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EXHIBIT 99(d)(l)
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PURCHASE AGREEMENT
BY AND AMONG
JAMES L. SCHULTZ,
JAMES L. SCHULTZ AND HELEN D. SCHULTZ
AS TENANTS BY THE ENTIRETIES AND AS JOINT TENANTS,
DAVID J. VAGNONI,
COMPUTER RESEARCH, INC.
AND
CRI ACQUISITION, INC.
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Dated as of July 7, 2000
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TABLE OF CONTENTS
1. Purchase and Sale......................................................................................-1-
1.1 Purchase and Sale.............................................................................-1-
(a) Initial Purchase.....................................................................-1-
(b) Further Assurances...................................................................-1-
1.2 Tender Offer..................................................................................-2-
1.3 Company Actions...............................................................................-3-
1.4 Directors.....................................................................................-4-
2. Closing of Initial Purchase; Purchase Price............................................................-4-
2.1 Closing Date..................................................................................-4-
2.2 Purchase Price and Payment at Closing.........................................................-5-
3. Representations and Warranties.........................................................................-5-
3.1 Representations and Warranties of the Sellers and the Company.................................-5-
(a) Due Organization; Good Standing and Power............................................-5-
(b) Validity of Agreement; Capitalization................................................-5-
(c) No Approvals or Notices Required; No Conflict with Instruments.......................-6-
(d) Reports..............................................................................-6-
(e) Absence of Certain Changes...........................................................-7-
(f) Offer Documents; Other Information...................................................-8-
(g) Certain Fees.........................................................................-8-
(h) State Takeover Laws..................................................................-8-
(i) Opinion of Financial Advisor.........................................................-9-
(j) Intellectual Property................................................................-9-
3.2 Representations and Warranties of Buyer.......................................................-9-
(a) Due Organization; Authorization and Validity of Agreement............................-9-
(b) No Approvals or Notices Required; No Conflict with Instruments......................-10-
(c) Offer Documents.....................................................................-10-
(d) Certain Fees........................................................................-10-
(e) Financial Ability...................................................................-10-
3.3 Survival of Representations and Warranties...................................................-10-
4. Covenants; Actions Prior to Closing...................................................................-11-
4.1 Access to Information........................................................................-11-
4.2 Conduct of the Business......................................................................-11-
4.3 Additional Agreements........................................................................-12-
4.4 Notification.................................................................................-12-
4.5 Acquisition Proposals........................................................................-12-
4.6 Public Announcements.........................................................................-13-
5. Conditions Precedent..................................................................................-13-
5.1 Conditions Precedent to Obligations of Buyer.................................................-13-
(a) No Action...........................................................................-13-
(b) Accuracy of Representations and Warranties..........................................-13-
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(c) Performance of Agreements...........................................................-14-
(d) Material Adverse Change.............................................................-14-
5.2 Conditions Precedent to the Obligations of the Sellers.......................................-14-
(a) Accuracy of Representations and Warranties..........................................-14-
(b) Performance of Agreements...........................................................-14-
6. Termination...........................................................................................-14-
6.1 General......................................................................................-14-
6.2 No Liabilities in Event of Termination.......................................................-14-
7. Covenants; Action Subsequent to Closing...............................................................-15-
7.1 Sellers' Covenants Not to Compete............................................................-15-
7.2 Articles of Incorporation; Bylaws............................................................-15-
7.3 Merger Without Meeting of Stockholders.......................................................-15-
7.4 Alternative Merger...........................................................................-16-
(a) Long Form Merger....................................................................-16-
(b) Proxy Statement.....................................................................-16-
(c) Approval of Stockholders............................................................-17-
7.5 Employment Agreements........................................................................-17-
8. Indemnification.......................................................................................-17-
8.1 Indemnification by the Sellers...............................................................-17-
8.2 Indemnification by Buyer.....................................................................-17-
8.3 Indemnification Procedures...................................................................-17-
8.4 Limits on Liability..........................................................................-18-
9. Miscellaneous.........................................................................................-19-
9.1 Payment of Certain Fees and Expenses........................................................-19-
9.2 Notices......................................................................................-19-
9.3 Entire Agreement.............................................................................-20-
9.4 Binding Effect; Benefit......................................................................-20-
9.5 Assignability................................................................................-20-
9.6 Amendment; Waiver............................................................................-21-
9.7 Section Headings; Index......................................................................-21-
9.8 Reformation and Severability.................................................................-21-
9.9 Counterparts.................................................................................-21-
9.10 Release......................................................................................-21-
9.11 Applicable Law...............................................................................-22-
9.12 Exercise of Rights and Remedies..............................................................-22-
10. Definitions...........................................................................................-22-
10.1 Defined Terms................................................................................-22-
10.2 References...................................................................................-23-
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PURCHASE AGREEMENT
This Purchase Agreement (this "Agreement") is made and entered into as
of July 7, 2000 by and among JAMES L. SCHULTZ, JAMES L. SCHULTZ AND HELEN D.
SCHULTZ AS TENANTS BY THE ENTIRETIES AND AS JOINT TENANTS, and DAVID J. VAGNONI
(collectively, the "Sellers" and individually, a "Seller"), COMPUTER RESEARCH,
INC., a Pennsylvania corporation (the "Company"), and CRI ACQUISITION, INC., a
Delaware corporation and its permitted assigns hereunder ("Buyer").
RECITALS:
1. Together, the Sellers own 1,403,495 shares (the "Seller Shares") of
the common stock, no par value (the "Common Stock") of the Company, which is
engaged in the business of back-office data processing for securities brokerage
firms, bank broker dealers and municipal bond dealers (the "Business"); and
2. The Sellers desire to sell to Buyer and Buyer desires to acquire
from the Sellers, the Seller Shares, in consideration of the payment by Buyer of
the purchase price provided for herein, all upon the terms and subject to the
conditions hereinafter set forth; and
3. The Company joins in the execution of this Agreement for the purpose
of evidencing its consent to the transactions described herein and for the
purpose of making certain representations and warranties to and covenants and
agreements with Buyer.
AGREEMENT
In consideration of the premises and of the respective representations,
warranties, covenants, agreements and conditions of the parties contained
herein, it is hereby agreed as follows:
1. Purchase and Sale.
1.1 Purchase and Sale.
(a) Initial Purchase. Subject to the terms and conditions of
this Agreement, at the Closing, Sellers shall sell and deliver to Buyer
and Buyer shall purchase from Sellers all of the Seller Shares, free
and clear of all Encumbrances (the "Initial Purchase"). At the Closing,
each of the Sellers shall deliver to Buyer certificates evidencing all
of the shares of Common Stock owned by such Seller (which, in the
aggregate, shall constitute all of the Seller Shares), duly endorsed
for transfer or accompanied by duly executed stock powers.
(b) Further Assurances. From time to time after the Closing,
the Sellers will execute and deliver, or cause to be executed and
delivered, without further consideration, such other instruments of
conveyance, assignment, transfer and delivery and will take such
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other actions as Buyer may reasonably request in order to more
effectively transfer, convey, assign and deliver to Buyer, and to place
Buyer in possession and control of any of the Seller Shares or to
enable Buyer to exercise and enjoy all rights and benefits of the
Sellers with respect thereto.
1.2 Tender Offer.
(a) Provided that (w) the Initial Purchase shall have been
closed, (x) none of the events set forth in Annex I hereto shall have
occurred and be continuing, (y) the average closing price of the Common
Stock for the fifteen trading days following the public announcement of
this Agreement is less than or equal to $2.42 per share (the "Offer
Price"), and (z) no other competing offer to purchase the Company or
the Shares (as hereinafter defined) is made at any price (the
conditions in w, x, y and z above being referred to as the "Offer
Conditions"), then on or before July 31, 2000, or as soon as
practicable thereafter (but in no event later than August 7, 2000),
Buyer shall commence under the Securities Exchange Act of 1934, as
amended (together with the rules and regulations promulgated
thereunder, the "Exchange Act")) a tender offer (the "Offer") to
purchase all of the outstanding shares of Common Stock other than the
Seller Shares (the "Shares") at the Offer Price per Share, net to the
seller in cash, which Offer shall be on the terms set forth herein.
