Asset Purchase Agreement

Exhibit A	Form of Assignment and Assumption Agreement
Exhibit B	Form of Escrow Agreement
Exhibit C	Form of Services Agreement

 

 

 

 

 

This ASSET PURCHASE AGREEMENT, dated as of July 10, 2018 (this “Agreement”), is by and between The Bancorp Bank, a Delaware chartered commercial bank (“Seller”), and Millennium Trust Company, LLC, an Illinois limited liability company (“Buyer”).

WHEREAS, Seller is engaged in the business of establishing, pursuant to agreements with Plan Sponsors, individual retirement accounts for participants of employee benefit plans pursuant to the automatic rollover rules of Section 401(a)(31)(B) of the Code and Title 29 of the Code of Federal Regulations Sections 404a-2 and 404a-3, as applicable (“Safe Harbor IRAs”), and serving as the Trustee or custodian of, and providing related services to, such Safe Harbor IRAs (the “Business”);

WHEREAS, Buyer desires to purchase from Seller, and Seller desires to sell to Buyer, all of Seller’s right, title and interest in and to the Acquired Assets (as hereinafter defined), and Seller desires to transfer to Buyer, and Buyer desires to accept and assume from Seller, the Assumed Liabilities (as hereinafter defined); and

WHEREAS, the parties desire to make certain representations, warranties, covenants and agreements as provided in this Agreement.

NOW, THEREFORE, in consideration of the foregoing and the representations, warranties, covenants and agreements set forth herein, and for other good and valuable consideration, and intending to be legally bound, the parties hereto agree as follows:

  Section 1.1 Definitions.  For all purposes of this Agreement, the following terms shall have the respective meanings set forth under this “Definitions” heading (such definitions to be equally applicable to both the singular and plural forms of the terms herein defined):

“Account Agreements” shall mean any Automatic Rollover Traditional Individual Retirement Trust Account Agreement, Automatic Rollover Roth Individual Retirement Trust Account Agreement or similar agreement between Seller and an Account Holder prior to the Cut Off Time (together, in each case, with all modifications, amendments, supplements or other changes thereto) under which an Account is established and which contains the terms and conditions applicable to the Account.

“Account Files” shall mean the following information reflected on the systems of Seller in respect of the Accounts:  (i) the demographic information used to process and service the Accounts, to the extent specifically requested by Buyer in order to open new accounts on systems of Buyer, (ii) available balance information, (iii) historical transaction information, (iv) information collected (if any) in accordance with Seller’s Customer Identification Program (CIP) procedures and (v) such additional information as Buyer may from time to time reasonably request.

 

 

“Account Holder” shall mean a Person in whose name an Account has been established and any authorized users of such Account.

“Account Information” shall have the meaning set forth in Section 3.13(a).

 “Account Liabilities” shall mean all deposit liabilities, including all Accrued Interest, with respect to the Accounts.

 “Account Prepaids” shall mean all amounts paid to Seller on the applicable Accounts, including monthly maintenance fees and any other charges and fees assessed on such Accounts, relating to services provided under the Account Agreements after the Cut Off Time.

“Account Receivables” shall mean all amounts owed to Seller on the applicable Accounts, including any charges and fees assessed on such Accounts relating to services provided under the Account Agreements, but excluding the annual fees and charges assessed against the Accounts in the ordinary course of business consistent with past practice, prior to the Cut Off Time.

“Accounts” shall mean Safe Harbor IRAs that are administered by Seller and for which Seller serves as Trustee or custodian as of the Closing.

“Accrued Interest” shall mean, as of any date, with respect to an Account Liability, interest which is accrued on such Account Liability to but excluding such date and not yet posted to the relevant Account.

“Acquired Assets” shall have the meaning set forth in Section 2.1.

“Affiliate” shall mean any individual, partnership, corporation, entity or other Person that, directly or indirectly through one or more intermediaries, controls, is controlled by or is under common control with the Person specified.

“Agreed Claims” shall have the meaning set forth in Section 7.4(b).

“Agreement” shall have the meaning set forth in the preamble.

“Allocation Schedule” shall have the meaning set forth in Section 2.7(d).

“Ancillary Agreements” shall mean the Services Agreement, the Escrow Agreement, and the Assignment and Assumption Agreement.

“Applicable Law” shall mean any federal, state or local statute, law (whether statutory or common law), ordinance, rule, administrative interpretation, regulation, order, writ, injunction, directive or judgment (including those of any Governmental Authority or self-regulatory organization) applicable to and legally binding on Buyer or Seller or any of their respective Affiliates, equity holders, properties, assets, officers, directors or employees, as the case may be.

 

 

“Assignment and Assumption Agreement” shall mean that certain assignment and assumption agreement and bill of sale in substantially the form attached hereto as Exhibit A.

“Assumed Contracts” shall have the meaning set forth in Section 2.1(a).

“Assumed Liabilities” shall have the meaning set forth in Section 2.3.

“Books and Records” shall mean books, documents, records and files, whether written, printed or electronically stored.

“Business” has the meaning set forth in the recitals.

“Business Day” shall mean any day that is not a Saturday, a Sunday or a day on which banks in the City of New York are authorized or required to close for regular banking business.

“Buyer” shall have the meaning set forth in the preamble.

“Buyer Disclosure Schedule” shall mean the disclosure schedule dated as of the date of this Agreement and delivered by Buyer to Seller prior to the execution and delivery of this Agreement.

“Buyer Indemnitees” shall have the meaning set forth in Section 7.2.

“Buyer Material Adverse Effect” shall mean, with respect to Buyer, any effect that prevents, or would be reasonably likely to prevent, Buyer from consummating the Transactions on a timely basis and fulfilling its obligations under this Agreement or the Ancillary Agreements.

“Claim Notice” shall have the meaning set forth in Section 7.4(a).

“Closing” shall have the meaning set forth in Section 2.7(a).

“Closing Date” shall mean the date hereof.

“Code” shall mean the U.S. Internal Revenue Code of 1986, as amended.

“Confidential Information” means all information of a confidential or proprietary nature (whether or not specifically labeled or identified as “confidential”), in any form or medium, of Seller or its customers, suppliers, distributors or other business relations that is used in, related to or necessary for the operation of the Business, including all information concerning finances, customer information, supplier information, products, services, prices, organizational structure and internal practices, forecasts, sales and other financial results, records and budgets, and business, marketing, development, sales and other commercial strategies, unpatented inventions, ideas, methods and discoveries, trade secrets, know-how, unpublished patent applications and other confidential intellectual property, designs, specifications, documentation, components, source code, object code, schematics, drawings, protocols and processes.  Confidential Information shall not include any information that is or becomes generally known to and available for use by the public other than as a result of any acts or omissions of Seller or any of its Affiliates.

 

 

“Confidentiality Agreement” shall mean that certain letter agreement dated as of May 14, 2018 between Seller and Buyer.

“Consent” of a Person shall mean any consent, waiver, authorization, approval, concession, license, Permit, variance, exemption or Order of, registration, certificate, declaration or filing with or report or notice to such Person.

“Contract” shall mean any contract, agreement, arrangement, commitment, undertaking, license or other instrument (including all amendments, modifications, supplements or other changes thereto), whether written or oral to which Seller is a party and/or by which Seller or any of its properties or assets is bound.

“Controlling Party” shall have the meaning set forth in Section 7.4(d).

“Cut Off Time” shall mean 12:01 a.m., Eastern Time, on the Closing Date.

“Damages” shall have the meaning set forth in Section 7.2.

“Data Protection Laws” shall mean all Applicable Laws relating to the Processing of Personal Data and their implementing regulations.

“Disclosure Schedule” shall mean the disclosure schedule dated as of the date of this Agreement and delivered by Seller to Buyer prior to the execution and delivery of this Agreement; provided, however, that “Disclosure Schedule” shall exclude Schedule D, Schedule E and Schedule F.

“Escrow Agent” shall mean Wilmington Trust, N.A.

“Escrow Agreement” shall mean that certain Escrow Agreement, by and among Buyer, Seller and Escrow Agent, substantially in the form attached hereto as Exhibit B.

“Escrow Amount” shall mean $5,000,000.

“Excluded Assets” shall have the meaning set forth in Section 2.2.

“Excluded Liabilities” shall have the meaning set forth in Section 2.4.

“Excluded Taxes” shall mean any Taxes (i) relating to the Business, the Acquired Assets or the Assumed Liabilities for any Pre-Closing Tax Period, (ii) imposed on Seller for any taxable period, (iii) of another Person arising as a result of being (or ceasing to be) a member of any affiliated group as defined in Section 1504 of the Code (or any analogous combined, consolidated or unitary group defined under state, local or foreign income Tax Applicable Law) (or being included (or required to be included) in any Tax Return relating thereto), (iv) of another Person as a result of any transferee or secondary liability or any liability assumed by contract, agreement, Applicable Law, or otherwise, (v) imposed in connection with the transactions contemplated by this Agreement (excluding Buyer’s portion of Transfer Taxes pursuant to Section 6.2), or (vi) imposed on Buyer or its Affiliates as a transferee or successor of Seller.

 

 

“GAAP” shall mean generally accepted accounting principles as used in the United States as in effect at the time any applicable financial statements or information were or are prepared.

“Governmental Authority” shall mean any United States or foreign government, any state or other political subdivision thereof, any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, including the SEC, or any other authority, agency, department, board, commission or instrumentality of the United States, any State of the United States or any political subdivision thereof or any foreign jurisdiction, and any court, tribunal or arbitrator(s) of competent jurisdiction.

“Indemnified Party” shall have the meaning set forth in Section 7.4(a).

“Indemnifying Party” shall have the meaning set forth in Section 7.4(a).

“Intellectual Property” shall mean (a) all intellectual property, industrial property and proprietary and similar rights in any jurisdiction owned or held for use under license, whether or not subject to statutory registration or protection, and whether now known or hereafter recognized in any jurisdiction, including such rights in and to:  (i) Trademarks; (ii) inventions and discoveries (whether or not patentable or reduced to practice), all improvements thereto, all patents (including utility and design patents, industrial designs and utility models), registrations, invention disclosures and applications therefor, including divisions, revisions, supplementary protection certificates, continuations, continuations-in-part and renewal applications, and including renewals, extensions, reissues and re-examinations thereof; (iii) trade secrets, confidential business and technical information and any other confidential information (including ideas, research and development, know-how, formulae, drawings, prototypes, models, designs, technology, compositions, manufacturing, production and other processes and techniques, schematics, technical data, engineering, production and other designs, drawings, engineering notebooks, industrial models, software and specifications, business methods, customer lists, representative lists and supplier lists, and any other information meeting the definition of a trade secret under the Uniform Trade Secrets Act or similar laws); (iv) published and unpublished works of authorship, whether copyrightable or not (including databases and other compilations of information, computer and electronic data processing programs, software, both source code and object code, flow charts, diagrams, descriptive texts and similar items), copyrights therein and thereto, registrations and applications therefor, and all renewals, extensions, restorations and reversions thereof; (v) account servicing platforms; (vi) URLs, domain names and related items, (vii) all general intangibles, and (viii) moral rights, design rights, mask works and rights of privacy and publicity; and (b) in the case of (a)(i) through (viii), all benefits, privileges, causes of action and remedies relating to any of the foregoing, whether before or hereafter accrued (including the rights to sue for all past, present or future infringements or other violations of any of the foregoing and to settle and retain proceeds from any such actions); provided, that Intellectual Property shall not include any Account Files.

 

 

“Knowledge” with respect to Seller shall mean the actual knowledge of those individuals set forth on Section 1.1(b) of the Disclosure Schedule and the knowledge, after due inquiry, of those individuals set forth on Section 1.1(c) of the Disclosure Schedule, and with respect to Buyer shall mean the knowledge, after due inquiry, of those individuals set forth on Section 1.1 of the Buyer Disclosure Schedule.

