EXHIBIT 10.1

EXECUTION VERSION

 

 

 

 

PURCHASE AND SALE AGREEMENT

BY AND AMONG

SANTA BARBARA TAX PRODUCTS GROUP, LLC

PACIFIC CAPITAL BANK, N.A.

AND

PACIFIC CAPITAL BANCORP

JANUARY 14, 2010

 

 

 

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TABLE OF CONTENTS

 

  

ARTICLE 1

DEFINITIONS

   1.1    Definitions    1 1.2    Construction    1   

ARTICLE 2

PURCHASE AND SALE; CLOSING

   2.1    Purchase and Sale    1 2.2    Consideration; Assumed Obligations;
Retained Liabilities    3 2.3    Closing    3 2.4    Closing Deliveries.    3
2.5    Allocation of Consideration    6 2.6    Orderly Transition; Practical
Benefits    6   

ARTICLE 3

REPRESENTATIONS AND WARRANTIES OF SELLER AND HOLDINGS

   3.1    Organization and Qualification    6 3.2    Authority; Enforceability
   7 3.3    No Conflict    7 3.4    Subsidiaries    8 3.5    Financial
Information.    8 3.6    Absence of Changes or Events    8 3.7    Tax Matters.
   9 3.8    Compliance with Agreements    10 3.9    Compliance with Laws    10
3.10    Customers.    10 3.11    Purchased RALs    11 3.12    Proceedings    11
3.13    Employee Liabilities and Employee Benefits.    11 3.14    Real Property.
   12 3.15    Tangible Personal Property    13 3.16    Intellectual Property.   
13 3.17    Sufficiency of Assets    14 3.18    Environmental Matters.    14 3.19
   Contracts.    14 3.20    Fees and Commissions    17 3.21    Transactions with
Directors, Officers, Managers, and Affiliates    17 3.22    Insurance.    17
3.23    Bank Accounts    18 3.24    RAL Committee Minutes    18

 

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ARTICLE 4

REPRESENTATIONS AND WARRANTIES OF PURCHASER

   4.1    Organization and Qualification    18 4.2    Authority; Enforceability
   18 4.3    No Conflict; Authorization    19 4.4    Proceedings    19 4.5   
Fees and Commissions    19   

ARTICLE 5

COVENANTS

   5.1    Confidentiality    19 5.2    Required Consents    19 5.3   
Non-Competition; Non-Solicitation.    20 5.4    Indemnification.    21 5.5   
Access to Records    23 5.6    Negative Covenant    23   

ARTICLE 6

MISCELLANEOUS

   6.1    Public Announcements    23 6.2    Fees and Expenses    23 6.3   
Notices    23 6.4    Headings    25 6.5    Further Assurances    25 6.6   
Successors and Assigns; Assignment; No Third-Party Beneficiaries    25 6.7   
Entire Agreement; Amendment and Waiver    25 6.8    Counterparts    25 6.9   
Governing Law; Severability    25 6.10    No Extinguishment    26 6.11    Rules
of Construction    26

 

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GLOSSARY OF DEFINED TERMS

The location of the definition of each capitalized term used in this Agreement
is set forth in this Glossary:

 

Affiliate

   A-1    Party    1

Agreement

   1    Permits    A-5

Assigned Contract

   A-1    Person    A-5

Assumed Obligations

   A-1    Present Fair Salable Value    A-5

Benefit Plan

   A-1    Purchase Price    3

Books and Records

   A-1    Purchase Price Allocation    6

Business

   A-2    Purchased Assets    2

Closing

   3    Purchased RALs    2

Closing Date

   3    Purchaser    1

Closing Date Cash Consideration

   3    Purchaser Indemnified Persons    21

Code

   A-2    RAL    A-5

Covered Employee

   A-2    RAL Statements    8

Earn-Out Consideration

   5    Regulatory Action    22

Earn-Out Payment Date

   5    Related Person    17

Employee Liabilities

   A-2    Release    A-5

Environmental Laws

   A-2    Required Consents    A-6

Equipment

   A-2    Restricted Parties    20

Equitable Principles

   7    Retained Liabilities    A-5

ERISA

   A-2    RT    A-6

ERISA Affiliate

   A-2    Scheduled Intellectual Property    13

Escrow Agreement

   4    Scheduled Tangible Personal Property    13

Exchange Act

   A-3    Securities Act    A-6

Excluded Assets

   A-3    Seller    1

Facilities

   A-3    Seller Indemnified Persons    22

Family Member

   A-3    Solvent    A-6

Fundamental Representations

   A-3    Subsidiaries    A-6

GAAP

   A-3    Subsidiary    A-6

General Conveyance

   4    Suspended Assets    6

Governmental Entity

   A-3    Tax    A-6

Hazardous Materials

   A-3    Tax Return    A-7

Holdings

   1    Taxes    A-6

Indebtedness

   A-3    Trade Secrets    A-7

Indemnitees

   21    Trademark Assignment    4

Intellectual Property

   A-4    Transaction Documents    A-7

Intermediary

   17    Transition Services Agreement    A-2

Inventory

   A-4    WARN Act    12

JPMorgan

   3      

Law

   A-4      

Laws

   A-4      

Leased Office Space

   12      

Lien

   A-4      

Losses

   21      

Material Adverse Effect

   A-4      

Material Contract

   15      

Non-Competition Period

   20      

Nonsolicitation Period

   20      

Office Lease Agreements Assets

   2      

Order

   A-4      

Organizational Documents

   A-5      

Parties

   1      

 

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PURCHASE AND SALE AGREEMENT

THIS PURCHASE AND SALE AGREEMENT (as amended and restated from time to time in
accordance with Section 8.6, this “Agreement“) is made and entered into as of
January 14, 2010 by and among Pacific Capital Bank, National Association, a
national banking association (“Seller“), Santa Barbara Tax Products Group, LLC,
a Delaware limited liability company (“Purchaser“), and Pacific Capital Bancorp,
a California corporation (“Holdings“). Each of the foregoing is individually
referred to from time to time herein as a “Party“ and collectively as the
“Parties.”

RECITALS

WHEREAS, Seller desires to sell to Purchaser, and Purchaser desires to purchase
from Seller, the Purchased Assets (as defined below) on the terms set forth
herein;

NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained in this Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged by the Parties, the
Parties hereby agree as follows:

AGREEMENTS

ARTICLE 1

DEFINITIONS

1.1 Definitions. In addition to the terms defined in the body of this Agreement,
capitalized terms used herein shall have the meanings given to them in Exhibit
A. The Glossary, which follows the Table of Contents, sets forth the location in
this Agreement of the definition for each capitalized term used herein.

1.2 Construction. Unless the context requires otherwise: (a) the gender (or lack
of gender) of all words used in this Agreement includes the masculine, feminine,
and neuter; (b) references to Articles and Sections refer to articles and
sections of this Agreement; (c) references to Exhibits and Schedules are to
exhibits and schedules attached to this Agreement, each of which is made a part
of this Agreement for all purposes; (d) references to money refer to legal
currency of the United States of America; and (e) the word “including” means
“including without limitation.”

ARTICLE 2

PURCHASE AND SALE; CLOSING

2.1 Purchase and Sale. On the terms set forth in this Agreement and in reliance
upon the representations and warranties of the Parties, at the Closing, Seller
shall sell and, except as provided in Section 2.6, transfer, convey, assign and
deliver to Purchaser, and Purchaser will purchase and, except as set forth in
Section 2.6, accept from Seller, all of the assets and properties owned,
licensed, used or held for use in the Business, whether real, personal or mixed,
tangible or intangible, including, but not limited to, the following
(collectively, but excluding the

 

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Excluded Assets, the “Purchased Assets“) in exchange for the Purchase Price (as
defined below):

(a) the right, title and interest of Seller, as tenant, under office lease
agreements listed on Schedule 2.1(a) (the “Office Lease Agreements“);

(b) all Equipment, all Inventory and all other Tangible Personal Property of
Seller or its Affiliates used or held for use in the operation of the Business;

(c) the Assigned Contracts;

(d) the Intellectual Property, including the all Scheduled Intellectual
Property;

(e) the Permits, including the Scheduled Permits;

(f) all of Seller’s rights to receive payment on outstanding refund anticipation
loans advanced by Seller prior to the date hereof and all rights of setoff or
counterclaim of Seller with respect to the collection thereof (collectively,
including such collection rights, the “Purchased RALs“);

(g) all Books and Records of Seller related to the operation of the Business;

(h) the fictitious (or “doing business as”) name SBBT E-Filing Financial
Services;

(i) all deposits held by Seller (which, for purposes of clarification, is not
intended to include bank deposits), prepaid expenses, credits, claims for
refunds (excluding Tax refunds), advance payments, security deposits and other
deposits and rights of offset, that are related to the Business;

(j) all claims and defenses of Seller against third parties to the extent
relating to the Purchased Assets, or the Business as conducted by Seller,
whether choate or inchoate, known or unknown, contingent or noncontingent,
including all rights of Seller under or pursuant to all warranties,
representations and guarantees made by suppliers, manufacturers and contractors
in connection with products or services purchased by Seller in respect of the
Business;

(k) the right to receive and retain Seller’s mail and other communications
relating to the Business;

(l) all of Seller’s telephone numbers, fax numbers, domain names, URLs, web site
design and e-commerce functions, in each case, used for or in the Business;

(m) all of Seller’s preprinted advertising, marketing and promotional materials,
studies, reports and all other printed or written materials, in each case, used
in the Business, but excluding any such items that include the name of Seller or
an Affiliate of Seller, unless the name “SBBT E-Filing Financial Services” is
used therein or thereon;

 

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(n) accounts and other receivables from customers of the Business pertaining to
amounts previously paid by Seller to customers of the Business;

(o) all of the goodwill of the Business and Purchased Assets; and

(p) all other assets, rights and properties of Seller of every kind that are
used in the operation of the Business whether known or unknown, fixed or
unfixed, accrued, absolute, contingent or otherwise, and whether or not
specifically referred to in this Agreement. It is understood, however, that no
loan origination capacity is being transferred as part of the Business.

2.2 Consideration; Assumed Obligations; Retained Liabilities. The entire
consideration (the “Purchase Price“) payable by Purchaser for the Purchased
Assets shall consist of (a) cash in the amount of $10,000,000 which has been
delivered by Purchaser to JPMorgan Chase Bank, National Association (“JP
Morgan“) as of the date hereof and which shall be payable to Seller by JP Morgan
as follows: (i) $5,000,000 of which shall be released to Seller on January 14,
2010 (the “Closing Date Cash Consideration“), and (ii) $5,000,000 (the “Escrowed
Consideration”) shall be payable upon satisfaction of the conditions set forth
in the Escrow Agreement (as defined below); (b) the assumption by Purchaser of
the Assumed Obligations; and (c) the Earn-Out Consideration earned and payable
as provided in Section 2.4(c). It is understood and agreed that Seller shall
retain all responsibility for all debts, claims, obligations and liabilities of
Seller other than the Assumed Obligations including those relating to the
Retained Liabilities.

