<PAGE>
EXHIBIT 2.1
EXECUTION COPY
STOCK PURCHASE AGREEMENT
by
and among
OPEN SOLUTIONS INC.,
HUSKY ACQUISITION CORPORATION,
THE BISYS GROUP, INC.,
and
BISYS INC.
Dated as of September 15, 2005
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ARTICLE I
DEFINITIONS
SECTION 1.01
Definitions..............................................
1
ARTICLE II
PURCHASE AND SALE OF SHARES
SECTION 2.01 The
Transactions......................................... 9
SECTION 2.02 Purchase
Price........................................... 9
SECTION 2.03 Purchase Price
Adjustments............................... 9
SECTION 2.04
Closing..................................................
14
SECTION 2.05 Further
Assurances....................................... 15
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLER
PARENT AND THE SELLER
SECTION 3.01 Authority Relative to
Agreement.......................... 15
SECTION 3.02 Capitalization; Title
to Shares.......................... 15
SECTION 3.03 Execution and
Performance of Agreement; Validity and
Binding Nature........................................ 16
SECTION 3.04
Non-Contravention........................................
16
SECTION 3.05 Organization,
Standing, and Qualification................ 16
SECTION 3.06
Subsidiaries.............................................
17
SECTION 3.07 Organizational
Documents................................. 17
SECTION 3.08 Financial
Statements..................................... 17
SECTION 3.09 Books and
Records........................................ 18
SECTION 3.10 Intellectual
Property.................................... 18
SECTION 3.11 Business
Employees....................................... 19
SECTION 3.12 Employee Benefit
Plans................................... 20
SECTION 3.13 Real
Property............................................ 21
SECTION 3.14 Personal Property,
Accounts Receivable, Inventory and
Working Capital....................................... 22
SECTION 3.15
Taxes....................................................
23
SECTION 3.16
Litigation...............................................
25
SECTION 3.17
Contracts................................................
25
SECTION 3.18 Customers and
Suppliers.................................. 28
SECTION 3.19 Labor
Relations.......................................... 28
SECTION 3.20
Insurance................................................
29
SECTION 3.21 Conduct of the
Business.................................. 29
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SECTION 3.22 Third Party
Consents..................................... 30
SECTION 3.23 Loans to or from
Directors, Officers, or Business
Employees; Intercompany Balances...................... 30
SECTION 3.24 Compliance with
Laws..................................... 30
SECTION 3.25 Environmental
Matters.................................... 31
SECTION 3.26 No
Broker................................................ 31
SECTION 3.27 Sufficiency of
Assets.................................... 31
SECTION 3.28 Interests in Clients,
Suppliers, Etc.; Affiliate
Transactions.......................................... 31
SECTION 3.29 Bank Accounts and
Powers of Attorney..................... 32
SECTION 3.30 Warranty
Claims.......................................... 32
SECTION 3.31 BISYS Management
Company................................. 32
SECTION 3.32
Disclosure...............................................
32
SECTION 3.33 No Other
Representations or Warranties................... 32
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER PARENT AND THE
PURCHASER
SECTION 4.01 Authority Relative to
Agreement.......................... 33
SECTION 4.02 Execution and
Performance of Agreement; Validity and
Binding Nature........................................ 33
SECTION 4.03
Non-Contravention........................................
33
SECTION 4.04 Organization,
Standing, and Qualification................ 33
SECTION 4.05 Financial
Condition...................................... 34
SECTION 4.06
Bankruptcy...............................................
34
SECTION 4.07
Litigation...............................................
34
SECTION 4.08 No
Broker................................................ 34
SECTION 4.09 Investment
Representations............................... 34
SECTION 4.10 Third Party
Consents..................................... 35
SECTION 4.11 No Other
Representations or Warranties................... 35
ARTICLE V
COVENANTS
SECTION 5.01 Conduct of the
Business.................................. 35
SECTION 5.02 Access to Information;
Cooperation....................... 38
SECTION 5.03 Permitted
Actions........................................ 39
SECTION 5.04 Consents and
Approvals; Assignment; Transfer of
Intellectual Property................................. 40
SECTION 5.05 Approvals from
Governmental Authorities.................. 42
SECTION 5.06 HSR Act
Filing........................................... 42
SECTION 5.07 Notification of
Certain Matters.......................... 43
SECTION 5.08 Business
Employees....................................... 43
SECTION 5.09
Non-Solicitation.........................................
44
SECTION 5.10 Intercompany Balances;
Termination of Affiliate
Agreements............................................ 44
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SECTION 5.11 Release of
Guarantees.................................... 45
SECTION 5.12
Resignations.............................................
45
SECTION 5.13
Schedules................................................
45
SECTION 5.14
Confidentiality..........................................
46
SECTION 5.15 Non-Competition;
Non-Interference........................ 46
SECTION 5.16 Exclusive
Dealing........................................ 47
SECTION 5.17 Shared Assets and
Services; Change of Name;
Use of Marks.......................................... 47
SECTION 5.18 Accounts Receivable
and Accounts Payable................. 48
SECTION 5.19 Interim Financial
Statements............................. 48
SECTION 5.20 Transaction Related
Expenses............................. 49
SECTION 5.21 Section 404
Documentation................................ 49
SECTION 5.22 Agreement with BISYS
Retirement Services, Inc............ 49
ARTICLE VI
TAX MATTERS
SECTION 6.01 Responsibility for
Taxes................................. 49
SECTION 6.02 Tax Returns and
Contests................................. 51
SECTION 6.03 Section 338(h)(10)
Election.............................. 53
SECTION 6.04
Refunds..................................................
54
SECTION 6.05 Purchase Price
Adjustment................................ 54
SECTION 6.06
Exclusivity..............................................
54
SECTION 6.07 Tax Sharing
Agreements................................... 54
ARTICLE VII
CONDITIONS TO CLOSING
SECTION 7.01 Conditions to Each
Party's Obligation to Close........... 55
SECTION 7.02 Conditions to the
Obligation of the Seller............... 55
SECTION 7.03 Conditions to the
Obligation of the Purchaser............ 56
SECTION 7.04 Waiver of
Conditions..................................... 57
ARTICLE VIII
INDEMNIFICATION
SECTION 8.01 Seller's
Indemnification................................. 57
SECTION 8.02 Purchaser's
Indemnification.............................. 58
SECTION 8.03 Limitations on Amount
of Damages......................... 58
SECTION 8.04
Procedures...............................................
59
SECTION 8.05 Survival of
Representations and Warranties............... 60
SECTION 8.06 Mitigation of
Damages.................................... 61
SECTION 8.07 Calculation of
Damages................................... 61
SECTION 8.08 Exclusive
Remedy......................................... 61
SECTION 8.09 Limitation of
Damages.................................... 62
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ARTICLE IX
TERMINATION AND ABANDONMENT
SECTION 9.01 Termination and
Abandonment.............................. 62
SECTION 9.02 Effect of
Termination.................................... 63
ARTICLE X
MISCELLANEOUS
SECTION 10.01 Fees and
Expenses........................................ 63
SECTION 10.02
Publicity................................................
64
SECTION 10.03
Amendments...............................................
64
SECTION 10.04 Section Headings and
Captions............................ 64
SECTION 10.05 Counterparts; Third Party
Beneficiaries.................. 64
SECTION 10.06
Notices..................................................
65
SECTION 10.07
Waivers..................................................
65
SECTION 10.08 Entire
Agreement......................................... 66
SECTION 10.09 Applicable
Law........................................... 66
SECTION 10.10 Waiver of Jury
Trial..................................... 66
SECTION 10.11
Severability.............................................
66
SECTION 10.12
Jurisdiction.............................................
66
SECTION 10.13 Successors and
Assigns................................... 67
SECTION 10.14 Waiver of
Conflict....................................... 67
SECTION 10.15 No Right of
Set-Off...................................... 67
SECTION 10.16
Guarantee................................................
67
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STOCK PURCHASE AGREEMENT
THIS STOCK
PURCHASE AGREEMENT (this "AGREEMENT") is made and entered into
as of September 15, 2005, 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").
WHEREAS, BIS LP
Inc., a Delaware corporation and a wholly-owned subsidiary
of the Seller (the "COMPANY"), is engaged
in the business of providing
outsourced information and account
processing services, asset-retention
solutions, and specialized back-office
services and check imaging solutions to
banks, insurance companies and corporations
(the "BUSINESS");
WHEREAS, the
Seller owns all of the issued and outstanding shares of the
common stock, no par value per share, of
the Company (the "SHARES");
WHEREAS, the
Seller desires to sell to the Purchaser, and the Purchaser
desires to purchase from the Seller, the
Shares, upon the terms and subject to
the conditions set forth in this Agreement;
and
NOW, THEREFORE,
in consideration of the respective representations,
warranties, covenants, and conditions
contained in this Agreement, and to set
forth the terms and conditions of the sale
and purchase of the Shares, the
parties agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01
Definitions.
(a) As used in
this Agreement, the following terms shall have the following
meanings:
"ACTION" means
any complaint, claim, prosecution, indictment, action, suit,
arbitration or proceeding by or before any
Governmental Authority or arbitrator.
"AFFILIATE"
means, with respect to a specified Person, any other Person
controlling, controlled by or under common
control with such Person, including,
in the case of the Purchaser Parent after
the Closing, the Company and the
Subsidiaries.
"AFFILIATED
GROUP" means an affiliated group as defined in Section 1504 of
the Code (or any analogous combined,
consolidated, or unitary group defined
under state, local, or foreign income Tax
law).
"BALANCE SHEET"
means the unaudited consolidated balance sheet of the
Company and the Subsidiaries as of June 30,
2005 included in the Financial
Statements and attached hereto as
<PAGE>
SCHEDULE 1.01(A)-1; provided, that the
categories of assets and liabilities set
forth on SCHEDULE 1.01(A)-2 shall not
constitute assets and liabilities for
purposes of the Balance Sheet.
"BALANCE SHEET
NET WORKING CAPITAL" means the Company's Net Working Capital
as of June 30, 2005, as determined from the
Balance Sheet, the amount of which
is $5,000,000.
"BUSINESS DAY"
shall mean any day, other than a Saturday, Sunday or a day
on which banks located in New York, New
York shall be authorized or required by
law to close.
