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EXHIBIT 10.1
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
S1 CORPORATION,
AUSTIN ACQUISITION CORPORATION,
Q-UP SYSTEMS, INC.,
AND
FOR THE LIMITED PURPOSES SET FORTH HEREIN
CERTAIN OF THE Q-UP SHAREHOLDERS
DATED AS OF MARCH 6, 2000
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AGREEMENT AND PLAN OF MERGER.........................................................................1
ARTICLE I THE MERGER.................................................................................2
1.1 The Merger............................................................................2
1.2 Effective Time........................................................................2
1.3 Effects of the Merger.................................................................2
1.4 Conversion of Q-Up Capital Stock......................................................2
1.5 Conversion of Merger Sub Common Stock.................................................5
1.6 Options, Warrants and Other Rights....................................................5
1.7 Articles of Incorporation.............................................................5
1.8 By-Laws...............................................................................5
1.9 Directors and Officers................................................................6
1.10 Tax Consequences......................................................................6
ARTICLE II EXCHANGE OF SHARES AND ESCROW.............................................................6
2.1 Exchange of Shares and Escrow Agreement...............................................6
ARTICLE III REPRESENTATIONS AND WARRANTIES OF Q-UP...................................................7
3.1 Corporate Organization................................................................7
3.2 Capitalization........................................................................8
3.3 Authority; No Violation...............................................................9
3.4 Consents and Approvals................................................................9
3.5 Financial Statements; Exchange Act Filings; Books and Records.........................10
3.6 Broker's Fees.........................................................................10
3.7 Absence of Certain Changes or Events..................................................10
3.8 Legal Proceedings.....................................................................10
3.9 Taxes and Tax Returns.................................................................11
3.10 Employee Plans........................................................................12
3.11 Certain Contracts.....................................................................14
3.12 Agreements with Regulatory Agencies...................................................14
3.13 Environmental Matters.................................................................15
3.14 Properties and Assets.................................................................15
3.15 Insurance.............................................................................16
3.16 Compliance with Applicable Laws.......................................................16
3.17 Intellectual Property.................................................................16
3.18 Affiliates............................................................................18
3.19 Shareholder Meeting...................................................................18
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF S1......................................................19
4.1 Corporate Organization................................................................19
4.2 Capitalization........................................................................19
4.3 Authority; No Violation...............................................................20
4.4 Consents and Approvals................................................................21
4.5 Financial Statements; Exchange Act Filings; Books and Records.........................21
4.6 Absence of Certain Changes or Events..................................................22
4.7 Broker's Fees.........................................................................22
4.8 SEC Filings...........................................................................22
ARTICLE V COVENANTS RELATING TO CONDUCT OF BUSINESS..................................................22
5.1 Covenants of Q-Up.....................................................................22
5.2 Compliance with Antitrust Laws........................................................25
ARTICLE VI ADDITIONAL AGREEMENTS.....................................................................25
6.1 Regulatory Matters....................................................................25
6.2 Access to Information.................................................................26
6.3 Legal Conditions to Merger............................................................27
6.4 Stock Exchange Listing................................................................27
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6.5 Employees.............................................................................27
6.6 Additional Agreements.................................................................27
6.7 Advice of Changes.....................................................................27
6.8 Current Information...................................................................28
6.9 Transaction Expenses of Q-Up..........................................................28
6.10 Form S-8..............................................................................28
6.11 Indemnification of Q-Up...............................................................28
6.12 Indemnification of S1.................................................................29
6.13 Claim for Indemnification.............................................................29
6.14 Lock-up...............................................................................30
6.15 Additional Options....................................................................31
6.16 Registration Rights...................................................................31
6.17 Disclosure Schedule...................................................................34
6.18 Other Transactions....................................................................34
6.19 No Solicitation.......................................................................35
6.20 Charter Amendment.....................................................................35
ARTICLE VII CONDITIONS PRECEDENT.....................................................................35
7.1 Conditions to Each Party's Obligation To Effect the Merger............................35
7.2 Conditions to Obligations of S1 and Merger Sub........................................36
7.3 Conditions to Obligations of Q-Up.....................................................37
ARTICLE VIII TERMINATION AND AMENDMENT...............................................................38
8.1 Termination...........................................................................38
8.2 Effect of Termination.................................................................40
8.3 Amendment.............................................................................40
8.4 Extension; Waiver.....................................................................40
ARTICLE IX GENERAL PROVISIONS........................................................................40
9.1 Closing...............................................................................40
9.2 Survival of Representations, Warranties and Agreements................................41
9.3 Expenses; Breakup Fee.................................................................41
9.4 Notices...............................................................................41
9.5 Interpretation........................................................................42
9.6 Counterparts..........................................................................42
9.7 Entire Agreement......................................................................42
9.8 Governing Law.........................................................................42
9.9 Enforcement of Agreement..............................................................43
9.10 Severability..........................................................................43
9.11 Publicity.............................................................................43
9.12 Assignment; Limitation of Benefits....................................................43
9.13 Additional Definitions................................................................43
Exhibit A Articles of Merger
Exhibit B Escrow Agreement
Exhibit C Q-Up Shareholder Agreement
Exhibit D Noncompetition Agreement
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "AGREEMENT") is
entered into as of March 6, 2000 by and among S1 Corporation, a Delaware
corporation ("S1"), Austin Acquisition Corporation, a Texas corporation and a
wholly owned subsidiary of S1 ("MERGER SUB"), Q-Up Systems, Inc., a Texas
corporation ("Q-UP") and, for the limited purposes of Sections 6.12 and 6.13
herein, those shareholders of Q-Up who are signatories hereto (the "Q-UP
SHAREHOLDERS").
W I T N E S S E T H:
WHEREAS, Q-Up provides Internet banking and e-commerce portal
products for financial institutions (the "BUSINESS");
WHEREAS, the Boards of Directors of S1, Merger Sub and Q-Up
have determined that it is in the best interests of their respective companies
and shareholders to consummate the business combination transaction provided for
herein in which Merger Sub will, subject to the terms and conditions set forth
herein, merge with and into Q-Up, with Q-Up being the Surviving Corporation (as
defined) and becoming a wholly owned subsidiary of S1 (the "MERGER");
WHEREAS, as an inducement to S1 to enter into this Agreement
and pursuant to that certain that certain Q-Up Systems, Inc. Consent, Waiver and
Voting Agreement, executed concurrently herewith (the "WAIVER AGREEMENT"), the
holders of Series A Convertible Stock (as defined below) and Series B Redeemable
Stock (as defined below) have agreed to waive certain rights in connection with
such shares;
WHEREAS, it is intended that the Merger will qualify as a
reorganization under Section 368(a) of the Internal Revenue Code of 1986, as
amended (the "CODE");
WHEREAS, as an inducement to S1 to enter into this Agreement,
Xxxxxx X. Xxxxx III, Chief Executive Officer of Q-Up, and Xxxxxx Xxxxxx,
President of Q-Up, have agreed to enter into a noncompetition agreement as of
the Effective Time (as defined herein), the form of which is attached as EXHIBIT
D hereto (the "NONCOMPETITION AGREEMENT");
WHEREAS, each director, executive officer and other person who
is an "affiliate" (for purposes of Rule 145 under the Securities Act of 1933, as
amended (the "SECURITIES ACT"), of Q-Up has delivered to S1, concurrently with
the execution of this Agreement, a shareholder agreement in the form of EXHIBIT
C hereto (the "Q-UP SHAREHOLDER AGREEMENT"); and
WHEREAS, the parties desire to make certain representations,
warranties and agreements in connection with the Merger and also to prescribe
certain conditions to the Merger.
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements contained herein and intending to be
legally bound hereby, the parties hereto agree as follows:
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ARTICLE I
THE MERGER
1.1 THE MERGER.
Subject to the terms and conditions of this Agreement, in accordance
with the Texas Business Corporation Act (the "TBCA"), at the Effective Time (as
defined in Section 1.2 hereof), Merger Sub shall merge into Q-Up, with Q-Up
being the surviving corporation (hereinafter sometimes called the "SURVIVING
CORPORATION") in the Merger. Upon consummation of the Merger, the corporate
existence of Merger Sub shall cease and the Surviving Corporation shall continue
to exist as a Texas corporation, and a wholly owned subsidiary of S1.
1.2 EFFECTIVE TIME.
The Merger shall become effective on the Closing Date (as defined in
Section 9.1 hereof), upon the filing of the articles of merger (the "ARTICLES OF
MERGER") in the form attached as EXHIBIT A hereto with the Secretary of State of
the State of Texas (or at such later time as may be agreed by Q-Up and S1 in
writing and specified in the Articles of Merger). The term "EFFECTIVE TIME"
shall be the date and time when the Merger becomes effective as set forth in the
Articles of Merger.
1.3 EFFECTS OF THE MERGER.
At and after the Effective Time, the Merger shall have the effects set
forth in Section 5.06 of the TBCA.
1.4 CONVERSION OF Q-UP CAPITAL STOCK.
(a) At the Effective Time, subject to Sections 1.4(b),
1.4(c), 1.4(d), 1.4(e), 1.4(f), 1.4(g), 1.4(h), 1.4(i) and 1.4(j) hereof, each
share of Q-Up Common Stock and each share of Q-Up Conversion Stock (as defined
below) issued and outstanding or otherwise deemed to be issued and outstanding
pursuant to the Articles of Incorporation of Q-Up immediately prior to the
Effective Time shall, by virtue of this Agreement and without any action on the
part of the holder thereof, be converted into the right to receive, and be
exchangeable for (i) such number of shares of S1 Common Stock, $0.01 par value
per share (the "S1 COMMON STOCK") that results from dividing 2,342,032 (the
"FIRM SHARES") by the number of Q-Up Common Equivalents (as defined below) (the
"FIRM EXCHANGE RATIO") and (ii) the contingent right to receive not more than
such number of shares of S1 Common Stock that results from dividing 260,225 (the
"ESCROW SHARES") by the number of Q-Up Common Equivalents (the "ESCROW EXCHANGE
RATIO"). The sum of the Firm Exchange Ratio and the Escrow Exchange Ratio is
referred to herein as the "EXCHANGE RATIO."
"Q-UP COMMON EQUIVALENTS" shall mean the total of (i) the
number of shares of Q-Up Common Stock issued and outstanding immediately prior
to the Effective Time; plus (ii) the number of shares of "Q-Up Conversion Stock"
(as defined below); plus (iii) the number of shares of Q-Up Common Stock subject
to options granted pursuant to the Q-Up Stock Plan, which are outstanding
immediately prior to the Effective Time (as defined in Section 1.6 hereto) (the
"Q-UP OPTIONS") or otherwise pursuant to any other options, warrants, rights or
agreements for the purchase from Q-Up of any shares of Q-Up Common Stock or
other shares of capital stock or other shares of capital stock or securities
exercisable or exchangeable for Q-Up Common Stock or other shares of capital
stock outstanding immediately prior to the Effective Time; provided that this
shall not include up to 6,936,530 Q-Up Options granted after the date hereof.
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"Q-UP CONVERSION STOCK" shall mean the number of shares of
Q-Up Common Stock that would result from the conversion of each share of Q-Up
Series A Convertible Preferred Stock ("Q-Up Series A Convertible Stock"), issued
and outstanding immediately prior to the Effective Time.
(b) At the Effective Time, subject to Sections 1.4(a),
1.4(c), 1.4(d), 1.4(e), 1.4(f), 1.4(g), 1.4(h), 1.4(i) and 1.4(j) hereof, each
share of Q-Up Series B Redeemable Preferred Stock ("Q-UP SERIES B REDEEMABLE
STOCK") issued and outstanding or otherwise deemed to be issued and outstanding
pursuant to the Articles of Incorporation of Q-Up immediately prior to the
Effective Time shall, by virtue of this Agreement and without any action on the
part of the holder thereof, be converted into the right to receive, and be
exchangeable for such number of shares of S1 Common Stock (the "SERIES B
EXCHANGE SHARES") that results from dividing $5,000,000 by the average of the
daily closing asking prices per share for S1 Common Stock for the ten
consecutive trading days on which shares of S1 Common Stock are actually traded
(as reported on the Nasdaq Stock Market National Market System) ending on the
third trading day preceding the Closing Date (the "FAIR MARKET Value") (the
"SERIES B EXCHANGE RATIO").
(c) At the Effective Time, subject to Sections 1.4(a),
1.4(c), 1.4(d), 1.4(e), 1.4(f), 1.4(g), 1.4(h), 1.4(i) and 1.4(j) hereof, each
share of Q-Up Series A Redeemable Preferred Stock ("Q-UP SERIES A REDEEMABLE
STOCK") issued and outstanding or otherwise deemed to be issued and outstanding
pursuant to the Articles of Incorporation of Q-Up immediately prior to the
Effective Time shall, by virtue of this Agreement and without any action on the
part of the holder thereof, be converted into the right to receive, and be
exchangeable for such number of shares of S1 Common Stock (the "SERIES A
EXCHANGE SHARES") that results from dividing $2,500,000 by the Fair Market Value
of S1 Common Stock (the "SERIES A EXCHANGE RATIO").
(d) Immediately prior to the Effective Time, each holder
of record of Q-Up Series A Convertible Stock shall surrender his, her or its
certificates representing Q-Up Series A Convertible Stock to Q-Up pursuant to
Section 6(c) of Subdivision A of Article 4 of the Q-Up Articles of
Incorporation. Without any further action on the part of any holder of such Q-Up
Series A Convertible Stock, each such share of Q-Up Series A Convertible Stock
outstanding immediately prior to the Effective Time shall be deemed to have been
converted into one share of Q-Up Common Stock and one share of Q-Up Series A
Redeemable Stock.
(e) Pursuant to the Waiver Agreement, immediately prior
to the Effective Time, each holder of record of Q-Up Series A Convertible Stock
shall (i) convert its shares of Series A Convertible Stock into Q-Up Common
Stock and Q-Up Series A Redeemable Stock, and (ii) elect to participate in the
Merger; and each holder of Q-Up Series B Redeemable Stock shall agree to waive
its redemption rights for such stock and agree to exchange his, her or its
shares of Q-Up Series B Redeemable Stock for the Series B Exchange Shares; and
each subsequent holder of Q-Up Series A Redeemable Stock shall agree to waive
his, her or its redemption rights for Q-Up Series A Redeemable Stock and agree
to exchange his, her or its shares of such stock for the Series A Exchange
Shares.
(f) At the Effective Time, all of the shares of Q-Up
Common Stock and Q-Up Series A Convertible Stock or any other capital stock of
Q-Up (together, the "Q-UP CAPITAL STOCK") converted into S1 Common Stock
pursuant to this Article I shall no longer be outstanding and shall
automatically be canceled and shall cease to exist, and each certificate (each a
"CERTIFICATE") previously representing any such shares of Q-Up Capital Stock
shall thereafter represent the right to receive (i) the number of whole Firm
Shares, (ii) cash in lieu of fractional Firm Shares into which the shares of
Q-Up Capital Stock represented by such certificate have been converted pursuant
to Section 1.4(a) hereof and (iii) the contingent right to receive Series A
Escrow Shares as provided in the Escrow Agreement (as defined in Section 2.1(b)
hereto). At the Effective Time, all of the shares of Q-Up Series B Redeemable
Stock converted into S1 Common Stock pursuant to this Article I shall no longer
be outstanding and shall
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automatically be canceled and shall cease to exist, and each certificate
previously representing shares of Q-Up Series B Redeemable Stock shall
thereafter represent the right to receive (x) the number of whole Series B
Exchange Shares, and (y) cash in lieu of fractional Series B Exchange Shares
into which the shares of Q-Up Series B Redeemable Stock represented by such
Certificate have been converted pursuant to Section 1.4(b) hereof. At the
Effective Time, all of the shares of Q-Up Series A Redeemable Stock converted
into S1 Common Stock pursuant to this Article I shall no longer be outstanding
and shall automatically be canceled and shall cease to exist, and each
certificate previously representing shares of Q-Up Series A Redeemable Stock
shall thereafter represent the right to receive (x) the number of whole Series A
Exchange Shares, and (y) cash in lieu of fractional Series A Exchange Shares
into which the shares of Q-Up Series A Redeemable Stock represented by such
Certificate have been converted pursuant to Section 1.4(c) hereof.
(g) At the Effective Time, (i) all shares of Q-Up Capital
Stock that are owned by Q-Up as treasury stock and (ii) all shares of Q-Up
Common Stock that are owned directly or indirectly by S1 or Q-Up or any of their
respective Subsidiaries, shall be canceled and shall cease to exist and no stock
of S1 or other consideration shall be delivered in exchange therefor. All shares
of S1 Common Stock that are owned by Q-Up or any of its Subsidiaries shall
become treasury stock of S1.
(h) Certificates for fractions of shares of S1 Common
Stock will not be issued. In lieu of a fraction of a share of S1 Common Stock,
each holder of Q-Up Capital Stock otherwise entitled to a fraction of a Firm
Share shall be entitled to receive an amount of cash equal to (i) the fraction
of a share of the S1 Common Stock to which such holder would otherwise be
entitled, multiplied by (ii) the actual market value of the S1 Common Stock,
which shall be deemed to be the average of the daily closing bid prices per
share for S1 Common Stock for the twenty consecutive trading days on which
shares of S1 Common Stock are actually traded (as reported on the Nasdaq Stock
Market National Market System) ending on the third trading day preceding the
Closing Date. In lieu of a fraction of a share of S1 Common Stock, each holder
of Q-Up Series B Redeemable Stock shall be entitled to receive an amount of cash
equal to (i) the fraction of a share of the S1 Common Stock to which such holder
would otherwise be entitled, multiplied by (ii) Fair Market Value of S1 Common
Stock. In lieu of a fraction of a share of S1 Common Stock, each holder of Q-Up
Series A Redeemable Stock shall be entitled to receive an amount of cash equal
to (i) the fraction of a share of the S1 Common Stock to which such holder would
otherwise be entitled, multiplied by the Fair Market Value of S1 Common Stock.
Following consummation of the Merger, no holder of Q-Up Common Stock shall be
entitled to dividends or any other rights in respect of any such fraction.
(i) If any shares of Q-Up Capital Stock outstanding
immediately prior to the Effective Time are subject to a repurchase option, risk
of forfeiture or other condition under any applicable restricted stock purchase
agreement or other agreement with Q-Up, then the shares of S1 Common Stock
issued in exchange for such shares of Q-Up Capital Stock will also be unvested
and subject to the same repurchase option, risk of forfeiture or other
condition, and the certificates representing such shares of S1 Common Stock
accordingly may be marked with appropriate legends. Q-Up shall take all action
that may be necessary to ensure that, from and after the Effective Time, S1 is
entitled to exercise any such repurchase option or other right set forth in any
such restricted stock purchase agreement or other agreement.
