SECURITIES AND EXCHANGE
COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of
earliest reported):
September 14, 2001
ALLIANCE DATA SYSTEMS
CORPORATION
(Exact name of
registrant as specified in its chapter)
DELAWARE | 001-15749 | 31-1429215 |
(State or Other Jurisdiction | (Commission | (IRS Employer |
of Incorporation) | File Number) | Identification No.) |
17655 WATERVIEW PARKWAY
DALLAS, TEXAS 75252
(Address and Zip Code of Principal Executive Offices)
(972) 348-5100
(Registrants telephone number, including area code)
NOT APPLICABLE
(Former name or former address, if changed since last report)
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On September 14, 2001, a wholly owned subsidiary of Alliance Data Systems Corporation (Alliance), acquired substantially all the assets of Mailbox Capital Corporation (Mailbox) by the assumption of all the outstanding senior indebtedness and a portion of the subordinated indebtedness of Mailbox, together totaling $32.5 million. An earn out agreement was also entered into allowing for additional funds to be earned depending on the annual level of business for the next year. The acquisition was effective September 1, 2001 and non-material adjustments were made to the amount of indebtedness assumed at closing. Alliance paid off the indebtedness immediately subsequent to assumption using Alliances own funds. Alliance intends to continue to use the acquired assets in the same manner as previously used by Mailbox which was to provide services such as statement generation and data processing for clients in a variety of industries including utilities, telecom, financial, government and retail. Alliance has issued a press release announcing the transaction which is being filed as an exhibit.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED
(1) | Financial Statements, prepared pursuant to Regulation S-X for the periods specified in Section 210.3-05(b) will be filed by the Registrant within 60 days after the filing of this initial report on Form 8-K. |
(b) PRO FORMA FINANCIAL INFORMATION.
(1) | Pro forma financial information as required pursuant to Article 11 of Regulation S-X will be filed by the Registrant within 60 days after the filing of this initial report on Form 8-K. |
(c) EXHIBITS.
10.1 | Asset Purchase Agreement dated September 14, 2001 between Alliance Data Systems Corporation, ADS MB Corporation, Mailbox Capital Corporation and its shareholders, as listed. | |
10.2 | Earn Out Agreement dated September 14, 2001 between ADS MB Corporation, and MailBox Capital Corporation. | |
99.1 | Press Release dated September 20, 2001, in connection with the acquisition announcement. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
ALLIANCE DATA SYSTEMS CORPORATION | ||||
Dated: September 24, 2001 | By: | /s/
Edward J. Heffernan
|
||
Edward J. Heffernan | ||||
Executive Vice President and | ||||
Chief Financial Officer |
Exhibit 10.1
ASSET PURCHASE AGREEMENT
by and among
ADS MB Corporation
Alliance Data Systems Corporation
and
Mail Box Capital Corporation
Kenneth W. Murphy,
C. Cleave Buchanan, Jr.
Robert Meador,
John Erickson,
Richard Bainter,
Earl Johnson,
Charles Buchanan, and
Stacy Riffe
Dated as of September 1, 2001
TABLE OF CONTENTS
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT, dated as of September 1, 2001 (the Agreement), between Mail Box Capital Corporation, a Delaware corporation (the Seller), ADS MB Corporation, a Delaware corporation (the Buyer), Alliance Data Systems Corporation, a Delaware corporation (the Parent), Kenneth W. Murphy, C. Cleave Buchanan, Jr., Robert Meador, John Erickson, Richard Bainter, Earl Johnson, Charles Buchanan, and Stacy Riffe (the Stockholders).
RECITAL
The Seller desires to sell to the Buyer, and the Buyer desires to buy from the Seller, the Assets (as hereinafter defined) and the business of the Seller relating to automated presort, laser printing, webb printing, fulfillment, list rental, and data processing, maintenance, database management, disaster recovery and response analysis related to any of the foregoing and other products ancillary or relating to or derived from any of the foregoing (all of the foregoing being hereinafter referred to as the Business).
STATEMENT OF AGREEMENT
In consideration of the foregoing and the mutual covenants, representations, warranties and agreements hereinafter set forth, and intending to be legally bound hereby, the parties hereto agree that, subject to the conditions herein contained:
SALE OF ASSETS AND TERMS OF PAYMENT
(i) All owned furniture, fixtures,
computers (including both hardware and software) and other assets used in
connection with the operation of the Business as listed in Section 1.1(a)(i)
of the disclosure schedule delivered to the Buyer by the Seller on the date
hereof (the Disclosure
Schedule);
(ii) All machinery, vehicles and equipment owned by Seller, including, but not limited to, all machinery, vehicles and equipment listed on Section 1.1(a)(ii) of the Disclosure Schedule;
(iii) All inventory, supplies and materials of Seller related to the Business as listed on Section 1.1(a)(iii) of the Disclosure Schedule, including all inventory in the hands of suppliers for which Seller is committed with respect to the Business as of the Closing Date;
(iv) All receivables and all other evidences of indebtedness owed to the Seller, including, without limitation, those listed on Section 1.1(a)(iv) of the Disclosure Schedule;
(v) All leases of real property (including, without limitation, to the extent leased by Seller, land, buildings, structures, fixtures, appurtenances and improvements) relating to the Business, including, without limitation, the leases relating to real property listed on Section 1.1(a)(v) of the Disclosure Schedule (the Leases);
(vi) All contracts to which Seller is a party listed on Section 1.1(a)(vi) of the Disclosure Schedule;
(vii) All of Sellers right, title and interest in the Intellectual Property (as hereinafter defined) used in connection with the Business, including, without limitation, those items listed on Section 1.1(a)(vii) of the Disclosure Schedule; and
(viii) The current assets of Seller as set forth on the balance sheet attached hereto as Section 1.1(a)(viii) of the Disclosure Schedule, including, without limitation, any security deposits transferred to Buyer under the Leases.
(b) Notwithstanding anything in this Agreement to the contrary, specifically excluded from the Assets are the assets of the Business listed on Section 1.1(b) of the Disclosure Schedule (collectively, the Excluded Assets).
(c) The Seller shall sell, transfer, convey
and assign to the Buyer good and valid title to all of the Assets at the
Closing, free and clear of any liens, pledges, charges, mortgages, security
interests, restrictions, easements, liabilities, claims, encumbrances or rights
of others of every kind and description (collectively, Liens), except for
Permitted Liens (as hereinafter defined).
(d) (i) Upon the terms and subject to the conditions of this Agreement, on the Closing Date, the Buyer shall execute and deliver to the Seller an Assignment and Assumption Agreement in the form of Exhibit A (the Assignment Agreement) pursuant to which the Seller shall assign and the Buyer shall assume all of the liabilities and obligations of the Business set forth in Section 1.1(d)(i) of the Disclosure Schedule (collectively, the Assumed Liabilities) other than the Excluded Liabilities (as hereinafter defined). Except for the Assumed Liabilities expressly set forth in Section 1.1(d)(i) of the Disclosure Schedule, the Buyer shall not assume any other debts, commitments, obligations or liabilities of the Seller or the Business. Notwithstanding the foregoing, nothing contained herein shall require Buyer to pay, perform or discharge any obligations assumed so long as Buyer shall in good faith contest the amount or validity thereof, provided that the foregoing shall not relieve Buyer of its obligations to indemnify Seller from any Assumed Liabilities pursuant to the terms of this Agreement.
(ii) Notwithstanding anything in this Agreement to the contrary, specifically excluded from the Assumed Liabilities are the debts, commitments, obligations and liabilities of the Seller and the Business listed on Section 1.1(d)(ii) of the Disclosure Schedule (collectively, the Excluded Liabilities) all of which shall be retained by the Seller.
1.2 Purchase Price; Manner of Payment.
(a) Upon the terms and subject to the conditions contained in this Agreement, in reliance upon the representations, warranties and agreements of the Seller contained herein, and in consideration of the aforesaid sale, assignment, transfer and delivery of the Assets, on the Closing Date the Buyer will assume the Assumed Liabilities and will discharge, pursuant to appropriate payoff letters or otherwise, immediately subsequent to the Closing the debt of Seller listed on Section 1.2 of the Disclosure Schedule with an aggregate principal and interest balance of $32,500,000.00 (the Up-Front Purchase Price) plus an additional aggregate principal and interest balance of $600,289.57. At the Closing (as hereinafter defined), the Buyer shall deliver the Up-Front Purchase Price by wire transfer of immediately available funds to the accounts set forth across from each debtor specified in Section 1.2 of the Disclosure Schedule.
1.3 Allocation. The Buyer and Seller agree that they will use their best efforts to timely enter into an agreement after the Closing concerning the allocation of the Purchase Price for purposes of Section 1060 of the Code, and Buyer and Seller will use that Purchase Price allocation for all federal, state and local tax filings.
1.4 Transfer Taxes. The Seller shall pay and be responsible for all transfer taxes attributable to the transactions contemplated by this Agreement, if any.
1.5 Reporting. The Buyer and Seller agree that, for tax purposes, they will report the transactions contemplated by this agreement as if they were effective September 1, 2001.
ARTICLE 2
2.1 Time and Place of
Closing. Upon the terms and subject to the conditions
contained in this Agreement, the closing of the transactions contemplated by
this Agreement (the Closing) will take place at the offices of Akin, Gump,
Strauss, Hauer & Feld, L.L.P., 1700 Pacific Avenue, Suite 4100,
Dallas, Texas at 10:00 A.M. (local time) on such date as the parties may agree,
provided that the Closing Date shall be no later than September 14, 2001. The date on which the Closing actually
occurs is hereinafter referred to as the Closing Date.
2.2 Deliveries by the Seller. At the Closing, the Seller will deliver or cause to be delivered to the Buyer duly executed instruments of transfer and assignment of the Assets in form reasonably satisfactory to the Buyer, subject only to Permitted Liens, sufficient to vest in the Buyer good and valid title to the Assets to be conveyed at the Closing in accordance with the terms of this Agreement. In addition, at the Closing, the Seller shall deliver to Buyer:
(e) the Bill of Sale, by and between the Buyer and the Seller in the form attached hereto as Exhibit C, duly executed by the Seller (the Bill of Sale);
(f) the Assignment Agreement, by and between the Buyer and the Seller in the form attached hereto as Exhibit A, duly executed by Seller;
(i) a consulting agreement duly executed by each of the individuals listed on Section 2.2(j) of the Disclosure Schedule, in the form attached hereto as Exhibit E (the Consulting Agreement);
(j) employment offers duly executed by
each of the individuals listed on Section 2.2(k) of the Disclosure
Schedule (the Employment
Offers);
(k) payoff letters in the form reasonably acceptable to Buyer from each of the lenders of the Seller listed in Section 1.2 of the Disclosure Schedule and indicated thereon to be delivering payoff letters;
(l) a side letter agreement in the form attached hereto as Exhibit F (AAFES Side Letter) duly executed by Seller and Blair;
(m) all documents necessary to change the name of the Seller and to terminate all of its assumed name filings; and
(n) all other documents required by the terms of this Agreement to be delivered to the Buyer at the Closing.
2.3 Deliveries by the Buyer and/or the Parent. At the Closing, the Buyer and/or the Parent shall deliver or cause to be delivered:
(d) the Earnout Agreement, duly executed by the Buyer;
(e) the Assignment Agreement, duly executed by the Buyer;
(f) the Trademark Assignment Agreement, duly executed by the Buyer;
(g) the Consulting Agreements, duly executed by the Buyer;
(h) Employment Offers duly executed by the Buyer;
(i) the AAFES Side Letter duly executed by Buyer; and
(j) all other documents required by the terms of this Agreement to be delivered to the Seller at the Closing.
REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS
Each Stockholder hereby severally, but not jointly, represents and warrants to the Buyer and the Parent, except as set forth in the applicable section of the Disclosure Schedule, as follows:
3.1 Ownership. Such Stockholder is the record and beneficial owner of the number of shares of common stock, par value $0.01 per share, of the Seller (the Common Stock) set forth opposite such Shareholders name on Section 3.1 of the Disclosure Schedule (the Subject Shares). The Subject Shares constitute the only shares, with respect to which such Stockholder is the record or beneficial owner, of Common Stock or other capital stock of the Seller. Such Stockholder does not beneficially own any options, warrants or other rights (whether or not contingent) to acquire shares of capital stock of the Seller and is not party to any agreement, understanding, contract or other arrangement with the Seller pursuant to which such Stockholder may require Seller to repurchase, redeem or otherwise acquire any of the Subject Shares. Except as set forth in Section 4.22 of the Disclosure Schedule, such Stockholder does not own any assets that are used in the Business.
