Exhibit 2.1
SHARE EXCHANGE AGREEMENT
by and between
COMPUTER SCIENCES CORPORATION
and
WEST SIDE INVESTMENTS, INC.
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As of April 8, 2005
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TABLE OF CONTENTS
Page
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ARTICLE I. CERTAIN DEFINITIONS AND OTHER MATTERS.........................................................1
Section 1.1 Certain Definitions...........................................................1
Section 1.2 Terms Defined in Other Sections..............................................10
Section 1.3 Interpretation...............................................................10
ARTICLE II. EXCHANGE OF STOCK; CLOSING; CONSIDERATION ADJUSTMENT........................................10
Section 2.1 Exchange of Stock............................................................10
Section 2.2 Closing......................................................................11
Section 2.3 Parent's Deliveries at the Closing...........................................11
Section 2.4 Stockholder's Deliveries at the Closing......................................11
ARTICLE III. REORGANIZATION.............................................................................12
Section 3.1 Reorganization...............................................................12
Section 3.2 Business Assets..............................................................12
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF PARENT....................................................12
Section 4.1 Organization and Standing....................................................13
Section 4.2 Capitalization of Splitco....................................................13
Section 4.3 Corporate Power and Authority................................................14
Section 4.4 Conflicts; Consents and Approvals............................................15
Section 4.5 [RESERVED]...................................................................16
Section 4.6 No Material Adverse Effect...................................................16
Section 4.7 [RESERVED]...................................................................16
Section 4.8 Compliance with Law..........................................................16
Section 4.9 Intellectual Property........................................................16
Section 4.10 Title to Assets; Condition and Sufficiency of Assets.........................18
Section 4.11 Environmental Matters........................................................19
Section 4.12 Litigation...................................................................20
Section 4.13 Employee Benefit Plans.......................................................20
Section 4.14 Contracts....................................................................21
Section 4.15 Major Customers and Third Party Licensors....................................23
Section 4.17 Labor and Employment Matters.................................................23
Section 4.18 Financial Information; Undisclosed Liabilities...............................24
Section 4.19 Permits; Compliance..........................................................26
Section 4.20 Real Estate..................................................................26
Section 4.21 Intercompany Services and Accounts...........................................27
Section 4.22 Guaranties; Absence of Restrictions..........................................27
Section 4.23 Insurance....................................................................28
Section 4.24 Consulting Agreements........................................................28
ARTICLE V. REPRESENTATIONS AND WARRANTIES OF STOCKHOLDER................................................28
Section 5.1 Organization and Standing....................................................28
Section 5.2 Corporate Power and Authority................................................28
Section 5.3 Conflicts; Consents and Approvals............................................29
Section 5.4 Stockholder Parent Shares....................................................30
Section 5.5 Litigation...................................................................30
Section 5.6 No Material Adverse Effect...................................................30
Section 5.7 [RESERVED]...................................................................30
Section 5.8 Governmental Actions.........................................................30
Section 5.9 Investment Purpose and Experience............................................30
ARTICLE VI. COVENANTS AND AGREEMENTS....................................................................31
Section 6.1 Access and Information.......................................................31
Section 6.2 Conduct of Business..........................................................31
Section 6.3 [RESERVED]...................................................................34
Section 6.4 Third-Party Software.........................................................34
Section 6.5 Closing Documents............................................................35
Section 6.6 Further Assurances...........................................................35
Section 6.7 HSR Approval; Certain Covenants..............................................36
Section 6.8 Notification by the Parties..................................................37
Section 6.9 Insurance Policies...........................................................38
Section 6.10 Confidentiality; Access to Records after Closing.............................38
Section 6.11 Employee Matters.............................................................39
Section 6.12 Release of Restrictions; Intercompany Accounts...............................40
Section 6.13 Employee Options to Purchase Parent Stock Held By Business Employees.........40
Section 6.14 Cooperation with Respect to Financial Reporting..............................41
Section 6.15 Non-Solicitation of Employees................................................41
Section 6.16 Non-Competition..............................................................41
Section 6.17 Use of Names.................................................................42
Section 6.18 Waiver.........................................................................
Section 6.19 No Solicitation..............................................................43
Section 6.20 Certain Tax Matters..........................................................43
ARTICLE VII. CONDITIONS TO CLOSING......................................................................44
Section 7.1 Mutual Conditions............................................................44
Section 7.2 Conditions to Stockholder's Obligations......................................45
Section 7.3 Conditions to Parent's and Splitco's Obligations.............................46
Section 7.4 Frustration of Closing Conditions............................................47
ARTICLE VIII. TERMINATION...............................................................................47
Section 8.1 Termination..................................................................47
Section 8.2 Effect of Termination........................................................48
ARTICLE IX. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION.................................48
Section 9.1 Survival of Representations and Warranties...................................48
Section 9.2 Indemnification..............................................................48
Section 9.3 Notice of Claims.............................................................50
Section 9.4 Third Party Claims...........................................................50
Section 9.5 Limitation on Indemnity......................................................51
Section 9.6 Exclusive Remedies...........................................................53
ARTICLE X. MISCELLANEOUS................................................................................54
Section 10.1 Notices......................................................................54
Section 10.2 Expenses.....................................................................55
Section 10.3 Governing Law; Consent to Jurisdiction.......................................55
Section 10.4 Waiver of Jury Trial...........................................................
Section 10.5 Assignment; Successors and Assigns; No Third Party Rights....................55
Section 10.6 Counterparts.................................................................56
Section 10.7 Titles and Headings..........................................................56
Section 10.8 Amendment and Modification...................................................56
Section 10.9 Publicity; Public Announcements..............................................56
Section 10.10 Waiver.......................................................................56
Section 10.11 Severability.................................................................56
Section 10.12 No Strict Construction.......................................................56
Section 10.13 Entire Agreement.............................................................57
SHARE EXCHANGE AGREEMENT
This SHARE EXCHANGE AGREEMENT, dated as of April 8, 2005
(this "Agreement"), is entered into by and between COMPUTER SCIENCES
CORPORATION, a Nevada corporation ("Parent"), and WEST SIDE INVESTMENTS, INC.,
a Nevada corporation ("Stockholder").
W I T N E S S E T H:
WHEREAS, CSC HEALTHCARE INC. ("Splitco") is a California
corporation and direct wholly owned subsidiary of Parent;
WHEREAS, the Business (as defined in Article I) is conducted
by Splitco and the Parent Entities (as defined in Article I);
WHEREAS, prior to the Closing (as defined in Section 2.2),
Parent will complete the Reorganization (as defined in Section 3.1), pursuant
to which the Business as a going concern will be consolidated, whether by
assignment, transfer, conveyance, contribution or otherwise, into Splitco, and
thereafter at the Closing the Business will be operated solely by Splitco;
WHEREAS, immediately following the Reorganization, Splitco
shall be a direct, wholly owned subsidiary of Parent;
WHEREAS, upon the terms and subject to the conditions set
forth in this Agreement, (a) Parent desires to exchange the Splitco Shares (as
defined in Article I) for the Stockholder Parent Shares (as defined in Article
I), and (b) Stockholder desires to exchange the Stockholder Parent Shares for
the Splitco Shares;
WHEREAS, the parties hereto intend that the Exchange (as
defined in Section 2.1) qualify as a tax-free exchange under Section 355(a) of
the Code (as defined in Article I) and this Agreement constitute a "plan of
reorganization," as defined in Section 368 of the Code (as defined in Article
II); and
WHEREAS, the Boards of Directors of Parent and Stockholder
have, in each case, determined that it is in the best interests of their
respective corporations to enter into this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants
contained in this Agreement, and intending to be legally bound, the parties
hereto agree as follows:
ARTICLE I.
CERTAIN DEFINITIONS AND OTHER MATTERS
Section 1.1 Certain Definitions. As used in this Agreement
and the schedules hereto, the following terms have the respective meanings set
forth below.
"Action" means any demand, action, claim, suit, countersuit,
litigation, arbitration, prosecution, proceeding (including any civil,
criminal, administrative, investigative or appellate proceeding), hearing,
inquiry, audit, examination or investigation commenced, brought, conducted or
heard by or before, or otherwise involving, any court, grand jury or other
Governmental Authority or any arbitrator or arbitration panel.
"Affiliate" means, with respect to any Person, any other
Person that, directly or indirectly, through one or more intermediaries,
controls, is controlled by, or is under common control with, such Person. The
term "control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract or otherwise,
including the ability to elect the members of the board of directors or other
governing body of a Person, and the terms "controlled" and "controlling" have
correlative meanings.
"Ancillary Agreements" means the Tax Sharing Agreement,
which is being entered into concurrently herewith, and the following
agreements that will be entered into among Parent, Splitco and Stockholder
simultaneously with the Closing as listed on Section 1.1(a) of the Parent
Disclosure Letter.
"Antitrust Division" means the Antitrust Division of the
United States Department of Justice.
"Business" means the business of Splitco, as Splitco shall
be reorganized as described in Section 3.1 of the Parent Disclosure Letter.
"Business Contracts" means the Contracts of the Business
(other than Employment Agreements, Employee Benefit Plans and other Contracts
primarily related to employee compensation or benefits, but including all
non-disclosure or confidentiality, non-compete or non-solicitation Contracts
with Business Employees, consultants and agents or representatives of the
Business).
"Business Employees" means individuals who provide
employment or employment-type services primarily to the Business as of the
date hereof, other than any such individuals who cease employment with the
applicable Parent Entity prior to the Closing, but including any such
individual hired after the date hereof and prior to Closing.
"Business Day" means any day that is not a Saturday, Sunday
or other day on which banking institutions in New York, New York are
authorized or required by law or executive order to close.
"Cash Amount" means an amount in cash equal to (i) the
product of the 7,128,772 Stockholder Parent Shares and the Parent Share Value
less (ii) $100,000,000.
"Closing Date" means the date of the Closing.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commercial Customers" means customers, clients and
licensees which are not, and are not owned, in whole or in part, or controlled
by, a Governmental Entity.
"Confidential Business Information" shall mean any
information not already lawfully available to the public concerning Splitco or
any of its customers or suppliers, including but not limited to any such
information concerning products, product development, business strategy,
financial information or customer, supplier or employee lists, technical data,
design, pattern, formula, computer program, source code, object code,
algorithm, subroutine, manual, product specification, or plan for a new,
revised or existing product, any business, marketing, financial or sales
orders, or the present or future business or products of Splitco or the
Business.
"Confidentiality Agreement" means the Non-Disclosure
Agreement, dated February 7, 2005, by and between Parent and Stockholder.
"Contract" means any agreement, contract, lease, power of
attorney, note, loan, evidence of indebtedness, purchase order, letter of
credit, settlement agreement, franchise agreement, undertaking, covenant not
to compete, employment agreement, license, instrument, obligation, commitment,
understanding, policy, purchase and sales order, quotation and other executory
commitment, whether oral or written, express or implied.
"Controlled Group Liability" means any and all liabilities
(i) under Title IV of ERISA, (ii) under Section 302 of ERISA, (iii) under
Sections 412 and 4971 of the Code, and (iv) as a result of a failure to comply
with the continuation coverage requirements of Section 601 et seq. of ERISA
and Section 4980B of the Code or the group health plan requirements of
sections 701 et seq. of the Code and section 701 et seq. of ERISA.
"Customer Agreements" means all Contracts between Splitco or
any Parent Entity (with respect to the Business) and a customer of Splitco or
the Business.
" Disabling Code" means, with respect to Software, computer
instructions that alter or destroy such Software and includes instructions
that may cause such Software to self-replicate without manual intervention.
"Documentation" means, with respect to Software, the online
and written materials and manuals describing the functional processes,
assumptions, specifications and principles of operation of such Software and
designated as the official documentation by the owner of such Software.
"Employee Benefit Plan" means any employee benefit plan,
program, policy, practices, or other arrangement providing benefits to any
Business Employee, officer or director of Parent, the Parent Entities or
Splitco or any beneficiary or dependent thereof that is sponsored or
maintained by Parent, the Parent Entities or Splitco or to which Parent, the
Parent Entities or Splitco contribute or are obligated to contribute, whether
or not written, including without limitation any employee welfare benefit plan
within the meaning of Section 3(1) of ERISA, any employee pension benefit plan
within the meaning of Section 3(2) of ERISA (whether or not such plan is
subject to ERISA) and any bonus, incentive, deferred compensation, vacation,
stock purchase, stock option, severance, employment, change of control or
fringe benefit plan, program or policy.
"Employment Agreement" means a written Contract or offer
letter of Parent or any of its Affiliates with or addressed to any Business
Employee or Former Business Employee pursuant to which Splitco shall, directly
or indirectly, have any actual or contingent liability or obligation to
provide compensation and/or benefits on or after the Closing Date in
consideration for past, present or future services.
"Encumbrances" means security interests, liens, charges,
claims, title defects, deficiencies or exceptions (including, with respect to
Real Property, defects, deficiencies or exceptions in, or relating to,
marketability of title, or leases, subleases or the like affecting title),
mortgages, pledges, easements, encroachments, restrictions on use,
rights-of-way, rights of first refusal, conditional sales or other title
retention agreements, covenants, conditions or other similar restrictions
(including restrictions on transfer) or other encumbrances of any nature
whatsoever.
"Environmental Laws" means all Laws relating to pollution or
protection of human health and safety or the environment (including ambient
air, surface water, groundwater, land surface, natural resources or subsurface
strata), including all such Laws relating to Releases or threatened Releases
of Regulated Substances into the environment or work place, or otherwise
relating to the environmental or worker health and safety aspects of
manufacturing, processing, distribution, importation, use, treatment, storage,
disposal, transport or handling of Regulated Substances, including, but not
limited to, chemical inventories in all relevant jurisdictions, and all such
Laws relating to the registration of products of the Business or Splitco under
the Federal Insecticide, Fungicide and Rodenticide Act, the Food Drug and
Cosmetic Act, the Toxic Substances Control Act, the European List of Notified
Chemical Substances, the European Inventory of Existing Commercial Chemical
Substances or similar Laws.
"Environmental Permit" means any permit, registration,
approval, identification number, license or other authorization or filing
required under or issued pursuant to any applicable Environmental Law.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"ERISA Affiliate" means any entity which would be aggregated
with Parent under Section 414 of the Code or Section 4001(b) of ERISA.
"FLSA" means the Fair Labor Standards Act, 29 U.S.C. Section
201, as amended.
"Former Business Employee" means individuals who, prior to
the Closing, provided employment or employment-type services primarily to the
Business.
"FTC" means the United States Federal Trade Commission.
"GAAP" means United States generally accepted accounting
principles, consistently applied.
"Governmental Authority" means any supranational, national,
federal, state or local government, foreign or domestic, or the government of
any political subdivision of any of the foregoing, or any entity, authority,
agency, ministry, department, board, commission or other similar body
exercising executive, legislative, judicial, regulatory or administrative
authority or functions of or pertaining to government, including any authority
or other quasi-governmental entity established by a Governmental Authority to
perform any of such functions.
"Hazardous Materials" means any hazardous substance, the
use, transportation or disposition of which is regulated by law or by any
Governmental Authority, including any petroleum product or by product,
material containing asbestos, lead or polychlorinated biphenyls, radioactive
material or radon.
"HSR Authority" means the FTC and/or the Antitrust Division.
"Indebtedness" of any Person means, without duplication, (i)
all obligations of such Person for money borrowed, whether current or
unfunded, or secured or unsecured; (ii) all obligations of such Person
evidenced by notes, debentures, bonds or other similar instruments or debt
securities for the payment of which such Person is responsible or liable;
(iii) all obligations of such Person issued or assumed for deferred purchase
price payments associated with acquisitions, divestments or other
transactions; (iv) all obligations of such Person under leases required to be
capitalized in accordance with GAAP, (v) all obligations of such Person for
the reimbursement of any obligor on any letter of credit, banker's acceptance,
guarantees or similar credit transaction, (vi) all indebtedness of such Person
created or arising under any conditional sale or other title retention
agreement with respect to property acquired by such Person (even though the
rights and remedies of the seller or lender under such agreement in the event
of default are limited to repossession or sale of such property), (vii) all
indebtedness of such Person secured by a purchase money mortgage or other
Encumbrance to secure all or part of the purchase price of the property
subject to such Encumbrance, (viii) all interest, fees, prepayment premiums
and other expenses owed with respect to the indebtedness referred to above and
(ix) all indebtedness referred to above which is directly or indirectly
guaranteed by such Person or which such Person has agreed (contingently or
otherwise) to purchase or otherwise acquire or in respect of which it has
otherwise assured a creditor against loss.
"Intellectual Property" shall mean all U.S. and foreign (i)
patents, patent applications, patent disclosures, and all related
continuations, continuations-in-part, divisionals, reissues, re-examinations,
substitutions, and extensions thereof ("Patents"), (ii) trademarks, service
marks, trade names, domain names, logos, slogans, trade dress, and other
similar designations of source or origin, together with the goodwill
symbolized by any of the foregoing ("Trademarks"), (iii) copyrights and
copyrightable subject matter ("Copyrights"), (iv) rights of publicity, (v)
moral rights and rights of attribution and integrity, (vi) computer programs
(whether in source code, object code, or other form), databases, compilations
and data, technology supporting the foregoing, and all documentation,
including user manuals and training materials, related to any of the
foregoing, as well as any enhancements or modifications to the
foregoing("Software"), (vii) trade secrets and all confidential information,
know-how, inventions, proprietary processes, formulae, models, and
methodologies ("Trade Secrets"), (viii) all rights in the foregoing and in
other similar intangible assets, (ix) all applications and registrations for
the foregoing, and (x) all rights and remedies against infringement,
misappropriation, or other violation thereof.
