EDGAR Online Inc. Contracts
Sample Business Contracts
Agreement and Plan of Merger - EDGAR Online Inc. and Financial Insight Systems Inc.
AGREEMENT AND PLAN OF MERGER
AGREEMENT, dated as of the 18th day of October, 2000, by and
among EDGAR Online, Inc., a Delaware corporation ("EOL"), FIS Acquisition Corp.,
a Delaware corporation ("ACQUISITION CORP."), Financial Insight Systems, Inc., a
Maryland corporation ("FIS"), Albert E. Girod ("GIROD"), Kristine N. Delta
("DELTA"), Mark H. Davey ("DAVEY"), Peter S. Szwec ("SZWEC"), Richard Jones
("JONES") and Paul Sappington ("SAPPINGTON") (Girod, Delta, Davey, Szwec, Jones
and Sappington are collectively referred to herein as the "PRINCIPAL
STOCKHOLDERS").
W I T N E S S E T H:
WHEREAS, Acquisition Corp. is a wholly-owned subsidiary of
EOL; and
WHEREAS, the Principal Stockholders are the owners of an
aggregate of 500,000 shares of common stock, no par value of FIS ("FIS COMMON
STOCK") in the amounts set forth on Exhibit A annexed hereto, which shares
represent 100% of the issued and outstanding shares of the capital stock of FIS;
and
WHEREAS, the Board of Directors of each of EOL, Acquisition
Corp. and FIS deem it to be advisable and in the best interests of said
corporation and its stockholders that FIS be merged with and into Acquisition
Corp. (the "MERGER"), all in accordance with the terms of this Agreement and the
applicable provisions of the Delaware General Corporation Law (the "DGCL") and
the Maryland General Corporation Law ("MGCL"); and
WHEREAS, for Federal income tax purposes, it is intended that
the Merger will be treated as a reorganization within the meaning of Section
368(a) of the Internal Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, the parties hereto wish to make certain
representations, warranties and covenants in connection with the Merger, to
prescribe the terms thereof and the mode of carrying it into effect, and to
impose various conditions precedent thereto.
NOW, THEREFORE, in consideration of, and in reliance upon, the
representations, warranties and covenants herein contained, the parties hereto
hereby agree as follows:
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1. The Merger.
1.1 The Merger. At the Effective Time (as defined in
subparagraph 1.3 hereof), subject to and upon the terms and conditions of this
Agreement and in accordance with the applicable provisions of the DGCL and MGCL,
FIS shall be merged with and into Acquisition Corp., the separate corporate
existence of FIS shall cease and Acquisition Corp. shall continue as the
surviving corporation (the "SURVIVING CORPORATION"). The Merger shall have the
effects set forth in Section 259 of the DGCL and Section 3-114 of the MGCL.
1.2 Closing. Unless this Agreement shall have been terminated
and the transactions herein contemplated shall have been abandoned pursuant to
subparagraph 9.1 hereof, and subject to the satisfaction or waiver of the
conditions set forth in subparagraphs 8.1 and 8.2 hereof, the closing of the
Merger (the "CLOSING") shall take place (i) at the offices of Littman Krooks
Roth & Ball P.C., 655 Third Avenue, New York, New York 10017 as promptly as
practicable after the satisfaction or waiver of all of the conditions set forth
in subparagraphs 8.1 and 8.2 hereof, or (ii) at such other time, date and/or
place as may be agreed upon by the parties hereto. The date on which the Closing
occurs is hereinafter referred to as the "CLOSING DATE."
1.3 Effective Time. As promptly as practicable after the
Closing Date, Acquisition Corp. and FIS shall (i) file in the office of the
Secretary of State of the State of Delaware, a Certificate of Merger meeting the
requirements of the DGCL, (ii) file in the office of the Department of
Assessments and Taxation of the State of Maryland, Articles of Merger meeting
the requirements of the MGCL, and (iii) execute, acknowledge, deliver, file
and/or record all such other instruments, and take all such other actions, as
may be required in order to cause the Merger to become effective in accordance
with the provisions of the DGCL and MGCL. The date and time on which the Merger
becomes effective in accordance with the applicable provisions of the DGCL and
the MGCL is hereinafter referred to as the "EFFECTIVE TIME." For accounting
purposes, the effective date of the Merger shall be the first day of the month
in which the Closing occurs.
1.4 Corporate Governance.
1.4.1 Certificate of Incorporation. At the Effective
Time, the Certificate of Incorporation of Acquisition Corp. will be amended to
read as set forth on Exhibit B annexed hereto (the "AMENDED CERTIFICATE OF
INCORPORATION") and the Amended Certificate of Incorporation will be the
Certificate of Incorporation of the Surviving Corporation immediately after the
Effective Time.
1.4.2 Bylaws. At the Effective Time, the Bylaws of
Acquisition Corp. will be amended to read as set forth on Exhibit C annexed
hereto (the "AMENDED BYLAWS"), and the Amended Bylaws will be the Bylaws of the
Surviving Corporation immediately after the Effective Time.
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1.4.3 Directors. The following persons shall be the
initial members of the Board of Directors of the Surviving Corporation, each to
hold office in accordance with the applicable provisions of law:
Albert E. Girod
Marc Strausberg
Tom Vos
1.4.4 Officers. The following persons shall be the
initial officers of the Surviving Corporation, each to hold office in accordance
with the applicable provisions of law:
Name Office(s)
---- ---------
Albert Girod President and Chief Executive Officer
Tom Vos Vice President
Greg Adams Chief Financial Officer, Treasurer and
Secretary
1.5 Effect of Merger on Securities of Constituent
Corporations. As of the Effective Time, by virtue of the Merger and without any
action on the part of Acquisition Corp., FIS or the Principal Stockholders:
1.5.1 Acquisition Corp. Common Stock. At the Effective
Time, each share of common stock of Acquisition Corp. that is issued and
outstanding immediately before the Effective Time will, by virtue of the Merger,
and without the need for any further action on the part of the holder thereof,
remain one share of Acquisition Corp. common stock.
1.5.2 FIS Capital Stock; Merger Consideration. At the
Effective Time, the Principal Stockholders, constituting the holders of all
issued and outstanding shares of FIS Common Stock shall receive an aggregate of
(i) $17,765,000 ("CASH/NOTE PORTION"), consisting of (X) a cash payment in
immediately available funds of $11,765,000 ("CASH PORTION") and (Y) a two-year
7.5% Senior Subordinated Secured Promissory Note of EOL and Acquisition Corp.
(the "NOTE") in the amount of $6,000,000, substantially in the form annexed
hereto as Exhibit D and (ii) 2,450,000 restricted shares of common stock, par
value $.01 per share, of EOL ("EOL COMMON STOCK"). The foregoing items ("MERGER
CONSIDERATION") shall be allocated to the holders of FIS Common Stock on a
pro-rata basis, in accordance with their respective shareholdings in FIS and as
set forth in Exhibit E hereto.
1.5.3 Cancellation of Certain Shares of FIS Capital
Stock. Each and any share of capital stock of FIS that is held in the treasury
of FIS immediately before the Effective Time shall be cancelled and extinguished
and no consideration whatsoever shall be paid or delivered in exchange therefor.
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1.5.4 Exchange of Stock Certificates. In addition to his
pro-rata portion of the Cash/Note Portion of the Merger Consideration, as of the
Effective Time, each holder of an outstanding certificate or certificates
representing shares of FIS Common Stock shall receive in exchange therefor, upon
surrender of such certificate or certificates to EOL, one or more certificates
representing in the aggregate the number of whole shares of EOL Common Stock
into which said shares of FIS Common Stock shall have been converted. Until
surrendered and exchanged, the outstanding certificates theretofore representing
shares of FIS Common Stock shall be deemed for all purposes, other than the
payment of dividends or other distributions to stockholders of EOL, to represent
the number of whole shares of EOL Common Stock into which said shares of FIS
Common Stock shall have been converted. No dividend or other distributions which
is payable to the holders of record of EOL Common Stock as of any date
subsequent to the Effective Time shall be paid to the holders of outstanding
unsurrendered certificates theretofore representing shares of FIS Common Stock;
provided, however, that upon surrender and exchange of such outstanding
certificates as provided above, there shall be paid to the record holders of
said certificates the amount (without any interest thereon) of any dividends and
other distributions which became payable to holders of record of EOL Common
Stock as of a date between the Effective Time and the date of such surrender and
exchange, inclusive.
1.5.5 Fractional Shares. No fractional shares of EOL
Common Stock, and no scrip certificates, shall be issued or delivered in
connection with the Merger, and no fractional share interest shall entitle the
owner thereof to exercise any rights as a stockholder of EOL. In lieu of the
issuance or delivery of fractional shares, the aggregate number of shares of EOL
to which each Principal Stockholder shall be entitled as a result of the Merger
shall be rounded up to the next whole share.
1.5.6 Adjustment. If subsequent to the date hereof but
prior to the Effective Time, EOL Common Stock shall be changed into or exchanged
for a different number or kind of shares through reorganization,
recapitalization, reclassification, stock dividend, stock split, reverse stock
split or other like change in EOL's capitalization, there shall be a
proportionate and appropriate adjustment in the number of shares of EOL Common
Stock to be delivered pursuant to the Merger.
1.5.7 No Transfers. Commencing as of the Effective Time,
there shall be no registration of transfers on the records of FIS of any shares
of FIS Capital Stock. Subject to the provisions of subsection 1.5.4 hereof, if a
certificate for such shares is presented for transfer, it shall be exchanged for
a certificate representing shares of EOL Common Stock as herein provided.
1.5.8 Subsequent Cooperation. At any time and from time
to time after the Effective Time, the last acting officers of FIS, or the
corresponding officers of the Surviving Corporation, may, in the name of FIS,
execute and deliver all such proper deeds, assignments and other instruments and
take or cause to be taken all such further or other action as the Surviving
Corporation may deem necessary or desirable in order to best perfect or confirm
in the Surviving Corporation title to and possession of all of FIS' properties,
rights, privileges, immunities, powers and purposes, and to otherwise carry out
the purposes of this Agreement.
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1.5.9 Escrow Fund. At the Closing of the Merger, EOL, the
Principal Stockholders and an escrow agent mutually acceptable to the parties
hereto ("ESCROW AGENT"), shall execute and deliver at the Closing an Escrow
Agreement, substantially in the form annexed hereto as Exhibit F (the "ESCROW
AGREEMENT"), pursuant to which EOL will withhold from the Merger Consideration
the sum of (i) $588,250, representing five percent (5%) of the Cash Portion and
(ii) the original Note (collectively the "ESCROW FUND"), both of which shall be
deposited with the Escrow Agent, with each Principal Stockholder being deemed to
have deposited a pro rata amount based on his holdings of FIS Common Stock
immediately prior to the Closing. Such Escrow Fund shall be held as security for
the Principal Stockholders' indemnification obligations under Section 5.2 hereof
pursuant to the terms and conditions of the Escrow Agreement.
1.5.10 Effect Of Principal Stockholders' Approval
Regarding Escrow Fund; Escrow Representative. By their approval of the Merger
and execution of this Agreement, the Principal Stockholders will be conclusively
deemed to have consented to and approved: (i) the Escrow Agreement; (ii) the
appointment of Girod as the representative of Principal Stockholders (the
"ESCROW REPRESENTATIVE") under the Escrow Agreement and as the attorney-in-fact
and agent for and on behalf of each Principal Stockholders; and (iii) the taking
by the Escrow Representative of any and all actions and the making of any
decisions required or permitted to be taken by the Escrow Representative under
the Escrow Agreement. The Escrow Representative will have authority and power to
act on behalf of each Principal Stockholders with respect to the Escrow
Agreement and the disposition, settlement or other handling of all claims under
or rights under Section 5 hereof or governed by the Escrow Agreement, and all
rights or obligations arising under the Escrow Agreement so long as all
Principal Stockholders are treated in the same manner. The Principal
Stockholders will be bound by all actions taken and documents executed by the
Escrow Representative in connection with the Escrow Agreement, and EOL will be
entitled to rely on any action or decision of the Escrow Representative. In
performing the functions specified in this Agreement and the Escrow Agreement,
the Escrow Representative will not be liable to any Principal Stockholders in
the absence of gross negligence or willful misconduct on the part of the Escrow
Representative. Any out-of-pocket costs and expenses reasonably incurred by the
Escrow Representative in connection with actions taken by the Escrow
Representative pursuant to the terms of the Escrow Agreement (including without
limitation the hiring of legal counsel and the incurring of legal fees and
costs) will be paid by the Principal Stockholders to the Escrow Representative
pro rata in proportion to their respective percentage interests in the Escrow
Consideration.
1.6 Approval by Principal Stockholders. The principal terms of
the Merger shall be approved by all of the holders of FIS Common Stock. EOL, as
the sole stockholder of Acquisition Corp., shall approve the Merger. The
Principal Stockholders, as the holders of 100% of the outstanding shares of FIS
Capital Stock, simultaneously with the execution of this Agreement, have
executed and delivered to EOL and Acquisition Corp. a consent in writing as
stockholders in lieu of a meeting, in conformity with Section 2-505 of the MGCL,
adopting and approving this Agreement (the "SECTION 2-505 CONSENT").
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1.7 Representations of the Principal Stockholders. Each
Principal Stockholder represents, warrants and agrees to and with EOL and
Acquisition Corp. as follows:
1.7.1 Execution and Validity. The Principal Stockholder
has the full legal right and capacity to enter into this Agreement and to
perform his obligations hereunder. This Agreement has been duly and validly
executed and delivered by such Principal Stockholder and, assuming due
authorization, execution and delivery by EOL and Acquisition Corp., constitutes
a legal, valid and binding obligation of the Principal Stockholder, enforceable
against the Principal Stockholder in accordance with its terms.
1.7.2 Share Ownership. The Principal Stockholder is the
true and lawful owner of the number of shares of FIS Common Stock reflected on
Exhibit A hereto and all of such Shares have been duly and validly authorized
and issued and are fully paid, non-assessable and free of preemptive rights,
with no personal liability attaching to the ownership thereof, except as such
liability may be imposed pursuant to applicable laws, and such ownership is free
and clear of all Liens (as hereinafter defined).
1.7.3 No Options. There are no outstanding subscriptions,
options, rights (including "PHANTOM STOCK RIGHTS"), warrants, calls,
commitments, understandings, arrangements, plans or other agreements of any kind
to acquire any FIS Common Stock from the Principal Stockholder and there are no
agreements or understandings with respect to the sale or transfer of any FIS
Common Stock by the Principal Stockholder.
