ASSET ACQUISITION AGREEMENT
dated April 15, 1997
FOR THE ACQUISITION OF
CERTAIN ASSETS OF
PREMIER SOLUTIONS LTD.
BY
A SUBSIDIARY OF
SUNGARD DATA SYSTEMS INC.
TABLE OF CONTENTS
Page
Background -1-
1. DEFINED TERMS -2-
1.1. "Accounts Receivable" -2-
1.2. "Asset" -2-
1.3. "Cash Asset" -2-
1.4. "Consent" -2-
1.5. "Contract" -2-
1.6. "Contract Right" -2-
1.7. "Employee Benefit Plan" -2-
1.8. "Encumbrance" -3-
1.9. "Excluded Assets" -3-
1.10. "Executive Officers of Seller" -3-
1.11. "GAAP" -3-
1.12. "Hazardous Substances" -3-
1.13. "Insurance Policy" -3-
1.14. "Intangible" -3-
1.15. "Judgment" -3-
1.16. "Law" -3-
1.17. "Maximis" -4-
1.18. "Obligation" -4-
1.19. "Permit" -4-
1.20. "Person" -4-
1.21. "Proceeding" -4-
1.22. "Real Property" -4-
1.23. "Software" -4-
1.24. "Tangible Property" -4-
1.25. "Tax" -4-
2. THE TRANSACTION -4-
2.1. Sale and Purchase of Specified Assets -4-
2.1.1 Specified Assets of Seller -5-
2.1.2 Specified Liabilities of Seller -6-
2.2. No Other Liabilities -7-
2.2.1 Affiliates -7-
2.2.2 Taxes -7-
2.2.3 Excluded Liabilities -7-
2.2.4 Post-Closing -7-
2.2.5 Transaction Related -8-
2.2.6 Defaults -8-
2.2.7 Employees -8-
2.2.8 Infringement -8-
2.2.9 Encumbrances -8-
2.2.10 Maximis -8-
2.2.11 Excluded Contracts -8-
2.3. Seller's Employees -8-
(i)
Page
3. PURCHASE PRICE AND CLOSING FINANCIAL STATEMENTS -9-
3.1. Purchase Price and Allocation -9-
3.2. Closing Financial Statements -9-
3.2.1 Type of Statements -9-
3.2.2 Audit Requirements -10-
3.2.3 Delivery of Documents -10-
3.3. Purchase Price Adjustments -11-
3.3.1 Net Assets Adjustment -11-
3.3.2 Net Assets Statement -11-
3.3.3 Payment of Net Asset Adjustment
and First Holdback -12-
3.4. Accounts Receivable Adjustment -12-
3.4.1 Collections by Buyer -12-
3.4.2 Unpaid Receivables -12-
3.4.3 Adjustment to Purchase Price
and Payment of the Second
Holdback -13-
3.4.4 Collections by Seller -13-
3.6. Earnout Payment -14-
3.6.1 1997 Payment -14-
3.6.2 1998 Payment -14-
3.6.3 1999 Payment -14-
3.6.4 Revenue Recognition -14-
3.6.5 PSL's Operations -15-
3.6.6 Calculation and Payment -15-
3.7. Currency and Method of Payment -15-
3.8. Imputed Interest -16-
4. REPRESENTATIONS OF THE SELLING COMPANIES -16-
4.1. Organization -16-
4.2. Effect of Agreement -16-
4.3. Financial and Corporate Records -17-
4.4. Compliance with Law -17-
4.5. Financial Statements -17-
4.6. Assets -18-
4.7. Seller's Obligations -18-
4.8. Operations Since January 31, 1997 -18-
4.9. Accounts Receivable -19-
4.10. Tangible Property -19-
4.11. Real Property -19-
4.12. Software and Intangibles -19-
4.13. Contracts -20-
4.14. Employees and Independent Contractors -21-
4.15. Employee Benefit Plans -22-
4.16. Customers, Prospects and Suppliers -23-
4.17. Taxes -23-
4.18. Proceedings and Judgments -24-
4.19. Insurance -24-
4.20. Questionable Payments -24-
4.21. Related Party Transactions -24-
(ii)
Page
4.22. Brokerage Fees -25-
4.23. Full Disclosure -25-
5. REPRESENTATIONS OF THE BUYING COMPANIES -25-
5.1. Organization -25-
5.2. Effect of Agreement -25-
5.3. Brokerage Fees -26-
5.4. Full Disclosure -26-
5.5. Access to Information -26-
6. CONDITIONS TO CLOSING FOR SELLING COMPANIES -26-
6.1. Buying Companies' Representations -26-
6.2. Buying Companies' Performance -26-
6.3. Absence of Proceedings -26-
6.4. Xxxx-Xxxxx-Xxxxxx -26-
7. CONDITIONS TO CLOSING FOR BUYING COMPANIES -27-
7.1. Selling Companies' Representations -27-
7.2. Selling Companies' Performance -27-
7.3. Absence of Proceedings -27-
7.4. Absence of Adverse Changes -27-
7.5. Xxxx-Xxxxx-Xxxxxx -27-
7.6. Consents -27-
8. CLOSING -27-
8.1. Closing -27-
8.2. Obligations of Seller at Closing -27-
8.2.1 Specified Assets -28-
8.2.2 Documents of Transfer -28-
8.2.3 Name Change -28-
8.2.4 Incumbency Certificate -28-
8.2.5 Resolutions -28-
8.2.6 Good Standing -28-
8.2.7 Closing Certificate -28-
8.2.8 Opinion of Counsel -28-
8.2.9 Consents -29-
8.2.10 Debt Payoff -29-
8.2.11 Non-Compete Agreements -29-
8.2.12 Restructuring Documents -29-
8.2.13 Other Documents -29-
8.3. Obligations of Buying Companies at
Closing -29-
8.3.1 Closing Payments -29-
8.3.2 Assumption of Liabilities -29-
8.3.3 Closing Certificate -29-
8.3.4 Incumbency Certificate -30-
8.3.5 Resolutions -30-
8.3.6 Good Standing -30-
8.3.7 Opinion of Counsel -30-
(iii)
Page
8.3.8 Other Documents -30-
9. CERTAIN POST-CLOSING OBLIGATIONS -30-
9.1. Transition and Cooperation -30-
9.2. Use of Names -30-
9.3. Contract Matters -31-
9.3.1 Consent -31-
9.3.2 Subcontracting -31-
9.3.3 Buyer's Instructions -31-
9.3.4 Collateral Assignment -31-
9.5. PSL's Operations during Earnout Period -32-
9.6. NIDS Twenty-First Century Operation -32-
9.7. Further Assurances -32-
9.8. Books and Records of Seller -33-
9.9. Books and Records of Buyer -33-
9.10. Cash Reconciliation -33-
10. RESTRICTIVE COVENANTS OF THE SELLING
COMPANIES -33-
10.1. Certain Acknowledgements -33-
10.1.1 Competitive Nature of
Business -33-
10.1.2 Access to Information -33-
10.1.3 Basis for Covenants -34-
10.2. Nondisclosure Covenants -34-
10.2.1 General Restrictions -34-
10.2.2 Software Restrictions -34-
10.3. Nondisclosure Covenants of the
Buying Companies -34-
10.4. Noncompetition Covenants -35-
10.4.1 Solicitation Restrictions -35-
10.4.2 Software Restrictions -35-
10.4.3 Competing Business
Restrictions -35-
10.5. Certain Exclusions -35-
10.6. Enforcement of Covenants -36-
10.7. Scope of Covenants -36-
11. INDEMNIFICATION -36-
11.1. Selling Companies' Indemnification -36-
11.1.1 Misrepresentation -36-
11.1.2 Nonperformance -36-
11.1.3 Non-Assumed Obligations -36-
11.1.4 Unasserted Claims -37-
11.1.5 Proceedings by Employees
and Related Matters -37-
11.1.6 Other Proceedings -37-
11.1.7 NIDS Twenty-First Century
Operation -37-
11.2. Buying Companies' Indemnification -37-
11.2.1 Misrepresentation -37-
11.2.2 Nonperformance -37-
11.2.3 Specified Liabilities -38-
11.2.4 Proceedings by Employees
and Related Matters -38-
(iv)
Page
11.3. Indemnification Procedures -38-
11.3.1 Notice -38-
11.3.2 Defense -38-
11.3.3 Payments -38-
11.3.4 Sole Remedy -39-
11.4. Limits on Indemnification -39-
11.4.1 Deductible -39-
11.4.2 Ceiling -39-
11.4.3 Time Period -39-
11.4.4 Exceptions -39-
11.5. Setoff and Holdback -39-
12. OTHER PROVISIONS -39-
12.1. Fees and Expenses -39-
12.2. Notice -40-
12.3. Survival of Representations and
Covenants -40-
12.4. Interpretation of Representations -40-
12.5. Reliance by the Buying Companies -40-
12.6. Entire Understanding -40-
12.7. Publicity -41-
12.8. Parties in Interest -41-
12.9. Waivers -41-
12.10. Severability -41-
12.11. Counterparts -41-
12.12. Section Headings -41-
12.13. References -41-
12.14. Controlling Law -41-
12.15. Dispute Resolution -42-
12.16. Jurisdiction and Process -42-
12.17. No Third-Party Beneficiaries -42-
(v)
ASSET ACQUISITION AGREEMENT
Parties: Premier Solutions Ltd.
a Pennsylvania corporation ("Premier")
000 Xxxxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Global Software, Inc.
a Nevada corporation ("Premier's Subsidiary")
Bank of America Plaza, Suite 1100
000 Xxxxx Xxxxxx Xxxxxx
Xxx Xxxxx, XX 00000
Safeguard Scientifics, Inc.
a Pennsylvania corporation ("Seller's Parent")
800 The Safeguard Building
000 Xxxxx Xxxx Xxxxx
Xxxxx, XX 00000
PSL Acquisition Inc.
a Delaware corporation ("Buyer")
000 Xxxxxxxx Xxxxxxxx, 0000 Xxxxxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
SunGard Data Systems Inc.
a Delaware corporation ("Buyer's Parent")
0000 Xxxxxxxx Xxxx
Xxxxx, XX 00000
Date: April 15, 1997
Background: Premier is in the business of providing data processing and
related services using proprietary software systems, and designing,
developing, selling, licensing maintaining and enhancing a variety of
proprietary software systems and products, which proprietary software systems
are used for multicurrency trust accounting and global custody, portfolio
management, shareholder accounting, investment accounting and management,
data warehousing for trust and custody and other support functions, to banks
and other financial institutions ("Business"). Premier is approximately
eight-five percent (85%) beneficially owned by Seller's Parent and Premier's
Subsidiary is one hundred percent (100%) owned by Premier (Premier, Premier's
Subsidiary and Seller's Parent are sometimes collectively referred to herein
as "Selling Companies"). Buyer is a wholly owned subsidiary of Buyer's
Parent. (Buyer and Buyer's Parent are sometimes collectively referred to
herein as "Buying Companies"). As used hereinafter, the term "Seller" means,
collectively, Premier and Premier's Subsidiary, and the term "Seller's
Business" means all of the Business of Seller other than that related to the
Maximis product line. The parties desire that Seller sells and Buyer buys
substantially all of Premier's business and assets, all on and subject to the
terms and conditions of this Agreement.
1
INTENDING TO BE LEGALLY BOUND, in consideration of the mutual agreements
contained herein, and subject to the satisfaction of the terms and conditions
set forth herein, the parties agree as follows:
1. DEFINED TERMS Certain defined terms used in this Agreement and not
specifically defined in context are defined in this Section 1, as follows:
1.1. "Accounts Receivable" means (a) any right to payment for
goods sold, leased or licensed or for services rendered, whether or not it
has been earned by performance, whether billed or unbilled, and whether or
not it is evidenced by any Contract (as defined in Section 1.5); (b) any note
receivable; or (c) any other receivable or right to payment of any nature.
1.2. "Asset" means any real, personal, mixed, tangible or
intangible property of any nature, including, but not limited to, Cash Assets
(as defined in Section 1.3), prepayments, deposits, escrows, Accounts
Receivable (as defined in Section 1.1), Tangible Property (as defined in
Section 1.24), Real Property (as defined in Section 1.22), Software (as
defined in Section 1.23), Contract Rights (as defined in Section 1.6),
Intangibles (as defined in Section 1.14) and good will, and claims, causes of
action and other legal rights and remedies.
1.3. "Cash Asset" means any cash on
hand, cash in bank or other accounts, readily marketable securities, and other
cash-equivalent liquid assets of any nature.
1.4. "Consent" means any consent, approval, order or
authorization of, or any declaration, filing or registration with, or any
application or report to, or any waiver by, or any other action (whether
similar or dissimilar to any of the foregoing) of, by or with, any Person (as
defined in Section 1.20), which is necessary in order to take a specified
action or actions in a specified manner and/or to achieve a specified result.
1.5. "Contract" means any written or oral contract, agreement,
instrument, order, arrangement, commitment or understanding of any nature,
including, but not limited to, sales orders, purchase orders, leases,
subleases, data processing agreements, maintenance agreements, license
agreements, sublicense agreements, loan agreements, promissory notes,
security agreements, pledge agreements, deeds, mortgages, guaranties,
indemnities, warranties, employment agreements, consulting agreements, sales
representative agreements, joint venture agreements, buy-sell agreements or
purchase options.
1.6. "Contract Right" means any right, power or remedy of any
nature under any Contract (as defined in Section 1.5) including, but not
limited to, rights to receive property or services or otherwise derive
benefits from the payment, satisfaction or performance of another party's
Obligations (as defined in Section 1.18), rights to demand that another party
accept property or services or take any other actions, and rights to pursue
or exercise remedies or options.
1.7. "Employee Benefit Plan" means any employee benefit plan
as defined in Section 3(3) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), and any other plan, program, policy or
arrangement for or regarding bonuses, commissions, incentive compensation,
severance, vacation, deferred compensation, pensions, profit sharing,
retirement, payroll savings, stock options, stock purchases, stock awards,
2
stock ownership, phantom stock, stock appreciation rights, medical/dental
expense payment or reimbursement, disability income or protection, sick pay,
group insurance, self insurance, death benefits, employee welfare or fringe
benefits of any nature; but not including employment Contracts with
individual employees.
1.8. "Encumbrance" means any lien, security interest, pledge,
mortgage, easement, covenant, restriction, reservation, conditional sale,
prior assignment, or other encumbrance, claim, burden or charge of any
nature, other than the permitted encumbrances" which are set forth on Exhibit
1.8 and hereinafter referred to as the "Permitted Encumbrances".
1.9. "Excluded Assets" means the Assets of Seller identified
on Exhibit 1.9A, "Excluded Liabilities" means the liabilities of Seller
identified on Exhibit 1.9B, "Excluded Contracts" means the Contracts
identified on Exhibit 1.9C, in each case other than those related to Maximis.
1.10. "Executive Officers of Seller" means G.A. Xxxxxxx, III,
Xxxxxxx X. Xxxxx and Xxxxx X. Xxxxxx, III.
1.11. "GAAP" means generally accepted accounting principles
under United States accounting rules and regulations, consistently applied.
In no event shall the consistent application of the historical accounting
policies used by the Selling Companies have priority over GAAP, regardless of
materiality.
1.12. "Hazardous Substances" means any substance, waste,
contaminant, pollutant or material that has been determined by any United
States federal government authority, or any state or local government
authority having jurisdiction over Seller's Real Property, to be capable of
posing a risk of injury or damage to health, safety, property or the
environment, including, but not limited to, (a) all substances, wastes,
contaminants, pollutants and materials defined or designated as hazardous,
dangerous or toxic pursuant to any Law of any state in which any of Seller's
leased or owned Real Property is located or any United States Law, and (b)
asbestos, polychlorinated biphenyls ("PCB's") and petroleum.
1.13. "Insurance Policy" means any public liability, product
liability, general liability, comprehensive, property damage, vehicle, life,
hospital, medical, dental, disability, worker's compensation, key man,
fidelity bond, theft, forgery, errors and omissions, directors' and officers'
liability, or other insurance policy of any nature.
1.14. "Intangible" means any name, corporate name, fictitious
name, trademark, trademark application, service xxxx, service xxxx
application, trade name, brand name, product name, slogan, trade secret,
know-how, patent, patent application, copyright, copyright application,
design, logo, formula, invention, product right or other intangible asset of
any nature, whether in use, under development or design, or inactive.
1.15. "Judgment" means any order, writ, injunction, citation,
award, decree or other judgment of any nature of any foreign, federal, state
or local court, governmental body, administrative agency, regulatory
authority or arbitration tribunal.
1.16. "Law" means any provision of any foreign, federal, state
or local law, statute, ordinance, charter, constitution, treaty, rule or
regulation.
3
1.17. "Maximis" means any Asset (as defined in Section 1.2),
Contract (as defined in Section 1.5) or Obligation (as defined in Section
1.18) related in any manner to the portfolio management/investment accounting
Software with the trade name of "MAXIMIS" that is marketed and maintained by
Premier.
1.18. "Obligation" means any debt, liability or obligation of
any nature, whether secured, unsecured, recourse, nonrecourse, liquidated,
unliquidated, accrued, absolute, fixed, contingent, ascertained,
unascertained, known, unknown or otherwise.