"IRS" means the Internal Revenue Service of the United
States of America.
"Knowledge" means (i) with respect to Parent, the actual
knowledge, after reasonable investigation, of each officer of Parent or
Splitco and each other person listed in Section 1.1(b) of the Parent
Disclosure Letter or (ii) with respect to Stockholder, the actual knowledge,
after reasonable investigation, of each officer of Stockholder.
"Laws" means all United States federal, state or local or
foreign laws, constitutions, statutes, codes, rules, regulations, ordinances,
orders, judgments, writs, stipulations, awards, injunctions, arbitration
awards or findings decrees or edicts by a Governmental Authority having the
force of law.
"Leased Real Property" means any real property leased or
subleased to Splitco, Parent or any of the Parent Entities primarily for use
in the operation of the Business and set forth (and designated as leased) in
Section 4.20 of the Parent Disclosure Letter.
"Liabilities" means any and all Indebtedness, liabilities,
commitments and obligations, whether or not fixed, contingent or absolute,
matured or unmatured, direct or indirect, liquidated or unliquidated, accrued
or unaccrued, known or unknown, whether or not required by GAAP to be
reflected in financial statements or disclosed in the notes thereto, including
those arising under any Action, law, order, judgment, injunction or consent
decree of any Governmental Authority or any award of any arbitrator of any
kind, and those arising under any contract, commitment or undertaking.
"Material Adverse Effect" means, with respect to a Person or
the Business, any change, effect, event, occurrence, development, condition or
circumstance that, individually or in the aggregate with all other adverse
changes, effects, events, occurrences, developments, conditions or
circumstances, is, or could reasonably be expected to be materially adverse to
the business, results of operations, financial condition, assets, liabilities
or properties of such Person, and its Subsidiaries, taken as a whole or
Splitco or the Business, taken as a whole, or on the ability of such Person to
consummate the transactions contemplated by this Agreement and the Ancillary
Agreements, other than any change, effect, event, occurrence, development,
condition or circumstance resulting from, or relating to (i) the U.S. economy
in general or (ii) the industry in which Splitco and (with respect to the
Business) the Parent Entities operate in general and not specifically relating
to (or having a materially disproportionate effect (relative to the effect on
other Persons operating in such industry) on) Splitco or the Parent Entities
(with respect to the Business).
"Material Employment Agreement" means an Employment
Agreement that requires the payment of cash compensation in excess of $50,000
per year or in excess of $250,000 in the aggregate.
"Multiemployer Plan" means any "multiemployer plan" within
the meaning of Section 3(37) of ERISA.
"Ordinary Course of Business" means, with respect to the
Business or Splitco, actions that (a) are consistent with the past practices
of such Business or entity within the preceding twenty-four months, or (b) are
similar in nature, style and magnitude to actions customarily taken in the
ordinary course of the normal day-to-day operations of such Business or
entity.
"Parent Common Stock" means the Common Stock, par value
$1.00 per share, of Parent.
"Parent Entities" means each Affiliate of Parent (other than
Splitco) that is engaged in the operation or conduct of the Business or that
has title to any asset which constitutes a Business Asset or is subject to a
liability which constitutes a Liability relating to the Business, in each
case, as of the date hereof or at any time prior to the Closing.
"Parent Disclosure Letter" means the disclosure letter that
Parent has delivered to Stockholder on the date of this Agreement prior to the
execution hereof.
"Parent Share Value" means $45.53 per share.
"Permitted Encumbrances" means (i) Encumbrances securing
property taxes or assessments, which taxes have been incurred in the Ordinary
Course of Business (including, with respect to Splitco for periods prior to
the Reorganization, incurred as a general Partner of CSC Enterprises) and are
not yet due and payable, or are being contested in good faith by appropriate
proceedings and with sufficient reserves, (ii) the claims of mechanics,
materialmen or like Persons that have arisen in the Ordinary Course of
Business or imperfections of title, restrictions and other Encumbrances that,
in any such case, do not materially interfere with the use of (in the Ordinary
Course of Business), the property subject thereto, (iii) rights granted to any
licensee of any Intellectual Property Rights in the Ordinary Course of
Business, and (iv) Encumbrances securing Indebtedness not yet in default for
the purchase price or lease payments on property purchased or leased in the
Ordinary Course of Business.
"Person" means an individual, partnership, corporation,
limited liability company, joint stock company, unincorporated organization or
association, trust or joint venture, or a Governmental Authority.
"Plan" means any Employee Benefit Plan other than a
Multiemployer Plan.
"Real Property" means, collectively, Leased Real Property
and any real property to be leased pursuant to a sublease from Parent or any
of its Affiliates (other than Splitco).
"Real Property Lease" means the lease or sublease agreement
pursuant to which a Leased Real Property is leased or subleased to Splitco or
any of the Parent Entities (with respect to the Business).
"Regulated Substances" means any substance which is listed,
defined or regulated as a pollutant, contaminant, hazardous, dangerous or
toxic substance, material or waste, or is otherwise classified as hazardous,
dangerous or toxic in or pursuant to any Environmental Law or which is or
contains any explosives, radon, radioactive materials, asbestos, urea
formaldehyde foam insulation, polychlorinated biphenyls, petroleum and
petroleum products (including waste petroleum and petroleum products) as
regulated under any applicable Environmental Law.
"Release" means any release, spill, emission, discharge,
leaking, pumping, injection, deposit, disposal, dispersal, leaching or
migration into the indoor or outdoor environment (including ambient air,
surface water, groundwater and surface or subsurface strata) or into or out of
any property, including the movement of Regulated Substances through or in the
air, soil, surface water, groundwater or property.
"Required Consents" means, collectively, (a) each consent or
novation with respect to any Contract to which Parent or any of its
Subsidiaries is a party or by which any of their respective assets are bound
required to be obtained from the other parties thereto by virtue of the
execution and delivery of this Agreement or the Ancillary Agreements or the
consummation of the transactions contemplated hereby or thereby in order to
avoid the invalidity of the transfer of such Contract, the termination or
acceleration thereof, giving rise to any obligation to make a payment
thereunder or to any increased, additional or guaranteed rights of any person
thereunder, a breach or default thereunder or any other change or modification
to the terms thereof, and (b) each registration, filing, application, notice,
transfer, consent, approval, order, qualification and waiver required from any
third party or Governmental Authority by virtue of the execution and delivery
of this Agreement or the Ancillary Agreements or the consummation of the
transactions contemplated hereby or thereby.
"Retained Business" means the business currently conducted
by Parent and its Subsidiaries other than the Business.
"SEC" means the United States Securities and Exchange
Commission.
"Securities Act" means the United States Securities Act of
1933, as amended.
"Splitco Common Stock" means the common stock, par value
$0.01 per share, of Splitco.
"Splitco Shares" means all of the issued and outstanding
shares of Splitco Common Stock.
"Stockholder Parent Shares" means 7,128,772 shares of Parent
Common Stock owned by Stockholder as of the date hereof.
"Subsidiary" of any entity means, at any date, any Person
(a) the accounts of which would be consolidated with those of the applicable
entity in such entity's consolidated financial statements if such financial
statements were prepared in accordance with GAAP as of such date, or (b) in
which securities or other ownership interests having ordinary voting power or
the right to elect a majority of the board of directors, board of managers
(or, in the absence thereof, managing members), or other persons performing
similar functions are at the time owned by such entity and/or one or more of
its Subsidiaries.
"Tax" means (i) any and all taxes, charges, fees, levies,
customs, duties, tariffs, or other assessments, including income, gross
receipts, excise, real or personal property, sales, withholding, social
security, retirement, unemployment, occupation, use, goods and services,
service use, license, value added, capital, net worth, payroll, profits,
withholding, franchise, transfer and recording taxes, fees and charges, and
any other taxes, charges, fees, levies, customs, duties, tariffs or other
assessments imposed by the IRS or any taxing authority (whether domestic or
foreign including any state, county, local or foreign government or any
subdivision or taxing agency thereof (including a United States possession)),
whether computed on a separate, consolidated, unitary, combined or any other
basis; and such term shall include any interest thereon, fines, penalties,
additions to tax, or additional amounts attributable to, or imposed upon, or
with respect to, any such taxes, charges, fees, levies, customs, duties,
tariffs, or other assessments; (ii) any Liability for the payment of any
amounts described in clause (i) as a result of being a member of an
affiliated, consolidated, combined, unitary or similar group or as a result of
transferor, successor or similar Liability; and (iii) any Liability for the
payments of any amounts as a result of being a party to any Tax Sharing
Agreement or as a result of any express or implied obligation to indemnify any
other Person with respect to the payment of any amounts of the type described
in clause (i) or (ii).
"Tax Returns" means any return, information return or report
or filing with respect to Taxes, including any disclosures, elections and
schedules attached thereto and including any amendment thereof.
"Tax Sharing Agreement" means the Tax Sharing Agreement to
be entered into by and among Parent, Splitco, Stockholder and DST Systems,
Inc., a Delaware corporation, concurrently with this Agreement.
"Transition Services Agreement" means the Transition
Services Agreement to be entered into by and among Parent, Splitco and
Stockholder and dated as of the Closing.
"WARN Act" means the Worker Adjustment and Retraining
Notification Act and any similar state or local law of any jurisdiction in the
United States of America.
Section 1.2 Terms Defined in Other Sections. The following
terms are defined elsewhere in this Agreement in the following Sections:
Agreement.........................................................Preamble
Business Assets...................................................Section 3.2.1
Business Records..................................................Section 6.10.2
Closing...........................................................Section 2.2
Collective Bargaining Agreement...................................Section 4.17.1
Confidential Information..........................................Section 6.10.1
Damages...........................................................Section 9.4
Financial Information ............................................Section 4.18.1
Parent............................................................Preamble
Purchaser Indemnified Persons.....................................Section 9.2.1
Exchange..........................................................Section 2.1
HSR Act...........................................................Section
Indemnification Cap...............................................Section 9.2.2
Indemnitor........................................................Section 9.5.1
Stockholder.......................................................Preamble
Seller Indemnified Persons........................................Section 9.3.1
Splitco...........................................................Preamble
Permits...........................................................Section 4.19.1
Records...........................................................Section 610.2
Reorganization....................................................Section 3.1
Restrictions......................................................Section 4.10
Waiving Parties...................................................Section 6.18
Section 1.3 Interpretation. Unless otherwise indicated to
the contrary in this Agreement by the context or use thereof: (a) the words,
"herein," "hereto," "hereof" and words of similar import refer to this
Agreement as a whole and not to any particular Section or paragraph hereof;
(b) words importing the masculine gender shall also include the feminine and
neutral genders, and vice versa; (c) words importing the singular shall also
include the plural, and vice versa; and (d) the word "including" means
"including without limitation."
ARTICLE II.
EXCHANGE OF STOCK; CLOSING; CONSIDERATION ADJUSTMENT
Section 2.1 Exchange of Stock. Upon the terms and subject to
the conditions of this Agreement, at the Closing, (a) Parent shall assign,
transfer, convey and deliver to Stockholder and Stockholder shall accept and
acquire from Parent, all of the Splitco Shares (free and clear of all
Encumbrances) in exchange for the Stockholder Parent Shares, and (b)
Stockholder shall assign, transfer, convey and deliver to Parent, and Parent
shall accept and acquire from Stockholder, the Stockholder Parent Shares (free
and clear of all Encumbrances) in exchange for the Splitco Shares
(collectively, the "Exchange").
Section 2.2 Closing. The closing of the Exchange and the
other transactions contemplated hereby (the "Closing") shall take place on
April 29, 2005 at the offices of Stockholder in Las Vegas, Nevada, or at such
other time, date and location in Las Vegas, Nevada, as is mutually agreeable
to Parent and Stockholder. For the purposes of this Agreement, the Closing
shall be effective as of 11:59 p.m. on April 30, 2005, or at such other time
and date as is mutually agreeable to Parent and Stockholder. The date upon
which the Closing shall be effective is referred to herein as the "Closing
Date."
Section 2.3 Parent's Deliveries at the Closing. At the
Closing, Parent shall deliver or cause to be delivered to Stockholder the
following:
2.3.1 one or more stock certificates, together with
stock powers executed in blank, representing all
of the issued and outstanding capital stock of
Splitco;
2.3.2 copies of the stock books, stock ledgers and
minute books of Splitco;
2.3.3 certified copies of resolutions, duly adopted by
the Board of Directors of Parent, which shall be
in full force and effect at the time of the
Closing, authorizing the execution and delivery
and performance by Parent of this Agreement and
the Ancillary Agreements and the consummation of
the transactions contemplated hereby and thereby;
2.3.4 each of the Ancillary Agreements, executed by
Parent;
2.3.5 letters of resignation, dated as of the Closing
Date, from each of the directors and officers of
Splitco identified by Stockholder to Parent at
least three (3) business days prior to the Closing
Date;
2.3.6 a certificate of an authorized officer of Parent
pursuant to Sections 7.2.1 and 7.2.2 hereof; and
2.3.7 such other documents as are reasonably requested
by Stockholder to be delivered to effectuate the
transactions contemplated hereby no later than
five (5) Business Days before the Closing Date.
Section 2.4 Stockholder's Deliveries at the Closing. At the
Closing, Stockholder shall deliver or cause to be delivered to Parent the
following:
2.4.1 one or more stock certificates, together with
stock powers executed in blank, representing the
Stockholder Parent Shares, or a confirmation from
Parent's transfer agent, Mellon Investor Services
LLC, of a book-entry transfer of such Stockholder
Parent Shares to Parent;
2.4.2 certified copies of resolutions, duly adopted by
the Board of Directors of Stockholder which shall
be in full force and effect at the time of the
Closing authorizing the execution and delivery and
performance by Stockholder of this Agreement and
the Ancillary Agreements and the consummation of
the transactions contemplated hereby and thereby;
2.4.3 a certificate of an authorized officer of
Stockholder pursuant to Sections 7.3.1 and 7.3.2
hereof
2.4.4 each of the Ancillary Agreements to which
Stockholder is a party, executed by it; and
2.4.5 such other documents as are reasonably requested
by Parent to be delivered to effectuate the
transactions contemplated hereby no later than
five (5) Business Days before the Closing Date.
Each document of transfer or assumption referred to in this
Article II (or in any related definition set forth in
Article I) that is not attached as an Exhibit to this
Agreement or is not otherwise an Ancillary Agreement shall
be in customary form and shall be reasonably satisfactory in
form and substance to the parties thereto.
ARTICLE III.
REORGANIZATION
Section 3.1 Reorganization. Parent agrees that, prior to the
Closing, Parent shall, and shall cause its respective Subsidiaries and
Affiliates to, take the actions set forth in Section 3.1 of the Parent
Disclosure Letter for the purpose of consolidating the Business into Splitco
(the "Reorganization").
Section 3.2 Business Assets. For purposes of this Agreement,
"Business Assets" means (i) all of the assets, properties, rights, agreements
and other interests which are held by Splitco both immediately before the
Reorganization and at the Closing, (ii) all assets, properties, rights,
agreements and other interests set forth on Schedule 3.1 of the Parent
Disclosure Letter that will be transferred or licensed by Parent or any Parent
Entity to Splitco pursuant to the Reorganization and (iii) any rights of
Splitco or any Parent Entity to use licensed third party Software used by
Splitco or any Parent Entity (in connection with the Business) or used by each
of Splitco and Parent or any Parent Entity (in connection with the Business),
except for rights to any Material Shared Third Party Software set forth in
Section 6.4 of the Parent Disclosure Letter.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF PARENT
Parent hereby represents and warrants to Stockholder as
follows:
Section 4.1 Organization and Standing.
4.1.1 Each of Parent and Splitco is (a) a corporation,
limited liability company or other legal entity
duly organized, validly existing and duly
qualified or licensed and in good standing under
the Laws of the state or jurisdiction of its
organization with full corporate or other power,
as the case may be, and authority to own, lease,
use and operate its properties and to conduct its
business as currently conducted, and (b) duly
qualified or licensed to do business and, to the
extent applicable, in good standing in any other
jurisdiction in which the nature of the business
conducted by it or the property it owns, leases,
uses or operates requires it to be so qualified,
licensed or in good standing, except where the
failures to be so qualified, licensed or in good
standing, individually and in the aggregate, have
not had and could not reasonably be expected to
have a Material Adverse Effect on Parent or
Splitco, respectively. Parent has furnished or
made available to Stockholder a complete and
correct copy of the certificate of incorporation
and by-laws (or other comparable organizational
documents) for Parent and Splitco, as in effect on
the date hereof. Section 4.1.1 of the Parent
Disclosure Letter sets forth a list, correct and
complete, of the Parent Entities as of the date of
this Agreement.
4.1.2 Neither Splitco nor any Parent Entity has
conducted the Business under or otherwise used,
for any purpose or in any jurisdiction, any
fictitious name, assumed name, trade name or other
name, other than the names set forth in Section
4.1.2 of the Parent Disclosure Letter.
Section 4.2 Capitalization of Splitco.
4.2.1 As of the Closing, Splitco's authorized capital
stock will consist of one hundred (100) shares of
Splitco Common Stock. Parent will, as of the
Closing, own all of the issued and outstanding
shares of Splitco beneficially and of record, free
and clear of any Encumbrances. There will, as of
the Closing, be no shares of capital stock of
Splitco issued or outstanding other than the
Splitco Shares. As of the Closing, Parent shall
have the sole, absolute and unrestricted right,
power and capacity to exchange, assign and
transfer all of the Splitco Shares to Stockholder.
Upon delivery to Stockholder of the certificates
representing the Splitco Shares at the Closing,
Stockholder will acquire good and valid title to
such shares, free and clear of any Encumbrances
other than Encumbrances created by Stockholder or
any of its Subsidiaries.
