<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
Current Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): September 29, 1995
-------------------
SUNGARD DATA SYSTEMS INC.
---------------------------------------------------------------------
(Exact name of registrant specified in its charter)
Delaware 7379 51-0267091
----------------------------------------------------------------
(State or other (Commission (IRS Employee
jurisdiction of File Number) Identification No.)
incorporation)
1285 DRUMMERS LANE WAYNE, PENNSYLVANIA 19087
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone, including area code: (610) 341-8700
--------------
- --------------------------------------------------------------------------------
(Former name and former address, if changed since last report)
<PAGE>
Item 5. Other Events
------------
On September 29, 1995, SunGard Data Systems Inc., a Delaware
corporation ("SunGard"), MACESS Corporation, an Alabama corporation ("MACESS"),
and SDS Merger Inc., an Alabama corporation and wholly owned subsidiary of
SunGard ("Newco"), signed an Agreement and Plan of Merger (the "Merger
Agreement") and a related Agreement and Plan of Reorganization (the
"Reorganization Agreement") by and among MACESS, the eight principal
shareholders of MACESS (the "Principals"), SunGard and Newco, providing for the
merger (the "MACESS Merger") of Newco with and into MACESS with MACESS surviving
as a wholly owned subsidiary of SunGard. MACESS' principal business is providing
work-flow management and document imaging systems to the healthcare industry,
with an emphasis on managed healthcare providers. Total consideration for the
MACESS Merger will be 1,990,000 shares of SunGard common stock, par value $.01
per share ("SunGard Common Stock"), subject to adjustment only for
recapitalization, having a value of approximately $57,710,000 based on the last
sale price of SunGard Common Stock on October 2, 1995 as reported on The Nasdaq
Stock Market. The closing of the MACESS Merger is subject to certain conditions,
including, among other conditions, certain regulatory approvals and the approval
of the shareholders of MACESS. The closing of the MACESS Merger is expected to
occur in November 1995. The Reorganization Agreement and Merger Agreement
attached hereto as Exhibits 2.1 and 2.2, respectively, and SunGard's press
release dated October 2, 1995 attached hereto as Exhibit 99.1 are incorporated
herein by reference.
On September 28, 1995, SunGard and Renaissance Software Inc., a
California corporation ("Renaissance"), announced the signing of an Agreement
and Plan of Merger and a related Agreement and Plan of Reorganization by and
among Renaissance, the four principal shareholders of Renaissance, SunGard and a
wholly owned subsidiary of SunGard, providing for the merger (the "Renaissance
Merger") of such subsidiary with and into Renaissance with Renaissance surviving
as a wholly owned subsidiary of SunGard. Renaissance's principal business is
developing and licensing software used by financial institutions, banks and
other market makers in the trading of over-the-counter interest rate derivative
instruments. The closing of the Renaissance Merger is subject to certain
conditions, including, among other conditions, certain regulatory approvals and
the approval of the shareholders of Renaissance. The closing is expected to
occur in November 1995. SunGard's press release dated September 28, 1995
attached hereto as Exhibit 99.2 is incorporated herein by reference.
On August 31, 1995, SunGard completed the acquisition of Intelus
Corporation, a Delaware corporation ("Intelus"), whereby Intelus became a wholly
owned subsidiary of SunGard in accordance with an Agreement and Plan of Merger
and a related Agreement and Plan of Reorganization dated August 23, 1995 (the
"Intelus Merger"). Intelus' principal business is providing work-flow
management and document imaging systems to the healthcare and financial services
industries, with an emphasis on hospitals.
The three business acquisitions described above will be accounted for
as poolings-of-interests. Additionally, during the nine month period ended
September 30, 1995, SunGard has completed five business acquisitions accounted
for as purchases, none of which are expected to have a material effect on
SunGard's financial condition or results of operations.
As described in the press release attached as Exhibit 99.1, MACESS and
Intelus will form the nucleus of a new business group called SunGard Technology
Systems, headed by Kenneth R. Adams who was chief executive officer of SunGard's
Recovery Services Group. Michael F. Mulholland, president and chief operating
officer of SunGard Recovery Services Inc., has succeeded Mr. Adams as Chief
Executive Officer of the Recovery Services Group. With the addition of
Renaissance, SunGard is also reorganizing its trading and risk management
businesses under the SunGard Trading Systems Group, formerly known as the
SunGard Capital Markets Group. The SunGard Trading Systems Group will continue
to be led by Cristobal I. Conde.
1
<PAGE>
Item 7. Financial Statements and Exhibits
---------------------------------
(a) Financial Statements.
(1) MACESS Corporation, attached hereto as Appendix I.
a. Report of Independent Auditors dated May 31, 1995.
b. Balance Sheets as of June 30, 1995 (unaudited) and
December 31, 1994 and 1993.
c. Statements of Income for the six months ended June 30,
1995 and 1994 (unaudited), for the years ended
December 31, 1994 and 1993, and for the year ended
December 31, 1992 (unaudited).
d. Statements of Cash Flows for the six months ended June
30, 1995 and 1994 (unaudited), for the years ended
December 31, 1994 and 1993, and for the year ended
December 31, 1992 (unaudited).
e. Statements of Changes in Stockholders' Equity for the
six months ended June 30, 1995 (unaudited), for the
years ended December 31, 1994 and 1993, and for the year
ended December 31, 1992 (unaudited).
f. Notes to Financial Statements.