1.19. "Permit" means any license, permit, approval, waiver,
order, authorization, right or privilege of any nature, granted, issued,
approved or allowed by any foreign, federal, state or local governmental
body, administrative agency or regulatory authority.
1.20. "Person" means any individual, sole proprietorship, joint
venture, partnership, corporation, association, cooperative, trust, estate,
governmental body, administrative agency, regulatory authority or other
entity of any nature.
1.21. "Proceeding" means any demand, claim, suit, action,
litigation, investigation, arbitration, administrative hearing or other
proceeding of any nature.
1.22. "Real Property" means any real estate, land, building,
condominium, town house, structure or other real property of any nature, all
shares of stock or other ownership interests in cooperative or condominium
associations or other forms of ownership interest through which interests in
real estate may be held, and all appurtenant and ancillary rights thereto,
including, but not limited to, easements, covenants, water rights, sewer rights
and utility rights.
1.23. "Software" means any computer program, operating
system, applications system, firmware or software of any nature, whether
operational, under development or inactive, including all object code, source
code, technical manuals, user manuals and other documentation therefor, whether
in machine-readable form, programming language or any other language or symbols,
and whether stored, encoded, recorded or written on disk, tape, film, memory
device, paper or other media of any nature.
1.24. "Tangible Property" means any furniture, fixtures,
leasehold improvements, vehicles, office equipment, computer equipment, other
equipment, machinery, tools, forms, supplies or other tangible personal
property of any nature.
1.25. "Tax" means (a) any foreign, federal, state or local
income, earnings, profits, gross receipts, franchise, capital stock, net
worth, sales, use, occupancy, general property, real property, personal
property, intangible property, transfer, fuel, excise, payroll, withholding,
unemployment compensation, social security or other tax of any nature; (b)
any foreign, federal, state or local organization fee, qualification fee,
annual report fee, filing fee, occupation fee, assessment, sewer rent or
other fee or charge of any nature; or (c) any deficiency, interest or penalty
imposed with respect to any of the foregoing.
2. THE TRANSACTION
2.1. Sale and Purchase of Specified Assets. On the Closing
Date (as defined in Section 8.1), effective to the fullest extent possible at
5:00 p.m. EDT on the Effective Date
4
(as defined in Section 8.1), and subject to the other terms and conditions of
this Agreement, the Seller hereby sells, transfers, assigns and conveys to
Buyer, and Buyer hereby purchases, all right, title and interest in and to
all of the Specified Assets (as defined in Section 2.1.1), and Seller hereby
assigns to Buyer, and Buyer hereby assumes, the Specified Liabilities of
Seller (as defined in Section 2.1.2).
2.1.1 Specified Assets of Seller. The "Specified Assets of
Seller" means all Assets (as defined in Section 1.2) of Seller as of the
Effective Date, wherever located and whether or not reflected on Seller's
books and records used in or pertaining to Seller's Business, including, but
not limited to, the following Assets, but excluding the Excluded Assets (as
defined in Section 1.9) and excluding the Assets specifically excepted below:
(A) All Software (as defined in Section 1.23) owned by
Seller or under development by Seller, but excluding the Maximis Software.
(B) All Intangibles (as defined in Section 1.14) owned by
Seller or under development by Seller, but excluding all Maximis
Intangibles.
(C) All of Seller's Accounts Receivable (as defined in
Section 1.1) and other current assets including, but not limited to, prepaid
expenses, security deposits, rent escrows, and other prepayments, deposits
and escrows, but excluding (1) all Cash Assets (as defined in Section 1.3);
(2) all prepayments and rights to refunds or credits of any Taxes (as defined
in Section 1.25) other than those related to real estate taxes for Seller's
leased Real Property to be transferred to Buyer hereunder for the period
beginning on the Effective Date; (3) all intercompany receivables and all
note receivables from officers, directors and employees of Seller; (4) all
prepayments and deposits with respect to Seller's leased Real Property not
being transferred to Buyer hereunder; (5) all prepaid premiums and other
prepayments and deposits with respect to Seller's Insurance Policies; (6) all
prepayments and deposits with respect to Seller's Group Insurance Plans (as
defined in Section 2.1.1(F)) and Seller's Retirement Plans (as defined in
Section 2.1.1,); and (7) any Accounts Receivable or other current Assets
relating to Maximis.
(D) All of Seller's Tangible Property (as defined in
Section 1.24) excluding Tangible Property relating solely to Maximis and
excluding the furniture and fixtures in the leased Real Property not being
transferred to Buyer hereunder.
(E) All of Seller's Contract Rights (as defined in
Section 1.6) under the Specified Contracts (as defined in Section 4.13) and,
including without limitation, all rights of Seller with respect to all
noncompetition, nondisclosure and other restrictive covenants made for the
benefit of Seller or its affiliates in any agreements between Seller and its
current and former employees; but excluding Contract Rights under (1) this
Agreement and any other Contracts entered into by any of the Selling
Companies with any of the Buying Companies in connection with the
transactions contemplated by this Agreement; (2) Contracts that constitute or
evidence Employee Benefit Plans (as defined in Section 1.7) of Seller, except
for Seller's health and dental insurance contract with Prudential Health Care
that is attached to Schedule 4.15 and shall be deemed a Specified Contract
for the purpose of this Agreement; (3) all Contracts relating to the
acquisition of Seller or any of Seller's predecessors, provided that the
Specified Assets shall include the rights of Seller with respect to all
noncompetition, nondisclosure and other restrictive covenants made for the
benefit of Seller or its affiliates in any such Contract; (4) any Specified
Contracts requiring a Consent
5
that is not obtained or waived on or before the Closing Date ("Non-Assigned
Contracts"), provided that, once such Consent is obtained or waived, the
Contract Rights under such Specified Contract shall be deemed, automatically
and without further action by the parties, to be included in the Specified
Assets as of the date such Consent is delivered to Buyer; (5) all Contract
Rights under any license, distribution, maintenance, customer, vendor
Contract or other Contract relating to Maximis; and (6) all Contract Rights
under the Excluded Contracts (as defined in Section 1.9).
(F) All transferable rights under all Permits (as defined
in Section 1.19) related to Seller's Business granted or issued to Seller or
otherwise held by Seller.
(G) All of Seller's rights with respect to telephone
numbers, telephone directory listings and advertisements, and all of Seller's
goodwill, in each case to the extent related to Seller's Business.
(H) All of Seller's customer lists, prospect lists,
supplier lists, data bases, computer media, sales and marketing materials,
invoices, correspondence, files, books and records, but excluding (1)
Seller's minute books, stock books, articles of incorporation, seals, tax
returns or other records relating to the organization of Seller; and (2)
Seller's files, books and records relating exclusively to Seller's Assets not
included in the Specified Assets or to Seller's liabilities not included in
the Specified Liabilities.
(I) All of Seller's claims, causes of action and other
legal rights and remedies, whether or not known as of the Effective Date,
relating to Seller's ownership of the Specified Assets and/or the operation
of Seller's Business, but excluding causes of action and other legal rights
and remedies of Seller (1) against any of the Buying Companies with respect
to the transactions contemplated by this Agreement; (2) relating exclusively
to Seller's Assets not included in the Specified Assets or to Seller's
liabilities not included in the Specified Liabilities; or (3) relating to
income Tax refunds, credits or deductions relating to the period ending on or
before the Effective Date.
2.1.2 Specified Liabilities of Seller. The "Specified
Liabilities of Seller" means the following specifically described liabilities
of Seller as of the Effective Date:
(A) The current and long-term liabilities of Seller which
shall be reflected on the Closing Balance Sheet (as defined in, and to be
prepared in accordance with, Section 3.2.1), but only to the extent that the
incurrence or existence of any such liability does not constitute a breach or
failure of, or a default under, any representation, warranty, covenant or
other provision of this Agreement (including, but not limited to, those of
Section 4.8). Notwithstanding the foregoing, the Specified Liabilities shall
not include (1) the Excluded Liabilities (as defined in Section 1.9) or any
reserves pertaining to any of the Excluded Assets or the Excluded Contracts;
(2) any current or long-term notes payable and all accrued interest with
respect thereto, other than any current or long-term notes payable or
capitalized leases for any of the Specified Assets; (3) any liabilities for
overdrafts or any other liabilities with respect to bank accounts; (4) any
intercompany payables or any guarantees of indebtedness of the Seller's
Parent or any subsidiary or affiliate of Seller or Seller's Parent; (5) any
liabilities related to Maximis; (6) any accrued expenses with respect to
Seller's Insurance Policies; and (7) any accrued expenses, liabilities or
reserves pertaining
6
to Seller's leased Real Property relating to the period ending on or before
the Effective Date.
(B) The liabilities of Seller under those Specified
Contracts (as defined in Section 4.13) to which Seller is a party, but only
to the extent that such liabilities are not due to any breach or default by
any of the Selling Companies under any such Specified Contract occurring
prior to or on the Closing Date. Notwithstanding the foregoing, the Specified
Liabilities of Seller shall not include the liabilities of the Selling
Companies under (1) this Agreement or any other Contracts entered into by any
of the Selling Companies with any of the Buying Companies in connection with
the transactions contemplated by this Agreement; (2) any Contracts that
constitute or evidence Employee Benefit Plans of Seller, other than Seller's
health and dental insurance contract with Prudential Health Care which is
being assigned to Buyer hereunder, but only to the extent that such
liabilities accrue to Buyer after the Effective Date and are not due to a
breach or default by any of the Selling Companies occurring prior to or on
the Closing Date; and (3) any Contracts relating to the formation or
acquisition of Seller or any of Seller's predecessors.
(C) The liabilities of Seller for any Tax incurred and
payable with respect to Seller's Business and/or the ownership, possession,
purchase, lease, sale, disposition or use of any of the Specified Assets of
Seller, at any time after the Effective Date, including payroll and sales tax
liability.
2.2. No Other Liabilities. Notwithstanding any other
provisions of this Agreement, Buyer shall not purchase the Specified Assets
subject to, and Buyer shall not in any manner assume or be liable or
responsible for any Obligations (as defined in Section 1.18) of Seller other
than the Specified Liabilities, and all Obligations of Seller other than the
Specified Liabilities shall remain the sole responsibility of Seller. Without
limiting the generality of the foregoing, and in addition to the liabilities
excluded from the Specified Liabilities under Section 2.1.2, Buyer shall not
in any manner assume or be liable or responsible for, or acquire any Assets
of Seller subject to, any of the following Obligations of Seller, whether or
not reflected on the Closing Balance Sheet:
2.2.1 Affiliates. Any Obligation to Seller's Parent or any
current or former shareholder, partner, director or controlling Person (as
defined in Section 1.20) of Seller, or to any other Person affiliated with
Seller, its affiliates and predecessors, including, but not limited to
Obligations for dividends declared but not paid.
2.2.2 Taxes. Any Obligation for any Tax arising at any time on
or before the Effective Date, including but not limited to, (a) any Tax
payable by the Selling Companies with respect to Seller's business
operations; (b) any Tax payable by the Selling Companies with respect to the
ownership, possession, purchase, lease, sale, disposition or use of any of
Seller's Assets at any time on or before the Effective Date; and (c) any Tax
resulting from the sale of the Specified Assets to Buyer or otherwise
resulting from the transactions contemplated by this Agreement.
2.2.3 Excluded Liabilities. Any of the Excluded Liabilities (as
defined in Section 1.9).
2.2.4 Post-Closing. Any Obligation that is incurred or arises
after the Effective Date, or that relates to any Proceeding (as defined in
Section 1.21) or other event
7
that occurs or circumstances that exist after the Effective Date
other than the Specified Liabilities and Obligations of Buyer with respect
to the Non-Assigned Contracts.
2.2.5 Transaction Related. Any Obligation that was or is
incurred in connection with the negotiation, execution or performance of this
Agreement and any other Contracts entered into between any of the Buying
Companies and any of the Selling Companies, or among Selling Companies and
the Buying Companies in connection with the transactions contemplated by this
Agreement.
2.2.6 Defaults. Any Obligation, the incurrence or existence of
which constitutes or will constitute a breach or failure of Seller, or a
default by Seller under, any representation, warranty, covenant or other
provision of this Agreement, including, but not limited to, any Obligation,
whether or not known to the Selling Companies, that has not been disclosed to
the Buyer in writing in this Agreement or the Schedules and Exhibits hereto.
2.2.7 Employees. Any Obligation to any or all employees of
Seller, including, but not limited to, Obligations under Seller's payroll
savings, profit sharing and/or other retirement plans which are employee
pension benefit plans as defined in Section 3(2) of ERISA ("Seller's
Retirement Plans"'), Obligations under Seller's Group Insurance Plans (as
defined in Section 2.1.1, other than Seller's health and dental insurance
contract), and Obligations for severance pay and other termination benefits
except for the Obligations for severance pay and other termination benefits
described on Exhibit 2.2.7, and except that the Specified Liabilities shall
include, with respect to any employees listed on Exhibit 2.3 and to the
extent consistent with Buyer's policies and practices, any properly accrued
but unpaid regular compensation and sales commissions due in the normal
course for the current payroll period as of the Effective Date and any
properly accrued vacation pay and other regular benefits as of the Effective
Date (but excluding benefits under Seller's Retirement Plans and Group
Insurance Plans, and excluding severance and termination benefits except as
otherwise provided on Exhibit 2.2.7), all of which accruals shall be properly
reflected as liabilities on the Closing Balance Sheet.
2.2.8 Infringement. Any Obligation of Seller arising in
connection with or related to Seller's infringement or alleged infringement
of any Software or Intangible of any Person.
2.2.9 Encumbrances. Any Encumbrance on or affecting Seller's
Assets including, without limitation, the Specified Assets, other than those
Encumbrances included in the Specified Liabilities of Seller and the
Permitted Encumbrances (as defined in Section 1.8).
2.2.10 Maximis. Any Obligation related to Maximis.
2.2.11 Excluded Contracts. Any Obligation related to any
Excluded Contract (as defined in Section 1.9).
2.3. Seller's Employees. Subject to the condition that the Closing
hereunder occurs, Buyer shall offer to employ, as of the Effective Date, the
employees of Seller listed on Exhibit 2.3. Such employment will be on an "at
will" basis for salaries or wages determined by Buyer with recognition of
their original hire date by Seller for purposes of Buyer's benefit plans.
Buyer shall make available to employees of Seller that accept
8
employment with Buyer all employee benefit plans available to Buyer's other
employees. Any such employment by Buyer may, at some time, require relocation
by the employee to Buyer's currently occupied facilities. In the event of a
termination of employment without cause during the twelve (12) month period
after the Effective Date of any employees listed on Exhibit 2.3 that are
hired by Buyer, Buyer will provide any such terminated employee severance
consistent with Seller's severance policy described on Exhibit 2.2.7. Buyer
does not assume, and Seller shall be fully responsible for the payment of,
any severance or other benefits related to or payable upon the termination of
any of its employees, including, without limitation, any employees not
offered employment by Buyer (except to the extent otherwise provided on
Exhibit 2.2.7) and any employees offered employment by Buyer who fail to
accept such employment offer. Seller shall cooperate with Buyer's efforts to
employ and retain any such employees. Within at least ten (10) days prior to
the Closing Date, Seller shall make available to Buyer accurate and complete
copies of the personnel records of Seller's employees. Seller shall be
responsible for compliance with all Laws related to the termination by Seller
of Seller's employees and Buyer shall be responsible for compliance with all
Laws related to offering employment to, and employing the employees of Seller
listed on Exhibit 2.3.
3. PURCHASE PRICE AND CLOSING FINANCIAL STATEMENTS
3.1. Purchase Price and Allocation. The total purchase price for the
Specified Assets ("Purchase Price") shall consist of: (a) subject to the
adjustments described in Sections 3.3, 3.4 and 3.5, a cash payment ("Closing
Payment") in the amount of Twenty-Nine Million, Three Hundred Thousand
Dollars ($29,300,000) payable at Closing by the Buying Companies to Seller;
(b) a cash payment ("First Holdback") in the amount of Five Hundred Thousand
Dollars ($500,000) payable in accordance with Section 3.3.3; (c) a cash
payment ("Second Holdback") in the amount of Two Hundred Thousand Dollars
($200,000) payable in accordance with Section 3.4.3; (d) the assumption of
the Specified Liabilities by Buyer in accordance with Section 2.1; and (e)
the Earnout Payment (as defined in Section 3.6) payable in accordance with
Section 3.6.6. The Purchase Price shall be allocated among the Specified
Assets, Specified Liabilities and the noncompetition covenants set forth in
Section 10.4 in the manner set forth on Exhibit 3.1.
3.2. Closing Financial Statements. The Selling Companies shall
prepare or cause to be prepared certain financial statements of Seller ("Closing
Financial Statements"), and shall engage the Philadelphia office of KPMG Peat
Marwick LLP ("Seller's Accountants") to conduct an audit ("Closing Audit") of
the Closing Financial Statements, in accordance with the following provisions:
3.2.1 Type of Statements. The Closing Financial Statements
shall include a balance sheet of Seller as of the Effective Date ("Closing
Balance Sheet") and a statement of operations, a statement of changes in
stockholders' equity and statement of cash flows of Seller for the period
from January 1, 1997 to the Effective Date, and shall (a) be prepared in
accordance with GAAP (as defined in Section 1.11), (b) fairly present the
financial condition and results of operations of Seller as of the date and
for the period indicated, and (c) be audited by Seller's Accountants whose
reports thereon shall be without qualification or explanatory paragraphs. In
addition, the Selling Companies shall provide to the Buying Companies, with
the delivery of the Closing Financial Statements, supplemental financial
information consisting of a combining balance sheet as of the Effective Date
and a combining statement of operations for the period from January 1, 1997
to the Effective Date,
9
each segregated by product line, consistent with the information contained in
the Closing Financial Statements.
