Exhibit 99.3
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AGREEMENT AND PLAN OF MERGER
Among
THE BISYS GROUP, INC.,
BI-DWW, INC., DASCIT/WHITE & WINSTON, INC.,
THE SHAREHOLDERS OF DASCIT/WHITE & WINSTON, INC.
XXXXXXX X. XXXXXX AND XXXXXX X. XXXXXXXXX
Dated as of August 29, 1997
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TABLE OF CONTENTS
Page
ARTICLE I THE MERGER....................................................2
SECTION 1.01 The Merger....................................................2
SECTION 1.02 Effect Of the Merger..........................................2
SECTION 1.03 Consummation of the Merger....................................2
SECTION 1.04 Charter; By-Laws; Directors and Officers......................2
SECTION 1.05 Further Assurances............................................3
ARTICLE II CONVERSION OF SECURITIES......................................4
SECTION 2.01 Conversion of Securities of the Company.......................4
SECTION 2.02 Acquisition Common Stock......................................4
SECTION 2.03 Exchange of Certificates......................................5
ARTICLE III REPRESENTATIONS AND WARRANTIES OF
THE COMPANY AND XXXXXX AND XXXXXXX............................6
SECTION 3.01 Authority Relative to Agreement...............................6
SECTION 3.02 Shareholders' Title to Stock..................................6
SECTION 3.03 Organization, Standing and Qualification......................6
SECTION 3.04 Stock of the Company..........................................6
SECTION 3.05 Subsidiaries and Other Investments............................7
SECTION 3.06 Certification of Incorporation and By-Laws....................7
SECTION 3.07 Execution and Performance of Agreement;
Validity and Binding Nature...................................7
SECTION 3.08 Financial Statements..........................................8
SECTION 3.09 Intellectual Property Rights..................................8
SECTION 3.10 Contracts and Contract Parties................................9
SECTION 3.11 Major Suppliers..............................................10
SECTION 3.12 Employment, Deferred Compensation or
Similar Agreements; Collective Bargaining
Agreements; Employee Benefit Plans...........................10
SECTION 3.13 Inventory....................................................11
SECTION 3.14 Real Estate..................................................11
SECTION 3.15 Title to and Condition of Personal
Property.....................................................11
SECTION 3.16 Accounts and Notes Receivable................................12
SECTION 3.17 Marketable Securities and Other Investments..................12
SECTION 3.18 Taxes........................................................12
SECTION 3.19 Litigation...................................................13
SECTION 3.20 Other Material Contracts and Commitments.....................13
SECTION 3.21 Labor Relations..............................................14
SECTION 3.22 Insurance....................................................14
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TABLE OF CONTENTS
(continued)
Page
SECTION 3.23 Conduct of Business and Absence of
Changes......................................................14
SECTION 3.24 Compliance with Laws; Governmental
Authorizations...............................................15
SECTION 3.25 Officers, Directors and Depositories.........................15
SECTION 3.26 Environmental Matters........................................15
SECTION 3.27 Third Party and Governmental
Consents.....................................................16
SECTION 3.28 Licenses and Permits.........................................16
SECTION 3.29 Software.....................................................17
SECTION 3.30 Loans to or from Shareholders or Employees...................17
SECTION 3.31 Absence of Undisclosed Liabilities...........................17
SECTION 3.32 Shareholders' and Similar Agreements.........................17
SECTION 3.33 Approval of Merger...........................................18
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE
SHAREHOLDERS.................................................18
SECTION 4.01 Authority and Capacity Relative to
Agreement....................................................18
SECTION 4.02 Execution and Performance of Agreement;
Validity and Binding Nature..................................18
SECTION 4.03 Stock of the Company.........................................19
SECTION 4.04 Additional Representations and Covenants
of Shareholders..............................................19
ARTICLE V REPRESENTATIONS AND WARRANTIES OF PARENT.....................22
SECTION 5.01 Organization and Qualification...............................22
SECTION 5.02 Acquisition..................................................22
SECTION 5.03 Capitalization...............................................23
SECTION 5.04 Authority Relative to Agreement..............................23
SECTION 5.05 Non-Contravention............................................23
SECTION 5.06 Parent Public Information....................................24
SECTION 5.07 Financial Statements.........................................24
SECTION 5.08 Absence of Certain Changes or Events.........................24
SECTION 5.09 Governmental Consents........................................25
SECTION 5.10 Compliance with Law..........................................25
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TABLE OF CONTENTS
(continued)
Page
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF PARENT AND
ACQUISITION..................................................26
SECTION 6.01 Organization and Qualification...............................26
SECTION 6.02 Capitalization...............................................26
SECTION 6.03 Authority Relative to Agreement..............................26
SECTION 6.04 Non-Contravention............................................27
SECTION 6.05 Governmental Consents........................................27
SECTION 6.06 Other Matters................................................27
ARTICLE VII COVENANTS AND OTHER AGREEMENTS...............................27
SECTION 7.01 Non-Competition Agreements...................................27
SECTION 7.02 Employment Agreement.........................................27
SECTION 7.03 Certain Life Insurance Policies..............................28
SECTION 7.04 Indemnification..............................................28
SECTION 7.05 Confidentiality..............................................30
SECTION 7.06 Transfer Restrictions After the
Effective Time...............................................30
SECTION 7.07 Registration Rights Agreements...............................31
SECTION 7.08 Termination of Shareholders' Agreements......................31
SECTION 7.09 Shareholder Sub-S Tax Liability..............................31
SECTION 7.10 Payments under FILCO Agreement...............................32
SECTION 7.11 Closing Deliveries...........................................32
SECTION 7.12 No Recission.................................................33
ARTICLE VIII MISCELLANEOUS................................................33
SECTION 8.01 Survival of Certain Representations and
Warranties...................................................33
SECTION 8.02 Fees and Expenses............................................33
SECTION 8.03 Publicity....................................................34
SECTION 8.04 Execution in Counterparts....................................34
SECTION 8.05 Notices......................................................34
SECTION 8.06 Waivers......................................................35
SECTION 8.07 Entire Agreement.............................................35
SECTION 8.08 Applicable Law...............................................36
SECTION 8.09 Binding Effect, Benefits.....................................36
SECTION 8.10 Assignability................................................36
SECTION 8.11 Amendments...................................................36
SECTION 8.12 Applicable Disclosures.......................................36
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INDEX TO SCHEDULES AND EXHIBITS
Schedule Description
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3.02 Shareholder's Agreements
3.03 Qualifications
3.05 Subsidiaries/Other Investments
3.06 Certificate of Incorporation and
By-Laws of the Company
3.09 Intellectual Property Rights
3.10 Contracts and Contract Parties
3.11 Major Suppliers
3.12(a) Employment Contracts and
Other Compensation Agreements
3.12(b) Employee Benefit Plans
3.13 Inventory
3.14(b) Real Estate Leased
3.15 Liens and Encumbrances on
Personal Property
3.16 Accounts and Notes Receivable
3.17 Company Investments
3.18 Tax Matters
3.19 Litigation
3.20 Other Contracts
3.21 Compliance with Employment
Related Laws
3.22 Insurance
3.23 Changes in Conduct of Business
3.25 Officers, Directors and Depositories
3.27 Consents and Waivers
3.28 Licenses and Permits
4.04(e) Accredited Investors
4.04(m) Shareholder Interests
7.03 Certain Life Insurance Policies
iv
Exhibit Ref. Description
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A 7.13 Form of Registration Rights
Agreement
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AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of August
29, 1997, among The BISYS Group, Inc., a Delaware corporation, with an address
at 000 Xxxxx Xxxx, Xxxxxx Xxxxx, Xxx Xxxxxx 00000 ("Parent"), BI-DWW, Inc., a
Delaware corporation and a wholly-owned subsidiary of Parent, with an address at
000 Xxxxx Xxxx, Xxxxxx Xxxxx, Xxx Xxxxxx 00000 ("Acquisition"), Dascit/White &
Winston, Inc., a New York corporation, with an address at 00 Xxxxxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000 (the "Company"), Xxxxxxx X. Xxxxxx, with an address at 0000
Xxxxxxx Xxxxxx, Xxxxxxxx, Xxx Xxxx 00000 ("Xxxxxx"), Xxxxxx X. XxXxxxxxx (a/k/a
Xxxxxx X. Xxxxxxx), with an address at 000 Xxxxxxxx Xxxxxx, Xxxxx Xxxxxxxx, Xxx
Xxxx 00000 ("Xxxxxxx"), and the shareholders of the Company, whose names and
addresses are set forth on the signature pages hereto (all of said persons and
Xxxxxxx being sometimes referred to herein individually as a "Shareholder", and
collectively, together with Xxxxxxx, as the "Shareholders"). Xxxxxxx X. Xxxxxx,
as Trustee of the Trust for the Benefit of Xxxxx Xxxxxx, a Shareholder, is
sometimes referred to herein as the "Xxxxxx Trustee Shareholder." The Company
and Acquisition are hereinafter sometimes referred to as the "Constituent
Corporations" and the Company as the "Surviving Corporation.
WHEREAS, the Company is a general insurance agency;
WHEREAS, Parent, Acquisition and the Company desire that Acquisition
merge with and into the Company (the "Merger"), upon the terms and conditions
set forth herein and in accordance with the Business Corporation Law of the
State of New York (the "New York BCL") and the General Corporation Law of the
State of Delaware (the "Delaware GCL"), with the result that the Company shall
continue as the Surviving Corporation and the separate existence of Acquisition
(except as it may be continued by operation of law) shall cease;
WHEREAS, Parent, Acquisition and the Company desire that upon the
Merger, at the Effective Time (as hereinafter defined), the outstanding shares
of the capital stock of the Company be converted into the right to receive fully
paid and nonassessable shares of Common Stock, $.02 par value, of Parent
("Parent Common Stock"), and the outstanding shares of Acquisition be converted
into the right to receive fully paid and nonassessable shares of the Common
Stock, $.01 par value, of the Surviving Corporation, as hereinafter provided;
WHEREAS, Parent, Acquisition and the Company desire that, immediately
after the Effective Time and solely as a result of the Merger, Parent will own
all the issued and outstanding shares of the capital stock of the Surviving
Corporation;
WHEREAS, for federal income tax purposes, it is intended that the
Merger qualify as a reorganization within the meaning of Section 368 of the
Internal Revenue Code of 1986, as amended (the "Code");
WHEREAS, for accounting purposes, it is intended that
the Merger shall be accounted for as a "pooling-of-interests"; and
WHEREAS, the respective Boards of Directors of the Company, Parent
and Acquisition and the shareholders of the Company have approved the Merger;
NOW, THEREFORE, in consideration of the mutual representations,
warranties, covenants, agreements and conditions contained herein, and in order
to set forth the terms and conditions of the Merger and the mode of carrying the
same into effect, the parties hereto hereby agree as follows:
ARTICLE I
THE MERGER
SECTION 1.01 The Merger. Subject to the terms and conditions of this
Agreement, at the Effective Time, in accordance with this Agreement, the New
York BCL and the Delaware GCL, Acquisition shall be merged with and into the
Company, the separate existence of Acquisition (except as it may be continued by
operation of law) shall cease, and the Company shall continue as the Surviving
Corporation.