"BUSINESS
EMPLOYEES" means (i) the current and, except for purposes of
the
definition of "Knowledge", inactive (but
only to the extent that such Person is
entitled to any payments or benefits from
the Company or a Subsidiary in respect
of employment in the Business) full and
part-time (if any) employees of the
Company and the Subsidiaries, and (ii) the
current employees of certain
Affiliates of the Company (other than the
Subsidiaries) who provide services to
or for the Company and the Subsidiaries and
who are identified on SCHEDULE
1.01(B).
"CLOSING" means
the closing of the Transactions as provided in Section
2.04.
"CLOSING DATE"
means the date on which the Closing shall occur, as provided
in Section 2.04.
"CODE" means the
Internal Revenue Code of 1986, as amended, and rules and
regulations promulgated thereunder.
"CONFIDENTIALITY
AGREEMENT" means the Confidentiality Agreement dated
January 17, 2005 between the Purchaser
Parent and Bear, Stearns & Co., Inc. for
itself and on behalf of the Seller
Parent.
"CONTRACT" means
any agreement, contract, obligation, promise, note, bond,
mortgage, indenture, instrument, lease,
franchise, license, permit,
understanding, arrangement or undertaking
(whether written or oral, express or
implied) (each, including all amendments to
each of them) that is legally
binding.
"CONTROL"
(including the terms "CONTROLLING," "CONTROLLED BY" and "UNDER
COMMON CONTROL WITH") means the possession,
directly or indirectly, of the power
to direct or cause the direction of the
management and policies of a Person,
whether through the ownership of voting
securities, by contract, or otherwise.
"DAMAGES" means
actual losses, liabilities, damages or expenses, including
reasonable fees and expenses of experts and
counsel, but not including any
punitive, exemplary, incidental, indirect,
special or consequential damages,
except to the extent that such damages are
actually paid or payable by an
Indemnified Party to a third Person
pursuant to a Third Person Claim.
"DISREGARDED
ENTITY" means an entity that is disregarded an as entity
separate from its owner under Treasury
Regulation Section 301.7701-3(a).
"DROP DEAD DATE"
means December 31, 2005.
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"EEOC" means the
United States Equal Employment Opportunity Commission.
"EMPLOYEE
BENEFIT PLANS" means collectively, the "employee benefit plans"
(within the meaning of Section 3(3) of
ERISA), including multiemployer plans
within the meaning of Section 3(37) of
ERISA, and all stock purchase, stock
option, severance, employment,
change-in-control, fringe benefit, collective
bargaining, bonus, incentive, deferred
compensation, employee loan and all other
employee benefit plans, agreements,
programs, and other arrangements, whether or
not subject to ERISA, (including any
funding mechanism therefor now in effect or
required in the future as a result of the
Transaction or otherwise), whether
formal or informal, oral or written,
legally binding or not, under which (i) any
Business Employee or current or former
director, officer or consultant of the
Company or the Subsidiaries has any present
or future right to benefits and
which are contributed to, sponsored by or
maintained by the Seller, the Company,
any Subsidiary, or any of their respective
Affiliates, or (ii) the Company or
any Subsidiary has any present or future
liability.
"ENVIRONMENTAL CLAIM"
means any written notice, claim, demand, action,
suit, proceeding or other written
communication by any Person alleging any
violation of, or any actual or potential
liability under, any Environmental
Laws.
"ENVIRONMENTAL
LAWS" means all foreign, federal and state statutes, rules,
regulations, ordinances, orders, decrees
and common law relating to
environmental contamination, pollution or
the protection of the environment,
natural resources or human health or safety
as it relates to environmental
protection.
"ERISA" means
the Employee Retirement Income Security Act of 1974, as
amended.
"FEDERAL FUNDS
RATE" means for each day, the rate per annum (rounded
upward, if necessary, to the nearest 1/100
of 1%), which is the weighted average
of the rates on overnight federal funds
transactions arranged on such day by
federal funds brokers, computed and
released by the Federal Reserve Bank of New
York (or any successor). Any change in the
Federal Funds Rate shall be effective
immediately without notice or demand of any
kind.
"FINANCIAL
STATEMENTS" means, collectively, the Balance Sheet and the
related unaudited consolidated statement of
income of the Company and the
Subsidiaries for the year ended June 30,
2005, and the unaudited consolidated
balance sheets of the Company and the
Subsidiaries as of June 30, 2004 and June
30, 2003 and the related unaudited
consolidated statements of income for the
fiscal years then ended.
"GAAP" means
accounting principles generally accepted in the United States
of America.
"GOVERNMENTAL
AUTHORITY" means any foreign, federal, state or local
government, and any foreign, federal state
or local governmental
instrumentality, agency, authority or
court.
"GOVERNMENTAL
AUTHORIZATIONS" means any license, permit (including
occupancy permit), Order, franchise
agreement, concession, grant, certificate,
authorization, consent or any approval from
a Governmental Authority, or
termination or lapse of any waiting period
with respect to a filing with a
Governmental Authority (including the
termination or lapse of the
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waiting period under the HSR Act), that is
necessary to transfer the Shares
pursuant to this Agreement or to permit the
Company to operate the Business
immediately after the Closing in
substantially the same manner as the Company
operated the Business immediately before
the Closing.
"HAZARDOUS
MATERIALS" means all materials or substances regulated under
any
Environmental Laws, including petroleum,
petroleum products, asbestos and
polychlorinated biphenyls.
"HSR ACT" means
the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended, and the rules and regulations
promulgated thereunder.
"INDEBTEDNESS"
means the aggregate amount of the principal of, and accrued
and unpaid interest and penalties on, all
obligations for borrowed money, or any
portion thereof, and all costs, expenses
and other charges included therein,
that is due and payable on or after the
Closing Date.
"INDEMNIFIED
PARTY" means a party that has received notice or that has
knowledge of any claim or the commencement
of any Action for which such party
may be entitled to indemnification under
Article VIII.
"INDEMNIFYING
PARTY" means a party that is required to indemnify any other
party under Article VIII.
"INTELLECTUAL
PROPERTY" means any or all intellectual property rights of
any kind, including any of the following,
and all rights in, arising out of, or
associated therewith: (i) all patents,
patent applications, and all inventions
and discoveries, whether or not patentable,
technology, processes and invention
disclosures; (ii) all computer software,
applications, code and related items;
(iii) all copyrights, copyrightable works,
copyright registrations, and
copyright applications relating to any
media (including print, online or
electronic); (iv) all trade names, logos,
trademarks, and service marks, all
registrations and applications therefor,
and the goodwill associated therewith;
(v) all web sites, website content and
domain names (including registrations
thereof); and (vi) all Trade Secret
Information. For purposes of this Agreement,
Intellectual Property and Company
Intellectual Property do not include the name
"BISYS" or any logo, trademark, trade name
or service mark owned by the Seller
or any of its Affiliates or used by the
Company or any Subsidiary using the name
"BISYS" or used together or associated with
the name "BISYS," or any rights with
respect thereto.
"INTERCOMPANY
ACCOUNTS" consist of: (i) an intercompany account for
corporate funded transactions, including
payroll, payroll taxes, employee
benefits, corporate-funded vendor payments
in respect of multi-divisional
services or products, and incentive and
bonus payments; (ii) an intradivisional
account for transactions in the ordinary
course of business between or among
subsidiaries of Seller Parent other than
corporate-funded transactions; (iii) an
intercompany line of credit account for
amounts owed to or from Seller Parent by
subsidiaries of Seller Parent in the
ordinary course of business; (iv) an
intercompany management fee account for
allocation of corporate expenses to each
of Seller Parent's subsidiaries; and (v)
an
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intercompany royalty fee account for the
use of Seller Parent's trademarks and
service marks by subsidiaries of Seller
Parent.
"INTERCOMPANY
BALANCES" means any and all intercompany balances (including,
without limitation, Indebtedness and all
other liabilities) between the Company
or any Subsidiary, on the one hand, and the
Seller and its Affiliates (other
than the Company and the Subsidiaries), on
the other hand, arising from
transactions of any kind between or among
the Company or the Subsidiaries and
any of their respective Affiliates, whether
shown on the Balance Sheet or
arising after the date of the Balance
Sheet. Such intercompany balances are
reflected in the Intercompany Accounts.
"KNOWLEDGE" in
the case of the Seller Parent and the Seller means the
knowledge of the Persons identified on
SCHEDULE 1.01(C) after reasonable inquiry
of Business Employees who would reasonably
be expected to have actual knowledge
of the matters in question, and in the case
of the Purchaser means the knowledge
of the Persons identified on SCHEDULE
1.01(D) after reasonable inquiry of
employees of the Purchaser who would
reasonably be expected to have actual
knowledge of the matters in question.
"LAWS" means any
Order or any ordinance, regulation, statute, permit,
license, certificate or award of any
Governmental Authority.
"LIEN" or
"LIENS" means, with respect to any asset, any mortgage, lien,
pledge, charge, security interest,
encumbrance, restriction, or other adverse
claim of any kind with respect to such
asset.
"MATERIAL
ADVERSE EFFECT" means an effect, event, occurrence, state of
facts, or development that is or would
reasonably be expected to be, in each
case, individually or together with any
other effect, event, occurrence, state
of facts, or development, materially
adverse, (i) as to the Company, to the
assets, liabilities, financial condition or
results of operations of the Company
and the Subsidiaries taken as a whole or
(ii) as to a party to this Agreement,
on the ability of such party to perform its
obligations under the Agreement or
consummate the Closing; provided, however,
that none of the following shall be
deemed, either alone or in combination, to
constitute, and none of the following
shall be taken into account in determining
whether there has been or shall be, a
Material Adverse Effect to the extent such
changes or effects do not result from
or relate to or are not exacerbated by any
failure to comply with any Law by any
of the Seller and its Affiliates: any
adverse change, effect, event, occurrence,
state of facts, or development caused by
(A) the execution and delivery of this
Agreement by the parties hereto, or the
public announcement of the identity of
the Purchaser or the Transactions; (B)
conditions affecting the industry in
which the Company or any Subsidiary
participates, the United States economy as a
whole, or the capital markets in general
which do not disproportionately impact
the Company and the Subsidiaries taken as a
whole; (C) an act of terrorism, or
an escalation of war, or hostilities
involving the United States which do not
disproportionately impact the Company and
the Subsidiaries taken as a whole; or
(D) a change in GAAP after the date of this
Agreement which does not
disproportionately impact the Company and
the Subsidiaries taken as a whole.
