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): September 08, 1999
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.
(a) On September 8, 1999, through a wholly-owned subsidiary, Jack Henry
& Associates, Inc., a Delaware corporation (the Company ) completed the
acquisition of certain assets comprising the BancTec Financial Systems unit
( BFS ) of BancTec, Inc. ( BancTec ) for $50,000,000 in cash and the assumption
of approximately $8,000,000 in debt, subject to possible post-closing adjustment
(the Purchase Price ). BFS provides a broad range of products and services,
including software, account processing capabilities and six data center
operations to over 800 community banks throughout the United States and the
Caribbean. The acquisition was completed pursuant to the Agreement for Purchase
and Sale of Assets dated as of September 1, 1999, by and among the Company, Open
Systems Group, Inc., a wholly-owned subsidiary of the Company, and BancTec. The
Purchase Price was determined by arm s-length negotiations between
representatives of the Company and BancTec.
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, between the Company and Commerce Bank, N.A.
(b) The Company expects to continue using the purchased assets in BFS
historic business of serving the data processing needs of community banks.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial statements of businesses acquired.
It is impractical to provide the required financial information at the
time of filing this report. The required financial information will be filed by
amendment to this Form 8-K not later than November 22, 1999.
(b) Pro Forma Financial Information.
It is impractical to provide the required pro forma financial information
at the time of filing this report. The required pro forma financial information
will be filed by amendment to this Form 8-K not later than November 22, 1999.
(c) Exhibits
Exhibit
Number Title
2.1 Agreement for Sale and Purchase of Assets dated September 1, 1999 by
and among the Company, Open Systems Group, Inc. and BancTec, Inc.
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 Agreement dated September 7, 1999 between
the Company and Commerce Bank, N.A.
99.1 Company Press Release dated September 9, 1999.
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: September 15, 1999 JACK HENRY & ASSOCIATES, INC.
(Registrant)
By: /S/ Michael E. Henry
Michael E. Henry
Chairman of the Board
EXHIBIT 2.1
AGREEMENT FOR PURCHASE AND SALE OF ASSETS
THIS AGREEMENT is entered into effective as of the 1st day of September, 1999 by
and between BancTec, Inc. a Delaware corporation (hereinafter referred to as
"SELLER") Jack Henry & Associates, Inc., a Delaware corporation ( JHA ) and
JHA s wholly-owned subsidiary Open Systems Group, Inc., a Delaware corporation
(hereinafter referred to as "BUYER").
WHEREAS, SELLER desires to sell to BUYER and BUYER desires to purchase from
SELLER substantially all of the assets and assume the associated liabilities of
SELLER s community banking business unit known as BancTec Financial Systems (the
Business ); and
NOW THEREFORE, in consideration of the mutual representations, warranties,
covenants and agreements, and upon the terms, and subject to the conditions,
hereinafter set forth, the parties do hereby agree as follows:
1.0 DEFINITIONS
For the purposes of this Agreement, the following terms shall have the
meanings set forth below. Unless specifically stated otherwise, the
following definitions refer solely to the Business:
1.1 Accounts Payable shall mean those specific accounts payable
obligations entered into by SELLER on or before the Closing Date,
all as listed on Schedule 1.1.
1.2 Accounts Receivable shall mean accounts receivable and other
rights to receive unpaid monies with respect to Products/Services
shipped or provided to SELLER s customers on or before the Closing
Date, as detailed on Schedule 1.2.
1.3 Affiliate shall mean, with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under common
control with such first Person. The term control shall mean the
power to direct the affairs of a Person by reason of ownership of
voting stock, by contract or otherwise. The term AAffiliates@ shall
include all Subsidiaries of such Person.
1.4 Agency shall mean any court or any federal, state, municipal,
local or other governmental department, commission, board, bureau or
agency.
1.5 Assets shall mean all of the following assets pertaining to the
Business:
(a) Accounts Receivable
(b) Business Records
(c) Physical Assets
(d) Customer Contracts
(e) Intellectual Property
(f) Inventory
(g) Pre-Paid Expenses
(h) Vendor Contracts
1.6 "Assumed Liabilities" shall mean those liabilities, obligations and
commitments listed on Schedule 1.6 hereto.
1.7 "Business Records" shall mean all documentation, business and
marketing records, accounting and operating records, customer and
supplier lists, customer files and other written material primarily
relating to the Business.
1.8 "Closing Date" shall mean the date established pursuant to Section 8
hereof.
1.9 "Customer Contracts" shall mean all contracts, agreements and
purchase orders between SELLER and purchasers of Products/Services
(the ACustomer Contracts@).
1.10 Deferred Revenue shall mean a liability listed in the Business
financial statements as of the Closing Date in an amount not to
exceed $6,365,000 which reflects payments made by SELLER s customers
for Products/Services which have not yet been delivered or
performed, which delivery and performance is assumed by BUYER
pursuant to this Agreement.
1.11 "Encumbrance" shall mean any security interest, mortgage, lien,
pledge, claim, lease, agreement, right of first refusal, option or
any other restriction which would affect the transfer to BUYER of
SELLER s ownership and license rights pursuant to the terms of this
Agreement.
1.12 "Excluded Assets" shall mean the assets listed on Schedule 1.12.
1.13 Intellectual Property shall mean intellectual property owned by
SELLER and/or used by SELLER in the Business, consisting of SELLER s
proprietary software and related source code and documentation,
registered and common law trademarks and service marks, registered
and common law copyrights, patents, patent applications, processes,
trade secrets, knowhow, training manuals and materials and all other
intellectual property, as listed in Schedule 3.6.
1.14 "Inventory" shall mean the Business inventory of software Products,
documents, manuals and other written or recorded materials related
thereto, with respect to the Products/Services, including all
related materials, as well as those hardware products and third
party software products purchased for pending customer installations
and other office supplies and consumables purchased for internal use
by the employees of the Business, which are included in inventory
in the Business financial statements as of the Closing Date.
1.15 "Person" shall mean any individual, corporation, association,
partnership, joint venture, trust, Agency or other entity.
1.16 "Physical Assets" shall mean the physical assets (other than
Inventory), including computer equipment, office equipment,
furniture and fixtures used by the Business, as detailed on Schedule
3.5, subject to the exclusions and limitations set forth in such
schedule.
1.17 Pre-Paid Expenses shall mean payments made by SELLER to its
vendors for products or services which have not yet been delivered
or performed, as set forth on Schedule 1.17.
1.18 Products/Services shall mean the products and services sold and/or
marketed by SELLER as described in Schedule 1.18.
1.19 "Schedules" shall mean the compiled Disclosure Schedules, as the
same are amended by the Bring-Down Schedule as of the Closing
Date, and which are referred to and incorporated in this Agreement
by reference.
1.20 Subsidiaries of any person shall mean any other Person which, now
or at any time hereafter, is directly or indirectly owned 50% or
more (in terms of voting securities or other voting ownership or
partnership interest) by such first Person.
1.21 Title shall mean all of SELLER s ownership rights with respect to
Assets owned by SELLER and all of SELLER s rights as a licensee with
respect to Assets licensed by SELLER from a third party.
1.22 Vendor Contracts shall mean those contracts with vendors and any
other contracts with SELLER s suppliers which are utilized
exclusively by the Business, which contracts are listed Schedule
1.22.
2.0 TERMS OF PURCHASE AND SALE OF ASSETS
Upon the terms and subject to the conditions set forth in this Agreement,
BUYER agrees to purchase from SELLER and SELLER agrees to sell, transfer,
assign and deliver to BUYER as of the Closing Date, the Assets, free and
clear of all Encumbrances, in accordance with the following:
2.1 Purchase Price. The purchase price for the Assets shall be the sum
of $50,000,000, to be paid by BUYER to SELLER at the Closing.
2.2 Transfer of Assets. SELLER agrees to transfer all rights and title
to the Assets to BUYER as of the Closing Date.
2.3 Assignment and Assumption. BUYER shall assume only the liabilities,
obligations and commitments of SELLER specified in the Assignment
and Assumption Agreement executed in the form attached hereto as
Exhibit 1. BUYER shall not assume or be responsible for any
liability of SELLER which is not enumerated in the Assignment and
Assumption Agreement or which in any way pertains to any liability
of SELLER for (a) federal, state or local income, franchise,
property, sales or use taxes; (b) resulting from violations of any
applicable laws or regulations prior to the Closing; (c) any
employee liabilities (other than accrued vacation) existing on or
prior to the Closing Date, including workers compensation,
retirement benefits, disability plans, profit-sharing plans or
pensions, or any other severance payments; (d) claims arising out of
any product, program or material delivered or services performed
prior to the Closing Date; or (e) any litigation pending or
threatened against SELLER or the Assets prior to Closing. SELLER
agrees that with respect to sales and use taxes included in invoices
issued prior to the Closing Date for Products/Services which have
not been paid by customers prior to the Closing Date, BUYER shall be
entitled to retain those payments when received from customers of
the Business and SELLER agrees to be responsible for making payments
to the applicable tax authorities for such taxes.
2.4 Accounts Receivable Received by SELLER. In the event that
subsequent to the Closing Date SELLER receives any Accounts
Receivable paid by customers for Products/Services provided prior to
the Closing Date, SELLER agrees to remit such amounts to BUYER
within 30 days.
2.5 Other Payments Received by SELLER. In the event that subsequent to
the Closing Date SELLER receives any other payments from customers
or vendors relating to the Products/Services, SELLER agrees to remit
such amounts to BUYER within 30 business days.
3.0 REPRESENTATIONS AND WARRANTIES OF SELLER
SELLER hereby represents and warrants to JHA and BUYER as follows:
3.1 Organization. SELLER is a corporation duly organized, validly
existing and in good standing under the laws of the State of
Delaware. The SELLER and/or its former subsidiary BancTec USA, Inc.
is authorized to conduct business and is in good standing under the
laws of each jurisdiction where such qualification is required and
where the failure to so qualify would in the aggregate not have a
material adverse effect on the Business. For purposes of this
Agreement, the term material adverse effect means, when used in
connection with the Business, any change, effect, event, occurrence
or development that is, or reasonably likely to be, materially
adverse to the Business, results of operations or condition
(financial or other) of the Business, taken as a whole. SELLER s
wholly-owned subsidiary, BancTec USA, Inc., was merged into SELLER
effective July 22, 1999. Prior to such merger, the Business was
conducted under the name of BancTec USA, Inc. The SELLER now has no
subsidiaries involved in the conduct of the Business or which owns
or operates any of the Assets. The SELLER has the full corporate
power and authority to carry on the Business and to own and use the
Assets.
3.2 Authority for Agreement. The execution and delivery by SELLER of
this Agreement and the consummation by SELLER of the transactions
contemplated by this Agreement (a) have been duly authorized and
approved by all necessary corporate action; (b) will not result in a
breach of SELLER's Certificate of Incorporation or By-Laws; (c) will
not result in a breach of any of the terms or provisions of, or
constitute a default or a condition which upon notice or lapse of
time or both would ripen into a default under or right to accelerate
or terminate, any indenture, agreement, instrument or obligation to
which SELLER is a party or by which SELLER or any of its properties
is bound; and (d) will not constitute a violation of any law, order,
injunction, rule, regulation or restriction applicable to SELLER or
the Assets. This Agreement is not required to be approved by any
vote of SELLER s stockholders. This Agreement is the valid and
binding obligation of SELLER in accordance with its terms.
3.3 Title. SELLER is the owner of the Assets free and clear of all
Encumbrances except as specifically set forth on Schedule 3.3
hereto. Upon consummation of the Closing and SELLER's execution and
delivery of the bills of sale, deeds and other instruments of
transfer, conveyance and assignment to be delivered by SELLER
pursuant to this Agreement, BUYER will acquire good and marketable
title to the Assets free and clear of all Encumbrances. SELLER has
no material obligation or liability, accrued, contingent or
otherwise, asserted or unasserted, related to the Assets for which
BUYER could become liable, other than the Assumed Liabilities.
