Exhibits

 

Exhibit A -	Assignment and Assumption Agreement
Exhibit B -	Assignment and Bill of Sale
Exhibit C -	Assumption Agreement
Exhibit D -	Business Products
Exhibit E -	Management Non-Compete Agreement
Exhibit F -	Director Non-Compete Agreement
Exhibit G -	Customer Services Agreement
Exhibit H -	Escrow Agreement
Exhibit I -	Heathrow License
Exhibits J-1 through J-3 -      Local Agreements
Exhibit K -	Specified Projects
Exhibit L -	Transition Services Agreement

 

 

Seller Disclosure Schedule

 

Section 1.1 (a) -	Cobra Project
Section 1.1(b) -	Hawaii Project
Section 1.1(c) -	Pre-Closing Environmental Liabilities
Section 1.1(d) -	Thailand Project
Section 1.3(j) -	Seller’s Knowledge
Section 1.3(k) -	Buyer’s Knowledge
Section 2.1(c) -	Assumed Leased Property
Section 2.1(e) -	Assumed Contracts
Section 2.1(n) -	Other Assets to Be Acquired
Section 2.2(a) -	Excluded Contracts
Section 2.2(h) -	Net Cash Recoveries for Pre-Paid Expenses
Section 2.3(a) -	Other Liabilities to Be Assumed
Section 2.6(a) -	Accounting Methodologies
Section 2.11(g) -	Executives to Execute Management Non-Compete Agreement
Section 2.11(h) -	Directors to Execute Director Non-Compete Agreement
Section 3.2 -	Capitalization and Structure
Section 3.3(c)(ii) -	Authority; Non-Contravention; Approvals - Violations
Section 3.3(d) -	Authority; Non-Contravention; Approvals - Required Consents
Section 3.4 -	Financial Statements
Section 3.7(a) -	Tax Matters - Tax Returns
Section 3.7(d) -	Tax Matters - Governmental Authority Closing Agreements and Tax Rulings
Section 3.8(a) -	ERISA and Employee Benefits - Seller Plans
Section 3.9(a) -	Employment Matters - Employees and Compensation

 

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Section 3.9(c) -	Employment Matters - Employment Actions
Section 3.9(e) -	Employment Matters - Employment Termination Payments
Section 3.9(f) -	Employment Matters - IRCA Matters
Section 3.10 -	Labor Relations - Proceedings and Non-Compliance
Section 3.11 -	Litigation
Section 3.12(b) -	Business Permits
Section 3.13 -	Title to Assets; Encumbrances
Section 3.15 -	Transactions with Affiliates
Section 3.16 -	Insurance
Section 3.17 -	Contracts - List of Contracts
Section 3.17(b) -	Contracts - Renegotiations of Assumed Contracts
Section 3.18 -	Tangible Property
Section 3.19(a) -	Intellectual Property - Registered Intellectual Property Rights
Section 3.19(b) -	Intellectual Property - Proceedings
Section 3.19(f) -	Intellectual Property - Products/Services Containing Open Source Software
Section 3.19(k) -	Intellectual Property - Copy of Seller’s Proprietary Information, Confidentiality and Assignment Agreement
Section 3.20(a) -	Real Property - Leased Real Property
Section 3.20(b) -	Real Property - Enforceability and Consent
Section 3.23 -	Product and Service Warranties; Defects; Returns; Recalls
Section 3.24 -	Customers
Section 3.25 -	Suppliers
Section 5.1 -	Conduct of Business
Section 5.1(i) -	Conduct of Business - Employee Terminations

 

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Section 5.4(g) -	Individuals to Sign Seller’s Standard Intellectual Property Assignment and Confidentiality Agreement
Section 5.8 -	Use of Name and Trademarks
Section 5.13 -	Business Employees
Section 5.18 -	New Leased Properties
Section 6.2(d) -	Required Consents
Section 6.2(g) -	Individuals Required to Deliver Employment and Non-Competition Agreement

 

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ASSET PURCHASE AGREEMENT

 

This ASSET PURCHASE AGREEMENT (this “ Agreement ”) is made and entered into as of June 29, 2005 by and between S2 SYSTEMS, INC., a Delaware corporation (“ Seller ”), and TRANSACTION SYSTEMS ARCHITECTS, INC., a Delaware corporation (“ Buyer ”).

 

BACKGROUND

 

A.                                    Seller and the Seller Subsidiaries (as defined herein) are engaged in the Business (as defined herein).

 

B.                                      The Business is composed of certain assets and liabilities that are currently owned or leased by Seller and the Seller Subsidiaries or in respect of which Seller and the Seller Subsidiaries are currently obligated, as the case may be.

 

C.                                      Seller and certain of the Seller Subsidiaries desire to sell, transfer and assign to Buyer or one or more certain designated Subsidiaries (as defined herein) of Buyer, and Buyer desires to purchase (or cause one or more certain designated Subsidiaries of Buyer to purchase) from Seller and such Seller Subsidiaries, the Acquired Assets (as defined herein), and Buyer is willing to assume (or cause one or more certain designated Subsidiaries of Buyer to assume) the Assumed Liabilities (as defined herein), in each case as more fully described and upon the terms and subject to the conditions set forth herein.

 

D.                                     Seller and/or the Selling Subsidiaries (as defined herein), on one hand, and Buyer, on the other hand, desire to enter into each Assignment and Bill of Sale, each Assignment and Assumption Agreement, the Assumption Agreement, the Assignments of Trademarks, each Lease Assignment and Assumption Agreement, the Heathrow License, the Escrow Agreement, each Local Agreement, the Customer Services Agreement and the Transition Services Agreement (each as hereinafter defined and collectively, the “ Collateral Agreements ”).

 

STATEMENT OF AGREEMENT

 

The parties hereto hereby agree as follows:

 

ARTICLE 1
DEFINITIONS

 

1.1                                  Definitions .

 

(a)                                   As used in this Agreement, the following terms shall have the following meanings:

 

“ Acquired Business ” means the Business conducted by Seller and the Selling Subsidiaries.

 

“ Action ” means any civil, criminal or administrative actions, suits, demands, claims, charges, citations, complaints, reexaminations, oppositions, interferences, decrees, injunctions, arbitrations, mediations, hearings, notices of violation, investigations, proceedings or demand letters.

 

“ Active Customer Contracts ” means customer Contracts under which Seller or any Seller Subsidiary has recognized revenue in the 12 months prior to the date hereof.

 

1

 

“ Affiliate ” means, with respect to any Person, any other Person that directly, or indirectly through one or more intermediaries, controls or is controlled by or is under common control with the Person specified; provided , however , that Baker Communications Fund, L.P. and its Affiliates (other than Seller and the Seller Subsidiaries), including their general partner and limited partners and any other portfolio company in which they may have an investment, shall be deemed not to be Affiliates of Seller or the Seller Subsidiaries.  The term “control” (including the terms “controlling,” “controlled by” and “under common control with”) means, other than with respect to the Assigned Intellectual Property or the Registered Intellectual Property Rights, possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.

 

“ Assigned Intellectual Property ” means the Owned IP and the Controlled IP.

 

“ Assignment and Assumption Agreement ” means each agreement substantially in the form attached hereto as Exhibit A .

 

“ Assignment and Bill of Sale ” means each agreement in substantially the form attached hereto as Exhibit B .

 

“ Assignment of Trademarks ” means one or more assignments of trademarks in a form reasonably acceptable to Buyer.

 

“ Assumption Agreement ” means the agreement substantially in the form attached hereto as Exhibit C .

 

“ Balance Sheet ” means the most recent balance sheet included in the Financial Statements.

 

“ Business ” means the business conducted by Seller and the Seller Subsidiaries as of the date hereof and as of the Closing Date, including the research, design, development, manufacture, distribution, license and sale of the Business Products (including any enhancements, derivatives, modifications, evolutions or combinations of or with a Business Product) and other software, firmware and/or hardware usable in connection therewith, and the Business Services.

 

“ Business Day ” means any day other than a Saturday, Sunday or a statutory or civic holiday in the State of New York.

 

“ Business Material Adverse Effect ” means any material adverse effect on (i) the business, assets, condition (financial or otherwise) or results of operations of the Acquired Business, Acquired Assets or Assumed Liabilities or (ii) the ability of the parties to perform their obligations under this Agreement or any Collateral Agreement in a timely manner or to consummate the transactions contemplated by this Agreement or the Collateral Agreements without material delay, but excluding, in the case of clause (i) above, any material adverse effect resulting from general economic conditions or economic conditions affecting the software industry generally.  In determining whether there has been a Business Material Adverse Effect, any event, circumstance, change or effect shall be considered both individually and together with all other events, circumstances, changes or effects, and any event, circumstance, change or effect that reasonably could be expected to result in a Business Material Adverse Effect (individually or together with one or more other events, circumstances, changes or effects) shall be considered a Business Material Adverse Effect.

 

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“ Business Products ” means all of the products manufactured, distributed, licensed or sold by or on behalf of the Business, which are identified on Exhibit D .

 

“ Business Records ” means all files, documents, ledgers, instruments, papers, books and records and similar information (whether in paper, digital or other tangible or intangible form) that are used or held for use in, or necessary for the conduct of, the Acquired Business, the Acquired Assets or the Assumed Liabilities, including all technical information, operating and production records, quality control records, blueprints, research and development notebooks and files, customer credit data, mailing lists, warranty information, catalogs, advertising materials, brochures, standard forms of documents, product testing reports, manuals, engineering and scientific data, sales and promotional literature, drawings, technical plans, business plans, budgets, price lists, customer lists and lists of suppliers, but excluding any financial records and any Tax records.

 

“ Business Services ” means all of the services sold by or on behalf of the Business, in connection with the distribution, license or sale of the Business Products or otherwise.

 

“ Buyer Material Adverse Effect ” means a material adverse effect on the enforceability of Buyer’s obligations under this Agreement or the Collateral Agreements or Buyer’s ability to perform its obligations under this Agreement or the Collateral Agreements in a timely manner or to consummate the transactions contemplated by this Agreement or the Collateral Agreements without material delay.

 

“ CERCLA ” means the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, and the rules and regulations promulgated thereunder.