“Liabilities” shall mean any and all debts, liabilities, guarantees, assurances, commitments, costs, expenses, fees, Taxes and obligations, whether accrued or not accrued, direct or indirect, choate or inchoate, perfected or unperfected, secured or unsecured, fixed, known or unknown, absolute or contingent, asserted or unasserted, matured or unmatured, liquidated or unliquidated, due or to become due, or determined or determinable, whenever or however arising (including whether arising out of any Contract or tort based on negligence, strict liability, other Applicable Law or related to Taxes payable by a Person in connection with compensatory payments to employees or independent contractors).

“Lien” shall mean any lien, claim, charge, option, encumbrance, mortgage, right of way, easement, encroachment, servitude, right of first option, right of first refusal, pledge or security interest or other restriction of any kind.

“Marketing Laws” means, to the extent applicable to Seller or any of its Affiliates, all Applicable Laws pertaining to direct marketing, e-mails, text messages, telemarketing and telephone calls, and the sending of solicited and unsolicited electronic marketing communications, including the CAN-SPAM Act, the Telephone Consumer Protection Act, and the Telemarketing Sales Rule.

“Material Adverse Effect” shall mean (a) any one or more circumstances, changes, developments, conditions or events that, individually or in the aggregate, has or would reasonably be expected to have a material adverse effect on the business, assets, liabilities, prospects, condition (financial or otherwise) or results of operations of the Business, taken as a whole, or (b) that prevents, or would be reasonably likely to prevent, Seller from consummating the Transactions on a timely basis and fulfilling its material obligations under this Agreement or the Ancillary Agreements; provided, however, that for purposes of clause (a) “Material Adverse Effect” shall not include any circumstance, change, development, condition or event to the extent occurring from and after the date of this Agreement and arising out of or resulting from (i) any changes in the United States or global economic or market conditions (including changes in credit availability, interest rates, currency exchange rates or prices of securities or commodities generally or liquidity of trading markets), (ii) any changes in the United States or global political conditions (including the outbreak of war or acts of terrorism), (iii) natural disasters, storms and other weather conditions, (iv) changes in Applicable Law applicable to the Business, or (v) changes in GAAP, which in the case of each of clauses (i), (ii), (iii), (iv) and (v) do not disproportionately affect the Business, taken as a whole, relative to other participants in the industry in which the Business operates.

 

 

“Material Contract” shall have the meaning set forth in Section 3.5(a); provided, that for purposes of this Agreement, the term “Material Contract shall also include the Account Agreements.

“Maximum Amount” shall have the meaning set forth in Section 7.2.

“Non-Controlling Party” shall have the meaning assigned thereto in Section 7.4(d).

“Order” shall mean any order, judgment, injunction, award, decree, writ or other legally enforceable requirement handed down, adopted or imposed by, including any consent decree, settlement agreement or similar written agreement with, any Governmental Authority.

“Permits” shall mean all permits, licenses, registrations, agreements, waivers and authorizations by or of Governmental Authorities held or used by the applicable Person in connection with its business and operations.

“Person” shall mean any individual, corporation, company, partnership (limited or general), limited liability company, joint venture, association, estate, trust or other business entity or any Governmental Authority.

“Personal Data” means any information that, alone or in combination with other information, could be used to identify, contact or locate an individual, including name, street address, telephone number, e-mail address, social security number, driver’s license number, passport number or customer or account number, as may be considered “Nonpublic Personal Information,” as defined under the Gramm-Leach Bliley Act (15 U.S.C. Sec. 6801, et. seq.).

“Plan Sponsor” shall mean any plan sponsor, administrator or other fiduciary that has entered into a Contract with Seller relating to the establishment of Safe Harbor IRAs or any other services included in the Business, including pursuant to Seller’s Automatic Rollover Agreement, Automatic EGTRRA Rollover Agreements, Terminated Plan Distribution Agreement or any other similar agreement.

“Plan Sponsor Agreement” means a Contract between Seller and a Plan Sponsor relating to the establishment of Safe Harbor IRAs or any other services included in the Business, including an Automatic Rollover Agreement, Automatic EGTRRA Rollover Agreement, Terminated Plan Distribution Agreement or similar agreement between Seller and a Plan Sponsor.

“Pre-Closing Tax Period” shall mean any Tax period (or portion thereof) ending on or before the Closing Date.

“Privacy and Information Security Requirements” means (i) all Data Protection Laws; (ii) all Contracts that relate to the Processing of Personal Data and/or protecting the security or privacy of information; (iii) all Privacy Policies; and (iv) all Marketing Laws.

 

 

“Privacy Policies” means any notices, policies, disclosures, public representations, or internal agreements by Seller or any of its Affiliates in respect of such entity’s Processing of Personal Data or privacy practices.

“Proceedings” shall have the meaning set forth in Section 3.7.

“Process” or “Processing” shall mean the collection, use, storage, processing, recording, distribution, transfer, import, export, protection (including security measures), disposal or disclosure or other activity regarding data (whether electronically or in any other form or medium).

“Purchase Price” shall have the meaning set forth in Section 2.5.

“Release Date” shall have the meaning set forth in Section 2.7(c).

“Restricted Period” shall mean the period commencing on the Closing Date and ending five (5) years thereafter.

“Safe Harbor IRAs” has the meaning set forth in the recitals.

“Seller” shall have the meaning set forth in the preamble.

“Seller Indemnitees” shall have the meaning set forth in Section 7.3.

“Seller Transaction Expenses” means (i) all of the fees, costs and expenses incurred by any Seller or its Affiliates in connection with the Transactions, including all fees, costs and expenses payable to attorneys, financial advisors or accountants, and all obligations under any engagement letter or other agreement or understanding with any such advisor and (ii) all payments by any Seller or its Affiliates to obtain any third party consent required under any Contract in connection with the consummation of the Transactions.

“Services Agreement” shall mean a Services Agreement to be entered into as of the Closing, substantially in the form set forth in Exhibit C.

“Straddle Period” shall mean any Tax period beginning on or prior to and ending after the Closing Date.

“Survival Period” shall have the meaning set forth in Section 7.1.

“Tax Claim” shall have the meaning assigned thereto in Section 7.4(d).

“Tax Return” shall mean all returns, elections, claims for refund, declarations, notices, forms, reports, statements, estimates, information statements and other forms and documents (including all schedules, supplements, exhibits and other attachments thereto and Treasury Form TD F 90-22.1 and FinCEN Form 114) filed or required to be filed with any Governmental Authority, or maintained or required to be maintained by any Person, with respect to the calculation, determination, assessment or collection of any Taxes.

 

 

“Taxes” shall mean all U.S. federal, state, local or foreign net income, alternative or add-on minimum tax, gross income, gross receipts, sales, use, ad valorem, value added, escheat, abandoned or unclaimed property (whether or not considered a tax, under Applicable Law), transfer, franchise, profits, license, withholding, payroll, employment, excise, severance, stamp, occupation, premium, property, environmental or windfall profit tax, custom, duty, estimated, registration, natural resources, entertainment, amusement, capital stock, social security, unemployment, disability, composite, healthcare or other tax or other like assessment of any kind whatsoever, together with any interest, penalty, addition to tax or additional amount imposed by any Applicable Law or Taxing Authority, whether disputed or not.

“Taxing Authority” shall mean any Governmental Authority having jurisdiction over the assessment, determination, collection or other imposition of any Tax.

“Threshold Amount” shall have the meaning set forth in Section 7.2.

“Top Customers” shall have the meaning set forth in Section 3.15.

“Top Director Customer” shall have the meaning set forth in Section 3.15.

“Top Indirect Customer” shall have the meaning set forth in Section 3.15.

“Top Intermediary” shall have the meaning set forth in Section 3.15.

“Top Plan Sponsor” shall have the meaning set forth in Section 3.15.

“Trademarks” shall mean trademarks, service marks, brand names, certification marks, collective marks, d/b/a’s, Internet domain names, e-mail addresses, source-identifying phone numbers, logos, product names and slogans, symbols, trade dress, assumed names, fictitious names, trade names, business names, corporate names and any and every other form of trade identity and other indicia of origin, whether registered or unregistered, all applications and registrations for the foregoing, including all renewals of same, and all goodwill associated therewith and symbolized thereby.

“Transactions” shall mean the transactions contemplated by this Agreement and by the Ancillary Agreements.

“Transfer Taxes” shall have the meaning set forth in Section 6.2.

“Trustee” shall have the meaning set forth in Section 2652(b)(2) of the Code.

“Trustee Resignation Date” shall have the meaning set forth in the Services Agreement.

“Trustee Resignation Communications” shall have the meaning set forth in the Services Agreement.

“U.S.” or “United States” means the United States of America.

“Wire Transfer” shall mean a payment in immediately available funds by wire transfer in lawful money of the United States to such account or to a number of accounts as shall have been designated by written notice from the receiving party to the paying party.

 

 

  Section 2.1  Sale and Purchase of the Acquired Assets.  On the terms and subject to the conditions of this Agreement and the Ancillary Agreements, at the Closing, Seller shall sell, transfer, assign, convey and deliver to Buyer, and Buyer shall purchase and acquire from Seller, all the right, title and interest as of the Cut Off Time of Seller in and to the following assets and rights, but excluding any Excluded Assets (collectively, the “Acquired Assets”):

(a) all (i) Plan Sponsor Agreements and (ii) other Contracts set forth on Section 2.1(a) of the Disclosure Schedule (the “Assumed Contracts”);

(b) all Account Agreements (including, for the avoidance of doubt, the rights to serve as the Trustee or custodian in accordance with the terms thereof);

(c) all Account Receivables relating to the Accounts as of the Cut Off Time and all payments in respect thereof following the Cut Off Time;

(d) all Account Prepaids; and

(e) the Account Files.

The Acquired Assets shall be conveyed free and clear of all Liens.  Notwithstanding the foregoing, the transfer of the Acquired Assets pursuant to this Agreement shall not include the assumption of any Liability related to the Business or the Acquired Assets unless Buyer specifically assumes that Liability pursuant to Section 2.3 of this Agreement.

  Section 2.2  Excluded Assets.  Notwithstanding anything to the contrary contained in Section 2.1 or elsewhere in this Agreement, the following assets of Seller (collectively, the “Excluded Assets”) are not part of the sale and purchase contemplated hereunder, are excluded from the Acquired Assets and shall remain the property of Seller after the Closing:

(a) any Contracts that are not set forth on Section 2.1(a) of the Disclosure Schedule;

(b) all cash and cash equivalents of Seller or its Affiliates;

(c) all real property of Seller or its Affiliates;

(d) all capital stock or other ownership interests of Seller or its Affiliates;

(e) all tangible personal property, including any equipment, office furniture, or fixtures owned, leased or used by Seller or its Affiliates;

 

 

 

(f) any Tax refunds (or credits) of Seller or any of its Affiliates relating to the Business, the Acquired Assets or the Assumed Liabilities;

(g) all rights of Seller or its Affiliates under this Agreement and any Ancillary Agreement; and

(h) any Intellectual Property utilized in the Business.

  Section 2.3  Assumed Liabilities.  On the terms and subject to conditions set forth herein, effective from and after the Cut Off Time, Buyer will assume and agree to pay, perform, and discharge only the following Liabilities (collectively, the “Assumed Liabilities”):

(a) Liabilities that accrue following the Closing under the Assumed Contracts (except, for the avoidance of doubt, as provided in Section 2.4(e)); and

(b) fifty percent (50%) of any Transfer Taxes payable by Buyer pursuant to Section 6.2.

