UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: April 30, 1996
Commission File Number: 0-3713
NATIONAL COMPUTER SYSTEMS, INC.
- -----------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Minnesota 41-0850527
- ------------------------------- --------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
11000 Prairie Lakes Drive
Eden Prairie, Minnesota 55344
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (612)829-3000
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months and (2) has been subject to such filing requirements for
the past 90 days. Yes [X] No [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the last practicable date:
The number of shares of common stock, par value $.03 per share,outstanding
on May 31, 1996, was 15,456,247.
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
NATIONAL COMPUTER SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (unaudited)
<TABLE>
<CAPTION>
Three Months
Ended April 30,
-------------------
1996 1995
------ ------
(In thousands, except
per share amounts)
<S> <C> <C>
REVENUES
Net sales $60,812 $53,786
Maintenance and support 9,695 10,223
------- -------
Total revenues 70,507 64,009
COST OF REVENUES
Cost of sales 37,140 31,374
Cost of maintenance and support 6,629 6,682
------- -------
Gross margin 26,738 25,953
OPERATING EXPENSES
Sales and marketing 9,692 9,534
Research and development 2,164 2,290
General and administrative 8,301 8,028
------- -------
INCOME FROM OPERATIONS 6,581 6,101
Interest expense 568 1,043
Other expense, net 652 371
------- -------
INCOME FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES 5,361 4,687
Income taxes 2,160 1,835
------- -------
INCOME FROM CONTINUING OPERATIONS 3,201 2,852
------- -------
Loss from discontinued operations,
net of tax benefit of $260 and
$320, respectively (370) (487)
------- -------
NET INCOME $2,831 $2,365
======= =======
EARNINGS PER SHARE
Continuing operations $0.20 $0.18
Discontinued operations (0.02) (0.03)
------- -------
Net income $0.18 $0.15
======= =======
AVERAGE SHARES OUTSTANDING 15,631 15,497
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>
NATIONAL COMPUTER SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (unaudited)
<TABLE>
<CAPTION>
April 30, January 31,
1996 1996
--------- -----------
(In thousands)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 7,316 $ 5,154
Receivables 57,912 68,713
Inventories:
Finished products 5,544 6,012
Scoring services and work in process 13,354 8,694
Raw materials and purchased parts 4,214 3,630
-------- --------
Total inventories 23,112 18,336
Prepaid expenses and other 8,481 8,460
Investment in discontinued operations 19,118 17,557
-------- --------
TOTAL CURRENT ASSETS 115,939 118,220
PROPERTY, PLANT AND EQUIPMENT
Land, buildings and improvements 49,401 49,350
Machinery and equipment 105,630 104,551
Accumulated depreciation (81,286) (79,072)
-------- --------
Net property, plant and equipment 73,745 74,829
OTHER ASSETS
Acquired and internally developed
software products 10,964 11,865
Non-current receivables, investments
and other assets 11,987 12,384
Goodwill 2,271 2,426
-------- --------
Total other assets 25,222 26,675
-------- --------
TOTAL ASSETS $214,906 $219,724
======== ========
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>
NATIONAL COMPUTER SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (unaudited)
<TABLE>
<CAPTION>
April 30, January 31,
1996 1996
---------- -----------
(In thousands)
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current maturities $ 3,565 $ 2,473
Accounts payable 17,208 16,416
Accrued expenses 20,203 23,137
Deferred income 14,596 16,148
Income taxes 1,352 4,458
-------- --------
TOTAL CURRENT LIABILITIES 56,924 62,632
DEFERRED INCOME TAXES 3,915 4,359
LONG-TERM DEBT -- less current maturities 23,228 24,535
COMMITMENTS - -
STOCKHOLDERS' EQUITY
Preferred stock - -
Common stock--issued and outstanding -
15,442 and 15,365 shares,
respectively 463 461
Paid-in capital 4,269 3,427
Retained earnings 131,596 130,007
Deferred compensation (5,489) (5,697)
-------- --------
Total stockholders' equity 130,839 128,198
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $214,906 $219,724
======== ========
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>
NATIONAL COMPUTER SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
<TABLE>
<CAPTION>
Three Months Ended
April 30,
------------------
1996 1995
------- -------
(In thousands)
<S> <C> <C>
OPERATING ACTIVITIES
Net income from continuing operations $ 3,201 $ 2,852
Loss from discontinued operations (370) (487)
Depreciation, amortization and other
noncash expenses 7,091 6,731
Provision for deferred income taxes (444) (49)
Changes in operating assets and liabilities:
Decrease in accounts receivable 11,390 2,357
Increase in inventory and other
current assets (4,902) (3,017)
Decrease in accounts payable and
accrued expenses (7,412) (5,657)
Decrease in deferred income (2,082) (3,195)
------- -------
Net cash provided (used) by
operating activities 6,472 (465)
------- -------
INVESTING ACTIVITIES
Purchases of property, plant and equipment (2,431) (3,734)
Capitalized software products (711) (1,051)
Other, net (386) (1,133)
------- -------
Net cash used in investing activities (3,528) (5,918)
------- -------
FINANCING ACTIVITIES
Net increase in revolving credit borrowing - 6,400
Net proceeds (repayments) of other borrowings (240) 309
Issuance of common stock, net 844 473
Dividends paid (1,386) (1,380)
------- -------
Net cash provided (used)
by financing activities (782) 5,802
------- -------
Increase (decrease) in cash 2,162 (581)
CASH - beginning of period 5,154 1,195
------- -------
CASH - end of period $ 7,316 $ 614
======= =======
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>
NATIONAL COMPUTER SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note A - The accompanying unaudited Consolidated Financial Statements have been
prepared in accordance with the instructions to Form 10-Q and, therefore, do not
include all the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments (which include only normal recurring adjustments)
necessary to present fairly the financial position, results of operations and
cash flows for all periods presented have been made. The results of operations
for the period ended April 30, 1996, are not necessarily indicative of the
operating results that may be expected for the entire fiscal year ending January
31, 1997.
Note B - Earnings per share for the respective operating periods are computed
based on average shares outstanding and common stock equivalents.
Note C - The Company has 10,000,000 shares of $.01 par value Preferred Stock
authorized of which none is outstanding. 50,000,000 shares of $.03 par value
Common Stock are authorized.
Note D - The Company has received a claim from a customer for expenses, alleged
loan defaults, and other damages related to performance under a loan processing
and servicing contract. The Company has tendered the defense of this claim to
its insurer, and the insurer has accepted that defense subject to a reservation
of rights. The Company and its insurer intend to vigorously contest this claim.
While the claim has not yet been fully articulated, the Company believes that
any such claim would be substantially covered by insurance and would not have a
material effect on the Company's financial position.
Note E - On May 30, 1996, the Company entered into an agreement to sell its
Financial Systems business for $95 million in cash. NCS Financial Systems
business provides software and services for asset management, primarily to bank
trust departments. Revenues of this business were $11.1 million and $10.3
million for the three-month periods ending April 30, 1996 and 1995,
respectively. The completion of the sale is subject to certain regulatory
approvals and other closing conditions and is expected to be completed during
the month of July 1996. The accompanying consolidated statements have been
presented to report separately the net assets and operating results of these
discontinued operations. In addition, Management's Discussion and Analysis of
Results of Operations and Financial Condition is a discussion of continuing
operations only.
<PAGE>
Item 2. Management's Discussion and Analysis of Results of Operations and
Financial Condition
National Computer Systems, Inc. is an information services company providing
data collection services and systems to selected segments of the education,
business, government and healthcare markets.
Recap of 1996 First Quarter Results
For the quarter ended April 30, 1996, total revenues were up by $6.5 million or
10.2% from the quarter ended April 30, 1995. Though overall gross margin as a
percent of revenue decreased by 2.6 percentage points from the prior year, and
overall operating expenses increased slightly, the higher revenues generated a
quarter-to-quarter increase in income from operations of $.5 million or 7.9%. A
more detailed discussion of the various income statement items follows.
Revenues
Total revenues for the quarter ended April 30, 1996 were up 10.2% to $70.5
million from $64.0 million in the prior year. Total revenues increased in the
quarter primarily as a result of higher volumes of student financial aid and
educational assessment processing at the Company's Iowa City service center. In
addition, revenues were positively impacted by higher data collection systems
sales in the commercial market and higher forms revenue in the education market.
Cost of Revenues and Gross Margins
For the quarter ended April 30, 1996, the Company's overall gross margin
declined to 37.9% from 40.5% for the same period in the prior year. The gross
margin on net sales revenue declined by 2.8 percentage points from the same
period in fiscal 1995. The quarter-to-quarter decline was principally due to
lower relative margins on student financial aid and assessment revenues at the
Company's Iowa City service center. Gross margins on maintenance and support
revenues declined by 3.0 percentage points in the first quarter as compared to
the prior year quarter as a result of lower margins on a decreasing base of
third-party hardware maintenance.
Operating Expenses
Sales and marketing expenses increased $.2 million or 1.7 % in the quarter ended
April 30, 1996, over the prior year quarter. As a percentage of revenues,
however, sales and marketing expenses declined quarter to quarter by 1.1
percentage points. For the remainder of fiscal 1996, the Company expects sales
and marketing expenses to be slightly higher than fiscal 1995; as a percentage
of revenues, these expenses are expected to remain relatively constant year to
year. Research and development costs declined slightly in the quarter ended
April 30, 1996 as compared to the quarter ended April 30, 1995. This decline is
the result of the timing of certain expenditures. For the full year, these
expenses are expected to be at higher levels for fiscal 1996 than fiscal 1995,
as the Company intends to increase its investment in, among other things, new
data collection technologies and services.
General and administrative expenses increased by $.3 million or 3.4% for the
quarter ended April 30, 1996, from the prior year quarter. For fiscal 1996,
these expenses are expected to be comparable or slightly higher than the
previous year.
Non-operating Expenses
Interest expense decreased by $.5 million in the quarter ended April 30, 1996,
from the comparable prior year period. This decrease is the result of
substantially lower debt levels in fiscal 1996 than fiscal 1995.
Provision for Income Taxes
The effective income tax rate of 40.2% for the three months ended April 30, 1996
was higher than the effective rate applied for the same period in the prior year
primarily as a result of the statutory expiration of research and development
credits.
Liquidity and Capital Resources
For the three-month period ended April 30, 1996, the Company generated $6.5
million of cash flow from operating activities. This compares favorably to the
corresponding prior year period primarily as a result of improved collections of
trade receivables. Cash provided from operations was used primarily to fund
investments in property, plant and equipment of $2.4 million, as well as pay
dividends of $1.4 million. As of April 30, 1996, the Company had accumulated
cash and cash equivalents of $7.3 million, an increase of $2.2 million from
January 31, 1996. The Company expects for the remainder of fiscal 1996 that its
cash flows will be adequate to fund operations and investing activities for its
continuing operations. In addition, the Company anticipates funding internal
growth and possible acquisitions with its excess cash flows from operations, its
existing revolving credit facility and proceeds from the sale of its Financial
Systems business (see Note E of Notes to Consolidated Financial Statements).
<PAGE>
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
(a) The registrant held its Annual Meeting of Stockholders on May 23,
1996.
(c) Briefly described below are the only matters voted on at the
Annual meeting and the number of votes with respect to each matter.
(i) Election of Board of Directors
Withhold
Name For Authority
---- --- ---------
Russell A. Gullotti 12,619,015 2,784,622
David C. Cox 12,302,585 3,101,052
Jean B. Keffeler 12,309,028 3,094,609
Charles W. Oswald 12,282,924 3,120,713
Stephen G. Shank 12,307,527 3,096,110
John E. Steuri 12,320,273 3,083,364
Jeffrey E. Stiefler 12,377,346 3,026,291
John W. Vessey 12,601,861 2,801,776
(ii) Approval of the appointment of Ernst & Young LLP as auditors
for the year ending January 31, 1996
For 12,570,472
Against 45,588
Abstain 25,611
Broker Non-Vote 0
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits.
2.0 -- Stock Purchase and Sale Agreement, dated as of May 30, 1996,
by and among SunGard Data Systems Inc., NCS and NCS Holdings;
no Schedules thereto are being filed by the registrant but the
registrant will furnish a copy of any such Schedule to
the Commission upon request.
*10.1 -- Amended and Restated Severance Agreement,
dated May 23, 1996, by and between NCS and
Russell A. Gullotti.
*10.2 -- Change of Control Agreement, dated April 15,
1996, by and between NCS and certain executives
of NCS.
27.0 -- Financial Data Schedule.
---------------
* Indicates management contract or compensatory plan or
arrangement required to be filed as an exhibit to this report.
(b) There were no reports on Form 8-K filed for the three months ended
April 30, 1996.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
NATIONAL COMPUTER SYSTEMS, INC.
/s/ Jeffrey W. Taylor
---------------------------
Jeffrey W. Taylor
Vice President and
Chief Financial Officer
Dated: June 13, 1996
<PAGE>
FORM 10-Q
NATIONAL COMPUTER SYSTEMS, INC.
For the quarterly period ended April 30, 1996
---------------
EXHIBIT INDEX
---------------
Exhibit
-------
2.0 -- Stock Purchase and Sale Agreement, dated as of May 30, 1996,
by and among SunGard Data Systems Inc., NCS and NCS Holdings;
no Schedules thereto are being filed by the registrant but the
registrant will furnish a copy of any such Schedule to the
Commission upon request.
10.1 -- Amended and Restated Severance Agreement, dated May 23,
1996, by and between NCS and Russell A. Gullotti.
10.2 -- Change of Control Agreement, dated April 15, 1996, by and
between NCS and certain executives of NCS.
27.0 -- Financial Data Schedule.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS FOR NATIONAL COMPUTER SYSTEMS, INC. AND SUBSIDIARIES, FOR
THE FISCAL YEAR ENDED JANUARY 31, 1996, AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-31-1997
<PERIOD-END> APR-30-1996
<CASH> 7,316
<SECURITIES> 0
<RECEIVABLES> 56,380
<ALLOWANCES> 0
<INVENTORY> 23,112
<CURRENT-ASSETS> 115,939
<PP&E> 155,031
<DEPRECIATION> (81,286)
<TOTAL-ASSETS> 214,906
<CURRENT-LIABILITIES> 56,924
<BONDS> 23,228
0
0
<COMMON> 463
<OTHER-SE> 130,376
<TOTAL-LIABILITY-AND-EQUITY> 214,906
<SALES> 60,812
<TOTAL-REVENUES> 70,507
<CGS> 37,140
<TOTAL-COSTS> 43,769
<OTHER-EXPENSES> 20,157
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 568
<INCOME-PRETAX> 5,361
<INCOME-TAX> 2,160
<INCOME-CONTINUING> 3,201
<DISCONTINUED> (370)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,831
<EPS-PRIMARY> 0.18
<EPS-DILUTED> 0.18
</TABLE>
AMENDED AND RESTATED SEVERANCE AGREEMENT
This Agreement, dated May 23, 1996, is made by and between National
Computer Systems, Inc., a Minnesota corporation (the "Company"), and Russell A.
Gullotti (the "Executive") and supersedes that certain Severance Agreement
between the Company and Executive.