 

“ Cleanup ” means all actions to: (i) clean up, remove, treat or remediate Hazardous Substances in the indoor or outdoor environment; (ii) prevent the Release of Hazardous Substances so that they do not migrate, endanger or threaten to endanger public health or welfare or the indoor or outdoor environment; (iii) perform pre-remedial studies and investigations and post-remedial monitoring and care; or (iv) respond to any government requests for information or documents in any way relating to cleanup, removal, treatment or remediation or potential cleanup, removal, treatment or remediation of Hazardous Substances in the indoor or outdoor environment, that in any such case are reasonably determined by the Person taking the actions to be required under any applicable Environmental Law or reasonably determined to be desirable in order to mitigate or avoid liability under any such Law.

 

“ Closing ” means the closing of the transactions contemplated by this Agreement.

 

“ Closing Date ” means the date on which the Closing actually occurs.

 

“ Cobra Project ” means the project described on Section 1.1(a) of the Seller Disclosure Schedule .

 

“ Code ” means the United States Internal Revenue Code of 1986, as amended, and the Treasury Regulations promulgated thereunder.

 

“ Completed Project ” means any Specified Project that is completed by Buyer or its Affiliates and finally accepted by the applicable customer.

 

“ Contingent Payment Contracts ” means the Cobra Project, the Hawaii Project and the Thailand Project.

 

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“ Contracts ” means all contracts, agreements, leases, subleases, licenses, supply contracts, purchase orders, sales orders, and other instruments, commitments, obligations, arrangements or understandings, whether written or oral.

 

“ Controlled IP ” means all Intellectual Property and Intellectual Property Rights for which Seller or any Seller Subsidiary has the right to grant licenses or sublicenses without violating the terms of any agreement or other arrangement with, or the rights of, any third party.

 

“ Customer Services Agreement ” means the agreement substantially in the form attached hereto as Exhibit G .

 

“ Director Non-Compete Agreement ” means each agreement substantially in the form attached hereto as Exhibit F .

 

“ Dormant Customer Contracts ” means customer Contracts, other than Active Customer Contracts, that have not expired or been terminated.

 

“ Dubai Lease ” means that certain Standard Lease No. 739 dated July 5, 2001 by and between Dubai Internet City and S2 Systems International Ltd. for the property described in item 6 on Section 3.20(a) of the Seller Disclosure Schedule .

 

“ Employee Information ” means the data relating to the Business Employees and any records (including performance reviews) that are reasonably necessary to manage the Transferred Employees after the Closing; provided, however , that Seller shall not be required to produce such records where doing so could reasonably be expected to result in liability to Seller or the applicable Selling Subsidiary or in a violation of any Law.

 

“ Encumbrances ” means any and all liens, claims, charges, security interests, mortgages, easements, covenants, pledges, options, preemptive rights, rights of first refusal or first offer, proxies, levies, voting trusts or agreements, or other adverse claims or restrictions on title or transfer of any nature whatsoever.

 

“ Environment ” means soil, surface waters, groundwater, land, stream sediments, surface or subsurface strata, ambient air, indoor air or indoor air quality, including any material or substance used in the physical structure of any building or improvement and any environmental medium.

 

“ Environmental Claim” means any claim, action, cause of action, investigation, demand, letter, request for information or notice (written or oral) by any Person alleging potential liability (including potential liability for investigatory costs, Cleanup costs, governmental response costs, natural resources damages, property damages, personal injuries or penalties) arising out of, based on or resulting from (i) the presence, Release or threatened Release of any Hazardous Substance or (ii) circumstances forming the basis of any violation, or alleged violation, of any Environmental Law.

 

“ Environmental Law ” means any international, supranational, national, provincial, regional, federal, state, municipal or local Law, regulation, order, judgment, decree, authorization, opinion or other legally binding requirement relating to the protection, investigation or restoration of the environment (including natural resources) or the health or safety of human or other living organisms, including the manufacture, introduction into commerce, export, import, processing, distribution, use, generation, treatment, storage, handling, presence, disposal, transportation, Release or management of, or other activities with respect to, Hazardous Substances, including CERCLA, the Hazardous Materials Transportation Act, 49 U.S.C. § 1801 et seq. , the Resource Conservation and Recovery Act, 42 U.S.C.

 

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§ 6901 et seq. , the Clean Water Act, 33 U.S.C. § 1251 et seq. , the Clean Air Act, 33 U.S.C. § 2601 et seq. , the Toxic Substances Control Act, 15 U.S.C. § 2601 et seq. , the Federal Insecticide, Fungicide, and Rodenticide Act, 7 U.S.C. § 136 et seq. , the Oil Pollution Act of 1990, 33 U.S.C. § 2701 et seq. and the Occupational Safety and Health Act, 29 U.S.C. § 651 et seq. , in each case as in effect from time to time prior to, on and after the Closing.

 

“ Environmental Permit ” means any Permit under or issued pursuant to any Environmental Law.

 

“ Equipment ” means hardware (including computers), office equipment and telecommunications equipment and the peripherals and cables thereto.

 

“ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended, and the rules and regulations promulgated thereunder.

 

“ ERISA Affiliate ” means any Person required at any particular time to be aggregated with any of Seller or any Seller Subsidiary under Sections 414(b), (c), (m) or (o) of the Code or Section 4001 of ERISA.

 

“ Escrow Agreement ” means the agreement substantially in the form attached hereto as Exhibit H .

 

“ Escrow Amount ” means the sum of the Project Completion Escrow Amount and the Indemnity Escrow Amount.

 

“ Escrow Funds ” means the Escrow Amount, together with all products and proceeds thereof, including all interest, dividends, gains and other income accrued thereon.

 

“ Financial Statements ” means the consolidated audited balance sheet of Seller for each of the three fiscal years of Seller ended as of March 31, 2004, 2003 and 2002 and the related audited statements of income, cash flows and stockholders’ equity for the periods then ended, together with the notes thereto, and the unaudited consolidated balance sheet of Seller for the fiscal year of Seller ended as of March 31, 2005 and the related unaudited consolidated statements of income, cash flows and stockholders’ equity for the period then ended.

 

“ GAAP ” means generally accepted accounting principles in the United States of America 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, or in such other statements by such other entity as may be in general use by significant segments of the accounting profession, which are applicable to the circumstances as of the date of determination.

 

“ Governmental Authority ” means any international, supranational, national, provincial, regional, federal, state, municipal or local government, any instrumentality, subdivision, court, administrative or regulatory agency or commission or other authority thereof, or any quasi-governmental or private body exercising any regulatory, taxing, importing or other governmental or quasi-governmental authority.

 

“ Governmental Order ” means any decision, ruling, order, charge, writ, judgment, injunction, decree, stipulation, determination, award or binding agreement issued, promulgated or entered by or with any Governmental Authority.

 

5

 

“ GST ” means the goods and services tax or similar value added tax levied or imposed in Australia under A New Tax System (Goods and Services Tax) Act 1999 (Cth) or any replacement or subsequent similar tax.

 

“ Hawaii Project ” means the project described in Section 1.1(b) of the Seller Disclosure Schedule .

 

“ Hazardous Substance ” means (i) any petroleum or petroleum products, flammable explosives, radioactive materials, medical waste, radon, toxic mold and other harmful biological agents, asbestos or asbestos-containing products or materials, chloroflourocarbon, hydroflourocarbon, urea formaldehyde foam insulation, polychlorinated biphenyls (PCBs) or lead-containing paint or plumbing and (ii) any element, compound, substance, waste or other material that is regulated under any Environmental Law or is defined as, or included in the definition of, or deemed by or pursuant to any Environmental Law or by any Governmental Authority to be “hazardous,” “toxic,” a “contaminant,” “waste,” a “pollutant,” “hazardous substance,” “hazardous waste,” “restricted hazardous waste,” “hazardous material,” “extremely hazardous waste,” a “toxic substance,” a “toxic pollutant” or words with similar meaning.

 

“ Heathrow Lease ” means that certain Lease dated as of January 31, 2001 by and among Orbit Developments (Southern) Limited, S2 Systems International Limited and S2 Systems, Inc. for the property described as item 2 on Section 3.20(a) of the Seller Disclosure Schedule .

 

“ Heathrow License ” means the agreement substantially in the form attached hereto as Exhibit I .

 

“ Indemnified Party ” means any Person claiming indemnification under any provision of ARTICLE 7.

 

“ Indemnifying Party ” means any Person against whom a claim for indemnification is being asserted under any provision of ARTICLE 7.

 

“ Indemnity Escrow Amount ” means Five Million U.S. Dollars (US$5,000,000).

 

“ Intellectual Property ” means any or all of the following:  (i) works of authorship, including computer programs, source code and executable code, whether embodied in software, firmware or otherwise, designs, documentations, records, data and maskworks; (ii) inventions (whether or not patentable and whether or not reduced to practice), improvements and technology; (iii) proprietary and confidential information, trade secrets and know how; (iv) databases, data compilations and collections and technical data; (v) logos, trade names, trade dress, trademarks and service marks; (vi) domain names, web addresses and sites; (vii) tools, methods and processes; and (viii) all instantiations of the foregoing in any form and embodied in any medium.

 

“ Intellectual Property Rights ” means worldwide common law and statutory rights associated with (i) domestic and foreign patents, patent applications, patent rights and patent disclosures; (ii) copyrights, copyright registrations and copyright applications and “moral” rights; (iii) rights in maskworks and applications therefor; (iv) the protection of trade and industrial secrets and confidential information; (v) registered and unregistered trademarks, trade names and service marks, applications therefor, and all goodwill associated therewith; (vi) analogous rights to those set forth above; (vii) divisionals, continuations, continuation-in-part, renewals, reissuances, reexaminations, revisions and extensions of the foregoing (as applicable); and (viii) all other proprietary rights relating to Intellectual Property throughout the world.

 

6

 

“ Interim Project Settlement Date ” means the date that is 15 months after the Closing Date.

 

“ IRS ” means the United States Internal Revenue Service.

 

“ Law ” means any applicable U.S. or foreign, supranational, national, federal, state, provincial, local or common law, act, statute, ordinance, regulation, rule or code promulgated by a Governmental Authority and any Governmental Order.

