UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): June 7, 2000
JACK HENRY & ASSOCIATES, INC.
(Exact name of Registrant as specified in its Charter)
Delaware 0-14112 43-1128385
(State or Other Jurisdiction (Commission File Number) (IRS Employer
of Incorporation) Identification No.)
663 Highway 60, P.O. Box 807, Monett, MO 65708
(Address of principal executive offices)(zip code)
Registrant's telephone number, including area code: (417) 235-6652
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
1. ON JUNE 7, 2000, JACK
HENRY & ASSOCIATES, INC., A
DELAWARE CORPORATION (THE
"COMPANY") COMPLETED THE
ACQUISITION OF 100% OF THE
OUTSTANDING COMMON STOCK OF
SYMITAR SYSTEMS, INC., A
CALIFORNIA CORPORATION
("SYMITAR") FOR $44,000,000 IN
CASH (THE "PURCHASE PRICE").
SYMITAR IS A PROVIDER OF IN-HOUSE
DATA PROCESSING SOLUTIONS FOR
CREDIT UNIONS. THE ACQUISITION
WAS COMPLETED PURSUANT TO THE
STOCK PURCHASE AGREEMENT DATED AS
OF MAY 14, 2000, BY AND AMONG THE
COMPANY, AND THE SHAREHOLDERS OF
SYMITAR. THE PURCHASE PRICE WAS
DETERMINED BY ARM'S-LENGTH
NEGOTIATIONS BETWEEN
REPRESENTATIVES OF THE COMPANY
AND SYMITAR.
The funds used to pay the
Purchase Price were from working
capital and borrowings under an
unsecured Line of Credit Loan
Agreement, dated September 7,
1999, and amended effective as of
June 6, 2000, between the
Company and Commerce Bank, N.A.
2. SYMITAR'S ASSETS
CONSIST MAINLY OF CASH,
RECEIVABLES, INVENTORY, PROPERTY
AND EQUIPMENT, AND OTHER TANGIBLE
AND INTANGIBLE ASSETS. THE
ASSETS OF SYMITAR WERE USED,
PRIOR TO THE EFFECTIVE TIME OF
THE STOCK PURCHASE AGREEMENT, FOR
THE DESIGN, DEVELOPMENT,
INSTALLATION AND SUPPORT OF
INTEGRATED INFORMATION SYSTEMS,
INCLUDING PROPRIETARY COMPUTER
SOFTWARE AND THIRD PARTY SOFTWARE
AND HARDWARE, FOR CREDIT UNIONS,
A USE WHICH THE COMPANY INTENDS
TO CONTINUE IMMEDIATELY FOLLOWING
THE ACQUISITION.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
The following financial statements and
exhibits are filed as part of this report,
where indicated.
(a) Financial Statements of business acquired, prepared
pursuant to Rule 3.05 of Regulation S-X:
It is impractical to provide the required financial
information at the time of filing of this report. The
required financial information will be filed by amendment
to this Form 8-K not later than August 12, 2000.
(b) Pro forma financial information required pursuant to
Article 11 of Regulation S-X:
It is impractical to provide the required pro forma
financial information at the time of filing of this
report. The required pro forma financial information will
be filed by amendment to this Form 8-K not later than
August 12, 2000.
(c) Exhibits
Exhibit
Number Title
2.1 Stock
Purchase Agreement
dated May 14, 2000 by
and among the Company
and the shareholders
of Symitar. The
schedules and exhibits
relating to the
agreement have been
omitted, but will be
provided to the
Commission upon its
request, pursuant to
Item 601(b)(2) of
Regulation S-K.
10.11 Line of
Credit Loan
Modification Agreement
dated June 6, 2000
between the Company
and Commerce Bank, N.A.
99.1 Company
Press Release dated
June 7, 2000.
SIGNATURES
Pursuant to the requirements of the
Securities Exchange Act of 1934, the
registrant has duly caused this report to be
signed on its behalf by the undersigned
hereunto duly authorized.
Date: June 15, 2000
JACK HENRY & ASSOCIATES, INC.
(Registrant)
By: /s/ Terry W. Thompson
Terry W. Thompson
Chief Financial Officer
STOCK PURCHASE AGREEMENT
dated as of May 14, 2000
by and among
Jack Henry & Associates, Inc.,
a Delaware corporation,
and
the Sellers listed on the
Signature Pages hereto
with respect to all
outstanding capital stock of
SYMITAR SYSTEMS, INC.
a California corporation
TABLE OF CONTENTS PAGE
ARTICLE I
SALE OF SHARES AND CLOSING
1.01
Purchase and Sale. . . . . . . . . . . . . . . . . .1
1.02
Purchase Price . . . . . . . . . . . . . . . . . . .1
1.03
Closing. . . . . . . . . . . . . . . . . . . . . . .1
1.04
Further Assurances; Post-Closing
Cooperation. . . . . . . . . . . . . . . . . . . . . . . . . . .2
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
2.01
Corporate Existence. . . . . . . . . . . . . . . . .2
2.02
Authority. . . . . . . . . . . . . . . . . . . . . .3
2.03
Capital Stock. . . . . . . . . . . . . . . . . . . .3
2.04
No Conflicts . . . . . . . . . . . . . . . . . . . .3
2.05
Governmental Approvals and Filings . . . . . . . . .4
2.06
Financial Statements and Condition . . . . . . . . .4
2.07
Taxes. . . . . . . . . . . . . . . . . . . . . . . .4
2.08
Legal Proceedings. . . . . . . . . . . . . . . . . .5
2.09
Compliance With Laws and Orders. . . . . . . . . . .5
2.10
Benefit Plans; ERISA . . . . . . . . . . . . . . . .5
2.11
Real Property. . . . . . . . . . . . . . . . . . . .5
2.12
Personal Property. . . . . . . . . . . . . . . . . .6
2.13
Intellectual Property Rights . . . . . . . . . . . .6
2.14
Contracts. . . . . . . . . . . . . . . . . . . . . .7
2.15
Licenses . . . . . . . . . . . . . . . . . . . . . .8
2.16
Affiliate Transactions . . . . . . . . . . . . . . .8
2.17
Environmental Matters. . . . . . . . . . . . . . . .8
2.18
Brokers, Finders and Advisors. . . . . . . . . . . .9
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PURCHASER
3.01
Corporate Existence. . . . . . . . . . . . . . . . .9
3.02
Authority. . . . . . . . . . . . . . . . . . . . . .9
3.03
No Conflicts . . . . . . . . . . . . . . . . . . . .9
3.04
Governmental Approvals and Filings . . . . . . . . 10
TABLE OF CONTENTS(CONTINUED)
PAGE3.05
Legal Proceedings. . . . . . . . . . . . . . . . . 10
3.06
Purchase for Investment/Sophisticated
Investor . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.07
Brokers, Finders and Advisors. . . . . . . . . . . 10
3.08
Financing. . . . . . . . . . . . . . . . . . . . . 10
3.09
Regulatory Status. . . . . . . . . . . . . . . . . 11
ARTICLE IV
COVENANTS OF THE SELLERS
4.01
Regulatory and Other Approvals . . . . . . . . . . 11
4.02
HSR Filings. . . . . . . . . . . . . . . . . . . . 11
4.03
Investigation by Purchaser . . . . . . . . . . . . 12
4.04
Conduct of Business. . . . . . . . . . . . . . . . 12
4.05
Financial Statements and Reports . . . . . . . . . 12
4.06
Certain Restrictions . . . . . . . . . . . . . . . 12
4.07
Fulfillment of Conditions. . . . . . . . . . . . . 13
ARTICLE V
COVENANTS OF PURCHASER
5.01
Regulatory and Other Approvals . . . . . . . . . . 13
5.02
HSR Filings. . . . . . . . . . . . . . . . . . . . 14
5.03
Release of Guarantees. . . . . . . . . . . . . . . 14
5.04
Indemnification of Directors and Officers. . . . . 14
5.05
Investigation by Sellers . . . . . . . . . . . . . 15
5.06
Fulfillment of Conditions. . . . . . . . . . . . . 15
ARTICLE VI
CONDITIONS TO OBLIGATIONS OF PURCHASER
6.01
Representations and Warranties . . . . . . . . . . 15
6.02
Performance. . . . . . . . . . . . . . . . . . . . 15
6.03
Officers' Certificates . . . . . . . . . . . . . . 16
6.04
Orders and Laws. . . . . . . . . . . . . . . . . . 16
6.05
Regulatory Consents and Approvals. . . . . . . . . 16
6.06
Opinion of Counsel . . . . . . . . . . . . . . . . 16
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF SELLER
7.01
Representations and Warranties . . . . . . . . . . 16
7.02
Performance. . . . . . . . . . . . . . . . . . . . 16
7.03
Officers' Certificates . . . . . . . . . . . . . . 16
7.04
Orders and Laws. . . . . . . . . . . . . . . . . . 17
7.05
Regulatory Consents and Approvals. . . . . . . . . 17
ARTICLE VIII
TAX MATTERS
8.01
Closing Date . . . . . . . . . . . . . . . . . . . 17
8.02
Transfer Taxes . . . . . . . . . . . . . . . . . . 17
8.03
Tax Cooperation; Tax Returns . . . . . . . . . . . 17
8.04
Control of Contests. . . . . . . . . . . . . . . . 18
ARTICLE IX
EMPLOYEE BENEFITS MATTERS
ARTICLE X
SURVIVAL; NO OTHER REPRESENTATIONS
10.01
Survival of Representations, Warranties,
Covenants and Agreements . . . . . . . . . . . . . . . . . . . 19
10.02
No Other Representations . . . . . . . . . . . . . 20
ARTICLE XI
TERMINATION
11.01
Termination. . . . . . . . . . . . . . . . . . . . 20
11.02
Effect of Termination. . . . . . . . . . . . . . . 21
ARTICLE XII
INDEMNIFICATION
12.01
Indemnification. . . . . . . . . . . . . . . . . . 21
12.02
Method of Asserting Claims . . . . . . . . . . . . 22
12.03
Method of Calculating Losses . . . . . . . . . . . 25
12.04
Exclusivity. . . . . . . . . . . . . . . . . . . . 25
ARTICLE XIII
DEFINITIONS
13.01
Defined Terms. . . . . . . . . . . . . . . . . . . 25
13.02
Construction of Certain Terms and Phrases. . . . . 32
ARTICLE XIV
MISCELLANEOUS
14.01
Notices. . . . . . . . . . . . . . . . . . . . . . 32
14.02
Entire Agreement . . . . . . . . . . . . . . . . . 33
14.03
Expenses . . . . . . . . . . . . . . . . . . . . . 33
14.04
Public Announcements . . . . . . . . . . . . . . . 33
14.05
Confidentiality. . . . . . . . . . . . . . . . . . 34
14.06
No Shop. . . . . . . . . . . . . . . . . . . . . . 34
14.07
Noncompetition . . . . . . . . . . . . . . . . . . 34
14.08
Waiver . . . . . . . . . . . . . . . . . . . . . . 36
14.10
No Third Party Beneficiary . . . . . . . . . . . . 36
14.11
No Assignment; Binding Effect. . . . . . . . . . . 36
14.12
Headings . . . . . . . . . . . . . . . . . . . . . 36
14.13
Invalid Provisions . . . . . . . . . . . . . . . . 36
14.14
Governing Law. . . . . . . . . . . . . . . . . . . 36
14.15
Counterparts . . . . . . . . . . . . . . . . . . . 37
SCHEDULES
Section 2.04 of the Disclosure ScheduleThe Company's Consents
and Notices
Section 2.05 of the Disclosure Schedule. . . . . . . . Governmental Approvals
Section 2.06(a) of the Disclosure Schedule . . . . . . . . . . . . . . . GAAP
Section 2.06(b) of the Disclosure Schedule . . . . . Material Adverse Effects
Section 2.07(a) of the Disclosure Schedule . . . . . . . . Tax Return Filings
Section 2.07(b) of the Disclosure Schedule . . . . . . . . . . . . Tax Audits
Section 2.08 of the Disclosure Schedule. . . . . . . . . . .Legal Proceedings
Section 2.09 of the Disclosure Schedule. . . . . . . . . Compliance with Laws
Section 2.10 of the Disclosure Schedule. . . . . . . . . . . . .Benefit Plans
Section 2.11 of the Disclosure Schedule. . . . . . . . . . . . .Real Property
Section 2.13 of the Disclosure Schedule. . . . . Intellectual Property Rights
Section 2.14(a) of the Disclosure Schedule . . . . . . . . . . . . .Contracts
Section 2.14(b) of the Disclosure Schedule . . . . . . . .Contract Violations
Section 2.16 of the Disclosure Schedule. . . . . . . . Affiliate Transactions
Section 2.17 of the Disclosure Schedule. . . .Releases of Hazardous Materials
Section 2.18 of the Disclosure ScheduleBrokers, Finders and
Advisors
Schedule 3.04. . . . . . . . . . . . . . . Purchaser's Governmental Approvals
Schedule 3.07. . . . . . . . . . . . . . . . . .Brokers, Finders and Advisors
Schedule 5.03. . . . . . . . . . . . . . . . . . . .Guarantees to be Released
Schedule 9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Employees
Schedule 14.07 . . . . . . . . . . . . . . . . . . . . Business Jurisdictions
EXHIBITS
Exhibit A. . . . . . . . . . . . . . . . . . . . . . .Purchase Price Schedule
Exhibit B. . . . . . . . . . . . . . . . . . . . . . . . Sellers' Certificate
Exhibit C. . . . . . . . . . . . . . . . . Secretary's Certificate of Company
Exhibit D. . . . . . . . . . . . . . . . . Officer's Certificate of Purchaser
Exhibit E. . . . . . . . . . . . . . . . Secretary's Certificate of Purchaser
Exhibit F. . . . . . . . . . . . . . . . . . . . . . . . . Opinion of Counsel
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (the "Agreement") dated as of May
14, 2000 is made and entered into by and between Jack Henry &
Associates, Inc., a Delaware corporation ("Purchaser"), and the
Sellers listed on the signature pages hereof (each a "Seller"
and collectively, the "Sellers"). Capitalized terms not
otherwise defined herein have the meanings set forth in Section
13.01.
WHEREAS, Sellers own nine hundred (900) shares of common stock,
no par value, of Symitar Systems, Inc., a California corporation
(the "Company") constituting all issued and outstanding shares
of capital stock of the Company (such shares being referred to
herein as the "Shares"); and
WHEREAS, Sellers desire to sell, and Purchaser desires to
purchase, the Shares on the terms and subject to the conditions
set forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth in this Agreement, and for other good and
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
SALE OF SHARES AND CLOSING
ARTICLE I.1 Purchase and Sale.
Sellers agree to sell to Purchaser, and Purchaser agrees to
purchase from Sellers, all of the right, title and interest of
Sellers in and to the Shares at the Closing on the terms and
subject to the conditions set forth in this Agreement.
ARTICLE I.2 Purchase Price.
The aggregate purchase price for the Shares is Forty Four
Million Dollars ($44,000,000.00) (the "Purchase Price"), payable
in immediately available United States funds at the Closing in
the manner provided in Section 1.03 below and allocated among
the Sellers as set forth on Exhibit A.
ARTICLE I.3 Closing.
The Closing will take place at the offices of Munger, Tolles &
Olson LLP, 355 South Grand Avenue, 35th floor, Los Angeles,
California, or at such other place as Purchaser and Sellers
mutually agree, at 10:00 A.M. local time, on the Closing Date.
