Exhibit 10.1
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "AGREEMENT") is made as of the 20th day
of October, 2004 (the "Effective Date"), by and among DST Systems, Inc., a
Delaware corporation ("SELLER"), Computershare Ltd., an Australian corporation
("CPU"), Computershare (US), a Delaware general partnership ("CPUUS") and EQAC
Inc., a Delaware corporation ("EQAC"). CPU, CPUUS, and EQAC are collectively
referred to as "PURCHASERS".
RECITALS
WHEREAS, Seller owns all of the issued and outstanding shares of the
capital stock of EquiServe, Inc., a Delaware corporation ("EQS"), which stock
shall sometimes hereinafter be referred to as the "SHARES"; and
WHEREAS, EQAC desires to purchase and Seller desires to sell all of the
Shares upon the terms and conditions set forth in this Agreement; and
WHEREAS, CPUUS is the parent entity of EQAC and CPU is the ultimate parent
entity of CPUUS, and each of them will derive substantial value from the
Transactions.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
set forth below, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
ARTICLE 1
DEFINITIONS
1.1 DEFINITIONS. As used in this Agreement, the following terms shall have
the meanings set forth below:
"ACQUISITION TRANSACTION" means any transaction involving the direct or
indirect acquisition of all or any portion of the equity interests or Assets of
either Company or a merger, consolidation or other business combination,
acquisition, purchase, sale, transfer or conveyance pursuant to which any other
Person would directly or indirectly acquire the Business or any interest
therein.
"AFFILIATE" means, with respect to any Person, any other Person
controlling, controlled by or under common control with, such Person. As used in
this definition, the term "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting securities, by
contract, or otherwise. The parties acknowledge that the entities shown on
Section 1.1(a) of the Seller's Disclosure Schedule (the "Excluded Entities")
shall not be considered Affiliates of Seller so long as Seller's ownership
interest in such entities' issued and outstanding voting securities does not
exceed fifty percent (50%).
"ANCILLARY AGREEMENTS" means additional agreements entered into between the
parties and their Affiliates to be effective as of the Closing, as listed on
Section 1.1(b) of the Seller's Disclosure Schedule.
"BANK ONE CORPORATION AGREEMENTS" means the Contribution Agreement, dated
as of February 9, 1998, between EQS and Bank One Corporation, as modified
pursuant to Section 7.3 of the Agreement for Purchase and Sale of Partnership
Interests, dated December 7, 2000, between Bank One Corporation and Seller and
the Reconciliation Project Plan, dated as of December 7, 2000, between EQS and
Bank One Corporation, as each has been amended or modified to date.
"BUSINESS DAY" means a day other than a Saturday, Sunday or other day on
which commercial banks in Kansas City, Missouri or New York, New York are
authorized or required by Law to close.
"CIBCA" means the Change in Bank Control Act (12 U.S.C. 1817(j)).
"CLAIM" means a suit, proceeding, hearing, investigation, litigation,
written charge, complaint, claim or demand.
"CODE" means the Internal Revenue Code of 1986 and the rules and
regulations promulgated thereunder, as amended and in effect from time to time.
"COMPANIES" means EQS and EquiServe Trust, collectively.
"COMPANY" means EQS and EquiServe Trust, individually.
"COMPETING BUSINESS" means the provision of services to Issuers to transfer
a shareholder's stock, disburse and reinvest dividends, solicit and tabulate
proxies, provide merger and acquisition services in the capacity of a
depositary, exchange agent or information agent (but excluding the provision of
investment banking advice), conduct small shareholder (odd-lot) programs and
post-merger cleanup programs and provide employee stock purchase plan and stock
option plan services and the provision of class action administration services
in the United States, but not including (i) the provision of services described
in those Ancillary Agreements designated in Section 1.1(b) of Seller's
Disclosure Schedule as the "Designated Ancillary Agreements", or (ii) the
provision of class action administration services to the mutual fund industry.
"DEFINED WORKING CAPITAL" means the difference, which may be a negative
number, between (i) the sum of the balances in the following asset accounts:
cash, customer receivables (net of allowance for doubtful accounts), other
receivables and prepaid expenses and other current assets, and (ii) the sum of
the balances in the following liability accounts: accounts payable - trade,
accrued expenses (excluding account 24005- general reserve), payables to related
parties, deferred revenue and other short term liabilities, as reflected on the
books and records of EQS.
"DOLLARS" or the symbol "$" shall represent United States Dollars.
"EQUISERVE TRUST" means EquiServe Trust, N.A., a national trust company
owned by EQS.
"ESCHEATMENT LIABILITY" means Liabilities of the Companies relating to
escheatment, including without limitation obligations of the companies to
deliver property to Governmental Authorizies or third parties acting on their
behalf, pay penalties and/or interest to Governmental Authorities in respect of
their actions or omissions relating to the escheatment of property or make
payemnt to any other Person in respect of the escheatment practices of the
Companies.
"GAAP" means generally accepted accounting principles, consistently
applied, as used in a Person's country of domicile as in effect at the time any
applicable financial statements were or are prepared or any act requiring the
application of GAAP was or is performed.
"GOVERNMENTAL AUTHORITY" means (i) when applicable to Seller, EQS,
EquiServe Trust, CPUUS, EQAC and any of their Affiliates domiciled in the United
States, any United States federal, territorial, state or local governmental
authority, quasi-governmental authority, instrumentality, court, government or
self-regulatory organization, commission, tribunal or organization or any
regulatory, administrative or other agency, or any political or other
subdivision, department or branch of any of the foregoing, or any arbitrator or
mediator, and (ii) when applicable to CPU and any of its Affiliates domiciled in
Australia, the government of the Commonwealth of Australia or any state or
territory or other political subdivision of Australia including any
administrative or judicial body, department, commission, authority,
instrumentality, tribunal, agency or entity of any such government or any
arbitrator or mediator.
"IDENTIFIED LIABILITIES" means those Liabilities set forth in SECTION
1.1(c) of Purchasers' Disclosure Schedule.
"INDEBTEDNESS" means, with respect to any Person, (a) all indebtedness of
such Person, whether or not contingent, for borrowed money, (b) all obligations
of such Person for the deferred purchase price of property or services, (c) all
obligations of such Person evidenced by notes, bonds, debentures or other
similar instruments, (d) all indebtedness created or arising under any
conditional sale or other title retention agreement with respect to property
acquired by such Person, (e) all capital leases, and (f) all obligations,
contingent or otherwise, of such Person under acceptance, letter of credit or
similar facilities.
"ISSUERS" means U.S. corporations, other U.S. securities issuers, including
limited partnerships, and issuers of American Depository Receipts and American
Depository Shares (excluding open-end and closed-end investment companies, i.e.
mutual funds, open-end and closed-end unit investment trusts, hedge funds and
real estate investment trusts).
"INTELLECTUAL PROPERTY" means (a) all inventions (whether patentable or
unpatentable and whether or not reduced to practice), all improvements thereto,
and all
patents, (b) all trademarks, together with all translations, adaptations,
derivations, and combinations thereof and including all goodwill associated
therewith, (c) all copyrightable works, all copyrights, and all applications,
registrations, and renewals in connection therewith, and (d) all copies and
tangible embodiments thereof (in whatever form or medium).
"KNOWLEDGE" means, whether capitalized or not: (a) with respect to
Purchasers, the actual knowledge of Xxx Xxxxx, Xxxxx Xxxxxxxx, Xxxxx Xxxxxx, or
Xxxxxx Xxxxxxxxx, without further investigation and without regard to whether a
Person had reason to know, and (b) with respect to Seller, the actual knowledge
of Xxxxxxx Xxxxxx, Xxxxx Xx. Xxxxxx, Xxxxxxx X. Xxxxx or Xxxxxx X. XxXxxxxxx
after due inquiry of Xxxxxxx Xxxxx, Xxxxxxx X. Xxxxxxx, Xxxxxx X. Xxxxxx, Xxxx
X. Xxxxxx, Xxxxxxxx Xxxxxxxx and Xxxxxxx X. Xxxxx and, except for such inquiry,
without further investigation and without regard to whether a Person had reason
to know.
"LAW" means (i) when applicable to Seller, EQS, EquiServe Trust, CPUUS,
EQAC and any of their Affiliates domiciled in the United States, any United
States federal, state, provincial, local, county, city, municipal or other
administrative order, constitution, law, ordinance, directive, principle of
common law, regulation, rule, restriction, statute or treaty, and (ii) when
applicable to CPU and any of its Affiliates domiciled in Australia, any
Commonwealth of Australia federal, state, provincial, local, county, city,
municipal or other administrative order, constitution, law, ordinance,
directive, principle of common law, regulation, rule, restriction, statute or
treaty.
"LIABILITY" means, with respect to any Person, any financial or
non-financial liability or obligation of such Person of any kind, character or
description, absolute or contingent, accrued or unaccrued, liquidated or
unliquidated, secured or unsecured and whether or not the same is required to be
accrued on the financial statements of such Person.
"LIEN" means, with respect to any asset, any mortgage, deed of trust, title
defect lien, pledge, security interest, hypothecation, restriction, encumbrance
or charge of any kind in respect of such asset.
"MATERIAL ADVERSE EFFECT" means the magnitude of any events, circumstances
or conditions is substantial enough such that, as a result, the Companies are
unable to operate in the Ordinary Course of Business.
"MINIMUM THRESHOLD AMOUNT" means Five Million Dollars ($5,000,000).
"MINIMUM DEFINED WORKING CAPITAL" means a negative balance of Seven Million
Six Hundred Seventy Five Thousand Dollars (-$7,675,000.00).
"MAXIMUM DEFINED WORKING CAPITAL" means a negative balance of Five Million
Six Hundred Seventy Five Thousand Dollars (-$5,675,000.00).
"OCC" means the Office of the Comptroller of the Currency.
"ORDINARY COURSE OF BUSINESS" means the ordinary course of the business
operations of the Companies consistent with past custom and practice.
"OTHER BID" means any proposal or offer in connection with an Acquisition
Transaction, other than the Transactions.
"PERSON" means any individual, partnership, corporation, association,
trust, limited liability company, joint partnership, unincorporated organization
and any government or political subdivision thereof, governmental department or
agency.
"PURCHASERS' DISCLOSURE SCHEDULE" means the disclosure schedule that
Purchasers have delivered to Seller on the date of this Agreement prior to the
execution hereof.
"REFERENCE DATE" means June 30, 2004.
"RETURNS" means all returns, declarations, reports, estimates, information
returns, elections, consents, notices, forms, documents and statements
(including all schedules, exhibits and other attachments thereto) relating to
any Taxes.
"SELLER'S DISCLOSURE SCHEDULE" means the disclosure schedule that Seller
has delivered to Purchasers on the date of this Agreement prior to the execution
hereof.
"TARGET DEFINED WORKING CAPITAL" means a negative balance of Six Million
Six Hundred Seventy Five Thousand Dollars (-$6,675,000.00) and, for purposes of
clarity, this means that the difference between the assets and liabilities
comprising Target Defined Working Capital will be a negative number because the
aggregate of the balances in the liability accounts will exceed the aggregate of
the balances in the asset accounts.
"TAX" or "TAXES" means all taxes, charges, fees, levies or other
assessments, including all net income, gross income, gross receipts, sales, use,
ad valorem, transfer, franchise, profits, license, registration, value added,
alternative, withholding, payroll, employment, social security, unemployment,
excise, estimated, severance, stamp, occupation, environmental, property or
other taxes, including all interest and penalties thereon, and additions to tax
or additional amounts imposed by any Governmental Authority upon either Company
or otherwise associated with the Business.
"TAX AFFILIATE" means each Company and any other Person that is or was a
member of an affiliated, combined or unitary group of which either Company is or
was a member.
"TRANSACTIONS" means the purchase and sale of the Shares, the delivery of
the CPU Shares and the other transactions contemplated by this Agreement to
occur at the Closing.
1.2 CROSS REFERENCES TO CERTAIN TERMS DEFINED ELSEWHERE IN THIS AGREEMENT.
TERM SECTION
Accounting Firm 2.14(d)
Agreement Preamble
ASX 2.4(c)
Benefit Plans 3.9(a)
Changed Circumstances 5.6(b)
CPUUS Preamble
Closing 2.3
Closing Date 2.3
Closing Date Balance Sheet 2.14(a)
COBRA 5.21(e)
Company Employees 5.21(a)
Company Flex Plan 5.21(c)
Company Plans 5.21(b)
control Affiliate Definition
EQAC Preamble
CPU Preamble
CPU Financial Statements 4.8(a)
CPU Shares 2.2(b)
CPU Welfare Plans 5.21(d)
Designated Ancillary Agreements Competing Business Definition
Disclosing Party 5.1
Disclosure Date 2.8
Disclosure Notice 2.4(c)
Dispute Accountants 2.14(d)
Dispute Notice 2.14(c)
Dividend 2.13
DST Flex Plan 5.21(c)
Effective Date Preamble
EQS Recitals
EQS Common Stock 3.3(a)
EQS Intellectual Property 3.15
EQS System Software 3.15
EquiServe Trust Common Stock 3.3(b)
EquiServe Trust Shares 3.3(b)
ERISA 3.9(a)
ERISA Affiliates 3.9(e)
Excluded Entities Affiliate Definition
Excluded Information 2.5(a)(i)
Financial Statements 3.12(a)
Indemnification Period 8.1(b)
Indemnified Party 8.3(a)
Indemnifying Party 8.3(a)
Information 5.1
Interim Financial Statements 3.12(b)
Major Customers 3.16(a)
Major Suppliers 3.16(b)
Material Contracts 3.10
Notice 7.1(e)
Purchase Price 2.2
Purchaser(s) Preamble
Purchasers' Losses 8.1(a)
Rectification Date 2.5(b)
Restricted Period 5.6(a)
Retained Plans 5.21(a)
Rights 3.3(a)
Seller Preamble
Seller's Losses 8.2(a)
Shares Recitals
Third Party Claim 8.3(a)
ARTICLE 2
PURCHASE AND SALE; PURCHASE PRICE
2.1 PURCHASE AND SALE OF THE SHARES. At the Closing (as defined below), and
in the manner herein provided, Seller hereby agrees to sell, transfer, assign
and deliver all of the Shares to EQAC, and EQAC hereby agrees to purchase,
acquire and accept from Seller, all of the Shares, free and clear of all Liens.