Neither Buyer's commencement of the Offer nor the agreement by any
holder of Shares to tender such Shares pursuant to the Offer shall be a
condition precedent to the Closing of the purchase of the Seller
Shares. Buyer shall, subject only to the satisfaction or waiver of the
conditions set forth in Annex I hereto (the "Offer Conditions"), accept
for payment, and pay for, all Shares validly tendered pursuant to the
Offer (and not withdrawn) as soon as practicable after such acceptance
and payment is legally permitted. Payment for any Shares accepted for
payment shall be made within two business days after acceptance thereof
by delivering the purchase price for such Shares to the depositary to
whom such Shares have been tendered. Buyer shall have the right to
change the terms and conditions of the Offer, so long as such changes
do not, without the prior written approval of the Company, (i) decrease
the Offer price or the number of Shares sought, (ii) amend the Offer to
modify or add any conditions, (iii) change the form of consideration
payable in the Offer or (iv) otherwise amend the Offer in any manner
adverse to the holders of Shares other than to extend the Offer as
permitted hereunder. The Offer shall expire on the date designated by
the Buyer that is within three business days after the earliest time
permitted by the Exchange Act, unless the Offer is extended by Buyer as
permitted herein (the date of expiration, as the same may be extended,
is herein referred to as the "Expiration Date"). Buyer may, from time
to time, without the consent of the Company, extend the Expiration Date
(i) if any of the Offer Conditions has not been satisfied, for the
minimum period of time deemed appropriate by Buyer to satisfy such
condition, but in no event later than the 20th business day following
the initial Expiration Date (subject, with respect to the Minimum
Condition (as defined in Annex I hereto), to the provisions of clause
(ii) hereof); (ii) if all of the Offer Conditions have been satisfied
other than the Minimum Condition, for a period of not more than 10
business days following the initial Expiration Date, in order to allow
the Minimum Condition to be satisfied; and (iii) to provide for a
subsequent offering period in accordance with Rule 14d-
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11 under the Exchange Act. It is agreed that the conditions set forth
in Annex I, other than the Minimum Condition, are for the sole benefit
of Buyer, and may be asserted by it regardless of the circumstances
giving rise to such condition or may be waived by Buyer, in whole or in
part at any time and from time to time.
(b) As soon as practicable on the date the Offer is commenced,
Buyer shall file with the Securities and Exchange Commission (the
"Commission") a Tender Offer Statement on Schedule TO (together with
all amendments and supplements thereto, the "Schedule TO") with respect
to the Offer, which Schedule TO will contain (either as exhibits or
incorporated by reference) the form of offer to purchase the Shares
(the "Offer to Purchase") and related Letter of Transmittal (the
"Letter of Transmittal"). Buyer and the Company agree to promptly
correct the Schedule TO, the Offer to Purchase and related Letter of
Transmittal, and all amendments thereto (which together constitute the
"Offer Documents") if any information provided by any of them for use
in the Offer Documents shall have become false or misleading in any
respect, and Buyer shall take all steps necessary to cause the Schedule
TO as so corrected to be filed with the Commission and the other Offer
Documents as so corrected to be disseminated to the holders of the
Shares, in each case as and to the extent required by applicable
federal securities laws. The Company and its counsel shall be given an
opportunity to review the Offer Documents prior to the filing thereof
with the Commission. Buyer agrees to provide the Company with any
written comments Buyer or its counsel may receive from the Commission
with respect to the Offer Documents promptly after receipt thereof.
1.3 Company Actions. The Company hereby consents to the Offer and
represents that its Board of Directors has (i) approved the Offer subject to the
terms and conditions set forth herein, (ii) resolved that the Offer and the
other transactions contemplated hereby are fair to and in the best interests of
the Company's shareholders, and (iii) resolved to recommend acceptance of the
Offer by the Company's shareholders. The Company shall file with the Commission
a Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-9")
which shall reflect such recommendations. The Company hereby consents to the
inclusion in the Offer of the recommendations referred to in this Section. The
Company and the Buyer shall correct promptly any information provided by either
of them for use in the Schedule 14D-9 which shall have become false or
misleading in any material respect, and the Company shall take all steps
necessary to cause the Schedule 14D-9 as so corrected to be filed with the
Commission and disseminated to holders of Shares, in each case as and to the
extent required by applicable federal securities laws. Buyer and its counsel
shall be given the opportunity to review the Schedule 14D-9 prior to the filing
thereof with the Commission. The Company agrees to provide Buyer with any
written comments the Company or its counsel may receive from the Commission with
respect to any documents filed by the Company with the Commission in connection
with the transactions contemplated hereby, promptly after receipt thereof. In
connection with the Offer, the Company will upon request of Buyer promptly
furnish Buyer with such information and assistance as Buyer may reasonably
request, including lists of the names and addresses of the shareholders of the
Company, mailing labels and lists of security positions, and such assistance as
Buyer or its agents may reasonably request in communicating the Offer to the
record and beneficial holders of Shares. Subject to the
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requirements of Applicable Law, and except for such steps as are necessary to
disseminate the Offer, Buyer (and its affiliates, associates and
representatives) will hold in confidence the information contained in any such
labels and lists and, if this Agreement is terminated, will upon request deliver
to the Company all copies of, and any extracts or summaries from, such
information then in their possession.
1.4 Directors. Buyer and the Company agree that, until after the
conclusion of the merger described in Section 7 below, neither Buyer nor any of
its affiliates shall elect any members of the Company's Board of Directors or
seek to influence or change the management or policies of the Company in any
way, and Buyer covenants and agrees on behalf of itself and its affiliates not
to do so; however, if the Offer Conditions are not met, and Buyer determines not
to proceed with the Offer, or if Buyer proceeds with the Offer but does not
complete the Offer, then the Buyer shall, upon written notice to the Company,
have the right to designate such number of directors, rounded up to the next
whole number, as will give Buyer representation on the Board of Directors of the
Company ("Equivalent Representation") equal to the product of the number of
directors comprising the Board of Directors of the Company and the percentage
that the aggregate number of shares of Common Stock beneficially owned by Buyer
bears to the total number of shares of Common Stock outstanding. The Company
shall exercise its best efforts to secure the resignations of such number of
directors as is necessary to enable the Buyer's designees to be elected to the
Board of Directors of the Company, and shall cause Buyer's designees to be so
elected so that Buyer shall have Equivalent Representation on the Board of
Directors of the Company. At the request of Buyer, the Company shall take, at
its expense, all action necessary to effect any such election, including mailing
to its stockholders the information required by Section 14(f) of the Exchange
Act and Rule 14f-1 promulgated thereunder, such action to be taken as soon as
practicable after Buyer's request. Buyer shall supply to the Company and be
solely responsible for any information with respect to itself and Buyer's
designees, officers, directors and affiliates required by Section 14(f) of the
Exchange Act and Rule 14f-1 promulgated thereunder. If the Buyer exercises its
rights to Equivalent Representation, any amendment or termination of this
Agreement, extension for the performance or waiver of the obligations or other
acts of Buyer or waiver of the Company's rights hereunder, which amendment,
termination, extension or waiver would adversely affect the shareholders of the
Company, shall also require the approval of all of the then serving directors,
if any, who are directors as of the date hereof (the "Continuing Directors"). If
the Offer Conditions are satisfied, the Continuing Directors shall not be
removed prior to completion of the merger described in Section 7 below. If the
number of Continuing Directors prior to the completion of the merger is reduced
below two for any reason, the remaining Continuing Director shall be entitled to
designate a person to fill such vacancy who shall be deemed a Continuing
Director for all purposes of this Agreement.
2. Closing of Initial Purchase; Purchase Price.
2.1 Closing Date. The closing of the Initial Purchase (the "Closing")
shall take place at (i) the offices of the Company concurrently with the
execution of this Agreement or (ii) at such other time or place or on such other
date as the parties hereto shall agree. The date on which the Closing is
required to take place is herein referred to as the "Closing Date".
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2.2 Purchase Price and Payment at Closing. The aggregate purchase price
for the Seller Shares in the Initial Purchase shall be $3,396,457.90 (the
"Purchase Price"), which shall be payable in cash at the Closing. The portion of
the Purchase Price payable to each Seller shall consist of the Offer Price per
share of Common Stock multiplied by the number of Seller Shares held by such
Seller, and shall be paid to each Seller at the Closing in the form of a bank
cashier's check payable to the order of such Seller or, if requested by such
Seller, in immediately available funds by confirmed wire transfer to a bank
account to be designated by such Seller (such designation to occur no later than
the second business day prior to the Closing Date).
3. Representations and Warranties.
3.1 Representations and Warranties of the Sellers and the Company. The
Sellers and the Company, jointly and severally, represent and warrant to Buyer
as of the date hereof and as of the Closing Date as follows:
(a) Due Organization; Good Standing and Power. The Company is
a corporation duly organized, validly existing and in good standing
under the laws of the State of Pennsylvania. The Company has the
corporate power and authority to own, lease and operate its assets and
to conduct its business as now conducted. The Company is duly
authorized, qualified or licensed to do business as a foreign
corporation and is in good standing in each jurisdiction in which its
right, title or interest in or to any of its assets, or the conduct of
its business, requires such authorization, qualification or licensing,
except where the failure to so qualify or to be in good standing in
such other jurisdictions would not have a material adverse effect on
any of the assets, the business or the results of operations of the
Company. No actions or proceedings to dissolve the Company are pending.
The Company has delivered to Buyer true and complete copies of its
minute books and stock transfer books, each of which is accurate and
complete. The Company has no Subsidiaries.