 

“ Lease Assignment and Assumption Agreement ” means a lease assignment and assumption agreement in a form reasonably acceptable to each of Seller and Buyer.

 

“ Liabilities ” means any and all debts, liabilities and obligations of any kind, whether accrued or fixed, absolute or contingent, matured or unmatured, determined or undeterminable, on-or off-balance sheet, including those arising under any Law or Action and those arising under any Contract or undertaking or otherwise.

 

“ Local Agreements ” means the agreements necessary to give effect to the transactions hereunder in certain of the foreign jurisdictions in which the Acquired Business is conducted, materially in the form and substance set forth on Exhibits J-1 through J-3 , with such changes as are reasonably agreed to by Buyer and Seller.

 

“ Losses ” means any and all damages, fines, fees, penalties, deficiencies, liabilities, claims, losses (including loss of value), demands, judgments, awards, settlements, taxes, actions, obligations, costs and expenses (including interest, court costs and fees and costs of attorneys, accountants and other experts or other expenses of litigation or other Actions or of any default or assessment).

 

“ Management Non-Compete Agreement ” means the agreement substantially in the form attached hereto as Exhibit E .

 

“ Owned IP ” means all Intellectual Property and Intellectual Property Rights that are owned by Seller or any Seller Subsidiary.

 

“ Permit ” means any permit, license, franchise, approval, consent, registration, clearance, variance, exemption, identification number, certificate or authorization by or of any Governmental Authority.

 

“ Person ” means any natural person, corporation, general partnership, limited partnership, limited or unlimited liability company, proprietorship, joint venture, other business organization, trust, union, association or Governmental Authority.

 

“ Plan ” means any employment, consulting, bonus, incentive compensation, deferred compensation, pension, profit sharing, retirement, stock purchase, stock option, stock ownership, stock appreciation rights, phantom stock, equity (or equity-based), leave of absence, layoff, vacation, day or dependent care, legal services, cafeteria, life, health, medical, dental, vision, welfare, accident, disability, workmen’s compensation or other insurance, severance, separation, termination, change of control, collective bargaining or other benefit plan, understanding, agreement, practice, policy or arrangement of any kind (whether written or oral, qualified or nonqualified, funded or unfunded, foreign or domestic, currently effective or terminated), and whether or not subject to ERISA, including any “employee benefit plan” within the meaning of Section 3(3) of ERISA.

 

7

 

“ Pre-Closing Environmental Liabilities ” means all Losses asserted against, resulting to, imposed on or incurred by Buyer or its Affiliates in connection with:  (i) any actual or alleged Release, threatened Release or presence of any Hazardous Substance prior to the Closing on or from or affecting any of the Leased Real Property; (ii) any actual or alleged violation of any Environmental Law prior to the Closing by Seller or any Seller Subsidiary or in connection with the Business by any other Person; (iii) any Environmental Claim made by any Person that relates to or is based upon the operation of the Business prior to the Closing, to any act or omission of Seller or any Seller Subsidiary prior to the Closing, or to any condition of the Leased Real Property that existed prior to the Closing, including Environmental Claims based on indemnities or other contractual undertakings; and (iv) the matters listed in Section 1.1(c) of the Seller Disclosure Schedule .

 

“ Project Completion Costs ” mean Buyer’s or its Affiliates’ aggregate costs (equal to hourly rates, which hourly rates shall be determined in a manner consistent with Buyer’s and its Subsidiaries’ practices in determining the hourly rates for their other material customers at the time, multiplied by time incurred) incurred to obtain the customer’s final acceptance under any Completed Project.

 

“ Project Completion Escrow Amount ” means Three Million U.S. Dollars (US$3,000,000).

 

“ Project Completion Losses ” means the aggregate amount, if any, by which Project Completion Costs exceed Project Completion Revenues as finally determined in accordance with Section 2.13, Section 9.8 or both.

 

“ Project Completion Revenues ” means Buyer’s or its Affiliates aggregate cash collected under any Completed Project.

 

“ Project Completion Settlement Date ” means the date on which every Specified Project has become a Completed Project or has otherwise been terminated.

 

“ Project Period ” means the period between the Closing Date and the Interim Project Settlement Date, if any; the period between the Interim Project Settlement Date and the Project Completion Settlement Date, if there is an Interim Project Settlement Date; and the date between the Closing Date and the Project Completion Settlement Date, if there is no Interim Project Settlement Date.

 

“ Registered Intellectual Property Rights ” means any Assigned Intellectual Property that is the subject of an application, certificate, filing, registration or other document issued, filed with, or recorded by any Governmental Authority, including any of the following: (a) issued patents and patent applications; (b) trademark registrations and applications; and (c) copyright registrations and applications.

 

“ Release ” means any releasing, spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, migrating, disposing or dumping of a Hazardous Substance into the Environment (including the abandonment or discarding of barrels, containers and other closed receptacles containing any Hazardous Substance) and any condition that results in the exposure of a Person to a Hazardous Substance.

 

“ Representatives ” means, with respect to any Person, such Person’s officers, directors, employees, agents, counsel, accountants, financial advisors, lenders, consultants and other representatives.

 

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“ Seller Material Adverse Effect ” means a material adverse effect on the enforceability of Seller’s obligations under this Agreement or Seller’s or the Selling Subsidiaries’ obligations under the Collateral Agreements or Seller’s ability to perform its obligations under this Agreement or Seller’s or the Selling Subsidiaries’ ability to perform their respective obligations under the Collateral Agreements in a timely manner or to consummate the transactions contemplated by this Agreement or the Collateral Agreements without material delay.

 

“ Seller Plan ” means a Plan that Seller or any Seller Subsidiary, or any ERISA Affiliate, sponsors, maintains, has any obligation to contribute to, has or may have Liability under or is otherwise a party to, or that otherwise provides benefits for current or former employees, directors, officers, stockholders, consultants or independent contractors (or their dependents and beneficiaries) of Seller or any Selling Subsidiary providing service in the conduct of the Acquired Business, on the date hereof or at any time subsequent thereto and on or prior to the Closing Date and, in the case of a Plan that is subject to Part 3 of Subtitle B of Title I of ERISA, Section 412 of the Code or Title IV of ERISA, at any time during the five-year period preceding the date of this Agreement.

 

“ Seller Subsidiaries ” means each direct and indirect Subsidiary of Seller.

 

“ Selling Subsidiaries ” means each Seller Subsidiary that owns, licenses or otherwise possesses any rights with respect to any of the Acquired Assets or any of the Assumed Liabilities.

 

“ Specified Projects ” means those projects identified on Exhibit K , as defined by any statements of work under such projects as of the Closing Date and any reasonably foreseeable amendments to such statements of work or reasonably foreseeable additional statements of work, in each case, as reasonably required to complete any Specified Project.

 

“ Subsidiary ” means, with respect to any Person, any other Person (i) of which the first Person owns directly or indirectly 50% or more of the equity interest in the other Person, (ii) of which the first Person or any other Subsidiary of the first Person is a general partner, or (iii) of which securities or other ownership interests having ordinary voting power to elect a majority of the board of directors or other persons performing similar functions with respect to the other Person are at the time owned by the first Person and/or one or more of the first Person’s Subsidiaries

 

“ Tangible Property ” means all machinery, tools, Equipment, fixtures, vehicles, spare parts, storage devices, office supplies, computers, servers and other tangible personal property (other than Corporate Calling Cards), in each case whether owned or leased, that is used or held for use in, or necessary for the conduct of, the Business.

 

“ Tax ” and “ Taxes ” means any federal, state, local or foreign income, gross receipts, employment, payroll, license, excise, severance, stamp, occupation, premium, windfall profits, environmental (including taxes under Section 59A of the Code), customs duties, capital stock, franchise, profits, withholding, social security (or similar), unemployment, disability, real property, personal property, sales, use, transfer, registration, VAT, GST, alternative or add-on minimum, estimated or other tax of any kind whatsoever (whether computed on a separate or consolidated, unitary or combined basis or in any other manner), and any liability under Treas. Reg. § 1.1502-6 or a similar provision of state, local or foreign law, in each case, including any interest, penalty or addition thereto.

 

“ Tax Return ” means any return, declaration, report, claim for refund or information return or statement that relates to Taxes and is required to be filed with any Governmental Authority, including any schedule or attachment thereto, and including any amendment thereof.

 

9

 

“ Tax Settlement Escrow ” means an escrow account to be established to hold that portion of the Tax Settlement Amount subject to a Dispute, if any.

 

“ Thailand Project ” means the project described on Section 1.1(d) of the Seller Disclosure Schedule .

 

“ Transition Services Agreement ” means the agreement substantially in the form attached hereto as Exhibit L .

 

“ U.S. Dollars ” or “ US $ ” means the lawful currency of the United States of America.

 

“ VAT ” means any value added Tax, goods and services Tax or similar Tax, including such Tax as may be levied in accordance with (but subject to derogation from) EEC Directive 77/388/EEC.

 

“ Working Capital ” means accounts receivable; minus accounts payable due as of a date less than 60 days after the Closing Date; minus accrued compensation, benefits and payroll taxes; and minus other current liabilities (other than Excluded Liabilities).