3.2.2 Audit Requirements. All of the Closing Financial
Statements shall be prepared and audited in accordance with GAAP (as defined
in Section 1.11), provided that the schedule of unadjusted differences
prepared in connection with the Closing Audit ("Audit SUD") shall not contain
any individual item exceeding Twenty-Five Thousand Dollars ($25,000), nor
shall the net aggregate of all items on the Audit SUD exceed One Hundred
Thousand Dollars ($100,000). The Selling Companies shall fully cooperate with
Seller's Accountants in connection with the Closing Audit including, but not
limited to, agreeing to any required adjustments and taking any other
necessary actions to enable the audit report issued by Seller's Accountants
with respect to the Closing Financial Statements ("Audit Report") to be
completely unqualified without any explanatory paragraphs. The Selling
Companies shall instruct Seller's Accountants to review with the Buying
Companies and the Philadelphia office of Coopers & Xxxxxxx ("Buyer's
Accountants") the workpapers prepared by Seller's Accountants in connection
with the Closing Audit ("Audit Workpapers") before Seller's Accountants
finalize the Closing Financial Statements and Audit Report.
3.2.3 Delivery of Documents. The Selling Companies shall
instruct Seller's Accountants to deliver to the Buying Companies, within
sixty (60) days after the Effective Date, the Closing Financial Statements,
including at least one original signed copy of the Audit Report, and a copy
of the Audit SUD, and to allow the Buying Companies to examine and copy the
Audit Workpapers. On or before the date that Seller's Accountants deliver the
Closing Financial Statements and accompanying documents to the Buying
Companies, the Selling Companies shall deliver to the Buying Companies
detailed lists ("Closing Balance Sheet Lists") of all of the Assets (as
defined in Section 1.2) and Obligations (as defined in Section 1.18) of
Seller related to Seller's Business reflected on the Closing Balance Sheet
(including fully depreciated and fully amortized Assets, and the related,
accumulated depreciation and amortization), by balance sheet account and
segregated by product line, and with aggregate net balances equal to the
balances on the Closing Balance Sheet; provided, that the obligation of the
Selling Companies to deliver the Closing Balance Sheet lists shall be
contingent upon the Buying Companies permitting the Selling Companies and
their representative to have sufficient access to the necessary books,
records and personnel upon the reasonable request of the Selling Companies.
The Closing Balance Sheet Lists shall include, but not necessarily be limited
to, lists of the following items related to Seller's Business (a) Accounts
Receivable (as defined in Section 1.1), showing customer names, individual
invoice dates, individual invoice amounts and allowances for doubtful
accounts, or, in the case of earned but not billed receivables, customer
names and individual dates on which the receivables are billable
("Receivables Lists"); (b) other current assets, itemized by category and
with appropriate explanation; (c) Tangible Property (as defined in Section
1.24), grouped as to type, showing cost, accumulated depreciation and net
book value; (d) Software (as defined in Section 1.23) and Intangibles (as
defined in Section 1.14), showing cost or amount capitalized, accumulated
amortization and net book value; (e) accounts payable, itemized by payee; (f)
accrued expenses and reserves, itemized by category and with appropriate
explanation; (g) deferred revenues, itemized by customer and time periods;
and (h) other current and long-term liabilities, itemized by payee. The
Closing Financial Statements shall be accompanied by a certificate ("Audit
Certificate") signed by the Chief Financial Officer of Seller's Parent in
which Seller's Parent represents and warrants to the Buying Companies that
(w) the Closing Balance Sheet Lists are accurate and complete in all material
respects; (x) Seller had no Obligations as of the Effective Date other than
the
10
Obligations reflected on the Closing Financial Statements and Obligations
under Contracts listed or not required to be listed on Schedule 4.13 that
were not, as of the Effective Date, required by GAAP to be reflected on the
Closing Financial Statements; (y) all Accounts Receivable listed on the
Closing Balance Sheet Lists arose in the ordinary course of business and, as
of the Effective Date, represented legally enforceable claims against
third-parties for goods sold, leased or licensed or to be sold, leased or
licensed or for services rendered or to be rendered; and (z) as of the
Effective Date, there were no refunds, discounts, unissued credits, rights of
setoff or assignments affecting any such Accounts Receivable except to the
extent that applicable reserves established in accordance with GAAP were
reflected on the Closing Balance Sheet.
3.3. Purchase Price Adjustments. The Purchase Price shall be subject to
adjustment as follows:
3.3.1 Net Assets Adjustment. The Purchase Price shall be
subject to adjustment based upon Seller's net assets as of the Effective
Date, as follows:
(A) Definition. Seller's net assets as of the Effective
Date shall equal (a) the aggregate net book value of all Specified Assets of
Seller reflected on the Closing Balance Sheet (it being understood that the
net book value of Assets that are reflected on the Closing Balance Sheet, but
are not included in the Specified Assets, shall not be included in Seller's
net assets); minus (b) all Intangibles on the Closing Balance Sheet,
including but not limited to, purchase price intangibles arising from the
acquisition of any parts of Seller's Business, or from intangibles, such as
capitalized software, resulting from the capitalization of internal costs;
and minus (c) the aggregate full face amount of all Specified Liabilities
reflected on the Closing Balance Sheet (it being understood that the face
amount of liabilities that are reflected on the Closing Balance Sheet, but
are not included in the Specified Liabilities, shall not be deducted from
Seller's net assets).
3.3.2 Net Assets Statement. The Selling Companies shall
instruct Seller's Accountants to (a) prepare a statement ("Net Assets
Statement") which shall include a detailed calculation showing each separate
component identified in Section 3.3.1(A) segregated by product line; and (b)
deliver the Net Assets Statement to the Buying Companies at the same time as
the Closing Financial Statements and related documents are delivered to the
Buying Companies under Section 3.2.3. The Buying Companies shall notify the
Seller, in reasonable detail, of any objections to the Net Assets Statement
(which may include objections to the Closing Financial Statements) within
thirty (30) days after the Buying Companies receive the Net Assets Statement
and all of the documents required to be delivered to the Buying Companies
under Section 3.2.3. If the Buying Companies do not notify the Seller of any
such objections by the end of that thirty-day period, then the Net Assets
Statement, as prepared by Seller's Accountants, shall be considered final on
the last day of that thirty-day period. If the Buying Companies do notify the
Selling Companies of any such objections by the end of that thirty-day
period, and the Buying Companies and the Selling Companies are unable to
resolve their differences within fifteen (15) days thereafter, then the
disputed items on the Net Assets Statement shall be reviewed, as soon as
possible, at the Buying Companies' expense, by the Buyer's Accountants. The
Selling Companies and Buying Companies shall instruct their respective
Accountants to, in good faith, use their best efforts to resolve such disputed
11
items to their mutual satisfaction and to deliver a final Net Assets
Statement to the Selling Companies and Buying Companies as soon as possible.
If Seller's Accountants and the Buyer's Accountants are unable to resolve any
such disputed items within thirty (30) days after receiving such
instructions, then the remaining disputed items shall be submitted to Xxxxxx
Xxxxxxxx & Co., Philadelphia, Pennsylvania ("Arbiter"), for resolution, with
the costs thereof paid fifty percent (50%) by the Selling Companies and fifty
percent (50%) by the Buying Companies, and the Arbiter shall be instructed to
deliver a final Net Assets Statement to the Selling Companies and the Buying
Companies as soon as possible.
3.3.3 Payment of Net Asset Adjustment and First Holdback.
Exhibit 3.3.1 sets forth a summary of the calculation of Seller's net assets
by Seller as of December 31, 1996, which equals Two Million, Six Hundred
Ninety-Two Thousand Dollars $2,692,000, and also indicates the manner in
which the calculation of Seller's net assets as of the Effective Date will be
summarized. The Purchase Price shall be adjusted by the amount that Seller's
net assets on the Effective Date, as finally determined in accordance with
Section 3.3.1 ("Final Net Assets"), are (i) less than Two Million, Two
Hundred Thousand Dollars ($2,200,000) resulting in a decrease in the Purchase
Price, or (ii) greater than Three Million, Two Hundred Thousand Dollars
($3,200,000) resulting in an increase in the Purchase Price, (in either case,
such difference referred to as the "Net Asset Adjustment"). If the Net Asset
Adjustment constitutes a decrease in the Purchase Price of an amount less
than the amount of the First Holdback, then the Buying Companies shall pay to
Seller the amount of the First Holdback minus the amount of the Net Asset
Adjustment, subject to setoff and holdback under Section 11.5. If the Net
Asset Adjustment constitutes a decrease in the Purchase Price of an amount
exceeding the amount of the First Holdback, then the Selling Companies shall
pay to the Buying Companies an amount equal to the difference between the Net
Asset Adjustment and the First Holdback. If the Net Asset Adjustment
constitutes an increase in the Purchase price, then the Buying Companies
shall pay to Seller the amount of the Net Asset Adjustment plus the amount of
the First Holdback. Any payment under this Section 3.3.3 shall be made within
fifteen (15) business days after the Net Assets Statement is finalized in
accordance with Section 3.3.2.
3.4. Accounts Receivable Adjustment. In addition to the
Purchase Price Adjustment described in Section 3.3, the Purchase Price shall
be subject to downward adjustment based upon collections of Seller's Accounts
Receivable, as follows:
3.4.1 Collections by Buyer. After Closing, Buyer shall,
in the ordinary course of business, use reasonable and normal efforts to
collect all of Seller's Accounts Receivables reflected on the Closing Balance
Sheet, as listed on the Receivables List delivered by Seller to Buyer in
accordance with Section 3.2.3 ("Purchased Receivables"). The Buyer shall
apply collections from each customer to the earliest open receivable due from
that customer, unless otherwise specified by the customer or unless the
payment clearly applies to a specific invoice. Buyer shall have no obligation
to institute legal action or otherwise take unusual steps to collect any of
Purchased Receivables. If, after the Closing Date but before the A/R Cutoff
Date (as defined in Section 3.4.2), Seller receives any payments on account
of Purchased Receivables, then Seller shall promptly remit the amount thereof
to Buyer.
3.4.2 Unpaid Receivables. Buyer shall maintain complete
and accurate records of all customer payments received by the Buyer and
customer credits issued by the Buyer from the Closing Date until 90 days
after the Closing Date ("A/R Cutoff Date"), which records shall show the
individual amounts of such payments and credits that were applied to
Purchased Receivables. Within 120 days after the Closing Date, Buyer shall
deliver to the Selling Companies copies of such records, together with a
statement as to which of the
12
Purchased Receivables (if any) were not collected by the A/R Cutoff Date
("Unpaid Receivables") provided that such nonpayment is not attributable to
Buyer's failure to perform under a Specified Contract after the Effective
Date (unless any of the Selling Companies involved in PSL's Operations (as
defined in Section 3.6.5) directly or indirectly contributed to such failure
to perform), which shall include unpaid Purchased Receivables that were
earned but not billed as of the Closing Date whether designated as "A/R
earned, not billed" or included as part of "A/R, work-in-progress" on the
Seller's books and records. For the purposes of this Section 3.4, Unpaid
Receivables shall not include the receivables set forth on Exhibit 3.4.2
which are not expected to be collected by the A/R Cutoff Date, provided that
the amount of such receivables shall not include any portion that should have
been collected in accordance with the underlying agreement prior to the A/R
Cutoff Date. The Selling Companies shall notify the Buying Companies of any
objections to such statement of Unpaid Receivables within 30 days after the
Seller receives such documents. If the Selling Companies do not notify the
Buying Companies of any objections by the end of such 30-day period, then the
amount of Unpaid Receivables shown on the Buyer's statement shall be
considered final on the last day of such 30-day period. If the Selling
Companies do notify the Buying Companies of any objections by the end of such
30-day period, and the Selling Companies and the Buying Companies are unable
to resolve their differences within 15 days thereafter, then the disputed
amount of Unpaid Receivables shall be submitted to the Arbiter for
resolution, with the costs thereof paid 50% by the Selling Companies and 50%
by the Buying Companies, and the Arbiter shall be instructed to deliver a
final statement of Unpaid Receivables to the Selling Companies and the Buying
Companies as soon as possible.
3.4.3 Adjustment to Purchase Price and Payment of the Second
Holdback. The Purchase Price shall be reduced by the full aggregate amount of
the Unpaid Receivables, if any, less an allowance for specific doubtful
accounts properly accrued and fully reserved on the Closing Financial
Statements, as finally determined in accordance with Section 3.4.2 ("A/R
Adjustment") as set forth in Schedule 3.4.3 which will be delivered in
conjunction with the Closing Financial Statements. If the A/R Adjustment is
less than the amount of the Second Holdback, then the Buying Companies shall,
jointly and severally, pay to the Selling Companies the amount by which the
Second Holdback exceeds the A/R Adjustment. If the A/R Adjustment is more
than the amount of the Second Holdback, then the Selling Companies shall,
jointly and severally, pay to the Buying Companies the amount by which the
A/R Adjustment exceeds the amount of the Second Holdback. At the time of such
payment ("A/R Adjustment Payment Date"), Buyer shall assign the Unpaid
Receivables to Seller without recourse. If, between the A/R Cutoff Date but
before the A/R Adjustment Payment Date, Buyer receives any payments on
account of the Unpaid Receivables, then the Buying Companies shall promptly
notify the Selling Companies, and the amount of such payments shall be
applied to reduce the A/R Adjustment. If, after the A/R Adjustment Payment
Date, the Buying Companies receive any payments on account of the Unpaid
Receivables, then the Buying Companies shall promptly remit the amount
thereof to the Selling Companies. Notwithstanding the foregoing provisions of
this Section 3.4.3, Buyer may elect to retain any Unpaid Receivables it
wishes to retain, in which case such retained receivables shall not be
included in the A/R Adjustment, and the Selling Companies shall have no
further responsibility with respect thereto.
3.4.4 Collections by Seller. Before the A/R Adjustment Payment
Date, none of the Selling Companies shall take any action to collect any of
Seller's Unpaid Receivables without the Buyer's prior written consent. After
the A/R Adjustment Date, Seller may attempt to directly collect the Unpaid
Receivables, provided that, before initiating legal
13
action against any customer of Buyer, Seller shall notify Buyer and afford
Buyer a reasonable opportunity to persuade the customer to pay or, at Buyer's
sole option, to purchase the Unpaid Receivable in question from Seller.
3.5. Sales Tax Adjustment. In addition to the Purchase Price
Adjustments set forth in Sections 3.3 and 3.4, the Purchase Price shall be
subject to an upward adjustment by the full aggregate amount of the accrued,
current sales tax liability which is reflected on the Closing Balance Sheet
("Sales Tax Adjustment"). Payment of the Sales Tax Adjustment shall be made
at the same time as the Net Asset Adjustment and First Holdback as set forth
in Section 3.3.3. Seller shall pay and Seller's Parent shall cause to be
paid, such accrued current sales tax liability with the appropriate tax
authorities in a proper and timely manner.
3.6. Earnout Payment. The Buying Companies, jointly and severally,
shall pay to Seller certain payments aggregating not more than Two Million,
Five Hundred Thousand Dollars ($2,500,000) (collectively, "Earnout Payment")
based upon Revenue of PSL's Operations (as defined in Section 3.6.5)
calculated in accordance with GAAP (as defined in Section 1.11) and Section
3.6.4 during (i) the twelve (12) month period beginning April 1, 1997 ("1997
Revenue"), (ii) the twelve (12) month period beginning April 1, 1998 ("1998
Revenue") and (iii) the twelve (12) month period beginning April 1, 1999
("1999 Revenue"), (all such periods collectively referred to herein as the
"Earnout Period") as follows:
3.6.1 1997 Payment. If the 1997 Revenue is at least Twenty-One
Million, Five Hundred Thousand Dollars ($21,500,000) ("First Threshold"),
then there shall be an Earnout Payment equal to five percent (5%) of the
amount by which the 1997 Revenue exceeds the First Threshold ("First Earnout
Payment").
3.6.2 1998 Payment. If the aggregate of the 1997 Revenue and
the 1998 Revenue is at least Forty-Two Million Dollars ($42,000,000) ("Second
Threshold") then there shall be an Earnout Payment equal to five percent (5%)
of the amount by which the aggregate of the 1997 Revenue and 1998 Revenue
exceeds the Second Threshold, minus the amount of the First Earnout Payment
("Second Earnout Payment").
3.6.3 1999 Payment. If the aggregate of the 1997 Revenue, the
1998 Revenue and the 1999 Revenue is at least Sixty Million, Five Hundred
Thousand Dollars ($60,500,000) ("Third Threshold") then there shall be an
Earnout Payment equal to percent (5%) of the amount by which the aggregate of
the 1997 Revenue, the 1998 Revenue and the 1999 Revenue exceeds the Third
Threshold, minus the amount of the First Earnout Payment and the amount of
the Second Earnout Payment ("Third Earnout Payment").