2.3 Closing. The closing of the transactions contemplated by this Agreement and
the other Transaction Documents (the “Closing“) shall take place on January 14,
2010 (the “Closing Date“), and the Closing shall occur electronically (by email
and telecopy) and by mail and courier, to the extent practicable, unless
physical delivery of original counterparts is required or requested by any Party
in which case such physical delivery shall occur at the offices of Willkie
Farr & Gallagher LLP, 787 Seventh Avenue, New York, New York 10019. The Closing
shall be effective as of 12:01 a.m., New York City time, on the Closing Date.

2.4 Closing Deliveries.

(a) Closing Deliveries of Seller. At the Closing, Seller shall execute and
deliver, as applicable, or cause to be executed and delivered, to Purchaser, the
following documents, where the execution or delivery of documents is
contemplated, and shall take or cause to be taken the following actions, where
the taking of action is contemplated (in each case, except to the extent waived
by Purchaser):

(i) certificate from the Office of Comptroller of the Currency dated not more
than thirty days prior to the Closing Date, as to the existence and good
standing of Seller;

(ii) resolutions duly adopted by the board of directors of Seller authorizing
the execution and delivery by Seller of this Agreement and the other Transaction
Documents and the performance by Seller of the transactions contemplated hereby
and thereby, duly certified by the Secretary or an Assistant Secretary of
Seller, and incumbency certificates,

 

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certifying the names and true signatures of the representatives of each such
Person authorized to execute and deliver this Agreement and the Transaction
Documents;

(iii) a General Conveyance, Assignment, Bill of Sale and Assumption Agreement in
a form acceptable to the Parties (the “General Conveyance“), duly executed and
delivered by Seller;

(iv) an Assignment of Tradename in a form acceptable to the Parties (the
“Tradename Assignment“) with respect to the name “SBBT E-Filing Financial
Services”;

(v) an Assignment of the Domain Names in a form acceptable to the Parties;

(vi) UCC-3 releases with respect to the financing statements on record that
relate to the Business;

(vii) the Business Transition Agreement and each of the other Transaction
Documents to which Seller is a party in each case, duly executed by Seller;

(viii) the Required Consents, in form reasonably acceptable to the Parties;

(ix) an opinion of counsel in form satisfactory to the Parties; and

(x) that certain Second Amended and Restated Escrow Agreement by and among the
parties set forth therein dated as of the Closing Date, in form reasonably
acceptable to the Parties (the “Escrow Agreement“).

(b) Closing Deliveries of Purchaser. At the Closing, Purchaser shall execute
and/or deliver, as applicable, or cause to be executed and/or delivered to
Seller, the following documents, where the execution or delivery of documents is
contemplated, and shall take or cause to be taken the following actions, where
the taking of action is contemplated (in each case, except to the extent waived
by Seller):

(i) From the escrow with JP Morgan, by wire transfer in immediately available
funds to an account designated by Seller, the payment of the Closing Date Cash
Consideration;

(ii) the Business Transition Agreement, duly executed and delivered by
Purchaser;

(iii) the General Conveyance, duly executed and delivered by Purchaser;

(iv) a release, in form satisfactory to the Parties, from each of Rich Turner,
Jeffrey Henseler, Doug Burcombe and Steven Varga of any and all obligations and
liabilities of Seller and Holdings to make (A) any retention bonus or change of
control payment under the terms of the existing employment agreement or
otherwise, or (B) any other payment as

 

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such employees and Seller shall agree to release to each such releasing party,
and acknowledging that Purchaser would not have entered into certain
compensation arrangements with each of the foregoing individuals in the absence
of their release of retention bonus payments due from Seller (which fact
Purchaser hereby represents to Seller);

(v) an agreement, in form satisfactory to the Seller, by the equity investors of
Purchaser, that the Purchaser will not make any distributions that are
inconsistent with Purchaser’s covenants in Section 5.6 of this Agreement;

(vi) an opinion of counsel in form satisfactory to the Parties;

(vii) the Escrow Agreement in form reasonably acceptable to the Parties; and

(viii) such other documents as may be reasonably required to consummate the
transactions contemplated by this Agreement and the Transaction Agreements.

(c) Earn-Out Consideration. Not later than June 30, 2010 (the “Earn-Out Payment
Date“), Purchaser shall pay to Seller, by wire transfer in immediately available
funds to an account designated by Seller, the dollar amount specified in the
chart below that correlates to the number of RALs actual processed by Purchaser
between January 1, 2010 and April 30, 2010 (the “Earn-Out Consideration“):

 

# of RALs Processed by Purchaser    Aggregate Earn-Out Consideration

Less than 750,000

   $0

Greater than 750,000 and less than 900,000

   $15,000,000

Greater than 900,000 and less than 1,050,000

   $17,000,000

Greater than 1,050,000 and less than 1,200,000

   $19,000,000

Greater than 1,200,000 and less than 1,350,000

   $21,000,000

Greater than 1,350,000 and less than 1,500,000

   $23,000,000

Greater than 1,500,000

   $25,000,000

Not later than the Earn-Out Payment Date, Purchaser shall deliver to Seller a
report, certified by an executive officer of Purchaser, supporting the
calculation of the Earn-Out Consideration. If Seller contests the calculation,
Seller shall notify Purchaser, whereupon Purchaser shall provide such additional
access to its records as Seller may reasonably request to enable Seller to audit
the calculation. If, after review of such records, the parties are unable to
reach agreement as to the amount of the Earn-Out Consideration within 30 days
after the Earn-Out Payment Date, either party may initiate an arbitration to
resolve the controversy. Such arbitration shall be determined by arbitration in
Los Angeles, Californian, before one arbitrator. The arbitration shall be
administered by the Judicial Arbitration and Mediation Service (JAMS) pursuant
to its Streamlined Arbitration Rules and Procedures. Judgment on the award may
be entered in any court having jurisdiction. The arbitrator may, in the award,
allocate all or part of the costs of the arbitration, including the fees of the
arbitrator and the reasonable attorneys’ fees of the prevailing party, in the
manner the arbitrator determines is fair and equitable to the Parties.

 

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2.5 Allocation of Consideration. Purchaser and Seller agree to allocate the
Purchase Price and all other capitalized costs among the Purchased Assets
following the Closing Date in the manner set forth in Schedule 2.5 (the
“Purchase Price Allocation“). As soon as practicable after the Closing Date,
Purchaser and Seller shall jointly prepare IRS Form 8594, which shall be used by
both Purchaser and Seller to report the Purchase Price Allocation in compliance
with the Code and other applicable U.S. tax authority. Purchaser and Seller
shall adopt and utilize, and shall cause their respective Affiliates to adopt
and utilize, the Purchase Price Allocation for the purpose of all Tax Returns
filed by them or their Affiliates and shall not take any position that is
inconsistent with the Purchase Price Allocation on any Tax Return or other
filing, or upon examination of any Tax Return in any refund claim or in any
litigation or otherwise, unless required by applicable Law. Purchaser and Seller
shall timely file, and shall cause their respective Affiliates to timely file,
such reports and information returns (including the jointly prepared IRS Form
8594) as may be required under the Code and any applicable United States
Treasury Regulations and any corresponding provisions of applicable state or
foreign Laws to report the allocation of the Purchase Price among the Assets in
accordance with the Purchase Price Allocation.

2.6 Orderly Transition; Practical Benefits. Notwithstanding the fact that
Purchaser is paying the Closing Date Cash Consideration and assuming the Assumed
Obligations in exchange for the Purchased Assets on the Closing Date, Purchaser
and Seller have a mutual interest in ensuring that the Business transitions from
Seller to Purchaser in an orderly manner. Accordingly, the Parties will perform
the respective functions as provided in the Business Transition Agreement on the
terms set forth therein. Notwithstanding anything to the contrary in this
Agreement, nothing in Article 2 shall operate to assign any Purchased Asset if
and to the extent the assignment thereof to Purchaser would require the consent
of any third party that has not been obtained or would otherwise result in a
violation of Law or contract (collectively, the “Suspended Assets“). From and
after the date hereof, Purchaser and Seller will cooperate in all reasonable
respects to secure such consents, permissions, novations and other matters as
are necessary for Seller to assign the Suspended Assets to Purchaser at an
agreed upon time (taking into account the transition arrangements set forth in
the Business Transition Agreement) without violating any Law or contractual
restriction. Until such time as such consent, permission, novation or other
matter is obtained in order to validly assign a Suspended Asset from Seller to
Purchaser, Purchaser and Seller will enter into such arrangements as are
commercially reasonable whereby (a) Purchaser receives the full benefit arising
from each such Suspended Asset that otherwise would inure to Seller and
(b) Purchaser assumes all Assumed Obligations arising from each Suspended Asset
to the extent Purchaser received the benefits arising therefrom. Seller shall
bear all costs and expenses incurred to deliver the Purchased Assets to
Purchaser including those incurred to obtain consent to assign the Suspended
Assets to Purchaser.

ARTICLE 3

REPRESENTATIONS AND WARRANTIES OF SELLER AND HOLDINGS

Seller and Holdings jointly and severally represent and warrant to Purchaser as
follows:

3.1 Organization and Qualification. Seller is a national banking association
that has been duly organized and incorporated, validly existing and in good
standing under the laws of

 

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the United States. Seller has the requisite organizational power and authority
to own, lease and operate its assets (including the Purchased Assets) and to
carry on the Business as now being conducted. Holdings is a corporation and has
been duly formed or organized under the laws of the State of California and is
validly existing under the laws of the jurisdiction of its formation or
organization. Each of Seller and Holdings is qualified to transact business and,
where the concept of “good standing” is applicable in such jurisdictions, is in
good standing as a foreign corporation in the jurisdictions where it is required
to qualify or register in order to conduct the Business as presently conducted,
except where the failure to be so qualified would not have a Material Adverse
Effect on the Business, the Purchased Assets or the consummation of the
transactions contemplated hereby. Seller is an “insured depositary institution”
as defined in the Federal Deposit Insurance Act.

3.2 Authority; Enforceability. Each of Seller and Holdings has all requisite
power and authority to execute and deliver this Agreement and the other
Transaction Documents to which it is a party, to consummate the transactions
contemplated hereby and thereby and to perform all of the terms and conditions
hereof and thereof to be performed by it. This Agreement and the other
Transaction Documents to which each of Seller and Holdings is a party have been
duly executed and delivered by Seller and Holdings. Each of Seller and Holdings
has obtained all necessary consents, authorizations, approvals and orders,
including consents required, if any, under any applicable Law, each of the
Material Contracts and under its Organizational Documents, and has made all
registrations, qualifications, designations, declarations or filings with all
federal, state, or other relevant Governmental Entities, required in connection
with the consummation of the transactions contemplated by this Agreement and the
other Transaction Documents and no other proceedings or actions on the part of
Seller is necessary to authorize such execution, delivery and consummation. This
Agreement and the other Transaction Documents to which each of Seller and
Holdings is a party constitute the valid and binding obligations of Seller or
Holdings, as applicable,, each enforceable against Seller or Holdings, as
applicable, in accordance with the terms thereof, subject to applicable
bankruptcy, insolvency or other similar laws relating to or affecting the
enforcement of creditors’ rights generally and general equitable principles
(regardless of whether such enforceability is considered in a proceeding at law
or in equity) (collectively, “Equitable Principles“).