SECTION 1.02 Effect Of the Merger. Upon the effectiveness of the
Merger, the Surviving Corporation shall succeed to and assume all the rights and
obligations of the Company and Acquisition in accordance with the New York BCL
and the Delaware GCL and the Merger shall otherwise have the effects set forth
in Section 906 of the New York BCL.
SECTION 1.03 Consummation of the Merger. Simultaneously herewith, the
parties hereto are causing the Merger to be consummated by filing (a) with the
Secretary of State of the State of New York a properly executed Certificate of
Merger in accordance with the New York BCL, and (b) with the Secretary of State
of the State of Delaware a properly executed certificate of merger in accordance
with the Delaware GCL. The effective time of the Merger is referred to herein as
the "Effective Time".
SECTION 1.04 Charter; By-Laws; Directors and Officers. As of the
Effective Time, the Certificate of Incorporation of the Surviving Corporation
shall be the Certificate of Incorporation of
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the Company unless and until thereafter amended or restated in accordance with
the provisions thereof and as provided by the New York BCL. As of the Effective
Time, the By-Laws of the Surviving Corporation shall be the By-Laws of the
Company as in effect immediately prior to the Effective Time, unless and until
thereafter amended in accordance with the provisions thereof and as provided by
the New York BCL. The initial directors and officers of the Surviving
Corporation shall be the directors and officers set forth below, in each case
until their respective successors are duly elected and qualified.
Directors:
Xxxx X. Xxxxxx
Xxxxxx X. XxXxxxxx
Officers:
Xxxx X. Xxxxxx - Chairman
Xxxxxxx X. Xxxxxxxx - President
Xxxxxx X. XxXxxxxx - Executive Vice President and
Treasurer
J. Xxxxxxx Xxxxxxx - Executive Vice President
Xxxxxx X. Xxxx - Executive Vice President
Xxxxxx X. Xxxxxxx - Senior Vice President
Xxxx X. Xxxxxxxxx - Senior Vice President
Xxxxxx X. Xxxxxxx - Senior Vice President
Xxxxx X. Dell - Vice President, General Counsel and
Secretary
Xxxxxxxxx Xxxxxxx - Assistant Secretary
Xxxxxxxx X. Xxxxx - Assistant Secretary
SECTION 1.05 Further Assurances. If at any time after the Effective
Time the Surviving Corporation shall consider or be advised that any deeds,
bills of sale, assignments or assurances or any other acts or things are
necessary, desirable or proper (i) to vest, perfect or confirm, of record or
otherwise, in the Surviving Corporation, its right, title or interest in, to or
under any of the rights, privileges, powers, franchises, properties or assets of
either of the Constituent Corporations, or (ii) otherwise to carry out the
purposes of this Agreement, the Surviving Corporation and its proper officers
and directors or their designees shall be authorized to execute and deliver, in
the name and on behalf of either of the Constituent Corporations, all such
deeds, bills of sale, assignments and assurances and do, in the name and on
behalf of such Constituent Corporation, all such other acts and things
necessary, desirable or proper to vest, perfect or confirm its right, title or
interest in, to or under any of the rights, privileges, powers, franchises,
properties or assets of such
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Constituent Corporation and otherwise to carry out the purposes of this
Agreement.
ARTICLE II
CONVERSION OF SECURITIES
SECTION 2.01 Conversion of Securities of the Company. (a) Net Merger
Price. By virtue of the Merger and without any action on the part of the holders
of the common stock, without par value, of the Company ("Company Common Stock"),
at the Effective Time all outstanding shares of the Company Common Stock
(subject to Section 2.03(b) hereof) shall be converted into the right to receive
58,223.7087 fully paid and nonassessable shares of Parent Common Stock on the
following basis:
The aggregate consideration being paid in connection with the Merger
is being paid in the form of Parent Common Stock valued, as set forth below, at
Two Million Sixty Two Thousand Five Hundred Dollars ($2,062,500.00) less the
amount of $104,000 (the "FILCO Obligation"), representing the maximum amount
payable by the Company as of the Effective Time pursuant to that certain
agreement dated March 26, 1996 among FILCO Intermediary, Ltd. ("FILCO"), the
Company, Krauss, Trapani, Xxxxxxx Xxxxxx and Xxxxxx Xxxx (the "FILCO Agreement")
(the "Net Merger Price"). The Net Merger Price is divided by $33.6375, which is
the average of the daily closing price per share of Parent Common Stock (the
"Average Price"), as reported on the Nasdaq National Market for the 30 trading
day period immediately preceding the day which is three business days prior to
the Effective Time, in order to determine the number of shares of Parent Common
Stock into which the outstanding shares of Company Common Stock are being
converted in the Merger (the "Aggregate Parent Common Stock Consideration").
(b) Exchange Value. Each share of Company Common Stock issued and
outstanding immediately prior to the Effective Time (other than any such shares
held in the treasury of the Company, which are being canceled as provided in
paragraph (c) below) are being converted into the right to receive 582.2371
shares of Parent Common Stock, which represents the quotient obtained by
dividing the number of outstanding shares of Company Common Stock by the
Aggregate Parent Common Stock Consideration.
(c) Treasury Stock. Each share of capital stock that is held in the
treasury of the Company is being canceled and retired and no capital stock of
Parent, cash or other consideration shall be paid or delivered in exchange
therefor.
SECTION 2.02 Acquisition Common Stock. At the Effective Time, each
share of Common Stock, $.01 par value, of
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Acquisition issued and outstanding immediately prior to the Effective Time is
being converted into a right to receive one (1) share of the common stock of the
Surviving Corporation, which shall constitute all of the issued and outstanding
shares of the Surviving Corporation after the Effective Time.
SECTION 2.03 Exchange of Certificates. (a) Simultaneously herewith,
each Shareholder is delivering to Parent the certificate or certificates
representing its shares of Company Common Stock (each, a "Certificate") in form
sufficient for transfer and cancellation pursuant hereto. Each Shareholder
surrendering such Certificate shall be entitled to receive in exchange therefor,
without any further payment of consideration by such Shareholder, (i) a
certificate evidencing that number of whole shares of Parent Common Stock which
such holder has the right to receive in respect of the shares of Company Common
Stock formerly evidenced by such Certificate (after taking into account all
shares of Company Common Stock then held of record by such holder) and (ii) a
check representing the amount of cash in lieu of fractional shares of Parent
Common Stock, if any, and unpaid dividends or other distributions, if any, to
which such holder is entitled pursuant to the provisions of this Section 2.03,
after giving effect to any applicable withholding tax, and the Certificate so
surrendered shall forthwith be canceled. No interest will be paid or accrued on
the cash in lieu of fractional shares and unpaid dividends and distributions, if
any, payable to the Shareholders.
(b) No certificates or scrip representing fractional shares of Parent
Common Stock shall be issued upon the surrender for exchange of Certificates,
and such fractional share interests will not entitle the owner thereof to vote
or to any rights of a shareholder of Parent. Each holder of shares of Company
Common Stock who would otherwise have been entitled to receive in the Merger a
fraction of a share of Parent Common Stock (after taking into account all
certificates surrendered by such holder) shall be entitled to receive, in lieu
thereof, a check in an amount (without interest) equal to such fractional part
of a share of Parent Common Stock multiplied by the Average Price.
(c) Promptly after the Effective Time, the Surviving Corporation
shall issue to Parent a certificate representing One Hundred (100) shares of the
common stock of the Surviving Corporation, and Parent shall cause the
certificate representing the shares of the capital stock of Acquisition to be
canceled.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
AND XXXXXX AND XXXXXXX
Each of the Company and each of Xxxxxx and Xxxxxxx, jointly and
severally, hereby represents and warrants to Parent and Acquisition, knowing and
intending that each of Parent and Acquisition is relying hereon in entering into
the transactions contemplated hereby, as follows:
SECTION 3.01 Authority Relative to Agreement. The Company has all
requisite power and authority to enter into and to perform its obligations
hereunder. The execution and delivery of this Agreement by the Company and the
consummation by the Company of the transactions contemplated hereby have been
duly authorized by the Board of Directors and shareholders of the Company, and
no other corporate proceedings on the part of the Company are necessary to
authorize this Agreement and the transactions contemplated hereby.
SECTION 3.02 Shareholders' Title to Stock. The shares of Company
Common Stock identified on the signature page(s) hereof opposite the respective
names of the holders thereof have been duly and validly issued to the respective
holders. The shares of Company Common Stock owned by them represent,
collectively, all of the issued and outstanding shares of capital stock (or
other equity interests) in the Company. Except with respect to such agreements
set forth on Schedule 3.02 hereto (the "Shareholders' Agreements"), each of
which is terminated as of the Effective Time, neither the Company nor the
Shareholders are party to any shareholders' agreement, buy-sell agreement or
similar agreement or arrangement.
SECTION 3.03 Organization, Standing and Qualification. The Company is
a corporation, duly organized, validly existing and in good standing under the
laws of the State of New York 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 its state of incorporation and the states (or other jurisdictions)
in which it has qualified to do business. The Company is qualified to do
business and is in good standing in all states (or other jurisdictions) in which
such qualification is required by reason of the nature or extent of business
conducted by the Company therein, except where the failure to so qualify would
not have a material adverse effect on the business, results of operations or
financial condition of the Company, and such states (and jurisdictions) are
specified in Schedule 3.03 attached hereto
SECTION 3.04 Stock of the Company. (a) The authorized capital stock
of the Company consists in its entirety of
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Two Hundred (200) shares of Company Common Stock, of which One Hundred (100)
shares of Company Common Stock are validly issued and outstanding, fully paid
and nonassessable. The Company does not have any outstanding subscription,
warrants, convertible securities, obligations, options or rights entitling
others to acquire shares of capital stock of the Company, or any outstanding
securities, options, warrants, rights or other instruments convertible into
shares of capital stock of the Company.
(b) Except with respect to the shares of Company Common Stock
identified on the signature page(s) hereof, none of the Shareholders or any
other person or entity has any outstanding claim against the Company or any
right whatsoever against the Company with respect to any shares of capital stock
of the Company, including, without limitation, any option, warrant or other
right to acquire from the Company shares of the capital stock of the Company or
any securities, options or other instruments convertible into or exchangeable
for shares of capital stock of the Company.
SECTION 3.05 Subsidiaries and Other Investments. Other than as listed
on Schedule 3.05 hereto, and other than FILCO, there is no corporation,
partnership, joint venture, or other entity in which the Company has, directly
or indirectly, made any investment or to which the Company has made an advance
of cash. The Company is not under any obligation to acquire any securities from
any person or entity, and, other than pursuant to the FILCO Agreement, the
Company is not under any obligation to make any investment, loan, cash
contribution or other advance to any person or entity, including, but not
limited to, International Benefits Administrators, L.L.C. or any member thereof.
