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<PAGE>
EXHIBIT 10.1
EXECUTION COPY
AMENDED & RESTATED STOCK PURCHASE AGREEMENT
BETWEEN
FIDELITY NATIONAL INFORMATION SERVICES, INC.,
FIDELITY NATIONAL FINANCIAL, INC.
AND
THE PURCHASERS NAMED HEREIN
DATED AS OF MARCH 8, 2005
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TABLE OF CONTENTS
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ARTICLE I
DEFINITIONS.............................................. 3
1.1 Certain Definitions......................................
3
1.2 Construction.............................................
11
ARTICLE II PURCHASE OF
SHARES....................................... 11
2.1 Purchase and Sale of the Shares..........................
12
2.2 Closing Date.............................................
12
2.3 Proceedings at Closing...................................
12
2.4 Use of Proceeds..........................................
12
ARTICLE III REPRESENTATIONS AND WARRANTIES OF
PARENT................. 13
3.1 Organization and Power...................................
13
3.2 Authorization............................................
13
3.3 Consents and Approvals...................................
13
3.4 No Conflicts.............................................
14
3.5 Broker's Fees............................................
14
3.6 Capitalization...........................................
14
3.7 Subsidiaries and Equity Investments; Joint Ventures......
15
3.8 Authorization of Securities..............................
16
3.9 Investment Company Act...................................
16
3.10 Financial Statements.....................................
16
3.11 Absence of Undisclosed Liabilities, Indebtedness.........
16
3.12 Absence of Certain Changes...............................
17
3.13 Litigation; Orders.......................................
17
3.14 Compliance with Laws.....................................
17
3.15 Permits..................................................
17
3.16 Contracts................................................
18
3.17 Intellectual Property....................................
18
3.18 Affiliate Transactions...................................
20
3.19 Assets and Properties....................................
20
3.20 Insurance................................................
21
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3.21 Tax Matters..............................................
21
3.22 Employee Benefit Plans...................................
23
3.23 Labor and Employment Matters.............................
27
3.24 Real Property............................................
28
3.25 Environmental Matters....................................
28
3.26 Material Customers.......................................
29
3.27 Corporate Records........................................
30
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF
PURCHASERS............. 30
4.1 Organization.............................................
30
4.2 Authorization............................................
30
4.3 Consents and Approvals...................................
31
4.4 No Conflicts.............................................
31
4.5 Brokers' Fees............................................
31
4.6 Securities Law Matters; Valid Offering...................
31
4.7 Sufficiency of Funds.....................................
31
ARTICLE V
COVENANTS................................................ 31
5.1 Access to Information....................................
32
5.2 Conduct of the Business..................................
32
5.3 Intercompany Agreements..................................
35
5.4 All Reasonable Efforts; Further Assurances...............
36
5.5 Approvals................................................
36
5.6 Public Announcements.....................................
37
5.7 Notification.............................................
37
5.8 Exclusivity..............................................
38
5.9 Confidentiality..........................................
38
5.10 Transfer Taxes...........................................
38
5.11 Financial Statements.....................................
38
5.12 Non-Competition Agreements...............................
39
5.13 New York State Title Insurance Subsidiary................
39
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5.14 Certain Business in Certain Counties.....................
40
ARTICLE VI CONDITIONS PRECEDENT TO
CLOSING.......................... 40
6.1 Conditions Precedent to the Company's Obligations........
40
6.2 Conditions Precedent to Purchasers' Obligations..........
42
ARTICLE VII CLOSING
DELIVERIES....................................... 45
7.1 Items to Be Delivered by the Company.....................
45
7.2 Items to Be Delivered by Purchasers......................
46
ARTICLE VIII SURVIVAL AND
INDEMNIFICATION............................. 46
8.1 Survival of Representations, Warranties, and Covenants...
46
8.2 Indemnification..........................................
46
8.3 Deductible; Maximum Liability............................
48
8.4 Definitions..............................................
49
8.5 Procedures for Third-Party Claims........................
49
8.6 Direct Claims............................................
50
8.7 Sole Remedy..............................................
51
8.8 Certain Other Matters....................................
51
ARTICLE IX
TERMINATION.............................................. 51
9.1 Termination..............................................
51
9.2 Effect of Termination....................................
52
ARTICLE X
MISCELLANEOUS............................................ 52
10.1 Amendments...............................................
52
10.2 Assignment...............................................
52
10.3 Binding Effect...........................................
53
10.4 Counterparts.............................................
53
10.5 Entire Agreement.........................................
53
10.6 Fees and Expenses........................................
53
10.7 Governing Law............................................
54
10.8 Headings.................................................
54
10.9 Jurisdiction.............................................
54
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10.10 Notices..................................................
54
10.11 No Recourse..............................................
56
10.12 Severability.............................................
56
10.13 Specific Performance.....................................
56
10.14 Third-Party Beneficiaries................................
56
10.15 Waiver...................................................
56
10.16 Purchaser Obligations....................................
57
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SCHEDULES
A Allocation of Purchase Price and Shares
EXHIBITS
A Non-Competition and Non-Solicitation Agreement
B Registration Rights Agreement
C 2005 Stock Incentive Plan
D Stockholders Agreement
E Financing Term Sheet
F Management Agreements
G Intentionally Left Blank
H Form of Director Indemnification Agreement
I Promissory Note
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AMENDED & RESTATED STOCK PURCHASE AGREEMENT
THIS AMENDED & RESTATED STOCK PURCHASE AGREEMENT (this
"Agreement") is
entered into as of March 8, 2005, among Fidelity National
Information Services,
Inc., a Delaware corporation (the "Company"), Fidelity National
Financial, Inc.,
a Delaware corporation ("Parent"), and each of the Persons
listed on Schedule A
attached hereto (collectively, the "Purchasers").
WHEREAS, certain of the parties hereto entered into that certain
Stock
Purchase Agreement, dated as of December 23, 2004 (the "Initial
Agreement");
WHEREAS, the parties hereto desire to amend and restate the
initial
Purchase Agreement in order to add (i) Evercore METC Capital
Partners II L.P.
("Evercore"), and (ii) Banc of America Capital Investors, L.P.
("BACI") as
Purchasers, and to make certain other changes;
WHEREAS, on the terms and subject to the conditions set forth
herein, the
Company desires to issue and sell to each Purchaser, and each
such Purchaser
desires to purchase and acquire from the Company, that number of
shares of
common stock, par value $0.0001 per share ("Common Stock"), of
the Company, set
forth opposite its name on Schedule A attached hereto.
WHEREAS, Parent desires that the Company undertake such
transactions.
WHEREAS, the shares of Common Stock to be issued to the
Purchasers
hereunder are referred to collectively as the "Shares."
WHEREAS, prior to the consummation of the sale of the Shares
(the
"Transaction"), the Company intends to declare and pay a
dividend (the "Parent
Distribution") through distribution of a promissory note
(attached hereto as
Exhibit I) from the Company to Parent in the amount of $2.7
billion (the "$2.7
Billion Note").
WHEREAS, prior to the consummation of the Transaction, Parent
may cause
the Company to be recapitalized in a transaction pursuant to
which, the Company
will have borrowed up to $2.5 billion (the "Initial Financing")
on terms
reasonably comparable to the terms set forth on the financing
term sheet
attached hereto as Exhibit E (the "Financing Term Sheet") of
which up to $2
billion will be paid by the Company to Parent in partial
repayment of the $2.7
Billion Note and accrued interest thereon.
WHEREAS, immediately prior to the consummation of the
Transaction, Parent
may cause the Company to be recapitalized in a transaction
pursuant to which,
immediately prior to the Closing, the Company will have borrowed
up to a total
(including the Initial Financing) of $3.2 billion (together with
the Initial
Financing, the "Financing") on terms reasonably comparable to
the terms set
forth on the Financing Term Sheet, and a total of $2.7 billion,
plus accrued
interest on the $2.7 Billion Note will have been paid by the
Company to Parent
in full repayment of the $2.7 Billion Note and interest
thereon.