3.2 Authority Relative to this Agreement. Such Stockholder has the sole right to vote the Subject Shares set forth opposite its name on Section 3.1 of the Disclosure Schedule, and, except for a Securityholders Agreement, dated August, 20, 1999, by and among the Seller and the Stockholders, none of such Subject Shares is subject to any voting trust or other agreement, arrangement or restriction with respect to the voting of the Subject Shares. Such Stockholder is either (i) a natural person with the legal capacity to execute and deliver this Agreement and to perform his or her obligations hereunder, or (ii) has all requisite power and authority, to enter into this Agreement and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement by such Stockholder and the performance by such Stockholder of its obligations hereunder have been duly authorized by all necessary action on the part of such Stockholder. This Agreement has been duly executed and delivered by, and constitutes a valid and binding agreement of such Stockholder, enforceable against such Stockholder in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization or other similar laws affecting creditors rights generally and by general equitable principles (regardless of whether enforceability is considered in a proceeding in equity or at law).
3.3 Consents and Approvals; No Violation.
(a) There is no requirement applicable to
such Stockholder to make any filing with, or to obtain any permit,
authorization, consent or approval of, any governmental or regulatory authority
as a condition to the lawful consummation by such Stockholder of the
transactions contemplated by this Agreement.
(b) Except as may be required under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the HSR Act) and except as set forth in that certain Securityholders' Agreement, dated August 20, 1999, by and among the Seller and the other signatories thereto, neither the execution and delivery of this Agreement by such Stockholder nor the consummation by such Stockholder of the transactions contemplated hereby nor compliance by such Stockholder with any of the provisions hereof will (i) result in a breach of or default, or give rise to any right of termination, cancellation or acceleration under, any of the terms, conditions or provisions of any material note, bond, mortgage, indenture, license, agreement, lease or other similar material instrument or obligation to which such Stockholder is a party or by which any of such Stockholders Subject Shares may be bound, or (ii) violate any material order, judgment, writ, injunction, decree, statute, rule or regulation applicable to such Stockholder or any of such Stockholders Subject Shares. If the Stockholder is married and the Subject Shares of the Stockholder constitute community property or spousal approval is otherwise required for this Agreement to be legal, valid and binding, then, to the extent so required, this Agreement has been duly executed and delivered by, and constitutes a valid and binding agreement of, the Stockholders spouse, enforceable against such spouse in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization or other similar laws affecting creditors rights generally and by general equitable principles (regardless of whether enforceability is considered in a proceeding in equity or at law).
3.4 Litigation. There are no actions, suits, proceedings or government investigations pending or, to the knowledge of such Stockholder, threatened against such Stockholder which seek to question, delay or prevent the consummation of or would materially impair the ability of such Stockholder to consummate the transactions contemplated hereby.
3.5 Brokers. No broker, finder or other person is entitled to any brokerage fees, commissions or finders fees from such Stockholder in connection with the transactions contemplated hereby.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller hereby represents and warrants to the Buyer and the Parent, except as set forth in the applicable section of the Disclosure Schedule, as follows:
4.1 Organization. The Seller is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation and has all requisite corporate power and authority to own, lease
and operate its properties and to carry on its business as now being conducted,
to own or use the properties and assets that it purports to own or use and to
perform all of its obligations under the Material Contracts, except where the
failure to be so existing and in good standing or to have such power and
authority would not, individually or in the aggregate, have a Material Adverse
Effect (as hereinafter defined). The
Seller is duly qualified to do business as a foreign corporation, and is in
good standing, in each jurisdiction where the character of its properties owned
or held under lease or the nature of its activities make such qualification
necessary, except where the failure to be so qualified and in good standing
would not, individually or in the aggregate, have a Material Adverse
Effect. For all purposes herein, Material Adverse Effect
shall mean any state or states of fact, condition or conditions, event or
events, circumstance or circumstances, change or changes, or effect or effects
that individually or in the aggregate (including, without limitation, an
aggregate combination of one or more of the foregoing whether or not related to
each other or involving or affecting the same or different representations,
warranties and/or covenants) are materially adverse to (a) the business,
financial condition, results of operations or prospects of the Business or the
Assets or (b) the ability of Seller to consummate the transactions contemplated
by this Agreement.
4.2 Authorization. The Seller has all requisite corporate power and authority to execute and deliver this Agreement and each other agreement, document and instrument to be executed or delivered by it contemplated by this Agreement (the Seller Documents) and to consummate the transactions contemplated hereby and thereby. The execution and delivery of this Agreement or the Seller Documents by the Seller and the consummation of the transactions contemplated hereby and thereby by the Seller have been duly and validly authorized by all necessary action on the part of the Seller and no other corporate proceedings on the part of the Seller are necessary to authorize this Agreement and the Seller Documents or to consummate the transactions contemplated hereby and thereby. This Agreement has been, and when executed and delivered at Closing, the Seller Documents will be, duly and validly executed and delivered by the Seller, and, assuming the due authorization, execution and delivery by the Buyer and the Parent, this Agreement constitutes, and the Seller Documents will constitute, legal, valid and binding obligations of the Seller, enforceable against the Seller in accordance with their terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization or other similar laws affecting creditors rights generally and by general equitable principles (regardless of whether enforceability is considered in a proceeding in equity or at law).
4.3 Consents and Approvals; No Violation.
(a) There is no requirement applicable to the Seller to make any filing with, or to obtain any permit, authorization, consent or approval of, any governmental or regulatory authority as a condition to the lawful consummation by the Seller of the transactions contemplated by this Agreement.
(b) Assuming the payment immediately
subsequent to Closing of those items set forth on Section 1.2 of the
Disclosure Schedule and except as set forth in Section 4.3 of the
Disclosure Schedule, neither the execution and delivery of this Agreement by
the Seller nor the consummation by the Seller of the transactions contemplated
hereby nor compliance by the Seller with any of the provisions hereof will
directly or indirectly (with or without notice or lapse of time): (i) contravene, conflict with or result in
any breach or violation of any provision of the certificate of incorporation or
bylaws of the Seller or any resolution adopted by the Board of Directors of
Seller or the stockholders of Seller, (ii) result in a breach of or default, or
give rise to any right of termination, cancellation or acceleration under, any
of the terms, conditions or provisions of any material note, bond, mortgage,
indenture, license, agreement, lease or other similar instrument or obligation
to which the Seller is a party or by which any of its properties or assets may
be bound (for purposes hereof, a note, bond, mortgage, indenture, license,
agreement, lease or similar instrument shall be deemed material only if it
involves (A) executory performance of services or delivery of goods or
materials to or by the Seller of an amount in excess of $50,000, (B) the future
expenditure or receipt by the Seller in excess of $50,000, (C) the lease,
rental or occupancy of real or personal property involving the future
expenditure by the Seller of in excess of $50,000 in the current or any ensuing
fiscal year, (D) any agreement pursuant to which the Seller licenses software
or other intellectual property, other than commercially available software
programs generally available to the public which have been licensed to the
Seller pursuant to standard end-user license agreements or (E) in the case of
any note or other obligation involving debt for money borrowed, it involved
debt other than as disclosed on Section 1.2 of the Disclosure Schedule),
(iii) cause Buyer or the Parent to become subject to or liable for the payment
of any Tax, (iv) violate or conflict with any order, judgment, writ,
injunction, decree, or any statute, rule or regulation which is either
applicable to, binding upon or enforceable against the Seller or the Business
or any of the Sellers properties or assets or (v) result in the imposition or
creation of any Lien upon or with respect to the Assets.
4.4 Capitalization. The authorized, issued and outstanding capital stock of Seller and each subsidiary of Seller and the legal owner of such capital stock is set forth on Section 4.4 of the Disclosure Schedule. Except for the Subject Shares, there are not outstanding any shares of capital stock of the Seller. Except for warrants to purchase shares of Common Stock held by William Blair Mezzanine Capital Fund II, L.P. (Blair), there are not outstanding any options, warrants or other rights (whether or not contingent) to acquire shares of capital stock of the Seller. There are no outstanding contract obligations or understandings of the Seller to repurchase, redeem or otherwise acquire any of the Subject Shares.
4.5 Financial Statements and Books and Records.
4.6 Absence of Certain
Changes or Events. Except as set forth in Section 4.6 of
the Disclosure Schedule or except as permitted by this Agreement, since June
30, 2001, the Business has not (a) suffered any damage, destruction or casualty
loss adversely affecting the Assets or the Business; (b) incurred or discharged
any obligation or liability or entered into any other transaction except in the
ordinary course of business; (c)
suffered any change in its business, financial condition or in
its relationship with its suppliers, customers, distributors, lessors,
licensors, licensees or other third parties which individually or in the
aggregate would have a Material Adverse Effect; (d) other than with respect to
agreements for which the Buyer or the Parent will have no liability after
Closing, increased the rate or terms of compensation or benefits payable to or to
become payable by it to its directors, officers or key employees or increased
the rate or terms of any bonus, pension or other employee benefit plan covering
any of its directors, officers or key employees; (e) incurred any indebtedness
for borrowed money other than in the ordinary course of business and consistent
with past practice; (f) forgiven or canceled any indebtedness owing to it or
waived any claims or rights of material value; (g) sold, leased, licensed or
otherwise disposed of any of its assets other than sales of inventory in the
ordinary course of business and consistent with past practice or dispositions
of assets not material to the Business; (h) created or assumed any mortgage,
lien, security interest or other encumbrance on any of the Assets, except for
Permitted Liens; (i) entered into, amended or terminated any Material Contract,
Lease or Permit (each as hereinafter defined) or any Assumed Liability except
in the ordinary course of its business; or (j) committed pursuant to a legally
binding agreement to do any of the things set forth in clause (b) and clauses
(d) through (i) above.
4.7 Title to Assets. The Seller has good and valid title to all of the assets, properties and rights that it owns or purports to own (including all right, title and interest in and to the Intellectual Property), free and clear of all Liens, except Permitted Liens. The Seller has a valid leasehold interest or a royalty-free license to all of the assets, properties and rights that it leases or licenses or purports to lease or license. Other than services rendered by officers and directors of the Seller who are also stockholders of Seller, the Business does not receive any services from the Seller or any of its affiliates which are material to the operation and conduct of the Business. As used in this Agreement, the term Permitted Liens shall mean and include (i) those exceptions to title to the properties and assets of the Seller listed in Section 4.7 of the Disclosure Schedule; (ii) statutory liens for current taxes or assessments not yet due or delinquent; (iii) mechanics, carriers, workers, repairers and other similar statutory Liens arising or incurred in the ordinary course of business relating to obligations as to which there is no default on the part of the Seller; (iv) liens securing the obligations listed on Section 1.2 of the Disclosure Schedule; and (v) such other minor imperfections in title, charges, easements, restrictions, and encumbrances which do not materially detract from the value or transferability of or interfere with the present use of the properties subject thereto or affected thereby.
4.8 Adequacy of Assets. The Assets are free from defects that would impair their usage in the manner intended, in good and safe operating condition and repair (ordinary wear and tear excepted), have been maintained in accordance with normal industry practice, are adequate for the uses to which they are being put and currently proposed to be put by the Seller and include all assets, properties and rights which are necessary in the conduct of the Business as currently conducted and as are necessary for Buyer to conduct its business in the same manner as the Business has been conducted during the last 12 months.
4.9 Indebtedness. Section 4.9 of the Disclosure
Schedule sets forth a complete and accurate list and description of all
instruments or other documents relating to any direct or indirect indebtedness
for borrowed money of the Seller, including any loan agreements, indentures,
mortgages, pledges, hypothecations, deeds of trust, conditional sale or title
retention agreements, security agreements, equipment financing obligations or
guaranties, or other sources of contingent liability in respect of any
indebtedness or obligations to any other person for borrowed money, or letters
of intent or commitment letters with respect to same as well as indebtedness by
way of lease-purchase arrangements, guarantees, undertakings on which others
rely in extending credit and all conditional sales contracts, chattel mortgages
and other security arrangements with respect to personal property used or owned
by Seller (collectively Indebtedness).