3.3 No Conflict. Except as disclosed on the attached Schedule 3.3, the execution
of this Agreement and the other Transaction Documents by Seller and Holdings and
the performance of the transactions contemplated hereby and thereby by Seller
and Holdings will not (a) violate, conflict with, result in a default under or
require consent under any contract to which Seller or Holdings is a party or by
which any of the assets (including the Purchased Assets) of Seller and Holdings
are bound, or any provision of the Organizational Documents of Seller or
Holdings or cause the creation of any Lien upon any of the assets (including the
Purchased Assets) of the Business, (b) violate or result in a violation of, or
constitute a default (whether after the giving of notice, lapse of time or both)
under, any Law, (c) accelerate any obligation under, or give rise to a right of
termination of, any Material Contract, permit, license or authorization to which
Seller or Holdings is a party or by which any of its assets are (including the
Purchased Assets) bound or affected, (d) with respect to the Material Contracts
and Office Lease Agreements, require the affirmative consent or approval of any
Governmental Entity; (e) conflict with or result in a breach (with notice or
lapse of time or both) of any judgment, order, decree or ruling to which Seller
or Holdings is subject, or by which it or any of its property is

 

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bound or any injunction of any court or Governmental Authority to which it or
any of its property is subject, (f) result in the acceleration of any amount
payable by, or give rise to any additional payment by, or obligation of, Seller
or Holdings, or (g) pursuant to a preferential purchase right, right of first
refusal or offer, buy-sell arrangement or other provision, trigger the right of
any Person to acquire all or any part of the Purchased Assets.

3.4 Subsidiaries. No subsidiary or Affiliate of Seller is or has been engaged in
the Business.

3.5 Financial Information.

(a) Seller has delivered to Purchaser true and complete copies of the following
financial statements relating to the conduct of the Business by Seller (the “RAL
Statements“):

(i) the unaudited pro forma financial statements of the Business as conducted by
Seller for the 2007, 2008 and 2009 tax seasons (i.e., tax returns related to
calendar years 2006, 2007 and 2008); and

(ii) the unaudited balance sheet for the Business as conducted by Seller as of
September 30, 2009 and the related unaudited statements of income for the
Business as conducted by Seller during the period January 1, 2009 to
September 30, 2009 (each of which is attached hereto as Schedule 3.5).

(b) Immediately after giving effect to the transactions contemplated by this
Agreement, assuming the accuracy of the representations and warranties of
Purchaser set forth herein, Seller shall be Solvent. No transfer of property is
being made and no obligation is being incurred in connection with the
transactions contemplated by this Agreement with the intent to hinder, delay or
defraud either present or future creditors of Seller or any of its Subsidiaries.

(c) The RAL Statements have been prepared based on the Books and Records of
Seller in accordance with Seller’s historical accounting practices, consistently
applied throughout the periods indicated and fairly present the financial
position of Seller, the results of its operations and cash flow as of the dates
and for the periods indicated therein.

(d) All financial projections, forecasts and other forward-looking information
provided by or on behalf of Seller to Purchaser with respect to Seller and the
Business were, as of their respective dates, prepared in good faith and on a
basis that management of Seller believes to be reasonable.

3.6 Absence of Changes or Events. Since December 31, 2008, except as disclosed
on Schedule 3.6, Seller has operated the Business and its assets (including the
Purchased Assets) in the ordinary and usual course of business of the Business.
Without limiting the foregoing, since December 31, 2008, there has not occurred
or been:

(i) event or change in the business, operations, assets, liabilities, condition
(financial or otherwise) or results of operations of the Business that,
individually or in the aggregate, has had or is reasonably likely to have a
Material Adverse Effect;

 

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(ii) any damage, destruction or loss (whether or not covered by insurance)
affecting any portion of the Purchased Assets that, individually or in the
aggregate, has had or is reasonably likely to have a Material Adverse Effect;

(iii) any change in the accounting methods or practices, collection policies,
pricing policies or payment policies of Seller, and Seller has consistently
applied such methods, practices and policies;

(iv) any material change in the operation or maintenance of the Purchased
Assets;

(v) any loss or suspension of any of the material Permits of Seller related to
the ownership or operations of the Purchased Assets or the Business;

(vi) any transfer, abandonment, grant of exclusive license or disposition of any
Intellectual Property of Seller;

(vii) any sale, transfer, lease, abandonment or other disposition of any of the
Purchased Assets;

(viii) any grant or increase in the compensation of any of the managers,
officers and employees of Seller except in the ordinary course of business of
the Business, or any loss of the employment, services or benefits of any key
employee of the Business; or

(ix) any authorization, approval, agreement, commitment or contract to do any of
the foregoing.

3.7 Tax Matters.

(a) (i) Seller has filed, on or prior to the due date (after giving effect to
any extensions), all Tax Returns required by applicable Law to have been filed
with respect to Seller, and all Taxes shown to be due by Seller on such Tax
Returns have been timely paid; (ii) all such Tax Returns were true, correct and
complete as of the time of such filing; and (iii) all Taxes owed by Seller
(whether or not shown on any Tax Return), if required to have been paid, have
been paid.

(b) Since January 1, 2005, no claim has been made by any Tax authority in a
jurisdiction where Seller has not filed a Tax Return that Seller is or may be
subject to Tax by such jurisdiction in connection with the Business, nor is any
such assertion overtly threatened.

(c) Seller has withheld all Taxes required to have been withheld by it in
connection with any amounts paid to any employee, creditor, independent
contractor or other third party relating to the Business, and has paid over to
the proper Governmental Entity all amounts required to have been so withheld and
paid over.

(d) Seller has collected all appropriate sales taxes and/or have obtained the
appropriate exemption certificates to exempt Seller from collecting any sales
tax that would otherwise be due.

 

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(e) The consummation of the transactions contemplated hereby will not result in
any sales, transfer, use or similar Tax becoming due.

3.8 Compliance with Agreements. Except as set forth on Schedule 3.8, Seller has
performed in all material respects all obligations required to be performed by
it under, and it is not in default in any material respect under, or in
violation in any material respect of, the terms and conditions of its Articles
of Incorporation or Bylaws, and/or any contract, agreement, lease, mortgage,
note, bond, indenture, license, obligation, understanding, or other undertaking
(whether oral or written) to which Seller is bound in connection with the
conduct of the Business or by which it, any of its properties or assets used in
connection with the conduct of the Business may be affected, which default or
violation would have a Material Adverse Effect on Seller.

3.9 Compliance with Laws. Seller has been in compliance and is in compliance in
all material respects with all Laws (including those relating to the employees
of the Business) and has originated, administered and services all Purchased
RALs in compliance in all material respects with all Laws and applicable
regulations applicable to the Business, including, without limitation, all
regulations and orders of any applicable Governmental Entity. There are no
material and uncured or unremedied deficiencies with respect to or affecting the
Business, or the Purchased Assets or Assumed Obligations, noted in internal
audit reports or reports of examination of a Governmental Entity. Seller has not
received any written notice of any violation of, or commencement of any
proceeding in connection with, any violation of the federal Bank Secrecy Act
with respect to any of the Purchased RALs (including, but not limited to any
hearing or investigation related to the imposition of fines or penalties) and
does not know of any violation of the Bank Secrecy Act or any similar anti-money
laundering statute or regulation which has been violated by Seller or any of its
employees with respect to the Purchased RALs.

(a) Except as set forth in Schedule 3.9, Seller is not a party to any written
agreement or memorandum of understanding with, or order or directive from, any
Governmental Entity.

3.10 Customers.

(a) Schedule 3.10(a) sets forth (i) a true and complete list of the 13 largest
electronic return originators, transmitters and other customers of the Business
based on the volume of RAL and RT transactions to Seller from bank products
provided by Seller in the Business during the last three tax seasons, and (ii) a
true and complete list of the 13 largest electronic return originators,
transmitters and other customers of the Business based on the dollar amount of
fees to the Seller attributable to each such customer for each of last three tax
seasons (such customers listed on Schedule 3.10(a), the “Key Customers”).

(b) Schedule 3.10(b) references all indications of which Seller has knowledge
from any Key Customer whereby such Key Customer has or is considering
terminating or significantly and adversely changing its relationship with Seller
as it relates to the Business as compared to the relationship that existed
during the last, i.e. 2009, tax season. To the knowledge of Seller, each of the
Key Customers is planning to provide, is prepared to provide, and is not
restricted from providing (by court order, law or otherwise) RALs, RTs and other
bank products

 

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furnished by the Business for the next tax season (i.e. 2010) at an activity
level that is consistent in all material respects with those provided during the
2009 tax season.

3.11 Purchased RALs. Schedule 3.11 identifies all Purchased RALs. All Purchased
RALs (a) have resulted from bona fide business transactions in the ordinary
course of Seller’s operations; (b) in all material respects were made in
accordance with Seller’s customary loan policies and procedures; (c) are not
subject to offset or counterclaim and (d) are owned by Seller free and clear of
all liens, encumbrances, assignments, participation or repurchase agreements, or
other exceptions to title or to the ownership or collection rights of any other
person or entity.

3.12 Proceedings. Except as set forth in Schedule 3.12, there is no suit,
action, proceeding, administrative or governmental inquiry or investigation is
pending or, to the knowledge of Seller, is threatened against Seller, the
Purchased Assets or the Business, or any of Seller’s officers, managers, members
or employees (in their capacity as such) before any court, arbitration board or
tribunal or administrative or other Governmental Entity, in each case relating
to the Business. Except as set forth in Schedule 3.12, none of Seller, the
Business nor the Purchased Assets is a party to or subject to the provisions of
any Order. Schedule 3.12 set forth a true and complete list of all suits,
actions and similar proceedings relating to the Business that have been
initiated, asserted or filed by or against Seller, alone or with others.

3.13 Employee Liabilities and Employee Benefits.

(a) Schedule 3.13(a) is a true and complete list of the names, positions,
employing entity and current annual salary or hourly rate of all employees of
Seller whose time is dedicated in full or primarily to the Business (each, a
“Business Employee”), which list includes for each such Person his or her base
salary and any other monetary compensation paid or expected to be paid with
respect to calendar year 2009. Except as set forth on Schedule 3.13(a), there
are no employment, consulting, management, severance, retention, change of
control or other similar agreements, policies or arrangements between Seller and
any of such employees or any independent contractors providing services to the
Business that are not terminable at will without severance, salary continuation,
retention bonus or other monetary payment.

