Document:

Prepared by MERRILL CORPORATION

EXHIBIT 10.21

 

 

 

 

STOCK PURCHASE

AGREEMENT

 

by and between

 

THE PURCHASERS

SET FORTH ON EXHIBIT A,

 

SANTA BARBARA

RESTAURANT GROUP, INC.,

 

AND

 

CKE

RESTAURANTS, INC.

 

for the

purchase of

 

189,900 shares

of Common Stock of CKE Restaurants, Inc.

 

 

 

 

DATED AUGUST ______,

2001

 

THIS STOCK PURCHASE AGREEMENT (the “Agreement”) is entered into

as of August ___, 2001 (the “Effective Date”), by and between the

Purchasers set forth on Exhibit A hereto (each, a “Purchaser”),

Santa Barbara Restaurant Group, Inc., a Delaware corporation (“SBRG”),

and CKE Restaurants, Inc., a Delaware corporation (“CKE”).

 

RECITALS

 

A.            SBRG

beneficially owns 189,900 shares of common stock, par value $0.01, of CKE (the

“Shares”).

 

B.            Each

of the Purchasers is a participant in CKE’s Employee, or Non-Employee Director,

Stock Purchase Loan Plan (as applicable, the “Plan”), pursuant to which CKE

provided loans to certain officers and directors of CKE for the purpose of

purchasing shares of CKE common stock.

 

C.            CKE

desires to provide loans to each Purchaser in the amounts set forth opposite

such Purchaser’s name on Exhibit A, for the purpose of purchasing

the number of Shares set forth opposite such Purchaser’s name on Exhibit A.

 

D.            SBRG desires to sell to the Purchasers, and each of the

Purchasers desires to purchase from SBRG, the number of Shares set forth

opposite such Purchaser’s name on Exhibit A, pursuant to the terms

and conditions hereunder.

 

NOW, THEREFORE, for good and valuable consideration, the receipt and

sufficiency of which is hereby acknowledged, the parties agree as follows:

 

AGREEMENT

 

1.             Purchase

and Sale.  Subject to the terms and

conditions of this Agreement and the Plan, Purchaser hereby purchases from

SBRG, and SBRG hereby sells to Purchaser, the number of Shares set forth

opposite Purchaser’s name on Exhibit A hereto at a purchase price

of Five Dollars and Seventy-Two Cents ($5.72) per share.  Concurrently herewith, CKE is delivering to

SBRG an aggregate of $1,086,228.00 for the purchase of all of the Shares on

behalf of the Purchasers, and SBRG is delivering to CKE on behalf of the

Purchasers certificates evidencing the Shares, duly endorsed for transfer,

receipts for which are hereby acknowledged.

 

2.             Election

to Participate.  Purchaser hereby

agrees to borrow from CKE the amount set forth opposite such Purchaser’s name

on Exhibit A hereto, and to enter into a promissory note for such

amount in the form attached hereto as Exhibit B, pursuant to the

terms of the Plan.

 

3.             Representations and Warranties of SBRG.  SBRG makes the following representations and

warranties:

 

3.1           Authorization.  SBRG has full power and authority to enter

into this Agreement, and this Agreement has been duly authorized by all

requisite corporate action of SBRG and will not result in a breach, acceleration

or violation of any agreement to which SBRG is a party or is otherwise

bound.  This Agreement will constitute

the valid and legally binding obligation of SBRG, enforceable against SBRG in

accordance with its terms except (i) as limited by applicable bankruptcy,

insolvency, reorganization, moratorium, and other laws of general application

affecting enforcement of creditors’ rights generally and (ii) as limited

by laws relating to the availability of specific performance, injunctive

relief, or other equitable remedies. 

SBRG has received all consents, approvals, orders waivers and

authorizations, and has provided all notices, which are necessary in connection

with the valid execution and delivery of this Agreement and the sale of the

Shares.

 

(a)           The

Shares are validly issued and are fully paid and nonassessable.

 

(b)           SBRG

holds of record and beneficially owns the Shares free and clear of all liens,

charges, claims, encumbrances, warrants, security interests, equities,

restrictions on transfer, right of first refusal, preemptive rights or other

defects in title of any kind or description (collectively, “Encumbrances”),

and is offering, selling and transferring the Shares free and clear of

Encumbrances, other than such restrictions imposed by this Agreement and under

applicable state and federal securities laws. 

There is no action, suit, claim, investigation or proceeding, whether at

law or in equity, against SBRG or claim or counter-claim initiated by SBRG,

that is pending, or to SBRG’s knowledge, threatened (collectively, “Proceedings”),

that could reasonably be expected to affect adversely SBRG’s ownership and sale

of the Shares free and clear of Encumbrances, or to otherwise perform any of

its obligations hereunder.

 

(c)           SBRG

is not a party to any option, warrant, purchase right, or other contract or

commitment that could require it to sell, transfer, or otherwise dispose of any

capital stock of CKE (other than this Agreement).  SBRG is not a party to any voting trust, proxy, or other

agreement or understanding with respect to the voting of any capital stock of

CKE, including, without limitation, the Shares.

 

4.             Purchaser Investment Representations.  Each Purchaser makes the following

representations and warranties:

 

4.1           Purchaser understands that the Shares are not registered

under the Securities Act and are not qualified or registered under Blue Sky

Laws pursuant to exemptions from registration or qualification contained in the

Securities Act and in the Blue Sky Laws. 

Purchaser understands that the Shares must be held indefinitely unless

subsequently registered or qualified under the Securities Act and under the

Blue Sky Laws unless exemptions from the registration or qualification

requirements under the Securities Act and under the Blue Sky Laws are available

in connection with any proposed transfer of the Shares by Purchaser.

 

4.2           Purchaser agrees that none of the Shares, nor any interest

in such shares, will be resold or otherwise transferred by Purchaser without

registration or qualification under the Securities Act and the Blue Sky Laws

unless exemptions from such registration or qualification requirements are

available.

 

4.3           Purchaser is aware of CKE’s business affairs and financial

condition and has acquired sufficient information about CKE to reach an

informed and knowledgeable decision regarding the merits and risks of investing

in the Shares.  Purchaser has had ample

opportunity to review information regarding CKE and to ask questions of CKE and

its representatives and to seek independent investment, tax, and legal advice

prior to investing in the Shares.

 

4.4           The Shares are being acquired for private investment for

Purchaser’s own account and not with a view to or for sale in connection with

any distribution of such shares.

 

4.5           The

sale of the Shares to Purchaser was not accompanied by the publication of any

written or printed communication or any communication by means of recorded

telephone messages or spoken on radio, television, or similar communications

media.

 

4.6           Purchaser is an “Accredited Investor” as defined under

Section 501(a) of the Securities Act.

 

4.7           Purchaser acknowledges that the certificates representing

the Shares will bear the legends set forth herein:

 

THE SECURITIES REPRESENTED

BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933;

THEY HAVE BEEN ACQUIRED BY THE HOLDER FOR INVESTMENT AND MAY NOT BE PLEDGED,

HYPOTHECATED, SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT AS MAY BE

AUTHORIZED UNDER THE SECURITIES ACT OF 1933, AND THE RULES AND REGULATIONS

PROMULGATED THEREUNDER.

 

4.8           Purchaser understands that the Shares constitute

“restricted securities” for the purposes of Rule 144 promulgated under the

Securities Act.

 

4.9           Purchaser understands that SBRG will rely upon the

foregoing for the purposes of transferring the Shares hereunder.  Purchaser hereby agrees to indemnify SBRG

and its respective officers, directors, agents, and counsel and hold them

harmless from and against any and all damages suffered and liabilities incurred

by them (including costs of investigation, defense, and attorneys’ fees)

arising out of any breach by Purchaser of the agreements or inaccuracy in the

representations and warranties which Purchaser has made herein.

 

5.             Representations

and Warranties of CKE.  CKE makes

the following representations and warranties:

 

5.1           Authorization. CKE has full power and authority to

enter into this Agreement and make the loans to Purchasers, and such actions

have been duly authorized by all requisite corporate action of CKE and will not

result in a breach, acceleration or violation of any agreement to which CKE is

a party or is otherwise bound.  This

Agreement, when executed and delivered, will constitute a valid and legally

binding obligation of CKE, enforceable against CKE in accordance with its terms

except (i) as limited by applicable bankruptcy, insolvency,

reorganization, moratorium, and other laws of general application affecting

enforcement of creditors’ rights generally and (ii) as limited by laws

relating to the availability of specific performance, injunctive relief, or

other equitable remedies.  CKE has

received all consents, approvals, orders waivers and authorizations, and has

provided all notices, which are necessary in connection with the valid

execution and delivery of this Agreement and the delivery of the purchase price

on behalf of the Purchasers.

 

6.             Miscellaneous.

 

6.1           Governing Law. 

This Agreement shall be governed by and interpreted in accordance with

the laws of the State of California, without regard to its conflict of law

principles.

 

6.2           Binding

Effect.  This Agreement shall be

binding upon and shall inure to the benefit of the parties hereto and their

respective successors and assigns.

 

6.3           Counterparts. 

This Agreement may be executed in counterparts, each of which shall be

deemed an original and all of which together shall constitute one and the same

document.

 

6.4           Titles and Subtitles.  The titles and subtitles used in this Agreement are used for

convenience only and are not to be considered in construing or interpreting

this Agreement.

 

6.5           Notices. 

Unless otherwise provided, all notices and other communications required

or permitted under this Agreement shall be in writing and shall be mailed by

United States first-class mail, postage prepaid, sent by facsimile or delivered

personally by hand or by a courier addressed to the party to be notified at the

address or facsimile number below, or at such other address or facsimile number

as such party may designate by ten (10) days’ advance written notice to the

other parties hereto.

 

	

  If to SBRG, to:

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

  Attn:

  	

   

  
	

   

  	

   

  	

   

  
	

  with a copy to:

  	

   

  	

  Stradling Yocca Carlson

  & Rauth

  
	

   

  	

   

  	

  660 Newport Center Dr.,

  Suite 1600

  
	

   

  	

   

  	

  Newport Beach, California

  92660

  
	

   

  	

   

  	

  Attn: 

  C. Craig Carlson, Esq.

  
	

   

  	

   

  	

   

  
	

  If to CKE, to:

  	

   

  	

  401 W. Carl Karcher Way

  
	

   

  	

   

  	

  Anaheim, California  92801

  
	

   

  	

   

  	

  Attn: 

  Michael Murphy

  

 

6.6           Finder’s Fees. 

Each party represents that it neither is nor will be obligated for any

finder’s fee or commission in connection with this transaction.  Each party agrees to severally indemnify and

to hold harmless the other party from any liability for any commission or

compensation in the nature of a finder’s fee (and the cost and expenses of

defending against such liability or asserted liability) for which such

indemnifying party or any of its officers, partners, employees, or

representatives is responsible.

 

6.7           Expenses. 

Each party shall pay its own costs and expenses with respect to the

negotiation, execution, delivery, and performance of this Agreement.

 

6.8           Attorneys’ Fees. 

If any action at law or in equity is necessary to enforce or interpret

the terms of this Agreement, the prevailing party shall be entitled to

reasonable attorneys’ fees, costs, and disbursements in addition to any other

relief to which such party may be entitled.

 

6.9           Amendments and Waivers.  Any term of this Agreement may be amended and the observance of

any term of this Agreement may be waived (either generally or in a particular

instance and either retroactively or prospectively), only with the written

consent of the parties hereto.

 

6.10         Severability.  If one or more provisions of this Agreement

are held to be unenforceable under applicable law, such provision shall be

excluded from this Agreement and the balance of the Agreement shall be

interpreted as if such provision were so excluded and shall be enforceable in

accordance with its terms.

 

6.11         Dispute Resolution. 

If there arises a dispute between any party to this Agreement and any

other party to this Agreement regarding this Agreement, those parties agree to

negotiate in good faith to resolve the dispute between them regarding this

Agreement.  If the negotiations do not

resolve the dispute to the reasonable satisfaction of both parties, then each

party shall nominate one partner, member or senior officer of the rank of Vice

President or higher as its representative. 

These representatives shall, within thirty (30) days of a written

request by either party to call such a meeting, meet in person and alone

(except for one assistant for each party) and shall attempt in good faith to

resolve the dispute.  If the disputes

cannot be resolved by such senior managers in such meeting, the parties agree

that they shall, if requested in writing by either party, meet within thirty

(30) days after such written notification for one day with an impartial

mediator and consider dispute resolution alternatives other than

litigation.  If any alternative method

of dispute resolution is not agreed upon within thirty (30) days after the one

day mediation, either party may begin litigation proceedings.  This procedure shall be a prerequisite

before taking any additional action hereunder.

 

IN WITNESS THEREOF, the parties hereto have

executed this Stock Purchase Agreement as of the Effective Date.

 

	

  Santa Barbara Restaurant Group, Inc.,

  	

   

  	

  CKE Restaurants, Inc.,

  
	

  a Delaware corporation

  	

   

  	

  a Delaware corporation

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

  By:

  	

   

  	

   

  	

  By:

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

  Name:

  	

   

  	

   

  	

  Name:

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

  Title:

  	

   

  	

   

  	

  Title:

  	

   

  
	

   

  	

   

  	

   

  
	

  Purchaser

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

  By:

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

  Print Name:

  	

   

  	

   

  	

   

  
											

 

Exhibit A

 

	

  Name

  	

   

  	

  Number of Shares

  	

  Amount

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

  Bryon Allumbaugh

  	

   

  	

  6,126

  	

   

  	

  $

  	

  35,040

  	

   

  
	

  Peter Churm

  	

   

  	

  6,126

  	

   

  	

  35,040

  	

   

  
	

  Carl L. Karcher

  	

   

  	

  6,126

  	

   

  	

  35,040

  	

   

  
	

  Daniel D. Lane

  	

   

  	

  6,126

  	

   

  	

  35,040

  	

   

  
	

  Daniel E. Ponder, Jr.