SECTION 3.06 Certificate of Incorporation and By-Laws. True and
complete copies of the Company's Certificate of Incorporation and By-Laws
(together with any amendments thereto) are attached hereto as Schedule 3.06. The
Company has provided to Parent true and complete copies of the Certificate of
Incorporation and By-Laws of the Company and the Certificate of Incorporation
and By-Laws or other organizational agreements and documents of each Subsidiary,
together with all amendments thereto.
SECTION 3.07 Execution and Performance of Agreement; Validity and
Binding Nature. The execution and delivery of this Agreement, and the
performance by the Company, Xxxxxx, Xxxxxxx and the Shareholders of the terms of
this Agreement and the transactions contemplated hereby, will not result in a
breach of any of the terms of, or constitute a violation of or default under,
the Certificate of Incorporation or By-Laws of the Company or any statute or
contract, indenture or other instrument by which the Company, Krauss, Trapani,
or the Shareholders or any of their respective properties are bound, and except
as provided in Section
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3.27 and disclosed in Schedule 3.27 hereof, no consent, approval, authorization
or order of any court or governmental authority is required in connection with
the execution and delivery of the Agreement by the Company, Xxxxxx, Xxxxxxx and
the Shareholders and the performance by the Company, Xxxxxx, Xxxxxxx and the
Shareholders of the terms of this Agreement and the transactions contemplated
hereby. This Agreement has been duly executed and delivered by the Company,
Xxxxxx, Xxxxxxx and the Shareholders. This Agreement is, and the documents and
agreements executed and delivered by the Company, Xxxxxx, Xxxxxxx and the
Shareholders pursuant to the terms hereof, when duly executed and delivered by
all parties whose execution and delivery thereof is required, will be legal,
valid, and binding obligations of the Company, Xxxxxx, Xxxxxxx and the
Shareholders, enforceable against the Company, Xxxxxx, Xxxxxxx and the
Shareholders 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 3.08 Financial Statements. Parent has caused Coopers &
Xxxxxxx L.L.C. to audit the combined balance sheet of the Company and its
affiliated entities, Xxxxxx & Xxxxxxx Co., Ltd. and Group Plan Administrators,
Inc., as of April 30, 1997 (the "April 1997 Combined Balance Sheet"), and notes
thereto. The Company has delivered to Parent (i) the unaudited balance sheet of
the Company as of April 30, 1997 (the "April 1997 Balance Sheet") used for
purposes of preparing the April 1997 Combined Balance Sheet and included
therein, and the related unaudited statements of income, stockholders' equity
and cash flows for the period then ended, and notes thereto, and (ii) the
unaudited balance sheet of the Company as of December 31, 1996 (the "December
1996 Balance Sheet"), and the related unaudited statements of income,
stockholders' equity and cash flows for the fiscal year then ended, and notes
thereto, herein referred to collectively as the "Financial Statements". All
prepaid expenses included in the Financial Statements as assets represent
payments theretofore made by the Company, the benefit and advantage of which may
be obtained and enjoyed by the Surviving Corporation. The books and records of
the Company have been kept, and will be kept to the Effective Time, in
reasonable detail and in accordance with the same accounting principles
heretofore used and consistently applied.
SECTION 3.09 Intellectual Property Rights. Schedule 3.09 attached
hereto contains a complete and correct list and accurate description of all
trademarks, trade names, service marks, logos and other identifying symbols,
names or marks, copyrights, inventions, processes, designs, formulas, trade
secrets, patents, patent applications and other intellectual and/or proprietary
rights or interests (collectively, "Intellectual Property Rights")
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(a) owned by the Company free and clear of all licenses, liens, charges or
encumbrances, except as specified in such Schedule, or (b) licensed to the
Company under valid and enforceable agreements. The Company owns, or possesses
adequate rights to use, all Intellectual Property Rights necessary for the
conduct of the business of the Company, and the protection of patents is not
material to the conduct of the business of the Company. There are no
infringements by any third parties upon any Intellectual Property Rights or any
conflict with or infringement by the Company of the rights of others with
respect to same.
SECTION 3.10 Contracts and Contract Parties. Schedule 3.10 contains a
complete list of (a) each joint venture, co-marketing, co-brokerage or similar
contract or arrangement, whether written or oral, to which the Company is a
party, (b) each contract or arrangement, whether written or oral, with an
insurance company, general insurance agency, distributor or broker to which the
Company is a party, and under which the Company is authorized or obligated to
sell or broker insurance or related products or services, (c) each contract or
arrangement, whether written or oral, under which the Company receives
commissions or other income in connection with the conduct of its business, (d)
each lease or capital lease of equipment or other personal property, whether
written or oral, to which the Company is a party and (e) each consulting or
similar agreement, whether written or oral, to which the Company is a party, all
of the foregoing including the names and addresses of each party thereto other
than the Company (collectively, the "Contract Parties"), in each case under
which the Company's revenues or expenses exceeded $10,000.00 for the twelve
months ended June 30, 1997 or under which the Company reasonably anticipates
that its revenues or expenses will exceed $10,000.00 in the twelve months ending
June 30, 1998. True and complete copies of those contracts or arrangements
described in this Section 3.10 which are in writing have been made available to
Parent, and accurate descriptions of those contracts or arrangements described
in this Section 3.10 which are oral have been made available to Parent. Except
as described in Schedule 3.10, none of the contracts or arrangements listed in
Schedule 3.10 require the Company to purchase any product or service exclusively
from a Contract Party, require the Company to deal exclusively with a Contract
Party with respect to any customer or class of customers of the Company, or
otherwise limit the Company from selling or purchasing any product or service to
or from any person or entity. No Contract Party listed in Schedule 3.10 has
expressed to the Company, Xxxxxx or Xxxxxxx its intention to cancel or otherwise
terminate its relationship with the Company, and, to the knowledge of the
Company, Xxxxxx and Xxxxxxx, all of such contracts and arrangements will
continue in full force and effect after the Effective Time and a continuing
relationship with each such Contract Party is not in jeopardy.
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SECTION 3.11 Major Suppliers. Except as disclosed in Schedule 3.11,
and other than insurance companies or insurance brokers, there are no suppliers
or consultants from whom the Company has purchased goods and/or services
(collectively, the "Major Suppliers"), the loss of which would cause a material
adverse effect on the business, results of operations or financial condition of
the Company or the Surviving Corporation. No Major Supplier has expressed to the
Company, Xxxxxx or Xxxxxxx its intention to cancel or otherwise terminate its
relationship with the Company or the Surviving Corporation.
SECTION 3.12 Employment, Deferred Compensation or Similar Agreements;
Collective Bargaining Agreements; Employee Benefit Plans. (a) Except as
disclosed in Schedule 3.12(a), the Company is not a party to any agreement or
employment contract or deferred compensation or similar employment or incentive
compensation arrangement with any of its respective employees or former
employees. There are no collective bargaining agreements or any agreements with
any labor union covering any employees of the Company. The business of the
Company is not affected by any present strike or other labor disturbance
involving the employees of the Company nor, to the best knowledge of the Company
or any Management Shareholder, is any union attempting to represent, as
collective bargaining agent, any person employed by the Company.
(b) Except as disclosed in Schedule 3.12(b), the Company does not
sponsor or maintain and is not otherwise a party to or liable under 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 the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), or any other
benefit arrangement for its employees, their dependents and beneficiaries.
(c) Except as disclosed in Schedule 3.12(b) hereto, the Company has
not and does not contribute to any multi-employer plan (as defined in Section
3(37) of ERISA), incurred any liability under Section 4201 of ERISA for any
complete or partial withdrawal from any multi-employer plan and has not assumed
any such liability by any prior owner of any of its assets or properties.
(d) Each employee pension benefit plan maintained by the Company and
listed in Schedule 3.12(b) complies in all material respects with the
requirements of ERISA. No "reportable event" within the meaning of Section 403
of ERISA has occurred with respect to any such plan and the Company has not
engaged in any "prohibited transaction" within the meaning of Section 406(a) or
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(b) of ERISA or of Section 4975(c) of the Code, with respect to any such plan;
and no such plan has been terminated in accordance with the procedures set forth
in Section 4041 or 4042 of ERISA.
(e) 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 plan
described in Schedule 3.12(b). The Company has, and shall have, for all periods
ending on or prior to the Effective Time, administered each employee pension
benefit plan and each employee welfare benefit plan described in Schedule
3.12(b) in all material respects in compliance with the reporting, disclosure
and all other requirements applicable thereto under ERISA, the Code or any other
applicable law.
SECTION 3.13 Inventory. Except as disclosed in Schedule 3.13 or in
the April 1997 Balance Sheet, the Company does not own any inventory, and the
ownership and maintenance of inventory is not significant to the conduct of the
business of the Company.
SECTION 3.14 Real Estate. (a) The Company owns no real property. The
Company is not a party to any agreement involving the purchase or sale of real
or personal property except as disclosed in this Agreement or a Schedule hereto.
(b) Schedule 3.14 (b) contains a true and correct list and
description of all leases, subleases or other agreements under which the Company
is lessee or subtenant or lessor or sublessor of real estate. The Company has
provided to Parent true and complete copies of all such leases, subleases and
agreements, all of which leases, subleases and agreements are valid, binding and
enforceable. The Company has no oral leases of real estate.
(c) All leased real property (and improvements thereon) described in
Schedule 3.14(b) is in good operating condition and repair and conforms in all
material respects with all applicable building, zoning, planning and other
regulations, ordinances or laws, and the Company has the right to use all real
estate necessary to the conduct of its business as currently conducted.
SECTION 3.15 Title to and Condition of Personal Property. The Company
has merchantable title to all personal property reflected in the April 1997
Balance Sheet or acquired subsequent to the date of the April 1997 Balance
Sheet, free and clear of all liens or encumbrances, except as disclosed in
Schedule 3.15 hereto. No representation or warranty as to the condition of any
such personal property is made in this Agreement. The Company owns or has the
right to use all such properties necessary to the conduct of its business as
currently conducted.
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SECTION 3.16 Accounts and Notes Receivable. Except as disclosed in
Schedule 3.16, the accounts and notes receivable of the Company reflected in the
April 1997 Balance Sheet or acquired by the Company subsequent to the date of
the April 1997 Balance Sheet (a) are true, bona fide accounts or notes
receivable of the Company created in the ordinary course of business; (b) have
been collected or are fully collectible in amounts not less than the aggregate
amount thereof, net of reserves established therefor, on the books of the
Company and reflected in the April 1997 Balance Sheet; (c) are not subject to
any offsets, credits or counterclaims; and (d) have not at any time been placed
for collection with any attorney, collection agency or similar individual or
firm.