Except as provided in Section 4.9 to the Disclosure Schedule,
Seller has made available to Buyer a true, correct, and complete copy of each
of the items listed on Section 4.9 of the Disclosure Schedule.
4.10 Contracts. Section 4.10 of the Disclosure Schedule sets forth all contracts, agreements and other arrangements of the Seller or the Business or affecting any of the Assets which provide for payment or performance obligations having an aggregate value in excess of $25,000 in any single year or has a term of more than one year from the Closing Date (collectively, the Material Contracts), and except as set forth in Section 4.10 of the Disclosure Schedule, there are no other Material Contracts. There is not, under any of the Material Contracts, any existing default or event of default on the part of the Seller which could have a Material Adverse Effect. Except as set forth in Section 4.10 of the Disclosure Schedule, no consents are required for the assignment of any Material Contract to the Buyer other than consents listed on Section 2.2(d) of the Disclosure Schedule. Each Material Contract is in full force and effect and is a valid and binding obligation of the Seller and, to the knowledge of the Seller, each other party thereto, and is enforceable in accordance with its terms, and will, unless such Material Contract requires the consent of the other party or parties thereto to its assignment and such consent has not been obtained prior to Closing, immediately following the Closing be valid, binding and enforceable by Buyer as assignee thereof in accordance with its terms, except as any such enforceability may be limited by the effect of bankruptcy, insolvency or similar laws affecting creditors rights generally or by general principles of equity.
4.11 Legal Proceedings. Except as set forth on Section 4.11 of the Disclosure Schedule (the Litigation Matters), there are no actions, suits, proceedings or any legal, administrative, arbitration or other proceedings or governmental investigations pending or, to the knowledge of the Seller, threatened against the Seller, any of the Assets or the Business or which seek to question, delay or prevent the consummation of or could materially impair the ability of the Seller to consummate the transactions contemplated hereby. There are no outstanding judgments, orders, writs, injunctions, indictments or informations, grand jury subpoenas or civil investigative demands, plea agreements, stipulations, awards or decrees of any court, arbitrator or any federal, state, municipal or other governmental department, commission, board, agency or instrumentality against or relating to Seller, relating to the Business or the Assets.
(a) Section 4.12 of the Disclosure
Schedule lists all employment, retention, severance, deferred compensation,
change of control or other agreements or contracts with any employee of Seller,
and all employee
benefit plans as such term is defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended (ERISA) maintained or
contributed to by Seller in which any employee of Seller participates, and all
stock option, restricted stock, stock appreciation or other equity plans and
all bonus, severance, change in control, retention, deferred compensation or
other compensatory plans maintained or contributed to by the Seller in which
any employee of Seller participates, whether any such plans or arrangements are
written or oral (Employee
Benefit Plans). Seller
has made available to Buyer true and complete copies of all Employee Benefit
Plans. This Agreement and the
consummation of the transactions contemplated herein do not create any
liabilities or trigger any expenses under the Employee Benefits Plans.
(b) With respect to each Employee Benefit Plan, except as set forth in Section 4.12 of the Disclosure Schedule: (i) if intended to qualify under Section 401(a) or 401(k) of the Internal Revenue Code of 1986, as amended (the Code), such plan satisfies the requirements of such sections, has received a favorable determination letter from the Internal Revenue Service, and its related trust has been determined to be exempt from tax under Section 501(a) of the Code and, to the knowledge of Seller, nothing has occurred since the date of such letter to adversely affect such qualification or exemption; (ii) each such plan has been operated and administered in substantial compliance with its terms and applicable law; (iii) Seller has not engaged in, and Seller has no knowledge of any person that has engaged in, any transaction or acted or failed to act in any manner that would subject Seller to any liability for a breach of fiduciary duty under ERISA; (iv) no disputes are pending, or, to the knowledge Seller, threatened; (v) Seller has not engaged in and has no knowledge of any person that has engaged in, any transaction in violation of Section 406(a) or (b) of ERISA or Section 4975 of the Code for which no exemption exists under Section 408 of ERISA or Section 4975(c) of the Code or Section 4975(d) of the Code or that would result in a civil penalty being imposed under subsections (i) or (l) of Section 502 of ERISA; (vi) all contributions due have been made on a timely basis; (vii) no Employee Benefit Plan is a plan covered by Title IV of ERISA or subject to the funding requirements of Section 412 of the Code; (viii) except to the extent required under ERISA Section 601 et seq. and Section 4980B of the Code, Seller does not provide health or welfare benefits under the Employee Benefit Plans for any retired or former employee and is not obligated to provide health or welfare benefits to any active employee following such employees retirement or other termination of service; (ix) the termination of any Employee Benefit Plan would not result in any material liability or further obligation on the part of the Seller; and (x) all reports and the documents required to be filed by any of the Employee Benefit Plans with any governmental agency or distributed to plan participants or beneficiaries (including notices required by the Consolidated Omnibus Reconciliation Act of 1985, as amended, actuarial reports, audits, or tax returns ) have been timely filed or distributed. All contributions made or required to be made under any Employee Benefit Plan meet the requirements for deductibility under the Code, and all contributions that are required and that have not been made have been properly recorded on the books of Seller.
(a) Section 4.13 of the Disclosure
Schedule is a true and complete list as of September 1, 2001 of the name of
each individual who is employed or retained or compensated as an employee,
independent contractor or consultant (either directly or indirectly) by the
Seller (the Employees)
on the date hereof along with his or her current job title, compensation and
any employee benefits enjoyed by such Employee which are not generally
available to employees of the Seller.
(b) Except as set forth on Section 4.13 of the Disclosure Schedule, (i) as of September 2, 2001, the Seller has paid or made provision for the payment of all salaries, commissions and accrued wages of the Employees up to the Closing; (ii) the Seller has complied in all material respects with all applicable laws, rules and regulations relating to the employment of labor, including those relating to wages, hours, unemployment insurance, collective bargaining and the payment and withholding of taxes for all Employees; (iii) the Seller has withheld all amounts required by law or agreement to be withheld from the wages or salaries of the Employees; and (iv) the Seller is not liable for any arrears of wages or other taxes or penalties for failure to comply with any of the foregoing to the extent they are applicable to the Employees or any former employees of the Business. There is not pending or, to the knowledge of the Seller, threatened, any labor dispute, strike, work stoppage or union organizing effort involving the Business.
(c) Except as set forth in Section 4.13 of the Disclosure Schedule, Seller has not during the past ninety days taken any action which would require any compliance under the Worker Adjustment and Retraining Notification Act of 1988, as amended (the WARN Act), including the termination or laying off of any employees, or any other action that could constitute a plant closing or mass layoff, as those terms are defined by the WARN Act.
(d) The Seller is not a party to any agreement with a labor union or other labor representative of any Employee.
4.14 Taxes. Except as set forth on Section 4.14
of the Disclosure Schedule, all taxes, fees, assessments and charges,
including, without limitation, income, property, sales, use, franchise, added
value, employees income withholding and social security taxes, imposed by the
United States or by any foreign country or by any state, municipality,
subdivision or instrumentality of the United States or of any foreign country,
or by any other taxing authority, which are due or payable by the Seller with
respect to the Business on or prior to the date hereof, or for which the Seller
may be liable on or prior to the date hereof with respect to the Business
(including any for which the Seller may be liable by reason of its being a
member of an affiliated, consolidated or combined group with any other company
at any time on or prior to the Closing Date), and all interest and penalties
thereon (collectively, Taxes or individually, a Tax), have been paid in full, or, if not due
on or prior to the date hereof but due on or prior to the Closing Date, will be
timely paid in full when due. All Tax
returns required to be filed in connection therewith have been, or will be
timely and accurately prepared in all material respects and filed, and all
deposits required by law to be made by the Seller with respect to employees of
the Business and other withholding Taxes due on or prior to the date hereof
have been duly made or, if not due on
or prior to the date hereof but due on or prior to the Closing Date, will be
timely and duly made. The Seller has
withheld and paid over all Taxes required to have been withheld and paid over,
and complied with all information reporting and backup withholding
requirements, including maintenance of required records with respect thereto,
in connection with amounts paid or owing to any employee, creditor, independent
contractor or other third party. No
deficiency for any Tax or claim for additional Taxes relating to or affecting
in any manner any of the Business or the Assets has been proposed, asserted or
assessed against the Seller or any of the Assets. There are no Liens on any of the Assets with respect to Taxes,
other than Liens for Taxes not yet due and payable and other Permitted Liens.
(a) Section 4.15(a) of the Disclosure Schedule identifies, illustrates (in the case of marks consisting of a graphical design or fanciful fonts), describes (in the case of an items trade dress) or lists all of the Sellers intellectual property that is not included in the Excluded Assets (the Intellectual Property) (i) pertaining to any product, software or service manufactured, marketed, licensed or sold by the Seller or used, employed or exploited in the development, license, sale, marketing, distribution or maintenance thereof and (ii) including all contracts and other agreements to which the Seller is a party, including such contracts and agreements where the Seller is either a licensee or licensor, for each item of the Intellectual Property. The Intellectual Property includes, but is not limited to, the Sellers (or the Sellers rights, under a license, in and to), foreign and domestic trademarks, service marks, appellations of origin, trade names, trade dresses, domain names, labels, logos, all goodwill associated with all of the foregoing, computer software, copyrights, patents, inventions, industrial models, processes, designs, ideas, any proprietary or confidential information, trade-secrets, all other creative works and measures of protection therefor, and all related applications, whether filed or unfiled, registrations, and grants. To the Sellers knowledge, the use of any item of Intellectual Property by the Seller does not infringe or violate the rights of any third party. The Seller has taken reasonable security measures to protect the secrecy, confidentiality and value of the Intellectual Property, to the extent such measures are appropriate. To the knowledge of the Seller, the trademarks, service marks, trade names, trade dress, labels and logos described in Section 4.15(a) of the Disclosure Schedule are sufficient for the conduct of the Sellers Business as now conducted.
(b) Except as disclosed in Section 4.15(b) of the Disclosure Schedule, all patents, copyrights, trademarks (including state, federal and foreign registrations and applications) and other rights and property listed in Section 4.15(a) of the Disclosure Schedule are valid, subsisting and in full force and effect.
(c) Except as disclosed in Section
4.15(b) of the Disclosure Schedule, (i) the Seller owns or has the
exclusive right to use the Intellectual Property in connection with the
Business, (ii) no third party has any interest (other than as a stockholder or
lender of the Seller) in, owns, possesses or otherwise holds in any manner any of
the Intellectual Property, (iii) the Seller is not required to pay any royalty
or other amount to anyone with respect to any of the Intellectual Property,
(iv) the rights and properties listed in Section 4.15(a) of the
Disclosure Schedule are not subject to any maintenance fees or renewal fees,
(v) the Seller has not received any notice of infringement of, or conflict
with, asserted rights of others with respect to any of the Intellectual
Property, and there is no claim, action, suit, investigation or proceeding
pending or, to the knowledge of the Seller, threatened against the Seller with
respect thereto, and (vi) since August 10, 1999, the Seller has never
agreed to indemnify or has never indemnified any person for or against any
interference, infringement, misappropriation, or other conflict with respect to
any item of the Intellectual Property.
(d) Except as disclosed in Section 4.15(b) of the Disclosure Schedule, (i) the development or sale by the Seller of all computer software developed by or for the Seller (the Software) did not and do not violate any rights of any other person or entity, and the Seller has not received any communication alleging such a violation, (ii) the Seller has not granted to any other person or entity any license, option or other right to develop or sell the Software, whether requiring the payment of royalties or not, and (iii) the Seller does not have any obligation to compensate any person for the development, use, sale or exploitation of the Software.
4.16 Compliance with Law; Permits. Each of the Seller and the Business is in compliance with all applicable laws, rules and regulations, including, without limitation, any applicable laws, rules, regulations, ordinances, codes, orders, judgments or decrees as to hiring, employment, environmental, health and/or safety matters, except where the failure to so comply would not have a Material Adverse Effect. The Business has all of the licenses, permits and other governmental authorizations required for the operation of the Business as conducted as of the date of this Agreement (the Permits), each of which is identified on Section 4.16 of the Disclosure Schedule, except where the failure to possess any such license, permits and other governmental authorizations would not have a Material Adverse Effect.