(b) Validity of Agreement; Capitalization. This Agreement has
been duly executed and delivered by the Sellers and the Company and
constitutes a legal, valid and binding obligation of each of them,
enforceable against them in accordance with its terms, except as the
same may be limited by bankruptcy, insolvency or other similar laws
affecting creditors' rights generally and by general equity principles.
The Company's authorized capital consists of 5,000,000 shares of common
stock, no par value, of which 4,037,255 are issued and 4,037,255 are
outstanding. All of the issued and outstanding shares of the Company
have been duly authorized and validly issued, are fully paid and
nonassessable, have not been issued in violation of any preemptive or
similar rights, and have been issued in compliance with all Applicable
Laws (including state and federal securities laws). There are (and as
of the Closing Date there will be) outstanding (i) no shares of capital
stock or other voting securities of the Company other than as described
above, no securities of the Company convertible into or exchangeable
for shares of the capital stock or other voting securities of the
Company, (ii) no options or other rights to acquire from the Company,
and no obligation of the Company to issue or sell, any shares of its
capital stock or other voting securities or any securities of the
Company convertible into or exchangeable for such capital
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stock or voting securities, (iii) no equity equivalents, interest in
the ownership or earnings, or other similar rights of or with respect
to the Company, and (iv) no shares of any other entity owned by the
Company. There are (and as of the Closing Date there will be) no
outstanding obligations of the Company to repurchase, redeem or
otherwise acquire any shares, securities, options, equity equivalents,
interests or rights. Sellers are (and at the Closing Date will be) the
record and beneficial owners of, and upon consummation of the
transactions contemplated hereby Buyer will acquire, good, valid and
marketable title to, 883,310 shares of Common Stock held by James L.
Schultz and by James L. Schultz and Helen D. Schultz as Tenants by the
Entireties and as joint tenants, and 520,185 shares of Common Stock
held by David J. Vagnoni, free and clear of all Encumbrances, other
than (i) those that may arise by virtue of any actions taken by or on
behalf of Buyer or its affiliates or (ii) restrictions on transfer that
may be imposed by federal or state securities laws. To the knowledge of
the Sellers and the Company, there are no voting or other stockholders
agreements to which any shares of Common Stock are subject.
(c) No Approvals or Notices Required; No Conflict with
Instruments. Except for filings required under federal and state
securities laws and with the National Association of Securities
Dealers, Inc. and any necessary shareholder vote, the execution,
delivery and performance of this Agreement by the Sellers and the
Company and the consummation of the transactions contemplated hereby
(i) will not violate (with or without the giving of notice or the lapse
of time or both) or require any consent, approval, filing or notice
under, any provision of any Applicable Law and (ii) will not result in
the creation of any Encumbrance on the Seller Shares under, conflict
with, or result in the breach or termination of any provision of, or
constitute a default under, or result in the acceleration of the
performance of the obligations of, or the payment of any termination or
other similar fee or reimbursement amount by, the Sellers or the
Company under, or result in the creation of an Encumbrance upon any
portion of the assets of the Company pursuant to, the charters or
by-laws of the Company, or any indenture, mortgage, deed of trust,
lease, licensing agreement, contract, instrument or other agreement to
which the Sellers or the Company are a party or by which any of them or
any of their assets is bound or affected. The Seller Shares are
transferable and assignable to Buyer as contemplated by this Agreement
without the waiver of any right of first refusal or the consent of any
other party being obtained, and there exists no preferential right of
purchase in favor of any person with respect of any of the Seller
Shares, any other shares of Common Stock or the Business or any of the
assets of the Company.
(d) Reports.
(1) Since January 1, 1995, the Company has filed all
forms, reports and documents with the Commission required to be filed
by it pursuant to the applicable requirements of the Securities Act of
1933, as amended (together with rules and regulations promulgated
thereunder, the "Securities Act") and the Exchange Act, all of which
complied in all material respects with all applicable requirements of
the Securities Act and the Exchange Act. Each final prospectus,
definitive proxy statement and report filed by the Company with the
Commission since January 1, 1995 complied as of its respective filing
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date (or, in the case of a final prospectus, the effective date
thereof) in all material respects with all applicable requirements of
the Securities Act and the Exchange Act. None of such forms, reports
and documents filed with the Commission, including, without limitation,
any exhibits, financial statements or schedules included therein, at
the time filed (or, in the case of a final prospectus, the effective
date thereof), contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(ii) The consolidated balance sheets and the related
consolidated statements of earnings and of cash flows (including the
related notes thereto) of the Company (the "Financial Statements")
included in the Company's Annual Report on Form 10-KSB for the fiscal
year ended August 31, 1999 (the "10K"), the Company's Quarterly Report
on Form 10-QSB for the fiscal quarters ended November 30, 1999 and
February 29, 2000 (the"10Qs"), and the Company's Quarterly Report on
Form 10-QSB for the fiscal quarter ended May 31, 2000 previously
supplied in draft form to Buyer (the "Draft 10Q", and, together with
the 10K and the 10Qs, the "Reports") have been prepared in accordance
with generally accepted accounting principles applied on a consistent
basis (except as stated in the Financial Statements, including the
related notes, and except that the quarterly financial statements do
not contain all of the footnote disclosures required by generally
accepted accounting principles) and fairly present the consolidated
financial position of the Company as of their respective dates, and the
results of consolidated operations and consolidated cash flows for the
periods presented therein, subject in the case of the unaudited
financial statements, to normal year-end adjustments and any other
adjustments described therein, none of which adjustments would be
material.
(iii) Except as disclosed in the Financial
Statements, since February 29, 2000 to the date of this Agreement, the
Company has not incurred a liability of a nature which would be
required to be reflected on a consolidated balance sheet of the Company
prepared as of the date of this Agreement and in accordance with
generally accepted accounting principles, other than liabilities to
persons or entities not affiliated with the Company and which were
incurred in the ordinary course of business, consistent with past
practice.
(e) Absence of Certain Changes. Except as contemplated by this
Agreement or disclosed in the Reports, and except for information
received by the Company regarding the probable loss of its customer,
Regions Financial Corp., since February 29, 2000, the Company has not
suffered any adverse effect on its business, condition (financial or
otherwise), operations or assets. Except as disclosed in the Reports,
since February 29, 2000, there has not been (i) any declaration,
setting aside or payment of any dividend or other distribution in
respect of shares of capital stock of the Company, any redemption or
other acquisition by the Company of any shares of its capital stock,
any change in the authorized capital stock or outstanding capital stock
of the Company, any change in any Seller's ownership interest in the
Company, or any grant or issuance of any options, warrants, calls,
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conversion rights or commitments with respect to the capital stock of
the Company; (ii) any increase in the rate or terms of compensation
payable or to become payable by the Company to its directors, officers
or employees; (iii) any increase in the rate or terms of any bonus,
insurance, pension or other employee benefit plan, payment or
arrangement made to, for or with any such directors, officers or
employees; (iv) other than the Letter of Intent entered into with
SunGard Data Systems, Inc., any entry into, or any material amendment
to, any agreement, commitment or transaction by the Company which is
material to the Company taken as a whole other than agreements with a
term of no greater than one year made or entered into in the ordinary
course of business with persons or entities not affiliated with the
Company; or (v) any change by the Company in accounting methods,
principles or practices except for changes made after the date hereof
and required by generally accepted accounting principles.
(f) Offer Documents; Other Information. None of the
information relating to the Company supplied in writing by the Company
specifically for inclusion in the Offer Documents or obtained from any
document filed by the Company with the Commission, and none of the
information contained in the Schedule 14D-9, including any amendments
or supplements thereto, or any schedules required to be filed with the
Commission in connection therewith, will, at the respective times of
filing with the Commission contain any untrue statement of a material
fact or omit to state any 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.
(g) Certain Fees. Neither the Company nor its officers,
directors or employees, nor Sellers, on behalf of the Company or
themselves, has employed any broker or finder or incurred any other
liability for any brokerage fees, commissions or finders' fees in
connection with the transactions contemplated hereby, other than the
fees and expenses payable to William Lerner, which shall be paid by the
Company.
(h) State Takeover Laws. Subchapters E through H of Chapter
25, Title 15 of the Pennsylvania Business Corporation Law ("PBCL") do
not apply to the Company, and the Buyer shall not be affected by the
provisions set forth therein. Each Seller and the Company has taken all
necessary action to exempt the transactions contemplated by this
Agreement from, or if necessary to challenge the validity or
applicability of, any applicable "moratorium," "fair price," "business
combination," "control share" or other anti-takeover laws. The Company
has taken all action so that the entering into of this Agreement and
the consummation of the transactions contemplated hereby do not and
will not result in the grant of any rights to any person under the
Articles of Incorporation, Bylaws or other governing instruments of the
Company or restrict or impair the ability of Buyer to vote, or
otherwise to exercise the rights of a stockholder with respect to,
shares of the Company that may be directly or indirectly acquired or
controlled by it.
