1
Exhibit 2.6
PURCHASE AGREEMENT
BY AND AMONG
DC SYSTEMS, INC.,
A TEXAS CORPORATION,
CAMINUS LLC,
A DELAWARE LIMITED LIABILITY COMPANY,
CAMINUS/DC ACQUISITION CORP.,
A DELAWARE CORPORATION
AND
▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
JULY 31, 1999
2
PURCHASE AGREEMENT
This PURCHASE AGREEMENT (the "AGREEMENT") is entered into as of this
31st day of July, 1999, by and among DC SYSTEMS, INC., a Texas corporation ("DC
SYSTEMS"), CAMINUS LLC, a Delaware limited liability company ("CAMINUS"),
CAMINUS/DC ACQUISITION CORP., a Delaware corporation ("ACQUISITION SUB"), and
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇
▇. ▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇ ▇▇▇▇▇ (the
"SHAREHOLDERS"), with reference to the following facts and circumstances.
RECITALS
WHEREAS, the Shareholders own all of the capital stock of and other
equity interests in DC Systems, including, without limitation, the warrants to
purchase the capital stock of DC Systems held by ▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇ ▇▇▇▇▇;
WHEREAS, the Shareholders desire to sell, assign and transfer to
Caminus and Caminus, through Acquisition Sub, desires to purchase and accept
from the Shareholders all of their equity interests in DC Systems (the
"Purchase");
NOW THEREFORE, in consideration of the premises and the respective
representations, warranties and agreements contained herein and in the Related
Agreements (as hereinafter defined), the parties hereto hereby agree as follows:
ARTICLE 1
DEFINITIONS
For purposes of this Agreement, the following terms shall be defined as
follows:
"AAA" shall have the meaning as set forth in Section 7.6 hereof.
"ADDITIONAL TAX" shall have the meaning set forth in Section 5.4.3.
"AGREEMENT" means this Purchase Agreement, including all exhibits and
schedules.
"CAPITAL GAIN RATE" shall have the meaning set forth in Section 5.4.3.
"CODE" means the Internal Revenue Code of 1986, as amended.
"DC SYSTEMS FINANCIAL STATEMENTS" shall have the meaning as set forth
in Section 3.5.
3
"DISPUTED MATTER" shall have the meaning as set forth in Section 7.6.
"EFFECTIVE DATE" shall mean July 31, 1999.
"ESCROW AGENT" shall have the meaning given to it in the Escrow
Agreement.
"ESCROW AGREEMENT" shall mean an escrow agreement among Caminus, the
Escrow Agent and the Shareholders, in substantially the form attached as EXHIBIT
A. The parties acknowledge that the Escrow Agreement will not be executed and
delivered in conjunction with this Agreement; rather, the Escrow Agreement will
be used only if Caminus undergoes a reorganization (referred to herein as the
"REORGANIZATION") into a subchapter C corporation. At the time of the
Reorganization, the Escrow Agreement will be executed and delivered by the
parties thereto (and each of the parties that will receive Membership Interests
pursuant to this Agreement, hereby agrees to enter into the Escrow Agreement at
that time in substantially the form attached as EXHIBIT A) pursuant to which the
shares of Caminus issued in exchange for the Membership Interests in the
Reorganization will be deposited into the escrow established pursuant to the
Escrow Agreement, to be held in accordance with and until the Release Date
specified in the Escrow Agreement.
"EXECUTION DATE" shall mean August ___, 1999.
"EXPENSES" shall have the meaning as set forth in Section 5.5 hereof.
"GAAP" shall mean generally accepted accounting principles applied on a
consistent basis.
"INDEMNIFIED PARTY" shall have the meaning as set forth in Section
6.3.1 hereof.
"INDEMNIFYING PARTY" shall have the meaning as set forth in Section
6.3.1 hereof.
"KNOWLEDGE" or "KNOWLEDGE" shall mean, with respect to DC Systems, any
Shareholder, Caminus, or Acquisition Sub, actual knowledge of such Person or the
officers and key employees of such Person and such Person's affiliates, as
applicable.
"LIEN" shall mean any claim, security interest, charge, restriction, or
encumbrance of any kind of any party and of any nature whatsoever.
"LIMITED LIABILITY COMPANY AGREEMENT" shall mean the limited liability
company agreement of Caminus, as amended.
"LOSSES" shall have the meaning as set forth in Section 6.2.1.
-2-
4
"MATERIAL ADVERSE EFFECT" means for all purposes of this Agreement,
with respect to any Person and any statement, representation, warranty or
covenant contained herein, any change or effect that individually or when taken
together with all other changes or effects relating to such statement,
representation, warranty or covenant that have occurred during any relevant
period of time prior to the date of determination of the occurrence of the
Material Adverse Effect, is or is reasonably likely to be materially adverse to
the business, assets (including intangible assets), financial condition, results
of operation or prospects of such Person, or does or is reasonably likely to
materially adversely affect the ability of such Person to perform its
obligations under this Agreement or the Related Agreements or to consummate the
transactions contemplated hereby or thereby, or materially adversely affects the
ability of such Person to conduct its business after the Effective Date
substantially as such business has been conducted historically and immediately
prior thereto.
"MEMBERSHIP INTERESTS" means an aggregate of 2,546,182 notional shares
of Series A membership interests in Caminus (representing 2.61% of the issued
and outstanding Series A membership interests in Caminus after giving effect to
the issuance thereof and of the additional notional shares to be issued to fund
the Purchase), bearing an aggregate initial capital account of Three Million
Dollars ($3,000,000). The Membership Interests shall be allocated among the
Shareholders as specified in SCHEDULE 7.4.
"OUTSTANDING LIABILITIES" shall mean any and all of DC Systems'
liabilities or obligations of any nature (contingent or otherwise, and
including, without limitation, all liabilities for Taxes) arising, accruing, or
pertaining to periods prior to the Execution Date (whether or not GAAP would
require such liabilities to be reflected on DC Systems' balance sheet as of
Execution Date), other than (i) liabilities or obligations that would be
properly included as accounts payable or other current liabilities on a balance
sheet (prepared as of the Execution Date, in accordance with GAAP, consistently
applied) of DC Systems that have been incurred in the ordinary course of the DC
Systems' business consistent with past practice; (ii) liabilities or obligations
arising from or related to Personal Property Leases, Real Property Leases,
Material Contracts set forth on SCHEDULE 3.6 (for purposes of this clause (ii),
excluding the Material Contracts with customers of DC Systems, which are covered
by clause (iii) following), insurance policies set forth on SCHEDULE 3.8, or
Employee Plans set forth in SCHEDULE 3.9.2, in each case to the extent such
liabilities or obligations arise from and pertain solely to events or periods of
time after the Execution Date of any kind; or (iii) liabilities or obligations
arising from or related to the Material Contracts with customers of DC Systems
set forth on SCHEDULE 3.6, to the extent such liabilities or obligations arise
from and pertain solely to alleged breaches of warranties or delivery
obligations of any kind or failures to make on-time delivery, regardless of the
time period(s) to which such alleged breaches relate; provided, however, that,
notwithstanding the foregoing, any liabilities for Expenses
-3-
5
incurred by the Shareholders or DC Systems prior to the Execution Date shall
constitute "Outstanding Liabilities."
"PERMITS" shall have the meaning as set forth in Section 3.17.
"PERMITTED LIEN" shall have the meaning as set forth in Section 3.12.
"PERSON" means an individual, a corporation, a limited liability
company, a partnership, an association, a trust or any other entity or
organization, including a governmental or political subdivision or any agency or
instrumentality thereof.
"PERSONAL PROPERTY LEASES" shall have the meaning as set forth in
Section 3.15.
"PURCHASE" shall have the meaning as set forth in the second Whereas
clause hereto.
"PURCHASE PRICE" means the cash payments by Caminus to the Shareholders
in the aggregate amount of Ten Million Dollars ($10,000,000) made pursuant to
Section 2.3 hereof (as adjusted as provided therein), plus the Tax Make-Up
Payment.
"REAL PROPERTY LEASES" shall have the meaning as set forth in Section
3.16.
"RELATED AGREEMENTS" shall mean (i) the employment letters or
agreements entered into between DC Systems and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇▇▇ ▇. ▇▇▇▇, and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, forms of which are attached in EXHIBITS B, C,
D AND E, dated as of the date hereof, (ii) the covenants not to compete entered
into between Caminus and each Shareholder, a form of which is attached as
EXHIBIT F, (iii) the Escrow Agreement (if such agreement is required to be
executed and delivered, as provided in the definition of "Escrow Agreement" in
Article 1 hereof), and (iv) the Joinder Agreement, a form of which is attached
as EXHIBIT G.
"REORGANIZATION" shall have the meaning as set forth in the definition
of "Escrow Agreement" above.
"SECTION 338(H)(10) ELECTION" shall have the meaning as set forth in
Section 5.3.
"SELLERS" shall mean, with respect to this Agreement and the
transactions contemplated hereby and with respect to the Related Agreements and
the transactions contemplated thereby (to the extent such Persons are parties
thereto), DC Systems and the Shareholders.
"SHAREHOLDER AGREEMENT" shall have the meaning as set forth in Section
3.18.
-4-
6
"STOCK" shall mean all of the capital stock of DC Systems, together
with any and all options, warrants (including, without limitation, the warrants
to purchase the capital stock of DC Systems held by ▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇ ▇▇▇▇▇),
and other commitments to issue or transfer such capital stock to any Person.
"TAX" and "TAXES" shall have the meanings as set forth in Section 3.10.
"TAX MAKE-UP PAYMENT" shall have the meaning as set forth in Section
5.4.1.
"TAX RETURN" shall have the meaning as set forth in Section 3.10.
"THIRD PARTY CLAIMS" shall have the meaning as set forth in Section
6.3.2.