In consideration of the premises and the mutual covenants contained in
this Agreement, the Company and the Executive agree as follows:
1. Definitions. The definitions set forth in Exhibit A to this
Agreement are incorporated herein by reference.
2. Term of Agreement. This Agreement shall continue in effect
indefinitely.
3. Severance Payments. If Executive's employment is involuntarily
terminated other than for Cause or if Executive voluntarily terminates his
employment within 60 days after the occurrence of a Severance Event, in lieu of
any cash severance benefit otherwise payable to the Executive, for a period of
two years from the termination of Executive's employment and subject to normal
tax withholding, (a) the Company shall continue Executive's base salary, (b) the
Company shall arrange to provide the Executive with the insurance, fringe
benefits and perquisites that Executive would have received if he had remained
employed upon the same terms and conditions existing before the Severance Event
and (c) the Company shall pay within 90 days of termination of Executive's
employment a pro rata portion of the annual bonus for the then current fiscal
year. Perquisites currently include monthly country club dues, tax preparation
services and an annual physical. Notwithstanding any provision of any incentive
compensation plan requiring continued employment after the completed fiscal year
or other measuring period as a condition to payment, the Company shall pay to
the Executive an amount, in cash, equal to the amount of any incentive
compensation that was allocated or awarded to the Executive for a completed
fiscal year or other measuring period preceding the occurrence of a Severance
Event not yet paid to the Executive.
4. Acceleration of Vesting. Notwithstanding the terms of any option,
restricted stock grant, stock appreciation right, performance share plan or any
other agreement, now existing or hereafter entered into, in which Executive
receives an interest in stock of the Company or a right to obtain an interest in
stock in the Company or whose economic value depends upon the stock performance
of the Company ("Award"), subject to the passage of time, a future event or the
payment of money, such Award shall accelerate and become fully vested upon
termination of Executive's employment following a Change in Control as though
all time had passed, all events had occurred and all performances had been
attained.
5. Limitation on Payments. In the event that any payment or benefit
received or to be received by Executive (whether payable pursuant to the terms
of this Agreement or any other plan, arrangement or agreement with the Company
(collectively the "Total Payments") would not be deductible (in whole or in
part) by the Company as a result of Section 280G of the Code, the Total Payments
shall be reduced until no portion of the Total Payments is not deductible as a
result of Section 280G of the Code. For purposes of this limitation (i) no
portion of the Total Payments the receipt or enjoyment of which Executive shall
have effectively waived in writing prior to the date of payment of the Severance
Payments shall be taken into account, (ii) no portion of the Total Payments
shall be taken into account which in the opinion of tax counsel selected by the
Company's independent auditors and acceptable to Executive does not constitute a
"parachute payment" within the meaning of Section 280G(b) (2) of the Code, (iii)
the Severance Payments shall be reduced only to the extent necessary so that the
Total Payments (other than those referred to in clause (ii)) in their entirety
constitute reasonable compensation for services actually rendered within the
meaning of Section 280G(b)(4) of the Code, in the opinion of the tax counsel
referred to in clause (ii), and (iv) the value of any non-cash benefit or any
deferred cash payment included in the Total Payments shall be determined by the
Company's independent auditors in accordance with the principles of Sections
280G(d)(3) and (4) of the Code.
6. Fees and Expenses. The Company shall pay to the Executive reasonable
legal fees and reasonable expenses incurred in good faith by the Executive in
obtaining the payments and other benefits provided by this Agreement (including,
but not limited to, all such fees and expenses, if any, in seeking in good faith
to obtain or enforce any benefit or right provided by this Agreement or in
connection with any tax audit or proceeding to the extent attributable to the
application of Section 4999 of the Code to any payment or benefit provided
hereunder). Such payment shall be made within five business days after delivery
of the Executive's written request for payment accompanied with such evidence of
fees and expenses incurred as the Company reasonably may require.
7. No Mitigation. The Company agrees that Executive is not required to
seek other employment or to attempt in any way to reduce any amounts payable to
the Executive by the Company. The amount of any payment or benefit provided for
in Section 3) shall not be reduced by any compensation earned by the Executive
as the result of employment by another employer, by retirement benefits, by
offset against any amount claimed to be owed by the Executive to the Company or
any Subsidiary, or otherwise.
<PAGE>
8. Miscellaneous.
(a) Governing Law. All matters relating to the interpretation,
construction, validity and enforcement of this Agreement shall be governed by
the internal laws of the State of Minnesota without giving effect to any choice
or conflict of law provision or rule (whether of the State of Minnesota or any
other jurisdiction) that would cause the application of laws of any jurisdiction
other than the State of Minnesota.
(b) Entire Agreement. This Agreement contains the entire agreement of
the parties relating to the subject matter hereof and supersedes all prior
agreements and understandings with respect to such subject matter, and the
parties hereto have made no agreements, representations or warranties relating
to the subject matter of this Agreement which are not set forth herein.
(c) Amendments. No amendment or modification of this Agreement shall be
deemed effective unless made in writing and signed by the parties hereto.
(d) No Waiver. No term or condition of this Agreement shall be deemed
to have been waived, nor shall there be any estoppel to enforce any provisions
of this Agreement, except by a statement in writing signed by the party against
whom enforcement of the waiver or estoppel is sought. Any written waiver shall
not be deemed a continuing waiver unless specifically stated, shall operate only
as to the specific term or condition waived and shall not constitute a waiver of
such term or condition for the future or as to any act other than that
specifically waived.
(e) Successor to Company. In addition to any obligations imposed by law
upon any successor to the Company, the Company will require any successor
(whether direct or indirect, by purchase, merger, consolidation or otherwise) to
all or substantially all of the business or assets of the Company to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place.
(f) Successor to Executive. This Agreement shall inure to the benefit
of and be enforceable by the Executive's personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees. If the Executive shall die while any amount would still be payable to
the Executive hereunder (other than amounts which, by their terms, terminate
upon the death of the Executive) if the Executive had continued to live, all
such amounts, unless otherwise provided herein, shall be paid in accordance with
the terms of this Agreement to the executors, personal representatives or
administrators of the Executive's estate.
(g) Notices. For the purpose of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
registered mail, return receipt requested, postage prepaid, addressed to the
respective addresses set forth below, or to such other address as either party
may have furnished to the other in writing in accordance herewith, except that
notice of change of address shall be effective only upon actual receipt:
To the Company: To the Executive:
National Computer Systems, Inc. Russell A. Gullotti
P.O. Box 9365 7051 Kenmare Drive
Minneapolis, MN 55440 Bloomington, MN 55438
(h) Counterparts. This Agreement may be simultaneously executed in any
number of counterparts, and such counterparts executed and delivered, each as an
original, shall constitute but one and the same instrument.
(i) Severability. To the extent any provision of this Agreement shall
be invalid or unenforceable, it shall be considered deleted herefrom and the
remainder of such provision and of this Agreement shall be unaffected and shall
continue in full force and effect.
(j) Captions and Headings. The captions and paragraph headings used in
this Agreement are for convenience of reference only and shall not affect the
construction or interpretation of this Agreement or any of the provisions
hereof.
IN WITNESS WHEREOF, Executive and the Company have executed this
Agreement as of the date set forth in the first paragraph.
NATIONAL COMPUTER SYSTEMS, INC.
By: /S/ David C. Cox /S/ Russell A. Gullotti
David C. Cox Russell A. Gullotti
Its: Director and Chairman - Compensation
Committee
EXHIBIT A
"Acquiring Person" shall mean any Person who or which, alone or
together with all Affiliates and Associates of such Person, shall be the
Beneficial Owner of 15% or more of the shares of Common Stock then outstanding,
but shall not include the Company, any Subsidiary of the Company or any employee
benefit plan of the Company or of any Subsidiary of the Company or any entity
holding shares of Common Stock organized, appointed or established for, or
pursuant to the terms of, any such plan. For purposes of this Agreement, any
calculation of the number of shares of Common Stock outstanding at any
particular time, including for purposes of determining the particular percentage
of such outstanding shares of Common Stock of which any Person is the Beneficial
Owner, shall be made in accordance with the last sentence of Rule 13d-3(d)(1)(i)
of the General Rules and Regulations under the Exchange Act.
"Affiliate" and "Associate" shall have the respective meanings ascribed
to such terms in Rule 12b-2 of the General Rules and Regulations under the
Exchange Act.
"Beneficial Owner" means beneficial owner (as defined in Rule 13d-3
under the Exchange Act) and "beneficially own" has a meaning correlative
therewith.
"Cause" means (i) the willful and continued failure by the Executive to
substantially perform the Executive's duties with the Company or a Subsidiary,
as such duties may be defined from time to time, or abide by the written
policies of the Company or of the Executive's primary employer after a written
demand for substantial performance is delivered to the Executive by the Board of
Directors which demand specifically identifies the manner in which the Board of
Directors believes that the Executive has not substantially performed the
Executive's duties or has not abided by written policies, or (ii) the willful
engaging by the Executive in conduct which is demonstrably and materially
injurious to the Company or its Subsidiaries, monetarily or otherwise. For
purposes of clauses (i) and (ii) of this definition, no act, or failure to act,
on the Executive's part shall be deemed "willful" unless done, or omitted to be
done, by the Executive not in good faith and without reasonable belief that the
Executive's act, or failure to act, was in the best interest of the Company and
its Subsidiaries.
"Change in Control" means (i) a public announcement (which, for
purposes of this definition, shall include, without limitation, a report filed
pursuant to Section 13(d) of the Exchange Act) is made by the Company or any
Person that such Person has become an Acquiring Person, unless approved by the
Board of Directors, (ii) a public announcement (which, for purposes of this
definition, shall include, without limitation, a report filed pursuant to
Section 13(d) of the Exchange Act) is made by the Company or any Person that
such Person beneficially owns more than 50% of the Common Stock, regardless of
whether approved by the Board of Directors, (iii) a tender or exchange offer by
any Person (other than the Company, any Subsidiary of the Company or any
employee benefit plan of the Company or of any Subsidiary of the Company or any
entity holding shares of Common Stock organized, appointed or established for,
or pursuant to the terms of, any such plan) is commenced (within the meaning of
Rule 14d-2(a) of the General Rules and Regulations under the Exchange Act), if,
upon the consummation thereof, such Person would be an Acquiring Person, (iv)
the Company enters into a merger, consolidation or statutory share exchange with
any other Person in which the surviving entity would not have as its directors
at least 60% of the Continuing Directors and would not have at least 60% of its
common stock owned by the common shareholders of the Company prior to such
merger, consolidation or statutory share exchange, or (v) a sale or disposition
of all or substantially all of the assets of the Company or the dissolution of
the Company.
"Code" means the Internal Revenue Code of 1986, as the same may be
amended from time to time.
"Common Stock" means the Company's Common Stock, $.03 par value per
share.
"Continuing Director" means any Person who is a member of the Board of
Directors of the Company, is not an Acquiring Person or an Affiliate or
Associate of an Acquiring Person or a representative of an Acquiring Person or
of any such Affiliate or Associate, and was a member of the Board of Directors
immediately prior to a Change in Control. A Continuing Director also means any
Person who subsequently becomes a member of the Board of Directors of the
Company and is not an Acquiring Person or an Affiliate or Associate of an
Acquiring Person or a representative of an Acquiring Person or of any such
Affiliate or Associate, if such Person's initial nomination for election or
initial election to the Board of Directors is recommended or approved by a
majority of the Continuing Directors; provided that any Person who first becomes
a member of the Board of Directors of the Company in connection with a
transaction described by clause (iv) of the definition of "Change in Control"
shall not be a Continuing Director.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Severance Event" means (i) Executive's duties are reassigned
inconsistent with his duties as Chairman and Chief Executive Officer of the
Company, (ii) the Company reduces, in a manner not agreed to by Executive,
Executive's base salary and/or the target percentage of Executive's defined MIP,
(iii) Executive is required to relocate in a manner not agreed to by Executive,
(iv) a substantial reduction in benefits or perquisites or other involuntary
material adverse change in the terms and conditions of Executive's employment or
(v) a Change in Control resulting in an involuntary change in Executive's
responsibilities or an infringement on Executive's ability to perform the role
of Chairman and Chief Executive Officer.
"Person" means any individual, firm, corporation or other entity, and
shall include any successor (by merger or otherwise) of such entity.
"Subsidiary" means a corporation or other entity or enterprise, whether
incorporated or unincorporated, of which at least a majority of the securities
or other interests having by their terms ordinary voting power to elect a
majority of the board of directors or others serving similar functions with
respect to such corporation or other entity or enterprise is owned, directly or
indirectly, by the Company.
CHANGE IN CONTROL AGREEMENT
This Agreement, dated April 15, 1996, is made by and between
National Computer Systems, Inc., a Minnesota corporation (the "Company"), and
______________________________ (the "Executive").
The Board of Directors of the Company has determined that it
is in the best interests of the Company and its shareholders to assure that the
Company will have the continued dedication of the Executive, notwithstanding the
possibility, threat or occurrence of a Change in Control of the Company. The
Board believes that it is imperative to diminish the inevitable distraction of
the Executive by virtue of the personal uncertainties and risks created by a
pending or threatened Change in Control, to encourage the Executive's full
attention and dedication to the Company currently and in the event of any
threatened or pending Change in Control and to provide the Executive with
compensation and benefit arrangements upon a Change in Control which ensure that
the compensation and benefit expectations of the Executive will be satisfied and
which are competitive with those of other corporations. To accomplish these
objectives, the Board has authorized this Agreement.
In consideration of the premises and the mutual covenants
contained in this Agreement, the Company and the Executive agree as follows:
1. Definitions. The definitions set forth in Exhibit A to this
Agreement are incorporated herein by reference.
2. Term of Agreement. This Agreement shall continue in effect
until the earliest of (i) termination of Executive's employment prior to a
Change in Control, (ii) a Payment Event shall have occurred and the Company
shall have performed all of its obligations and satisfied all of its liabilities
under this Agreement or (iii) January 31 of the year following at least six
months' notice of nonrenewal by either party if such January 31 occurs prior to
a Change in Control.
3. Severance Payments. Upon a Payment Event, in lieu of any
further salary payments and any cash severance benefit otherwise payable to the
Executive, (a) the Company shall pay to the Executive in cash, within 10 days of
the Payment Event, the Severance Payment and (b), for an 18-month period after
the Payment Event or until such earlier time that the Executive becomes
reemployed, the Company shall arrange to provide the Executive with life,
accident and health insurance benefits substantially similar to those that the
Executive was receiving upon a Change in Control. Notwithstanding any provision
of any incentive compensation plan requiring continued employment after the
completed fiscal year or other measuring period as a condition to payment, the
Company shall pay to the Executive an amount, in cash, equal to the amount of
any incentive compensation that was allocated or awarded to the Executive for a
completed fiscal year or other measuring period preceding the occurrence of a
Payment Event not yet paid to the Executive.
4. Acceleration of Vesting. Notwithstanding the terms of any
option, restricted stock grant, stock appreciation right, performance share plan
or any other agreement, now existing or hereafter entered into, in which
Executive receives an interest in stock of the Company or a right to obtain an
interest in stock in the Company or whose economic value depends upon the stock
performance of the Company ("Award"), subject to the passage of time, a future
event or the payment of money, such Award shall accelerate and become fully
vested upon a Payment Event as though all time had passed, all events had
occurred and all performances had been attained.
