Exhibit 10.2
STOCK PURCHASE AGREEMENT
by and among
Brokat Infosystems AG,
Transaction Software Technologies, Inc.,
and
The Shareholders of
Transaction Software Technologies, Inc
TABLE OF CONTENTS
I. DEFINITIONS................................................................................................- 1 -
II. PURCHASE AND SALE OF SHARES...............................................................................- 6 -
A. Basic Transaction...........................................................................- 6 -
B. Payments to the Shareholders................................................................- 6 -
C. The Closing.................................................................................- 7 -
D. Deliveries at Closing.......................................................................- 7 -
III. REPRESENTATIONS AND WARRANTIES
CONCERNING THE TRANSACTION...........................................................................- 8 -
A. Representations and Warranties of the Shareholders
...........................................................................................- 8 -
1. Authorization of Transaction.............................................................- 8 -
2. Non-contravention........................................................................- 8 -
3. Good Title...............................................................................- 8 -
4. Brokers' Fees............................................................................- 9 -
5. Capitalization...........................................................................- 9 -
B. Representations and Warranties of Brokat.........................................................- 10 -
1. Authorization of Transaction............................................................- 10 -
2. Non-contravention.......................................................................- 10 -
IV. REPRESENTATIONS AND WARRANTIES
CONCERNING TST AND ITS SUBSIDIARIES.................................................................- 11 -
A. Shareholders and TST.............................................................................- 11 -
1. Organization, Qualification, and
Corporate Power.........................................................................- 11 -
2. Events Subsequent to the Most Recent
Fiscal Year End.........................................................................- 11 -
3. Undisclosed Liabilities.................................................................- 13 -
4. Intellectual Property...................................................................- 13 -
5. Certain Business Relationships With
TST and Its Subsidiaries................................................................- 15 -
6. Tax Matters.............................................................................- 16 -
7. Disclosure..............................................................................- 16 -
B. TST. ...........................................................................................- 16 -
1. Non-contravention.......................................................................- 16 -
2. Title to Assets.........................................................................- 17 -
3. Subsidiaries............................................................................- 17 -
4. Financial Statements....................................................................- 18 -
5. Legal Compliance........................................................................- 18 -
6. Tax Matters.............................................................................- 18 -
7. Tangible Assets.........................................................................- 20 -
8. Contracts...............................................................................- 20 -
9. Notes and Accounts Receivable...........................................................- 21 -
10. Powers of Attorney.....................................................................- 22 -
11. Insurance..............................................................................- 22 -
12. Litigation.............................................................................- 23 -
13. Product Warranty.......................................................................- 23 -
14. Product Liability......................................................................- 23 -
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15. Employees..............................................................................- 23 -
16. Year 2000..............................................................................- 24 -
17. Employee Benefits......................................................................- 24 -
18. Guaranties.............................................................................- 27 -
19. Environment, Health, and Safety Matters................................................- 27 -
20. Disclosure.............................................................................- 28 -
V. Pre-Closing Covenants.....................................................................................- 28 -
A. General..........................................................................................- 29 -
B. Notices and Consents.............................................................................- 29 -
C. Operation of Business............................................................................- 29 -
D. Preservation of Business.........................................................................- 29 -
E. Full Access......................................................................................- 30 -
F. Notice of Developments...........................................................................- 30 -
G. Exclusivity......................................................................................- 30 -
H. Confidentiality..................................................................................- 31 -
I. Confidentiality Agreements.......................................................................- 31 -
X. XXXX Fee.........................................................................................- 31 -
VI. Post-Closing Covenants...................................................................................- 31 -
A. General..........................................................................................- 32 -
B. Covenant Not to Compete..........................................................................- 33 -
VII. Conditions to Obligation to Close.......................................................................- 34 -
A. Conditions to Obligation of Brokat...............................................................- 34 -
B. Conditions to Obligation of the Shareholders
and TST..........................................................................................- 35 -
VIII. Remedies for Breaches of This Agreement................................................................- 36 -
A. Survival of Representations and Warranties.......................................................- 36 -
B. Indemnification Provisions for Benefit of Brokat.................................................- 37 -
C. Matters Involving Third Parties..................................................................- 38 -
IX. Tax Matters..............................................................................................- 39 -
A. Cooperation......................................................................................- 39 -
B. Mitigation of Tax Liability......................................................................- 39 -
C. Code (S)(S)6043..................................................................................- 39 -
X. Termination...............................................................................................- 40 -
A. Termination of Agreement.........................................................................- 40 -
B. Effect of Termination............................................................................- 40 -
XI. Miscellaneous............................................................................................- 41 -
A. Press Releases and Public Announcements..........................................................- 41 -
B. No Third-Party Beneficiaries.....................................................................- 41 -
C. Entire Agreement.................................................................................- 41 -
D. Succession and Assignment........................................................................- 41 -
E. Counterparts.....................................................................................- 42 -
F. Headings.........................................................................................- 42 -
G. Notices..........................................................................................- 42 -
H. Governing Law and Jurisdiction...................................................................- 43 -
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I. Amendments and Waivers...........................................................................- 43 -
J. Severability.....................................................................................- 43 -
K. Expenses.........................................................................................- 43 -
L. Construction.....................................................................................- 44 -
M. Incorporation of Exhibits, Annexes, and Schedules................................................- 44 -
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STOCK PURCHASE AGREEMENT
THIS AGREEMENT, made this seventh day of May, 1999, by and among BROKAT
INFOSYSTEMS AG, a corporation of Germany ("Brokat"); TRANSACTION SOFTWARE
TECHNOLOGIES, INC., a corporation of the State of Georgia, U.S.A. ("TST"); XX.
XXXXXX X. XXXXXX III, an individual ("Xxxxxx")(also sometimes referred to in
related documents as "Xxxxxx Xxxxxx Xxxxxx"); XXXX X. XXXXX, an individual
("Drake"); XXXXXX X. XXXXXX, an individual ("Sating"); XXXX XXXXXXXXX, an
individual ("Xxxxxxxxx"), (Gainer, Drake, Sating and Xxxxxxxxx are hereinafter
referred to collectively as "Individual Shareholders"; XXXXXXXXX XXXXXXXX
XXXXXXXXX, AS SPECIAL INDEPENDENT TRUSTEE OF THE XXXX X. AND XXXXXXXX XXXXX
CHARITABLE REMAINDER TRUST, DATED APRIL 13, 1999, (the "Drake Trust"); XXXXXXXX
XXXXXXXXX XXXXXX AND XXXXXX X. XXXXXX XX, AS CO-TRUSTEES OF THE XXXXXX XXXXXX
XXXXXX III IRREVOCABLE FAMILY TRUST, DATED APRIL 18, 1999 (the "Xxxxxx Trust");
and XXXXXX XXXXXX XXXXXX AND XXXXX X XXXXXX, AS CO-TRUSTEES OF THE XXXXXXXX
XXXXXXXXX XXXXXX IRREVOCABLE FAMILY TRUST, DATED APRIL 18, 1999 (The "2/nd/
Xxxxxx Trust") (The Drake Trust, the Xxxxxx Trust and the 2/nd/ Xxxxxx Trust"
are hereinafter referred to collectively as the "Trust Shareholders".) The
Individual Shareholders and the Trust Shareholders are referred to collectively
herein as the "Shareholders", and Brokat, TST and the Shareholders are referred
to herein individually as a "Party" or collectively as the "Parties"),
WITNESSETH THAT:
WHEREAS, Brokat wishes to acquire 100% of the issued and outstanding capital
stock of TST; and
WHEREAS, The Shareholders own 100% of the issued and outstanding capital stock
of TST and are willing to sell the same to Brokat; and
WHEREAS, The parties desire that the Closing (hereinafter defined) of the sale
of TST take place, subject to the terms and conditions described herein, on or
before May 10, 1999;
NOW THEREFORE, in consideration of the mutual covenants described herein, and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged by the parties, the parties have agreed as follows:
I. DEFINITIONS
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"Adverse Consequences" means all actions, suits, proceedings, hearings,
investigations, charges, complaints, claims, demands, injunctions, judgments,
orders, decrees, rulings, damages, dues, penalties, fines, costs, reasonable
amounts paid in settlement, liabilities, obligations, taxes, liens, losses,
expenses, and fees, including court costs and reasonable attorneys' fees and
expenses.
"Affiliate" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act.
"Affiliated Group" means any affiliated group within the meaning of Code
(S)1504(a).
"Basis" means any past or present fact, situation, circumstance, status,
condition, activity, practice, plan, occurrence, event, incident, action,
failure to act, or transaction that forms or could form the basis for any
specified consequence.
"Closing" has the meaning set forth in (S)II.C., below.
"Closing Date" has the meaning set forth in (S)II.C., below.
"COBRA" means the requirements of Part 6 of Subtitle B of Title I of ERISA
and Code (S)4980B.
"Code" means the Internal Revenue Code of 1986, as amended.
"Confidential Information" means any information without regard to form,
which is not commonly known by or available to the public and which information
derives economic value, actual or potential, from not being generally known to,
and not being readily ascertainable by proper means by, other Persons who can
obtain economic value from its disclosure or use.
"Employee Benefit Plan" means any (a) non-qualified deferred compensation
or retirement plan or arrangement, (b) qualified defined contribution retirement
plan or arrangement which is an Employee Pension Benefit Plan, (c) qualified
defined benefit retirement plan or arrangement which is an Employee Pension
Benefit Plan (including any Multiemployer Plan), or (d) Employee Welfare Benefit
Plan.
"Employee Pension Benefit Plan" has the meaning set forth in ERISA (S)3(2).
"Employee Welfare Benefit Plan" has the meaning set forth in ERISA (S)3(1).
"Environmental, Health, and Safety Requirements" shall mean all applicable
federal, state, local and foreign statutes, regulations, ordinances and similar
provisions having the force or
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effect of law, and all judicial and administrative orders and determinations,
concerning public health and safety, worker health and safety, and pollution or
protection of the environment, including without limitation all those relating
to the presence, use, production, generation, handling, transportation,
treatment, storage, disposal, distribution, labeling, testing, processing,
discharge, release, threatened release, control, or cleanup of any hazardous
materials, substances or wastes, chemical substances or mixtures, pesticides,
pollutants, contaminants, toxic chemicals, petroleum products or byproducts,
asbestos, polychlorinated biphenyls, noise or radiation.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" means each entity which is treated as a single employer
with Seller for purposes of Code (S)414.
"Fiduciary" has the meaning set forth in ERISA (S)3(21).
"Financial Statement" has the meaning set forth in (S)IV.F., below.
"GAAP" means United States generally accepted accounting principles as in
effect from time to time, consistently applied throughout the relevant period.
"Xxxx-Xxxxx-Xxxxxx Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976, as amended.
"Income Tax" means any federal, state, local, or foreign income tax,
including any interest, penalty, or addition thereto, whether disputed or not.
"Income Tax Return" means any return, declaration, report, claim for
refund, or information return or statement relating to Income Taxes, including
any schedule or attachment thereto, and including any amendment thereof.
"Indemnifying Party" has the meaning set forth in (S)VIII.B.1., below.
"Intellectual Property" means (a) all inventions (whether patentable or
unpatentable and whether or not reduced to practice), all improvements thereto,
and all patents, patent applications, and patent disclosures, together with all
reissuances, continuations, continuations-in-part, revisions, extensions, and
reexaminations thereof; (b) all trademarks, service marks, trade dress, logos,
trade names, and corporate names, together with all translations, adaptations,
derivations, and combinations thereof and including all goodwill associated
therewith, and all applications,
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registrations, and renewals in connection therewith; (c) all copyrightable
works, all copyrights, and all applications, registrations, and renewals in
connection therewith; (d) all mask works and all applications, registrations,
and renewals in connection therewith; (e) all trade secrets and confidential
business information (including ideas, research and development, know-how,
formulas, compositions, manufacturing and production processes and techniques,
technical data, designs, drawings, specifications, supplier lists, and cost
information; (f) customer lists, price lists, and business and marketing plans
and proposals; (g)all computer software (including data and related
documentation); and (h) all other proprietary rights therein, and (h) all copies
and tangible embodiments thereof (in whatever form or medium).
