EXHIBIT 2.1
EXECUTION COPY
STOCK PURCHASE AGREEMENT
by and among
OPEN SOLUTIONS INC.,
HUSKY ACQUISITION CORPORATION,
THE BISYS GROUP, INC.,
and
BISYS INC.
Dated as of September 15, 2005
TABLE OF CONTENTS
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ARTICLE I
DEFINITIONS
SECTION 1.01 Definitions.............................................. 1
ARTICLE II
PURCHASE AND SALE OF SHARES
SECTION 2.01 The Transactions......................................... 9
SECTION 2.02 Purchase Price........................................... 9
SECTION 2.03 Purchase Price Adjustments............................... 9
SECTION 2.04 Closing.................................................. 14
SECTION 2.05 Further Assurances....................................... 15
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLER
PARENT AND THE SELLER
SECTION 3.01 Authority Relative to Agreement.......................... 15
SECTION 3.02 Capitalization; Title to Shares.......................... 15
SECTION 3.03 Execution and Performance of Agreement; Validity and
Binding Nature........................................ 16
SECTION 3.04 Non-Contravention........................................ 16
SECTION 3.05 Organization, Standing, and Qualification................ 16
SECTION 3.06 Subsidiaries............................................. 17
SECTION 3.07 Organizational Documents................................. 17
SECTION 3.08 Financial Statements..................................... 17
SECTION 3.09 Books and Records........................................ 18
SECTION 3.10 Intellectual Property.................................... 18
SECTION 3.11 Business Employees....................................... 19
SECTION 3.12 Employee Benefit Plans................................... 20
SECTION 3.13 Real Property............................................ 21
SECTION 3.14 Personal Property, Accounts Receivable, Inventory and
Working Capital....................................... 22
SECTION 3.15 Taxes.................................................... 23
SECTION 3.16 Litigation............................................... 25
SECTION 3.17 Contracts................................................ 25
SECTION 3.18 Customers and Suppliers.................................. 28
SECTION 3.19 Labor Relations.......................................... 28
SECTION 3.20 Insurance................................................ 29
SECTION 3.21 Conduct of the Business.................................. 29
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SECTION 3.22 Third Party Consents..................................... 30
SECTION 3.23 Loans to or from Directors, Officers, or Business
Employees; Intercompany Balances...................... 30
SECTION 3.24 Compliance with Laws..................................... 30
SECTION 3.25 Environmental Matters.................................... 31
SECTION 3.26 No Broker................................................ 31
SECTION 3.27 Sufficiency of Assets.................................... 31
SECTION 3.28 Interests in Clients, Suppliers, Etc.; Affiliate
Transactions.......................................... 31
SECTION 3.29 Bank Accounts and Powers of Attorney..................... 32
SECTION 3.30 Warranty Claims.......................................... 32
SECTION 3.31 BISYS Management Company................................. 32
SECTION 3.32 Disclosure............................................... 32
SECTION 3.33 No Other Representations or Warranties................... 32
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER PARENT AND THE
PURCHASER
SECTION 4.01 Authority Relative to Agreement.......................... 33
SECTION 4.02 Execution and Performance of Agreement; Validity and
Binding Nature........................................ 33
SECTION 4.03 Non-Contravention........................................ 33
SECTION 4.04 Organization, Standing, and Qualification................ 33
SECTION 4.05 Financial Condition...................................... 34
SECTION 4.06 Bankruptcy............................................... 34
SECTION 4.07 Litigation............................................... 34
SECTION 4.08 No Broker................................................ 34
SECTION 4.09 Investment Representations............................... 34
SECTION 4.10 Third Party Consents..................................... 35
SECTION 4.11 No Other Representations or Warranties................... 35
ARTICLE V
COVENANTS
SECTION 5.01 Conduct of the Business.................................. 35
SECTION 5.02 Access to Information; Cooperation....................... 38
SECTION 5.03 Permitted Actions........................................ 39
SECTION 5.04 Consents and Approvals; Assignment; Transfer of
Intellectual Property................................. 40
SECTION 5.05 Approvals from Governmental Authorities.................. 42
SECTION 5.06 HSR Act Filing........................................... 42
SECTION 5.07 Notification of Certain Matters.......................... 43
SECTION 5.08 Business Employees....................................... 43
SECTION 5.09 Non-Solicitation......................................... 44
SECTION 5.10 Intercompany Balances; Termination of Affiliate
Agreements............................................ 44
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SECTION 5.11 Release of Guarantees.................................... 45
SECTION 5.12 Resignations............................................. 45
SECTION 5.13 Schedules................................................ 45
SECTION 5.14 Confidentiality.......................................... 46
SECTION 5.15 Non-Competition; Non-Interference........................ 46
SECTION 5.16 Exclusive Dealing........................................ 47
SECTION 5.17 Shared Assets and Services; Change of Name;
Use of Marks.......................................... 47
SECTION 5.18 Accounts Receivable and Accounts Payable................. 48
SECTION 5.19 Interim Financial Statements............................. 48
SECTION 5.20 Transaction Related Expenses............................. 49
SECTION 5.21 Section 404 Documentation................................ 49
SECTION 5.22 Agreement with BISYS Retirement Services, Inc............ 49
ARTICLE VI
TAX MATTERS
SECTION 6.01 Responsibility for Taxes................................. 49
SECTION 6.02 Tax Returns and Contests................................. 51
SECTION 6.03 Section 338(h)(10) Election.............................. 53
SECTION 6.04 Refunds.................................................. 54
SECTION 6.05 Purchase Price Adjustment................................ 54
SECTION 6.06 Exclusivity.............................................. 54
SECTION 6.07 Tax Sharing Agreements................................... 54
ARTICLE VII
CONDITIONS TO CLOSING
SECTION 7.01 Conditions to Each Party's Obligation to Close........... 55
SECTION 7.02 Conditions to the Obligation of the Seller............... 55
SECTION 7.03 Conditions to the Obligation of the Purchaser............ 56
SECTION 7.04 Waiver of Conditions..................................... 57
ARTICLE VIII
INDEMNIFICATION
SECTION 8.01 Seller's Indemnification................................. 57
SECTION 8.02 Purchaser's Indemnification.............................. 58
SECTION 8.03 Limitations on Amount of Damages......................... 58
SECTION 8.04 Procedures............................................... 59
SECTION 8.05 Survival of Representations and Warranties............... 60
SECTION 8.06 Mitigation of Damages.................................... 61
SECTION 8.07 Calculation of Damages................................... 61
SECTION 8.08 Exclusive Remedy......................................... 61
SECTION 8.09 Limitation of Damages.................................... 62
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(continued)
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ARTICLE IX
TERMINATION AND ABANDONMENT
SECTION 9.01 Termination and Abandonment.............................. 62
SECTION 9.02 Effect of Termination.................................... 63
ARTICLE X
MISCELLANEOUS
SECTION 10.01 Fees and Expenses........................................ 63
SECTION 10.02 Publicity................................................ 64
SECTION 10.03 Amendments............................................... 64
SECTION 10.04 Section Headings and Captions............................ 64
SECTION 10.05 Counterparts; Third Party Beneficiaries.................. 64
SECTION 10.06 Notices.................................................. 65
SECTION 10.07 Waivers.................................................. 65
SECTION 10.08 Entire Agreement......................................... 66
SECTION 10.09 Applicable Law........................................... 66
SECTION 10.10 Waiver of Jury Trial..................................... 66
SECTION 10.11 Severability............................................. 66
SECTION 10.12 Jurisdiction............................................. 66
SECTION 10.13 Successors and Assigns................................... 67
SECTION 10.14 Waiver of Conflict....................................... 67
SECTION 10.15 No Right of Set-Off...................................... 67
SECTION 10.16 Guarantee................................................ 67
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "AGREEMENT") is made and entered into
as of September 15, 2005, by and among OPEN SOLUTIONS INC., a Delaware
corporation (the "PURCHASER PARENT"), HUSKY ACQUISITION CORPORATION, a Delaware
corporation and a wholly-owned subsidiary of the Purchaser Parent (the
"PURCHASER"), THE BISYS GROUP, INC., a Delaware corporation (the "SELLER
PARENT") and BISYS INC., a Delaware corporation and a wholly-owned subsidiary of
the Seller Parent (the "SELLER").
WHEREAS, BIS LP Inc., a Delaware corporation and a wholly-owned subsidiary
of the Seller (the "COMPANY"), is engaged in the business of providing
outsourced information and account processing services, asset-retention
solutions, and specialized back-office services and check imaging solutions to
banks, insurance companies and corporations (the "BUSINESS");
WHEREAS, the Seller owns all of the issued and outstanding shares of the
common stock, no par value per share, of the Company (the "SHARES");
WHEREAS, the Seller desires to sell to the Purchaser, and the Purchaser
desires to purchase from the Seller, the Shares, upon the terms and subject to
the conditions set forth in this Agreement; and
NOW, THEREFORE, in consideration of the respective representations,
warranties, covenants, and conditions contained in this Agreement, and to set
forth the terms and conditions of the sale and purchase of the Shares, the
parties agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01 Definitions.
(a) As used in this Agreement, the following terms shall have the following
meanings:
"ACTION" means any complaint, claim, prosecution, indictment, action, suit,
arbitration or proceeding by or before any Governmental Authority or arbitrator.
"AFFILIATE" means, with respect to a specified Person, any other Person
controlling, controlled by or under common control with such Person, including,
in the case of the Purchaser Parent after the Closing, the Company and the
Subsidiaries.
"AFFILIATED GROUP" means an affiliated group as defined in Section 1504 of
the Code (or any analogous combined, consolidated, or unitary group defined
under state, local, or foreign income Tax law).
"BALANCE SHEET" means the unaudited consolidated balance sheet of the
Company and the Subsidiaries as of June 30, 2005 included in the Financial
Statements and attached hereto as
SCHEDULE 1.01(A)-1; provided, that the categories of assets and liabilities set
forth on SCHEDULE 1.01(A)-2 shall not constitute assets and liabilities for
purposes of the Balance Sheet.
"BALANCE SHEET NET WORKING CAPITAL" means the Company's Net Working Capital
as of June 30, 2005, as determined from the Balance Sheet, the amount of which
is $5,000,000.
"BUSINESS DAY" shall mean any day, other than a Saturday, Sunday or a day
on which banks located in New York, New York shall be authorized or required by
law to close.
"BUSINESS EMPLOYEES" means (i) the current and, except for purposes of the
definition of "Knowledge", inactive (but only to the extent that such Person is
entitled to any payments or benefits from the Company or a Subsidiary in respect
of employment in the Business) full and part-time (if any) employees of the
Company and the Subsidiaries, and (ii) the current employees of certain
Affiliates of the Company (other than the Subsidiaries) who provide services to
or for the Company and the Subsidiaries and who are identified on SCHEDULE
1.01(B).
"CLOSING" means the closing of the Transactions as provided in Section
2.04.
"CLOSING DATE" means the date on which the Closing shall occur, as provided
in Section 2.04.
"CODE" means the Internal Revenue Code of 1986, as amended, and rules and
regulations promulgated thereunder.
"CONFIDENTIALITY AGREEMENT" means the Confidentiality Agreement dated
January 17, 2005 between the Purchaser Parent and Bear, Xxxxxxx & Co., Inc. for
itself and on behalf of the Seller Parent.
"CONTRACT" means any agreement, contract, obligation, promise, note, bond,
mortgage, indenture, instrument, lease, franchise, license, permit,
understanding, arrangement or undertaking (whether written or oral, express or
implied) (each, including all amendments to each of them) that is legally
binding.
"CONTROL" (including the terms "CONTROLLING," "CONTROLLED BY" and "UNDER
COMMON CONTROL WITH") means the possession, directly or indirectly, of the power
to direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract, or otherwise.
"DAMAGES" means actual losses, liabilities, damages or expenses, including
reasonable fees and expenses of experts and counsel, but not including any
punitive, exemplary, incidental, indirect, special or consequential damages,
except to the extent that such damages are actually paid or payable by an
Indemnified Party to a third Person pursuant to a Third Person Claim.
"DISREGARDED ENTITY" means an entity that is disregarded an as entity
separate from its owner under Treasury Regulation Section 301.7701-3(a).
"DROP DEAD DATE" means December 31, 2005.
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"EEOC" means the United States Equal Employment Opportunity Commission.
"EMPLOYEE BENEFIT PLANS" means collectively, the "employee benefit plans"
(within the meaning of Section 3(3) of ERISA), including multiemployer plans
within the meaning of Section 3(37) of ERISA, and all stock purchase, stock
option, severance, employment, change-in-control, fringe benefit, collective
bargaining, bonus, incentive, deferred compensation, employee loan and all other
employee benefit plans, agreements, programs, and other arrangements, whether or
not subject to ERISA, (including any funding mechanism therefor now in effect or
required in the future as a result of the Transaction or otherwise), whether
formal or informal, oral or written, legally binding or not, under which (i) any
Business Employee or current or former director, officer or consultant of the
Company or the Subsidiaries has any present or future right to benefits and
which are contributed to, sponsored by or maintained by the Seller, the Company,
any Subsidiary, or any of their respective Affiliates, or (ii) the Company or
any Subsidiary has any present or future liability.
"ENVIRONMENTAL CLAIM" means any written notice, claim, demand, action,
suit, proceeding or other written communication by any Person alleging any
violation of, or any actual or potential liability under, any Environmental
Laws.
"ENVIRONMENTAL LAWS" means all foreign, federal and state statutes, rules,
regulations, ordinances, orders, decrees and common law relating to
environmental contamination, pollution or the protection of the environment,
natural resources or human health or safety as it relates to environmental
protection.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"FEDERAL FUNDS RATE" means for each day, the rate per annum (rounded
upward, if necessary, to the nearest 1/100 of 1%), which is the weighted average
of the rates on overnight federal funds transactions arranged on such day by
federal funds brokers, computed and released by the Federal Reserve Bank of New
York (or any successor). Any change in the Federal Funds Rate shall be effective
immediately without notice or demand of any kind.
"FINANCIAL STATEMENTS" means, collectively, the Balance Sheet and the
related unaudited consolidated statement of income of the Company and the
Subsidiaries for the year ended June 30, 2005, and the unaudited consolidated
balance sheets of the Company and the Subsidiaries as of June 30, 2004 and June
30, 2003 and the related unaudited consolidated statements of income for the
fiscal years then ended.
"GAAP" means accounting principles generally accepted in the United States
of America.
"GOVERNMENTAL AUTHORITY" means any foreign, federal, state or local
government, and any foreign, federal state or local governmental
instrumentality, agency, authority or court.
"GOVERNMENTAL AUTHORIZATIONS" means any license, permit (including
occupancy permit), Order, franchise agreement, concession, grant, certificate,
authorization, consent or any approval from a Governmental Authority, or
termination or lapse of any waiting period with respect to a filing with a
Governmental Authority (including the termination or lapse of the
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waiting period under the HSR Act), that is necessary to transfer the Shares
pursuant to this Agreement or to permit the Company to operate the Business
immediately after the Closing in substantially the same manner as the Company
operated the Business immediately before the Closing.
"HAZARDOUS MATERIALS" means all materials or substances regulated under any
Environmental Laws, including petroleum, petroleum products, asbestos and
polychlorinated biphenyls.
"HSR ACT" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976,
as amended, and the rules and regulations promulgated thereunder.
"INDEBTEDNESS" means the aggregate amount of the principal of, and accrued
and unpaid interest and penalties on, all obligations for borrowed money, or any
portion thereof, and all costs, expenses and other charges included therein,
that is due and payable on or after the Closing Date.
"INDEMNIFIED PARTY" means a party that has received notice or that has
knowledge of any claim or the commencement of any Action for which such party
may be entitled to indemnification under Article VIII.
"INDEMNIFYING PARTY" means a party that is required to indemnify any other
party under Article VIII.
"INTELLECTUAL PROPERTY" means any or all intellectual property rights of
any kind, including any of the following, and all rights in, arising out of, or
associated therewith: (i) all patents, patent applications, and all inventions
and discoveries, whether or not patentable, technology, processes and invention
disclosures; (ii) all computer software, applications, code and related items;
(iii) all copyrights, copyrightable works, copyright registrations, and
copyright applications relating to any media (including print, online or
electronic); (iv) all trade names, logos, trademarks, and service marks, all
registrations and applications therefor, and the goodwill associated therewith;
(v) all web sites, website content and domain names (including registrations
thereof); and (vi) all Trade Secret Information. For purposes of this Agreement,
Intellectual Property and Company Intellectual Property do not include the name
"BISYS" or any logo, trademark, trade name or service xxxx owned by the Seller
or any of its Affiliates or used by the Company or any Subsidiary using the name
"BISYS" or used together or associated with the name "BISYS," or any rights with
respect thereto.
"INTERCOMPANY ACCOUNTS" consist of: (i) an intercompany account for
corporate funded transactions, including payroll, payroll taxes, employee
benefits, corporate-funded vendor payments in respect of multi-divisional
services or products, and incentive and bonus payments; (ii) an intradivisional
account for transactions in the ordinary course of business between or among
subsidiaries of Seller Parent other than corporate-funded transactions; (iii) an
intercompany line of credit account for amounts owed to or from Seller Parent by
subsidiaries of Seller Parent in the ordinary course of business; (iv) an
intercompany management fee account for allocation of corporate expenses to each
of Seller Parent's subsidiaries; and (v) an
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intercompany royalty fee account for the use of Seller Parent's trademarks and
service marks by subsidiaries of Seller Parent.
"INTERCOMPANY BALANCES" means any and all intercompany balances (including,
without limitation, Indebtedness and all other liabilities) between the Company
or any Subsidiary, on the one hand, and the Seller and its Affiliates (other
than the Company and the Subsidiaries), on the other hand, arising from
transactions of any kind between or among the Company or the Subsidiaries and
any of their respective Affiliates, whether shown on the Balance Sheet or
arising after the date of the Balance Sheet. Such intercompany balances are
reflected in the Intercompany Accounts.
"KNOWLEDGE" in the case of the Seller Parent and the Seller means the
knowledge of the Persons identified on SCHEDULE 1.01(C) after reasonable inquiry
of Business Employees who would reasonably be expected to have actual knowledge
of the matters in question, and in the case of the Purchaser means the knowledge
of the Persons identified on SCHEDULE 1.01(D) after reasonable inquiry of
employees of the Purchaser who would reasonably be expected to have actual
knowledge of the matters in question.
"LAWS" means any Order or any ordinance, regulation, statute, permit,
license, certificate or award of any Governmental Authority.
"LIEN" or "LIENS" means, with respect to any asset, any mortgage, lien,
pledge, charge, security interest, encumbrance, restriction, or other adverse
claim of any kind with respect to such asset.
"MATERIAL ADVERSE EFFECT" means an effect, event, occurrence, state of
facts, or development that is or would reasonably be expected to be, in each
case, individually or together with any other effect, event, occurrence, state
of facts, or development, materially adverse, (i) as to the Company, to the
assets, liabilities, financial condition or results of operations of the Company
and the Subsidiaries taken as a whole or (ii) as to a party to this Agreement,
on the ability of such party to perform its obligations under the Agreement or
consummate the Closing; provided, however, that none of the following shall be
deemed, either alone or in combination, to constitute, and none of the following
shall be taken into account in determining whether there has been or shall be, a
Material Adverse Effect to the extent such changes or effects do not result from
or relate to or are not exacerbated by any failure to comply with any Law by any
of the Seller and its Affiliates: any adverse change, effect, event, occurrence,
state of facts, or development caused by (A) the execution and delivery of this
Agreement by the parties hereto, or the public announcement of the identity of
the Purchaser or the Transactions; (B) conditions affecting the industry in
which the Company or any Subsidiary participates, the United States economy as a
whole, or the capital markets in general which do not disproportionately impact
the Company and the Subsidiaries taken as a whole; (C) an act of terrorism, or
an escalation of war, or hostilities involving the United States which do not
disproportionately impact the Company and the Subsidiaries taken as a whole; or
(D) a change in GAAP after the date of this Agreement which does not
disproportionately impact the Company and the Subsidiaries taken as a whole.
"NET WORKING CAPITAL" means the difference of the consolidated current
assets of the Company and the Subsidiaries minus the consolidated current
liabilities of the Company and the
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Subsidiaries, in each case determined as of the Closing Date in accordance with
GAAP, provided that the amount of Intercompany Balances shall be excluded from
the consolidated current assets and consolidated current liabilities, as
applicable, of the Company and the Subsidiaries; provided, that the categories
of assets and liabilities set forth on SCHEDULE 1.01(A)-2 shall not constitute
assets and liabilities for purposes of Net Working Capital.
"ORDER" means any judgment, decision, order, injunction, decree, writ,
permit or license of any Governmental Authority or any arbitrator.
"PERMITTED LIENS" means (i) statutory liens for current Taxes and other
charges and assessments by any Governmental Authority that are not yet due and
payable or are being contested in good faith and have been reserved for on the
financial books and records of the Company or any of the Subsidiaries, (ii)
mechanics, materialmen's, and similar liens that can be satisfied by a payment
of cash to the lienholders, (iii) rights reserved to any Governmental Authority
to regulate the affected assets, including zoning laws and ordinances, (iv) as
to real property interests, including leasehold interests, any easements,
rights-of-way, servitudes, permits, restrictions, and minor imperfections or
irregularities in title that do not, individually or in the aggregate, interfere
with the ability to own, use or operate such real property, (v) purchase money
liens and liens securing rental payments under any capital lease arrangements
that are reflected in the Balance Sheet as a liability or disclosed in notes to
the Balance Sheet, and (vi) notice filings with respect to equipment leases or
other leases of personal property.
"PERSON" means any individual, any entity or any unincorporated
organization, including a partnership, a corporation, a limited liability
company, an association, a joint stock company, a trust, a joint venture or a
Governmental Authority.
"PREMISES" means all real property leased or subleased by or occupied by
the Company in the conduct of the Business.
"RELEASE" shall have the meaning provided under 42 U.S.C. Section 9601 (22)
but without giving effect to sections (A) and (C) of that definition.
"REQUIRED CONSENT CONTRACT" means any Contract that requires the consent of
another party to such Contract upon a change in control of the Company as is
provided for in this Agreement.
"SECURITIES ACT" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"SEVERANCE BENEFITS EXPENSES" means the aggregate amount payable to any
Business Employees, whether before, on or after the Closing, with respect to
severance benefits or any other change of control or "purchaser" benefits or
payments in connection with the consummation of the Transaction.
"SUBSIDIARIES" means the entities set forth on SCHEDULE 1.01(E).
"SUBSIDIARY INTERESTS" means the outstanding shares of the capital stock,
limited liability company membership interests or partnership interests, as
applicable, of the Subsidiaries.
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"TAX" and "TAXES" mean (i) all United States federal, state, local or
foreign taxes, charges, fees, levies, or other assessments, including all net
income, gross income, gross receipts, sales, use, ad valorem, transfer,
franchise, profits, withholding, payroll, employment, excise, severance, stamp,
occupation, occupancy, value added, alternative add-on minimum, license
transaction, property, estimated or other taxes, customs, duties, fees,
assessments or charges of any kind whatsoever, together with any interest and
any penalties, additions to tax or additional amounts imposed by any taxing
authority (including any federal, state or other Governmental Authority), (ii)
any obligations under any agreements or arrangements with any Person with
respect to the liability for, or sharing of, Taxes, including pursuant to
Treasury Regulation Section 1.1502-6 or comparable provisions of state, local or
foreign Tax law, and (iii) any liability for Taxes as a transferee or successor,
by contract, or otherwise.
"TAX RETURNS" means returns, declarations, reports, estimates, information
returns and statements in respect of Taxes (including any attached schedules)
and amendments thereto.
"THIRD PERSON CLAIM" means a claim by, or an Action instituted by, a Person
not a party to this Agreement or not an Affiliate of a party to this Agreement.
"TRADE SECRET INFORMATION" means know-how, trade secrets, confidential
information, customers lists, data, databases and technical information and all
rights in, arising out of or associated therewith.
"TRANSACTION DOCUMENTS" means this Agreement and the other agreements,
certificates and documents contemplated in this Agreement and the other
Transaction Documents.
"TRANSACTION RELATED EXPENSES" means the aggregate amount of all fees,
costs, charges, obligations and expenses payable to Bear, Xxxxxxx & Co. Inc.,
Drinker Xxxxxx & Xxxxx LLP and any other banker, counsel, accountant, advisor,
consultant, agent or representative retained by or on behalf of the Company or
any of the Subsidiaries, in each case, relating to the sale of the Company, the
Subsidiaries and the Business, including the preparation, negotiation, execution
and delivery of this Agreement and the Transaction Documents and the
consummation of the Transactions. Transaction Related Expenses also shall
include amounts paid or payable to any officer, director, employee, consultant,
stockholder, agent or other representatives of the Company or any of the
Subsidiaries contingent upon the consummation of the Transactions, including
Severance Benefits Expenses payable to Xxxxxxx Xxxxxxx, Xxxxx X. Xxxxxxx,
Xxxxxxx X. Xxxxxxx and Xxxx Xxxx (the "TOP MANAGERS"); provided, however,
Transaction Related Expenses shall not include Severance Benefits Expenses
payable to Business Employees other than the Top Managers.
"TRANSACTIONS" means the transactions contemplated by this Agreement and
the other Transaction Documents.