 

1.2                                  Additional Defined Terms .  Other terms defined are in the other parts of this Agreement indicated below:

 

“ AAA ”.................................................................................................9.8(a)

“ Acquired Assets ”...................................................................................2.1

“ Acquisition Proposal ”...........................................................................5.5

“ Agreement ”..................................................................................Preamble

“ Allocation Schedule ”........................................................................5.7(f)

“ Arbitration Panel ”............................................................................9.8(a)

“ Assumed Contracts ”.........................................................................2.1(e)

“ Assumed Leased Property ”...............................................................2.1(c)

“ Assumed Liabilities ”.........................................................................2.3(a)

“ Business Employees ”......................................................................5.13(a)

“ Business Permits ”...........................................................................3.12(b)

“ Buyer ”..........................................................................................Preamble

“ Buyer Benefit Plans ”......................................................................5.13(d)

“ Buyer Indemnified Parties ”..................................................................7.2

“ Closing Date Working Capital ”.......................................................2.6(b)

“ Closing Date Working Capital Statement ”......................................2.6(b)

“ Closing Payment ”.............................................................................2.5(a)

“ Collateral Agreements ”..........................................................Background

“ Collected Revenues ”.........................................................................2.7(a)

“ Competing Portion ”..........................................................................5.9(b)

“ Competitive Activities ”......................................................................5.9(a)

“ Competitive Products ”......................................................................5.9(a)

“ Confidentiality Agreement ”.............................................................5.3(a)

“ Contingent Payment ”.......................................................................2.7(d)

“ Customers ”..........................................................................................3.24

“ Deductible Amount ”.............................................................................7.5

“ Dispute ”.............................................................................................9.8(a)

“ Dispute Notice ”.................................................................................2.6(c)

“ Employees ”.......................................................................................3.9(a)

 

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“ Excluded Assets ”...................................................................................2.2

“ Excluded Contracts ”.........................................................................2.2(a)

“ Excluded Liabilities ”.............................................................................2.4

“ Excluded Representations ”..............................................................7.1(a)

“ Final Closing Date Working Capital ”.............................................2.6(e)

“ Indemnity Amount ”..............................................................................7.5

“ Interim Project Settlement Date ”...................................................2.13(b)

“ IP Contracts ”..................................................................................3.17(a)

“ IRCA ”................................................................................................3.9(f)

“ Leased Real Property ”....................................................................3.20(a)

“ Name ”....................................................................................................5.8

“ New Leased Property ”.........................................................................5.18

“ Nonassignable Assets ”....................................................................5.10(a)

“ Pre-Closing Employment Related Liabilities ”...............................5.13(b)

“ Preliminary Closing Date Working Capital Statement ”.................2.6(a)

“ Project Completion Losses Dispute Notice ”..................................2.13(c)

“ Project Completion Schedule ”.......................................................2.13(b)

“ Project Completion Settlement Date ”............................................2.13(b)

“ Purchase Price ”................................................................................2.5(a)

“ Registration Offices ”......................................................................3.19(b)

“ Required Consents ”..........................................................................3.3(d)

“ Revenue Dispute Notice ”..................................................................2.7(b)

“ Reviewing Accountant ”....................................................................2.6(d)

“ Seller ”..........................................................................................Preamble

“ Seller Disclosure Schedule ”..................................................ARTICLE 3

“ Seller Indemnified Parties ”..................................................................7.3

“ Set-Off Amount ”...............................................................................2.7(h)

“ Suppliers ”............................................................................................3.25

“ Statement of Revenues ”....................................................................2.7(a)

“ Terminal Payment ”...........................................................................2.7(e)

“ Transfer Taxes ”................................................................................5.7(b)

“ Transferred Employees ”.................................................................5.13(a)

“ UK Subsidiary ”....................................................................................5.20

“ WARN Act ”.......................................................................................3.9(d)

 

1.3                                  Other Definitional and Interpretive Matters .  As used in this Agreement, except to the extent that the context otherwise requires:

 

(a)                                   when a reference is made in this Agreement to an Article, Section, Exhibit or Schedule, such reference is to an Article or Section of, or an Exhibit or Schedule to, this Agreement unless otherwise indicated;

 

(b)                                  the table of contents and headings for this Agreement are for reference purposes only and do not affect in any way the meaning or interpretation of this Agreement;

 

(c)                                   whenever the words “include,” “includes” or “including” (or similar terms) are used in this Agreement, they are deemed to be followed by the words “without limitation”;

 

(d)                                  the words “hereof,” “herein” and “hereunder” and words of similar import, when used in this Agreement, refer to this Agreement as a whole and not to any particular provision of this Agreement;

 

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(e)                                   any reference in this Agreement to gender shall include all genders, and the definitions contained in this Agreement are applicable to the singular as well as the plural forms of such terms;

 

(f)                                     if any action is to be taken by any party hereto pursuant to this Agreement on a day that is not a Business Day, such action shall be taken on the next Business Day following such day;

 

(g)                                  references to a Person are also to its permitted successors and assigns;

 

(h)                                  “ordinary course of business” (or similar terms) shall be deemed followed by “consistent with past practice (in quantity and frequency)”;

 

(i)                                      all acts and proceedings to be taken and all documents to be executed and delivered by the parties at the Closing shall be deemed to have been taken and executed simultaneously, and, except as permitted hereunder, no acts or proceedings shall be deemed taken nor any documents executed or delivered until all have taken, executed and delivered;

 

(j)                                      references to Seller’s “knowledge” (and words of similar import) mean the actual knowledge, after due inquiry and reasonable investigation, of the individuals listed on Section 1.3(j) of the Seller Disclosure Schedule ; and

 

(k)                                   references to Buyer’s “knowledge” (and words of similar import) mean the actual knowledge of the individuals listed on Section 1.3(k) of the Seller Disclosure Schedule .

 

ARTICLE 2
PURCHASE AND SALE OF ASSETS AND CLOSING

 

2.1                                  Purchase and Sale .  At the Closing, upon the terms and subject to the conditions of this Agreement, Seller shall, or shall cause one or more of the Selling Subsidiaries to, sell, transfer, assign, convey and deliver, or cause to be sold, transferred, assigned and delivered, to Buyer (or one or more certain designated Subsidiaries of Buyer), and Buyer shall (or shall cause one or more certain designated Subsidiaries of Buyer to) purchase, acquire, assume and accept from Seller or the applicable Selling Subsidiary or Selling Subsidiaries, all of the right, title and interest in, to and under all of the assets, properties and rights used or held for use by Seller or the applicable Selling Subsidiary or Selling Subsidiaries that are used or held for use in, or necessary for the conduct of, the Business, whether tangible or intangible, real, personal or mixed (collectively, the “ Acquired Assets ”), in each case other than the Excluded Assets described in Section 2.2.  The Acquired Assets shall include:

 

(a)                                   all Assigned Intellectual Property of Seller and the Selling Subsidiaries;

 

(b)                                  all Business Products of Seller and the Selling Subsidiaries;

 

(c)                                   all Leased Real Property listed on Section 2.1(c) of the Seller Disclosure Schedule  (the “ Assumed Leased Property ”);

 

(d)                                  all Tangible Property of Seller and the Selling Subsidiaries (including all rights of Seller and the Selling Subsidiaries in any leases of Tangible Property);

 

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(e)                                   all rights and incidents of Seller and the Selling Subsidiaries under the Contracts listed in Section 2.1(e) of the Seller Disclosure Schedule  (together with all open purchase orders) (the “ Assumed Contracts ”);

 

(f)                                     all accounts receivable, unbilled revenues, reimbursable costs and expenses and other claims for money due to Seller or any Selling Subsidiary, other than claims for money due to Seller or any Selling Subsidiary under Excluded Contracts so long as such claims are not included in the calculation of Working Capital;

 

(g)                                  all Business Permits of Seller and the Selling Subsidiaries listed in Section 3.12(b) of the Seller Disclosure Schedule ;

 

(h)                                  all Business Records of Seller and the Selling Subsidiaries (subject to Seller’s right to retain copies of such information as required by applicable Law);

 

(i)                                      all Employee Information (subject to Seller’s right to retain copies of such information as required by applicable Law);

 

(j)                                      all rights, claims and causes of action that are related to the Acquired Business, any of the Assumed Liabilities or any of the Acquired Assets, but excluding rights, claims and causes of action that are related to Excluded Liabilities;

 

(k)                                   all rights, claims and credits of Seller or any Selling Subsidiary under or pursuant to all warranties, representations and guarantees made by suppliers, manufacturers and contractors in connection with products sold or services provided to Seller or any Selling Subsidiary for or in connection with the Business, or in respect of any Acquired Asset or any Assumed Liability (but excluding any such items arising under insurance policies);

 

(l)                                      all deferred charges, advance payments and prepaid items, other than those that relate to any Excluded Asset;

 

(m)                                all goodwill associated with the Acquired Business or the Acquired Assets, together with the right to represent to third parties that Buyer is the successor to the Acquired Business; and

 

(n)                                  all assets described on Section 2.1(n) of the Seller Disclosure Schedule .

 

2.2                                  Excluded Assets .  Notwithstanding any provision of this Agreement to the contrary, neither Buyer nor any of its Subsidiaries shall acquire, and there shall be excluded from the Acquired Assets, the following (the “ Excluded Assets ”):

 

(a)                                   all rights and incidents of Seller and the Seller Subsidiaries under the Contracts listed in Section 2.2(a) of the Seller Disclosure Schedule  (the “ Excluded Contracts ”);

 

(b)                                  all rights of Seller and the Seller Subsidiaries under this Agreement and the Collateral Agreements;

 

(c)                                   all cash, cash equivalents, bank deposits, investment accounts, lockboxes, certificates of deposit, marketable securities, bank accounts, Corporate Credit Cards or similar cash items, of Seller or any Seller Subsidiary;

 

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(d)                                  any and all insurance policies, binders and claims and rights thereunder and the proceeds thereof;

 

(e)                                   the minute books, records, stock ledgers, Tax records and other materials that Seller or each of the Seller Subsidiaries is required by Law to retain;

 

(f)                                     rights in any leased real property, other than the Assumed Leased Property;

 

(g)                                  all stock or equity interests in any Person, including all stock or equity interests in the Seller Subsidiaries;

 

(h)                                  net cash recoveries for expenses pre-paid by Seller or any Seller Subsidiary prior to Closing and described in Section 2.2(h) of the Seller Disclosure Schedule ;

 

(i)                                      [intentionally deleted];

 

(j)                                      all refunds or credits of or relating to any Taxes attributable to the Acquired Assets or Business to the extent such Taxes arise from or relate to any period or portion thereof ending prior to the Closing Date; and

 

(k)                                   all of the assets, properties and rights, whether tangible or intangible, real, Personal or mixed, used or held for use by any Seller Subsidiary that is not a Selling Subsidiary.