(i) Opinion of Financial Advisor. The Company has delivered,
or will deliver within three (3) business days following Closing, to
Buyer a signed opinion of the
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Company's financial advisor, Valuation Professionals of Newport Beach,
California, dated as of the date of this Agreement, which opinion
states that the consideration to be received by the holders of Company
Common Stock is fair, from a financial point of view, to such holders.
(j) Intellectual Property.
(i) The Company owns all rights, title and
interest in and to all Intellectual Property, inventions, trade
secrets, copyrights, patents, trademarks, know-how, ideas, expressions,
processes, subroutines, algorithms and programming techniques necessary
to conduct its Business, other than those inventions, trade secrets,
copyrights, patents, trademarks, know-how, ideas, expressions,
processes, subroutines, algorithms and programming techniques that are
owned by third parties and used by the Company under adequate licenses
or other rights (the "Third Party Rights").
(ii) The Company has the sole and exclusive right
to use the Intellectual Property used in the conduct of the Business
without infringing or violating the rights of any third parties. No
consent of third parties will be required for the use thereof by the
Company upon consummation of the transactions contemplated by this
Agreement. No claim has been asserted by any person to the ownership of
or right to use any such Intellectual Property or challenging or
questioning the validity or effectiveness of any such license or
agreement, and neither the Company nor the Sellers know of any valid
basis for any such claim.
(iii) There exists no claim that, or inquiry as to
whether, any product, activity or operation of the Company infringes
upon or involves, or has resulted in the infringement of, any
proprietary right of any other person, corporation or other entity; and
no proceedings have been instituted, are pending or are threatened
which challenge the rights of the Company with respect thereto. The
Company has not given and is not bound by any agreement of
indemnification for any Intellectual Property as to any property
manufactured, used or sold by the Company.
(iv) The Company's owned software is unique and
original, is free of any claims or encumbrances, and does not infringe
any patent, copyright, trade secret or other proprietary right of any
person, nor does it include or make use of any trade secrets or
confidential or proprietary information owned by any third party, other
than the Third Party Rights. The Company's owned software is free of
material programming errors or defects in workmanship or materials.
3.2 Representations and Warranties of Buyer. Buyer represents and
warrants to the Sellers as follows:
(a) Due Organization; Authorization and Validity of Agreement.
Buyer is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware. This Agreement has
been duly executed and delivered by Buyer and constitutes
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a legal, valid and binding obligation of Buyer, enforceable against
Buyer in accordance with its terms, except as the same may be limited
by bankruptcy, insolvency or other similar laws affecting creditors'
rights generally and by general equity principles.
(b) No Approvals or Notices Required; No Conflict with
Instruments. The execution, delivery and performance of this Agreement
by Buyer and the consummation by it of the transactions contemplated
hereby (i) will not violate (with or without the giving of notice or
the lapse of time or both), or require any consent, approval, filing or
notice under any provision of any Applicable Law, and (ii) will not
conflict with, or result in the breach or termination of any provision
of, or constitute a default under, or result in the acceleration of the
performance of the obligations of Buyer, under, the charter or bylaws
of Buyer or any indenture, mortgage, deed of trust, lease, licensing
agreement, contract, instrument or other agreement to which Buyer is a
party or by which Buyer or any of its assets or properties is bound.
(c) Offer Documents. The Offer Documents (including any
amendments or supplements thereto) shall contain all information which
is required to be included therein in accordance with the Exchange Act
and other Applicable Laws, and will not, at the respective times the
Offer Documents or any amendments or supplements thereto are filed with
the Commission, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary
in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading, except that
no representation is given with respect to information supplied in
writing by the Company specifically for inclusion in the Offer
Documents or obtained from any document filed by the Company with the
Commission. While the Offer is outstanding, Buyer will promptly correct
any statements in the Schedule TO and the other Offer Documents that to
its knowledge become false or misleading and take all steps necessary
to cause such Schedule TO as so corrected to be filed with the
Commission and Offer Documents as so corrected to be disseminated to
each holder of Shares, in each case only as and to the extent required
by Applicable Law.
(d) Certain Fees. Neither Buyer nor any of its officers,
directors, employees or representatives has employed any broker or
finder or incurred any other liability for any brokerage fees,
commissions or finders' fees in connection with the transactions
contemplated hereby, other than fees and expenses payable to Sanders
Morris Harris, which shall be the sole responsibility of Buyer.
(e) Financial Ability. Buyer has, and any permitted assignee
of Buyer will have, the financial ability to consummate the purchase of
the Seller Shares pursuant to this Agreement and the purchase of the
Shares pursuant to the Offer.
3.3 Survival of Representations and Warranties. The respective
representations and warranties of the parties contained herein shall expire on
the second anniversary of the Closing Date; provided that there shall be no
expiration of any such representation or warranty as to which a bona
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fide claim has been asserted by written notice of such claim delivered to the
party or parties making such representation or warranty during the survival
period. This Section 3.3 shall not at any time relieve any party hereto from the
performance of such party's agreements, covenants and undertakings set forth in
this Agreement.
4. Covenants; Actions Prior to Closing.
4.1 Access to Information. During the period beginning on the date
hereof and ending on the Closing Date, the Sellers and the Company will (a) give
or cause to be given to Buyer and its representatives such access, during normal
business hours, to the plant, properties, books and records of the Company as
Buyer shall from time to time reasonably request and (b) furnish or cause to be
furnished to Buyer such financial and operating data and other information with
respect to the Company as Buyer shall from time to time reasonably request.
Buyer and its representatives shall be entitled, in consultation with the
Sellers, to such access to the representatives, officers and employees of the
Company as Buyer may reasonably request.
4.2 Conduct of the Business. Except as specifically required or
contemplated by this Agreement or otherwise consented to or approved in writing
by Buyer, during the period commencing on the date hereof and ending on the
Closing Date:
(a) the Company shall not conduct its businesses except in the
usual, regular and ordinary manner consistent with current practice
and, to the extent consistent with such current practice, shall use
reasonable best efforts to keep available the services of the present
employees of the Company and preserve the Company's present
relationships with persons having business dealings with the Company;
(b) the Company shall not fail to maintain the Company's
books, accounts and records in the usual, regular and ordinary manner,
on a basis consistent with past practice, and shall comply in all
material respects with all Applicable Laws and other obligations of the
Company;
(c) the Company shall not (i) sell, pledge or issue any option
or other right to acquire any stock owned by it, (ii) amend its
Articles of Incorporation or Bylaws, (iii) split, combine or reclassify
the outstanding Common Stock, (iv) declare, set aside or pay any
dividend payable in cash, stock or property with respect to the Common
Stock, or (v) tender any Common Stock for purchase pursuant to the
Offer;
(d) the Company shall not (i) issue any additional shares of,
securities convertible into shares of, or rights of any kind to acquire
any shares of, its capital stock, (ii) sell, transfer, lease or
otherwise encumber any assets or incur any indebtedness other than in
the ordinary course of business consistent with past practice, and
that, with respect to incurrence of indebtedness, is prepayable without
penalty or premium, (iii) make any material capital expenditures other
than replacements, repairs or betterments made in the ordinary course
of business, (iv) acquire any corporation, partnership or other
business organization or
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enterprise, (v) acquire or offer to acquire any of its capital stock,
or (vi) modify in any material respect any agreement with respect to
any of the foregoing;
(e) the Company shall not grant any severance or termination
pay to or increase the compensation payable to, or enter into or amend
any employment agreement with, any officer, director or employee of the
Company (except pursuant to agreements of the Company in effect on the
date hereof disclosed in the 10K); and the Company shall not increase
benefits payable under its current severance or termination pay
policies;
(f) the Company shall not adopt, or amend to increase
compensation or benefits payable under, any plan, agreement, trust,
fund or arrangement for the benefit of any employees; and
(g) the Company shall not agree or commit to take any of the
actions prohibited in this Section or any action that would make any
representation or warranty contained in Section 3.1 untrue.
4.3 Additional Agreements. Subject to the terms and conditions herein
provided and the fiduciary duties of the Board of Directors of the Company, each
of the parties hereto agrees to use its best efforts consistent with prudent
business judgment to take, or cause to be taken, all action and to do, or cause
to be done, all things necessary, proper or advisable under Applicable Law to
consummate and make effective the transactions contemplated by this Agreement,
including using its best efforts consistent with prudent business judgment to
lift or rescind any injunction, restraining order or other order adversely
affecting the ability of the parties to consummate the transactions contemplated
hereby, to obtain all necessary waivers, consents, approvals and authorizations
and to effect all necessary registrations and filings; subject, however, to the
appropriate vote of the shareholders of the Company if required by Applicable
Law or the rules of the Nasdaq National Stock Market. Each party further agrees
to use its best efforts, consistent with prudent business judgment, subject to
the restrictions of this Agreement, and except as otherwise contemplated by this
Agreement, to cause the representations and warranties of such parties contained
herein to be true and correct in all material respects at the Closing Date as if
made again at that date.