ARTICLE 2
PURCHASE AND SALE OF CAPITAL STOCK
2.1 SALE OF STOCK. Subject to the terms and conditions set forth herein
and in the Related Agreements, as of the Effective Date the Shareholders hereby
sell, assign and transfer, free and clear of any and all Liens, and deliver
certificates representing, the Stock to Acquisition Sub, and Acquisition Sub
hereby purchases and accepts the Stock from the Shareholders. Upon execution of
this Agreement certificates representing the Stock shall be duly indorsed for
transfer to Acquisition Sub or accompanied by duly executed stock powers
separate from certificates, as instructed by Caminus or Acquisition Sub.
2.2 PAYMENT OF LIABILITIES AT EXECUTION. Except as specifically
indicated in SCHEDULE 2.2, the Shareholders have discharged or shall discharge,
upon execution of this Agreement, all Outstanding Liabilities. To the extent
Caminus or Acquisition Sub discovers Outstanding Liabilities after the execution
of this Agreement that were not discharged by the Shareholders prior to or upon
such execution, the Shareholders shall discharge such Outstanding Liabilities
upon notice from Caminus.
2.3 PAYMENT OF PURCHASE PRICE. Subject to the terms and conditions set
forth herein and in the Related Agreements, the Purchase Price, less the amount
of any liabilities included on SCHEDULE 2.2 (i.e., Outstanding Liabilities that
are not discharged by the Shareholders upon or prior to the execution of this
Agreement, in accordance with Section 2.2), shall be paid to the Shareholders by
Caminus upon the execution of this Agreement by wire transfer according to wire
transfer instructions delivered by each Shareholder to Caminus at least one day
prior to such execution. The payment of the Purchase Price will be allocated
among the Shareholders in accordance with SCHEDULE 7.4 attached hereto.
2.4 MEMBERSHIP INTERESTS. Subject to the terms and conditions set forth
herein and in the Related Agreements, upon the execution of this Agreement,
Caminus shall admit the Shareholders as members of Caminus and grant them the
-5-
7
Membership Interests, pursuant to a Joinder Agreement to the Limited Liability
Company Agreement, in the form attached hereto as EXHIBIT G. As members, the
Shareholders shall have the same rights, privileges and obligations as other
members pursuant to the terms and provisions of the Limited Liability Company
Agreement.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF DC SYSTEMS
AND THE SHAREHOLDERS
As an inducement for Caminus to enter into and consummate the
transactions contemplated by this Agreement (including the Related Agreements),
DC Systems, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇ ▇. ▇▇▇▇, jointly and severally, and each
other Shareholder (with respect to each other Shareholder, solely with respect
to Sections 3.2, 3.4, 3.7.2, 3.14.2, 3.17, 3.18 and 3.22, and in each instance
solely with respect to him or her), severally, represents and warrants that each
of the following statements is true, correct and complete as of the date hereof,
which representations and warranties shall survive the execution of this
Agreement as provided in Section 6.1 hereof.
3.1 EXISTENCE AND GOOD STANDING.
3.1.1 DC SYSTEMS. At the Execution Date, DC Systems is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Texas, having full power and authority to own its properties and
to carry on its business as conducted. At the Execution Date, DC Systems is duly
qualified to transact business and is in good standing in each jurisdiction in
which the operation of its business or the ownership of its assets and
properties requires it to be so qualified, except where the failure to so
qualify is not reasonably likely to have a Material Adverse Effect.
3.1.2 ORGANIZATIONAL DOCUMENTS. Copies of the articles of
incorporation and by-laws of DC Systems, effective prior to and as of the date
hereof, have been delivered to Caminus and as delivered are true and complete.
3.1.3 SUBSIDIARIES. DC Systems does not own or have any
subsidiaries, or own any interest in a partnership, joint venture or other
business entity, other than its wholly owned subsidiary DCS*Gasnet Corporation,
a Texas corporation. For purposes of this ARTICLE 3, and except where the
context otherwise requires, "DC SYSTEMS" includes DC Systems, Inc. and
DCS*Gasnet Corporation.
3.2 AUTHORITY. Each of the Sellers has the requisite power and
authority to execute and deliver this Agreement and the Related Agreements to
which such Seller is a party, and perform such Seller's obligations herein and
therein, and consummate the transactions contemplated hereby and thereby. Each
of the Sellers has duly
-6-
8
executed and delivered this Agreement and the Related Agreements to which such
Seller is a party and has obtained, to the extent applicable, any necessary
authorization in accordance with all applicable laws and such Seller's
organizational documents to execute and deliver this Agreement and the Related
Agreements to which such Seller is a party, and to perform such Seller's
respective obligations herein and therein and consummate the transactions
contemplated hereby and thereby, and such matters do not require notice to, or
consent or approval of, any other third party, governmental authority or
regulatory agency, except as set forth on SCHEDULE 3.2. Each of this Agreement
and the Related Agreements to which such Seller is a party is a valid, legal and
binding obligation of such Seller enforceable against such Seller in accordance
with its respective terms, except to the extent that enforceability may be
limited by applicable bankruptcy, insolvency or similar laws affecting the
enforcement of creditors' rights generally and subject to general principles of
equity (regardless of whether such enforcement is considered in a proceeding at
law or at equity). Any Person executing this Agreement and any Related
Agreements on behalf of a Seller has been specifically authorized to do so by
all necessary corporate or other action. No other action will be necessary by
any of the Sellers to authorize the execution and delivery of this Agreement and
the Related Agreements and the consummation of the transactions contemplated
hereby and thereby. Each of the Sellers agrees that, if the Escrow Agreement is
required to be executed and delivered as provided in the definition of "Escrow
Agreement" set forth in ARTICLE 1, then each of the foregoing representations
and warranties shall be automatically deemed made by the Sellers with respect to
the Escrow Agreement at that time.
3.3 STOCKHOLDERS' MEETING. DC Systems has duly convened a meeting of
its stockholders (unless the requirement of such meeting has been waived or
otherwise satisfied under applicable law) to approve this Agreement, the Related
Agreements (to the extent DC Systems is a party), and the transactions
contemplated hereby and thereby, and such agreements and transactions have been
duly approved and become effective in accordance with applicable law.
3.4 NO CONFLICTS. Except as set forth in SCHEDULE 3.4, neither the
execution and delivery of this Agreement or the Related Agreements, nor the
consummation of the transactions contemplated hereby or thereby, (i) violates or
conflicts with any provision of the articles of incorporation, by-laws or other
organizational documents of DC Systems; (ii) conflicts with or violates any
material provision of any foreign, federal, state or local law, statute, treaty,
ordinance, rule, regulation or any order, writ, judgment or decree of any court
or other governmental authority to which any of the Sellers or any of their
respective properties or assets may be bound or affected; or (iii) breaches or
constitutes grounds for a default (or an event that, with notice or lapse of
time or both would become a default) under, or gives to others a right of
termination, amendment, acceleration, modification or cancellation of, or
results in the creation or imposition of (or the obligation to create
-7-
9
or impose) any Lien on any of the properties or assets of any of the Sellers
pursuant to any material note, mortgage, indenture, bond, lease, license,
permit, franchise, agreement, contract, undertaking or other instrument to which
any of the Sellers is a party or by which any of the Sellers or any of their
respective properties or assets may be bound or affected. Each of the Sellers
agrees that, if the Escrow Agreement is required to be executed and delivered as
provided in the definition of "Escrow Agreement" set forth in ARTICLE 1, then
each of the foregoing representations and warranties shall be automatically
deemed made by the Sellers with respect to the Escrow Agreement at that time.
3.5 FINANCIAL STATEMENTS. DC Systems has delivered to Caminus true and
complete copies of the unaudited balance sheets of DC Systems for June 1999, and
for December 1998 and December 1997, and the related statements of income (the
"DC SYSTEMS FINANCIAL STATEMENTS"). Such balance sheets were created in the
normal course of DC Systems' business and, as of their respective dates, are
true and correct, in all material respects, and, in all material respects,
fairly present in accord with DC Systems' business and accounting practices (as
disclosed on SCHEDULE 3.5) and consistently applied, except as disclosed on
SCHEDULE 3.5, the financial position, assets and liabilities of DC Systems, at
the dates indicated. Similarly, such statements of income are true and correct,
in all material respects, as of their respective dates, and, in all material
respects, fairly present in accord with DC Systems' business and accounting
practices (as disclosed on SCHEDULE 3.5) and consistently applied, except as
disclosed on SCHEDULE 3.5, the results of operations for the periods indicated.
The officers of DC Systems have no Knowledge of any material claims, obligations
or liabilities of DC Systems relating to the period prior to the Execution Date,
other than those set forth in the DC Systems Financial Statements included in
SCHEDULE 3.5. For avoidance of ambiguity, the parties acknowledge and agree
that, for purposes of the previous sentence, (i) liabilities or obligations
arising from or related to Personal Property Leases, Real Property Leases,
Material Contracts set forth on SCHEDULE 3.6 (for purposes of this clause (i),
excluding the Material Contracts with customers of DC Systems, which are covered
by clause (ii) following), insurance policies set forth on SCHEDULE 3.8, and
Employee Plans set forth in SCHEDULE 3.9.2 shall not be considered to relate to
the period prior to the Execution Date to the extent such liabilities or
obligations arise from and pertain solely to events or periods of time after the
Execution Date; and (ii) liabilities or obligations arising from or related to
the Material Contracts with customers of DC Systems set forth on SCHEDULE 3.6
shall be disregarded to the extent such liabilities or obligations arise from
and pertain solely to alleged breaches of warranties or delivery obligations of
any kind or failures to make on-time delivery, regardless of the time period(s)
to which such alleged breaches relate. The officers of DC Systems have no
Knowledge of any events or circumstances that have occurred or come into
existence since the date of the most recent DC Systems Financial Statements that
may reasonably be expected, individually or in the aggregate, to have or
constitute a Material Adverse Effect.