 

2.3                                  Assumed Liabilities .

 

(a)                                   At the Closing, Buyer shall (or shall cause one or more certain designated Subsidiaries of Buyer to) execute and deliver to Seller one or more Assumption Agreements pursuant to which Buyer (or a designated Subsidiary of Buyer) shall accept, assume and agree to pay, perform or otherwise discharge, as the case may be, except to the extent being contested in good faith, in accordance with the respective terms and subject to the respective conditions thereof, the following (collectively, the “ Assumed Liabilities ”):

 

(i)                                      all Liabilities of Seller or a Selling Subsidiary under the Assumed Contracts from and after the Closing Date; provided, however , that, except as set forth in Section 5.10(a), Buyer shall not have any obligations pursuant to any Assumed Contract that by its terms or under applicable Law requires, prior to assignment, a consent to assignment, unless a written consent thereto has been obtained on or prior to the Closing Date;

 

(ii)                                   all Liabilities of Seller or a Seller Subsidiary under the leases for the Assumed Leased Property from and after the Closing Date;

 

(iii)                                the Liabilities to be prorated pursuant to Section 2.8;

 

(iv)                               all Liabilities relating to, or arising out of the employment of, the Transferred Employees from and after the Closing Date, including all salary and severance obligations;

 

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(v)                                  all accounts payable due as of a date less than 60 days after the Closing Date as set forth on the Preliminary Closing Date Working Capital Statement;

 

(vi)                               all Liabilities that arise from the ownership, use, possession or operation of the Acquired Assets from and after the Closing Date;

 

(vii)                            the Liabilities of Seller or a Selling Subsidiary set forth in Section 2.3(a) of the Seller Disclosure Schedule; and

 

(viii)                         all Liabilities for or relating to any Taxes attributable to the Acquired Assets to the extent such Taxes arise from or relate to any period or portion thereof beginning after the Closing Date.

 

(b)                                  In the event of any claim against Buyer or any of its Subsidiaries with respect to any of the Assumed Liabilities, Buyer and each of its Subsidiaries shall have, and Seller and each Selling Subsidiary hereby assigns to Buyer and its Subsidiaries, any defense, counterclaim or right of setoff that would have been available to Seller, such Selling Subsidiary or the Business if such claim had been asserted against Seller, such Selling Subsidiary or the Business.  The assumption by Buyer or any of its Subsidiaries of the Assumed Liabilities and the transfer of the Assumed Liabilities by Seller and each Selling Subsidiary shall in no way expand the rights or remedies of any Person against Buyer, Seller or any Selling Subsidiary or their respective officers, directors, employees, stockholders and advisors as compared to the rights and remedies that such Person would have had against such parties had Buyer not assumed the Assumed Liabilities.  Without limiting the generality of the foregoing, the assumption by Buyer or any of its Subsidiaries of the Assumed Liabilities shall not create any third-party beneficiary rights.

 

2.4                                  Excluded Liabilities .  Notwithstanding any provision of this Agreement to the contrary (and without implication that Buyer is assuming any Liability of Seller, any Seller Subsidiary or the Business or any Liability related to any of the Acquired Assets not expressly excluded), neither Buyer nor any of its Subsidiaries is assuming, and neither shall be required to pay, perform or discharge, any Liabilities, including any Liabilities associated with the operation of the Business on or prior to the Closing Date, that are not specifically included in the Assumed Liabilities (the “ Excluded Liabilities ”), whether or not, in any particular instance, any such Liability has a value for accounting purposes or is carried or reflected on or specifically referred to in either Seller’s or the applicable Seller Subsidiary’s financial statements.  Seller shall (or shall cause one of the Seller Subsidiaries to) pay, perform or discharge when due or required to be performed or discharged, or contest in good faith, the Excluded Liabilities.  The Excluded Liabilities shall include the following:

 

(a)                                   all Liabilities relating to or incurred in connection with the Excluded Assets (except to the extent that such Liabilities are included in Section 2.3(a)(iv) above);

 

(b)                                  all Liabilities based on any actual or alleged defect in the design, manufacture, quality, conformity to specification or fitness for purpose of any product manufactured or sold by the Business (including any Business Products), or any service provided by the Business (including the Business Services), before the Closing Date, including all product liability, product warranty obligations and liabilities and all obligations and liabilities in respect of product recalls or product warnings (including voluntary recalls and warnings reasonably intended to avoid or mitigate liability);

 

(c)                                   all Pre-Closing Environmental Liabilities;

 

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(d)                                  all Pre-Closing Employment Related Liabilities;

 

(e)                                   all Liabilities for or relating to any Taxes of Seller or any Seller Subsidiary, including the Taxes described in Section 5.7(c);

 

(f)                                     all Liabilities related to, associated with or arising out of any breach or default, failure to perform and overcharges or underpayments, in each case arising from events or actions prior to the Closing under the Assumed Contracts;

 

(g)                                  all legal, accounting, brokerage, investment banking and finder’s fees or other fees and expenses incurred by or on behalf of Seller or any Seller Subsidiary in connection with this Agreement and/or the transactions contemplated hereby;

 

(h)                                  all Liabilities of Seller, any Seller Subsidiary or any of their Affiliates relating to indebtedness for borrowed money (including accounts payable due as of a date more than 60 days after the Closing Date, accrued liabilities relating to sales and use tax payments, payroll tax payments, VAT payments, income tax payments or any other Tax payments or to a year prior to Seller’s current fiscal year and capital lease obligations) and guarantees by Seller, any Seller Subsidiary or any of their Affiliates of indebtedness for borrowed money;

 

(i)                                      all Liabilities of Seller or any Seller Subsidiary to any stockholder or Affiliate of Seller or any Seller Subsidiary;

 

(j)                                      all Liabilities related to, associated with or arising out of any Action with respect to the operation of the Business or the Acquired Assets prior to the Closing, whether such Action is brought prior to, on or after the Closing; and

 

(k)                                   all Liabilities pertaining to the Business and arising out of or resulting from noncompliance on or prior to the Closing Date with any Laws (including any Environmental Laws).

 

2.5                                  Purchase Price .

 

(a)                                   Subject to any adjustments required pursuant to Section 2.6, the aggregate purchase price (the “ Purchase Price ”) for the Acquired Assets is (i) Thirty-Five Million U.S. Dollars (US $35,000,000) (the “ Closing Payment ”), plus (ii) the amount, if any, by which the Working Capital estimate in the Preliminary Closing Date Working Capital Statement exceeds zero, minus (iii) the amount, if any, by which the Working Capital estimate in the Preliminary Closing Date Working Capital Statement is less than zero, plus (iv) the assumption by Buyer or any of its Subsidiaries of the Assumed Liabilities, plus (v) the Contingent Payments, if any, plus (vi) the Terminal Payment, if any.

 

(b)                                  On the Closing Date, Buyer shall pay, or cause to be paid, (i) the Closing Payment, minus the Escrow Amount and the Tax Settlement Amount, if any, to Seller, (ii) an aggregate amount equal to the Escrow Amount into an escrow account in accordance with the Escrow Agreement and (iii) an aggregate amount equal to the Tax Settlement Amount, if any, to the applicable Governmental Authorities in Seller’s or the applicable Seller Subsidiary’s name, provided that Seller and Buyer acknowledge and agree that any portion of the Tax Settlement Amount which is the subject of a Dispute will be deposited into the Tax Settlement Escrow; each by wire transfer in immediately available funds to the respective account pursuant to written instructions that will be provided to Buyer at least three Business Days prior to Closing.  The Tax Settlement Escrow, if any, will be held and disbursed to Seller,

 

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Buyer or any applicable Governmental Authority, as the case may be, in accordance with its terms upon the resolution of any Dispute in accordance with Section 9.8.

 

(c)                                   The Escrow Amount shall be disbursed in accordance with the Escrow Agreement.

 

2.6                                  Purchase Price Adjustment .

 

(a)                                   At least two Business Days prior to the Closing Date, Seller shall deliver or cause to be delivered to Buyer a statement setting forth the components of Working Capital of the Acquired Business as of the close of business on the day immediately prior to the Closing Date (the “ Preliminary Closing Date Working Capital Statement ”) and an estimate of the Working Capital of the Acquired Business as of the close of business on the day immediately prior to the Closing Date.  The Preliminary Closing Date Working Capital Statement shall be prepared in accordance with GAAP, applied on a basis consistent with the preparation of the Balance Sheet, and in accordance with the methodologies set forth in Section 2.6(a) of the Seller Disclosure Schedule .

 

(b)                                  Within 60 days following the Closing Date, Buyer shall deliver or cause to be delivered to Seller a statement setting forth the components of Working Capital of the Acquired Business as of the close of business on the day immediately prior to the Closing Date (the “ Closing Date Working Capital Statement ”) and a determination of the Working Capital of the Business as of the close of business on the day immediately prior to the Closing Date (the “ Closing Date Working Capital ”).  The Closing Date Working Capital Statement shall be prepared in accordance with GAAP, applied on a basis consistent with the preparation of the Balance Sheet, and in accordance with the methodologies set forth in Section 2.6(a) of the Seller Disclosure Schedule .

 

(c)                                   Unless, within 30 days after delivery of the Closing Date Working Capital Statement to Seller pursuant to Section 2.6(b), Seller shall deliver to Buyer a notice setting forth, in reasonable detail, any good faith dispute as to the Closing Date Working Capital and the basis for such dispute (a “ Dispute Notice ”), the Closing Date Working Capital shall be deemed accepted by Seller and shall be final and binding.

 

(d)                                  For 15 days after Buyer’s receipt of a Dispute Notice, the parties hereto shall endeavor in good faith to resolve by mutual agreement all matters in the Dispute Notice.  If the parties are unable to resolve any matter in the Dispute Notice within such 15-day period, Buyer and Seller shall engage Deloitte & Touche LLP as the “ Reviewing Accountant ” (if such accounting firm is unable or unwilling to serve as the Reviewing Accountant, the parties shall, within 15 days after the end of such 15-day period, agree on an alternate “Big Four” independent accounting firm or have such selection made pursuant to the rules of the American Arbitration Association to resolve the remaining disputes).  All fees and expenses relating to this work of the Reviewing Accountant shall be borne equally by Seller and Buyer, provided that, if the Reviewing Accountant determines that one party’s position is completely correct, then such party shall pay none of the fees, costs and expenses of the Reviewing Accountant and the other party shall pay all such fees, costs and expenses.