(j) Holders of shares Q-Up Capital Stock, the rights of
which entitle the holder thereof to vote on the Merger, shall have the right
under Article 5.11 of the TBCA to dissent from the Merger. If the Merger is
consummated, each holder of Q-Up Capital Stock who has not voted in favor of the
Merger and who otherwise has perfected its right to dissent under Article 5.12
of the TBCA (a "DISSENTING SHAREHOLDER") shall be entitled to such rights of a
dissenting shareholder, and each such share of Q-Up Capital Stock in respect of
which rights to dissent shall have been perfected shall not be converted in
accordance with this Agreement, unless such appraisal rights shall cease as
provided in Article 5.13 of the TBCA.
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1.5 CONVERSION OF MERGER SUB COMMON STOCK.
Each of the shares of the common stock, par value $.01 per share, of
Merger Sub issued and outstanding immediately prior to the Effective Time shall
become shares of the Surviving Corporation after the Merger and shall thereupon
constitute all of the issued and outstanding shares of the Surviving
Corporation.
1.6 OPTIONS, WARRANTS AND OTHER RIGHTS.
At the Effective Time, each option, warrant or other right or
instrument (each, an "INSTRUMENT") granted by Q-Up to purchase shares of Q-Up
Common Stock which is outstanding and unexercised immediately prior thereto,
whether or not vested, shall be converted automatically into a corresponding
right to purchase shares of S1 Common Stock in an amount and at an exercise
price to be determined as provided below and, if applicable to any particular
instrument, subject to the terms of the Q-Up Systems, Inc. 1999 Stock Option
Plan (the "Q-UP STOCK Plan"):
(a) The number of shares of S1 Common Stock to be subject to the
instrument immediately after the Effective Time shall be equal to the product of
the number of shares of Q-Up Common Stock subject to the instrument immediately
prior to the Effective Time, multiplied by the Exchange Ratio, provided that any
fractional shares of S1 Common Stock resulting from such multiplication shall be
rounded down to the nearest whole share; and
(b) The exercise price per share of S1 Common Stock under the
instrument immediately after the Effective Time shall be equal to the exercise
price per share of Q-Up Common Stock under the instrument immediately prior to
the Effective Time divided by the Exchange Ratio, provided that such exercise
price shall be rounded up to the nearest whole cent.
The adjustment provided herein shall be and is intended to be effected
in a manner which is consistent with Section 424(a) of the Code. Except as set
forth in Section 1.6 of the Q-Up Disclosure Schedule, the duration, vesting
schedule, exercisability and other terms of each instrument immediately after
the Effective Time shall be the same as the corresponding terms in effect
immediately prior to the Effective Time. Except as set forth in Section 1.6 of
the Q-Up Disclosure Schedule, vesting of stock options under the Q-Up Stock Plan
shall not be accelerated as a result of the Merger. Continuous employment with
Q-Up shall be credited to the optionee for purposes of determining the vesting
of all assumed Q-Up options after the Effective Time. It is intended that Q-Up
options assumed by S1 shall qualify following the Effective Time as incentive
stock options are defined in Section 422 of the Code to the extent such options
qualified as such immediately prior to the Effective Time and the provisions of
this Section 1.6 shall be applied consistently with such intent. As soon as
reasonably practicable, but in no event more than 30 days after the Effective
Time, S1 will issue to each holder of an assumed instrument notice of the
foregoing assumption by S1 of such Q-Up instrument.
1.7 ARTICLES OF INCORPORATION.
At the Effective Time, the Articles of Incorporation of Q-Up, as the
Surviving Corporation, shall be amended to be the same form of Articles of
Incorporation as Merger Sub, except that the name of the Surviving Corporation
shall be Q-Up Systems, Inc.
1.8 BY-LAWS.
At the Effective Time, the By-Laws of Merger Sub, as in effect
immediately prior to the Effective Time, shall be the By-Laws of the Surviving
Corporation.
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1.9 DIRECTORS AND OFFICERS.
At the Effective Time, the directors of Merger Sub immediately prior to
the Effective Time together with Xxxxxx X. Xxxxx III shall be the directors of
the Surviving Corporation. At the Effective Time, the officers of Q-Up
immediately prior to the Effective Time shall be the officers of the Surviving
Corporation.
1.10 TAX CONSEQUENCES.
(a) Except as otherwise required by the Internal Revenue
Service (the "IRS") pursuant to a determination (as defined in Section 1313 of
the Code) or otherwise, or by applicable law, the parties shall not take a
position on any tax returns inconsistent with the treatment of the Merger for
tax purposes as a reorganization within the meaning of Section 368(a) of the
Code.
(b) S1 represents, solely for tax purposes, now, and as
of the Closing Date, that it presently intends to continue Q-Up's historic
business or use a significant portion of Q-Up's business assets in business in a
manner that satisfies the continuity of business enterprise requirement set
forth in Treasury Regulation Section 1.368-1(d); provided, however, that nothing
contained herein shall constitute a representation by S1 regarding the tax
consequences of the Merger or the transactions contemplated herein to Q-Up or
any shareholder of Q-Up.
(c) Q-Up represents, solely for tax purposes, that it has
not taken any action that would prevent the Merger from meeting the requirement
under Section 368(a)(2)(E) of the Code that "substantially all of the assets" of
Q-Up must be acquired in the Merger; provided, however, that nothing contained
herein shall constitute a representation by Q-Up regarding the tax consequences
of the Merger or the transactions contemplated herein.
ARTICLE II
EXCHANGE OF SHARES AND ESCROW
2.1 EXCHANGE OF SHARES AND ESCROW AGREEMENT.
(a) At the Effective Time, S1 shall exchange certificates
representing Firm Shares, Series B Exchange Shares and Series A Exchange Shares,
cash in lieu of fractional Firm Shares, Series B Exchange Shares and Series A
Exchange Shares and any dividends or distributions issued pursuant to Section
1.4 and paid pursuant to this Section 2.1 for outstanding shares of Q-Up Capital
Stock. Upon surrender of a Certificate to S1, the holder of such Certificate
shall be entitled to receive in exchange therefor (x) a certificate representing
that number of whole Firm Shares, Series B Exchange Shares or Series A Exchange
Shares, as applicable, to which such holder of Q-Up Capital Stock shall have
become entitled pursuant to the provisions of Article I hereof, (y) a check
representing the amount of cash in lieu of fractional Firm Shares, Series B
Exchange Shares or Series A Exchange Shares, as applicable, if any, which such
holder has the right to receive in respect of the Certificate surrendered
pursuant to the provisions of this Article II and (z) any dividends or
distributions pursuant to this Section 2.1, and the Certificate so surrendered
shall forthwith be canceled. No interest will be paid or accrued on the cash in
lieu of fractional Firm Shares, Series B Exchange Shares or Series A Exchange
Shares, as applicable, and unpaid dividends and distributions, if any, payable
to holders of Certificates. No dividends or other distributions declared after
the Effective Time with respect to S1 Common Stock and payable to the holders of
record thereof shall be paid to the holder of any unsurrendered Certificate
until the holder thereof shall surrender such Certificate in accordance with
this Article II. After the surrender of a Certificate in accordance with this
Article II, the record holder thereof shall be entitled to receive any such
dividends or other distributions, without any interest thereon, which
theretofore had become payable with respect to Firm Shares represented by such
Certificate. No holder of an unsurrendered
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Certificate shall be entitled, until the surrender of such Certificate, to vote
the Firm Shares into which his Q-Up Capital Stock shall have been converted.
(b) Whenever certificates representing Firm Shares are
delivered to the holders of Certificates, S1 shall also deposit the Escrow
Shares, rounded to the nearest whole share, and any dividends or distribution
pursuant to this Section 2.1 to be issued and paid pursuant to Section 1.4
hereof with American Stock Transfer and Trust Company as escrow agent (the
"ESCROW AGENT") to collectively be held in escrow pursuant to the Escrow
Agreement attached hereto as EXHIBIT B, to be entered into among S1, the
Shareholder Representative (as defined below) and the Escrow Agent (the "ESCROW
AGREEMENT") and distributed in accordance with the terms thereof. Consummation
of the Merger pursuant to his Agreement shall constitute an appointment of
Xxxxxx X. Xxxxx III as the shareholder representative (the "SHAREHOLDER
REPRESENTATIVE") by all of the former Q-Up shareholders, with full power of
substitution therefor. The Shareholder Representative shall have full power and
authority to represent the former Q-Up shareholders and their successors with
respect to all matters arising in connection with the Escrow Agreement, and all
action taken by the Shareholder Representative thereunder shall be binding upon
such former Q-Up shareholders and their successors as if expressly ratified and
confirmed in writing by each of them. Without limiting the generality of the
foregoing, the Shareholder Representative shall have full power and authority,
on behalf of all the former Q-Up shareholders and their successors, to interpret
all the terms and provisions of the Escrow Agreement, to negotiate and
compromise any dispute which may arise under the Escrow Agreement, to sign any
releases or other documents with respect to any such dispute, and to authorize
payments to be made with respect thereto.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF Q-UP
Q-Up hereby makes the following representations and warranties to S1
and Merger Sub as set forth in this Article III, subject to the exceptions
disclosed in writing in the Q-Up Disclosure Schedule as of the date hereof, each
of which is being relied upon by S1 and Merger Sub as a material inducement to
enter into and perform this Agreement. All of the disclosure schedules of Q-Up
referenced below and thereby required of Q-Up pursuant to this Agreement, which
disclosure schedules are cross-referenced to the specific sections and
subsections of this Agreement and delivered pursuant to Section 6.19, are
referred to herein as the "Q-UP DISCLOSURE SCHEDULE."
3.1 CORPORATE ORGANIZATION.
(a) Q-Up is a corporation duly organized, validly
existing and in good standing under the laws of the State of Texas. Except as
set forth in Section 3.1 of the Q-Up Disclosure Schedule, Q-Up has the corporate
power and authority to own or lease all of its properties and assets and to
carry on its business as it is now being conducted, and is duly licensed or
qualified to do business in each jurisdiction in which the nature of any
material business conducted by it or the character or location of any material
properties or assets owned or leased by it makes such licensing or qualification
necessary. The Articles of Incorporation and By-Laws of Q-Up, copies of which
have been made available to S1, are true, correct and complete copies of such
documents as in effect as of the date of this Agreement.
(b) No subsidiary of Q-Up is a "Significant Subsidiary"
as such term is defined in Regulation S-X promulgated by the Securities and
Exchange Commission (the "SEC"). Each subsidiary of Q-Up and the jurisdiction of
its organization is set forth at Section 3.1(b) of the Q-Up Disclosure Schedule
(each, a "Q-UP SUBSIDIARY"). Each Q-Up Subsidiary has the corporate power and
authority to own or lease all of its properties and assets and to carry on its
business as it is now being conducted and is duly licensed or qualified to do
business in each jurisdiction in which the nature of any material
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business conducted by it or the character or the location of any material
properties or assets owned or leased by it makes such licensing or qualification
necessary. The Articles of Incorporation and By-Laws or other corporate
governance documents of each Q-Up Subsidiary, copies of which have previously
been made available to S1, are true, correct and complete copies of such
documents as in effect as of the date of this Agreement.
(c) Neither Q-Up nor any Q-Up Subsidiary has agreed or is
obligated to make, or is bound by any written, oral or other agreement,
contract, subcontract, lease, binding understanding, instrument, note, option,
warranty, purchase order, license, sublicense, insurance policy, benefit plan or
legally binding commitment or undertaking of any nature, as in effect as of the
date hereof or as may hereinafter be in effect (each, a "CONTRACT") under which
Contract it may become obligated to make, any future investment in or capital
contribution to any other entity. Neither Q-Up nor any Q-Up Subsidiary has, at
any time, been a general partner of any general partnership, limited partnership
or other entity.
3.2 CAPITALIZATION.
As of the date of this Agreement, the authorized capital stock
of Q-Up consists of 20,000,000 shares of Q-Up Common Stock, of which 10,045,263
shares are issued and outstanding, 3,652,727 shares of Q-Up Series A Convertible
Stock, of which 3,652,727 shares are issued and outstanding, 3,652,727 shares of
Q-Up Series A Redeemable Stock, of which none of the shares are issued and
outstanding, and 5,000,000 shares of Q-Up Series B Redeemable Stock, of which
5,000,000 shares are issued and outstanding. Section 3.2(a) of the Q-Up
Disclosure Schedule sets forth a true and correct list of the shares of Q-Up
Capital Stock owned of record and beneficially by each Q-Up shareholder
presently, to be updated immediately prior to the Effective Time. As of the date
hereof, 2,000,000 shares of Q-Up Common Stock are reserved for issuance of
options and 3,652,727 shares of Q-Up Common Stock and 3,652,727 shares of Q-Up
Series A Redeemable Stock are reserved for conversion of Q-Up Series A
Convertible Stock. The Q-Up Series A Convertible Stock, Q-Up Series A Redeemable
Stock and Q-Up Series B Redeemable Stock are collectively referred to herein as
"Q-UP PREFERRED STOCK." All of the issued and outstanding shares of Q-Up Common
Stock and Q-Up Preferred Stock have been duly authorized and validly issued and
are fully paid, nonassessable and free of preemptive rights, with no personal
liability attaching to the ownership thereof. Except for the Q-Up Stock Plan and
except as disclosed in Section 3.2 of the Q-Up Disclosure Schedule, Q-Up does
not have and is not bound by any outstanding subscriptions, options, warrants,
calls, commitments or agreements of any character calling for the purchase or
issuance of any shares of Q-Up Common Stock or Q-Up Preferred Stock or any other
equity security of Q-Up or any securities representing the right to purchase or
otherwise receive any shares of Q-Up Common Stock or any other equity security
of Q-Up. The names of the optionees, the date of each option to purchase Q-Up
Common Stock granted, the number of shares subject to each such option, the
expiration date of each such option, and the price at which each such option may
be exercised under the Q-Up Stock Plans are set forth in Section 3.2(a) of the
Q-Up Disclosure Schedule. Since December 31, 1999 Q-Up has not issued any shares
of its capital stock or any securities convertible into or exercisable for any
shares of its capital stock, other than pursuant to the exercise of stock
options granted prior to the date hereof under the Q-Up Stock Plan.
(b) Except as set forth in Section 3.2(b) of the Q-Up
Disclosure Schedule, Q-Up owns, directly or indirectly, all of the issued and
outstanding shares of capital stock of each of its Subsidiaries, free and clear
of all liens, charges, encumbrances and security interests whatsoever, and all
of such shares are duly authorized and validly issued and are fully paid,
nonassessable and free of preemptive rights, with no personal liability
attaching to the ownership thereof. No Q-Up Subsidiary has or is bound by any
outstanding subscriptions, options, warrants, calls, commitments or agreements
of any character calling for the purchase or issuance of any shares of capital
stock or any other equity
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security of such Subsidiary or any securities representing the right to purchase
or otherwise receive any shares of capital stock or any other equity security of
such Subsidiary.
3.3 AUTHORITY; NO VIOLATION.
(a) Q-Up has full corporate power and authority to
execute and deliver this Agreement and, subject to the adoption of this
Agreement by the requisite vote of the shareholders of Q-Up, to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly and
validly approved by the Board of Directors of Q-Up. The Board of Directors of
Q-Up has declared this Agreement advisable and directed that this Agreement and
the transactions contemplated hereby be submitted to Q-Up's shareholders for
approval at a special meeting of such shareholders or by written consent in lieu
of a meeting and, except for the adoption of this Agreement by the requisite
vote of Q-Up's shareholders, no other corporate proceedings on the part of Q-Up
(except for matters related to setting the date, time, place and record date for
the special meeting) are necessary to approve this Agreement or to consummate
the transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by Q-Up and (assuming due authorization, execution and
delivery by S1 and Merger Sub of this Agreement) constitutes a valid and binding
obligation of Q-Up, enforceable against Q-Up in accordance with their terms
except as may be limited by general principles of equity whether applied in a
court of law or a court of equity and by bankruptcy, insolvency and similar laws
affecting creditors' rights and remedies generally.
(b) Except as set forth at Section 3.3(b) of the Q-Up
Disclosure Schedule, none of the execution and delivery of this Agreement by
Q-Up, the consummation by Q-Up of the transactions contemplated hereby, or
compliance by Q-Up with any of the terms or provisions hereof, will (i) violate
any provision of the Articles of Incorporation or By-Laws of Q-Up, or (ii)
assuming that the consents and approvals referred to in Sections 3.3(a) and 3.4
hereof are duly obtained, (x) violate any Laws (as defined in Section 9.13)
applicable to Q-Up or any of its properties or assets, or (y) violate, conflict
with, result in a breach of any provision of or the loss of any benefit under,
constitute a default (or an event which, with notice or lapse of time, or both,
would constitute a default) under, result in the termination of or a right of
termination or cancellation under, accelerate the performance required by, or
result in the creation of any lien, pledge, security interest, charge or other
encumbrance upon any of the properties or assets of Q-Up under, any of the
terms, conditions or provisions of any note, bond, mortgage, indenture, deed of
trust, license, lease, agreement or other instrument or obligation to which Q-Up
is a party, or by which it or any of its properties or assets may be bound or
affected, except, in each case, where such violation, conflict, breach, loss,
default, termination, cancellation or acceleration would not have a Material
Adverse Effect on Q-Up or the Surviving Corporation.
3.4 CONSENTS AND APPROVALS.
(a) Except for (i) the approval of this Agreement by the
requisite vote of the shareholders of Q-Up, (ii) the filing of the Articles of
Merger with the Secretary of State of the State of Texas pursuant to the TBCA,
(iii) such consents, approvals, orders, authorizations, registrations,
declarations and filings as may be required under applicable federal, foreign
and state securities (or related) laws and, if applicable, the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended (the "HSR ACT"), and the
securities or antitrust laws of any foreign country, and (iv) such filings,
authorizations or approvals as may be set forth in Section 3.4 of the Q-Up
Disclosure Schedule, no consents or approvals of or filings or registrations
with any court, administrative agency or commission or other governmental
authority or instrumentality (each a "GOVERNMENTAL ENTITY"), or with any third
party are necessary in connection with (1) the execution and delivery by Q-Up of
this Agreement and (2) the consummation by Q-Up of the Merger and the other
transactions contemplated hereby except, in each case, for such consents,
approvals or filings, the failure of which to obtain will not
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have (x) a material adverse effect on the ability of S1 to consummate the
transactions contemplated hereby or (y) a Material Adverse Effect on Q-Up, S1 or
the Surviving Corporation following the Effective Time.