WHEREAS, in the event that the Initial Financing shall not have
been
consummated prior to the time immediately prior to the
consummation of the
Transaction, the Parent may cause the
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Company to be recapitalized in a transaction pursuant to which,
immediately
prior to the Closing, the Company will have borrowed up to a
total of $3.2
billion (and in such event, such borrowing will be deemed
hereunder to be the
"Financing") on terms reasonably comparable to the terms set
forth on the
Financing Term Sheet, and $2.7 billion, plus accrued interest on
the $2.7
Billion Note, will be paid by the Company to Parent in full
repayment of the
$2.7 Billion Note and interest thereon.
WHEREAS, the Company will use the remaining proceeds from the
Transaction
and the Financing in the manner set forth herein.
NOW, THEREFORE, in consideration of the foregoing recitals and
the
representations, warranties, covenants, and agreements herein
contained, and
other good and valuable consideration, the receipt and
sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as
follows:
ARTICLE I
Definitions
1.1 Certain Definitions. The following terms shall have the
meanings set
forth below (and such meanings shall be equally applicable to
both the singular
and plural form of the terms defined, as the context may
require):
"Affiliate" means, in respect of any Person, any other Person
that is
directly or indirectly controlling, controlled by, or under
common control with
such Person or any of its Subsidiaries, and the term "control"
(including the
terms "controlled by" and "under common control with") means
having, directly or
indirectly, the power to direct or cause the direction of the
management and
policies of a Person, whether through ownership of voting
securities or by
contract or otherwise.
"Affiliated Group" has the meaning ascribed to it in Section
1504(a) of
the Code or any other provision of Law pursuant to which Taxes
or Tax Returns
are or may be paid or filed on a consolidated, combined or
unitary basis.
"Amended Company Disclosure Letter" has the meaning ascribed to
it in the
preamble to Article III.
"Annual Combined Financial Statements" has the meaning ascribed
to it in
Section 3.10.
"BACI" has the meaning ascribed to it in the preamble to this
Agreement.
"Board of Directors" has the meaning ascribed to it in Section
6.2(h).
"Business Day" means any day other than a Saturday, Sunday, or
other day
on which banking institutions in the State of New York are
authorized or
required by Law to close.
"Business Restraint" has the meaning ascribed to it in Section
5.5(a).
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"Capital Leases" means, in respect of any Person, leases of (or
other
agreements conveying the right to use) any property (whether
real, personal, or
mixed) by such Person as lessee that, in accordance with GAAP,
either would be
required to be classified and accounted for as capital leases on
a balance sheet
of such Person or otherwise be disclosed as such in a note to
such balance
sheet.
"Capital Stock" means, in respect of any Person, any shares or
other
equivalents (however designated) of any class of corporate
stock, partnership
interests, or membership interests in a limited liability
company or any other
participations, rights, warrants, options, or other interests in
the nature of
an equity interest in such Person, including preferred
stock.
"Closing" has the meaning ascribed to it in Section 2.2.
"Closing Date" has the meaning ascribed to it in Section
2.2.
"Code" means the Internal Revenue Code of 1986, as amended.
"Common Stock" has the meaning ascribed to it in the recitals to
this
Agreement.
"Company" has the meaning ascribed to it in the preamble to
this
Agreement.
"Company Documents" has the meaning ascribed to it in Section
3.2.
"Contractor" means all "preferred" agents, consultants,
contractors, and
subcontractors, as tracked by the Company's Contractor
Management Office, which
are involved in the development, support, customization,
installation,
maintenance or modification of any Intellectual Property of the
Company or its
Subsidiaries.
"Contractor Agreement" means any written agreement between any
Contractor
and the Company or its Subsidiaries.
"Contracts" means oral or written contracts, agreements,
indentures,
notes, bonds, loans, instruments, leases, commitments, or other
equivalent
arrangements or commitments.
"Copyrights" means unexpired registrations for copyrighted
material duly
issued by the U.S. Copyright Office.
"Corporate Services" has the meaning ascribed to it in Section
5.3.
"CTI" has the meaning ascribed to it in Section 5.13(c).
"Default" has the meaning ascribed to it in Section 3.4.
"Defaulting Sponsor Group" has the meaning ascribed to it in
Section 6.2.
"DGCL" means the General Corporation Law of the State of
Delaware.
4
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"Direct Claim" has the meaning ascribed to it in Section
8.5.
"Director Indemnification Agreements" mean the indemnification
agreements
to be entered into by the Company and each member of the
Company's Board of
Directors, in substantially the form attached hereto as Exhibit
H.
"EBITDA" means the combined earnings of the Company and its
Subsidiaries
before deduction for interest, income taxes, depreciation and
amortization, with
each determined in accordance with GAAP applied consistent with
the Company's
past practice.
"Employee Benefit Plans" has the meaning ascribed to it in
Section
3.22(a).
"Encumbrance" means any security interest, lien, pledge, claim,
charge,
encumbrance, right of first offer, right of first refusal,
preemptive right,
mortgage, indenture, security agreement or other equivalent
agreement,
arrangement, contract, commitment, understanding, or obligation,
whether written
or oral, and whether or not relating in any way to credit or the
borrowing of
money, other than as imposed by the Transaction Documents.
"Environmental Costs and Liabilities" means, in respect of any
Person, all
Liabilities, obligations, responsibilities, Remedial Actions,
losses, damages,
punitive damages, consequential damages, treble damages, costs,
and expenses
(including all reasonable fees, disbursements, and expenses of
counsel, experts,
and consultants and costs of investigation and feasibility
studies), fines,
penalties, sanctions, and interest incurred as a result of any
claim or demand
by any other Person or in response to any violation of
Environmental Law,
whether known or unknown, accrued or contingent, whether based
in contract,
tort, implied or express warranty, strict liability, criminal or
civil statute,
to the extent based upon, related to, or arising under or
pursuant to any
Environmental Law, Environmental Permit, Order, or Contract with
any
Governmental Entity or other Person, that relates to any
environmental, health
or safety condition, violation of Environmental Law, or a
Release or threatened
Release of Hazardous Materials.
"Environmental Law" means any Law in any way relating to the
protection of
human health and safety, the environment or natural resources,
including the
Comprehensive Environmental Response, Compensation and Liability
Act (42 U.S.C.
Section 9601 et seq.), the Hazardous Materials Transportation
Act (49 U.S.C.
App. Section 1801 et seq.), the Resource Conservation and
Recovery Act (42
U.S.C. Section 6901 et seq.), the Clean Water Act (33 U.S.C.
Section 1251 et
seq.), the Clean Air Act (42 U.S.C. Section 7401 et seq.), the
Toxic Substances
Control Act (15 U.S.C. Section 2601 et seq.), the Federal
Insecticide,
Fungicide, and Rodenticide Act (7 U.S.C. Section 136 et seq.),
and the
Occupational Safety and Health Act (29 U.S.C. Section 651 et
seq.), as each has
been amended.
"Environmental Permits" has the meaning ascribed to it in
Section 3.25(a).
"ERISA" has the meaning ascribed to it in Section 3.22(a).
"ERISA Affiliate" has the meaning ascribed to it in Section
3.22(a).
"Evercore" has the meaning ascribed to it in the preamble to
this
Agreement.
5
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"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Filed SEC Reports" means the Registration Statement on Form S-1
dated May
26, 2004, as amended through the date hereof, as filed by the
Company with the
SEC (but not including the information incorporated by reference
therein).
"Financial Statements" has the meaning ascribed to it in Section
3.10.
"Financing" has the meaning ascribed to it in the recitals to
this
Agreement.
"Financing Term Sheet" has the meaning ascribed to it in the
recitals to
this Agreement.
"Foreign Plan" has the meaning ascribed to it in Section
3.22(q).
"Form A Filing" has the meaning ascribed to it in Section
5.13(a).
"GAAP" has the meaning ascribed to it in Section 3.10.
"Governmental Entity" means any federal, state, or municipal
court or
other governmental department, commission, board, bureau,
agency, or
instrumentality, governmental or quasi-governmental, domestic or
foreign.