Purchasers will cause EQAC to satisfy its obligations pursuant to this Article
2.
2.2 PURCHASE PRICE. Subject to the terms and conditions of this Agreement
and in consideration of the sale, transfer and delivery to EQAC of all of the
Shares, Purchasers hereby agree to pay the following amounts to Seller (as it
may be adjusted in accordance with Section 2.14, the "PURCHASE PRICE") in
accordance with the terms and conditions set forth below:
(a) At the Closing, EQAC will pay Seller the sum of Two Hundred
Sixteen Million Dollars ($216,000,000), via wire transfer of immediately
available funds in accordance with instructions delivered prior to the
Closing Date by Seller to EQAC.
(b) At the Closing, EQAC will deliver, subject to Section 2.11, to
Seller Twenty Nine Million Six Hundred Five Thousand (29,605,000) ordinary
shares in the capital of CPU (the "CPU SHARES"), which shall be issued and
allotted to Seller by CPU.
2.3 CLOSING. Unless otherwise mutually agreed, the closing ("CLOSING") of
the sale and purchase of the Shares shall take place at the offices of Seller
the fifth business day following the satisfaction or waiver of the conditions
set forth in Article 6 of this Agreement. The date on which the Closing actually
occurs is hereinafter referred to as the "CLOSING DATE".
2.4 CLOSING OBLIGATIONS.
(a) At the Closing, Seller shall deliver to Purchasers certificates
representing the Shares, duly endorsed (or accompanied by duly executed
stock powers).
(b) At the Closing, Purchasers shall deliver (i) to Seller the sum of
Two Hundred Sixteen Million Dollars ($216,000,000), and, if applicable, the
Additional Amount, and (ii) to Seller, or an Affiliate of Seller in
accordance with written instructions from Seller, a holding statement in
respect of the CPU Shares in accordance with the ASTC Settlement Rules.
(c) At the Closing, CPU shall (i) apply for official quotation of the
CPU Shares on the Australian Stock Exchange ("ASX") by delivering an ASX
Listing Rule Appendix 3B to the ASX with a copy to Seller, and, subject to
Section 2.5(a) and Section 2.5(b), (ii) deliver a notice that complies with
section 708A(5)(e) and 708A(6) of the Australian Corporations Act (the
"DISCLOSURE NOTICE") to the ASX with a copy to Seller.
(d) At the Closing, Seller shall, and shall cause its relevant
Affiliates to, execute and deliver the Ancillary Agreements to which Seller
and/or such Affiliates are proposed to be a party.
(e) Purchasers shall, and shall cause the Companies to, execute and
deliver the Ancillary Agreements to which Purchasers and/or either Company
is proposed to be a party.
(f) At the Closing, Seller shall deliver to Purchasers:
(i) a true and correct copy of the Certificate of Incorporation
of each Company, certified by the Secretary of State of the State of
Delaware or the OCC, as applicable.
(ii) a true and correct copy of the Bylaws of each Company,
together with all amendments thereto, in effect as of the Closing
Date, certified by an officer of Seller.
(iii) a certificate of good standing for each Company from its
jurisdiction of incorporation and each of the states in which it is
qualified to do business, dated no more than seven (7) days prior to
the Closing Date.
(iv) letters of resignation executed by each of the officers and
directors of the Companies who are employees of Seller and those
identified by CPU a reasonable time prior to the Closing Date, or
proof of their termination or removal.
(v) all original stock books, registers and records for the
Companies, including the corporate seal, if any.
2.5 DEFERRAL OF CLOSING OBLIGATIONS.
(a) Subject to Section 2.7, CPU shall have no obligation at Closing to
deliver a notice to the ASX under Section 2.4(c)(ii), if at Closing CPU
has:
(i) 'excluded information' (within the meaning of that term in
section 708A(7) of the Australian Corporations Act) ("EXCLUDED
INFORMATION") that concerns an incomplete proposal or negotiation and
the board of CPU acting in good faith reasonably determines that
disclosure of the Excluded Information to the ASX is not in the best
interests of CPU and will have a materially adverse effect on the
relevant matter which is the subject of the Excluded Information; or
(ii) Excluded Information that comprises matters of supposition
or is insufficiently definite to warrant disclosure and CPU becomes
aware of the relevant matter which is the subject of the Excluded
Information within ten (10) days of the Closing Date and the board of
CPU acting in good faith has taken all reasonable steps to disclose
the relevant matter which is the subject of the Excluded Information.
(b) If Section 2.5(a) applies, CPU must within five (5) business days
of the Closing Date (the "Rectification Date") deliver a Disclosure Notice
to the ASX with a copy to Seller unless at the Rectification Date CPU has:
(i) Excluded Information that concerns an incomplete proposal or
negotiation and the board of CPU acting in good faith reasonably
determines that disclosure of the Excluded Information to the ASX is
not in the best interests of CPU and will have a materially adverse
effect on the relevant matter which is the subject of the Excluded
Information; or
(ii) Excluded Information that comprises matters of supposition
or is insufficiently definite to warrant disclosure and CPU becomes
aware of the relevant matter which is the subject of the Excluded
Information within ten (10) days of the Rectification Date and the
board of CPU acting in good faith has taken all reasonable steps to
disclose the relevant matter which is the subject of the Excluded
Information.
(c) If Section 2.5(b) applies, CPU must within sixty (60) business
days of the Closing Date prepare and lodge a Section 708A(11) Prospectus
with ASIC to cause section 708A(11) of the Australian Corporations Act to
apply in respect of a Sale Offer.
2.6 PROVISION OF EXCLUDED INFORMATION. CPU must two (2) Business Days prior
to the Closing Date provide the Seller with any information that is Excluded
Information.
2.7 DELIVERY OF DISCLOSURE NOTICE AT CLOSING. CPU must take all reasonable
steps to deliver a Disclosure Notice to the ASX at Closing (including taking all
reasonable steps to be in a position to deliver the Disclosure Notice).
2.8 LIMITATION ON SECONDARY SALES. If Section 2.5(a) or Section 2.5(b)
applies, the Seller must not offer the CPU Shares for sale if the sale offer
requires disclosure under section 707(3) of the Australian Corporations Act
until the earlier of the date ("Disclosure Date"):
(a) CPU was required to deliver a Disclosure Notice under Section
2.5(b); or
(b) CPU was required to lodge a Section 708A(11) Prospectus with ASIC
under Section 2.5(c).
2.9 UNDERTAKING IN RESPECT OF SECONDARY SALES. If Section 2.5(a) or Section
2.5(b) applies and the Seller sells some or all the CPU Shares prior to the
Disclosure Date, the Seller must obtain an undertaking from any purchaser of the
CPU Shares that:
(a) the purchaser is a "sophisticated investor" (within the meaning of
section 708(8) of the Australian Corporations Act) or a "professional
investor" (within the meaning of section 708(11) of the Australian
Corporations Act;) and
(b) the purchaser will not offer the CPU Shares for sale prior to the
Disclosure Date if the Sale Offer requires disclosure under section 707(3)
of the Australian Corporations Act.
2.10 SELLER AGREES TO ACQUIRE CPU SHARES BY WAY OF ISSUE. Where this
Agreement requires CPU to issue the CPU Shares to Seller, Seller agrees to
accept those shares, become a member of CPU and be bound by CPU's constitution.
2.11 CPU OBLIGATIONS. For purposes of clarity, but without limitation to
Sections 2.5(a) or 2.5(b), no later than the expiration of the sixty (60) day
period following the Closing Date, there will be no impediments on the
transferability of the CPU Shares by Seller.
2.12 Adjustment of CPU Shares. If at any time between the execution of this
document and the Closing Date there occurs any reorganization of the capital of
CPU, including any consolidation, subdivision, capital reduction, cancellation
of capital, stock split, stock dividend, capital return or similar event, then
at Closing the number of CPU Shares must be recalculated and reorganized or a
cash payment must be made to Seller (as the case may be) so that Seller receives
the same benefit it would have received if it held the CPU Shares as at the date
of execution of this document.
2.13 PAYMENT OF DIVIDENDS. If, following the Conditions Satisfaction Date,
any dividend or other distribution of profits ("DIVIDEND") is paid by CPU to
holders of ordinary shares in the capital of CPU, CPU must ensure that the
Dividend is also paid to Seller.
2.14 POST-CLOSING ADJUSTMENTS.
(a) Within sixty (60) days after the Closing Date, Seller shall
deliver to Purchasers a consolidated unaudited balance sheet of the
Companies dated as of the Closing Date (the "CLOSING DATE BALANCE SHEET")
prepared in accordance with GAAP on a basis consistent with the unaudited
Interim Financial Statements and in accordance with the following
accounting protocols: (i) the accounts entitled "due from DST" and "taxes
payable/receivable" will have a zero balance on the Closing Date Balance
Sheet, and (ii) the account entitled "deferred taxes" will not necessarily
have a zero balance.
(b) In the event that the amount of Defined Working Capital reflected
on the Closing Date Balance Sheet is less than the Minimum Defined Working
Capital, Seller shall pay to the Purchasers, by wire transfer of
immediately available funds, the amount necessary to achieve the Target
Defined Working Capital as of the Closing Date. In the event that the
amount of Defined Working Capital reflected on the Closing Date Balance
Sheet is greater than the Maximum Defined Working Capital, Purchasers shall
pay to Seller, by wire transfer of immediately available funds, the amount
by which the Defined Working Capital exceeds the Target Defined Working
Capital as of the Closing Date. Any payments required pursuant to this
subparagraph (b) shall be made within thirty (30) days following the
delivery by Purchasers of the Closing Date Balance Sheet, unless a Dispute
Notice (defined below) is delivered.
(c) If, within thirty (30) calendar days after the date of delivery to
Purchasers of the Closing Date Balance Sheet, Purchasers dispute the amount
of Defined Working Capital reflected therein, Purchasers will give written
notice to Seller within such thirty (30) calendar day period specifying in
reasonable detail Purchasers' basis for its dispute (a "DISPUTE NOTICE").
In its review of the Closing Date Balance Sheet, Purchasers shall have
reasonable access to Seller's work papers relating thereto and Seller's
accountants, subject to whatever releases and indemnifications that may be
requested by such accountants. In the event that Purchasers notify Seller
in writing that it has accepted the Closing Date Balance Sheet, or in the
event that Purchasers do not issue a Dispute Notice within thirty (30)
calendar days of delivery of the Closing Date Balance Sheet, then the
Closing Date Balance Sheet shall become the final and binding upon the
parties for purposes of any adjustment required pursuant to Section
2.14(b).
(d) If Purchasers deliver a Dispute Notice to Seller within such
30-day period, Seller and Purchasers shall work together in good faith to
seek to resolve the dispute over the correct amount of Defined Working
Capital. If Seller and Purchasers are unable to resolve their disagreement
within 15 calendar days after delivery of a Dispute Notice by Purchasers,
the dispute shall be referred for determination to a nationally known firm
of independent public accountants (an "ACCOUNTING FIRM") mutually selected
by Seller and Purchasers (the "DISPUTE ACCOUNTANTS") as promptly as
practicable. In the event that
Seller and Purchasers are unable to agree on the Dispute Accountants, then
the Parties agree to retain KPMG, LLP. The Dispute Accountants will make a
determination as to the correct amount of Defined Working Capital, which
determination will be (a) in writing, (b) furnished to each of Seller and
Purchasers as promptly as practicable after the dispute has been referred
to the Dispute Accountants, (c) made in accordance with this Agreement, and
(d) conclusive and binding. Seller and Purchasers will use reasonable
commercial efforts to cause the Dispute Accountants to render their
decision within thirty (30) days of submitting such dispute and shall
promptly comply with all reasonable written requests for information,
books, records and similar items. Neither party will disclose to the
Dispute Accountants, and the Dispute Accountants will not consider for any
purpose, any settlement offer made by either party. Any payments required
upon the determination by the Dispute Accountants shall be made within ten
(10) days following such determination.
(e) Purchasers shall pay the fees and expenses charged by any Dispute
Accountant retained hereunder, unless any payment required to be made by
Seller pursuant to this Section 2.14 is greater than $250,000, in which
case Seller shall pay such fees and expenses.
2.15 TAX ELECTIONS. At the election of Purchasers, Seller shall join with
Purchasers and make an election with respect to the Transactions under Code
section 338(h)(10) and the Regulations thereunder, and under any similar state
statute or regulation. At the request of Purchasers, Seller shall execute any
and all documents (including without limitation Forms 8023 and 8883) and take
any and all actions necessary, including providing all required information on a
timely basis, to cause such election to become effective. Purchasers and Seller
shall mutually agree to the "aggregate deemed sales price" and the allocation of
such price for the purposes of such election. Purchasers and Seller agree that
neither of them shall take any action to modify or withdraw such election and
shall file all Tax returns (including Form 8883) in a manner consistent with
such election and the "aggregate deemed sales price" and allocation of such
price jointly agreed by Purchasers and Seller.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLER
As a material inducement to Purchasers to enter into this Agreement, Seller
hereby represents and warrants to Purchasers as follows:
3.1 ORGANIZATION.
(a) Seller is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware, and has all
requisite corporate power and authority to (i) own the Shares, and (ii)
enter into this Agreement and perform all of its obligations hereunder.
(b) EQS is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware, and has all requisite
corporate
power and authority to (i) own all of the EquiServe Trust Shares, (ii) own,
operate or lease the assets owned or used by it and to carry on its
business as now conducted by it. EQS is duly licensed or qualified to do
business and is in good standing in the jurisdictions set forth in Section
3.1(b) of the Seller's Disclosure Schedule. True and correct copies of the
certificate of incorporation and by-laws of EQS, each as in effect on the
date hereof, are attached to Section 3.1(b) of the Seller's Disclosure
Schedule.
(c) EquiServe Trust is a national trust company chartered by the OCC,
is validly existing and in good standing under the Laws of the United
States of America and has all requisite corporate power and authority to
own, operate or lease the assets owned or used by it and to carry on its
business as now conducted by it. EquiServe Trust is chartered by the OCC to
carry on the business reflected in its charter. True and correct copies of
the charter, articles of incorporation and by-laws of EquiServe Trust, each
as in effect on the date hereof, are attached to Section 3.1(c) of the
Seller's Disclosure Schedule.