4.4 Notification. The Sellers and the Company shall promptly notify
Buyer in writing and keep it advised as to (i) any litigation or administrative
proceeding filed or pending against the Company or, to their knowledge,
threatened against it, including any such litigation or administrative
proceeding that challenges the transactions contemplated hereby; (ii) any
material damage or destruction of any of the assets of the Company; (iii) any
material adverse change in the results of operations of the Company; and (iv)
any variance from the representations and warranties contained in Section 3.1
hereof or of any failure or inability on the part of the Sellers or the Company
to comply with any of their respective covenants contained in this Section 4.
4.5 Acquisition Proposals. None of the Sellers, the Company, or any
affiliate, director, officer, employee or representative of any of them shall,
directly or indirectly (i) solicit, initiate or knowingly encourage any
Acquisition Proposal or (ii) engage in discussions or negotiations with any
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person that is considering making or has made an Acquisition Proposal. Sellers
and the Company shall immediately cease and cause to be terminated any existing
activities, discussions or negotiations with any persons conducted heretofore
with respect to any Acquisition Proposal and shall promptly request each such
person who has heretofore entered into a confidentiality agreement in connection
with an Acquisition Proposal to return to Sellers and the Company all
confidential information heretofore furnished to such person by or on behalf of
any Seller or the Company. If at any time prior to commencement of the Offer,
the Company receives an unsolicited, written, bona fide Acquisition Proposal
from a third party, the Company's Board of Directors may, but only if, in the
good faith judgement of the Board, based, as to legal matters, on the advice of
legal counsel, the Board determines that the failure to do so would be
inconsistent with the discharge of its fiduciary duties to the Company's
shareholders under Applicable Law, proceed with discussions regarding such
Acquisition Proposal and furnish information and access pursuant to
confidentiality agreements that do not prohibit or restrict disclosure of any
matter to Buyer and negotiate any such Acquisition Proposal. The Company shall
immediately advise Buyer orally and in writing of the receipt of any Acquisition
Proposal, the terms and conditions thereof and the identity of the person making
the proposal. The term "Acquisition Proposal," as used herein, means any offer
or proposal for or any indication of interest in, a merger, tender offer or
other business combination involving the Company or any of its affiliates, or
the acquisition of an equity interest in or substantial portion of the assets
of, the Company or any affiliate of the Company, other than the transactions
contemplated by this Agreement.
4.6 Public Announcements. Neither Buyer, on the one hand, nor Sellers
and the Company, on the other, shall issue any press release or otherwise make
any public statements with respect to this Agreement or the transactions
contemplated hereby without the prior written consent of the other party.
5. Conditions Precedent.
5.1 Conditions Precedent to Obligations of Buyer. The obligations of
Buyer under this Agreement are subject to the satisfaction (or waiver by Buyer)
at or prior to the Closing Date of each of the following conditions:
(a) No Action. No action of any private party or Governmental
Entity shall have been taken or threatened and no statute, rule,
regulation or executive order shall have been proposed, promulgated or
enacted by any Governmental Entity which seeks to restrain, enjoin or
otherwise prohibit or to obtain damages or other relief in connection
with this Agreement or the transactions contemplated hereby.
(b) Accuracy of Representations and Warranties. All
representations and warranties of the Sellers and the Company contained
herein or in any certificate or document delivered to Buyer pursuant
hereto shall be true and correct in all material respects on and as of
the Closing Date, with the same force and effect as though such
representations and warranties had been made on and as of the Closing
Date, except as contemplated or permitted by this Agreement.
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(c) Performance of Agreements. The Sellers and the Company
shall have, in all material respects, performed all obligations and
agreements, and complied with all covenants and conditions, contained
in this Agreement to be performed or complied with by them prior to or
at the Closing Date.
(d) Material Adverse Change. The Company shall have suffered
no Material Adverse Change from the date of this Agreement until the
Closing Date (provided, however, that any change in the customer status
of Regions Financial Corp. shall not be a Material Adverse Change).
5.2 Conditions Precedent to the Obligations of the Sellers. The
obligations of the Sellers under this Agreement are subject to the satisfaction
(or waiver by the Sellers) at or prior to the Closing Date of each of the
following conditions:
(a) Accuracy of Representations and Warranties. All
representations and warranties of Buyer contained herein or in any
certificate or document delivered to the Sellers pursuant hereto shall
be true and correct on and as of the Closing Date, with the same force
and effect as though such representations and warranties had been made
on and as of the Closing Date, except as contemplated or permitted by
this Agreement.
(b) Performance of Agreements. Buyer shall have performed all
obligations and agreements, and complied with all covenants and
conditions contained in this Agreement to be performed or complied with
by it prior to or at the Closing Date.
6. Termination.
6.1 General. This Agreement may be terminated and the transactions
contemplated herein may be abandoned (a) by mutual consent of Buyer and the
Sellers, or (b) following the Closing, by the Buyer or the Seller, if the Offer
Conditions have not been satisfied by July 31, 2000; provided, however, that if
the Offer Conditions have not been satisfied on or before such date due to a
breach of this Agreement by one of the parties or an affiliate of that party,
that party may not terminate this Agreement.
6.2 No Liabilities in Event of Termination. In the event of any
termination of this Agreement as provided above, this Agreement shall forthwith
become wholly void and of no further force or effect and there shall be no
liability on the part of Buyer, the Sellers, the Company or their respective
officers, directors, or agents, except that the provisions of Section 9.1 hereof
shall remain in full force and effect, and provided that nothing contained
herein shall release any party from liability for any failure to comply with any
provision, covenant or agreement contained herein.
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7. Covenants; Action Subsequent to Closing.
7.1 Sellers' Covenants Not to Compete. In order to allow Buyer to
realize the full benefit of its bargain in connection with the purchase of the
Seller Shares, the Sellers will not at any time for a period of five years
following the Closing Date, directly or indirectly, acting alone or as a member
of a partnership or as a holder of in excess of 5% of any security of any class,
or as a consultant to or representative of, any corporation or other business
entity,
(a) engage in any business in competition with the Business as
conducted by the Sellers or the Company at the date hereof in those
geographic areas in which such Business is conducted or has been
conducted within one year prior to the Closing Date; or
(b) request any present or future customer or supplier of the
Company or of the Business as conducted by the Company, Buyer or their
respective affiliates to curtail or cancel its business with the
Company, Buyer or their respective affiliates; or
(c) unless otherwise required by Applicable Law, disclose to
any person, firm or corporation any details of organization or business
affairs of the Company or the Business, any names of past or present
customers of the Company, or any other non-public information
concerning the Business or the Company; or
(d) induce or attempt to influence any employee of Buyer
or the Company assigned to the conduct of the Business to terminate his
or her employment.
The Sellers acknowledge that in the event the scope of the covenants set forth
in this Section 7.1 is deemed to be too broad in any court proceeding, the court
may reduce such scope to that which it deems reasonable under the circumstances.
The parties hereto agree and acknowledge that Buyer would not have any adequate
remedy at law for the breach or threatened breach by any of the Sellers or any
of their affiliates of the covenants and agreements set forth in this Section
7.1 and, accordingly, the Sellers further agree that Buyer may, in addition to
the other remedies which may be available to it hereunder, file suit in equity
to enjoin any of the Sellers and any of their affiliates from such breach or
threatened breach and consent to the issuance of injunctive relief hereunder.
The Sellers understand and agree that the act of Buyer in entering into this
Agreement, and Buyer's covenants and payments hereunder, shall and do constitute
sufficient consideration for the Sellers to agree not to compete against Buyer
as set out in this Section 7.1.
7.2 Articles of Incorporation; Bylaws. The Articles of Incorporation
and Bylaws of the Company will not be amended for a period of six years from the
Closing Date in any manner that would adversely affect the indemnification or
litigation expense reimbursement rights thereunder of individuals who on or
prior to the Closing Date were directors, officers, employees or agents of the
Company, except if such amendment is required by Applicable Law.
7.3 Merger Without Meeting of Stockholders. In the event that the Offer
is commenced and Buyer shall acquire in the aggregate at least 90% of the
outstanding shares of the voting capital
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stock of the Company, pursuant to the Offer or otherwise (including the purchase
of the Seller Shares pursuant to this Agreement), the parties hereto shall, at
the request of Buyer and subject to the provisions of this Section 7, take all
necessary and appropriate action to cause a corporation wholly owned by Buyer to
be merged with and into the Company, with the Company as the surviving
corporation, without a meeting of stockholders of the Company, in accordance
with the Applicable Law; such that each share of capital stock of the
corporation wholly owned by Buyer shall be canceled and cease to be outstanding
and each share of the Company Common Stock shall be exchanged for cash
consideration equal to the Offer Price.