SECTION 3.17 Marketable Securities and Other Investments. Schedule
3.17 lists all of the marketable securities and other investments shown on the
April 1997 Balance Sheet (the "Company Investments"), all of which are owned by
the Company free and clear of any liens, encumbrances or claims, except as shown
in Schedule 3.17. The value of each of the Company Investments shown on the
April 1997 Balance Sheet reflect the fair market value thereof on the date of
the April 1997 Balance Sheet, as applicable, and the Financial Statements are in
conformity with the requirements of Financial Accounting Standards Board
Statement No. 115. All of the Company Investments are readily marketable except
as described in Schedule 3.17, and, since the date of the April 1997 Balance
Sheet, as applicable, there has been no material decline in the aggregate market
value of the Company Investments.
SECTION 3.18 Taxes. The Company has properly completed and filed all
federal, state, county, municipal and other tax returns, reports and
declarations which are required to be filed by it and has paid all taxes,
penalties and interest which have become due pursuant thereto or which became
due pursuant to asserted deficiencies or assessments. The Company has reported
its income for tax purposes on the cash method of accounting and will be
required pursuant to the Code to change to the accrual method of accounting at
the Effective Time. By reason of such change in the method of accounting, the
Surviving Corporation may be required to make certain adjustments to its taxable
income and may be required to pay additional taxes in respect of income which
the Company would have been required to report had it used the accrual method of
accounting prior to the Effective Time, it being understood and agreed hereunder
that such additional taxes, if any, shall be the exclusive liability of the
Surviving Corporation. Except as set forth in Schedule 3.18 hereto, the Company
has not received any notice of deficiency or assessment of additional taxes, all
such deficiencies or assessments set forth in Schedule 3.18 are being
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contested in good faith and through appropriate proceedings, and no tax audits
are in process. The last year for which the federal or state income taxes or
other taxes of the Company have been examined is set forth accurately and
completely on Schedule 3.18 hereto. The Company has not granted any waiver of
any statute of limitation with respect to, or any extension of a period for the
assessment of, any federal, state, county, municipal or other tax. The Company
filed an election under Section 1362(a) of the Code to be taxed as an S
Corporation on the date indicated on Schedule 3.18, and said election is in
effect on and as of the date hereof.
SECTION 3.19 Litigation. Except as disclosed in Schedule 3.19, there
is no litigation, investigation or proceeding pending or, to the knowledge of
the Company, Xxxxxx or Xxxxxxx, threatened, involving the Company or any of its
properties. There are no outstanding orders, writs, injunctions or decrees of
any court, governmental agency or arbitration tribunal materially affecting or
materially limiting the conduct of the business of the Company.
SECTION 3.20 Other Material Contracts and Commitments. Except as
disclosed in Schedule 3.20 or another Schedule hereto, the Company is not a
party to and none of its properties are bound by any of the following types of
contracts or commitments, written or oral: (a) mortgages, indentures, security
agreements and other agreements and instruments relating to the borrowing of
money in excess of $10,000.00 in the aggregate or extension of credit in excess
of $10,000.00 in the aggregate or imposition of an encumbrance on any of the
assets of the Company; (b) any contract with any officer, director or with any
employee of the Company (other than agreements relating to current wage or
salary payments terminable by the Company on notice of thirty (30) days or
less); (c) any contract or promissory note or other instrument with any
Affiliate (as hereinafter defined) of the Company; (d) any guarantee of the
obligations of any person or entity or obligation to provide funds or assume the
debt of any person or entity; (e) any option or right to acquire any assets of
the Company outside of the ordinary course of business; or (f) profit-sharing,
stock option, pension, or retirement agreements, shareholder or similar
agreements or arrangements, trusts, or funds for the benefit of employees
(collectively, the "Other Contracts"). The Company has delivered to Parent
complete and correct copies of all of the Other Contracts as are in writing,
together with all amendments thereto, and accurate descriptions of all of the
other Contracts which are oral. The Company is not in default with respect to
any of the Other Contracts, and to the knowledge of the Company, Xxxxxx and
Xxxxxxx, no other party to any of the Other Contracts is in default with respect
thereto. Except as specifically set forth on Schedule 3.20, each of the Other
Contracts will continue in full force and effect after the Effective Time
without any right on the part of
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any party thereto, other than the Surviving Corporation, to terminate it as a
result of the occurrence of the Merger. For purposes of this Agreement, an
"Affiliate" of the Company means (a) any corporation, partnership, trust or
other entity in control of, controlled by or under common control with the
Company; and (b) any officer, director, trustee, general partner or employee of
any corporation, partnership, trust or other entity in control of, controlled by
or under common control with the Company. For purposes of this Agreement, the
term "control" (including the terms "controlling," "controlled by" and "under
common control with") means the possession, direct or indirect, 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.
Schedule 3.20 discloses all Affiliates of the Company which are business
entities currently in existence.
SECTION 3.21 Labor Relations. Except as disclosed in Schedule 3.21,
the Company, in the conduct of its affairs, has complied in all material
respects with all applicable laws (including, without limitation, labor and tax
laws), and regulations relating to the hiring and employment of employees and
independent contractors, including, without limitation, those related to
discrimination, wages, hours, collective bargaining, employee pension and
welfare benefit plans, and the payment of (and withholding for) income, Social
Security and other employment related taxes, and the Company is not liable for
any penalties or damages for failure to comply with any of the foregoing. There
are no unfair labor practice claims or charges pending or threatened involving
the Company.
SECTION 3.22 Insurance. Schedule 3.22 hereto contains a list and
description (including the name of the insurer, coverage and expiration date) of
all insurance policies maintained by the Company. Schedule 3.22 further lists
all claims presently pending or threatened which are covered by such policies.
The Company has not received notice of cancellation or non-renewal of any of
such policies.
SECTION 3.23 Conduct of Business and Absence of Changes. Except as
disclosed in Schedule 3.23, since April 30, 1997, the Company has conducted its
business in the regular and ordinary course and has not (a) undergone any
material adverse change in its condition (financial or otherwise), assets,
liabilities, business, or operations, (b) declared, set aside, made or paid any
cash or stock dividend or distribution or purchased, issued or sold any shares
of its capital stock, (c) incurred any indebtedness for borrowed money other
than as disclosed in Schedule 3.20 or issued or sold any debt securities, (d)
instituted any increase in the compensation or bonuses payable or to become
payable to any officers or employees, or any changes in personnel
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policies or employees benefits, or (e) made any payment to any Shareholder
except for payments described in a Schedule hereto and regular salary and
ordinary and necessary business expense reimbursements.
SECTION 3.24 Compliance with Laws; Governmental Authorizations. The
Company is in compliance, in all material respects, with all statutes, laws,
ordinances, rules, regulations, judgments, orders, decrees, governmental
licenses or permits and other governmental licenses, permits, authorizations or
approvals applicable to it or any of its properties. All governmental licenses,
permits, authorizations or approvals necessary for the conduct of its business
have been duly and lawfully obtained and are in full force and effect, except
where the failure to obtain and/or maintain the same would not have a material
adverse effect on the business, results of operations or financial condition of
the Company, and none of the Company, Xxxxxx or Xxxxxxx have knowledge of any
proceedings pending or threatened which may result in the revocation,
cancellation or suspension, or any materially adverse modification, of any
thereof.
SECTION 3.25 Officers, Directors and Depositories. Schedule 3.25
hereto contains the names of all the officers and directors of the Company, the
names of all depositories of the funds of the Company and the names of the
officers and other persons empowered to sign instruments withdrawing funds from
said depositories.
SECTION 3.26 Environmental Matters. (a) The business and operations
of the Company comply in all material respects with all federal, state and local
laws, rules, regulations and directives pertaining to the environment. No
governmental agency has asserted any claim or given notice of any possible claim
or, to the knowledge of the Company, Xxxxxx or Xxxxxxx, threatened to assert any
claim against the Company in respect of its business, any assets owned or leased
by it, real properties owned or leased by it, or the condition, use or operation
thereof, arising out of any federal, state or local law, rule, regulation or
directive pertaining to the environment.
(b) To the best knowledge of the Company and Xxxxxx and Xxxxxxx,
there are nowhere on any real property leased by, used by or otherwise under the
control of the Company any deposits, dumps, or tanks of toxic or other
poisonous, dangerous or noxious waste, fluids, solvents, chemicals or effluents,
all of which chemicals, fuels and fluids are properly and safely stored,
identified, labeled and maintained in accordance with applicable industrial
standards and all governmental or other laws or regulations relating thereto.
The Company does not discharge from any real property leased, used or otherwise
under its control, whether by
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effluent, emission or other means, any noxious, toxic, hazardous or deleterious
matter or gases. All discharges of waste material and other substances from the
operating facilities of the Company are in full compliance with applicable law
and covered by valid permits and licenses, where required.
SECTION 3.27 Third Party and Governmental Consents. Except as
disclosed in Schedule 3.27 hereto, and except for (i) consents of or filings
with governmental agencies and (ii) consents of insurance carriers or other
parties under contracts terminable at will or on notice of 60 days or less, no
consent, waiver, authorization, approval, order, license, certificate or permit
of or from, or registration, declaration or filing with, any court or other
tribunal or any other person, firm or entity, nor under any contract, indenture,
mortgage, lease, license or other agreement or instrument to which the Company,
Xxxxxx or any Shareholder is a party or by which the Company, Xxxxxx or any
Shareholder, or any of their respective assets or properties, is subject or
bound, is required by or with respect to the Company, Xxxxxx or any Shareholder
in connection with the execution, delivery or performance of this Agreement or
of any other agreement, document or instrument to be executed and delivered by
the Company, Xxxxxx or any Shareholder pursuant hereto or in connection herewith
or the consummation of the transactions contemplated hereby. The Company,
Xxxxxx, Xxxxxxx or a Shareholder, as applicable, has obtained all consents and
waivers listed in Schedule 3.27 on or prior to the date hereof, including,
without limitation, the consent of American Mayflower Life Insurance Company and
the consent of First Colony Life Insurance Company.
SECTION 3.28 Licenses and Permits. The Company has obtained all
consents, approvals, waivers, licenses and permits from governmental authorities
required to have been obtained by it in connection with the ownership of the
assets of the Company and the operation of the business of the Company as
presently and heretofore conducted, including, without limitation, all insurance
producer and similar licenses required to have been obtained by it (herein
collectively referred to as the "Company Licenses"), except where the failure to
obtain the same would not have a material adverse effect on the business,
results of operations or financial condition of the Company. Except as disclosed
in Schedule 3.28 hereto, the Company, Xxxxxx or Xxxxxxx is not aware of any
failure by any employee and agent of the Company to obtain all approvals,
licenses and permits from governmental authorities required in connection with
the operation of the business of the Company and the services provided by such
employee or agent to the Company, including, without limitation, insurance
producer licenses and similar licenses (herein collectively referred to as the
"Employee and Other Licenses"). The Company Licenses and the Employee and Other
Licenses are listed on Schedule 3.28 hereto and, except as
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otherwise set forth in Schedule 3.28 hereto, no other licenses or permits are
required to conduct or operate the business of the Company as presently
conducted, except where the failure to obtain the same would not have a material
adverse effect on the business, results of operations or financial condition of
the Company. None of the Company Licenses or the Employee and Other Licenses are
threatened to be revoked or suspended, and there are no disciplinary proceedings
pending or threatened by, any issuer of any such license or any other
governmental authority against the holder thereof.