4.17 Accounts Receivable. Section 4.17 of the Disclosure Schedule contains a true and complete list and aging of the accounts receivable pertaining or related to any of the Assets or the Business as of the date set forth thereon. All of the Receivables are valid and legally binding, represent bona fide transactions, and arose in the ordinary course of business and are reflected properly in Sellers books and records. To Sellers knowledge the Receivables are collectible and will be collected in accordance with past practice and the terms of such receivables (and in any event within six months following the Closing Date), without set off or counterclaims, subject to the allowance for doubtful accounts, if any, set forth in the Balance Sheet, as such allowance has been adjusted up to the Closing Date consistent with the past practices of Seller; provided, however, any breach of the forgoing will be cured upon Buyers subsequent collection of such receivables. For purposes of this Agreement, the term Receivables means all receivables of the Seller, including, without limitation, all contracts in transit, manufacturers warranty receivables and all trade account receivables arising from the provision of services, sale of inventory, notes receivable, and insurance proceeds receivable.
4.18 Insurance. The Assets and the Business are insured for Sellers benefit and will be so insured through the Closing Date, in amounts and against risks consistent with levels and types commonly used in the industry in which the Seller operates. Section 4.18 of the Disclosure Schedule contains a true and complete list of all policies providing such insurance.
4.19 Real Property. The Seller does not own any real
property. Section 4.19 of the Disclosure
Schedule sets forth a true and complete list of all Leases. All of the Leases are in full force and
effect and have not been modified or amended, and there are no disputes, oral
agreements or forbearance programs in effect as to the Leases. There has not occurred any default by the
Seller under any Lease and, to the knowledge of the Seller, there has not
occurred any default thereunder by any other party thereto.
(d) As used herein, Environmental Law means all federal, state, and local laws, regulations, licenses, and common law related to the environment, health and safety, including, without limitation, the Federal Clean Water Act, Oil Pollution Act, Resource Conservation and Recovery Act, Clean Air Act, Comprehensive Environmental Response, Compensation and Liability Act, and the Occupational Health and Safety Act, each as amended and currently in effect; and Hazardous Material means any hazardous or toxic substance, material, pollutant, contaminant or waste which is regulated by any federal, state or local governmental authority, regulated under any Environmental Law, including any petroleum produce, any explosives, any radioactive material and any asbestos containing material.
4.21 Undisclosed Liabilities. Except as set forth in Section 4.21
of the Disclosure Schedule and except as set forth or reflected in the Sellers
Balance Sheet, the Business does not have any liability or obligation of any
kind or nature (fixed or contingent) that is required to be reflected on a
balance sheet in accordance with generally accepted accounting principles which
is not reflected, reserved against or disclosed in the Balance Sheet, except
for customary accounts payable and accrued business expenses incurred since
June 30, 2001 in the ordinary course of business.
4.22 Subsidiaries and Affiliate Relationships. Except as set forth on Section 4.22 of the Disclosure Schedule, the Seller has no subsidiary nor any interest, direct or indirect, nor has any commitment to purchase any interest, direct or indirect, in any other corporation or in any partnership, joint venture or other business enterprise or entity, which has any involvement with or possesses or uses any of the Business and/or the Assets. Since August 1999, the Business and the operations of the Seller have not been conducted through any direct or indirect subsidiary or any direct or indirect affiliate of the Seller. Except as set forth on Section 4.22 of the Disclosure Schedule, none of the Stockholders or affiliates of the Seller own any assets that are used in the Business.
(a) No insolvency proceedings of any character, including, without limitation, bankruptcy, receivership, reorganization, composition or arrangement with creditors, voluntary or involuntary, involving Seller as a debtor are pending, or to Sellers knowledge, threatened, and Seller has not made any assignment for the benefit of creditors or taken any action with a view to, or which would constitute the basis for the institution of, any such insolvency proceedings.
(b) After giving effect to the transactions contemplated by this Agreement (i) the fair market value of the assets retained by the Seller will exceed the amount that will be required to be paid on or in respect of the existing debts and other liabilities (including contingent liabilities) retained by Seller as they mature, (ii) the assets of the Seller will not constitute unreasonably small capital to carry out its business as conducted or as proposed to be conducted, including the capital needs of the Seller, (iii) the Seller does not intend to incur debts beyond its ability to pay such debts as they mature, (iv) the Seller has not made any conveyance or transfer and has not incurred any obligation with any intent to hinder, delay or defraud any of its creditors or any other entity or person, and (v) the Seller acknowledges that the transactions contemplated by this Agreement have been entered into on terms which are commercially reasonably.
4.24 Suppliers and Customers. Since June 30, 2001, no customer or supplier has cancelled or otherwise terminated, or, to Sellers knowledge, threatened to cancel or otherwise terminate, its relationship with Seller, or indicated that it intends to decrease its services to Seller or its usage of the services of Seller.
4.25 Brokers. No broker, finder or other person is entitled to any brokerage fees, commissions or finders fees from the Seller in connection with the transactions contemplated hereby.
4.26 Full Disclosure. This Agreement, the Disclosure Schedule and
the Seller Documents are true, complete and correct. This Agreement, the Disclosure Schedule and the Seller Documents
do not contain any untrue statement of a material fact and do not omit to state
any material fact necessary to make the statements made, in the context in
which they were made, not false or misleading. Seller has not knowingly withheld and will
not withhold from Buyer or the Parent information of any events, conditions or
facts that could have a Material Adverse Effect.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF THE BUYER AND THE PARENT
The Buyer and the Parent represent and warrant to the Seller as follows:
5.1 Organization. Each of the Buyer and the Parent is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and each of the Buyer and the Parent has all requisite corporate power and authority to own, lease and operate its properties and to carry on its business as now being conducted, except where the failure to be so existing and in good standing or to have such power and authority would not individually or in the aggregate have a material adverse effect on the business, financial condition or results of operations, on a consolidated basis, of the Parent.
5.2 Authority Relative to this Agreement. Each of the Buyer and the Parent has all requisite corporate power and authority to execute and deliver this Agreement and each other agreement, document or instrument to be executed or delivered by it contemplated by this Agreement (the Buyer Documents) and to consummate the transactions contemplated hereby and thereby. The execution and delivery of this Agreement and the Buyer Documents by each of the Buyer and the Parent and the consummation of the transactions contemplated hereby and thereby by each of the Buyer and the Parent have been duly and validly authorized by all necessary action on the part of the Buyer and the Parent and no other proceedings on the part of the Buyer and the Parent are necessary to authorize this Agreement and the Buyer Documents or to consummate the transactions contemplated hereby and thereby. This Agreement has been, and when executed and delivered at the Closing, the Buyer Documents will be, duly and validly executed and delivered by each of the Buyer and the Parent and, assuming the due authorization, execution and delivery by the Seller and each Stockholder, this Agreement constitutes, and the Buyer Documents will constitute, a legal, valid and binding obligation of the Buyer and the Parent, enforceable against the Buyer and the Parent in accordance with their terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization or other similar laws affecting creditors rights generally and by general equitable principles (regardless of whether enforceability is considered in a proceeding in equity or at law).
5.3 Consents and Approvals;
No Violation. There is no requirement applicable to the
Buyer and the Parent, including under the HSR Act, to make any filing with, or
to obtain any permit, authorization, consent or approval of, any governmental
or regulatory authority as a condition to the lawful consummation by the Buyer
of the transactions contemplated by this Agreement. Neither the execution and delivery of this Agreement by each of
the Buyer and the Parent nor the consummation by each of the Buyer and the
Parent of the transactions contemplated hereby nor compliance by each of the
Buyer and the Parent with any of the provisions hereof will (i) conflict with
or result in a breach or violation of any provision of the certificate of
incorporation or bylaws of the Buyer or the Parent, (ii) result in a breach of
or default, or give rise to any right of termination, cancellation or
acceleration under, any of the terms, conditions or provisions of any material
note, bond, mortgage, indenture, license, agreement, lease or other similar
material instrument or obligation to which the Buyer or the Parent is a party
or by which any of the Buyers or the Parents properties or assets may be
bound, or (iii) violate any material order, judgment, writ, injunction, decree,
statute, rule or regulation applicable to the Buyer and the Parent or any of
the Buyers and the Parents properties or assets. Other than as provided in this Agreement or
the Buyer Documents, there are no other restrictions which would prevent or
delay in any material fashion the Buyers and the Parents obligations under
the Earnout Agreement.
5.4 Litigation. There are no actions, suits, proceedings or any legal, administrative, arbitration or other proceedings or government investigations pending or, to the knowledge of the Buyer and the Parent, threatened against Buyer or the Parent which seek to question, delay or prevent the consummation of or could impair the ability of the Buyer to consummate the transactions contemplated hereby.
(a) No insolvency proceedings of any character, including, without limitation, bankruptcy, receivership, reorganization, composition or arrangement with creditors, voluntary or involuntary, involving the Buyer or the Parent as a debtor are pending, or to Buyers and Parents knowledge, threatened, and neither the Buyer nor the Parent has made any assignment for the benefit of creditors or taken any action with a view to, or which would constitute the basis for the institution of, any such insolvency proceedings.
(b) Each of the Buyer and the Parent has the necessary financial capacity to consummate the transactions hereby and to perform all of its obligation under the Earnout Agreement without violating any solvency requirements applicable to the Buyer and the Parent.
5.6 Brokers. No broker, finder or other person is entitled to any brokerage fees, commissions or finders fees from the Buyer or the Parent in connection with the transactions contemplated hereby.
6.1 Expenses. Except as otherwise specifically provided in this Agreement, all costs and expenses incurred by the Buyer and the Parent in connection with this Agreement and the transactions contemplated hereby will be paid by the Buyer or the Parent and all costs and expenses incurred by the Seller and each Stockholder in connection with this Agreement and the transactions contemplated hereby will be paid by such Seller or Stockholder.
6.2 Reasonable Efforts. Subject to the terms and conditions of this
Agreement, each of the parties hereto will use its reasonable efforts to take,
or cause to be taken, all action, and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement.
Reasonable efforts
for such purpose, and for all other purposes of this Agreement, shall mean the
reasonable commercial efforts that a prudent person desirous of achieving a
result would use in similar circumstances in an effort to ensure that such
result is achieved as expeditiously as possible. As used herein, the term reasonable efforts shall not include
any obligation on the part of any party to agree to any material adverse
modification of the terms of any document or contractual arrangement or to
repay or incur additional material obligations to any person or entity that
would be effective prior to the Closing or to pay any monetary amount or other
expenses exceeding, in the aggregate, $20,000 in furtherance of such
efforts. The parties hereto acknowledge
that time shall be of the essence and agree not to take any action that will
have the effect of unreasonably delaying, impairing or impeding the receipt of
any required authorizations, consents, orders or approvals.
6.3 Filings. The Seller and each Stockholder and each of the Buyer and the Parent will use their reasonable efforts to make or cause to be made all such filings and submissions as may be required under applicable laws and regulations, if any, including, without limitation, the filing by the Parent of a Current Report on Form 8-K under the Securities Exchange Act of 1934, as amended, if required to be filed in connection with the consummation of the transactions contemplated by this Agreement. Each of the parties hereto will coordinate and cooperate with one another in exchanging such information and providing such reasonable assistance as another may request in connection with all of the foregoing.
6.4 Public Announcements. None of the parties to this Agreement shall issue any press release with respect to the terms of this Agreement and the transactions contemplated hereby without the prior approval of the other parties, except as may be required by applicable law or by any listing agreement with a national securities exchange; provided, however that nothing contained herein shall preclude or restrict the Buyer and the Parent from making any statement regarding the conduct of the Business and its operations at any time after the Closing.
(a) From time to time, without further consideration, the Seller and each Stockholder will execute and deliver such documents to the Buyer and the Parent as the Buyer and the Parent may reasonably request in order more effectively to consummate the transactions contemplated hereby. From time to time, without further consideration, the Buyer and the Parent will execute and deliver such documents as the Seller may reasonably request in order more effectively to consummate the transactions contemplated hereby. In case at any time after the Closing Date any further action is necessary or desirable to carry out the purposes of this Agreement, each party to this Agreement will take or cause its proper officers and directors to take all such necessary action.
(b) Parent covenants and agrees that Buyer
will have the necessary financial capacity to perform all of its obligations
under the Earnout Agreement.