(b) Except as set forth in Section 3.4(b) of the Q-Up
Disclosure Schedule, Q-Up has no knowledge of any reason why approval or
effectiveness of any of the applications, notices or filings referred to in
Section 3.4(a) cannot be obtained or granted on a timely basis.
3.5 FINANCIAL STATEMENTS; EXCHANGE ACT FILINGS; BOOKS AND RECORDS.
Q-Up has prepared and furnished to S1, and there are included as
attachments to Section 3.5 of the Q-Up Disclosure Schedule, the balance sheet
and the statements of income, changes in shareholders' equity and cash flows for
such fiscal year of Q-Up as of the end of the fiscal year ending December 31,
1999 (the "BALANCE SHEET DATE"). The financial statements referred to in this
Section 3.5 (including the related notes, where applicable) fairly present
(subject, in the case of the unaudited statements, to recurring audit
adjustments normal in nature and amount) the results of the consolidated
operations and consolidated financial condition of Q-Up and its Subsidiaries for
the respective fiscal periods or as of the respective dates therein set forth;
each of such statements (including the related notes, where applicable) comply,
with applicable accounting requirements and each of such statements (including
the related notes, where applicable) has been prepared in accordance with
generally accepted accounting principles ("GAAP") consistently applied during
the periods involved, except in each case as indicated in such statements or in
the notes thereto. The books and records of Q-Up have been, and are being,
maintained in all material respects in accordance with GAAP and any other
applicable legal and accounting requirements.
3.6 BROKER'S FEES.
Neither Q-Up nor any Q-Up Subsidiaries nor any of their respective
officers or directors has employed any broker or finder or incurred any
liability for any broker's fees, commissions or finder's fees in connection with
any of the transactions contemplated by this Agreement.
3.7 ABSENCE OF CERTAIN CHANGES OR EVENTS.
(a) Except as disclosed in Section 3.7 of the Q-Up
Disclosure Schedule or in the financial statements referred to in Section 3.5
hereof, since the Balance Sheet Date (i) neither Q-Up nor any Q-Up Subsidiary
has incurred any material liability, except as contemplated by the Agreement or
in the ordinary course of their business consistent with their past practices,
and (ii) no event has occurred which has had, or would have, individually or in
the aggregate, a Material Adverse Effect (as defined in Section 9.13) on Q-Up.
(b) Since the Balance Sheet Date, Q-Up and its
Subsidiaries have carried on their respective businesses in the ordinary and
usual course consistent with their past practices.
3.8 LEGAL PROCEEDINGS.
(a) Except as disclosed in Section 3.8 of the Q-Up
Disclosure Schedule, neither Q-Up nor any of its Subsidiaries is a party to any,
and, to Q-Up's knowledge, there are no pending or threatened, legal,
administrative, arbitration or other proceedings, claims, actions or
governmental or regulatory investigations of any nature against Q-Up or any of
its Subsidiaries.
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(b) There is no injunction, order, judgment, decree, or
regulatory restriction imposed upon Q-Up, any of its Subsidiaries or the assets
of Q-Up or any of its Subsidiaries.
(c) No Governmental Entity has at any time challenged or
questioned in a writing delivered to Q-Up the legal right of Q-Up to design,
manufacture, offer or sell any of its products or services in the present manner
or style thereof. As of the date hereof, to the knowledge of Q-Up, no event has
occurred, and no claim, dispute or other condition or circumstance exists, that
will, or that would reasonably be expected to, cause or provide a bona fide
basis for a director or executive officer of Q-Up to seek indemnification from
Q-Up.
3.9 TAXES AND TAX RETURNS.
(a) For purposes of this Section 3.9, Q-Up shall include Q-Up and
each Q-Up Subsidiary and any other affiliated or related corporation or entity
if Q-Up or any Q-Up Subsidiary has or could have any material liability for the
Taxes of such corporation or entity. Q-Up has duly filed all Tax Returns
required to be filed by it on or before the date hereof (all such returns being
accurate and complete in all material respects) and has duly paid or made
provision in the financial statements referred to in Section 3.5 hereof in
accordance with GAAP for the payment of all material Taxes that have been
incurred or are due or claimed to be due from it by Taxing Authorities on or
before the date hereof other than Taxes (a) that (x) are not yet delinquent or
(y) are being contested in good faith and set forth in Section 3.9 of the Q-Up
Disclosure Schedule and (b) that have not been finally determined. The charges,
accruals, and reserves with respect to Taxes in the financial statements
referred to in Section 3.5 are adequate (determined in accordance with GAAP) and
are at least equal to its liability for Taxes as of the date of such financial
statements. There exists no proposed tax assessment against Q-Up except as
disclosed in the financial statements referred to in Section 3.5 hereof in
accordance with GAAP. No consent to the application of Section 341(f)(2) of the
Code has been filed with respect to any property or assets held, acquired, or to
be acquired by Q-Up. All Taxes that Q-Up is or was required to withhold or
collect have been duly withheld or collected and, to the extent required, have
been paid to the proper Taxing Authority. All liability with respect to the Tax
Returns of Q-Up has been satisfied for all years to and including April 30,
1999. No Taxing Authority has notified Q-Up of, or otherwise asserted, that
there are any material deficiencies with respect to the Tax Returns of Q-Up.
There are no material disputes pending, or claims asserted, for Taxes or
assessments of Q-Up, nor has Q-Up given or been requested to give any currently
effective waiver extending the statutory period of limitation applicable to any
Tax Return. In addition, Tax Returns that are accurate and complete in all
material respects have been filed by Q-Up for all periods for which returns were
due with respect to income and employment tax withholding with respect to wages
and other income and the amounts shown on such Tax Returns to be due and payable
have been paid in full or adequate provision therefor in accordance with GAAP
has been included by Q-Up in the financial statements referred to in Section 3.5
hereto. Q-Up has provided or made available to S1 complete and correct copies of
its Tax Returns and all material correspondence and documents, if any, relating
directly or indirectly to Taxes for each taxable year or other relevant period
as to which the applicable statute of limitations has not run on the date
hereof. For this purpose, "correspondence and documents" include, without
limitation, amended Tax Returns, pending claims for refunds, notices from Taxing
Authorities of proposed changes or adjustments to Taxes or Tax Returns that have
not been finally resolved, consents to assessment or collection of Taxes,
acceptances of proposed adjustments, closing agreements, rulings and
determination letters and requests therefor, and all other written
communications to or from Taxing Authorities relating to any material Tax
liability of Q-Up.
(b) For purposes of this Agreement:
"TAX" means any tax (including any income tax, employment tax,
capital gains tax, value-added tax, sales tax, property tax, gift tax, or estate
tax), levy, assessment, tariff, duty (including any customs duty), deficiency,
or other fee, and any related charge or amount (including
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any fine, penalty, interest, or addition to tax), imposed, assessed, or
collected by or under the authority of any Taxing Authority or payable pursuant
to any tax-sharing agreement or any other contract relating to the sharing or
payment of any such tax, levy, assessment, tariff, duty, deficiency, or fee.
"TAX RETURN" means any return (including any information
return), report, statement, schedule, notice, form, or other document or
information filed with or submitted to, or required to be filed with or
submitted to, any Taxing Authority in connection with the determination,
assessment, collection, or payment of any Tax or in connection with the
administration, implementation, or enforcement of or compliance with any law,
regulation or other legal requirement relating to any Tax.
"TAXING AUTHORITY" means any:
(a) nation, state, county, city, town, village,
district, or other jurisdiction of any nature;
(b) federal, state, local, municipal, foreign, or
other government;
(c) governmental or quasi-governmental authority of
any nature (including any governmental agency, branch, department, official, or
entity and any court or other tribunal);
(d) multi-national organization or body; or
(e) body exercising, or entitled to exercise, any
administrative, executive, judicial, legislative, police, regulatory, or taxing
authority or power of any nature.
3.10 EMPLOYEE PLANS.
(a) For purposes of this Section 3.10, Q-Up shall include
each of its Subsidiaries and any other entity that together with Q-Up would be
deemed a "single employer" for purposes of Section 4001 of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") or Code Sections
414(b), (c) or (m) (determined without regard to whether such entity conducts
business in the United States). Section 3.10(a) of the Q-Up Disclosure Schedule
sets forth a true and complete list of each employee benefit plan (within the
meaning of Section 3(3) of ERISA) ("ERISA PLAN") and each other plan,
arrangement or agreement providing benefits to the current or former employees
of Q-Up that as of the date of this Agreement Q-Up maintains, to which Q-Up
contributes or under which Q-Up has any liability, or within the last five years
that Q-Up has maintained, to which Q-Up has contributed or under which Q-Up has
had any liability (collectively, the "Q-UP PLANS"). Each Q-Up Plan that is an
ERISA Plan is referred to as a "Q-UP ERISA PLAN."
(b) Q-Up has heretofore made available to S1 true,
correct and complete copies of each of the Q-Up Plans and all related documents,
including but not limited to (i) the actuarial report for such Q-Up ERISA Plan
(if applicable) for each of the last five years or shorter period of the
applicable Q-Up ERISA Plan's existence, (ii) the most recent determination
letter from the Internal Revenue Service ("IRS") for each Q-Up ERISA Plan that
has received a determination letter from the IRS, (iii) the current summary plan
description and any summaries of material modification for each Q-Up ERISA Plan
and any corresponding document for each other Q-Up Plan which have not been
incorporated into the current summary plan description, (iv) all annual reports
required to be filed with the IRS or other governmental agency for each Q-Up
ERISA Plan filed for the preceding five plan years or shorter period of the
applicable Q-Up ERISA Plan's existence and any annual or other periodical
financial information concerning any other Q-Up Plan filed with any governmental
agency, (v) all agreements with fiduciaries and service providers relating to
the Q-Up Plan, (vi) all substantive correspondence relating to any such
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Q-Up Plan addressed to or received from any governmental agency or authority,
(vii) all personnel, payroll, and employment manuals and policies, and (viii) a
written description of any Q-Up Plan that is not otherwise in writing.
(c) Q-Up has performed all of its obligations under all
Q-Up Plans. Q-Up has made appropriate entries in the financial statements
referred to in Section 3.5 hereof in accordance with GAAP for all obligations
and liabilities under the Q-Up Plans as of the date of this Agreement. No
statement, either written or oral, has been made by Q-Up with regard to any Q-Up
Plan that was not in accordance with the Q-Up Plan and that could have a
Material Adverse Effect on S1. Q-Up has no liability to the IRS, the U.S.
Pension Benefit Guaranty Corporation or to any other governmental or
quasi-governmental agency or authority with respect to any Q-Up Plan. No Q-Up
ERISA Plan is subject to title IV of ERISA and no Q-Up Plan is subject to the
minimum funding requirements of Section 412 of the Code or Part 3 of Subtitle B
of Title I of ERISA.
(d) Except as set forth at Section 3.10(d) of the Q-Up
Disclosure Schedule, (i) each of the Q-Up Plans has been operated and
administered in all material respects in compliance with applicable Laws,
including, but not limited, in the case of each Q-Up ERISA Plan, to ERISA and
the Code, (ii) each of the Q-Up ERISA Plans intended to be "qualified" within
the meaning of Section 401 of the Code is so qualified and Q-Up has received a
determination letter or opinion letter from the IRS to such effect, which letter
remains in full force and effect or the time period for submitting a
determination letter request and adopting retroactive amendments under Code
Section 410(b) and corresponding regulations is still open as of the date of
this Agreement, (iii) no Q-Up Plan provides benefits, including, without
limitation, death or medical benefits (whether or not insured), with respect to
current or former employees of Q-Up beyond their retirement or other termination
of service, other than (a) coverage mandated by applicable Law, (b) death
benefits or retirement benefits under an Q-Up Plan that also provides
post-retirement income, annuity or pension benefits (including an "employee
pension plan" as that term is defined in Section 3(2) of ERISA), (c) deferred
compensation benefits under an Q-Up Plan that are accrued as liabilities in the
financial statements referred to in Section 3.5 hereof in accordance with GAAP,
or (d) benefits the full cost of which is borne by the current or former
employee (or his beneficiary), (iv) no liability under Title IV of ERISA has
been incurred by Q-Up that has not been satisfied in full, and no condition
exists that presents a material risk of Q-Up incurring a material liability
thereunder, (v) no Q-Up ERISA Plan is a "multiemployer pension plan," as such
term is defined in Section 3(37) of ERISA and no other Q-Up Plan is maintained
pursuant to any collective bargaining agreement or other agreement with a labor
union or other authorized representative of labor, (vi) all contributions or
other amounts required to be paid by Q-Up as of the date of this Agreement with
respect to each Q-Up Plan and all other liabilities of each such entity with
respect to each Q-Up Plan required to be paid as of the date of this Agreement,
in respect of current or prior plan years have been paid or accrued in the
financial statements referred to in Section 3.5 hereof in accordance with GAAP
and, in the case of a Q-Up ERISA Plan, ERISA and the Code, (vii) Q-Up has not
engaged in a "prohibited transaction" as defined in Section 406 of ERISA or
Section 4975 of the Code in connection with which Q-Up could be subject to
either any material excise tax or civil penalty assessed pursuant to ERISA or
the Code, (viii) to the knowledge of Q-Up, there are no pending, threatened or
anticipated claims (other than routine claims for benefits) by, on behalf of or
against any of the Q-Up Plans or any trusts related thereto, (ix) all Q-Up Plans
could be terminated as of the Closing without material liability to Q-Up in
excess of the amount accrued and the usual administrative costs associated with
termination of a plan therefor in the financial statements referred to in
Section 3.5 hereof in accordance with GAAP; (x) no Q-Up Plan, either
individually or collectively, provides for any material payment by Q-Up that
would not be deductible for U.S. federal income tax purposes pursuant to
Sections 162(a)(1), 162(m) or 404 of the Code or that, after giving effect to
the transactions contemplated by this Agreement, would constitute an "excess
parachute payment" as defined in Code Section 280G; and (xi) no Q-Up ERISA Plan
has experienced a "reportable event" (as such term is defined in ERISA and
regulations thereunder) that is not subject to an administrative or statutory
waiver from the reporting requirement.
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3.11 CERTAIN CONTRACTS.
(a) Except as set forth at Section 3.11 of the Q-Up
Disclosure Schedule, neither Q-Up nor any of its Subsidiaries is a party to or
bound by any contract, arrangement or commitment (i) with respect to the
employment of any directors, officers, employees or consultants (other than
standard offer letters which provide for no more than at-will employment), (ii)
which, upon execution of this Agreement or the consummation of the transactions
contemplated by this Agreement, will (either alone or upon the occurrence of any
additional acts or events) result in any payment (whether of severance pay or
otherwise) becoming due from S1, Q-Up, the Surviving Corporation or any of their
respective Subsidiaries to any director, officer or employee thereof, (iii) with
or to a labor union or guild (including any collective bargaining agreement),
(iv) (including any stock option plan, stock appreciation rights plan,
restricted stock plan or stock purchase plan) any of the benefits of which will
be increased, or the vesting of the benefits of which will be accelerated, by
the occurrence of any of the transactions contemplated by this Agreement, or the
value of any of the benefits of which will be calculated on the basis of any of
the transactions contemplated by this Agreement, (v) containing any covenant
materially limiting the right of Q-Up or any of its Subsidiaries to engage in
any line of business or to compete with any person or granting any exclusive
distribution rights, (vi) relating to the disposition or acquisition by Q-Up or
any of its Subsidiaries after the date of this Agreement of a material amount of
assets not in the ordinary course of business or pursuant to which Q-Up or any
of its Subsidiaries has any material ownership interest in any corporation,
partnership, joint venture or other business enterprise other than Q-Up's
Subsidiaries that is material to Q-Up's business as currently conducted, or
(vii) to provide source code to any third party for any product or technology
that is material to Q-Up and its Subsidiaries taken as a whole. Q-Up has
previously made available to S1 true, correct and complete copies of all
employment, consulting and deferred compensation agreements to which Q-Up or any
of its Subsidiaries is a party. Section 3.11(a) of the Q-Up Disclosure Schedule
sets forth a list of all material contracts (as defined in Item 601(b)(10) of
Regulation S-K) of Q-Up. Each contract, arrangement or commitment of the type
described in this Section 3.11(a), whether or not set forth in Section 3.11(a)
of the Q-Up Disclosure Schedule, is referred to herein as an "Q-UP CONTRACT",
and neither Q-Up nor any of its Subsidiaries has received written notice of, nor
do any executive officers of such entities know of, any violation of any
material Q-Up Contract.
(b) (i) Except as set forth in Section 3.11 of the Q-Up
Disclosure Schedule, each Q-Up Contract is valid and binding and in full force
and effect as to the obligations of Q-Up thereunder, and, to the knowledge of
Q-Up, is valid and binding and in full force and effect as to the obligations by
the third parties thereto, (ii) Q-Up and each of its Subsidiaries has, and to
the knowledge of Q-Up, each third party has, in all material respects performed
all obligations required to be performed by it to date under each Q-Up Contract,
and (iii) no event or condition exists which constitutes or, after notice or
lapse of time or both, would constitute, a material default on the part of Q-Up
or any of its Subsidiaries under any such Q-Up Contract or, to the knowledge of
Q-Up, any third party thereto.
3.12 AGREEMENTS WITH REGULATORY AGENCIES.
Q-Up (i) is not subject to any cease-and-desist or other order issued
by, (ii) is not a party to any written agreement, consent agreement or
memorandum of understanding with, and (iii) has not adopted any board
resolutions at the request of (each, whether or not set forth in Section 3.12 of
the Q-Up Disclosure Schedule, a "REGULATORY AGREEMENT"), any Governmental Entity
that restricts the conduct of its business or that in any manner relates to its
management or its business, nor has Q-Up been advised by any Governmental Entity
that it is considering issuing or requesting any Regulatory Agreement.
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3.13 ENVIRONMENTAL MATTERS.