3.4 Consents. Except as listed in Schedule 3.4, no consent from or
approval by any third party is necessary to transfer the Assets to
BUYER or to consummate any of the other transactions as contemplated
by this Agreement. The parties agree to use their best efforts to
obtain certain consents specified in Schedule 3.4 by the Closing.
3.5 Physical Assets. Schedule 3.5 contains a true and complete list of
the Physical Assets as reflected in the Business accounting
records, excluding any physical assets which may be shared by the
Business and other organizations within SELLER.
3.6 Intellectual Property.
(a) Schedule 3.6 contains a true and correct list of SELLER s (a)
trademarks (registered and common law) used in the Business,
(b) registered and unregistered copyrights used in the
Business, (d) issued patents and patent applications owned by
SELLER or licensed to SELLER which are used in the Business
Products and (e) all other intellectual property and
technology rights owned or controlled or licensed to SELLER
which are used in the Business in the manner in which it is
presently conducted. SELLER has sufficient rights, title and
interest in the Intellectual Property to make the grants and
transfers contemplated by and agreed to be made under this
Agreement. Schedule 3.6 identifies which items of Intellectual
Property are included in the Assets being transferred to
BUYER pursuant to this Agreement, subject to the listed
limitations and exclusions. Schedule 3.6 also contains a true
and correct list of software products which are embedded in
the Products.
(b) SELLER 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 Schedule 3.6, SELLER has not entered
into an agreement that limits or restricts its right to use,
copy, modify, prepare derivatives of, sublicense, distribute
and otherwise market, severally or together, any of its
Intellectual Property. Except as set forth in Schedule 3.6,
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
SELLER, or with any independent sales person, distributor,
sublicensee or other remarketer or sales organization.
SELLER 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 has either (i) so
contributed or participated as an employee of SELLER 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 SELLER, or (iii) otherwise assigned
to SELLER the copyright in any Intellectual Property.
(e) The SELLER has taken efforts that are reasonable under the
circumstances to prevent the unauthorized disclosure to other
Persons of such of SELLER s trade secrets as would have a
material adverse effect on the Business.
(f) Except as specifically set forth in Schedule 3.6, and except
for products supplied to SELLER by third parties, SELLER has
no obligation to make any payments by way of royalty, fee,
settlement or otherwise to any Person in connection with
SELLER s present use, sublicensing, distribution or other
marketing of such Intellectual Property.
(g) No claim has been asserted against SELLER within the scope of
the Business 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
SELLER s trademarks pertaining to the Business, (iii) to the
effect that any past, present or projected act or omission by
SELLER infringes any rights of such Person to any copyright,
patent, trade secret, know-how or trademark, or (iv) that
challenges SELLER s right to use any of the Intellectual
Property.
3.7 Real Estate. SELLER does not own of record any Real Estate occupied
by or pertaining to the Business except as set forth on Schedule
3.7. Schedule 3.7 contains a true and correct list of locations at
which employees of the Business are located. Schedule 3.7 designates
which office leases are being assigned to BUYER and which locations
are not being transferred pursuant to this Agreement. As to those
specific leases being transferred to and assumed by BUYER, such
leases are in good standing, valid and effective, and SELLER is not
in default thereunder, except as specified in Schedule 3.7. Neither
SELLER, nor to its knowledge, any prior owner, occupant or tenant of
such leased premises has used hazardous materials at any facility or
site listed in Schedule 3.7.
3.8 Non-Real Estate Leases. Schedule 3.8 contains a true and correct
list of all non-real estate equipment/software being leased by
SELLER from third parties. Schedule 3.8 designates which leases are
being assigned to BUYER and which are not being assigned pursuant to
this Agreement. All such assigned leases are in good standing,
valid and effective, and SELLER is not in default thereunder except
as specified in Schedule 3.8.
3.9 Financial Statements. SELLER has provided to BUYER proforma
financial statements of the Business for the fiscal quarter ended
June 30, 1999 (the Most Recent Fiscal Quarter End ), a copy of
which is attached hereto as Exhibit 3.9, and for the fiscal year
ended December 31, 1998. The financial statements have been
prepared from the books and records of SELLER in accordance with
GAAP applied on a consistent basis throughout the periods covered
thereby (except as may be indicated in the notes to such financial
statements) and fairly present in all material respects the
financial condition of the Business as of the indicated dates and
the results of operations of the Business for the indicated periods,
are correct and complete in all material respects, and are
consistent with prior accounting policies and with the books and
records of SELLER; provided, however, that the interim statements
are subject to normal year-end adjustments.
3.10 Events Subsequent to Most Recent Fiscal Quarter End. Since the Most
Recent Fiscal Quarter End, there has not been any material adverse
change in the business, financial condition, operations, results of
operations, or future prospects of the Business.
3.11 Agreements, Contracts and Commitments. Except as set forth in
Schedule 3.11, SELLER has not breached, or received in writing any
claim or notice that it has breached, any of the terms or conditions
of any agreement, contract or commitment relating to the Business,
including all Customer Contracts. Each Customer Contract that has
not expired by its terms is in full force and effect and enforceable
against the parties thereto in accordance with its terms.
3.12 Employee Plans and Other Matters. All retirement, benefit and other
welfare plans established for the benefit of persons who are or were
employed in the Business are the sole responsibility of SELLER. No
liability of the Pension Benefit Guaranty Corporation has been
incurred with respect to such plans. None of the plans has an
accumulated funding deficiency. Neither SELLER nor any predecessor-
in-interest has ever contributed to any pension plan that is a
multi-employer plan for the benefit of employees involved in the
Business. SELLER has been in compliance with all applicable laws
respecting employment and employment practices, terms and conditions
of employment, wages and hours and occupational health and safety
pertaining to the Business and its employees. There are no charges,
investigations, administrative proceedings, or formal complaints of
discrimination pending or, to the knowledge of SELLER, threatened
before the Equal Employment Opportunity Commission or any federal,
state or local agency or court against SELLER pertaining to the
Business or the employees of the Business.
3.13 Labor Matters. SELLER is not a party to, or bound by, any
collective bargaining agreement, contract or other agreement or
understanding with a labor union or labor organization. There is no
unfair labor practice or labor arbitration proceeding pending or
threatened against SELLER relating to the Business. There are no
organizational efforts with respect to the formation of a collective
bargaining unit presently being made or threatened involving
employees of SELLER.
3.14 Litigation. Except as set forth in Schedule 3.14, as of the date
hereof, there is no suit, claim, action, proceeding, at law or in
equity, or investigation pending or threatened against SELLER
pertaining to the Business before any court or other governmental
entity, and the SELLER and its Business are not subject to any
outstanding order, writ, judgment, injunction, decree or arbitration
order or award. As of the date hereof, there are no suits, claims,
actions, proceedings or investigations pending or threatened,
seeking to prevent, hinder, modify or challenge the transactions
contemplated by this Agreement.
3.15 Taxes. Except as would not have a material adverse effect on the
Business, (a) all federal, state and local tax returns required to
be filed by SELLER on or prior to the date hereof have been filed;
(b) all Taxes and assessments including, without limitation,
estimated tax payments, excise, unemployment, social security,
occupation, franchise, property, sales and use taxes, and all
penalties or interest in respect thereof now or heretofore due and
payable by or with respect to SELLER and the Business have been
paid; (c) all federal, state and local withholdings of SELLER
including, without limitation, withholding taxes, social security,
and any similar taxes, have been withheld and paid over as required
by law; and (d) no extension with any taxing authority concerning
any tax liability of or with respect to SELLER or the Business is
currently outstanding. There are no tax liens, whether imposed by
any federal, state, local or foreign taxing authority, outstanding
against any of the Assets, properties or Business of SELLER. For
purposes of this Agreement, Taxes shall mean all federal, state,
local, foreign income, property, sales, use, excise, employment,
payroll, franchise, withholding and other taxes, tariffs, charges,
fees, levies, imposts, duties, licenses or other assessments of
every kind and description, together with any interest and any
penalties, additions to tax or additional amounts imposed by any
taxing authority.
3.16 Year 2000. Schedule 3.16 lists the Products, including revision
levels and product dependencies, for which the following
representations and warranties apply (the Y2K Products ): Y2K
Products, when performing processing functions which are dependent
upon the usage of calendar dates, will be capable of processing
dates before, on and after January 1, 2000, including recognizing
the year 2000 as a leap year, without impairment of the function of
the Y2K Products when used in accordance with the documentation
provided by SELLER with such Y2K Products, provided that (a) all
associated products (such as hardware, software and firmware) used
in combination with the Y2K Products properly exchange date data
with the Y2K Products and (b) no unauthorized modifications have
been made to the Y2K Products.
3.17 Compliance with Laws. SELLER has complied with, is not in violation
of, and has not received any notices of violation with respect to,
any federal, state, local or foreign statute, law or regulation with
respect to the conduct of the Business, or the ownership or
operation of the Business.
3.18 No Bulk Sale. The sale of Assets contemplated hereunder is not a
Bulk Sale under any applicable state law and neither SELLER nor
BUYER shall be required to provide any bulk sales notices to
creditors.
3.19 Accounts Receivable. All Accounts Receivable represent amounts for
Products/Services shipped, delivered and/or provided to customers in
accordance with SELLER s contracts with its customers and with
SELLER s normal business practices and further represent a legal
obligation of the customer to make payment to SELLER. All Accounts
Receivable, including accrued amounts, provide for payment to be
made to SELLER at its principal office within at least 60 days from
date of invoice or represent amounts which are accrued for
Products/Services shipped or delivered to customers for which the
customer has not yet been invoiced. If any of the Accounts
Receivable resulting from sales of the ImageFirst TPS products, as
specified on Schedule 3.19 hereto and updated in the Final
Financial Statements as defined in Section 10.5 (the TPS
Receivables ), have not been collected by BUYER within 180 days from
the Closing Date, SELLER agrees to reimburse BUYER for 50% of the
then unpaid TPS Receivables within 30 days from the receipt of a
written request from BUYER. In the event that any of the then
unpaid TPS Receivables are later received by BUYER, BUYER agrees to
remit 50% of those amounts to SELLER. TPS Receivable amounts shall
not be discounted without the mutual written consent of the parties.
3.20 Condition of Property and Inventory. All of the non-inventory
tangible Assets are conveyed to BUYER on an as is and where is
basis. As of the Closing Date, the Inventory (net of reserves) is
of merchantable quality and includes no material amount of obsolete
or discontinued items or items that cannot be used by BUYER in the
Business in the ordinary course. All Inventory in the financial
statements has been recorded using the accounting method described
in the footnotes to the financial statements attached as Exhibit
3.9.
4.0 REPRESENTATIONS AND WARRANTIES OF BUYER
JHA and BUYER hereby jointly and severally represent and warrant to SELLER
as follows:
4.1 Organization. JHA and BUYER are corporations duly organized, validly
existing and in good standing under the laws of the State of
Delaware.
4.2 Authority for Agreement. The execution and delivery by BUYER of this
Agreement and the consummation by BUYER of the transactions
contemplated by this Agreement (a) have been duly authorized and
approved by all necessary corporate action; (b) will not result in a
breach of BUYER's or JHA s Certificate of Incorporation or By-Laws;
(c) will not result in a breach of any of the terms or provisions
of, or constitute a default or a condition which upon notice or
lapse of time or both would ripen into a default under, any
indenture, agreement, instrument or obligation to which BUYER or
JHA is a party or by which BUYER or JHA or any of their properties
is bound; and (d) to the best knowledge of BUYER or JHA will not
constitute a violation of any law, order, rule or regulation
applicable to BUYER, JHA or their properties. This Agreement is the
valid and binding obligation of BUYER and JHA in accordance with its
terms.