(b) Each of the following terms is defined in the Section set forth
opposite such term:
TERM SECTION
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"AFFILIATE CONTRACTS" 3.17(b)
"AGGREGATE CHANGE IN EBITDA" 2.03(b)(i)
"AGREEMENT" Preamble
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"AVERAGE CHANGE IN EBITDA" 2.03(b)(ii)
"BASE CONSIDERATION" 2.02
"BASKET" 8.03(a)
"BISYS MARKS" 5.17(c)
"BUSINESS" Recitals
"CAP" 8.03(b)
"CLOSING DATE BALANCE SHEET" 2.03(d)(i)
"CLOSING DATE NET WORKING CAPITAL STATEMENT" 2.03(d)(i)
"COMPANY" Recitals
"COMPANY CONTRACTS" 3.17(a)
"COMPANY INTELLECTUAL PROPERTY" 3.10(c)
"COMPETITIVE ACTIVITIES" 5.15(a)
"EBITDA" 2.03(b)
"ESTIMATED CLOSING DATE BALANCE SHEET" 2.03(a)(i)
"ESTIMATED CLOSING DATE NET WORKING CAPITAL" 2.03(a)(i)
"ESTIMATED CLOSING DATE NET WORKING CAPITAL STATEMENT" 2.03(a)(i)
"ESTIMATED PURCHASE PRICE" 2.03(c)
"FINAL CLOSING DATE NET WORKING CAPITAL" 2.03(d)(ii)
"FINAL CLOSING DATE NET WORKING CAPITAL STATEMENT" 2.03(d)(ii)
"FIVE YEAR PERIOD" 2.03(b)
"INSURANCE POLICIES" 3.20
"IP LICENSES" 3.10(b)
"ISSUER" 5.02(e)
"MINIMUM CLAIM AMOUNT" 8.03(a)
"NEUTRAL ACCOUNTANT" 2.03(d)(ii)
"OBJECTION NOTICE" 2.03(d)(ii)
"PBGC" 3.12(e)
"PERMITTED GOODS AND SERVICES" 5.15(a)
"PHASE-OUT PERIOD" 5.17(c)
"PROPERTY LEASES" 3.13(b)
"PURCHASE PRICE" 2.02
"PURCHASER" Preamble
"PURCHASER INDEMNIFIED PARTIES" 8.01
"PURCHASER PARENT" Preamble
"PURCHASER PLANS" 5.08(c)
"SEC" 5.02(e)
"RESTATEMENT" 2.03(b)
"RESTATEMENT ADJUSTMENT" 2.03(b)(iv)
"RESTATEMENT ADJUSTMENT CERTIFICATE" 2.03(b)
"SECTION 338(H)(10) ELECTION" 6.03
"SELLER" Preamble
"SELLER INDEMNIFIED PARTIES" 8.02
"SELLER PARENT" Preamble
"SHARED ASSETS AND SERVICES" 5.17(a)
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"SHARES" Recitals
"STRADDLE PERIOD" 6.01(a)
"THREE YEAR PERIOD" 2.03(b)
"TRANSFERRED EMPLOYEE" 5.08(a)
"TRANSITION SERVICES AGREEMENT" 2.04(d)
"WACHOVIA COMMITMENT" 4.05
"WARRANTY CLAIMS" 3.30
(c) Except as otherwise provided or if the context otherwise requires,
whenever used in this Agreement, (i) any noun or pronoun shall be deemed to
include the plural and the singular, (ii) the terms "include," "includes" and
"including" shall be deemed to be followed by the phrase "without limitation,"
(iii) the word "or" shall be inclusive and not exclusive, (iv) unless the
context otherwise requires, all references to Articles and Sections refer to
Articles and Sections of this Agreement, all references to Schedules are to
Schedules attached to this Agreement, and all references to Exhibits are to
Exhibits attached to this Agreement, each of which is made a part of this
Agreement for all purposes, (v) the phrase "made available" in this Agreement
shall mean that the information referred to has been made available if requested
by the party to whom such information is to be made available, (vi) the phrases
"the date of this Agreement", "the date hereof", and terms of similar import,
unless the context otherwise requires, shall be deemed to refer to the date
first written above, (vii) the terms "hereof", "herein", and "herewith" and
words of similar import shall, unless otherwise stated, be construed to refer to
this Agreement as a whole (including all Schedules hereto) and not to any
particular provision of this Agreement, (viii) unless otherwise specified
herein, all references to any period of days shall be deemed to be the relevant
number of calendar days, (ix) the terms "dollars" or "$" means United States
dollars and (x) the term "cash" means dollars in immediately available funds.
The parties have jointly participated in the negotiating and drafting of this
Agreement. In the event that an ambiguity or a question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the parties hereto, and no presumption or burden of proof shall arise
favoring or disfavoring any party hereto by virtue of the authorship of any
provisions of this Agreement.
ARTICLE II
PURCHASE AND SALE OF SHARES
SECTION 2.01 The Transactions. Upon the terms and subject to the conditions
of this Agreement, at the Closing, the Purchaser shall purchase from the Seller,
and the Seller shall sell, convey, assign, transfer and deliver to the
Purchaser, the Shares free and clear of any Liens against the payment by
Purchaser to the Seller of an amount in cash equal to the Purchase Price.
SECTION 2.02 Purchase Price. The "BASE CONSIDERATION" for the Shares under
this Agreement shall be the amount equal to Four Hundred Seventy Million Dollars
($470,000,000). The Base Consideration as it may be adjusted pursuant to Section
2.03, shall be the "PURCHASE PRICE" under this Agreement.
SECTION 2.03 Purchase Price Adjustments
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(a) Net Working Capital Closing Adjustment.
(i) The Seller shall deliver to the Purchaser before the Closing Date,
and shall use its commercially reasonable efforts to make such delivery not less
than three (3) Business Days before the scheduled Closing Date, (A) an unaudited
estimated consolidated Balance Sheet of the Company and the Subsidiaries as of
the Closing, which Balance Sheet shall be prepared by the Seller in accordance
with GAAP consistently applied using the same accounting principles, procedures,
policies and methods that were used to prepare the Balance Sheet (including the
exclusion of footnotes), except as described on SCHEDULE 1.01(A)-2 (the
"ESTIMATED CLOSING DATE BALANCE SHEET"), and (B) a written statement setting
forth the Seller's estimate of the Net Working Capital immediately prior to the
Closing, which statement shall be prepared in accordance with GAAP consistently
applied using the same accounting principles, procedures, policies, and methods
that were used to prepare the Balance Sheet (including the exclusion of
footnotes), except as described on SCHEDULE 1.01(A)-2 (the "ESTIMATED CLOSING
DATE NET WORKING CAPITAL STATEMENT"); provided, however, that if there is any
discrepancy between the accounting principles, procedures, policies, and methods
that were used to prepare the Balance Sheet and the accounting principles,
procedures, policies, and methods that were used to prepare the Restatement
Adjustment Certificate, the accounting principles, procedures, policies, and
methods that were used to prepare the Restatement Adjustment Certificate shall
be used to prepare the Estimated Closing Date Balance Sheet and the Estimated
Closing Date Net Working Capital Statement with respect to such discrepancy,
except that for purposes of calculating Net Working Capital immediately prior to
the Closing under this Section 2.03(a)(i), deferred revenue and accrued
liabilities with respect to existing lease obligations shall be accounted for
consistent with the accounting principles, procedures, policies and methods that
were used to prepare the Balance Sheet. If the Purchaser has any disagreement
with the Estimated Closing Date Balance Sheet or Estimated Closing Date Net
Working Capital Statement, the Purchaser shall promptly notify the Seller of any
such disagreement and the Seller and the Purchaser shall use good faith efforts
to resolve any such disagreement within three Business Days of the Purchaser so
notifying the Seller. The estimated Net Working Capital set forth in the
Estimated Closing Date Net Working Capital Statement shall be the "ESTIMATED
CLOSING DATE NET WORKING CAPITAL."
(ii) If the Estimated Closing Date Net Working Capital is:
(A) greater than the Balance Sheet Net Working Capital, the Base
Consideration shall be increased by a dollar amount equal to
the difference between the Estimated Closing Date Net
Working Capital and the Balance Sheet Net Working Capital;
or
(B) less than the Balance Sheet Net Working Capital, the Base
Consideration shall be decreased by a dollar amount equal to
the difference between the Balance Sheet Net Working Capital
and the Estimated Closing Date Net Working Capital; or
(C) equal to the Balance Sheet Net Working Capital, the Base
Consideration shall not be adjusted.
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(b) Restatement Adjustment. The parties hereto acknowledge that the Seller
Parent has publicly announced that it shall restate certain of its historical
consolidated financial statements (the "RESTATEMENT"). The parties hereto
further acknowledge that the Restatement is expected to affect the historical
results of operations of the "Information Services Segment" of the Seller
Parent, which is solely comprised of the Seller, the Company and the
Subsidiaries, and is further expected to affect the results of operations of the
Company and the Subsidiaries for fiscal years ending after the Closing Date.
Within ten (10) days after the public announcement by the Seller Parent of the
completion of the Restatement, but in no event later than fifteen (15) days
prior to the Closing Date, the Seller shall deliver to the Purchaser a
certificate (the "RESTATEMENT ADJUSTMENT CERTIFICATE") signed by the Chief
Financial Officer of the Seller Parent, setting forth in reasonable detail (i) a
calculation of the amount of (x) the actual average change, if any, in the
consolidated earnings before interest, tax, depreciation and amortization of the
Company and the Subsidiaries ("EBITDA") over the twelve-month periods ending
June 30, 2003, June 30, 2004 and June 30, 2005 (collectively, the "THREE YEAR
PERIOD") and (y) the projected average change, if any, in EBITDA over the
twelve-month periods ending June 30, 2006 and June 30, 2007 (collectively and
together with the Three Year Period, the "FIVE YEAR PERIOD") which shall result
from the Restatement based solely on facts and circumstances known to Seller
Parent as of the date of the Restatement. The Restatement Adjustment Certificate
shall be prepared in good faith by the Seller and shall be in form and substance
reasonably satisfactory to the Purchaser, and if the Purchaser has any
disagreement with the Restatement Adjustment Certificate, the Purchaser shall
notify the Seller in writing of any such disagreement and the Seller and the
Purchaser shall use good faith efforts to resolve any such disagreement within
three (3) Business Days of the Purchaser so notifying the Seller. During the
period preceding and following the delivery of the Restatement Adjustment
Certificate, to the extent reasonably necessary, the Seller Parent and the
Seller shall, and shall cause the Company, the Subsidiaries and any other
Affiliates of the Seller Parent to, (A) provide the Purchaser Parent and the
Purchaser and the Purchaser Parent's and the Purchaser's authorized
representatives with reasonable access to the financial books and records of the
Company and the Subsidiaries, (B) provide the Purchaser Parent and the Purchaser
as promptly as practicable with financial information for the Company and the
Subsidiaries for the Five Year Period, and (C) cooperate fully with the
Purchaser Parent and the Purchaser and the Purchaser Parent's and the
Purchaser's authorized representatives in connection with their review of such
information. Such actual and projected average change in EBITDA over the Five
Year Period and the adjustment to the Base Consideration related thereto shall
be calculated as follows:
(i) the actual and projected increase or decrease in EBITDA for each
of the years in the Five Year Period shall be added, and adjusted to exclude any
increase or decrease in EBITDA for the twelve (12) month period ended June 30,
2005 not related to any changes in the timing of deferred revenue and accrued
liabilities with respect to existing lease obligations. The sum of such addition
and adjustment shall be the "AGGREGATE CHANGE IN EBITDA";
(ii) the Aggregate Change in EBITDA shall be divided by a factor of 5,
and the quotient of such division plus the effect, if any, of any increase or
decrease in EBITDA for the twelve (12) month period ended June 30, 2005 not
related to any changes in the timing of deferred revenue and accrued liabilities
with respect to existing lease obligations shall be the "AVERAGE CHANGE IN
EBITDA";
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(iii) if the Average Change in EBITDA is 0 or a positive number or a
negative number not greater than ($500,000), there shall be no adjustment to the
Base Consideration; and
(iv) if the Average Change in EBITDA is a negative number greater than
($500,000), the amount of the Average Change in EBITDA, expressed as a positive
number, shall be multiplied by a factor of 8. The product of such multiplication
shall constitute the "RESTATEMENT ADJUSTMENT", and the Base Consideration shall
be reduced by the amount of the Restatement Adjustment; provided, however, that
the amount of the Restatement Adjustment shall not be greater than $15,000,000.
For the avoidance of doubt, nothing in this Section 2.03(b) shall effect the
Balance Sheet in any manner.
(c) Adjustment to Estimated Purchase Price. The Base Consideration, as it
may be adjusted pursuant to Section 2.03(a) and Section 2.03(b) shall be the
"ESTIMATED PURCHASE PRICE," which Estimated Purchase Price shall be payable to
the Seller at the Closing in accordance with Section 2.04.
(d) Post-Closing Adjustment.
(i) As promptly as reasonably practicable, but in any event not later
than 60 days after the Closing Date, the Purchaser shall deliver to the Seller
(A) an unaudited consolidated balance sheet of the Company and the Subsidiaries
as of the Closing, which balance sheet shall be prepared in accordance with GAAP
from the books and records of the Company and the Subsidiaries using the same
accounting principles, procedures, policies, and methods that were used to
prepare the Balance Sheet (including the exclusion of footnotes), except as
described on SCHEDULE 1.01(A)-2 (the "CLOSING DATE BALANCE SHEET") and (B) a
written statement of the Net Working Capital (the "CLOSING DATE NET WORKING
CAPITAL STATEMENT"); provided, however, that if there is any discrepancy between
the accounting principles, procedures, policies, and methods that were used to
prepare the Balance Sheet and the accounting principles, procedures, policies,
and methods that were used to prepare the Restatement Adjustment Certificate,
the accounting principles, procedures, policies, and methods that were used to
prepare the Restatement Adjustment Certificate shall be used to prepare the
Closing Date Balance Sheet and the Closing Date Net Working Capital Statement
with respect to such discrepancy, except that for purposes of calculating Net
Working Capital immediately prior to the Closing under this Section 2.03(d),
deferred revenue and accrued liabilities with respect to existing lease
obligations shall be accounted for consistent with the accounting principles,
procedures, policies and methods that were used to prepare the Balance Sheet.
(ii) The Closing Date Balance Sheet and the Closing Date Net Working
Capital Statement (and the Closing Date Net Working Capital set forth therein)
shall be final and binding on the parties unless, within 15 days after delivery
thereof to the Seller, written notice is given by the Seller to the Purchaser of
its objection, setting forth in reasonable detail the Seller's basis for
objection (the "OBJECTION NOTICE"). If the Objection Notice is given, the
Purchaser and the Seller shall consult with each other in good faith with
respect to the objection. If the Purchaser and the Seller are unable to reach
agreement within 30 days after the Objection Notice has been given, the dispute
shall be submitted, as promptly as reasonably practicable, for
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resolution to Deloitte & Touche LLP, or such other nationally-recognized
accounting firm that is acceptable to the Purchaser and the Seller (the "NEUTRAL
ACCOUNTANT"). The Purchaser and the Seller agree to execute, if requested by the
Neutral Accountant, a reasonable engagement letter with the Neutral Accountant.
The Neutral Accountant shall make a determination, based solely on presentations
by the Seller and the Purchaser and not by independent review, as to (and only
as to) each of the items in dispute, and shall be instructed that, in resolving
such items in dispute, it must select a position with respect to the Closing
Date Balance Sheet and the Closing Date Net Working Capital Statement that is
either exactly the Purchaser's position with respect to the Closing Date Balance
Sheet and the Closing Date Net Working Capital Statement or exactly the Seller's
position with respect to the Closing Date Balance Sheet and the Closing Date Net
Working Capital Statement, or that is between such position of the Purchaser and
such position of the Seller. The Neutral Accountant shall furnish its
determination as to the items in dispute (which determination shall have been
made in accordance with this Agreement) to the Seller and to the Purchaser in
writing together with a revised version of the Closing Date Net Working Capital
Statement, which shall have been revised by the Neutral Accountant to reflect
its determination. The determination of the Neutral Accountant and the revised
version of the Closing Date Net Working Capital Statement reflecting the Neutral
Accountant's determination shall be final, conclusive and binding upon, and
non-appealable by, the Purchaser and the Seller. In connection with its
determination of the disputed items, the Neutral Accountant shall be entitled to
rely upon the accounting records and similar materials prepared in connection
with the Estimated Closing Date Balance Sheet, the Estimated Closing Date Net
Working Capital Statement, the Closing Date Balance Sheet, and the Closing Date
Net Working Capital Statement. All fees and expenses relating to the work, if
any, to be performed by the Neutral Accountant will be allocated between the
Purchaser and the Seller in the same proportion that the aggregate amount of the
disputed items so submitted to the Neutral Accountant that is unsuccessfully
disputed by each such party (as finally determined by the Neutral Accountant)
bears to the total amount of such disputed items so submitted. The Purchaser and
the Seller shall each use reasonable efforts to cause the Neutral Accountant to
render its decision as soon as reasonably practicable (but in no event later
than thirty (30) days following the expiration of the 30-day period provided
above for the Purchaser and the Seller to resolve disputes before submission to
the Neutral Accountant), including by promptly complying with all reasonable
requests by the Neutral Accountant for information, books, records, and similar
items. The Closing Date Net Working Capital Statement as finally determined
pursuant to this Section 2.03(d) shall be referred to as the "FINAL CLOSING DATE
NET WORKING CAPITAL STATEMENT," and the Closing Date Net Working Capital as set
forth in the Final Closing Date Net Working Capital Statement shall be the
"FINAL CLOSING DATE NET WORKING CAPITAL."
(iii) During the period following the delivery of the Closing Date
Balance Sheet until the Final Closing Date Net Working Capital Statement is
finally determined, to the extent reasonably necessary, the Purchaser shall and
shall cause the Company and any other Affiliates of the Purchaser to (A) provide
the Seller and the Seller's authorized representatives with reasonable access to
the financial books and records of the Company and the Subsidiaries, (B) provide
the Seller as promptly as practicable after the delivery of the Closing Date
Balance Sheet with financial information for the Company for the period ending
on the Closing Date, and (C) cooperate fully with the Seller and the Seller's
authorized representatives.
(iv) If the Final Closing Date Net Working Capital is:
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(A) greater than the Estimated Closing Date Net Working Capital,
the Purchaser shall pay to the Seller a dollar amount equal
to the difference between the Final Closing Date Net Working
Capital and the Estimated Closing Date Net Working Capital,
plus interest on such amount at the Federal Funds Rate from
the Closing Date through the date of payment; or
(B) less than the Estimated Closing Date Net Working Capital,
the Seller shall pay to the Purchaser a dollar amount equal
to the difference between the Estimated Closing Date Net
Working Capital and the Final Closing Date Net Working
Capital, plus interest on such amount at the Federal Funds
Rate from the Closing Date through the date of payment; or
(C) equal to the Estimated Closing Date Net Working Capital, no
payment shall be required to be made pursuant to this
Section 2.03(d)(iv).
(e) Any amounts (i) required to be paid pursuant to Section 2.03(d) by the
Purchaser shall be paid by wire transfer of immediately available funds to the
account or accounts specified by the Seller in writing, or (ii) required to be
paid by the Seller pursuant to Section 2.03(d) shall be paid by wire transfer of
immediately available funds to an account or accounts designated by the
Purchaser in writing, in each case within five (5) Business Days after the Final
Closing Date Net Working Capital is determined in accordance with Section
2.03(d).
SECTION 2.04 Closing. The Closing shall take place at the offices of
Xxxxxxx Xxxxxxx & Xxxxxxxx LLP, 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
at 10:00 a.m. on the third Business Day following the date on which the
conditions set forth in Article VII shall be satisfied or waived by the party
entitled to the benefit of such condition (other than those conditions that by
their nature are to be satisfied at the Closing, but subject to the fulfillment
or waiver of those conditions), or at such other time or place as the parties
may mutually agree. The Closing shall be effective as of 12:01 a.m. on the
Closing Date. At the Closing:
(a) the Seller shall deliver to the Purchaser certificates for the Shares,
duly endorsed or accompanied by stock powers duly endorsed in blank for
transfer, with any required transfer stamps affixed thereto;
(b) the Purchaser shall deliver to Seller cash in an amount equal to the
Estimated Purchase Price by wire transfer of immediately available funds to an
account or accounts designated by the Seller by notice given to the Purchaser
not later than the Business Day immediately prior to the Closing Date;
(c) the Seller shall deliver to the Purchaser the resignations of all of
the directors of the Company and those officers of the Company as shall be
requested by the Purchaser;
(d) the Purchaser shall deliver to the Seller a counterpart of the
Transition Services Agreement substantially in the form of EXHIBIT A attached
hereto (the "TRANSITION SERVICES AGREEMENT"), duly executed by the Purchaser;
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(e) the Seller shall deliver to the Purchaser counterparts of the
Transition Services Agreement, duly executed by the Seller Parent and the
Seller; and
(f) the Purchaser Parent, the Purchaser, the Seller Parent and the Seller
shall deliver such certificates, agreements and other documents required to be
delivered by each such party hereto pursuant to Article VII.
SECTION 2.05 Further Assurances. From time to time, as and when requested
by any party hereto and at such party's expense, the other party shall execute
and deliver, or cause to be executed and delivered, all such documents and
instruments and shall take, or cause to be taken, all such further or other
actions as the requesting party may reasonably deem necessary or desirable to
evidence and effectuate the Transactions.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLER
PARENT AND THE SELLER
The Seller Parent and the Seller hereby jointly and severally represent and
warrant to the Purchaser and the Purchaser Parent, knowing and intending that
the Purchaser Parent and the Purchaser is relying hereon in entering into the
Transactions, as follows:
SECTION 3.01 Authority Relative to Agreement. Each of the Seller Parent and
the Seller has the requisite corporate power and authority to enter into and to
perform its obligations under this Agreement and the other Transaction Documents
to which it is a party, and each of the Company and the Subsidiaries has the
requisite power and authority to enter into and to perform its obligations under
any Transaction Documents to which it is a party. Each of the Seller Parent and
the Seller has the corporate power and authority to consummate the Transactions,
including the sale, assignment, transfer and conveyance of the Shares pursuant
to this Agreement, and the Company and the Subsidiaries have the corporate power
and authority to consummate the transactions contemplated by any Transaction
Document to which they are a party. The execution, delivery and performance of
this Agreement and any other Transaction Documents by the Seller Parent, the
Seller, the Company and the Subsidiaries, as the case may be, and the
consummation by the Seller Parent, the Seller and the Company of the
Transactions, have been duly authorized by all necessary corporate action on the
part of the Seller Parent, the Seller, the Company and the Subsidiaries, and no
other corporate action on the part of the Seller Parent, the Seller, the Company
or the Subsidiaries is necessary to authorize the execution, delivery and
performance of the Transaction Documents and the consummation of the
Transaction.
SECTION 3.02 Capitalization; Title to Shares. The Seller owns of record and
beneficially, and, subject to the terms of this Agreement, shall transfer and
deliver to the Purchaser at the Closing, good and valid title to the Shares,
free and clear of all Liens. The Shares constitute all of the issued and
outstanding capital stock of the Company, and have been duly authorized, validly
issued and are fully paid and nonassessable. The Company has an authorized
capitalization consisting of 3,000 shares of common stock, no par value per
share, of the Company. There are no outstanding subscriptions, warrants,
convertible securities, obligations, options, or rights entitling others to
acquire capital stock of or equity or voting interest in the Company, or any
outstanding securities, options, warrants, rights, or other
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instruments convertible into or exchangeable or exercisable for capital stock of
the Company. None of the Seller Parent, the Seller, the Company or any Affiliate
thereof is a party to any shareholders agreement, buy-sell, or similar
agreement, redemption or similar agreement, proxy, voting trust, or other
Contract or arrangement affecting the Shares. There are no equity securities of
the Company reserved for issuance nor are there any outstanding bonds,
debentures, notes or other evidences of Indebtedness having the right to vote on
any matters on which the stockholders of the Company may vote.
SECTION 3.03 Execution and Performance of Agreement; Validity and Binding
Nature. This Agreement has been, and each of the Transaction Documents to be
executed and delivered by each of the Seller Parent, the Seller, the Company and
the Subsidiaries will be, duly executed and delivered by the Seller Parent, the
Seller, the Company and the Subsidiaries, as applicable, and this Agreement is,
and each of the Transaction Documents, when duly executed and delivered by all
parties whose execution and delivery thereof is required, shall be, the legal,
valid, and binding obligations of the Seller Parent, the Seller, the Company and
the Subsidiaries, as applicable, enforceable against the Seller Parent, the
Seller, the Company and the Subsidiaries, as applicable, in accordance with
their respective terms, except to the extent that enforceability may be limited
by bankruptcy, receivership, moratorium, conservatorship, reorganization, or
other Laws of general application affecting the rights of creditors generally or
by general principles of equity.
SECTION 3.04 Non-Contravention. Neither the execution and delivery of this
Agreement or any other Transaction Documents nor the consummation of the
Transactions will (a) violate, breach, or be in conflict with any provisions of
the certificate of incorporation or by-laws of the Seller Parent, the Seller,
the Company or any of the Subsidiaries, (b) result in the creation or imposition
of any Lien upon the property, rights or assets of the Company or any of the
Subsidiaries, (c) subject to the obtaining of the consents set forth on SCHEDULE
3.04, 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 Contract to which any of the
Seller Parent, the Seller, the Company or any of the Subsidiaries is a party or
by which it is bound or to which any of its assets is subject, or (d) violate
any Law or Order to which the Seller Parent, the Seller, the Company or any of
the Subsidiaries, or by which any of their respective properties or assets may
be bound is subject.
SECTION 3.05 Organization, Standing, and Qualification.
(a) Each of the Seller Parent and the Seller is a corporation, duly
incorporated, validly existing, and in good standing under the laws of the State
of Delaware.
(b) The Company is a corporation, duly incorporated, validly existing, and
in good standing under the laws of the State of Delaware and has the corporate
power and lawful authority to own and hold its properties and conduct the
Business as now owned, held, and conducted in Delaware and the other states (or
other jurisdictions) in which it is required to qualify to do business. The
Company is qualified and in good standing in all states (or other jurisdictions)
in which such qualification is required by reason of the nature or extent of the
Business conducted by the Company in such states, except where the failure to be
so qualified in
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such states (and other jurisdictions) would not reasonably be expected to have a
Material Adverse Effect with respect to the Company.
