EXHIBIT 2.01
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement ("Agreement") is made and entered into as of the
_____ day of February, 2005 (the "Effective Date"), by and among NCR Texas LLC,
a single member Delaware LLC wholly owned by XXX Xxxxxxxxxxx, a Maryland
corporation, having its principal place of business at 0000 X. Xxxxxxxxx Xxxx.,
Xxxxxx, Xxxx 00000 ("Buyer"), and Tidel Technologies, Inc. a Delaware company,
having its principal place of business in Houston, Texas ("Tidel"), together
with its wholly owned subsidiary Tidel Engineering, LP, a Delaware limited
partnership ("Engineering") and their respective successors and assigns. Tidel
and Engineering shall be collectively referred to as "Sellers". Capitalized
terms not defined in the context of this Agreement shall have the meanings
specified in Section 28 hereof.
RECITALS:
(A) WHEREAS, Sellers are in the business of developing and manufacturing
electronic cash controller safes and automated teller machines, and;
(B) WHEREAS, Sellers desire to sell to Buyer, and Buyer desires to purchase from
Sellers, all of the assets relating to, reasonably necessary in, used to support
and in connection with Sellers' automated teller machine business (referred
herein to as the "Business"), as provided herein, together with certain
liabilities as defined herein (such sale of the Business and certain liabilities
by Sellers to Buyer referred to herein as the "Transaction").
NOW, THEREFORE, in consideration of the premises above and of the mutual
covenants, representations, warranties, and agreements set forth herein, the
parties hereby agree as follows:
1. PURCHASE AND SALE OF PURCHASED ASSETS. Except for the Excluded Assets (as
defined herein), as of the Closing Date, Sellers will sell, assign, transfer,
convey, and deliver to Buyer, and Buyer will purchase, accept and assume from
Sellers, all of Sellers' right, title and interest in and to all of the Sellers'
property and assets, real or personal, tangible or intangible, relating to,
reasonably necessary in and/or used in connection with the Business as set forth
below(collectively, the "Purchased Assets"), free and clear of all Encumbrances
(as defined herein) with the exception of the Excluded Assets. Nothing contained
herein shall require the physical delivery of the Purchased Asset. The Purchased
Asset shall consist of:
(A) All of Sellers' right, title and interest in and to all written customer
contracts, distributor contracts, reseller contracts, and contracts with sales
agents, to which either Seller is a party that are related to the Business and
that are listed in Section 1(A) of the Disclosure Schedule, including, but not
limited to, contracts, agreements, outstanding proposals and commitments with
such distributors, resellers, dealers, sales agents (the "Distributor
Contracts");
(B) All of Sellers' right, title and interest in and to the vendor purchase
orders and contracts, that are related to the Business and that are listed in
Section 1(B) of the Disclosure Schedule (the "Vendor Contracts");
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(C) All of Sellers' right, title and interest in and to third party commercial
computer software and related maintenance contracts relating to the Business to
which either Seller is a party and that are listed in Section 1(C) of the
Disclosure Schedule (the "Third Party Licenses");
(D) All of Sellers' inventory items relating to the Business whether new, used,
excess or obsolete, both in and out of service, inventory held for sale, if any,
including, but not limited to, all inventory currently being held to supply
Sellers' contractual commitments to customers, and all other similar items of
inventory all of which are listed in Section 1(D) of the Disclosure Schedule
(the "Inventory");
(E) All of Sellers' right, title and interest in and to that certain Commercial
Lease Agreement, dated December 1994, by and between Booth, Inc. and Sellers,
for the commercial real estate located at 0000 XxXxxxxx Xxxxx, Xxxxxxxxxx, Xxxxx
00000-0000 (the "Transferred Lease"), a copy of which is attached hereto as
Exhibit A1; and that certain agreement between Airport Executive Office, Inc.
and Engineering for the Business Centre at Xxxxx 000, 0000 Xxxxxxxx Xxxx., X.
Xxxxxxxxxxxx, Xxxxxxx X0X#0X0 attached hereto as Exhibit A2 (the "Canadian
Lease");
(F) All of Sellers' right, title and interest in and to any written contracts
(including any solicitation or outstanding offers for contract), agreements,
outstanding price quotes, commitments from service providers, customers and/or
manufacturers, other than the Distributor Contracts, Vendor Contracts, Third
Party Licenses, and the Transferred Lease that relate to the Business to which
either Sellers is a party and that are listed in Section 1(F) of the Disclosure
Schedule (the "Other Contracts") (the Distributor Contracts, Vendor Contracts,
Transferred Lease, Third Party Licenses, and Other Contracts are sometimes
referred to collectively as the "Contracts" and individually as a "Contract");
(G) All of Sellers' right, title and interest in and to the licenses, permits,
certificates, approvals, exemptions, franchises, registrations, variances,
accreditations or authorizations that relate to the Business and are listed in
Section 1(G) of the Disclosure Schedule (the "Permits");
(H) All of Sellers' right, title and interest in and to the "Intellectual
Property," (as such term is hereinafter defined) of the Business and as set
forth in Section 1(H) of the Disclosure Schedule (the "Business Intellectual
Property"). "Intellectual Property" shall mean, for purposes of this Agreement:
patents, patent rights, patent applications, patent disclosures, and inventions
and designs that are not disclosed in any patent, patent application, or patent
disclosure; registered and unregistered trademarks, trade names, and service
marks, brand marks, brand names, copyrights, copyright registrations, and any
applications therefore; all designs, diagrams, specifications, schematics,
molds, tooling and assembly, installation and other key processes ; licenses
granted by or to a party; trade secrets relating to or arising from any monetary
process; proprietary computer software, hardware and databases, including source
code and documentation corresponding thereto and any software and source or
object code; symbols and logos and all applications therefor, registrations
thereof and licenses and sublicenses or agreements in respect thereof;
improvements to any of the foregoing (whether or not completed); all filings,
registrations or issuances of any of the foregoing with or by any federal,
state, local or foreign regulatory, administrative or governmental office; and
other tangible and intangible proprietary information owned or licensed by a
party; including goodwill and going concern
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value; technology, and know-how related to, reasonably necessary in and used to
support the Business and not embodied in any of the foregoing; and other
tangible and intangible proprietary information owned or licensed by a party;
(I) The machinery, equipment, furniture, fixtures, furnishings, supplies, office
equipment, accessories, vehicles, personal computers, notebook computers,
cellular phones, pagers, copiers, calculators, workstations, office automation
software, printers, facsimile machines, and other property relating to the
Business, and as listed in Section 1(I) of the Disclosure Schedule;
(J) All leases of equipment, machinery or other tangible personal property to
which either Seller is a party, solely used in conducting the Business as listed
in Section 1(J) of the Disclosure Schedule (the "Personal Property Leases");
(K) Sellers' marketing and sales materials relating to the Business;
(L) All accounts, notes, contracts or other receivables of Sellers generated in
connection with the Business existing as of the Closing Date that are listed in
Section 1(L) of the Disclosure Schedule and are not listed as Excluded Assets
herein, and rights and benefits of any security interests and corresponding UCC
Financing Statements that may be filed (the "Accounts Receivable");
(M) All of Sellers' books and records relating exclusively to the Business
(other than Sellers' Tax returns and Sellers' organizational books and records)
including, without limitation, lists of customers, vendors and suppliers,
records with respect to pricing, volume, billing and payment history, cost,
inventory, machinery and equipment, mailing lists, distribution lists, sales,
purchasing and materials, technical processes, production and testing techniques
and procedures, marketing research, design and manufacturing drawings and
specifications and other engineering data, promotional literature, training,
operations, equipment and other manuals, quotation, correspondence, and other
miscellaneous information, including any such records which are maintained on
computer or any storage media;
(N) All service manuals, databases, and knowledge bases, in their current forms,
listed in Section 1(N) of the Disclosure Schedule relating to the operation of
the Business as currently operated by Sellers;
(O) Sellers' backlog on orders relating to the Business;
(P) Sellers' claims, demands, actions or causes of actions, which either Seller
has or may have against any other person or entity relating to the Business,
rights to judgments, and proceeds resulting from the matters listed in Section
1(P) of the Disclosure Schedule; and
(Q) The following doubtful accounts (the "Seller Doubtful Accounts"), subject to
Section 9(H):
(i) Accounts of JRA 222 d/b/a Credit Card Center ("CCC") and related
reserves, except for the Seller CCC Amounts (as hereinafter
defined);
(ii) Tidel's judgment against Xxxxxx Xxxxxx;-.
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(iii) Tidel's 5/30/03 default judgment against First National On-line
Processing, for $61,000 plus interest and cost;
(iv) Tidel's 2004 legal action vs. Renegade Technology Group LLC; and
(v) Other doubtful accounts and related assets as may be listed Section
1(Q) of the Disclosure Schedule.
(R) All property and assets of Sellers that are related to (or utilized by) both
the Business and Sellers' TACC Business (as defined below) that are listed on
Section 1(R) of the Disclosure Schedule.
2. EXCLUDED ASSETS. Notwithstanding anything to the contrary contained in
Section 1 or elsewhere in this Agreement, the following assets of Sellers
(collectively, the "Excluded Assets") are not part of the sale and purchase
contemplated hereunder, are excluded from the Purchased Assets and shall remain
the property of Sellers after the Closing Date:
(A) All property and assets of Sellers that are not related to the Business,
including, without limitation, all property and assets of Sellers related to
Sellers' timed-access cash controller product division (the "TACC Business");
(B) Except for the property and assets of Sellers listed in Section 1(R) of the
Disclosure Schedule, all property and assets of Sellers that are related to (or
utilized by) both the Business and Sellers' TACC Business, including but not
necessarily limited to the items listed on Section 2(B) of the Disclosure
Schedule;
(C) All rights of either Seller under this Agreement and the other documents,
agreements and instruments executed or delivered in connection with this
Agreement (together with this Agreement, the "Transaction Documents"), including
all monies to be received by either Seller, and all other rights of Sellers
under the Transaction Documents, including, without limitation, the Purchase
Price (as defined herein);
(D) all real estate and real property leases other than the Transferred Lease
and the Canadian Lease;
(E) all minute books, transfer records and corporate seals of Sellers;
(F) all cash, cash equivalents, bank accounts, certificates of deposit,
commercial paper, annuities, treasury notes, bills and other marketable
securities of Sellers;
(G) all rights of Sellers relating to claims, refunds, causes of action, rights
of recovery, rights of set-off, deposits and prepaid expenses and claims for
refunds and rights to offset of every kind and nature whether or not related to
the Business and related to time periods prior to the Closing Date, except for
Accounts Receivable claims pertaining to the Business and other matters set out
in Section 1(P) of the Disclosure Schedule;
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(H) all of Sellers' doubtful accounts not related to the Business and any
allowances or reserves related thereto, as well as the following doubtful
accounts of the Business which shall remain the property of Sellers (the "Seller
CCC Amounts"):
(i) approximately $750,000 on deposit with the Philadelphia bankruptcy
court; and
(ii) an approved disbursement by the trustee in the CCC bankruptcy case in
the approximate amount of $75,000;
(I) all insurance policies of Sellers and rights thereunder, including, without
limitation, all rights to receive proceeds of insurance policies and all rights
of offset, counterclaims and insurance coverage thereunder;
(J) any income tax credits and refunds;
(K) Intellectual Property of the Sellers not related to the Business and any
rights or obligations associated therewith;
(L) all severance, pension, retirement and other Employee Benefit Plans and
administration and services contracts related thereto, or funding arrangements;
(M) all of Seller's distributor contracts, purchase contracts and other
contracts that are not related to the Business;
(N) all of Seller's domain names, internet names, net names, web addresses and
internet locators, links to other relevant sites and applicable related
registrations; and
(O) the right to receive mail and other communications addressed to Seller
relating to any of the assets described in the foregoing clauses (A)
through (N).
3. LIMITED ASSUMPTION OF LIABILITIES. Except as specifically set forth in this
Section 3, Buyer is not assuming any obligation to pay for any of the debts,
liabilities, or obligations of either Seller, whether known or unknown, now or
hereafter existing, accrued or contingent, or arising out of or related to the
Purchased Assets, the Business, or the consummation of the transactions
contemplated in this Agreement. Specifically, and without limitation, Buyer is
not purchasing Sellers' reserves for excess and obsolete inventory. On the
Closing Date, Buyer agrees to assume and hereby agrees to pay, perform and
discharge when due, all accrued debts, accrued property taxes, liabilities,
obligations and commissions of Sellers related to the Business, including the
following liabilities (collectively, the "Assumed Liabilities"):
(A) The liabilities and obligations specifically related to the Contracts and
Permits that arise after the Closing Date due to events that occur after the
Closing Date; provided, however, in no event shall Buyer assume any liabilities
or obligations to the extent such liabilities or obligations are attributable to
any breach or default by Sellers under such Contracts or Permits occurring on or
before the Closing Date.
(B) Warranty obligations associated with the Business;
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(C) Unrecognized revenue of either Sellers accrued prior to Closing described in
Section 3(C) of the Disclosure Schedule;
(D) The current trade accounts payable and accrued liabilities listed in Section
3(D) of the Disclosure Schedule (the "Accounts Payable"), but only to the extent
such Accounts Payable are reflected on the Financial Statements or have been
incurred in the ordinary course of business; and
(E) Obligations with respect to Accepted Employees (as such term is defined
herein).
4. NON-ASSIGNMENT OF CERTAIN PROPERTY. To the extent that the assignment
hereunder of any of the Permits, Personal Property Leases or Contracts shall
require the consent of any other party (or in the event that any of the same
shall be nonassignable) (each, a "Consent Contract"), neither this Agreement nor
any action taken pursuant to its provisions shall constitute an assignment or an
agreement to assign if such assignment or attempted assignment would constitute
a breach thereof; provided, however, that in each such case, Sellers shall use
their good faith efforts to obtain the consents of such other party to an
assignment to Buyer without being obligated to pay any fees or to make any other
payments to any party to obtain any such consents. If such consent is not
obtained, (i) such Consent Contract shall not be deemed assigned at Closing,
(ii) Buyer shall act as Sellers' agent to perform Sellers' obligations
thereunder and shall so perform, and (iii) Sellers, at Buyer's expense, shall
cooperate with Buyer in any reasonable arrangement designed to provide for Buyer
the full benefits of any such Consent Contract including, without limitation,
enforcement, for the account and benefit of Buyer, of any and all rights of
Sellers against any other person with respect to any such Consent Contract. When
such consents to the transfer, conveyance and assignment of a Consent Contract
have been obtained, if ever, such Consent Contract shall thereupon automatically
be transferred, conveyed and assigned to Buyer, and the obligations and
liabilities of either Seller under such Consent Contract shall automatically
cease to be excluded from the Assumption Agreement (as hereinafter defined) by
reason of this Section 4, without the payment of any additional consideration.