  Section 2.4  Excluded Liabilities.  Notwithstanding anything to the contrary contained in this Agreement or any Ancillary Agreement, except as expressly set forth in Section 2.3, Buyer will not assume or be liable for any Liabilities of Seller or the Business or with respect to any of the Acquired Assets (collectively, the “Excluded Liabilities”), including:

(a) the Account Liabilities;

(b) Excluded Taxes;

(c) Liabilities for which Seller or any of its Affiliates expressly has responsibility pursuant to the terms of this Agreement or the Ancillary Agreements;

(d) Liabilities relating to the Excluded Assets (including, for the avoidance of doubt, any Liabilities arising under or pursuant to any Contracts excluded pursuant to Section 2.2(a) hereof);

(e) Liabilities relating to any breach or alleged breach of the Assumed Contracts in connection with the assignment of such Assumed Contracts to Buyer;

(f) fifty percent (50%) of any Transfer Taxes payable by Seller pursuant to Section 6.2;

(g) Liabilities of whatever kind and nature to the extent relating to the operation or conduct of the Business by Seller or the use or ownership of the Acquired Assets prior to the Closing;

(h) Seller Transaction Expenses; and

(i) any Liability for which Buyer has a right to indemnification pursuant to Section 7.2.

 

 

 

  Section 2.5  Purchase Price.  The “Purchase Price” for the Acquired Assets shall be an amount in cash equal to $65,000,000, which shall be paid by Buyer at the Closing in accordance with and as adjusted pursuant to Section 2.7 of this Agreement.

  Section 2.6  Refunds and Remittances.  If Seller or its Affiliates receives any refund or other amount (including, for the avoidance of doubt, any account fees) which is properly an Acquired Asset in accordance with the terms of this Agreement and the Ancillary Agreements, Seller will collect and promptly forward to Buyer (along with all associated documents) at the address set forth in Section 8.5 no less frequently than monthly such refund or other amount.  Seller shall advise Buyer of any counterclaims or setoffs of which it receives notice subsequent to the Closing with respect to any such Acquired Asset.  After the Closing, if Buyer or any of its Affiliates receives any refund or other amount which is properly an Excluded Asset in accordance with the terms of this Agreement, Buyer promptly shall remit, or shall cause to be remitted, such amount to Seller (along with all associated documents) at the address set forth in Section 8.5 no less frequently than monthly.

  Section 2.7  The Closing.

(a) On the terms and subject to the conditions of this Agreement, the closing of the Transactions (the “Closing”) shall take place at 10:00 a.m. Eastern time on the date hereof at the offices of Paul Hastings LLP, 71 South Wacker Drive, Suite 4500, Chicago, Illinois 60606, by remote electronic exchange of documents (by facsimile, .pdf, e-mail or other form of electronic communication), or at such other date and place as agreed to by the parties hereto.

(b) At the Closing:

(i) Seller shall:

(1) deliver duly executed counterparts to each of the Ancillary Agreements;

(2) deliver a non-foreign person affidavit in form and substance reasonably satisfactory to Buyer that complies with the requirements of Section 1445 of the Code, duly executed by Seller;

(3) deliver evidence, reasonably satisfactory to the Buyer, that the consents, waivers, authorizations, approvals, concessions, licenses, Permits, variances, exemptions, Orders and notices set forth in Section 2.7(b)(i)(3) of the Disclosure Schedule have been obtained and are in full force and effect as of the Closing

(4) deliver a certificate executed and delivered by the Secretary or comparable representative of Seller, attesting and certifying as to (x) the organizational documents of Seller, and the certificate of incorporation or comparable organizational document of Seller shall also be certified as of a recent date by the Secretary of State or comparable Governmental Authority of its jurisdiction of organization, and (y) copies of resolutions of the board of directors (or comparable governing body) of Seller adopting and authorizing the Transactions;

 

 

 

(5) deliver a certificate of good standing for Seller issued not more than ten (10) days prior to the Closing Date by the Secretary of State or comparable Governmental Authority of its jurisdiction of organization and each other jurisdiction where Seller is qualified to do business;

(6) deliver a list of all addresses of the Account Holders to which the Trustee Resignation Communications will be sent by Seller pursuant to the Services Agreement; and

(7) deliver any other customary certificates or other instruments as Buyer may reasonably request in order to give effect to this Agreement.

(ii) Buyer shall:

(1) pay to Seller by Wire Transfer to the account set forth on Schedule D hereto immediately available funds in dollars in an amount equal to (x) the Purchase Price minus (y) the Escrow Amount;

(2) deposit the Escrow Amount by Wire Transfer in an escrow account pursuant to the Escrow Agreement;

(3) deliver duly executed counterparts to each of the Ancillary Agreements; and

(4) deliver any other customary certificates or other instruments as Seller may reasonably request in order to give effect to this Agreement.

(c) The escrow account shall be governed by the terms and conditions of the Escrow Agreement, and shall be available to satisfy any Buyer Damages in accordance with and subject to the terms and conditions of Article VII.  The fees and expenses of the Escrow Agent shall be borne fifty percent (50%) by the Buyer, on the one hand, and fifty percent (50%) by the Seller, on the other hand.  On the date that is fifteen (15) months following the Closing Date (the “Release Date”), any funds then remaining in the Escrow Account as of the Release Date (other than an amount of funds subject to any claims for indemnification pursuant to Section 7.2 and Section 7.4 that are pending and unresolved as of the Release Date) shall be released to Seller.

 

 

 

(d) Buyer and Seller agree that the Purchase Price, and any other consideration to be paid pursuant to this Agreement to, or for the benefit of, Seller, shall be allocated among the Acquired Assets for all income Tax purposes as shown on the allocation schedule (the “Allocation Schedule”) prepared in accordance with this Section 2.7(d), Section 1060 of the Code and the principles set forth on Schedule E.  A draft of the Allocation Schedule shall be prepared by Buyer and delivered to Seller within sixty (60) calendar days following the Closing Date.  If Seller notifies Buyer in writing within five (5) calendar days of receipt of the Allocation Schedule that Seller objects to one or more items reflected in the Allocation Schedule (the sole permissible basis for which shall be that the Allocation Schedule was not prepared in accordance with this Section 2.7(d)), Seller and Buyer shall negotiate in good faith to resolve such dispute; provided, however, that if Seller and Buyer are unable to resolve any dispute with respect to the Allocation Schedule within ninety (90) calendar days following the Closing Date, such dispute shall be resolved by a nationally recognized independent accountant mutually acceptable to Seller and Buyer (whose determination shall be limited to whether the Allocation was prepared in accordance with this Section 2.7(d)).  The fees and expenses of such accounting firm shall be borne by Seller.  If Seller does not object to the Allocation Schedule within such five (5) day period, the Allocation Schedule will be final, binding and non-appealable by the parties hereto. In case of any adjustment to the Purchase Price (or any other item of consideration for United States federal income Tax purposes), requiring an amendment to the Allocation Schedule, Buyer shall amend the Allocation Schedule in accordance with the principles set forth in this Section 2.7(d) and provide such amended allocation to Seller (which, subject to the dispute resolution provisions set forth in this Section 2.7(d), shall become the Allocation Schedule).  Buyer and Seller shall file all Tax Returns (including amended returns and claims for refund) and Tax information reports in a manner consistent with the Allocation Schedule.

Except as set forth in the Disclosure Schedule (it being agreed that disclosure in any section of the Disclosure Schedule shall apply to the indicated section of this Agreement and to all other sections of this Agreement to the extent that it is reasonably apparent from the face of such disclosure that such matter is relevant to such other sections), Seller hereby represents and warrants as of the Closing Date (except to the extent made only as of a specified date, in which case as of such date) to Buyer as follows:

  Section 3.1  Organization and Related Matters.  Seller is a commercial bank, duly organized and validly existing under the laws of the State of Delaware, with deposits insured by the Federal Deposit Insurance Corporation.  Seller has the organizational power and authority to own, lease and operate all of its properties and assets and to carry on the Business as it is now being conducted and to own the Acquired Assets as and in the places where now conducted or owned.  Seller is duly licensed or qualified to do business in each jurisdiction in which the nature of the Business or the character or location of the Acquired Assets makes such licensing or qualification necessary, except where the failure to be so licensed or qualified would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

  Section 3.2  Authority; No Violation.

(a) Seller has all requisite corporate power and authority to execute and deliver this Agreement and the Ancillary Agreements and to consummate or cause to be consummated the Transactions.  The execution and delivery of this Agreement and the Ancillary Agreements and the consummation of the Transactions have been duly and validly approved by all necessary corporate action on the part of Seller or its applicable Affiliates.  No other corporate proceedings on the part of Seller or its Affiliates are necessary to approve this Agreement or the Ancillary Agreements or to consummate or cause to be consummated the Transactions.  This Agreement has been, and the Ancillary Agreements will be, duly and validly executed and delivered by Seller or its applicable Affiliates and, assuming due authorization, execution and delivery by Buyer or its applicable Affiliates, this Agreement constitutes, and the Ancillary Agreements will constitute, a valid and binding obligation of Seller or its applicable Affiliates, enforceable against Seller or its applicable Affiliates in accordance with its terms, except as such enforcement may be limited by (i) the effect of bankruptcy, insolvency, reorganization, receivership, conservatorship, arrangement, moratorium or other laws affecting or relating to the rights of creditors generally or (ii) the rules governing the availability of specific performance, injunctive relief or other equitable remedies and general principles of equity, regardless of whether considered in a proceeding in equity or at law.

 

 

 

(b) Neither the execution and delivery of this Agreement or the Ancillary Agreements by Seller or its applicable Affiliates, nor the consummation by Seller and its Affiliates of the Transactions nor compliance by Seller and its Affiliates with any of the terms or provisions hereof and of the Ancillary Agreements does or will (i) violate any provision of the certificate of incorporation, bylaws, or similar organization documents of Seller or its applicable Affiliates or (ii) (x) violate any Applicable Law or (y) violate, conflict with, result in a breach of any provision of or the loss of any benefit under, constitute a default (or an event which, with notice or lapse of time, or both, would constitute a default) under, result in the termination of or a right of termination or cancellation under or in any payment conditioned, in whole or in part, on consummation of the Transactions, accelerate the performance required by or rights or obligations under, or result in the creation of any Lien upon any of the Acquired Assets under any of the terms, conditions or provisions of any Contract or other instrument or obligation to which Seller, the Business or its applicable Affiliates are a party, or by which the Acquired Assets may be bound or affected.

  Section 3.3  Consents and Approvals. Except for such consents, waivers, authorizations, approvals, concessions, licenses, Permits, variances, exemptions, Orders or notices as are set forth in Section 3.3 of the Disclosure Schedule, and except with respect to any filings that may be required pursuant to applicable securities laws, Seller and its Affiliates are not required to obtain any consent, waiver, authorization, approval, concession, license, Permit, variance, exemption or Orders of, or provide notice to, any Governmental Authority or other Person in connection with (i) the execution and delivery by Seller or its Affiliates of this Agreement and the Ancillary Agreements or (ii) the consummation by Seller and its Affiliates of the Transactions.