5. Limitation on Payments. In the event that any payment or
benefit received or to be received by Executive (whether payable pursuant to the
terms of this Agreement or any other plan, arrangement or agreement with the
Company (collectively the "Total Payments") would not be deductible (in whole or
in part) by the Company as a result of Section 280G of the Code, the Total
Payments shall be reduced until no portion of the Total Payments is not
deductible as a result of Section 280G of the Code. For purposes of this
limitation (i) no portion of the Total Payments the receipt or enjoyment of
which Executive shall have effectively waived in writing prior to the date of
payment of the Severance Payments shall be taken into account, (ii) no portion
of the Total Payments shall be taken into account which in the opinion of tax
counsel selected by the Company's independent auditors and acceptable to
Executive does not constitute a "parachute payment" within the meaning of
Section 280G(b) (2) of the Code, (iii) the Severance Payments shall be reduced
only to the extent necessary so that the Total Payments (other than those
referred to in clause (ii)) in their entirety constitute reasonable compensation
for services actually rendered within the meaning of Section 280G(b)(4) of the
Code, in the opinion of the tax counsel referred to in clause (ii), and (iv) the
value of any non-cash benefit or any deferred cash payment included in the Total
Payments shall be determined by the Company's independent auditors in accordance
with the principles of Sections 280G(d)(3) and (4) of the Code.
6. Fees and Expenses. The Company shall pay to the Executive
reasonable legal fees and reasonable expenses incurred in good faith by the
Executive in obtaining the Severance Payment (including, but not limited to, all
such fees and expenses, if any, in seeking in good faith to obtain or enforce
any benefit or right provided by this Agreement or in connection with any tax
audit or proceeding to the extent attributable to the application of Section
4999 of the Code to any payment or benefit provided hereunder). Such payment
shall be made within five business days after delivery of the Executive's
written request for payment accompanied with such evidence of fees and expenses
incurred as the Company reasonably may require.
7. No Mitigation. The Company agrees that if a Payment Event
occurs, the Executive is not required to seek other employment or to attempt in
any way to reduce any amounts payable to the Executive by the Company. The
amount of any payment or benefit provided for in Section 3 (other than clause
(b)) shall not be reduced by any compensation earned by the Executive as the
result of employment by another employer, by retirement benefits, by offset
against any amount claimed to be owed by the Executive to the Company or any
Subsidiary, or otherwise.
8. Miscellaneous.
(a) Governing Law. All matters relating to the interpretation,
construction, validity and enforcement of this Agreement shall be governed by
the internal laws of the State of Minnesota without giving effect to any choice
or conflict of law provision or rule (whether of the State of Minnesota or any
other jurisdiction) that would cause the application of laws of any jurisdiction
other than the State of Minnesota.
(b) Entire Agreement. This Agreement contains the entire
agreement of the parties relating to the subject matter hereof and supersedes
all prior agreements and understandings with respect to such subject matter, and
the parties hereto have made no agreements, representations or warranties
relating to the subject matter of this Agreement which are not set forth herein.
(c) Amendments. No amendment or modification of this Agreement
shall be deemed effective unless made in writing and signed by the parties
hereto.
(d) No Waiver. No term or condition of this Agreement shall be
deemed to have been waived, nor shall there be any estoppel to enforce any
provisions of this Agreement, except by a statement in writing signed by the
party against whom enforcement of the waiver or estoppel is sought. Any written
waiver shall not be deemed a continuing waiver unless specifically stated, shall
operate only as to the specific term or condition waived and shall not
constitute a waiver of such term or condition for the future or as to any act
other than that specifically waived.
(e) Successor to Company. In addition to any obligations
imposed by law upon any successor to the Company, the Company will require any
successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business or assets of the Company
to expressly assume and agree to perform this Agreement in the same manner and
to the same extent that the Company would be required to perform it if no such
succession had taken place.
(f) Successor to Executive. This Agreement shall inure to the
benefit of and be enforceable by the Executive's personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. If the Executive shall die while any amount would still
be payable to the Executive hereunder (other than amounts which, by their terms,
terminate upon the death of the Executive) if the Executive had continued to
live, all such amounts, unless otherwise provided herein, shall be paid in
accordance with the terms of this Agreement to the executors, personal
representatives or administrators of the Executive's estate.
(g) Notices. For the purpose of this Agreement, notices and
all other communications provided for in the Agreement shall be in writing and
shall be deemed to have been duly given when delivered or mailed by United
States registered mail, return receipt requested, postage prepaid, addressed to
the respective addresses set forth below, or to such other address as either
party may have furnished to the other in writing in accordance herewith, except
that notice of change of address shall be effective only upon actual receipt:
To the Company:
National Computer Systems, Inc.
P.O. Box 9365
Minneapolis, MN 55440
To the Executive:
__________________________
11000 Prairie Lakes Drive
Eden Prairie, MN 55344
(h) Counterparts. This Agreement may be simultaneously
executed in any number of counterparts, and such counterparts executed and
delivered, each as an original, shall constitute but one and the same
instrument.
(i) Severability. To the extent any provision of this
Agreement shall be invalid or unenforceable, it shall be considered deleted
herefrom and the remainder of such provision and of this Agreement shall be
unaffected and shall continue in full force and effect.
(j) Captions and Headings. The captions and paragraph headings
used in this Agreement are for convenience of reference only and shall not
affect the construction or interpretation of this Agreement or any of the
provisions hereof.
IN WITNESS WHEREOF, Executive and the Company have executed
this Agreement as of the date set forth in the first paragraph.
NATIONAL COMPUTER SYSTEMS, INC.
By: /S/ Russell A. Gullotti
Russell A. Gullotti
Its: Chairman, President and Chief
Executive Officer
-------------------------------
Executive
<PAGE>
EXHIBIT A
"Acquiring Person" shall mean any Person who or which, alone
or together with all Affiliates and Associates of such Person, shall be the
Beneficial Owner of 15% or more of the shares of Common Stock then outstanding,
but shall not include the Company, any Subsidiary of the Company or any employee
benefit plan of the Company or of any Subsidiary of the Company or any entity
holding shares of Common Stock organized, appointed or established for, or
pursuant to the terms of, any such plan. For purposes of this Agreement, any
calculation of the number of shares of Common Stock outstanding at any
particular time, including for purposes of determining the particular percentage
of such outstanding shares of Common Stock of which any Person is the Beneficial
Owner, shall be made in accordance with the last sentence of Rule 13d-3(d)(1)(i)
of the General Rules and Regulations under the Exchange Act.
"Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Exchange Act.
"Applicable Incentive Amount" means the pro rata maximum
amount payable to the Executive pursuant to all incentive compensation plans
with a performance period commencing coincident with or most recently prior to
the date on which the Change in Control or Payment Trigger, whichever applies,
occurs, assuming that the Executive were continuously employed by the Company or
a Subsidiary until the last day of the performance period.
"Beneficial Owner" means beneficial owner (as defined in Rule
13d-3 under the Exchange Act) and "beneficially own" has a meaning correlative
therewith.
"Cause" means (i) the willful and continued failure by the
Executive to substantially perform the Executive's duties with the Company or a
Subsidiary, as such duties may be defined from time to time, or abide by the
written policies of the Company or of the Executive's primary employer (other
than any such failure resulting from the Executive's termination for Good Reason
by the Executive) after a written demand for substantial performance is
delivered to the Executive by the Board of Directors which demand specifically
identifies the manner in which the Board of Directors believes that the
Executive has not substantially performed the Executive's duties or has not
abided by written policies, or (ii) the willful engaging by the Executive in
conduct which is demonstrably and materially injurious to the Company or its
Subsidiaries, monetarily or otherwise. For purposes of clauses (i) and (ii) of
this definition, no act, or failure to act, on the Executive's part shall be
deemed "willful" unless done, or omitted to be done, by the Executive not in
good faith and without reasonable belief that the Executive's act, or failure to
act, was in the best interest of the Company and its Subsidiaries.
"Change in Control" means (i) a public announcement (which,
for purposes of this definition, shall include, without limitation, a report
filed pursuant to Section 13(d) of the Exchange Act) is made by the Company or
any Person that such Person has become an Acquiring Person, unless approved by
the Board of Directors, (ii) a public announcement (which, for purposes of this
definition, shall include, without limitation, a report filed pursuant to
Section 13(d) of the Exchange Act) is made by the Company or any Person that
such Person beneficially owns more than 50% of the Common Stock, regardless of
whether approved by the Board of Directors, (iii) a tender or exchange offer by
any Person (other than the Company, any Subsidiary of the Company or any
employee benefit plan of the Company or of any Subsidiary of the Company or any
entity holding shares of Common Stock organized, appointed or established for,
or pursuant to the terms of, any such plan) is commenced (within the meaning of
Rule 14d-2(a) of the General Rules and Regulations under the Exchange Act), if,
upon the consummation thereof, such Person would be an Acquiring Person, (iv)
the Company enters into a merger, consolidation or statutory share exchange with
any other Person in which the surviving entity would not have as its directors
at least 60% of the Continuing Directors and would not have at least 60% of its
common stock owned by the common shareholders of the Company prior to such
merger, consolidation or statutory share exchange, or (v) a sale or disposition
of all or substantially all of the assets of the Company or the dissolution of
the Company.
"Code" means the Internal Revenue Code of 1986, as the same
may be amended from time to time.
"Common Stock" means the Company's Common Stock, $.03 par
value per share.
"Continuing Director" means any Person who is a member of the
Board of Directors of the Company, is not an Acquiring Person or an Affiliate or
Associate of an Acquiring Person or a representative of an Acquiring Person or
of any such Affiliate or Associate, and was a member of the Board of Directors
immediately prior to a Change in Control. A Continuing Director also means any
Person who subsequently becomes a member of the Board of Directors of the
Company and is not an Acquiring Person or an Affiliate or Associate of an
Acquiring Person or a representative of an Acquiring Person or of any such
Affiliate or Associate, if such Person's initial nomination for election or
initial election to the Board of Directors is recommended or approved by a
majority of the Continuing Directors; provided that any Person who first becomes
a member of the Board of Directors of the Company in connection with a
transaction described by clause (iv) of the definition of "Change in Control"
shall not be a Continuing Director.
"Disability" means any physical or mental illness or
impairment that renders Executive unable to substantially perform all of such
Executive's duties and services hereunder in a satisfactory manner for a period
of 60 consecutive days.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Good Reason" means (i) the assignment to the Executive of any
duties inconsistent in any respect with the Executive's position (including
status, office, title and reporting requirement), authority, duties or
responsibilities or any other action by the Company which results in a
diminution in such position, authority, duties or responsibilities, excluding
for this purpose an isolated, insubstantial and inadvertent action not taken in
bad faith and which is remedied by the Company promptly after receipt of notice
thereof given by the Executive; (ii) the Company's requiring the Executive to be
based at any office or location further than 60 miles from Executive's place of
employment immediately prior to a Change in Control; (iii) any purported
termination by the Company of the Executive's employment otherwise than as
expressly permitted by this Agreement; (iv) any failure by the Company to comply
with and satisfy Section 8(e) of this Agreement, provided that such successor
has received at least ten days prior written notice from the Company or the
Executive of the requirements of Section 8(e) of the Agreement; (v) a reduction
in the Executive's annual base salary as in effect on the date hereof or as the
same may be increased from time to time; (vi) the failure by the Company or a
Subsidiary to pay to the Executive any portion of the Executive's compensation
within seven days of the date of such compensation is due; (vii) the failure by
the Company or a Subsidiary to continue in effect any compensation plan in which
the Executive participates immediately prior to the Change in Control which is
material to the Executive's total compensation unless an equitable arrangement
(embodied in an ongoing substitute or alternative plan or arrangement) has been
made with respect to such plan, or the failure by the Company or a Subsidiary to
continue the Executive's participation therein (or in such substitute or
alternative plan or arrangement) on a basis not materially less favorable, both
in terms of the amount of benefits provided and the level of the Executive's
participation relative to other participants, as existed at the time of the
Change in Control; or (viii) the failure by the Company or a Subsidiary to
continue to provide the Executive with benefits substantially similar to those
enjoyed by the Executive under any of the Company's or a Subsidiary's
retirement, life insurance, medical, health and accident, or disability plans in
which the Executive was participating at the time of the Change in Control, the
taking of any action by the Company or a Subsidiary which would directly or
indirectly materially reduce any of such benefits or deprive the Executive of
any material fringe benefit enjoyed by the Executive at the time of the Change
in Control, or the failure by the Company or a Subsidiary to provide the
Executive with the number of paid vacation days to which the Executive is
entitled on the basis of years of service with the Company and its Subsidiary in
accordance with the Company's or a Subsidiary's normal vacation policy in effect
at the time of the Change in Control.
"Payment Event" means the occurrence of a Change in Control
coincident with or followed (i) at any time before the end of the 12th month
immediately following the month in which the Change in Control occurred, by the
termination of the Executive's employment with the Company or a Subsidiary for
any reason other than (A) by the Executive without Good Reason, (B) by the
Company as a result of the Disability of the Executive or for Cause or (C) as a
result of the death of the Executive or (ii) in the event the Executive remains
continuously employed by the Company or a Subsidiary until the end of the 12th
month immediately following the month in which the Change in Control occurred,
the termination of the Executive's employment with the Company or a Subsidiary,
at any time during the three-month period immediately following the expiration
of such 12-month period, for any reason other than (A) by the Company as a
result of the Disability of the Executive or (B) as a result of the death of the
Executive. Any transfer of the Executive's employment from the Company to a
Subsidiary, from a Subsidiary to the Company, or from one Subsidiary to another
Subsidiary shall not constitute a termination of the Executive's employment for
purposes of this Agreement.
"Person" means any individual, firm, corporation or other
entity, and shall include any successor (by merger or otherwise) of such entity.
"Severance Payment" means an amount equal to the higher of (a)
two times Executive's annual base salary in effect immediately prior to the
occurrence of the Change in Control plus the Applicable Incentive Amount or (b)
two times Executive's annual base salary in effect immediately prior to the
occurrence of the Payment Event plus the Applicable Incentive Amount.
"Subsidiary" means a corporation or other entity or
enterprise, whether incorporated or unincorporated, of which at least a majority
of the securities or other interests having by their terms ordinary voting power
to elect a majority of the board of directors or others serving similar
functions with respect to such corporation or other entity or enterprise is
owned, directly or indirectly, by the Company.
EXECUTION COPY
==============================================================================
STOCK PURCHASE AND SALE AGREEMENT
dated as of May 30, 1996
by and among
SUNGARD DATA SYSTEMS INC.,
NATIONAL COMPUTER SYSTEMS, INC.
and
NCS HOLDINGS, INC.
