Purchase and Sale Agreement (2006)Full Document 

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Purchase and Sale Agreement
Between
E*TRADE Access, Inc.,
E*TRADE Bank,
Cardtronics, LP
and
Cardtronics, Inc.
Dated as of June 2, 2004
 
 

 


 

SCHEDULES AND ANNEXES
     
Schedule A
  Transferred ATM Equipment
Schedule B
  Location of Transferred ATM Equipment
Schedule C
  Transferred Vendor Contracts
 
   
Disclosure Schedule
   
 
   
Schedule 4.1(c)
  Governmental and Third-Party Consents
Schedule 4.1(e)
  Absence of Certain Changes
Schedule 4.1(f)(i)
  Financial Statements
Schedule 4.1(f)(ii)
  Undisclosed Liabilities
Schedule 4.1(h)
  ATMs
Schedule 4.1(j)
  Permits
Schedule 4.1(k)
  Deposit or Prepaid Items
Schedule 4.1(l)
  Litigation
Schedule 4.1(m)(i)
  Contract Defaults
Schedule 4.1(m)(ii)
  Restrictive Covenants
Schedule 4.1(n)
  Compliance with Laws
Schedule 4.1(p)
  Taxes
Schedule 5.11
  Business Employees
Schedule 5.16
  Dealer Agreements
 
   
Annex A
  Form of Assignment, Bill of Sale and Assumption Agreement
Annex B
  Form of Guaranty

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          THIS PURCHASE AND SALE AGREEMENT, dated as of June 2, 2004 (this “Agreement”), between E*TRADE Access, Inc., an Oregon corporation (“Seller”), E*TRADE Bank, a federal savings bank (“E*TRADE Bank”), Cardtronics, LP, a Delaware limited partnership (the “Purchaser”), and Cardtronics, Inc., a Delaware corporation, for the limited purposes set forth in Section 8.3.
RECITALS
          WHEREAS, Seller is engaged in the business of owning and operating automated teller machines (“ATMs”) and providing certain administrative, operational and support services to third-party merchants and other customers relating thereto (“ATM Support Services”);
          WHEREAS, on the terms and subject to the conditions set forth in this Agreement, Seller desires to sell, assign and transfer to Purchaser, and Purchaser desires to purchase from Seller, the Transferred Assets (as defined below), and Purchaser desires to assume the Assumed Liabilities (as defined below);
          NOW, THEREFORE, in consideration of the premises, and the mutual representations, covenants and agreements contained herein, and for other good and valuable consideration the receipt and sufficiency of which is hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:
ARTICLE I
DEFINITIONS
          SECTION 1.1. Definitions of Certain Terms. (a) In this Agreement, the following terms are used with the meanings assigned below:
     “Affiliate” means, with respect to any Person, any other Person directly or indirectly controlling, controlled by, or under common control with such Person. As used herein, the term “control” (including the terms “controlling,” “controlled by” or “under common control with”) means possession, directly or indirectly, of the power to direct or cause the direction and management of the policies of a Person, whether through the ownership of over 50% or more of the voting securities or other ownership interests of such Person, by contract or otherwise.
     “Allpoint” means ATM National, LLC d/b/a “Allpoint Network.”
     “Allpoint Contract” means that certain Deployer Participation Agreement, dated August 23, 2002, between Allpoint and Seller, as amended to the date hereof.
     “Allpoint Interest” means any equity, partnership, limited liability company or joint venture interest in Allpoint owned by Seller or its Affiliates.
     “Ancillary Agreements” means the Interim Servicing Agreement, the Licensing Agreement, if applicable, the Assignment, Bill of Sale and Assumption Agreement, the

 


 