 

(e)                                   Buyer and Seller shall instruct the Reviewing Accountant to resolve the disputed matters as promptly as practicable.  The parties hereto shall cooperate with each other and the Reviewing Accountant in connection with the matters set forth in this Section 2.6, including by furnishing such information as may be reasonably requested.  Each party hereto shall afford the other party the opportunity to participate in all communications with the Reviewing Accountant.  The determination of the Reviewing Accountant shall be final and binding and no party shall seek recourse to other tribunals, other than to collect any amounts due under this Section 2.6.  The Working Capital accepted by Seller in

 

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accordance with Section 2.6(c), agreed to by the parties hereto in accordance with Section 2.6(d) or determined by the Reviewing Accountant in accordance with this Section 2.6(e) shall be referred to herein as the “ Final Closing Date Working Capital .”

 

(f)                                     Within 10 Business Days after the Final Closing Date Working Capital has been determined pursuant to this Section 2.6, (i) Buyer shall pay to Seller the amount, if any, by which the Final Closing Date Working Capital is greater than the Preliminary Closing Date Working Capital, and (ii) Seller shall pay to Buyer the amount, if any, by which the Final Closing Date Working Capital is less than the Preliminary Closing Date Working Capital.  All payments under this Section 2.6 shall be made by wire transfer of immediately available funds in U.S. Dollars to an account designated by Seller or Buyer, as the case may be, in writing to the other for such purpose.  The parties agree that any amount paid pursuant to this Section 2.6(f) shall be treated as an adjustment to the Closing Payment and shall adjust the amounts allocated under Section 5.7(f).

 

2.7                                  Contingent Payments .

 

(a)                                   Buyer shall, within 30 days after the end of each of Buyer’s fiscal quarters, commencing with the first fiscal quarter ended after the Closing Date and ending with the fiscal quarter ended September 30, 2008, deliver to Seller a statement (each, a “ Statement of Revenues ”) setting forth (i) for all fiscal quarters other than the fiscal quarters ended June 30, 2008 and September 30, 2008, the amount of the transaction-based license fee revenues that have been collected under each of the Cobra Project, the Hawaii Project and the Thailand Project for the applicable fiscal quarter, and (ii) for the fiscal quarters ended June 30, 2008 and September 30, 2008, the amount of transaction-based license fee revenues recognized in accordance with GAAP under each of the Cobra Project, the Hawaii Project and the Thailand Project for the applicable fiscal quarter (the “ Collected Revenues ”).  Buyer shall at all times during the period beginning on the Closing Date and ending on March 31, 2008, collect, or cause the collection of, revenues for the Contingent Payment Contracts in a commercially reasonable manner consistent with Buyer’s and its Subsidiaries’ practices in collecting revenues under its other material customer contracts at the time.

 

(b)                                  Seller shall be given the opportunity to undertake a reasonable review of the books and records relating to the calculation of the Collected Revenues at mutually agreeable times during normal business hours after delivery of the Statement of Revenues.  Unless, within 30 days after delivery of the Statement of Revenues to Seller pursuant to Section 2.7(a), Seller shall deliver to Buyer a notice setting forth, in reasonable detail, any good faith dispute as to the amount of the Collected Revenues and the basis for such dispute (a “ Revenue Dispute Notice ”), the amount of the Collected Revenues shall be deemed accepted by Seller and shall be final and binding.

 

(c)                                   For 15 days after Buyer’s receipt of a Revenue Dispute Notice, the parties hereto shall endeavor in good faith to resolve by mutual agreement all matters in the Revenue Dispute Notice.  If the parties are unable to resolve any matter in the Revenue Dispute Notice within such 15-day period, Buyer and Seller shall engage the Reviewing Accountant to resolve the dispute in accordance with Sections 2.6(d) and (e).

 

(d)                                  Within 10 Business Days after the amount of the Collected Revenues has been finally determined pursuant to this Section 2.7, Buyer shall pay to Seller an amount in cash equal to one third of the Collected Revenues for the relevant period (as finally determined in accordance with this Section 2.7) (the “ Contingent Payment ”).

 

(e)                                   In addition to the amount to be paid to Seller in accordance with Section 2.7(d) for the period ended September 30, 2008, within 10 Business Days after the amount of the Collected

 

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Revenues has been finally determined pursuant to this Section 2.7 for the fiscal quarter ended September 30, 2008, Buyer shall pay to Seller an amount in cash equal to 12 times the amount of the Collected Revenues for such period (as finally determined in accordance with this Section 2.7) (the “ Terminal Payment ”), minus the amount equal to the product of (i) the fraction obtained by dividing the amount of the Collected Revenues for the fiscal quarter ended September 30, 2008 (as finally determined in accordance with this Section 2.7) by the amount of the Collected Revenues for the fiscal quarter ended June 30, 2008 (as finally determined in accordance with this Section 2.7), and (ii) the amount of the Terminal Payment for the fiscal quarter ended September 30, 2008 (as finally determined in accordance with this Section 2.7); provided that such amount shall only be subtracted from the Terminal Payment if the fraction obtained in (i) is a number less than one; and provided further that if any customer from which the Collected Revenues are generated has indicated to Buyer that it intends to terminate its contract with Buyer, then the amount of the revenues collected under such contract shall be excluded from “Collected Revenues” for the purpose of determining the amount to be paid to Seller under this Section 2.7(e).

 

(f)                                     All payments under this Section 2.7 shall be made by wire transfer of immediately available funds in U.S. Dollars to an account designated by Seller in writing to Buyer for such purpose.  The parties agree that any amount paid pursuant to Sections 2.7(d) or 2.7(e) shall be treated as an adjustment to the Purchase Price and shall adjust the amounts allocated under Section 5.7(f).

 

(g)                                  Buyer shall at all times during the period beginning on the Closing Date and ending on September 30, 2008 devote, or cause its Affiliates to devote, the resources, including Transferred Employees, reasonably necessary to service the Contingent Payment Contracts in a commercially reasonable manner consistent with Buyer’s and its Subsidiaries’ practices in servicing their other material customer contracts at the time.  Buyer and its Subsidiaries shall use their respective commercially reasonable efforts to keep each Contingent Payment Contract in effect from the Closing Date until September 30, 2008.  If Buyer or any of its Subsidiaries terminates or materially amends any Contingent Payment Contract, Buyer shall provide notice of such termination or amendment to Seller within 10 Business Days.  Notwithstanding any other provision of this Agreement, Seller acknowledges and agrees that one or more of the Contingent Payment Contracts are with current customers of Buyer and that no provision of this Agreement will be construed to limit in any manner Buyer’s ability to continue to service those customers with products and services other than the products and services acquired pursuant to this Agreement.

 

(h)                                  Notwithstanding any other provision of this Agreement, Buyer may withhold payment of all or any portion of any Contingent Payment or the Terminal Payment that equals the aggregate amount by which the amount of any claim for Losses asserted by Buyer in accordance with ARTICLE 7 exceeds the Escrow Funds then held in accordance with the Escrow Agreement (a “ Set-Off Amount ”).  Any Set-Off Amount withheld by Buyer pursuant to this Section 2.7(h) shall be retained by Buyer or released to Seller, as the case may be, upon resolution of the asserted claim for Losses in accordance with ARTICLE 7 or any Dispute with respect to such asserted claim for Losses in accordance with Section 9.8.

 

2.8                                  Proration of Payments .  After the Closing, any regular periodic charges with respect to the Business or the Acquired Assets, including amounts payable with respect to leases and utilities and all real property or personal property Taxes relating to the Acquired Assets, which become due and payable on or after the Closing Date and relate to periods that begin before and end after the Closing Date, shall be prorated and adjusted between Seller and Buyer as of the Closing Date on a per diem basis, and Seller shall be responsible for and pay to Buyer the portion of such amounts allocable to the period prior to the Closing Date for which payment is due on or after the Closing Date within five business days of the receipt of an invoice from Buyer.

 

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2.9                                  Closing .  Except as hereinafter provided, the Closing shall take place at the offices of Jones Day, 2727 North Harwood Street, Dallas, Texas at 10:00 a.m. (local time) on the third Business Day following the satisfaction or waiver of the last of the conditions to the obligations of the parties set forth in ARTICLE 6 (other than conditions that by their terms are not expected to be satisfied until the Closing Date, but subject to the fulfillment of those conditions or, in the case of Section 6.1, waived by Buyer and Seller, or, in the case of Section 6.2, waived by Buyer, or, in the case of Section 6.3, waived by Seller, at or prior to the Closing) or at such other time or on such other date or at such other place as Seller and Buyer may mutually agree upon in writing.

 

2.10                            Closing Deliveries by Buyer .  At the Closing, Buyer shall deliver or cause to be delivered to Seller:

 

(a)                                   The Closing Payment by wire transfer of immediately available funds to such account as Seller may direct in accordance with Section 2.5(b);

 

(b)                                  Each of the Collateral Agreements, duly executed by Buyer;

 

(c)                                   A copy of the resolutions of the Board of Directors of Buyer authorizing the execution, delivery and performance of this Agreement and the Collateral Agreements, certified by an officer of Buyer;

 

(d)                                  A certificate, dated as of the Closing Date, in form and substance reasonably satisfactory to Seller and duly executed by an executive officer of Buyer, certifying the fulfillment of the conditions set forth in Sections 6.3(a) and (b); and

 

(e)                                   Such further instruments and documents as may be required to be delivered by Buyer pursuant to the terms of this Agreement or as may be reasonably requested by Seller in connection with the closing of the transactions contemplated hereby or to complete the assumption by Buyer or any of its Subsidiaries of the Assumed Liabilities.