"NET WORKING
CAPITAL" means the difference of the consolidated current
assets of the Company and the Subsidiaries
minus the consolidated current
liabilities of the Company and the
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Subsidiaries, in each case determined as of
the Closing Date in accordance with
GAAP, provided that the amount of
Intercompany Balances shall be excluded from
the consolidated current assets and
consolidated current liabilities, as
applicable, of the Company and the
Subsidiaries; provided, that the categories
of assets and liabilities set forth on
SCHEDULE 1.01(A)-2 shall not constitute
assets and liabilities for purposes of Net
Working Capital.
"ORDER" means
any judgment, decision, order, injunction, decree, writ,
permit or license of any Governmental
Authority or any arbitrator.
"PERMITTED
LIENS" means (i) statutory liens for current Taxes and other
charges and assessments by any Governmental
Authority that are not yet due and
payable or are being contested in good
faith and have been reserved for on the
financial books and records of the Company
or any of the Subsidiaries, (ii)
mechanics, materialmen's, and similar liens
that can be satisfied by a payment
of cash to the lienholders, (iii) rights
reserved to any Governmental Authority
to regulate the affected assets, including
zoning laws and ordinances, (iv) as
to real property interests, including
leasehold interests, any easements,
rights-of-way, servitudes, permits,
restrictions, and minor imperfections or
irregularities in title that do not,
individually or in the aggregate, interfere
with the ability to own, use or operate
such real property, (v) purchase money
liens and liens securing rental payments
under any capital lease arrangements
that are reflected in the Balance Sheet as
a liability or disclosed in notes to
the Balance Sheet, and (vi) notice filings
with respect to equipment leases or
other leases of personal property.
"PERSON" means
any individual, any entity or any unincorporated
organization, including a partnership, a
corporation, a limited liability
company, an association, a joint stock
company, a trust, a joint venture or a
Governmental Authority.
"PREMISES" means
all real property leased or subleased by or occupied by
the Company in the conduct of the
Business.
"RELEASE" shall
have the meaning provided under 42 U.S.C. Section 9601 (22)
but without giving effect to sections (A)
and (C) of that definition.
"REQUIRED
CONSENT CONTRACT" means any Contract that requires the consent
of
another party to such Contract upon a
change in control of the Company as is
provided for in this Agreement.
"SECURITIES ACT"
means the Securities Act of 1933, as amended, and the
rules and regulations promulgated
thereunder.
"SEVERANCE
BENEFITS EXPENSES" means the aggregate amount payable to any
Business Employees, whether before, on or
after the Closing, with respect to
severance benefits or any other change of
control or "purchaser" benefits or
payments in connection with the
consummation of the Transaction.
"SUBSIDIARIES"
means the entities set forth on SCHEDULE 1.01(E).
"SUBSIDIARY
INTERESTS" means the outstanding shares of the capital stock,
limited liability company membership
interests or partnership interests, as
applicable, of the Subsidiaries.
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"TAX" and
"TAXES" mean (i) all United States federal, state, local or
foreign taxes, charges, fees, levies, or
other assessments, including all net
income, gross income, gross receipts,
sales, use, ad valorem, transfer,
franchise, profits, withholding, payroll,
employment, excise, severance, stamp,
occupation, occupancy, value added,
alternative add-on minimum, license
transaction, property, estimated or other
taxes, customs, duties, fees,
assessments or charges of any kind
whatsoever, together with any interest and
any penalties, additions to tax or
additional amounts imposed by any taxing
authority (including any federal, state or
other Governmental Authority), (ii)
any obligations under any agreements or
arrangements with any Person with
respect to the liability for, or sharing
of, Taxes, including pursuant to
Treasury Regulation Section 1.1502-6 or
comparable provisions of state, local or
foreign Tax law, and (iii) any liability
for Taxes as a transferee or successor,
by contract, or otherwise.
"TAX RETURNS"
means returns, declarations, reports, estimates, information
returns and statements in respect of Taxes
(including any attached schedules)
and amendments thereto.
"THIRD PERSON
CLAIM" means a claim by, or an Action instituted by, a Person
not a party to this Agreement or not an
Affiliate of a party to this Agreement.
"TRADE SECRET
INFORMATION" means know-how, trade secrets, confidential
information, customers lists, data,
databases and technical information and all
rights in, arising out of or associated
therewith.
"TRANSACTION
DOCUMENTS" means this Agreement and the other agreements,
certificates and documents contemplated in
this Agreement and the other
Transaction Documents.
"TRANSACTION
RELATED EXPENSES" means the aggregate amount of all fees,
costs, charges, obligations and expenses
payable to Bear, Stearns & Co. Inc.,
Drinker Biddle & Reath LLP and any
other banker, counsel, accountant, advisor,
consultant, agent or representative
retained by or on behalf of the Company or
any of the Subsidiaries, in each case,
relating to the sale of the Company, the
Subsidiaries and the Business, including
the preparation, negotiation, execution
and delivery of this Agreement and the
Transaction Documents and the
consummation of the Transactions.
Transaction Related Expenses also shall
include amounts paid or payable to any
officer, director, employee, consultant,
stockholder, agent or other representatives
of the Company or any of the
Subsidiaries contingent upon the
consummation of the Transactions, including
Severance Benefits Expenses payable to
William Neville, James J. Guidici,
William L. Johnson and Mark Ryan (the "TOP
MANAGERS"); provided, however,
Transaction Related Expenses shall not
include Severance Benefits Expenses
payable to Business Employees other than
the Top Managers.
"TRANSACTIONS"
means the transactions contemplated by this Agreement and
the other Transaction Documents.
(b) Each of the
following terms is defined in the Section set forth
opposite such term:
<TABLE>
<CAPTION>
TERM
SECTION
----
-------
<S>
<C>
"AFFILIATE CONTRACTS"
3.17(b)
"AGGREGATE CHANGE IN EBITDA"
2.03(b)(i)
"AGREEMENT"
Preamble
</TABLE>
-7-
<PAGE>
<TABLE>
<S>
<C>
"AVERAGE CHANGE IN EBITDA"
2.03(b)(ii)
"BASE CONSIDERATION"
2.02
"BASKET"
8.03(a)
"BISYS MARKS"
5.17(c)
"BUSINESS"
Recitals
"CAP"
8.03(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)
"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)
"FIVE YEAR PERIOD"
2.03(b)
"INSURANCE POLICIES"
3.20
"IP LICENSES"
3.10(b)
"ISSUER"
5.02(e)
"MINIMUM CLAIM AMOUNT"
8.03(a)
"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)(iv)
"RESTATEMENT ADJUSTMENT CERTIFICATE"
2.03(b)
"SECTION 338(H)(10) ELECTION"
6.03
"SELLER"
Preamble
"SELLER INDEMNIFIED PARTIES"
8.02
"SELLER PARENT"
Preamble
"SHARED ASSETS AND SERVICES"
5.17(a)
</TABLE>
-8-
<PAGE>
<TABLE>
<S>
<C>
"SHARES"
Recitals
"STRADDLE PERIOD"
6.01(a)
"THREE YEAR PERIOD"
2.03(b)
"TRANSFERRED EMPLOYEE"
5.08(a)
"TRANSITION SERVICES AGREEMENT"
2.04(d)
"WACHOVIA COMMITMENT"
4.05
"WARRANTY CLAIMS"
3.30
</TABLE>
(c) Except as
otherwise provided or if the context otherwise requires,
whenever used in this Agreement, (i) any
noun or pronoun shall be deemed to
include the plural and the singular, (ii)
the terms "include," "includes" and
"including" shall be deemed to be followed
by the phrase "without limitation,"
(iii) the word "or" shall be inclusive and
not exclusive, (iv) unless the
context otherwise requires, all references
to Articles and Sections refer to
Articles and Sections of this Agreement,
all references to Schedules are to
Schedules attached to this Agreement, and
all references to Exhibits are to
Exhibits attached to this Agreement, each
of which is made a part of this
Agreement for all purposes, (v) the phrase
"made available" in this Agreement
shall mean that the information referred to
has been made available if requested
by the party to whom such information is to
be made available, (vi) the phrases
"the date of this Agreement", "the date
hereof", and terms of similar import,
unless the context otherwise requires,
shall be deemed to refer to the date
first written above, (vii) the terms
"hereof", "herein", and "herewith" and
words of similar import shall, unless
otherwise stated, be construed to refer to
this Agreement as a whole (including all
Schedules hereto) and not to any
particular provision of this Agreement,
(viii) unless otherwise specified
herein, all references to any period of
days shall be deemed to be the relevant
number of calendar days, (ix) the terms
"dollars" or "$" means United States
dollars and (x) the term "cash" means
dollars in immediately available funds.
The parties have jointly participated in
the negotiating and drafting of this
Agreement. In the event that an ambiguity
or a question of intent or
interpretation arises, this Agreement shall
be construed as if drafted jointly
by the parties hereto, and no presumption
or burden of proof shall arise
favoring or disfavoring any party hereto by
virtue of the authorship of any
provisions of this Agreement.
ARTICLE II
PURCHASE AND SALE OF SHARES
SECTION 2.01 The
Transactions. Upon the terms and subject to the conditions
of this Agreement, at the Closing, the
Purchaser shall purchase from the Seller,
and the Seller shall sell, convey, assign,
transfer and deliver to the
Purchaser, the Shares free and clear of any
Liens against the payment by
Purchaser to the Seller of an amount in
cash equal to the Purchase Price.
SECTION 2.02
Purchase Price. The "BASE CONSIDERATION" for the Shares under
this Agreement shall be the amount equal to
Four Hundred Seventy Million Dollars
($470,000,000). The Base Consideration as
it may be adjusted pursuant to Section
2.03, shall be the "PURCHASE PRICE" under
this Agreement.
SECTION 2.03
Purchase Price Adjustments
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<PAGE>
(a) Net Working
Capital Closing Adjustment.