1.7.4 No Restrictions. There is no suit, action, claim,
investigation or inquiry by any court, tribunal, arbitrator, authority, agency,
commission, official or other instrumentality of the United States, any foreign
country or any domestic or foreign state, county, city or other political
subdivision ("GOVERNMENTAL OR REGULATORY AUTHORITY"), and no legal,
administrative or arbitration proceeding pending or, to the Principal
Stockholder's Best Knowledge, threatened against the Principal Stockholder or
any of the FIS Common Stock, with respect to the execution, delivery and
performance of this Agreement or the transactions contemplated hereby or any
other agreement entered into by the Principal Stockholder in connection with the
transactions contemplated hereby. As used in this Agreement the term "BEST
KNOWLEDGE" shall mean, with reference to any natural person, (i) the actual
knowledge of such person, or (ii) such knowledge as reasonably should be known
by such person after reasonably diligent inquiry.
1.7.5 Non-Contravention. The execution, delivery and
performance by the Principal Stockholder of his obligations hereunder and the
consummation of the transactions contemplated hereby, will not (a) result in the
violation by the Principal Stockholder of any statute, law, rule, regulation or
ordinance (collectively, "LAWS"), or any judgment, decree, order, writ, permit
or license (collectively, "ORDERS"), of any Governmental or Regulatory
Authority, applicable to the Principal Stockholder or any of his FIS Common
Stock, or (b) conflict with, result in a violation or breach of, constitute
(with or without notice or lapse of time or both) a default under, or require
the Principal Stockholder to obtain any consent, approval or action of, make any
filing
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with or give any notice to, or result in or give to any Person (as hereinafter
defined) any right of payment or reimbursement, termination, cancellation,
modification or acceleration of, or result in the creation or imposition of any
Lien upon any of the FIS Common Stock of the Principal Stockholder, under any of
the terms, conditions or provisions of any agreement, commitment, lease,
license, evidence of indebtedness, mortgage, indenture, security agreement,
instrument, note, bond, franchise, permit, concession, or other instrument,
obligation or agreement of any kind (collectively, "CONTRACTS") to which the
Principal Stockholder is a party or by which the Principal Stockholder or any of
his assets or properties are bound. For purposes of this Agreement, the term
"PERSON" shall mean and include an individual, a company, a joint venture, a
corporation (including any non-profit corporation), an estate, an association, a
trust, a general or limited partnership, a limited liability company, a limited
liability partnership, an unincorporated organization and a government or other
department or agency thereof.
1.7.6 Approvals and Consents. No consent, approval or
action of, filing with or notice to any Governmental or Regulatory Authority or
Person is necessary or required under any of the terms, conditions or provisions
of any Law or Order of any Governmental or Regulatory Authority or any Contract
to which the Principal Stockholder is a party or his FIS Common Stock are bound
for the execution and delivery of this Agreement by the Principal Stockholder,
the performance by the Principal Stockholder of his obligations hereunder or the
consummation of the transactions contemplated hereby.
2. Representations and Warranties as to FIS. Each of FIS and the
Principal Stockholders, jointly and severally, represents, warrants and agrees
to and with EOL and Acquisition Corp. as follows:
2.1 Organization, Standing and Power. FIS is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Maryland, and has all requisite corporate power and authority to own,
lease and operate its properties and to carry on its business as presently
conducted by it. FIS is duly qualified to do business as a foreign corporation
and is in good standing in each jurisdiction set forth on SCHEDULE 2.1 hereto
which are the only jurisdictions in which the ownership, use or leasing of its
assets and properties, or the conduct or nature of its business, makes such
qualification, licensing or admission necessary, except where the failure to so
qualify would not reasonably be expected to have a Material Adverse Effect. As
used in this Agreement, the term "MATERIAL ADVERSE EFFECT" shall mean any effect
that is materially adverse to the properties, assets, liabilities, business,
prospects, results of operations or condition (financial or otherwise) of FIS,
taken as a whole. Copies of the Certificate of Incorporation or other
organizational documents of FIS and all amendments thereof, and of the By-laws
or other corporate governance documents of FIS, as amended to date, have been
furnished to EOL and are complete and correct. The minute books of FIS delivered
to EOL contain complete and accurate records of all meetings and other corporate
actions of FIS stockholders and Boards of Directors (including committees of its
Boards of Directors).
2.2 Capitalization. The authorized capital stock of FIS
consists solely of 1,000,000 shares of FIS Common Stock of which 500,000 shares
are issued and outstanding, and
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500,000 shares are authorized and unissued FIS Common Stock. All outstanding
shares of FIS Common Stock has been duly authorized and validly issued and are
fully paid and nonassessable. Other than as set forth above, there are no
outstanding subscriptions, options, warrants, rights (including "PHANTOM STOCK
RIGHTS"), calls, commitments, understandings, conversion rights, rights of
exchange, plans or other agreements of any kind providing for the purchase,
issuance or sale of any shares of the capital stock of FIS. There is no personal
liability, and other than as set forth on SCHEDULE 2.2, there are no preemptive
or similar rights, attached to any capital stock of FIS. SCHEDULE 2.2 contains a
complete and correct list of the (i) names, addresses and number of shares of
FIS Common Stock owned of record by each of the Principal Stockholders and (ii)
the amount of Merger Consideration into which such stockholder's shares of FIS
Common Stock shall be converted as a result of the Merger.
2.3 Interests in Other Entities. Other than as set forth on
SCHEDULE 2.3, FIS does not (i) own, directly or indirectly, of record or
beneficially, any shares of voting stock or other equity securities of any other
corporation, (ii) have any ownership interest, direct or indirect, of record or
beneficially, in any unincorporated entity, or (iii) have any obligation, direct
or indirect, present or contingent, (1) to purchase or subscribe for any
interest in, advance or loan monies to, or in any way make investments in, any
Person, or (2) to share any profits or capital investments or both.
2.4 Authority. The execution and delivery by FIS of this
Agreement and of all of the agreements to be executed and delivered by FIS
pursuant hereto, the performance by FIS of its obligations hereunder and
thereunder, and the consummation of the transactions contemplated hereby and
thereby, have been duly and validly authorized by all necessary corporate action
on the part of FIS (including, but not limited to, the unanimous consent of its
stockholders and Board of Directors), and FIS has all necessary power with
respect thereto. This Agreement is, and when executed and delivered by FIS each
of the other agreements to be delivered by FIS pursuant hereto will be, the
valid and binding obligation of FIS in accordance with their respective terms.
2.5 Non-Contravention; Approvals and Consents.
2.5.1 Non-Contravention. The execution, delivery and
performance by FIS of its obligations hereunder and the consummation of the
transactions contemplated hereby, will not (a) violate, conflict with or result
in the breach of any provision of the Articles of Incorporation or By-Laws of
FIS, or (b) result in the violation by FIS of any Laws or Orders of any
Governmental or Regulatory Authority, applicable to FIS or its assets or
properties, or (c) if the consents and notices set forth on SCHEDULE 2.5.2 are
obtained, given or waived, conflict with, result in a violation or breach of,
constitute (with or without notice or lapse of time or both) a default under, or
(except as set forth on SCHEDULE 2.5.2) require FIS to obtain any consent,
approval or action of, make any filing with or give any notice to, or result in
or give to any Person any right of payment or reimbursement, termination,
cancellation, modification or acceleration of, or result in the creation or
imposition of any Lien upon the assets of any FIS, under any of the terms,
conditions or provisions of any Contract to which FIS is a party or by which FIS
or its assets or properties are bound.
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2.5.2 Approvals and Consents. Except as disclosed on
SCHEDULE 2.5.2, no consent, approval or action of, filing with or notice to any
Governmental or Regulatory Authority or other Person is necessary or required
under any of the terms, conditions or provisions of any Law or Order of any
Governmental or Regulatory Authority or any Contract to which FIS is a party or
by which its assets or properties are bound for the execution and delivery of
this Agreement by FIS, the performance by FIS of its obligations hereunder or
the consummation of the transactions contemplated hereby.
2.6 Financial Statements. FIS has heretofore delivered to EOL
(i) its audited financial statements, including its balance sheets, statements
of income, stockholders' equity and cash flows for the fiscal years ended
December 31, 1999 and December 31, 1998, certified without qualification by KPMG
LLP, independent certified public accountants (the "FIS AUDITED FINANCIAL
STATEMENTS"), and its unaudited balance sheet (the "SEPTEMBER 30 BALANCE SHEET")
as of September 30, 2000 (the "BALANCE SHEET DATE"), FIS' unaudited statement of
income for the nine months ended on the Balance Sheet Date (all such financial
statements of FIS and the notes thereto are hereinafter collectively referred to
as the "FIS FINANCIAL STATEMENTS"). The FIS Financial statements were prepared
in accordance with generally accepted accounting principles ("GAAP")
consistently applied. The balance sheets included in the FIS Financial
Statements (including the related notes) fairly present the financial position
of FIS as of their respective dates, and the statements of operations and cash
flows included therein (including the related notes) fairly present FIS's
results of operations for the fiscal periods indicated thereof and reflect all
claims against and all debts and liabilities of FIS, fixed or contingent, as at
the date thereof, required to be shown thereon under GAAP, and the related
combined statement of income, changes in stockholder's equity and cash flow
fairly present the combined results of operations, changes in stockholder's
equity and cash flows of FIS for the period indicated. Since the Balance Sheet
Date, there has been no material adverse change in the assets or liabilities, or
in the business or condition, financial or otherwise, or in the results of the
operations of FIS. The books and records of FIS are complete and correct, have
been maintained in accordance with good business practices, and accurately
reflect the basis for its financial condition and results of operations as set
forth in the aforementioned financial statements.
2.7 Absence of Undisclosed Liabilities. Except as reflected on
the September 30 Balance Sheet, FIS does not have any outstanding claims,
liabilities or indebtedness of any nature whatsoever (collectively in this
Section 2.7, "LIABILITIES"), whether accrued, absolute or contingent, determined
or undetermined, asserted or unasserted, and whether due or to become due, other
than (i) Liabilities specifically disclosed in any Schedule hereto; (ii)
Liabilities under Contracts of the type required to be disclosed by FIS on any
Schedule and so disclosed or which because of the dollar amount or other
qualifications are not required to be listed on such Schedule; and (iii)
Liabilities incurred in the ordinary course of business and consistent with past
practice since the Balance Sheet Date not involving borrowings by FIS.
2.8 Title to Properties; Encumbrances. FIS has good and valid
title to, or enforceable leasehold interests in, or valid rights under contract
to use, all the properties and assets owned or used by it (real and personal,
tangible and intangible), including, without limitation (a) all
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the properties and assets reflected in the September 30 Balance Sheet, and (b)
all the properties and assets purchased or otherwise contracted for by FIS since
the Balance Sheet Date (except for properties and assets reflected in the
September 30 Balance Sheet or acquired or otherwise contracted for since the
Balance Sheet Date that have been sold or otherwise disposed of in the ordinary
course of business), in each case free and clear of all Liens (as hereinafter
defined), except for Liens set forth on SCHEDULE 2.8. The property, plant and
equipment owned or otherwise contracted for by FIS is in a state of good
maintenance and repair (ordinary wear and tear excepted) and is adequate and
suitable for the purposes for which they are presently being used. For purposes
hereof, the term "LIENS" shall mean with respect to any asset, (a) any mortgage,
deed of trust, lien, pledge, hypothecation, encumbrance, charge or security
interest in, on or of such asset, (b) the interest of a vendor or a lessor under
any conditional sale agreement, capital lease or title retention agreement
(other than an operating lease) (or any financial lease having substantially the
same economic effect as any of the foregoing) relating to such asset and (c) in
the case of securities, any purchase option, call or similar right of a third
party with respect to such securities.
2.9 Real Property.
2.9.1 Owned Real Property. FIS does not own any real
property (including ground leases) or hold any option or right of first refusal
or first offer to acquire any real property, and FIS is not obligated by
Contract or otherwise to purchase any real property.
2.9.2 Leased Real Property. SCHEDULE 2.9.2 contains an
accurate and complete list of each "REAL PROPERTY LEASE", defined as any real
property lease, sublease, license or other occupancy agreement, including
without limitation, any modification, amendment or supplement thereto and any
other related document or agreement executed or entered into by FIS (including,
without limitation, any of the foregoing which FIS has subleased or assigned to
another Person and as to which FIS remains liable). With respect to each Real
Property Lease set forth on SCHEDULE 2.9.2 (or required to be set forth on
SCHEDULE 2.9.2): (a) it is valid, binding and in full force and effect; (b) all
rents and additional rents and other sums, expenses and charges due to date have
been paid; (c) the lessee has been in peaceable possession since the
commencement of the original term thereof; (d) no waiver, indulgence or
postponement of the lessee's obligations thereunder has been granted by the
lessor; (e) there exists no default or event of default by FIS or to the Best
Knowledge of the Principal Stockholders, by any other party thereto; (f) there
exists no occurrence, condition or act which, with the giving of notice, the
lapse of time or the happening of any further event or condition, would become a
default or event of default by FIS thereunder; and (g) there are no outstanding
claims of breach or indemnification or notice of default or termination
thereunder. FIS holds the leasehold estate on each Real Property Lease, free and
clear of all Liens except for the liens of mortgagees of the real property in
which such leasehold estate is located. The real property leased by FIS is
adequate and suitable for the purposes for which it is presently being used. FIS
is in physical possession and actual and exclusive occupation of the whole of
each of its leased properties. FIS does not owe any brokerage commission with
respect to any Real Property Lease.
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2.10 Accounts Receivable; Work in Process; Accounts Payable.
The amount of all work-in-process, accounts receivable, unbilled invoices
(including without limitation unbilled invoices for services and out-of-pocket
expenses) and other debts due or recorded in the records and books of account of
FIS as being due to FIS and reflected on the September 30 Balance Sheet
represent or will represent valid obligations arising from sales actually made
or services actually performed in the ordinary course of business and will be
good and collectible in full (less the amount of any provision, reserve or
similar adjustment therefor reflected on the September 30 Balance Sheet) in the
ordinary course of business, and none of the accounts receivable or other debts
(or accounts receivable arising from any such work-in-process or unbilled
invoices) is or will be subject to any counterclaim or set-off except to the
extent of any such provision, reserve or adjustment. There has been no change
since the September 30 Balance Sheet Date in the amount or aging of the
work-in-process, accounts receivable, unbilled invoices, or other debts due to
FIS, or the reserves with respect thereto, or accounts payable of FIS which
would have a Material Adverse Effect.