(a) Effective as of September 10, 2001, the Buyer shall offer employment on an at-will basis commencing on the Closing Date to each employee listed on Section 6.6 of the Disclosure Schedule, who is working for the Seller as of the Closing Date. Each individual listed on Section 6.6 of the Disclosure Schedule was an employee on the payroll of Seller immediately prior to the Closing, other than those terminated or added in the ordinary course. All such employees who accept such offer of employment are referred to herein as Transferred Employees. Beginning on the day following the Closing Date, the Buyer shall provide each Transferred Employee with compensation comparable to the compensation currently provided by the Seller.
(b) At the Closing Date, Buyer shall adopt, assume and otherwise become responsible for, either primarily or as a successor employer, the Employee Benefit Plans currently sponsored by the Seller listed on Section 6.6(b) of the Disclosure Schedule. The Sellers 401(k) plan and any Employee Benefit Plan not specifically listed on Section 6.6(b) of the Disclosure Schedule shall not be assumed by Buyer and Buyer shall not become responsible for, or have any liability relating to, any such Employee Benefit Plan. Buyer agrees to provide immediate coverage for the Transferred Employees, effective as of 12:00 a.m. on the Closing Date, under a group health insurance plan sponsored or assumed by the Buyer, which provides group health insurance coverage consistent with that currently provided by the Seller. Buyer agrees to grant service credit to Transferred Employees for periods of service with the Seller for purposes of eligibility and vesting under the tax-qualified retirement plan of the Buyer.
6.7 Non-Competition; Non-Solicitation.
(a) For a period ending on
December 31, 2005, the Seller and each of Kenneth W. Murphy, C. Cleave
Buchanan, Jr., Robert Meador, Richard Bainter and John Erickson will not,
directly or indirectly, (i) enter into, conduct, carry on or engage in any
business engaged in the Business (the Competitive Business) within the area
specified in Section 6.7 of the Disclosure Schedule (the Restricted Territory);
(ii) other than for the businesses of Matrix Digital Technologies, L.P. and
Matrix Digital Capital Corp. (together Matrix) as such businesses are being
conducted as of the Closing Date, be engaged by any person engaged in a
Competitive Business or render any services to any person for use in a
Competitive Business; (iii) other than for Matrix, have an interest in any
person engaged in any such Competitive Business, directly or indirectly, in any
capacity, including without limitation, as an individual, partner, shareholder,
officer, director, principal, agent, employee, trustee or consultant or any
other relationship or capacity; provided, however, that Seller and each Stockholder
may invest in any publicly held company so long as such investment does not
exceed five percent of such companys total ownership; (iv) solicit for
employment or hire any person who is a Transferred Employee, unless that person
is hereafter terminated by the Buyer or voluntarily leaves the employ of the
Buyer at least one year prior to any such hire; (v) divert or attempt to divert
from the Buyer any Business, nor interfere with the relationships of the Buyer
with customers or sources of supply; or (vi) publish any oral or written
statement(s) to any person that (A) disparage in any manner, the Assets, the
Business, the Buyer or the Parent or any of its affiliates, its or their
business reputation, or the personal or business reputations of its or their
directors, officers, stockholders or employees or engage in any disparaging
conduct or make any negative or derogatory statements concerning any of the
foregoing or (B) in any way impede, disrupt or interfere with the contracts,
agreements, understandings, communications or relationships of the Buyer or the
Parent and any of its affiliates with any third party.
(b) For a period ending on June 30, 2004 for each of Earl Johnson and Stacy Riffe, and ending on December 31, 2004 for Charles Buchanan (each of such periods, along with the periods set forth in Section 6.7(a), being a Noncompete Period), each of Earl Johnson, Charles Buchanan and Stacy Riffe will not, directly or indirectly, (i) enter into, conduct, carry on or engage in any business engaged in the Business (the Competitive Business) within the area specified in Section 6.7 of the Disclosure Schedule (the Restricted Territory); (ii) be engaged by any person engaged in a Competitive Business or render any services to any person for use in a Competitive Business; (iii) have an interest in any person engaged in any such Competitive Business, directly or indirectly, in any capacity, including without limitation, as an individual, partner, shareholder, officer, director, principal, agent, employee, trustee or consultant or any other relationship or capacity; provided, however, that Seller and each Stockholder may invest in any publicly held company so long as such investment does not exceed five percent of such companys total ownership; (iv) solicit for employment or hire any person who is a Transferred Employee, unless that person is hereafter terminated by the Buyer or voluntarily leaves the employ of the Buyer at least one year prior to any such hire; (v) divert or attempt to divert from the Buyer any Business, nor interfere with the relationships of the Buyer with customers or sources of supply; or (vi) publish any oral or written statement(s) to any person that (A) disparage in any manner, the Assets, the Business, the Buyer or the Parent or any of its affiliates, its or their business reputation, or the personal or business reputations of its or their directors, officers, stockholders or employees or engage in any disparaging conduct or make any negative or derogatory statements concerning any of the foregoing or (B) in any way impede, disrupt or interfere with the contracts, agreements, understandings, communications or relationships of the Buyer or the Parent and any of its affiliates with any third party. Notwithstanding the foregoing, each of Earl Johnson, Charles Buchanan and Stacy Riffe may be employed by a business engaged in a Competitive Business so long as the revenue generated by such business Competitive Business is less than 10% of such business total revenue and for so long as such Stockholder is not personally involved in such business Competitive Business. Notwithstanding (ii) and (iii), Stacy Riffes involvement in the business of Matrix as such businesses are being conducted as of the Closing Date shall not constitute a breach of Section 6.7 (ii) and (iii).
(c) (i) Notwithstanding anything contained herein to the contrary, the provisions of Section 6.7(a) and (b) shall immediately terminate and be of no further force or effect with respect to any Stockholder if such Stockholder is Terminated Without Cause (as defined in the Earnout Agreement) during the Earnout Period and Buyer and/or Parent cease paying such Stockholder his or her salary, wages and benefits existing as of the day immediately prior to such termination. (ii) Notwithstanding anything contained herein to the contrary if Buyer, Parent or whichever affiliate of Parent such Stockholder is then currently employed terminates such Stockholder subsequent to the Earnout Period, the provisions of Section 6.7(a) and (b) shall immediately terminate and be of no further force and effect on the later to occur of (A) twelve (12) months after Buyer and/or Parent ceases to pay (or twelve (12) months after the period to which such severance relates if paid in a lump sum) such Stockholder severance pay, and (B) the end of the applicable Noncompete Period.
6.8 Access to Information.
After the Closing Date, upon reasonable notice, the Buyer shall afford to the
Seller and its representatives reasonable access during normal business hours
to the books and records relating to the Business and the Assets to the extent
they relate to a period prior to the Closing Date (and shall permit such
persons to examine and photocopy such books and records at such persons
expense to the extent reasonably requested by such person) in connection with
financial reporting and tax matters (including financial and tax audits and tax
contests) and other matters reasonably related to the Business, or as provided
in Article 8 to enable the Seller and/or the Stockholders to defend any
third party claim or contest any claim for indemnity hereunder; provided,
however, that any such access or investigation shall be conducted by
Seller and its representatives in such a manner as not to unreasonably interfere
with the operation of the Business by the Buyer. Seller will bear all reasonable outofpocket costs
and expenses incurred by the Buyer or the Parent with respect to such access or
investigation.
7.1 Indemnification by the Seller and the Stockholders. The Seller (with respect to Sections 7.1(a) through (c)) and the Stockholders (with respect to Sections 7.1(a) and (b) only) hereby agree, severally, and not jointly, to indemnify each of the Buyer and the Parent and their respective officers, directors, employees and stockholders against, and agree to defend and hold them harmless from, any loss, liability, claim, judgment, settlement, award, penalty, damage, cost or expense (including reasonable attorneys fees and expenses) (a Loss) incurred by Buyer or the Parent or their respective officers, directors, employees and stockholders for or on account of or arising from or in connection with or otherwise with respect to:
(c) the Litigation Matters or any of the Excluded Assets or the Excluded Liabilities.
Except as set forth in Section 7.8, it is hereby expressly agreed and acknowledged that each Stockholder shall not be liable for any Losses resulting from the breaches of any other Stockholderor the Seller.
7.2 Indemnification by the Buyer and Parent. The Buyer and Parent hereby agree to indemnify each of the Stockholders, the Seller and its officers, directors, employees and stockholders against, and agrees to defend and hold them harmless from, any Loss incurred by such person for or on account of or arising from or in connection with or otherwise with respect to:
(b) any
breach by the Buyer of any of its covenants or agreements contained in this
Agreement or in the Buyer Documents.
7.3 Procedure For Non-Third Party Claims. Claims for indemnification hereunder other than a Third Party Claim (as hereinafter defined) shall be resolved in the manner provided in Article 8.
7.4 Procedure For Third Party Claims.
(b) If a Third Party Claim is made against
an Indemnified Party, the Indemnifying Party will be entitled to participate in
the defense thereof and, if it chooses, to assume the defense thereof at its
own cost and expense with counsel selected by the Indemnifying Party and
reasonably satisfactory to the Indemnified Party. Should the Indemnifying Party elect to assume the defense of a
Third Party Claim, the Indemnifying Party will not be liable to the Indemnified
Party for any legal expenses subsequently incurred by the Indemnified Party in
connection with the defense thereof unless the Indemnified Party shall have
reasonably determined that there may be one or more defenses which are
available to it which are different from or in addition to those available to
the Indemnifying Party. If the
Indemnifying Party assumes such defense, the Indemnified Party shall have the
right to participate in the defense thereof and to employ counsel, at its own
expense, separate from the counsel employed by the Indemnifying Party, it being
understood that the Indemnifying Party shall control such defense unless the
circumstances described in the immediately preceding sentence are present. The Indemnifying Party shall be liable for
the reasonable fees and expenses of counsel employed by the Indemnified Party
for any period during which the Indemnifying Party has not assumed the defense
thereof (other than during any period in which the Indemnified Party shall have
failed to give notice of the Third Party Claim as provided above unless it is
finally determined that the Indemnified Party is not entitled to
indemnification under this Article 7).
If the Indemnifying Party chooses to defend a Third Party Claim, the
parties hereto shall reasonably cooperate in the defense thereof. Such cooperation shall include, at the sole
cost and expense of the Indemnifying Party, the retention and (upon the
Indemnifying Partys request) the provision to the Indemnifying Party of
records and information which are reasonably relevant to such Third Party
Claim, and making employees, consultants and independent contractors available
on a mutually convenient basis to provide additional information and
explanation of any material provided hereunder and to provide testimony. If the Indemnifying Party chooses to defend
any Third Party Claim, the Indemnifying Party shall not agree to any
settlement, compromise or discharge of such Third Party Claim without the prior
written consent of the Indemnified Party, unless such settlement, compromise or
discharge provides solely for monetary relief and the full
and complete release of the Indemnified Party is the
result thereof. Whether or not the
Indemnifying Party shall have assumed the defense of a Third Party Claim, the
Indemnified Party shall not admit any liability with respect to, or settle,
compromise or discharge, such Third Party Claim without the Indemnifying
Partys prior written consent; provided, however, that if the Indemnifying
Party does not elect to control or defend a Third Party Claim, or after so
electing does not actively contest and defend the same in good faith, the
Indemnified Party shall be entitled to contest, defend and/or settle such Third
Party Claim on such terms and with such counsel as the Indemnified Party deems
appropriate, and at the cost and expense of the Indemnifying Party unless it is
finally determined that the Indemnified Party is not entitled to
indemnification.
7.5 Exclusive Remedy. After the Closing, this Article 7 shall provide the sole and exclusive remedy for any and all Losses sustained or incurred by a party in connection with the transactions contemplated by this Agreement; provided, however, that a party may seek specific performance or damages for fraud or willful misconduct on the part of the party or parties against whom damages are sought. Notwithstanding the foregoing, the parties hereto agree and acknowledge that (i) Buyer and Parent may exercise the right of set-off as provided in the Earnout Agreement and (ii) money damages may not be an adequate remedy for any breach or threatened breach of Section 6.7 and the Buyer or the Parent may, in its sole discretion, apply to any court of law or equity of competent jurisdiction and be entitled to specific performance and/or injunctive relief in order to enforce or prevent any violation of Section 6.7.
7.6 Survival of Representations and Warranties.
(a) Any rights of Buyer and Parent to indemnification under this Agreement (including under Section 7.1) shall apply only to those claims written notice of which shall have been delivered by Buyer or Parent to Seller on or before September 30, 2003.