  	

   

  	

  6,126

  	

   

  	

  35,040

  	

   

  
	

  Frank P. Willey

  	

   

  	

  6,126

  	

   

  	

  35,040

  	

   

  
	

  William P. Foley, II

  	

   

  	

  67,383

  	

   

  	

  385,434

  	

   

  
	

  Andrew F. Puzder

  	

   

  	

  67,383

  	

   

  	

  385,434

  	

   

  
	

  Carl N. Karcher

  	

   

  	

  6,126

  	

   

  	

  35,040

  	

   

  
	

  E. Michael Murphy

  	

   

  	

  6,126

  	

   

  	

  35,040

  	

   

  
	

  Dennis J. Lacey

  	

   

  	

  6,126

  	

   

  	

  35,040

  	

   

  
							

 

Exhibit B

 

Form of Promissory

Note

 

[See Attached]Prepared by MERRILL CORPORATION

Exhibit 10.1

ASSET PURCHASE AGREEMENT

by and among

ADS MB Corporation

Alliance Data Systems Corporation

and

Mail Box Capital Corporation

Kenneth W. Murphy, 

C. Cleave Buchanan, Jr. 

Robert Meador, 

John Erickson, 

Richard Bainter, 

Earl Johnson, 

Charles Buchanan, and 

Stacy Riffe

Dated as of September 1, 2001

 

TABLE OF CONTENTS

 

 

 

 

ARTICLE 1 SALE OF ASSETS AND TERMS OF

PAYMENT

 

 

 

1.1

The Sale.

 

 

 

1.2

Purchase Price; Manner of Payment.

 

 

 

1.3

Allocation

 

 

 

1.4

Transfer Taxes

 

 

 

1.5

Reporting

ARTICLE 2 THE CLOSING

 

 

 

2.1

Time and Place of Closing

 

 

 

2.2

Deliveries by the Seller

 

 

 

2.3

Deliveries by the Buyer and/or the Parent

 

 

 

 

 

 

ARTICLE 3 REPRESENTATIONS AND WARRANTIES

OF THE STOCKHOLDERS

 

 

 

3.1

Ownership

 

 

 

3.2

Authority Relative to this Agreement

 

 

 

3.3

Consents and Approvals; No Violation.

 

 

3.4

Litigation

 

 

3.5

Brokers

 

 

 

 

 

 

ARTICLE 4 REPRESENTATIONS AND WARRANTIES

OF THE SELLER

 

 

 

4.1

Organization

 

 

 

4.2

Authorization

 

 

 

4.3

Consents and Approvals; No Violation.

 

 

 

4.4

Capitalization

 

 

 

4.5

Financial Statements and Books and Records.

 

 

 

4.6

Absence of Certain Changes or Events

 

 

 

4.7

Title

to Assets

 

 

 

4.8

Adequacy

of Assets

4.9

Indebtedness

 

 

 

4.10

Contracts

 

 

 

4.11

Legal

Proceedings

 

 

 

4.12

Employee Benefit Plans.

 

 

 

4.13

Employees.

 

 

 

4.14

Taxes

 

 

 

4.15

Intellectual Property.

 

 

 

4.16

Compliance with Law; Permits

 

 

 

4.17

Accounts

Receivable

 

 

 

4.18

Insurance

 

4.19

Real

Property

 

 

 

4.20

Environmental Matters.

 

 

 

4.21

Undisclosed Liabilities

 

 

 

4.22

Subsidiaries and Affiliate Relationships

 

 

 

4.23

Solvency.

 

 

 

4.24

Suppliers and Customers

 

 

 

4.25

Brokers

 

 

 

4.26

Full

Disclosure

ARTICLE 5 REPRESENTATIONS AND WARRANTIES

OF THE BUYER AND THE PARENT

 

 

 

5.1

Organization

 

 

 

5.2

Authority Relative to this Agreement

 

 

 

5.3

Consents and Approvals; No Violation

 

 

 

5.4

Litigation

 

 

 

5.5

Solvency.

 

 

 

5.6

Brokers

 

 

ARTICLE 6 COVENANTS OF THE PARTIES

 

 

 

6.1

Expenses

 

 

 

6.2

Reasonable

Efforts

 

 

 

6.3

Filings

 

 

 

6.4

Public Announcements

 

6.5

Further

Assurances.

 

 

 

6.6

Employee

Matters.

 

 

 

6.7

Non-Competition; Non-Solicitation.

 

 

 

6.8

Access to Information

 

 

 

 

 

 

ARTICLE 7 INDEMNIFICATION

 

 

 

7.1

Indemnification by the Seller and the

Stockholders

 

 

 

7.2

Indemnification by the Buyer and Parent

 

 

 

7.3

Procedure For Non-Third Party Claims

 

 

 

7.4

Procedure For Third Party Claims.

 

 

 

7.5

Exclusive

Remedy

7.6

Survival of Representations and Warranties.

 

 

 

7.7

Indemnity

Notice

 

 

 

7.8

Indemnification Basket and Ceiling

 

 

 

 

 

 

ARTICLE 8 DISPUTE RESOLUTION

 

 

 

8.1

Exclusive Procedure for Dispute Resolution

 

 

 

8.2

Negotiation Between Executives.

 

 

 

8.3

Mediation

 

 

 

8.4

Litigation

 

 

 

8.5

Provisional Remedies

 

 

 

8.6

Tolling Statutes of Limitation

8.7

Performance to Continue

 

 

 

 

 

 

ARTICLE 9 MISCELLANEOUS PROVISIONS

 

 

 

9.1

Amendment and Modification

 

 

 

9.2

Waiver of Compliance; Consents

 

 

 

9.3

Notices

 

 

 

9.4

GOVERNING

LAW

 

 

 

9.5

Assignment

 

 

 

9.6

Counterparts

 

 

 

9.7

Interpretation.

9.8

Entire

Agreement

 

 

 

9.9

Severability

 

 

 

9.10

No Third Party Beneficiary

 

 

 

 

 

 

EXHIBITS 

 

 

 

 

 

 

 

Exhibit A

Form of Assignment and

Assumption Agreement

 

 

Exhibit B

Form of Earnout Agreement

 

 

Exhibit C

Form of Bill of Sale

 

 

Exhibit D

Form of Trademark Assignment

Agreement

 

 

Exhibit E

Form of Consulting Agreement

 

 

Exhibit F

Form of AAFES Side Letter

 

ASSET PURCHASE AGREEMENT

                ASSET

PURCHASE AGREEMENT, dated as of September 1, 2001 (the “ Agreement ”), between Mail Box Capital

Corporation, a Delaware corporation (the “ Seller ”), ADS MB Corporation, a Delaware corporation

(the “ Buyer ”),

Alliance Data Systems Corporation, a Delaware corporation (the “ Parent ”),

Kenneth W. Murphy, C. Cleave Buchanan, Jr., Robert Meador, John

Erickson, Richard Bainter, Earl Johnson, Charles Buchanan, and Stacy Riffe (the

“ Stockholders ”).

RECITAL

                The

Seller desires to sell to the Buyer, and the Buyer desires to buy from the

Seller, the Assets (as hereinafter defined) and the business of the Seller

relating to automated presort, laser printing, webb printing, fulfillment, list

rental, and data processing, maintenance, database management, disaster

recovery and response analysis related to any of the foregoing and other

products ancillary or relating to or derived from any of the foregoing (all of

the foregoing being hereinafter referred to as the “ Business ”).

STATEMENT

OF AGREEMENT 

                In

consideration of the foregoing and the mutual covenants, representations,

warranties and agreements hereinafter set forth, and intending to be legally

bound hereby, the parties hereto agree that, subject to the conditions herein

contained:

ARTICLE 1

SALE

OF ASSETS AND TERMS OF PAYMENT 

                1.1           The Sale.

                (a)           Upon

the terms and subject to the conditions of this Agreement, on the Closing Date

(as hereinafter defined), the Seller shall sell, convey, transfer, assign and

deliver to the Buyer, and the Buyer shall purchase and acquire from the Seller,

all of the Seller’s right, title and interest in and to all business,

properties, assets, machinery, equipment, furniture, franchises, goodwill and

rights of the Seller of every nature, kind and description, tangible and

intangible, owned or leased, personal or mixed, including, without limitation,

equipment, inventory, receivables, trade names and trademarks, wherever located,

pertaining and/or related to or used in the Business, whether or not carried or

reflected on the books or records of the Seller, and all of the other Assets

hereinafter referred to, but excluding the Excluded Assets (as hereinafter

defined), in each case as the same exist on the date hereof, in accordance with

the terms of this Agreement.  All of the foregoing (other than the

Excluded Assets) are herein collectively referred to as the “Assets” and

include, without limitation, the following:

                                                (i)            All owned furniture, fixtures,

computers (including both hardware and software) and other assets used in

connection with the operation of the Business as listed in Section 1.1(a)(i)

of the disclosure schedule delivered to the Buyer by the Seller on the date

hereof (the “ Disclosure Schedule ”);

                                                (ii)           All machinery, vehicles and equipment

owned by Seller, including, but not limited to, all machinery, vehicles and

equipment listed on Section 1.1(a)(ii) of the Disclosure Schedule;

                                                (iii)          All inventory, supplies and materials

of Seller related to the Business as listed on Section 1.1(a)(iii) of

the Disclosure Schedule, including all inventory in the hands of suppliers for

which Seller is committed with respect to the Business as of the Closing Date;

 

                                                (iv)          All receivables and all other

evidences of indebtedness owed to the Seller, including, without limitation,

those listed on Section 1.1(a)(iv) of the Disclosure Schedule;

                                                (v)           All leases of real property

(including, without limitation, to the extent leased by Seller, land,

buildings, structures, fixtures, appurtenances and improvements) relating to

the Business, including, without limitation, the leases relating to real

property listed on Section 1.1(a)(v) of the Disclosure Schedule (the “ Leases ”);

                                                (vi)          All contracts to which Seller is a

party listed on Section 1.1(a)(vi) of the Disclosure Schedule;

                                                (vii)         All of Seller’s right, title and

interest in the Intellectual Property (as hereinafter defined) used in

connection with the Business, including, without limitation, those items listed

on Section 1.1(a)(vii) of the Disclosure Schedule; and

                                                (viii)        The current assets of Seller as set

forth on the balance sheet attached hereto as Section 1.1(a)(viii) of

the Disclosure Schedule, including, without limitation, any security deposits

transferred to Buyer under the Leases.

                (b)           Notwithstanding

anything in this Agreement to the contrary, specifically excluded from the

Assets are the assets of the Business listed on Section 1.1(b) of the

Disclosure Schedule (collectively, the “ Excluded Assets ”).

                                (c)           The Seller shall sell, transfer,

convey and assign to the Buyer good and valid title to all of the Assets at the

Closing, free and clear of any liens, pledges, charges, mortgages, security

interests, restrictions, easements, liabilities, claims, encumbrances or rights

of others of every kind and description (collectively, “ Liens ”), except for Permitted Liens (as

hereinafter defined).

                                (d)           (i)            Upon

the terms and subject to the conditions of this Agreement, on the Closing Date,

the Buyer shall execute and deliver to the Seller an Assignment and Assumption

Agreement in the form of Exhibit A (the “ Assignment Agreement ”) pursuant to which the

Seller shall assign and the Buyer shall assume all of the liabilities and

obligations of the Business set forth in Section 1.1(d)(i) of the

Disclosure Schedule (collectively, the “ Assumed Liabilities ”) other than the Excluded

Liabilities (as hereinafter defined).  Except for the Assumed Liabilities

expressly set forth in Section 1.1(d)(i) of the Disclosure Schedule, the

Buyer shall not assume any other debts, commitments, obligations or liabilities

of the Seller or the Business. Notwithstanding the foregoing, nothing contained

herein shall require Buyer to pay, perform or discharge any obligations assumed

so long as Buyer shall in good faith contest the amount or validity thereof,

provided that the foregoing shall not relieve Buyer of its obligations to

indemnify Seller from any Assumed Liabilities pursuant to the terms of this

Agreement.

                                                (ii)           Notwithstanding anything in this

Agreement to the contrary, specifically excluded from the Assumed Liabilities

are the debts, commitments, obligations and liabilities of the Seller and the

Business listed on Section 1.1(d)(ii) of the Disclosure Schedule

(collectively, the “ Excluded Liabilities ”) all of which shall be retained

by the Seller.

                1.2           Purchase Price ; Manner of Payment 

                                (a)           Upon the terms and subject to the

conditions contained in this Agreement, in reliance upon the representations,

warranties and agreements of the Seller contained herein, and in consideration

of the aforesaid sale, assignment, transfer and delivery of the Assets, on the

Closing Date the Buyer will assume the Assumed Liabilities and will discharge, pursuant

to appropriate payoff letters or otherwise, immediately subsequent to the

Closing the debt of Seller listed on Section 1.2 of the Disclosure

Schedule with an aggregate principal and interest balance of $32,500,000.00

(the “ Up-Front Purchase

Price ”) plus an additional aggregate principal and interest

balance of $600,289.57. At the Closing (as hereinafter defined), the Buyer

shall deliver the Up-Front Purchase Price by wire transfer of immediately

available funds to the accounts set forth across from each debtor specified in Section

1.2 of the Disclosure Schedule.
                                (b)           Pursuant to the terms and conditions

of an Earnout Agreement by and between Buyer and Seller in the form attached

hereto as Exhibit B (the “ Earnout Agreement ”), the Buyer shall pay Seller the

Earnout Amount (as defined therein), if any, calculated in accordance with the

terms and conditions of the Earnout Agreement and subject to the Buyer’s right

of set-off contained therein.  The Up-Front Purchase Price plus the

Earnout Amount is referred to herein as the “ Final Purchase Price .”