(c) Each Subsidiary is a corporation, limited liability company, or limited
partnership, as indicated on SCHEDULE 3.05(C)-1, duly incorporated or formed, as
applicable, validly existing and in good standing under the laws of the state of
its incorporation or formation, as applicable, and has the corporate, limited
liability company, or limited partnership, as applicable, power and lawful
authority to own and hold its properties and conduct its business as now owned,
held, and conducted in the state of its incorporation or formation, as
applicable, and the other states (or other jurisdictions) in which it is
qualified to do business. Each Subsidiary is qualified and in good standing in
all states (or other jurisdictions) in which such qualification is required by
reason of the nature and extent of the Business conducted by such Subsidiary in
such states (or other jurisdictions), except where the failure to be so
qualified in such states (and other jurisdictions) would not reasonably be
expected to have a Material Adverse Effect with respect to the Company. Such
states (and other jurisdictions) are disclosed in SCHEDULE 3.05(C)-2.
SECTION 3.06 Subsidiaries. The Company owns of record and beneficially good
and valid title to the Subsidiary Interests, free and clear of all Liens. Except
for the Subsidiaries, the Company does not own any capital stock or other equity
securities of or equity or voting interest in any Person. The Company is not
under any obligation to acquire any securities from any Person. The Subsidiary
Interests constitute all of the issued and outstanding equity interests of the
Subsidiaries and have been duly authorized validly issued and are fully paid and
nonassessable. There are no outstanding subscriptions, warrants, convertible
securities, obligations, options, or rights entitling others to acquire equity
or voting interests of any Subsidiary, or any outstanding securities, options,
warrants, rights or other instruments convertible into or exchangeable for
equity or voting interests of any Subsidiary. Except as listed in SCHEDULE 3.06,
none of the Subsidiaries is a party to any shareholders agreement, limited
partnership agreement, limited liability company operating agreement, buy-sell
or similar Contract or arrangement affecting the Subsidiary Interests. There are
no equity securities of any Subsidiary reserved for issuance nor are there any
outstanding bonds, debentures, notes or other evidences of Indebtedness having
the right to vote on any matters. There are no restrictions of any kind which
prevent or restrict the payment of dividends or other distributions by any of
the Subsidiaries other than those imposed by the Laws of general applicability
of their respective jurisdictions of organization.
SECTION 3.07 Organizational Documents. True and complete copies of the
Articles of Incorporation and By-Laws of the Company (together with all
amendments thereto) and true and complete copies of the constitutive documents
of each of the Subsidiaries (together with all amendments thereto) have been
made available to the Purchaser.
SECTION 3.08 Financial Statements
(a) The Seller has delivered true and complete copies of the Financial
Statements to the Purchaser. The Financial Statements have been prepared from
the books and records of the Company and the Subsidiaries as prepared in the
ordinary course of the Business. Except as disclosed in SCHEDULE 3.08(A), the
Financial Statements, including footnotes thereto, have been prepared in
accordance with GAAP applied on a consistent basis throughout the periods
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indicated, and present fairly, in all material respects, the consolidated
financial position of the Company and the Subsidiaries as of their respective
dates and the consolidated results of operations of the Company and the
Subsidiaries for the periods covered thereby and the changes in their financial
position for the periods indicated.
(b) Neither the Company nor the Subsidiaries has any obligations or
liabilities (whether accrued, absolute, contingent, or otherwise, whether due or
to become due and regardless of when or by whom asserted), except (i)
liabilities incurred in the ordinary course of the Business consistent with past
practice since June 30, 2005, (ii) liabilities reflected on the Balance Sheet or
the notes thereto consistent with past practice and (iii) liabilities otherwise
expressly disclosed on SCHEDULE 3.08(B). The Company and the Subsidiaries have
no Indebtedness that does not constitute an Intercompany Balance.
SECTION 3.09 Books and Records. The books of account, minute books, equity
interest record books, and other records of the Company and each of the
Subsidiaries, all of which have been made available to the Purchaser, are
complete and correct in all material respects. At the Closing, all of such books
and records will be in possession of the Company. Prior to the date hereof, the
Seller Parent has made available to the Purchaser true and complete copies of
all documentation representing the Seller Parent's, the Seller's, the Company's
and the Subsidiaries' efforts to prepare to comply with Section 404 of the
Xxxxxxxx-Xxxxx Act of 2002.
SECTION 3.10 Intellectual Property.
(a) SCHEDULE 3.10(A) sets forth a list of all registrations and
applications therefor with respect to Intellectual Property that is owned by the
Company or a Subsidiary other than Trade Secret Information.
(b) SCHEDULE 3.10(B) sets forth a list of all Intellectual Property that is
not owned by the Company or a Subsidiary and that is used by the Company or a
Subsidiary in the Business (other than (i) commercially available desktop
computer software programs licensed non-exclusively under "shrink wrap" or other
comparable standard form licenses, (ii) software relating solely to
administrative or clerical functions, and (iii) software having an initial or
replacement value of less than $50,000) and a list of each license or other
Contract under which any such Company Intellectual Property is used by the
Company or a Subsidiary (the "IP LICENSES").
(c) Except as disclosed in SCHEDULE 3.10(C), the Company or a Subsidiary
possesses all right, title and interest in or has the right to use all
Intellectual Property used or held by the Company in the conduct of its Business
as presently conducted, including, without limitation, the Intellectual Property
set forth on SCHEDULE 3.10(A) and SCHEDULE 3.10(B) ("COMPANY INTELLECTUAL
PROPERTY"), free and clear of all Liens other than Permitted Liens, and, giving
effect to any consents set forth on SCHEDULE 3.10(C), the execution, delivery
and performance of this Agreement shall not affect or alter the right of the
Company or a Subsidiary to use any Company Intellectual Property nor result in
the levying of any fees, costs or penalties against the Company or a Subsidiary.
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(d) To the Knowledge of the Seller, the use of Company Intellectual
Property by the Company or a Subsidiary does not infringe on or violate the
Intellectual Property of any Person, and no Person has infringed or violated the
Company Intellectual Property.
(e) All Persons who have contributed to the creation, invention or
development of Company Intellectual Property have assigned to the Company or a
Subsidiary all of their rights therein that do not vest initially in the Company
or a Subsidiary by operation of law. The Company and the Subsidiaries take all
reasonable actions to protect and maintain (i) any Trade Secret Information that
is Company Intellectual Property, including, without limitation, executing
confidentiality and non-disclosure agreements with employees and contractors,
and (ii) the confidentiality, integrity and security of its software, databases,
systems, networks, and Internet websites, and information stored or contained
therein or transmitted thereby, and all transactions consummated in connection
therewith, from any unauthorized use, access, interruption or modification by
third parties, including, without limitation, the use of reliable encryption
protection (or an equivalent).
(f) The Company and the Subsidiaries take commercially reasonable actions
to back up their software, databases and systems in a manner sufficient to
enable resumed or continued functioning in all material respects following a
hardware, telecommunications or related interruption or failure.
(g) The Company's proprietary software and software licensed pursuant to an
IP License substantially conform to all written specifications for their use in
the conduct of the business of the Company and the Subsidiaries as currently
conducted, and to the Knowledge of the Seller are substantially free of bugs,
errors, viruses and other contaminants.
(h) To the Knowledge of the Seller, no material proprietary software
product owned by the Company or a Subsidiary and distributed in connection with
the Business is currently required to be distributed in source code form by the
GNU General Public License or any other "open source" license agreement, nor is
the Company or a Subsidiary in violation of any such agreement.
SECTION 3.11 Business Employees
(a) Except as set forth in SCHEDULE 1.01(B), all of the active Business
Employees are employed by the Company or a Subsidiary. SCHEDULE 3.11(A)-1 sets
forth a list as of the date of this Agreement of the names and titles of each
Business Employee, including the base salary of and any cash bonus received by
each such Business Employee during the 12-month period ended December 31, 2004
and the rate of base salary and bonus opportunity for each such Business
Employee for the current fiscal year of the Company ending June 30, 2005.
SCHEDULE 3.11(A)-2 sets forth a list as of the date of this Agreement of the
name of each Business Employee who is on layoff, sick, time, disability or other
leave of absence (including the reason for the leave of absence and the
anticipated return date, if known), such list to be updated to reflect such
names and other information as of the Closing.
(b) SCHEDULE 3.11(B) sets forth a list, as of the date of this Agreement,
of each agreement with respect to the employment or termination of employment of
any Business
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Employee under which the Company or a Subsidiary has any continuing payment or
performance obligation after the Closing. Except as disclosed in SCHEDULE
3.11(B), neither the Company nor a Subsidiary is a party to any employment
contract, severance agreement, or deferred compensation, bonus, profit-sharing,
or stock option, or similar agreement, or any agreement pertaining to the
payment of compensation in the event of a change in control of the Company or a
Subsidiary that would represent an obligation of the Company or a Subsidiary
after the Closing, and no Employee Benefit Plan exists that, as a result of the
execution of this Agreement, shareholder approval of this Agreement, or the
Transactions (whether alone or in connection with any subsequent event(s)),
would (i) accelerate the time of payment or vesting or result in any payment or
funding (through a grantor trust or otherwise) of compensation or benefits
under, increase the amount payable or result in any other material obligation of
the Company or a Subsidiary pursuant to, any of the Employee Benefit Plans, (ii)
otherwise result in payments, or any increase in payments (including severance
pay), required to be made by the Company or a Subsidiary under any of the
Employee Benefit Plans or (iii) limit or restrict the right of the Company or
any of the Subsidiaries to merge, amend or terminate any of the Employee Benefit
Plans.
(c) SCHEDULE 3.11(C) sets forth a list as of the date of this Agreement of
each of the directors of the Company and each Subsidiary that is a corporation.
SECTION 3.12 Employee Benefit Plans
(a) SCHEDULE 3.12(A) sets forth a true and complete list of each material
Employee Benefit Plan. Except as set forth in SCHEDULE 3.12(A), the Business
Employees do not participate in any plan, program, fund, or arrangement (whether
or not qualified for federal income tax purposes), whether benefiting a single
individual or multiple individuals, and whether funded or not, that is an
"employee pension benefit plan," or an "employee welfare benefit plan," as such
terms are defined in ERISA, or any incentive or other benefit arrangement for
such employees and their respective dependents and beneficiaries.
(b) With respect to each Employee Benefit Plan, the Seller has provided or
made available to the Purchaser a current, accurate and complete copy (or, to
the extent no such copy exists, an accurate description) thereof and, to the
extent applicable: (i) any related trust agreement or other funding instrument;
(ii) the most recent determination letter, if applicable; (iii) any summary plan
description and other written communications (or a description of any oral
communications) by the Seller, the Company or the Subsidiaries to the Business
Employees concerning the extent of the benefits provided under an Employee
Benefit Plan; and (iv) for the three most recent years (A) the Form 5500 and
attached schedules, (B) audited financial statements and (C) actuarial valuation
reports.
(c) Neither the Company nor any Subsidiary has contributed to any
"multi-employer" plan (as defined in Section 3(37) of ERISA), has incurred any
liability under Section 4201 of ERISA for any complete or partial withdrawal
from any multi-employer plan, or has assumed any such liability by any prior
owner of any of its assets or properties. No event has occurred and no condition
exists that would subject the Company or the Subsidiaries, either directly or by
reason of their affiliation with any member of their "Controlled Group" (defined
as any organization which is a member of a controlled group of organizations
within the meaning of
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Sections 414(b), (c), (m) or (o) of the Code), to any tax, fine, lien, penalty
or other liability imposed by ERISA or the Code or other applicable Laws.
(d) The Company and the Subsidiaries are in compliance, in all material
respects, with the requirements of ERISA, the Code and all other Laws applicable
with respect to those Employee Benefit Plans that are subject to ERISA, the Code
and all such other Laws. Each Employee Benefit Plan has been established and
administered in all material respects in accordance with its terms, and in
compliance with the applicable provisions of ERISA, the Code and other
applicable laws, rules and regulations. Each Employee Benefit Plan that is
intended to be qualified within the meaning of Section 401(a) of the Code is so
qualified and has received a favorable determination letter as to its
qualification, and, to the Knowledge of the Seller, nothing has occurred,
whether by action or failure to act, that would reasonably be expected to cause
the loss of such qualification. No "reportable event" within the meaning of
Section 4043 of ERISA has occurred with respect to any Employee Benefit Plan,
neither the Company nor any Subsidiary has engaged in any "prohibited
transaction" within the meaning of Section 406(a) or (b) of ERISA or of Section
4975(c) of the Code, no "accumulated funding deficiency" within the meaning of
Section 302 of ERISA and Section 412 of the Code (whether or not waived) has
occurred with respect to any Employee Benefit Plan, and no such Employee Benefit
Plan has been terminated in accordance with the procedures set forth in Section
4041 or 4042 of ERISA. No liability has been incurred by the Company or any
Subsidiary for any Tax imposed by Section 4975 of the Code with respect to any
Employee Benefit Plan.
(e) With respect to any Employee Benefit Plan, (i) no actions, suits or
claims (other than routine claims for benefits in the ordinary course) are
pending or, to the Knowledge of the Seller, threatened, (ii) to the Knowledge of
the Seller, no facts or circumstances exist that would reasonably be expected to
give rise to any such actions, suits or claims, (iii) no written communication
has been received from the Pension Benefit Guaranty Corporation (the "PBGC") in
respect of any Employee Benefit Plan subject to Title IV of ERISA concerning the
funded status of any such plan or any transfer of assets and liabilities from
any such plan in connection with the transactions contemplated herein, and (iv)
no administrative investigation, audit or other administrative proceeding by the
Department of Labor, the PBGC, the Internal Revenue Service or other
governmental agencies are pending or in progress or, to the Knowledge of the
Seller, threatened (including, without limitation, any routine requests for
information from the PBGC).
SECTION 3.13 Real Property
(a) Neither the Company nor any Subsidiary owns any real property or has a
fee simple ownership interest in any real property.
(b) SCHEDULE 3.13(B) sets forth an accurate and complete list of all real
property leases and subleases with respect to the Premises to which the Company
or a Subsidiary is a party (as lessee or lessor) ("PROPERTY LEASES"). The Seller
has delivered to the Purchaser Parent a true and complete copy of each Property
Lease and any and all amendments, consents for alterations, documents recording
variations and evidence of commencement dates and expirations dates. The rental
set forth in each Property Lease is the actual rental being paid and there are
no separate agreements or understandings with respect to same.
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(c) The Company or one of the Subsidiaries has valid leasehold interests in
all leased real property described in each Property Lease, free and clear of any
and all Liens, other than Permitted Liens. Neither the Seller nor any of its
Affiliates has received any notice of a breach or default under any Property
Lease, and neither the Seller nor any of its Affiliates has granted any other
Person any rights, adverse or otherwise, under any Property Lease. The Company
or a Subsidiary has undisturbed possession of the Premises, all Property Leases
are in full force and effect, and the Company or a Subsidiary is entitled to the
benefits of such Property Leases in accordance with the terms thereof. Neither
the Company nor any Subsidiary is in material breach or violation of, or
material default under, any Property Lease and, to the Knowledge of the Seller,
no other party to any Property Lease is in material breach or violation thereof
or material default thereunder, nor is there any material dispute between the
Company or a Subsidiary and any landlord under any of the Property Leases and no
waiver, indulgence or postponement of the lessee's obligations thereunder has
been granted by the lessor. No event has occurred and no condition exists which,
with the giving of notice or the lapse of time or both, would constitute a
default by the Company or a Subsidiary or termination event under any Property
Lease. To the Knowledge of the Seller, the current use by the Company or a
Subsidiary of the Premises does not violate any local zoning or similar land use
Laws in any material respect.
(d) The Premises constitute the only real property used in the conduct of
the Business. Except as set forth on SCHEDULE 3.13(D), the Premises (including
improvements on the Premises) are in good operating condition and repair
(ordinary wear and tear excepted) and are adequate in all material respects for
their present uses by the Company or a Subsidiary.
SECTION 3.14 Personal Property, Accounts Receivable, Inventory and Working
Capital
(a) The Company or a Subsidiary has valid title to or, in the case of
leased assets, a valid leasehold interest in, free and clear of Liens, other
than Permitted Liens, all tangible and intangible personal property and assets
reflected in the Balance Sheet, or thereafter acquired, except for properties
and assets disposed of in the ordinary course of the Business consistent with
past practice, since June 30, 2005. The Company and the Subsidiaries own or have
the exclusive right to use all of the tangible and intangible personal
properties and assets necessary for the conduct of the Business as presently
conducted. Notwithstanding the foregoing, the representations and warranties
contained in this Section 3.14(a) do not apply to Intellectual Property or
Company Intellectual Property, which is covered by the representations and
warranties contained in Section 3.10.
(b) The equipment and other tangible properties and assets necessary to the
conduct of the Business as presently conducted are in good operating condition
and repair, ordinary wear and tear excepted, and are suitable for their present
use by the Company and the Subsidiaries.
(c) The accounts receivable of the Company and the Subsidiaries reflected
on the Balance Sheet have arisen from bona fide sales transactions in the
ordinary course of the Business. Except as set forth in SCHEDULE 3.14(C), none
of the accounts receivable of the Company and the Subsidiaries reflected on the
Balance Sheet have been referred to an attorney or third party collection agent
for collection.
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(d) Except as disclosed in SCHEDULE 3.14(D), all inventory of the Company
and the Subsidiaries reflected on the Balance Sheet consisted, and all such
inventory acquired since the date of the Balance Sheet consists, of a quality
and quantity usable and with respect to finished goods, salable in the ordinary
course of the Business, except for obsolete items and items of below standard
quality which have been written off or written down in accordance with GAAP
applied on a consistent basis, and such inventory is sufficient for the
operation of the Business in the ordinary course. Except as disclosed in
SCHEDULE 3.14(D), all items included in the inventory of the Company and the
Subsidiaries are the property of the Company or a Subsidiary, free and clear of
any Liens other than Permitted Liens, have not been pledged as collateral, and
are not held by the Company or a Subsidiary on consignment from others.
SECTION 3.15 Taxes. Except as disclosed in SCHEDULE 3.15:
(a) the Tax Returns of the Company and the Subsidiaries and of the Seller
Parent required to be filed separately or as part of a consolidated Tax Return
of an Affiliated Group before the date of this Agreement have been prepared and
timely filed and each such Tax Return is true, complete and correct in all
material respects;
(b) except for Taxes that are being contested in good faith and by
appropriate proceedings and reserved for on the Balance Sheet, (i) all Taxes
whether or not shown to be due in Tax Returns filed by, or in respect of the
operations of, the Company and the Subsidiaries and the Seller have been duly
paid or accrued on the Balance Sheet of the Company, a Subsidiary or the Seller,
as the case may be, in accordance with GAAP, and (ii) all deficiencies and
assessments for any amount of Taxes that are or would become payable by the
Seller, the Company or a Subsidiary and chargeable as a Lien upon any assets of
the Company or a Subsidiary have been paid;
(c) neither the Company nor any of the Subsidiaries is a party to, or bound
by, or has any obligation under, any tax allocation, sharing or indemnification
agreement or similar contract or arrangement or any agreement that obligates it
to make any payment computed by reference to Taxes, taxable income or taxable
losses of any other Person;
(d) there is no contract, agreement, plan or arrangement covering any
Person that, individually or collectively, would give rise to after the Closing,
nor shall the consummation of the Closing obligate the Company or a Subsidiary
to make after the Closing, any parachute payment subject to Section 280G of the
Code;
(e) no examination or audit of any Tax Return relating to any material
Taxes of the Company or its Affiliated Group by any Governmental Authority is
currently in progress or, to the Knowledge of the Seller, is threatened or
contemplated, no assessment of a material amount of Tax has been proposed in
writing against the Company, and there are no outstanding agreements, waivers or
arrangements extending the statutory period of limitation applicable to any
claim for, or the period for the collection or assessment of, Taxes due from or
with respect to the Company or its Affiliated Group for any taxable period;
(f) except with respect to the consolidated group to which the Company and
the Subsidiaries are currently members, (i) neither the Company nor any
Subsidiary is a member of
-23-
an affiliated group of corporations filing a consolidated federal income Tax
Return and (ii) neither the Company nor any Subsidiary has any liability for the
Taxes of any Person under Treasury Regulations Section 1.1502-6 (or any similar
provision of any state, local, or foreign law), as a transferee or successor, by
contract, or otherwise;
(g) the Company and the Subsidiaries have duly and timely withheld all
Taxes required to be withheld, including from employee salaries, wages and other
compensation and paid over to the appropriate taxing authorities all amounts
required to be so withheld and paid over for all periods under all applicable
laws and regulations;
(h) neither the Company nor any Subsidiary will be required to include any
item of income in, or exclude any item of deduction from, taxable income for any
taxable period (or portion thereof) ending after the Closing Date as a result of
(i) any change in method of accounting for a taxable period ending on or prior
to the Closing Date, (ii) a closing agreement as described in Section 7121 of
the Code (or any corresponding or similar provision of state or local income Tax
law), (iii) the installment method of accounting, the completed cash method of
accounting, the long-term contract method of accounting or the cash method of
accounting, (iv) intercompany transactions or any excess loss account described
in Treasury Regulations under Section 1502 of the Code (or any corresponding or
similar provision of state or local income Tax law), or (v) prepaid amount
received on or prior to the Closing Date;
(i) neither the Company nor any Subsidiary has been a United States real
property holding corporation within the meaning of Section 897(c)(2) of the Code
during the applicable period specified in Section 897(c)(l)(A)(ii) of the Code;
(j) neither the Company nor any Subsidiary has distributed stock of another
Person, or has had its stock distributed by another Person, in a transaction
that was purported or intended to be governed in whole or in part by Section 355
or Section 361 of the Code.
(k) the Company and the Subsidiaries have collected all material sales and
use Taxes required to be collected, and has remitted, or will remit on a timely
basis, such amounts to the appropriate Governmental Authorities, or has been
furnished properly completed exemption certificates and has maintained all such
records and supporting documents in the manner required by all applicable sales
and use Tax statutes and regulations;
(l) neither the Company nor any of the Subsidiaries has, to the Knowledge
of the Seller, engaged in any transaction that could give rise to (i) a
registration obligation with respect to any Person under Section 6111 of the
Code or the regulations thereunder, (ii) a list maintenance obligation with
respect to any Person under Section 6112 of the Code or the regulations
thereunder, or (iii) a disclosure obligation as a "reportable transaction" under
Section 6011 of the Code and the regulations thereunder;
(m) the Tax Returns of the Company and the Subsidiaries (i) with respect to
federal income Taxes have been examined by and settled with the Internal Revenue
Service, or the statute of limitations with respect to the relevant Tax
liability has expired, for all taxable periods through and including the year
ended June 30, 2000 and (ii) with respect to state Taxes have been examined by
and settled with the appropriate taxing authorities, or the statute of
limitations
-24-
with respect to the relevant Tax liability has expired, for the taxable periods
set forth in SCHEDULE 3.15;
(n) no power of attorney granted by or with respect to the Company or any
of the Subsidiaries relating to Taxes is currently in force;
(o) the Seller has delivered or made available to Purchaser for inspection
(A) complete and correct copies of all income Tax Returns of the Company and the
Subsidiaries for the fiscal years ended June 30, 2002, 2003 and 2004 and (B)
complete and correct copies of all private letter rulings, revenue agent
reports, closing agreements, settlement agreements, deficiency notices and any
similar documents submitted by, received by or agreed to by or on behalf of the
Company of the Subsidiaries and relating to material Taxes for such taxable
periods; and
(p) BISYS Information Solutions L.P. has been classified as a partnership
for U.S. federal income, state and local tax purposes effective as of its
inception and BISYS Document Solutions LLC has been classified as a Disregarded
Entity for U.S. federal income tax purposes effective as of its inception.
SECTION 3.16 Litigation. Except as disclosed in SCHEDULE 3.16, as of the
date hereof (a) there is no Action pending or, to the Knowledge of the Seller,
threatened in writing, involving the Company or any Subsidiary or any of their
respective properties, assets or rights, and (b) there are no Orders of any
Governmental Authority or arbitrator that prohibit or limit in any material
respect the conduct of the Business by the Company and the Subsidiaries taken as
a whole.