  Section 3.4  Absence of Changes or Events.  Since December 31, 2017, there has not been any one or more related or unrelated changes, events, developments or circumstances which, individually or in the aggregate, have had, or could reasonably be expected to have, a Material Adverse Effect.  Except as disclosed in the applicable subsection of Section 3.4 of the Disclosure Schedule, since December 31, 2017, Seller has conducted the Business in the ordinary course consistent with past practice.  Without limiting the generality of the foregoing, except as disclosed in the applicable subsection of Section 3.4 of the Disclosure Schedule, since December 31, 2017:

 

 

(a) Seller has not sold, leased, transferred, or assigned any of its assets related to the conduct, ownership, use or operation of the Business and/or the Acquired Assets;

(b) no party has terminated, cancelled, amended, modified or accelerated any Contract that is or would have been required to be listed on Section 3.5 of the Disclosure Schedule;

(c) Seller has not made any material changes in its accounting policies, methods, principles or practices with respect to the Business;

(d) Seller, with respect to the Business, has not made any material Tax election, changed its method of Tax accounting, prepared any Tax Returns in a manner which is materially inconsistent with the past practices of Seller with respect to the treatment of items on prior Tax Returns; and

(e) Seller has not entered into any agreement, understanding or commitment to do any of the foregoing.

  Section 3.5  Material Contracts.

(a) Except as set forth on Section 3.5(a) of the Disclosure Schedule (by reference to the applicable subsection hereof), none of Seller or any of its Affiliates has entered into or is bound by any Contract relating to the conduct of the Business (each, a “Material Contract”):

(i) under which Seller or its Affiliates has made or is obligated to make, directly or indirectly, any advance, loan, extension of credit or capital contribution to, or other investment in, any Person, other than in the ordinary course of business consistent with past practice, and in an amount that exceeds $50,000;

(ii)  that prohibits or restricts the ability of Seller or its Affiliates to conduct the Business, or that would restrict the ability of Buyer or any of its Affiliates after Closing to conduct its business (including the Business), in any geographical area, to solicit clients, to solicit or hire any Person, or to compete with any Person;

(iii) that requires for the Business’s purchase of materials, supplies, products or services involving annual payments in excess of $50,000 in the aggregate;

(iv) that provides for any joint venture, strategic alliance, partnership or similar arrangement involving a sharing of profits or expenses or payments based on revenues or profits of the Business;

(v) with any Governmental Authority (and to the extent any such Contract involves a small business “set aside,” the same shall be noted on Section 3.5(a)(v) of the Disclosure Schedule);

 

 

 

(vi) pursuant to which Seller leases, is licensed or otherwise authorized to use or distribute any Intellectual Property of any other Person that is used in, related to or necessary for the operation of the Business or which otherwise affect the ability of Seller to use any Seller Intellectual Property material to the Business;

(vii) pursuant to which Seller leases, licenses or otherwise authorizes another Person to use, distribute, sell, resell or incorporate any Seller Intellectual Property,

(viii) that contain any fixed or indexed pricing, “most-favored nation” pricing or similar pricing terms or provisions regarding minimum volumes, volume discounts, or rebates;

(ix) with Top Customers; and

(x) that are not made in the ordinary course of business consistent with past practice or that are otherwise material.

Correct and complete copies of the written Contracts listed or required to be listed on Section 3.5(a) of the Disclosure Schedule, together with all modifications and amendments thereto, have previously been delivered to Buyer.

(b) Each Material Contract is valid, binding and in full force and effect, and is enforceable against each of Seller and its Affiliates that is a party thereto and, to Seller’s Knowledge, each other party thereto in accordance with its terms, except as such enforcement may be limited by (i) the effect of bankruptcy, insolvency, reorganization, receivership, conservatorship, arrangement, moratorium or other laws affecting or relating to the rights of creditors generally or (ii) the rules governing the availability of specific performance, injunctive relief or other equitable remedies and general principles of equity, regardless of whether considered in a proceeding in equity or at law.  Seller or its applicable Affiliate that is a party thereto has duly performed in all material respects its obligations under each such Material Contract to the extent that such obligations have accrued.  There are no existing breaches or defaults (or circumstances, occurrences, events or acts that, with the giving of notice or lapse of time or both, would become breaches or defaults) of Seller or its applicable Affiliate that is a party thereto or, to Seller’s Knowledge, any other party thereto, under any Contract that is an Acquired Asset or other Contract included in the Assumed Liabilities.  None of Seller and any of its Affiliates has received any notice of any actual or intended cancellation or termination, nor to Seller’s Knowledge has any such cancellation or termination been threatened, in connection with any Contract that is an Acquired Asset or other Contract included in the Assumed Liabilities.

(c) Except as set forth on Section 3.5(c) of the Disclosure Schedule, Seller does not possess or hold any license (other than “shrink-wrap” or “click-through” licenses for commercial off-the-shelf computer software) to use any Intellectual Property rights of any other Person that is related to the conduct, ownership, use or operation of the Business and/or the Acquired Assets.

 

 

  Section 3.6  No Broker.  Neither Seller nor any Affiliate of Seller has employed any broker or finder or incurred any Liability for any broker’s fees, commissions or finder’s fees in connection with this Agreement and the Transactions.

  Section 3.7  Legal Proceedings.  Except as set forth on Section 3.7(a) of the Disclosure Schedule, there are no legal, administrative, arbitral or other proceedings, claims, suits, actions or governmental or regulatory investigations or inquiries of any nature (collectively, “Proceedings”) that are pending or, to Seller’s Knowledge, threatened against or relating to Seller or its Affiliates in connection with the use, ownership, performance, operation or conduct of the Business or the Acquired Assets or the Assumed Liabilities.  Except as set forth on Section 3.7(b) of the Disclosure Schedule, there are no Proceedings pending or threatened by Seller arising out of related to the use, ownership, performance, operation or conduct of the Business or the Acquired Assets.  Section 3.7(c) of the Disclosure Schedule sets forth a complete and correct list and description of all Proceedings made, filed or otherwise initiated by or against Seller or any of the current or former officers, directors or employees of Seller in connection with the use, ownership, performance, operation or conduct of the Business or the Acquired Assets or the Assumed Liabilities that have been resolved in the past three (3) years.  Section 3.7(c) of the Disclosure Schedule sets forth any Order to which Seller is subject in connection with the use, ownership, performance, operation or conduct of the Business or the Acquired Assets or the Assumed Liabilities.

  Section 3.8  Compliance with Applicable Law; Permits.

(a) Seller and its Affiliates have conducted and continue to conduct the Business in accordance with all Applicable Law, including the Consumer Identification Program under the U.S.A. PATRIOT Act of 2001, and are not in material default or material violation of any such Applicable Law with respect to the conduct of the Business.  Except as set forth on Section 3.8(a) of the Disclosure Schedule, none of Seller or any of its Affiliates has received any written communication since January 1, 2015, from a Governmental Authority that alleges that Seller or any of its Affiliates is not in material compliance with any Applicable Law in connection with the operation or conduct of the Business or the Acquired Assets or the Assumed Liabilities.

(b) Seller or its Affiliates hold, own or possess all material Permits necessary for the lawful ownership, operation and use of the properties and assets owned, operated or used in the conduct of the Business as currently conducted.  Seller or its Affiliates is in compliance with its obligations under such Permits in all material respects.  Since January 1, 2015, none of such Permits has been challenged or revoked and no statement of intention to challenge, revoke or fail to renew any such Permit has been received in writing by Seller or its Affiliates.

  Section 3.9  Taxes.

(a) Seller and all of its Affiliates have timely and properly paid all Taxes that relate to any of the Acquired Assets or the Business that will have been required to have been paid on or prior to the Closing Date the nonpayment of which could result in a Lien for Taxes on any of the Acquired Assets, could result in Buyer becoming liable or responsible therefore.

 

 

(b) Seller has timely and properly filed all U.S. federal, state, county, local and foreign Tax Returns that relate to the Acquired Assets or the Business that it is required to have filed, and such Tax Returns are true, complete and correct in all material respects.

(c) Seller is not a “foreign person” within the meaning of Section 1445 of the Code.

(d) Any deficiencies proposed as a result of any Tax audits of Seller by any Governmental Authority that relate to the Acquired Assets or the Business have been fully paid or finally settled, and there are no present disputes as to Taxes payable by Seller that relate to the Acquired Assets or the Business except as set forth on Section 3.9(d) of the Disclosure Schedule.

(e) There are no Liens for Taxes (other than for current Taxes not yet due and payable) on any of the Acquired Assets.

(f) Seller has not requested or received a ruling from any Governmental Authority or signed any binding agreement with any Governmental Authority that might impact the amount of Tax due from Buyer or any of its Affiliates after the Closing Date.

(g) None of the Acquired Assets are an interest in an entity or arrangement classified as a partnership for U.S. federal, state or local income Tax purposes.

(h) Seller has not deferred the inclusion of any amounts in gross income pursuant to Internal Revenue Service Revenue Procedure 2004-34, Treasury Regulations Section 1.451-5, Sections 451(c), 455, 456 or 460 of the Code, as a deposit or pre-paid amount, or any corresponding or similar provision of state or local Applicable Law (irrespective of whether or not such deferral is elective).

  Section 3.10  Title.  Seller is the lawful owner of each of the Acquired Assets, free and clear of all Liens.  Assuming the accuracy of Buyer’s representations and warranties and compliance with covenants set forth herein, and the filing of all notices and receipt of all consents set forth on Section 3.3 of the Disclosure Schedule, immediately following the Cut Off Time, Buyer will be vested with good and valid title in all of the Acquired Assets (other than any Contracts that have expired or been terminated in accordance with their terms), free and clear of all Liens.

  Section 3.11  Accounts.  All of the Accounts have been administered and originated in compliance in all material respects with the documents governing the relevant type of Account (including any applicable Account Agreements) and all Applicable Law.  Except as set forth on Section 3.11 of the Disclosure Schedule, and subject to the accuracy of Buyer’s representations and warranties provided in this Agreement, pursuant to the Account Agreements, the Accounts are transferable at the Closing to Buyer, and there are no Accounts that are subject to any judgment, decree or order of any Governmental Authority.  Prior to the date of this Agreement, Seller has provided Buyer with true, complete and correct forms of all Account Agreements related to the Accounts and all such forms contain all material terms of the Accounts.

 

 

  Section 3.12  Data Privacy.  With respect to any Personal Data collected, stored, used, disclosed, transferred, or otherwise Processed by Seller or its Affiliates in connection with the Business:

(a) Each of Seller and its Affiliates has complied in all material respects with all Privacy and Information Security Requirements;

(b) no material notice or material Proceeding of any kind has been served on, or initiated against, the Seller or any of its Affiliates in respect of the Business under any applicable Privacy and Information Security Requirement;

(c) there are no pending complaints, actions, fines, or other penalties facing the Seller or any of its Affiliates in connection with any data security breaches or violations of any Privacy and Information Security Requirement;

(d) none of Seller or its Affiliates has experienced any security breaches of Personal Data that would require law enforcement or individual notification or remedial action under any applicable Privacy and Information Security Requirement;

(e) and Seller and its Affiliates employ commercially reasonable security measures that comply in all material respects with all Privacy and Information Security Requirements to protect Personal Data within its custody or control and requires the same of all vendors that Process Personal Data on its behalf; and

(f) Seller and its Affiliates have provided all requisite notices and obtained all required consents, and satisfied all other requirements (including notification to Government Authorities), necessary for such entities’ Processing (including international and onward transfer) of all Personal Data in connection with the conduct of the Business as currently conducted and in connection with the consummation of the transactions contemplated hereunder.

  Section 3.13  Account Information.

(a) Attached as Schedule F are copies of the following (collectively, the “Account Information”):

(i) (A) The aggregate number of Accounts open as of December 31, 2016, December 31, 2017, and June 30, 2018, and the number of Accounts established and closed during each of the years ended December 31, 2016 and 2017, and the six-month period ended June 30, 2018, (B) aggregate fee income (by category) derived by Seller from such Accounts, and all related fees paid by Seller to Wealth Management Systems Inc. or its successor in connection therewith, for the years ended December 31, 2016 and 2017, and the six-month period ended June 30, 2018, and (C) the fair market value of the assets collectively held by such Accounts as of December 31, 2016, December 31, 2017, and June 30, 2018; and

 

 

 

(ii) The number of Automatic Rollover Agreements and the number of Terminated Plan Distribution Agreements with Plan Sponsors that Seller was a party to as of December 31, 2016, December 31, 2017, and June 30, 2018.