(a) Each of Q-Up and the Q-Up Subsidiaries is in
compliance in all material respects with all applicable federal and state laws
and regulations relating to pollution or protection of the environment
(including without limitation, laws and regulations relating to emissions,
discharges, releases and threatened releases of Hazardous Material (as
hereinafter defined), or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Materials;
(b) There is no suit, claim, action, proceeding,
investigation or notice pending or to the knowledge of Q-Up's directors and
executive officers threatened (or past or present actions or events that could
form the basis of any such suit, claim, action, proceeding, investigation or
notice), in which Q-Up or any Q-Up Subsidiary has been or, with respect to
threatened suits, claims, actions, proceedings, investigations or notices may
be, named as a defendant (x) for alleged material noncompliance (including by
any predecessor), with any environmental law, rule or regulation or (y) relating
to any material release or threatened release into the environment of any
Hazardous Material, whether or not occurring at or on a site owned, leased or
operated by Q-Up or any Q-Up Subsidiary;
(c) To the knowledge of Q-Up's directors and executive
officers, during the period of Q-Up's or any Q-Up Subsidiary's ownership or
operation of any of its properties, there has not been any material release of
Hazardous Materials in, on, under or affecting any such property; and
(d) For purposes of this Section 3.13, the term
"HAZARDOUS MATERIAL" means any hazardous waste, petroleum product,
polychlorinated biphenyl, chemical, pollutant, contaminant, pesticide,
radioactive substance, or other toxic material, or other material or substance
(in each such case, other than small quantities of such substances in retail
containers) regulated under any applicable environmental or public health
statute, law, ordinance, rule or regulation.
3.14 PROPERTIES AND ASSETS.
Section 3.14 of the Q-Up Disclosure Schedule lists (i) all real
property owned by Q-Up and each Q-Up Subsidiary; (ii) each real property lease,
sublease or installment purchase arrangement to which Q-Up or any Q-Up
Subsidiary is a party; (iii) a description of each contract for the purchase,
sale, or development of real estate to which Q-Up or any Q-Up Subsidiary is a
party; and (iv) all items of Q-Up's or any Q-Up Subsidiary's tangible personal
property and equipment with a book value of $25,000 or more or having any annual
lease payment of $25,000 or more. Except for (a) items reflected in Q-Up's
consolidated financial statements as of December 31, 1999 referred to in Section
3.5 hereof, (b) exceptions to title that do not interfere materially with Q-Up's
or any Q-Up Subsidiary's use and enjoyment of owned or leased real property, (c)
liens for current real estate taxes not yet delinquent, or being contested in
good faith, properly reserved against (and reflected on the financial statements
referred to in Section 3.5 above), (d) properties and assets sold or transferred
in the ordinary course of business consistent with past practices since December
31, 1999, and (e) items listed in Section 3.14 of the Q-Up Disclosure Schedule,
Q-Up and each Q-Up Subsidiary have good and, as to owned real property,
marketable and insurable title to all their properties and assets, reflected in
its consolidated financial statements of Q-Up as of December 31, 1999, free and
clear of all liens, claims, charges and other encumbrances. Q-Up and each Q-Up
Subsidiary, as lessees, have the right under valid and subsisting leases to
occupy, use and possess all property leased by them, and there has not occurred
under any such lease any material breach, violation or default by Q-Up, and
neither Q-Up nor any Q-Up Subsidiary has experienced any material uninsured
damage or destruction with respect to such properties since December 31, 1999.
All properties and assets used by Q-Up and each Q-Up Subsidiary are in good
operating condition and repair (subject to ordinary wear and tear) and comply in
all material respects with all Laws relating thereto now in effect. Q-Up and
each Q-Up Subsidiary enjoy peaceful and undisturbed possession under all leases
for the use of all property under which they are the lessees,
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and all leases to which Q-Up or any Q-Up Subsidiary is a party are valid and
binding obligations of Q-Up, and to the knowledge of Q-Up with respect to the
respective third parties thereto, enforceable, in accordance with the terms
thereof. Neither Q-Up nor any Q-Up Subsidiary is in material default with
respect to any such lease, and there has occurred no default by Q-Up or event
which with the lapse of time or the giving of notice, or both, would constitute
a material default under any such lease. There are no Laws, conditions of
record, or other impediments which interfere with the intended use by Q-Up or
any Q-Up Subsidiary of any of the property owned, leased, or occupied by them.
3.15 INSURANCE.
Section 3.15 of the Q-Up Disclosure Schedule contains a true, correct
and complete list of all insurance policies and bonds maintained by Q-Up and any
Q-Up Subsidiary, including the name of the insurer, the policy number, the type
of policy and any applicable deductibles, and all such insurance policies and
bonds (or other insurance policies and bonds that have, from time to time, in
respect of the nature of the risks insured against and amount of coverage
provided, been substantially similar in kind and amount to that customarily
carried by parties similarly situated who own properties and engage in
businesses substantially similar to that of Q-Up and any Q-Up Subsidiary) are in
full force and effect and have been in full force and effect since the
respective dates each such policies and bonds were first obtained. As of the
date hereof, neither Q-Up nor any Q-Up Subsidiary has received any notice of
cancellation or amendment of any such policy or bond or is in default under any
such policy or bond, no coverage thereunder is being disputed and all material
claims thereunder have been filed in a timely fashion. The existing insurance
carried by Q-Up and Q-Up Subsidiaries is, in respect of the nature of the risks
insured against and the amount of coverage provided, substantially similar in
kind and amount to that customarily carried by parties similarly situated who
own properties and engage in businesses substantially similar to that of Q-Up
and the Q-Up Subsidiaries, and is sufficient for compliance by Q-Up and the Q-Up
Subsidiaries with all requirements of Law and agreements to which Q-Up or any of
the Q-Up Subsidiaries is subject or is party. True, correct and complete copies
of all such policies and bonds reflected at Section 3.15 of the Q-Up Disclosure
Schedule, as in effect on the date hereof, have been made available to S1.
3.16 COMPLIANCE WITH APPLICABLE LAWS.
Each of Q-Up and any Q-Up Subsidiary has complied in all material
respects with all Laws applicable to it or to the operation of its business.
Neither Q-Up nor any Q-Up Subsidiary has received any written notice or to
Q-Up's knowledge, any other notice, of any material alleged or threatened claim,
violation, or liability under any such Laws that has not heretofore been cured
and for which there is no remaining liability.
3.17 INTELLECTUAL PROPERTY.
Except, in each case, as set forth in Section 3.17 of the Q-Up
Disclosure Schedule:
(a) (i) Q-Up and each Q-Up Subsidiary owns, free and
clear of liens, orders and arbitration awards, or are licensed or otherwise
possess valid and enforceable rights to use all patents, trademarks, trade
names, service marks, copyrights and any applications therefor, schematics,
technology, know-how, trade secrets, ideas, algorithms, processes, Software (as
defined below), and tangible or intangible proprietary information or material
("INTELLECTUAL PROPERTY") that are used in or necessary to conduct the business
of Q-Up and the Q-Up Subsidiaries. "SOFTWARE" means any and all (i) computer
programs and applications, including any and all software implementations of
algorithms, models and methodologies, whether in source code or object code,
(ii) databases and compilations, including any and all data and collections of
data, whether machine readable or otherwise, (iii) descriptions, flow-charts and
other work product used to design,
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plan, organize and develop any of the foregoing, (iv) the technology supporting
any Internet site(s) operated by or on behalf of Q-Up or any Q-Up Subsidiary,
and (v) all documentation, including user manuals and training materials,
relating to any of the foregoing.
(ii) Except as would not be materially adverse to the
business of Q-Up or any Q-Up Subsidiary, Q-Up and the Q-Up Subsidiaries have
taken commercially reasonable steps to protect their Intellectual Property.
There is no litigation pending or, to the knowledge of Q-Up and the Q-Up
Subsidiaries, threatened or any written claim from any person challenging the
ownership, use, validity or enforceability of any Intellectual Property, nor is
there any basis for the assertion of any such claim or challenge.
(b) Schedule 3.17(b) lists all (i) patents, patent
applications, registered and unregistered trademarks, trade names and service
marks, and registered copyrights owned by Q-Up included in the Intellectual
Property, including the jurisdictions in which each such item of Intellectual
Property right has been issued or registered or in which any application for
such issuance and registration has been filed, (ii) software licenses and value
added reseller agreements, and (iii) licenses, sublicenses and other agreements
as to which Q-Up and any Q-Up Subsidiary are a party and pursuant to which Q-Up
and its Subsidiaries are authorized to use any third party patents, trademarks
or copyrights, including Software ("THIRD PARTY INTELLECTUAL PROPERTY RIGHTS")
which are incorporated in or form a part of any Q-Up or Q-Up Subsidiary product,
except such schedule shall not include "off-the-shelf" or other software widely
available through regular commercial channels.
(c) (i) To the knowledge of Q-Up and the Q-Up
Subsidiaries, there is no unauthorized use, disclosure, infringement or
misappropriation of any Intellectual Property rights of Q-Up or any Q-Up
Subsidiary, any trade secret material to Q-Up or its Subsidiaries, or any
Intellectual Property right of any third party to the extent licensed by or
through Q-Up or its Subsidiaries, by any employee of Q-Up or any Q-Up subsidiary
or third party for whom Q-Up is responsible. Except as set forth in Schedule
3.17(c), there are no royalties, fees or other payments payable by Q-Up or its
Subsidiaries to any person by reason of the ownership, use, sale or disposition
of Intellectual Property.
(ii) To the knowledge of Q-Up and its Subsidiaries,
there has been no prior use of Q-Up's registered trademarks by any third party
which would confer upon said third party superior rights in such trademarks.
Q-Up and its Subsidiaries have taken reasonable steps to adequately police the
trademarks against third party infringement, and the material trademarks
registered in the United States and in other jurisdictions where Q-Up or its
Subsidiaries are doing business have been continuously used in the form
appearing in, and in connection with the goods and services listed in, their
respective registration certificates or any amendment, supplement or office
action related thereto.
(d) Q-Up and its Subsidiaries are not, nor will they be
as a result of the execution and delivery of this Agreement or the performance
of their obligations under this Agreement, in breach of any material license,
sublicense or other agreement relating to the Intellectual Property or Third
Party Intellectual Property Rights, and the execution and delivery of this
Agreement or the performance of the obligations under this Agreement by Q-Up and
its Subsidiaries will not result in the loss or impairment of, or give rise to
any right of any third party to terminate, any of Q-Up's or any of its
Subsidiaries' rights to own any of its Intellectual Property or their respective
rights under any material license agreements, nor require the consent of any
Governmental Entity or third party in respect of any such Intellectual Property.
(e) Q-Up and its Subsidiaries (i) have no knowledge
(including knowledge of any litigation pending or threatened or any written
claim from any person) or reason to believe that the conduct of the Business
infringes any patent, trademark, service xxxx, copyright, trade secret, or
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other proprietary right of any third party; and (ii) have not advised any
third party that such third party may be infringing any Intellectual Property or
breaching any license or agreement involving Intellectual Property and have not
brought or threatened any claim against such third party for such conduct.
(f) The Software owned or purported to be owned by Q-Up
or any of its Subsidiaries, was either (i) developed by employees of Q-Up or any
of its Subsidiaries within the scope of their employment; (ii) developed by
independent contractors or consultants who have assigned their rights to Q-Up or
any of its Subsidiaries pursuant to written agreements; or (iii) otherwise
acquired by Q-Up or its Subsidiary from a third party.
(g) All employees and independent contractors and
consultants of Q-Up and its Subsidiaries have executed and delivered to Q-Up or
its Subsidiaries, as the case may be, agreements regarding the protection of
proprietary information and the assignment to Q-Up or its Subsidiaries of any
Intellectual Property arising from services performed for Q-Up or its
Subsidiaries by such persons.
(h) Q-Up and its Subsidiaries have obtained or entered
into written agreements with their employees and with third parties, in
transactions deemed appropriate, in connection with the disclosure to or use or
appropriation by, employees and third parties, of trade secret or proprietary
information owned by Q-Up and its Subsidiaries and not otherwise protected by a
patent, a patent application, copyright, trademark, or other registration or
legal scheme ("Q-UP CONFIDENTIAL INFORMATION"), and do not know of any situation
involving such employee or third party use, disclosure or appropriation of Q-Up
Confidential Information where the lack of such a written agreement is likely to
result in any Material Adverse Effect. Except as set forth in Schedule 3.17(h),
neither Q-Up nor any of its Subsidiaries has furnished the source code of any of
their Software products to any third party, deposited any such source code in
escrow or otherwise provided access to such source code to any third party.
(i) Except as would not be materially adverse to the
business of Q-Up or its Subsidiaries, Q-Up and its Subsidiaries have taken
reasonable steps with the intent of ensuring that their products (including
existing products and technology and products and technology currently under
development) will, when used in accordance with associated documentation on a
specified platform or platforms, be capable upon installation of accurately
processing, providing, and receiving date data from, into, and between the
twentieth and twenty-first centuries, including the years 1999 and 2000, and
making accurate leap-year calculations, provided that all other non-Q-Up or Q-Up
Subsidiary products (e.g., hardware, software and firmware) used in or in
combination with Q-Up's or its Subsidiaries' products, properly exchange data
with Q-Up's and its Subsidiaries products.
3.18 AFFILIATES.
Each director, executive officer and other person who is an "affiliate"
(for purposes of Rule 145 under the Securities Act) of Q-Up is listed at Section
3.18 of the Q-Up Disclosure Schedule, and each such person has delivered to S1,
concurrently with the execution of this Agreement, the Q-Up Shareholder
Agreement.
3.19 SHAREHOLDER MEETING.
As of the date hereof, Q-Up's board of directors has called a special
meeting of Q-Up's shareholders of record as of the date hereof for the purposes
of approving and adopting this Agreement and the Merger contemplated hereby.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF S1
S1 hereby makes the following representations and warranties to Q-Up as
set forth in this Article IV, subject to the exceptions disclosed in writing in
the S1 Disclosure Schedule as of the date hereof, each of which is being relied
upon by Q-Up as a material inducement to enter into and perform this Agreement.
All of the disclosure schedules of S1 referenced below or otherwise required of
S1 pursuant to this Agreement, which disclosure schedules shall be
cross-referenced to the specific sections and subsections of this Agreement and
delivered pursuant to Section 6.19, are referred to herein as the "S1 DISCLOSURE
SCHEDULE."
4.1 CORPORATE ORGANIZATION.
(a) S1 is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware. S1 has the
corporate power and authority to own or lease all of its properties and assets
and to carry on its business as it is now being conducted, and is duly licensed
or qualified to do business in each jurisdiction in which the nature of the
business conducted by it or the character or location of the properties and
assets owned or leased by it makes such licensing or qualification necessary.
The Amended and Restated Certificate of Incorporation and Amended and Restated
Bylaws of S1, copies of which have previously been made available to Q-Up, are
true, correct and complete copies of such documents as in effect as of the date
of this Agreement.
(b) Merger Sub is a corporation duly organized, validly
existing and in good standing under the laws of the State of Texas. Each
Subsidiary of S1 (each, a "S1 SUBSIDIARY") and the jurisdiction of its
organization is set forth at Section 4.1(b) of the S1 Disclosure Schedule. Each
S1 Subsidiary is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization. Each S1
Subsidiary has the corporate power and authority to own or lease all of its
properties and assets and to carry on its business as it is now being conducted,
and is duly licensed or qualified to do business in each jurisdiction in which
the nature of any material business conducted by it or the character or location
of any material properties or assets owned or leased by it makes such licensing
or qualification necessary. The chartering and other corporate governance
documents of each S1 Subsidiary, copies of which have previously been made
available to Q-Up, are true, correct and complete copies of such documents as in
effect as of the date of this Agreement.
4.2 CAPITALIZATION.
(a) The authorized capital stock of S1 consists of (i)
350,000,000 shares of S1 Common Stock, of which 48,767,678 shares were
outstanding at December 31, 1999 and (ii) 25,000,000 shares of serial preferred
stock, par value $.01 per share ("S1 PREFERRED STOCK"), 1,637,832 shares of
which were designated as "SERIES A CONVERTIBLE PREFERRED STOCK," 749,064 of
which were designated as "SERIES B REDEEMABLE CONVERTIBLE PREFERRED STOCK" and
215,000 shares of which were designated as "SERIES C REDEEMABLE CONVERTIBLE
PREFERRED STOCK." At December 31, 1999, 428,950 shares of Series A Convertible
Preferred Stock, 749,064 shares of Series B Redeemable Convertible Preferred
Stock and 215,000 shares of Series C Redeemable Convertible Preferred Stock were
outstanding. At such date, there were 21,222,252 shares of S1 Common Stock
reserved for issuance pursuant to employee and director stock options (of which
options for 16,939,418 shares are currently outstanding) and 2,357,990 shares of
S1 Common Stock reserved for conversion of S1 Preferred Stock. All of the issued
and outstanding shares of S1 Common Stock and Preferred Stock have been duly
authorized and validly issued and are fully paid, nonassessable and free of
preemptive rights, with no personal liability attaching to the ownership
thereof, and upon issuance in accordance with the terms hereof, the shares of S1
Common Stock to be issued in the Merger (including, without
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limitation, upon exercise of options to purchase Q-Up Common Stock) are duly
authorized and upon issuance in accordance with the terms hereof, will be
validly issued, and fully paid, nonassessable and free of preemptive rights,
with no personal liability attaching to the ownership thereof. As of the date
hereof, S1 has not issued any new shares of S1 Capital Stock except as listed at
Section 4.2(a) of the S1 Disclosure Schedule, and S1 does not have and is not
bound by any outstanding subscriptions, options, warrants, calls, commitments or
agreements of any character calling for the purchase or issuance of any shares
of S1 Common Stock or S1 Preferred Stock or any other equity securities of S1 or
any securities presenting the right to purchase or otherwise receive any shares
of S1 Common Stock or S1 Preferred Stock, other than as set forth at Section
4.2(a) of the S1 Disclosure Schedule.
(b) Except as set forth at Section 4.2(b) of the S1
Disclosure Schedule, S1 owns, directly or indirectly, all of the issued and
outstanding shares of capital stock of each of the S1 Subsidiaries, free and
clear of all liens, charges, encumbrances and security interests whatsoever, and
all of such shares are duly authorized and validly issued and are fully paid,
nonassessable and free of preemptive rights, with no personal liability
attaching to the ownership thereof. No S1 Subsidiary has or is bound by any
outstanding subscriptions, options, warrants, calls, commitments or agreements
of any character calling for the purchase or issuance of any shares of capital
stock or any other equity security of such Subsidiary or any securities
representing the right to purchase or otherwise receive any shares of capital
stock or any other equity security of such Subsidiary.