Guaranty and all certificates and other documents required to be delivered hereunder by the parties hereto at the Closing.
     “Applicable Order” means, with respect to any Person, a judgment, injunction, writ, decree or order of any Governmental Authority, in each case legally binding on that Person or on any material amount of its property.
     “Assumed Liabilities” means, any and all Liabilities (whether accruing prior to or after consummation of the transactions contemplated under this Agreement) related to, associated with or arising out of the ownership, operation, configuration or performance of the Transferred Assets, including:
     (1) all Liabilities of Seller arising under any of the Transferred Contracts, including the Transferred ATM Management Agreements and the Transferred Vendor Contracts;
     (2) all accounts payable of Seller but only to the extent reflected on the Final Working Capital Statement;
     (3) all Liabilities of Seller arising under or relating to the Transferred ATM Equipment;
     (4) all Liabilities of Seller and its Affiliates arising from the following matters (the “Listed Litigation”): (i) Commonwealth of Massachusetts, et al., United States District Court for the District of Massachusetts, Case No. 03 11206 MEL (and all settlements related thereto past, present or future, including that certain Partial Settlement Agreement set forth in Item 7 on Schedule 4.1(l), but only to the extent such Partial Settlement Agreement relates to ATMs included in the Transferred Assets), except for Liabilities attributable to ATMs owned by Seller and its Affiliates immediately after the Closing; (ii) Polo v. Gooding’s Supermarkets, Inc. & E*TRADE Access, Inc., United States District Court Middle District of Florida, Orlando Division, Case No. 6:03-CV-134-ORL-28 JGG; (iii) Hazelaar v. Bank of America, N.A., E*TRADE Bank et al., Superior Court of the State of California, County of San Francisco, Case No. CGC 03-420622.; (iv) Promenade Mall/Michael Katz v. E*TRADE Access, Inc., Superior Court of California, County of San Diego, Case No. 816475.; (v) Promenade Mall/Michael Katz v. E*TRADE Access, Inc., General District Court of Arlington County, Virginia, Case No. V03-3434; and (vi) JRA 222, Inc. d/b/a/ Credit Card Center v. E*TRADE Bank, et al., United States Bankruptcy Court for the Eastern District of Pennsylvania, Adversary Proceeding No. 03-559;
provided, notwithstanding anything to the contrary in this definition, the term “Assumed Liabilities” shall not include any of the Excluded Liabilities.
     “ATM Ventures Interest” means any limited liability company or joint venture interest in ATM Ventures, LLC owned by Seller or its Affiliates.

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     “Business” means the business of owning, selling, leasing, placing, operating and managing ATMs and providing certain ATM administrative, operational and support services to third-party merchants and other customers relating thereto, in each case, as conducted by Seller and its Affiliates.
     “Business Day” means any day other than a Saturday, a Sunday or a day on which banks located in New York generally are required or authorized by law or executive order to close.
     “Business Offices” means the offices of E*TRADE Bank maintained at 671 North Glebe Road, Arlington, Virginia.
     “Chevron Agreement” means that certain agreement, dated January 22, 2004, between Chevron Stations, Inc. and Seller, as amended to the date hereof.
     “Code” means the Internal Revenue Code of 1986, as amended.
     “Competing Business” means the business of owning or operating ATMs or providing ATM Support Services in the United States; provided, however, that (a) engaging in any electronic deposit taking or check processing activities shall not be considered a “Competing Business” and (b) owning and operating ATMs on the premises of any of Seller’s or its Affiliates’ offices or Seller’s or its Affiliates’ retail locations dedicated to financial services shall not be considered a “Competing Business.”
     “Concord Agreement” means that certain Money Access Service Processing Agreement, dated August 22, 1996, between Money Access Service Corp. and Card Capture Services, Inc., as amended to date.
     “Constituent Documents” means the articles of association, articles of incorporation, certificate of incorporation, by-laws, limited liability company agreement and/or other organizational documents, as applicable, of any Person.
     “Contract” means, with respect to any Person, any agreement, undertaking, contract, indenture, deed of trust or other instrument, document or agreement by which that Person, or any of its properties, is bound and/or subject.
     “Customer” means a Person or Persons to whom Seller or its Affiliates provides ATM Support Services.
     “Customer Documentation” means originals (or copies if originals are unavailable) of all of the following books and records of Seller and its Affiliates to the extent they relate to the Transferred Assets: all records and data relating to Customers, whether on paper, microfilm, microfiche, magnetic tape, computer disk or in any other form, but only in the media in which such records and data are maintained by or on behalf of Seller as of the date hereof, correspondence to or from any Customers relating to any Transferred Contract, cost information, files, correspondence, memoranda, Customer lists, quality records and other data.

