, or license of, any Software. Neither of Sellers nor NCPS or NDVS uses, relies
on or contracts with any Person to provide service bureau, outsourcing or other computer processing
services to the Business, in lieu of or in addition to their respective use of the Software.
Following the Closing, Buyer will have sufficient rights to all necessary Software, to operate the
Business as it is conducted or proposed to be conducted.
3.14 Material Contracts.
(a) Schedule 3.14 lists the following Contracts to which a Seller, NCPS or NDVS is a party or
subject or by which it is bound (with the Contracts required to be listed on Schedule 3.13, the
“Material Contracts”):
(i) each employment, agency, collective bargaining or consulting Contract;
(ii) each Contract (A) with any Insider or (B) between or among any Insiders relating
in any way to the Business;
(iii) each distributor, reseller, broker, sales representative, advertising agency or
finder’s Contract;
(iv) each franchise agreement;
(v) each Contract or group of related Contracts with the same party for the purchase of
products or services with an undelivered balance in excess of $25,000;
(vi) each Contract or group of related Contracts with the same party for the sale of
products or services with an undelivered balance in excess of $25,000;
26
(vii) each lease of real or personal property with aggregate annual payments in excess
of $25,000;
(viii) each Contract for the sale of any capital assets;
(ix) each Contract for capital expenditures in excess of $25,000;
(x) each Contract relating to the borrowing of money or to mortgaging, pledging or
otherwise placing an Encumbrance on any of the assets of the Business;
(xi) each written warranty, guaranty or other similar undertaking with respect to
contractual performance extended by a Seller, NCPS or NDVS other than in the Ordinary Course
of Business;
(xii) each Contract relating to any surety bond or letter of credit required to be
maintained by the Business;
(xiii) each Contract that contains or provides for an express undertaking by a Seller,
NCPS or NDVS to be responsible for consequential damages;
(xiv) each Contract concerning a partnership or joint venture;
(xv) each Contract providing for the development of any products, Software or
Intellectual Property Rights;
(xvi) each Contract containing exclusivity, noncompetition or nonsolicitation
provisions or that would otherwise prohibit a Seller, NCPS or NDVS from freely engaging in
business anywhere in the world or prohibiting the solicitation of the employees or
contractors of any other entity;
(xvii) each Contract pertaining to confidentiality or non-disclosure;
(xviii) each Capital Lease;
(xix) each Contract terminable by any other party upon a change of control of a Seller,
NCPS or NDVS or upon the failure of a Seller, NCPS or NDVS to satisfy financial or
performance criteria specified in such Contract;
(xx) each power of attorney that is currently in effect; and
(xxi) each other Contract of a Seller, NCPS or NDVS not entered into in the Ordinary
Course of Business or that is material to the business, financial condition, results of
operations or prospects of the Business taken as a whole.
(b) Each Material Contract is valid and binding, currently in force and enforceable in
accordance with its terms, subject to the Remedies Exception. A Seller, NCPS or NDVS has performed
all obligations required to be performed by it in connection with each Material Contract. Neither
of Sellers nor NCPS or NDVS has received any notice of any claim of default
27
by it under or termination of any Material Contract. Neither of Sellers nor NCPS or NDVS has
any present expectation or intention of not fully performing any obligation pursuant to any
Material Contract, and there is no breach, anticipated breach or default by Seller, NCPS or NDVS or
any other party to any Material Contract. There is no renegotiation of, attempt to renegotiate or
outstanding right to renegotiate any material terms of any Material Contract and no Person has made
written demand for such renegotiation. To Sellers’ Knowledge, Seller, NCPS or NDVS can perform
each Material Contract for the sale of products or services on time, at a profit and without
unusual expenditures of time and money. Neither of Sellers nor NCPS or NDVS has any obligation to
refund payments received for work not yet performed under a Material Contract where the percentage
of work completed is less than the percentage of revenues received to date.
3.15 Litigation. Except for the Litigation involving the Family Shareholders, Xxx
Xxxxxxxxx and the Xxxxxx Trust described in Section 3.15 of the Disclosure Schedule (the
“Xxxxxx/Xxxxxxx Litigation”), no Litigation is pending or, to the Knowledge of Sellers, threatened
against a Seller, NCPS or NDVS and there is no reasonable basis for any Litigation against a
Seller, NCPS or NDVS. Neither of Sellers nor NCPS or NDVS is subject to any outstanding
Governmental Order.
3.16 Insurance.
(a) Sellers, NCPS and NDVS have at all times since January 1, 2003, maintained insurance
relating to the Business and covering property, fire, casualty, liability and workers’
compensation. Such insurance (i) is in full force and effect, (ii) is sufficient for compliance
with all requirements of applicable Law, (iii) is valid and enforceable, (iv) insures against risks
of the kind customarily insured against and in amounts customarily carried by businesses similarly
situated and (v) provides adequate insurance coverage for the activities of the Business. Schedule
3.16 lists each policy of insurance in effect.
(b) Schedule 3.16 lists by year for the current policy year and each of the two preceding
policy years a summary of the loss experience under each policy involving any claim in excess of
$25,000, setting forth (i) the name of the claimant, (ii) a description of the policy by insurer,
type of insurance and period of coverage and (iii) the amount and a brief description of the claim.
Schedule 3.16 also describes the loss experience for all claims in excess of $10,000 that were
self-insured, including the aggregate cost of such claims.
3.17 Compliance with Laws; Governmental Authorizations.
(a) Each of Sellers, NCPS and NDVS has complied with all applicable Laws and Governmental
Orders. Neither of Sellers nor NCPS or NDVS is relying on any exemption from or deferral of any
Law, Governmental Order or Governmental Authorization that would not be available to Buyer after
the Closing.
(b) Each of Sellers, NCPS and NDVS has in full force and effect all Governmental
Authorizations necessary to conduct its business and own and operate its properties, and Schedule
3.17(b) lists each Governmental Authorization held by it. Sellers, NCPS and NDVS have complied
with all Governmental Authorizations applicable to them except where failure
28
could not reasonably be expected to result in a Material Adverse Effect. The Governmental Authorizations (i) have not
been violated and (ii) are not subject to any pending, or to the Knowledge of Sellers, threatened
proceeding seeking their revocation or limitation.
(c) (i) The operation of the Business as currently conducted does not violate (A) the Fair
Credit Reporting Act, 15 U.S.C. § 1681 et seq., the Xxxxx-Xxxxx-Xxxxxx Xxx, 00 X.X.X. § 0000-0000,
the Driver’s Privacy Protection Act of 1994, 18 U.S.C. § 2771 et seq., and similar state Laws, or
(B) to Sellers’ Knowledge, any other credit reporting, privacy (including the solicitation of
customers who have elected under applicable law to prevent the sharing of personal information),
data protection, publicity, advertising or similar federal, state or local Law or Governmental
Order of any kind, (C) nor has a Seller, NCPS or NDVS received notice of any such violation, and
neither of Sellers nor NCPS or NDVS is aware of any facts that would give rise to such a violation.
(ii) Neither Seller, NCPS, NDVS nor any of their directors, officers, Affiliates,
agents or employees has violated or is currently in default or violation under (A) the Fair
Credit Reporting Act, 15 U.S.C. § 1681 et seq., the Xxxxx-Xxxxx-Xxxxxx Xxx, 00 X.X.X. §
0000-0000, the Driver’s Privacy Protection Act, 18 U.S.C. § 2771 et seq., and similar state
Laws, nor (B) to Sellers’ Knowledge, any other Law or Governmental Order applicable to a
Seller, NCPS or NDVS or any of their assets, properties, or operations, including without
limitation any credit reporting, privacy (including the solicitation of customers who have
elected under applicable law to prevent the sharing of personal information), data
protection, publicity, advertising or similar federal, state or local law of any kind.
(iii) Neither of Sellers nor NCPS or NDVS is a party to any Contract, license or
agreement wherein or whereby it has agreed to, or assumed, any obligation or duty to
warrant, indemnify, reimburse, hold harmless, guaranty or otherwise assume or incur any
obligation or liability, or provide a right of rescission, with respect to compliance by the
counterparty thereto with any Law or Governmental Order, including without limitation any
credit reporting, privacy (including the solicitation of customers who have elected under
applicable law to prevent the sharing of personal information), data protection, publicity,
advertising or similar federal, state or local law of any kind (including the Fair Credit
Reporting Act, 15 U.S.C. § 1681 et seq., the Xxxxx-Xxxxx-Xxxxxx Xxx, 00 X.X.X. § 0000-0000,
the Driver’s Privacy Protection Act, 18 U.S.C. § 2771 et seq., and similar state Laws).
(d) Neither of Sellers nor NCPS or NDVS has offered, authorized, promised, made or agreed to
make any gifts, payments or transfers of property of any kind (other than incidental gifts of
nominal value) in connection with any actual or proposed transaction, except as required or
permitted by the Laws of each applicable jurisdiction and in each such case has complied with the
U.S. Foreign Corrupt Practices Act.
(e) Neither of Sellers nor NCPS or NDVS has ever had a legal obligation to file any form,
report, schedule, proxy statement or other document with the SEC, and neither of Sellers nor NCPS
or NDVS has filed with the SEC any such form, report, schedule, proxy statement or other document.
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3.18 Environmental Matters.
(a) Neither of Sellers nor NCPS or NDVS is in violation of any Law, Governmental Authorization
or Governmental Order relating to environmental matters (“Environmental Laws”), including, but not
limited to, matters related to air pollution, water pollution, noise control, on-site or off-site
hazardous substance (as defined in the Comprehensive Environmental Response, Compensation and
Liability Act, as amended, and including any other dangerous waste), handling, discharge, disposal
or recovery, toxic or hazardous substances or materials (whether products or waste), asbestos,
PCBs, and transportation or shipping safety and no notice of violation of any Environmental Laws
have been received by a Seller, NCPS or NDVS, nor, to Sellers’ Knowledge, is any such notice
threatened.
(b) To Sellers’ Knowledge: (i) no hazardous, dangerous or toxic materials have been
generated, contained, handled, located, used, manufactured, processed, buried, incinerated,
deposited, stored or released on, under or about any part of the Real Property, (ii) the buildings
and improvements located on the Real Property do not contain asbestos, urea, formaldehyde, radon at
levels above natural background, polychlorinated biphenyls (PCBs) or pesticides and (iii) no
aboveground or underground storage or fuel tanks are located on, under or about the Real Property.
(c) To Sellers’ Knowledge, no expenditure will be required following the Closing for a Seller,
NCPS, NDVS or Buyer to comply with any Environmental Laws in connection with the operation or
continued operation of the Business on the Real Property in a manner consistent with the current
operation thereof.
(d) Each Seller, on behalf of itself and its successors and assigns, hereby waives, releases
and agrees not to bring any claim, demand, cause of action or proceeding, including without
limitation any cost recovery action, against Buyer under any Environmental Law.
3.19 Warranties. Except as listed on Schedule 3.19, no product provided or service
performed by a Seller, NCPS or NDVS is subject to any guaranty, warranty or other indemnity, nor
are any claims pending or, to the Knowledge of Sellers, threatened for product liability or breach
of any warranty relating to any such product or service.
3.20 Employees.
(a) Schedule 3.20(a) lists each employee of a Seller, NCPS or NDVS as of the date of this
Agreement, states the total number of employees and indicates for each such employee, and in the
aggregate, full-time, part-time and temporary status.
(b) Schedule 3.20(b) lists each salaried employee of a Seller, NCPS or NDVS as of the date of
this Agreement and shows for each such employee their annual salary, any other compensation payable
to them (including compensation payable pursuant to bonus, incentive, deferred compensation or
commission arrangements), date of employment and position. To the Knowledge of Sellers, no
executive employee of a Seller, NCPS or NDVS and no group of employees has any plans to terminate
his, her or their employment. Sellers, NCPS and NDVS have complied at all times with all
applicable Laws relating to employment and employment practices and those relating to the
calculation and payment of wages (including overtime pay,
30
maximum hours of work and child labor restrictions), equal employment opportunity (including Laws prohibiting discrimination and/or
harassment or requiring accommodation on the basis of race, color, national origin, religion,
gender, disability, age, sexual orientation or otherwise), affirmative action and other hiring
practices, occupational safety and health, workers’ compensation, unemployment compensation, the
payment of social security and other Taxes, and unfair labor practices under the National Labor
Relations Act or applicable state law. Sellers, NCPS and NDVS do not have any labor relations
problem pending or, to the Knowledge of Sellers, threatened, and their labor relations are
satisfactory. There are no workers’ compensation claims pending against a Seller, NCPS or NDVS,
or, to the Knowledge of Sellers, any facts that would give rise to such a claim. No employee of a
Seller, NCPS or NDVS is subject to any secrecy or noncompetition agreement or any other agreement
or restriction of any kind that would impede in any way the ability of such employee to carry out
fully all activities of such employee in furtherance of the Business.