3.2 AUTHORITY; ENFORCEABILITY. The execution, delivery and performance of
this Agreement has been duly authorized by all necessary corporate action on the
part of Seller and will not result in any violation of or conflict with or
constitute a default under (i) any term of the charter or bylaws or other
constitutive documents of Seller, (ii) any agreement, instrument, judgment,
decree, order, statute, rule or governmental regulation applicable to Seller
other than such violations or conflicts which would not materially adversely
affect the ability of Seller to consummate the transactions contemplated hereby.
This Agreement has been duly executed and delivered by Seller and constitutes
the legal, valid and binding obligation of Seller enforceable against Seller in
accordance with the terms hereof.
3.3 CAPITALIZATION OF THE COMPANIES.
(a) EQS's authorized capital stock consists of 75,000 shares of common
stock (the "EQS Common Stock"), with a par value of $1.00 per share. The
Shares are the only shares of EQS Common Stock which are issued and
outstanding. There are no options, warrants, subscriptions, puts, calls or
other rights, commitments, undertakings or understandings ("RIGHTS") to
acquire, dispose of or restrict the transfer of, any capital stock or other
securities of any kind or class of EQS, except such restrictions as may be
imposed by applicable federal or state securities laws. All of the Shares
are duly authorized, validly issued, fully paid and non-assessable, were
issued in compliance with all applicable Laws, and were not issued in
violation of the preemptive right of any Person. There are no voting
trusts, stockholder agreements, proxies or other agreements or
understandings in effect with respect to the voting or transfer of any of
the EQS Common Stock, nor is there any Indebtedness of EQS granting holders
thereof the right to vote (or convertible into, or exchangeable for,
securities having the right to vote) on any matters on which holders of EQS
Common Stock may vote.
(b) EquiServe Trust's authorized capital stock consists of 1,000,000
shares of common stock ("EQUISERVE TRUST COMMON STOCK"), with a par value
of $1.00 per share. 500,000 shares of EquiServe Trust Common Stock (the
"EQUISERVE TRUST SHARES") are issued and outstanding and are held
beneficially and of record by EQS. There are no Rights to acquire, dispose
of or restrict the transfer of, any capital stock or other securities of
any kind or class of EquiServe Trust, except such restrictions as may be
imposed by applicable federal or state securities laws. All of the
EquiServe Trust Shares are duly authorized, validly issued, fully paid and
non-assessable, were issued in compliance with all applicable Laws, and
were not issued in violation of the preemptive right of any Person. There
are no voting trusts, stockholder agreements, proxies or other agreements
or understandings in effect with respect to the voting or transfer of any
of the EquiServe Trust Common Stock, nor is there any Indebtedness of
EquiServe Trust granting holders thereof the right to vote (or convertible
into, or exchangeable for, securities having the right to vote) on any
matters on which holders of EquiServe Trust Common Stock may vote.
(c) Except for EQS's interest in EquiServe Trust, there are no other
corporations, partnerships, joint ventures, associations or other entities
in which either Company owns, of record or beneficially, any direct or
indirect equity or other interest or any right (contingent or otherwise) to
acquire the same. Neither Company is a member of (nor is any part of the
business of the Companies conducted through) any partnership nor is either
Company a participant in any joint venture or similar arrangement.
3.4 TITLE TO THE SHARES. Seller owns all of the Shares free and clear of
any and all Liens, subject to restrictions imposed by applicable federal or
state securities laws which restrictions do not adversely affect good and valid
title to the Shares. EQS owns 100% of all the EquiServe Trust Shares free and
clear of any Liens. At the Closing, Seller shall deliver to EQAC good and valid
title to the Shares free and clear of any and all Liens, subject to restrictions
imposed by applicable federal or state securities Laws which restrictions do not
adversely affect the ability of Seller to deliver to EQAC good and valid title
to the Shares.
3.5 CONSENTS. Except as described in Section 3.5 of the Seller's Disclosure
Schedule, and except with respect to consents required under any contract or
agreement to which the Companies are a party, no consent, approval or
authorization of, or registration, qualification or filing with, any
Governmental Authority or other Person is required for the execution and
delivery of this Agreement by Seller or for the consummation by Seller and the
Companies of the transactions contemplated hereby.
3.6 COMPLIANCE WITH LAWS. Except as described in Section 3.6 of Seller's
Disclosure Schedule, each Company has complied and continues to comply with (i)
its charter, articles or certificate of incorporation and bylaws and (ii) to
Seller's Knowledge, applicable Law and has all material permits, licenses,
certificates of authority, orders and approvals of, and has made all material
filings, applications and registrations with, all governmental entities that are
required in order to permit it to carry on its business as it is
presently being conducted in all material respects; all such permits, licenses,
certificates of authority, orders and approvals are in full force and effect,
will not be adversely affected by virtue of the completion of the sale and
transfer of the Shares and, except as disclosed in Section 3.6 of Seller's
Disclosure Schedule, as of the Effective Date there are no pending, or to
Seller's Knowledge, threatened proceedings which could result in the
termination, suspension, revocation, limitation or impairment thereof. To
Seller's Knowledge, neither Company, nor any of their respective officers,
agents or employees or any licensee or other Person acting on behalf of such
Company, has made any payment or provided services (including to an employee of
a vendor or customer in order to obtain business from such vendor or customer)
that were not legal to make or that such Company or any such officer, employee
or other Person knew (or had reason to believe) were either (x) not legal for
the payee or recipient of such services to receive, or (y) not disclosed to the
employer of such payee or recipient.
3.7 TITLE TO ASSETS; CONDITION AND SUFFICIENCY OF ASSETS. Except as
described in Section 3.7 of Seller's Disclosure Schedule, the Companies have
good and marketable title to, or valid and subsisting license or leasehold
interests in, all of the material assets used in the conduct of their business.
Except as described in Section 3.7 of the Seller's Disclosure Schedule, such
assets, together with the rights and services provided under the Ancillary
Agreements, are, in all material respects, all of the assets necessary for the
conduct of the business of the Companies immediately after Closing in
substantially the same manner as presently conducted.
3.8 LEGAL PROCEEDINGS. Except as disclosed in Section 3.8 of the Seller's
Disclosure Schedule, there are no material Claims pending or, to Seller's
Knowledge, any material unasserted Claim or threatened Claim against either
Company as of the Effective Date. SECTION 3.8 of the Seller's Disclosure
Schedule sets forth a description of any Claims against either Company which (i)
are currently pending, or (ii) which were made in the twelve (12) months prior
to the Effective Date. Neither Company is subject to an order of a Governmental
Authority, consent decree or the like.
3.9 EMPLOYEE BENEFITS.
(a) Section 3.9(a) of the Seller's Disclosure Schedule lists each
"employee benefit plan" (within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")) maintained by
either Company or to which either Company contributes or is required to
contribute, and each employment, compensation, bonus, fringe benefit,
cafeteria, profit sharing, deferred compensation, bonus, stock option,
stock purchase, restricted stock, pension, severance, change of control,
loans, retainer, consulting, retirement, welfare, or other incentive plan
or agreement maintained by EQS or to which either Company contributes or is
required to contribute, with respect to any employee or former employee of
either Company (collectively, "BENEFIT PLANS"). With respect to each
Benefit Plan, Seller has made available to Purchasers a copy of the plan
document other governing contract, as amended, and a summary of any
unwritten plan and, if applicable, the most recent copy of the following:
summary plan description together with any modifications thereto, Form 5500
with all attachments, trust or funding agreement, and determination or
qualification letter from the IRS.
(b) Each Benefit Plan has been administered in compliance in all
material respects with their terms and all applicable provisions of the
Code and applicable Law. Each Benefit Plan that is intended to be qualified
under Code Section 401(a) has received a favorable determination letter
from the Internal Revenue Service and, to Seller's Knowledge, nothing has
occurred since the date of such determination letter which resulted in or
is likely to result in the revocation of such favorable determination.
(c) All contributions and all payments and premiums required to be
made by either Company under applicable Law or the terms of any Benefit
Plan as of the Closing Date have been made as of such date and all
contributions, payments and premiums for any period ending on or before the
Closing Date that are not yet due have been made or have been accrued for
in the books and records of the Companies.
(d) Except as described in Section 3.9(d) of Seller's Disclosure
Schedule, there are no actions, suits or claims (other than routine claims
for benefits) pending or threatened against or with respect to any Benefit
Plans or the assets of such Benefit Plans, and to Seller's knowledge, no
facts exist that could give rise to any actions, suits or claims (other
than routine claims for benefits) against such Benefit Plans or the assets
of such Benefit Plans.
(e) Neither Company maintains or contributes to or in any way directly
or indirectly have any liability with respect to any "multiemployer plan"
within the meaning of Sections 3(37) or 4001(3) of ERISA. No Benefit Plan
is subject to Title IV of ERISA. Neither Company nor any trade or business
(whether or not incorporated) which is or has ever been treated as a single
employer with either Company under Section 414(b), (c), (m) or (o) of the
Code ("ERISA AFFILIATES"), has incurred any liability under title IV of
ERISA or Section 412 of the Code, except for such liability that has been
paid in full.
(f) No Benefit Plan is maintained in connection with any trust
described in Section 501(c)(9) of the Code.
(g) Except as disclosed in Section 3.9(g) of the Seller's Disclosure
Schedule, neither Company has any current or projected Liability in respect
of post-employment health and life benefits for retired, former or current
officers, directors or employees of such Company, except (i) as may be
required under part 6 of Title I of ERISA and at the sole expense of the
participant or the participant's beneficiary, or (ii) pursuant to a medical
expense reimbursement account described in Section 125 of the Code.
(h) Neither Company has engaged in any "prohibited transaction," as
defined in Section 4975 of the Code or ERISA Section 406 with
respect to the Benefit Plans, and, to Seller's Knowledge, all
"fiduciaries," as defined in Section 3(21) of ERISA, with respect to the
Benefit Plans, have substantially complied with the requirements of Section
404 of ERISA.
(i) All Benefit Plans that are group health plans have been operated
in material compliance with the group health plan continuation coverage
requirements of Section 4980B of the Code and Title I, Part 6 of ERISA and
the requirements of the Health Insurance Portability and Accountability Act
of 1996.
(j) Except as provided in SECTION 3.9(J) of the Seller's Disclosure
Schedule, neither the execution and delivery of this Agreement nor the
consummation of the Transactions will (i) result in any payment becoming
due to any current or former employee or director of either Company under
any Benefit Plan, (ii) increase any benefits under any Benefit Plan, or
(iii) result in the acceleration of the time of payment, vesting or other
rights with respect to any such benefits. Any payment or vesting under any
Benefit Plan will not be an "excess parachute payment" as defined in
Section 280G(b)(1) of the Code.
(k) Except as provided in Section 3.9(k) of the Seller's Disclosure
Schedule, none of the assets of any Benefit Plan is stock of either Company
or any of its Affiliates, or property leased to or jointly owned by either
Company or any of its Affiliates, except that EQS employees who participate
in Seller's 401(k) Plan may invest account balances in Seller's stock.
3.10 CONTRACTS.
(a) Set forth in Section 3.10(a) of the Seller's Disclosure Schedule
is a list of all Material Contracts to which either Company is a party as
of the Effective Date. Prior to Closing, Seller will have provided
Purchasers with true and complete copies of all Material Contracts. The
term "MATERIAL CONTRACTS" shall mean contracts and agreements of any type
requiring payment, exchange of value or assumption of any obligation or
liability in an amount greater than $100,000 annually (as measured at
December 31, 2003 for Material Contracts that are EQS customer contracts)
and shall not include (x) the Ancillary Agreements, or (y) any contracts or
agreements which will be terminated and of no further force and effective
as of the Closing Date. Other than the Ancillary Agreements, or as
described in Section 3.10(a) of Seller's Disclosure Schedule, or the
obligation to pay money as reflected in the Closing Date Balance Sheet,
there are no agreements between the Companies and Seller or any Affiliate
of Seller. The parties acknowledge that the Ancillary Agreement entitled
Headquarters Building Lease is an operating lease.
(b) Except as described in Section 3.10(b) of the Seller's Disclosure
Schedule, the consummation of the Transaction without obtaining the consent
of the counterparty to a Material Contract shall not, by itself, give rise
to a right of termination under such Material Contract.
(c) To Seller's Knowledge, (i) the Companies are not in default or
alleged to be in material default under any Material Contract, (ii) there
is no material default by any other party to any Material Contract, and
(iii) there exists no event, condition or occurrence which, after notice or
lapse of time, or both, is reasonably likely to constitute a material
default under a Material Contract except as shown on Section 3.10(c) of
Seller's Disclosure Schedule. To Seller's Knowledge, all of the Material
Contracts are in full force and effect and constitute legal, valid and
binding obligations of the parties thereto in accordance with their terms,
and will remain in full force and effect after the Closing Date without any
notice or consent by any other party (other than consents described in
Section 3.10(b) of Seller's Disclosure Schedule).
(d) To Seller's Knowledge, the Bank One Corporation Agreements are in
full force and effect. No Claims have been asserted or are pending against
either Company or, to Seller's Knowledge threatened against either Company,
under or in respect of any such contracts or agreements.
3.11 LABOR AND EMPLOYMENT MATTERS. No work stoppage involving either
Company is pending or, to Seller's Knowledge, threatened. Except as disclosed in
Section 3.11 of the Seller's Disclosure Schedule, neither Company is involved in
or, to Seller's Knowledge, threatened with or affected by, any labor dispute,
discrimination or sexual harassment claim, arbitration, lawsuit or
administrative proceeding involving any of its employees. Neither Company is a
party to any labor agreement with any labor organization or union and there are
no organizational campaigns, petitions or other activities seeking recognition
of a collective bargaining unit which could affect either Company. No unfair
labor practice complaints are pending or threatened against either Company
before the National Labor Relations Board.
3.12 FINANCIAL STATEMENTS.
(a) Set forth in Section 3.12(a) of the Seller's Disclosure Schedule
are true, correct and complete copies of the unaudited consolidated income
statements of the Companies for the years ended as of December 31, 2003 and
2002. Such unaudited income statements (the "FINANCIAL STATEMENTS") present
fairly the statements of operations for the periods then ended and have
been prepared in accordance with GAAP applied on a consistent basis (except
for the omission of any notes thereto).