(2) Renaissance Software Inc., attached hereto as Appendix II.
a. Independent Auditors' Report dated May 17, 1995
(September 23, 1995 as to Note 8).
b. Consolidated Balance Sheet as of March 31, 1995.
c. Consolidated Statement of Income for the year
ended March 31, 1995.
d. Consolidated Statement of Cash Flows for the year
ended March 31, 1995.
e. Consolidated Statement of Shareholders' Equity for the
year ended March 31, 1995.
f. Notes to Consolidated Financial Statements.
g. Condensed Consolidated Balance Sheet as of
June 30, 1995 (unaudited).
h. Condensed Consolidated Statements of Income for the
three months ended June 30, 1995 and 1994 (unaudited).
i. Condensed Consolidated Statements of Cash Flows for the
three months ended June 30, 1995 and 1994 (unaudited).
j. Notes to Condensed Consolidated Financials Statements
(unaudited).
2
<PAGE>
(3) Intelus Corporation, attached hereto as Appendix III.
a. Report of Independent Accountants dated August 29, 1995.
b. Balance Sheets as of June 30, 1995 and 1994 (unaudited)
and December 31, 1994 and 1993.
c. Statements of Operations for the six months ended June
30, 1995 and 1994 (unaudited) and for each of the two
years in the period ended December 31, 1994.
d. Statements of Cash Flows for the six months ended June
30, 1995 and 1994 (unaudited) and for each of the two
years in the period ended December 31, 1994.
e. Statements of Changes in Stockholders' Equity for the
six months ended June 30, 1995 (unaudited) and for each
of the two years in the period ended December 31, 1994.
f. Notes to Financial Statements.
(b) Pro Forma Financial Information, attached hereto as Appendix IV.
(1) Unaudited Pro Forma Combined Condensed Income Statement Data
of SunGard, MACESS, Renaissance and Intelus for the six months
ended June 30, 1995 and 1994 and for each of the three years in
the period ended December 31, 1994.
(c) Exhibits.
2.1 Agreement and Plan of Reorganization dated September 29, 1995 by
and among SunGard, Newco, MACESS and the Principals.
3
<PAGE>
2.2 Agreement and Plan of Merger dated September 29, 1995 by and
among SunGard, Newco and MACESS.
23.1 Consent of Ernst & Young LLP, independent auditors, regarding
such firm's report on MACESS' audited financial statements.
23.2 Consent of Deloitte & Touche LLP, independent auditors, regarding
such firm's report on Renaissance's audited consolidated
financial statements.
23.3 Consent of Coopers & Lybrand L.L.P., independent accountants,
regarding such firm's report on Intelus' audited financial
statements.
99.1 Press Release dated October 2, 1995 regarding the MACESS and
Intelus acquisitions.
99.2 Press Release dated September 28, 1995 regarding the
Renaissance acquisition.
4
<PAGE>
APPENDIX I
5
<PAGE>
MACESS Corporation
Financial Statements
June 30, 1995 (unaudited) and 1994 (unaudited) and
December 31, 1994, 1993 and 1992 (unaudited)
with Report of Independent Auditors
<PAGE>
MACESS Corporation
Financial Statements
June 30, 1995 (unaudited) and 1994 (unaudited) and
December 31, 1994, 1993 and 1992 (unaudited)
Contents
Report of Independent Auditors.............................................. 1
Financial Statements
Balance Sheets.............................................................. 2
Statements of Income........................................................ 3
Statements of Cash Flows.................................................... 4
Statements of Changes in Stockholders' Equity............................... 5
Notes to Financial Statements............................................... 7
<PAGE>
Report of Independent Auditors
The Board of Directors
MACESS Corporation
We have audited the accompanying balance sheets of MACESS Corporation as of
December 31, 1994 and 1993, and the related statements of income, changes in
stockholders' equity and cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of MACESS Corporation at December
31, 1994 and 1993, and the results of its operations and its cash flows for the
years then ended in conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
May 31, 1995
Birmingham, Alabama
1
<PAGE>
MACESS Corporation
Balance Sheets
<TABLE>
<CAPTION>
June 30 December 31
1995 1994 1993
---------------------------------------------------
(Unaudited)
<S> <C> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 1,592,490 $ 1,280,756 $ 503,978
Accounts receivable 2,340,190 1,313,703 551,604
Prepaid taxes -- 86,841 --
Prepaid expenses 67,384 30,984 2,445
---------------------------------------------------
Total current assets 4,000,064 2,712,284 1,058,027
Property, plant and equipment 903,330 562,225 385,725
Capitalized software development costs, less accumulated
amortization of $481,114 in 1995, $372,261 in 1994 and
$203,381 in 1993 569,353 505,231 364,202
---------------------------------------------------
Total assets $ 5,472,747 $ 3,779,740 $ 1,807,954
===================================================
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 249,139 $ 15,640 $ 41,821
Accrued liabilities 300,323 220,133 316,929
Taxes payable 350,268 -- 85,145
Deferred taxes payable 332,975 399,570 70,660
Notes payable to stockholders due within one year 407,465 403,317 400,000
---------------------------------------------------
Total current liabilities 1,640,170 1,038,660 914,555
---------------------------------------------------
Notes payable to stockholders 55,714 109,592 --
---------------------------------------------------
Deferred taxes payable 246,115 188,360 158,790
---------------------------------------------------
Stockholders' equity:
Common stock, voting 2,891 2,891 14,456
Common stock, non-voting 11,565 11,565 --
Paid-in-capital 12,461 12,461 --
Treasury stock (66,504) (66,504) --
Notes receivable (241,490) (267,750) --
Retained earnings 3,811,825 2,750,465 720,153
---------------------------------------------------
Total stockholders' equity 3,530,748 2,443,128 734,609
---------------------------------------------------
Total liabilities and stockholders' equity $ 5,472,747 $ 3,779,740 $ 1,807,954
===================================================
</TABLE>
See accompanying notes.