4.2.2 As of the Closing, all of the Splitco Shares shall
be duly authorized, validly issued, fully paid and
nonassessable, and not issued in violation of any
preemptive or similar rights. As of the Closing,
there shall be no outstanding subscriptions,
options, warrants, puts, calls, agreements or
other rights of any type or other securities (a)
requiring the issuance, sale, transfer,
repurchase, redemption or other acquisition of any
shares of capital stock of Splitco, (b)
restricting the transfer of any shares of capital
stock of Splitco, or (c) relating to the voting of
any shares of capital stock of Splitco. As of the
Closing, there shall be no issued or outstanding
bonds, debentures, notes or other indebtedness of
Splitco having the right to vote (or convertible
into, or exchangeable for, securities having the
right to vote), upon the happening of a certain
event or otherwise, on any matters on which the
equity holders of Splitco may vote.
4.2.3 As of the Closing, Splitco shall not be in default
or violation (and no event shall have occurred
which, with notice or the lapse of time or both,
would constitute such a default or violation) of
any term, condition or provision of its
certificate of incorporation or bylaws.
4.2.4 Except for the ownership interests set forth in
Section 4.2.4 of the Parent Disclosure Letter, as
of the Closing, Splitco shall not own, directly or
indirectly, nor have entered into any agreement,
arrangement or understanding to purchase or sell
any capital stock or other equity interests in any
Person or is a member of or participant in any
Person. As of the Closing, Splitco will not have
any Subsidiaries.
Section 4.3 Corporate Power and Authority. Parent has all
requisite corporate power and authority to enter into and deliver this
Agreement and to consummate the transactions contemplated hereby and thereby.
Each of Parent and Splitco has all requisite corporate or other power, as the
case may be, and authority to execute and deliver the Ancillary Agreements and
the other agreements, documents and instruments to be executed and delivered
by it in connection with this Agreement or the Ancillary Agreements and to
consummate the transactions contemplated thereby. The execution, delivery and
performance of this Agreement by Parent and the consummation by Parent and
Splitco of the transactions contemplated hereby, including the execution,
delivery and performance of the Ancillary Agreements and the other agreements,
documents and instruments to be executed and delivered in connection with this
Agreement or the Ancillary Agreements by Parent and Splitco and the
consummation of the transactions contemplated thereby, have been duly
authorized by all necessary action on the part of Parent and Splitco. This
Agreement has been duly executed and delivered by Parent and constitutes the
legal, valid and binding obligation of Parent, enforceable against Parent in
accordance with its terms, except as may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter
in effect relating to or affecting creditors' rights generally, including the
effect of statutory and other laws regarding fraudulent conveyances and
preferential transfers and subject to the limitations imposed by general
equitable principles (regardless of whether such enforceability is considered
in a proceeding at law or in equity). The Ancillary Agreements and the other
agreements, documents and instruments to be executed and delivered in
connection with this Agreement or the Ancillary Agreements at or prior to the
Closing will be duly executed and delivered by Parent and Splitco and will
constitute the legal, valid and binding obligations of Parent and Splitco,
enforceable against each such Person in accordance with their respective
terms, except as may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to or affecting creditors' rights generally, including the effect of
statutory and other laws regarding fraudulent conveyances and preferential
transfers and subject to the limitations imposed by general equitable
principles (regardless of whether such enforceability is considered in a
proceeding at law or in equity).
Section 4.4 Conflicts; Consents and Approvals. Neither the
execution and delivery by Parent of this Agreement, nor the execution and
delivery by Parent or Splitco of the Ancillary Agreements and the other
agreements, documents and instruments to be executed and delivered by any of
them in connection with this Agreement and the Ancillary Agreements, nor the
consummation of the transactions contemplated hereby and thereby, nor the
performance of any such Person's obligations hereunder or thereunder will:
4.4.1 conflict with, or result in a breach of any
provision of, the organizational documents of (a)
Parent or (b) Splitco;
4.4.2 except as set forth in Section 4.4.2 of the Parent
Disclosure Letter, violate, or conflict with, or
result in a breach of any provision of, or
constitute a change of control or default (or an
event that, with the giving of notice, the passage
of time or otherwise, would constitute a default)
under, or require any (other than a minor or
immaterial) action, consent, waiver or approval of
any third party or entitle any Person (with the
giving of notice, the passage of time or
otherwise) to terminate, accelerate, modify or
call a default under, or give rise to any
obligation to make a payment under, or to any
increased, additional or guaranteed rights of any
Person under, or result in the creation of any
Encumbrance upon any of the properties or assets
of the Business or the Splitco Shares under any of
the terms, conditions or provisions of (a) the
organizational documents of Parent, the Parent
Entities or Splitco, (b) any Contract to which
Parent, the Parent Entities (with respect to the
Business) or Splitco is a party or to which any of
their respective properties or assets (including
the Business Assets) may be bound or (c) any
permit, registration, approval, license or other
authorization or filing to which Parent, the
Parent Entities (with respect to the Business) or
Splitco is subject or to which any of their
respective properties or assets (including the
Business Assets) may be subject;
4.4.3 [RESERVED];
4.4.4 violate any order, writ, or injunction, or any
decree, or any Law applicable to Parent, the
Parent Entities or Splitco, or any of their
respective properties or assets (including the
Business Assets) or to the Business; or
4.4.5 except as set forth in Section 4.4.5 of the Parent
Disclosure Letter, require any (other than a minor
or immaterial) action, consent or approval of, or
review by, or registration or filing by Parent,
the Parent Entities or Splitco with, any
Governmental Authority, other than actions
required by the ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Antitrust
Improvements of 1976, as amended (the "HSR Act").
Section 4.5 [RESERVED].
Section 4.6 No Material Adverse Effect. Except as expressly
contemplated by this Agreement (including with respect to the Reorganization)
or as disclosed in Section 4.6 of the Parent Disclosure Letter, since December
31, 2004, (1) Parent, Splitco and the Parent Entities have conducted the
Business in the Ordinary Course of Business, (2) no Material Adverse Effect on
the Business or Splitco has occurred, and (3) there has been no event,
occurrence or development that has had, or could reasonably be expected to
have, a material adverse effect on the ability of Parent or Splitco to timely
consummate the transactions contemplated hereby, except to the extent related
to the delivery of the Tax opinions referenced in Section 7.1.3 hereof.
Section 4.7 [RESERVED].
Section 4.8 Compliance with Law. Parent, Splitco and each of
the Parent Entities and each of the officers, directors, employees and agents
of Parent, Splitco and of the Parent Entities has complied, and is now in
compliance with all Laws applicable to the Business and Splitco, except where
the failure to so comply or be in such compliance is not material to Splitco
or the Business. Except as set forth in Section 4.8 of the Parent Disclosure
Letter, none of Parent, Splitco or any of the Parent Entities has received any
notice from any Governmental Authority that the Business or Splitco or any
Parent Entity (with respect to the Business) or any of the Business Assets,
has been or is being conducted in violation of any applicable Law or that an
investigation or inquiry into any noncompliance with any applicable Law is
ongoing, pending or, to Parent's Knowledge, threatened.
Section 4.9 Intellectual Property.
4.9.1 Section 4.9.1 of the Parent Disclosure Letter sets
forth a true, correct, and complete list of all
U.S. and foreign (i) issued Patents and Patent
applications, (ii) Trademark registrations and
applications and material unregistered trademarks,
(iii) Copyright registrations and applications and
material unregistered Copyrights, (iv) Software ,
and (v) other material Intellectual Property in
each case (1) which, as of the date hereof, is
used or held for use in the conduct of the
Business, and (2) in which Parent and/or any of
its Affiliates have any ownership interest
(collectively, the "Parent Proprietary
Intellectual Property"). Except as set forth in
Section 4.9.1 of the Parent Disclosure Letter, as
of the Closing Splitco will be the sole and
exclusive beneficial and record owner of all of
the Parent Proprietary Intellectual Property, and
all such Parent Proprietary Intellectual Property
will be subsisting, valid, enforceable, and free
and clear of all Encumbrances other than Permitted
Encumbrances (all Parent Proprietary Intellectual
Property in which Splitco will have any ownership
interest, as set forth on Section 4.9.1 of the
Parent Disclosure Letter, is referred to herein as
the "Splitco Proprietary Intellectual Property").
Except as noted on Section 4.9.1 of the Parent
Disclosure Letter, there are no actions that must
be taken within four (4) months from the date of
this Agreement, including the payment of fees or
the filing of documents, for the purposes of
obtaining, maintaining, perfecting, preserving, or
renewing any rights in any Splitco Proprietary
Intellectual Property.
4.9.2 "Third Party Software" means all Software (other
than Software listed on Schedule 4.14(d) of the
Parent Disclosure Letter) which, as of the date
hereof, is used or held for use in the conduct of
the Business and in which neither Parent nor any
of its Affiliates has an ownership interest.
Section 4.9.2 of the Parent Disclosure Letter sets
forth a true, correct, and complete list of all
Third Party Software for which aggregate license
and maintenance fees in excess of $50,000 were
paid during the last 12 months (collectively, the
"Material Third Party Software).
4.9.3 The Splitco Proprietary Intellectual Property, the
Material Third Party Software and the Intellectual
Property to be provided to Splitco pursuant to the
Ancillary Agreements together constitute all of
the material Intellectual Property necessary and
sufficient for the continued operation of the
Business, as the Business is currently being
operated and conducted.
4.9.4 Except as set forth in Section 4.9.2 or Section
4.12 of the Parent Disclosure Letter, as of the
Closing:
4.9.4.1 The conduct of the Business (including
the products and services of Splitco)
will not infringe, misappropriate, or
otherwise violate any Person's
Intellectual Property rights, and there
will not have been any such claim
asserted or threatened in the past three
(3) years against Splitco or any other
Person.
4.9.4.2 (i) To the Knowledge of Parent, no
Person will be infringing,
misappropriating, or otherwise violating
any Intellectual Property owned, used,
or held for use by Splitco in the
conduct of the Business, and (ii) no
such claims will have been asserted or,
to the Knowledge of Parent, threatened
against any Person by Splitco or any
other Person, in the past three (3)
years.
4.9.4.3 Splitco will have taken reasonable
measures to protect the confidentiality
of its Trade Secrets, including
requiring all Persons who were hired
after April 1, 2003 and who have access
thereto to execute written
non-disclosure agreements.
4.9.4.4 No Affiliate or current or former
partner, director, stockholder, officer,
or employee of Parent, any Parent Entity
or Splitco will own or retain any rights
to use any of the Splitco Proprietary
Intellectual Property.
4.9.4.5 To the Knowledge of Parent, there will
be no facts, circumstances, or
conditions that could reasonably be
expected to form the basis for a claim
of infringement, misappropriation, or
other violation of Intellectual Property
rights against Splitco.
4.9.5 All Software included in the Splitco Proprietary
Intellectual Property (the "Splitco Proprietary
Software") will operate in substantial conformity
with its Documentation. Splitco and the Parent
Entities have used commercially reasonable
procedures in the development of the Splitco
Proprietary Software, and have been able to
maintain each system included therein as a viable
computer system for the functionality described in
the Documentation. The Splitco Proprietary
Software (a) does not contain any "hidden files",
"non-functional code", "access key", "back ▇▇▇▇",
"▇▇▇▇▇▇▇▇", "▇▇▇▇▇ trap", "time bomb", "drop dead
device", "data scrambling device", or similar
device which Splitco or any Parent Entity can
electronically or automatically activate to render
any system included therein inoperable or in any
way restrict use or access by Splitco, and (b) is
free of Disabling Code as of the date of delivery
by Splitco or the Parent Entities, as applicable.
4.9.6 None of the Splitco Proprietary Software is
subject to the terms of any general public
license, limited general public license, or other
similar agreement, the terms of which could (i)
require or condition the use or distribution of
such Software on the disclosure, licensing, or
distribution of any source code of any portion of
Splitco Proprietary Software, or (ii) otherwise
impose any limitation, restriction or condition on
the right of Splitco to distribute its products
and services.
4.9.7 Splitco has at all times complied, and is now in
compliance with, all applicable Laws, except where
the failure to so comply or be in such compliance
is not material to Splitco or the Business, as
well as its own rules, policies, and procedures
relating to privacy, data protection, and the
collection and use of personal information
collected, used, or held for use by Splitco in the
conduct of the Business. Except as set forth in
Section 4.9.7 of the Parent Disclosure Letter, no
claims have been asserted or, to the Knowledge of
Parent, threatened against Splitco alleging a
violation of any Person's privacy or personal
information or data rights and the consummation of
the transactions contemplated hereby will not
breach or otherwise cause any violation of any Law
or rule, policy, or procedure related to privacy,
data protection, or the collection and use of
personal information collected, used, or held for
use by Splitco in the conduct of the Business.
Splitco takes reasonable measures to ensure that
such information is protected against unauthorized
access, use, modification, or other misuse.
Section 4.10 Title to Assets; Condition and Sufficiency
of Assets.
4.10.1 As of the Closing, Splitco shall have good and
valid title to, or a valid and binding leasehold
interest or license, or its reasonable equivalent
outside of the United States, (subject to the
terms of the relevant lease or license) in, the
Business Assets free and clear of any Encumbrances
other than and subject to Permitted Encumbrances
and the Cash Amount, free and clear of any
Encumbrances (all such Encumbrances, other than
Permitted Encumbrances, the "Restrictions").
4.10.2 Except as set forth on Section 4.10.2 of the
Parent Disclosure Letter, as of the Closing, the
Business Assets, the Business Contracts, the
Leased Real Property, the Business Records and the
Business Employees will constitute, all of the
rights, assets, properties and interests, other
than (a) those addressed by the Ancillary
Agreements, (b) the Material Third Party Software
in which Splitco will not have any post-Closing
ownership interests, as set forth in Section 6.4
of the Parent Disclosure Letter, and (c) the
Employee Benefit Plans listed in Section 3.1 of
the Parent Disclosure Letter, which are necessary
and sufficient for the continued operation and
conduct of the Business as a division of a
publicly held company, as the Business is
currently being operated and conducted.
Section 4.11 Environmental Matters.
4.11.1.1 The Business, the Parent Entities (with
respect to the Business), Splitco and
the Business Assets are in compliance
with, and have at all times complied
with, all applicable Environmental Laws,
and there are no facts, circumstances or
conditions, for which reserves or
accruals would be required under GAAP,
as consistently applied by Parent.
4.11.1.2 Neither Splitco nor the Parent Entities
(with respect to the Business), has
disposed of, Released, transported,
stored, or arranged for the disposal of
any Hazardous Materials to, at or upon:
(i) any location other than a site
lawfully permitted to receive such
Hazardous Materials; (ii) any premises
currently or formerly owned or leased by
the Company or any of its Subsidiaries,
except for the use of household cleaners
and office products in the ordinary
course of business in compliance with
applicable Environmental Laws; or (iii)
any site which has been placed on the
National Priorities List, CERCLIS or
their state equivalents;
4.11.1.3 The Business, the Parent Entities (with
respect to the Business), Splitco and
the Business Assets are not subject to
and have not received notice of any
existing, pending, or threatened Action,
by any Person under any Environmental
Laws or involving the presence, Release
or threatened Release of any Hazardous
Material at any location currently or
formerly owned or operated by Splitco or
the Parent Entities (in connection with
the Business).
Section 4.12 Litigation. Except as set forth on Section 4.12
of the Parent Disclosure Letter, there are no, and since March 31, 2000, have
not been any, Actions pending or involving the Business, the Business Assets,
the Parent Entities (with respect to the Business) or Splitco, by or before
any court or other Governmental Authority, nor, to the Knowledge of Parent, is
any such Action threatened. Except as set forth in Section 4.12 of the Parent
Disclosure Letter, there is no judgment, decree, injunction, ruling or order
of any court or other Governmental Authority outstanding against the Business,
the Parent Entities (with respect to the Business) or Splitco.
Section 4.13 Employee Benefit Plans.
4.13.1 As of the Closing, Splitco will not sponsor,
maintain, or contribute to any Employee Benefit
Plans (including Multiemployer Plans) either
directly or as a participating employer in any
Employee Benefit Plans (including Multiemployer
Plans) sponsored or maintained by Parent or any of
the Parent Entities.
4.13.2 As of the Closing, Splitco will not have any
liability or projected liability for life, health,
medical or other welfare benefits to former
employees or beneficiaries or dependents thereof,
except for health continuation coverage as
required by Section 4980B of the Code or Part 6 of
Title I of ERISA.
4.13.3 Neither the execution and delivery of this
Agreement nor the consummation of the transactions
contemplated hereby will (either alone or in
conjunction with any other event) result in, cause
the accelerated vesting, funding or delivery of,
or increase the amount or value of, any payment or
benefit to any employee, officer or director of
Parent, the Parent Entities or Splitco, or result
in any limitation on the right of Parent, the
Parent Entities or Splitco to amend, merge,
terminate or receive a reversion of assets from
any Employee Benefit Plan or related trust or any
Material Employment Agreement or related trust.
Without limiting the generality of the foregoing,
no amount paid or payable (whether in cash, in
property, or in the form of benefits) by Parent,
the Parent Entities or Splitco in connection with
the transactions contemplated hereby (either
solely as a result thereof or as a result of such
transactions in conjunction with any other event)
will be an "excess parachute payment" within the
meaning of Section 280G of the Code.