(b) Schedule 3.13(b) lists each Benefit Plan applicable to any of the Business
Employees. Seller has provided Purchaser a true and complete copy of each such
Benefit Plan.

(c) No Benefit Plan is, and neither Seller nor any of its ERISA Affiliates has
ever maintained or been obligated to contribute to, a multiemployer plan within
the meaning of Section 3(37) of ERISA or any other employee pension benefit plan
(within the meaning of Section 3(2) of ERISA) that is subject to Title IV or
Section 302 of ERISA or Section 412 of 4971 of the Code.

(d) (i) Except as set forth on Schedule 3.13(d), Seller is not a party to any
outstanding employment agreements or contracts with officers, directors or
employees that are not terminable at will without any ongoing obligations, or
that provide for the payment of any bonus or commission; (ii) Seller is not a
party to any agreement, policy or practice that requires it to pay termination,
change of control or severance pay to any Business Employee or independent

 

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contractor providing services to the Business; (iii) Seller is not a party to
any collective bargaining agreement or other labor union contract applicable to
any Business Employee nor does Seller know of any activities or proceedings of
any labor union within the preceding three years to organize any such employees;
and (iv) Seller is not a party to any consulting agreements with any individual
providing services relating to the Business that are not terminable at-will
without any ongoing obligations, or that provide for the payment of any bonus or
commission.

(e) Since December 31, 2005, there has been no “mass layoff” or “plant closing”
as defined by the Worker Adjustment and Retraining Notification Act (the “WARN
Act“) or any similar state or local “plant closing” Law with respect to the
current or former employees of Seller.

3.14 Real Property.

(a) The only real property interests used or held for use by Seller in the
Business consist of Seller’s interest in the Office Lease Agreements including
the leasehold interests reflected thereby (the “Leased Office Space“)

(b) Each Office Lease Agreement is valid, binding and enforceable against Seller
and, to the knowledge of Seller, each of the other parties thereto in accordance
with its terms. None of the Leased Office Space is subject to any sublease,
license or other agreement granting to any third party any right to the use,
occupancy or enjoyment of such property or any portion thereof. To the knowledge
of Seller, all material buildings, structures, fixtures, building systems and
equipment included in or that make up the Leased Office Space are in reasonably
good condition and repair and are sufficient for the operation of the Business.
The use and operation of the Leased Office Space in the conduct of the Business
does not (i) to the knowledge of Seller, violate any instrument of record or
agreement or (ii) violate any applicable laws, rules, regulations and
ordinances, in each case, except for violations that, individually or in the
aggregate, would not reasonably be expected to materially interfere with the
present use of the relevant Leased Office Space.

(c) No option to renew, extend or otherwise modify any Office Lease Agreement
has been entered into or exercised by Seller or, to the knowledge of Seller, by
any other party thereto.

(d) No party to any Office Lease Agreement has given Seller notice of, or made a
claim with respect to, any breach or default of such Lease by Seller, and to the
knowledge of Seller, no event has occurred which, with the giving of notice or
the passage of time or both, would constitute such a breach or default.

(e) No real property interest, other than the Leased Office Space, is required
to be owned, leased and/or otherwise used or occupied by Seller to operate the
Business in a manner consistent with the manner in which the Business has been
operated by Seller since January 1, 2009.

(f) Seller has not received any notice of any appropriation, condemnation or
like proceeding, or of any violation of any applicable zoning Law or Order
relating to or

 

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affecting the Leased Office Space, and no such proceeding has been threatened or
commenced, and no such proceeding is pending.

(g) To Seller’s knowledge, none of the Leased Office Space is within any area
determined by the Department of Housing and Urban Development to be flood prone
under the Federal Flood Disaster Protection Act of 1973. Seller has such rights
of entry to and exit from the Leased Office Space and the facilities located
thereon as is necessary to carry on the Business consistent with past practices.
All utilities (including water, sewer, gas, electricity, trash removal and
telephone service) are available to the Business in sufficient quantities and
quality to carry on the Business consistent with past practices.

3.15 Tangible Personal Property. Schedule 3.15 identifies tangible personal
property included in the Purchased Assets with a book value in excess of $5,000.
Each item listed or required to be listed on Schedule 3.15 (collectively, the
“Scheduled Tangible Personal Property“) is in good working order and repair,
reasonable wear and tear excepted and has been operated and maintained in the
ordinary course of business of the Business and consistent with prudent industry
standards and remains in suitable and adequate condition for use consistent with
past practices and prudent industry practices of the Business. Seller is vested
with good and valid title in and to, or a valid lease or other use agreement
with respect to, each item of Scheduled Tangible Personal Property, and such
title or right of use is free and clear of Liens. The tangible personal property
and assets owned or leased by Seller constitute all of the tangible personal
property and assets used or held for use in connection with the Business and are
adequate to conduct the Business as currently conducted by Seller. At Closing,
Seller will convey to Purchaser good and marketable title to the Tangible
Personal Property, free and clear of all Liens. Schedule 3.15 sets forth any
defect or condition or related series of defects or conditions affecting the
Equipment that is reasonably likely to require an expenditure of $10,000 or more
out of the ordinary course of business over the 12-month period following the
Closing Date. Seller has not intentionally deferred maintenance to any piece of
Equipment in contemplation of transactions of the sort contemplated by this
Agreement.

3.16 Intellectual Property.

(a) Schedule 3.16(a) sets forth a true and complete list of all Intellectual
Property (including, but not limited to, all software) that is used by, or in
the operation of, the Business (collectively, “Scheduled Intellectual
Property“). All Scheduled Intellectual Property is valid, subsisting and
enforceable.

(b) Seller has valid title to or valid right to use each item of Scheduled
Intellectual Property. Seller is in compliance with all contractual obligations
relating to the protection of the Scheduled Intellectual Property. The operation
of the Business as currently conducted does not infringe, misappropriate or
violate the Intellectual Property rights of others.

(c) Seller has not made or threatened any claim of a violation, infringement,
misuse or misappropriation by any third party (including any employee or former
employee of Seller) of any Scheduled Intellectual Property owned by Seller which
claim is pending. Seller has not entered into any agreement to indemnify any
other Person against any charge of infringement of any Scheduled Intellectual
Property. The consummation of the transactions

 

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contemplated hereby and by the Transaction Documents will not alter or impair in
any material respect the Scheduled Intellectual Property or the rights of
Seller.

(d) Seller has taken all commercially reasonable actions to protect and maintain
the Scheduled Intellectual Property. Seller has taken commercially reasonable
steps, including, without limitation, the execution of appropriate
confidentiality agreements, to protect and preserve the confidentiality of
Seller’s Trade Secrets relating to the Business, including proprietary customer
data and owned confidential databases.

(e) No current or former employee or consultant of Seller owns any right, title
or interest in or to any Scheduled Intellectual Property or software or
technology owned or purported to be owned by Seller. Seller has obtained written
agreements from each employee and contractor of the Business ensuring that all
Intellectual Property developed by such persons is owned exclusively by Seller.

3.17 Sufficiency of Assets. The Purchased Assets and those other assets listed
on Schedule 3.17 constitute all of the material assets which are used or held
for use by Seller in the operation of the Business as conducted since January 1,
2009.

3.18 Environmental Matters.

(a) Seller, in its conduct of the Business, is and has been in compliance in all
material respects with all applicable Environmental Laws, which compliance
includes, but is not limited to, obtaining, maintaining and complying in
material respects with all prior and current Permits and other authorizations
required under applicable Environmental Laws. Schedule 3.18 contains a list of
all current Permits related to Environmental Laws that pertain to the Business
or the premises at which the Business is conducted.

(b) Seller has not received, and is not subject to, any written notice of a
violation or potential liability, order, written agreement or settlement, and to
the knowledge of Seller, none are threatened, related to applicable
Environmental Laws from any Person or any Governmental Entity inquiry, request
for information, or demand letter related to applicable Environmental Law and
relating to the Business or owned or leased properties used in the Business
(including, without limitation, properties to which Seller’s waste has been
sent), whether currently or formerly owned or operated, of Seller or its
predecessors as of the date hereof.

(c) There has been no Release or threatened Release of Hazardous Materials by
Seller or any Person at, on, under, migrating to, or from any of the real
property currently or formerly owned or leased by Seller and used in the
Business.

(d) Seller has delivered to Purchaser copies of all environmental studies,
investigations, reports or assessments prepared by or for Seller concerning
Seller, the real property owned or leased by them and any real property
previously owned, operated or used for disposal by Seller or its predecessors in
relation to the Business or premised used in the Business.

3.19 Contracts.

 

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(a) Schedule 3.19 sets forth a complete and correct list of each of the
following contracts (including any amendment, supplement or modification,
whether written or verbal, thereto) to which Seller is a party and which relates
to the Business or any of the Purchased Assets (each, a “Material Contract“)
other than those which have terminated in accordance with their terms or by
consent of the Parties thereto (and which have no continuing rights or
obligations thereunder):

(i) any financial services agreement, transmitter agreement and similar
agreement entered into by Seller in connection with the conduct of the Business;

(ii) any contract entered into by Seller and a Key Customer;

(iii) any agreement entered into by Seller relating to the outsourcing of
customer service;

(iv) any voice response unit and maintenance agreement entered into by Seller;

(v) any agreement pursuant to which Seller engaged a collection agency on its
behalf;

(vi) any credit reporting agreement entered into by Seller, including but not
limited to Lexis Nexis and Experian credit reporting agreements;

(vii) any agreement entered into between Seller and a temporary staffing
agencies regarding temporary employment by Seller;

(viii) all agreements relating to the destruction or retention and preservation
of documents;

(ix) any agreements relating to disaster recovery;

(x) any agreement relating to lobbying activities of Seller or any Person
engaged by Seller in connection with the conduct of the Business;

(xi) any agreements relating to telephones and communication systems used by
Seller in the conduct of the Business;

(xii) all mystery shop and customer survey agreements;

(xiii) any contract for the purchase, sale or license of materials, supplies,
goods, services, equipment or other assets or rights (including Intellectual
Property) that provides for, or for which transactions entered into or made
pursuant thereto have generated, either (A) annual payments by Seller of $20,000
or more or (B) aggregate payments during the term of such contract or agreement
by such entity of $50,000 or more;

(xiv) any sales, distribution or other similar contract providing for the sale
by Seller of materials, supplies, goods, services, equipment or other assets or
rights

 

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(including Intellectual Property) that provides for, or for which transactions
entered into or made pursuant thereto have generated, either (A) annual payments
to Seller of $20,000 or more or (B) aggregate payments during the term of such
contract or agreement to such entity of $50,000 or more;

(xv) any contract relating to or affecting the use of any Scheduled Tangible
Personal Property which involve annual rental maintenance or other payments in
excess of $10,000;

(xvi) any contract pertaining to the use or license of any Scheduled
Intellectual Property that involves annual payments in excess of $10,000;

(xvii) any joint venture, partnership, limited liability company or other
agreement involving a sharing of profits, losses, costs or liabilities by Seller
with any other Person;

(xviii) any mortgage, indenture, security agreement, guaranty, letter of credit
or other agreement or instrument relating to the borrowing of money or extension
of credit (other than accounts receivable and accounts payable in the ordinary
course of business consistent with past practice or security therefor);

(xix) any contracts, agreements, purchase orders or contract awards with
Governmental Entities reasonably anticipated to involve payments to or by Seller
of more than $10,000 annually;

(xx) any contracts imposing confidentiality obligations on Seller or any of its
Affiliates or any of their employees, officers and agents thereof;

(xxi) any Lease;

(xxii) any non-competition agreement or any other agreement or obligation which
purports to limit (A) the manner in which, or the localities in which, the
Business may be conducted or (B) the ability of Seller to provide any type of
service relating to the Business; and

(xxiii) any contract that grants any Person the exclusive right to sell products
or provide services within any geographical region.

