View:
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): June 30, 1995
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
On June 30, 1995, Jack Henry & Associates, Inc. (the "Company") purchased the
community banking business unit of Broadway & Seymour, Inc. ("BSI"). The
acquisition was effected by the purchase of all of the issued and outstanding
capital stock of Liberty Software, Inc., a wholly owned subsidiary of BSI. The
total consideration to be paid by the Company is $12 million.
The Stock Purchase Agreement (the "Agreement") and ancillary agreements between
the Company and BSI provide for certain management services to be provided to
the Company by BSI over the 12 months following the purchase and provide for
certain marketing rights which the Company will grant to BSI. All of BSI's
contracts with its community banking customers will be assumed by the Company
458913.V
HEN25/72567
and BSI will gain access to the Company's customers to market other products.
Many of the BSI's community banking employees will remain with Liberty, which
will be operated as the Liberty division of the Company.
The Company believes that the addition of BSI's community banking clients will
be a good fit with the Company's core business in community banking and that the
combined customer base of the Company and BSI may expect to see a wider array of
products and services from both companies.
Item 7. Financial Statements and Exhibits
(a) and (b) Financial Statements and Pro Forma Financial Information.
It is impractical to provide required financial statements
or pro forma financial information at this time. Such
financial statements and information will be filed as soon
as they become available, which is expected to be no later
than September 15, 1995.
(c) Index of Exhibits Page No.
Exhibit 2 Plan of Acquisition Stock Purchase Agreement N/A
Exhibit 10 Material Contracts Marketing Agreement N/A
Master Agreement N/A
Exhibit 99 Additional Exhibits Press Release N/A
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.
JACK HENRY & ASSOCIATES, INC.
By: /s/ Terry W. Thompson
Terry W. Thompson, Vice President, Treasurer
and Chief Financial Officer
Date: July 17, 1995
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is entered into this 30th
day of June, 1995, by and between BROADWAY & SEYMOUR, INC., a Delaware
corporation with its principal offices in Charlotte, North Carolina ("BSI") and
JACK HENRY & ASSOCIATES, INC., a Delaware corporation with its principal offices
in Monett, Missouri ("Purchaser").
BACKGROUND STATEMENT
The Community Financial Institutions business unit of BSI is engaged in the
business of providing software and related services to community banks and owns
certain valuable assets including software and contract rights and the goodwill
associated with its business. BSI has formed Liberty Software, Inc.
("Subsidiary") as a wholly owned subsidiary and will be transferring to
Subsidiary a substantial portion of the assets and liabilities of the Community
Financial Institutions business unit of BSI. Purchaser is also engaged in the
business of providing software and related services to community banks and
wishes to acquire all of the issued and outstanding shares of stock of the
Subsidiary, thereby acquiring a substantial portion of the assets and assuming a
substantial portion of the contracts and liabilities of the Community Financial
Institutions business unit of BSI.
STATEMENT OF AGREEMENT
In consideration of the premises and the mutual covenants herein contained,
the parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND TERMS
In addition to the terms defined elsewhere in this Agreement, the following
terms shall have the meanings indicated below:
1.1 The term "Assumed Contracts" means those contracts, leases,
agreements, licenses and other arrangements to which BSI is a party and that are
listed in SCHEDULE 3.6(D).
1.2 The term "Assumed Liabilities" has the meaning set forth in SECTION
3.10.
1.3 The term "CFI Assets" means those assets, rights and properties of BSI
within the scope of the CFI Business that are to be transferred, assigned and
conveyed to Subsidiary in connection with this transaction, as described in more
detail in SECTION 3.6.
1.4 The term "CFI Business" means the business presently conducted by the
Community Financial Institutions business unit of BSI related to the licensing
of Proprietary Software to community banks, maintenance of that software, the
operation of service bureaus and the sale of related supplies, but excluding the
business related to BancCorp Systems and the business related to the licensing
and maintenance of other software products.
1.5 The term "Copyright" means the legal right provided by the Copyright
Act of 1976, as amended, to the expression contained in any work of authorship
fixed in any tangible medium of expression.
1.6 The term "Documentation" means Proprietary Documentation and Third
Party Documentation.
(a) The term "Proprietary Documentation" means those written materials
created by BSI that explain Proprietary Software or were used by BSI in the
development of Proprietary Software or represent an interim step in BSI's
development of Proprietary Software, including, without limitation, logic
diagrams, flowcharts, procedural diagrams and algorithms, as well as
manuals, training materials, sales materials, error reports and related
correspondence and memoranda.
(b) The term "Third Party Documentation" means those written materials
owned by BSI that explain any Third Party Software or the use thereof.
1.7 The term "ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and any successor statute of similar import, together with the
regulations thereunder, in each case as in effect from time to time. References
to sections of ERISA shall be construed also to refer to any successor sections.
1.8 The term "Financial Statements" means the audited balance sheets and
statements of income, retained earnings and cash flows of BSI for the fiscal
year ended December 31, 1994 as they relate to the CFI Business; and the
unaudited balance sheets and statements of income, retained earnings and cash
flows of BSI for the 5 months ended May 31, 1995 as they relate to the CFI
Business.
1.9 The term "GAAP" means generally accepted accounting principles as
recognized by the American Institute of Certified Public Accountants, as in
effect from time to time, applied and maintained on a consistent basis for BSI
throughout the period indicated and consistent with BSI's prior financial
practices.
1.10 The term "Governmental Authority" means any nation, province, state or
other political subdivision thereof, and any government or any natural person or
entity exercising executive, legislative, regulatory or administrative functions
of or pertaining to government.
1.11 The term "June Balance Sheet" means the unaudited proforma balance
sheet setting forth the assets and liabilities, as of June 30, 1995, of that
portion of the CFI Business to be transferred by BSI to Subsidiary, to be
prepared by BSI subsequent to Closing.
1.12 The term "Know-how" means ideas, designs, compilations of information,
methods, techniques, procedures and processes, whether or not patentable.
1.13 The term "May Balance Sheet" means the unaudited proforma balance
sheet setting forth the assets and liabilities, as of May 31, 1995, of that
portion of the CFI Business to be transferred by BSI to Subsidiary, as jointly
developed by the parties, a copy of which is attached hereto as Exhibit 1.13.
1.14 The term "Patent" means any patent granted by the U.S. Patent Office,
or by the comparable agency of any other country, and any rights arising under
any patent application filed with the U.S. Patent Office or the comparable
agency of any other country and any rights which may exist to file any such
application.
1.15 The term "Permitted Liens" means: (a) liens for current taxes not yet
due and payable, (b) liens arising in the ordinary course of business for sums
not yet due and payable, but not involving any borrowed money or the deferred
purchase price for property or services and (c) liens that are disclosed on
SCHEDULE 1.15.
1.16 The term "Person" means an individual, partnership, corporation,
trust, joint venture, joint stock company, association, unincorporated
organization, Governmental Authority or other entity.
1.17 The term "Proprietary Rights" means Copyrights, Know-how, Patents,
Trade Secrets and Trademarks.
1.18 The term "Related Obligation" means those amounts payable by Purchaser
to BSI under the Master Agreement between Purchaser and BSI dated June 30, 1995.
1.19 The term "Software" means "Proprietary Software" and "Third Party
Software".
(a) The term "Proprietary Software" means those computer software programs
that are owned by BSI and are to be assigned to Subsidiary prior to the
Closing (in both object code and source code versions) listed on SCHEDULE
1.19(A) hereto, including every modification and enhancement thereto that
has been created by BSI, together with any additional modifications and
enhancements thereto created by BSI in the ordinary course of the CFI
Business between the date hereof and the Closing Date.
(b) The term "Third Party Software" means those computer software programs
listed on SCHEDULE 1.19(B) (in object code only or both source code and
object code, as indicated on SCHEDULE 1.19(B)) that are owned by third
parties and used or sublicensed by BSI within the scope of the CFI
Business.
1.20 The term "Subsidiary Shares" means all of the issued and outstanding
shares of common stock of Subsidiary.
1.21 The term "Trade Secrets" means business or technical information that
is not generally known to other Persons and that derives actual or potential
commercial value from not being generally known or readily ascertainable to
other Persons.
1.22 The term "Trademark" means any symbol used by a Person to identify its
goods or services, whether or not registered, and any right that may exist to
obtain a registered trademark with respect to any such symbol.
ARTICLE II
CONTEMPLATED TRANSACTIONS
2.1 Shares Acquired. On the terms and subject to the conditions of this
Agreement, on the Closing Date BSI shall sell and deliver to Purchaser, and
Purchaser shall purchase and accept from BSI, the Subsidiary Shares. At the
Closing, BSI shall deliver to the Purchaser the certificate or certificates
representing the Subsidiary Shares, properly endorsed for transfer to the
Purchaser.
2.2 Consideration. In consideration of the transfer to it of the
Subsidiary Shares, Purchaser shall pay BSI the amount of Two Million Dollars
($2,000,000)(the "Purchase Price"), by certified check or wire transfer of funds
at the Closing.
2.3 Closing. The closing of the sale of the Subsidiary Shares (the
"Closing") shall take place on June 30, 1995 (the "Closing Date"), or such other
date as the parties may establish by mutual agreement as the Closing Date and
shall be effective as of the closing of business on the Closing Date. The
Closing shall occur at the offices of Robinson, Bradshaw & Hinson, P.A., 1900
Independence Center, 101 North Tryon Street, Charlotte, North Carolina.
2.4 Adjustment of Purchase Price.
(a) Negative Net Worth Adjustment. On or before July 14, 1995, BSI shall
deliver to Purchaser the June Balance Sheet prepared in a manner consistent
with the May Balance Sheet. To the extent that the June Balance Sheet
reflects a negative net worth for Subsidiary, BSI shall pay to Purchaser
one-half (1/2) of the amount of such negative net worth (the "Negative Net
Worth Adjustment"); provided that the amount of such Negative Net Worth
Adjustment shall in no event exceed Eight Hundred Thousand Dollars
($800,000.00); provided further that BSI may elect to retain as its
obligation that obligation payable to IBM in the amount of Two Hundred
Seven Thousand Dollars ($207,000) and to receive a credit against the
Negative Net Worth Adjustment equal thereto; provided further that BSI may
elect to either offset the Negative Net Worth Adjustment against the next
payment due to BSI under the Related Obligations or to pay such Negative
Net Worth Adjustment to Purchaser on or before July 14, 1995. The June
Balance Sheet represents BSI's best efforts to identify the assets,
liabilities and capital of the Subsidiary as of the date of Closing in a
manner consistent with the May Balance Sheet. BSI warrants and represents
that the CFI Business has been conducted in the ordinary course and that
there have been no material adverse changes in the financial condition of
the CFI Business between May 31, 1995 and the Closing Date.