5.0 COVENANTS OF PARTIES
5.1 Conduct of Business. Prior to the Closing, SELLER will continue to
operate the Business in the usual, regular and ordinary course
consistent with reasonable business practices. SELLER shall use its
best efforts to preserve the Business and to preserve for BUYER its
relationships with its customers and suppliers. In no event,
without the prior written consent of BUYER, shall SELLER sell,
transfer or otherwise dispose any material amount of the Assets,
waive any claims or rights of substantial value, permit the Assets
to be subjected to any mortgage, pledge, lien or encumbrance,
increase the compensation of any of its employees, or permit to
lapse any rights in Intellectual Property. SELLER shall continue to
insure all of the Assets against ordinary and insurable casualty
risks.
5.2 Conditions. Each Party agrees to use its best efforts to cause to be
satisfied all conditions necessary to close the transactions
contemplated by this Agreement and to prevent the occurrence of any
change or event which would prevent such conditions from being
satisfied.
5.3 Assumed Liabilities. SELLER agrees that the Assumed Liabilities
being assumed by BUYER pursuant to this Agreement shall not exceed
$8,465,000.
5.4 Notices and Consents. Each of SELLER and BUYER will give any
notices to third parties, and will use its best efforts to obtain
any third party consents, that the other party reasonably may
request.
5.5 Notice of Developments. Each party will give prompt written notice
to the other of any material adverse development causing a breach of
any of its own representations and warranties herein. No disclosure
by any party pursuant to this Section, however, shall be deemed to
amend or supplement either parties respective Disclosure Schedule or
to prevent or cure any misrepresentation, breach of warranty, or
breach of covenant.
5.6 Full Access. SELLER shall afford to BUYER and to BUYER s financial
advisors, legal counsel, accountants, consultants and other
representatives full access during normal business hours throughout
the period prior to the Closing Date to all of its books, records,
properties and personnel pertaining to the Business and shall
furnish promptly to BUYER all information as BUYER may reasonably
request (subject to applicable legal constraints), provided that no
investigation pursuant to this Section shall affect any of the
representations or warranties made herein or the conditions of the
obligations of the respected parties to consummate the purchase of
the Assets.
6.0 CONDITIONS TO THE OBLIGATIONS OF BUYER
The obligations of JHA and BUYER at Closing are subject to the fulfillment
at or before the Closing of each of the following conditions, subject to
the right of BUYER to waive any one or more of such conditions:
6.1 The representations and warranties of SELLER contained in this
Agreement shall be true at and as of the Closing.
6.2 All covenants and agreements of SELLER contained in this Agreement
to be performed at or prior to the Closing shall have been so
performed.
6.3 The transactions contemplated under this Agreement shall not be
restrained or prohibited by any injunction or order or judgment
rendered by any Agency of competent jurisdiction, and no proceeding
shall have been instituted and be pending or be threatened which, if
adversely determined, could have a material adverse effect on the
Assets, or the ability of BUYER to enjoy the benefit of the
transactions contemplated by this Agreement and no proceeding shall
have been instituted and be pending or be threatened in which any
creditor or shareholder of SELLER or any other Person seeks to
restrain such transactions or otherwise to attack them or obtain
damages in respect thereof.
6.4 SELLER shall have delivered to BUYER copies of the signed Consents
referred to on Schedule 3.4.
6.5 SELLER shall have delivered to BUYER a certificate of SELLER
executed in its corporate name by its President or any Vice
President, and its Secretary dated as of Closing, certifying to the
fulfillment of the conditions set forth in the foregoing Sections
6.1 through 6.4.
6.6 SELLER shall have delivered to BUYER the legal opinion of SELLER's
legal counsel, dated as of Closing and in such form and subject only
to such assumptions and qualifications as shall be satisfactory to
legal counsel for BUYER.
6.7 SELLER and BUYER shall have executed and delivered the Assignment
and Assumption Agreement(s) in the form set forth in Exhibit 1
attached hereto.
6.8 SELLER shall have executed and delivered a Bill of Sale in the form
set forth in Exhibit 2 hereto.
6.9 The waiting period, if any, required by the Hart Scott Rodino Act
(see Section 8.1 below) shall have expired.
7.0 CONDITIONS TO THE OBLIGATIONS OF SELLER
The obligations of SELLER at Closing are subject to the fulfillment at or
before the Closing of each of the following conditions, subject to the
right of SELLER to waive any one or more of such conditions:
7.1 The representations and warranties of JHA and BUYER contained in
this Agreement shall be true at and as of the Closing.
7.2 All covenants and agreements of JHA and BUYER contained in this
Agreement to be performed by it at or prior to the Closing shall
have been so performed.
7.3 The transactions contemplated under this Agreement shall not be
restrained or prohibited by any injunction or order or judgment
rendered by any Agency of competent jurisdiction, and no proceeding
shall have been instituted and be pending or be threatened in which
any creditor or shareholder of JHA or BUYER or any other Person seek
to restrain such transactions or otherwise to attack them or obtain
damages in respect thereof.
7.4 BUYER and JHA shall have delivered to SELLER a certificate of BUYER
and JHA executed in their corporate names by the President or any
Vice President, and the Secretary of each corporation dated as of
Closing, certifying as to the fulfillment of the conditions set
forth in the foregoing Sections 7.1, 7.2 and 7.3.
7.5 SELLER and BUYER and JHA shall have executed and delivered the
Assignment and Assumption Agreement in the form attached hereto as
Exhibit 1.
7.6 The waiting period, if any, required by the Hart Scott Rodino Act
(See Section 8.1 below) shall have expired.
8.0 HART SCOTT RODINO, EXCLUSIVITY AND CLOSING
8.1 Hart Scott Rodino. If required under the Hart Scott Rodino Act
and the rules of the Federal Trade Commission (collectively, the
Act ), SELLER and JHA shall promptly prepare and file an acquired
person s and acquiring person s notification and report forms, with
respect to the transaction contemplated by this Agreement and
request early termination of the waiting period under the Act. Each
party agrees to use their best efforts to procure early termination
and otherwise comply with all applicable provisions under the Act.
8.2 Exclusivity. Between the execution of this Agreement and the
Closing, SELLER will not conduct any discussions or negotiations
with any other person or entity with respect to the sale of the
Business.
8.3 Closing. The closing of the transactions contemplated herein shall
take place on or about September 8, 1999 (the "Closing") and shall
be effective as of September 1, 1999 (the "Closing Date"). Except as
otherwise agreed by BUYER and SELLER, the Closing shall proceed in
the order stated below, but the Closing shall not be deemed to have
been completed until each of such steps has been completed or has
been waived by all of the parties hereto.
(a) Exchange of Documents. The parties hereto shall exchange and
deliver the certificates, letters, agreements and other
documents specified in Articles 6.0 and 7.0.
(b) Payment. JHA and BUYER shall deliver to SELLER in the amount
of the cash consideration payable pursuant to Section 2.1
hereof.
(c) Additional Documents. Each party shall deliver such
additional documents as shall be reasonably requested by any
party to evidence or effect the consummation of the
transactions provided for in this Agreement.
9.0 BROKERAGE
BUYER, JHA and SELLER each represent that it has not retained any broker
or finder or agreed to pay any brokerage or finder's fee or commission to
any Person for or on account of this Agreement or the transactions
contemplated hereby.
10.0 COVENANT FOR FURTHER CONVEYANCES AND ACTIONS
10.1 Conveyances. From and after the Closing, SELLER, JHA and BUYER
shall take all such further actions as may be reasonably requested
in order to effectuate or evidence the consummation of the
transactions contemplated by this Agreement. If at any time after
the Closing any further conveyance, assignment or other document, or
any further action, is reasonably necessary to vest in BUYER full
t i tle to the Assets, the respective party shall cause its
appropriate officer to execute and deliver all such instruments and
take all such action as may be reasonably necessary in order to
complete the transfer of title to and possession of Assets, and
otherwise to carry out the purposes of this Agreement.
10.2 Final Bring-Down Schedules. On or prior to the 45th day following
the Closing Date, SELLER shall provide its final Bring-Down
Schedules providing any final updates to all of the Disclosure
Schedules required to make them accurate as of the Closing Date, all
in form reasonably satisfactory to BUYER.
10.3 Access to Business Records. For a period of five years after the
Closing Date, (a) JHA and BUYER will retain the Business Records and
provide SELLER with reasonable access to such Business Records in
order to make copies as may be reasonably required by SELLER, and
(b) SELLER will retain such financial and other records pertaining
to the Business which are not delivered to the BUYER hereunder and
provide JHA and BUYER with reasonable access to same in order to
make copies as may be reasonably requested by JHA and BUYER.
10.4 Access to Former Employees. For a period of five years after the
Closing Date, BUYER shall make available to SELLER the Employees
then employed by BUYER as SELLER may reasonably need such employees
to defend any legal or administrative proceeding which may arise
involving the conduct of the Business prior to the Closing. SELLER
shall reimburse BUYER for all reasonable out of pocket expenses
incurred by BUYER, including travel, lodging and meal expenses.
10.5 Post-Closing Adjustment. JHA has advised SELLER that JHA must
provide audited financial statements of the Business to meet its
Form 8-K filing obligations under the Securities and Exchange Act of
1934 and SELLER agrees that it will cooperate fully and timely with
JHA s auditors in connection therewith. On or prior to the 60th day
following the Closing, BUYER shall delivery to SELLER audited
financial statements prepared for BUYER by its auditors, Deloitte &
Touche, LLC (in a form similar to the proforma financials attached
as Exhibit 3.9, and subject to the same footnotes) as at the Closing
Date and for the period then ended, prepared in a manner consistent
with prior periods and in accordance with the reasonable accounting
practices followed by SELLER in preparing its historical financial
statements (the Final Financial Statements ). All adjustments to
the accounts reflected on SELLER s books will be made in a
consistent manner to both the Final Financial Statements and the
financial statements at the Most-Recent Fiscal Quarter End. Any
proposed adjustments by BUYER s auditors shall first be reviewed
w i t h SELLER prior to preparation of the audited financial
statements. If the statement of assets and liabilities at the
Closing Date contained in the Final Financial Statements reveals a
net worth of the Business which is less than the net worth set
forth on the financial statements provided by SELLER as of the Most
Recent Fiscal Quarter End, as set forth in Section 3.9, above, then
SELLER shall, subject to the Claims Basket provided in Section 12.4
below, pay the difference to BUYER in cash, on or before the
ninetieth day following the Closing. In the event that the SELLER
disputes the net worth findings of Deloitte & Touche, LLC as set
forth in the Final Financial Statements, and if this dispute cannot
be settled promptly through discussions between the parties, then
the issues shall be submitted to mediation and arbitration before an
experienced mediator who is also a certified public accountant
pursuant to the procedures set forth in Section 15.10, below. For
purposes of this Section 10.5, the term net worth shall mean the
difference between total assets and total liabilities as stated in
the financial statements.
10.6 Allocation of Purchase Price. The parties hereto agree to cooperate
and use their best efforts to prepare a joint statement of
allocation of purchase price on or before the 90th day following the
Closing, and to report the sale and acquisition of assets hereunder
to the Internal Revenue Service in a consistent manner on their
respective Forms 8594.
11.0 NONCOMPETITION
In consideration of the purchase by BUYER of the Business, SELLER agrees
that for a period of 24 months from the Closing Date, SELLER s direct
sales forces will not sell account processing or check processing software
products (excluding check exception item and check archive) and data
center services for account processing or check processing to the
community banking market, which market is defined as U.S. banks or bank
holding companies with less than $2 Billion in assets (the Noncompete
Market ).
It shall not be deemed to be a violation of this section if (a) SELLER
should be acquired by a third party which markets products to the
Noncompete Market, (b) SELLER or its parent should acquire a company which
may market products to the Noncompete Market, (c) SELLER markets its
products to distributors, resellers or systems integrators which remarket
such products to the Noncompete Market.
The parties acknowledge that this noncompete provision shall not apply to:
(i) maintenance services marketed/provided by SELLER for hardware products
and operating system software products which may be used in conjunction
with the Products (ii) consumable supplies, (iii) products ordered by
third parties through SELLER s web site or 1-800 number, or (iv) customers
specified in the Transition Agreement referred to in Section 13 below.