2.11 Absence of Changes. Since the Balance Sheet Date except
as specifically stated on SCHEDULE 2.11, FIS has not (a) incurred any liability
or obligation of any nature (whether accrued, absolute, contingent or
otherwise), except in the ordinary course of business; (b) permitted any asset
to be subjected to any Lien; (c) sold, transferred or otherwise disposed of any
assets except in the ordinary course of business; (d) made any capital
expenditure or commitment therefor which individually or in the aggregate
exceeded $25,000; (e) declared or paid any dividends or made any distributions
on any shares of its capital stock, or redeemed, purchased or otherwise acquired
any shares of its capital stock or any option, warrant or other right to
purchase or acquire any such shares; (f) made any bonus or profit sharing
distribution; (g) increased or prepaid its indebtedness for borrowed money,
except current borrowings under credit lines listed on SCHEDULE 2.20 or made any
loan to any Person other than to any employee for normal travel and expense
advances; (h) written down the value of any work-in-process, or written off as
uncollectible any notes or accounts receivable, except write-downs and
write-offs in the ordinary course of business, none of which individually or in
the aggregate, is material to FIS; (i) granted any increase in the rate of
wages, salaries, bonuses or other remuneration of any employee who, whether as a
result of such increase or prior thereto, receives aggregate compensation from
FIS at an annual rate of $50,000 or more, or except in the ordinary course of
business to any other employees; (j) entered into an employment or exclusive
consultant agreement which is not cancelable without penalty or other financial
obligation within 30 days; (k) canceled or waived any claims or rights of
material value; (l) made any change in any method of accounting procedures; (l)
changed any of the accounting principles or methods which are utilized by FIS,
(m) disposed or allowed any lapse of any rights to the use of trademark, service
mark, trade name, patent, copyright or other intellectual property right; (n)
otherwise conducted its business or entered into any transaction, except in the
usual and ordinary manner and in the ordinary course of its business; (o)
amended or terminated any agreement which is material to its business; (p)
renewed, extended or modified any Real Property Lease or except in the ordinary
course of business, any lease of personal property; (q) adopted, amended or
terminated any Plan; or (r) agreed, whether or not in writing, to do any of the
actions set forth in any of the above clauses.
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2.12 Litigation. Except as set forth in SCHEDULE 2.12, there
is no action, suit, proceeding or investigation pending or to FIS' or the
Principal Stockholders' Best Knowledge threatened against FIS or the Principal
Stockholders that questions the right of FIS or the Principal Stockholders to
enter into this Agreement or to consummate the transactions contemplated hereby
or that might result, either individually or in the aggregate, in any Material
Adverse Effect, nor to FIS' or Girod's Best Knowledge is there any basis for the
foregoing. The foregoing includes, without limitation, actions, suits,
proceedings or investigations pending or threatened involving the prior
employment of any of FIS' employees, their use in connection with FIS' business
of any information or techniques allegedly proprietary to any of their former
employers, or their obligations under any agreements with prior employers.
Neither FIS nor any of its subsidiaries is a party or subject to the provisions
of any order, writ, injunction, judgment or decree of any court or government
agency or instrumentality. There is no action, suit, proceeding or investigation
by FIS currently pending or which FIS intends to initiate. There is no action,
suit, proceeding or investigation pending, or to FIS' or the Principal
Stockholders' Best Knowledge, threatened against any officer, key employee or 5%
Shareholder of FIS in his capacity as such. Neither FIS, nor to FIS' Best
Knowledge, any officer, key employee or 5% Shareholder of FIS in his capacity as
such, is in default with respect to any order, writ, injunction, decree, ruling
or decision of any court, commission, board or any other government agency which
might, either individually or in the aggregate, result in any Material Adverse
Effect.
2.13 Intellectual Property
(a) The Intellectual Property Rights (as defined below)
comprise all of the intellectual property rights necessary for the operation of
the business of FIS as currently conducted or as currently proposed by FIS to be
conducted (assuming the transactions contemplated by this Agreement are not
consummated). SCHEDULE 2.13 sets forth a true, correct and complete list of all:
(i) patented or registered Intellectual Property Rights and pending patent
applications or other applications for registrations of the Intellectual
Property Rights owned or filed by or on behalf of FIS or any of its
subsidiaries; (ii) all registered trademarks and service marks owned by FIS or
any of its subsidiaries (iii) all registered copyrights owned by FIS or any of
its subsidiaries and material to the financial condition, operating results,
assets, operations or business prospects of FIS or any of its subsidiaries; and
(iv) all licenses or similar agreements or arrangements relating to the
Intellectual Property Rights to which FIS is a party, either (A) as licensee and
that require payments aggregating more than $5,000 in any 12-month period, or
(B) as a licensor and that require payments aggregating more than $5,000 in any
12-month period.
(b) Except as set forth in SCHEDULE 2.13, (i) FIS owns and
possesses all right, title and interest in and to, or has a valid and
enforceable license to use, the Intellectual Property Rights necessary for the
operation of the business of FIS as currently conducted or as currently proposed
by FIS to be conducted (assuming the transactions contemplated by this Agreement
are not consummated) free and clear of all Liens; (ii) no written claim by any
third party contesting the validity, enforceability, use or ownership of any of
the Intellectual Property Rights is currently outstanding or is threatened, and,
to the Best Knowledge of FIS and the Principal Stockholders, there are no
grounds for the same; (iii) no loss or expiration of any material Intellectual
Property Right or related group of material Intellectual Property Rights is
pending or to the Best Knowledge of FIS
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or the Principal Stockholders, threatened; (iv) neither FIS nor the Principal
Stockholders has received any written notice of, or has any knowledge of any
facts which indicate a likelihood of, any currently existing or otherwise
unresolved infringement or misappropriation by, or conflict with, any third
party with respect to the Intellectual Property Rights (including, without
limitation, any demand or request that he FIS licenses any rights from a third
party); and (v) to the Best Knowledge of FIS and the Principal Stockholders, FIS
has not infringed, misappropriated or otherwise conflicted with any intellectual
property rights or other similar rights of any third parties, other than any of
the foregoing which may have occurred in the past and have been fully and
finally resolved prior to the date of this Agreement and neither FIS nor The
Principal Stockholders has any knowledge of any infringement, misappropriation
or conflict which will occur as a result of the continued operation of the
business of FIS and its subsidiaries as currently conducted or as currently
proposed by FIS to be conducted (assuming the transaction contemplated by this
Agreement are not consummated).
(c) The transactions contemplated hereby will have no adverse
effect on the right, title and interest of FIS in and to any material
Intellectual Property Rights or the validity and enforceability thereof. All
material Intellectual Property Rights owned by FIS will be the property of the
Surviving Corporation as a result of the Merger.
(d) Except as set forth on SCHEDULE 2.13, no copy of FIS'
software is subject to or held in escrow or is in any third party's possession,
other than the object code version in accordance with the licenses listed on
SCHEDULE 2.13 hereto.
(e) FIS has taken commercially reasonable measures to protect
the Business Intellectual Property (as defined below). FIS has treated the
Business Intellectual Property (other that user documentation and manuals and
other materials provided to customers of FIS (not including source code) under
obligations of confidentiality) as trade secrets.
(f) Except to the extent licensed to customers of FIS in the
ordinary course of business, FIS has not previously assigned, transferred,
conveyed or otherwise encumbered its right, title and ownership to the Business
Intellectual Property (or any portion thereof), and no third party has any right
to use any such Business Intellectual Property except in accordance with an
agreement which is listed in SCHEDULE 2.13. Except as set forth on SCHEDULE
2.13, no licensing fees, royalties or payments are due and payable by FIS in
connection with the use of the Business Intellectual Property.
(g) To the Best Knowledge of FIS and the Principal
Stockholders, neither FIS nor any third party is in default under any licenses,
agreements or other rights with respect to the Business Intellectual Property,
and there exists no event, occurrence, condition or act which, with the giving
of notice, the lapse of time or the happening of any other event or condition,
would become an event of default thereunder.
(h) For purposes of this Agreement, "INTELLECTUAL PROPERTY
RIGHTS" means all of following owned by, issued to or licensed to FIS, along
with all income, royalties, damages and payments due or payable to FIS at the
Effective Time or thereafter (including, without limitation,
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damages and payments for past or future infringements or misappropriations
thereof), the right to sue and recover for past infringements or
misappropriation thereof and any and all corresponding rights that are secured
by FIS throughout the world: patents, patent applications, patent disclosures
and intentions (whether or not patentable and whether or not reduced to practice
and including, without limitation, all inventions of employees of FIS or any of
its subsidiaries) and any reissues, continuations, continuations-in-part,
revisions, extensions or reexaminations thereof; trademarks, service marks,
trade dress, logos, trade names and corporate names, together with all goodwill
associated therewith (including, without limitation, the use of the current
corporate name and trade name(s) listed on SCHEDULE 2.13 and all translations,
adaptations, derivative works and combinations of the foregoing); copyrights and
copyrightable works; Internet domain names; mask works; and registrations,
applications and renewals for any of the foregoing; trade secrets and
confidential information (including, without limitation, ideas, formulae,
compositions, know-how, manufacturing and production processes and techniques,
research and development information, drawings, specifications, designs, plans,
proposals, technical data, financial and accounting data, and production
processes and techniques, research and development information, drawings,
specifications designs, plans, proposals, technical data, financial and
accounting data, business and marketing plans, and customer and supplier lists
and related information; computer software (in object code and source code form
and including, without limitation, data, related data bases and documentation),
including all works in progress relating to corrections, modifications or
enhancements thereto as well as all current and prior (but only to the extent
still maintained) versions of such software; other intellectual property rights;
and all copies and tangible embodiments of the foregoing (in whatever form or
medium), in each case including, without limitation, the items set forth on
SCHEDULE 2.13.
(i) For purposes of this Agreement, "BUSINESS INTELLECTUAL
PROPERTY" means all computer programs (including application software and
operating software and including all operating codes, source codes, updates,
upgrades, modifications and enhancements associated with such computer programs)
and documentation, specifications, manuals and materials (including all
Intellectual Property Rights) associated therewith owned by or licensed to FIS
(regardless of whether it is used internally and/or by customers of FIS.)
(j) FIS has reviewed its operations and the operations of its
subsidiaries to evaluate the extent to which the business or operations of FIS
or any of its subsidiaries will be affected by the Year 2000 Problem. As a
result of such review, the Company has no reason to believe, and does not
believe, that the Year 2000 Problem will have a Material Adverse Effect. The
"YEAR 2000 PROBLEM" as used herein means any significant risk that the computer
hardware or software used in the receipt, transmission, storage, retrieval,
retransmission or other utilization of data or in the operation of mechanical or
electrical systems of any kind will not, in the case of dates or time periods
occurring after December 31, 1999, function at least as effectively as in the
case of dates or time periods occurring prior to January 1, 2000.
2.14 Taxes. FIS has timely filed, or caused to be filed,
taking into account any valid extensions of due dates, completely and
accurately, all federal, state, local and foreign tax or information returns
(including estimated tax returns) required under the statutes, rules or
regulations
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of such jurisdictions to be filed by FIS. The term "TAXES" means taxes, duties,
charges or levies of any nature imposed by any taxing or other Governmental or
Regulatory Authority, including without limitation income, gains, capital gains,
surtax, capital, franchise, capital stock, value-added taxes, taxes required to
be deducted from payments made by the payor and accounted for to any tax
authority, employees' income withholding, back-up withholding, withholding on
payments to foreign Persons, social security, national insurance, unemployment,
worker's compensation, payroll, disability, real property, personal property,
sales, use, goods and services or other commodity taxes, business, occupancy,
excise, customs and import duties, transfer, stamp, and other taxes (including
interest, penalties or additions to tax in respect of the foregoing), and
includes all taxes payable by FIS pursuant to Treasury Regulations
Section 1.1502-6 or any similar provision of state, local or foreign law. All
Taxes shown on said returns to be due and all additional assessments received
prior to the date hereof have been paid or are being contested in good faith, in
which case, such contested assessments are set forth on SCHEDULE 2.14. FIS has
collected all sales, use, goods and services or other commodity Taxes required
to be collected and remitted or will remit the same to the appropriate taxing
authority within the prescribed time periods. FIS has withheld all amounts
required to be withheld on account of Taxes from amounts paid to employees,
former employees, directors, officers, residents and non-residents and remitted
or will remit the same to the appropriate taxing authorities within the
prescribed time periods. The amount set up as an accrual for Taxes on the
Balance Sheet is sufficient for the payment of all unpaid Taxes of FIS, whether
or not disputed, for all periods ended on and prior to the date thereof. Since
the Balance Sheet Date, FIS has not incurred any liabilities for Taxes other
than in the ordinary course of business. The Principal Stockholders has
delivered to EOL correct and complete copies of all federal, state and local
income tax returns filed with respect to FIS for all taxable periods for the
last five taxable years. Except as set forth on SCHEDULE 2.14, none of the
federal, state or local income tax returns of FIS have ever been audited by the
Internal Revenue Service or any other Governmental or Regulatory Authority. No
examination of any return of FIS is currently in progress, and FIS has not
received notice of any proposed audit or examination. No deficiency in the
payment of Taxes by FIS for any period has been asserted in writing by any
taxing authority and remains unsettled at the date of this Agreement. FIS has
not made any agreement, waiver or other arrangement providing for an extension
of time with respect to the assessment or collection of any Taxes against it.
FIS has not been a member of an affiliated group filing combined federal income
tax returns nor has it been included in any combined, consolidated or unitary
state or local income tax return. FIS is not party to any tax allocation or tax
sharing agreement nor does FIS have any contractual obligation to indemnify any
other Person with respect to Taxes. FIS has never been a United States real
property holding corporation within the meaning of Section 897(c)(2) of the Code
within the period specified in Section 897(c)(1)(A)(ii) of the Code. FIS will
not be required as a result of a change in accounting method for any period
ending on or before the Closing Date to include any adjustment under Section 481
of the Code (or any similar provision of state, local or foreign income tax law)
in income for any period ending after the Closing Date, including any change
which may be required by law in connection with this transaction. FIS is not
obligated to make any payments and is not party to any agreement that under
certain circumstances could obligate it to make any payments that will not be
deductible under Section 280G of the Code. Neither FIS nor any of its present or
former stockholders has ever filed an election pursuant to Section 1362 of the
Internal Revenue Code of 1986, as amended, that FIS be taxed as an S
corporation.
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2.15 Insurance. SCHEDULE 2.15 is a complete and correct list
and summary description of all policies of insurance in which FIS is an insured
party, beneficiary or loss payable payee. Such policies are in full force and
effect, all premiums due and payable with respect thereto have been paid, and no
notice of cancellation or termination has been received by FIS. Such policies
cover risks normally insured against, and are in amounts normally carried, by
companies engaged in similar businesses.
2.16 Banks; Powers of Attorney. SCHEDULE 2.16 is a complete
and correct list showing (i) the names of each bank in which FIS has an account
or safe deposit box and the names of all persons authorized to draw thereon or
who have access thereto, and (ii) the names of all persons, if any, holding
powers of attorney from FIS.
2.17 Employee Arrangements. SCHEDULE 2.17 is a complete and
correct list and summary description of all (i) union, collective bargaining,
employment, management, termination and consulting agreements to which FIS is a
party or otherwise bound, and (ii) compensation plans and arrangements; bonus
and incentive plans and arrangements; deferred compensation plans and
arrangements; pension and retirement plans and arrangements; profit-sharing and
thrift plans and arrangements; stock purchase and stock option plans and
arrangements; hospitalization and other life, health or disability insurance or
reimbursement programs; holiday, sick leave, severance, vacation, tuition
reimbursement, personal loan and product purchase discount policies and
arrangements; and other plans or arrangements providing for benefits for
employees of FIS. Such Schedule also lists the names and compensation of all
employees of FIS, including, without limitation, compensation due and payable,
as well as, contingent accrued and projected bonuses to be earned or paid within
12 months of the Closing Date.
