EXHIBIT 99
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STOCK PURCHASE AGREEMENT
BY AND AMONG
S1 CORPORATION,
▇▇▇▇▇▇▇ DATA SYSTEMS CORP.
AND
GL CONSULTANTS, INC
DATED AS OF OCTOBER 20, 2004
Table of Contents
Page
ARTICLE I SALE AND PURCHASE OF STOCK.............................................................................1
1.1 Sale and Purchase of Stock..........................................................1
1.2 Purchase Price......................................................................1
ARTICLE II CLOSING...............................................................................................1
ARTICLE III REPRESENTATIONS AND WARRANTIES OF ▇▇▇▇▇▇▇ AND S1.....................................................2
3.1 Corporate Organization..............................................................2
3.2 Capitalization......................................................................2
3.3 Authority; No Violation.............................................................2
3.4 Consents and Approvals..............................................................3
3.5 Financial Statements; Books and Records.............................................3
3.6 Accounts Receivable; Accounts Payable...............................................4
3.7 Broker's Fees.......................................................................4
3.8 Absence of Certain Changes or Events................................................4
3.9 Legal Proceedings...................................................................5
3.10 Taxes and Tax Returns...............................................................6
3.11 Employee Plans......................................................................7
3.12 Labor and Employment Matters........................................................8
3.13 Certain Contracts...................................................................9
3.14 Agreements with Regulatory Agencies.................................................10
3.15 Environmental Matters...............................................................10
3.16 Properties and Assets...............................................................11
3.17 Insurance...........................................................................11
3.18 Compliance with Applicable Laws; Permits............................................12
3.19 Intellectual Property...............................................................12
3.20 Bank Accounts.......................................................................14
3.21 Intercompany Arrangements...........................................................14
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF S1..................................................................14
4.1 Corporate Organization..............................................................14
4.2 Brokers.............................................................................14
4.3 Vote Required.......................................................................15
4.4 Title to the Shares.................................................................15
ARTICLE V REPRESENTATIONS AND WARRANTIES OF PURCHASER............................................................15
5.1 Corporate Organization..............................................................15
5.2 Authority; No Violation.............................................................15
5.3 Consents and Approvals..............................................................16
5.4 Disclosure of Information...........................................................16
5.5 No Knowledge of Breach of Representations and Warranties............................16
5.6 Financing...........................................................................16
5.7 Broker's Fees.......................................................................17
ARTICLE VI COVENANTS RELATING TO CONDUCT OF BUSINESS.............................................................17
6.1 Covenants of ▇▇▇▇▇▇▇................................................................17
ARTICLE VII ADDITIONAL AGREEMENTS................................................................................18
7.1 Regulatory Matters..................................................................18
7.2 Access to Information...............................................................19
7.3 Legal Conditions to Stock Purchase..................................................19
7.4 Agreement to Retain Shares..........................................................19
7.5 Employees...........................................................................20
7.6 Advice of Changes...................................................................20
7.7 Current Information.................................................................20
7.8 Indemnification.....................................................................20
7.9 Claim for Indemnification...........................................................21
7.10 Post-Closing Cooperation............................................................23
7.11 Tax Matters.........................................................................24
7.12 New York Sublease...................................................................24
7.13 Accounts Receivable.................................................................24
7.14 Non-Compete.........................................................................24
ARTICLE VIII CONDITIONS PRECEDENT................................................................................25
8.1 Conditions to Each Party's Obligation to Effect the Stock Purchase..................25
8.2 Conditions to Obligations of Purchaser..............................................25
8.3 Conditions to Obligations of ▇▇▇▇▇▇▇ and S1.........................................26
ARTICLE IX TERMINATION AND AMENDMENT.............................................................................27
9.1 Termination.........................................................................27
9.2 Effect of Termination...............................................................28
9.3 Amendment...........................................................................28
9.4 Extension; Waiver...................................................................28
ARTICLE X GENERAL PROVISIONS.....................................................................................28
10.1 Expenses............................................................................28
10.2 Notices.............................................................................28
10.3 Interpretation......................................................................29
10.4 Counterparts........................................................................29
10.5 Entire Agreement; Construction......................................................30
10.6 Governing Law.......................................................................30
10.7 Enforcement of Agreement............................................................30
10.8 Severability........................................................................30
10.9 Publicity...........................................................................30
10.10 Assignment; Limitation of Benefits..................................................30
10.11 Survival............................................................................31
10.12 Additional Definitions..............................................................31
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "AGREEMENT") is entered
into as of October 20, 2004, by and among GL Consultants, Inc., a New York
corporation ("PURCHASER"), S1 Corporation, a Delaware corporation ("S1"), and
▇▇▇▇▇▇▇ Data Systems Corp., a New York corporation ("▇▇▇▇▇▇▇" and, together with
S1, the "SELLERS").
W I T N E S S E T H:
WHEREAS, Purchaser desires to acquire ▇▇▇▇▇▇▇;
WHEREAS, S1 owns all of the issued and outstanding shares of
capital stock of ▇▇▇▇▇▇▇;
WHEREAS, S1 desires to sell and Purchaser desires to purchase
all of the issued and outstanding shares of capital stock of ▇▇▇▇▇▇▇ at the
price and upon the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants and
representations contained herein and intending to be legally bound hereby, the
parties hereto agree as follows:
ARTICLE I
SALE AND PURCHASE OF STOCK
1.1 SALE AND PURCHASE OF STOCK.
On the basis of the representations, warranties and agreements
contained herein, and subject to the terms and conditions hereof, S1 agrees to
sell to Purchaser, and Purchaser agrees to purchase from S1, 100 shares of
issued and outstanding common stock of ▇▇▇▇▇▇▇, par value $0.01 per share
("▇▇▇▇▇▇▇ COMMON STOCK"), which shares constitute all of the outstanding shares
of capital stock of ▇▇▇▇▇▇▇ (the "SHARES"), at the purchase price specified in
Section 1.2 (the "STOCK PURCHASE").
1.2 PURCHASE PRICE.
The purchase price for the Shares shall be equal to (i)
$12,523,687 (the "FIRM CONSIDERATION") plus (ii) such additional consideration
as calculated pursuant to the terms and conditions set forth in ANNEX A hereto
(the "EARN-OUT CONSIDERATION" and, together with the Firm Consideration, the
"PURCHASE PRICE").
ARTICLE II
CLOSING
Subject to the terms and conditions of this Agreement, the
closing of the Stock Purchase (the "CLOSING") will take place at 10:00 a.m., New
York time, at the offices of ▇▇▇▇▇ & ▇▇▇▇▇▇▇ L.L.P. on the date hereof or as
soon as reasonably practicable following the satisfaction or waiver of all
conditions precedent specified under Article VIII hereof (except for those
conditions which by their terms are to be satisfied at Closing), or on such
other date, place and time as the parties may agree in writing (the
"CLOSING DATE").
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF ▇▇▇▇▇▇▇ AND S1
▇▇▇▇▇▇▇ and S1, severally and not jointly, hereby make the
following representations and warranties to Purchaser as set forth in this
Article III, subject to the exceptions disclosed in writing in the Sellers
Disclosure Schedule as of the date hereof, each of which is being relied upon by
Purchaser as a material inducement to enter into and perform this Agreement. All
of the disclosure schedules of ▇▇▇▇▇▇▇ and S1 referenced below and attached to
this Agreement are collectively referred to herein as the "SELLERS DISCLOSURE
SCHEDULE."
3.1 CORPORATE ORGANIZATION.
(a) ▇▇▇▇▇▇▇ is a corporation duly organized, validly
existing and in good standing under the laws of the State of New York. Except as
set forth in Section 3.1(a) of the Sellers Disclosure Schedule, ▇▇▇▇▇▇▇ has the
corporate power and authority to own or lease all of its properties and assets
and to carry on its business as it is now being conducted, and is duly licensed
or qualified to do business in each jurisdiction in which the nature of any
material business conducted by it or the character or location of any material
properties or assets owned or leased by it makes such licensing or qualification
necessary, which jurisdictions are set forth in Section 3.1(a) of the Sellers
Disclosure Schedule. The copies of the Certificate of Incorporation and By-Laws
of ▇▇▇▇▇▇▇, which are attached at Section 3.1(a) of the Sellers Disclosure
Schedule, are true, correct and complete copies of such documents as in effect
as of the date of this Agreement.
(b) There is no corporation, partnership or other
organization, whether incorporated or unincorporated, which is either directly
or indirectly owned by ▇▇▇▇▇▇▇.
3.2 CAPITALIZATION.
The authorized capital stock of ▇▇▇▇▇▇▇ consists of 20,000
shares of ▇▇▇▇▇▇▇ Common Stock. As of the date hereof, there are 100 shares of
▇▇▇▇▇▇▇ Common Stock issued and outstanding and no shares of ▇▇▇▇▇▇▇ Common
Stock held in ▇▇▇▇▇▇▇'▇ treasury. All of the issued and outstanding shares of
▇▇▇▇▇▇▇ Common Stock have been duly authorized and validly issued and are fully
paid, nonassessable and free of preemptive rights, with no personal liability
attaching to the ownership thereof, and all of such shares are owned by S1 free
and clear of all liens, pledges, charges, claims, encumbrances, security
interests, options, mortgages, rights of first refusal or similar restrictions.
▇▇▇▇▇▇▇ does not have and is not bound by any outstanding subscriptions,
options, warrants, calls, commitments or agreements of any character calling for
the purchase or issuance of any shares of ▇▇▇▇▇▇▇ Common Stock or any other
equity security of ▇▇▇▇▇▇▇ or any securities representing the right to purchase
or otherwise receive any shares of ▇▇▇▇▇▇▇ Common Stock or any other equity
security of ▇▇▇▇▇▇▇.
3.3 AUTHORITY; NO VIOLATION.
(a) Each of the Sellers has full corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly and
validly approved by all necessary corporate action on the part of each of S1 and
▇▇▇▇▇▇▇. No other corporate proceedings on the part of either ▇▇▇▇▇▇▇ or S1 are
necessary to approve this Agreement or to consummate the transactions
contemplated hereby. This Agreement has been duly and validly
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executed and delivered by each of the Sellers and, assuming due authorization,
execution and delivery by Purchaser of this Agreement, constitutes a valid and
binding obligation of each of the Sellers, enforceable against the Sellers in
accordance with its terms, except as enforcement may be limited by general
principles of equity whether applied in a court of law or a court of equity and
by bankruptcy, insolvency and similar laws affecting creditors' rights and
remedies generally.
(b) Except as set forth at Section 3.3(b) of the Sellers
Disclosure Schedule, none of the execution and delivery of this Agreement by the
Sellers, the consummation by the Sellers of the transactions contemplated
hereby, or compliance by the Sellers with any of the terms or provisions hereof,
will (i) violate any provision of the Certificate of Incorporation or By-Laws of
either of the Sellers, or (ii) assuming that the consents and approvals referred
to in Section 3.4 hereof are duly obtained, (x) violate any Laws (as defined in
Section 10.12) applicable to either Seller or any of ▇▇▇▇▇▇▇'▇ respective
properties or assets, or (y) violate, conflict with, result in a material breach
of any provision of or the loss of any benefit under, constitute a default (or
an event which, with notice or lapse of time, or both, would constitute a
default) under, result in the termination of or a right of termination or
cancellation under, accelerate the performance required by, or result in the
creation of any lien, pledge, security interest, charge or other encumbrance
upon any of the properties or assets of ▇▇▇▇▇▇▇ under, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, deed of trust,
license, lease, agreement or other instrument or obligation to which ▇▇▇▇▇▇▇ is
a party, or by which ▇▇▇▇▇▇▇ or any of its respective properties or assets may
be bound or affected.
3.4 CONSENTS AND APPROVALS.
(a) Except for (i) such consents, approvals, orders,
authorizations, registrations, declarations and filings as may be required under
applicable federal, foreign and state securities or antitrust laws, and (ii)
such filings, authorizations or approvals, in each case as may be set forth in
Section 3.4(a) of the Sellers Disclosure Schedule, no consents or approvals of
or filings or registrations with any court, administrative agency or commission
or other governmental authority or instrumentality (each a "GOVERNMENTAL
ENTITY"), or with any third party are necessary in connection with (1) the
execution and delivery by the Sellers of this Agreement, and (2) the
consummation of the Stock Purchase and the other transactions contemplated
hereby.
(b) Except as set forth in Section 3.4(b) of the Sellers
Disclosure Schedule, Sellers have no knowledge of any reason why approval or
effectiveness of any of the applications, notices or filings referred to in
Section 3.4(a) cannot be obtained or granted on a timely basis.
3.5 FINANCIAL STATEMENTS; BOOKS AND RECORDS.
Attached at Section 3.5 of the Sellers Disclosure Schedule are
true, correct and complete copies of the unaudited financial statements of
▇▇▇▇▇▇▇ as of December 31, 2003 and the unaudited interim financial statements
of ▇▇▇▇▇▇▇ as of and for the six months ended June 30, 2004. The financial
statements referred to in this Section 3.5 (including the related notes, where
applicable) (the "FINANCIAL STATEMENTS") fairly present (subject, in the case of
the unaudited interim financial statements for the six months ended June 30,
2004 only, to recurring audit adjustments normal in nature and amount) the
results of the operations and financial condition of ▇▇▇▇▇▇▇ for the respective
fiscal periods or as of the respective dates therein set forth; the Financial
Statements comply with applicable accounting requirements and have been prepared
in accordance with US generally accepted accounting principles ("GAAP")
consistently applied during the periods involved, except in each case as
indicated in such statements or in the notes thereto. The books and records of
▇▇▇▇▇▇▇ have been, and are being, maintained in all material respects in
accordance with GAAP and any other applicable legal and accounting requirements.