(b) Accounts Receivable Collection Adjustment. As of December 31, 1995
the amount of the accounts receivable shown on the June Balance Sheet (the
"Opening Receivables") that have been collected shall be determined (the
"Collected Receivables"). Purchaser covenants that it will use diligence
in pursuing the collection of all such accounts receivable prior to
December 31, 1995 in a manner consistent with Purchaser's practices in
pursuing the collection of its own accounts receivable. Without
limitation, Purchaser shall communicate its demands by writing and by
telephone, follow-up in a timely manner and, to the extent that Purchaser
decides it is appropriate to do so, withhold software or services from
customers with delinquent accounts receivable. Purchaser shall document
its calls, notices and other collection efforts. BSI acknowledges that
Purchaser shall not be required to initiate legal action to pursue
collections. Should Purchaser and BSI agree prior to December 31, 1995
that any particular account receivable will be uncollectible despite
Purchaser's best efforts, Purchaser may cause Subsidiary to reassign that
account receivable to BSI and discontinue collection efforts. Any amount
received by the Subsidiary from a third party who owes any of the Opening
Receivables shall be first applied to the Opening Receivables payable by
that third party unless such payment is expressly identified as being
related to products or services provided to that third party by the
Subsidiary subsequent to Closing. The amount by which the Opening
Receivables, less any reserves for uncollectible receivables reflected in
the June Balance Sheet, exceeds Collected Receivables determined as of
December 31, 1995, shall be paid by BSI to Purchaser on or before January
2, 1996 or, at BSI's election, offset against the next payment due to BSI
under the Related Obligations. On December 31, 1995, and as a condition
precedent to BSI's obligation to pay such amounts to Purchaser, Purchaser
shall cause Subsidiary to assign to BSI, through an agreement in form and
substance reasonably satisfactory to BSI, all of Subsidiary's right, title
and interest in any portion of the Opening Receivables that remains
uncollected. At the time that any account receivable is reassigned to BSI,
Purchaser shall deliver to BSI a written record of its collection efforts
with respect to that account receivable.
(c) Effect of Adjustments. Amounts paid by BSI to Purchaser, or credited
by BSI to Purchaser pursuant to this Section 2.4 shall not be considered to be
"Purchasers Damages" under Section 9.2 hereof.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BSI
BSI represents and warrants to Purchaser that, as of the date hereof:
3.1 Organization and Standing of BSI. BSI is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has all requisite corporate power and authority and possesses all
governmental franchises, licenses, permits, authorizations and approvals
necessary to enable it to own, lease or otherwise hold its properties and
assets, to carry on its business as presently conducted and to carry out the
transactions contemplated by this Agreement. BSI is duly qualified and in good
standing to do business in each jurisdiction in which the nature of its business
or the ownership, leasing or holding of its properties makes such qualification
necessary and in which the failure so to qualify would have a material adverse
effect on it or its properties.
3.2 Organization and Standing of Subsidiary. Subsidiary is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware and has, or will have, all requisite corporate power and
authority necessary to enable it to own, lease or otherwise hold its properties
and assets and to carry out the transactions contemplated by this Agreement.
Subsidiary is, or prior to Closing will be, duly qualified and in good standing
to do business in Delaware. Subsidiary shall not have conducted any business
prior to Closing. The Certificate of Incorporation of Subsidiary is in the form
of Exhibit 3.2-A and the By-Laws of Subsidiary are in the form of Exhibit
3.2-B. Prior to Closing, Subsidiary shall have filed applications to qualify
to do business as a foreign corporation in North Carolina, Texas and Minnesota.
3.3 Authority of BSI. BSI has all requisite corporate power and authority
to execute and deliver this Agreement and to perform its obligations hereunder.
The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by all
necessary corporate action on the part of BSI. This Agreement has been duly and
validly executed and delivered by an authorized officer of BSI and constitutes
the legal, valid and binding obligation of BSI, enforceable in accordance with
its terms.
3.4 Consents and Approvals; No Violation. There is no requirement
applicable to BSI or to Subsidiary to make any filing with, or to obtain any
permit, authorization, consent or approval of, any Governmental Authority as a
condition to the lawful consummation of the transactions contemplated by this
Agreement. Except as disclosed in SCHEDULE 3.4, neither the execution, delivery
and performance of this Agreement by BSI, its compliance with the provisions
hereof nor its transfer of a substantial portion of the assets and liabilities
of the CFI Business to Subsidiary will: (a) conflict with any provision of the
Certificate of Incorporation or bylaws of BSI or Subsidiary; (b) result in a
default (or give rise to any right of termination, cancellation or acceleration)
under any Assumed Contract, (c) result in the imposition or creation of any
lien, security interest, charge or encumbrance upon any CFI Asset; (d) require
any authorization, consent, approval or notice under, any of the terms,
conditions or provisions of any material note, bond, mortgage, indenture,
agreement, contract, lease or other instrument or arrangement to which BSI is a
party, except for such of the foregoing as to which requisite waivers or
consents have been obtained; or (e) violate any law, statute, rule, regulation,
order, writ, injunction or decree of any Governmental Authority.
3.5 Capital Stock of the Subsidiary. The authorized capital stock of the
Subsidiary consists of 3,000 shares of voting common stock, of which 3,000
shares are issued and outstanding, all of which are owned by BSI. All
outstanding shares of capital stock of the Subsidiary are duly authorized,
validly issued and fully paid and nonassessable. Except as set forth above,
there are no shares of capital stock or other equity securities of the
Subsidiary outstanding. There are no outstanding, and on the Closing Date there
will be no outstanding, warrants, options, agreements, convertible or
exchangeable securities or other commitments pursuant to which the Subsidiary is
or may become obligated to issue, sell, purchase, return or redeem any shares of
capital stock or other securities of the Subsidiary, and there are not any
equity securities of the Subsidiary reserved for issuance for any purpose.
3.6 CFI Assets. Except as disclosed in SCHEDULE 3.6, Subsidiary will own
at Closing good and valid title to all of the following assets, rights and
properties (the "CFI Assets"):
(a) The Proprietary Software and the Proprietary Documentation, including
all of BSI's Proprietary Rights therein and all of the inventories of
written or electronic copies of the Proprietary Software and the
Proprietary Documentation including all media, devices and documentation
that constitute all copies of the Proprietary Software and the Proprietary
Documentation;
(b) That equipment (including data processing and other computer hardware,
telecommunications equipment, media and tools), machinery, furniture and
furnishings listed in SCHEDULE 3.6(B) hereto, all of which is presently
used by BSI in the CFI Business and all of which is in reasonably good
condition and repair and is adequate and sufficient in all material
respects to carry on the CFI Business as now conducted, except as otherwise
disclosed in SCHEDULE 3.6(B);
(c) All of the customer records, customer lists, vendor lists,
correspondence, product and service literature and materials, design,
development and maintenance records and files, technical reports and other
business documents that are presently used by BSI in the CFI Business
(except that BSI may retain copies of any of the foregoing that relate to
business that is outside of the scope of the CFI Business and that BSI will
continue to conduct subsequent to Closing and except that BSI shall have a
right of access, during Jack Henry's normal business hours and at BSI's
sole expense, to review and copy those materials to the extent necessary in
connection with accounting, reporting and the preparation of tax returns);
(d) Those contracts, leases, agreements, licenses and other arrangements
to which BSI is a party and that are listed in SCHEDULE 3.6(D), all of
which will be assigned by BSI to Subsidiary prior to the Closing (the
"Assumed Contracts");
(e) The accounts receivable that are due and payable under the Assumed
Contracts, all of which are collectable in the ordinary course of business
at amounts no less than that reflected on the June Balance Sheet except to
the extent of any reserve for uncollectible accounts receivable included
therein;
(f) Those Trademarks and Patents listed on SCHEDULE 3.6(F) hereto;
(g) The Know-how that is presently used by BSI in connection with the CFI
Business (except that BSI shall continue to have the right to use such
Know-how outside of the scope of the CFI Business and may retain copies of
any documentation of such Know-how that relates to business that is outside
of the scope of the CFI Business and that BSI will continue to conduct
subsequent to Closing);
(h) The incidental supplies owned by BSI and physically located in the
premises used by the CFI Business;
(i) BSI's inventory of software and hardware purchased from third parties
for resale to customers in connection with the CFI Business;
(j) BSI's inventory of forms and supplies purchased from third parties for
resale to customers in connection with that portion of the CFI Business
referred to as the "Single Source" business;
(k) Deferred costs and prepaid commissions within the scope of the CFI
Business;
(l) Those "800" telephone numbers used exclusively in connection with the
CFI Business; and
(m) The goodwill appurtenant to the CFI Business.
At the Closing, Subsidiary shall own all such CFI Assets free and clear of all
mortgages, liens, security interests or encumbrances of any nature whatsoever,
except for Permitted Liens and Assumed Liabilities. Except as disclosed in
SCHEDULE 3.6, the CFI Assets include all of the material assets presently used
by BSI in the operation of the CFI Business.
3.7 Leases. SCHEDULE 3.7 hereto sets forth a list of all leases of real
property and all other leases involving annual payments by the lessee of more
than $1,000 related to the CFI Business (the "Leases"). Complete and correct
copies of all such Leases have been delivered to Purchaser. Except as disclosed
in SCHEDULE 3.7, each of the Leases is a legal, valid and binding obligation of
BSI and the other party thereto, enforceable in accordance with its terms except
as the same may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance or similar laws affecting the enforcement of
creditor's rights generally and by general principles of equity, and no party
to any Lease has given notice to BSI that BSI is in default thereunder or given
notice of the termination thereof. Except as disclosed in SCHEDULE 3.7, BSI is
aware of no facts or circumstances that exist and that, with the passage of time
or the giving of notice or both, would constitute a breach of or an event of
default under any of the Leases. The leasehold interests under the Leases are
subject to no lien or other encumbrance created by BSI or the Subsidiary other
than Permitted Liens.
3.8 Insurance. BSI maintains such insurance policies covering the CFI
Business and the CFI Assets as are consistent with prudent business practice.
Neither BSI nor Subsidiary has received any notice of cancellation with respect
to any such insurance policies or of any unwillingness of an insurer to renew
such policies based on standard premium charges.
3.9 Bank Accounts, Signing Authority, Powers of Attorney. Except as set
forth on SCHEDULE 3.9 hereto, Subsidiary has no account or safe deposit box in
any bank and no Person has any power, whether singly or jointly, to sign any
checks on behalf of the Subsidiary, to withdraw any money or other property from
any bank, brokerage or other account of Subsidiary or to act under any power of
attorney granted by Subsidiary at any time for any purpose. SCHEDULE 3.9 also
sets forth the names of all Persons authorized to borrow money or sign notes on
behalf of Subsidiary.