(b) Any rights of the Seller and any of its officers, directors, employees and stockholders to indemnification under this Agreement (including under Section 7.2) shall apply only to those claims written notice of which shall have been delivered by Seller to Buyer on or before September 30, 2003.
(c) Notwithstanding anything in this Section 7.6 to the contrary, (i) the representations and warranties of Seller regarding title to the assets shall survive indefinitely, and (ii) the representations and warranties of Seller regarding tax related matters shall survive until the expiration of the applicable statute of limitations.
7.7 Indemnity
Notice. No party shall be entitled to assert any
claims against the other for misrepresentations or breaches of representations
and warranties under or pursuant to this Agreement (or for indemnification
under Article 7 hereof for such misrepresentations or breaches of
representations and warranties), unless the party asserting such claim shall
notify the other of such claim with reasonable specificity and outlining the
basis of alleged liability within the survival period of the applicable
representation and warranty and in the event of such notice the party asserting
such claim shall be entitled to pursue and seek recovery for all Losses
relating thereto, subject to the limitations set forth in Article 7.
7.8 Indemnification Basket and Ceiling. Any right of Buyer or Parent to indemnification under this Agreement shall not apply to any claim until the aggregate of all such claims totals $100,000 (the Indemnity Basket), in which event such indemnity shall apply to all such claims, but only to the extent of the amount in excess of the Indemnity Basket. Sellers aggregate liability for Losses under this Article 7 will not exceed the aggregate amount earned by the Seller pursuant to the Earnout Agreement and such Losses shall only be payable from or offset against the proceeds of the Earnout Agreement; provided, however, in the event that all or a portion of the Earnout Amount under the Earnout Agreement has been paid to Seller under the Earnout Agreement and Seller has subsequently distributed all or a portion of such amounts to Blair and/or the Stockholders, in addition to pursuing its rights to indemnification under this Agreement against the Seller, each Stockholder covenants and agrees to return such proceeds to Buyer and/or Parent (without duplication) as are necessary to satisfy any indemnification obligations of Seller determined to be owing to Buyer subsequent to such distributions (the Indemnification Amount) within 30 days of notice of such indemnification obligation (the Stockholder Notice). To the extent that Buyer and/or Parent, using commercially reasonable efforts, has not collected such amounts from the Stockholders within 90 days of the Stockholder Notice, the Buyer and/or Parent may pursue any uncollected portion of the Indemnification Amount against Blair to satisfy the Indemnification Amount and Blair covenants and agrees to promptly return an amount equal to such uncollected portion of the Indemnification Amount. Notwithstanding the foregoing, to the extent that the Indemnification Amount exceeds the amount actually received by the Stockholders, the Buyer and/or the Parent may immediately pursue such excess against Blair in partial satisfaction of the Indemnification Amount and Blair covenants and agrees to promptly return such excess to Buyer and/or Parent. Notwithstanding the foregoing, Blairs maximum liability under this provision shall be the amount of proceeds actually received by Blair from the Seller under the Earnout Agreement. The term commercially reasonable efforts as such term is used in this Section 7.8 shall not include or otherwise require the filing of any suit, claim, petition, appeal, charge, litigation, proceeding or other similar action, in a court of law or otherwise, or the use of a collection agency.
ARTICLE 8
8.1 Exclusive Procedure for Dispute Resolution. Any dispute arising out of or relating to this Agreement, including claims for indemnification pursuant to Article 7, shall be resolved in accordance with the procedures specified in this Article 8, which shall be sole and exclusive procedures for the resolution of any such disputes.
8.2 Negotiation Between Executives.
(a) The parties shall attempt in good faith
to resolve any dispute arising out of or relating to this Agreement promptly by
negotiation between executives of the Seller and executives of Buyer who, if
possible, shall be at a higher management level than the individuals with
direct responsibility for administration of this Agreement (the Negotiators). Any party may give the other parties written
notice of any dispute not resolved in the normal course of business. Within 15 days after delivery of the notice,
the receiving party shall submit to the others a written response. The notice and response shall include (i) a
statement of each partys position and a summary of arguments supporting that
position, and (ii) the name and title of the Negotiators and of any other
person who will accompany them. Within
30 days after delivery of the disputing partys notice, the Negotiators shall
meet at a mutually acceptable time and place, and thereafter as often as they
reasonably deem necessary, to attempt to resolve the dispute. All reasonable requests for information made
by one party to the others will be honored.
(b) If the matter has not been resolved by these persons within 60 days of the disputing partys notice, or if the parties fail to meet within 30 days, any party may initiate mediation as provided below.
(c) All negotiations pursuant to this clause shall be confidential and shall be treated as compromise and settlement negotiations for purposes of the Federal Rules of Evidence and state rules of evidence.
8.3 Mediation. If the dispute has not been resolved by negotiation as provided above, the parties shall endeavor to settle the dispute by mediation under the then current Center for Public Resources (CPR) Model Procedure for Mediation of Business Disputes. The neutral third party will be selected from the CPR Panels of Neutrals, with the assistance of CPR, unless the parties agree otherwise.
8.4 Litigation. If the dispute has not been resolved by non-binding means as provided herein within 90 days of the initiation of such procedure contemplated by Section 8.3 hereof, any party may initiate litigation (upon 30 days written notice to the other party); provided, however, that if one party has requested the others to participate in a non-binding procedure and the others have failed to participate, the requesting party may initiate litigation before expiration of such period.
8.5 Provisional Remedies. The procedures specified in this Article 8 shall be the sole and exclusive procedures for the resolution of disputes between the parties arising out of or relating to this Agreement; provided, however, that a party, without prejudice to the above procedures, may file a complaint (for statute of limitations or venue reasons or to seek preliminary injunction or other provisional judicial relief), if in its reasonable judgment such action is necessary to avoid irreparable damage or to preserve the status quo. Despite such action the parties will continue to participate in good faith in following the dispute resolution procedures specified in this Article 8. Notwithstanding the foregoing, the Buyer and the Parent may, in its sole discretion, apply to any court of law or equity of competent jurisdiction and be entitled to specific performance and/or injunctive relief in order to enforce or prevent any violation of Section 6.7.
8.6 Tolling
Statutes of Limitation. All applicable statutes of limitation and
defenses based upon the passage of time shall be tolled while the procedures
specified in this Article 8 are pending. The parties will take such
action, if any, reasonably required to effectuate such tolling.
8.7 Performance to Continue. Each party shall continue to perform his or its obligations under this Agreement pending final resolution of any dispute arising out of or relating hereto; provided that no amounts shall be paid pursuant to the Earnout Agreement to the extent such amounts are subject to set-off or may become subject to set-off upon final resolution of a dispute so arising.
ARTICLE 9
9.1 Amendment and Modification. Subject to applicable law, this Agreement may be amended, modified or supplemented only by written agreement of the Seller, the Buyer and the Stockholders.
9.2 Waiver of Compliance; Consents. Except as otherwise provided in this Agreement, any failure of any of the parties to comply with any obligation, covenant, agreement or condition herein may be waived by the party or parties entitled to the benefits thereof only by a written instrument signed by the party granting such waiver, but such waiver or failure to insist upon strict compliance with such obligation, covenant, agreement or condition shall not operate as a waiver of, or estoppel with respect to, any subsequent or other failure. Whenever this Agreement requires or permits consent by or on behalf of any party hereto, such consent shall be given in writing in a manner consistent with the requirements for a waiver of compliance as set forth in this Section 9.2.
9.3 Notices. All notices and other communications hereunder shall be in writing and shall be deemed given if delivered personally, when actually received, or, if mailed by registered or certified mail (return receipt requested), postage prepaid, two (2) business days after being properly posted to the parties at the following addresses (or at such other address for a party as shall be specified by like notice; provided, however, that notices of a change of address shall be effective only upon receipt thereof):
(a) | if to the Buyer or the Parent: |
Alliance Data Systems Corporation | |
17655 Waterview Parkway | |
Dallas, Texas 75292 | |
Attention: General Counsel |
with a copy to: | |
Akin, Gump, Strauss, Hauer & Feld, L.L.P. | |
1700 Pacific Avenue | |
Suite 4100 | |
Dallas, Texas 75201 | |
Attention: Alex Frutos |
(b) | if to the Seller: |
Mail Box Capital Corporation | |
3700 Pipestone | |
Dallas, Texas 75212 | |
Attention: Kenneth W. Murphy | |
with a copy to: | |
Jenkens & Gilchrist, P.C. | |
1445 Ross Ave. | |
Suite 3200 | |
Dallas, Texas 75202 | |
Attention: L. Steven Leshin |
(c) | if to a Stockholder: |
To the Address set forth across from such Stockholders name on Section 9.3 of the Disclosure Schedule. |
9.4 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF TEXAS (REGARDLESS OF THE LAWS THAT MIGHT OTHERWISE GOVERN UNDER APPLICABLE TEXAS PRINCIPLES OF CONFLICTS OF LAW) AS TO ALL MATTERS, INCLUDING BUT NOT LIMITED TO MATTERS OF VALIDITY, CONSTRUCTION, EFFECT, PERFORMANCE AND REMEDIES. All actions and proceedings arising out of or relating to this Agreement shall be heard and determined in a Texas state or federal court sitting in the City of Dallas, and the parties hereto hereby irrevocably submit to the exclusive jurisdiction of such courts in any such action or proceeding and irrevocably waive the defense of an inconvenient forum to the maintenance of any such action or proceeding.
9.5 Assignment. This Agreement and all of the provisions hereof shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns. Neither this Agreement nor any of the rights, interests or obligations hereunder may be assigned by any party hereto without the prior written consent of the other parties; provided however that the Buyer may assign this Agreement or any of the Buyer Documents in whole or in part to an affiliate of the Buyer or the Parent without the consent of the Seller or the Stockholders; provided however, Buyer acknowledges and agrees that any such assignment shall not relieve or release Buyer from its agreements and obligations hereunder, all of which, shall survive such assignment.
9.6 Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
9.7 Interpretation.
9.8 Entire Agreement. This Agreement, including the Exhibits and
Disclosure Schedules and the documents, certificates and instruments referred
to herein,
and that certain Confidentiality Agreement by and between the Parent
and the Seller dated March 26, 2001 (the Confidentiality Agreement) embody the entire
agreement and understanding of the parties hereto in respect of the
transactions contemplated by this Agreement.
There are no restrictions, promises, representations, warranties,
covenants or undertakings, other than those expressly set forth or referred to
herein. This Agreement supersedes all
prior agreements and understandings, other than the Confidentiality Agreement
(which shall remain in full force and effect), between the parties with respect
to such transactions.
9.9 Severability. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule of law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the greatest extent possible.
9.10 No Third Party Beneficiary. Nothing herein, expressed or implied, is intended or shall be construed to confer upon or give to any person, firm, corporation or legal entity, other than the parties hereto and their respective successors and permitted assigns, any right, remedy, or other benefit under or by reason of this Agreement or any documents executed in connection with this Agreement.
[SIGNATURE PAGES FOLLOW]
IN WITNESS WHEREOF, each of the Seller, the Stockholders, the Buyer and the Parent has caused this Agreement to be signed by its duly authorized officers as of the date first above written.
ALLIANCE DATA SYSTEMS CORPORATION | ||
By: | ||
Name: | ||
Title: | ||
ADS MB CORPORATION | ||
By: | ||
Name: | ||
Title: | ||
MAIL BOX CAPITAL CORPORATION | ||
By: | ||
Name: | ||
Title: |
STOCKHOLDERS
By: | ||
Kenneth W. Murphy, individually | ||
By: | ||
C. Cleave Buchanan, Jr., individually | ||
By: | ||
Robert Meador, individually | ||
By: | ||
John Erickson, individually | ||
By: | ||
Richard Bainter, individually | ||
By: | ||
Earl Johnson, individually | ||
By: | ||
Charles Buchanan, individually | ||
By: | ||
Stacy Riffe, individually | ||
EXHIBIT 10.2
EARNOUT AGREEMENT
THIS EARNOUT AGREEMENT (this Agreement), dated as of September 1, 2001 (the Closing Date), is made by and between ADS MB Corporation, a Delaware corporation (Buyer) and Mail Box Capital Corporation, a Delaware corporation (Seller). Buyer and Seller are sometimes collectively referred to as the Parties, and individually referred to as a Party.