As of the Closing Date, goodwill shall not appear on the ▇▇▇▇▇▇▇ balance sheet.
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3.6 ACCOUNTS RECEIVABLE; ACCOUNTS PAYABLE
Except as set forth on Section 3.6 of the Sellers Disclosure
Schedule, the notes and accounts receivable of ▇▇▇▇▇▇▇, as set forth on the
Financial Statements or arising since the date thereof, have arisen in the
ordinary course of business consistent with past practice, and have arisen out
of legal and bona fide sales of goods, performance of services and other
business transactions in the ordinary course of business, as adjusted for the
passage of time through the Closing Date in accordance with the past custom and
practice of ▇▇▇▇▇▇▇ and, to the knowledge of the Sellers, are not subject to
set-offs or counterclaims. Section 3.6 of the Sellers Disclosure Schedule also
sets forth the accounts payable of ▇▇▇▇▇▇▇ as of June 30, 2004. Except as set
forth on Section 3.6 of the Sellers Disclosure Schedule, ▇▇▇▇▇▇▇ does not have
any single account payable which exceeds $5,000.
3.7 BROKER'S FEES.
None of ▇▇▇▇▇▇▇, nor any of its respective officers or
directors has employed any broker or finder or incurred any liability for any
broker's fees, commissions or finder's fees in connection with any of the
transactions contemplated by this Agreement.
3.8 ABSENCE OF CERTAIN CHANGES OR EVENTS.
(a) Except as disclosed in Section 3.8 of the Sellers
Disclosure Schedule or in the Financial Statements, since June 30, 2004:
(i) ▇▇▇▇▇▇▇ has not sold, leased, transferred,
or assigned any of its assets, tangible or intangible, other than for a fair
consideration in the ordinary course of business;
(ii) ▇▇▇▇▇▇▇ has not entered into any agreement,
contract, lease, or license (or series of related agreements, contracts, leases,
and licenses) outside the ordinary course of business;
(iii) no party (including ▇▇▇▇▇▇▇) has terminated
or cancelled any agreement, contract, lease, or license (or series of related
agreements, contracts, leases, and licenses) to which ▇▇▇▇▇▇▇ is a party or by
which any of them is bound and has not modified any agreement, contract, lease
or license outside the ordinary course of business;
(iv) the Sellers have received no notice of, and
to the knowledge of the Sellers there has been no security interest imposed upon
any of ▇▇▇▇▇▇▇'▇ assets, tangible or intangible;
(v) other than in connection with customer
agreements, ▇▇▇▇▇▇▇ has not made any capital expenditure (or series of related
capital expenditures) or capital investment involving more than $10,000;
(vi) ▇▇▇▇▇▇▇ has not issued, sold, or otherwise
disposed of any of its capital stock, or granted any options, warrants, or other
rights to purchase or obtain (including upon conversion, exchange, or exercise)
any of its capital stock;
(vii) ▇▇▇▇▇▇▇ has not declared, set aside, or paid
any dividend or made any distribution with respect to its capital stock (whether
in cash or in kind) or redeemed, purchased, or otherwise acquired any of its
capital stock;
(viii) ▇▇▇▇▇▇▇ has not issued any note, bond, or
other debt security or created, incurred, assumed, or guaranteed any
indebtedness for borrowed money or capitalized lease obligation;
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(ix) ▇▇▇▇▇▇▇ has not delayed or postponed the
payment of accounts payable and other Liabilities outside the ordinary course of
business;
(x) there has not been any change in the
accounting principles followed by ▇▇▇▇▇▇▇;
(xi) ▇▇▇▇▇▇▇ has not cancelled, compromised,
waived, or released any right or claim (or series of related rights and claims);
(xii) other than in the ordinary course of
business, ▇▇▇▇▇▇▇ has not granted any license or sublicense of any rights under
or with respect to any Intellectual Property (as defined in Section 3.19);
(xiii) there has been no change made or authorized
in the Certificate of Incorporation or By-Laws of ▇▇▇▇▇▇▇;
(xiv) ▇▇▇▇▇▇▇ has not made any loan to, or entered
into any other transaction with, any of its directors, officers, or employees
outside the ordinary course of business;
(xv) ▇▇▇▇▇▇▇ has not granted any increase in the
base compensation of any of its directors, officers, and employees;
(xvi) ▇▇▇▇▇▇▇ has not adopted, amended, modified,
or terminated any bonus, profit-sharing, incentive, severance, or other plan,
contract, or commitment for the benefit of any of its directors, officers, and
employees (or taken any such action with respect to any other ▇▇▇▇▇▇▇ Plan (as
defined in Section 3.11));
(xvii) ▇▇▇▇▇▇▇ has not made any other change in
employment terms for any of its directors, officers, and employees;
(xviii) to the knowledge of the Sellers, ▇▇▇▇▇▇▇ has
not incurred any other material liability, except as contemplated by this
Agreement or in the ordinary course of its business consistent with past
practices;
(xix) to the knowledge of the Sellers, no event
has occurred which has had, or would have, individually or in the aggregate, a
Material Adverse Effect (as defined in Section 10.12) on ▇▇▇▇▇▇▇; and
(xx) Neither S1 nor ▇▇▇▇▇▇▇ has committed to any
of the foregoing.
(b) Since June 30, 2004, ▇▇▇▇▇▇▇ has carried on its
business in the ordinary course consistent with its past practices.
3.9 LEGAL PROCEEDINGS.
(a) Except as disclosed on Section 3.9 to the Sellers
Disclosure Schedule, ▇▇▇▇▇▇▇ is not a party to any, and there are no pending or,
to the knowledge of ▇▇▇▇▇▇▇, threatened, legal, administrative, arbitration or
other proceedings, claims, actions or governmental or regulatory investigations
of any nature against ▇▇▇▇▇▇▇.
(b) There is no injunction, order, judgment, decree, or
regulatory restriction imposed upon ▇▇▇▇▇▇▇ or the assets of ▇▇▇▇▇▇▇.
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(c) No Governmental Entity has at any time challenged or
questioned in a writing delivered to ▇▇▇▇▇▇▇ the legal right of ▇▇▇▇▇▇▇ to
design, manufacture, offer or sell any of its products or services in the
present manner or style thereof. As of the date hereof, to the knowledge of
Sellers, no event has occurred, and no claim, dispute or other condition or
circumstance exists, that will, or that would reasonably be expected to, cause
or provide a bona fide basis for a director or executive officer of ▇▇▇▇▇▇▇ to
seek indemnification from ▇▇▇▇▇▇▇.
3.10 TAXES AND TAX RETURNS.
(a) Since April 12, 2000, ▇▇▇▇▇▇▇ has paid (or there have
been paid on its behalf) all Taxes relating to the income, business or assets of
▇▇▇▇▇▇▇ (without regard to whether or not such Taxes are or were disputed),
whether or not shown on any Tax Return.
(b) Since April 12, 2000, ▇▇▇▇▇▇▇ has filed (or there
have been filed on its behalf) on a timely basis all Tax Returns that are
required to have been filed with respect to the income, business or assets of
▇▇▇▇▇▇▇, subject to any applicable extensions as described in Section 3.10(b) of
the Sellers Disclosure Schedule. All such Tax Returns, to the extent they relate
to ▇▇▇▇▇▇▇, were accurate and complete in all material respects. Except as
described in Section 3.10(b) of the Sellers Disclosure Schedule, ▇▇▇▇▇▇▇ is not
the beneficiary of any extension of time within which to file any Tax Return.
Since April 12, 2000, ▇▇▇▇▇▇▇ has not received notice of a claim by an authority
in a jurisdiction where ▇▇▇▇▇▇▇ does not file Tax Returns that it is or may be
subject to taxation by that jurisdiction and to the knowledge of the Sellers,
there is no such claim outstanding or pending. ▇▇▇▇▇▇▇ has not given, and is not
subject to, any currently effective waiver of any statute of limitations in
respect of Taxes or agreed to any currently effective extension of time with
respect to a Tax assessment or deficiency. Except as set forth in Section
3.10(b) of the Sellers Disclosure Schedule, since June 30, 2004, the Sellers
have received no notice of, and to the knowledge of the Sellers there has been
no security interests on any of the assets of ▇▇▇▇▇▇▇ that arose in connection
with any failure (or alleged failure) to pay any Tax. To the knowledge of the
Sellers, prior to April 12, 2000, ▇▇▇▇▇▇▇ filed (or there were filed on its
behalf) on a timely basis all Tax Returns that were required to have been filed
with respect to the income, business or assets of ▇▇▇▇▇▇▇ and all such Tax
Returns, to the extent they relate to ▇▇▇▇▇▇▇, were to the knowledge of the
Sellers accurate and complete in all material respects.
(c) Since April 12, 2000, ▇▇▇▇▇▇▇ has withheld and paid
all Taxes required to have been withheld and paid in connection with amounts
paid or owing to any employee, independent contractor, creditor, stockholder or
other third party.
(d) There is no dispute or claim concerning any liability
for Taxes of or with respect to ▇▇▇▇▇▇▇ either (i) claimed or raised by any
authority in writing or (ii) as to which ▇▇▇▇▇▇▇ has knowledge based upon
personal contact with any agent of such authority. Section 3.10(d) to the
Sellers Disclosure Schedule sets forth a complete and accurate list of Tax
Returns filed with respect to the taxable periods of ▇▇▇▇▇▇▇ ended on or after
April 12, 2000; indicates those Tax Returns that have been audited; and
indicates those Tax Returns that currently are the subject of an audit.
(e) The unpaid Taxes of ▇▇▇▇▇▇▇ (i) did not, as of the
date of the most recent Financial Statements, exceed the reserve for Tax
Liability (rather than any reserve for deferred Taxes established to reflect
timing differences between book and Tax income) set forth on the face of such
Financial Statements (without reference to any notes thereto) and (ii) do not
exceed that reserve as adjusted for the passage of time through the Closing Date
in accordance with the past custom and practice of ▇▇▇▇▇▇▇ in filing its Tax
Returns.
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(f) ▇▇▇▇▇▇▇ has not been a United States real property
holding corporation within the meaning of Section 897(c)(2) of the Code during
the applicable period specified in Section 897(c)(1)(A)(ii) of the Code. ▇▇▇▇▇▇▇
has disclosed on its federal income Tax Returns filed after April 12, 2000 all
positions taken therein that could reasonably be expected to give rise to a
substantial understatement of federal income Tax within the meaning of Section
6662 of the Code. ▇▇▇▇▇▇▇ has not made any payments, is not obligated to make
any payments, and is not a party to any agreement that under certain
circumstances could obligate it to make any payments that will not be deductible
under Section 280G of the Code.
(g) For purposes of this Agreement:
"TAX" means any tax (including any income tax, capital gains
tax, value-added tax, sales tax, property tax, withholding tax, social security
tax or unemployment tax, levy, assessment, tariff, duty (including any customs
duty), deficiency, or other fee, and any related charge or amount (including any
fine, penalty, interest, or addition to tax), imposed, assessed, or collected by
or under the authority of any Taxing Authority or payable pursuant to any
tax-sharing agreement or any other contract relating to the sharing or payment
of any such tax, levy, assessment, tariff, duty, deficiency, or fee.
"TAX RETURN" means any return (including any information
return), report, statement, schedule, notice, form, or other document or
information filed with or submitted to, or required to be filed with or
submitted to, any Taxing Authority in connection with the determination,
assessment, collection, or payment of any Tax or in connection with the
administration, implementation, or enforcement of or compliance with any law,
regulation or other legal requirement relating to any Tax.
"TAXING AUTHORITY" means any:
(a) nation, state, county, city, town, village,
district, or other jurisdiction of any nature;
(b) federal, state, local, municipal, foreign,
or other government;
(c) governmental or quasi-governmental authority
of any nature (including any governmental agency, branch, department, official,
or entity and any court or other tribunal);
(d) multi-national organization or body; or
(e) body exercising, or entitled to exercise,
any administrative, executive, judicial, legislative, police, regulatory, or
taxing authority or power of any nature.
3.11 EMPLOYEE PLANS.
(a) Section 3.11 of Sellers Disclosure Schedule sets
forth a complete list of each "employee benefit plan," as defined in Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), and each other plan, arrangement or agreement providing benefits that
is maintained, administered or contributed to by ▇▇▇▇▇▇▇ or any of its ERISA
Affiliates and covers any current employee of ▇▇▇▇▇▇▇ (collectively, the
"▇▇▇▇▇▇▇ PLANS"). For purposes of this Section 3.11, "ERISA AFFILIATE" of any
entity means any other entity (whether or not incorporated) that, together with
such entity, would be treated as a single employer under Section 414 of the Code
or Section 4001 of ERISA. Each ▇▇▇▇▇▇▇ Plan that is an "employee benefit plan,"
as defined in Section 3(3) of
7
ERISA, is referred to as a "▇▇▇▇▇▇▇ ERISA PLAN." Sellers have furnished or
otherwise made available for Purchaser's review true and complete copies of each
▇▇▇▇▇▇▇ Plan or a summary of such plan.