(b) The Account Information is correct and complete in all material respects, and are consistent with the Books and Records of Seller (which Books and Records are correct and complete in all material respects).

  Section 3.14  Plan Sponsor Relationships.  To Seller’s Knowledge, no Plan Sponsor intends to terminate its relationship with Seller or the Business.

  Section 3.15  Plan Sponsors and Other Business Relationships.  Section 3.15 of the Disclosure Schedule contains a complete and correct list of (i) the 19 largest Plan Sponsors from which the Business indirectly derives revenue through fees attributable to Accounts, by the aggregate dollar value of revenue derived by the Business from such Accounts during the twelve (12)-month period ended May 1, 2018 (each, a “Top Plan Sponsor”), (ii) the 10 largest record keepers, third-party administrators, advisors and other intermediaries, other than Wealth Management Systems Inc., from which the Business indirectly derives revenue through fees attributable to Accounts, by the aggregate dollar value of revenue derived by the Business from such Accounts during the twelve (12)-month period ended May 1, 2018 (each, a “Top Intermediary” and collectively with the Top Plan Sponsors, the “Top Customers”), and (iii) with respect to each Top Customer, the aggregate dollar value of such revenue.  A Top Customer with which the Business has a direct relationship pursuant to a Contract is referred to in this Agreement as a “Top Direct Customer,” and a Top Customer with which Seller does not have a direct relationship pursuant to a Contract is referred to as a “Top Indirect Customer.”  No Top Direct Customer has terminated or adversely modified the amount, pricing, frequency or terms of the business such Top Direct Customer conducts with the Business.  Seller has not received any notice in connection with any Top Direct Customer or any written notice in connection with any Top Indirect Customer, nor does Seller have Knowledge, that any such Top Direct Customer or Top Indirect Customer will or could reasonably be expected to terminate or adversely modify the amount, pricing, frequency or terms of the business such Top Direct Customer or Top Indirect Customer conducts in connection with the Business.  There is no material dispute pending with any Top Direct Customer or Top Indirect Customer, and Seller has not received any notice in connection with any Top Direct Customer or any written notice in connection with any Top Indirect Customer, nor does Seller have any Knowledge, of a reasonable basis for any such dispute.

  Section 3.16  Limitations on Representations and Warranties.  Except for the representations and warranties specifically set forth in this Agreement and in any document delivered pursuant hereto, neither Seller nor any Affiliate of Seller, nor their respective officers, directors, employees, agents or representatives, nor any other Person, makes or shall be deemed to make any representation or warranty to Buyer, express or implied, at law or in equity, with respect to the Transactions, and Seller hereby disclaims any such representation or warranty whether by such Seller or any of its Affiliates or their respective officers, directors, employees, agents or representatives, or any other Person, except in the case of fraud or willful misrepresentation.

 

 

Except as set forth in the Buyer Disclosure Schedule (it being agreed that disclosure in any section of the Buyer Disclosure Schedule shall apply to the indicated section of this Agreement and to all other sections of this Agreement to the extent that it is reasonably apparent from the face of such disclosure that such matter is relevant to such other sections), Buyer hereby represents and warrants as of the Closing Date (except to the extent made only as of a specified date, in which case as of such date) to Seller as follows:

  Section 4.1  Organization and Related Matters.  Buyer is a limited liability company duly organized and validly existing under the laws of the State of Illinois.  Buyer has the limited liability company power and authority to own or lease all of its properties and assets and to carry on its business as it is now being conducted, and is duly licensed or qualified to do business in each jurisdiction in which the nature of the business conducted by it or the character or location of the properties and assets owned or leased by it makes such licensing or qualification necessary, except where the failure to be so licensed or qualified would not reasonably be expected to have, individually or in the aggregate, a Buyer Material Adverse Effect.

  Section 4.2  Authority; No Violation.

(a) Buyer has all requisite limited liability company power and authority to execute and deliver this Agreement and the Ancillary Agreements and to consummate the Transactions.  The execution and delivery of this Agreement and the Ancillary Agreements and the consummation of the Transactions has been duly and validly approved by all necessary corporate action on the part of Buyer.  No other corporate proceeding on the part of Buyer is necessary to approve this Agreement or the Ancillary Agreements or to consummate the Transactions.  This Agreement has been, and the Ancillary Agreements will be, duly and validly executed and delivered by Buyer and, assuming due authorization, execution and delivery by Seller and its applicable Affiliates, this Agreement constitutes, and the Ancillary Agreements will constitute, a valid and binding obligation of Buyer, enforceable against Buyer in accordance with its terms, except as such enforcement may be limited by (i) the effect of bankruptcy, insolvency, reorganization, receivership, conservatorship, arrangement, moratorium or other laws affecting or relating to the rights of creditors generally or (ii) the rules governing the availability of specific performance, injunctive relief or other equitable remedies and general principles of equity, regardless of whether considered in a proceeding in equity or at law.

(b) Neither the execution and delivery of this Agreement or the Ancillary Agreements by Buyer, nor the consummation by Buyer of the Transactions nor compliance by Buyer with any of the terms or provisions hereof and the Ancillary Agreements does or will (i) violate any provision of the certificate of incorporation or bylaws or similar organizational documents of Buyer or its applicable Affiliates or (ii) (x) violate any Applicable Law or (y) violate, conflict with, result in a breach of any provision of or the loss of any benefit under, constitute a default (or an event which, with notice or lapse of time, or both, would constitute a default) under, result in the termination of or a right of termination or cancellation under, accelerate the performance required by or rights or obligations under, or result in the creation of any Lien upon any of the respective properties or assets of Buyer under, any of the terms, conditions or provisions of any contract or similar instrument or obligation to which Buyer is a party, or by which it or any of its properties, assets or business activities may be bound or affected, except (in the case of clause (ii) above) for such violations, conflicts, breaches, defaults or loss of benefits which, either individually or in the aggregate, would not reasonably be expected to have a Buyer Material Adverse Effect.

 

 

 

  Section 4.3  No Broker.  None of Buyer or any of its Affiliates has employed any broker or finder or incurred any Liability for any broker’s fees, commissions or finder’s fees in connection with the Transactions (other than any broker or finder whose broker’s fees, commissions or finder’s fees shall be paid solely by Buyer or its Affiliates).

  Section 4.4  Legal Proceedings.  There are no Proceedings that are pending or, to Buyer’s Knowledge, threatened against or relating to Buyer or its controlled Affiliates in connection with the Buyer’s operation or conduct of the Business on and subsequent to Closing that would materially and adversely affect the legality, validity or enforceability of this Agreement or the other Ancillary Agreements to which it or its controlled Affiliates are a party or the consummation of the Transactions.

  Section 4.5  Qualification.  Buyer is duly qualified to act as Trustee or custodian for the Accounts.

  Section 4.6  Permits.  At Closing, Buyer or its Affiliates will hold, own or possess all material Permits necessary for the lawful ownership, operation and use of the Acquired Assets.

  Section 4.7  Consents and Approvals.  Except with respect to any filings that may be required pursuant to applicable securities laws, Buyer is not required to obtain any consent, waiver, authorization, approval, concession, license, Permit, variance, exemption or Orders of, or provide notice to, any Governmental Authority or other Person in connection with the execution and delivery by Buyer of this Agreement and the Ancillary Agreements.

  Section 4.8  Limitations on Representations and Warranties.  Except for the representations and warranties specifically set forth in this Agreement or in any document delivered pursuant hereto, neither Buyer nor its officers, directors, employees, agents or representatives, nor any other Person, makes or shall be deemed to make any representation or warranty to Seller, express or implied, at law or in equity, with respect to the Transactions, and Buyer hereby disclaims any such representation or warranty whether by Buyer or any of its Affiliates or its or their officers, directors, employees, agents or representatives or any other Person, except in the case of fraud or willful misrepresentation.

  Section 5.1  Books and Records.  From and after the Closing, each party hereto shall use commercially reasonable efforts to preserve and keep all Books and Records, Account Files and other information to the extent in its possession and relating to the accounting, business and financial affairs of the Business or Acquired Assets that relate to the period prior to the Cut Off Time, for six (6) years after the Closing Date or such longer time as required by Applicable Law; provided that each party shall notify the other party at least thirty (30) days in advance of destroying any materials referred to in this Section 5.1 prior to the sixth (6th) anniversary of the Closing Date.

 

 

 

  Section 5.2  Restrictive Covenants.

(a) Confidentiality.  From and after the date hereof, Seller and its Affiliates will refrain from using or disclosing, and will take all commercially reasonable steps to prevent unauthorized use or disclosure of, any Confidential Information.  In the event that Seller reasonably believes after consultation with counsel that Seller or its Affiliate is required by applicable Law or Order to disclose any Confidential Information, such Seller or Affiliate may disclose only such Confidential Information as may be legally required, provided that it (if permitted by such applicable Law or Order) (i) provides Buyer with prompt notice before such disclosure so that Buyer may attempt to obtain a protective order or other assurance that confidential treatment will be accorded to such Confidential Information and (ii) cooperates with Buyer in attempting to obtain such order or assurance.  From and after the Closing, the Confidentiality Agreement shall terminate and be of no force and effect with respect to any information relating to the Business.

(b) Non-Competition.  Seller covenants and agrees that, during the Restricted Period, Seller and its Affiliates will not, directly or indirectly, engage or participate in any manner (as an owner, equity holder, financing source, director, manager, officer, employee, agent, representative, consultant, service provider or otherwise) in any business that offers, administers, markets, serves as a custodian or trustee of, or otherwise provides services with respect to, Safe Harbor IRAs. Notwithstanding the foregoing, nothing in this Section 5.2(b) shall prohibit Seller or its Affiliates from (i) continuing to serve as a custodian or trustee for a period not to exceed two hundred ten (210) days from the Closing Date solely for the purpose of closing any of the Accounts that Seller has been directed by the Account Holder to close on or prior to the Trustee Resignation Date, (ii) serving solely as the depository bank for any Safe Harbor IRAs for which one or more unrelated third parties serves as custodian or trustee and provides all other services, or (iii) the passive ownership of less than two percent (2%) of any class of stock listed on a national securities exchange or traded in the over-the-counter market.

(c) Non-Solicitation of Business Relationships. Without limiting the generality of the provisions of Section 5.2(b) above, Seller hereby covenants and agrees that, during the Restricted Period, Seller and its Affiliates will not, directly or indirectly, solicit, or participate in any manner (as an owner, equity holder, financing source, director, manager, officer, employee, agent, representative, consultant, service provider or otherwise) in any business that solicits, any Person that is or was a customer, supplier or other business relation of Seller at any time during the twenty-four (24)-month period prior to the Closing Date for purposes of diverting such Person’s business from Buyer or the Business or providing any goods or services which are or may reasonably be considered to be competitive with those provided by Buyer or the Business.

(d) Non-Disparagement.  Seller hereby covenants and agrees that, during the Restricted Period, Seller and its Affiliates will not, directly or indirectly, make any derogatory or disparaging statement or communication regarding Buyer or the Business or any of their employees.  Nothing in this Section 5.2(d) shall limit Seller’s or its Affiliate’s ability to make true and accurate statements or communications in connection with any disclosure Seller or its Affiliates reasonably believe is required pursuant to applicable Law.