 

2.11                            Closing Deliveries by Seller .  At the Closing, Seller shall deliver or cause to be delivered to Buyer:

 

(a)                                   Possession of the Acquired Assets, including all original Assumed Contracts and Business Records of Seller and the Selling Subsidiaries, to the extent in Seller’s or a Selling Subsidiary’s possession or control and not previously provided to Buyer;

 

(b)                                  A tax clearance certificate, letter or other receipt indicating no Taxes are due in the State of Texas and the State of Georgia;

 

(c)                                   An executed officer’s certificate of occasional sale exemption qualification or similar instrument as required by applicable state law for every state where any of the tangible Acquired Assets are located and such exemption is available, and any equivalent document required by a Governmental Authority in any foreign jurisdiction where any of the tangible Acquired Assets are located and any equivalent exemption is available;

 

(d)                                  Copies of the Certificate of Incorporation (or equivalent organizational document) of Seller and each Selling Subsidiary, as amended, certified by the applicable authority of the jurisdiction of organization of Seller and each Selling Subsidiary, as applicable, and copies of the Bylaws

 

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(or equivalent governing document) of Seller and each Selling Subsidiary, as amended, each certified by an officer of Seller or such Selling Subsidiary, as applicable;

 

(e)                                   A reasonably current certificate of good standing, including tax good standing, of Seller and each Selling Subsidiary issued by the Secretary of State or equivalent authority in the jurisdiction of organization of Seller and each Selling Subsidiary, as applicable;

 

(f)                                     Each of the Collateral Agreements, duly executed by Seller and/or the applicable Selling Subsidiaries, as applicable;

 

(g)                                  The Management Non-Compete Agreement, duly executed by each of the executives identified on Section 2.11(g) of the Seller Disclosure Schedule ;

 

(h)                                  The Director Non-Compete Agreements, duly executed by each of the directors identified on Section 2.11(h) of the Seller Disclosure Schedule ;

 

(i)                                      A copy of each of the resolutions of the Board of Directors and securityholders of Seller and each Selling Subsidiary authorizing the execution, delivery and performance of this Agreement and/or any of the Collateral Agreements, as applicable, to which it is a party, certified by an officer of Seller or such Selling Subsidiary, as applicable;

 

(j)                                      A certificate, dated the Closing Date, in form and substance reasonably satisfactory to Buyer and duly executed by an executive officer of Seller, certifying the fulfillment of the conditions set forth in Sections 6.2(a), (b) and (c);

 

(k)                                   A certification in the form contained in Section 1.1445-2(b)(2)(iv) of the Treasury Regulations to the effect that Seller is not a “foreign person” and duly executed by an executive officer of Seller;

 

(l)                                      Appropriate termination statements under the Uniform Commercial Code and other instruments as may be requested by Buyer to extinguish all indebtedness of Seller and the Selling Subsidiaries and all security interests related thereto to the extent directed by Buyer; and

 

(m)                                Such further instruments and documents as may be required to be delivered by Seller pursuant to the terms of this Agreement or as may be reasonably requested by Buyer in connection with the closing of the transactions contemplated hereby or to complete the transfer of the Acquired Assets and the Acquired Business to Buyer (or one or more certain designated subsidiaries of Buyer), including good, sufficient instruments of assignment with respect to the Assigned Intellectual Property of Seller and the Selling Subsidiaries in recordable form, endorsements, consents, assignments and other good and sufficient instruments of conveyance and assignment necessary or appropriate to vest in Buyer (or one or more certain designated subsidiaries of Buyer) all right, title and interest in, to and under the Acquired Assets without Encumbrance of any kind.

 

2.12                            Accounting .  From and after the Closing, Buyer shall have the right and authority to collect for its own account all receivables and other related items that are included in the Acquired Assets.  To the extent that, after the Closing, (i) Buyer or any of its Affiliates receive any payment that is for the account of Seller or any Selling Subsidiary according to the terms of this Agreement or the Collateral Agreements, or Seller or any Selling Subsidiary makes a payment on behalf of Buyer, Buyer shall deliver such amount to Seller or (ii) Seller, any Selling Subsidiary or any of their Affiliates receive any payment that is for the account of Buyer or any of its Affiliates according to the terms of this Agreement or the Collateral Agreements, or Buyer makes a payment on behalf of Seller or any Selling

 

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Subsidiary, Seller shall deliver such amount to Buyer.  All amounts due and payable under this Section 2.12, if any, shall be due and payable by the applicable party in immediately available funds, by wire transfer to an account designated in writing by the other party and shall be delivered to the other party within 30 days of receipt thereof.

 

2.13                            Project Completion .

 

(a)                                   Buyer shall, within 30 days after the end of each of Buyer’s fiscal quarters, commencing with the first fiscal quarter ended after the Closing Date and ending on the Project Completion Settlement Date, deliver to Seller a statement setting forth the amount of Project Completion Costs and Project Completion Revenues for each Specified Project for the applicable fiscal quarter.  Buyer shall at all times during the period beginning on the Closing Date and ending on the Project Completion Settlement Date devote, or cause its Affiliates to devote, the resources, including the Transferred Employees, reasonably necessary to service the Specified Projects in a manner consistent with Buyer’s and its Subsidiaries’ practices in servicing their other material customer contracts at the time.

 

(b)                                  Within 60 days of (i) the Interim Project Settlement Date and (ii) the Project Completion Settlement Date, Buyer shall deliver to Seller a detailed schedule (the “ Project Completion Schedule ”) of the Project Completion Costs incurred by Buyer and the Project Completion Revenue collected by Buyer with respect to each Completed Project during the applicable Project Period.  The Project Completion Schedule shall set forth a calculation of aggregate Project Completion Costs and Project Completion Revenues associated with the Completed Projects for the Project Period together with a calculation of any Project Completion Losses claimed by Buyer for the Project Period.

 

(c)                                   Seller shall be given the opportunity to undertake a reasonable review of the books and records relating to the calculation of Project Completion Losses at mutually agreeable times during normal business hours after delivery of the Project Completion Schedule.  Unless, within 30 days after delivery of the Project Completion Schedule to Seller pursuant to Section 2.13(b), Seller shall deliver to Buyer a notice setting forth, in reasonable detail, any good faith dispute as to the amount of the Project Completion Losses and the basis for such dispute (a “ Project Completion Losses Dispute Notice ”), the amount of the Project Completion Losses shall be deemed accepted by Seller and shall be final and binding.

 

(d)                                  For 15 days after Buyer’s receipt of a Project Completion Losses Dispute Notice, the parties hereto shall endeavor in good faith to resolve by mutual agreement all matters in the Project Completion Losses Dispute Notice.  If the parties are unable to resolve any matter in the Project Completion Losses Dispute Notice within such 15-day period, the Dispute shall be resolved in accordance with the procedures set forth in Section 9.8

 

(e)                                   After each of the Interim Project Settlement Date and the Project Completion Settlement Date, Buyer shall be entitled to reimbursement from the Project Completion Escrow Amount for any Project Completion Losses finally determined to be due and payable in accordance with this Section 2.13.  After each of the Interim Project Settlement Date and the Project Completion Settlement Date, Seller shall be entitled to receive the Project Completion Escrow Amount less (i) any Project Completion Losses finally determined to be due and payable in accordance with this Section 2.13, and (ii) the aggregate amount by which the amount of any Losses specified in any then pending claim by any Buyer Indemnified Party in accordance with ARTICLE 7 exceeds the Indemnity Escrow Amount, provided that in respect of the Interim Project Completion Date, the aggregate amount of the Project Completion Escrow Amount that may be released to Seller shall not exceed an aggregate amount equal to Buyer’s reasonable estimate of the aggregate amount by which estimated Project Completion Costs of

 

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then-uncompleted Specified Projects exceed estimated Project Completion Revenues for such Specified Projects for the remaining Project Period.  Buyer and Seller agree to execute and deliver joint written instructions to the Escrow Agent in accordance with Section 1.2 of the Escrow Agreement to give effect to the distribution of the Project Completion Escrow Amount as finally determined in accordance with this Section 2.13, and the appropriate amounts will be distributed to Buyer and Seller, as applicable, in accordance with the Escrow Agreement.

 

(f)                                     If any cash is collected after the Project Completion Date that if collected prior to the Project Completion Date would have constituted Project Completion Revenues, and if such cash, if collected prior to the Project Completion Date, would not have otherwise been payable to Buyer as reimbursement for Project Completion Losses in accordance with this Section 2.13, such cash will be paid over to Seller by Buyer as soon as practicable after Buyer’s receipt of such cash.

 

ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLER

 

Seller, on behalf of itself and the Selling Subsidiaries, hereby represents and warrants to Buyer that, except as set forth in the disclosure schedule delivered by Seller to Buyer prior to the execution and delivery of this Agreement (the “ Seller Disclosure Schedule ”) (which Seller Disclosure Schedule shall be arranged in sections corresponding to the sections of this ARTICLE 3, and any information disclosed in any such section of the Seller Disclosure Schedule shall be deemed to be disclosed only for purposes of the corresponding section of this ARTICLE 3, unless it is reasonably apparent from the face of the disclosure that the disclosure contained in such section of the Seller Disclosure Schedule applies to other representations and warranties contained in this ARTICLE 3), as of the date hereof and as of the Closing Date:

 

3.1                                  Organization and Qualification .  Seller is a corporation duly organized, validly existing and in good standing under the Laws of the State of Delaware.  Each Selling Subsidiary is duly organized, validly existing and in good standing under the Laws of the jurisdiction of its organization.  Each of Seller and each Selling Subsidiary has all requisite corporate or similar power and authority to own, license, use, lease and operate the Acquired Assets owned, leased or operated by it and to carry on its portion of the Business.  Each of Seller and each Selling Subsidiary is duly qualified, licensed or admitted to transact business and is in good standing (with respect to jurisdictions which recognize that concept) in each jurisdiction in which the Acquired Assets are owned, licensed, used, leased or operated by it in the conduct of the Business or in which the nature of the Business makes such qualification necessary, except where the failure to be so qualified could not reasonably be expected to have a Business Material Adverse Effect.

 

3.2                                  Capitalization and Structure .  Section 3.2 of the Seller Disclosure Schedule  sets forth a true, correct and complete list of each Affiliate of Seller that is engaged in the operation or conduct of the Business or that has fee or leasehold title to any Acquired Asset or is the obligor under any Assumed Liability.  Section 3.2 of the Seller Disclosure Schedule  also includes a true, correct and complete table that lists each Seller Subsidiary, its jurisdiction of organization, its entity type, its capitalization, the names of all of its securityholders and the respective ownership interests of each such securityholder.  Neither the Acquired Assets nor the Assumed Liabilities include any securities or ownership interests of any Person.  Seller does not own any equity interest in any Person other than the Seller Subsidiaries.