                1.3           Allocation.  The Buyer and Seller agree that

they will use their best efforts to timely enter into an agreement after the

Closing concerning the allocation of the Purchase Price for purposes of Section

1060 of the Code, and Buyer and Seller will use that Purchase Price allocation

for all federal, state and local tax filings.

                1.4           Transfer Taxes.  The Seller shall pay and be

responsible for all transfer taxes attributable to the transactions

contemplated by this Agreement, if any.

                1.5           Reporting.  The Buyer and Seller agree that, for

tax purposes, they will report the transactions contemplated by this agreement

as if they were effective September 1, 2001.

 

ARTICLE 2 

THE

CLOSING 

                2.1           Time and Place of Closing.   Upon

the terms and subject to the conditions contained in this Agreement, the

closing of the transactions contemplated by this Agreement (the “ Closing ”) will take

place at the offices of Akin, Gump, Strauss, Hauer & Feld, L.L.P.,

1700 Pacific Avenue, Suite 4100, Dallas, Texas at 10:00 A.M. (local time)

on such date as the parties may agree, provided that the Closing Date shall be

no later than September 14, 2001.  The date on which the Closing actually

occurs is hereinafter referred to as the “ Closing Date. ”

                2.2           Deliveries by the Seller.  At the

Closing, the Seller will deliver or cause to be delivered to the Buyer duly

executed instruments of transfer and assignment of the Assets in form

reasonably satisfactory to the Buyer, subject only to Permitted Liens,

sufficient to vest in the Buyer good and valid title to the Assets to be

conveyed at the Closing in accordance with the terms of this Agreement. 

In addition, at the Closing, the Seller shall deliver to Buyer:

                                (a)           the originals (or if not in

existence, copies) of all Material Contracts (as hereinafter defined) and the

originals of all books, records and files included in the Assets, unless copies

have otherwise previously been provided to Buyer or made available to Buyer;

                                (b)           a certificate dated as of the Closing

Date and signed by the secretary of Seller, certifying the certificate of

incorporation, bylaws, board of directors and stockholders approvals and the

incumbency of the officers authorized to execute this Agreement and the documents

contemplated herein;

                                (c)           a certificate of good standing of the

Seller issued as of a recent date by the Secretary of State of the Seller’s

jurisdiction of incorporation (Delaware) and by the Secretary of State of the

State of Texas;

                                (d)           executed counterparts reasonably

satisfactory in form and substance to the Buyer of all consents listed in Section

2.2(d) of the Disclosure Schedule (the “ Consents ”), other than those listed on Section

4.3 of the Disclosure Schedule;

                                (e)           the Bill of Sale, by and between the

Buyer and the Seller in the form attached hereto as Exhibit C , duly

executed by the Seller (the “ Bill of Sale ”);

                                (f)            the Assignment Agreement, by and

between the Buyer and the Seller in the form attached hereto as Exhibit A ,

duly executed by Seller;
                                (g)           the Earnout Agreement, by and between

the Buyer, the Parent and the Seller in the form attached hereto as Exhibit

B , duly executed by the Seller;

                                (h)           the Trademark Assignment Agreement,

by and between the Seller and the Buyer in the form attached hereto as Exhibit

D , duly executed by the Seller (the “ Trademark Assignment Agreement ”);

                                (i)            a consulting agreement duly executed

by each of the individuals listed on Section 2.2(j) of the Disclosure

Schedule, in the form attached hereto as Exhibit E (the “ Consulting Agreement ”);

                                (j)            employment offers duly executed by

each of the individuals listed on Section 2.2(k) of the Disclosure

Schedule (the “ Employment Offers ”);

                                (k)           payoff letters in the form reasonably

acceptable to Buyer from each of the lenders of the Seller listed in Section

1.2 of the Disclosure Schedule and indicated thereon to be delivering

payoff letters;

                                (l)            a side letter agreement in the form

attached hereto as Exhibit F (“ AAFES Side Letter ”) duly executed by Seller and Blair;

                                (m)          all documents necessary to change the

name of the Seller and to terminate all of its assumed name filings; and

                                (n)           all other documents required by the

terms of this Agreement to be delivered to the Buyer at the Closing.

                2.3           Deliveries by the Buyer and/or the

Parent.  At the Closing, the Buyer and/or the Parent shall

deliver or cause to be delivered:

                                (a)           the Up-Front Purchase Price,

including evidence of repayment of the debt listed in Section 1.2 of the

Disclosure Schedule;

                                (b)           a certificate of good standing of the

Buyer and the Parent, issued as of a recent date by the Secretary of State of

the State of Delaware;

                                (c)           a certificate dated as of the Closing

Date and signed by the secretary of each of the Buyer and the Parent, certifying

the certificate of incorporation, bylaws, board of director approvals and the

incumbency of the officers authorized to execute this Agreement and the

documents contemplated herein;

                                (d)           the Earnout Agreement, duly executed

by the Buyer;

                                (e)           the Assignment Agreement, duly

executed by the Buyer;

                                (f)            the Trademark Assignment Agreement,

duly executed by the Buyer;

                                (g)           the Consulting Agreements, duly

executed by the Buyer;

                                (h)           Employment Offers duly executed by

the Buyer;

                                (i)            the AAFES Side Letter duly executed

by Buyer; and

                                (j)            all other documents required by the

terms of this Agreement to be delivered to the Seller at the Closing.

ARTICLE 3

REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS 

                Each

Stockholder hereby severally, but not jointly, represents and warrants to the

Buyer and the Parent, except as set forth in the applicable section of the

Disclosure Schedule, as follows:

                3.1           Ownership.  Such Stockholder is the record and

beneficial owner of the number of shares of common stock, par value $0.01 per

share, of the Seller (the “ Common Stock ”) set forth opposite such Shareholder’s

name on Section 3.1 of the Disclosure Schedule (the “ Subject Shares ”). 

The Subject Shares constitute the only shares, with respect to which such

Stockholder is the record or beneficial owner, of Common Stock or other capital

stock of the Seller.   Such Stockholder does not beneficially own any

options, warrants or other rights (whether or not contingent) to acquire shares

of capital stock of the Seller and is not party to any agreement,

understanding, contract or other arrangement with the Seller pursuant to which

such Stockholder may require Seller to repurchase, redeem or otherwise acquire

any of the Subject Shares.  Except as set forth in Section 4.22 of

the Disclosure Schedule, such Stockholder does not own any assets that are used

in the Business.

                3.2           Authority Relative to this Agreement. 

Such Stockholder has the sole right to vote the Subject Shares set forth

opposite its name on Section 3.1 of the Disclosure Schedule, and, except

for a Securityholder’s Agreement, dated August, 20, 1999, by and among the

Seller and the Stockholders, none of such Subject Shares is subject to any

voting trust or other agreement, arrangement or restriction with respect to the

voting of the Subject Shares.  Such Stockholder is either (i) a natural

person with the legal capacity to execute and deliver this Agreement and to

perform his or her obligations hereunder, or (ii) has all requisite power and

authority, to enter into this Agreement and to consummate the transactions

contemplated hereby.  The execution and delivery of this Agreement by such

Stockholder and the performance by such Stockholder of its obligations

hereunder have been duly authorized by all necessary action on the part of such

Stockholder.  This Agreement has been duly executed and delivered by, and

constitutes a valid and binding agreement of such Stockholder, enforceable

against such Stockholder in accordance with its terms, except as such enforceability

may be limited by applicable bankruptcy, insolvency, reorganization or other

similar laws affecting creditors’ rights generally and by general equitable

principles (regardless of whether enforceability is considered in a proceeding

in equity or at law).

                3.3           Consents and Approvals; No

Violation.

                                (a)           There is no requirement applicable to

such Stockholder to make any filing with, or to obtain any permit,

authorization, consent or approval of, any governmental or regulatory authority

as a condition to the lawful consummation by such Stockholder of the

transactions contemplated by this Agreement.

                                (b)           Except as may be required under the

Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “ HSR Act ”) and except

as set forth in that certain Securityholders' Agreement, dated August 20,

1999, by and among the Seller and the other signatories thereto, neither the

execution and delivery of this Agreement by such Stockholder nor the

consummation by such Stockholder of the transactions contemplated hereby nor

compliance by such Stockholder with any of the provisions hereof will (i)

result in a breach of or default, or give rise to any right of termination,

cancellation or acceleration under, any of the terms, conditions or provisions

of any material note, bond, mortgage, indenture, license, agreement, lease or

other similar material instrument or obligation to which such Stockholder is a

party or by which any of such Stockholder’s Subject Shares may be bound, or

(ii) violate any material order, judgment, writ, injunction, decree, statute,

rule or regulation applicable to such Stockholder or any of such Stockholder’s

Subject Shares.  If the Stockholder is married and the Subject Shares of

the Stockholder constitute community property or spousal approval is otherwise

required for this Agreement to be legal, valid and binding, then, to the extent

so required, this Agreement has been duly executed and delivered by, and

constitutes a valid and binding agreement of, the Stockholder’s spouse,

enforceable against such spouse in accordance with its terms , except as such

enforceability may be limited by applicable bankruptcy, insolvency,

reorganization or other similar laws affecting creditors’ rights generally and

by general equitable principles (regardless of whether enforceability is

considered in a proceeding in equity or at law).

 

                3.4           Litigation.  There are no actions, suits,

proceedings or government investigations pending or, to the knowledge of such

Stockholder, threatened against such Stockholder which seek to question, delay

or prevent the consummation of or would materially impair the ability of such

Stockholder to consummate the transactions contemplated hereby.

                3.5           Brokers.  No broker, finder or other person is

entitled to any brokerage fees, commissions or finder’s fees from such

Stockholder in connection with the transactions contemplated hereby.

ARTICLE 4

REPRESENTATIONS AND WARRANTIES OF THE SELLER 

                The

Seller hereby represents and warrants to the Buyer and the Parent, except as

set forth in the applicable section of the Disclosure Schedule, as follows:

                4.1           Organization.  The Seller is a corporation

duly organized, validly existing and in good standing under the laws of the

jurisdiction of its incorporation and has all requisite corporate power and

authority to own, lease and operate its properties and to carry on its business

as now being conducted, to own or use the properties and assets that it

purports to own or use and to perform all of its obligations under the Material

Contracts, except where the failure to be so existing and in good standing or

to have such power and authority would not, individually or in the aggregate,

have a Material Adverse Effect (as hereinafter defined).  The Seller is

duly qualified to do business as a foreign corporation, and is in good

standing, in each jurisdiction where the character of its properties owned or

held under lease or the nature of its activities make such qualification

necessary, except where the failure to be so qualified and in good standing

would not, individually or in the aggregate, have a Material Adverse

Effect.  For all purposes herein, “ Material Adverse Effect ” shall mean any state or states

of fact, condition or conditions, event or events, circumstance or

circumstances, change or changes, or effect or effects that individually or in

the aggregate (including, without limitation, an aggregate combination of one

or more of the foregoing whether or not related to each other or involving or

affecting the same or different representations, warranties and/or covenants)

are materially adverse to (a) the business, financial condition, results of

operations or prospects of the Business or the Assets or (b) the ability of

Seller to consummate the transactions contemplated by this Agreement.

                4.2           Authorization.   The Seller has all

requisite corporate power and authority to execute and deliver this Agreement

and each other agreement, document and instrument to be executed or delivered

by it contemplated by this Agreement (the “ Seller Documents ”) and to consummate the

transactions contemplated hereby and thereby.  The execution and delivery

of this Agreement or the Seller Documents by the Seller and the consummation of

the transactions contemplated hereby and thereby by the Seller have been duly and

validly authorized by all necessary action on the part of the Seller and no

other corporate proceedings on the part of the Seller are necessary to

authorize this Agreement and the Seller Documents or to consummate the

transactions contemplated hereby and thereby. This Agreement has been, and when

executed and delivered at Closing, the Seller Documents will be, duly and

validly executed and delivered by the Seller, and, assuming the due

authorization, execution and delivery by the Buyer and the Parent, this Agreement

constitutes, and the Seller Documents will constitute, legal, valid and binding

obligations of the Seller, enforceable against the Seller in accordance with

their terms, except as such enforceability may be limited by applicable

bankruptcy, insolvency, reorganization or other similar laws affecting

creditors’ rights generally and by general equitable principles (regardless of

whether enforceability is considered in a proceeding in equity or at law).

                4.3           Consents and Approvals; No Violation 

                                (a)           There is no requirement applicable to

the Seller to make any filing with, or to obtain any permit, authorization,

consent or approval of, any governmental or regulatory authority as a condition

to the lawful consummation by the Seller of the transactions contemplated by

this Agreement.