At the Closing, Purchaser will pay the Purchase Price by wire
transfer of immediately available funds to such accounts as
Sellers may reasonably direct by written notice delivered to
Purchaser at least two (2) Business Days before the Closing
Date. Simultaneously, Sellers will assign and transfer to
Purchaser all of Sellers' right, title and interest in and to
the Shares held by Sellers by delivering to Purchaser a
certificate or certificates representing the Shares held by
Sellers, in genuine and unaltered form, duly endorsed in blank
or accompanied by duly executed stock powers endorsed in blank,
with requisite stock transfer tax stamps, if any, attached. At
the Closing, there shall also be delivered to Purchaser and
Sellers, respectively, the certificates, documents and
instruments to be delivered under Articles VI and VII below.
1.04 Further Assurances; Post-Closing Cooperation.
(a) Subject to the terms and conditions of this Agreement, at
any time or from time to time after the Closing, each of the
parties hereto shall execute and deliver such other documents
and instruments, provide such materials and information and take
such other actions as may reasonably be necessary, proper or
advisable, to the extent permitted by Law, to fulfill its
obligations under this Agreement.
(b) Following the Closing, each party will afford the other
party, its counsel and its accountants, during normal business
hours, reasonable access to the books, records and other data
relating to the Business or Condition of the Company in its
possession with respect to periods prior to the Closing and the
right to make copies and extracts therefrom, to the extent that
such access may be reasonably required by the requesting party
in connection with (i) the preparation of Tax Returns, (ii) the
determination or enforcement of rights and obligations under
this Agreement, (iii) compliance with the requirements of any
Governmental or Regulatory Authority, (iv) the determination or
enforcement of the rights and obligations of any party to this
Agreement or (v) in connection with any actual or threatened
Action or Proceeding. Further, each party agrees for a period
extending seven (7) years after the Closing Date not to destroy
or otherwise dispose of any such books, records and other data
unless such party shall first offer in writing to surrender such
books, records and other data to the other party and such other
party shall not agree in writing to take possession thereof
during the ten (10) day period after such offer is made.
(c) If, in order properly to prepare its Tax Returns, other
documents or reports required to be filed with Governmental or
Regulatory Authorities or its financial statements or to fulfill
its obligations hereunder, it is necessary that a party be
furnished with additional information, documents or records
relating to the Business or Condition of the Company not
referred to in paragraph (b) above, and such information,
documents or records are in the possession or control of the
other party, such other party agrees to use its best efforts to
furnish or make available such information, documents or records
(or copies thereof) at the recipient's request, cost and expense.
(d) Notwithstanding anything to the contrary contained in this
Section, if the parties are in an adversarial relationship in
litigation or arbitration, the furnishing of information,
documents or records in accordance with any provision of this
Section shall be subject to applicable rules relating to discovery.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
Sellers hereby represent and warrant to Purchaser as follows:
ARTICLE II.1 Corporate Existence.
The Company is a corporation duly incorporated, validly existing
and in good standing under the Laws of the State of California,
and has full corporate power and authority to conduct its
business as and to the extent now conducted and to own, use and
lease its Assets and Properties. The Company is duly qualified
to do business and is in good standing in those jurisdictions in
which the ownership, use or leasing of its Assets and
Properties, or the conduct or nature of its business, makes such
qualification necessary, except for those jurisdictions in which
the adverse effects of all such failures by the Company to be
qualified and in good standing could not reasonably be expected
to have a Material Adverse Effect. The Company has prior to the
execution of this Agreement delivered to Purchaser true and
complete copies of the articles of incorporation and bylaws of
the Company as in effect on the date hereof.
ARTICLE II.2 Authority.
This Agreement has been duly and validly executed and delivered
by the Sellers and constitutes a legal, valid and binding
obligation of the Sellers enforceable against them in accordance
with its terms, except to the extent such enforceability (a) may
be limited by bankruptcy, insolvency, reorganization, moratorium
or other similar laws relating to creditors' rights generally,
and (b) is subject to general principles of equity.
ARTICLE II.3 Capital Stock.
The authorized capital stock of the Company consists solely of
ten thousand (10,000) shares of Common Stock, of which only the
Shares are issued and outstanding. The Shares are duly
authorized, validly issued, fully paid and nonassessable. The
Shares are free and clear of all liens, encumbrances, claims and
restrictions. There are (i) no outstanding warrants, options,
agreements, convertible or exchangeable securities or other
commitments pursuant to which the Company is or may become
obligated to issue, sell, purchase, return or redeem any shares
of capital stock or other securities of the Company and (ii)
except as disclosed in Section 2.03 of the Disclosure Schedule,
no agreements with respect to the voting of shares of the
Company capital stock. There are no equity securities of the
Company reserved for issuance for any purpose.
ARTICLE II.4 No Conflicts.
The execution and delivery by the Sellers of this Agreement do
not and the consummation of the transactions contemplated hereby
will not:
(a) conflict with or result in a violation or breach of any of
the terms, conditions or provisions of the articles of
incorporation or bylaws (or other comparable charter documents)
of the Company;
(i)a subject to obtaining the
consents, approvals and actions, making the filings and giving
the notices disclosed in Section 2.04 of the Disclosure
Schedule, conflict with or result in a violation or breach of
any term or provision of any Law or Order applicable to the
Sellers or the Company or any of their respective Assets and
Properties; or
(i)b except as disclosed in Section
2.04 of the Disclosure Schedule or as could not, individually or
in the aggregate, reasonably be expected to have a Material
Adverse Effect or to materially and adversely affect the ability
of the Sellers to consummate the transactions contemplated
hereby or to perform their obligations hereunder, (i) conflict
with or result in a violation or breach of, (ii) constitute
(with or without notice or lapse of time or both) a default
under, (iii) require the Sellers to obtain any consent, approval
or action of, make any filing with or give any notice to any
Person as a result or under the terms of, (iv) result in or give
to any Person any right of termination, cancellation,
acceleration or modification in or with respect to, or (v)
result in the creation or imposition of any Lien (other than a
Permitted Lien) upon the Sellers or the Company or any of their
respective Assets and Properties under, any Contract or License
to which the Sellers or the Company may be a party or by which
any of their respective Assets and Properties is bound.
ARTICLE II.5 Governmental Approvals and
Filings.
Except as disclosed in Section 2.05 of the Disclosure Schedule,
no consent, approval or action of, filing with or notice to any
Governmental or Regulatory Authority on the part of the Sellers
or the Company is required in connection with the execution,
delivery and performance of this Agreement or the consummation
of the transactions contemplated hereby.
ARTICLE II.6 Financial Statements and
Condition.
(a) Prior to the execution of this Agreement, the Sellers have
delivered to Purchaser true and complete copies of the following
financial statements:
(i) the audited balance sheets of the Company as of
December 31, 1999, and the related audited statements of
operations, shareholders' equity and cash flows for each
of the fiscal years then ended, together with a true and
correct copy of the report on such audited information by
Deloitte & Touche LLP, and
(ii) the unaudited balance sheets of the Company as of
March 31, 2000, and the related unaudited statements of
operations, shareholders' equity and cash flows for the
portion of the fiscal year then ended.
Except as set forth in the notes thereto and as disclosed in
Section 2.06(a) of the Disclosure Schedule, all such financial
statements were prepared in accordance with GAAP and fairly
present in all material respects the consolidated financial
condition and results of operations of the Company as of the
respective dates thereof and for the respective periods covered
thereby.
(b) Except for the execution and delivery of this Agreement
and the transactions to take place pursuant hereto on or prior
to the Closing Date and as disclosed in Section 2.06(b) of the
Disclosure Schedule, since the Unaudited Financial Statement
Date there has not been any change that could reasonably be
expected to have a Material Adverse Effect.
(c) Except as set forth in the financial statements or the
Disclosure Schedules, the Company has no liabilities, whether
accrued or unaccrued, fixed or contingent, known or unknown,
that could reasonably be expected to have a Material Adverse
Effect on the Company.
ARTICLE II.7 Taxes.
(a) Tax Return Filings. Except as set forth in Section 2.07(a)
of the Disclosure Schedule, the Company has filed all income Tax
Returns required to be filed by applicable Law prior to the date
set forth in Section 2.07(a) of the Disclosure Schedule and has
paid all Taxes shown as due from it on such income Tax Returns.
(i)a Audit, Administrative and Court
Proceedings. Except as set forth in Section 2.07(b) of the
Disclosure Schedule, no audits or other administrative
proceedings or court proceedings are presently pending with
regard to any income Taxes or income Tax Returns of the Company
and the Company has not waived any statute of limitations in
respect of income Taxes or agreed to any extension of time with
respect to an income Tax assessment or deficiency.
(i)b S Status. A qualified
subchapter S election (within the meaning of Code Section1361
and 1362) has been in effect for the Company since 1988.
ARTICLE II.8 Legal Proceedings.
Except as disclosed in Section 2.08 of the Disclosure Schedule,
there are no Orders outstanding and no Actions or Proceedings
pending or, to the Knowledge of the Sellers, threatened against,
relating to or affecting the Sellers or the Company or any of
its respective Assets and Properties.
ARTICLE II.9 Compliance With Laws and Orders.
To the Knowledge of the Sellers, except as disclosed in Section
2.09 of the Disclosure Schedule, none of the Sellers nor the
Company is in violation of or in default under any Law or Order
applicable to them or any of their respective Assets and
Properties.
ARTICLE II.10 Benefit Plans; ERISA.
(a) Section 2.10 of the Disclosure Schedule contains a true and
complete list and description of each of the Benefit Plans.
Each Benefit Plan listed in Section 2.10 of the Disclosure
Schedule which is intended to be qualified under Section 401(a)
of the Code has received a favorable determination letter from
the Internal Revenue Service that such Benefit Plan meets the
qualification requirements of Section 401(a). Nothing has
occurred which would adversely affect the qualified status of
any such Benefit Plan under Section 401(a).
(i)a Neither the Company, any ERISA
Affiliate nor any other corporation or organization controlled
by or under common control with any of the foregoing within the
meaning of Section 4001 of ERISA has at any time contributed to
any "multiemployer plan", as that term is defined in Section
4001 of ERISA.
(i)b Complete and correct copies of
the following documents have been made available to Purchaser
prior to the execution of this Agreement: (i) the Benefit Plans
and any related trust agreements and insurance contracts; (ii)
current summary Plan descriptions of each Benefit Plan subject
to ERISA; (iii) the most recent Form 5500 and schedules thereto
for each Benefit Plan subject to ERISA reporting requirements;
(iv) the most recent determination of the United States Internal
Revenue Service with respect to the qualified status of each
Benefit Plan intended to qualify under Section 401(a) of the
Code; and (v) the most recent accountings with respect to any
Benefit Plan funded through a trust.
ARTICLE II.11 Real Property.
(a) Section 2.11 of the Disclosure Schedule contains a list of
each parcel of real property leased by the Company which is
individually or in the aggregate with other owned or leased
parcels material to the Business or Condition of the Company.
(i)a The Company has a valid and
subsisting leasehold estate in the real properties referred to
in paragraph (a) above. The Company has not sent or received
any notice of default under such leases and no event or
condition exists which constitutes, or after notice or lapse of
time or both would constitute, a material default of the
Company's obligations thereunder.
ARTICLE II.12 Personal Property.
The Company is in possession of and has good title to, or has
valid leasehold interests in or valid rights under Contract to
use, all personal property (provided that no representation or
warranty is made in this Section 2.12 as to personal property
described in Section 2.13 or Section 2.14 of this Agreement)
used in and individually or in the aggregate with other such
property material to the Business or Condition of the Company,
except for such personal property sold, consumed or otherwise
disposed of in the ordinary course of business since the
Unaudited Financial Statement Date. The Company's personal
property (provided that no representation or warranty is made in
this Section 2.12 as to personal property described in Section
2.13 of this Agreement) is free and clear of all Liens, other
than Permitted Liens and Liens disclosed on Section 2.12 of the
Disclosure Schedule.
ARTICLE II.13 Intellectual Property Rights.
(a) Section 2.13 of the Disclosure Schedule contains a
true and correct list of the Company's Intellectual
Property owned or controlled by or licensed to the Company
as of the date hereof. The Company has all right, title
and interest in such Intellectual Property or a valid and
binding right under contract to use same.
(b) Except as set forth on Section 2.13 of the
Disclosure Schedule, the Company owns or is licensed to
use all Intellectual Property necessary for the operation
of its business as now conducted.
(c) Except as set forth in Section 2.13 of the
Disclosure Schedule, the Company has not entered into any
agreement that limits or restricts its right to use, copy,
modify, prepare derivatives of, sublicense, distribute and
otherwise market, severally or together, any of the
Intellectual Property owned by it (i.e. not supplied or
licensed to it by a third party). Except as set forth in
Section 2.13 of the Disclosure Schedule, there are no
agreements or arrangements in effect with respect to the
marketing, distribution, licensing or promotion of the
Intellectual Property with any current or past employee of
the Company, or with any independent sales person,
distributor, sublicensee or other remarketer or sales
organization. The Company's present use, copying,
modification, preparation of derivatives of, sublicensing,
distribution or other marketing of the Intellectual
Property does not infringe any property right of any Person.
(d) Each Person who has participated in or contributed
to the development of the Intellectual Property owned by
the Company (i.e. not supplied or licensed to it by a
third party) has either (i) so contributed or participated
as an employee of the Company within the scope of his or
her employment obligations, (ii) contributed or
participated as an independent contractor pursuant to a
valid and binding agreement which specifically assigns all
copyrights to the Company, or (iii) otherwise assigned to
the Company the copyright in any Intellectual Property.
(e) The Company has taken efforts that are reasonable
under the circumstances to prevent the unauthorized
disclosure to other Persons of such of the Company's trade
secrets as would have a Material Adverse Effect on the
business or condition of the Company.
(f) Except as specifically set forth in Section 2.13 of
the Disclosure Schedule, and except with respect to
products supplied or licensed to the Company by third
parties, the Company has no obligation to make any
payments by way of royalty, fee, settlement or otherwise
to any Person in connection with the Company's present
use, sublicensing, distribution or other marketing of such
Intellectual Property.
(g) Except as set forth in Section 2.13 of the
Disclosure Schedule, no claim has been asserted against
the Company by any other Person (i) that such Person has
any right, title or interest in or to any of the
Intellectual Property, (ii) that such Person has the right
to use any of the Company's trademarks pertaining to the
Business, (iii) to the effect that any past, present or
projected act or omission by the Company infringes any
rights of such Person to any Intellectual Property, or
(iv) that challenges the Company's ownership of or right
to use any of the Intellectual Property.
ARTICLE II.14 Contracts.