-8-
10
3.6 MATERIAL CONTRACTS.
3.6.1 GENERALLY. Set forth on SCHEDULE 3.6 is a complete and
accurate list of all material active contracts and agreements, oral or written,
to which the DC Systems is a party or by which any of its assets, properties or
business is bound except for contracts and agreements listed in other Schedules.
With respect to each of the contracts set forth on SCHEDULE 3.6, a true and
correct copy, or if a copy is not available, a true and correct summary of the
contractual obligation, has been made available to Caminus and to its auditors
PriceWaterhouseCoopers. Each such contract is in full force and effect, to the
Knowledge of DC Systems and subject to the further provisions of Section 3.6.2,
without material breach or default by DC Systems. Except as set forth in
SCHEDULE 3.6, to the Knowledge of DC Systems no party to any such contract other
than DC Systems is in breach or default thereof and no notice has been received
regarding termination or suspension thereof.
3.6.2 SOFTWARE CONTRACTS. The parties hereto expressly
understand and agree that software license and development agreements frequently
have delivery dates which are not met by software vendors for a variety of
reasons caused by or attributable to both licensor and licensees and that this
is the case with certain of the contracts set forth on SCHEDULE 3.6. DC Systems
has negotiated or may have negotiated with certain of its customers to extend
product delivery dates, substitute different deliverables for those stated in
their contracts (because the needs of the licensee(s) changed or for other
reasons) or to alter terms and provisions of its contracts in other ways to
eliminate or moderate potential claims, obligations and liabilities. Such
negotiations, to the extent material, have been documented through amendments,
addenda, work orders, status reports or other written documents. DC Systems has
indicated on SCHEDULE 3.6 the contracts in which DC Systems may not have
achieved anticipated delivery dates or anticipates not achieving such delivery
dates. The parties acknowledge and agree that DC Systems makes no
representations or warranties, other than those contained in Section 3.14, that
claims will not arise respecting timing or acceptance of its software under the
contracts listed in SCHEDULE 3.6.
3.7 INTELLECTUAL PROPERTY.
3.7.1 Set forth on SCHEDULE 3.7 is a list of all significant
trade names, trademarks, service names, service marks, logos, patents, patent
applications, invention disclosures, copyrights, licenses, formulas, trade
secrets, programs, computer software (excluding commercially available general
office computer software licensed from unrelated third-parties), technology and
other intellectual property rights (the "INTELLECTUAL PROPERTY") owned by DC
Systems or used or required by DC Systems in the operation of its businesses.
Except as set forth on SCHEDULE 3.7, DC Systems holds all of its right, title
and interest in and to the Intellectual Property, free and clear of all Liens.
DC Systems owns or has the right to use, without the making of any payment or
the granting of any rights to others, all the
-9-
11
Intellectual Property. Except as set forth on SCHEDULE 3.7, the officers of DC
Systems have no Knowledge that the conduct of the businesses of DC Systems as
now conducted infringes or conflicts with any intellectual property rights of
others. Except as set forth on SCHEDULE 3.7, the officers of DC Systems have no
Knowledge that DC Systems has not, as of the date hereof, satisfied all material
requirements necessary to maintain the validity of all Intellectual Property,
and the right to use such Intellectual Property. Except as set forth on SCHEDULE
3.7, the officers of DC Systems have no Knowledge of any material infringement
by others of any Intellectual Property owned or used by DC Systems. Except as
set forth on SCHEDULE 3.7, there is no pending or, to the Knowledge of the
officers of DC Systems, threatened claim that DC Systems is or has infringed
upon the intellectual property rights of any third party. Except as set forth on
SCHEDULE 3.7, the officers of DC Systems have no Knowledge that any licenses,
rights and other agreements pertaining to the Intellectual Property are not in
compliance in all material respects with all applicable laws, rules and
regulations in all jurisdictions in which DC Systems conducts any business,
including without limitation, those pertaining to remittance of foreign exchange
and taxation. The execution and delivery of this Agreement and the Related
Agreements and the consummation of the transactions contemplated hereby and
thereby will not alter or impair the rights and interests of DC Systems in any
of the Intellectual Property owned or used by DC Systems and DC Systems will
have the same rights and interests in such items at and after the Execution Date
as it has had immediately prior to the Execution Date.
3.7.2 Except as specified in SCHEDULE 3.7.2, each Shareholder
represents and warrants, with respect to such Shareholder's Authored Software,
that all work of authoring and developing such Authored Software performed by
such Shareholder was performed while such Shareholder was a full-time employee
of DC Systems within the scope of such Shareholder's employment. Each
Shareholder agrees that the Authored Software and all portions thereof are works
made for hire on behalf of DC Systems; and that upon creation, ownership of all
copyrights (including all renewals and extensions) in those works vested in DC
Systems. In the event any such Authored Software, or any party thereof, is
deemed not to be a work made for hire for any reason, or any Shareholder
possesses any copyrights in such Authored Software for any reason, such
Shareholder hereby grants, transfers and assigns to DC Systems all right, title
and interest in that Authored Software and all copyrights in that Authored
Software and all renewals and extensions thereof, and agrees to provide all
assistance reasonably requested by DC Systems in the establishment, preservation
and enforcement of its copyright in such Authored Software. Each Shareholder
hereby waives all moral rights with respect to the Authored Software, including
without limitation any and all rights of identification of authorship and any
and all rights of approval, restriction or limitation on use or subsequent
modifications. Each Shareholder further hereby assigns to DC Systems all of such
Shareholder's right, title and interest in or to any and all Intellectual
Property other than copyright, if any, embodied, fixed, practiced, infringed or
used in the Authored
-10-
12
Software. Each Shareholder agrees to execute any additional documents necessary
or reasonably requested by DC Systems to effect or evidence the assignments of
this Section 3.7.2 ("SUPPORTING DOCUMENTS"). If any Shareholder fails or refuses
to execute any Supporting Documents, such Shareholder hereby agrees, on behalf
of such himself or herself and his or her successors, assigns, donees,
executors, administrators, transferees and personal representatives, to the
fullest extent permitted by law, that the president of DC Systems, and of any
successor to DC Systems, shall be, and are hereby, irrevocably appointed such
Shareholder's attorneys-in-fact with full authority to execute any Supporting
Documents requested by DC Systems, and to perform all other acts necessary to
effect, perfect or evidence the assignments of this Section 3.7.2. For purposes
of this Section 3.7.2, "AUTHORED SOFTWARE" shall mean, with respect to any
Shareholder, all software authored or developed, in whole or in part by such
Shareholder and constituting Intellectual Property used or required by DC
Systems in the operation of its businesses as currently or historically
conducted. Without limiting the generality of the foregoing, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
and ▇▇▇▇ ▇. ▇▇▇▇ hereby assign to DC Systems all of their right, title and
interest, including without limitation all rights under their agreement,
effective August 19, 1994, to any and all ideas, designs and software developed
by ▇▇▇▇ prior to and during his employment with DC Systems with respect to an
on-line database for the natural gas, energy or utility industry, including
exclusive rights to use the names "GASNET" and "M*NET."
3.8 INSURANCE. The material assets, properties and operations of DC
Systems are insured under various policies of general liability and other forms
of insurance, copies of which have been made available to Caminus. SCHEDULE 3.8
discloses for each policy the outstanding claims thereunder. All such policies
are in full force and effect in accordance with their terms. No notice of
cancellation has been received with respect to any such policy and there is no
existing breach or default (or event which with the giving of notice or lapse of
time or both would constitute a breach or default) thereunder. All premiums due
under such policies prior to the execution of this Agreement have been paid in
full.
3.9 EMPLOYEE MATTERS AND BENEFIT PLANS.
3.9.1 DEFINITIONS. With the exception of the definition of
"Affiliate" (which definition shall apply only to this Section 3.9), for
purposes of this Agreement, the following terms shall have the meanings set
forth below:
"AFFILIATE" shall mean any other person or entity
under common control with DC Systems within the
meaning of Section 414(b), (c), (m) or (o) of the
Code and the regulations issued thereunder.
"DC SYSTEMS EMPLOYEE PLAN" shall mean any plan,
program, policy, practice, contract, agreement or
other arrangement providing for compensation,
severance, termination pay,
-11-
13
deferred compensation, performance awards, stock or
stock-related awards, fringe benefits or other
employee benefits or remuneration of any kind,
whether written or unwritten or otherwise, funded or
unfunded, including without limitation, each
"employee benefit plan," within the meaning of
Section 3(3) of ERISA which is or has been
maintained, contributed to, or required to be
contributed to, by DC Systems or any Affiliate for
the benefit of any Employee, or with respect to which
DC Systems or any Affiliate has or may have any
liability or obligation.
"DOL" shall mean the U.S. Department of Labor.
"EMPLOYEE" shall mean any current or former employee,
consultant or director of DC Systems or any
Affiliate.
"EMPLOYEE AGREEMENT" shall mean each management,
employment, severance, consulting, relocation,
repatriation, expatriation, visas, work permit or
other agreement, contract or understanding between DC
Systems or any Affiliate and any Employee.
"ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended.
"IRS" shall mean the Internal Revenue Service.
3.9.2 SCHEDULE. SCHEDULE 3.9.2 contains an accurate and
complete list of all DC Systems Employee Plans. Except as set forth in SCHEDULE
3.9.2, DC Systems has no agreements with employees other than the employment
agreements made available to Caminus and the employment agreements disclosed in
the DC Systems Financial Statements. DC Systems does not have any plan or
commitment to establish any new DC Systems Employee Plan or Employee Agreement,
to modify any DC Systems Employee Plan or Employee Agreement (except to the
extent required by law or to conform any such DC Systems Employee Plan or
Employee Agreement to the requirements or any applicable law, in each case as
previously disclosed to Caminus in writing, or as required by this Agreement),
or to enter into any DC Systems Employee Plan or Employee Agreement.
