EXHIBIT 2.4
EXECUTION COPY
WAIVER AND THIRD AMENDMENT TO STOCK PURCHASE AGREEMENT
This Waiver and Amendment (this "Waiver and Amendment") is made and
entered into as of March 3, 2006, by and among OPEN SOLUTIONS INC., a Delaware
corporation (the "PURCHASER PARENT"), HUSKY ACQUISITION CORPORATION, a Delaware
corporation and a wholly-owned subsidiary of the Purchaser Parent (the
"PURCHASER"), THE BISYS GROUP, INC., a Delaware corporation (the "SELLER
PARENT"), and BISYS INC., a Delaware corporation and a wholly-owned subsidiary
of the Seller Parent (the "SELLER").
RECITALS
WHEREAS, the Purchaser Parent, the Purchaser, the Seller Parent and
the Seller entered into that certain Stock Purchase Agreement (the "PURCHASE
AGREEMENT"), made and entered as of September 15, 2005, as amended on December
15, 2005 and as further amended on February 28, 2006;
WHEREAS, pursuant to Section 2.03(b) of the Purchase Agreement, the
Seller is required to deliver to the Purchaser the Restatement Adjustment
Certificate within ten (10) days after the public announcement by the Seller
Parent of the completion of the Restatement, but in no event later than fifteen
(15) days prior to the Closing Date;
WHEREAS, pursuant to Section 5.19 of the Purchase Agreement, the
Seller Parent is required to deliver to the Purchaser Parent true and complete
copies of certain interim unaudited consolidated financial statements of the
Company and the Subsidiaries as specified in said Section 5.19 (the "INTERIM
FINANCIAL STATEMENTS");
WHEREAS, prior to the date hereof, the Seller Parent has delivered to
the Purchaser Parent true and complete copies of: (a) the unaudited consolidated
balance sheet of the Company and the Subsidiaries as of December 31, 2005 and
the unaudited consolidated statement of income of the Company and the
Subsidiaries for the quarterly period then ended, such financial statements
giving effect to the Carve-Out Restatement; and (b) the unaudited consolidated
balance sheet of the Company and the Subsidiaries as of September 30, 2005 and
the unaudited consolidated statement of income of the Company and the
Subsidiaries for the quarterly period then ended, such financial statements
giving effect to the Carve-Out Restatement; and (c) the unaudited balance sheets
of BISYS Information Solutions L.P. ("BIS LP") and BISYS Document Solutions LLC
("DSLLC") as of the end of each of the months of September 2005 through November
2005 and the unaudited statements of income of BIS LP and DSLLC for each of the
monthly periods then ended, which monthly financial statements do not give
effect to the Carve-Out Restatement; and (d) the unaudited consolidated balance
sheet of the Company and the Subsidiaries as of January 31, 2006 and the
unaudited consolidated statement of income of the Company and its Subsidiaries
for the monthly period then ended, such financial statements giving effect to
the Carve-Out Restatement;
WHEREAS, the Seller Parent has not delivered to the Purchaser Parent
monthly unaudited consolidated financial statements of the Company and the
Subsidiaries for any monthly period from June 2005 through December 2005;
WHEREAS, at the time that the Purchase Agreement was entered into, the
Seller and the Seller Parent anticipated that the Restatement would be completed
and announced in sufficient time to enable the Seller and the Seller Parent to
deliver the Restatement Adjustment Certificate and the Interim Financial
Statements, giving effect to the Restatement, within the time periods provided
for in the Purchase Agreement;
WHEREAS, on February 15, 2006 the Seller and the Seller Parent
delivered to the Purchaser Parent the Restatement Adjustment Certificate;
WHEREAS, the Seller and the Seller Parent were unable to meet the
requirements set forth in the Purchase Agreement for the delivery of the
Restatement Adjustment Certificate and certain of the Interim Financial
Statements; and
WHEREAS, the parties hereto desire to amend, among other things,
Sections 2.03(b) and (c) of the Purchase Agreement to reflect the Restatement
being completed by the Seller Parent after the delivery of the Restatement
Adjustment Certificate.
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. DEFINITIONS
All capitalized terms used but not elsewhere defined herein shall have
the meanings ascribed to such terms in the Purchase Agreement.