 

                                (b)           Assuming the payment immediately

subsequent to Closing of those items set forth on Section 1.2 of the

Disclosure Schedule and except as set forth in Section 4.3 of the

Disclosure Schedule, neither the execution and delivery of this Agreement by

the Seller nor the consummation by the Seller of the transactions contemplated

hereby nor compliance by the Seller with any of the provisions hereof will

directly or indirectly (with or without notice or lapse of time):  (i)

contravene, conflict with or result in any breach or violation of any provision

of the certificate of incorporation or bylaws of the Seller or any resolution

adopted by the Board of Directors of Seller or the stockholders of Seller, (ii)

result in a breach of or default, or give rise to any right of termination,

cancellation or acceleration under, any of the terms, conditions or provisions

of any material note, bond, mortgage, indenture, license, agreement, lease or

other similar instrument or obligation to which the Seller is a party or by

which any of its properties or assets may be bound (for purposes hereof, a

note, bond, mortgage, indenture, license, agreement, lease or similar

instrument shall be deemed material only if it involves (A) executory performance

of services or delivery of goods or materials to or by the Seller of an amount

in excess of $50,000, (B) the future expenditure or receipt by the Seller in

excess of $50,000, (C) the lease, rental or occupancy of real or personal

property involving the future expenditure by the Seller of in excess of $50,000

in the current or any ensuing fiscal year, (D) any agreement pursuant to which

the Seller licenses software or other intellectual property, other than

commercially available software programs generally available to the public

which have been licensed to the Seller pursuant to standard end-user license

agreements or (E) in the case of any note or other obligation involving debt

for money borrowed, it involved debt other than as disclosed on Section 1.2 of

the Disclosure Schedule), (iii) cause Buyer or the Parent to become subject to

or liable for the payment of any Tax, (iv) violate or conflict with any order,

judgment, writ, injunction, decree, or any statute, rule or regulation which is

either applicable to, binding upon or enforceable against the Seller or the

Business or any of the Seller’s properties or assets or (v) result in the

imposition or creation of any Lien upon or with respect to the Assets.

                4.4           Capitalization.  The authorized, issued and

outstanding capital stock of Seller and each subsidiary of Seller and the legal

owner of such capital stock is set forth on Section 4.4 of the

Disclosure Schedule.   Except for the Subject Shares, there are not

outstanding any shares of capital stock of the Seller.  Except for

warrants to purchase shares of Common Stock held by William Blair Mezzanine

Capital Fund II, L.P. ( “Blair ”), there are not outstanding any options,

warrants or other rights (whether or not contingent) to acquire shares of

capital stock of the Seller.  There are no outstanding contract

obligations or understandings of the Seller to repurchase, redeem or otherwise

acquire any of the Subject Shares.

                4.5           Financial Statements and Books and

Records. 

                                (a)           The Seller has delivered to the Buyer

copies of the June 30, 2001 balance sheet of the Seller, as attached

hereto as Section 4.5(a) of the Disclosure Schedule (the “ Balance Sheet ”). The

Balance Sheet fairly presents the financial position of the Seller in all

material respects as of its date and has been prepared in conformity with

generally accepted accounting principles applied on a consistent basis, except

as otherwise noted therein and except for lack of footnotes and for normal

year-end adjustments. The books and records of the Seller relating to the

Business are complete and correct in all material respects.

                                (b)           The Seller has delivered to the Buyer

copies of income statements of the Business for the 12-month period ended

December 31, 2000 and the period from August 20, 1999 to December 31, 1999 and

for the six-month periods ended June 30, 2001 and 2000, as attached hereto

as Section 4.5(b) of the Disclosure Schedule (the “ Income Statements ”). The Income Statements

fairly present the results of operations of the Business in all material

respects for the periods covered thereby and have been prepared in conformity

with generally accepted accounting principles applied on a consistent basis,

except as otherwise noted therein and, with respect to the interim Income

Statements, except for lack of footnotes and for normal year-end adjustments.

                4.6           Absence of Certain Changes or Events . 

Except as set forth in Section 4.6 of the Disclosure Schedule or except

as permitted by this Agreement, since June 30, 2001, the Business has not (a)

suffered any damage, destruction or casualty loss adversely affecting the

Assets or the Business; (b) incurred or discharged any obligation or liability

or entered into any other transaction except in the ordinary course of

business; (c) suffered any change in its business, financial condition or in

its relationship with its suppliers, customers, distributors, lessors,

licensors, licensees or other third parties which individually or in the

aggregate would have a Material Adverse Effect; (d) other than with respect to

agreements for which the Buyer or the Parent will have no liability after

Closing, increased the rate or terms of compensation or benefits payable to or

to become payable by it to its directors, officers or key employees or

increased the rate or terms of any bonus, pension or other employee benefit

plan covering any of its directors, officers or key employees; (e) incurred any

indebtedness for borrowed money other than in the ordinary course of business

and consistent with past practice; (f) forgiven or canceled any indebtedness

owing to it or waived any claims or rights of material value; (g) sold, leased,

licensed or otherwise disposed of any of its assets other than sales of

inventory in the ordinary course of business and consistent with past practice

or dispositions of assets not material to the Business; (h) created or assumed

any mortgage, lien, security interest or other encumbrance on any of the

Assets, except for Permitted Liens; (i) entered into, amended or terminated any

Material Contract, Lease or Permit (each as hereinafter defined) or any Assumed

Liability except in the ordinary course of its business; or (j) committed

pursuant to a legally binding agreement to do any of the things set forth in

clause (b) and clauses (d) through (i) above.

 

                4.7           Title to Assets.  The Seller has good and

valid title to all of the assets, properties and rights that it owns or

purports to own (including all right, title and interest in and to the

Intellectual Property), free and clear of all Liens, except Permitted

Liens.  The Seller has a valid leasehold interest or a royalty-free

license to all of the assets, properties and rights that it leases or licenses

or purports to lease or license.  Other than services rendered by officers

and directors of the Seller who are also stockholders of Seller, the Business

does not receive any services from the Seller or any of its affiliates which

are material to the operation and conduct of the Business.  As used in

this Agreement, the term “ Permitted Liens ” shall mean and include (i) those

exceptions to title to the properties and assets of the Seller listed in Section

4.7 of the Disclosure Schedule; (ii) statutory liens for current taxes or

assessments not yet due or delinquent; (iii) mechanics’, carriers’, workers’,

repairers’ and other similar statutory Liens arising or incurred in the

ordinary course of business relating to obligations as to which there is no

default on the part of the Seller; (iv) liens securing the obligations listed

on Section 1.2 of the Disclosure Schedule; and (v) such other minor

imperfections in title, charges, easements, restrictions, and encumbrances

which do not materially detract from the value or transferability of or

interfere with the present use of the properties subject thereto or affected

thereby.

                4.8           Adequacy of Assets.  The Assets are free

from defects that would impair their usage in the manner intended, in good and

safe operating condition and repair (ordinary wear and tear excepted), have

been maintained in accordance with normal industry practice, are adequate for

the uses to which they are being put and currently proposed to be put by the

Seller and include all assets, properties and rights which are necessary in the

conduct of the Business as currently conducted and as are necessary for Buyer

to conduct its business in the same manner as the Business has been conducted

during the last 12 months.

                4.9           Indebtedness.  Section 4.9 of

the Disclosure Schedule sets forth a complete and accurate list and description

of all instruments or other documents relating to any direct or indirect

indebtedness for borrowed money of the Seller, including any loan agreements,

indentures, mortgages, pledges, hypothecations, deeds of trust, conditional

sale or title retention agreements, security agreements, equipment financing

obligations or guaranties, or other sources of contingent liability in respect

of any indebtedness or obligations to any other person for borrowed money, or

letters of intent or commitment letters with respect to same as well as

indebtedness by way of lease-purchase arrangements, guarantees, undertakings on

which others rely in extending credit and all conditional sales contracts,

chattel mortgages and other security arrangements with respect to personal

property used or owned by Seller (collectively “ Indebtedness ”).  Except as provided in Section

4.9 to the Disclosure Schedule, Seller has made available to Buyer a true,

correct, and complete copy of each of the items listed on Section 4.9 of

the Disclosure Schedule.

                4.10         Contracts.  Section 4.10of the Disclosure Schedule sets forth all contracts, agreements and other

arrangements of the Seller or the Business or affecting any of the Assets which

provide for payment or performance obligations having an aggregate value in

excess of $25,000 in any single year or has a term of more than one year from

the Closing Date (collectively, the “ Material Contracts ”), and except as set forth in Section 

4.10 of the Disclosure Schedule, there are no other Material

Contracts.  There is not, under any of the Material Contracts, any

existing default or event of default on the part of the Seller which could have

a Material Adverse Effect.  Except as set forth in Section 4.10 of

the Disclosure Schedule, no consents are required for the assignment of any

Material Contract to the Buyer other than consents listed on Section 2.2(d) of

the Disclosure Schedule.  Each Material Contract is in full force and

effect and is a valid and binding obligation of the Seller and, to the

knowledge of the Seller, each other party thereto, and is enforceable in

accordance with its terms, and will, unless such Material Contract requires the

consent of the other party or parties thereto to its assignment and such

consent has not been obtained prior to Closing, immediately following the

Closing be valid, binding and enforceable by Buyer as assignee thereof in

accordance with its terms, except as any such enforceability may be limited by

the effect of bankruptcy, insolvency or similar laws affecting creditors’

rights generally or by general principles of equity.

 

                4.11         Legal Proceedings.  Except as set forth

on Section 4.11 of the Disclosure Schedule (the “ Litigation Matters ”), there are no actions,

suits, proceedings or any legal, administrative, arbitration or other proceedings

or governmental investigations pending or, to the knowledge of the Seller,

threatened against the Seller, any of the Assets or the Business or which seek

to question, delay or prevent the consummation of or could materially impair

the ability of the Seller to consummate the transactions contemplated

hereby.  There are no outstanding judgments, orders, writs, injunctions,

indictments or informations, grand jury subpoenas or civil investigative

demands, plea agreements, stipulations, awards or decrees of any court,

arbitrator or any federal, state, municipal or other governmental department,

commission, board, agency or instrumentality against or relating to Seller,

relating to the Business or the Assets.

                4.12         Employee Benefit Plans.

                                (a)           Section 4.12 of the Disclosure

Schedule lists all employment, retention, severance, deferred compensation,

change of control or other agreements or contracts with any employee of Seller,

and all “ employee benefit plans

” as such term is defined in Section 3(3) of the Employee

Retirement Income Security Act of 1974, as amended (“ ERISA ”) maintained or contributed to by

Seller in which any employee of Seller participates, and all stock option,

restricted stock, stock appreciation or other equity plans and all bonus,

severance, change in control, retention, deferred compensation or other

compensatory plans maintained or contributed to by the Seller in which any

employee of Seller participates, whether any such plans or arrangements are

written or oral (“ Employee Benefit Plans

”).  Seller has made available to Buyer true and complete

copies of all Employee Benefit Plans.  This Agreement and the consummation

of the transactions contemplated herein do not create any liabilities or

trigger any expenses under the Employee Benefits Plans.

                                (b)           With respect to each Employee Benefit

Plan, except as set forth in Section 4.12 of the Disclosure

Schedule:  (i) if intended to qualify under Section 401(a) or 401(k) of

the Internal Revenue Code of 1986, as amended (the “ Code ”), such plan satisfies the requirements

of such sections, has received a favorable determination letter from the

Internal Revenue Service, and its related trust has been determined to be

exempt from tax under Section 501(a) of the Code and, to the knowledge of

Seller, nothing has occurred since the date of such letter to adversely affect

such qualification or exemption; (ii) each such plan has been operated and

administered in substantial compliance with its terms and applicable law; (iii)

Seller has not engaged in, and Seller has no knowledge of any person that has

engaged in, any transaction or acted or failed to act in any manner that would

subject Seller to any liability for a breach of fiduciary duty under ERISA;

(iv) no disputes are pending, or, to the knowledge Seller, threatened; (v)

Seller has not engaged in and has no knowledge of any person that has engaged

in, any transaction in violation of Section 406(a) or (b) of ERISA or Section

4975 of the Code for which no exemption exists under Section 408 of ERISA or

Section 4975(c) of the Code or Section 4975(d) of the Code or that would result

in a civil penalty being imposed under subsections (i) or (l) of Section 502 of

ERISA; (vi) all contributions due have been made on a timely basis; (vii) no

Employee Benefit Plan is a plan covered by Title IV of ERISA or subject to the

funding requirements of Section 412 of the Code; (viii) except to the

extent required under ERISA Section 601 et seq. and Section 4980B of the Code,

Seller does not provide health or welfare benefits under the Employee Benefit

Plans for any retired or former employee and is not obligated to provide health

or welfare benefits to any active employee following such employee’s retirement

or other termination of service; (ix) the termination of any Employee Benefit

Plan would not result in any material liability or further obligation on the

part of the Seller; and (x) all reports and the documents required to be filed

by any of the Employee Benefit Plans with any governmental agency or distributed

to plan participants or beneficiaries (including notices required by the

Consolidated Omnibus Reconciliation Act of 1985, as amended, actuarial reports,

audits, or tax returns ) have been timely filed or distributed.  All

contributions made or required to be made under any Employee Benefit Plan meet

the requirements for deductibility under the Code, and all contributions that

are required and that have not been made have been properly recorded on the

books of Seller.

 

                                (c)           No Employee Benefit Plan is a “ multi-employer plan ”

(as defined in Section 4001(a)(3) of ERISA) or a “ multiple employer plan ” (within the meaning

of Section 413(c) of the Code).  No event has occurred with respect

to Seller in connection with which Seller would be subject to any liability,

lien or encumbrance with respect to any Employee Benefit Plan or any employee

benefit plan described in Section 3(3) of ERISA sponsored, maintained or

contributed to by Seller or any trade or business, whether or not incorporated,

which together with Seller would be deemed a “ single employer ” within the meaning of

Section 414(b), (c) or (m) of the Code or Section 4001(b)(1) of ERISA.