(a) Section 2.14(a) of the Disclosure Schedule (with
paragraph references corresponding to those set forth below)
contains a true and complete list of each of the following
Contracts in effect on the date hereof to which the Company is a
party or by which any of its respective Assets and Properties is
bound:
(i) all Contracts (excluding Benefit Plans) providing
for a commitment of employment or consultation services;
(ii) all Contracts with any Person containing any
provision or covenant prohibiting or materially limiting
the ability of the Company to engage in any business
activity or compete with any Person or prohibiting or
materially limiting the ability of any Person to compete
with the Company;
(iii) all Contracts relating to Indebtedness of the
Company in excess of Fifteen Thousand dollars ($15,000.00);
(iv) all Contracts with distributors, dealers,
manufacturer's representatives, sales agencies or
franchisees which in any case involve the payment,
pursuant to the terms of any such Contract, by or to the
Company of more than Twenty Thousand dollars ($20,000.00)
annually;
(v) all Contracts (other than Benefit Plans generally
available to persons other than the Sellers) between or
among the Company, on the one hand, and the Sellers, on
the other hand;
(vi) all Contracts (other than this Agreement) that (A)
limit or contain restrictions on the ability of the
Company to declare or pay dividends on, to make any other
distribution in respect of or to issue or purchase, redeem
or otherwise acquire its capital stock, to incur
Indebtedness, to incur or suffer to exist any Lien, to
purchase or sell any Assets and Properties, to change the
lines of business in which it participates or engages or
to engage in any merger or other business combination or
(B) require the Company to maintain specified financial
ratios or levels of net worth or other indicia of
financial condition; and
(vii) all other Contracts (other than Benefit Plans or
leases listed in Section 2.11 of the Disclosure Schedule)
that (A) involve the payment, pursuant to the terms of any
such Contract, by or to the Company of more than Twenty
Five Thousand dollars ($25,000.00) annually and (B) cannot
be terminated within one hundred eighty (180) days after
giving notice of termination without resulting in any
material cost or penalty to the Company.
(b) Each Contract required to be disclosed in Section 2.14(a)
of the Disclosure Schedule is in full force and effect and
constitutes a legal, valid and binding agreement, enforceable in
accordance with its terms, of the Company and, to the Knowledge
of the Sellers, of each other party thereto; and except as
disclosed in Section 2.14(b) of the Disclosure Schedule neither
the Company, nor, to the Knowledge of the Sellers, any other
party to such Contract is in violation or breach of or default
under any such Contract (or with notice or lapse of time or
both, would be in violation or breach of or default under any
such Contract). The Company has not conveyed or assigned the
Contracts required to be disclosed in Section 2.14(a) of the
Disclosure Schedules or the rights to payment thereunder to any
third party.
ARTICLE II.15 Licenses.
The Company has all Licenses required for the conduct of the
Business of the Company as presently conducted. Each such
License is valid, binding and in full force and effect; and to
the Knowledge of the Sellers, the Company is not in default (or
with the giving of notice or lapse of time or both, would be in
default) under any such License in any material respect, other
than defaults, individually or in the aggregate, which could not
reasonably be expected to have a Material Adverse Effect on the
Company.
ARTICLE II.16 Affiliate Transactions.
Except as reflected in the Financial Statements or disclosed in
Section 2.16 of the Disclosure Schedule, there is no
Indebtedness between the Company, on the one hand, and the
Sellers, on the other.
ARTICLE II.17 Environmental Matters.
(a) The Company has obtained all Licenses which are required
under applicable Environmental Laws in connection with the
conduct of the business or operations of the Company, except
where the failure to obtain any such License, individually or in
the aggregate with other such failures, could not reasonably be
expected to have a Material Adverse Effect. The Company is in
compliance with the terms and conditions of all such Licenses
and with any applicable Environmental Law, except where the
failure to be in compliance could not reasonably be expected to
have, individually or in the aggregate with other such failures,
a Material Adverse Effect.
(i)a Except as disclosed in Section
2.17 of the Disclosure Schedule, no written notification of a
Release of a Hazardous Material has been filed by or on behalf
of the Company and no site or facility now or previously owned,
operated or leased by the Company is listed or proposed for
listing on the NPL, CERCLIS or any similar state or local list
of sites requiring investigation or clean-up.
ARTICLE II.18 Brokers, Finders and Advisors.
Except as disclosed in Section 2.18 of the Disclosure Schedule,
all negotiations relative to this Agreement and the transactions
contemplated hereby have been carried out by Sellers and the
Company directly with Purchaser without the intervention of any
other Person on behalf of the Company or Sellers in such manner
as to give rise to any valid claim by any Person against
Purchaser or the Company for a finder's fee, brokerage
commission or similar payment.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Sellers as follows:
ARTICLE III.1 Corporate Existence.
Purchaser is a corporation duly incorporated, validly existing
and in good standing under the Laws of the State of Delaware.
Purchaser has full corporate power and authority to execute and
deliver this Agreement, to perform its obligations hereunder and
to consummate the transactions contemplated hereby.
ARTICLE III.2 Authority.
The execution and delivery by Purchaser of this Agreement, and
the performance by Purchaser of its obligations hereunder, have
been duly and validly authorized by the Board of Directors of
Purchaser, no other corporate action on the part of Purchaser or
its shareholders being necessary. This Agreement has been duly
and validly executed and delivered by Purchaser and constitutes
a legal, valid and binding obligation of Purchaser enforceable
against Purchaser in accordance with its terms.
ARTICLE III.3 No Conflicts.
The execution and delivery by Purchaser of this Agreement do not
and the consummation of the transactions contemplated hereby
will not:
(a) conflict with or result in a violation or breach of any of
the terms, conditions or provisions of the articles of
incorporation or by-laws (or other comparable corporate charter
document) of Purchaser;
(i)a subject to obtaining the
consents, approvals and actions, making the filings and giving
the notices disclosed in Schedule 3.03 hereto, conflict with or
result in a violation or breach of any term or provision of any
Law or Order applicable to Purchaser or any of its Assets and
Properties; or
(i)b Subject to obtaining the
consents, approvals and actions, making the filings and giving
the notices disclosed in Schedule 3.03, or except as could not,
individually or in the aggregate, reasonably be expected to
adversely affect the ability of Purchaser to consummate the
transactions contemplated hereby or to perform its obligations
hereunder, (i) conflict with or result in a violation or breach
of, (ii) constitute (with or without notice or lapse of time or
both) a default under, (iii) require Purchaser to obtain any
consent, approval or action of, make any filing with or give any
notice to any Person as a result or under the terms of, or (iv)
result in the creation or imposition of any Lien upon Purchaser
or any of its Assets or Properties under, any Contract or
License to which Purchaser is a party or by which any of its
Assets and Properties is bound.
ARTICLE III.4 Governmental Approvals and
Filings.
Except as disclosed in Schedule 3.03 hereto, no consent,
approval or action of, filing with or notice to any Governmental
or Regulatory Authority on the part of Purchaser is required in
connection with the execution, delivery and performance of this
Agreement or the consummation of the transactions contemplated
hereby, except where the failure to obtain any such consent,
approval or action, to make any such filing or to give any such
notice could not reasonably be expected to adversely affect the
ability of Purchaser to consummate the transactions contemplated
by this Agreement or to perform its obligations hereunder.
ARTICLE III.5 Legal Proceedings.
There are no Orders outstanding and no Actions or Proceedings
pending or, threatened against, relating to or affecting
Purchaser or any of its Assets and Properties which could
reasonably be expected to result in the issuance of an Order
restraining, enjoining or otherwise prohibiting or making
illegal the consummation of any of the transactions contemplated
by this Agreement.
ARTICLE III.6 Purchase for
Investment/Sophisticated Investor.
The Shares will be acquired by Purchaser for its own account for
the purpose of investment, it being understood that the right to
dispose of such Shares shall be entirely within the discretion
of Purchaser. Purchaser will refrain from transferring or
otherwise disposing of any of the Shares, or any interest
therein, in such manner as to cause the Company or the Sellers
to be in violation of the registration requirements of the
Securities Act of 1933, as amended, or applicable state
securities or blue sky laws. The Purchaser has substantial
knowledge and experience in financial and business matters, has
specific experience making investment decisions of a similar
nature, and is capable, without the use of a financial advisor,
of utilizing and analyzing the information made available in
connection with the transaction contemplated by this Agreement
and of evaluating the related risks thereof. The Purchaser will
provide the Sellers, upon request, with such information as the
Sellers may deem necessary to further evaluate the foregoing
representations.
ARTICLE III.7 Brokers, Finders and Advisors.
All negotiations relative to this Agreement and the transactions
contemplated hereby have been carried out by Purchaser directly
with Sellers without the intervention of any Person on behalf of
Purchaser in such manner as to give rise to any valid claim by
any Person against Sellers or the Company for a finder's fee,
brokerage commission or similar payment.
ARTICLE III.8 Financing.
Purchaser has sufficient cash and/or available credit facilities
(and has provided Sellers with evidence thereof) to pay the
Purchase Price, to make all other necessary payments of fees and
expenses in connection with the transactions contemplated by
this Agreement and to conduct the business of the Company in the
ordinary course after the Closing.
ARTICLE III.9 Regulatory Status.
Subject to compliance with the HSR Act, the execution and
delivery of this Agreement by Purchaser and Sellers do not and
the consummation of the transactions contemplated hereby will
not conflict with or result in a violation or breach of any term
or provision of any Law or Order solely as a result of the
identity or the legal or regulatory status of Purchaser or any
of its Affiliates. Except for the pre-merger notification
required by the HSR Act, no consent, approval or action of,
filing with or notice to any Governmental or Regulatory
Authority on the part of the Sellers, the Company or the
Purchaser is required in connection with the execution, delivery
and performance of this Agreement or the consummation of the
transactions contemplated hereby solely as a result of the
identity or the legal or regulatory status of Purchaser or any
of its Affiliates.
ARTICLE IV
COVENANTS OF THE SELLERS
The Sellers covenant and agree with Purchaser that, at all times
from and after the date hereof until the Closing, the Sellers
will, and will cause the Company to, comply with all covenants
and provisions of this Article IV, except to the extent
Purchaser may otherwise consent in writing.
ARTICLE IV.1 Regulatory and Other Approvals.
Sellers will, and will cause the Company to, as promptly as
reasonably practicable (a) take all commercially reasonable
steps necessary or desirable to obtain all consents, approvals
or actions of, make all filings with and give all notices to
Governmental or Regulatory Authorities or any other Person
required of the Company to consummate the transactions
contemplated hereby, (b) provide such other information and
communications to such Governmental or Regulatory Authorities or
other Persons as such Governmental or Regulatory Authorities or
other Persons may reasonably request in connection therewith and
(c) provide reasonable cooperation to Purchaser in connection
with the performance of Purchasers obligations under Sections
5.01, 5.02 and 5.03 below. Sellers will, and will cause the
Company to, provide, or cause to be provided, notification to
Purchaser when any such consent, approval, action, filing or
notice referred to in clause (a) above is obtained, taken, made
or given, as applicable, and will advise Purchaser of any
communications (and, unless precluded by Law, provide copies of
any such communications that are in writing) with any
Governmental or Regulatory Authority or other Person regarding
any of the transactions contemplated by this Agreement.
ARTICLE IV.2 HSR Filings.
In addition to and not in limitation of the Seller's covenants
contained in Section 4.01 above, the Sellers will, and will
cause the Company to, (a) take promptly all actions necessary to
make the filings required of Sellers, the Company and/or their
Affiliates under the HSR Act, (b) comply at the earliest
practicable date with any request for additional information
received by the Company or its Affiliates from the Federal Trade
Commission or the Antitrust Division of the Department of
Justice pursuant to the HSR Act and (c) cooperate with Purchaser
in connection with Purchaser's filing under the HSR Act and in
connection with resolving any investigation or other inquiry
concerning the transactions contemplated by this Agreement
commenced by either the Federal Trade Commission or the
Antitrust Division of the Department of Justice or state
attorneys general.
ARTICLE IV.3 Investigation by Purchaser.
Sellers will, and will cause the Company to, (a) provide
Purchaser and its officers, employees, counsel, accountants,
financial advisors, consultants and other representatives
(together, "Representatives") with full access, upon reasonable
prior notice and during normal business hours, to all officers,
employees, agents and accountants of the Company and its Assets
and Properties and Books and Records, but only to the extent
that such access does not unreasonably interfere with the
business and operations of the Company, and (b) furnish
Purchaser and such other Persons with all such information and
data (including without limitation copies of Contracts, Benefit
Plans and other Books and Records) concerning the business and
operations of the Company as Purchaser or any of such other
Persons reasonably may request in connection with such
investigation, except to the extent that furnishing any such
information or data would violate any Law, Order, Contract or
License applicable to the Sellers or the Company or by which any
of their respective Assets and Properties is bound.
ARTICLE IV.4 Conduct of Business.
Sellers will cause the Company to conduct its business only in
the ordinary course. Neither Sellers nor the Company will take
any action which would constitute a misrepresentation or breach
of any warranty contained in Article II hereof.
ARTICLE IV.5 Financial Statements and Reports.
(a) As promptly as practicable and in any event no later than
sixty (60) days after the end of each fiscal quarter ending
after the date hereof and before the Closing Date (other than
the fourth quarter) or one hundred and twenty (120) days after
the end of each fiscal year ending after the date hereof and
before the Closing Date, as the case may be, the Sellers will
cause the Company to deliver to Purchaser true and complete
copies of (in the case of any such fiscal year) the audited and
(in the case of any such fiscal quarter) the unaudited balance
sheet, and the related audited or unaudited statements of
operations, shareholders' equity and cash flows, of the Company,
in each case as of and for the fiscal year then ended or as of
and for each such fiscal quarter and the portion of the fiscal
year then ended, as the case may be, together with the notes, if
any, relating thereto, which financial statements shall be
prepared on a basis consistent with the Audited Financial
Statements.
(i)a As promptly as practicable,
Sellers will cause the Company to deliver to Purchaser true and
complete copies of such other regularly-prepared monthly
financial statements, reports and analyses as may be prepared by
the Company relating to the business or operations of the Company.
ARTICLE IV.6 Certain Restrictions.
Seller will cause the Company to refrain from:
(a) amending its articles of incorporation or bylaws;
(i)a authorizing, issuing, selling
or otherwise disposing of any shares of capital stock of or any
Option with respect to the Company;
(i)b making capital expenditures or
commitments for additions to property, plant or equipment
constituting capital assets (except as set forth in the budget
for the Company) in an aggregate amount exceeding Ten Thousand
dollars ($10,000.00); or
(i)c entering into any written
employment contracts or granting any increase in pay or benefits
other than increases (i) granted in the ordinary course of
business pursuant to regularly scheduled annual or semi-annual
employee reviews or (ii) agreed to by Purchaser, provided,
however, Seller may grant aggregate increases totaling less than
$30,000, on an annual basis, in the period between the date
hereof and the Closing Date, provided it notifies Purchaser in
advance of instituting any such increase and consults with
Purchaser as to whether to grant any such increase; and
(i)d entering into any Contract to
do or engage in any of the foregoing.
ARTICLE IV.7 Fulfillment of Conditions.
Sellers (a) will execute and deliver at the Closing each
certificate, document and instrument that they are hereby
required to execute and deliver as a condition to Closing, (b)
will take all commercially reasonable steps necessary or
desirable and proceed diligently and in good faith (i) to
satisfy each condition to the obligations of Purchaser contained
in this Agreement and (ii) to consummate all of the transactions
contemplated by this Agreement, and (c) will not take or fail to
take any action that could reasonably be expected to result in
the nonfulfillment of any obligation of the Company, Sellers or
Purchaser contained in this Agreement.
ARTICLE V
COVENANTS OF PURCHASER
Purchaser covenants and agrees with Sellers that, at all times
from and after the date hereof until the Closing and, in the
case of Sections 5.03, 5.04 and 5.05 below, thereafter,
Purchaser will comply with all covenants and provisions of this
Article V, except to the extent Sellers may otherwise consent in
writing.