"Guaranty" shall mean any guaranty of the payment or performance
of any
Indebtedness or other obligation and any other equivalent
arrangement whereby
credit is extended to one obligor on the basis of any promise of
another Person,
whether that promise is expressed in terms of an obligation to
pay the
Indebtedness of such obligor, or to purchase an obligation owed
by such obligor,
or to purchase goods and services from such obligor pursuant to
a take or pay
contract, or to maintain the capital, working capital, solvency,
or general
financial condition of such obligor, whether or not any such
arrangement is
reflected on the balance sheet of such other Person or referred
to in a note
thereto.
"Hazardous Material" means any substance, material, or waste
that is
regulated, classified, or otherwise characterized under or
pursuant to any
Environmental Law as "hazardous," "toxic," "pollutant,"
"contaminant,"
"radioactive," or words of equivalent meaning or effect,
including petroleum and
its by-products, asbestos, polychlorinated biphenyls, radon,
mold, and urea
formaldehyde insulation.
"HSR Act" has the meaning ascribed to it in Section 3.3.
"Indebtedness" means, for any Person at the time of any
determination,
without duplication, all obligations, contingent or otherwise,
of such Person
that, in accordance with GAAP, should be classified upon the
balance sheet of
such Person as indebtedness.
"Indemnifiable Losses" has the meaning ascribed to it in Section
8.4.
"Indemnitee" has the meaning ascribed to it in Section 8.4.
6
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"Indemnitor" has the meaning ascribed to it in Section 8.4.
"Indemnity Payment" has the meaning ascribed to it in Section
8.4.
"Intercompany Agreements" has the meaning ascribed to it in
Section 5.3.
"Interim Balance Sheet" has the meaning ascribed to it in
Section 3.10.
"Interim Period" has the meaning ascribed to it in Section
5.13(c).
"Intellectual Property" means Marks; Patents; Copyrights;
internet domain
names that are registered with a domain name registrar; computer
software;
databases; proprietary technology; trade secrets and other
confidential
information; proprietary know-how; proprietary processes;
formulae; algorithms;
customer lists; source codes; object codes; and, in respect of
all of the
foregoing, related confidential data or information.
"IRS" means the Internal Revenue Service and any governmental
body or
agency succeeding to the functions thereof.
"IT" has the meaning ascribed to it in Section 5.3.
"Law" means the common law and all federal, state, local, and
foreign
laws, rules and regulations, Orders, and other determinations of
the United
States, any foreign country, or any domestic or foreign
Governmental Entity.
"Leased Real Property" has the meaning ascribed to it in Section
3.24(a).
"Liabilities" means all Indebtedness, obligations, and other
liabilities
(or contingencies that have not yet become liabilities) of a
Person, whether
absolute, accrued, contingent (or based upon any contingency),
known or unknown,
fixed or otherwise, or whether due or to become due.
"LSI" has the meaning ascribed to it in Section 5.5(b).
"Management Agreements" shall mean those Management Agreements
to be
entered into at the Closing by and between the Company and each
of THL Managers
V, LLC, TPG GenPar IV, L.P. and Evercore Advisors L.L.C., each
in substantially
the form attached as Exhibit F.
"Marks" means trademarks and service marks (whether registered
or
unregistered), trade names and designs, together with all
goodwill related to
the foregoing.
"Material Adverse Effect" means any material adverse effect on:
(A) the
business, liabilities, operations or financial position of the
Company and its
Subsidiaries, taken as a whole, other than any such effect to
the extent it
results from (i) changes in general economic, market or
political conditions or
any acts of war or terrorism, (ii) matters generally affecting
any of the
industries in which the Company or its Subsidiaries operate,
(iii) matters
resulting from the execution, delivery, performance or
announcement of any of
the Transaction Documents and the transactions contemplated
hereby and thereby,
or (iv) the actions of any of the Purchasers, or (B)
7
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the ability of the Company to perform any of its material
obligations under any
of the Transaction Documents.
"Material Contracts" has the meaning ascribed to it in Section
3.16.
"Material Customers" has the meaning ascribed to it in Section
3.26(a).
"Multiemployer Plan" has the meaning ascribed to it in Section
3.22(a).
"Multiple Employer Plans" has the meaning ascribed to it in
Section
3.22(a).
"National Title" has the meaning ascribed to it in Section
5.13(a).
"Non-Competition Agreement" shall mean that Non-Competition
and
Non-Solicitation Agreement to be entered into at the Closing by
and between the
Company and Parent, in substantially the form attached as
Exhibit A.
"Non-Disclosure Agreements" shall mean the Non-Disclosure
Agreements, by
and among Parent, Bear Stearns Merchant Manager II, LLC, and
certain of the
Purchasers or their affiliates, dated as of October 13,
2004.
"NYSDI" has the meaning ascribed to it in Section 5.5(d).
"Order" has the meaning ascribed to it in Section 3.4.
"Owned Real Property" has the meaning ascribed to it in Section
3.24(a).
"Parent" has the meaning ascribed to it in the preamble.
"Parent Distribution" has the meaning ascribed to it in the
recitals to
this Agreement.
"Parent's Knowledge" means the actual knowledge of William P.
Foley, II,
Al Stinson, Brent Bickett, Peter Sadowski, Tony Park, Dan
Murphy, Roger Maloch,
Brian Hershkowitz, Eric Swenson, Todd Johnson, Michael Gravelle,
Dan Scheuble,
Hugh Harris, Ernie Smith and Michael Sanchez.
"Patents" means unexpired patents duly issued by the U.S. Patent
and
Trademark Office.
"PBGC" has the meaning ascribed to it in Section 3.22(d).
"Permits" has the meaning ascribed to it in Section 3.15.
"Permitted Encumbrances" means (i) Encumbrances for current
Taxes not yet
due and payable, (ii) any materialmen's, mechanics, workmen's,
repairmen's,
contractor's, warehousemen's, carrier's, supplier's, vendor's,
or equivalent
Encumbrances if payment is not yet due on the underlying
obligation, (iii) liens
reflected in the financial statements contained in the Filed SEC
Reports, (iv)
statutory or common law liens to secure landlords, lessors, or
renters
8
<PAGE>
under leases or rental agreements confined to the premises
rented, and (v)
deposits or pledges made in connection with, or to secure
payment of, worker's
compensation, unemployment insurance, old age pension, or other
social security
programs mandated under applicable laws.
"Person" means any individual, partnership, limited
partnership,
corporation, limited liability company, association, joint stock
company, trust,
joint venture, unincorporated organization, or Governmental
Entity.
"Products" has the meaning ascribed to it in Section
3.17(g).
"Purchase Price" has the meaning ascribed to it in Section
2.1.
"Purchasers" has the meaning ascribed to it in the preamble to
this
Agreement.
"Purchasers Representatives" means, in the case of the
Purchasers
affiliated with Thomas H. Lee Equity Fund V, L.P., Thomas M.
Hagerty, and in the
case of the Purchasers affiliated with TPG Partners IV, L.P. and
TPG Partners
III, L.P., Jonathan Coslet, and in case any individual set forth
above is unable
to serve, such other person as a majority in interest of the
Purchasers whom
such person represents shall designate as a successor. It is
acknowledged by the
parties that any required consent of the Purchasers
Representatives hereunder
shall require the consent of each of Thomas M. Hagerty and
Jonathan Coslet and
their respective successors, as the case may be.
"Purchaser Documents" has the meaning ascribed to it in Section
4.2.
"Purchaser Material Adverse Effect" shall mean a material
adverse effect
on the Purchasers' ability to consummate the transactions
contemplated hereby.
"Qualified Plans" has the meaning ascribed to it in Section
3.22(b).
"Real Property" has the meaning ascribed to it in Section
3.24(a).
"Registration Rights Agreement" shall mean that Registration
Rights
Agreement to be entered into at the Closing by and among the
Company, the
Purchasers and Parent, in substantially the form attached as
Exhibit B.
"Related Persons" has the meaning ascribed to it in Section
3.18.
"Relationships" has the meaning ascribed to it in Section
5.3.
"Release" means any release, spill, emission, leaking, pumping,
injection,
deposit, disposal, discharge, dispersal, or leaching into the
indoor or outdoor
environment, or into or out of any property.