2
<PAGE>
MACESS Corporation
Statements of Income
<TABLE>
<CAPTION>
Six months ended June 30 Year ended December 31
1995 1994 1994 1993 1992
---------------------------------------------------------------------------------------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C>
Net sales $ 6,514,555 $ 5,597,064 $ 10,314,617 $ 6,470,204 $ 1,871,653
Cost of sales 2,379,868 1,716,353 3,983,625 2,877,628 488,451
---------------------------------------------------------------------------------------------
4,134,687 3,880,711 6,330,992 3,592,576 1,383,202
Operating expenses:
General and administrative:
Salaries 1,166,086 831,521 1,618,875 896,236 452,482
Other 683,134 267,821 602,505 345,093 377,581
Selling:
Salaries 388,696 282,487 564,974 279,532 150,828
Other 139,762 99,149 202,072 190,698 169,634
Research and development 46,940 9,799 56,301 16,300 32,878
---------------------------------------------------------------------------------------------
Income from operations 1,710,069 2,389,934 3,286,265 1,864,717 199,799
Interest expense 25,371 18,801 44,276 56,057 80,686
Loss on disposal of assets -- -- 73,213 201,370 --
---------------------------------------------------------------------------------------------
1,684,698 2,371,133 3,168,776 1,607,290 119,113
Provision for taxes 623,338 853,608 1,138,464 499,595 --
---------------------------------------------------------------------------------------------
Net income $ 1,061,360 $ 1,517,525 $ 2,030,312 $ 1,107,695 $ 119,113
=============================================================================================
</TABLE>
See accompanying notes.
3
<PAGE>
MACESS Corporation
Statements of Cash Flows
<TABLE>
<CAPTION>
Six months ended June 30 Year ended December 31
1995 1994 1994 1993 1992
-------------------------------------------------------------------------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net income $ 1,061,360 $ 1,517,525 $ 2,030,312 $ 1,107,695 $ 119,113
Adjustments to reconcile net income to net
cash provided (used) by operating activities:
Depreciation and amortization 214,431 153,800 326,417 280,199 181,919
Provision for deferred taxes (8,840) 354,656 358,480 229,450 --
Loss on disposal of assets -- -- 73,213 201,370 --
Change in assets and liabilities:
Accounts receivable (1,026,487) (954,018) (762,099) (545,694) (133,672)
Prepaid expenses (36,400) -- (28,539) (2,445) --
Accounts payable and accrued liabilities 313,689 (50,949) (122,977) 252,628 (264,054)
Taxes 437,109 227,633 (171,986) 85,145 --
-------------------------------------------------------------------------------
Total adjustments (106,498) (268,878) (327,491) 500,653 (215,807)
-------------------------------------------------------------------------------
Net cash provided (used) by operating activities 954,862 1,248,647 1,702,821 1,608,348 (96,694)
Cash flows from investing activities:
Purchase of equipment and leasehold improvements (446,683) (190,877) (389,749) (277,206) (17,203)
Additions to capitalized software development costs (172,975) (114,571) (327,410) (312,221) (133,692)
-------------------------------------------------------------------------------
Net cash used in investing activities (619,658) (305,448) (717,159) (589,427) (150,895)
-------------------------------------------------------------------------------
Cash flows from financing activities:
Issuance of notes payable -- -- -- -- 319,000
Issuance of stock -- -- -- -- 5,000
Net payments on stockholder notes (23,470) (170,283) (208,884) (640,943) --
-------------------------------------------------------------------------------
Net cash provided (used) by financing activities (23,470) (170,283) (208,884) (640,943) 324,000
-------------------------------------------------------------------------------
Increase in cash and cash equivalents 311,734 772,916 776,778 377,978 76,411
Cash and cash equivalents at beginning of period 1,280,756 503,978 503,978 126,000 49,589
-------------------------------------------------------------------------------
Cash and cash equivalents at end of period $ 1,592,490 $ 1,276,894 $ 1,280,756 $ 503,978 $ 126,000
===============================================================================
</TABLE>
4
<PAGE>
MACESS Corporation
Statements of Cash Flows (continued)
<TABLE>
<CAPTION>
Six months ended June 30 Year ended December 31
1995 1994 1994 1993 1992
------------------------------------------------------------------------------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C>
Supplemental disclosure of cash
flow information and non-cash transactions:
Cash paid during the period for:
Interest $ 8,288 $ 416 $ 18,912 $ -- $ 46,875
Income taxes 195,069 105,000 951,970 185,000 --
Issuance of note payable for purchase of
treasury stock -- 321,793 321,793 -- --
Issuance of notes receivable for sale of
treasury stock -- -- 267,750 -- --
</TABLE>
See accompanying notes.