12.0 INDEMNIFICATION
12.1 SELLER hereby agrees to indemnify and hold harmless JHA and BUYER
against:
(a) Any and all losses, liabilities and damages (including but not
limited to any amounts to be paid in settlement) to which JHA
or BUYER may become subject or which it may suffer or incur,
insofar as such losses, liabilities or damages (or actions or
claims in respect thereof) arise out of or are based upon (i)
any breach of the warranties, representations and covenants of
the SELLER hereunder, (ii) disputes with customers with
respect to damages arising out of Products/Services provided
to customers prior to the Closing, (iii) disputes with any
vendors or other parties related to actions by SELLER
occurring prior to the Closing, (iv) any taxes and assessments
with respect to the SELLER or, as to periods prior to the
Closing Date, with respect to the Business, and (v) any
disputes with current or former employees of SELLER relating
to their employment by SELLER, including but not limited to
compensation and benefits prior to the Closing Date and
employment action/decisions of SELLER prior to the Closing.
(b) Any and all out-of-pocket legal and other expenses reasonably
i n c u rred in connection with investigating, defending,
prosecuting or settling any of the matters referred to in
Section 12.1(a) above, or actions or claims in respect
thereof, whether or not resulting in any loss, liability or
damage.
12.2 JHA and BUYER hereby agree to indemnify and hold harmless SELLER
against:
(a) Any and all losses, liabilities and damages (including but not
limited to amounts paid in settlement) to which SELLER may
become subject or which it may suffer or incur, insofar as
such losses, liabilities or damages (or actions or claims in
respect thereof) arise out of or are based upon (i) any breach
of the warranties, representations and covenants of BUYER
hereunder, (ii) disputes with customers with respect to
damages arising out of Products/Services provided to customers
by BUYER following the Closing, (iii) the failure of JHA or
BUYER to timely pay and discharge any of the Assumed
Liabilities, (iv) disputes with any vendors or other parties
related to actions by JHA or BUYER occurring subsequent to the
Closing and (v) any disputes with employees of SELLER with
respect to their employment by BUYER, including but not
l i mited to compensation, benefits and other employment
actions/decisions of BUYER.
(b) Any and all out-of-pocket legal and other expenses reasonably
i n c u rred in connection with investigating, defending,
prosecuting or settling any of the matters referred to in
Section 12.2(a) above, or actions or claims in respect
thereof, whether or not resulting in any loss, liability or
damage.
12.3 Procedures. If any party seeks indemnification pursuant to this
A r ticle 12, it shall notify the party required to provide
indemnification within a reasonable time after such party shall have
been notified of the claim or shall have been served with the
summons or other first legal process giving information as to the
nature and basis of the claim. The indemnifying party shall assume
the defense of any action or claim, including the employment of
counsel and the payment of all expenses. The indemnified party shall
have the right to separate counsel and to participate in the defense
thereof but the fees and expenses of such counsel shall be at the
expense of the indemnified party unless (a) the employment thereof
shall have been specifically authorized by the indemnifying party or
(b) the indemnifying party shall fail to assume the defense and
employ counsel. Such parties shall each cooperate in the defense of
any such claim and shall make available to each other all records
and other materials required for use in such defense. In no event
shall the indemnifying party be liable for any settlement of any
action or claim made without the written consent of the indemnifying
party.
12.4 The claiming party shall not be entitled to indemnification, or
reimbursement under Section 10.5 above, unless the total amount of
all claims exceeds $150,000 (the Claims Basket ); provided,
however, that BUYER shall be entitled to indemnification with
respect to any liability for taxes and assessments as set forth in
Section 12.1(a)(iv) above in any amount and without regard to the
aforementioned Claims Basket.
12.5 The maximum liability of SELLER for BUYER s claims under this
Agreement for indemnification (including BUYER s attorney fees)
shall not exceed 30% of the purchase price paid by BUYER under this
Agreement.
13.0 TRANSITION MATTERS
13.1 SELLER Employees.
(a) SELLER shall make available to BUYER all of SELLER s employees
who are exclusively assigned to the Business and any other
SELLER employees as may be mutually agreed to between SELLER
and BUYER (the Employees ) for the purpose of continuing to
conduct the Business for a period of approximately 40 days
following the Closing Date. Arrangements with respect to the
provision of such Employees and pertaining to the payment of
all related employment expenses, including salary, bonus,
withholding taxes, health insurance and other related employee
benefits shall be set forth in the Transition Agreement
between BUYER and SELLER to be executed at Closing.
(b) BUYER shall make offers of employment to all of SELLER s
employees who are exclusively assigned to the Business and any
other SELLER employees as may be mutually agreed to by SELLER
and BUYER (the Employees ). The effective date of any offers
of employment shall be the day following the termination of
the Transition Agreement set forth in A, above. The Employees
shall continue to receive from BUYER an annual salary at least
equal to what they were receiving in salary from SELLER at the
time of Closing. In the case of those Employees who are
eligible to receive bonuses from SELLER (but excluding any
sales commissions), BUYER agrees that if BUYER does not offer
the Employees the same bonuses, BUYER will increase their
salaries by at least (i) 75% of the annual bonus amount for
those Employees covered by SELLER s Management Bonus Plan
and (ii) 50% of the annual bonus amount for Employees covered
by the implementation services revenue bonus plan. In the
case of the Management Bonus Plan for calendar year 1999,
such Employees will receive a bonus payment from BUYER within
60 days of the Closing Date at the rate of 72.5% of the annual
bonus amount, prorated for the number of months in the current
calendar year prior to the Closing Date.
(c) The Employees shall be given credit for their years of service
with SELLER as reflected on SELLER s employment records, for
purposes of vacation and benefits; provided, however, that
prior service shall not be taken into account for purposes of
determining eligibility for BUYER s employee stock purchase
plan.
(d) Employees shall begin their employment by BUYER with the
amount of accrued but unused vacation which exists as of the
date of termination of the Transition Agreement and shall
begin to accrue vacation under BUYER s vacation policy based
upon their respective service dates.
(e) In the event that within 12 months from the Closing Date any
of the Employees are terminated by BUYER, such employees shall
be provided with the same severance benefits that they would
have been entitled to receive under SELLER s severance policy
in effect on June 30, 1999, a copy of which is attached as
Exhibit 13.1(e).
(f) BUYER shall offer to the Employees as of the first day of
their employment with BUYER (following the transition period
contemplated in paragraph A, above) the same medical and
insurance benefits that BUYER offers to its other employees.
13.2 Office Space. In addition to those leases to be assumed by the
BUYER, SELLER has agreed to provide working space to BUYER in
certain facilities for a period following the Closing Date in
accordance with the Transition Agreement.
13.3 Transition Services. SELLER has also agreed to provide the certain
administrative transition services to BUYER with respect to the
Business and the Assets in accordance with the Transition Agreement.
13.4 TPS Issues. The Transition Agreement shall specify SELLER s
obligations to resolve certain issues with regard to the TPS 1.0 and
1.1 Software Products and to provide to BUYER and JHA ongoing
maintenance support of TPS versions of other embedded software. In
particular, SELLER shall commit to making the TPS version of its
Open Archive product fully operational by December 31, 1999 with
specified functionalities.
14.0 TERMINATION.
14.1 Termination of Agreement. This Agreement may be terminated at any
time prior to the Closing:
(a) by the mutual consent of BUYER and SELLER;
(b) by BUYER or SELLER, in writing, without liability, if the
Closing shall not have occurred on or before October 1, 1999;
or
(c) by BUYER or SELLER, in writing, without liability, if the
other party shall fail to perform in any material respect
agreements contained herein required to be performed by, on or
prior to the Closing, or materially breaches any of its
representations, warranties, agreements or covenants contained
herein.
14.2 Termination of Obligations. Termination of this Agreement shall
t e rminate all obligations of the parties contained in this
Agreement.
15.0 MISCELLANEOUS
15.1 Press Releases and Public Announcements. No party shall issue any
press release or make any public announcement relating to the
subject matter of this Agreement without the prior written approval
of the other parties; provided, however, that any party may make any
public disclosure it believes in good faith is required by
applicable law or any listing or trading agreement concerning its
publicly-traded securities (in which case the disclosing party will
use its reasonable best efforts to advise the other parties prior to
making the disclosure).
15.2 Assignment and Successors. No party to this Agreement may assign
this Agreement or such party's rights hereunder without the prior
written consent of the other party, which consent shall not be
unreasonably withheld, except that either party may assign its
rights hereunder to a wholly-owned subsidiary (who shall then be
subject to this Section), provided that any such assignment shall
not relieve the assignor of any of its obligations under this
Agreement. Subject to the foregoing, this Agreement shall be
binding upon and inure to the benefit of the successors and
permitted assigns of the respective parties hereto.
15.3 Governing Law. The substantive laws of the State of Delaware shall
govern the effect and construction of this Agreement.
15.4 Notices. Any notice, demand or consent contemplated or permitted to
be given hereunder shall be in writing and may be delivered
personally or by courier, or may be sent by prepaid mail, telegram
or telecopy, to the addressee at its address shown below, or such
other address as it may hereafter designate by notice so given. If a
notice is sent by registered or certified mail, it shall be
effective on the fifth business day after having been deposited in
the U. S. mail or on receipt, if earlier. Notice sent by any other
method shall be effective only upon actual receipt.
BUYER: With a copy to:
Jack Henry & Associates, Inc. Shughart Thomson & Kilroy, P.C.
663 Highway 60 120 West 12th Street, Suite 1600
Monett, Missouri 65708 Kansas City, Missouri 64105
ATTN: Chairman and CEO ATTN: Robert T. Schendel, Esq.
FAX: (417) 235-1765 FAX: (816) 374-0509
SELLER: With a copy to:
BancTec, Inc. BancTec, Inc.
4851 LBJ Freeway, Suite 1100 4851 LBJ Freeway, Suite 1100
Dallas, Texas 75244 Dallas, Texas 75244
ATTN: Chief Financial Officer ATTN: General Counsel
FAX: (972) 341-4882 FAX: (972) 341-4882
15.5 Counterparts. The parties may execute this Agreement in two or more
counterparts which shall in the aggregate be signed by each of the
parties, and each such counterpart shall be deemed an original
instrument as against any party which has signed it.
15.6 Schedules, Etc. All statements contained in any exhibit, schedule,
certificate or other instrument delivered by or on behalf of the
parties hereto in connection with the transactions contemplated
hereby are an integral part of this Agreement.
15.7 Expenses. Each party hereto shall bear and pay all costs and
expenses incurred by it or on its behalf in connection with this
Agreement and the transactions contemplated hereby, including,
without limiting the generality of the foregoing, fees and expenses
of its own financial consultants, accountants and counsel, which may
be imposed upon or be payable in respect of the transactions. The
foregoing shall not be construed as limiting any other rights either
may have as the result of a misrepresentation or breach of
obligation of the other party.
15.8 Headings. The headings of the Articles, Sections and other
subdivisions of this Agreement are inserted for convenience only and
shall not be deemed to constitute part of this Agreement or to
affect the construction hereof.
15.9 Modification and Waiver. Any of the terms or conditions of this
Agreement may be waived in writing at any time by the party which is
entitled to the benefits thereof. No supplement, modification or
amendment of this Agreement shall be binding unless executed in
writing by all of the parties hereto. No waiver of any of the
provisions of this Agreement shall be deemed or shall constitute a
waiver of any other provision hereof (whether or not similar), nor
shall such waiver constitute a continuing waiver.