"Knowledge" means actual knowledge.
"Letter of Intent" means that certain Letter of Intent dated March 19,
1999, by and among Brokat, TST and the Individual Shareholders.
"Most Recent Balance Sheet" means the balance sheet contained within the
Most Recent Financial Statements.
"Most Recent Financial Statements" has the meaning set forth in (S)IV.G.,
below.
"Most Recent Fiscal Month End" has the meaning set forth in (S)IV.B.4.,
below.
"Most Recent Fiscal Year End" has the meaning set forth in (S)IV.G., below.
"Multiemployer Plan" has the meaning set forth in ERISA (S)3(37).
"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity and
frequency).
"Party" has the meaning set forth in the preface above.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Person" means an individual, a partnership, a corporation, a limited
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization, or a governmental entity (or any
department, agency, or political subdivision thereof).
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"Prohibited Transaction" has the meaning set forth in ERISA (S)406 and Code
(S)4975.
"Reportable Event" has the meaning set forth in ERISA (S)4043.
"Representatives" means, collectively, any director(s), officer(s),
employee(s), agent(s), consultant(s), attorney(s), accountant(s),
representative(s) and adviser(s) of a Party.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Security Interest" means any mortgage, pledge, lien, encumbrance, charge,
or other security interest, other than (a) mechanic's, materialmen's, and
similar liens, (b) liens for taxes not yet due and payable or for taxes that the
taxpayer is contesting in good faith through appropriate proceedings, (c)
purchase money liens and liens securing rental payments under capital lease
arrangements, and (d) other liens arising in the Ordinary Course of Business and
not incurred in connection with the borrowing of money.
"Subsidiary(ies)" means TranSoft Services, Inc.,(a Georgia corporation) a
wholly-owned subsidiary of TST; and Internet Treasury Services, Inc., (a Georgia
corporation) a wholly-owned subsidiary of TST.
"TST" has the meaning set forth in the preface above.
"TST Share" means any issued and outstanding share (including treasury
stock) of the common capital stock (voting or non-voting) of TST.
"Third Party Claim" has the meaning set forth in (S)VIII.C., below.
II. PURCHASE AND SALE OF SHARES
A. Basic Transaction
The basic transaction consists of the acquisition by Brokat of 100% of the TST
Shares in consideration of the payment by Brokat to the Shareholders of US$
18,674,000.00 (Eighteen Million Six Hundred Seventy-Four Thousand United States
Dollars). TST Shares sold pursuant to this Stock Purchase Agreement will be
offered without registration with the U.S. Securities and Exchange Commission or
any U.S. State Securities Administrator.
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B. Payments to the Shareholders
1. At Closing, an aggregate amount of $16,874,000.00 (Sixteen Million Eight
Hundred Seventy-Four Thousand United States Dollars shall be paid to the
order of each of the Shareholders in the following amounts:
x. Xxxxxx: $5,764,650.81
x. Xxxxx: $2,271,786.84
c. Sating: $2,505,793.47
x. Xxxxxxxxx: $168,710.17
x. Xxxxx Trust: $3,408,011.71
x. Xxxxxx Trust: $1,377,523.50
g. 2nd Xxxxxx Trust: $1,377,523.50
2. Twelve months after Closing, the aggregate amount of $900,000.00 (Nine
Hundred Thousand United States Dollars) shall be paid to the order of each
of the Shareholders in the following amounts:
x. Xxxxxx: $307,466.26
x. Xxxxx: $121,169.14
c. Sating: $133,650.24
x. Xxxxxxxxx: $8,998.41
x. Xxxxx Trust: $181,771.40
x. Xxxxxx Trust: $73,472.27
g. 2nd Xxxxxx Trust: $73,472.27
3. Twenty-four months after Closing, the aggregate amount of $900,000.00 (Nine
Hundred Thousand United States Dollars) shall be paid to the order of each
of the Shareholders in the following amounts:
x. Xxxxxx: $307,466.26
x. Xxxxx: $121,169.14
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c. Sating: $133,650.24
x. Xxxxxxxxx: $8,998.41
x. Xxxxx Trust: $181,771.40
x. Xxxxxx Trust: $73,472.27
g. 2nd Xxxxxx Trust: $73,472.27
C. The Closing
The closing of the transactions contemplated by this Agreement (the "Closing")
shall take place at the offices of Xxxxx, Xxxxx & Xxxxx, Chicago, Illinois,
commencing at ____.m. local time on May ___, 1999, or such other date as Brokat
and the Shareholders may mutually determine (the "Closing Date"); provided,
however, that the Closing Date shall be no later than May 10, 1999.
D. Deliveries at Closing
1. Deliveries of the Shareholders and TST
At the Closing a) the Shareholders and TST will deliver to Brokat the
various certificates, instruments, and documents referred to in
(S)VII.A., below, and b) each of the Shareholders will deliver to
Brokat stock certificates representing all of his TST Shares, endorsed
in blank or accompanied by duly executed assignment documents.
2. Deliveries of Brokat
At the Closing Brokat will deliver to the Shareholders the various
payments (by wire transfer of immediately available funds as
instructed by the Shareholders), instruments, and documents referred
to in (S)VII.B., below.
III. REPRESENTATIONS AND WARRANTIES
CONCERNING THE TRANSACTION
A. Representations and Warranties of the Shareholders. Each Shareholder
hereby represents and warrants to Brokat solely for himself (unless otherwise
specifically noted to the contrary) that the statements contained in this
(S)III.A. are correct and complete as of the date of this Agreement and will be
correct and complete as of the Closing Date (as though made then and as though
the Closing Date were substituted for the date of this Agreement throughout this
(S)III.A) subject only to the exceptions described in
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the attached Disclosure Schedule. The representations and warranties made by
each Shareholder shall be deemed to be representations and warranties only as to
such Shareholder, unless specifically noted to the contrary.
1. Authorization of Transaction. The Shareholder has full power and authority
to execute and deliver this Agreement and to perform his obligations
hereunder. This Agreement constitutes the valid and legally binding
obligation of the Shareholder, enforceable in accordance with its terms and
conditions.
2. Non-contravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby,
will
a. violate any constitution, statute, regulation, rule, injunction,
judgment, order, decree, ruling, charge, or other restriction of any
government, governmental agency, or court to which the Shareholder is
subject, or
b. conflict with, result in a breach of, constitute a default under,
result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under
any duty (fiduciary or otherwise), agreement, contract, lease, license,
instrument, or arrangement to which the Shareholder is a party or by
which he is bound or to which any of his assets is subject.
3. Good Title. The Shareholders, in the aggregate, own 100% of the issued and
outstanding stock of TST. Each of the Shareholders has good and marketable
title to and holds of record and owns beneficially the number of TST Shares
set forth next to his or its name in Exhibit A, free and clear of any
restrictions on transfer (other than any restrictions under the Securities
Act and state securities laws), taxes, Security Interests, options,
warrants, purchase rights, contracts, commitments, equities, claims,
demands, or any other arrangement or duty (fiduciary or otherwise)
restricting his right to sell, transfer and assign TST shares pursuant to
this Agreement. None of the Shareholders is a party to any option,
warrant, purchase right, or other contract or commitment that could require
the Shareholders to sell, transfer, or otherwise dispose of any capital
stock of TST (other than pursuant to this Agreement). None of the
Shareholders is a party to any voting trust, proxy, or other agreement or
understanding with respect to the voting of any capital stock of TST. No
Shareholder needs to give any notice to, make any filing with, or obtain
any authorization, consent, or approval of any government or governmental
agency the failure of which to do or obtain could restrict or prevent the
Shareholder's right or ability to transfer and assign his TST Shares to
Brokat
- 8 -
pursuant to this Agreement. There are no outstanding or authorized options,
warrants, purchase rights, subscription rights, conversion rights, or other
contracts or commitments that could require TST to issue, sell, or
otherwise cause to become outstanding any of its capital stock (other than
pursuant to this Agreement) such that the TST Shares purchased under this
Agreement might amount to less than 100% of the issued and outstanding
capital stock of TST. The representations and warranties made in this
(S)III.A.3. are made jointly and severally as to all Shareholders by the
Individual Shareholders, and separately, for themselves only, by each of
the Trust Shareholders.
4. Brokers' Fees. The Shareholder does not have any liability or obligation to
pay any fees or commissions to any broker, finder, or agent with respect to
the transactions contemplated by this Agreement for which Brokat could
become liable or obligated.
5. Capitalization. The entire authorized capital stock of TST consists of
100,000 voting TST Shares, of which 600 shares are issued and outstanding
and no shares are held in treasury; and 900,000 non-voting shares, of which
101,218 shares are issued and outstanding and no shares are held in
treasury. All of the issued and outstanding TST Shares have been duly
authorized, are validly issued, fully paid, and non-assessable. There are
no voting trusts, proxies, or other agreements or understandings with
respect to the voting of the capital stock of TST.
B. Representations and Warranties of Brokat. Brokat represents and warrants
to the Shareholders that the statements contained in this (S)III.B. are correct
and complete as of the date of this Agreement and will be correct and complete
as of the Closing Date (as though made then and as though the Closing Date were
substituted for the date of this Agreement throughout (S)III.B.) Subject only to
the exceptions described in the attached Disclosure Schedule.
1. Authorization of Transaction. Brokat has full power and authority
(including full corporate power and authority) to execute and deliver this
Agreement and has taken all required and appropriate corporate action,
including approval of the execution, delivery and performance of this
Agreement. This Agreement constitutes the valid and legally binding
obligation of Brokat, enforceable in accordance with its terms and
conditions. Brokat need not give any notice to, make any filing with, or
obtain any authorization, consent, or approval of any government or
governmental agency in order to consummate the transactions contemplated by
this Agreement.
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2. Non-contravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby,
will
a. violate any constitution, statute, regulation, rule, injunction,
judgment, order, decree, ruling, charge, or other restriction of any
government, governmental agency, or court to which Brokat is subject, or
b. conflict with, result in a breach of, constitute a default under, result
in the acceleration of, create in any party the right to accelerate,
terminate, modify, or cancel, or require any notice under any duty
(fiduciary or otherwise), agreement, contract, lease, license, instrument,
or arrangement to which Brokat is a party or by which it is bound or to
which any of its assets is subject.
3. Brokat does not have any liability or obligation to pay any fees or
commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which Shareholders could
become liable or obligated.
IV. REPRESENTATIONS AND WARRANTIES
CONCERNING TST AND ITS SUBSIDIARIES
A. Shareholders and TST. The Shareholders, each for himself and not jointly
and severally, and TST represent and warrant to Brokat that the following
statements are correct and complete as of the date of this Agreement and will be
correct and complete as of the Closing Date (as though made then and as though
the Closing Date were substituted for the date of this Agreement throughout this
Article IV.A.) subject only to the exceptions described in the attached
Disclosure Schedule:
1. Organization, Qualification, and Corporate Power. Each of TST and its
Subsidiaries is a corporation duly organized, validly existing, and in good
standing under the laws of the jurisdiction of its incorporation. Each of
TST and its Subsidiaries has full corporate power and authority to carry on
the businesses in which it is engaged and to own and use the properties
owned and used by it. Exhibit B lists the directors and officers of each of
TST and its Subsidiaries, and the states in which each of TST and its
Subsidiaries is authorized to conduct business and in good standing.