4.3 AUTHORITY; NO VIOLATION.
(a) S1 has full corporate power and authority to execute
and deliver this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly approved by the
Board of Directors of S1. The Board of Directors of S1 has declared this
Agreement and the transactions contemplated hereby advisable and no other
corporate proceedings on the part of S1 are necessary to approve this Agreement
or to consummate the transactions contemplated hereby. This Agreement and the
Escrow Agreement have been duly and validly executed and delivered by S1 and
(assuming due authorization, execution and delivery by Merger Sub and Q-Up of
this Agreement and by the Shareholder Representative and the Escrow Agent of the
Escrow Agreement) constitute a valid and binding obligation of S1, enforceable
against S1 in accordance with its terms, except as enforcement may be limited by
general principles of equity whether applied in a court of law or a court of
equity and by bankruptcy, insolvency and similar law affecting creditors' rights
and remedies generally.
(b) Merger Sub has full corporate power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly and validly
approved by the Board of Directors of Merger Sub and the sole shareholder of
Merger Sub and no other corporate proceedings on the part of Merger Sub are
necessary to approve this Agreement or to consummate the transactions
contemplated hereby. This Agreement has been duly and validly executed and
delivered by Merger Sub and (assuming due authorization, execution and delivery
by S1 and Q-Up) constitutes valid and binding obligations of Merger Sub,
enforceable against Merger Sub in accordance with its terms, except as
enforcement may be limited by general principles of equity whether applied in a
court of law or a court of equity and by bankruptcy, insolvency and similar law
affecting creditors' rights and remedies generally. All of the outstanding
shares of Merger Sub common stock, par value $.01 per share, have been duly
authorized, validly issued and are fully paid and non-assessable and are owned
by S1. Merger Sub was formed for the purpose of consummating the Merger and has
no material liabilities.
(c) Neither the execution and delivery of this Agreement
by S1 or Merger Sub nor the consummation by S1 or Merger Sub of the transactions
contemplated hereby, nor compliance by S1 or Merger Sub with any of the terms or
provisions hereof, will (i) violate any provision of (x) the
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Amended and Restated Certificate of Incorporation or Amended and Restated Bylaws
of S1 or (y) the Articles of Incorporation or Bylaws of Merger Sub, or (ii)
assuming that the consents and approvals referred to in Section 4.4 are duly
obtained, (x) violate any Laws applicable to S1 or Merger Sub or any of
properties or assets, or (y) violate, conflict with, result in a breach of any
provision of or the loss of any benefit under, constitute a default (or an event
which, with notice or lapse of time, or both, would constitute a default) under,
result in the termination of or a right of termination or cancellation under,
accelerate the performance required by, or result in the creation of any lien,
pledge, security interest, charge or other encumbrance upon any of the
respective properties or assets of S1 or Merger Sub under any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, deed of trust,
license, lease, agreement or other instrument or obligation to which S1 or
Merger Sub is a party, or by which S1 or Merger Sub or any of their properties
or assets may be bound or affected, except, in each case, where such violation,
conflict, breach, loss, default, termination, cancellation or acceleration would
not have a Material Adverse Effect on S1 and its Subsidiaries taken as a whole.
4.4 CONSENTS AND APPROVALS.
(a) Except for (i) the filing of the Articles of Merger
with the Secretary of State of the State of Texas, (ii) such consents,
approvals, orders, authorizations, registrations, declarations and filings as
may be required under applicable federal, foreign and state securities (or
related) laws and, if applicable, the HSR Act, and the securities or antitrust
laws of any foreign country, (iii) such filings and approvals as are required to
be made or obtained with Nasdaq (or such other exchange as may be applicable) in
connection with the issuance of the shares of S1 Common Stock pursuant to this
Agreement, (iv) such other consents and approvals as may be set forth in Section
4.4(a) of the S1 Disclosure Schedule, and (v) the filings required by Sections
6.10 and 6.16 hereof, no consents or approvals of or filings or registrations
with any Governmental Entity or with any third party are necessary in connection
with (1) the execution and delivery by S1 of this Agreement and the Escrow
Agreement, and (2) the consummation by S1 of the Merger and the other
transactions contemplated hereby, except for such consents, approvals or filings
the failure of which to obtain will not have (x) a material adverse effect on
the ability of S1 or Merger Sub to consummate the transactions contemplated
hereby or (y) a Material Adverse Effect on Q-Up, S1 or the Surviving Corporation
following the Effective Time.
(b) S1 hereby represents to Q-Up that it has no knowledge
of any reason why approval or effectiveness of any of the applications, notices
or filings referred to in Section 4.4(a) cannot be obtained or granted on a
timely basis.
4.5 FINANCIAL STATEMENTS; EXCHANGE ACT FILINGS; BOOKS AND RECORDS.
S1 has previously made available to Q-Up true, correct and complete
copies of the consolidated balance sheets of S1 and its Subsidiaries as of
December 31 for the fiscal years 1998 and 1997 and the related consolidated
statements of operations, stockholders' equity and cash flows for the fiscal
years 1996 through 1998, inclusive, as reported in S1's Annual Report on Form
10-K for the fiscal year ended December 31, 1998, filed with the SEC under the
Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"), in each case
accompanied by the audit report of KPMG LLP, the then-independent public
accountants with respect to S1, and the interim financial statements of S1 as of
and for the nine months ended September 30, 1999 and 1998, as included in S1's
quarterly report on Form 10-Q for the quarter ended September 30, 1999, as filed
with the SEC. The financial statements referred to in this Section 4.5
(including the related notes, where applicable) (the "S1 FINANCIAL STATEMENTS")
fairly present (subject, in the case of the unaudited statements, to recurring
audit adjustments normal in nature and amount) the results of the consolidated
operations and consolidated financial condition of S1 and its Subsidiaries for
the respective fiscal periods or as of the respective dates therein set forth;
each of such statements (including the related notes, where applicable) comply
with applicable accounting requirements and with the published rules and
regulations of the SEC with respect thereto; and each of such statements
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(including the related notes, where applicable) has been prepared in accordance
with GAAP consistently applied during the periods involved, except as indicated
in the notes thereto or, in the case of unaudited statements, as permitted by
Form 10-Q or any successor form. S1's Annual Report on Form 10-K for the fiscal
year ended December 31, 1998 and all subsequently filed reports under Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act comply in all material respects
with the appropriate requirements for such reports under the Exchange Act, and
S1 has previously made available to Q-Up true, correct and complete copies of
such reports. The books and records of S1 and its Subsidiaries have been, and
are being, maintained in all material respects in accordance with GAAP and any
other applicable legal and accounting requirements.
4.6 ABSENCE OF CERTAIN CHANGES OR EVENTS.
Except as disclosed in its reports filed prior to the date hereof under
the Exchange Act, there have been no changes in the business, operations,
results of operations or financial condition of S1 and its Subsidiaries which
have had a Material Adverse Effect on S1, and since December 31, 1998 neither S1
nor any of its Subsidiaries has incurred any material liability, except as
contemplated hereby or in the ordinary course of their business consistent with
their past practices and which has not had a Material Adverse Effect on S1 and
its Subsidiaries taken as a whole. Since December 31, 1998, S1 and its
Subsidiaries have carried on their respective businesses in the ordinary and
usual course consistent with their past practices.
4.7 BROKER'S FEES.
Except as set forth at Section 4.7 of the S1 Disclosure Schedule,
neither S1 nor any S1 Subsidiaries nor any of their respective officers or
directors has employed any broker or finder or incurred any liability for any
broker's fees, commissions or finder's fees in connection with any of the
transactions contemplated by this Agreement.
4.8 SEC FILINGS.
S1 has filed (i) all material required to be filed pursuant to Section
13, 14 or 15(d) of the Exchange Act for the previous 12 calendar months and (ii)
in a timely manner all reports required to be filed during the previous 12
calendar months.
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
5.1 COVENANTS OF Q-UP.
During the period from the date of this Agreement and continuing until
the earlier of the termination of this Agreement or the Effective Time, except
as expressly contemplated or permitted by this Agreement or with the prior
written consent of S1, Q-Up and each Q-Up Subsidiary shall carry on their
respective businesses in the ordinary course consistent with past practices.
Q-Up will use its commercially reasonable efforts to (x) preserve its business
organization and that of each Q-Up Subsidiary intact, (y) keep available to
itself and S1 the present services of the employees of Q-Up and each Q-Up
Subsidiary and (z) preserve for itself and S1 the goodwill of the customers of
Q-Up and each Q-Up Subsidiary and others with whom business relationships exist.
Without limiting the generality of the foregoing, and except as set forth in the
Q-Up Disclosure Schedule or as otherwise contemplated by
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this Agreement or consented to by S1 in writing, Q-Up shall not, and shall not
permit any Q-Up Subsidiary to:
(a) declare or pay any dividends on, or make other
distributions in respect of, any of its capital stock;
(b) (i) split, combine or reclassify any shares of its
capital stock or, except as permitted by Section 5.1(c), issue, authorize or
propose the issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock except upon the exercise or
fulfillment of rights or options issued or existing pursuant to the Q-Up Stock
Plan in accordance with their present terms, all to the extent outstanding and
in existence on the date of this Agreement, or (ii) repurchase, redeem or
otherwise acquire (except repurchases of unvested shares at cost in connection
with the termination of the employee relationship with any employee pursuant to
stock option or purchase agreements in effect on the date of this Agreement),
any shares of the capital stock of Q-Up or any Q-Up Subsidiary, or any
securities convertible into or exercisable for any shares of the capital stock
of Q-Up or any Q-Up Subsidiary;
(c) issue, deliver or sell, or authorize or propose the
issuance, delivery or sale of, any shares of its capital stock or, any
securities convertible into or exercisable for, or any rights, warrants or
options to acquire, any such shares, or enter into any agreement with respect to
any of the foregoing, other than issuances of Q-Up Common Stock pursuant to the
exercise of vested options granted under the Q-Up Stock Plan;
(d) amend its Articles of Incorporation, By-Laws or other
similar governing documents;
(e) authorize or permit any of Q-Up's officers,
directors, employees or agents to, directly or indirectly, solicit, initiate or
knowingly encourage any inquiries relating to, or the making of any proposal
for, hold substantive discussions or negotiations with, knowingly provide any
information to, any person, entity or group (other than S1) concerning any Q-Up
Acquisition Transaction (as defined below), or approve, endorse or recommend any
such proposal or enter into any letter of intent or similar document or any
contract, agreement or commitment relating to any Q-Up Acquisition Transaction.
Q-Up will, as of the date hereof, cease and cause to be terminated any existing
activities, discussions or negotiations previously conducted with any parties
other than S1 with respect to any of the foregoing. As used in this Agreement,
Q-Up Acquisition Transaction shall mean any offer, proposal or expression of
interest relating to (i) any tender or exchange offer, (ii) merger,
consolidation or other business combination involving Q-Up, or (iii) other than
through the Merger and the transactions contemplated or permitted by this
Agreement, the acquisition in any manner of a substantial equity interest in, or
a substantial portion of the assets of Q-Up involving or contemplating the
acquisition or purchase of more than 1%, in the case of any class or series of
capital stock or 1% in the case of the assets of Q-Up, as well as any lease or
sale transaction out of the ordinary course of business of more than 1% of the
assets of Q-Up or any liquidation or dissolution of Q-Up;
(f) make capital expenditures aggregating in excess of
$75,000;
(g) enter into any new line of business or, except in the
ordinary course of business, (i) enter into any material contract (as defined in
Item 601(b)(10) of Regulation S-K), or other contract requiring aggregate
payments exceeding $50,000, or (ii) modify, amend or transfer in any material
respect, or terminate, any material contract to which Q-Up or any of its
Subsidiaries is a party or waive, release, or assign any material rights
thereunder;
(h) acquire or agree to acquire, by merging or
consolidating with, or by purchasing an equity interest in or a material amount
of assets of, or by any other manner, any business or any
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corporation, partnership, association or other business organization or division
thereof or otherwise acquire any material amount of assets, other than in
connection with foreclosures, settlements in lieu of foreclosure or troubled
loan or debt restructurings, or in the ordinary course of business;
(i) take any action that is intended or may reasonably be
expected to result in any of its representations and warranties set forth in
this Agreement being or becoming untrue or in any of the conditions to the
Merger set forth in Article VII not being satisfied, or in a violation of any
provision of this Agreement, except, in every case, as may be required by
applicable law;
(j) change its methods of accounting in effect at
December 31, 1998 except as required by changes in GAAP as concurred to by S1's
independent auditors;
(k) (i) except as required by applicable law or to
maintain qualification pursuant to the Code, adopt, amend, renew or terminate
any Q-Up Plan or any agreement, arrangement, plan or policy between Q-Up or any
Q-Up Subsidiary and one or more of its current or former directors or officers,
(ii) except as permitted by Section 5.1(c), increase in any manner the
compensation of any employee or director or pay any benefit not required by any
plan or agreement as in effect as of the date hereof (including, without
limitation, the granting of stock options, stock appreciation rights, restricted
stock, restricted stock units or performance units or shares), (iii) enter into,
modify or renew any contract, agreement, commitment or arrangement providing for
the payment to any director, officer or employee of compensation or benefits,
other than normal annual increases in pay, consistent with past practice, (iv)
hire any new employee at a level of director or above at an annual base salary
compensation in excess of $125,000, (v) pay expenses of any employees or
directors for attending conventions or similar meetings which conventions or
meetings are held after the date hereof, other than in the ordinary course of
business consistent with past practice, (vi) promote to a rank of director or
more senior any employee, or (vii) pay any retention or other bonuses to any
employees;
(l) incur any indebtedness for borrowed money, assume,
guarantee, endorse or otherwise as an accommodation become responsible for the
obligations of any other individual, corporation or other entity;
(m) sell, purchase, enter into a lease, relocate, open or
close any office;
(n) make any equity investment or commitment to make such
an investment in any entity or real estate;
(o) make any investment, other than in the ordinary
course of business consistent with past practices;
(p) sell, purchase or lease any real property;
(q) waive any stock repurchase rights, accelerate, amend
or change the period of exercisability of any options or restricted stock, or
reprice options granted under any employee, consultant, director or other stock
plans or authorize cash payments in exchange for any options granted under any
of such plans;
(r) transfer or license to any person or entity or
otherwise extend, amend or modify in any material respect any rights to material
Intellectual Property other than in the ordinary course of business, or enter
into grants to future patent rights, other than as may be required by applicable
Laws; or
(s) agree or commit to do any of the actions set forth in
(a) - (r) above.
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The consent of S1 to any action by Q-Up or any Q-Up Subsidiary that is not
permitted by any of the preceding paragraphs shall be evidenced by a writing
signed by the President or any Executive Vice President of S1.
5.2 COMPLIANCE WITH ANTITRUST LAWS.
Each of S1 and Q-Up shall use its reasonable best efforts to resolve
objections, if any, which may be asserted with respect to the Merger under
antitrust laws, including, without limitation and if applicable, the HSR Act. In
the event a suit is threatened or instituted challenging the Merger as violative
of antitrust laws, each of S1 and Q-Up shall use its reasonable best efforts to
avoid the filing of, or resist or resolve such suit. S1 and Q-Up shall use their
reasonable best efforts to take such action as may be required by: (a) the
Antitrust Division of the Department of Justice or the Federal Trade Commission
in order to resolve such objections as either of them may have to the Merger
under antitrust laws, or (b) any federal or state court of the United States, in
any suit brought by a private party or Governmental Entity challenging the
Merger as violative of antitrust laws, in order to avoid the entry of, or to
effect the dissolution of, any injunction, temporary restraining order, or other
order which has the effect of preventing the consummation of the Merger.
Reasonable best efforts shall not include the willingness of S1 to accept an
order agreeing to the divestiture, or the holding separate, of any assets of S1
or Q-Up which S1 reasonably determines to be material to S1 or to benefits of
the transaction for which it has bargained for hereunder.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 REGULATORY MATTERS.
(a) As promptly as practicable following the execution
and delivery of this Agreement, if applicable, Q-Up and S1 will prepare and file
with the United States Federal Trade Commission (the "FTC") and the Antitrust
Division of the United States Department of Justice (the "DOJ") Notification and
Report Forms relating to the transactions contemplated herein if and as required
by the HSR Act, as well as comparable pre-merger notification forms required by
the merger notification or control laws and regulations of any applicable
jurisdiction, as agreed by the parties (the "ANTITRUST FILINGS"). The parties
will comply with any requests for additional information relating to the
Antitrust Filings and will use their reasonable best efforts to secure all
required approvals of the Antitrust Filings.
(b) The parties hereto shall cooperate with each other
and use their reasonable best efforts to promptly prepare and file all necessary
documentation, to effect all applications, notices, petitions and filings (which
shall include the Antitrust Filings), and to obtain as promptly as practicable
all permits, consents, approvals and authorizations of all third parties and
Governmental Entities which are necessary or advisable to consummate the
transactions contemplated by this Agreement (including without limitation the
Merger). Q-Up and S1 shall have the right to review in advance, and to the
extent practicable each will consult the other on, in each case subject to
applicable laws relating to the exchange of information, all the information
relating to Q-Up or S1, as the case may be, which appears in any filing made
with, or written materials submitted to, any third party or any Governmental
Entity in connection with the transactions contemplated by this Agreement and
will promptly notify each other of any communication with any Governmental
Entity and provide the other with an opportunity to participate in any meetings
with a Governmental Entity relating thereto; provided, however, that nothing
contained herein shall be deemed to provide either party with a right to review
any information provided to any Governmental Entity on a confidential basis in
connection with the transactions contemplated hereby. In exercising the
foregoing right, each of the parties hereto shall act reasonably and as promptly
as practicable. The parties hereto agree that they will consult with each other
with respect to the obtaining of all permits, consents, approvals and
authorizations of all third parties and
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Governmental Entities necessary or advisable to consummate the transactions
contemplated by this Agreement and each party will keep the other apprised of
the status of matters relating to contemplation of the transactions contemplated
herein.
(c) S1 and Q-Up shall promptly advise each other upon
receiving any communication from any Governmental Entity whose consent or
approval is required for consummation of the transactions contemplated by this
Agreement which causes such party to believe that there is a reasonable
likelihood that any requisite regulatory approval will not be obtained or that
the receipt of any such approval will be materially delayed.