(c) Schedule 3.20(c), Part 1, lists each employee of a Seller, NCPS or NDVS as of the date of
this Agreement who holds a temporary work authorization, including X-0X, X-0, X-0 or J-1 visas or
work authorizations (the “Work Permits”), and shows for each such employee the type of Work Permit
and the length of time remaining on such Work Permit. With respect to each Work Permit, all of the
information that a Seller, NCPS or NDVS provided to the Department of Labor and the Immigration and
Naturalization Service or the Department of Homeland Security (collectively, the “Department”) in
the application for such Work Permit was true and complete. A Seller, NCPS or NDVS received the
appropriate notice of approval from the Department with respect to each such Work Permit. Neither
of Sellers nor NCPS or NDVS has received any notice from the Department that any Work Permit has
been revoked. There is no action pending or, to the Knowledge of Sellers, threatened to revoke or
adversely modify the terms of any Work Permit. Except as disclosed in Schedule 3.20(c), Part 2, no
employee of a Seller, NCPS or NDVS is (a) a non-immigrant employee whose status would terminate or
otherwise be affected by the transactions contemplated by this Agreement, or (b) an alien who is
authorized to work in the United States in non-immigrant status. For each employee of a Seller,
NCPS or NDVS hired after November 6, 1986, that Seller, NCPS or NDVS has retained an Immigration
and Naturalization Service Form I-9, completed in accordance with applicable Law.
Sellers, NCPS and NDVS have each re-verified the employment eligibility status of all of their
current employees by completing a new Form I-9 for each such employee.
(d) The employment of any terminated former employee of a Seller, NCPS or NDVS has been
terminated in accordance with any applicable Contract terms and applicable Law, and neither of
Sellers nor NCPS or NDVS has liability under any Contract or applicable Law toward any such
terminated employee. The transactions contemplated by this Agreement will not cause a Seller, NCPS
or NDVS to incur or suffer any liability relating to, or obligation to pay, severance, termination
or other payment to any Person.
(e) Neither of Sellers nor NCPS or NDVS has made any loans (except advances for business
travel, lodging or other expenses in the Ordinary Course of Business) to any Insider.
(f) Within the last five years, neither of Sellers nor NCPS or NDVS has experienced and, to
the Knowledge of Sellers, there has not been threatened, any strike, work stoppage, slowdown,
lockout, picketing, leafleting, boycott, other labor dispute, union organization attempt, demand
31
for recognition from a labor organization or petition for representation under the National Labor
Relations Act or applicable state law. No grievance, demand for arbitration or arbitration
proceeding arising out of or under any collective bargaining agreement is pending or, to the
Knowledge of Sellers, threatened. No Litigation is pending or, to the Knowledge of Sellers,
threatened respecting or involving any applicant for employment, any current employee or any former
employee, or any class of the foregoing, including Litigation involving:
(i) the Equal Employment Opportunity Commission or any other corresponding state or
local fair employment practices agency relating to any claim or charge of discrimination or
harassment in employment;
(ii) the United States Department of Labor or any other corresponding state or local
agency relating to any claim or charge concerning hours of work, wages or employment
practices;
(iii) the Occupational Safety and Health Administration or any other corresponding
state or local agency relating to any claim or charge concerning employee safety or health;
(iv) the Office of Federal Contract Compliance or any corresponding state agency; and
(v) the National Labor Relations Board or any corresponding state agency, whether
relating to any unfair labor practice or any question concerning representation,
and, to Sellers’ Knowledge, there is no reasonable basis for any such Litigation.
(g) No employee of a Seller, NCPS or NDVS is covered by any collective bargaining agreement,
and no collective bargaining agreement is being negotiated.
(h) Seller, NCPS and NDVS have each paid in full to all employees all wages, salaries, bonuses
and commissions due and payable to such employees and have fully reserved in their
books of account all amounts for wages, salaries, bonuses and commissions due but not yet
payable to such employees.
(i) There has been no lay-off of employees or work reduction program undertaken by or on
behalf of a Seller, NCPS or NDVS in the past two years, and no such program has been adopted by a
Seller, NCPS or NDVS or publicly announced.
3.21 Employee Benefits.
(a) Schedule 3.21 lists all Plans by name.
(b) Sellers’ Representative has delivered to Buyer true, complete and up-to-date copies of all
Plans and compensation policies and all amendments thereto.
(c) No fact, condition or circumstance exists that would materially affect the information
contained in the documents provided pursuant to this Section 3.21 and, in particular, no promises
32
or commitments have been made by a Seller, NCPS or NDVS to amend any Plan or compensation policy.
(d) Except as disclosed on Schedule 3.21, all Plans are duly registered where required by any
Governmental Entity (including registration with the relevant tax authorities where such
registration is required to qualify for tax exemption or other beneficial tax status) and comply in
all material respects with the requirements of ERISA, the Code and any other applicable law.
(e) Neither of Sellers nor NCPS or NDVS has incurred any liabilities or obligations with
respect to any of the Plans that are not funded, insured or accrued in accordance with GAAP. The
group health plans, as defined in Section 4980B(g) of the Code, that benefit employees of a Seller,
NCPS or NDVS are in compliance with the continuation coverage requirements of Section 4980B of the
Code. There are no outstanding violations of Section 4980B of the Code with respect to any Plan,
covered employees or qualified beneficiaries.
(f) Neither of Sellers nor NCPS or NDVS contributes, nor has it ever contributed, to any
multi-employer plan, as defined in Section 3(37) of ERISA. Neither of Sellers nor NCPS or NDVS has
any actual or potential liabilities under Section 4201 of ERISA for any complete or partial
withdrawal from a multi-employer plan. Neither of Sellers nor NCPS or NDVS has any actual or
potential liability to provide coverage for death or medical benefits after separation from
employment, other than health care continuation benefits described in Section 4980B of the Code or
similar statute.
(g) Neither Seller, NCPS, NDVS nor any of their respective directors, officers, trustees,
employees or other “fiduciaries,” as such term is defined in Section 3(21) of ERISA, has committed
any breach of fiduciary responsibility imposed by ERISA or any other applicable law with respect to
any Plan.
(h) There has been no occurrence or development that has, and the consummation of the
transactions contemplated by this Agreement will not, subject Buyer, Buyer’s Subsidiaries or any
of their respective directors, officers or employees to any liability with respect to the
Plans under ERISA or any other governmental regulation.
(i) None of the Plans provide coverage for benefits beyond retirement or other termination of
service to employees or their beneficiaries or dependants.
(j) Neither of Sellers nor NCPS or NDVS has unsatisfied liabilities or is reasonably expected
to incur any liabilities that could become a liability of Buyer with respect to any Plan, and, with
respect to each such Plan, full payment has been made of all amounts that a Seller, NCPS or NDVS is
required, under the terms of each such Plan, to have paid as contributions to that Plan.
(k) None of the Acquired Assets is subject to any lien under Section 412(n) of the Code or
Section 4068 of ERISA.
(l) Schedule 3.21 lists each employee of a Seller, NCPS or NDVS who is (i) absent from active
employment due to short or long term disability, (ii) absent from active employment on a leave
pursuant to the Family and Medical Leave Act or a comparable state Law, (iii) absent from
33
active employment on any other leave or approved absence (together with the reason for each leave or
absence), (iv) absent from active employment due to military service (under conditions that give
the employee rights to re-employment) or (v) currently receiving severance benefits.
3.22 Customers. Schedule 3.22 lists the eight (8) largest customers of the Business
on a consolidated basis for each of the last two fiscal years and for the interim period ended on
the Latest Balance Sheet Date and sets forth opposite the name of each such customer the percentage
of net sales attributable to such customer for each such period. No customer listed on Schedule
3.22 has indicated that it will stop or decrease the rate of business done with a Seller, NCPS or
NDVS. Buyer has received copies of all Contracts with such respect to such persons.
3.23 Suppliers. Schedule 3.23 lists the 10 largest suppliers of the Business on a
consolidated basis for each of the last two fiscal years and for the interim period ended on the
Latest Balance Sheet Date and sets forth opposite the name of each such supplier the approximate
percentage of purchases attributable to such supplier for each such period. No supplier listed on
Schedule 3.23 is a sole source of supply for the Business. No supplier listed on Schedule 3.23 has
indicated that it will stop or decrease the rate of business done with a Seller, NCPS or NDVS.
Buyer has received copies of all Contracts with respect to such persons.
3.24 Affiliate Transactions. No Insider has any Contract with a Seller, NCPS or NDVS
(other than employment not represented by a written Contract and terminable at will), any loan to
or from a Seller, NCPS or NDVS or any interest in any assets (whether real, personal or mixed,
tangible or intangible) used in or pertaining to the Business. No Insider has any direct or
indirect interest in any competitor, supplier or customer of a Seller, NCPS or NDVS or in any
Person from whom or to whom a Seller, NCPS or NDVS leases any property, or in any other Person with whom Seller, NCPS or
NDVS otherwise transacts business of any nature. Ownership by an Insider, as a passive investment,
of less than (a) three percent of the outstanding shares of capital stock of any corporation whose
stock is listed on a national securities exchange or publicly traded on The NASDAQ National Market
or (b) ten percent of a privately held entity, will not constitute a breach of this Section 3.24.
3.25 Brokerage. Other than Xxxxxx Xxxxxxxxx, no Person will be entitled to receive
any brokerage commission, finder’s fee, fee for financial advisory services or similar compensation
in connection with the transactions contemplated by this Agreement based on any Contract made by or
on behalf of a Seller, NCPS or NDVS for which Buyer is or could become liable or obligated, other
than the amounts payable by NCPS under the agreement dated November 22, 2002 between NCPS and
Xxxxxx Xxxxxxxxx, which will be paid by Sellers.
3.26 Availability of Documents. Sellers have delivered to Buyer correct and complete
copies of the items referred to in the Disclosure Schedule or in this Agreement (and in the case of
any items not in written form, a written description thereof).
3.27 Solvency.
(a) Neither of Sellers nor NCPS or NDVS is insolvent or will be rendered insolvent by any of
the transactions contemplated by this Agreement. As used in this Section 3.27,
34
“insolvent” means that the sum of the debts and other probable Liabilities of a Seller, NCPS or NDVS, respectively,
exceeds the present fair saleable value of its assets.
(b) Immediately after giving effect to the consummation of the transactions contemplated by
this Agreement, (i) each Seller, NCPS and NDVS will be able to pay its Liabilities as they become
due in the usual course of its business; (ii) neither of Sellers nor NCPS or NDVS will have
unreasonably small capital with which to conduct its present or proposed business; (iii) each
Seller, NCPS and NDVS will have assets (calculated at fair market value) that exceed its
Liabilities; (iv) taking into account all pending and threatened litigation, final judgments
against a Seller, NCPS or NDVS in actions for money damages are not reasonably anticipated to be
rendered at a time when, or in amounts such that, a Seller, NCPS or NDVS will be unable to satisfy
any such judgments promptly in accordance with their terms (taking into account the maximum
probable amount of such judgments in any such actions and the earliest reasonable time at which
such judgments might be rendered) as well as all other obligations of Sellers, NCPS and NDVS; and
(v) the cash available to each Seller, NCPS and NDVS, after taking into account all other
anticipated uses of the cash, will be sufficient to pay all such debts and judgments promptly in
accordance with their terms.
3.28 Disclosure.
(a) This Agreement, the exhibits, the Disclosure Schedule, the Annual Financial Statements or
the Latest Financial Statements do not contain any untrue statement or omit any material fact
necessary to make the statements contained herein or therein, in light of the circumstances in
which they were made, not misleading.
(b) Except as set forth in this Agreement or the Disclosure Schedule, to Sellers’ Knowledge,
there is no fact that has specific application to the Business (other than general economic or
industry conditions) and that may materially adversely affect the assets, business, prospects,
financial condition or results of operations of the Business.
IV. Representations and Warranties of Buyer
Buyer and Parent, jointly and severally, represent and warrant to Sellers that as of the date
of this Agreement and as of the Closing Date (as though made then and as though the Closing Date
were substituted for the date of this Agreement):
4.1 Incorporation; Power and Authority. Buyer and Parent are each corporations duly
organized, validly existing and in good standing under the Laws of its jurisdiction of
organization, with all necessary power and authority to execute, deliver and perform this Agreement
and the Transition Services Agreement.
4.2 Valid and Binding Agreement. The execution, delivery and performance of this
Agreement and the Transition Services Agreement by each of Buyer and Parent has been duly and
validly authorized by all necessary corporate action. This Agreement has been duly executed and
delivered by Buyer and Parent and constitutes the valid and binding obligation of each, enforceable
against each in accordance with its terms, subject to the Remedies Exception. The Transition
Services Agreement, when executed and delivered by Buyer and Parent will
35
constitute its valid and binding obligation, enforceable against each of them in accordance with its terms, subject to the
Remedies Exception.
4.3 No Breach; Consents. The execution, delivery and performance of this Agreement
and the Transition Services Agreement by each of Buyer and Parent will not (a) contravene any
provision of its Organizational Documents; (b) violate or conflict with any Law, Governmental Order
or Governmental Authority; (c) conflict with, result in any breach of any of the provisions of,
constitute a default (or any event that would, with the passage of time or the giving of notice or
both, constitute a default) under, result in a violation of, increase the burdens under, result in
the termination, amendment, suspension, modification, abandonment or acceleration of payment (or
any right to terminate) or require a Consent, including any Consent under any Contract or
Governmental Authorization that is either binding upon or enforceable against Buyer or Parent;
or (d) require any Governmental Authorization.
4.4 Brokerage. No Person will be entitled to receive any brokerage commission,
finder’s fee, fee for financial advisory services or similar compensation in connection with the
transactions contemplated by this Agreement based on any Contract made by or on behalf of Buyer for
which Sellers, NCPS or NDVS is or could become liable or obligated.