3.9.3 DOCUMENTS. DC Systems has made available to Caminus: (i)
correct and complete copies of all documents embodying each DC Systems Employee
Plan and each Employee Agreement including (without limitation) all amendments
thereto and all related trust documents; (ii) the most recent summary plan
description together with the summary(ies) of material modifications thereto, if
any, required under ERISA with respect to each DC Systems Employee Plan; (iii)
all
-12-
14
material written agreements and contracts relating to each DC Systems Employee
Plan, including, but not limited to, administrative service agreements, group
annuity contracts and group insurance contracts; (iv) all correspondence to or
from any governmental agency relating to any DC Systems Employee Plan; (v) all
policies pertaining to fiduciary liability insurance covering the fiduciaries
for each DC Systems Employee Plan; and (vi) all discrimination tests for each DC
Systems Employee Plan for the most recent plan year, if required.
3.9.4 EMPLOYEE PLAN COMPLIANCE. DC Systems has performed all
material obligations required to be performed by it under, is not in default or
violation of, and has no knowledge of any material default or violation by any
other party to each DC Systems Employee Plan, and each DC Systems Employee Plan
has been established and maintained in accordance with its terms and in material
compliance and all applicable laws, including, but not limited to, ERISA. Any DC
Systems Employee Plan which is intended to meet the requirements of Sections
408(k) or 408(p) of the Code and which permits an election described in Section
408(k)(8) of the Code (i.e., a "SARSEP") (i) was established by the execution of
IRS Form 5305A-SEP, (ii) has substantially met such requirements at all times
since its inception, including all requirements regarding reporting and notices
to employees, and (iii) permitted, by its terms, such election on December 31,
1996. There are no actions, suits or claims pending or threatened or reasonably
anticipated (other than routine claims for benefits) against any DC Systems
Employee Plan or against the assets of any DC Systems Employee Plan. Each DC
Systems Employee Plan can be amended, terminated or otherwise discontinued after
the Effective Time in accordance with its terms, without liability to Caminus,
Acquisition Sub, DC Systems or any Affiliate (other than ordinary administration
expenses). There are no audits, inquiries or proceedings pending or threatened
by the IRS or DOL with respect to any DC Systems Employee Plan. Neither DC
Systems nor any Affiliate is subject to any penalty or tax with respect to any
DC Systems Employee Plan under Section 502(i) of ERISA or Sections 4975 through
4980 of the Code. Each DC Systems Employee Plan which is an accident and health
plan intended to meet the requirements for tax-favored status under Subchapter B
of Chapter 1 of the Code has met and meets such requirements. The benefits under
each DC Systems Employee Plan which is a "welfare benefit plan" under Section
3(1) of ERISA are paid from the assets of DC Systems and its Affiliates, through
insurance policies, or a combination of both.
3.9.5 ABSENCE OF CERTAIN PENSION PLANS. Neither DC Systems nor
any Affiliate has ever maintained, established, sponsored, participated in, or
contributed to, (i) any pension plan which is subject to Title IV of ERISA or
Section 412 of the Code, (ii) any "multiemployer plan," as defined in Section
3(37) of ERISA, or (iii) any pension, profit sharing, or stock bonus plan which
is intended to qualify under Section 401 of the Code.
-13-
15
3.9.6 NO POST-EMPLOYMENT OBLIGATIONS. No DC Systems Employee
Plan provides or has any liability to provide, retiree life insurance, retiree
health or other retiree employee welfare benefits to any person for any reason,
except as may be required by applicable law, and DC Systems has never
represented, promised or contracted (whether in oral or written form) to any
Employee (either individually or to Employees as a group) or any other person
that such Employee(s) or other person would be provided with retiree life
insurance, retiree health or other retiree employee welfare benefit, except to
the extent required by applicable law. At all times, DC Systems and its
Affiliates have normally employed fewer than 20 Employees on a typical business
day. DC Systems and its Affiliates have substantially complied with all
applicable state and local laws requiring the continuation of health care
coverage beyond the termination of employment.
3.9.7 EFFECT OF TRANSACTION. The execution of this Agreement
and the Related Agreements and the consummation of the transactions contemplated
hereby and thereby will not constitute an event under any DC Systems Employee
Plan, Employee Agreement, trust or loan that will or may result in any payment
(whether of severance pay or otherwise), acceleration, forgiveness of
indebtedness, vesting, distribution, increase in benefits or obligation to fund
benefits with respect to any Employee. No payment or benefit which will or may
be made by DC Systems or its Affiliates with respect to any Employee as a result
of the transactions contemplated by this Agreement or the Related Agreements or
otherwise which will be characterized as a "parachute payment," within the
meaning of Section 280G(b)(2) of the Code (but without regard to clause (ii)
thereof); provided that this representation does not cover any payment or
benefit provided to any Person following the Execution Date by or at the
direction of Caminus, other than payments or benefits that are required to be
paid or provided pursuant to any DC Systems Employee Plan in existence on or
prior to the Execution Date.
3.9.8 EMPLOYMENT MATTERS. DC Systems: (i) is in material
compliance in all respects with all applicable foreign, federal, state and local
laws, rules and regulations respecting employment, employment practices, terms
and conditions of employment and wages and hours, in each case, with respect to
Employees; (ii) has withheld and reported all amounts required by law or by
agreement to be withheld and reported with respect to wages, salaries and other
payments to Employees; (iii) is not liable for any arrears of wages or any taxes
or any penalty for failure to comply with any of the foregoing; and (iv) is not
liable for any payment to any trust or other fund governed by or maintained by
or on behalf of any governmental authority, with respect to unemployment
compensation benefits, social security or other benefits or obligations for
Employees (other than routine payments to be made in the normal course of
business and consistent with past practice). There are no pending, threatened,
or, to the Knowledge of the officers of DC Systems, reasonably anticipated
claims or actions against DC Systems under any worker's compensation policy or
long-term disability policy. DC Systems has made available
-14-
16
to Caminus copies of all employment, consulting, and similar agreements and
arrangements between DC Systems and any individual. All such agreements and
arrangements are terminable by DC Systems at-will by payment of 2-weeks'
severance pay or less. All members of the boards of directors of DC Systems and
DCS*Gasnet Corporation shall have resigned prior to or shall resign upon
execution of this Agreement.
3.9.9 LABOR. No work stoppage or labor strike against DC
Systems is pending, threatened or reasonably anticipated. DC Systems does not
know of any activities or proceedings of any labor union to organize any
Employees. There are no actions, suits, claims, labor disputes or grievances
pending or, to the Knowledge of the officers of DC Systems, threatened or
reasonably anticipated against DC Systems relating to any labor, safety or
discrimination matters involving any Employee, including, without limitation,
charges of unfair labor practices or discrimination complaints, which, if
adversely determined, would, individually or in the aggregate, result in any
material liability to DC Systems, Caminus, Acquisition Sub or any Affiliate. DC
Systems has not engaged in any unfair labor practices within the meaning of the
National Labor Relations Act. DC Systems is not presently, nor has it been in
the past, a party to, or bound by, any collective bargaining agreement or union
contract with respect to Employees and no collective bargaining agreement is
being negotiated by DC Systems.
3.10 PAYMENT OF TAXES.
3.10.1 GENERAL. DC Systems has timely filed all Tax Returns
required to have been filed by it, including, without limitation, Tax Returns
with respect to state income, sales and use tax, and has paid or accrued all
Taxes due to any taxing authority with respect to all taxing periods ending on
or prior to the date hereof, and all such Tax Returns are true, correct and
complete in all material respects; provided, however that to the extent any such
Tax Returns were not filed on a timely basis or such taxes were not accrued and
paid on a timely basis or such Tax Returns were not true, correct and complete
in all respects, DC Systems has taken appropriate actions to correct any
deficiency and has paid all associated penalties and interest. DC Systems has
provided copies of its federal income tax returns to Caminus for its taxable
years ending December 31, 1996, December 31, 1997, and December 31, 1998. The DC
Systems Financial Statements for the period ending June 30, 1999 include an
adequate reserve for all Taxes not yet due or with respect to which Tax Returns
are not required to have been filed, in each case to reflect the operations of
DC Systems through June 30, 1999. Except as set forth in SCHEDULE 3.10, there is
no Tax audit, investigation or other proceeding pending or, to the Knowledge of
the officers of DC Systems, threatened by a governmental authority against or
affecting DC Systems. For purposes of this Agreement, "TAX" and "TAXES" shall
mean and refer to all taxes imposed of any nature including federal, state,
commonwealth, local or foreign net income tax, alternative or add-on minimum
tax, profits or excess
-15-
17
profits tax, franchise tax, gross income, adjusted gross income or gross
receipts tax, employment related tax, real and personal property tax or ad
valorem tax, sales or use tax, excise tax, stamp tax or duty, any withholding or
back up withholding tax, value added tax, severance tax, prohibited transaction
tax, premiums tax, occupation tax, together with any interest or any penalty, in
addition to any tax or additional amount imposed by any governmental authority
(domestic or foreign) responsible for the imposition of such tax. "TAX RETURN"
means all returns, reports, forms or other information required to be filed with
respect to any Taxes.
3.10.2 S CORPORATION STATUS. DC Systems has made and continues
to have in effect a valid and timely election to be treated as an "S
corporation" under Section 1361 et seq. of the Code (and any corresponding
provisions of all applicable state and local income tax laws) for all taxable
years since its formation, and it will be treated as an S corporation under the
Code and all such state and local tax laws for all taxable years or portions
thereof ending on or prior to the date of this Agreement. DC Systems has never
been a Subchapter C corporation for federal, New York, Texas or California tax
purposes.