                4.13         Employees. 

                                (a)           Section 4.13 of the Disclosure

Schedule is a true and complete list as of September 1, 2001 of the name of

each individual who is employed or retained or compensated as an employee,

independent contractor or consultant (either directly or indirectly) by the

Seller (the “ Employees ”)

on the date hereof along with his or her current job title, compensation and

any employee benefits enjoyed by such Employee which are not generally

available to employees of the Seller.

                                (b)           Except as set forth on Section

4.13 of the Disclosure Schedule, (i) as of September 2, 2001, the Seller

has paid or made provision for the payment of all salaries, commissions and

accrued wages of the Employees up to the Closing; (ii) the Seller has complied

in all material respects with all applicable laws, rules and regulations

relating to the employment of labor, including those relating to wages, hours,

unemployment insurance, collective bargaining and the payment and withholding

of taxes for all Employees; (iii) the Seller has withheld all amounts required

by law or agreement to be withheld from the wages or salaries of the Employees;

and (iv) the Seller is not liable for any arrears of wages or other taxes or

penalties for failure to comply with any of the foregoing to the extent they

are applicable to the Employees or any former employees of the Business. 

There is not pending or, to the knowledge of the Seller, threatened, any labor

dispute, strike, work stoppage or union organizing effort involving the

Business.

                                (c)           Except as set forth in Section

4.13 of the Disclosure Schedule, Seller has not during the past ninety days

taken any action which would require any compliance under the Worker Adjustment

and Retraining Notification Act of 1988, as amended (the “ WARN Act ”), including the termination or

laying off of any employees, or any other action that could constitute a “plant

closing” or “mass layoff,” as those terms are defined by the WARN Act.

                                (d)           The Seller is not a party to any

agreement with a labor union or other labor representative of any Employee.

                4.14         Taxes.  Except as set forth on Section 4.14 of

the Disclosure Schedule, all taxes, fees, assessments and charges, including,

without limitation, income, property, sales, use, franchise, added value,

employees’ income withholding and social security taxes, imposed by the United

States or by any foreign country or by any state, municipality, subdivision or

instrumentality of the United States or of any foreign country, or by any other

taxing authority, which are due or payable by the Seller with respect to the

Business on or prior to the date hereof, or for which the Seller may be liable

on or prior to the date hereof with respect to the Business (including any for

which the Seller may be liable by reason of its being a member of an

affiliated, consolidated or combined group with any other company at any time

on or prior to the Closing Date), and all interest and penalties thereon

(collectively, “ Taxes ”

or individually, a “ Tax ”), have been paid in full, or, if not due on or

prior to the date hereof but due on or prior to the Closing Date, will be

timely paid in full when due.  All Tax returns required to be filed in

connection therewith have been, or will be timely and accurately prepared in

all material respects and filed, and all deposits required by law to be made by

the Seller with respect to employees of the Business and other withholding

Taxes due on or prior to the date hereof have been duly made or, if not due on

or prior to the date hereof but due on or prior to the Closing Date, will be

timely and duly made.  The Seller has withheld and paid over all Taxes

required to have been withheld and paid over, and complied with all information

reporting and backup withholding requirements, including maintenance of

required records with respect thereto, in connection with amounts paid or owing

to any employee, creditor, independent contractor or other third party. 

No deficiency for any Tax or claim for additional Taxes relating to or

affecting in any manner any of the Business or the Assets has been proposed,

asserted or assessed against the Seller or any of the Assets.  There are

no Liens on any of the Assets with respect to Taxes, other than Liens for Taxes

not yet due and payable and other Permitted Liens.

 

                4.15         Intellectual Property. 

                                (a)           Section 4.15(a) of the

Disclosure Schedule identifies, illustrates (in the case of marks consisting of

a graphical design or fanciful fonts), describes (in the case of an item’s

trade dress) or lists all of the Seller’s intellectual property that is not

included in the Excluded Assets (the “ Intellectual Property ”) (i) pertaining to any product,

software or service manufactured, marketed, licensed or sold by the Seller or

used, employed or exploited in the development, license, sale, marketing,

distribution or maintenance thereof and (ii) including all contracts and other

agreements to which the Seller is a party, including such contracts and

agreements where the Seller is either a licensee or licensor, for each item of

the Intellectual Property.  The Intellectual Property includes, but is not

limited to, the Seller’s (or the Seller’s rights, under a license, in and to),

foreign and domestic trademarks, service marks, appellations of origin, trade

names, trade dresses, domain names, labels, logos, all goodwill associated with

all of the foregoing, computer software, copyrights, patents, inventions,

industrial models, processes, designs, ideas, any proprietary or confidential

information, trade-secrets, all other creative works and measures of protection

therefor, and all related applications, whether filed or unfiled, registrations,

and grants.  To the Seller’s knowledge, the use of any item of

Intellectual Property by the Seller does not infringe or violate the rights of

any third party. The Seller has taken reasonable security measures to protect

the secrecy, confidentiality and value of the Intellectual Property, to the

extent such measures are appropriate.  To the knowledge of the Seller, the

trademarks, service marks, trade names, trade dress, labels and logos described

in Section 4.15(a) of the Disclosure Schedule are sufficient for the

conduct of the Sell er’s Business as now conducted.

                                (b)           Except as disclosed in Section

4.15(b) of the Disclosure Schedule, all patents, copyrights, trademarks

(including state, federal and foreign registrations and applications) and other

rights and property listed in Section 4.15(a) of the Disclosure Schedule

are valid, subsisting and in full force and effect.

                                (c)           Except as disclosed in Section

4.15(b) of the Disclosure Schedule, (i) the Seller owns or has the

exclusive right to use the Intellectual Property in connection with the

Business, (ii) no third party has any interest (other than as a stockholder or

lender of the Seller) in, owns, possesses or otherwise holds in any manner any

of the Intellectual Property, (iii) the Seller is not required to pay any

royalty or other amount to anyone with respect to any of the Intellectual

Property, (iv) the rights and properties listed in Section 4.15(a) of

the Disclosure Schedule are not subject to any maintenance fees or renewal

fees, (v) the Seller has not received any notice of infringement of, or

conflict with, asserted rights of others with respect to any of the

Intellectual Property, and there is no claim, action, suit, investigation or

proceeding pending or, to the knowledge of the Seller, threatened against the

Seller with respect thereto, and (vi) since August 10, 1999, the Seller

has never agreed to indemnify or has never indemnified any person for or

against any interference, infringement, misappropriation, or other conflict

with respect to any item of the Intellectual Property.

                                (d)           Except as disclosed in Section

4.15(b) of the Disclosure Schedule, (i) the development or sale by the

Seller of all computer software developed by or for the Seller (the “ Software ”) did not

and do not violate any rights of any other person or entity, and the Seller has

not received any communication alleging such a violation, (ii) the Seller has

not granted to any other person or entity any license, option or other right to

develop or sell the Software, whether requiring the payment of royalties or

not, and (iii) the Seller does not have any obligation to compensate any person

for the development, use, sale or exploitation of the Software.

                4.16         Compliance with Law; Permits . 

Each of the Seller and the Business is in compliance with all applicable laws,

rules and regulations, including, without limitation, any applicable laws,

rules, regulations, ordinances, codes, orders, judgments or decrees as to

hiring, employment, environmental, health and/or safety matters, except where

the failure to so comply would not have a Material Adverse Effect.  The

Business has all of the licenses, permits and other governmental authorizations

required for the operation of the Business as conducted as of the date of this

Agreement (the “ Permits ”),

each of which is identified on Section 4.16 of the Disclosure Schedule,

except where the failure to possess any such license, permits and other

governmental authorizations would not have a Material Adverse Effect.

 

                4.17         Accounts Receivable.   Section 4.17 of

the Disclosure Schedule contains a true and complete list and aging of the

accounts receivable pertaining or related to any of the Assets or the Business

as of the date set forth thereon.  All of the Receivables are valid and

legally binding, represent bona fide transactions, and arose in the ordinary

course of business and are reflected properly in Seller’s books and

records.  To Seller’s knowledge the Receivables are collectible and will

be collected in accordance with past practice and the terms of such receivables

(and in any event within six months following the Closing Date), without set

off or counterclaims, subject to the allowance for doubtful accounts, if any,

set forth in the Balance Sheet, as such allowance has been adjusted up to the

Closing Date consistent with the past practices of Seller; provided , however

, any breach of the forgoing will be cured upon Buyer’s subsequent

collection of such receivables.  For purposes of this Agreement, the term

“ Receivables ” means all

receivables of the Seller, including, without limitation, all contracts in

transit, manufacturer’s warranty receivables and all trade account receivables

arising from the provision of services, sale of inventory, notes receivable,

and insurance proceeds receivable.

                4.18         Insurance.  The Assets and the Business are

insured for Seller’s benefit and will be so insured through the Closing Date,

in amounts and against risks consistent with levels and types commonly used in

the industry in which the Seller operates.  Section 4.18 of the

Disclosure Schedule contains a true and complete list of all policies providing

such insurance.

                4.19         Real Property.   The Seller does not own any

real property.  Section 4.19 of the Disclosure Schedule sets forth

a true and complete list of all Leases.  All of the Leases are in full

force and effect and have not been modified or amended, and there are no

disputes, oral agreements or forbearance programs in effect as to the

Leases.  There has not occurred any default by the Seller under any Lease

and, to the knowledge of the Seller, there has not occurred any default

thereunder by any other party thereto.

                4.20         Environmental Matters. 

                                (a)           All activities of the Business have

been conducted in substantial compliance with, and all properties owned, leased

or operated by Seller in connection with the Business’s operations have and

continue to substantially comply with, all Environmental Laws.

                                (b)           Except as set forth on Section

4.20 of the Disclosure Schedule, no Hazardous Material (as hereinafter

defined) is located or is suspected to be located in the soil, groundwater,

surface water, or waterways at or under any property now or previously owned,

leased or operated by Seller, in quantities or concentrations sufficient to

require investigation, removal or remediation under any Environmental Laws.

                                (c)           Seller has not (i) treated, stored,

disposed of, arranged for or permitted the disposal of, transported, handled,

or released any substance, including any Hazardous Material, or (ii) owned or

operated property or facilities, either of which in a manner that has given or

would give rise to any damages, including any damages for response costs,

corrective action costs, personal injury, property damage or natural resources

damages, pursuant to any Environmental Laws.

                                (d)           As used herein, “ Environmental Law ”

means all federal, state, and local laws, regulations, licenses, and common law

related to the environment, health and safety, including, without limitation,

the Federal Clean Water Act, Oil Pollution Act, Resource Conservation and

Recovery Act, Clean Air Act, Comprehensive Environmental Response, Compensation

and Liability Act, and the Occupational Health and Safety Act, each as amended

and currently in effect; and “ Hazardous Material ” means any hazardous or toxic

substance, material, pollutant, contaminant or waste which is regulated by any

federal, state or local governmental authority, regulated under any

Environmental Law, including any petroleum produce, any explosives, any radioactive

material and any asbestos containing material.

                4.21         Undisclosed Liabilities.  Except as

set forth in Section 4.21 of the Disclosure Schedule and except as set

forth or reflected in the Seller’s Balance Sheet, the Business does not have

any liability or obligation of any kind or nature (fixed or contingent) that is

required to be reflected on a balance sheet in accordance with generally

accepted accounting principles which is not reflected, reserved against or

disclosed in the Balance Sheet, except for customary accounts payable and

accrued business expenses incurred since June 30, 2001 in the ordinary course

of business.

 

                4.22         Subsidiaries and Affiliate

Relationships.  Except as set forth on Section 4.22 of the

Disclosure Schedule, the Seller has no subsidiary nor any interest, direct or

indirect, nor has any commitment to purchase any interest, direct or indirect,

in any other corporation or in any partnership, joint venture or other business

enterprise or entity, which has any involvement with or possesses or uses any

of the Business and/or the Assets.  Since August 1999, the Business and

the operations of the Seller have not been conducted through any direct or

indirect subsidiary or any direct or indirect affiliate of the Seller.   Except

as set forth on Section 4.22 of the Disclosure Schedule, none of the

Stockholders or affiliates of the Seller own any assets that are used in the

Business.

                4.23         Solvency.

                                (a)           No insolvency proceedings of any

character, including, without limitation, bankruptcy, receivership,

reorganization, composition or arrangement with creditors, voluntary or

involuntary, involving Seller as a debtor are pending, or to Seller’s

knowledge, threatened, and Seller has not made any assignment for the benefit

of creditors or taken any action with a view to, or which would constitute the

basis for the institution of, any such insolvency proceedings.

                                (b)           After giving effect to the

transactions contemplated by this Agreement (i) the fair market value of the

assets retained by the Seller will exceed the amount that will be required to

be paid on or in respect of the existing debts and other liabilities (including

contingent liabilities) retained by Seller as they mature, (ii) the assets of

the Seller will not constitute unreasonably small capital to carry out its

business as conducted or as proposed to be conducted, including the capital

needs of the Seller, (iii) the Seller does not intend to incur debts beyond its

ability to pay such debts as they mature, (iv) the Seller has not made any

conveyance or transfer and has not incurred any obligation with any intent to

hinder, delay or defraud any of its creditors or any other entity or person,

and (v) the Seller acknowledges that the transactions contemplated by this

Agreement have been entered into on terms which are commercially reasonably.

                4.24         Suppliers and Customers.   Since

June 30, 2001, no customer

or supplier has cancelled or otherwise terminated, or, to Seller’s knowledge,

threatened to cancel or otherwise terminate, its relationship with Seller, or

indicated that it intends to decrease its services to Seller or its usage of

the services of Seller.