===============================================================================
<PAGE>
TABLE OF CONTENTS
ARTICLE I--SALE OF SHARES, CLOSING AND DEFINITIONS .......................... 1
1.01 Purchase and Sale ......................................... 1
1.02 Purchase Price ............................................ 1
1.03 The Closing ............................................... 1
1.04 Agreement with Respect to Section 338(h)(10) Election ..... 2
1.05 Definitions ............................................... 2
ARTICLE II--REPRESENTATIONS AND WARRANTIES OF PARENT ........................ 6
2.01 Incorporation and Corporate Power ......................... 6
2.02 Execution, Delivery; Valid and Binding Agreements ......... 6
2.03 No Conflict ............................................... 6
2.04 Governmental Authorities; Consents ........................ 7
2.05 Subsidiaries .............................................. 7
2.06 Common Stock and Securities; Corporate Records ............ 7
2.07 Financial Statements ...................................... 8
2.08 No Material Adverse Effect. ............................... 9
2.09 Real Properties ........................................... 9
2.10 Tax Matters ............................................... 9
2.11 Contracts and Commitments .................................10
2.12 Intellectual Property Rights ..............................12
2.13 Litigation ................................................12
2.14 Employee Benefit Plans ....................................13
2.15 Compliance with Laws ......................................13
2.16 Brokerage. ................................................13
2.17 Insurance .................................................14
2.18 Other Disclosure ..........................................14
ARTICLE III--REPRESENTATIONS AND WARRANTIES OF BUYER ........................14
3.01 Incorporation and Corporate Power .........................14
3.02 Execution, Delivery; Valid and Binding Agreement ..........14
3.03 No Conflict ...............................................14
3.04 Governmental Bodies; Consents .............................15
3.05 Brokerage .................................................15
3.06 Investment Representations ................................15
3.07 Financing. ................................................15
<PAGE>
ARTICLE IV--COVENANTS OF PARENT .............................................15
4.01 Conduct of the Business ...................................15
4.02 Access to Books and Records ...............................16
4.03 HSR Filing ................................................17
4.04 Conditions ................................................17
ARTICLE V--COVENANTS OF BUYER ...............................................17
5.01 HSR Filing ................................................17
5.02 Conditions ................................................17
ARTICLE VI--CONDITIONS TO CLOSING ...........................................17
6.01 Conditions to Buyer's Obligation ..........................17
6.02 Conditions to Seller's and Parent's Obligation ............20
ARTICLE VII--TERMINATION ....................................................21
7.01 Termination ...............................................21
7.02 Effect of Termination .....................................21
7.03 Earnest Money Payment. ....................................21
ARTICLE VIII--ADDITIONAL AGREEMENTS .........................................22
8.01 Tax Matters ...............................................22
8.02 Employees and Employee Benefit Matters ....................23
8.03 Insurance .................................................25
8.04 Cash Management ...........................................25
8.05 Names .....................................................25
8.06 Other Transition Matters ..................................26
8.07 Books and Records .........................................26
8.08 Confidentiality ...........................................27
8.09 Additional Consents .......................................27
8.10 Further Assurances ........................................27
ARTICLE IX--SURVIVAL; INDEMNIFICATION .......................................28
9.01 Survival of Representations and Warranties ................28
9.02 Indemnification by Parent .................................28
9.03 Indemnification by Buyer ..................................29
9.04 Method of Asserting Claims ................................29
<PAGE>
ARTICLE X--MISCELLANEOUS ....................................................30
10.01 Press Releases and Announcements ..........................30
10.02 Expenses ..................................................30
10.03 Amendment and Waiver ......................................30
10.04 Notices ...................................................31
10.05 Assignment ................................................31
10.06 Severability ..............................................31
10.07 Complete Agreement ........................................32
10.08 Counterparts ..............................................32
10.09 Governing Law; Venue ......................................32
10.10 Effect of Headings ........................................32
<PAGE>
STOCK PURCHASE AND SALE AGREEMENT
This STOCK PURCHASE AGREEMENT (this "Agreement"), dated as of May 30,
1996, is made and entered into by and among SunGard Data Systems Inc., a
Delaware corporation ("Buyer"), National Computer Systems, Inc., a Minnesota
corporation ("Parent"), and NCS Holdings, Inc., a Minnesota corporation and
wholly-owned subsidiary of Parent ("Seller").
WHEREAS, Seller owns 1,000 shares (the "Shares") of common stock, par
value $1.00 per share (the "Common Stock"), of NCS Financial Systems, Inc., a
Minnesota corporation (the "Company"), and the Shares constitute all of the
issued and outstanding shares of capital stock of the Company; and
WHEREAS, Seller desires to sell, and Buyer desires to purchase, the
Shares on the terms and subject to the conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth in this Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Buyer, Parent and
Seller hereby agree as follows:
ARTICLE I
SALE OF SHARES, CLOSING AND DEFINITIONS
1.01 Purchase and Sale. Seller agrees to sell to Buyer, and
Buyer agrees to purchase from Seller, all of the right, title and interest of
Seller in and to the Shares at the Closing (as defined in Section 1.03) on the
terms and subject to the conditions set forth in this Agreement.
1.02 Purchase Price. In consideration of the transfer to Buyer
of the Shares, Buyer will pay to Seller on the Closing Date (as defined in
Section 1.03) the total amount of Ninety-Five Million Dollars ($95,000,000) (the
"Purchase Price") in cash, less the Deposit Amount (as defined in Section 1.05).
1.03 The Closing.
(a) The closing of the transactions contemplated by this
Agreement (the "Closing") will take place at the offices of Dorsey & Whitney
LLP, 220 South Sixth Street, Minneapolis, Minnesota, at 9:00 a.m. on July 1,
1996 (the "Closing Date"), or at such other place and later date promptly
following satisfaction or waiver of the closing conditions set forth in Article
VI mutually agreeable to Buyer and Seller.
(b) Subject to the conditions set forth in this Agreement, the
parties agree to consummate the following "Closing Transactions" on the Closing
Date:
(i) Seller will assign and transfer to Buyer good and valid
title in and to the Shares, free and clear of all Liens (as defined in
Section 1.05), by delivering to Buyer a stock certificate or
certificates representing the Shares, duly endorsed for transfer or
accompanied by duly executed stock powers;
(ii) Buyer shall pay the Purchase Price, less the Deposit
Amount, to Seller by wire transfer of immediately available funds to an
account designated by Seller to Buyer prior to the Closing; and
(iii) Each of the parties shall deliver to the other the
documents required to be delivered pursuant to Article VI and such
other documents as are reasonably requested by the other party or
parties to fully consummate the transactions contemplated by this
Agreement.
1.04 Agreement with Respect to Section 338(h)(10) Election.
Buyer and Parent agree to make an election under Section 338(h)(10) of the
Internal Revenue Code of 1986, as amended (the "Code"), and the treasury
regulations promulgated thereunder (the "Treasury Regulations") in form and
substance satisfactory to Buyer and Parent, with respect to the Company, and to
file such election in the manner required by applicable Treasury Regulations.
Prior to the Closing Date, Buyer and Parent shall agree on a list of assets to
which the modified "aggregate deemed sale price" (as defined in the Treasury
Regulations) of the assets of the Company shall be allocated. Such allocation
shall be determined by the parties, after taking into account the applicable
Treasury Regulations and the fair market value of such assets. Buyer shall
prepare for filing all of the tax returns, information returns and statements
("Reports") that may be required by Section 338(h)(10) of the Code. At least 10
days prior to filing such Reports, Buyer shall deliver drafts thereof to Parent
for Parent's review and comment thereon. Buyer and Parent shall file all other
returns and tax information on a basis that is consistent with such Reports
prepared by Buyer. Buyer and Parent shall jointly comply with the requirements
under any applicable state and local law so that the joint election under
Section 338(h)(10) of the Code is also valid and effective for purposes of such
state and local law.
1.05 Definitions. The terms defined in this Section 1.05
shall have the meanings herein specified for all purposes of this Agreement.
" Agreement" is defined in the introductory paragraphs.
"Annual Financial Statements" is defined in Section 2.07.
"Basket Amount" is defined in Section 9.02(b).
"Business" means the business of developing, selling,
licensing and supporting systems for asset and investment management reporting
and recordkeeping primarily for bank trust departments and other organizations
with trust powers (including applications for personal trust, corporate trust
and private banking), which business (i) is currently conducted by the Company,
the Financial Systems division of the Parent and NCS-IPB and (ii) is more fully
described as Parent's Financial Systems segment in Parent's Annual Report on
Form 10-K for the fiscal year ended January 31, 1996 ("the Form 10-K Report").
"Buyer" is defined in the introductory paragraphs.
"Buyer Indemnified Parties" is defined in Section 9.02(a).
"Buyer Losses" is defined in Section 9.02(a).
"Cap Amount" is defined in Section 9.02(b).
"Claim" is defined in Section 9.04(a).
"Closing" is defined in Section 1.03.
"Closing Date" is defined in Section 1.03.
"Closing Transactions" is defined in Section 1.03(b).
"Code" is defined in Section 1.04.
"Common Stock" is defined in the introductory paragraphs.
"Company" is defined in the introductory paragraphs.
"Confidentiality Agreement" means the confidentiality
agreement by and between Buyer and Parent dated February 27, 1996.
"Deposit Amount" means (a) the Earnest Money Payment plus (b)
the total amount of interest earned by Parent from its investment of the Earnest
Money Payment in a commercially available money market account of the type
typically invested in by Parent during the period beginning on the date that the
Earnest Money Payment is available for investment through the date prior to the
Closing Date, or the date prior to payment of the Deposit Amount pursuant to
Section 7.03 in the event of termination of this Agreement, as the case may be.
"Disclosure Schedule" is defined in Article II.
"Earnest Money Payment" is defined in Section 7.03.
"Employees" means all of the employees of the Parent, the
Company and NCS-IPB employed primarily in the Business, including all such
employees who may be on leave or disability as of the Closing Date.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"Form 10-K Report" is defined in the definition of "Business"
in this Section 1.05.
"GAAP" is defined in Section 2.07.
"Governmental Body" means any federal, state or local
governmental authority or regulatory body.
"HSR Act" is defined in Section 2.04.
"Indemnified Party" is defined in Section 9.04.
"Intellectual Property Rights" means all rights to any
trademark, trademark application, service mark, service mark application,
patent, patent application, copyright, copyright application, legally
protectable design or formula or invention, logo, trade name, brand name,
product name or trade secret.
"Knowledge" means with respect to those certain
representations and warranties set forth in Article II that are based upon the
knowledge of Parent, the actual knowledge of the elected officers of Parent,
Seller and the Company, and James Afdahl (Corporate Controller of Parent), Carl
W. Genk (President of Parent's Financial Systems division), Michael R. Cox
(Director of Product Management of Parent's Financial Systems division), Stephen
J. Smith (Vice President and General Manager of Parent's Financial Systems
division), Marilyn Mcluckie (Vice President and General Manager Series 7 of
Parent's Financial Systems division), Frederick C. Aumann, III (Vice President
and General Manager Series 11 of Parent's Financial Systems division) and Harold
C. Finders (Managing Director of NCS-IPB).
"Latest Balance Sheet" is defined in Section 2.07.
"Latest Financial Statements" is defined in Section 2.07.
Leases" is defined in Section 2.09.
"Lien" means any security interest, pledge, mortgage, claim,
lien or encumbrance.
"Material Adverse Effect" means (a) a material adverse effect
on the business, financial condition or results of operations of the Business
taken as a whole, (b) the creation of any Lien upon the Shares, (c) any event or
action that would give any person or entity other than Buyer any equity interest
in the Business after the Closing or (d) any event or action that would prohibit
or materially restrict the transactions contemplated by this Agreement.
"NCS Indemnified Parties" is defined in Section 9.03(a).
"NCS-IPB" means NCS-IPB SA, a Swiss corporation.
"NCS Losses" is defined in Section 9.03(a).
"Notifying Party" is defined in Section 9.04.
"Parent" is defined in the introductory paragraphs.
"Plans" is defined in Section 2.14.
"Purchase Price" is defined in Section 1.02.
"Reports" is defined in Section 1.04.
"Requirements of Laws" means any laws, statutes, regulations,
rules, codes or ordinances enacted, adopted, issued or promulgated by any
Governmental Body.
"Returns" is defined in Section 2.10(a).
"Securities Act" means the Securities Act of 1933, as amended
from time to time.
"Seller" is defined in the introductory paragraphs.
"Shares" is defined in the introductory paragraphs.
"Software" means any computer program, operating system,
application system, firmware or software of any nature, whether operational,
under development or inactive, including all object code, source code, and
documentation therefor, whether in machine-readable form, programming language
or other language or symbols, and whether stored, encoded, recorded or written
on disk, tape, film, memory device, paper or other media of any nature.
"Taxes" is defined in Section 2.10(b).
"Treasury Regulations" is defined in Section 1.04.
<PAGE>
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF PARENT
Parent hereby represents and warrants to Buyer that, except as
set forth in the Disclosure Schedule delivered by Parent to Buyer on the date
hereof (the "Disclosure Schedule") (which Disclosure Schedule (i) sets forth the
exceptions to the representations and warranties contained in this Article II
and (ii) identifies by section number the representations and warranties to
which such exceptions principally apply):
2.01 Incorporation and Corporate Power. Each of Seller and
Parent is a corporation duly incorporated, validly existing and in good standing
under the laws of the State of Minnesota and has the corporate power and
authority to execute and deliver this Agreement and to perform its obligations
hereunder. Seller is a wholly-owned subsidiary of Parent. The Company is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Minnesota, and each of Parent and the Company has the
corporate power and authority to own and operate its properties and to carry on
its business as now conducted. The copies of the Company's articles of
incorporation and bylaws which have been furnished by the Company to Buyer prior
to the date hereof reflect all amendments made thereto and are correct and
complete as of the date hereof. The Company is qualified to do business as a
foreign corporation in all jurisdictions in which the failure to do so would or
could reasonably be expected to result in a Material Adverse Effect. The
jurisdictions where the Company is qualified to do business as a foreign
corporation are listed in the Disclosure Schedule. The Disclosure Schedule sets
forth a list of all corporate, fictitious and other names under which the
Business has been conducted at any time since January 1, 1991.
2.02 Execution, Delivery; Valid and Binding Agreements. The
execution, delivery and performance of this Agreement by Seller and Parent and
the consummation of the transactions contemplated to be performed by Seller and
Parent hereby have been duly and validly authorized by all requisite corporate
action of Seller and Parent. This Agreement has been duly executed and delivered
by Seller and Parent and constitutes a valid and binding obligation of Seller
and Parent, enforceable against Seller and Parent in accordance with its terms.
2.03 No Conflict. The execution, delivery and performance of
this Agreement by Seller and Parent and the consummation by Seller and Parent of
the transactions contemplated hereby, do not conflict with or result in any
breach of any of the provisions of, constitute a default under, result in a
violation of, result in the creation of a right of termination or acceleration
under or result in any Lien upon any of the Shares under the provisions of the
articles of incorporation or bylaws of Seller or Parent or the articles of
incorporation or bylaws of the Company or NCS-IPB or any indenture, mortgage,
lease, loan agreement or other agreement or instrument by which Seller, Parent,
the Company or NCS-IPB is bound or affected, or any law, statute, rule or
regulation or order, judgment or decree to which Seller, Parent, the Company or
NCS-IPB is subject, in each case the result of which would or could reasonably
be expected to have a Material Adverse Effect.