V. Agreements of Sellers and the Shareholders
5.1 Conduct of the Business. To and including the Closing Date, except with the prior
consent of Buyer or as otherwise provided in this Agreement, each Seller shall, and shall cause
NCPS and NDVS to:
(a) conduct the Business only in, and will not take any action except in, the Ordinary Course
of Business and in accordance with applicable Law;
(b) not amend or modify any Material Contract or enter into any Contract that would have been
a Material Contract if such Contract had been in effect on the date of this Agreement, except that
a Seller, NCPS or NDVS may enter into Contracts with vendors or customers in the Ordinary Course of
Business;
(c) (i) use its best efforts to preserve its business organization and goodwill, keep
available the services of its officers, employees and consultants and maintain satisfactory
relationships with vendors, customers and others having business relationships with it, (ii)
subject to applicable Laws, confer on a regular and frequent basis with representatives of Buyer to
report operational matters and the general status of ongoing operations as requested by Buyer and
(iii) not take any action that would render, or that reasonably may be expected to render, any
representation or warranty made by Sellers in Article III of this Agreement untrue at the Closing
as though then made and as though the Closing Date had been substituted for the date of this
Agreement in such representation or warranty, including any actions referred to in Section 3.9;
(d) except in the Ordinary Course of Business, not use extraordinary selling efforts that
would have the effect of accelerating sales prior to the time reasonably expected, through offering
of discounts, shipment of goods prior to anticipated shipping dates or otherwise;
36
(e) not change any of its methods of accounting in effect on the Latest Balance Sheet Date,
other than changes required by GAAP; and
(f) not cancel or terminate its current insurance policies or allow any of the coverage
thereunder to lapse, unless simultaneously with such termination, cancellation or lapse replacement
policies providing coverage equal to or greater than the coverage under the canceled, terminated or
lapsed policies for substantially similar premiums are in full force and effect.
5.2 Notice of Developments. Each Seller will promptly notify Buyer of any emergency
or other change in the Ordinary Course of Business of that Seller, NCPS or NDVS or the commencement
or threat of Litigation. Each Seller will promptly notify Buyer in writing if that Seller should
discover that any representation or warranty made by it, NCPS or NDVS in this Agreement was when
made, has subsequently become or will be on the Closing Date untrue in any respect.
5.3 Pre-Closing Access. Through the Closing Date, each Seller will (and will cause
NCPS and NDVS to) afford to Buyer and its authorized representatives full access at all reasonable
times and upon reasonable notice to the facilities, offices, properties, technology, processes,
books, business and financial records, officers, employees, business plans, budgets, and
projections, suppliers and other information of each Seller, NCPS and NDVS, and the work papers of
Xxxxx X. Xxxxxx & Associates, their independent accountants, and otherwise provide such assistance
as may be reasonably requested by Buyer in order that Buyer have a full opportunity to make such
investigation and evaluation as it reasonably desires to make of the business and affairs of each
Seller, NCPS and NDVS. In addition, each Seller will (and will cause NCPS and NDVS to) cooperate
fully (including providing introductions where necessary) with Buyer to enable Buyer to contact
third parties, including employees, suppliers, customers and prospective customers of NCPS and
NDVS, and to offer employment to employees of NCPS and NDVS. Subject to Laws, Buyer will have full
access to the personnel records (including performance appraisals, disciplinary actions, grievances
and medical records) of NCPS and NDVS for the purpose of preparing for and conducting employment
interviews with all Active Employees. Each Seller will provide such Plan documents and summary
plan descriptions, employee data or other information as may be reasonably required to carry out
the arrangements described in Section 6.3. The Confidentiality Agreement will apply with respect
to information obtained by Buyer under this Section 5.3. Any direct contact with a Seller’s
customers shall be subject to that Seller’s prior written approval, which shall not be unreasonably
withheld.
5.4 Pre-Closing Mergers. Prior to the Closing Date, Sellers and the Shareholders will
take all action necessary under all applicable Laws to cause NCPS to merge with and into NCPS
Business Trust, and NDVS to merge with and into NDVS Business Trust, with Sellers as the surviving
entities, and to cause the assignment of all of the assets and liabilities of NCPS and NDVS to the
respective Sellers by operation of law (the “Mergers”).
5.5 Conditions. Each Seller will use its best efforts to cause the conditions set
forth in Section 7.1 to be satisfied and to consummate the transactions contemplated by this
Agreement as soon as reasonably possible and in any event prior to the Closing Date.
37
5.6 Consents and Authorizations; Regulatory Filings. Sellers will obtain, and will cause NCPS or NDVS to obtain, (at no cost or burden to Buyer)
all Consents and Governmental Authorizations (the “Required Consents”) necessary or reasonably
desirable for the consummation of the transactions contemplated by this Agreement or that could, if
not obtained, adversely affect the conduct of the Business as it is conducted or proposed to be
conducted, including those listed on Schedule 5.6, as promptly as practicable. Sellers will keep
Buyer reasonably advised of the status of obtaining the Required Consents.
5.7 No Sale. Each Seller will not (and will cause NCPS and NDVS not to) sell, pledge,
transfer or otherwise place any Encumbrance on any of the Acquired Assets.
5.8 Post-Closing Access. After the Closing Date, each Seller will afford to Buyer,
its accountants and counsel, during normal business hours, upon reasonable request, full access to
its books and records and those of NCPS and NDVS pertaining to the Business.
5.9 Litigation Support. In the event and for so long as Buyer is actively contesting
or defending against any Litigation in connection with any fact, situation, circumstance, status,
condition, activity, practice, plan, occurrence, event, incident, action, failure to act or
transaction existing or occurring on or prior to the Closing Date involving the Acquired Assets,
each Seller and Shareholder will cooperate in the contest or defense, make available its personnel
and provide such testimony and access to its books and records as may be reasonably necessary in
connection with the contest or defense, at the cost and expense of Buyer (unless and to the extent
Buyer is entitled to indemnification therefor under Article IX).
5.10 Nondisparagement. No Seller or Shareholder will take any action that is designed
or intended to have the effect of discouraging any lessor, licensor, customer, supplier or other
business associate of a Seller, NCPS or NDVS from maintaining the same business relationship with
Buyer after the Closing as it maintained with such Seller, NCPS or NDVS prior to the Closing. Each
Seller will refer all customer inquiries relating to the Business to Buyer from and after the
Closing.
5.11 Non-Hire. During the period that commences on the Closing Date and ends on the
second anniversary of the Closing Date, no Seller or Shareholder will, and each Seller and
Shareholder will cause each of its Affiliates not to, employ (or attempt to employ or interfere
with any employment relationship with) any employee of the Business; provided, however, that the
provisions of this Section 5.11 shall not apply to Persons terminated without cause by Buyer if
such Persons are hired by a business other than a Competing Business.
5.12 Confidentiality.
(a) Except as necessary and appropriate in the Ordinary Course of Business until the Closing,
and in all circumstances after the Closing, and other than as necessary and appropriate to protect
a party’s interests in connection with the Xxxxxx/Xxxxxxx Litigation, each Seller and Shareholder
will keep confidential and protect, and will not divulge, allow access to or use in any way, any of
the following with respect to the Business: (i) Intellectual Property Rights, including current
and planned manufacturing and distribution methods and processes, customer lists, current and
anticipated customer requirements, price lists, market studies, business plans,
38
Software, database
technologies, systems, structures, architectures and data (and related processes, formulae,
compositions, improvements, devices, know-how, inventions, discoveries, concepts, ideas, designs,
methods and information), (ii) any and all information concerning the Business (including
historical financial statements, financial projections and budgets, historical and projected sales,
capital spending budgets and plans, the names and backgrounds of key personnel, personnel training
and techniques and materials ), however documented, and (iii) any and all notes, analyses,
compilations, studies, summaries and other material containing or based, in whole or in part, on
any information included in the foregoing (“Confidential Information”). Each Seller and
Shareholder acknowledges that such Confidential Information constitutes a unique and valuable asset
of the Business and represents a substantial investment of time and expense, and that any
disclosure or other use of such Confidential Information other than as provided in the preceding
sentence or for the sole benefit of Buyer would be wrongful and would cause irreparable harm to
Buyer. Promptly after the Closing, each Seller and Shareholder will deliver promptly to Buyer or
destroy, at the request and option of Buyer, all tangible and intangible embodiments (and all
copies) of such Confidential Information that are in its possession. The foregoing obligations of
confidentiality will not apply to any Confidential Information that is or subsequently becomes
generally publicly known, other than as a direct or indirect result of the breach of this Agreement
by any Seller or Shareholder.
(b) Each Seller and Shareholder acknowledges that Buyer has required it makes the agreements
in this Section 5.12 as a condition to Buyer’s purchase of the Acquired Assets and consummation of
the transactions contemplated by this Agreement. Each Seller and Shareholder agrees that the
agreements contained in this Section 5.12 are reasonable and necessary to protect the legitimate
interests of Buyer and that any violation or breach of this Section 5.12 will result in irreparable
injury to Buyer for which no adequate remedy would exist at law. Accordingly, in addition to any
relief at law that may be available to Buyer for such violation or breach and regardless of any
other provision contained in this Agreement, Buyer will be entitled to injunctive and other
equitable relief restraining such violation or breach (without any requirement that Buyer provide
any bond or other security).
(c) In the event that any Seller or Shareholder is requested or required (by oral question or
request for information or documents in any legal proceeding, interrogatory, subpoena, civil
investigative demand or similar process) to disclose any Confidential Information, other than as
necessary and appropriate to protect a party’s interests in connection with the Xxxxxx/Xxxxxxx
Litigation, Seller or Shareholder will notify Buyer promptly of the request or requirement so that
Buyer may seek an appropriate protective order or waive compliance with the provisions of this
Section 5.12. If, in the absence of a protective order or the receipt of a waiver from Buyer,
Seller or any Shareholder is, on the advice of counsel, compelled to disclose any Confidential
Information to any tribunal or else stand liable for contempt, such Seller or Shareholder may
disclose the Confidential Information to the tribunal; provided, however, that the disclosing
Seller or Shareholder will notify Buyer and use best efforts to cooperate with Buyer to obtain, at
the request of Buyer, an order or other assurance that confidential treatment will be accorded to
such portion of the Confidential Information required to be disclosed as Buyer designates.
5.13 Assignment of Confidentiality Agreements. Effective upon the Closing, each
Seller will assign to Buyer all of Seller’s right, title and interest in and to any confidentiality
agreement to which Seller or the agent of Seller may be a party pertaining to the confidentiality
39
of information relating to the Business or the hiring of employees of the Business. Each Seller
will request the return or destruction of information covered by any such agreement within two
business days of the date of this Agreement to the broadest extent permitted by such
confidentiality agreement.
5.14 Covenant Not to Compete.
(a) As an inducement for Buyer to enter into this Agreement and as additional consideration
for the consideration to be paid to Sellers under this Agreement, for a period of five years from
the Closing Date, no Seller or Shareholder will, directly or indirectly, engage in, acquire, own or
hold a business anywhere in the United States of America or in any other geographic area in which
the Business operates as of the Closing Date that competes with the Business as conducted prior to
the Closing Date (a “Competing Business”), including as a proprietor, principal, agent, partner,
officer, director, shareholder, employee, member of any association, consultant or otherwise.
Ownership by a Seller or a Shareholder, as a passive investment, of less than three percent of the
outstanding shares of capital stock of any corporation whose stock is listed on a national
securities exchange or publicly traded on The NASDAQ National Market will not constitute a breach
of this Section 5.14.
(b) Each Seller and Shareholder acknowledges that Buyer has required that it makes the
agreements in this Section 5.14 as a condition to Buyer’s consummation of the transactions
contemplated by this Agreement. Each Seller and Shareholder acknowledges that the agreements
contained in this Section 5.14 are reasonable (including with respect to duration, geographical
area and scope) and necessary to protect the legitimate interests of Buyer and the Business,
including the preservation of the Business, and that any violation or breach of this Section 5.14
will result in substantial and irreparable harm to Buyer for which no adequate remedy would exist
at law. Accordingly, in addition to any relief at law that may be available to Buyer for such
violation or breach and regardless of any other provision contained in this Agreement, Buyer will
be entitled to injunctive and other equitable relief restraining such violation or breach (without
any requirement that Buyer provide any bond or other security).
(c) In the event of a violation or breach by any Seller or Shareholder of any agreement set
forth in this Section 5.14, the term of such agreement will be extended by the period of the
duration of such violation or breach.
(d) If the final judgment of a court of competent jurisdiction declares that any term or
provision of this Section 5.14 is invalid or unenforceable, the court making the determination of
invalidity or unenforceability will have the power to reduce the scope, duration or area of the
term or provision, to delete specific words or phrases or to replace any invalid or unenforceable
term or provision with a term or provision that is valid and enforceable and that comes closest to
expressing the intention of the invalid or unenforceable term or provision, and this Agreement will
be enforceable as so modified after the expiration of the time within which the judgment may be
appealed.
5.15 Change of Business Name. On or prior to the Closing Date, each Seller shall
change its business name to a name that is not confusingly similar to National Check Protection
Service or National Data Verification Service and shall cease to use any element of either name
40
of
or any trademarks of NCPS or NDVS in Seller’s business name, printed materials, signage, websites
or similar identifying materials.