5. PURCHASE PRICE AND ALLOCATION.
(A) Purchase Price. The aggregate purchase price for the Purchased Assets (the
"Purchase Price") shall be Ten Million One Hundred Seventy Five Thousand Dollars
($10,175,000), subject to the adjustments set forth in this Section 5, plus the
assumption of the Assumed Liabilities.
(B) Initial Payment and Holdback Amount. Buyer shall pay the Purchase Price as
follows: (1) Nine Million Six Hundred Seventy Five Thousand Dollars ($9,675,000)
at Closing ("Initial Payment"), subject to adjustment as provided in Section
5(F), by wire transfer in immediately available funds to a bank account of
Sellers as per written instructions of Sellers given to Buyer at the Closing;
plus (2) the holdback amount ("Holdback Amount") of FIVE HUNDRED THOUSAND
DOLLARS ($500,000), to be deposited into escrow pursuant and subject to this
Section 5 (B).
i. Buyer shall deposit the Holdback Amount in a segregated interest-bearing
escrow account, pursuant to a mutually agreeable Escrow Agreement by and among
Buyer, Sellers and a
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reputable Escrow Agent, which Escrow Agent shall to be selected by Sellers
subject to approval by Buyer.
ii. Within three business days prior to the Closing, Sellers shall deliver to
Buyer an estimate of the book value of Purchased Assetsand the Assumed
Liabilities ("Net Asset Value), including a detailed and itemized calculation of
such amount ("Seller's Estimated Net Asset Value"). Within thirty days following
the Closing, Sellers may, at their option, update the Sellers Estimated Net
Asset Value by delivering an updated schedule to Buyer.
iii. Within 60 days following the Closing Date, Buyer shall review the Sellers
Estimated Net Asset Value, as updated, and notify Sellers whether it accepts
such amount (the Notification"). If Buyer accepts the Seller's Estimated Net
Asset Value (the "Delivered Net Asset Value"), then if the Delivered Net Asset
Value is within 5% above or below Six Million Five Hundred Thousand
($6,500,000)(the "Closing Net Asset Value") (i.e., no less than $6,175,000 and
no greater than $6,825,000) (the " Range") then no adjustment shall be made and
the remaining Holdback Amount shall be paid to Sellers. If the Delivered Net
Asset Value is less than $6,175,000, then the difference between $6,125,000 and
the Delivered Net Asset Value shall be paid out of the Holdback Amount to Buyer
and the remainder of the Holdback Amount_shall be paid to Sellers. If difference
exceeds the Holdback Amount, such excess shall be paid by Sellers to Buyer
within three business days. If the Delivered Net Asset Value is greater than
$6,825,000, then the difference between the Delivered Net Asset Value and
$6,825,000 shall be paid by Buyer to Sellers and the Holdback Amount shall be
paid to Sellers, each within three business days.
iv. If the Notification indicates that Buyer disputes Seller's Estimated Net
Asset Value, and the Notification states that Buyer believes that the Net Assets
Value is below Sellers' Estimated Net Asset Value and not within the Range then
the Notification shall clearly and in detail show Buyer's disagreement with
Seller's Estimated Net Asset Value. In the event Buyer believes the Net Asset
Value is below the Range, the Notification shall also include a requested
Purchase Price reduction based on the calculation set forth in Section
5(B)(viii)(a "Purchase Price Reduction"). Within ten (10) Business Days
following Sellers' of receipt of the Notification, Sellers shall notify Buyer
whether they dispute the amount of such Purchase Price Reduction, and if so,
shall set forth the amount they believe should be deducted or added, if any, and
any support therefor (a "Dispute Notice") to the Buyer. Buyer and Sellers shall
negotiate to agree upon a mutually agreed upon value for the Purchase Price
Reduction or addition to the Purchase Price. If, within twenty (20) Business
Days of receipt of the Dispute Notice by Sellers to Buyer, Buyer and Sellers are
unable to come to agreement on the amount of such Purchase Price Reduction or
addition to the Purchase Price, then they shall obtain the assistance of
Deloitte & Touche LLP (the "Accountants"), to whom each of Buyer and Sellers
shall deliver their respective estimates of the Purchase Price Reduction or
addition to the Purchase Price, and such Accountants shall decide which estimate
shall prevail. Each of Buyer and Sellers shall have an opportunity to make a
submission to the Accountants along with the delivery of their respective
estimates, with a copy to the other party. Such other party shall have the
opportunity to rebut such submission within five (5) days of receipt of such
copy. The fees and any expenses of the Accountants shall be paid within fifteen
(15) calendar days of the determination of the Purchase Price Reduction as
follows: (a) if the Accountants adopt the position of Sellers, then Buyer shall
bear such fees and expenses; (b) if the Accountants adopt the position of Buyer,
then Sellers
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shall bear such fees and expenses. If a retainer is required by the Accountants,
the retainer shall be split equally between Buyer and Sellers; provided,
however, that the retainer shall be considered part of the fees and expenses of
the Accountants and if either party has paid a portion of such retainer, that
party will be entitled to be reimbursed by the other party to the extent
required by this Section 5(B). In the event that the Accountants are not
available or otherwise willing to be engaged in this matter within 20 Business
Days after Buyer's receipt of the Notice, then Buyer and Seller agree to resolve
the Purchase Price Deduction or addition to the Purchase Price pursuant to
Section 16 hereof. In the event a party does not comply with the procedure and
time requirements contained herein or such other procedure or time requirements
as the parties otherwise elect in writing, the Accountants shall render a
decision based solely on the evidence it has which was timely filed by either of
the parties.
v. .
vi. In the event the Purchase Price Reduction, if any made pursuant to this
Section 5 exceed the Holdback Amount as finally determined pursuant to Section
5(B)(iv) hereof, the Escrow Agent shall remit the Holdback Amount to Buyer and
the amount of such excess shall be paid by Sellers to Buyer by wire transfer in
immediately available funds to a bank account of Buyer.
vi. Reductions to or offsets against the Holdback Amount on behalf of Buyer
shall only be made in the event a Purchase Price Reduction is requested by Buyer
and finally determined pursuant to Section 5(B)(iv) hereof.
vii. If the Notification indicates that Buyer disputes Seller's Estimated Net
Asset Value, as updated and Buyer believes that the Net Asset Value is above the
Sellers Estimated Net Asset Value and above the Range, then Buyers statement of
Net Asset Value shall be the Delivered Net Asset Value, and payments shall be
made pursuant to Section 5(B)(iii).
viii. In the event the Delivered Net Asset Value is within the Range, no
Purchase Price adjustment shall be made. If the Net Asset Value is less than
$6,175,000, then the Purchase Price Reduction shall be the difference between
$6,175,000 the Delivered Net Asset Value. If the Net Asset Value is greater than
$6,825,000, then the Purchase Price will be increased by the difference between
the Delivered Net Asset Value and $6,825,000, and such difference shall be paid
by Buyer to Sellers.
ix. In determining Net Asset Value, the value of the Purchased Assets shall not
be reduced for excess and obsolete Inventory, or for accrued property taxes.
(C) Allocation. The aggregate Purchase Price shall be allocated for purposes of
this Agreement and for federal, state and local tax purposes, to be mutually
agreed at Closing. Sellers and Buyer shall be bound by such allocation for all
purposes, shall prepare and file (or cause to be prepared and filed) all
federal, state and local Tax Returns (as defined herein) in a manner consistent
with such allocations, including Internal Revenue Service Form 8594, and shall
not take any position inconsistent with such allocations in any Tax return,
proceeding before any Governmental Authority (as defined herein) or otherwise.
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(D) Prorations. At Closing, the parties hereto shall determine the proration of
any expenses, if necessary.
(E) Fair Dealing. The parties acknowledge and agree that the transactions,
covenants and agreements set forth in this Agreement result from arm's length
good faith negotiations among the parties and their respective representatives.
(F) Adjustments. The Purchase Price and Initial Payment shall be adjusted as set
forth in Section 5(F) of the Disclosure Schedule.
6. REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLERS. Sellers represent and
warrants to Buyer as of the Effective Date and agree to represent and warranty
to Buyer as of the Closing Date as follows. The disclosure schedule attached
hereto (the "Disclosure Schedule") is divided into sections that correspond to
the sections of this Agreement.
(A) Organization. Tidel is a corporation duly organized and validly existing
under the Laws of the State of Delaware. Engineering is a limited partnership
duly organized and validly existing under the laws of the State of Delaware.
Both Tidel and Engineering have (i) the requisite power and authority to conduct
the Business as now conducted and (ii) the necessary corporate power and
authority to execute, deliver and perform their obligations under the
Transaction Documents and to consummate the transactions contemplated herein.
and therein. Complete and correct copies of the Certificate of Incorporation and
Bylaws of Tidel and the Articles of Organization and Limited Partnership
Agreement of Engineering have previously been delivered to Buyer (such
documents, the "Sellers' Organizational Documents"). Each Seller is duly
qualified to do business in every jurisdiction in which the nature of its
business makes such qualifications necessary, except where such failure would
not have a Material Adverse Effect. Each Seller has the full right, power, and
authority to engage in the Business as it is now conducted, and has all
necessary licenses and permits to operate the Business as it is presently being
operated.
(B) Authority. Each Seller now has, and at Closing will have, all requisite
organizational authority to execute, deliver and perform each Transaction
Document to which it is a party, and to perform its obligations and consummate
the transactions contemplated under the Transaction Documents to which it is a
party, subject to receipt of shareholder approval, if the Board of Directors of
Tidel determines that such approval is required. The execution and the delivery
of each Transaction Document to which either Seller is a party, and the
performance of the transactions contemplated by such Transaction Documents, have
been duly authorized by each Seller and all necessary corporate or
organizational actions by each Seller for the execution, delivery and
performance of each Transaction Document to which such Seller is a party and the
consummation of the transactions contemplated hereby and thereby have been
taken, and no further corporate or organizational authorization will be
necessary to authorize the execution and delivery by each Seller of, and the
performance of its obligations under, each Transaction Document to which such
Seller is a party.
(C) Execution and Delivery. Each Transaction Document to which either Seller is
a party has been validly executed and delivered by such Seller(s) and
constitutes valid and binding obligations of each such Seller, enforceable
against each such Seller in accordance with its terms,
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except (i) as such enforceability may be limited by or subject to any
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights generally, (ii) as such obligations are subject to
general principles of equity and (iii) as rights to indemnity may be limited by
federal or state securities laws or by public policy.
(D) Financial Statements. To the extent Sellers have delivered a balance sheet
and income statement of Engineering as of September 30, 2004 (the "Financial
Statements"), Sellers represent that, to Sellers' actual knowledge, and subject
to adjustments recommended by Seller's independent auditors, the Financial
Statements (i) are true and correct and in accordance with the books of account
and records of Engineering in all material respects; (ii) accurately and fairly
reflect in all material respects all assets, liabilities, income, loss, costs
and expenses of Engineering; and (iii) accurately and fairly represent the
financial condition of Engineering in all material respects. To Sellers' actual
knowledge, Engineering does not have any indebtedness or liability, absolute or
contingent, which is not reflected in the financial statements, or that has not
been specifically identified to Buyer, other than liabilities or indebtedness
incurred in the ordinary course of business.
(E) No Conflict or Default. The execution and performance of this Agreement, the
compliance with its provisions by each Seller, and the transfer of the Purchased
Assets to Buyer on the Closing Date will not conflict with or result in any
breach of any of the terms, conditions, or provisions of any agreement,
indenture, mortgage, or other instrument to which either Seller is a party or by
which it is bound, except for any such breach which would not in the aggregate
reasonably be expected to have a Material Adverse Effect or as set forth in
Section 6(E) of the Disclosure Schedule. Further, the execution and performance
of this Agreement, the compliance with its provisions by Sellers, and the
transfer of the Purchased Assets to Buyer on the Closing Date will materially
comply with all Laws of any Governmental Authority applicable to the Business or
any of the Purchased Assets and will not conflict with, or result in, the breach
of any of the terms of any Sellers' Organizational Documents. Except as set
forth in Section 6(E) of the Disclosure Schedule, the consummation of the
transactions contemplated by this Agreement will not require the consent of any
Person with respect to the rights, licenses, franchises, leases, contracts or
agreements (including but not limited to the Contracts) of Sellers and will not
have a Material Adverse Effect upon any such rights, licenses, franchises,
leases or agreements.
(F) Title to Assets. Sellers have or shall have good and marketable title, or
valid leasehold rights (in the case of leased property) to all of the Purchased
Assets, free and clear of all security interests, liabilities, conditions,
pledges, liens, mortgages, licenses in favor of any Person other than either
Seller, conditional sales contracts, attachments, hypothecations, judgments,
easements, claims, and encumbrances of every kind and nature (collectively,
"Encumbrances"), except for those set forth in Section 6(F) of the Disclosure
Schedule (the "Permitted Encumbrances"). At the Closing, Sellers will sell,
assign, transfer, convey, and deliver good and marketable title to the Purchased
Assets, or, in the case of assets constituting Purchased Assets which are leased
or licensed by either Seller pursuant to Personal Property Leases or other
Contracts, valid leasehold interests or licenses to such Personal Property
Leases or other Contracts, free and clear of all Encumbrances other than
Permitted Encumbrances.