2. Events Subsequent to the Most Recent Fiscal Year End. To the Knowledge of
the Shareholders and TST, since the Most Recent Fiscal Year End, there has
not been any material adverse change in the business, financial condition,
operations, or results of operations of TST and its Subsidiaries taken as a
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whole, and, without limiting the generality of the foregoing, to the
Knowledge of the Shareholders and TST, since that date:
a. neither TST nor any of its Subsidiaries has sold, leased, transferred,
or assigned any material assets, tangible or intangible, except in the
Ordinary Course of Business;
b. neither TST nor any of its Subsidiaries has entered into any material
agreement, contract, lease, or license except in the Ordinary Course
of Business, provided, however, that TST's broker's contract with
MASI, Ltd., payments already made thereunder, and payment by TST to
MASI, Ltd., of the remaining balance due thereunder in an amount not
to exceed $326,000.00 (Three Hundred Twenty-Six Thousand United States
Dollars) prior to Closing shall not be deemed a breach of this
representation and warranty;
c. neither TST nor any of its Subsidiaries has accelerated, terminated,
made material modifications to, or canceled any material agreement,
contract, lease, or license to which either TST or any of its
Subsidiaries is a party or by which either of them is bound;
d. neither TST nor any of its Subsidiaries has imposed any Security
Interest upon any of its assets, tangible or intangible;
e. neither TST nor any of its Subsidiaries has made any material capital
expenditures except in the Ordinary Course of Business;
f. neither TST nor any of its Subsidiaries has made any material capital
investment in, or any material loan to, any other Person except in the
Ordinary Course of Business;
g. TST and any of its Subsidiaries have not created, incurred, assumed,
or guaranteed more than $200,000.00 in aggregate indebtedness for
borrowed money and capitalized lease obligations;
h. neither TST nor any of its Subsidiaries has granted any license or
sub- license of any material rights under or with respect to any
Intellectual Property, except in the Ordinary Course of Business;
i. there has been no change made or authorized in the charter or bylaws
of TST or any of its Subsidiaries;
- 11 -
j. neither TST nor any of its Subsidiaries has issued, sold, or otherwise
disposed of any of its capital stock, or granted any options,
warrants, or other rights to purchase or obtain (including upon
conversion, exchange, or exercise) any of its capital stock, or
otherwise amended or altered the rights of its voting stock;
k. neither TST nor any of its Subsidiaries has declared, set aside, or
paid any dividend or made any distribution with respect to its capital
stock (whether in cash or in kind) or redeemed, purchased, or
otherwise acquired any of its capital stock;
l. neither TST nor any of its Subsidiaries has experienced any material
damage, destruction, or loss (whether or not covered by insurance) to
its property;
m. neither TST nor any of its Subsidiaries has made any loan to, or
entered into any other transaction with, any of its directors,
officers, and employees except in the Ordinary Course of Business;
n. neither TST nor any of its Subsidiaries has entered into employment
contract or collective bargaining agreement, written or oral, or
modified the terms of any existing such contract or agreement;
o. neither TST nor any of its Subsidiaries has granted any increase in
the base compensation of any of its directors, officers, and employees
except in the Ordinary Course of Business;
p. neither TST nor any of its Subsidiaries has adopted, amended,
modified, or terminated any bonus, profit-sharing, incentive,
severance, or other plan, contract, or commitment for the benefit of
any of its directors, officers, and employees (or taken any such
action with respect to any other Employee Benefit Plan);
q. neither TST nor any of its Subsidiaries has made any other material
change in employment terms for any of its directors, officers, and
employees except in the Ordinary Course of Business;
r. neither TST nor any of its Subsidiaries has reacquired shares of its
voting common stock in anticipation of any transaction(s) contemplated
in this Agreement;
s. neither TST nor any of its Subsidiaries has acquired any of the
capital stock of Brokat; and
- 12 -
t. neither TST nor any of its Subsidiaries has committed to any of the
foregoing.
3. Undisclosed Liabilities. To the Knowledge of Shareholders and TST,
neither TST nor any of its Subsidiaries has any material liability (whether
asserted or unasserted, whether absolute or contingent, whether accrued or
unaccrued, whether liquidated or unliquidated, and whether due or to become
due, including any liability for taxes), except for (i) liabilities set
forth on the face of the Most Recent Balance Sheet and (ii) liabilities
which have arisen after the Most Recent Fiscal Month End in the Ordinary
Course of Business.
4. Intellectual Property.
a. To the Knowledge of the Shareholders and TST neither TST nor any of its
Subsidiaries has ever received any charge, complaint, claim, demand, or
notice alleging any interference, infringement, misappropriation, or
violation of any rights of Intellectual Property rights of third parties in
any material respect(including any claim that any of TST and its
Subsidiaries must license or refrain from using any Intellectual Property
rights of any third party). To the Knowledge of the Shareholders, no
third party has interfered with, infringed upon, misappropriated, or
violated any material Intellectual Property rights of any of TST and its
Subsidiaries in any material respect.
b. To the Knowledge of Shareholders and TST, Exhibit C identifies each
patent, copyright or registration which has been issued to either TST or
any of its Subsidiaries with respect to any of its Intellectual Property;
identifies each pending patent or copyright application or application for
registration which either TST or any of its Subsidiaries has made with
respect to any of its Intellectual Property; identifies each material
license, agreement, or other permission which either TST or any of its
Subsidiaries has granted to any third party with respect to any of its
Intellectual Property (together with any exceptions); and identifies each
and every other item of Intellectual Property, whether or not patented (or
pending), copyrighted (or applied for), registered (or applied for)
necessary or useful to the business of TST or any of its Subsidiaries as
presently conducted or as planned or projected in projections delivered to
Brokat. TST has delivered to Brokat correct and complete copies of all
such patents, registrations, applications, licenses, agreements, and
permissions (as amended to date). Exhibit C also identifies each material
trade or service name or xxxx, and unregistered trade or service name or
xxxx used by TST or any of its Subsidiaries in connection with any of their
businesses. With respect to each item of Intellectual
- 13 -
Property required to be identified in Exhibit C, to the Knowledge of the
Shareholders and TST:
i. TST and its Subsidiaries possess all right, title, and interest in and
to the item, free and clear of any Security Interest, license, or
other restriction;
ii. the item is not subject to any outstanding injunction, judgment,
order, decree, ruling, or charge;
iii. no action, suit, proceeding, hearing, investigation, charge,
complaint, claim, or demand is pending or is threatened which
challenges the legality, validity, enforceability, use, or ownership
of the item; and
iv. Except in the Ordinary Course of Business, neither TST nor any of its
Subsidiaries has ever agreed to indemnify any Person for or against
any interference, infringement, misappropriation, or other conflict
with respect to the item.
c. To the Knowledge of Shareholders and TST, Exhibit D identifies each material
item of Intellectual Property that any third party owns and that TST
or any of its Subsidiaries uses pursuant to license, sublicense,
agreement, or permission. TST has delivered to Brokat correct and
complete copies of all such licenses, sublicenses, agreements, and
permissions (as amended to date). With respect to each item of
Intellectual Property required to be identified in Exhibit D, to the
Knowledge of the Shareholders and TST:
i. the license, sublicense, agreement, or permission covering the item is
legal, valid, binding, enforceable, and in full force and effect in
all material respects;
ii. TST and its Subsidiaries are not and no other party to the license,
sublicense, agreement, or permission is in material breach or default,
and no event has occurred which with notice or lapse of time would
constitute a material breach or default or permit termination,
modification, or acceleration thereunder;
iii. no party to the license, sublicense, agreement, or permission has
repudiated any material provision thereof; and
iv. neither TST nor any of its Subsidiaries has granted any sublicense or
similar right with respect to the license, sublicense, agreement, or
permission, except to customers as necessary in the Ordinary Course of
Business.
- 14 -
5. Certain Business Relationships With TST and Its Subsidiaries. None of the
Shareholders and their Affiliates has been involved in any material
business arrangement or relationship with TST or any of its Subsidiaries
(other than as officer, director or employee) within the past 12 months,
and none of the Shareholders and their Affiliates owns any material asset,
tangible or intangible, which is used in the business of TST or any of its
Subsidiaries.
6. Tax Matters. To the Knowledge of Shareholders and TST, the tax returns
heretofore filed by TST and its Subsidiaries did not and do not materially
understate TST's income or materially overstate expenses.
7. Disclosure. The representations and warranties contained in this (S)IV.A.
do not contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements and information
contained in this (S)IV.A. not misleading. This representation and warranty
is limited to the Knowledge of the Shareholders with respect to any
representations and warranties above which are made to the Knowledge of the
Shareholders.
B. TST. TST represents and warrants to Brokat that the following statements
are correct and complete as of the date of this Agreement and will be correct
and complete as of the Closing Date (as though made then and as though the
Closing Date were substituted for the date of this Agreement throughout this
Article IV) subject only to the exceptions described in the attached Disclosure
Schedule:
1. Non-contravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby,
will (i) violate any constitution, statute, regulation, rule, injunction,
judgment, order, decree, ruling, charge, or other restriction of any
government, governmental agency, or court to which any of TST or any of its
Subsidiaries is subject or any provision of the charter or bylaws of any of
TST or any of its Subsidiaries or (ii) conflict with, result in a breach
of, constitute a default under, result in the acceleration of, create in
any party the right to accelerate, terminate, modify, or cancel, or require
any notice under any agreement, contract, lease, license, instrument, or
other arrangement to which any of TST or any of its Subsidiaries is a party
or by which it is bound or to which any of its assets is subject (or result
in the imposition of any Security Interest upon any of its assets), except
where the violation, conflict, breach, default, acceleration, termination,
modification, cancellation, failure to give notice, or Security Interest
would not have a material adverse effect on the business, financial
condition,
- 15 -
operations, or results of operations of TST and its Subsidiaries or on the
ability of the Parties to consummate the transactions contemplated by this
Agreement. Neither TST nor any of its Subsidiaries needs to give any notice
to, make any filing with, or obtain any authorization, consent, or approval
of any government or governmental agency in order for the Parties to
consummate the transactions contemplated by this Agreement, except where
the failure to give notice, to file, or to obtain any authorization,
consent, or approval would not have a material adverse effect on the
business, financial condition, operations, or results of operations of TST
or any of its Subsidiaries or on the ability of the Parties to consummate
the transactions contemplated by this Agreement.
2. Title to Assets. TST and its Subsidiaries have good and marketable title
to, or a valid leasehold interest in, the properties and assets used by
them, located on their premises, or shown on the Most Recent Balance Sheet
or acquired after the date thereof, free and clear of all Security
Interests, except for properties and assets disposed of in the Ordinary
Course of Business since the date of the Most Recent Balance Sheet.
3. Subsidiaries. Exhibit E sets forth for each of its Subsidiaries (i) its
name and jurisdiction of incorporation, (ii) the number of shares of
authorized capital stock of each class of its capital stock, (iii) the
number of issued and outstanding shares of each class of its capital stock,
the names of the holders thereof, and the number of shares held by each
such holder, and (iv) the number of shares of its capital stock held in
treasury. All of the issued and outstanding shares of capital stock of
Subsidiaries of TST have been duly authorized and are validly issued, fully
paid, and non-assessable. TST holds of record and owns beneficially all of
the outstanding shares of its Subsidiaries, free and clear of any
restrictions on transfer (other than restrictions under the Securities Act
and state securities laws), taxes, Security Interests, options, warrants,
purchase rights, contracts, commitments, equities, claims, and demands.
There are no outstanding or authorized options, warrants, purchase rights,
subscription rights, conversion rights, exchange rights, or other contracts
or commitments that could require any of TST and its Subsidiaries to sell,
transfer, or otherwise dispose of any capital stock of its Subsidiaries or
that could require any of its Subsidiaries to issue, sell, or otherwise
cause to become outstanding any of its own capital stock. There are no
outstanding stock appreciation, phantom stock, profit participation, or
similar rights with respect to any of its Subsidiaries. There are no
voting trusts, proxies, or other agreements or understandings with respect
to the voting of any
- 16 -
capital stock of any of its Subsidiaries. None of TST and its Subsidiaries
controls directly or indirectly or has any direct or indirect equity
participation in any corporation, partnership, trust, or other business
association.