5.16 Release of Claims.
(a) Each Seller and its respective successors and assigns waive, release and agree not to
bring any claim, demand, cause of action or proceeding, including any cost recovery action, against
Buyer or any Affiliate of Buyer under the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, or any state equivalent or any similar Law now existing or
hereinafter enacted.
(b) Xxxxx X. Xxxxxx, Xx., the Xxxxxx Trust and their respective successors and assigns waive,
release and agree not to bring any claim, demand, cause of action, whether known or unknown, or
proceeding against Buyer, any Affiliate of Buyer or any of their respective officers, directors,
employees, agents or shareholders, arising out of or in any way related to the Xxxxxx/Xxxxxxx
Litigation or any other claim, demand or cause of action, whether known or unknown, of any kind or
character, which either now exist, may exist, or may later exist, arising from, resulting from, or
in any way growing out of any act, event, transaction, occurrence, agreement or relationship
occurring at any time prior to the date of this Agreement. The foregoing sentence shall not
constitute a waiver or release of any claim, demand or cause of action of Xxxxx X. Xxxxxx, Xx. or
the Xxxxxx Trust against any of the Family Shareholders, Sellers or, with respect to his acts or
omissions prior to the date of this Agreement, Xxx Xxxxxxxxx.
(c) Xxxxx X. Xxxxxx, Xx. and the Xxxxxx Trust further agree not to seek injunctive relief or
any other remedy against any Shareholder or Seller in connection with the Xxxxxx/Xxxxxxx Litigation
that would prevent such Shareholder or Seller from performing any of his, her or its obligations in
this Agreement or that would otherwise impair the ability of Buyer or Parent to
enforce any provision of this Agreement or the Transition Services Agreement against such
Shareholder or Seller.
5.17 Termination of 401(k) Plan. Prior to the Mergers, Sellers shall cause NCPS and
NDVS to terminate their 401(k) plan, contingent on the Closing. Sellers shall cause the
distribution of the 401(k) plan assets and liquidation and wind-down of the 401(k) plan trust as
soon as administratively feasible following the Closing. Sellers shall deliver to Buyer a
favorable determination letter with respect to the 401(k) plan (or other evidence of tax
qualifications satisfactory to Buyer) prior to or immediately following the termination of the
401(k) plan and take such further action as is required of Sellers in Section 6.3. Nothing in this
Section shall be construed to limit liability of any Seller or Shareholder for the representations
made under Section 3.21.
5.18 Termination; Payment of Wages; Plans. Immediately prior to the Closing, each
Seller will terminate the employment of all its then current employees and employment arrangements,
including but not limited to employment, agency, collective bargaining or consulting Contract
described in Section 3.14(a)(i). Each Seller will be responsible for (a) the payment of all wages
and other remuneration due to Active Employees with respect to their
services as employees of the Business through the close of business on the Closing Date,
41
including pro rata bonus payments and
all vacation pay earned prior to the Closing Date, (b) the payment of any termination or severance
payments and the provision of health plan continuation coverage in accordance with the requirements
of COBRA and Sections 601 through 608 of ERISA and (c) any and all payments to employees that may
be required under the WARN Act.
5.19 COBRA. On and after the Closing Date, each Seller will maintain a group health
plan and will provide COBRA continuation coverage to all “M&A Qualified Beneficiaries,” as that
term is defined by Treas. Reg. §54.4980B-9 (“Final IRS COBRA Regulations”), with respect to the
sale of the Acquired Assets. Seller will maintain such group health plan for at least the maximum
period that COBRA continuation coverage may be available to the COBRA M&A Qualified Beneficiaries
under the Final IRS COBRA Regulations (including any second COBRA qualifying events experienced by
the M&A Qualified Beneficiaries.) Buyer will not be a “Successor Employer” under the Final IRS
COBRA Regulations by virtue of a Seller’s continued maintenance of a group health plan for the
entire period the M&A Qualified Beneficiaries may be entitled to COBRA continuation coverage.
5.20 Tax Elections. Neither of Sellers nor NCPS or NDVS will make any election with
respect to Taxes, change an annual accounting period, adopt or change any accounting method, take
any discretionary position with respect to Taxes, or file an amended Tax Return or any report or
form with respect to Taxes of a Seller, NCPS or NDVS which affect the Acquired Assets without prior
consultation with and consent of Buyer (which shall not be unreasonably withheld), if such
election, adoption, change, position or filing would have the effect of increasing the Tax
liability
of Buyer with respect to the Acquired Assets with respect to any period ending after the
Closing Date.
5.21 Payment of Taxes by Sellers.
(a) Sellers will pay in a timely manner all Taxes resulting from or payable in connection with
the sale of the Acquired Assets pursuant to this Agreement, regardless of the Person on whom such
Taxes are imposed by Law.
(b) Sellers will pay all sales and use taxes imposed by the State of Massachusetts with
respect to the Business for all periods prior to the Closing Date and will deliver to Buyer, no
later than June 30, 2005, a tax clearance certificate or other evidence reasonably satisfactory to
Buyer from the taxing authority of the State of Massachusetts evidencing payment in full of such
taxes.
(c) Each Seller and Buyer will (i) provide the other with such assistance as may reasonably be
requested by any of them in connection with the preparation of any Return, audit or other
examination by any taxing authority or judicial or administrative proceedings relating to liability
for Taxes, (ii) retain and provide the other with any records or other information that may be
relevant to such Return, audit or examination, proceeding or determination, and (iii) provide the
other with any final determination of any such audit or examination, proceeding or determination
that affects any amount required to be shown on any Return of the other for any period.
5.22 Payment of Other Retained Liabilities. In addition to payment of Taxes pursuant
to Section 5.21, each Seller will pay, or make adequate provision for the payment, in full all of
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the Retained Liabilities and other Liabilities of that Seller under this Agreement. If any such
Liabilities are not so paid or provided for, or if Buyer reasonably determines that failure to make
any payments will impair Buyer’s use or enjoyment of the Acquired Assets or conduct of the business
previously conducted by that Seller, NCPS or NDVS with the Acquired Assets and the payment has not
been reasonably disputed by such Seller, Buyer may, at any time after the Closing Date, elect to
make all such payments directly (but shall have no obligation to do so) without limiting Buyer’s
right to recover such payments from that Seller or from the Retained Amount.
5.23 Restrictions on Seller Dissolution and Distributions. Neither Seller will
dissolve, nor make any distribution of the proceeds received pursuant to this Agreement, other than
distributions to cover tax liabilities, of proceeds received pursuant to this Agreement, until
Seller’s payment, or adequate provision for the payment, of all of its obligations pursuant to
Sections 5.21 and 5.22.
VI. Agreements of Buyer
Buyer agrees with Sellers that:
6.1 Conditions. Buyer will use its best efforts to cause the conditions set forth in
Section 7.2 to be satisfied and to consummate the transactions contemplated by this Agreement as
soon as reasonably possible and in any event prior to the Closing Date.
6.2 Books and Records; Access. After the Closing Date, Buyer will cause the Business
to hold all of the books and records of the Business existing on the Closing Date in accordance
with Buyer’s retention policies in effect from time to time for a period of not less than two years
from the Closing Date and, if it thereafter proposes to destroy or dispose of any such books and
records, to offer first in writing at least 60 days prior to such proposed destruction or
disposition to surrender them to Sellers’ Representative at the sole expense of Sellers. After the
Closing Date, Buyer will cause the Business to afford Sellers’ Representative and its accountants
and counsel, during normal business hours, upon reasonable request, full access to such books and
records of the Business directly related to a Seller’s Tax or Litigation matters involving the
Business. Buyer will make available to Sellers’ Representative upon written request and at the
expense of Sellers, but consistent with Buyer’s business requirements, reasonable assistance of any
of the Business’s personnel whose assistance or participation is required by Sellers’
Representative, in anticipation of, or preparation for, existing or future Litigation or Tax
matters in which a Seller is involved related to the Business.
6.3 Employee Matters.
(a) Nothing in this Agreement will be construed to create a right in any employee of the
Business to employment with Buyer. Although Buyer will not be obligated to offer employment to any
particular employee of the Business, Buyer agrees to offer employment to at least 75% of the
current employees of the Business prior to the Closing, which are contingent on the Closing and
subject to background checks and drug testing according to Buyer’s policies and procedures.
Buyer’s intention to extend offers of employment as set forth in this Section 6.3 will not
constitute any commitment, Contract or understanding (express or implied) of any obligation on
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the
part of Buyer to a post-Closing employment relationship of any fixed term or duration or upon any
terms or conditions other than those that Buyer may establish pursuant to individual offers of
employment. Subject to any agreement between an employee and Buyer, the employment of each
employee of the Business who is hired by Buyer will be “at will” employment. Any employment
offered by Buyer is “at will” and may be terminated by Buyer or by an employee at any time for any
reason (subject to any written commitments to the contrary made by Buyer and to Law). Buyer will
not have any responsibility, liability or obligation, whether to Active Employees, former
employees, their beneficiaries or to any other Person, with respect to any employee benefit plans,
practices, programs or arrangements (including the
establishment, operation or termination thereof and the notification and provision of COBRA
coverage extension) maintained by a Seller.
(b) Buyer may interview any Active Employee. Within five business days of the date of this
Agreement, Sellers will make available, in electronic form, such information with respect to each
Active Employee as Buyer may reasonably request. Buyer will provide Sellers with a list of Active
Employees to whom Buyer has made an offer of employment that has been accepted effective on the
Closing Date (the “Hired Active Employees”). Immediately after the Closing, each Seller will
terminate the employment of all its then current employees, including all Hired Active Employees.
(c) Nothing in this Agreement will be deemed to prevent or restrict in any way the right of
Buyer to terminate, reassign, promote or demote any Hired Active Employee after the Closing or to
change adversely or favorably the title, powers, duties, responsibilities, functions, locations,
salaries, other compensation or terms or conditions of employment of any Hired Active Employee.
Buyer will set its own initial terms and conditions of employment for the Hired Active Employees
and others it may hire, including work rules, benefits and salary and wage structure, all as
permitted by law. Buyer is not obligated to assume any collective bargaining agreements under this
Agreement. Each Seller will be solely liable for any severance payment required to be made to its
employees due to the transactions contemplated by this Agreement.
(d) With respect to any benefit plans or policies of Buyer or Parent, no Hired Active Employee
shall be given credit for service with a Seller, NCPS or NDVS prior to the Closing for any purpose
including, but not limited to, eligibility, vesting and benefit accrual.
(e) After the Closing, Parent and Buyer shall allow all of the Hired Active Employees who are
residents of the United States to participate in Parent’s 401(k) plan on the same terms and
conditions as apply to other similarly situated employees of Buyer and its affiliates, with no
credit given for service with a Seller, NCPS or NDVS prior to Closing. As soon as practicable
after the Closing and subject to delivery by Sellers’ Representative to Buyer of a favorable
determination letter with respect to NCPS’ or NDVS’ 401(k) plan (or other evidence of tax
qualifications satisfactory to Buyer) and the satisfaction of any other applicable legal
requirements to such transfer, Sellers shall permit each such Hired Active Employee to effect a
“direct rollover” (within the meaning of Section 401(a)(31) of the Code) of his or her account
balances under the 401(k) plan in accordance with applicable Law, and Parent and Buyer shall cause
the Parent’s 401(k) plan to accept such direct rollover (including promissory notes evidencing
outstanding loans with respect to Hired Active Employees who elect a direct rollover of their
entire account balances).
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(f) Buyer will not assume any Plan and will not succeed to any Plan assets.
(g) Each Seller will (or will cause NCPS or NDVS to) give any notices required by Law and take
whatever other actions with respect to any Plan as may be necessary to carry out this Section 6.3.
(h) Each Seller will provide Buyer with completed INS Forms I-9 and attachments with respect
to each Hired Active Employee, except for such employees as that Seller certifies in writing to
Buyer are exempt from such requirement.
(i) The participation by each Hired Active Employee in Welfare Plans maintained by a Seller,
NCPS or NDVS shall cease on the Closing Date. As of the Closing Date, Buyer shall permit Hired
Active Employees immediately to commence participation in Parent’s Welfare Plans that are offered
to similarly situated employees of Buyer. Hired Active Employees may be eligible to participate in
Parent’s long and short-term disability plans only after such Hired Active Employees complete the
waiting period that applies to other similarly situated employees of Buyer and its Affiliates.
Hired Active Employees may not participate in Parent’s severance plans. Parent’s Welfare Plans in
which Hired Active Employees participate on and after the Closing Date shall waive any pre-existing
condition exclusion (to the extent such exclusion was waived under applicable Welfare Plans offered
by a Seller, NCPS or NDVS to its employees) and any proof of insurability for such Hired Active
Employees and their eligible dependents. For purposes of this Agreement, “Welfare Plan” shall mean
any plan, fund, policy or program which provides employees with welfare benefits or similar fringe
benefits.