(G) Contracts. All of the Contracts are in full force and are enforceable
against Tidel or Engineering, as the case may be, in accordance with their
terms. To the Sellers' knowledge and
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except as set forth in Section 6(G) of the Disclosure Schedule, (i) none of the
Contracts is in breach or default due to the action of Tidel or Engineering, or
to Sellers' knowledge, of any other party thereto; and (ii) no event exists
which is a default or breach due to the action of Tidel or Engineering, under
any of the Contracts, or which after the passage of time or giving of notice or
both would constitute a breach or default, due to the action of Tidel or
Engineering. All duties and obligations required to be performed by any party to
the Contracts prior to Closing have been so performed. Except as set forth in
Section 6(G) of the Disclosure Schedule, the Contracts are freely assignable, or
if the consent of the contracting party to the assignment is required, Sellers
shall have obtained such consent prior to Closing, or if the giving of notice of
such assignment is required, Sellers have provided such notice prior to the
Closing. To Sellers' actual knowledge: (x) no party to any of the Contracts is
threatened with insolvency; and (y) there exists no fact or circumstance which
may cause a party to one of the Contracts to fail to perform such Contract. The
execution, delivery, consummation and performance of this Agreement and the
transactions contemplated herein will not cause either Seller to be in breach or
default of any of the Contracts. Sections 1 (A), (B), (C), (E), and (F) of the
Disclosure Schedule collectively constitute accurate, correct and complete lists
of the Contracts.
(H) No Other Contracts. Other than the Contracts or the Excluded Assets, there
are no written or oral or contractual commitments, contracts, or agreements that
relate to the Business to which either Seller is a party that will be binding
upon Buyer, or that will affect Buyer or the Purchased Assets, on or after the
Closing.
(I) Permits. Other than the Contracts or the Excluded Assets, the Permits listed
in Section 1(G) of the Disclosure Schedule constitute all of the licenses,
permits, certificates, approvals, exemptions, franchises, registrations,
variances, accreditations or authorizations related to, reasonably necessary in,
currently used in or required for the operation of the Business. The Permits are
valid and in full force and effect and there are no pending proceedings which
could result in the termination, revocation, limitation or impairment of any of
the Permits. Neither Seller has received notice of any violations in respect of
any of the Permits. Section 1(G) of the Disclosure Schedule contains an
accurate, correct and complete list of the Permits that are reasonably necessary
in, currently used in or required for the operation of the Business.
(J) Intellectual Property. Other than the Contracts or the Excluded Assets, the
Business Intellectual Property listed in Section 1(H) of the Disclosure Schedule
constitutes all of the Intellectual Property owned or licensed by Sellers that
is currently used solely in the conduct of the Business, and any license for any
of the foregoing in each case. Sellers own, or are licensed or otherwise possess
legally enforceable rights to use the Business Intellectual Property that is
listed in Section 1(H) of the Disclosure Schedule and such Business Intellectual
Property is sufficient for the conduct of the Business of Sellers as it is
currently being conducted on the date hereof. Except as disclosed in Section
6(J) of the Disclosure Schedule, neither the manufacture, marketing, license,
sale or intended use of any tangible product currently sold by the Business
violates any license or agreement between either Seller and any third party
relating to such product or, to Sellers' knowledge, infringes any Intellectual
Property right of any other party. Neither Seller has received any written
charge, complaint, claim, demand, or notice alleging any such interference,
infringement, misappropriation, or violation (including any claim that either
Seller must license or refrain from using any Intellectual Property rights of
any Person relating to the Business Intellectual Property), nor is there any
pending claim or litigation contesting the
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validity of the Business Intellectual Property or Sellers' ownership or right to
use, sell, license or dispose of the Business Intellectual Property. Neither
Seller has received any notice asserting that any of the Business Intellectual
Property or the proposed use, sale, license or disposition thereof conflicts or
will conflict with the rights of any other party, and neither Seller has
licensed the use of the Business Intellectual Property to any third party nor
permitted the use by any third party of the same in a manner which would
infringe the trademark rights of Sellers. Sellers will make available to Buyer
complete and correct copies of all reasonably accessible user and technical
documentation related to the Business Intellectual Property that is listed in
Section 1(H) of the Disclosure Schedule. Except as disclosed in Section 6(J) of
the Disclosure Schedule, neither Seller has received any notice that any of
their current or prior members, officers, employees or consultants claim an
ownership interest in any of the Business Intellectual Property as a result of
having been involved in the development of such property while employed by or
consulting to the Business or otherwise.
(K) Inventory. Except as set forth in Section 6(K) of the Disclosure Schedule,
Sellers are not in possession of any inventory that is not owned by one of them.
All of the Inventory has been valued at cost on a first in, first out basis.
(L) No Real Property Owned by Sellers. Sellers own no real property used in the
Business. Except as set forth in Section 6(L) of the Disclosure Schedule, the
Transferred Lease may be freely assigned, assumed or sublet, is valid and in
full force and effect, and to Sellers' knowledge there is not pending or
threatened any proceedings which could result in the termination, revocation,
limitation or impairment of the Transferred Lease.
(M) Litigation. Except as set forth in Section 6(M) of the Disclosure Schedule,
there is no litigation, proceeding, or governmental investigation pending in
front of any court, arbitration board, administrative agency, or tribunal
against or relating to Sellers that would prevent or affect the Purchased
Assets, the Business, or the consummation of this Agreement or the sale,
transfer or assignment of the Purchased Assets by Sellers.
(N) Compliance with Law. Except as set forth in Section 6(N) of the Disclosure
Schedule, Sellers have been and are in, and the Business has been and is being
conducted in, compliance in all material respects with all Laws that are
applicable to or binding upon the Business or the Purchased Assets, and Sellers
have not received any written or oral notice of any violation or alleged
violation of any Law.
(O) Brokers' Fees. Sellers have no liability or obligation to pay any fees or
commissions to any broker, finder or agent with respect to the transactions
contemplated by the Transaction Documents.
(P) No Material Adverse Change. Since September 30, 2004, there have been no
changes that would have a Material Adverse Effect. Since September 30, 2004,
Sellers have operated the Business in the ordinary course of business consistent
with past practices and Sellers have used reasonable efforts to keep the
Business intact.
(Q) Accounts Receivable. Except as set forth on Section 1(L)(#2) of the
Disclosure Schedule, all Accounts Receivable of the Business arose from valid
transactions and in the
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ordinary course of business for goods sold or services rendered and are not
subject to any valid counterclaims or setoffs known to Sellers with respect to
any such Accounts Receivable. The list of Accounts Receivable listed in Section
1(L) of the Disclosure Schedule is a true, accurate and complete list of such
accounts generated in connection with the Business and existing as of the date
thereof.
(R) Tax Matters. For purposes of this Agreement, (A) the term "Taxes" shall mean
all taxes, charges, fees, levies or other assessments, including, without
limitation, income, gross receipts, excise, property, use, sales, license,
payroll and franchise taxes, imposed by the United States, or any state, local
or foreign government or subdivision or agency thereof whether computed on a
unitary, combined or any other basis; and such term shall include any interest
and penalties or additions to tax; and (B) the term "Tax Return" shall mean any
report, return or other information required to be filed with, supplied to or
otherwise made available to a taxing authority in connection with Taxes. Sellers
have filed, and through the Closing will duly and timely file with the
appropriate taxing authorities, all Tax Returns required to be filed by them and
all such Tax Returns are, or will be when filed, true, complete and correct in
all material respects and Seller has paid or through the Closing Date will pay
all Taxes shown to be due on such Tax Returns which are due and payable or
claimed by any taxing authority to be due and payable on such Tax Returns
through periods ending on or before the Closing Date. All necessary sales Tax
exemption certificates have been obtained by Sellers and all such certificates
have been properly completed and maintained. Sellers have not received notice of
any outstanding audits, assessments, notices of deficiency, deficiencies,
investigations, claims or demands for Taxes related to the Business or proposed
deficiencies against either Seller for any Taxes related to the Business. No
claims are being asserted with respect to any Taxes of Sellers related to the
Business for which Buyer reasonably could be held liable. Sellers have complied
in all material respects with all applicable Laws relating to the payment and
withholding of Taxes and have withheld all amounts which were required by law to
be withheld from the wages or salaries of their managers, officers and employees
for all periods ending on or before the Closing Date, and are not liable for any
Taxes with respect to the managers, officers and employees of the Business for
failure to comply with such Laws.
(S) Accounts Payable. Except as set forth on Section 6(S) of the Disclosure
Schedule, all accounts payable of Sellers related to the Business are current
and have been generated in the ordinary course of business. Except as set forth
in Section 6(S) of the Disclosure Schedule, Sellers have paid promptly, when
due, all accounts payable related to the Business, including lease payments and
rental fees, utility bills, and other obligations due as a result of the
operation of the Business and the ownership of the Purchased Assets through the
Closing Date.
(T) No Undisclosed Liabilities. Except as disclosed on Section 6(T) of the
Disclosure Schedule, Sellers have no material liability related to the operation
of the Business, except for liabilities reflected in the Financial Statements
and for current liabilities incurred in the ordinary course of business. Sellers
have no liability or obligation to refund any economic development incentives
received from any governmental entity.
(U) Environmental, Health & Safety Compliance. To Sellers' knowledge, neither
the conduct nor operation of the Business, nor any condition of the Transferred
Lease, nor the premises leased by the Transferred Lease, violates any Law or
common law concerning public health and
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safety, worker health and safety, and pollution or protection of the environment
("Environmental, Health, and Safety Requirements"), where such violation would
reasonably be expected to have a Material Adverse Effect and Sellers have not
received any notice stating that the operation or condition of any real property
presently leased or operated in connection with the Business is in violation of
any Environmental, Health, and Safety Requirements, where such violation would
reasonably be expected to have a Material Adverse Effect.
(V) Government Authorizations. The governmental authorizations listed in Section
6(V) of the Disclosure Schedule collectively constitute all of the
authorizations of any Governmental Authority necessary to permit Sellers to
lawfully conduct and operate the Business in the manner in which they currently
conduct and operate the Business and to permit Sellers to own and use the
Purchased Assets in the manner in which they currently owns and uses such
Purchased Assets, except where the failure to do so would not have a Material
Adverse Effect.
(W) Relationships with Affiliates. Neither Sellers nor any of their Affiliates
has any interest in, has owned, of record or as a beneficial owner, or has an
equity interest or any other financial or profit interest in any Person that has
(a) had business dealings or a material financial interest in any transaction
with either Seller other than business dealings or transactions disclosed in
Section 6(W) of the Disclosure Schedule, each of which has been conducted in the
ordinary course of business with Sellers at substantially prevailing market
prices and on substantially prevailing market terms or (b) engaged in
competition with Sellers with respect to the Business in any market presently
served by Sellers. Except as set forth in Section 6(W) of the Disclosure
Schedule, neither Seller nor any of their Affiliates is a party to any Contract
with, or has any claim or right against, either Seller, (i) providing for the
furnishing of services by, (ii) providing for the rental of real or personal
property from, or (iii) otherwise requiring payments to (other than for services
as managers, officers, directors or employees of the Business), any such person
or any corporation, partnership, trust or other entity in which any such person
has a substantial interest as a stockholder, officer, director, trustee or
partner.
(X) Employees.
(i) Each written plan, program, compensation, or arrangement, for the
benefit of the employees of the Business (the "Employees") and maintained
by either Seller is listed in Section 6(X) of the Disclosure Schedule (the
"Employee Benefit Plans") and copies or descriptions of each such Employee
Benefit Plan have been delivered to Buyer. Buyer will not have, as a
consequence of the transactions contemplated hereby, any liability or
obligation with respect to or under any agreement between either Seller
and any of the Employees, except for the Accepted Employees (as such term
is defined herein) to the extent contemplated by Section 9(B) hereof.
(ii) Each Employee Benefit Plan maintained by Sellers with respect to the
Employees has been maintained and administered at all times in material
compliance with its terms and all applicable Laws.
(iii) Section 6(X) of the Disclosure Schedule contains: (i) a list of the
Employees of the Business; (ii) the current annual compensation provided
by Sellers to each such Employee as of the Closing Date; (iii) a list of
any increase presently scheduled
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(including the effective date thereof) in the rate of compensation of any
the Employees; (iv) the title and location of each such Employee; (v) a
job description for each Employee; and (v) vacation benefits of each such
Employee that have been accrued but not taken as of the Closing Date.
(i) Neither Seller is a party to or bound by any union contract or
collective bargaining agreement and has not experienced any strike,
grievance or any arbitration proceeding, claim of unfair labor
practices filed or, to Sellers' knowledge, threatened to be filed or
any other material labor difficulty.
(ii) All of the Employees are United States citizens, or lawful residents
of the United States.
(Y) No Disputes. Except as set forth on Section 6(Y) of the Disclosure Schedule,
to Sellers' knowledge, there are no material conflicts or problems with any
officer, manager or Key Employee of Sellers that would likely result in the
termination or resignation of employment of any such individual. To Sellers'
knowledge, there are no material disputes with suppliers that would likely
result in the termination of the source of supply of a material product and
there are no long term commitments with suppliers.
(Z) Insurance Coverage. Sellers maintain insurance policies for fire, liability
and other forms of insurance covering the Business and the Purchased Assets in
amounts and against such losses and risks as are generally maintained for
comparable businesses and properties and such insurance will be maintained
through Closing.
(AA) No Other Assets Needed. The Purchased Assets constitute all material assets
that are required to operate the Business as currently being operated by the
Sellers prior to the Closing. other than the assets listed on Section 2(B) of
the Disclosure Schedule.
(BB) Product Warranties. Each product manufactured, licensed or sold by Sellers
has been in substantial conformity with all contractual commitments and express
warranties applicable to Sellers, all of which are described in Section 6(BB) of
the Disclosure Schedule, as well as with all warranties implied by law.
7. REPRESENTATIONS AND WARRANTIES OF BUYER AND PARENT. Buyer and Parent
represent and warrant to Sellers as of the Effective Date and agree to represent
and warrant to Sellers as of the Closing Date as follows:
(A) Organization. Buyer is a limited liability company duly organized and
validly existing under the laws of the State of Delaware. XXX Xxxxxxxxxxx (the
"Parent") is a corporation duly organized and validly existing under the Laws of
the State of Maryland. Both Buyer and Parent have (i) all requisite power and
authority to carry on respective business as it is now being conducted and as
contemplated to be conducted immediately following the Closing, and (ii) the
necessary corporate power and authority to execute, deliver and perform its
obligations under the Transaction Documents and to consummate the transactions
contemplated herein and therein.