"Remedial Action" means all actions to (i) clean up, remove,
treat, or in
any other way address any Hazardous Material, (ii) prevent the
Release of any
Hazardous Material so it does not endanger or threaten to
endanger public health
or welfare or the indoor or outdoor environment,
9
<PAGE>
(iii) perform pre-remedial studies and investigations or
post-remedial
monitoring and care, or (iv) correct a condition of
noncompliance with
Environmental Laws.
"Restraint" has the meaning ascribed to it in Section
6.1(d).
"SEC" means the U.S. Securities and Exchange Commission and
any
governmental body or agency succeeding to the functions
thereof.
"Securities Act" means the Securities Act of 1933, as
amended.
"Separation Agreements" has the meaning ascribed to it in
Section 5.3.
"Shares" has the meaning ascribed to it in the recitals to this
Agreement.
"Sponsor Group" shall mean either (i) Thomas H. Lee Equity Fund
V, L.P.,
Thomas H. Lee Parallel Fund V, L.P., Thomas H. Lee Cayman Fund
V, L.P., Thomas
H. Lee Investors Limited Partnership, Putnam Investments
Holdings, LLC, Putnam
Investments Employees' Securities Company I, LLC, and Putnam
Investments
Employees' Securities Company II, LLC, collectively, or (ii) TPG
Partners III,
L.P., TPG Parallel III, L.P., TPG Investors III, L.P., FOF
Partners III, L.P.,
FOF Partners III-B, L.P., TPG Dutch Parallel III, C.V. and TPG
Partners IV,
L.P., collectively.
"State Interim Period" has the meaning ascribed to it in Section
5.13(c).
"Stock Incentive Plan" means the Company's 2005 Stock Incentive
Plan, in
substantially the form attached as Exhibit C.
"Stockholders Agreement" shall mean that Stockholders Agreement
to be
entered into at the Closing by and among the Company, the
Purchasers and Parent,
in substantially the form attached as Exhibit D.
"Subsidiary" means, in respect of any Person, any Person in
which such
first Person, directly or indirectly, beneficially owns more
than 50% of either
the equity interest in, or the voting control of, such Person,
whether or not
existing on the date hereof.
"Tax Returns" means all returns, declarations, reports,
estimates,
information returns and statements required to be filed or
actually filed in
respect of any Taxes.
"Taxes" means (i) all federal, state, local, or foreign taxes,
charges,
fees, imposts, levies, or other assessments, including, all net
income, gross
receipts, capital, sales, use, ad valorem, value added,
transfer, franchise,
profits, inventory, capital stock, license, withholding,
payroll, employment,
social security, unemployment, excise, severance, stamp,
occupation, property,
and estimated taxes, customs duties, fees, assessments, and
charges of any kind
whatsoever, (ii) all interest, penalties, fines, additions to
tax, or additional
amounts imposed by any taxing authority in connection with any
item described in
clause (i), and (iii) any liability in respect of any items
described in clauses
(i) and/or (ii) payable by reason of contract, assumption,
transferee liability,
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operation of Law, Treasury Regulation Section 1.1502-6(a) (or
any predecessor or
successor thereof or any analogous or similar provision of Law)
or otherwise.
"Third Party Claims" has the meaning ascribed to it in Section
8.3.
"THL" means Thomas H. Lee Equity Fund V, L.P., Thomas H. Lee
Parallel Fund
V, L.P., Thomas H. Lee Cayman Fund V, L.P., Thomas H. Lee
Investors Limited
Partnership, Putnam Investments Holdings, LLC, Putnam
Investments Employees'
Securities Company I, LLC, and Putnam Investments Employees'
Securities Company
II, LLC, collectively.
"Title Plant" has the meaning ascribed to it in Section 5.3.
"TPG" means TPG Partners III, L.P., TPG Parallel III, L.P., TPG
Investors
III, L.P., FOF Partners III, L.P., FOF Partners III-B, L.P., TPG
Dutch Parallel
III, C.V. and TPG Partners IV, L.P., collectively.
"Transaction" has the meaning ascribed to it in the recitals to
this
Agreement.
"Transaction Documents" means, collectively, this Agreement,
the
Stockholders Agreement, the Registration Rights Agreement, the
Intercompany
Agreements, the Non-Competition Agreement, the Management
Agreements, the
Director Indemnification Agreements and each other document,
instrument,
certificate, or agreement to be executed by the parties to
effect the
transactions contemplated by this Agreement.
"Unaudited Financial Statements" has the meaning ascribed to it
in Section
3.10.
1.2 Construction.
(a) All references to "Articles," "Sections," "Schedules,"
and
"Exhibits" contained in this Agreement are, unless specifically
indicated
otherwise, references to articles, sections, schedules, or
exhibits of or
to this Agreement.
(b) As used in this Agreement, the following terms shall have
the
meanings indicated: (i) "day" means a calendar day; (ii) "U.S."
or "United
States" means the United States of America; (iii) "dollar" or
"$" means
lawful currency of the United States; (iv) "including" or
"include" means
"including without limitation"; and (v) references in this
Agreement to
specific Laws (such as the DGCL, the Code, and ERISA), or to
specific
sections or provisions of Laws, apply to the respective U.S. or
state Laws
that bear the names so specified and to any succeeding Law
(which now has
a new section number, code number or other designation that is
different
from that used herein and is in existence on the date hereof),
section, or
provision corresponding thereto and the rules and regulations
promulgated
thereunder.
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ARTICLE II
Purchase of Shares
2.1 Purchase and Sale of the Shares. On the terms and subject to
the
conditions set forth herein, on the Closing Date, the Company
shall issue, sell,
and deliver to each Purchaser, and each Purchaser, severally and
not jointly,
shall purchase and acquire from the Company, the number of
Shares listed
opposite its name on Schedule A attached hereto for the
consideration set forth
opposite such Purchaser's name on Schedule A attached hereto.
The aggregate
consideration to be paid to the Company by the Purchasers for
the Shares shall
be equal to Five Hundred Million Dollars ($500,000,000) (the
"Purchase Price.")
The Purchase Price shall be paid by one or more wire transfers
of immediately
available funds to the Company's account designated to the
Purchasers in writing
no later than two (2) business days before the Closing.
2.2 Closing Date. The closing of the Transaction (the "Closing")
shall
take place at the offices of Weil, Gotshal & Manges LLP, 767
Fifth Avenue, New
York, New York 10153, at 10:00 a.m., local time, as promptly as
practicable
following the date on which all of the conditions contained in
Article VI have
been satisfied or waived, as applicable, or at such other place,
time, or date
as may be mutually agreed to in writing by Purchasers
Representatives and the
Company. The date of the Closing is referred to herein as the
"Closing Date."
2.3 Proceedings at Closing. All actions to be taken and all
documents to
be executed and delivered by the Company in connection with the
consummation of
the transactions contemplated at the Closing shall be reasonably
satisfactory in
form and substance to Purchasers Representatives and their
counsel, and all
actions to be taken and all documents to be executed and
delivered by Purchasers
in connection with the consummation of the transactions
contemplated at the
Closing shall be reasonably satisfactory in form and substance
to the Company
and its counsel. All actions to be taken and all documents to be
executed and
delivered by all parties hereto at the Closing shall be deemed
to have been
taken and executed and delivered simultaneously, and no action
shall be deemed
taken nor any document executed or delivered until all have been
taken,
executed, and delivered. At the Closing, (i) the Company shall
deliver to
Purchasers the items in Section 7.1 and (ii) Purchasers shall
deliver to the
Company the items described in Section 7.2.
2.4 Use of Proceeds. The Company will use the proceeds received
from the
Initial Financing and the Financing to (i) repay at or prior to
the Closing, all
the Company's Indebtedness for borrowed money existing
immediately prior to the
Initial Financing or the Financing, as the case may be (other
than with respect
to Capital Leases), (ii) pay all expenses of the Company or its
Subsidiaries
incurred in connection with the negotiation and consummation of
the Initial
Financing and the Financing (including the associated fees of
the lenders),
(iii) fund at least $30.0 million of additional cash to the
Company's balance
sheet, and (iv) pay to Parent up to $2 billion of proceeds from
the Initial
Financing and a total of $2.7 billion, plus accrued interest on
the $2.7 Billion
Note, of proceeds from the Financing in full repayment of the
$2.7 Billion Note
and interest thereon. The Company will use the proceeds received
from the
Transaction to (i) repay all the Company's Indebtedness for
borrowed money
existing immediately prior to the Closing (other than with
respect to Capital
Leases and $2.8 billion of the Financing), and (ii) pay all
expenses of the
Company and the Purchasers incurred in connection with the
negotiation and
consummation of the Transaction at the Closing (including the
amounts due under
Section 2(a) of the Management Agreements), and (iii) fund at
least $40 million
of additional cash to the Company's balance sheet.