                4.25         Brokers.  No broker, finder or other person

is entitled to any brokerage fees, commissions or finder’s fees from the Seller

in connection with the transactions contemplated hereby.

                4.26         Full Disclosure.  This Agreement, the

Disclosure Schedule and the Seller Documents are true, complete and

correct.  This Agreement, the Disclosure Schedule and the Seller Documents

do not contain any untrue statement of a material fact and do not omit to state

any material fact necessary to make the statements made, in the context in

which they were made, not false or misleading.   Seller has not knowingly

withheld and will not withhold from Buyer or the Parent information of any

events, conditions or facts that could have a Material Adverse Effect.

ARTICLE 5 

REPRESENTATIONS AND WARRANTIES OF THE BUYER AND THE PARENT 

                The

Buyer and the Parent represent and warrant to the Seller as follows:

                5.1           Organization.  Each of the Buyer and the

Parent is a corporation duly organized, validly existing and in good standing

under the laws of the State of Delaware and each of the Buyer and the Parent

has all requisite corporate power and authority to own, lease and operate its

properties and to carry on its business as now being conducted, except where

the failure to be so existing and in good standing or to have such power and

authority would not individually or in the aggregate have a material adverse

effect on the business, financial condition or results of operations, on a

consolidated basis, of the Parent.

 

                5.2           Authority Relative to this

Agreement.  Each of the Buyer and the Parent has all requisite

corporate power and authority to execute and deliver this Agreement and each

other agreement, document or instrument to be executed or delivered by it

contemplated by this Agreement (the “ Buyer Documents ”) and to consummate the transactions

contemplated hereby and thereby.  The execution and delivery of this Agreement

and the Buyer Documents by each of the Buyer and the Parent and the

consummation of the transactions contemplated hereby and thereby by each of the

Buyer and the Parent have been duly and validly authorized by all necessary

action on the part of the Buyer and the Parent and no other proceedings on the

part of the Buyer and the Parent are necessary to authorize this Agreement and

the Buyer Documents or to consummate the transactions contemplated hereby and

thereby.  This Agreement has been, and when executed and delivered at the

Closing, the Buyer Documents will be, duly and validly executed and delivered

by each of the Buyer and the Parent and, assuming the due authorization,

execution and delivery by the Seller and each Stockholder, this Agreement

constitutes, and the Buyer Documents will constitute, a legal, valid and

binding obligation of the Buyer and the Parent, enforceable against the Buyer

and the Parent in accordance with their terms, except as such enforceability

may be limited by applicable bankruptcy, insolvency, reorganization or other

similar laws affecting creditors’ rights generally and by general equitable

principles (regardless of whether enforceability is considered in a proceeding

in equity or at law).

                5.3           Consents and Approvals; No

Violation.  There is no requirement applicable to the Buyer and

the Parent, including under the HSR Act, to make any filing with, or to obtain

any permit, authorization, consent or approval of, any governmental or

regulatory authority as a condition to the lawful consummation by the Buyer of

the transactions contemplated by this Agreement.  Neither the execution

and delivery of this Agreement by each of the Buyer and the Parent nor the

consummation by each of the Buyer and the Parent of the transactions contemplated

hereby nor compliance by each of the Buyer and the Parent with any of the

provisions hereof will (i) conflict with or result in a breach or violation of

any provision of the certificate of incorporation or bylaws of the Buyer or the

Parent, (ii) result in a breach of or default, or give rise to any right of

termination, cancellation or acceleration under, any of the terms, conditions

or provisions of any material note, bond, mortgage, indenture, license,

agreement, lease or other similar material instrument or obligation to which

the Buyer or the Parent is a party or by which any of the Buyer’s or the

Parent’s properties or assets may be bound, or (iii) violate any material

order, judgment, writ, injunction, decree, statute, rule or regulation applicable

to the Buyer and the Parent or any of the Buyer’s and the Parent’s properties

or assets.   Other than as provided in this Agreement or the Buyer

Documents, there are no other restrictions which would prevent or delay in any

material fashion the Buyer’s and the Parent’s obligations under the Earnout

Agreement.

                5.4           Litigation.  There are no actions, suits,

proceedings or any legal, administrative, arbitration or other proceedings or

government investigations pending or, to the knowledge of the Buyer and the

Parent, threatened against Buyer or the Parent which seek to question, delay or

prevent the consummation of or could impair the ability of the Buyer to

consummate the transactions contemplated hereby.

                5.5           Solvency. 

                                (a)           No insolvency proceedings of any

character, including, without limitation, bankruptcy, receivership,

reorganization, composition or arrangement with creditors, voluntary or

involuntary, involving the Buyer or the Parent as a debtor are pending, or to

Buyer’s and Parent’s knowledge, threatened, and neither the Buyer nor the

Parent has made any assignment for the benefit of creditors or taken any action

with a view to, or which would constitute the basis for the institution of, any

such insolvency proceedings.

                                (b)           Each of the Buyer and the Parent has

the necessary financial capacity to consummate the transactions hereby and to

perform all of its obligation under the Earnout Agreement without violating any

solvency requirements applicable to the Buyer and the Parent.

                5.6           Brokers.  No broker, finder or other person

is entitled to any brokerage fees, commissions or finder’s fees from the Buyer

or the Parent in connection with the transactions contemplated hereby.

ARTICLE 6

COVENANTS

OF THE PARTIES 

                6.1           Expenses.  Except as otherwise specifically

provided in this Agreement, all costs and expenses incurred by the Buyer and

the Parent in connection with this Agreement and the transactions contemplated

hereby will be paid by the Buyer or the Parent and all costs and expenses

incurred by the Seller and each Stockholder in connection with this Agreement

and the transactions contemplated hereby will be paid by such Seller or

Stockholder.

                6.2           Reasonable Efforts.   Subject to the

terms and conditions of this Agreement, each of the parties hereto will use its

reasonable efforts to take, or cause to be taken, all action, and to do, or

cause to be done, all things necessary, proper or advisable under applicable

laws and regulations to consummate and make effective the transactions

contemplated by this Agreement. “Reasonable efforts ” for such purpose, and for all other

purposes of this Agreement, shall mean the reasonable commercial efforts that a

prudent person desirous of achieving a result would use in similar

circumstances in an effort to ensure that such result is achieved as

expeditiously as possible.  As used herein, the term “reasonable efforts”

shall not include any obligation on the part of any party to agree to any

material adverse modification of the terms of any document or contractual

arrangement or to repay or incur additional material obligations to any person

or entity that would be effective prior to the Closing or to pay any monetary

amount or other expenses exceeding, in the aggregate, $20,000 in furtherance of

such efforts.  The parties hereto acknowledge that time shall be of the

essence and agree not to take any action that will have the effect of

unreasonably delaying, impairing or impeding the receipt of any required

authorizations, consents, orders or approvals.

                6.3           Filings.  The Seller and each Stockholder and each

of the Buyer and the Parent will use their reasonable efforts to make or cause

to be made all such filings and submissions as may be required under applicable

laws and regulations, if any, including, without limitation, the filing by the

Parent of a Current Report on Form 8-K under the Securities Exchange Act of

1934, as amended, if required to be filed in connection with the consummation

of the transactions contemplated by this Agreement.  Each of the parties hereto

will coordinate and cooperate with one another in exchanging such information

and providing such reasonable assistance as another may request in connection

with all of the foregoing.

                6.4           Public Announcements.  None of the

parties to this Agreement shall issue any press release with respect to the

terms of this Agreement and the transactions contemplated hereby without the

prior approval of the other parties, except as may be required by applicable

law or by any listing agreement with a national securities exchange; provided,

however that nothing contained herein shall preclude or restrict the

Buyer and the Parent from making any statement regarding the conduct of the

Business and its operations at any time after the Closing.

                6.5           Further Assurances. 

                                (a)           From time to time, without further

consideration, the Seller and each Stockholder will execute and deliver such

documents to the Buyer and the Parent as the Buyer and the Parent may

reasonably request in order more effectively to consummate the transactions

contemplated hereby.  From time to time, without further consideration,

the Buyer and the Parent will execute and deliver such documents as the Seller

may reasonably request in order more effectively to consummate the transactions

contemplated hereby.  In case at any time after the Closing Date any

further action is necessary or desirable to carry out the purposes of this

Agreement, each party to this Agreement will take or cause its proper officers

and directors to take all such necessary action.

                                (b)           Parent covenants and agrees that Buyer will have the

necessary financial capacity to perform all of its obligations under the

Earnout Agreement.

 

                6.6           Employee Matters. 

                                (a)           Effective as of September 10, 2001,

the Buyer shall offer employment on an at-will basis commencing on the Closing

Date to each employee listed on Section 6.6 of the Disclosure Schedule,

who is working for the Seller as of the Closing Date.  Each individual

listed on Section 6.6 of the Disclosure Schedule was an employee on the payroll

of Seller immediately prior to the Closing, other than those terminated or

added in the ordinary course.  All such employees who accept such offer of

employment are referred to herein as “ Transferred Employees.”  Beginning on the day

following the Closing Date, the Buyer shall provide each Transferred Employee

with compensation comparable to the compensation currently provided by the

Seller.

                                (b)           At the Closing Date, Buyer shall

adopt, assume and otherwise become responsible for, either primarily or as a

successor employer, the Employee Benefit Plans currently sponsored by the

Seller listed on Section 6.6(b) of the Disclosure Schedule. The Seller’s

401(k) plan and any Employee Benefit Plan not specifically listed on Section

6.6(b) of the Disclosure Schedule shall not be assumed by Buyer and Buyer

shall not become responsible for, or have any liability relating to, any such

Employee Benefit Plan. Buyer agrees to provide immediate coverage for the

Transferred Employees, effective as of 12:00 a.m. on the Closing Date, under a

group health insurance plan sponsored or assumed by the Buyer, which provides

group health insurance coverage consistent with that currently provided by the

Seller. Buyer agrees to grant service credit to Transferred Employees for periods

of service with the Seller for purposes of eligibility and vesting under the

tax-qualified retirement plan of the Buyer.

                6.7           Non-Competition; Non-Solicitation.

                                (a)           For a period ending on

December 31, 2005, the Seller and each of Kenneth W. Murphy, C. Cleave

Buchanan, Jr., Robert Meador, Richard Bainter and John Erickson will not,

directly or indirectly, (i) enter into, conduct, carry on or engage in any

business engaged in the Business (the “ Competitive Business ”) within the area specified in Section

6.7 of the Disclosure Schedule (the “ Restricted Territory ”); (ii) other than for the

businesses of Matrix Digital Technologies, L.P. and Matrix Digital Capital

Corp. (together “ Matrix ”)

as such businesses are being conducted as of the Closing Date, be engaged by

any person engaged in a Competitive Business or render any services to any

person for use in a Competitive Business; (iii) other than for Matrix, have an

interest in any person engaged in any such Competitive Business, directly or

indirectly, in any capacity, including without limitation, as an individual,

partner, shareholder, officer, director, principal, agent, employee, trustee or

consultant or any other relationship or capacity; provided, however, that

Seller and each Stockholder may invest in any publicly held company so long as

such investment does not exceed five percent of such company’s total ownership;

(iv) solicit for employment or hire any person who is a Transferred Employee,

unless that person is hereafter terminated by the Buyer or voluntarily leaves

the employ of the Buyer at least one year prior to any such hire; (v) divert or

attempt to divert from the Buyer any Business, nor interfere with the

relationships of the Buyer with customers or sources of supply; or (vi) publish

any oral or written statement(s) to any person that (A) disparage in any

manner, the Assets, the Business, the Buyer or the Parent or any of its

affiliates, its or their business reputation, or the personal or business

reputations of its or their directors, officers, stockholders or employees or

engage in any disparaging conduct or make any negative or derogatory statements

concerning any of the foregoing or (B) in any way impede, disrupt or interfere

with the contracts, agreements, understandings, communications or relationships

of the Buyer or the Parent and any of its affiliates with any third party.

                                (b)           For a period ending on June 30,

2004 for each of Earl Johnson and Stacy Riffe, and ending on December 31,

2004 for Charles Buchanan (each of such periods, along with the periods set

forth in Section 6.7(a) , being a “ Noncompete Period ”), each of Earl Johnson, Charles

Buchanan and Stacy Riffe will not, directly or indirectly, (i) enter into,

conduct, carry on or engage in any business engaged in the Business (the “ Competitive Business ”)

within the area specified in Section 6.7 of the Disclosure Schedule (the

“ Restricted Territory ”);

(ii) be engaged by any person engaged in a Competitive Business or render any

services to any person for use in a Competitive Business; (iii) have an

interest in any person engaged in any such Competitive Business, directly or

indirectly, in any capacity, including without limitation, as an individual,

partner, shareholder, officer, director, principal, agent, employee, trustee or

consultant or any other relationship or capacity; provided, however, that

Seller and each Stockholder may invest in any publicly held company so long as

such investment does not exceed five percent of such company’s total ownership;

(iv) solicit for employment or hire any person who is a Transferred Employee,

unless that person is hereafter terminated by the Buyer or voluntarily leaves

the employ of the Buyer at least one year prior to any such hire; (v) divert or

attempt to divert from the Buyer any Business, nor interfere with the

relationships of the Buyer with customers or sources of supply; or (vi) publish

any oral or written statement(s) to any person that (A) disparage in any

manner, the Assets, the Business, the Buyer or the Parent or any of its

affiliates, its or their business reputation, or the personal or business

reputations of its or their directors, officers, stockholders or employees or

engage in any disparaging conduct or make any negative or derogatory statements

concerning any of the foregoing or (B) in any way impede, disrupt or interfere

with the contracts, agreements, understandings, communications or relationships

of the Buyer or the Parent and any of its affiliates with any third

party.  Notwithstanding the foregoing, each of Earl Johnson, Charles

Buchanan and Stacy Riffe may be employed by a business engaged in a Competitive

Business so long as the revenue generated by such business’ Competitive

Business is less than 10% of such business’ total revenue and for so long as such

Stockholder is not personally involved in such business’ Competitive

Business.  Notwithstanding (ii) and (iii), Stacy Riffe’s involvement in

the business of Matrix as such businesses are being conducted as of the Closing

Date shall not constitute a breach of Section 6.7 (ii) and (iii).