(i) The Seller shall deliver to the Purchaser before the Closing
Date,
and shall use its commercially reasonable
efforts to make such delivery not less
than three (3) Business Days before the
scheduled Closing Date, (A) an unaudited
estimated consolidated Balance Sheet of the
Company and the Subsidiaries as of
the Closing, which Balance Sheet shall be
prepared by the Seller in accordance
with GAAP consistently applied using the
same accounting principles, procedures,
policies and methods that were used to
prepare the Balance Sheet (including the
exclusion of footnotes), except as
described on SCHEDULE 1.01(A)-2 (the
"ESTIMATED CLOSING DATE BALANCE SHEET"),
and (B) a written statement setting
forth the Seller's estimate of the Net
Working Capital immediately prior to the
Closing, which statement shall be prepared
in accordance with GAAP consistently
applied using the same accounting
principles, procedures, policies, and methods
that were used to prepare the Balance Sheet
(including the exclusion of
footnotes), except as described on SCHEDULE
1.01(A)-2 (the "ESTIMATED CLOSING
DATE NET WORKING CAPITAL STATEMENT");
provided, however, that if there is any
discrepancy between the accounting
principles, procedures, policies, and methods
that were used to prepare the Balance Sheet
and the accounting principles,
procedures, policies, and methods that were
used to prepare the Restatement
Adjustment Certificate, the accounting
principles, procedures, policies, and
methods that were used to prepare the
Restatement Adjustment Certificate shall
be used to prepare the Estimated Closing
Date Balance Sheet and the Estimated
Closing Date Net Working Capital Statement
with respect to such discrepancy,
except that for purposes of calculating Net
Working Capital immediately prior to
the Closing under this Section 2.03(a)(i),
deferred revenue and accrued
liabilities with respect to existing lease
obligations shall be accounted for
consistent with the accounting principles,
procedures, policies and methods that
were used to prepare the Balance Sheet. If
the Purchaser has any disagreement
with the Estimated Closing Date Balance
Sheet or Estimated Closing Date Net
Working Capital Statement, the Purchaser
shall promptly notify the Seller of any
such disagreement and the Seller and the
Purchaser shall use good faith efforts
to resolve any such disagreement within
three Business Days of the Purchaser so
notifying the Seller. The estimated Net
Working Capital set forth in the
Estimated Closing Date Net Working Capital
Statement shall be the "ESTIMATED
CLOSING DATE NET WORKING CAPITAL."
(ii) If the Estimated Closing Date Net Working Capital is:
(A) greater than the
Balance Sheet Net Working Capital, the Base
Consideration shall be increased by a dollar amount equal to
the difference between the Estimated Closing Date Net
Working Capital and the Balance Sheet Net Working Capital;
or
(B) less than the
Balance Sheet Net Working Capital, the Base
Consideration shall be decreased by a dollar amount equal to
the difference between the Balance Sheet Net Working Capital
and the Estimated Closing Date Net Working Capital; or
(C) equal to the
Balance Sheet Net Working Capital, the Base
Consideration shall not be adjusted.
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<PAGE>
(b) 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.
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, the Seller shall
deliver 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
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 Restatement based solely on facts
and circumstances known to Seller
Parent as of the date of the Restatement.
The 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 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:
(i) 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";
(ii) 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";
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<PAGE>
(iii) 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
(iv) 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 by the amount of the Restatement
Adjustment; provided, however, that
the amount of the Restatement Adjustment
shall not be greater than $15,000,000.
For the avoidance of doubt, nothing in this
Section 2.03(b) shall effect the
Balance Sheet in any manner.
(c) Adjustment
to Estimated Purchase Price. The Base Consideration, as it
may be adjusted pursuant to Section 2.03(a)
and Section 2.03(b) 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.
(d) Post-Closing
Adjustment.
(i) As promptly as reasonably practicable, but in any event not
later
than 60 days after the Closing Date, the
Purchaser shall deliver to the Seller
(A) an unaudited consolidated balance sheet
of the Company and the Subsidiaries
as of the Closing, which balance sheet
shall be prepared in accordance with GAAP
from the books and records of the Company
and the Subsidiaries using the same
accounting principles, procedures,
policies, and methods that were used to
prepare the Balance Sheet (including the
exclusion of footnotes), except as
described on SCHEDULE 1.01(A)-2 (the
"CLOSING DATE BALANCE SHEET") and (B) a
written statement of the Net Working
Capital (the "CLOSING DATE NET WORKING
CAPITAL STATEMENT"); provided, however,
that if there is any discrepancy between
the accounting principles, procedures,
policies, and methods that were used to
prepare the Balance Sheet and the
accounting principles, procedures, policies,
and methods that were used to prepare the
Restatement Adjustment Certificate,
the accounting principles, procedures,
policies, and methods that were used to
prepare the Restatement Adjustment
Certificate shall be used to prepare the
Closing Date Balance Sheet and the Closing
Date Net Working Capital Statement
with respect to such discrepancy, except
that for purposes of calculating Net
Working Capital immediately prior to the
Closing under this Section 2.03(d),
deferred revenue and accrued liabilities
with respect to existing lease
obligations shall be accounted for
consistent with the accounting principles,
procedures, policies and methods that were
used to prepare the Balance Sheet.
(ii) The Closing Date Balance Sheet and the Closing Date Net
Working
Capital Statement (and the Closing Date Net
Working Capital set forth therein)
shall be final and binding on the parties
unless, within 15 days after delivery
thereof to the Seller, written notice is
given by the Seller to the Purchaser of
its objection, setting forth in reasonable
detail the Seller's basis for
objection (the "OBJECTION NOTICE"). If the
Objection Notice is given, the
Purchaser and the Seller shall consult with
each other in good faith with
respect to the objection. If the Purchaser
and the Seller are unable to reach
agreement within 30 days after the
Objection Notice has been given, the dispute
shall be submitted, as promptly as
reasonably practicable, for
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<PAGE>
resolution to Deloitte & Touche LLP, or
such other nationally-recognized
accounting firm that is acceptable to the
Purchaser and the Seller (the "NEUTRAL
ACCOUNTANT"). The Purchaser and the Seller
agree to execute, if requested by the
Neutral Accountant, a reasonable engagement
letter with the Neutral Accountant.
The Neutral Accountant shall make a
determination, based solely on presentations
by the Seller and the Purchaser and not by
independent review, as to (and only
as to) each of the items in dispute, and
shall be instructed that, in resolving
such items in dispute, it must select a
position with respect to the Closing
Date Balance Sheet and the Closing Date Net
Working Capital Statement that is
either exactly the Purchaser's position
with respect to the Closing Date Balance
Sheet and the Closing Date Net Working
Capital Statement or exactly the Seller's
position with respect to the Closing Date
Balance Sheet and the Closing Date Net
Working Capital Statement, or that is
between such position of the Purchaser and
such position of the Seller. The Neutral
Accountant shall furnish its
determination as to the items in dispute
(which determination shall have been
made in accordance with this Agreement) to
the Seller and to the Purchaser in
writing together with a revised version of
the Closing Date Net Working Capital
Statement, which shall have been revised by
the Neutral Accountant to reflect
its determination. The determination of the
Neutral Accountant and the revised
version of the Closing Date Net Working
Capital Statement reflecting the Neutral
Accountant's determination shall be final,
conclusive and binding upon, and
non-appealable by, the Purchaser and the
Seller. In connection with its
determination of the disputed items, the
Neutral Accountant shall be entitled to
rely upon the accounting records and
similar materials prepared in connection
with the Estimated Closing Date Balance
Sheet, the Estimated Closing Date Net
Working Capital Statement, the Closing Date
Balance Sheet, and the Closing Date
Net Working Capital Statement. All fees and
expenses relating to the work, if
any, to be performed by the Neutral
Accountant will be allocated between the
Purchaser and the Seller in the same
proportion that the aggregate amount of the
disputed items so submitted to the Neutral
Accountant that is unsuccessfully
disputed by each such party (as finally
determined by the Neutral Accountant)
bears to the total amount of such disputed
items so submitted. The Purchaser and
the Seller shall each use reasonable
efforts to cause the Neutral Accountant to
render its decision as soon as reasonably
practicable (but in no event later
than thirty (30) days following the
expiration of the 30-day period provided
above for the Purchaser and the Seller to
resolve disputes before submission to
the Neutral Accountant), including by
promptly complying with all reasonable
requests by the Neutral Accountant for
information, books, records, and similar
items. The Closing Date Net Working Capital
Statement as finally determined
pursuant to this Section 2.03(d) shall be
referred to as the "FINAL CLOSING DATE
NET WORKING CAPITAL STATEMENT," and the
Closing Date Net Working Capital as set
forth in the Final Closing Date Net Working
Capital Statement shall be the
"FINAL CLOSING DATE NET WORKING
CAPITAL."
(iii) During the period following the delivery of the Closing
Date
Balance Sheet until the Final Closing Date
Net Working Capital Statement is
finally determined, to the extent
reasonably necessary, the Purchaser shall and
shall cause the Company and any other
Affiliates of the Purchaser to (A) provide
the Seller and the Seller's authorized
representatives with reasonable access to
the financial books and records of the
Company and the Subsidiaries, (B) provide
the Seller as promptly as practicable after
the delivery of the Closing Date
Balance Sheet with financial information
for the Company for the period ending
on the Closing Date, and (C) cooperate
fully with the Seller and the Seller's
authorized representatives.
(iv) If the Final Closing Date Net Working Capital is:
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<PAGE>
(A) greater than the
Estimated Closing Date Net Working Capital,
the Purchaser shall pay to the Seller a dollar amount equal
to the difference between the Final Closing Date Net Working
Capital and the Estimated Closing Date Net Working Capital,
plus interest on such amount at the Federal Funds Rate from
the Closing Date through the date of payment; or
(B) less than the
Estimated Closing Date Net Working Capital,
the
Seller shall pay to the Purchaser a dollar amount equal
to the difference between the Estimated Closing Date Net
Working Capital and the Final Closing Date Net Working
Capital, plus interest on such amount at the Federal Funds
Rate from the Closing Date through the date of payment; or
(C) equal to the
Estimated Closing Date Net Working Capital, no
payment shall be required to be made pursuant to this
Section 2.03(d)(iv).