4. Financial Statements. Attached hereto as Exhibit F are the following
financial statements (collectively the "Financial Statements"): (i) audited
consolidated balance sheets and statements of income, changes in
stockholders' equity, and cash flow as of and for the fiscal year ended
September 30, 1998 (the "Most Recent Fiscal Year End"), for TST and its
Subsidiaries, and (ii) unaudited consolidated balance sheets and statements
of income, changes in stockholders' equity, and cash flow as of and for the
period ended March 31, 1999(the "Most Recent Fiscal Month End"),(the "Most
Recent Financial Statements").
The Financial Statements (including the notes thereto) have been prepared
in accordance with GAAP applied on a consistent basis throughout the
periods covered thereby and present fairly the financial condition and the
results of operations of TST and its Subsidiaries on a consolidated basis
for such periods; provided, however, that the Most Recent Financial
Statements are subject to normal year-end adjustments (which will not be
material individually or in the aggregate) and may be required to reflect a
change of accounting method from "cash basis" accounting to "accrual
method" accounting, and lack footnotes and other presentation items.
5. Legal Compliance. Each of TST and its Subsidiaries has complied in all
material respects with all applicable laws (including rules, regulations,
codes, plans, injunctions, judgments, orders, decrees, rulings, and charges
thereunder) of federal, state, local, and foreign governments (and all
agencies thereof), and no action, suit, proceeding, hearing, investigation,
charge, complaint, claim, demand, or notice has been filed or commenced
against any of them alleging any failure so to comply, except where the
failure to comply would not have a material adverse effect on the business,
financial condition, operations, results of operations, or future prospects
of TST and any of its Subsidiaries.
6. Tax Matters.
a. Each of TST and any of its Subsidiaries has filed all Income Tax
Returns and other tax returns that it was required to file. To TST's
Knowledge such Income Tax Returns and other tax returns were correct
and complete in all material respects. All taxes owed by either of TST
and any of its Subsidiaries (shown on any Income Tax Return or other
tax return) have been paid. Neither TST
- 17 -
nor any of its Subsidiaries currently is the beneficiary of any
extension of time within which to file any Income Tax Return or other
tax return.
b. To TST's Knowledge there is no material dispute or claim concerning
any tax liability of any of TST and any of its Subsidiaries claimed or
raised by any authority in writing.
c. TST has delivered to Brokat correct and complete copies of all
federal, state and local (if any) income tax returns, examination
reports, and statements of deficiencies assessed against, or agreed to
by either TST or any of its Subsidiaries since October 1, 1995.
Neither TST nor any of its Subsidiaries has waived any statute of
limitations in respect of income taxes or agreed to any extension of
time with respect to an income tax assessment or deficiency.
d. Neither TST nor any of its Subsidiaries has filed a consent under Code
(S)341(f) concerning collapsible corporations. Neither TST nor any of
its Subsidiaries has made any material payments, is obligated to make
any material payments, or is a party to any agreement that under
certain circumstances could obligate it to make any material payments
that will not be deductible under Code (S)280G. Neither TST nor any of
its Subsidiaries has been a United States real property holding
corporation within the meaning of Code (S)897(c)(2) during the
applicable period specified in Code (S)897(c)(1)(A)(ii). Neither TST
nor any of its Subsidiaries is a party to any tax allocation or
sharing agreement. Neither TST nor any of its Subsidiaries
i. has been a member of an Affiliated Group filing a consolidated
federal income tax return (other than a group the common parent
of which was TST) or
ii. has any liability for the taxes of any Person (other than TST and
its Subsidiaries) under Reg. (S)1.1502-6 (or any similar
provision of state, local, or foreign law), as a transferee or
successor, by contract, or otherwise.
e. The unpaid income taxes of TST and its Subsidiaries (A) did not, as of
the Most Recent Fiscal Month End, exceed by any material amount the
reserve for income tax liability (rather than any reserve for deferred
taxes established to reflect timing differences between book and tax
income) set forth on the face of the Most Recent Balance Sheet and (B)
will not exceed by any material amount that reserve as adjusted for
operations and transactions
- 18 -
through the Closing Date in accordance with the past custom and
practice of TST and its Subsidiaries in filing their income tax
returns.
7. Tangible Assets. To TST's Knowledge the machinery, equipment, and other
tangible assets that TST and its Subsidiaries own and lease are free from
material defects (patent and latent), have been maintained in accordance
with normal industry practice, and are in good operating condition and
repair (subject to normal wear and tear).
8. Contracts. Exhibit G lists the following contracts and other agreements to
which any of TST and any of its Subsidiaries is a party:
a. any agreement (or group of related agreements) for the lease of
personal property to or from any Person providing for lease payments
in excess of $200,000.00 per annum;
b. any agreement (or group of related agreements) for the purchase or
sale of raw materials, commodities, supplies, products, or other
personal property, or for the furnishing or receipt of services, the
performance of which will extend over a period of more than one year
or involve consideration in excess of $500,000.00;
c. any agreement concerning a partnership or joint venture;
d. any agreement (or group of related agreements) under which it has
created, incurred, assumed, or guaranteed any indebtedness for
borrowed money, or any capitalized lease obligation, in excess of
$200,000.00 or under which it has imposed a Security Interest on any
of its assets, tangible or intangible;
e. any material agreement concerning confidentiality or noncompetition;
f. any material agreement with any of the Shareholders and their
Affiliates (other than TST and its Subsidiaries);
g. any profit sharing, stock option, stock purchase, stock appreciation,
deferred compensation, severance, or other material plan or
arrangement for the benefit of its current or former directors,
officers, and employees;
h. any collective bargaining agreement;
i. any agreement for the employment of any individual on a full-time,
part-time, consulting, or other basis
- 19 -
providing annual compensation in excess of $150,000.00 or providing
material severance benefits;
j. any agreement under which it has advanced or loaned any amount to any
of its directors, officers, and employees except in the Ordinary
Course of Business;
k. any agreement under which the consequences of a default or termination
could have a material adverse effect on the business, financial
condition, operations, results of operations, or future prospects of
TST and any of its Subsidiaries; or
l. any other agreement (or group of related agreements) the performance
of which involves consideration in excess of $500,000.00.
TST has delivered to Brokat a correct and complete copy of each written
agreement(as amended to date)listed in Exhibit G and a written summary setting
forth the material terms and conditions of each oral agreement referred to in
Exhibit G. With respect to each such agreement:
aa. the agreement is legal, valid, binding, enforceable, and in full force
and effect in all material respects;
bb. TST and its Subsidiaries are not, and to the Knowledge of TST no party
is in material breach or default, and no event has occurred which with
notice or lapse of time would constitute a material breach or default,
or permit termination, modification, or acceleration, under the
agreement; and
cc. no party has repudiated any material provision of the agreement.
9. Notes and Accounts Receivable. All notes and accounts receivable of TST
and its Subsidiaries are reflected properly on their books and records, and
to TST's Knowledge, are valid receivables subject to no set-offs or
counterclaims, are current and collectible, and will be collected in
accordance with their terms at their recorded amounts, subject only to the
reserve for bad debts set forth in the Most Recent Balance Sheet as
adjusted for operations and transactions through the Closing Date in
accordance with the past custom and practice of TST and its Subsidiaries.
10. Powers of Attorney. To the Knowledge of TST and any of its Subsidiaries,
there are no material outstanding powers of attorney executed on behalf of
any of TST and any of its Subsidiaries.
- 20 -
11. Insurance. Exhibit H sets forth the following information with respect to
each material insurance policy (including policies providing property,
casualty, liability, and workers compensation coverage and bond and surety
arrangements) with respect to which TST or any of its Subsidiaries is a
party, a named insured, or otherwise the beneficiary of coverage:
a. the name, address, and telephone number of the agent;
b. the name of the insurer, the name of the policyholder, and the name of
each covered insured;
c. the policy number and the period of coverage;
d. the coverage (including an indication of whether the coverage is on a
claims made, occurrence, or other basis) and amount (including a
description of how deductibles and ceilings are calculated and
operate) of coverage; and
e. a description of any retroactive premium adjustments or other material
loss- sharing arrangements.
With respect to each such insurance policy: to TST's Knowledge, the policy
is legal, valid, binding, enforceable, and in full force and effect in all
material respects; neither TST nor any of its Subsidiaries nor any other
party to the policy is in material breach or default (including with
respect to the payment of premiums or the giving of notices), and no event
has occurred which, with notice or the lapse of time, would constitute such
a material breach or default, or permit termination, modification, or
acceleration, under the policy; and no party to the policy has repudiated
any material provision thereof. Exhibit H describes any material self-
insurance arrangements affecting TST or any of its Subsidiaries.
12. Litigation. Exhibit I sets forth each instance in which either TST or any
of its Subsidiaries is subject to any outstanding injunction, judgment,
order, decree, ruling, or charge, or is a party or, to the Knowledge of TST
and any of its Subsidiaries, is threatened to be made a party to any
action, suit, proceeding, hearing, or investigation of, in, or before any
court or quasi-judicial or administrative agency of any federal, state,
local, or foreign jurisdiction or before any arbitrator.
13. Product Warranty. TST and its Subsidiaries do not sell or lease software
products to customers, but rather licenses software products to their
customers. To the Knowledge of TST, substantially all of the products
licensed and delivered by TST and its Subsidiaries have conformed in all
material
- 21 -
respects with all applicable contractual commitments and any express and
implied warranties offered, or such products have been corrected to conform
to such warranties, and neither TST nor any of its Subsidiaries has any
material liability (, whether asserted or unasserted, whether absolute or
contingent, whether accrued or unaccrued, whether liquidated or
unliquidated, and whether due or to become due) for replacement or repair
thereof or other damages in connection therewith, other than the obligation
to revise any software programs to conform to warranties under licenses or
applicable maintenance agreements. Exhibit J includes copies of the
standard terms and conditions of license for TST and any of its
Subsidiaries (containing applicable guaranty, warranty, and indemnity
provisions). Notwithstanding that most licenses of products by TST and its
Subsidiaries are pursuant to individually negotiated variations on the
standard terms and conditions, all of them exclude any liability of TST or
its Subsidiaries for incidental and consequential damages.
14. Product Liability Neither TST nor any of its Subsidiaries has any material
liability (whether asserted or unasserted, whether absolute or contingent,
whether accrued or unaccrued, whether liquidated or unliquidated, and
whether due or to become due) arising out of any injury to individuals or
property as a result of the ownership, possession, or use of any product
manufactured, sold, leased, or delivered by any of TST or any of its
Subsidiaries.
15. Employees. To the Knowledge of TST and its Subsidiaries, no executive, key
employee, or significant group of employees plans to terminate employment
with any of TST or any of its Subsidiaries during the 12 months following
the date hereof. Neither TST nor any of its Subsidiaries is a party to or
bound by any collective bargaining agreement, nor has any of them
experienced any strike or material grievance, claim of unfair labor
practices, or other collective bargaining dispute within the past three
years. To the Knowledge of TST neither TST nor any of its Subsidiaries has
committed any material unfair labor practice. Neither TST nor any of its
Subsidiaries has any Knowledge of any organizational effort presently being
made or threatened by or on behalf of any labor union with respect to
employees of any of TST or any of its Subsidiaries.