3.10 Liabilities. Subsidiary has no liabilities of any nature whatsoever,
whether accrued or unaccrued, known or unknown, fixed or contingent except: (a)
the obligations arising under the Assumed Contracts including contractual and
warranty liabilities; (b) those liabilities disclosed on SCHEDULE 3.10 hereto;
and (c) any other liabilities incurred by BSI or Subsidiary in connection with
the operation of the CFI Business in the ordinary course of business between the
date of the May Balance Sheet and June 30, 1995 and which do not and cannot
reasonably be anticipated to have a material adverse effect on the CFI Business
or CFI Assets (cumulatively, the "Assumed Liabilities"). Subsidiary is not in
default with respect to any outstanding indebtedness for borrowed money or any
instrument relating thereto and no such indebtedness or any instrument or
agreement relating thereto purports to limit the operation of the CFI Business
by Subsidiary. Complete and correct copies of all instruments, (including all
amendments, supplements, waivers and consent) relating to any indebtedness for
borrowed money of the Subsidiary have been furnished to Purchaser.
3.11 Proprietary Rights.
(a) Except as set forth in SCHEDULE 3.11(A), BSI owns, and will convey to
Subsidiary prior to Closing, all Proprietary Rights necessary for the
operation of the CFI Business as now conducted.
(b) Except as set forth in SCHEDULE 3.11(B), neither BSI nor Subsidiary
has entered into any agreement that limits or restricts its right to use,
copy, modify, prepare derivatives of, sublicense, distribute and otherwise
market, severally or together, the Proprietary Software and the Proprietary
Documentation. Except as set forth in SCHEDULE 3.11(B), there are no
agreements or arrangements in effect with respect to the marketing,
distribution, licensing or promotion of the Proprietary Software with any
current or past employee of BSI or Subsidiary, or with any independent
sales person, distributor, sublicensee or other remarketer or sales
organization. Neither BSI's or Subsidiary's present use, copying,
modification, preparation of derivatives of, sublicensing, distribution or
other marketing of the Proprietary Software infringes any intellectual
property right of any Person.
(c) Except as set forth in SCHEDULE 3.11(C), BSI owns, and will convey to
Subsidiary prior to Closing, all right, title and interest in and to the
Copyrights in all Proprietary Software and Proprietary Documentation. BSI
has obtained registrations of such Copyrights to the extent listed in
SCHEDULE 3.11(C). BSI will assign all such registrations to Subsidiary
prior to Closing. Except as set forth in SCHEDULE 3.11(C), each other
Person who has participated in or contributed to the development of the
Proprietary Software and the Proprietary Documentation has either: (i) so
contributed or participated as an employee of BSI within the scope of his
or her employment obligations, (ii) so contributed or participated as an
independent contractor pursuant to a valid and binding agreement which
specifically assigns all Copyrights to BSI, or (iii) otherwise assigned to
BSI the Copyright in any Proprietary Software and Proprietary
Documentation.
(d) BSI has taken efforts that are reasonable under the circumstances to
prevent the unauthorized disclosure to other Persons of such portions of
BSI's Trade Secrets as would enable any such other Person to compete with
BSI within the scope of the CFI Business as now conducted.
(e) BSI does not use any Trademark in connection with the CFI Business in
any material way, except for those Trademarks listed in SCHEDULE 3.11(E).
No such Trademark is registered except as otherwise indicated on SCHEDULE
3.11(E). All such Trademarks, and any registration thereof, shall be
transferred to Subsidiary prior to the Closing.
(f) Any Third Party Software used by BSI within the scope of the CFI
Business is identified in SCHEDULE 3.11(F). Except as set forth in
SCHEDULE 3.11(F), BSI has the legal right to use, sublicense, distribute
and otherwise market all Third Party Software in the manner that BSI
presently uses, sublicenses, distributes and otherwise markets such Third
Party Software in the normal course of the CFI Business. Except as set
forth in SCHEDULE 3.11(F), BSI has no obligation to make any payments by
way of royalty, fee, settlement or otherwise to any Person in connection
with BSI's present use, sublicensing, distribution or other marketing of
such Third Party Software.
(g) Except as set forth in SCHEDULE 3.11(G), no claim has been asserted
against BSI within the scope of the CFI Business by any other Person: (i)
that such Person has any right, title or interest in or to any of BSI's
Copyrights, Patents or Trade Secrets, (ii) that such Person has the right
to use any of BSI's Trademarks, (iii) to the effect that any past, present
or projected act or omission by BSI infringes any rights of such Person to
any Copyright, Patent, Trade Secret, Know-how or Trademark, or (iv) that
challenges BSI's right to use any of BSI's Copyrights, Patents, Trade
Secrets, Know-how or Trademarks.
3.12 Adequacy of Documentation. Except as otherwise disclosed in SCHEDULE
3.12, the Documentation includes the source code, system documentation,
statements of principles of operation, and schematics for all Proprietary
Software, as well as any pertinent commentary or explanation that may be
necessary to render such materials understandable and usable by a trained
computer programmer. Except as otherwise disclosed in SCHEDULE 3.12, the
Documentation also includes any program (including compilers), "workbenches",
tools, and higher level (or "proprietary") language that are reasonably
necessary for the further development, maintenance, and implementation of the
Proprietary Software.
3.13 Financial Statements. The Financial Statements have been prepared in
accordance with GAAP (except as set forth in the footnotes thereto). To the
extent that the Financial Statements separately identify the CFI Business, they
fairly present, in all material respects, the results of operations and
financial condition of the CFI Business for the periods and as of the dates set
forth.
3.14 Absence of Changes or Events. Except as set forth on SCHEDULE 3.14
hereto, or as permitted or contemplated by this Agreement, since December 31,
1994, there has not been: (a) any material change in BSI's assets, liabilities,
sales, income or business within the scope of the CFI Business or in its
relationships with those suppliers, customers or lessors within the scope of the
CFI Business, other than in the ordinary course of business; (b) any acquisition
or disposition by BSI of any material asset or property within the scope of the
CFI Business other than in the ordinary course of business; (c) any damage,
destruction or loss of any property within the scope of the CFI Business,
whether or not covered by insurance, that had a material adverse effect on or to
the CFI Assets or the CFI Business; or (d) any forgiveness or cancellation of
any debt or claim by BSI within the scope of the CFI Business or any waiver by
BSI of any right of material value within the scope of the CFI Business, other
than compromises of accounts receivables in amounts not material and in the
ordinary course of business.
3.15 Assumed Contracts. Except as disclosed in SCHEDULE 3.15, each of the
Assumed Contracts is a legal, valid and binding obligation of BSI and the other
party thereto, and will be prior to the Closing a legal, valid and binding
obligation of Subsidiary and the other party thereto enforceable in accordance
with its terms except as the same may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance or similar laws
affecting the enforcement of creditor's rights generally and by general
principles of equity, and no party to any Assumed Contract has given notice to
BSI that BSI is in default thereunder or given notice of the termination
thereof. Except as disclosed in SCHEDULE 3.15, BSI is aware of no facts or
circumstances that exist and that, with the passage of time or the giving of
notice or both, would constitute a breach of or an event of default under any of
the Assumed Contracts.
3.16 Litigation. Except as disclosed in SCHEDULE 3.16, there are no
lawsuits, actions, claims or legal, administrative or arbitration proceedings or
investigations pending or, to the knowledge of BSI, threatened by or against BSI
or Subsidiary that threatens the validity of this Agreement or any action taken
or to be taken pursuant hereto or that would, if adversely decided, materially
adversely affect the CFI Business or the operations and affairs thereof, or the
CFI Assets or materially impair the right or ability of the Subsidiary to carry
on the CFI Business substantially as now conducted; nor, to the best of BSI's
knowledge, does there exist any basis for any such lawsuit, action, claim or
proceeding.
3.17 Compliance with Applicable Laws. Except as set forth in SCHEDULE
3.17, BSI is in compliance with all applicable statutes, laws, ordinances,
rules, orders and regulations of any Governmental Authority in the operation of
the CFI Business, including those related to wages, hours, collective
bargaining, the payment of social security taxes and applicable discrimination
laws, except where noncompliance would not, individually or in the aggregate,
have a material adverse effect on the business, assets, condition (financial or
otherwise) or results of operations of the CFI Business. Except as set forth in
SCHEDULE 3.17, BSI has not received any written communication from a
Governmental Authority that alleges that BSI is not in compliance with any
federal, state, local or foreign laws, ordinances, rules or regulations in
connection with its operation of the CFI Business. SCHEDULE 3.17 hereto sets
forth a complete and correct list of all material licenses, permits and other
authorizations from all Governmental Authorities as are necessary for BSI to
conduct the CFI Business as presently conducted or for BSI to own or use the CFI
Assets as presently used.
3.18 Employees;Labor Matters. SCHEDULE 3.18 lists the names of all the
employees of the CFI Business and, except as otherwise noted thereon, the salary
or wage rate for each such employee and a brief description of the
responsibilities of each such employee. Except as otherwise disclosed on
SCHEDULE 3.18, BSI has not entered into a written employment agreement with any
such employee. BSI is not a party to any collective bargaining agreement, and
has not recognized or received a demand for recognition of any collective
bargaining representative with respect thereto; and during the past three years
there have been no material labor strikes, disputes or work stoppages and, to
the best of BSI's knowledge, no such actions are threatened against BSI and no
basis exists therefor. There are no unfair labor practice claims or charges
pending against BSI.
3.19 Employee Benefit Plans; ERISA. SCHEDULE 3.19 identifies each employee
pension, retirement, profit sharing, bonus, incentive, deferred compensation,
hospitalization, medical, dental, vacation, insurance, sick pay, disability,
severance or other plan, fund, program, policy, contract or arrangement
providing employee benefits maintained, promised or contributed to by BSI,
whether created in writing, through an employee manual or similar document or
orally (the "Plans"). BSI has no formal plan or commitment, whether legally
binding or not, to create any additional Plan or modify or change any existing
Plan that would affect any employee or terminate any employee of BSI. SCHEDULE
3.19 sets forth all liabilities, obligations and commitments of BSI, whether
legally binding or not, to make any contributions to any Plan or payments to any
employee or any other Person with respect to any of the Plans as of the date
hereof. Except as set forth on SCHEDULE 3.19, (a) all such Plans that are
subject to ERISA comply in all material respects with ERISA, (b) all
contributions to or payments under such Plans that were due and payable by BSI
on or before the date hereof have been made, and (c) none of the Plans subject
to Title IV of ERISA has been terminated, no proceeding to terminate any of such
Plans has been instituted, and there has been no complete or partial withdrawal,
cessation of facility operations or occurrence of any other event that would
result in the imposition of liability on BSI under Title IV of ERISA.
3.20 Disclosure. No representation or warranty made by BSI in this
Agreement or in any exhibit, schedule, or certificate delivered or to be
delivered to the Purchaser pursuant hereto or in connection with the
consummation of the transactions contemplated hereby contains or will contain
any untrue statement of a material fact or omits or will omit to state a
material fact required to be stated herein or necessary to make the statements
therein not misleading.
3.21 Minute Book. The minute books of Subsidiary made available to the
Purchaser for inspection accurately record therein all actions taken by its
Board of Directors and Shareholders.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to BSI as follows:
4.1 Organization and Authority. Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has all requisite corporate power and authority to execute and
deliver this Agreement and to carry out the transactions and perform the
obligations contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly and
validly authorized by all necessary corporate action on the part of Purchaser.