(e) Any amounts
(i) required to be paid pursuant to Section 2.03(d) by the
Purchaser shall be paid by wire transfer of
immediately available funds to the
account or accounts specified by the Seller
in writing, or (ii) required to be
paid by the Seller pursuant to Section
2.03(d) shall be paid by wire transfer of
immediately available funds to an account
or accounts designated by the
Purchaser in writing, in each case within
five (5) Business Days after the Final
Closing Date Net Working Capital is
determined in accordance with Section
2.03(d).
SECTION 2.04
Closing. The Closing shall take place at the offices of
Simpson Thacher & Bartlett LLP, 425
Lexington Avenue, New York, New York 10017,
at 10:00 a.m. on the third Business Day
following the date on which the
conditions set forth in Article VII shall
be satisfied or waived by the party
entitled to the benefit of such condition
(other than those conditions that by
their nature are to be satisfied at the
Closing, but subject to the fulfillment
or waiver of those conditions), or at such
other time or place as the parties
may mutually agree. The Closing shall be
effective as of 12:01 a.m. on the
Closing Date. At the Closing:
(a) the Seller
shall deliver to the Purchaser certificates for the Shares,
duly endorsed or accompanied by stock
powers duly endorsed in blank for
transfer, with any required transfer stamps
affixed thereto;
(b) the
Purchaser shall deliver to Seller cash in an amount equal to
the
Estimated Purchase Price by wire transfer
of immediately available funds to an
account or accounts designated by the
Seller by notice given to the Purchaser
not later than the Business Day immediately
prior to the Closing Date;
(c) the Seller
shall deliver to the Purchaser the resignations of all of
the directors of the Company and those
officers of the Company as shall be
requested by the Purchaser;
(d) the
Purchaser shall deliver to the Seller a counterpart of the
Transition Services Agreement substantially
in the form of EXHIBIT A attached
hereto (the "TRANSITION SERVICES
AGREEMENT"), duly executed by the Purchaser;
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<PAGE>
(e) the Seller
shall deliver to the Purchaser counterparts of the
Transition Services Agreement, duly
executed by the Seller Parent and the
Seller; and
(f) the
Purchaser Parent, the Purchaser, the Seller Parent and the
Seller
shall deliver such certificates, agreements
and other documents required to be
delivered by each such party hereto
pursuant to Article VII.
SECTION 2.05
Further Assurances. From time to time, as and when requested
by any party hereto and at such party's
expense, the other party shall execute
and deliver, or cause to be executed and
delivered, all such documents and
instruments and shall take, or cause to be
taken, all such further or other
actions as the requesting party may
reasonably deem necessary or desirable to
evidence and effectuate the
Transactions.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLER
PARENT AND THE SELLER
The Seller
Parent and the Seller hereby jointly and severally represent
and
warrant to the Purchaser and the Purchaser
Parent, knowing and intending that
the Purchaser Parent and the Purchaser is
relying hereon in entering into the
Transactions, as follows:
SECTION 3.01
Authority Relative to Agreement. Each of the Seller Parent and
the Seller has the requisite corporate
power and authority to enter into and to
perform its obligations under this
Agreement and the other Transaction Documents
to which it is a party, and each of the
Company and the Subsidiaries has the
requisite power and authority to enter into
and to perform its obligations under
any Transaction Documents to which it is a
party. Each of the Seller Parent and
the Seller has the corporate power and
authority to consummate the Transactions,
including the sale, assignment, transfer
and conveyance of the Shares pursuant
to this Agreement, and the Company and the
Subsidiaries have the corporate power
and authority to consummate the
transactions contemplated by any Transaction
Document to which they are a party. The
execution, delivery and performance of
this Agreement and any other Transaction
Documents by the Seller Parent, the
Seller, the Company and the Subsidiaries,
as the case may be, and the
consummation by the Seller Parent, the
Seller and the Company of the
Transactions, have been duly authorized by
all necessary corporate action on the
part of the Seller Parent, the Seller, the
Company and the Subsidiaries, and no
other corporate action on the part of the
Seller Parent, the Seller, the Company
or the Subsidiaries is necessary to
authorize the execution, delivery and
performance of the Transaction Documents
and the consummation of the
Transaction.
SECTION 3.02
Capitalization; Title to Shares. The Seller owns of record and
beneficially, and, subject to the terms of
this Agreement, shall transfer and
deliver to the Purchaser at the Closing,
good and valid title to the Shares,
free and clear of all Liens. The Shares
constitute all of the issued and
outstanding capital stock of the Company,
and have been duly authorized, validly
issued and are fully paid and
nonassessable. The Company has an authorized
capitalization consisting of 3,000 shares
of common stock, no par value per
share, of the Company. There are no
outstanding subscriptions, warrants,
convertible securities, obligations,
options, or rights entitling others to
acquire capital stock of or equity or
voting interest in the Company, or any
outstanding securities, options, warrants,
rights, or other
-15-
<PAGE>
instruments convertible into or
exchangeable or exercisable for capital stock of
the Company. None of the Seller Parent, the
Seller, the Company or any Affiliate
thereof is a party to any shareholders
agreement, buy-sell, or similar
agreement, redemption or similar agreement,
proxy, voting trust, or other
Contract or arrangement affecting the
Shares. There are no equity securities of
the Company reserved for issuance nor are
there any outstanding bonds,
debentures, notes or other evidences of
Indebtedness having the right to vote on
any matters on which the stockholders of
the Company may vote.
SECTION 3.03
Execution and Performance of Agreement; Validity and Binding
Nature. This Agreement has been, and each
of the Transaction Documents to be
executed and delivered by each of the
Seller Parent, the Seller, the Company and
the Subsidiaries will be, duly executed and
delivered by the Seller Parent, the
Seller, the Company and the Subsidiaries,
as applicable, and this Agreement is,
and each of the Transaction Documents, when
duly executed and delivered by all
parties whose execution and delivery
thereof is required, shall be, the legal,
valid, and binding obligations of the
Seller Parent, the Seller, the Company and
the Subsidiaries, as applicable,
enforceable against the Seller Parent, the
Seller, the Company and the Subsidiaries,
as applicable, in accordance with
their respective terms, except to the
extent that enforceability may be limited
by bankruptcy, receivership, moratorium,
conservatorship, reorganization, or
other Laws of general application affecting
the rights of creditors generally or
by general principles of equity.
SECTION 3.04
Non-Contravention. Neither the execution and delivery of this
Agreement or any other Transaction
Documents nor the consummation of the
Transactions will (a) violate, breach, or
be in conflict with any provisions of
the certificate of incorporation or by-laws
of the Seller Parent, the Seller,
the Company or any of the Subsidiaries, (b)
result in the creation or imposition
of any Lien upon the property, rights or
assets of the Company or any of the
Subsidiaries, (c) subject to the obtaining
of the consents set forth on SCHEDULE
3.04, conflict with, result in a breach of,
constitute a default under, result
in the acceleration of, create in any party
the right to accelerate, terminate,
modify, or cancel, or require any notice
under any Contract to which any of the
Seller Parent, the Seller, the Company or
any of the Subsidiaries is a party or
by which it is bound or to which any of its
assets is subject, or (d) violate
any Law or Order to which the Seller
Parent, the Seller, the Company or any of
the Subsidiaries, or by which any of their
respective properties or assets may
be bound is subject.
SECTION 3.05
Organization, Standing, and Qualification.
(a) Each of the
Seller Parent and the Seller is a corporation, duly
incorporated, validly existing, and in good
standing under the laws of the State
of Delaware.
(b) The Company
is a corporation, duly incorporated, validly existing, and
in good standing under the laws of the
State of Delaware and has the corporate
power and lawful authority to own and hold
its properties and conduct the
Business as now owned, held, and conducted
in Delaware and the other states (or
other jurisdictions) in which it is
required to qualify to do business. The
Company is qualified and in good standing
in all states (or other jurisdictions)
in which such qualification is required by
reason of the nature or extent of the
Business conducted by the Company in such
states, except where the failure to be
so qualified in
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such states (and other jurisdictions) would
not reasonably be expected to have a
Material Adverse Effect with respect to the
Company.
(c) Each
Subsidiary is a corporation, limited liability company, or
limited
partnership, as indicated on SCHEDULE
3.05(C)-1, duly incorporated or formed, as
applicable, validly existing and in good
standing under the laws of the state of
its incorporation or formation, as
applicable, and has the corporate, limited
liability company, or limited partnership,
as applicable, power and lawful
authority to own and hold its properties
and conduct its business as now owned,
held, and conducted in the state of its
incorporation or formation, as
applicable, and the other states (or other
jurisdictions) in which it is
qualified to do business. Each Subsidiary
is qualified and in good standing in
all states (or other jurisdictions) in
which such qualification is required by
reason of the nature and extent of the
Business conducted by such Subsidiary in
such states (or other jurisdictions),
except where the failure to be so
qualified in such states (and other
jurisdictions) would not reasonably be
expected to have a Material Adverse Effect
with respect to the Company. Such
states (and other jurisdictions) are
disclosed in SCHEDULE 3.05(C)-2.
SECTION 3.06
Subsidiaries. The Company owns of record and beneficially good
and valid title to the Subsidiary
Interests, free and clear of all Liens. Except
for the Subsidiaries, the Company does not
own any capital stock or other equity
securities of or equity or voting interest
in any Person. The Company is not
under any obligation to acquire any
securities from any Person. The Subsidiary
Interests constitute all of the issued and
outstanding equity interests of the
Subsidiaries and have been duly authorized
validly issued and are fully paid and
nonassessable. There are no outstanding
subscriptions, warrants, convertible
securities, obligations, options, or rights
entitling others to acquire equity
or voting interests of any Subsidiary, or
any outstanding securities, options,
warrants, rights or other instruments
convertible into or exchangeable for
equity or voting interests of any
Subsidiary. Except as listed in SCHEDULE 3.06,
none of the Subsidiaries is a party to any
shareholders agreement, limited
partnership agreement, limited liability
company operating agreement, buy-sell
or similar Contract or arrangement
affecting the Subsidiary Interests. There are
no equity securities of any Subsidiary
reserved for issuance nor are there any
outstanding bonds, debentures, notes or
other evidences of Indebtedness having
the right to vote on any matters. There are
no restrictions of any kind which
prevent or restrict the payment of
dividends or other distributions by any of
the Subsidiaries other than those imposed
by the Laws of general applicability
of their respective jurisdictions of
organization.