SECTION 3.29 Software. The Company does not own or license any
computer software or related programs other than off-the-shelf software licensed
to the Company and used in the ordinary course of the Company's business.
SECTION 3.30 Loans to or from Shareholders or Employees. The Company
does not have outstanding any loans, advances or other indebtedness incurred by
Xxxxxx, Xxxxxxx or any Shareholder or any employee, former employee or former
shareholder of the Company or any member of their respective families, and there
are no loans or advances made to the Company by or indebtedness incurred by the
Company to Xxxxxx, Xxxxxxx or any Shareholder or any employee, former employee
or former shareholder of the Company, or any member of their respective
families.
SECTION 3.31 Absence of Undisclosed Liabilities. Except as and to the
extent disclosed or accrued on the Financial Statements or incurred in the
ordinary course of business since the date of the April 1997 Balance Sheet,
there exist no liabilities or obligations of any nature whatsoever (whether
absolute, contingent or otherwise) known to the Company, Xxxxxx or Xxxxxxx in
respect of the business or assets of the Company of the type customarily
reflected in financial statements prepared in accordance with generally accepted
accounting principles. None of the Company, Xxxxxx or Xxxxxxx knows or has any
reasonable grounds to know after due inquiry of any basis for assertion against
the Company of any claim or liability of any nature in any amount not fully
disclosed in the Financial Statements or otherwise pursuant to the terms hereof.
SECTION 3.32 Shareholders' and Similar Agreements. Except as set
forth in Schedule 3.02, neither any Shareholder, nor any other person or entity,
nor the Company, Xxxxxx or Xxxxxxx are parties to any shareholders' agreement,
buy-sell agreement, stock rights agreement or any similar agreement or
arrangement related to the purchase and sale of any shares of Company Common
Stock. As of the Effective Time, each of the agreements listed in Schedule 3.02
is terminated and will be of no further effect, and, as of the Effective Time,
the Company has no obligation to any Shareholder or
-17-
74y other person or entity for the purchase of any shares of Company Common
Stock or for the payment of any consideration in respect of the purchase, sale
or other disposition of shares of Company Common Stock.
SECTION 3.33 Approval of Merger. The Merger has been duly and validly
authorized and approved by the holders of 100% of the outstanding shares of
Company Common Stock.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF THE SHAREHOLDERS
Each Shareholder hereby represents and warrants to Parent and
Acquisition, as to itself, severally and not jointly, as follows, knowing and
intending that each of Parent and Acquisition is relying hereon in entering into
the transactions contemplated hereby:
SECTION 4.01 Authority and Capacity Relative to Agreement. Such
Shareholder has all requisite power, authority and legal capacity to enter into
and perform each of its obligations hereunder.
SECTION 4.02 Execution and Performance of Agreement; Validity and
Binding Nature. The execution and delivery of this Agreement, and the
performance by such Shareholder of the terms of this Agreement and the
transactions contemplated hereby, will not result in a material breach of any of
the terms of, or constitute a violation or default under, any statute or
contract, indenture or other instrument by which such Shareholder or any of its
respective properties are bound, and no consent, approval, authorization or
order of any court or governmental authority is required in connection with the
execution and delivery of this Agreement by such Shareholder and the performance
by such Shareholder of the terms of this Agreement and the transactions
contemplated hereby. This Agreement has been duly executed and delivered by each
Shareholder and, together with the other documents and agreements to be executed
by all parties whose execution and delivery thereof is required, constitutes the
legal, valid and binding obligations of such Shareholder, enforceable against
such Shareholder 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.
-18-
SECTION 4.03 Stock of the Company. The number of shares of Company
Common Stock beneficially owned by such Shareholder is as identified on the
signature page(s) hereof opposite the respective Shareholder's name. The shares
of Company Common Stock beneficially owned by such Shareholder are owned free
and clear of all liens, claims, options, encumbrances or restrictions
whatsoever. Such Shareholder has the full legal right and power and all
authorizations and approvals required by law or otherwise to sell, transfer and
deliver such shares hereunder and to make the representations, warranties and
agreements set forth in this Agreement. Except with respect to the shares of
Company Common Stock identified on the signature page(s) hereof opposite such
Shareholder's name, such Shareholder has no outstanding claim against the
Company or any right whatsoever with respect to any shares of the capital stock
of the Company, including without limitation any option, warrant or other right
to acquire shares of the capital stock of the Company or any securities, options
or other instruments convertible or exchangeable into shares of capital stock of
the Company. Except as set forth in that certain Shareholders' Agreement of
Company disclosed on Schedule 3.32, no Shareholder has granted any option or
other right to acquire from such other Shareholder any shares of Company Common
Stock.
SECTION 4.04 Additional Representations and Covenants of
Shareholders. Each Shareholder hereby acknowledges, represents and warrants to
Parent, as to itself, severally and not jointly and agrees as follows, knowing
and intending that Parent is relying hereon in entering into the transaction
contemplated hereby:
(a) Such Shareholder understands that the shares of Parent Common
Stock which are the subject of this Agreement are intended to be exempt from
registration under the Securities Act of 1933, as amended (the "Securities Act")
by virtue of Section 4(2) thereof, based, in part, upon the representations,
warranties and agreements of each Shareholder contained in this Agreement.
(b) Neither the Securities and Exchange Commission (the "SEC") nor
any state securities commission has approved the Parent Common Stock or passed
upon or endorsed the merits of an investment therein or confirmed the accuracy
or adequacy of any information provided by Parent to the Shareholders or the
accuracy or adequacy of any of the representations, warranties and agreements of
Parent contained herein.
(c) Such Shareholder is acquiring Parent Common Stock solely for its
own account for investment and not with any present view to resale or
distribution thereof, in whole or in part. No Shareholder has any agreement or
arrangement, formal or informal, written or oral, with any person to sell or
transfer or otherwise dispose of all or any part of the Parent Common Stock, and
none has
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any present plans to enter into any such agreement or arrangement.
(d) No Shareholder became aware of the offer and sale of Parent
Common Stock through or as a result of any form of general solicitation or
general advertising including, without limitation, any article, notice,
advertisement or other communication published in any newspaper, magazine or
other media in connection with the offer and sale of Parent Common Stock
contemplated hereby and no Shareholder is purchasing Parent Common Stock through
or as a result of any seminar or meeting to which any Shareholder was invited.
(e) Such Shareholder, if listed in Schedule 4.04(e), meets the
requirements of at least one of the categories of an "accredited investor", as
defined in Rule 501(a) under the Securities Act.
(f) Such Shareholder, or such Shareholder together with its Purchaser
Representative (hereinafter defined), has such knowledge and experience in
financial, tax, and business matters in general, and investments in securities
in particular, so as to enable such Shareholder to evaluate the merits and risks
of an investment in Parent Common Stock and to make an informed investment
decision with respect thereto.
(g) Such Shareholder, or such Shareholder together with its Purchaser
Representative, is familiar with the business, historical financial performance
and prospects of the Company, including the risks associated therewith. All
information, including, without limitation, financial information and the
Financial Statements, provided by the Company or such Shareholder for insertion
in the Merger Information (hereafter defined) does not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances in which they were made, not misleading, it being
understood and acknowledged that such information has not been independently
verified by Parent or Acquisition.
(h) Such Shareholder recognizes that it must bear the substantial
economic risks of the investment in Parent Common Stock indefinitely, because
none of the Parent Common Stock may be sold, transferred, hypothecated or
otherwise disposed of unless such Parent Common Stock is registered under the
Securities Act and applicable state securities laws or an exemption from such
registration is available. Legends shall be placed on the certificates
representing Parent Common Stock issuable stating that the shares represented
thereby have not been registered under the Securities Act or applicable state
securities laws, and appropriate notations thereof will be made in Parent's
stock books.
-20-
(i) Such Shareholder has adequate means of providing for its current
financial needs and foreseeable contingencies and has no need for liquidity of
its investment in Parent Common Stock for an indefinite period of time. Such
Shareholder's overall commitment to investments which are not readily marketable
is not excessive in view of its net worth and financial circumstances and the
purchase of the Parent Common Stock will not cause such commitment to become
excessive.
(j) Such Shareholder is not relying on Parent or any of its employees
or agents with respect to the legal, tax, economic and related considerations of
an investment in Parent Common Stock, other than as expressly contained in the
representations and warranties of Parent contained in Article V hereof. There
has been delivered to such Shareholder copies of this Agreement, Parent's Annual
Report on Form 10-K for the fiscal year ended June 30, 1996, Parent's 1996
Annual Report to Stockholders, Parent's Quarterly Reports on Form 10-Q for the
quarters ended September 30, 1996, December 31, 1996 and March 31, 1997,
Parent's Proxy Statement for its Annual Meeting held on November 14, 1996,
Parents Press Releases dated July 17, 1997 and August 5, 1997, the Financial
Statements and a summary description of the Company's business (collectively,
the "Merger Information"). Such Shareholder, or such Shareholder together with
its Purchaser Representative, has read and fully understands the Merger
Information.
(k) Such Shareholder, or such Shareholder together with its Purchaser
Representative, (i) has had the opportunity to obtain all information requested
by him for the purposes of verifying the Merger Information or for any other
purpose related hereto and (ii) has had the opportunity to meet with
representatives of Parent and the Company and to have them answer any questions
and provide such additional information regarding the terms and conditions of
the transactions contemplated hereby, the information with respect to Parent
included in the Merger Information and the business and prospects of Parent
deemed relevant by such Shareholder, or such Shareholder together with its
Purchaser Representative, all of which questions have been answered and all of
which requested information has been provided to the full satisfaction of such
Shareholder. Such Shareholder is aware that an investment in Parent Common Stock
is speculative and involves significant risks, including, among other things,
the risk of the loss of such Shareholder's entire investment in Parent Common
Stock.
(l) In evaluating the suitability of an investment in Parent, and in
deciding to enter into this Agreement, no Shareholder, nor any Shareholder
together with its Purchaser Representative, has relied upon any representation
or other information (whether oral or written) other than as set forth in
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the representations and warranties of Parent contained in Article V of this
Agreement and the Merger Information. No oral or written representations have
been made, or oral or written information furnished, to any Shareholder in
connection with the offer and sale of Parent Common Stock that are in any way
inconsistent with the representations and warranties of Parent contained herein
or any of the information contained in the Merger Information.
(m) Except as described in Schedule 4.04(m) hereto, no Shareholder
has any beneficial interest, directly or indirectly, in any person, firm,
corporation, partnership or other entity which is or within the past two years
has been a supplier of any goods or services to the Company, including, without
limitation, any Major Supplier, or from which the Company has received fees,
including, without limitation, any Contract Party, other than as the beneficial
owner of 1% or less of the voting securities of a publicly held corporation. The
nature and amount of any such beneficial interest is disclosed in Schedule
4.04(m).