This Agreement has been duly and validly executed and delivered by an authorized
officer of Purchaser and constitutes a legal, valid and binding obligation of
Purchaser, enforceable against Purchaser in accordance with its terms.
4.2 Consents and Approvals; No Violation. There is no requirement
applicable to Purchaser to make any filing with, or to obtain any permit,
authorization, consent or approval of, any Governmental Authority as a condition
to the lawful consummation of the transactions contemplated by this Agreement.
The execution, delivery and performance of this Agreement by Purchaser and
compliance with the provisions hereof will not (a) conflict with any provision
of the Certificate of Incorporation or bylaws of Purchaser, (b) violate any
material law, statute, ordinance, rule or regulation applicable to Purchaser or
(c) result in a breach of or default under any material contract or other
agreement of Purchaser, the effect of which would be materially to impair
Purchaser's ability to perform its obligations under this Agreement.
4.3 Litigation. There are no lawsuits, actions, claims or legal,
administrative or arbitration proceedings or investigations pending or, to the
knowledge of Purchaser, threatened by or against or affecting Purchaser, any of
its properties, assets, operations or business that could reasonably be expected
materially to impair Purchaser's ability to perform its obligations under this
Agreement; nor, to the best of Purchaser's knowledge, does there exist any basis
for any such lawsuit, action, claim or proceeding.
4.4 Investment. The Subsidiary Shares acquired by the Purchaser pursuant
to this Agreement are being acquired for investment only and not with a view to
any public distribution thereof, and the Purchaser will not offer to sell or
otherwise dispose of the Subsidiary Shares so acquired by it in violation of the
Securities Act of 1933.
4.5 Disclosure. No representation or warranty made by Purchaser in this
Agreement or in any exhibit, schedule, or certificate delivered or to be
delivered to BSI pursuant hereto or in connection with the consummation of the
transactions contemplated hereby contains or will contain any untrue statement
of a material fact or omits or will omit to state a material fact required to be
stated herein or necessary to make the statements therein not misleading.
ARTICLE V
COVENANTS OF BSI
BSI covenants and agrees, that, until the Closing Date:
5.1 Ordinary Conduct. It will conduct the CFI Business in the ordinary
course in substantially the same manner as presently conducted and make all
reasonable efforts consistent with past practices to preserve its relationships
with its customers, suppliers and others with whom it deals and to keep
available the services of its officers and employees and that it will not
commence any new business in the Subsidiary.
5.2 Sale of CFI Assets. It will not sell, lease or otherwise dispose of,
or agree to sell, lease or otherwise dispose of, any of the CFI Assets other
than in the ordinary course of business consistent with past practices and
except for the transfers to the Subsidiary permitted hereunder.
5.3 Compliance With Contracts. It will comply with all of its obligations
under any Assumed Contract, as such obligations become due, to the extent that
the failure to comply therewith would have a material adverse effect on the CFI
Business, and it will not modify or terminate any Assumed Contract.
5.4 Compliance With Laws. It will comply with all applicable laws, rules
and regulations of all Governmental Authorities, the violation of which would
have a material adverse effect on the CFI Business.
5.5 Notification of Disputes. It will promptly notify Purchaser of any
claim, action, litigation or proceeding that, if adversely determined, would
have a material adverse effect on the CFI Business.
5.6 Further Information. It will permit Purchaser to have reasonable
access to its employees, books and records to the extent reasonably required for
Purchaser to conduct its due diligence investigation of the CFI Business and
will promptly furnish to Purchaser, from time to time, such other information
regarding its CFI Business as Purchaser may reasonably request.
ARTICLE VI
MUTUAL COVENANTS
6.1 Consummation of Agreement. BSI and Purchaser will use their
reasonable efforts to perform or fulfill all conditions and obligations to be
performed or fulfilled by them under this Agreement so that the transactions
contemplated hereby shall be consummated. Specifically, and without limitation
of the foregoing, each party shall exercise reasonable efforts to obtain all
approvals, consents, waivers and clearances from, and to deliver and make all
notices to and filings with, Governmental Authorities and other Persons that are
required by applicable law or by the terms of any material contract or agreement
to which it is a party in order to consummate the transactions contemplated by
this Agreement. Purchaser acknowledges that BSI is unlikely to obtain all
required consents to assignment of the Assumed Contracts to Subsidiary prior to
Closing and the parties agree that they will continue to work together in good
faith subsequent to Closing until all such consents are obtained or waived and
that, until all such consents are obtained, they will enter into such additional
subcontracts or similar agreements as may be necessary in order for Subsidiary
to perform all of the obligations and exercise all of the rights under such
Assumed Contracts. Except for events that are the subject of specific
provisions of this Agreement, if any event should occur, either within or
outside the control of BSI or Purchaser that would materially delay or prevent
fulfillment of the conditions upon the obligations of any party hereto to
consummate the transactions contemplated by this Agreement, the parties will
notify the others of any such event and will use their reasonable, diligent and
good faith efforts to cure or minimize the same as expeditiously as possible.
6.2 Publicity. BSI and Purchaser agree that neither party shall issue any
public release or announcement concerning the transactions contemplated hereby
without the prior consent of the other, except such releases or announcements as
may be required by applicable law or the rules of the NASDAQ National Market
System, in which case the releasing party shall permit the other party an
opportunity to review and comment upon such release or announcement.
6.3 Further Assurances. Subject to the terms and conditions of this
Agreement, each of the parties hereto will use all reasonable efforts to take,
or cause to be taken, all actions, and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to
consummate the transactions contemplated hereby.
6.4 Confidentiality.
(a) Until the Closing, each of Purchaser and BSI:
(i) will hold, and will cause its officers, directors, employees,
lenders, accountants, representatives, agents, consultants and
advisors to hold, in strict confidence all information (other
than such information as may be publicly available) furnished to
it by the other party in connection with the transactions
contemplated by this Agreement as well as all information
concerning the other party hereto contained in any analyses,
compilations, studies or other documents prepared by or on behalf
of it (collectively, the "Information"); and
(ii) will not, without the prior written consent of the other party
hereto, except as required by law, release or disclose any
Information to any other Person, except to its officers,
directors, employees, lenders, accountants, representatives,
agents, consultants and advisors who need to know the Information
in connection with the consummation of the transactions
contemplated by this Agreement, who are informed by it of the
confidential nature of the Information and who are instructed to
comply with the terms and conditions of this SECTION 6.4.
(b) If the transactions contemplated by this Agreement are not
consummated, the Information, including all analyses, compilations, studies
or other documents prepared by or on behalf of Purchaser or BSI, as the
case may be, based on the Information disclosed by the other party, will be
returned to the other party or destroyed immediately upon such party's
request therefor.
ARTICLE VII
CLOSING CONDITIONS
7.1 Conditions to Each Party's Obligations to Effect the Transactions
Contemplated Hereby. The respective obligations of each party to effect the
transactions contemplated hereby shall be subject to the fulfillment of the
following condition: neither BSI nor Purchaser shall be subject on the Closing
Date to any order, decree or injunction of a court of competent jurisdiction
that enjoins or prohibits the consummation of this Agreement, nor shall there be
pending a suit or proceeding by any Governmental Authority that seeks injunctive
or other relief in connection with the transactions contemplated hereby.
7.2 Conditions to the Obligations of Purchaser to Effect the Transactions
Contemplated Hereby. The obligations of Purchaser to effect the transactions
contemplated hereby shall be subject to the following conditions, any one or
more of which may be waived by Purchaser:
(a) All representations and warranties of BSI contained in this Agreement
shall be true and correct in all material respects as of the Closing Date
as though made as of such date (except as otherwise expressly contemplated
by this Agreement). BSI shall have performed and complied in all material
respects with all covenants and agreements contained in this Agreement
required to be performed and complied with by it at or prior to the Closing
Date. BSI shall have executed and delivered to Purchaser at and as of the
Closing a certificate, in form and substance satisfactory to Purchaser and
Purchaser's counsel, certifying that the conditions specified in this
SECTION 7.2(A) have been satisfied.
(b) Purchaser shall have received an opinion from Robinson, Bradshaw &
Hinson, P.A., counsel to BSI, dated the Closing Date, addressing matters
customary for a transaction of this nature and in a form reasonably
acceptable to Purchaser.
(c) BSI shall have obtained all approvals, consents, waivers and
clearances from, and shall have delivered and made all notices to and
filings with, Governmental Authorities and other Persons required under
this Agreement to be obtained or made in order to consummate the
transactions contemplated hereby, other than consents to assignment of the
Assumed Contracts to Subsidiary.
(d) BSI shall have exerted reasonable good faith efforts to obtain the
required consents to assignment of all Assumed Contracts to Subsidiary and
those consents that remain outstanding would not have a material adverse
effect on the Subsidiary's ability to operate the CFI Business.
(e) No litigation or proceeding shall be pending or threatened that will
prevent or, in the judgment of Purchaser, render inadvisable the
transactions contemplated by this Agreement.
(f) There shall not have been any material damage to or loss or
destruction of any of the CFI Assets or any properties or assets owned or
leased by Subsidiary (whether or not covered by insurance) or any material
adverse change in the condition (financial or otherwise), operations,
business, prospects or assets of the CFI Business or imposition of any
laws, rules or regulations which would materially adversely affect the
condition (financial or otherwise), operations, business, prospects or
assets of the CFI Business since December 31, 1994, other than changes in
general economic conditions in the United States.
(g) All of the directors and officers of Subsidiary shall have resigned
their positions with Subsidiary on or prior to the Closing Date (subject to
reelection to the same or different positions at the discretion of
Purchaser) and prior thereto shall have executed such appropriate documents
with respect to the transfer or establishment of bank accounts, signing
authority, etc., as Purchaser shall have reasonably requested.
(h) BSI shall have executed and delivered to the Purchaser a valid
sublease in the form of EXHIBIT 7.2(I) hereto (the "Sublease"), providing
for the sublease of a portion of the premises in Charlotte, North Carolina
currently leased by BSI and used in connection with the CFI Business, which
premises are more specifically described in the Sublease, and shall have
obtained and delivered any necessary consents or approvals for the Sublease
or the parties shall have otherwise provided to their satisfaction for the
temporary use by Subsidiary of those premises pending such consent.
7.3 Conditions to the Obligations of BSI to Effect the Transactions
Contemplated Hereby. The obligations of BSI to effect the transactions
contemplated hereby shall be subject to the following conditions, any one or
more of which may be waived by BSI:
(a) All representations and warranties of Purchaser contained in this
Agreement shall be true and correct in all material respects as of the
Closing Date as though made as of such date (except as otherwise expressly
contemplated by this Agreement). Purchaser shall have performed and
complied in all material respects with all covenants and agreements
contained in this Agreement required to be performed and complied with by
it at or prior to the Closing Date. Purchaser shall have executed and
delivered to BSI at and as of the Closing a certificate, in form and
substance satisfactory to BSI and BSI's counsel, certifying that the
conditions specified in this SECTION 7.3(A) have been satisfied.