6.2 ACCESS TO INFORMATION.
(a) Upon reasonable notice and subject to applicable Laws
relating to the exchange of information, Q-Up shall provide to the officers,
employees, accountants, counsel and other representatives of S1, access, during
normal business hours during the period prior to the Closing, to all its
properties, books, contracts, commitments and records and, during such period,
Q-Up shall make available to S1 all information concerning its business,
properties and personnel as S1 may reasonably request (except as to information
which is confidential or competitively sensitive ("CONFIDENTIAL MATTERS")). S1
will hold all such information in confidence to the extent required by, and in
accordance with, the provisions of THE CONFIDENTIAL INFORMATION AND
NON-DISCLOSURE AGREEMENT BETWEEN THE PARTIES DATED AS OF FEBRUARY 1, 2000 (the
"CONFIDENTIALITY AGREEMENT") as if the mutual purpose of S1 and Q-Up as
expressly recited in Paragraph 1 thereof is to consummate the transactions
contemplated hereby. The parties agree that the terms of the Confidentiality
Agreement are incorporated by reference herein. The parties agree and
acknowledge that the Confidentiality Agreement will continue in full force and
effect in accordance with its terms. The parties hereto agree and acknowledge
that S1 has not had the opportunity to perform its due diligence investigation
prior to the date hereof. Accordingly, in addition to the access contemplated by
this Section 6.2(a), Q-Up shall cooperate fully with S1 to conduct a reasonable
due diligence investigation of Q-Up, which investigation shall be completed by
the close of business on March 15, 2000 (the "DUE DILIGENCE PERIOD").
(b) Upon reasonable notice and subject to applicable Laws
relating to the exchange of information, S1 shall and shall cause Merger Sub to,
provide to the officers, employees, accountants, counsel and other
representatives of Q-Up, access, during normal business hours during the period
prior to the Effective Time, to such information regarding S1 (except as to
Confidential Matters), as shall be reasonably necessary for Q-Up to fulfill its
obligations pursuant to this Agreement or which may be reasonably necessary for
Q-Up to confirm that the representations and warranties of S1 contained herein
are true and correct and that the covenants of S1 contained herein have been
performed in all material respects. S1 also will provide a copy of each report,
schedule, registration statement and other document filed or received by it
during such period pursuant to the requirements of federal securities laws or
other federal or state banking Laws and all other information concerning its
business as Q-Up may reasonably request (except Confidential Matters). Q-Up will
hold all such information in confidence to the extent required by, and in
accordance with, the provisions of the Confidentiality Agreement. The parties
hereto agree and acknowledge that Q-Up has not had the opportunity to perform
its due diligence investigation prior to the date hereof. Accordingly, S1 shall
cooperate fully with Q-Up to conduct a reasonable due diligence investigation of
S1, which investigation shall be completed within the Due Diligence Period.
(c) No investigation by either party or its
representatives shall affect the representations and warranties of the other
party set forth herein.
(d) Q-Up shall provide S1 with true, correct and complete
copies of all financial information provided to directors of Q-Up in connection
with meetings of its Boards of Directors or committees thereof, except as to
Confidential Matters.
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6.3 LEGAL CONDITIONS TO MERGER.
Each of the parties hereto shall use their reasonable best efforts (a)
to take, or cause to be taken, all actions necessary, proper or advisable to
comply promptly with all legal requirements which may be imposed on such party
with respect to the Merger and, subject to the conditions set forth in Article
VII hereof, to consummate the transactions contemplated by this Agreement and
(b) to obtain (and to cooperate with the other party to obtain) any consent,
authorization, order or approval of, or any exemption by, any Governmental
Entity and any other third party which is required to be obtained by S1 or Q-Up
in connection with the Merger and the other transactions contemplated by this
Agreement.
6.4 STOCK EXCHANGE LISTING.
S1 shall cause the shares of S1 Common Stock to be issued in the Merger
and pursuant to options referred to herein to be approved for quotation on the
Nasdaq Stock Market National Market System (or such other national securities
exchange on which the S1 Common Stock has become listed, or approved for
listing) prior to the Closing.
6.5 EMPLOYEES.
As soon as practicable after the execution of this Agreement,
Q-Up and S1 shall confer and work together in good faith to agree upon mutually
acceptable employee benefit and compensation arrangements (and terminate Q-Up
employee plans immediately prior to the Effective Time, if appropriate) so as to
provide benefits to Q-Up employees initially upon the Merger which are generally
equivalent to those being provided to employees of S1 at the Effective Time.
6.6 ADDITIONAL AGREEMENTS.
In case at any time after the Closing any further action is necessary
or desirable to carry out the purposes of this Agreement, or to vest the
Surviving Corporation with full title to all properties, assets, rights,
approvals, immunities and franchises of any parties to the Merger, the proper
officers and directors of each party to this Agreement shall take all such
necessary action as may be reasonably requested by either party or any such
person. S1 shall cause Merger Sub to perform all of its obligations under this
Agreement and the transactions contemplated hereby.
6.7 ADVICE OF CHANGES.
S1 and Q-Up shall promptly advise the other party of any change or
event that, individually or in the aggregate, has or would be reasonably likely
to have a Material Adverse Effect on S1 or Q-Up, as the case may be, or to cause
or constitute a material breach of any of its representations, warranties or
covenants contained herein. From time to time prior to the Closing Date, each
party will promptly supplement or amend its disclosure schedule delivered in
connection with the execution of this Agreement to reflect any matter which, if
existing, occurring or known at the date of this Agreement, would have been
required to be set forth or described in such disclosure schedule or which is
necessary to correct any information in such disclosure schedule which has been
rendered inaccurate thereby. No supplement or amendment to such disclosure
schedule shall have any effect for the purpose of determining satisfaction of
the conditions set forth in Sections 7.2(a) or 7.3(a) hereof, as the case may
be, or the compliance by Q-Up or S1, as the case may be, with the respective
covenants set forth in Sections 5.1 and 5.2 hereof. Q-Up shall deliver to S1, no
later than three business days prior to the end of the Due Diligence Period, a
true, correct and complete copy of the balance sheet of Q-Up as of the end of
the fiscal year ending December 31, 1999 and the related statements of income,
shareholders' equity and cash flows for such fiscal year, accompanied by the
audit report of Ernst & Young LLP. S1 shall deliver
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to Q-Up, no later than three business days prior to the end of the Due Diligence
Period, a true, correct and complete copy of the balance sheet of S1 as of the
end of the fiscal year ending December 31, 1999 and the related statements of
income, stockholders' equity and cash flows for such fiscal year, accompanied by
the audit report of PricewaterhouseCoopers LLP.
6.8 CURRENT INFORMATION.
S1 and Q-Up shall promptly notify the other party of any material
change in the normal course of its business or in the operation of its
properties and of any governmental complaints, investigations or hearings (or
communications indicating that the same may be contemplated), or the institution
or the threat of litigation involving it, and will keep such other fully
informed of such events.
6.9 TRANSACTION EXPENSES OF Q-UP.
(a) For planning purposes, Q-Up shall, within 15 days
from the date hereof, provide S1 with its estimated budget of
transaction-related expenses reasonably anticipated to be payable by Q-Up in
connection with this transaction, including the fees and expenses of counsel,
accountants, investment bankers and other professionals. Q-Up shall promptly
notify S1 if or when it determines that it will expect to exceed its budget.
(b) Promptly after the execution of this Agreement, Q-Up
shall ask all of its attorneys and other professionals to render current and
correct invoices for all unbilled time and disbursements. Q-Up shall accrue
and/or pay all of such amounts promptly thereafter.
6.10 FORM S-8.
S1 agrees to file a registration statement on Form S-8 for the
shares of S1 Common Stock issuable with respect to assumed Q-Up stock options,
as described in Section 1.6 of this Agreement as soon as reasonably practicable
after the Effective Time and shall maintain the effectiveness of such
registration statement thereafter for so long as any of such options or other
rights remain outstanding.
6.11 INDEMNIFICATION OF Q-UP.
(a) In the event of any threatened or actual claim,
action, suit, proceeding or investigation, whether civil, criminal or
administrative, in which any person who is now, or has been at any time prior to
the date of this Agreement, or who becomes prior to the Effective Time, a
director or officer or employee of Q-Up (the "INDEMNIFIED PARTIES") is, or is
threatened to be, made a party based in whole or in part on, or arising in whole
or in part out of, or pertaining to (i) the fact that he is or was a director,
officer or employee of Q-Up or any of Q-Up's subsidiaries, or a trustee
administering an employee benefit plan of Q-Up or (ii) this Agreement or any of
the transactions contemplated hereby, whether in any case asserted or arising
before or after the Effective Time (an "INDEMNIFIABLE CLAIM"), the parties
hereto agree to cooperate and use their best efforts to defend against and
respond thereto to the extent permitted by applicable law and the articles of
incorporation and bylaws of Q-Up.
(b) It is understood and agreed that after the Effective
Time, the Surviving Corporation and S1 shall indemnify and hold harmless, as and
to the fullest extent permitted by applicable law and the articles of
incorporation and bylaws of the Surviving Corporation or the certificate of
incorporation and bylaws of S1, as may be the case, each such Indemnified Party
against any losses, claims, damages, liabilities, costs, expenses (including
reasonable attorney's fees and expenses which the Surviving Corporation or S1,
as the case may be, shall pay in advance of the final disposition of any claim,
suit, proceeding or investigation to each Indemnified Party to the
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fullest extent permitted by law upon receipt of any undertaking required by
applicable law), judgments, fines and amounts paid in settlement in connection
with any such threatened or actual claim, action, suit, proceeding or
investigation in connection with an Indemnifiable Claim, and in the event of any
such threatened or actual claim, action, suit, proceeding or investigation
(whether asserted or arising before or after the Effective Time), the
Indemnified Parties may retain counsel reasonably satisfactory to S1; provided,
however, that (1) S1 shall have the right to assume the defense thereof and upon
such assumption S1 shall not be liable to any Indemnified Party for any legal
expenses of other counsel or any other expenses subsequently incurred by any
Indemnified Party in connection with the defense thereof, except that if S1
elects not to assume such defense or counsel for the Indemnified Parties
reasonably advises the Indemnified Parties that there are issues which raise
conflicts of interest between S1 and the Indemnified Parties, the Indemnified
Parties may retain counsel reasonably satisfactory to S1, and S1 shall pay the
reasonable fees and expenses of such counsel for the Indemnified Parties, (2) S1
shall be obligated pursuant to this paragraph to pay for only one firm of
counsel for each Indemnified Party and one firm of local counsel, and (3) no
settlement or compromise may be made without the joint consent or approval of S1
and any such Indemnified Party (which consent shall not be unreasonably
withheld). The parties hereto agree that, following the Effective Time, the
Articles of Incorporation and By-laws of the Surviving Corporation shall not be
amended to limit the indemnification provided for in this Section 6.11.
(c) S1 and the Surviving Corporation shall have no
obligation to advance expenses incurred in connection with a threatened or
pending action, suit or preceding in advance of final disposition of such
action, suit or proceeding, unless (1) S1 would be permitted to advance such
expenses pursuant to the Delaware General Corporation Law ("DGCL") and S1's
certificate of incorporation or bylaws, and (2) S1 receives an undertaking by
the Indemnified Party to repay such amount if it is determined that such party
is not entitled to be indemnified by S1 pursuant to the DGCL and S1's
certificate of incorporation or bylaws, Q-Up's articles of incorporation or
bylaws, or this Agreement. Any Indemnified Party wishing to claim
indemnification under this Section 6.11, upon learning of any such claim,
action, suit, proceeding or investigation, shall notify S1 thereof; provided,
however, that the failure to so notify shall not affect the obligations of S1
under this Section 6.11 except to the extent such failure to notify materially
prejudices S1. S1's obligations under this Section 6.11 continue in full force
and effect for a period of six years from the Effective Time; provided, however,
that all rights to indemnification in respect of any claim asserted or made
within such period shall continue until the final disposition of such claim.
6.12 INDEMNIFICATION OF S1.
Subject to the terms of Section 6.13 below, the shareholders of Q-Up
agree to indemnify, defend and hold harmless S1 and the officers and directors
of S1 for one year after the Effective Time from and against any and all Damages
to the extent such Damages arise out of, result from or relate to:
(a) a breach of any representation or warranty made by
Q-Up contained in this Agreement; or
(b) a breach of any covenant, agreement or undertaking
made by Q-Up in this Agreement or in any certificate or other instrument or
agreement delivered by or on behalf of Q-Up pursuant to this Agreement.
6.13 CLAIM FOR INDEMNIFICATION.
Any claim for indemnification must be made by a written notice to the
party against whom indemnification is sought. Such notice shall specify in
reasonable detail the particulars of the claim
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for indemnity and the basis upon which indemnity is claimed. Any claim for
indemnification by S1 shall be paid first by means of the release of a number of
the Escrow Shares from escrow to S1, in accordance with the provisions of the
Escrow Agreement. Once all of the Escrow Shares have been released from escrow,
any additional claim for indemnification by S1 shall be paid by the Q-Up
Shareholders in cash or, at the sole discretion of the Q-Up Shareholders, in
shares of S1 Common Stock based upon the Fair Value (as defined below) per share
of S1 Common Stock as of such date; provided that the aggregate indemnification
amount provided by the Q-Up Shareholders hereunder shall not exceed 50% of the
Fair Value as of the Closing Date of such number of shares of S1 Common Stock
computed as follows (x) the total number of shares of S1 Common Stock received
by the Q-Up Shareholders pursuant to Article I hereto minus (y) any shares of S1
Common Stock sold by the Q-Up Shareholders pursuant to any applicable
registration statement filed hereunder. Notwithstanding anything in this
Agreement to the contrary, (i) the indemnification amount provided hereunder by
the shareholders of Q-Up who do not constitute the Q-Up Shareholders shall be
limited to each holder's respective portion of the Escrow Shares, and (ii) the
parties shall not be entitled to indemnification payments until the aggregate
amount of Damages for which the party would otherwise be entitled to receive
such payments exceeds $100,000; provided, however, the parties shall be entitled
to indemnification for all Damages based upon a claim of fraud without regard to
such aggregate amount. The "FAIR VALUE" per share of S1 Common Stock, as may be
determined from time to time, shall equal the average closing asking price per
share for S1 Common Stock for the three previous trading days on which shares of
S1 Common Stock are actually traded (as reported on the Nasdaq Stock Market
National Market System, or such other national securities exchange on which such
shares are then traded).
6.14 LOCK-UP.
(a) The holders of Q-Up Preferred Stock shall not be
permitted to sell any shares of S1 Common Stock received upon conversion of such
Q-Up Preferred Stock pursuant to this Agreement except as follows: up to a
number of shares of S1 Common Stock in the aggregate equal to the lesser of (A)
such number of shares of S1 Common Stock equal to $35,000,000 divided by the
Fair Value of S1 Common Stock, measured as of the close of business on the day
before the S1 Secondary Offering (as defined herein) is declared effective by
the SEC, or (B) 50% of the S1 Common Stock received by such holders, may be sold
immediately after the Closing Date; and up to 100% of the S1 Common Stock
received by such holders may be sold upon the earlier to occur of the following
(x) 90 days following the closing of the S1 Secondary Offering, or (y) September
30, 2000; provided however, if the S1 Secondary Offering has not been filed with
the SEC within 30 days following the Closing Date, then up to 100% of the S1
Common Stock received by such holders may be sold beginning on the 31st day
following the Closing Date.
(b) The Q-Up Shareholders shall not be permitted to sell
any shares of S1 Common Stock received upon conversion of such Q-Up Common Stock
pursuant to this Agreement except as follows: up to 10% of the S1 Common Stock
received may be sold immediately after the Closing Date; up to an additional 30%
of the S1 Common Stock received may be sold twelve months after the Closing
Date; up to an additional 30% of the S1 Common Stock received may be sold
twenty-four months after the Closing Date; and up to an additional 30% of the S1
Common Stock received may be sold thirty-six months after the Closing Date.
(c) All other holders of Q-Up Capital Stock who receive
shares of S1 Common Stock in the Merger will not be subject to any lock-up
restrictions in connection herewith.
(d) The agreements set forth in this Section 6.14 shall
be memorialized by the Q-Up Shareholder Agreement attached hereto as EXHIBIT C,
which Q-Up shall cause each of the holders of Q-Up Preferred Stock and the Q-Up
Shareholders to execute and deliver to S1 prior to Closing.
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6.15 ADDITIONAL OPTIONS.
Prior to the Closing Date, Q-Up may grant up to 6,936,530
options to purchase shares of Q-Up Common Stock to such employees of Q-Up and in
such amounts as are set forth at Section 6.15 of the Q-Up Disclosure Schedule.
The exercise price of such options shall be the lower of (i) the closing asking
price per share for S1 Common Stock for the last day on which shares of S1
Common Stock are actually traded immediately prior to the Closing Date (as
reported on the Nasdaq Stock Market National Market System), multiplied by the
Exchange Ratio or (ii) $105.777 multiplied by the Exchange Ratio. The options
granted to each optionee shall be assumed by S1 in accordance with Section 1.6
hereof and shall vest over four years, 25% at each one year anniversary of the
date of grant, so long as the optionee continues to be employed by S1 or its
Subsidiaries.