2. WAIVER
The Seller and the Seller Parent hereby request, and the Purchaser and
the Purchaser Parent hereby agree, pursuant to Section 10.07 of the Purchase
Agreement, that the Purchaser and the Purchaser Parent hereby waive the
requirement of the delivery within the time periods specified in Section 5.19 of
the Purchase Agreement of: (i) the Restatement Adjustment Certificate; (ii) the
unaudited consolidated balance sheet of the Company and the Subsidiaries as of
December 31, 2005 and the unaudited consolidated statement of income of the
Company and the Subsidiaries for the quarterly period then ended, such financial
statements giving effect to the Restatement; (iii) the unaudited consolidated
balance sheet of the Company and its Subsidiaries as of September 30, 2005 and
the unaudited consolidated statement of income of the Company and its
Subsidiaries for the quarterly period then ended, such financial statements
giving effect to the Restatement; (iv) the unaudited balance sheet of the
Company as of January 31, 2006 and the unaudited consolidated statement of
income of the Company and its Subsidiaries for the monthly period then ended,
such financial statements giving effect to the Restatement; and (v) monthly
unaudited consolidated financial statements of the Company and the Subsidiaries
for each of the monthly periods of June 2005 through and including December
2005, provided, however, that as soon as practicable after the Closing the
Seller Parent shall deliver to the Purchaser Parent an unaudited consolidated
statement of revenues and expenses of the Company and the Subsidiaries for each
of the monthly periods ending on the last day of the months of January 2005
through and including December 2005, each such monthly statement including
depreciation and
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amortization, together with a separate statement setting forth pro rata on a
line-item-by-line-item basis with respect to each such monthly statement the
Restatement adjustments for the quarter in which such month is included.
3. AMENDMENT TO SECTION 1.01(B) OF THE PURCHASE AGREEMENT
"Section 1.01(b) of the Purchase Agreement is amended and replaced in
its entirety by the following:
Each of the following terms is defined in the Section set forth
opposite such term:
TERM SECTION
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"AFFILIATE CONTRACTS" 3.17(b)
"AGGREGATE CHANGE IN EBITDA" 2.03(b)(i)(A)
"AGGREGATE CHANGE IN FINAL EBITDA" 2.03(b)(ii(A)
"AGREEMENT" Preamble
"AVERAGE CHANGE IN EBITDA" 2.03(b)(i)(B)
"AVERAGE CHANGE IN FINAL EBITDA" 2.03(b)(ii)(B)
"BASE CONSIDERATION" 2.02
"BASKET" 8.03(a)
"BISYS MARKS" 5.17(c)
"BUSINESS" Recitals
"CAP" 8.03(b)
"CARVE-OUT RESTATEMENT" 2.03(b)
"CLOSING DATE BALANCE SHEET" 2.03(d)(i)
"CLOSING DATE NET WORKING CAPITAL STATEMENT" 2.03(d)(i)
"COMPANY" Recitals
"COMPANY CONTRACTS" 3.17(a)
"COMPANY INTELLECTUAL PROPERTY" 3.10(c)
"COMPETITIVE ACTIVITIES" 5.15(a)
"EBITDA" 2.03(b)(i)
"ESTIMATED CLOSING DATE BALANCE SHEET" 2.03(a)(i)
"ESTIMATED CLOSING DATE NET WORKING CAPITAL" 2.03(a)(i)
"ESTIMATED CLOSING DATE NET WORKING CAPITAL STATEMENT" 2.03(a)(i)
"ESTIMATED PURCHASE PRICE" 2.03(c)
"FINAL CLOSING DATE NET WORKING CAPITAL" 2.03(d)(ii)
"FINAL CLOSING DATE NET WORKING CAPITAL STATEMENT" 2.03(d)(ii)
"FINAL EBITDA" 2.03(b)(ii)
"FINAL RESTATEMENT ADJUSTMENT" 2.03(b)(ii)(D)
"FINAL RESTATEMENT ADJUSTMENT CERTIFICATE" 2.03(b)(ii)
"FIVE YEAR PERIOD" 2.03(b)(i)
"INSURANCE POLICIES" 3.20
"IP LICENSES" 3.10(b)
"ISSUER" 5.02(e)
"MINIMUM CLAIM AMOUNT" 8.03(a)
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"NEUTRAL ACCOUNTANT" 2.03(d)(ii)
"OBJECTION NOTICE" 2.03(d)(ii)
"PBGC" 3.12(e)
"PERMITTED GOODS AND SERVICES" 5.15(a)
"PHASE-OUT PERIOD" 5.17(c)
"PROPERTY LEASES" 3.13(b)
"PURCHASE PRICE" 2.02
"PURCHASER" Preamble
"PURCHASER INDEMNIFIED PARTIES" 8.01
"PURCHASER PARENT" Preamble
"PURCHASER PLANS" 5.08(c)
"SEC" 5.02(e)
"RESTATEMENT" 2.03(b)
"RESTATEMENT ADJUSTMENT" 2.03(b)(i)(D)
"RESTATEMENT ADJUSTMENT CERTIFICATE" 2.03(b)(i)
"SECTION 338(H)(10) ELECTION" 6.03
"SELLER" Preamble
"SELLER INDEMNIFIED PARTIES" 8.02