(b) Purchaser shall have obtained all approvals, consents, waivers and
clearances from, and shall have delivered and made all notices to and
filings with, Governmental Authorities and other Persons required under
this Agreement to be obtained or made in order to consummate the
transactions contemplated hereby.
(c) BSI shall have received an opinion from Shughart, Thomson & Kilroy,
P.C., counsel to Purchaser, dated the Closing Date, addressing matters
customary for transactions of this nature and in a form reasonably
acceptable to BSI.
ARTICLE VIII
TERMINATION
8.1 Termination. The obligations of the parties hereunder may be
terminated and the transactions contemplated hereby abandoned at any time prior
to the Closing Date:
(a) by mutual written consent of BSI and Purchaser;
(b) by either BSI or Purchaser, if there shall be any law or regulation
that makes consummation of this Agreement illegal or otherwise prohibited
or if any judgment, injunction, order or decree permanently enjoining BSI
or Purchaser from consummating this Agreement is entered and such judgment,
injunction, order or decree shall become final and non-appealable;
(c) by either BSI or Purchaser, if (i) the other party shall fail to
perform its agreements contained herein required to be performed by it on
or prior to the Closing Date, or (ii) any representation or warranty of the
other party shall be found to be untrue or inaccurate as of the date made,
provided that such failure or inaccuracy is not cured within ten (10) days
after the noncomplying party has received written notice of the other
party's intent to terminate this Agreement pursuant hereto; or
(d) by either BSI or Purchaser, if a condition of its obligation to effect
the transactions contemplated hereby remains unsatisfied as of the Closing
Date or shall have become incapable of fulfillment and shall not have been
waived.
8.2 Procedure and Effect of Termination or Failure to Close.
(a) In the event of a termination contemplated hereby by any party
pursuant to SECTION 8.1, prompt written notice thereof shall be given to
the other party, and the transactions contemplated hereby shall be
abandoned, without further action by the other party hereto. In such
event:
(i) All filings, applications and other submissions relating to the
transactions contemplated hereby shall, to the extent practicable, be
withdrawn from the agency or other Person to which made; and
(ii) Neither of the parties hereto nor any of their partners, directors,
officers, shareholders, employees, agents, or affiliates shall have
any liability or further obligation to the other party or any of its
partners, directors, officers, shareholders, employees, agents or
affiliates pursuant to this Agreement, except: (A) as stated in
SECTIONS 6.4 (relating to confidentiality) and 9.1 (expenses) hereof;
and (B) BSI and Purchaser shall nevertheless each be entitled to seek
any remedy to which it may be entitled at law or in equity for the
material violation or breach by the other party of any agreement,
covenant, representation or warranty contained in this Agreement.
ARTICLE IX
MISCELLANEOUS PROVISIONS
9.1 Expenses. Whether or not the transactions contemplated hereby are
consummated, BSI and Purchaser will each pay all costs and expenses incurred by
it in connection with the negotiation, preparation and execution of this
Agreement and the closing of the transactions contemplated hereby.
9.2 Survival of Representations; Indemnification.
(a) Survival. All representations, warranties, covenants and agreements
made by the parties to this Agreement or pursuant hereto shall survive the
Closing, but all claims made by virtue of such representations, warranties
and agreements shall be made under, and subject to the limitations set
forth in, this SECTION 9.2.
(b) BSI's Agreement to Indemnify.
(i) Indemnification. Subject to the limitations, conditions, and
provisions set forth herein, BSI agrees to indemnify, defend and hold
harmless Purchaser from and against all demands, claims, actions,
losses, damages, liabilities, costs and expenses asserted against or
incurred by Purchaser resulting from (A) noncompliance with any bulk
sale laws applicable to the transactions contemplated by this
Agreement, except to the extent any such demands, claims, actions,
losses, damages, liabilities, costs and expenses relate to any of the
Assumed Liabilities, and (B) a breach of any covenant, agreement,
representation or warranty of BSI contained in this Agreement
(collectively, "Purchaser Damages"). Should BSI have any obligation
hereunder to pay Purchaser Damages to Purchaser, Purchaser may elect
to offset the amount of such Purchaser Damages against any Related
Obligations.
(ii) Limitation of Liability. BSI shall be obligated to indemnify
Purchaser only for those Purchaser Damages as to which Purchaser has
given BSI written notice within 24 months after the Closing Date. Any
written notice delivered by Purchaser to BSI shall set forth with
specificity the basis of the claim for Purchaser Damages and an
estimate of the amount thereof. BSI shall have no obligation with
respect to the first One Hundred Thousand Dollars ($100,000) of
Purchaser Damages. BSI's cumulative liability for Purchaser Damages
shall not exceed Nine Million Dollars ($9,000,000).
(iii) Conditions of Indemnification. The obligations and liabilities of
BSI under this SECTION 9.2(B) with respect to claims for Purchaser
Damages resulting from the assertion of liability by third parties
("Purchaser Claims") shall be subject to the following terms and
conditions:
(A) Within 20 days after receiving notice thereof, Purchaser will
give BSI notice of any Purchaser Claims asserted against or
incurred by Purchaser. BSI may undertake the defense thereof by
counsel of its own choosing. Purchaser may, by counsel,
participate in such proceedings, negotiations or defense at its
own expense, but BSI shall retain control over such litigation.
In all such cases, Purchaser will give reasonable assistance to
BSI.
(B) In the event that, within 20 days after notice of any such
Purchaser Claim, BSI fails to notify Purchaser of its intention
to defend, Purchaser will (upon further notice to BSI) have the
right as against BSI to undertake the defense, compromise or
settlement of such Purchaser Claim. BSI may elect to participate
in such proceedings, negotiations or defense at any time at its
own expense. Purchaser shall not settle any such Purchaser Claim
without the consent of BSI, which consent shall not be
unreasonably withheld.
(c) Purchaser's Agreement to Indemnify.
(i) Indemnification. Subject to the limitations, conditions, and
provisions set forth herein, Purchaser agrees to indemnify, defend
and hold harmless BSI from and against all demands, claims, actions,
losses, damages, liabilities, costs and expenses asserted against or
incurred by BSI resulting from (A) Purchaser's failure to comply with
all of its obligations and liabilities under the Assumed Contracts,
and (B) a breach of any covenant, agreement, representation or
warranty of Purchaser contained in this Agreement (collectively, "BSI
Damages").
(ii) Limitation of Liability. Purchaser shall be obligated to indemnify
BSI only for those BSI Damages as to which BSI has given Purchaser
written notice within 24 months after the Closing Date. Any written
notice delivered by BSI to Purchaser shall set forth with specificity
the basis of the claim for BSI Damages and an estimate of the amount
thereof. Purchaser shall have no obligation with respect to the
first One Hundred Thousand Dollars ($100,000) of BSI Damages.
Purchaser's cumulative liability for BSI Damages shall not exceed
Nine Million Dollars ($9,000,000).
(iii) Conditions of Indemnification. The obligations and liabilities of
Purchaser under this SECTION 9.2(C) with respect to claims for BSI
Damages resulting from the assertion of liability by third parties
("BSI Claims") shall be subject to the following terms and
conditions:
(A) Within 20 days after receiving notice thereof, BSI will give
Purchaser notice of any BSI Claims asserted against or incurred
by BSI. Purchaser may undertake the defense thereof by counsel
of its own choosing. BSI may, by counsel, participate in such
proceedings, negotiations or defense at its own expense, but
Purchaser shall retain control over such litigation. In all such
cases, BSI will give reasonable assistance to Purchaser.
(B) In the event that, within 20 days after notice of any such BSI
Claim, Purchaser fails to notify BSI of its intention to defend,
BSI will (upon further notice to Purchaser) have the right as
against Purchaser to undertake the defense, compromise or
settlement of such BSI Claim. Purchaser may elect to participate
in such proceedings, negotiations or defense at any time at its
own expense. BSI shall not settle any such BSI Claim without the
consent of Purchaser, which consent shall not be unreasonably
withheld.
9.3 Further Assurances. From time to time after the Closing Date,
without further consideration, BSI and Purchaser will each, at its expense,
execute and deliver, or cause to be executed and delivered, such documents to
the other as the other may reasonably request.
9.4 Amendment and Modification. This Agreement may be amended, modified
or supplemented only by written agreement of BSI and Purchaser with respect to
any of the terms, conditions or provisions contained herein.
9.5 Waiver of Compliance; Consents. Except as otherwise provided in this
Agreement, any failure of any of the parties to comply with any obligation,
representation, warranty, covenant, agreement or condition herein may be waived
by the party entitled to the benefits thereof only by a written instrument
signed by the party granting such waiver, but such waiver or failure to insist
upon strict compliance with such obligation, representation, warranty, covenant,
agreement or condition shall not operate as a waiver of, or estoppel with
respect to, any subsequent or other failure. Whenever this Agreement requires
or permits consent by or on behalf of any party hereto, such consent shall be
given in writing in a manner consistent with the requirements for a waiver of
compliance as set forth in this Section.
9.6 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given when delivered by hand or by facsimile
transmission or three days after deposit in the U.S. mail if mailed by
registered or certified mail (return receipt requested), postage prepaid, to the
parties at the following addresses (or at such other address for a party as
shall be specified by like notice, provided that notices of a change of address
shall be effective only upon receipt thereof):
If to BSI: Broadway & Seymour, Inc.
128 South Tryon Street
Suite 1000
Charlotte, North Carolina 28202
Attention: Mr. William W. Neal
Fax: (704) 344-3542
If to Purchaser: Jack Henry & Associates, Inc.
663 Highway 60
Monett, Missouri 65708
Attention: Mr. Mike Henry
Fax: (417) 235-1765
9.7 Assignment. This Agreement and all of the provisions hereof shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors, and permitted assigns, and shall not confer upon any other Person
except the parties hereto any rights or remedies hereunder. Neither this
Agreement nor any of the rights, interests or obligations hereunder may be
assigned by either party without the prior written consent of the other.
9.8 Governing Law; Jurisdiction. The execution, interpretation and
performance of this Agreement shall be governed by the internal laws and
judicial decisions of the State of North Carolina.
9.9 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
9.10 Interpretation. The article and section headings contained in this
Agreement are solely for the purpose of reference, are not part of the agreement
of the parties and shall not in any way affect the meaning or interpretation of
this Agreement. As used herein, the singular shall include the plural and the
plural the singular, and the use of any gender shall be applicable to all
genders.
9.11 Entire Agreement. This Agreement, including the Exhibits and
Schedules hereto and the documents delivered pursuant to this Agreement, embody
the entire agreement and understanding of the parties hereto in respect of the
subject matter hereof. The Exhibits and Schedules hereto are an integral part
of this Agreement and are incorporated by reference herein. This Agreement
supersedes all prior agreements and understandings between the parties with
respect to the transactions contemplated hereby.