                                (c)           (i) Notwithstanding anything

contained herein to the contrary, the provisions of Section 6.7(a) and (b)

shall immediately terminate and be of no further force or effect with respect

to any Stockholder if such Stockholder is Terminated Without Cause (as defined

in the Earnout Agreement) during the Earnout Period and Buyer and/or Parent

cease paying such Stockholder his or her salary, wages and benefits existing as

of the day immediately prior to such termination.  (ii) Notwithstanding

anything contained herein to the contrary if Buyer, Parent or whichever

affiliate of Parent such Stockholder is then currently employed terminates such

Stockholder subsequent to the Earnout Period, the provisions of

Section 6.7(a) and (b) shall immediately terminate and be of no further

force and effect on the later to occur of (A) twelve (12) months after Buyer

and/or Parent ceases to pay (or twelve (12) months after the period to which

such severance relates if paid in a lump sum) such Stockholder severance pay,

and (B) the end of the applicable Noncompete Period.

                6.8           Access to Information. After the Closing

Date, upon reasonable notice, the Buyer shall afford to the Seller and its

representatives reasonable access during normal business hours to the books and

records relating to the Business and the Assets to the extent they relate to a

period prior to the Closing Date (and shall permit such persons to examine and

photocopy such books and records at such persons’ expense to the extent reasonably

requested by such person) in connection with financial reporting and tax

matters (including financial and tax audits and tax contests) and other matters

reasonably related to the Business, or as provided in Article 8 to

enable the Seller and/or the Stockholders to defend any third party claim or

contest any claim for indemnity hereunder; provided , however ,

that any such access or investigation shall be conducted by Seller and its

representatives in such a manner as not to unreasonably interfere with the

operation of the Business by the Buyer.  Seller will bear all reasonable

out–of–pocket costs and expenses incurred by the Buyer or the Parent with

respect to such access or investigation.

ARTICLE 7 

INDEMNIFICATION

                7.1           Indemnification by the Seller and

the Stockholders.  The Seller (with respect to Sections 7.1(a) through

(c) ) and the Stockholders (with respect to Sections 7.1(a) and

(b) only) hereby agree, severally, and not jointly, to indemnify each of

the Buyer and the Parent and their respective officers, directors, employees

and stockholders against, and agree to defend and hold them harmless from, any

loss, liability, claim, judgment, settlement, award, penalty, damage, cost or

expense (including reasonable attorneys’ fees and expenses) (a “ Loss ”) incurred by

Buyer or the Parent or their respective officers, directors, employees and

stockholders for or on account of or arising from or in connection with or

otherwise with respect to:

                                (a)           any breach by the Seller or such

Stockholder of any of the representations or warranties made by such party

contained in this Agreement or any agreement, document or certificate delivered

in connection herewith;

 

                                (b)           any breach by the Seller or such

Stockholder of any of its covenants or agreements contained in this Agreement

or any breach by the Seller or any Stockholder of its covenants and agreements

contained in the Seller Documents; or

                                (c)           the Litigation Matters or any of the

Excluded Assets or the Excluded Liabilities .

Except as set forth in Section 7.8, it is

hereby expressly agreed and acknowledged that each Stockholder shall not be

liable for any Losses resulting from the breaches of any other Stockholderor

the Seller.

                7.2           Indemnification by the Buyer and

Parent.  The Buyer and Parent hereby agree to indemnify each of

the Stockholders, the Seller and its officers, directors, employees and

stockholders against, and agrees to defend and hold them harmless from, any

Loss incurred by such person for or on account of or arising from or in

connection with or otherwise with respect to:

                                (a)           any breach by the Buyer of any of its

representations or warranties contained in this Agreement or any agreement,

document or certificate delivered in connection herewith; or

                                (b)           any breach by the Buyer of any of its

covenants or agreements contained in this Agreement or in the Buyer Documents .

                7.3           Procedure For Non-Third Party Claims. 

Claims for indemnification hereunder other than a Third Party Claim (as

hereinafter defined) shall be resolved in the manner provided in Article 8 .

                7.4           Procedure For Third Party Claims.

                                (a)           In order for a party (the “ Indemnified Party ”)

to be entitled to any indemnification provided for under this Article 7 in

respect of, arising out of or involving a claim made by any entity or person

not a party hereto against the Indemnified Party (a “ Third Party Claim ”), such Indemnified Party

must notify the indemnifying party (the “ Indemnifying Party ”) promptly in writing of the Third

Party Claim and such notice shall state in reasonable detail the nature, basis

and amount of such claim; provided, however, that failure to give such

notification shall not affect the indemnification provided hereunder except to

the extent the indemnifying party actually shall have been prejudiced as a result

of such failure (except that the indemnifying party shall not be liable for any

expenses incurred during the period in which the Indemnified Party failed to

give such notice). Thereafter, the Indemnified Party shall deliver to the

indemnifying party, within five (5) Business Days after the Indemnified Party’s

receipt thereof, copies of all notices and documents (including court papers)

received by the Indemnified Party relating to the Third Party Claim.

                                (b)           If a Third Party Claim is made

against an Indemnified Party, the Indemnifying Party will be entitled to

participate in the defense thereof and, if it chooses, to assume the defense

thereof at its own cost and expense with counsel selected by the Indemnifying

Party and reasonably satisfactory to the Indemnified Party.  Should the

Indemnifying Party elect to assume the defense of a Third Party Claim, the

Indemnifying Party will not be liable to the Indemnified Party for any legal

expenses subsequently incurred by the Indemnified Party in connection with the

defense thereof unless the Indemnified Party shall have reasonably determined

that there may be one or more defenses which are available to it which are

different from or in addition to those available to the Indemnifying

Party.  If the Indemnifying Party assumes such defense, the Indemnified

Party shall have the right to participate in the defense thereof and to employ

counsel, at its own expense, separate from the counsel employed by the

Indemnifying Party, it being understood that the Indemnifying Party shall

control such defense unless the circumstances described in the immediately

preceding sentence are present.  The Indemnifying Party shall be liable

for the reasonable fees and expenses of counsel employed by the Indemnified

Party for any period during which the Indemnifying Party has not assumed the

defense thereof (other than during any period in which the Indemnified Party

shall have failed to give notice of the Third Party Claim as provided above

unless it is finally determined that the Indemnified Party is not entitled to

indemnification under this Article 7 ).  If the Indemnifying Party

chooses to defend a Third Party Claim, the parties hereto shall reasonably

cooperate in the defense thereof.  Such cooperation shall include, at the

sole cost and expense of the Indemnifying Party, the retention and (upon the

Indemnifying Party’s request) the provision to the Indemnifying Party of

records and information which are reasonably relevant to such Third Party

Claim, and making employees, consultants and independent contractors available

on a mutually convenient basis to provide additional information and

explanation of any material provided hereunder and to provide testimony. 

If the Indemnifying Party chooses to defend any Third Party Claim, the Indemnifying

Party shall not agree to any settlement, compromise or discharge of such Third

Party Claim without the prior written consent of the Indemnified Party, unless

such settlement, compromise or discharge provides solely for monetary relief

and the full and complete release of the Indemnified Party is the result

thereof.  Whether or not the Indemnifying Party shall have assumed the

defense of a Third Party Claim, the Indemnified Party shall not admit any

liability with respect to, or settle, compromise or discharge, such Third Party

Claim without the Indemnifying Party’s prior written consent; provided,

however, that if the Indemnifying Party does not elect to control or defend a

Third Party Claim, or after so electing does not actively contest and defend

the same in good faith, the Indemnified Party shall be entitled to contest,

defend and/or settle such Third Party Claim on such terms and with such counsel

as the Indemnified Party deems appropriate, and at the cost and expense of the

Indemnifying Party unless it is finally determined that the Indemnified Party

is not entitled to indemnification.

 

                7.5           Exclusive Remedy.  After the Closing, this

Article 7 shall provide the sole and exclusive remedy for any and all

Losses sustained or incurred by a party in connection with the transactions

contemplated by this Agreement; provided, however, that a party may seek

specific performance or damages for fraud or willful misconduct on the part of

the party or parties against whom damages are sought.  Notwithstanding the

foregoing, the parties hereto agree and acknowledge that (i) Buyer and Parent

may exercise the right of set-off as provided in the Earnout Agreement and (ii)

money damages may not be an adequate remedy for any breach or threatened breach

of Section 6.7 and the Buyer or the Parent may, in its sole discretion,

apply to any court of law or equity of competent jurisdiction and be entitled

to specific performance and/or injunctive relief in order to enforce or prevent

any violation of Section 6.7 .

                7.6           Survival of Representations and

Warranties. 

                                (a)           Any rights of Buyer and Parent to

indemnification under this Agreement (including under Section 7.1 )

shall apply only to those claims written notice of which shall have been

delivered by Buyer or Parent to Seller on or before September 30, 2003.

                                (b)           Any rights of  the Seller and

any of its officers, directors, employees and stockholders to indemnification

under this Agreement (including under Section 7.2 ) shall apply only to

those claims written notice of which shall have been delivered by Seller to

Buyer on or before September 30, 2003.

                                (c)           Notwithstanding anything in this Section

7.6 to the contrary, (i) the representations and warranties of Seller

regarding title to the assets shall survive indefinitely, and (ii) the

representations and warranties of Seller regarding tax related matters shall

survive until the expiration of the applicable statute of limitations.

                7.7           Indemnity Notice.  No party shall be

entitled to assert any claims against the other for misrepresentations or

breaches of representations and warranties under or pursuant to this Agreement

(or for indemnification under Article 7 hereof for such

misrepresentations or breaches of representations and warranties), unless the

party asserting such claim shall notify the other of such claim with reasonable

specificity and outlining the basis of alleged liability within the survival

period of the applicable representation and warranty and in the event of such

notice the party asserting such claim shall be entitled to pursue and seek

recovery for all Losses relating thereto, subject to the limitations set forth

in Article 7. 

                7.8           Indemnification Basket and Ceiling. 

Any right of Buyer or Parent to indemnification under this Agreement shall not

apply to any claim until the aggregate of all such claims totals $100,000 (the

“ Indemnity Basket ”),

in which event such indemnity shall apply to all such claims, but only to the

extent of the amount in excess of the Indemnity Basket.  Seller’s

aggregate liability for Losses under this Article 7 will not exceed the

aggregate amount earned by the Seller pursuant to the Earnout Agreement and

such Losses shall only be payable from or offset against the proceeds of the

Earnout Agreement; provided , however , in the event that all or

a portion of the Earnout Amount under the Earnout Agreement has been paid to

Seller under the Earnout Agreement and Seller has subsequently distributed all

or a portion of such amounts to Blair and/or the Stockholders, in addition to pursuing

its rights to indemnification under this Agreement against the Seller, each

Stockholder covenants and agrees to return such proceeds to Buyer and/or Parent

(without duplication) as are necessary to satisfy any indemnification

obligations of Seller determined to be owing to Buyer subsequent to such

distributions (the “ Indemnification Amount ”) within 30 days of notice of

such indemnification obligation (the “ Stockholder Notice ”). To the extent that Buyer and/or

Parent, using commercially reasonable efforts, has not collected such amounts

from the Stockholders within 90 days of the Stockholder Notice, the Buyer

and/or Parent may pursue any uncollected portion of the Indemnification Amount

against Blair to satisfy the Indemnification Amount and Blair covenants and

agrees to promptly return an amount equal to such uncollected portion of the

Indemnification Amount.  Notwithstanding the foregoing, to the extent that

the Indemnification Amount exceeds the amount actually received by the

Stockholders, the Buyer and/or the Parent may immediately pursue such excess

against Blair in partial satisfaction of the Indemnification Amount and Blair

covenants and agrees to promptly return such excess to Buyer and/or

Parent.  Notwithstanding the foregoing, Blair’s maximum liability under

this provision shall be the amount of proceeds actually received by Blair from

the Seller under the Earnout Agreement.  The term “commercially reasonable

efforts” as such term is used in this Section 7.8 shall not include or

otherwise require the filing of any suit, claim, petition, appeal, charge,

litigation, proceeding or other similar action, in a court of law or otherwise,

or the use of a collection agency.

ARTICLE 8

DISPUTE

RESOLUTION 

                8.1           Exclusive Procedure for Dispute

Resolution.  Any dispute arising out of or relating to this

Agreement, including claims for indemnification pursuant to Article 7 ,

shall be resolved in accordance with the procedures specified in this Article

8 , which shall be sole and exclusive procedures for the resolution of any

such disputes.

                8.2           Negotiation Between Executives.

                                (a)           The parties shall attempt in good

faith to resolve any dispute arising out of or relating to this Agreement

promptly by negotiation between executives of the Seller and executives of

Buyer who, if possible, shall be at a higher management level than the

individuals with direct responsibility for administration of this Agreement

(the “ Negotiators ”). 