"SELLER PARENT" Preamble
"SHARED ASSETS AND SERVICES" 5.17(a)
"SHARES" Recitals
"STRADDLE PERIOD" 6.01(a)
"THREE YEAR PERIOD" 2.03(b)(i)
"TRANSFERRED EMPLOYEE" 5.08(a)
"TRANSITION SERVICES AGREEMENT" 2.04(d)
"WACHOVIA COMMITMENT" 4.05
"WARRANTY CLAIMS" 3.30"
4. AMENDMENT TO SECTION 2.03(B) OF THE PURCHASE AGREEMENT
Section 2.03(b) of the Purchase Agreement is amended and replaced in
its entirety by the following:
"Restatement Adjustment. The parties hereto acknowledge that the
Seller Parent has publicly announced that it shall restate certain of its
historical consolidated financial statements (the "RESTATEMENT"). The parties
hereto further acknowledge that the Restatement is expected to affect the
historical results of operations of the "Information Services Segment" of the
Seller Parent, which is solely comprised of the Seller, the Company and the
Subsidiaries, and is further expected to affect the results of operations of the
Company and the Subsidiaries for fiscal years ending after the Closing Date. The
parties hereto further acknowledge that the Seller Parent shall restate certain
historical consolidated financial statements of the Seller, the Company and the
Subsidiaries prior to the Closing Date (the "CARVE-OUT RESTATEMENT").
(i) In no event later than ten (10) days prior to the Closing Date,
the Seller shall have delivered to the Purchaser a certificate (the "RESTATEMENT
ADJUSTMENT CERTIFICATE") signed by the Chief Financial Officer of the Seller
Parent, setting forth in reasonable detail (i) a
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calculation of the amount of (x) the actual average change, if any, in the
consolidated earnings before interest, tax, depreciation and amortization of the
Company and the Subsidiaries ("EBITDA") over the twelve-month periods ending
June 30, 2003, June 30, 2004 and June 30, 2005 (collectively, the "THREE YEAR
PERIOD") and (y) the projected average change, if any, in EBITDA over the
twelve-month periods ending June 30, 2006 and June 30, 2007 (collectively and
together with the Three Year Period, the "FIVE YEAR PERIOD") which shall result
from the Carve-Out Restatement based solely on facts and circumstances known to
Seller Parent as of the date of the Carve-Out Restatement. The Restatement
Adjustment Certificate shall have been prepared in good faith by the Seller and
shall be in form and substance reasonably satisfactory to the Purchaser, and if
the Purchaser has any disagreement with the Restatement Adjustment Certificate,
the Purchaser shall notify the Seller in writing of any such disagreement and
the Seller and the Purchaser shall use good faith efforts to resolve any such
disagreement within three (3) Business Days of the Purchaser so notifying the
Seller. During the period preceding and following the delivery of the
Restatement Adjustment Certificate, to the extent reasonably necessary, the
Seller Parent and the Seller shall, and shall cause the Company, the
Subsidiaries and any other Affiliates of the Seller Parent to, (A) provide the
Purchaser Parent and the Purchaser and the Purchaser Parent's and the
Purchaser's authorized representatives with reasonable access to the financial
books and records of the Company and the Subsidiaries, (B) provide the Purchaser
Parent and the Purchaser as promptly as practicable with financial information
for the Company and the Subsidiaries for the Five Year Period, and (C) cooperate
fully with the Purchaser Parent and the Purchaser and the Purchaser Parent's and
the Purchaser's authorized representatives in connection with their review of
such information. Such actual and projected average change in EBITDA over the
Five Year Period and the adjustment to the Base Consideration related thereto
shall be calculated as follows:
(A) the actual and projected increase or decrease in EBITDA for each
of the years in the Five Year Period shall be added, and adjusted to
exclude any increase or decrease in EBITDA for the twelve (12) month period
ended June 30, 2005 not related to any changes in the timing of deferred
revenue and accrued liabilities with respect to existing lease obligations.