15.10 Mediation and Arbitration. The parties will attempt in good faith to
resolve any controversy or dispute arising out of or relating to
this Agreement promptly by negotiations between or among the
parties. If any party reaches the conclusion that the controversy
or dispute cannot be resolved by unassisted negotiations, such party
may notify the Center for Public Resources, Inc. ("CPR"), 366
Madison Avenue, New York, New York 10017 [telephone (212) 949-6490;
fax (212) 949-8859]. CPR will promptly designate a mediator who is
independent and impartial, and CPR's decision about the identity of
the mediator will be final and binding. The parties agree to
conduct at least eight consecutive hours of mediated negotiations
within 30 days after the notice is sent. If the dispute is not
resolved by negotiation or mediation within 30 days after the first
notice to CPR is sent, then, upon notice by any party to the other
affected parties and to CPR, the controversy or dispute shall be
submitted to a sole arbitrator who is independent and impartial,
selected by CPR, for binding arbitration in accordance with CPR's
Rules for Non-Administered Arbitration of Business Disputes. The
arbitration shall be governed by the United States Arbitration Act,
9 U.S.C. Sections 1-16 (or by the same principles enunciated by such
Act in the event it may not be technically applicable). The parties
agree that they will faithfully observe the terms of this paragraph
and will abide by and perform any award rendered by the arbitrator.
The award or judgment of the arbitrator shall be final and binding
on all parties. No litigation or other proceeding may be instituted
in any court for the purpose of adjudicating, interpreting or
enforcing any of the rights or obligations relating to the subject
matter hereof, whether or not covered by the express terms of this
A g reement, or for the purpose of adjudicating a breach or
determination of the validity of this Agreement, or for the purpose
of appealing any decision of an arbitrator, except a proceeding
instituted for the sole purpose of having the award or judgment of
an arbitrator entered and enforced. Notwithstanding the above,
either party shall have the right to seek injunctive relief from a
court of competent jurisdiction in order to protect the rights of
the parties pending the final award/judgment of the arbitrator.
15.11 No Third Party Beneficiaries. This Agreement shall not confer any
rights or remedies upon any Person other than the parties and their
respective successors and permitted assigns.
15.12 Construction. The parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an
ambiguity or question of intent or interpretation arises, this
Agreement shall be construed as if drafted jointly by the parties
and no presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of the authorship of any of the
provisions of this Agreement. Any reference to any federal, state,
local, or foreign statute or law shall be deemed also to refer to
all rules and regulations promulgated thereunder, unless the context
otherwise requires. The word including shall mean including
without limitation.
16.0 SURVIVAL
All representations, warranties and covenants made in this Agreement or
otherwise in writing in connection with the transactions contemplated
hereby shall survive the Closing of such transactions and shall not be
extinguished at the Closing Date or by any investigation made by or on
behalf of any party hereto. All such representations and warranties,
except representations and warranties regarding title to the Assets,
shall terminate upon the expiration of 24 months after the Closing Date.
17.0 ENTIRE AGREEMENT
This Agreement (including all Schedules and Exhibits attached hereto) and
the confidentiality obligations contained in the letter dated July 6, 1999
constitute the entire agreement of the parties with respect to its subject
matter and integrate all previous agreements or understandings, both oral
and written, relating to that subject matter. No party shall be liable or
bound to the other in any manner by any warranties or representations
except as specifically set forth herein or expressly required to be made
or delivered pursuant hereto.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their duly authorized officers and delivered on September 8, 1999, with the
intention that it be effective as of September 1, 1999.
BANCTEC, INC. JACK HENRY & ASSOCIATES, INC.
By: /s/ Raghauan Rajaji By: /s/ Michael E. Henry
Name: Raghauan Rajaji Name: Michael E. Henry
Title: Sr. Vice President Title: C.E.O.
OPEN SYSTEMS GROUP, INC.
By: /s/ Michael R. Wallace
Name: Michael R. Wallace
Title: President
LIST OF EXHIBITS AND SCHEDULES
Exhibits:
No. Description
1 Assignment and Assumption Agreement
2 Bill of Sale
3.9 Pro Forma June 30, 1999 Financial Statements
13.1(e) SELLER s Severance Policy
Schedules:
No. Description
1.1 Accounts Payable
1.2 Accounts Receivable
1.6 Assumed Liabilities
1.12 Excluded Assets
1.17 Pre-Paid Expenses
1.18 Products/Services
1.22 Vendor Contracts
3.3 Title
3.4 Consents
3.5 Physical Assets
3.6 Intellectual Property
3.7 Real Estate
3.8 Non-Real Estate Leases
3.11 Contract Breaches and Claims
3.14 Litigation
3.16 Y2K Products
3.19 TPS Accounts Receivable
EXHIBIT 10.11
LINE OF CREDIT LOAN AGREEMENT
THIS LINE OF CREDIT LOAN AGREEMENT (the Agreement ) is entered into
this 7th day of September, 1999 by and between JACK HENRY &
ASSOCIATES, INC., a Delaware corporation ( Company ), and COMMERCE
BANK, N.A., a national banking association ( Bank ).
WHEREAS, Bank has approved a line of credit facility (the Line of
Credit ) for Company in the maximum principal amount of $40,000,000
for permitted acquisitions, working capital, capital expenditures and
other general corporate purposes.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained in this Agreement, the parties agree as follows:
ARTICLE I
LINE OF CREDIT
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 in the
aggregate principal amount at any time outstanding Forty Million
and no/100 Dollars ($40,000,000.00). Subject to the conditions and
limitations set forth herein, advances under the Line of Credit
(each, an Advance , and collectively, the Advances) will be made to
Company, from time to time during the period commencing on the date
hereof to, but not including, September 7, 2000, 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 hereinafter
defined) to become immediately due and payable.
1.2 LINE OF CREDIT NOTE. The Line of Credit (and the Advances made
by Bank with respect thereto) shall be evidenced by the Line of Credit
Note.
1.3 PRINCIPAL PAYMENT. The Line of Credit shall be payable on
September 7, 2000.
1.4 ADVANCES. Advances under the Line of Credit shall be either
LIBOR Rate Advances or Domestic Rate Advances, as Company may elect.
LIBOR Rate Advances shall bear interest at the LIBOR Rate, plus the
Eurodollar Margin as set forth herein. Each LIBOR Rate Advance shall
be in an amount of at least $1,000,000 and incremental
multiples of
$100,000.
(a) Domestic Rate Advances shall bear interest at the Domestic
Rate, which shall be equal to the Prime Rate minus one percent.
Prime Rate shall mean the interest rate per annum announced
from time to time by Bank as its prime rate. No
representation is made that the Prime Rate is the best or
lowest rate of interest.
(b) (i) The LIBOR Rate means, with respect to each LIBOR
Funding Period, the rate per annum (rounded upward, if
necessary, to the nearest 1/100 of 1%) equal to the rate per
annum which is the average of the interbank offered rates for
dollar deposits in the London market based on quotations at
five major banks as quoted in the Wall Street Journal two
Business Days prior to the beginning of such LIBOR Funding
Period. The LIBOR Rate determined or adjusted by Lender shall
be conclusive if made in good faith absent manifest error.
A Business Day means a day of the year on which banks are not
required or authorized to close in Kansas City, Missouri.
(c) The Eurodollar Margin, for any fiscal quarter, will be
the rate per annum set forth in the table below based upon
the ratio of Average Funded Debt to EBITDA. Such ratio shall
be determined by dividing average quarter ending Funded Debt
for the last four quarters by total EBITDA over the trailing
last four fiscal quarters of Company.
AVERAGE FUNDED DEBT/EBITDA EURODOLLAR
LEVEL MARGIN
1 1.90:1 but < 2.55:1 80 bps
2 1.30:1 but < 1.90:1 70 bps
3 0.50:1 but < 1.30:1 60 bps
Funded Debt shall mean as of any date of determination thereof all
Debt which would be classified upon a balance sheet prepared as of such
date in accordance with generally accepted accounting principles,
consistently applied (GAAP), as long term or funded debt, including in
any event (without duplication) the Line of Credit, and all Debt, whether
secured or unsecured, having a final maturity (or which pursuant to the
terms of a revolving credit agreement or otherwise, is renewable or
extendable for a period) ending more than one year after the date as of
which Funded Debt is being determined.
Debt shall mean as of any date of determination, all obligations
(other than capital, surplus and reserves for deferred income taxes)
which would be classified on a balance sheet prepared in accordance
with GAAP as of such date as indebtedness, including in any event (without
duplication):
(i) all obligations for borrowed money or evidenced by bonds,
debentures, notes, drafts or similar instruments;
(ii) all obligations for all or any part of the deferred
purchase price of property or services or for the cost of
property constructed or of improvements;
(iii) all obligations secured by any lien on or payable out
of the proceeds of production from property owned or held by
a person even though such person has not assumed or become
liable for the payment of such obligations;
(iv) all capital lease obligations;
(v) all obligations, contingent or otherwise, in respect of
any letter of credit facilities, bankers acceptance
facilities or other similar credit facilities; and
(vi) all guaranties of or with respect to obligations of the
character referred to in the foregoing clauses (a) through
(e).
EBITDA shall mean for any period, consolidated net income for such
period, plus all amounts deducted in arriving at such consolidated net income
in respect of (i) consolidated interest expense for such period, plus (ii)
federal, state and local income taxes for such period, plus all amounts properly
charged for depreciation of fixed assets and amortization of intangible assets
during such period on the books of Company and its Subsidiaries (as defined
herein).
(d) Each LIBOR Funding Period shall be for a period of thirty (30),
sixty (60), ninety (90) or one hundred eighty (180) days and shall commence
on the first day of any month, provided that each LIBOR Funding Period which
would otherwise end on a day which is not a Business Day shall be extended to
the next succeeding Business Day; provided that if the next Business Day is in
a new calendar month such LIBOR Funding Period shall end on the next preceding
Business Day, and Company may not select a LIBOR Funding Period that extends
beyond the Termination Date. Company may not have more than ten (10) LIBOR
Funding Periods outstanding at any one time.
(i) If on any date on which the LIBOR Rate would otherwise
be set, Bank shall have in good faith determined (which
determination shall be conclusive) that adequate and
reasonable means do not exist for ascertaining the LIBOR Rate;
or
(ii) At any time Bank shall have determined in good faith upon
written advice of counsel (which advice shall deal with the
lawfulness of the LIBOR Rate), a copy of which written advice
shall be promptly provided to Company (which determination
shall be conclusive) that the making, maintenance or funding
of the Line of Credit bearing interest at the LIBOR Rate has
been made impracticable or unlawful by compliance by Bank in
good faith with any law or guideline or interpretation or
administration thereof;
then, in any such event, Bank may notify the Company of such
determination. Upon such date as shall be specified in such notice
(which shall not be earlier than the date such notice is given) the
Line of Credit shall bear interest at the Domestic Rate until Bank
shall have later notified Company of Bank s determination in good faith
(which determination shall be conclusive) that the circumstances giving
rise to such previous determination no longer exist.
(e) Interest on the Line of Credit shall be calculated based
upon a year consisting of three hundred and sixty (360) days, and shall
be payable (i) quarterly in arrears with respect to any Domestic Rate
Advance and (ii) on the last day of a LIBOR Funding Period with respect
to which a LIBOR Rate Advance is outstanding. The principal balance of
the Line of Credit shall bear interest after maturity, whether by
acceleration or otherwise, at the per annum rate of three percent (3%)
in excess of the LIBOR Rate, but not to exceed the maximum rate allowed
by law (the Default Rate ).
1.5 MANNER OF BORROWING.
(a) Company shall give telephonic or telecopy notice to Bank
(which notice shall be irrevocable once given and, if by telephone,
shall be promptly confirmed in writing): (i) by no later than 10:00
a.m. (Kansas City time) on the date at least two Business Days before
the date of each requested LIBOR Rate Advance and (ii) by no later than
10:00 a.m. (Kansas City time) on the date of each requested Domestic
Rate Advance. Each notice from Company shall specify (1) the date of
the requested Advance (which shall be a Business Day), (2) the amount
of the requested Advance, (3) whether the Advance is a LIBOR Rate
Advance or a Domestic Rate Advance and (4) if such Advance is to be a
LIBOR Rate Advance, the LIBOR Funding Period to be applicable thereto.