5
<PAGE>
MACESS Corporation
Statements of Changes in Stockholders' Equity
<TABLE>
<CAPTION>
Common stock, par value of $.002;
1,500,000 shares authorized, Common stock, $.002 par value;
1,445,600 shares issued and 6,000,000 shares authorized,
1,430,100, 1,430,100, 1,445,600 5,782,400 shares issued and
and 1,445,600 shares outstanding 5,720,400 outstanding at
at June 30, 1995 and December 31, June 30, 1995 and
1994, 1993, and 1992, respectively December 31, 1994
-------------------------------------------------------------------
Voting Non-Voting Paid-in Treasury
Shares Amount Shares Amount Capital Stock
---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1991
(unaudited) 945,600 $ 9,456 -- $ -- $ -- $ --
Issuance of stock 500,000 5,000 -- -- -- --
Net income -- -- -- -- -- --
----------------------------------------------------------------------------------------------------
Balance at December 31, 1992
(unaudited) 1,445,600 14,456 -- -- -- --
Net income -- -- -- -- -- --
----------------------------------------------------------------------------------------------------
Balance at December 31, 1993 1,445,600 14,456 -- -- -- --
Purchase of treasury stock -- -- -- -- -- (321,793)
Treasury stock sold -- -- -- -- 12,461 255,289
Five-for-one stock split -- (11,565) 5,782,400 11,565 -- --
Net income -- -- -- -- -- --
----------------------------------------------------------------------------------------------------
Balance at December 31, 1994 1,445,600 2,891 5,782,400 11,565 12,461 (66,504)
Payments on notes receivable -- -- -- -- -- --
Net income -- -- -- -- -- --
----------------------------------------------------------------------------------------------------
Balance at June 30, 1995
(unaudited) 1,445,600 $ 2,891 5,782,400 $ 11,565 $ 12,461 $ (66,504)
====================================================================================================
<CAPTION>
Total
Retained Stockholders'
Notes Earnings Equity
Receivable (Deficit) (Deficit)
-------------------------------------------------------
<S> <C> <C> <C>
Balance at December 31, 1991
(unaudited) $ -- $ (506,655) $ (497,199)
Issuance of stock -- -- 5,000
Net income -- 119,113 119,113
-------------------------------------------------------
Balance at December 31, 1992
(unaudited) -- (387,542) (373,086)
Net income -- 1,107,695 1,107,695
-------------------------------------------------------
Balance at December 31, 1993 -- 720,153 734,609
Purchase of treasury stock -- -- (321,793)
Treasury stock sold (267,750) -- --
Five-for-one stock split -- -- --
Net income -- 2,030,312 2,030,312
-------------------------------------------------------
Balance at December 31, 1994 (267,750) 2,750,465 2,443,128
Payments on notes receivable 26,260 -- 26,260
Net income -- 1,061,360 1,061,360
-------------------------------------------------------
Balance at June 30, 1995
(unaudited) $ (241,490) $ 3,811,825 $ 3,530,748
=======================================================
</TABLE>
See accompanying notes.
6
<PAGE>
MACESS Corporation
Notes to Financial Statements
June 30, 1995 (unaudited) and 1994 (unaudited) and
December 31, 1994, 1993 and 1992 (unaudited)
1. Basis of Presentation
MACESS Corporation (the Company) was formed December 29, 1989 for the purpose of
developing and selling computer software, providing consultation, installation
and training services to meet the needs of potential customers. The Company's
software sales are part of a turnkey vertical market solution to meet its
customers needs which include the above-mentioned services as well as support
and maintenance services and ongoing software sales.
The accompanying unaudited financial statements for the six months ended
June 30, 1995 and 1994 have been prepared in accordance with generally accepted
accounting principles for interim financial information. The Company has
included adjustments (consisting of normal recurring accruals) necessary for a
fair presentation of the Company's financial position at June 30, 1995 and
results of operations and cash flows for the six-month periods ended June 30,
1995 and 1994.