(b) ▇▇▇▇▇▇▇ and its ERISA Affiliates have performed all
of their material obligations under all ▇▇▇▇▇▇▇ Plans since April 12, 2000.
▇▇▇▇▇▇▇ has no liability in any material amount to the IRS, the U.S. Pension
Benefit Guaranty Corporation or to any other governmental or quasi-governmental
agency or authority with respect to any ▇▇▇▇▇▇▇ Plan. No ▇▇▇▇▇▇▇ ERISA Plan is
subject to Title IV of ERISA and no ▇▇▇▇▇▇▇ Plan is subject to the minimum
funding requirements of Section 412 of the Code or Part 3 of Subtitle B of Title
I of ERISA. Neither ▇▇▇▇▇▇▇ nor any of its ERISA Affiliates has, at any time
during the last six years, contributed to or been obligated to contribute to any
Multiemployer Plan or a plan that has two or more contributing sponsors at least
two of whom are not under common control, within the meaning of Section 4063 of
ERISA (a "MULTIPLE EMPLOYER PLAN"). Neither ▇▇▇▇▇▇▇ nor any of its ERISA
Affiliates has incurred any Withdrawal Liability that has not been satisfied in
full. "WITHDRAWAL LIABILITY" means liability to a Multiple Employer Plan or a
Multiemployer Plan as a result of a complete or partial withdrawal from such
Multiple Employer Plan or Multiemployer Plan. "MULTIEMPLOYER PLAN" means any
"multiemployer plan" within the meaning of Section 4001(a)(3) of ERISA.
(c) Except as set forth at Section 3.11(c) of the Sellers
Disclosure Schedule, (i) each of the ▇▇▇▇▇▇▇ Plans has been operated and
administered in all material respects in compliance with applicable Laws since
April 12, 2000, (ii) no ▇▇▇▇▇▇▇ Plan is intended to be "qualified" within the
meaning of Section 401 of the Code, (iii) no ▇▇▇▇▇▇▇ Plan provides benefits,
including, without limitation, death or medical benefits (whether or not
insured), with respect to current or former employees of ▇▇▇▇▇▇▇ beyond their
retirement or other termination of service, other than (a) coverage mandated by
applicable Law, (b) death benefits or retirement benefits under a ▇▇▇▇▇▇▇ Plan
that also provides post-retirement income, annuity or pension benefits, (c)
deferred compensation benefits under a ▇▇▇▇▇▇▇ Plan that are accrued as
Liabilities in the Financial Statements in accordance with GAAP, or (d) benefits
the full cost of which is borne by the current or former employee (or his
beneficiary), (iv) all contributions or other amounts payable by ▇▇▇▇▇▇▇ with
respect to each ▇▇▇▇▇▇▇ Plan and all other Liabilities of ▇▇▇▇▇▇▇ with respect
to each ▇▇▇▇▇▇▇ Plan, as to current or prior plan years ending after April 12,
2000 have been paid or accrued in the Financial Statements in accordance with
GAAP, (v) since April 12, 2000, ▇▇▇▇▇▇▇ has not engaged in a "prohibited
transaction" as defined in Section 406 of ERISA or Section 4975 of the Code in
connection with which ▇▇▇▇▇▇▇ could be subject to either any excise tax or civil
penalty assessed pursuant to ERISA or the Code, (vi) to the knowledge of
Sellers, there are no pending, threatened or anticipated claims (other than
routine claims for benefits) by, on behalf of or against any of the ▇▇▇▇▇▇▇
Plans or any trusts related thereto, and (vii) no ▇▇▇▇▇▇▇ Plan, either
individually or collectively, provides for any material payment by ▇▇▇▇▇▇▇ that
would not be deductible for U.S. federal income tax purposes pursuant to
Sections 162(a)(1), 162(m) or 404 of the Code or that, after giving effect to
the transactions contemplated by this Agreement, would constitute an "excess
parachute payment" as defined in Code Section 280G.
(d) Except as set forth at Section 3.11(d) of the Sellers
Disclosure Schedule, the execution and delivery of this Agreement and the
consummation of the Stock Purchase will not (i) require ▇▇▇▇▇▇▇ to make a larger
contribution to, or pay greater benefits under, any of the ▇▇▇▇▇▇▇ Plans than it
otherwise would have been required to make or pay as of the date of this
Agreement, or (ii) create, give rise to or accelerate the payment of any bonus,
severance or other payments or additional vested rights or service credits under
any ▇▇▇▇▇▇▇ Plan.
3.12 LABOR AND EMPLOYMENT MATTERS
Section 3.12 of the Sellers Disclosure Schedule sets forth as
of the date of this Agreement (i) the names and titles of, current annual base
salary, commission rates or hourly rates
8
for and accrued vacation of all employees of ▇▇▇▇▇▇▇, together with all accrued
commissions and bonuses of ▇▇▇▇▇▇▇ and (ii) employment agreements, stock option
plans, stock purchase plans, bonus plans, incentive award plans or policies,
deferred compensation plans or policies, executive compensation or supplemental
income plan or policy or any other employee benefit plan applicable to ▇▇▇▇▇▇▇.
Except as set forth in Section 3.12 of the Sellers Disclosure Schedule, the
execution and delivery of this agreement and the consummation of the
transactions contemplated hereby will not create, give rise or accelerate the
payment of any bonus, severance or other payment or additional vested rights or
service credits under any employment agreement, stock option plan or policy,
executive compensation or supplemental income plan or policy or any other
employee benefit plan applicable to ▇▇▇▇▇▇▇.
To the knowledge of the Sellers, no person employed by ▇▇▇▇▇▇▇
has, in respect of his or her activities to date on behalf of ▇▇▇▇▇▇▇, violated
any of the terms or conditions of his or her employment contract with any third
party, or disclosed or utilized any trade secrets or proprietary information or
documentation of any third party, or interfered in the employment relationship
between any third party and any of its employees, and to the knowledge of the
Sellers, no other person employed by ▇▇▇▇▇▇▇ has employed any trade secrets or
any information or documentation proprietary to any former employer, or has
violated any confidential relationship that such person may have had with any
third party, in connection with the development, manufacture and sale of any
products, or relating in any way to the business of ▇▇▇▇▇▇▇.
3.13 CERTAIN CONTRACTS.
(a) Except as set forth at Section 3.13 of the Sellers
Disclosure Schedule, ▇▇▇▇▇▇▇ is not a party to or bound by any written or oral:
(i) agreement, contract, arrangement or
commitment with any present or former employee or consultant for the employment
of any person including any consultant and there are no offer letters for
employment with ▇▇▇▇▇▇▇ outstanding as of the date hereof;
(ii) agreement, contract, commitment or
arrangement with any labor union or other representative of employees (including
any collective bargaining agreement);
(iii) agreement, contract or commitment for the
future purchase of, or payment for, supplies or products, or for the performance
of services by a third party, involving in any one case $25,000 annually or
more, other than in connection with the purchase of hardware or equipment on
behalf of a ▇▇▇▇▇▇▇ customer;
(iv) third party commission, representative,
distributorship or sales agency agreement, contract or commitment continuing
over a period of more than six months from the date hereof or exceeding $10,000
in value;
(v) conditional sale agreement under which
▇▇▇▇▇▇▇ is either the seller or the purchaser;
(vi) other than with S1, note, debenture, bond,
trust agreement, letter of credit agreement, loan agreement or other contract or
commitment for the borrowing or lending of money or agreement or arrangement for
a line of credit or guarantee, pledge or undertaking of the indebtedness of any
other person;
(vii) agreement, contract or commitment limiting
or restraining ▇▇▇▇▇▇▇ or any respective successor thereto from engaging or
competing in any aspect of the business, granting any exclusive distribution
rights;
9
(viii) license (except any license in the ordinary
course of business and except as would otherwise not have a Material Adverse
Effect on ▇▇▇▇▇▇▇), franchise, distributorship or other agreement which relates
in whole or in part to any Intellectual Property, including, without limitation,
any patent, trademark, trade name, service ▇▇▇▇ or copyright or to any ideas,
technical assistance or other know-how of or used by ▇▇▇▇▇▇▇, but excluding any
"shrink-wrap" or other similar licenses;
(ix) agreement, contract, or commitment relating
to the disposition or acquisition by ▇▇▇▇▇▇▇ after the date of this Agreement of
a material amount of assets not in the ordinary course of business or pursuant
to which ▇▇▇▇▇▇▇ has any material ownership interest in any corporation,
partnership, joint venture or other business enterprise that is material to
▇▇▇▇▇▇▇'▇ business as currently conducted;
(x) agreement, contract, or commitment to
provide source code which constitutes any or part of ▇▇▇▇▇▇▇'▇ Intellectual
Property to any third party for any product or technology;
(xi) except as would otherwise not have a
Material Adverse Effect on ▇▇▇▇▇▇▇, other agreement, contract or commitment not
made in the ordinary course of business; or
(xii) customer contract, which contains any
liquidated damage provisions exceeding $25,000 in any one instance.
▇▇▇▇▇▇▇ has made available to Purchaser true, correct and
complete copies of all agreements listed in Section 3.13 of the Sellers
Disclosure Schedule. Each contract, arrangement or commitment of the type
described in Section 3.13, is referred to herein as a "▇▇▇▇▇▇▇ CONTRACT," and
▇▇▇▇▇▇▇ has no knowledge of any violation of any ▇▇▇▇▇▇▇ Contract.
(b) Each ▇▇▇▇▇▇▇ Contract is valid and binding and in
full force and effect as to the obligations of ▇▇▇▇▇▇▇ thereunder, and, to the
knowledge of ▇▇▇▇▇▇▇, is valid and binding and in full force and effect as to
the obligations by the third parties thereto. ▇▇▇▇▇▇▇ has, and to the knowledge
of ▇▇▇▇▇▇▇, each third party has, in all material respects performed all
obligations required to be performed by it to date under each ▇▇▇▇▇▇▇ Contract.
No event or condition exists which constitutes or, after notice or lapse of time
or both, would constitute, a material default on the part of ▇▇▇▇▇▇▇ under any
such ▇▇▇▇▇▇▇ Contract or, to the knowledge of ▇▇▇▇▇▇▇, any third party thereto.
3.14 AGREEMENTS WITH REGULATORY AGENCIES.
▇▇▇▇▇▇▇ (i) is not subject to any cease-and-desist or other
order issued by, (ii) is not a party to any written agreement, consent agreement
or memorandum of understanding with, and (iii) has not adopted any board
resolutions at the request of (each, whether or not set forth on Section 3.14 of
the Sellers Disclosure Schedule, a "REGULATORY AGREEMENT") any Governmental
Entity that restricts the conduct of its business or that in any manner relates
to its management or its business, nor has ▇▇▇▇▇▇▇ been advised by any
Governmental Entity that it is considering issuing or requesting any Regulatory
Agreement.
3.15 ENVIRONMENTAL MATTERS.
(a) ▇▇▇▇▇▇▇ is in compliance in all material respects
with all applicable federal and state laws and regulations relating to pollution
or protection of the environment (including without limitation, laws and
regulations relating to emissions, discharges, releases and threatened releases
of Hazardous
10
Hazardous Material (as hereinafter defined), or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Materials.
(b) There is no suit, claim, action, proceeding,
investigation or notice pending or, to the knowledge of ▇▇▇▇▇▇▇, threatened (or
past or present actions or events that could form the basis of any such suit,
claim, action, proceeding, investigation or notice), in which ▇▇▇▇▇▇▇ has been
or, with respect to threatened suits, claims, actions, proceedings,
investigations or notices may be, named as a defendant (x) for alleged material
noncompliance (including by any predecessor), with any environmental law, rule
or regulation or (y) relating to any material release or threatened release into
the environment of any Hazardous Material, whether or not occurring at or on a
site owned, leased or operated by ▇▇▇▇▇▇▇.
(c) To the knowledge of ▇▇▇▇▇▇▇, during the period of
▇▇▇▇▇▇▇'▇ ownership or operation of any of its properties, there has not been
any material release of Hazardous Materials in, on, under or affecting any such
property.
(d) For purposes of this Section 3.15, the term
"HAZARDOUS MATERIAL" means any hazardous waste, petroleum product,
polychlorinated biphenyl, chemical, pollutant, contaminant, pesticide,
radioactive substance, or other toxic material, or other material or substance
(in each such case, other than small quantities of such substances in retail
containers) regulated under any applicable environmental or public health
statute, law, ordinance, rule or regulation.