(b) With respect to each Material Contract, except as set forth in Schedule
3.19]: (i) such Material Contract is the legal and valid obligation of Seller
and, to the knowledge of Seller, of each other party thereto, and constitutes
the binding and enforceable obligation of Seller and, to the knowledge of
Seller, of each other party thereto, in accordance with its terms; (ii) such
Material Contract has not been terminated, and Seller is not, nor, to the
knowledge of Seller, is any other Person, in breach or default thereunder and,
to the knowledge of Seller, no event has occurred (including any event that with
notice or lapse of time, or both) that would constitute a material breach or
default, or permit termination, modification in any manner adverse to Purchaser
or the Business or acceleration thereunder; (iii) to the knowledge of Seller, no
party has asserted nor has (except by operation of Law) any right to offset,
discount or

 

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otherwise abate any amount owing under such Material Contract except as
expressly set forth in such contract; and (iv) no written amendments or
modifications have been made thereto except those, if any, reflected in the
copies previously furnished to Purchaser. None of the rights of Seller under the
Material Contracts have been assigned (including by an absolute assignment of
rents or contracts) or collaterally assigned, assigned for the purpose of
granting security, or are affected by any security interest or similar
encumbrance.

3.20 Fees and Commissions. Seller has not retained, or otherwise authorized to
act, any finder, broker, agent, financial advisor or other intermediary
(collectively “Intermediary“) in connection with the transactions contemplated
by this Agreement or entered into any contract or other arrangement or
understanding (written or oral, express or implied) with an Intermediary that
may result in the obligation of Purchaser to pay any fees or commissions to any
broker or finder as a result of the execution and delivery of this Agreement or
the consummation of the transactions contemplated by this Agreement.

3.21 Transactions with Directors, Officers, Managers, and Affiliates. Seller is
not a party to any agreement or arrangement with any of the directors, officers,
managers, members, partners, Affiliates, equity holders or stockholders of
Seller or any Family Member of any of the foregoing (each a “Related Person“)
under which it: (a) leases any real or personal property (either to or from such
Person) used in connection with the Business; (b) licenses technology (either to
or from such Person) used in connection with the Business; (c) is obligated to
purchase any tangible or intangible asset from or sell such asset to such Person
that is used in connection with the Business; (d) purchases products or services
used in connection with the Business from such Person; (e) pays or receives
commissions, rebates or other payments in connection with the Business;
(f) lends or borrows money in connection with the Business; or (g) provides or
receives any other material benefit in connection with the Business. To the
knowledge of Seller, during the past two years, none of the current directors,
officers, managers, members, Affiliates or 10% or greater equity holders of
Seller, or any Family Member of any such Persons, has been a director, officer,
manager or member of, or has had any direct or indirect interest (other than
equity interests in a Person listed on a registered exchange constituting no
more than 5% of such Person) in, any Person which during such period has been a
customer or client of Seller in connection with the Business or has competed
with or been engaged in any business of the kind being conducted by Seller. No
Affiliate of Seller owns or has any rights in or to any of the assets,
properties or rights used in the Business (including the Purchased Assets).

3.22 Insurance.

(a) The Business and the Purchased Assets are insured until the Effective Date
against such losses and risks and in such amount as is customary in the business
in which Seller is engaged and is in material compliance with all applicable
Laws and all Contracts to which the Business or the Purchased Assets are
subject.

(b) Schedule 3.21(b) sets forth a complete and correct list of (i) the policies
of insurance and self-insurance arrangements and (ii) the material surety bonds,
fidelity bonds, in each case currently maintained by Seller that relate to the
Business, as well as the insurance companies, policy numbers, aggregate coverage
amount and type, and deductibles of all material policies of title, liability,
fire, casualty, business interruption, workers’ compensation and other

 

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forms of insurance insuring Seller, the Purchased Assets and Seller’s employees
in the Business as of the date hereof.

(c) All such policies and bonds are in full force and effect. Seller is not in
default under any provisions of any such bond or policy of insurance. Seller has
not cancelled, received notice of any material increase of the premiums with
respect to, or cancellation of, such insurance without replacement thereof.

(d) Schedule 3.21(d) sets forth a list of all material claims that relate to the
Business (other than health insurance claims) made since January 1, 2005 by
Seller under any such insurance policy. All litigation pertaining to the
Business covered by any of the policies has been properly reported to and
accepted by the applicable insurer. Since January 1, 2005, there have been no
historical gaps in insurance coverage related to the Business.

3.23 Bank Accounts. None of the bank accounts maintained by or for the benefit
of Seller in connection with the conduct of the Business, at any bank or other
financial institution, is a cash collateral account. Seller does not have any
lock box arrangements in place relating to the Business.

3.24 RAL Committee Minutes. Except as set forth on Schedule 3.24, the minute
books of the RAL/RT Committee of Seller accurately reflect in all material
respects and in reasonable detail all action taken by such committee.

ARTICLE 4

REPRESENTATIONS AND WARRANTIES OF PURCHASER

Purchaser represents and warrants to Seller as follows:

4.1 Organization and Qualification. Purchaser is a limited liability company,
duly formed or organized and validly existing under the laws of the jurisdiction
of its organization. Purchaser has the requisite organizational power and
authority to own, lease and operate its assets and to carry on its business as
now being conducted and is duly qualified or licensed to do business and is in
good standing in each jurisdiction in which the ownership of its property or the
conduct of its business requires such qualification or license.

4.2 Authority; Enforceability. Purchaser has all requisite power and authority
to execute and deliver this Agreement and the other Transaction Documents to
which it is a party, to consummate the transactions contemplated hereby and
thereby and to perform all of the terms and conditions hereof and thereof to be
performed by it. This Agreement and the other Transaction Documents to which
Purchaser is a party have been duly executed and delivered by Purchaser.
Purchaser has obtained all necessary consents, authorizations, approvals and
orders, and has made all registrations, qualifications, designations,
declarations or filings with all federal, state, or other relevant Governmental
Entities, required by such authorities in connection with the consummation of
the transactions contemplated by this Agreement and the other Transaction
Documents. This Agreement and the other Transaction Documents to which Purchaser
is a party constitute the valid and binding obligations of Purchaser, each
enforceable against Purchaser in accordance with the terms thereof, subject to
Equitable Principles.

 

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4.3 No Conflict; Authorization. The execution of this Agreement and the other
Transaction Documents and the performance of the transactions contemplated
hereby and thereby will not: (a) violate, conflict with, result in a default or
require consent under any contract to which Purchaser is a party or by which any
assets of it are bound, or any provision of the Organizational Documents of it,
or cause the creation of any Lien upon any of its assets; (b) violate or result
in a violation of, or constitute a default (whether after the giving of notice,
lapse of time or both) under, any Law; or (c) accelerate any obligation under,
or give rise to a right of termination of, any contract, permit, license or
authorization to which it is a party or by which it, or any of its assets are
bound. Purchaser has obtained all necessary consents, authorizations, approvals
and orders, and has made all registrations, qualifications, designations,
declarations or filings with all federal, state, or other relevant Governmental
Entities, required by such authorities to be obtained or made, as applicable, by
it in connection with the consummation of the transactions contemplated by this
Agreement and the other Transaction Documents to which it is a party.

4.4 Proceedings. There are no suits, actions or proceedings pending against
Purchaser or any of its Affiliates or, to the knowledge of Purchaser, threatened
against it or any of its Affiliates, in each case, relating to or affecting the
transactions contemplated by under this Agreement or the validity or
enforceability of this Agreement or any of the other Transaction Documents, and,
to the knowledge of Purchaser, there is no basis for any such action or
proceeding.

4.5 Fees and Commissions. Purchaser has not retained, or otherwise authorized to
act, any finder, broker, agent, financial advisor or other Intermediary in
connection with the transactions contemplated by this Agreement or entered into
any contract or other arrangement or understanding (written or oral, express or
implied) with an Intermediary that may result in the obligation of Seller or
Purchaser to pay any fees or commissions to any broker or finder as a result of
the execution and delivery of this Agreement or the consummation of the
transactions contemplated by this Agreement.

ARTICLE 5

COVENANTS

5.1 Confidentiality. Except as required by Law or as mutually agreed by the
Seller and Purchaser, each Party agrees that it will keep confidential and will
not disclose or divulge the terms of this Agreement and the transactions
contemplated hereby, unless such information is known, or until such information
becomes known, to the public without wrongful disclosure by any disclosing Party
or its attorneys, accountants, consultants, other professionals, Affiliates, or
partners; provided a Party may disclose, on a confidential basis, such
information to its respective attorneys, accountants, consultants, financial
advisors and other professionals to the extent necessary to obtain their
services. Seller agrees to maintain in confidence, and not to use for its own
benefit or the benefit of another Person, all confidential information and Trade
Secrets owned or licensed or previously owned or licensed by Seller.

5.2 Required Consents. Seller shall use commercially reasonable efforts to
obtain, as soon as practicable after the Closing Date, at its expense, each of
the Required Consents, to the extent not obtained or delivered on or prior to
the Closing Date. Purchaser agrees to use

 

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commercially reasonable efforts to cooperate with Seller in obtaining the
Required Consents, which consents shall be obtained in any event on or prior to
the applicable date set forth in the Transition Services Agreement.

5.3 Non-Competition; Non-Solicitation.

(a) During the 10-year period following the date hereof (the “Non-Competition
Period“), neither Seller nor Holdings shall, and Seller and Holdings shall
ensure that none of its Affiliates or successors (Holdings, Seller and their
respective Affiliates and successors are hereinafter referred to as the
“Restricted Parties“) shall, directly or indirectly, whether on such Restricted
Party’s behalf or in association, directly or indirectly, as an employee,
officer, director, manager, agent, partner, stockholder, owner, member,
representative, consultant or in any representative or other capacity with any
other Person (or any parent company, subsidiary or affiliate of any such Person)
engage or participate in a business that is competitive with the Business as the
Business has been conducted over the last two tax seasons (i.e. 2008 and 2009).