(b) Set forth in Section 3.12(b) of the Seller's Disclosure Schedule
is a true, correct and complete copies of the unaudited consolidated
financial statements of the Companies consisting of a statement of income
and balance sheet for the eight month period ended on August 31, 2004 (the
"INTERIM FINANCIAL STATEMENTS"). The Interim Financial Statements present
fairly the consolidated financial condition of the Companies as of such
date, and the consolidated results of its operations for the period then
ended and have been prepared in accordance with GAAP applied on a
consistent basis (except as may be disclosed in the notes thereto).
(c) Except (i) as disclosed or reserved against in the balance sheet
portion of the Interim Financial Statements or (ii) as incurred in the
Ordinary Course of Business since the Reference Date or (iii) as set forth
in SECTION 3.12(C) of the Seller's Disclosure Schedule, the Companies and
their assets are not subject to any Liabilities. All Liabilities of the
Companies in respect of unreconciled or out-of-balance accounts including
obligations to shareholders, Governmental Authorities or others are either
fully reflected or reserved against in the Interim Financial Statements or
are amounts that EQS could seek to recover pursuant to the Bank One
Corporation Agreements. There are no escheatment liabilities.
(d) Set forth in Section 3.12(d) of the Seller's Disclosure Schedule
are true, correct and complete copies of the audited consolidated financial
statements consisting of statements of income and balance sheets for the
years ended as of December 31, 2003 and 2002 which audited financial
statements present fairly the consolidated financial condition of the
operations described in the reports attached to such financial statements
as of the dates thereof and its statements of income for the periods then
ended and have been prepared in accordance with GAAP applied on a
consistent basis (except as may be disclosed in the report and notes
thereto).
3.13 NON-COMPETITION AGREEMENTS. Except as described in SECTION 3.13 of the
Seller's Disclosure Schedule, neither Company has entered into any agreement
which restricts, or as a result of the Transactions would restrict, the ability
or authority of either Company, Purchasers or any of their Affiliates to conduct
business operations in any respect.
3.14 CONDUCT IN THE ORDINARY COURSE. Since the Reference Date and as of the
Effective Date, the Companies have conducted business operations in the Ordinary
Course of Business. As amplification and not limitation of the foregoing, since
the Reference Date, neither Company has (a) made any changes in the customary
methods of operations of the Companies, including practices and policies
relating to purchasing, marketing, selling and pricing, (b) delayed or postponed
the payment of accounts payable and other Liabilities or accelerated the
collection of accounts receivable or (c) other than in the Ordinary Course of
Business: (i) granted any increase, or announced any increase, in the wages,
salaries, compensation, bonuses, incentives, pension or other benefits payable
by either Company to any of its employees, including any increase or change
pursuant to any Benefit Plan, (ii) established or increased or promised to
increase any benefits under any Benefit Plan, in either case except as required
by Law, or (iii) established or created any Benefit Plan.
3.15 INTELLECTUAL PROPERTY. To Seller's Knowledge, the business operations
of the Companies as currently conducted and the use of the Intellectual Property
owned by the Company and the "EQS System Software" as defined in the Ancillary
Agreement between the parties titled: EQS LICENSE AND DATA PROCESSING AGREEMENT
(the "EQS INTELLECTUAL PROPERTY") in connection therewith do not conflict with,
infringe, misappropriate or otherwise violate the Intellectual Property or other
proprietary rights of any Person as of the Effective Date. To Seller's
Knowledge, the EQS Intellectual
Property is subsisting, valid and enforceable and has not been adjudged invalid
or unenforceable in whole or part. To Seller's Knowledge, no Person is engaging
in any activity that infringes the EQS Intellectual Property as of the Effective
Date.
3.16 CUSTOMERS AND SUPPLIERS.
(a) Set forth in SECTION 3.16(A) of the Seller's Disclosure Schedule
is a list of what, to Seller's Knowledge, is the one hundred (100) largest
customers of the Companies in terms of sales for the twelve (12) month
periods ended December 31, 2002 and 2003 as of the Effective Date (the
"MAJOR CUSTOMERS"), together with the dollar amount of sales or services to
such customers and the number of shareholder accounts serviced by the
Companies for such customers. Except as set forth in SECTION 3.16(A) of the
Seller's Disclosure Schedule, since the Reference Date, none of the Major
Customers has materially reduced its purchases from the Companies or made
any written complaints relating to the Companies as of the Effective Date.
As of the Effective Date, none of the Major Customers has notified either
Company in writing of its intent to materially reduce its purchases or
cease to do business with the Companies, or substantially reduce or delay
its business with the Companies. None of the Major Customers has notified
the Company in writing that it is threatened with bankruptcy or insolvency.
Except as set forth in Section 3.16(a) of the Seller's Disclosure Schedule,
to Seller's Knowledge, none of the Major Customers is currently planning an
odd-lot buyback program.
(b) Set forth in SECTION 3.16(B) of the Seller's Disclosure Schedule
is a list of what, to Seller's Knowledge, is the fifty (50) largest
suppliers of the Companies who provided more than $100,000 of services or
products to the Companies in 2004 prior to the Effective Date (the "MAJOR
SUPPLIERS"), together with the dollar amount of the services or products
from such Major Suppliers. As of the Effective Date, no Major Supplier has
notified either Company in writing of its intent to cease to do business
with the Companies, or substantially reduce or delay its business with the
Companies.
3.17 TAX MATTERS.
(a) Except as set forth in SECTION 3.17(A) of the Seller's Disclosure
Schedule:
(i) Each Company has (A) timely filed (or has had timely filed on
its behalf) all Returns required to be filed or sent by it in respect
of any Taxes or required to be filed or sent by it by any Governmental
Authority, all of which were correct and complete in all respects; (B)
timely and properly paid (or has had paid on its behalf) all Taxes;
and (C) established in the Financial Statements, in accordance with
GAAP and consistent with past practices, reserves that are adequate
for the payment of any Taxes not yet due and payable.
(ii) All Taxes that are required to have been withheld with
respect to all employees in connection with the operations of the
Companies have been withheld and timely remitted to the applicable
Governmental Authority.
(iii) There are no Liens for Taxes upon any assets or client
funds of either Company except Liens for Taxes not yet due and payable
(such as Taxes withheld from monies due to shareholders of customers
on behalf of such customers.
(iv) No deficiency for any Taxes has been proposed, asserted or
assessed against or affecting either Company that has not been
resolved and paid in full or, if not paid in full, the liability
therefore has been provided for in the Financial Statements. To
Seller's Knowledge, no claim has ever been made by a Governmental
Authority in a jurisdiction where either Company does not file any
Return that such Company is or may be subject to taxation.
(b) Set forth in SECTION 3.17(B) of the Seller's Disclosure Schedule
is a true and correct list of all Returns filed with respect to the
Companies that currently are the subject of audit.
3.18 INSURANCE.
(a) Set forth in SECTION 3.18(A) of the Seller's Disclosure Schedule
is the following information with respect to each currently effective
insurance policy (including policies providing property, casualty,
liability, health and workers' compensation coverage and bond and surety
arrangements) to which either Company is the only party (and for purposes
of clarity, Seller's insurance policies are not listed):
(i) the name, address, and telephone number of the agent;
(ii) the name of the insurer, the name of the policyholder, and
the name of each covered insured;
(iii) the policy number and the period of coverage;
(iv) a general description of the terms of such policy.
(b) As of the Effective Date, Seller has not cancelled any such
insurance policy described in Section 3.18(a) above and has not received a
notice from the insurer of any default by Seller under any such policy.
Seller is self insured with respect to all risks not covered by the
policies specified in Section 3.18(a) above.
3.19 REGULATORY COMPLIANCE AND CONSENTS. Neither Company has taken nor
agreed to take any action, and Seller has no Knowledge of any fact or
circumstance, that would materially impede or delay the consummation of the
Transactions or the ability of
the parties to obtain any regulatory approval or to perform their covenants and
agreements under this Agreement.
3.20 SURVIVAL, KNOWLEDGE AND DISCLOSURE OF INFORMATION. All of the
representations and warranties of Seller shall survive the Closing, subject to
the limitations set forth in Section 8.1(b). Any fact or circumstance that (i)
is within Purchasers' Knowledge prior to or at the time of Closing (including,
for this purpose only, that information (other than information relating to (i)
any out of balance condition, (ii) Escheatment Liabilities, or (iii) amounts to
be paid to tax authorities on account of monies paid or payable by Issuers to
security holders) which is expressly set forth in any document set forth on the
data room index attached to SECTION 3.20 of the Seller's Disclosure Schedule and
that was made available to Purchasers in Seller's data room) or (ii) is
described in Seller's Disclosure Schedule (other than information relating to
Escheatment Liabilities), shall be deemed to have been disclosed to Purchasers
for any and all purposes except for Seller's obligations in Article 5, and shall
not serve as a basis for a termination of this Agreement by Purchasers, a
refusal by Purchasers to close the Transactions, or any claim against Seller
under this Agreement or otherwise in connection with the Transactions.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF PURCHASERS
As a material inducement to Seller to enter into this Agreement, Purchasers
hereby represent and warrant to Seller as follows:
4.1 ORGANIZATION.
(a) CPU is a validly existing body corporate incorporated under the
laws of the Australian state of Victoria, and has all requisite corporate
power and authority to (i) issue and allot the CPU Shares, (ii) enter into
this Agreement and perform all of its obligations hereunder, and (iii) own,
operate or lease the assets owned or used by it and to carry on its
business as now conducted by it.
(b) CPUUS is a general partnership duly organized, validly existing
and in good standing under the laws of the State of Delaware, and has all
requisite power and authority to enter into this Agreement and perform all
of its obligations hereunder. All of the issued and outstanding partnership
interests of CPUUS are indirectly held by CPU.
(c) EQAC is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware, and has all requisite
corporate power and authority to enter into this Agreement and perform all
of its obligations hereunder. All of the issued and outstanding capital
stock of EQAC is held by CPUUS.
4.2 AUTHORITY; ENFORCEABILITY. The execution, delivery and performance of
this Agreement has been duly authorized by all necessary corporate action on the
part of
Purchasers and will not result in any violation of or conflict with or
constitute a default under (i) any term of the charter, bylaws or other
constitutive documents of Purchasers or (ii) any agreement, instrument,
judgment, decree, order, statute, rule or governmental regulation applicable to
Purchasers. This Agreement has been duly executed and delivered by Purchasers
and constitutes the legal, valid and binding obligation of Purchasers
enforceable against Purchasers in accordance with the terms hereof.
4.3 CAPITALIZATION OF CPU. As of the date of this Agreement, the total
issued share capital of CPU consists of 562,563,658 ordinary fully paid shares
excluding the CPU Shares. There are no Rights to acquire, dispose of or restrict
the transfer of, the CPU Shares. All of the CPU Shares will be validly issued,
will be fully paid, will be issued in compliance with all applicable laws, and
will not be issued in violation of the preemptive right of any person, and at
Closing will be quoted on the ASX.
4.4 TITLE TO THE CPU SHARES. The CPU Shares are free and clear of any and
all Liens, subject to restrictions imposed by applicable Law which restrictions
do not adversely affect good title to the CPU Shares.
4.5 REGULATORY COMPLIANCE AND CONSENTS.
(a) Except as disclosed in SECTION 4.5(A) of the Purchasers'
Disclosure Schedule, no consent, approval (including, without limitation,
an approval of CPU's shareholders) or authorization of, or registration,
qualification or filing with, any Governmental Authority or any
governmental agency or authority in Australia, is required for the
execution and delivery of this Agreement by Purchasers or for the
consummation by the Purchasers of the transactions contemplated hereby.
(b) Except as set forth in Section 4.5(b) of the Purchaser's
Disclosure Schedule, CPU has neither taken nor agreed to take any action,
and has no Knowledge of any fact or circumstance, that would materially
impede or delay the consummation of the transactions contemplated by this
Agreement or the ability of the parties to obtain any regulatory approval
or to perform their covenants and agreements under this Agreement.
(c) Except as set forth in Section 4.5(c) of the Purchaser's
Disclosure Schedule, all regulated Affiliates of CPU, including, but not
limited to, all broker-dealer, banking and other fiduciary entities that
(x) CPU owns 10% or more of, or (y) own 10% or more of CPU, both within the
United States and in foreign jurisdictions, are operating in material
compliance with all applicable legal requirements in each jurisdiction in
which such entity conducts business.
(d) No senior executive officer, director or principal shareholder of
CPU (owning 10% or more of the outstanding stock of CPU or its Affiliates),
and none of the individuals proposed to constitute the Board of Directors
or senior management of EQS or EquiServe Trust after Closing, (i) have been
the subject of any law enforcement agency's charge, arrest, indictment,
conviction or have
pleaded NOLO CONTENDERE to any criminal matter, (ii) have had a license
revoked, (iii) have been the subject of a civil action alleging fraud or
breach of fiduciary duty, or (iv) have been involved with an insured
depository institution, as defined by 12 U.S.C. 1813(c), that has (1)
failed, (2) received financial assistance from a financial institution
depository agency, or (3) was a merger partner with an institution that
received financial assistance from a financial institution depository
agency.
(e) Neither CPU nor any of its Affiliates have ever been the subject
of an application or notice that was filed in final form with the OCC, the
Federal Reserve Board, the Office of Thrift Supervision, or the Federal
Deposit Insurance Corporation.
(f) Except as described in Section 4.5(f) of the Purchasers'
Disclosure Schedule, as of the Effective Date, neither CPU nor any of its
Affiliates have, in the last five (5) years, been involved or are currently
involved, in any lawsuit, investigation, examination, or administrative
proceeding (excluding routine or customary audits, inspections, and
investigations) that may result in or resulted in any sanction, fine,
monetary damage, loss of right or benefit, revocation of license,
agreements, undertakings, consents or orders with any U.S. federal or state
court, any department, state or federal agency, or commission of the U.S.
government or state, municipal or foreign government entity.
4.6 COMPLIANCE WITH LAWS. Except as described in SECTION 4.6 of the
Purchasers' Disclosure Schedule, each Purchaser has complied and continues to
comply with (i) charter, bylaws or constituent documents and (ii) to Purchaser's
Knowledge, applicable Law and each has all permits, licenses, certificates of
authority, orders and approvals of, and has made all filings, applications and
registrations with, all governmental entities that are required in order to
permit it to carry on its business as it is presently being conducted in all
material respects; all such permits, licenses certificates of authority, orders
and approvals are in full force and effect, will not be adversely affected by
virtue of the completion of the sale and transfer of the CPU Shares and there
are no pending, or to Purchasers' Knowledge, threatened proceedings which could
result in the termination, suspension, revocation, limitation or impairment
thereof.