3.16 PROPERTIES AND ASSETS.
Section 3.16 of the Sellers Disclosure Schedule lists (i) each
real property lease, sublease or installment purchase arrangement to which
▇▇▇▇▇▇▇ or S1 (if such lease, sublease or installment purchase arrangement
relates to the ▇▇▇▇▇▇▇ business) is a party; (ii) all items of tangible personal
property and equipment with a book value of $25,000 or more or having any annual
lease payment of $25,000 or more. Except for (a) items reflected in ▇▇▇▇▇▇▇'▇
Financial Statements, (b) liens for current real estate taxes not yet
delinquent, or being contested in good faith, properly reserved against (and
reflected on the Financial Statements), (c) properties and assets sold or
transferred in the ordinary course of business consistent with past practices
since June 30, 2004 and (d) items listed in Section 3.16 of the Sellers
Disclosure Schedule, ▇▇▇▇▇▇▇ has good title to all its properties and assets,
reflected in its Financial Statements, free and clear of all liens, claims,
charges and other encumbrances. ▇▇▇▇▇▇▇, as lessee, has the right under valid
and subsisting leases to occupy, use and possess all property leased by it, and
there has not occurred under any such lease any breach, violation or default by
▇▇▇▇▇▇▇, and ▇▇▇▇▇▇▇ has not experienced any uninsured damage or destruction
with respect to such properties since June 30, 2004. All properties and assets
used by ▇▇▇▇▇▇▇ are in good operating condition and repair (subject to ordinary
wear and tear). ▇▇▇▇▇▇▇ enjoys peaceful and undisturbed possession under all
leases for the use of all property under which it is the lessee, and all leases
to which ▇▇▇▇▇▇▇ is a party are valid and binding obligations of ▇▇▇▇▇▇▇, and to
the knowledge of ▇▇▇▇▇▇▇ with respect to the respective third parties thereto,
enforceable, in accordance with the terms thereof. ▇▇▇▇▇▇▇ is not in material
default with respect to any such lease, and there has occurred no default by
▇▇▇▇▇▇▇ or event which with the lapse of time or the giving of notice, or both,
would constitute a material default under any such lease. There are no Laws,
conditions of record, or other impediments which interfere with the intended use
by ▇▇▇▇▇▇▇ of any of the property owned, leased, or occupied by it.
3.17 INSURANCE.
▇▇▇▇▇▇▇ (or S1 on behalf of ▇▇▇▇▇▇▇) currently has in full
force and effect (and will have in full force and effect until the Closing)
insurance sufficient for compliance by ▇▇▇▇▇▇▇ with all
11
requirements of Law and agreements to which ▇▇▇▇▇▇▇ is a party. The Sellers have
not received notice of any outstanding insurance claims regarding ▇▇▇▇▇▇▇ and
there is no claim under such insurance which remains outstanding.
3.18 COMPLIANCE WITH APPLICABLE LAWS; PERMITS
(a) ▇▇▇▇▇▇▇ owns, possesses, or has the right to use in
the operation of its business all federal, state, local and, to the Sellers'
knowledge, other foreign governmental permits, easements, rights, franchises,
applications, filings, registrations and other authorizations ("PERMITS") which
are in any manner necessary for them to conduct its business as now conducted,
free and clear of all liens, charges, encumbrances and adverse claims and in
substantial compliance with all laws, rules, regulations, orders and decrees.
All the Permits are listed and described in Section 3.18 of the Sellers
Disclosure Schedule. ▇▇▇▇▇▇▇ is not in default, nor has it received any written
notice of any claim of default, with respect to any Permit.
(b) Since April 12, 2000, ▇▇▇▇▇▇▇ has complied in all
material respects with all Laws applicable to it or to the operation of its
business, and has not failed to obtain or to adhere to the material requirements
of any Permit. ▇▇▇▇▇▇▇ has not received any written notice or to Sellers'
knowledge, any other notice, of any material alleged or threatened claim,
violation, or liability under any such Laws that has not heretofore been cured
and for which there is no remaining liability.
3.19 INTELLECTUAL PROPERTY.
Except, in each case, as set forth in Section 3.19 of the
Sellers Disclosure Schedule:
(a) ▇▇▇▇▇▇▇ either (i) owns exclusively, free and clear
of all liens, pledges, charges, claims, encumbrances, security interests,
options, mortgages, orders, arbitration awards or similar restrictions, or (ii)
is licensed or otherwise possesses valid and enforceable rights throughout the
world to use, all patents, trademarks, trade names, logos, service marks,
copyrights (whether registered or unregistered) including copyrights in the
Software (as defined below) and any applications therefor, trade secrets and
tangible or intangible proprietary information or material ("INTELLECTUAL
PROPERTY") that are used by ▇▇▇▇▇▇▇ in its operations, incorporated in or form a
part of any ▇▇▇▇▇▇▇ product or are used in any way for the business of ▇▇▇▇▇▇▇.
"SOFTWARE" means any and all (i) computer programs and applications, including
any and all software implementations of algorithms, models and methodologies,
whether in source code or object code, (ii) databases and compilations in
digital form, including any and all data and collections of data in digital
form, whether machine readable or otherwise, (iii) descriptions, flow-charts and
other work product used to design, plan, organize and develop any of the
foregoing, and (iv) all documentation, including user manuals and training
materials, functional and technical specifications, relating to any of the
foregoing. Neither ▇▇▇▇▇▇▇ in the operation of its business prior to the Closing
Date, nor the utilization of the ▇▇▇▇▇▇▇ Intellectual Property prior to the
Closing Date as authorized by ▇▇▇▇▇▇▇ (which shall in any event exclude any
Third Party Intellectual Property) (i) infringes any third party copyrights,
trademarks, service marks or trade names, and (ii) to the knowledge of the
Sellers, infringes any third party patent or trade secret. The warranty in the
immediately preceding sentence shall not apply to any claim which arises: (a)
from any changes to the ▇▇▇▇▇▇▇ Intellectual Property after the Closing Date;
(b) as a result of the use of the ▇▇▇▇▇▇▇ Intellectual Property in a manner
which is inconsistent with the way such ▇▇▇▇▇▇▇ Intellectual Property was used
or authorized to be used by ▇▇▇▇▇▇▇ immediately prior to the Closing Date; or
(c) as a result of the use of the ▇▇▇▇▇▇▇ Intellectual Property in combination
with any Intellectual Property not so utilized by ▇▇▇▇▇▇▇ prior to the Closing
Date.
12
(b) Section 3.19(b) of the Sellers Disclosure Schedule
lists all (i) patents, patent applications, registered and unregistered
trademarks, trade names and service marks, and registered copyrights owned by
▇▇▇▇▇▇▇ included in the Intellectual Property, including the jurisdictions in
which each such item of Intellectual Property has been issued or registered or
in which any application for such issuance and registration has been filed, (ii)
all Software products owned by ▇▇▇▇▇▇▇ and licensed to its customers, (iii)
software licenses and value added reseller agreements, and (iv) licenses,
sublicenses and other agreements as to which ▇▇▇▇▇▇▇ is a party and pursuant to
which ▇▇▇▇▇▇▇ is authorized to use any third party patents, trademarks or
copyrights, including Software (such items in (iv) herein "THIRD PARTY
INTELLECTUAL PROPERTY RIGHTS") which are used by ▇▇▇▇▇▇▇ in its operations,
incorporated in or form a part of any, ▇▇▇▇▇▇▇ product or are used in any way
for the business of ▇▇▇▇▇▇▇. ▇▇▇▇▇▇▇'▇ Intellectual Property and Third Party
Intellectual Property Rights listed in Section 3.19 of the Sellers Disclosure
Schedule include all the material Intellectual Property rights used in the
business by ▇▇▇▇▇▇▇ as now being conducted. Notwithstanding the foregoing,
Section 3.19(b) of the Sellers Disclosure Schedules does not include all of the
shrink-wrap and/or click-wrap agreements related to the operation of ▇▇▇▇▇▇▇'▇
business.
(c) To the knowledge of ▇▇▇▇▇▇▇, there is no unauthorized
use, disclosure, infringement or misappropriation of any Intellectual Property
rights of ▇▇▇▇▇▇▇, any trade secret material to ▇▇▇▇▇▇▇, or any Third Party
Intellectual Property Right, by any employee of ▇▇▇▇▇▇▇ or third party for whom
▇▇▇▇▇▇▇ is responsible. Except as set forth in Section 3.19(c) of the Sellers
Disclosure Schedule, there are no royalties, fees or other payments payable by
▇▇▇▇▇▇▇ to any person by reason of the ownership, use, sale or disposition of
Intellectual Property.
(d) To the extent that ▇▇▇▇▇▇▇ has used and incorporated
Third Party Intellectual Property Rights into its Software, ▇▇▇▇▇▇▇ has complied
in all material respects with the terms and conditions under which such Third
Party Intellectual Property Rights are licensed to ▇▇▇▇▇▇▇, and ▇▇▇▇▇▇▇ has not
received any written notice from any such third party asserting a breach of,
terminating or issuing a notice to terminate any such license. Neither this
Agreement nor any of the transactions contemplated by it will result in a
termination or other change in the rights of ▇▇▇▇▇▇▇ with respect to any Third
Party Intellectual Property Rights.
(e) Except in the ordinary course of business and then on
a confidential basis, to the knowledge of the Sellers no disclosure has been
made by ▇▇▇▇▇▇▇ or S1 to a third party of any confidential information, trade
secrets or other proprietary information belonging to ▇▇▇▇▇▇▇.
(f) Section 3.19(f) to the Sellers Disclosure Schedule
identifies any Software for which the Software source code has been placed in
escrow, the name and address of the escrow agent with respect thereto and the
agreement under which the source code is to be released by the escrow agent to
any person other than ▇▇▇▇▇▇▇ (a copy of which has been made available to the
Purchaser).
(g) Except as disclosed in Section 3.19(g) of the Sellers
Disclosure Schedule there are no licenses granted to a third party to use the
Software source codes. No third party will obtain access to the source code of
▇▇▇▇▇▇▇'▇ Software (whether in whole or in part) as a result of the transactions
contemplated by this Agreement.
(h) Since April 12, 2000, neither ▇▇▇▇▇▇▇ nor S1 has
received any written notice of any opposition or other action or challenge to
the validity of ownership of any of ▇▇▇▇▇▇▇'▇ Intellectual Property.
(i) To the knowledge of the Sellers, no third party who
is licensing Third Party Intellectual Property Rights to ▇▇▇▇▇▇▇ has received
any written notice of any opposition or other action or challenge to the
validity of ownership of any such Third Party Intellectual Property Rights.
13
(j) Neither S1 nor, the to the knowledge of the Sellers,
any present or former employee of, officer of, or consultant to ▇▇▇▇▇▇▇, or any
other person (including, without limitation, any employer of a current or former
employee of, or consultant to, ▇▇▇▇▇▇▇) owns or has any proprietary, financial
or other interest, direct or indirect, in whole or in part, in any form of
▇▇▇▇▇▇▇'▇ Intellectual Property.
(k) The Software owned or purported to be owned by
▇▇▇▇▇▇▇ was either (i) developed by employees of ▇▇▇▇▇▇▇ within the scope of
their employment; (ii) developed by independent contractors or consultants who
have assigned their rights to ▇▇▇▇▇▇▇ pursuant to written agreements; or (iii)
otherwise acquired by ▇▇▇▇▇▇▇ from a third party.
3.20 BANK ACCOUNTS
Section 3.20 of the Sellers Disclosure Schedule contains an
accurate list and summary description of the name and address of every bank and
other financial institution in which ▇▇▇▇▇▇▇ maintains an account (whether
checking, savings or otherwise), lock box or safe deposit box, and the account
numbers and names of persons having signing authority or other access thereto.
3.21 INTERCOMPANY ARRANGEMENTS
Except as disclosed in Section 3.21 of the Sellers Disclosure
Schedule, ▇▇▇▇▇▇▇ does not have any contract or arrangement currently in effect
with S1 or any affiliate of S1. The Sellers will cause all liabilities owing
from ▇▇▇▇▇▇▇ to S1 or any affiliate of S1 as of the close of business on the day
before the Closing Date to be discharged, terminated or cancelled (i.e., after
the day before the Closing Date, ▇▇▇▇▇▇▇ shall have no obligation to repay such
liabilities). S1 will cause all liabilities owing from S1 or any affiliate of S1
to ▇▇▇▇▇▇▇ as of the close of business on the day before the Closing Date to be
discharged, terminated or cancelled (i.e., after the Closing neither S1 nor any
of its affiliates shall have any obligation to repay such liabilities).
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF S1
S1 hereby makes the following representations and warranties
to Purchaser as set forth in this Article IV, subject to the exceptions
disclosed in writing in the Sellers Disclosure Schedule as of the date hereof,
each of which is being relied upon by Purchaser as a material inducement to
enter into and perform this Agreement.
4.1 CORPORATE ORGANIZATION.
S1 is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware. S1 has the corporate
power and authority to own or lease all of its properties and assets and to
carry on its business as it is now being conducted, and is duly licensed or
qualified to do business in each jurisdiction in which the nature of any
business conducted by it or the character or location of any properties or
assets owned or leased by it makes such licensing or qualification necessary.
4.2 BROKERS.
None of S1, nor any of its officers, directors or employees
has employed any broker or finder or incurred any liability for any broker's
fees, commissions or finder's fees in connection with any of the transactions
contemplated by this Agreement.
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4.3 VOTE REQUIRED.
No vote of the holders of any class or series of any
securities of S1 is required to approve and adopt this Agreement, to approve the
Stock Purchase or otherwise to consummate the transactions contemplated by this
Agreement.
4.4 TITLE TO THE SHARES.
S1 has, and on the Closing Date will have, good and valid
title, free and clear of all encumbrances, to the Shares, with full right and
lawful authority to transfer the Shares to Purchaser pursuant to the terms of
this Agreement.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby makes the following representations and
warranties to ▇▇▇▇▇▇▇ and S1 as set forth in this Article V, subject to the
exceptions disclosed in writing in the Purchaser Disclosure Schedule as of the
date hereof, each of which is being relied upon by ▇▇▇▇▇▇▇ and S1 as a material
inducement to enter into and perform this Agreement. All of the disclosure
schedules of Purchaser referenced below or otherwise required of Purchaser
pursuant to this Agreement are collectively referred to herein as the "PURCHASER
DISCLOSURE SCHEDULE."