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     “CVS Agreement” means that certain agreement, dated December 19, 2002, between CVS Pharmacy, Inc. and Seller, as amended to the date hereof.
     “Dealer Agreement” means any Contract between Seller or any of its Affiliates (or any of their predecessors in interest) and any Person (herein called a “Dealer”) wherein Seller appoints, designates or authorizes a Dealer to sell ATMs to third parties and thereafter those ATMs are processed by Seller pursuant to a Contract to provide ATM Support Services and in return therefor Dealer receives a percentage of the net fees collected by Seller from transactions made on said ATMs, including all Contracts listed on Schedule 5.16 hereto.
     “Excluded Assets” means the following assets of Seller and its Affiliates:
     (1) all Contracts other than the Transferred ATM Management Agreements, the Transferred Vendor Contracts, the Dealer Agreements and the Allpoint Contract, including Contracts between Seller and any employee thereof;
     (2) two ATMs (Nos. ETA00024 and ETA00023) located at 671 North Glebe Road, Arlington, Virginia 22203;
     (3) Vault Cash;
     (4) insurance policies maintained by or for the benefit of Seller and all claims accrued thereunder;
     (5) all Intellectual Property Rights (and goodwill associated therewith, including all Retained Names and Marks (as defined in Section 5.8(b)) other than the Transferred IP Rights;
     (6) all assets relating to Seller’s (or any of its Affiliate’s) employee benefit agreements, plans, vacation or bonus accruals or other arrangements;
     (7) all of Seller’s right, title and interest in real property, including the Business Offices;
     (8) Seller’s interest in CCS Canada, Inc.;
     (9) all current Tax receivables, deferred Tax assets and prepaid Taxes, Tax payments due from Affiliates, and entitlements to refunds or credits for overpayment of Taxes relating to any period prior to the Closing Date;
     (10) all office furniture, fixtures, personal computers, copiers, telephone systems, postage meters, and similar customary office equipment and supplies;
     (11) originals of any books and records of Seller with respect to which Seller has provided copies to Purchaser at Closing; and

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     (12) all rights, payments and receivables arising under the Agreement and Sublease with Safeway, Inc. dated February 23, 2004.
     “Excluded Liabilities” means the following Liabilities of Seller or any of its Affiliates:
     (1) all Liabilities for Taxes except for Transfer Taxes for which Purchaser is responsible under Section 5.7;
     (2) except for Purchaser’s Liabilities and obligations under Section 5.11, all Liabilities (whether or not disclosed on schedules hereto) relating to: (i) employees or former employees of Seller or any of its Affiliates relating to their employment by Seller or any Affiliate of Seller including claims relating to (A) the consummation of the transactions contemplated by this Agreement, (B) the termination of employment, (C) the failure to obtain employment with Purchaser, (D) compensation, severance, bonus, profit sharing and an other benefits under any Law, contract or benefit or compensation plan or any other employee benefit program maintained by or on behalf of the employees of Seller or any Affiliate of Seller or (ii) employee benefit plans sponsored, maintained or contributed to by Seller or any ERISA Affiliate of Seller;
     (3) all Liabilities of Seller to any shareholder or Affiliate of Seller;
     (4) all indemnification obligations under Seller’s or any Affiliate of Seller’s charter or bylaws or by statute;
     (5) all Liabilities that do not directly arise from the Transferred Assets including Liabilities that arise from the Excluded Assets;
     (6) all Liabilities for monetary amounts that became due and owing on or before the Closing Date under any Contract included in the Transferred Assets or in connection with the Listed Litigation, including all attorney’s fees and expenses in connection with such litigation, except, in each case, for accounts payable reflected on the Final Working Capital Statement;
     (7) all Liabilities for indebtedness for borrowed money or capitalized lease obligations including Liabilities under any instrument, promissory note, loan agreement, indenture, security agreement, financing statement or other agreement evidencing any indebtedness for borrowed money or capitalized lease obligation;
     (8) all Liabilities to the extent actually covered by Seller’s insurance policies; and
     (9) all Liabilities under the Fleetwood Agreement.
     “Fleetwood Agreement” means that certain Master Agreement of Lease, dated as of March 29, 2001, between Fleetwood Financial Corp, as Lessor, and XtraCash ATM, Inc., as Lessee, as amended on June 21, 2002.