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT
Parent represents and warrants to the Company and each Shareholder as
follows:
SECTION 5.01 Organization and Qualification. Parent is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware and has all requisite corporate power and authority to own or
lease and operate its properties and assets and to carry on its business as it
is now being conducted. Parent is duly qualified as a foreign corporation to do
business, and is in good standing, in each jurisdiction in which the character
of its properties owned or leased or the nature of its activities makes such
qualification necessary, except where the failure to be so qualified would not
have a material adverse effect on the business, results of operations or
financial condition of Parent and its subsidiaries, taken as a whole.
SECTION 5.02 Acquisition. Acquisition is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has all requisite corporate power and authority to own or lease and
operate its properties and to carry on its business as it is now being
conducted. Acquisition is duly qualified as a foreign corporation to do
business, and is in good standing, in each jurisdiction in which the character
of its properties owned or leased or the nature of its activities makes such
qualification necessary, except where the failure to be so qualified would not
have a material adverse effect on business, results of operations or financial
condition of Parent and its
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subsidiaries, taken as a whole. All the outstanding shares of capital stock of
Acquisition are validly issued, fully paid and nonassessable and are owned by
Parent.
SECTION 5.03 Capitalization. The authorized capital stock of Parent
consists of 80,000,000 shares of Parent Common Stock, and, as of June 30, 1997,
25,235,288 shares of Parent Common Stock were issued and outstanding, all of
which were validly issued and are fully paid and nonassessable. Except as
contemplated hereby and except for rights or options outstanding under Parent's
employee stock purchase and stock options plans, and rights outstanding under
the Rights Agreement dated May 7, 1997 between Parent and Bank of New York, as
rights agent, no subscription, warrant, option, convertible security, stock
appreciation or other right (contingent or other) to purchase or acquire any
shares of any class of capital stock of Parent is authorized or outstanding and
there is not any agreement of Parent to issue any shares, warrants, options or
other such rights or to distribute to holders of any class of its capital stock
any evidences of indebtedness or assets. Parent does not have any obligation
(contingent or other) to purchase, redeem or otherwise acquire any shares of its
capital stock or any interest therein or to pay any dividend or make any other
distribution in respect thereof. At the Effective Time, Parent will have
sufficient authorized and unissued shares of Parent Common Stock available for
issuance in accordance with Article II hereof. When issued to the Shareholders
hereunder, such shares of Parent Common Stock will have been duly authorized by
Parent and, upon receipt of consideration therefor in accordance with the terms
hereof, such shares will be validly issued, fully paid and nonassessable shares
of Parent Common Stock.
SECTION 5.04 Authority Relative to Agreement. Parent has all
requisite corporate power and authority to enter into this Agreement and to
perform its obligations hereunder. The execution and delivery of this Agreement
by Parent and the consummation by Parent of the transactions contemplated hereby
(including issuance of Parent Common Stock to the Shareholders pursuant to the
terms hereof) have been duly authorized by the Board of Directors of Parent, and
no other corporate proceedings on the part of Parent are necessary to authorize
this Agreement and the transactions contemplated hereby. This Agreement has been
duly executed and delivered by Parent and constitutes the legal, valid and
binding obligation of Parent, enforceable against Parent in accordance with its
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 5.05 Non-Contravention. The execution and delivery of this
Agreement by Parent and the consummation by Parent
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of the transactions contemplated hereby will not (a) conflict with any provision
of the Certificate of Incorporation or By-Laws of Parent or (b) result (with or
without the giving of notice or the lapse of time or both) in any violation of
or default or loss of a benefit under, or permit the acceleration of any
obligation under, any mortgage, indenture, lease, agreement or other instrument,
permit, concession, grant, franchise, license, judgment, order, decree, statute,
law, ordinance, rule or regulation applicable to Parent or any of its
subsidiaries or any of their respective properties, other than any such
violation, default, loss or acceleration that would not have a material adverse
effect on the business, results of operations or financial condition of Parent
and its subsidiaries, taken as a whole.
SECTION 5.06 Parent Public Information. Parent has provided to each
Shareholder a copy of that portion of the Merger Information consisting of the
public reports and press releases of Parent referred to in Section 4.04(j) the
"Parent Public Information"). The Parent Public Information does not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
SECTION 5.07 Financial Statements. The consolidated financial
statements of Parent included in the Parent Public Information have been
prepared in accordance with GAAP consistently applied and consistent with prior
periods, subject, in the case of unaudited interim consolidated financial
statements, to year-end adjustments (which consist of normal recurring accruals)
and the absence of certain footnote disclosures. The consolidated balance sheets
of Parent included in the Parent Public Information fairly present in all
material respects the financial position of Parent and its subsidiaries as of
their respective dates, and the related consolidated statements of operations,
shareholders' equity and cash flows included in the Parent Public Information
fairly present in all material respects the results of operations of Parent and
its subsidiaries for the respective periods then ended, subject, in the case of
unaudited interim financial statements, to year-end adjustments (which consist
of normal recurring accruals) and the absence of certain footnote disclosures.
SECTION 5.08 Absence of Certain Changes or Events. Except as
contemplated hereby or disclosed in Parent's press releases dated July 17, 1997
and August 5, 1997, and except for the issuance of Parent Common Stock pursuant
to employee benefit plans of Parent described in Section 5.03 above, since March
31, 1997, Parent has not (a) issued any Parent Common Stock or securities or
obligations convertible into or exchangeable for Parent Common Stock, (b)
incurred any material liabilities (absolute or contin-
-24-
gent), except in the ordinary course of business or (c) suffered any material
adverse effect on the business, results of operations or financial condition of
Parent and its subsidiaries, taken as a whole.
SECTION 5.09 Governmental Consents. No consent, approval, order or
authorization of, or registration, declaration or filing with, any Federal,
state, local or foreign governmental or regulatory authority is required to be
made or obtained by Parent in connection with the execution and delivery of this
Agreement by Parent or the consummation by Parent of the transactions
contemplated hereby, except for (a) filings pursuant to the Securities Act and
the Securities Exchange Act of 1934, as amended (the "Exchange Act") and the
rules and regulations promulgated by the SEC thereunder, if applicable, (b)
filings with state securities agencies under state securities or blue sky laws,
if applicable, (c) the filing of a listing application with the Nasdaq National
Market with respect to shares of Parent Common Stock issuable in the Merger, (d)
the filing of a Certificate of Merger with the Secretary of State of the State
of New York in accordance with the New York BCL, (e) the filing of a Certificate
of Merger with the Secretary of State of the State of Delaware in accordance
with the Delaware GCL, (f) filings of notices required to be filed with state
insurance departments, (g) any licenses, permits, franchises or other
governmental authorizations pertaining to the business of the Company and its
subsidiaries that are required as a result of the consummation of the
transactions contemplated hereby and (h) such consents, approvals, orders or
authorizations which if not obtained, or registrations, declarations or filings
which if not made, would not have a material adverse effect on the business,
results of operations or financial condition of Parent and its subsidiaries,
taken as a whole.
SECTION 5.10 Compliance with Law. Neither Parent nor any of its
subsidiaries is in default under any order of any court, governmental authority
or arbitration board or tribunal. Neither Parent nor any such subsidiary has
received notice of any alleged violation of any applicable laws, ordinances and
governmental rules and regulations to which Parent or any such subsidiary is
subject, including, without limitation, federal securities and banking laws.
Neither Parent nor any subsidiary has failed to obtain any licenses, permits,
franchises or other governmental authorizations necessary to the ownership of
its properties or to the conduct of its business, except where the failure to
obtain such licenses, permits, franchises or other governmental authorizations
would not have a material adverse effect on business, results of operations or
financial condition of Parent and its subsidiaries, taken as a whole.
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ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF PARENT AND ACQUISITION
Each of Parent and Acquisition, jointly and severally, represents and
warrants to the Company and each Shareholder, knowing and intending that the
Company and each Shareholder is relying thereon in entering into the
transactions contemplated hereby, as follows:
SECTION 6.01 Organization and Qualification. Acquisition is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has all requisite corporate power and authority to
own or lease and operate its properties and assets and to carry on its business
as it is now being conducted. Acquisition is duly qualified as a foreign
corporation to do business, and is in good standing, in each jurisdiction in
which the character of its properties owned or leased or the nature of its
activities makes such qualification necessary, except where the failure to be so
qualified would not have a Material Adverse Effect with respect to Acquisition.
SECTION 6.02 Capitalization. The authorized capital stock of
Acquisition consists of 3,000 shares of common stock, $.01 par value. As of the
date hereof, 100 shares of such common stock are validly issued and outstanding,
fully paid and nonassessable and are owned of record and beneficially by Parent,
and no shares of such common stock are held in the treasury of Acquisition.
Acquisition has no commitments to issue or sell any shares of such common stock
or any securities or obligations convertible into or exchangeable for, or giving
any person any right to subscribe for or acquire from Acquisition, any shares of
such common stock, and no securities or obligations evidencing any such rights
are outstanding.
SECTION 6.03 Authority Relative to Agreement. Acquisition has all
requisite corporate power and authority to enter into this Agreement and to
perform its obligations hereunder. The execution and delivery of this Agreement
by Acquisition and the consummation by Acquisition of the transactions
contemplated hereby have been duly authorized by the Board of Directors of
Acquisition and by Parent as its sole shareholder, and no other corporate
proceedings on the part of Acquisition are necessary to authorize this Agreement
and the transactions contemplated hereby. This Agreement has been duly executed
and delivered by Acquisition and constitutes the legal, valid and binding
obligation of Acquisition, enforceable against Acquisition in accordance with
its 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
-26-
generally or by principles of equity.
SECTION 6.04 Non-Contravention. The execution and delivery of this
Agreement by Acquisition and the consummation by Acquisition of the transactions
contemplated hereby will not (a) conflict with any provision of the Certificate
of Incorporation or By-Laws of Acquisition or (b) result (with the giving of
notice or the lapse of time or both) in any violation of or default or loss of a
benefit under, or permit the acceleration of any obligation under, any mortgage,
indenture, lease, agreement, license, judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to Acquisition or its properties.
SECTION 6.05 Governmental Consents. No consent, approval, order or
authorization of, or registration, declaration or filing with, any Federal,
state, local or foreign governmental or regulatory authority is required to be
made or obtained by Acquisition in connection with the execution and delivery of
this Agreement by Acquisition or the consummation by Acquisition of the
transactions contemplated hereby, except for (a) the filing of Certificate of
Merger with the Secretary of State of the State of New York in accordance with
the New York BCL, (b) the filing of a Certificate of Merger with the Secretary
of State of the State of Delaware in accordance with the Delaware GCL, (c) any
licenses, permits, franchises or other governmental authorizations pertaining to
the business of Acquisition that are required as a result of the consummation of
the transactions contemplated hereby and (d) the filing of notices required to
be filed with state insurance departments.