4.7 LEGAL PROCEEDINGS. Except as disclosed in Section 4.7 of the
Purchasers' Disclosure Schedule, there are no material Claims pending or, to
Purchasers' Knowledge, any material unasserted Claim or threatened Claim,
against CPU as of the Effective Date.
4.8 FINANCIAL STATEMENTS.
(a) Set forth in SECTION 4.8(A) of the Purchasers' Disclosure Schedule
are true, correct and complete copies of the audited consolidated financial
statements of CPU consisting of statements of profit and loss, balance
sheets and statements of cash flows for the years ended as of June 30,
2004, 2003 and 2002. Such audited financial statements (the "CPU FINANCIAL
STATEMENTS") give a true and fair view of the financial position and
performance of the periods then ended
and have been prepared in accordance with Australian Accounting Standards
applied on a consistent basis (except as may be disclosed in the notes
thereto).
(b) Except (i) as disclosed or reserved against in the CPU Financial
Statements as of June 30, 2004 or (ii) incurred in the ordinary course of
business since June 30, 2004 or (iii) as set forth in SECTION 4.8(B) of the
Purchasers' Disclosure Schedule, to Purchasers' Knowledge, CPU is not
subject to any Liabilities.
4.9 FINANCING. Purchasers have either (a) sufficient cash on hand to pay
the cash portion of the Purchase Price, or (b) binding written commitments, a
copy of which is set forth in Section 4.9 of Purchaser's Disclosure Schedule,
from one or more Australian or U.S. national banking institutions to lend to
Purchasers sufficient cash to pay the cash portion of the Purchase Price at
Closing.
4.10 SURVIVAL, KNOWLEDGE AND DISCLOSURE OF INFORMATION. All of the
representations and warranties of Purchasers shall survive the Closing, subject
to the limitations set forth in Section 8.2(b). Any fact or circumstance that
(i) is within Sellers' knowledge prior to or at the time of Closing or (ii) is
described in Purchasers' Disclosure Schedule, shall be deemed to have been
disclosed to Seller for any and all purposes, and shall not serve as a basis for
any claim against Purchaser under this Agreement or otherwise in connection with
the Transactions.
4.11 COMPLIANCE WITH CONTINUOUS DISCLOSURE. CPU has complied with its
continuous disclosure obligations under the ASX Listing Rules and there is no
information that has been excluded from a disclosure in accordance with ASX
Listing Rule 3.1A.
4.12 COMPLIANCE WITH SECONDARY SALES. At Closing: (i) the CPU Shares will
be in a class of shares that has been quoted on ASX at all times in the 12
months before the day on which the CPU Shares were issued, (ii) the ordinary
shares of CPU will not have been suspended for more than a total of 5 days in
that 12 months, (iii) no exemption under section 111AS or 111AT of the
Australian Corporations Act will have covered CPU, or any person as director or
auditor of CPU, at any time in that 12 months, and (iv) no order under section
340 or 341 of the Australian Corporations Act will have covered CPU, or any
person as a director or auditor of CPU, at any time in that 12 months.
ARTICLE 5
ADDITIONAL COVENANTS AND AGREEMENTS
Purchasers and Seller hereby covenant and agree that:
5.1 CONFIDENTIALITY. Each party to this Agreement shall hold, and shall
cause its respective subsidiaries and their directors, officers, employees,
agents, consultants and advisors to hold, in strict confidence and not used for
any purpose that would violate Section 5.6 of this Agreement or for any purpose
which is directly or indirectly detrimental to the disclosing party or any of
its respective Affiliates, unless disclosure to a banking or other regulatory
authority is necessary or appropriate or unless compelled to
disclose by judicial or administrative process or, in the written opinion of its
counsel, by other requirement of law or the applicable requirements of any
regulatory agency or relevant stock exchange, all non-public records, books,
contracts, reports, instruments, computer data and other data and information
(collectively, "INFORMATION") concerning the other party (or, if required under
a contract with a third party, such third party) furnished it by such other
party or its representatives pursuant to this Agreement, except to the extent
that such Information can be shown to have been (a) previously known by such
party on a non-confidential basis, (b) available to such party on a
non-confidential basis from a source other than the disclosing party, (c) in the
public domain through no fault of such party or (d) later lawfully acquired from
other sources by the party to which it was furnished, and none of the parties
shall release or disclose such Information to any other person, except its
auditors, attorneys, financial advisors, bankers, other consultants and advisors
and, to the extent permitted above, to bank regulatory authorities. In the event
that a party to this Agreement becomes compelled to disclose any Information in
connection with any necessary regulatory approval or by judicial or
administrative process, such party shall provide the party who provided such
Information (the "DISCLOSING PARTY") with prompt prior written notice of such
requirement so that the Disclosing Party may seek a protective order or other
appropriate remedy. In the event that such protective order, or other remedy is
not obtained, only that portion of the Information which is legally required to
be disclosed shall be so disclosed. Each party agrees that the provisions of
this Section 5.1 are (i) supported by adequate consideration, (ii) reasonable
and appropriate in the context of the transactions covered by this Agreement,
and (iii) necessary for protection of the business and prospects of the parties.
Each party agrees that any breach of such provisions would cause irreparable
injury to the other party that would not be adequately remediable in damages.
Accordingly, each party agrees that any breach of its obligations under this
Section 5.1 shall, in addition to any other relief to which the other party may
be entitled, entitle the other party to temporary, preliminary and final
injunctive relief against further breach of such obligations, without the
posting of any bond.
5.2 CONDUCT OF BUSINESS BY THE COMPANIES. During the period from the date
of this Agreement and continuing through the Closing Date, except as expressly
permitted or required by this Agreement or with the prior written consent of
Purchaser, Seller shall cause each of the Companies to (i) carry on its business
in the Ordinary Course of Business, (ii) not shorten or lengthen the customary
payment cycles for any of its payables or receivables; (iii) not make capital
expenditures unless substantially in conformance with its budget therefore, (iv)
not enter into any transaction with Seller or any of its Affiliates other than
in the Ordinary Course of Business, (v) use its commercially reasonable efforts
to (A) preserve intact the business organization of such Company, (B) keep
available to Purchasers the services of the employees of such Company (other
than employee departures arising by reason of terminations where appropriate in
accordance with such Company's past practice), (C) continue in full force and
effect without material modification all existing policies or binders of
insurance currently maintained in respect of such Company and its business
operations, (D) preserve its current relationships with its customers, suppliers
and other persons with which it has had significant business relationships,
which efforts shall not include the payment of any additional consideration to
such customer, supplier or person, (E)
continue without material modification all programs for the benefit of
employees, and (F) be in compliance with, and maintain the effectiveness of, all
licenses and permits of such Company, and (vi) not transfer, sell, convey or
distribute any of its assets, except as described in SECTION 5.2 of the Seller's
Disclosure Schedule.
5.3 AGREEMENT TO DEFEND. In the event any action, suit, proceeding or
investigation is instituted to restrain or prohibit the consummation of the
transactions contemplated under this Agreement, whether before or after the
Effective Date, all the parties hereto agree to cooperate and use their best
efforts to defend against and respond thereto.
5.4 PUBLIC ANNOUNCEMENTS. CPU and CPUUS, on the one hand, and Seller and
the Companies, on the other hand, shall consult with each other before issuing,
and shall provide each other the opportunity to review and comment upon, any
press release or other public statements with respect to the Transactions,
including the identity of the parties and the consideration paid hereunder, and
shall not issue any such press release or make any such public statement prior
to such consultation and without receiving the other party's consent, except as
may be required by applicable Law, court process or by obligations pursuant to
any listing agreement with any national securities exchange. This Section 5.4
shall survive the Closing or termination of this Agreement for any reason.
5.5 FURTHER ASSURANCES. From time to time after the Effective Date, at
Purchasers' request and without further consideration from Purchasers, Seller
shall execute and deliver such other instruments of conveyance and transfer and
take such other action as Purchasers reasonably may require to convey, transfer
to and vest in Purchasers and to put Purchasers in possession of the Shares in
accordance with the terms of this Agreement.
5.6 NON-COMPETITION AGREEMENT.
(a) During the period commencing on the Closing Date and ending on the
fifth (5th) annual anniversary of the Closing Date (the "RESTRICTED
PERIOD"), subject to Section 5.6(c), Seller shall not, and Seller shall not
permit its Affiliates to:
(i) engage, directly or indirectly, in a Competing Business
(other than as a holder of less than five percent (5%) of the common
stock of any publicly traded corporation, partner or holder of any
other ownership interest in the Competing Business);
(ii) solicit or direct to any other Person any customer or
prospective customer of the Companies for Competing Business services;
or
(iii) hire any officer, employee, director or consultant of an
Affiliate of CPUUS that operates a Competing Business or either
Company or solicit or encourage such a Person to leave the employ of
an Affiliate of CPUUS that operates a Competing Business or either
Company for alternative
employment with Seller or its Affiliates or any other Person unless
such Person is terminated by a Company or Purchasers after the
Closing; or
(iv) allow the use by the Excluded Entities of the Fairway
System, the Delta Vantage System, the STS System or the SINQ System in
any way in a Competing Business anyplace in the world;
provided, however, that this Section 5.6 shall not prohibit the ownership
and operation by Seller or its Affiliates of a Competing Business as a
result of Changed Circumstances applicable to such Person so long as such
Person and its Affiliates comply with the provisions of Section 5.6(c).
Additionally, notwithstanding anything contained herein, Seller may use the
Fairway System, the Delta Vantage System, the STS System or the SINQ System
in any way, including allowing the use of such systems by its Affiliates
and the Excluded Entities or other parties in any manner which does not
otherwise violate the terms of this Section 5.6 or the terms of any
Ancillary Agreement.
(b) The term "CHANGED CIRCUMSTANCES" for purposes of this Section 5.6
shall mean: (i) an acquisition by Seller or an Affiliate of a previously
unaffiliated Person conducting a Competing Business which generates
revenues in an amount equal to at least five percent (5%) of EQS's
revenues; (ii) an acquisition of Seller or an Affiliate by a previously
unaffiliated Person conducting a Competing Business which generates
revenues in an amount equal to at least five percent (5%) of EQS's
revenues; or (iii) a merger, consolidation or other business combination by
and between Seller and a previously unaffiliated Person conducting a
Competing Business which generates revenues in an amount equal to at least
five percent (5%) of EQS's revenues. Notwithstanding any other terms of
this Agreement, Changed Circumstances shall not include a transaction in
which Seller or any Affiliate acquires, by purchase, merger or other form
of transaction, a Person with respect to which revenues from a Competing
Business for the twelve month period immediately prior to the acquisition
comprised more than fifty percent (50%) of the total revenues of such
Person.
(c) During any such time as Seller or any of its Affiliates may own a
Competing Business due to Changed Circumstances, until the expiration of
the Restricted Period or the acquisition of such Competing Business by CPU,
such Persons shall not, and shall cause their Affiliates to refrain from
(i) soliciting, or accepting any offer to provide Competing Business
services of any kind to, any Person that is a customer of either Company at
the time such Changed Circumstances occur and has paid fees to the Company
within the twelve (12) month period preceding the Changed Circumstances,
(ii) hiring any officer, employee, director or consultant of either Company
or an Affiliate of CPUUS that operates a Competing Business unless such
Person is terminated by either Company or such Affiliate after the Changed
Circumstances, or (iii) using, directly or indirectly, the Fairway System,
the Delta Vantage System, the STS System or the SINQ System in any way in
the Competing Business anyplace in the world.
(d) Within five (5) Business Days following the closing of any
transaction resulting in Changed Circumstances, Seller shall provide notice
thereof to CPU. Such notice shall include a summary of the price paid for
the Competing Business (if such a price has been separately negotiated) and
an offer to sell such Competing Business to CPU at such price, or at a
price negotiated by the parties at such time; provided Seller has the legal
right, authority or power to effect such an offer. For a period of twenty
(20) Business Days following its receipt of such notice, CPU shall have the
right and option to (i) conduct reasonable due diligence on the operations
of such Competing Business and (ii) purchase such Competing Business. The
terms and conditions of such sale (other than price) shall be substantially
identical to the terms and conditions of such transaction to the extent
such terms and conditions can be allocated to the Competing Business and if
not, upon reasonable terms and conditions negotiated by the parties at such
time. In the event the price and other terms of the transaction resulting
in Changed Circumstances have not been separately negotiated, and Seller
and CPU cannot agree upon reasonable price and other terms, then neither
party will be required to enter in to a transaction for the sale of the
Competing Business to CPU.
(e) Notwithstanding the foregoing restrictions, if (a) a customer of
Seller or an Affiliate requires Seller or an Affiliate to provide Competing
Business services to such customer as a condition of Seller's or an
Affiliate's continued receipt of business from the customer or as a
condition of Seller's or an Affiliate's acquiring new business from the
customer and (b) revenues derived from such business from such customer are
reasonably projected by Seller or an Affiliate to exceed the revenues
derived from the Competing Business services provided to such customer,
then Seller or an Affiliate may provide the Competing Business services to
such customer without violation of this restrictive covenant; provided,
that (x) Seller or an Affiliate notifies EQS in writing that it is
performing such services within thirty (30) days after such services begin,
(y) Seller or an Affiliate pays EQS a monthly fee in an amount equal to
thirty percent (30%) of all revenues billed to such customer each month for
Competing Business services during the Restricted Period, and (z) Seller
and its Affiliates comply with the terms of the Ancillary Agreements. In
the event services are bundled, the fees charged by Seller or an Affiliate
for Competing Business services shall be deemed to be equal to the
Companies' published rates. Seller shall not, and shall cause its
Affiliates not to, solicit Competing Business from existing or prospective
customers and, except as set forth in the immediately preceding sentence,
shall not accept Competing Business from existing or prospective customers.