SECTION 3.17 Contracts
(a) SCHEDULE 3.17(A) sets forth an accurate and complete list of each of
the following Contracts to which the Company or any of the Subsidiaries is a
party or by which any of them are directly or indirectly bound: (i) Contracts
creating an obligation on the part of the Company or a Subsidiary to pay to any
other Person an amount in excess of $750,000 in any 12-month period; (ii)
Contracts creating an obligation on the part of another Person to pay to the
Company or a Subsidiary an amount in excess of $750,000 in any 12-month period;
(iii) Contracts for the employment of any officer, individual employee or other
Person on a full-time or consulting basis with annual payments in excess of
$200,000; (iv) Contracts evidencing Indebtedness; (v) Contracts (including so
called take-or-pay or keep-well agreements) under which the Company or any
Subsidiary has directly or indirectly guaranteed Indebtedness of any Person
(other than the Company or any of the Subsidiaries) or other guaranties by the
Company or any Subsidiary; (vi) Contracts which prohibit the Company or any
Subsidiary from engaging in the Business or any line of Business or competing
with any Person in the United States or Canada or which restrict the ability of
the Company or any Subsidiary to hire any Person; (vii) any VAR, OEM or other
distribution Contract, which require the Company or any of the Subsidiaries to
reach specific sales or payment minimums, targets or milestones or which require
the Company or any of the Subsidiaries to use "best efforts" to distribute
products thereunder and which generated more than $200,000 in payments during
the fiscal year ended June 30, 2005; (viii) Contracts for capital expenditures
or other purchases of material supplies, equipment or other assets or
-25-
properties (other than purchase orders for inventory or supplies in the ordinary
course of the Business) in excess of $1,000,000 individually by the Company or
any Subsidiary; (ix) Contracts with the Seller or any Affiliate of the Seller
(other than the Company and the Subsidiaries); (x) Contracts that were not
entered into in the ordinary course of the Business; (xi) Contracts which
contain restrictions with respect to payment of dividends or any other
distribution in respect of the capital stock or other equity interests of the
Company or any of the Subsidiaries; (xii) Contracts (including so called
take-or-pay or keep-well agreements) under which any Person (other than the
Company or any of the Subsidiaries) has directly or indirectly guaranteed
Indebtedness of the Company or any of the Subsidiaries; (xiii) Contracts
granting or evidencing Liens on any properties or assets of the Company or any
of the Subsidiaries, other than Permitted Liens; (xiv) any management service,
consulting, financial advisory or any other similar type Contract and any
Contract with any investment or commercial bank (other than Contracts pursuant
to which the Company or any of the Subsidiaries acts as a service provider to an
investment or commercial bank in the ordinary course of the Business); (xv)
Contracts (other than any agreement entered into with the Purchaser or an
Affiliate of the Purchaser pursuant to this Agreement) with any current or
former officer or director of the Company or any of the Subsidiaries under which
the Company or any of the Subsidiaries would have obligations after the Closing;
(xvi) other than Contracts described in the other subclauses of this Section
3.17(a), Contracts (including letters of intent) involving the future
disposition or acquisition of assets or properties other than in the ordinary
course of the Business and consistent with past practice, or any merger,
consolidation or similar business combination transaction, whether or not
enforceable; (xvii) Contracts involving any joint venture, partnership,
strategic alliance, shareholders' agreement, co-marketing, co-promotion,
co-packaging, joint development or similar arrangement; (xviii) Contracts
involving any resolution or settlement of actual or threatened material
litigation, arbitration, claim or other dispute entered into on or after July 1,
2004 or that will continue to affect the Company, any Subsidiary or the Business
after the Closing; (xix) Contracts involving leases or subleases of personal
property involving an annual base rental payment in excess of $750,000; or (xx)
other than Contracts described in the other subclauses of this Section 3.17(a)
or that were entered into in the ordinary course of the Business and consistent
with past practice, Contracts to which the Company or any Subsidiary is a party
that are material to the Company and the Subsidiaries or the Business (all of
the foregoing Contracts, together with the Affiliate Contracts and the IP
Licenses, the "COMPANY CONTRACTS"). SCHEDULE 3.17(A) sets forth an accurate and
complete list of (1) each Contract to which the Company or any of its
Subsidiaries was a party or by which any of them were bound that created an
obligation on the part of the Company or a Subsidiary in an amount in excess of
$750,000 in the last 12-month period and (2) each Contract to which the Company
or any of its Subsidiaries was a party or by which any of them were bound that
created an obligation on the part of another Person to pay the Company or a
Subsidiary an amount in excess of $750,000 in the last 12-month period.
(b) SCHEDULE 3.17(B) sets forth an accurate and complete list of each of
the following Contracts to which the Seller Parent or any of its Affiliates
(other than the Company or any of the Subsidiaries) is a party or by which any
of them are bound: (i) Contracts creating an obligation on the part of the
Seller Parent or any of its Affiliates (other than the Company or any of the
Subsidiaries) with respect to the Business to pay to any other Person an amount
in excess of $750,000 in any 12-month period; (ii) Contracts creating an
obligation on the part of another Person to pay to the Seller Parent or any of
its Affiliates (other than the Company or any of the
-26-
Subsidiaries) with respect to the Business an amount in excess of $750,000 in
any 12-month period; (iii) Contracts evidencing Indebtedness with respect to the
Business; (iv) Contracts for capital expenditures or other purchases of material
supplies, equipment or other assets or properties (other than purchase orders
for inventory or supplies in the ordinary course of the Business) in excess of
$1,000,000 individually by the Seller Parent or any of its Affiliates (other
than the Company or any of the Subsidiaries) with respect to the Business; (v)
Contracts that were not entered into in the ordinary course of the Business;
(vi) Contracts which prohibit the Company or any Subsidiary from engaging in the
Business or any line of Business or competing with any Person in the United
States or Canada or which restrict the ability of the Company or any Subsidiary
to hire any Person; (vii) any VAR, OEM or other distribution Contract, which
require the Seller Parent or any of its Affiliates (other than the Company or
any of the Subsidiaries) with respect to the Business to reach specific sales or
payment minimums, targets or milestones or which require the Seller Parent or
any of its Affiliates (other than the Company or any of the Subsidiaries) with
respect to the Business to use "best efforts" to distribute products thereunder
and which generated more than $200,000 in revenues during the fiscal year ended
June 30, 2005; (viii) Contracts (including so called take-or-pay or keep-well
agreements) under which any Person (other than the Company or any of the
Subsidiaries) has directly or indirectly guaranteed Indebtedness of the Company
or any of the Subsidiaries; (ix) Contracts granting or evidencing Liens on any
properties or assets of the Company or any of the Subsidiaries, other than
Permitted Liens; (x) any management service, consulting, financial advisory or
any other similar type Contract with respect to the Business and any Contract
with any investment or commercial bank (other than Contracts pursuant to which
the Company or any of the Subsidiaries acts as a service provider to an
investment or commercial bank in the ordinary course of the Business) with
respect to the Business; (xi) Contracts (other than any agreement entered into
with the Purchaser or an Affiliate of the Purchaser pursuant to this Agreement)
with any current or former officer or director of the Company or any of the
Subsidiaries under which the Company or any of the Subsidiaries would have
obligations after the Closing; (xii) other than Contracts described in the other
subclauses of this Section 3.17(b), Contracts (including letters of intent) with
respect to the Business involving the future disposition or acquisition of
assets or properties other than in the ordinary course of the Business and
consistent with past practice, or any merger, consolidation or similar business
combination transaction, whether or not enforceable; (xiii) Contracts with
respect to the Business involving any joint venture, partnership, strategic
alliance, shareholders' agreement, co-marketing, co-promotion, co-packaging,
joint development or similar arrangement; (xiv) Contracts with respect to the
Business involving any resolution or settlement of actual or threatened
litigation, arbitration, claim or other dispute; (xv) Contracts with respect to
the Business involving leases or subleases of personal property involving an
annual base rental payment in excess of $750,000; or (xvi) other than Contracts
described in the other subclauses of this Section 3.17(b) or that were entered
into in the ordinary course of the Business and consistent with past practice,
Contracts to which the Seller Parent or any of its Affiliates (other than the
Company or any of the Subsidiaries) is a party that are material to the Company
and the Subsidiaries or the Business (all of the foregoing Contracts, the
"AFFILIATE CONTRACTS"). SCHEDULE 3.17(B) sets forth an accurate and complete
list of (1) each Contract to which the Seller Parent or any of its Affiliates
(other than the Company or any of the Subsidiaries) was a party or by which any
of them were bound that created an obligation on the Seller Parent or any of its
Affiliates (other than the Company or any of the Subsidiaries) with respect to
the Business in an amount in excess of $750,000 in the last 12-
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month period and (2) each Contract to which the Seller Parent or any of its
Affiliates (other than the Company or any of the Subsidiaries) was a party or by
which any of them were bound that created an obligation on the part of another
Person to pay the Seller Parent or any of its Affiliates (other than the Company
or any of the Subsidiaries) an amount in excess of $750,000 in the last 12-month
period with respect to the Business.
(c) Each Company Contract is legal, valid, binding, and in full force and
effect against the Seller Parent, an Affiliate of the Seller Parent (other than
the Company or any of the Subsidiaries), the Company or a Subsidiary, as
applicable, and to the Knowledge of the Seller, the other party thereto, and
enforceable in accordance with its terms subject to the bankruptcy,
receivership, moratorium, conservatorship, reorganization, or other Laws of
general application affecting the rights of creditors generally or by general
principles of equity. Except as disclosed in SCHEDULE 3.17(C), none of the
Seller Parent, an Affiliate of the Seller Parent (other than the Company or any
of the Subsidiaries), the Company or any Subsidiary is in default in any
material respect with respect to any Company Contract to which it is a party,
and, to the Knowledge of the Seller, no other party to any Company Contract is
in default in any material respect with respect to such Company Contract, and,
to the Knowledge of the Seller, no event has occurred which with notice or lapse
of time would constitute a breach or default, or permit termination,
modification, or acceleration, under any such Company Contract. The Seller has
made available to the Purchaser true and complete copies of all Company
Contracts, including all amendment thereto, in existence as of the date hereof.
SECTION 3.18 Customers and Suppliers. SCHEDULE 3.18 sets forth for the
12-month period ended June 30, 2005, a list of (i) the twenty largest customers
of the banking solutions business of the Business (ranked by processing
revenues), (ii) the ten largest customers of the check imaging business of the
Business (ranked by maintenance revenues), (iii) the five largest customers of
the asset retention solutions business of the Business (ranked by processing
revenues) and (iv) the five largest customers of the corporate financial
solutions business of the Business (ranked by processing revenues), in each
case, for such time period and the aggregate amount of the applicable revenues
for each such customer in such period. Except as disclosed in SCHEDULE 3.18, no
customer that accounted for more than 5% of the aggregate annual net sales
revenues of the Business for the 12-month period ended June 30, 2005 has
terminated, or has given written notice to the Company, any Subsidiary, the
Seller Parent or the Seller or any Affiliate thereof that it intends to
terminate or alter in any material respect, its business relationship with the
Company or a Subsidiary. SCHEDULE 3.18 sets forth for the 12-month period ended
June 30, 2005, a list of the twenty largest suppliers of the Business (ranked by
aggregate expenditures) for such time period, and the aggregate amount of
expenditures for each such supplier in such period. Except as disclosed in
SCHEDULE 3.18, no supplier that accounted for more than 5% of the aggregate
expenditures of the Business for the 12-month period ended June 30, 2005 has
terminated, or has given written notice to the Company, any Subsidiary, the
Seller Parent, the Seller or any Affiliate thereof that it intends to terminate
or alter in any material respect, its business relationship with the Company or
a Subsidiary.
SECTION 3.19 Labor Relations.
(a) There are no collective bargaining agreements, Contracts or other
agreements or understandings with a labor union or other labor organization
covering any of the Business
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Employees. During the past two years, the Business has not been affected by any
strike or other labor disturbance involving the Business Employees nor, to the
Knowledge of the Seller, has any union attempted to represent, as collective
bargaining agent, the Business Employees. Except as set forth on SCHEDULE
3.19(A), neither the Company nor any of the Subsidiaries is the subject of any
material proceeding asserting that the Company or any of the Subsidiaries has
committed an unfair labor practice or seeking to compel any of them to bargain
with any labor union or other labor organization nor has there been since
January 1, 2000 or is there pending or, to the Knowledge of the Seller,
threatened any labor strike, dispute, walk-out, work stoppage, slow-down or
lockout involving the Company or any of the Subsidiaries.
(b) Except as disclosed in SCHEDULE 3.19(B), there are no claims or charges
by any employees or former employees of the Company or a Subsidiary pending or,
to the Knowledge of the Seller, threatened in writing before the EEOC, or
alleging discrimination, harassment, or wrongful termination.
(c) Since January 1, 2000, none of the Company nor any of the Subsidiaries
has taken any action that would constitute a "mass layoff," "mass termination"
or "plant closing" within the meaning of the United States Worker Adjustment and
Retraining Notification Act or would otherwise trigger notice requirements or
liability under any federal, local, state or foreign plant closing notice or
collective dismissal Law.
SECTION 3.20 Insurance. SCHEDULE 3.20 contains an accurate and complete
list and description of insurance policies maintained by the Seller Parent, the
Seller or the Company in respect of the Business (the "INSURANCE POLICIES") and,
except as otherwise specified therein, (i) the coverages thereunder are written
on a "claims made" (rather than an "occurrence") basis, and such coverages are
in full force and effect on the date hereof, (ii) such coverages will be
maintained in full force and effect through the Closing, (iii) all premiums due
and payable have been paid and the Seller Parent, the Seller or the Company, as
applicable, has otherwise complied in all material respects with the terms and
conditions of all such policies, (iv) none of the Seller Parent, the Seller, the
Company or any Affiliate thereof has received written notice from any insurance
company or on behalf of any insurance company of any material defects,
inadequacies or conditions that would adversely affect the insurability of, or
cause a material increase in the premiums for, insurance covering the Business,
and (v) the Insurance Policies are sufficient for compliance with the
requirements of applicable Laws and of the Company Contracts. SCHEDULE 3.20
further lists all claims with respect to the Company or the Business presently
pending or, to the Knowledge of the Seller, threatened in writing that are
covered by such Insurance Policies. None of the Seller Parent, the Seller, the
Company or any Affiliate thereof has received written notice of cancellation or
non-renewal of any of the Insurance Policies. None of the Subsidiaries maintain
separate insurance policies in respect of the Business.
SECTION 3.21 Conduct of the Business. Except as disclosed in SCHEDULE 3.21,
since June 30, 2005, (i) there has not been any condition, event or occurrence
that has had, individually or in the aggregate, a Material Adverse Effect with
respect to the Company, and no condition, event or occurrence shall have
occurred which could reasonably be expected to result, individually or in the
aggregate, in a Material Adverse Effect with respect to the Company, and (ii)
the Company and the Subsidiaries have conducted the Business in the ordinary
course consistent with past practice, and (iii) none of the Seller Parent, the
Seller, the Company or any
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Subsidiary has taken any action that if taken after the date of this Agreement
would constitute a breach of any of the covenants set forth in Section 5.01.
SECTION 3.22 Third Party Consents. Except as disclosed in SCHEDULE 3.22 and
except for the termination or expiration of the waiting period under the HSR
Act, no consent or approval under any Company Contract material to the conduct
of the Business, and no consent or approval from, or filing or declaration with,
any Governmental Authority, is required to be obtained or made by the Seller
Parent, the Seller, the Company, or any Subsidiary in connection with the
execution, delivery, or performance by the Seller Parent, Seller of this
Agreement or the consummation of the Closing.
SECTION 3.23 Loans to or from Directors, Officers, or Business Employees;
Intercompany Balances
(a) Except as disclosed in SCHEDULE 3.23(A), and except for tuition
advances, draws against incentive compensation consistent with past practice,
sign-on advances for new employees consistent with past practice and advances
for relocation expenses and business expenses in the ordinary course of the
Business, none of the Seller Parent, the Seller, the Company or any Subsidiary
has any outstanding loans, advances, or other Indebtedness incurred by any
director or officer of the Company or incurred by any Business Employee, and
there are no loans or advances made to the Company or a Subsidiary by, or
Indebtedness incurred by the Company or a Subsidiary to, any director or officer
of the Company or a Subsidiary, or any Business Employee, or any investment by
the Company or any of the Subsidiaries in any Person relating to the making of
any such loan, advance or investment.
(b) SCHEDULE 3.23(B) contains an accurate and complete list of all
Intercompany Balances as of June 30, 2005. Since June 30, 2005, there has not
been any accrual of liability by the Company or a Subsidiary to Seller or any of
its Affiliates (other than the Company and the Subsidiaries) or other
transaction between the Company or a Subsidiary, on the one hand, and Seller and
any of its Affiliates (other than the Company and the Subsidiaries), on the
other hand, except accruals of Intercompany Balances in the ordinary course of
the Business consistent with past practice or as disclosed in SCHEDULE 3.23(B).
SECTION 3.24 Compliance with Laws
(a) The Company and each Subsidiary is in compliance with all Laws and
Orders applicable to the conduct of the Business as presently conducted by them,
except for violations that, individually, or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect with respect to the
Company; provided that this Section 3.24(a) does not address any Laws covered by
Section 3.12, Section 3.15, or Section 3.25.
(b) Each of the Company and each Subsidiary has all Governmental
Authorizations that are necessary for them to lawfully conduct the Business as
presently conducted by them, or necessary for the lawful ownership of their
properties and assets or the operation of the Business as currently conducted,
other than those the failure of which to obtain, possess or make would not
individually or in the aggregate, have a Material Adverse Effect with respect to
the Company. All such Governmental Authorizations are in full force and effect
except for those the
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failure of which to be in full force and effect would not have a Material
Adverse Effect with respect to the Company. The Company and each of the
Subsidiaries are compliance with all such Governmental Authorizations except for
such non-compliances that would not have a Material Adverse Effect with respect
to the Company. To the Knowledge of the Seller, each such Governmental
Authorization can be renewed in the ordinary course of the Business by the
Company or the Subsidiary, as the case may be. Any applications for the renewal
of any such Governmental Authorization which are due prior to the Closing Date
will be timely made or filed by the Seller Parent, the Seller, the Company or
the appropriate Subsidiary prior to the Closing Date. No proceeding to modify,
suspend, revoke, withdraw, terminate or otherwise limit any such Governmental
Authorization is pending or, to the Knowledge of the Seller, threatened,
including the transactions contemplated hereby. No administrative or
governmental action or proceeding is pending or, to the Knowledge of the Seller,
threatened, in connection with the expiration, continuance or renewal of any
such Governmental Authorization. A true and accurate list of all such
Governmental Authorizations is set forth on SCHEDULE 3.24(B).
SECTION 3.25 Environmental Matters. The Company and the Subsidiaries are,
and at all prior relevant times were, in compliance with all Environmental Laws.
None of the Company, any Subsidiary, the Seller Parent or the Seller has
received any written Environmental Claim, and to the Knowledge of the Seller,
there is no threatened Environmental Claim; neither the Company nor any
Subsidiary has assumed, contractually or by operation of Law, any liabilities
under any Environmental Laws. None of the Company and the Subsidiaries has
Released Hazardous Materials or arranged for disposal of Hazardous Materials in
violation of Environmental Laws or in a manner that would reasonably be expected
to result in liability under any Environmental Law; and Hazardous Materials are
not present at any of the facilities owned, leased or operated by the Company or
any of the Subsidiaries in amount or condition that would reasonably be expected
to result in liability under any Environmental Law.
SECTION 3.26 No Broker. Except for Bear, Xxxxxxx & Co. Inc., whose fees
shall be paid by the Seller, no Person acting on behalf of the Seller or any of
its Affiliates is or will be entitled to any broker's or finder's fee or any
other commission or similar fee, directly or indirectly, from any of the parties
in connection with any of the Transactions.
SECTION 3.27 Sufficiency of Assets. The Company or a Subsidiary owns or has
the right to use all of the assets used or held for use in the Business, and
such assets, together with the services to be provided under the Transition
Services Agreement and the services and assets set forth on SCHEDULE 3.27, are
sufficient to enable the Company and the Subsidiaries to conduct or operate the
Business from and after the Closing Date in substantially the same manner and to
the extent as the Business is currently conducted.
SECTION 3.28 Interests in Clients, Suppliers, Etc.; Affiliate Transactions.
Except as set forth on SCHEDULE 3.28 and except for the Intercompany Balances,
(i) there are no Contracts, liabilities or obligations between the Company or
any of the Subsidiaries, on the one hand, and either (A) the Seller or any
Affiliate of Seller (other than the Company or any of the Subsidiaries), or (B)
any other Affiliate of the Company, on the other hand and (ii) neither the
Seller, any Affiliate of Seller (other than the Company and the Subsidiaries)
nor, to the Knowledge of the Seller, any officer or director of the Company or
any of the Subsidiaries possesses, directly or indirectly, any financial
interest in, or is a director, officer or employee of,
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any Person which is a client, supplier, customer, lessor, lessee, or competitor
or potential competitor of the Company or any of the Subsidiaries. Ownership of
securities of a company whose securities are registered under the Securities
Exchange Act of 1934, as amended, of 1% or less of any class of such securities
shall not be deemed to be a financial interest for purposes of this Section
3.28.
SECTION 3.29 Bank Accounts and Powers of Attorney. Set forth on SCHEDULE
3.29 is an accurate and complete list showing (a) the name and address of each
bank in which the Company or any of the Subsidiaries has an account or safe
deposit box, the number of any such account or any such box and the names of all
Persons authorized to draw thereon or to have access thereto and (b) the names
of all Persons, if any, holding powers of attorney from the Company or any of
the Subsidiaries and a summary statement of the terms thereof.
SECTION 3.30 Warranty Claims. Except as set forth on SCHEDULE 3.30, there
are no pending or, to the Knowledge of the Seller, threatened Warranty Claims
against the Company or any of the Subsidiaries in connection with the sales of
the Company's and the Subsidiaries' products or services which exceed $500,000
and are not covered by insurance. As used herein, the phrase "Warranty Claims"
means claims by third parties for defects in products or services sold by the
Company or any of the Subsidiaries which the customer claims do not meet the
product or service warranty.
SECTION 3.31 BISYS Management Company. BISYS Management Company is a
wholly-owned subsidiary of the Seller Parent.
SECTION 3.32 Disclosure. No representation or warranty of the Seller or the
Seller Parent contained in this Agreement or in any other Transaction Document,
the Schedules to this Agreement or any certificate or other document delivered
by the Seller or the Seller Parent pursuant to this Agreement or any such other
Transaction Document contains any untrue statement of a material fact or omits
to state a fact necessary in order to make the statements herein or therein, in
light of the circumstances under which they were made, not misleading in any
material respect.
SECTION 3.33 No Other Representations or Warranties. Except for the
representations and warranties contained in this Agreement (as modified by the
Schedules hereto) or in any other Transaction Documents, or in any certificate
or other document delivered by the Seller or the Seller Parent pursuant to this
Agreement or any such other Transaction Document, each of the Seller Parent and
the Seller make no other representation or warranty with respect to the Company,
any Subsidiary or the Business, and the Seller Parent and the Seller disclaim
any other representation or warranties, whether made by the Seller, any
Affiliate of the Seller Parent or the Seller or any of their respective
officers, directors, employees, agents or representatives.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER PARENT AND THE PURCHASER
The Purchaser Parent and the Purchaser hereby jointly and severally
represent and warrant to the Seller Parent and the Seller, knowing and intending
that the Seller Parent and the Seller are relying hereon in entering into the
Transactions, as follows:
SECTION 4.01 Authority Relative to Agreement. Each of the Purchaser Parent
and the Purchaser has the requisite corporate power and authority to enter into
and to perform its obligations under this Agreement and the other Transaction
Documents to which it is a party. Each of the Purchaser Parent and the Purchaser
has the corporate power and authority to consummate the Transactions. The
execution and delivery of this Agreement and the other Transaction Documents by
the Purchaser, and the consummation by the Purchaser of the Transactions have
been duly authorized by all necessary corporate action on the part of the
Purchaser Parent and the Purchaser, and no other corporate action on the part of
the Purchaser Parent or the Purchaser is necessary to authorize the execution,
delivery and performance of the Transaction Documents and the consummation of
the Transaction.
SECTION 4.02 Execution and Performance of Agreement; Validity and Binding
Nature. This Agreement has been, and each of the Transaction Documents to be
executed and delivered by each of the Purchaser Parent and the Purchaser will
be, duly executed and delivered by each of the Purchaser Parent and the
Purchaser, and this Agreement is, and each of the Transaction Documents executed
and delivered by each of the Purchaser Parent and the Purchaser, when duly
executed and delivered by all parties whose execution and delivery thereof is
required, shall be, the legal, valid, and binding obligations of the Purchaser,
enforceable against each of the Purchaser Parent and the Purchaser, as
applicable, in accordance with their respective terms, except to the extent that
enforceability may be limited by bankruptcy, receivership, moratorium,
conservatorship, reorganization, or other Laws of general application affecting
the rights of creditors generally or by general principles of equity.
SECTION 4.03 Non-Contravention. Neither the execution and delivery of this
Agreement or any other Transaction Documents nor the consummation of the
Transactions will (a) violate, breach, or be in conflict with any provisions of
the certificate of incorporation or by-laws of the Purchaser Parent and the
Purchaser, (b) subject to obtaining the consents set forth on SCHEDULE 4.03,
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 Contract to which any of the
Purchaser Parent or the Purchaser is a party to or by which it is bound or to
which any of its assets is subject, or (c) violate any Law or Order to which the
Purchaser Parent or the Purchaser is subject.
SECTION 4.04 Organization, Standing, and Qualification. The Purchaser
Parent is a corporation duly organized, validly existing, and in good standing
under the laws of the State of Delaware. The Purchaser is a corporation, duly
organized, validly existing, and in good standing under the laws of the State of
Delaware and has the corporate power and lawful authority to own and hold its
properties and conduct its business as now owned, held, and conducted in
Connecticut and the other states (or jurisdictions) in which it is required to
qualify to do business,
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except where the failure to be so qualified would not reasonably be expected to
have a material adverse effect on the ability of the Purchaser to perform its
obligations hereunder and to consummate the Closing.
SECTION 4.05 Financial Condition. The Purchaser has obtained a commitment
letter from Wachovia Bank, National Association and Wachovia Capital Markets,
LLC providing for, subject to certain conditions set forth therein, commitments
to provide all funds necessary, together with other funds available to the
Purchaser, to pay the Estimated Purchase Price at Closing (the "WACHOVIA
COMMITMENT"). A complete and accurate copy of the Wachovia Commitment has been
furnished to the Seller.
SECTION 4.06 Bankruptcy. Neither the Purchaser Parent nor any of its
subsidiaries is a debtor in possession in any proceedings by or against it or
any of them in any court under any bankruptcy Laws or any other insolvency or
debtor's relief Laws, whether federal, state, or foreign, or for the appointment
of a trustee, receiver, liquidator, assignee, sequestrator, or other similar
official.