(B) Authority. Buyer and Parent now have, and at Closing will have, all
requisite organizational authority to execute, deliver and perform the
Transaction Documents and to
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perform its obligations and consummate the transactions contemplated under the
Transaction Documents to which it is a party. The execution and the delivery of
the Transaction Documents to which either Buyer or Parent is a party and the
performance of the transactions contemplated by such Transaction Documents have
been duly authorized by Buyer or Parent, as the case may be, and all necessary
corporate or organizational actions by Buyer and Parent for the execution,
delivery and performance of the Transaction Documents to which either of them is
a party and the consummation of the transactions contemplated hereby and thereby
have been taken, and no further corporate or organizational authorization will
be necessary to authorize the execution and delivery by Buyer or Parent of, and
the performance of its obligations under, each Transaction Document to which
Buyer or Parent is a party. Each Transaction Document to which either Parent or
Buyer is a party has been validly executed and delivered by either Parent or
Buyer, as the case may be, and constitutes valid and binding obligations of
Parent and Buyer, enforceable against Parent and Buyer in accordance with its
terms, except (i) as such enforceability may be limited by or subject to any
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights generally, (ii) as such obligations are subject to
general principles of equity and (iii) as rights to indemnity may be limited by
federal or state securities laws or by public policy.
(C) Approvals. No third-party action, waiver, consent or approval is required of
any Person for the execution, delivery and performance of the Transaction
Documents by Buyer or Parent, and the execution, delivery or performance, and
the consummation of the transactions contemplated herein or therein do not
breach any provision of Buyer's Articles of Organization and Limited Liability
Company Operating Agreement and Parent's Certificate of Incorporations and
Bylaws. No action, waiver, consent or approval by any Governmental Authority is
necessary to make this Agreement a valid instrument binding on Buyer and Parent
in accordance with its terms.
(D) Broker or Finder's Fee. Neither Buyer nor Parent has any liability or
obligation to pay any fees or commissions to any broker, finder or agent with
respect to the transactions contemplated by this Agreement.
(E) No Conflict or Default. The execution and performance of this Agreement, the
compliance with its provisions by Buyer and Parent, and the transfer of the
Purchased Assets to Buyer on the Closing Date will not conflict with or result
in any breach of any of the terms, conditions, or provisions of any agreement,
indenture, mortgage, or other instrument to which either Buyer or Parent is a
party or by which it is bound. Further, the execution and performance of this
Agreement, the compliance with its provisions by Buyer and Parent, and the
transfer of the Purchased Assets to Buyer on the Closing Date will materially
comply with all Laws of any Governmental Authority applicable to the Business or
any of the Purchased Assets and will not conflict with, or result in the breach
of any of the terms of any of Buyers' Organizational Documents. The consummation
of the transactions contemplated by this Agreement will not require the consent
of any Person with respect to the rights, licenses, franchises, leases,
contracts or agreements (including but not limited to the Contracts) of either
Buyer or Parent.
(F) Litigation. There is no litigation, proceeding or governmental investigation
pending in front of any court, arbitration board, administrative agency or
tribunal against or relating to Buyer or Parent that would prevent or affect the
transactions contemplated by the Transaction Documents.
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(G) Solvency. Both Buyer and Parent are Solvent (as defined below). Neither
Buyer nor Parent will fail to be Solvent as a result of the execution and
delivery of the Transaction Documents. "Solvent" shall mean, when used with
respect to any person or entity, that at the time of determination: (i) it is
then able and expects to be able to pay its debts as they mature; and (ii) it
has capital sufficient to carry on its business as conducted and as proposed to
be conducted.
(H) No Default. Neither Buyer nor Parent is in default with respect to any
indebtedness, note, indenture, loan agreement, mortgage, lease, deed or other
agreement to which Buyer is a party or by which it is bound and neither Buyer
nor Parent has received any notice or demands with respect to the same that
would prevent or affect the transactions contemplated by the Transaction
Documents.
8. PRE-CLOSING COVENANTS OF SELLERS. Sellers agree as follows:
(A) Maintenance of the Purchased Assets. Until the Closing Date, Sellers shall
not lease, sell, or dispose of any of the Purchased Assets other than in the
ordinary course of business consistent with past practice or otherwise except
with the prior written consent of Buyer.
(B) Update of Disclosure Schedule. Prior to the Closing Date, Sellers shall
supplement or amend all relevant Sections of the Disclosure Schedule and/or
notify Buyer with respect to any matter thereafter arising or discovered which,
if existing or known on the Effective Date of this Agreement, would have been
required to be set forth or described in such Section of the Disclosure Schedule
or would have been required to be disclosed to Buyer under this Agreement. At
the Closing Date, Sellers shall deliver to Buyer a complete Disclosure Schedule,
marked to show all of the changes since the Effective Date (the "Updated
Disclosure Schedule").
(C) Continuity. From the date hereof to the Closing Date, except (i) for
entering into and performing this Agreement, the Services Agreement and the
other Transaction Documents; (ii) for the effect of the consummation of the
transactions contemplated hereby and thereby; or (iii) as otherwise consented to
by Buyer in writing, such consent not to be unreasonably withheld or delayed,
the Sellers shall conduct the Business in the ordinary course in substantially
the same manner in which it has previously been conducted, and shall take or
refrain from taking (as appropriate) the following actions:
(i) Sellers will use their best efforts to maintain and preserve
relationships with its present customers and suppliers of the
Business and employees;
(ii) Sellers will maintain the books, accounts and records on a basis
consistent with that of prior periods and said books, accounts and
records will accurately reflect activities of Sellers with respect
to the Business;
(iii) Sellers will not do any act or omit to do any act or permit any act
or omission to act that will cause a material breach of any
contract, commitment or obligation of either Seller, including but
not limited to the Contracts where such breach would reasonably
likely to have a Material Adverse Effect;
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(iv) Sellers will use their best efforts to prevent the occurrence of any
change or event which would prevent any of their representations and
warranties contained herein from being true in all material respects
at and as of the Closing Date;
(v) Sellers will maintain in full force and effect the insurance
coverage under the policies set forth in Section 6(Z);
(vi) Sellers will use their best efforts to cooperate with Buyer and
provide access to the Buyer to the operations of Sellers related to
the Business during ordinary business hours and upon reasonable
advance written notice from the Effective Date to the Closing Date;
(vii) Sellers will not enter into any settlement of any material
litigation or proceeding relating to the Purchased Assets, the
Business or the Assumed Liabilities;
(viii) Sellers will not incur any material obligation or liability or
enter into any transaction material to the Business without the
prior written consent of the Buyer;
(ix) Sellers will not fail to discharge or satisfy any known Encumbrance
or pay or satisfy any known obligation or liability (whether
absolute, accrued, contingent or otherwise), other than Permitted
Encumbrances, liabilities being contested in good faith and for
which adequate reserves have been provided and Encumbrances arising
in the ordinary course of business that do not, individually or in
the aggregate, materially interfere with the use, operation, or
marketability of any of the Purchased Assets, which may be
discharged or satisfied at Closing with a portion of the Purchase
Price;
(x) Sellers will not mortgage, pledge or subject to any Encumbrance any
of the Purchased Assets, except for Permitted Encumbrances and
Encumbrances arising in the ordinary course of business and
consistent with past practice and liens for Taxes not yet due and
payable;
(xi) Sellers will not dispose of any of the Purchased Assets or enter
into any material contracts relating to the Business, except in the
ordinary course of business and consistent with past practices,
without the prior written consent of the Buyer;
(xii) Sellers will not become or remain in breach or default on any
material obligation;
(xiii) Sellers will not write-off as uncollectible any of their Accounts
Receivable relating to the Business or any portion thereof unless
otherwise advised by Sellers' independent accountants;
(xiv) Sellers will not discontinue the sales of any services of the
Business;
(xv) Sellers will not increase any salary or wage of any Employee, other
than regularly scheduled salary increases agreed upon by the Board
of Directors of Tidel or Engineering (which shall not exceed 2% in
the aggregate, per annum), or as
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agreed to prior to the Effective Date, declare or pay any bonus,
revise, amend, institute, or terminate any employee benefit of any
Employee other than previously disclosed to Buyer;
(xvi) Sellers will not enter into any agreement or make any commitment to
do any of the foregoing;
(xvii) Sellers will assist in the transfer of Transferred Employees needed
for the Business; and
(xviii) Sellers shall assist Buyer with reasonable integration efforts and
transition.
(D) Notification. Sellers shall promptly notify Buyer in writing if it becomes
aware of (a) any fact or condition that, in Sellers' reasonable determination,
causes or constitutes a material breach of any of Sellers' representations and
warranties made as of the Effective Date or (b) the occurrence after the
Effective Date of any fact or condition that, in Sellers' reasonable
determination, would or would be reasonably likely to (except as expressly
contemplated by this Agreement) cause or constitute a breach of any such
representation or warranty had that representation or warranty been made as of
the time of the occurrence of, or Sellers' discovery of, such fact or condition.
(E) No Negotiation. (i). Except as specifically set forth in Section 8(E)(ii),
(iii), (iv), (v) or (vi) hereof, until the earlier of the Closing or the
termination of this Agreement pursuant to Section 14 hereof (the "Exclusivity
Period"), Sellers shall not directly or indirectly, individually or through any
of their respective officers, directors, stockholders, employees,
representatives, agents, affiliates, or otherwise (collectively, the
"Representatives") initiate, solicit or encourage, consider, evaluate, or
respond to (other than to say that Seller is contractually obligated not to
respond, and referring such party to public disclosure regarding this Agreement,
but shall not otherwise respond, including, without limitation, by way of
furnishing non-public information or assistance) any proposals, inquiries or
offers from any person or entity, including, but not limited to, any Tidel
stockholder ("Third Party"), or enter into any confidentiality agreement, due
diligence agreement, letter of intent, purchase agreement, merger agreement or
other arrangement, regarding any proposed sale of all or any portion of the
Purchased Assets or control thereof, whether by means of a sale or exchange of
shares, sale of assets, whether in whole or in part, merger, recapitalization,
liquidation or otherwise ("Third Party Acquisition"). Except as specifically set
forth in Sections 8(E)(i), (ii), (iii), (iv), (v) or (vi) hereof, during the
Exclusivity Period, Sellers shall not have, and shall take reasonable efforts to
cause their Representatives not to have, any discussions, conversations,
negotiations or other communications relating to any Third Party Acquisition
with any Third Party expressing interest therein, and shall immediately
discontinue negotiations with any Third Party with which it heretofore has
engaged in negotiations or discussions regarding any Third Party Acquisition.
During the Exclusivity Period, Sellers immediately shall notify Buyer of all
terms of any written inquiry, contact, communication, or proposal by any Third
Party with respect to any Third Party Acquisition that is received by Sellers or
any of their Representatives (including Sellers' response thereto), and
immediately shall provide Buyer with a copy of any such written inquiry,
contact, communication or proposal. With respect to any oral inquiry, contact,
communication or proposal, Sellers shall document the same in writing (including
Sellers' response thereto) and
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reasonably promptly provide Buyer with a copy of the same. Sellers agree that if
either Seller shall breach and fail to cure promptly any material provision of
this Section 8(E) and within twelve (12) months thereafter enter into any
definitive agreement with a Third Party with whom Sellers breached this Section
8(E) regarding a Third Party Acquisition, then upon the consummation of such
acquisition, Sellers immediately shall pay to Buyer by wire transfer (in readily
available funds) Two Million Dollars $2,000,000.00 (the "Fee"), which Sellers
acknowledge is reasonable under the circumstances and designed to compensate
Buyer for the lost opportunity to consummate the Transaction. This Fee will
serve as the exclusive remedy to Buyer hereunder in the event of a breach by
Sellers of the exclusivity arrangement set forth herein, including, but not
limited to, Buyer's damages relative to its efforts, expenses and costs incurred
in evaluating the Transaction. The parties acknowledge that the foregoing
provisions do not necessarily require Sellers to provide Buyer a written summary
of on-going discussions with a third party, nor shall Seller be required to
document to Buyer any oral inquiry, contact, communication or proposal that does
not materially change any inquiry, contact, communication or proposal previously
provided by Buyer.
(ii) Buyer acknowledges that Sellers are pursuing a potential sale of the
TACC Business and, in connection therewith, have engaged Xxxxxx Xxxxxxxx. Buyer
further acknowledges that Sellers' efforts to sell the TACC Business or any
other equity or assets not related to the Business, including the engagement of
Xxxxxx Xxxxxxxx, will not be deemed a breach of the provisions of this Section
8(E), provided such efforts do not in any way involve the Purchased Assets.
(iii) The parties acknowledge that prior to the Closing, in response to a
bona fide unsolicited written proposal for a Third Party Acquisition that did
not result from the breach of this Section 8(E) (a "Third Party Proposal") and
following delivery to Buyer of notice and a copy of the Third Party Proposal in
compliance with its obligations under Section 8(E)(i) hereof, the Sellers may
participate in discussions or negotiations with or furnish information (pursuant
to a confidentiality agreement with customary terms comparable to those in place
between Buyer and Seller) to any Third Party which makes a bona fide written
Third Party Proposal if, and only if, prior to taking such action: (A) a
majority of Tidel's Board of Directors reasonably determines in good faith
(after consultation with its financial advisors) that the transactions
contemplated by such Third Party Proposal are capable of being completed and
would, if consummated, result in a Superior Transaction (as hereinafter defined)
and (B) a majority of Tidel's Board of Directors determines in good faith (after
receiving the written advice of outside legal counsel) that it is necessary to
pursue such Superior Proposal in order to comply with its fiduciary duties to
its shareholders under applicable law and (C) Sellers comply with the
information and notice obligations set forth in Section 8(E)(i).