(f) If at any time the provisions of this Section 5.6 shall be
determined to be invalid or unenforceable, by reason of being vague or
unreasonable as to area, duration or scope of activity or otherwise, this
Section 5.6 shall be considered divisible and shall become and be
immediately amended to relate only to such area, duration and scope of
activity as shall be determined to be reasonable and enforceable by a court
or other body having jurisdiction over the matter; and this Section 5.6 as
so amended shall be valid and binding as though
any invalid or unenforceable provision had not been included herein. EQS
and Purchasers shall be entitled to specific performance of the provisions
of this Section 5.6 in addition to any other remedies that it or they may
have at law or in equity.
(g) Seller agrees that the provisions of this Section 5.6 are (i)
supported by adequate consideration, (ii) reasonable and appropriate in the
context of the transactions covered by this Agreement, and (iii) necessary
for protection of the business and prospects of the Purchasers and EQS.
Seller agrees that any breach of such provisions would cause irreparable
injury to the Purchasers and EQS that would not be adequately remediable in
damages. Accordingly, Seller agrees that any breach of its obligations
under this Section 5.6 shall, in addition to any other relief to which the
Purchasers and EQS may be entitled, entitle the Purchasers and EQS to
temporary, preliminary and final injunctive relief against further breach
of such obligations, without the posting of any bond.
(h) Notwithstanding the foregoing terms of this Section 5.6, nothing
in this Agreement shall be construed to prohibit (i) Seller and its
Affiliates from providing any services to each other solely for their own
account, (ii) Seller from providing services that are not a Competing
Business service, or (iii) continue to service the customers set forth on
Section 5.11 of Seller's Disclosure Schedule in the event such customers do
not consent to the transfer of such customer contracts to EQS or
Purchasers. For purposes of additional clarity, Swingvote LLC shall not be
deemed to be a Competing Business for so long a Seller and its Affiliates
do not control such Persons and Seller shall not be in violation of this
Section 5.6 if a Competing Business acquired by Seller or any of its
Affiliates as a going concern generates revenues in an amount less than
five percent (5%) of EQS's revenues.
5.7 THIRD PARTY CONSENTS. Seller shall, and shall cause each Company to,
use its commercially reasonable efforts to obtain all Consents set forth in
SECTIONS 3.5 and 3.10(b) of the Seller's Disclosure Schedule and will cooperate
fully with Purchasers in promptly seeking to obtain all such Consents, which
efforts shall not include the payment of any additional consideration (except as
otherwise agreed by the parties in writing). CPU shall use its commercially
reasonable efforts to obtain all Consents set forth in SECTION 4.5 of the
Purchaser's Disclosure Schedule and will cooperate fully with Seller in promptly
seeking to obtain such Consents, which efforts shall not include the payment of
any additional consideration, except for the payment of any fees payable to
Governmental Authorities in connection with Governmental Approvals. In the
event, that, on the Effective Date, there are contracts for which a consent to
the Transactions has not been obtained, then, in addition to the foregoing,
until such time as such consent is obtained or is not otherwise obtainable,
Purchasers and Seller shall use their reasonable efforts to (i) obtain such
consent, (ii) provide to the Companies the benefits and burdens of the contract
to which such consent relates, and (iii) cooperate in any reasonable and lawful
arrangement designed to provide such benefits to the Companies.
5.8 REQUIRED APPROVALS. Between the date of this Agreement and the Closing
Date:
(a) CPU will promptly, and in no event later than five (5) business
days after the Effective Date, (i) prepare and file all applications and
other instruments required to obtain approvals from all Governmental
Authorities (including all filings under the HSR Act and all approvals from
the OCC and other appropriate bank regulatory authorities) and pursue the
approval thereof diligently, (ii) comply with all informational requests
and conditions of regulators in connection with such applications that may
be necessary for approval by applicable regulatory authorities that would
not have a detrimental effect on the Purchasers, and (iii) CPU will keep
Seller promptly and fully apprised of all material communications in
connection with any such application process, and will authorize
representatives of Seller to communicate with the OCC regarding the
application process or any notice in connection therewith only after Seller
notifies CPU and allows CPU to participate in any such communication.
(b) Seller with promptly, and in no event later than five (5) business
days after the Effective Date, (i) prepare and file all applications and
other instruments that Seller is required to file to obtain approvals from
all Governmental Authorities (including all filings under the HSR Act) and
pursue the approval thereof diligently, (ii) comply with all informational
requests and conditions of regulators in connection with such applications
that may be necessary for approval by applicable regulatory authorities
that would not have a detrimental effect on the Seller, and (iii) will keep
CPU promptly and fully apprised of all material communications in
connection with any such application process.
(c) Seller will (i) cooperate with Purchasers with respect to all
filings that Purchasers elect to make or are required by law to make in
connection with transactions contemplated hereby, and (ii) cooperate with
Purchasers in obtaining all required consents (including taking all actions
requested by Purchasers to cause early termination of any applicable
waiting period under the HSR Act).
5.9 ACCESS TO INFORMATION; ADDITIONAL INFORMATION AND DELIVERY OF FINANCIAL
STATEMENTS.
(a) Subject to compliance with applicable Laws, from the date hereof
until the Closing Date, Seller shall use commercially reasonable efforts to
promptly: (i) give CPU and its counsel, financial advisors, auditors and
other authorized representatives reasonable access during normal business
hours to the offices, facilities, properties, books and records relating to
the Companies and their business operations upon reasonable prior notice;
(ii) furnish to CPU and its counsel, financial advisors, auditors and other
authorized representatives such information relating to the Companies and
their business operations as CPU may reasonably request; and (iii) instruct
the directors, officers, employees, counsel,
auditors and financial advisors of the Companies to use commercially
reasonable efforts to (A) assist the Companies and their representatives in
transition planning and (B) cooperate with CPU and its counsel, financial
advisors, auditors and other authorized representatives in their
investigation of the Companies and their business operations.
(b) As promptly as practicable after the end of each calendar month,
but in no event after the fifteenth (15th) Business Day of the following
month) prior to the Closing, Seller shall cause EQS to provide CPU with the
unaudited monthly consolidated income statements and balance sheets for EQS
as at such month-end, and for the month ending on the date of such
month-end. Upon delivery thereof, such monthly statements shall be included
within the term "Interim Financial Statements" and, as such, shall be
subject to the representations set forth in Section 3.12 hereof.
5.10 CUSTOMER VISITS. Between the date hereof and the Closing, Seller
shall, and shall cause representatives of the Companies to, use commercially
reasonable efforts to arrange for meetings with each of the customers set forth
in Section 3.16 of the Purchasers' Disclosure Schedule to discuss such
customer's relationship with the Companies and the Transactions and shall
accompany CPU on such meetings.
5.11 TRANSFER OF CERTAIN AGREEMENTS. Prior to the Closing, Seller and its
Affiliates shall use commercially reasonable efforts to transfer to the
Companies those customer agreements and benefits and obligations that are
allocable to products used by EQS under third party enterprise license and
vendor agreements described in Section 5.11 of Seller's Disclosure Schedule. At
the Closing, Seller and its Affiliates shall transfer to a U.K. Affiliate of CPU
the U.K. customer agreement set forth in Section 5.11 of the Seller's Disclosure
Schedule subject to the customer's right to consent, if any. Purchasers agree to
cause the Companies not to terminate any such agreement that is a customer
agreement before the expiration of the term of such agreement; provided,
however, if the remaining term of such agreement is less than one (1) year,
Purchasers shall cause the Companies not to terminate such agreement for twelve
(12) months from the Closing Date.
5.12 LITIGATION AND TAX SUPPORT. In the event and for so long as any party
actively is contesting or defending against any Claim (including any Tax audit
or similar proceeding) in any such case in connection with (a) the Transactions
or (b) any fact, situation, circumstance, status, condition, activity, practice,
plan, occurrence, event, incident, action, failure to act or transaction on or
prior to the Closing Date involving the Companies, each party shall cooperate,
to the extent commercially reasonable, with the other party and their counsel in
the contest or defense, make its personnel reasonably available, and provide
such testimony and access to its books and records as shall be reasonably
necessary in connection with the contest or defense, all at the sole cost and
expense of the contesting or defending party (unless the contesting or defending
party is entitled to indemnification therefor under this Agreement). Each party
shall similarly cooperate with the other party in connection with the
preparation of any Returns to be prepared by the other party related to the
Companies.
5.13 NO SOLICITATION OF OTHER BIDS. Seller and its Affiliates shall not,
nor shall any of them authorize or permit any of their officers, directors or
employees or any investment banker, attorney, accountant or other representative
retained by any of them to (a) solicit, initiate, continue or encourage any
Other Bid, (b) enter into any agreement with respect to any Other Bid, (c)
participate in any discussions or negotiations regarding, or furnish to any
person any information with respect to, or take any other action to facilitate
any inquiries or the making of any proposal that constitutes, or may reasonably
be expected to lead to, any Other Bid, (d) enter into a recapitalization,
reorganization or any other extraordinary business transaction involving or
otherwise relating to either Company or its business operations or (e) enter
into any other arrangement with any other party, the purpose of which is to
prevent the consummation of the Transactions. Without limiting the foregoing, it
is understood that any violation of the restrictions set forth in the preceding
sentence by any executive officer of Seller or its Affiliates, or any Person
acting at their direction, shall be deemed to be a breach of this Section 5.13
by Seller. Seller agrees not to, without the prior written consent of CPU,
release any Person from, or waive any provision of, any confidentiality or
standstill agreement to which Seller is a party that is related to the
Companies.
5.14 ALLOCATION OF TAX LIABILITIES.
(a) Seller shall be liable and be responsible for all Taxes relating
to the Companies regardless of when due and payable, (i) with respect to
all Tax periods ending on or prior to the Closing Date, and (ii) for the
portion of such period up to and including the Closing Date.
(b) EQAC will be liable and responsible for all Taxes relating to the
Companies regardless of when due and payable with respect to all periods or
any portion thereof subsequent to the Closing Date.
5.15 TAX RETURNS.
(a) Seller will include the income or loss of the Company for all
periods ending on or before the Closing Date on Seller's timely filed
income Tax Returns and will file all such Returns when due (including
extensions). Seller will cause to be prepared, and will cause to be filed
when due (including any extensions), all income Tax Returns of the
Companies for all Tax periods ending on or before the Closing Date, for
which such Returns have not been filed as of the Closing Date. Seller will
cause all such Returns to be accurate and complete in accordance with
applicable Laws and to be prepared on a basis consistent with the Returns
filed by or on behalf of the Companies for the preceding Tax period. Where
such Returns must be filed by the Companies, upon Seller's reasonable
request EQAC will cause such Returns to be filed when due (including any
extensions).
(b) Seller will cause to be prepared, and will cause to be filed when
due (including any extensions), all non-income Tax Returns of the Companies
for all Tax periods ending on or before the Closing Date. Seller will cause
all such
Returns to be accurate and complete in accordance with applicable Laws and
to be prepared on a basis consistent with the Returns filed by or on behalf
of the Companies for the preceding Tax period. Where such Returns must be
filed by the Companies, upon Seller's reasonable request EQAC will cause
such Returns to be filed when due (including any extensions). All
non-income Tax Returns of the Companies for periods ending after the
Closing Date (including those for which a portion of such period occurred
prior to the Closing Date) will be prepared by Purchaser.
(c) Except as otherwise provided in this Section 5.15, EQAC will
prepare and file when due (including any extensions) all other Returns of
the Companies that include a period after the Closing Date; provided,
however, that Seller will have the right to review and provide reasonable
comments (prior to filing) with respect to all income Tax Returns that
include the Closing Date or any period prior to the Closing Date.
(d) For purposes of this Section 5.15, in the case of any Taxes that
are imposed on a periodic basis and are payable for a Tax period that
includes (but does not end on) the Closing Date, the portion of such Tax
related to the Tax period ending on the Closing Date will (i) in the case
of Taxes other than Taxes based upon or related to income, sales, gross
receipts, wages, capital expenditures, expenses or any similar Tax base, be
deemed to be the amount of such Tax for the entire period multiplied by a
fraction, the numerator of which is the number of days in the Tax period
ending on the Closing Date and the denominator of which is the number of
days in the entire Tax period, and (ii) in the case of any Taxes based upon
or related to income, sales, gross receipts, wages, capital expenditures,
expenses or any similar Tax base, be deemed equal to the amount that would
be payable if the relevant Tax period ended on the Closing Date. All
determinations necessary to give effect to the foregoing allocations will
be made in a manner consistent with prior practice of the Companies.
5.16 TAX COOPERATION. After the Closing Date, EQAC and Seller will make
available to the other, as reasonably requested, all information, records or
documents (including state apportionment information) relating to Tax
liabilities or potential Tax liabilities of the Companies with respect to (i)
Tax periods ending on or prior to the Closing Date, and (ii) Tax periods
beginning before the Closing Date, and ending after the Closing Date, but only
with respect to the portion of such period up to and including the Closing Date.
EQAC and Seller will preserve all such information, records and documents until
the expiration of any applicable statute of limitations thereof. EQAC will
prepare and provide to Seller any information or documents reasonably requested
by Seller for Seller's use in preparing or reviewing the Returns referred to in
Section 5.15. Notwithstanding any other provision hereof, each party will bear
its own expenses in complying with the foregoing provisions.
5.17 TAX REFUNDS.
(a) All refunds of Taxes relating to the Companies received by Seller,
the Companies, Purchasers or any of their Tax Affiliates with respect to
Tax periods ending on or before the Closing Date or involving Seller's
consolidated returns will be for the account of Seller. At Seller's
request, EQAC will pay over to Seller any such refunds that EQAC may
receive, as well as the cash value of any deductions available to EQAC in
connection with the exercise of Seller stock options after the Closing,
computed at an assumed 40% tax rate, immediately upon receipt of such
request. Any refunds due to Seller pursuant to this Section 5.17(a) shall
be payable within thirty days of receipt of such refund by Companies,
Purchasers or any of their Tax Affiliates.
(b) All other refunds of Taxes with respect to the Companies will be
for the account of EQAC. At EQAC's request, Seller will take such action as
reasonably requested by EQAC to obtain such refunds and will pay over to
EQAC any such refunds immediately upon receipt thereof.
(c) All refunds of Taxes which relate to both periods before and after
the Closing shall be apportioned between EQAC and Seller based upon the
allocation method described in Sections 5.15.
5.18 TAX SHARING AGREEMENTS. All tax sharing agreements between Seller, on
the one hand, and either Company on the other hand, shall be terminated as of
the Closing Date after normal operations but before the "deemed sale of assets"
under Code Section 338(h)(10).