Company agrees that Bank may rely on any such telephonic or telecopy
notice given by any person it in good faith believes is an authorized
representative of Company without the necessity of independent
investigation, and in the event any notice by telephone conflicts with
this written confirmation, such telephone notice shall govern if Bank
has acted in reliance thereon.
(b) Company may elect from time to time to convert all or part of
one type of Advance into another type of Advance or to renew all or
part of an Advance by giving Bank notice at least one Business Day
before conversion into a Domestic Rate Advance and at least two
Business Days before conversion into or renewal of a LIBOR Rate Advance
specifying (i) the renewal or conversion date, (ii) the amount of the
Advance to be converted or renewed, (iii) in the case of a conversion,
the type of Advance to be converted into, and (iv) in the case of
renewals or conversions into LIBOR Rate Advances, the LIBOR Funding
Period applicable thereto; provided, however, that LIBOR Rate Advances
may be converted only on the last day of the LIBOR Funding Period for
such Advance. If Company does not notify Bank pursuant to this
paragraph 1.5 at least two Business Days prior to the end of the LIBOR
Funding Period for a LIBOR Rate Advance that it has selected a new
LIBOR Funding Period with respect to such LIBOR Rate Advance, such
Advance shall automatically convert to a LIBOR Rate Advance with a
LIBOR Funding Period of the same duration as the terminating LIBOR
Funding Period (a Rollover LIBOR Funding Period); provided, however,
that if a Rollover LIBOR Funding Period would end on a date after the
Termination Date, the Rollover LIBOR Funding Period shall be for such
shorter period (which shall be in thirty (30) day increments, and which
shall in no event be less than thirty (30) days) as will terminate on
or prior to the Termination Date. If any LIBOR Funding Period or
Rollover LIBOR Funding Period terminates less than thirty (30) days
prior to the Termination Date, the LIBOR Rate Advance with respect
to such LIBOR Funding Period or Rollover LIBOR Funding Period shall
automatically convert to a Domestic Rate Advance at the end of such
Funding Period.
1.6 INDEMNIFICATION. If Bank incurs any loss, cost or expense
(including, without limitation, any loss of profit and any loss, cost, expense
or premium incurred by reason of the liquidation or reemployment of deposits
or other funds acquired by Bank to fund or maintain any LIBOR Rate Advance or
the relending or reinvesting of such deposits or amounts paid or prepaid to
Bank and reasonable attorneys fees incurred in connection therewith) as a
result of:
(a) Any payment or prepayment of a LIBOR Rate Advance on a date
other than the last day of its LIBOR Funding Period (whether as a
result of acceleration, mandatory prepayment or otherwise),
(b) Any failure (because of a failure to meet the conditions of
Article VI or otherwise (by Company to borrow a LIBOR Rate Advance on
the date specified in the notice given pursuant to Section 1.5 hereof;
or
(c) The occurrence of any Event of Default hereunder.
Then upon the demand of Bank, Company shall pay to Bank such amount as
will reimburse Bank for such loss, cost or expense. Bank s determination of the
amount of such loss, cost or expense shall be conclusive and binding absent
manifest error.
1.7 UNUSED LINE FEE. Company shall pay to Bank an unused line fee on
the average daily unused principal of the Line of Credit, which fee shall be
paid quarterly in arrears as set forth in the following table:
LEVEL AVERAGE FUNDED DEBT/EBITDA UNUSED FEE
1 1.90:1 but < 2.55:1 20 bps
2 1.30:1 but < 1.90:1 17 bps
3 0.50:1 but < 1.30:1 15 bps
1.8 DISBURSEMENTS. Bank will credit the proceeds of any Advances
under the Line of Credit Note to Company s deposit account maintained with Bank,
or as otherwise instructed by Company.
1.9 CONDITIONS TO ADVANCES. Each request for an Advance under the
Line of Credit Note shall be deemed to constitute a representation by Company
at the time of the request that no Event of Default (as defined under Article
V hereof) exists or is imminent and that the representations and warranties of
Company contained in this Agreement are true in all material respects on or as
of the date of such request for an Advance.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Company represents and warrants to Bank as follows:
2.1 INCORPORATION; SUBSIDIARIES. Company is a corporation duly
organized, validly existing, and in good standing under the laws of the State
of Delaware. Company has the power to own its property and to carry on its
business and is qualified to do business and is in good standing in each
jurisdiction in which the character of the properties owned by it or in which
the transaction of its business makes such qualification necessary, except where
the failure to so qualify would not have a material adverse effect. Schedule
2.1 hereto sets forth all Subsidiaries (as defined herein) of Company, their
respective states of incorporation or organization and foreign qualification,
the Company s percentage ownership of each such Subsidiary, and separately
identifies as Guarantors those individual Subsidiaries with assets having a
total book value in excess of $1,000,000. Subsidiary shall mean (a) any
corporation, partnership, joint venture, limited liability company, trust or
estate of which (or in which) more than 50% of (i) the issued and outstanding
capital stock having ordinary voting power to elect a majority of the Board of
Directors of such corporation (irrespective of whether at the time capital stock
of any other class or classes of such corporation shall or might have voting
power upon the occurrence of any contingency), (ii) the interest in the capital
or profits of such partnership, joint venture or limited liability company, or
(iii) the beneficial interest in such trust or estate is at the time directly
or indirectly owned or controlled by Company, by Company and one or more of its
other Subsidiaries, or by one or more of Company s other Subsidiaries. Each
Subsidiary is a corporation or limited partnership duly organized, validly
existing and in good standing under the laws of the state set forth on Schedule
2.1 opposite its name. Each Subsidiary has the power to own its property and
to carry on its business and is qualified to do business and is in good standing
in each jurisdiction in which the nature of the property is owned by it or in
which the transaction of its business makes such qualification necessary, except
where the failure to so qualify would not have a material adverse effect.
2.2 AUTHORITY. Company has the full power and authority to execute and
deliver this Agreement and the Line of Credit Note, each Guarantor has the full
power and authority to execute and deliver the Guaranty, and Company and each
Guarantor has full power and authority to execute and deliver the other
instruments referred to herein or therein which Company and each Guarantor is
required to execute (the foregoing shall sometimes hereinafter be collectively
referred to as the Loan Documents) and perform its obligations thereunder, and
the same constitute the binding and enforceable obligations of Company and each
Guarantor in accordance with their terms. The respective Boards of Directors of
Company and each Guarantor have taken all necessary action to authorize the
execution and delivery of the Loan Documents to which they are a party. No
consent or approval of the stockholders of Company or of any other party is
required as a condition to the effectiveness and validity of the Loan Documents.
2.3 LITIGATION. There are no actions, suits or proceedings pending or,
to the knowledge of Company, threatened, or any basis therefor, against or
affecting Company or any Subsidiary or any of their properties at law or in
equity, in any court or before any governmental department, agency or
instrumentality, which may result in any material adverse change in the
properties, assets, business or condition, financial or otherwise, of any of
them or the ability of Company or any Guarantor to perform the obligations under
this Agreement and/or the other Loan Documents.
2.4 CONFLICTING AGREEMENTS. There are no charter, bylaw, or preference
stock provisions of Company or any Guarantor and no provision of any existing
mortgage, indenture, contract or agreement binding on Company or any Guarantor
or affecting their property, which would conflict with or in any way prevent the
execution, delivery, or carrying out of the terms of this Agreement and the Loan
Documents.
2.5 TITLE AND LIENS. Company and each of its Subsidiaries has good,
valid and marketable title of record to its assets, all of which are owned free
and clear of all mortgages, liens, pledges, charges and other security interests
and encumbrances, except as provided in this Agreement.
2.6 TAXES. Company and each Subsidiary have filed all Federal, state
and other tax and similar returns and have paid or provided for the payment of
all material taxes and assessments due thereunder through the date of this
Agreement, including without limitation, all withholding, FICA and franchise
taxes. No material tax claims have been asserted against Company or any
Subsidiary which remain unresolved or unpaid.
2.7 FINANCIAL STATEMENTS. The consolidated annual financial statements
of Company dated as of June 30, 1998, copies of which have been delivered to
Bank, are complete and correct and fairly and accurately present the financial
condition of Company and its Subsidiaries as at such date and the results of the
operations of Company and its Subsidiaries for the period covered by such
statements, all in accordance with generally accepted accounting principles
consistently applied, and there has been no material adverse change in the
condition (financial or otherwise), business or operations of Company or its
Subsidiaries subsequent thereto. There are no liabilities, direct or indirect,
fixed or contingent, of Company or its Subsidiaries, as of the date of the most
current balance sheet included in said financial statements which are not
reflected therein or in the notes thereto which should have been disclosed in
accordance with generally accepted accounting principles consistently applied.
2.8 LIABILITY. Neither Company nor any of its Subsidiaries have any
liabilities, direct or contingent, except those disclosed in the audited annual
financial statements above mentioned in Section 2.7 and those incurred in the
ordinary course of business since the date of the last such audited financial
statements. Neither Company nor any of its Subsidiaries is in material default,
nor does there exist an event which, except for the lapse of time or service of
notice or both, would constitute a material default under any agreement,
indenture, mortgage, security agreement or other instrument under which Company
or any such Subsidiary is directly or contingently liable or pursuant to which
any of the assets or properties of Company or any such Subsidiary are encumbered
or affected in any way.
2.9 REGULATION U. No part of the proceeds of any Advance hereunder will
be used to purchase or carry any margin stock or to extend credit to others for
the purpose of purchasing or carrying any such margin stock or to reduce or
retire any indebtedness incurred for any such purpose. If requested by Bank,
Company will furnish to Bank a statement in conformity with the requirements of
Federal Reserve Form U-1 referred to in Regulation U to the foregoing effect.
2.10 Y2K. All software utilized in the conduct of Company s and its
Subsidiaries business will have appropriate capabilities and compatibility for
operation to handle calendar dates falling on or after January 1, 2000, and all
information pertaining to such calendar dates, in the same manner and with the
same functionality as the software does respecting calendar dates falling on or
before December 31, 1999. Further, Company warrants and represents that the
data-related user interface functions, data-fields, and data-related program
instructions and functions of the software include the indication of the
century.
2.11 COMPLIANCE WITH LAWS. Company and its Subsidiaries (a) have not
received any notice to the effect that their operations are in material
violation of any applicable statutes, laws, ordinances, regulations or licenses
(including, without limitation, environmental, health and safety statutes,
regulations and, licenses); (b) during the three years immediately preceding
the date hereof, have not materially violated any of the requirements or any
applicable statutes, laws, ordinances, regulations or licenses (including,
without limitation, environmental, health and safety statutes, regulations and
licenses); or (c) are not the subject of any governmental investigation
evaluating whether any remedial action is needed to respond to a release of any
toxic or hazardous waste or substance into the environment.
2.12 INVESTMENT COMPANY ACT. Company is not an investment company or
a company controlled by an investment company, within the meaning of the
Investment Company Act of 1940, as amended.
2.13 PUBLIC UTILITY HOLDING COMPANY ACT. Neither Company nor any
person controlling Company or under common control with Company is subject to
regulation under the Public Utility Holding Company Act of 1935, as amended, the
Interstate Commerce Act, or any other statute, or regulation which regulates
the incurring by Company of indebtedness.
2.14 COPYRIGHTS, LICENSES, ETC. To the best of Company s knowledge,
Company and its Subsidiaries own, possess or have the right to use all
copyrights, licenses, trademarks, service marks, trade names, permits and other
rights necessary to own and operate their properties and to carry on their
business as presently conducted or as presently planned to be conducted. Each
of the foregoing is in full force and effect, and Company is in compliance in
all material respects with all the terms and conditions of each of the
foregoing, with no known conflict with the rights of others. No event has
occurred which permits, or after the giving of notice or the lapse of time, or
both, would permit, the revocation or termination of any copyrights, licenses,
trademarks, service marks, trade names, permits or other right so as to have a
material adverse effect on the Company or any Subsidiary.