RECITALS
A. Buyer, Alliance Data Systems Corporation, a Delaware corporation (the Parent) and Seller, among others, are a party to that certain Asset Purchase Agreement, dated as of the date hereof (the Purchase Agreement), pursuant to which Buyer has agreed to purchase and assume and Seller has agreed to sell and assign all of the Assets and Assumed Liabilities (as defined in the Purchase Agreement) of Seller.
B. The Purchase Agreement provides for, among other things, the execution and delivery of this Agreement in order to establish the terms and conditions of the earnout portion of the purchase price specified in the Purchase Agreement.
C. Capitalized terms used in this Agreement but not defined herein shall have the meanings set forth in the Purchase Agreement.
STATEMENT OF AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual agreements, covenants, representations and warranties set forth in this Agreement and for other good, valid and binding consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:
ARTICLE I.
DEFINITIONS
Section 1.1 Definitions. The terms defined in this Article I will have the meanings specified below for all purposes of this Agreement:
Agreement has the meaning set forth in the first paragraph.
Books and Records means the books and records maintained for or related to the Buyer, as the case may be, including all accounting records, computerized records and storage media and the software used in connection therewith.
Calculation Statement has the meaning set forth in Section 2.3(a).
Closing Date has the meaning set forth in the first paragraph.
Earnout Period means the consecutive
twelve (12) month period beginning on January 1, 2002 and ending on
December 31, 2002.
EBITDA means, with respect to a particular period, the consolidated net income of the Buyer before any deduction for interest, income taxes, depreciation or amortization. EBITDA will be determined on a consolidated basis for the Buyer in accordance with GAAP, consistently applied as to the Buyer, prepared from the applicable accounts as reflected on the Books and Records after making all year-end adjustments, modified as set forth on Exhibit A attached hereto.
Financial Statements has the meaning set forth in Section 2.3(a).
GAAP means generally accepted accounting principles in effect in the United States of America as of the date the Financial Statements are prepared.
Objection Notice has the meaning set forth in Section 2.4(b).
Parties and Party has the meaning set forth in the first paragraph.
Purchase Agreement will have the meaning set forth in the Recitals.
Representatives means, such entitys directors, employees, officers, agents, accountants, attorneys and shareholders.
Section 1.2 Accounting Terms. Except as otherwise provided in this Agreement, all accounting terms defined in this Agreement, whether defined herein or otherwise, will be construed in accordance with GAAP.
Section 1.3 Articles, Sections and Exhibits. Except as specifically stated otherwise, references to Articles, Sections and Exhibits refer to the Articles, Sections and Schedules of this Agreement.
Section 1.4 Drafting. Neither this Agreement nor any provision set forth in this Agreement will be interpreted in favor of or against any Party because such Party or its legal counsel drafted this Agreement or such provision. No prior draft of this Agreement or any provision set forth in this Agreement will be used when interpreting this Agreement or its provisions.
Section 1.5 Headings. Article and section headings are used in this Agreement only as a matter of convenience and will not have any effect upon the construction or interpretation of this Agreement.
Section 1.6 Include. The term include or any derivative of such term does not mean that the items following such term are the only types of such items.
Section 1.7 Plural and Singular Words. Whenever the plural form of a word is used in this Agreement, that word will include the singular form of that word. Whenever the singular form of a word is used in this Agreement, that word will include the plural form of that word.
Section 1.8 Pronouns.
Whenever a pronoun of a particular gender is used in this Agreement, if
appropriate that pronoun also will refer to the other gender and the
neuter. Whenever a neuter pronoun is
used in this Agreement, if appropriate that pronoun also will refer to the
masculine and feminine gender.
ARTICLE II.
EARNOUT PAYMENTS
Section 2.1 Earnout Payments. As a component of the Final Purchase Price, Buyer will pay to Seller the Earnout Amount (as defined below) within ten (10) Business Days after the date on which such Earnout Amount is deemed final in accordance with Section 2.4(c). Buyer will make such payments by wire transfer of immediately available funds to the bank account(s) set forth on a notice given by Seller to Buyer on the date that the Earnout Amount is deemed final in accordance with Section 2.4(c). Buyer acknowledges that Seller has entered into an Agreement with William Blair Mezzanine Capital Fund II, L.P. (Blair), dated as of the date hereof, which sets forth certain understandings between Seller and Blair with respect to the priority of payments by the Seller of the Earnout Amount (the Blair Letter).
Section 2.2 Earnout Amount. The Earnout Amount shall be equal to (a) actual EBITDA for the Earnout Period multiplied by six, minus (b) the Up-Front Purchase Price; provided, however, (i) if actual EBITDA for the four months ended December 31, 2001 (the period is hereinafter referred to as the 2001 Period, and the amount is hereinafter referred to as the 2001 EBITDA) is less than $1,900,000, the Earnout Amount shall be reduced by an amount equal to six multiplied by the amount by which 2001 EBITDA is less than $1,900,000 or (ii) if 2001 EBITDA is greater than $2,500,000, the Earnout Amount shall be increased by an amount equal to six multiplied by the amount by which 2001 EBITDA is greater than $2,500,000. Notwithstanding the foregoing, the Earnout Amount shall not exceed $60,000,000 less the Up-Front Purchase Price. By way of example only, Exhibit B attached hereto, sets forth example calculations for four scenarios.
Section 2.3 Calculation of 2001 EBITDA.
(a) Preparation of the Calculation Statement. As soon as reasonably practicable, but not later than 90 calendar days after the end of the 2001 Period, Buyer will deliver to Seller (i) the audited balance sheet of Buyer as of the end of such period and the statement of operations and cash flows of Buyer for the period ended on such date, prepared in accordance with GAAP consistently applied as to the Buyer, with the exception of footnotes thereto (the 2001 Financial Statements), and (ii) a statement setting forth in reasonable detail the computation of 2001 EBITDA for the 2001 Period, including identification of all excluded items and adjustments and all necessary back up calculations (the work papers showing such calculation, the 2001 Calculation Statement).
(b) Review of
the 2001 Financial Statements and the 2001 Calculation Statement. As soon as practicable, but not later than
25 calendar days after receipt of the 2001 Financial Statements and the 2001
Calculation Statement, Seller will inform Buyer in writing of any objection it
has to the 2001 Financial Statements or the 2001 Calculation Statement, which
objection, if any, will set forth in reasonable detail Sellers objections and
the basis for those objections (an Objection Notice).
If Seller so objects and the Parties do not resolve such objections on a
mutually agreeable basis within 120 calendar days after the end of the 2001
Period, then the disagreement will be resolved as soon as practicable
thereafter, but not later than 150 calendar days after the end of the 2001
Period, by an accounting firm of national reputation, which accounting firm
will be selected jointly by Buyer on the one hand and Seller on the other hand
and in no event may such accounting firm resolve the objection in a manner that
would result in 2001 EBITDA being greater or lesser in the aggregate than such
amounts originally proposed by Buyer and Seller. The Parties acknowledge that the scope of such accounting firms
work will be limited to resolving the objections set forth in the Objection
Notice. The decision of such accounting
firm, which shall be set forth in writing, shall be final and binding upon the
Parties, and may be entered as a final judgment in any court of proper
jurisdiction.
(c) Calculation Deemed Final. The 2001 Financial Statements, the 2001 Calculation Statement (as both or either may be adjusted, if applicable, by the agreement of the Parties or the decision of the accounting firm) and 2001 EBITDA based thereon will be deemed final upon the earlier to occur of (i) the agreement of the Parties, (ii) the decision of the accounting firm, or (iii) the failure of Seller to deliver an Objection Notice to Buyer within 25 calendar days after receipt by Seller of the 2001 Financial Statements and the 2001 Calculation Statement. The finally determined 2001 EBITDA shall be the amount used in the final calculation of the Earnout Amount as set forth in Section 2.2.
Section 2.4 Calculation of Earnout Payments.
(a) Preparation of the 2002 Calculation Statement. As soon as reasonably practicable, but not later than 90 calendar days after the end of the Earnout Period, Buyer will deliver to Seller (i) the audited balance sheet of Buyer as of the end of such period and the statement of operations and cash flows of Buyer for the period ended on such date, prepared in accordance with GAAP consistently applied as to the Buyer, with the exception of footnotes thereto (the 2002 Financial Statements), (ii) a calculation of the Earnout Amount in the manner provided in Section 2.2, based on the 2002 Financial Statements and the final amount of 2001 EBITDA, along with a statement setting forth in reasonable detail the computation of EBITDA for the Earnout Period, including identification of all excluded items and adjustments and all necessary back up calculations (the work papers showing such calculation, the 2002 Calculation Statement) and (iii) by wire transfer of immediately available funds an amount equal to half of the amount shown as owing to Seller in the Calculation Statement.
(b) Review of the 2002 Financial Statements and the 2002
Calculation Statement. As
soon as practicable, but not later than 25 calendar days after receipt of the
2002 Financial Statements and the 2002 Calculation Statement, Seller will
inform Buyer in writing of any objection it has to the 2002 Financial
Statements or the 2002 Calculation Statement, which objection, if any, will set
forth in reasonable detail Sellers objections and the basis for those
objections. If Seller so objects and
the Parties do not resolve such objections on a mutually agreeable basis within
120 calendar days after the end of the Earnout Period, then the disagreement
will be resolved as soon as practicable thereafter, but not later than 150
calendar days after the end of the Earnout Period, by an accounting firm of
national reputation, which accounting firm will be selected jointly by Buyer on
the one hand and Seller on the other hand and in no event may such accounting
firm resolve the objection in a manner that would result in the Earnout Amount
being greater or lesser in the aggregate than the amounts originally proposed
by Buyer and Seller. The Parties
acknowledge that the scope of such accounting firms work will be limited to
resolving the objections set forth in the Objection Notice. The decision of such accounting firm, which
shall be set forth in writing, shall be final and binding upon the Parties, and
may be entered as a final judgment in any court of proper jurisdiction.
(c) Calculation Deemed Final; Payment. The 2002 Financial Statements, the 2002 Calculation Statement (as both or either may be adjusted, if applicable, by the agreement of the Parties or the decision of the accounting firm) and the Earnout Amount based thereon will be deemed final upon the earlier to occur of (i) the agreement of the Parties, (ii) the decision of the accounting firm, or (iii) the failure of Seller to deliver an Objection Notice to Buyer within 25 calendar days after receipt by Seller of the 2002 Financial Statements and the 2002 Calculation Statement. The Buyer shall pay to Seller the balance of the finally determined Earnout Amount, after deducting amounts already paid to Seller pursuant to Section 2.4(a) and subject to Section 2.6, within ten (10) Business Days of the 2002 Financial Statements, the 2002 Calculation Statement and the Earnout Amount becoming final pursuant to this Section 2.4(c).
Section 2.5 Fees and Expenses. Each Party will bear the fees, costs and expenses of its own accountants, and will share equally in the fees, costs and expenses of the accounting firm selected by the Parties to resolve any disagreements regarding any Objection Notice.
Section 2.6 Right to Set-off. Buyer shall have the right to withhold and set-off against the Earnout Amount any amount owed or subject to final resolution of any dispute arising out of or relating to the Purchase Agreement to Buyer and/or Parent by Seller.
Section 2.7 Access to Books and Records. Each of Buyer and Seller will permit the others representatives reasonable access to the Books and Records (and shall permit such persons to examine and photocopy such Books and Records at such persons expense to the extent reasonably requested by such person) necessary to perform any analysis such party deems necessary in order to calculate the 2001 EBITDA and/or the Earnout Amount; provided, however, that any such access or investigation shall be conducted by Seller and Sellers Representatives in such a manner as not to unreasonably interfere with the operation of the business of the Buyer.
ARTICLE III.
OPERATION OF THE
BUSINESS; OTHER AGREEMENTS
Section 3.1 Operation of the Business.
(a) The Buyer agrees that during the Earnout Period, for so long as Buyer achieves at least 70% of the business plan of the Seller at the Closing Date attached hereto as Exhibit C (the Business Plan) as of March 31, 2002, June 30, 2002 and September 30, 2002, Buyer shall not, without the written consent of Seller:
(i) acquire the stock or assets of any other businesses;
(ii) sell or dispose of the stock or assets of the Buyer, other than in the ordinary course of business;
(iii) engage in any unrelated line of business in which the Seller is not engaged at the Closing;
(v) open any additional offices, manufacturing plants or other facilities;
(vi) effect any change of more than 10% in the number of employees or the total payroll of the Seller at the Closing, other than in the ordinary course of business; and
(vii) discontinue any line of business in which the Seller is engaged at the Closing.