3.6.4 Revenue Recognition. Revenues from software licenses and
other customer Contracts of PSL's Operations will be recognized in accordance
with the standard accounting practices and policies of Buyer's Parent
(sometimes referred to hereinafter as "SunGard") in effect for the relevant
period. For the purpose of revenue recognition with respect to any Earnout
Payments, the amount of revenue for any period will be equal to the amount of
revenue recognized by Buyer for which cash has been collected by Buyer within
three (3) months after the end of the relevant period ("grace period"),
provided that with respect to the 1997 Revenue and the 1998 Revenue, any
revenue generated in a prior period and collected beyond the end of that
period and the grace period will be counted as revenue in the next cumulative
period.
14
3.6.5 PSL's Operations. "PSL's Operations" means the operations
of Seller's Business (as defined under the "Background" caption on page one
of this Agreement) with respect to the Global Plus and InfoHarbour products
and services, as conducted by Seller just before Closing, and as conducted
after Closing by the Buying Companies and their successors, assigns and
affiliates, as such business operations may be expanded, contracted or
otherwise changed after Closing as a result of (a) expansion or contraction
of customer base; (b) development of product enhancements or improvements;
(c) development of new releases or new versions of products having
substantially similar functional capabilities and market scopes; (d)
discontinuance of unsuccessful products, product enhancements, product
releases or other projects, including, without limitation, any product
development or enhancements related to large volume account processing as
currently under discussion with State Street Bank and Trust and other
customers and potential customers; and (e) other factors generally affecting
Buyer's and/or SunGard's overall business or the computer services industry,
in all cases subject to the applicable provisions of Section 9.5. For the
purpose of the Earnout Payment, the revenues of PSL's Operations shall
include: license fees, remote processing fees, data center fees, pricing
service fees and other third party resales including but not limited to
hardware and software resales, and professional services for implementation,
customizations, maintenance and training with respect to the Global Plus and
InfoHarbour Software systems, whether or not provided under the trade name
"CogniSource". For the purposes of the Earnout Payment, the revenue of PSL's
Operations shall not include any other professional services of Buyer or any
affiliated company of Buyer, including but not limited to, any such
professional services provided in conjunction with the trade name
"CogniSource".
3.6.6 Calculation and Payment. The Buying Companies shall
deliver to the Selling Companies a report detailing the Earnout Payment
("Earnout Report") within one hundred twenty (120) days after the Earnout
Period. The Buying Companies and the Selling Companies shall in good faith
attempt to agree upon the amount of the Earnout Payment within one hundred
thirty-five (135) days after the end of the Earnout Period, and the
undisputed portion of the Earnout Payment, if any, shall be paid to Seller
within fifteen (15) business days after such agreement is reached.
Thereafter, if any disputes exist with respect to the Earnout Payment, the
Selling Companies and the Buying Companies shall instruct their respective
Accountants to, in good faith, use their best efforts to resolve such
disputed items to their mutual satisfaction and to deliver a report on the
Earnout Payment to the Selling Companies and the Buying Companies as soon as
possible. If Seller's Accountants and Buyer's Accountants are unable to
resolve any such disputed items within thirty (30) days after receiving such
instructions, then the remaining disputed items shall be submitted to the
Arbiter for resolution, with the costs thereof paid fifty percent (50%) by
the Selling Companies and fifty percent (50%) by the Buying Companies, and
the Arbiter shall be instructed to deliver a final Earnout Report to the
Selling Companies and the Buying Companies as soon as possible. Within
fifteen (15) business days after the Earnout Report is finalized in
accordance with this Section 3.6.6, any unpaid portion of the Earnout Payment
shall be paid to the Selling Companies.
3.7. Currency and Method of Payment. All dollar amounts stated in this
Agreement are stated in United States currency, and all payments required
under this Agreement shall be paid in United States currency. All payments
required under this Agreement shall be made as follows: (a) any payment may
be made by wire transfer of immediately available United States federal
funds; (b) any payment exceeding $100,000 shall be made by wire transfer of
immediately available United States federal funds; (c) any
15
payment exceeding $10,000, but not exceeding $100,000, may be made by bank
certified, treasurer's or cashier's check; and (d) any payment not exceeding
$10,000 may be made by ordinary check.
3.8. Imputed Interest. Any cash portion of the Purchase Price that is
paid after the end of the six-month period beginning on the Closing Date
shall be deemed to include interest from the Closing Date, calculated at the
required, applicable rate for imputed interest under federal income tax law.
4. REPRESENTATIONS OF THE SELLING COMPANIES
Knowing that the Buying Companies rely thereon, the Selling Companies,
jointly and severally, represent and warrant to the Buying Companies, and
covenant with the Buying Companies as follows:
4.1. Organization. Premier and Seller's Parent are corporations duly
organized, validly existing and in good standing under the Laws of the
Commonwealth of Pennsylvania. Premier's Subsidiary is a corporation duly
organized, validly existing and in good standing under the laws of the State
of Nevada. Each of Premier, Premier's Subsidiary and Seller's Parent
possesses the full corporate power and authority to own its Assets, conduct
its business as and where presently conducted, and enter into and perform
this Agreement. Premier is duly qualified to do business in each jurisdiction
listed on Schedule 4.1, and Premier is not required to be qualified in any
other jurisdiction, except where the failure to so qualify would not have a
material adverse effect on Seller's Business. Premier does not have any
predecessors other than as set forth on Schedule 4.1. Schedule 4.1 states, as
to each of Premier and Premier's Subsidiary (a) its exact legal name; (b) its
jurisdiction and date of formation; (c) its federal employer identification
number; (d) its headquarters address, telephone number and facsimile number;
and (e) its directors and officers, indicating all current title(s) of each
individual. Accurate and complete copies of articles or certificate of
incorporation, bylaws and other organization and related documents, each as
amended to date, and all Contracts relating to the acquisition of Premier (or
its affiliates or predecessors) have been made available to the Buying
Companies.
4.2. Effect of Agreement. The execution, delivery and performance of
this Agreement by each of the Selling Companies and the consummation by each
of the Selling Companies of the transactions contemplated hereby, (a) have
been, or shall have been by the Closing Date, duly authorized by all
necessary actions by their respective shareholders and boards of directors,
or other governing bodies; (b) do not constitute a violation of, a default
under, or termination of the articles or certificate of incorporation or
other organizational documents or; (c) do not constitute a default or breach
of (immediately after the giving of notice, passage of time or both), or
termination of any Contract to which Seller is a party or by which any of
Seller is bound; (d) do not constitute a violation of any Law applicable to
any of the Selling Companies or to Seller's Business or the Specified
Assets; (e) except as listed on Schedule 4.2, do not require the Consent (as
defined in Section 1.4) of any Person (as defined in Section 1.20); (f) do
not accelerate or otherwise modify any Obligation (as defined in Section
1.18) of Seller (other than obligations of Seller to repurchase the preferred
stock held by its preferred stockholders to be satisfied on or after the
Effective Date, and Obligations under loans from CoreStates and Seller's
Parent to be satisfied on the Effective Date); and (g) do not result in the
creation of any Encumbrance (as defined in Section 1.8) upon, or give to any
other Person any interest in, any of Seller's Business or the Specified
16
Assets. There exists no rights of first refusal or other preemptive rights
with respect to Seller's Business or the Specified Assets, that have not been
waived by the Person entitled to such right. This Agreement constitutes the
valid and legally binding agreement of each of the Selling Companies,
enforceable against each of the Selling Companies in accordance with its
terms, subject to the effects of bankruptcy, insolvency, moratoriums,
fraudulent conveyance, reorganization or other similar laws affecting
creditors' rights generally and except that enforceability of the obligations
under this Agreement is subject to the application of equitable principles or
the availability of equitable remedies in any proceeding, whether at law or
in equity.
4.3. Financial and Corporate Records. Seller's books and records are
and have been properly prepared and maintained in form and substance adequate
for preparing audited financial statements in accordance with GAAP (as
defined in Section 1.11), and fairly and accurately reflect all of Seller's
Assets and Obligations and all Contracts and transactions to which Seller is
or was a party or by which Seller or any of business or Assets is or were
affected. Seller's corporate minute books have been made available to Buyer.
4.4. Compliance with Law. Seller's operations, the conduct of Seller's
Business as and where such business has been or presently is conducted, and
the ownership, possession and use of the Assets comply in all material
respects with all Laws (as defined in Section 1.16) applicable to Seller, its
operations, business, Assets or Obligations. Except as set forth on Schedule
4.4, Seller has obtained and holds all Permits (as defined in Section 1.19)
required for the lawful operation of its business as and where such business
is presently conducted. All Permits related to Seller's Business held by
Seller are listed on Schedule 4.4, and copies of such Permits have been
delivered or made available to Buyer. Seller has taken all steps necessary or
appropriate to comply with the Workers' Adjustment and Retraining
Notification Act ("WARN Act").
4.5. Financial Statements. Seller's fiscal year ends on December 31.
Schedule 4.5A includes accurate and complete copies of the following
financial statements ("Audited Financial Statements"): (a) a balance sheet of
Seller as of December 31, 1996 and December 31, 1995; and (b) statements of
operations, stockholders' equity and cash flows for the periods from January
1, 1996 to December 31, 1996, and January 1, 1995 to December 31, 1995, and
notes thereto. Schedule 4.5B includes accurate and complete copies of all
unaudited financial statements ("Unaudited Financial Statements") prepared by
the management of the Seller on an ongoing basis since the Audited Financial
Statements. All of the Audited Financial Statements were (a) prepared in
accordance with GAAP; (b) fairly present the financial condition and results
of operations of Seller as of the dates and for the periods indicated; and
(c) audited by Seller's Accountants, whose reports thereon are without
qualification or explanatory paragraphs. All of the Unaudited Financial
Statements were prepared in accordance with GAAP, and all adjustments that
are necessary for a fair presentation thereof (consisting only of normal
recurring adjustments) have been made. Schedule 4.5C includes supplemental
financial information of Seller consisting of combining balance sheets as of
February 28, 1997, January 31, 1997, December 31, 1996 and December 31, 1995,
and combining statements of operations for the periods from January 1, 1996
to December 31, 1996 and January 1, 1995 to December 31, 1995, each
segregated by product line, consistent with the information contained in the
Audited Financial Statements.
17
4.6. Assets. Schedule 4.6 includes detailed lists of all the Assets of
Seller as of January 31, 1997 itemized by balance sheet account, segregated
by product line and designated as to ownership by Premier or Premier's
Subsidiary, including (a) Accounts Receivable, showing customer names,
individual invoice dates, individual invoice amounts and allowances for
doubtful accounts, or, in the case of earned but not billed receivables,
customer names and individual dates on which the receivables are billable;
(b) other current Assets, itemized by category and with appropriate
explanation; (c) Tangible Property, grouped as to type, showing cost,
accumulated depreciation and net book value; and (d) Software and
Intangibles, showing cost or amount capitalized, accumulated amortization and
net book value. Except as set forth in Schedule 4.6A, Seller has good and
marketable title to all of the Specified Assets and has the right to transfer
all rights, title and interest in such Assets to Buyer, free and clear of any
Encumbrance other than the Permitted Encumbrances (as defined in Section
1.8). Except for the Specified Assets included on Schedule 4.6 and the
Contract Rights set forth in Section 4.13, no other Assets are necessary to
operate the Seller's Business.
4.7. Seller's Obligations. Schedule 4.7 is a list, as of January 31,
1997, of all of Seller's accounts payable, accrued expenses, deferred income,
and other current and long-term liabilities, grouped by balance sheet account
and segregated by product line, excluding liabilities for Taxes other than
real estate taxes, intercompany liabilities and notes payable. Seller has no
Obligations other than (a) the Excluded Liabilities listed on Schedule 1.9B,
(b) the Obligations listed on Schedule 4.7; (c) Obligations under the
Specified Contracts, any Contracts not required to be listed on Schedule
4.13, Employee Benefit Plans listed on Schedule 4.15, and Insurance Policies
listed on Schedule 4.19; and (d) Obligations incurred since January 31, 1997
and not in breach or violation of any of the representations, warranties or
covenants of Section 4.8. Except as set forth on Schedule 4.7, none of
Seller's Obligations relating to the Seller's Business is guaranteed by any
Person.
4.8. Operations Since January 31, 1997. Except as set forth on
Schedule 4.8 and excluding any operations with respect to Maximis, from
January 31, 1997 to the date of this Agreement:
4.8.1 Except in the ordinary course of its business consistent
with its past practices, Seller has not (a) created or assumed any
Encumbrance, other than the Permitted Encumbrances, upon any of Seller's
Business or the Specified Assets, (b) incurred any material Obligation, (c)
made any loan or advance to any Person; (d) assumed, guaranteed or otherwise
become liable for any Obligation of any Person; (e) committed for any capital
expenditure; (f) purchased, leased, sold, abandoned or otherwise acquired or
disposed of any business or Specified Assets; (g) waived any right or
canceled any material debt or claim; (h) assumed or entered into any material
Contract other than this Agreement; (i) increased, or authorized an increase
in, the compensation or benefits paid or provided to any of its directors,
officers, employees, salesmen, agents or representatives; or (j) done
anything else outside the ordinary course of business, whether or not
specifically described in any of the foregoing clauses.
4.8.2 Even in the ordinary course of its business consistent
with its past practices, Seller has not incurred any Obligation related to
Seller's Business, made any loan to any Person, acquired or disposed of any
business or Specified Assets, entered into any Contract related to Seller's
Business (other than customer contracts) or other transaction, or done any of
the other things described in Section 4.8.1, involving an amount exceeding
18
$100,000 in any single case or $500,000 (excluding
all amounts due Corestates or Seller's Parent) in the aggregate.
4.8.3 There has been no material adverse change or material
casualty loss affecting Seller, its Business, Assets or financial condition,
and there has been no material adverse change in the financial performance of
Seller.
4.9. Accounts Receivable. All Accounts Receivable listed in Schedule
4.6 arose in the ordinary course of business and are proper and valid
accounts receivable. Except as set forth in Schedule 4.9, there are no
refunds, discounts, rights of setoff or assignment affecting any such
Accounts Receivable. Proper amounts of deferred revenues appear on Seller's
books and records, in accordance with generally accepted accounting
principles, with respect to all of Seller's (a) billed but unearned Accounts
Receivable; (b) previously billed and collected Accounts Receivable still
unearned; and (c) unearned customer deposits.
4.10. Tangible Property. Except as set forth on Schedule 4.10 and
excluding any Tangible Property related solely to Maximis, Premier has good
and marketable title to all of Seller's Tangible Property, free and clear of
any Encumbrances, other than the Permitted Encumbrances. All of Seller's
Tangible Property is located at Seller's offices or facilities. All Tangible
Property used by Seller is in reasonable operating condition, ordinary wear
and tear excepted, and is sufficient for Seller's Business as presently
conducted.
4.11. Real Property. Seller does not own any Real Property (as defined
in Section 1.22). Schedule 4.11 is a detailed list of all Real Property
leased by Premier, showing location, rental cost and landlord. All Real
Property under lease to or otherwise used by Seller which is being assigned
to Buyer hereunder is in reasonable condition, ordinary wear and tear
excepted, and is sufficient for the current operations of Seller. No such
Real Property which is being assigned to Buyer hereunder, nor the occupancy,
maintenance or use thereof, is in violation of, or breach or default under,
any Contract or Law, and no notice from any lessor, governmental body or
other Person has been received by any of the Selling Companies or served upon
any such Real Property claiming any violation of, or breach or default under,
any Contract or Law, or requiring or calling attention to the need for any
work, repairs, construction, alternation or installations. Seller has not
placed or caused to be placed and Seller has no knowledge or belief that
there were or are any Hazardous Substances on or under any of Seller's Real
Property.