5.1 CORPORATE ORGANIZATION.
Purchaser is a corporation duly organized, validly existing
and in good standing under the laws of New York. Purchaser has the corporate
power and authority to own or lease all of its properties and assets and to
carry on its business as it is now being conducted, and is duly licensed or
qualified to do business in each jurisdiction in which the nature of the
business conducted by it or the character or location of the properties and
assets owned or leased by it makes such licensing or qualification necessary.
5.2 AUTHORITY; NO VIOLATION.
(a) Purchaser has full corporate power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly and validly
approved by the Board of Directors of Purchaser. No other corporate proceedings
on the part of Purchaser are necessary to approve this Agreement or to
consummate the transactions contemplated hereby. This Agreement has been duly
and validly executed and delivered by Purchaser and (assuming due authorization,
execution and delivery by ▇▇▇▇▇▇▇ and S1) constitutes a valid and binding
obligation of Purchaser, enforceable against Purchaser in accordance with its
terms, except as enforcement may be limited by general principles of equity
whether applied in a court of law or a court of equity and by bankruptcy,
insolvency and similar law affecting creditors' rights and remedies generally.
No vote of the holders of any class or series of any securities of Purchaser is
required to approve and adopt this Agreement, to approve the Stock Purchase or
otherwise to consummate the transactions contemplated by this Agreement.
(b) None of the execution and delivery of this Agreement
by Purchaser, the consummation by Purchaser of the transactions contemplated
hereby, or compliance by Purchaser with any of the terms or provisions hereof,
will (i) violate any provision of the organizational documents of
15
Purchaser, or (ii) assuming that the consents and approvals referred to in
Section 5.3 are duly obtained, (x) violate any Laws applicable to Purchaser or
any of its respective properties or assets, or (y) violate, conflict with,
result in a material breach of any provision of or the loss of any benefit
under, constitute a default (or an event which, with notice or lapse of time, or
both, would constitute a default) under, result in the termination of or a right
of termination or cancellation under, accelerate the performance required by, or
result in the creation of any lien, pledge, security interest, charge or other
encumbrance upon any of the properties or assets of Purchaser under any of the
terms, conditions or provisions of any note, bond, mortgage, indenture, deed of
trust, license, lease, agreement or other instrument or obligation to which
Purchaser is a party, or by which Purchaser or any of its properties or assets
may be bound or affected.
5.3 CONSENTS AND APPROVALS.
(a) Except for such consents and approvals as may be set
forth in Section 5.3(a) of the Purchaser Disclosure Schedule, no consents or
approvals of or filings or registrations with any Governmental Entity or with
any third party are necessary in connection with (i) the execution and delivery
by Purchaser of this Agreement, and (ii) the consummation by Purchaser of the
Stock Purchase and the other transactions contemplated hereby, except for such
consents, approvals or filings the failure of which to obtain will not have a
Material Adverse Effect on Purchaser.
(b) Purchaser has no knowledge of any reason why approval
or effectiveness of any of the applications, notices or filings referred to in
Section 5.3(a) cannot be obtained or granted on a timely basis.
5.4 DISCLOSURE OF INFORMATION.
Purchaser is acquiring the Shares for its own account and not
with a view to their distribution within the meaning of Section 2(11) of the
Securities Act of 1933, as amended (the "SECURITIES Act"). Purchaser believes it
has received all the information it considers necessary or appropriate for
deciding whether to acquire the Shares. Purchaser further represents that it has
had an opportunity to ask questions and receive answers from ▇▇▇▇▇▇▇ and S1
regarding the terms and conditions of the offering of the Shares. The foregoing,
however, does not limit or modify the representations and warranties of ▇▇▇▇▇▇▇
and S1 contained in Articles III and IV of this Agreement or the right of
Purchaser to rely thereon. Purchaser is an "accredited investor" within the
meaning of Paragraph (a) of Rule 501 promulgated by the Securities and Exchange
Commission under the Securities Act.
5.5 NO KNOWLEDGE OF BREACH OF REPRESENTATIONS AND
WARRANTIES
To the knowledge of Purchaser, as of the date of this
Agreement, Purchaser is not aware of any facts or circumstances that might
constitute a breach of any of the representations and warranties and covenants
of the Sellers contained in this Agreement. Notwithstanding the foregoing, S1
shall not claim Purchaser's knowledge of the existence of United States Patent
5.864.827 issued January 26, 1999 (System and Method for Providing an
Information Gateway) as a defense to S1's obligation to indemnify Purchaser with
respect to a claim for breach of a representation or warranty set forth in
Section 3.19 of this Agreement.
5.6 FINANCING.
Purchaser has sufficient funds in US Dollars available to
consummate the transactions contemplated by this Agreement.
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5.7 BROKER'S FEES.
None of Purchaser, nor any of its respective officers or
directors has employed any broker or finder or incurred any liability for any
broker's fees, commissions or finder's fees in connection with any of the
transactions contemplated by this Agreement.
ARTICLE VI
COVENANTS RELATING TO CONDUCT OF BUSINESS
6.1 COVENANTS OF ▇▇▇▇▇▇▇.
Except as set forth on Section 6.1 of the Sellers Disclosure
Schedule, during the period from the date of this Agreement and continuing until
the earlier of the termination of this Agreement or the Closing, except as
expressly contemplated or permitted by this Agreement or with the prior written
consent of Purchaser, ▇▇▇▇▇▇▇ shall (and S1 shall cause ▇▇▇▇▇▇▇ to) carry on its
business in the ordinary course consistent with past practices. S1 and ▇▇▇▇▇▇▇
will use their commercially reasonable efforts to (x) preserve ▇▇▇▇▇▇▇'▇
business organization intact, (y) keep available to ▇▇▇▇▇▇▇ and Purchaser the
present services of the employees of ▇▇▇▇▇▇▇ and (z) preserve for ▇▇▇▇▇▇▇ and
Purchaser the goodwill of the customers of ▇▇▇▇▇▇▇ and others with whom business
relationships exist. Without limiting the generality of the foregoing, and
except as set forth in the Sellers Disclosure Schedule or as otherwise
contemplated by this Agreement or consented to by Purchaser in writing, ▇▇▇▇▇▇▇
shall not, and S1 shall not permit ▇▇▇▇▇▇▇ to:
(a) declare or pay any dividends on, or make
other distributions in respect of, any of its capital stock;
(b) (i) split, combine or reclassify any shares
of its capital stock or issue, authorize or propose the issuance of any other
securities in respect of, in lieu of or in substitution for shares of its
capital stock, or (ii) repurchase, redeem or otherwise acquire any shares of its
capital stock, or any securities convertible into or exercisable for any shares
of its capital stock;
(c) issue, deliver or sell, or authorize or
propose the issuance, delivery or sale of, any shares of its capital stock or
any securities convertible into or exercisable for, or any rights, warrants or
options to acquire, any such shares, or enter into any agreement with respect to
any of the foregoing;
(d) amend its Certificate of Incorporation,
By-Laws or other similar governing documents;
(e) authorize or permit any of S1's or ▇▇▇▇▇▇▇'▇
officers, directors, employees or agents to, directly or indirectly, solicit,
initiate or knowingly encourage any inquiries relating to, or the making of any
proposal for, hold substantive discussions or negotiations with, knowingly
provide any information to, any person, entity or group (other than Purchaser)
concerning any Acquisition Transaction (as defined below), or approve, endorse
or recommend any such proposal or enter into any letter of intent or similar
document or any contract, agreement or commitment relating to any Acquisition
Transaction. S1 and ▇▇▇▇▇▇▇ will, as of the date hereof, cease and cause to be
terminated any existing activities, discussions or negotiations previously
conducted with any parties other than Purchaser with respect to any of the
foregoing. As used in this Agreement, "ACQUISITION TRANSACTION" shall mean any
offer, proposal or expression of interest relating to (i) any tender or exchange
offer, (ii) merger, consolidation or other business combination involving
▇▇▇▇▇▇▇, or (iii) other than through the Stock Purchase and the transactions
contemplated or permitted by this Agreement, the acquisition in any manner of
any equity interest in, or any portion of the assets of ▇▇▇▇▇▇▇;
17
(f) make capital expenditures in excess of $10,000;
(g) enter into any new line of business or, except in the
ordinary course of business, (i) enter into any material contract, or other
contract requiring aggregate annual payments exceeding $10,000, or (ii) modify,
amend, transfer or terminate any material contract to which ▇▇▇▇▇▇▇ is a party
or waive, release, or assign any material rights thereunder;
(h) acquire or agree to acquire, by merging or
consolidating with, or by purchasing an equity interest in or a material amount
of assets of, or by any other manner, any business or any corporation,
partnership, association or other business organization or division thereof or
otherwise acquire any material amount of assets;
(i) change ▇▇▇▇▇▇▇'▇ methods of accounting in effect at
December 31, 2003, except as required by changes in GAAP;
(j) (i) adopt any ▇▇▇▇▇▇▇ Plan or any agreement,
arrangement, plan or policy between it and one or more of its current or former
directors or officers, (ii) enter into, modify or renew any contract, agreement,
commitment or arrangement providing for the payment to any ▇▇▇▇▇▇▇ director,
officer or employee of compensation or benefits, (iii) hire any new employee or
terminate any existing employee, (iv) promote any of its employees, (v) pay any
retention or other bonuses to any of its employees, or (vi) pay any severance
payment to any of its employees other than severance payments to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇.
(k) incur any indebtedness for borrowed money, assume,
guarantee, endorse or otherwise as an accommodation become responsible for the
obligations of any other individual, corporation or other entity;
(l) make any equity investment or commitment to make such
an investment in any entity or real estate;
(m) sell, purchase or lease any real property;
(n) agree or commit to do any of the actions set forth in
(a) - (m) above; or
(o) take any action that is intended or may reasonably be
expected to result in (i) any of its representations or warranties set forth in
this Agreement being or becoming untrue or (ii) any of the conditions to the
Stock Purchase set forth in Article VIII not being satisfied, or (iii) a
violation of any provision of this Agreement, except, in every case, as may be
required by applicable Law.
ARTICLE VII
ADDITIONAL AGREEMENTS
7.1 REGULATORY MATTERS.
(a) The parties hereto shall cooperate with each other
and use their commercially reasonable efforts to promptly prepare and file all
necessary documentation, to effect all applications, notices, petitions and
filings, and to obtain as promptly as practicable all permits, consents,
approvals and authorizations of all third parties and Governmental Entities, as
set forth in Section 3.4 of the Sellers Disclosure Schedule, which are necessary
or advisable to consummate the transactions contemplated by this Agreement
(including without limitation the Stock Purchase). S1, ▇▇▇▇▇▇▇ and
18
Purchaser shall have the right to review in advance, and to the extent
practicable each will consult the other on, in each case subject to applicable
laws relating to the exchange of information, all the information relating to
S1, ▇▇▇▇▇▇▇ or Purchaser, as the case may be, which appears in any filing made
with, or written materials submitted to, any third party or any Governmental
Entity in connection with the transactions contemplated by this Agreement and
will promptly notify each other of any communication with any Governmental
Entity and provide the other with an opportunity to participate in any meetings
with a Governmental Entity relating thereto; provided, however, that nothing
contained herein shall be deemed to provide either party with a right to review
any information provided to any Governmental Entity on a confidential basis in
connection with the transactions contemplated hereby. In exercising the
foregoing right, each of the parties hereto shall act reasonably and as promptly
as practicable. The parties hereto agree that they will consult with each other
with respect to the obtaining of all permits, consents, approvals and
authorizations of all third parties and Governmental Entities necessary or
advisable to consummate the transactions contemplated by this Agreement and each
party will keep the other apprised of the status of matters relating to the
consummation of the transactions contemplated herein.
(b) Purchaser, S1 and ▇▇▇▇▇▇▇ shall promptly
advise each other upon receiving any communication from any Governmental Entity
whose consent or approval is required for consummation of the transactions
contemplated by this Agreement which causes such party to believe that there is
a reasonable likelihood that any requisite regulatory approval will not be
obtained or that the receipt of any such approval will be materially delayed.
7.2 ACCESS TO INFORMATION.
Upon reasonable notice and subject to applicable Laws relating
to the exchange of information, ▇▇▇▇▇▇▇ shall (and S1 shall cause ▇▇▇▇▇▇▇ to)
provide to the officers, employees, accountants, counsel and other
representatives of Purchaser, access, during normal business hours during the
period prior to the Closing, to all its properties, books, contracts,
commitments and records and, during such period, ▇▇▇▇▇▇▇ shall make available to
Purchaser such information concerning its business, properties and personnel as
Purchaser may reasonably request. Purchaser will hold all such information in
confidence to the extent required by, and in accordance with, the provisions of
the Confidential Information and Non-Disclosure Agreement between Purchaser and
S1 (the "CONFIDENTIALITY AGREEMENT"). The parties hereto agree and acknowledge
that the Confidentiality Agreement will continue in full force and effect in
accordance with its terms.