2. Accounting Policies
Cash and Cash Equivalents
For purposes of the statement of cash flows, the Company considers all highly
liquid investments with a maturity of three months or less to be cash
equivalents. Cash equivalents, consisting primarily of money market funds, are
valued at cost which approximates market.
Property, Plant and Equipment
Property, plant and equipment are recorded at cost. Depreciation and
amortization are computed on the straight-line method over the estimated useful
lives of the related assets ranging from three to five years, except for
leasehold improvements which is 39 years.
7
<PAGE>
MACESS Corporation
Notes to Financial Statements (continued)
2. Accounting Policies (continued)
Capitalized Software
Amortization of software development costs begins at the time the product is
ready for sale, and is calculated on the straight-line method over the estimated
economic life of the product. Research and development costs related to
software development are expensed as incurred.
Taxes
Deferred taxes are provided for differences between financial and income tax
reporting.
Revenue Recognition
The Company recognizes revenue based on the terms of the contract which
correlates to the percentage of completion method of accounting. The contract
payment terms for software, consulting and training generally include an initial
payment equal to 25% of the contract value, 50% after the computer system is
installed and the final 25% 30 to 90 days after installation. The contract
payment terms for hardware generally include an initial payment equal to 25% of
the contract value and 75% after the computer system is installed. The Company
generally does not require collateral as security for payment.
3. Property, Plant and Equipment
Property, plant and equipment, net consists of the following:
<TABLE>
<CAPTION>
June 30 December 31
1995 1994 1993
------------------------------------
(Unaudited)
<S> <C> <C> <C>
Furniture and equipment $ 517,674 $ 300,114 $ 154,533
Leasehold improvements 46,206 - 47,913
Computer equipment 701,812 518,895 332,303
-------------------------------------
1,265,692 819,009 534,749
Less accumulated depreciation (362,362) (256,784) (149,024)
--------------------------------------
$ 903,330 $ 562,225 $ 385,725
======================================
</TABLE>
8
<PAGE>
MACESS Corporation
Notes to Financial Statements (continued)
4. Capitalized Software Development Costs
The Company capitalized salaries and indirect costs of $172,975 for the six
months ended June 30, 1995 and $327,410, $312,221 and $133,692 in 1994, 1993 and
1992, respectively, relating to the development of new software products,
including product enhancements. Capitalization of software development costs
begins upon the establishment of technological feasibility and continues until
such software is available for sale.
The establishment of technological feasibility, the point at which the product
is ready for general release, and the ongoing assessment of recoverability of
capitalized software development costs requires the exercise of judgment by
management. In the opinion of management, all such costs capitalized at June 30,
1995 are recoverable through anticipated future sales of the applicable
products.
5. Notes Payable to Stockholders
Notes payable to stockholders consisted of the following:
<TABLE>
<CAPTION>
June 30 December 31
1995 1994 1993
-----------------------------------------
(Unaudited)
<S> <C> <C> <C>
Notes payable to stockholder,
interest at 8%, payable on demand $ 300,544 $ 300,544 $ 400,000
Note payable to stockholder, interest
at 8%, payable in monthly
installments through 1996 and
1997 162,635 212,365 --
-----------------------------------------
463,179 512,909 400,000
Less current maturities (407,465) (403,317) (400,000)
-----------------------------------------
$ 55,714 $ 109,592 $ --
=========================================
</TABLE>
In 1994 the Company purchased 75,000 shares of common stock from a stockholder
through the issuance of a note payable of $321,793, with a balance of $212,365
at December 31, 1994. In connection with this transaction, the Company entered
into a covenant not-to-compete with monthly payments of $6,250 through December
31, 1997.
9
<PAGE>
MACESS Corporation
Notes to Financial Statements (continued)
5. Notes Payable to Stockholders (continued)
The Company's notes payable mature as follows:
<TABLE>
<CAPTION>
<S> <C>
1995 $ 407,465
1996 55,714
---------------
$ 463,179
===============
</TABLE>
6. Taxes
The Company follows the provisions of Financial Accounting Standards Board
Statement No. 109 "Accounting for Income Taxes." Under Statement 109, the
liability method is used in accounting for income taxes. Deferred tax assets
and liabilities are determined based on differences between financial reporting
and tax bases of assets and liabilities and are measured using the enacted tax
rates and laws that will be in effect when the differences are expected to
reverse.