4.12. Software and Intangibles. Schedule 4.12 is an accurate and
complete list and description of all Software (as defined in Section 1.23),
other than the Maximis Software, and Intangibles (as defined in Section
1.14), other than Intangibles related to Maximis, owned (designated as to
ownership between Premier and Premier's Subsidiary), marketed, licensed, used
or under development by Seller, and, in the case of Software, a product
description, the language in which it is written and the type of hardware
platform(s) on which it runs. Except as set forth on Schedule 4.12, no other
Software is required to operate Seller's Business. Except as explained on
Schedule 4.12, Seller has good and marketable title to, and has the full
right to use and transfer to Buyer, all of the Software and Intangibles,
other than those related to Maximis, listed on Schedule 4.12, free and clear
of any Encumbrance (as defined in Section 1.8), other than the Permitted
Encumbrances. Except as set forth on Schedule 4.12, no rights of any third
party are necessary to market, license, sell, modify, update, and/or create
derivative works for the Software listed on Schedule 4.12. With respect to
the Software listed on Schedule 4.12, (a) Seller maintains machine-readable
master-reproducible
19
copies, source code listings, technical documentation and user manuals for
the most current releases or versions thereof and for all earlier releases or
versions thereof currently being supported by Seller; (b) in each case, the
machine-readable copy substantially conforms to the corresponding source code
listing; (c) such Software is written in the language set forth on Schedule
4.12, for use on the hardware set forth on Schedule 4.12 with the operating
systems described on Schedule 4.12; (d) such Software can be maintained and
modified by reasonably competent programmers familiar with such language,
hardware and operating systems; (e) in each case, the Software operates
substantially in accordance with the user manual therefor without material
operating defects; and (f) except for the NIDS and Global Plus Software, in
each case, each component of such Software that creates, accepts, displays,
stores, retrieves, accesses, recognizes, distinguishes, compares, sorts,
manipulates, processes, calculates or otherwise uses dates or date-related
data will do so accurately, without material operating defects, using dates
in the twentieth and twenty-first centuries, and will not be adversely
affected by the advent of the year 2000, the advent of the twenty-first
century, or the transition from the twentieth century through the year 2000
and into the twenty-first century (collectively, "Year 2000 Compliant"). The
"Year 2000 Plan" included in Schedule 4.12 reasonably sets forth the steps to
make the Global Plus Software Year 2000 Compliant in a sufficient time period
to not materially adversely affect the current customers or the marketing to
prospective customers, and the cost associated with making Global Plus Year
2000 Compliant in accordance with the "Year 2000 Plan" will not be material
to Seller's Business. None of the Software or Intangibles listed on Schedule
4.12, or their respective past or current uses, has violated or infringed
upon, or is violating or infringing upon, any Software, patent, copyright,
trade secret or other Intangible of any Person. To the best knowledge of each
of the Selling Companies, no Person is violating or infringing upon, or has
violated or infringed upon at any time, any of the Software or Intangibles
listed on Schedule 4.12. Except as set forth on Exhibit 4.12, none of the
Software or Intangibles listed on Schedule 4.12 is owned by or registered in
the name of any current or former shareholder, partner, director, executive,
officer, employee, salesman, agent, customer, representative or contractor of
any of the Selling Companies nor does any such Person have any interest
therein or right thereto, including but not limited to the right to royalty
payments. The representations and warranties set forth in this Section 4.12
apply only to Seller's Business and not to Maximis.
4.13. Contracts. Schedule 4.13 is an accurate and complete list of all
of the following types of Contracts to which Seller is a party or by which
Seller is bound, excluding any Contracts relating to Maximis and the Excluded
Contracts, (collectively, the "Specified Contracts"), grouped into the
following categories and, where applicable, subdivided by product line or
division: (a) customer Contracts; (b) Contracts for the purchase or lease of
Real Property or otherwise concerning Real Property owned or used by Seller
including a description of the Real Property; (c) loan agreements, mortgages,
notes, guarantees and other financing Contracts; (d) Contracts for the
purchase, lease and/or maintenance of computer equipment and other equipment,
Contracts for the purchase, license, lease and/or maintenance of software
under which Seller is the purchaser, licensee, lessee or user, and other
supplier Contracts providing for payments in excess of $1000 per month; (e)
employment, consulting and sales representative Contracts (excluding
Contracts which constitute Employee Benefit Plans listed on Schedule 4.15,
and excluding oral Contracts with employees for "at will" employment); (f)
Contracts under which any rights in and/or ownership of any Software product
of Seller, any prior version thereof, or any part of the customer base or
business of Seller was acquired; and (g) other Contracts (excluding Contracts
which constitute Insurance Policies listed on Schedule 4.19, excluding this
Agreement and all other
20
Contracts entered into between Seller and Buyer, or among Seller, Buyer and
other parties in connection herewith). A description of each oral Specified
Contract is included on Schedule 4.13, and copies of each written Specified
Contract have been delivered or made available to Buyer. Schedule 4.13
indicates which Specified Contracts have been assigned to Premier's
Subsidiary and which Specified Contracts remain with Premier. With respect to
each applicable customer Specified Contract, whereby Seller is currently
performing customization work pursuant to such Specified Contract or a letter
agreement and the amount to be paid for such customization project exceeds
$50,000, Schedule 4.13 includes, as of March 31, 1997, the name of the
customer, a brief description of the work, the amount to be paid for such
project, the commencement date and the estimated completion date of each
customization project and the percentage of complete of each such
customization project, and all credits granted to, or other adjustments made
for, the customer to be applied against future payments or purchases; and
except as set forth in Schedule 4.13, Seller has no unfunded contractual
obligations to provide customization work or implementation under any
customer Specified Contract in amount greater than $100,000 per customer
Specified Contract or greater than $500,000 in the aggregate. Except as
provided on Schedule 4.13, all customers have accepted the Software described
in their respective customer Specified Contracts. Except as set forth on
Schedule 4.13, with respect to each of the Specified Contracts, Seller
neither is in default thereunder nor would be in default thereunder with the
passage of time, the giving of notice of both. Except as set forth on
Schedule 4.13, to the best knowledge and belief of each of the Selling
Companies, none of the other parties to any Specified Contract is in default
thereunder or would be in default thereunder with the passage of time, the
giving of notice or both. Except as set forth on Schedule 4.13, Seller has
not given or received any notice of default or notice of termination with
respect to any Specified Contract, and each Specified Contract is in full
force and effect in accordance with its terms. The Specified Contracts are
all the Contracts necessary to operate Seller's Business. Except as set forth
on Schedule 4.13 or with respect to Maximis or the Excluded Contracts, there
are no currently outstanding proposals or offers submitted by Seller to any
customer, prospect, supplier or other Person which, if accepted, would result
in a legally binding Contract of Seller involving an amount or commitment
exceeding $25,000 in any single case or an aggregate amount or commitment
exceeding $100,000 in the aggregate.
4.14. Employees and Independent Contractors. Schedule 4.14A is a list of
all of Seller's employees excluding Maximis employees and (a) their titles or
responsibilities; (b) their social security numbers and principal residence
address; (c) their dates of hire; (d) their current salaries or wages; (e)
any specific bonus, commission or incentive plans or agreements for or with
them; and (f) any outstanding loans or advances made to them. Seller has
delivered to Buyer an accurate and complete list of all bonuses, commissions
and incentives paid to the employees listed on Schedule 4.14A at any time
during the past period from January 1, 1996 through February 28, 1997.
Schedule 4.14B is a list of all sales representatives and independent
contractors engaged by Seller, their tax identification numbers and states of
residence, their payment arrangements (if not set forth in a Contract listed
or described on Schedule 4.13), and a brief description of their jobs or
projects currently in progress. Except as limited by any employment Contracts
listed on Schedule 4.13 and except for any limitations of general application
which may be imposed under applicable employment Laws, Seller has the right
to terminate the employment of each of its employees at will and to terminate
the engagement of any of its independent contractors without payment to such
employee or independent contractor other than for services rendered through
termination and without incurring any penalty or liability other than
liability for severance pay in accordance with Seller's disclosed severance
pay policy. Seller is in compliance in all material respects
21
with all Laws respecting employment practices. Seller has never been a party
to or bound by any union or collective bargaining Contract, nor is any such
Contract currently in effect or being negotiated by or on behalf of Seller.
Since January 1, 1994, Seller has not experienced any labor problem that was
or is material to Seller. Except as set forth on Schedule 4.14, since April
1, 1996, each of Seller's employees have signed an employee agreement which
contains certain restrictive covenants substantially in the form attached to
Schedule 4.14. Except as set forth on Schedule 4.14, since April 1, 1996,
each of Seller's contractors have signed agreements with Seller containing
appropriate restrictions with respect to the protection of proprietary and
confidential information and the ownership of items developed by such
contractor. Except as indicated on Schedule 4.14A, since January 1, 1997, no
employee of Seller having an annual salary of $80,000 or more has given
notice to terminate his or her employment with Seller.
4.15. Employee Benefit Plans. Except as set forth on Schedule 4.15,
Seller has not established, maintained or contributed to any Employee Benefit
Plans and Seller has not proposed any Employee Benefit Plans which it will
establish, maintain, or to which it will contribute, and it has not proposed
any changes to any Employee Benefit Plans now in effect (all of the preceding
referred to collectively hereinafter as "Seller's Employee Benefit Plans").
The Seller does not maintain and has never maintained or been obligated to
contribute to an Employee Pension Benefit Plan (as such term is defined by
Section 3(2) of ERISA) that is subject to the funding requirements of Section
412 of the Internal Revenue Code of 1986, as amended ("Code") or of Section
302 of ERISA or to the requirements of Title IV of ERISA. The Seller does not
maintain and has never maintained or been obligated to contribute to a
"Multiemployer Plan" (as such term is defined by Section 4001(a)(3) of ERISA
or Section 414(f) of the Code). True and correct copies and descriptions of
all of Seller's Employee Benefit Plans, all employees listed on Exhibit 2.3
that are affected or covered by Seller's Employee Benefit Plans and all
Liabilities and Obligations thereunder have been made available to Buyer; and
a complete copy of Seller's health and dental insurance contracts and plans
are attached to Schedule 4.15. If permitted and/or required by applicable
Law, Seller has properly submitted all of Seller's Retirement Plans in good
faith to the IRS for a determination as to each Plan's qualified status
within the time prescribed therefor under applicable federal regulations. The
most recent favorable letters of determination of such tax-qualified status
from the IRS with respect to such Plans have been made available to Buyer.
With respect to Seller's Retirement Plans, Seller will have made, on or prior
to the Closing Date, all payments required to be made by it on or prior to
the Closing Date and will have accrued (in accordance with GAAP consistently
applied) as of the Closing Date all payments due but not yet payable as of
the Closing Date. Seller has furnished Buyer with a true and correct copy of
the most current Form 5500 and any other form or filing required to be
submitted to any governmental agency with regard to any of Seller's
Retirement Plans. To the best of Seller's knowledge, all of Seller's Employee
Benefit Plans are, and have been, operated in full compliance with their
provisions and with all applicable Laws including, without limitation, ERISA
and the Code and the regulations and rulings thereunder. Seller and all
fiduciaries of Seller's Employee Benefit Plans have complied with the
provisions of Seller's Employee Benefit Plans and with all applicable Laws
including, without limitation, ERISA and the Code and the regulations and
rulings thereunder. Neither the execution and delivery of this Agreement nor
the consummation of the transactions contemplated hereby will (i) result in
any payment (including, without limitation, unemployment compensation, golden
parachute or otherwise) becoming due from Seller under any of Seller's
Employee Benefit Plans, except under Seller's severance pay plan as described
on Exhibit 2.2.7 for which Seller maintains responsibility as set forth in
Section 2.3, (ii) increase any benefits otherwise payable under any of
Seller's
22
Employee Benefit Plans, or (iii) result in the acceleration of the time of
payment or vesting of any such benefits to any extent. There are no pending
actions, claims or lawsuits which have been asserted or instituted against
any of Seller's Employee Benefit Plans, the assets of any of the trusts under
such plans, the plan sponsor, the plan administrator or against any fiduciary
of Seller's Employee Benefit Plans (other than routine benefit claims) nor
does Seller or Seller's Parent have knowledge of facts which could form the
basis for any such action, claim or lawsuit. There are no investigations or
audits of any of Seller's Employee Benefit Plans, any trusts under such
plans, the plan sponsor, the plan administrator or any fiduciary of Seller's
Employee Benefit Plans which have been threatened or instituted nor does
Seller or Seller's Parent have knowledge of facts which could form the basis
for any such investigation or audit. To the best of the Seller's knowledge,
except as disclosed in Schedule 4.15, no event has occurred or will occur
which will result in Liability to Seller in connection with any Employee
Benefit Plan established, maintained, or contributed to (currently or
previously) by it or by any other entity which, together with Seller,
constitute elements of either (i) a controlled group of corporations (within
the meaning of Section 414(b) of the Code), (ii) a group of trades or
businesses under common control (within the meaning of Sections 414(c) of the
Code or 4001 of ERISA), (iii) an affiliated service group (within the meaning
of Section 414(m) of the Code), or (iv) another arrangement covered by
Section 414(o) of the Code.
4.16. Customers, Prospects and Suppliers. All customers of Seller have
signed a Contract and are listed in the list of customers included as part of
Schedule 4.13. Schedule 4.16 is a complete list of all current prospects and
suppliers of Seller. Except as set forth on Schedule 4.16, since January 1,
1994, none of Seller's current customers or suppliers has given notice or
otherwise indicated to Seller that it will or intends to terminate or not
renew its Contract with Seller before the scheduled expiration date or
otherwise terminate its relationship with Seller. The relationship of Seller
with each of its current customers is currently on a good and normal basis
and Seller has not experienced any problems with current customers or current
suppliers since January 1, 1994. None of the Selling Companies has any
knowledge or belief that the transactions contemplated by this Agreement will
adversely affect relations with any of Seller's customers or suppliers. The
representations and warranties set forth in this Section 4.16 apply only to
Seller's Business and not to Maximis.
4.17. Taxes. Schedule 4.17 is an accurate and complete list of all
federal, state, local, foreign and other jurisdictions where Seller has filed
Tax (as defined in Section 1.25) returns since January 1, 1994. Except as
explained on Schedule 4.17, (a) Seller has properly and timely filed all Tax
Returns required to be filed by it, all of which were accurately prepared and
completed; (b) Seller has properly withheld and paid all Taxes with respect
to payments to its employees, agents, representatives, contractors and
suppliers all amounts required by Law to be withheld for Taxes; (c) Seller
has paid all amounts for Taxes required to be paid by it except for current
Taxes which are not yet due or Taxes which are being contested in good faith
(as disclosed on Schedule 4.17) by appropriate proceedings diligently
prosecuted; (d) no audit of Seller by any governmental taxing authority is
currently pending or, to the knowledge of Seller or Seller's Parent
threatened; (e) since January 1, 1994, no notice of any proposed Tax audit,
or of any Tax deficiency or adjustment, has been received by Seller, and
there is no reasonable basis for any Tax deficiency or adjustment to be
assessed against Seller; and (f) there are no agreements or waivers currently
in effect that provide for an extension of time for the assessment of any Tax
against Seller, except for routine extensions of time which have been filed
or are going to be filed with respect to federal and state income taxes.
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4.18. Proceedings and Judgments. Except as described on Schedule 4.18,
(a) no Proceeding (as defined in Section 1.21) is currently pending or
threatened in writing, nor has any Proceeding occurred at any time since
January 1, 1992, to which Seller is or was a party, or by which Seller or any
of its Assets or business is or was affected; (b) no Judgment (as defined in
Section 1.15) is currently outstanding, nor has any Judgment been outstanding
at any time since January 1, 1992, against Seller, or by which Seller or any
of its Assets or business is or was affected; and (c) no breach of contract,
breach of warranty, tort, negligence, infringement, product liability,
discrimination, wrongful discharge or other claim of any nature has been
asserted or threatened in writing by or against Seller at any time since
January 1, 1992, and there is no basis for any such claim. As to each matter
described on Schedule 4.18, accurate and complete copies of all pertinent
pleadings, judgments, orders, correspondence and other legal documents have
been delivered or made available to Buyer.
4.19. Insurance. Schedule 4.19 is an accurate and complete list and
description of all Insurance Policies (as defined in Section 1.13) currently
owned or maintained by Seller (excluding Insurance Policies that constitute
Employee Benefit Plans described on Schedule 4.15) and all liability and
errors and omissions Insurance Policies owned or maintained by Seller and/or
any of its predecessors at any time since January 1, 1994. Seller has not
received notice of cancellation with respect to any such current Insurance
Policy, and to the best of Seller's knowledge there is no basis for the
insurer thereunder to terminate any such current Insurance Policy. Except as
indicated on Schedule 4.19, accurate and complete copies of all Insurance
Policies described on Schedule 4.19 have been delivered or made available to
Buyer. Each such Insurance Policy is or was in full force and effect during
the relevant period(s) of coverage. Except as described on Schedule 4.19,
there are no claims that are pending under any of the Insurance Policies
described on Schedule 4.19.
4.20. Questionable Payments. None of the Selling Companies, nor to the
best of Seller's knowledge, any of Seller's current or former partners,
shareholders, directors, executives, officers, representatives, agents or
employees (when acting in such capacity or otherwise on behalf of Seller or
any of its predecessors), (a) has used or is using any corporate funds for
any illegal contributions, gifts, entertainment or other unlawful expenses
relating to political activity; (b) has used or is using any corporate funds
for any direct or indirect unlawful payments to any foreign or domestic
government officials or employees; (c) has violated or is violating any
provision of the Foreign Corrupt Practices Act of 1977, except where such
violation was not, is not and will not be material to Seller; (d) has
established or maintained, or is maintaining, any unlawful or unrecorded fund
of corporate monies or other properties; (e) has made, at any time since
January 1, 1992, any false or fictitious entries on the books and records of
Seller; (f) has made any bribe, rebate, payoff, influence payment, kickback
or other unlawful payment of any nature using corporate funds or otherwise on
behalf of any of the Selling Companies; or (g) made any material favor or
gift that is not deductible for federal income tax purposes using corporate
funds or otherwise on behalf of any of the Selling Companies.
4.21. Related Party Transactions. Except with respect to Seller's
Parent's guarantee of three equipment leases, with respect to the Specified
Assets or the Specified Liabilities, there are no real estate leases,
personal property leases, loans, guarantees, Contracts, transactions,
understandings or other arrangements of any nature between Seller and any
current or former partners, shareholder, director, executive, officer or
controlling Person of Seller (or any of their respective predecessors) or any
other Person affiliated with Seller (or any of their respective predecessors).
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4.22. Brokerage Fees. Except as set forth on Schedule 4.22, no Person
acting on behalf of any of the Selling Companies is or shall be entitled to
any brokerage or finder's fee in connection with the transactions
contemplated by this Agreement.
