UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 1)*
COMPUTER RESEARCH, INC.
(Name of Issuer)
COMMON STOCK
(Title of Class of Securities)
205327109
(CUSIP Number)
James L. Schultz
Computer Research, Inc.
Southpointe Plaza I, Suite 300, 400 Southpointe Boulevard
Canonsburg, Pennsylvania 15317
(724) 745-0600
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
Copy to:
John J. Zak, Esq.
Hodgson, Russ, Andrews, Woods & Goodyear, LLP
One M&T Plaza, Suite 2000
Buffalo, New York 14203-2391
(716) 848-1253
July 7, 2000
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of ss.ss.240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the
following box [ ].
Note: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. Seess.240.13d-7(b) for other
parties to whom copies are to be sent.
* The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 (the "Act") or otherwise subject to the liabilities of that section of the
Act but shall be subject to all other provisions of the Act (however, see the
Notes).
<PAGE>
SCHEDULE 13D
CUSIP No. 205327109
1. NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS (ENTITIES ONLY):
James L. Schultz
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ] (b) [ ]
3. SEC USE ONLY:
4. SOURCE OF FUNDS: N/A
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [ ]
6. CITIZENSHIP OR PLACE OF ORGANIZATION: United States of America
NUMBER OF 7. SOLE VOTING POWER: 0
SHARES
BENEFICIALLY 8. SHARED VOTING POWER: 0
OWNED BY
EACH 9. SOLE DISPOSITIVE POWER: 0
REPORTING
PERSON 10. SHARED DISPOSITIVE POWER: 0
WITH
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON: 0
12. CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [ ]
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): 0
14. TYPE OF REPORTING PERSON (SEE INSTRUCTIONS): IN
<PAGE>
SCHEDULE 13D
Item 1. Security and Issuer.
This Amendment No. 1 ("Amendment No. 1") to Schedule 13D amends the
original Schedule 13D previously filed by James L. Schultz, as Reporting Person.
This statement relates to shares of common stock, without par value (the "Common
Stock"), of Computer Research, Inc. (the "Issuer").
The names of the principal executive officers of the Issuer are:
James L. Schultz President and Treasurer
David J. Vagnoni Executive Vice President
Their address is:
Computer Research, Inc.
Southpointe Plaza I, Suite 300
400 Southpointe Boulevard
Canonsburg, Pennsylvania 15317
Item 2. Identity and Background.
(a) The person filing this statement is James L. Schultz (the "Reporting
Person").
(b) The Reporting Person's business address is Computer Research, Inc.,
Southpointe Plaza I, Suite 300, 400 Southpointe Boulevard, Canonsburg,
Pennsylvania 15317.
(c) The Reporting Person is the President and Chief Executive Officer of
the Issuer.
(d) During the last five years, the Reporting Person has not been
convicted in a criminal proceeding (excluding traffic violations or
similar misdemeanors).
(e) During the last five years, the Reporting Person was not a party to a
civil proceeding of a judicial or administrative body of competent
jurisdiction, as a result of which proceeding he would have been or
would be subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to,
federal or state securities laws.
(f) The Reporting Person is a citizen of the United States of America.
Item 3. Source of Funds or Other Considerations
The Reporting Person has previously reported his individual ownership of
five percent of the Issuer's Common Stock on a Schedule 13D. This Amendment No.
1 is being filed because the Reporting Person has sold all of the Issuer's
Common Stock owned by him. No purchases by the Reporting Person of the Issuer's
Common Stock are being reported on this Amendment No. 1.
Item 4. Purpose of Transaction.
On July 7, 2000, the Reporting Person sold all of the 883,310 shares of the
Issuer's Common Stock owned by him to CRI Acquisition, Inc. (the "Buyer"). The
Reporting Person, the Issuer and the Buyer, along with others, have entered into
a Purchase Agreement, dated as of July 7, 2000 (the "Purchase Agreement"),
providing, subject to certain conditions, for the Buyer or an affiliate to make
a tender offer (the "Offer") for all of the outstanding shares of the Issuer's
Common Stock at a price of $2.42 per share on or before July 31, 2000, or as
soon as practicable thereafter but no later than August 7, 2000.