4.13.4 None of Parent or its ERISA Affiliates nor any
other person, including any fiduciary, has engaged
in any "prohibited transaction" (as defined in
Section 4975 of the Code or Section 406 of ERISA),
which could subject any of the Employee Benefit
Plans or their related trusts, Parent or its ERISA
Affiliates, or any person that Parent, the Parent
Entities or Splitco has an obligation to
indemnify, to any material Tax or penalty imposed
under Section 4975 of the Code or Section 502 of
ERISA.
4.13.5 There are no pending or threatened claims (other
than claims for benefits in the ordinary course),
lawsuits or arbitrations which have been asserted
or instituted, and no set of circumstances exists
which may reasonably give rise to a claim or
lawsuit, against the Plans, any fiduciaries
thereof with respect to their duties to the Plans
or the assets of any of the trusts under any of
the Plans which could reasonably be expected to
result in any material liability of Parent, the
Parent Entities or Splitco to the Pension Benefit
Guaranty Corporation, the Department of Treasury,
the Department of Labor, any Multiemployer Plan,
any Plan, any participant in an Employee Benefit
Plan, or any other party.
4.13.6 None of Business Employees are presently covered
or have ever in connection with the Business been
covered by a collective bargaining agreement, and
none of Business Employees will be covered by a
collective bargaining agreement as of Closing.
None of the Business Employees are located in
Puerto Rico or any location other than the United
States.
Section 4.14 Contracts. Section 4.14 of the Parent
Disclosure Letter contains a complete list, as of the date hereof, of all
executory Contracts (other than this Agreement and the Ancillary Agreements)
to which Splitco is, or will be at Closing, a party or bound, or that
otherwise relate to the Business or a Business Asset, and that fall within any
of the following categories (the "Material Contracts"):
(a) each Contract with a Major Customer (collectively, the
"Major Customer Contracts");
(b) each Contract providing for the sale, lease or other
disposition of any of the Business Assets other than in the Ordinary Course of
Business;
(c) each Contract for the purchase of any assets, and each
Contract relating to any outstanding capital expenditures, in excess of
$100,000;
(d) each currently effective joint venture or partnership or
similar agreement and each Contract providing for the formation of a joint
venture, limited liability company, long-term alliance or partnership or
involving an equity investment by any Parent Entity (with respect to the
Business) or Splitco;
(e) each currently effective Contract (including an
Employment Agreement) which (A) restricts the ability of the Business, or
Splitco or the Parent Entities (with respect to the Business) to engage in any
business activity in any geographic area or line of business, (B) restricts
the ability of the Business, or Splitco or the Parent Entities (with respect
to which obligations or limitations shall remain in effect following the
Closing of the Business) to compete with any Person, (C) imposes
non-solicitation (except in the Ordinary Course of Business with respect to
employees), exclusive dealing or other similar obligations on the Business or
Splitco or the Parent Entities (with respect to the Business), which
obligations or limitations shall remain in effect following the Closing, or
(D) otherwise limits or contains restrictions on the ability of the Company or
its Subsidiaries to (1) continue any material current business practice, (2)
make any acquisition or disposition of material property or assets, (3)
declare or pay dividends on, make any other distribution in respect of, issue,
purchase, redeem or otherwise acquire its equity interests or capital stock,
as the case may be, (4) incur Indebtedness, (5) incur or suffer to exist any
Encumbrance or (6) change the lines of business in which it participates or
engages;
(f) [RESERVED];
(g) each Contract (or group of related Contracts) under
which any Parent Entity (with respect to the Business) or Splitco has created,
incurred, assumed, or guaranteed any Indebtedness or that relates to the
lending or advancing of amounts or investment in any other Person, by any of
the Parent Entities (with respect to the Business) or Splitco or providing for
the creation of any Encumbrance securing an obligation likely to exceed
$100,000 upon any Business Asset;
(h) each lease, sublease or similar agreement under which
any Parent Entity (with respect to the Business) or Splitco is a lessee or
sublessee of tangible personal property used or held for use in the Business,
for an annual rent in excess of $100,000, or agreement regarding the purchase
of real property;
(i) each joint research and development agreement involving
expenditures by the Business in excess of $100,000 in any calendar year;
(j) each currently effective Real Property Lease;
(k) any currently effective Contract concerning the
marketing or distribution by third parties of any products or services of the
Business (including any Contract requiring the payment of any sales or
marketing or distribution commissions or granting to any Person rights to
market, distribute or sell such products or services) involving sales of
products of more than $100,000 annually;
(l) any other currently effective Contract which was entered
into other than in the Ordinary Course of Business involving payments to or
from third parties in excess of $100,000;
(m) currently effective agreements between the Parent or any
Affiliate of Parent, on the one hand, and Splitco, on the other hand;
(n) currently effective labor or collective bargaining
agreement, work rules or practices or any other labor-related agreements or
arrangements with any labor union, labor organization or works council; and
(o) each currently effective Material Employment Agreement.
Parent has made available to Stockholder or its representatives correct and
complete copies of all such Material Contracts with all amendments thereof.
Each such Material Contract is valid, and will at Closing be, binding and
enforceable against Splitco and the other parties thereto in accordance with
its terms, and is, and will at Closing be, in full force and effect. Except as
set forth in Section 4.14 of the Parent Disclosure Letter, none of Parent, the
Parent Entities or Splitco is, or as of the Closing will be, in material
default under or in material breach of any such Material Contract, and no
event has occurred, or will as of the closing occur, that, with notice or
lapse of time, or both, would constitute such a material default. Except as
set forth in Section 4.14 of the Parent Disclosure Letter, each of the other
parties to the Material Contracts has performed in all material respects all
of the obligations required to be performed by it under, and is not in
material default under, any such Material Contract, and to the Knowledge of
Parent, no event has occurred that, with notice or lapse of time, or both,
would constitute such a material default. Except as set forth in Section 4.14
of the Parent Disclosure Letter, there are no material disputes pending or, to
Parent's Knowledge, threatened in writing with respect to any such Material
Contracts. None of Parent, the Parent Entities or Splitco, or, to the
Knowledge of Parent, any other party to any such Material Contract, has
exercised any option granted to it to terminate or shorten or extend the term
of such Material Contract and none of Parent, the Parent Entities or Splitco
has given written notice or, to the Knowledge of Parent, received written
notice to such effect. All of such Material Contracts will be valid, binding,
enforceable and in full force and effect on substantially identical terms at
the Closing.
Section 4.15 Major Customers and Third Party Licensors.
Section 4.15 of the Parent Disclosure Letter contains (a) a list of the top
fifty (50) customers of Splitco (by total revenue generated by such customer)
for the fiscal year ended April 2, 2004 (the "Major Customers"), which list
indicates the total revenues generated by the Major Customers for the fiscal
years ended April 2, 2004 and March 28, 2003 and for the eleven months ended
February 25, 2005, and also identifies the additional customers which were in
the top fifty (50) customers of Splitco (by total revenue generated by such
customer) for the fiscal year ended March 28, 2003 and (b) a list of all
parties who license Intellectual Property to Splitco for an amount in excess
of $200,000 for any such period (the "Major Third Party Licensors"). Except as
set forth in Section 4.15 of the Parent Disclosure Letter, since December 31,
2004, Splitco has not received any notice or other communication from any
Major Customer to the effect that such Major Customer intends to stop or
materially reduce its purchases of Splitco products or services. Except as set
forth in Section 4.15 of the Parent Disclosure Letter, since December 31,
2004, Splitco has not received any notice or other communication from any
Major Third Party Licensor to the effect that such Major Third Party Licensor
intends to terminate or materially modify its arrangements with Splitco.
Section 4.16 [RESERVED]
Section 4.17 Labor and Employment Matters.
4.17.1 There are no collective bargaining agreements,
union contracts or similar agreements or
arrangements in effect that cover any Business
Employee (each, a "Collective Bargaining
Agreement"). Except as set forth in Section 4.17.1
of the Parent Disclosure Letter, with respect to
any Business Employee, (a) there is no labor
strike, dispute, slowdown, lockout or stoppage
pending or threatened against Splitco or with
respect to any Business Employees, and Splitco has
not experienced any labor strike, dispute,
slowdown, lockout or stoppage since March 31,
2000; (b) there is no unfair labor practice charge
or complaint against any of Splitco and (with
respect to the Business) the Parent Entities
pending or, to Parent's Knowledge, threatened
before the National Labor Relations Board or
before any similar state or foreign agency; (c)
there is no grievance or arbitration arising out
of any Collective Bargaining Agreement or other
grievance procedure; and (d) no charges are
pending before the Equal Employment Opportunity
Commission or any other agency responsible for the
prevention of unlawful employment practices.
4.17.2 Except as set forth in Section 4.17.2 of the
Parent Disclosure Letter, at no time within one
(1) year prior to the date hereof have Parent or
any of its Affiliates effectuated any of the
following with respect to any Business Employee:
(a) a "plant closing" (as defined in the WARN Act)
affecting any site of employment or one or more
facilities or operating units within any site of
employment or facility; (b) a "mass layoff" (as
defined in the WARN Act) affecting any site of
employment or facility; nor have any of the Parent
Entities or Splitco been affected by any
transaction or engaged in layoffs or employment
terminations sufficient in number to trigger
application of any similar state or local law; or
(c) any other event, which under the Laws of any
jurisdiction outside of the United States of
America, would require notification and/or
consultation with employee representatives,
affected parties or government agencies, a "social
plan," or similar employer action as a result of,
or in connection with, employee terminations or
business restructurings.
Section 4.18 Financial Information; Undisclosed Liabilities.
4.18.1 Section 4.18 of the Parent Disclosure Letter
contains a true, correct and complete copy of (a)
the unaudited interim balance sheet of Splitco as
at February 25, 2005 and the related unaudited
interim statement of operations for the eleven
month period then ended, (b) an unaudited pro
forma balance sheet as at February 25, 2005
reflecting the six Customer Agreements, and the
Intellectual Property related thereto, to be
transferred to Splitco by AdvanceMed Corporation
prior to the Closing pursuant to Section 3.1
hereof and (c) a listing of the net book value, as
at February 25, 2005, of the assets to be
transferred to Splitco by Parent's Global
Infrastructure Services Group prior to the Closing
pursuant to Section 3.1 hereof (collectively, the
"Financial Information").
The Financial Information has been derived from
the books and records of Parent and, collectively,
subject to the following proviso (i) presents
fairly in all material respects the financial
position and results of operations of the Business
on a consolidated basis as at and for the periods
indicated therein and was prepared in accordance
with Parent's accounting procedures and policies
consistently applied during the period covered by
the Financial Information and (ii) has been
prepared in accordance with GAAP; provided,
however, that:
4.18.1.1 The results of operations for the
interim period presented is not
necessarily indicative of the results
for the full year.
4.18.1.2 The Financial Information does not
reflect the impact of many significant
events and changes that will occur as a
result of (i) the Reorganization,
including, without limitation, the
transfer of the Business Employees and
certain assets to Splitco, or (ii) the
separation from Parent at the Closing,
including, without limitation, the
creation of independent information
technology, purchasing, banking,
insurance, employee benefits and other
programs.
4.18.1.3 Splitco is not a stand-alone business,
and does not have its own
infrastructure. The Financial
Information includes allocations of
expenses incurred by Parent to provide
certain services to Splitco, including
executive oversight and corporate
headquarter functions, consolidation
accounting, treasury, tax, legal, public
affairs, human resources, benefits,
information technology and other
services. Although these allocations
have been determined on bases that are
consistent with allocations to Parent's
other operations, it is possible that,
following the Closing, Stockholder may
not be able to provide these services to
Splitco at the same costs or on the same
terms and conditions.
4.18.1.4 The Financial Information as presented
reflects assets, liabilities, and
expenses that are as a result of
intercompany transactions with Parent,
including other current assets,
intercompany payables to Parent, and
fiscal transfers and other tax related
items that do not reflect actual assets,
liabilities, and expenses of Splitco
post Closing.
4.18.1.5 The goodwill as presented in the
Financial Information is specifically
attributable to the Business, however,
periodic reviews for impairment as
required by GAAP are performed as part
of the Parent consolidated group and not
on a stand-alone basis.
4.18.1.6 The level of materiality used for all
purposes in the preparation of the
Financial Information is the level
applicable under GAAP to Parent's
consolidated financial statements, not
the level that would be applicable under
GAAP to stand-alone financial statements
of Splitco.
The Financial Information may not reflect all
liabilities of Splitco, including undisclosed or
unasserted Customer claims and non-recorded
payables incurred in the Ordinary Course of
Business of which Parent has no Knowledge.
GAAP requires management to make estimates and
assumptions that affect the amounts reported in
the Financial Information. Actual results could
differ from those estimates including estimates
regarding allowances for doubtful accounts (no
allowance has been provided for the BC/BS
receivable disclosed in Section 4.12 of the Parent
Disclosure Letter) and revenue recognition on
fixed price contracts. Parent makes no
representation as to the accuracy of those
estimates other than that it has followed GAAP
guidance and Parent's accounting procedures and
policies in the creation thereof.
4.18.2 Neither the Business, the Business Assets nor
Splitco are subject to any Liabilities, other than
(i) Liabilities reflected in the Financial
Information, (ii) Liabilities arising under the
Material Contracts set forth in Section 4.14 of
the Parent Disclosure Letter, (iii) Liabilities
arising under the licenses relating to Material
Third Party Software set forth in Section 4.9.2 of
the Parent Disclosure Letter, (iv) Liabilities
under the AdvanceMed Contracts set forth in
Section 3.1 of the Parent Disclosure Letter, (v)
Liabilities under Real Property Leases set forth
in Section 4.14 of the Parent Disclosure Letter or
(vi) liabilities incurred in the Ordinary Course
of Business
Section 4.19 Permits; Compliance. Each of the Parent
Entities (with respect to the Business) and Splitco is in possession of all
franchises, grants, authorizations, licenses, permits, easements, variances,
exemptions, consents, certificates, approvals and orders necessary to own,
lease and operate its properties and to carry on its business as it is now
being conducted, other than such franchises, grants, authorizations, licenses,
permits, easements, variances, exemptions, consents, certificates, approvals
and orders which the failure to hold would not, individually or in the
aggregate, result in a Material Adverse Effect on Splitco or the Business
(collectively, the "Permits"). Except as set forth in Section 4.19 of the
Parent Disclosure Letter (a) there is no material Action pending, or, to
Parent's Knowledge, threatened, regarding any of the Permits, (b) each such
Permit is in full force and effect and (c) the Parent Entities (with respect
to the Business) and Splitco are not in material default under, or in
violation of, any of the Permits.
Section 4.20 Real Estate.
4.20.1 As of the date hereof and the Closing Date,
Splitco does and will not own any real property.
Section 4.20 of the Parent Disclosure Letter sets
forth a list, complete and accurate in all
respects, of all real property used in the
operation of the Business and all real property
that is, as of the date hereof, and will be as of
the Closing, leased or subleased to Splitco,
Parent or any Parent Entity and used in the
operation of the Business. Parent has provided
Stockholder with true and correct copies of all
leases for the Leased Real Property.
4.20.2 To the Knowledge of Parent, each Real Property
Lease is, and will be at the Closing, valid,
binding and enforceable against Splitco and/or
Parent or any Parent Entity party thereto and the
other parties thereto in accordance with its
terms, and is in full force and effect.
4.20.3 To the Knowledge of Parent, Splitco, Parent or any
Parent Entity party thereto is not, and as of the
Closing will not be, in material default under, in
material breach of or otherwise materially
delinquent in performance under any Real Property
Lease and no event has occurred, or as of the
closing will occur, which, with due notice or
lapse of time, or both, would constitute such a
default.
4.20.4 There are no material leases or subleases to which
Splitco will be a party or bound at Closing, as
lessor, and third parties, as lessees, with
respect to any of the Real Property, except as
disclosed in Section 4.20 of the Parent Disclosure
Letter.
4.20.5 To the Knowledge of Parent, there does not exist
any actual, threatened or contemplated
condemnation or eminent domain proceedings that
affect any material Real Property.
Section 4.21 Intercompany Services and Accounts.
4.21.1 Except for the Ancillary Agreements, all Contracts
pursuant to which any goods, services, materials
or supplies have at any time been provided (i) by
Splitco, the Business, or the Business Assets, on
the one hand, to Parent or any of its Affiliates
(other than Splitco), on the other hand, or (ii)
by Parent or any of its Affiliates (other than
Splitco), on the one hand, to Splitco, the
Business, or the Business Assets, on the other
hand, will be terminated as of the Closing.
4.21.2 [RESERVED]
Section 4.22 Guaranties; Absence of Restrictions. Except to
the extent contemplated by this Agreement or as set forth in Section 4.22 of
the Parent Disclosure Letter, as of the Closing, Splitco will not be directly
or indirectly (a) liable, by guarantee or otherwise, upon or with respect to,
(b) obligated to provide funds with respect to, or to guarantee or assume, any
Indebtedness or other obligation of any Person.
Section 4.23 Insurance. Parent has delivered to Stockholder
a correct and complete Summary of Insurance for Splitco's current insurance
coverages (the "Insurance Policies"), including their commercial general
liability, property, automobile liability, and workers' compensation insurance
coverages. The insurance provided under the Insurance Policies is in such
amounts, with such deductibles and against such risks and losses as are
reasonable in respect of the operations of the Business as presently
conducted. The Insurance Policies are in full force and effect and all
premiums due and payable thereon have been paid in full, and no written notice
of cancellation or termination has been received with respect to any such
Insurance Policy which has not been replaced on substantially similar terms
prior to the date of such cancellation. Except as set forth in Section 4.23 of
the Parent Disclosure Letter, there are no pending material claims under the
Insurance Policies by Splitco as to which the insurers have denied Liability.