(b) During the 10-year period immediately following the date hereof (the
“Nonsolicitation Period“) without limiting the generality of Section 5.3(a),
neither Holdings nor Seller shall, and Holdings and Seller shall ensure that
none of the other Restricted Parties shall, directly or indirectly, whether on
such Restricted Party’s own behalf or in association, directly or indirectly, as
an employee, officer, director, manager, agent, partner, stockholder, owner,
member, representative, consultant or in any representative or other capacity
with any other Person (or any parent company, subsidiary or affiliate of any
such Person), solicit any customer of the Business as of the date hereof or at
anytime during the two-year period ending on the date hereof or contact any such
customer of the Business for the purpose of procuring business in competition
with the Business or where such contact may reasonably be expected to result in
the procuring of such business.

(c) Holdings and Seller acknowledge and agree that the Business is conducted in
various locations nationally and that, in order to protect the businesses and
goodwill of the Business, the provisions of Section 5.3(a) and 5.3(b) are not
only fair and reasonable, but necessary to the protection of the goodwill of the
Business.

(d) No Restricted Party shall be in violation of Section 5.3(a) or 5.3(b) solely
as a result of an investment in stock or other interest of an entity or any of
its direct or indirect subsidiaries listed on a national securities exchange or
quotation system or traded in the over-the-counter market if the Restricted
Party does not, directly or indirectly, hold in the aggregate more than a total
of 5% of all such shares of stock or other interest issued and outstanding and
does not serve as an officer, director, manager, employee, agent or
representative of, or consult to, such entity.

(e) During the Nonsolicitation Period, neither Holdings nor Seller shall,
whether on its own behalf or on behalf of any other Person, either directly or
indirectly, solicit, induce, persuade, or entice, or endeavor to solicit,
induce, persuade, or entice a Covered Employee to leave that employment or cease
performing those services; provided, however, that this prohibition will not
apply to solicitations of employment made by Holdings or Seller to the

 

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general public through the use of media advertisement, electronic job boards or
professional search firms, in case where such solicitations are not directed to
Covered Employees.

(f) Notwithstanding any other provision to the contrary, the Noncompetition
Period and/or the Nonsolicitation Period, as applicable, shall be tolled (and
the applicable period extended) during the continuation of any legal proceeding
brought by Purchaser to enforce the Restricted Party’s covenants in
Section 5.3(a) or Section 5.3(b) if it is ultimately determined that the
Restricted Party was in breach of such covenants or if any temporary restraining
order, injunction, judgment or settlement is entered against or agreed to by the
Restricted Party by reason of such alleged violations.

(g) In the event the terms of this Section 5.3 shall be determined by any court
of competent jurisdiction to be unenforceable by reason of its extending for too
great a period of time or over too great a geographical area or by reason of its
being too extensive in any other respect, it will be interpreted to extend only
over the maximum period of time for which it may be enforceable, over the
maximum geographical area as to which it may be enforceable, and to the maximum
extent in all other respects as to which it may be enforceable, all as
determined by such court in such action.

5.4 Indemnification.

(a) Subject to the other terms of this Section 5.4, Seller and Holdings shall
jointly and severally indemnify, defend and hold harmless Purchaser and its
Affiliates and their respective partners, members, directors, officers,
managers, shareholders, employees, successors and assigns (collectively, the
“Purchaser Indemnified Persons“ and, together with the Seller Indemnified
Persons, the “Indemnitees“) from and against any and all judgments, losses,
liabilities, actions, legal proceedings, amounts paid in settlement, damages,
fines, penalties, deficiencies, losses, diminution in value, lost profits,
consequential damages and expenses (including interest, court costs, reasonable
fees of attorneys, accountants and other experts or other reasonable expenses of
litigation or other proceedings or of any claim, default or assessment)
(collectively, “Losses“) arising out of, relating to or resulting from: (i) the
failure of any of the representations or warranties made by Seller or Holdings
in this Agreement, any certificate delivered by Seller or Holdings pursuant to
this Agreement or any of the Transaction Documents to be true and correct;
(ii) the failure of Seller or Holdings to perform any of its covenants required
to be performed by it under this Agreement, any of the Transaction Documents;
(iii) the failure of Seller and Holdings to obtain any consent to assignment of
the Office Lease Agreements; (iv) the commencement of any action or proceeding
under the National Bank Act or the Federal Deposit Insurance Act for the
appointment of a receiver, liquidator, or conservator for the Seller or the
taking of any other action by any Governmental Entity that affects the ability
of the Seller to perform any of its obligations or covenants under this
Agreement or any of the Transaction Documents (a “Regulatory Action” ); (v) the
failure of Seller to deliver title to the Purchased Assets; (vi) the Retained
Liabilities; or (vii) the Excluded Assets.

(b) Subject to the other terms of this Section 5.4, Purchaser shall indemnify,
defend and hold harmless Seller and its Affiliates and its partners, members,
directors, managers, officers, shareholders, employees, successors and assigns
(collectively, the “Seller Indemnified

 

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Persons“) from and against any and all Losses arising out of or resulting from
(i) the failure of any of the representations or warranties made by Purchaser in
this Agreement, any certificate delivered by Purchaser pursuant to this
Agreement or any of the Transaction Documents to be true and correct; (ii) the
failure of Purchaser to perform any of their covenants required to be performed
by Purchaser under this Agreement or any of the Transaction Documents; (iii) the
Assumed Obligations or (iv) the Business from and after the Effective Date that
are not indemnifiable by Seller and Holdings under Section 5.4(a) or that are
Seller’s or Holdings’ responsibility under any of the other Transaction
Documents.

(c) Notwithstanding anything to the contrary in this Section 5.4 or elsewhere in
this Agreement, Seller will not have any obligation to any of the Purchaser
Indemnified Persons with respect to any Claim arising under Section 5.4(a)(i)
unless and until the Purchaser Indemnified Persons, as a group, have suffered
Losses in excess of $100,000 in the aggregate, and then the Indemnifying Parties
will be liable under Section 5.4(a)(i) for the full amount of such Losses;
provided, that the foregoing deductible shall not apply with respect to Losses
arising from a breach of any of the Fundamental Representations and any Losses
arising from a breach of any of the Fundamental Representations shall not count
against such deductible.

(d) No claim for indemnification under Section 5.4(a)(i) may be asserted after
such date that is 18 months from the date hereof unless such claim for
indemnification under Section 5.4(a)(i) relates to a breach of a Fundamental
Representation, which may be made at any time.

(e) Each Party is relying on the representations and warranties of the other
Parties regardless of the knowledge obtained through its own investigation or
otherwise. Thus, an indemnified party’s right to indemnification or any other
remedy based on representations, warranties, covenants and agreements in this
Agreement or any Transaction Document shall not be affected by any investigation
conducted at any time, or any knowledge acquired (or capable of being
acquired) at any time, whether before or after the execution and delivery of
this Agreement or the Closing Date, with respect to the accuracy or inaccuracy
of, or compliance with, any such representation, warranty, covenant or
agreement, unless expressly waived in writing. An Indemnitee may assert a Claim
under any applicable clause of Section 5.4(a) or 5.4(b) even if such Claim could
be brought under, or is foreclosed from being brought under, any other clause of
Section 5.4(a) or 5.4(b), as applicable.

(f) THE FOREGOING INDEMNITIES SET FORTH IN THIS SECTION 5.4 ARE INTENDED TO BE
ENFORCEABLE AGAINST THE PARTIES IN ACCORDANCE WITH THE EXPRESS TERMS AND SCOPE
THEREOF NOTWITHSTANDING ANY EXPRESS NEGLIGENCE RULE OR ANY SIMILAR DIRECTIVE
THAT WOULD PROHIBIT OR OTHERWISE LIMIT INDEMNITIES BECAUSE OF THE SIMPLE OR
GROSS NEGLIGENCE (WHETHER SOLE, CONCURRENT, ACTIVE OR PASSIVE) OR OTHER FAULT OR
STRICT LIABILITY OF ANY INDEMNIFIED PARTIES. THE PARTIES HERETO ACKNOWLEDGE THAT
THE INDEMNITIES SET FORTH HEREIN MAY RESULT IN THE INDEMNITY OF A PARTY FOR ITS
SIMPLE OR GROSS NEGLIGENCE (WHETHER SOLE, CONCURRENT, ACTIVE OR PASSIVE) OR
OTHER FAULT OR STRICT LIABILITY OF THE INDEMNIFIED PARTY.

 

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5.5 Access to Records. Purchaser shall afford to Seller, Holdings and their
employees, agents and representatives reasonable access to its books and
records, subject to entering into reasonably confidentiality agreements, so as
to enable them to audit the calculation of the Earn-Out Consideration.

5.6 Negative Covenant. Prior to the 90th day after the Earn-Out Payment Date,
Purchaser shall not make any distribution to any of its members in respect of
their equity in Purchaser except for (a) customary tax distributions to cover
income tax liability arising from Purchaser’s business, (b) amounts not
reasonably likely to be required to satisfy Purchaser’s Earn-Out Consideration
payment obligation and (c) amounts nominally distributed to the members of
Purchaser but deposited by the members in an escrow account maintained with
JPMorgan, which escrow shall be available to satisfy Purchaser’s Earn-Out
Consideration payment obligation if Purchaser does not make such payment in a
full and timely manner.

ARTICLE 6

MISCELLANEOUS

6.1 Public Announcements. The Parties shall not, and shall not permit their
representatives to, make or release any public announcements or otherwise
communicate with any news media with respect to this Agreement, or any of the
agreements, documents and instruments to be entered into in connection herewith,
without the prior approval of the other Parties, which shall not be unreasonably
withheld. In any event, each Party may make such public announcement as its
counsel or accountants reasonably believe is disclosure necessary or advisable
to satisfy the Party’s obligations under applicable securities law (in which
case the disclosing Party shall advise the other Parties and provide it with a
copy of the proposed disclosure or filing prior to making the disclosure or
filing).

6.2 Fees and Expenses. Except as provided in the last sentence of this
Section 6.3, if the Acquisition is consummated, all fees and expenses incurred
in connection with this Agreement and the Transaction Documents and the
transactions contemplated hereby and thereby shall be paid by the party
incurring such expenses. All transfer taxes incurred in connection with the
Acquisition shall be paid solely by Seller.

6.3 Notices. All notices, requests, demands and other communications hereunder
shall be in writing and shall be deemed to have been duly given if (a) mailed,
registered mail, first-class postage paid, (b) sent by overnight delivery
service or other courier, (c) transmitted via facsimile, (d) transmitted by
electronic mail, or (e) delivered by hand to the addresses, as the case may be,
set forth below. Any notice shall be deemed to have been duly received, unless
earlier received, (i) if sent by certified or registered mail, return receipt
requested, when actually received, (ii) if sent by overnight mail or courier,
when actually received, (iii) if sent by facsimile transmission or electronic
mail, when confirmation of receipt is received by sender, and (iv) if delivered
by hand, on the date of receipt. The notice addresses and facsimile numbers of
the Parties are as follows:

If to Purchaser, to:

Santa Barbara Tax Products Group, LLC

 

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5770 Oberlin Drive

San Diego, California 921921

Facsimile: (858) 622-4098

email: rich.turner@sbbtral.com

Attn: Rich Turner

With a copy to:

Willkie Farr & Gallagher LLP

787 Seventh Avenue

New York, New York 10019

Facsimile: (212) 728-9220

email: bherzog@willkie.com

Attn: Bruce C. Herzog, Esq.