 

 

 

(e) Blue-Pencil.  If any court of competent jurisdiction shall at any time deem the term of any particular restrictive covenant contained in this Section 5.2 too lengthy, the geographic area covered too extensive or the scope too broad, the other provisions of this Section 5.2 shall nevertheless stand, the term shall be deemed to be the longest period permissible by Law under the circumstances, the geographic area covered shall be deemed to comprise the largest territory permissible by Law under the circumstances and the scope shall be as broad as permissible by Law under the circumstances.  The court in each case shall reduce the term, geographic area and or scope covered to what the court deems permissible duration, size or breadth.

(f) Acknowledgements; Remedies.  Seller acknowledges and agrees that (i) the covenants and agreements set forth in this Section 5.2 were a material inducement to Buyer to enter into this Agreement and to perform its obligations hereunder, (ii) Buyer and its stakeholders would not obtain the benefit of the bargain set forth in this Agreement as specifically negotiated by the parties hereto if Seller or any of its Affiliates breached the provisions of this Section 5.2, (iii) any breach of the provisions of this Section 5.2 by Seller or its Affiliates would result in a significant loss of goodwill by Buyer and the Business, (iv) the Purchase Price is sufficient consideration to make the covenants and agreements set forth herein enforceable, (v) the length of time, scope and geographic coverage of the covenants set forth in this Section 5.2 is reasonable given the benefits Seller will directly or indirectly receive hereunder, (vi) Seller is familiar with all the restrictive covenants contained in this Section 5.2 and is fully aware of its obligations hereunder, and (vii) Seller will not challenge the reasonableness of the time, scope, geographic coverage or other provisions of this covenants set forth in this Section 5.2 in any Proceeding, regardless of who initiates such Proceeding.  Seller further acknowledges and agrees that irreparable injury will result to Buyer if Seller or any of its Affiliates breaches any of the terms of this Section 5.2, and that in the event of an actual or threatened breach by Seller or any of its Affiliates of any of the provisions contained in this Section 5.2, Buyer will have no adequate remedy at Law.  Seller accordingly agrees that in the event of any actual or threatened breach by Seller or any of its Affiliates of any of the provisions contained in this Section 5.2, Buyer shall be entitled to injunctive and other equitable relief without (i) the posting of any bond or other security, (ii) the necessity of showing actual damages and (iii) the necessity of showing that monetary damages are an inadequate remedy.  Nothing contained herein shall be construed as prohibiting Buyer from pursuing any other remedies available to it for such breach or threatened breach, including the recovery of any damages that it is able to prove.  Seller shall cause its Affiliates to comply with this Section 5.2, and shall be liable for any breach by any of its Affiliates of this Section 5.2.  In the event of a breach or violation by Seller or any of its Affiliates of this Section 5.2, the Restricted Period with respect to Seller shall be extended by a period of time equal to the period of time during which Seller violates the terms of this Section 5.2.

  Section 5.3  Press Release.  Seller and Buyer shall consult with each other as to the form, substance and timing of any press release or other public disclosure related to this Agreement or the Transactions and the party seeking to issue such a press release or make a public disclosure shall obtain the other party’s consent prior to the issuance, publication or dissemination thereof; provided, however, that Seller may make any disclosures to Account Holders as contemplated by the Ancillary Agreements and either party may make such disclosure to the extent required by Applicable Law.

 

 

  Section 5.4  Regulatory Matters; Third-Party Consents.

(a) As promptly as practicable after the date of this Agreement, to the extent (and only to the extent) requested by Buyer in writing, Seller shall take, or cause to be taken, all actions, and do, or cause to be done, all things reasonably necessary, proper or advisable under this Agreement to obtain as promptly as practicable and to the extent possible all Consents, Orders, rulings and clearances necessary to be obtained from any third-party and/or any Governmental Authority in order to assign or transfer any Acquired Asset.  Seller shall cooperate with Buyer following the Closing Date in any reasonable arrangement requested by Buyer and designed to provide Buyer with the rights and benefits (subject to the obligations) under any such Contract, including, at the request of Buyer, enforcement for the benefit of Buyer of any and all rights of Seller against any other party arising out of any such Contract by such other party and, if requested by Buyer, acting as an agent on behalf of Buyer or as Buyer shall otherwise reasonably require.  With respect to any such Contract, following the Closing Date, if requested by Buyer, Seller shall continue use commercially reasonable efforts to obtain such consents or waivers if requested to do so by Buyer.  Upon the receipt of any such consent or waiver, Seller shall promptly assign such Contract to Buyer.

(b) Seller also shall cooperate with Buyer and its representatives with respect to all filings that Buyer elects to make or, pursuant to Applicable Law, is required to make in connection with the Transactions.

  Section 5.5  Expenses.  Except as otherwise contemplated hereby, Seller, on the one hand, and Buyer, on the other hand, shall each bear its own costs and expenses incurred in connection with the negotiation and preparation of this Agreement and the consummation of the Transactions.

  Section 5.7  Payment of Excluded Liabilities.  After the Closing, Seller agrees to pay in full and discharge (a) all of the Excluded Liabilities in accordance with their stated terms, as applicable, and in a manner that is not detrimental to any relationships of Buyer or the Business with lessors, employees, contractors, customers, suppliers or others; and (b) all checks written, or ACH or similar transactions authorized, by Seller that are outstanding on or before the Closing Date.

  Section 5.8  Information Relating to the Business.  From and after the Closing, Seller shall use its reasonable best efforts, and shall cause each of its Affiliates to provide to Buyer from time to time information regarding the Business requested by Buyer and reasonably available to Seller.

 

 

 

  Section 6.1  Tax Cooperation.  Buyer, on the one hand, and Seller and its Affiliates, on the other hand, shall cooperate and (at the expense of the requesting party) provide to each other such information and assistance as may reasonably be requested in connection with (i) the preparation of any Tax Return relating to the Acquired Assets or the Business, (ii) the conduct of any audit or other examination by any Taxing Authority relating to any liability for Taxes relating to the Acquired Assets or the Business, and (iii) the prosecution or defense of any claim, suit or Proceeding relating to any Tax Return relating to the Acquired Assets or the Business.  Without limiting the generality of the foregoing, Seller will retain, until the expiration of the applicable statutes of limitation (including any extensions thereof), copies of all Tax Returns, supporting work schedules and other records relating to Tax periods or portions thereof of Seller that relate to the Acquired Assets or the Business ending on or prior to the Closing Date.

  Section 6.2  Transfer Taxes.  All transfer, documentary, sales, use, stamp, registration, value added and other such Taxes (including any penalties and interest) imposed in connection with this Agreement and the sale of the Acquired Assets (“Transfer Taxes”) will be borne and paid fifty percent (50%) by Buyer and fifty percent (50%) by Seller when due, and Buyer, at its own expense, will cause to be filed all necessary Tax Returns and other documentation with respect to all such Transfer Taxes and Seller shall cooperate and, as required by Applicable Law, join in the execution of all necessary Tax Returns and other documentation with respect to Transfer Taxes.

  Section 6.3  Tax Reporting.  Seller shall be responsible for, and shall make, all required reports to applicable Taxing Authorities and to holders of Accounts for (i) any Pre-Closing Tax Period and (ii) any post-Closing period ending on the Conversion Date (as defined in the Services Agreement).  Buyer shall be responsible for, and shall make, all required reports to applicable Taxing Authorities for any post-Closing period following the Conversion Date.¹

  Section 6.4  Allocation of Tax Liability.  For all purposes under this Agreement involving the determination of Taxes (including the determination of Excluded Taxes), in the case of Taxes that are payable with respect to any Straddle Period, the portion of any such Tax that is allocable to the portion of such Straddle Period ending on the end of the Closing Date shall be (i) in the case of Taxes imposed on a periodic basis with respect to any assets or otherwise measured by the level of any item (without regard for income, gross receipts, payroll, sales or use), deemed to be the amount of such Taxes for such entire Straddle Period multiplied by a fraction the numerator of which is the number of calendar days in such Straddle Period ending on the end of the Closing Date and the denominator of which is the number of calendar days in such entire Straddle Period, and (ii) in the case of all other Taxes not described in clause (i) above, deemed equal to the amount which would be payable if such Straddle Period ended on the end of the Closing Date.

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  Section 7.1  Survival of Representations and Warranties and Agreements.  The respective representations and warranties of Seller and Buyer contained in this Agreement shall survive the Closing but shall expire on the date that is eighteen (18) months after the Closing Date, except with respect to, and to the extent of, any claim of which written notice in accordance with Section 7.4 has been given by one party to the other prior to such expiration; provided, however, that, notwithstanding the foregoing, (i) the representations and warranties set forth in Section 3.9 (Taxes) shall continue until sixty (60) days after the applicable statute of limitations (giving effect to any waiver, mitigation or extension thereof) bar any claims that would result in a breach thereof and (ii) (x) the representations and warranties set forth in Sections 3.1 (Organization and Related Matters), 3.2(a) (Authority), 3.6 (No Broker), 3.10 (Title), 3.11 (Accounts), 4.1 (Organization and Related Matters), 4.2(a) (Authority) and 4.3 (No Broker) and (y) any action relating to fraud or intentional misrepresentation each shall survive until the date that is twenty (20) years after the Closing Date.  The indemnification obligations under Section 7.2 and 7.3 with respect to breaches of covenants and agreements shall continue until sixty (60) days after all applicable statutes of limitation (giving effect to any waiver, mitigation or extension thereof) bar any claims that would result in a breach thereof.  Notwithstanding anything to the contrary contained herein, if written notice of any claim for indemnification hereunder has been delivered in accordance herewith prior to the expiration of the applicable period set forth above, the indemnification obligations shall continue with respect to such claim until the final resolution and satisfaction of such claim in accordance with the provisions of this Article VII, and the Indemnifying Party shall indemnify the Indemnified Party for all Damages incurred in respect of such claim (subject to any applicable limitations herein), regardless of when such Damages are incurred.  The period from the Closing to the expiration, if any, of a representation, warranty, covenant or agreement hereunder shall be referred to with respect to a claim for indemnification thereunder as the “Survival Period.”

  Section 7.2  Indemnification by Seller.  Subject to the provisions of this Article VII, Seller shall indemnify, defend and hold harmless Buyer and its Affiliates and their respective equity holders, officers, directors, managers, employees, representatives and agents (collectively, the “Buyer Indemnitees”) from and against, and pay or reimburse the Buyer Indemnitees for, any and all claims, losses, damages, Liabilities, awards, judgments, penalties, fines, Taxes, demands, costs and expenses (including reasonable fees and expenses of attorneys, accountants and other experts paid in connection with the investigation or defense of, and all amounts paid in settlement with respect to, any of the foregoing or any Proceeding relating to any of the foregoing) (subject to Section 7.5(a), “Damages”) incurred, suffered or sustained by the Buyer Indemnitees arising out of or relating to: (i) any breach of or inaccuracy in any of the representations and warranties made in Article III, (ii) any breach of any covenant or agreement of Seller made herein, (iii) any Excluded Liability, (iv) any Proceeding that is or should be disclosed on Sections 3.7(a) through 3.7(c) of the Disclosure Schedule and (v) any fraud or willful misrepresentation by or on behalf of Seller in connection with this Agreement, the Transaction Documents, and/or the Transactions.  Notwithstanding the foregoing, Seller shall not be liable to indemnify any Buyer Indemnitees against Damages arising under Section 7.2(i) above unless and until the aggregate amount of such Damages exceeds $650,000 (the “Threshold Amount”), whereupon the Buyer Indemnitees shall be entitled to indemnification for the full amount of such Damages; provided, however, that Seller’s maximum Liability to the Buyer Indemnitees for all Damages arising under Section 7.2(i) above shall not exceed $5,000,000 (the “Maximum Amount”); provided, further, however, that the Threshold Amount and Maximum Amount shall not apply with respect to Damages arising out of any breach of or inaccuracy in any of the representations and warranties set forth in Sections 3.1 (Organization and Related Matters), 3.2 (Authority; No Violation), 3.3 (Consents and Approvals), Section 3.6 (No Broker), 3.9 (Taxes), 3.10 (Title), and 3.11 (Accounts), in which case Seller’s maximum Liability to the Buyer Indemnitees shall not exceed the Purchase Price.  The limitations set forth in this Section 7.2 shall not apply in respect of any indemnification obligation arising out of or resulting from fraud or willful misrepresentation by Seller.  Notwithstanding anything herein to the contrary, for purposes of determining the amount of any Damages related to a breach of any representation or warranty made by Seller in this Agreement, the representations and warranties made by Seller in this Agreement shall be considered without regard to any “material,” “Material Adverse Effect” or any similar term or limitation contained therein (and shall be treated as if such words were deleted from such representation or warranty).