2.04 Governmental Authorities; Consents. Except for the
applicable requirements of the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and the rules and regulations promulgated thereunder (the "HSR
Act") and federal securities laws, neither Seller, Parent, the Company nor
NCS-IPB is required to submit any notice, report or other filing to or with any
Governmental Body in connection with the execution or delivery by Seller and
Parent of this Agreement or the consummation of the transactions contemplated
hereby, except where failure to so submit such notice, report or other filing
would not or could not reasonably be expected to result in a Material Adverse
Effect. No consent, approval or authorization of any Governmental Body or any
other person or entity is required to be obtained by Seller, by Parent, by the
Company or by NCS-IPB in connection with Seller's and Parent's execution,
delivery and performance of this Agreement or the transactions contemplated
hereby, except where failure to so obtain such consent, approval or
authorization would not or could not reasonably be expected to result in a
Material Adverse Effect.
2.05 Subsidiaries. Except as otherwise set forth in the
Disclosure Schedule, the Company does not own any stock, partnership interest,
joint venture interest or any other ownership interest issued by any other
corporation, organization or entity. All issued and outstanding shares of
capital stock of any entity set forth in the Disclosure Schedule are owned by
the Company, either directly or through one or more other subsidiaries, free and
clear of all Liens. NCS-IPB is duly organized and validly existing as a
corporation under the laws of Switzerland, is qualified to do business in
Luxembourg and has no locations or employees in any other jurisdictions.
2.06 Common Stock and Securities; Corporate Records. The
authorized capital stock of the Company consists of 100,000 shares of Common
Stock, of which 1,000 shares are issued and outstanding, all of which are owned
beneficially and of record by Seller, free and clear of any Liens. All of the
Shares have been duly authorized and are validly issued, fully paid and
nonassessable. The Company has no other equity or debt securities authorized,
issued or outstanding. The Company is not a party to or bound by any agreements
which provide for the sale or issuance of capital stock by the Company, and the
Company has not granted any outstanding rights, subscriptions, warrants, options
or conversion rights to purchase or otherwise acquire from the Company any
shares of capital stock or other debt or equity securities of the Company.
Copies of the contents of the Company's minute books and stock books have been
made available to Buyer. To the knowledge of Parent, the minute books of the
Company contain true and correct minutes of all meetings and consents in lieu of
meetings of the Board of Directors and of the shareholders of the Company since
the time of its incorporation. The Disclosure Schedule sets forth a list of all
bank and other financial and investment accounts and all safes and lock boxes of
the Company or NCS-IPB, and the names of all officers or other individuals who
have access thereto or are authorized to make withdrawals therefrom or
dispositions thereof.
2.07 Financial Statements. Parent has delivered to Buyer
copies of (a) the unaudited balance sheet, as of April 30, 1996, of the Business
(the "Latest Balance Sheet") and the unaudited statement of earnings of the
Business for the 3-month period ended April 30, 1996 (such statement and the
Latest Balance Sheet being herein referred to as the "Latest Financial
Statements"), and (b) the unaudited balance sheets, as of January 31, 1996 and
January 31, 1995, of the Business and the unaudited statement of earnings of the
Business for each of the years ended January 31, 1996 and January 31, 1995
(collectively, the "Annual Financial Statements"). The Latest Financial
Statements and the Annual Financial Statements are based upon the information
contained in the books and records of the Business (which books and records are
and have been properly maintained to facilitate the preparation of financial
statements in accordance with United States generally accepted accounting
principles ("GAAP")) and fairly present, in all material respects, the financial
condition of the Business as of the dates thereof and the results of operations
for the Business for the periods indicated therein. The Latest Financial
Statements and the Annual Financial Statements have been prepared in accordance
with GAAP consistently applied, except that they (i) do not contain all required
footnotes, (ii) may not contain prior period comparative data and, as to the
Latest Financial Statements, year end adjustments, (iii) do not include any
current or deferred income tax assets or liabilities and (iv) do not include
certain other disclosures that may be required to be presented under GAAP. To
the extent that any such disclosures, in the form of footnotes or otherwise, are
omitted from the Latest Financial Statements and Annual Financial Statements and
are not otherwise included in the Disclosure Schedules, such omission does not
cause the representation that the financial statements fairly present, in all
material respects, the financial condition of the Business as of the dates
thereof and the results of operations for the Business for the periods indicated
therein, to be untrue. The Parent, NCS-IPB or the Company has good and valid
title to all of the assets of the Business, free and clear of any material Liens
other than those reflected in the Latest Financial Statements, disclosed in the
Disclosure Schedule or arising out of customer and related transactions that
have arisen after the date of the Latest Financial Statements in the ordinary
course of business, and except for any assets that are licensed or leased from
third parties, and effective on or prior to the Closing, all such assets of the
Business held in the name of Parent shall have been transferred to the Company.
The Business has no material obligations, fixed or contingent, that are not
reflected or described in the Latest Financial Statements or disclosed in the
Disclosure Schedule, except for obligations arising out of customer and related
transactions that have arisen after the date of the Latest Financial Statement
in the ordinary course of business.
2.08 No Material Adverse Effect. Since the date of the Latest
Balance Sheet, there has been no Material Adverse Effect, and the Business has
been conducted in the ordinary course of business consistent in all material
respects with past practices.
2.09 Real Properties. Parent, NCS-IPB and the Company do not
own any real property primarily used or occupied by the Business. The real
property demised by the leases described in the Disclosure Schedule (the
"Leases") constitutes all of the real property primarily used or occupied by the
Business. To the Knowledge of Parent, as of the date of this Agreement, the
Leases are in full force and effect, and Parent, the Company or NCS-IPB holds a
valid and existing leasehold interest under each of the Leases for the term set
forth under such caption in the Disclosure Schedule. To the Knowledge of Parent,
none of Parent, NCS-IPB, the Company or the landlord is in default, and no
circumstances exist which, if unremedied, would, either with or without notice
or the passage of time or both, result in such default under any of the Leases.
To the Knowledge of Parent, no occupancy, maintenance or use of the leased
premises is in breach or violation of any applicable contract or Requirement of
Laws, and no notice from any lessor, Governmental Body or other person or entity
has been received by Parent, the Company or NCS-IPB or served upon any of the
leased premises claiming any breach or violation of any applicable contract or
Requirement of Laws. To the Knowledge of Parent, there are not any hazardous
substances on or under any such leased premises.
2.10 Tax Matters.
(a) Parent, NCS-IPB or the Company has (i) properly prepared
and timely filed (or has had properly prepared and timely filed on behalf of the
Business) all returns, declarations, reports, estimates, information returns and
statements, including those filed on a consolidated or unitary basis with Parent
with respect to the Business ("Returns"), required to be filed or sent prior to
the Closing Date in respect of any Taxes payable by Parent, NCS-IPB or the
Company or required to be filed or sent by any taxing authority having
jurisdiction over Parent, NCS-IPB or the Company; and (ii) timely and properly
paid (or has had timely and properly paid on behalf of the Business) prior to
the Closing Date all Taxes shown to be due and payable on such Returns. No
deficiency for any Taxes has been asserted or assessed against Parent, NCS-IPB
or the Company with respect to the Business that has not been resolved and paid
in full. The Disclosure Schedule sets forth all tax years of Parent, NCS-IPB or
the Company that have been audited or are currently under audit with respect to
the Business, any filings currently in effect that extend the deadline for the
filing of any Returns by Parent, NCS-IPB or the Company, and any agreements or
waivers currently in effect that provide for an extension of time for the
assessment of any Tax against Parent, NCS-IPB or the Company with respect to the
Business. Parent, NCS-IPB or the Company has properly withheld from payments to
its employees, agents, representatives, contractors and suppliers all amounts
required to be withheld for Taxes with respect to the Business and has timely
paid (or has had timely paid on its behalf) prior to the Closing Date such Taxes
to the proper taxing authorities.
(b) For purposes of this Agreement, "Taxes" means any foreign,
federal, state or local income, earnings, profits, gross receipts, franchise,
capital stock, net worth, sales, use, occupancy, general property, real
property, personal property, intangible property, transfer, fuel, excise,
payroll, withholding, unemployment compensation, social security, value added,
retirement or other tax, or any foreign, federal, state or local organization
fee, qualification fee, annual report fee, occupation fee, assessment, sewer
rent or other fee or charge in the nature of a tax, or any interest or penalty
thereon.
2.11 Contracts and Commitments. (a) The Disclosure Schedule
lists the following written agreements relating to the operation of the Business
to which the Company, NCS-IPB or Parent is a party or by which it is bound and
which are currently in effect:
(i) customer agreements, including agreements relating to the
license of software and the purchase and/or lease of computer hardware from
the Business by the end user customer;
(ii) agreements under which the Business has assigned the
rights to payments under certain of the agreements listed above to any
person or entity;
(iii) reseller agreements entered into for the resale of
computer hardware;
(iv) agreements for the employment in the Business of any
officer, individual employee or other person on an employment, independent
contractor or consulting basis or relating to severance pay or severance
benefits for any such person;
(v) agreements relating to the borrowing of money or to
mortgaging, pledging or otherwise placing a Lien on any of the assets of
the Business;
(vi) guarantees of any obligation entered into by the Company
or NCS-IPB;
(vii) each lease, license or agreement relating to the
Business under which Parent, the Company or NCS-IPB is lessee of, or holds
or operates any property, real or personal, or any Software or Intellectual
Property Rights owned by any other party, for which the annual payment
exceeds $50,000 or the total commitment exceeds $200,000;
(viii) each lease, license or agreement (excluding any
customer agreements) relating to the Business under which Parent, the
Company or NCS-IPB is lessor or licensor of, or permits any other person to
hold or operate, any property, real or personal, or any Software or
Intellectual Property Rights for which the annual payment exceeds $50,000
or the total commitment exceeds $200,000;
(ix) agreements for the distribution of the products of the
Business (including any distributor, sales and original equipment
manufacturer contract);
(x) agreements or commitments for capital or other
expenditures in excess of $200,000;
(xi) agreements for the sale of any capital or other assets in
excess of $200,000;
(xii) agreements under which any material product line,
business line, or subsidiary of the Business was acquired at any time since
January 1, 1991, or earlier if any material part of such agreement
continues in effect; or
(xiii) any other agreements which, to Parent's Knowledge, are
material to the Business.
(b) To the Parent's Knowledge, Parent, NCS-IPB or the Company,
as the case may be, and the other party or parties thereto have performed all
obligations required to be performed by it in connection with the contracts or
commitments disclosed in the Disclosure Schedule, except where the failure to
perform such obligations would not and could not reasonably be expected to have
a Material Adverse Effect, and Parent, NCS-IPB and the Company are not in
receipt of any written claim of material default under any contract or
commitment disclosed in the Disclosure Schedule.
(c) Copies of each agreement referred to in the Disclosure
Schedule have been made available to Buyer.
(d) There are no currently outstanding written proposals or
offers submitted by the Business (other than such proposals or offers made in
the ordinary course of business relating to customer or related transactions) to
any person or entity which, if accepted, would result in a legally binding
contract of the type required to be disclosed under Section 2.11(a). To the
Knowledge of Parent, the Company has no material oral contracts or currently
outstanding oral proposals or offers submitted by the Company (other than such
proposals or offers made in the ordinary course of business relating to customer
or related transactions) to any person or entity which, if accepted, would
result in a legally binding contract of the type required to be disclosed under
Section 2.11(a). To the Knowledge of Parent, there are no written contracts
between Parent, NCS-IPB or the Company and any of their affiliates relating
primarily to the Business, or between the Company (or any of its affiliates) and
any current or former shareholder, director, officer or employee, of the Company
or any of its affiliates or predecessors relating primarily to the Business.
2.12 Intellectual Property Rights. The Disclosure Schedule
describes the trademark and service mark registrations, trademark and service
mark applications, unregistered trademarks and service marks, patents, patent
applications, copyright registrations and copyright applications that are used
in the conduct of the Business and are material to the Business, and the product
name of the software products licensed, maintained or under development by the
Business that are material to the Business. Parent, NCS-IPB or the Company owns
and possesses all right, title and interest in, or holds a valid license
(pursuant to license agreements identified in the Disclosure Schedule or falling
below the required thresholds in the Disclosure Schedule) to, the Intellectual
Property Rights and the Software set forth in the Disclosure Schedule, except
where the failure to own or possess such right would not or could not reasonably
be expected to result in a Material Adverse Effect. Parent, the Company and
NCS-IPB have not received any written notice of any infringement,
misappropriation or violation by the Business of any Software or Intellectual
Property Rights of any other person or entity, and, to the Knowledge of Parent,
no such infringement, misappropriation or violation has occurred. To the
Knowledge of Parent, no person or entity has infringed or misappropriated any
Software or Intellectual Property Rights set forth in the Disclosure Schedule.
To the Knowledge of Parent, Parent, NCS-IPB or the Company has the right, free
and clear of any material Liens, to use, modify, create derivative works for and
otherwise exploit all of the Software and Intellectual Property Rights described
in the Disclosure Schedule, other than the Software and Intellectual Property
Rights identified in the Disclosure Schedule as being licensed or otherwise
subject to third party rights pursuant to an agreement and other than such
Software and Intellectual Property Rights licensed or otherwise subject to third
party rights pursuant to an agreement that falls below the required thresholds
in the Disclosure Schedule. As to the Software and Intellectual Property Rights
licensed or otherwise subject to third party rights pursuant to an agreement,
Parent, NCS-IPB or the Company has the rights stated in the applicable license
or agreement. Notwithstanding the foregoing, the preceding two sentences shall
not be construed as a representation or warranty that Parent, NCS-IPB or the
Company has any rights greater than are available under applicable laws and
regulations. Parent has used reasonable measures to maintain its proprietary
Software as trade secrets of the Business and has a general practice of imposing
reasonable confidentiality restrictions on its customers, employees and
contractors.
2.13 Litigation. There are no actions, suits, proceedings,
injunctions, judgments, orders, decrees or rulings pending against the Company
or NCS-IPB or affecting the Business or, to the Knowledge of Parent, threatened
against the Company or NCS-IPB or affecting the Business, and, in both
instances, which would, if finally determined adversely to the Company or
NCS-IPB or the Business, have a Material Adverse Effect.
2.14 Employee Benefit Plans. The Disclosure Schedule sets
forth a list of all of the Employees whose annual compensation exceeds $50,000,
including names, positions and current compensation. Parent, the Company and
NCS-IPB have no union or collective bargaining contract in effect or being
negotiated that relates to or affects the Employees. All employee benefit plans
(as defined in Section 3(3) of ERISA) and any other benefit or welfare plan,
trust agreement or arrangement including, without limitation, any bonus,
vacation, severance, group insurance, hospitalization, deferred compensation,
pension, profit-sharing, payroll savings, retirement, death benefit, stock
option, equity award or fringe benefit plan, which the Company or Parent
maintains or to which the Company or Parent contributes for the benefit of the
Employees, former employees or retired employees of the Business (collectively,
the "Plans") comply in all respects with the requirements of ERISA and the Code,
except for such failures to comply which could not reasonably be expected to
have a Material Adverse Effect. The Plans are listed in the Disclosure Schedule
and copies or descriptions of the Plans have been made available to Buyer.