16. Year 2000. To TST's Knowledge, each software product sold, licensed or
otherwise assigned by TST and any of its Subsidiaries in its business
(collectively, the "Software") will accurately process date data
(including, but not limited to, calculating, comparing and sequencing)
from, into and between the twentieth and twenty-first centuries, including,
without limitation, leap year calculations, without a decrease in the
functionality of the Software. To TST's Knowledge,
- 22 -
after substantial and prudent testing, the Software is designed to
correctly process dates that are in the range from January 1, 1980 through
December 31, 2079, and will operate while processing such dates without
error relating to date data, specifically including any error relating to,
or the product of, date data which represents or references different
centuries or more than one century. Without limiting the generality of the
foregoing, the Software (a) will not abnormally end or provide invalid or
incorrect results as a result of date data, specifically including date
data which represents or references different centuries or more than one
century; (b) has been designed to ensure year 2000 compatibility,
including, but not limited to, date data century recognition, calculations
which accommodate same century and multi- century formulas and date values,
and date data interface values that reflect the century; (c) will manage
and manipulate data involving dates, including single century formulas and
multi-century formulas, and will not cause an abnormally ending scenario
within the application or generate incorrect values or invalid results
involving such dates; and (d) provides that all date-related data interface
functionalities include the indication of century.
17. Employee Benefits.
a. Exhibit K lists each Employee Benefit Plan that either TST or any of
its Subsidiaries maintains or to which either TST or any of its
Subsidiaries contributes or has any obligation to contribute.
i. To TST's Knowledge, each such Employee Benefit Plan (and each
related trust, insurance contract, or fund) complies in form and in
operation in all material respects with the applicable requirements of
ERISA, the Code, and other applicable laws.
ii. All required reports and descriptions (including Form 5500 Annual
Reports, summary annual reports, PBGC-l's, and summary plan
descriptions) have been timely filed and distributed appropriately
with respect to each such Employee Benefit Plan. The requirements of
COBRA have been met in all material respects with respect to each such
Employee Benefit Plan which is an Employee Welfare Benefit Plan.
iii. All contributions (including all employer contributions and
employee salary reduction contributions) which are due have been paid
to each such Employee Benefit Plan which is an Employee Pension
Benefit Plan and all contributions for any period ending on or before
the Closing Date which are not yet due have
- 23 -
been paid to each such Employee Pension Benefit Plan or accrued in
accordance with the past custom and practice of TST and its
Subsidiaries. All premiums or other payments for all periods ending on
or before the Closing Date have been paid with respect to each such
Employee Benefit Plan which is an Employee Welfare Benefit Plan.
iv. Each such Employee Benefit Plan which is an Employee Pension
Benefit Plan meets the requirements of a "qualified plan" under Code
(S)401(a), has received, within the last two years, a favorable
determination letter from the Internal Revenue Service that it is a
"qualified plan," and to TST's Knowledge there are no facts or
circumstances that could result in the revocation of such
determination letter.
v. The market value of assets under each such Employee Benefit Plan
which is an Employee Pension Benefit Plan (other than any
Multiemployer Plan) equals or exceeds the present value of all vested
and nonvested liabilities thereunder determined in accordance with
PBGC methods, factors, and assumptions applicable to an Employee
Pension Benefit Plan terminating on the date for determination.
vi. TST has delivered to Brokat correct and complete copies of the
plan documents and summary plan descriptions, the most recent
determination letter received from the Internal Revenue Service, the
most recent Form 5500 Annual Report, and all related trust agreements,
insurance contracts, and other funding agreements which implement each
such Employee Benefit Plan.
b. With respect to each Employee Benefit Plan that any of TST, any of its
Subsidiaries, and any ERISA Affiliate maintains or ever has maintained
or to which any of them contributes, ever has contributed, or ever has
been required to contribute:
i. No such Employee Benefit Plan which is an Employee Pension Benefit
Plan (other than any Multiemployer Plan) has been completely or
partially terminated or been the subject of a Reportable Event as to
which notices would be required to be filed with the PBGC. No
proceeding by the PBGC to terminate any such Employee Pension Benefit
Plan (other than any Multiemployer Plan) has been instituted or, to
the Knowledge of TST, threatened.
ii. There have been no Prohibited Transactions with respect to any
such Employee Benefit Plan. No Fiduciary
- 24 -
has any liability for material breach of fiduciary duty or any other
material failure to act or comply in connection with the
administration or investment of the assets of any such Employee
Benefit Plan. No action, suit, proceeding, hearing, or investigation
with respect to the administration or the investment of the assets of
any such Employee Benefit Plan (other than routine claims for
benefits) is pending or, to the Knowledge of TST, threatened.
iii. To TST's Knowledge, neither TST nor any of its Subsidiaries has
incurred any material liability (whether asserted or unasserted,
whether absolute or contingent, whether accrued or unaccrued, whether
liquidated or unliquidated, and whether due or to become due) to the
PBGC (other than PBGC premium payments) or otherwise under Title IV of
ERISA (including any withdrawal liability as defined in ERISA (S)4201)
or under the Code with respect to any such Employee Benefit Plan which
is an Employee Pension Benefit Plan.
c. Neither TST, nor any of its Subsidiaries, nor the other members of any
Controlled Group that includes TST and any of its Subsidiaries
contributes to, ever has contributed to, or, to TST's Knowledge, ever
has been required to contribute to any Multiemployer Plan or has any
material liability whether asserted or unasserted, whether absolute or
contingent, whether accrued or unaccrued, whether liquidated or
unliquidated, and whether due or to become due), including any
withdrawal liability (as defined in ERISA (S)4201), under any
Multiemployer Plan.
d. Neither TST nor any of its Subsidiaries maintains or ever has
maintained or contributes, ever has contributed, or, to TST's
Knowledge, ever has been required to contribute to any Employee
Welfare Benefit Plan providing medical, health, or life insurance or
other welfare-type benefits for current or future retired or
terminated employees, their spouses, or their dependents (other than
in accordance with COBRA).
18. Guaranties. Neither TST nor any of its Subsidiaries is a guarantor or
otherwise is responsible for any liability or obligation (including
indebtedness) of any other Person.
19. Environment, Health, and Safety Matters.
a. To TST's Knowledge, each of TST, its Subsidiaries, and their respective
predecessors and Affiliates has complied and is in compliance, in each case
in all material respects, with all Environmental, Health, and Safety
Requirements.
- 25 -
b. To TST's Knowledge, without limiting the generality of the foregoing,
each of TST, any of its Subsidiaries, and their respective Affiliates, has
obtained, has complied, and is in compliance with, in each case in all
material respects, all material permits, licenses and other authorizations
that are required pursuant to Environmental, Health, and Safety
Requirements for the occupation of its facilities and the operation of its
business; a list of all such material permits, licenses and other
authorizations is set forth on the attached "Environmental and Safety
Permits Schedule."
c. To TST's Knowledge, none of TST, any of its Subsidiaries, or their
respective Affiliates has received any written or oral notice, report or
other information regarding any actual or alleged material violation of
Environmental, Health, and Safety Requirements, or any material liabilities
or potential material liabilities (whether accrued, absolute, contingent,
unliquidated or otherwise), including any material investigatory, remedial
or corrective obligations, relating to any of them or its facilities
arising under Environmental, Health, and Safety Requirements.
d. Except as set forth on the attached "Environmental and Safety Matters
Schedule", to TST's Knowledge, none of the following exists at any property
or facility operated by TST or any of its Subsidiaries: (1) underground
storage tanks, (2) asbestos-containing material in any friable and damaged
form or condition, (3) materials or equipment containing polychlorinated
biphenyls, or (4) landfills, surface impoundments, or disposal areas.
e. To TST' Knowledge, none of TST, any of its Subsidiaries, or any of their
respective predecessors or Affiliates has treated, stored, disposed of,
arranged for or permitted the disposal of, transported, handled, or
released any substance, including without limitation any hazardous
substance, or owned or operated any property or facility (and no such
property or facility is contaminated by any such substance) in a manner
that has given or would give rise to material liabilities, including any
material liability for response costs, corrective action costs, personal
injury, property damage, natural resources damages or attorney fees,
pursuant to the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended ("CERCLA") or the Solid Waste Disposal
Act, as amended ("SWDA") or any other Environmental, Health, and Safety
Requirements.
f. Neither this Agreement nor the consummation of the transaction that is
the subject of this Agreement will result in any material obligations for
site investigation or cleanup, or notification to or consent of government
agencies or third
- 26 -
parties, pursuant to any of the so-called "transaction- triggered" or
"responsible property transfer" Environmental, Health, and Safety
Requirements.
20. Disclosure. To TST's Knowledge the representations and warranties
contained in this (S)IV.B. do not contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make
the statements and information contained in this (S)IV.B. not misleading.
V. Pre-Closing Covenants
The Parties agree as follows with respect to the period between the execution of
this Agreement and the Closing.
A. General. Each of the Parties will use his or its reasonable best efforts to
take all action and to do all things necessary, proper, or advisable in order to
consummate and make effective the transactions contemplated by this Agreement
(including satisfaction, but not waiver, of the closing conditions set forth in
Article VII below).
B. Notices and Consents. TST shall give any notices to third parties, and shall
obtain any third party consents that Brokat reasonably may request in connection
with any exceptions (noted in the Disclosure Schedule attached hereto) to the
representations and warranties described in Article IV., above. Each of the
Parties will (and the Shareholders will cause TST and its Subsidiaries to) give
any notices to, make any filings with, and use its reasonable best efforts to
obtain any authorizations, consents, and approvals of governments and
governmental agencies in connection with the matters referred to in (S)III.A.2.,
(S)III.B.2., and (S)IV.C. above. Without limiting the generality of the
foregoing, each of the Parties will file (and the Shareholders will cause each
of TST and its Subsidiaries to file) any Notification and Report Forms and
related material that he or it may be required to file with the Federal Trade
Commission and the Antitrust Division of the United States Department of Justice
under the Xxxx-Xxxxx-Xxxxxx Act, will use his or its reasonable best efforts to
obtain a waiver from the applicable waiting period, and will make any further
filings pursuant thereto that may be necessary, proper, or advisable in
connection therewith.
C. Operation of Business. TST and any of its Subsidiaries shall not engage in
any practice, take any action, or enter into any transaction except in the
Ordinary Course of Business. Without limiting the generality of the foregoing,
TST and any of its Subsidiaries shall not, except in the Ordinary Course of
Business
1. declare, set aside, or pay any dividend or make any distribution with
respect to its capital stock, or
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2. redeem, purchase, or otherwise acquire any of its capital stock, or
3. otherwise engage in any practice, take any action, or enter into any
transaction of the sort described in (S)IV.G., above.
D. Preservation of Business. TST and its Subsidiaries shall use reasonable best
efforts to keep their business and properties substantially intact, including
present operations, physical facilities, working conditions, and relationships
with lessors, licensors, suppliers, customers, and employees.
E. Full Access. Each of the Shareholders shall permit, and TST and its
Subsidiaries shall permit, representatives of Brokat to have full access at all
reasonable times, and in a manner so as not to interfere with the normal
business operations of TST and its Subsidiaries, to all premises, properties,
personnel, books, records (including tax records), contracts, and documents of
or pertaining to TST and its Subsidiaries. Brokat will treat and hold as such
any Confidential Information it receives from any of the Shareholders, TST, and
its Subsidiaries in the course of the reviews contemplated by this (S)V.E., will
not use any of the Confidential Information except in connection with this
Agreement, and, if this Agreement is terminated for any reason whatsoever, will
return to the Shareholders, TST, and its Subsidiaries all tangible embodiments
(and all copies) of the Confidential Information which are in its possession.
F. Notice of Developments. TST will give prompt written notice to Brokat of any
material adverse development causing a breach of any of the representations and
warranties in Article IV., above. Each Party will give prompt written notice to
the others of any material adverse development causing a breach of any of his or
its own representations and warranties in Article III above. No disclosure by
any Party pursuant to this (S)V.F., however, shall be deemed to amend or
supplement the Exhibits to this Agreement or to prevent or cure any
misrepresentation, breach of warranty, or breach of covenant.