For purposes of this Agreement, "Superior Proposal" means a bona fide Third
Party Proposal to purchase at least two-thirds of the outstanding equity
securities of either Seller pursuant to a tender offer or exchange offer or to
effect any merger, consolidation, business combination or sale of all or
substantially all of the Purchased Assets, recapitalization or similar
transaction involving the Sellers, on terms which a majority of Tidel's Board of
Directors determines in good faith (after consultation with its financial
advisors) to be superior to Tidel and its shareholders (in their capacity as
shareholders) from a financial point of view (taking into account, among other
things, all legal, financial, regulatory and other aspects of the proposal and
TIDEL NCR Final 021805
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identity of the offeror) as compared to (i) the transactions contemplated hereby
and (ii) any alternative proposed by Buyer in accordance with Section 8(E)(vi)
which is reasonably capable of being consummated (any such transaction being
referred to herein as a "Superior Transaction").
(iv) The Sellers and Buyer agree that, notwithstanding anything to the
contrary herein, prior to the Closing, Tidel and/or its Board of Directors may
take the actions otherwise prohibited by Section 8(E)(i), subject to the
conditions of and as limited by Section 8(E)(iii), if and only if: (A) (i) a
Third Party makes a Superior Proposal, and (ii) Tidel complies with its
obligations under Section 8(E)(iii) and (vi) and its disclosure obligations
under Section 8(E)(i), (B) all of the conditions to Tidel's Board of Directors'
right to withhold or withdraw its recommendation of this Transaction in
accordance with Section 8(E)(vi) hereof have been complied with (including the
expiration of the six Business Day period described therein) with the exception
of compliance with the requirement to pay the amounts contemplated pursuant to
Section 8(E)(vi) hereof), which amount shall be paid when due pursuant to the
terms thereof; and (C) simultaneously therewith, the Tidel Board of Directors
withholds or withdraws its recommendation of this Agreement in accordance with
Section 8(E)(vi) hereof.
(v) Buyer agrees that nothing contained in this Section 8(E) shall
prohibit Tidel from taking and disclosing to its shareholders a position
contemplated by Rule 14d-9 and Rule 14e-2 promulgated under the Securities
Exchange Act of 1934, as amended, with respect to any tender offer.
(vi) If at any time prior to the Closing a Superior Proposal is received
by the Sellers and the Board of Directors of Tidel reasonably determines in good
faith (after receiving the advice of outside legal counsel) that it is necessary
to withhold or withdraw the Board's recommendation of this Transaction and to
enter into an agreement to effect the Superior Proposal in order to comply with
its fiduciary duties to its shareholders under applicable law, then the Tidel
Board of Directors may withhold or withdraw its recommendation of this
Transaction; provided that the Tidel Board of Directors may not withdraw its
recommendation pursuant to this Section 8(E)(vi) unless and until (A) six
Business Days have elapsed following delivery to Buyer of a written notice of
such determination by the Board of Directors of Tidel, and during such six
Business Day period Tidel has fully cooperated with Buyer, including, without
limitation, informing Buyer of the terms and conditions of such Superior
Proposal and the identity of the Third Party making such Superior Proposal and
providing to Buyer copies of all documents required by Section 8(E)(i), with the
intent of enabling the parties hereto to agree to a modification of the terms
and conditions of this Agreement to provide substantially equivalent value to
the Sellers as determined in the reasonable and good faith exercise of the
discretion of the Board of Directors of Tidel, so that the transactions
contemplated hereby may be effected, it being the intent that Buyer be given the
opportunity to consummate the Transaction on substantially equivalent financial
terms as any Superior Proposal, without any requirement to provide more
favorable terms thereto; (B) at the end of such six Business Day period the
Third Party Proposal continues in the good faith judgment of the Board of
Directors of Tidel to constitute a Superior Proposal compared to this
Transaction or any other offer made by Buyer and the Board of Directors of Tidel
confirms its determination (after receiving the advice of outside legal counsel)
that it is necessary to withhold or withdraw its recommendation of the
Transaction and enter into an agreement to effect the Superior Proposal to
comply with its
TIDEL NCR Final 021805
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fiduciary duties to its shareholders under applicable law; and (C) immediately
following such withdrawal, the Sellers or either of them enter into a definitive
acquisition, merger or similar agreement to effect the Superior Proposal and
immediately following the execution of a definitive agreement for the Superior
Transaction, Buyer is paid the Fee by wire transfer of immediately available
funds.
(F) Interim Financial Statements. Until the Closing Date, Sellers shall deliver
to Buyer within ten (10) Business Days after the end of each month a copy of the
unaudited financial statements of Engineering or such month prepared in
accordance with Generally Accepted Accounting Principles, consistently applied,
in a manner and containing information consistent with Sellers' current
practices.
(G) License of Name. On or before the Closing Date, Tidel shall take all actions
necessary to license the use of the name "Tidel" to Sellers as further set out
in that certain License Agreement by and between Tidel and Buyer dated as of the
date hereof, attached hereto as Exhibit B hereto (the "License Agreement").
(H) Meeting of Tidel Stockholders.
(i) In the event that the Board of Directors of Tidel, in its sole
discretion, determines that the transactions contemplated by this Agreement
require the approval of the holders of Tidel's common stock, par value $.01 (the
"Common Stock", and such holders, the "Tidel Stockholders"), Tidel will take all
action necessary in accordance with applicable law and regulations and its
Certificate of Incorporation and Bylaws to duly call, give notice of, convene
and hold, as promptly as reasonably practicable after the date hereof, a meeting
(the "Stockholders' Meeting") of the Tidel Stockholders for the purpose of
obtaining approval of this Agreement and the transactions contemplated hereby
(the "Transactions") and shall submit this Agreement and the Transactions for
approval by the Tidel Stockholders at such meeting or any adjournment thereof.
(ii) Unless the Tidel Board of Directors withholds or withdraws its
recommendation of this Transaction pursuant to and subject to the conditions of
Section 8(E)(vi) above, Tidel, through its Board of Directors, shall recommend
approval of the Transactions by the Tidel Stockholders at the Stockholders'
Meeting or any adjournment thereof, shall include such recommendation in the
Proxy Statement, and shall use all commercially reasonable efforts to obtain the
approval of the Tidel Stockholders. Notwithstanding any such withdrawal, if
approval of the Tidel Stockholders is necessary under applicable law for the
Sellers to consummate the Transaction, Tidel shall be obligated to convene the
stockholders meeting contemplated by this Section 8(H) as soon as reasonably
practicable and shall submit the Transaction to a vote of its stockholders as
provided herein.
(iii) As promptly as practicable after the execution of this Agreement,
Tidel shall prepare and file with the Securities and Exchange Commission ("SEC")
proxy materials as required by applicable law to solicit from the Tidel
Stockholders proxies in favor of the adoption of this Agreement and the approval
of the Transactions (the "Proxy Statement"), and shall use reasonable efforts to
have the Proxy Statement cleared by the SEC. The Proxy Statement shall comply
with applicable provisions of the Securities Act of 1933, as amended (the
"Securities
TIDEL NCR Final 021805
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Act") and the Exchange Act and the rules and regulations thereunder. If at any
time prior to the Stockholder's Meeting any event shall occur that should be set
forth in an amendment of or a supplement to the Proxy Statement, Tidel shall
prepare and file with the SEC such amendment or supplement as soon thereafter as
is reasonably practicable. Buyer and Tidel shall cooperate with each other in
the preparation of the Proxy Statement, and Tidel shall notify Buyer of the
receipt of any comments of the SEC with respect to the Proxy Statement and of
any requests by the SEC for any amendment or supplement thereto or for
additional information, and shall provide to Buyer promptly copies of all
correspondence between Tidel or any representative of Tidel and the SEC with
respect to the Proxy Statement. Buyer and its counsel shall have the right to
review the Proxy Statement and all responses to requests for additional
information by and replies to comments of the SEC before their being filed with,
or sent to, the SEC. Each of Tidel and Buyer agrees to use commercially
reasonable efforts, after consultation with the other parties hereto, to respond
promptly to all such comments of and requests by the SEC in an effort to cause
the Proxy Statement to be mailed to the holders of Tidel Stock entitled to vote
at the Sellers Stockholders' Meeting at the earliest practicable time. Tidel
agrees that the information provided by it for inclusion in the Proxy Statement
and each amendment or supplement thereto, at the time of mailing thereof and at
the time of the Stockholders' Meeting, will not include an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.
(iv) Buyer acknowledges that as of the date hereof, Tidel is not current
in filing its annual reports on Form 10-K and quarterly reports on Form 10-Q
(collectively, the "SEC Reports"). In satisfying the covenants in this Section
8, Tidel shall not be required to file any SEC Reports that are currently or may
hereinafter become overdue. Additionally, Tidel shall not be required to file a
Proxy Statement with the SEC to the extent that Tidel is advised by counsel that
such Proxy Statement may not be cleared by the SEC for any reason, including,
without limitation, as a result of Tidel's overdue SEC Reports. The covenants in
this Section 8 are furthermore subject to any restrictions or requirements of
the rules and regulations of the SEC.
(v) In no event shall Sellers be required to incur expenses in excess of
$50,000 to obtain the legal opinion required by Section 13(B)(ix) of this
Agreement. If the expense to obtain this legal opinion exceeds $50,000, Sellers
shall not be required to obtain such opinion; however, Sellers and Buyer may, if
they shall so mutually agree, in each of their sole discretion, to each pay 50%
of the difference between the total cost of obtaining such opinions and $50,000.
9. ADDITIONAL COVENANTS. Each of the parties hereto, as the case may be, hereby
covenant and agree as follows:
(A) Taxes.
(i) Payment; Filing Returns. Sellers shall pay all federal, state and
local sales, transfer, excise, value-added, or other similar Taxes that may be
imposed by reason of the sale, transfer, assignment, or delivery by Sellers of
the Purchased Assets or assumption of the Assumed Liabilities. Sellers shall be
responsible for the preparation and filing of all required Tax Returns and shall
be liable for the payment of any and all Taxes relating to all periods
TIDEL NCR Final 021805
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through and including the Closing Date (including all Taxes resulting from the
sale and transfer by the Sellers of Purchased Assets hereunder).
(ii) Cooperation. The parties hereto agree to furnish or cause to be
furnished to one another, upon request, as promptly as practicable, such
information and assistance relating to the Purchased Assets, the Assumed
Liabilities and the Business as is reasonably necessary for the filing of all
Tax Returns, and making of any election related to Taxes, the preparation for
any audit by any Governmental Authority, and the prosecution or defense of any
claim, suit or proceeding relating to any Tax Return. The parties hereto shall
cooperate with each other in the conduct of any audit or other proceeding
related to Taxes involving the Business and each shall execute and deliver such
other documents as are necessary to carry out the intent of this Section
8(A)(ii). Buyer shall retain possession of all files and records transferred to
Buyer hereunder, if any, and coming into existence after the Closing Date that
relate to the Business before the Closing Date, for a period not to exceed five
(5) years from the Closing Date.
(B) Employee Matters.
(i) Transferred Employees. Subject to and in accordance with the
provisions of this Section 9(B), Buyer shall offer full-time employment,
effective upon the Closing, to certain Employees identified by Sellers and who
Buyer agrees are necessary to operate the Business and are acceptable to Buyer,
as listed on Section 9(B) of the Disclosure Schedule (the "Transferred
Employees"), subject without limitation to Buyer's hiring policies. Accordingly,
pursuant to Rev. Proc. 96-60, 1996-2 C.B. 399, provided that Sellers provide
Buyer with all necessary payroll records for the calendar year which includes
the Closing Date, Buyer shall furnish a Form W-2 to each Transferred Employee
disclosing all wages and other compensation paid prior to the Closing Date, and
Taxes withheld therefrom, and Sellers shall be relieved of the responsibility to
do so. All such information provided by Seller shall be accurate, correct and
complete.
(ii) Offer of Employment. On or prior to the date of Closing, Buyer shall
offer to each of the Transferred Employees an employment position similar to his
or her position with Sellers on the Closing Date on terms and conditions
substantially equivalent to the terms and conditions of employment and benefits
for current employees of Buyer in similar job classifications and grades. Buyer
shall hire all Transferred Employees who accept such offer, and shall deliver to
Seller a list of all of the Transferred Employees who accept such offer, which
list shall be included in Section 9(B) of the Disclosure Schedule (the "Accepted
Employees"). The parties hereto agree to coordinate their efforts in order to
effect a smooth transition of the payroll for the Employees from Sellers to
Buyer. Buyer shall not, however, in any event have any responsibility for any
employee litigation or potential litigation matters, nor for any other
employment-related claims, including but not limited to claims for severance,
asserted by any employee of Sellers (except for claims brought by Accepted
Employees who accept Buyer's offer of employment related solely to Buyer's
actions occurring after such acceptance).
(iii) Eligibility. Each of the Transferred Employees shall be eligible to
participate in all health, defined and welfare benefits currently offered by
Buyer to its employees, including, but not limited to, medical, dental, life,
disability, vacation and 401(k) plans (subject to complying with eligibility
requirements). For purposes of administering such plans or programs,
TIDEL NCR Final 021805
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past service with Sellers shall be deemed to be service with Buyer for purposes
of determining eligibility to participate and vesting (if applicable), in such
welfare plans and programs, unless otherwise expressly agreed by Buyer in
writing. Coverage for Accepted Employees under Buyer's benefit plans and
programs shall commence as of 12:01 a.m. on the Closing Date. Sellers shall
retain responsibility for all vacation time for Accepted Employees accrued on or
before the Closing Date and for any claims under its health insurance policies
made by Accepted Employees arising out of insurable losses incurred or claims
accrued on or prior to the Closing Date.
(iv) Transition. The employment of each Accepted Employee by Sellers shall
end effective as of the close of business on the day before the Closing Date and
the employment of the Accepted Employees by Buyer shall commence at or after
12:01 a.m. on the Closing Date. Buyer and Sellers agree to cooperate in jointly
notifying the Employees of the termination of their employment by Seller and the
offer of employment by Buyer.
(v) Vacation Benefits. Buyer shall offer and pay for all vacation benefits
of the Transferred Employees who become Accepted Employees accrued while
employed by Sellers but not taken as of the Closing Date, but only to the extent
disclosed in the Disclosure Schedule. Buyer and Sellers acknowledge and agree
that Buyer shall not assume any liabilities for vacation benefits accrued
through the Closing Date for any Transferred Employee that does not become an
employee of Buyer after the Closing.