SECTION 4.07 Litigation. There is no Action pending or, to the Knowledge of
the Purchaser, threatened in writing involving the Purchaser, any Affiliate of
the Purchaser, or any of their respective assets, which, if decided adversely to
the Purchaser or any Affiliate of the Purchaser, would result in a material
adverse effect on the ability of the Purchaser to perform its obligations
hereunder or consummate the Closing. There are no outstanding Orders of any
Governmental Authority that have had or would have a material adverse effect on
the ability of the Purchaser to perform its obligations hereunder or consummate
the Closing.
SECTION 4.08 No Broker. Except for Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated, no agent, broker, investment banker, or other Person acting on
behalf of the Purchaser or any of its Affiliates or any of its or their
directors or officers is or shall be entitled to any broker's or finder's fee or
any other commission or similar fee, directly or indirectly, from the Seller or
any of its Affiliates, including any Company, in connection with any of the
Transactions.
SECTION 4.09 Investment Representations.
(a) The Purchaser understands that the Shares have not been registered
under the Securities Act and may not be sold, transferred, hypothecated or
otherwise disposed of in the absence of an effective registration statement
under the Securities Act covering the Shares or an available exemption from such
registration under the Securities Act. The Purchaser further understands that
the purchase and sale of the Shares under this Agreement is intended to be
exempt from registration under the Securities Act by virtue of Section 4(2) of
the Securities Act based, in part, upon the representations, warranties, and
agreements of the Purchaser contained in this Agreement.
(b) The Purchaser is acquiring the Shares solely for its own account, for
investment, and not with a view to resale or distribution thereof, in whole or
in part. The Purchaser has no agreement or arrangement, formal or informal,
written or oral, with any Person to sell or transfer,
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or otherwise dispose of all or any part of the Shares, and has no present plans
to enter into any such agreement or arrangement.
(c) The Purchaser meets the requirements of at least one of the categories
of an "accredited investor" as defined in Rule 501(a) promulgated under the
Securities Act.
SECTION 4.10 Third Party Consents. Except as disclosed in SCHEDULE 4.10,
and except for the termination or expiration of the waiting period under the HSR
Act, no consent or approval under any contract, agreement, or commitment to
which the Purchaser is a party, and no consent or approval from or filing,
declaration, or registration with, any Governmental Authority is required to be
obtained or made by the Purchaser in connection with the execution, delivery, or
performance by the Purchaser of this Agreement or of any other agreement annexed
as an exhibit hereto or the consummation of the Closing, except for any such
consents or approvals that, if not obtained, would not reasonably be expected to
cause a material adverse effect on the ability of the Purchaser to perform its
obligations hereunder or consummate the Closing.
SECTION 4.11 No Other Representations or Warranties. No representation or
warranty of the Purchaser or the Purchaser Parent contained in this Agreement or
in any other Transaction Document, the Schedules to this Agreement or any
certificate or other document delivered by the Purchaser or the Purchaser Parent
pursuant to this Agreement or any such other Transaction Document contains any
untrue statement of a material fact or omits to state a fact necessary in order
to make the statements herein or therein, in light of the circumstances under
which they were made, not misleading in any material respect.
ARTICLE V
COVENANTS
SECTION 5.01 Conduct of the Business. The Seller Parent and the Seller
covenant and agree that, during the period from the date of this Agreement to
the Closing Date, unless the Purchaser Parent shall otherwise consent in writing
(which consent shall not unreasonably be withheld) or as otherwise contemplated
by this Agreement:
(a) (i) the Company and each of the Subsidiaries shall conduct their
respective operations (including, subject to the provisions of Section 5.03,
their cash and working capital management practices) only according to their
ordinary and usual course of business consistent with past practice and shall
use their respective commercially reasonable efforts to preserve intact their
respective business operations and relationships with suppliers, customers and
other third parties; (ii) none of the Seller Parent, the Seller, the Company or
any Subsidiary will take any action in respect of the Business that is not in,
the ordinary and usual course of the Business consistent with past practice; and
(iii) neither the Company nor any of the Subsidiaries shall enter into any new
line of business;
(b) neither the Company nor any Subsidiary shall, directly or indirectly,
do any of the following: (i) sell, assign, pledge, transfer, lease, license,
dispose of, or encumber (in whole or in part) any of its assets or properties,
except in the ordinary course of the Business consistent with past practice and
which incurrence, individually or in the aggregate, would not have a
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Material Adverse Effect with respect to the Company; (ii) amend or restate or
propose to amend or restate its certificate of incorporation or certificate of
formation or certificate of limited partnership, as applicable, or its by-laws,
partnership agreement, or limited liability company operating agreement or other
comparable organizational or governing documents, as applicable; (iii) split,
combine, or reclassify any outstanding equity interests; (iv) redeem, purchase,
acquire, or offer to acquire, directly or indirectly, any of its equity
interests; (v) issue, sell, pledge, deliver or dispose of, or agree or authorize
to issue, sell, pledge, deliver or dispose of, any additional securities of, or
securities convertible into, exchangeable for or evidencing the right to
subscribe for or any options, warrants, or rights of any kind to acquire, any of
its equity or voting interests or other property or assets, or make any other
change in its capital structure; (vi) acquire (by merger, consolidation,
acquisition of equity interests, assets or otherwise) any Person or division
thereof in a single transaction or a series of related transactions; (vii)
incur, assume or modify any Indebtedness, except for Indebtedness incurred in
the ordinary course of the Business consistent with past practice and which
incurrence, individually and in the aggregate, would not have a Material Adverse
Effect with respect to the Company, provided that not withstanding the
foregoing, any such Indebtedness incurred shall be repaid in full prior to the
Closing and all liens and guarantees related to such Indebtedness shall be
terminated or released prior to the Closing and the Seller shall provide
evidence of the foregoing reasonably satisfactory to the Purchaser, or prepay
any Indebtedness, except for prepayments required by the terms of any Company
Contract or as otherwise specifically contemplated by this Agreement; (viii)
cancel or waive any claims or rights of material value; (ix) make any change in
any accounting procedure or method other than those required by GAAP; (x) amend,
cancel or knowingly fail to renew any Company Contract outside of the ordinary
course of the Business consistent with past practice; (xi) renew, extend or
modify in any respect or cancel any lease of real property outside of the
ordinary course of the Business consistent with past practice; (xii) declare,
pay or set aside any dividend or make any distribution other than dividends or
distributions by any of the Subsidiaries to the Company; or (xiii) adopt a plan
of liquidation, dissolution, merger, consolidation, restructuring,
recapitalization or reorganization;
(c) none of the Seller Parent, the Seller, the Company or any Subsidiary
shall (i) grant any increase in the salary, fringe benefit or other compensation
(including wages, salaries, bonuses or other remuneration) payable or to become
payable to any Business Employee or current or former director, officer or
consultant of the Company or any of the Subsidiaries, except in the ordinary
course of the Business consistent with past practice or as may be required by
the terms of any Employee Benefit Plan or Contract in existence as of the date
of this Agreement, (ii) make any bonus, pension, retirement or insurance payment
except for payments that have been accrued on the Balance Sheet or are required
by the terms of any Employee Benefit Plans, (iii) establish, adopt, enter into,
amend, modify in any material respect or terminate any Employee Benefit Plan, or
any plan, agreement, program, policy, trust, fund or other arrangement that
would be an Employee Benefit Plan if it were in existence as of the date of this
Agreement, except as may be required by applicable Law or any Employee Benefit
Plan in existence as of the date of this Agreement, (iv) make any loan or
advance any money or other property to any Business Employee or current or
former director, officer or consultant of the Company or the Subsidiaries, (v)
change in any material respect any personnel policies with respect to any
Business Employees, or (vi) grant any equity or equity-based awards (including
commencing any new offering periods under any employee stock purchase plans);
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(d) none of the Seller Parent, the Seller, the Company or any Subsidiary
shall take any action to institute any new severance or termination pay
practices, or grant any severance or termination pay, with respect to any
Business Employees or current or former director, officer or consultant of the
Company or the Subsidiaries, or to increase in any respect the benefits payable
under its severance or termination pay plans, programs or practices to the
extent that the same would be obligations of the Company at or after the
Closing;
(e) none of the Seller Parent, the Seller, the Company or any Subsidiary
shall adopt or amend in any material respect, except as provided for in this
Agreement or as may be required by applicable law or regulation, any bonus,
profit sharing, compensation, stock option, restricted stock, pension,
retirement, deferred compensation, employment or other employee benefit plan,
agreement, trust, fund, plan or arrangement for the benefit or welfare of any
Business Employees to the extent that the same would be obligations of the
Company after the Closing;
(f) the Company and each Subsidiary shall maintain its books, accounts and
records in the ordinary course of the Business consistent with past practice and
shall comply in all material respects with all Laws and Governmental
Authorizations applicable to it and to the conduct of the Business as presently
conducted by it;
(g) the Seller shall not, and the Seller Parent shall not cause the Seller
to, sell, transfer, pledge, dispose of, or otherwise encumber, any of the
Shares;
(h) the Company shall not sell, transfer, pledge, dispose of or otherwise
encumber, any of the Subsidiary Interests;
(i) except as would not adversely affect the Purchaser or any of its
Affiliates, including the Company and its Subsidiaries, neither the Company nor
the Subsidiaries shall make or change any Tax election, change an annual
accounting period, adopt or change any accounting method with respect to Taxes,
file any amended Tax Return, enter into any closing agreement, settle or
compromise any proceeding with respect to any Tax claim or assessment relating
to the Company or any of the Subsidiaries, surrender any right to claim a refund
of Taxes, consent to any extension or waiver of the limitation period applicable
to any Tax claim or assessment relating to the Company or any of the
Subsidiaries, take any other similar action relating to the filing of any Tax
Return or the payment of any Tax, shall settle and/or compromise any Tax
liability, prepare any Tax Returns inconsistent with past practice, incur any
liability for Taxes other than in the ordinary course, file an amended Tax
Return or a claim for refund of Taxes, make any payment pursuant to any tax
sharing, allocation or similar agreement or enter into any tax sharing,
allocation or similar agreement that would create or give rise to any obligation
or liability of any of the Company and the Subsidiaries that is not satisfied or
otherwise discharged in full prior to the Closing;
(j) neither the Company nor any of the Subsidiaries shall make any capital
expenditures or commitments other than as set forth in the most recent budget
disclosed to the Purchaser Parent prior to the date hereof and attached hereto
as SCHEDULE 5.01(J);
(k) neither the Company nor any of the Subsidiaries shall write-off as
uncollectible any notes or accounts receivable, except in the ordinary course of
the Business consistent with
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past practice and which (1) would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect with respect to the
Company or (2) is required by GAAP;
(l) none of the Seller Parent, the Seller, or the Company or any of the
Subsidiaries shall knowingly take any action that would cause the Seller
Parent's or the Seller's representations and warranties to be inaccurate or
untrue in any material respect as of the Closing Date;
(m) neither the Company nor any of the Subsidiaries shall make any loans,
advances or capital contributions to, or investments in, any other Person other
than loans, advances or capital contributions or investments by the Company or
any of the Subsidiaries to or in any wholly-owned Subsidiary, or tuition
advances, draws against sales commissions, and advances for relocation expenses
and business expenses in the ordinary course of the Business consistent with
past practices;
(n) neither the Company nor any of the Subsidiaries shall enter into or
consummate any transactions with Affiliates, except in the ordinary course of
the Business consistent with past practices;
(o) neither the Company nor any of the Subsidiaries shall enter into any
hedging or derivative Contract; and
(p) none of the Seller Parent, the Seller, the Company or any Subsidiary
shall enter into any contract, agreement, or commitment with respect to any of
the matters set forth in this Section 5.01(b)-(e) and (g)-(o).
SECTION 5.02 Access to Information; Cooperation
(a) The Seller shall cause the Company, the Subsidiaries and their
respective officers, directors, representatives, agents and Business Employees
to afford, from the date of this Agreement to the Closing Date, the officers,
employees, accountants, attorneys and other representatives and agents of the
Purchaser and Purchaser Parent reasonable access, upon reasonable prior written
notice, during regular business hours, to the premises and designated officers,
employees and agents, properties, books, records and work papers of the Company
and the Subsidiaries (including any Tax Returns or other Tax-related information
pertaining to the Company and the Subsidiaries), and shall furnish the Purchaser
and the Purchaser Parent such financial, operating and other information and
data, as the Purchaser, through its officers, accountants, attorneys, and other
employees or agents, may reasonably request, all subject to any confidentiality
provisions set forth in any contracts or agreements by which the Company or a
Subsidiary is bound, and pursuant to Section 5.14(a).
(b) No investigation or communication pursuant to this Section 5.02 shall
affect or add to any representations or warranties of the parties or the
conditions to the obligations of the parties to consummate the Transactions.
(c) Without limiting the generality of Section 5.02(a), prior to the
Closing, each of the Seller Parent and the Seller shall use, and shall cause the
Company and the Subsidiaries to use, commercially reasonable efforts to cause
the senior management personnel and advisors,
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including legal and accounting advisors and auditors, of the Seller Parent,
Seller and the Company to provide such cooperation as is reasonably requested by
the senior management personnel of the Purchaser Parent in connection with the
financing by Purchaser Parent of the transactions provided for in this Agreement
and the due diligence review of the Company and the Subsidiaries by Purchaser
Parent's financing sources, including commercially reasonable efforts to cause
senior management personnel of Purchaser Parent, Purchaser and the Company to be
available at reasonable times, at reasonable locations in the New York
metropolitan area, and on reasonable prior notice to meet with prospective
lenders in presentations, meetings, and due diligence sessions with respect to
Seller Parent's financing of said transactions, the preparation of documents for
said financing and the preparation of related marketing material, disclosure
documents, projections, legal opinions and consents of auditors. The Purchaser
Parent shall pay all of the Seller Parent's reasonable out-of-pocket expenses
incurred in connection therewith.
(d) Prior to the Closing, each of the Seller Parent and the Seller shall
provide, and shall cause the Company and the Subsidiaries to, and shall use its
commercially reasonable efforts to cause the respective officers, employees,
representatives and advisors of the Seller Parent, the Seller, the Company and
the Subsidiaries to, provide such cooperation as is reasonably requested by the
Company's nationally recognized independent accounting firm in connection with
the audit contemplated by Section 7.03(i).
(e) The Seller shall use commercially reasonable efforts after the Closing
Date to cause the auditors referred to in Section 7.03(i) to consent to the
inclusion of the audited financial statements referred to in Section 7.03(i) in
any registration statement filed by the Purchaser Parent or any of its
subsidiaries (the "Issuer") with the Securities and Exchange Commission (the
"SEC"), and the Purchaser Parent shall pay all Seller Parent's reasonable
out-of-pocket expenses incurred in connection therewith. The Seller Parent shall
use commercially reasonable efforts to cause the aforesaid auditors to cooperate
with the Issuer in resolving any comments on the audited financial statements
referred to in Section 7.03(i) by the staff of the SEC, and the Purchaser Parent
shall pay all of the Seller Parent's reasonable out-of-pocket expenses incurred
in connection therewith.
(f) For a period of at least seven (7) years after the Closing Date, the
Purchaser shall either (i) retain the books and records of the Company and the
Subsidiaries and shall provide the Seller and its representatives and Affiliates
with reasonable access to such books and records during normal business hours
upon reasonable prior written notice for any reasonable business purpose
specified in such written notice or (ii) shall afford the Seller a reasonable
opportunity a the Seller's sole expense to take possession of such books and
records.
(g) Prior to the Closing, the Seller Parent shall, at its own expense,
cause the removal of all liens relating to Taxes on the stock or other equity
interests, as the case may be, of the Company or any of the Subsidiaries, if any
such liens are then outstanding.
SECTION 5.03 Permitted Actions. Notwithstanding anything to the contrary in
Section 5.01 or any other provision of this Agreement, Subsidiaries may
distribute to the Company, and the Company may distribute to the Seller, by
dividend or otherwise, and the Seller may withdraw from the Company, cash and
cash equivalents of the Company.
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SECTION 5.04 Consents and Approvals; Assignment; Transfer of Intellectual
Property (a) The Seller shall use commercially reasonable efforts to obtain, or
to cause the Company or a Subsidiary to obtain, the consents or approvals
required under Required Consent Contracts, and the Purchaser shall cooperate
with the Seller and the Company and the Subsidiaries in connection with
obtaining such consents and approvals. If the Seller or the Company or a
Subsidiary is unable to obtain the consent or approval required under any
Required Consent Contract before the Closing, or if any such consent or approval
required under a Required Consent Contract cannot be obtained without
unreasonable effort or expense by the Seller or the Company, the parties shall:
(a) arrange an equitable assignment by the Company or a Subsidiary to the
Purchaser of the rights and interest of the Company or such Subsidiary in and
to, and obligations under, such Required Consent Contract; (b) cooperate in any
reasonable arrangement designed to provide, after the Closing, the Company or a
Subsidiary or the Purchaser the benefits under any such Required Consent
Contract, and the Purchaser shall pay, perform and discharge fully all of the
obligation of the Company or a Subsidiary under each such Required Consent
Contract; and (c) use commercially reasonable efforts to cooperate to obtain the
consent or approval required under such Required Consent Contract as promptly as
reasonably possible after the Closing Date, except that the foregoing shall in
no event require the Seller, the Company or a Subsidiary to incur any
unreasonable expense to obtain any such consent or approval. If and when any
such consents or approvals shall be obtained, then the Seller shall promptly
assign its rights and obligations, if any, under the applicable Required Consent
Contract to the Purchaser without payment of consideration and the Purchaser
shall, without the payment of any consideration therefor, assume such rights and
obligations. The parties shall execute such instruments as may be necessary to
evidence such assignment and assumption. Purchaser shall indemnify and hold
harmless the Seller and its Affiliates from and against any and all liabilities,
losses, costs or expenses (including reasonable attorneys fees) incurred by any
of them from and after the Closing under, with respect to or in connection with
any breach by Purchaser of a Contract (x) assigned to the Purchaser or (y) the
performance of Seller's obligations under which the Purchaser has acquired and
assumed control of pursuant to the alternative arrangement referred to in the
second sentence of this subsection (a), and in each case for which the Seller
has not been released of its obligations thereunder by the counterparty to the
Contract, provided, that in all events, Seller shall remain responsible for any
breach or alleged breach of any assignment provisions of such Contract.
(b) On or prior to the Closing Date, each of the Seller Parent and the
Seller shall take all actions required to assign each Affiliate Contract set
forth on SCHEDULE 5.04(B) to the entity identified on SCHEDULE 5.04(B) (or such
other entity as the Purchaser reasonably requests). Such assignment shall be by
novation (i.e., non-recourse to the assignor) if and to the extent agreed by the
contractual counterparty. All costs of such transfer shall be borne by the
Seller. In the event that any Affiliate Contract set forth on SCHEDULE 5.04(B)
cannot be assigned on or prior to the Closing Date because such assignment
requires the consent of the counterparty and such consent is not timely
received, (i) the Seller Parent and the Seller shall, to the maximum extent
consistent with the terms of such Affiliate Contract, make available to the
Company and the Subsidiaries the benefits of such Affiliate Contract, (ii) the
Company and the Subsidiaries, to the extent (but only to the extent) of benefits
actually received, shall reimburse the Seller Parent or the Seller, as
applicable, for any payments required to be made thereunder, (iii) each of the
Seller Parent, the Seller and the Purchaser shall continue to cooperate to
facilitate the assignment of such Affiliate Contract as promptly as practicable
thereafter, and (iv) if such Affiliate Contract is a customer
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contract, each of the Seller Parent and the Seller shall following the Closing
continue to make all commercially reasonable efforts to facilitate the
assignment of such Affiliate Contract to the entity identified on SCHEDULE
5.04(B) (or such other entity as the Purchaser reasonably requests) and to
mitigate any adverse consequences to the Company and the Subsidiaries that arise
as a result of the delay in such assignment. Purchaser shall indemnify and hold
harmless the Seller and its Affiliates from and against any and all liabilities,
losses, costs or expenses (including reasonable attorneys fees) incurred by any
of them from and after the Closing under, with respect to or in connection with
any breach by Purchaser of an Affiliate Contract (x) assigned to the Purchaser
or (y) the performance of Seller's Affiliate's obligations under which the
Purchaser has acquired and assumed control of pursuant to the alternative
arrangement referred to in the fourth sentence of this subsection (b), and in
each case for which the Affiliate of Seller party to such Contract has not been
released of its obligations thereunder by the counterparty to the Contract,
provided, that in all events, Seller's Affiliate shall remain responsible for
any breach or alleged breach of any assignment provisions of such Contract.
(c) Prior to the Closing, each of the Seller Parent and the Seller, as
applicable, shall execute or cause to be executed all instruments necessary to
transfer ownership of all Intellectual Property set forth on SCHEDULE 3.10(A) to
the Company, and shall file and record such instruments, along with all
instruments necessary to establish proper chain of title for such Intellectual
Property, with the appropriate intellectual property offices or Governmental
Authorities.
(d) On or prior to the Closing Date, each of the Seller Parent and the
Seller shall use commercially reasonable efforts to cause each of the agreements
set forth on SCHEDULE 5.04(D) to be split into two separate agreements (whether
by entering into two new agreements for each agreement set forth on SCHEDULE
5.04(D), amending each existing agreement set forth on SCHEDULE 5.04(D) for the
benefit of one party and entering into new agreements for the benefit of the
other party, or otherwise), one for the benefit of the Company and the
Subsidiaries and one for the benefit of the Seller Parent and its other
Affiliates, such that the Company and the Subsidiaries, on the one hand, and the
Seller Parent and its other Affiliates, on the other hand, continue to receive
services under such agreements in a manner consistent with the use of services
under such agreements for periods prior to the split. It is the intent of the
parties hereto that the fees payable pursuant to the separate agreements as
provided above shall equitably reflect the split of services and shall be the
same in all material respects as the fees under the existing agreements for the
same services, and such fees, the terms and conditions of the split, and the
terms and conditions of such separate agreements shall in any event be subject
to approval by the Purchaser with respect to its separate agreements and the
Seller Parent with respect to its separate agreements, which approvals will not
be unreasonably withheld or delayed. Any credits available under the existing
agreements set forth on SCHEDULE 5.04(D) that pertain to periods after the
Closing shall be equitably split between the separate agreements, on terms and
conditions reasonably acceptable to the Purchaser and the Seller Parent. The
parties hereto shall each bear their own costs and expenses with respect to the
foregoing. The Purchaser shall use commercially reasonable efforts to cooperate
with each of the Seller Parent and the Seller to cause each of the agreements
set forth on SCHEDULE 5.04(d) to be split into two separate agreements as
described above. In the event that notwithstanding commercially reasonable
efforts, the Seller Parent and the Seller are unable to obtain two separate
agreements for each agreement as contemplated by this Section 5.04(d) prior to
Closing, then the Seller Parent and
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the Seller shall instead assign each of the agreements set forth on SCHEDULE
5.04(D) to the Company, and the Transition Services Agreement shall thereafter
apply to the services procured under each such agreement.
SECTION 5.05 Approvals from Governmental Authorities. Except as
contemplated by Section 5.06, each of the parties hereto shall use its
commercially reasonable efforts (with the reasonable assistance of the other
party to the extent reasonably required) promptly make all required
notifications to, and obtain required approvals of, Governmental Authorities
with respect to the consummation of transactions contemplated by this Agreement.
SECTION 5.06 HSR Act Filing.
(a) As soon as practicable after the date of this Agreement, and in no
event later than ten (10) Business Days following the execution hereof, the
Purchaser and the Seller shall each file a Xxxx-Xxxxx-Xxxxxx Notification and
Report Form with the United States Federal Trade Commission and the Antitrust
Division of the United States Department of Justice under the HSR Act. All
filing fees payable with respect to such filing by the Purchaser and the Seller
shall be paid by the Purchaser. The Purchaser and the Seller agree to keep the
other promptly apprised of the status of matters relating to completion of the
Closing and the pre-acquisition notification review process. Notwithstanding the
foregoing, nothing set forth in this Agreement shall obligate any party hereto
to litigate any action or inaction by any Governmental Authority under the HSR
Act.
(b) The Purchaser and the Seller shall, in connection with the efforts
referenced in Section 5.06(a) to obtain the requisite Governmental
Authorizations for the Closing under the HSR Act: (i) use commercially
reasonable efforts to obtain prompt termination of any waiting period under the
HSR Act (including any extension of the initial thirty (30) day waiting period
with respect to the transactions contemplated by this Agreement); (ii) cooperate
in all reasonable respects with each other in connection with any filing or
submission and in connection with any investigation or other inquiry; (iii) keep
the other parties promptly informed in all material respects of any material
communication received by such party from, or given by such party to, any
Governmental Authority regarding any of the Transactions; and (iv) permit the
other parties to review any material communication given by it to, and consult
with each other in advance of any meeting or conference with, any Governmental
Authority in connection therewith, and, to the extent permitted by such
Governmental Authority, give the other parties the opportunity to attend and
participate in such meetings and conferences.
(c) Notwithstanding anything to the contrary in this Agreement, nothing set
forth in this Agreement shall or shall be deemed to obligate any party hereto to
litigate or challenge any action or inaction by any Governmental Authority under
the HSR Act or any other Laws designed or intended to prohibit, restrict or
regulate actions having the purpose or effect of monopolization or restraint of
trade, or to sell or otherwise divest itself of or hold separate any asset, or
enter into any consent decree, as a condition to obtaining any consent,
approval, order or authorization of any Governmental Authority necessary or
appropriate for consummation of the Transactions.