ARTICLE V.1 Regulatory and Other Approvals.
Purchaser will as promptly as practicable (a) take all steps
necessary or desirable to obtain all consents, approvals or
actions of, make all filings with and give all notices to
Governmental or Regulatory Authorities or any other Person
required of Purchaser to consummate the transactions
contemplated hereby and will diligently and in good faith strive
to obtain the same, (b) provide such other information and
communications to such Governmental or Regulatory Authorities or
other Persons as such Governmental or Regulatory Authorities or
other Persons may request in connection therewith and (c)
provide cooperation to Sellers in connection with the
performance of Sellers' obligations under Sections 4.01 and 4.02
above. Purchaser will provide prompt written notification to
Sellers when any such consent, approval, action, filing or
notice referred to in clause (a) above is obtained, taken, made
or given, as applicable, and will advise Sellers of any
communications (and, unless precluded by Law, provide copies of
any such communications that are in writing) with any
Governmental or Regulatory Authority or other Person regarding
any of the transactions contemplated by this Agreement.
ARTICLE V.2 HSR Filings.
In addition to and without limiting Purchaser's covenants
contained in Section 5.01 above, Purchaser will (a) take
promptly all actions necessary to make the filings required of
Purchaser or its Affiliates under the HSR Act, (b) comply at the
earliest practicable date with any request for additional
information received by Purchaser or its Affiliates from the
Federal Trade Commission or the Antitrust Division of the
Department of Justice pursuant to the HSR Act and (c) cooperate
with Sellers and/or the Company in connection with their filing
under the HSR Act and in connection with resolving any
investigation or other inquiry concerning the transactions
contemplated by this Agreement commenced by either the Federal
Trade Commission or the Antitrust Division of the Department of
Justice or state attorneys general.
ARTICLE V.3 Release of Guarantees.
(a) Before the Closing, Purchaser shall cooperate with Sellers
and the Company and either (i) obtain the release of the
Shareholders from their respective guarantees of all obligations
under or related to the Real Property Lease and the IBM
Guarantee, or (ii) provide a letter of credit, guarantee or
other security for the benefit of the Shareholders satisfactory,
in the sole judgment of the Shareholders, to ensure that for so
long as any obligations are outstanding related to the Real
Property Lease and/or IBM Guarantee, if the Shareholders suffer
any Loss pursuant to their guarantee of the Real Property Lease
and/or IBM Guarantee, such Loss will be satisfied (in the first
instance or by reimbursement of the Shareholders) by the Purchaser.
(b) Before the Closing, Purchaser shall cooperate with Sellers
and/or the Shareholders in seeking to have Sellers and/or the
Shareholders released from, and will indemnify and hold Sellers
and/or the Shareholders harmless against payments Sellers and/or
the Shareholders may be required to make from and after the
Closing in respect of, the guarantees that Sellers and/or the
Shareholders have given in respect of Indebtedness or other
obligations of the Company described in this Schedule 5.03.
ARTICLE V.4 Indemnification of Directors
and Officers.
(a) Until the seventh (7th) anniversary of the Closing Date,
Purchaser shall indemnify, defend, protect and hold harmless
each person who is now, or has been at any time prior to the
date of this Agreement or who becomes such prior to the Closing
Date, an officer or director of the Company (the "Indemnified
Parties") against (i) all losses, claims, damages, costs,
expenses, liabilities or judgments or amounts that are paid in
settlement with the approval of the indemnifying party (which
approval shall not be unreasonably withheld) of or in connection
with any claim, action, suit, proceeding or investigation based
in whole or in part on or arising in whole or in part out of the
fact that such person is or was a director or officer of the
Company whether pertaining to any matter existing or occurring
at or prior to the Closing Date and whether asserted or claimed
prior to, or at or after, the Closing Date ("Indemnified
Liabilities").
(b) Until the seventh (7th) anniversary of the Closing Date,
Purchaser will not, nor will it permit any of its subsidiaries
to, take any action to amend any provision of the articles of
incorporation or bylaws or certificate of formation or limited
liability company operating agreement (or other comparable
charter documents) of the Company that provides for
indemnification of directors, officers or employees (including
an amendment effected through a merger, consolidation, sale of
all or substantially all the assets, liquidation or dissolution
of any such corporation), if the effect of such amendment would
be to adversely affect the rights provided thereby to any Person
who shall have served as a director or officer of the Company
prior to the Closing Date in respect of actions taken in such
capacity on or prior to the Closing Date, unless such Person
would immediately thereafter be entitled to indemnification by
Purchaser or another subsidiary of Purchaser comparable to that
provided by the affected provision prior to any such amendment.
ARTICLE V.5 Investigation by Sellers.
The Purchaser will provide Sellers and their Representatives
with such assurances as Sellers may reasonably request as to
Purchaser's ability to finance the Purchase Price.
ARTICLE V.6 Fulfillment of Conditions.
Purchaser (a) will execute and deliver at the Closing each
certificate, document and instrument that Purchaser is hereby
required to execute and deliver as a condition to the Closing,
(b) will promptly and affirmatively take all steps necessary or
desirable and proceed diligently and in good faith (i) to
satisfy each other condition to the obligations of the Sellers
contained in this Agreement and (ii) to consummate all of the
transactions contemplated in this Agreement, and (c) will not
take or fail to take any action that could reasonably be
expected to result in the nonfulfillment of any obligation of
the Company, the Sellers or Purchaser contained in this Agreement.
ARTICLE VI
CONDITIONS TO OBLIGATIONS OF PURCHASER
The obligations of Purchaser hereunder to purchase the Shares
are subject to the fulfillment, at or before the Closing, of
each of the following conditions (all or any of which may be
waived in whole or in part by Purchaser in its sole discretion):
ARTICLE VI.1 Representations and Warranties.
The representations and warranties made by the Sellers in this
Agreement shall be true and correct on and as of the Closing
Date as though made on and as of the Closing Date or, in the
case of representations and warranties made as of a specified
date earlier than the Closing Date, on and as of such earlier
date, except in each case as could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse
Effect.
ARTICLE VI.2 Performance.
The Sellers shall have performed and complied with, in all
material respects, the agreements, covenants and obligations
required by this Agreement to be so performed or complied with
by the Sellers, as the case may be, at or before the Closing.
ARTICLE VI.3 Officers' Certificates.
The Sellers shall have delivered to Purchaser a certificate,
dated the Closing Date, substantially in the form and to the
effect of Exhibit B hereto, and a certificate, dated the Closing
Date and executed by the Secretary of the Company, substantially
in the form and to the effect of Exhibit C hereto.
ARTICLE VI.4 Orders and Laws.
There shall not be in effect on the Closing Date any Order or
Law restraining, enjoining or otherwise prohibiting or making
illegal the consummation of any of the transactions contemplated
by this Agreement.
ARTICLE VI.5 Regulatory Consents and Approvals.
All consents, approvals and actions of, filings with and notices
to any Governmental or Regulatory Authority necessary to permit
Purchaser, the Company and Sellers to perform their respective
obligations under this Agreement and to consummate the
transactions contemplated hereby, shall have been duly obtained,
made or given and shall be in full force and effect, and all
terminations or expirations of waiting periods imposed by any
Governmental or Regulatory Authority necessary for the
consummation of the transactions contemplated by this Agreement,
including under the HSR Act, shall have occurred.
ARTICLE VI.6 Opinion of Counsel.
The Sellers shall deliver to Purchaser an opinion of the
Company's legal counsel dated the Closing Date in substantially
the form attached hereto as Exhibit F.
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF SELLER
The obligations of Sellers hereunder to sell the Shares are
subject to the fulfillment, at or before the Closing, of each of
the following conditions (all or any of which may be waived in
whole or in part by the Sellers in their sole discretion):
ARTICLE VII.1 Representations and Warranties.
The representations and warranties made by Purchaser in this
Agreement shall be true and correct in all respects on and as of
the Closing Date as though made on and as of the Closing Date.
ARTICLE VII.2 Performance.
Purchaser shall have performed and complied with, in all
respects, the agreements, covenants and obligations required by
this Agreement to be so performed or complied with by Purchaser
at or before the Closing.
ARTICLE VII.3 Officers' Certificates.
Purchaser shall have delivered to Sellers a certificate, dated
the Closing Date and executed in the name and on behalf of
Purchaser by the Chief Executive Officer of the Purchaser,
substantially in the form and to the effect of Exhibit D hereto,
and a certificate, dated the Closing Date and executed by the
Secretary of Purchaser, substantially in the form and to the
effect of Exhibit E hereto.
ARTICLE VII.4 Orders and Laws.
There shall not be in effect on the Closing Date any Order or
Law restraining, enjoining or otherwise prohibiting or making
illegal the consummation of any of the transactions contemplated
by this Agreement.
ARTICLE VII.5 Regulatory Consents and Approvals.
All consents, approvals and actions of, filings with and notices
to any Governmental or Regulatory Authority necessary to permit
Sellers and Purchaser to perform their obligations under this
Agreement and to consummate the transactions contemplated hereby
shall have been duly obtained, made or given and shall be in
full force and effect, and all terminations or expirations of
waiting periods imposed by any Governmental or Regulatory
Authority necessary for the consummation of the transactions
contemplated by this Agreement, including under the HSR Act,
shall have occurred.
7.06 Release of Shareholder Guarantees.
As required by Section 5.03 of this Agreement, Purchaser shall
have either (i) obtained the release of the Shareholders from
their respective guarantees of the Real Property Lease and the
IBM Guarantee or (ii) provided a letter of credit, guarantee or
other security for the benefit of the Shareholders to ensure
that any Loss incurred by the Shareholders that arises out of,
or in connection with, the Real Property Lease and/or the IBM
Guarantee will be fully satisfied by Purchaser.
ARTICLE VIII
TAX MATTERS
ARTICLE VIII.1 Closing Date.
Purchaser agrees that it will cause the Company at such times as
it controls the Company not to engage in any transactions on the
Closing Date other than transactions in the ordinary course of
the Company's business.
ARTICLE VIII.2 Transfer Taxes.
Purchaser shall pay all sales, use, transfer, real property
transfer, recording, stock transfer and other similar taxes and
fees ("Transfer Taxes") arising out of or in connection with the
transactions effected pursuant to this Agreement, and shall
indemnify, defend, and hold harmless Sellers on an after-Tax
basis with respect to such Transfer Taxes.
ARTICLE VIII.3 Tax Cooperation; Tax Returns
After the Closing Date, Purchaser, the Company and Sellers will
cooperate in the preparation of all Tax Returns and in
connection with any Tax investigation, audit or other proceeding
and each will provide (or cause to be provided) any records and
other information the other reasonably requests, and will
provide access to, and the cooperation of its auditors.
Notwithstanding the foregoing, Sellers shall prepare and file
all Tax Returns for the Company (other than Tax Returns relating
to Transfer Taxes) with respect to the Tax periods ending on or
before the Closing Date, which are filed after the Closing Date.
ARTICLE VIII.4 Control of Contests.
Notwithstanding anything to the contrary in Section 8.03,
Sellers shall have the right to control any audit or examination
relating to Taxes by any taxing authority, initiate any claim
for refund, file any amended return, contest, resolve and defend
against any assessment, notice of deficiency or other adjustment
or proposed adjustment relating or with respect to any Taxes of
the Company for all taxable periods (or portions thereof) ending
on or before the Closing Date, and any such refunds shall be for
the account of Sellers.
8.05 Elections. At Purchaser's option, Sellers will join with
Purchaser in making an election under Code Section 338(h)(10)
(and any corresponding elections under state, local, or foreign
Tax law) (collectively, the "Section 338(h)(10) Elections") with
respect to the purchase and sale of the Shares hereunder. In
the event the Section 338(h)(10) Elections are made:
(a) Subject to Section 8.02, Sellers will include
any income, gain, loss, deduction or other tax item
resulting from the Section 338(h)(10) Elections on
their tax returns to the extent permitted by
applicable law.
(b) Purchaser, Sellers and the Company shall
report the transaction consistent with the Section
338(h)(10) Elections and agree not to take any action
that could cause such Section 338(h)(10) Elections to
be invalid, and shall take no position contrary
thereto unless required to do so pursuant to a
determination (as defined in Code Section 1313(a) or
any similar state or local tax provision).
(c) To the extent possible, Purchaser shall
prepare for Sellers' review and approval, and
Purchaser, Sellers and, if required under relevant
law, the Company, shall execute at the Closing, any
and all forms necessary to effectuate the Section
338(h)(10) Elections (including, without limitation,
Internal Revenue Service Form 8023 and any similar
forms under applicable state and local Tax laws (the
"Section 338(h)(10) Forms")). In the event, however,
any Section 338(h)(10) Forms are not executed at the
Closing, Purchaser shall prepare and complete each
such Section 338(h)(10) Form no later than forty-five
(45) days prior to the date such Section 338(h)(10)
Form is required to be filed, and Purchaser shall
deliver any such Section 338(h)(10) Form to Sellers
for their review and approval at least thirty (30)
prior to the date such Section 338(h)(10) Form is
required to be filed. Purchaser, Sellers and, if
required under relevant law, the Company, shall each
cause the Section 338(h)(10) Forms to be duly
executed by an authorized person for Purchaser,
Sellers and the Company in each case, and shall duly
and timely file the Section 338(h)(10) Forms in
accordance with applicable Tax laws and the terms of
this Agreement.
(d) As soon as practicable after the Closing,
Sellers and Purchaser shall agree on the fair market
value of the assets of the Company and the allocation
of the deemed sales price of the assets of the
Company resulting from the Section 338(h)(10)
Elections (as required pursuant to Code Section
338(h)(10) and Treasury Regulation Section 1.338-6T)
among such assets (the "Section 338(h)(10)
Allocation"). If Purchaser and Sellers are unable to
agree on the Section 338(h)(10) Allocation within
sixty (60) days after the Closing, they shall request
a "big five" accounting firm mutually agreeable to
Sellers and Purchaser to prepare the Section
338(h)(10) Allocation. The cost of any such firm
shall be borne equally by Purchaser and Sellers.
Purchaser, Sellers and the Company will file all Tax
Returns (including amended returns and claims for
refund) and information reports in a manner
consistent with such allocation and take no position
contrary thereto.
(e) As soon as practicable after the preparation
of the Section 338(h)(10) Allocation, Sellers shall
prepare and deliver to Purchaser a calculation
setting forth the amount of additional Taxes
reasonably expected to be imposed on Sellers as a
result of the making of the Section 338(h)(10)
Elections, and the amount (the "Gross-Up Amount")
which must be paid to each Seller so that on an
after-Tax basis the amount received by such Seller in
connection with this transaction equals the amount
that would have been received had no Section
338(h)(10) Elections been made. The Gross-Up Amount
shall be determined without reduction for any net
operating losses, capital losses or other tax
deductions or tax attributes of the Sellers, and by
assuming that ordinary income will be taxed to the
Sellers at the maximum marginal income rate then in
effect for federal and state purposes. Purchaser
shall pay the requested Gross-Up Amount to each
Seller within ten (10) days after receipt of such
calculation. Sellers and Purchaser shall make
appropriate adjustments and payments to account for
the impact of any subsequent adjustments or refunds
that would otherwise alter the amount so calculated.