G. Exclusivity. None of the Shareholders will (and the Shareholders will not
cause or permit TST or any of its Subsidiaries to) (i) solicit, initiate, or
encourage the submission of any proposal or offer from any Person relating to
the acquisition of any capital stock or other voting securities, or any
substantial portion of the assets, of any of TST and any of its Subsidiaries
(including any acquisition structured as a merger, consolidation, or share
exchange) or (ii) participate in any discussions or negotiations regarding,
furnish any information with respect to, assist or participate in, or facilitate
in any other manner any effort or attempt by any Person to do or seek any of the
foregoing. None of the Shareholders will vote their TST Shares in
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favor of any such acquisition structured as a merger, consolidation, or share
exchange. The Shareholders shall promptly notify Brokat of any inquiry or
proposal received by the Shareholders or TST with respect to any such
acquisition and shall furnish Brokat with a copy of any written information
relating thereto. In the event that Shareholders or TST breach the provisions of
this (P)V.G. and subsequently close(s) a transaction for the sale of a majority
of the capital stock of TST, or all or substantially all of the material assets
of TST (whether through direct purchase, merger, consolidation or otherwise)
with a person or entity (or an affiliate of such person or entity) that was
involved in said breach of this (S)V.G. then, upon the closing of such
transaction, the Shareholders shall on a pro rata basis pay to Brokat a fee
equal to 3.5% of the value of the shares or assets (as the case may be) to be
exchanged in this transaction. The foregoing shall be the exclusive remedy, and
in lieu of all other remedies at law or in equity, of Brokat for breach of the
provisions of this (S)V.G.
H. Confidentiality. Each Party agrees that all Confidential Information
pertaining to the other Party or parties and furnished, or to be furnished, by
or on behalf of such other Party or parties (i) will be kept in strict
confidence by each Party and its Representatives, (ii) if the transactions
contemplated in this Agreement are not consummated, such Confidential
Information shall not be used in competition with either Party or for any
purpose other than evaluating the transaction, and (iii) such information shall
not be disclosed to any person other than each Party's Representatives who need
to know such information for the purpose of evaluating the transaction or for
other relationships between the parties and their subsidiaries. If such
information is disclosed to any Representative of either Party, that person or
entity shall be informed at the time of such disclosure of the confidential
nature of the information and of his or its obligations with respect thereto. If
for any reason the transaction is not consummated, each Party will return to the
other Party all documents and materials containing or reflecting Confidential
Information and will not retain any copies, summaries, extracts, or other
reproductions thereof, except information relating the ongoing business
relationship of the Parties.
I. Confidentiality Agreements. Brokat shall provide to TST and its Subsidiaries
samples of the confidentiality agreements for officers and employees presently
used by Brokat in its own organization. TST and its Subsidiaries shall confer
with Brokat regarding the best approach to be made to officers and employees of
TST and its Subsidiaries for the purpose of securing their execution of
confidentiality agreements. Brokat, TST and TST's Subsidiaries recognize that
this endeavor shall be made in such a way as to minimize disruption to the
business of TST and its Subsidiaries.
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X. XXXX Fee. TST shall pay the broker fee owed to MASI in the amount of
$326,000.
VI. Post-Closing Covenants.
With respect to the period following the Closing:
A. General.
1. In case at any time after the Closing any further action is necessary to
carry out the purposes of this Agreement, each of the Parties will take
such further action (including the execution and delivery of such further
instruments and documents) as any other Party reasonably may request, all
at the sole cost and expense of the requesting Party (unless the requesting
Party is entitled to indemnification therefor under Article VIII, below).
2. The Shareholders acknowledge and agree that from and after the Closing
Brokat will be entitled to possession of all documents, books, records
(including tax records), agreements, and financial data of any sort
relating to TST and its Subsidiaries.
3. None of the Shareholders will take any action that is designed or intended
to have the effect of discouraging any lessor, licensor, customer,
supplier, or other business associate of TST and any of its Subsidiaries
from maintaining the same business relationships with TST and any of its
Subsidiaries after the Closing as it maintained with TST and any of its
Subsidiaries prior to the Closing.
4. Each of the Shareholders will treat and hold as such all of the information
deemed confidential under this Agreement ("Confidential Information"),
refrain from using any of the Confidential Information except in connection
with this Agreement or future employment with TST, Brokat or an affiliate
of either of them, and deliver promptly to Brokat or destroy, at the
request and option of Brokat, all tangible embodiments (and all copies) of
the Confidential Information which are in his possession. In the event
that any of the Shareholders is requested or required (by oral question or
request for information or documents in any legal proceeding,
interrogatory, subpoena, civil investigative demand, or similar process) to
disclose any Confidential Information, that Shareholder will notify Brokat
promptly of the request or requirement so that Brokat may seek an
appropriate protective order or waive compliance with the provisions of
this subsection. If, in the absence of a protective order or the receipt
of a waiver hereunder, any of the Shareholders is, on the advice of
counsel, compelled to disclose any Confidential
- 30 -
Information to any tribunal or else stand liable for contempt, that
Shareholder may disclose the Confidential Information to the tribunal;
provided, however, that the disclosing Shareholder shall use his or its
reasonable best efforts to obtain, at the reasonable request of Brokat, an
order or other assurance that confidential treatment will be accorded to
such portion of the Confidential Information required to be disclosed as
Brokat shall designate.
B. Covenant Not to Compete. For a period of two years from and after the
Closing Date, Xxxxxx, Xxxxx or Sating (hereinafter in this (S)VI.B. referred to
as "Sellers:) will not, (except with the express written consent of TST or
Brokat) directly or indirectly, whether for the Seller's own behalf or on behalf
of any person, firm, partnership, association, corporation or business
organization, entity or enterprise, in any way do or attempt to do any of the
following:
1. solicit, contact, call upon, communicate with, or attempt to communicate
with, in any way directly or indirectly, for the purpose of attempting to
provide services or goods competitive with those of TST or Brokat, any
client or prospective client of TST or Brokat, with whom the Seller has had
personal contact within a period of two years prior to the Closing. A
client, for the purposes of this (S)VI.B., means any person, corporation,
or other enterprise with whom TST or Brokat has entered into an agreement
for services or goods within the two-year period prior to the Closing. A
prospective client, for purposes of this (S)VI.B., means any one to whom a
proposal for services or goods was made within the two year period prior to
the Closing. The Seller understands and agrees that the market for TST's
and Brokat's products and services is worldwide, that TST and Brokat
conducts their business in competition with enterprises located throughout
the world and that the geographical scope of this provision is fair and
reasonable;
2. contact, hire or attempt to persuade any agents, employees, or officers of
TST or Brokat to terminate their relationship with TST or Brokat or do any
act that may result in the impairment of the relationship between TST or
Brokat or any of their respective agents, employees or officers; or
3. dissuade any client from seeking services or goods from TST.
If the final judgment of a court of competent jurisdiction declares that any
term or provision of this (S)VI.B. is invalid or unenforceable, the Parties
agree that the court making the determination of invalidity or unenforceability
shall have the power to reduce the scope, duration, or area of the term or
provision, to delete specific words or phrases, or to replace any
- 31 -
invalid or unenforceable term or provision with a term or provision that is
valid and enforceable and that comes closest to expressing the intention of the
invalid or unenforceable term or provision, and this Agreement shall be
enforceable as so modified after the expiration of the time within which the
judgment may be appealed.
C. Personal Guaranties. Within 10 business days after the Closing, TST and
Brokat shall have taken the necessary steps to relieve the Individual
Shareholders of personal guaranties on a TST line of credit and other
liabilities of TST with a present aggregate outstanding balance of approximately
$60,000.00 (Sixty Thousand United States Dollars) which they have made on behalf
of TST as principal debtor. The Individual Shareholders shall deliver to
Brokat, at or before the Closing, documentation evidencing such guaranties and
the amount thereof. From and after the Closing, Brokat agrees to indemnify and
hold the Individual Shareholders from and against any and all liability under
the mentioned guaranties.
VII. Conditions to Obligation to Close
A. Conditions to Obligation of Brokat. The obligation of Brokat to consummate
the transactions to be performed by it in connection with the Closing is subject
to satisfaction of the following conditions:
1. the representations and warranties set forth in (S)III.A. and Article IV.,
above shall be true and correct in all material respects at and as of the
Closing Date;
2. the Shareholders and TST shall have performed and complied with all of
their covenants hereunder in all material respects through the Closing;
3. TST and its Subsidiaries shall have procured all of the material third
party consents specified in (S)V.B. above;
4. no action, suit, or proceeding shall be pending before any court or quasi-
judicial or administrative agency of any federal, state, local, or foreign
jurisdiction or before any arbitrator wherein an unfavorable injunction,
judgment, order, decree, ruling, or charge would (A) prevent consummation
of any of the transactions contemplated by this Agreement, (B) cause any of
the transactions contemplated by this Agreement to be rescinded following
consummation, (C) affect adversely the right of Brokat to own TST Shares
and to control TST and its Subsidiaries, or (D) affect materially and
adversely the right of any of TST and its Subsidiaries to own its assets
and to operate its businesses (and no such injunction, judgment, order,
decree, ruling, or charge shall be in effect);
- 32 -
5. the Shareholders shall have delivered to Brokat a certificate to the effect
that each of the conditions specified above in (S)VII.A.1.-4. is satisfied
in all respects;
6. all applicable waiting periods (and any extensions thereof) under the Xxxx-
Xxxxx-Xxxxxx Act shall have expired or otherwise been terminated and the
Parties, TST, and its Subsidiaries shall have received all other material
authorizations, consents, and approvals of governments and governmental
agencies referred to in (S)III.A.2., (S)III.B.1., and (S)IV.B.1., above;
7. all actions to be taken by the Shareholders, TST and any of its
Subsidiaries in connection with consummation of the transactions
contemplated herein and all certificates, opinions, instruments, and other
documents required to effect the transactions contemplated hereby will be
reasonably satisfactory in form and substance to Brokat;
8. all U.S. federal and state securities law requirements have been satisfied;
and
9. receipt by Brokat of written resignations of all directors and officers of
TST and its Subsidiaries who are Shareholders.
Brokat may waive any condition specified in this (S)VII.A. if it executes a
writing so stating at or prior to the Closing.
B. Conditions to Obligation of the Shareholders and TST. The obligation of the
Shareholders and TST to consummate the transactions to be performed by them in
connection with the Closing is subject to satisfaction of the following
conditions:
1. the representations and warranties set forth in (S)III.B. above shall be
true and correct in all material respects at and as of the Closing Date;
2. Brokat shall have performed and complied with all of its covenants
hereunder in all material respects through the Closing;
3. no action, suit, or proceeding shall be pending before any court or quasi-
judicial or administrative agency of any federal, state, local, or foreign
jurisdiction or before any arbitrator wherein an unfavorable injunction,
judgment, order, decree, ruling, or charge would (A) prevent consummation
of any of the transactions contemplated by this Agreement or (B) cause any
of the transactions contemplated by this Agreement to be rescinded
following consummation (and no such injunction, judgment, order, decree,
ruling, or charge shall be in effect);
- 33 -
4. Brokat shall have delivered to the Shareholders a certificate to the effect
that each of the conditions specified above in (S)VII.B. 1.- 3. is
satisfied in all respects;
5. all applicable waiting periods (and any extensions thereof) under the Xxxx-
Xxxxx-Xxxxxx Act shall have expired or otherwise been terminated and
Brokat, TST, and Subsidiaries shall have received all other material
authorizations, consents, and approvals of governments and governmental
agencies referred to in (S)III.B.1., above;
6. employment agreements shall have been executed between Brokat and certain
key executives of TST, namely, Xxxxxx X. Xxxxxx III, Xxxx X. Xxxxx, Xxxxxx
X. Xxxxxx, and Xxxx Xxxxxxxxx, to be employed with TST, Brokat or an
affiliate of them.
7. all actions to be taken by Brokat in connection with consummation of the
transactions contemplated hereby will be reasonably satisfactory in form
and substance to the Shareholders.