3.11 BOOKS OF ACCOUNT; BANK ACCOUNTS. The books, records and accounts
of DC Systems accurately and fairly reflect, in reasonable detail, based upon
the business practices and accounting methodologies used by DC Systems (as
disclosed on SCHEDULE 3.5) and consistently applied, except as disclosed on
SCHEDULE 3.5, the transactions and the assets and liabilities of DC Systems with
respect to its businesses. DC Systems has not engaged in any material
transaction with respect to its businesses, maintained any bank account for its
businesses or used any of its funds, except for transactions, bank accounts and
funds which have been and are reflected in the normally maintained books,
records and accounts of DC Systems. SCHEDULE 3.11 sets forth a list of all bank
accounts, bank boxes and other depositories of DC Systems identifying bank,
branch and account number, as well as the authorized signatories thereto. DC
Systems has maintained a system of internal accounting control sufficient to
provide reasonable assurances for the purposes of its business operations that
(i) transactions are executed in accordance with management's general or
specific authorization, (ii) transactions are recorded as necessary to permit
preparation of financial statements that fairly present the financial position,
assets, liabilities, results of operations, cash flow and changes in
stockholders' equity of DC Systems, and (iii) access to assets, properties,
books, records and accounts is permitted only in accordance with management's
general or specific authorization.
3.12 OWNERSHIP OF ASSETS. Except as described in SCHEDULE 3.12, DC
Systems has good and marketable title to, or holds under valid leases or
licenses, all of its material assets, rights and properties, free and clear of
all Liens except for Permitted Liens, and such assets, rights, and properties
constitute all material assets, rights, and properties used or held for use by,
or necessary or desirable for the
-16-
18
operations (as currently and historically conducted) of DC Systems. For purposes
of this Agreement, "PERMITTED LIENS" shall mean mechanic's, carrier's, worker's,
repairman's or other statutory liens arising or incurred in the ordinary course
of business; Liens for taxes, assessment and other governmental charges which
are not yet due and payable or which may thereafter be paid without penalty or
are being contested in good faith pursuant to appropriate proceedings and fully
reserved on the DC Systems Financial Statements; and zoning, building,
restrictions and other governmental ordinances. All machinery, equipment,
furniture, motor vehicles and other tangible assets necessary or appropriate for
the conduct of the business and operations of DC Systems are in good operating
condition and repair, subject to ordinary wear and tear.
3.13 BROKERS. No amount is payable by the Sellers by way of brokerage
fees, finder's commissions or otherwise to any party on account of this
Agreement or the Related Agreements or the transactions contemplated hereby or
thereby.
3.14 LITIGATION.
3.14.1 Except as disclosed on SCHEDULE 3.14, there is no
material claim, action, suit, litigation, arbitration, investigation or other
legal proceeding which is pending or, to the Knowledge of the officers of DC
Systems, threatened, before any court or governmental authority, or arbitrator
or board of arbitrators to which DC Systems is a party, or to which any of the
assets, or properties of DC Systems is subject. DC Systems is not in default
with respect to any order, writ, injunction, decree or demand of any court or
other governmental or regulatory authority.
3.14.2 Except as disclosed on SCHEDULE 3.14, there is no
material claim, action, suit, litigation, arbitration, investigation or other
legal proceeding, relating in any way to DC Systems or any of the Stock, which
is pending or, to the Knowledge of the Sellers, threatened, before any court or
governmental authority, or arbitrator or board of arbitrators to which any
Shareholder is a party, or to which any of the Stock is subject. No Shareholder
is in default with respect to any order, writ, injunction, decree or demand of
any court or other governmental or regulatory authority, relating in any way to
DC Systems or any of the Stock.
3.15 PERSONAL PROPERTY LEASES. SCHEDULE 3.15 sets forth a list of all
material personal property leases ("PERSONAL PROPERTY LEASES") to which DC
Systems is a party. Each of the Personal Property Leases is a valid and binding
obligation of the respective parties thereto and enforceable in accordance with
its respective terms. DC Systems is not in material breach or default of any of
such Personal Property Leases. Except as disclosed on SCHEDULE 3.15, no consent
or approval is required for the assignment or transfer of any of the Personal
Property Leases in connection with this Agreement or the Related Agreements or
the transactions contemplated hereby or thereby.
-17-
19
3.16 REAL PROPERTY LEASES. SCHEDULE 3.16 sets forth a list of all real
property leases ("REAL PROPERTY LEASES") to which DC Systems is a party. Each of
the Real Property Leases is a valid and binding obligation of the respective
parties thereto and enforceable in accordance with its respective terms. DC
Systems is not in material breach or default of any of such Real Property
Leases. Except as disclosed on SCHEDULE 3.16, no consent or approval is required
for the assignment or transfer of any of the Real Property Leases in connection
with this Agreement or the Related Agreements or the transactions contemplated
hereby or thereby.
3.17 COMPLIANCE WITH LAWS; PERMITS. The officers of DC Systems have no
Knowledge that DC Systems, and (with respect to DC Systems and the Stock) each
Shareholder has no Knowledge that such Shareholder has not complied with or is
not in compliance with all federal, state, local and foreign statutes, laws,
ordinances, regulations, rules, permits, judgments, orders and decrees
applicable to such Person, any of the Stock, and any of the properties, assets,
operations and businesses of DC Systems, except where the failure so to comply
would not reasonably be expected to result in a Material Adverse Effect. The
officers of DC Systems have no Knowledge of any failures by DC Systems to hold
any permits, licenses, easements, variances, exemptions, consents, certificates,
orders and approvals from governmental authorities which failures, individually
or in the aggregate, might reasonably be expected to result in a Material
Adverse Effect (collectively, the "PERMITS") and all such Permits of which the
officers of DC Systems have Knowledge are listed on SCHEDULE 3.17. The officers
of DC Systems have no Knowledge that DC Systems is not in compliance with the
terms of the Permits applicable to it, except where the failure so to comply
would not reasonably be expected to result in a Material Adverse Effect.
3.18 CAPITALIZATION; STOCK. The authorized capital stock of DC Systems
consists of 100,000,000 shares of common stock. As of the Execution Date the
outstanding capital stock of DC Systems consists of 100,000,000 shares of common
stock. Each of the Sellers has, prior to the Execution Date, executed a
Shareholder Agreement (the "SHAREHOLDER AGREEMENT") in which such Seller has
agreed as to the allocation of the outstanding Stock and related matters. The
Shareholder Agreement constitutes a duly executed, valid, legal and binding
agreement with respect to each Seller, enforceable against such Seller in
accordance with its terms. As of the execution of this Agreement, the Stock is
owned beneficially and of record as set forth in Article 1 of Shareholder
Agreement, no other persons have any legal or equitable interest therein, and
there are no other outstanding subscriptions, options, rights, warrants,
convertible securities, stock appreciation rights, phantom equity, or other
agreements or commitments obligating DC Systems to issue, transfer, sell,
redeem, repurchase or otherwise acquire any shares of its capital stock of any
class. All of the Stock is being sold, assigned and transferred to Acquisition
Sub pursuant to this Agreement free and clear of any and all Liens, and upon the
Execution Date the Stock will represent 100% of the issued and outstanding
shares of capital stock of
-18-
20
DC Systems. Except for the Shareholder Agreement, there are no agreements or
understandings between any Seller and any other Seller or any other person that
restrict the transfer or otherwise relate to the Stock.
3.19 UNDISCLOSED LIABILITIES. Except for obligations incurred in the
ordinary course of the business consistent with DC Systems' past practice or as
set forth in Sections 3.5 and 3.6, in the DC Systems Financial Statements or in
SCHEDULE 3.5 or in other Schedules to this Agreement, to the extent specifically
referenced in SCHEDULE 3.5, there is no claim, liability or obligation of any
nature, whether absolute, accrued, known or unknown, contingent or otherwise,
affecting DC Systems or its business which is reasonably likely, individually or
aggregated with all other such obligations, to have a Material Adverse Effect.
Notwithstanding the foregoing, all payments and liabilities of DC Systems,
accrued or arising prior to or on the Execution Date, for Expenses incurred in
connection with the transactions contemplated by this Agreement or the Related
Agreements shall be separately listed on SCHEDULE 3.5.
3.20 SCOPE OF REPRESENTATIONS AND WARRANTIES. This Agreement, the
Related Agreements (including all exhibits or schedules to the Related
Agreements) and each other document and certificate prepared or delivered by or
on behalf of the Sellers and furnished or to be furnished to Caminus in
connection herewith, as of the date hereof, do not contain any untrue statement
of a material fact, or omit to state a material fact necessary in order to make
the statements contained herein and therein not misleading.
3.21 CONDUCT OF BUSINESS IN ORDINARY COURSE. From June 1, 1999 through
the Execution Date, except as set forth in SCHEDULE 3.21, DC Systems has
conducted its business in the ordinary course consistent with past practice and
has used all reasonable efforts to preserve intact its business organizations
and relationships with third parties and to keep available the services of its
present officers and key employees. Without limiting the generality of the
foregoing, from June 1, 1999 through the Execution Date, DC Systems (i) has not
sold, acquired or compromised any assets other than in the ordinary course of
business and in a manner consistent with reasonable business practices, (ii) has
not declared, set aside or paid any dividend or other distribution with respect
to any shares of its capital stock, except as set forth in SCHEDULE 3.21, (iii)
has not repurchased, redeemed or otherwise acquired any outstanding shares of
the capital stock of DC Systems or other securities of, or other ownership
interests in DC Systems, and (iv) has paid trade and other current obligations
in a reasonable commercial manner consistent with past practice.
3.22 INVESTMENT REPRESENTATION. Each Shareholder represents that such
Shareholder is acquiring such Shareholder's portion of the Membership Interests
for such Shareholder's own account, for investment and not for resale or
distribution.
-19-
21
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF CAMINUS
As an inducement for the Sellers to enter into and consummate the
transactions contemplated by this Agreement and the Related Agreements, Caminus
represents and warrants that each of the following statements is true, correct
and complete as of the date hereof which representations and warranties shall
survive the execution of this Agreement, as provided in Section 6.2.
4.1 EXISTENCE AND GOOD STANDING. Caminus is a limited liability company
duly organized, validly existing and in good standing under the laws of the
State of Delaware, having full power and authority to own its properties and to
carry on its business as conducted. Caminus is duly qualified to transact
business and is in good standing in each jurisdiction in which the operation of
its business and the ownership of its assets requires it to be so qualified.