 

 

  Section 7.3  Indemnification by Buyer.  Subject to the provisions of this Article VII,  Buyer shall indemnify, defend and hold harmless Seller and its Affiliates and their respective equity holders, officers, directors, managers, employees, representatives and agents (collectively, the “Seller Indemnitees”) from and against, and pay or reimburse the Seller Indemnitees for, any and all Damages incurred, suffered or sustained by the Seller Indemnitees arising out of or relating to: (i) any breach of or inaccuracy in any of the representations and warranties made in Article IV, (ii) any breach of any covenant or agreement of Buyer made herein and (iii) any Assumed Liability.  Notwithstanding the foregoing, Buyer shall not be liable to indemnify any Seller Indemnitees against Damages arising under clause Section 7.3(i) above unless and until the aggregate amount of such Damages exceeds the Threshold Amount, whereupon the Seller Indemnitees shall be entitled to indemnification for the full amount of such Damages; provided, however, that Buyer’s maximum Liability to the Seller Indemnitees for all Damages arising under Section 7.3(i) above shall not exceed the Maximum Amount; provided, further, however, that the Threshold Amount and Maximum Amount shall not apply with respect to Damages arising out of any breach of or inaccuracy in any of the representations and warranties set forth in Sections 4.1 (Organization and Related Matters), 4.2(a) (Authority) and 4.3 (No Broker), in which case Buyer’s maximum Liability to the Seller Indemnitees shall not exceed the Purchase Price.  The limitations set forth in this Section 7.3 shall not apply in respect of any indemnification obligation arising out of or resulting from fraud or willful misrepresentation by Buyer.  Notwithstanding anything herein to the contrary, for purposes of determining the amount of any Damages related to a breach of any representation or warranty made by Buyer in this Agreement, the representations and warranties made by Buyer in this Agreement shall be considered without regard to any “material,” “Material Adverse Effect” or any similar term or limitation contained therein (and shall be treated as if such words were deleted from such representation or warranty).

  Section 7.4  Indemnification Procedure.

(a) Promptly after the incurrence of any Damages by the party seeking indemnification hereunder (the “Indemnified Party”), including any claim by or communication from a third-party described in Section 7.4(c) hereof that would be reasonably likely to give rise to indemnification hereunder, or the earlier discovery of any facts or circumstances that would be reasonably likely to result in an indemnification claim hereunder, the Indemnified Party shall deliver to the party from which indemnification is sought (the “Indemnifying Party”) a notice (the “Claim Notice”), which Claim Notice shall be delivered within the relevant Survival Period; provided, however, that the failure to provide such notice shall not release the Indemnifying Party from any of its obligations under this Article VII except to the extent (and only to the extent) that the Indemnifying Party forfeits material rights or defenses by reason of such failure, and shall:

(i) state that the Indemnified Party has paid or properly accrued Damages, or anticipates (specifying the events or occurrences giving rise to such anticipation) that it is reasonably likely that it will incur Liability for Damages for which such Indemnified Party is entitled to indemnification pursuant to this Agreement; and

(ii) specify in reasonable detail each individual item of Damages included in the amount so stated to the extent known, the date such item was paid or properly accrued (if applicable), the basis for any anticipated Liability and the nature of the breach of representation, warranty, covenant or agreement and the computation of the amount, if reasonably capable of computation, to which such Indemnified Party claims to be entitled hereunder.

 

 

(b) Claims for Damages specified in any Claim Notice with respect to which the parties agree in writing to be due, or which are finally determined by a court of competent jurisdiction to be due, are hereinafter referred to, collectively, as “Agreed Claims.” Within ten (10) Business Days of the determination of the amount of any Agreed Claim, subject to the limitations of this Article VII, the Indemnifying Party shall pay to the Indemnified Party an amount equal to the Agreed Claim by cashier’s check or Wire Transfer to the bank account or accounts designated in writing by the Indemnified Party not less than one (1) Business Day prior to such payment.

(c) Promptly after the assertion by any third-party of any claim against any Indemnified Party that may result in the incurrence by such Indemnified Party of Damages for which such Indemnified Party would be entitled to indemnification pursuant to this Agreement and within the relevant Survival Period, such Indemnified Party shall deliver to the Indemnifying Party a Claim Notice; provided, however, that the failure to provide such notice shall not release the Indemnifying Party from any of its obligations under this Article VII except to the extent (and only to the extent) that the Indemnifying Party forfeits rights or defenses by reason of such failure, and the Indemnifying Party shall have thirty (30) days after receipt of the Claim Notice to elect, at its option, to assume and control the defense of, at its own expense and by its own counsel, such claim, and the Indemnifying Party shall be entitled to assert any and all defenses available to the Indemnified Party to the fullest extent permitted by Applicable Law; provided that (i) such Indemnifying Party’s counsel is not reasonably objected to by the Indemnified Party and the Indemnified Party shall not have been advised by counsel that an actual or potential conflict of interest makes representation by the same counsel selected by the Indemnifying Party inappropriate and (ii) the Indemnifying Party first enters into a written agreement with the Indemnified Party that the Indemnifying Party is unconditionally obligated to pay and satisfy any Damages which may arise with respect to such third-party claim and provides evidence of its ability to satisfy such obligation, in each case, in form and substance reasonably satisfactory to the Indemnified Party.  If the Indemnifying Party shall, in accordance with the previous sentence, undertake to compromise or defend any such claim, it shall reasonably promptly notify the Indemnified Party of its intention to do so, and the Indemnified Party agrees in such case to cooperate fully with the Indemnifying Party and its counsel in the compromise of, or defense against, any such claim.  Notwithstanding an election by the Indemnifying Party to assume the defense of such action or proceeding, the Indemnified Party shall have the right to employ separate counsel and to participate in, but not control, the defense of such action or proceeding.  The Indemnifying Party shall bear the reasonable fees, costs and expenses of such separate counsel if, but only if, (A) the Indemnifying Party shall have authorized in writing (which authorization shall not be unreasonably withheld, conditioned or delayed) the Indemnified Party to employ separate counsel at the Indemnifying Party’s expense and/or (B) such fees or expenses of such separate counsel are incurred prior to the date the Indemnifying Party assumes control of such defense, provided that the engagement of counsel by the Indemnified Party prior to such time was reasonably necessary to preserve any potential rights or defenses with respect to such third-party claim.  In any event, the Indemnified Party and Indemnifying Party and their counsel shall cooperate in the defense of any such claim subject to this Section 7.4(c) and keep such Persons informed of all developments relating to any such claims, and provide copies of all relevant correspondence and documentation relating thereto.  If the Indemnifying Party receiving such Claim Notice does not elect within thirty (30) days to defend such third-party claim, the Indemnified Party shall have the right, at the Indemnifying Party’s expense, to defend such claim.  No Indemnifying Party shall be liable to indemnify any Indemnified Party for any settlement of any such action or claim effected without the consent of the Indemnifying Party, but if settled with the written consent of the Indemnifying Party, or if there be a final judgment for the plaintiff in any such action, the Indemnifying Party shall indemnify and hold harmless each Indemnified Party from and against any Damages by reason of such settlement or judgment, subject to the limitations set forth in this Article VII.  If the Indemnifying Party shall assume the defense of any claim in accordance with the provisions of this Section 7.4(c),  the Indemnifying Party shall obtain the prior written consent of the Indemnified Party before entering into any settlement of such claim, but only if: (1) the settlement does not expressly and unconditionally release the Indemnified Party from all Liabilities and obligations with respect to such claim, (2) the settlement is in excess of the remaining portion of the Maximum Amount set forth in Section 7.2 or 7.3, as applicable, (3) a finding or admission of any violation of Law would be made by any Indemnified Party, (4) such settlement, consent or cessation could otherwise reasonably be expected to interfere with or adversely affect the business, operations or assets of the Indemnified Party, and/or (5) if the settlement imposes injunctive or other equitable relief against the Indemnified Party.  The Indemnified Party and the Indemnifying Party each agrees to cooperate fully in all matters covered by this Section 7.4(c), including, as required, the furnishing of Books and Records, personnel and witnesses and the execution of documents, in each case as necessary for any defense of such third-party claim and at no cost to the other party (provided that any reasonable out-of-pocket expenses of the Indemnified Party incurred in connection with the foregoing shall be considered part of Damages hereunder).

 

 

(d) Anything to the contrary in this Section 7.4 notwithstanding, if a third-party claim that primarily relates to Taxes or Excluded Taxes includes or could reasonably be expected to include both a claim for Taxes that are Excluded Taxes and a claim for Taxes that are not Excluded Taxes, and such claim for Taxes that are Excluded Taxes is not separable from such a claim for Taxes that are not Excluded Taxes, Seller (if the claim for Taxes that are Excluded Taxes exceeds or reasonably could be expected to exceed in amount the claim for Taxes that are not Excluded Taxes) or otherwise Buyer (Seller or Buyer, as the case may be, the “Controlling Party”), shall be entitled to control the defense of such third-party claim (such third-party claim, a “Tax Claim”).  In such case, the other party (Seller or Buyer, as the case may be, the “Non-Controlling Party”) shall be entitled to participate fully (at the Non- Controlling Party’s sole expense) in the conduct of such Tax Claim and the Controlling Party shall not settle such Tax Claim without the consent of such Non-Controlling Party (which consent shall not be unreasonably withheld, conditioned or delayed).  The costs and expenses of conducting the defense of such Tax Claim shall be reasonably apportioned based on the relative amounts of the Tax Claim that are Excluded Taxes and the Tax Claim that are not Excluded Taxes.  Notwithstanding the foregoing, Seller shall be entitled to control in all respects, and neither Buyer nor any of its Affiliates shall be entitled to participate in, the defense of any third-party claim that relates to any income Taxes of Seller or any of its Affiliates.  Seller shall be liable for any Damages resulting from any Tax audit or other examination related to the Acquired Assets or the Business for any Tax period or portion thereof ending on or before the Closing Date whether or not such Tax audit or other examination results in any adjustment of the Seller’s liability for Taxes related to the Acquired Assets or the Business.

  Section 7.5  Certain Damages; Certain Offsets; Calculation of Damages.

(a) Notwithstanding anything herein to the contrary, no party shall be liable to any Indemnified Party for remote or speculative, punitive or exemplary Damages as a result of any breach of this Agreement or other agreements referred to herein or of any private right of action that any party may have hereunder against another party hereto; provided that the foregoing shall not limit the right of any Indemnified Party to indemnification in accordance with this Agreement with respect to any component of any claim, settlement, award or judgment against such party by any unaffiliated third-party.