9.12 Severability. If any provision of this Agreement is held invalid or
unenforceable for any reason, such invalidity or unenforceability will not
affect the validity of the remaining provisions hereof, which shall continue in
full force and effect.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
under seal as of the date first above written.
BROADWAY & SEYMOUR, INC.
By: /s/ William W. Neal
Title: Chairman and Chief Executive Officer
JACK HENRY & ASSOCIATES, INC.
By: /s/ Michael E. Henry
Title: Chairman and Chief Executive Officer
MARKETING AGREEMENT
This Marketing Agreement is entered into this 30th day of June, 1995 by and
between Jack Henry & Associates, Inc. ("Jack Henry") and Broadway & Seymour,
Inc. ("BSI").
BACKGROUND STATEMENT
Contemporaneously herewith, Jack Henry and BSI are entering into a Stock
Purchase Agreement pursuant to which Jack Henry is purchasing all of the issued
and outstanding stock of Liberty Software, Inc. ( "LSI"). LSI is a wholly owned
subsidiary of BSI that has acquired a substantial portion of the assets of the
Community Financial Institution business unit of BSI. In connection with that
transaction, the parties have agreed to cooperate in connection with BSI
marketing certain other software to the combined customer base of Jack Henry and
LSI. This Agreement sets forth in more detail the rights and obligations of the
parties.
AGREEMENT
NOW, THEREFORE, the parties hereto agree for themselves, their successors
and assigns as follows:
1. DEFINITIONS. As used in this Agreement as defined terms, the
following terms shall have the meanings set forth below:
1.1 The term "BSI AUXILIARY SOFTWARE" means the BSI software products
described in Exhibit A hereto. The parties may enter into one or more Addenda
in the future providing that the term "BSI AUXILIARY SOFTWARE" shall also
include specific additional software products that are marketed by BSI to
Customers during the term of this Agreement for use with the Software to provide
functions and capabilities supplemental to the Software.
1.2 The term "CUSTOMERS" means the aggregation of (a) the existing
licensees of BSI's Liberty software, for so long as each such license is in
existence; (b) the existing licensees of Jack Henry's CIF 20/20 software, for so
long as each such license is in existence; (c) the existing licensees of Jack
Henry's Silverlake software, for so long as each such license is in existence;
(d) the existing licensees of Software owned by any other competitor of Jack
Henry at the time Jack Henry directly or indirectly acquires that competitor or
the assets thereof; and (e) those third parties who become licensees of Software
during the term of this Agreement, whether such licenses are granted by Jack
Henry or any direct or indirect subsidiary of Jack Henry, or any other entity
resulting from the combination or other reorganization of Jack Henry, for so
long as each such license is in existence.
1.3 The term "CUSTOMER LIST" means any list of Liberty Customers retained
by BSI and any list of Customers supplied by Jack Henry to BSI pursuant to
Section 3.2 hereof.
1.4 The term "SOFTWARE" means all of the following software products to
the extent they are being marketed, distributed, licensed or supported during
the term hereof by Jack Henry or any direct or indirect subsidiary of Jack
Henry, or any other entity resulting from the combination or other
reorganization of Jack Henry: (a) BSI's Liberty software; (b) Jack Henry's CIF
20/20 and Silverlake software; and (c) any modification, enhancement or
replacement thereof or any third party software that performs essentially the
same basic functions as any such software product.
2. BSI RIGHTS AND OBLIGATIONS.
2.1 Right to Market. BSI agrees that it will provide Jack Henry with
advance copies of any written materials that are to be mailed or otherwise
provided to Customers in connection with a marketing campaign that uses the
Customer List to market any software product to the Customer base. Except as
otherwise expressly provided above and in Section 6.7 hereof, BSI shall have and
retain the right to market BSI Auxiliary Software to Customers through whatever
means BSI determines to be appropriate. Except as otherwise expressly provided
in Section 6.7 hereof, BSI shall have and retain the right to enter into any
agreements with Customers with respect to the BSI Auxiliary Software that BSI
may determine to be appropriate, without any approval by or consent from Jack
Henry.
2.2 BSI Obligations. BSI shall have the sole responsibility for
developing any new products that are to be included within the scope of BSI
Auxiliary Software and for enhancing, marketing, installing and supporting all
BSI Auxiliary Software. BSI shall have the sole contractual relationship with
Customers with respect to BSI Auxiliary Software and shall be solely responsible
for all of its warranties and representations relating to BSI Auxiliary
Software.
3. JACK HENRY RIGHTS AND OBLIGATIONS.
3.1 Endorsements and Marketing Assistance. Upon the execution of this
Agreement and from time to time during the term of this Agreement upon request
by BSI, Jack Henry shall endorse the BSI Auxiliary Software as the preferred
supplemental software for Customers. BSI and Jack Henry shall cooperate in good
faith in developing the text of each such written endorsement and distributing
the endorsement to Customers. Jack Henry shall identify BSI as a provider of
supplemental products in its advertising and direct mail solicitations whenever
it would be commercially appropriate to do so given the nature and other content
of the materials. The above notwithstanding, Jack Henry shall not be required
to endorse any unproven BSI Auxiliary Software until BSI has reasonably
demonstrated the adequacy of that software through successful implementation.
3.2 Customer Access. Upon the execution of the first Addendum to this
Agreement, Jack Henry shall provide BSI with a customer list, identifying each
Customer (other than customers of BSI's Liberty software) and including the
name, address and telephone number of Jack Henry's principal contact at each
such Customer. Upon request by BSI from time to time during the term of this
Agreement, Jack Henry shall update the customer list to assure that it is
complete and accurate (with the initial customer list and all updates thereto
cumulatively referred to in this Agreement as the "Customer List"). Upon
request by BSI from time to time during the term of this Agreement, Jack Henry
shall introduce representatives of BSI to its Customer contacts. Jack Henry
shall notify BSI in advance of all scheduled meetings of the Jack Henry users
group and other customer events and shall assist BSI in securing a visible and
prominent presence at such events, at BSI's sole expense. Upon the expiration
or earlier termination of this Agreement, BSI shall return to Jack Henry or
destroy all of BSI's copies of any Customer List in any tangible form, including
written documents and electronic storage.
3.3 Technical Support. Jack Henry shall cooperate with BSI to assure that
each Customer has access to appropriate interfaces allowing the Customer to use
the BSI Auxiliary Software with the Software. Jack Henry shall develop that
portion of each such interface that is typically developed by the licensor of
the underlying software in accordance with normal industry standards and shall
provide BSI with the specifications and information required for BSI to develop
the remainder of each such interface.
4. COMPENSATION.
4.1 Marketing Commission. In consideration of Jack Henry's performance of
its obligations as set forth hereunder, BSI shall pay Jack Henry with respect to
each BSI Auxiliary Software product, a reasonable and appropriate percentage of
the license fees actually received by BSI during the term of this Agreement from
Customers with respect to their licensing of that BSI Auxiliary Software
product. Subsequent to the execution of this Agreement, the parties shall
negotiate in good faith and execute an Addendum setting forth the marketing
commission rate for each specific BSI Auxiliary Software product; should the
parties be unable to negotiate any such Addendum, this Agreement shall be void.
Jack Henry shall not be entitled to a percentage of any fees or other amounts
charged by BSI for maintenance, custom product development or enhancement, the
provision of other services or the provision of third party hardware or
software. BSI agrees that it will not reallocate license fees to other products
or services for the purpose of avoiding or decreasing the payments due to Jack
Henry hereunder. In the event that BSI charges any Customer a single fee
representing a license fee for BSI Auxiliary Software and fees or charges for
other products or services, BSI shall be deemed to have charged the Customer a
license fee for the BSI Auxiliary Software equal to the amount that would have
been charged in like circumstances if each product and service had been billed
separately.
4.2 Payment of Marketing Commission. BSI shall calculate the marketing
commission payable to Jack Henry at the end of each calendar year quarter and
shall pay the marketing commission within thirty (30) days thereafter. At the
time it makes each payment, BSI shall provide Jack Henry with a report
describing in reasonable detail its basis for calculating the marketing
commission due.
4.3 Right of Audit. Upon reasonable advance request by Jack Henry during
the term of this Agreement (and for a period of one year thereafter), Jack Henry
shall have the right during BSI's normal business hours to audit those books and
records of BSI required to confirm the calculation of marketing commissions.
All such information shall be disclosed to Jack Henry in strict confidence and
Jack Henry may not disclose such information to any third party nor use any such
information for any purpose whatsoever other than the confirmation of the
marketing commission calculation.
5. TERM. This Agreement shall commence upon the execution hereof and
shall continue for a term of five years. Either party may terminate this
Agreement during the term hereof should the other party breach a material term
of this Agreement and fail to cure that breach within sixty (60) days after
notice from the nonbreaching party identifying specifically the nature of the
breach and the steps that must be taken to cure the breach. In addition, Jack
Henry may terminate this Agreement during the term hereof should BSI (a) fail to
develop, market and maintain the BSI Auxiliary Software in a competent manner,
consistent with accepted norms in the computer industry or (b) fail to exert
reasonable commercial efforts to assure that no significant portion of those
Customers who are licensees thereof are unable to satisfactorily use the BSI
Auxiliary Software for its intended purpose and, in either case, fail to cure
that deficiency within sixty (60) days after notice from Jack Henry identifying
specifically the nature of the deficiency and the steps that must be taken to
cure the deficiency. BSI may terminate this Agreement by notice to Jack Henry
if, at any time, there is no BSI Auxiliary Software covered by this Agreement
and the parties are unable to reach agreement with respect to an Addendum adding
software to this Agreement within thirty (30) days subsequent to such notice.
6. MISCELLANEOUS TERMS.
6.1 Notices. All notices and other communications hereunder shall be
in writing and shall be deemed given when delivered by hand or by facsimile
transmission or three days after deposit in the U.S. mail if mailed by
registered or certified mail (return receipt requested), postage prepaid, to the
parties at the following addresses (or at such other address for a party as
shall be specified by like notice, provided that notices of a change of address
shall be effective only upon receipt thereof):
If to BSI: Broadway & Seymour, Inc.
128 South Tryon Street
Suite 1000
Charlotte, North Carolina 28202
Attention: Mr. William W. Neal
Fax: (704) 344-3542
If to Jack Henry: Jack Henry & Associates, Inc.
663 Highway 60
Monett, Missouri 65708
Attention: Mike Henry
Fax: (417) 235-1765
6.2 Assignment. This Agreement and all of the provisions hereof shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns, and shall not confer upon any other person
except the parties hereto any rights or remedies hereunder. Neither this
Agreement nor any of the rights, interests or obligations hereunder may be
assigned by either party without the prior written consent of the other.
6.3 Arbitration. Any dispute arising out of or relating to this
Agreement, specifically including any dispute with respect to the amount of
royalties payable to Jack Henry hereunder, shall be resolved through arbitration
in accordance with the rules of the American Arbitration Association. The
arbitration shall be conducted in Charlotte, North Carolina. The decision of
the arbitrators shall be final and binding upon the parties and may be enforced
in any court of competent jurisdiction.