If to Seller or Holdings, to:

Pacific Capital Bank, N.A.

1021 Anacapa Street

P.O. Box 60839

Santa Barbara, CA 93160-0839

Facsimile: (805) 882-3856

email: george.leis@sbbt.com

Attn: George Leis

With copies to:

Frederick W. Clough, Esq.

General Counsel

Pacific Capital Bank, N.A.

1021 Anacapa Street

P.O. Box 60839

Santa Barbara, CA 93160-0839

Facsimile: (805) 882-3856

email: cloughf@sbbt.com

and to:

Manatt, Phelps & Phillips, LLP

695 Town Center Drive

Costa Mesa, California 92626

Facsimile: (714) 971-2550

email: emarshall@manatt.com

Attn: Ellen R. Marshall, Esq.

Each Party may change the address to which notices are to be sent by written
notice given to the other Parties hereto.

 

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6.4 Headings. The headings contained in this Agreement are for convenience only
and shall not affect the meaning or interpretation of this Agreement

6.5 Further Assurances. Upon the request of any Party at any time after the
Closing, the other Parties shall execute and deliver such documents, as such
Party or its counsel may reasonably request to effectuate the purposes of this
Agreement and the Transaction Documents.

6.6 Successors and Assigns; Assignment; No Third-Party Beneficiaries. This
Agreement shall inure to the benefit of and be binding upon the successors and
assigns of the Parties. Neither this Agreement nor any of the rights, interests
or obligations hereunder shall be assignable by (a) Seller without the prior
written consent of Purchaser, or (b) Purchaser without the prior written consent
of Seller; provided, Purchaser may (i) assign its rights under this Agreement to
any Affiliate of Purchaser and (ii) collaterally assign any or all of its rights
and interests hereunder to one or more lenders of Purchaser or its Affiliates.
Nothing in this Agreement shall confer upon any Person not a party to this
Agreement any rights or remedies of any nature or kind whatsoever under or by
reason of this Agreement, except the Indemnitees shall be the third-party
beneficiaries of the indemnification rights in Section 5.5 hereof.

6.7 Entire Agreement; Amendment and Waiver. This Agreement, the Escrow Agreement
and the Transaction Documents constitute the entire understandings of the
parties hereto and supersede all prior agreements or understandings with respect
to the subject matter hereof or thereof among such parties, including but not
limited to the prior agreements or understandings set forth in the Purchase and
Sale Agreement dated January 12, 2010 which was executed but not delivered by
the Parties (and therefore which does not constitute a valid and effective
agreement among the Parties). This Agreement may be amended, and the observance
of any term of this Agreement may be waived, with (and only with) the written
consent of Seller and Purchaser and the party or parties to be affected by such
amendment.

6.8 Counterparts. This Agreement may be executed in any number of counterparts,
each of which when so executed and delivered shall be deemed an original, and
all such counterparts together shall constitute one instrument. Delivery of a
copy of this Agreement bearing an original signature by facsimile transmission
or by electronic mail in “portable document format” form shall have the same
effect as physical delivery of the paper document bearing the original
signature.

6.9 Governing Law; Severability. This Agreement shall be governed by the
internal laws of the State of New York, without regard to principles of
conflicts of law. Whenever possible, each provision of this Agreement shall be
interpreted in such a manner as to be effective and valid under applicable Law,
but if any provision of this Agreement shall be deemed prohibited or invalid
under such applicable Law, such provision shall be ineffective to the extent of
such prohibition or invalidity, and such prohibition or invalidity shall not
invalidate the remainder of such provision or the other provisions of this
Agreement. In addition, the obligations of each of Seller and Holdings hereunder
shall be independent and Holdings agrees that all of its obligations hereunder
shall be unconditional notwithstanding the occurrence of any Regulatory Action.

 

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6.10 No Extinguishment. All warranties, representations, and covenants made by
Purchaser or by Seller herein or in any certificate or other instrument
delivered by such Person as specifically required under this Agreement shall be
considered to have been relied upon by Seller or Purchaser, as the case may be,
and shall survive all deliveries to Purchaser of the Purchased Assets, and
payment to Seller for the Purchased Assets.

6.11 Rules of Construction. Each of the Parties has contributed to the drafting
of this Agreement; accordingly, no rule of strict construction shall be applied
against any Party.

[Remainder of Page Intentionally Left Blank]

 

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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date
first written above.

 

PURCHASER:

 

SANTA BARBARA TAX PRODUCTS GROUP, LLC

By:   /s/ Richard Turner   Name: Richard Turner   Title: CEO

 

SELLER:

 

PACIFIC CAPITAL BANK, NATIONAL ASSOCIATION

By:   /s/ George Leis   Name: George Leis   Chief Executive Officer

 

HOLDINGS:

 

PACIFIC CAPITAL BANCORP

By:   /s/ George Leis   Name: George Leis   Chief Executive Officer

 

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EXHIBIT A

Defined Terms

As used in the Agreement, the following terms shall have the respective meanings
set forth below:

“Affiliate“ means, when used with reference to a specified Person, any Person
that directly or indirectly through one or more intermediaries controls or is
controlled by or is under common control with the specified Person.

“Assigned Contract“ means each Material Contract listed on Schedule 3.15(a) and
designated with an asterisk (*) indicating that such Material Contract is an
Assigned Contract.

“Assumed Obligations“ means only liabilities and obligations of Seller arising
under each validly assigned Assigned Contract or Permit, except to the extent
such liabilities or obligations arise out of or relate to the period of time
prior to the Closing Date.

“Benefit Plan“ means (a) any pension plan, defined contribution plan,
profit-sharing plan, health or welfare plan, and any other employee benefit plan
(within the meaning of Section 3(3) of ERISA or any comparable provision of any
other applicable Law) that is maintained or sponsored by Seller or to which
Seller contributes or for which Seller otherwise has or may have any liability,
contingent or otherwise, either directly or as a result of an ERISA Affiliate,
and (b) any other benefit arrangement, obligation, or practice, whether or not
legally enforceable, to provide benefits, other than currently-paid salary, as
compensation for services rendered, to one or more present or former employees,
directors, agents, or independent contractors, that is maintained or sponsored
by Seller or to which Seller contributes or for which Seller otherwise has or
may have any liability, contingent or otherwise, either directly or as a result
of an ERISA Affiliate, including, without limitation, employment agreements,
offer letters, severance policies or agreements, change in control agreements,
executive compensation arrangements, deferred compensation arrangements,
incentive arrangements, consulting or other compensation arrangements, bonus
plans, stock option, stock grant or stock purchase plans, tuition reimbursement
programs or scholarship programs, 529 plans, any plans subject to Section 125 of
the Code or any comparable provision of any other applicable Law, any plans
providing benefits or payments in the event of a change of ownership or control,
and each other employee benefit plan, fund, program, agreement or arrangement.

“Books and Records“ means all books and records of Seller, Holdings or any
Affiliate relating to the operations of the Business, including but not limited
to all minutes of meetings of the committee of the Seller’s board of directors
overseeing the conduct of the Business, books of account, journals and ledgers,
files, correspondence, memoranda, maps, plats, customer lists, all taxpayer,
electronic return originator and transmitter data from prior tax seasons,
supplier lists, all financial, billing, personnel, equipment and staff records,
documents, catalogs, operating manuals, product development testing,
environmental documents, promotional materials, data processing programs and
other computer software, building and machinery diagrams and plans, but not
including (i) the limited liability minute book and related limited liability
ownership records of Seller and (ii) Tax returns filed by Seller, supporting and
backup information and

 

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workpapers prepared in connection therewith and copies of all written
communication between Seller and any Taxing authority relating to any Tax audit.

“Business“ means the business conducted by Seller of providing RALs, RAL
Advances (including “Money Now” loans), RTs, New Money Loans and other related
bank products.

“Business Transition Agreement“ means that certain Business Transition
Agreement, dated as of the Closing Date, by and among the Purchaser and Seller.

“Code“ means The Internal Revenue Code of 1986, as amended.

“Covered Employee“ means any Person who is, or has been since January 1, 2009,
employed in the Business as conducted by Seller.

“Employee Liabilities“ means all obligations and liabilities of Seller relating
to the employment of the Business Employees or termination thereof, whether
arising under a Benefit Plan or otherwise.

“Environmental Laws“ means all federal, state and local laws, rules and
regulations (including common law) relating to pollution, the environment
(including, without limitation, ambient air, surface water, groundwater, land
surface or subsurface strata or rare, threatened or endangered species and
critical habitat) or protection of human health or safety, Releases or
threatened Releases or exposure to Hazardous Materials or otherwise relating to
the manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Materials, including, without limitation, the
federal Comprehensive Environmental Response, Compensation, and Liability Act of
1980, 42 U.S.C. Section 9601, et seq., as amended, the federal Resource
Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq., as amended, the
related final rules and regulations and other laws and regulations relating
thereto.

“Equipment“ means (a) all machinery, equipment, rolling stock parts, computer
hardware, office equipment, furniture, furnishings, non-leased vehicles
(including forklifts and front-end loaders), communications lines,
interconnections, computers, laptops, servers and related hardware, facsimile
machines, telephones, duplicating machines, fixtures and improvements, supplies,
raw materials, any other fixed or long-term assets and other tangible property
used or held for use in the Business, including all of the foregoing located at
any of the Facilities, that (i) is located at the Facilities or (ii) is not
located at the Facilities but relates to the Business, (b) any rights of Seller
to the warranties and licenses received from manufacturers and sellers of the
Equipment referred to in clause (a) immediately above and (c) any related
claims, credits, rights of recovery and set-off with respect to the items
referred to in clauses (a) and (b) immediately above.

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

“ERISA Affiliate“ means any person that, together with Seller is or was at any
time treated as a single employer under Section 414 of the Code.

 

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“Exchange Act“ means the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder.

“Excluded Assets“ means (a) the corporate minute book and related corporate
records of Seller, (b) cash, accounts payable and accounts receivable (other
than Purchased RALs) and (c) Tax returns filed by Seller, supporting and backup
information and workpapers prepared in connection therewith and copies of all
written communication between Seller and any Taxing authority relating to any
Tax.

“Facilities“ means the Leased Real Property.

“Family Member“ means a Person’s child, stepchild, grandchild, niece, nephew,
parent, stepparent, grandparent, spouse, sibling, mother-in-law, father-in-law,
son-in-law, daughter-in-law, brother-in-law, or sister-in-law of such Person,
and any Person (other than a tenant or employee) sharing the household of such
Person.