6.16 REGISTRATION RIGHTS.
(a) S1 will register the shares received by the holders
of Q-Up Capital Stock in the Merger (excluding those received pursuant to
Section 1.4(a)(ii) hereof) with the SEC on Form S-3, as described below:
(1) If, as of the Effective Time, S1 has filed, plans to file,
or is in the process of filing any underwritten public
offering of S1 Common Stock (the "S1 SECONDARY OFFERING"),
then the holders of Q-Up Preferred Stock may, at the sole
discretion of the managing underwriter of the S1 Secondary
Offering, sell up to a number of shares of S1 Common Stock
in the aggregate equal to the lesser of (A) such number of
shares of S1 Common Stock equal to $35,000,000 divided by
the Fair Value of S1 Common Stock, measured as of the
close of business on the day before the S1 Secondary
Offering is declared effective by the SEC, or (B) 50% of
the shares of S1 Common Stock received by them in the
Merger in the S1 Secondary Offering. In addition to the
foregoing, S1 shall (I) cause a registration statement to
be filed upon the earlier to occur of the following (x) 90
days following closing of the S1 Secondary Offering (or as
soon as possible thereafter if S1 does not then have
available financial statements eligible for inclusion or
incorporation by reference into a Form S-3), or (y)
September 30, 2000 (or as soon as possible thereafter if
S1 does not then have available financial statements
eligible for inclusion or incorporation by reference into
a Form S-3), (II) seek to get it declared effective as
soon as possible thereafter, and (III) keep it effective
until the earlier of (i) the first anniversary of the
Closing Date or (ii) until all such shares are sold;
(2) If, as of the Effective Time, S1 has filed, plans to file,
or is in the process of filing the S1 Secondary Offering,
then the holders of Q-Up Common Stock may, at the sole
discretion of the managing underwriter of the S1 Secondary
Offering, sell up to such number of shares of S1 Common
Stock then issued to and available for sale by such
holders pursuant to Section 6.14(b) (excluding those
shares received pursuant to Section 1.4(a)(ii) hereof), it
being understood that, in the event the managing
underwriter of the S1 Secondary Offering deems it
necessary to reduce the total number of shares of S1
Common Stock to be sold in the S1 Secondary Offering by
the holders of Q-Up Capital Stock pursuant to this Section
6.16, such reduction shall first be applied to the shares
of S1 Common Stock available for sale by the holders of
Q-Up Common Stock. If the holders of Q-Up Common Stock do
not have the opportunity to sell the full number of shares
of S1 Common Stock available for sale by such holders in
the S1 Secondary Offering, S1 shall (I) cause a
registration statement to be filed as soon as practicable
following the closing of the S1 Secondary
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Offering, (II) seek to get it declared effective as soon
as possible thereafter, and (III) keep it effective until
the earlier of (i) the first anniversary of the Closing
Date or (ii) until all such shares are sold; provided
however that any holder of Q-Up Common Stock who is not a
Q-Up Shareholder may sell up 100% of his, her or its
shares of S1 Common Stock received in the Merger in the
registration statement contemplated hereunder;
(3) Notwithstanding anything to the contrary contained herein,
if the S1 Secondary Offering has not been filed with the
SEC within 30 days following the Closing Date, then S1
shall, for the purpose of registering 100% of the shares
of S1 Common Stock received by the holders of Q-Up
Preferred Stock in the Merger and 10% of the shares of S1
Common Stock received by the holders of Q-Up Common Stock
in the Merger, (I) cause a registration statement to be
filed within 3 business days following such date, (II)
seek to get it declared effective as soon as possible
thereafter, and (III) keep it effective until the earlier
of (i) the first anniversary of the Closing Date or (ii)
until all such shares are sold; provided however that any
holder of Q-Up Common Stock who is not a Q-Up Shareholder
may sell up 100% of his, her or its shares of S1 Common
Stock received in the Merger in the registration statement
contemplated hereunder; and
(4) With a view to making available the benefits of certain
rules and regulations of the SEC which may at any time
permit the sale of the S1 Common Stock issued to the
holders of Q-Up Capital Stock in the Merger to the public
without registration, S1 agrees to make and keep public
information available, as those terms are understood and
defined in Rule 144 under the Securities Act and file with
the SEC in a timely manner all reports and other documents
required of S1 under the Securities Act and the Exchange
Act. Except for transfer taxes, if any, relating to the
sale of S1 Common Stock by the holders of Q-Up Capital
Stock, the fees and expenses of such holders' counsel, and
such holders' pro rata portion of any underwriting
discounts or commissions or the equivalent thereof, S1
shall pay all expenses incident to the Registration
Statement, including, without limitation, all registration
and filing fees, fees and expenses of compliance with Blue
Sky Laws, printing expenses, messenger and delivery
expenses, and fees and expenses of counsel for S1 and all
independent certified public accountants and other persons
retained by S1.
(b) In the event that any S1 Common Stock owned by any
former Q-Up shareholder is sold by means of a registration statement filed
pursuant to this Section 6.16, Q-Up shall cause each such former Q-Up
shareholder (for the purposes of this paragraph 6.16(b), the "INDEMNIFYING
PERSON") to indemnify and hold harmless S1, each of S1's officers and directors,
and each person, if any, who controls or may control S1 within the meaning of
the Securities Act (for the purposes of this paragraph 6.16(b), S1, its officers
and directors, and any such other persons being hereinafter referred to
individually as an "INDEMNIFIED PERSON" and collectively as "INDEMNIFIED
PERSONS") from and against all demands, claims, actions or causes of action,
assessments, losses, damages, liabilities, costs, and expenses, including,
without limitation, interest, penalties, and reasonable attorneys' fees and
disbursements, asserted against, resulting to, imposed upon, or incurred by such
Indemnified Person, directly or indirectly (collectively, hereinafter referred
to in the singular as a "CLAIM" and in the plural as "CLAIMS"), based upon,
arising out of, or resulting from (i) any untrue statement of a material fact
contained in the registration statement or any omission to state therein a
material fact necessary in order to make the statements made therein not
misleading, or (ii) any untrue statement of a material fact contained in the
prospectus, or any supplement or amendment thereto, or any omission to state
therein a material fact necessary in order to make the statements made therein,
in the light of the circumstances under which they were
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made, not misleading, in each case, only to the extent that such Claim is based
upon, arises out of or results from information furnished to S1 by such former
Q-Up shareholder for use in connection with the registration statement.
(c) S1 (for the purposes of this paragraph 6.16(c), the
"INDEMNIFYING PERSON") agrees to indemnify and hold harmless each former Q-Up
shareholder whose S1 Common Stock is sold by means of a registration statement
pursuant to this Section 6.16 (for the purposes of this paragraph 6.16(c), such
persons also being hereinafter referred to individually as an "INDEMNIFIED
PERSON" and collectively as "INDEMNIFIED PERSONS") from and against all Claims
based upon, arising out of, or resulting from (i) any untrue statement of a
material fact contained in the registration statement or any omission to state
therein a material fact necessary in order to make the statement made therein
not misleading, or (ii) any untrue statement of a material fact contained in the
prospectus, or any supplement or amendment thereto, or any omission to state
therein a material fact necessary in order to make the statements made therein,
in the light of the circumstances under which they were made, not misleading,
except to the extent that such Claim is based upon, arises out of or results
from information furnished to S1 by such former Q-Up shareholder for use in the
registration statement.
(d) The indemnification set forth herein shall be in
addition to any liability S1 or any former Q-Up shareholders may otherwise have
in connection with any registration of such S1 Common Stock. Within a reasonable
time after receiving definitive notice of any Claim in respect of which an
Indemnified Person may seek indemnification under this Section 6.16, such
Indemnified Person shall submit written notice thereof to Indemnifying Person.
The failure of the Indemnified Person so to notify the Indemnifying Person of
any such Claim shall not relieve the Indemnifying Person from any liability it
may have hereunder except to the extent that (a) such liability was caused or
increased by such failure, or (b) the ability of the Indemnifying Person to
reduce such liability was materially adversely affected by such failure. In
addition, the failure of the Indemnified Person to so notify the Indemnifying
Person of any such Claim shall not relieve the Indemnifying Person from any
liability it may have otherwise than hereunder. The Indemnifying Person shall
have the right to undertake, by counsel or representatives of its own choosing,
the defense, compromise, or settlement (without admitting liability of the
Indemnifying Person or the Indemnified Person) of any such Claim asserted, such
defense, compromise, or settlement to be undertaken at the expense and risk of
the Indemnifying Person, and the Indemnified Person shall have the right to
engage separate counsel, at its own expense, which counsel for the Indemnifying
Person shall keep informed and consult with in a reasonable manner. In the event
the Indemnifying Person shall fail to undertake such defense by its own
representatives, the Indemnifying Person shall give prompt written notice of
such election to the Indemnified Person, and the Indemnified Person shall
undertake the defense, compromise, or settlement (without admitting liability of
the Indemnified Person or the Indemnifying Person) thereof on behalf of and for
the account and risk of the Indemnifying Person by counsel or other
representatives designated by the Indemnified Person. In the event that any
Claim shall arise out of a transaction or cover any period or periods wherein S1
and any such former Q-Up shareholders shall each be liable hereunder for part of
the liability or obligation arising therefrom, then the parties shall, each
choosing its own counsel and bearing its own expenses, defend such Claim, and no
settlement or compromise of such Claim may be made without the joint consent or
approval of S1 and each such former Q-Up shareholder. Notwithstanding the
foregoing, no Indemnifying Person shall be obligated hereunder with respect to
amounts paid in settlement of any Claim if such settlement is effected without
the consent of such Indemnifying Person (which consent shall not be unreasonably
withheld).
(e) S1 shall have no obligation to include any S1 Common
Stock owned by any former Q-Up shareholder in any registration statement filed
pursuant to this Section 6.16 unless and until such former Q-Up shareholder has
furnished S1 with all information and statements about or pertaining to such
former Q-Up shareholder in such reasonable detail and on such timely basis as is
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reasonably deemed by S1 to be necessary or appropriate for the preparation of
the registration statement.
(f) Whenever any S1 Common Stock held by any former Q-Up
shareholder is registered on a registration statement filed pursuant to this
Section 6.16, S1 shall:
(1) furnish to such former Q-Up shareholder the number of
copies of such registration statement, each amendment
and supplement thereto, the prospectus contained in
such registration statement (including each
preliminary prospectus), and such other documents as
each such former Q-Up shareholder may reasonably
request;
(2) if required by applicable law, use reasonable efforts
to register or qualify such shares under the state
blue sky or securities laws ("BLUE SKY LAWS") of such
jurisdictions as such former Q-Up shareholder
reasonably requests (and to keep such registrations
and qualifications effective for a period of three
months, or until each such former Q-Up shareholder
has completed the distribution of such shares,
whichever occurs first), and to do any and all other
acts and things that may be reasonably necessary or
advisable to enable each such former Q-Up shareholder
to consummate the disposition of such shares in such
jurisdictions; provided, however, that S1 will not be
required to do any of the following: (i) qualify
generally to do business in any jurisdiction where it
would not be required but for this Section 6.16, (ii)
subject itself to taxation in any such jurisdiction,
or (iii) file any general consent to service of
process in any such jurisdiction; and
(3) promptly notify such former Q-Up shareholder at any
time when a prospectus relating thereto is required
to be delivered under applicable federal securities
laws during the period that S1 is required to keep
the registration statement effective, of the
occurrence of any event as a result of which the
prospectus included in such registration statement
contains an untrue statement of a material fact or
omits any fact necessary to make the statements
therein, in the light of the circumstances under
which they were made, not misleading, and prepare a
supplement or amendment to the prospectus so that, as
thereafter delivered to the purchasers of such
shares, the prospectus will not contain an untrue
statement of a material fact or omit to state any
fact necessary to make the statements therein, in the
light of the circumstances under which they were
made, not misleading.
6.17 DISCLOSURE SCHEDULE.
S1 and Q-Up shall each, within 7 calendar days hereof, deliver
to the other party a complete copy of their respective Disclosure Schedule.
6.18 OTHER TRANSACTIONS.
During the period from the date of this Agreement until the
earlier of (i) the first anniversary of the termination of this Agreement by
Q-Up pursuant to Sections 8.1(e) or 8.1(f) hereof by reason of a willful or
intentional breach of S1's representations or warranties or a willful or
intentional failure of S1 to perform its covenants and agreements under this
Agreement, or (ii) the Effective Time, S1 shall not, and shall not permit any of
its Subsidiaries to, authorize or knowingly permit or encourage, directly or
indirectly through any officer, director, employee or agent, any
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proposal for, hold substantive discussions or negotiations with, or knowingly
provide any nonpublic information to any entity listed at Section 6.18 of the
Q-Up Disclosure Schedule concerning any merger, consolidation or other business
combination, the acquisition in any manner of a substantial equity interest in,
or a substantial portion of the assets of an entity listed on Section 6.18 of
the Q-Up Disclosure Schedule (each, an "S1 ACQUISITION TRANSACTION").
6.19 NO SOLICITATION.
(a) The parties hereto acknowledge and recognize that in
the course of their due diligence investigation, each will become acquainted
with confidential information of the other party relating to persons, firms and
corporations which are, will become or are known to be potential clients or
customers of the other parties hereto (each, a "CLIENT"), either through direct
or indirect contact by Q-Up or S1 or their respective agents (whether prior to
or after the date hereof). The parties agree that they will not, without the
prior written consent of the other party, prior to the Effective Time, use any
such confidential information for the purpose of inducing or attempting to
induce any Client to become a client and/or customer of the other party or of
any person, firm or corporation with which either Q-Up or S1 is affiliated in
any capacity other than as agreed.
(b) Prior to the Effective Time and for one year
following the termination of this Agreement for any reason, neither party shall
directly or indirectly solicit the employment of, employ or induce the
termination of employment of, any current employee of the other party.
6.20 CHARTER AMENDMENT.
Prior to the Closing Date, Q-Up's board of directors shall approve and
adopt Amended and Restated Articles of Incorporation of Q-Up (the "AMENDED AND
RESTATED ARTICLES OF INCORPORATION") to provide for the conditions set forth in
the Waiver Agreement, executed as of the date hereof, a copy of which is
attached at Section 6.20 of the Q-Up Disclosure Schedule.
ARTICLE VII
CONDITIONS PRECEDENT
7.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER.
The respective obligation of each party to effect the Merger shall be
subject to the satisfaction at or prior to the Effective Time of the following
conditions:
(a) SHAREHOLDER APPROVAL.
This Agreement, including the Articles of Merger and the
Merger, shall have been approved and adopted by the requisite vote of the
holders of Q-Up Capital Stock.
(b) STOCK EXCHANGE LISTING.
The shares of S1 Common Stock which shall be issued in the
Merger (including the S1 Common Stock that may be issued upon exercise of the
options referred to in Section 1.6 hereof) upon consummation of the Merger shall
have been authorized for quotation on the Nasdaq Stock Market National Market
System (or such other national securities exchange on which the S1 Common Stock
may become listed).
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(c) NO INJUNCTIONS OR RESTRAINTS; ILLEGALITY; HSR ACT.
No order, injunction or decree issued by any court or agency
of competent jurisdiction or other legal restraint or prohibition (an
"INJUNCTION") preventing the consummation of the Merger or any of the other
transactions contemplated by this Agreement or the Articles of Merger shall be
in effect. No statute, rule, regulation, order, injunction or decree shall have
been enacted, entered, promulgated or enforced by any Governmental Entity which
prohibits, restricts or makes illegal consummation of the Merger. All waiting
periods, if any, under the HSR Act or foreign merger notification requirements,
if applicable, relating to the transactions contemplated hereby will have
expired or been terminated early and all material foreign antitrust approvals
required to be obtained prior to the Merger in connection with the transactions
contemplated hereby shall have been obtained.
7.2 CONDITIONS TO OBLIGATIONS OF S1 AND MERGER SUB.
The obligations of S1 and Merger Sub to effect the Merger are also
subject to the satisfaction or waiver by S1 at or prior to the Effective Time of
the following conditions:
(a) REPRESENTATIONS AND WARRANTIES.
The representations and warranties of Q-Up set forth in this
Agreement shall be true and correct in all material respects as of the date of
this Agreement and (except to the extent such representations and warranties
speak as of an earlier date) as of the Closing Date as though made on and as of
the Closing Date. S1 shall have received a certificate signed on behalf of Q-Up
by each of the chief executive officer and the chief financial officer of Q-Up
to the foregoing effect.
(b) PERFORMANCE OF COVENANTS AND AGREEMENTS OF Q-UP.
Q-Up shall have performed in all material respects all
covenants and agreements required to be performed by it under this Agreement at
or prior to the Closing Date, except in each case where such nonperformance does
not or would not have a Material Adverse Effect on any of Q-Up, S1 or the
Surviving Corporation. S1 shall have received a certificate signed on behalf of
Q-Up by each of the chief executive officer and the chief financial officer of
Q-Up to such effect.
(c) CONSENTS UNDER AGREEMENTS.
The consent, approval or waiver of each person whose consent
or approval shall be required in order to permit the succession by S1, to the
extent applicable, to any obligation, right or interest of Q-Up under any loan
or credit agreement, note, mortgage, indenture, lease, license or other
agreement or instrument shall have been obtained except for those, the failure
of which to obtain, will not result in a Material Adverse Effect on Q-Up or S1.
(d) NO PENDING GOVERNMENTAL ACTIONS.
No proceeding initiated by any Governmental Entity seeking an
Injunction preventing consummation of the Merger shall be pending or shall have
been threatened in writing.
(e) NO MATERIAL ADVERSE EFFECT.
There shall have been no Material Adverse Effect with respect
to Q-Up, which is continuing.
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(f) Q-UP SHAREHOLDER AGREEMENT.
The Q-Up Shareholder Agreement has been duly and validly
executed and delivered to S1 by the Q-Up Shareholders and the holders of Series
A Convertible Stock.
(g) UPDATED Q-UP DISCLOSURE SCHEDULE.
Q-Up shall have delivered to S1 its supplemented or amended
Disclosure Schedule.
(h) DELIVERY OF Q-UP SHARES.
Q-Up shall have delivered all outstanding Certificates to S1.
(i) AUDITED FINANCIAL STATEMENTS.
Q-Up shall have provided S1 with its audited financial
statements for the year ending December 31, 1999.
(j) AMENDED AND RESTATED ARTICLES.
Q-Up shall have filed the Amended and Restated Articles of
Incorporation with the Secretary of State of the State of Texas.
(k) NONCOMPETITION AGREEMENT.
The Noncompetition Agreement has been duly and validly
executed and delivered to S1 by Xxxxxx X. Xxxxx III and Xxxxxx Xxxxxx.
(l) Q-UP TAX REPRESENTATION LETTER.
S1 and Merger Sub shall have received from Q-Up, in form and
substance reasonably satisfactory to them, a certificate signed by an authorized
officer of Q-Up setting forth certain facts and representations of Q-Up as
relates to the federal income tax treatment of the Merger.
7.3 CONDITIONS TO OBLIGATIONS OF Q-UP.
The obligations of Q-Up to effect the Merger are subject to the
satisfaction or waiver by Q-Up at or prior to the Closing of the following
conditions:
(a) REPRESENTATIONS AND WARRANTIES.
The representations and warranties of S1 and Merger Sub set
forth in this Agreement shall be true and correct in all material respects as of
the date of this Agreement and (except to the extent such representations and
warranties speak as of an earlier date) as of the Closing Date as though made on
and as of the Closing Date. Q-Up shall have received a certificate signed on
behalf of S1 by each of the Chief Executive Officer and the Chief Financial
Officer of S1 to the foregoing effect.
(b) PERFORMANCE OF COVENANTS AND AGREEMENTS OF S1.