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ARTICLE III
Representations and Warranties of Parent
Except as disclosed in (i) the Filed SEC Reports or (ii) the
amended and
restated disclosure letter delivered by Parent to the Purchasers
concurrently
with the execution of this Agreement (the "Amended Company
Disclosure Letter)
(it being agreed, that any disclosure therein with respect to
any particular
section of the Agreement shall not be deemed disclosure with
respect to another
section of the Agreement and no disclosure in any SEC Filed
Report shall be
deemed disclosed for purposes hereof, unless, in each case, the
applicability of
such disclosure to the subject matter of such section is clear
from a reasonable
reading of such disclosure or listing in such section), the
Parent hereby makes
the following representations and warranties to the Purchasers,
each of which
was true and correct as of the date of the Initial
Agreement:
3.1 Organization and Power. Parent, the Company and each of
the
Company's Subsidiaries is a corporation duly incorporated,
validly existing, and
in good standing under the Laws of the jurisdiction of its
incorporation. The
Company and each of its Subsidiaries has the requisite corporate
power and
authority to own, lease, or otherwise hold the assets and
properties owned,
leased, or otherwise held by it and necessary to carry on its
business as
presently conducted. The Company and each of its Subsidiaries is
in good
standing and is duly qualified to conduct business as a foreign
corporation in
each jurisdiction in which the nature of its business or the
ownership of
property make such qualification necessary, except where the
failure to be so
qualified would not reasonably be expected to have a Material
Adverse Effect.
3.2 Authorization. Each of Parent and the Company has the
requisite
corporate power to execute and deliver this Agreement and each
other Transaction
Document to be executed by it in connection with the
consummation of the
transactions contemplated hereby (the "Company Documents") and
to perform its
obligations hereunder and thereunder. The execution and delivery
by the Company
and Parent of this Agreement and each Company Document to which
it is a party
and the performance by each of them of its obligations hereunder
and thereunder
have been (or at the time of execution will be) duly authorized
by all necessary
corporate action on its part. This Agreement has been (and each
Company Document
to which it is a party will be) duly executed and delivered by
duly authorized
officers of each of the Company and Parent and, assuming the due
execution and
delivery of this Agreement and each Company Document by the
other party or
parties hereto or thereto, this Agreement and each Company
Document to which it
is a party shall constitute valid and binding obligations of the
Company and
Parent enforceable against the Company and Parent in accordance
with their
respective terms, except as may be limited by bankruptcy,
insolvency,
reorganization, moratorium, or other equivalent Laws affecting
the enforcement
of creditors' rights in general and subject to general
principles of equity
(regardless of whether such enforceability is considered in a
proceeding at law
or in equity).
3.3 Consents and Approvals. Except as would not reasonably be
expected
to have a Material Adverse Effect, no consent, approval, waiver,
order, or
authorization of, or registration, declaration, or filing with,
or notice to,
any Governmental Entity (including any consent, approval,
waiver, or
authorization in respect of any Contract or Permit) is required
to be obtained
or made by or in respect of Parent, the Company or any of the
Company's
Subsidiaries in
13
<PAGE>
connection with the execution and delivery of this Agreement or
any Company
Document by the Company or Parent, the performance by the
Company or Parent of
its obligations hereunder and thereunder or the consummation of
the transactions
contemplated hereby or thereby, other than (i) if required, the
filing of a Form
D with the SEC and any applicable state securities regulatory
authorities, (ii)
the filing of premerger notification and report forms under
the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended
(the "HSR
Act"), or (iii) any required filings or approvals with insurance
authorities in
New York State.
3.4 No Conflicts. The execution and delivery of this Agreement
does not
(and of each Company Document will not), and neither the
performance by the
Company or Parent of its obligations hereunder and thereunder,
nor the
consummation of the Financing or the transactions contemplated
hereby and
thereby, will, (i) conflict with the Certificate of
Incorporation or bylaws of
the Company or Parent, as the case may be, (ii) except as would
not reasonably
be expected to have a Material Adverse Effect, conflict with,
result in any
violation of, constitute a default (with or without notice,
lapse of time, or
both (a "Default")) under, or give rise to a right of
termination, cancellation,
or acceleration of, or any obligation or to loss of a benefit
under, any
Contract, or any contract or agreement that is material to the
business, assets,
financial condition or results of operation of the Company and
its Subsidiaries,
taken as a whole, (iii) violate, constitute a Default under, or
cause the
forfeiture, impairment, non-renewal, revocation, or suspension
of any Permit,
(iv) violate any citation, order, judgment, decree, writ, or
injunction
("Order") of any Governmental Entity applicable to Parent, the
Company or any of
the Company's Subsidiaries, (v) violate any Law applicable to
Parent, the
Company or any of the Company's Subsidiaries, or (vi) except as
would not
reasonably be expected to have a Material Adverse Effect, result
in the creation
of any Encumbrance upon any of the assets or properties of
Parent, the Company
or the Company's Subsidiaries.
3.5 Broker's Fees. No agent, broker, finder, investment
banker,
financial advisor, or other equivalent Person will be entitled
to any fee,
commission, or other compensation in connection with the
transactions
contemplated by this Agreement on the basis of any act or
statement made or
alleged to have been made by the Company, Parent or any of their
respective
Affiliates or Representatives, except for the fees and expenses
of Stephens
Inc., which fees and expenses will be paid out of proceeds from
this Transaction
in accordance with Section 2.4 hereof.
3.6 Capitalization.
(a) The authorized Capital Stock of the Company consists of
400,000,000 shares of Common Stock, of which 1,000 are issued
and
outstanding as of the date hereof. All of the issued and
outstanding
shares of Capital Stock of the Company are duly authorized,
validly
issued, fully paid, and nonassessable, and were not issued in
violation of
any preemptive rights or any federal or state securities Laws,
and are
owned beneficially and of record by Parent. Immediately after
the Closing,
but prior to the issuance of any shares of Common Stock under
the Stock
Incentive Plan, the Shares will constitute 25 % of the
outstanding Common
Stock of the Company on a fully diluted basis.
14
<PAGE>
(b) There are no outstanding options, warrants, and other
equivalent rights to purchase Capital Stock of the Company.
There are (i)
no authorized or outstanding securities, rights (preemptive or
other),
subscriptions, calls, commitments, warrants, options, or other
agreements
that give any Person the right to purchase, subscribe for, or
otherwise
receive or be issued Capital Stock of the Company or any
security
convertible into or exchangeable or exercisable for Capital
Stock of the
Company, (ii) no outstanding debt or equity securities of the
Company that
upon the conversion, exchange, or exercise thereof would require
the
issuance, sale, or transfer by the Company of any new or
additional
Capital Stock of the Company (or any other securities of the
Company
which, whether after notice, lapse of time, or payment of
monies, are or
would be convertible into or exchangeable or exercisable for
Capital Stock
of the Company), (iii) no agreements or commitments obligating
the Company
to repurchase, redeem, or otherwise acquire Capital Stock or
other
securities of the Company or its Subsidiaries, and (iv) no
outstanding or
authorized stock appreciation rights, phantom stock, stock
rights, or
other equity-based interests in respect of the Company. The
Company has
not issued any voting indebtedness.
(c) There is no proxy, stockholders agreement, voting trust,
or
other agreement or understanding to which the Company, Parent,
or to
Parent's Knowledge, any other Person, is a party or by which it
is bound
relating to the voting of any shares of Capital Stock of the
Company.
3.7 Subsidiaries and Equity Investments; Joint Ventures.
(a) Schedule 3.7 sets forth the name, jurisdiction of
incorporation, and the Company's percentage ownership interest
of Capital
Stock for each direct and indirect Subsidiary of the Company.