The provision for taxes as a percentage of income before taxes differs from the
U.S. federal statutory rate as follows:
<TABLE>
<CAPTION>
Six months
ended June 30 December 31
1995 1994 1993 1992
---------------------------------------------------------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Federal provision at the current
statutory rate $ 572,797 $ 1,077,384 $ 546,479 $ 40,498
Tax (benefit) resulting from:
State tax expense 50,541 62,414 27,023 3,573
Adjustment to provision -- -- 50,000 --
Change in beginning of the year
valuation allowance -- (123,907) (44,071)
Other -- (1,334) -- --
---------------------------------------------------------------
$ 623,338 $ 1,138,464 $ 499,595 $ --
===============================================================
</TABLE>
10
<PAGE>
MACESS Corporation
Notes to Financial Statements (continued)
6. Taxes (continued)
An analysis of the Company's tax provision is as follows:
<TABLE>
<CAPTION>
Six months
ended June 30 December 31
1995 1994 1993 1992
---------------------------------------------------------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Current:
Federal $ 579,091 $ 714,484 $ 247,806 $ -
State 53,087 65,500 22,339 -
---------------------------------------------------------------
632,178 779,984 270,145 -
---------------------------------------------------------------
Deferred:
Federal (8,122) 329,414 210,845 -
State (718) 29,066 18,605 -
---------------------------------------------------------------
(8,840) 358,480 229,450 -
---------------------------------------------------------------
$ 623,338 $ 1,138,464 $ 499,595 $ -
===============================================================
</TABLE>
The deferred tax position is as follows:
<TABLE>
June 30 December 31
1995 1994 1993
--------------------------------------------
(Unaudited)
<S> <C> <C> <C>
Deferred tax liabilities:
Accrual to cash differences $ 332,975 $ 399,570 $ 70,660
Capitalized software 209,115 154,075 134,755
Tax over book depreciation 37,000 34,285 24,035
--------------------------------------------
$ 579,090 $ 587,930 $ 229,450
============================================
</TABLE>
7. 401(k) Plan
The Company began a 401(k) plan in April 1994. The Plan covers substantially
all of the Company's employees ages 21 and over who have completed 12 months of
service. The Company matches contributions in amounts determined by the Board
of Directors at the beginning of each Plan year. The Company's contribution to
the Plan in 1994 was $16,500, and $30,117 for the six months ended June 30,
1995.
11
<PAGE>
MACESS Corporation
Notes to Financial Statements (continued)
8. Commitments
The Company leases its office space under an operating lease. Rental expense
amounted to $156,889 for the six months ended June 30, 1995, and $171,579,
$108,473 and $51,911 in 1994, 1993 and 1992, respectively. Future minimum lease
payments under the lease are $276,500 annually through 1999.
9. Related Party Transactions
Effective January 1, 1993, the Company entered into a management agreement with
Complete Health Services, Inc. (CHS) which terminated April 15, 1994. CHS was
founded by a major shareholder of the Company and sold to an unrelated party in
May 1994. In return for services provided to CHS at substantially reduced
rates, CHS agreed to provide all accounting, payroll and bookkeeping functions
for the Company. In connection with this agreement, the Company recognized
revenue and management fee expense of $5,800 and $12,500 in 1994 and 1993,
respectively.
Under the terms of the agreement, CHS also employed all employees on behalf of
the Company and was fully reimbursed at the end of each month by the Company.
Included in general and administrative and selling expenses is $1,058,000, and
$1,373,000 in 1994, and 1993, respectively, for such reimbursed amounts.
10. Subsequent Event (unaudited)
On September 29, 1995, the Company entered into an agreement with SunGard Data
Systems Inc. (SunGard) whereby all of the Company's common stock will be
exchanged for approximately 1,990,000 shares of SunGard's common stock.
12
<PAGE>
APPENDIX II
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Shareholders
Renaissance Software, Inc.:
We have audited the accompanying consolidated balance sheet of Renaissance
Software, Inc. and its subsidiaries as of March 31, 1995, and the related
consolidated statements of income, shareholders' equity and cash flows for the
year then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the consolidated financial position of Renaissance Software,
Inc. and its subsidiaries as of March 31, 1995, and the results of their
operations and their cash flows for the year then ended, in conformity with
generally accepted accounting principles.
DELOITTE & TOUCHE LLP
May 17, 1995 (September 23, 1995 as to Note 8)
San Jose, California
<PAGE>
RENAISSANCE SOFTWARE, INC.
CONSOLIDATED BALANCE SHEET
MARCH 31, 1995 (In thousands, except share amounts)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
CURRENT ASSETS:
Cash and equivalents $ 5,500
Accounts receivable 3,725
Notes receivable from employees 40
Prepaid expenses 178
Deferred income taxes 332
-------
Total current assets 9,775
PROPERTY AND EQUIPMENT, Net 1,651
NOTES RECEIVABLE FROM EMPLOYEES 8
OTHER ASSETS 115
-------
TOTAL $11,549
=======
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 503
Accrued compensation and related benefits 761
Deferred revenue 246
Other accrued liabilities 337
Income taxes payable 880
-------
Total current liabilities 2,727
-------
DEFERRED INCOME TAXES 28
-------
SHAREHOLDERS' EQUITY:
Convertible preferred stock, no par value; 20,000,000 shares
authorized; 2,560,000 shares outstanding; $2,560 aggregate
liquidation preference 2,000
Common stock, no par value; 30,000,000 shares authorized;
5,053,870 shares outstanding 3,520
Notes receivable from shareholders (2,076)
Deferred compensation (20)
Retained earnings 5,370
-------
Total shareholders' equity 8,794
-------
TOTAL $11,549
=======
</TABLE>
See notes to consolidated financial statements.