SECTION 6.06 Other Matters. Acquisition has been formed for the sole
purpose of effecting the Merger and, except as contemplated by this Agreement,
Acquisition has not conducted any business activities and does not have any
material liabilities or obligations.
ARTICLE VII
COVENANTS AND OTHER AGREEMENTS
SECTION 7.01 Non-Competition Agreements. Simultaneously with the
execution and delivery hereof, Xxxxxx and Xxxxxxx are each entering into a
non-competition and confidentiality agreement, effective as of the Effective
Time, for the benefit of Parent and the Surviving Corporation, in form and
substance satisfactory to the parties thereto.
SECTION 7.02 Employment Agreement. Simultaneously with the execution
and delivery hereof, Xxxxxxx is entering into a three-year employment contract
with Parent, effective as of the
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Effective Time in form and substance satisfactory to the parties thereto.
SECTION 7.03 Certain Life Insurance Policies. Schedule 7.03 sets
forth certain life insurance policies maintained in force by the Company in
respect of employees of the Company. As soon as practicable, the Surviving
Corporation will transfer and assign each such insurance policy to the insured
employee, to the extent transferrable and assignable, provided that such
employee shall undertake and assume in writing all obligations of the Surviving
Corporation thereunder. Any such life insurance policy which is not transferable
and assignable will be terminated.
SECTION 7.04 Indemnification. (a) The Shareholders shall be severally
liable to, and shall severally indemnify, protect, defend and hold harmless
Parent and its successors and the Surviving Corporation and its successors
against any and all claims, damages, liabilities and expenses (including
reasonable attorneys' fees) sustained by Parent or the Surviving Corporation,
resulting from or in connection with the breach of any representation, warranty,
covenant or other agreement made by the Company, Xxxxxx, Xxxxxxx or any
Shareholder in or pursuant to this Agreement or any other agreement or
instrument executed and delivered by or on behalf of the Company, Xxxxxx,
Xxxxxxx or any Shareholder pursuant hereto or in connection herewith (such
breaches or failures being hereinafter referred to individually as an
"Indemnifiable Breach" and collectively as "Indemnifiable Breaches"); provided,
however, that (i) neither the Xxxxxx Trustee Shareholder, individually, nor
Xxxxxxx, individually, shall be required to pay Parent and/or the Surviving
Corporation, as the case may be, pursuant to this Section 7.04(a), an amount in
excess of fifty percent (50%) of any amount required to be paid to Parent and/or
the Surviving Corporation in respect of any Indemnifiable Breach, and (ii)
neither the Xxxxxx Trustee Shareholder, individually, nor Xxxxxxx, individually,
shall be required to pay Parent and/or the Surviving Corporation, as the case
may be, pursuant to this Section 7.04, an aggregate amount in excess of the
dollar value equivalent of Parent Common Stock valued at the Average Price
received by them upon consummation of the Merger pursuant to the terms hereof.
The indemnification obligations of the Shareholders under this Section 7.04
shall apply to claims, damages, liabilities and expenses sustained by Parent
and/or the Surviving Corporation in respect of Indemnifiable Breaches if and
when the aggregate amount of such claims, damages, liabilities and expenses
exceeds $25,000.00, or $30,000.00 in the aggregate in respect of indemnifiable
claims, damages, liabilities and expenses for Indemnifiable Breaches and
indemnifiable claims, damages, liabilities and expenses payable by shareholders
of Group Plan Administrators, Inc. and/or Xxxxxx & Xxxxxxx Co., Ltd. under the
separate Agreements and Plans of Merger executed simultaneously
-28-
herewith among Parent, the certain acquisition subsidiaries of Parent, said
corporations and said shareholders of said corporations (the "Affiliate Merger
Agreements"). In the event the aggregate amount of the claims, damages,
liabilities and expenses sustained by Parent and/or the Surviving Corporation in
respect of Indemnifiable Breaches and/or Indemnifiable Breaches together with
indemnifiable claims, damages, liabilities and expenses in respect of the
Affiliate Merger Agreements exceeds said amount, the indemnification obligations
of the Shareholders under this Section 7.04 shall apply to all claims, damages,
liabilities and expenses actually sustained by Parent and/or the Surviving
Corporation in respect of Indemnifiable Breaches.
(b) Notwithstanding anything herein to the contrary, and except for
the payment by Parent or the Surviving Corporation of the FILCO Obligation after
the Effective Time pursuant to Section 7.10 hereof, each of Xxxxxx and Xxxxxxx
shall be jointly and severally liable to, and shall jointly and severally
indemnify, protect, defend and hold harmless Parent and its successors and the
Surviving Corporation and its successors, against any and all claims, damages,
liabilities and expenses (including reasonable attorneys' fees) arising from or
in connection with (i) any obligation to advance, loan or contribute any amounts
to FILCO or International Benefits Administrators L.L.C. not expressly
undertaken by the Surviving Corporation after the Effective Time and (ii) any
obligation of Xxxxxx and/or Xxxxxxx as shareholders of FILCO or as members of
International Benefits Administrators L.L.C. The indemnification obligation set
forth in this Section 7.04(b) shall be unlimited in dollar amount as to Xxxxxx
and Xxxxxxx.
(c) The Shareholders shall each be permitted to satisfy any
obligation under Section 7.04(a) or Section 7.04(b) in cash or by delivering to
Parent shares of Parent Common Stock in an amount equal to his obligation
thereunder based on a per share value equal to the Average Price.
(d) Parent and Acquisition shall be jointly and severally liable to,
and shall jointly and severally indemnify, protect, defend and hold harmless
each Shareholder and its respective successors against any and all claims,
damages, liabilities and expenses (including reasonable attorneys' fees)
sustained by any Shareholder, resulting from or in connection with the breach of
any representation, warranty, covenant or other agreement made by Parent or
Acquisition in or pursuant to this Agreement or any other agreement or
instrument executed and delivered by or on behalf of Parent and/or Acquisition
pursuant hereto or in connection herewith.
(e) Notwithstanding anything herein to the contrary, any party hereto
shall be entitled to seek specific enforcement of
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this Agreement. In the event Parent and/or the Surviving Corporation becomes
entitled to any sums under the terms hereof, Parent and/or the Surviving
Corporation shall have the right but not the obligation to set off such
liabilities of the Xxxxxx Trustee Shareholder and/or Xxxxxxx against any
existing or future liabilities of Parent or the Surviving Corporation to the
Xxxxxx Trustee Shareholder and/or Xxxxxxx other than against amounts owed by the
Company to Xxxxxx and/or Xxxxxxx as compensation for employment.
(f) The terms of this Section 7.04 are intended to benefit the
parties hereto, and any and all claims for indemnification under this Section
7.04 must be made during the period commencing at the Effective Time and ending
on the earlier to occur of (i) one (1) year after the Effective Time or (ii)
publication of the independent audit report on the consolidated financial
statements of Parent for the fiscal year ending June 30, 1998.
SECTION 7.05 Confidentiality. Except as otherwise provided in the
certain Confidentiality Agreement dated December 4, 1996 between the Company and
Parent with regard to information about the Company and Parent (the
"Confidentiality Agreement"), Parent and Acquisition, on the one hand, and the
Company and each Shareholder, on the other, shall hold, and shall use their
respective best efforts to cause their respective officers, directors,
employees, consultants, advisors and agents to hold, in confidence, unless
compelled to disclose by judicial or administrative process or by other
requirements of law, all confidential documents and information concerning the
other parties furnished to such party in connection with the transactions
contemplated by this Agreement, except to the extent that such information can
be shown to have been (a) previously known on a nonconfidential basis by such
party; (b) in the public domain through no fault of such party; or (c) later
lawfully acquired by such party from sources other than the other parties;
provided that each party may disclose such information to its Affiliates and its
Affiliates' officers, directors, employees, consultants, advisors and agents,
lenders and other investors in connection with the transactions contemplated by
this Agreement so long as such persons are informed by such party of the
confidential nature of such information and are directed by such party to treat
such information confidentially.
SECTION 7.06 Transfer Restrictions After the Effective Time. Each
Shareholder hereby agrees that, from and after the Effective Time:
(a) Lock-Up. Such Shareholder shall not sell or otherwise reduce its
risk relative to any shares of Parent Common
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Stock received by it in the Merger (within the meaning of Financial Reporting
Policy, Section 201.01), except as permitted by Staff Accounting Bulletin No. 76
issued by the SEC, until Parent has published financial results covering a
fiscal quarter that includes results (including combined sales and net income)
for a period of at least 30 days of post-Merger operations.
(b) Securities Act Compliance. Such Shareholder shall not offer,
sell, or otherwise dispose of the shares of Parent Common Stock received by such
Shareholder in connection with the Merger other than (i) pursuant to an
effective registration statement under the Securities Act, or (ii) otherwise
pursuant to an exemption from the registration requirements of the Securities
Act.
SECTION 7.07 Registration Rights Agreements. Simultaneously with the
execution hereof, Parent and each Shareholder are executing and delivering a
registration rights agreement in the form of Exhibit A hereto (the "Registration
Rights Agreement"), which agreement shall be effective as of the Effective Time.
SECTION 7.08 Termination of Shareholders' Agreements. Simultaneously
with the execution and delivery hereof, the Company and each Shareholder which
is a party to a shareholders' or similar agreement disclosed in Schedule 3.02 is
entering into a written agreement terminating such agreement, as of the
Effective Time, without further obligation of the Company or the Surviving
Corporation thereunder.
SECTION 7.09 Shareholder Sub-S Tax Liability. Simultaneously
herewith, the Company is remitting to each Shareholder that amount reasonably
estimated by the Company to represent such Shareholder's tax obligation for the
undistributed profits of the Company from October 1, 1996 through the Effective
Time, calculated using the anticipated marginal tax rate of 43.9%. The Company
has provided to Parent a written schedule showing the calculation thereof. Such
amount paid to each Shareholder simultaneously herewith shall be adjusted upward
or downward, as the case may be, as hereinafter set forth in this Section 7.09.
In the event that the actual undistributed profits of the Company from January
1, 1997 through the Effective Date (the "Actual Undistributed Profits") shall
exceed the amount of undistributed profits estimated for the calculation of
amounts paid to the Shareholders simultaneously herewith (the "Estimated
Undistributed Profits"), an amount equal to 43.9% of the amount by which the
Actual Undistributed Profits exceed the Estimated Undistributed Profits shall be
paid by Parent or the Surviving Corporation to the Shareholders in proportion to
their respective equity interests in the Company immediately prior to the
Effective Time. In the event
-31-
that the Actual Undistributed Profits shall be less than the Estimated
Undistributed Profits, the Shareholders shall remit to Parent an amount equal to
43.9% of the amount by which the Actual Undistributed Profits are less than the
Estimated Undistributed Profits. Parent or the Surviving Corporation shall
notify the Shareholders in writing of its good faith determination of the Actual
Undistributed Profits and any amount to be paid to the Shareholders or remitted
by the Shareholders under this Section 7.09, which determination shall be
binding on the parties hereto. The obligations of the parties under this Section
7.09 shall survive the Effective Time.