Acquisition Sub is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware, having full power and
authority to own its properties and to carry on its business as conducted.
Acquisition Sub is duly qualified to transact business and is in good standing
in each jurisdiction in which the operation of its business or the ownership of
its assets requires it to be so qualified.
4.2 AGREEMENT.
4.2.1 AGREEMENT AUTHORIZED. Caminus and Acquisition Sub have
the requisite power and authority to execute and deliver this Agreement and the
Related Agreements, as applicable, and perform their respective obligations
herein and therein, and consummate the transactions contemplated hereby and
thereby. Caminus and Acquisition Sub have duly executed and delivered this
Agreement and the Related Agreements to which they are parties, and have
obtained the necessary authorization in accordance with all applicable laws and
their organizational documents to execute and deliver this Agreement and the
Related Agreements to which they are parties, and perform their respective
obligations herein and therein and consummate the transactions contemplated
hereby and thereby, and such matters do not require notice to, or consent or
approval of, any other third party, governmental authority or regulatory agency,
except as set forth on SCHEDULE 4.2.1. Each of this Agreement and the Related
Agreements to which Caminus or Acquisition Sub is a party is a valid, legal and
binding obligation of such party enforceable against such party in accordance
with its terms, except to the extent that enforceability may be limited by
applicable bankruptcy, insolvency or similar laws affecting the enforcement of
creditors' rights generally and subject to general principles of equity
(regardless of whether such enforcement is considered in a proceeding at law or
at equity). The persons executing this Agreement and the Related Agreements to
which it is a party on behalf of Caminus and Acquisition Sub have been
specifically authorized to do so by all necessary action. No other action will
be necessary by Caminus or Acquisition Sub to authorize the execution and
-20-
22
delivery of this Agreement and the Related Agreements to which they are parties
and the consummation of the transactions contemplated hereby and thereby.
4.2.2 NO CONFLICT. Except as set forth in SCHEDULE 4.2.2,
neither the execution and delivery of this Agreement or the Related Agreements
to which either Caminus or Acquisition Sub is a party, nor the consummation of
the transactions contemplated hereby or thereby, (i) violates or conflicts with
any provision of the organizational documents of Caminus or Acquisition Sub;
(ii) conflicts with or violates any material provision of any foreign, federal,
state or local law, statute, treaty, ordinance, rule, regulation or any order,
writ, judgment or decree of any court or other governmental authority to which
Caminus or Acquisition Sub or any of their respective properties or assets may
be bound or affected; or (iii) breaches or constitutes grounds for a default (or
an event, with notice or lapse of time or both would become a default) under, or
gives to others a right of termination, amendment, acceleration, modification or
cancellation of, or results in the creation or imposition of (or the obligation
to create or impose) any Lien on any of the properties or assets of Caminus or
Acquisition Sub pursuant to any material note, mortgage, indenture, bond, lease,
license, permit, franchise, agreement, contract, undertaking or other instrument
to which Caminus or Acquisition Sub, respectively, is a party or by which any of
their respective properties or assets may be bound or affected.
4.3 BROKERS. No amount is payable by Caminus or Acquisition Sub by way
of brokerage fees, finder's commissions or otherwise to any party on account of
this Agreement or the Related Agreements or the transactions contemplated hereby
or thereby.
4.4 CAPITALIZATION. SCHEDULE 4.4 sets forth all of the equity interests
in Caminus, after giving effect to the transactions described herein as
occurring upon the execution of this Agreement. The Membership Interests are
validly issued, fully paid and nonassessable, and free of preemptive rights.
Except as reflected on SCHEDULE 4.4 or as provided in the Limited Liability
Company Agreement, there are no outstanding subscriptions, options, rights,
warrants, convertible securities, stock appreciation rights, phantom equity, or
other agreements or commitments obligating Caminus to issue, transfer, sell,
redeem, repurchase or otherwise acquire any equity interests.
4.5 LITIGATION. There is no material claim, action, suit, litigation,
arbitration, investigation or other legal proceeding which is pending or, to the
Knowledge of Caminus, threatened, before any court or governmental authority, or
arbitrator or board of arbitrators to which Caminus or Acquisition Sub was or is
a party, or to which any of their assets or properties is subject. Neither
Caminus nor Acquisition Sub is in default with respect to any order, writ,
injunction, decree or demand of any court or other governmental or regulatory
authority.
-21-
23
4.6 INVESTMENT REPRESENTATION. Caminus and Acquisition Sub represent
that Acquisition Sub is acquiring the Stock for its own account, for investment
and not for resale or distribution.
4.7 LIMITED LIABILITY COMPANY AGREEMENT. Caminus has furnished DC
Systems with a true and accurate copy of the Limited Liability Company
Agreement, as amended up to the date of this Agreement, which is entitled
"Limited Liability Company Agreement of GFI Caminus LLC". Caminus represents and
warrants that "Caminus LLC" and "GFI Caminus LLC" are two separate names of the
same legal entity (the name "GFI Caminus LLC" having been previously changed to
"Caminus Energy LLC" and then to "Caminus LLC").
4.8 SECURITIES LAW COMPLIANCE. The issuance of the Membership Interests
and any securities which may be issued to the Shareholders pursuant to the
Reorganization shall comply, in all material respects, with the requirements of
the Securities Act of 1933, as amended, as well as any applicable state
securities laws.
4.9 SENIORITY OF DC SYSTEMS EMPLOYEES. To the maximum extent permitted
by Caminus' employee benefit programs, the employees of DC Systems will be
admitted to the various employee benefits programs of Caminus upon the Execution
Date and for purposes of such programs will be deemed to have been employees of
Caminus for the same period of time they were employees of DC Systems. Nothing
in this Section 4.9 shall be construed as an agreement by Acquisition Sub,
Caminus, or any of their affiliates, express or implied, (i) to employ any
current employee of DC Systems or contract for any such employee's services,
(ii) to restrict the right of Acquisition Sub, Caminus, or any of their
affiliates to discharge any such employee or cease contracting for such
employee's services after execution of this Agreement, or (iii) to modify,
extend or otherwise affect in any manner whatsoever, the terms of any employment
agreement or contract for services which may exist between DC Systems or any of
its affiliates and any of their respective employees.
ARTICLE 5
RELATED AGREEMENTS; ACKNOWLEDGEMENTS
5.1 RELIANCE. The parties acknowledge that the Related Agreements are
being executed and delivered simultaneously with this Agreement, and that
Caminus would not have agreed to execute, deliver or perform this Agreement in
the absence thereof.
5.2 DOCUMENT DELIVERY. The parties acknowledge that the following
documents are being delivered in connection with the execution of this Agreement
(except as provided in clause (ix) below):
-22-
24
(i) the Related Agreements (other than the Escrow
Agreement), duly executed by the respective parties
thereto;
(ii) an opinion from ▇▇▇▇ ▇. ▇▇▇▇, counsel to DC Systems
and the Shareholders in the form attached hereto as
EXHIBIT H.
(iii) an opinion from Irell & ▇▇▇▇▇▇▇ LLP, counsel to
Caminus, in the form attached hereto as EXHIBIT I;
(iv) certificates from DC Systems and the Shareholders,
dated the Execution Date, in form and substance
reasonably satisfactory to Caminus;
(v) the Limited Liability Company Agreement, duly
executed by each Shareholder;
(vi) certificates or other instruments representing all of
the Stock, together with duly executed stock powers,
or, as applicable, other duly executed documents of
assignment, transferring the Stock to Caminus;
(vii) such other documents, instruments, certifications and
further assurances as Caminus or its counsel may have
reasonably requested;
(viii) a completed and fully-executed Section 338(h)(10)
Election on Internal Revenue Service Form 8023 with
respect to the Purchase; and
(ix) a schedule reflecting the parties' agreement on the
tax basis and GAAP book value of the assets and
properties of DC Systems immediately after giving
effect to the execution of this Agreement, the
Related Agreements, and the other transactions
contemplated hereby to occur on the Execution Date
(the "AGREED VALUATIONS"). Such schedule shall be
prepared by Caminus or DC Systems (subject to the
approval of Shareholders, which approval shall not be
unreasonably withheld) within 30 days following the
Execution Date, and shall thereupon be attached to
this Agreement and become a part hereof.
Each of the parties hereto agrees that it shall not at any time take any
position in any Tax filing or otherwise that is inconsistent with the Agreed
Valuations.
-23-
25
5.3 TAX ELECTION. The parties acknowledge and agree that they intend to
make a Section 338(h)(10) Election, within the meaning of Treasury Regulations
Section 1.338-1(c)(11), promulgated under the Code (a "SECTION 338(h)(10)
ELECTION") with respect to the Purchase. Each party shall use all reasonable
efforts to make such Section 338(h)(10) Election and to cause the Purchase to
qualify for such Section 338(h)(10) Election, and shall not take any actions
which could prevent the Purchase from qualifying for such a Section 338(h)(10)
Election.
5.4 TAX MAKE-UP PAYMENT.
5.4.1 As additional consideration for the Purchase (and for
all purposes of this Agreement such amount to be added to the "Purchase Price"),
Caminus shall pay to the Shareholders an aggregate amount of cash (the "TAX
MAKE-UP PAYMENT"), calculated as follows (such payments to be made as soon as
practicable following completion of the computation of DC Systems' income for
its short subchapter S corporation year, and in any event not later than April
15, 2000):
Additional Tax
---------------------
1 - Capital Gain Rate
5.4.2 The Tax Make-Up Payment will be allocated among the
Shareholders in accordance with SCHEDULE 7.4.
5.4.3 For purposes of Section 5.4.1, the following terms shall
have the following meanings:
"ADDITIONAL TAX" shall mean the difference between (a) the
aggregate amount of federal income tax payable by the Shareholders as a
result of the Purchase, including the Section 338(h) (10) Election
(using the Capital Gain Rate and the highest federal income tax rate
for individuals on ordinary income), and (b) the aggregate amount of
federal income tax payable by the Shareholders as a result of the
Purchase, computed as if no Section 338(h)(10) Election had been made.