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     “GAAP” means generally accepted accounting principles in the United States consistently applied and applied in a manner consistent with E*TRADE Bank’s audited financial statements for the year ended December 31, 2003.
     “Governmental Authority” means any domestic or foreign governmental, regulatory or self-regulatory authority, agency, court, tribunal, commission or other governmental, regulatory or self-regulatory entity exercising legislative, judicial, regulatory or administrative functions.
     “HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.
     “Intellectual Property Rights” means all (a) inventions (whether patentable or unpatentable and whether or not reduced to practice), improvements thereon, and patents, patent applications and patent disclosures, together with reissues, continuations, continuations-in-part, revisions, extensions and reexaminations thereof; (b) trademarks, service marks, trade dress, logos, trade names, domain names and corporate names, together with translations, adaptations, derivations and combinations thereof, and including goodwill associated therewith, and applications, registrations and renewals in connection therewith, whether or not principally related to the Business; (c) copyrightable works, copyrights and applications, registrations and renewals in connection therewith, mask works, copyrights and applications, registrations and renewals in connection therewith; (d) computer software (including related documentation), other than commercially available software, source code, data, processes, know-how, technology and technical information; (e) marketing materials, logos, designs, trade secret, web sites, customer and vendor lists, goodwill, or other intangible assets, intellectual property or proprietary rights; and (f) all documentation, media or other tangible embodiment of or relating to any of the foregoing and all proprietary rights therein.
     “Interim Servicing Agreement” means the agreement to be entered into by the parties hereto at the Closing relating to the provision by Seller of certain transition services, including vault cash, processing, vendor management and information technology support, to Buyer.
     “Key ATM Management Agreements” means the Target Agreement, the CVS Agreement and the Chevron Agreement.
     “Knowledge” means, with respect to Seller, the actual knowledge of Dale Dentlinger and Steven Gutterman, each in their capacities as officers of Seller, after due inquiry, which inquiry includes consultation with the officers, employees, consultants and agents who have primary responsibility over the matter with respect to which the term “Knowledge” is used in this Agreement.
     “Liability” means any debt, liability, commitment or obligation, of any kind whatsoever, whether due or to become due, known or unknown, accrued or fixed, absolute or contingent, or otherwise.

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     “Lien” means, with respect to any property, any lien, security interest, mortgage, lease, sublease, purchase option, pledge, charge, encumbrance or other adverse claim of any kind relating to that property, including the interest of a vendor or lessor under any conditional sale agreement, capital lease or other title retention agreement relating to such property.
     “Material Adverse Effect” means a material impairment of Seller’s ability to perform its obligations under this Agreement or to consummate the transactions contemplated hereby or a material adverse change in, or a material adverse effect upon, the Transferred Assets or the business conducted therewith, taken as a whole, or the ability of Purchaser to acquire or own the Transferred Assets or operating the business conducted therewith, taken as a whole; provided, however, that any adverse effect resulting from (i) any changes in law, rule or regulation or GAAP that apply generally to the industry in which the Transferred Assets are used, (ii) any change in economic or business conditions affecting such industry, (iii) the announcement of the transactions contemplated hereby or (iv) any loss of Seller’s employees (other than because of termination by Seller or any Affiliate of Seller) and any decline in service levels associated therewith, shall not be considered in determining if a Material Adverse Effect has occurred.
     “Person” means any individual, corporation, business trust, partnership, association, limited liability company or similar organization or entity, or any Governmental Authority.
     “Prime Rate” means the prime interest rate then generally in effect on the first day of the applicable period as set forth in the Wall Street Journal.
     “Requirement of Law” means, with respect to any Person, any requirement under any law, ordinance, statute, treaty, rule or regulation or determination of an arbitrator or of a Governmental Authority, in each case as in effect as of the date hereof and as applicable to and binding on that Person or any material amount of its property.
     “Requisite Regulatory Approvals” means the consents, registrations, approvals, permits or authorizations, if any, necessary to consummate the transactions contemplated by this Agreement in compliance with applicable law.
     “Subsidiary” means, with respect to any Person, any other Person a majority of the outstanding voting securities of which are owned directly or indirectly by such Person.
     “Target Agreement” means that certain agreement, dated April 9, 2001, between Target Corporation and Seller, as amended to the date hereof.
     “Tax Return” means any return, declaration, report or similar statement required to be filed with respect to any Taxes (including any attached schedules) including any information return, claim for refund, amended return and declaration of estimated Tax.