Section 4.24 Consulting Agreements. From and after the
Closing, neither Splitco nor the Business will be obligated to perform or
otherwise provide any services in connection with any of the agreements
identified as "Consulting Contracts" in Section 3.1 of the Parent Disclosure
Letter (the "Consulting Agreements"). There are no revenues or costs relating
to any of the Consulting Agreements reflected in the Financial Information,
nor would any such revenues or costs be required to be reflected therein under
GAAP.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF STOCKHOLDER
Stockholder hereby represents and warrants to Parent as
follows:
Section 5.1 Organization and Standing. Stockholder is (a) a
corporation duly organized, validly existing and duly qualified or licensed
and in good standing under the Laws of the state or jurisdiction of its
organization with full corporate power and authority to own, lease, use and
operate its properties and to conduct its business, and (b) duly qualified or
licensed to do business and in good standing in any other jurisdiction in
which the nature of the business conducted by it or the property it owns,
leases or operates requires it to so qualify, be licensed or be in good
standing, except where the failures to be so qualified, licensed or in good
standing, individually and in the aggregate, have not had and could not
reasonably be expected to have a Material Adverse Effect on Stockholder.
Section 5.2 Corporate Power and Authority. Stockholder has
all requisite corporate power and authority to enter into and deliver this
Agreement and to consummate the transactions contemplated hereby. Stockholder
has all requisite corporate power and authority to execute and deliver the
Ancillary Agreements and the other agreements, documents and instruments to be
executed and delivered by it in connection with this Agreement or the
Ancillary Agreements and to consummate the transactions contemplated thereby.
The execution, delivery and performance of this Agreement by Stockholder and
the consummation by Stockholder of the transactions contemplated hereby,
including the exchange and delivery to Parent of the Stockholder Parent
Shares, and the execution, delivery and performance of the Ancillary
Agreements and the other agreements, documents and instruments to be executed
and delivered in connection with this Agreement or the Ancillary Agreements by
Stockholder and the consummation of the transactions contemplated thereby,
have been duly authorized by all necessary action on the part of Stockholder.
This Agreement has been duly executed and delivered by Stockholder and
constitutes the legal, valid and binding obligation of Stockholder,
enforceable against Stockholder in accordance with its terms, except as may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws now or hereafter in effect relating to or affecting
creditors' rights generally, including the effect of statutory and other laws
regarding fraudulent conveyances and preferential transfers and subject to the
limitations imposed by general equitable principles (regardless of whether
such enforceability is considered in a proceeding at law or in equity). The
Ancillary Agreements and the other agreements, documents and instruments to be
executed and delivered by Stockholder in connection with this Agreement or the
Ancillary Agreements at the Closing will be duly executed and delivered by
Stockholder and will constitute the legal, valid and binding obligations of
Stockholder, enforceable against Stockholder in accordance with their
respective terms, except as may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter
in effect relating to or affecting creditors' rights generally, including the
effect of statutory and other laws regarding fraudulent conveyances and
preferential transfers and subject to the limitations imposed by general
equitable principles (regardless of whether such enforceability is considered
in a proceeding at law or in equity).
Section 5.3 Conflicts; Consents and Approvals. Neither the
execution and delivery by Stockholder of this Agreement, the Ancillary
Agreements and the other agreements, documents and instruments to be executed
and delivered by Stockholder in connection with this Agreement and the
Ancillary Agreements, nor the consummation of the transactions contemplated
hereby and thereby, will:
5.3.1 conflict with, or result in a breach of any
provision of, the organizational documents of (a)
Stockholder or (b) any Affiliate of Stockholder
which is a party to the Ancillary Agreements or
any other agreements and instruments to be
executed and delivered in connection therewith;
5.3.2 violate, or conflict with, or result in a breach
of any provision of, or constitute a default (or
an event that, with the giving of notice, the
passage of time or otherwise, would constitute a
default) under, or entitle any Person (with the
giving of notice, the passage of time or
otherwise) to terminate, accelerate, modify or
call a default under, or give rise to any
obligation to make a payment under, or to any
increased, additional or guaranteed rights of any
Person under, or result in the creation of any
Encumbrance upon any of the Stockholder Parent
Shares or any of the other properties or assets of
Stockholder under any of the terms, conditions or
provisions of (a) any organizational documents of
Stockholder, (b) any Contract to which Stockholder
is a party or to which any of its properties or
assets may be bound, or (c) any permit,
registration, approval, license or other
authorization or filing to which Stockholder is
subject or to which any of its properties or
assets may be subject;
5.3.3 violate any order, writ, or injunction, or any
material decree, or material Law applicable to
Stockholder or any of its properties or assets;
5.3.4 require any action, consent or approval of, or
review by, or registration or filing by
Stockholder with, any Governmental Authority,
other than actions required by the HSR Act; or
5.3.5 require any action, consent or approval of any
non-governmental third party; except in the case
of Sections 5.3.2 or 5.3.5 for any of the items
specified therein (other than Encumbrances upon
the Stockholder Parent Shares) that, individually
or in the aggregate, (i) have not had and could
not reasonably be excepted to have a Material
Adverse Effect on Stockholder or (ii) would not
materially impair the ability of Stockholder to
timely consummate the transactions contemplated
hereby.
Section 5.4 Stockholder Parent Shares. As of the date
hereof, Stockholder owns a total of 7,128,772 shares of Parent Common Stock.
As of the Closing, Stockholder will have good and valid title to the
Stockholder Parent Shares, free and clear of all Encumbrances. Upon delivery
to Parent of the certificates representing the Stockholder Parent Shares at
the Closing, or evidence of a book-entry transfer of the Stockholder Parent
Shares to an account of Parent, Parent will acquire good and valid title to
such shares, free and clear of any Encumbrances, other than Encumbrances
created by Parent or any of its Subsidiaries.
Section 5.5 Litigation. As of the date hereof, there is no
material Action pending or threatened in writing, or, to Stockholder's
knowledge, otherwise threatened, against Stockholder that seeks, or could
reasonably be expected, to prohibit or restrain the ability of Stockholder to
enter into this Agreement or to timely consummate any of the transactions
contemplated hereby.
Section 5.6 No Material Adverse Effect. Since December 31,
2004, there has been no event, occurrence or development that has had, or
could reasonably be expected to have, a material adverse effect on the ability
of Stockholder to timely consummate the transactions contemplated hereby.
Section 5.7 [RESERVED]
Section 5.8 Governmental Actions. There are no material
judgments, decrees, written agreements, memoranda of understanding or orders
of any Governmental Authority outstanding against Stockholder which could
reasonably be expected to prevent, prohibit, materially delay or enjoin the
consummation of the transactions contemplated hereby.
Section 5.9 Investment Purpose and Experience. Stockholder
is receiving the Splitco Shares for its own account and not with a view
towards, or for resale in connection with, the public sale or distribution
thereof, except pursuant to sales registered or exempted under the Securities
Act. Stockholder is an "accredited investor," as that term is defined in
Regulation D promulgated under the Securities Act. Stockholder acknowledges
that it can bear the economic risk and complete loss of its investment in the
Splitco Shares, and has such knowledge and experience in financial or business
matters that it is capable of evaluating the merits and risks of the
investment contemplated hereby.
ARTICLE VI.
COVENANTS AND AGREEMENTS
Section 6.1 Access and Information. During the period from
the date of this Agreement to the Closing, except to the extent prohibited by
applicable Law, and subject to the obligations of Stockholder under the
Confidentiality Agreement with respect thereto, Parent will permit (and will
cause Splitco and each of the Parent Entities to permit) representatives of
Stockholder to have reasonable access during normal business hours and upon
reasonable notice to all premises, properties, personnel, books, records,
Contracts, commitments, reports of examination, and documents of or pertaining
to the Business, the Parent Entities (to the extent relating to the Business),
Splitco, the Business Assets, and the Liabilities related to the Business, and
reasonable opportunity upon prior notice and consultation with Parent to (i)
contact customers and employees of the Business regarding the transactions
contemplated by this Agreement and (ii) communicate with employees of the
Business about matters relating to the integration of Splitco with and into
the business and operations of Stockholder and its Affiliates (provided that
Parent and Splitco shall have the right to be present by representative for
all such contacts between Stockholder and any customer or employee of the
Business, whether in person, telephonic or otherwise) as may be necessary to
permit Stockholder to, at its sole expense, make, or cause to be made, such
investigations thereof as are reasonably necessary in connection with the
consummation of the transactions contemplated by this Agreement, and Parent
shall (and shall cause Splitco and the Parent Entities to) reasonably
cooperate with any such investigations. No investigation by Stockholder or its
representatives or advisors prior to or after the date of this Agreement
(including any information obtained by Stockholder pursuant to this Section
6.1) shall diminish, obviate or cure any breach of any representation,
warranty, covenant or agreement contained in this Agreement or any Ancillary
Agreement nor shall the conduct or completion of any such investigation be a
condition to any of Stockholder's obligations under this Agreement.
Section 6.2 Conduct of Business. Except (i) as contemplated
by this Agreement and the Ancillary Agreements, (ii) as described in Section
6.2 of the Parent Disclosure Letter or (iii) with the prior written consent of
Stockholder (not to be unreasonable withheld), during the period from the date
hereof to the Closing Date, Parent shall, and shall cause each of Splitco and
the Parent Entities to, conduct the Business only in the Ordinary Course of
Business and, to the extent consistent therewith, with no less diligence and
effort than would be applied in the absence of this Agreement, and to seek to
preserve intact their current business organizations, keep available the
service of their current officers, employees and consultants (to the extent
such consultants provide services with respect to the Business) and preserve
their relationships with customers, suppliers and others having business
dealings with them to the end that their goodwill and the Business shall be
unimpaired on the Closing Date. Without limiting the generality of the
foregoing, except as otherwise contemplated by this Agreement or as described
in Section 6.2 of the Parent Disclosure Letter, prior to the Closing Date,
neither Splitco nor the Business will, without the prior written consent of
Stockholder (provided, however, that no provision of this Section 6.2 shall
require any Person to take any action or refrain from taking any action that
would violate any Law or the terms of any Contract to which such Person is a
party):
6.2.1 change Splitco's fiscal year, revalue any of the
material Business Assets, or make any changes in
any financial or accounting methods, principles or
practices in respect of the Business, any Business
Asset or any Business Liability (including the
acceleration of any accounts receivable, granting
of any discounts relating to any accounts
receivable or delay in connection with the
satisfaction of any accounts payable), except in
each case as required by GAAP or applicable law;
6.2.2 except for inventory and supplies sold or
otherwise disposed of in the Ordinary Course of
Business, sell, lease (as lessor), mortgage,
pledge or otherwise dispose of any material
Business Asset (including securities of any
Affiliate of Parent and Intellectual Property
owned or licensed by Splitco or any of the Parent
Entities (and relating to the Business) to any
Person;
6.2.3 (i) permit Splitco to enter into any transaction
with any shareholder, equityholder or Affiliate of
Parent, other than those transactions listed on
Schedule 6.2 of the Parent Disclosure Letter or
(ii) permit Splitco to make any loans or advances
to, or guaranties for the benefit of, any Person,
except for travel and similar advances made to
employees, officers or directors, in the Ordinary
Course of Business;
6.2.4 (i) amend the articles of incorporation, bylaws or
other governing documents of Splitco or (ii) alter
through merger, liquidation, reorganization,
restructuring or in any other manner the corporate
structure or ownership of Splitco;
6.2.5 (i) increase salary, wages or other compensation
(including any bonuses, commissions and any other
payments) of, or terminate the employment of, any
Business Employee or consultant of Splitco and the
Parent Entities (to the extent such consultants
provide services with respect to the Business)
whose annual salary, wages and such other
compensation is, or after giving effect to such
change would be, in the aggregate, $50,000 or more
per annum; (ii) hire any new Business Employee or
enter into a contract with any consultant to
perform services relating to the Business, in each
case on terms providing for annual salary, wages
and other compensation, in the aggregate, of
$50,000 or more per annum (iii) establish or
modify (A) targets, goals, pools or similar
provisions under any Employee Benefit Plan,
employment contract or other employee compensation
arrangement or (B) salary ranges, increase
guidelines or similar provisions in respect of any
Employee Benefit Plan, employment contract or
other employee compensation arrangement; (iv)
adopt, enter into, amend, modify or terminate (in
whole or in part) any Employee Benefit Plan in a
manner affecting the Business Employees; or (v)
adopt or enter into any Collective Bargaining
Agreement or other labor union contract applicable
to Business Employees;
6.2.6 (i) issue, deliver or sell, or authorize or
propose the issuance, delivery or sale of, any
shares of capital stock or securities convertible
into shares of capital stock of Splitco, or any
subscriptions, rights, warrants or options to
acquire, or other agreements or commitments of any
character obligating the Parent or any of its
Affiliates to issue any such shares or other
convertible securities, (ii) modify or amend any
right of any holder of any outstanding shares of
capital stock or other equity interests of Splitco
or option with respect thereto, (iii) declare, set
aside or pay any dividend or other distribution in
respect of the capital stock or other equity
interests of Splitco, (iv) directly or indirectly
redeem, purchase or otherwise acquire any such
capital stock or other equity interests of Splitco
or (v) split, combine, reclassify any of Splitco's
share capital or issue or authorize the issuance
of any other securities in respect of, in lieu of
or in substitution for shares of Splitco's capital
stock, or purchase or otherwise acquire, directly
or indirectly, any shares of Splitco's capital
stock;
6.2.7 (i) permit Splitco to incur any indebtedness for
borrowed money or guarantee any such indebtedness
of another Person, issue or sell any debt
securities or warrants or other rights to acquire
any debt securities, or guarantee any debt
securities of another Person, except for the
endorsement of checks and the extension of credit
to customers, in each case, in the Ordinary Course
of Business or (ii) incur, impose or permit to
exist any Encumbrance, other than Permitted
Encumbrances, on any Business Asset;
6.2.8 (i) except as required by law, enter into any
Contract of a character required to be disclosed
in Section 4.14 of the Parent Disclosure Letter,
other than in the Ordinary Course of Business, or
terminate, renew (other than in the Ordinary
Course of Business) or amend in any material
respect any of the Material Contracts; provided
that, for the avoidance of doubt, the expiration
in accordance with its terms of any Material
Contract shall not constitute termination, renewal
or amendment of such Material Contracts; or (ii)
cancel or terminate any material insurance
relating to the Business or any Business Asset;
6.2.9 permit Splitco to (i) acquire any business or
significant assets and properties of any Person
(whether by merger, consolidation or otherwise),
(ii) make any capital expenditures, execute any
lease or incur any obligation to make any capital
expenditure or execute any lease in an amount
exceeding, in any one instance or series of
related instances, $200,000, (iii) commence,
terminate or change any line of business or (iv)
except as necessary in the Ordinary Course of
Business, dispose of, grant, or obtain, or permit
to lapse any rights to, any Intellectual Property,
or dispose of or disclose to any Person, other
than representatives of Stockholder, any
Confidential Business Information of the Business;
6.2.10 permit Splitco or the Parent Entities to (i) pay,
discharge, settle or satisfy any claims (including
claims of stockholders), liabilities or
obligations (whether absolute, accrued, asserted
or unasserted, contingent or otherwise) relating
to the Business (1) in excess of $100,000
individually and $200,000 in the aggregate, other
than in the Ordinary Course of Business or (2)
involving any material limitation on the conduct
of the Business, (ii) waive or release any right
of the Business with a value in excess of $100,000
or (iii) make or agree to make any voluntary
purchase, cancellation, prepayment or complete or
partial discharge in advance of a scheduled
payment date with respect to, or waiver of any
right of Splitco or the Parent Entities, any
Indebtedness of or owing to Splitco or the Parent
Entities (in the case of the Parent Entities, with
respect to the Business);
6.2.11 engage in any practice or take any action that
would slow, obstruct or otherwise frustrate the
process for receiving any authorization or consent
of any Governmental Authority required to be
obtained on connection with the performance by
Parent or Splitco of its obligations under this
Agreement; or
6.2.12 permit Splitco or any Parent Entity to, except as
necessary in the Ordinary Course of Business,
dispose of, grant, or obtain, or permit to lapse
any rights to, any Intellectual Property owned,
used, or held for use by Splitco or such Parent
Entity in connection with the Business, or dispose
of or disclose to any Person, other than
representatives of Stockholder, any Trade Secret.
Section 6.3 [RESERVED]
Section 6.4 Third-Party Software. Without limiting the
generality of Section 3.1, subject to licensor consent, as well as the terms
of the applicable license agreements, Parent shall, and shall cause its
Affiliates to, use commercially reasonable efforts to assign to Splitco, in
connection with the Reorganization, all Third Party Software used exclusively
by Splitco (or the Business) as of the Closing Date. All licenses to use
Material Third Party Software (other than Software for which Parent has an
enterprise or similar type license) that is used by both Splitco (or the
Business) and Parent (or one of its Affiliates other than Splitco) as of the
Closing Date (hereinafter collectively referred to as "Shared Material Third
Party Software") shall remain in the name of the licensee as of the Closing
Date, and shall, to the extent possible, as in the case of the Microsoft
software, be partitioned between the parties using such Shared Material Third
Party Software as of the Closing Date. Parent shall use commercially
reasonable efforts to assist Stockholder or Splitco in obtaining the
independent, non-exclusive right to use Shared Material Third Party Software
licensed in the name of Parent and/or its Affiliates as of the Closing Date.
Section 6.4 of the Parent Disclosure Letter lists the Shared Material Third
Party Software, and the licensee thereof, identified by the parties hereto as
of the date hereof. Parent shall bear all costs and expenses associated with
Splitco's obtaining the right to use all Third Party Software, except for the
Shared Material Third Party Software set forth in Section 6.4 of the Parent
Disclosure Letter, which costs and expenses will be borne by Splitco;
provided, however, that Parent shall bear all costs and expenses of
partitioning and transferring to Splitco all Software licensed from Microsoft.