<PAGE>
RENAISSANCE SOFTWARE, INC.
CONSOLIDATED STATEMENT OF INCOME
YEAR ENDED MARCH 31, 1995 (In thousands)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
NET REVENUES:
Licenses $ 8,874
Services 3,653
-------
Total net revenues 12,527
-------
COSTS AND EXPENSES:
Research and development 3,393
Selling, marketing and support 3,798
General and administrative 1,748
-------
Total costs and expenses 8,939
-------
INCOME FROM OPERATIONS 3,588
OTHER INCOME, Net 159
-------
INCOME BEFORE INCOME TAXES 3,747
PROVISION FOR INCOME TAXES 1,370
-------
NET INCOME $ 2,377
=======
</TABLE>
See notes to consolidated financial statements.
<PAGE>
RENAISSANCE SOFTWARE, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
YEAR ENDED MARCH 31, 1995 (In thousands)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 2,377
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation 599
Amortization of deferred compensation 26
Loss on disposal of fixed assets 8
Interest accrued on notes receivable from shareholders (92)
Deferred income taxes (304)
Changes in operating assets and liabilities:
Accounts receivable (1,975)
Prepaid income taxes 1,064
Prepaid expenses and other assets (171)
Accounts payable 151
Accrued liabilities and deferred revenue 515
Income taxes payable 880
-------
Net cash provided by operating activities 3,078
-------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (1,055)
Collection of notes receivable 69
-------
Net cash used in investing activities (986)
-------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock 2
Repurchase of common stock (95)
-------
Net cash used in financing activities (93)
-------
NET INCREASE IN CASH AND EQUIVALENTS 1,999
CASH AND EQUIVALENTS - Beginning of year 3,501
-------
CASH AND EQUIVALENTS - End of year $ 5,500
=======
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION -
Income taxes paid $ 378
=======
NONCASH INVESTING AND FINANCING ACTIVITIES -
Issuance of common stock in exchange for notes receivable $ 81
=======
</TABLE>
See notes to consolidated financial statements.
<PAGE>
RENAISSANCE SOFTWARE, INC.
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
YEAR ENDED MARCH 31, 1995 (In thousands, except share amounts)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Notes
Preferred Stock Common Stock Receivable
------------------- ------------------ from Deferred Retained
Shares Amount Shares Amount Shareholders Compensation Earnings Total
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCES, April 1, 1994 2,560,000 $ 2,000 5,102,770 $3,453 $(1,923) $(46) $3,085 $6,569
Issuance of common stock for cash 5,800 2 2
Issuance of common stock in
exchange for notes receivable 90,000 81 (81) -
Repurchase of common stock (144,700) (16) 13 (92) (95)
Collection of notes receivable 7 7
Interest accrued on notes
receivable from shareholders (92) (92)
Amortization of deferred
compensation 26 26
Net income 2,377 2,377
--------- --------- --------- ------ ------- ---- ------ ------
BALANCES, March 31, 1995 2,560,000 $ 2,000 5,053,870 $3,520 $(2,076) $(20) $5,370 $8,794
========= ========= ========= ====== ======= ==== ====== ======
</TABLE>
See notes to consolidated financial statements.
<PAGE>
RENAISSANCE SOFTWARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED MARCH 31, 1995
- --------------------------------------------------------------------------------
1. BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
Business - Renaissance Software, Inc. (the Company) is engaged in the
development, marketing and sale of software products and services for use
in the financial services and capital markets industries.
Basis of Presentation - The consolidated financial statements include the
Company and its wholly-owned subsidiaries. All significant intercompany
balances and transactions have been eliminated.
Cash and Equivalents - Cash equivalents consist of highly liquid debt
instruments purchased with original maturities of ninety days or less.
Property and Equipment - Property and equipment are stated at cost.
Depreciation is computed using the straight-line method over the estimated
useful lives of the related assets, which range from four to seven years.
Software Development Costs - Software development costs are expensed as
incurred until technological feasibility is established, at which time any
additional costs are capitalized in accordance with Statement of Financial
Accounting Standards No. 86, "Accounting for the Costs of Computer Software
To Be Sold, Leased, or Otherwise Marketed." Because the Company believes
its current process for developing software is essentially completed
concurrently with the establishment of technological feasibility, no costs
have been capitalized through March 31, 1995.
Revenue Recognition - Revenue from software licenses is recognized upon
installation and when no significant obligations remain outstanding. When
the Company receives payment prior to installation or fulfillment of
significant vendor obligations, such payments are recorded as deferred
revenue and are recognized as revenue upon installation or fulfillment of
significant vendor obligations. Contract revenues are generally recognized
upon completion of milestones and when such amounts are billable.
Maintenance revenue is recognized ratably over the term of the maintenance
agreement. Revenue from customer training, support, and other services is
recognized as the service is performed.
Income Taxes - The Company accounts for income taxes in accordance with
Statement of Financial Accounting Standards No. 109, which requires an
asset and liability approach for financial accounting and reporting of
income taxes.