5.19 INCENTIVE COMPENSATION. After the Closing Date, Purchasers will pay,
or cause the Companies to pay, any bonuses or other incentive compensation that
have been accrued for on the Closing Date Balance Sheet.
5.20 FURTHER ASSURANCES; COOPERATION. From and after Closing, Purchasers
shall cooperate with Seller and provide Seller all reasonable information,
including, but not limited to, tax, financial and operational information, to
the extent Seller needs such information to make all filings with Governmental
Authorities.
5.21 EMPLOYEE BENEFITS.
(a) RETAINED PLANS. Effective as of the Closing Date, the Companies
shall cease to be participating employers in any Benefit Plan maintained by
the Seller or any of its ERISA Affiliates (other than the Companies) prior
to the Closing Date, whether or not disclosed under this Agreement or in
any Schedule (the "Retained Plans"). The Seller shall take all actions
necessary to effectuate such withdrawal of the Companies as participating
employers in the Retained Plans without any further liability or obligation
to the Companies; provided, that Purchasers shall cause all amounts accrued
on the Closing Date Balance Sheet for contributions to Retained Plans to be
paid by the
Companies to Seller within five (5) business days after written request by
Seller. The benefits of (i) those individuals actively employed by the
Companies as of the Closing Date and (ii) those individuals who are on an
approved leave of absence as of the Closing Date, whose last employment was
with the Companies and who are expected to return to employment with the
Companies (collectively, "Company Employees"), or of any persons claiming
through such Company Employees, shall be administered in accordance with
the terms of the Retained Plans, except to the extent otherwise set forth
herein. Except as expressly provided by the terms of the Retained Plans,
benefits of all Company Employees in the Retained Plans shall be
discontinued as of the Closing Date. CPU agrees to take all actions
necessary to ensure that a qualified retirement plan sponsored by
Companies, or by an ERISA Affiliate of the Companies, following the Closing
Date, shall accept direct rollovers of distributions made to the Company
Employees from the Seller 401(k) Profit Sharing, including rollovers of
participant loans and related promissory notes.
(b) COMPANY PLANS. The Companies shall continue to maintain any
Benefit Plan maintained by the Companies for Company Employees only prior
to the Closing Date, whether or not disclosed under this Agreement or in
any Schedule (the "Company Plans"), on and after the Closing Date, and such
Company Plans shall not be Retained Plans as described in Section 5.20(a).
Company Plans shall include, but shall not be limited to, the EQS 401(k)
Retirement Plan, the EQS Employee Assistance Program, and the Boston EQS,
L.P. Deferred Compensation Plan. Seller shall have no liability or
obligations with respect to any Company Plan on or after the Closing Date
except for a breach of representation covered by Section 8.1.
(c) CODE SECTION 125 PLAN. Seller shall take all actions necessary to
effectuate a "spin-off," effective as of the Closing Date, of that portion
of the DST Systems, Inc. Flexible Benefit Program (the "DST Flex Plan")
consisting of the elections and account balances of Company Employees to a
plan sponsored by CPU or any CPU Affiliate which is substantially similar
to the Seller Flex Plan (the "Company Flex Plan").
(d) WELFARE PLANS. Effective as of the Closing Date, CPU shall
establish employee welfare benefit plans maintained by CPU or any of its
ERISA Affiliates (the "CPU Welfare Plans"), including, but not limited to,
medical, dental, disability and group life insurance plans, which shall:
(i) provide coverage to Company Employees and their spouses and eligible
dependents effective as of the Closing Date which is substantially similar
to coverage provided to similarly-situated employees of CPU's operations in
the United States, (ii) provide credit to Company Employees for prior
service with the Seller and any of its ERISA Affiliates for purposes of any
waiting periods under the CPU Welfare Plans, and (iii) with respect to
medical and dental benefits, waive any pre-existing condition limitations
(to the extent such limitations were not applicable under the Retained
Plans immediately prior to the Closing Date). The CPU Welfare Plans shall
be responsible and liable for all claims for health, accident, sickness and
disability
benefits and workers compensation claims that are deemed incurred after the
Closing Date by Company Employees. Seller and the Retained Plans shall
remain responsible and liable for all similar claims that are deemed
incurred by Company Employees on or prior to the Closing Date, to the
extent such claims are otherwise covered by the terms of the Retained
Plans. For purposes of this Section 5.21(d): (i) a claim for health
benefits (including, without limitation, claims for medical, prescription
drug, dental, and vision care expenses) will be deemed to have been
incurred on the date on which the related medical service or material was
rendered to, prescribed or received by the Company Employee claiming such
benefit, (ii) a claim for sickness or disability benefits or workers
compensation will be deemed to have been incurred on the date on which such
injury or illness giving rise to such claim occurred, and (iii) in the case
of any claim for benefits other than health benefits and sickness and
disability benefits (e.g., life insurance benefits), a claim will be deemed
to have been incurred upon the occurrence of the event giving rise to such
claim.
(e) COBRA. The Seller shall be responsible for complying with all
obligations under Part 6, Subtitle B of Title I of ERISA, as amended
("COBRA"), with respect to Company Employees and other "qualified
beneficiaries" who incur a "qualifying event" under a Retained Plan on or
prior to the Closing Date. CPU shall be responsible for complying with all
COBRA obligations with respect to any Company Employee and other qualified
beneficiaries under the CPU Welfare Plans as a result of any qualifying
events occurring after the Closing Date.
(f) BONUS AND INCENTIVE PLANS. After the Closing Date, Purchasers will
pay, or cause the Companies to pay, any bonuses or other incentive
compensation that have been accrued for on the Closing Date Balance Sheet.
(g) STOCK OPTIONS AND RESTRICTED STOCK. Seller may, at its sole
option, extend the exercise period for stock options held by Company
Employees as of the Closing Date for an additional period following the
Closing Date and may accelerate the vesting of certain restricted stock
held by Company Employees as of the Closing Date.
5.22 PRE-CLOSING DISCLOSURE. Seller shall immediately disclose to
purchasers any fact, event or circumstance that has a Material Adverse Effect
with respect to the Companies.
5.23 CERTAIN IT EMPLOYEES. Prior to or at the Closing, Seller shall effect
the transfer of employment to EQS of up to fifty (50) Seller information
technology employees that prior to Closing have been dedicated to support of EQS
desktop systems at EQS's facility.
ARTICLE 6
CONDITIONS PRECEDENT TO CLOSING
6.1 CONDITIONS PRECEDENT - ALL PARTIES. The obligations of the parties to
effect the sale and purchase of the Shares shall be subject to satisfaction of
the following conditions at or prior to the Closing.
(a) None of the parties shall be subject to any statute, rule,
regulation, injunction or other order or decree which shall have been
enacted, entered, promulgated or enforced by any governmental entity or
court of competent jurisdiction which prohibits, prevents or makes illegal
completion of the sale and purchase of the Shares or the consummation of
the Transactions;
(b) No proceeding initiated by any Governmental Authority or any other
Person seeking an order, injunction or decree issued by any court or agency
of competent jurisdiction or other legal restraint or prohibition
preventing the completion of the sale and purchase of the Shares shall be
pending or threatened;
(c) All required consents of Governmental Authorities and approvals
shall have been obtained, including filings pursuant to the HSR Act and the
CIBCA; and
(d) All of the Ancillary Agreements shall have been executed and
delivered by the parties thereto.
6.2 CONDITIONS PRECEDENT - SELLER. The obligations of Seller to effect the
sale and transfer of the Shares shall be subject to satisfaction of the
following conditions at or prior to the Closing.
(a) The representations and warranties of Purchasers set forth in
Article 4 hereof shall be true and correct as of the date of this Agreement
and in all material respects as of the Closing as though made anew as of
the Closing, unless in the latter case the representation and warranty
specifically relates to an earlier date;
(b) Purchasers shall have performed in all material respects all
obligations and complied in all material respects with all covenants and
agreements required to be performed and complied with by it pursuant to
this Agreement at or prior to the Closing;
(c) Seller shall have been released from any and all guarantees of
obligations relating to EQS or EquiServe Trust described in SECTION 6.2(C)
of the Seller's Disclosure Schedule;
(d) Seller shall have received from Purchasers the documents to be
delivered to Seller pursuant to Section 2.4;
(e) Each of Purchasers shall have delivered to Seller a certificate,
dated as of the Closing and signed by a duly authorized officer, to the
effect that the conditions set forth in Sections 6.2(a) and 6.2(b) have
been satisfied.
6.3 CONDITIONS PRECEDENT - PURCHASERS. The obligations of Purchasers to
effect the sale and transfer of the Shares shall be subject to satisfaction of
the following conditions at or prior to the Closing.
(a) The representations and warranties of Seller set forth in Article
3 hereof shall be true and correct as of the date of this Agreement and in
all material respects as of the Closing as though made anew as of the
Closing, unless in the latter case the representation and warranty
specifically relates to the Effective Date or to another date;
(b) Seller shall have performed in all material respects all
obligations and complied in all material respects with all covenants and
agreements required to be performed and complied with by it pursuant to
this Agreement at or prior to the Closing;
(c) Purchasers shall have received from Seller the documents to be
delivered to Purchaser pursuant to Section 2.4;
(d) Since the date of the Agreement, there shall not have occurred any
Material Adverse Effect with respect to the Companies;
(e) Seller shall have delivered to Purchasers a certificate, dated as
of the Closing and signed by a duly authorized officer, to the effect that
the conditions set forth in Sections 6.3(a) and 6.3(b)have been satisfied.
ARTICLE 7
TERMINATION
7.1 TERMINATION. This Agreement may be terminated:
(a) at any time prior to the Closing, by the mutual consent in writing
of Purchasers and Seller;
(b) at any time prior to the Closing, by Purchasers in writing if
Seller has breached in any material respect any material covenant or
undertaking contained herein or any material representation or warranty
contained herein,
unless such breach has been cured within thirty (30) days after written
notice of such breach;
(c) at any time prior to the Closing, by Seller in writing if
Purchasers have breached in any material respect any material covenant or
undertaking contained herein or any material representation or warranty
contained herein, unless such breach has been cured within thirty (30) days
after written notice of such breach;
(d) at any time prior to the Closing, by either Purchasers or Seller
in writing if any governmental entity or court of competent jurisdiction
shall have issued a final nonappealable order enjoining or otherwise
prohibiting the completion of the sale and purchase of the Shares pursuant
to this Agreement;
(e) at any time prior to the Closing, by Seller in writing if (i)
Purchasers have not obtained regulatory approval within six months of
filing a technically complete Corporate Background and Financial Report
Form, and other related documents and filings pursuant to the CIBCA, or
(ii) if a Corporate Background and Financial Report Form (the "Notice") has
not been filed prior to the date set forth in Section 5.8(b), or , if
additions or changes to the Notice are requested by the OCC in order to
make it technically complete, within ten (10) business days after the date
of such request by the OCC.
(f) and if Seller terminates this Agreement pursuant to Section 7.1(c)
or (e) (unless, with respect to a termination under Section 7.1(e), the
Seller is the cause of the failure to obtain any such regulatory approval),
Seller shall be entitled to liquidated damages in the amount of Twenty
Million Dollars ($20,000,000), payable by Purchasers, in cash, immediately
upon demand by Seller. If Purchasers terminate this Agreement pursuant to
Section 7.1(b), Purchasers shall be entitled to liquidated damages in the
amount of Twenty Million Dollars ($20,000,000) payable by Seller, in cash,
immediately upon demand by Purchaser. The parties agree that the foregoing
is intended as an estimate of their actual losses in such an event, which
will be difficult to calculate, and not as a penalty, and that the payment
of the foregoing liquidated damages shall be the sole and exclusive remedy
for termination of this Agreement as described in this paragraph. Prior to
the exercise of any termination rights under this Article 7, the chief
executive officers of the parties shall discuss with each other reasonable
alternatives that may be available for restructuring the Transactions to
avoid termination.
ARTICLE 8
INDEMNIFICATION
8.1 INDEMNITY BY SELLER.
(a) Subject to Section 8.1(b), Seller agrees to indemnify Purchasers,
their Affiliates (including, after the Closing, the Companies) and their
respective employees, officers, directors, controlling persons, successors
and assigns, harmless from and with respect to any and all claims,
liabilities, losses, damages, costs and expenses, including without
limitation the reasonable fees and disbursements of counsel and expert
witnesses (collectively, the "PURCHASERS' LOSSES"), related to or arising
directly or indirectly out of (i) any inaccuracies in any representation or
warranty made by Seller in this Agreement, (ii) any failure or breach by
Seller of any covenant, obligation, or undertaking made by Seller in this
Agreement or (iii) any Identified Liability.
(b) Except for Purchasers' Losses arising directly from a
misrepresentation or breach under Sections 3.1, 3.2, 3.3, 3.4, 5.6, 5.14,
5.16, 5.17 and 5.21, no Claim may be made under Section 8.1(a)(i) after the
second annual anniversary of the Closing Date (the "INDEMNIFICATION
Period"). Seller shall have no liability under Section 8.1(a) or otherwise
pursuant to this Agreement or arising out of the Transactions for any claim
resulting in Purchasers' Losses of less than $10,000 and until the total
aggregate of Purchasers' Losses exceeds the Minimum Threshold Amount, and
then only for the amount by which Purchasers' Losses exceed the Minimum
Threshold Amount. The total liability of Seller under Section 8.1(a)(i) or
otherwise pursuant to this Agreement or arising out of the Transactions
shall not exceed, in the aggregate, $15,000,000. However, the foregoing two
sentences of this Section 8.1(b) shall not apply to Claims pursuant to
Section 8.1(a)(iii) or any breach of the representations and warranties or
covenants or agreements set forth in Sections 2.15, 3.1, 3.2, 3.3, 3.4,
5.6, 5.14, 5.16, 5.17, 5.21 and Section 7.1 (f) hereof. Any Claim for
Purchasers' Losses arising from, or in connection with, any inaccuracy or
misrepresentation in, or breach of any representation or warranty or
covenant or agreement set forth in Sections 2.15, 3.1, 3.2, 3.3, 3.4, 5.6,
5.14, 5.16, 5.17 and 5.21 shall be limited to, and under no circumstances
shall exceed, in the aggregate, the total value of the Purchase Price on
the Closing Date. For purposes of determining the total value of the
Purchase Price, the value of the CPU Shares on the Closing Date shall be
computed using the average high and low trading price of the CPU Shares on
the ASX on the Closing Date, or the next business day after the Closing
Date, if the markets are closed on the Closing Date.