(vi) COBRA. Sellers shall remain solely liable or responsible for all
COBRA obligations of Sellers arising from any qualifying event as defined under
Section 4980B(f)(3) of the Code and ERISA Section 603 occurring on or before the
Closing Date.
(vii) Option Cancellation Agreements. The parties acknowledge that Buyer
does not hereby assume and shall not have any liability for the payment of any
option payments to Employees hereunder or the administration of any options of
Sellers.
(C) Payment of Liabilities. Prior to the Closing Date, Sellers shall pay or
otherwise satisfy in the ordinary course of business all of its retained
liabilities and other obligations associated with the Business.
(D) Noncompetition, Nonsolicitation and Nondisparagement
(i) Noncompetition with Buyer. For a period of five (5) years after the
Closing Date, Sellers shall not anywhere in the world (the "Restricted Area"),
directly or indirectly, invest in, own, manage, operate, finance, control,
advise, aid or assist, act as a broker for, render services to, be employed by
or guarantee the obligations of any Person engaged in or planning to become
engaged a business similar to the Business or the business of manufacturing,
assembly, selling, marketing, distribution or servicing Automated Teller
Machines (ATMs) (a "Buyer Competing Business"). In order to induce Buyer to
enter into this Agreement, and for other good and valuable consideration, the
sufficiency of which is hereby acknowledged, Sellers agrees that for a period of
five (5) years following the Closing Date, Sellers shall not engage, either
directly or indirectly, on their own behalf or as a partner, member, owner,
director, officer, employee, agent, contractor, shareholder or otherwise,
anywhere within the Restricted Area, in any business that is
TIDEL NCR Final 021805
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involved or engaged, directly or indirectly, in a Buyer Competing Business. With
respect to the covenants and agreements set forth in this Section 9(D), Sellers
agree that it may be impossible to measure in monetary terms the damages which
will accrue to Buyer by reason of an actual breach by it of such covenants and
agreements, that a violation of such covenants and agreements will cause
irreparable injury to Buyer, and that Buyer shall be entitled, in addition to
any other rights and remedies it may have, at law or in equity, to apply to a
court of competent jurisdiction for an injunction to restrain Sellers from
violating, or continuing to violate, such covenants and agreements. Nothing in
this Section 9(D) shall be deemed to limit Buyer's right to recover damages
caused by any actual breach by Sellers.
(ii) Nonsolicitation.
(a) Buyer agrees that it shall not, for a period of two (2)
years from the Closing Date, either directly or indirectly on its
own behalf or in association with or on behalf of others, directly
or indirectly, solicit, entice or induce any employee or independent
consultant of Sellers to leave its service with Sellers or solicit,
entice or induce for employment or employ, whether as an advisor,
independent consultant or otherwise, any person who was, either at
the Closing Date or within a period of three months prior thereto,
an employee of Sellers.
(b) Each Seller agrees that it shall not, for a period of two
(2) years from the Closing Date, either directly or indirectly on
its own behalf or in association with or on behalf of others,
directly or indirectly, solicit, entice or induce any employee or
independent consultant of Buyer to leave its service with Buyer or
solicit, entice or induce for employment or employ, whether as an
advisor, independent consultant or otherwise, any person who was,
either at the Closing Date or within a period of three months prior
thereto, an employee of Buyer.
(c) The geographic scope of this Section 9(D)(ii) shall extend
worldwide to anywhere the Buyer or Sellers are doing business, has
done business or has plans to do business, or to such lesser
geographic area as a court of competent jurisdiction may direct. The
provisions of 9(D)(ii) shall not be deemed to apply to or include
general solicitations of employment that are not specifically
directed towards employees of the other party.
(iii) Nondisparagement. After the Closing Date, neither party will
disparage any other party hereto or any of such party's managers, directors,
officers, employees, representatives or agents.
(iv) Modification of Covenant. If a final judgment of a court or tribunal
of competent jurisdiction determines that any term or provision contained in
this Section 9(D) is invalid or unenforceable, then the parties agree that the
court or tribunal will have the power to reduce the scope, duration or
geographic 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. This Section 9(D)
will be enforceable as so modified after the expiration of
TIDEL NCR Final 021805
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the time within which the judgment may be appealed. This Section 9(D) is
reasonable and necessary to protect and preserve Buyer's legitimate business
interests in the geographical locations in which the business operates and the
value of the Purchased Assets and to prevent any unfair advantage conferred on
Sellers.
(v) Payment. In consideration of the Agreements contained in this Section
9(D), Buyer shall pay Sellers, or to certain current named employees of Sellers,
at Sellers' sole discretion, a total of $100,000 paid as of the Closing Date, in
exchange for transition cooperation and non-competition agreements (for 5-year
periods each with respect to non-competition), which $100,000 shall be allocated
as designated by Seller's compensation committee (the "Noncompete Payment").
(E) Further Assurances. Sellers agrees to cooperate with Buyer and its
authorized representatives in connection with any steps required to be taken as
part of Sellers' respective obligations under this Agreement, and shall (i)
furnish upon request to Sellers such further information; (ii) execute and
deliver to Sellers such other documents; and (iii) do such other acts and
things, all as Buyer may request for the purpose of carrying out the intent of
this Agreement and the transactions contemplated thereby.
(F) Collection of Accounts Receivable. After the Closing Date, Buyer shall
collect any Accounts Receivable that were generated in connection with the
Business prior to the Closing Date. Sellers shall promptly remit to Buyer any
such payments on the Accounts Receivable received by Sellers after the Closing
Date. After the Closing Date, Buyer shall have the right to notify any customers
who owe Sellers any amounts properly payable to Buyer to send their payments
directly to Buyer.
(G) Necessary Action. Sellers shall each, at its own expense, and subject to
Section (J) hereof, both prior to and after the Closing, take all necessary
action, obtain any consents, approvals and amendments of agreements required to
carry out the transactions contemplated by this Agreement and to satisfy any
conditions for which any of them is responsible hereunder.
(H) Satisfaction of Doubtful Accounts. With respect to the collection,
satisfaction, sale or other monetization of the Seller Doubtful Accounts as set
forth in Section 1(Q), for a period of 2 years following the Closing, Buyer
shall be entitled to retain the first Two Million Dollars ($2,000,000) (without
reduction for any costs or other expenses of collection) of any proceeds or
other value received by Buyer or its Affiliates, but with respect to any amounts
received above such amount (without reduction for any costs or other expenses of
collection), if any, Buyer and Sellers shall share such proceeds on a 50/50
basis and Sellers' share shall be promptly paid by Buyer to Seller within ten
Business Days of receipt for such proceeds or other value. Buyer shall deliver
to Sellers on each of the first two anniversaries of the Closing a certificate
signed by its Principal Financial Officer describing any proceeds or other value
received, confirming that no other amounts have been received and confirming
that 50% of the proceeds or other value in excess of $2,000,000 in the aggregate
have been paid to Sellers.
(I) Tidel Lease.
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(i) In connection with the Sellers' relocation to another facility
following the Closing Date, the parties acknowledge that it may be difficult for
the Sellers to obtain alternative space on reasonable terms, and accordingly the
Buyer and XXX Xxxxxxxxxxx agree to guaranty the payment of a lease for space to
conduct Sellers' remaining businesses for a period of up to 12 months, or to
otherwise provide such security requested by a prospective landlord for such
period.
(ii) Buyer and XXX Xxxxxxxxxxx further agree that if the costs and
expenses of Sellers' relocation to another location exceed $500,000, then they
will pay to Sellers one half of the amount that such costs and expenses exceed
$500,000.
(iii) The foregoing (I)(i) and (I)(ii) shall not apply should Buyer not be
able to obtain the Landlord's consent per 9(J) below.
(I) Seller Covenant. Sellers shall use their commercially reasonable efforts to
obtain an opinion from their financial advisor as to whether the transactions
contemplated hereunder are fair to the TidelStockholders from a financial point
of view and shall provide such financial advisor with all information reasonably
required to render such opinion.
(J) Transferred Lease. The parties hereto acknowledge and agree that assignment
of the Transferred Lease to Buyer as of the Closing Dates, as provided for
herein, requires consent of the Landlord. While it shall not be a condition of
Closing that such consent be obtained, Seller shall use their best efforts to
obtain the consent of the Landlord under the Transferred Lease to assign the
Transferred Lease to Buyer within 30 days from the Effective Date of this
Agreement. If consent is not obtained Buyer shall have the option to terminate
this Agreement as set out is Section 14(B)(vi).
10. INDEMNIFICATION.
(A) Sellers Indemnification. Sellers agree to protect, defend, indemnify and
hold harmless Buyer and its directors, officers, employees, agents, managers,
shareholders, members, successors and assigns, from any and all losses, claims,
liabilities, obligations, deficiencies, assessments, fines, costs, and damages
(including, without limitation, interest, penalties, reasonable legal fees and
reasonable accounting fees), whether fixed or contingent, liquidated or
unliquidated, matured or unmatured and all demands, assessments and judgments
(collectively, "Damages"), resulting from, arising from or relating to: (a) any
liability of Sellers or the Business arising on or before the Closing Date other
than the Assumed Liabilities; (b) any events relating to the Business occurring
on or before the Closing Date; (c) any misrepresentation, inaccuracy or breach
of any warranty or representation by Sellers in this Agreement; (d) any material
failure of Sellers to perform any covenant or agreement in the Transaction
Documents in a timely manner and the failure of which remains uncured for a
period of ten (10) Business Days after receipt of written notice from Buyer
setting forth in reasonable detail the nature of such material failure; or (e)
any forfeitures, fines, penalties, or other sanctions imposed as a result of
noncompliance by Sellers prior to the Closing Date with any Laws applicable to
the Business or the Purchased Assets.
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(B) Indemnification. Buyer shall protect, defend, indemnify and hold harmless
Sellers and their directors, officers, employees, agents, managers,
shareholders, partners, members, successors and assigns, from and against any
and all Damages resulting from, arising from or relating to: (a) the Assumed
Liabilities; (b) any misrepresentation, inaccuracy or breach of any warranty or
representation by Buyer in this Agreement; (c) the operation or ownership of the
Business and the Purchased Assets after the Closing Date; (d) any events
relating to the Business occurring after the Closing Date; and (e) any material
failure of Buyer to perform any covenant or agreement in Transaction Documents
in a timely manner and the failure of which remains uncured for a period of ten
(10) Business Days after the receipt of written notice from Sellers setting
forth in reasonable detail the nature of such material failure.
(C) Exclusive Remedy. The parties hereby acknowledge and agree that, from and
after the Closing, except for the rights and remedies of Buyer contained in
Sections 5(B) and 16, their sole remedy with respect to any and all claims
arising under this Agreement shall be pursuant to the indemnification provisions
set forth in this Section. In furtherance of the foregoing, the parties hereby
waive, from and after the Closing, to the fullest extent permitted by Law, any
and all other rights, claims and causes of action they may have against the
other parties hereto, or any of the other parties' officers, directors,
employees, agents, managers, members, shareholders, representatives and
Affiliates relating to any misrepresentation in or breach of any representation
or warranty or nonfulfillment of any covenant, agreement or other obligation
contained in the Transaction Documents.
(D) Basket. In no event may either party make a claim for Damages pursuant to
this Section 10 unless and until the total amount of such claim individually
exceeds Ten Thousand Dollars ($10,000), or such claim and other current or prior
claims, in the aggregate, exceed Fifty Thousand Dollars ($50,000) (the
"Basket"), and in such event, then the Indemnitor (as defined in subsection (G)
below) shall reimburse the Indemnitee (as defined in subsection (G) below) for
the amount of all Damages incurred by the Indemnitee under this Agreement.
Notwithstanding anything herein to the contrary, the Basket shall not apply with
respect to any breach of any representation or warranty involving fraud or
fraudulent misrepresentation.
(E) Survival.
(i) With respect to any and all claims among the parties hereto arising in
connection with this Agreement, the representations, warranties, covenants and
agreements that are set forth in this Agreement shall be continuing and shall
survive the Closing for a period of nine (9) months except (1) the
representations and warranties set out in Sections 6(R),(U) and (BB), which
shall survive for the period of the applicable statute of limitations plus
thirty (30) days; (2) the representations and warranties set out in Sections 6
(C) and (F) shall indefinitely survive the Closing; and (3) in the case of a
claim for any breach of any of the representations and warranties contained in
this Agreement involving fraud or fraudulent misrepresentation shall survive and
continue in full force and effect without limitation of time, subject only to
applicable limitation periods imposed by Law (the period during which the
representations and warranties and covenants and agreements shall survive being
referred to herein with respect to such representations and warranties and
covenants and agreements as the "Survival Period"), but shall thereafter
terminate and be of no further force and effect unless a written notice
asserting a claim
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shall have been made pursuant to this Section 10(E) within the Survival Period
with respect to such matter.
(ii) All claims made hereunder prior to the expiration of the applicable
survival period stated above, but are not yet settled, shall be subject to the
indemnification provisions hereunder.
(F) Procedure for Indemnification. If a party entitled to indemnification under
this Agreement (an "Indemnitee") asserts that a party obligated to indemnify it
under this Agreement (an "Indemnitor") has become obligated to such Indemnitee
pursuant to this Agreement, or if any suit, action, investigation, claim or
proceeding is begun, made or instituted as a result of which the Indemnitor may
become obligated to an Indemnitee hereunder, such Indemnitee shall promptly give
written notice to the Indemnitor. The Indemnitor agrees to defend, contest or
otherwise protect the Indemnitee against any such suit, action, investigation,
claim or proceeding at its sole cost and expense. The Indemnitee shall have the
right, but not the obligation, to participate at its own expense in the defense
thereof by counsel of the Indemnitee's choice and shall in any event cooperate
with and assist the Indemnitor to the extent reasonably possible. If the
Indemnitor fails timely to defend, contest or otherwise protect against such
suit, action, investigation, claim or proceeding, the Indemnitee shall have the
right to do so, including, without limitation, the right to make any compromise
or settlement thereof, and the Indemnitee shall be entitled to recover the
entire cost thereof from the Indemnitor, including, without limitation,
reasonable attorneys' fees, disbursements and amounts paid as the result of such
suit, action, investigation, claim or proceeding. The parties shall in no case
settle or compromise the other's Claim or consent to the entry of judgment, in
either case other than solely for money damages, without the prior written
consent of the other party if such settlement, compromise or judgment would
adversely affect the rights of the other party in any continuing manner.