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     “Taxes” means (A) any income, alternative or add-on minimum tax, gross receipts, sales, use, transfer, gains, ad valorem, franchise, profits, license, withholding, payroll, employment, excise, severance, stamp, occupation, premium, property, environmental or windfall profit tax, custom, duty or other tax, governmental fee or other like assessment or charge, together with any interest or any penalty, addition to tax or additional amount imposed by any Governmental Authority responsible for the imposition of any such tax (domestic or foreign), and (B) any liability of Seller for the payment of any amounts of the type described in clause (A) above as a result of being a member of an affiliated, consolidated, combined or unitary group for any period.
     “Transferred Assets” means all of the assets and rights, tangible and intangible, franchises and properties, real, personal and mixed, used, or held for use, in connection with the current operations of the Business as conducted by Seller or any of its Affiliates on the date of this Agreement, including the following:
     (1) the Transferred ATM Management Agreements;
     (2) the Transferred Vendor Contracts;
     (3) the Transferred ATM Equipment;
     (4) the Dealer Agreements;
     (5) the Allpoint Contract;
     (6) the Allpoint Interest;
     (7) the ATM Ventures Interest;
     (8) the Customer Documentation;
     (9) the Scheduled Permits;
     (10) all cash (excluding Vault Cash) and accounts receivable arising from the Business to the extent reflected on the Final Working Capital Statement; and
     (11) the Transferred IP Rights;
provided, notwithstanding anything to the contrary, the term “Transferred Assets” shall not include the Excluded Assets.
     “Transferred ATM Equipment” means all ATMs and related assets set forth on Schedule A hereto; provided, notwithstanding anything to the contrary contained in Seller’s disclosure schedules, no interest in any ATMs located in Canada or any ATMs associated with the Fleetwood Agreement will be considered “Transferred ATM Equipment.”

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     “Transferred ATM Management Agreements” means each Contract pursuant to which Seller or any Affiliate thereof is performing as of the date hereof ATM Support Services, including the Key ATM Management Agreements.
     “Transferred Contracts” means any Contract included in the Transferred Assets.
     “Transferred IP Rights” means all of Seller’s or any of its Affiliate’s right, title and interests in and to all Intellectual Property Rights primarily used by Seller or any Affiliate thereof in connection with the Business other than (x) software used by Seller that is commercially available pursuant to “shrink-wrap,” “click-through,” or other standard form license agreements; (y) all trademarks, service marks, trade dress, logos, trade names, domain names and corporate names, including the Retained Names and Marks, together with translations, adaptations, derivations and combinations thereof, and including goodwill associated therewith, and applications, registrations and renewals in connection therewith; and (z) and materials incidental to the items in (x) and (y) above. Transferred IP Rights shall specifically include all of Seller’s right, title and interest in and to ATM Pro and Postillion, all software installed on any ATM included in the Transferred ATM Equipment and all Customer, dealer and similar lists.
     “Transferred Vendor Contracts” all Contracts to which Seller or any Affiliate thereof is a party and pursuant to which Seller or any Affiliate thereof obtains services or materials primarily in connection with the operation of the Business as currently conducted by Seller or any Affiliate thereof, including the Contracts listed on Schedule C hereto.
          (b) Each of the following terms is defined in the section of this Agreement set forth opposite such term:
         