ARTICLE IX
EMPLOYEE BENEFITS MATTERS
At the Closing Date, Purchaser shall continue the employment by
the Company of each of the employees of the Company on such
terms and conditions as Purchaser may, in its sole discretion,
determine, but shall not be under any obligation to cause the
Company to continue the employment of any or all employees or
any particular employees under this Agreement except for those
individuals listed on Schedule 9 hereto which Purchaser will
employ on the same terms and conditions for the longer of (a)
ninety (90) days or (b) the remaining term of such individuals'
specific current personal service agreements with the Company;
provided, however, that Purchaser shall be solely responsible
for compliance with, and to provide timely notice pursuant to
the Worker Adjustment and Retraining Notification Act, if
applicable, and any similar provision of applicable state law,
to employees of the Company who are not employed by the Company
on or after the Closing.
ARTICLE X
SURVIVAL; NO OTHER REPRESENTATIONS
ARTICLE X.1 Survival of Representations,
Warranties, Covenants and Agreements.
The representations and warranties of the Sellers contained in
Sections 2.02 and 2.03 of this Agreement will survive the
Closing until the fifth (5th) anniversary of the date hereof.
All other representations, warranties, covenants and agreements
of the Sellers, the Company and Purchaser contained in this
Agreement will survive the Closing until the first anniversary
of the date hereof in the case of each representation, warranty,
covenant and agreement (other than the agreements of Purchaser
contained in Sections 5.03 and 5.04, which shall survive for the
respective period specified therein), except that any
representation, warranty, covenant or agreement that would
otherwise terminate will continue to survive if a Claim Notice
or Indemnity Notice (as applicable) shall have been timely given
in good faith based on facts reasonably expected to establish a
valid claim under Article XII on or prior to such termination
date, until the related claim for indemnification has been
satisfied or otherwise resolved as provided in Article XII.
This Section shall not limit in any way the survival and
enforceability of any covenant or agreement of the parties
hereto which by its terms contemplates performance after the
Closing Date, which survive for the respective periods set forth
therein.
ARTICLE X.2 No Other Representations.
Notwithstanding anything to the contrary contained in this
Agreement, but subject to Section 10.01 above, it is the
explicit intent of each party hereto that the Company and
Sellers are making no representation or warranty whatsoever,
express or implied, except those representations and warranties
contained in Articles II above and in any certificate delivered
pursuant to Section 6.03 above.
ARTICLE XI
TERMINATION
ARTICLE XI.1 Termination.
This Agreement may be terminated, and the transactions
contemplated hereby may be abandoned:
(a) at any time before the Closing, by mutual written
agreement of Sellers and Purchaser;
(i)a at any time before the Closing
without liability to the terminating party, by Sellers or
Purchaser, in the event that any Order or Law becomes effective
restraining, enjoining or otherwise prohibiting or making
illegal the consummation of any of the transactions contemplated
by this Agreement upon notification of the non-terminating party
by the terminating party;
(i)b at any time before the Closing,
by Sellers or Purchaser (i) in the event of a material breach of
this Agreement by the non-terminating party if such
non-terminating party fails to cure such breach within fifteen
(15) Business Days following notification thereof by the
terminating party or (ii) upon notification of the
non-terminating party by the terminating party that the
satisfaction of any condition to the terminating party's
obligations under this Agreement becomes impossible or
impracticable with the use of commercially reasonable efforts;
if the party seeking to terminate this Agreement shall not be in
breach of any material provision of this Agreement; or
(i)c at any time after June 30,
2000, without liability to the terminating party, by Sellers or
Purchaser upon notification of the non-terminating party by the
terminating party if the Closing shall not have occurred on or
before such date and such failure to consummate is not caused by
a breach of this Agreement by the terminating party; provided,
however, if the Closing shall not have occurred on or before
June 30, 2000 solely due the failure of the waiting period under
the HSR Act to terminate, then this Agreement may be terminated,
and the transactions contemplated hereby may be abandoned
pursuant to this Section 11.01(d) at any time after July 31, 2000.
ARTICLE XI.2 Effect of Termination.
If this Agreement is validly terminated pursuant to Section
11.01 above, this Agreement will forthwith become null and void,
and, except as set forth in the next sentence, there will be no
liability or obligation on the part of Sellers, the Company or
Purchaser (or any of their respective officers, directors,
employees, agents or other representatives or Affiliates),
except the obligations relating to expenses in Section 14.03
below and confidentiality in Section 14.05 below will continue
to apply following any such termination. Notwithstanding any
other provision in this Agreement to the contrary, upon
termination of this Agreement pursuant to clauses (b), (c) or
(d) of Section 11.01 above, Sellers will remain liable to
Purchaser for any willful breach of this Agreement by them
existing at the time of such termination, and Purchaser will
remain liable to Sellers for any willful breach of this
Agreement by Purchaser existing at the time of such termination,
and Sellers or Purchaser, as the case may be, may seek such
remedies, including damages and attorneys' fees, against the
other with respect to any such breach as are provided in this
Agreement or as are otherwise available at Law or in equity.
ARTICLE XII
INDEMNIFICATION
ARTICLE XII.1 Indemnification.
(a) Subject to paragraph (c) of this Section and the other
Sections of this Article XII, Sellers shall indemnify Purchaser
in respect of, and hold it harmless from and against, any and
all Losses suffered, incurred or sustained by it or to which it
becomes subject, resulting from, arising out of or relating to
any breach of representation or warranty or nonfulfillment of or
failure to perform any covenant or agreement on the part of
Sellers contained in this Agreement.
(i)a Subject to the other Sections
of this Article XII, Purchaser shall indemnify Sellers and each
of their Affiliates (other than the Company) in respect of, and
hold it and them harmless from and against, any and all Losses
suffered, incurred or sustained by it and them or to which it or
they become subject, resulting from, arising out of or relating
to any breach of representation or warranty or nonfulfillment of
or failure to perform any covenant or agreement on the part of
Purchaser contained in this Agreement.
(i)b Notwithstanding anything to the
contrary contained in this Agreement, no amounts of indemnity
shall be payable as a result of any claim in respect of a Loss
arising under paragraph (a) of Section 12.01:
(i)(A) unless and until Purchaser has suffered, incurred,
sustained or become subject to Losses referred to in such
paragraph in excess of $250,000.00 in the aggregate;
(B) unless Purchaser has received payments in respect
of claims made under such paragraph of $6.0 million or
less in the aggregate; and
(C) unless the Indemnified Party has given the
Indemnifying Party a Claim Notice or Indemnity Notice, as
applicable, with respect to such claim, setting forth in
reasonable detail the specific facts and circumstances
pertaining thereto, (I) as soon as practical following the
time at which the Indemnified Party discovered or
reasonably should have discovered such claim (except to
the extent the Indemnifying Party is not prejudiced by any
delay in the delivery of such notice) and (II) in any
event prior to the applicable Cut-off Date;
(ii) to the extent that the Indemnified Party had a reasonable
opportunity, but failed, in good faith to mitigate the Loss,
including but not limited to the failure to use commercially
reasonable efforts to recover under a policy of insurance or
under a contractual right of set-off or indemnity; or
(iii) to the extent it arises from or was caused by actions
taken or failed to be taken by Purchaser or any of its
Affiliates after the Closing;
provided that the limitations contained in clauses (i)(A) and
(B) shall not apply to Losses arising from breach of the
representations contained in Sections 2.02, 2.03 and 2.18.
ARTICLE XII.2 Method of Asserting Claims.
All claims for indemnification by any Indemnified Party under
Section 12.01 will be asserted and resolved as follows:
(a) In the event any claim or demand in respect of which an
Indemnified Party might seek indemnity under Section 12.01 is
asserted against or sought to be collected from such Indemnified
Party by a Person other than Sellers or any Affiliate of Sellers
or of Purchaser (a "Third Party Claim"), the Indemnified Party
shall deliver a Claim Notice with reasonable promptness to the
Indemnifying Party. The Indemnifying Party will notify the
Indemnified Party as soon as practicable within the Dispute
Period whether the Indemnifying Party disputes its liability to
the Indemnified Party under Section 12.01 and whether the
Indemnifying Party desires, at its sole cost and expense, to
defend the Indemnified Party against such Third Party Claim.
(i) If the Indemnifying Party notifies
the Indemnified Party within the Dispute Period that the
Indemnifying Party desires to defend the Indemnified Party
with respect to the Third Party Claim pursuant to this
Section 12.02(a), then the Indemnifying Party will have
the right to defend, at the sole cost and expense of the
Indemnifying Party, such Third Party Claim by all
appropriate proceedings, which proceedings will be
vigorously and diligently prosecuted by the Indemnifying
Party to a final conclusion or will be settled at the
discretion of the Indemnifying Party. The Indemnifying
Party will have full control of such defense and
proceedings, including any settlement thereof; provided,
however, that if requested by the Indemnifying Party, the
Indemnified Party will, at the sole cost and expense of
the Indemnifying Party, cooperate with the Indemnifying
Party and its counsel in contesting any Third Party Claim
that the Indemnifying Party elects to contest, and, if
appropriate and related to the Third Party Claim in
question, in making any counterclaim against the Person
asserting the Third Party Claim, or any cross-complaint
against any Person (other than the Indemnified Party or
any of its Affiliates). The Indemnified Party may retain
separate counsel to represent it in, but not control, any
defense or settlement of any Third Party Claim controlled
by the Indemnifying Party pursuant to this clause (i), and
the Indemnified Party will bear its own costs and expenses
with respect to such separate counsel except as provided
in the preceding sentence and except that the Indemnifying
Party will pay the costs and expenses of such separate
counsel if (x) in the Indemnified Party's good faith
judgment, it is advisable, based on advice of counsel, for
the Indemnified Party to be represented by separate
counsel because a conflict or potential conflict exists
between the Indemnifying Party and the Indemnified Party
which makes representation of both parties inappropriate
under applicable standards of professional conduct or (y)
the named parties to such Third Party Claim include both
the Indemnifying Party and the Indemnified Party and the
Indemnified Party determines in good faith, based on
advice of counsel, that defenses are available to it that
are unavailable to the Indemnifying Party.
Notwithstanding the foregoing, the Indemnified Party may
retain or take over the control of the defense or
settlement of any Third Party Claim the defense of which
the Indemnifying Party has elected to control if the
Indemnified Party irrevocably waives its right to
indemnity under Section 12.02 with respect to such Third
Party Claim
(ii) If the Indemnifying Party fails to
notify the Indemnified Party within the Dispute Period
that the Indemnifying Party desires to defend the Third
Party Claim pursuant to Section 12.02(a), then the
Indemnified Party will have the right to defend, at the
sole cost and expense of the Indemnifying Party, the Third
Party Claim by all appropriate proceedings, which
proceedings will be vigorously and diligently prosecuted
by the Indemnified Party to a final conclusion or will be
settled at the discretion of the Indemnified Party (with
the consent of the Indemnifying Party, which consent will
not be unreasonably withheld). The Indemnified Party will
have full control of such defense and proceedings,
including (except as provided in the immediately preceding
sentence) any settlement thereof; provided, however, that
if requested by the Indemnified Party, the Indemnifying
Party will, at the sole cost and expense of the
Indemnifying Party, cooperate with the Indemnified Party
and its counsel in contesting any Third Party Claim which
the Indemnified Party is contesting, and, if appropriate
and related to the Third Party Claim in question, in
making any counterclaim against the Person asserting the
Third Party Claim, or any cross-complaint against any
Person (other than the Indemnifying Party or any of its
Affiliates). Notwithstanding the foregoing provisions of
this clause (ii), if the Indemnifying Party has notified
the Indemnified Party within the Dispute Period that the
Indemnifying Party disputes its liability hereunder to the
Indemnified Party with respect to such Third Party Claim
and if such dispute is resolved in favor of the
Indemnifying Party in the manner provided in clause (iii)
below, the Indemnifying Party will not be required to bear
the costs and expenses of the Indemnified Party's defense
pursuant to this clause (ii) or of the Indemnifying
Party's participation therein at the Indemnified Party's
request, and the Indemnified Party will reimburse the
Indemnifying Party in full for all reasonable costs and
expenses incurred by the Indemnifying Party in connection
with such litigation. The Indemnifying Party may retain
separate counsel to represent it in, but not control, any
defense or settlement controlled by the Indemnified Party
pursuant to this clause (ii), and the Indemnifying Party
will bear its own costs and expenses with respect to such
participation.
(iii) If the Indemnifying Party notifies
the Indemnified Party that it does not dispute its
liability to the Indemnified Party with respect to the
Third Party Claim under Section 12.01 or fails to notify
the Indemnified Party within the Dispute Period whether
the Indemnifying Party disputes its liability to the
Indemnified Party with respect to such Third Party Claim,
the Loss arising from such Third Party Claim will be
conclusively deemed a liability of the Indemnifying Party
under Section 12.01 and the Indemnifying Party shall pay
the amount of such Loss to the Indemnified Party on demand
following the final determination thereof. If the
Indemnifying Party has timely disputed its liability with
respect to such claim, the Indemnifying Party and the
Indemnified Party will proceed in good faith to negotiate
a resolution of such dispute, and if not resolved through
negotiations within the Resolution Period, such dispute
shall be resolved by arbitration in accordance with
paragraph (c) of this Section 12.02.
(b) In the event any Indemnified Party should have a claim
under Section 12.01 against any Indemnifying Party that does not
involve a Third Party Claim, the Indemnified Party shall deliver
an Indemnity Notice with reasonable promptness to the
Indemnifying Party. If the Indemnifying Party notifies the
Indemnified Party that it does not dispute the claim described
in such Indemnity Notice or fails to notify the Indemnified
Party within the Dispute Period whether the Indemnifying Party
disputes the claim described in such Indemnity Notice, the Loss
arising from the claim specified in such Indemnity Notice will
be conclusively deemed a liability of the Indemnifying Party
under Section 12.01 and the Indemnifying Party shall pay the
amount of such Loss to the Indemnified Party on demand following
the final determination thereof. If the Indemnifying Party has
timely disputed its liability with respect to such claim, the
Indemnifying Party and the Indemnified Party will proceed in
good faith to negotiate a resolution of such dispute, and if not
resolved through negotiations within the Resolution Period, such
dispute shall be resolved by arbitration in accordance with
paragraph (c) of this Section 12.02.
(i)b Any dispute submitted to
arbitration pursuant to this Section 12.02 shall be finally and
conclusively determined by the decision of a board of
arbitration consisting of three (3) members (hereinafter
sometimes called the "Board of Arbitration") selected as
hereinafter provided. Each of the Indemnified Party and the
Indemnifying Party shall select one (1) member and the third
member shall be selected by mutual agreement of the other
members, or if the other members fail to reach agreement on a
third member within twenty (20) days after their selection, such
third member shall thereafter be selected by the American
Arbitration Association upon application made to it for a third
member possessing expertise or experience appropriate to the
dispute jointly by the Indemnified Party and the Indemnifying
Party. The Board of Arbitration shall meet in San Diego,
California or such other place as a majority of the members of
the Board of Arbitration determines more appropriate, and shall
reach and render a decision in writing (concurred in by a
majority of the members of the Board of Arbitration) with
respect to the amount, if any, which the Indemnifying Party is
required to pay to the Indemnified Party in respect of a claim
filed by the Indemnified Party. In connection with rendering
its decisions, the Board of Arbitration shall adopt and follow
such rules and procedures as a majority of the members of the
Board of Arbitration deems necessary or appropriate. To the
extent practical, decisions of the Board of Arbitration shall be
rendered no more than thirty (30) days following commencement of
proceedings with respect thereto. The Board of Arbitration
shall cause its written decision to be delivered to the
Indemnified Party and the Indemnifying Party. Any decision made
by the Board of Arbitration (either prior to or after the
expiration of such thirty (30) calendar day period) shall be
final, binding and conclusive on the Indemnified Party and the
Indemnifying Party and entitled to be enforced to the fullest
extent permitted by law and entered in any court of competent
jurisdiction. Each party to any arbitration shall bear its own
expense in relation thereto, including but not limited to such
party's attorneys' fees, if any, and the expenses and fees of
the Board of Arbitration shall be divided between the
Indemnifying Party and the Indemnified Party in the same
proportion as the portion of the related claim determined by the
Board of Arbitration to be payable to the Indemnified Party
bears to the portion of such claim determined not to be so payable.