Section 2.14 of the Disclosure Schedule identifies all bonus arrangements with
the Employees entered into by Parent, NCS-IPB or the Company in connection with
the transactions contemplated by this Agreement. There would not be and could
not reasonably be expected to be a Material Adverse Effect on the Company under
Title IV of ERISA if any Plan were terminated as of the Closing Date, and the
Company does not have, has not incurred and will not incur any withdrawal
liability to any multiemployer plan under ERISA (as amended by the Multiemployer
Pension Plan Amendments Act of 1980). Except as set forth in the Disclosure
Schedule, no event has occurred or will occur which will result in liability to
the Company in connection with any employee pension benefit plan (as defined in
Section 3(2) of ERISA) established, maintained or contributed to, currently or
previously, by the Company or any other entity which, together with the Company,
constitute elements of a controlled group of corporations (within the meaning of
Section 414(b) of the Code), or a group or trades or businesses under common
control (within the meaning of Section 414(c) of the Code or Section 4001 of
ERISA), or an affiliated service group (within the meaning of Section 414(m) of
the Code), or another arrangement covered by Section 414(o) of the Code.
2.15 Compliance with Laws. The Company is not in violation of
or default under any Requirement of Laws applicable to it, the effect of which,
individually or in the aggregate with other such violations or defaults, would
or could reasonably be expected to have a Material Adverse Effect.
2.16 Brokerage. No third party shall be entitled to receive
any brokerage commissions, finder's fees, fees for financial advisory services
or similar compensation in connection with the transactions contemplated by this
Agreement based on any arrangement or agreement made by or on behalf of Seller,
Parent or the Company, other than the fees and expenses of Smith Barney, Inc.,
which will be paid by Parent.
2.17 Insurance. The insurance policies (excluding group
insurance policies disclosed under Section 2.14) maintained by or for the
benefit of the Business are believed by Parent to be reasonably adequate for the
business engaged in by the Business, and none of Parent, NCS-IPB or the Company
has received any notice of cancellation with respect to any such insurance
policies.
2.18 Other Disclosure. As of the date of filing with the
Securities and Exchange Commission, the Form 10-K Report did not contain any
untrue statement of a material fact or omit 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 in any material
respect. The business segment information regarding the Business set forth in
the Form 10-K Report sets forth in all material respects the information
required by the applicable provisions of Regulation S-X and Regulation S-K under
the Securities Exchange Act of 1934, as amended. To the Knowledge of Parent,
there is no fact that currently has or currently could reasonably be expected to
have a Material Adverse Effect that has not been disclosed to Buyer in this
Agreement, the Latest Financial Statements, the Annual Financial Statements or
the Disclosure Schedule.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller and Parent that:
3.01 Incorporation and Corporate Power. Buyer is a corporation
duly incorporated, validly existing and in good standing under the laws of the
State of Delaware, and has the requisite corporate power and authority to
execute and deliver this Agreement and perform its obligations hereunder.
3.02 Execution, Delivery; Valid and Binding Agreement. The
execution, delivery and performance of this Agreement by Buyer and the
consummation of the transactions contemplated to be performed by Buyer hereby
have been duly and validly authorized by all requisite corporate action of
Buyer. This Agreement has been duly executed and delivered by Buyer and
constitutes the valid and binding obligation of Buyer, enforceable against Buyer
in accordance with its terms.
3.03 No Conflict. The execution, delivery and performance of
this Agreement by Buyer and the consummation by Buyer of the transactions
contemplated hereby do not conflict with or result in any breach of any of the
provisions of, constitute a default under or result in a violation of the
provisions of the articles of incorporation or bylaws of Buyer or any indenture,
mortgage, lease, loan agreement (except as disclosed by Buyer in Schedule 3.03)
or other agreement or instrument by which Buyer is bound or affected, or any
law, statute, rule or regulation or order, judgment or decree to which Buyer is
subject.
3.04 Governmental Bodies; Consents. Except for the applicable
requirements of the HSR Act and federal securities laws, Buyer is not required
to submit any notice, report or other filing with any Governmental Body in
connection with the execution or delivery by it of this Agreement or the
consummation of the transactions contemplated hereby. No consent, approval or
authorization of any Governmental Body or any other party or person is required
to be obtained by Buyer in connection with its execution, delivery and
performance of this Agreement or the transactions contemplated hereby.
3.05 Brokerage. No third party shall be entitled to receive
any brokerage commissions, finder's fees, fees for financial advisory services
or similar compensation in connection with the transactions contemplated by this
Agreement based on any arrangement or agreement made by or on behalf of Buyer.
3.06 Investment Representations. The Shares are being
purchased for Buyer's own account and not with the view to, or for resale in
connection with, any distribution or public offering thereof within the meaning
of the Securities Act.
3.07 Financing. As of the date hereof, Buyer has the ability
to and intends to finance the aggregate of the Purchase Price with cash on hand
(meaning those assets designated on Buyer's balance sheet as cash and
equivalents and short-term investments) and will not take any action which would
impair its ability to finance the Purchase Price.
ARTICLE IV
COVENANTS OF PARENT
4.01 Conduct of the Business. From the date hereof until the
Closing Date, Parent shall consult with appropriate representatives of Buyer, as
reasonably requested by Buyer, on a regular basis to report on the general
status of ongoing operations of the Business, and Parent shall inform Buyer of
new facts or developments that are material to the Business. Parent agrees to
observe, with respect to the Business, and to cause the Company and NCS-IPB to
observe each term set forth in this Section 4.01 and agrees that, from the date
hereof until the Closing Date, unless otherwise consented to by Buyer in
writing:
(a) The Business shall be conducted only in the ordinary
course of business consistent in all material respects with past practices.
Without limiting the generality of the foregoing, the accounts receivable of the
Business shall be collected and the accounts payable of the Business shall be
paid only in the ordinary course of business consistent with past practices.
Parent shall use commercially reasonable efforts to preserve the Business'
organization and relationships intact;
(b) Parent, the Company and NCS-IPB shall not, directly or
indirectly, do or permit to occur any of the following: (i) issue or sell any
additional shares of, or any options, warrants, conversion privileges or rights
of any kind to acquire any shares of, debt or equity securities of the Company
or NCS-IPB, (ii) sell, pledge, dispose of or encumber any assets of the
Business, except in the ordinary course of business consistent in all material
respects with past practices; (iii) amend or propose to amend the articles of
incorporation or bylaws of the Company or NCS-IPB; (iv) split, combine or
reclassify any outstanding shares of capital stock of the Company or NCS-IPB, or
declare, set aside or pay any dividend or other distribution payable in cash,
stock, property or otherwise with respect to shares of common stock of the
Company or NCS-IPB; (v) redeem, purchase or acquire or offer to acquire any
shares of common stock or other securities of the Company or NCS-IPB; (vi) have
the Company or NCS-IPB acquire (by merger, exchange, consolidation, acquisition
of stock or assets or otherwise) any corporation, partnership, joint venture or
other business organization or division or material assets thereof relating
primarily to the Business; (vii) change or adopt any employee benefit plan
(except as set forth in the Disclosure Schedule); and (viii) incur any
obligation, make any loan, or enter into any contract, commitment or
transaction, all relating primarily to the Business (other than contracts,
commitments or transactions with customers or related transactions and except as
set forth on the Disclosure Schedule) whether or not in the ordinary course of
business, involving an amount exceeding $200,000 in any single case; or (ix)
enter into or propose to enter into, or modify or propose to modify, any
agreement, arrangement or understanding with respect to any of the matters set
forth in this Section 4.01(b); and
(c) Parent shall not cancel or terminate its current insurance
policies or cause any of the coverage thereunder to lapse, unless simultaneously
with such termination, cancellation or lapse, replacement policies providing
coverage equal to or greater than the coverage under the canceled, terminated or
lapsed policies for substantially similar premiums are in full force and effect.
4.02 Access to Books and Records. Between the date hereof and
the Closing Date, Parent shall and shall cause the Company and NCS-IPB to afford
to Buyer and its authorized representatives access at reasonable times and upon
reasonable notice to the offices, properties, books, records, selected officers
and selected employees of the Business, and shall deliver to Buyer copies of the
Business' monthly financial statements (prepared in their customary manner and
form) promptly after they are prepared in the ordinary course of business, and
such other documents reasonably requested by Buyer. Parent shall include Buyer
(at its address set forth in Section 10.04) on Parent's mailing list of persons
who are sent copies of Parent's reports filed with the Securities and Exchange
Commission pursuant to the Securities Exchange Act of 1934, as amended.
4.03 HSR Filing. As promptly as practicable after the
execution of this Agreement, Parent shall make or cause to be made its filings
under the HSR Act regarding the transfer of the Shares and shall provide a copy
thereof to Buyer. Parent will coordinate and cooperate with Buyer in exchanging
such information, and will provide such reasonable assistance as Buyer may
request, in connection with the filings by Buyer and Parent under the HSR Act
and under federal securities laws.
4.04 Conditions. Parent shall use its good faith efforts to
cause the conditions set forth in Section 6.01 to be satisfied and to consummate
the transactions contemplated herein as soon as reasonably possible after the
satisfaction thereof. Parent shall promptly notify Buyer if, to the Knowledge of
Parent, any such condition becomes impossible to be satisfied. Parent shall
promptly advise Buyer of the receipt of any bona fide proposal received by
Parent, NCS-IPB or the Company after the date of this Agreement from a party
other than Buyer regarding such party's interest in acquiring the Business or a
material part thereof.
ARTICLE V
COVENANTS OF BUYER
Buyer covenants and agrees with Seller and Parent as follows:
5.01 HSR Filing. As promptly as practicable after the
execution of this Agreement, Buyer shall make its filing under the HSR Act
regarding the purchase of the Shares and shall provide a copy thereof to Parent.
Buyer will coordinate and cooperate with Parent in exchanging such information,
and will provide such reasonable assistance as Parent may request, in connection
with the filings by Buyer and Parent under the HSR Act and under federal
securities laws.
5.02 Conditions. Buyer shall use its good faith efforts to
cause the conditions set forth in Section 6.02 to be satisfied and to consummate
the transactions contemplated herein as soon as reasonably possible after the
satisfaction thereof. Buyer shall promptly notify Parent if, to the knowledge of
Buyer, any such condition becomes impossible to be satisfied.
ARTICLE VI
CONDITIONS TO CLOSING
6.01 Conditions to Buyer's Obligation. The obligation of Buyer
to consummate the transactions contemplated by this Agreement is subject to the
satisfaction of the following conditions:
(a) The representations and warranties set forth in Article II
(without regard to any knowledge qualification, materiality threshold or
reference to Material Adverse Effect) shall be true and correct in all respects
at and as of the Closing Date as though then made (provided that those
representations or warranties made as of a specified date shall only need to
have been true on and as of such date), except for any inaccuracies which,
individually or in the aggregate, have not had and cannot reasonably be expected
to have a Material Adverse Effect; and there shall not have been any Material
Adverse Effect; provided, however, that there shall be deemed not to be a
Material Adverse Effect to the extent that such effect is the result of
conditions or factors affecting the economy generally or the industry in which
the Company operates or the result of the announcement of the transactions
contemplated by this Agreement;
(b) Seller and Parent shall have performed in all material
respects all of the covenants and agreements required to be performed and
complied with by them under this Agreement at or prior to the Closing;
(c) The applicable waiting periods under the HSR Act shall
have expired or been terminated, and no Governmental Body shall have taken or
threatened in writing any action to require any party to divest itself of any
assets in order to consummate the transactions contemplated by this Agreement;
(d) No action, suit, or proceeding brought by a Governmental
Body or other person or entity that is not frivolous shall be pending before any
court or quasijudicial or administrative agency of any federal, state, local, or
foreign jurisdiction or before any arbitrator having jurisdiction wherein an
unfavorable injunction, judgment, order, decree, ruling, or charge would (i)
prevent consummation of any of the transactions contemplated by this Agreement
or require any party to this Agreement to pay material damages as a result of
such consummation, (ii) cause any of the transactions contemplated by this
Agreement to be rescinded following consummation, or (iii) have a Material
Adverse Effect, and no such injunction, judgment, order, decree, ruling, or
charge shall be in effect; and
(e) On the Closing Date, Seller and Parent shall have
delivered to Buyer all of the following:
(i) certificate of the President or a Vice President of
Parent, dated the Closing Date, stating that the conditions set forth
in subsections (a) and (b) above have been satisfied;
(ii) the stock certificate or certificates representing the
Shares, duly endorsed for transfer or accompanied by a duly executed
stock power, and the stock certificate(s) representing the Company's
ownership of NCS-IPB;
(iii) the Company's and NCS-IPB's minute books, stock transfer
records, corporate seal and other materials related to the Company's
and NCS-IPB's corporate administration;
(iv) resignations (effective as of the Closing Date) from such
of the Company's and NCS-IPB's officers and directors as Buyer shall
have requested prior to the Closing Date;
(v) a copy of the articles of incorporation of the Company,
certified by the Secretary of State of the State of Minnesota, and
Certificates of Good Standing from the Secretary of State of the State
of Minnesota evidencing the good standing of the Company, Seller and
Parent in such jurisdiction, and Certificates of Good Standing from the
appropriate officials of the States of Alabama, Georgia, Massachusetts
and Pennsylvania evidencing the good standing of the Company in such
jurisdictions; and
(vi) a copy of each of (X) the text of the resolutions adopted
by the Board of Directors of Seller and Parent, and the shareholder of
Seller if required, authorizing the execution, delivery and performance
of this Agreement and the consummation of all of the transactions
contemplated by this Agreement, and (Y) the bylaws of the Parent and
Seller; along with certificates executed on behalf of each of Seller
and Parent, respectively, by its corporate secretary certifying to
Buyer that such copies are true, correct and complete copies of such
resolutions and bylaws, respectively, and that such resolutions and
bylaws were duly adopted and have not been amended or rescinded;
(vii) copies of assignments or other transfer documents, in
form and substance reasonably satisfactory to Buyer and Parent,
evidencing the transfer by Parent to the Company, effective on or prior
to the Closing Date, of all Intellectual Property Rights, Software,
contracts, outstanding shares of NCS-IPB capital stock and other assets
owned or held by or in the name of Parent that are used primarily in
the Business;
(viii) copies of any consents, approvals and authorizations of
any third party to contracts between such party and Parent, the Company
and/or NCS-IPB relating primarily to the Business (but excluding any
contracts individually designated in Section 2.11(a)(iii) and Section
2.07 of the Disclosure Schedule as contracts that will not be
transferred to the Company in connection with the transactions
contemplated hereby) required in connection with the transactions
contemplated by this Agreement; provided, however, that any such
consents, approvals and authorizations need not be delivered to Buyer
on or prior to the Closing Date if (a) the failure to obtain such
consents, approvals and authorizations will not and would not
reasonably be expected to have a Material Adverse Effect or (b) the
parties shall have agreed to pursue an alternative means of avoiding
such Material Adverse Effect without obtaining such consents, approvals
or authorizations; and
(ix) a statement from Parent regarding the interest earned on
the Deposit Amount.