4.23. Full Disclosure. No representation or warranty made in writing by
the Selling Companies in this Agreement or pursuant hereto (a) contains any
untrue statement of any material fact; or (b) omits to state any fact that is
necessary to make the statements made, in the context in which made, not
false or misleading in any material respect. The copies of documents attached
as Schedules to this Agreement or otherwise referenced on a schedule to this
Agreement or otherwise in this Agreement in connection with the transactions
contemplated by this Agreement, are accurate and complete in all material
respects, and are not missing any amendments, modifications, correspondence
or other related papers which would be pertinent to Buyer's understanding
thereof in any respect. There is no fact known to any management employees of
the Selling Companies that has not been disclosed to Buyer in the Schedules
to this Agreement or otherwise in writing that has, or so far as any of
management employees of the Selling Companies can reasonably foresee will
have, a material adverse effect on Seller, the business of Seller, the Assets
or financial condition of Seller or the ability of any of the Selling
Companies to perform its obligations under this Agreement; provided, that the
Selling Companies make no representations or warranties with respect to (a)
the future scope of the market for, or the future market acceptance of,
Seller's services and products, or (b) the budgets and forecasts for future
periods that have been delivered to the Buying Companies.
5. REPRESENTATIONS OF THE BUYING COMPANIES
Knowing that the Selling Companies rely thereon, the Buying Companies,
jointly and severally, represent and warrant to the Selling Companies, and
covenant with the Selling Companies, as follows:
5.1. Organization. Buyer is a corporation that is duly organized,
validly existing and in good standing under the Law (as defined in Section
1.16) of the State of Delaware. Buyer's Parent is a corporation that is duly
organized, validly existing and in good standing under the Law of the State
of Delaware. Buyer is a wholly owned subsidiary of Buyer's Parent. Each of
Buyer and Buyer's Parent has the full corporate power and authority to own
its Assets, conduct its business as and where such business is presently
conducted, and enter into this Agreement.
5.2. Effect of Agreement. Each of the Buying Companies' execution,
delivery and performance of this Agreement, and its consummation of the
transactions contemplated by this Agreement, (a) have been duly authorized by
all necessary corporate actions by its board of directors; (b) do not
constitute a violation of or default under its charter or bylaws; (c) do not
constitute a default or breach (immediately or after the giving of notice,
passage of time or both) under any Contract to which it is a party or by
which it is bound; (d) do not constitute a violation of any Law (as defined
in Section 1.16) or Judgment (as defined in Section 1.15) that is applicable
to it or to its business or Assets, or to the transactions contemplated by
this Agreement; and (e) except as stated on Schedule 5.2, do not require the
Consent (as defined in Section 1.4) of any Person (as defined in Section
1.20). This Agreement constitutes the valid and legally binding agreement of
each of the Buying Companies, enforceable against each of them in accordance
with its terms, subject to the effects of bankruptcy, insolvency,
moratoriums, fraudulent conveyance, reorganization or
25
other similar laws affecting creditors' rights generally and except that
enforceability of the obligations under this Agreement is subject to the
application of equitable principles or the availability of equitable remedies
in any proceeding, whether at law or in equity.
5.3. Brokerage Fees. No Person acting on behalf of any of the Buying
Companies is entitled to any brokerage, finder's or investment banking fee in
connection with the transactions contemplated by this Agreement.
5.4. Full Disclosure. No representation or warranty made in writing by
either of the Buying Companies in this Agreement or pursuant hereto (a)
contains any untrue statement of any material fact; or (b) omits to state any
fact that is necessary to make the statements made, in the context in which
made, not false or misleading in any material respect.
5.5. Access to Information. Each of the Buying Companies or such
company's representative has had the opportunity to ask questions of, and
receive answers from, management of each of the Selling Companies concerning
the assets, financial condition and other aspects of Seller's Business and to
review and ask questions about the documents, contracts, records and books of
the Seller's Business which were made available or delivered to such company
or representative by the Selling Companies. Each of the Buying Companies or
such company's representative has such knowledge and experience in financial
and business matters that it is capable of evaluating the merits and risks of
the purchase of the Seller's Business, it being understood that in making
such evaluation the Buying Companies have also relied upon the
representations and warranties of the Selling Companies in this Agreement.
6. CONDITIONS TO CLOSING FOR SELLING COMPANIES
Each obligation of Seller and Seller's Parent to be performed on the
Closing Date shall be subject to the satisfaction of each of the conditions
stated in this Section 6, except to the extent that such satisfaction is
waived by the Selling Companies in writing.
6.1. Buying Companies' Representations. All representations, warranties
and certifications made by the Buying Companies in this Agreement or pursuant
hereto shall not have been false or misleading in any material respect.
6.2. Buying Companies' Performance. All of the terms and conditions of
this Agreement to be satisfied or performed by the Buying Companies on or
before the Closing Date shall have been substantially satisfied or performed.
6.3. Absence of Proceedings. No Proceeding (as defined in Section 1.21)
shall have been instituted (excluding any Proceeding instituted by or on
behalf Seller or Seller's Parent), no Judgment (as defined in Section 1.15)
shall have been issued, and no new Law (as defined in Section 1.16) shall
have been enacted, on or before the Closing Date, that seeks to or does
prohibit or restrain, or that seeks damages as a result of, the consummation
of or any of the transactions contemplated by this Agreement.
6.4. Xxxx-Xxxxx-Xxxxxx. All applicable waiting periods under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended, with
respect to the transactions contemplated by this Agreement shall have
expired, and neither the Federal Trade Commission nor Department of Justice
shall have taken any action to prohibit the consummation of the
26
transactions contemplated by this Agreement or to impose any divestiture
requirement as a condition thereto.
7. CONDITIONS TO CLOSING FOR BUYING COMPANIES
Each obligation of the Buying Companies to be performed on the Closing
Date shall be subject to the satisfaction of each of the conditions stated in
this Section 7, except to the extent that such satisfaction is waived by the
Buying Companies in writing.
7.1. Selling Companies' Representations. All representations,
warranties and certifications made by the Selling Companies in this Agreement
or pursuant hereto shall not have been false or misleading in any material
respect.
7.2. Selling Companies' Performance. All of the terms and conditions of
this Agreement to be satisfied or performed by the Selling Companies on or
before the Closing Date shall have been substantially satisfied or performed.
7.3. Absence of Proceedings. No Proceeding (as defined in Section 1.21)
shall have been instituted (excluding any Proceeding instituted by or on
behalf of the Buying Companies ) no Judgment (as defined in Section 1.15)
shall have been issued, and no new Law (as defined in Section 1.16) shall
have been enacted, on or before the Closing Date, that seeks to or does
prohibit or restrain, or that seeks damages as a result of, the consummation
of or any of the transactions contemplated by this Agreement.
7.4. Absence of Adverse Changes. There shall not have been any material
adverse change or material casualty loss affecting Seller or its business,
Assets or financial condition, and there shall not have been any material
adverse change in the financial performance of Seller.
7.5. Xxxx-Xxxxx-Xxxxxx. All applicable waiting periods under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended, with
respect to the transactions contemplated by this Agreement shall have expired
before the Closing Date, and neither the Federal Trade Commission nor
Department of Justice shall have taken any action to prohibit the
consummation of the transactions contemplated by this Agreement or to impose
any divestiture requirement as a condition thereto.
7.6. Consents. All of the Consents described in Schedule 4.2 shall have
been obtained, unless waived by the Buying Companies.
8. CLOSING
8.1. Closing. The transactions contemplated by this Agreement (the
"Closing") shall be held on at a mutually agreeable time on April 8, 1997
(the "Closing Date"), at the law offices of Drinker Xxxxxx & Xxxxx in Berwyn,
Pennsylvania and simultaneously at the headquarters of Premier's Subsidiary
in Las Vegas, Nevada. Except to the extent prohibited by Law, the Closing
shall be considered to have been effective on March 31, 1997 ("Effective
Date").
8.2. Obligations of Seller at Closing. At the Closing, the Selling
Companies shall deliver to the Buying Companies the following:
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8.2.1 Specified Assets. Possession and control of Seller's
Business and Seller's Premises (as defined in the "Background" section on
page one of this Agreement and Section 8.2.9, respectively), all of the
Specified Assets, and all of Seller's leased Real Property and Tangible
Property (except such property included in the Excluded Assets or Excluded
Contracts), including, but not limited to, all applicable keys, access cards
and other entry devices.
8.2.2 Documents of Transfer. Such bills of sale, assignments,
endorsements, affidavits, and other instruments and documents of sale,
transfer, assignment and conveyance as Buyer may reasonably require, in order
to lawfully and effectively sell, transfer, assign and convey to Buyer all
right, title and interest in and to all of the Specified Assets, in each case
in form acceptable to Seller and Buyer, dated as of the Effective Date, and
duly executed and, if necessary, acknowledged by the Selling Companies.
8.2.3 Name Change. A proper Amendment to the Premier's Articles
of Incorporation, dated the Closing date and duly executed by the appropriate
officers, in form acceptable for immediate filing with the appropriate office
changing Seller's corporate name to a name that is not similar to Premier's
current corporate name or any product or other name used by Seller and
included in the Specified Assets. After the Effective Date, Premier's
corporate name shall be GPMC, Inc.
8.2.4 Incumbency Certificate. A certificate of Secretary of
each of the Selling Companies as to the incumbency and signatures of their
respective officers executing this Agreement.
8.2.5 Resolutions. Copies of the resolutions duly adopted by
the shareholders and board of directors of Seller, and board of directors of
each of the Selling Companies authorizing them to enter into and perform this
Agreement, certified by proper officers as in full force and effect on and as
of the Closing Date.
8.2.6 Good Standing. Good standing certificates for (i) Premier
from the Commonwealth of Pennsylvania, the States of New York and California,
(ii) Premier's Subsidiary from the State of Nevada, and (iii) Seller's Parent
from the Commonwealth of Pennsylvania; all dated no earlier than 20 days
before the Closing Date.
8.2.7 Closing Certificate. A certificate, in form and substance
satisfactory to the Buying Companies, dated the Closing Date and duly
executed by Premier, Premier's Subsidiary and Seller's Parent, certifying,
jointly and severally, that (a) all representations and warranties made by
Seller and Seller's Parent in this Agreement are correct in all material
respects as of the Closing Date, as if made on and as of the Closing Date,
except for changes contemplated or permitted by this Agreement; (b) all of
the terms and conditions of this Agreement to be satisfied or performed by
Seller and/or Seller's Parent on or before the Closing Date have been
substantially satisfied or performed; and (c) there has not been any material
adverse change or material casualty loss affecting Seller, or its Business,
Assets or financial condition, between the date of this Agreement and the
Closing Date, and there has not been any material adverse change in the
financial performance of Seller between the date of this Agreement and the
Closing Date.
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8.2.8 Opinion of Counsel. An opinion of counsel to the Selling
Companies addressed to the Buying Companies and dated the Closing Date, in
form reasonably acceptable to the Buying Companies.
8.2.9 Consents. A Consent to Assignment to Buyer of the Lease
for Seller's leased premises located at 000 Xxxxxxxxxx Xxxxx, Xxxxxxx,
Xxxxxxxxxxxx ("Seller's Premises"), dated as of the Effective Date and duly
executed by Seller's landlord, and consents to assignment to Buyer for of
each of the Specified Contracts (as defined in Section 4.13) listed on
Schedule 4.2.
8.2.10 Debt Payoff. Except for the Permitted Encumbrances,
proper documentary evidence of the full payment and satisfaction of all debt
of Seller with respect to which there are any Encumbrances upon any of the
Specified Assets; together with all documents reasonably requested by Buyer
to remove all such Encumbrances on the Specified Assets, including, but not
limited to, UCC-3 termination forms duly executed by the secured parties and
mortgage satisfaction and release forms duly executed by the mortgagees, and
UCC-3 termination forms duly executed by former secured parties for which
UCC-1 financing statements remain of record, in each case in form acceptable
for immediate filing with the appropriate state or local governmental office.
8.2.11 Non-Compete Agreements. Non-compete agreements duly
executed by the Executive Officers of Seller substantially in the form
attached to this Agreement as Exhibit 8.2.11.
8.2.12 Restructuring Documents. All assignments and other
related documents transferring any right, title or interest in any of the
Specified Assets from Premier to Premier's Subsidiary.
8.2.13 Other Documents. All other agreements, certificates,
instruments and documents reasonably requested by the Buying Companies in
order to fully consummate the transactions contemplated by this Agreement and
carry out the purposes and intent of this Agreement.
8.3. Obligations of Buying Companies at Closing. At the Closing, the
Buying Companies shall deliver to the Selling Companies the following:
8.3.1 Closing Payments. A wire transfer in the amount of the
Closing Payment (as defined in Section 3.1), in accordance with Selling the
Companies' proper instructions as to payment.
8.3.2 Assumption of Liabilities. An assumption of the Specified
Liabilities, in form acceptable to Buyer and Seller, dated as of the
Effective Date, and duly executed by Buyer, and if necessary acknowledged by
Buyer's Parent.
8.3.3 Closing Certificate. A certificate, in form and substance
satisfactory to the Sellers, dated the Closing Date and duly executed by each
of the Buying Companies, certifying, jointly and severally, that (a) all
representations and warranties made by each of the Buying Companies in this
Agreement are correct in all material respects as of the Closing Date, as if
made on and as of the Closing Date, except for changes contemplated or
permitted by this Agreement, and (b) all of the terms and conditions of this
Agreement to
29
be satisfied or performed by the Buying Companies on or before the Closing
Date have been substantially satisfied or performed.
8.3.4 Incumbency Certificate. A certificate of Secretary of
each of the Buying Companies as to the incumbency and signatures of their
respective officers executing this Agreement.
8.3.5 Resolutions. Copies of the resolutions duly adopted by
the board of directors of each of the Buying Companies authorizing them to
enter into and perform this Agreement, certified by proper officers as in
full force and effect on and as of the Closing Date.
8.3.6 Good Standing. Good standing certificates for each of
Buyer and Buyer's Parent from the State of Delaware, dated no earlier than 20
days before the Closing Date.
8.3.7 Opinion of Counsel. An opinion of counsel to the Buying
Companies, addressed to the Selling Companies and dated the Closing Date, in
form acceptable to the Selling Companies.
8.3.8 Other Documents. All other agreements, certificates,
instruments and documents reasonably requested by the Selling Companies in
order to fully consummate the transactions contemplated by this Agreement and
carry out the purposes and intent of this Agreement.
9. CERTAIN POST-CLOSING OBLIGATIONS
9.1. Transition and Cooperation. From and after the Closing Date, (a)
the Selling Companies shall fully cooperate to transfer to the Buyer the
control and enjoyment of Seller's Business and the Specified Assets; (b) the
Selling Companies shall not take any action, directly or indirectly, alone or
together with others, which obstructs or impairs the smooth assumption by
Buyer of Seller's Business and the Specified Assets; and (c) the Selling
Companies shall promptly deliver to Buyer all correspondence, papers,
documents and other items and materials received by any of the Selling
Companies or found to be in the possession of any of the Selling Companies
which pertain to Seller's Business or the Specified Assets.
9.2. Use of Names. Beginning immediately after the Closing Date, the
Selling Companies shall cease all use of all corporate names, fictitious
names, product names and other names used by Premier and all product names
used by Premier's Subsidiary at any time on or before the Closing Date and
included in the Specified Assets (it being understood that the names
"Maximis" and "Imis" are not included in the Specified Assets), except as may
be necessary to perform their obligations hereunder. Upon Buyer's request,
Seller shall promptly sign all Consents and other documents that may be
necessary to allow Buyer to use or appropriate the use of any name used by
Premier or product names used by Seller at any time on or before the Closing
Date. Premier shall retain the right to use its name for the purposes of (i)
collecting the accounts receivable of Seller's Business recorded prior to the
Closing, (ii) pay the accounts payable outstanding as of the Closing, (iii)
defend or institute any legal proceeding where the cause of action arose
prior to the Closing, and (iv) on-going corporate matters including but not
limited to tax payments.
30
9.3. Contract Matters. After the Closing, each Non-Assigned Contract
shall be handled in accordance with the following provisions:
9.3.1 Consent. The Selling Companies shall fully cooperate with
Buyer in the Buyer's efforts to obtain Consent to the assignment of such
Non-Assigned Contract. If and when Consent to assignment of such Non-Assigned
Contract is obtained, such Non-Assigned Contract shall no longer be subject
to the provisions of this Section 9.3.
9.3.2 Subcontracting. Seller shall make available to Buyer all
Contract Rights and other benefits of such Non-Assigned Contract, on a
subcontract or sublease basis or in some other appropriate manner to the
fullest extent possible, and Buyer shall be considered an independent
subcontractor or sublessee of Seller, or an agent of Seller, with respect to
all matters concerning such Non-Assigned Contract. As a subcontractor, Buyer
shall pay, perform and fully satisfy when due Seller's Obligations set forth
in such Non-Assigned Contract. Without limiting the foregoing, Buyer shall be
considered Seller's agent for purposes of (a) collecting all amounts that may
be due from the other party or parties to such Non-Assigned Contract; and (b)
negotiating or otherwise handling all disputes and issues that may arise in
connection with such Non-Assigned Contract. Buyer shall be entitled to retain
all payments due from the other party or parties under the Non-Assigned
Contracts. Without Buyer's prior written consent, Seller shall not agree to
any amendment, modification, extension, renewal, termination or other change
in the terms of such Non-Assigned Contract, nor shall Seller exercise any
Contract Right under such Non-Assigned Contract.