6.4 Governing Law; Jurisdiction. The execution, interpretation and
performance of this Agreement shall be governed by the internal laws and
judicial decisions of the State of North Carolina.
6.5 Interpretation. The article and section headings contained in this
Agreement are solely for the purpose of reference, are not part of the agreement
of the parties and shall not in any way affect the meaning or interpretation of
this Agreement. As used herein, the singular shall include the plural and the
plural the singular, and the use of any gender shall be applicable to all
genders.
6.6 Entire Agreement. This Agreement, including the Exhibit hereto,
embodies the entire agreement and understanding of the parties hereto in respect
of the subject matter hereof. This Agreement supersedes all prior agreements
and understandings between the parties with respect to the transactions
contemplated hereby and may not be modified except in a writing signed by both
of the parties hereto.
6.7 Noncompetition Agreement. During the term of this Agreement and for
so long thereafter as BSI retains any Customer List in any tangible form,
including written documents and electronic storage, BSI shall not use the
Customer List to market any software product to the Customer base except
pursuant to an Addendum to this Agreement or with the prior written consent of
Jack Henry. BSI acknowledges that the foregoing restriction shall apply to any
marketing effort that targets the Customers on the Customer List, whether
through written mailing or other solicitation or personal contact. Jack Henry
acknowledges that the foregoing restriction shall not preclude BSI from
marketing software products to any third party, including a Customer, unless the
marketing effort is part of a targeted effort using the Customer List to market
the software product to the Customer base.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
the day first written above.
BROADWAY & SEYMOUR, INC. JACK HENRY & ASSOCIATES, INC.
By: /s/ William W. Neal By: /s/ Michael E. Henry
Title : Chairman and Title: Chairman and
Chief Executive Officer Chief Executive Officer
MASTER AGREEMENT
THIS MASTER AGREEMENT is entered into this 30th day of June, 1995, by and
between Broadway & Seymour, Inc., a Delaware corporation with its principal
place of business in Charlotte, North Carolina 28202 on behalf of itself and its
wholly owned subsidiaries (cumulatively, "BSI") and Jack Henry & Associates,
Inc. ("Client"), a Delaware corporation with its principal place of business in
Monett, Missouri.
1. NATURE OF AGREEMENT
1.1 Scope and Purpose of Agreement. Prior to the execution of this Agreement,
BSI has evaluated and assessed Client's software related needs and has
determined the extent to which the software licensed hereunder would be
appropriate for Client's needs. This Agreement relates to BSI s licensing
to Client of certain intellectual property rights and BSI's provision to
Client of certain services. This Agreement does not relate to the sale of
tangible copies of software to Client.
1.2 Effect of Master Agreement. This Agreement constitutes the complete
understanding between the parties with respect to the terms and conditions
set forth herein and supersedes all previous written or oral agreements
and representations. The terms and conditions of this Agreement shall
control over any terms and conditions in any solicitation, request for
proposal, proposal, purchase order, acknowledgment or other written form.
This Agreement may be modified only in a writing that expressly references
this Agreement and is executed by both of the parties hereto.
1.3 Term. This Agreement shall become effective upon execution by both of the
parties hereto and shall continue in effect for a term of one year. This
Agreement shall thereafter continue until the license granted hereunder is
terminated by BSI or Client pursuant to Section 2.2. The provisions of
Articles 5 and 6 hereof shall survive and continue in full force and
effect notwithstanding the termination of this Agreement or such license.
1.4 Definitions. As used in this Agreement, the following terms shall have
the meanings set forth below:
1.4.1 "BANCStar Application" means any application program created by
Client that is generated by BANCStar Generator and executed by
BANCStar Processor, including any derivative version of BANCStar
Spectrum created by Client.
1.4.2 "BANCStar Generator" means Version 10.0 of BSI's BANCStar
Generator in both object and source code, the related Technical
Reference Guide and both object and source code versions of the
separate software package used to generate the license and
security file for each user and any existing documentation related
thereto, together with any updates and new releases thereof
provided to Client during the term hereof in connection with the
Maintenance Services.
1.4.3 "BANCStar Processor" means Version 10.0 of BSI's BANCStar
Processor in both object and source code and the related Standard
User Manual and standard demonstration application set, together
with any updates and new releases thereof provided to Client
during the term hereof in connection with the Maintenance
Services.
1.4.4 "BANCStar Spectrum" means the current version of BSI's BANCStar
Spectrum in both object and source code, including all of the
existing modules thereof, and all existing system and user level
documentation related thereto.
1.4.5 "BSI Software" means BANCStar Processor, BANCStar Generator and
BANCStar Spectrum.
1.4.6 "Community Banks" means those financial institutions that have
assets of no more than One Billion Dollars and who are licensees
of the CIF 20/20, Silverlake or Liberty software owned directly or
indirectly by Client, or any modification or new version thereof.
1.4.7 "Maintenance Services" means those maintenance and support
services provided by BSI to Client pursuant to Article 4 of this
Agreement.
1.4.8 "Transition Services" means those services provided by BSI to
Client pursuant to Article 3 of this Agreement.
2. LICENSE OF BSI SOFTWARE
2.1 Grant of License. BSI hereby grants to Client, and Client hereby accepts
from BSI, subject to the terms and conditions of this Agreement
(specifically including the restrictions on use), a nontransferable right
and license in and to the BSI Software. Upon the payment of the license
fee specified in Exhibit B, the license shall be fully paid and royalty-
free. The license is worldwide, subject to the restrictions set forth in
Section 8.1. The license is perpetual unless terminated by either party
in accordance with Section 2.2. The license shall be exclusive as to
BANCStar Spectrum and nonexclusive as to BANCStar Generator and BANCStar
Processor.
Client shall have only those rights in the BSI Software expressly granted
herein and BSI retains all other right, title and interest in the BSI
Software. BSI retains all rights to patents, copyrights, trademarks and
trade secrets in or relating to the BSI Software.
Client shall retain all legends relating to copyright or confidentiality
on all copies of the BSI Software and shall stamp any additional copies of
these materials and all portions, modifications, or other compilations
thereof with appropriate confidentiality legends.
2.2 Term. Client s right and license to use the BSI Software shall be
effective until terminated in accordance with the express provisions of
this Section 2.2. Client may terminate the license upon written notice to
BSI and compliance with the procedures described below. BSI may terminate
the license upon written notice to Client should Client materially breach
Section 2.3 or Article 6 hereof and fail to cure that breach within sixty
(60) days after written notice from BSI specifying in detail the nature of
the breach and the steps that must be taken by Client to cure the breach.
Upon termination, Client shall discontinue the use of and shall return to
BSI all copies of the BSI Software and related documentation and shall
destroy, and document in writing such destruction of, any embodiments of
these materials stored in or on a reusable electronic or similar medium,
including but not limited to memory, disk packs, tape, and other
peripheral devices. Termination of the license by Client or BSI shall in
no event entitle Client to a refund of any license fees. Any permitted
sublicense granted by Client during the term of this Agreement shall
survive the termination of this license.
2.3 Restrictions on Use. Client shall not use, copy, display, perform,
distribute, sublicense or create derivative works of the BSI Software
except to the extent expressly provided below:
2.3.1 Client may use, copy and create derivative works of BANCStar
Generator for its internal purposes in writing and compiling
BANCStar Applications to be licensed to Community Banks. Client
shall not transfer, sublicense or otherwise assign its rights in
BANCStar Generator to any third party nor allow any third party to
access or use BANCStar Generator.
2.3.2 Client may use, copy and create derivative works of both object
and source code versions of BANCStar Processor for its internal
purposes in developing, maintaining and modifying BANCStar
Processor. Client may grant sublicenses to Community Banks
permitting each such Community Bank to use object code copies of
BANCStar Processor for the Community Bank's internal business use,
contingent upon Client having included in each such sublicense
terms that protect BSI's intellectual property rights in BANCStar
Processor and impose an obligation of confidentiality on the
sublicensee in a manner no less extensive than BSI's Master
License for Liberty software, a copy of which is attached as
Exhibit C. Client shall not transfer, sublicense or otherwise
assign its rights in BANCStar Processor to any third party nor
allow any third party to access or use BANCStar Processor except
as provided above.
2.3.3 Client may use, copy, display and create derivative works of
BANCStar Spectrum and grant sublicenses of BANCStar Spectrum to
Community Banks.
2.3.4 Should any Community Bank that is a sublicensee of BSI Software
hereunder cease to be a Community Bank, as defined herein, as a
result of acquiring, being acquired by or merging with another
banking institution, that Community Bank may retain its then
existing sublicense of BSI Software but Client may not grant that
sublicensee any further rights in BSI Software that would expand
the use thereof beyond that scope of use typical for a Community
Bank.
2.4 Client Responsibility. Client shall be solely responsible for obtaining,
maintaining and operating at its expense all computer hardware and
software necessary for the use of the BSI Software being licensed pursuant
to this Agreement. Without limiting the generality of the foregoing,
Client acknowledges that it must license software from Bankers Systems in
order to generate disclosure forms and documents.
3. TRANSITION SERVICES
For a period of one year commencing upon the date hereof, BSI shall
provide to Client those Transition Services that are identified in Exhibit A
hereto. In addition to its obligations and liabilities hereunder, Client shall
have those obligations and liabilities relating to the Transition Services
described in Exhibit A hereto.
4. SOFTWARE MAINTENANCE SERVICES
4.1 Updates. Prior to developing each new version of BANCStar Processor and
BANCStar Generator, BSI shall consult with Client to determine its needs
and the extent to which the proposed new version would meet those needs.
BSI shall provide to Client all generally available updates and new
versions of BANCStar Processor and BANCStar Generator that are developed
by BSI. BSI shall deliver each such update and new version of BANCStar
Processor to Client, on suitable medium and in both object and source
code, at the time BSI first makes such software generally available to its
customers. BSI shall deliver each such update and new version of BANCStar
Generator to Client, on suitable medium and in both object and source
code, at the time BSI first makes application programs generated by such
software (other than custom programs for specific users) available to its
customers. Each such update and new version that is delivered to Client
C-289635.V03
pursuant to this Section shall be deemed to be licensed to Client subject
to all of the terms, conditions, restrictions and limitations applicable
hereunder to licensed versions of the BANCStar Processor or BANCStar
Generator, as the case may be.
4.2 Documentation. At the time that it delivers each updated or new version
of BANCStar Processor to Client, BSI shall deliver to Client on suitable
electronic medium or in hard copy, any then existing updated version of
the related Standard User Manual and standard demonstration application
set. At the time that it delivers each updated or new version of BANCStar
Generator to Client, BSI shall deliver to Client on suitable electronic
medium or in hard copy, any then existing updated version of the related
Technical Reference Guide. If any of the foregoing updated documentation
is not available at the time that the updated or new version of the
software is delivered to Client, BSI shall deliver to Client any such
documentation that BSI may subsequently create as soon as any such
documentation becomes generally available. All of the foregoing
documentation that is delivered to Client pursuant to this Section shall
be deemed to be licensed to Client subject to all of the terms,
conditions, restrictions and limitations applicable hereunder to licensed
versions of the BANCStar Processor or BANCStar Generator, as the case may
be.