VII. Conditions to Closing
7.1 Conditions to Buyer’s Obligations. The obligation of Buyer to take the actions
required to be taken by it at the Closing is subject to the satisfaction or waiver, in whole or in
part, in Buyer’s sole discretion (but no such waiver will waive any rights or remedy otherwise
available to Buyer), of each of the following conditions at or prior to the Closing:
(a) The representations and warranties set forth in Article III will be true and correct
(without taking into account any supplemental disclosures after the date of this Agreement by any
Seller or Shareholder or the discovery of information by Buyer);
(b) Sellers and the Shareholders will have performed and complied with each of their
agreements contained in this Agreement;
(c) Each Required Consent will have been obtained and be in full force and effect;
(d) Buyer will have obtained each Governmental Authorization required to operate the Business
in the manner it was operated prior to the Closing Date, other than authorization to access the
Massachusetts Criminal History Systems Board criminal offender record information system (XXXX);
(e) Buyer will have received evidence satisfactory to it that no Litigation is pending or
threatened (i) challenging or seeking to prevent or delay consummation of any of the transactions
contemplated by this Agreement, (ii) asserting the illegality of or seeking to render
45
unenforceable
any material provision of this Agreement or the Transition Services Agreement, (iii) seeking to
prohibit direct or indirect ownership, combination or operation by Buyer of any portion of the
Acquired Assets, or to compel Buyer or any of its Subsidiaries to dispose of, or to hold
separately, or to make any change in any portion of the business or assets of Buyer or its
Subsidiaries, as a result of the transactions contemplated by this Agreement, or incur any
burden, (iv) seeking to require direct or indirect transfer or sale by Buyer of, or to impose
material limitations on the ability of Buyer to exercise full rights of ownership of, any of the
Acquired Assets or (v) imposing or seeking to impose material damages or sanctions directly arising
out of the transactions contemplated by this Agreement on Buyer or any of its officers or directors
or with respect to any portion of the Acquired Assets;
(f) No Law or Governmental Order will have been enacted, entered, enforced, promulgated,
issued or deemed applicable to the transactions contemplated by this Agreement by any Governmental
Entity that would reasonably be expected to result, directly or indirectly, in any of the
consequences referred to in Section 7.1(f)
(g) After the date of this Agreement, no Material Adverse Effect will have occurred;
(h) No Person will have asserted or threatened that, other than as set forth in the Disclosure
Schedule, such Person (i) is the owner of, or has the right to acquire or to obtain ownership of,
any of the Acquired Assets or (ii) is entitled to all or any portion of the Purchase Price;
(i) Buyer will have received from counsel for Sellers a written opinion, dated the Closing
Date, addressed to Buyer and in the form set forth in Exhibit F;
(j) Buyer or an Affiliate or Subsidiary of Buyer will have entered into employment,
consulting, noncompete or nonsolicitation agreements with Xxxxxx Xxxxxxxxx, Xxxxx Xxxxxxxx and
Xxxxx Xxxxxx, on terms and conditions satisfactory to it, such agreements will be in full force and
effect and none of such Persons will have indicated any intention of not fulfilling his or her
obligations under any such agreement;
(k) Buyer will have been satisfied (in its sole discretion) with the results of its continuing
business, legal, environmental and accounting due diligence regarding Sellers, NCPS and NDVS;
(l) Seller will have delivered each of the agreements, certificates, instruments and other
documents that it is obligated to deliver pursuant to Section 2.8(b)(i), and such agreements so
delivered will be in full force and effect;
(m) Buyer will have received releases of all Encumbrances on the Acquired Assets, other than
Permitted Encumbrances; and
(n) Buyer will have received certificates dated as of a date not earlier than the fifth
business day prior to the Closing as to the good standing of each Seller, executed by the
appropriate officials of the State of Massachusetts and each jurisdiction in which a Seller, NCPS
or NDVS is licensed or qualified to do business as a foreign corporation as specified in Schedule
3.1.
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7.2 Conditions to Sellers’ Obligations. The obligation of Sellers to take the actions required to be taken by it at the Closing is
subject to the satisfaction or waiver, in whole or in part, in the sole discretion of Sellers’
Representative (but no such waiver will waive any right or remedy otherwise available under this
Agreement), of each of the following conditions at or prior to the Closing:
(a) The representations and warranties set forth in Article IV will be true and correct;
(b) Buyer will have performed and complied with each of its agreements contained in this
Agreement;
(c) No Law or Governmental Order will have been enacted, entered, enforced, promulgated,
issued or deemed applicable to the transactions contemplated by this Agreement by any Governmental
Entity that prohibits the Closing; and
(d) Buyer will have delivered each of the certificates, instruments and other documents that
it is obligated to deliver pursuant to Section 2.8(b)(ii).
VIII. Termination
8.1 Termination. This Agreement may be terminated prior to the Closing:
(a) by the mutual written consent of Buyer and Sellers’ Representative;
(b) by Sellers’ Representative, if
(i) Buyer has or will have breached any representation, warranty or agreement contained
in this Agreement in any material respect;
(ii) the transactions contemplated by this Agreement will not have been consummated on
or before May 31, 2005; provided, that Sellers’ Representative will not be entitled to
terminate this Agreement pursuant to this Section 8.1(b)(i) if Sellers’ failure to comply
fully with their obligations under this Agreement has prevented the consummation of the
transactions contemplated by this Agreement;
(iii) a Law or Governmental Order will have been enacted, entered, enforced,
promulgated, issued or deemed applicable to the transactions contemplated by this Agreement
by any Governmental Entity that prohibits the Closing;
(iv) any of the conditions set forth in Section 7.2 will have become impossible to
satisfy; or
(v) after the date of this Agreement, there is a material adverse change in the
financial condition of Buyer that significantly impairs Buyer’s ability to perform its
obligations under this Agreement.
(c) by Buyer, if
47
(i) Any Seller or Shareholder has or will have breached any representation, warranty or
agreement contained in this Agreement in any material respect;
(ii) the transactions contemplated by this Agreement will not have been consummated on
or before May 31, 2005; provided, that Buyer will not be entitled to terminate this
Agreement pursuant to this Section 8.1(c)(i) if Buyer’s failure to comply fully with its
obligations under this Agreement has prevented the consummation of the transactions
contemplated by this Agreement;
(iii) a Law or Governmental Order will have been enacted, entered, enforced,
promulgated, issued or deemed applicable to the transactions contemplated by this Agreement
by any Governmental Entity that would reasonably be expected to result directly or
indirectly, in any of the consequences referred to in Section 7.1(d);
(iv) after the date of this Agreement, a Material Adverse Effect will have occurred;
(v) any of the conditions set forth in Section 7.1 will have become impossible to
satisfy; or
(vi) Buyer will have discovered any fact or circumstance existing as of the date of
this Agreement that has not been previously disclosed on the Disclosure Schedule that has a
Material Adverse Effect.
8.2 Effect of Termination. The right of termination under Section 8.1 is in addition
to any other rights Buyer or a Seller may have under this Agreement or otherwise, and the exercise
of a right of termination will not be an election of remedies and will not preclude an action for
breach of this Agreement. If this Agreement is terminated, all continuing obligations of the
parties under this Agreement will terminate except that Article X and the Confidentiality Agreement
will continue in force in accordance with its terms unless terminated or modified by the parties in
writing.
IX. Indemnification
9.1 Indemnification by Sellers and Shareholders.
(a) Sellers and Shareholders (collectively, for purposes of this Article IX only, “Sellers”)
will indemnify in full Buyer and hold it harmless against any Loss, whether or not actually
incurred prior to the applicable date referred to in Section 9.1(e), arising from, relating to,
constituting or reflected by (i) any breach or inaccuracy in any of the representations and
warranties of Sellers contained in this Agreement or in the Disclosure Schedule or any closing
certificate delivered by or on behalf of any Seller pursuant to this Agreement (any such breach or
inaccuracy to be determined without regard to any qualification for “materiality,” “in all material
respects” or similar qualification and, with respect to the representations and warranties in
Section 3.11, without regard to any exception set forth on the Disclosure Schedule); (ii) the
operation of the Business on or prior to the Closing Date (except for liabilities accurately
reflected on the Final Closing Date Balance Sheet), (iii) the Litigation disclosed in Section 3.15
of the Disclosure Schedule; (iv) any liability of a Seller, NCPS or NDVS for Taxes incurred on
48
or
prior to the Closing Date; (v) failure of a Seller, NCPS or NDVS to pay and discharge its
obligations that Buyer has not explicitly assumed pursuant to this Agreement, including any
liability imposed on Buyer as a matter of Law; (vi) any claim by a customer of Buyer for a credit,
discount or payment arising out of any sales made by a Seller, NCPS or NDVS on or prior to the
Closing Date; (vii) any noncompliance with any Bulk Sales Laws or fraudulent transfer law in
respect of the contemplated transactions; (viii) any liability under the WARN Act or any similar
state or local Law that may result from an “Employment Loss,” as defined by 29 U.S.C. 2101(a)(6),
caused by any action of a Seller, NCPS or NDVS prior to the Closing or by Buyer’s decision not to
hire previous employees of a Seller, NCPS or NDVS; (ix) any Plan established or maintained by a
Seller, NCPS or NDVS; (x) any Retained Liabilities and (xi) any breach of any of the agreements of
any Seller contained in this Agreement (collectively, “Buyer Losses”).
(b) Sellers will indemnify Buyer for Buyer Losses (i) resulting from breaches or inaccuracies
of Sections 3.6 through 3.28 (excluding Sections 3.11 and 3.12) and (ii) pursuant to Section
9.1(a)(ii) only if the aggregate amount of all Buyer Losses attributable to this Section 9.1(b)
exceeds $100,000 (the “Basket Amount”), in which case Sellers will be liable for all Buyer Losses
under this Agreement; provided, however, that in determining the amount of Buyer Losses that Buyer
has incurred, in no event shall Sellers be liable for any individual Buyer Loss in an amount that
is less than $10,000, unless such Buyer Loss relates to a Buyer Claim that arises from the same or
substantially similar set of facts or circumstances as one or more other Buyer Claims and the
aggregate of Buyer Losses so arising is at least $10,000.
(c) All Buyer Claims for indemnification pursuant to this Article IX shall be satisfied first
from the Retained Amount. In the event that the available Retained Amount is insufficient to cover
any claim for indemnification pursuant to this Article IX, Buyer Claims shall be satisfied by
payment by Sellers to Buyer via wire transfer of immediately available funds.
(d) Sellers’ Liability will not exceed $10,000,000 for Buyer Losses (i) resulting from
breaches or inaccuracies of Sections 3.6 through 3.28 (excluding Sections 3.11 and 3.12), or (ii)
pursuant to Section 9.1(a)(ii).
(e) If Buyer has a claim for indemnification under this Section 9.1, Buyer will deliver to
Sellers one or more written notices of Buyer Losses (each a “Buyer Claim”), prior to the second
anniversary of the Closing Date, except for Buyer Losses arising from a breach or inaccuracy in the
representations and warranties made in Sections 3.1 through 3.5 (Organizational Structure and Power
and Authority), 3.12 (Tax Matters), 3.13 (Intellectual Property), 3.18 (Environmental) or 3.21
(Employee Benefits) or any breach of any of the agreements by any Seller contained in this
Agreement, for which Buyer will deliver a Buyer Claim prior to 30 days after the expiration of the
applicable statute of limitations. No Seller will have any liability under this Section 9.1 unless
the written notices required by the preceding sentence are given by the date specified. Any Buyer
Claim will state in reasonable detail the basis for such Buyer Losses to the extent then known by
Buyer and the nature of the Buyer Loss for which indemnification is sought, and it may state the
amount of the Buyer Loss claimed. If such Buyer Claim (or an amended Buyer Claim) states the
amount of the Buyer Loss claimed and Sellers notify Buyer that Sellers do not
dispute the claim described in such notice or fails to notify Buyer within 20 business days
after delivery of such notice by Buyer whether Sellers dispute the claim described in such notice,
the Buyer Loss in the amount specified in Buyer’s notice will be admitted by Sellers (an “Admitted
49
Claim”), and Sellers will pay the amount of such Buyer Loss to Buyer. If Sellers have timely
disputed the liability of Sellers with respect to a Buyer Claim (or an amended Buyer Claim) stating
the amount of a Buyer Loss claimed, Sellers and Buyer will proceed in good faith to negotiate a
resolution of such dispute. If a claim for indemnification has not been resolved within 30 days
after delivery of Sellers’ notice, Buyer may seek judicial recourse. If a Buyer Claim does not
state the amount of the Buyer Loss claimed, such omission will not preclude Buyer from recovering
from Sellers the amount of the Buyer Loss described in such Buyer Claim if any such amount is
subsequently provided in an amended Buyer Claim. In order to assert its right to indemnification
under this Article IX, Buyer will not be required to provide any notice except as provided in this
Section 9.1(e).
(f) Sellers will pay the amount of any Buyer Loss to Buyer within 10 business days following
the determination of Sellers’ liability for and the amount of a Buyer Loss (whether such
determination is made pursuant to the procedures set forth in this Section 9.1, by agreement
between Buyer and Sellers, by arbitration award or by final adjudication).
(g) For purposes of this Article IX, the liability of each of NCPS Business Trust, NDVS
Business Trust and the Family Shareholders shall be joint and several exclusive of the Xxxxxx
Trust.
(h) The Xxxxxx Trust’s Liability for Buyer Losses under this Agreement will not exceed the
lesser of (i) 16% of the Purchase Agreement or (ii) the amount of the Purchase Price distributed by
the Sellers to the Xxxxxx Trust. The foregoing limitation of liability shall not apply to Buyer
Losses resulting from a breach of any covenant of the Xxxxxx Trust in this Agreement.