9.3.3 Buyer's Instructions. At Buyer's direction, Seller shall
(a) notify the other party or parties to such Non-Assigned Contract that
Buyer is Seller's subcontractor, sublessee or agent with respect thereto and
that all further payments, notices and other communications with respect
thereto shall be directed to Buyer; (b) agree to such amendments,
modifications, extensions, renewals, terminations or other changes in the
terms of such Non-Assigned Contract as Buyer determines, in its sole
discretion, are advisable; and (c) exercise any Contract Right under such
Non-Assigned Contract at such time and in such manner as Buyer determines, in
its sole discretion, to be advisable.
9.3.4 Collateral Assignment. Effective as of the Closing Date,
Seller hereby collaterally assigns to Buyer (except and only to the extent
that such collateral assignment is expressly prohibited by the terms of such
Non-Assigned Contract), and grants to Buyer a security interest in, all of
Seller's contract rights under such Non-Assigned Contract and all cash and
non-cash proceeds thereof, as security for the prompt and timely satisfaction
and performance of Seller's obligations under this Section 9.3. Buyer shall
have, and Seller shall deliver to Buyer at the Closing, possession of the
original executed copy of such Non-Assigned Contract. Effective as of the
Closing Date, Seller hereby appoints Buyer as Seller's attorney to take such
actions, in Seller's name and on its behalf, as such attorney reasonably
determines, in its sole discretion, to be necessary or advisable to protect,
perfect and continue perfected the security interest granted hereunder,
including, but not limited to, the execution and filing of such financing
statements and other instruments and documents as such attorney reasonably
determines, in its sole discretion, to be necessary or advisable for such
purposes. Upon the reasonable request of the Selling Companies and provided
that (i) consents have been received by Buyer for the assignment of the
Non-Assigned Contracts, (ii) Buyer has entered into new Contracts with the
customers which replace the Non-Assigned Contracts, or (iii) the Non-Assigned
Contracts have expired or been terminated in accordance with their
31
terms, Buyer shall execute and deliver to Seller UCC-3 financing statements
terminating its security interest under this Section 9.3.4.
9.4. Certain Benefit Plans. Seller will assign its current health and
dental insurance contract with Prudential Health Care to Buyer in accordance
with the terms and conditions of this Section 9.4. As of the Effective Date,
the Prudential Health Care contract will consist of (i) a main contract
covering all of Seller's employees hired by Buyer and the COBRA benefits of
the individuals listed in Sections II and IV of Schedule 9.4 ("Main
Contract") and (ii) an associated contract covering the individuals listed in
Section III of Schedule 9.4 ("Associated Contract"). Buyer will be
responsible for paying the premiums under the Main Contract and the Selling
Companies will be responsible for paying an amount equal to the premiums
under the Associated Contract. Buyer shall continue to maintain the Main
Contract and the Associated Contract until their expiration dates for the
benefit of Seller's employees who are hired by Buyer and for those
individuals who are entitled to COBRA coverage as of the Closing Date under
such contracts pursuant to Section 4980B of the Code and Sections 601 through
609 of ERISA. Buyer assumes responsibility for COBRA coverage obligations
that arise with respect to any qualifying event occurring on or after the
Closing Date with respect to any of Seller's employees hired by Buyer and any
individual listed in Sections II, III and IV of Schedule 9.4. With respect to
each individual listed in Section III of Schedule 9.4, the coverage set forth
in this Section 9.4, other than COBRA coverage with respect to any qualifying
event, shall only extend until the first date of employment by such
individual with the buyer of the Maximis business. Seller shall provide Buyer
with all reasonable assistance necessary for Buyer to satisfy its obligations
under this Section 9.4. The Seller shall terminate all Seller's Retirement
Plans as soon as possible after the Closing Date. Participants in the
Seller's Retirement Plans shall receive distributions from the Seller's
Retirement Plans in accordance with the terms of each individual plan and the
requirements of applicable law.
9.5. PSL's Operations during Earnout Period. During the Earnout Period
(as defined in Section 3.6), PSL's Operations (as defined in Section 3.6.5)
shall be conducted in the ordinary course of business consistent with
SunGard's standard business and financial procedures.
9.6. NIDS Twenty-First Century Operation. Following the Closing, Buyer
shall, and Buyer's Parent shall cause Buyer to, use commercially reasonable
efforts to (i) market or otherwise make available to customers of the NIDS
Software that have Specified Contracts with terms extending into the
twenty-first century or which contain a warranty or representation with
respect to the operation of the NIDS Software in the twenty-first century,
other appropriate SunGard products as a replacement for the NIDS Software, or
(ii) to make the NIDS Software compliant for twenty-first century operation.
In connection with such commercially reasonable efforts, the Buying Companies
acknowledge it is in their best interests to maintain such customers or to
provide a Year 2000 solution.
9.7. Further Assurances. At any time and from time to time after the
Closing Date, at the Buying Companies' request and expense, and without
further consideration, the Selling Companies shall promptly execute and
deliver all such further agreements, certificates, instruments and documents,
and perform such further actions, as the Buying Companies may reasonably
request in order to fully consummate the transactions contemplated hereby and
carry out the purposes and intent of this Agreement.
32
9.8. Books and Records of Seller. Following the Closing, Seller and
Seller's Parent agrees to permit the Buying Companies and its representatives
to inspect the books and records of Seller which are not included in the
Specified Assets insofar as they related to the Specified Assets and
Specified Liabilities, during regular hours and at no expense to Seller in
order for the Buying Companies and such representative to obtain information
relevant to the Closing Financial Statements and to the Buying Companies' tax
returns, third party claims or litigation involving the Buying Companies, or
as otherwise reasonably required for the conduct of the Buying Companies'
business. The Selling Companies agree to maintain such books and records
insofar as they related to the Specified Assets and the Specified Liabilities
for a period of five (5) years after the Closing Date.
9.9. Books and Records of Buyer. Following the Closing, the Buying
Companies agree to permit the Selling Companies and their representatives to
inspect the books and records of Seller which are included in the Specified
Assets or insofar as they are related to the Specified Assets or the
Specified Liabilities, during regular hours and at no expense to the Buying
Companies in order for the Selling Companies and such representative to
obtain information relevant to the Closing Financial Statements and to
Seller's tax returns, third party claims or litigation involving the Selling
Companies, or as otherwise reasonably required for the conduct of Seller's
business. Buyer agrees to maintain such books and records insofar as they
related to the Specified Assets and the Specified Liabilities for a period of
five (5) years after the Closing Date.
9.10. Cash Reconciliation. Beginning on the Effective Date, (a) all
payments received by Seller on account of accounts receivable arising after
the Effective Date under any Specified Contracts or Non-Assigned Contracts,
and all other payments received by Seller which are properly allocable to the
conduct of Seller's Business with respect to periods after the Effective
Date, shall be held in trust for Buyer and shall be promptly paid to Buyer,
and (b) all payments received by Buyer which are properly allocable to the
conduct of Seller's Business with respect to periods before the Effective
Date shall be held in trust for Seller and shall be promptly paid to Seller.
10. RESTRICTIVE COVENANTS OF THE SELLING COMPANIES
10.1. Certain Acknowledgements. Each of the Selling Companies expressly
acknowledges that:
10.1.1 Competitive Nature of Business. Seller's Business, as
conducted by Seller before Closing, and as conducted by Buyer and other
existing and future subsidiaries of Buyer's Parent after Closing (Buyer's
Parent, Buyer, and such other direct and indirect subsidiaries of Buyer's
Parent are referred to collectively as the "SunGard Group") is highly
competitive, is marketed throughout the United States, throughout Europe and
in many other locations worldwide, and requires long sales "lead times" often
exceeding one year. The SunGard Group expends substantial time and money, on
an ongoing basis, to train its employees, maintain and expand its customer
base, and improve and develop its software and services.
10.1.2 Access to Information. During its tenure as an owner of
Seller or Seller's Assets, it has had access to proprietary and confidential
property, knowledge and information of Seller's operations in connection with
Seller's Business which, after Closing, shall be proprietary and confidential
property, knowledge and information of the SunGard
33
Group; such property, knowledge and information must be kept in strict
confidence to protect Seller's Business and maintain the SunGard Group's
competitive positions in the marketplace; and such property, knowledge and
information would be useful to competitors of the SunGard Group for
indefinite periods of time.
10.1.3 Basis for Covenants. The covenants of Sections 10.2, 10.3
and 10.4 (the "Covenants") and the assignment of the employment agreements of
the Executive Officers of Seller are a material part of this Agreement. The
Covenants of Sections 10.2 and 10.4 are an integral part of the obligations
of the Selling Companies hereunder and the Covenants of Section 10.3 are an
integral part of the obligations of the Buying Companies hereunder; the
Covenants are supported by good and adequate consideration; and the Covenants
are reasonable and necessary to protect the legitimate business interests of
the SunGard Group and the Selling Companies, as applicable.
10.2. Nondisclosure Covenants. At all times after the date of this
Agreement, for an indefinite period of time, except with SunGard's prior
written consent, none of the Selling Companies shall, directly or indirectly,
in any capacity:
10.2.1 General Restrictions. With respect to Seller's Business,
communicate, publish or otherwise disclose to any Person, or use for the
benefit of any Person, any confidential or proprietary property, knowledge or
information of the SunGard Group or concerning any of its business, software,
assets or financial condition, no matter when or how such knowledge or
information was obtained, including without limitation (a) any information
concerning the Specified Assets, or the conduct and details of Seller's
Business; (b) the identity of customers and prospects, their specific
requirements, and the names, addresses and telephone numbers of individual
contacts at customers and prospects; (c) prices, renewal dates and other
detailed terms of customer and supplier Contracts and proposals; (d) pricing
policies, marketing and sales strategies, methods of delivering Software and
services, and Software and service development projects and strategies; (e)
source code, object code, user manuals, technical manuals and other
documentation for Software products; (f) screen designs, report designs and
other designs, concepts and visual expressions for Software products; (g)
employment and payroll records; (h) forecasts, budgets and other nonpublic
financial information; and (i) expansion plans, management policies, methods
of operation, and other business strategies and policies.
10.2.2 Software Restrictions. With respect to the Software
conveyed to Buyer pursuant to this Agreement, disclose, use or refer to any
proprietary software or other confidential or proprietary property, knowledge
or information of the SunGard Group, no matter when or how acquired, for any
purpose not in furtherance of the business and interests of the SunGard
Group, including without limitation the purposes of designing, developing,
marketing and/or selling any Software that is similar to, visually or
functionally, or competitive with Seller's Software as it exists on, and as
developed after the Effective Date by, the SunGard Group.
10.3. Nondisclosure Covenants of the Buying Companies. At all times
after the date of this Agreement, for an indefinite period of time, except
with Seller's Parent's prior written consent, the Buying Companies shall not,
directly or indirectly, in any capacity communicate, publish or otherwise
disclose to any Person, or use for the benefit of any Person, any
confidential or proprietary property, knowledge or information of Seller's
Parent or relating to any assets of Seller not included in the Specified
Assets or any obligations of
34
Seller not included in the Specified Liabilities, no matter when or how such
knowledge or information was obtained. For the purposes of Sections 10.5,
10.6 and 10.7, the covenants set forth in this Section 10.2 shall be deemed a
Covenant.
10.4. Noncompetition Covenants. During the period beginning on the date
of this Agreement and ending on the third (3rd) anniversary of the date of
this Agreement, except with SunGard's prior written consent, none of the
Selling Companies shall, directly or indirectly, in any capacity, at any
location worldwide:
10.4.1 Solicitation Restrictions. Communicate with or solicit
any Person who is or during such period becomes a customer, prospect,
supplier, employee, salesman, agent or representative of, or a consultant to,
the SunGard Group, with respect to Seller's Business in any manner which
interferes or might interfere with such Person's relationship with the
SunGard Group with respect to Seller's Business, or in an effort to obtain
any such Person as a customer, employee, salesman, agent or representative
of, or a consultant to, any other Person that conducts a business competitive
with or similar to all or any part of Seller's Business.
10.4.2 Software Restrictions. Market or sell, in any manner
other than in furtherance of the business and interests of the SunGard Group,
any Software that is similar to, visually or functionally, or competitive
with any proprietary Software developed, marketed or licensed in the Seller's
Business, as it exists on the Effective Date.
10.4.3 Competing Business Restrictions. Establish, own, manage,
operate, finance or control, or participate in the establishment, ownership,
management, operation, financing or control of, or be a director, officer,
employee, salesman, agent or representative of, or be a consultant to, any
Person that conducts a business competitive with or similar to all or any
part of Seller's Business. Notwithstanding the foregoing, the provisions of
this Section 10.4.3 shall not prevent or restrict the ability of Seller's
Parent to (i) make non-controlling investments in a Person that conducts a
business that is competitive with or similar to part of Seller's Business,
(ii) participate as either a general partner and/or limited partner in
venture funds or other funds which make investments in a Person that conducts
a business that is competitive with or similar to part of Seller's Business.
For the purpose of this Section 10.4.3, the term "non-controlling" means the
ownership of less than fifty percent (50%) of the voting securities of an
entity or the lack of control over a majority of the board of directors.
10.5. Certain Exclusions. Confidential and proprietary property,
knowledge and information of the SunGard Group or of the Selling Companies
Parent, as the case may be, shall not include any information that is (i) now
known by or readily available to the general public, nor shall it include any
information that in the future becomes known by or readily available to the
general public other than as a result of any breach of the Covenants of this
Agreement or (ii) now known or which becomes known to one party on a
non-confidential basis from a third party (other than the other party or its
agents or representatives) which is not prohibited from so disclosing such
information because of a legal, contractual or fiduciary obligation to the
other party. The ownership by any of the Selling Companies of not more than
five percent (5%) of the outstanding securities of any public company shall
not, by itself, constitute a breach of the Covenants of Section 10.4, even if
such public company competes with the SunGard Group. The operation of the
Maximis business by Seller shall not constitute a breach of the Covenants of
Section 10.4.
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10.6. Enforcement of Covenants. Each of the parties hereto expressly
acknowledges that it would be extremely difficult to measure the damages that
might result from any breach of the Covenants, and that any breach of the
Covenants will result in irreparable injury to the other party for which
money damages could not adequately compensate. If a breach of the Covenants
occurs, then the non-breaching party shall be entitled, in addition to all
other rights and remedies that it may have at law or in equity, to have an
injunction issued by any competent court enjoining and restraining the
breaching party, all other Persons involved therein from continuing such
breach. The existence of any claim or cause of action that one party or any
such other Person may have against the other party shall not constitute a
defense or bar to the enforcement of any of the Covenants. If either the
SunGard Group or the Selling Companies must resort to litigation to enforce
any of the Covenants that has a fixed term, then such term shall be extended
for a period of time equal to the period during which a breach of such
Covenant was occurring, beginning on the date of a final court order (without
further right of appeal) holding that such a breach occurred or, if later,
the last day of the original fixed term of such Covenant.
10.7. Scope of Covenants. If any Covenant, or any part thereof, or the
application thereof, is construed to be invalid, illegal or unenforceable,
then the other Covenants, or the other portions of such Covenant, or the
application thereof, shall not be affected thereby and shall be enforceable
without regard thereto. If any of the Covenants is determined to be
unenforceable because of its scope, duration, geographical area or other
factor, then the court making such determination shall have the power to
reduce or limit such scope, duration, area or other factor, and such Covenant
shall then be enforceable in its reduced or limited form.
11. INDEMNIFICATION
11.1. Selling Companies' Indemnification. From and after the Closing
Date, the Selling Companies jointly and severally, shall indemnify and hold
harmless the SunGard Group, and their respective successors and assigns, and
their respective directors, officers, employees, agents and representatives,
from and against any and all actions, suits, claims, demands, debts,
liabilities, obligations, losses, damages, costs and expenses, including
without limitation reasonable attorney's fees and court costs, arising out of
or caused by, directly or indirectly, any or all of the following:
11.1.1 Misrepresentation. Any misrepresentation, breach or
failure of any warranty or representation made by any of the Selling
Companies, in writing, in or pursuant to this Agreement, except for any
warranty or representation of the Selling Companies regarding the validity of
assignment of, or the enforceability of any of the covenants with respect to
non-competition and non-solicitation, in any of Seller's agreements with its
current or former employees.
11.1.2 Nonperformance. Any failure or refusal by any of the
Selling Companies to satisfy or perform any covenant, term or condition of
this Agreement required to be satisfied or performed by any or all of them.
11.1.3 Non-Assumed Obligations. Any Obligation (as defined in
Section 1.18) of Seller other than those expressly included in the Specified
Liabilities including, but not limited to, (a) any of the types of
Obligations specifically excluded from the Specified
36
Liabilities under Section 2.2; (b) any such Obligation that may be imposed
upon the Buying Companies as a result of the failure by Seller to comply with
any bulk sales, bulk transfer, fraudulent conveyance or similar Law of any
jurisdiction that may be applicable to some or all of the transactions
contemplated by this Agreement; (c) any such Obligation of Seller that may be
imposed upon the Buying Companies or their affiliates as a result of any Law
under which the Buying Companies or their affiliates may have successor
liability for any Tax or other Obligations of Seller, (d) any Obligations of
Seller related to Maximis, (e) the Excluded Liabilities and (f) any
Obligation related to any of the Excluded Assets or Excluded Contracts.