2.18 ERISA.
(a) Plans. SCHEDULE 2.18 lists each "EMPLOYEE PENSION
BENEFIT PLAN" (collectively called "FIS PENSION PLANS" and severally called "FIS
PENSION PLAN"), as such term is defined in Section 3(2) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), and each "EMPLOYEE
WELFARE BENEFIT PLAN" (collectively called "FIS WELFARE PLANS" and severally
called "FIS WELFARE PLAN") as such term is defined in Section 3(1) of ERISA,
which is maintained by FIS or to which they contribute or are obligated or
required to contribute, and which is subject to the provisions of ERISA. The FIS
Pension Plans and FIS Welfare Plans are hereinafter sometimes collectively
referred to as the "PLANS" and severally referred to as a "PLAN."
(b) Qualification. Each FIS Pension Plan and the trust
(if any) forming a part thereof has been determined by the IRS to be qualified
under Section 401(a) of the Code and is exempt from taxation under Section
501(a) of the Code, and nothing has occurred since the date of such
determination which would adversely affect such qualification.
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(c) Plan Documents. FIS have heretofore delivered to EOL,
true, complete and correct copies of (i) the Plans, and all related trust
agreements, (ii) all written interpretations and summary plan descriptions
relating thereto, (iii) the two most recent annual reports (Form 5500 Series)
and accompanying schedules which were prepared in connection with each Plan,
(iii) all IRS determination letters relating to the Plans, and (iv) the two most
recent actuarial evaluation reports which were prepared in connection with any
of the Plans.
(d) No Prohibited Transactions. None of FIS, nor any of
the Plans, nor any trust created thereunder, nor any trustee or administrator
thereof, have engaged in a transaction which would subject any of FIS or any of
the Plans to the tax on prohibited transactions imposed by Section [4975] of the
Code or to a civil penalty assessed pursuant to Section 502(i) of ERISA.
(e) No Accumulated Funding Deficiency. None of the FIS
Pension Plans has incurred any "ACCUMULATED FUNDING DEFICIENCY", as such term is
defined in Section 302 of ERISA and Section 412 of the Code, whether or not
waived.
(f) Termination, etc. None of FIS have incurred, and are
not expected to incur, directly or indirectly, any liability to the Pension
Benefit Guaranty Corporation (the "PBGC") with respect to any FIS Pension Plan.
The PBGC has not instituted proceedings to terminate any FIS Pension Plan, nor
has it notified any of FIS, either formally or informally, of its intention to
institute any such proceedings.
(g) Reportable Events. There have not been, with respect
to any of the Plans, any "REPORTABLE EVENTS", as such term is defined in Section
4043(b) of ERISA.
(h) Multiemployer Plans. Neither of FIS have ever
maintained or contributed to, or been obligated or required to contribute to, a
"MULTIEMPLOYER PLAN", as such term is defined in Section 3(37) of ERISA.
(i) Contributions; Benefits. Each of FIS has paid in full
all amounts which were required to have been paid by them on or prior to the
date hereof as contributions to any of the FIS Pension Plans. The current value
of all accrued benefits under each of the FIS Pension Plans did not, as of the
latest valuation date thereof, exceed the then current value of the assets of
such FIS Pension Plan allocable to such accrued benefits, based upon the
actuarial assumptions then being utilized with respect thereto.
(j) Claims. There is not pending, and to the Best
Knowledge of FIS and the Principal Stockholders there is not threatened, any
claims against any of the Plans or any fiduciary thereof (other than claims for
benefits made in the ordinary course).
2.19 Certain Business Matters. Except as is set forth in
SCHEDULE 2.19, (A) FIS is not a party to or bound by any distributorship,
dealership, sales agency, franchise or similar agreement which relates to the
sale or distribution of any of its products or services, (B) there are no
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pending, or to the Best Knowledge of FIS and the Principal Stockholders
threatened, labor negotiations, work stoppages or work slowdowns involving or
affecting FIS, and, to the Best Knowledge of FIS and the Principal Stockholders,
there are pending activities by any labor union seeking to represent or organize
the employees of FIS, (D) the product and service warranties given by FIS or by
which FIS is bound (descriptions of which are set forth on SCHEDULE 2.19),
entail no greater obligations than are customary in the business in which they
are engaged, (E) FIS is not party to or bound by any agreement which limits its
freedom to compete in any line of business or with any Person, and (F) FIS is
not a party to or bound by any agreement in which any officer, director or
stockholder of FIS (or any affiliate of any such person) has, or had when made,
a direct or indirect material interest.
2.20 Contracts. SCHEDULE 2.20 hereto contains an accurate and
complete list of the following Contracts: (a) all Plans (as such term is defined
in Section 2.18); (b) any personal property lease with a fixed annual rental of
$10,000 or more; (c) any Contract relating to capital expenditures which involve
payments of $25,000 or more in any single transaction or series of related
transactions; (d) any Contract relating to the making of a loan or advance to or
investment in, any other Person; (e) any Contract evidencing or relating in any
way to indebtedness for money borrowed or to be borrowed, whether directly or
indirectly, by way of loan, purchase money obligation, guarantee (other than the
endorsement of negotiable instruments for collection in the ordinary course of
business), conditional sale, purchase or otherwise; (f) any management service,
employment, consulting or similar type of Contract which is not cancelable by
the Company party thereto without penalty or other financial obligation within
30 days; (g) any Contract limiting any Company's freedom to engage in any line
of business or to compete with any other Person, including agreements limiting
the ability of any Company or any of its affiliates to service competitive
accounts during or after the term thereof; (h) any collective bargaining or
union agreement; (i) any Contract with any of its officers or directors or any
Principal Stockholder not covered by subsection (f) above (including
indemnification agreements); (j) any secrecy or confidentiality agreement (other
than standard confidentiality agreements in computer software license agreements
or agreements with clients entered into in the ordinary course of business); (k)
any Contract with respect to any Intellectual Property, other than "SHRINK-WRAP"
and similar end-user licenses; (l) any agreement with a client required to be
listed on SCHEDULE 2.23; (m) any Contract with a media buying service; provided,
however, commitments to purchase media in the ordinary course of business do not
have to be set forth on SCHEDULE 2.20; (n) any joint venture agreement involving
a sharing of profits not covered by clauses (a) through (m) above; and (o) any
Contract (not covered by another subsection of this Section 2.20) which involves
$100,000 or more over the unexpired term thereof and is not cancelable by FIS
without penalty or other financial obligation within 30 days. Each Contract to
which FIS is a party, including, but not limited to those set forth on SCHEDULE
2.20 is in full force and effect, and there exists no default or event of
default by FIS or to the Best Knowledge of the Principal Stockholders, by any
other Person, or occurrence, condition, or act (including the transactions
contemplated hereby) which, with the giving of notice, the lapse of time or the
happening of any other event or condition, would become a default or event of
default thereunder by FIS, and there are no outstanding claims of breach or
indemnification or notice of default or termination of any such Contract.
2.21 Compliance with Laws; Permits.
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2.21.1 Compliance. FIS is, and its business has been
conducted, in compliance with all applicable Laws and Orders, except in each
case (other than with respect to compliance with Laws and Orders relating to the
regulation or protection of the environment ("ENVIRONMENTAL LAWS AND ORDERS"),
where the failure to so comply would not reasonably be expected to have a
Material Adverse Effect, including without limitation: (a) all Laws and Orders
promulgated by the Federal Trade Commission or any other Governmental or
Regulatory Authority; (b) all Environmental Laws and Orders; and (c) all Laws
and Orders relating to labor, civil rights, and occupational safety and health
laws, worker's compensation, employment and wages, hours and vacations, or pay
equity. FIS has not been charged with, or, to the Best Knowledge of the
Principal Stockholders threatened with or under any investigation with respect
to, any charge concerning any violation of any Laws or Orders.
2.21.2 Permits. FIS has all permits, licenses, and other
government certificates, authorizations and approvals ("PERMITS") required by
any Governmental or Regulatory Authority for the operation of its business and
the use of its assets as presently operated or used, except where the failure to
have such Permits would not reasonably be expected to have a Material Adverse
Effect. All of the Permits are in full force and effect and no action or claim
is pending, nor to the Best Knowledge of the Principal Stockholders is
threatened, to revoke or terminate any of such Permits or declare any such
Permit invalid in any material respect.
2.22 No Default or Violation. Except as set forth on SCHEDULE
2.22, FIS (i) is not in default under or in violation of (and no event has
occurred which has not been waived which, with notice or lapse of time or both,
would result in a default by FIS under), nor has FIS received any notice of a
claim that it is in default under or that it is in violation of any of the
terms, conditions or provisions of any note, bond, mortgage, debt instrument,
credit facility, security agreement, lease, deed of trust, franchise, indenture,
license, agreement or other instrument, commitment or obligation to which it is
a party or by which any property of assets of FIS is bound.
2.23 Customers. SCHEDULE 2.23 sets forth for FIS (a) the 20
largest clients (measured by revenues), and the revenues from each such client
and from all clients (in the aggregate) for the twelve months ended December 31,
1999 and (b) the clients projected to be the 20 largest clients (measured by
revenues) based on FIS' current profit plan for the year ended December 31,
2000, together with the estimated revenues for each such client and all clients
(in the aggregate) for such periods. The Principal Stockholders do not warrant
that the estimated revenues set forth on SCHEDULE 2.23 will prove to be
accurate; provided, however, the Principal Stockholders do represent that they
were made in good faith and on a reasonable basis. Except as set forth on
SCHEDULE 2.23, no client of FIS has advised FIS or any Principal Stockholder in
writing that it is (x) terminating or considering terminating the handling of
its business by FIS as a whole or in respect of any particular product, project
or service or (y) planning to reduce its future spending with FIS in any
material manner; and to the Best Knowledge of the Principal Stockholders
(without making any special inquiry of any clients), no client has orally
advised any of FIS or the Principal Stockholders of any of the foregoing events.
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2.24 Interests in Customers, Suppliers, Etc. Except as set
forth on SCHEDULE 2.24, (x) neither the Principal Stockholders nor any Person
controlled by any of the Principal Stockholders nor (y) to the Best Knowledge of
the Principal Stockholders (without making any inquiry of any member of the
Related Group, as hereinafter defined), any officer, director, or employee of
any of FIS, any parent, brother, sister, child or spouse of any such officer,
director or employee (collectively, the "RELATED GROUP"), or any entity
controlled by anyone in the Related Group:
(i) owns, directly or indirectly, any interest in
(excepting for ownership, directly or indirectly, of less than 1/4 of
1% of the issued and outstanding shares of any class of securities of a
publicly held and traded companies) or received or has any right to
receive payments from, or is an officer, director, employee or
consultant of, any Person which is, or is engaged in business as, a
competitor, lessor, lessee, supplier, distributor, sales agent,
customer or client of FIS;
(ii) owns, directly or indirectly, in whole or in part,
any tangible or intangible property (including, but not limited to
Intellectual Property), that FIS uses in the conduct of its business,
other than immaterial personal items owned and used by employees at
their work stations; or
(iii) has any cause of action or other claim whatsoever
against, or owes any amount to, FIS, except for claims in the ordinary
course of business such as for accrued vacation pay, accrued benefits
under employee benefit plans, and similar matters and agreements
existing on the date hereof.
2.25 Corporate Controls. Neither the Principal Stockholders,
nor, to the Best Knowledge of the Principal Stockholders, any officer,
authorized agent, employee or any other Person while acting on behalf of FIS,
has, directly or indirectly: used any corporate fund for unlawful contributions,
gifts, or other unlawful expenses relating to political activity; made any
unlawful payment to foreign or domestic government officials or employees or to
foreign or domestic political parties or campaigns from corporate funds;
established or maintained any unlawful or unrecorded fund of corporate monies or
other assets; made any false or fictitious entry on its books or records; made
any bribe, rebate, payoff, influence payment, kickback, or other unlawful
payment, or other payment of a similar or comparable nature, to any Person,
private or public, regardless of form, or entity, private or public, regardless
of form, whether in money, property, or services, to obtain favorable treatment
in securing business or to obtain special concessions, or to pay for favorable
treatment for business secured or for special concessions already obtained, and
FIS has not participated in any illegal boycott or other similar illegal
practices affecting any of its actual or potential customers.
2.26 Brokers. No agent, broker, person or firm acting on
behalf of FIS or any of the Principal Stockholders, or under the authority of
either of them, is or will be entitled to a financial advisory fee, brokerage
commission or other like payment in connection with any of the transactions
contemplated hereby.
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2.27 Information as to FIS. None of the representations or
warranties made by FIS and the Principal Stockholders with respect to FIS in
this Agreement or in any agreement or document executed and delivered pursuant
hereto are false or misleading with respect to any material fact, or omit to
state any material fact necessary in order to make the statements therein
contained not misleading.
3. Representations and Warranties as to EOL and Acquisition Corp.. EOL
represents and warrants to FIS and the Principal Stockholders as follows:
3.1 Organization, Standing and Power. Each of EOL and
Acquisition Corp. are corporations duly organized, validly existing and in good
standing under the laws of the State of Delaware and have all requisite
corporate power and authority to own, lease and operate its properties and to
carry on its business as presently conducted by it. Each of EOL and Acquisition
Corp. are duly qualified to do business as a foreign corporation and is in good
standing in each jurisdiction where the ownership, use or leasing of its assets
and properties, or the conduct or nature of its business, makes such
qualification, licensing or admission necessary, except where the failure to so
qualify would not reasonably be expected to have an EOL Material Adverse Effect.
As used in this Agreement, the term "EOL MATERIAL ADVERSE EFFECT" shall mean any
effect that is materially adverse to the properties, assets, liabilities,
business, prospects, results of operations or condition (financial or otherwise)
of EOL and Acquisition Corp., taken as a whole.
3.2 Authority. The execution and delivery by EOL and
Acquisition Corp. of this Agreement and of each agreement to be executed and
delivered by either of them pursuant hereto, the performance by them of their
respective obligations hereunder and thereunder, and the consummations of the
transactions contemplated hereby and thereby, have been duly and validly
authorized by all necessary corporate action on the part of EOL and Acquisition
Corp., and EOL and Acquisition Corp. have all necessary corporate power with
respect thereto. This Agreement is, and, when executed and delivered by EOL and
Acquisition Corp. each other agreement will be, the valid and binding obligation
of EOL and Acquisition Corp., to the extent they are parties thereto, in
accordance with their respective terms.