2.15 ACCURACY OF INFORMATION. All factual information heretofore or
contemporaneously furnished by or on behalf of Company to Bank for purposes of
or in connection with this Agreement or any transaction contemplated hereby is
and all other such factual information hereafter furnished by or on behalf of
Company to Bank will be true and accurate in every material respect on the date
as of which such information is dated or certified and as of the date hereof,
and such information is not, or shall not be, as the case may be, incomplete by
omitting to state any material fact necessary to make such information not
misleading.
2.16 PENSION AND WELFARE PLANS.
(a) During the twelve-consecutive-month period prior to the date
hereof no steps have been taken by Company or its Subsidiaries to
terminate or completely or partially withdraw from any multiemployer
plan, as defined in Section 4001(a) of the Employment Retirement Income
Security Act of 1974, as amended (ERISA), multiple employer plan, as
defined in Section 4001(a)(15) of ERISA, single employer plan, as
defined in Section 4001(a)(15) of ERISA, or any welfare plan, as
defined in Section 3(1) of ERISA (each, a Plan), and no contribution
failure has occurred with respect to any Plan sufficient to give rise
to a lien under Section 302(f) of ERISA;
(b) To the best of Company s knowledge, no condition exists or
events or transactions have occurred with respect to any Plan which
might result in the incurrence by Company or any other member of the
Company s Controlled Group (as defined below) of any material
liability, fine, tax or penalty;
(c) Except as disclosed in Schedule 2.16, neither Company nor any
member of Company s Controlled Group has any vested or contingent
liability with respect to any post-retirement benefit under a welfare
plan, other than liability for continuation coverage described in Part
6 of Title I of ERISA;
(d) With respect to each Plan maintained or contributed to by
Company or its Subsidiaries which is intended to qualify under Section
401 of the Internal Revenue Code of 1986, as amended (the Code), a
favorable determination letter has been received from the Internal
Revenue Service stating that such Plan so qualifies and such
determination letter is still valid and in effect.
(e) No Plan maintained by or contributed to by Company or any
other member of Company s Controlled Group and subject to Section 302
of ERISA or Section 412 of the Code has incurred an accumulated funding
deficiency as defined in Section 302(a)(2) of ERISA and Section 412(a)
of the Code, whether or not waived.
Controlled Group means all members of a controlled group of
trades or businesses (whether or not incorporated) under common
control which, together with Company, are treated as a single employer
under Section 414(b) or Section 414(c) of the Code or Section 4001 of
ERISA.
2.17 SOLVENCY. Company and each Guarantor shall be solvent, both
immediately prior to and following the making of any Advance hereunder.
2.18 OTHER. All statements by Company or any Guarantor contained in
any certificate, statement, document or other instrument delivered by or on
behalf of Company or any Guarantor at any time pursuant to this Agreement or the
other Loan Documents shall constitute representations and warranties made by
Company hereunder.
ARTICLE III
AFFIRMATIVE COVENANTS
So long as this Agreement remains in effect, or as long as there is any
principal or interest due under the Line of Credit Note, unless Bank shall
otherwise consent in writing, Company shall:
3.1 BOOKS AND RECORDS; INSPECTIONS. Maintain proper books and records,
and account for financial transactions in accordance with generally accepted
accounting principles, consistently applied, and permit Bank s officers and/or
its authorized representatives or accountants to visit and inspect Company s
offices and properties, examine its books and records, and discuss its accounts
and business with its respective officers, employees, accountants and auditors,
all at reasonable times upon reasonable notice to Company.
3.2 FINANCIAL REPORTING. Deliver to Bank financial information in such
form and detail and at such times as are satisfactory to Bank, including,
without limitation:
(a) Company s annual consolidated audited financial statements
of independent certified public accountants of recognized standing
acceptable to Bank in accordance with generally applied accounting
principles applied on a basis consistent with that of the audited
financial statements for the preceding fiscal year, within ninety-five
(95) days after the end of each of Company s fiscal years;
(b) Company s interim quarterly financial statements (to include
the balance sheet of the Company as at the end of each such month and
the related statements of income and retained earnings, setting forth
in each case in comparative form the figures for the previous year),
signed and certified correct by Company s Chief Financial Officer
(subject to normal year-end adjustments), within fifty (50) days after
the end of such period; and
(c) Such other information concerning Company and its Subsidiaries
as Bank may reasonably require from time to time.
All financial statements required hereunder shall be complete and correct in
all respects and shall be prepared in reasonable detail and in accordance with
generally accepted accounting principles (consistent with the financial
statements referred to in Subsection 2.7.) and applied consistently throughout
the periods reflected therein.
3.3 PAYMENT OF DEBTS, TAXES AND CLAIMS. Promptly pay and discharge
prior to delinquency all debts, accounts, liabilities, taxes, assessments and
other governmental charges or levies imposed upon, or due from, Company or
its Subsidiaries, as well as all claims of any kind (including claims for labor,
materials and supplies) which, if unpaid, might by law become a lien or charge
upon any of its property, except that nothing herein contained shall be
interpreted to require the payment of any such debt, account, liability, tax,
assessment or charge so long as its validity is being contested in good faith
by appropriate legal proceedings and against which, if requested by Bank,
reserves satisfactory to Bank have been made therefor.
3.4 INSURANCE. Maintain adequate insurance with responsible insurance
companies on such of its and its Subsidiaries properties, in such amounts and
against such risks as is customarily maintained by similar businesses.
3.5 PROPERTY MAINTENANCE. Keep its and its Subsidiaries properties in
good repair, working order, and condition and from time to time make any needful
and proper repairs, renewals, replacements, extensions, additions, and
improvements thereto so that the business of Company and its Subsidiaries will
be conducted at all times in accordance with prudent business management.
3.6 EXISTENCE; COMPLIANCE WITH LAWS. Take or cause to be taken such
action as from time to time may be necessary to maintain its corporate existence
and that of its Subsidiaries and use due diligence to comply with all laws
pertaining to the business or property of Company and its Subsidiaries, or any
part thereof, and with all other lawful government requirements relating to
its business and property.
3.7 LITIGATION; ADVERSE EVENTS. Promptly inform Bank of the
commencement of any material action, suit, proceeding or investigation against
Company or any Subsidiary, or the making of any material counterclaim against
Company or any Subsidiary and of all liens against any of the Company s or
any Subsidiary s property and promptly advise Bank in writing of any other
condition, event or act which comes to the Company s attention that would or
might prejudice Bank s rights under this Agreement or the other Loan Documents.
3.8 NOTIFICATION. Notify Bank immediately if it becomes aware of the
occurrence of any Event of Default (as defined under Article V hereof) or of any
fact, condition, or event that, only with the giving of notice or passage of
time or both, would become an Event of Default, or if it becomes aware of a
material adverse change in the business prospects, financial condition
(including, without limitation, proceedings in bankruptcy, insolvency,
reorganization, or the appointment of a receiver or trustee), or consolidated
results of operations of Company and its Subsidiaries, or the failure of Company
or any Guarantor to observe any of their undertakings under the Loan Documents
or the failure of Company or any Subsidiary to observe any of their undertakings
under any other material agreement to which Company or any Subsidiary is a party
or by which they or any of their properties is bound.
3.9 NET WORTH. Maintain a minimum consolidated tangible net worth of
$77,000,000, 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). Tangible net worth means aggregate book
value of assets minus the book value of all assets which would be classified as
intangible assets under GAAP.
3.10 LEVERAGE RATIO. Maintain a ratio of total liabilities to net
worth for the four quarters then ended of no more than 1.2 to 1 on a
consolidated basis.
3.11 DEBT SERVICE COVERAGE RATIO. Maintain a debt service coverage
ratio for the four quarters then ended of greater than 2.0 to 1 on a
consolidated basis. Debt service coverage ratio means EBITDA over scheduled
principal payments plus interest, excluding amounts paid pursuant to this Line
of Credit.
3.12 ADDITIONAL GUARANTORS. At such time as any Subsidiary of Company
that is not a Guarantor as of Closing meets the definition of Guarantor in
Section 2.1 hereof, Company shall cause such Subsidiary to deliver to Bank a
Guaranty in form and substance acceptable to Bank, together with other
documentation in connection therewith as requested by Bank.
ARTICLE IV
NEGATIVE COVENANTS
So long as this Agreement remains in effect, or as long as there is any
principal or interest due under the Line of Credit Note, Company shall not and
shall not permit any of its Subsidiaries to, without the prior written consent
of Bank:
4.1 LIENS. Create, incur, assume or suffer to exist any security
interest, mortgage, pledge, lien or other encumbrance upon any of its or
any Subsidiary s assets or property, other than purchase money liens and
equipment leases in an aggregate amount not to exceed $5,000,000.
4.2 FUNDAMENTAL CHANGES.
(a) Wind up, liquidate, or dissolve itself;
(b) Reorganize, merge or consolidate with or into, or sell,
transfer, convey or lease substantially all of its assets, to another
person or entity (unless with respect to a merger, Company is the
surviving entity and no Event of Default shall have occurred and be
continuing at the time of such merger and no Event of Default shall
occur as a result thereof);
(c) Sell or assign any accounts receivable;
(d) Purchase or otherwise acquire all or substantially
all of the assets of any corporation, partnership, or other entity, or
any shares or similar interest in any other corporate entity if such
acquisition involves an aggregate purchase price of $10,000,000 or more
or aggregate cash consideration of $5,000,000; provided, that the
consent of Bank to any such acquisition in excess of such amounts will
not be unreasonably withheld; or
(e) Permit a Change in Control in Company. Change in Control
shall mean the occurrence of any of the following: (i) any person or
two or more persons acting in concert shall have acquired beneficial
ownership (within the meaning of Rule 13d-3 of the Securities and
Exchange Commission under the Securities Exchange Act of 1934),
directly or indirectly, of voting stock of Company (or other securities
convertible into such voting stock) representing 50% or more of the
combined voting power of all voting stock of Company; (ii) a majority
of the members of the Board of Directors of Company cease to be
Continuing Directors (defined, as of any date of determination, as any
member of the Board of Directors who was nominated for election or
elected to such Board of Directors with, or whose election to such
Board of Directors was approved by, the affirmative vote of a majority
of the Continuing Directors who are members of such Board of Directors
at the time of such nomination or election); or (iii) any person or two
or more persons acting in concert shall have acquired by contract or
otherwise, or shall have entered into a contract or arrangement that,
upon consummation, will result in its or their acquisition of the
power to exercise, directly or indirectly, a controlling influence over
the management or policies of Company.
5.1 CONDUCT OF BUSINESS. Materially alter the character in which
Company or its Subsidiaries conducts its business or the location of such
business or the nature of such business conducted at the date hereof.
5.2 STOCK REPURCHASES. Repurchase capital stock of Company in an
aggregate amount greater than $1,000,000.
5.3 DIVIDENDS. Pay cash dividends in excess of $.10 per share of
capital stock per quarter.
5.4 ADDITIONAL DEBT. Incur additional Debt, other than (a) Debt for
which liens are permitted under Section 4.1 and (b) Company s existing
$8,000,000 line of credit with First State Bank of Purdy. The Company shall
be required to obtain the prior consent of Bank for incurring other Debt, which
consent shall not be unreasonably withheld.
5.5 INVESTMENTS IN SUBSIDIARIES. Make any investment in a Subsidiary,
except in the ordinary course of business.