Any party may give the other parties written notice of any dispute not resolved

in the normal course of business.  Within 15 days after delivery of the

notice, the receiving party shall submit to the others a written

response.  The notice and response shall include (i) a statement of each

party’s position and a summary of arguments supporting that position, and (ii)

the name and title of the Negotiators and of any other person who will

accompany them.  Within 30 days after delivery of the disputing party’s

notice, the Negotiators shall meet at a mutually acceptable time and place, and

thereafter as often as they reasonably deem necessary, to attempt to resolve

the dispute.  All reasonable requests for information made by one party to

the others will be honored.

                                (b)           If the matter has not been resolved

by these persons within 60 days of the disputing party’s notice, or if the

parties fail to meet within 30 days, any party may initiate mediation as

provided below.

                                (c)           All negotiations pursuant to this

clause shall be confidential and shall be treated as compromise and settlement

negotiations for purposes of the Federal Rules of Evidence and state rules of

evidence.

                8.3           Mediation.  If the dispute has not been resolved

by negotiation as provided above, the parties shall endeavor to settle the

dispute by mediation under the then current Center for Public Resources (CPR)

Model Procedure for Mediation of Business Disputes.  The neutral third

party will be selected from the CPR Panels of Neutrals, with the assistance of

CPR, unless the parties agree otherwise.

                8.4           Litigation.  If the dispute has not been

resolved by non-binding means as provided herein within 90 days of the

initiation of such procedure contemplated by Section 8.3 hereof, any

party may initiate litigation (upon 30 days written notice to the other party);

provided, however, that if one party has requested the others to participate in

a non-binding procedure and the others have failed to participate, the

requesting party may initiate litigation before expiration of such period.

 

                8.5           Provisional Remedies.  The procedures

specified in this Article 8 shall be the sole and exclusive procedures

for the resolution of disputes between the parties arising out of or relating

to this Agreement; provided, however, that a party, without prejudice to the

above procedures, may file a complaint (for statute of limitations or venue

reasons or to seek preliminary injunction or other provisional judicial

relief), if in its reasonable judgment such action is necessary to avoid

irreparable damage or to preserve the status quo.  Despite such action the

parties will continue to participate in good faith in following the dispute

resolution procedures specified in this Article 8 . 

Notwithstanding the foregoing, the Buyer and the Parent may, in its sole

discretion, apply to any court of law or equity of competent jurisdiction and

be entitled to specific performance and/or injunctive relief in order to

enforce or prevent any violation of Section 6.7 .

                8.6           Tolling Statutes of Limitation.

  All applicable statutes of limitation and defenses based upon the

passage of time shall be tolled while the procedures specified in this Article

8 are pending. The parties will take such action, if any, reasonably

required to effectuate such tolling.

                8.7           Performance to Continue.  Each party

shall continue to perform his or its obligations under this Agreement pending

final resolution of any dispute arising out of or relating hereto; provided

that no amounts shall be paid pursuant to the Earnout Agreement to the extent

such amounts are subject to set-off or may become subject to set-off upon final

resolution of a dispute so arising.

ARTICLE 9

MISCELLANEOUS PROVISIONS 

                9.1           Amendment and Modification. 

Subject to applicable law, this Agreement may be amended, modified or

supplemented only by written agreement of the Seller, the Buyer and the

Stockholders.

                9.2           Waiver of Compliance; Consents. 

Except as otherwise provided in this Agreement, any failure of any of the

parties to comply with any obligation, covenant, agreement or condition herein

may be waived by the party or parties entitled to the benefits thereof only by

a written instrument signed by the party granting such waiver, but such waiver

or failure to insist upon strict compliance with such obligation, covenant,

agreement or condition shall not operate as a waiver of, or estoppel with

respect to, any subsequent or other failure.  Whenever this Agreement

requires or permits consent by or on behalf of any party hereto, such consent

shall be given in writing in a manner consistent with the requirements for a waiver

of compliance as set forth in this Section 9.2 .

                9.3           Notices.  All notices and other communications

hereunder shall be in writing and shall be deemed given if delivered

personally, when actually received, or, if mailed by registered or certified

mail (return receipt requested), postage prepaid, two (2) business days after

being properly posted to the parties at the following addresses (or at such

other address for a party as shall be specified by like notice; provided,

however, that notices of a change of address shall be effective only upon

receipt thereof):

(a)

if to the Buyer or the Parent:

 

 

 

 

 

Alliance Data Systems

Corporation

 

 

17655 Waterview Parkway

 

Dallas, Texas  75292

 

 

Attention:              General Counsel

 

 

 

with a copy to:

 

 

 

 

 

Akin, Gump, Strauss, Hauer &

Feld, L.L.P.

 

 

1700 Pacific Avenue

 

 

Suite 4100

 

 

Dallas, Texas  75201

 

 

Attention:              Alex Frutos

 

 

 

(b)

if to the Seller:

 

 

 

 

 

Mail Box Capital Corporation

 

 

3700 Pipestone

 

 

Dallas, Texas  75212

 

 

Attention:              Kenneth W. Murphy

 

 

 

 

 

 

with a copy to:

 

 

 

 

 

Jenkens & Gilchrist, P.C.

 

 

1445 Ross Ave.

 

 

Suite 3200

 

 

Dallas, Texas  75202

 

 

Attention:              L. Steven Leshin

 

 

(c)

if to a Stockholder:

 

 

 

 

 

To the Address set forth across

from such Stockholder’s name on Section 9.3  of the Disclosure

Schedule.

 

                9.4           GOVERNING LAW.  THIS AGREEMENT SHALL BE

GOVERNED BY THE LAWS OF THE STATE OF TEXAS (REGARDLESS OF THE LAWS THAT MIGHT

OTHERWISE GOVERN UNDER APPLICABLE TEXAS PRINCIPLES OF CONFLICTS OF LAW) AS TO

ALL MATTERS, INCLUDING BUT NOT LIMITED TO MATTERS OF VALIDITY, CONSTRUCTION,

EFFECT, PERFORMANCE AND REMEDIES.  All actions and proceedings arising out

of or relating to this Agreement shall be heard and determined in a Texas state

or federal court sitting in the City of Dallas, and the parties hereto hereby

irrevocably submit to the exclusive jurisdiction of such courts in any such

action or proceeding and irrevocably waive the defense of an inconvenient forum

to the maintenance of any such action or proceeding.

                9.5           Assignment.  This Agreement and all of the

provisions hereof shall be binding upon and inure to the benefit of the parties

hereto and their respective successors and permitted assigns.  Neither

this Agreement nor any of the rights, interests or obligations hereunder may be

assigned by any party hereto without the prior written consent of the other

parties; provided however that the Buyer may assign this Agreement or

any of the Buyer Documents in whole or in part to an affiliate of the Buyer or

the Parent without the consent of the Seller or the Stockholders; provided

however, Buyer acknowledges and agrees that any such assignment shall not

relieve or release Buyer from its agreements and obligations hereunder, all of

which, shall survive such assignment.

 

                9.6           Counterparts.  This Agreement may be executed

in one or more counterparts, each of which shall be deemed an original, but all

of which together shall constitute one and the same instrument.

                9.7           Interpretation. 

                                (a)           The article and section headings

contained in this Agreement are solely for the purpose of reference, are not

part of the agreement of the parties and shall not in any way affect the

meaning or interpretation of this Agreement.

                                (b)           Whenever the words “ include ,” “ includes ” or “ including ” are used

in this Agreement they shall be deemed to be followed by the words “ without limitation .”

                                (c)           The words “ hereof ,” “ herein ” and “ herewith ” and words of similar import shall,

unless otherwise stated, be construed to refer to this Agreement as a whole and

not to any particular provision of this Agreement, and article, section,

paragraph, exhibit and schedule references are to the articles, sections,

paragraphs, exhibits and schedules of this Agreement unless otherwise

specified.

                                (d)           As used in this Agreement, the term “

person ” shall mean

and include an individual, a partnership, a joint venture, a corporation, a

limited liability company, a trust, an unincorporated organization and a

government or any department or agency thereof.

                                (e)           As used in this Agreement, an

individual will be deemed to have “ knowledge ” of a particular fact or matter if (a) such

individual is actually aware of such fact or other matter or (b) such

individual should be aware of such fact or matter after reasonable

investigation.  The terms “ known ,” “ to Seller’s knowledge ” and “ to the knowledge of Seller ” and words of

similar import shall mean the knowledge of (x) any individual serving as a

director, manager, officer or similar position of Seller or (y) any Stockholder

 .

                                (f)            The plural of any defined term shall

have a meaning correlative to such defined term, and words denoting any gender

shall include all genders.  Where a word or phrase is defined herein, each

of its other grammatical forms shall have a corresponding meaning.

                                (g)           A reference to any party to this

Agreement or any other agreement or document shall include such party’s

successors and permitted assigns.

                                (h)           A reference to any legislation or to

any provision of any legislation shall include any modification or re-enactment

thereof, any legislative provision substituted therefor and all regulations and

statutory instruments issued thereunder or pursuant thereto.

                                (i)            The parties have participated

jointly in the negotiation and drafting of this Agreement.  In the event

an ambiguity or question of intent or interpretation arises, this Agreement

shall be construed as if drafted jointly by the parties, and no presumption or

burden of proof shall arise favoring or disfavoring any party by virtue of the

authorship of any provisions of this Agreement.

                9.8           Entire Agreement.  This Agreement,

including the Exhibits and Disclosure Schedules and the documents, certificates

and instruments referred to herein , and that certain Confidentiality

Agreement by and between the Parent and the Seller dated March 26, 2001

(the “ Confidentiality

Agreement ”) embody the entire agreement and understanding of

the parties hereto in respect of the transactions contemplated by this

Agreement.  There are no restrictions, promises, representations,

warranties, covenants or undertakings, other than those expressly set forth or

referred to herein.  This Agreement supersedes all prior agreements and

understandings, other than the Confidentiality Agreement (which shall remain in

full force and effect), between the parties with respect to such transactions.

                9.9           Severability.  If any term or other provision

of this Agreement is invalid, illegal or incapable of being enforced by any

rule of law or public policy, all other conditions and provisions of this

Agreement shall nevertheless remain in full force and effect so long as the

economic or legal substance of the transactions contemplated hereby is not

affected in any manner adverse to any party.  Upon such determination that

any term or other provision is invalid, illegal or incapable of being enforced,

the parties hereto shall negotiate in good faith to modify this Agreement so as

to effect the original intent of the parties as closely as possible in a

mutually acceptable manner in order that the transactions contemplated hereby

be consummated as originally contemplated to the greatest extent possible.

                9.10         No Third Party Beneficiary. 

Nothing herein, expressed or implied, is intended or shall be construed to

confer upon or give to any person, firm, corporation or legal entity, other

than the parties hereto and their respective successors and permitted assigns,

any right, remedy, or other benefit under or by reason of this Agreement or any

documents executed in connection with this Agreement.

[SIGNATURE PAGES FOLLOW]

 

                IN

WITNESS WHEREOF, each of the Seller, the Stockholders, the Buyer and the Parent

has caused this Agreement to be signed by its duly authorized officers as of

the date first above written.

 

	

  ALLIANCE

  DATA SYSTEMS CORPORATION

  
	

   

  
	

   

  
	

   

  
	

   

  
	

  By:

  
	

   

  
	

   

  
	

   

  
	

   

  
	

  Name:

  
	

   

  
	

   

  
	

   

  
	

  Title:

  

ADS MB CORPORATION

 

 

 

 

 

 

	

  By:

  
	

   

  
	

   

  
	

   

  
	

   

  
	

   

  
	

  Name:

  
	

   

  
	

   

  
	

   

  
	

  Title:

  
	

   

  

 

 

 

 

 

 

 

 

 

 

	

  MAIL BOX

  CAPITAL CORPORATION

  
	

   

  
	

   

  
	

   

  
	

   

  
	

   

  
	

  By:

  
	

   

  
	

   

  
	

   

  
	

   

  
	

  Name:

  
	

   

  
	

   

  
	

   

  
	

  Title:

  

 

STOCKHOLDERS 

 

	

  By:

  
	

   

  
	

   

  
	

   

  
	

   

  
	

   

  
	

   

  
	

  Kenneth W.

  Murphy, individually

  
	

   

  
	

   

  
	

   

  
	

   

  
	

   

  
	

  By:

  
	

   

  
	

   

  
	

   

  
	

   

  
	

   

  
	

  C. Cleave Buchanan,

  Jr., individually

  
	

   

  
	

   

  
	

   

  
	

   

  
	

   

  
	

   

  
	

  By:

  
	

   

  
	

   

  
	

   

  
	

   

  
	

   

  
	

  Robert

  Meador, individually

  
	

   

  
	

   

  
	

   

  
	

   

  
	

   

  
	

   

  
	

  By:

  
	

   

  
	

   

  
	

   

  
	

   

  
	

   

  
	

  John

  Erickson, individually

  

 

 

	

   

  
	

   

  
	

  By:

  
	

   

  
	

   

  
	

   

  
	

   

  
	

   

  
	

  Richard

  Bainter, individually

  
	

   

  
	

   

  
	

   

  
	

   

  
	

   

  
	

   

  
	

  By:

  
	

   

  
	

   

  
	

   

  
	

   

  
	

   

  
	

  Earl

  Johnson, individually

  
	

   

  
	

   

  
	

   

  
	

   

  
	

   

  
	

   

  
	

  By:

  
	

   

  
	

   

  
	

   

  
	

   

  
	

   

  
	

  Charles

  Buchanan, individually

  
	

   

  
	

   

  
	

   

  
	

   

  
	

   

  
	

   

  
	

  By:

  
	

   

  
	

   

  
	

   

  
	

   

  
	

   

  
	

  Stacy Riffe,

  individually

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