6.02 Conditions to Seller's and Parent's Obligation. The
obligation of Seller and Parent to consummate the transactions contemplated by
this Agreement is subject to the satisfaction of the following conditions on or
before the Closing Date:
(a) The representations and warranties set forth in Article
III shall be true and correct in all material respects as of the Closing Date,
as though made on and as of such date;
(b) Buyer shall have performed in all material respects all
the covenants and agreements required to be performed by it under this Agreement
at or prior to the Closing;
(c) The applicable waiting periods under the HSR Act shall
have expired or been terminated, and no Governmental Body shall have taken or
threatened in writing any action to require any party to divest itself of any
assets in order to consummate the transactions contemplated by this Agreement;
(d) No action, suit, or proceeding brought by a Governmental
Body that is not frivolous shall be pending before any court or quasijudicial or
administrative agency of any federal, state, local, or foreign jurisdiction or
before any arbitrator having jurisdiction wherein an unfavorable injunction,
judgment, order, decree, ruling, or charge would (i) prevent consummation of any
of the transactions contemplated by this Agreement or require any party to this
Agreement to pay material damages as a result of such consummation, (ii) cause
any of the transactions contemplated by this Agreement to be rescinded following
consummation, or (iii) have a Material Adverse Effect, and no such injunction,
judgment, order, decree, ruling, or charge shall be in effect; and
(e) On the Closing Date, Buyer will have delivered to Seller
and Parent all of the following:
(i) a certificate of the President or a Vice President of
Buyer, dated the Closing Date, stating that the conditions set forth in
subsections (a) and (b) above have been satisfied; and
(ii) a copy of each of (X) the text of the resolutions adopted
by the Board of Directors of Buyer authorizing the execution, delivery
and performance of this Agreement and the consummation of all of the
transactions contemplated by this Agreement, and (Y) the bylaws of the
Buyer; along with certificates executed on behalf of Buyer by its
corporate secretary certifying to Parent that such copies are true,
correct and complete copies of such resolutions and bylaws,
respectively, and that such resolutions and bylaws were duly adopted
and have not been amended or rescinded.
ARTICLE VII
TERMINATION
7.01 Termination. This Agreement may be terminated at any time
prior to the Closing:
(a) by the mutual consent of Buyer and Parent;
(b) by Buyer or Parent if the transactions contemplated hereby
have not been consummated by December 31, 1996; provided that, neither Buyer nor
Parent will be entitled to terminate this Agreement pursuant to this Section
7.01(b) if such party's willful breach of this Agreement has prevented the
consummation of the transactions contemplated hereby.
7.02 Effect of Termination. In the event of termination of
this Agreement by Buyer or Parent as provided in Section 7.01, this Agreement
shall become void and there shall be no liability on the part of Buyer or
Parent, or their respective shareholders, officers, or directors, (i) except
with respect to willful breaches of this Agreement prior to the time of such
termination and (ii) except that the Confidentiality Agreement shall survive
according to its own terms and conditions and Sections 10.01, 10.02, 10.04 and
10.09 hereof shall survive indefinitely. Parent shall be entitled to retain the
Earnest Money Payment in the event of any termination of this Agreement, except
as may be expressly otherwise provided in Section 7.03.
7.03 Earnest Money Payment. As of the date hereof, Buyer has
paid to Seller by check the amount of Five Million Dollars ($5,000,000) as an
earnest money payment (the "Earnest Money Payment") which funds will earn
interest as set forth in the definition of Deposit Amount in Section 1.05. The
Deposit Amount is nonrefundable, except in the event of a termination pursuant
to Section 7.01(b) resulting from any reason other than a willful breach of this
Agreement by Buyer, in which case the Deposit Amount shall be promptly paid to
Buyer by Seller.
ARTICLE VIII
ADDITIONAL AGREEMENTS
8.01 Tax Matters.
(a)(i) Income for Periods through Closing Date. Parent shall
prepare or cause to be prepared and shall file or cause to be filed on a timely
basis, for taxable periods of the Company ending on or prior to the Closing
Date, all Returns with respect to the Company which are filed on a consolidated
or unitary basis with Parent ("Consolidated Returns"). Parent shall prepare or
cause to be prepared and shall provide to Buyer at least 20 days before the due
date therefor (as extended by any proper extension which Buyer shall cause the
Company or NCS-IPB to file at Parent's request), for taxable periods of the
Company or NCS-IPB ending on or prior to the Closing Date, all Returns with
respect to the Company or NCS-IPB which are not filed on a consolidated or
unitary basis with Parent ("Separate Company Returns"). Parent will include the
income of the Company or NCS-IPB for all applicable periods ending on or prior
to the Closing Date on all such Returns and shall pay or cause to be paid all
Taxes shown on all such Returns. Buyer shall review such Separate Company
Returns (but shall not change their content without Parent's consent) and shall
cause the Company or NCS-IPB to timely file such Separate Company Returns. The
income of the Company or NCS-IPB through the Closing Date shall be computed as
if its taxable year ended on and included the Closing Date. The Company and
NCS-IPB shall provide to Parent such information as may be required for Parent
to prepare such Returns. The income of the Company to be included on Returns
pursuant to this Section 8.01 shall include any income or gain from the deemed
asset sale resulting from the Section 338(h)(10) election provided in Section
1.04.
(ii) Income for Periods Straddling the Closing Date. With
respect to each jurisdiction in which one Return (a "Full Year Return") for the
period from February 1, 1996 to December 31, 1996 will be required (i.e., no
Consolidated Return or short-period Separate Company Return may be filed),
Parent shall prepare or cause to be prepared and shall provide to Buyer by
December 31, 1996 a separate company Return for the Company or NCS-IPB for the
short period ending on the Closing Date, on a pro forma basis as if a
short-period Separate Company Return were required ("Pro Forma Return"). Pro
Forma Returns shall be prepared on the same basis as short-period Separate
Company Returns under Section 8.01. Pro Forma Returns shall not be filed, but
Parent shall pay to the Company or NCS-IPB the amount of Taxes shown thereon.
Buyer shall prepare or cause to be prepared the Full Year Returns, and shall
cause the Company or NCS-IPB to timely file the Full Year Returns and pay the
amount of Taxes shown thereon.
(b) Income for Periods After Closing Date. Buyer shall prepare
or cause to be prepared and shall file or cause to be filed on a timely basis,
for all taxable periods of the Company or NCS-IPB beginning on or after the
Closing Date, all Returns with respect to the Company or NCS-IPB, whether filed
on a consolidated, unitary or separate company basis, and shall pay or cause to
be paid all Taxes shown on such Returns. Parent shall provide to Buyer such
information as may be required for Buyer to prepare such Returns. If any such
Return includes any income or gain from the deemed asset sale resulting from the
Section 338(h)(10) election provided in Section 1.04, then Parent shall
reimburse to Buyer the amount of Taxes attributable thereto.
(c) Control of Audits. Parent shall have sole control over all
audits and other proceedings which relate to Taxes of the Company or NCS-IPB for
any period that ends on or before the Closing Date. Buyer shall have sole
control over all audits and other proceedings which relate to Taxes of the
Company or NCS-IPB for any period that begins on or after the Closing Date.
Parent and Buyer shall cooperate as to any audits or other proceedings which
relate to Taxes of the Company or NCS-IPB for any period that straddles the
Closing Date.
(d) Transfer Taxes. Notwithstanding any other provisions of
this Agreement to the contrary, (i) Buyer shall pay all sales, use, stock
transfer, stamp, recording, real property transfer and similar taxes, if any,
required to be paid in connection with the sale of Shares contemplated by this
Agreement, (ii) Seller shall pay all sales, use, stock transfer, stamp,
recording, real property transfer and similar taxes, if any, required to be paid
in connection with the transfer on or prior to the Closing Date by Parent to the
Company of the assets referred to in Section 6.01(vii), and (iii) Seller shall
pay all sales, use, stock transfer, stamp, recording, real property transfer and
similar taxes, if any, required to be paid in connection with the deemed asset
sale resulting from the Section 338(h)(10) election provided in Section 1.04.
8.02 Employees and Employee Benefit Matters.
(a) On or prior to the Closing Date, all of the Employees who
are employed by Parent shall become employees of the Company, and, effective as
of the Closing, Buyer will cause the Company and NCS-IPB, as the case may be, to
continue to employ the Employees on substantially the same terms in effect for
such Employees while they were employees of Parent (immediately prior to their
transfer to the Company) or NCS-IPB (immediately prior to Closing); provided
that no provision of this Agreement shall prohibit the Company or NCS-IPB after
the Closing Date from terminating the employment of any Employees.
(b)(i) Buyer shall not adopt, assume, contribute to or
otherwise become a sponsoring employer of any employee pension benefit plan of
the Seller or Parent. Seller and Parent shall take such actions as are necessary
to provide that the Employees shall cease to be eligible to participate in and
accrue benefits under any employee pension benefit plan maintained by Seller or
Parent for the Employees as of the Closing Date. There shall be no transfer of
assets or liabilities from any employee pension benefit plan of Seller or Parent
to any plan of Buyer. Parent shall take such actions as are necessary to fully
vest the respective accrued benefits of the Employees in Parent's Employee Stock
Ownership Plan. Parent shall authorize lump sum distributions of vested benefits
to the Employees in connection with the transactions under this Agreement from
Parent's employee pension benefit plans pursuant to Section 401(k)(10) of the
Code and Parent shall permit the Employees who so elect, to make a "direct
rollover" of their accounts with Parent to any similar plan of Buyer.
(ii) Subject to the general requirements of this Section 8.02,
Buyer shall be free to establish such employee pension benefit plans as it deems
appropriate for the Employees. Buyer shall recognize the Employees' years of
service recognized by the Parent, NCS-IPB and the Company for the purpose of
determining eligibility, vesting and accrual of benefits under such employee
pension benefit plans.
(iii) Parent shall within a reasonable period of time after
the Closing Date take such action as is necessary for it to provide the
Employees employed in the Business as of the Closing Date with a partial year
matching contribution under Parent's 401(k) Profit Sharing Plan without regard
to the plan's "last day requirement" in such amount and in such manner as is
reasonably determined by Parent.
(iv) Parent shall be responsible for any payments under the
bonus arrangements with the Employees entered into in connection with the
transactions contemplated by this Agreement, which arrangements are listed in
Section 2.14 of the Disclosure Schedule referencing Employee bonus arrangements.
(c)(i) Buyer shall not adopt, assume, contribute to or
otherwise become a sponsoring employer of any employee welfare benefit plan of
Parent. Parent's plans shall be responsible for claims incurred on or before the
Closing Date but shall not be responsible for any claims incurred after the
Closing Date. There shall be no transfer of assets or liabilities from any
employee welfare benefit plan of Parent to any plan of Buyer.
(ii) Notwithstanding any eligibility provision that may be
generally effective for new employees of Buyer, effective immediately after the
Closing Date, each Employee, spouse or dependent shall be eligible to be covered
by a group health plan (as such term is defined in Sections 601 et. seq. of
ERISA) which exists or which shall be created by Buyer for this purpose on terms
and conditions which are substantially equivalent to the terms and conditions
applicable to other, similarly situated, employees of Buyer. Such group health
plan shall not contain any exclusion or limitation with respect to any
preexisting condition (as that term is used in Section 602(2)(D) of ERISA) of
any Employee, spouse or dependent.
(iii) Notwithstanding any eligibility provision that may be
generally effective for new employees of Buyer, effective immediately after the
Closing Date, each Employee, spouse or dependent shall be eligible to be covered
by a group life insurance plan which exists or which shall be created by Buyer
for this purpose on terms and conditions which are substantially equivalent to
the terms and conditions applicable to other, similarly situated, employees of
Buyer. Such group life insurance plan shall not contain any exclusion or
limitation with respect to any preexisting condition of any Employee, spouse or
dependent.
(iv) Buyer shall cause the Company to preserve, and provide
all Employees with, all accrued vacation and accrued sick time that each such
Employee has earned as an employee of Parent, the Company and NCS-IPB as of the
Closing Date.
(v) Subject to the general requirements of this Section
8.02(c) and the foregoing requirements regarding group health and life plans,
Buyer shall be free to establish such employee welfare benefit plans as it deems
appropriate for the Employees. Buyer shall recognize any prior service with
Parent, the Company and NCS-IPB for the purpose of determining eligibility,
vesting and accrual of benefits under such employee welfare benefit plans. Buyer
shall recognize the Employees' years of service recognized by the Parent,
NCS-IPB and the Company for the purpose of determining eligibility, vesting and
accrual of benefits under such employee welfare benefit plans.
8.03 Insurance. The parties acknowledge that both Parent and
Buyer maintain centralized insurance programs for their respective affiliated
groups. Parent and Buyer shall cooperate with each other, taking into account
the extent to which their respective policies are "occurrence" or "claims made"
policies, in order to maintain appropriate insurance coverage for the Business
without any lapses in coverage caused by the sale of Shares contemplated hereby.
Parent and Buyer shall cooperate with each other in the handling of insurance
claims relating to the Business that straddle the Closing Date.
8.04 Cash Management. The parties acknowledge that the cash
generated by and used in the Business (other than the cash of NCS-IPB) is swept
out of or funded into the Business, as the case may be, by Parent on a daily
basis. The parties also acknowledge that both Parent and Buyer maintain
centralized cash management programs for their respective affiliated groups. To
the fullest extent practicable, Parent shall cause all intercompany receivables
and payables involving the Business to be satisfied by Closing. Parent and Buyer
shall cooperate with each other in order to transfer cash management functions
for the Business from Parent to Buyer on or as soon as is reasonably practical
after the Closing Date. To the extent that such transfer is not completed on the
Closing Date, Parent and Buyer shall cooperate with each other in order to
maintain appropriate funding for the Business during a reasonable transition
period and to fairly allocate the receipts and disbursements of the Business
between Parent and Buyer.
8.05 Names. On or promptly after the Closing Date, Buyer shall
cause both the Company and IPB to change their corporate names to names that do
not include "NCS", "National Computer Systems" or any substantially similar
letters or word. As soon as is reasonably practicable after the Closing Date,
Buyer shall change its use of and abandon any registered or pending trademarks,
service marks or other names of the Company's Business, and all other names,
product designations and the like, which contain "NCS" or "National Computer
Systems" to a mark or name that does not include such letters or words or any
substantially similar letters or words, except for any use that is permitted
pursuant to the terms of a pre-existing written marketing agreement with Parent
dated December 31, 1990. Notwithstanding any other provision of this Agreement,
after the Closing Date, the Company, NCS-IPB and Buyer shall neither use nor
have any right to use the letters "NCS," the name "National Computer Systems,"
any logo of Parent, or any substantially similar letters, word or logo in any
corporate, business or product name (whether or not combined with any other
letters, word or logo) or for any other purpose except to the extent reasonably
necessary to describe the transactions contemplated by this Agreement, to
implement the terms of this Agreement, or, for a period not to exceed 90 days
after the Closing Date, to use up existing quantities of sales and marketing
materials and similar items.