"CAPITAL GAIN RATE" shall mean, with respect to each
Shareholder, the highest federal income tax rate for individuals on
long-term capital gains or short-term capital gains, as applicable to
the Stock sold by such Shareholder to Acquisition Sub under this
Agreement, for the holding period specified with respect to such
Shareholder on SCHEDULE 7.4.
5.5 EXPENSES. Notwithstanding anything to the contrary in this
Agreement or any Related Agreement, all Expenses (as defined below) incurred by
the Shareholders or DC Systems at any time shall be borne solely and entirely by
the Shareholders. For purposes of this Agreement, "EXPENSES" shall include all
out-of-
-24-
26
pocket expenses (including, without limitation, all fees and expenses of
counsel, accountants, investment bankers, experts and consultants to a party
hereto and its affiliates) incurred by a party or on its behalf in connection
with or related to the authorization, preparation, negotiation, execution and
performance of this Agreement and the Related Agreements, and all other matters
related to the consummation of the transactions contemplated hereby or thereby.
ARTICLE 6
INDEMNITY
6.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS.
6.1.1 SELLERS. Except for the representations and warranties
set forth in each of Sections 3.1, 3.2, 3.4(i), 3.7, 3.18 and 3.22 of this
Agreement (as to which survival shall be indefinite) and in Section 3.10 of this
Agreement (as to which survival shall extend for the applicable statute of
limitations with respect to any Tax matters that are the subject of an indemnity
claim), all representations, warranties and covenants of DC Systems and the
Shareholders made hereunder or in connection with the transactions contemplated
by this Agreement shall survive the execution of this Agreement only through
December 31, 2000, regardless of any investigation made at any time by or on
behalf of any party or of any information any party may have, after which time
they shall be null and void and of no effect whatsoever; provided that the lapse
of such representations, warranties and covenants at the end of such period
shall not affect any bona fide claims asserted prior to the end of such period
with respect to such representations, warranties and covenants.
6.1.2 CAMINUS. Except for the representations and warranties
set forth in each of Sections 4.1, 4.2.1 and 4.6 (as to which survival shall be
indefinite), all representations, warranties and covenants of Caminus made
hereunder or in connection with the transactions contemplated by this Agreement
shall survive the execution of this Agreement only through December 31, 2000,
regardless of any investigation made at any time by or on behalf of any party or
of any information any party may have, after which time they shall be null and
void and of no effect whatsoever; provided that the lapse of such
representations, warranties and covenants at the end of such period shall not
affect any bona fide claims asserted prior to the end of such period with
respect to such representations, warranties and covenants.
6.2 THE INDEMNITY OBLIGATION.
6.2.1 Subject to the provisions of Sections 6.3.3, 6.4, and
6.5, the Shareholders, shall indemnify, hold harmless and reimburse Caminus for
any and all losses, liabilities, damages, costs and expenses (including, without
limitation, reasonable legal fees) (hereinafter "LOSSES"), actually suffered or
incurred by Caminus, or any affiliate thereof or any assignee or successor
thereof, and each officer, director, and trustee of any of the foregoing, which
is incurred as a result of
-25-
27
any breach of any representation, warranty or agreement made by any Seller in
this Agreement (including all instruments and undertakings delivered or made in
connection herewith) or any certificate delivered pursuant to this Agreement,
and any third party claim arising as a result thereof. Notwithstanding the
foregoing, Caminus agrees that the Shareholders other than ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and
▇▇▇▇ ▇. ▇▇▇▇ shall not have responsibility for any Losses resulting from a
breach of the representations and warranties in ARTICLE 3, except for those
representations and warranties specifically identified in the first paragraph of
ARTICLE 3.
6.2.2 Subject to the provisions of Section 6.3.3, Caminus
shall indemnify, hold harmless and reimburse each Shareholder for any and all
Losses incurred by such Shareholder as a result of any breach of any
representation, warranty or agreement made by Caminus in this Agreement
(including all instruments and undertakings delivered or made in connection
herewith) or any certificates delivered pursuant to this Agreement, and any
third party claim arising as a result thereof.
6.3 CLAIMS.
6.3.1 NOTICE. Subject to the provisions of this Section 6.3,
any party entitled to indemnification hereunder (the "INDEMNIFIED PARTY") shall
promptly give the party from which indemnification is sought (the "INDEMNIFYING
PARTY") written notice of any matter which the Indemnified Party has determined
has given rise to a right of indemnification under this Agreement, stating the
details of the claim, so far as is known, the amount of the Loss, if known, and
method of computation thereof, all with reasonable particularity; provided,
however, that the failure of the Indemnified Party to give any notice required
to be given hereunder shall not affect the Indemnified Party's right to
indemnification hereunder except to the extent any of the Indemnifying Parties
from whom such indemnity is sought shall have been actually and materially
prejudiced in its ability to defend the claim or action for which such
indemnification is sought by reason of such failure.
6.3.2 THIRD PARTY CLAIM PROCEDURES. The obligations and
liabilities of any party under this Section 6.3.2 with respect to Losses arising
from claims, assertions, events or proceedings of any third party (including,
without limitation, claims by any assignee or successor of the Indemnified Party
or any governmental agency), which are subject to the indemnification provided
for in this ARTICLE 6 ("THIRD PARTY CLAIMS") shall be governed by and be subject
to the following additional terms and conditions: If the Indemnified Party shall
receive written notice of any Third Party Claim, the Indemnified Party shall
give the Indemnifying Parties prompt written notice of such Third Party Claim
(subject to the proviso in Section 6.3.1 above) and shall permit any of such
Indemnifying Parties, at its option, to participate in the defense of such Third
Party Claim by counsel of its own choosing and at its expense. If any of the
Indemnifying Parties acknowledges in writing its obligation to indemnify the
Indemnified Party hereunder against any Loss
-26-
28
(without limitation) that may result from such Third Party Claim, then such
Indemnifying Party shall be entitled, at its option, to assume and control the
defense against such Third Party Claim at its expense and through counsel of its
choice if it gives prompt written notice of its intention to do so to the
Indemnified Party unless, in the reasonable opinion of counsel for the
Indemnified Party, there is a conflict or a potential conflict of interest
between the Indemnified Party and such Indemnifying Party in such action, suit
or proceeding, in which event the Indemnified Party shall be entitled to direct
the defense with respect to, but only with respect to, those issues as to which
such conflict exists. In the event any of the Indemnifying Parties exercises its
right to undertake the defense against any such Third Party Claim as provided
above, the Indemnified Party shall, and it shall cause its affiliates to,
cooperate with such Indemnifying Party in such defense and make available to
such Indemnifying Party all pertinent records, materials and information in
their possession or under their control relating thereto as is required by such
Indemnifying Party. No Third Party Claim, except the settlement thereof which
involves the payment of money only for which the Indemnified Party is totally
indemnified (without limitation) by any of the Indemnifying Parties and the
unconditional release from all related liability of the Indemnified Party, may
be settled by any of the Indemnifying Parties without the written consent of the
Indemnified Party. Any settlement of a Third Party Claim by the Indemnified
Party without the written consent of any of the Indemnifying Parties shall
discharge such Indemnifying Parties from all liability hereunder with respect to
the subject matter of such Third Party Claim. With written notice to the
Indemnified Party, an Indemnifying Person shall be entitled, at its own cost and
expense, to rectify any breach of a representation or warranty within a
reasonable period of time and to the reasonable satisfaction of the Indemnified
Party.
6.3.3 CLAIM RESTRICTIONS. Notwithstanding anything to the
contrary herein, the parties agree that:
(a) no claim shall be made by an Indemnified Party for
indemnification under this ARTICLE 6, to the extent
such claim pertains to a violation of this Agreement
reasonably susceptible to cure, unless the
Indemnifying Party fails to cure such violation
within 30 days of notice of such violation from the
Indemnified Party (unless provision of such 30-day
cure period would result in material prejudice to the
Indemnified Party, in which case the cure period
shall be reduced in duration to the maximum number of
days that would not result in such prejudice); and
(b) no claim shall be made by an Indemnified Party for
indemnification under this ARTICLE 6 for breaches of
such party's representations and warranties in this
Agreement unless the aggregate total of such claims
exceeds $100,000 (provided,
-27-
29
that a breach of the representations and warranties
included in Sections 3.1, 3.2, 3.4, 3.7, 3.18 and
3.22 shall neither be subject to nor count toward the
foregoing numerical threshold).
6.4 INDEMNIFICATION FROM SHARES. The parties agree that Caminus shall
have recourse to the Membership Interests to satisfy any and all obligations
that the Shareholders may have to Caminus pursuant to this Agreement (including,
without limitation, pursuant to this Article 6). Further, as provided in the
definition of "Escrow Agreement" in Article 1 hereof, in the event that Caminus
undergoes the Reorganization, then the parties agree to obtain an Escrow Agent
(which shall be mutually agreeable to Caminus and the Seller Representative
specified in the Escrow Agreement or, if the Seller Representative has not been
specified, then to a majority-in-interest of the Shareholders) and enter into
the Escrow Agreement in substantially the form attached to this Agreement as
EXHIBIT A. Thereupon, Caminus shall have recourse to the shares of capital stock
issued in exchange for the Membership Interests in the Reorganization, which
will be deposited into the escrow established pursuant to the Escrow Agreement.