7.3 LEGAL CONDITIONS TO STOCK PURCHASE.
Each of the parties hereto shall use their commercially
reasonable efforts to take, or cause to be taken, all actions necessary, proper
or advisable to comply promptly with all legal requirements which may be imposed
on such party with respect to the Stock Purchase and, subject to the conditions
set forth in Article VIII hereof, to consummate the transactions contemplated by
this Agreement.
7.4 AGREEMENT TO RETAIN SHARES.
S1 agrees not to transfer (except as may be specifically
required by court order or by operation of law, in which case any such
transferee shall agree to be bound hereby), sell, exchange, pledge or otherwise
dispose of or encumber any of the Shares or make any offer or agreement relating
thereto, at any time prior to the Expiration Date. As used herein, the term
"EXPIRATION DATE" shall mean the earlier to occur of (i) the Closing, or (ii)
termination of this Agreement in accordance with the terms thereof.
19
7.5 EMPLOYEES.
(a) Nothing in this Agreement shall give rise to any
obligation by Purchaser to retain any employee or group of employees of ▇▇▇▇▇▇▇
following the Closing.
(b) At or prior to the Closing, S1 and ▇▇▇▇▇▇▇ shall
prepare and deliver to Purchaser a schedule which sets forth the accrued and
unpaid bonuses and commissions for each of the employees of ▇▇▇▇▇▇▇ entitled to
a bonus or commission and payable in respect of any period up to the Closing
Date (such aggregate amount, the "BONUS REIMBURSEMENT AMOUNT"). Purchaser shall
pay to each employee of ▇▇▇▇▇▇▇ the bonus and commission amounts set forth on
the schedule opposite his or her name in a time and manner consistent with
▇▇▇▇▇▇▇'▇ practice of paying bonuses and commissions prior to the Closing. S1
shall reimburse Purchaser the full amount of the Bonus Reimbursement Amount, in
accordance with the provisions of Annex A hereto.
(c) At or prior to the Closing, S1 and ▇▇▇▇▇▇▇ shall
prepare and deliver to Purchaser a schedule which sets forth the accrued and
unused vacation for each of the employees of ▇▇▇▇▇▇▇ entitled to vacation in
respect of any period up to the Closing Date and the dollar value associated
therewith (such aggregate amount, the "VACATION REIMBURSEMENT AMOUNT"). S1 shall
reimburse Purchaser the full amount of the Vacation Reimbursement Amount, in
accordance with the provisions of Annex A hereto.
7.6 ADVICE OF CHANGES.
The Sellers shall promptly advise Purchaser of any change or
event that, individually or in the aggregate, has or would be reasonably likely
to have a Material Adverse Effect on ▇▇▇▇▇▇▇, or to cause or constitute a
material breach of any of the respective representations, warranties or
covenants contained herein.
7.7 CURRENT INFORMATION.
▇▇▇▇▇▇▇ shall promptly notify Purchaser of any material change
in the normal course of its business or in the operation of its properties and
of any governmental complaints, investigations or hearings (or communications
indicating that the same may be contemplated), or the institution or the threat
of material litigation involving it, and will keep Purchaser fully informed of
such events.
7.8 INDEMNIFICATION.
(a) S1 agrees to indemnify, defend and hold harmless
Purchaser and its officers and directors at all times after the Closing from and
against any and all claims, damages, losses, liabilities, payments, costs,
obligations and expenses (including, without limitation, all reasonable legal,
accounting and other professional fees and disbursements) (collectively,
"DAMAGES") to the extent such Damages result from, arise out of, or are caused
by:
(i) a breach of any representation or warranty
made by ▇▇▇▇▇▇▇ or S1 contained in this Agreement or in any certificate or other
instrument or agreement delivered by or on behalf of ▇▇▇▇▇▇▇ or S1 pursuant to
this Agreement;
(ii) a breach of any covenant, agreement or
undertaking made by ▇▇▇▇▇▇▇ or S1 in this Agreement or in any certificate or
other instrument or agreement delivered by or on behalf of ▇▇▇▇▇▇▇ or S1
pursuant to this Agreement;
20
(iii) the employment or termination of ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇ ▇▇▇▇▇▇ by ▇▇▇▇▇▇▇ prior to the Closing whether
or not related to the transactions contemplated by this Agreement;
(iv) the lawsuit styled as ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ v.
S1 Corporation and ▇▇▇▇▇▇▇ Data Systems Corp., File 04-CV-02884, pending in the
United States District Court, Southern District of New York or any other
litigation by ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ against ▇▇▇▇▇▇▇ arising out of or related to his
employment with ▇▇▇▇▇▇▇ prior to the date hereof or arising out of the Agreement
and Plan of Merger by and among, S1, Delta Acquisition Corporation, ▇▇▇▇▇▇▇ and
the ▇▇▇▇▇▇▇ shareholders dated January 18, 2000 and S1 hereby agrees to assume
control of the defense of such lawsuit and to reimburse Purchaser and ▇▇▇▇▇▇▇,
as applicable, for any legal or other expenses incurred by Purchaser and
▇▇▇▇▇▇▇, as applicable, in connection with the defense thereof;
(v) except as otherwise set forth in the New
York Sublease (as defined in Section 7.12)
attached hereto as Exhibit A, any obligation (including relating to termination)
pursuant to the Lease, by and between 20 Place Associates LLC (as successor in
interest to West World Holding, Inc.) and S1 (as successor in interest to
▇▇▇▇▇▇▇), dated January 18, 1990, as amended; or
(vi) any obligation of ▇▇▇▇▇▇▇: (A) relating to
options granted by S1 to purchase shares of the common stock of S1 held by
employees of ▇▇▇▇▇▇▇ prior to or as of the date hereof; or (B) under the 2004 S1
Executive and Management Incentive Plan.
(b) Purchaser agrees to indemnify, defend and hold
harmless S1 and its officers and directors at all times after the Closing from
and against any and all Damages to the extent such Damages result from, arise
out of, or are caused by:
(i) a breach of any representation or warranty
made by Purchaser contained in this Agreement or in any certificate or other
instrument or agreement delivered by or on behalf of Purchaser pursuant to this
Agreement; or
(ii) a breach of any covenant, agreement or
undertaking made by Purchaser in this Agreement or in any certificate or other
instrument or agreement delivered by or on behalf of Purchaser pursuant to this
Agreement.
Notwithstanding the foregoing or anything in this Agreement to
the contrary, the term "Damages" shall in no event include any loss of profits
or business opportunity, or any indirect, special or consequential damages
however caused.
7.9 CLAIM FOR INDEMNIFICATION.
(a) Subject to Section 7.9(b), any claim for
indemnification must be made by written notice to the party against whom
indemnification is sought. Such notice shall specify in reasonable detail the
particulars of the claim for indemnity and the basis upon which indemnity is
claimed. Any claim for indemnification shall be paid in cash.
The aggregate value of the indemnification payments made by any party hereunder
shall be limited to:
(1) 40% of the Purchase Price, for Damages other than pursuant
to or resulting from:
21
(i) Sections 7.8(a)(iii), (v) (only to the
extent Damages are caused by the acts or omissions of S1) and (vi) hereof, or
(ii) any breach of a covenant contained in
Sections 6.1(a)-(n), 7.10, 7.11 or 7.14 hereof, or
(iii) any inaccuracy or breach of a representation
or warranty contained in Sections 3.10, 3.19 or 4.4 hereof (subsections (i),
(ii) and (iii) together, the "EXCEPTED DAMAGES"), and
(2) the Purchase Price for the Excepted Damages,
provided, however, that the aggregate value of the indemnification payments made
by any party hereunder shall in no event exceed the Purchase Price.
Notwithstanding the foregoing, the aggregate value of the indemnification
payments, if any, made by S1 with respect to any Damages arising under Section
7.8(a)(iv) shall be unlimited.
Except as provided in Section 10.7, the indemnification provisions contained in
Section 7.8, Section 7.11 and this Section shall constitute the sole and
exclusive remedy for Damages resulting from any inaccuracy or breach of a
representation or warranty or breach of any covenant or agreement made by
▇▇▇▇▇▇▇▇▇, ▇▇ or ▇▇▇▇▇▇▇ pursuant to this Agreement. Notwithstanding anything
herein to the contrary, no claims for Damages shall be asserted, and no party
shall be liable for any claim for indemnification hereunder, other than with
respect to Damages pursuant to Sections 7.8(a)(iii), (iv), (v) and (vi) hereof,
unless and until the aggregate amount of Damages that would otherwise be payable
exceeds $200,000 (the "DEDUCTIBLE AMOUNT"), in which case the Seller shall be
liable for all such Damages. In calculating the Deductible Amount or Damages
hereunder, other than with respect to Damages pursuant to Sections 7.8(iii),
(iv), (v) and (vi) hereof, all Damages which total less than $17,500 with
respect to any single claim for Damages shall be excluded in their entirety, and
the indemnified party shall have no recourse for such Damages. If any event
shall occur which would otherwise entitle Purchaser to assert a claim for
indemnification hereunder, no Damages shall be deemed to have been sustained to
the extent of (i) any net proceeds received by the indemnified party from any
insurance policy with respect thereto, (ii) any net recovery received by the
indemnified party from third parties with respect thereto, or (iii) any tax
benefit realized by the indemnified party with respect thereto. S1 and Purchaser
shall take all reasonable steps to mitigate damages in respect of any claim for
which they are seeking indemnification, including, without limitation, using
commercially reasonable efforts to effect recovery from third parties and of
available insurance claims in connection with such claim.
(b) Indemnification Procedures for Third Party Claims.
(i) If any third party shall notify any party
(the "INDEMNIFIED PARTY") with respect to any matter (a "THIRD PARTY CLAIM")
which may give rise to a claim for indemnification against any other party (the
"INDEMNIFYING PARTY") under this Agreement, then the Indemnified Party shall
promptly notify each Indemnifying Party thereof in writing; provided, however,
that no delay on the part of the Indemnified Party in notifying any Indemnifying
Party shall relieve the Indemnifying Party from any obligation hereunder unless
(and then solely to the extent) the Indemnifying Party thereby is prejudiced.
(ii) Any Indemnifying Party will have the right
to defend the Indemnified Party against the Third Party Claim with counsel of
its choice so long as (A) the Indemnifying Party notifies the Indemnified Party
in writing within 30 days after the Indemnified Party has given notice of the
Third Party Claim that the Indemnifying Party will indemnify the Indemnified
Party from and against the entirety of any Damages the Indemnified Party may
suffer resulting from, arising
22
out of, relating to, in the nature of, or caused by the Third Party Claim, (B)
the Indemnifying Party provides the Indemnified Party with evidence acceptable
to the Indemnified Party that the Indemnifying Party will have the financial
resources to defend against the Third Party Claim and fulfill its
indemnification obligations hereunder (not to be unreasonably withheld), (C) the
Third Party Claim involves only money damages and does not seek an injunction or
other equitable relief, and (D) the Indemnifying Party is conducting the defense
of the Third Party Claim actively and diligently (provided, that in the event
the Indemnified Party does not believe that the Indemnifying Party is conducting
the defense of the Third Party Claim actively and diligently, the Indemnified
Party may upon reasonable advance notice to the Indemnifying Party, with an
opportunity to cure any identified deficiency, defend itself with counsel of its
choice, at the Indemnifying Party's expense). In the event counsel to the
Indemnifying Party identifies a conflict of interest in connection with such
counsel's representation of the Indemnifying Party, the Indemnifying Party shall
take all necessary measures to resolve the conflict, including, but not limited
to selecting new counsel.
(iii) So long as the Indemnifying Party is
conducting the defense of the Third Party Claim in accordance with Section
7.9(b)(ii) above, (A) the Indemnified Party may retain separate co-counsel at
its sole cost and expense and participate in the defense of the Third Party
Claim, (B) the Indemnified Party will not consent to the entry of any judgment
or enter into any settlement with respect to the Third Party Claim without the
prior written consent of the Indemnifying Party (not to be withheld
unreasonably), and (C) the Indemnifying Party will not consent to the entry of
any judgment or enter into any settlement with respect to the Third Party Claim
without the prior written consent of the Indemnified Party (not to be withheld
unreasonably).
(iv) In the event any of the conditions in
Section 7.9(b)(ii) above is or becomes unsatisfied, however, (A) the Indemnified
Party may defend against, and consent to the entry of any judgment or enter into
any settlement with respect to, the Third Party Claim in any manner it
reasonably may deem appropriate (and the Indemnified Party need not consult
with, or obtain any consent from, any Indemnifying Party in connection
therewith), (B) the Indemnifying Parties will reimburse the Indemnified Party
promptly and periodically for the costs of defending against the Third Party
Claim (including reasonable attorneys' fees and expenses), and (C) the
Indemnifying Parties will remain responsible for any Damages the Indemnified
Party may suffer resulting from, arising out of, relating to, in the nature of,
or caused by the Third Party Claim to the fullest extent provided in this
Agreement.