3.3 Capitalization. The authorized capital stock of EOL
consists of 30,000,000 shares of EOL Common Stock, of which 12,458,602 shares
were issued and outstanding as of the date hereof , and 1,000,000 shares of
Preferred Stock, par value $.01 per share, none of which were issued and
outstanding as at that date. The authorized capital stock of Acquisition Corp.
consists of 10,000 shares of common stock, par value $.01 per share, of which
100 shares are issued and outstanding and owned by EOL. All issued and
outstanding shares of Common Stock of EOL and Acquisition Corp. have been duly
authorized and validly issued and are fully paid and non-assessable. As of the
date hereof, 2,007,271 shares of EOL Common Stock were issuable upon the
exercise or conversion of outstanding options, warrants, convertible securities
or other rights to acquire EOL Common Stock.
3.4 Non-Contravention; Approvals and Consents.
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3.4.1 Non-Contravention. The execution, delivery and
performance by EOL and Acquisition Corp. of their respective obligations
hereunder and the consummation of the transactions contemplated hereby will not
(a) violate, conflict with or result in the breach of any provision of the
Certificate of Incorporation or By-laws of EOL or Acquisition Corp. , or (b)
result in the violation by EOL or Acquisition Corp. of any Laws or Orders of any
Governmental or Regulatory Authority applicable to EOL or Acquisition Corp. or
any of their assets or properties, or (c) result in a violation or breach of,
constitute (with or without notice or lapse of time or both) a default under, or
require EOL or Acquisition Corp. to obtain any consent, approval or action of,
make any filing with or give any notice to, or result in or give to any Person
any right of payment or reimbursement, termination, cancellation, modification
or acceleration of, or result in the creation or imposition of any Lien upon any
of the assets or properties of EOL or Acquisition Corp., under any of the terms,
conditions or provisions of any Contract to which EOL or Acquisition Corp. is a
party or by which EOL and Acquisition Corp. or any of their assets or properties
are bound.
3.4.2 Approvals and Consents. No consent, approval or
action of, filing with or notice to any Governmental or Regulatory Authority or
other public or private third party is necessary or required under any of the
terms, conditions or provisions of any Law or Order of any Governmental or
Regulatory Authority or any Contract to which EOL or Acquisition Corp. is a
party or by which EOL or Acquisition Corp., or any of their assets or properties
are bound for EOL and Acquisition Corp., for the execution and delivery of this
Agreement, the performance by EOL and Acquisition Corp. of their obligations
hereunder or EOL and Acquisition Corp.'s consummation of the transactions
contemplated hereby..
3.5 Stock Issuable Pursuant to Merger. The shares of EOL
Common Stock into which the FIS Capital Stock will be converted as a result of
the Merger will be duly authorized and validly issued, and fully paid and
non-assessable.
3.6 Brokers. No agent, broker, person or firm acting on behalf
of EOL or Acquisition Corp., or under the authority of either of them, is or
will be entitled to a financial advisory fee, brokerage commission or other like
payment in connection with any of the transactions contemplated hereby.
3.7 SEC Filings. EOL has filed all forms, registration
statements, reports, statements and documents required to be filed by it with
the Securities and Exchange Commission (the "SEC") since the initial public
offering of its securities on May 26, 1999 (collectively, the "SEC REPORTS").
None of the SEC Reports (except to the extent revised or superseded by a
subsequent filing with the SEC) contained, as of the date that it was filed with
the SEC, any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The financial statements included in the SEC Reports were prepared
in accordance with GAAP consistently applied (except as may be otherwise
indicated in the notes
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thereto), and fairly present the financial position of EOL as at the dates
thereof and its results of operations and cash flows for the periods indicated,
except that (i) any unaudited financial statements are subject to normal
reoccurring adjustments which might be required as a result of year-end audits,
and (ii) the financial statements contained in Form 10-Q filings contain certain
departures from GAAP, as permitted by the SEC.
3.8 Review of FIS information. EOL has had a full opportunity
to request from FIS and its representatives, and has received and reviewed, all
oral and written information concerning the FIS that EOL deems relevant to its
decision to enter into this Agreement and to consummate the transactions
contemplated hereby. Notwithstanding the access and receipt of such information,
EOL is relying fully upon the representations, warranties, covenants and
agreements of the FIS and the Principal Stockholders contained in this Agreement
and the Schedules furnished by FIS and the Principal Stockholders pursuant to
this Agreement, as well as the certificates delivered at the Closing by FIS and
the Principal Stockholders in connection with its decision to consummate the
transactions contemplated in this Agreement.
4. Registration Rights.
(a) In the event that EOL seeks to effect a public
offering of EOL Common Stock and, in such regard, EOL shall determine to proceed
with the actual preparation and filing of a registration statement under the
Securities Act of 1933, as amended (the "SECURITIES ACT"), in connection with
the proposed offer and sale of any of its securities by it or any of its
security holders (other than a registration statement on Form S-4, S-8 or other
limited purpose form), then EOL will give written notice of such determination
to the Principal Stockholders ("HOLDERS"). Upon the written request of the
Holders (the "RESPONDING HOLDERS"), within twenty (20) days after receipt of any
such notice from EOL, EOL will, except as provided herein, cause all, or any
portion so requested, of the shares of EOL Common Stock (collectively the
"REGISTRABLE SECURITIES") owned by the Responding Holders to be included in such
registration statement, all to the extent requisite to permit the sale or other
disposition by the prospective seller or sellers of the Registrable Securities
to be so registered; provided, however, that nothing provided herein shall
either (i) require EOL to file any registration statement at any time or (ii)
prevent EOL from, at any time, abandoning or delaying any such registration. If
any registration pursuant to this Section 4(a) shall be underwritten, in whole
or in part, EOL shall require that the Registrable Securities requested for
inclusion pursuant to this Section 4(a) be included in the underwriting on the
same terms and conditions as the securities otherwise being sold through the
underwriters. Notwithstanding the foregoing, if the managing underwriter
determines and advises in writing that the inclusion of all or any portion of
the Registrable Securities proposed to be included in the underwritten public
offering, together with any other issued and outstanding securities proposed to
be included therein by holders of securities other than the Responding Holders,
would interfere with the successful marketing of such securities, then the
number of such Registrable Securities that the managing underwriter believes may
be sold in such underwritten public offering shall be allocated for inclusion in
the registration statement in the following order of priority: (i) the
securities being offered by EOL: (ii) to the extent not in conflict with prior
agreements of EOL, the number of Registrable Securities then owned by each
Responding Holder, on a pro rata basis, based upon the number of Registrable
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Securities sought to be registered by each such Responding Holder; and (iii) the
number of securities held by holders other than Responding Holders, on a pro
rata basis, based upon the number of securities sought to be registered by each
such other holder. The Holders agree that, during the period of duration
specified by the Company and an underwriter of Common Stock or other securities
of the Company, following the date of the final prospectus distributed in
connection with an underwritten public offering of the Company's securities, it
shall not, to the extent requested by the Company and such underwriter, directly
or indirectly sell, offer to sell, contract to sell (including, without
limitation, any short sale or other Hedging Transaction), grant any option to
purchase or otherwise transfer or dispose of any securities of the Company held
by it at any time during such period except Common Stock included in such
registration. In the event of any cutback of Registrable Securities held by the
Responding Holders, the piggyback registration rights as set forth in this
Section 4(a) with respect to such cutback Registrable Securities shall continue
in effect, subject to the provisions of this Section 4.
(b) When EOL is required by the provisions of Section
4(a) to effect the registration of Registrable Securities under the Act, EOL
will:
1. prepare and file with the Securities and Exchange Commission
("SEC") a registration statement with respect to such
securities, and use its best efforts to cause such
registration statement to become and remain effective for a
period of one year from the date of effectiveness;
2. prepare and file with the SEC such amendments to such
registration statement and supplements to the prospectus
contained therein as may be necessary to keep such
registration statement effective for a period of one year from
the date of effectiveness;
3. furnish to the Holders participating in such registration and
to the underwriters of the securities being registered such
reasonable number of copies of the registration statement,
preliminary prospectus, final prospectus and such other
documents as such underwriters may reasonably request in order
to facilitate the public offering of such securities;
4. use its reasonable efforts to register or qualify the
securities covered by such registration statement under such
state securities or blue sky laws of such jurisdictions as
such participating holders may reasonably request in writing,
except that EOL shall not for any purpose be required to
execute a general consent to service of process or to qualify
to do business as a foreign company in any jurisdiction
wherein it is not so qualified;
5. notify the Holders participating in such registration,
promptly after it shall receive notice thereof, of the time
when such registration statement has become effective or a
supplement to any prospectus forming a part of such
registration statement has been filed;
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6. notify such holders promptly of any request by the SEC for the
amending or supplementing of such registration statement or
prospectus or for additional information;
7. prepare and file with the SEC, promptly upon the request of
any such holders, any amendments or supplements to such
registration statement or prospectus which, in the opinion of
counsel for such holders (and concurred with by counsel for
EOL), is required under the Securities Act or the rules and
regulations thereunder in connection with the distribution of
Registrable Securities by such holder;
8. prepare and promptly file with the SEC and promptly notify
such holders of the filing of such amendment or supplement to
such registration statement or prospectus as may be necessary
to correct any statements or omissions if, at the time when a
prospectus relating to such securities is required to be
delivered under the Securities Act, any event shall have
occurred as the result of which any such prospectus would
include an untrue statement of a material fact or omit to
state any material fact necessary to make the statement
therein, in light of the circumstances in which they were
made, not misleading; and;
9. advise such holders, promptly after it shall receive notice or
obtain knowledge thereof, of the issuance of any stop order by
the SEC suspending the effectiveness of such registration
statement or the initiation or threatening of any proceeding
for that purpose and promptly use its reasonable to prevent
the issuance of any stop order or to obtain its withdrawal if
such stop order should be issued.
(c) With respect to the registration, all fees, costs and
expenses of and incidental to such registration and public offering (as
specified below) in connection therewith shall be borne by EOL, provided,
however, that any Holders participating in such registration shall bear their
pro rata share of the underwriting discount and commission and transfer taxes.
The fees, costs and expenses of registration to be borne by EOL as provided
above shall include, without limitation, all registration, filing and NASD fees,
printing expenses, fees and disbursements of counsel and accountants for EOL,
and all legal fees and disbursements and other expenses of complying with state
securities or blue sky laws of any jurisdictions in which the securities to be
offered are to be registered and qualified. Fees and disbursements of counsel
and accountants for the Holders and any other expenses incurred by the Holders
not expressly included above shall be borne by the Holders; and
(d) 1. EOL will indemnify and hold harmless each holder
of Registrable Securities which are included in a registration statement
pursuant to the provisions of Section 4(a) hereof, its directors and officers,
and any underwriter (as defined in the Securities Act) for such holder and each
person, if any, who controls such holder or such underwriter
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within the meaning of the Securities Act, from and against, and will reimburse
such holder and each such underwriter and controlling person with respect to,
any and all loss, damage, liability, cost and expense to which such holder or
any such underwriter or controlling person may become subject under the
Securities Act or otherwise, insofar as such losses, damages, liabilities, costs
or expenses are caused by any untrue statement or alleged untrue statement of
any material fact contained in such registration statement, any prospectus
contained therein or any amendment or supplement thereto, or arise out of or are
based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances in which they were made, not misleading; provided,
however, that EOL will not be liable in any such case to the extent that any
such loss, damage, liability, cost or expense arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission so
made in conformity with information furnished by such holder, such underwriter
or such controlling person in writing specifically for use in the preparation
thereof.
2. Each holder of the Registrable Securities included in
a registration pursuant to the provisions of Section 4(a) will indemnify and
hold harmless EOL, its directors and officers, any controlling person and any
underwriter from and against, and will reimburse EOL, its directors and
officers, any controlling person and any underwriter with respect to, any and
all loss, damage, liability, cost or expense to which EOL or any controlling
person and/or any underwriter may become subject under the Securities Act or
otherwise, insofar as such losses, damages, liabilities, costs or expenses are
caused by any untrue statement or alleged untrue statement of any material fact
contained in such registration statement, any prospectus contained therein or
any amendment or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein in light of the
circumstances in which they were made, not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was so made in reliance upon and in
strict conformity with written information furnished by or on behalf of such
holder specifically for use in the preparation thereof.
3. Promptly after receipt by an indemnified party
pursuant to the provisions of paragraph (1) or (2) of this Section 4(c) of
notice of the commencement of any action involving the subject matter of the
foregoing indemnity provisions such indemnified party will, if a claim thereof
is to be made against the indemnifying party pursuant to the provisions of said
paragraph (1) or (2), promptly notify the indemnifying party of the commencement
thereof; but the omission to so notify the indemnifying party will not relieve
it from any liability which it may have to any indemnified party otherwise than
hereunder. In case such action is brought against any indemnified party and it
notifies the indemnifying party of the commencement thereof, the indemnifying
party shall have the right to participate in, and, to the extent that it may
wish, jointly with any other indemnifying party similarly notified, to assume
the defense thereof, with counsel satisfactory to such indemnified party,
provided, however, if the defendants in any action include both the indemnified
party and the indemnifying party and the indemnified party shall have reasonably
concluded that there may be legal defenses available to it and/or other
indemnified parties which are different from or in addition to those available
to the indemnifying party, or if there is a conflict of interest which would
prevent counsel for the indemnifying party from also representing
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the indemnified party, the indemnified party or parties have the right to select
separate counsel to participate in the defense of such action on behalf of such
indemnified party or parties. After notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party pursuant to the
provisions of said paragraph (1) or (2) for any legal or other expense
subsequently incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation unless (i) the indemnified
party shall have employed counsel in accordance with the provisions of the
preceding sentence, (ii) the indemnifying party shall not have employed counsel
satisfactory to the indemnified party to represent the indemnified party within
a reasonable time after the notice of the commencement of the action or (iii)
the indemnifying party has authorized the employment of counsel for the
indemnified party at the expense of the indemnifying party.
4. EOL will have no obligations pursuant to Section 4
with respect to any Registrable Securities proposed to be sold by a Responding
Holder in a registration pursuant to Section 4(a) hereof if, in the opinion of
counsel to EOL, all such Registrable Securities proposed to be sold by a
Responding Holder may be sold in a three-month period without registration under
the Securities Act pursuant to Rule 144 under the Securities Act.
5. Indemnification.
5.1 Survival. Notwithstanding any right of any party hereto
fully to investigate the affairs of any other party, and notwithstanding any
knowledge of facts determined or determinable pursuant to such investigation or
right of investigation, each party hereto shall have the right to rely fully
upon the representations, warranties, covenants and agreements of the other
parties contained in this Agreement and the Schedules, if any, furnished by any
other party pursuant to this Agreement, or in any certificate delivered at the
Closing by any other party. Subject to the limitations set forth in Sections
5.6.2, 5.6.3 and 5.6.5, the respective representations, warranties, covenants
and agreements of FIS, the Principal Stockholders and EOL and Acquisition Corp.
contained in this Agreement shall survive the Closing.