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SECTION 5.07 Notification of Certain Matters. The Seller shall give prompt
notice to the Purchaser Parent, and the Purchaser shall give prompt notice to
the Seller Parent, of (a) the occurrence, or failure to occur, of any event that
such party reasonably believes would be likely to cause any of its
representations or warranties contained in this Agreement to be untrue or
inaccurate in any material respect at any time from the date of this Agreement
to the Closing Date, (b) any material failure of the Seller Parent, Seller, the
Purchaser Parent or the Purchaser, as the case may be, or any officer, director,
employee, or agent thereof, to comply with or satisfy any covenant or agreement
to be complied with or satisfied by it under this Agreement, (c) the failure of
any condition precedent to such party's obligations, (d) any notice of, or other
communication relating to, a default or event that, with notice or lapse of time
or both, would become a default under any Company Contract and (e) any notice or
other communication from any Person not a party to this Agreement alleging that
the consent of such Person is or may be required in connection with the
transactions contemplated by this Agreement; provided, however, that failure to
give such notice shall not constitute a waiver of any defense that may be
validly asserted.
SECTION 5.08 Business Employees
(a) The Purchaser shall (i) cause the Company and the Subsidiaries, as
applicable, to continue the employment, effective as of the Closing Date, of
each Business Employee employed by the Company or a Subsidiary other than the
Business Employees identified on SCHEDULE 3.11(A)-2 and SCHEDULE 5.08(A), and
(ii) offer employment, effective as of the Closing Date, to each Business
Employee identified on SCHEDULE 1.01(B) other than the Business Employees
identified on SCHEDULE 3.11(A)-2 and SCHEDULE 5.08(A). For the avoidance of
doubt, the Purchaser is not hereby obligated to employ any Transferred Employee
for any particular period of time. Any Business Employee who becomes an employee
of the Purchaser, the Company, any of the Subsidiaries or any other Affiliate of
the Purchaser as of the Closing Date shall be referred to in this Agreement as a
"TRANSFERRED EMPLOYEE". Each Business Employee identified on SCHEDULE 3.11(A)-2
shall become a Transferred Employee only on the date that he or she returns to
active employment by joining the Purchaser's workforce, which shall occur no
later than the expiration of the approved period of leave or the end of their
illness or disability.
(b) The Purchaser shall cause the Company and the Subsidiaries, as
applicable, to recognize, honor, and assume the liability for each Transferred
Employee's accrued but unused paid time off for vacation, sickness and permitted
personal days, as accrued as of the Closing.
(c) Effective as of the Closing Date, the Transferred Employees shall cease
participation in all of the Employee Benefit Plans and, subject to the
Purchaser's standard policies, including eligibility requirements, commence
participation in plans sponsored or established by the Purchaser for similarly
situated employees, including health, life insurance, and disability plans (the
"PURCHASER PLANS"). The Purchaser shall recognize and give credit for all
service by each Transferred Employee with the Company or any predecessor or
Affiliate of the Company for purposes of the Purchaser Plans and the policies of
the Purchaser related to flexible time off including vacation, sick leave, and
personal or family leave, to the extent such credit was recognized and given
under the Employee Benefit Plans immediately prior to the Closing except to the
extent such credit would result in duplication of benefits. The Purchaser shall
provide or cause the Company or a Subsidiary to provide to each Transferred
Employee
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whose employment is involuntarily terminated within thirty (30) days after the
Closing Date severance benefits that are substantially equivalent to those
offered to such Transferred Employees immediately prior to the Closing, giving
effect to each such Transferred Employee's past service with the Company or any
predecessor or Affiliate of the Company. Those of the Purchaser Plans that are
health benefit plans shall, with respect to any Transferred Employee or any
dependents of such Transferred Employee, waive any limitations or restrictions
on participation under any such Purchaser Plan for reason of any pre-existing
condition limitation or waiting period in any such Purchaser Plan, to the extent
such limitations or restrictions were waived under the Employee Benefit Plans
immediately prior to the Closing. The Purchaser shall use its commercially
reasonable efforts to accommodate the direct rollover of eligible rollover
distributions made to any Transferred Employees, from any Employee Benefit Plans
to the applicable Purchaser Plans, subject to administrative feasibility.
The Seller and the Purchaser acknowledge and agree that all provisions
contained herein with respect to employees are included for the sole benefit of
the Seller and the Purchaser and shall not create any right (i) in any other
Person, including, without limitation, any employees, former employees, any
participant in any Employee Benefit Plans or any beneficiary thereof or (ii) to
continued employment with the Purchaser, the Company or any of the Subsidiaries.
SECTION 5.09 Non-Solicitation.
(a) For a period of two years after the Closing Date, neither Seller nor
any of its Affiliates shall, directly or indirectly, on its own behalf or on
behalf of any other Person, solicit the employment of or hire any Transferred
Employee, except that nothing in this Section 5.09 shall prohibit any Seller or
any of its Affiliates from hiring or soliciting the employment of any Person (i)
who responds to a general solicitation not directed solely at Transferred
Employees, or (ii) whose employment is terminated by the Purchaser or an
Affiliate of the Purchaser.
(b) The Seller acknowledges that the remedy at law for breach of the
provisions of this Section 5.09 shall be inadequate and that, in addition to any
other remedy the Purchaser may have, it shall be entitled to seek an injunction
restraining any breach or threatened breach, without any bond or other security
being required and without the necessity of showing actual damages. If any court
construes the covenant in this Section 5.09, or any part of this Section 5.09,
to be unenforceable in any respect, the court may reduce the duration or area to
the extent necessary so that the provision is enforceable, and the provision, as
reduced, shall then be enforced.
SECTION 5.10 Intercompany Balances; Termination of Affiliate Agreements.
Before the Closing, all of the outstanding Intercompany Balances shall be
repaid, canceled or otherwise settled. At least two (2) Business Days prior to
the Closing, the Seller shall prepare and deliver to the Purchaser a certificate
signed by the chief executive officer of the Seller setting out the calculation
of all such Intercompany Balances based upon the latest available financial
information as of such date. All Contracts between the Company or any of the
Subsidiaries, on the one hand, and the Seller or its other Affiliates, on the
other hand, other than agreements contemplated by this Agreement and agreements
set forth on SCHEDULE 5.10, shall be terminated as of the Closing, and all
obligations and liabilities thereunder shall have been satisfied.
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SECTION 5.11 Release of Guarantees. Except as provided in Section 7.03(j),
the Purchaser shall use commercially reasonable efforts following the Closing to
cause any guarantees of the Seller or any of its Affiliates of the obligations
under any Contracts and Property Leases to which the Company or any Subsidiary
is a party or otherwise relating to the Business to be terminated and released,
and the Purchaser shall indemnify and hold harmless the Seller and its
Affiliates from and against any and all liabilities, losses, costs or expenses
(including reasonable attorneys fees) incurred by any of them from and after the
Closing under, with respect to or in connection with any such guarantees or the
Contracts to which such guarantees relate; provided, however, that nothing in
this Section 5.11 shall require the Purchaser Parent or the Purchaser to
guarantee any Indebtedness or make any payments or amend any such Contracts or
Property Leases in any material respect.
SECTION 5.12 Resignations. The Seller shall deliver to the Purchaser the
resignations, effective as of the Closing Date, of the directors and officers of
the Company, as applicable, at least one day before the Closing Date.
SECTION 5.13 Schedules
(a) The parties hereto shall promptly revise or supplement their respective
Schedules (other than Schedules in, or to the extent Schedules are incorporated
by reference into, Articles I (excluding SCHEDULE 1.01(B)), II, V, VI and VII,
except in each case (other than Schedule 7.03(f)) as a result of a revision or
supplement to which the last sentence of this Section 5.13(a) is applicable)
upon the occurrence of any event or change in condition that would render any
Schedule incorrect as of the Closing Date to reflect information learned of or
that came into existence after the date of this Agreement and that would have
been required to be disclosed on one or more Schedules if such information was
in existence or known on the date of this Agreement; provided, however, that, in
the event that a party revises or supplements its Schedules pursuant to this
Section 5.13(a) (other than updating Schedule 3.11(a)-2 as required by Section
3.11(a)) and absent such revision or supplement a condition to the obligation of
the other party to close would not be satisfied and, if the last sentence of
this Section 5.13(a) is not applicable, there would be a Material Adverse Effect
with respect to the non-terminating party, for a period of fifteen (15) Business
Days following such revision, the other party shall be entitled to terminate
this Agreement pursuant to Section 9.01(g), and, if such other party does not
elect to terminate this Agreement during such fifteen-Business Day period
pursuant to Section 9.01(g), then such Schedules, as so revised or supplemented,
shall be used for purposes of determining the satisfaction of the conditions set
forth in Sections 7.02 and 7.03(a), (b), (c) and (d). Notwithstanding anything
to the contrary in the foregoing, no revision or supplement to any Schedule
permitted by this Section 5.13(a) shall eliminate or decrease the
indemnification obligations of any party hereto with respect thereto pursuant to
Article VIII; PROVIDED, HOWEVER, THAT (I) SOLELY TO THE EXTENT THAT ANY REVISION
OR SUPPLEMENT TO SCHEDULE 3.17(A), SCHEDULE 3.17(B) OR SCHEDULE 3.18 DISCLOSES
(A) THE NON-RENEWAL BY THE COUNTERPARTY TO A CONTRACT WITH THE SELLER, THE
COMPANY OR ANY SUBSIDIARY OF SUCH CONTRACT THAT EXPIRED IN ACCORDANCE WITH ITS
TERMS AFTER THE DATE HEREOF, (B) A TERMINATION BY THE COUNTERPARTY TO A CONTRACT
WITH THE SELLER, THE COMPANY OR ANY SUBSIDIARY OF SUCH CONTRACT AFTER THE DATE
HEREOF IN ACCORDANCE WITH ITS TERMS OR (C) THE LOSS OF ANY CUSTOMER OR VENDOR OF
THE BUSINESS AFTER THE DATE HEREOF, IN EACH CASE SOLELY FOR REASONS OTHER THAN A
MATERIAL DEFAULT UNDER OR MATERIAL BREACH OF THE PROVISIONS OF ANY CONTRACT BY
SELLER, THE COMPANY OR ANY
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SUBSIDIARY AND (II) SOLELY TO THE EXTENT ANY REVISION OR SUPPLEMENT TO SCHEDULE
1.01(B) DISCLOSES THE TERMINATION OF EMPLOYMENT WITH THE BUSINESS, WHETHER
VOLUNTARY OR INVOLUNTARY, OF ANY BUSINESS EMPLOYEE AFTER THE DATE HEREOF, SUCH
REVISION OR SUPPLEMENT SHALL BE INCLUDED IN SUCH SCHEDULE (AND NO OTHER) FOR THE
PURPOSES OF SELLER'S INDEMNIFICATION OBLIGATION UNDER ARTICLE VIII.
(b) Matters reflected on the Schedules are not necessarily limited to
matters required by this Agreement to be reflected on the Schedules and the
inclusion of such matters shall not be deemed an admission that such matters (or
additional matters) were required to be reflected in the applicable Schedules.
The disclosure of any matter, event, condition, or state of facts in any
Schedule delivered on the date hereof shall be deemed to be a disclosure for all
representations, warranties, and Schedules calling for such disclosure of
matters, events, conditions or states of facts if it is reasonably apparent on
the face of such disclosure that such disclosure is applicable thereto, but
shall expressly not be deemed to constitute an admission by any party, or to
otherwise imply, that any such matter is material for the purposes of this
Agreement.
SECTION 5.14 Confidentiality. Each party agrees that the Confidentiality
Agreement is hereby incorporated by reference in this Agreement and made a part
hereof.
SECTION 5.15 Non-Competition; Non-Interference
(a) For a period of 36 months after the Closing, the Seller Parent shall
not, and shall cause each of its Affiliates not to (i) directly or indirectly,
own, manage, operate, control, be employed by or participate in the ownership,
management, operation or control of, or be connected in any manner with, any
business of the type and character, or otherwise compete, with the Business, as
conducted by the Company and the Subsidiaries as of the Closing Date
("COMPETITIVE ACTIVITIES"); (ii) persuade or attempt to persuade any potential
customer or client to which the Company or any of the Subsidiaries has made a
presentation, or with which the Company or any of the Subsidiaries has had
discussions, not to hire the Company or such Subsidiary, or to hire another
company; or (iii) solicit for the Seller Parent or any Person other than the
Company or any of the Subsidiaries the business of any Person with respect to
the Competitive Activities which is a customer or client of the Company or any
of the Subsidiaries, or was its customer or client within two (2) years prior to
the date of this Agreement or take any action to disparage the Company or any of
the Subsidiaries or otherwise seek to interfere with the contractual
arrangements and relationships of the Company and the Subsidiaries with such
Person with respect to the Competitive Activities. Competitive Activities shall
not, and shall not be deemed to, include any activities currently engaged in by
the Seller Parent or any Affiliates of the Seller Parent (other than the Seller,
the Company and the Subsidiaries) in the ordinary course of their respective
businesses (collectively, "PERMITTED GOODS AND SERVICES"), and the Seller or any
Affiliate of the Seller may sell any Permitted Goods and Services to any Person
notwithstanding anything contained in this Agreement.
(b) Notwithstanding anything to the contrary in Section 5.15(a), Section
5.15(a) shall not be, and shall not be deemed to have been, breached as a result
of: (i) the acquisition of the Seller or any of its Affiliates by a Person that
engages in Competitive Activities, so long as the Competitive Activities do not
represent more than 10% of the revenues of such Person and its Affiliates; (ii)
the acquisition by the Seller or any of its Affiliates of any Person whose
business
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includes Competitive Activities, so long as the Competitive Activities do not
represent a material part of the business of such Person; (iii) the ownership by
Seller or any of its Affiliates of an aggregate of not more than 5% of any class
of stock of a Person engaged, directly or indirectly, in Competitive Activities;
provided, that such stock is listed on a national securities exchange or is
quoted on the National Market System of NASDAQ or (iv) the ownership by Seller
or any of its Affiliates of less than 10% in value of any instrument of
Indebtedness of a Person engaged, directly or indirectly, in Competitive
Activities.
(c) For purposes of this Section 5.15, the term "Affiliates" shall be
deemed to not include any director of the Seller (including a non-executive
Chairman of the Board) who is not an employee of the Seller or not under the
control of the Seller.
SECTION 5.16 Exclusive Dealing. During the period from the date of this
Agreement through the Closing or the earlier termination of this Agreement
pursuant to Section 9.1 hereof, neither the Seller nor the Seller Parent shall
take or permit any other Person on its behalf to take, and it shall cause the
Company not to take, any action to encourage, initiate, solicit or engage in
discussions or negotiations with, or provide any information to, any Person
(other than the Purchaser or its representatives) concerning any purchase of the
capital stock of the Company or any of the Subsidiaries, any merger involving
the Company or any of the Subsidiaries, any sale of the assets of the Business
or similar transaction involving the Company, any of the Subsidiaries or the
Business (other than assets sold in the ordinary course of the Business
consistent with prior practices). To the extent not prohibited by a legally
binding obligation of confidentiality, the Seller Parent, the Seller and/or the
Company shall notify the Purchaser as soon as practicable if any Person makes
any proposal, offer, inquiry to, or contact with, the Seller Parent, the Seller
or the Company, as the case may be, with respect to the foregoing and shall
describe in reasonable detail the identity of any such Person and the substance
and material terms of any such contact and the material terms of any such
proposal.
SECTION 5.17 Shared Assets and Services; Change of Name; Use of Marks
(a) The Purchaser acknowledges and agrees that certain assets and
administrative services as more fully described on SCHEDULE 5.17 (the "SHARED
ASSETS AND SERVICES") are provided by the Seller and certain of its Affiliates
to the Company. The Purchaser further acknowledges and agrees that such Shared
Assets and Services will not be provided to the Company from and after the
Closing.
(b) No later than thirty (30) Business Days after the Closing, the
Purchaser will file with the Secretary of State of the State of Delaware a
document causing the change of the corporate name of the Company and each
Subsidiary to a name which does not use the words "BISYS," "BIS" or any words
confusingly similar thereto.
(c) For a period of 180 days following the Closing, the Company and the
Subsidiaries shall have the non-exclusive, personal, limited, and
non-transferable right to use the service xxxx "BISYS" and any trademark,
service xxxx, and logo containing the name "BISYS" owned or licensed by the
Company or a Subsidiary or which the Company or a Subsidiary has the right to
use (the "BISYS MARKS") as shall be reasonably necessary to conduct the Business
in a manner consistent with and not adverse to the use of the BISYS Marks by the
Seller Parent and its
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Affiliates, including, the Seller (the "PHASE-OUT PERIOD"). During the Phase-Out
Period (i) the Purchaser agrees (x) not to use the BISYS Marks to advertise,
market or promote any products or services not included as part of the Business
as of the Closing Date and (y) not to undertake any advertising, marketing or
promotional activities not in existence or initiated as of the Closing Date nor
any advertising, marketing or promotional campaigns using the BISYS Marks, and
(ii) the Purchaser shall not knowingly use the BISYS Marks in any manner that
disparages the business and reputation of the Seller Parent and its Affiliates
or that reflects adversely upon the Seller Parent and its Affiliates. Further,
during the Phase-Out Period, (i) the Purchaser shall use commercially reasonable
efforts to remove as soon as practicable after the Closing the BISYS Marks from
all signs, purchase orders, invoices, labels, letterheads, Internet websites and
other items and materials visible to third parties, and (ii) all Internet
websites owned by the Company or a Subsidiary and either containing a BISYS Xxxx
in the domain name or displaying a BISYS Xxxx will redirect Internet users or,
in the Purchaser's sole discretion provide a link, to a website of Purchaser's
designation that does not use any BISYS Marks. Following the Phase-Out Period,
the Purchaser shall cease all use of the BISYS Marks, provided that the
Purchaser may thereafter use the BISYS Marks solely for informational or
non-trademark purposes and as required by any applicable Laws.
SECTION 5.18 Accounts Receivable and Accounts Payable. The Seller and the
Purchaser agree that, as between themselves, the benefit of all accounts
receivable and other receivables of the Business, the Company and the
Subsidiaries, and all accounts payable and other trade payables of the Business,
the Company and the Subsidiaries, in each case in existence as of the Closing
but whether relating to or arising from the period prior to, on or subsequent to
the Closing, shall be for the account of and for the benefit and burden of the
Purchaser. To the extent that the Seller or any of its Affiliates receive any
funds to which the Company or any of the Subsidiaries is entitled pursuant to
the preceding sentence, the Seller shall, or shall cause its Affiliates to,
promptly deliver such funds to an account designated in writing by the
Purchaser. If the Seller or its Affiliates pay any accounts/trade payables of
the Company or any of the Subsidiaries after the Closing Date, the Purchaser
Parent and the Purchaser shall promptly cause the Company or the relevant
Subsidiary to reimburse the Seller for such payment.
SECTION 5.19 Interim Financial Statements. The Seller Parent shall deliver
to the Purchaser Parent true and complete copies of (a) (i) an unaudited
consolidated balance sheet of the Company and the Subsidiaries as of the end of
each quarterly period ending (x) after June 30, 2005 and (y) at least forty-five
(45) days prior to the Closing Date and (ii) an unaudited consolidated statement
of income of the Company and the Subsidiaries for each quarterly period ending
(x) after June 30, 2005 and (y) at least forty-five (45) days prior to the
Closing Date and (b) (i) an unaudited consolidated balance sheet of the Company
and the Subsidiaries as of the end of each month ending (x) after June 30, 2005
and (y) at least thirty (30) days prior to the Closing Date and (ii) an
unaudited consolidated statement of income of the Company and the Subsidiaries
for each quarterly period ending (x) after June 30, 2005 and (y) at least thirty
(30) days prior to the Closing Date; provided, however, that each such balance
sheet and statement of income shall be prepared by the Seller in accordance with
GAAP consistently applied using the same accounting principles, procedures,
policies and methods that were used to prepare the Financial Statements
(including the exclusion of period-ending adjustments and footnotes); provided,
further, that if there is any discrepancy between the accounting principles,
procedures, policies, and methods that were used to prepare the Financial
Statements and the accounting principles, procedures, policies, and methods that
were used to prepare the Restatement Adjustment Certificate, the accounting
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principles, procedures, policies, and methods that were used to prepare the
Restatement Adjustment Certificate shall be used to prepared each such balance
sheet and each such statement of income with respect to such discrepancy;
provided, further, that the Seller acknowledges and agrees that the Purchaser
shall be permitted to provide copies of such balance sheets and statements of
income to each of Wachovia Bank, National Association and Wachovia Capital
Markets, LLC in connection with the Wachovia Commitment.
SECTION 5.20 Transaction Related Expenses. The Seller Parent, the Seller
and their respective subsidiaries (other than the Company and the Subsidiaries),
shall pay all Transaction Related Expenses and the Severance Benefits Expenses
payable to the Top Managers.
SECTION 5.21 Section 404 Documentation. The Seller Parent shall make
available to the Purchaser at Closing true and complete copies of all
certifications and attestations of the Seller Parent made by the Seller Parent
prior to Closing pursuant to Section 404 of the Xxxxxxxx-Xxxxx Act of 2002.
Prior to Closing, the Seller Parent shall make available to the Purchaser true
and complete copies of all documentation representing the Seller Parent's, the
Seller's, the Company's and the Subsidiaries' efforts to prepare to comply with
Section 404 of the Xxxxxxxx-Xxxxx Act of 2002 from the date hereof and through
Closing.
SECTION 5.22 Agreement with BISYS Retirement Services, Inc. . The Seller
shall, no later than the Closing Date, cause the Company to enter into a written
agreement with BISYS Retirement Services, Inc. evidencing the Retirement
Arrangement described in item (ix) set forth on SCHEDULE 3.17(A), which
agreement shall be in form and substance reasonably satisfactory to the
Purchaser.
ARTICLE VI
TAX MATTERS
SECTION 6.01 Responsibility for Taxes
(a) The Seller shall be responsible for: (i) all Taxes imposed on the
Seller (including any Taxes determined on a consolidated, combined, or unitary
basis with respect to an Affiliated Group that includes or included the Company
and the Subsidiaries and Taxes resulting from the Company and the Subsidiaries
ceasing to be a member of the Affiliated Group of which the Seller is a member)
for any taxable year or period that ends on or before the Closing Date; (ii) all
Taxes imposed on the Seller or the Company and the Subsidiaries, or for which
the Seller or the Company and the Subsidiaries may otherwise be liable,
including any and all liability as a result of Treasury Regulation Section
1.1502-6 (and any similar provision under state, local or foreign Tax law) and
any payments to be made after the Closing Date under any Tax sharing, Tax
indemnity, Tax allocation or similar contracts (whether or not written) to which
the Company or any of the Subsidiaries was obligated, or was a party, on or
prior to the Closing Date, for any taxable year or period that ends on or before
the Closing Date; (iii) the portion of all Taxes imposed on the Seller or the
Company and the Subsidiaries, or for which the Seller or the Company or any of
the Subsidiaries may otherwise be liable, for any taxable year or period that
begins before and ends after the Closing Date (the "STRADDLE PERIOD"), to the
extent that such
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Taxes are attributable to the operations of the Company and the Subsidiaries for
the year or period ending on the Closing Date as provided in Section 6.01(d);
(iv) any loss, liability, claim, damage or expense attributable to any breach of
(A) any representation or warranty contained in Section 3.15 (relating to Taxes)
and for determination of liability under this clause (iv), matters listed on
SCHEDULE 3.15 shall be taken into account in determining whether or not a breach
of representation has occurred or (B) any covenant set forth in Section 5.01(j);
(v) all liability for Taxes arising (directly or indirectly) as a result of the
sale of the Shares or the other transactions contemplated hereby (including,
without limitation, any Taxes arising as a result of the recognition by Seller,
Company or any of the Subsidiaries of any "deferred intercompany gain" or
"excess loss account"); (vi) all liability for Taxes resulting from the Section
338(h)(10) Election (defined below) (or any comparable elections under state or
local Tax law) contemplated by Section 6.03; and (vii) all liability for
reasonable costs and expenses (including reasonable attorneys' fees and
disbursements) incurred by Purchaser or any of its Affiliates in connection with
any action, suit, proceeding, demand, assessment or judgment incident to any of
the matters indemnified against in this Section 6.01; provided, however, that
the Seller shall not be responsible or liable for any Taxes which have been
accrued or reserved for on the Closing Date Balance Sheet (excluding any reserve
for deferred Taxes established to reflect timing differences between book and
Tax income) and have been taken into account in determining the Purchase Price
adjustments pursuant to Section 2.03 of this Agreement.
(b) The Purchaser shall be responsible for (without any right to be
reimbursed by the Seller): (i) all Taxes imposed on the Purchaser or the Company
or the Subsidiaries, or for which the Purchaser or the Company or the
Subsidiaries may otherwise be liable, for any taxable year or period that begins
after the Closing Date; and (ii) the portion of all Taxes imposed on the
Purchaser or the Company or the Subsidiaries, or for which the Purchaser or the
Company or the Subsidiaries may otherwise be liable, for the Straddle Period, to
the extent that such Taxes are attributable to the year or period beginning
after the Closing Date as provided in Section 6.01(d).
(c) Each of the Purchaser, on the one hand, and the Seller and the Company,
on the other hand, shall each be responsible for one-half (i) any and all stock
transfer, stamp, or similar Taxes payable in connection with the consummation of
the Transactions, and (ii) any and all real property transfer, document, and
stamp, bulk sale, or similar Taxes resulting from the consummation of the
Transactions.