7.10 POST-CLOSING COOPERATION.
Purchaser and S1 shall cooperate fully, as and to the extent
reasonably requested by the other party, in connection with the filing of Tax
Returns following the Closing and any audit, litigation or other proceeding with
respect to Taxes. Such cooperation shall include the retention and (upon the
other party's request) the provision of records and information which are
reasonably relevant to any such audit, litigation or other proceeding and making
employees available on a mutually convenient basis to provide additional
information and explanation of any material provided hereunder. Purchaser shall
fully cooperate with S1 in the completion of all of ▇▇▇▇▇▇▇'▇ books and records
for any period prior to the Closing Date. Purchaser and S1 further agree (A) to
retain all books and records with respect to Tax matters pertinent to ▇▇▇▇▇▇▇
relating to any taxable period beginning before the Closing Date until the
expiration of the statute of limitations (and, to the extent notified by
Purchaser or S1, any extensions thereof) of the respective taxable periods, and
to abide by all record retention agreements entered into with any taxing
authority, and (B) to give the other party reasonable written notice prior to
transferring, destroying or discarding any such books and records and, if the
other party so requests, Purchaser or S1, as the case may be, shall allow the
other party to take possession of such books and records.
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7.11 TAX MATTERS.
(a) Any tax sharing agreement to which ▇▇▇▇▇▇▇
and S1 are parties shall be terminated as of the Closing Date and after the
Closing Date neither party shall have any liability to the other thereunder. S1
shall indemnify and hold harmless ▇▇▇▇▇▇▇ and Purchaser against any loss, cost
or liability arising from the inclusion of ▇▇▇▇▇▇▇ in any consolidated tax
return of S1 or any consolidated group of which S1 is or was a member.
(b) S1 shall include the income (or losses) of
▇▇▇▇▇▇▇ on consolidated federal income Tax Returns for the affiliated group of
which S1 is the common parent (the "S1 GROUP") for all periods through the end
of the Closing Date ("CONSOLIDATED RETURN PERIODS") and pay any federal Income
Taxes attributable to such income. Following the Closing, ▇▇▇▇▇▇▇ shall furnish
Tax information to S1 for inclusion in the S1 Group's federal consolidated
income Tax Return for the Consolidated Return Period that includes the Closing
Date in accordance with past custom and practice. The income (or losses) of
▇▇▇▇▇▇▇ shall be apportioned to Consolidated Return Periods and periods after
the Closing Date ("SEPARATE RETURN PERIODS") by closing the books of ▇▇▇▇▇▇▇ as
of the end of the Closing Date. S1 will allow Purchaser an opportunity to review
and comment upon such Tax Returns (including any amended returns) to the extent
they relate to ▇▇▇▇▇▇▇.
(c) If the S1 Group has a consolidated net
operating loss, a consolidated net capital loss, a consolidated unused
investment credit, a consolidated unused foreign tax credit or a consolidated
excess charitable contribution (each as defined in the Regulations and each a
"CARRYFORWARD TAX ATTRIBUTE") that can be carried to a Separate Return Period,
then the portion, if any, of such Carryforward Tax Attribute that is
attributable to ▇▇▇▇▇▇▇ shall be determined in accordance with Section 1.1502-79
of the Regulations. For purposes hereof, "REGULATIONS" means the Treasury
Regulations promulgated pursuant to the U.S. Internal Revenue Code.
(d) S1 will pay to Purchaser any Tax refund
resulting from a carryback of a post-acquisition Tax attribute of ▇▇▇▇▇▇▇ to the
S1 consolidated Tax Return; and S1 will cooperate in obtaining such refunds,
including filing amended Tax Returns. Purchaser will indemnify S1 for any Taxes
resulting from disallowance of such Tax attributes upon audit.
7.12 NEW YORK SUBLEASE.
Prior to the Closing, S1 and ▇▇▇▇▇▇▇ shall have entered into
that certain sublease in substantially the form attached hereto as Exhibit A
(the "NEW YORK SUBLEASE").
7.13 ACCOUNTS RECEIVABLE.
The parties agree that the accounts receivable set forth on
Section 7.13 of the Sellers Disclosure Schedule shall be included in the
calculation of the Earn-Out Consideration (as defined in Annex A) in accordance
with the provisions of Annex A hereto.
7.14 NON-COMPETE.
In partial consideration of the payment of the Purchase Price,
S1 agrees that for a period of two years following the Closing Date, S1 and each
entity that S1 directly (or indirectly through a controlled Affiliate) controls,
including any entity acquired by S1 subsequent to the date hereof, shall not
provide order management, order routing (connectivity) or regulatory equity and
equity option trade reporting software and services with respect to equities and
equity option transactions (the
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"Business"). The restriction set forth in the previous sentence shall terminate
upon a consolidation or merger of S1 into any unaffiliated entity, the sale of
all or substantially all of S1's assets, or any other transaction or
transactions which result in more than 50% of the voting power of S1 being held
by persons or entities which did not hold more than 50% of the voting power of
S1 prior to the consummation of such transaction or transactions. For purposes
of this Section, "CONTROL" means the ability (through the ownership of
securities or similar interests, by contract or otherwise and whether or not
exercised) to elect a majority of the board of directors or similar governing
body of a person. This Section shall not prohibit S1 from acquiring an interest
in any entity where no more than one-third of such entity's operations consists
of, or one-third of such entity's revenues are recognized from, the Business.
ARTICLE VIII
CONDITIONS PRECEDENT
8.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE
STOCK PURCHASE.
The respective obligation of each party to effect the Stock
Purchase shall be subject to the satisfaction at or prior to the Closing of the
following conditions:
(a) NO INJUNCTIONS OR RESTRAINTS; ILLEGALITY.
No order, injunction or decree issued by any court or agency
of competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the Stock Purchase or any of the other transactions contemplated
by this Agreement shall be in effect. No statute, rule, regulation, order,
injunction or decree shall have been enacted, entered, promulgated or enforced
by any Governmental Entity which prohibits, restricts or makes illegal
consummation of the Stock Purchase. All waiting periods, if any, under foreign
merger notification requirements, if applicable, relating to the transactions
contemplated hereby shall have expired or been terminated early and all material
foreign antitrust approvals required to be obtained prior to the consummation of
the transactions contemplated hereby shall have been obtained.
8.2 CONDITIONS TO OBLIGATIONS OF PURCHASER.
The obligation of Purchaser to effect the Stock Purchase is
also subject to the satisfaction or waiver by Purchaser at or prior to the
Closing of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES.
The representations and warranties of ▇▇▇▇▇▇▇ and S1
set forth in this Agreement shall be true and correct in all material respects
as of the date of this Agreement, and (except to the extent such representations
and warranties speak as of an earlier date) as of the Closing Date as though
made on and as of the Closing Date. Purchaser shall have received a certificate
signed by an officer of ▇▇▇▇▇▇▇ and S1 to the foregoing effect.
(b) PERFORMANCE OF COVENANTS AND AGREEMENTS OF
▇▇▇▇▇▇▇ AND S1.
▇▇▇▇▇▇▇ and S1 shall have performed all covenants and
agreements required to be performed by them under this Agreement in all material
respects at or prior to the Closing Date. Purchaser shall have received a
certificate signed by an officer of ▇▇▇▇▇▇▇ and S1 to the foregoing effect.
(c) NO MATERIAL ADVERSE EFFECT.
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No Material Adverse Effect shall have occurred with respect to
▇▇▇▇▇▇▇, which is continuing as of the Closing Date.
(d) DELIVERY OF THE SHARES.
S1 shall have delivered a stock certificate representing the
Shares with an appropriate stock power duly endorsed to Purchaser.
(e) TERMINATION OF EMPLOYEES.
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ shall not be employed by
▇▇▇▇▇▇▇.
(f) RESIGNATIONS OR REMOVAL OF OFFICERS AND DIRECTORS OF
▇▇▇▇▇▇▇.
▇▇▇▇▇▇▇ shall have either received the written resignations
(effective as of or prior to Closing) of each of its officers and directors or
such officers and directors shall have been removed from serving in such
capacity (effective as of or prior to Closing).
(g) EXECUTION OF NEW YORK SUBLEASE.
S1 and ▇▇▇▇▇▇▇ have entered into the New York Sublease in
substantially the form attached hereto as Exhibit A and the same shall be in
full force and effect, which sublease shall have received the required consent
of the related landlord.
(h) ASSIGNMENT AND ASSUMPTION AGREEMENT.
The parties shall have executed the Assignment and Assumption
Agreement in substantially the form attached hereto as Exhibit B.
(i) DELIVERY OF SOURCE CODE.
▇▇▇▇▇▇▇ and S1 shall have delivered to Purchaser a CD-Rom
containing the source code for the ▇▇▇▇▇▇▇ Software listed in Section 3.19(b) to
the Sellers Disclosure Schedule.
8.3 CONDITIONS TO OBLIGATIONS OF ▇▇▇▇▇▇▇ AND S1.
The obligations of ▇▇▇▇▇▇▇ and S1 to effect the Stock Purchase
are subject to the satisfaction or waiver by ▇▇▇▇▇▇▇ and S1 at or prior to the
Closing of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES.
The representations and warranties of Purchaser set
forth in this Agreement shall be true and correct in all material respects as of
the date of this Agreement and (except to the extent such representations and
warranties speak as of an earlier date) as of the Closing Date as though made on
and as of the Closing Date. ▇▇▇▇▇▇▇ and S1 shall have received a certificate
signed by an officer of Purchaser to the foregoing effect and confirming the
continued accuracy of the provisions of Section 5.5 hereof.
(b) PERFORMANCE OF COVENANTS AND AGREEMENTS OF
PURCHASER.
Purchaser shall have performed all covenants and
agreements required to be performed by it under this Agreement at or prior to
the Closing Date, except in each case where such
26
nonperformance does not or would not have a Material Adverse Effect on
Purchaser. ▇▇▇▇▇▇▇ and S1 shall have received a certificate signed by an officer
of Purchaser to the foregoing effect.
(c) PURCHASE PRICE.
Purchaser shall have delivered the Firm Consideration
by wire transfer to S1.
(d) CONFIDENTIALITY AGREEMENT.
Purchaser shall have executed and delivered to S1 the
Confidentiality Agreement.
(e) KNIGHT GUARANTY.
Knight Execution Partners LLC ("KNIGHT") shall have
released S1 from its guarantee of ▇▇▇▇▇▇▇'▇ obligations under the ▇▇▇▇▇▇▇ Data
User Agreement and Limited Warranty, dated March 28, 2002, by and between
▇▇▇▇▇▇▇ and ▇▇▇▇▇▇.
ARTICLE IX
TERMINATION AND AMENDMENT
9.1 TERMINATION.
This Agreement may be terminated at any time prior to the
Closing:
(a) by the mutual written consent of Purchaser
and S1, duly authorized by the Boards of Directors of Purchaser and S1;
(b) by Purchaser or S1 if a Governmental Entity
shall have issued an order, decree or ruling or taken any other action having
the effect of permanently restraining, enjoining or otherwise prohibiting the
Stock Purchase, which order, decree, ruling or other action is final and
nonappealable;
(c) by Purchaser or S1 if the Stock Purchase
shall not have been consummated on or before November 30, 2004, unless the
failure of the Closing to occur by such date shall be due to the failure of the
party seeking to terminate this Agreement to perform or observe the covenants
and agreements of such party set forth herein;
(d) by Purchaser or S1 (provided that the
terminating party is not then in breach of any representation, warranty,
covenant or other agreement contained herein that, individually or in the
aggregate, would give the other party the right to terminate this Agreement) if
there shall have been a material breach of any of the representations or
warranties set forth in this Agreement on the part of S1 or ▇▇▇▇▇▇▇, on the one
hand, or Purchaser, on the other hand, if such breach, individually or in the
aggregate, has had or is reasonably likely to have a Material Adverse Effect on
▇▇▇▇▇▇▇ or Purchaser, as the case may be, and such breach shall not have been
cured within 20 days following receipt by the breaching party of written notice
of such breach from the other party or such breach, by its nature, cannot be
cured prior to the Closing or within 20 days, whichever is longer; or
(e) by Purchaser or S1 (provided that the
terminating party is not then in breach of any representation, warranty,
covenant or other agreement contained herein that, individually or in the
aggregate, would give the other party the right to terminate this Agreement) if
there shall have been a material breach of any of the covenants or agreements
set forth in this Agreement on the part of S1 or ▇▇▇▇▇▇▇, on the one hand, or
Purchaser, on the other hand, and such breach shall not have been cured within
20 days following receipt by the breaching party of written notice of such
breach from the other
27
party hereto or such breach, by its nature, cannot be cured prior to the
Closing or within 20 days, whichever is longer, except in each case where such
breach does not or would not have a Material Adverse Effect on ▇▇▇▇▇▇▇ or
Purchaser, as the case may be.
9.2 EFFECT OF TERMINATION.
In the event of termination of this Agreement by
either Purchaser or S1 as provided in Section 9.1 hereof, this Agreement shall
forthwith become void and have no effect except (i) the last sentence of Section
7.2 and Sections 9.2, 10.1 and 10.8 hereof shall survive any termination of this
Agreement, and (ii) notwithstanding anything to the contrary contained in this
Agreement, no party shall be relieved or released from any liabilities or
damages arising out of its willful or intentional breach of any provision of
this Agreement.
9.3 AMENDMENT.
This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto.