4.3 Technical Support. BSI shall provide to Client reasonable levels of
technical consultation and advice relating to the application and use of
the BSI Software, including all updated and new versions thereof delivered
to Client pursuant to this Agreement. All such consultation and support
shall be by telephone during the hours that BSI generally makes such
support available to its other customers. In addition, BSI shall provide
to Client on a regular basis any patches that are generally made available
to customers to correct errors in licensed versions of BSI Software. BSI
shall have no obligation to develop software or documentation for Client,
to provide consultation or assistance at Client's premises or to provide
support or other services of any nature whatsoever to Client's
sublicensees.
4.4 Maintenance Term. BSI shall provide the Maintenance Services to
Client for a period of one year commencing upon the execution of this
Agreement and shall continue thereafter to provide the Maintenance
Services to Client during the term of this Agreement for so long as, and
to the extent that BSI continues to generally offer such support services
to its customers relating to the BSI Software licensed hereunder.
5. WARRANTIES AND REMEDIES
5.1 Warranties. Client acknowledges that BSI has agreed to allow Client to
hire present BSI employees who are knowledgeable and experienced in the
use, maintenance and application of BSI Software. Accordingly, BSI is
providing all of the BSI Software and related documentation hereunder,
specifically including any updates and new versions thereof provided
pursuant to the Maintenance Services, "AS IS" without any warranty
whatsoever. BSI EXPRESSLY DISCLAIMS ALL WARRANTIES, WHETHER EXPRESS OR
IMPLIED, RELATING TO THE BSI SOFTWARE INCLUDING ANY IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
5.2 Limitation of Liability. IN NO EVENT SHALL BSI BE LIABLE FOR ANY
INDIRECT, INCIDENTAL, SPECIAL OR CONSEQUENTIAL DAMAGES, INCLUDING LOSS OF
PROFITS, REVENUE, DATA OR USE, ARISING OUT OF OR RELATING TO THIS
AGREEMENT, WHETHER IN AN ACTION IN CONTRACT, BREACH OF WARRANTY OR TORT,
EVEN IF BSI HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
5.3 Indemnity. BSI shall indemnify, defend and hold Client harmless from any
loss, damage or cost (including attorneys fees and court costs should BSI
breach its obligation to defend) arising out of a third party claim that
any BSI Software infringes any copyright, trade secret, patent or other
intellectual property right of that third party in the United States.
BSI s obligation of indemnification is contingent upon Client promptly
notifying BSI of any such claim, granting BSI the sole control over the
defense and settlement of such claim and cooperating with BSI in the
defense of the claim (at the expense of BSI). At BSI s option, it may
mitigate Client's losses by: (a) modifying or replacing the BSI Software
so that it performs comparable functions without material degradation in
efficiency and without infringement; or (b) obtaining a royalty-free
license for Client and Client's sublicensees to use the infringing BSI
Software in the manner permitted herein. Any damages payable by Client to
any third party as a result of such infringement shall be considered to be
"Purchaser's Damages" under that Stock Purchase Agreement between the
parties of even date herewith, subject to the cumulative limitations on
liability included therein.
6. CONFIDENTIALITY
6.1 Definition and Identification of Confidential Information. The term
"Confidential Information" means BANCStar Generator and BANCStar Processor
and any documentation, algorithm, compilation of information, method,
technique or process related thereto that is not generally known to the
public and that derives value from not being generally known to the
public.
6.2 Limitations on Disclosure and Use of Confidential Information. Client
agrees that it will use the same degree of care in protecting the
confidentiality of the Confidential Information that it uses to protect
its own confidential information of like importance. In addition, Client
agrees that it shall: (a) not use the Confidential Information for any
purpose beyond the scope of this Agreement; (b) upon request by BSI,
return any portion of the Confidential Information that Client no longer
has the right to use, including all copies thereof, and all abstracts,
summaries or documents produced using such Confidential Information; (c)
not disclose any part of the Confidential Information to any person or
entity other than as expressly permitted herein; and (d) take reasonable
steps to assure that its employees and consultants who have access to the
Confidential Information do not use or disclose any part of the
Confidential Information in violation of this Agreement.
6.3 Exclusions. Client's obligations under this Agreement shall not apply to
any information that: (a) at the time of disclosure to Client was in the
public domain or subsequently becomes a part of the public domain through
no breach of this Agreement; (b) Client had in its possession at the time
of disclosure by BSI, as established by written documentation in existence
at the time, and that was not acquired directly or indirectly from BSI;
(c) Client subsequently acquires by lawful means from a third party who is
under no obligation of confidentiality or non-use owed to BSI; or (d)
Client subsequently develops without any use of or reference to the
Confidential Information, as established by written documentation produced
contemporaneously with the development of such information. In addition,
nothing in this Article 6 shall be construed as precluding Client from
granting any license permitted hereunder and delivering the licensed
software and documentation to the permitted sublicensee.
6.4 Disclosure Pursuant to Legal Process. Should Client become legally
compelled to disclose any portion of the Confidential Information in
connection with a lawsuit or similar proceeding or to any governmental
agency, Client shall give BSI prompt notice of that fact, including in its
notice the legal basis for the required disclosure and the nature of the
Confidential Information that must be disclosed. Client shall cooperate
fully with BSI in obtaining a protective order or other appropriate
protection relating to the disclosure and subsequent use of the
Confidential Information. Client shall disclose only that portion of the
Confidential Information that is legally required to be disclosed.
6.5 Enforcement. Client acknowledges that BSI would have no adequate remedy
at law should Client breach its obligations under this Article and agrees
that BSI shall be entitled to enforce its rights under this Article by
obtaining appropriate equitable relief including a temporary restraining
order and an injunction.
7. FEES
In consideration of BSI's license to Client of the BSI Software and its
provision of the Transition Services and the Maintenance Services, Client shall
pay BSI the fees specified on Exhibit B hereto in accordance with the schedule
set forth on Exhibit B hereto. The quoted fees do not include taxes. Any
federal, state or local taxes based on the products or services provided under
this Agreement shall be paid by BSI.
8. MISCELLANEOUS PROVISIONS
8.1 Export Administration. Client may not use or sublicense BSI Software for
use outside of the United States without the prior written consent of BSI,
which will not be unreasonably withheld. In no event may Client export
any BSI Software or use any BSI Software outside the United States unless
it has complied fully with all relevant regulations of the U.S. Department
of Commerce and with the U.S. Export Administration Act. Client will
deliver to BSI any requested certifications of compliance.
8.2 Governing Law. This Agreement shall be governed by the laws of the State
of North Carolina.
8.3 Notices. All notices, including notices of address changes, required to
be sent hereunder shall be in writing and shall be deemed to have been
given when mailed by prepaid certified mail, return receipt requested, or
sent by telefax to the party at the address set forth with its signature
below.
8.4 Interpretation of Agreement. In the event any provision of this Agreement
is held to be invalid or unenforceable, the remaining provisions of this
Agreement will remain in full force and effect. No delay or failure by
either party in exercising any right under this Agreement shall be
construed to be a waiver of that right nor of the right to assert a claim
with respect to any future breach of this Agreement.
8.5 Assignment. Client may assign all or any part of its rights hereunder to
LSI or to any other Affiliate (as defined below) but Client shall remain
fully responsible for the compliance by its Affiliate with all of the
terms, conditions, limitations and restrictions contained herein. As used
in this Agreement, the term "Affiliate" means any entity that is directly
or through one or more intermediaries controlled by Client, such control
to be evidenced by ownership of at least fifty percent (50%) of the voting
stock or other equity interests of an entity. Should Client, LSI or any
such Affiliate be directly or indirectly acquired by a third party
(whether in connection with a sale of stock or assets) the rights
hereunder shall lapse as to that third party unless BSI has consented to
such acquisition. BSI agrees that it shall not unreasonably withhold or
delay any such consent. Neither party may otherwise assign any right or
obligation under this Agreement to any third party.
8.6 Force Majeure. Neither party shall be held responsible for any delay or
failure in performance to the extent that such delay or failure is caused
by fire, flood, explosion, war, strike, embargo, government regulation,
civil or military
authority, act of God, acts or omissions of carriers or other similar
causes beyond its control.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the year and date first above written.
BROADWAY & SEYMOUR, INC. JACK HENRY & ASSOCIATES, INC.
By:/s/ William W. Neal By:/s/ Michael E. Henry
Title: President Title: Chairman and
Chief Executive Officer
NOTICE: NOTICE:
Broadway & Seymour, Inc. Jack Henry & Associates, Inc.
128 South Tryon Street 663 Highway 60
Suite 1000 Monett, Missouri 65708
Charlotte, North Carolina 28202 Attention: Mr. Mike Henry
Attention: Mr. William W. Neal Fax: (417) 235-1765
Fax: (704) 344-3542
NEWS RELEASE
FOR IMMEDIATE RELEASE Contact: Mr. Terry W. Thompson
Jack Henry & Associates, Inc.
663 Highway 60, P.O. Box 807
Monett, Missouri 65708
417-235-6652
JACK HENRY & ASSOCIATES COMPLETES THE PURCHASE
OF THE COMMUNITY BANKING BUSINESS OF BROADWAY & SEYMOUR
Monett, Mo., June 30, 1995 - Jack Henry & Associates (NASDAQ:JKHY) a leading
vendor of computer software and hardware to community banks in the U.S. an-
nounced that it has completed the transaction to purchase the Community Banking
Business (CFI) of Broadway & Seymour (BSIS) with locations in Charlotte, NC; St
Paul, MN; and Houston, TX. Broadway & Seymour, like Jack Henry & Associates
("JHA"), markets software to banks. The unit had an installed base of approxi-
mately 340 customers in over 35 states. The cash transaction requires a total
of $12,000,000 in payments over a twelve month period.
Michael E. Henry, Chairman & CEO for JHA, stated the Company is very
excited about the CFI purchase. It clearly establishes the Company as the
premier leader in providing in-house banking software and services using IBM
mid-range systems. The end result is a stronger and more capable JHA with the
combined resources and capabilities of both units. This transaction could add
revenues in excess of $15,000,000 and provide JHA more opportunities for growth
and profitability than any prior acquisition per Mr. Henry. Mr. Henry also
indicated the CFI customers will appreciate the same quality service and support
JHA's customers receive on a daily basis. This continues the Company's plans to
provide growth through occasional strategic acquisitions.
Jack Henry & Associates, Inc. provides integrated computer systems and ATM
networking products for banks and other financial institutions. JHA markets and
supports its systems throughout the United States and overseas. The Company has
over 1230 customers worldwide.
THIRTY