Pursuant to the Purchase Agreement, the Buyer and the Issuer have agreed
that, until after the conclusion of the merger described below, neither the
Buyer nor any of its affiliates shall elect any members of the Issuer's Board of
Directors or seek to influence or change the management or policies of the
Issuer in any way, and the Buyer has covenanted and agreed on behalf of itself
and its affiliates not to do so; however, if certain Offer conditions are not
met, and the Buyer determines not to proceed with the Offer, or if the Buyer
proceeds with the Offer but does not complete the Offer, then the Buyer shall,
upon written notice to the Issuer, have the right to designate such number of
directors, rounded up to the next whole number, as will give the Buyer
representation on the Board of Directors of the Issuer ("Equivalent
Representation") equal to the product of the number of directors comprising the
Board of Directors of the Issuer and the percentage that the aggregate number of
shares of Common Stock beneficially owned by the Buyer bears to the total number
of shares of Common Stock outstanding. The Issuer 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
Issuer, and shall cause the Buyer's designees to be so elected so that the Buyer
shall have Equivalent Representation on the Board of Directors of the Issuer. At
the request of the Buyer, the Issuer 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 the
Buyer's request. The Buyer shall supply to the Issuer and be solely responsible
for any information with respect to itself and the 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 the Purchase Agreement,
extension for the performance or waiver of the obligations or other acts of the
Buyer or waiver of the Issuer's rights thereunder, which amendment, termination,
extension or waiver would adversely affect the shareholders of the Issuer, shall
also require the approval of all of the then serving directors, if any, who are
directors as of the date of the Purchase Agreement (the "Continuing Directors").
If the Offer conditions are satisfied, the Continuing Directors shall not be
removed prior to completion of the merger described 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 the Purchase Agreement.
In the event that the Offer is commenced and the Buyer shall acquire in the
aggregate at least 90% of the outstanding shares of the voting capital stock of
the Issuer, pursuant to the Offer or otherwise (including the purchase of shares
pursuant to the Purchase Agreement), the parties to the Purchase Agreement
shall, at the request of the Buyer and subject to the provisions of Section 7 of
the Purchase Agreement, take all necessary and appropriate action to cause a
corporation wholly owned by the Buyer to be merged with and into the Issuer,
with the Issuer as the surviving corporation, without a meeting of stockholders
of the Issuer, in accordance with applicable law; such that each share of
capital stock of the corporation wholly owned by the Buyer shall be canceled and
cease to be outstanding and each share of the Issuer Common Stock shall be
exchanged for cash consideration equal to the Offer price under the Purchase
Agreement.
In the event that the 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 Issuer, pursuant to the Offer or otherwise (including the purchase of shares
pursuant to the Purchase Agreement), then, as soon as practicable after the
acquisition of shares in the Offer the parties to the Purchase Agreement shall,
subject to the provisions of Section 7 of the Purchase Agreement, take all
necessary and appropriate action to cause a corporation wholly owned by the
Buyer to be merged with and into the Issuer, with the Issuer as the surviving
corporation, in accordance with applicable law; such that each share of capital
stock of the corporation wholly owned by the Buyer shall be cancelled and cease
to be outstanding and each share of the Issuer Common Stock shall be exchanged
for cash consideration equal to the Offer price under the Purchase Agreement. If
a merger is to be effected under this paragraph, the Issuer 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
required by applicable law in order to consummate the merger under this
paragraph, the Issuer 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 the Purchase Agreement and the merger contemplated
thereby as soon as reasonably practicable after the purchase of and payment for
shares pursuant to the Offer. At such meeting, the Buyer shall cause all shares
of Issuer Common Stock owned by the Buyer to be voted in favor of the adoption
of the Purchase Agreement and the merger contemplated thereby.
The Purchase Agreement is attached as Exhibit 1 hereto and is hereby
incorporated by reference herein. The description of the Purchase Agreement set
forth herein does not purport to be complete and is qualified in its entirety by
the actual provisions of the Purchase Agreement.
Except as described above, the Reporting Person does not have any plans or
proposals which would result in:
(a) The acquisition by any person of additional securities of the Issuer;
(b) An extraordinary corporate transaction, such as a merger,
reorganization or liquidation, involving the Issuer or any of its
subsidiaries;
(c) A sale or transfer of a material amount of assets of the Issuer or any
of its subsidiaries;
(d) Any change in the present board of directors or management of the
Issuer, including any plans or proposals to change the number or term
of directors or to fill any existing vacancies on the board of
directors;
(e) Any other material change in the present capitalization or dividend
policy of the Issuer;
(f) Any other material change in the Issuer's business or corporate
structure;
(g) Changes in the Issuer's charter, bylaws or instruments corresponding
thereto or other actions which may impede the acquisition or control
of the Issuer by any person;
(h) Causing a class of securities of the Issuer to be delisted from a
national securities exchange or to cease to be authorized to be quoted
in an inter-dealer quotation system of a registered national
securities association;
(i) A class of equity securities of the Issuer becoming eligible for
termination of registration pursuant to Section 12(g) (4) of the Act;
or
(j) Any action similar to any of those enumerated above.