SECTION 7.10 Payments under FILCO Agreement. Parent and/or the
Surviving Corporation covenant and agree with the Shareholders, Xxxxxx and
Xxxxxxx to make all payments required to be made by the Surviving Corporation
under the FILCO Agreement after the Effective Time. In the event that aggregate
amount required to be paid by Parent and/or the Surviving Corporation under the
FILCO Agreement is less than $104,000.00, the amount by which the amount of
$104,000.00 exceeds the aggregate amount required to be paid by Parent and/or
the Surviving Corporation shall be paid to the Shareholders in proportion to
their respective equity interests in the Company immediately prior to the
Effective Time. The obligations of Parent and/or the Surviving Corporation under
this Section 7.10 shall survive the Effective Time.
SECTION 7.11 Closing Deliveries. The Company and the Shareholders are
simultaneously herewith delivering to Parent and Acquisition, the following:
(i) A copy of resolutions duly adopted by the Board of Directors
of the Company and the Shareholders, certified by the Secretary or
Assistant Secretary of the Company, approving the execution, delivery
and performance of this Agreement and the transactions contemplated
hereby;
(ii) the opinion of counsel to the Company and the
Shareholders in form and substance satisfactory to Parent and its
counsel; and
(iii) a good standing certificate issued by the Secretary of State of
New York as to the good standing of the Company in such jurisdiction.
(b) Parent and Acquisition are simultaneously herewith
delivering to the Company and the Shareholders, the following:
(i) A copy of resolutions duly adopted by the Board of Directors
of Parent and by the Board of
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Directors of Acquisition, certified by the Secretary or Assistant
Secretary of Parent and Acquisition, respectively, approving the
execution, delivery and performance of this Agreement and the
transactions contemplated hereby;
(ii) the opinion of the Vice President and General Counsel of
Parent in form and substance satisfactory to the Company and its
counsel; and
(iii) good standing certificates issued by the Secretary of
State of Delaware as to the good standing of Parent and Acquisition
in such jurisdictions.
SECTION 7.12 No Recission. The parties hereto covenant and agree that
none of them will seek recission of the Merger in the event that the
pooling-of-interests method of accounting is unavailable for the Merger.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01 Survival of Certain Representations and Warranties. The
representations and warranties of the Company and the Shareholders in this
Agreement and in any instrument delivered pursuant hereto shall survive the
Effective Time until the earlier to occur of (i) one (1) year after the
Effective Time or (ii) publication of the independent audit report on the
consolidated financial statements of Parent for the fiscal year ending June 30,
1998, provided that this Section 10.01 shall not limit any other covenant or
agreement of the parties that by its terms contemplates performances beyond such
period.
SECTION 8.02 Fees and Expenses. (a) The Company shall pay the
reasonable attorney's and accountant's fees of the Company, Xxxxxx, Xxxxxxx and
the Shareholders actually incurred by them in connection with the negotiation,
preparation and execution of this Agreement up to a maximum aggregate amount of
$60,000.00 for this Agreement and the Affiliate Merger Agreements. Except as
provided in the foregoing sentence, none of the Company, Xxxxxx, Xxxxxxx or the
Shareholders, on the one hand, and Parent and Acquisition, 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, without limitations, the fees and expenses of counsel, accountants,
advisors, investment bankers and other experts.
(b) The Shareholders, on the one hand, and Parent and Acquisition, on
the other hand, shall indemnify the other and hold
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it or them, as the case may be, harmless from and against any claims for
advisor's fees, finders' fees or brokerage commissions, in relation to or in
connection with the transactions contemplated by this Agreement as a result of
any agreement or understanding between the Company or any of the Shareholders,
on the one hand, or Parent and Acquisition, on the other hand, and any third
party.
SECTION 8.03 Publicity. The Company, Krauss, Trapani, the
Shareholders and Parent agree that they will not issue any press release or make
any other public announcement concerning this Agreement or the transactions
contemplated hereby without the prior consent of the other party, except that
the Company or Parent may make such public disclosure that it believes in good
faith to be required by law.
SECTION 8.04 Execution in Counterparts. For the convenience of the
parties, this Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
SECTION 8.05 Notices. All notices that are required or may be given
pursuant to the terms of this Agreement shall be in writing and shall be
sufficient in all respects if given in writing and delivered by hand or national
overnight courier service, transmitted by telecopy or mailed by registered or
certified mail, postage prepaid, as follows:
If to Parent and/or Acquisition, to:
The BISYS Group, Inc.
Overlook at Great Notch
000 Xxxxx Xxxx
Xxxxxx Xxxxx, Xxx Xxxxxx 00000
Attention: Chairman and Chief Executive Officer
with a copy to:
The BISYS Group, Inc.
Overlook at Great Notch
000 Xxxxx Xxxx
Xxxxxx Xxxxx, Xxx Xxxxxx 00000
Attention: General Counsel
If to the Company and/or the Shareholders, to:
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Dascit/White & Winston, Inc.
00 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Chairman
with a copy to:
Todtman, Young, Nachamie,
Xxxxxxx & Spizz, P.C.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxxx, Esq.
or such other address or addresses as any party hereto shall have designated by
notice in writing to the other parties hereto.
SECTION 8.06 Waivers. The Company, Xxxxxx and Xxxxxxx, on the one
hand, and Parent and Acquisition, on the other hand, may, by written notice to
the other, (a) extend the time for the performance of any of the 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; or (c) waive compliance with
any of the covenants and agreements of the other contained in this Agreement.
Except as provided in the preceding sentence, no action taken pursuant to this
Agreement, including, without limitation, 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 hereto of a
breach of any provision of this Agreement shall not operate or be construed as a
waiver of any subsequent breach.
SECTION 8.07 Entire Agreement. This Agreement, its Schedules and the
agreements and documents executed at the Effective Time in connection herewith
and the Confidentiality Agreement constitute the entire agreement among the
parties hereto with respect to the subject matter hereof and supersede all prior
agreements and understandings, oral and written, among the parties hereto with
respect to the subject matter hereof. 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 herein or therein.
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SECTION 8.08 Applicable Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, without regard
to principles of conflict of laws.
SECTION 8.09 Binding Effect, Benefits. This Agreement shall inure to
the benefit of and be binding upon the parties hereto and their respective
permitted successors and assigns. Notwithstanding anything contained in this
Agreement to the contrary, nothing in this Agreement, expressed or implied, is
intended to confer on any person other than the parties hereto or their
respective permitted successors and assigns, any rights, remedies, obligations
or liabilities under or by reason of this Agreement.
SECTION 8.10 Assignability. Neither this Agreement nor any of the
parties' rights hereunder shall be assignable by any party hereto without the
prior written consent of the other parties hereto.
SECTION 8.11 Amendments. This Agreement may be modified, amended or
supplemented at any time by action of the respective Boards of Directors of the
Company, Parent and Acquisition, and by Xxxxxx, Xxxxxxx and the Shareholders.
Without limiting the generality of the foregoing, this Agreement may only be
amended, varied or supplemented by an instrument in writing, signed by the
parties hereto.
SECTION 8.12 Applicable Disclosures. For purposes of this Agreement,
any disclosure made in any provision hereof, in any Schedule annexed hereto or
in any Agreement and Plan of Merger bearing even date herewith providing for the
merger of a subsidiary of Parent into any Affiliate of the Company shall be
deemed to be disclosed under a Section of this Agreement.
IN WITNESS WHEREOF, intending to be legally bound hereby, the parties
have executed and delivered this Agreement and Plan of Merger as of the day and
year first above written.
THE BISYS GROUP, INC.
By:/s/ Xxxx X. Xxxxxx
------------------------
Xxxx X. Xxxxxx
Chairman and
Chief Executive Officer
[signatures continued on next page]
-36-
[signatures continued from previous page]
BI-DWW, INC.
By:/s/ Xxxx X. Xxxxxx
------------------------
Xxxx X. Xxxxxx
Chairman
DASCIT/WHITE & WINSTON, INC.
By:/s/ Xxxxxxx X. Xxxxxx
------------------------
Xxxxxxx X. Xxxxxx
Chairman
/s/ Xxxxxxx X. Xxxxxx
------------------------
Xxxxxxx X. Xxxxxx
Number of
Shares of Company
Common Stock Owned: SHAREHOLDERS:
50 /s/ Xxxxxx X. XxXxxxxxx
------------------------
Xxxxxx X. XxXxxxxxx
000 Xxxxxxxx Xxxxxx
Xxxxx Xxxxxxxx, XX 00000
50 /s/ Xxxxxxx X. Xxxxxx
------------------------
Xxxxxxx X. Xxxxxx, as
Trustee of the Trust for
the Benefit of Xxxxx Xxxxxx
0000 Xxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
-37-
INDEX TO DEFINED TERMS
Term Reference
---- ---------
"Acquisition" Preamble
"Actual Undistributed Profits" 7.09
"Affiliate" 3.20
"Affiliate Merger Agreements" 7.04(a)
"Aggregate Parent Common Stock
Consideration" 2.01(a)
"Agreement" Preamble
"April 1997 Balance Sheet" 3.08
"April 1997 Combined Balance Sheet 3.08
"Average Price" 2.01(a)
"Balance Sheet" 3.08(a)
"Certificate" 2.03(a)
"Code" Recitals
"Combined Balance Sheet" 3.08
"Company" Preamble
"Company Common Stock" 2.01(a)
"Company Investments" 3.17
"Company Licenses" 3.28
"Confidentiality Agreement" 3.05
"Constituent Corporations" Preamble
"Contract Parties" 3.10
"Control" 3.20
"December 1996 Balance Sheet" 3.08
"Delaware GCL" Recitals
"Effective Time" 1.03
"Employee and Other Licenses" 3.28
"ERISA" 3.12(b)
"Estimated Undistributed Profits" 7.09
"Exchange Act" 5.09
"FILCO" 2.01(a)
"FILCO Agreement" 2.01(a)
"FILCO Obligation" 2.01(a)
"Financial Statements" 3.08(a)
"Indemnifiable Breaches" 7.04(a)
"Intellectual Property Rights" 3.09
"Xxxxxx" Preamble
"Xxxxxx Trustee Shareholder" Preamble
"Major Suppliers" 3.11
"Merger" Recitals
"Merger Information" 4.04(j)
"Net Merger Price" 2.01(a)
"New York BCL" Recitals
"Other Contracts" 3.20
"Parent" Preamble
"Parent Common Stock" Recitals
"Parent Public Information" 5.06
"Registration Rights Agreement" 7.07
"SEC" 4.04(b)
"Securities Act" 4.04(a)
"Shareholders" Preamble
"Shareholders' Agreements" 3.02
"Surviving Corporation" Preamble
"Xxxxxxx" Preamble