Section 6.5 Closing Documents. Parent shall, prior to or at
the Closing, execute and deliver, or cause to be executed and delivered, to
Stockholder, the documents or instruments described in Section 7.2 to be
delivered by Parent prior to or at the Closing. Stockholder shall, prior to or
at the Closing, execute and deliver, or cause to be executed and delivered to
Parent, the documents or instruments described in Section 7.3 to be delivered
by Stockholder prior to or at the Closing.
Section 6.6 Further Assurances.
6.6.1 Subject to the terms and conditions of this
Agreement, each party hereto shall use reasonable
best efforts to take, or to cause to be taken, all
actions and to do, or to cause to be done, all
things necessary, proper or advisable as promptly
as practicable to satisfy the conditions set forth
in Article VII and to consummate the transactions
contemplated hereby. Each party shall cooperate in
all reasonable respects with the other party
hereto in assisting such party to comply with this
Section 6.6.
6.6.2 In the event that any Business Contract (including
any Real Property Lease) is not transferable
indirectly to Stockholder through the transfer of
the Splitco Shares, Parent shall, and shall cause
the appropriate Parent Entity to, use its
reasonable best efforts to maintain such Contract,
Permit or other Business Asset for the benefit of
Splitco (including the benefit of enforcement of
any rights of Parent or any of its Affiliates
against any third party thereto arising out of
breach or cancellation by the third party thereto
or otherwise), or otherwise make arrangements
reasonably requested by Stockholder designed to
provide to Splitco such benefit; provided, that
Splitco shall be responsible for performing the
obligations of Parent and the appropriate Parent
Entity under any such Contract or Permit or with
respect to such other Business Asset, in each
case, that Splitco would have been responsible for
had they been transferable directly to Splitco,
and only to the extent that the corresponding
benefits thereunder are provided to Splitco. From
the date of this Agreement to the Closing, Parent
shall use its reasonable best efforts to obtain
estoppel certificates, in form and substance
reasonably satisfactory to Stockholder, duly
executed by Stockholder or Splitco and the
landlord for each item of Leased Real Property and
the landlord consents referred to in Section 4.4.2
of the Parent Disclosure Letter.
6.6.3 Subject to the terms and conditions hereof
(including, to the extent applicable, Section
6.7), from time to time, whether before or
following the Closing, each of Stockholder and
Parent shall, and shall cause their respective
Affiliates to, use reasonable best efforts to
take, or cause to be taken, all actions, and to
do, or cause to be done, all things necessary,
proper or advisable, including as required by
applicable Laws, to assure fully to Splitco (and,
following the Closing, Stockholder and its
Subsidiaries) and its and their successors or
permitted assigns, all of the Business Assets and
Liabilities intended to be conveyed to, owned by,
or assumed by Splitco under this Agreement and to
otherwise make effective as promptly as
practicable the transactions contemplated hereby
(including (i) transferring back to Parent any
asset not included in the Business Assets and any
Liability not intended to be transferred to
Splitco under this Agreement, which, in each case,
was transferred to Stockholder indirectly through
the acquisition of the Splitco Shares at the
Closing and (ii) transferring to Splitco any asset
or Liability contemplated by this Agreement to be
a Business Asset or Liability to be transferred to
Splitco, respectively, which asset or liability
was not transferred to Splitco at or prior to the
Closing).
6.6.4 From and after the Closing Date, Parent will
promptly pay to Stockholder when received all
monies received by Parent in connection with any
Business Asset or any claim, right or benefit
arising thereunder relating to the period on or
after the Closing Date and not previously
transferred to Splitco. In addition, from and
after the Closing Date, (i) Parent will reimburse
Splitco for any expenses paid by Splitco or
Stockholder that relate to Liabilities set forth
on Section 3.2.3 of the Parent Disclosure Letter,
upon receipt from Splitco of appropriate evidence
of such payment, and (ii) Stockholder will
reimburse Parent for any expenses paid by Parent
that represent Liabilities to be assumed by
Splitco pursuant to this Agreement, upon receipt
from Parent of appropriate evidence of such
payment. The parties agree to keep proper accounts
of such the expenses referenced in the previous
sentence and agree to settle such amounts on a
date that is to be mutually agreed upon within 60
days after the Closing Date and on each following
successive 30 day period.
Section 6.7 HSR Approval; Certain Covenants.
6.7.1 Each of Stockholder and Parent shall (a) promptly
make or cause to be made all filings required of
each of them or any of their respective
Subsidiaries or Affiliates, and thereafter make
any other required submissions, under the HSR Act
with respect to the transactions contemplated
hereby after the date of this Agreement, (b) use
reasonable best efforts to comply at the earliest
practicable date with any request under the HSR
Act for additional information, documents, or
other materials received by each of them or any of
their respective Subsidiaries from the FTC, the
Antitrust Division or any other Governmental
Authority in respect of such filings or
submissions or such transactions and (c) cooperate
with each other in connection with any such filing
or submission and in connection with resolving any
investigation or other inquiry of any of the FTC,
the Antitrust Division or other Governmental
Authorities under any Antitrust Laws with respect
to any such filing or submission or any such
transaction. Each such party shall use reasonable
best efforts to furnish to each other all
information required for any application or other
filing to be made pursuant to any applicable Law
in connection with the transactions contemplated
by this Agreement. Each such party shall promptly
inform the other parties hereto of any oral
communication with, and provide copies of written
communications with, any Governmental Authority
regarding any such filings or any such
transaction. No party hereto shall independently
participate in any formal meeting with any
Governmental Authority in respect of any such
filings, submissions, investigation, or other
inquiry without giving the other parties hereto
prior notice of the meeting and, to the extent
permitted by such Governmental Authority, the
opportunity to attend and/or participate. Subject
to applicable Law, the parties hereto will consult
and cooperate with one another in connection with
any analyses, appearances, presentations,
memoranda, briefs, arguments, opinions and
proposals made or submitted by or on behalf of any
party hereto relating to proceedings under the HSR
Act.
6.7.2 Each of Stockholder and Parent shall use
reasonable best efforts to resolve such
objections, if any, as may be asserted by any
Governmental Authority with respect to the
transactions contemplated by this Agreement under
the HSR Act, the ▇▇▇▇▇▇▇ Act, as amended, the
▇▇▇▇▇▇▇ Act, as amended, the Federal Trade
Commission Act, as amended, and any other United
States federal or state or foreign statutes,
rules, regulations, orders, decrees,
administrative or judicial doctrines or other Laws
that are designed to prohibit, restrict or
regulate actions having the purpose or effect of
monopolization or restraint of trade
(collectively, the "Antitrust Laws"). Each of
Stockholder and Parent shall use reasonable best
efforts to take such action as may be required to
cause the expiration of the notice periods under
the HSR Act with respect to such transactions as
promptly as possible after the execution of this
Agreement.
Section 6.8 Notification by the Parties. Each party hereto
shall use its reasonable best efforts to as promptly as practicable inform the
other parties hereto in writing if, prior to the consummation of the Closing,
it obtains Knowledge that any of the representations and warranties made by
such party in this Agreement ceases to be accurate and complete in any
material respect (except for any representation and warranty that is qualified
hereunder as to materiality or Material Adverse Effect, as to which such
notification shall be given if the notifying party obtains knowledge that such
representation and warranty ceases to be accurate and complete in any
respect). Each party hereto shall also use its reasonable best efforts to
promptly inform the other parties hereto in writing if, prior to the
consummation of the Closing, it becomes aware of any fact or condition that
constitutes, in its reasonable judgment, a breach of any covenant of such
party as of the date of this Agreement or that could reasonably be expected to
cause any of its covenants to be breached as of the Closing Date. Any such
notification shall not be deemed to have cured any breach of any
representation, warranty, covenant or agreement made in this Agreement for any
purposes of this Agreement.
Section 6.9 Insurance Policies. Parent shall, and shall
cause the Parent Entities and Splitco to, use their commercially reasonable
efforts to maintain all Insurance Policies (or comparable policies providing
substantially similar coverage with respect to Splitco, the Business, the
Business Assets and the Liabilities related to the Business) in full force and
effect at all times up to and including the Closing Date and shall pay all
premiums, deductibles and retro-adjustment ▇▇▇▇▇▇▇▇, if any, with respect
thereto covering all periods, and ensuring coverage of the Business, up to and
including the Closing Date.
Section 6.10 Confidentiality; Access to Records after
Closing.
6.10.1 The parties hereto agree that the provisions of
the Confidentiality Agreement shall remain in full
force and effect (and Splitco agrees to be bound
thereby to the same extent as Parent as if a party
thereto); provided, that as of the Closing Date,
the Confidentiality Agreement shall be deemed to
have terminated without further action by the
parties.
6.10.2 Parent recognizes that, after the Closing, it may
have documents, books, records, work papers and
information, whether in written, magnetic,
electronic or optical form (collectively,
"Records") which relate to the Business with
respect to the period or matters arising prior to
the Closing, including Records pertaining to the
Business Assets, the Liabilities related to the
Business and Splitco's respective employees,
assets and liabilities (the "Business Records") or
other Records relating to the Business. Parent
recognizes that Stockholder or its Affiliates may
need access to such Business Records and other
Records after the Closing. Upon Stockholder's or
Splitco's reasonable request Parent shall provide
Stockholder or Splitco and their respective
employees, representatives and agents access to,
and the right to photocopy (at Stockholder's or
Splitco's expense), during normal business hours
on reasonable advance notice, such reasonably
requested Records. Parent shall use reasonable
best efforts to maintain all such Records for the
same length of time that Parent maintains its own
Records, or, at Parent's discretion (at Parent's
expense) or (at any time) at Stockholder's or
Splitco's reasonable request (at Stockholder's or
Splitco's expense), transfer any such Records to
Stockholder or Splitco.
6.10.3 Notwithstanding any provision herein to the
contrary, from and after the Closing, Records
pertaining to Taxes shall be governed solely by
the Tax Sharing Agreement.
Section 6.11 Employee Matters.
6.11.1.1 Prior to the Closing Date, Parent shall
take all necessary and appropriate
actions to cause Splitco to cease to
sponsor, maintain, or contribute to any
Employee Benefit Plans (including
Multiemployer Plans), either directly or
as a participating employer in any
Employee Benefit Plans (including
Multiemployer Plans) sponsored or
maintained by Parent or any of the
Parent Entities, as provided in Section
4.13.1.
6.11.1.2 Parent shall, at its expense, make
available to all Business Employees and
dependants who incur a qualifying event
at any time prior to the Closing or as a
result of the Closing, all continuation
coverage required to be provided under
Section 4980B of the Code and Part 6 of
Subtitle B of Title I of ERISA
(collectively "COBRA") with respect to
all Employee Benefit Plans in which any
Business Employee participates
immediately prior to Closing Date.
6.11.1.3 Stockholder shall amend its employee
welfare benefit plans (as that term is
defined in Section 3(1) of ERISA) which
provide medical, dental, vision, life
and disability benefits as necessary to
make such plans available to eligible
Business Employees as of Closing and
shall use its best efforts prior to
Closing to enroll eligible Business
Employees in such plans as of Closing.
Parent shall use its best efforts to
provide assistance to Stockholder in
such enrollment efforts.
6.11.1.4 Parent shall use its best efforts to
assist and support Stockholder in the
creation of a new medical plan for those
Business Employees covered as of the
Closing Date by Parent's self-insured
medical plan administered by Blue Cross
Blue Shield of Alabama, on substantially
the same terms and conditions, and on
substantially similar contractual terms
and conditions with Blue Cross Blue
Shield of Alabama, as Parent's medical
plan, the same to be effective as of the
Closing.
6.11.1.5 Parent shall take all actions necessary
to effectuate a "spin-off," effective as
of Closing, of that portion of the
Computer Sciences Corporation Section
125 Plan (the "Parent Plan") consisting
of the elections and account balances of
Business Employees to a plan sponsored
by Stockholder or any of its affiliates
which is substantially similar to the
Parent Plan.
6.11.1.6 Within 20 business days following the
Closing Date, Parent will make all
required matching or other employer
contributions under any Employee Benefit
Plan which is a defined contribution
pension plan to the account of each
Business Employee participating in such
plan with respect to all compensation
earned by such Business Employee on or
prior to the Closing Date. Parent will
also accrue any benefit under any
Employee Benefit Plan which is a defined
benefit pension plan for the benefit of
each Business Employee participating in
such plan with respect to all
compensation earned by and service
credited to such Business Employee on or
prior to the Closing Date.
6.11.2 Within 20 business days following the Closing
Date, Parent shall pay to each Business Employee
(a) a cash bonus equal to 100% of such Business
Employee's bonus target for the fiscal year ended
April 1, 2005 and (b) all salary, wages, overtime
and commissions earned by such Business Employee
through the Closing Date.
6.11.3 Parent has provided Stockholder with respect to
each Employee Benefit Plan, summaries of the most
recent plan document and any amendment thereto.
Section 6.12 Release of Restrictions; Intercompany Accounts.
Parent shall use its reasonable commercial efforts to obtain at or before the
Closing the written release and waiver from all appropriate Persons of any
Restrictions. Prior to the Closing, all intercompany receivables or payables
and loans then existing between Parent and its Affiliates (other than
Splitco), on the one hand, and Splitco, on the other hand, other than
intercompany payables of Splitco as of the Closing reflecting an allocation of
third party payables of Parent or such Affiliates incurred on behalf of
Splitco or the Business in an aggregate amount not in excess of $500,000
("Intercompany Pass-Through Payables"), shall be settled by way of capital
contribution, dividend or otherwise and all intercompany arrangements shall be
terminated, except for those arrangements contemplated by the Ancillary
Agreements or as expressly set forth in Section 3.1 of the Parent Disclosure
Letter. Splitco shall pay to Parent all Intercompany Pass-Through Payables
identified by Parent and made known to Splitco during the 90-day period
commencing on the Closing Date. All other Intercompany Pass-Through Payables
shall be the responsibility of Parent.
Section 6.13 Employee Options to Purchase Parent Stock Held
By Business Employees. Within 30 business days following the Closing, Parent
shall pay to each Business Employee who holds an employee option to purchase
shares of Parent Common Stock, with respect to each such option, an amount in
cash equal to the product of (a) the number of shares of Parent Common Stock
which would have become vested during the period commencing on the Closing
Date and continuing until September 1, 2005 if the holder had remained a
regular, full-time employee of Parent or any of its subsidiaries during such
period, multiplied by (b) the excess of the Parent Share Value over and above
the option exercise price per share.
Section 6.14 Cooperation with Respect to Financial
Reporting. Until the third anniversary of the Closing Date, Parent and
Stockholder shall, and shall cause each of its Affiliates to, reasonably
cooperate with the other (at the other's expense) in connection with the
other's preparation of historical financial statements of, or including, the
Business as required for the other's filings under the Exchange Act following
the Closing. Until the third anniversary of the Closing Date, Stockholder
shall, and shall cause Splitco to, reasonably cooperate with Parent (at
Parent's expense) in connection with Parent's preparation of pro forma and
historical financial statements of the Business as may be required for
Parent's filings under the Exchange Act following the Closing.
Section 6.15 Non-Solicitation of Employees. For a period of
two years from and after the Closing Date, Parent and Stockholder shall not,
and shall cause each of their respective Subsidiaries not to, directly or
indirectly, hire or attempt to hire of any employee of the other or of its
Subsidiaries following the Closing, without the other's prior written consent;
provided, however, that the foregoing provisions shall not apply to (i) a
general advertisement or solicitation program that is not specifically
targeted at such persons or (ii) the solicitation of any employee after such
time that such employee's employment has been terminated.
Section 6.16 Non-Competition.
6.16.1 Parent agrees, subject to the following proviso,
that from the Closing until the fifth anniversary
of the Closing, without the prior written consent
of Stockholder, Parent shall not, and shall not
cause any third party to, and shall cause each of
its Subsidiaries not to, directly or indirectly,
operate, perform, control, engage in or manage, or
directly or indirectly own more than 1% of, any
Person or business which (a) owns or develops, and
licenses or sells to Commercial Customers in the
United States, any packaged software product that
directly competes with PowerMHS, PowerSTEPP, MD
Practice Manager, MHC or CCIS (collectively, the
"Products"), or (b) operates, or offers to
operate, as an applications services provider to
Commercial Customers in the United States, or
provides, or offers to provide, business process
outsourcing services to Commercial Customers in
the United States, by utilizing any packaged third
party software product that directly competes with
the Products (a "Competing Third Party Product");
provided, however, that this provision shall not
operate to prohibit Parent from, or from causing
any third party to, or from causing any of its
Subsidiaries to, directly or indirectly,
operating, performing, controlling, engaging in or
managing, or directly or indirectly owning more
than 1% of, any Person or business which (x) sells
and/or provides, or offers to provide, consulting
services with respect to, but does not own or
develop, a packaged software product that directly
competes with one or more of the Products, and/or
(y) operates, or offers to operate, as an
applications services provider for a customer
(other than any Major Customer) utilizing a
Competing Third Party Product, and/or provides, or
offers to provide, business process outsourcing
services for a customer (other than any Major
Customer), utilizing a Competing Third Party
Product, subject to the limitation that, during
the period from the Closing to the second
anniversary thereof, the revenues generated by
such applications services and business process
outsourcing services collectively constitute 25%
or less of the total outsourcing services revenue
from each such customer on an annual basis.