SECTION 3.07
Organizational Documents. True and complete copies of the
Articles of Incorporation and By-Laws of
the Company (together with all
amendments thereto) and true and complete
copies of the constitutive documents
of each of the Subsidiaries (together with
all amendments thereto) have been
made available to the Purchaser.
SECTION 3.08
Financial Statements
(a) The Seller
has delivered true and complete copies of the Financial
Statements to the Purchaser. The Financial
Statements have been prepared from
the books and records of the Company and
the Subsidiaries as prepared in the
ordinary course of the Business. Except as
disclosed in SCHEDULE 3.08(A), the
Financial Statements, including footnotes
thereto, have been prepared in
accordance with GAAP applied on a
consistent basis throughout the periods
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indicated, and present fairly, in all
material respects, the consolidated
financial position of the Company and the
Subsidiaries as of their respective
dates and the consolidated results of
operations of the Company and the
Subsidiaries for the periods covered
thereby and the changes in their financial
position for the periods indicated.
(b) Neither the
Company nor the Subsidiaries has any obligations or
liabilities (whether accrued, absolute,
contingent, or otherwise, whether due or
to become due and regardless of when or by
whom asserted), except (i)
liabilities incurred in the ordinary course
of the Business consistent with past
practice since June 30, 2005, (ii)
liabilities reflected on the Balance Sheet or
the notes thereto consistent with past
practice and (iii) liabilities otherwise
expressly disclosed on SCHEDULE 3.08(B).
The Company and the Subsidiaries have
no Indebtedness that does not constitute an
Intercompany Balance.
SECTION 3.09
Books and Records. The books of account, minute books, equity
interest record books, and other records of
the Company and each of the
Subsidiaries, all of which have been made
available to the Purchaser, are
complete and correct in all material
respects. At the Closing, all of such books
and records will be in possession of the
Company. Prior to the date hereof, the
Seller Parent has made available to the
Purchaser true and complete copies of
all documentation representing the Seller
Parent's, the Seller's, the Company's
and the Subsidiaries' efforts to prepare to
comply with Section 404 of the
Sarbanes-Oxley Act of 2002.
SECTION 3.10
Intellectual Property.
(a) SCHEDULE
3.10(A) sets forth a list of all registrations and
applications therefor with respect to
Intellectual Property that is owned by the
Company or a Subsidiary other than Trade
Secret Information.
(b) SCHEDULE
3.10(B) sets forth a list of all Intellectual Property that is
not owned by the Company or a Subsidiary
and that is used by the Company or a
Subsidiary in the Business (other than (i)
commercially available desktop
computer software programs licensed
non-exclusively under "shrink wrap" or other
comparable standard form licenses, (ii)
software relating solely to
administrative or clerical functions, and
(iii) software having an initial or
replacement value of less than $50,000) and
a list of each license or other
Contract under which any such Company
Intellectual Property is used by the
Company or a Subsidiary (the "IP
LICENSES").
(c) Except as
disclosed in SCHEDULE 3.10(C), the Company or a Subsidiary
possesses all right, title and interest in
or has the right to use all
Intellectual Property used or held by the
Company in the conduct of its Business
as presently conducted, including, without
limitation, the Intellectual Property
set forth on SCHEDULE 3.10(A) and SCHEDULE
3.10(B) ("COMPANY INTELLECTUAL
PROPERTY"), free and clear of all Liens
other than Permitted Liens, and, giving
effect to any consents set forth on
SCHEDULE 3.10(C), the execution, delivery
and performance of this Agreement shall not
affect or alter the right of the
Company or a Subsidiary to use any Company
Intellectual Property nor result in
the levying of any fees, costs or penalties
against the Company or a Subsidiary.
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<PAGE>
(d) To the
Knowledge of the Seller, the use of Company Intellectual
Property by the Company or a Subsidiary
does not infringe on or violate the
Intellectual Property of any Person, and no
Person has infringed or violated the
Company Intellectual Property.
(e) All Persons
who have contributed to the creation, invention or
development of Company Intellectual
Property have assigned to the Company or a
Subsidiary all of their rights therein that
do not vest initially in the Company
or a Subsidiary by operation of law. The
Company and the Subsidiaries take all
reasonable actions to protect and maintain
(i) any Trade Secret Information that
is Company Intellectual Property,
including, without limitation, executing
confidentiality and non-disclosure
agreements with employees and contractors,
and (ii) the confidentiality, integrity and
security of its software, databases,
systems, networks, and Internet websites,
and information stored or contained
therein or transmitted thereby, and all
transactions consummated in connection
therewith, from any unauthorized use,
access, interruption or modification by
third parties, including, without
limitation, the use of reliable encryption
protection (or an equivalent).
(f) The Company
and the Subsidiaries take commercially reasonable actions
to back up their software, databases and
systems in a manner sufficient to
enable resumed or continued functioning in
all material respects following a
hardware, telecommunications or related
interruption or failure.
(g) The
Company's proprietary software and software licensed pursuant to
an
IP License substantially conform to all
written specifications for their use in
the conduct of the business of the Company
and the Subsidiaries as currently
conducted, and to the Knowledge of the
Seller are substantially free of bugs,
errors, viruses and other contaminants.
(h) To the
Knowledge of the Seller, no material proprietary software
product owned by the Company or a
Subsidiary and distributed in connection with
the Business is currently required to be
distributed in source code form by the
GNU General Public License or any other
"open source" license agreement, nor is
the Company or a Subsidiary in violation of
any such agreement.
SECTION 3.11
Business Employees
(a) Except as
set forth in SCHEDULE 1.01(B), all of the active Business
Employees are employed by the Company or a
Subsidiary. SCHEDULE 3.11(A)-1 sets
forth a list as of the date of this
Agreement of the names and titles of each
Business Employee, including the base
salary of and any cash bonus received by
each such Business Employee during the
12-month period ended December 31, 2004
and the rate of base salary and bonus
opportunity for each such Business
Employee for the current fiscal year of the
Company ending June 30, 2005.
SCHEDULE 3.11(A)-2 sets forth a list as of
the date of this Agreement of the
name of each Business Employee who is on
layoff, sick, time, disability or other
leave of absence (including the reason for
the leave of absence and the
anticipated return date, if known), such
list to be updated to reflect such
names and other information as of the
Closing.
(b) SCHEDULE
3.11(B) sets forth a list, as of the date of this Agreement,
of each agreement with respect to the
employment or termination of employment of
any Business
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<PAGE>
Employee under which the Company or a
Subsidiary has any continuing payment or
performance obligation after the Closing.
Except as disclosed in SCHEDULE
3.11(B), neither the Company nor a
Subsidiary is a party to any employment
contract, severance agreement, or deferred
compensation, bonus, profit-sharing,
or stock option, or similar agreement, or
any agreement pertaining to the
payment of compensation in the event of a
change in control of the Company or a
Subsidiary that would represent an
obligation of the Company or a Subsidiary
after the Closing, and no Employee Benefit
Plan exists that, as a result of the
execution of this Agreement, shareholder
approval of this Agreement, or the
Transactions (whether alone or in
connection with any subsequent event(s)),
would (i) accelerate the time of payment or
vesting or result in any payment or
funding (through a grantor trust or
otherwise) of compensation or benefits
under, increase the amount payable or
result in any other material obligation of
the Company or a Subsidiary pursuant to,
any of the Employee Benefit Plans, (ii)
otherwise result in payments, or any
increase in payments (including severance
pay), required to be made by the Company or
a Subsidiary under any of the
Employee Benefit Plans or (iii) limit or
restrict the right of the Company or
any of the Subsidiaries to merge, amend or
terminate any of the Employee Benefit
Plans.
(c) SCHEDULE
3.11(C) sets forth a list as of the date of this Agreement of
each of the directors of the Company and
each Subsidiary that is a corporation.
SECTION 3.12
Employee Benefit Plans
(a) SCHEDULE
3.12(A) sets forth a true and complete list of each material
Employee Benefit Plan. Except as set forth
in SCHEDULE 3.12(A), the Business
Employees do not participate in any plan,
program, fund, or arrangement (whether
or not qualified for federal income tax
purposes), whether benefiting a single
individual or multiple individuals, and
whether funded or not, that is an
"employee pension benefit plan," or an
"employee welfare benefit plan," as such
terms are defined in ERISA, or any
incentive or other benefit arrangement for
such employees and their respective
dependents and beneficiaries.
(b) With respect
to each Employee Benefit Plan, the Seller has provided or
made available to the Purchaser a current,
accurate and complete copy (or, to
the extent no such copy exists, an accurate
description) thereof and, to the
extent applicable: (i) any related trust
agreement or other funding instrument;
(ii) the most recent determination letter,
if applicable; (iii) any summary plan
description and other written
communications (or a description of any oral
communications) by the Seller, the Company
or the Subsidiaries to the Business
Employees concerning the extent of the
benefits provided under an Employee
Benefit Plan; and (iv) for the three most
recent years (A) the Form 5500 and
attached schedules, (B) audited financial
statements and (C) actuarial valuation
reports.
(c) Neither the
Company nor any Subsidiary has contributed to any
"multi-employer" plan (as defined in
Section 3(37) of ERISA), has incurred any
liability under Section 4201 of ERISA for
any complete or partial withdrawal
from any multi-employer plan, or has
assumed any such liability by any prior
owner of any of its assets or properties.
No event has occurred and no condition
exists that would subject the Company or
the Subsidiaries, either directly or by
reason of their affiliation with any member
of their "Controlled Group" (defined
as any organization which is a member of a
controlled group of organizations
within the meaning of
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<PAGE>
Sections 414(b), (c), (m) or (o) of the
Code), to any tax, fine, lien, penalty
or other liability imposed by ERISA or the
Code or other applicable Laws.
(d) The Company
and the Subsidiaries are in compliance, in all material
respects, with the requirements of ERISA,
the Code and all other Laws applicable
with respect to those Employee Benefit
Plans that are subject to ERISA, the Code
and all such other Laws. Each Employee
Benefit Plan has been established and
administered in all material respects in
accordance with its terms, and in
compliance with the applicable provisions
of ERISA, the Code and other
applicable laws, rules and regulations.