(c) Notwithstanding the foregoing provisions of Section 8.1, or any
other provision of this Agreement, Seller shall have no obligation for any
of Purchasers' Losses that are recoverable pursuant to (i) the Bank One
Corporation Agreements, or (ii) any insurance policies described in Section
3.18 of Seller's Disclosure Schedule. No waiver or compromise of any rights
by CPU or by EQS after the Closing shall have any effect upon the foregoing
limitation of Seller's obligations
8.2 INDEMNITY BY PURCHASERS.
(a) Subject to Section 8.2(b), Purchasers agree to jointly and
severally indemnify Seller, its Affiliates and their respective employees,
officers, directors, controlling persons, successors and assigns, harmless
from and with
respect to any and all claims, liabilities, losses, damages, costs and
expenses, including without limitation the reasonable fees and
disbursements of counsel and expert witnesses (collectively, the "SELLER'S
LOSSES"), related to or arising directly or indirectly out of (i) any
inaccuracies in any representation or warranty made by Purchasers in this
Agreement, or (ii) any failure or breach by Purchasers of any covenant,
obligation, or undertaking made by Purchasers in this Agreement and (iii)
all guarantees made by Seller or its Affiliate of obligations of EQS or
EquiServe Trust described in SECTION 6.2(C) of the Seller's Disclosure
Schedule.
(b) Except for Seller's Losses arising directly from a
misrepresentation or breach under Sections 2.2(a), 2.2(b), 4.1, 4.2, 4.3 or
4.4, no Claim may be made under Section 8.2(a) after the expiration of the
Indemnification Period. Purchasers shall have no liability under Section
8.2(a)(i) or otherwise pursuant to this Agreement or arising out of the
Transactions for any claim resulting in Seller's Losses of less than
$10,000 and until the total aggregate of Seller's Losses exceeds the
Minimum Threshold Amount and then only for the amount by which Seller's
Losses exceed the Minimum Threshold Amount. The total liability of
Purchasers for indemnification under Section 8.2(a)(i) or otherwise
pursuant to this Agreement or arising out of the Transactions for any
amount of Seller's Losses shall not exceed, in the aggregate, $15,000,000.
However, the foregoing two sentences of this Section 8.2(b) shall not apply
to any breach of the representations and warranties or covenants or
agreements set forth in Sections 2.2(a), 2.2(b), 2.15, 4.1, 4.2, 4.3 and
4.4, and to Section 7.1(f) hereof. Any Claim for Seller's Losses arising
from, or in connection with, any inaccuracy or misrepresentation in, or
breach of any representation or warranty or covenant or agreement set forth
in Sections 2.15, 2.2(a), 2.2(b), 4.1, 4.2, 4.3 or 4.4, shall be limited
to, and under no circumstances shall exceed, in the aggregate, the total
value of the Purchase Price on the Closing Date. The value of the CPU
Shares on the Closing Date shall be computed using the average high and low
trading price of the CPU Shares on the ASX on the Closing Date, or the next
business day after the Closing Date, if the markets are closed on the
Closing Date.
8.3 CLAIMS.
(a) Any party seeking indemnification hereunder (the "INDEMNIFIED
PARTY") shall promptly notify the party hereto obligated to provide
indemnification hereunder (the "INDEMNIFYING Party") of any Claim with
respect to which the Indemnified Party seeks indemnification hereunder,
provided that failure of the Indemnified Party to give such notice shall
not relieve the Indemnifying Party of its obligations under this Article 8
except to the extent, if at all, that such Indemnifying Party shall have
been prejudiced thereby. If such Claim relates to any action, suit,
proceeding or demand instituted against the Indemnified Party by a third
party (a "THIRD PARTY CLAIM"), upon receipt of such notice from the
Indemnified Party the Indemnifying Party shall be entitled to participate
in the defense of such Third Party Claim, and if and only if each of the
following conditions is satisfied, the Indemnifying Party may assume the
defense of such Third Party Claim, and in the case of such an assumption
the
Indemnifying Party shall have the authority to negotiate, compromise and
settle such Third Party Claim: (i) the Indemnifying Party confirms in
writing that it is obligated hereunder to indemnify the Indemnified Party
with respect to such Third Party Claim; and (ii) there is no conflict of
interest which would make separate representation by the Indemnified
Party's own counsel advisable. The Indemnified Party shall retain the right
to employ its own counsel and to participate in the defense of any Third
Party Claim, the defense of which has been assumed by the Indemnifying
Party pursuant hereto, but the Indemnified Party shall bear and shall be
solely responsible for its own costs and expenses in connection with such
participation. The Indemnifying Party shall not, without the prior written
consent of the Indemnified Party, settle or compromise any claim or consent
to the entry of any judgment that (i) does not include as an unconditional
term thereof the giving by the claimant or the plaintiff to the Indemnified
Party a release from all liability in respect of such claim or (ii) impose
any obligation on the Indemnified Party.
(b) In the event of any Indemnification Claim under Section 8.1 or 8.2
hereof, the Indemnified Party shall fully advise the Indemnifying Party in
writing of the amount and circumstances surrounding such Indemnification
Claim and cooperate fully with the Indemnifying Party in the defense of
such Indemnification Claim.
8.4 INDEMNIFICATION AS SOLE REMEDY. Indemnification pursuant to this
Article 8 is the sole and exclusive remedy for any and all claims arising under,
or in connection with, this Agreement or any of the Transactions, other than as
set forth in Sections 5.1, 5.6 and 7.1, and no party hereto shall be entitled to
make any claim that would circumvent the limitations set forth in Sections
8.1(b) and (c) and 8.2(b); provided, however, Purchaser shall have the rights to
equitable relief set forth in Sections 5.1 and 5.6.
8.5 CHARACTERIZATION OF PAYMENTS. Any payments made by Seller or Purchasers
pursuant to this Article 8 shall be treated by all parties as an adjustment to
the Purchase Price, unless otherwise required by applicable Law.
8.6 INTERPRETATION. The parties expressly acknowledge and agree that, with
the exception of the representations, warranties and covenants specified in
Section 3.16 herein, the words and terms "material," "in all material respects"
and "Material Adverse Effect" (whether or not capitalized) when used to modify a
representation, warranty or covenant contained herein shall be disregarded for
the purposes of this Article 8. By way of further explanation, for purposes of
determining whether a breach of any representation, warranty or covenant (except
for the representations, warranties and covenants specified in Section 3.16
herein) has occurred and the amount of Losses by reason of any such breach under
this Article 8, the applicable representation, warranty or covenant shall be
read and interpreted as if such words and terms were not included therein. For
purposes of this Article 8, the term "Transactions" does not include the
Ancillary Agreements.
ARTICLE 9
GENERAL; MISCELLANEOUS
9.1 EXPENSES. Except as expressly set forth in this Agreement, all expenses
of the preparation, execution and consummation of this Agreement and of the
transactions contemplated hereby, including, without limitation, attorneys',
accountants' and outside advisors' fees and disbursements, shall be borne by the
party incurring such expenses.
9.2 NOTICES. Any notice, request, instruction or other communication to be
given hereunder by any party to another shall be given by hand delivery,
facsimile, certified or registered mail (return receipt requested) or by
recognized overnight express service, addressed to the respective party or
parties at the following addresses:
If to Seller:
DST Systems, Inc.
000 X. 00xx Xxxxxx
Xxxxxx Xxxx, Xxxxxxxx 00000
Attention: Chief Executive Officer
Facsimile: (000)000-0000
With a copy to:
DST Systems, Inc.
000 X. 00xx Xxxxxx
Xxxxxx Xxxx, Xxxxxxxx 00000
Attention: General Counsel
Facsimile: (000)000-0000
If to Purchasers:
Computershare (US)
0 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Chief Executive Officer
Facsimile: (000) 000-0000
With a copy to:
Computershare Ltd.
00 Xxxxxxxxxx Xxxxxx
Xxxxxx, XXX 0000 Xxxxxxxxx
Attention: Chief Legal Officer
Facsimile: 613 9473 2415
or to such other address or addresses as any party may designate to the others
by like notice as hereinabove set forth. Any notice given hereunder shall be
deemed given and received on the date of hand delivery, the date sent by
facsimile so long as the notice and confirmation are sent the same day and such
day is a Business Day (otherwise on the next Business Day) or three (3) Business
Days after deposit with the United States Postal Service if sent by mail as
provided above, or one (1) Business Day after delivery to a recognized overnight
express service for next day delivery, as the case may be
9.3 GOVERNING LAW. This Agreement shall be governed by, and construed and
enforced in accordance with, the laws of the State of Delaware without regard to
its conflict of laws rules.
9.4 CONSENT TO JURISDICTION. Each of the parties hereto agrees that any
suit, action or proceeding instituted against such party under or in connection
with this Agreement shall be brought, non-exclusively in a court of competent
jurisdiction of the State of Delaware. By execution hereof, each party hereto
irrevocably waives any objection to, and any right of immunity on the grounds
of, improper venue, the convenience of the forum, the personal jurisdiction of
such courts or the execution of judgments resulting therefrom. Each party hereto
hereby irrevocably accepts and submits to the non-exclusive jurisdiction of such
courts in any such action, suit or proceeding.
9.5 SECTIONS AND SECTION HEADINGS. The headings of sections and subsections
are for reference only and shall not limit or control the meaning thereof.
9.6 ASSIGNS. This Agreement shall be binding upon and inure to the benefit
of the parties hereto and their respective heirs, successors and permitted
assigns. Neither this Agreement nor the obligations of any party hereunder or
thereunder shall be assignable or transferable by such party without the prior
written consent of the other party hereto or thereto, except that each Purchaser
may assign any and all of its right, interests and obligations hereunder as
security for obligations to lenders and except that each Purchaser may assign
its rights under this Agreement to an Affiliate; PROVIDED that neither Purchaser
shall be released from any of its obligations hereunder by reason of such
assignment.
9.7 NO IMPLIED RIGHTS OR REMEDIES. Except as otherwise expressly provided
herein, nothing herein expressed or implied is intended or shall be construed to
confer upon or to give any Person, except the parties and their respective
successors, if any, hereto, any rights or remedies under or by reason of this
Agreement.
9.8 COUNTERPARTS. This Agreement may be executed in multiple counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
9.9 CONSTRUCTION.
(a) The language used in this Agreement will be deemed to be the
language chosen by the parties hereto to express their mutual intent, and
no rule of strict construction shall be applied against either party. Any
reference to any applicable Law
shall be deemed also to refer to all rules and regulations promulgated
thereunder unless the context requires otherwise. Whenever required by the
context, any gender shall include any other gender, the singular shall
include the plural and the plural shall include the singular. The words
"herein," "hereof," "hereunder," and words of similar import refer to the
Agreement as a whole and not to a particular section. All references to an
Article or Section include all subparts thereof. The headings contained in
this Agreement are for reference purposes only and shall not affect in any
way the meaning or interpretation of this Agreement. Each party hereto has
participated in the drafting of this Agreement, which each party
acknowledges and agrees is the result of extensive negotiations among the
parties. Whenever the word "including" is used in this Agreement, it shall
be deemed to mean "including without limitation," "including, but not
limited to" or other words of similar import such that the items following
the word "including" shall be deemed to be a list by way of illustration
only and shall not be deemed to be an exhaustive list of applicable items
in the context thereof.
(b) The parties hereto intend that each representation, warranty, and
covenant contained herein shall have independent significance. If any party
has breached any representation, warranty or covenant contained herein in
any respect, the fact that there exists another representation, warranty or
covenant relating to the same subject matter (regardless of the relative
levels of specificity) that the party has not breached shall not detract
from or mitigate the fact that the party is in breach of the first
representation, warranty or covenant.
9.10 SEVERABILITY. The invalidity or unenforceability of any particular
provision of this Agreement or any related agreement shall not affect the other
provisions hereof or thereof, and this Agreement shall be construed in all
respects as if such invalid or unenforceable provision was omitted.
9.11 WAIVER OF CERTAIN DAMAGES. All of the parties hereto to the fullest
extent permitted by law irrevocably waive any rights they may have to punitive,
special, exemplary or consequential damages based upon or arising out of this
Agreement or any course of conduct, course of dealing, statements or actions of
any of them relating thereto; PROVIDED that the foregoing waiver shall not apply
with respect to damages awarded to third parties and subject to indemnification
under this Agreement. For purposes of this Agreement, no party shall waive, and
either party shall be entitled to, liquidated damages pursuant to Article 7
hereof.
9.12 ENTIRE AGREEMENT. This Agreement contains the entire understanding of
the parties hereto and thereto, supersedes all prior agreements and
understandings relating to the subject matter hereof and thereof and shall not
be amended except by a written instrument hereafter signed by all of the parties
hereto or thereto, as applicable. No waiver of any provision of this Agreement
shall be effective unless evidenced by a written instrument signed by the
waiving party. Each of the parties hereto further acknowledge and agree that, in
entering into this Agreement they have not in any way relied upon any oral or
written agreements, statements, promises, information, arrangements,
understandings, representations or warranties, express or implied, not
specifically set forth in this Agreement.
SIGNATURE PAGE FOLLOWS
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first hereinabove written.
SELLER:
DST SYSTEMS, INC., a Delaware
corporation
By: /s/ Xxxxxx X. XxXxxxxxx
----------------------------------
Xxxxxx X. XxXxxxxxx
President and Chief Executive Officer
PURCHASERS:
COMPUTERSHARE LTD., an Australian
corporation
By: /s/ Xxxxxxxxxxx X. Xxxxxx
----------------------------------
Xxxxxxxxxxx X. Xxxxxx
President and Chief Executive Officer
COMPUTERSHARE (US), a Delaware general
partnership
By Computershare Finance Company
Pty Ltd., its general partner
By: /s/ Xxxx X. Xxxxx
----------------------------------
Name: Xxxx X. Xxxxx
Title: Director
EQAC INC., a Delaware corporation
By: /s/ Xxxxxx Xxxxxxxxx
----------------------------------
Name: Xxxxxx Xxxxxxxxx
Title: President