(i)c In the event of any claim for
indemnity under Section 12.01(a), Purchaser agrees to give
Sellers and their Representatives reasonable access to the Books
and Records and employees of the Company and any of its
subsidiaries in connection with the matters for which
indemnification is sought to the extent Sellers reasonably deem
necessary in connection with their rights and obligations under
this Article XII.
ARTICLE XII.3 Method of Calculating Losses.
The parties shall make appropriate adjustments for any
anticipated Tax benefit in determining Losses for purposes of
calculating any indemnification hereunder.
ARTICLE XII.4 Exclusivity.
After the Closing, to the extent permitted by Law, the
indemnities set forth in this Article XII shall be the exclusive
remedies of Purchaser and Sellers and their respective officers,
directors, employees, agents and Affiliates for any
misrepresentation, breach of warranty or nonfulfillment or
failure to be performed of any covenant or agreement contained
in this Agreement, and the parties shall not be entitled to a
rescission of this Agreement or to any further indemnification
rights or claims of any nature whatsoever in respect thereof,
all of which the parties hereto hereby waive.
ARTICLE XIII
DEFINITIONS
ARTICLE XIII.1 Defined Terms.
As used in this Agreement, the following defined terms have the
meanings indicated below:
"Acquisition Proposal" means any proposal for a merger or other
business combination to which the Company is a party or the
direct or indirect acquisition of any equity interest in, or a
substantial portion of the assets of, Sellers or the Company,
other than the transactions contemplated by this Agreement.
"Actions or Proceedings" means any action, suit, proceeding,
arbitration or Governmental or Regulatory Authority investigation.
"Affiliate" means any Person that directly, or indirectly
through one or more intermediaries, controls or is controlled by
or is under common control with the Person specified. For
purposes of this definition, control of a Person means the
power, direct or indirect, to direct or cause the direction of
the management and policies of such Person whether by Contract
or otherwise and, in any event and without limitation of the
previous sentence, any Person owning ten percent (10%) or more
of the voting securities of another Person shall be deemed to
control that Person.
"Agreement" means this Stock Purchase Agreement and the
Exhibits, the Disclosure Schedule and the Schedules hereto and
the certificates delivered in accordance with Sections 6.03 and
7.03 above, as the same shall be amended from time to time.
"Assets and Properties" of any Person means all assets and
properties of every kind, nature, character and description
(whether real, personal or mixed, whether tangible or
intangible, and wherever situated), including the goodwill
related thereto, operated, owned or leased by such Person.
"Benefit Plan" means any Plan established by the Company, or any
predecessor or Affiliate of any of the foregoing, existing at
the Closing Date or at any time since December 31, 1996, to
which the Company contributes or has contributed, or under which
any employee, former employee or director of the Company or any
beneficiary thereof is covered, is eligible for coverage or has
benefit rights.
"Board of Arbitration" has the meaning ascribed to it in
Section 12.02(c).
"Books and Records" means all files, documents, instruments,
papers, books and records of the Company relating to the
Business or Condition of the Company, including without
limitation financial statements, Tax Returns and related work
papers and letters from accountants, budgets, pricing
guidelines, ledgers, journals, deeds, title policies, minute
books, stock certificates and books, stock transfer ledgers,
Contracts, Licenses, customer lists, computer files and
programs, retrieval programs, operating data and plans and
environmental studies and plans.
"Business Day" means a day other than Saturday, Sunday or any
day on which banks located in the State of California are
authorized or obligated to close.
"Business or Condition of the Company" means the business,
operations, prospects, results of operations, condition
(financial or otherwise), properties (including intangible
properties), assets (including intangible assets) and
liabilities of the Company taken as a whole.
"CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, and the
rules and regulations promulgated thereunder.
"CERCLIS" means the Comprehensive Environmental Response and
Liability Information System, as provided by 40 C.F.R.
Section300.5.
"CIM" means the Company's Confidential Information Memorandum,
as amended and/or supplemented from time to time.
"Claim Notice" means written notification pursuant to
Section 12.02(a) of a Third Party Claim as to which indemnity
under Section 12.01 is sought by an Indemnified Party, enclosing
a copy of all papers served, if any, and specifying the nature
of and basis for such Third Party Claim and for the Indemnified
Party's claim against the Indemnifying Party under Section
12.01, together with the amount or, if not then reasonably
determinable, the estimated amount, determined in good faith, of
the Loss arising from such Third Party Claim.
"Closing" means the closing of the transactions contemplated by
Section 1.03 above.
"Closing Date" means (a) the second Business Day after the day
on which the last of the consents, approvals, actions, filings,
notices or waiting periods described in or related to the
filings described in Section 6.05 above and Section 7.05 above
has been obtained, made or given or has expired, as applicable,
or (b) such other date as Purchaser and the Sellers mutually
agree upon in writing.
"Code" means the Internal Revenue Code of 1986, as amended, and
the rules and regulations promulgated thereunder.
"Common Stock" means the common stock, no par value, of the
Company.
"Company" has the meaning ascribed to it in the forepart of this
Agreement.
"Competing Business" means any business actively engaged in
providing in-house information processing software systems to
the credit union industry.
"Confidentiality Agreement" means the letter agreement dated
March 14, 2000 between the Company and Purchaser.
"Contract" means any agreement, lease, license, evidence of
Indebtedness, mortgage, indenture, security agreement or other
contract.
"Cut-off Date" means, with respect to any representation,
warranty, covenant or agreement contained in this Agreement, the
date on which such representation, warranty, covenant or
agreement ceases to survive as provided in Section 10.01, as
applicable.
"Disclosure Schedule" means the record delivered to Purchaser by
the Company herewith and dated as of the date hereof, containing
all lists, descriptions, exceptions and other information and
materials as are required to be included therein by the Company
or the Sellers pursuant to this Agreement, as said record may be
amended, supplemented or modified by the Company or the Sellers
at any time prior to the Closing without any liability to the
Company or the Sellers other than that Purchaser shall have the
right for five (5) Business Days after such amendment,
supplement or modification of the Disclosure Schedule to
terminate the Agreement based upon such amendment, supplement or
modification of the Disclosure Schedule if such amendment,
supplement or modification of the Disclosure Schedule reveals a
matter which would have a Material Adverse Effect. Reference
herein to the Disclosure Schedule shall mean and refer not only
to the record itself, but to all items, documents, agreements
and instruments referenced therein and to the content of each
such item, document, agreement and instrument. Likewise,
reference herein to a certain Section of the Disclosure Schedule
shall refer not only to that portion of the Disclosure Schedule,
but to the items, documents, agreements and instruments
referenced in that Section and the contents of each such item,
document, agreement and instrument. Further, matters disclosed
for the purpose of one Section of the Disclosure Schedule shall
constitute disclosure of such matters for the purposes of all
other Sections of the Disclosure Schedule. The duplication or
cross-referencing of any disclosures made in the Disclosure
Schedule shall not, in any instance or in the aggregate, effect
a waiver of the foregoing sentence.
"Dispute Period" means the period ending thirty (30)
days following receipt by an Indemnifying Party of either a
Claim Notice or an Indemnity Notice.
"Environmental Law" means any Law or Order relating to the
regulation or protection of human health, safety or the
environment or to emissions, discharges, releases or threatened
releases of pollutants, contaminants, chemicals or industrial,
toxic or hazardous substances or wastes into the environment
(including, without limitation, ambient air, soil, surface
water, ground water, wetlands, land or subsurface strata), or
otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of
pollutants, contaminants, chemicals or industrial, toxic or
hazardous substances or wastes.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and the rules and regulations promulgated
thereunder.
"ERISA Affiliate" means any Person who is in the same controlled
group of corporations or who is under common control with
Sellers or, before the Closing, the Company (within the meaning
of Section 414 of the Code).
"Financial Statements" means the financial statements of the
Company delivered to Purchaser pursuant to Section 2.06 or 4.05
above.
"GAAP" means generally accepted accounting principles,
consistently applied throughout the specified period and in the
immediately prior comparable period.
"Governmental or Regulatory Authority" means any court,
tribunal, arbitrator, authority, agency, commission, official or
other instrumentality of the United States or any state, county,
city or other political subdivision.
"Gross-Up Amount" has the meaning ascribed to it in Section 8.05.
"Hazardous Material" means (A) any petroleum or petroleum
products, flammable explosives, radioactive materials, asbestos
in any form that is or could become friable, urea formaldehyde
foam insulation and transformers or other equipment that contain
dielectric fluid containing levels of polychlorinated biphenyls
(PCBs); (B) any chemicals or other materials or substances which
are now or hereafter become defined as or included in the
definition of "hazardous substances," "hazardous wastes,"
"hazardous materials," "extremely hazardous wastes," "restricted
hazardous wastes," "toxic substances," "toxic pollutants" or
words of similar import under any Environmental Law; and (C) any
other chemical or other material or substance, exposure to which
is now or hereafter prohibited, limited or regulated by any
Governmental or Regulatory Authority under any Environmental Law.
"HSR Act" means Section 7A of the Clayton Act (Title II of the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended) and the rules and regulations promulgated thereunder.
"IBM Guarantee" means those individual Guaranty Agreements
between IBM Credit Corp. and John Landis, David Held and Manny
Prupes, respectively.
"Indebtedness" of any Person means all obligations of such
Person (i) for borrowed money, (ii) evidenced by notes, bonds,
debentures or similar instruments, (iii) for the deferred
purchase price of goods or services (other than trade payables
or accruals incurred in the ordinary course of business), (iv)
under capital leases and (v) in the nature of guarantees of the
obligations described in clauses (i) through (iv) above of any
other Person.
"Indemnified Party" means any Person claiming
indemnification under any provision of Article XII.
"Indemnifying Party" means any Person against whom a
claim for indemnification is being asserted under any provision
of Article XII.
"Indemnity Notice" means written notification pursuant
to Section 12.02(b) of a claim for indemnity under Article XII
by an Indemnified Party, specifying the nature of and basis for
such claim, together with the amount or, if not then reasonably
determinable, the estimated amount, determined in good faith, of
the Loss arising from such claim.
"Intellectual Property" means all patents and patent rights,
trademarks and trademark rights, trade names and trade name
rights, service marks and service mark rights, service names and
service name rights, brand names, inventions, copyrights and
copyright rights, processes, formulae, trade dress, business and
product names, logos, slogans, trade secrets, industrial models,
processes, designs, methodologies, computer programs (including
all source codes) and related documentation, technical
information, manufacturing, engineering and technical drawings,
know-how and all pending applications for and registrations of
patents, trademarks, service marks and copyrights.
"Knowledge of the Sellers" means the actual knowledge of John
Landis and David Held.
"Laws" means all laws, statutes, rules, regulations, ordinances
and other pronouncements having the effect of law of the United
States or any state, county, city or other political subdivision
or of any Governmental or Regulatory Authority.
"Liabilities" means all Indebtedness, obligations and other
liabilities of a Person (whether absolute, accrued, contingent,
fixed or otherwise, or whether due or to become due).
"Licenses" means all licenses, permits, certificates of
authority, authorizations, approvals, registrations, franchises
and similar consents granted or issued by any Governmental or
Regulatory Authority.
"Liens" means any mortgage, pledge, assessment, security
interest, lease, lien, adverse claim, levy, charge or other
encumbrance of any kind, or any conditional sale Contract, title
retention Contract or other Contract to give any of the foregoing.
"Loss" means any and all damages, fines, penalties,
deficiencies, losses and expenses (including without limitation
interest, court costs, reasonable fees of attorneys, accountants
and other experts or other reasonable expenses of litigation or
other proceedings or of any claim, default or assessment).
"Material Adverse Effect" means any event or circumstance that
has or will have, or could reasonably be expected to have, a
material adverse effect on the Business or Condition of the
Company, it being understood that in no event shall any failure
by the Company to meet internal earnings, revenue or other
projections or earnings, revenue or other predictions (including
without limitation any projections contained in the CIM) be
deemed by itself or by themselves, either individually or in the
aggregate, to constitute a Material Adverse Effect.
"NPL" means the National Priorities List under CERCLA.
"Option" with respect to any Person means any security, right,
subscription, warrant, option, "phantom" stock right or other
Contract that gives the right to purchase or otherwise receive
or be issued any shares of capital stock of such Person or any
security of any kind convertible into or exchangeable or
exercisable for any shares of capital stock of such Person.
"Order" means any writ, judgment, decree, injunction or similar
order of any Governmental or Regulatory Authority (in each such
case whether preliminary or final).
"Permitted Lien" means (i) any Lien for Taxes not yet due or
delinquent or being contested in good faith by appropriate
proceedings for which adequate reserves have been established in
accordance with GAAP, (ii) any statutory Lien arising in the
ordinary course of business by operation of Law with respect to
a Liability that is not yet due or delinquent and (iii) any
minor imperfection of title or similar Lien which individually
or in the aggregate with other such Liens could not reasonably
be expected to have a Material Adverse Effect.
"Person" means any natural person, corporation, limited
liability company, general partnership, limited partnership,
proprietorship, other business organization, trust, union,
association or Governmental or Regulatory Authority.
"Plan" means any bonus, incentive compensation, deferred
compensation, pension, profit sharing, retirement, stock
purchase, stock option, stock ownership, stock appreciation
rights, phantom stock, leave of absence, layoff, vacation, day
or dependent care, legal services, cafeteria, life, health,
accident, disability, workmen's compensation or other insurance,
severance, separation or other employee benefit plan, practice,
policy or arrangement of any kind, whether written or oral,
including, but not limited to, any "employee benefit plan"
within the meaning of Section 3(3) of ERISA.
"Purchase Price" has the meaning ascribed to it in Section 1.02
above.
"Purchaser" has the meaning ascribed to it in the forepart of
this Agreement.
"Real Property Lease" means that lease dated as of April 28,
1997, as amended, relating to the premises at 404 Camino del Rio
South, San Diego, California 92108.
"Release" means any release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or
migration into the indoor or outdoor environment, including,
without limitation, the movement of Hazardous Materials through
ambient air, soil, surface water, ground water, wetlands, land
or subsurface strata.
"Representatives" has the meaning ascribed to it in Section 4.03
above.
"Resolution Period" means the period ending thirty (30)
days following receipt by an Indemnified Party of a written
notice from an Indemnifying Party stating that it disputes all
or any portion of a claim set forth in a Claim Notice or an
Indemnity Notice.