5.2 Obligation of the Principal Stockholders to Indemnify.
Subject to the limitations contained in Sections 5.6.1 and 5.6.2, the Principal
Stockholders hereby agree, severally and pro rata, in accordance with their
respective ownership of their FIS Common Stock, and will agree in accordance
with the provisions of the Escrow Agreement, to indemnify EOL and Acquisition
Corp. and their respective affiliates, shareholders, officers, directors,
employees, agents and successors, permitted assignees of EOL and their
affiliates (individually a "EOL INDEMNIFIED PARTY" and collectively, the "EOL
INDEMNIFIED PARTIES") against, and to protect, save and keep harmless the EOL
Indemnified Parties from, and to pay on behalf of or reimburse the EOL
Indemnified Parties as and when incurred for, any and all liabilities (including
liabilities for Taxes), obligations, losses, damages, penalties, demands,
claims, actions, suits, judgments, settlements, penalties, interest,
out-of-pocket costs, expenses and disbursements (including reasonable costs of
investigation, and reasonable attorneys', accountants' and expert witnesses'
fees) of whatever kind and nature (collectively, "LOSSES"), that may be imposed
on or incurred by the EOL Indemnified Party as a consequence of, in connection
with, incident to, resulting from or arising out of or in any
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way related to or by virtue of: (a) any misrepresentation, inaccuracy or breach
of any warranty or representation contained in Section 1.7 or Section 2 hereof
or in any certificate delivered by any Principal Stockholder at the Closing; (b)
any action, demand, proceeding, investigation or claim by any third party
(including any Governmental or Regulatory Authority) against or affecting any
EOL Indemnified Party which may give rise to or evidence the existence of or
relate to a misrepresentation or breach of any of the representations and
warranties of any Principal Stockholder contained in Section 1.7 or Section 2
hereof or in any certificate delivered by any Principal Stockholder at the
Closing; (c) any breach or failure by any Principal Stockholder to comply with,
perform or discharge any obligation, agreement or covenant by any Principal
Stockholder contained in this Agreement and (d) any litigation or claim
disclosed on SCHEDULE 2.11 to this Agreement. The term "LOSSES" as used in this
Agreement is not limited to matters asserted by third parties against an EOL
Indemnified Party, but includes Losses incurred or sustained by a EOL
Indemnified Party in the absence of third party claims.
5.3 Obligation of EOL to Indemnify. Subject to the limitations
set forth in Section 5.6.3 hereof, EOL hereby agrees to indemnify the Principal
Stockholders against, and to protect, save and keep harmless the Principal
Stockholders from, and to pay on behalf of or reimburse the Principal
Stockholders as and when incurred for, any and all Losses that may be imposed on
or incurred by the Principal Stockholders as a consequence of, in connection
with, incident to, resulting from or arising out of or in any way related to or
by virtue of: (a) any misrepresentation, inaccuracy or breach of any warranty or
representation of EOL contained in Section 3 hereof or in any certificate
delivered by EOL at the Closing; (b) any action, demand, proceeding,
investigation or claim by any third party (including any Governmental or
Regulatory Authority) against or affecting the Principal Stockholders which may
give rise to or evidence the existence of or relate to a misrepresentation or
breach of any of the representations and warranties of EOL contained in Section
3 hereof or in any certificate delivered by EOL at the Closing; or (c) any
breach or failure by EOL to comply with, perform or discharge any obligation,
agreement or covenant by EOL contained in this Agreement.
5.4 Indemnification Procedures.
5.4.1 Non-Third-Party Claims. In the event that any Person entitled to
indemnification under this Agreement (an "INDEMNIFIED PARTY") asserts a claim
for indemnification which does not involve a Third Party Claim (as defined in
Section 5.4.2) against which a Person is required to provide indemnification
under this Agreement (an "INDEMNIFYING PARTY"), the Indemnifying Party may
acknowledge and agree by notice to the Indemnified Party in writing to satisfy
such claim within 30 days of receipt of notice of such claim from the
Indemnified Party. In the event that the Indemnifying Party disputes such claim,
the Indemnifying Party shall provide written notice of such dispute to the
Indemnified Party within 30 days of receipt of written notice of such claim,
setting forth a reasonable basis of such dispute. In the event that the
Indemnifying Party shall fail to provide written notice to the Indemnified Party
within 30 days of receipt of notice from the Indemnified Party that the
Indemnifying Party either acknowledges and agrees to pay such claim or disputes
such claim, the Indemnifying Party shall be deemed to have acknowledged and
agreed to pay such claim in full and to have waived any right to dispute such
claim. Once the Indemnifying Party has acknowledged and agreed to pay any claim
pursuant to this Section 5.4.1 or once any dispute under
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this Section 5.4.1 has been finally resolved in favor of indemnification by a
court or other tribunal of competent jurisdiction, subject to the provisions of
Section 5.6.1, the Indemnifying Party shall pay the amount of such claim to the
Indemnified Party within 10 days of the date of acknowledgement or resolution,
as the case may be, to such account and in such manner as is designated in
writing by the Indemnified Party.
5.4.2 Third-Party Claims. (a) In the event that any Indemnified Party
asserts a claim for indemnification or receives notice of the assertion of any
claim or of the commencement of any action or proceeding by any Person who is
not a party to this Agreement or an affiliate of a party to this Agreement (a
"THIRD PARTY CLAIM") against an Indemnifying Party, the Indemnified Party shall
give written notice to the Indemnifying Party (the "CLAIMS NOTICE") within 20
days after learning of such claim (or within such shorter time as may be
necessary to give the Indemnifying Party a reasonable opportunity to respond to
such claim), together with a statement specifying the basis of such Third Party
Claim. The Indemnifying Party shall have the right, upon written notice to the
Indemnified Party (the "DEFENSE NOTICE") within 20 days after receipt from the
Indemnified Party of the Claims Notice, which Defense Notice shall specify the
counsel it will appoint to defend such claim ("DEFENSE COUNSEL"), to conduct at
its expense the defense against such Third Party Claim in its own name, or if
necessary in the name of the Indemnified Party; provided, however, that the
Indemnified Party shall have the right to approve the Defense Counsel, which
approval shall not be unreasonably withheld or delayed.
(b) In the event that the Indemnifying Party within such 20 day period
fails to give the Defense Notice, the Indemnified Party shall have the right to
conduct the defense and to compromise and settle such Third Party Claim without
prior consent of the Indemnifying Party and subject to the provisions of Section
5.6.1, the Indemnifying Party will be liable for all reasonable costs, expenses,
settlement amounts or other Losses paid or incurred in connection therewith.
(c) In the event that the Indemnifying Party disputes the claim for
indemnification against it, such Indemnifying Party shall notify the Indemnified
Party to such effect within 20 days after receipt of the Claims Notice (or
within such shorter time as may be necessary to give the Indemnified Party a
reasonable opportunity to respond to such Third Party Claim). In such event the
Indemnified Party shall have the right to conduct the defense and to compromise
and settle such Third Party Claim, with the prior consent of the Indemnifying
Party (which consent will not be unreasonably withheld or delayed), and, once
such dispute has been finally resolved in favor of indemnification by a court or
other tribunal of competent jurisdiction or by mutual agreement of the
Indemnified and Indemnifying Party, subject to the provisions of Section 5.6.1,
the Indemnifying Party shall within 10 days of the date of such resolution or
agreement, pay to the Indemnified Party all reasonable costs, expenses,
settlement amounts or other Losses paid or incurred by the Indemnified Party in
connection with such Third Party Claim.
(d) In the event that the Indemnifying Party does deliver a Defense
Notice and thereby elects to conduct the defense of the Third Party Claim, the
Indemnifying Party shall be entitled to have the exclusive control over the
defense of the Third Party Claim and the Indemnified Party will cooperate in
good faith with and make available to the Indemnifying Party such assistance and
materials as it may reasonably request, all at the expense of the Indemnifying
Party. The
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Indemnified Party shall have the right at its expense to participate in the
defense assisted by counsel of its own choosing. The Indemnifying Party will not
settle the Third Party Claim or cease to defend against any Third Party Claim as
to which it has delivered a Defense Notice, without the prior written consent of
the Indemnified Party, which consent will not be unreasonably withheld or
delayed; provided, however, such consent may be withheld for any reason if, as a
result of such settlement or cessation of defense, (i) injunctive relief or
specific performance would be imposed against the Indemnified Party, or (ii)
such settlement or cessation would lead to liability or create any financial or
other obligation on the part of the Indemnified Party for which the Indemnified
Party is not entitled to indemnification hereunder.
(e) If an Indemnified Party refuses to consent to a bona fide offer of
settlement which provides for a full release of the Indemnified Party and its
affiliates relating to the claims underlying the offer of settlement and solely
for a monetary payment which the Indemnifying Party wishes to accept, the
Indemnified Party may continue to pursue such matter, free of any participation
by the Indemnifying Party, at the sole expense of the Indemnified Party. In such
an event, the obligation of the Indemnifying Party shall be limited to the
amount of the offer of settlement which the Indemnified Party refused to accept
plus the reasonable costs and expenses of the Indemnified Party incurred prior
to the date the Indemnifying Party notified the Indemnified Party of the offer
of settlement.
(f) A failure by an Indemnified Party to give timely, complete or
accurate notice as provided in this Section 5.4 will not affect the rights or
obligations of any party hereunder except and only to the extent that, as a
result of such failure, any party entitled to receive such notice was deprived
of its right to recover any payment under its applicable insurance coverage or
was otherwise directly and materially damaged as a result of such failure to
give timely notice.
5.5 Right to Proceed Against Escrow Fund. Without limiting any
other rights or remedies available to it, EOL shall be entitled, subject to the
limitations set forth in Section 5.6, to obtain indemnity from the Escrow Fund
for Losses under Section 5.2 hereof and in accordance with Section 5.4 (which
indemnity shall be at the option of EOL in form of release of a portion of the
Cash Portion or an offset to principal and/or interest under the Note);
provided, however, EOL may only exercise such right to proceed in such manner in
respect of claims relating to Losses actually incurred by a EOL Indemnified
Party (in which case the right to obtain indemnity from the Escrow Fund shall be
limited to the amount of such actual Loss) or claims actually asserted by a
third party (in which case the right to obtain indemnity from the Escrow Fund
shall not exceed EOL's good faith estimate of the amount of indemnifiable Losses
that will ultimately be payable to a EOL Indemnified Party in respect of such
claims). If any such claims for indemnity are resolved in favor of a Principal
Stockholder by mutual agreement or otherwise, or if the amount withdrawn from
the Escrow Fund exceeds the amount ultimately payable to an EOL Indemnified
Party in respect of such claim, EOL shall pay to the Escrow Fund the excess
amount withdrawn from the Escrow Fund with respect to such claim, together with
interest thereon for the period such amount has been withheld at a rate equal to
the published prime rate of interest of The Chase Manhattan Bank, in effect from
time to time during the relevant period.
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5.6 Limitations On and Other Matters Regarding
Indemnification.
5.6.1 Indemnity Cushion and Cap. Subject to Section 5.6.5
the Principal Stockholders shall not have any liability to any EOL Indemnified
Party with respect to Losses arising out of any of the matters referred to in
Sections 5.2 until such time as the amount of such liability shall exceed
$62,500 (in which case the Principal Stockholders shall be liable for all Losses
in excess of $62,500); provided, however, that this Section 5.6.1 shall not
apply to a breach of a representation or warranty contained in Sections 1.7,
2.8, 2.14, 2.18 or 2.26 or any other provision of this Agreement relating to
Taxes (for which there is no cushion). Notwithstanding anything to the contrary
herein, subject to Section 5.6.5, the maximum aggregate liability of each
Principal Stockholder for indemnity payments under Section 5.2 shall be limited
to his pro-rata portion of the Merger Consideration allocated to such Principal
Stockholder (including, without duplication, any amounts offset pursuant to
Section 5.5).
5.6.2 Termination of Indemnification Obligations of the
Principal Stockholders. Subject to Section 5.6.5, the obligation of the
Principal Stockholders to indemnify under Section 5.2 hereof shall terminate on
the second anniversary of the Closing Date, except (a) as to matters as to which
the EOL Indemnified Party has made a claim for indemnification on or prior to
such date and (b) with respect to any claim for Losses pertaining to a
misrepresentation or a breach of representation or warranty under Sections 1.7,
2.8, 2.14, 2.18 or 2.26 or any other Section of this Agreement relating to
Taxes. The obligation to indemnify referred to in:
(i) the preceding clause (a) shall survive the expiration of such
period until such claim for indemnification is finally resolved and any
obligations with respect thereto are fully satisfied; and
(ii) the preceding clause (b) shall terminate 180 days after the
expiration of the relevant federal, state or local statute of
limitations (taking into account any extensions or waivers thereof),
except as to matters as to which any Indemnified Party has made a claim
for indemnification on or prior to such date, in which case the right
to indemnification with respect thereto shall survive the expiration of
any such period until such claim for indemnification is finally
resolved and any obligations with respect thereto are fully satisfied.
5.6.3 Termination of Indemnification Obligations of EOL.
The obligation of EOL to indemnify under Section 5.3 hereof shall terminate on
the second anniversary of the Closing Date except as to matters as to which the
Principal Stockholders have made a claim for indemnification on or prior to such
date, in which case the right to indemnification with respect thereto shall
survive such period until such claim for indemnification is resolved and any
obligations with respect thereto are fully satisfied.
5.6.4 Treatment. Any indemnity payments by an
Indemnifying Party to an Indemnified Party under this Section 5 shall be treated
by the parties as an adjustment to the Merger Consideration.
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5.6.5 Exceptions. Each of the limitations set forth above
in this Section 5.6 shall in no event (a) apply to any Losses incurred by a EOL
Indemnified Party which relate, directly or indirectly, to (i) any fraudulent
acts committed by a Principal Stockholder in connection with the transaction
contemplated hereby; (ii) any indemnity obligation under Section 5.2(d); and
(iii) the Principal Stockholders' obligations set forth in Section 10.1 to pay
certain expenses; or (b) apply to any Losses incurred by any Principal
Stockholder which relate, directly or indirectly, to (i) any fraudulent acts
committed by EOL in connection with the transaction contemplated hereby and (ii)
EOL's obligations set forth in Section 10.1 to pay certain expenses.