(d) For purposes of Section 6.01(a) and Section 6.01(b), whenever it is
necessary to determine the responsibility for Taxes of the Seller or the Company
or any Subsidiary in respect of the operations of the Company and the
Subsidiaries for the Straddle Period, the determination of the Taxes in respect
of the operations of the Company and the Subsidiaries for the portion of the
taxable year or period ending on, and the portion of the taxable year or period
beginning after, the Closing Date shall be determined: (i) in the case of Taxes
that are either (x) based upon or related to income or receipts, or (y) imposed
in connection with any sale or other transfer or assignment of property, by
assuming that the Seller or the Company and the Subsidiaries had a taxable year
or period that ended at the close of the Closing Date and closing the books of
the Seller or the Company and the Subsidiaries as of such date, except that
exemptions, allowances or deductions that are calculated on an annual basis,
such as the deduction for depreciation, shall be apportioned on a time basis;
and, (ii) in the case of Taxes not described in subparagraph (i) that are
imposed on a periodic basis and measured by the level of any item, deemed to be
the
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amount of such Taxes (including any minimum) for the entire period (or, in the
case of such Taxes determined on an arrears basis, the amount of such Taxes for
the immediately preceding period) multiplied by a fraction the numerator of
which is the number of calendar days in the period ending on the Closing Date
and the denominator of which is the number of calendar days in the entire
period.
(e) The Purchaser, the Seller and the Company shall each cooperate, as and
to the extent reasonably requested by another party in connection with the
preparation and filing of any Tax Returns. Such cooperation shall include the
retention and provision of records and information which are reasonably relevant
to any such Tax Returns.
(f) If the Seller is liable pursuant to this Section 6.01 for any Taxes due
and to be paid by the Purchaser, the Seller shall pay to the Purchaser, or if
the Purchaser is liable pursuant to this Section 6.01 for any Taxes due and to
be paid by the Seller or any of its Affiliates, the Purchaser shall pay to the
Seller, as applicable, on or before the date on which such Taxes are due and
payable an amount equal to the Taxes for which the Seller is liable, or the
Taxes for which the Purchaser is liable, as applicable. If the Seller or any of
its Affiliates receive any refund of Taxes to which the Purchaser is entitled
pursuant to Section 6.04, the Seller shall pay to the Purchaser an amount equal
to such refund within 15 days after receipt of such refund by the Seller or its
any of its Affiliates. If the Purchaser receives any refund of Taxes to which
the Seller is entitled pursuant to Section 6.04, the Purchaser shall pay to the
Seller an amount equal to such refund within 15 days after receipt of such
refund by the Purchaser.
(g) The participation of the Company and any Subsidiary in any Tax sharing
or allocation agreements between or among the Seller or any of their Affiliates
and the Company and the Subsidiaries shall be terminated as of the Closing Date,
and such agreements shall have no further effect with respect to the Company and
the Subsidiaries for any taxable year (whether the current year, a future year,
or a past year) and no payments that are owed by or to the Company or any
Subsidiary pursuant to such Tax sharing or allocation agreement shall be made
thereunder.
SECTION 6.02 Tax Returns and Contests
(a) The Tax Returns of the Seller and of the Company in respect of the
operations of the Company and the Subsidiaries required to be filed separately
or as part of a consolidated Tax Return of an Affiliated Group for all periods
ending on or before the Closing Date (including any Tax Return for the short
period ending on the Closing Date), that are required to be filed after the
Closing Date shall be prepared and filed by the Seller or its Affiliates at the
expense of the Seller and such Tax Returns shall be prepared in a manner
consistent with past practice; provided, however, that all such Tax Returns
shall be delivered to Buyer not less than five (5) Business Days before filing
thereof to provide Buyer with an opportunity to review such Tax Returns, and no
such Tax Return shall be filed without the prior written consent of Buyer if
such Tax Return is not consistent with Seller's past practices. To the extent
that the operations of the Company and the Subsidiaries reflected on such Tax
Returns are required to be included in the consolidated, unitary or combined Tax
Return of the Seller and its Affiliates, the Seller or its Affiliates, as the
case may be, shall cause the operations of the Company and the Subsidiaries to
be so included. The Seller shall pay all Taxes due with respect to such Tax
Returns.
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(b) The Purchaser shall prepare or cause to be prepared and file or cause
to be filed at its expense any Tax Returns of the Purchaser and the Company and
the Subsidiaries required to be filed separately or as part of a consolidated
Tax Return of an Affiliate Group for all periods that end after the Closing Date
(including the Straddle Period), which are filed after the Closing Date. Any
such Tax Returns that relate to the Straddle Period shall be prepared in a
manner consistent with the Tax Returns of the Company referred to in Section
6.02(a) filed on or before the Closing Date for prior fiscal periods. Any such
Tax Returns that relate to the Straddle Period as are required to be filed
separately or as a part of a unitary or combined Tax Return of the Purchaser and
its Affiliates (but not any consolidated Tax Return) shall be submitted to the
Seller at least 15 days before the first date on which such Tax Returns are
legally required to be filed, including extensions, to enable the Seller to
review, comment on and approve such Tax Returns and no such Tax Return shall be
filed until such Tax Return has been approved by the Seller. The Purchaser shall
cooperate with the Seller in connection with the Seller's review of such
Straddle Period Tax Returns and provide to the Seller such additional
information related to the operations of the Company as the Seller shall
reasonably request in connection with such review. The Purchaser and the Seller
shall consult with each other in good faith to resolve any issues arising as a
result of such review and approval. The Seller shall pay to the Purchaser, at
least two Business Days prior to the filing of the Tax Return, the amount of
Taxes properly allocated to the Seller under Section 6.01(d).
(c) The Purchaser shall promptly notify the Seller in writing upon receipt
by the Purchaser, any of its Affiliates or the Company or any Subsidiary of
notice of any pending or threatened federal, state, local or foreign income or
franchise Tax audits or assessments that may affect the Tax liabilities of the
Seller or Tax liability for which the Seller may be required to indemnify the
Purchaser pursuant to this Agreement; provided, however, the failure to give
such notice shall not affect the indemnification provided hereunder except to
the extent that the Seller or any of its Affiliates has suffered damage or
prejudice by reason of such failure to give, or any delay in giving, such
notice.
(d) The Seller shall have the sole and exclusive right, power and
authority, at its expense, to negotiate, resolve, settle, or contest any notice
of audit or assessment referred to in Section 6.02(c) and to represent and act
for and on behalf of the Seller, the Purchaser and the Company and the
Subsidiaries in connection with any such audit or assessment, including refund
claims of any Tax liability for any period ending on or before the Closing Date.
The Seller shall keep the Purchaser informed of the progress thereof.
Notwithstanding the foregoing, the Seller shall not resolve, settle, compromise,
or abandon any issue or claim without the prior written consent of the Purchaser
if such action would adversely affect the Tax liabilities of Purchaser or the
Company and the Subsidiaries in any period after the Closing Date and the
portion of the Straddle Period that begins on the Closing Date (including the
imposition of any income Tax deficiencies, the reduction of asset basis on cost
adjustments, the lengthening of any amortization or depreciation periods, the
denial of amortization or depreciation deductions or the reduction of loss or
credit carryforwards). Such consent shall not be unreasonably withheld and shall
not be necessary to the extent that the Seller has indemnified the Purchaser
against the effects of any such settlement.
(e) The Purchaser shall have the sole and exclusive right, power and
authority, at its expense, to negotiate, resolve, settle, or contest any such
notice of audit or assessment referred to
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in Section 6.02(c), including refund claims of any Tax liability, for any period
ending after the Closing Date. To the extent that any Seller has indemnified the
Purchaser with respect to any such notice of audit or assessment, the Purchaser
shall keep the Seller informed of the progress thereof and the Purchaser shall
not, and shall not permit the Company or any Subsidiary to, resolve, settle,
compromise, or abandon any issue or claim without the prior written consent of
the Seller if such action would materially and adversely affect the Tax
liabilities of the Seller or any of its Affiliates for any period (including the
imposition of any income Tax deficiencies, the reduction of asset basis on cost
adjustments, the lengthening of any amortization or depreciation periods, the
denial of amortization or depreciation deductions or the reduction of loss or
credit carryforwards). Such consent shall not be unreasonably withheld and shall
not be necessary to the extent that the Purchaser notifies the Seller in writing
that it shall forego any obligation of the Seller to indemnify the Purchaser
against the effects of any such settlement.
(f) The Purchaser and the Seller shall, and the Purchaser shall cause the
Company and the Subsidiaries to, cooperate fully, as and to the extent
reasonably requested by the other party, in connection with the filing of all
Tax Returns and any audit, litigation, or other proceeding with respect to
Taxes. Such cooperation shall include prompt notices to each party to this
Agreement of any audit, investigation, or inquiry by any Governmental Authority
as to any such Tax Return reflecting activity of the Company and the
Subsidiaries on or before the date of this Agreement. Such cooperation also
shall include the retention and (upon the request of any other party) the
provision of records and information that are reasonably relevant to any Tax
Return of the Company or any Subsidiary (but not including any information or
Tax Returns of the Seller or any of its Affiliates other than the Company or
such Subsidiary), 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. The Purchaser agrees (i) to
retain all books and records with respect to Taxes or Tax matters pertinent to
the Company and the Subsidiaries relating to any taxable period beginning before
the date of this Agreement until the expiration of the statute of limitations
(and any extension thereof) of the respective taxable periods, and (ii) to give
the Seller reasonable written notice before transferring, destroying, or
discarding any such books and records and, if the Seller so requests, the
Purchaser shall allow the Seller to take possession of such books and records.
The Purchaser and the Seller further agree, upon request, to use their
commercially reasonable efforts to obtain any certificate or other document from
any Governmental Authority or other Person as may be necessary to mitigate,
reduce, or eliminate any Taxes that could be imposed (including with respect to
the consummation of the Transactions).
SECTION 6.03 Section 338(h)(10) Election. The Purchaser and Seller shall
join in timely making an election under Section 338(h)(10) of the Code (and any
corresponding elections under state, local, or foreign tax law) (collectively a
"SECTION 338(H)(10) ELECTION") with respect to the purchase and sale of the
stock of the Company and each of the Subsidiaries, and the Purchaser and Seller
shall cooperate in the completion and timely filing of such elections in
accordance with the provisions of Treasury Regulation Section 1.338(h)(10)-1 (or
any comparable provisions of state, local or foreign Tax law) or any successor
provision. Seller will pay any Tax attributable to the making of the Section
338(h)(10) Election and will indemnify the Purchaser, the Company and the
Subsidiaries against any such Tax. Seller and Buyer shall determine the fair
market value of the assets of the Company and the allocation of Purchase Price
(as required pursuant to Section 338(h)(10) of the Code and regulations
promulgated thereunder),
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together with applicable liabilities, among such assets. The parties shall agree
on a schedule setting forth the allocation as soon as practicable after the
Closing Date. Neither Seller nor the Purchaser shall take any position on any
Tax Return or with any taxing authority that is inconsistent with such
allocation, provided that nothing contained herein shall require a party to
litigate over such allocation against a taxing authority that challenges such
allocation. The Purchaser and the Seller shall give each other prompt written
notice of such any written notice by a taxing authority asserting any proposed
deficiency or adjustment with respect to such allocation.
SECTION 6.04 Refunds. The amount or economic benefit of any refunds,
credits or offsets of Taxes of the Company, or any of the Subsidiaries for any
Pre-Closing Tax Period shall be for the account of Seller to the extent such
refund is not reflected on the Final Closing Date Net Working Capital Statement
and not taken into account in determining the Purchase Price adjustments
pursuant to Section 2.03 of this Agreement. Notwithstanding the foregoing, any
such refunds, credits or offsets of Taxes shall be for the account of Purchaser
to the extent such refunds, credits or offsets of Taxes are attributable
(determined on a marginal basis) to the carryback from a Post-Closing Tax Period
of items of loss, deduction or credit, or other Tax items, of the Company or any
of the Subsidiaries (or any of their respective Affiliates, including
Purchaser). The amount or economic benefit of any refunds, credits or offsets of
Taxes of Company or any of the Subsidiaries for any Post-Closing Tax Period
shall be for the account of Purchaser. The amount or economic benefit of any
refunds, credits or offsets of Taxes of Company or any of the Subsidiaries for
any Straddle Period shall be equitably apportioned between Seller and Purchaser
in accordance with Section 6.01(d); provided, however, that to the extent the
refund is apportioned for the Seller under the preceding clause, the amount of
any refund shall only be for the account of the Seller to the extent such refund
is not reflected on the Final Closing Date Net Working Capital Statement and not
taken into account in determining the Purchase Price adjustments pursuant to
Section 2.03 of this Agreement.
SECTION 6.05 Purchase Price Adjustment. The Purchaser and the Seller agree
that any indemnification payment made pursuant to this Agreement shall be
treated as an adjustment to the Purchase Price for Tax purposes, unless
otherwise required by applicable law.
SECTION 6.06 Exclusivity. Notwithstanding any other provision of this
Agreement, except as specifically provided in Section 3.15, Section 5.01(i),
Article VI and Section 8.05, any matter related to Taxes shall be governed
solely by this Article VI.
SECTION 6.07 Tax Sharing Agreements. The Seller shall cause the provisions
of any agreement, arrangement or practice with respect to Taxes (including any
Tax sharing agreements) between Seller, on the one hand, and Company or any of
the Subsidiaries, on the other hand, to be terminated on or before the Closing
Date. After the Closing Date no person shall have any rights or obligations
under any such agreement, arrangement or practice with respect to Taxes.
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ARTICLE VII
CONDITIONS TO CLOSING
SECTION 7.01 Conditions to Each Party's Obligation to Close. The respective
obligations of each party to consummate the Closing shall be subject to the
fulfillment, on or before the Closing Date, of the following conditions:
(a) no statute, rule, regulation or order entered, promulgated or enacted
by any Governmental Authority shall be in effect that would prohibit the
consummation of the Transactions or has the effect of making them illegal;
(b) no preliminary or permanent injunction, decree or other order shall
have been issued by any Governmental Authority which prohibits the consummation
of the Transactions and which is in effect at the Closing; provided, however,
that in the case of any such injunction, decree or order entered against the
Seller Parent, the Seller or any of the Subsidiaries, the Seller shall have, and
in the case of any such injunction, decree or order entered against the
Purchaser or the Purchaser Parent, the Purchaser shall have, used its
commercially reasonable efforts to prevent the entry of any such injunction,
decree or order and to appeal promptly any such injunction, decree or order and
to appeal promptly any such injunction, decree or order that may be entered;
(c) all applicable waiting periods under the HSR Act with respect to the
transactions contemplated by this Agreement shall have expired or been
terminated; and
(d) all other Governmental Authorizations that are required to be obtained
before the Closing and that are necessary to permit the consummation of the
Transactions, shall have been received.
SECTION 7.02 Conditions to the Obligation of the Seller. The obligation of
the Seller to consummate the Closing shall be subject to the fulfillment, on or
before the Closing Date, of the following additional conditions:
(a) the Purchaser Parent and the Purchaser shall have duly performed and
complied in all material respects with all obligations and agreements required
to be performed and complied with by it under this Agreement on or before the
Closing Date;
(b) the representations and warranties of the Purchaser Parent and the
Purchaser contained in this Agreement shall be true and correct in all material
respects on and as of the Closing Date as if made at and as of such date, except
that any representations and warranties that are qualified by standards of
materiality shall be true and correct in all respects on and as of the Closing
Date as if made at and as of such date; and
(c) the Seller shall have received a certificate signed by a senior
executive officer of the Purchaser, dated as of the Closing Date, to the effect
that the conditions set forth in Section 7.01(b), Section 7.02(a) and Section
7.02(b) have been satisfied.
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SECTION 7.03 Conditions to the Obligation of the Purchaser. The obligation
of the Purchaser Parent and the Purchaser to consummate the Closing shall be
subject to the fulfillment, on or before the Closing Date, of the following
additional conditions:
(a) the Seller Parent and the Seller shall have duly performed and complied
in all material respects with all obligations and agreements required to be
performed and complied with by it under this Agreement on or before the Closing
Date, other than the obligations and agreements required to be performed and
complied with pursuant to Section 5.10, which shall have been performed and
complied with in all respects;
(b) the representations and warranties of the Seller Parent and the Seller
contained in this Agreement shall be true and correct in all material respects
on and as of the Closing Date as if made at and as of such date, except that any
representations and warranties that are qualified by standards of materiality
shall be true and correct in all respects on and as of the Closing Date as if
made at and as of such date;
(c) the Purchaser shall have received a certificate signed by an officer of
the Seller, dated as of the Closing Date, to the effect that the conditions set
forth in Section 7.01(b), Section 7.03(a) and Section 7.03(b) have been
satisfied;
(d) all third party consents, waivers and approvals, if any, disclosed on
SCHEDULE 7.03(D) shall have been received;
(e) the Seller shall have delivered to the Parent (a) copies of the
Company's Certificate of Incorporation and the Certificate of Incorporation or
Certificate of Formation, as applicable, of each Subsidiary as in effect on the
Closing Date, including all amendments thereto, in each case certified by the
Secretary of State or other appropriate official of its jurisdiction of
incorporation, (b) a certificate from the Secretary of State or other
appropriate official of their respective jurisdictions of incorporation to the
effect that the Company and each of the Subsidiaries is in good standing or
subsisting in such jurisdiction and listing all charter documents of the Company
and such Subsidiaries on file, (c) a certificate from the Secretary of State or
other appropriate official in each State in which the Company or any Subsidiary
is qualified to do business to the effect that the Company or such Subsidiary is
in good standing in such State, (d) a certificate as to the tax status of the
Company and each Subsidiary from the appropriate official in its jurisdiction of
incorporation and each State in which the Company or such Subsidiary is
qualified to do business and (e) a copy of the By-Laws of the Company and each
Subsidiary, certified by the Secretary of the Company and each Subsidiary as
being true and correct and in effect on the Closing Date;
(f) each of the individuals set forth on SCHEDULE 7.03(F) shall have
executed employment agreements with the Company in form and substance reasonably
acceptable to the Purchaser;
(g) the Purchaser shall have received all of the proceeds of the financings
described in the commitment letter referred to in Section 4.05;
(h) the Purchaser shall have received a non-foreign person affidavit from
the Seller dated the Closing Date as required by Section 1445 of the Code;
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(i) the Purchaser shall have received true and complete copies from the
Seller Parent of audited consolidated financial statements of the Company and
the Subsidiaries for the twelve-month period ending June 30, 2003, the
twelve-month period ending June 30, 2004 and the twelve-month period ending June
30, 2005, in form and substance reasonably satisfactory to the Purchaser,
audited by a nationally recognized independent accounting firm (at the sole
expense of the Seller), without any "going concern" or similar qualification and
compliant with Regulation S-X promulgated under the Securities Act, and there
shall have been no material change in the consolidated financial position of the
Company and the Subsidiaries as of their respective date, the consolidated
results of operations of the Company and the Subsidiaries for the periods
covered thereby or the changes in their financial position for their respective
periods reflected in such audited financial statements from the consolidated
financial position of the Company and the Subsidiaries as of such dates, the
consolidated results of operations of the Company and the Subsidiaries for such
periods or the changes in their financial position for such periods reflected in
the Financial Statements; and
(j) the Purchaser shall have received evidence reasonably satisfactory to
it that any guarantees provided by BISYS Information Solutions L.P. and BISYS
Document Solutions LLC pursuant to that certain Credit Agreement, dated as of
March 31, 2004, among the Seller Parent, the lenders party thereto, Fleet
National Bank, JPMorgan Chase Bank, Suntrust Bank and Wachovia Bank, National
Association and The Bank of New York have been terminated.
SECTION 7.04 Waiver of Conditions. Notwithstanding the failure of any one
or more of the foregoing conditions, the Purchaser may proceed with the Closing
without satisfaction, in whole or in part, of any one or more of such conditions
and without written waiver.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.01 Seller's Indemnification. The Seller Parent and the Seller
shall jointly and severally indemnify and hold harmless, the Purchaser Parent,
the Purchaser and their respective Affiliates (including after the Closing the
Company and the Subsidiaries), and their respective directors, officers,
employees, partners, stockholders, members, representatives, and agents, and
their respective successors and assigns (collectively, the "PURCHASER
INDEMNIFIED PARTIES") against any and all Damages and Actions (whether involving
a third party or between the parties to this Agreement) that any Purchaser
Indemnified Party may suffer or become subject to as a result of, or arising out
of or in connection with (i) the failure of any representation or warranty made
by the Seller Parent or the Seller in this Agreement (whether or not contained
in Article III) or in any certificate delivered by or on behalf of the Seller
Parent or the Seller hereunder to be true and correct in all respects as of the
date of this Agreement and as of the Closing Date (without giving effect to any
"materiality", "material adverse effect" or similar qualification and without
giving effect to any knowledge qualification), (ii) any breach of any or
covenant or agreement of the Seller Parent or the Seller contained in this
Agreement, (iii) the termination of Contracts as of the Closing pursuant to
Section 5.10 and any liabilities, obligations, losses, costs or expenses arising
under such Contracts, (iv) the liens set forth on SCHEDULE 8.01 or (v) the
abatement of the conditions described on SCHEDULE 3.13(D).
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SECTION 8.02 Purchaser's Indemnification. The Purchaser and Purchaser
Parent shall jointly and severally indemnify and hold harmless the Seller and
its Affiliates, and their respective directors, officers, employees, partners,
stockholders, members, representatives, and agents, and their respective
successors and assigns (collectively, the "SELLER INDEMNIFIED PARTIES") against
any and all Damages and Actions (whether involving a third party or between the
parties to this Agreement) that any Seller Indemnified Party may suffer or
become subject to as a result of, arising out of, or in connection with (i) the
failure of any representation or warranty made by the Purchaser Parent or the
Purchaser in this Agreement (whether or not contained in Article IV) or in any
certificate delivered by or on behalf of the Purchaser hereunder to be true and
correct in all respects as of the date of this Agreement and as of the Closing
Date (without giving effect to any "materiality", "material adverse effect" or
similar qualification and without giving effect to any knowledge qualification),
and (ii) any breach of any covenant or agreement of the Purchaser or Purchaser
Parent contained in this Agreement.
SECTION 8.03 Limitations on Amount of Damages
(a) Notwithstanding anything to the contrary in this Agreement other than
as set forth in the next sentence, neither the Seller Parent nor the Seller
shall be liable for any breach of any representation or warranty made by it in
this Agreement unless and until the aggregate amount of Damages incurred by the
Purchaser Indemnified Parties as a result of all breaches of representations or
warranties by the Seller Parent or the Seller under this Agreement exceeds an
amount equal to $1,500,000 (the "BASKET"); provided that, in determining whether
the Purchaser Indemnified Parties are entitled to indemnification for any breach
of any representation or warranty and in calculating whether the Basket has been
exceeded, only individual claims or groups of related claims for Damages in
excess of seventy-five thousand dollars ($75,000) (the "MINIMUM CLAIM AMOUNT")
shall be considered; provided, further, that to the extent the amount of Damages
exceeds the Basket, the Purchaser Indemnified Parties shall be entitled to
recover the Basket as well as the amount of Damages in excess of the Basket.
Neither the Basket nor the Minimum Claim Amount shall apply to any breach of any
representation or warranty contained in Section 3.01 (Authority Relative to
Agreement), Section 3.02 (Capitalization; Title to Shares), Section 3.03
(Execution and Performance of Agreement; Validity and Binding Nature), Section
3.05 (Organization, Standing and Qualification), Section 3.06 (Subsidiaries),
Section 3.12 (Employee Benefit Plans), Section 3.15 (Taxes), Section 3.25
(Environmental) and Section 3.26 (No Broker) and the Basket also shall not apply
to any breach of any representation or warranty contained in Section 3.10
(Intellectual Property).
(b) Except as set forth in the next sentence, the aggregate liability of
the Seller Parent and the Seller arising from misrepresentation or breach of
warranty under this Agreement shall not exceed an amount equal to fifty percent
(50%) of the Purchase Price (as it may be adjusted pursuant to Section 2.03)(the
"CAP"). The Cap shall not apply to any breach of any representation or warranty
contained in Section 3.01 (Authority Relative to Agreement), Section 3.02
(Capitalization; Title to Shares), Section 3.03 (Execution and Performance of
Agreement; Validity and Binding Nature), Section 3.05 (Organization, Standing
and Qualification), Section 3.06 (Subsidiaries), Section 3.15 (Taxes), Section
3.25 (Environmental) or Section 3.26 (No Broker).
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(c) Notwithstanding anything to the contrary in this Agreement other than
as set forth in the next sentence, neither the Purchaser Parent nor the
Purchaser shall be liable for any breach of any representation or warranty made
by it in this Agreement unless and until the aggregate amount of Damages
incurred by the Seller Indemnified Parties as a result of all breaches of
representations or warranties by the Purchaser Parent or the Purchaser under
this Agreement exceeds an amount equal to the Basket; provided that, in
determining whether the Seller Indemnified Parties are entitled to
indemnification for any breach of any representation or warranty and in
calculating whether the Basket has been exceeded, only individual claims or
groups of related claims for Damages in excess of the Minimum Claim Amount shall
be considered; provided, further, that to the extent the amount of Damages
exceeds the Basket, the Seller Indemnified Parties shall be entitled to recover
the Basket as well as the amount of Damages in excess of the Basket. Neither the
Basket nor the Minimum Claim Amount shall apply to any breach of any
representation or warranty contained in Section 4.01 (Authority Relative to
Agreement), Section 4.02 (Execution and Performance of Agreement; Validity and
Binding Nature), Section 4.04 (Organization, Standing and Qualification) and
Section 4.08 (No Broker).
(d) Except as set forth in the next sentence, the aggregate liability of
the Purchaser Parent and the Purchaser arising from misrepresentation or breach
of warranty under this Agreement shall not exceed an amount equal to the Cap.
The Cap shall not apply to any breach of any representation or warranty
contained in Section 4.01 (Authority Relative to Agreement), Section 4.02
(Execution and Performance of Agreement; Validity and Binding Nature), Section
4.04 (Organization, Standing and Qualification) and Section 4.08 (No Broker).
(e) Notwithstanding anything herein to the contrary, Section 8.03 shall not
apply to indemnification payments with respect to Taxes.