S1 and Merger Sub shall have performed in all material
respects all covenants and agreements required to be performed by it under this
Agreement at or prior to the Closing Date, except in each case where such
nonperformance does not or would not have a Material Adverse Effect on Q-Up,
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S1 or the Surviving Corporation. Q-Up shall have received a certificate signed
on behalf of S1 by each of Chief Executive Officer and the Chief Financial
Officer of S1 to such effect.
(c) NO MATERIAL ADVERSE EFFECT.
There shall have been no Material Adverse Effect with respect
to S1, which is continuing.
(d) UPDATED S1 DISCLOSURE SCHEDULE.
S1 shall have delivered to Q-Up its supplemented or amended
Disclosure Schedule.
(e) AUDITED FINANCIAL STATEMENTS.
S1 shall have provided Q-Up with its audited financial
statements for the year ending December 31, 1999.
(f) CONSENTS UNDER AGREEMENTS.
The consent, approval or waiver of each person whose consent
or approval shall be required in order to permit the succession by S1, to the
extent applicable, to any obligation, right or interest of Q-Up under any loan
or credit agreement, note, mortgage, indenture, lease, license, customer
contract or other agreement or instrument shall have been obtained except for
those, the failure of which to obtain, will not result in a Material Adverse
Effect on Q-Up or S1.
(g) NO PENDING GOVERNMENTAL ACTIONS.
No proceeding initiated by any Governmental Entity seeking an
Injunction preventing consummation of the Merger shall be pending or shall have
been threatened in writing.
(h) S1 TAX REPRESENTATION LETTER.
Q-Up shall have received from S1 and Merger Sub, in form and
substance reasonably satisfactory to it, a certificate signed by an authorized
officer of each of S1 and Merger Sub setting forth certain facts and
representations of S1 and Merger Sub as relates to the federal income tax
treatment of the Merger.
ARTICLE VIII
TERMINATION AND AMENDMENT
8.1 TERMINATION.
This Agreement may be terminated at any time prior to the Effective
Time, or such shorter period as specified in Section 8.1(i) below, whether
before or after approval of the matters presented in connection with the Merger
by the shareholders of Q-Up:
(a) by mutual consent of S1 and Q-Up in a written
instrument, if the Board of Directors of each so determines by a vote of a
majority of the members of its entire Board;
(b) by either S1 or Q-Up if a Governmental Entity shall
have issued an order, decree or ruling or taken any other action having the
effect of permanently restraining, enjoining or otherwise prohibiting the
Merger, which order, decree, ruling or other action is final and nonappealable;
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(c) by either S1 or Q-Up if the Merger shall not have
been consummated on or before May 31, 2000, unless the failure of the Closing to
occur by such date shall be due to (i) the failure of the party seeking to
terminate this Agreement to perform or observe the covenants and agreements of
such party set forth herein, or (ii) the failure to receive any required HSR
approval;
(d) by either S1 or Q-Up (provided that the terminating
party is not in breach of its obligations under Section 6.3 hereof) if the
approval of the shareholders of Q-Up required for the consummation of the Merger
shall not have been obtained by reason of the failure to obtain the required
vote at a duly held meeting of shareholders (at any adjournment or postponement
thereof) or by written consent in lieu thereof, respectively;
(e) by either S1 or Q-Up (provided that the terminating
party is not then in breach of any representation, warranty, covenant or other
agreement contained herein that, individually or in the aggregate, would give
the other party the right to terminate this Agreement) if there shall have been
a breach of any of the representations or warranties set forth in this Agreement
on the part of the other party, if such breach, individually or in the
aggregate, has had or is reasonably likely to have a Material Adverse Effect on
the breaching party, and such breach shall not have been cured within 30 days
following receipt by the breaching party of written notice of such breach from
the other party hereto or such breach, by its nature, cannot be cured prior to
the Closing or within 30 days, whichever is longer;
(f) by either S1 or Q-Up (provided that the terminating
party is not then in breach of any representation, warranty, covenant or other
agreement contained herein that, individually or in the aggregate, would give
the other party the right to terminate this Agreement) if there shall have been
a material breach of any of the covenants or agreements set forth in this
Agreement on the part of the other party, and such breach shall not have been
cured within 30 days following receipt by the breaching party of written notice
of such breach from the other party hereto or such breach, by its nature, cannot
be cured prior to the Closing or within 30 days, whichever is longer, except in
each case where such breach does not or would not have a Material Adverse Effect
on any of Q-Up, S1 or the Surviving Corporation;
(g) by S1, if Q-Up's Board of Directors, for any reason,
(i) withdraws or amends or modifies in a manner adverse to S1 or fails to
recommend to shareholders the approval of this Agreement and the transactions
contemplated hereby, (ii) approves or recommends any third party proposal for an
Acquisition Transaction that is inconsistent with the transactions contemplated
by this Agreement, (iii) fails to recommend rejection of a tender or exchange
offer relating to Q-Up's securities which is commenced by a third party not
affiliated with S1, within ten business days from the date the tender or
exchange offer commenced, or (iv) violates Section 5.1(e) of this Agreement;
(h) by S1 if:
(i) Q-Up's revenues, as measured in accordance
with GAAP, for the first calendar quarter of
the year 2000 are less than $3,212,580
provided, that, Q-Up shall be operated in
the ordinary course of its business
consistent with its past practices during
that certain period; or
(ii) any ten of Q-Up's customers, as of the date
hereof, cancel or suspend their relationship
with Q-Up following the date hereof;
provided that such cancellation or
suspension shall not apply in the case of a
merger, sale or consolidation of such a
customer.
(i) by either party upon approval of its Board of
Directors at any time during the Due Diligence Period, if upon completion of its
legal, financial and business due diligence investigation contemplated in
Section 6.2 hereof, such party shall have reasonably determined that,
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based on matters discovered in such due diligence investigation, consummation of
the Merger would not result in such party obtaining the benefits for which it
bargained in this Agreement; it being understood and agreed that (i) the direct
effect of the public announcement, pendency or consummation of the Merger or
(ii) changes in stock market conditions or general economic conditions or
changes affecting the industry generally in which such party operates are not
within the bargained for benefits contemplated in this Section 8.1(i).
8.2 EFFECT OF TERMINATION.
In the event of termination of this Agreement by either S1 or Q-Up as
provided in Section 8.1 hereof, this Agreement shall forthwith become void and
have no effect except (i) the third to last sentence of Section 6.2(a) and
Sections 6.18, 6.19(b) and 8.2 hereof shall survive any termination of this
Agreement, and (ii) notwithstanding anything to the contrary contained in this
Agreement, no party shall be relieved or released from any liabilities or
damages arising out of its willful or intentional breach of any provision of
this Agreement.
8.3 AMENDMENT.
Subject to compliance with applicable law, this Agreement may be
amended by the parties hereto, by action taken or authorized by their respective
Board of Directors, at any time before or after approval of the matters
presented in connection with the Merger by the shareholders of Q-Up; provided,
however, that after any approval of the transactions contemplated by this
Agreement by Q-Up's shareholders, there may not be, without further approval of
such shareholders, any amendment of this Agreement which (i) alters or changes
the amount or kind of shares, securities, cash, property and/or rights to be
received in exchange for or on conversion of all or any of the shares of any
class or series thereof of Q-Up, (ii) alters or changes any term of the Articles
of Incorporation of the Surviving Corporation to be effected by the Merger, or
(iii) alters or changes any of the terms and conditions of this Agreement if
such alteration or change would adversely affect the holders of any class or
series thereof of Q-Up. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto.
8.4 EXTENSION; WAIVER.
At any time prior to the Effective Time, the parties hereto, by action
taken or authorized by their respective Boards of Directors, may, to the extent
legally allowed, (a) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (b) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto, and (c) waive compliance with any of the
agreements or conditions contained herein. Any agreement on the part of a party
hereto to any such extension or waiver shall be valid only if set forth in a
written instrument signed on behalf of such party, but such extension or waiver
or failure to insist on strict compliance with an obligation, covenant,
agreement or condition shall not operate as a waiver of, or estoppel with
respect to, any subsequent or other failure.
ARTICLE IX
GENERAL PROVISIONS
9.1 CLOSING.
Subject to the terms and conditions of this Agreement, the closing of
the Merger (the "CLOSING") will take place at 10:00 a.m. at the offices of Xxxxx
& Xxxxxxx L.L.P., counsel to S1, as soon as reasonably practicable upon
satisfaction or waiver of all conditions precedent specified under Article VII
hereof, or on such other date, place and time as the parties may agree in
writing (the "CLOSING DATE").
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9.2 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
The representations, warranties, covenants and agreements in this
Agreement and in any instrument delivered pursuant to this Agreement shall
survive for one year after the Effective Time; provided, however, Section 3.9
shall survive until the expiration of the statute of limitations relating to an
assessment of the relevant tax.
9.3 EXPENSES; BREAKUP FEE.
Except as provided below, all costs and expenses incurred in connection
with this Agreement and the transactions contemplated hereby shall be paid by
the party incurring such expense, provided that all filing and other fees paid
to the SEC shall be borne by S1. If this Agreement is terminated by S1 under
Sections 8.1(e) or 8.1(f) by reason of a willful or intentional breach of Q-Up's
representations or warranties or a willful or intentional failure of Q-Up to
perform its covenants and agreements under this Agreement, Q-Up shall pay all
documented, reasonable costs and expenses up to $250,000 incurred by S1 in
connection with this Agreement and the transactions contemplated hereby, plus a
breakup fee of $5,000,000; provided that if this Agreement is terminated by S1
pursuant to the foregoing and (i) Q-Up shall consummate any Q-Up Disposition
Transaction within one year from the date of such termination or (ii) Q-Up shall
file a registration statement with the SEC for the purpose of making an initial
public offering of its securities within one year from the date of such
termination, Q-Up shall pay S1 an additional fee of $5,000,000. If this
Agreement shall be terminated by Q-Up under Sections 8.1(e) or 8.1(f) by reason
of a willful or intentional breach of S1's representations or warranties or a
willful or intentional failure of S1 to perform its covenants and agreements
under this Agreement, S1 shall pay all documented, reasonable costs and expenses
up to $250,000 incurred by Q-Up in connection with this Agreement and the
transactions contemplated hereby, plus a breakup fee of $5,000,000; provided
that if this Agreement is terminated by Q-Up pursuant to the foregoing and S1
shall consummate any S1 Acquisition Transaction within one year from the date of
such termination, S1 shall pay Q-Up an additional fee of $5,000,000. As used in
this Section 9.13, Q-Up Disposition Transaction shall mean any offer, proposal
or expression of interest relating to (i) any tender or exchange offer, (ii)
merger, consolidation or other business combination involving Q-Up, or (iii)
other than through the Merger and the transactions contemplated or permitted by
this Agreement, the acquisition in any manner, whether in one transaction or a
series of transactions, of a substantial equity interest in, or a substantial
portion of the assets of Q-Up involving or contemplating the acquisition or
purchase of more than 20% in the aggregate, in the case of capital stock, or 20%
in the case of the assets of Q-Up, as well as any lease or sale transaction out
of the ordinary course of business of more than 20% of the assets of Q-Up.
9.4 NOTICES.
All notices and other communications hereunder shall be in writing and
shall be deemed given if delivered personally, mailed by registered or certified
mail (return receipt requested) or delivered by an express courier (with
confirmation) to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
(a) if to S1, to:
S1 Corporation
0000 Xxxxxxxxx Xxxx, XX
Xxxxx 0000
Xxxxxxx, XX 00000
Attn.: Chief Financial Officer
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with a copy (which shall not constitute notice) to:
Xxxxx & Xxxxxxx L.L.P.
Columbia Square
000 Xxxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, XX 00000
Attn.: Xxxxxx X. Xxxxx, Esq.
and
(b) Q-Up Systems, Inc.
00000 Xxxxxxxx Xxxxxxxxx
Xxxxxxxx Xxx, Xxxxx 000
Xxxxxx, XX 00000
with a copy (which shall not constitute notice) to:
Xxxx Xxxx Xxxx & Freidenrich LLP
000 Xxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxx, XX 00000
Attn.: X. Xxxxx Fox III
9.5 INTERPRETATION.
When a reference is made in this Agreement to Sections, Exhibits or
Schedules, such reference shall be to a Section of or an Exhibit or Schedule to
this Agreement unless otherwise indicated. The table of contents and headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement. Whenever the words
"include," "includes" or "including" are used in this Agreement, they shall be
deemed to be followed by the words "without limitation."
9.6 COUNTERPARTS.
This Agreement may be executed in counterparts, all of which shall be
considered one and the same agreement and shall become effective when
counterparts have been signed by each of the parties and delivered to the other
parties, it being understood that all parties need not sign the same
counterpart.
9.7 ENTIRE AGREEMENT.
This Agreement (including the disclosure schedules, documents and the
instruments referred to herein) constitutes the entire agreement and supersedes
all prior agreements and understandings, both written and oral, among the
parties with respect to the subject matter hereof, other than the
Confidentiality Agreement, the Articles of Merger or the Q-Up Shareholder
Agreement.
9.8 GOVERNING LAW.
This Agreement shall be governed and construed in accordance with the
laws of the State of Delaware, without regard to any applicable conflicts of law
rules.
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9.9 ENFORCEMENT OF AGREEMENT.
The parties hereto agree that irreparable damage would occur in the
event that the provisions of this Agreement were not performed in accordance
with its specific terms or were otherwise breached. It is accordingly agreed
that the parties shall be entitled to an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and provisions
thereof in any court of the United States or any state having jurisdiction, this
being in addition to any other remedy to which they are entitled at law or in
equity.
9.10 SEVERABILITY.
Any term or provision of this Agreement which is invalid or
unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective
to the extent of such invalidity or unenforceability without rendering invalid
or unenforceable the remaining terms and provisions of this Agreement or
affecting the validity or enforceability of any of the terms or provisions of
this Agreement in any other jurisdiction. If any provision of this Agreement is
so broad as to be unenforceable, the provision shall be interpreted to be only
so broad as is enforceable.
9.11 PUBLICITY.
Except as otherwise required by law or the rules of The Nasdaq Stock
Market (or such other exchange on which the S1 Common Stock may become listed),
so long as this Agreement is in effect, neither S1 nor Q-Up shall, or shall
permit any of S1's or Q-Up's Subsidiaries to, issue or cause the publication of
any press release or other public announcement with respect to, or otherwise
make any public statement concerning, the transactions contemplated by this
Agreement, the Articles of Merger or the Q-Up Shareholder Agreement without the
consent of the other party, which consent shall not be unreasonably withheld.
9.12 ASSIGNMENT; LIMITATION OF BENEFITS.
Neither this Agreement nor any of the rights, interests or obligations
hereunder shall be assigned by any of the parties hereto (whether by operation
of law or otherwise) without the prior written consent of the other parties.
Subject to the preceding sentence, this Agreement will be binding upon, inure to
the benefit of and be enforceable by the parties and their respective successors
and assigns.
9.13 ADDITIONAL DEFINITIONS.
In addition to any other definitions contained in this Agreement, the
following words, terms and phrases shall have the following meanings when used
in this Agreement.
"AFFILIATED PERSON": any director, officer or 5% or greater
stockholder, spouse or other person living in the same household of such
director, officer or stockholder, or any company, partnership or trust in which
any of the foregoing persons is an officer, 5% or greater stockholder, general
partner or 5% or greater trust beneficiary.
"KNOWLEDGE" or "KNOW" means with respect to a party hereto, with
respect to a matter in question, that the directors or any executive officer of
such party has actual knowledge of such matter.
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"LAWS": any and all statutes, laws, ordinances, rules, regulations,
orders, permits, judgments, injunctions, decrees, case law and other rules of
law enacted, promulgated or issued by any Governmental Entity.
"MATERIAL ADVERSE EFFECT": with respect to S1 or Q-Up, as the case may
be, means a condition, event, change or occurrence that has had or would have a
material adverse effect upon S1 or Q-Up, as the case may be, taking into account
(A) the business, customers, assets, capitalization, financial condition and
results of operations of S1 or Q-Up, other than as a result primarily of (i) the
direct effect of the public announcement, pendency or consummation of the Merger
or (ii) changes in general economic conditions or changes affecting the industry
generally in which such entity operates, or (B) the ability of S1 or Q-Up to
perform its obligations under, and to consummate the transactions contemplated
by, this Agreement.
[SIGNATURES ON NEXT PAGE]
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IN WITNESS WHEREOF, S1, Merger Sub, Q-Up and, for the limited purposes
set forth in Sections 6.12 and 6.13 herein, the Q-Up Shareholders have caused
this Agreement to be executed and delivered by their respective officers
thereunto duly authorized as of the date first above written.
S1 CORPORATION
By: /s/ XX Xxxxxxxx
-----------------------------------------
Name: XX Xxxxxxxx
---------------------------------------
Title: COO
--------------------------------------
AUSTIN ACQUISITION CORPORATION
By: /s/ XX Xxxxxxxx
-----------------------------------------
Name: XX Xxxxxxxx
---------------------------------------
Title: COO
--------------------------------------
Q-UP SYSTEMS, INC.
By:/s/ XX Xxxxxx
-----------------------------------------
Name: XX Xxxxxx
---------------------------------------
Title: President
--------------------------------------
/s/ Xxxxxx X. Xxxxx, III
--------------------------------------------
Xxxxxx X. Xxxxx, III
/s/ L. Xxxxxx Xxxxxx
--------------------------------------------
L. Xxxxxx Xxxxxx
RHS INVESTMENTS-1, L.P.
By: RS & TS Corporation, its general partner
-----------------------------------------
By: /s/ Xxxxxx X. Xxxxx, III
-----------------------------------------
Xxxxxx X. Xxxxx, III
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Xxxxxx X. Xxxxxxxx
--------------------------------------------
Xxxxxx X. Xxxxxxx
LDC CONSULTING, a sole proprietorship
By: /s/ Xxxxxxxx X. Xxxxxxx-Xxxxx
-----------------------------------------
Xxxxxxxx X. Xxxxxxx-Xxxxx
Sole Proprietor
By: /s/ Xxxxxxxx X. Xxxxxxx-Xxxxx
-----------------------------------------
Xxxxxxxx X. Xxxxxxx-Xxxxx
/s/ Xxxx Xxxxxxx
--------------------------------------------
Xxxx Xxxxxxx
/s/ Xxxx XxXxxxxx
--------------------------------------------
Xxxx XxXxxxxx
/s/ Xxxx Xxxxx
--------------------------------------------
Xxxx Xxxxx
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