The sum of such addition and adjustment shall be the "AGGREGATE CHANGE IN
EBITDA";
(B) the Aggregate Change in EBITDA shall be divided by a factor of 5,
and the quotient of such division plus the effect, if any, of any increase
or decrease in EBITDA for the twelve (12) month period ended June 30, 2005
not related to any changes in the timing of deferred revenue and accrued
liabilities with respect to existing lease obligations shall be the
"AVERAGE CHANGE IN EBITDA";
(C) if the Average Change in EBITDA is 0 or a positive number or a
negative number not greater than ($500,000), there shall be no adjustment
to the Base Consideration; and
(D) if the Average Change in EBITDA is a negative number greater than
($500,000), the amount of the Average Change in EBITDA, expressed as a
positive number, shall be multiplied by a factor of 8. The product of such
multiplication shall constitute the "RESTATEMENT ADJUSTMENT", and the Base
Consideration shall be reduced
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by the amount of the Restatement Adjustment; provided, however, that the
amount of the Restatement Adjustment shall not be greater than $15,000,000.
(ii) Within ten (10) days after the public announcement by the Seller
Parent of the completion of the Restatement, the Seller shall deliver to the
Purchaser a certificate (the "FINAL RESTATEMENT ADJUSTMENT CERTIFICATE") signed
by the Chief Financial Officer of the Seller Parent, setting forth in reasonable
detail (i) a calculation of the amount of (x) the actual average change, if any,
in the consolidated earnings before interest, tax, depreciation and amortization
of the Company and the Subsidiaries ("FINAL EBITDA") over the Three Year Period
and (y) the projected average change, if any, in Final EBITDA over the
twelve-month periods ending June 30, 2006 and June 30, 2007 which shall result
from the Restatement based solely on facts and circumstances known to Seller
Parent as of the date of the Restatement. The Final Restatement Adjustment
Certificate shall be prepared in good faith by the Seller and shall be in form
and substance reasonably satisfactory to the Purchaser, and if the Purchaser has
any disagreement with the Final Restatement Adjustment Certificate, the
Purchaser shall notify the Seller in writing of any such disagreement and the
Seller and the Purchaser shall use good faith efforts to resolve any such
disagreement within three (3) Business Days of the Purchaser so notifying the
Seller. During the period preceding and following the delivery of the Final
Restatement Adjustment Certificate, to the extent reasonably necessary, the
Seller Parent and the Seller shall, and shall cause the Company, the
Subsidiaries and any other Affiliates of the Seller Parent to, (A) provide the
Purchaser Parent and the Purchaser and the Purchaser Parent's and the
Purchaser's authorized representatives with reasonable access to the financial
books and records of the Company and the Subsidiaries, (B) provide the Purchaser
Parent and the Purchaser as promptly as practicable with financial information
for the Company and the Subsidiaries for the Five Year Period, and (C) cooperate
fully with the Purchaser Parent and the Purchaser and the Purchaser Parent's and
the Purchaser's authorized representatives in connection with their review of
such information. Such actual and projected average change in Final EBITDA over
the Five Year Period and the post-Closing adjustment to the Base Consideration
related thereto shall be calculated as follows:
(A) the actual and projected increase or decrease in Final EBITDA for
each of the years in the Five Year Period shall be added, and adjusted to
exclude any increase or decrease in Final EBITDA for the twelve (12) month
period ended June 30, 2005 not related to any changes in the timing of
deferred revenue and accrued liabilities with respect to existing lease
obligations. The sum of such addition and adjustment shall be the
"AGGREGATE CHANGE IN FINAL EBITDA";
(B) the Aggregate Change in Final EBITDA shall be divided by a factor
of 5, and the quotient of such division plus the effect, if any, of any
increase or decrease in Final EBITDA for the twelve (12) month period ended
June 30, 2005 not related to any changes in the timing of deferred revenue
and accrued liabilities with respect to existing lease obligations shall be
the "AVERAGE CHANGE IN FINAL EBITDA";
(C) if the Average Change in Final EBITDA is 0 or a positive number or
a negative number not greater than ($500,000), there shall be no adjustment
to the Base Consideration; and
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(D) if the Average Change in Final EBITDA is a negative number greater
than ($500,000), the amount of the Average Change in Final EBITDA,
expressed as a positive number, shall be multiplied by a factor of 8. The
product of such multiplication shall constitute the "FINAL RESTATEMENT
ADJUSTMENT," and the Base Consideration shall be reduced by the amount of
the Final Restatement Adjustment.