11. CONDITION PRECEDENT TO BUYER'S OBLIGATION TO PERFORM.
The obligation of Buyer to consummate the transaction contemplated in this
Agreement is subject to the satisfaction or express waiver by Buyer at or prior
to the Closing of the following conditions:
(A) All organizational approvals necessary to authorize the transaction
contemplated under this Agreement shall have been obtained by Buyer (or obtained
by Sellers and evidence of such approval is delivered to Buyer), including
without limitation either (i) an opinion reasonably acceptable to the Sellers
and Buyer, of Delaware counsel that is reasonably acceptable to the Sellers and
the Buyer, stating the approval by the Tidel Stockholders is not required under
Law for the consummation of the transactions contemplated herein; or (ii) the
approval of the transactions contemplated herein by proxy or written consent of
a majority of the holders of the outstanding shares of Common Stock or
securities convertible or exchangeable into Common Stock and having the right to
vote in such matter in a form and substance reasonably acceptable to the Buyer;
(B) All necessary consents of third parties to the transaction contemplated by
the Transaction Documents shall have been obtained by Sellers or Buyer, as
applicable, including, without limitation, (i) any required consents in the
Contracts, and (ii) any required consents of creditors,
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lessors, suppliers and Governmental Authorities including without limitation
those listed in Section 6(V) of the Disclosure Schedule, attached hereto;
(C) All representations and warranties by Sellers in this Agreement or in any
document delivered by Sellers pursuant to this Agreement shall be true and
correct in all material respects on and as of the Effective Date and the Closing
Date;
(D) Sellers shall have performed, satisfied and complied with all covenants,
agreements, and conditions required by this Agreement to be performed or
complied with by them on or before the Effective Date and the Closing Date;
(E) Sellers shall have delivered all of the documents, agreements, instruments
and other items that Sellers are required to deliver at the Closing pursuant to
Section 13(B) of this Agreement;
(F) Since the Effective Date, there shall not have been commenced or threatened
against Buyer, or against any Affiliate of Buyer, any proceeding (a) involving
any challenge to, or seeking Damages or other relief in connection with, any of
the transactions contemplated under this Agreement or (b) that may have the
effect of preventing, delaying, making illegal, imposing limitations or
conditions on or otherwise interfering with any of the transactions;
(G) Sellers shall have provided assistance as requested by Buyer in obtaining,
and Buyer shall have obtained, appropriate amendments to or terminations of any
third party agreements that Buyer and Sellers mutually agree appropriate in
their reasonable discretion, provided, however, Sellers shall not be required to
make any payment in connection herewith.;
(H) Seller shall have obtained the consent to assign the Transferred Lease.
12. CONDITIONS PRECEDENT TO SELLERS' OBLIGATION TO PERFORM.
The obligation of Sellers to consummate the transaction contemplated in this
Agreement is subject to the satisfaction or express waiver by Sellers at or
prior to the Closing of the following conditions:
(A) All representations and warranties by Buyer in this Agreement or in
any document delivered by Buyer pursuant to this Agreement shall be true and
correct in all material respects on and as of the Closing Date and the Effective
Date;
(B) All organizational approvals necessary to authorize the transactions
contemplated herein shall have been obtained by Sellers;
(C) Buyer shall have performed, satisfied and complied with all covenants,
agreements, and conditions required by this Agreement to be performed or
complied with by it on or before the Effective Date and the Closing Date;
(D) Buyer shall have delivered all of the documents, agreements,
instruments and other items that Buyer is required to deliver at the Closing
pursuant to Section 13(C) of this Agreement;
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(E) All organizational approvals necessary to authorize the transaction
contemplated under this Agreement shall have been obtained by Buyer (or obtained
by Sellers and evidence of such approval is delivered to Buyer), including
without limitation either (i) an opinion reasonably acceptable to the Sellers
and Buyer, of Delaware counsel that is reasonably acceptable to the Sellers and
the Buyer, stating the approval by the Tidel Stockholders is not required under
Law for the consummation of the transactions contemplated herein; or (ii) the
approval of the transactions contemplated herein by proxy or written consent of
a majority of the holders of the outstanding shares of Common Stock or
securities convertible or exchangeable into Common Stock and having the right to
vote in such matter in a form and substance reasonably acceptable to the Buyer.
(F) Since the Effective Date, there shall not have been commenced or
threatened against Buyer, or against any Affiliate of Buyer, any proceeding (a)
involving any challenge to, or seeking Damages or other relief in connection
with, any of the transactions contemplated under this Agreement or (b) that may
have the effect of preventing, delaying, making illegal, imposing limitations or
conditions on or otherwise interfering with any of the transactions;
(G) The Buyer shall make the Noncompete Payment at Closing; and
(H) Sellers shall have received an opinion from a financial advisor that
this transaction is fair from a financial point of view to the Tidel
Stockholders.
13. CLOSING.
(A) The closing of the transactions contemplated in this Agreement (the
"Closing") shall take place on or before December 31, 2005 (the "Closing Date")
at the offices of Sellers in Houston, Texas. If any of the parties determines
prior to the Closing Date that any of the conditions set forth in Sections 11 or
12 have not been met and will not be able to be met on or prior to the Closing
Date, such party shall notify the other in writing at the address set forth in
Section 17 below prior to the Closing Date.
(B) At the Closing, Sellers shall deliver or cause to be delivered to
Buyer the following documents, instruments, certificates and agreements (which
shall be in form and substance reasonably satisfactory to Buyer and its
counsel):
(i) A counterpart to the License Agreement, duly executed by Sellers;
(ii) A counterpart to the Xxxx of Sale in a form to be mutually agreed,
duly executed by Sellers;
(iii) A counterpart to the Assignment and Assumption Agreement in a form
to be mutually agreed (the "Assignment Agreement"), duly executed by Sellers;
(iv) Such other deeds, bills of sale, assignments and other instruments of
sale, in form and substance reasonably satisfactory to Buyer's counsel, as shall
be required or as may be desirable to vest in Buyer good and marketable title to
the Purchased Assets, free and clear of all Encumbrances;
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(v) A certificate signed by an authorized officer of each of the Sellers
and dated as of the Closing Date, certifying that the representations and
warranties of Sellers contained in this Agreement are true and correct on the
Closing Date as if such representations and warranties were made on the Closing
Date;
(vi) An incumbency and specimen certificate with respect to the officer(s)
of Sellers executing the Transaction Documents to which such entity is a party;
(vii) Certificates of good standing for Sellers issued not earlier than
thirty (30) days prior to the Closing Date by the Secretary of State of Delaware
or Texas as applicable;
(viii) An opinion of Xxxxxx Xxxxxxxx Frome Xxxxxxxxxx & Xxxxxxx LLP, legal
counsel to Sellers, in a form reasonably acceptable to Buyer;
(ix) Either (i) approval of the Tidel Stockholders to the consummation of
the transactions contemplated herein; or (ii) subject to Section 8(H)(v) hereof,
an opinion that is acceptable to both Buyer and Sellers of Delaware counsel
acceptable to both Buyer and Sellers stating that the transactions contemplated
herein do not require the approval of the Tidel Stockholders under Law;
(x) A Release of Liens as may be identified by the Buyer prior to the
Closing;
(xi) A counterpart to the Escrow Agreement, duly executed by Sellers;
(xii) All of the required consents from third Persons set forth in Section
13(B)(xi) of the Disclosure Schedule; and
(xii) Execution of certain contracts between Buyer and the individuals
listed on Schedule 13(B)(xii) of the Disclosure Schedule (the "Key Employment
Agreements").
(C) At the Closing, Buyer shall deliver or cause to be delivered to
Sellers the following documents, instruments, certificates and agreements (which
shall be in form and substance reasonably satisfactory to Sellers and its
counsel):
(i) A counterpart to the Xxxx of Sale, duly executed by Buyer;
(ii) A counterpart to the Assignment Agreement duly executed by
Buyer;
(iii) A counterpart to the License Agreement, duly executed by
Buyer;
(iv) A certificate signed by an authorized officer of Buyer and
dated as of the Closing Date, certifying that the representations and
warranties of Buyer contained in this Agreement are true and correct in
all material respects on the Closing Date as if such representations and
warranties were made on the Closing Date;
(v) An incumbency and specimen certificate with respect to the
officer(s) of Buyer executing the Transaction Documents to which Buyer is
party;
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(vi) The Initial Payment and the Noncompete Payment;
(vii) A counterpart to each of the Key Employment Agreements being
entered into by the Key Employees to the extent provided herein, duly
executed by Buyer; and
(viii) A counterpart to the Escrow Agreement, duly executed by
Buyer.
14. TERMINATION.
(A) Sellers may, on or prior to the Closing Date, terminate this Agreement
without liability if:
(i) there shall have been a material breach of any representations or
warranties set forth in this Agreement on the part of Sellers or if any
representations or warranties of Buyer shall have become untrue, provided that
Sellers has not materially breached any of its obligations hereunder; or
(ii) there shall have been a material breach by Buyer of any of its
covenants or agreements hereunder and such breach would result in a Material
Adverse Effect on the ability of Buyer or Sellers to consummate the transactions
contemplated by this Agreement, and Buyer has not cured such breach within ten
(10) Business Days after notice by Sellers thereof setting forth in reasonable
detail the nature of such breach; provided that Sellers has not materially
breached any of its obligations hereunder; or
(iii) any condition to Closing set forth in Sections 11-13 shall not have
been fulfilled or waived by Sellers by the Closing Date; or
(iv) if the meaning Closing has not occurred by December 31, 2005, unless
such date is extended by the mutual written consent of Sellers and Buyer;
provided, however, that this right to terminate shall not be available to
Sellers if Sellers' failure to fulfill in any material respect any covenant or
obligation under this Agreement has been the cause of, or results in, the
failure of the Closing to occur on or before the Closing Date; or any court of
competent jurisdiction in the United States or other United States federal or
state governmental entity shall have issued a final order, decree or ruling, or
taken any other final action, restraining, enjoining or otherwise prohibiting
the transactions contemplated by this Agreement and such order, decree, ruling
or other action is or shall have become non appealable, and if this agreement is
terminated under this Section 14(A)(iv), neither Buyer nor Seller shall have any
liability hereunder. Notwithstanding the foregoing, in no event shall Sellers
have any liability in connection with a termination of this Agreement by any
party hereto due to (a) the failure to file a Proxy Statement or obtain the
approval of the Tidel Stockholders to the transactions contemplated herein, (b)
the failure of Tidel's Board of Directors to determine that the transactions
contemplated hereby require the approval of the Tidel Stockholders; (c) the
failure of Tidel to obtain a legal opinion of counsel stating that the approval
of the Tidel Stockholders is not required under any Law, or (d) the failure of
Seller to assign the Transferred Lease due to failure to receive consent from
the landlord thereunder, provided in each instance that Seller has applied good
faith efforts to obtain said consent, approval or opinions; nor shall failure to
do any of the foregoing preclude Sellers from terminating this Agreement; or
(B) Buyer may, on or prior to the Closing Date, terminate this agreement without
liability if:
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(i) there shall have been a material breach of any representations or
warranties set forth in this Agreement on the part of Sellers or if any
representations or warranties of the Sellers shall have become untrue provided
that Buyer has not materially breached any of its obligations hereunder;
(ii) there shall have been a material breach by Sellers of one or more of
its covenants or agreements hereunder having a Material Adverse Effect on
Sellers or materially adversely affecting (or materially delaying) the ability
of Sellers and Buyer to consummate transactions contemplated by this Agreement,
and Sellers has not cured such breach within ten (10) Business Days after notice
by Buyer thereof setting forth in reasonable detail the nature of such breach,
provided that Buyer has not materially breached any of its obligations
hereunder,
(iii) any condition to Closing set forth in Section 13 shall not have been
fulfilled or waived by Buyer by the Closing Date;
(iv) if the Closing has not occurred by December 31, 2005, unless such
date shall have been extended by the mutual written consent of Sellers and
Buyer; provided, however, that this right to terminate shall not be available to
Buyer if Buyer's failure to fulfill in any material respect any covenant or
obligation under this Agreement has been the cause of, or results in, the
failure of the Closing to occur on or before the Closing Date; or any court of
competent jurisdiction in the United States or other United States federal or
state governmental entity shall have issued a final order, decree or ruling, or
taken any other final action, restraining, enjoining or otherwise prohibiting
the transactions contemplated by this Agreement and such order, decree, ruling
or other action is or shall have become non appealable, and if this agreement is
terminated under this Section 14(B)(iv), neither Buyer nor Seller shall have any
liability hereunder.
(v) if Buyer shall not have entered into Employment Agreements with two of the
Key Employees within thirty days following the Effective Date, them Buyer may
terminate within 10 days following the end of such 30 day period by providing
notice to Sellers pursuant to Section, provided however if Buyer does not
terminate pursuant to this Section 12(B)(v) Purchase Price shall be adjusted
pursuant to Section 5(F).
(vi) With reference to section 9(J) regarding the Transferred Lease, Buyer may
terminate this Agreement if the consent of the Landlord is not obtained within
30 days from the Effective Date.
(C) This agreement may be terminated by mutual written consent of Seller and
Buyer (in which case neither Buyer nor Seller shall have any liability
hereunder).
(D) Procedures Upon Termination. In the event of termination pursuant to this
Section 14, written notice shall forthwith be given to the other party or
parties, and the transactions contemplated hereby shall be abandoned, without
further action by any party hereto; provided, however, that nothing contained
herein shall be construed to prevent any parties hereto from pursuing any remedy
available at law or in equity for any breach, violation, default or other
failure of performance of any other party hereto prior to Closing.
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15. CONFIDENTIALITY.