Item 5. Interest in Securities of the Issuer.
(a) The Reporting Person has sold all of his shares of the Issuer's Common
Stock that were previously reported as beneficially owned by him. As
of July 7, 2000 the Reporting Person does not beneficially own any
shares of the Issuer's outstanding Common Stock.
(b) Pursuant to the transaction described in (a) above and (c) below, the
Reporting Person does not have any power to dispose or direct the
disposition of any shares of the Issuer's Common Stock.
(c) On July 7, 2000, the Reporting Person sold all of the 883,310 shares
of Common Stock of the Issuer owned by him to the Buyer, at a purchase
price per share of $2.42, for an aggregate cash consideration of
$2,137,610.20, pursuant to the Purchase Agreement.
(d) Except for the directors of the Issuer (who, through their statutory
powers as directors, have the right to determine if and when dividends
are declared and paid), no person (other than the Reporting Person) is
known by the Reporting Person to have the right to receive or the
power to direct the receipt of dividends from, or the proceeds from
the sale of, the shares of Common Stock that were sold by the
Reporting Person as described in (c) above.
(e) The Reporting Person ceased to be the beneficial owner of more than
five percent of the Issuer's Common Stock on July 7, 2000.
Item 6. Contracts, Arrangements, Understanding or Relationships with
Respect to Securities of the Issuer.
The following contracts, arrangements, understandings and relationships
currently exist between the Reporting Person and other persons with respect to
securities of the Issuer: the Reporting Person, the Issuer and the Buyer, along
with others, have entered into the Purchase Agreement, dated as of July 7, 2000,
providing, subject to certain conditions, for the Buyer or an affiliate to make
a tender offer for all of the outstanding shares of the Issuer's Common Stock at
a price of $2.42 per share on or before July 31, 2000, or as soon as practicable
thereafter but no later than August 7, 2000. See the text of Item 4, which is
hereby incorporated by reference in this Item, for a description of the terms of
the Purchase Agreement.
The Purchase Agreement is attached as Exhibit 1 hereto and is hereby
incorporated by reference herein.
Item 7. Material to be filed as Exhibits.
The following written agreements, contracts, arrangements, understandings,
plans and proposals are hereby filed as Exhibits to this Amendment No. 1:
Purchase Agreement, dated 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, David J. Vagnoni, Computer Research, Inc. and CRI Acquisition, Inc.,
attached as Exhibit 1 hereto.
Signature
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: July 17, 2000
/s/ James L. Schultz
-------------------------------
James L. Schultz
<PAGE>
EXHIBIT 1
------------------
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.
------------------
Dated as of July 7, 2000
<PAGE>
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............................-10-
(a) Due Organization; Authorization and Validity of Agreement.....-10-
(b) No Approvals or Notices Required; No Conflict with Instruments-10-
(c) Offer Documents...............................................-10-
(d) Certain Fees..................................................-10-
(e) Financial Ability.............................................-11-
3.3 Survival of Representations and Warranties.........................-11-
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.............................................-13-
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...................-14-
(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............................-16-
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-
<PAGE>
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").
R E C I T A L S:
- - - - - - - -
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 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.
<PAGE>
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-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.
-2-
<PAGE>
(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 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.
-3-
<PAGE>
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
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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 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.
(i) 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
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.
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<PAGE>
(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
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<PAGE>
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, 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.
-8-
<PAGE>
(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 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.
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<PAGE>
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 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.
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<PAGE>
(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 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;
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<PAGE>
(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 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.
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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
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.
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<PAGE>
(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.
(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.
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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 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 662/3% 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:
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(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 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 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.
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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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(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
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of that employment, the 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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<PAGE>
"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 Agreement.
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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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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement on the date first above written.
_____________________________________
JAMES L. SCHULTZ
JAMES L. SCHULTZ AND HELEN D.
SCHULTZ, AS TENANTS BY THE
ENTIRETIES AND AS JOINT TENANTS
By:__________________________________
James L. Schultz
and By:______________________________
Helen D. Schultz
_____________________________________
DAVID J. VAGNONI
COMPUTER RESEARCH, INC.
By:__________________________________
Name:________________________________
Title:_______________________________
CRI ACQUISITION, INC.
By:_________________________________
Name:_______________________________
Title:______________________________
[Signature Page to Purchase Agreement]
<PAGE>
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.
__________________________
RODGER O. RINEY
<PAGE>
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
Annex I-2
<PAGE>
(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 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
Annex I-2
<PAGE>
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
<PAGE>
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.