 

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3.3                                  Authority; Non-Contravention; Approvals .

 

(a)                                   Seller has all requisite corporate power and authority to execute and deliver this Agreement and the Collateral Agreements to which it will be a party and to effect the transactions contemplated hereby and thereby, and the execution, delivery and performance of this Agreement and the Collateral Agreements to which Seller will be a party have been duly authorized by all requisite corporate action.  Each Selling Subsidiary has all requisite corporate or similar power and authority to execute and deliver the Collateral Agreements to which it will be a party and to effect the transactions contemplated thereby, and the execution, delivery and performance of the Collateral Agreements to which such Selling Subsidiary will be a party have been duly authorized by all requisite corporate or similar action.

 

(b)                                  This Agreement has been duly executed and delivered by Seller and this Agreement is, and the Collateral Agreements to which Seller and each Selling Subsidiary will be a party, when duly executed and delivered by Seller or such Selling Subsidiary, will be, valid and legally binding obligations of Seller or such Selling Subsidiary, as applicable, enforceable against Seller or such Selling Subsidiary, as applicable, in accordance with their respective terms except that the enforcement hereof or thereof may be limited by (i) bankruptcy, insolvency, reorganization, moratorium or other similar Laws now or hereafter in effect relating to creditors’ rights generally, and (ii) general principles of equity (regardless of whether enforceability is considered in an Action at law or in equity).

 

(c)                                   Assuming that all Required Consents have been obtained, the execution, delivery and performance of this Agreement by Seller and each Collateral Agreement by Seller or any Selling Subsidiary that is a party thereto, and the consummation of the transactions contemplated hereby and thereby, do not and will not:  (i) result in a breach or violation of any provision of Seller’s or the applicable Selling Subsidiary’s charter, by-laws or similar organizational documents, (ii) except as set forth on Section 3.3(c)(ii) of the Seller Disclosure Schedule , violate or conflict with, in any material respect, or result in a material breach of or constitute (with notice or lapse of time, or both) an occurrence of material default under any provision of, result in the acceleration or cancellation of any obligation under, give rise to any claim, give any Person additional rights or compensation under or give rise to any right by any party to terminate or amend its obligations under, any mortgage, deed of trust, conveyance to secure debt, note, loan, indenture, Encumbrance, Contract, Permit, order, judgment, decree or other arrangement to which Seller or the applicable Selling Subsidiary is a party or by which it is bound, or (iii) violate, in any material respect, any Law of any Governmental Authority having jurisdiction over Seller, any Selling Subsidiary or the Acquired Assets.

 

(d)                                  No consent, approval, order or authorization of, or registration, declaration or filing with, any Person is required to be obtained by Seller or any Selling Subsidiary in connection with the execution and delivery of this Agreement or the Collateral Agreements to which Seller or such Selling Subsidiary will be a party or for the consummation of the transactions contemplated hereby or thereby by Seller or such Selling Subsidiary, except for (i) consents or approvals set forth on Section 3.3(d) of the Seller Disclosure Schedule  that are required to transfer or assign to Buyer any Acquired Assets or assign the benefits of or delegate performance with regard thereto, and (ii) the Required Filings (items (i) and (ii) being collectively referred to herein as the “ Required Consents ”).

 

3.4                                  Financial Statements .  Section 3.4 of the Seller Disclosure Schedule  sets forth the Financial Statements.  Except as shown or provided for in the Financial Statements or as otherwise described in Section 3.4 of the Seller Disclosure Schedule , the Financial Statements (i) have been prepared from the books and records of Seller and the Seller Subsidiaries.  The Financial Statements were prepared in accordance with GAAP on a basis consistent with prior periods and fairly present the financial position and results of operations of the Business as of their respective dates and for the respective periods presented (subject, in the case of the unaudited portions of the Financial Statements, to the absence of certain footnote disclosures otherwise required by GAAP).

 

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3.5                                  Absence of Undisclosed Liabilities .   There are no Liabilities relating to the Business of any nature, whether accrued, absolute, contingent, unliquidated or otherwise, whether due or to become due, whether known or unknown, regardless of when asserted, and there is no existing condition, situation or set of circumstances that reasonably could be expected to result in such a Liability, except for Liabilities (i) reflected in the Balance Sheet, (ii) that were incurred since the date of the Balance Sheet and were normal and recurring expenses incurred in the ordinary course of business and could not reasonably be expected to have a Business Material Adverse Effect or (iii) Excluded Liabilities.

 

3.6                                  Absence of Certain Changes or Events .  Except in connection with the transactions contemplated hereby, as expressly contemplated by this Agreement or consented to in writing by Buyer, since the date of the Balance Sheet, (i) there has not been any event, circumstance, change or effect that has had or reasonably could be expected to have a Seller Material Adverse Effect or a Business Material Adverse Effect and (ii) except as contemplated on Section 5.1 of the Seller Disclosure Schedule , the Business has been conducted only in the ordinary course.

 

3.7                                  Tax Matters .

 

(a)                                   Except as disclosed on Section 3.7(a) of the Seller Disclosure Schedule , all Tax Returns required to be filed with respect to Seller or any Seller Subsidiary with respect to the Business or any of the Acquired Assets have been timely filed.  All such Tax Returns were correct and complete.  All Taxes (whether or not shown as due on any Tax Return), the nonpayment of which could result in an Encumbrance on an Acquired Asset, adversely affect the Business or result in Buyer or any of its Affiliates having any Liability therefor, have been timely paid.  No claim has been made, and neither Seller nor any Seller Subsidiary has received notice of a proposed claim, by any authority in any jurisdiction where Seller or any Seller Subsidiary does not file Tax Returns that Seller or such Seller Subsidiary is or may be subject to taxation by that jurisdiction with respect to the Business or any of the Acquired Assets, or otherwise.  Neither Seller nor any Seller Subsidiary has received notice of a proposed audit by any authority in any jurisdiction where Seller or any Seller Subsidiary does not file Tax Returns.

 

(b)                                  Seller and the Seller Subsidiaries have withheld and timely paid all Taxes required to have been withheld and paid in connection with amounts paid or owing to any employee, independent contractor, creditor, stockholder or other third party relating to the Business or any of the Acquired Assets.

 

(c)                                   No proposed adjustment, audit or administrative or judicial proceeding is pending or threatened or involves any Tax or Tax Return relating to the Business or any of the Acquired Assets in cases where an adverse outcome with respect to such adjustment or proceeding could result in an Encumbrance on an Acquired Asset, adversely affect the Business or result in Buyer or any of its Affiliates having any Liability therefor.

 

(d)                                  Section 3.7(d) of the Seller Disclosure Schedule  sets forth all closing agreements and Tax rulings requested or received from any Governmental Authority that relate to the Acquired Assets or the Business.

 

(e)                                   Except as disclosed on Section 3.7(d) of the Seller Disclosure Schedule , neither Seller nor any Seller Subsidiary has waived any statute of limitations in respect of income taxes or agreed to any extension of time with respect to an income Tax assessment or deficiency.

 

(f)                                     Neither Seller nor any Seller Subsidiary (i) has been a member of an affiliated, consolidated, combined or unitary group, other than the group of which Seller is the common parent,

 

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filing a consolidated federal income Tax Return or (ii) has any liability for the Taxes of any Person under Treas. Reg. Section 1.1502-6 (or any similar provision of state, local or foreign law), as a transferee or successor, by contract or otherwise.

 

(g)                                  Neither Seller nor any Seller Subsidiary has made any material payment, is obligated to make any material payment or is a party to any agreement that under certain circumstances could obligate it to make any material payment that will not be deductible under Section 280(G) of the Code.

 

3.8                                  ERISA and Employee Benefits .

 

(a)                                   Section 3.8(a) of the Seller Disclosure Schedule  contains a true and complete list of each Seller Plan.  None of Seller, any Seller Subsidiary or any ERISA Affiliate has any obligation to change or otherwise modify any existing Seller Plan or program or to establish any new plan or program.

 

(b)                                  Copies of the following materials have been delivered or made available to Buyer:  (i) all current and prior plan documents for each Seller Plan or, in the case of an unwritten Seller Plan, a written description thereof, (ii) all determination letters from the IRS with respect to any of the Seller Plans, (iii) all current and prior summary plan descriptions, summaries of material modifications, annual reports and summary annual reports, (iv) all current and prior trust agreements, insurance contracts and other documents relating to the funding or payment of benefits under any Seller Plan, and (v) any other documents, forms or other instruments relating to any Seller Plan reasonably requested by Buyer.

 

(c)                                   Each Seller Plan has been maintained, operated and administered in material compliance with its terms and any related documents or agreements and in material compliance with all applicable Laws.

 

(d)                                  To Seller’s knowledge, each Seller Plan intended to be qualified under Section 401(a) of the Code is so qualified and has heretofore been determined by the IRS to be so qualified, each trust created thereunder has heretofore been determined by the IRS to be exempt from Tax under the provisions of Section 501(a) of the Code, and nothing has occurred since the date of any such determination that could reasonably be expected to give the IRS grounds to revoke such determination.

 

(e)                                   Seller does not currently have and at no time in the past has had an obligation to contribute to a “defined benefit plan” as defined in Section 3(35) of ERISA, a pension plan subject to the funding standards of Section 302 of ERISA or Section 412 of the Code, a “multiemployer plan” as defined in Section 3(37) of ERISA or Section 414(f) of the Code or a “multiple employer plan” within the meaning of Section 210(a) of ERISA or Section 413(c) of the Code.

 

(f)                                     With respect to each group health plan benefiting any current or former employee of Seller, any Seller Subsidiary or any ERISA Affiliate that is subject to Section 4980B of the Code, Seller, each such Seller Subsidiary and each such ERISA Affiliate has materially complied with the continuation coverage requirements of Section 4980B of the Code and Part 6 of Subtitle B of Title I of ERISA.

 

3.9                                  Employment Matters .

 

(a)                                   Section 3.9(a) of the Seller Disclosure Schedule  sets forth, as of the date hereof: the name, employment location, employee identification number, date of hire, current title, current annual salary and any bonus or commitment to pay any other amount or benefit in connection with a termination of employment or otherwise (including all remuneration payabl