The Shareholders may waive any condition specified in this (S)VII.B. if they
execute a writing so stating at or prior to the Closing.
VIII. Remedies for Breaches of This Agreement.
A. Survival of Representations and Warranties.
1. The representations and warranties of the Shareholders, TST, and Brokat
contained in (S)III. (other than (S)III.A.3. above) shall not survive the
Closing hereunder; excepting, however, that the representations and
warranties contained in (S)III.A.3., above, shall survive the Closing
hereunder (even if Brokat knew or had reason to know of any
misrepresentation or breach of warranty at the time of Closing) and
continue in full force and effect for a period of one year thereafter.
2. The representations and warranties contained in (S)IV.A. shall survive the
Closing hereunder (even if Brokat knew or had reason to know of any
misrepresentation or breach of warranty at the time of Closing) as follows:
a. (S)IV.A.2. shall survive for 6 months after the Closing; and
b. the remaining representations and warranties in (S)IV.A. shall survive
for 12 months after the Closing.
B. Indemnification Provisions for Benefit of Brokat.
1. In the event any of the Shareholders breaches any of their representations,
warranties, and covenants contained in (S)III.A.3., above, and, provided
that Brokat makes a written
- 34 -
claim for indemnification against any of the Shareholders within the
applicable survival period, then (a) each of the Individual Shareholders
agrees, jointly and severally, and (b) each of the Trust Shareholders
agrees, separately for itself, to indemnify Brokat from and against the
entirety of any Adverse Consequences Brokat may suffer through and after
the date of the claim for indemnification (including any Adverse
Consequences Brokat may suffer after the end the applicable survival
period) resulting from, arising out of, relating to, in the nature of, or
caused by the breach, but not more than the total consideration paid to the
Shareholders pursuant to this Agreement. Brokat's remedies shall include,
without limitation thereto, rescission and restitution. The Parties shall
make appropriate adjustments for tax consequences and insurance coverage
and take into account the time cost of money in determining Adverse
Consequences for purposes of this Article VIII. Brokat shall have a right
of offset for any amount due it hereunder by reason of indemnification
against any sums, if any, owed and not yet due by Brokat to the
Shareholders pursuant to Sections (S)(S)II.B.2. & 3. The amount of offset
with respect to each Trustee Shareholder shall be limited to the amount, if
any, still payable by Brokat to such Trustee Shareholder.
2. In the event any of the Shareholders breaches any of their representations,
warranties, and covenants contained in (S)IV.A. above, and, provided that
Brokat makes a written claim for indemnification against any of the
Shareholders within the applicable survival period, then each of the
Shareholders agrees, separately for himself only, to indemnify Brokat from
and against any Adverse Consequences Brokat may suffer through and after
the date of the claim for indemnification (including any Adverse
Consequences Brokat may suffer after the end the applicable survival
period) resulting from, arising out of, relating to, in the nature of, or
caused by the breach. The indemnification in this (S)VIII.B.2. shall cover
Adverse Consequences only after they shall have aggregated $750,000.00, and
shall be limited to a total indemnification of $1,450,000.00. Brokat shall
have a right of offset for any amount due it hereunder by reason of
indemnification against any sums, if any, owed and not yet due by Brokat to
the Shareholders pursuant to Sections (S)(S)II.B.2. & 3. The amount of
offset with respect to each Trustee Shareholder shall be limited to the
amount, if any, still payable by Brokat to such Trustee Shareholder. The
Parties shall make appropriate adjustments for tax consequences and
insurance coverage and take into account the time cost of money in
determining Adverse Consequences for purposes of this Article VIII.
C. Matters Involving Third Parties.
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1. If any third party shall notify Brokat with respect to any matter (a "Third
Party Claim") which may give rise to a claim for indemnification against
any other Party (the "Indemnifying Party") under this Article VIII, then
Brokat shall promptly notify each Indemnifying Party thereof in writing;
provided, however, that no delay on the part of Brokat in notifying any
Indemnifying Party shall relieve the Indemnifying Party from any obligation
hereunder unless (and then solely to the extent) the Indemnifying Party is
thereby materially prejudiced.
2. Any Indemnifying Party will have the right to assume the defense of the
Third Party Claim with counsel of his choice reasonably satisfactory to
Brokat at any time within 15 days after Brokat has been given notice of the
Third Party Claim; provided, however, that the Indemnifying Party must
conduct the defense of the Third Party Claim actively and diligently
thereafter in order to preserve his rights in this regard; and provided
further that Brokat may retain separate co-counsel at its sole cost and
expense and observe, consul and cooperate in the defense of the Third Party
Claim.
3. So long as the Indemnifying Party has assumed and is conducting the defense
of the Third Party Claim in accordance with (S)VIII.B.2., above, (A) the
Indemnifying Party will not consent to the entry of any judgment or enter
into any settlement with respect to the Third Party Claim without the prior
written consent of Brokat (not to be withheld unreasonably) unless the
judgment or proposed settlement involves only the payment of money damages
by one or more of the Indemnifying Parties and does not impose an
injunction or other equitable relief upon the Brokat and (B) Brokat will
not consent to the entry of any judgment or enter into any settlement with
respect to the Third Party Claim without the prior written consent of the
Indemnifying Party (not to be withheld unreasonably).
4. In the event the Indemnifying Parties do not assume and conduct the defense
of the Third Party Claim in accordance with (S)VIII.B.2., (A) Brokat may
defend against, and consent to the entry of any judgment or enter into any
settlement with respect to, the Third Party Claim in any manner Brokat
reasonably may deem appropriate (and Brokat need not consult with, or
obtain any consent from, any Indemnifying Party in connection therewith)
and (B) the Indemnifying Parties will remain responsible for any Adverse
Consequences Brokat may suffer resulting from, arising out of, relating to,
in the nature of, or caused by the Third Party Claim to the fullest extent
provided in this Article VIII.
IX. Tax Matters.
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A. Cooperation. Brokat, TST, Subsidiaries and Shareholders shall cooperate
fully, as and to the extent reasonably requested by the other Party, in
connection with the filing of tax returns pursuant to this Section and any
audit, litigation or other proceeding with respect to taxes. Such cooperation
shall include the retention and (upon the other Party's request) the provision
of records and information which are reasonably relevant to any such audit,
litigation or other proceeding and making employees available on a mutually
convenient basis to provide additional information and explanation of any
material provided hereunder. TST and its Subsidiaries and Shareholders agree (A)
to retain all of its or his respective books and records with respect to tax
matters pertinent to TST and any of its Subsidiaries relating to any taxable
period beginning before the Closing Date until the expiration of the statute of
limitations (and, to the extent notified by Brokat or Shareholders, any
extensions thereof) of the respective taxable periods, and to abide by all
record retention agreements entered into with any taxing authority, and (B) to
give the other Party reasonable written notice prior to transferring, destroying
or discarding any such books and records and, if the other Party so requests,
TST and its Subsidiaries or Shareholders, as the case may be, shall allow the
other Party to take possession of such books and records.
B. Mitigation of Tax Liability. Brokat and Shareholders further agree, upon
request, to use their best efforts to obtain any certificate or other document
from any governmental authority or any other Person as may be necessary to
mitigate, reduce or eliminate any tax that could be imposed (including, but not
limited to, with respect to the transactions contemplated hereby).
C. Code (S)6043. Brokat and Shareholders further agree, upon request, to provide
the other Party with all information that either Party may be required to report
pursuant to (S)6043 of the Code and all Treasury Department Regulations
promulgated thereunder.
X. Termination.
A. Termination of Agreement. Certain of the Parties may terminate this Agreement
as provided below:
1. Brokat and the Shareholders may terminate this Agreement by mutual written
consent at any time prior to the Closing;
2. Brokat may terminate this Agreement by giving written notice to the
Shareholders at any time prior to the Closing (A) in the event any of the
Shareholders or TST has breached any material representation, warranty, or
covenant contained in this Agreement in any material respect, the Buyer has
notified the Requisite Shareholders of the breach, and the breach has
- 37 -
continued without cure for a period of 15 after the notice of breach or (B)
if the Closing shall not have occurred on or before May 10, 1999, by reason
of the failure of any condition precedent under (S)VII.A. hereof (unless
the failure results primarily from Brokat itself breaching any
representation, warranty, or covenant contained in this Agreement); and
3. The representative designated by the Shareholders may terminate this
Agreement by giving written notice to Brokat at any time prior to the
Closing (A) in the event Brokat has breached any material representation,
warranty, or covenant contained in this Agreement in any material respect,
any of the Shareholders has notified Brokat of the breach, and the breach
has continued without cure for a period of 15 days after the notice of
breach or (B) if the Closing shall not have occurred on or before April 30,
l999, by reason of the failure of any condition precedent under (S)VII.B.
hereof (unless the failure results primarily from any of the Shareholders
themselves or TST breaching any representation, warranty, or covenant
contained in this Agreement).
B. Effect of Termination. If any Party terminates this Agreement pursuant to
(S)X.A., above, all rights and obligations of the Parties hereunder shall
terminate without any liability of any Party to any other Party (except for any
liability of any Party then in breach); provided, however, that the
confidentiality provisions contained in (S)V.H. above, shall survive
termination.
Additionally, if the parties fail to achieve Closing under this Agreement,
except in the event failure to achieve the Closing shall have been caused by any
of the Shareholders or of TST, Brokat and TST shall execute and deliver:
1. That certain Minority Equity Investment Agreement attached to the Letter of
Intent as Exhibit A thereto;
2. That certain inventory Finance Loan Agreement attached to the Letter of
Intent as Exhibit B thereto; and
3. That certain Promissory Note attached to the Letter of Intent as Exhibit C
thereto.
XI. Miscellaneous.
A. Press Releases and Public Announcements. No Party shall issue any press
release or make any public announcement relating to the subject matter without
the prior written approval of Brokat and Xxxxxx; provided, however, that any
Party may make any public disclosure it believes in good faith is required by
applicable law or any listing or trading agreement concerning its publicly-
traded securities (in which case the disclosing Party will use its
- 38 -
reasonable efforts to advise the other Parties prior to making the disclosure).
B. No Third-Party Beneficiaries. This Agreement shall not confer any rights or
remedies upon any Person other than the Parties and their respective successors
and permitted assigns.
C. Entire Agreement. This Agreement (including the documents referred to herein)
constitutes the entire agreement among the Parties and supersedes any prior
understandings, agreements, or representations by or among the Parties, written
or oral, to the extent they related in any way to the subject matter hereof.
D. Succession and Assignment. This Agreement shall be binding upon and inure to
the benefit of the Parties named herein and their respective successors and
permitted assigns. No Party may assign either this Agreement or any of his or
its rights, interests, or obligations hereunder without the prior written
approval of Brokat and the Shareholders; provided, however, that Brokat may (i)
assign any or all of its rights and interests hereunder to one or more of its
Affiliates and (ii) designate one or more of its Affiliates to perform its
obligations hereunder (in any or all of which cases Brokat nonetheless shall
remain responsible for the performance of all of its obligations hereunder).
E. Counterparts. This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original but all of which together will
constitute one and the same instrument.
F. Headings. The section headings contained in this Agreement are inserted for
convenience only and shall not affect in any way the meaning or interpretation
of this Agreement.
G. Notices. All notices, requests, demands, claims, and other communications
hereunder will be in writing. Any notice, request, demand, claim, or other
communication hereunder shall be deemed duly given if (and then two business
days after) it is sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended recipient as set forth
below:
If to the Shareholders: Xxxxxx Xxxxxx
0000 Xxxxxxxxxxx Xxx
Xxxxxxxx, XX 00000
Copy to: Xxxxxxxx X. Xxxxxxxxx, Esq.
Xxxxxxxx & Xxxxxxx
000 X. Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
- 39 -
If to TST: Transaction Software Technologies, Inc.