(b) The Buyer agrees that during the Earnout Period, for so long as Buyer achieves at least 70% of the Business Plan as of March 31, 2002, June 30, 2002 and September 30, 2002:
(i) Buyer will remain a separate corporation rather than a division of Parent and that substantially all of the assets of Buyer will continue to be owned by Buyer, except such assets as may be disposed in the ordinary course of business;
(ii) Buyer will operate the business acquired from the Seller in the ordinary course consistent with the Business Plan;
(iii) Buyer will ensure that Buyer is sufficiently capitalized and has sufficient working capital to operate the business acquired from the Seller in the ordinary course consistent with the Business Plan and assuming capital expenditures do not exceed $500,000 during the Earnout Period; and
(iv) any purchases or sales of goods or services or any other transactions between Buyer on the one hand and Parent or any of its other subsidiaries or affiliates on the other, will be on terms no less favorable to Buyer than would be obtainable by it in any arms-length transaction with an unaffiliated third party.
(c) For
purposes of this Section 3.1, Kenneth W. Murphy, Robert Meador, John
Erickson and Charles Buchanan (the Consent Panel) shall have all requisite power and
authority to bind the Seller, subject to any contractual restrictions of the
Seller contained in the Blair Letter.
The size and composition of the Consent Panel shall not be changed in
any fashion during the Earnout Period.
(d) During the Earnout Period, Buyer may Terminate with Cause any Designated Individual; provided, however, Buyer shall not, during the Earnout Period, Terminate Without Cause any Designated Individual. For purposes of this Section 3.2(d): Designated Individual means each of Kenneth W. Murphy, Charles Buchanan, Robert Meador, Earl Johnson and Stacy Riffe; Terminate Without Cause means the termination of an individuals employment with the Buyer or the reduction of his or her salary, benefits or responsibilities (other than as provided in the final sentence of this Section 3.1(d)) for any reason other than Voluntary Termination or Termination With Cause; Termination With Cause means the termination of an individuals employment due to (i) misappropriation of funds or property of the Buyer or any of its affiliates or such individuals admission or conviction of fraud or embezzlement against the Buyer or any of its affiliates (including a plea of nolo contendere), (ii) the conviction of or entry of a plea of nolo contendere by such individual for any felony or any misdemeanor involving moral turpitude, or (iii) any action by such individual which is intended to result in substantial enrichment of such individual at the expense of the Buyer or any of its affiliates or any willful gross misconduct which has an adverse impact on the business, reputation or standing of the Buyer in the community, including, without limitation, acts related to moral turpitude and acts prohibited by the Buyers or the Parents policy on ethics; Voluntary Termination means an individuals voluntary termination of his or her employment hereunder for any reason. Notwithstanding the foregoing, Buyer may reduce the responsibilities (but not the salary or benefits) of any Designated Individual if Buyer fails to achieve at least 70% of the Business Plan as of March 31, 2002, June 30, 2002 and September 30, 2002.
Section 3.2 Sale or Discontinuation. If the business of the Parent shall be sold as an entirety (either by sale of capital stock or assets, a merger or otherwise) to an unaffiliated third party (the Acquiror) at any time from the Closing Date through the Earnout Period, the Parent shall cause the Acquiror to assume the obligations of the Buyer and the Parent under this Agreement. Upon satisfaction of such obligation, the Buyer and the Parent shall not have any further liability to Seller under this Agreement.
ARTICLE IV.
MISCELLANEOUS
Section 4.1 Amendment and Modification. Subject to applicable law, this Agreement may be amended, modified or supplemented only by written agreement of the Parties with respect to any of the terms contained herein.
Section 4.2 Waiver of Compliance; Consents. Except as otherwise provided in this Agreement, any failure of any of the Parties to comply with any obligation, covenant, agreement or condition herein may be waived by the Party or Parties entitled to the benefits thereof only by a written instrument signed by the Party granting such waiver, but such waiver or failure to insist upon strict compliance with such obligation, covenant, agreement or condition shall not operate as a waiver of, or estoppel with respect to, any subsequent or other failure. Whenever this Agreement requires or permits consent by or on behalf of any Party hereto, such consent shall be given in writing in a manner consistent with the requirements for a waiver of compliance as set forth in this Section 4.2.
Section 4.3 Notices. All
notices and other communications hereunder shall be in writing and shall be
deemed given if delivered personally or mailed by registered or certified mail
(return receipt requested), postage prepaid, to the Parties at the following
addresses (or at such other address for a Party as shall be specified by like
notice; provided, however, that notices of a change of address
shall be effective only upon receipt thereof):
(a) | if to Buyer or Parent: |
Alliance Data Systems Corporation | |
17655 Waterview Parkway | |
Dallas, Texas 75292 | |
Attention: General Counsel |
with a copy to: | |
Akin, Gump, Strauss, Hauer & Feld L.L.P. | |
1700 Pacific Avenue | |
Suite 1700 | |
Dallas, Texas 75201 | |
Attention: Alex Frutos |
(b) | if to Seller: |
Mail Box Capital Corporation | |
3700 Pipestone | |
Dallas, Texas 75212 | |
Attention: Kenneth W. Murphy |
with a copy to | |
Jenkens & Gilchrist, P.C. | |
1445 Ross Ave. | |
Suite 3200 | |
Dallas, Texas 75202 | |
Attention: L. Steven Leshin |
(c) | if to Blair: |
William Blair Mezzanine Capital Fund II, L.P. | |
222 West Adams Street | |
Chicago, Illinois 60606 | |
Attention: Terrance M. Shipp & David M. Jones |
(d) | with a copy to: Winston & Strawn |
35 West Wacker Drive | |
Chicago, Illinois 60601 | |
Attn: Laurence R. Bronska, Esq. | |
Telecopy: (312) 558-5700 |
Section 4.4 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS
OF THE STATE OF TEXAS (REGARDLESS OF THE LAWS THAT MIGHT OTHERWISE GOVERN UNDER
APPLICABLE TEXAS PRINCIPLES OF CONFLICTS OF LAW) AS TO ALL MATTERS, INCLUDING
BUT NOT LIMITED TO MATTERS OF VALIDITY, CONSTRUCTION, EFFECT, PERFORMANCE AND
REMEDIES. All actions and proceedings
arising out of or relating to this Agreement shall be heard and determined in a
Texas state or federal court sitting in the City of Dallas, and the Parties
hereto hereby irrevocably submit to the exclusive jurisdiction of such courts
in any such action or proceeding and irrevocably waive the defense of an
inconvenient forum to the maintenance of any such action or proceeding.
Section 4.5 Assignment. This Agreement and all of the provisions hereof shall be binding upon and inure to the benefit of the Parties hereto and their respective successors and permitted assigns. Except as provided in Section 3.2 hereof, neither this Agreement nor any of the rights, interests or obligations hereunder may be assigned by any Party hereto without the prior written consent of the other Parties; provided, however, that Buyer may assign this Agreement in whole or in part to any of its affiliates without the consent of Seller; provided, further, Buyer acknowledges and agrees that any such assignment shall not relieve or release Buyer from its agreements and obligations hereunder, all of which shall survive such assignment.
Section 4.6 Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
Section 4.7 Entire Agreement. This Agreement, the Purchase Agreement (including the Exhibits and Disclosure Schedules thereto and the documents, certificates and instruments referred to therein) and that certain Confidentiality Agreement by and between Parent and Seller dated March 26, 2001 (the Confidentiality Agreement) embody the entire agreement and understanding of the parties hereto in respect of the transactions contemplated by this Agreement. There are no restrictions, promises, representations, warranties, covenants or undertakings, other than those expressly set forth or referred to herein. This Agreement supersedes all prior agreements and understandings, other than the Purchase Agreement and the Confidentiality Agreement, between the Parties with respect to such transactions.
Section 4.8 Severability. If any term or other provision of this Agreement is determined to be invalid, illegal or incapable of being enforced by any rule of law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner adverse to any Party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the Parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the greatest extent possible.
Section 4.9 No Third Party Beneficiary. Nothing herein, expressed or implied, is
intended or shall be construed to confer upon or give to any person, firm,
corporation or legal entity, other than the Parties hereto and their respective
successors and permitted assigns, any right, remedy, or other benefit under or
by reason of this Agreement or any documents executed in connection with this
Agreement. Buyer acknowledges that Seller has entered
into an Agreement with Blair, dated as of the date hereof, which sets forth
certain understandings between Seller and Blair with respect to the priority of
payments by the Seller of the Earnout Amount.
Section 4.10 Representation by Legal Counsel. Each Party is a sophisticated party that was advised by experienced legal counsel and other advisors in the negotiation and preparation of this Agreement.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, each Party has caused this Agreement to be signed by its duly authorized officers as of the date first above written.
BUYER: | ADS MB CORPORATION |
By: |
|
Name: | |
Title: | |
SELLER: | MAIL BOX CAPITAL CORPORATION |
By: |
|
Name: | |
Title: |
Ex-99.1
Alliance Data Systems Acquires the Assets | |
of Mail Box Capital Corporation | September 24, 2001 |
Leverages Capabilities in Statement Processing Services
Alliance Data Systems Corp. announced today that it has acquired the assets of Mail Box Capital Corporation, based in Dallas, Texas. Mail Box Capital provides statement generation and data processing services for clients in a variety of industries including utilities, telecom, financial, government and retail. The acquisition will be neutral to Alliance Data cash earnings in the first year and is expected to be accretive thereafter.
Mike Beltz, Alliance Data Systems president, Transaction Services, commented that the acquisition is a strategic opportunity that augments Alliance Data's core competencies.
This acquisition will increase operational efficiencies, resulting in increased scalability and optimization of our statement processing capabilities, said Beltz. It will also provide cross-selling opportunities for Alliance Data, further leveraging one of our core service offering areas.
Ken Murphy, Mail Box Capital's founder, president, and chief executive officer, commented that the acquisition is extremely positive for the company's loyal employees and customers.
Since we founded the company over 30 years ago, our history has been marked by tremendous growth and development of new services for our customers, said Murphy. We have accomplished this through the loyalty of our many long-term employees and strong customer relationships. This acquisition leverages the strengths of our past as we continue to build our future. Mail Box Capital has a strong business history and reputation in the industry, which also happen to be attributes we share with Alliance Data. This is a fit that is both strategic and complementary.
Alliance Data Systems
Based in Dallas, Alliance Data Systems is a leading provider of transaction services, credit services and marketing services, assisting retail, petroleum, utility and financial services companies in managing the critical interactions between them and their customers. Additionally, Alliance Data operates and markets the largest coalition loyalty program in Canada. All together, each year, the company manages over 2.5 billion transactions and 72 million consumer accounts for some of North America's most recognizable companies. Alliance Data Systems employs approximately 6,000 associates at more than 20 locations in the United States, Canada and New Zealand. For more information about the company, visit its web site, http://www.alliancedatasystems.com.
Alliance Data Systems' Safe Harbor Statement/Forward Looking Statement
Statements contained in this press release which are not historical facts may be forward-looking statements, as the term is defined in the Private Litigation Reform Act of 1995. In some cases, you can identify forward-looking statements by terminology such as "anticipate," "estimate," "expect," "project," "intend," "plan," "believe" and other words and terms of similar meaning in connection with any discussion of future operating or financial performance. In particular, these include, among other things, statements relating to growth strategy, global expansion, use of proceeds, dividend policy, projected capital expenditures, sales and marketing expenses, research and development expenditures, other costs and expenses, revenue, profitability, liquidity and capital resources, and development. Any and all of the forward-looking statements can be affected by inaccurate assumptions we might make or by known or unknown risks and uncertainties. Many factors, including the risks outlined in Alliance Data's Registration Statement on Form S-1, will be important in determining future results. Actual results may vary materially.
SOURCE | Alliance
Data Systems Corp. |
CONTACT: | Tony Good, Media, +1-972-348-5425, tgood@alldata.net, or Ed Heffernan, Analysts-Investors, +1-972-348-5196, eheff@alldata.net, both of Alliance Data Systems |