The Company
does not, directly or indirectly, own any Capital Stock of any
Person
other than the Subsidiaries set forth on Schedule 3.7. The
Company is not
a direct or indirect participant in any material joint venture
or other
equivalent arrangement.
(b) The outstanding shares of Capital Stock of each Subsidiary
of
the Company are duly authorized, validly issued, fully paid,
and
non-assessable, have not been issued in violation of any
preemptive
rights, and are owned of record and beneficially, directly or
indirectly,
by the Company, free and clear of all Encumbrances.
(c) There are (i) no authorized or outstanding securities,
rights
(preemptive or other), subscriptions, calls, commitments,
warrants,
options, or other agreements that give any Person the right to
purchase,
subscribe for, or otherwise receive or be issued Capital Stock
of any
Subsidiary of the Company or any security convertible into or
exchangeable
or exercisable for Capital Stock of any Subsidiary of the
Company, (ii) no
outstanding debt or equity securities of the Company or its
Subsidiaries
that upon the conversion, exchange, or exercise thereof would
require the
issuance, sale, or transfer by the Company or its Subsidiaries
of any new
or additional Capital Stock of any Subsidiary of the Company (or
any other
securities, which, whether after notice,
15
<PAGE>
lapse of time, or payment of monies, are or would be convertible
into or
exchangeable or exercisable for Capital Stock of any Subsidiary
of the
Company), (iii) no agreements or commitments obligating any
Subsidiary of
the Company to repurchase, redeem, or otherwise acquire Capital
Stock or
other Securities of the Company or its Subsidiaries and (iv)
no
outstanding or authorized stock appreciation rights, phantom
stock, stock
rights, or stock based interests in respect of any Subsidiary of
the
Company. No Subsidiary of the Company has issued any voting
indebtedness.
3.8 Authorization of Securities. When issued in accordance with
the
terms of this Agreement, the Shares will be duly authorized,
validly issued,
fully paid and nonassessable, free and clear of all
Encumbrances.
3.9 Investment Company Act. The Company is not, and after giving
effect
to the issuance of the Shares and the application of the
proceeds thereof will
not be, an "investment company" within the meaning of Investment
Company Act of
1940, as amended.
3.10 Financial Statements. Prior to the date of the Initial
Agreement,
the Company provided to TPG and THL (i) the annual combined
balance sheets of
the Company and its Subsidiaries as of December 31, 2003 and
2002 and the
related combined statements of earnings, equity and
comprehensive earnings and
cash flows for each of the years in the three-year period ended
December 31,
2003 (the "Annual Combined Financial Statements"), together with
the notes
thereto, and the draft report of KPMG LLP thereon which includes
a legend
indicating that certain transactions would have to be completed
before KPMG LLP
would be in a position to issue the draft report in final form,
and (ii) the
unaudited combined balance sheet of the Company and its
Subsidiaries as at June
30, 2004 reviewed by KPMG LLP (the "Interim Balance Sheet"), and
the related
combined statements of earnings and cash flows, for the six (6)
month period
then ended, the "Unaudited Financial Statements"). The Unaudited
Financial
Statements, together with the Annual Combined Financial
Statements are referred
to as the "Financial Statements". The Financial Statements have
been prepared in
accordance with U.S. generally accepted accounting principles
consistently
applied ("GAAP") and fairly present the combined financial
condition, assets and
liabilities, results of operations, cash flows, and changes in
equity and
comprehensive earnings of the Company and its Subsidiaries as of
the dates, and
for the periods, indicated therein, subject in the case of the
Unaudited
Financial Statements to lack of footnotes and a statement of
changes in equity
and comprehensive earnings and normal year end adjustments that
will not be
material. Since June 30, 2004, there has not been any change of
the Company's
accounting principles, methods, or policies except as required
by GAAP or as
would not reasonably be expected to have a Material Adverse
Effect. The results
and accounts of the entities listed on disclosure Schedule 3.10
are included in
the Financial Statements, but have been excluded from the final
formation of the
Company and its Subsidiaries and are therefore, not subject to
the terms of this
Transaction.
3.11 Absence of Undisclosed Liabilities, Indebtedness. The
Company and
its Subsidiaries have no Liabilities that are required to be
reflected in,
reserved against, or otherwise described in a balance sheet (or
the notes
thereto) prepared in accordance with GAAP except (i) those
Liabilities provided
for or reserved against in the Financial Statements (or set
forth in the notes
thereto), (ii) Liabilities arising in the ordinary course of
business consistent
with past
16
<PAGE>
practice since June 30, 2004, and (iii) Liabilities under this
Agreement.
Immediately after the Closing, other than the Indebtedness for
borrowed money
incurred in connection with the Financing and other than with
respect to Capital
Leases, neither the Company nor any of its Subsidiaries will
have any
Indebtedness.
3.12 Absence of Certain Changes. Except as set forth in the
Unaudited
Financial Statements and except as contemplated by the
Financing, since June 30,
2004, neither the Company nor any of its Subsidiaries has: (i)
terminated or
suffered any material amendment of any Material Contract; (ii)
suffered any
event or circumstance that has had or could reasonably be
expected to have a
Material Adverse Effect; (iii) other than in the ordinary course
of business
consistent with past practice, increased the salaries or other
compensation of,
or made any advance or loan to, any of its current or former
directors or
executive officers or made any increase in, or any addition to,
other benefits
to which any of its current or former directors or executive
officers may be
entitled; (iv) (other than the $2.7 Billion Note) declared, set
aside, or paid
any dividend or made or agreed to make any other distribution or
payment in
respect of its Capital Stock or redeemed, purchased, or
otherwise acquired or
agreed to redeem, purchase, or acquire any of its Capital Stock
or other
securities; (v) waived any right of material value to the
Company or its
Subsidiaries; or (vi) incurred any Indebtedness (other than the
$2.7 Billion
Note).
3.13 Litigation; Orders. There is no claim or judicial or
administrative
action, suit, proceeding, or investigation pending or, to
Parent's Knowledge,
threatened (i) that questions the validity of this Agreement or
any other
Transaction Document, the performance by the Company or Parent
of the
obligations to be performed by it hereunder or thereunder or the
consummation of
the transactions contemplated hereby or thereby, or (ii) except
as would not
reasonably be expected to have a Material Adverse Effect,
relating to the
business of the Company or any of its Subsidiaries (as now
conducted or as
proposed to be conducted) or materially affecting the Company or
any of its
Subsidiaries or any of their respective assets or properties.
There is no
material Order of any Governmental Entity binding on the
Company, any of its
Subsidiaries, or any of their respective assets or
properties.
3.14 Compliance with Laws. The Company and each of its
Subsidiaries has
complied in all material respects with each Law and Order
binding on it or on
any of its assets or properties and is not currently in material
violation of
any such Law or Order, and there have been no notices or Orders
of noncompliance
issued to the Company of any of its Subsidiaries under or in
respect of any such
Law.
3.15 Permits. The Company and each of its Subsidiaries owns,
holds,
possesses, or lawfully uses in its business all approvals,
authorizations,
certifications, franchises, licenses, permits, and equivalent
authorities
("Permits") that are necessary for the conduct of their business
as currently
conducted or the ownership and use of their assets or
properties, in compliance
with all Laws, except for those Permits the failure to obtain or
loss of which
would not reasonably be expected to have a Material Adverse
Effect. Neither the
Company nor any of its Subsidiaries is in Default under, or has
received any
notice of any claim of Default in respect of, any such Permits,
except as would
not reasonably be expected to have a Material Adverse Effect. To
Parent's
Knowledge, all such Permits are renewable by their respective
terms in the
ordinary
17
<PAGE>
course of business without the need to comply with any special
qualification
procedures or to pay any amounts other than routine filing
fees.