SECTION 8.04 Procedures
(a) Promptly after an Indemnified Party has received notice or has
knowledge of any claim or the commencement of any Action for which such party
may be entitled to indemnification under this Article VIII, the Indemnified
Party shall, if it believes that such claim or Action is indemnifiable by the
Indemnifying Party, give the Indemnifying Party written notice of such claim or
the commencement of such Action and provide the Indemnifying Party with all
relevant information respecting such claim or Action that is in the possession
of the Indemnified Party. Such notice shall state the nature and basis of such
claim or Action and, if ascertainable, the amount in dispute under such claim or
Action. In each such case, the Indemnified Party agrees to give such notice to
the Indemnifying Party promptly following its receipt of notice or other
knowledge of any such claim or Action; provided, however, that the failure of
the Indemnified Party to give such notice shall not excuse the Indemnifying
Party's obligation to indemnify except to the extent the Indemnifying Party has
suffered damage or prejudice by reason of the Indemnified Party's failure to
give or delay in giving such notice. If such notice concerns a Third Person
Claim, the Indemnifying Party shall have the right to elect, at the Indemnifying
Party's sole expense, to assume the defense of such Third Person Claim;
provided, however, that the Indemnifying Party shall obtain the prior written
consent of the Indemnified Party (which consent shall not be unreasonably
withheld, conditioned, or delayed) before entering into any settlement,
adjustment or compromise of any such Third Person Claim;
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provided, further, that the Indemnifying Party shall not be entitled to assume
control of such defense and shall pay the fees and expenses of counsel retained
by the Indemnified Party if (i) the claim for indemnification relates to or
arises in connection with any criminal proceeding, action, indictment,
allegation or investigation; (ii) the claim seeks an injunction or equitable
relief against the Indemnified Party; (iii) the Indemnified Party has been
advised in writing by counsel that a reasonable likelihood exists of a conflict
of interest between the Indemnifying Party and the Indemnified Party; (iv) the
Indemnified Party reasonably believes an adverse determination with respect to
the action, lawsuit, investigation, proceeding or other claim giving rise to
such claim for indemnification would be detrimental to or injure the Indemnified
Party's reputation or future business prospects; or (vi) the Indemnifying Party
failed or is failing to vigorously prosecute or defend such claim. The
Indemnified Party shall have the right to elect, at such party's sole expense,
to participate in (but not control) the defense of such Third Person Claim, and
to employ, at its own expense, counsel in connection with its participation
therein. If the Indemnifying Party has elected not to assume the control of the
defense of such Third Person Claim, or if the Indemnifying Party shall have
failed after the lapse of a reasonable period of time, which shall in no event
be less than 30 calendar days after receipt by the Indemnifying Party of written
notice of such Third Person Claim, to assume the control of the defense of such
Third Person Claim, the Indemnified Party shall be entitled to defend against
the same and to employ counsel reasonably satisfactory to the Indemnifying
Party, at the expense of the Indemnifying Party; provided, however, in such
event, the Indemnified Party shall obtain the prior written consent of the
Indemnifying Party (which consent shall not be unreasonably withheld,
conditioned, or delayed) before entering into any settlement, adjustment or
compromise of any such Third Person Claim. So long as the Indemnifying Party is
reasonably contesting any such claim in good faith, the Indemnified Party shall
not pay, settle or compromise any such claim. Notwithstanding the foregoing, the
Indemnified Party shall have the right to pay, settle or compromise any such
claim, provided that in such event it shall waive any right to indemnity
therefor by the Indemnifying Party for such claim unless the Indemnifying Party
shall have consented to such payment, settlement or compromise. In connection
with any Third Person Claim, the Indemnified Party, or the Indemnifying Party,
if it has assumed the defense of such Third Person Claim pursuant to this
Section 8.04(a), shall vigorously and competently defend such Third Person Claim
in good faith and the parties shall cooperate with one another in connection
with the handling of such Third Person Claim, shall make available personnel,
witnesses, books, and records relevant to such Third Person Claim and grant such
authorizations as are necessary and reasonable to their respective agents,
representatives, and counsel upon reasonable request.
(b) If the Indemnified Party shall have any claim against the Indemnifying
Party pursuant to this Section 8.04, the Indemnified Party shall deliver to the
Indemnifying Party a written notice explaining the nature and amount of such
claim promptly after the Indemnified Party shall know the amount of such claim.
SECTION 8.05 Survival of Representations and Warranties. The respective
representations and warranties of the parties contained in this Agreement, and
the rights and obligations of the parties under this Article VIII with respect
to breaches of such representations and warranties, shall survive the Closing
for a period of two years, except that: (a) any claims for indemnification with
respect to any breaches of representations and warranties made on or before such
expiration date shall survive the Closing until final resolution thereof; (b)
the
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representations and warranties contained in Section 3.01 (Authority Relative to
Agreement), Section 3.04 (Non-Contravention), Section 3.10 (Intellectual
Property), Section 3.26 (No Broker), Section 3.27 (Sufficiency of Assets),
Section 4.01 (Authority Relative to Agreement), Section 4.03
(Non-Contravention), and Section 4.09 (No Broker), and the rights and
obligations of the parties under this Article VIII with respect to any breaches
of such representations and warranties, shall survive the Closing for a period
of three years; (c) the representations and warranties contained in Section 3.12
(Employee Benefit Plans), Section 3.15 (Taxes) and Section 3.25 (Environmental
Matters) shall survive the Closing for a period ending on the ninetieth (90th)
day after the expiration of the applicable statute of limitations, and the
rights and obligations of the parties under this Article VIII with respect to
any breaches of such representations and warranties shall survive the Closing
for a period ending at the same time and (d) the representations and warranties
contained in Section 3.02 (Capitalization, Title to Shares), Section 3.03
(Execution and Performance of Agreement; Validity and Binding Nature), and
Section 4.02 (Execution and Performance of Agreement; Validity and Binding
Nature) shall survive the Closing indefinitely. No claims for indemnification
for breaches of representations and warranties shall be made under Article VI or
this Article VIII after the expiration of the applicable period of survival. The
rights and obligations of the parties under this Article VIII with respect to
breaches of covenants shall survive the Closing indefinitely.
SECTION 8.06 Mitigation of Damages. Each Indemnified Party shall take
commercially reasonable steps to mitigate any Damages in respect of which a
claim could be made under this Article VIII or any other provision of this
Agreement, provided such mitigation does not unreasonably disrupt the ongoing
business operations of the Indemnified Party. Any costs or reasonable out of
pocket expenses incurred by an Indemnified Party in connection with such
mitigation shall constitute "Damages" that may be recovered by the Indemnified
Party under this Article VIII. For the avoidance of doubt, the parties agree
that an Indemnified Party shall not be obliged to make or pursue any claim or
right it may have against an insurer or any other Person for insurance,
indemnity, reimbursement or other payment.
SECTION 8.07 Calculation of Damages. The amount of any Damages for which
indemnification is provided under this Article VIII shall be computed net of (a)
in the case of Section 8.01, any accruals or reserves established on the Closing
Date Balance Sheet with respect to the matters to which those Damages relate and
(b) any third-party insurance proceeds and recoveries in respect of third party
indemnification obligations actually received by the Indemnified Party in
connection with such Damages. If an Indemnified Party receives such insurance
proceeds or indemnification recoveries in connection with Damages for which it
has received indemnification, such party shall refund to the Indemnifying Party
the amount of such insurance proceeds when received, up to the amount of
indemnification received.
SECTION 8.08 Exclusive Remedy. Except as otherwise provided below, the
indemnification provided for in this Article VIII, subject to the limitations
set forth herein or therein, shall be the exclusive post-Closing remedy
available to any Indemnified Party in connection with any Damages arising out of
the matters set forth in this Agreement or the transactions contemplated
hereunder; provided, however, that nothing herein will limit in any way any such
party's (A) remedies in respect of fraud, a violation of Rule 10b-5 under the
Securities Exchange Act of 1934, or an intentional and wrongful breach of a
representation, warranty or covenant or (B) rights hereunder or otherwise to
injunctive or other equitable relief
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to enforce its rights under this Agreement or otherwise in connection with the
transactions contemplated hereby.
SECTION 8.09 Limitation of Damages UNDER NO CIRCUMSTANCES SHALL THE SELLER
PARENT OR THE SELLER HAVE ANY LIABILITY TO THE PURCHASER, THE PURCHASER PARENT
OR ANY OF THEIR AFFILIATES UNDER THIS AGREEMENT FOR, AND THE PURCHASER, THE
PURCHASER PARENT AND THEIR AFFILIATES SHALL NOT HAVE THE RIGHT TO CLAIM OR
RECOVER FROM THE SELLER PARENT OR THE SELLER, ANY PUNITIVE DAMAGES, WHETHER
FORESEEABLE OR UNFORESEEABLE, HOWSOEVER CAUSED OR ON ANY THEORY OF LIABILITY,
EVEN IF THE SELLER PARENT OR THE SELLER HAS BEEN ADVISED OF THE POSSIBILITY OF
SUCH DAMAGES IN ADVANCE EXCEPT AND TO THE EXTENT THAT SUCH DAMAGES ARE AWARDED
PURSUANT TO A THIRD PARTY CLAIM.
ARTICLE IX
TERMINATION AND ABANDONMENT
SECTION 9.01 Termination and Abandonment. This Agreement may not be
terminated or rescinded after completion of the Closing. This Agreement may be
terminated and the Transactions may be abandoned at any time before completion
of the Closing:
(a) by mutual agreement of the Purchaser and the Seller;
(b) by the Seller, if all of the conditions set forth in Section 7.03 shall
have been complied with and performed and one or more of the conditions set
forth in Section 7.01 (except for any such conditions set forth in Section 7.01
or Section 7.03 as shall not have been complied with or performed as a resulted
any fault of the Purchaser Parent or the Purchaser) and Section 7.02 shall not
have been complied with or performed in any material respect and such
noncompliance or nonperformance shall not have been cured or eliminated (or by
its nature cannot be cured or eliminated) by the Purchaser Parent or the
Purchaser on or before the Drop Dead Date, subject to the Seller's right to
extend the Drop Dead Date for a period of up to the earlier of (x) thirty (30)
days or (y) the expiration of the Wachovia Commitment;
(c) by the Purchaser, if all of the conditions set forth in Section 7.02
shall have been complied with and performed and one or more of the conditions
set forth in Section 7.01 (except for any such conditions set forth in Section
7.01 or Section 7.02 as shall not have been complied with or performed as a
result of any fault of the Seller Parent or the Seller) and Section 7.03 shall
not have been complied with or performed in any material respect and such
noncompliance or nonperformance shall not have been cured or eliminated (or by
its nature cannot be cured or eliminated) by the Seller on or before the Drop
Dead Date, subject to the Purchaser's right to extend the Drop Dead Date for a
period of up to 30 days;
(d) by either the Purchaser or the Seller, if there shall be any Law of any
competent jurisdiction that makes consummation of the Transaction illegal or
otherwise prohibited or if any
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Order of any competent authority prohibiting the Transactions is entered and
such order shall become final and non-appealable;
(e) by the Purchaser, if there has been a Material Adverse Effect with
respect to the Company;
(f) by the Purchaser, if the amount of the Restatement Adjustment is in
excess of $15,000,000; or
(g) by either the Purchaser or the Seller pursuant to and in accordance
with Section 5.13(a).
SECTION 9.02 Effect of Termination. If this Agreement is terminated
pursuant to Section 9.01 by the Purchaser, on the one hand, or the Seller, on
the other hand, written notice thereof shall be given to the other party
specifying the provision of Section 10.06 pursuant to which such termination is
made, and this Agreement shall be terminated and there shall be no liability
hereunder on the part of the Purchaser or the Seller, except that the provisions
of Section 5.14 (Confidentiality), Section 9.01 (Termination and Abandonment),
this Section 9.02 (Effect of Termination), Section 10.01 (Fees and Expenses),
Section 10.01 (Publicity), Section 10.09 (Applicable Law), Section 10.10 (Waiver
of Jury Trial) and Section 10.12 (Jurisdiction) shall survive any termination of
this Agreement. Nothing in this Section 9.02 shall relieve any party of
liability for any breach of this Agreement.
ARTICLE X
MISCELLANEOUS
SECTION 10.01 Fees and Expenses
(a) Whether or not the Closing is consummated, neither the Seller Parent or
the Seller, on the one hand, nor the Purchaser Parent or the Purchaser, on the
other hand, shall have any obligation to pay any of the fees and expenses of the
other incident to the negotiation, preparation, and execution of this Agreement,
including the fees and expenses of counsel, accountants, investment bankers and
other experts. Notwithstanding the foregoing, (i) the fees and expenses of the
Neutral Accountant shall be allocated as provided in Section 2.03(d)(ii), (ii)
the Purchaser shall pay all filing fees under the HSR Act as provided in Section
5.06(a) and (iii) if the Agreement is terminated by the Purchaser pursuant to
(A) Section 9.01(c) if the condition set forth in Section 7.03(i) has not been
complied with or performed or (B) Section 9.01(f) or (C) Section 9.01(g) if the
last sentence of Section 5.13(a) is applicable, then the Seller Parent shall
promptly reimburse the Purchaser Parent and its Affiliates, by wire transfer of
immediately available funds to accounts designated by the Purchaser Parent, for
all reasonable out-of-pocket fees and expenses incurred by or on behalf of any
of the Purchaser Parent and its Affiliates in connection with the negotiation,
preparation and execution of this Agreement and the consummation of the
transactions contemplated hereby, including the fees and expenses of counsel,
accountants, investment bankers and other advisors and any commitment and other
fees and expenses incurred by or on behalf of any of the Purchaser Parent and
its Affiliates in connection with the Wachovia Commitment and the transactions
contemplated thereby; provided
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that the amount of such reimbursement shall not be greater than $2,750,000, in
the case of (A) or (B), and $2,000,000 in the case of (C).
(b) Except for any fees to Bear Xxxxxxx & Co. Inc., which shall be payable
by the Seller, no Person is entitled to receive from the Company, the Seller
Parent, the Seller, the Purchaser Parent or the Purchaser any investment
banking, brokerage or finder's fee or fees for financial consulting or advisory
services in connection with this Agreement or the Transactions. The Seller
Parent and the Seller, on the one hand, and the Purchaser Parent and the
Purchaser, on the other hand, shall indemnify the other and hold it harmless
from and against any claims for finders' fees or brokerage commissions in
relation to or in connection with such transactions as a result of any agreement
or understanding between such indemnifying party and any third party.
SECTION 10.02 Publicity. The Seller, on the one hand, and the Purchaser, on
the other hand, agree that neither they nor their respective Affiliates shall
issue any press release or make any other public announcement concerning this
Agreement or the Transactions without the prior written consent of the other
party (which consent may not be unreasonably withheld, conditioned, or delayed).
Notwithstanding the foregoing, the Seller and/or its Affiliates may make such
public disclosure that it believes in good faith to be required by applicable
laws, rules, regulations, or its agreements with the New York Stock Exchange,
Inc., provided that the Seller shall, to the extent reasonably practicable,
provide the Purchaser with advance notice of such disclosure and an opportunity
to comment as to the same. Notwithstanding the foregoing, the Purchaser and its
Affiliates may make such public disclosures that it believes in good faith to be
required by applicable laws, rules, regulations, or its agreements with NASDAQ,
provided, that the Purchaser shall, to the extent reasonably practicable,
provide the Seller with advance notice of such disclosure and an opportunity to
comment as to the same.
SECTION 10.03 Amendments. This Agreement may be modified, amended or
supplemented at any time by action of the Seller and the Purchaser. Without
limiting the generality of the foregoing, this Agreement may only be modified,
amended, or supplemented by an instrument in writing that is signed by all of
the parties, except that the parties may revise or supplement their respective
Schedules as provided in Section 5.13(a) without the necessity of a signed
writing.
SECTION 10.04 Section Headings and Captions. The Section headings and the
captions of the Articles in this Agreement are solely for convenient reference
and shall not be deemed to affect the meaning or interpretation of this
Agreement.
SECTION 10.05 Counterparts; Third Party Beneficiaries. This Agreement may
be signed in any number of counterparts, each of which shall be an original,
with the same effect as if such signatures were upon the same instrument. A
facsimile or photocopied signature (which may be delivered by facsimile) shall
be deemed to be the functional equivalent of an original for all purposes. This
Agreement shall inure to the benefit of and be binding upon the parties hereto
and their respective successors and permitted assigns. No provision of this
Agreement is intended to confer and shall not confer upon any Person other than
the parties hereto and their respective successors and permitted assigns any
rights or remedies.
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SECTION 10.06 Notices. All notices, requests, and other communications to
any party in connection with this Agreement shall be in writing and delivered
personally, sent by documented overnight delivery service or facsimile, and
shall be given,
If to the Seller or the Seller Parent, to:
The BISYS Group, Inc.
00 Xxxx Xxxxxx - 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: General Counsel
Telephone: (000) 000-0000
Fax: (000) 000-0000
with a copy to:
Drinker Xxxxxx & Xxxxx LLP
000 Xxxxxx Xxxxx
Xxxxxxx Xxxx, Xxx Xxxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxx, Esq.
Telephone: (000) 000-0000
If to the Purchaser or Purchaser Parent, to:
Open Solutions Inc.
000 Xxxxxxx Xxxxx Xxxxx
Xxxxxxxxxxx, Xxxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Vice President, General Counsel & Secretary
Telephone: (000) 000-0000
Fax: (000) 000-0000
with a copy to:
Xxxxxxx Xxxxxxx & Xxxxxxxx LLP
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxx, Esq.
Telephone: (000) 000-0000
Fax: (000) 000-0000
All such notices, requests, and other communications shall be deemed received on
the date of receipt by the recipient if received before 5:00 p.m. in the place
of receipt and such day is a Business Day in the place of receipt. Otherwise,
any such notice, request, or communication shall be deemed not to have been
received until the next succeeding Business Day in the place of receipt.
SECTION 10.07 Waivers. The Seller, on the one hand, and the Purchaser, on
the other hand, may, by written notice to the other: (a) extend the time for the
performance of any of the
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obligations or other actions of the other under this Agreement; (b) waive any
inaccuracies in the representations or warranties of the other contained in this
Agreement or in any document delivered pursuant to this Agreement; (c) waive
compliance with any of the conditions of the other contained in this Agreement;
or (d) waive performance of any of the obligations of the other under this
Agreement. Except as provided in the preceding sentence, no action taken
pursuant to this Agreement, including any investigation by or on behalf of any
party, shall be deemed to constitute a waiver by the party taking such action of
compliance with any representations, warranties, covenants or agreements
contained in this Agreement. The waiver by any party of a breach of any
provision of this Agreement shall not operate or be construed as a waiver of any
subsequent breach.
SECTION 10.08 Entire Agreement. This Agreement, the Schedules, and the
Transaction Documents executed on the Closing Date in connection with the
Closing, and the Confidentiality Agreement constitute the entire agreement among
the parties with respect to the subject matter of this Agreement and supersede
all prior agreements and understandings, oral and written, among the parties
with respect to the subject matter of this Agreement. No representation,
warranty, promise, inducement, or statement of intention has been made by any
party that is not embodied in this Agreement or such other documents, and none
of the parties shall be bound by, or be liable for, any alleged representation,
warranty, promise, inducement, or statement of intention not embodied in this
Agreement or in such other documents.
SECTION 10.09 Applicable Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York applicable to
contracts made to be performed therein.
SECTION 10.10 Waiver of Jury Trial. EACH PARTY IRREVOCABLY WAIVES ANY RIGHT
TO TRIAL BY JURY IN ANY ACTION ARISING OUT OF OR RELATED TO THIS AGREEMENT OR
THE TRANSACTIONS.
SECTION 10.11 Severability. If this Agreement, or any of its provisions, or
the performance of any provision, is found to be illegal or unenforceable, the
parties shall be excused from the performance of such portions of this Agreement
as shall be found to be illegal or unenforceable without affecting the validity
of the remaining provisions of this Agreement; provided, however, that the
remaining provisions of this Agreement shall in their totality constitute a
commercially reasonable agreement.
SECTION 10.12 Jurisdiction. Except as otherwise set forth in this
Agreement, any Action seeking to enforce any provision of, or based on any
matter arising out of or in connection with, this Agreement or the Transactions
shall be brought in the United States District Court for the Southern District
of New York or any Supreme Court, New York County, so long as one of such courts
shall have subject matter jurisdiction over such Action, and each of the parties
irrevocably consents to the jurisdiction of such courts (and of the appropriate
appellate courts from such courts) in any such Action and irrevocably waives, to
the fullest extent permitted by law any objection that it may now or hereafter
have to the laying of the venue of any such Action in any such court or that any
such Action that is brought in any such court has been brought in an
inconvenient forum. Process in any such Action may be served on any party
anywhere in the world, whether within or without the jurisdiction of any such
court.
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Without limiting the foregoing, each party consents to the service of process on
such party by delivery in the manner provided in Section 10.06, which shall be
effective service of process.
SECTION 10.13 Successors and Assigns. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties and their
respective successors and assigns; provided, that, other than by operation of
law, no party may assign, delegate, or otherwise transfer any of its rights or
obligations under this Agreement without the written consent of each other
party; provided, further, that the Purchaser may assign its rights, interests
and obligations hereunder to any direct or indirect subsidiary of the Purchaser
Parent, provided that the Purchaser shall remain liable under this Agreement;
and, provided, further, that no such consent shall be required for Purchaser to
assign part or all of its interests in and rights to any payment obligations of
Seller under this Agreement after the Closing to any entity providing financing
for the transactions contemplated by this Agreement (or any refinancing of such
financing) as security for such financing, provided that the Purchaser shall
remain liable under this Agreement. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective
administrators, successors and permitted assigns.
SECTION 10.14 Waiver of Conflict. The Purchaser waives for itself and on
behalf of the Company any right to disqualify the counsel of the Seller in
connection with any dispute arising under this Agreement or any of the
Transaction Documents.
SECTION 10.15 No Right of Set-Off. No covenant, obligation, claim or
liability of any party under this Agreement or any other Transaction Document
shall be subject to any right of setoff.
SECTION 10.16 Guarantee
(a) The Purchaser Parent shall cause the Purchaser to perform all of the
Purchaser's obligations under this Agreement.
(b) The Seller Parent shall cause the Seller to perform all of the Seller's
obligations under this Agreement.
[Signature page follows]
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IN WITNESS WHEREOF, the parties have duly executed and delivered this
Agreement as of the day and year first above written.
OPEN SOLUTIONS INC.
By: /s/ Xxxx X. Xxxxxxxx
------------------------------------
Name: Xxxx X. Xxxxxxxx
Title: Senior Vice President and Chief
Financial Officer
HUSKY ACQUISITION CORPORATION
By: /s/ Xxxx X. Xxxxxxxx
------------------------------------
Name: Xxxx X. Xxxxxxxx
Title: Secretary and Treasurer
THE BISYS GROUP, INC.
By: /s/ Xxxxx X. Xxxxxxx
------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: EVP + CFO
BISYS INC.
By: /s/ Xxxxx X. Xxxxxxx
------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: EVP
[SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT]
INDEX OF SCHEDULES
Schedules Description
--------- -----------
1.01(a)-1 Balance Sheet
1.01(a)-2 Balance Sheet Exceptions
1.01(b) Certain Business Employees
1.01(c) Knowledge of the Seller
1.01(d) Knowledge of the Purchaser
1.01(e) Subsidiaries
3.04 Non-Contravention
3.05(c)-1 Organization of Subsidiaries
3.05(c)-2 Jurisdictions of Qualification of Subsidiaries
3.06 Shareholders Agreements, Partnership Agreements and
Limited Liability Company Operating Agreements
3.08(a) Exceptions to GAAP
3.08(b) Liabilities
3.10(a), (b) and (c) Intellectual Property
3.11(a)-1 Business Employees
3.11(a)-2 Business Employees on Layoff or Leave of Absence
3.11(b) Agreements Relating to Employment
3.11(c) Directors of the Company and Subsidiaries
3.12(a) Employee Benefit Plans
3.13(b) Property Leases
3.13(d) Condition of Leased Premises
3.14(c) Accounts Receivable Referred for Collection
3.14(d) Inventory
3.15 Taxes
3.16 Litigation
3.17(a) Company Contracts
3.17(b) Affiliate Contracts
3.17(c) Contract Defaults
3.18 Customers and Suppliers
3.19(a) Labor Disputes
3.19(b) EEOC, Discrimination, Harassment, or Wrongful
Termination Claims
3.20 Insurance
3.21 Conduct of the Business
3.22 Third Party Consents (the Seller)
3.23(a) Loans to or from Directors, Officers or Business
Employees
3.23(b) Intercompany Balances
3.24(b) Governmental Authorizations
3.27 Sufficiency of Assets
3.28 Interests in Clients, Suppliers, Etc; Affiliate
Transactions
3.29 Bank Accounts and Powers of Attorney
3.30 Warranty Claims
4.03 Consents
4.10 Third Party Consents (the Purchaser)
5.01(j) Budget
5.04(b) Assignment of Affiliate Contracts
5.04(d) Additional Agreements
5.08(a) Excluded Business Employees
5.10 Affiliate Agreements Not to be Terminated
5.17 Shared Assets and Services
7.03(d) Third Party Consents
7.03(f) Employees Executing Employment Agreements
8.01 Liens
OMITTED SCHEDULES
Pursuant to Item 601(b)(2) of Regulation S-K promulgated by the Securities
and Exchange Commission (the "Commission") under the Securities Act of 1933, as
amended, and the Securities Exchange Act of 1934, as amended, Open Solutions
Inc. (the "Company") has, with respect to the Stock Purchase Agreement, dated as
of September 15, 2005, by and among the Company, Husky Acquisition Corporation,
The BISYS Group, Inc. and BISYS, Inc., omitted to file the schedules listed in
the table of contents herewith. These schedules will be supplementally furnished
to the Commission upon request.
