STOCK PURCHASE AGREEMENT
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This Stock Purchase Agreement (this "Agreement") is entered into as of the
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31st day of March, 1999 by and among SS&C Technologies, Inc., a Delaware
corporation with its principal office at ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ (the "Buyer"), The Brookside Corporation, a Rhode Island corporation with
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its principal office at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Company"), and ▇▇▇▇ ▇. ▇▇▇▇▇ (the "Stockholder").
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Preliminary Statement
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1. The Stockholder owns 200 issued and outstanding shares (the "Shares")
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of Common Stock, no par value per share (the "Common Stock"), of the Company,
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which Shares represent all of the issued and outstanding shares of capital stock
of the Company.
2. The Buyer desires to purchase, and the Stockholder desires to sell,
the Shares at the Closing (as defined below), for the consideration set forth
below, subject to the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the mutual promises hereinafter set
forth and other good and valuable consideration, the receipt of which is hereby
acknowledged, the parties hereby agree as follows:
1. Purchase and Sale of the Shares
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1.1 Purchase of the Shares from the Stockholder. Subject to and upon
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the terms and conditions of this Agreement, at the closing of the transactions
contemplated by this Agreement (the "Closing"), the Stockholder shall sell,
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transfer, convey, assign and deliver to the Buyer, and the Buyer shall purchase,
acquire and accept from the Stockholder, all the Shares owned by the
Stockholder. At the Closing the Stockholder shall deliver to the Buyer
certificates evidencing the Shares owned by the Stockholder duly endorsed in
blank or with stock powers duly executed by the Stockholder.
1.2 Further Assurances. At any time and from time to time after the
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Closing, at the Buyer's reasonable request and without further consideration,
the Stockholder shall promptly execute and deliver such instruments of sale,
transfer, conveyance, assignment and confirmation, and take all such other
action or actions as the Buyer may reasonably request, more effectively to
transfer, convey and assign to the Buyer, and to confirm the Buyer's title to,
all of the Shares owned by the Stockholder, to put the Buyer in actual
possession and operating control of the assets, properties and business of the
Company, and to carry out the purpose and intent of this Agreement.
1.3 Consideration for the Shares. The aggregate purchase price (the
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"Purchase Price") to be paid and delivered by the Buyer on the date of the
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Closing (the "Closing Date") to the Stockholder for the Shares shall consist of
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27,600 shares (the "Buyer Shares") of the Buyer's Common Stock, $.01 par value
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per share (the "Buyer Common Stock").
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1.4 Closing. The Closing shall take place at the offices of the
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Buyer, ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ at 9:00 a.m., Eastern Time, on
the date of this Agreement or at such other place, time or date as may be
mutually agreed upon in writing by the parties. The transfer of the Shares by
the Stockholder to the Buyer shall be deemed to occur at 9:00 a.m., Eastern
Time, on the Closing Date.
2. Representations of the Stockholder
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The Stockholder represents and warrants to the Buyer as follows:
(a) The Stockholder has good and marketable title to the Shares which
are to be transferred to the Buyer by the Stockholder pursuant hereto, free and
clear of any and all covenants, conditions, restrictions, voting trust
arrangements, liens, charges, encumbrances, options, voting trusts, voting
agreements and adverse claims or rights whatsoever ("Stock Claims").
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(b) The Stockholder has all requisite right, power and authority to
execute and deliver this Agreement, to perform his obligations hereunder and to
transfer, convey and sell to the Buyer at the Closing the Shares to be sold by
the Stockholder hereunder and, upon consummation of the purchase contemplated
hereby, the Buyer will acquire from the Stockholder good and marketable title to
such Shares, free and clear of all Stock Claims.
(c) No broker or finder has acted for the Stockholder in connection
with this Agreement or the transactions contemplated hereby, and no broker or
finder is entitled to any brokerage or finder's fee or other commissions in
respect of such transactions based upon agreements, arrangements or
understandings made by or on behalf of the Stockholder.
(d) The Stockholder is acquiring the Buyer Shares for his own account
for investment and not with a view to, or for sale in connection with, any
distribution thereof, nor with any present intention of distributing or selling
the same; and, except as contemplated by this Agreement, the Stockholder has no
present or contemplated agreement, undertaking, arrangement, obligation,
indebtedness or commitment providing for the disposition thereof. The
Stockholder is an "accredited investor" as defined in Rule 501(a) under the
Securities Act of 1933, as amended (the "Securities Act").
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(e) The Stockholder has carefully reviewed the representations
concerning the Buyer contained in this Agreement and has made detailed inquiry
concerning the Buyer, its business and its personnel; the officers of the Buyer
have made available to the Stockholder any and all written information which he
has requested and have answered to the Stockholder's satisfaction all inquiries
made by the Stockholder; and the Stockholder has sufficient knowledge and
experience in finance and business that he is capable of evaluating the risks
and merits of his investment in the Buyer and the Stockholder is able
financially to bear the risks thereof.
3. Representations of the Stockholder and the Company Regarding the Company
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The Company and the Stockholder jointly and severally represent and
warrant to the Buyer that the statements contained in this Section 3 are true
and correct, except as set forth in the disclosure schedule provided to the
Buyer on the date hereof and forming a part hereof (the "Disclosure Schedule").
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3.1 Organization, Qualification and Corporate Power. The Company is
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a corporation duly organized, validly existing and in corporate and franchise
tax good standing under the laws of the state of its incorporation. The Company
is duly qualified to conduct business and is in corporate and tax good standing
under the laws of each jurisdiction in which the nature of its business or the
ownership or leasing of its properties requires such qualification or payment of
Taxes (as defined below), except to the extent such failure would not have a
material adverse effect on the business, financial condition, results of
operations or prospects of the Company or on the ability of the Company or the
Stockholder to consummate the transactions contemplated hereby (a "Material
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Adverse Effect"). The Company has all requisite corporate power and authority
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to carry on the business in which it is engaged and to own and use the
properties owned and used by it. The Company has delivered to the Buyer true
and complete copies of its charter and by-laws, each as amended and/or restated
to date and as in effect on the date hereof. The Company is not in default
under or in violation of any provision of its charter or by-laws.
3.2 Capitalization. The authorized capital stock of the Company
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consists of 600 shares of Common Stock, of which 200 shares are issued and
outstanding on the date hereof and held of record and beneficially by the
Stockholder. All of the issued and outstanding Shares are duly authorized,
validly issued, fully paid, nonassessable and free of all preemptive rights.
There are no outstanding or authorized options, warrants, rights, agreements or
commitments to which the Company is a party or which are binding upon the
Company providing for the issuance, disposition or acquisition of any of its
capital stock. There are no outstanding or authorized stock appreciation,
phantom stock or similar rights with respect to the Company. There are no
agreements, voting trusts, proxies or understandings with respect to the voting,
or registration under the
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Securities Act, of any Shares. All of the issued and outstanding Shares were
offered and issued in compliance with applicable federal and state securities
laws.
3.3 Authority. The Company has all requisite power and authority to
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execute and deliver this Agreement and to perform its obligations hereunder.
The execution, delivery and performance of this Agreement by the Company and the
consummation by the Company of the transactions contemplated hereby have been
duly and validly authorized by all necessary corporate action on the part of the
Company. This Agreement has been duly and validly executed and delivered by the
Company and the Stockholder and constitutes a valid and binding obligation of
the Company and the Stockholder, enforceable against the Company and the
Stockholder in accordance with its terms.
3.4 Noncontravention. Neither the execution and delivery by the
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Company and the Stockholder of this Agreement or the other agreements
contemplated hereby, nor the consummation by the Company and the Stockholder of
the transactions contemplated hereby or thereby, will (a) conflict with or
violate any provision of the charter or by-laws of the Company; (b) require on
the part of the Company any filing with, or any permit, authorization, consent
or approval of, any court, arbitrational tribunal, administrative agency or
commission or other governmental or regulatory authority or agency (a
"Governmental Entity"); (c) conflict with, result in a breach of, constitute
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(with or without due notice or lapse of time or both) a default under, result in
the acceleration of, create in any party the right to accelerate, terminate,
modify or cancel, or require any notice, consent or waiver under, any contract,
lease, sublease, license, sublicense, franchise, permit, indenture, agreement or
mortgage for borrowed money, instrument of indebtedness, Security Interest (as
defined below) or other arrangement to which the Company or the Stockholder is a
party or by which the Company or the Stockholder is bound or to which any of the
assets of the Company or the Stockholder are subject; (d) result in the
imposition of any Security Interest upon any assets of the Company or the
Stockholder or (e) violate any order, writ, injunction, decree, statute, rule or
regulation applicable to the Shares or any of the properties or assets of the
Company or the Stockholder. For purposes of this Agreement, "Security Interest"
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means any mortgage, pledge, security interest, encumbrance, charge or other lien
(whether arising by contract or by operation of law), other than (i) mechanic's,
materialmen's and similar liens; (ii) liens for taxes not yet due and payable or
for taxes that the taxpayer is contesting in good faith through appropriate
proceedings and which are properly reflected in reserves (other than reserves to
reflect timing differences between book and tax accounting) on the Most Recent
Balance Sheet (as defined below), except to the extent such taxes do not have a
Material Adverse Effect; (iii) liens arising under worker's compensation,
unemployment insurance, social security, retirement, and similar legislation;
(iv) liens on goods in transit incurred pursuant to documentary letters of
credit; (v) purchase money liens and liens securing rental payments under
capital lease arrangements and (vi) other liens arising in the ordinary course
of business consistent with past custom and practice (including with respect to
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frequency and amount) of the Company ("Ordinary Course of Business") and not
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material to the Company.
3.5 Subsidiaries. The Company does not own or control, directly or
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indirectly, any shares of capital stock of any corporation or have any equity
interest in any partnership, limited liability company, joint venture, trust,
association or other non-corporate business enterprise.
3.6 Financial Statements. The Company has provided to the Buyer the
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unaudited balance sheets and the related statements of operations as of and for
each of the fiscal years ended December 31, 1996, 1997 and 1998 (the "Financial
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Statements"). The Financial Statements have been prepared in accordance with
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United States generally accepted accounting principles ("GAAP") applied on a
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consistent basis throughout the periods covered thereby, fairly present, in all
material respects, the financial condition and results of operations of the
Company as of the respective dates thereof and for the periods referred to
therein and are consistent with the books and records of the Company.
3.7 Absence of Certain Changes. Since December 31, 1998, (a) there
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has not been any Material Adverse Effect, nor has there occurred any event or
development which could reasonably be foreseen as likely to result in a Material
Adverse Effect in the future, and (b) the Company has not taken any of the
actions set forth below:
(a) issued, sold, delivered or agreed or committed to issue, sell or
deliver (whether through the issuance or granting of options, warrants,
commitments, subscriptions, rights to purchase or otherwise) or authorized the
issuance, sale or delivery of, or redeemed or repurchased, any stock of any
class or any other securities or any rights, warrants or options to acquire any
such stock or other securities;
(b) split, combined or reclassified any shares of its capital stock;
or declared, set aside or paid any dividend or other distribution (whether in
cash, stock or property or any combination thereof) in respect of its capital
stock;
(c) created, incurred or assumed any debt not currently outstanding
(including obligations in respect of capital leases); assumed, guaranteed,
endorsed or otherwise become liable or responsible (whether directly,
contingently or otherwise) for the obligations of any other person; or made any
loans, advances or capital contributions to, or investments in, any other person
or entity;
(d) entered into, adopted or amended any employee benefit plan or any
employment or severance agreement or arrangement of the type described in
Section 3.20 or (except for normal increases in the Ordinary Course of Business)
increased in any manner the compensation or fringe benefits of, or materially
modified the employment terms of, its directors, officers or employees,
generally or individually,
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or paid any benefit not required by the terms in effect on the date hereof of
any existing employee benefit plan;
(e) acquired, sold, leased, encumbered or disposed of any assets,
other than purchases of assets and sales of products in the Ordinary Course of
Business;
(f) amended its charter or by-laws;
(g) changed in any material respect its accounting methods, principles
or practices, except insofar as may be required by GAAP;
(h) discharged or satisfied any Security Interest or paid any
obligation or liability other than in the Ordinary Course of Business;
(i) mortgaged or pledged any of its property or assets or subjected
any such assets to any Security Interest;
(j) sold, assigned, transferred or licensed any Intellectual Property
(as defined below), other than in the Ordinary Course of Business;
(k) entered into, amended, terminated, took or intentionally omitted
to take any action that would constitute a violation of or default under, or
waived any rights under, any contract or agreement other than in the Ordinary
Course of Business;
(l) made or committed to make any capital expenditure in excess of
$5,000 per item or $15,000 in the aggregate other than in the Ordinary Course of
Business;
(m) took any action or failed to take any action permitted by this
Agreement with the knowledge that such action or failure to take action would
result in any of the representations and warranties of the Company set forth in
this Agreement becoming untrue; or
(n) agreed in writing or otherwise to take any of the foregoing
actions.
3.8 Undisclosed Liabilities. The Company has no liability (whether
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known or unknown, whether absolute or contingent, whether liquidated or
unliquidated and whether due or to become due), except for (a) liabilities shown
on the balance sheet dated December 31, 1998 (the "Most Recent Balance Sheet"),
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(b) liabilities which have arisen since the date of the Most Recent Balance
Sheet in the Ordinary Course of Business and which are not in the aggregate
material and (c) contractual liabilities
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incurred in the Ordinary Course of Business which are not required by GAAP to be
reflected on the Most Recent Balance Sheet and which are not in the aggregate
material.
3.9 Tax Matters
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(a) The Company has filed all Tax Returns (as defined below) required
to be filed by it and all such Tax Returns were correct and complete in all
material respects. The Company has paid all Taxes (as defined below) imposed on
it, or for which it is liable, whether to Governmental Entities (as, for
example, under law) or to other persons or entities (as, for example, under a
tax allocation agreement), due on or before the date hereof except for such
Taxes that such Company is contesting in good faith and for which the Company
has established adequate reserves. The unpaid Taxes of the Company for tax
periods through the date of the Most Recent Balance Sheet do not exceed the
accruals and reserves for Taxes (excluding accruals and reserves for deferred
Taxes established to reflect timing differences between book and Tax income) set
forth on the Most Recent Balance Sheet and do not exceed such accruals and
reserves as adjusted for the passage of time through the Closing Date in
accordance with the past custom and practice of the Company in filing its Tax
Returns. The Company has no actual or potential liability for any Tax
obligation of any taxpayer (including without limitation any affiliated group of
corporations or other entities that included the Company during a prior period)
other than the Company. All Taxes that the Company is or was required by law to
withhold or collect have been duly withheld or collected and, to the extent
required, have been paid to the proper Governmental Entity. For purposes of
this Agreement, "Taxes" means all taxes, charges, fees, levies or other similar
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assessments or liabilities, including without limitation income, gross receipts,
ad valorem, premium, value-added, excise, severance, stamp, occupation, windfall
profits, customs, duties, real property, personal property, sales, use,
transfer, withholding, employment, unemployment insurance, social security,
business license, business organization, environmental, workers compensation,
profits, license, lease, service, service use, payroll and franchise taxes
imposed by the United States of America or any state, local or foreign
government, or any agency thereof, or other political subdivision of the United
States or any such government, and any interest, fines, penalties, assessments
or additions to tax resulting from, attributable to or incurred in connection
with any tax or any contest or dispute thereof. For purposes of this Agreement,
"Tax Returns" means all reports, returns, declarations, statements or other
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information required to be supplied to a taxing authority in connection with
Taxes.
(b) The federal Tax Returns of the Company have been audited by the
Internal Revenue Service or are closed by the applicable statute of limitations
for all taxable years through the taxable year specified in Section 3.9(b) of
the Disclosure Schedule. The Company has delivered to the Buyer correct and
complete copies of all federal income Tax Returns, examination reports and
statements of deficiencies assessed against or agreed to by the Company since
1993. No examination or audit of any Tax Returns of the Company by any
Governmental Entity is currently in progress or, to the
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knowledge of the Company and the Stockholder, threatened or contemplated. The
Company has not been informed by any jurisdiction that the jurisdiction believes
that the Company was required to file any Tax Return that was not filed. The
Company has not waived any statute of limitations with respect to Taxes or
agreed to an extension of time with respect to a Tax assessment or deficiency.
(c) The Company is not a "consenting corporation" within the meaning
of Section 341(f) of the Internal Revenue Code of 1986, as amended (the "Code"),
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and none of the assets of the Company is subject to an election under Section
341(f) of the Code. The Company 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)(l)(A)(ii) of the Code. The
Company is not a party to any Tax allocation or sharing agreement.
(d) The Company is not and has never been a member of an "affiliated
group" of corporations (within the meaning of Section 1504 of the Code). The
Company has not made an election under Treasury Reg. Section 1.1502-20(g). The
Company is not, nor has it ever been, required to make a basis reduction
pursuant to Treasury Reg. Section 1.1502-20(b) or Treasury Reg. Section
1.337(d)-2(b).
(e) None of the assets of the Company: (i) is "tax exempt use
property" within the meaning of Section 168(h) of the Code; (ii) is property
that is required to be treated as being owned by any other person pursuant to
the provisions of former Section 168(f)(8) of the Code or (iii) directly or
indirectly secures any debt the interest on which is tax-exempt under Section
103(a) of the Code. The Company has not agreed to make, nor is required to
make, any adjustments under Section 481(a) of the Code by reason of a change in
accounting method or otherwise.
3.10 Tangible Assets; Inventory. The Company owns or leases all
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tangible assets necessary for the conduct of its business as presently
conducted. Each such tangible asset is free from material defects, has been
maintained in accordance with normal industry practice, is in good operating
condition and repair (subject to normal wear and tear) and is suitable for the
purposes for which it presently is used. No asset of the Company (tangible or
intangible) is subject to any Security Interest. The Company maintains no
inventory.
3.11 Owned Real Property. The Company owns no real property.
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3.12 Intellectual Property
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(a) The Company owns or has the right to use all Intellectual Property
(as defined below) used in the operation of its business or necessary for the
operation of its business as presently proposed to be conducted. Each item of
Intellectual Property owned by or used in the operation of the business of the
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Company at any time during the period covered by the Financial Statements will
be owned or available for use by the Company on identical terms and conditions
immediately following the Closing. The Company has taken all reasonable measures
to protect the proprietary nature of each item of Intellectual Property, and to
maintain in confidence all trade secrets and confidential information, that it
owns or uses, except to the extent that it has elected to disclose Confidential
Business Information (as defined below) pursuant to the agreements disclosed
pursuant to Section 3.14(f) below. No other person or entity has any rights to
any of the Intellectual Property owned or used by the Company (except pursuant
to agreements or licenses specified in Sections 3.12(c) or 3.12(d) of the
Disclosure Schedule), and, to the knowledge of the Company and the Stockholder,
no other person or entity is infringing, violating or misappropriating any of
the Intellectual Property that the Company owns or uses. For purposes of this
Agreement, "Intellectual Property" means all (i) patents, patent applications,
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patent disclosures and all related continuation, continuation-in-part,
divisional, reissue, reexamination, utility, model, certificate of invention and
design patents, patent applications, registrations and applications for
registrations; (ii) trademarks, service marks, trade dress, logos, trade names
and corporate names and registrations and applications for registration thereof;
(iii) copyrights and registrations and applications for registration thereof
(including moral rights); (iv) mask works and registrations and applications for
registration thereof; (v) computer software, data and documentation; (vi) trade
secrets and confidential business information, whether patentable or
unpatentable and whether or not reduced to practice, know-how, manufacturing and
production processes and techniques, research and development information,
copyrightable works, financial, marketing and business data, pricing and cost
information, business and marketing plans and customer and supplier lists and
information; (vii) other proprietary rights relating to any of the foregoing and
(viii) copies and tangible embodiments thereof (collectively, "Confidential
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Business Information").
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(b) None of the activities or business presently conducted by the
Company, or conducted by the Company at any time within the six years prior to
the date of this Agreement, infringes or violates, or constitutes a
misappropriation of, any Intellectual Property rights of any other person or
entity. The Company has not received any complaint, claim or notice alleging
any such infringement, violation or misappropriation, and, to the knowledge of
the Company and the Stockholder, there is no basis for any such complaint, claim
or notice.
(c) Section 3.12(c) of the Disclosure Schedule identifies each
trademark, patent or registration of an Intellectual Property right which has
been issued to the Company with respect to any of its Intellectual Property,
identifies each pending trademark application, patent application or application
for registration which the Company has made with respect to any of its
Intellectual Property, and identifies each license or other agreement pursuant
to which the Company has granted any rights to any third party with respect to
any of its Intellectual Property. The Company has delivered to the Buyer
correct and complete copies of all such trademarks, patents,
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registrations, applications, licenses and agreements (as amended to date) and
has made available to the Buyer correct and complete copies of all other written
documentation evidencing ownership of, and any claims or disputes relating to,
each such item. Except as set forth in Section 3.12(c) of the Disclosure
Schedule, with respect to each item of Intellectual Property that the Company
owns:
(i) the Company possesses all right, title and interest in
and to such item;
(ii) such item is not subject to any outstanding judgment,
order, decree, stipulation or injunction; and
(iii) the Company has not agreed to indemnify any person
or entity for or against any infringement, misappropriation or other conflict
with respect to such item.
(d) Except for commercially available software subject to standard
"shrinkwrap" licenses and software in the "public domain," Section 3.12(d) of
the Disclosure Schedule identifies each item of Intellectual Property used in
the operation of the business of the Company at any time during the period
covered by the Financial Statements, or that the Company currently plans to use
in the future, that is owned by a party other than the Company. The Company has
supplied the Buyer with correct and complete copies of all licenses, sublicenses
or other agreements (as amended to date) pursuant to which the Company uses such
Intellectual Property. Except as set forth in Section 3.12(d) of the Disclosure
Schedule, with respect to each such item of Intellectual Property:
(i) the license, sublicense or other agreement covering such
item is legal, valid, binding, enforceable and in full force and effect;
(ii) such license, sublicense or other agreement will
continue to be legal, valid, binding, enforceable and in full force and effect
following the Closing in accordance with the terms thereof as in effect prior to
the Closing;
(iii) Neither the Company nor, to the knowledge of the
Company or the Stockholder, any other party to such license, sublicense or other
agreement is in breach or default, and no event has occurred which with notice
or lapse of time or both would constitute a breach or default or permit
termination, modification or acceleration thereunder;
(iv) the underlying item of Intellectual Property is not
subject to any outstanding judgment, order, decree, stipulation or injunction;
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(v) the Company has not agreed to indemnify any person or
entity for or against any interference, infringement, misappropriation or other
conflict with respect to such item; and
(vi) no license or other fee is payable upon any transfer or
assignment of such license, sublicense or other agreement.
(e) Section 3.12(e) of the Disclosure Schedule accurately identifies
and describes in summary fashion the functions of all software developed by the
Company (the "Company Software") and identifies the nature of the Company's
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rights therein. Section 3.12(e) of the Disclosure Schedule identifies all
computer programs, libraries, databases or other software not owned by the
Company but embedded in or necessary for the use of the Company Software (the
"Third-Party Software"). Except as set forth in Section 3.12(e) of the
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Disclosure Schedule:
(i) the Company has not disclosed the source code for any of
the Company Software or other confidential or proprietary information
constituting, embodied in or pertaining to the Company Software to any person
and has taken reasonable measures to prevent such disclosure, other than
disclosure of such source code to employees or independent contractors of the
Company, in each case pursuant to valid and binding nondisclosure agreements
with such persons or entities which are in full force and effect. All of the
Company Software has been created by regular employees of the Company within the
scope of their employment by the Company or by independent contractors of the
Company who, in either case, have executed agreements maintaining the
confidentiality of the Company Software and expressly assigning, in the case of
such regular employees and such independent contractors, all such regular
employees and such independent contractors' right, title and interest in the
Company Software to the Company; and
(ii) the Company has not distributed the Company Software or
Third-Party Software except pursuant to and in compliance with written
agreements provided to the Buyer. No third parties are permitted to distribute
or otherwise use the Company Software except pursuant to valid written license
or sublicense agreements, copies of which have been provided to the Buyer.
(f) Section 3.12(f) of the Disclosure Schedule lists each item of
Intellectual Property in which the Company has any interest and which is not
listed elsewhere in Section 3.12 of the Disclosure Schedule, including but not
limited to all unregistered trademarks, trade names, service marks, logos and
trade dress.
3.13 Real Property Leases. Section 3.13 of the Disclosure Schedule
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lists and describes briefly all real property leased or subleased to the Company
and lists the term of such lease, any extension and expansion options, and the
rent payable thereunder. The Company has delivered to the Buyer correct and
complete copies of the
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leases and subleases (as amended to date) listed in Section 3.13 of the
Disclosure Schedule. With respect to each lease and sublease listed in Section
3.13 of the Disclosure Schedule:
(a) the lease or sublease is legal, valid, binding, enforceable
and in full force and effect;
(b) the lease or sublease will be legal, valid, binding, enforceable
and in full force and effect immediately following the Closing in accordance
with the terms thereof as in effect prior to the Closing;
(c) neither the Company nor, to the knowledge of the Company and the
Stockholder, the other party to the lease or sublease is in breach or default
thereof, and no event has occurred which, with notice or lapse of time, would
constitute a breach or default by the Company or permit termination,
modification or acceleration by the other party thereunder;
(d) there are no disputes, oral agreements or forbearance programs
between the Company and the other party to such lease or sublease in effect as
to the lease or sublease;
(e) the Company has not assigned, transferred, conveyed, mortgaged,
deeded in trust or encumbered any interest in the leasehold or subleasehold; and
(f) all facilities leased or subleased thereunder are supplied with
utilities and other services necessary for the operation of said facilities as
presently conducted.
3.14 Contracts. Section 3.14 of the Disclosure Schedule lists the
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following agreements (whether written or oral) to which the Company is a party:
(a) any original equipment manufacturer (OEM), value-added reseller
(VAR), distributor or site license agreements;
(b) any contract that requires the Company to perform custom
development work during the 12-month period following the Closing Date;
(c) any agreement (or group of related written agreements) for the
lease of personal property from or to third parties providing for lease payments
in excess of $10,000 per annum;
(d) any agreement (or group of related agreements for the purchase or
sale of supplies, products or other personal property or for the furnishing
-12-
or receipt of services (i) which calls for performance over a period of more
than six months, (ii) which involves more than the sum of $10,000 or (iii) in
which the Company has granted manufacturing rights, "most favored nation"
pricing provisions or marketing or distribution rights relating to any products
or territory or has agreed to purchase a minimum quantity of goods or services
or has agreed to purchase goods or services exclusively from a certain party;
(e) any agreement (or group of related agreements) under which the
Company has created, incurred, assumed or guaranteed (or may create, incur,
assume or guarantee) indebtedness (including capitalized lease obligations) or
under which it has imposed (or may impose) a Security Interest on any of its
assets, tangible or intangible;
(f) any agreement concerning confidentiality or noncompetition;
(g) any agreement involving the Stockholder or his affiliates
("Affiliates"), as defined in Rule 12b-2 under the Securities Exchange Act of
------------
1934, as amended (the "Exchange Act,"), that is not both terminated prior to the
------------
Closing and without any force or effect after the Closing;
(h) any consulting or employment agreement;
(i) any agreement under which the consequences of a default or
termination would reasonably be expected to have a Material Adverse Effect; and
(j) any other agreement (or group of related agreements) either
involving more than $15,000 or not entered into in the Ordinary Course of
Business.
The Company has made available to the Buyer a correct and complete
copy of each agreement (as amended to date) listed in Section 3.14 of the
Disclosure Schedule. With respect to each agreement so listed: (i) the
agreement is legal, valid, binding and enforceable and in full force and effect;
(ii) the agreement will be legal, valid, binding and enforceable and in full
force and effect immediately following the Closing in accordance with the terms
thereof as in effect prior to the Closing and (iii) neither the Company nor, to
the knowledge of the Company and the Stockholder, any other party is in breach
or default thereof, and no event has occurred which with notice or lapse of time
would constitute a breach or default by the Company or permit termination,
modification, or acceleration by the other party, under the agreement.
3.15 Powers of Attorney. There are no outstanding powers of attorney
------------------
executed on behalf of the Company.
3.16 Insurance. Section 3.16 of the Disclosure Schedule sets forth a
---------
list of each insurance policy (including fire, theft, casualty, general
liability, workers
-13-
compensation, business interruption, environmental, product liability and
automobile insurance policies and bond and surety arrangements) to which the
Company has been a party, a named insured, or otherwise the beneficiary of
coverage at any time within the past five years. Copies of all such policies
have been delivered to the Buyer. The Company and the Stockholder further
represent that: (i) each such insurance policy is enforceable and in full force
and effect; (ii) such policy will continue to be enforceable and in full force
and effect immediately following the Closing in accordance with the terms
thereof as in effect prior to the Closing; (iii) the Company is not in breach or
default (including with respect to the payment of premiums or the giving of
notices) under such policy, and no event has occurred which, with notice or the
lapse of time or both, would constitute such a breach or default or permit
termination, modification or acceleration, under such policy and (iv) the
Company has not received any notice from the insurer disclaiming coverage or
reserving rights with respect to a particular claim or such policy in general.
3.17 Litigation. Section 3.17 of the Disclosure Schedule identifies,
----------
and contains a brief description of, (a) any unsatisfied judgment, order,
decree, stipulation or injunction and (b) any claim, complaint, action, suit,
proceeding, hearing or investigation of or in any Governmental Entity or before
any arbitrator to which the Company is a party or, to the knowledge of the
Company and the Stockholder, is threatened to be made a party. None of the
complaints, actions, suits, proceedings, hearings and investigations set forth
in Section 3.17 of the Disclosure Schedule, if resolved adversely to the
Company, would be reasonably expected to have a Material Adverse Effect.
3.18 Product Warranty. The Company has not agreed with any customer
----------------
with respect to any product manufactured, sold, leased, licensed or delivered by
the Company to any guaranty, warranty, right of return or other indemnity beyond
the applicable written terms and conditions of such sale, lease, license or
delivery.
3.19 Employees. Section 3.19 of the Disclosure Schedule contains a
---------
list of all employees of the Company, along with the position and the annual
rate of compensation of each such person. To the knowledge of the Company and
the Stockholder, no employee or group of employees has any plans to terminate
employment with the Company. The Company is not a party to or bound by any
collective bargaining agreement, and has not experienced any strikes,
grievances, claims of unfair labor practices or other collective bargaining
disputes. Neither the Company nor the Stockholder has knowledge of any
organizational effort presently being made or threatened by or on behalf of any
labor union with respect to employees of the Company.
-14-
3.20 Employee Benefit Plans
----------------------
(a) Section 3.20 of the Disclosure Schedule sets forth an accurate
schedule of all employee benefit or welfare benefit plans or arrangements of the
Company, including without limitation any pension, profit sharing, bonus, stock
option, incentive, deferred compensation, hospitalization, medical, insurance or
other plan or arrangement, any employment agreement containing "golden
parachute" provisions, and a description of such plans and arrangements,
together with copies of such plans, agreements and any trusts relate thereto,
and classifications of employees covered thereby. All employee benefit plans
listed in Section 3.20 of the Disclosure Schedule are in compliance with any
applicable provisions of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), and the regulations issued thereunder, as well as with all
-----
other applicable federal, state and local statutes, ordinances and regulations.
(b) All plans listed in Section 3.20 of the Disclosure Schedule that
are intended to qualify (the "Qualified Plans") under Section 401(a) of the Code
---------------
have been determined by the Internal Revenue Service to be so qualified, or will
be submitted to the Internal Revenue Service within the relevant amendment
period of Section 401(b) of the Code, and copies of such determination letters
are included as part of Section 3.20 of the Disclosure Schedule. All reports
and other documents required to be filed with any Governmental Entity or
distributed to plan participants or beneficiaries (including, but not limited
to, actuarial reports, audits and Tax Returns) have been timely filed or
distributed, and true copies thereof have been delivered to the Buyer. Neither
the Stockholder, any such plan listed in Section 3.20 of the Disclosure Schedule
nor the Company has engaged in any transaction prohibited under the provisions
of Section 4975 of the Code or Section 406 of ERISA. No such plan listed in
Section 3.20 of the Disclosure Schedule has incurred an accumulated funding
deficiency, as defined in Section 412(a) of the Code and Section 302(1) of
ERISA. The Company has not incurred any liability for excise tax or penalty due
to the Internal Revenue Service or any liability due to the Pension Benefit
Guaranty Corporation. The Company has never maintained a plan that is subject
to Title IV of ERISA or Section 412 of the Code. The Company has never been
required to contribute to a multiemployer plan as defined in Section 4001 of
ERISA.
3.21 Environmental Matters. The Company has not disposed of, or
---------------------
contracted for the disposal of, hazardous wastes, hazardous substances,
infectious or medical waste, as those terms are defined by the Resource
Conservation and Recovery Act of 1976, as amended ("RCRA"), the Comprehensive
----
Environmental Response, Compensation and Liability Act of 1980, as amended
("CERCLA"), or any comparable state laws, rules or regulations. There has been
--------
no storage or treatment of solid wastes or hazardous wastes (as defined in RCRA)
by the Company at any site or other facility owned or operated by the Company in
violation of any
-15-
applicable law, rule, regulation, order, judgment or permit or that would
require any remedial action under any applicable law. Except as disclosed in
Section 3.21 of the Disclosure Schedule, (a) the Company has not received any
notice of any violation with respect to asbestos or other toxic or dangerous
materials at any of its sites, and (b) there has been no spill, discharge, leak,
emission, injection, escape, dumping or release of any kind by the Company onto
any property leased by Company, or into the environment surrounding any such
property of any toxic or hazardous substances as defined under any local, state
or federal regulations or laws. Except as disclosed in Section 3.21 of the
Disclosure Schedule, no employee of the Company has, in the course and scope of
his or her employment, been exposed by the Company in violation of any law or
regulation to hazardous, infectious or toxic wastes or substances. In addition,
neither the Company nor the Stockholder has knowledge of any assertion by any
Governmental Entity of any enforcement action. Section 3.21 of the Disclosure
Schedule sets forth a complete list of all disposal sites utilized in the past
five years by Company.
3.22 Legal Compliance. The Company, and its conduct and operations of
----------------
its business, is in compliance with each law (including rules and regulations
thereunder) of any federal, state, local or foreign government, or any
Governmental Entity, which (a) affects or relates to this Agreement or the
transactions contemplated hereby or (b) is applicable to the Company or its
business.
3.23 Permits. Section 3.23 of the Disclosure Schedule sets forth a
-------
list of all permits, licenses, registrations, certificates, orders or approvals
from any Governmental Entity (including without limitation those issued or
required under environmental laws and those relating to the occupancy or use of
owned or leased real property) ("Permits") issued to or held by the Company.
-------
Such listed Permits are the only Permits that are required for the Company to
conduct its business as presently conducted or as proposed to be conducted.
Each such Permit is in full force and effect and, to the knowledge of the
Company and the Stockholder, no suspension or cancellation of such Permit is
threatened and there is no basis for believing that such Permit will not be
renewable upon expiration. Each such Permit will be in full force and effect
immediately following the Closing.
3.24 Certain Business Relationships With Affiliates. No Affiliate of
----------------------------------------------
the Company (a) owns any property or right, tangible or intangible, which is
used in the business of the Company, (b) has any claim or cause of action
against the Company or (c) owes any money to the Company.
3.25 Year 2000 Compliance
--------------------
(a) The Company has conducted "year 2000" audits with respect to (i)
all of the Company's internal systems that are material to the Company,
including without limitation computer hardware systems, software applications,
firmware, equipment containing embedded microchips and other embedded systems,
and (ii) all of the software, hardware, firmware and other technology which
constitute part of the
-16-
products and services of the Company manufactured, marketed or sold by the
Company or licensed by the Company to third parties. The Company has used
reasonable efforts to obtain "year 2000" certifications with respect to all
third-party systems that are material to the Company, including without
limitation systems belonging to the Company's suppliers, service providers and
customers. The Company has furnished to the Buyer true and correct copies of all
"year 2000" audits, certifications, reports and other similar documents that
have been prepared or performed by or on behalf of the Company or any third
party with respect to the Company.
(b) All of (i) the Company's internal systems that are material to the
Company, including without limitation computer hardware systems, software
applications, firmware, equipment containing embedded microchips and other
embedded systems, and (ii) the software, hardware, firmware and other technology
which constitute part of the products and services of the Company manufactured,
marketed or sold by the Company or licensed by the Company to third parties are
Year 2000 Compliant (as defined below) and will not be adversely affected with
respect to functionality, interoperability, performance or volume capacity
(including without limitation the processing and reporting of data) by virtue of
the arrival of the year 2000.
(c) The Company is not aware of any failure to be Year 2000 Compliant
of any third-party system that is material to the Company, including without
limitation any system belonging to one of the Company's suppliers, service
providers or customers.
(d) For purposes of this Agreement, "Year 2000 Compliant" means
-------------------
that the applicable system or item:
(i) will accurately receive, record, store, provide,
recognize and process all date and time data from, during, into and between the
twentieth and twenty-first centuries, the years 1999 and 2000 and all leap
years;
(ii) will accurately perform all date-dependent calculations
and operations (including without limitation mathematical operations, sorting,
comparing and reporting) from, during, into and between the twentieth and
twenty-first centuries, the years 1999 and 2000 and all leap years; and
(iii) will not malfunction, cease to function or provide
invalid or incorrect results as a result of (x) the change of years from 1999 to
2000 or from 2000 to 2001, (y) date data, including date data which represents
or references different centuries, different dates during 1999 and 2000, or more
than one century or (z) the occurrence of any particular date;
in each case without human intervention, other than original
data entry; provided in each case, that all applications, hardware and other
systems used
-17-
in conjunction with such system or item which are not owned or licensed by the
Company correctly exchange date data with or provide data to such system or
item.
(e) Except as set forth in Section 3.25(e) of the Disclosure Schedule,
the Company has not provided any guarantee or warranty for any product sold or
licensed, or service provided, by the Company to the effect that such product or
service (i) complies with or accounts for the fact of the arrival of the year
2000 or (ii) will not be adversely affected with respect to functionality,
interoperability, performance or volume capacity (including without limitation
the processing and reporting of data) by virtue of the arrival of the year 2000.
3.26 Pooling. Neither the Company nor any of its Affiliates has
-------
through the date of this Agreement taken or agreed to take any action that would
prevent the Company and the Buyer from accounting for the business combination
contemplated by this Agreement as a "pooling of interests" in conformity with
GAAP.
3.27 Brokers' Fees. The Company has no liability or obligation to
-------------
pay any fees or commissions to any broker, finder or agent with respect to the
transactions contemplated by this Agreement.
3.28 Books and Records. The minute books and other similar records of
-----------------
the Company contain true and complete records in all material respects of all
actions taken at any meetings of the Company's stockholders, Board of Directors
or any committee thereof and of all written consents executed in lieu of the
holding of any such meeting. The books and records of the Company accurately
reflect in all material respects the assets, liabilities, business, financial
condition and results of operations of the Company and have been maintained in
all material respects in accordance with good business and bookkeeping
practices.
3.29 Customers and Suppliers. Except as disclosed in Section 3.29 of
-----------------------
the Disclosure Schedule, no material supplier of the Company has indicated in
writing within the past year that it will stop, or decrease the rate of,
supplying materials, products or services to them and no material customer of
the Company has indicated in writing within the past year that it will stop, or
decrease the rate of, buying, leasing or licensing materials, products or
services from them. Section 3.29 of the Disclosure Schedule sets forth a list
of (a) each customer that accounted for more than 1% of the revenues of the
Company during the last full fiscal year and the amount of revenues accounted
for by such customer during such period and (b) each supplier that is the sole
supplier of any significant product or component to the Company.
3.30 Disclosure. No representation or warranty by the Company and the
----------
Stockholder contained in this Agreement, and no statement contained in the
Disclosure Schedule or any other document, certificate or other instrument
delivered to or to be delivered by or on behalf of the Company and the
Stockholder pursuant to this
-18-
Agreement, contains any untrue statement of a material fact or omits to state
any material fact necessary, in light of the circumstances under which it was
made, in order to make the statements herein or therein not misleading.
4. Representations of the Buyer
----------------------------
The Buyer represents and warrants to the Company and the Stockholder
as follows:
4.1 Organization and Corporate Power. The Buyer is a corporation
--------------------------------
duly organized, validly existing and in corporate and tax good standing under
the laws of the State of Delaware, and has all requisite corporate power and
authority to carry on the business in which it is engaged and to own and use the
properties owned and used by it. The Buyer has delivered to the Company true and
complete copies of its charter and by-laws, each as amended and/or restated to
date and as in effect on the date hereof. The Buyer is not in default under or
in violation of any provision of its charter or by-laws.
4.2 Capitalization. The authorized capital stock of the Buyer
--------------
consists of (a) 25,000,000 shares of Buyer Common Stock, of which 15,551,589
shares were issued and outstanding and no shares were held in the treasury of
the Buyer as of March 29, 1999, and (b) 1,000,000 shares of Preferred Stock,
$.01 par value per share, of which no shares are issued or outstanding. All of
the issued and outstanding shares of Buyer Common Stock are duly authorized,
validly issued, fully paid, nonassessable and free of all preemptive rights.
All of the Buyer Shares will be, when issued in accordance with the terms of
this Agreement, duly authorized, validly issued, fully paid, nonassessable and
free of all preemptive rights.
4.3 Authority. The Buyer has all requisite power and authority to
---------
execute and deliver this Agreement and to perform its obligations hereunder.
The execution, delivery and performance of this Agreement by the Buyer and the
consummation by the Buyer of the transactions contemplated hereby have been duly
and validly authorized by all necessary corporate action on the part of the
Buyer. This Agreement has been duly and validly executed and delivered by the
Buyer and constitutes a valid and binding obligation of the Buyer, enforceable
against it in accordance with its terms.
4.4 Noncontravention. Neither the execution and delivery by the
----------------
Buyer of this Agreement or the other agreements contemplated hereby, nor the
consummation by the Buyer of the transactions contemplated hereby or thereby,
will (a) conflict or violate any provision of the charter or by-laws of the
Buyer; (b) require on the part of the Buyer any filing with, or permit,
authorization, consent or approval of, any Governmental Entity; (c) conflict
with, result in a breach of, constitute (with or without due notice or lapse of
time or both) a default under, result in the acceleration of, create
-19-
in any party any right to accelerate, terminate, modify or cancel, or require
any notice, consent or waiver under, any contract, lease, sublease, license,
sublicense, franchise, permit, indenture, agreement or mortgage for borrowed
money, instrument of indebtedness, Security Interest or other arrangement to
which the Buyer is a party or by which it is bound or to which any of its assets
are subject; (d) result in the imposition of any Security Interest upon any
assets of the Buyer or (e) violate any order, writ, injunction, decree, statute,
rule or regulation applicable to the Buyer or any of its properties or assets.
4.5 Reports and Financial Statements. The Buyer has previously
--------------------------------
furnished to the Company and the Stockholder complete and accurate copies, as
amended or supplemented, of its (a) Annual Report on Form 10-K for the fiscal
year ended December 31, 1998, as filed with the Securities and Exchange
Commission (the "SEC"), and (b) all other reports filed by the Buyer under
---
Section 13 of the Exchange Act with the SEC since December 31, 1998 (such
reports are collectively referred to herein as the "Buyer Reports"). The Buyer
-------------
Reports constitute all of the documents required to be filed by the Buyer under
Section 13 of the Exchange Act with the SEC since December 31, 1998. As of
their respective dates, the Buyer Reports did not contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The audited financial
statements and unaudited interim financial statements of the Buyer included in
the Buyer Reports (i) comply as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto, (ii) have been prepared in accordance with GAAP applied on a
consistent basis throughout the periods covered thereby (except as may be
indicated therein or in the notes thereto, and in the case of quarterly
financial statements, as permitted by Form 10-Q under the Exchange Act), (iii)
fairly present the consolidated financial condition, results of operations and
cash flows of the Buyer as of the respective dates thereof and for the periods
referred to therein and (iv) are consistent with the books and records of the
Buyer.
4.6 Absence of Material Adverse Changes. Since December 31, 1998,
-----------------------------------
there has not been any material adverse change in the business, properties,
operations, financial condition, assets or liabilities of the Buyer, nor has
there occurred any event or development which could reasonably be foreseen as
likely to result in such a material adverse change in the future.
4.7 Broker's Fees. The Buyer has no liability or obligation to pay
-------------
any fees or commissions to any broker, finder or agent with respect to the
transactions contemplated by this Agreement.
4.8 Disclosure. No representation or warranty by the Buyer contained
----------
in this Agreement, and no statement contained in any other document, certificate
or other instrument delivered by or on behalf of the Buyer pursuant to this
Agreement,
-20-
contains any untrue statement of a material fact or omits to state any material
fact necessary, in light of the circumstances under which it was made, in order
to make the statements herein or therein not misleading.
5. Indemnification
---------------
5.1 By the Stockholder. Subject to the provisions and limitations in
------------------
this Section 5, the Stockholder hereby agrees to indemnify and hold harmless the
Buyer and the Company from and against any and all debts, obligations and other
liabilities (whether absolute, accrued, contingent, fixed or otherwise, or
whether known or unknown, or due or to become due or otherwise), monetary
damages, fines, fees, penalties, interest obligations, deficiencies, losses and
expenses (including without limitation amounts paid in settlement; interest;
court costs; costs of investigators; reasonable fees and expenses of attorneys,
accountants, financial advisors and other experts; and other expenses of
litigation) incurred or suffered by the party seeking indemnification
("Damages") resulting from or relating to:
-------
(a) any breach of or failure to perform any representation, warranty,
covenant or agreement of the Company or the Stockholder contained in this
Agreement;
(b) any claim by a stockholder or former stockholder of the Company,
or any other person, firm, corporation or entity, seeking to assert, or based
upon: (i) ownership or rights to ownership of any shares of stock of the
Company; (ii) any rights of a stockholder, including any option, dissenter's or
preemptive rights or rights to notice or to vote; (iii) any rights under the
charter or by-laws of the Company or (iv) any claim that his, her or its shares
were wrongfully repurchased by the Company; and
(c) any and all Taxes with respect to the Company for any taxable
period prior to the Closing Date.
5.2 Claims for Indemnification. Whenever any claim shall arise for
--------------------------
indemnification under Section 5, the Buyer or the Company, as the case may be,
seeking indemnification (the "Indemnified Party") shall promptly notify the
-----------------
party from whom indemnification is sought (the "Indemnifying Party") of the
------------------
claim and, when known, the facts constituting the basis for such claim;
provided, however, that any delay in providing notice shall not relieve the
Indemnifying Party of its responsibility hereunder unless (and then only to the
extent) such delay materially impairs the Indemnifying Party's ability to defend
the claim. In the event of any such claim for indemnification hereunder
resulting from or in connection with any claim or legal proceedings by a third
party, the notice shall specify, if known, the amount or an estimate of the
amount of the liability arising therefrom. The Indemnified Party shall not
settle or compromise any claim by a third party for which it is entitled to
indemnification hereunder without the
-21-
prior written consent, which shall not be unreasonably withheld or delayed, of
the Indemnifying Party; provided, however, that if suit shall have been
instituted against the Indemnified Party and the Indemnifying Party shall not
have taken control of such suit after notification thereof as provided in
Subsection 5.3 of this Agreement, the Indemnified Party shall have the right to
settle or compromise such claim upon giving 30 days' prior written notice to the
Indemnifying Party as provided in Subsection 5.3. Notwithstanding the foregoing,
if a third party asserts that an Indemnified Person is liable to such third
party for a monetary or other obligation which may constitute or result in
Damages for which such Indemnified Person may be entitled to indemnification
pursuant to this Section 5, and such Indemnified Person reasonably determines
that it has a valid business reason to fulfill such obligation, then (i) such
Indemnified Person shall be entitled to satisfy such obligation, without consent
from the Indemnifying Party, (ii) such Indemnified Person may and shall make a
claim for indemnification pursuant to this Section 5 and (iii) such Indemnified
Person shall be reimbursed for any such Damages for which it is ultimately
determined to be entitled to indemnification pursuant to this Section 5 (it
being understood that nothing in this Section 5 shall operate or be construed to
affect the right of the Indemnifying Party to contest the amount or
appropriateness of such reimbursement or the settlement or satisfaction by the
Indemnified Party).
5.3 Defense by the Indemnifying Party. In connection with any claim
---------------------------------
which may give rise to indemnity hereunder resulting from or arising out of any
claim or legal proceeding by a person other than the Indemnified Party, the
Indemnifying Party, at its sole cost and expense, may, upon written notice to
the Indemnified Party, assume the defense of any such claim or legal proceeding
(provided that the Indemnifying Party acknowledges to the Indemnified Party in
writing the obligation of the Indemnifying Party to indemnify the Indemnified
Party with respect to all elements of such claim, subject to the limitations in
this Section 5). If the Indemnifying Party assumes the defense of any such
claim or legal proceeding, it shall select counsel reasonably acceptable to the
Indemnified Party to conduct the defense of such claims or legal proceedings and
at the sole cost and expense of the Indemnifying Party shall take all steps
necessary in the defense or settlement thereof. The Indemnifying Party shall
not consent to a settlement of, or the entry of any judgment arising from, any
such claim or legal proceeding, without the prior written consent of the
Indemnified Party (which consent shall not be unreasonably withheld), unless
such settlement or judgment contains a provision releasing the Indemnified Party
from all liability for such claim. The Indemnified Party shall cooperate with
and shall be entitled to participate in (but not control) the defense of any
such action, with its own counsel and at its own expense; provided, however,
that if the Indemnified Party reasonably concludes that the Indemnifying Party
and the Indemnified Party have conflicting interests or different defenses
available with respect to such claim or legal proceeding, the reasonable fees
and expenses of counsel to the Indemnified Party shall be considered "Damages"
for purposes of this Agreement. If the Indemnifying Party does not assume the
defense of any such claim or litigation resulting therefrom within 30 days after
receipt of notice of
-22-
such claim from the Indemnified Party: (a) the Indemnified Party may defend
against such claim or litigation in such manner as it may deem appropriate,
including, but not limited to, settling such claim or litigation, after giving
at least 15 days' prior written notice of the same to the Indemnifying Party, on
such terms as the Indemnified Party may deem appropriate, and (b) the
Indemnifying Party shall be entitled to participate in (but not control) the
defense of such action, with its counsel and at its own expense; in such event,
the Indemnifying Party may not thereafter seek to question the manner in which
the Indemnified Party defended such third-party claim or the amount or nature of
any such settlement.
5.4 No Contribution. If the Stockholder is required to make any
---------------
indemnification payment pursuant to this Section 5, he shall not have any rights
to contribution from the Company.
5.5 Survival. The representations, warranties, covenants and
--------
agreements of the Company and the Stockholder set forth in this Agreement shall
survive the Closing and the consummation of the transactions contemplated hereby
and continue until the earlier of (a) the first anniversary of the Closing Date
or (b) the date of issuance of the Buyer's audited financial statements for the
year ending December 31, 1999. Notwithstanding the foregoing, the
representations and warranties contained in Sections 2 and 3.2 shall survive the
Closing and the consummation of the transactions contemplated thereby and
continue in full force and effect indefinitely.
5.6 Limitations. Notwithstanding anything to the contrary herein,
-----------
(a) the aggregate liability of the Stockholder for Damages under Section 5 shall
not exceed $350,000 and (b) the Stockholder shall not be liable under Section 5
unless and until the aggregate Damages exceed $35,000 (at which point the
Indemnifying Party shall become liable for the aggregate Damages, and not just
amounts in excess of $35,000). Except with respect to claims based on fraud,
the rights of the Indemnified Persons under this Section 5 shall be the
exclusive remedy of the Indemnified Persons with respect to any claims resulting
from or relating to this Agreement.
5.7 Adjustment to Purchase Price. All indemnification payments
----------------------------
pursuant to this Section 5 shall be deemed adjustments to the Purchase Price.
6. Ancillary Matters
-----------------
6.1 Proprietary Information.
-----------------------
(a) The Stockholder shall hold in confidence all knowledge and
information of a secret or confidential nature with respect to the business of
the Company and shall not disclose, publish or make use of the same without the
consent of the Buyer, except to the extent that disclosure is required by law or
legal process or
-23-
such information shall have become public knowledge other than by breach of this
Agreement by the Stockholder.
(b) The Stockholder agrees that the remedy at law for any breach of
this Subsection 6.1 would be inadequate and that the Buyer shall be entitled to
injunctive relief in addition to any other remedy it may have upon breach of any
provision of this Subsection 6.1.
6.2 Employment Agreement.
--------------------
On the Closing Date, the Stockholder shall enter into an employment
agreement with the Buyer substantially in the form attached hereto as Exhibit A.
---------
6.3 Communications. No public communications concerning this
--------------
Agreement shall be made without the mutual consent and cooperation of the Buyer,
the Company and the Stockholder, except as otherwise required by law.
6.4 Transfer of Shares.
------------------
(a) Restricted Shares. "Restricted Shares" means (i) the Buyer Shares
----------------- -----------------
and (ii) any other shares of capital stock of the Buyer issued in respect of
such shares (as a result of stock splits, stock dividends, reclassifications,
recapitalizations or similar events); provided, however, that shares of Buyer
Common Stock which are Restricted Shares shall cease to be Restricted Shares (x)
upon any sale pursuant to Section 4(1) of the Securities Act or Rule 144 under
the Securities Act or (y) at such time as they become eligible for sale under
Rule 144(k) under the Securities Act.
(b) Requirements for Transfer. Restricted Shares shall not be sold or
-------------------------
transferred unless either (i) they first shall have been registered under the
Securities Act or (ii) the Buyer first shall have been furnished with an opinion
of legal counsel, reasonably satisfactory to the Buyer, to the effect that such
sale or transfer is exempt from the registration requirements of the Securities
Act.
(c) Legend. Each certificate representing Restricted Shares shall
------
bear a legend substantially in the following form:
"The shares represented by this certificate have not been registered
under the Securities Act of 1933, as amended, and may not be sold,
transferred or otherwise disposed of in the absence of an effective
registration statement under such Act or an opinion of counsel
satisfactory to the corporation to the effect that such registration
is not required."
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The Buyer, in its discretion, may cause stop transfer orders to be placed
with its transfer agent with respect to the certificates for the shares of Buyer
Common Stock which are required to bear the foregoing legend. The foregoing
legend shall be removed from the certificates representing any Restricted
Shares, at the request of the holder thereof, at such time as they become
eligible for resale pursuant to Rule 144(k) under the Securities Act. Until the
second anniversary of the Closing Date, the Buyer agrees to use its best efforts
to make and keep current public information about the Company, as those terms
are understood and defined in Rule 144 of the Securities Act, and to file in a
timely manner all reports required to be filed by the Buyer under the Exchange
Act.
6.5 Pooling Requirements.
--------------------
(a) The Stockholder agrees not to sell, transfer or otherwise dispose
of, or reduce his interest in, or risk relating to, any Buyer Common Stock
issued to the Stockholder pursuant to this Agreement, or upon exercise of any
employee stock options or warrants, until after such time as the Buyer has
published (within the meaning of Accounting Series Release No. 130, as amended,
of the SEC) financial results covering at least 30 days of combined operations
of the Company and the Buyer.
(b) The Stockholder understands that all certificates representing the
Buyer Common Stock deliverable to the Stockholder pursuant to this Agreement
shall, until the occurrence of the event referred to in Section 6.5(a), bear a
legend substantially as follows:
"The shares represented by this certificate may not be offered,
sold, pledged, transferred or otherwise disposed of except in
accordance with the requirements of the Securities Act of 1933, as
amended, and the other conditions specified in a Stock Purchase
Agreement between the holder of this certificate and SS&C
Technologies, Inc., a copy of which Agreement may be inspected by the
holder of this certificate at the executive offices of SS&C
Technologies, Inc. or furnished by SS&C Technologies, Inc. to the
holder of this certificate upon written request and without charge."
6.6 Tax Restrictions. The Stockholder has, and as of the Closing Date
----------------
will have, no plan or intent (a "Plan"), to engage in a sale, exchange,
transfer, pledge, disposition or any other transaction that results in a direct
or indirect transfer of the risk of ownership (a "Sale"): (i) to the Buyer, or
any person related to the Buyer, of (A) any shares of Common Stock for
consideration other than shares of Buyer Common Stock (or cash in lieu of
fractional shares of Buyer Common Stock) or (B) any shares of Buyer Common Stock
to be received hereunder; or (ii) to the Company, or any person related to the
Company, of any shares of Common Stock. For purposes of this section, the
determination of whether a person is related to the Buyer and/or the Company
shall be made in accordance with Treasury Regulation Section 1.368-1(e)(3).
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6.7. Repayment of Loan. The Stockholder acknowledges that he issued a
-----------------
demand note to the Company with a current outstanding principal balance of
$78,000 (the "Note") and agrees to deliver the Note to the Buyer no later than
----
the tenth day after the Closing Date. The Stockholder acknowledges that the
Note requires his payment on demand of the outstanding principal balance under
the Note, together with any interest thereon.
7. Dispute Resolution
------------------
7.1 General. In the event that any dispute should arise between the
-------
parties hereto with respect to any matter covered by this Agreement, including,
without limitation, the calculation of claims under Section 5, the parties
hereto shall resolve such dispute in accordance with the procedures set forth in
this Section 7.
7.2 Consent of the Parties. In the event of any dispute between the
----------------------
parties with respect to any matter covered by this Agreement, the parties shall
first use their best efforts to resolve such dispute among themselves. If the
parties are unable to resolve the dispute within 30 calendar days after the
commencement of efforts to resolve the dispute, the dispute will be submitted to
arbitration in accordance with Subsection 7.3 hereof.
7.3 Arbitration
-----------
(a) Either the Buyer or the Stockholder may submit any matter referred
to in Subsection 7.2 hereof to arbitration by notifying the other party hereto,
in writing, of such dispute. Within 15 days after receipt of such notice, the
Buyer and the Stockholder shall designate in writing one arbitrator to resolve
the dispute; provided, that if the parties hereto cannot agree on an arbitrator
within such 15-day period, the arbitrator shall be selected by the American
Arbitration Association from candidates not selected by the Buyer or the
Stockholder. The arbitrator so designated shall not be an employee, consultant,
officer, director or stockholder of any party hereto or any Affiliate of any
party to this Agreement.
(b) Within 30 days after the designation of the arbitrator, the
arbitrator, the Buyer and the Stockholder shall meet, at which time the Buyer
and the Stockholder shall be required to set forth in writing all disputed
issues and a proposed ruling on each such issue.
(c) The arbitrator shall set a date for a hearing, which shall be no
later than 30 days after the submission of written proposals pursuant to
paragraph (b) above, to discuss each of the issues identified by the Buyer and
the Stockholder. Each such party shall have the right to be represented by
counsel. The arbitration shall be governed by the rules of the American
Arbitration Association; provided, that the arbitrator shall have sole
discretion with regard to the admissibility of evidence.
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(d) The arbitrator shall use his or her best efforts to rule on each
disputed issue within 30 days after the completion of the hearings described in
paragraph (c) above. The determination of the arbitrator as to the resolution
of any dispute shall be binding and conclusive upon all parties hereto. All
rulings of the arbitrator shall be in writing and shall be delivered to the
parties hereto.
(e) The prevailing party in any arbitration shall be entitled to an
award of reasonable attorneys' fees incurred in connection with the arbitration.
The non-prevailing party shall pay such fees, together with the fees of the
arbitrator and the costs and expenses of the arbitration. For purposes hereof,
a party seeking payment of any amount in arbitration shall be deemed to be the
prevailing party if it is determined that it is entitled to receive at least 85%
of the payment initially claimed by it to be due to such party in such
arbitration, and the party from which such payment is sought shall be deemed to
be the "prevailing party" if the other party is not so deemed to be the
prevailing party.
(f) Any arbitration pursuant to this Subsection 7.3 shall be conducted
in Hartford, Connecticut. Any arbitration award may be entered in and enforced
by any court having jurisdiction thereover and the parties hereby consent and
commit themselves to the jurisdiction of the courts of the State of Connecticut
and the United States District Court for the District of Connecticut for
purposes of the enforcement of any arbitration award.
8. Notices
-------
Any notices or other communications required or permitted hereunder
shall be sufficiently given if in writing and delivered personally or sent by
telex, telecopy, Federal Express or other overnight courier, registered or
certified mail, postage prepaid, addressed as follows or to such other address
of which the parties may have given notice:
To the Buyer: SS&C Technologies, Inc.
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Chief Executive Officer
With a copy to: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
▇▇▇▇ and ▇▇▇▇ LLP
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
To the Stockholder: ▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇ ▇.▇. ▇▇/▇▇/ ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
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With a copy to: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, III, Esq.
Gunster, Yoakley, ▇▇▇▇▇▇-▇▇▇▇▇
& ▇▇▇▇▇▇▇, P.A.
Broward Financial Centre
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Unless otherwise specified herein, such notices or other communications shall be
deemed received (a) on the date delivered, if delivered personally or by telex
or telecopy, (b) the next business day, if delivered by Federal Express or other
overnight courier, charges prepaid, or (c) three business days after being sent,
if sent by registered or certified mail, first class postage prepaid.
9. Successors and Assigns
----------------------
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns, except that the
Buyer, on the one hand, and the Stockholder and the Company, on the other hand,
may not assign their respective obligations hereunder without the prior written
consent of the other party; provided, however, that the Buyer may assign this
Agreement, and its rights and obligations hereunder, to a wholly owned
subsidiary of the Buyer. Any assignment in contravention of this provision
shall be void. No assignment shall release the Buyer, the Stockholder or the
Company from any obligation or liability under this Agreement. In addition, the
Stockholder may not assign any rights to receive payments under this Agreement
without the prior written consent of the Buyer, which consent shall not be
unreasonably withheld.
10. Entire Agreement; Amendments; Attachments
-----------------------------------------
(a) This Agreement, all Schedules and Exhibits hereto, and all
agreements and instruments to be delivered by the parties pursuant hereto
represent the entire understanding and agreement between the parties hereto with
respect to the subject matter hereof and supersede all prior oral and written
and all contemporaneous oral negotiations, commitments and understandings
between such parties. The Buyer, by the consent of its Board of Directors or
officers authorized by such Board, and the Stockholder may amend or modify this
Agreement, in such manner as may be agreed upon, by a written instrument
executed by the Buyer and the Stockholder.
(b) If the provisions of any Schedule or Exhibit to this Agreement are
inconsistent with the provisions of this Agreement, the provisions of this
Agreement shall prevail. The Schedules and Exhibits attached hereto are hereby
incorporated as integral parts of this Agreement.
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11. Severability
------------
Any provision of this Agreement which is invalid, illegal or
unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective
to the extent of such invalidity, illegality or unenforceability, without
affecting in any way the remaining provisions hereof in such jurisdiction or
rendering that or any other provision of this Agreement invalid, illegal or
unenforceable in any other jurisdiction.
12. Investigation of the Parties
----------------------------
All representations and warranties contained herein which are made to
the best knowledge of a party shall require that such party make reasonable
investigation and inquiry with respect thereto to ascertain the correctness and
validity thereof.
13. Expenses
--------
Except as otherwise expressly provided herein, the Buyer shall pay all
fees and expenses (including, without limitation, legal and accounting fees and
expenses) incurred by it in connection with the transactions contemplated
hereby, and the Stockholder shall pay all fees and expenses (including, without
limitation, legal and accounting fees and expenses) incurred by the Stockholder
or the Company in connection with the transactions contemplated hereby. The
Stockholder shall be responsible for payment of all sales or transfer taxes
arising out of the conveyance of the Shares owned by the Stockholder.
14. Legal Fees
----------
In the event that legal proceedings are commenced by the Buyer against
the Stockholder, or by the Stockholder against the Buyer, in connection with
this Agreement or the transactions contemplated hereby, the party or parties
which do not prevail in such proceedings shall pay the reasonable attorneys'
fees and other costs and expenses, including investigation costs, incurred by
the prevailing party in such proceedings.
15. Governing Law
-------------
This Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware without regard to conflict of laws rules.
16. Section Headings
----------------
The section headings are for the convenience of the parties and in no
way alter, modify, amend, limit or restrict the contractual obligations of the
parties.
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17. Counterparts
------------
This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original, but all of which shall be one and the
same document.
18. Construction.
------------
The language used in this Agreement shall be deemed to be the language
chosen by the parties hereto to express their mutual intent, and no rule of
strict construction shall be applied against any party. Any reference to any
federal, state, local or foreign statute or law shall be deemed also to refer to
all rules and regulations promulgated thereunder, unless the context requires
otherwise.
[Remainder of page intentionally left blank.]
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IN WITNESS WHEREOF, this Agreement has been duly executed by the parties
hereto as of the date first above written.
SS&C TECHNOLOGIES, INC.
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
----------------------------------
By: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Chief Financial Officer
THE BROOKSIDE CORPORATION
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------
By: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: President
STOCKHOLDER:
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇
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SS&C Technologies, Inc. agrees to furnish supplementally to the Securities
and Exchange Commission copies of any of the following schedules and exhibits
upon request of the Commission.
Schedule 3.9 Tax Matters
Schedule 3.12 Intellectual Property
Schedule 3.13 Real Property Leases
Schedule 3.14 Contracts
Schedule 3.16 Insurance
Schedule 3.17 Litigation
Schedule 3.19 Employees
Schedule 3.20 Employee Benefit Plans
Schedule 3.21 Environmental Matters
Schedule 3.23 Permits
Schedule 3.25 Product Warranty
Schedule 3.29 Customers and Suppliers
Exhibit A Employment Agreement
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