Term   Section  
Acquisition Transaction
    5.12  
Agreement
  Preamble
Assignment, Bill of Sale and Assumption Agreement
    3.1 (b)
ATMs
  Recitals
ATM Support Services
  Recitals
Brand or Brands
    5.8 (b)
E*TRADE Bank
  Preamble
Business Employees
    5.11  
Closing
    3.1 (a)
Closing Date
    3.1 (a)
Confidential Information
    5.3 (c)
Deductible Amount
    8.2  
Determination
    3.2 (c)
Disputed Matter
    3.2 (c)
Economic Effect Time
    3.1 (a)
Excluded Items
    8.2  
Final Working Capital
    3.2 (c)
Final Working Capital Statement
    3.2 (c)

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Term   Section  
Financial Statements
    4.1 (f)
Indemnified Party
    8.4 (a)
Indemnifying Party
    8.4 (a)
Interim Financial Statements
    4.1 (f)
Latest Balance Sheet Date
    4.1 (f)
Licensing Agreement
    5.4 (c)
Litigation Liability
    5.13  
Losses
    8.2  
Operating Data
    4.1 (f)
Permitted Acquisition
    5.10 (a)(i)
Prepaid Items
    4.1 (k)
Purchase and Assumption
    3.1 (a)
Purchase Price
    2.3  
Purchaser
  Preamble
Purchaser Parties
    8.2  
Purchaser’s Dispute Report
    3.2 (c)
Retained Names and Marks
    5.8 (b)
Scheduled Permit
    4.1 (j)
Seller
  Preamble
Seller Group
    5.12  
Seller Parties
    8.3  
Supplemental Working Capital Report
    3.2 (b)
Target’s Channel of Trade
    4.1 (j)
Transition Period
    5.8 (b)
Vault Cash
    3.2 (a)
Working Capital Settlement Date
    3.2 (b)
Working Capital Statement
    3.2 (b)
          SECTION 1.2. Interpretation.
          (a) In this Agreement, unless the context otherwise requires, references to:
     (i) the Preamble or the Recitals, Sections, Annexes or Schedules refer to the Preamble or a Recital or Section of, or Annex or Schedule to, this Agreement;
     (ii) any Contract (including this Agreement) refers to the Contract as amended, modified, supplemented or replaced from time to time prior to the date of this Agreement (or thereafter, to the extent applicable and if permitted by the terms of this Agreement);
     (iii) any statute or regulation refer to the statute or regulation as amended, modified, supplemented or replaced and in effect as of the date hereof;
     (iv) any Governmental Authority includes any successor to the Governmental Authority;

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     (v) this Agreement are to this Agreement and the Annexes and Schedules to it; and
     (vi) any copy of any Contract or other document refer to a correct and complete copy.
          (b) The headings contained in this Agreement are for reference purposes only and do not limit or otherwise affect any of the provisions of this Agreement.
          (c) Whenever the word “include,” “includes” or “including” is used in this Agreement, it will be deemed to be followed by the words “without limitation.”
          (d) This Agreement is the product of negotiation by the parties having the assistance of counsel and other advisers. It is the intention of the parties that this Agreement not be construed more strictly with regard to one party than with regard to the other.
ARTICLE II
PURCHASE, SALE AND ASSUMPTION
          SECTION 2.1. Purchase and Sale of Assets; Assumption of Liabilities. At and effective from and after the Closing, on the terms and subject to the conditions of this Agreement:
          (a) Seller agrees to sell, convey and assign to Purchaser, free and clear of all Liens, the Transferred Assets, and Purchaser agrees to purchase and acquire the Transferred Assets from Seller; and

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