"Section 338(h)(10) Allocation" has the meaning ascribed
to it in Section 8.05 above.
"Section 338(h)(10) Elections" has the meaning ascribed
to it in Section 8.05. above.
"Section 338(h)(10) Forms" has the meaning ascribed to
it in Section 8.05 above.
"Sellers" has the meaning ascribed to it in the forepart of this
Agreement.
"Shares" has the meaning ascribed to it in the forepart of this
Agreement.
"Shareholders" means, namely, David Held, John Landis and Janis
Prupes and their respective heirs, successors and assigns,
collectively and individually.
"Tax Return" means any return, declaration, report, claim for
refund, or information return or statement relating to Taxes,
including any schedule or attachment thereto, and including any
amendment thereof.
"Taxes" means any federal, state, local or foreign income, gross
receipts, license, payroll, employment, excise, severance,
stamp, occupation, premium, windfall profits, environmental
(including taxes under Code Section59A), customs duties, capital
stock, franchise, profits, withholding, social security (or
similar), unemployment, disability, real property, personal
property, sales, use, transfer, registration, value added,
alternative or add-on minimum, estimated, or other tax of any
kind whatsoever, including any interest, penalty, or addition
thereto, whether disputed or not and any expenses incurred in
connection with the determination, settlement or litigation of
any Tax liability.
"Third Party Claim" has the meaning ascribed to it in Section
12.02(a).
"Transfer Taxes" has the meaning ascribed to it in Section 8.02
above.
"Unaudited Financial Statement Date" means the last day of the
most recent fiscal quarter of the Company for which Financial
Statements are delivered to Purchaser pursuant to Section
2.06(a)(ii).
ARTICLE XIII.2 Construction of Certain Terms
and Phrases.
Unless the context of this Agreement otherwise requires, (i)
words of any gender include each other gender; (ii) words using
the singular or plural number also include the plural or
singular number, respectively; (iii) the terms "hereof,"
"herein," "hereby" and derivative or similar words refer to this
entire Agreement; (iv) the terms "Article" or "Section" refer to
the specified Article or Section of this Agreement; and (v) the
phrase "ordinary course of business" refers to the business of
the Company. Whenever this Agreement refers to a number of
days, such number shall refer to calendar days unless Business
Days are specified. All accounting terms used herein and not
expressly defined herein shall have the meanings given to them
under GAAP. Any representation or warranty contained herein as
to the enforceability of a Contract shall be subject to the
effect of any bankruptcy, insolvency, reorganization, moratorium
or other similar law affecting the enforcement of creditors'
rights generally and to general equitable principles (regardless
of whether such enforceability is considered in a proceeding in
equity or at Law).
ARTICLE XIV
MISCELLANEOUS
ARTICLE XIV.1 Notices.
All notices, requests and other communications hereunder must be
in writing and will be deemed to have been duly given only if
delivered personally or mailed (first class postage prepaid) to
the parties at the following addresses:
If to Purchaser, to:
Jack Henry & Associates, Inc.
663 Hwy. 60, P.O. Box 807
Monett, MO 65708
Attn: Michael E. Henry, Chief Executive
Officer
with a copy to:
Shughart, Thomson & Kilroy, P.C.
120 W. 12th Street
Kansas City, MO 64105
Attn: Robert T. Schendel, Esq.
If to Sellers or the Company, to:
Symitar Systems, Inc.
404 Camino del Rio South, Suite 200
San Diego, California 92108
Attn: John Landis
with copies to:
Munger, Tolles & Olson LLP
355 South Grand Avenue, 35th Floor
Los Angeles, California 90071
Attn: Ruth E. Fisher, Esq.
and
Weitzen & Phillips LLP
12730 High Bluff Drive, Suite 200
San Diego, CA 92130
Attn: Eric Weitzen, Esq.
All such notices, requests and other communications will (a) if
delivered personally to the address as provided in this Section
14.01, be deemed given upon delivery and (b) if delivered by
mail in the manner described above to the address as provided in
this Section 14.01, be deemed given upon receipt (in each case
regardless of whether such notice, request or other
communication is received by any other Person to whom a copy of
such notice, request or other communication is to be delivered
pursuant to this Section 14.01). Any party from time to time
may change its address or other information for the purpose of
notices to that party by giving notice specifying such change to
the other party hereto.
ARTICLE XIV.2 Entire Agreement.
This Agreement, including the Exhibits and Schedules referred to
herein, supersedes all prior discussions and agreements between
the parties with respect to the subject matter hereof and
contains the sole and entire agreement between the parties
hereto with respect to the subject matter hereof, provided,
however, that nothing herein shall affect the validity or
enforceability of the Confidentiality Agreement or that certain
letter agreement, dated as of May 14, 2000, between the parties
hereto relating to the fees and expenses referenced on Section
2.18 of the Disclosure Schedule.
ARTICLE XIV.3 Expenses.
Whether or not the transactions contemplated hereby are
consummated, Purchaser shall pay its own costs and expenses
incurred in connection with the negotiation, execution and
closing of this Agreement and the transactions contemplated
hereby and the Company shall pay the costs and expenses of the
Company incurred in connection with the negotiation, execution
and closing of this Agreement and the transactions contemplated
hereby.
ARTICLE XIV.4 Public Announcements.
At all times at or before the Closing, Sellers and Purchaser
will not issue or make any reports, statements or releases to
the public or generally to the employees, customers, suppliers
or other Persons to whom the Company sell goods or provide
services or with whom the Company otherwise has significant
business relationships with respect to this Agreement or the
transactions contemplated hereby without the consent of the
other, which consent shall not be unreasonably withheld. If
either party is unable to obtain the approval of its public
report, statement or release from the other party and such
report, statement or release is, in the opinion of legal counsel
to such party, required by Law in order to discharge such
party's disclosure obligations, then such party may make or
issue the legally required report, statement or release and
promptly furnish the other party with a copy thereof. Purchaser
will obtain the Sellers' prior approval of any press release to
be issued immediately following the Closing announcing the
consummation of the transactions contemplated by this Agreement.
Sellers will obtain Purchaser's prior approval of any press
release to be issued immediately following the Closing
announcing the consummation of the transactions contemplated by
this Agreement.
ARTICLE XIV.5 Confidentiality.
Each party hereto will hold, and will use its best efforts to
cause its Affiliates, and in the case of Purchaser, any Person
who has provided, or who is considering providing, financing to
Purchaser to finance all or any portion of the Purchase Price,
and their respective Representatives to hold, in strict
confidence from any Person (other than any such Affiliate or
Person who has provided, or who is considering providing,
financing or its Representatives), unless (a) compelled to
disclose by judicial or administrative process (including
without limitation in connection with obtaining the necessary
approvals of this Agreement and the transactions contemplated
hereby of Governmental or Regulatory Authorities) or by other
requirements of Law or (b) disclosed in an Action or Proceeding
brought by a party hereto in pursuit of its rights or in the
exercise of its remedies hereunder, all documents and
information concerning the other party or any of its Affiliates
furnished to it by the other party or such other party's
representatives in connection with this Agreement or the
transactions contemplated hereby, except to the extent that such
documents or information can be shown to have been (i)
previously known by the party receiving such documents or
information, (ii) in the public domain (either prior to or after
the furnishing of such documents or information hereunder)
through no fault of such receiving party or (iii) later acquired
by the receiving party from another source if the receiving
party is not aware that such source is under an obligation to
another party hereto to keep such documents and information
confidential; provided, however, that following the Closing the
foregoing restrictions will not apply to Purchaser's use of
documents and information concerning the Company furnished by
Sellers hereunder. In the event the transactions contemplated
hereby are not consummated, upon the request of the other party,
each party hereto will, and will cause its Affiliates, any
Person who has provided, or who is providing, financing to such
party and their respective Representatives to, promptly (and in
no event later than five (5) Business Days after such request)
redeliver or cause to be redelivered all copies of confidential
documents and information furnished by the other party in
connection with this Agreement or the transactions contemplated
hereby and destroy or cause to be destroyed all notes,
memoranda, summaries, analyses, compilations and other writings
related thereto or based thereon prepared by the party furnished
such documents and information or its Representatives.
ARTICLE XIV.6 No Shop.
Subject to the duties imposed by applicable Law, prior to the
earlier of (i) the Closing or (ii) the termination of this
Agreement pursuant to Section 11.01 hereof, Sellers will not
take, nor will they permit the Company, or any other Affiliate
of Sellers (or authorize or permit any investment banker,
financial advisor, attorney, accountant or other Person retained
by or acting for or on behalf of Sellers, the Company or any
such Affiliate) to take, directly or indirectly, any action to
solicit, encourage, receive, negotiate, assist or otherwise
facilitate any offer or inquiry from any Person concerning an
Acquisition Proposal.
ARTICLE XIV.7 Noncompetition.
(a) Sellers will, for a period of one (1) year from the Closing
Date, refrain from, either alone or in conjunction with any
other Person, or directly or indirectly through their present or
future Affiliates:
(i) employing, engaging or seeking to employ or engage
any Person who within the prior six (6) months had been an
officer or employee of the Company, unless such officer or
employee (A) resigns voluntarily (without any solicitation
from Sellers or any of its Affiliates) or (B) is
terminated by the Company after the Closing Date;
(ii) causing or attempting to cause (A) any client,
customer or supplier of the Company to terminate or
materially reduce its business with the Company or (B) any
officer, employee or consultant of the Company to resign
or sever a relationship with the Company; or
(iii) participating or engaging in (other than through the
ownership of five percent (5%) or less of any class of
securities registered under the Securities Exchange Act of
1934, as amended), or otherwise lending assistance
(financial or otherwise) to any Person participating or
engaged in, a Competing Business in any jurisdiction
listed in Schedule 14.07 of the Disclosure Schedule, which
are all of the jurisdictions in which the Company
participates or engages in such line of business on the
Closing Date.
(b) The parties hereto recognize that the Laws and public
policies of the various states of the United States may differ
as to the validity and enforceability of covenants similar to
those set forth in this Section. It is the intention of the
parties that the provisions of this Section be enforced to the
fullest extent permissible under the Laws and policies of each
jurisdiction in which enforcement may be sought, and that the
unenforceability (or the modification to conform to such Laws or
policies) of any provisions of this Section shall not render
unenforceable, or impair, the remainder of the provisions of
this Section. Accordingly, if any provision of this Section
shall be determined to be invalid or unenforceable, such
invalidity or unenforceability shall be deemed to apply only
with respect to the operation of such provision in the
particular jurisdiction in which such determination is made and
not with respect to any other provision or jurisdiction.
(c) The parties hereto acknowledge and agree that any remedy
at Law for any breach of the provisions of this Section would be
inadequate, and Sellers hereby consent to the granting by any
court of an injunction or other equitable relief, without the
necessity of actual monetary loss being proved, in order that
the breach or threatened breach of such provisions may be
effectively restrained.
(d) Notwithstanding anything to the contrary set forth herein,
the Shareholders (and their heirs, successors and assigns) may
(i) continue to hold, directly or indirectly, interests, of any
size in the Company, (ii) be employed by, or act as consultants
to the Company and (iii) may consult with one another and/or
enter into agreements with one another related to the business
or operations of the Company or their respective interests in
the Company.
ARTICLE XIV.8 Waiver
Any term or condition of this Agreement may be waived at any
time by the party that is entitled to the benefit thereof, but
no such waiver shall be effective unless set forth in a written
instrument duly executed by or on behalf of the party waiving
such term or condition. No waiver by any party of any term or
condition of this Agreement, in any one or more instances, shall
be deemed to be or construed as a waiver of the same or any
other term or condition of this Agreement on any future
occasion. All remedies, either under this Agreement or by Law
or otherwise afforded, will be cumulative and not alternative.
ARTICLE XIV.9 Amendment.
Except for amendments, supplements and modifications to the
Disclosure Schedule by the Company or the Sellers prior to the
Closing, this Agreement may be amended, supplemented or modified
only by a written instrument duly executed by or on behalf of
Purchaser, on the one hand, and the Sellers, on the other hand.
ARTICLE XIV.10 No Third Party Beneficiary.
Except as provided in Sections 3.08, 5.03, 5.04 and 12.02
hereof, the terms and provisions of this Agreement are intended
solely for the benefit of each party hereto and their respective
heirs, successors or permitted assigns, and it is not the
intention of the parties to confer third-party beneficiary
rights upon any other Person.
ARTICLE XIV.11 No Assignment; Binding Effect.
Neither this Agreement nor any right, interest or obligation
hereunder may be assigned by any party hereto without the prior
written consent of the other party hereto and any attempt to do
so will be void, except (a) for assignments and transfers by
operation of Law and (b) that Purchaser may assign any or all of
its rights, interests and obligations hereunder to a
wholly-owned subsidiary, provided that any such subsidiary
agrees in writing to be bound by all of the terms, conditions
and provisions contained herein, but no such assignment referred
to in clause (b) shall relieve Purchaser of its obligations
hereunder. Subject to the preceding sentence, this Agreement is
binding upon, inures to the benefit of and is enforceable by the
parties hereto and their respective successors and assigns.
ARTICLE XIV.12 Headings.
The headings used in this Agreement have been inserted for
convenience of reference only and do not define or limit the
provisions hereof.
ARTICLE XIV.13 Invalid Provisions.
If any provision of this Agreement is held to be illegal,
invalid or unenforceable under any present or future Law, and if
the rights or obligations of any party hereto under this
Agreement will not be materially and adversely affected thereby,
(a) such provision will be fully severable, (b) this Agreement
will be construed and enforced as if such illegal, invalid or
unenforceable provision had never comprised a part hereof, and
(c) the remaining provisions of this Agreement will remain in
full force and effect and will not be affected by the illegal,
invalid or unenforceable provision or by its severance herefrom.
ARTICLE XIV.14 Governing Law.
This Agreement shall be governed by and construed in accordance
with the Laws of the State of California applicable to a
Contract executed and performed in such State, without giving
effect to the conflicts of laws principles thereof.
ARTICLE XIV.15 Counterparts.
This Agreement may be executed in any number of counterparts,
each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the duly authorized officer of each party hereto as
of the date first above written.
"PURCHASER"
JACK HENRY & ASSOCIATES, INC.
a Delaware corporation
By:
Name:
Title:
"SELLERS"
By:
Name: David Held
Title: Trustee
of the David Held
Revocable
Inter Vivos Trust
of June 9, 1988
By:
Name: John Landis
Title: Trustee
of the Landis
Family Trust,
dated April 18, 1997
By:
Name: Janis Prupes
Title: Trustee
of the Prupes
Family Trust,
dated May 12, 1983
EXHIBIT A
PURCHASE PRICE SCHEDULE
SELLERS CONSIDERATION
The David Held Revocable Inter $14,666,666.666*
Vivos Trust of June 9, 1988
The Landis Family Trust, dated $14,666,666.666*
April 18, 1997
The Prupes Family Trust dated May $14,666,666.666*
12, 1983
* Representing 33 % of the aggregate
consideration of
$44,000,000.
This amount does
not include any
fees or expenses
payable by the
Sellers on the
Closing Date.