11.1.4 Unasserted Claims. Any action, suit or claim arising out
of, caused by or based upon any act or omission of any of the Selling
Companies or any of their respective shareholders, partners, directors,
executives, officers, employees, agents or representatives at any time before
the Closing with respect to Seller's Business, except actions, suits or
claims which are disclosed in the Schedules to this Agreement.
11.1.5 Proceedings by Employees and Related Matters. Any
Proceeding against either of the Buying Companies by or on behalf of any
employee of Seller who is not hired by Buyer, and any obligation arising
under the WARN Act. This indemnity shall not include liability for any
violation of Law by Buyer in connection with the offering of employment to
such employee.
11.1.6 Other Proceedings. Any Proceeding against either of the
Buying Companies by or on behalf of any Person who, after the Closing
hereunder, purchases or receives any of the stock of Seller, any of the
Excluded Assets or Excluded Contracts, or any the Assets or Contracts related
to Maximis which Proceeding relates to Seller, its business, Assets or
ownership.
11.1.7 NIDS Twenty-First Century Operation. Any action, suit or
claim arising out of, caused by or based upon the failure of the NIDS
software to operate properly in conjunction with the transition to
twenty-first century with respect to Specified Contracts that have terms
extending into the twenty-first century or that contain a warranty or
representation with respect to operation of the software in the twenty-first
century, provided that Buyer has fulfilled its obligations set forth in
Section 9.6. The indemnity set forth in this Section 11.1.7 shall be limited
to a maximum aggregate amount of Three Hundred Thousand Dollars ($300,000)
and shall not be subject to the limitations set forth in Section 11.4.
11.2. Buying Companies' Indemnification. From and after the Closing
Date, the Buying Companies, jointly and severally, shall indemnify and hold
harmless Seller and Seller's Parent and its direct and indirect subsidiary,
and their respective successors and assigns, and their respective directors,
officers, employees, shareholders, agents and representatives, from and
against any and all actions, suits, claims, demands, debts, liabilities,
obligations, losses, damages, costs and expenses, including without
limitation reasonable attorney's fees and court costs, arising out of or
caused by, directly or indirectly, any of all of the following:
11.2.1 Misrepresentation. Any misrepresentation, breach or
failure of any warranty or representation made by any of the Buying
Companies, in writing, in or pursuant to this Agreement.
11.2.2 Nonperformance. Any failure or refusal by any of the
Buying Companies to satisfy or perform any covenant, term or condition of
this Agreement required
37
to be satisfied or performed by any or all of them, including but not limited
to the subcontracted Obligations set forth in Section 9.3.
11.2.3 Specified Liabilities. Any Obligation of the Buying
Companies included in the Specified Liabilities as set forth in Section 2.1.2.
11.2.4 Proceedings by Employees and Related Matters. Any
Proceeding against any of the Selling Companies by or on behalf of any former
employee of Seller that is offered employment by Buyer with respect the
hiring or employment of such employee.
11.3. Indemnification Procedures. With respect to each event, occurrence
or matter ("Indemnification Matter") as to which any member of the SunGard
Group or any of the Selling Companies, as the case may be, (the "Indemnitee")
is entitled to indemnification from the Selling Companies (the "Indemnitor")
under this Section 11:
11.3.1 Notice. Within ten (10) days after the Indemnitee
receives written documents underlying the Indemnification Matter or, if the
Indemnification Matter does not involve a third-party action, suit, claim or
demand, promptly after the Indemnitee first has actual knowledge of the
Indemnification Matter, the Indemnitee shall give notice to the Indemnitor of
the nature of the Indemnification Matter and the amount demanded or claimed
in connection therewith ("Indemnification Notice"), together with copies of
any such written documents.
11.3.2 Defense. If a third-party action, suit, claim or demand
is involved, then, upon receipt of the Indemnification Notice, the Indemnitor
shall, at its expense and through counsel of its choice, promptly assume and
have sole control over the litigation, defense or settlement (the "Defense")
of the Indemnification Matter, except that (a) the Indemnitee may, at its
option and expense and through counsel of its choice, participate in (but not
control) the Defense; (b) if the Indemnitee reasonably believes that the
handling of the Defense by the Indemnitor may have a material adverse affect
on the Indemnitee, its business or financial condition, or its relationship
with any customer, prospect, supplier, employee, salesman, consultant, agent
or representative, then the Defense shall be jointly controlled by the
Indemnitee and the Indemnitor, with each party paying its expenses and
participating through counsel of its choice; (c) the Indemnitor shall not
consent to any Judgment, or agree to any settlement, without the Indemnitee's
prior written consent, which such approval shall not be unreasonably withheld
except that it shall not be unreasonable to withhold approval if, pursuant to
or as a result of such settlement or cessation, injunctive or other equitable
relief would be imposed against the Indemnitee; and (d) if the Indemnitor
does not promptly assume control over the Defense or, after doing so, does
not continue to prosecute the Defense in good faith, the Indemnitee may, at
its option and through counsel of its choice and after reasonable notice to
Indemnitor, but at the Indemnitor's expense, assume control over the Defense.
In any event, the Indemnitor and the Indemnitee shall fully cooperate with
each other in connection with the Defense, including without limitation by
furnishing all available documentary or other evidence as is reasonably
requested by the other.
11.3.3 Payments. All amounts owed by the Indemnitor to the
Indemnitee (if any) shall be paid in full within fifteen (15) business days
after a final Judgment (without further right of appeal) determining the
amount owed is rendered, or after a final settlement or agreement as to the
amount owed is executed.
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11.3.4 Sole Remedy. Neither party shall have any liability to
the other party for misrepresentation, breach of warranty or failure to
fulfill any covenant or agreement to be performed at or prior to the Closing
Date except pursuant to this Section 11.
11.4. Limits on Indemnification. The Indemnitor's liability under this
Section 11 shall be limited as follows:
11.4.1 Deductible. No amount shall be payable by the Indemnitor
under this Section 11 unless and until the aggregate amount otherwise payable
by the Indemnitor under this Section 11 exceeds Two Hundred Thousand Dollars
($200,000), in which event the Indemnitor shall pay such aggregate amount and
all future amounts payable by the Indemnitor under this Section 11.
11.4.2 Ceiling. The Indemnitor's total liability under this
Section 11 shall not exceed the Purchase Price.
11.4.3 Time Period. With respect to any Indemnification Matter,
the Indemnitor shall have no liability unless the Indemnitee gives an
Indemnification Notice with respect thereto within eighteen (18) months after
the Closing Date.
11.4.4 Exceptions. None of the foregoing limitations shall apply
in the case of any Indemnification Matter involving: (i) intentional
misrepresentation, fraud or criminal matters, (ii) with respect to the
Selling Companies, title to or infringement (occurring before Closing) caused
by any Software product which, at any time before Closing, was marketed,
licensed, used, owned or claimed to have been owned by Seller, (iii) Taxes,
(iv) covenants to be performed after Closing, and (v) with respect to the
Selling Companies, any unasserted claims as referenced Section 11.1.4, (vii)
with respect to the Selling Companies any non-assumed Obligations, (viii)
with respect to the Buying Companies, Obligations under the Specified
Liabilities and subcontracted Obligations set forth in Section 9.3, and (ix)
with respect to the Buying Companies, infringement to the extent caused by
modifications, enhancements and changes after the Closing Date with respect
to the Software conveyed to Buyer pursuant to this Agreement.
11.5. Setoff and Holdback. In addition to all other rights and remedies
that the Indemnitee may have, the Indemnitee shall have the right to setoff,
against any amounts due to the Indemnitor, whether due under this Agreement,
any of the other Contracts contemplated by this Agreement or otherwise, any
sums for which the Indemnitee is entitled to indemnification under this
Section 11. The Indemnitee's rights to indemnification under this Section 11
shall not be in any manner limited by or to this right of setoff. If any
Indemnification Matters are pending at a time when the Indemnitee is required
to pay any amount due to the Indemnitor, then the Indemnitee shall have the
right, upon notice to the Indemnitor, to withhold from such payment, until
final determination of such pending Indemnification Matters, the total amount
for which the Indemnitor may become liable as a result thereof, as determined
by the Indemnitee reasonably and in good faith.
12. OTHER PROVISIONS
12.1. Fees and Expenses. The Buying Companies shall pay all of the fees
and expenses incurred by them, the Selling Companies shall pay all of the
fees and expenses incurred by them, in negotiating and preparing this
Agreement (and all other Contracts
39
executed in connection herewith or therewith) and in
consummating the transactions contemplated by this Agreement.
12.2. Notice. All notices, consents or other communications required or
permitted to be given under this Agreement shall be in writing and shall be
deemed to have been duly given (a) when delivered personally, (b) three
business days after being mailed by first class certified mail, return
receipt requested, postage prepaid, or (c) one business day after being sent
by a reputable overnight delivery service, postage or delivery charges
prepaid, to the parties at their respective addresses stated on the first
page of this Agreement. Notices may also be given by prepaid telegram or
facsimile and shall be effective on the date transmitted if confirmed within
24 hours thereafter by a signed original sent in the manner provided in the
preceding sentence. Notice to Seller's Parent at the address specified on
page one of this Agreement, attention General Counsel, shall suffice as
notice to all of the Selling Companies. Notice to the Buying Companies shall
be at the address specified on page one of this Agreement with a copy to
SunGard Data Systems Inc., attention of the General Counsel at 0000 Xxxxxxxx
Xxxx, Xxxxx, XX 00000. Any party may change its address for notice and the
address to which copies must be sent by giving notice of the new addresses to
the other parties in accordance with this Section 12.2, except that any such
change of address notice shall not be effective unless and until received.
12.3. Survival of Representations and Covenants. All representations and
warranties and covenants made in this Agreement or pursuant hereto shall
survive the date of this Agreement, the Effective Date, the Closing Date and
the consummation of the transactions contemplated by this Agreement for the
time period set forth in Section 11.4.3 or as otherwise provided in this
Agreement.
12.4. Interpretation of Representations. Each representation and
warranty made in this Agreement or pursuant hereto is independent of all
other representations and warranties made by the same parties, whether or not
covering related or similar matters, and must be independently and separately
satisfied. Exceptions or qualifications to any such representation or
warranty shall not be construed as exceptions or qualifications to any other
representation or warranty.
12.5. Reliance by the Buying Companies . Notwithstanding the right of
the Buying Companies to investigate the business, Assets and financial
condition of Seller, and notwithstanding any knowledge determined or
determinable by the Buying Companies as a result of such investigation, the
Buying Companies have the unqualified right to rely upon, and have relied
upon, each of the representations and warranties made by the Selling
Companies in this Agreement or pursuant hereto.
12.6. Entire Understanding. This Agreement, together with the Exhibits
and Schedules hereto, and related agreements referenced in this Agreement,
states the entire understanding among the parties with respect to the subject
matter hereof, and supersedes all prior oral and written communications and
agreements, and all contemporaneous oral communications and agreements, with
respect to the subject matter hereof, including without limitation all
confidentiality letter agreements and letters of intent previously entered
into among some or all of the parties hereto. No amendment or modification of
this Agreement shall be effective unless in writing and signed by the party
against whom enforcement is sought.
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12.7. Publicity. All voluntary public announcements concerning the
transactions contemplated by this Agreement shall be mutually acceptable to
both the Buying Companies and the Selling Companies. Unless required by Law,
none of the Selling Companies or the Buying Companies shall make any public
announcement or issue any press release concerning the transactions
contemplated by this Agreement without the prior written consent of the other
parties. With respect to any announcement that any of the parties is required
by Law or stock exchange regulation to issue, or on the reasonable advice of
counsel is advised to disclose, such party shall, to the extent possible
under the circumstances, review the necessity for and the contents of the
announcement with the other parties before issuing the announcement.
Notwithstanding the foregoing, Seller's Parent may file a Current Report
pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 on
Form 8-K with respect to this transaction without such review by the other
parties.
12.8. Parties in Interest. None of the parties may assign this Agreement
or any rights or obligations under this Agreement without the prior written
consent of the other parties, provided that either Seller or Buyer may assign
or otherwise transfer, including by operation of law, this Agreement to an
affiliate as part of an internal corporate reorganization without such
consent. This Agreement shall bind, benefit, and be enforceable by and
against the parties hereto, and their respective successors and permitted
assigns.
12.9. Waivers. Except as otherwise expressly provided herein, no waiver
with respect to this Agreement shall be enforceable unless in writing and
signed by the party against whom enforcement is sought. Except as otherwise
expressly provided herein, no failure to exercise, delay in exercising, or
single or partial exercise of any right, power or remedy by any party, and no
course of dealing between or among any of the parties, shall constitute a
waiver of, or shall preclude any other or further exercise of, any right,
power or remedy.
12.10. Severability. If any provision of this Agreement is construed to
be invalid, illegal or unenforceable, then the remaining provisions hereof
shall not be affected thereby and shall be enforceable without regard thereto.
12.11. Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be an
original hereof, and it shall not be necessary in making proof of this
Agreement to produce or account for more than one counterpart hereof.
12.12. Section Headings. The section and subsection headings in this
Agreement are used solely for convenience of reference, do not constitute a
part of this Agreement, and shall not affect its interpretation.
12.13. References. All words used in this Agreement shall be construed to
be of such number and gender as the context requires or permits. Unless a
particular context clearly requires otherwise, the words "hereof" and
"hereunder" and similar references refer to this Agreement in its entirety
and not to any specific section or subsection of this Agreement.
12.14. Controlling Law. THIS AGREEMENT IS MADE UNDER, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH OF
PENNSYLVANIA APPLICABLE TO AGREEMENTS MADE AND TO BE
41
PERFORMED SOLELY THEREIN, WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF
LAW.
12.15. Dispute Resolution. If any dispute arises under this Agreement
(other than a dispute under Sections 3.3, 3.4, and 3.6) that is not settled
promptly in the ordinary course of business, the parties shall seek to
resolve any such dispute between them, first by negotiating promptly with
each other in good faith in face-to-face negotiations. These face-to-face
negotiations shall be conducted by the respective designated senior
management representative of each party. If the parties are unable to resolve
the dispute between them through these face-to-face negotiations within
twenty (20) business days (or such other period as the parties shall
otherwise agree) following the date of notification ("Notice Date") by one
party to the other(s) of the existence of such dispute, then the parties
shall be entitled to pursue their legal remedies. For the purposes of this
Section 12.15, the Selling Companies and the Buying Companies, respectively,
shall be deemed a single party.
12.16. Jurisdiction and Process. In any action between or among any of
the parties, whether arising out of this Agreement or otherwise, (a) each of
the parties irrevocably consents to the exclusive jurisdiction and venue of
the federal and state courts located in the Commonwealth of Pennsylvania; (b)
if any such action is commenced in a state court, then, subject to applicable
law, no party shall object to the removal of such action to any federal court
located in the Commonwealth of Pennsylvania; (c) each of the parties
irrevocably waives the right to trial by jury; (d) each of the parties
irrevocably consents to service of process by first class certified mail,
return receipt requested, postage prepaid, to the address at which such party
is to receive notice in accordance with Section 12.2; and (e) the prevailing
parties shall be entitled to recover their reasonable attorney's fees
(including, if applicable, charges for in-house counsel) and court costs from
the other parties.
12.17. No Third-Party Beneficiaries. No provision of this Agreement is
intended to or shall be construed to grant or confer any right to enforce
this Agreement, or any remedy for breach of this Agreement, to or upon any
Person other than the parties hereto and their successors and permitted
assigns, including, but not limited to, any customer, prospect, supplier,
employee, contractor, salesman, agent or representative of the Selling
Companies or the Buying Companies.
(THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK)
42
EACH PARTY HAS CAUSED THIS AGREEMENT TO BE EXECUTED ON ITS BEHALF BY A DULY
AUTHORIZED OFFICER, AS OF THE DATE FIRST STATED ABOVE.
SELLING COMPANIES:
SELLER: SELLER'S PARENT:
Premier Solutions Ltd. Safeguard Scientifics, Inc.
By: /s/ G. A. Xxxxxxx III By: /s/ Xxxxx X. Xxxxxx
------------------------------ ----------------------------
Title: President and CEO Title: Vice President
------------------------------ ----------------------------
Date: April 15, 1997 Date: April 15, 1997
------------------------------ ----------------------------
Global Software, Inc.
By: /s/ Xxxxx X. Xxxxxx
------------------------------
Title: Secretary
------------------------------
Date: April 15, 1997
------------------------------
BUYING COMPANIES:
BUYER:
PSL Acquisition Inc.
By: /s/ Xxxxxxx Xxxxxx
------------------------------
Title: Vice President
------------------------------
Date: April 15, 1997
------------------------------
BUYER'S PARENT:
SunGard Data Systems Inc.
By: /s/ Xxxxxxx Xxxxxx
------------------------------
Title: Vice President - Corporate Development
-------------------------------------------
Date: April 15, 1997
------------------------------
43