(A) Confidential Nature of Information. Each of Parent and Buyer, as a party on
the one hand, and Sellers, as a party on the other, agrees that it will treat in
confidence all documents, materials and other information which it shall have
obtained regarding the other party during the course of the negotiations leading
to the consummation of the transactions contemplated by this Agreement (whether
obtained before or after the date of this Agreement), the investigation provided
for herein and the preparation of this Agreement and other related documents,
and, in the event that such transactions shall not be consummated, each party
will return to the other party all copies of nonpublic documents and materials
which have been furnished in connection therewith. Such documents, materials and
information shall not be communicated to any third Person (other than, in the
case of Buyer, to its counsel, accountants, financial advisors or lenders, and
in the case of Sellers, to their counsel, accountants or financial advisors). No
Person shall use any confidential information, including, without limitation,
with respect to the Business, any information relating to the Business or
customers, suppliers, contractors, subcontractors and licensors, in any manner
whatsoever except for (a) the purpose of evaluating the proposed purchase and
sale of the Purchases Assets or the negotiation or enforcement of this Agreement
or any agreement contemplated hereby; (b) where the disclosure of any portion
thereof is required by applicable law or determined to be necessary to comply
with any court order or Governmental Authorization (but only to the extent so
required); provided, however, that such party shall first notify the other party
of any such requirement and, if the other party desires, shall cooperate with
that party to seek approval to prevent or limit such disclosure; (c) where the
disclosure of any portion thereof is required in order to obtain any of the
consents contemplated hereby, and both parties agree in writing that such
disclosure is necessary; (d) where the information becomes generally available
to the public other than as a result of a disclosure by Buyer or Sellers; or (e)
where the information is or becomes lawfully available to Buyer from a source
other than Sellers. Notwithstanding the foregoing, after the Closing, Buyer may
use or disclose any confidential information related to the Purchased Assets or
the Business. Notwithstanding the foregoing, the parties hereto hereby reaffirm
the confidentiality provisions set forth in that certain Letter of Agreement
Regarding Potential Transaction by and between Parent and Tidel, dated as of
September 30, 2004. The parties acknowledge and agree that this Agreement and a
description hereof will be made publicly available by Tidel upon its execution,
but only to the extent required by applicable federal securities law.
16. DISPUTE RESOLUTION.
(A) Injunction. Each of the parties hereto acknowledges and agrees that a party
may be irreparably damaged if an Intellectual Property, non-compete,
non-solicitation or non-disparagement ("Special Claims") provision of this
Agreement is not performed in accordance with their specific terms and that such
breach of this Agreement by the other party could not be adequately compensated
in all cases by monetary damages alone. Accordingly, in addition to any other
right or remedy to which any party may be entitled, at law or in equity, any of
the parties hereto shall be entitled to seek to enforce such provision of this
Agreement by a decree of specific performance and to temporary, preliminary and
permanent injunctive relief to prevent
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any breach or threatened breach of any of the provisions of this Agreement,
without posting any bond or other undertaking.
(B) Arbitration. In the event that there is a dispute arising out of or relating
to this Agreement, the relationships created by it or the transactions occurring
under it, the parties hereto shall attempt in good faith to resolve such
disputes promptly by negotiation. Any party may give the other parties written
notice that a dispute exists (a "Notice of Dispute"). The Notice of Dispute
shall include a brief statement of such party's position. Within ten (10)
calendar days of the delivery of the Notice of Dispute, the parties shall meet
at a mutually acceptable time and place, and thereafter as long as they
reasonably deem necessary, to attempt to resolve the dispute. Key documents and
other information or data on which each party relies concerning the dispute
shall be furnished or made available on reasonable terms to the other party at
or before the first meeting of the Parties as provided by this subsection (B).
If the dispute has not been resolved by negotiation within thirty (30) calendar
days of the delivery of a Notice of Dispute, or if the parties have failed to
meet within ten (10) calendar days of the Notice of Dispute, then any
controversy or claim arising out of or relating to this Agreement, other than a
Special Claim, shall be resolved by arbitration in accordance with the following
provisions. Notwithstanding anything contained in this Section 16 to the
contrary, any matter where injunctive relief is sought may be brought by any
party to a court of competent jurisdiction.
(C) Forum and Jurisdiction. The forum for the arbitration shall be Dayton, Ohio.
Intellectual Property claims and injunctive relief claims shall be brought in
the U.S. District Court for the Southern District of New York, New York (the
"Courts"). The parties hereto submit to the jurisdiction of the Courts with
respect to Special Claims. The parties hereto waive all claims of forum non
conveniens or similar doctrines.
(D) Administration. The arbitration shall be administered by the American
Arbitration Association ("AAA"), pursuant to its then-current Commercial
Arbitration Rules of the AAA (the "AAA Rules"), as modified by this Agreement
and by other provisions that the parties may jointly agree upon in writing.
There shall be a single arbitrator, mutually selected by the parties. In the
event that the parties cannot mutually select the arbitrator then Sellers shall
select one (1) arbitrator and Buyer shall select one (1) arbitrator and the two
arbitrators selected by the parties shall select a third arbitrator who shall
conduct the arbitration (the "Arbitrator"). The Arbitrator shall (a) be a
licensed attorney with at least fifteen (15) years of experience in corporate
law matters and (b) have experience in the industry in which the Business
operates. If either party brings a claim in a competent court that is required
by this Section 16 to be brought in arbitration, and the party successfully
moves for an order compelling arbitration, the non-prevailing party shall be
obligated to pay the prevailing party's costs and reasonable attorney fees
associated therewith. Any demand for arbitration shall include detail sufficient
to establish the nature of the dispute (including the claims asserted and the
material issues with respect thereto) and shall be served upon to the other
party.
(E) Decision. The decision of the Arbitrator on the merits or any disposition or
partial shall be in writing, and shall describe in detail the legal reasoning
adopted by the Arbitrator in support of its decision. The Arbitrator shall hear
and determine, in advance of the hearing on the merits, any dispositive or
partially dispositive motions. The Arbitrator's decision shall be final and
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binding on the parties, however, that errors of law may be appealed to the
Courts for review and correction or entered for enforcement.
(F) Discovery. For the Arbitration, discovery from the other party shall be
limited to requests for production of documents and to five (5) depositions. No
additional formal discovery from the other party (e.g., interrogatories or
requests for admissions) shall be permitted except by mutual consent or as
approved by the Arbitrator for good cause shown. If disputes are entered into
the Courts, discovery shall be as permitted under the governing law.
(G) Expenses. Each party shall bear its own costs of arbitration or litigation
hereunder. In the event of arbitration, the fees and expenses of the Arbitrator
shall be shared equally between the parties.
(H) Remedies; Award. The Arbitrator shall have no authority to award treble,
exemplary, consequential or punitive damages of any type, or other damages
elsewhere excluded in this Agreement, under any circumstances. In making an
award the Arbitrator shall be bound by all limitations set forth in this
Agreement.
(I) WAIVER OF JURY TRIAL. THE PARTIES HEREBY WAIVE ANY RIGHT TO TRIAL BY JURY IN
ANY PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE
CONTEMPLATED TRANSACTIONS, WHETHER NOW EXISTING OR HEREAFTER ARISING, AND
WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE. THE PARTIES AGREE THAT ANY OF
THEM MAY FILE A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE
KNOWING, VOLUNTARY AND BARGAINED-FOR AGREEMENT AMONG THE PARTIES IRREVOCABLY TO
WAIVE TRIAL BY JURY AND THAT ANY PROCEEDING WHATSOEVER BETWEEN THEM RELATING TO
THIS AGREEMENT OR ANY OF THE CONTEMPLATED TRANSACTIONS SHALL INSTEAD BE TRIED IN
A COURT OF COMPETENT JURISDICTION BY A JUDGE SITTING WITHOUT A JURY
17. NOTICES. Any notices or demands to another party under the terms of this
Agreement shall be sent (a) by personal service, (b) by United States registered
or certified mail, postage prepaid and return receipt requested, or (c) by a
nationally recognized overnight courier, and shall be deemed effective (a)
immediately upon personal delivery or (b) five Business Days after deposit in
the mail or (c) one Business Day after deposit with the courier, and addressed
to:
If to Buyer:
General Counsel Notices
XXX Xxxxxxxxxxx
Law Department
0000 X. Xxxxxxxxx Xxxx., XXX-0
Xxxxxx, Xxxx 00000-0000
If to Seller:
Tidel Technologies, Inc.
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0000 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attn: Chief Executive Officer
With a copy to (which copy shall not
constitute notice):
Xxxxxx Xxxxxxxx Frome Xxxxxxxxxx
& Wolosky LLP
Park Avenue Tower
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxx X. Xxxxxxxx
Any party may change the address to which notices are to be addressed by giving
the other party notice in the manner set forth herein.
18. NO ASSIGNMENT. This Agreement, and the covenants herein contained, shall be
binding upon, shall inure to the benefit of, and shall be enforceable by the
parties hereto and their respective successors and permitted assigns. Neither
Party may assign this Agreement, either in part or in whole, without the prior
written consent of the other party.
19. PUBLIC ANNOUNCEMENTS. Any public announcement, press release or similar
publicity with respect to this Agreement will be issued, if at all, at such time
and in such manner as the parties may mutually determine. Sellers and Buyer will
consult with each other concerning the means by which Sellers' employees,
customers, suppliers and others having dealings with Sellers will be informed of
the transactions contemplated by this Agreement, and Buyer will have the right
to be present for any such communication. Notwithstanding the foregoing, the
parties acknowledge that Tidel will disclose this Agreement, its terms and
conditions, including a copy thereof, but only to the extent required pursuant
to federal securities law.
20. WAIVER. The waiver by either party to this Agreement of any breach of any
provision of this Agreement shall not constitute a continuing waiver or a waiver
of any breach of any other provision of this Agreement.
21. SEVERABILITY. If any provision of this Agreement is held to be unenforceable
for any reason, the remainder of this Agreement shall, nevertheless, remain in
full force and effect.
22. GOVERNING LAW. This Agreement shall be governed in all respects including
its validity, construction, interpretation, breach, performance, termination,
and with respect to matters of arbitrability of disputes and claims, by and in
accordance with the laws of the State of New York and any applicable federal
laws. For any actions arising in connection with this Agreement, the proper
venue shall be in any federal or state court in New York, however the parties
agree that any arbitration will be conducted in Dayton, Ohio
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23. CAPTIONS. Section captions used herein are for reference purposes only and
shall not in any way affect the meaning or interpretation of this Agreement.
24. COUNTERPARTS. This Agreement may be executed in two or more counterparts,
each of which shall be deemed on original, but all of which taken together shall
constitute one Agreement.
25. ENTIRE AGREEMENT; AMENDMENT. This Agreement, together with the Schedules and
Exhibits attached hereto, supersedes all other agreements and understandings
between the parties, either oral or written, constitutes the entire agreement of
the parties with respect to the subject matter hereof, and may be amended only
by an instrument in writing executed by all of the parties hereto.
26. CONSENTS TO ASSIGNMENTS. Subject to Section 9(J) hereof, nothing in this
Agreement or the documents to be executed and delivered at the Closing shall be
deemed to constitute an assignment or an attempt to assign any Permit, Contract
or other agreement to which Sellers is a party, if the attempted assignment
thereof without the consent of the other party to such Permit, Contract or other
agreement would constitute a breach thereof or affect in any way the rights of
Sellers thereunder.
27. EXPENSES. Each of the parties shall pay its expenses and costs incurred or
to be incurred by it in negotiating, closing, and carrying out this Agreement,
including, without limitation, all legal and accounting fees.
28. DEFINITIONS. As used herein, the following capitalized terms have the
following meanings:
(A) "Affiliate" means, as to any Person, (a) any subsidiary of such Person and
(b) any other Person which, directly or indirectly, controls, is controlled by,
or is under common control with, such Person and includes, in the case of a
Person other than an individual, each officer, director, general partner or
member of such Person, and each Person who is the beneficial owner of
twenty-five percent (25%) or more of such Person's outstanding stock having
ordinary voting power of such Person. For the purposes of this definition,
"control" means the possession of the power to direct or cause the direction of
management and policies of such Person, whether through the ownership of voting
securities, by contract or otherwise.
(B) "Business Day" means any day other than Saturday, Sunday, and any day on
which commercial banks in the State of Texas are authorized by Law to be closed.
(C) "Code" means the Internal Revenue Code of 1986, as amended and the rules and
regulations adopted thereunder.
(D) "Current Liabilities" shall include all Accounts Payable, accrued expenses
and accrued Tax liabilities of the Company on the Closing Date net of any and
all accrued interest on any long-term or short-term debt obligations of Sellers.
(E) "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended and the rules and regulations adopted pursuant thereto.
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(F) "GAAP" means generally accepted accounting principles in the United States
of America as in effect from time to time set forth in the opinions and
pronouncements of the Accounting Principles Board and the American Institute of
Certified Public Accountants and the statements and pronouncements of the
Financial Accounting Standards Board.
(G) "Governmental Authority" means any federal, state, local or foreign
government or governmental regulatory body and any of their respective
subdivisions, agencies, instrumentalities, authorities, courts or tribunals.
(H) "Law" means any federal, state, local or foreign law, ordinance, order,
rule, regulation, license or permit, and any order, writ, judgment, award,
injunction, or decree of any court or arbitrator or any Governmental Authority
of the United States of America, any state or political subdivision thereof or
any foreign Governmental Authority.
(I) "Material Adverse Effect" means, when used with respect to Sellers, any
event, condition, change, occurrence or circumstance which has a material
adverse effect on the Purchased Assets on the whole, operations, business, or
financial or other condition of the Business on the whole, as now conducted by
Sellers.
(J) "Person" means any individual, corporation, partnership, joint venture,
association, limited liability company, joint stock company, trust, or
unincorporated association, or any Governmental Authority, officer, department,
commission, board, bureau or instrumentality thereof.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
Effective Date.
NCR TEXAS LLC TIDEL TECHNOLOGIES, INC.
By: ________________________
___________________________________
By: _______________________________
Its: ______________________________
TIDEL ENGINEERING LP
FOR PURPOSES OF SECTION 9(I) ONLY:
BY: ________________________
XXX XXXXXXXXXXX
ITS ________________________
BY___________________________
ITS___________________________
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ASSET PURCHASE AGREEMENT
DISCLOSURE SCHEDULE
[SELLERS TO PROVIDE.]
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SCHEDULE LIST
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