Each Employee Benefit Plan that is
intended to be qualified within the meaning
of Section 401(a) of the Code is so
qualified and has received a favorable
determination letter as to its
qualification, and, to the Knowledge of the
Seller, nothing has occurred,
whether by action or failure to act, that
would reasonably be expected to cause
the loss of such qualification. No
"reportable event" within the meaning of
Section 4043 of ERISA has occurred with
respect to any Employee Benefit Plan,
neither the Company nor any Subsidiary has
engaged in any "prohibited
transaction" within the meaning of Section
406(a) or (b) of ERISA or of Section
4975(c) of the Code, no "accumulated
funding deficiency" within the meaning of
Section 302 of ERISA and Section 412 of the
Code (whether or not waived) has
occurred with respect to any Employee
Benefit Plan, and no such Employee Benefit
Plan has been terminated in accordance with
the procedures set forth in Section
4041 or 4042 of ERISA. No liability has
been incurred by the Company or any
Subsidiary for any Tax imposed by Section
4975 of the Code with respect to any
Employee Benefit Plan.
(e) With respect
to any Employee Benefit Plan, (i) no actions, suits or
claims (other than routine claims for
benefits in the ordinary course) are
pending or, to the Knowledge of the Seller,
threatened, (ii) to the Knowledge of
the Seller, no facts or circumstances exist
that would reasonably be expected to
give rise to any such actions, suits or
claims, (iii) no written communication
has been received from the Pension Benefit
Guaranty Corporation (the "PBGC") in
respect of any Employee Benefit Plan
subject to Title IV of ERISA concerning the
funded status of any such plan or any
transfer of assets and liabilities from
any such plan in connection with the
transactions contemplated herein, and (iv)
no administrative investigation, audit or
other administrative proceeding by the
Department of Labor, the PBGC, the Internal
Revenue Service or other
governmental agencies are pending or in
progress or, to the Knowledge of the
Seller, threatened (including, without
limitation, any routine requests for
information from the PBGC).
SECTION 3.13
Real Property
(a) Neither the
Company nor any Subsidiary owns any real property or has a
fee simple ownership interest in any real
property.
(b) SCHEDULE 3.13(B)
sets forth an accurate and complete list of all real
property leases and subleases with respect
to the Premises to which the Company
or a Subsidiary is a party (as lessee or
lessor) ("PROPERTY LEASES"). The Seller
has delivered to the Purchaser Parent a
true and complete copy of each Property
Lease and any and all amendments, consents
for alterations, documents recording
variations and evidence of commencement
dates and expirations dates. The rental
set forth in each Property Lease is the
actual rental being paid and there are
no separate agreements or understandings
with respect to same.
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<PAGE>
(c) The Company
or one of the Subsidiaries has valid leasehold interests in
all leased real property described in each
Property Lease, free and clear of any
and all Liens, other than Permitted Liens.
Neither the Seller nor any of its
Affiliates has received any notice of a
breach or default under any Property
Lease, and neither the Seller nor any of
its Affiliates has granted any other
Person any rights, adverse or otherwise,
under any Property Lease. The Company
or a Subsidiary has undisturbed possession
of the Premises, all Property Leases
are in full force and effect, and the
Company or a Subsidiary is entitled to the
benefits of such Property Leases in
accordance with the terms thereof. Neither
the Company nor any Subsidiary is in
material breach or violation of, or
material default under, any Property Lease
and, to the Knowledge of the Seller,
no other party to any Property Lease is in
material breach or violation thereof
or material default thereunder, nor is
there any material dispute between the
Company or a Subsidiary and any landlord
under any of the Property Leases and no
waiver, indulgence or postponement of the
lessee's obligations thereunder has
been granted by the lessor. No event has
occurred and no condition exists which,
with the giving of notice or the lapse of
time or both, would constitute a
default by the Company or a Subsidiary or
termination event under any Property
Lease. To the Knowledge of the Seller, the
current use by the Company or a
Subsidiary of the Premises does not violate
any local zoning or similar land use
Laws in any material respect.
(d) The Premises
constitute the only real property used in the conduct of
the Business. Except as set forth on
SCHEDULE 3.13(D), the Premises (including
improvements on the Premises) are in good
operating condition and repair
(ordinary wear and tear excepted) and are
adequate in all material respects for
their present uses by the Company or a
Subsidiary.
SECTION 3.14
Personal Property, Accounts Receivable, Inventory and Working
Capital
(a) The Company
or a Subsidiary has valid title to or, in the case of
leased assets, a valid leasehold interest
in, free and clear of Liens, other
than Permitted Liens, all tangible and
intangible personal property and assets
reflected in the Balance Sheet, or
thereafter acquired, except for properties
and assets disposed of in the ordinary
course of the Business consistent with
past practice, since June 30, 2005. The
Company and the Subsidiaries own or have
the exclusive right to use all of the
tangible and intangible personal
properties and assets necessary for the
conduct of the Business as presently
conducted. Notwithstanding the foregoing,
the representations and warranties
contained in this Section 3.14(a) do not
apply to Intellectual Property or
Company Intellectual Property, which is
covered by the representations and
warranties contained in Section 3.10.
(b) The
equipment and other tangible properties and assets necessary to
the
conduct of the Business as presently
conducted are in good operating condition
and repair, ordinary wear and tear
excepted, and are suitable for their present
use by the Company and the
Subsidiaries.
(c) The accounts
receivable of the Company and the Subsidiaries reflected
on the Balance Sheet have arisen from bona
fide sales transactions in the
ordinary course of the Business. Except as
set forth in SCHEDULE 3.14(C), none
of the accounts receivable of the Company
and the Subsidiaries reflected on the
Balance Sheet have been referred to an
attorney or third party collection agent
for collection.
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<PAGE>
(d) Except as
disclosed in SCHEDULE 3.14(D), all inventory of the Company
and the Subsidiaries reflected on the
Balance Sheet consisted, and all such
inventory acquired since the date of the
Balance Sheet consists, of a quality
and quantity usable and with respect to
finished goods, salable in the ordinary
course of the Business, except for obsolete
items and items of below standard
quality which have been written off or
written down in accordance with GAAP
applied on a consistent basis, and such
inventory is sufficient for the
operation of the Business in the ordinary
course. Except as disclosed in
SCHEDULE 3.14(D), all items included in the
inventory of the Company and the
Subsidiaries are the property of the
Company or a Subsidiary, free and clear of
any Liens other than Permitted Liens, have
not been pledged as collateral, and
are not held by the Company or a Subsidiary
on consignment from others.
SECTION 3.15
Taxes. Except as disclosed in SCHEDULE 3.15:
(a) the Tax
Returns of the Company and the Subsidiaries and of the Seller
Parent required to be filed separately or
as part of a consolidated Tax Return
of an Affiliated Group before the date of
this Agreement have been prepared and
timely filed and each such Tax Return is
true, complete and correct in all
material respects;
(b) except for
Taxes that are being contested in good faith and by
appropriate proceedings and reserved for on
the Balance Sheet, (i) all Taxes
whether or not shown to be due in Tax
Returns filed by, or in respect of the
operations of, the Company and the
Subsidiaries and the Seller have been duly
paid or accrued on the Balance Sheet of the
Company, a Subsidiary or the Seller,
as the case may be, in accordance with
GAAP, and (ii) all deficiencies and
assessments for any amount of Taxes that
are or would become payable by the
Seller, the Company or a Subsidiary and
chargeable as a Lien upon any assets of
the Company or a Subsidiary have been
paid;
(c) neither the
Company nor any of the Subsidiaries is a party to, or bound
by, or has any obligation under, any tax
allocation, sharing or indemnification
agreement or similar contract or
arrangement or any agreement that obligates it
to make any payment computed by reference
to Taxes, taxable income or taxable
losses of any other Person;
(d) there is no
contract, agreement, plan or arrangement covering any
Person that, individually or collectively,
would give rise to after the Closing,
nor shall the consummation of the Closing
obligate the Company or a Subsidiary
to make after the Closing, any parachute
payment subject to Section 280G of the
Code;
(e) no
examination or audit of any Tax Return relating to any material
Taxes of the Company or its Affiliated
Group by any Governmental Authority is
currently in progress or, to the Knowledge
of the Seller, is threatened or
contemplated, no assessment of a material
amount of Tax has been proposed in
writing against the Company, and there are
no outstanding agreements, waivers or
arrangements extending the statutory period
of limitation applicable to any
claim for, or the period for the collection
or assessment of, Taxes due from or
with respect to the Company or its
Affiliated Group for any taxable period;
(f) except with
respect to the consolidated group to which the Company and
the Subsidiaries are currently members, (i)
neither the Company nor any
Subsidiary is a member of
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an affiliated group of corporations filing
a consolidated federal income Tax
Return and (ii) neither the Company nor any
Subsidiary has any liability for the
Taxes of any Person under Treasury
Regulations Section 1.1502-6 (or any similar
provision of any state, local, or foreign
law), as a transferee or successor, by
contract, or otherwise;
(g) the Company
and the Subsidiaries have duly and timely withheld all
Taxes required to be withheld, including
from employee salaries, wages and other
compensation and paid over to the
appropriate taxing authorities all amounts
required to be so withheld and paid over
for all periods under all applicable
laws and regulations;
(h) neither the
Company nor any Subsidiary will be required to include any
item of income in, or exclude any item of
deduction from, taxable income for any
taxable period (or portion thereof) ending
after the Closing Date as a result of
(i) any change in method of accounting for
a taxable period ending on or prior
to the Closing Date, (ii) a closing
agreement as described in Section 7121 of
the Code (or any corresponding or similar
provision of state or local income Tax
law), (iii) the installment method of
accounting, the completed cash method of
accounting, the long-term contract method
of accounting or the cash method of
accounting, (iv) intercompany transactions
or any excess loss account described
in Treasury Regulations under Section 1502
of the Code (or any corresponding or
similar provision of state or local income
Tax law), or (v) prepaid amount
received on or prior to the Closing
Date;
(i) neither the
Company nor any Subsidiary has been a United States real
property holding corporation within the
meaning of Section 897(c)(2) of the Code
during the applicable period specified in
Section 897(c)(l)(A)(ii) of the Code;
(j) neither the
Company nor any Subsidiary has distributed stock of another
Person, or has had its stock distributed by
another Person, in a transaction
that was purported or intended to be
governed in whole or in part by Section 355
or Section 361 of the Code.