7.4 Alternative Merger.
(a) Long Form Merger. In the event that Buyer shall acquire in
the aggregate less than 90% but more than 66 2/3% of the outstanding
shares of the voting capital stock of the Company, pursuant to the
Offer or otherwise (including the purchase of the Seller Shares
pursuant to this Agreement), then, as soon as practicable after the
acquisition of Shares in the Offer the parties hereto shall, subject to
the provisions of this Section 7, take all necessary and appropriate
action to cause a corporation wholly owned by Buyer to be merged with
and into the Company, with the Company as the surviving corporation, in
accordance with the Applicable Law; such that each share of capital
stock of the corporation wholly owned by Buyer shall be cancelled and
cease to be outstanding and each share of the Company Common Stock
shall be exchanged for cash consideration equal to the Offer Price.
(b) Proxy Statement. If a merger is to be effected under this
Section 7.4, the Company shall, if required by Applicable Law, prepare
and file with the Commission a Proxy Statement or Information Statement
(the "Proxy Statement") as soon as reasonably practicable after the
purchase of and payment for Shares pursuant to the Offer, and shall use
its best efforts to have the Proxy Statement cleared by the Commission.
If at any time prior to the effective time of such merger any event
shall occur that should be set forth in an amendment of or a supplement
to the Proxy Statement, the Company shall prepare and file with the
Commission such amendment or supplement as soon thereafter as is
reasonably practicable. Buyer and the Company shall cooperate with each
other in the preparation of the Proxy Statement, and the Company shall
notify Buyer of the receipt of any comments of the Commission with
respect to the Proxy Statement and of any requests by the Commission
for any amendment or supplement thereto or for additional information,
and shall provide to Buyer promptly copies of all correspondence
between the Company or any representative of the Company and the
Commission with respect to the Proxy Statement. The Company shall give
Buyer and its counsel the opportunity to review the Proxy Statement and
all responses to requests for additional information by and replies to
comments of the Commission before their being filed with, or sent to,
the Commission. Each of the Company and Buyer agrees to use its best
efforts, after consultation with the other parties hereto, to respond
promptly to all such comments of and requests by the Commission and to
cause the Proxy Statement to be mailed to the holders of Company Common
Stock entitled to vote at the Company Stockholders' Meeting at the
earliest practicable time.
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(c) Approval of Stockholders. If required by Applicable Law in
order to consummate the merger under this Section 7.4, the Company
shall, through its Board of Directors, duly call, give notice of,
convene and hold a meeting of its stockholders for the purpose of
voting on the adoption of this Agreement and the merger contemplated
hereby as soon as reasonably practicable after the purchase of and
payment for Shares pursuant to the Offer. At such meeting, Buyer shall
cause all shares of Company Common Stock owned by Buyer to be voted in
favor of the adoption of this Agreement and the merger contemplated
hereby.
7.5 Employment Agreements. Following the Closing of the Initial
Purchase, the Buyer, the Company and the Sellers shall negotiate in good faith
Consulting Agreements between the Company and each of Mr. Schultz and Mr.
Vagnoni and an Employment Agreement between the Company and Mr. Schultz on the
terms set forth in Annex II.
8. Indemnification.
8.1 Indemnification by the Sellers. Subject to the provisions of this
Section 8, the Sellers and the Company, jointly and severally prior to the
consummation of the Offer, and thereafter the Sellers, jointly and severally,
shall protect, indemnify and hold harmless Buyer, its affiliates and their
officers, directors, employees, representatives and agents in respect of any
losses, claims, damages, liabilities, deficiencies, delinquencies, defaults,
assessments, fees, penalties or related costs or expenses, including, but not
limited to, court costs and attorneys' and accountants' fees and disbursements,
and any federal, state or local income or franchise taxes payable in respect of
the receipt of cash or money in discharge of the foregoing, but reduced by any
net amount paid to Buyer on account of such loss by any insurance policies
(collectively referred to herein as "Damages") to which Buyer may become subject
if such Damages arise out of or are based upon the breach of any of the
representations and warranties (whether such breach occurred as of the date of
execution of this Agreement or as of the Closing Date), covenants or agreements
made by the Sellers or the Company in this Agreement, including the Exhibits and
Schedules hereto, or in any certificate or instrument delivered by or on behalf
of the Sellers or the Company pursuant to this Agreement.
8.2 Indemnification by Buyer. Subject to the provisions of this Section
8, Buyer shall protect, indemnify and hold harmless the Sellers and the Company,
in respect of any Damages to which the Sellers may become subject if such
Damages arise out of or are based upon the breach of any of the representations,
warranties, covenants or agreements made by Buyer in this Agreement, including
the Exhibits and Schedules hereto, or in any certificate delivered by or on
behalf of Buyer pursuant to this Agreement.
8.3 Indemnification Procedures. The obligations and liabilities of each
indemnifying party hereunder with respect to claims resulting from the assertion
of liability by the other party or third parties shall be subject to the
following terms and conditions:
(a) If any person shall notify an indemnified party (the
"Indemnified Party") with respect to any matter which may give rise to
a claim for indemnification (a "Claim") against
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Buyer or the Sellers (the "Indemnifying Party") under this Section 8,
then the Indemnified Party shall promptly notify each Indemnifying
Party thereof in writing; provided, however, that no delay on the part
of the Indemnified Party in notifying any Indemnifying Party shall
relieve the Indemnifying Party from any obligation hereunder unless
(and then solely to the extent) the Indemnifying Party thereby is
prejudiced.
(b) Any Indemnifying Party will have the right to defend the
Indemnified Party against the Claim with counsel of its choice
reasonably satisfactory to the Indemnified Party so long as (i) the
Indemnifying Party notifies the Indemnified Party in writing within 15
days after the Indemnified Party has given notice of the Claim that the
Indemnifying Party will indemnify the Indemnified Party from and
against the entirety (subject to any limitations contained in Section
8) of any Damages the Indemnified Party may suffer resulting from,
arising out of, relating to, in the nature of or caused by the Claim,
(ii) the Indemnifying Party provides the Indemnified Party with
evidence reasonably acceptable to the Indemnified Party that the
Indemnifying Party will have the financial resources to defend against
the Claim and fulfill its indemnification obligations hereunder, (iii)
the Claim involves only money damages and does not seek an injunction
or other equitable relief, (iv) settlement of, or an adverse judgment
with respect to, the Claim is not, in the good faith judgment of the
Indemnifying Party, likely to establish a precedential custom or
practice materially adverse to the continuing business interests of the
Indemnified Party, and (v) the Indemnifying Party conducts the defense
of the Claim actively and diligently and in good faith.
(c) So long as the Indemnifying Party is conducting the
defense of the Claim in accordance with Section 8.3(b) above, (i) the
Indemnified Party may retain separate co-counsel at its sole cost and
expense and participate in the defense of the Claim, (ii) the
Indemnified Party will not consent to the entry of any judgment or
enter into any settlement with respect to the Claim without the prior
written consent of the Indemnifying Party (not to be withheld
unreasonably), and (iii) the Indemnifying Party will not consent to the
entry of any judgment or enter into any settlement with respect to the
Claim without the prior written consent of the Indemnified Party (not
to be withheld unreasonably).
(d) In the event any of the conditions in Section 8.3(b) above
is or becomes unsatisfied, however, (i) the Indemnified Party may
defend against, and consent to the entry of any judgment or enter into
any settlement with respect to, the Claim in any manner it reasonably
may deem appropriate (and the Indemnified Party need not consult with,
or obtain any consent from, any Indemnifying Party in connection
therewith), (ii) the Indemnifying Party will remain responsible for any
damages the Indemnified Party may suffer resulting from, arising out
of, relating to, in the nature of, or caused by the Claim to the
fullest extent provided in this Section 8.
8.4 Limits on Liability. Anything contained in this Agreement to the
contrary notwithstanding, the liability of any party for indemnity shall only
extend to matters for which a bona fide claim has been asserted by written
notice of such claim delivered to the Indemnifying Party on
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or before the second anniversary of the Closing Date. The maximum liability of
any Seller hereunder shall be the amount of the Purchase Price he has received.
9. Miscellaneous.
9.1 Payment of Certain Fees and Expenses. Except as otherwise provided
herein, each of the parties hereto shall pay the fees and expenses incurred by
it in connection with the negotiation, preparation, execution and performance of
this Agreement, including, without limitation, brokers' fees, attorneys' fees
and accountants' fees; provided, however, that if an event described in Section
(ii)(h) of Annex I has occurred, the Company shall pay all of Buyer's reasonable
fees and expenses incurred in connection with the transaction contemplated
herein. The Sellers will file all necessary documentation and returns with
respect to all sales, use, transfer and other similar Taxes arising or resulting
from the purchase and sale of the Seller Shares hereunder. In addition, each
Seller acknowledges that he, and not the Company or the Buyer, will pay all
Taxes due on receipt of the consideration payable to that Seller under this
Agreement.