8.06 Other Transition Matters. After the Closing Date, Parent
and Seller shall fully cooperate to transfer to Buyer the full ownership,
control and enjoyment of the Business, and shall promptly deliver to Buyer all
documents and other items received by Parent or Seller or found to be in their
possession that pertain primarily to the Business. For a period of 90 days after
the Closing Date, Parent shall continue to provide accounting and other certain
transitional administrative support to the Business, consistent with past
practices, as is reasonably requested by Buyer, and Parent and Buyer shall fully
cooperate to transition such functions to the Company, NCS-IPB and Buyer as
quickly as is reasonably practical. If such transition is not completed within
such period for reasons other than Buyer's fault, then Parent shall in good
faith negotiate a reasonable extension of such transition period solely for
purposes of allowing Buyer, the Company and NCS-IPB continued use of the
Parent's Access accounting system. Parent will cooperate with Buyer and provide
such reasonable assistance as Buyer may request in connection with the audit of
the financial statements of the Business that will be required for Buyer's Form
8-K filing with respect to its purchase of the Shares pursuant to this
Agreement.
8.07 Books and Records. After the Closing Date, Parent and
Seller, on the one hand, and Buyer, the Company and NCS-IPB, on the other hand,
shall retain all accounting, tax, payroll and similar books and records
pertaining to the Business for a period of at least seven years after the annual
period to which they relate, and shall provide access to such books and records
and related information to the other party and its representatives, and allow
them to make copies thereof and extracts therefrom, upon their reasonable
request and at their expense. Such access shall be provided during normal
business hours, and the requesting party shall in good faith attempt to minimize
any disruption to the other party's business. Parent shall provide the Company
with any personnel records (and Parent shall retain copies thereof) of Employees
of the Business not located at the offices of the Business.
8.08 Confidentiality. After the Closing Date (for a period of
five years with respect to all confidential or proprietary property, knowledge
or information of the Business other than proprietary Software and for a period
of seven years with respect to proprietary Software of the Business), Parent and
Seller shall not, directly or indirectly, (a) communicate, publish or otherwise
disclose to any person or entity, or use for the benefit of any person or
entity, any confidential or proprietary property, knowledge or information of
the Business or proprietary Software of the Business, no matter when or how such
knowledge or information was obtained, or (b) use or refer to any such
confidential or proprietary property, knowledge or information for any purpose
including without limitation the purpose of developing, marketing or selling any
Software that is competitive with any proprietary Software of the Business. The
preceding restrictions on confidential or proprietary property, knowledge,
information or Software shall not include any information that is generally
known or is available to the public, nor shall it include any trade secrets,
know-how, property, knowledge or information of Parent that are applicable to
any other business of Parent or any other confidential or proprietary property,
knowledge or information of Parent that does not pertain primarily to the
Business. Notwithstanding the foregoing, Buyer acknowledges that Parent has the
right to use the general know how and proprietary information possessed by
Parent in the data collection storage and retrieval businesses, and such use is
not in any way restricted as a result of the transfer of the OpTrieve products
of the Business and the provisions of this Section 8.08.
8.09 Additional Consents. After the Closing Date, Parent shall
use reasonable efforts to obtain all third party consents, approvals and
authorizations referred to in Section 6.01(e)(viii) that have not been obtained
on or prior to the Closing Date and shall deliver copies to Buyer, and Parent
agrees to indemnify and hold harmless Buyer, the Company and NCS-IPB against any
loss, liability, deficiency, damage, expense or cost (including reasonable legal
expenses) resulting from Parent's failure to obtain such consents, approvals and
authorizations on or prior to the Closing Date. In connection with Parent's
efforts to satisfy the closing conditions set forth in Sections 6.01(e)(vii) and
(viii) and its obligations to obtain consents, approvals and authorizations
pursuant to this Section 8.09, Buyer and its affiliates will cooperate with
Parent and shall, to the extent reasonably practicable, provide appropriate
guarantees of the Company or its affiliates in order to facilitate the receipt
of any required consents, approvals or authorizations and to replace existing
Parent guarantees (including, without limitation, the Parent guarantees referred
to in Section 2.11(a)(v) of the Disclosure Schedule).
8.10 Further Assurances. After the Closing Date, at any
party's request and without further consideration but at the expense of the
requesting party, the other party or parties shall promptly execute and deliver
all such further agreements and documents and perform such further actions as
the requesting party reasonably requests, in order to fully consummate the
transactions contemplated by this Agreement and carry out the purposes and
intent of this Agreement.
ARTICLE IX
SURVIVAL; INDEMNIFICATION
9.01 Survival of Representations and Warranties.
Notwithstanding any investigation made by or on behalf of any of the parties
hereto or the results of any such investigation and notwithstanding the
participation of such party in the Closing, the representations and warranties
contained in Article II and Article III hereof shall survive the Closing for a
period of 12 months following the Closing Date and thereafter shall terminate.
9.02 Indemnification by Parent. (a) Subject to the limitations
of Section 9.02(b), Parent agrees to indemnify in full Buyer, the Company,
NCS-IPB and their officers, directors, employees, agents and shareholders
(collectively, the "Buyer Indemnified Parties") and hold them harmless against
any loss, liability, deficiency, damage, expense or cost (including reasonable
legal expenses) (collectively, "Buyer Losses"), which Buyer Indemnified Parties
may suffer, sustain or become subject to, as a result of (i) any
misrepresentation in any of the representations and warranties of Parent
contained in this Agreement, (ii) any breach of, or failure to perform, any
agreement of Seller or Parent contained in this Agreement required to be
performed on or before the Closing Date, or (iii) any deficiency or adjustment
for Taxes and related interest, penalties or expenses assessed against or
imposed upon Buyer, the Company or NCS-IPB (or any successor or affiliate of the
Company or NCS-IPB), (X) with respect to the Business during any period ending
on or before the Closing Date, (Y) for or with respect to any income or gain
from the deemed asset sale resulting from the Section 338(h)(10) election
provided in Section 1.04, or (Z) any deficiency or adjustment for taxes assessed
against or imposed upon Buyer or the Company (or any successor or affiliate of
the Company) resulting from the fact that the Company (or any predecessor of the
Company) was a member of an affiliated group at any time on or before the
Closing Date whether such deficiency or adjustment arises under Treasury
Regulation Section 1.1502-6 (or any similar provision of state, local or foreign
law) as transferee or successor, by contract or otherwise.
(b) Parent shall be liable to the Buyer Indemnified Parties
for any Buyer Losses (i) only if Buyer or another Buyer Indemnified Party
delivers to Parent written notice, setting forth in reasonable detail the
identity, nature and amount of Buyer Losses related to such claim or claims
prior to the 12-month anniversary of the Closing Date; (ii) only if the
aggregate amount of all Buyer Losses exceeds $1,000,000 (the "Basket Amount"),
in which case Parent shall be obligated to indemnify the Buyer Indemnified
Parties only for the excess of the aggregate amount of all such Buyer Losses
over the Basket Amount; and (iii) provided that notwithstanding anything herein
to the contrary, the maximum aggregate liability of Parent under this Article IX
shall not exceed an amount equal to 25% of the Purchase Price (the "Cap
Amount").
9.03 Indemnification by Buyer. (a) Subject to the limitations
of Section 9.03(b), Buyer agrees to indemnify in full Parent and Seller, and
their officers, directors, employees, agents and shareholders (collectively, the
"NCS Indemnified Parties") and hold them harmless against any losses ("NCS
Losses") which any of the NCS Indemnified Parties may suffer, sustain or become
subject to as a result of (i) any misrepresentation in any of the
representations and warranties of Buyer contained in this Agreement, or (ii) any
breach of, or failure to perform, any agreement of Buyer contained in this
Agreement required to be performed on or before the Closing Date.
(b) Buyer shall be liable to the NCS Indemnified Parties for
any NCS Losses (i) only if Parent or another NCS Indemnified Party delivers to
Buyer written notice, setting forth in reasonable detail the identity, nature
and amount of NCS Losses related to such claim or claims prior to the six month
anniversary of the Closing Date.
9.04 Method of Asserting Claims. As used herein, an
"Indemnified Party" shall refer to a "Buyer Indemnified Party" or "NCS
Indemnified Party," as applicable, the "Notifying Party" shall refer to the
party hereto whose Indemnified Parties are entitled to indemnification
hereunder, and the "Indemnifying Party" shall refer to the party hereto
obligated to indemnify such Notifying Party's Indemnified Parties.
(a) In the event that any of the Indemnified Parties is made a
defendant in or party to any action or proceeding, judicial or administrative,
instituted by any third party for the liability or the costs or expenses of
which are Buyer Losses or NCS Losses (any such third party action or proceeding
being referred to as a "Claim"), the Notifying Party shall give the Indemnifying
Party prompt notice thereof. The failure to give such notice shall not affect
any Indemnified Party's ability to seek reimbursement unless such failure has
materially and adversely affected the Indemnifying Party's ability to defend
successfully a Claim. The Indemnifying Party shall be entitled to contest and
defend such Claim. The Notifying Party shall be entitled at any time, at its own
cost and expense (which expense shall not constitute a Buyer Loss or an NCS Loss
unless the Notifying Party reasonably determines, on the written advice of
counsel, that the Indemnifying Party, because of a conflict of interest, may not
adequately represent, any interests of the Indemnified Parties, and only to the
extent that such expenses are reasonable), to participate in such contest and
defense and to be represented by attorneys of its or their own choosing. If the
Notifying Party elects to participate in such defense, the Notifying Party will
cooperate with the Indemnifying Party in the conduct of such defense. Neither
the Notifying Party nor the Indemnifying Party may concede, settle or compromise
any Claim without the consent of the other party, which consents will not be
unreasonably withheld.
(b) After the Closing, the rights set forth in this Article IX
shall be each party's sole and exclusive remedies against the other party hereto
for misrepresentations or breaches of covenants contained in this Agreement
except for breaches of any covenants contained in Article VIII, Section 1.04 and
Section 10.2 required to be performed after the Closing Date. Notwithstanding
the foregoing, nothing herein shall prevent any of the Indemnified Parties from
bringing an action based upon allegations of fraud, intentional
misrepresentation or intentional breach of an obligation of or with respect to
any party in connection with this Agreement and the limitations set forth in
this Article IX shall not apply thereto. The time limits set forth in Sections
9.01, 9.02(b) and 9.03(b), the Basket Amount and the Cap Amount shall not apply
in the case of any indemnification relating to title to the Shares. The time
limits set forth in Sections 9.01, 9.02(b) and 9.03(b), the Basket Amount and
the Cap Amount shall not apply in the case of any indemnification relating to
Taxes, and such indemnification obligations shall survive until any claim,
action or suit relating to Taxes is barred by the applicable statutes of
limitations.
(c) Any indemnification payable under this Article IX shall
be, to the extent permitted by law, an adjustment to the Purchase Price.
ARTICLE X
MISCELLANEOUS
10.01 Press Releases and Announcements. No party hereto shall
issue any press release (or make any other public announcement) related to this
Agreement or the transactions contemplated hereby without prior written approval
of the other parties hereto, except as may be necessary to comply with
applicable Requirements of Laws, including securities laws. If any such press
release or public announcement is so required, the party making such disclosure
shall consult with the other parties prior to making such disclosure, and the
parties shall act in good faith to agree upon a text for such disclosure which
is satisfactory to all parties.
10.02 Expenses. Except as otherwise expressly provided for
herein, Seller, Parent and Buyer will pay all of their own expenses (including
attorneys' and accountants' fees) in connection with the negotiation of this
Agreement, the performance of their respective obligations hereunder and the
consummation of the transactions contemplated by this Agreement (whether
consummated or not).
10.03 Amendment and Waiver. This Agreement may not be amended
or waived except in a writing executed by the party against which such amendment
or waiver is sought to be enforced. No course of dealing between or among any
persons having any interest in this Agreement will be deemed effective to modify
or amend any part of this Agreement or any rights or obligations of any person
under or by reason of this Agreement.
10.04 Notices. All notices, demands and other communications
to be given or delivered under or by reason of the provisions of this Agreement
will be in writing and will be deemed to have been given when personally
delivered or mailed by first class mail, return receipt requested, or when
receipt is acknowledged, if sent by facsimile, telecopy or other electronic
transmission device. Notices, demands and communications to Buyer, Parent and
Seller will, unless another address is specified in writing, be sent to the
address indicated below:
Notices to Buyer: with a copy to:
- ---------------- --------------
SunGard Data Systems Inc. Blank, Rome, Comisky & McCauley
1285 Drummers Lane, Suite 300 1100 Four Penn Center Plaza
Wayne, Pennsylvania 19087 Philadelphia, Pennsylvania 19103
Attention: Lawrence A. Gross Attention: Fred Blume
Vice President and Telephone: (215) 569-5512
General Counsel Fax: (215) 569-5555
Telephone: (610) 341-8896
Fax: (610) 341-8115
Notices to Seller and Parent: with a copy to:
- ---------------------------- --------------
National Computer System, Inc. Dorsey & Whitney LLP
11000 Prairie Lakes Drive 220 South Sixth Street
Eden Prairie, Minnesota 55344 Minneapolis, Minnesota 55402
Attention: Michael C. Brewer Attention: Michael Trucano
Vice President and Telephone: (612) 340-2673
General Counsel Fax: (612) 340-8738
Telephone: (612) 829-3120
Fax: (612) 829-3066
10.05 Assignment. This Agreement and all of the provisions
hereof will be binding upon and inure to the benefit of the parties hereto and
their respective successors and permitted assigns, except that neither this
Agreement nor any of the rights, interests or obligations hereunder may be
assigned by any party hereto without the prior written consent of the other
parties hereto.
10.06 Severability. Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision will be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of such provision or the remaining provisions of this Agreement.
10.07 Complete Agreement. This Agreement, the Disclosure
Schedule and the Confidentiality Agreement contain the complete agreement among
the parties and supersede any prior understandings, agreements or
representations by or among the parties, written or oral, which may have related
to the subject matter hereof in any way.
10.08 Counterparts. This Agreement may be executed in one or
more counterparts, any one of which need not contain the signatures of more than
one party, but all such counterparts taken together will constitute one and the
same instrument.
10.09 Governing Law; Venue. The internal law, without regard
to conflicts of laws principles, of the State of Minnesota will govern all
questions concerning the construction, validity and interpretation of this
Agreement and the performance of the obligations imposed by this Agreement. Any
action relating to or arising out of this Agreement shall be brought in a court
of competent jurisdiction in the State of Minnesota or the Commonwealth of
Pennsylvania.
10.10 Effect of Headings. The subject headings of the
articles, sections and paragraphs of this Agreement are included for convenience
only and shall not affect the construction or interpretation of any of their
provisions.
<PAGE>
IN WITNESS WHEREOF, Buyer, Parent and Seller have executed
this Agreement as of the date set forth in the first paragraph.
SUNGARD DATA SYSTEMS INC.
By: /S/ Richard Tarbox
Its: Vice President-Corp. Development
NATIONAL COMPUTER SYSTEMS, INC.
By: /S/ Russell A. Gullotti
Russell A. Gullotti
Chairman, President and
Chief Executive Officer
NCS HOLDINGS, INC.
By: /S/ Jeffrey W. Taylor
Its: President