3.16 Contracts. Schedule 3.16 sets forth all of the following
Contracts
to which the Company or any of its Subsidiaries is a party or by
which it is
bound (the "Material Contracts"): (i) Contracts with any labor
union or
association representing any employee of the Company or any of
its Subsidiaries;
(ii) Contracts for the sale of any of the assets of the Company
or any of its
Subsidiaries other than in the ordinary course of business or
for the grant to
any Person of any preferential rights to purchase any of their
assets; (iii)
Contracts containing covenants of the Company or any of its
Subsidiaries not to
compete in any line of business or with any Person in any
geographical area;
(iv) Contracts granting any registration or similar right in
respect of
securities of the Company or any of its Subsidiaries, and (v)
Contracts pursuant
to which the Company or any of its Subsidiaries acquired the
capital stock or
assets of another entity and which contain earn-out provisions
relating to such
acquisition requiring the Company or any of its Subsidiaries to
make payments in
the future in excess of $250,000 individually or $750,000 in the
aggregate. All
of the Contracts to which the Company or any of its Subsidiaries
is a party or
by which it is bound are in full force and effect and are the
legal, valid, and
binding obligations of the Company and/or its Subsidiaries,
enforceable against
them in accordance with their terms, subject to applicable
bankruptcy,
insolvency, reorganization, moratorium, and equivalent Laws
affecting creditors'
rights and remedies generally and subject, as to enforceability,
to general
principles of equity (regardless of whether enforcement is
sought in a
proceeding at law or in equity). Neither the Company nor any of
its Subsidiaries
is in default, except as would not reasonably be expected to
have a Material
Adverse Effect, in any respect under any Contract of the Company
and its
Subsidiaries, nor, to Parent's Knowledge, is any other party to
any such
Contract in default thereunder in any respect.
3.17 Intellectual Property.
(a) Schedule 3.17(a) sets forth an accurate and complete list
of
all material Patents, registered Marks, pending applications
for
registrations of any Marks, registered Copyrights, and
pending
applications for registration of Copyrights, owned or filed by
the Company
or any of its Subsidiaries.
(b) The Company or its Subsidiaries is the sole and
exclusive
owner of all right, title and interest in and to all of the
Patents, the
registered Marks, and each of the registered Copyrights and
pending
applications filed by the Company or its Subsidiary therefor,
and each of
the other Copyrights in any works of authorship prepared by or
for the
Company or its Subsidiary that resulted from or arose out of any
work
performed by or on behalf of the Company or by any employee,
officer,
consultant or contractor of any of them. To Parent's Knowledge
and except
as would not reasonably be expected to have a Material Adverse
Effect, the
Company and its Subsidiaries is the sole and exclusive owner of,
or has
valid and continuing rights to use, sell or license, as the case
may be,
all other Intellectual Property used, sold or licensed by the
Company or
its Subsidiaries in their businesses as presently conducted,
free and
clear of all Encumbrances.
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<PAGE>
(c) To Parent's Knowledge, and except as would not reasonably
be
expected to have a Material Adverse Effect, the Intellectual
Property
owned, used, practiced or otherwise commercially exploited by
the Company
or its Subsidiaries in connection with their businesses as
presently
conducted (the "Company Intellectual Property") do not
constitute an
unauthorized use or misappropriation of any Patent, Copyright,
trade
secret or other equivalent right, of any Person and do not
infringe,
constitute an unauthorized use of, or violate any other right of
any
Person. The Intellectual Property owned by or licensed to the
Company or
its Subsidiaries, or as to which the Company or its Subsidiaries
otherwise
possess valid and continuing rights for use, includes all of the
material
intellectual property rights necessary to enable the Company and
its
Subsidiaries to conduct their businesses in the manner in which
such
businesses are currently being conducted.
(d) Neither the Company, nor any of its Subsidiaries: (i) is
a
party to any suit, action or proceeding which involves a claim
of
infringement or misappropriation of any Patent, Copyright or
trade secret
right by the Company or any of its Subsidiaries against any
third party;
(ii) has provided written notice to any third party alleging
infringement
or misappropriation of the Company's and its Subsidiaries'
Patents,
Copyrights or trade secrets; (iii) is a party to any suit,
action or
proceeding which involves a claim of infringement or
misappropriation of
any Patent, Copyright or trade secret by a third party against
the Company
or any of its Subsidiaries; (iv) except as would not reasonably
be
expected to have a Material Adverse Effect, has received any
written
notice from any third party alleging infringement or
misappropriation of
such third party's Patents, Copyrights or trade secrets. To
Parent's
Knowledge and except as would not reasonably be expected to have
a
Material Adverse Effect, the manufacturing, marketing,
licensing, use or
sale of the products or the performance of the services offered
by the
Company and its Subsidiaries in the ordinary course of its
respective
businesses as presently conducted do not currently infringe, and
have not
infringed, upon any Patent, Copyright or trade secret right of
any third
party.
(e) No trade secret or any other non-public, proprietary
information material to the Business as presently conducted has
been
authorized to be disclosed or, to Parent's Knowledge, has been
actually
disclosed by the Company or any of its Subsidiaries to any
employee or any
third party other than pursuant to a non-disclosure agreement
or
employment policy restricting the disclosure and use of such
trade secret
or non-public proprietary information. Except as would not
reasonably be
expected to have a Material Adverse Effect, the Company and
its
Subsidiaries have taken adequate security measures to protect
the secrecy
and confidentiality of all trade secrets and any other
material
confidential information of the Company and its Subsidiaries
which
measures are reasonable in the industry in which the Company and
its
Subsidiaries operate.
(f) The Company and its Subsidiaries have not received
written
notice from any current or prior officers, employees, or
Contractors of
the Company and its Subsidiaries claiming any ownership interest
in any
Company Intellectual Property as a
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result of having been involved in the development of such
property while
employed by or performing services for the Company or its
Subsidiaries.
(g) Except as would not reasonably be expected to have a
Material
Adverse Effect, the Company's unmodified version of its material
software
that is marketed and licensed by the Company and its
Subsidiaries to its
customers (the "Products") conforms in all material respects
with the
documentation prepared, marketed and licensed by the Company in
respect of
such Products. Except as would not reasonably be expected to
have a
Material Adverse Effect: (i) there are no defects, malfunctions
or
nonconformities in the unmodified version of the Products that
cause the
unmodified version of the Products, as properly installed, not
to perform
the material functions for which they are intended, on the
whole, as
provided in the Company's documentation, and (ii) there are no
errors in
any documentation, specifications, manuals, and user guides
associated
with or used or produced in the development, maintenance or
marketing of
the Company Intellectual Property.
3.18 Affiliate Transactions. Except as contemplated by the
Intercompany
Agreements, and except for arrangements between the Parent or
its Subsidiaries
(other than the Company and its Subsidiaries) on the one hand,
and the Company
and its Subsidiaries on the other hand, which do not involve
payments by any
party of more than $500,000 annually in the aggregate and which
do not restrict
the ability of the Company and its Subsidiaries to engage in any
line of
business in any geographic area, no stockholder, officer, or
director of the
Company or any of its Subsidiaries, or to Parent's Knowledge,
any member of his
or her immediate family, or any Person controlled by any of the
foregoing
Persons (collectively, "Related Persons") (i) owes any amount to
the Company or
any of its Subsidiaries nor does the Company or any of its
Subsidiaries owe any
amount (other than employment compensation or benefits), or has
it committed to
make any loan or extend or guarantee credit to or for the
benefit of, any
Related Person, (ii) has made any claim or cause of action or
any action, suit,
or proceeding whatsoever against the Company or any of its
Subsidiaries, (iii)
to Parent's Knowledge, (other than through stock ownership in a
public company)
has any direct or indirect ownership interest in, or is an
officer, director,
employee, consultant, or agent of, any Person that has a
business relationship
with the Company (or any of its Subsidiaries) or that competes
with the Company
or any of its Subsidiaries, or (iv) owns, directly or
indirectly, in whole or in
part, any real property, leasehold interests, or other property
or any Permits,
the use of which is necessary for the conduct of the business of
the Company or
its Subsidiaries as currently conducted and as proposed to be
conducted. To the
Company's Knowledge, no Related Person has any direct or
indirect (other than
through stock ownership in a public company) interest in any
Contract to which
the Company or its Subsidiaries is a party or by which it is
bound.