EXHIBIT B
SELLERS' CERTIFICATE
EXHIBIT C
SECRETARY'S CERTIFICATE OF COMPANY
EXHIBIT D
OFFICER'S CERTIFICATE OF PURCHASER
EXHIBIT E
SECRETARY'S CERTIFICATE OF PURCHASER
EXHIBIT F
OPINION OF COUNSEL
LOAN AND NOTE MODIFICATION AGREEMENT
THIS LOAN AND NOTE MODIFICATION AGREEMENT (the "Amendment") is
entered into this ___ day of June, 2000 by and between JACK
HENRY & ASSOCIATES, INC., a Delaware corporation ("Company"),
and COMMERCE BANK, N.A., a national banking association ("Bank").
WHEREAS, (i) Company and Bank entered into that certain Line of
Credit Loan Agreement dated September 7, 1999 (the "Loan
Agreement"), and (ii) Company executed and delivered to Bank
that certain Line of Credit Note of even date therewith in the
aggregate principal amount of $40,000,000 (the "Note) in
connection with the Loan Agreement; and
WHEREAS, Company and Bank desire to modify and amend certain
provisions of the Loan Agreement and the Note to, among other
things, increase the amount of the Line of Credit to
$75,000,000, reducing to $50,000,000 on September 15, 2000.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth herein, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
1. AMENDMENT OF THE LOAN AGREEMENT. The Loan Agreement
is hereby amended as follows:
(A) SECTION 1.1 OF THE LOAN AGREEMENT IS
AMENDED AND RESTATED TO READ:
1.1 LINE OF CREDIT. SUBJECT
TO THE TERMS OF THIS AGREEMENT,
BANK SHALL LEND COMPANY FROM
TIME TO TIME UNTIL THE
TERMINATION HEREOF, SUCH SUMS
AS COMPANY MAY REQUEST, BUT
WHICH SHALL NOT EXCEED THE
AGGREGATE PRINCIPAL AMOUNT OF:
(I) SEVENTY-FIVE MILLION AND
NO/100 DOLLARS ($75,000,000)
TO, BUT NOT INCLUDING,
SEPTEMBER 15, 2000 AND (II)
FIFTY MILLION AND NO/100
DOLLARS ($50,000,000) FROM
SEPTEMBER 15, 2000 TO, BUT NOT
INCLUDING, JUNE 15, 2001,
UNLESS RENEWED BY WRITTEN
AGREEMENT BETWEEN BANK AND
COMPANY (THE "TERMINATION
DATE"). IN ADDITION TO THE
FOREGOING, THE LINE OF CREDIT
SHALL BE DEEMED TO
AUTOMATICALLY TERMINATE IF THE
OCCURRENCE OF AN EVENT OF
DEFAULT (AS DEFINED UNDER
ARTICLE V HEREOF) CAUSES THE
PRINCIPAL BALANCE AND ALL
ACCRUED INTEREST UNDER THE LINE
OF CREDIT NOTE (AS DEFINED IN
SECTION 1.2) TO BECOME
IMMEDIATELY DUE AND PAYABLE.
(B) SECTION 1.4(C) OF THE LOAN AGREEMENT IS
AMENDED BY REPLACING THE PRICING GRID IN
SECTION 1.4(C) WITH THE FOLLOWING:
QUARTER-ENDING EURODOLLAR
LEVEL1 FUNDED MARGIN UNUSED FEE
DEBT/EBITDA
1 > 1.0 100bps 25bps
2 0.5 to 1.0 87bps 20bps
3 0.50 75bps 20bps
1 Level 1 pricing will apply from closing through
September 15, 2000. Thereafter, pricing will float based
upon Quarter-Ending Funded Debt to EBITDA measured on a
trailing four quarter basis.
(c) Section 3.9 of the Loan Agreement is
amended by and restated to read:
3.9. Net Worth. Maintain a minimum
consolidated net worth (determined in
accordance with GAAP) of $122,000,000, plus
(a) step-ups equal to 50% of net income as of
the end of each fiscal quarter and (b) 75% of
cash proceeds of any direct equity issuance
(other than stock (i) issued under employee
stock purchase plans, dividend reinvestment
plans, stock option plans and in merger and
acquisition transactions and (ii) that is not
directly owned by Company).
(d) Article III of the Loan Agreement is
amended by adding the following Section 3.13:
3.13 Funded Debt to EBITDA. Maintain a ratio
of Funded Debt to EBITDA of no more than 2.0
to 1 on a consolidated basis, with EBITDA
determined by adding the sum of EBITDA for the
most recent trailing four quarters.
2. AMENDMENT OF THE NOTE. The Note is hereby amended
as follows:
(a) The principal amount of the Note is
increased to Seventy-Five Million and No/100
Dollars ($75,000,000) until September 15, 2000,
which principal amount will decrease to Fifty
Million and No/100 Dollars from September 15,
2000 until June 15, 2001.
(b) The second paragraph of the Note is
amended and restated to read:
Principal in an amount sufficient to reduce
outstanding principal under this Line of
Credit Note to no more than $50,000,000 is due
and payable on September 15, 2000. From
September 15, 2000 through June 15, 2001, the
aggregate principal amount that can be
outstanding under this Line of Credit Note
shall be no more than $50,000,000. All
outstanding principal under this Line of
Credit Note is due and payable on June 15, 2001.
2. REPRESENTATIONS AND WARRANTIES. Company hereby
represents and warrants to Bank as follows:
(A) NO DEFAULT CURRENTLY EXISTS UNDER THE
LOAN AGREEMENT, THE NOTE OR THE OTHER LOAN
DOCUMENTS AND NO EVENT HAS OCCURRED WHICH WITH
THE PASSAGE OF TIME OR THE GIVING OF NOTICE,
OR BOTH, WOULD CONSTITUTE A DEFAULT UNDER THE
LOAN DOCUMENTS.
(B) THE CERTIFICATE OF INCORPORATION AND
BYLAWS OF COMPANY, THE ARTICLES OF
INCORPORATION OR CERTIFICATE OF LIMITED
PARTNERSHIP, AS APPLICABLE, FOR EACH
GUARANTOR, AND THE BYLAWS OR PARTNERSHIP
AGREEMENT, AS APPLICABLE, FOR EACH GUARANTOR
HAVE IN EACH CASE NOT BEEN AMENDED, MODIFIED
OR SUPPLEMENTED SINCE SEPTEMBER 7, 1999.
(C) ALL OF THE REPRESENTATIONS AND
WARRANTIES MADE BY COMPANY IN THE LOAN
DOCUMENTS ARE TRUE AS IF MADE ON THE DATE HEREOF.
2. CONDITIONS PRECEDENT. Closing of this Amendment
and the transactions contemplated hereunder is conditioned on
the following:
(A) RECEIPT BY BANK OF CERTIFICATES OF GOOD
STANDING, DATED NOT MORE THAN TEN (10) DAYS
PRIOR TO THE DATE OF THIS AMENDMENT FOR
COMPANY AND EACH GUARANTOR FROM THEIR
RESPECTIVE STATES OF ORGANIZATION.
(B) AN OPINION OF COUNSEL TO COMPANY AND THE
GUARANTORS, WITH RESPECT TO SUCH MATTERS AS
REQUESTED BY BANK.
(C) CERTIFIED COPIES OF EACH RESOLUTION OF
(I) COMPANY'S BOARD OF DIRECTORS DULY
AUTHORIZING THE ACQUISITION OF SYMITAR AND THE
EXECUTION AND DELIVERY OF THIS AMENDMENT AND
THE CONSUMMATION OF THE TRANSACTIONS
CONTEMPLATED HEREIN AND (II) EACH GUARANTOR'S
BOARD OF DIRECTORS APPROVING THIS AMENDMENT
AND THE CONSUMMATION OF THE TRANSACTIONS
CONTEMPLATED HEREIN.
(D) RECEIPT BY BANK OF THE GUARANTORS'
ACKNOWLEDGEMENT AND CONSENT, EXECUTED BY EACH
OF THE GUARANTORS.
(E) ANY OTHER DOCUMENTS, INSTRUMENTS AND
REPORTS AS BANK SHALL REASONABLY REQUEST.
2. INTERPRETATION. From and after the execution of
this Amendment by all of the parties hereto, all references in
the Loan Agreement, the Note, the Guaranty and the other Loan
Documents to "this Agreement," "hereof," "herein," and similar
terms shall mean or refer to such Loan Documents as amended by
this Amendment, and all references in other Loan Documents to
such documents shall mean such Loan Documents as amended by this
Amendment. Unless otherwise specifically defined herein, all
defined terms shall have the meaning given them in the Loan
Agreement. Section headings are inserted in this Amendment for
convenience of reference only and shall not be used in the
interpretation of this Amendment.
3. RATIFICATION. UNLESS SPECIFICALLY AMENDED OR
MODIFIED BY THE TERMS OF THIS AMENDMENT, ALL OTHER TERMS OF THE
LOAN AGREEMENT, THE NOTE AND THE OTHER LOAN DOCUMENTS SHALL
REMAIN UNCHANGED AND IN FULL FORCE AND EFFECT AND ARE HEREBY
RATIFIED AND CONFIRMED.
4. COUNTERPARTS. THIS AMENDMENT MAY BE EXECUTED IN
COUNTERPARTS, WHICH WHEN TAKEN TOGETHER, SHALL CONSTITUTE ONE
AND THE SAME DOCUMENT.
5. STATUTORY NOTICE. ORAL AGREEMENTS OR COMMITMENTS TO
LOAN MONEY, EXTEND CREDIT OR TO FORBEAR FROM ENFORCING REPAYMENT
OF A DEBT, INCLUDING PROMISES TO EXTEND OR RENEW SUCH DEBT, ARE
NOT ENFORCEABLE. TO PROTECT YOU (BORROWER) AND US (CREDITOR)
FROM MISUNDERSTANDING OR DISAPPOINTMENT, ANY AGREEMENTS WE REACH
COVERING SUCH MATTERS ARE CONTAINED IN THIS WRITING, WHICH IS
THE COMPLETE AND EXCLUSIVE STATEMENT OF THE AGREEMENT BETWEEN US
EXCEPT AS WE MAY LATER AGREE IN WRITING.
BY SIGNING BELOW, YOU AND WE AGREE THAT THERE ARE NO UNWRITTEN
ORAL AGREEMENTS BETWEEN US.
6. WAIVER OF JURY TRIAL. COMPANY HEREBY WAIVES TRIAL
BY JURY IN ANY ACTION OR PROCEEDING TO WHICH COMPANY AND BANK
MAY BE PARTIES ARISING OUT OF, IN CONNECTION WITH, OR IN ANY WAY
PERTAINING TO, THIS AMENDMENT, THE LOAN AGREEMENT, THE NOTE AND
ANY OTHER LOAN DOCUMENT. IT IS AGREED AND UNDERSTOOD THAT THIS
WAIVER CONSTITUTES A WAIVER OF TRIAL BY JURY OF ALL CLAIMS
AGAINST ALL PARTIES TO SUCH ACTIONS OR PROCEEDINGS, INCLUDING
CLAIMS AGAINST PARTIES WHO ARE NOT PARTIES TO THIS AGREEMENT.
THIS WAIVER IS KNOWINGLY, WILLINGLY AND VOLUNTARILY MADE BY
COMPANY, AND COMPANY HEREBY REPRESENTS THAT NO REPRESENTATIONS
OF FACT OR OPINION HAVE BEEN MADE BY ANY INDIVIDUAL TO INDUCE
THIS WAIVER OF TRIAL BY JURY OR TO IN ANY WAY MODIFY OR NULLIFY
ITS EFFECT. COMPANY FURTHER REPRESENTS AND WARRANTS THAT IT HAS
BEEN REPRESENTED IN THE SIGNING OF THIS AGREEMENT AND IN THE
MAKING OF THIS WAIVER BY INDEPENDENT LEGAL COUNSEL, OR HAS HAD
THE OPPORTUNITY TO BE REPRESENTED BY INDEPENDENT LEGAL COUNSEL
SELECTED OF ITS OWN FREE WILL, AND THAT IT HAS HAD THE
OPPORTUNITY TO DISCUSS THIS WAIVER WITH COUNSEL.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be executed by their duly authorized officers on
the day and year first above written.
JACK HENRY & ASSOCIATES, INC.
By:
Name: Michael E. Henry
Title: Chief Executive Officer
COMMERCE BANK, N.A.
By:
Name: Joe McCaddon
Title: First Vice President
GUARANTORS' ACKNOWLEDGEMENT AND CONSENT
Each of the undersigned has heretofore executed and
delivered to Bank a Guaranty dated September 7, 1999 and hereby
consents to the Loan and Note Modification Agreement as set
forth above, including without limitation the increase in the
amount of the Line of Credit and the extension of the
Termination Date, and, subject to such Amendment, confirms that
the Guaranty and all of the undersigneds' obligations thereunder
remain in full force and effect. Each of the undersigned
further agrees that its consent to any further amendments to the
Loan Agreement shall not be required as a result of this consent
having been obtained.
COMMLINK SERVICES, L.P.
By:__________________________
Name:________________________
Title:_________________________
PEERLESS GROUP, INC.
By:___________________________
Name:________________________
Title:_________________________
OPEN SYSTEMS GROUP, INC.
By:___________________________
Name:________________________
Title:_________________________
VERTEX, INC.
By:___________________________
Name:________________________
Title:_________________________
FOR IMMEDIATE RELEASE
Company: Jack Henry & Associates, Inc.,
663 Highway 60
P.O. Box 807
Monett, MO 65708
ANALYST CONTACT: Terry W. Thompson IR CONTACT: Becky Pendleton Reid
Chief Financial Officer Len Cereghino & Co.
(417) 235-6652 (206) 448-1996
JACK HENRY & ASSOCIATES FINALIZES SYMITAR SYSTEMS ACQUISITION
Monett, MO -- June 7, 2000. Jack Henry & Associates (Nasdaq:
JKHY) today announced it has completed its purchase of Symitar
Systems, Inc. (Symitar) for $44 million. The cash transaction
is expected to be immediately accretive to earnings.
Headquartered in San Diego, California, privately held Symitar
is a provider of in-house data processing solutions for credit
unions. Symitar had strong profits on revenues of $33 million
for the year ended December 31, 1999.
"The acquisition of Symitar greatly increases our presence in
the credit union market, which is known for a commitment to
investing in technology," stated Michael R. Wallace, President
and COO of Jack Henry. The acquisition adds 237 credit union
customers to Jack Henry's current count of 90. "With the
addition of Symitar's comprehensive product offerings, which
run on the IBM RS/6000, we can expand our reach into a market
that we have not yet tapped - the 2,500 credit unions with
over $25 million in assets." In conjunction with the merger,
Bruce Cormode has been named Presidnet of Symitar, which will
operate as a division of Jack Henry.
Jack Henry & Associates, Inc. provides integrated computer
systems and ATM networking products for banks and credit
unions. Jack Henry markets and supports its systems throughout
the United States and has over 2,850 financial institution
clients serving millions of customers nationwide. For
additional information on Jack Henry, visit the company's web
site at www.jackhenry.com.
Statements made in this news release that are not historical
facts are forward-looking information. Actual results may
differ materially from those projected in any forward-looking
information. Specifically, there are a number of important
factors that could cause actual results to differ materially
from those anticipated by any forward-looking information.
Additional information on these and other factors which could
affect the Company's financial results are included in its
Securities and Exchange Commission (SEC) filings on Form 10-K,
and these statements should be reviewed by potential
investors. Finally, there may be other factors not mentioned
above or included in the Company's SEC filings that may cause
actual results to differ materially from any forward-looking
information.
-thirty-