“Fundamental Representations“ means those representations and warranties
contained in Sections 3.1, 3.2, 3.3 and 3.20.

“GAAP“ means United States generally accepted accounting principles as
consistently applied.

“Governmental Entity“ means any U.S. or foreign court, instrumentality,
subdivision, commission, legislative, executive or regulatory authority or
agency, any state or political subdivision thereof or any entity or body
(including, without limitation, any arbitration panel) exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.

“Hazardous Materials“ means: (a) any petroleum or petroleum products,
radioactive materials, asbestos in any form, hexavalent chromium compounds, urea
formaldehyde foam insulation, chrome hydroxide and transformers or other
equipment that contain dielectric fluid containing polychlorinated biphenyls;
(b) any chemicals, materials or substances defined, included in the definition
of, or otherwise considered or alleged to be “hazardous substances”, “hazardous
wastes”, “hazardous materials”, “extremely hazardous wastes”, “restricted
hazardous wastes”, “toxic substances”, “toxic pollutants”, or words of similar
import; and (c) any other chemical, substance or waste, exposure to which is
harmful, or now prohibited, limited or regulated under any Environmental Law in
a jurisdiction in which Seller operates or formerly operated or any jurisdiction
which has received such chemical, substance or waste from Seller.

“Indebtedness“ means with respect to any Person, at any date, without
duplication: (a) all obligations of such Person for borrowed money, including
all principal, interest, premiums, fees, expenses, overdrafts and penalties with
respect thereto; (b) all obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments; (c) all obligations of such
Person to pay the deferred purchase price of the property or services, except
trade payables incurred in the ordinary course of business; (d) all obligations
of such Person to reimburse any bank or other Person in respect of amounts paid
under a letter of credit or similar instrument that have been drawn upon;
(e) all Capitalized Lease Obligations; and (f) all indebtedness of any other
Person of the type referred to in clauses (a) to (e) above directly or
indirectly guaranteed by

 

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such Person or secured by any assets of such Person, whether or not such
Indebtedness has been assumed by such Person. For the avoidance of doubt, the
term “Indebtedness” shall include any penalty, premium, breakage costs
associated with paying such Indebtedness off in full as of the Closing.

“Intellectual Property“ means all of the following: (a) trademarks and service
marks (registered or unregistered), logos, trade dress, product configurations,
trade names and other names and slogans embodying business or product goodwill
or indications of origin, all applications or registrations in any jurisdiction
pertaining to the foregoing and all goodwill associated therewith; (b) patents,
patentable inventions, discoveries, improvements, ideas, know-how, formula
methodology, research and development, business methods, processes, technology
and computer programs, software and databases (including source code, object
code, development documentation, programming tools, drawings, user manuals,
specifications and data) and all applications or registrations in any
jurisdiction pertaining to the foregoing, including all reissues, continuations,
divisions, continuations-in-art, renewals or extensions thereof; (c) Trade
Secrets, including confidential and other non-public information, and the right
in any jurisdiction to limit the use or disclosure thereof; (d) copyrights in
writings, designs, mask works or other works, and registrations or applications
for registration of copyrights in any jurisdiction; (e) Internet Web sites, Web
pages, domain names and registrations or applications for registration thereof
and all intellectual property and proprietary rights incorporated in such Web
sites and Web pages; (f) all similar proprietary rights; (g) licenses,
immunities, covenants not to sue and the like relating to any of the foregoing;
(h) books and records describing or used in connection with any of the
foregoing; and (i) claims or causes of action arising out of or related to
infringement or misappropriation of any of the foregoing.

“Inventory“ means all inventory (a) located at the Facilities or (b) used in the
Business, including but not limited to (i) raw materials, (ii) work in process,
(iii) byproducts, (iv) finished goods and (v) production, packaging and other
materials and supplies.

“Law“ or “Laws“ means any applicable federal or state laws (including common
law), statutes, ordinances, regulations, rules, Orders, arbitration awards,
agency requirements, variances, approvals or Permits of any Governmental Entity.

“Lien“ means, with respect to any asset, any mortgage, claim, lien, pledge,
charge, security interest, restriction, conditional sales contract,
encroachment, limitation or encumbrance of any kind in respect of such asset.

“Material Adverse Effect“ means any effect, change or development that has had,
or would be reasonably likely to have, individually or in the aggregate, a
material and adverse effect (a) with respect to the assets, liabilities, results
of operations, properties, prospects or condition (financial or otherwise) of
the Business, taken as a whole, or (b) on the ability of Seller to timely
consummate the transactions contemplated hereby, including as a consequence of
any material impediment, interference or delay.

“Order“ means any judgment, order, injunction, decree, rule, consent or writ of
or by any Governmental Entity or any arbitrator.

 

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“Organizational Documents“ means certificates of incorporation, by-laws,
certificates of formation, limited liability company operating agreements,
limited liability partnership agreements, partnership or limited partnership
agreements or other similar formation or governing documents of any Person.

“Permits“ means any Orders, licenses, permits, franchises, authorizations,
registrations, certifications, exemptions, classifications, declarations,
filings and other approvals of, from or with any Governmental Entity issued or
granted to a Person, but excluding the registration of Seller as a national
banking association and all rights attendant to such status.

“Person“ means an individual, partnership, joint-stock company, corporation,
limited liability company, trust or unincorporated organization, and a
government or agency or political subdivision thereof.

“Present Fair Salable Value“ means the amount that may be realized if the
aggregate assets of such Person (including goodwill) are sold as an entirety
with reasonable promptness in an arms length transaction under present
conditions for the sale of comparable business enterprises.

“RAL“ shall mean a short-term consumer loan commonly referred to as a “refund
anticipation loan,” which loan is made in anticipation of and secured by a
taxpayer’s income tax refund to be paid by the Internal Revenue Service.

“Release“ means any release, spill, pumping, emptying, escaping, dumping,
emission, leaking, injection, deposit, disposal, discharge, dispersal, leaching
or migration into the atmosphere, soil, surface water, groundwater or real or
tangible property in violation of Law.

“Retained Liabilities“ means any obligations or liabilities of any of Seller or
its Affiliates (whether or not attributable to the Purchased Assets or the
Business), including but not limited to all such obligations and liabilities
attributable to any of the following: (i) any and all liabilities or obligations
arising under, or violations of, legal requirements; (ii) contracts other than
the liabilities under the Assigned Contracts as expressly described in the
definition of Assumed Obligations; (iii) Permits assigned to Purchaser; provided
that “Retained Liabilities” shall include obligations and liabilities related
thereto only to the extent such obligations and liabilities arise as a result of
or in connection with, or relate to, periods prior to the Closing; (iv) any of
Seller or its Affiliates’ occupancy, ownership, use, or operations of the
Purchased Assets or the Business on or prior to the Closing Date, whether such
liability arises before, on or after the Closing Date; (v) all liabilities for
(X) Taxes of Seller or its Affiliates, (Y) Taxes that relate to the Purchased
Assets or the Assumed Obligations for taxable periods (or portions thereof)
ending on or before the Closing Date, including, without limitation, Taxes
allocable to Seller, and (Z) payments under any Tax allocation, sharing or
similar agreement (whether oral or written), (vi) any liability of Seller with
respect to any Indebtedness of Seller or any of its Affiliates; (vii) any
obligations or liabilities, whether know or contingent, under Environmental Laws
as a result of or in connection with, or relating to, any acts, omissions, or
conditions first occurring or in existence as of or prior to the Closing Date,
including the presence of Hazardous Materials, Environmental Claims, or
non-compliance; (viii) any liability of Seller or its Affiliates based upon
Seller’s or its Affiliates’ acts or omissions occurring prior to, on or after
the Closing Date;

 

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(ix) any Benefit Plan; (x) the Employee Liabilities; (xi) any liabilities
relating to or arising out of RALs extended on or prior to the date hereof and
(xii) Indebtedness of Seller.

“Required Consents“ means all consents, approvals, authorizations, notices,
filings, registrations or qualifications from, by or with any third party
(including any Governmental Entity) required in order to consummate the
transactions contemplated by this Agreement and by the Transaction Documents and
to operate the Business or to validly assign the Purchased Assets to Purchaser
on the terms of this Agreement.

“RT“ shall mean the program that has been established for the expedited
transfer, net of applicable fees, of a consumer tax refund following the deposit
of such refund in the consumer’s temporary account with Pacific Capital Bank or
another participating bank by the Internal Revenue Service.

“Securities Act“ means the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.

“Solvent“ means that, as of any date of determination, the Present Fair Salable
Value of its assets will, as of such date, exceed all of its liabilities,
contingent or otherwise, as of such date, (ii) such Person will not have, as of
such date, an unreasonably small amount of capital for the business in which it
is engaged or will be engaged and (iii) such Person will be able to pay its
debts as they become absolute and mature, in the ordinary course of business,
taking into account the timing of and amounts of cash to be payable on or in
respect of its indebtedness, in each case after giving effect to the
transactions contemplated by this Agreement. For purposes of the definition of
“Solvent”, (a) “debt” means liability on a “claim”; “claim” means (i) any right
to payment, whether or not such right is reduced to judgment, liquidated,
unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed,
secured or unsecured or (ii) the right to an equitable remedy for a breach in
performance if such breach gives rise to a right to payment, whether or not such
equitable remedy is reduced to judgment, liquidated, unliquidated, fixed,
contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured
or unsecured.

“Subsidiary“ or “Subsidiaries“ of any Person means any other Person of which a
majority of the outstanding voting securities or other voting equity interests,
or a majority of any other interests having the power to direct or cause the
direction of the management and policies of such other Person, are owned,
directly or indirectly, by such first Person.

“Tax“ or “Taxes“ means all federal, state, local or foreign taxes or similar
fees and charges payable to a Governmental Entity, including, without
limitation, income, gross income, gross receipts, production, excise,
employment, sales, use, transfer, ad valorem, value added, profits, license,
capital stock, franchise, severance, stamp, withholding, Social Security,
employment, unemployment, disability, worker’s compensation, payroll, utility,
windfall profit, custom duties, personal property, real property, registration,
alternative or add-on minimum, estimated taxes, including any interest,
penalties or additions thereto, whether disputed or not; and “Tax” shall mean
any one of them.

 

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“Tax Return“ means any report, return, information return, filing, claim for
refund or other information, including any schedules or attachments thereto, and
any amendments to any of the foregoing required to be supplied to a taxing
authority in connection with Taxes.

“Trade Secrets“ means trade secrets or confidential information, including
confidential information regarding software, software documentation, technical
studies, processes, formulas, databases, client lists, client information,
inventions, processes, designs, methodologies, know-how, data, and
documentation.

“Transaction Documents“ means all instruments, certificates and other agreements
entered into by Seller and Purchaser, as applicable, in connection with the
consummation of the transactions contemplated by this Agreement, including, but
not limited to the Business Transition Agreement and the Required Consents.

 

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