(iii) If (A) the Average Change in Final EBITDA is 0 or a positive
number or a negative number not greater than ($500,000), then the Purchaser
shall promptly deliver to the Seller cash in an amount equal to the amount of
the Restatement Adjustment, if any, by wire transfer of immediately available
funds to an account designated by the Seller by notice to the Purchaser no later
than the Business Day immediately preceding the date of payment under this
clause (A) of Section 2.03(b)(iii), (B) if the Average Change in Final EBITDA is
a negative number greater than ($500,000) and the absolute value of the Final
Restatement Adjustment is greater than the Restatement Adjustment, then the
Seller shall promptly deliver to the Purchaser cash in an amount equal to the
amount by which the absolute value of the Final Restatement Adjustment is
greater than the value of the Restatement Adjustment, plus interest on such
amount at the Federal Funds Rate from the Closing Date through the date of
payment, by wire transfer of immediately available funds to an account
designated by the Purchaser by notice to the Seller no later than the Business
Day immediately preceding the date of payment under this clause (B) of Section
2.03(b)(iii) or (C) if the Average Change in Final EBITDA is a negative number
greater than ($500,000) and the absolute value of the Final Restatement
Adjustment is less than the Restatement Adjustment, then the Purchaser shall
promptly deliver to the Seller cash in an amount equal to the amount by which
the absolute value of the Final Restatement Adjustment is less than the value of
the Restatement Adjustment by wire transfer of immediately available funds to an
account designated by the Seller by notice to the Purchaser no later than the
Business Day immediately preceding the date of payment under this clause (C) of
Section 2.03(b)(iii).
For the avoidance of doubt, nothing in this Section 2.03(b) shall effect the
Balance Sheet in any manner."
5. AMENDMENT TO SECTION 2.03(C) OF THE PURCHASE AGREEMENT
Section 2.03(c) of the Purchase Agreement is amended and replaced in
its entirety by the following:
"Adjustment to Estimated Purchase Price. The Base Consideration, as it
may be adjusted pursuant to Section 2.03(a) and Section 2.03(b)(i) shall be the
"ESTIMATED PURCHASE PRICE," which Estimated Purchase Price shall be payable to
the Seller at the Closing in accordance with Section 2.04."
6. REFERENCES
Each reference in the Purchase Agreement to "this Agreement",
"hereof", "herein", and "herewith" and words of similar import shall, unless
otherwise stated, be construed to refer to the Purchase Agreement as a whole
(including all Schedules thereto) as amended by this Waiver and Amendment.
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7. SECTION HEADINGS AND CAPTIONS
The Section headings and the captions of the Articles in this Waiver
and Amendment are solely for convenient reference and shall not be deemed to
affect the meaning or interpretation of this Agreement.
8. COUNTERPARTS; THIRD PARTY BENEFICIARIES
This Waiver and Amendment may be signed in any number of counterparts,
each of which shall be an original, with the same effect as if such signatures
were upon the same instrument. A facsimile or photocopied signature (which may
be delivered by facsimile) shall be deemed to be the functional equivalent of an
original for all purposes. This Waiver and Amendment shall inure to the benefit
of and be binding upon the parties hereto and their respective successors and
permitted assigns. No provision of this Waiver and Amendment is intended to
confer and shall not confer upon any Person other than the parties hereto and
their respective successors and permitted assigns any rights or remedies.
9. APPLICABLE LAW
This Waiver and Amendment shall be governed by and construed in
accordance with the laws of the State of New York applicable to contracts made
to be performed therein.
10. SEVERABILITY
If this Waiver and Amendment, or any of its provisions, or the
performance of any provision, is found to be illegal or unenforceable, the
parties shall be excused from the performance of such portions of this Waiver
and Amendment as shall be found to be illegal or unenforceable without affecting
the validity of the remaining provisions of this Waiver and Amendment; provided,
however, that the remaining provisions of this Waiver and Amendment shall in
their totality constitute a commercially reasonable agreement.
11. NO FURTHER EFFECT
Except as explicitly amended or otherwise modified by this Waiver and
Amendment, the Purchase Agreement shall remain in full force and effect in
accordance with its terms.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties have duly executed and delivered this
Waiver and Amendment as of the day and year first above written.
OPEN SOLUTIONS INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
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Name: Xxxxxxx X. Xxxxxxxx
Title: Executive Vice President and
Chief Financial Officer
HUSKY ACQUISITION CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxxx
------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Treasurer
THE BISYS GROUP, INC.
By: /s/ Xxxxx X. Xxxxxxx
------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: EVP + CFO
BISYS INC.
By: /s/ Xxxxx X. Xxxxxxx
------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: EVP + CFO