Prior to the Reorganization, to the extent that Caminus recovers notional shares
of the Membership Interests, such notional shares shall be valued at the rate of
$1.18 per notional share (i.e., reflecting the valuation of Caminus of
$100,000,000 as of and in connection with the Purchase, regardless of any change
in such valuation after the date hereof) (hereinafter the "VALUATION PER
SHARE"). From and after the Reorganization, to the extent that Caminus recovers
shares of capital stock from the escrow established pursuant to the Escrow
Agreement, such shares shall be valued in accord with Section 8 of the Escrow
Agreement. As more specifically provided in the Escrow Agreement, to the extent
that, in any initial public offering of Caminus' equity securities after the
Reorganization or thereafter, any Shareholder would otherwise be entitled to
sell any post-initial public offering shares of capital stock of Caminus, such
Shareholder shall be entitled to direct the Escrow Agent to do so, provided that
the proceeds of any such sale(s) shall be deposited into the escrow established
pursuant to the Escrow Agreement until the Release Date specified therein.
Subject to the provisions of Section 6.7, the remedies of Caminus expressed in
this Section 6.4 shall not constitute a limitation of Caminus' remedies; rather,
Caminus shall also be entitled to whatever other rights or remedies may be
available at law or in equity.
6.5 INDEMNITY LIMITATIONS. Notwithstanding anything contained in this
Agreement to the contrary, the Shareholders shall not be required to indemnify
Caminus pursuant to ARTICLE 6 for breaches of the Shareholders' representations
and warranties in this Agreement (i) with respect to all representations and
warranties except for those contained in Sections 3.1, 3.2, 3.4, 3.7, 3.18, and
3.22, for any amounts in excess of Three Million Dollars ($3,000,000) in the
aggregate, and (ii) with respect to all representations and warranties contained
in this Agreement (including, without limitation, those in Sections 3.1, 3.2,
3.4, 3.7, 3.18, and 3.22), for any amounts in excess of Thirteen Million Dollars
($13,000,000) in the aggregate or
-28-
30
Ten Million Dollars ($10,000,000) plus the value of the Membership Interests, if
the Membership Interests upon the date of any ultimate payment hereunder should
be less than Three Million Dollars ($3,000,000), whichever amount is less.
6.6 INSURANCE RECOVERIES. In computing the amount of any Indemnified
Party's Losses with respect to an indemnifiable claim, there shall be deducted
the amount of any insurance proceeds actually received, directly or indirectly,
by such Indemnified Party with respect to the same facts and circumstances
giving rise to the Loss.
6.7 SOLE REMEDY. The indemnification remedies described in this ARTICLE
6 shall be the sole and exclusive remedy for any Indemnified Party for any Loss
incurred as a result of a breach of any representation or warranty or failure to
perform any undertaking or covenant contained in this Agreement or the Related
Agreements except that equitable remedies shall be available with respect to the
Covenants Not to Compete executed by the Shareholders.
ARTICLE 7
MISCELLANEOUS
7.1 CONSTRUCTION. Throughout this Agreement, as the context requires,
(i) the singular tense and number includes the plural, and the plural tense and
number includes the singular; (ii) the past tense includes the present, and the
present tense includes the past; and (iii) references to parties, sections,
schedules, and exhibits mean the parties, sections, schedules, and exhibits of
and to this Agreement. All exhibits and schedules referred to in this Agreement
are hereby incorporated in and made part of this Agreement. The section headings
in this Agreement are inserted only as a matter of convenience, and in no way
define, limit, extend, or interpret the scope of this Agreement or of any
particular section. If there is any apparent conflict or inconsistency between
the provisions set forth in this Agreement, and the provisions set forth in any
schedule or exhibit, to the extent possible such provisions shall be interpreted
in a manner so as to make them consistent. If it is not possible to interpret
such provisions consistently, the provisions set forth in the body of this
Agreement shall prevail.
7.2 ENTIRE AGREEMENT. This Agreement together with the Related
Agreements and the certificates and other instruments delivered in connection
herewith constitutes the entire agreement among the parties and supersedes all
prior agreements, representations, warranties, statements and understandings,
whether oral or written, with respect to the subject matter hereof, except as
specifically set forth in any document signed by all the parties hereto which
expressly amends this Agreement.
7.3 FURTHER ASSURANCES. Each party hereto shall at any time and from
time to time following the execution of this Agreement promptly execute and
deliver,
-29-
31
or cause to be executed and delivered, to the other parties all such further
instruments and take all such further action as may be reasonably necessary or
appropriate to confirm or carry out the provisions and intent of this Agreement
and the Related Agreements.
7.4 NOTICES. Any notices or other communications required or permitted
hereunder shall be in writing and shall be delivered by personal service,
telecopy or certified mail (postage prepaid), to such address as may be
designated from time to time by the relevant party, and which initially shall
be:
If to Caminus or Acquisition Sub:
Caminus LLC
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
With a copy to:
GFI Energy Ventures LLC
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Principal
With a copy to:
Irell & ▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax : (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
If to any Shareholder, at the address specified for such Shareholder on
SCHEDULE 7.4.
Any notice sent by certified mail shall be deemed to have been given
three (3) days after the date on which it is mailed. If notice is given by
telecopy, notice shall be deemed given when such notice is transmitted to the
appropriate telecopy numbers specified in this Section 7.4. Notice by personal
service shall be deemed given when received.
7.5 GOVERNING LAW AND SUBMISSION TO JURISDICTION. This Agreement shall
be governed by the laws of New York applicable to contracts executed and
-30-
32
wholly performed therein, without giving effect to the conflict of laws
provisions thereof.
7.6 ARBITRATION. Any controversy, dispute, or claim between or among
the parties, whether arising under the common law or any statute, including any
claim arising out of, in connection with, or in relation to the interpretation,
performance or breach of this Agreement (a "DISPUTED MATTER"), will be resolved
exclusively by arbitration, before a panel of three arbitrators, conducted in
the Borough of Manhattan, New York City, New York, in accordance with the
Commercial Arbitration Rules of the American Arbitration Association ("AAA"),
and judgment upon any award rendered by the arbitrator may be entered by any
court of appropriate jurisdiction. Such arbitration will be administered by the
AAA if either of the parties requests such administration. Subject to Section
7.7, the parties shall, initially, bear the costs of arbitration (including
arbitrators' fees) equally.
7.7 COSTS AND ATTORNEYS FEES. In any dispute between or among the
parties concerning any provision of this Agreement or their rights and duties
under it, the party prevailing in such dispute shall be entitled, in addition to
such other relief as may be granted, to an award of its reasonable attorneys'
and expert witness fees and court costs (including the costs of the arbitration
procedure described in Section 7.6 and the fees of the arbitrators in any such
procedure) incurred by reason of the arbitration of the dispute, the enforcement
of any arbitration award, and any other court or other proceedings related to
such dispute. For purposes of this Section 7.7, the prevailing party is the
party that most closely obtains the relief it sought whether or not the suit or
other legal proceeding is settled or carried out to its conclusion.
7.8 SEVERABILITY. The validity, legality or enforceability this
Agreement shall not be affected even if one or more of the provisions of this
Agreement shall be held to be invalid, illegal or enforceable in any respect.
7.9 COUNTERPARTS. This Agreement may be executed in any number of
counterparts which together shall be one and the same instrument.
7.10 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the parties, their respective successors and permitted
assigns.
7.11 WAIVERS STRICTLY CONSTRUED. With regard to any power, remedy or
right provided herein or otherwise available to any party hereunder no waiver or
extension of time shall be effective unless expressly contained in a writing
signed by the waiving party; and no alteration, modification or impairment shall
be implied by reason of any previous waiver, extension of time, delay or
omission in exercise, or other indulgence.
7.12 THIRD PARTY BENEFITS. None of the provisions of this Agreement
will be for the benefit of, or enforceable by, any third party beneficiary.
-31-
33
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first written above.
DC SYSTEMS, INC.,
a Texas corporation
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Its: Chief Executive Officer
CAMINUS LLC,
a Delaware limited liability company
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Its: President
CAMINUS/DC ACQUISITION CORP.,
a Delaware corporation
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Its: President
/s/ ▇▇▇ ▇▇▇▇▇▇▇▇▇
------------------------------------------
▇▇▇ ▇▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-32-
34
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇ ▇. ▇▇▇▇
------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇▇▇▇▇
------------------------------------------
▇▇▇▇▇ ▇▇▇▇▇
/s/ ▇▇▇ ▇▇▇▇▇
------------------------------------------
▇▇▇ ▇▇▇▇▇
-33-
35
LIST OF EXHIBITS
Exhibit A - Escrow Agreement
Exhibit B - ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Employment Letter/Agreement
Exhibit C - ▇▇▇ ▇▇▇▇▇▇▇▇▇ Employment Letter/Agreement
Exhibit D - ▇▇▇▇ ▇. ▇▇▇▇ Employment Letter/Agreement
Exhibit E - ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Employment Letter/Agreement
Exhibit F - Covenant Not to Compete
Exhibit G - Joinder Agreement
Exhibit H - ▇▇▇▇ ▇. ▇▇▇▇ Opinion
Exhibit I - Irell & ▇▇▇▇▇▇▇ Opinion
LIST OF SCHEDULES
Schedule 2.2 - Exceptions to Payments Upon Execution
Schedule 3.2 - Seller Required Consents
Schedule 3.4 - DC Systems and Seller Conflicts and Violations
Schedule 3.5 - DC Systems Liabilities and Accounting Principles
Schedule 3.6 - DC Systems Material Contracts
Schedule 3.7 - DC Systems Intellectual Property
Schedule 3.8 - DC Systems Insurance
Schedule 3.9.2 - DC Systems Employee Plans
Schedule 3.10 - DC Systems Taxes
Schedule 3.11 - DC Systems Bank Accounts
Schedule 3.12 - DC Systems Exceptions to Title
Schedule 3.14 - DC Systems Litigation
Schedule 3.15 - DC Systems Personal Property Leases
Schedule 3.16 - DC Systems Real Property Leases
Schedule 3.17 - DC Systems Permits
Schedule 3.21 - DC Systems Exceptions to Ordinary Course
Schedule 4.2.1 - Caminus Required Consents
Schedule 4.2.2 - Caminus Conflicts and Violations
Schedule 4.4 - Capitalization of Caminus
Schedule 7.4 - Shareholders Specifications
Exhibit A
Page 1