9.2 Indemnification by Buyer and Parent.
(a) Buyer and Parent (collectively, for purposes of this Article IX only, “Buyer”) will
indemnify Sellers in full and hold them harmless against any Loss, whether or not actually incurred
prior to the date referred to in Section 9.2(d), arising from, relating to or constituting (i) any
breach or inaccuracy in any of the representations and warranties of Buyer contained in this
Agreement or in any certificate delivered by or on behalf of Buyer pursuant to this Agreement (any
such breach or inaccuracy to be determined without regard to any qualification as to “materiality,”
“in all material respects” or similar qualification), (ii) any breach of any of the agreements of
Buyer contained in this Agreement, (iii) the failure of Buyer to assume, pay and discharge the
Assumed Liabilities and (iv) any Liability resulting exclusively from the ownership or use of the
Acquired Assets after Closing (“Sellers’ Losses”).
(b) Buyer will indemnify Sellers for Sellers’ Losses pursuant to Section 9.2(a) only if the
aggregate amount of all Sellers’ Losses attributable to Section 9.2(a) exceeds the Basket Amount,
in which case Buyer will be liable for the aggregate amount of all Sellers’ Losses under
this Agreement; provided, however, that in determining the amount of Sellers’ Losses that
Sellers have incurred, in no event shall Buyer be liable for any individual Sellers’ Loss in an
amount that is less than $10,000, unless such Sellers’ Loss relates to a Seller Claim that arises
from the same or substantially similar set of facts or circumstances as one or more other Seller
Claims and the aggregate of Sellers’ Losses so arising is at least $10,000.
50
(c) Buyer’s liability will not exceed $500,000 for Sellers’ Losses attributable to Section
9.2(a).
(d) If Sellers have a claim for indemnification under this Section 9.2, Sellers’
Representative will deliver to Buyer one or more written notices of Sellers’ Losses (each, a
“Seller Claim”) prior to the second anniversary of the Closing Date. Buyer will have no liability
under this Section 9.2 unless the written notices required by the preceding sentence are given in a
timely manner. Any written notice will state in reasonable detail the basis for Sellers’ Losses to
the extent then known by Sellers and the nature of Sellers’ Losses for which indemnification is
sought, and it may state the amount of Sellers’ Losses claimed. If such written notice (or an
amended notice) states the amount of Sellers’ Losses claimed and Buyer notifies Sellers that Buyer
does not dispute the claim described in such notice or fails to notify Sellers within 20 business
days after delivery of such notice by Sellers whether Buyer disputes the claim described in such
notice, Sellers’ Losses in the amount specified in Sellers’ notice will be admitted by Buyer, and
Buyer will pay the amount of Sellers’ Losses to Sellers. If Buyer has timely disputed its
liability with respect to such claim, Buyer and Sellers’ Representative will proceed in good faith
to negotiate a resolution of such dispute. If a claim for indemnification has not been resolved
within 30 days after delivery of Buyer’s notice, Sellers may seek judicial recourse. If a written
notice does not state the amount of Sellers’ Losses claimed, such omission will not preclude
Sellers from recovering from Buyer the amount of Sellers’ Losses with respect to the claim
described in such notice if any such amount is promptly provided once determined. In order to
assert its right to indemnification under this Article IX, Sellers will not be required to provide
any notice except as provided in this Section 9.2.
(e) Buyer will pay the amount of any Sellers’ Losses to Sellers’ Representative within 10
business days following the determination of Buyer’s liability for and the amount of Sellers’
Losses (whether such determination is made pursuant to the procedures set forth in this Section
9.2, by agreement between Sellers’ Representative and Buyer, by arbitration award or by final
adjudication).
9.3 Third-Party Actions.
(a) Sellers will indemnify, defend and hold harmless Buyer and its officers, directors,
employees, agents, shareholders and Affiliates (collectively, the “Buyer Indemnified Parties”)
against any Loss arising from, relating to or constituting any Litigation instituted by any third
party arising out of the actions or inactions of any Seller, NCPS or NDVS (or allegations thereof)
whether occurring prior to, on or after the Closing Date that are or may be Buyer Losses (any such
third party action or proceeding being referred to as a “Third-Party Action”). A Buyer Indemnified
Party will give Sellers’ Representative prompt written notice of the commencement
of a Third-Party Action. The complaint or other papers pursuant to which the third party
commenced such Third-Party Action will be attached to such written notice. The failure to give
prompt written notice will not affect any Buyer Indemnified Party’s right to indemnification unless
such failure has materially and adversely affected Sellers’ ability to defend successfully such
Third-Party Action.
(b) Sellers will contest and defend such Third-Party Action on behalf of any Buyer Indemnified
Party that requests that they do so. Notice of the intention to so contest and defend
51
will be given by Sellers’ Representative to the requesting Buyer Indemnified Party within 20 business days
after the Buyer Indemnified Party’s notice of such Third-Party Action (but, in all events, at least
five business days prior to the date that a response to such Third-Party Action is due to be
filed). Such contest and defense will be conducted by reputable attorneys retained by Sellers. A
Buyer Indemnified Party will be entitled at any time, at its own cost and expense, to participate
in such contest and defense and to be represented by attorneys of its own choosing. If the Buyer
Indemnified Party elects to participate in such defense, the Buyer Indemnified Party will cooperate
with Sellers in the conduct of such defense. A Buyer Indemnified Party will cooperate with Sellers
to the extent reasonably requested by Sellers in the contest and defense of such Third-Party
Action, including providing reasonable access (upon reasonable notice) to the books, records and
employees of the Buyer Indemnified Party if relevant to the defense of such Third-Party Action in
accordance with the terms of Section 6.2; provided, that such cooperation will not unduly disrupt
the operations of the business of the Buyer Indemnified Party or cause the Buyer Indemnified Party
to waive any statutory or common law privileges, breach any confidentiality obligations owed to
third parties or otherwise cause any confidential information of such Buyer Indemnified Party to
become public.
(c) If any Buyer Indemnified Party does not request that Sellers contest and defend a
Third-Party Action, or if after such request Sellers do not contest and defend a Third-Party Action
or if any Buyer Indemnified Party reasonably determines that Sellers are not adequately
representing or, because of a conflict of interest, may not adequately represent any interests of
the Buyer Indemnified Party at any time after requesting Sellers to do so, such Buyer Indemnified
Party will be entitled to conduct its own defense and to be represented by one attorney of its own
choosing, all at Sellers’ cost and expense. Sellers will pay as incurred (no later than 25 days
after presentation) the reasonable fees and expenses of the counsel retained by such Buyer
Indemnified Party. Sellers will be entitled at any time, at its own cost and expense, to
participate in such contest and defense and to be represented by attorneys of its own choosing. If
Sellers elect to participate in such defense, Sellers will cooperate with the Buyer Indemnified
Party in the conduct of such defense. Sellers will cooperate with a Buyer Indemnified Party to the
extent reasonably requested by a Buyer Indemnified Party in the contest and defense of such
Third-Party Action, including providing reasonable access (upon reasonable notice) to the books,
records and employees of Sellers if relevant to the defense of such Third-Party Action; provided,
that such cooperation will not unduly disrupt the operations of the business of Sellers or cause
Sellers to waive any statutory or common law privileges, breach any confidentiality obligations
owed to third parties or otherwise cause any confidential information of such Seller to become
public.
(d) Neither a Buyer Indemnified Party nor Sellers may concede, settle or compromise any
Third-Party Action without the consent of the other party, which consents will not be unreasonably
withheld.
9.4 Sole and Exclusive Remedy. Prior to or in connection with the Closing, the
parties will have available to them all remedies available at law or in equity, including specific
performance or other equitable remedies. After the Closing, the rights set forth in Sections 9.1,
9.2 and, to the extent applicable, 9.3 will be the exclusive remedy for breach or inaccuracy of any
of the representations and warranties contained in Articles III and IV of this Agreement and will
be in lieu of contract remedies, but the parties otherwise will have available to them all other
52
remedies available at law or in equity. Notwithstanding the foregoing, nothing in this Agreement
will prevent any party from bringing an action based upon fraud or willful misconduct by the other
party in connection with this Agreement or limit the amounts which may be recoverable upon any
finding of the same on behalf of the other party. In the event such action is brought, the
prevailing party’s attorneys’ fees and costs will be paid by the nonprevailing party.
9.5 Tax Adjustment. Any payment to Buyer under this Article IX will be, for Tax
purposes, to the extent permitted by Law, an adjustment to the Purchase Price. In calculating any
Loss, the amount will be increased to give effect to any Tax related to the receipt of any payment
and the amount will be decreased to give effect to any benefit related to the increase of such Loss
to the extent actually received by Buyer.
9.6 Indemnification in Case of Strict Liability or Indemnitee Negligence. THE
INDEMNIFICATION PROVISIONS IN THIS ARTICLE IX WILL BE ENFORCEABLE REGARDLESS OF WHETHER THE
LIABILITY IS BASED UPON PAST, PRESENT OR FUTURE ACTS, CLAIMS OR LAWS (INCLUDING ANY PAST, PRESENT
OR FUTURE BULK SALES LAW, ENVIRONMENTAL LAW, FRAUDULENT TRANSFER ACT, OCCUPATIONAL SAFETY AND
HEALTH LAW OR PRODUCTS LIABILITY, SECURITIES OR OTHER LAW) AND REGARDLESS OF WHETHER ANY PERSON
(INCLUDING THE PERSON FROM WHOM INDEMNIFICATION IS SOUGHT) ALLEGES OR PROVES THE SOLE, CONCURRENT,
CONTRIBUTORY OR COMPARATIVE NEGLIGENCE OF THE PERSON SEEKING INDEMNIFICATION OR THE SOLE OR
CONCURRENT STRICT LIABILITY IMPOSED UPON THE PERSON SEEKING INDEMNIFICATION.
X. General
10.1 Press Releases and Announcements. Any public announcement, including any
announcement to employees, customers, suppliers or others having dealings with the Business, or
similar publicity with respect to this Agreement or the transactions contemplated by this
Agreement, will be issued, if at all, at such time and in such manner as Buyer determines and
approves. The parties agree that the Confidentiality Agreement will not prohibit Buyer from making any such public announcement or
similar publicity. Buyer will have the right to be present for any in-person announcement by any
Seller, Shareholder, NCPS or NDVS. Unless consented to by Buyer or required by Law, each Seller
and Shareholder will keep, and each Seller and Shareholder will cause NCPS and NDVS to keep, this
Agreement and the transactions contemplated by this Agreement confidential.
10.2 Expenses. Except as otherwise expressly provided for in this Agreement, Sellers
and the Shareholders, on the one hand, and Buyer, on the other hand, will each pay all expenses
incurred by each of them (and, in the case of Sellers, the expenses incurred by NCPS and NDVS and
Sellers’ Representative) in connection with the transactions contemplated by this Agreement,
including legal, accounting, investment banking and consulting fees and expenses incurred in
negotiating, executing and delivering this Agreement and the other agreements, exhibits, documents
and instruments contemplated by this Agreement (whether the transactions contemplated by this
Agreement are consummated or not).
53
10.3 Amendment and Waiver. This Agreement may not be amended, nor may a provision of
this Agreement or any default, misrepresentation or breach of warranty or agreement under this
Agreement be waived or a consent be rendered except in a writing executed by the party against
which such action is sought to be enforced. Neither the failure nor any delay by any Person in
exercising any right, power or privilege under this Agreement will operate as a waiver of such
right, power or privilege, and no single or partial exercise of any such right, power or privilege
will preclude any other or further exercise of such right, power or privilege or the exercise of
any other right, power or privilege. In addition, no course of dealing between or among any
Persons having any interest in this Agreement will be deemed effective to modify or amend any part
of this Agreement or any rights or obligations of any Person under or by reason of this Agreement.
The rights and remedies of the parties to this Agreement are cumulative and not alternative.
10.4 Notices. All notices, demands and other communications to be given or delivered
under or by reason of the provisions of this Agreement will be in writing and will be deemed to
have been given (i) when delivered if personally delivered by hand (with written confirmation of
receipt), (ii) when received if sent by a nationally recognized overnight courier service (receipt
requested), (iii) five business days after being mailed, if sent by first class mail, return
receipt requested, or (iv) when receipt is acknowledged by an affirmative act of the party
receiving notice, if sent by facsimile, telecopy or other electronic transmission device (provided
that such an acknowledgement does not include an acknowledgment generated automatically by a
facsimile or telecopy machine or other electronic transmission device). Notices, demands and
communications to Buyer, Seller, Sellers’ Representative and the Shareholders will, unless another
address is specified in writing, be sent to the address indicated below:
If to Buyer:
Chex Systems, Inc.
Xxxxxx Center II, Ste. 300
0000 Xxxxx Xxxxxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Attention: General Counsel
Facsimile No. (000) 000-0000
Xxxxxx Center II, Ste. 300
0000 Xxxxx Xxxxxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Attention: General Counsel
Facsimile No. (000) 000-0000
With a copy to:
eFunds Corporation
Xxxxxx Center II, Ste. 300
0000 Xxxxx Xxxxxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Attention: Chief Executive Officer
Facsimile No. (000) 000-0000
Xxxxxx Center II, Ste. 300
0000 Xxxxx Xxxxxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Attention: Chief Executive Officer
Facsimile No. (000) 000-0000
00
Xxxxxx & Xxxxxxx XXX
Xxxxx 0000
00 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxxx
Facsimile No. (000) 000-0000
Xxxxx 0000
00 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxxx
Facsimile No. (000) 000-0000
If to a Seller, Sellers’ Representative or the Family Shareholders:
Xxxxxx X. Xxxxxxx, Xx.