6. Intentionally Omitted.
7. Additional Covenants
7.1 Investigation. Between the date hereof and the Closing
Date, EOL may, directly and through its representatives, make such investigation
of FIS and their respective businesses, assets and liabilities as it deems
necessary or advisable, but such investigation shall not affect any of the
representations and warranties contained herein or in any instrument or document
delivered pursuant hereto. In furtherance of the foregoing, EOL and its
representatives shall have, at all reasonable times after the date hereof, full
access to the premises and to the books and records of FIS, and FIS shall
furnish to EOL and its representatives such financial and operating data and
other information as may be from time to time reasonably requested. Except in
connection with its evaluation of the transactions contemplated hereby, EOL
shall use its reasonable best efforts not to disclose or use any confidential
information which it obtains in connection with the foregoing until the
transactions contemplated hereby are consummated or said information becomes
otherwise lawfully ascertainable from other sources. In the event that the
Merger is not consummated for any reason whatsoever, EOL agrees that it shall
return to FIS all documents, workpapers and other written materials which were
obtained by it during the course of such investigation which constitute
Confidential Information.
7.2 Consummation of Transaction. Each of the parties hereto
hereby agrees to use its reasonable best efforts to cause all conditions
precedent to his or its obligations and to the obligations of the other parties
hereto to consummate the transactions contemplated hereby to be satisfied,
including, but not limited to, using its best efforts to obtain all required
consents, waivers, amendments, modifications, approvals, authorizations,
novations and licenses; provided, however, that nothing herein contained shall
be deemed to modify any of the absolute obligations imposed upon any of the
parties hereto under this Agreement or any agreement executed and delivered
pursuant hereto.
7.3 Cooperation. Each of the parties hereto hereby agrees to
fully cooperate with the other parties hereto in preparing and filing any
notices, applications, reports and other instruments and documents which are
required by, or which are desirable in the reasonable opinion of any of the
parties hereto in respect of, any statute, rule, regulation or order of any
governmental or administrative body in connection with the transactions
contemplated hereby.
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7.4 Accuracy of Representations. Each party hereto agrees that
prior to the Closing Date he or it will enter into no transaction and take no
action, and will use its reasonably best efforts to prevent the occurrence of
any event, which would result in any of its representations, warranties or
covenants contained in this Agreement or in any agreement, document or
instrument delivered pursuant hereto not to be true and correct in all material
respects, or not to be performed as contemplated, at and as of the time
immediately following the occurrence of such transaction or event.
7.5 Conduct of Business of FIS Pending Merger. During the
period from the date hereof to the Effective Time, except pursuant to the terms
hereof or unless EOL shall otherwise consent in writing, FIS shall, and each
Principal Stockholder shall cause FIS to, (i) carry out its operations only in
the ordinary course of business and in a manner consistent with past practice
and in compliance with applicable laws; (ii) use its best efforts to keep
available the services of their present officers, employees, representatives and
agents and not terminate the services of any employee (other than for good
reason and with prior written notice to EOL); and (iii) preserve its present
relationships with customers, suppliers and other persons with which it has
business relations. By way of illustration and not limitation, between the date
of this Agreement and the Effective Time, FIS shall not, and each Principal
Stockholder shall cause FIS not to, directly or indirectly, do or commit to do
any of the following without the prior written consent of EOL:
(a)(i) declare, set aside or pay any dividends on, or
make any other distributions in respect of, any of its common stock, except that
bonuses shall be permitted to made to certain stockholders of FIS immediately
prior to the Closing in an amount mutually acceptable to EOL and (ii) split,
combine or reclassify any of its common stock or issue or authorize the issuance
of any other securities in respect of, in lieu of or in substitution for shares
of its common stock; or (iii) purchase, redeem or otherwise acquire any shares
of common stock of any entities or any other securities thereof or any rights,
warrants or options to acquire any such shares or other securities.
(b) authorize for issuance, issue, deliver, sell or agree
to commit to issue, sell or deliver (whether through the issuance or granting of
options, warrants, commitments, subscriptions, rights to purchase or otherwise),
pledge or otherwise encumber any shares of its common stock, any other voting
securities or any securities convertible into, or any rights, warrants or
options to acquire, any such shares, voting securities convertible securities or
any other securities or equity equivalents;
(c)(i) increase the salary, compensation or fringe
benefits of any of its directors, officers or employees, (ii) enter into any
employment arrangement other than in the ordinary course of business consistent
with past practice, with any other employee of FIS, (iii) establish, adopt,
enter into or amend or terminate any written agreement or other plan, agreement,
trust, fund, policy or arrangement for the benefit of any directors, officers or
employees, (iv) notwithstanding any agreement to the contrary, pay any bonus,
salary or compensation to any of its directors, officers or employees or (v)
issue, grant or make any stock based awards to any of its directors, officers or
employees.
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(d) amend its Certificate of Incorporation, Bylaws or
other comparable charters or organizational documents or alter through merger,
liquidation, reorganization, restructuring or in any other fashion the corporate
structure or ownership of FIS;
(e) acquire or agree to acquire (i) by merging or
consolidating with, or by purchasing a substantial portion of the stock or
assets of, or by any other manner, any business or corporation, partnership,
joint venture, association or other business organization or division thereof,
or (ii) any assets that are material, individually or in the aggregate, to FIS,
except purchases consistent with past practice;
(f) sell, lease, license, mortgage or otherwise encumber
or subject to any lien or otherwise dispose of any of its properties or assets,
except sales in the ordinary course of business consistent with past practice;
(g) 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 of FIS,
guarantee any debt securities of another person, or enter into any arrangement
having the economic effect of any of the foregoing, except for short-term
borrowings incurred in the ordinary course of business consistent with past
practice;
(h) enter into any agreement, contract, commitment,
whether or not in the ordinary course of business, involving a commitment on the
part of FIS to purchase, sell, lease or otherwise dispose of assets or require
payment by any or all of FIS in excess of $25,000;
(i) expend funds for capital expenditures unless
otherwise consented to in writing by EOL;
(j) adopt a plan of complete or partial liquidation or
resolutions providing for or authorizing such a liquidation or dissolution,
merger, consolidation, restructuring, recapitalization or reorganization;
(k) recognize any labor union (unless legally required to
do so) or enter into or amend any collective bargaining agreement;
(l) change any accounting principles used by them, unless
otherwise consented to in writing by EOL;
(m) make any tax election or settle or compromise any
income tax liability or file any federal income tax return prior to the last day
(including extensions) prescribed by law, in the case of any of the foregoing,
material to the business, financial condition or results of operations of FIS;
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(n) settle or compromise any litigation in which FIS is a
defendant (whether or not commenced prior to the date of this Agreement) or
settle, pay or compromise any claims not required to be paid; and
(o) authorize or permit any of its officers, directors or
employees or any investment banker, financial advisor, attorney, accountant or
other representative, to solicit, initiate or encourage (including by way of
furnishing information) or take any other action to facilitate, any inquiries or
the making of any proposal which constitutes, or may reasonably be expected to
lead to any Alternate Transaction (as hereinafter defined) or enter into any
arrangement or negotiations of any type relating to the sale or other
disposition of a material portion of FIS' assets (other than in the ordinary
course of business) or FIS' capital stock (including any merger or consolidation
involving FIS.
(p) authorize any of, or commit or agree to take any of
the foregoing actions;
7.6 Sales Taxes, etc. The holders of FIS Capital Stock shall
be responsible for, and shall pay, any and all sales taxes, transfer taxes and
similar charges which became payable as a result of transactions contemplated
hereby.
7.7 Employment Agreement. On or prior to the Closing Date, EOL
and each of the Principal Stockholders shall execute and deliver an Employment
Agreement in substantially the in substantially the forms of Exhibit G-1 and G-2
attached hereto.
7.8 Landlord Consents. On or prior to the Closing Date, FIS
shall obtain the written consent of the landlords of the Rockville Office and
the Owen Mills Office to assign such leases for such premises on the same terms
and conditions as are in effect prior to the Closing Date.
7.9 FIS Employees.
7.9.1 EOL and/or the Surviving Corporation shall provide each
current FIS employee as of the Closing Date with (i) compensation that is at
least equal to the current compensation earned by such employees as reflected in
SCHEDULE 2.17 and (ii) benefits commensurate to the benefits that are currently
received by such employees as reflected in SCHEDULE 2.17.
7.9.2 In the event that EOL desires to terminate the services
of any present employee of FIS prior to December 31, 2000, EOL shall provide
such employee with no less than 60 days prior notice and if EOL desires to
terminate the services of any present employee of FIS during the period
commencing on January 1, 2001 through the first anniversary of the Closing Date,
EOL shall provide such employee with 30 days prior notice. The foregoing notice
periods shall however not be applicable in the event of a termination of a
nature in which EOL determines that special circumstances exist in which the
foregoing notice requirement is not justified (e.g., acts of
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fraud, dishonesty, negligence, other willful misconduct and the like to the
detriment of EOL or the Surviving Corporation). Other than the foregoing notice
requirements, nothing contained herein shall be deemed to create anything other
than an at-will employment relationship between the present employees of FIS
(other than the Principal Stockholders) and the Surviving Corporation and/or
EOL.
7.10 Further Assurances. Each Principal Stockholder shall from
time to time after the Closing Date, at his sole cost and expense, take any and
all actions, and execute, acknowledge, deliver, file and/or record any and all
documents and instruments, as EOL may reasonably request in order to more fully
perfect the rights which are intended to be granted to EOL or the Surviving
Corporation hereunder.
7.11 No Other Negotiations. During the time period commencing
on the date of this Agreement and ending on the earlier to occur of (a)
termination of this Agreement in accordance with the provisions of Section 9(a)
or 9(b) or (b) consummation of the Merger, FIS will not, and FIS will not
authorize or permit any officer, director, employee, stockholder, affiliate or
agent of FIS to, directly or indirectly: (i) solicit, initiate or induce the
making, submission or announcement of, any offer or proposal from any party
concerning any Alternative Transaction (as defined below); (ii) furnish any
information regarding FIS to any person or entity in connection with or in
response to any inquiry, offer or proposal for or regarding any Alternative
Transaction; (iii) participate in any negotiations with any person or entity
with respect to any Alternative Transaction; or (iv) execute, enter into or
become bound by any letter of intent, agreement, commitment or understanding
between FIS and any third party that relates to, provides for or concerns any
Alternative Transaction. During the foregoing time period identified in the
preceding sentence, Girod will promptly notify EOL orally and in writing of any
inquiries or proposals received by Girod regarding any Alternative Transaction
and will identify the party making the inquiry or proposal and the nature and
terms of any inquiry or proposal. As used herein, the term "Alternative
Transaction" means any commitment, agreement or transaction involving or
providing for the possible disposition of all or any substantial portion of FIS'
business, assets or capital stock, whether by way of merger, consolidation, sale
of assets, sale of stock, stock exchange, tender offer and/or any other form of
business combination.
7.12 Private Placement Exemption. The parties to this
Agreement intend that EOL shall issue the shares of EOL Common Stock hereunder
pursuant to a private placement under Section 4(2) of the Securities Act and
applicable state securities laws. The shares of EOL Common Stock shall
constitute "RESTRICTED SECURITIES" within the meaning of the Securities Act. The
certificates for EOL Common Stock to be issued in the Merger shall bear
appropriate legends to identify such shares as being restricted under the
Securities Act. FIS shall use its best efforts to furnish EOL with all
information concerning FIS and the Principal Stockholders as EOL may reasonably
request in connection with establishing the availability of federal and state
private placement exemptions for any action contemplated by this Section 7.12.
7.13 Reorganization. The parties intend to adopt this
Agreement as a plan of reorganization and to consummate the Merger as a
reorganization in accordance with the provisions of Section 368(a) of the Code.
However, EOL makes no representations or warranty to
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FIS or to any of the Principal Stockholders, and neither FIS nor any such holder
makes any representation or warranty to EOL, regarding the tax treatment of the
Merger or whether the Merger will qualify as a reorganization under the Code,
and FIS and EOL acknowledge and agree that they and the Principal Stockholders
are relying on their own tax advisors in connection with the Merger and the
other transactions contemplated by this Agreement. Notwithstanding the
foregoing, neither EOL nor FIS has taken or will take any action or will fail to
take any action, either before or after the Closing of the Merger (other than
those reflected in the terms of this Agreement), which could reasonably be
expected to cause the Merger to fail to qualify as a reorganization under
Section 368(a) of the Code.
8. Conditions of Merger.
8.1 Conditions to Obligations of EOL and Acquisition Corp. to
Effect the Merger. The respective obligations of EOL and Acquisition Corp. to
effect the Merger shall be subject to the fulfillment at or prior to the Closing
Date of the following conditions:
(a) Accuracy of Representations and Warranties. The
representations and warranties of FIS and the Principal Stockholders contained
in this Agreement or in any document, agreement or instrument delivered by any
or all of them pursuant hereto shall have been true in all material respects
when made, and, in addition, shall be true, in all material respects, on and as
of the Closing Date with the same force and effect as though made on and as of
the Closing Date.
(b) Performance of Agreements. FIS and each Principal
Stockholder shall have performed, in all material respects, all obligations and
agreements, and complied, in all material respects, with all covenants and
conditions, contained in this Agreement or in any document, agreement or
instrument delivered by any or all of them pursuant hereto and required to be
performed or complied with by any or all of them at or prior to the Closing
Date.
(c) Certificates. Each of FIS and the Principal
Stockholders shall have each furnished EOL with a certificate, dated the Closing
Date, to the effect that he has fulfilled the conditions specified in
subparagraphs 8.1(a) and 8.1(b) above.
(d) Opinion of Counsel for FIS and the Principal
Stockholders. EOL shall have received an opinion of Tighe Patton Armstrong &
Teasdale, P.L.L.C., counsel for FIS, and the Principal Stockholders, dated the
Closing Date, in substantially the form of Exhibit H attached hereto.
(e) Litigation. No order of any court or administrative
agency shall be in effect which restrains or prohibits the transactions
contemplated hereby, and no suit, action, inquiry, investigation or proceeding
in which it will be, or it is, sought to restrain, prohibit or change the terms
of or obtain damages or other relief in connection with this Agreement or any of
the transactions contemplated hereby, and which in the reasonable judgment of
EOL makes it
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inadvisable to proceed with the consummation of such transactions, shall have
been instituted or threatened by any person or entity.
(f) Consents and Approvals. All consents, waivers,
approvals, licenses and authorizations by third parties and governmental and
administrative authorities (and all amendments or modifications to existing
agreements with third parties) required as a precondition to the performance by
FIS and the Principal Stockholders of their respective obligations hereunder and
under any agreement delivered pursuant hereto, or which in EOL's judgment are
necessary to continue unimpaired any rights in and to the assets or business of
FIS which could be impaired by the Merger, shall have been duly obtained and
shall be in full force and effect. Specifically and not by way of limitation of
any consents, waivers, approvals, licenses and authorizations required to be
delivered hereunder, FIS shall have received from each of Nasdaq, CyberSettle,
Criimi Mae (i) a waiver of any rights that it may have to change its current
contractual or other relationship with FIS (either through exercise of any right
under, or amendment, modification, cancellation or termination of, its agreement
and other understanding with FIS) as a result of the execution of this Agreement
and the consummation of the transactions contemplated hereby and (ii) a
reaffirmation of its current contractual or other relationship with the
Surviving Corporation as of the Effective Time.