3.19 Assets and Properties. The Company and each of its
Subsidiaries has
good and marketable title to its assets and properties, and a
valid leasehold
interest in leasehold estates, free and clear of all
Encumbrances, other than
(i) Permitted Encumbrances and (ii) those that have arisen in
the ordinary
course of business consistent with past practice and that do not
materially
impair the ownership or use of such assets or properties. Such
assets and
properties are in such operating condition and repair as is
suitable for the
uses for which they are used in the business of the Company and
its
Subsidiaries, are not subject to any condition which materially
interferes
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with the use thereof by the Company or its Subsidiaries, as the
case may be,
and, together with rights under the Intercompany Agreements,
constitute all
assets, properties, interests in properties and rights necessary
to permit the
Company and its Subsidiaries to carry on their business after
the Closing
substantially as conducted by the Company and its Subsidiaries
prior thereto.
3.20 Insurance. The Company and each of its Subsidiaries has in
full
force and effect all insurance policies, with coverage, in
customary amounts
(subject to reasonable deductibles), sufficient to provide
adequate insurance
coverage for all of the assets and properties of the Company and
its
Subsidiaries for all material risks in compliance with all
applicable Laws,
Orders, and Permits. There are no pending claims against any
such insurance
policy as to which the insurers have denied liability.
3.21 Tax Matters.
(a) (i) All income, franchise and other material Tax Returns
required to be filed by or with respect to the Company, any of
its
Subsidiaries or any Affiliated Group of which the Company or any
of its
Subsidiaries is or was a member have been properly prepared and
duly and
timely filed with the appropriate taxing authorities in all
jurisdictions
in which such Tax Returns are required to be filed (after giving
effect to
any valid extensions of time in which to make such filings);
(ii) all
amounts of Taxes due and payable by or with respect to the
Company, any of
its Subsidiaries or any Affiliated Group of which the Company or
any of
its Subsidiaries is or was a member for any periods prior to (A)
the date
of this Agreement have been fully and timely paid or accrued on
the
consolidated balance sheet of the Company and its Subsidiaries
dated
November 30, 2004 previously delivered by Parent to Purchasers
and
attached hereto as Schedule 3.21(a)(ii)(A), and (B) the last day
of the
month immediately preceding the Closing Date will have been
fully and
timely paid or accrued in the financial statements delivered to
Purchasers
pursuant to Section 5.11 (provided that such accruals are made
consistent
with past practice, in accordance with GAAP and reflect only
Taxes
properly allocable to the Company and its Subsidiaries (as
opposed to
those allocable to Parent and its Subsidiaries other than the
Company and
its Subsidiaries), unless being contested in good faith by the
Company or
its Subsidiaries (such contested matters and the exposure
thereunder as of
the date of the Initial Agreement are set forth on Schedule
3.21(a) and
such contested matters arising after the date of the Initial
Agreement and
prior to the Closing Date shall be adequately reserved for in
the
financial statements delivered to Purchasers pursuant to Section
5.11);
and (iii) with respect to any taxable period prior to the
Closing Date for
which (A) Tax Returns have not yet been filed, or (B) Taxes not
yet due or
owing, the Company and its Subsidiaries will have made due and
sufficient
current accruals for any such Taxes on the financial statements
delivered
to Purchasers pursuant to Section 5.11.
(b) The Company and each of its Subsidiaries have complied in
all
material respects with all applicable Laws relating to the
payment and
withholding of Taxes and have duly and timely withheld from
employee
salaries, wages, other compensation, and other amounts of Taxes
and have
paid over to the appropriate taxing authorities all
21
<PAGE>
amounts required to be so withheld and paid over for all
periods
(including portions thereof) ending on or prior to the Closing
Date under
all applicable Laws.
(c) The Company has delivered or made available to Purchasers
true
and complete copies of (i) all federal, state, local, and
foreign income
and franchise Tax Returns of the Company and each of its
Subsidiaries (or,
in the case of Tax Returns filed for an Affiliated Group, the
portion of
such consolidated Tax Returns relating to the Company and
its
subsidiaries) relating to the taxable periods since December 31,
2000, and
(ii) any audit report issued within the last three years
relating to Taxes
due from or in respect of the Company or any of its
Subsidiaries.
(d) To Parent's Knowledge, with respect to the Company and
its
Subsidiaries no claim has been made by a taxing authority in
a
jurisdiction where the Company or any of its Subsidiaries does
not file a
type of Tax Return such that it is or may be subject to that
type of Tax
in that jurisdiction.
(e) To Parent's Knowledge, with respect to the Company and
its
Subsidiaries, there are no current audits or investigations by
any taxing
authority in progress, nor has the Company or any of its
Subsidiaries
received written notice from any taxing authority that it
intends to
conduct such an audit or investigation. No agreement, waiver or
other
document or arrangement extending or having the effect of
extending the
period for assessment or collection of Taxes (including any
applicable
statute of limitation), has been executed or filed with the IRS
or any
other taxing authority by or on behalf of the Company or any of
its
Subsidiaries and no power of attorney in respect of any Tax
matter is
currently in force.
(f) Neither the Company, any of its Subsidiaries nor any
other
Person on any of their behalf has (i) agreed to or is required
to make any
adjustments pursuant to Section 481(a) of the Code or any
similar
provision of Law by reason of a change in accounting method
initiated by
the Company or any of its Subsidiaries or has any knowledge that
the IRS
or any other taxing authority has proposed any such adjustment
or change
in accounting method, or has any application pending with any
taxing
authority requesting permission for any changes in accounting
methods that
relate to the business or operations of the Company or any of
its
subsidiaries, or (ii) executed or entered into a closing
agreement
pursuant to Section 7121 of the Code or any predecessor
provision thereof
or any similar provision of Law in respect of the Company or any
of its
Subsidiaries.
(g) Neither the Company nor its Subsidiaries is a party to any
tax
sharing agreement or arrangement, or any other agreement
relating to the
allocation of responsibility for any Tax, pursuant to which it
will have
any obligation to make any payments after the Closing.
(h) There are no Encumbrances (other than Permitted
Encumbrances)
as a result of any unpaid Taxes upon any of the assets of the
Company or
its Subsidiaries.
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<PAGE>
(i) All distributions of shares by, or consisting of shares
of,
the Company, any of its Subsidiaries or any member of an
Affiliated Group
of which the Company or any of its Subsidiaries is or was a
member,
purporting to qualify for tax-free treatment under Section 355
of the Code
so qualified. With respect to each distribution of shares
purporting to
qualify for tax-free treatment under Section 355 of the Code,
neither the
Company nor any of its Subsidiaries has constituted a
"distributing
corporation" or a "controlled corporation" (within the meaning
of Section
355(a)(1)(A) of the Code) in a distribution of shares qualifying
for
tax-free treatment under Section 355 of the Code (i) in the two
(2) years
prior to the date of the Initial Agreement in a distribution
that
constitutes part of a "plan" or "series of related transactions"
(within
the meaning of Section 355(e) of the Code) in conjunction with
this
acquisition or any other transaction (whether occurring before
or after
the Closing) or (ii) in a distribution that could otherwise
constitute
part of a "plan" or "series of related transactions" (within the
meaning
of Section 355(e) of the Code) in conjunction with this
acquisition.
(j) Neither the Company nor any of its Subsidiaries has
constituted a "U.S. real property holding company" within the
meaning of
Section 897(c)(2) of the Code at any time during the last five
years.
(k) To Parent's knowledge, after due inquiry, neither the
Company
nor any of its Subsidiaries has engaged in any "reportable
transaction"
within the meaning of Treasury Regulation Section 1.6011-4.
(l) As of the date of the Initial Agreement, the Company and
its
Subsidiaries, in the aggregate, own intangible assets that are
amortizable
for federal income tax purposes with a tax basis equal to at
least
$1,000,000,000.
3.22 Employee Benefit Plans.
(a) Schedule 3.22(a) sets forth a true and complete list of
all
"employee benefit plans" (as defined in Section 3(3) of the
Employee
Retirement Income Security Act of 1974, as amended ("ERISA")),
and any
employee benefit plans, agreements, arrangements, programs or
payroll
practices (including, without limitation, severance pay,
vacation pay,
company awards, salary continuation for disability, sick
leave,
retirement, deferred compensation, equity-based, bonus or other
incentive
compensation, stock pur
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