Fleet Environmental Services LLC
00-X Xxxx Xxxxxx
Xxxxxxxx, XX 00000
Facsimile No. (000) 000-0000
Fleet Environmental Services LLC
00-X Xxxx Xxxxxx
Xxxxxxxx, XX 00000
Facsimile No. (000) 000-0000
With a copy to:
Xxxxx X. Xxxxxxxxx, P.C.
One Boston Place – 00xx Xxxxx
Xxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxxxxx, Esq.
Facsimile No. (000) 000-0000
One Boston Place – 00xx Xxxxx
Xxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxxxxx, Esq.
Facsimile No. (000) 000-0000
If to the Xxxxxx Trust or Xxxxx X. Xxxxxx, Xx.:
Xxxxx X. Xxxxxx, Xx. Grantor Trust
000 Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxxxxx
Attn: Xxxxx X. Xxxxxx, Trustee
Facsimile No. (000) 000-0000
000 Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxxxxx
Attn: Xxxxx X. Xxxxxx, Trustee
Facsimile No. (000) 000-0000
With a copy to:
Klieman, Lyons, Xxxxxxxxx & Gross
00 Xxxxxx Xxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxx
Facsimile No. (000) 000-0000
00 Xxxxxx Xxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxx
Facsimile No. (000) 000-0000
10.5 Assignment. Neither this Agreement nor any of the rights, interests or
obligations under this Agreement may be assigned by any party to this Agreement without the prior
written consent of the other parties to this Agreement, except that Buyer may assign any of its
rights under this Agreement to one or more Affiliates of Buyer, so long as Buyer remains
responsible for the performance of all of its obligations under this Agreement. Subject to the
foregoing, this Agreement and all of the provisions of this Agreement will be binding upon and
inure to the benefit of the parties to this Agreement and their respective successors and permitted
assigns.
55
10.6 No Third-Party Beneficiaries. Nothing expressed or referred to in this Agreement
confers any rights or remedies upon any Person that is not a party or permitted assign of a party
to this Agreement.
10.7 Severability. In addition to the severability provisions of Section 5.14,
whenever possible, each provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable Law, but if any provision of this Agreement is held to be
prohibited by or invalid under applicable Law, such provision will be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder of such provision or
the remaining provisions of this Agreement.
10.8 Complete Agreement. This Agreement, the Confidentiality Agreement and, when
executed and delivered, the Transition Services Agreement, contain the complete agreement between
the parties and supersede any prior understandings, agreements or representations by or between the
parties, written or oral. Each Seller and Shareholder acknowledges that Buyer has made no
representations, warranties, agreements, undertakings or promises except for those expressly set
forth in this Agreement or in agreements referred to herein that survive the execution and
delivery of this Agreement.
10.9 Schedules. The Disclosure Schedule contains a series of schedules corresponding
to the sections contained in Article III. Notwithstanding anything to the contrary in this
Agreement and any cross references in any sections of the Disclosure Schedule (which
cross-references are offered only for the convenience of the reader), any matter which is disclosed
in any particular section of the Disclosure Schedule shall be deemed to be disclosed with respect
to other representations and warranties in the Agreement if it is reasonably apparent that the
matter disclosed establishes an exception to such other representations or warranties in the
Agreement. The mere listing (or inclusion of a copy) of a document or other item is not deemed
adequate to disclose an exception to a representation or warranty unless the representation or
warranty relates solely to the existence of the document or other item itself. The inclusion of
any disclosure or information in the Disclosure Schedule or any other schedule or exhibit which
goes beyond the requirements of the Agreement is offered for informational purposes only and shall
not form the basis for any inference that such disclosures or information constitute a complete
listing of information of a similar nature which is not required by the terms of the Agreement to
be disclosed.
10.10 Signatures; Counterparts. This Agreement may be executed in one or more
counterparts, any one of which need not contain the signatures of more than one party, but all such
counterparts taken together will constitute one and the same instrument. A facsimile signature
will be considered an original signature.
10.11 Governing Law. THE DOMESTIC LAW, WITHOUT REGARD TO CONFLICTS OF LAWS
PRINCIPLES, OF THE STATE OF DELAWARE WILL GOVERN ALL QUESTIONS CONCERNING THE CONSTRUCTION,
VALIDITY AND INTERPRETATION OF THIS AGREEMENT AND THE PERFORMANCE OF THE OBLIGATIONS IMPOSED BY
THIS AGREEMENT.
56
10.12 Specific Performance. Each of the parties acknowledges and agrees that the
subject matter of this Agreement, including the business, assets and properties of Sellers, NCPS
and NDVS, is unique, that the other parties would be damaged irreparably in the event any of the
provisions of this Agreement are not performed in accordance with their specific terms or otherwise
are breached, and that the remedies at law would not be adequate to compensate such other parties
not in default or in breach. Accordingly, each of the parties agrees that the other parties will
be entitled to an injunction or injunctions to prevent breaches of the provisions of this Agreement
and to enforce specifically this Agreement and the terms and provisions of this Agreement in
addition to any other remedy to which they may be entitled, at law or in equity (without any
requirement that Buyer provide any bond or other security). The parties waive any defense that a
remedy at law is adequate and any requirement to post bond or provide similar security in connection with
actions instituted for injunctive relief or specific performance of this Agreement.
10.13 Jurisdiction. Subject to the procedures specified in Article II, each of the
parties submits to the exclusive jurisdiction of any state or federal court sitting in Wilmington,
Delaware, in any action or proceeding arising out of or relating to this Agreement and agrees that
all claims in respect of the action or proceeding may be heard and determined in any such court.
Each party also agrees not to bring any action or proceeding arising out of or relating to this
Agreement in any other court. Each of the parties waives any defense of inconvenient forum to the
maintenance of any action or proceeding so brought and waives any bond, surety or other security
that might be required of any other party with respect to any such action or proceeding. The
parties agree that either or both of them may file a copy of this paragraph with any court as
written evidence of the knowing, voluntary and bargained agreement between the parties irrevocably
to waive any objections to venue or to convenience of forum.
10.14 Waiver of Jury Trial. EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY
THAT MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND
THEREFORE IT IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR
THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (I) NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT
SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (II)
IT UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF SUCH WAIVER, (III) IT MAKES SUCH WAIVER
VOLUNTARILY AND (IV) IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE
MUTUAL WAIVER AND CERTIFICATIONS IN THIS SECTION 10.14.
10.15 Construction. The parties and their respective counsel have participated
jointly in the negotiation and drafting of this Agreement. In addition, each of the parties
acknowledges that it is sophisticated and has been advised by experienced counsel and, to the
extent it deemed necessary, other advisors in connection with the negotiation and drafting of this
Agreement. In
57
the event an ambiguity or question of intent or interpretation arises, this
Agreement will be construed as if drafted jointly by the parties and no presumption or burden of
proof will arise favoring or disfavoring any party by virtue of the authorship of any of the
provisions of this Agreement. The parties intend that each representation, warranty and agreement
contained in this Agreement will have independent significance. If any party has breached any
representation, warranty or agreement in any respect, the fact that there exists another
representation, warranty or agreement relating to the same subject matter (regardless of the relative levels of specificity) that
the party has not breached will not detract from or mitigate the fact that the party is in breach
of the first representation, warranty or agreement. Any reference to any Law will be deemed to
refer to all rules and regulations promulgated thereunder, unless the context requires otherwise.
The headings preceding the text of articles and sections included in this Agreement and the
headings to the schedules and exhibits are for convenience only and are not to be deemed part of
this Agreement or given effect in interpreting this Agreement. References to sections, articles,
schedules or exhibits are to the sections, articles, schedules and exhibits contained in, referred
to or attached to this Agreement, unless otherwise specified. The word “including” means
“including without limitation.” A statement that an action has not occurred in the past means that
it is also not presently occurring. When any party may take any permissive action, including the
granting of a consent, the waiver of any provision of this Agreement or otherwise, whether to take
such action is in its sole and absolute discretion. The use of the masculine, feminine or neuter
gender or the singular or plural form of words will not limit any provisions of this Agreement. A
statement that an item is listed, disclosed or described means that it is correctly listed,
disclosed or described, and a statement that a copy of an item has been delivered means a true and
correct copy of the item has been delivered.
10.16 Time of Essence. With regard to all dates and time periods set forth or
referred to in this Agreement, time is of the essence.
58
IN WITNESS WHEREOF, Buyer, Parent, Sellers, Shareholders and Sellers’ Representative have
executed this Asset Purchase Agreement as of the date first above written.
BUYER:
|
SELLERS: | |
CHEX SYSTEMS, INC.
|
NATIONAL CHECK PROTECTION | |
SERVICE BUSINESS TRUST | ||
By: /s/ Xxxx Xxxxx
|
By: /s/ Xxxxxx X. Xxxxxxx, Xx. | |
Name: Xxxx Xxxxx
|
Name: Xxxxxx X. Xxxxxxx, Xx. | |
Title: Vice President
|
Title: | |
PARENT:
|
NATIONAL DATA VERIFICATION | |
SERVICE BUSINESS TRUST | ||
EFUNDS CORPORATION |
||
By: /s/ Xxxxxx X. Xxxxxxx | ||
By: /s/ Rahul
|
Name: Xxxxxx X. Xxxxxxx | |
Name: Xxxxx Xxxxx
|
Title: | |
Title: SVP, Payment Account Solutions |
||
SHAREHOLDERS: | ||
SELLERS’ REPRESENTATIVE: |
||
/s/ Xxxxxx X. Xxxxxxx | ||
XXXXXX X. XXXXXXX, XX. | ||
/s/ Xxxxxx X. Xxxxxxx |
||
XXXXXX X. XXXXXXX, XX.
|
/s/ Xxxx X. Xxxxxxx | |
XXXX X. XXXXXXX | ||
SOLELY FOR PURPOSES OF |
||
SECTION 5.16 AND ARTICLE X:
|
/s/ Xxxxxxx X. Xxxxxxx | |
XXXXXXX XXXXXXX | ||
/s/ X. X. Xxxxx
|
/s/ Xxxxxxxxxxx Xxxxxxx | |
XXXXX X. XXXXXX, XX.
|
XXXXXXXXXXX XXXXXXX | |
XXXXX X. XXXXXX, XX. | ||
GRANTOR TRUST | ||
By: /s/ Xxxxx X. Xxxxxx, Trustee | ||
Xxxxx X. Xxxxxx, Trustee |
59
List Identifying Contents of
Omitted Schedules
Omitted Schedules
The following Exhibits and Schedules
have been omitted from this Exhibit
10.1:
Exhibit A—Shareholders
Exhibit C—Transition Services Agreement
Exhibit D—Xxxx of Sale
Exhibit E—Assignment and Assumption Agreement
Exhibit F—Form of Opinion of Counsel for Seller
Disclosure Schedule
Exhibit C—Transition Services Agreement
Exhibit D—Xxxx of Sale
Exhibit E—Assignment and Assumption Agreement
Exhibit F—Form of Opinion of Counsel for Seller
Disclosure Schedule
The registrant will furnish
supplementally a copy of any omitted
Schedule or Exhibit to the Securities
and Exchange Commission upon the
request of the Commission.
60
A-1
EXHIBIT B
Definitions
“Acquired Assets” has the meaning set forth in Section 2.1.
“Active Employee” means any employee employed on the Closing Date in the Business who is a
bargaining unit employee currently covered by a collective bargaining agreement or employed
exclusively by a Seller, NCPS or NDVS, including employees on temporary leave of absence, family
medical leave, military leave, temporary disability or sick leave, but excluding employees on
long-term disability leave.
“Admitted Claim” has the meaning set forth in Section 9.1(e).
“Agreement” has the meaning set forth in the first paragraph of this Agreement.
“Affiliate” has the meaning set forth in Rule 12b-2 under the Exchange Act.
“Annual Financial Statements” has the meaning set forth in Section 3.6.
“Assignment and Assumption Agreement” has the meaning set forth in Section 2.8(b)(i)(G).
“B of A” has the meaning set forth in Section 2.7(b)(ii).
“B of A Locations” has the meaning set forth in Section 2.7(b)(ii).
“Basket Amount” has the meaning set forth in Section 9.1(b).
“Business” has the meaning set forth in the Recitals.
“Buyer” has the meaning set forth in the first paragraph of this Agreement and, for purposes
of Article IX only, the meaning set forth in Section 9.2(a).
“Buyer Claim” has the meaning set forth in Section 9.1(e).
“Buyer Indemnified Parties” has the meaning set forth in Section 9.3(a).
“Buyer Losses” has the meaning set forth in Section 9.1(a).
“Capital Lease” means a lease on which a Seller, NCPS or NDVS is a lessee that is a capital
lease as determined in accordance with GAAP.
“Closing” has the meaning set forth in Section 2.8(a).
“Closing Date” has the meaning set forth in Section 2.8(a).