(k) the Company
and the Subsidiaries have collected all material sales and
use Taxes required to be collected, and has
remitted, or will remit on a timely
basis, such amounts to the appropriate
Governmental Authorities, or has been
furnished properly completed exemption
certificates and has maintained all such
records and supporting documents in the
manner required by all applicable sales
and use Tax statutes and regulations;
(l) neither the
Company nor any of the Subsidiaries has, to the Knowledge
of the Seller, engaged in any transaction
that could give rise to (i) a
registration obligation with respect to any
Person under Section 6111 of the
Code or the regulations thereunder, (ii) a
list maintenance obligation with
respect to any Person under Section 6112 of
the Code or the regulations
thereunder, or (iii) a disclosure
obligation as a "reportable transaction" under
Section 6011 of the Code and the
regulations thereunder;
(m) the Tax
Returns of the Company and the Subsidiaries (i) with respect to
federal income Taxes have been examined by
and settled with the Internal Revenue
Service, or the statute of limitations with
respect to the relevant Tax
liability has expired, for all taxable
periods through and including the year
ended June 30, 2000 and (ii) with respect
to state Taxes have been examined by
and settled with the appropriate taxing
authorities, or the statute of
limitations
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with respect to the relevant Tax liability
has expired, for the taxable periods
set forth in SCHEDULE 3.15;
(n) no power of
attorney granted by or with respect to the Company or any
of the Subsidiaries relating to Taxes is
currently in force;
(o) the Seller
has delivered or made available to Purchaser for inspection
(A) complete and correct copies of all
income Tax Returns of the Company and the
Subsidiaries for the fiscal years ended
June 30, 2002, 2003 and 2004 and (B)
complete and correct copies of all private
letter rulings, revenue agent
reports, closing agreements, settlement
agreements, deficiency notices and any
similar documents submitted by, received by
or agreed to by or on behalf of the
Company of the Subsidiaries and relating to
material Taxes for such taxable
periods; and
(p) BISYS
Information Solutions L.P. has been classified as a partnership
for U.S. federal income, state and local
tax purposes effective as of its
inception and BISYS Document Solutions LLC
has been classified as a Disregarded
Entity for U.S. federal income tax purposes
effective as of its inception.
SECTION 3.16
Litigation. Except as disclosed in SCHEDULE 3.16, as of the
date hereof (a) there is no Action pending
or, to the Knowledge of the Seller,
threatened in writing, involving the
Company or any Subsidiary or any of their
respective properties, assets or rights,
and (b) there are no Orders of any
Governmental Authority or arbitrator that
prohibit or limit in any material
respect the conduct of the Business by the
Company and the Subsidiaries taken as
a whole.
SECTION 3.17
Contracts
(a) SCHEDULE
3.17(A) sets forth an accurate and complete list of each of
the following Contracts to which the
Company or any of the Subsidiaries is a
party or by which any of them are directly
or indirectly bound: (i) Contracts
creating an obligation on the part of the
Company or a Subsidiary to pay to any
other Person an amount in excess of
$750,000 in any 12-month period; (ii)
Contracts creating an obligation on the
part of another Person to pay to the
Company or a Subsidiary an amount in excess
of $750,000 in any 12-month period;
(iii) Contracts for the employment of any
officer, individual employee or other
Person on a full-time or consulting basis
with annual payments in excess of
$200,000; (iv) Contracts evidencing
Indebtedness; (v) Contracts (including so
called take-or-pay or keep-well agreements)
under which the Company or any
Subsidiary has directly or indirectly
guaranteed Indebtedness of any Person
(other than the Company or any of the
Subsidiaries) or other guaranties by the
Company or any Subsidiary; (vi) Contracts
which prohibit the Company or any
Subsidiary from engaging in the Business or
any line of Business or competing
with any Person in the United States or
Canada or which restrict the ability of
the Company or any Subsidiary to hire any
Person; (vii) any VAR, OEM or other
distribution Contract, which require the
Company or any of the Subsidiaries to
reach specific sales or payment minimums,
targets or milestones or which require
the Company or any of the Subsidiaries to
use "best efforts" to distribute
products thereunder and which generated
more than $200,000 in payments during
the fiscal year ended June 30, 2005; (viii)
Contracts for capital expenditures
or other purchases of material supplies,
equipment or other assets or
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properties (other than purchase orders for
inventory or supplies in the ordinary
course of the Business) in excess of
$1,000,000 individually by the Company or
any Subsidiary; (ix) Contracts with the
Seller or any Affiliate of the Seller
(other than the Company and the
Subsidiaries); (x) Contracts that were not
entered into in the ordinary course of the
Business; (xi) Contracts which
contain restrictions with respect to
payment of dividends or any other
distribution in respect of the capital
stock or other equity interests of the
Company or any of the Subsidiaries; (xii)
Contracts (including so called
take-or-pay or keep-well agreements) under
which any Person (other than the
Company or any of the Subsidiaries) has
directly or indirectly guaranteed
Indebtedness of the Company or any of the
Subsidiaries; (xiii) Contracts
granting or evidencing Liens on any
properties or assets of the Company or any
of the Subsidiaries, other than Permitted
Liens; (xiv) any management service,
consulting, financial advisory or any other
similar type Contract and any
Contract with any investment or commercial
bank (other than Contracts pursuant
to which the Company or any of the
Subsidiaries acts as a service provider to an
investment or commercial bank in the
ordinary course of the Business); (xv)
Contracts (other than any agreement entered
into with the Purchaser or an
Affiliate of the Purchaser pursuant to this
Agreement) with any current or
former officer or director of the Company
or any of the Subsidiaries under which
the Company or any of the Subsidiaries
would have obligations after the Closing;
(xvi) other than Contracts described in the
other subclauses of this Section
3.17(a), Contracts (including letters of
intent) involving the future
disposition or acquisition of assets or
properties other than in the ordinary
course of the Business and consistent with
past practice, or any merger,
consolidation or similar business
combination transaction, whether or not
enforceable; (xvii) Contracts involving any
joint venture, partnership,
strategic alliance, shareholders'
agreement, co-marketing, co-promotion,
co-packaging, joint development or similar
arrangement; (xviii) Contracts
involving any resolution or settlement of
actual or threatened material
litigation, arbitration, claim or other
dispute entered into on or after July 1,
2004 or that will continue to affect the
Company, any Subsidiary or the Business
after the Closing; (xix) Contracts
involving leases or subleases of personal
property involving an annual base rental
payment in excess of $750,000; or (xx)
other than Contracts described in the other
subclauses of this Section 3.17(a)
or that were entered into in the ordinary
course of the Business and consistent
with past practice, Contracts to which the
Company or any Subsidiary is a party
that are material to the Company and the
Subsidiaries or the Business (all of
the foregoing Contracts, together with the
Affiliate Contracts and the IP
Licenses, the "COMPANY CONTRACTS").
SCHEDULE 3.17(A) sets forth an accurate and
complete list of (1) each Contract to which
the Company or any of its
Subsidiaries was a party or by which any of
them were bound that created an
obligation on the part of the Company or a
Subsidiary in an amount in excess of
$750,000 in the last 12-month period and
(2) each Contract to which the Company
or any of its Subsidiaries was a party or
by which any of them were bound that
created an obligation on the part of
another Person to pay the Company or a
Subsidiary an amount in excess of $750,000
in the last 12-month period.
(b) SCHEDULE
3.17(B) sets forth an accurate and complete list of each of
the following Contracts to which the Seller
Parent or any of its Affiliates
(other than the Company or any of the
Subsidiaries) is a party or by which any
of them are bound: (i) Contracts creating
an obligation on the part of the
Seller Parent or any of its Affiliates
(other than the Company or any of the
Subsidiaries) with respect to the Business
to pay to any other Person an amount
in excess of $750,000 in any 12-month
period; (ii) Contracts creating an
obligation on the part of another Person to
pay to the Seller Parent or any of
its Affiliates (other than the Company or
any of the
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Subsidiaries) with respect to the Business
an amount in excess of $750,000 in
any 12-month period; (iii) Contracts
evidencing Indebtedness with respect to the
Business; (iv) Contracts for capital
expenditures or other purchases of material
supplies, equipment or other assets or
properties (other than purchase orders
for inventory or supplies in the ordinary
course of the Business) in excess of
$1,000,000 individually by the Seller
Parent or any of its Affiliates (other
than the Company or any of the
Subsidiaries) with respect to the Business; (v)
Contracts that were not entered into in the
ordinary course of the Business;
(vi) Contracts which prohibit the Company
or any Subsidiary from engaging in the
Business or any line of Business or
competing with any Person in the United
States or Canada or which restrict the
ability of the Company or any Subsidiary
to hire any Person; (vii) any VAR, OEM or
other distribution Contract, which
require the Seller Parent or any of its
Affiliates (other than the Company or
any of the Subsidiaries) with respect to
the Business to reach specific sales or
payment minimums, targets or milestones or
which require the Seller Parent or
any of its Affiliates (other than the
Company or any of the Subsidiaries) with
respect to the Business to use "best
efforts" to distribute products thereunder
and which generated more than $200,000 in
revenues during the fiscal year ended
June 30, 2005; (viii) Contracts (including
so called take-or-pay or keep-well
agreements) under which any Person (other
than the Company or any of the
Subsidiaries) has directly or indirectly
guaranteed Indebtedness of the Company
or any of the Subsidiaries; (ix) Contracts
granting or evidencing Liens on any
properties or assets of the Company or any
of the Subsidiaries, other than
Permitted Liens; (x) any management
service, consulting, financial advisory or
any other similar type Contract with
respect to the Business and any Contract
with any investment or commercial bank
(other than Contracts pursuant to which
the Company or any of the Subsidiaries acts
as a service provider to an
investment or commercial bank in the
ordinary course of the Business) with
respect to the Business; (xi) Contracts
(other than any agreement entered into
with the Purchaser or an Affiliate of the
Purchaser pursuant to this Agreement)
with any current or former officer or