000 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxxx, XX 00000
If to Brokat: Brokat Infosystems, Inc.
0000 Xxxxxxx Xxxxx Xxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000-0000
Attn: ________________
Copy to: Xxxxx X. Xxxxx
Xxxxxxx X. Xxxxxxxxx
Xxxxx, Xxxxx and Xxxxx
00 X. Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Any Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no such notice,
request, demand, claim, or other communication shall be deemed to have been duly
given unless and until it actually is received by the intended recipient. Any
Party may change the address to which notices, requests, demands, claims, and
other communications hereunder are to be delivered by giving the other Parties
notice in the manner herein set forth.
H. Governing Law and Jurisdiction. This Agreement shall be governed by and
construed in accordance with the domestic laws of the State of Georgia without
giving effect to any choice or conflict of law provision or rule (whether of the
State of Georgia or any other jurisdiction) that would cause the application of
the laws of any jurisdiction other than the State of Georgia. The Parties
consent to the non-exclusive jurisdiction of any federal or state court sitting
in Atlanta, Georgia. Each Party hereby waives to the extent permitted by law
personal service of any and all process and consents that all such service of
process shall be made by certified or registered mail directed to the party at
the address designated in this Agreement for notices, and service so made shall
be deemed to be completed upon actual receipt thereof. Each party hereby waives
any objection which such Party may have based on improper venue or forum non
conveniens to the conduct of any proceeding instituted hereunder and waives any
right it may have to transfer or change the venue of any litigation brought in
accordance with this (S)XI.H.
I. Amendments and Waivers. No amendment of any provision of this Agreement shall
be valid unless the same shall be in writing and signed by Brokat and the
Shareholders. No waiver by any Party of any default, misrepresentation, or
breach of warranty or covenant
- 40 -
hereunder, whether intentional or not, shall be deemed to extend to any prior or
subsequent default, misrepresentation, or breach of warranty or covenant
hereunder or affect in any way any rights arising by virtue of any prior or
subsequent such occurrence.
J. Severability. Any term or provision of this Agreement that is invalid or
unenforceable in any situation in any jurisdiction shall not affect the validity
or enforceability of the remaining terms and provisions hereof or the validity
or enforceability of the offending term or provision in any other situation or
in any other jurisdiction.
K. Expenses. Each of the Parties, TST, and its Subsidiaries will bear his or its
own costs and expenses (including legal fees and expenses) incurred in
connection with this Agreement and the transactions contemplated hereby. Brokat
agrees that TST will bear the Shareholders' reasonable costs, fees and expenses,
including any of their legal, accounting, and business and financial consultant
fees and expenses, in connection with the transactions contemplated by this
Agreement.
L. Construction. The Parties have participated jointly in the negotiation and
drafting of this Agreement. In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the Parties and no presumption or burden of proof shall arise favoring or
disfavoring any Party by virtue of the authorship of any of the provisions of
this Agreement. Any reference to any federal, state, local, or foreign statute
or law shall be deemed also to refer to all rules and regulations promulgated
thereunder, unless the context requires otherwise. The word "including" shall
mean including without limitation.
M. Incorporation of Exhibits, Annexes, and Schedules. The Exhibits, Annexes, and
Schedules identified in this Agreement are incorporated herein by reference and
made a part hereof.
*****
SIGNATURE PAGES FOLLOW
- 41 -
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of
the date first above written.
BROKAT INFOSYSTEMS AG
By: __________________________
Name: __________________________
Title: __________________________
By: __________________________
Name: __________________________
Title: __________________________
TRANSACTION SOFTWARE TECHNOLOGIES, INC.
By: __________________________
Name: __________________________
Title: __________________________
SHAREHOLDERS
_______________________________
Xx. Xxxxxx X. Xxxxxx III, individually
_______________________________
Xxxx X. Xxxxx, individually
_______________________________
Xxxxxx X. Xxxxxx, individually
_______________________________
Xxxx Xxxxxxxxx, individually
_______________________________
XXXXXXXXX XXXXXXXX XXXXXXXXX,
AS SPECIAL INDEPENDENT TRUSTEE OF THE XXXX X. AND XXXXXXXX XXXXX CHARITABLE
REMAINDER TRUST, DATED APRIL 13, 1999
- 42 -
_____________________________________________________________
XXXXXXXX XXXXXXXXX XXXXXX AND XXXXXX X. XXXXXX XX, AS CO-TRUSTEES
OF THE XXXXXX XXXXXX XXXXXX III IRREVOCABLE FAMILY TRUST
DATED APRIL 18, 1999
____________________________________________________________
XXXXXX XXXXXX XXXXXX AND XXXXX X XXXXXX, AS CO-TRUSTEES OF THE XXXXXXXX
XXXXXXXXX XXXXXX IRREVOCABLE FAMILY TRUST, DATED APRIL 18, 1999
- 43 -
EXHIBIT A
---------
NAMES OF SHAREHOLDERS AND NUMBER OF SHARES HELD BY EACH
TRANSACTION SOFTWARE TECHNOLOGIES, INC.
---------------------------------------
NAME OF SHAREHOLDER VOTING NON-VOTING
------------------- ------ ----------
Xx. Xxxxxx X. Xxxxxx III 306 34,478
Xxxx X. Xxxxx 204 13,504
Xxxxxx X. Xxxxxx 90 15,030
Xxxx Xxxxxxxxx 0 1,018
Xxxxxx Xxxxxx Xxxxxx III
Irrevocable Family Trust 0 8,312
Xxxxxxxx Xxxxxxxxx Xxxxxx
Irrevocable Family Trust 0 8,312
Xxxx X. and Xxxxxxxx Xxxxx
Charitable Remainder Trust 0 20,564
EXHIBIT B
---------
DIRECTORS AND OFFICERS
TRANSACTION SOFTWARE TECHNOLOGIES, INC.
---------------------------------------
DIRECTORS OFFICERS
Xx. Xxxxxx X. Xxxxxx III Xx. Xxxxxx X. Xxxxxx III (Chairman of the
Board, Secretary)
Xxxx X. Xxxxx Xxxx X. Xxxxx (President)
Xxxxxx X. Xxxxxx Xxxxxx X. Xxxxxx (Vice President)
. Company has good standing in Georgia.
TRANSOFT SERVICES, INC.
-----------------------
DIRECTORS OFFICERS
Xx. Xxxxxx X. Xxxxxx III Xx. Xxxxxx X. Xxxxxx III (Chairman of the
Board, Chief Executive Officer)
Xxxx X. Xxxxx Xxxx X. Xxxxx (President)
Xxxxxx X. Xxxxxx Xxxxxx X. Xxxxxx (Vice President)
. Company has good standing in Georgia and Texas.
INTERNET TREASURY SERVICES, INC.
--------------------------------
DIRECTORS OFFICERS
Xx. Xxxxxx X. Xxxxxx III Xxxx X. Xxxxx (President, Treasurer)
Xxxx X. Xxxxx Xx. Xxxxxx X. Xxxxxx III (Secretary)
Xxxxxx X. Xxxxxx
. Company has good standing in Georgia.
EXHIBIT C
---------
INTELLECTUAL PROPERTY
See list of agreements under Exhibit G. TST grants licenses in the software
systems listed below to certain of the financial institutions identified in the
contracts listed under Exhibit G. Some of the licenses permit the financial
institutions to sub-license the software systems to the financial institutions'
customers as end-users. In addition, TST places a "Copyright" designation upon
the source code and upon the documentation associated with the software.
NETS Software System
Web Based Version
Terminal Entry Version
GMTS-Global Money Transfer System
Terminal Entry Version
Web Version (in development)
Total Consulting Group
PC Rec.
PC FILE
Stop Payment Program
Terminal Entry Version
Web Version
ACH-Automated Clearing House System
Terminal Entry Version
Web Version
MMIS-Money Market Investment System
Terminal Entry Version
AAS-Cash Management Accounting System
Terminal Entry Version
Account Transfer System
Terminal Entry Version
Web Version
AIM-Application Interface Monitor
P.C. Based Systems:
------------------
Positive Pay
Money Transfer
Stop Payments
Scheduler
Account Transfer
Account Reconciliation
Balance Reporting
Custom Electronic Interface to Intranet
Interface to CAL/Money Net Money Transfer System
Electronic Interface to Back Office - Stop Payment Systems
COBOL Subroutine Library for Cash Management
C++ Library for Cash Management
Java Library for Cash Management
INTPDATA (TST Proprietary Transaction Database Structure). This constitutes a
trade secret embodied in some TST Software.
"AIM" Trademark (unregistered)
"TST" Logo (unregistered)
"On-Target" (unregistered)
TST may have other common-law trademarks, common law copyrights, or common-law
service marks in any and all of the above listed computer system names.
EXHIBIT D
---------
INTELLECTUAL PROPERTY LICENSED BY TST AND ITS SUBSIDIARIES
. TST entered into an Agreement with Global Payment Systems, LLC ("GPS"), dated
October 3, 1997 whereby GPS transferred, conveyed and assigned to TST full and
equal joint ownership in and to any and all rights of GPS and its affiliate
National Data Corporation in and to the NETS computer program. The transfer
and assignment was made subject to a number of existing licenses granted by
GPS and National Data Corporation to certain banks, bank service companies,
service bureaus, and other users. The Agreement also assigned certain existing
agreements to TST, including all rights, income and other benefits thereunder.
In consideration of the transfer and assignment of the rights to the NETS
computer program, TST agrees to pay to GPS a transfer fee for each license
which TST may grant to banks, bank service companies, service bureaus, and
other users.
. Under a Software Distribution Agreement between TST and Total Consulting Group
("TCG"), dated April 5, 1991, TST has the right to distribute the following
software programs owned by TCG: T6530 Terminal Emulator; T6530 File Transfer;
T6530 Utilities; X0000 XXX Xxxxxx; XXXXX; TCG Program Trace Facility; TCG
Testing Utilities. Under the Agreement, TST may grant licenses of the programs
to end users for a license fee, and must remit one-half of the TCG recommended
price to TCG for each license granted.
. TST incorporates a software program called BETRIEVE into certain TST software.
BETRIEVE is developed and owned by Pervasive Software and TST uses it on a
royalty fee basis.
. TST incorporates a software program called ZAP into certain TST software. ZAP
is developed and owned by Inmark Development Corporation and TST uses it on a
royalty free basis.
. TST plans to enter into a License Purchase Agreement with Phi-Tech, Inc. for
purchase of license for file transfer software.
. TST plans to enter into a Licensing Agreement with International Business
Machines Corporation ("IBM") for development license of MQ Series Software for
Tandem platform.
. TST uses the system application software supplied with Tandem micro-computers
and IBM personal computers, including but not limited to Microsoft Operating
Systems and Applications Software and Novell Networking Software. TST also
uses generally available commercial software.
EXHIBIT E
---------
SUBSIDIARIES
TRANSOFT SERVICES, INC.
-----------------------
(i) jurisdiction of incorporation:
Georgia, USA.
(ii) number of shares of authorized capital stock of each class of its
capital stock:
1,000 shares of common stock.
(iii) number of issued and outstanding shares of each class of its capital
stock, the names of the holders thereof, and the number of shares held
by each such holder:
1,000 shares of common stock held by Transaction Software Technologies,
Inc.
(iv) the number of shares of its capital stock held in treasury:
Zero.
INTERNET TREASURY SERVICES, INC.
--------------------------------
(i) jurisdiction of incorporation:
Georgia, USA.
(ii) number of shares of authorized capital stock of each class of its
capital stock:
100 shares of common stock.
(iii) number of issued and outstanding shares of each class of its capital
stock, the names of the holders thereof, and the number of shares held
by each such holder:
100 shares of common stock held by Transaction Software Technologies,
Inc.
(iv) the number of shares of its capital stock held in treasury:
Zero.
EXHIBIT I
LITIGATION
None