6.16.2 Parent, on behalf of itself and its controlled
Affiliates, hereby agrees that it shall not make,
participate in the making of, or encourage any
other person to make, any statement, whether
written or oral, that criticizes, disparages or
defames Splitco or the Business. Notwithstanding
the foregoing, nothing in this Agreement shall
prohibit any person from making truthful
statements when required by Law or by order of any
court or other governmental agency, legislative
body or other body having jurisdiction to legally
compel such statements, or as otherwise may be
required by Law or legal process.
6.16.3 Parent hereby agrees that Stockholder, the
Business and Splitco may suffer irreparable harm
from a breach of any of the covenants and/or
agreements contained in this Section 6.16. In the
event of an alleged or threatened breach by Parent
or any of its controlled Affiliates of any of the
provisions of this Section 6.16, Stockholder or
its successors and assigns may, in addition to all
other rights and remedies existing in their favor,
apply to any court of competent jurisdiction for
specific performance and/or injunctive or other
relief in order to enforce or prevent any
violations of the provisions hereof (including the
extension of the duration of the applicable
covenant by a period equal to the length of the
violation of this Section 6.16).
6.16.4 If any provision of this Section 6.16 is found not
to be enforceable in accordance with its terms
because of the duration of such provision the
scope of activities covered thereby, the parties
agree that the judge or other entity making such
determination will have the power to reduce the
duration or scope of such provision, and in its
reduced form such provision shall enforceable.
Section 6.17 Use of Names. Within 30 days after the Closing
Date, (a) Stockholder shall cause Splitco to change its corporate name to a
name that does not include "CSC" or the name of Parent or of any of its
Subsidiaries and (b) Stockholder shall have no right to use the name of Parent
or of any of its Subsidiaries, except that, for a period ending 120 days after
the Closing Date, Stockholder shall have the right to use any catalogues,
sales and promotional materials and printed forms that use such name and are
included in the Intellectual Property as of the Closing, Date or that have
been ordered prior to the Closing Date for use in the Business; provided,
however, that (a) promptly after the Closing Date, Stockholder shall make all
filings with the appropriate Governmental Authorities to effectuate such name
change, (b) Stockholder shall use its reasonable commercial efforts to
minimize the usage of the names referred to in Section (a) hereof, and to
discontinue it as soon as practicable after the Closing and (c)
notwithstanding anything to the contrary in this Section 6.17, to the extent
any approvals of Governmental Authorities are necessary to effectuate the said
name change, the time limits specified in this Section 6.17 shall be extended
by the time period necessary to obtain such approvals, so long as Stockholder
begins the process of seeking such approval within 30 days after the Closing.
Section 6.18 Waiver. In consideration of the transactions
contemplated hereby, as of the Closing, Parent, on behalf of itself and each
of its Subsidiaries and Affiliates (other than Splitco) and their respective
heirs, executors, successors and assigns (the "Waiving Parties"), releases,
waives and forever discharges, in all capacities, including as stockholders of
Splitco, from and after the Closing, any and all Claims, known or unknown,
that the Waiving Parties ever had, now have or may have against Splitco in
connection with or arising out of any act or omission of Splitco at or prior
to the Closing; provided, however, that nothing in this Section 6.18 shall be
deemed a waiver by the Waiving Parties of any rights under this Agreement or
any of the other agreements contemplated in connection herewith.
Section 6.19 No Solicitation. From the date hereof until the
Closing or the earlier termination of this Agreement, Parent shall not, nor
shall it authorize or permit any of the Parent Entities or Splitco or any of
their respective officers, directors, employees, representatives, consultants,
advisors, agents and Affiliates to, solicit the submission of any offers or
proposals for the Business, Splitco, any material portion of the Business
Assets or the Liabilities related to the Business from any third party or
otherwise directly or knowingly indirectly pursue any offer or proposal so
received. From the date hereof until the Closing or the earlier termination of
this Agreement, Stockholder shall not, nor shall it authorize or permit any of
its Subsidiaries to, solicit the submission of offers or proposals for the
sale of the Stockholder Parent Shares, from any third party or otherwise
directly or knowingly indirectly pursue any offer or proposal so received.
Section 6.20 Certain Tax Matters.
6.20.1 Notwithstanding anything to the contrary in this
Agreement, except as expressly provided in the Tax
Sharing Agreement and as set forth in Sections
7.1.2 and 7.1.3, (a) the parties' sole and
exclusive representations, warranties, agreements
or other obligations (including indemnities) with
respect to Tax matters (interpreted in its
broadest sense), including the Tax consequences of
the transactions contemplated in this Agreement
and any other matters referred to in the Tax
Sharing Agreement, shall be as set forth therein,
and (b) no representation, warranty, agreement or
other obligation (including indemnity) in this
Agreement with respect to such matters shall be of
any force or effect.
ARTICLE VII.
CONDITIONS TO CLOSING
Section 7.1 Mutual Conditions. The respective obligations of
each party hereto to consummate the transactions contemplated by this
Agreement shall be subject to the fulfillment or, if legally permitted, waiver
at or prior to the Closing of the following conditions:
7.1.1 No Governmental Authority of competent
jurisdiction shall have enacted, issued,
promulgated, enforced or entered any statute,
rule, regulation, judgment, decree, injunction or
other order of any nature that prohibits, enjoins
or restrains the consummation of the transactions
contemplated by this Agreement.
7.1.2 From the date of this Agreement through the
Closing, there shall have been no change or
proposed change in the Code, final, temporary or
proposed Treasury regulations, published
pronouncements of the IRS (including, without
limitation, any Revenue Ruling, Notice or
Announcement), case law or other relevant binding
authority (collectively a "Change in Tax Law") (i)
that (x) would reasonably be expected to cause the
Exchange not to qualify under Section 355(a) of
the Code or (y) would reasonably be expected to
cause Tax consequences to either party that are
materially worse than the expected Tax
consequences of the Exchange as of the date of
this Agreement and (ii) the effects of such Change
in Tax Law cannot be avoided by accelerating the
Closing Date or restructuring the transactions, in
a manner reasonably satisfactory to both parties.
7.1.3 (a) Parent shall have received an opinion of King
& Spalding LLP, dated as of the Closing Date, with
respect to the qualification of the Exchange under
Section 355 of the Code, in form and substance
satisfactory to Parent, and (b) Stockholder shall
have received an opinion of each of Skadden, Arps,
Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP and
PricewaterhouseCoopers LLP, dated as of the
Closing Date, with respect to the qualification of
the Exchange under Section 355 of the Code, in
form and substance satisfactory to Stockholder,
and (c) the Business Purpose Memorandum and the
Tax Opinion Representation Letters (both as
defined in the Tax Sharing Agreement) shall have
been executed and delivered, dated as of the
Closing Date, substantially in the forms attached
as Exhibits to the Tax Sharing Agreement.
7.1.4 The consents and approvals of Governmental
Authorities required under the HSR Act shall have
been obtained (or any applicable waiting period
thereunder shall have expired or been terminated).
7.1.5 Each of the Ancillary Agreements shall be executed
and entered into by each of the parties thereto
and shall be valid, binding and in full force and
effect.
Section 7.2 Conditions to Stockholder's Obligations. The
obligations of Stockholder to consummate the transactions contemplated by this
Agreement shall be subject to the fulfillment or waiver by Stockholder prior
to or at the Closing of each of the following conditions:
7.2.1 The representations of Parent and its Affiliates
contained in Section 4.2.1, Section 4.6, Section
4.10.1 and Section 4.18.2 shall be true and
correct in all respects, in each case as of the
Closing (or, to the extent such representations
and warranties speak as of an earlier date, they
shall be true and correct in all respects as of
such earlier date). Except as provided in the
previous sentence, (i) the representations and
warranties of Parent and its Affiliates set forth
in Article IV of this Agreement or in any
agreement or certificate delivered pursuant to the
provisions hereof or in connection with the
transactions contemplated hereby shall that are
qualified by reference to "materiality" or
"Material Adverse Effect" shall be true and
correct in all respects when made and as of the
Closing as if made at such time (or, to the extent
such representations and warranties speak as of a
specified date, they need only be true and correct
in all respects as of such specified date) and
(ii) the representations and warranties of Parent
and its Affiliates set forth in Article IV of this
Agreement or in any agreement or certificate
delivered pursuant to the provisions hereof or in
connection with the transactions contemplated
hereby that are not qualified by reference to
"materiality" or " Material Adverse Effect" shall
be true and correct in all material respects when
made and as of the Closing as if made at such time
(or, to the extent such representations and
warranties speak as of a specified date, they need
only be true and correct in all material respects
as of such specified date).
7.2.2 Each of Parent and Splitco shall have performed in
all material respects each obligation and
agreement to be performed by it, and shall have
complied in all material respects with each
covenant required by this Agreement to be
performed or complied with by it at or prior to
the Closing, and Stockholder shall have received a
certificate, dated the Closing Date, signed on
behalf of Parent by an appropriate officer of
Parent to such effect.
7.2.3 Since the date hereof, there shall not have been
any Material Adverse Effect with respect to the
Business or Splitco.
7.2.4 Prior to or at the Closing, Parent shall have
delivered to Stockholder the items to be delivered
pursuant to Section 2.3.
7.2.5 Prior to or at the Closing, the Reorganization
shall have been completed.
7.2.6 Prior to or at the Closing, Parent shall have delivered to
Stockholder a schedule setting forth the name of each
Business Employee, along with the Employee's job title and
reporting position, current salary and bonus opportunity,
and years of service, and designating the Employee's status
as exempt or non-exempt under the Fair Labor Standards Act,
whether the Employee's years of service are continuous or
broken, and whether the Employee is full-time or part-time,
which schedule shall be in form reasonably satisfactory to
Stockholder.
Section 7.3 Conditions to Parent's and Splitco's
Obligations. The obligations of Parent and Splitco to consummate the
transactions contemplated by this Agreement shall be subject to the
fulfillment or waiver at or prior to the Closing of each of the following
conditions:
7.3.1 The representations of Stockholder contained in
Section 5.4 and Section 5.6 shall be true and
correct in all respects, in each case as of the
Closing (or, to the extent such representations
and warranties speak as of an earlier date, they
shall be true and correct in all respects as of
such earlier date). Except as provided in the
previous sentence, (i) the representations and
warranties of Stockholder set forth in Article V
of this Agreement or in any agreement or
certificate delivered pursuant to the provisions
hereof or in connection with the transactions
contemplated hereby shall that are qualified by
reference to "materiality" or "Material Adverse
Effect" shall be true and correct in all respects
when made and as of the Closing as if made at such
time (or, to the extent such representations and
warranties speak as of a specified date, they need
only be true and correct in all respects as of
such specified date) and (ii) the representations
and warranties of Stockholder set forth in Article
V of this Agreement or in any agreement or
certificate delivered pursuant to the provisions
hereof or in connection with the transactions
contemplated hereby that are not qualified by
reference to "materiality" or " Material Adverse
Effect" shall be true and correct in all material
respects when made and as of the Closing as if
made at such time (or, to the extent such
representations and warranties speak as of a
specified date, they need only be true and correct
in all material respects as of such specified
date).
7.3.2 Stockholder shall have performed in all material
respects each obligation and agreement to be
performed by it, and shall have complied in all
material respects with each covenant required by
this Agreement to be performed or complied with by
it at or prior to the Closing, and Parent shall
have received a certificate, dated the Closing
Date, signed on behalf of Stockholder by an
appropriate officer of Stockholder to such effect.
7.3.3 Prior to or at the Closing, Stockholder shall have
delivered to Parent the items to be delivered
pursuant to Section 2.4.
7.3.4 Prior to the Closing, Parent shall have obtained
all the consents, waivers and approvals listed on
Section 4.4.2 of the Parent Disclosure Letter.
Section 7.4 Frustration of Closing Conditions. None of
Parent, Splitco or Stockholder may rely on the failure of any condition set
forth in this Article VII to be satisfied if such failure was caused by such
party's failure to act in good faith or to use its reasonable commercial
efforts to cause the Closing to occur as required by Section 6.6.1.
ARTICLE VIII.
TERMINATION
Section 8.1 Termination. This Agreement may be terminated at
any time prior to the consummation of the Closing under the following
circumstances:
8.1.1 by mutual written consent of Parent and
Stockholder;
8.1.2 by either Stockholder or Parent upon written
notice to the other if the Closing shall not have
been consummated on or before April 30, 2005;
provided, that the right to terminate this
Agreement under this Section 8.1.2 shall not be
available to a party if such party's or such
party's Affiliate's failure to fulfill any
obligation under this Agreement (including such
party's obligations under Section 6.7) has been
the cause of, or resulted in, the failure of the
Closing to be consummated on or before the April
30, 2005;
8.1.3 by Stockholder upon written notice to Parent, if
there has been a breach by Parent or Splitco of
any representation, warranty, covenant or
agreement contained in this Agreement which would
result in a failure of a condition set forth in
Section 7.2 and either cannot be cured prior to
April 30, 2005, or is not cured within 15 days
after Stockholder shall have given Parent written
notice stating Stockholder's intention to
terminate this Agreement pursuant to this Section
8.1.3 and the basis for such termination;
provided, at the time of the delivery of such
notice, Stockholder shall not be in material
breach of its obligations under this Agreement;
8.1.4 by Parent upon written notice to Stockholder, if
there has been a breach by Stockholder of any
representation, warranty, covenant or agreement
contained in this Agreement which would result in
a failure of a condition set forth in Section 7.3
and either cannot be cured prior to April 30,
2005, or is not cured within 15 days after Parent
shall have given Stockholder written notice
stating Parent's intention to terminate this
Agreement pursuant to this Section 8.1.4 and the
basis for such termination; provided, at the time
of the delivery of such notice, Parent shall not
be in material breach of its obligations under
this Agreement; or
8.1.5 by either Stockholder or Parent upon written
notice to the other, if there shall be in effect a
final, non-appealable order of a court or
government administrative agency of competent
jurisdiction permanently prohibiting the
consummation of the transactions contemplated
hereby
Section 8.2 Effect of Termination. In the event of the
termination of this Agreement pursuant to Section 8.1, this Agreement, except
for the provisions of (i) Section 6.10.1 relating to the obligation of the
parties to keep confidential certain information obtained by it, (ii) Article
X, and (iii) this Section 8.2, shall become void and have no effect, without
any liability on the part of any party hereto or its directors, officers or
stockholders. Notwithstanding the foregoing, (a) nothing in this Section 8.2
shall relieve any party hereto of liability for a willful breach of any of its
obligations under this Agreement, and (b) if it shall be finally judicially
determined that termination of this Agreement was caused by an intentional and
deliberate breach of this Agreement, then, in addition to other remedies at
Law or equity for breach of this Agreement, the party so found to have
intentionally and deliberately breached this Agreement shall indemnify and
hold harmless the other parties hereto for their respective out-of-pocket
costs, including the reasonable fees and expenses of their counsel,
accountants, financial advisors and other experts and advisors, as well as
reasonable fees and expenses incident to the negotiation, preparation and
execution of this Agreement and related documentation.
ARTICLE IX.
SURVIVAL OF REPRESENTATIONS AND
WARRANTIES; INDEMNIFICATION
Section 9.1 Survival of Representations and Warranties.
Except for (i) the representations and warranties contained in Sections 4.2.1,
4.10.1 and 5.4 hereof (collectively, the "Ownership Representations"), Section
4.3 and Section 5.2 hereof, each of which shall survive the Closing Date
indefinitely, (ii) the representations and warranties set forth in Section
4.11 hereof, which shall survive the Closing Date for the applicable statute
of limitations and (iii) the representations and warranties set forth in
Sections 4.9.1, 4.9.2 and 4.9.5 hereof (in each case, to the extent such
representations and warranties relate to each of PowerMHS, PowerSTEPP, MD
Practice Manager, MHC or CCIS), which shall survive the Closing Date until the
date that is eighteen (18) months following the Closing Date, the
representations of Parent and Stockholder made herein shall survive until, but
not beyond, the date that is one (1) year following the Closing Date. In
addition, any representations and warranties in the Tax Sharing Agreement
shall be exclusively governed by the survival provision in Section 11.k of the
Tax Sharing Agreement. The covenants, indemnities and agreements set forth in
this Agreement shall survive the Closing Date indefinitely.
Section 9.2 Indemnification.
9.2.1 Subsequent to the Closing, subject to the
limitations described below in Section 9.5, Parent
shall indemnify Stockholder and its affiliates,
and each of their respective officers, directors,
employees, shareholders, partners and agents
(collectively, the "Purchaser Indemnified
Persons") against, and hold each of the Purchaser
Indemnified Persons harmless from, any and all
claims, actions, causes of action, arbitrations,
proceedings, losses, damages, liabilities and
expenses (including, without limitation,
settlement costs, reasonable attorneys' fees and
any other expenses of investigating or defending
any actions or threatened actions) (collectively,
the "Losses") incurred by Stockholder or any other
Purchaser Indemnified Person arising out of or
resulting from:
(a) any breach of any representation or warranty
of Parent contained in this Agreement;
(b) the breach by Parent of any of its covenants
or agreements contained in this Agreement;
(c) any Liability arising under, with respect to
or in connection with any Employee Benefit
Plan (including a Multiemployer Plan)
sponsored or maintained by Parent or any of
the Parent Entities;
(d) the failure of Parent to obtain any consent
or waiver referred to in Section 4.4.2 of the
Parent Disclosure Letter;
(e) any Liability in connection with any of the
Actions or matters described in Section
9.2.1.6 of the Parent Disclosure Letter;
(f) any Liability in connection with any of the
Consulting Contracts to be transferred from
Splitco to Parent in connection with the
Reorganization as set forth in Section 3.1 of
the Parent Disclosure Letter;
(g) any Losses incurred by Splitco in connection
with obtaining the right to use any Third
Party Software, except for the Shared
Material Third Party Software set forth in
Section 6.4 of the Parent Disclosure Letter
(other than the costs and expenses of
partitioning and transferring to Splitco all
Software licensed from Microsoft); or
(h) any Losses incurred by Stockholder or Splitco
in connection with the failure of Parent to
transfer the Cash Amount to an account of
Splitco at the Closing in connection with the
Reorganization.