(b) For purposes of calculating the monetary amount of Damages for which any claim may be made against any Indemnifying Party, such monetary amount shall be decreased to the extent of any amounts actually recovered by an Indemnified Party under insurance policies and net of any increase in premiums directly attributable to such Damages for the year of the claim and the following year, deductibles or co-pays incurred in connection therewith and all costs of collection.

(c) Each party will use its commercially reasonable efforts to mitigate each loss or Liability for which such party is or may become entitled to be indemnified hereunder, including by (i) using commercially reasonable efforts in pursuing and attempting to recover any insurance proceeds available to it as a result thereof and (ii) incurring costs only to the extent reasonably appropriate to remedy any breach or remediate any other situation.

 

 

 

  Section 7.6  Exclusive Remedy.  After the Closing Date, this Article VII shall provide the exclusive remedy for any breach or alleged breach of this Agreement, except in the case of fraud or willful misrepresentation, or with respect to matters for which the remedy of specific performance, injunctive relief or other non-monetary equitable remedies are available.

  Section 7.7  Treatment of Indemnification Payments.  Any amounts payable under this Article VII shall for all income Tax purposes be treated by Buyer and Seller as an adjustment to the Purchase Price to the maximum extent permitted by Applicable Law.  Subject to the limitations described in this Article VII, Buyer shall have a right of set-off against any monies deducted, withheld or retained from or any monies which may be due or become due to Seller under this Agreement to satisfy any claims by Buyer against Seller for indemnification pursuant to this Article VII.

  Section 7.8  Distributions from the Escrow Account.  Upon the amount of Damages to which any Buyer Indemnitee shall be entitled to indemnification pursuant to this Article VII having been consented to in writing by Seller (whether pursuant to a settlement agreement or otherwise) or determined pursuant to a final, non-appealable judgment or other similar determination of a court of competent jurisdiction, Buyer and Seller shall, not more than two (2) Business Days after such determination, execute and deliver joint written instructions to the Escrow Agent instructing the Escrow Agent to disburse an amount equal to the amount of such Damages from the then-remaining funds in the escrow account in accordance with the terms of the Escrow Agreement and the separate written payment instructions of the Buyer Indemnitee.

  Section 7.9  Payment.  If any amount owed under this Article VII is not paid within ten (10) days of a final settlement among the Indemnifying Parties and the Indemnified Parties or upon a final adjudication determined by a court of competent jurisdiction that an indemnification obligation is owing by the Indemnifying Party to the Indemnified Party (either, a “Final Determination”), such amount shall bear interest at the rate of ten percent (10%) per annum, or, if less, the maximum rate permitted by applicable Law, and the Indemnifying Party shall reimburse the Indemnified Party for any and all costs or expenses of any nature or kind whatsoever (including reasonable legal fees) incurred in seeking to collect such amount under this Article VII, and no limitation in this Article VII shall apply to any such interest or reimbursement.

  Section 8.1  Amendments; Waiver.  This Agreement may not be amended, altered or modified except by written instrument executed by each of the parties hereto.  No waiver of any party to this Agreement will be effective unless it is in a writing signed by a duly authorized officer of the waiving party that makes express reference to the provision or provisions subject to such waiver.  No waiver shall constitute a waiver of, or estoppel with respect to, any further or subsequent instances, or other inaccuracy, breach or failure to strictly comply with the provisions of this Agreement.

 

 

  Section 8.2  Entire Agreement.  This Agreement (including the Disclosure Schedule, the Buyer Disclosure Schedule, the Schedules, the Ancillary Agreements, the Confidentiality Agreement and any other schedules, certificates, lists and documents referred to herein or therein, and any documents executed by any of the parties simultaneously herewith or pursuant thereto), constitutes the entire agreement of the parties hereto, and supersedes all prior agreements and understandings, discussions, negotiations and communications, written and oral, among the parties with respect to the subject matter hereof.

  Section 8.3  Interpretation.

(a) When a reference is made in this Agreement to Articles, Sections, Schedules or Exhibits, such reference shall be to an Article of, Section of, Schedule to or Exhibit to this Agreement unless otherwise indicated.  The table of contents and headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.  Whenever the words “include,” “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation.” The phrases “the date of this Agreement,” “the date hereof” and terms of similar import, unless the context otherwise requires, shall be deemed to refer to the date set forth in the first paragraph of this Agreement.  The word “extent” in the phrase “to the extent” shall mean the degree to which a subject or other thing extends, and such phrase shall not mean simply “if” unless the context in which such phrase is used shall dictate otherwise.  References to “dollars” or “$” mean United States dollars, unless otherwise clearly indicated to the contrary.

(b) The inclusion of any information in any section of the Disclosure Schedule or the Buyer Disclosure Schedule or other document delivered by any of the parties pursuant to this Agreement shall not be deemed to be an admission or evidence of the materiality of such item, nor shall it establish a standard of materiality for any purpose whatsoever.

  Section 8.4  Severability.  Without limiting Section 5.2(e), any term or provision of this Agreement that is invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent of such invalidity or unenforceability without rendering invalid or unenforceable the remaining terms and provisions of this Agreement or affecting the validity or enforceability of any of the terms or provisions of this Agreement in any other jurisdiction.  If any provision of this Agreement is so broad as to be unenforceable, the provision shall be interpreted to be only so broad as is enforceable.

  Section 8.5  Notices.  Unless otherwise provided herein, all notices and other communications hereunder shall be in writing and shall be deemed given if (i) delivered in person, (ii) transmitted by facsimile (with electronic confirmation, provided that a copy of the notice or other communication is sent by express courier) or (iii) delivered by an express courier, to the parties at the following addresses (or at such other address for a party as shall be specified by like notice):

 

 

	If to Seller, to:
	The Bancorp Bank
	409 Silverside Road, Suite 105
	Wilmington, DE 19809
	Facsimile:	302 ###-###-####
	E-mail:	***@***
	Attention:	William Cassidy,
		Executive Vice President, Head of Institutional Banking
	with a copy to:
	The Bancorp, Inc.
	123 N. 3rd Street, Suite 603
	Minneapolis, MN 55401
	Facsimile:	302 ###-###-####
	E-mail:	***@***
	Attention:	Tom Pareigat, General Counsel
	with a copy (which shall not constitute notice) to:
	Ballard Spahr LLP
	2000 IDS Center
	80 South 8th Street
	Minneapolis MN ###-###-####
	Facsimile:	612 ###-###-####
	E-mail:	***@***
	Attention:	Scott A. Coleman, Esq.
	If to Buyer, to:
	Millennium Trust Company, LLC
	2001 Spring Road, Suite 700
	Oak Brook, Illinois 60523
	E-mail:	***@***
	Attention:	Daniel K. Laszlo
	with a copy (which shall not constitute notice) to:
	Paul Hastings LLP
	71 South Wacker Drive, Suite 4500
	Chicago, IL  60606
	Facsimile:	(312) 499-6100
	E-mail:	***@***
	Attention:	Brian F. Richards

  Section 8.6  Binding Effect; Persons Benefiting; No Assignment.  This Agreement shall inure to the benefit of and be binding upon the parties and their respective successors and permitted assigns and any transferee of all or substantially all of the assets of such party and its subsidiaries taken as a whole.  This Agreement may not be assigned by any of the parties without the prior written consent of Buyer, in the case of any assignment by Seller, and Seller, in the case of any assignment by Buyer; provided, however, that nothing in this Agreement shall or is intended to limit the ability of Buyer to assign its rights or delegate its responsibilities, liabilities and obligations under this Agreement, in whole or in part, without the consent of Seller to (a) any Affiliate of Buyer, (b) any direct or indirect purchaser of all or substantially all of the assets of Buyer and/or the Business or (c) any lender to Buyer and/or the Business as security for borrowings.  Except as otherwise expressly set forth in Article VII, no provision of this Agreement is intended or shall be construed to confer upon any entity or Person other than the parties and their respective successors and permitted assigns any right, remedy or claim under or by reason of this Agreement or any part hereof.

 

 

 

  Section 8.7  Counterparts.  This Agreement may be executed in two or more counterparts, including via electronic transmission, each of which shall be deemed an original, but all of which taken together shall constitute one and the same agreement, it being understood that all of the parties need not sign the same counterpart.

  Section 8.8  Waiver of Jury Trial.  The parties hereby waive, to the fullest extent permitted by law, any right to trial by jury of any claim, demand, action or cause of action arising under this Agreement or in any way connected with or related or incidental to the dealings of the parties in respect of this Agreement or any of the Transactions, in each case, whether now existing or hereafter arising, and whether in contract, tort, equity or otherwise.  The parties hereby further agree and consent that any such claim, demand, action or cause of action shall be decided by court trial without a jury and that the parties may file a copy of this Agreement with any court as written evidence of the consent of the parties to the waiver of their right to trial by jury.

  Section 8.9  Governing Law; Venue.  This Agreement and any claim, demand, action or cause of action arising under this Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware applicable to contracts made and wholly performed within such state, without regard to any applicable conflicts of law principles.  The parties irrevocably submit to the exclusive jurisdiction of the courts of the State of Delaware and to the jurisdiction of the United States District Court for the District of Delaware over any suit, action or proceeding arising out of or relating to this Agreement or the affairs of the Business.  To the fullest extent that they may effectively do so under Applicable Law, the parties hereto irrevocably waive and agree not to assert, by way of motion, as a defense or otherwise, any claim that they are not subject to the jurisdiction of any such court, any objection that they may now or hereafter have to the laying of the venue of any such suit, action or proceeding brought in any such court and any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum.  Each party hereto further agrees that service of any process, summons, notice or document by U.S. registered mail to such party’s respective address set forth in Section 8.5 shall be effective service of process for any such suit, action or proceeding.

  Section 8.10  Attorneys’ Fees.  Unless as otherwise set forth herein, in the event of any litigation between the parties under this Agreement, the prevailing party shall be entitled to an award of its reasonable attorneys’ fees, paralegal fees and court costs through all trial and appellate levels and proceedings.

 

 

  Section 8.11  Bulk Sales.  Seller shall indemnify Buyer with respect to Losses  relating to the failure to comply with the requirements of the applicable Laws of any jurisdiction relating to a bulk sale or transfer of assets that may be applicable to the transfer of the Acquired Assets.

  Section 8.12  No Fiduciary Duty.  The parties acknowledge that (i) the Transactions constitute an arm’s-length commercial transaction between Buyer, on the one hand, and Seller, on the other, and (ii) notwithstanding any pre-existing relationship between the parties, Seller is not an agent of, and owes no fiduciary duties to, Buyer in connection with the Transactions.

  Section 8.13  Specific Performance.  The parties hereby acknowledge and agree that the failure of any party to perform its agreements and covenants hereunder, including its failure to take all actions as are necessary on its part to consummate the Transactions, will cause irreparable injury to the other party, for which damages, even if available, will not be an adequate remedy.  Accordingly, each party hereby consents to the issuance of temporary, preliminary and permanent injunctive relief by the courts referenced in Section 8.9 to compel performance of such party’s obligations, or to prevent breaches or threatened breaches of this Agreement, and to the granting by the courts referenced in Section 8.9 of the remedy of specific performance of its obligations hereunder, without, in any such case, the requirement to post any bond or other undertaking, in addition to any other rights or remedies available hereunder or at law or in equity.

  Section 8.14  Construction.  The parties have participated jointly in the negotiation and drafting of this Agreement and the Transaction Documents.  In the event an ambiguity or question of intent or interpretation arises, this Agreement and the Transaction Documents 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 of the provisions of this Agreement or any Ancillary Agreement.

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

 

 

 

	SELLER:
	THE BANCORP BANK
	By:
	Name:
	Its:
	BUYER:
	MILLENNIUM TRUST COMPANY, LLC
	By:
	Name:
	Its: