EXHIBIT 99.1
ASSET PURCHASE
AGREEMENT
BY AND BETWEEN
TRANSACTION NETWORK SERVICES, INC. AND
SUNTECH PROCESSING SYSTEMS, LLC
DATED
FEBRUARY 27, 1998
TABLE OF CONTENTS
Page
ARTICLE I PURCHASE AND SALE . . . . . . . . . . . . . . . . . . . . . . . 1
1.01 Assets Purchased . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.02 Exclusion of Liabilities . . . . . . . . . . . . . . . . . . . . . 2
1.03 General Assignment . . . . . . . . . . . . . . . . . . . . . . . . 2
1.04 Assumption Agreement . . . . . . . . . . . . . . . . . . . . . . . 3
1.05 Hiring Employees . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.06 Excluded Assets. . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.07 Determination as to Mixed Use Assets . . . . . . . . . . . . . . . 3
1.08 ▇▇▇▇ of Sale . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.09 Registration Rights Agreements . . . . . . . . . . . . . . . . . . 4
1.10 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE II LIABILITIES NOT BEING ASSUMED . . . . . . . . . . . . . . . . . 4
2.01 Liabilities Not Assumed. . . . . . . . . . . . . . . . . . . . . . 4
2.02 Indemnity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE III PURCHASE PRICE. . . . . . . . . . . . . . . . . . . . . . . . . 6
3.01 Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.02 Payment of Purchase Price. . . . . . . . . . . . . . . . . . . . . 6
3.03 Payment of Customer Liability. . . . . . . . . . . . . . . . . . . 6
ARTICLE IV THE CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . 6
4.01 The Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
4.02 SunTech's Deliveries at the Closing. . . . . . . . . . . . . . . . 6
4.03 TNS's Deliveries at the Closing. . . . . . . . . . . . . . . . . . 6
ARTICLE V REPRESENTATIONS AND WARRANTIES OF SUNTECH . . . . . . . . . . . 7
5.01 Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
5.02 Authorization. . . . . . . . . . . . . . . . . . . . . . . . . . . 7
5.03 No Violation . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
5.04 Governmental Authorities . . . . . . . . . . . . . . . . . . . . . 8
5.05 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . 8
5.06 No Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . 8
5.07 Absence of Certain Changes . . . . . . . . . . . . . . . . . . . . 8
5.08 Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
5.09 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
5.10 Tax Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . .10
5.11 Proprietary Rights . . . . . . . . . . . . . . . . . . . . . . . .10
5.12 Compliance with Applicable Laws. . . . . . . . . . . . . . . . . .11
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5.13 Accounts Receivable. . . . . . . . . . . . . . . . . . . . . . . .11
5.14 Employees; Employee Benefit Plans. . . . . . . . . . . . . . . . .11
5.15 Labor Matters. . . . . . . . . . . . . . . . . . . . . . . . . . .11
5.16 Brokers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
5.17 Acquisition of TNS Common Stock. . . . . . . . . . . . . . . . . .11
5.18 Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF TNS . . . . . . . . . . . . .12
6.01 Corporate Organization . . . . . . . . . . . . . . . . . . . . . .12
6.02 Authorization. . . . . . . . . . . . . . . . . . . . . . . . . . .12
6.03 No Violation . . . . . . . . . . . . . . . . . . . . . . . . . . .13
6.04 Governmental Authorities . . . . . . . . . . . . . . . . . . . . .13
6.05 SEC Documents; Financial Statements. . . . . . . . . . . . . . . .13
6.06 No Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . .14
6.07 Absence of Certain Changes . . . . . . . . . . . . . . . . . . . .14
6.08 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
6.09 Compliance with Applicable Laws. . . . . . . . . . . . . . . . . .14
6.10 Brokers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
ARTICLE VII COVENANTS OF SUNTECH PENDING THE CLOSING . . . . . . . . . . . . .15
7.01 Conduct of the Business. . . . . . . . . . . . . . . . . . . . . .15
7.02 Best Efforts . . . . . . . . . . . . . . . . . . . . . . . . . . .15
ARTICLE VIII COVENANTS OF SUNTECH AND TNS. . . . . . . . . . . . . . . . . .15
8.01 Confidentiality. . . . . . . . . . . . . . . . . . . . . . . . . .15
8.02 Access . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16
8.03 Audit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
ARTICLE IX CONDITIONS PRECEDENT TO THE OBLIGATIONS OF TNS. . . . . . . . .17
9.01 Representations and Warranties; Performance. . . . . . . . . . . .17
9.02 Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . . . .17
9.03 Registration Rights Agreements . . . . . . . . . . . . . . . . . .17
9.04 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
9.05 Injunctions. . . . . . . . . . . . . . . . . . . . . . . . . . . .18
9.06 Further Documentation. . . . . . . . . . . . . . . . . . . . . . .18
ARTICLE X CONDITIONS PRECEDENT TO THE
OBLIGATIONS OF SUNTECH. . . . . . . . . . . . . . . . . . . . .18
10.01 Representations and Warranties; Performance. . . . . . . . . . . .18
10.02 Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . . . .18
10.03 Registration Rights Agreement. . . . . . . . . . . . . . . . . . .18
10.04 Issuance of TNS Common Stock . . . . . . . . . . . . . . . . . . .18
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10.05 Injunctions. . . . . . . . . . . . . . . . . . . . . . . . . . . .18
10.06 Further Documentation. . . . . . . . . . . . . . . . . . . . . . .19
ARTICLE XI COMPETITION AND NON-SOLICITATION. . . . . . . . . . . . . . . .19
11.01 Duration and Scope . . . . . . . . . . . . . . . . . . . . . . . .19
11.02 Prohibited Activities. . . . . . . . . . . . . . . . . . . . . . .19
11.03 Breach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19
11.04 Intent of Parties. . . . . . . . . . . . . . . . . . . . . . . . .19
ARTICLE XII INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . . . . . . .20
12.01 Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . .20
12.02 Limitation . . . . . . . . . . . . . . . . . . . . . . . . . . . .20
12.03 Claims by Third Parties. . . . . . . . . . . . . . . . . . . . . .20
ARTICLE XIII MISCELLANEOUS PROVISIONS. . . . . . . . . . . . . . . . . . . .21
13.01 Amendment and Modification . . . . . . . . . . . . . . . . . . . .21
13.02 Waiver of Compliance; Consents . . . . . . . . . . . . . . . . . .21
13.03 Investigations; Survival of Representations and Warranties . . . .21
13.04 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21
13.05 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . .23
13.06 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . .23
13.07 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23
13.08 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . .23
13.09 Time of Essence. . . . . . . . . . . . . . . . . . . . . . . . . .23
13.10 Attorneys' Fees. . . . . . . . . . . . . . . . . . . . . . . . . .23
13.11 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . .23
13.12 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23
13.13 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . .23
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ASSET PURCHASE
AGREEMENT
THIS ASSET PURCHASE AGREEMENT ("Agreement") is made as of February 27,
1998 by and between Transaction Network Services, Inc., a Delaware corporation
("TNS") and SunTech Processing Systems, LLC, a Texas limited liability company
("SunTech").
RECITALS:
SunTech is engaged, among other things, in the business of providing
third-party transaction processing services for automated teller machines and
developing additional payment systems technology for automated teller machines
(the "Business"). SunTech desires to sell and TNS desires to purchase from
SunTech certain of the assets used by SunTech in connection with the Business
upon and subject to the terms set forth herein (the "Sale").
NOW THEREFORE, in consideration of the premises and of the mutual
provisions, agreements and covenants herein contained, the parties hereto agree
as follows:
ARTICLE I
PURCHASE AND SALE
1.01 Assets Purchased. Subject to the terms hereof, TNS agrees to
purchase from SunTech, and SunTech agrees to sell to TNS the following assets
(the "Assets") free and clear of all liabilities, security interests, leases,
liens and encumbrances whatsoever other than those liabilities, leases and
encumbrances assumed by TNS as expressly described herein:
(a) All equipment, inventory and other tangible personal property
identified on Schedule 1.01(a) hereto.
(b) All computer programs (excluding those programs related solely
to the low-end automated teller machines), products and components used in
connection with the Smart Modem 1000, the Host-Interface Processor and the
processing system used in the Business and more particularly identified on
Schedule 1.01(b) hereto, including all copyrights (including rights in the
structure, sequence and organization of the Programs, all screen layouts,
command sequences and user interfaces), copyright registrations, copyright
applications and patent rights (including, without limitation, issued patents,
applications, divisions, continuations and continuations-in-part, reissues,
patents of addition, utility models and inventors' certificates) on such
programs, products and components and related software ("Programs"). The
Programs shall include (i) all present and predecessor versions of the above
programs and any versions currently under development and related source and
object code and all right to manufacture, use and sell the same and (ii) all
rights, claims and causes of action, if any, arising out of any employment,
non-competition, confidentiality or other similar agreement, obligation or
understanding between, or arising out of, any person's existing or former
employment, contractor or consultant relationship with SunTech, to the extent
that
such rights relate to the programs described above.
(c) All existing specifications and documents for the use and
maintenance of the Programs (excluding those programs related solely to the
low-end automated teller machines), including but not limited to, all user
guides, installation guides, systems listings, narrative descriptions, file
layouts, logic flow diagrams, source and load modules, output reports, test or
other data, test programs and other necessary information that is owned, used or
held by SunTech with respect to the Programs ("Documentation").
(d) All right, title, interest and benefit of SunTech in, to and
under all contracts, agreements, leases and licenses entered into with respect
to the Business prior to the closing, including the contracts, agreements,
leases and licenses identified on Schedule 1.01(d) hereto (the "Assigned
Rights").
(e) All right, title and interest of SunTech in and to: all
patents, registered or unregistered tradenames, trademarks and servicemarks and
registered or unregistered copyrights and applications therefor and goodwill
associated therewith ("Rights") owned by SunTech and all trade secrets,
proprietary information, concepts, designs, drawings, plans and know-how,
inventions and inventors' notes relating to the Programs, the Documentation or,
to the extent transferable, the Business and more particularly identified on
Schedule 1.01(e) hereto (collectively, the "Proprietary Rights");
(f) All rights, claims and causes of action arising out of any
employment, non-competition, confidentiality or other similar agreement,
obligation or understanding between, or arising out of, any person's existing or
former employment, contractor or consulting relationship with SunTech to the
extent that such rights relate to the Programs or the Proprietary Rights.
(g) All of SunTech's books and records relating to the Business
prior to the Closing, including, but not limited to, all lists of customers and
mailing lists, all sales materials and records, all original contracts and all
collections and credit records and related materials.
(h) All of SunTech's customer accounts receivable as shown on the
Balance Sheet attached as Schedule 1.01(h) hereto, as adjusted to show the
balance as of the Closing.
(i) An amount in cash equal to the liability shown as "due to
customer" ("Customer Liability") on the Balance Sheet attached as Schedule
1.01(h) hereto, as adjusted to show the balance as of the Closings, as such
liability is described in Section 5.06. The parties intend that the amount of
such cash and the corresponding liabilities will be equal.
1.02 Exclusion of Liabilities. Except as expressly provided in
Section 1.04 and the Assumption Agreement, TNS is not assuming any liabilities
of SunTech.
1.03 General Assignment. At the Closing, SunTech shall execute a
Assignment Agreement, substantially in the form of Exhibit 1 hereto.
1.04 Assumption Agreement. At the Closing, TNS shall assume, and
agree to pay, perform, fulfill and discharge, the obligations and liabilities of
SunTech identified on Schedule 1.04 attached hereto. At the Closing, TNS shall
execute an Assumption Agreement, substantially in the form of Exhibit 1 hereto.
1.05 Hiring Employees. At the Closing, TNS shall offer employment
to all persons who are employees of the Business at the Closing (including any
employees on leave, disability or workmen's compensation) or are subject to
outstanding employment offers from SunTech at the Closing. All such offers
shall be for pay and benefits equivalent to that received by comparable TNS
employees as of the Closing. Such offers and the benefits to be provided to the
Assumed Employees (defined below) shall recognize the date of hire and time of
service with SunTech for all purposes. All employees accepting such offers are
referred to herein as "Assumed Employees" and their employment with TNS will be
deemed to have commenced immediately after 11:59 p.m. Dallas local time, on the
Closing Date.
1.06 Excluded Assets. Notwithstanding the assets listed in Section
1.01 above, SunTech is not selling, and TNS is not purchasing pursuant to this
Agreement, and the term "Assets" shall not include, any of the following assets
(the "Excluded Assets"):
(a) any of SunTech's title to, interest in or rights with respect to
any real property other than SunTech's office lease;
(b) any of SunTech's cash, marketable or other securities,
commercial paper and cash equivalents or other investments (collectively
"Cash"), on hand or in bank accounts, and all of SunTech's bank accounts,
excluding any Cash that is equal to the Customer Liability;
(c) any computers not used primarily in the Business, and any
software embodied in any such computers, any communication or data network
systems not used primarily in the Business, and any other equipment used to
support the Business but not located at SunTech's office lease facilities;
(d) any other assets of SunTech not identified in Section 1.01 or in
the Schedules referred to therein;
(e) any insurance policies relating to the Business; and
(f) all corporate, accounting, franchise, sales and income tax
records of SunTech and other records and files not relating primarily to the
Business, provided, however, that SunTech agrees to provide TNS with copies of
the records at the Closing.
1.07 Determination as to Mixed Use Assets. [Intentionally omitted]
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1.08 ▇▇▇▇ of Sale. At the Closing, SunTech shall execute a ▇▇▇▇ of
Sale, substantially in the form of Exhibit 1 hereto.
1.09 Registration Rights Agreements. At the Closing, TNS and SunTech
shall execute a Registration Rights Agreement, substantially in the form of
Exhibit 2 hereto
1.10 Further Assurances.
(a) After the Closing, SunTech and TNS shall take such other action
and execute and deliver such other documents as may be reasonably requested by
TNS or SunTech from time to time to effectuate, facilitate and confirm the
transfer of the Assets to TNS.
(b) SunTech has provided TNS with a list of all of the customers of
the Business. The parties acknowledge that SunTech prior to the Closing will
not request the consent of its customers with respect to customer contracts
included among the Assigned Rights, except the SunTech Processing Agreement
between SunTech and Bank One, Utah, N.A., dated May 20, 1997 (the "Bank One
Agreement"). Following the Closing, SunTech will use its best efforts to assist
TNS in obtaining all required consents with respect to such customer contracts
included among the Assigned Rights. If any such required consent cannot be
obtained, there shall be no adjustment to the Purchase Price, and SunTech will
enter into such subcontracts, sublicenses, subleases, management agreements or
other similar arrangements with TNS as are reasonably necessary to provide TNS
with the benefit of such Assigned Rights. SunTech makes no representation or
warranty whatsoever as to whether any consent from a customer can or will be
obtained or what conditions or requirements, if any, may be attached to such
customer's consent.
ARTICLE II
LIABILITIES NOT BEING ASSUMED
2.01 Liabilities Not Assumed. SunTech agrees that, except as
expressly assumed pursuant to Section 1.04, TNS will not assume or pay any
debts, liabilities or obligations of SunTech and, without limiting the
generality of the foregoing, will not assume or pay:
(a) any obligations or liabilities to persons providing services to
SunTech prior to the Closing, whether as contractors or consultants of SunTech
("SunTech Contractors");
(b) any obligation or liabilities of SunTech to third parties,
including, without limitation, any contingent liabilities based upon SunTech's
failure to perform any agreement, contract, commitment or lease in accordance
with its terms prior to the Closing;
(c) any income or franchise tax liabilities (and any interest or
penalties relating thereto) of SunTech based upon income or gain derived from
the Business;
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(d) any liabilities or obligations incurred by SunTech after the
Closing and not created, directly or indirectly, by TNS or the Business;
(e) any claim, regardless of when made or asserted, arising out of
or is based upon negligence, strict liability or the breach of any express or
implied representation, warranty, agreement or guarantee made by SunTech in
connection with any product sold or service provided by or on behalf of SunTech
prior to Closing, or which is imposed or asserted to be imposed by operation of
law, in connection with any product sold or service provided by or on behalf of
SunTech prior to Closing;
(f) any obligations or liabilities with respect to any federal,
state or local law or regulation, or any right of any employee or third party,
arising out of the generation, storage, use, transportation, discharge or
disposal of any hazardous waste or hazardous substance connected with the
Business prior to the Closing.
2.02 Indemnity.
(a) The liabilities and obligations retained by SunTech pursuant to
Section 2.01, including, without limitation, items (a) through (f) above, are
collectively referred to herein as the "Retained Liabilities." SunTech hereby
indemnifies and agrees to hold TNS harmless from, against and in respect of (and
on demand shall reimburse TNS for) any loss, liability, cost or expense,
including, without limitation, reasonable attorneys' fees (collectively, a
"Loss") suffered or incurred by TNS by reason of the failure of SunTech to pay
or discharge any Retained Liabilities when the same shall become due and
payable. SunTech may assume at its expense the defense of any claim asserted
against TNS with respect to the Retained Liabilities if it agrees in writing
that it is obligated hereunder to indemnify and hold TNS harmless in accordance
with this Section 2.02(a).
(b) The liabilities and obligations assumed by TNS pursuant to
Section 1.04 and the Assumption Agreement are collectively referred to herein as
the "Assumed Liabilities." TNS hereby indemnifies and agrees to hold SunTech
harmless from, against and in respect of (and on demand shall reimburse SunTech
for) any Loss suffered or incurred by SunTech by reason of the failure of TNS to
pay or discharge any Assumed Liabilities when the same shall become due and
payable after the Closing. TNS may assume at its expense the defense of any
claim asserted against SunTech with respect to the Assumed Liabilities if it
agrees in writing that it is obligated hereunder to indemnify and hold SunTech
harmless in accordance with this Section 2.02(b).
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ARTICLE III
PURCHASE PRICE
3.01 Purchase Price.
(a) The purchase Price for the Assets is Seventeen Million, Five
Hundred Thousand Dollars ($17,500,000), composed of (a) Twelve Million, Two
Hundred Fifty Thousand Dollars ($12,250,000) payable by certified check or other
immediately available funds (the "Cash Purchase Price") at the Closing and (b)
that number of shares of TNS common stock, par value $.01 per share (the "TNS
Common Stock"), determined by dividing Five Million, Two Hundred Fifty Thousand
Dollars ($5,250,000) by the average of the closing prices for the TNS Common
Stock, as reported by the Nasdaq Stock Market, Inc., for the ten trading days
immediately preceding the Closing (the "Share Purchase Price") as shown on
Schedule 3.01(a).
3.02 Payment of Purchase Price. TNS shall
(a) pay SunTech the Cash Purchase Price at the Closing, and
(b) deliver certificates for the Share Purchase Price within 10
business days after the Closing.
3.03 Payment of Customer Liability. SunTech shall deliver to TNS
control over those bank accounts listed on Schedule 3.03 which include cash in
an amount equal to the Customer Liability.
ARTICLE IV
THE CLOSING
4.01 The Closing. Subject to the terms and conditions set forth
herein, the closing of the transactions contemplated by this Agreement (the
"Closing") shall take place at the offices of UICI, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇ at 10:00 a.m. on Friday, February 27, 1998, or at such other place
or places and at such other time as the parties may agree (the "Closing Date").
4.02 SunTech's Deliveries at the Closing. SunTech shall deliver or
cause to be delivered to TNS at the Closing, the ▇▇▇▇ of Sale, Assignment and
Assumption Agreement and the Registration Rights Agreement, each as provided for
in Article I.
4.03 TNS's Deliveries at the Closing. TNS shall deliver or cause to
be delivered to SunTech, the following:
(a) at the Closing, a certified check or wire transfer payable to
the order of SunTech in the amount of the Cash Purchase Price.
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(b) within 10 business days after the Closing, a certificate for the
number of shares of TNS Common Stock determined pursuant to Section
3.02.
(c) at the Closing, the ▇▇▇▇ of Sale, Assignment and Assumption
Agreement and the Registration Rights Agreement, each as provided for
in Article I.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SUNTECH
SunTech hereby represents and warrants to TNS the following, except as
stated in the disclosure schedule attached hereto as Exhibit 3 (the "SunTech
Disclosure Schedule").
5.01 Organization. SunTech is a limited liability company duly
organized and validly existing under the laws of Texas and has full corporate
power and authority to carry on its business as it is now being conducted and to
own the properties and assets it now owns; SunTech is duly qualified or licensed
to do business as a foreign limited liability company in each jurisdiction set
forth on the SunTech Disclosure Schedule, which are the only jurisdictions in
which such qualification or authorization is required by law and in which
failure so to qualify or be authorized could have a material adverse effect on
(a) the Business or (b) the business, properties, condition (financial or
otherwise), results of operations or prospects of SunTech. SunTech has no
subsidiaries nor does it own any interest in any corporation, partnership, joint
venture, limited liability company, trust or other entity. UICI and Sun
Communications, Inc. (collectively, the "Members") own all of the equity
interest in SunTech.
5.02 Authorization. SunTech has full power and authority to enter
into this Agreement and to carry out the transactions contemplated hereby. The
execution and delivery of this Agreement and the transactions contemplated
hereby have been duly authorized and approved by the requisite vote or consent
of the Members. SunTech has completed all other necessary actions to authorize
and approve this Agreement and the transactions contemplated hereby. This
Agreement is a legal, valid and binding obligation of SunTech, enforceable
against it in accordance with its terms.
5.03 No Violation. Neither SunTech nor any of its properties is subject
to or obligated under any law, rule or regulation of any governmental
authority, or any order, writ, injunction or decree, or any agreement,
instrument, license, franchise or permit, which would be breached or violated
by entering into this Agreement or, subject to the consent of third parties
to those leases and contracts being assigned that require prior consent, the
consummation of the transactions contemplated hereby. Entering into this
Agreement and, subject to the consent of third parties to those leases and
contracts being assigned that require prior consent, the consummation of the
transactions contemplated hereby do not and will not conflict with, result in
a breach or violation of, or a default under (a) SunTech's certificate of
organization, limited liability company agreement, charter, bylaws or other
organizational documents, (b) any obligation under any mortgage, lease,
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agreement or instrument applicable to SunTech or any of its properties or (c)
any law, rule, regulation, judgment, order or decree of any government or
governmental or regulatory authority or court having jurisdiction over SunTech
or any of its properties.
5.04 Governmental Authorities. No consent, approval, order or
authorization of, or registration, declaration or filing with, any governmental
entity is required by or with respect to SunTech in connection with entering
into this Agreement or the consummation of the transactions contemplated hereby,
except for such other consents, authorizations, filings, approvals and
registrations which if not obtained or made would not have a material adverse
effect on (i) SunTech's ability to consummate the transactions hereunder, (ii)
the Business or (iii) the business, properties, condition (financial or
otherwise), results of operations or prospects of SunTech.
5.05 Financial Statements.
(a) SunTech has made available to TNS true and complete copies of
SunTech's unaudited financial statements for the year ended December 31, 1997
(the "SunTech Financial Statements") attached hereto as Schedule 5.05(a). The
SunTech Financial Statements have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis during the periods
involved (except as may be indicated in the notes thereto) and fairly present
the financial position of SunTech as of their date and the results of operations
and cash flows for the period then ended.
(b) SunTech has provided to TNS the unaudited balance sheet, and
related unaudited statements of income and cash flows, for SunTech for the month
ended January 31, 1998 (the "SunTech Unaudited Financial Statements") attached
hereto as Schedule 1.01(h). The SunTech Unaudited Financial Statements have
been prepared in accordance with generally accepted accounting principles
applied on a consistent basis for the period involved (except as may be
indicated in the notes thereto) and fairly present the financial position of
SunTech as of its date and the results of operations and cash flows for the
period then ended, subject to the absence of complete footnotes thereto. For
purposes of this Agreement, the unaudited balance sheet of SunTech at January
31, 1998, including the notes thereto, is hereinafter referred to as the
"SunTech Balance Sheet."
5.06 No Undisclosed Liabilities. Except for (a) liabilities and
obligations disclosed in the SunTech Disclosure Schedule and (b) liabilities and
obligations incurred in the ordinary course of business since the date of the
SunTech Balance Sheet and the obligations expressly set forth in this Agreement,
neither SunTech nor any of its properties is subject to any material liability
or obligation (absolute, accrued, contingent or otherwise) which was not fully
reflected or reserved against in the SunTech Balance Sheet. As of the date of
this Agreement, SunTech owes $420,510.31 with respect to the Customer Liability.
5.07 Absence of Certain Changes. Except as disclosed in the SunTech
Disclosure Schedule or as contemplated or permitted by this Agreement, since the
date of the SunTech Balance
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Sheet there has not been: (a) any material adverse change in (i) the Business
or (ii) the business, properties, condition (financial or otherwise), operations
or prospects of SunTech; (b) any damage, destruction or loss, whether covered by
insurance or not, materially and adversely affecting (i) the Business or (ii)
the business or properties of SunTech; (c) any transaction by SunTech not in the
ordinary course of business materially adversely affecting (i) the Business or
(ii) SunTech; or (d) any understanding or agreement, whether in writing or
otherwise, to take any action described in this Section 5.07.
5.08 Assets.
(a) SunTech has good and marketable title to the Assets free and
clear of all mortgages, liens, pledges, charges or encumbrances of any kind or
character. The Assets, other than the network services to be furnished by TNS,
constitute all of the assets reasonably necessary for TNS to conduct the
Business as it is currently conducted.
(b) All the material machinery, equipment, inventory and other
tangible personal property included in the Assets are, and at Closing will be,
in good operating condition and repair (excepting normal wear and tear and any
need for ordinary, routine maintenance and repairs), are usable in the regular
and ordinary course of conduct of the Business and are in the possession of
SunTech. No person other than SunTech owns any tangible assets which are
currently used in the operation of the Business, except for leased items
disclosed in the SunTech Disclosure Schedule and for items of immaterial value.
(c) SunTech has full and exclusive right, title and interest in and
to the Programs, Documentation and Proprietary Rights, free and clear of all
claims, liens, encumbrances or licenses. SunTech has the right to bring actions
for infringement of the Programs, the Documentation and the Proprietary Rights,
and none of the Proprietary Rights infringe the rights of any other person.
SunTech has taken reasonable action to maintain as trade secrets the source
codes and all other proprietary portions of the Programs. Except as set forth
in the SunTech Disclosure Schedule, no source or object code of any software
included in the Programs is subject to escrow. Notwithstanding the foregoing,
SunTech notifies TNS that none of the Programs, Documentation and Proprietary
Rights is protected by any patents or registered trademarks.
(d) Schedule 1.01(d) hereto sets forth a list of all of the Assigned
Rights. The Assigned Rights include all of SunTech's contracts and agreements
with all of the customers of the Business. Each of the Assigned Rights is in
full force and effect and, except as expressly set forth in the SunTech
Disclosure Schedule, (i) none of the Assigned Rights has been modified, amended,
cancelled or terminated; (ii) neither SunTech nor any other party to any of the
Assigned Rights, is in material default of any of its respective obligations
thereunder; (iii) no notice has been given or received by SunTech under any of
the Assigned Rights alleging a default by the recipient of such notice or a
claim or offset against the enforcement of such recipient's rights under any of
such Assigned Rights; and (iv) except as stated in the applicable contracts and
leases, no consent or approval of the other party under any of the Assigned
Rights or of any other party is required to
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permit the transactions contemplated by this Agreement, and such transactions
will not conflict with, or result in any breach or violation of or default
under, any of the Assigned Rights, entitle the other party to cancel or
terminate the same or otherwise materially adversely affect the rights of
SunTech or TNS thereunder. The copies of the Assigned Rights that have
heretofore been delivered or made available to TNS are true, complete and
correct copies of the Assigned Rights and reflect and constitute the entire
agreement between the parties thereto with respect to the matters covered
thereby.
5.09 Litigation. There is no investigation, suit, action, proceeding
or claim pending, threatened or, to the best knowledge of SunTech, contemplated,
which would materially and adversely affect (a) the Business or (b) the
business, properties, condition (financial or otherwise), results of operations
or prospects of SunTech. Neither SunTech nor any of its properties or assets is
subject to any judgment, injunction or decree that materially and adversely
affects (a) the Business or (b) the business, properties, condition (financial
or otherwise), results of operations or prospects of SunTech. TNS is advised
that Sun Communications, Inc., one of SunTech's Members, has filed a lawsuit
against SunTech and Cash Delivery Systems, L.L.C., in ▇▇▇▇ ▇▇. ▇▇▇▇-▇▇▇▇▇, ▇▇
the 14th Judicial District Court, Dallas County, Texas, styled Sun
Communications, Inc. v. SunTech Processing Systems, L.L.C. and Cash Delivery
Systems, a copy of which pleadings have been provided to TNS.
5.10 Tax Matters. SunTech has, and by the Closing will have, paid or
otherwise discharged all Taxes which are due and which, if not paid or
discharged, would materially adversely affect (a) title to the Assets or (b) the
Business. For purposes of this Agreement, "Taxes" shall mean all taxes,
assessments, charges, duties, fees, levies or other governmental charges
(including interest, penalties or additions associated therewith) (including,
without limitation, federal, state, city, county, local, foreign, or other
income, franchise, capital, withholding, real or tangible property, employment,
unemployment compensation, transfer, sales, use, excise and all other taxes of
any kind) imposed by the United States or any state, city, county, country or
foreign government or subdivision or agency thereof, whether disputed or not.
5.11 Proprietary Rights. The SunTech Disclosure Schedule accurately
identifies all Programs and all Rights licensed to SunTech by third parties, the
ownership as well as the registered or unregistered status of all the foregoing
being separately stated. The Programs, Documentation and Proprietary Rights,
together with all Rights licensed to SunTech by third parties are adequate for
the conduct of the Business. No Member, manager, officer, or SunTech Contractor
or Assumed Employee owns, directly or indirectly, any interest in (a) any
Program, Documentation or Proprietary Rights, or (b) any Rights, which infringe
upon, conflict with, or relate to any Program, Documentation or Proprietary
Rights. SunTech has not granted any license or other similar right to a third
party with respect to any Program, Documentation or Proprietary Rights. With
the exception of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, all persons who have had access to the source
code or other trade secrets contained in and regarding the Programs,
Documentation or Proprietary Rights have executed a non-disclosure agreement
with SunTech. Notwithstanding the foregoing, SunTech notifies TNS
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that none of the Programs, Documentation and Proprietary Rights is protected by
any patents or registered trademarks.
5.12 Compliance with Applicable Laws. SunTech in compliance with all
federal, state or local laws, statutes, ordinances, regulations, orders, decrees
and judgments applicable to it, the enforcement of which, if any one were not in
compliance, would have a materially adverse affect on (a) the Business or (b)
the business, properties, condition (financial or otherwise), results of
operations or prospects of SunTech.
5.13 Accounts Receivable. Except as set forth in the SunTech
Disclosure Schedule, the accounts receivable reflected on the SunTech Balance
Sheet with respect to the Business arose from bona fide transactions in the
ordinary course of business (except for amounts which are not, individually or
in the aggregate, material).
5.14 Employees; Employee Benefit Plans. The SunTech Disclosure
Schedule contains a true and complete list identifying each Assumed Employee,
each such person's position with SunTech and the compensation currently payable
to each such persons. All Assumed Employees are contracted for use by SunTech
from UICI and such employees will be offered employment by TNS as described in
Section 1.05 above. All employee benefit plans or other material arrangements
under which the Assumed Employees are currently entitled to receive benefits are
accurately identified in the SunTech Disclosure Schedule.
5.15 Labor Matters. SunTech has complied in all material respects
with the Occupational Safety and Health Act, the regulations promulgated
thereunder and all other applicable federal, state, local and foreign laws
relating to the employment of labor, including any provisions thereto relating
to wages, bonuses, collective bargaining, equal opportunity, equal pay and the
payment of social security and similar payroll taxes. No Assumed Employee is on
strike nor has threatened to strike. Except as set forth in the SunTech
Disclosure Schedule, no unfair labor practice charges are pending or are
threatened or contemplated against SunTech.
5.16 Brokers. No broker or finder has, as a representative of
SunTech, been employed by SunTech or has any interest in this Agreement or the
transactions contemplated hereby.
5.17 Acquisition of TNS Common Stock. SunTech is acquiring the TNS
Common Stock for SunTech's own account, for investment purposes only and without
any view to resell or effect any distribution of such TNS Common Stock, other
than as contemplated by the Registration Rights Agreement. SunTech has been
fully informed as to the circumstances under which SunTech is required to take
and hold such TNS Common Stock pursuant to the requirements of the Securities
Act of 1933 (the "Securities Act") and applicable state securities laws, and
that SunTech may have to continue to bear the economic risk of such TNS Common
Stock indefinitely. SunTech has been informed that such TNS Common Stock may
not be transferred or otherwise disposed of unless the TNS Common Stock is
registered or an exemption from such registration is available, as determined by
TNS. SunTech is an "accredited investor" (as defined under Regulation D of the
Securities Act)
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and is otherwise qualified under state and federal securities laws to receive
TNS Common Stock pursuant to this Agreement. TNS acknowledges that SunTech may
distribute the TNS Common Stock to its Members in compliance with the applicable
securities laws.
5.18 Programs. SunTech has successfully inspected and tested the
Programs to determine if they contain threats known as software viruses,
salamis, time bombs, logic bombs, trojan horses, trapdoors or other malicious
computer instructions, intentional devices or techniques that can or were
designed to threaten, infect, assault, vandalize, defraud, disrupt, damage,
disable or shut down the use of such Programs or a computer system or any
component of such computer system, including its security or user data
("Disabling Devices"), and the Programs are free and clear of and contain no
Disabling Devices. The Programs are designed to ensure year 2000 compatibility,
which shall include, but not be limited to, (a) properly processing data
containing dates beyond 1999, (b) date data century recognition, (c)
calculations that accommodate same century and multi-century formulas, (d) date
values and date data interface values that reflect the century, (e) the ability
to manage and manipulate data involving dates, including single century and
multi-century formulas, and will not cause an abnormally ending scenario within
the application or result in the generation of incorrect values involving such
dates, (f) ensuring that date-related user interface functions and data fields
include the indication of the century, (g) ensuring that all date-related
functions will include an indication of the century and (h) ensuring that year
2000 will be recognized as a leap year.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF TNS
TNS hereby represents and warrants to SunTech the following, except as
stated in the disclosure schedule attached hereto as Exhibit 4 (the "TNS
Disclosure Schedule").
6.01 Corporate Organization. TNS is a corporation duly organized and
validly existing under the laws of Delaware and has full corporate power and
authority to carry on its business as it is now being conducted and to own the
properties and assets it now owns; TNS is duly qualified or licensed to do
business as a foreign corporation in each jurisdiction set forth on the TNS
Disclosure Schedule, which are the only jurisdictions in which such
qualification or authorization is required by law and in which failure so to
qualify or be authorized could have a material adverse effect on the business,
properties, condition (financial or otherwise), results of operations or
prospects of TNS and its subsidiaries considered as a consolidated entity.
6.02 Authorization. TNS has full corporate power and authority to
enter into this Agreement and to carry out the transactions contemplated hereby.
The Board of Directors of TNS (the "TNS Board") has duly authorized and approved
the execution and delivery of this Agreement and the transactions contemplated
hereby. TNS has completed all other necessary actions to authorize and approve
this Agreement and the transactions contemplated hereby. This Agreement is a
legal, valid and binding obligation of TNS, enforceable against TNS in
accordance with its terms.
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6.03 No Violation. Neither TNS or any of its properties nor any
subsidiary or any of its properties, is subject to or obligated under any law,
rule or regulation of any governmental authority, or any order, writ, injunction
or decree, or any agreement, instrument, license, franchise or permit, which
would be breached or violated by the performance of this Agreement and the
consummation of the transactions contemplated hereby. The performance of this
Agreement and the consummation of the transactions contemplated hereby do not
and will not conflict with, result in a breach or violation of, or a default
under (a) TNS's certificate of incorporation or bylaws, (b) any obligation under
any mortgage, lease, agreement or instrument applicable to TNS or any of its
properties or any subsidiary or any of its properties or (c) any law, rule,
regulation, judgment, order or decree of any government or governmental or
regulatory authority or court having jurisdiction over TNS or any of its
properties or any subsidiary or any of its properties.
6.04 Governmental Authorities. No consent, approval, order or
authorization of, or registration, declaration or filing with, any governmental
entity is required by or with respect to TNS in connection with the execution
and delivery of this Agreement or the consummation of the transactions
contemplated hereby, except for (a) such disclosures, filings, statements and
reports under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), or otherwise as may be required in connection with this Agreement and the
transactions contemplated hereby to be filed with the Securities and Exchange
Commission ("SEC") and (b) such other consents, authorizations, filings,
approvals and registrations which if not obtained or made would not have a
material adverse effect on TNS's ability to consummate the transactions
hereunder.
6.05 SEC Documents; Financial Statements.
(a) TNS has made available to SunTech true and complete copies of
all the documents (other than preliminary material) filed by TNS with the SEC
since January 1, 1997 (collectively, and including all exhibits and schedules
thereto and documents incorporated by reference therein, the "TNS SEC
Documents"). As of their respective filing dates, all TNS SEC Documents
complied in all material respects with the requirements of the Exchange Act or
the Securities Act, as applicable, and none of the TNS SEC Documents contained
any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the statements made
therein, in light of the circumstances under which they were made, not
misleading. The audited consolidated financial statements and unaudited
consolidated interim financial statements of TNS and its subsidiaries included
or incorporated by reference in the TNS SEC Documents (collectively, the "TNS
Financial Statements") have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis during the periods involved
(except as may be indicated in the notes thereto) and fairly present the
consolidated financial position of TNS and its subsidiaries as of their
respective dates and the consolidated results of their operations and cash flows
for the periods then ended, subject, in the case of any unaudited interim
financial statements, to the absence of complete footnotes thereto.
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(b) TNS has provided to SunTech the unaudited consolidated balance
sheet, and related unaudited consolidated statements of income and cash flows,
for TNS for the quarter ended September 30, 1997 (collectively, the "TNS
September Financial Statements"). The TNS September Financial Statements have
been prepared in accordance with generally accepted accounting principles
applied on a consistent basis for the periods involved (except as may be
indicated in the notes thereto) and fairly present the consolidated financial
position of TNS and its subsidiaries as of its date and the consolidated results
of their operations and cash flows for the periods then ended, subject to the
absence of complete footnotes thereto. For purposes of this Agreement, the
unaudited consolidated balance sheet of TNS and its subsidiaries at September
30, 1997, including the notes thereto, is hereinafter referred to as the "TNS
Balance Sheet."
6.06 No Undisclosed Liabilities. Except for (a) liabilities and
obligations disclosed in the TNS Disclosure Schedule and (b) liabilities and
obligations incurred in the ordinary course of business since the date of the
TNS Balance Sheet and the obligations expressly set forth in this Agreement,
neither TNS nor any subsidiary nor any of their respective properties is subject
to any material liability or obligation (absolute, accrued, contingent or
otherwise) which was not fully reflected or reserved against in the TNS Balance
Sheet.
6.07 Absence of Certain Changes. Except as disclosed in the TNS
Disclosure Schedule or as contemplated or permitted by this Agreement, since the
date of the TNS Balance Sheet there has not been: (a) any material adverse
change in the business, properties, condition (financial or otherwise),
operations or prospects of TNS and its subsidiaries considered as a consolidated
entity; (b) any damage, destruction or loss, whether covered by insurance or
not, materially and adversely affecting the business or properties of TNS and
its subsidiaries considered as a consolidated entity; (c) any transaction by TNS
or any subsidiary, not in the ordinary course of business, materially adversely
affecting TNS and its subsidiaries considered as a consolidated entity; or (d)
any understanding or agreement, whether in writing or otherwise, to take any
action described in this Section 6.07.
6.08 Litigation. There is no investigation, suit, action, proceeding
or claim pending, threatened or, to the best knowledge of TNS, contemplated,
which would materially and adversely affect the business, properties, condition
(financial or otherwise), results of operations or prospects of TNS and its
subsidiaries considered as a consolidated entity. Neither TNS nor any
subsidiary nor any of their respective properties or assets is subject to any
judgment, injunction or decree that materially and adversely affects the
business, properties, condition (financial or otherwise), results of operations
or prospects of TNS and its subsidiaries considered as a consolidated entity.
6.09 Compliance with Applicable Laws. TNS and each of its
subsidiaries are in compliance with all federal, state or local laws, statutes,
ordinances, regulations, orders, decrees and judgments applicable to them, the
enforcement of which, if any one were not in compliance, would have a materially
adverse affect on the business, properties, condition (financial or otherwise),
results of operations or prospects of TNS and its subsidiaries considered as a
consolidated entity.
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6.10 Brokers. No broker or finder has, as a representative of TNS,
been employed by TNS or has any interest in this Agreement or the transactions
contemplated hereby.
ARTICLE VII
COVENANTS OF SUNTECH
PENDING THE CLOSING
7.01 Conduct of the Business. Pending the Closing, in order to
maintain the current status quo, and except as otherwise expressly consented to
or approved in writing by TNS, SunTech covenants and agrees with TNS as follows.
Any consent or approval requested by SunTech shall be subject to the sole
discretion of TNS.
(a) SunTech shall not: (i) effect any material change to the
Business; (ii) enter into, terminate, modify or waive any agreement,
understanding, commitment, relationship or transaction with respect to the
Business except in the ordinary course of business consistent with past
practices; (iii) amend, terminate, modify or waive any Assigned Right; or (iv)
sell, lease, grant a license with respect to or otherwise encumber or dispose of
any of the Assets except in the ordinary course of business consistent with past
practices.
(b) SunTech shall: (i) operate the Business diligently, in good
faith and in the ordinary course of business, consistent with past practices;
and (ii) use its reasonable efforts to preserve the its Business, goodwill and
business relationships, including its current relationships with the Assumed
Employees.
7.02 Best Efforts. SunTech shall use its best efforts to take, or
cause to be taken, all action or do, or cause to be done, all things necessary,
proper or advisable under this Agreement, applicable laws and regulations to
enable, consummate, make effective and evidence the transactions contemplated
hereby.
ARTICLE VIII
COVENANTS OF SUNTECH AND TNS
8.01 Confidentiality.
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(a) Following the Closing, SunTech shall hold and shall cause its
Members, attorneys, accountants or other agents or authorized representatives to
hold, in strict confidence, and not disclose to any third party or use for any
purpose without the express prior written consent of TNS, the confidential
information provided to TNS in connection with entering into this Agreement and
closing the transactions contemplated hereby, including the Programs,
Documentation and Proprietary Rights, except (i) as may be required by
applicable law, (ii) as such confidential information becomes public, other than
due to a breach of this Agreement by SunTech or a breach of any other
confidentiality agreement entered into in connection with the Closing, or (iii)
as otherwise contemplated herein.
(b) Until filed by TNS with the SEC following the Closing, without
the express prior written consent of the other party, no party shall provide any
person a copy of this Agreement or communicate to any person the contents of
this Agreement, except to its Members, attorneys, accountants or other agents or
authorized representatives on a need to know basis (all of whom shall have
agreed to comply with the provisions of this Section 8.01), as required by
applicable law or as otherwise contemplated herein.
(c) The parties acknowledge that TNS intends to resell the
processing portion of the Business, and in connection therewith TNS may disclose
to prospective purchasers of such portion of the Business information subject to
the foregoing confidentiality provisions, provided that TNS shall obtain a
customary confidentiality agreement for the benefit of TNS and SunTech from such
third party prior to making any such disclosures to such third party.
(d) TNS and SunTech shall consult with each other before issuing any
press release or otherwise making any public statements with respect to the
Agreement and the transactions contemplated hereby. Without limiting the
generality of the foregoing, neither party shall (and neither party shall permit
any of its representatives to) issue any press release or to make any public
statement regarding this Agreement or any of the transactions contemplated
hereby, without the other party's prior consent, except that either party shall
be permitted, without the consent of the other party, to make such disclosures
if such disclosure is required to be made under applicable law.
8.02 Access.
(a) Following the Closing, TNS shall provide SunTech access at
reasonable times to all of SunTech's books and records relating to the Business
prior to the Closing (the "Records") necessary for SunTech to prepare financial
statements and tax returns or other similar purposes and shall permit SunTech
to duplicate or otherwise make copies of or to take extracts from the Records.
TNS shall preserve the Records for at least three years from the date of the
Closing at their current location or at some other reasonably convenient
location. TNS shall advise SunTech in writing before TNS destroys the Records
and offer to deliver the Records to SunTech.
(b) Following the Closing, SunTech shall cooperate with TNS to
assist in the transition in the operation of the Business and the preparation of
audited financial statements with
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respect to the Business. SunTech shall provide such information and other
assistance with respect to the Business as TNS shall reasonably request,
including (i) providing TNS access at reasonable times to such of SunTech's
employees, contractors or consultants who have information with respect to the
operation of the Business prior to the Closing and with whom TNS reasonably
needs to consult with respect to such operations and (ii) providing TNS access
at reasonable times to the records described in Section 1.06(f). Further,
SunTech shall cooperate with TNS in the resolution of any disputes relating to
the Business based upon or arising from facts or event occurring prior to the
Closing.
8.03 Audit. TNS has stated that it may desire to have SunTech's
financial statements audited. SunTech and UICI, the owner of the majority
membership interest in SunTech, have agreed to cooperate in good faith with TNS
and TNS' auditors in connection with such audit, provided that it is expressly
understood and agreed that the all costs and expenses for such audit shall be
borne by TNS. UICI uses Ernst and Young as its outside auditors. If desired by
TNS, SunTech will make the appropriate introductions to a representative of
Ernst & Young for purposes of TNS engaging Ernst & Young for the audit of
SunTech desired by TNS. SunTech and UICI acknowledge that any audit performed
pursuant to this Section 8.03 must be performed in an expeditious manner, and
agree to cooperate with TNS so that such audit shall be completed within
seventy-five (75) days of Closing.
ARTICLE IX
CONDITIONS PRECEDENT TO
THE OBLIGATIONS OF TNS
Each and every obligation of TNS under this Agreement to be performed at
or before the Closing (except for its obligations with respect to
confidentiality) shall be subject to the satisfaction, at or before the Closing,
of each of the following conditions, except to the extent that TNS shall have
waived such satisfaction:
9.01 Representations and Warranties; Performance. Each of the
representations and warranties made by SunTech herein shall be true and
correct in all material respects as of the Closing with the same effect as
though made at such time; and SunTech and the Members shall have performed
and complied in all material respects with all agreements, covenants and
conditions required by this Agreement to be performed and complied with by
such party prior to the Closing. SunTech shall have delivered to TNS a
certificate certifying to the fulfillment of the foregoing conditions.
9.02 Opinion of Counsel. TNS shall have received an opinion of counsel
to SunTech, in form and substance reasonably satisfactory to TNS dated as of
the date of the Closing, substantially to the effect set forth in Exhibit 5
hereto.
9.03 Registration Rights Agreements. TNS and SunTech shall have
executed the Registration Rights Agreement, substantially in the form of
Exhibit 2 hereto.
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9.04 Consents. Except as provided in Section 1.07(b), SunTech shall
have obtained all consents required to consummate the transactions contemplated
herein, including but not limited to any consents required under (a)SunTech's
lease of the premises located at ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇,
(b) the License Agreement between SunTech and Computer Associates International
Inc. last signed by Computer Associates International Inc. on August 12, 1997,
and (c) the Bank One Agreement.
9.05 Injunctions. No injunction or restraining order shall be in
effect to forbid or enjoin the consummation of this Agreement or the
transactions contemplated hereby and no action shall be pending seeking such an
injunction or restraining order.
9.06 Further Documentation. TNS shall have received such further
certificates and documents as shall be reasonably requested by TNS.
ARTICLE X
CONDITIONS PRECEDENT TO
THE OBLIGATIONS OF SUNTECH
Each and every obligation of SunTech under this Agreement to be performed
at or before the Closing (except for its obligations with respect to
confidentiality) shall be subject to the satisfaction, at or before the Closing,
of each of the following conditions, except to the extent that SunTech shall
have waived such satisfaction with respect to its obligations:
10.01 Representations and Warranties; Performance. Each of the
representations and warranties made by TNS herein shall be true and correct in
all material respects as of the Closing with the same effect as though made at
such time; and TNS shall have performed and complied in all material respects
with all agreements, covenants and conditions required by this Agreement to be
performed and complied with by such party prior to the Closing. TNS shall have
delivered to SunTech a certificate certifying to the fulfillment of the
foregoing conditions.
10.02 Opinion of Counsel. SunTech shall have received an opinion of
counsel to TNS, in form and substance reasonably satisfactory to SunTech dated
as of the date of the Closing, substantially to the effect set forth in Exhibit
6 hereto.
10.03 Registration Rights Agreement. TNS and SunTech shall have
executed the Registration Rights Agreement, substantially in the form of Exhibit
2 hereto.
10.04 Issuance of TNS Common Stock. The shares of TNS Common Stock to
be issued to SunTech pursuant to this Agreement when so issued (i) will be duly
and validly authorized and issued, fully paid and nonassessable and (ii) will be
duly listed on the Nasdaq National Market.
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10.05 Injunctions. No injunction or restraining order shall be in
effect to forbid or enjoin the consummation of this Agreement or the
transactions contemplated hereby and no action shall be pending seeking such an
injunction or restraining order.
10.06 Further Documentation. SunTech shall have received such further
certificates and documents as shall be reasonably requested by SunTech.
ARTICLE XI
COMPETITION AND NON-SOLICITATION
11.01 Duration and Scope. SunTech shall not engage, in the United
States, in any Prohibited Activities as defined in Section 11.02 for a period of
two (2) years from the date of the Closing.
11.02 Prohibited Activities.
(a) SunTech shall not in any way, without TNS's prior written
consent, either directly or indirectly, engage in, represent, furnish
consulting services to or have an interest in, any business which competes with
the Business as it exists on the date of the Closing.
(b) SunTech shall not in any way, either directly or indirectly,
whether for his own benefit or for the benefit of any other person, firm or
company, either as a consultant, advisor, partner, co-venturer, shareholder,
investor, lender of money, trustee, principal, agent or otherwise, induce or
attempt to induce any customer which SunTech has provided services within the
twelve (12) months prior to the Closing, or any affiliates, subsidiaries,
parents or related entity thereof, to cease doing business in whole or in part
with TNS.
(c) SunTech further agrees that it shall not, in any way, either
directly or indirectly, whether for their own benefit or for the benefit of any
other person, firm or company, either as a consultant, advisor, partner,
co-venturer, shareholder, investor, lender of money, trustee, principal, agent
or otherwise, induce or attempt to induce any employee, contractor or consultant
of TNS following the Closing to terminate such employment, contracting or
consulting arrangements with TNS.
11.03 Breach. If SunTech violates these restrictive covenants and TNS
brings legal action for injunctive or other relief, then TNS shall not as a
result of the time involved in obtaining the relief be deprived of the benefit
of the full period of the restrictive covenants. In such a case, the
restrictive covenants shall be deemed to have the duration specified above,
computed from the date the relief is granted, but reduced by the time between
when the period began to run and the date of the violation of the covenant.
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11.04 Intent of Parties. If any court of competent jurisdiction shall
determine that any restriction contained in this Article XI is unenforceable, it
is the intention of the parties that the restrictive covenants set forth herein
shall not thereby be terminated, but shall be deemed amended to the extent
required to render them valid and enforceable. Such amendment shall only apply
to the operation of this Article in the jurisdiction of the court that has made
the adjudication.
ARTICLE XII
INDEMNIFICATION
12.01 Indemnification.
(a) Subject to the limitations set forth in Section 12.02, SunTech
hereby indemnifies, defends and holds harmless TNS and its permitted successors
and assigns, officers, directors and shareholders (collectively, the "TNS
Indemnitees") from and against, and shall reimburse each of the Indemnitees for,
all demands, claims, actions or causes of action, assessments, losses, damages,
liabilities, costs and expenses, including interest, penalties, court costs and
reasonable attorneys' fees and expenses, asserted against, resulting to, imposed
upon or incurred by any of the TNS Indemnitees, directly or indirectly, with
respect to (i) any misrepresentation or breach by SunTech of any representation,
warranty, undertaking or covenant of SunTech contained herein, (ii) services
rendered, or omissions made in such services, by SunTech under the Assigned
Rights or in connection with the Business prior to the Closing and (iii) any
other aspect of SunTech's operation of the Business prior to the Closing.
(b) Subject to the limitations set forth in Section 12.02, TNS
hereby indemnifies, defends and holds harmless SunTech and its permitted
successors and assigns, Members, managers and officers (collectively, the
"SunTech Indemnitees") from and against, and shall reimburse each of the
Indemnitees for, all demands, claims, actions or causes of action, assessments,
losses, damages, liabilities, costs and expenses, including interest, penalties,
court costs and reasonable attorneys' fees and expenses, asserted against,
resulting to, imposed upon or incurred by any of the SunTech Indemnitees,
directly or indirectly, with respect to (i) any misrepresentation or breach by
TNS of any representation, warranty, undertaking or covenant of TNS contained
herein, (ii) services rendered, or omissions made in such services, by TNS under
the Assigned Rights or in connection with the Business after the Closing and
(iii) any other aspect of TNS's operation of the Business after the Closing.
12.02 Limitation. A party shall only be entitled to make indemnity
claims under this Article XII for claims which are $175,000 or more per
occurrence. For purposes of this Section 12.02, any series of related or
connected events shall be deemed to be an "occurrence."
12.03 Claims by Third Parties. A party claiming indemnification under
this Article XII (the "Indemnitee") shall give the other party (the
"Indemnifying Party") notice of any claim or the commencement of any action or
proceeding for which such Indemnitee seeks indemnification, and
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such Indemnitee shall permit the Indemnifying Party to assume the defense of any
claim or any litigation resulting from such claim. The failure by any
Indemnitee to give an Indemnifying Party timely notice shall not preclude any
Indemnitee from seeking indemnification from any Indemnifying Party except to
the extent that such failure has materially prejudiced the Indemnifying Party's
ability to defend the claim or litigation. No Indemnifying Party shall settle
any claim for which any Indemnitee seeks indemnification in respect of an
indemnifiable claim hereunder or consent to entry of any judgment in litigation
arising from such a claim without obtaining a release of each Indemnitee from
all liability in respect of such claim or litigation. If an Indemnifying Party
shall not assume the defense of any such claim or litigation resulting
therefrom, or if injunctive relief is sought against an Indemnitee, the
Indemnitee may, but shall have no obligation to, defend against or settle such
claim or litigation in such manner as it may deem appropriate. The Indemnifying
Party shall promptly reimburse each Indemnitee for the amount of all expenses,
legal or otherwise, incurred by such Indemnitee in connection with the defense
against or settlement of such claim or litigation. If no settlement of the
claim or litigation is made, the Indemnifying Party shall promptly reimburse
each Indemnitee for the amount of any judgment rendered with respect to such
claim or in such litigation and of all expenses, legal and otherwise, incurred
by each Indemnitee, in the defense against such claim or litigation.
ARTICLE XIII
MISCELLANEOUS PROVISIONS
13.01 Amendment and Modification. This Agreement may be amended,
modified and supplemented only by written agreement of TNS and SunTech.
13.02 Waiver of Compliance; Consents. Any failure of a party to
comply with any obligation, covenant, agreement or condition herein may be
waived in writing by the other party or parties, but no waiver shall be
effective for any purpose unless it is expressed and in writing, and any such
waiver or failure to insist upon strict compliance with such obligation,
covenant, agreement or condition shall not operate as a waiver of, or estoppel
with respect to, any subsequent or other failure. Whenever this Agreement
requires or permits consent by or on behalf of any party hereto, such consent
shall be effective only if given in writing in a manner consistent with the
requirements for a waiver of compliance as set forth in this Section 13.02.
13.03 Investigations; Survival of Representations and Warranties. The
respective representations and warranties of SunTech and TNS contained herein or
in any certificates or other documents delivered prior to or at the Closing
shall not be deemed waived or otherwise affected by any investigation made by
any party or parties hereto. Each and every such representation and warranty,
together with the indemnification contained in Article XII hereof, shall survive
the Closing through February 27, 2000.
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13.04 Notices. All notices, requests, demands and other
communications required or permitted hereunder shall be in writing and shall be
deemed to have been duly given when delivered by hand, facsimile transmission or
mailed first class with postage prepaid:
(a) If to SunTech, to:
SunTech Processing Systems, LLC
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
with copy to:
UICI
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
and
Gardere & ▇▇▇▇▇, L.L.P
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. Pleasant, Esq.
or to such other person or address as SunTech shall furnish to TNS in writing
pursuant to the above;
(b) If to TNS, to:
Transaction Network Services, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
with copy to:
Arent Fox ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
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or to such other person or address as TNS shall furnish to the SunTech in
writing pursuant to the above.
13.05 Assignment. This Agreement and all of the provisions hereof
shall be binding upon the parties hereto and their respective successors and
assigns and inure to the benefit of the parties hereto and their respective
successors and permitted assigns, but neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any party hereto
without the prior written consent of the other party, except that TNS may assign
its rights in whole or in part to a purchaser or purchasers of the processing
portion of the Business.
13.06 Counterparts. This Agreement may be executed in two fully or
partially executed counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same instrument.
13.07 Headings. The article and section headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
13.08 Governing Law. The parties agree that this Agreement shall be
governed and construed by the laws of the state of Delaware and that no
conflict-of-laws provision shall be invoked to permit the laws of any other
state or jurisdiction.
13.09 Time of Essence. Time is of the essence with respect to each
provision of this Agreement in which time is an element.
13.10 Attorneys' Fees. In the event of any action instituted by any
party or parties hereto arising under this Agreement, the prevailing party or
parties shall be entitled to recover from the losing party or parties all of its
costs and expenses, including attorneys' fees, in addition to any other
available remedy.
13.11 Entire Agreement. This Agreement and the attached Schedules and
Exhibits embody the entire agreement and understanding of the parties hereto in
respect of the subject matter contained herein. There are no restrictions,
promises, representations, warranties, covenants, or undertakings, other than
those expressly set forth or referred to herein. This Agreement supersedes all
prior negotiations, agreements and understandings among the parties with respect
to such subject matter.
13.12 Expenses. All costs and expenses incurred in connection with
the Agreement and the transactions contemplated hereby shall be paid by the
party or parties incurring such expenses.
13.13 Severability. Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
or invalid under applicable law, such provision will be
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ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered, all as of the date first above written.
TRANSACTION NETWORK SERVICES, INC.
(Corporate Seal)
By: /s/▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇.
---------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇.
President
SUNTECH PROCESSING SYSTEMS, LLC
(Seal)
By: /s/▇▇▇ ▇▇▇▇▇▇
---------------------------
▇▇▇ ▇▇▇▇▇▇
President
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