9.2.2 Subsequent to the Closing, subject to the
limitations described below in Section 9.5,
Stockholder shall indemnify Parent and its
affiliates, officers, directors, employees,
shareholders, partners and agents (collectively,
the "Seller Indemnified Persons") against, and
hold each of the Seller Indemnified Persons
harmless from, any Losses incurred by such Seller
Indemnified Person arising out of or resulting
from:
(a) any breach of any representation or warranty
of Stockholder contained in this Agreement;
(b) The breach by Stockholder of any of its
covenants contained in this Agreement; or
(c) Stockholder's operation of the Business after
Closing, but not to the extent resulting from
Parent's or any of its Affiliates' (including
Splitco's) actions or operations prior to
Closing.
Section 9.3 Notice of Claims. Except in connection with
third person claims, which are covered by Section 9.4, any Purchaser
Indemnified Person or Seller Indemnified Person (the "Indemnified Person")
seeking indemnification hereunder shall, within the relevant limitation period
provided for in Section 9.5 below, give to the party obligated to provide
indemnification to such Indemnified Person (the "Indemnitor") a notice (a
"Claim Notice") within 30 days after it acquires knowledge of the fact, event
or circumstances giving rise to the claim for the Loss, describing in
reasonable detail the facts giving rise to any claims for indemnification
hereunder and shall include in such Claim Notice (if then known) the amount or
the method of computation of the amount of such claim, and a reference to the
provision of this Agreement upon which such claim is based; provided, that
failure to give such notice within such 30-day period shall not relieve any
Indemnitor of its obligations hereunder except to the extent it shall have
been prejudiced by such failure. The Indemnitor shall have a period of 30 days
after its receipt of such notice and such evidence to either (i) agree to the
payment of the Loss to the Indemnified Person or (ii) contest the payment of
the Loss. If the Indemnitor does not agree to or contest the payment of the
Loss within such 30 day period, the Indemnitor shall be deemed not to have
accepted the Loss and the parties shall negotiate in good faith to seek a
resolution of such dispute and, if not resolved through negotiations, such
dispute will be resolved in accordance with Section 10.4 of this Agreement. If
the Indemnitor agrees to the payment of the Loss within such 30 day period, it
shall, within 10 business days after such agreement, pay to the Indemnified
Person the amount of the Loss that is payable pursuant to, and subject to the
limitations set forth in, this Article IX.
Section 9.4 Third Party Claims.
9.4.1 If any Proceeding at Law or in equity is
instituted by a third party against an Indemnified
Person (each, a "Third Party Claim") with respect
to which an Indemnified Person intends to claim
indemnification for any Losses under this Article
IX, such Indemnified Person shall give written
notice to the Indemnitor within 30 days after it
has knowledge of a written assertion of liability
from the third party and shall not make any
admissions or acceptances; provided, however, that
the Indemnified Person shall not be foreclosed
from seeking indemnification pursuant to this
Article IX as a result of any failure to provide
timely notice of the existence of such Third Party
Claim to the Indemnitor except and only to the
extent that the Indemnitor has been materially
damaged or prejudiced as a result of such delay.
9.4.2 Except as otherwise provided herein, the
Indemnitor shall have the right to conduct and
control, at its own expense, through counsel of
its choosing (which counsel shall be reasonably
satisfactory to the Indemnified Person), the
defense of a Third Party Claim so long as the
Indemnitor notifies the Indemnified Person that it
has agreed to indemnify the Indemnified Person
(subject to the limitations on indemnification set
forth herein) for any and all Losses arising out
of or resulting from the Third Party Claim that it
is assuming the right to conduct and control the
defense of within 15 business days of its receipt
of the initial notice of the Third Party Claim,
and shall do so vigorously and in good faith;
provided, however, that the Indemnified Person may
participate at its own expense, with counsel of
its choosing, in the defense of such third party
action or suit although such action or suit shall
be controlled by the Indemnitor. Notwithstanding
the foregoing, in connection with any Third Party
Claim (other than the Third Party Claims for which
Parent is indemnifying Stockholder and its
affiliates, and each of their respective officers,
directors, employees, shareholders, partners and
agents pursuant to Section 9.2.1(e) hereof) as to
which the Indemnified Person shall reasonably
conclude that (i) there is a material conflict of
interest between the Indemnitor and the
Indemnified Person in the conduct of the defense
of such Third Party Claim, (ii) there are specific
defenses available to the Indemnified Person which
are different from or additional to those
available to the Indemnitor and which could be
materially adverse to the Indemnitor, (iii) the
Third Party Claim is for an amount greater than
the Cap or less than the Deductible or (iv) the
Third Party Claims seeks an order, injunction or
other equitable relief or relief for other than
money damages against the Indemnified Person, then
the Indemnified Person shall have the right, at
the expense of the Indemnitor, to conduct and
control, through counsel of its choosing, the
defense of such Third Party Claim and shall do so
in good faith; provided, however, that in each of
the forgoing cases the Indemnitor shall have the
same right to participate in the defense, subject
to the control of the Indemnified Person, at its
own expense.
9.4.3 Neither the Indemnified Person nor the Indemnitor
shall settle any Third Party Claim without the
consent of the other party, which consent shall
not be unreasonably withheld. Any compromise or
settlement of the Third Party Claim under this
Section 9.4 shall include as an unconditional term
thereof the giving by the claimant in question to
the Indemnitor and the Indemnified Person of a
release of all liabilities in respect of such
claims.
Section 9.5 Limitation on Indemnity.
9.5.1 Time Limitations. Claims for indemnification made
under Section 9.2.1(a) or Section 9.2.2(a) of this
Agreement may be made only during the survival
period set forth in Section 9.1.
9.5.2 Deductible. Parent shall not be liable to
indemnify any Purchaser Indemnified Person
pursuant to Section 9.2.1(a), Section 9.2.1(b)
(except with respect to breaches of the covenants
and agreements contained in Sections 6.5, 6.7,
6.11, 6.12, 6.13, 6.15, 6.16, 6.19 and 10.2) of
this Agreement, and Stockholder shall not be
liable to indemnify any Seller Indemnified Person
pursuant to Section 9.2.2(a), (b) (except with
respect to breaches of the covenants and
agreements contained in Sections, Sections 6.5,
6.7 and 10.2) or (c) of this Agreement, unless and
until the Purchaser Indemnified Persons or the
Seller Indemnified Persons, as applicable, have
suffered aggregate Losses otherwise indemnifiable
pursuant to this Article IX in excess of a
$1,000,000 aggregate deductible (the "Deductible")
(at which point, subject to the other limitations
herein, Parent will be liable to the Purchaser
Indemnified Persons for all Losses in excess of
such Deductible, and Stockholder will be liable to
the Seller Indemnified Persons for all Losses in
excess of such Deductible, as the case may be);
provided, however, anything herein to the contrary
notwithstanding, where the aggregate amount of
Losses arising out of a single claim or series of
related claims for which any Purchaser Indemnified
Person or any Seller Indemnified Person, as the
case may be, could otherwise seek indemnification
under this Article IX does not exceed $25,000 (the
"Minimum Claim Threshold"), such claim or series
of related claims shall not count towards the
Deductible as Losses for purposes of, or otherwise
be subject to indemnification under, this
Agreement; and provided further, however, that the
Deductible shall not apply to breaches of the
Ownership Representations or Section 4.11 hereof.
In addition, for the avoidance of doubt, the
Deductible shall not apply to any claims for
indemnification arising under the Tax Sharing
Agreement.
9.5.3 Cap. Neither (i) the aggregate amount of all
payments to be made by Parent in satisfaction of
claims for indemnification pursuant to Section
9.2.1(a), and Section 9.2.1(b) (except with
respect to breaches of the covenants and
agreements contained in Section 6.16) nor (ii) the
aggregate amount of all payments to be made by
Stockholder in satisfaction of claims for
indemnification pursuant to Section 9.2.1(a), (b)
and (c), shall exceed $20,000,000 (the "Cap");
provided, however, that the Cap shall not apply to
breaches of the Ownership Representations or
Section 4.11 hereof. In addition, for the
avoidance of doubt, the Cap shall not apply to any
claims for indemnification arising under the Tax
Sharing Agreement.
9.5.4 Reimbursable Claims. The Indemnified Persons shall
use reasonable best efforts, consistent with and
no less diligent than such party's past practice,
to obtain under any applicable Contract any
indemnification proceeds or other right of
reimbursement or recovery in respect of any claim
for which the Indemnified Person seeks
indemnification under this Article IX. The amount
of any indemnified Losses hereunder shall be
determined net of the amount, if any, of the
recovery actually received by the Indemnified
Person with respect to such indemnified Losses
under any such Contract or arrangement. In the
event that a recovery is received pursuant to any
such Contract or arrangement by an Indemnified
Person with respect to any Loss for which any
Indemnified Person has previously been indemnified
by the Indemnitor pursuant hereto, then such
Indemnified Person shall promptly make a refund to
the Indemnitor of an amount equal to the lesser of
(i) the total amount of such recovery, and (ii)
the amount previously paid by the Indemnitor to
the Indemnified Person as indemnification for such
Loss.
9.5.5 Insured Claims. The amount of any indemnified
Losses hereunder shall be determined, in the case
of the Seller Indemnified Persons, net of the
amount, if any, of the recovery actually received
by the Seller Indemnified Persons with respect to
such indemnified Losses under any insurance or
similar policy, and in the case of the Purchaser
Indemnified Persons, net of the amount, if any, of
the recovery actually received by the Purchaser
Indemnified Persons with respect to such
indemnified Losses under any insurance or similar
policy maintained by Parent, Splitco or any Parent
entity prior to the Closing and in place at the
Closing, in each case less (i) any reasonable
out-of-pocket collection costs; (ii) any amount
which is reimbursed by the Indemnified Person or
an affiliate thereof, directly or indirectly, that
is charged back to the Indemnified Person or an
affiliate thereof or that is not otherwise
received for the permanent benefit of the
Indemnified Person; and (iii) any other reasonable
out-of-pocket cost which may reasonably be borne
by the Indemnified Person or an affiliate thereof
as a result of such insurance claim or recovery,
whether as a result of any self-insurance
arrangement, retention amount, deductible amount
or otherwise; provided however that Losses of the
Purchaser Indemnified Parties shall not be reduced
or offset by any amount received by Stockholder or
Splitco under any insurance or similar policy
under which Stockholder or Splitco has obtained
coverage relating to the Business following the
Closing. Subject to the preceding sentence, the
Indemnitor shall be subrogated to the rights of
the Indemnified Person to recover amounts under
insurance policies or other rights of the
Indemnified Person with respect to such
indemnified amount and, in the event that an
insurance recovery is received by an Indemnified
Person with respect to any Loss for which any
Indemnified Person has previously been indemnified
by the Indemnitor pursuant hereto, then such
Indemnified shall promptly make a refund to the
Indemnitor an amount equal to the lesser of (i)
the total amount of such insurance recovery (net
of any reasonable out-of-pocket collection costs),
and (ii) the amount previously paid by the
Indemnitor to the Indemnified Person as
indemnification for such Loss.
Section 9.6 Exclusive Remedies. Except as otherwise
expressly provided in this Agreement, following the Closing, the remedies in
this Article IX shall be the exclusive remedies of the parties with respect to
any and all matters covered by this Agreement; provided, however, that no
party hereto shall be deemed to have waived any rights, claims, causes of
action or remedies if and to the extent such rights, claims, causes of action
or remedies may not be waived under Law or intentional fraud or willful
misconduct is proven on the part of a party by another party hereto. No party
hereto shall have any liability under any provision of this Agreement or
otherwise for any punitive, incidental, consequential, special or indirect
damages, or loss of business reputation or opportunity relating to the breach
or alleged breach of this Agreement or any Schedule, certificate or other
document delivered pursuant hereto or thereto or in connection with the
transactions contemplated hereby.
ARTICLE X.
MISCELLANEOUS
Section 10.1 Notices. All notices or other communications
required or permitted hereunder shall be in writing and shall be delivered
personally, by facsimile (with confirming copy sent by one of the other
delivery methods specified herein), by overnight courier or sent by certified,
registered or express air mail, postage prepaid, and shall be deemed given
when so delivered personally, or when so received by facsimile or courier, or,
if mailed, three calendar days after the date of mailing, as follows:
If to Parent: Computer Sciences Corporation
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Attention: General Counsel
with a copy to: Computer Sciences Corporation
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Attention: Vice President,
Corporate Development
If to Stockholder: West Side Investments, Inc.
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Attention: General Counsel
with a copy to: DST Systems, Inc.
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Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ Esq.
and with a copy to: Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
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Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
or to such other address and with such other copies as any party hereto shall
notify the other parties hereto (as provided above) from time to time.
Section 10.2 Expenses. Regardless of whether the
transactions provided for in this Agreement are consummated, except as
otherwise expressly provided herein, each of the parties hereto shall pay its
own expenses incident to this Agreement and the transactions contemplated
herein (including legal fees, accounting fees, investment banking fees and
filing fees).
Section 10.3 Governing Law; Consent to Jurisdiction. This
Agreement shall be governed by, and construed in accordance with, the internal
Laws of the State of Delaware, without reference to the choice of law
principles thereof. Each of the parties hereto irrevocably submits to the
exclusive jurisdiction of the courts of the State of Delaware and the United
States District Court for any district within such state for the purpose of
any Action or judgment relating to or arising out of this Agreement or any of
the transactions contemplated hereby and to the laying of venue in such court.
Service of process in connection with any such Action may be served on each
party hereto by the same methods as are specified for the giving of notices
under this Agreement. Each party hereto irrevocably and unconditionally waives
and agrees not to plead or claim any objection to the laying of venue of any
such Action brought in such courts and irrevocably and unconditionally waives
any claim that any such Action brought in any such court has been brought in
an inconvenient forum.
Section 10.4 Waiver of Jury Trial. Each party hereto
acknowledges and agrees that any controversy which may arise under this
Agreement is likely to involve complicated and difficult issues, and,
therefore, each such party hereby irrevocably and unconditionally waives to
the fullest extent permitted by applicable Law, any right such party may have
to a trial by jury in respect to any Action directly or indirectly arising out
of, under or in connection with or relating to this Agreement or the
transactions contemplated by this Agreement. Each party hereto certifies and
acknowledges that (a) no representative, agent or attorney of any other party
hereto has represented, expressly or otherwise, that such other party would
not, in the event of such Action, seek to enforce the foregoing waiver, (b)
each such party understands and has considered the implications of this
waiver, (c) each such party makes this waiver voluntarily, and (d) each such
party has been induced to enter into this Agreement by, among other things,
the mutual waivers and certifications in this Section 10.4.
Section 10.5 Assignment; Successors and Assigns; No Third
Party Rights. This Agreement may not be assigned by any party hereto without
the prior written consent of the other parties hereto, and any attempted
assignment shall be null and void. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns. This Agreement shall be for the sole benefit of the parties
hereto, and their respective successors and permitted assigns and is not
intended, nor shall be construed, to give any Person, other than the parties
hereto and their respective successors and permitted assigns any legal or
equitable right, benefit, remedy or claim hereunder.
Section 10.6 Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original agreement, but all of
which together shall constitute one and the same instrument.
Section 10.7 Titles and Headings. The headings and table of
contents in this Agreement are for reference purposes only, and shall not in
any way affect the meaning or interpretation of this Agreement.
Section 10.8 Amendment and Modification. This Agreement may
not be amended except by an instrument in writing signed on behalf of each of
the parties hereto.
Section 10.9 Publicity; Public Announcements. The initial
press release concerning this Agreement and the transactions contemplated
hereby shall be a joint press release approved in advance by Parent and
Stockholder and thereafter each of Parent and Stockholder shall consult with
the other prior to issuing any press releases or otherwise making public
announcements with respect to this Agreement and the transactions contemplated
hereby and prior to making any filings with any third party or any
Governmental Authority (including any national securities exchange or
interdealer quotation system) with respect thereto, except as may be required
by applicable Laws or the requirements of any national securities exchange or
interdealer quotation system on which the securities of Parent or Stockholder
are listed or quoted.
Section 10.10 Waiver. Any of the terms or conditions of this
Agreement may be waived at any time by the party or parties hereto entitled to
the benefit thereof, but only by a writing signed by the party or parties
waiving such terms or conditions.
Section 10.11 Severability. If any term, provisions,
covenant or restriction of this Agreement is held by a court of competent
jurisdiction or other authority to be invalid, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions of this
Agreement shall remain in full force and effect and shall in no way be
affected, impaired or invalidated so long as the economic or legal substance
of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination, the parties shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner in order
that the transactions contemplated hereby be consummated as originally
contemplated to the fullest extent possible.
Section 10.12 No Strict Construction. Stockholder and Parent
each acknowledge that this Agreement has been prepared jointly by the parties
hereto and shall not be strictly construed against any party hereto.
Section 10.13 Entire Agreement. This Agreement (including
the Disclosure Letters, Schedules and Exhibits attached hereto or delivered in
connection herewith), the Ancillary Agreements and the Confidentiality
Agreement constitute the entire agreement among the parties hereto with
respect to the matters covered hereby and thereby, and supersede all previous
written, oral or implied understandings among them with respect to such
matters.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first above written.
COMPUTER SCIENCES CORPORATION
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
WEST SIDE INVESTMENTS, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President