9.2 Notices. All notices, requests, demands and other communications
which are required or may be given under this Agreement shall be in writing and
shall be deemed to have been duly given and received (i) if personally delivered
or if delivered by telex, telegram, facsimile or courier service, when actually
received by the party to whom notice is sent or (ii) if delivered by mail
(whether actually received or not), at the close of business on the fifth
business day next following the day when placed in the mail, postage prepaid,
certified or registered, addressed to the appropriate party or parties, at the
address of such party or parties set forth below (or at such other address as
such party may designate by written notice to all other parties in accordance
herewith):
(a) If to Buyer:
CRI Acquisition, Inc.
c/o Mr. Rodger O. Riney
12855 Flushing Meadow Drive
St. Louis, Missouri 63131
with a copy to:
Gardere Wynne Sewell & Riggs, L.L.P.
1000 Louisiana, Suite 3400
Houston, Texas 77002-5007
Attention: Bryan W. Baker
Facsimile: (713) 276-6754
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23
(b) If to a Seller:
Mr. James L. Schultz
Ms. Helen D. Schultz
Mr. David J. Vagnoni
c/o Computer Research, Inc.
Southpointe Plaza I, Suite 300
400 Southpointe Boulevard
Cannonsburg, Pennsylvania 15317-8539
(c) If to the Company:
Computer Research, Inc.
Southpointe Plaza I, Suite 300
400 Southpointe Boulevard
Cannonsburg, Pennsylvania 15317-8539
with a copy to:
Mr. John J. Zak, Esq.
Hodgson Russ Andrews Woods & Goodyear, LLP
One M&T Plaza, Suite 2000
Buffalo, New York 14203-2391
Facsimile: (716) 849-0349
9.3 Entire Agreement. This Agreement (including the Exhibits and
Schedules hereto and the other transaction documents expressly contemplated
hereby) constitutes the entire agreement between the parties hereto and
supersedes all prior agreements and understandings, oral and written, between
the parties hereto with respect to the subject matter hereof.
9.4 Binding Effect; Benefit. This Agreement shall inure to the benefit
of and be binding upon the parties hereto and their respective permitted heirs,
personal representatives, successors and assigns. Except as provided expressly
herein, nothing in this Agreement, expressed or implied, is intended to confer
on any person other than the parties hereto or their respective heirs, personal
representatives, successors and assigns any rights, remedies, obligations or
liabilities under or by reason of this Agreement.
9.5 Assignability. This Agreement shall not be assignable by the
Sellers or the Company without the prior written consent of the Buyer, or by the
Buyer without the prior written consent of the Sellers; provided, however, that
Buyer shall be entitled to assign its rights and obligations under this
Agreement to an affiliate of such Buyer without the consent of the Sellers, but
the Buyer shall not be released from its obligations hereunder.
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9.6 Amendment; Waiver. This Agreement may be amended, supplemented or
otherwise modified only by a written instrument executed by the parties hereto.
No waiver by any party of any of the provisions hereof shall be effective unless
explicitly set forth in writing and executed by the party so waiving. Except as
provided in the preceding sentence, no action taken pursuant to this Agreement,
including any investigation by or on behalf of any party, shall be deemed to
constitute a waiver by the party taking such action of compliance with any
representations, warranties, covenants, or agreements contained herein, and in
any documents delivered or to be delivered pursuant to this Agreement and in
connection with the Closing hereunder. The waiver by any party hereto of a
breach of any provision of this Agreement shall not operate or be construed as a
waiver of any subsequent breach.
9.7 Section Headings; Index. The section headings contained in this
Agreement are for reference purposes only and shall not affect the meaning or
interpretation of this Agreement.
9.8 Reformation and Severability. If any provision of this Agreement
shall be declared by any court of competent jurisdiction to be illegal, void or
unenforceable, that provision will, to the extent possible, be modified in such
manner as to be valid, legal and enforceable but so as to most nearly retain the
intent of the parties hereto as expressed herein, and if such a modification is
not possible, that provision will be severed from this Agreement, and in either
case the validity, legality and enforceability of the remaining provisions of
this Agreement will not in any way be affected or impaired thereby.
9.9 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
together shall be deemed to be one and the same instrument.
9.10 Release. Notwithstanding any other provision of this Agreement and
subject to the limitations the last sentence of this Section 9.10 sets forth,
each Seller hereby unconditionally and irrevocably releases and forever
discharges, effective as of and forever after the Closing, to the fullest extent
Applicable Law permits, the Buyer and its past, present and future officers,
directors, employees, agents and affiliates (including the Company)
(collectively, the "Released Parties") from any and all debts, liabilities,
obligations, claims, demands, actions or causes of action, suits, judgments or
controversies of any kind whatsoever (collectively, "Pre-Closing Claims")
against the Company that arise out of or are based on any agreement or
understanding or act or failure to act (INCLUDING ANY ACT OR FAILURE TO ACT THAT
CONSTITUTES ORDINARY OR GROSS NEGLIGENCE OR RECKLESS OR WILLFUL, WANTON
MISCONDUCT), misrepresentation, omission, transaction, fact, event or other
matter occurring prior to the time of the Closing (whether based on any law,
regulation, right of action, at law or in equity, or otherwise, foreseen or
unforeseen, matured or unmatured, known or unknown, accrued or not accrued)
(collectively, "Pre-Closing Matters"), including without limitation: (i) claims
by such Seller with respect to payment of royalties or repayment of loans or
indebtedness; (ii) any rights, titles and interests in, to or under any
agreements, arrangements or understandings to which such Seller is a party; and
(iii) claims by such Seller with respect to dividends, violation of preemptive
rights, or payment of salaries or other compensation or in any way arising out
of or in connection with the Seller's employment with the Company, the cessation
of that employment, the
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Seller's status as an officer, director or stockholder of the Company or
otherwise (but excluding any and all claims in respect of accrued and unpaid
cash compensation owing to the Seller at such rates or in such amounts, as the
case may be, as have been in effect for the six months preceding the Closing
Date and benefits accrued under each Company benefit plan). Each Seller also
agrees not to file or bring any proceeding before any Governmental Entity on the
basis of or respecting any Pre-Closing Claim concerning any Pre-Closing Matter
against any Released Party. Each Seller (i) acknowledges that he fully
comprehends and understands all the terms of this Section 9.10 and their legal
effects and (ii) expressly represents and warrants that (A) he is competent to
effect the release made in this Section 9.10 knowingly and voluntarily and
without reliance on any statement or representation of any Released Party or its
representatives and (B) he had the opportunity to consult with an attorney of
his choice regarding this Section 9.10. This Section 9.10 will not affect the
rights of the Sellers under this Agreement or any other document entered in
connection with this Agreement.
9.11 Applicable Law. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of New York, without regard to any
conflicts of law provisions thereof that would cause the laws of any other
jurisdiction to apply.
9.12 Exercise of Rights and Remedies. Except as this Agreement
otherwise provides, no delay or omission in the exercise of any right, power or
remedy accruing to any party hereto as a result of any breach or default
hereunder by any other party hereto will impair any such right, power or remedy,
nor will it be construed, deemed or interpreted as a waiver of or acquiescence
in any such breach or default, or of any similar breach or default occurring
later; nor will any waiver of any single breach or default be construed, deemed
or interpreted as a waiver of any other breach or default hereunder occurring
before or after that waiver. No right, remedy or election under any term of this
Agreement will be deemed exclusive, but each will be cumulative with all other
rights, remedies and elections available at law or in equity.
10. Definitions.
10.1 Defined Terms. As used in this Agreement, each of the following
terms has the meaning given it below:
"affiliate" means, with respect to any person, any other
person that, directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under common control
with, such person.
"Applicable Law" means any statute, law, rule or regulation or
any judgment, order, writ, injunction or decree of any Governmental
Entity to which a specified person or property is subject.
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"Encumbrances" means liens, charges, pledges, options,
mortgages, deeds of trust, security interests, claims, restrictions
(whether on voting, sale, transfer, disposition or otherwise),
licenses, sublicenses, easements and other encumbrances of every type
and description, whether imposed by law, agreement, understanding or
otherwise.
"Governmental Entity" means any court or tribunal in any
jurisdiction (domestic or foreign) or any public, governmental or
regulatory body, agency, department, commission, board, bureau or other
authority or instrumentality (domestic or foreign).
"Intellectual Property" means patents, trademarks, service
marks, trade names, copyrights, trade secrets, know-how, inventions,
and similar rights, and all registrations, applications, licenses and
rights with respect to any of the foregoing.
"Material Adverse Change" means a material adverse change
after the date of this Agreement in the business, condition (financial
or otherwise), operations, assets, or prospects of the Company taken as
a whole.
"person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, enterprise,
unincorporated organization or Governmental Entity.
"reasonable best efforts" means a party's best efforts in
accordance with reasonable commercial practice and without the
incurrence of unreasonable expense.
"Subsidiary" means any corporation more than 30 percent of
whose outstanding voting securities, or any partnership, joint venture,
or other entity more than 30 percent of whose total equity interests,
is owned, directly or indirectly, by the Company.
"Taxes" means any income taxes or similar assessments or any
sales, excise, occupation, use, ad valorem, property, production,
severance, transportation, employment, payroll, franchise or other tax
imposed by any United States federal, state or local (or any foreign or
provincial) taxing authority, including any interest, penalties or
additions attributable thereto.