ARTICLE VI
EVENTS OF DEFAULT
6.1 EVENTS OF DEFAULT. The occurrence of any one or more of the
following events shall constitute a default by Company under this Agreement
(Event of Default):
(a) (i) The non-payment, when due, whether by demand,
acceleration or otherwise, of any principal and/or interest payment
or other obligation under the Line of Credit Note, or under the other
Loan Documents or (ii) termination of this Agreement by Company prior
to the Termination Date; or
(b) A breach by Company or any Guarantor in the performance or
observance of any agreement, term, covenant or condition contained
herein (other than (a) above) or in the other Loan Documents and such
failure shall not have been remedied within a period of thirty (30)
days after written notice is given to Company; or
(c) Any representation or warranty made herein, in the Loan
Documents or in any other writing furnished to Bank in connection with
this Agreement both before and after the execution hereof, shall be
false in any material respect and shall continue for a period of
fifteen (15) days after Bank has given Company written notice of same;
or
(d) Company or any Subsidiary shall (i) fail to pay any material
indebtedness for borrowed money, or any interest or premium thereon,
when due (whether by scheduled maturity, required prepayment,
acceleration, demand or otherwise) and such failure shall continue
after any applicable grace period; or (ii) fail to perform or observe
any term, covenant, or condition on its part to be performed or
observed under any agreement or instrument relating to any such
indebtedness, when required to be performed or observed, if the effect
of such failure is to permit the acceleration of the maturity of such
indebtedness; or
(e) Company or any Subsidiary shall (i) generally not pay, or be
unable to pay, or admit in writing its inability to pay its debts as
such debts become due; or (ii) make an assignment for the benefit of
creditors, or petition or apply to any tribunal for the appointment of
a custodian, receiver, or trustee for it or for a substantial part of
its assets; or (iii) commence any proceeding under any bankruptcy,
reorganization, arrangement, readjustment of debt, dissolution, or
liquidation law or statute of any jurisdiction, whether now or
hereafter in effect; or (iv) have any such petition or application
filed or any such proceeding commenced against it which is not
discharged within thirty (30) days; or (v) take any corporate action
indicating its consent to, approval of, or acquiescence in any such
proceeding, or order for relief, or the appointment of a custodian,
receiver, or trustee for all or any substantial part of its properties;
or (vi) suffer any judgment, writ of attachment, execution or similar
process to be issued or levied against all or a substantial part of its
property which is not released, stayed or bonded within thirty (30)
days; or
(f) The occurrence of an event of default under, or the revocation
or termination of, any agreement, instrument or document executed by
any person pursuant to which such person has guaranteed to Bank the
payment of all or any of the Line of Credit or Advances or has granted
Bank a security interest in or lien upon some or all of such person s
real and/or personal property to secure the payment of all or any of
the Line of Credit or Advances; or
(g) (i) Company or any ERISA affiliate of Company shall engage
in any prohibited transaction (as defined in Section 4.06 of ERISA or
Section 4975 of the Code) involving any Plan or any employee plan or
any trust created thereunder resulting in a material amount of taxes or
penalties, (ii) any material accumulated funding deficiency (as defined
in Section 3.02 of ERISA (whether or not waived, shall exist with
respect to any Plan, (iii) a reportable event shall occur with respect
to, or proceeding shall commence to have a trustee appointed, or a
trustee shall be appointed, to administer or to terminate, any Plan,
which reportable event or commencement of proceedings or appointment of
a trustee is, in the reasonable opinion of Bank, likely to result in
the termination of such Plan for purposes of Title IV of ERISA, (iv)
any Plan shall terminate for purposes of Title IV of ERISA, or (v)
Company or any ERISA affiliate of Company shall, or is, in the
reasonable opinion of Bank, likely to, incur any liability in
connection with the termination of any Plan or contribution to any Plan
or a withdrawal from, or the insolvency or reorganization of, a
multiemployer Plan.
6.2 REMEDIES. Upon the occurrence of an Event of Default, the sums
payable under the Line of Credit Note, then outstanding, shall become forthwith
due and payable in full, together with interest thereon, without presentment,
demand, protest or notice of any kind, all of which are hereby expressly waived
by Company, and Bank shall have no further obligation to make any Advances.
Bank may resort to any and all security and to any remedy existing at law or
in equity for the collection of all outstanding indebtedness and the enforcement
of the covenants and provisions of the Loan Documents. Bank s resort to any
remedy shall not prevent the concurrent and subsequent employment of any remedy.
6.3 WAIVER. Any waiver of an Event of Default by Bank shall not extend
to or affect any subsequent Event of Default, No failure or delay by Bank in
exercising any right hereunder shall operate as a waiver, nor shall any single
or partial exercise of any right preclude any other right hereunder.
ARTICLE VII
CLOSING; CONDITIONS PRECEDENT
7.1 CLOSING. Closing shall take place at Bank s offices at Kansas
City, Missouri, on September 7, 1999 or such other place and time as mutually
agreed.
7.2 CLOSING DOCUMENTS. As a condition precedent to Closing, Company
shall have delivered to Bank the following documents:
(a) This Agreement and the Line of Credit Note, duly executed
by the Company;
(b) A Guaranty, executed by each of the Guarantors identified
on Schedule 2.1;
(c) A Solvency Certificate, duly executed by the Chief Financial
Officer of Company and each Guarantor;
(d) Certified copies of the Bylaws or Partnership Agreement of
Company and each Guarantor and of each resolution of Company s and each
Guarantor s Board of Directors duly authorizing the execution and
delivery of the applicable Loan Documents and Company s performance
hereunder and thereunder;
(e) Certificate of Good Standing, dated not more than thirty (30)
days prior to the date of this Agreement, for Company from the Delaware
Secretary of State, and for each Guarantor from their respective states
of incorporation or organization;
(f) Certificate of Incorporation of Company certified by the
Delaware Secretary of State, and Articles of Incorporation or
Certificate of Limited Partnership, as applicable, for each Guarantor,
certified by the Secretary of State of each of their respective states
of incorporation, in each case dated not more than ten (10) days prior
to Closing;
(g) Certificates dated the date of this Agreement of the
Secretary of Company and of each Guarantor, certifying the names and
true signatures of the officers of Company and each Guarantor
authorized to sign the Loan Documents to which they are parties;
(h) An opinion of counsel to Company and the Guarantors, with
respect to such matters as requested by Bank; and
(i) Any other documents, instruments and reports as Bank shall
reasonably request.
ARTICLE VIII
MISCELLANEOUS
8.1 AMENDMENTS. This Agreement may be amended or modified in whole or
in part at any time provided that such amendment or modification be in writing
and signed by the parties hereto.
8.2 EXPENSES OF COLLECTION. All reasonable costs, expenses and
liabilities incurred by Bank in the collection of any indebtedness arising
under the Loan Documents, and all reasonable attorneys fees incurred in
connection with such matters, shall constitute a demand obligation owing by
Company and shall bear interest at the highest rate of interest provided for
under this Agreement.
8.3 DELAY; WAIVER. Any waiver of an Event of Default by Bank shall
not extend to or affect any subsequent default, whether it be the same Event
of Default or not, nor impair any right consequent thereon. No failure or
delay on the part of Bank in exercising any right, power or privilege hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such right, power or privilege preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. No waiver of
any provision of this Agreement or of any instrument executed hereunder or
consent to any departure by Company therefrom shall be effective unless the same
shall be in writing, signed by an officer of Bank, and then only to the extent
specified. All rights and remedies of Bank herein and by law afforded will be
cumulative and will be available to Bank until the indebtedness of Company under
the Loan Documents is paid in full.
8.4 NOTICES. Any notice, request, authorization, approval or consent
made hereunder shall be in writing and shall be personally delivered or sent by
registered or certified mail, and shall be deemed given when delivered or
postmarked and mailed postage prepaid to the following addresses:
IF TO BANK: Commerce Bank, N.A.
1000 Walnut Street
Kansas City, Missouri 64106
Attn: Joe McCaddon
IF TO COMPANY: Jack Henry & Associates, Inc.
663 Highway 60
Monett, Missouri 65708
Attn: Chief Financial Officer
Bank and Company may designate a change of address by notice given in accordance
with the provisions of this Subsection at least five (5) days before such change
is to become effective.
8.5 TRANSFER OR ASSIGNMENT. This Agreement shall extend to and be
binding upon the successors and assigns of the parties hereto; provided,
however, that Company shall not assign or transfer its rights or obligations
hereunder without the prior written consent of Bank, and any such assignment
or transfer without such consent shall be void.
8.6 CONSTRUCTION OF AGREEMENT. The titles and headings of the
subsections and paragraphs of this Agreement have been inserted for convenience
of reference only and are not intended to summarize or otherwise describe the
subject matter of such subsections and paragraphs and shall not be given any
consideration in the construction of this Agreement.
8.7 SEVERABILITY OF PROVISIONS. Any provision of this Agreement which
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or enforceability
without invalidating the remaining provisions hereof or affecting the validity
or enforceability of such provisions in any other jurisdiction.
8.8 COUNTERPART AGREEMENTS. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original and all of
which together shall constitute one and the same agreement.
8.9 APPLICABLE LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Missouri.
8.10 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.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their duly authorized officers on the day and year first above
written.
JACK HENRY & ASSOCIATES, INC.
By:
Name:
Title:
COMMERCE BANK, N.A.
By:
Name:
Title:
EXHIBIT 99.1
Press Release
For Immediate Release
COMPANY: JACK HENRY & ASSOCIATES, INC. ANALYST CONTACT:Terry W. Thompson
663 Highway 60 Chief Financial Officer
P.O. Box 807 (417)-235-6652
Monett, MO 65708
IR Contact: Becky Pendleton Reid
Len Cereghino & Co.
(206) 448-1996
JACK HENRY & ASSOCIATES COMPLETES PURCHASE OF BANCTEC S
COMMUNITY BANKING AND DATA CENTER OPERATIONS
Monett, MO and Dallas, TX, September 9, 1999 -- Jack Henry & Associates
(Nasdaq:JKHY) and BancTec, Inc. today announced Jack Henry has completed the
acquisition of BancTec s community banking business, providing software, account
processing capabilities and six data center operations to over 800 community
banks throughout the United States and the Caribbean. The total value of the
transaction was approximately $58 million, of which $50 million was in cash and
the remainder was for the assumption of certain liabilities.
``We are very pleased to welcome these community banks to our client roster. We
are working hard to ensure the transition is an easy, seamless one for our new
customers and look forward to building a strong working relationship with these
banks said Michael E. Henry, chairman and chief executive officer of Jack
Henry. This unit will be a wholly-owned Jack Henry subsidiary and will operate
under the name of Open Systems Group, Inc. ( OSG ), continued Henry.
OSG's community banking products operate primarily on a UNIX platform, while
Jack Henry's core products and services operate primarily on the IBM A/S 400
platform. For calendar 1998, revenues from these acquired community banking
operations totaled approximately $43 million, or 24% of JKHY's revenues in that
same period.
We are excited about the opportunity to expand into the UNIX and NT client-
server world because 20% to 30% of the 9,000 banks in the country operate on the
UNIX platform, stated Michael R. Wallace, president and chief operating
officer. In addition, the majority of the customers acquired have assets under
$250 million, which is a segment of the market that in the past few years has
generated strong demand for our ancillary products such as Internet banking, ATM
switch processing and check imaging. We have already begun transitioning these
services to the UNIX and NT platforms and will be offering them to these new
customers in the near future.
(more)
JKHY Acquires BancTec Community Banking Operations
September 9, 1999
Page 2
Our field representatives have been highly successful in expanding the breadth
of our products being used by each client bank. Approximately 25% of our core
Bank customers use at least one of our ancillary products and many banks have
two or more installed. As a result, while many technology providers are
suffering from the Y2K flu, we are continuing to generate respectable revenues
and profits from our existing loyal customer base, Wallace continued. This
acquisition expands our customer base by almost 50% and we are confident these
banks will also find our fully integrated suite of products to be an excellent
solution to their on-going technology needs.
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 2,630 customers
nationwide. For 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. Those factors include, but
are not limited to, changes in technology and product acceptance, Y2K-affected
spending trends, ability of Jack Henry to successfully integrate the acquired
businesses, and general economic conditions. Additional information on these and
other factors which could affect the Company s financial results are included in
its Securities and Exchange Commission filings. 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.
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