(g) No Material Adverse Change. There shall not have
occurred after the date hereof, in the reasonable judgment of EOL, a material
adverse change in the condition (financial or otherwise), business, assets,
prospects, liabilities or results of operations of FIS, taken as a whole.
(h) Intentionally Omitted.
(i) Stockholder Consents and Investors Representations.
All of the holders of shares of FIS Common Stock as of the Effective Time shall
have consented to the Merger and the transactions contemplated by this Agreement
and all of the holders of shares of FIS Capital Stock shall have executed and
delivered to EOL, investor representation letters, in substantially the form of
Exhibit I attached hereto and made a part hereof.
(j) Fairness Opinion. EOL shall have received from Gerard
Klauer Mattison & Co., Inc. an opinion as to the fairness to EOL from a
financial point of view of the consideration to be offered by EOL in connection
with the transactions contemplated hereby.
(j) Termination and Release of Participants in Stock
Option Plan. EOL shall have received reasonably acceptable documentation
relating to the termination of the FIS Year 2000 Stock Option Plan and releases
from all participants in such plan.
(k) Employment Agreements of Principal Stockholders. On
or prior to the Closing Date, EOL and each of the Principal Stockholders shall
execute and deliver an Employment Agreement in substantially the forms of
Exhibit G-1 and G-2 attached hereto.
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(l) Certain Deliveries of Girod. On or prior to the
Closing Date, Girod shall execute and deliver (i) an Officer and Director
Questionnaire of EOL and (ii) a waiver and release of claim with respect to any
previously authorized but unpaid compensation for prior years, both in the forms
provided by EOL.
8.2 Conditions to Obligations of FIS and the Principal
Stockholders to Effect the Merger. The obligations of FIS and the Principal
Stockholders to effect the Merger shall be subject to the fulfillment at or
prior to the Closing Date of the following conditions:
(a) Accuracy of Representations and Warranties. The
representations and warranties of EOL and Acquisition Corp. contained in this
Agreement or in any document, agreement or instrument delivered by it pursuant
hereto shall have been true when made, and, in addition, shall be true, in all
material respects, on and as of the Closing Date with the same force and effect
as though made on and as of the Closing Date.
(b) Performance of Agreements. EOL and Acquisition Corp.
shall have performed, in all material respects, all obligations and agreements,
and complied, in all material respects, with all covenants and conditions,
contained in this Agreement or in any document, agreement or instrument
delivered by them pursuant hereto and required to be performed or complied with
by them at or prior to the Closing Date.
(c) Certificates. EOL and Acquisition Corp. shall have
furnished FIS with certificates, executed by a responsible executive officers of
EOL and Acquisition Corp., dated the Closing Date, to the effect that each of
them has fulfilled the conditions specified in subsections 8.2(a) and 8.2(b)
hereof.
(d) Opinion of Counsel for EOL and Acquisition Corp.. FIS
and the Principal Stockholders shall have received an opinion of Littman Krooks
Roth & Ball P.C., counsel for EOL and Acquisition Corp., dated the Closing Date,
in substantially the form of Exhibit J attached hereto and made a part hereof.
(e) Litigation. No order of any court or administrative
agency shall be in effect which restrains or prohibits the transactions
contemplated hereby, and no suit, action, inquiry, investigation or proceeding
in which it will be, or it is, sought to restrain, prohibit or change the terms
of or obtain damages or other relief in connection with this Agreement or any of
the transactions contemplated hereby, and which in the reasonable judgment of
Girod makes it inadvisable to proceed with the consummation of such
transactions, shall have been instituted or threatened by any person or entity.
9. Termination, Amendment and Waiver.
9.1 Termination. This Agreement may be terminated at any time
prior to the Effective Time:
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(a) By mutual consent of EOL and Girod; or
(b) By either EOL, on the one hand, or FIS and Girod, on
the other hand, if (i) the Merger shall not have been consummated by October 30,
2000; provided, further, however, that the right to terminate this Agreement
under this subparagraph 9.1(b)(i) shall not be available to any party whose
failure to fulfill any obligation under this Agreement has been the cause of, or
resulted in, the failure of the Effective Time to occur on or before such date,
or (ii) a court of competent jurisdiction or governmental, regulatory or
administrative agency or commission shall have issued an order, decree or ruling
or taken any other action (which order, decree, ruling or other action the
parties hereto shall have used their reasonable best efforts to vacate), in each
case permanently restraining, enjoining or otherwise prohibiting the
transactions contemplated by this Agreement, or (iii) by either party if (A)
there has been a breach of a representation or warranty by the other such that
the conditions to this Agreement cannot be satisfied, or (B) there has been a
willful breach of a covenant by the other which has not been cured by the
breaching party.
9.2 Effect of Termination. In the event of the termination of
this Agreement as provided in paragraph 9, except with respect to (A)
subparagraphs 6.1, 7.1, 9.3 and 10.1, and (B) liability for any breach of any
obligation, covenant or agreement contained herein or any failure of the
representations and warranties contained herein to have been true if such breach
or failure results from the intentional, willful or grossly negligent conduct of
any party hereto, this Agreement shall forthwith become null and void, and there
shall be no liability on the part of any party hereto.
9.3 Certain Payments by FIS and Girod. In order to induce EOL
to execute and deliver this Agreement and to expend the resources necessary to
implement the transactions contemplated hereby, in the event that the Merger is
abandoned by Girod or FIS under circumstances that constitute a breach by FIS or
Girod of their obligations hereunder, and prior to December 31, 2000, either of
FIS and/or Girod reach an agreement, come to a mutual understanding as to terms
of an Alternative Transaction or execute a letter of intent, definitive
agreement or publicly announce an Alternative Transaction with a party other
than EOL or Acquisition Corp., then, in such event, FIS and Girod on a joint and
several basis shall pay to EOL within 5 days from the time such Alternative
Transaction becomes known to EOL, an amount not to exceed $250,000, plus EOL's
reasonable actual costs and expenses paid or incurred (including all
professional fees). To the extent permitted by applicable law, the payment to
EOL of the aforementioned amounts would be in addition to all other rights and
remedies which may be available to EOL.
10. General Provisions.
10.1 Fees and Expenses. Except as may be otherwise
specifically provided herein, EOL, on one hand, and the Principal Stockholders
(on behalf of itself and FIS), on the other hand, shall bear their own expenses
in connection with the transactions contemplated hereby. All expenses of the FIS
shall be deemed to be expenses of the Principal Stockholders.
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10.2 Amendment. This Agreement may not be amended except by a
written instrument executed by the parties hereto.
10.3 Waiver. At any time prior to the Effective Time, any
party hereto may (a) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (b) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto and (c) waive compliance with any of the
agreements or conditions contained herein. Any such extension or waiver shall be
valid only if set forth in an instrument in writing signed by the party or
parties to be bound thereby.
10.4 Notices. All notices, requests, demands and other
communications given hereunder shall be in writing and shall be deemed to have
been duly given: (i) on the date of delivery, if delivered personally or by
messenger, (ii) on the first business day following the date of timely deposit
with Federal Express or other nationally recognized overnight courier service,
if sent by such courier specifying next day delivery, (iii) upon receipt of
confirmation of transmission, if transmitted by telecopier; and (iv) on the
third business day after mailing, if mailed by registered or certified mail
(postage prepaid, return receipt requested); provided, however, that a notice of
change of address or telecopier number shall not be deemed to have been given
until actually received by the addressee. All such notices, requests, demands
and other communications shall be addressed as set forth below or to such other
address or telecopier number as either party hereto may designate to the other
party hereto by like notice:
if to EOL:
EDGAR Online, Inc.
50 Washington Avenue
12th Floor
Norwalk, CT 06854
Telecopier No.: (203) 852-5667
Attn: Susan Strausberg, Chief Executive Officer
Tom Vos, President
with a copy to:
Littman Krooks Roth & Ball P.C.
655 Third Avenue
New York, New York 10017
Telecopier No.: (212) 490-2990
Attn: Mitchell C. Littman, Esq.
if to FIS or the Principal Stockholders:
Financial Insight Systems
11200 Rockville Pike; Suite 310
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Rockville, MD 20852
Attn: Albert E. Girod, President and Representative
for the Principal Stockholders
with a copy to:
Tighe Patton Armstrong Teasdale, P.L.L.C.
1747 Pennsylvania Avenue, N.W.
Suite 300
Washington, D.C. 20006
Attn: Brian C. Quinn, Esq.
10.6 Press Releases. EOL and FIS shall consult with each other
prior to issuing any press release or otherwise making any public statement with
respect to the contents of this Agreement or the transactions contemplated
hereby, and none of the parties hereto shall, and FIS shall not, and the
Principal Stockholders shall cause FIS not to, issue any such press release or
make any such public statement prior to such consultation, except as may be
required by law.
10.7 Interpretation. As used in this Agreement, unless the
context otherwise requires: words describing the singular number shall include
the plural and vice versa; words denoting any gender shall include all genders;
words denoting natural persons shall include corporations, partnerships and
other entities, and vice versa; and the words "HEREOF", "HEREIN" and
"HEREUNDER", and words of similar import, shall refer to this Agreement as a
whole, and not to any particular provision of this Agreement.
10.8 Entire Agreement. This Agreement, the agreements referred
to herein, and the other agreements and instruments delivered pursuant hereto
and thereto, constitute the entire agreement, and supersede all prior
agreements, understandings, undertakings, inducements or conditions, both
written and oral, express or implied, among the parties or any of them, with
respect to the subject matter hereof.
10.9 No Assignment. This Agreement may not be assigned, by
operation of law or otherwise, without the prior written consent of all of the
parties hereto. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective heirs, legal representatives,
successors and permitted assigns.
10.10 Headings. Headings in this Agreement are for convenience
of reference only, and shall not affect the interpretation of any of the
provisions hereof.
10.11 Governing Law; Jurisdiction. Except to the extent that
the laws of any other jurisdiction shall mandatorily apply to the Merger, this
Agreement shall be governed by, and construed in accordance with, the laws of
the State of Delaware, without regard to the principles of conflict of laws. The
parties hereto hereby irrevocably submit to the jurisdiction of any Delaware
State or United States federal court sitting in New York County over any action
or proceeding
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arising out of or relating to this agreement or any agreement contemplated
hereby, and the parties hereto hereby irrevocably agrees that all claims in
respect of such action or proceeding may be heard and determined in such
Delaware State or federal court. The parties hereto further waive any objection
to venue in such state and any objection to an action or proceeding in such
state on the basis of a non-convenient forum. The parties hereto further agree
that any action or proceeding brought against the other or any of their
respective principals shall be brought only in Delaware State or United States
federal courts sitting in Kent county. Service of process may be made upon any
of the parties hereto by mailing a copy thereof to it, by United States
certified or registered mail, at its address set forth on page one hereof.
10.12 Counterparts. This Agreement may be executed in one or
more counterparts, and by the different parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original, but all of
which taken together shall constitute one and the same agreement.
10.13 Absence Of Third Party Beneficiary Rights. No provisions
of this Agreement are intended, nor will be interpreted, to provide or create
any third party beneficiary rights or any other rights of any kind in any
client, customer, affiliate, stockholder, partner or any party hereto or any
other person or entity unless specifically provided otherwise herein, and,
except as so provided, all provisions hereof will be personal solely between the
parties to this Agreement.
10.14 Schedules. The Schedules delivered pursuant to this
Agreement are an integral part hereof, and are considered to be part of the
representations and warranties to which they relate. Each such Schedule shall be
in writing, shall indicate the subparagraph pursuant to which it is being
delivered, and shall be initialed by the delivering party.
10.15 Confidentiality. FIS and EOL each confirm that they have
entered into the Confidentiality Agreement and that they are each bound by, and
will abide by, the provisions of such Confidentiality Agreement (except that EOL
will cease to be bound by the Confidentiality Agreement after the Merger becomes
effective). If this Agreement is terminated, all copies of documents containing
confidential information of a disclosing party will be returned by the receiving
party to the disclosing party or be destroyed, as provided in the
Confidentiality Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Agreement as of the date first above written.
EDGAR ONLINE, INC.
By: /s/ Tom Vos
--------------------------------
Name: Tom Vos
Title: President
FIS ACQUISITION CORP.
By: /s/ Tom Vos
--------------------------------
Name: Tom Vos
Title: President
FINANCIAL INSIGHT SYSTEMS, INC.
By: /s/ Albert E. Girod
--------------------------------
Name: Albert E. Girod
Title: President and Chief Executive Officer
/s/ Albert E. Girod
---------------------------------
Albert E. Girod
/s/ Kristine N. Delta
----------------------------------
Kristine N. Delta
/s/ Mark H. Davey
----------------------------------
Mark H. Davey
/s/ Peter S. Szwec
----------------------------------
Peter S. Szwec
/s/ Richard Jones
----------------------------------
Richard Jones
/s/ Paul Sappington
----------------------------------
Paul Sappington
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EXHIBITS
--------
EXHIBIT A Principal Stockholders
EXHIBIT B Amended Certificate of Incorporation
EXHIBIT C Amended Bylaws
EXHIBIT D Note
EXHIBIT E Shareholdings in FIS
EXHIBIT F Escrow Agreement
EXHIBIT G1 Form of Employment Agreement (Girod)
EXHIBIT G2 Form of Employment Agreement (Other key employees)
EXHIBIT H Opinion of Tighe Patton Armstrong & Teasdale, P.L.L.P.
EXHIBIT I Stockholders Representation Letter
EXHIBIT J Opinion of Littman Krooks Roth & Ball P.C.
SCHEDULES
---------
SCHEDULE 2.1 - QUALIFICATIONS AS A FOREIGN CORPORATION
SCHEDULE 2.2 - STOCKHOLDERS
SCHEDULE 2.3 - INTERESTS IN OTHER ENTITIES
SCHEDULE 2.5.2 - APPROVALS AND CONSENTS
SCHEDULE 2.8 - TITLES TO PROPERTIES; ENCUMBRANCES
SCHEDULE 2.9.2 - LEASED REAL PROPERTY
SCHEDULE 2.11 - ABSENCE OF CHANGES
SCHEDULE 2.11 - LITIGATION
SCHEDULE 2.13 - INTELLECTUAL PROPERTY
SCHEDULE 2.14 - TAXES
SCHEDULE 2.15 - INSURANCE
SCHEDULE 2.16 - BANKS, POWER OF ATTORNEY
SCHEDULE 2.17 - EMPLOYEE ARRANGEMENTS
SCHEDULE 2.18 - PENSION PLANS
SCHEDULE 2.19 - CERTAIN BUSINESS MATTERS
SCHEDULE 2.20 - CONTRACTS
SCHEDULE 2.22 - NO DEFAULT OR VIOLATION
SCHEDULE 2.23 - CUSTOMERS
SCHEDULE 2.24 - INTEREST IN CUSTOMERS, SUPPLIERS, ETC.