“Closing Date Working Capital” has the meaning set forth in Section 2.9(a).
B-1
“Code” means the Internal Revenue Code of 1986, as amended.
“Competing Business” has the meaning set forth in Section 5.14(a).
“Confidential Information” has the meaning set forth in Section 5.12(a).
“Confidentiality Agreement” means that certain Confidentiality Agreement dated October 11,
2004, between Sellers and Parent.
“Consent” means any authorization, consent, approval, filing, waiver, exemption or other
action by or notice to any Person.
“Contract” means a contract, agreement, lease, commitment or binding understanding, whether
oral or written, that is in effect as of the date of this Agreement or any time after the date of
this Agreement.
“Contract Retained Amount” has the meaning set forth in Section 2.7(b)(i).
“Contract Retained Amount Payment” has the meaning set forth in Section 2.7(b)(i).
“Disclosure Schedule” means the schedule delivered by Sellers’ Representative to Buyer on or
prior to the date of this Agreement.
“Employment Loss” has the meaning set forth in Section 9.1(a).
“Encumbrance” means any charge, claim, community property interest, easement, covenant,
condition, equitable interest, lien, option, pledge, security interest, right of first refusal or
restriction of any kind, including any restriction on use, voting, transfer, receipt of income or
exercise of any other attribute of ownership.
“Environmental Laws” has the meaning set forth in Section 3.18(a)
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and the rules
and regulations thereunder.
“ERISA Affiliate” means any entity or trade or business that is treated as a member of the
controlled group of a Seller, NCPS or NDVS within the meaning of Section 414(b), (c), (m) or (o) of
the Code.
“Estimated Closing Balance Sheet” has the meaning set forth in Section 2.6.
“Estimated Closing Date Working Capital” has the meaning set forth in Section 2.6.
“Estimated Purchase Price” has the meaning set forth in Section 2.6.
“Excess Working Capital” has the meaning set forth in Section 2.9(d)(i).
“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and
regulations thereunder.
B-2
“Excluded Contracts” has the meaning set forth in Section 2.2(f).
“Family Shareholders” means all Shareholders other than the Xxxxxx Trust.
“Final Closing Date Balance Sheet” has the meaning set forth in Section 2.9(a).
“Final IRS COBRA Regulations” has the meaning set forth in Section 5.19.
“GAAP” means United States generally accepted accounting principles, as in effect from time to
time.
“Governmental Authorization” means any approval, consent, license, permit, waiver,
registration or other authorization issued, granted, given, made available or otherwise required by
any Governmental Entity or pursuant to Law.
“Governmental Entity” means any federal, state, local or foreign court, arbitral tribunal,
administrative or governmental agency or commission, authority, or body or any instrumentality or
political subdivision thereof.
“Governmental Order” means any judgment, injunction, writ, order, ruling, award or decree by
any Governmental Entity or arbitrator.
“Xxxxxx Trust” means the Xxxxx X. Xxxxxx, Xx. Grantor Trust.
“Xxxxxx/Xxxxxxx Litigation” has the meaning set forth in Section 3.17.
“Hired Active Employees” has the meaning set forth in Section 6.3(b).
“Insider” means (i) a shareholder, officer, director or employee of NCPS or NDVS, (ii) any
trustee, shareholder or employee of a Seller, (iii) any Member of the Immediate Family of any
shareholder, officer, director or employee of NCPS, NDVS or any trustee, shareholder or employee of
a Seller or (iv) any entity in which any of the Persons described in clause (i), (ii) or (iii) owns
any beneficial interest (other than less than three percent of the outstanding shares of capital
stock of any corporation whose stock is listed on a national securities exchange or publicly traded
on The NASDAQ National Market).
“Intellectual Property Rights” means (i) rights in patents, patent applications and patentable
subject matter, whether or not the subject of an application, (ii) rights in trademarks, service
marks, trade names, trade dress and other designators of origin, registered or unregistered, (iii)
rights in copyrightable subject matter or protectable designs, registered or unregistered, (iv)
trade secrets, (v) rights in internet domain names, uniform resource locators and e-mail addresses,
(vi) rights in semiconductor topographies (mask works), registered or unregistered, (vii) know-how
and (viii) all other intellectual and industrial property rights of every kind and nature and
however designated, whether arising by operation of Law, Contract, license or otherwise.
“IRS” means the United States Internal Revenue Service.
B-3
“Knowledge of Sellers” or “Sellers’ Knowledge” means the knowledge of (i) a Seller, any Family
Shareholder or any of their respective shareholders or trustees (but not including the Xxxxxx
Trust), (ii) any director or officer of NCPS or NDVS, or (iii) any knowledge that would have been
acquired by any such Person upon appropriate inquiry and investigation.
“Last Fiscal Year End” has the meaning set forth in Section 3.6.
“Latest Balance Sheets” has the meaning set forth in Section 3.6.
“Latest Balance Sheet Date” has the meaning set forth in Section 3.6.
“Latest Financial Statements” has the meaning set forth in Section 3.6.
“Law” means any domestic or foreign law (including all implementing regulations and
interpretations), constitutional provision, statute, rule, regulation, ordinance, treaty, order,
decree, decision, certificate or ruling enforceable at law or in equity.
“Liability” means any liability or obligation whether accrued, absolute, contingent,
unliquidated or otherwise, whether due or to become due, whether known or unknown, and regardless
of when asserted.
“Licensed-In Intellectual Property Rights” means Third-Party Intellectual Property Rights used
or held for use by a Seller, NCPS or NDVS with the permission of the owner.
“Litigation” means any claim, action, arbitration, mediation, audit, hearing, investigation,
proceeding, litigation or suit (whether civil, criminal, administrative, investigative or informal)
commenced, brought, conducted or heard by or before, or otherwise involving, any Governmental
Entity or arbitrator or mediator.
“Loss” means any damage, deficiency, penalty, fine, cost, amount paid in settlement,
Liability, loss, expense or fee (including but not limited to court costs, costs of investigators,
fees and reasonable expenses of attorneys, accountants, financial advisors and other experts and
other expenses of Litigation).
“Material Adverse Effect” means any change, effect, event or condition, individually or in the
aggregate, that has had, or, with the passage of time, could have, a material adverse effect on the
business, assets, properties, condition (financial or otherwise), results of operations, prospects
or customer, supplier or employee relationships of a Seller, NCPS or NDVS.
“Material Contracts” has the meaning set forth in Section 3.14(a).
“Member of the Immediate Family” of a Person means a spouse, parent, child, sibling, mother-
or father-in-law, son- or daughter-in-law, and brother- or sister-in-law of such Person.
“Mergers” has the meaning set forth in the Section 5.4.
“NCPS” has the meaning set froth in the Recitals.
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“NCPS Business Trust” has the meaning set forth in the Recitals.
“NDVS” has the meaning set forth in the Recitals.
“NDVS Business Trust” has the meaning set forth in the Recitals.
“NDVS Business Trust” has the meaning set forth in the first paragraph of this Agreement.
“Off-the-Shelf Software” means Software that is widely commercially available for a price of
less than $750 for any number of users.
“Ordinary Course of Business” means the ordinary course of business of Sellers, NCPS and NDVS
consistent with past custom and practice (including with respect to quantity and frequency).
“Organizational Documents” means (i) the articles or certificate of incorporation and the
bylaws of a corporation, (ii) the partnership agreement and any statement of partnership of a
general partnership, (iii) the limited partnership agreement and the certificate of limited
partnership of a limited partnership, (iv) the limited liability company agreement and articles or
certificate of formation of a limited liability company, agreement or declaration of trust, (v) any
charter or similar document adopted or filed in connection with the creation, formation or
organization of a Person and (vi) any amendment to any of the foregoing.
“Owned Intellectual Property Rights” means Intellectual Property Rights owned by a Seller,
NCPS or NDVS.
“Parent” has the meaning set forth in the first paragraph of this Agreement.
“Permitted Encumbrances” means (i) Encumbrances of carriers, warehousemen, mechanics and
materialmen and other like Encumbrances arising in the Ordinary Course of Business (provided lien
statements have not been filed as of the Closing Date), (ii) easements, rights of way and
restrictions, zoning ordinances and other similar Encumbrances affecting the Real Property and
which do not unreasonably restrict the use thereof or Buyer’s proposed use thereof in the Ordinary
Course of Business, (iii) statutory Encumbrances in favor of lessors arising in connection with any
property leased to a Seller, NCPS or NDVS, (iv) Encumbrances reflected in the Latest Financial
Statements or arising under Material Contracts and (v) Encumbrances that will be removed prior to
or in connection with the Closing.
“Person” means any individual, corporation (including any non-profit corporation), general or
limited partnership, limited liability company, joint venture, estate, trust, association,
organization, labor union, Governmental Entity or other entity.
“Plan” means every plan, fund, contract, program and arrangement (whether written or not) for
the benefit of present or former employees, including those intended to provide (i) medical,
surgical, health care, hospitalization, dental, vision, workers’ compensation, life insurance,
death, disability, legal services, severance, sickness or accident benefits (whether or not defined
in Section 3(1) of ERISA), (ii) pension, profit sharing, stock bonus, other stock-
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based compensation, incentive, retirement, supplemental retirement or deferred compensation
benefits (whether or not tax qualified and whether or not defined in Section 3(2) of ERISA) or
(iii) salary continuation, unemployment, supplemental unemployment, severance, termination pay,
change-in-control, vacation or holiday benefits (whether or not defined in Section 3(3) of ERISA),
(w) that is maintained or contributed to by a Seller, NCPS or NDVS, (x) that a Seller, NCPS or NDVS
has committed to implement, establish, adopt or contribute to in the future, (y) for which a
Seller, NCPS or NDVS is or may be financially liable as a result of the direct sponsor’s
affiliation with a Seller, NCPS or NDVS or its shareholders (whether or not such affiliation exists
at the date of this Agreement and notwithstanding that the Plan is not maintained by a Seller, NCPS
or NDVS for the benefit of its employees or former employees) or (z) for or with respect to which a
Seller, NCPS or NDVS is or may become liable under any common law successor doctrine, express
successor liability provisions of Law, provisions of a collective bargaining agreement, labor or
employment Law or agreement with a predecessor employer. Plan does not include any arrangement
that has been terminated and completely wound up prior to the date of this Agreement and for which
a Seller, NCPS or NDVS has no present or potential liability.
“Purchase Price” has the meaning set forth in Section 2.5.
“QSub” has the meaning set forth in Section 3.12(h).
“Real Property” has the meaning set forth in Section 3.10(b).
“Registered Intellectual Property Rights” means Intellectual Property Rights that are the
subject of a pending application or an issued patent, trademark, copyright, design right or other
similar registration formalizing exclusive rights.
“Remedies Exception,” when used with respect to any Person, means except to the extent
enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other laws affecting the enforcement of creditors’ rights generally and by general equitable
principles.
“Required Consents” has the meaning set forth in Section 5.6.
“Retained Amount” has the meaning set forth in Section 2.7.
“Retained Liabilities” has the meaning set forth in Section 2.4.
“Return” means any return, declaration, report, estimate, information return or statement
pertaining to any Taxes.
“SEC” means the United States Securities and Exchange Commission.
“Seller” and “Sellers” have the meanings set forth in the first paragraph of this Agreement
and, for purposes of Article IX only, the meaning set forth in Section 9.1(a).
“Seller Claim” has the meaning set forth in Section 9.2(d).
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“Sellers’ Losses” has the meaning set forth in Section 9.2(a).
“Sellers’ Representative” has the meaning set forth in the first paragraph of this Agreement.
“Shareholders” has the meaning set forth in the first paragraph of this Agreement, and
“Shareholder” means any one of the Shareholders, as the context requires.
“Software” means computer programs or data in computerized form, whether in object code,
source code or other form.
“Statement” has the meaning set forth in Section 2.7(b)(v).
“Subsidiary” means any Person in which any ownership interest is owned, directly or
indirectly, by another Person.
“Target Working Capital” has the meaning set forth in Section 2.5.
“Tax Affiliate” means any other Person that is or was a member of an affiliated, combined or
unitary group of which a Seller, NCPS or NDVS is or was a member.
“Taxes” means all taxes, charges, fees, levies or other assessments, including all net income,
gross income, gross receipts, sales, use, ad valorem, transfer, franchise, profits, license,
withholding, payroll, employment, social security, unemployment, excise, estimated, severance,
stamp, occupation, property or other taxes, customs duties, fees, assessments or charges of any
kind whatsoever, including all interest and penalties thereon, and additions to tax or additional
amounts imposed by any Governmental Entity upon a Seller, NCPS, NDVS or any Tax Affiliate.
“Third-Party Action” has the meaning set forth in Section 9.3(a).
“Third-Party Intellectual Property Rights” means Intellectual Property Rights in which a
Person other than a Seller, NCPS or NDVS has any ownership interest.
“Transition Services Agreement” has the meaning set forth in Section 2.8(b).
“Treasury Regulations” means the rules and regulations under the Code.
“WARN Act” means the Worker Adjustment and Retraining Notification Act of 1988, as amended.
“Welfare Plan” has the meaning set forth in Section 6.3(i).
“Work Permits” has the meaning set forth in Section 3.20(c).
“Working Capital Shortfall” has the meaning set forth in Section 2.9(d)(ii).
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