9.4 EXTENSION; WAIVER
At any time prior to the Closing, the parties hereto,
by action taken or authorized by their respective Boards of Directors, may, to
the extent legally allowed, (a) extend the time for the performance of any of
the obligations or other acts of the other parties hereto, (b) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto, and (c) waive compliance with any of the
agreements or conditions contained herein. Any agreement on the part of a party
hereto to any such extension or waiver shall be valid only if set forth in a
written instrument signed on behalf of such party, but such extension or waiver
or failure to insist on strict compliance with an obligation, covenant,
agreement or condition shall not operate as a waiver of, or estoppel with
respect to, any subsequent or other failure.
ARTICLE X
GENERAL PROVISIONS
10.1 EXPENSES.
All costs and expenses incurred in connection with
this Agreement and the transactions contemplated hereby shall be paid by the
party incurring such expense, provided, however, that S1 shall have paid all
costs and expenses incurred by ▇▇▇▇▇▇▇ prior to Closing in connection with this
Agreement and the transactions contemplated hereby.
10.2 NOTICES.
All notices and other communications hereunder shall
be in writing and shall be deemed given if delivered personally, or three days
after mailed by registered or certified mail (return receipt requested) or
delivered by an express courier (with confirmation) to the parties at the
following addresses (or at such other address for a party as shall be specified
by like notice):
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(a) if to ▇▇▇▇▇▇▇ or S1, to:
S1 Corporation
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn.: Chief Executive Officer
with copies (which shall not constitute notice) to:
▇▇▇▇▇ & ▇▇▇▇▇▇▇ L.L.P.
Columbia Square
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn.: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
and
S1 Corporation
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn.: General Counsel
(b) if to Purchaser, to:
GL Consultants, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇
Attn.: Chief Executive Officer
with a copy to:
GL Trade SA
▇▇ ▇▇▇ ▇▇▇▇▇-▇▇▇▇-▇▇▇-▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇
Attn.: General Counsel
10.3 INTERPRETATION.
When a reference is made in this Agreement to Sections,
Exhibits or Schedules, such reference shall be to a Section of, an Exhibit of or
Schedule to this Agreement unless otherwise indicated. The table of contents and
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement. Whenever
the words "include," "includes" or "including" are used in this Agreement, they
shall be deemed to be followed by the words "without limitation."
10.4 COUNTERPARTS.
This Agreement may be executed in counterparts, all of which
shall be considered one and the same agreement and shall become effective when
counterparts have been signed by each of the parties and delivered to the other
parties, it being understood that all parties need not sign the same
counterpart.
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10.5 ENTIRE AGREEMENT; CONSTRUCTION.
This Agreement (including the disclosure schedules, documents
and the instruments referred to herein) and the Confidentiality Agreement
constitute the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof. The parties have participated jointly in the negotiation
and drafting of this Agreement. In the event an ambiguity or question of intent
or interpretation arises, this Agreement shall be construed as if drafted
jointly by the parties and no presumption or burden of proof shall arise
favoring or disfavoring any party by virtue of the authorship of any of the
provisions of this Agreement.
10.6 GOVERNING LAW.
This Agreement shall be governed and construed in accordance
with the laws of the State of New York, without regard to any applicable
conflicts of law rules.
10.7 ENFORCEMENT OF AGREEMENT.
The parties hereto agree that irreparable damage would occur
in the event that the provisions of this Agreement were not performed in
accordance with its specific terms or were otherwise breached. It is accordingly
agreed that the parties shall be entitled to an injunction or injunctions to
prevent breaches of this Agreement and to enforce specifically the terms and
provisions thereof in any court of the United States or any state having
jurisdiction, this being in addition to any other remedy to which they are
entitled at law or in equity.
10.8 SEVERABILITY.
Any term or provision of this Agreement which is invalid or
unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective
to the extent of such invalidity or unenforceability without rendering invalid
or unenforceable the remaining terms and provisions of this Agreement or
affecting the validity or enforceability of any of the terms or provisions of
this Agreement in any other jurisdiction. If any provision of this Agreement is
so broad as to be unenforceable, the provision shall be interpreted to be only
so broad as is enforceable.
10.9 PUBLICITY.
The parties will agree to the extent reasonably practicable
before issuing any press release or otherwise making any public statement with
respect to this Agreement or the transactions contemplated hereby and will not
issue any such press release or make any such public statement prior to such
agreement, except as may be required by law or any listing agreement with a
national or foreign securities exchange.
10.10 ASSIGNMENT; LIMITATION OF BENEFITS.
Neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by any of the parties hereto (whether by
operation of law or otherwise) without the prior written consent of the other
parties. Subject to the preceding sentence, this Agreement will be binding upon,
inure to the benefit of and be enforceable by the parties and their respective
successors and assigns.
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10.11 SURVIVAL.
The representations, warranties, covenants and agreements of
Purchaser, ▇▇▇▇▇▇▇ and S1 contained in this Agreement or in any instrument
delivered pursuant to this Agreement, shall survive for a period of twelve (12)
months after the Closing Date; provided that those covenants and agreements
contained herein and therein, which by their terms apply in whole or part for a
period greater than twelve months after the Closing Date shall survive for such
longer period of time, and the representations made in Sections 3.1 through and
including 3.21 shall survive for the applicable periods set forth in Section
10.11 of the Sellers Disclosure Schedule; and provided, further, that if a claim
is still pending at the end of any such designated period, the particular
representation, warranty, covenant, agreement and/or undertaking upon which such
claim is based will survive (but only with respect to such claim) until the
claim is resolved.
10.12 ADDITIONAL DEFINITIONS.
In addition to any other definitions contained in this
Agreement, the following words, terms and phrases shall have the following
meanings when used in this Agreement.
"AFFILIATED PERSON": any director, officer or 5% or greater
stockholder, spouse or other person living in the same household of such
director, officer or stockholder, or any company, partnership or trust in which
any of the foregoing persons is an officer, 5% or greater stockholder, general
partner or 5% or greater trust beneficiary.
"KNOWLEDGE" or "KNOW": means with respect to a party hereto,
with respect to a matter in question, that as to S1 or Purchaser, the directors
or any executive officer of such party has actual knowledge of such matter, and
as to ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇ (solely in his capacity as a
director of ▇▇▇▇▇▇▇ and not as counsel to S1 or ▇▇▇▇▇▇▇), ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ or
▇▇▇▇ ▇▇▇▇ has actual knowledge of such matter.
"LAWS": any and all statutes, laws, ordinances, rules,
regulations, orders, permits, judgments, injunctions, decrees, case law and
other rules of law enacted, promulgated or issued by any Governmental Entity.
"MATERIAL ADVERSE EFFECT": means, with respect to ▇▇▇▇▇▇▇▇▇,
▇▇ or ▇▇▇▇▇▇▇, as the case may be, a condition, event, change or occurrence that
is not anticipated by this Agreement and that is reasonably likely to have a
material adverse effect upon (A) the financial condition, results of operations,
loans, securities, deposit accounts, business or properties of Purchaser, S1 or
▇▇▇▇▇▇▇ (other than as a result of (i) changes in laws or regulations or
interpretations thereof by courts or Governmental Entities or accounting rules
of general applicability or interpretations thereof, (ii) actions or omissions
of ▇▇▇▇▇▇▇ or S1, on the one hand, or Purchaser, on the other hand, taken with
the prior written consent of the other party, or required under this Agreement,
or (iii) changes, after the date of this Agreement, in general economic or
market conditions affecting the parties generally), or (B) the ability of
▇▇▇▇▇▇▇▇▇, ▇▇ or ▇▇▇▇▇▇▇ to perform its obligations under, and to consummate the
transactions contemplated by, this Agreement.
[SIGNATURES ON NEXT PAGE]
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IN WITNESS WHEREOF, S1, ▇▇▇▇▇▇▇ and Purchaser have caused this
Agreement to be executed and delivered by their respective officers thereunto
duly authorized as of the date first above written.
S1 CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇▇▇▇
Title: CFO
▇▇▇▇▇▇▇ DATA SYSTEMS CORP.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇▇▇▇
Title: CFO
GL CONSULTANTS, INC.
By: /s/ ▇▇▇▇▇▇ Varjacques
Name: ▇▇▇▇▇▇ Varjacques
Title: CEO
(Continuation of Signature Page to Stock Purchase Agreement)
GL Trade SA ("GL TRADE") does hereby unconditionally and absolutely guaranty to
S1 the performance by Purchaser of all of the terms, covenants, conditions,
duties and obligations contained herein (including, without limitation, the
prompt payment of any amounts to be paid by Purchaser hereunder). GL Trade shall
have no obligation under this Agreement other than as expressly stated in the
preceding sentence.
GL TRADE SA
By: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Chief Executive Officer
ANNEX A
EARN-OUT SCHEDULE
For purposes of this Annex, the following terms shall have the
meanings set out below. All other capitalized terms used herein but not defined
below shall have the meanings set forth in the Agreement. This Annex sets forth
the terms and conditions of the calculation and payment of the Earn-out
Consideration pursuant to the Agreement. The parties agree and acknowledge that
the terms of the Earn-out set forth herein relate solely to how the Earn-out
Consideration is calculated, notwithstanding actual operations or results of
▇▇▇▇▇▇▇ or S1.
"ANNUALIZED 2004 REVENUES" shall mean the amount equal to all
Eligible Revenues DIVIDED by three, then MULTIPLIED by four.
"HARDWARE PASS-THROUGH COSTS" shall mean the actual cost to
▇▇▇▇▇▇▇ of any hardware sold by ▇▇▇▇▇▇▇ during the third quarter of 2004.
"EARN-OUT CONSIDERATION" shall mean the amount calculated in
accordance with Section 2 hereof.
"EARN-OUT PAYMENT DATE" shall be the Closing Date, if the
final determination of the Earn-out Consideration is agreed by S1 and the
Purchaser prior to such date in accordance with the terms hereof, or else within
five days following the final determination of the Earn-out Consideration
pursuant to the terms hereof.
"ELIGIBLE REVENUES" shall mean the amount equal to all
Revenues MINUS (i) all Revenues attributable to that certain Amendment dated
September 30, 2004 to the agreement entered into by and between ▇▇▇▇▇▇▇ and
▇▇▇▇▇▇ Brothers Inc. dated December 31, 2001, and (ii) the Hardware Pass-Through
Costs.
"REVENUES" shall mean any amounts that are properly
recognized and reported as "revenue" by ▇▇▇▇▇▇▇ during the first three quarters
of 2004 in accordance with GAAP applied on a consistent basis, as reasonably
determined by S1's independent certified public accountants.
* * *
1. PAYMENT OF EARN-OUT CONSIDERATION. The Earn-out Consideration shall be
paid on the Earn-out Payment Date. The Earn-out Consideration shall in
no event exceed $1,750,000.
2. CALCULATION OF EARN-OUT CONSIDERATION. The Earn-out Consideration shall
be equal to: Annualized 2004 Revenues MULTIPLIED by two, MINUS the sum
of: (x) $12,500,000, (y) the Bonus Reimbursement Amount and (z) the
Vacation Reimbursement Amount, PLUS the sum of the Amount to Remit to
S1 column on Section 7.13 to the Sellers Disclosure Schedules, to the
extent such amounts are not received by the Sellers prior to Closing;
provided, that, if such result is less than zero, the Earn-out
Consideration shall be zero.
3. REVENUE SUMMARIES. For purposes of determining the payment(s) to be
made hereunder, S1 shall cause to be delivered to Purchaser within 30
days following the end of the third quarter of 2004, a document which
calculates the Annualized 2004 Revenues (the "REVENUE SUMMARY"),
together with a statement of S1 which states that such Revenue Summary
was prepared in
accordance with the terms of this Agreement, and which sets forth the
calculation of the Earn-out Consideration. S1 will provide Purchaser
with such information as it shall reasonably request in order to verify
S1's calculations of the Earn-out Consideration.
4. DISPUTE RESOLUTION.
(a) Within ten (10) days after its receipt and review of
the Revenue Summary, if the Purchaser disagrees with S1's determination of the
Earn-out Consideration, the Purchaser shall notify S1 of such disagreement.
(b) The Purchaser and S1 agree to negotiate in good faith
to resolve any such disagreement and any resolution agreed to in writing by the
Purchaser and S1 shall be final and binding upon the parties.
(c) If the Purchaser and S1 are unable to resolve the
disagreements identified by the Purchaser within thirty (30) days after notice
to S1 of such disagreement, then the disputed matters shall be referred to the
Business Development and External Growth Director of Purchaser and the Vice
President, Office of the CEO and Corporate Development of S1 for resolution. If
such officers are not able to come to an agreement with respect to the Revenue
Summary, then the disagreement shall be referred to the Chief Executive Officers
of each of the Purchaser and S1 for resolution. If the Chief Executive Officers
of the parties are unable to come to an agreement with respect to the Revenue
Summary within fifteen (15) days, then, within fifteen (15) days thereafter, the
matter shall be referred for final determination to a nationally recognized
accounting firm mutually agreeable to S1 and the Purchaser (the "Accounting
Arbitrator"). The Accounting Arbitrator shall deliver to the Purchaser and S1,
as promptly as practicable and in any event within sixty (60) days after its
appointment, a written report setting forth the resolution of any such
disagreement determined in accordance with the terms herein. Upon the decision
of the Accounting Arbitrator (or the earlier agreement of the Purchaser and S1),
the Revenue Summary, as adjusted if necessary, shall be deemed to be final for
purposes of calculating the Earn-out Consideration. The fees, expenses and costs
of the Accounting Arbitrator shall be borne equally by S1 and the Purchaser.