10.2 References. All references in this Agreement to Sections,
paragraphs and other subdivisions refer to the Sections, paragraphs and other
subdivisions of this Agreement unless expressly provided otherwise. The words
"this Agreement", "herein", "hereof", "hereby", "hereunder" and words of similar
import refer to this Agreement as a whole and not to any particular subdivision
unless expressly so limited. Whenever the words "include", "includes" and
"including" are used in this Agreement, such words shall be deemed to be
followed by the words "without limitation". Each reference herein to a Schedule,
Exhibit or Annex refers to the item identified separately in writing by the
parties hereto as the described Schedule, Exhibit or Annex to this
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Agreement. All Schedules, Exhibits and Annexes are hereby incorporated in and
made a part of this Agreement as if set forth in full herein. Wherever the
context shall so require, all words herein in the male gender shall be deemed to
include the female or neuter gender, all singular words shall include the
plural, and all plural words shall include the singular. The language used in
this Agreement shall be deemed to be the language the parties hereto have chosen
to express their mutual intent, and no rule of strict construction will be
applied against any party hereto.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement on the date first above written.
/s/ James L. Schultz
---------------------------------
JAMES L. SCHULTZ
JAMES L. SCHULTZ AND HELEN D.
SCHULTZ, AS TENANTS BY THE
ENTIRETIES AND AS JOINT TENANTS
By: /s/ James L. Schultz
------------------------------
James L. Schultz
and By: /s/ Helen D. Schultz
--------------------------
Helen D. Schultz
/s/ David J. Vagnoni
---------------------------------
DAVID J. VAGNONI
COMPUTER RESEARCH, INC.
By: /s/ James L. Schultz
------------------------------
Name: James L. Schultz
Title: President
CRI ACQUISITION, INC.
By: /s/ Rodger O. Riney
------------------------------
Name: Rodger O. Riney
Title: President
[Signature Page to Purchase Agreement]
29
GUARANTY
The undersigned (the "Guarantor") hereby irrevocably, unconditionally
and absolutely guarantees, in favor of the Sellers and the Company the truth and
accuracy of the representations and warranties made by Buyer in this Agreement
and the full performance by Buyer of its covenants and agreements (the
"Obligations") under this Agreement. Any of the Sellers or the Company may
enforce the Guarantors' obligations hereunder without first suing or enforcing
its rights or remedies against Buyer. Guarantor hereby waives (a) notice of
acceptance of this guaranty, (b) notice of the occurrence of any breach or
default by Buyer in respect of the Obligations, and (c) demand for payment,
presentment, protest, notice of protest and non-payment, or other notice of
default. The Guarantor hereby consents and agrees to, and acknowledges that his
obligations hereunder shall not be released or discharged by, the following: (a)
the renewal, extension, modification, increase, amendment or alteration of the
Obligations, (b) any waiver, extension or compromise granted to Buyer by the
Sellers or the Company, (c) the insolvency, bankruptcy, liquidation or
dissolution of Buyer, (d) the invalidity, illegality or unenforceability of all
or any part of the Obligations, (e) the full or partial release of Obligations,
and (f) the extension or waiver of the time for Buyer's performance of or
compliance with any of the Obligations.
EXECUTED as of the date first set forth above.
/s/ Rodger O. Riney
--------------------------------
RODGER O. RINEY
30
ANNEX I
to
Purchase Agreement
The capitalized terms used in this Annex I have the meanings set forth
in the Purchase Agreement to which this Annex I is attached, except that the
term "Agreement" shall be deemed to refer to said Purchase Agreement.
Certain Conditions of the Offer. Notwithstanding any other provision of
the Offer, Buyer shall not be required to accept for payment or pay for, and may
delay the acceptance for payment of or payment for any tendered Shares or may
terminate or amend the Offer, if
(i) the number of Shares validly tendered and not withdrawn immediately
prior to the expiration of the Offer plus the number of Seller Shares purchased
in the Initial Purchase shall be less than two-thirds of the Company's
outstanding Common Stock determined on a fully diluted basis (including, without
limitation, all Shares issuable by the Company upon the exercise of any options,
warrants or rights, or upon the conversion or exchange of any securities or
rights convertible into or exercisable or exchangeable for Shares) (the "Minimum
Condition"), or
(ii) on or after the date of the Agreement and at or before the time of
payment for any of such Shares (whether or not any Shares have theretofore been
accepted for payment) any of the following shall occur and be continuing:
(a) there shall be in effect an injunction, order, decree,
judgment, statute, rule, or regulation which (i) materially restricts
or prohibits the making or consummation of the Offer, (ii) materially
restricts or prohibits the ownership or operation by Buyer of its or
the Company's business or assets or compels Buyer (or any of its
respective affiliates) to dispose of or hold separate any material
portion of its or the Company's business or assets, (iii) imposes any
material limitations on the ability of Buyer effectively to acquire or
to hold or to exercise full rights of ownership of the Shares,
including, without limitation, the right to vote the Shares purchased
by Buyer on all matters properly presented to the shareholders of the
Company, or (iv) imposes any limitations on the ability of Buyer or any
of its affiliates effectively to control in any material respect the
business and operations of the Company; or
(b) there shall be instituted, pending or threatened any suit,
action, or proceeding which has a reasonable probability of resulting
in (i) any of the consequences referred to in paragraph (a) immediately
preceding, (ii) the assessment of material damages against the Company,
Buyer or any of their affiliates with respect to the transactions
contemplated by this Agreement, or (iii) a Material Adverse Change; or
31
(c) (i) any general suspension of, or limitation on prices
for, trading in securities on the New York Stock Exchange or the United
States over-the-counter market, (ii) the declaration of a banking
moratorium or any suspension of payments in respect of banks in the
United States, (iii) any limitation by any Governmental Authority or
any other event which is reasonably likely to have a material adverse
effect on the extension of credit by banks or other lending
institutions of the United States, (iv) a commencement of a war, armed
hostilities or other national or international calamity or national
emergency directly involving or directly affecting the United States,
(v) in the case of any of the foregoing (except for (iv)) existing at
the date of execution of the Agreement, any material acceleration or
worsening thereof; or
(d) the Company shall have breached or failed to perform any
of its obligations, covenants or agreements under the Agreement (except
where such breaches would not, in the aggregate, constitute a Material
Adverse Change); or
(e) any representation or warranty of the Company set forth in
the Agreement shall have not been true when made (except where such
failures to be true would not, in the aggregate, constitute a Material
Adverse Change); or
(f) any representation or warranty of the Company set forth in
the Agreement, if made again as of the date of the consummation of the
Offer, would not be true as of such date (except where such failures to
be true would not, in the aggregate, constitute a Material Adverse
Change); or
(g) the Agreement shall have been terminated pursuant to its
terms; or
(h) the Company's Board of Directors shall have (i) withdrawn
or adversely modified its approval or recommendation in favor of the
Offer, (ii) after receipt of an Acquisition Proposal by the Company,
failed to publicly reconfirm its recommendations as set forth in
Section 1.2 of the Agreement within five business days after the
Company's receipt of Buyer's written request for such reconfirmation,
or (iii) recommended acceptance, or shall have determined to recommend
acceptance, of any Acquisition Proposal received by the Company after
the date of the Agreement; or
(i) Buyer and the Company shall have agreed that Buyer shall
amend the Offer to terminate the Offer or postpone the payment for
Shares pursuant thereto;
which in the reasonable judgment of Buyer, in any such case, and regardless of
the circumstances giving rise to any such condition (other than circumstances
caused by the breach by Buyer of its obligations under the Agreement), makes it
inadvisable to proceed with the Offer or with acceptance for payment or payment
for Shares.
The foregoing conditions (other than the Minimum Condition) are for the
sole benefit of Buyer, subject to the terms of the Agreement, and may be
asserted or waived by Buyer in whole or
Annex I - 2
32
in part, at any time and from time to time, in the sole discretion of Buyer. The
failure by Buyer at any time to exercise its rights under any of the foregoing
conditions shall not be deemed a waiver of any such rights and each such right
shall be deemed an ongoing right which may be asserted at any time or from time
to time.
Annex I - 3
33
ANNEX II
The Company and Schultz shall enter into:
(a) An Employment Agreement having a term of one year and a salary
of $200,000 per year. The Employment Agreement will provide
that it may be extended by mutual agreement of Schultz and the
Company. The Employment Agreement will provide that Schultz
shall have generally the same duties, title and
responsibilities as he currently has with the Company.
(b) A Consulting Agreement, which shall begin upon termination of
the Employment Agreement and extend for two years thereafter,
at a fee of $100,000 per year. The Consulting Agreement will
require Schultz to consult with the Company from time to time
as requested by the Company.
The Company and Vagnoni shall enter into a two-year Consulting Agreement at a
fee of $50,000 in the first year and $25,000 in the second. The Consulting
Agreement will require Vagnoni to consult with the Company from time to time as
requested by the Company.