2. NOTES RECEIVABLE
The notes receivable from employees are unsecured, bear interest at 5% to
6% per annum and are due September 1995 through February 1997.
<PAGE>
3. PROPERTY AND EQUIPMENT
Property and equipment at March 31, 1995 consist of the following (in
thousands):
<TABLE>
<S> <C>
Equipment $ 2,245
Furniture and fixtures 555
Purchased software 296
-------
3,096
Accumulated depreciation (1,445)
-------
$ 1,651
=======
</TABLE>
4. SHAREHOLDERS' EQUITY
Convertible Preferred Stock
Convertible preferred stock at March 31, 1995 consists of the following:
<TABLE>
<CAPTION>
Shares
------------------------
Designated Issued Amount
<S> <C> <C> <C>
Series A 200,000 - $ -
Series B-1 1,620,000 1,620,000 900,000
Series B-2 540,000 540,000 600,000
Series B-3 400,000 400,000 500,000
---------- ---------- ----------
2,760,000 2,560,000 $2,000,000
========== ========== ==========
</TABLE>
The holders of convertible preferred stock are entitled to receive
dividends, prior and in preference to holders of common stock, when and if
declared by the Board of Directors. Each share of convertible preferred
stock has voting rights equal to its common stock equivalents and is
entitled to a liquidation preference of $1.00 per share.
Beginning June 30, 1995, each share of Series B-1, B-2 and B-3 preferred
stock is convertible into 1-1/8 shares of common stock at the option of the
holder. Such conversions are based on the initial conversion rate, as
defined in the stock purchase agreements, and are subject to certain
antidilution provisions. All outstanding shares of preferred stock
automatically convert to common stock upon the closing of an underwritten
public offering of the Company's common stock yielding proceeds in excess
of $7,500,000 and $3.00 per share.
The Company has reserved 2,880,000 shares of common stock for future
conversion of convertible preferred stock.
Common Stock and Stock Option Plan
In fiscal 1993, the Board of Directors approved the Renaissance Software,
Inc. 1992 Equity Incentive Plan (the Plan), which provides for the issuance
of up to 4,250,000 shares of common stock, incentive stock options and
nonqualified stock options. At March 31, 1995, a total of 3,183,870 shares
of common stock have been issued under the Plan, net of repurchases.
<PAGE>
Common stock is issued at fair market value, as determined by the Board of
Directors, and generally vests over a period of three to five years. The
Company may repurchase such stock at the original issue price for unvested
shares. At March 31, 1995 there were 1,108,914 unvested shares. Options are
granted at fair market value, as determined by the Board of Directors, and
generally vest over a period of five years.
In fiscal 1995, the Company issued common stock to certain officers and
employees in exchange for notes receivable. The common stock vests ratably
over a period of three to five years. The notes receivable from the sale of
common stock bear interest at 5% to 10% and are due through 1997.
Option activity under the incentive and nonqualified stock option plan for
fiscal 1995 is as follows:
<TABLE>
<CAPTION>
Shares Exercise
Under Option Price
<S> <C> <C>
Balance, April 1, 1994 64,400 $.40-.75
Exercised (5,800) .40
Canceled (14,200) .40-.75
-------
Balance, March 31, 1995 44,400 $.40-.75
=======
</TABLE>
At March 31, 1995, options to purchase 26,600 shares of common stock were
exercisable and 1,021,730 shares were available for future grant.
5. INCOME TAXES
The provision for income taxes for the year ended March 31, 1995 consists
of the following (in thousands):
<TABLE>
<S> <C>
Current:
Federal $1,233
State 353
Foreign 88
------
1,674
------
Deferred:
Federal (307)
State 3
------
(304)
------
$1,370
======
</TABLE>
Total provision for income taxes for the year ended March 31, 1995 differs
from amounts computed by applying the statutory federal income tax rate to
income before taxes as a result of the following (in thousands):
<TABLE>
<S> <C>
Statutory federal income tax $1,311
State income taxes, net of federal benefit 289
Research and experimentation credits (230)
------
$1,370
======
</TABLE>
<PAGE>
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amount of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes.
Significant components of the Company's deferred income tax assets and
liabilities as of March 31, 1995 are as follows (in thousands):
<TABLE>
<S> <C>
Deferred tax assets:
Accruals not currently deductible $221
State taxes 111
----
332
Deferred tax liabilities - depreciation (28)
----
Net deferred tax assets $304
====
</TABLE>
6. LEASES
The Company leases its facilities under operating lease agreements, which
expire through April 2000. The lease agreements require the Company to pay
its allocable share of property taxes, insurance and normal maintenance
costs. The lease agreement for the Company's principal facility includes a
five-year renewal option.
Following is a schedule of future minimum lease payments at March 31, 1995
(in thousands):
<TABLE>
<CAPTION>
Years Ending
March 31,
<S> <C>
1996 $ 614
1997 582
1998 567
1999 505
2000 360
------
Total $2,628
======
</TABLE>
Rent expense for the year ended March 31, 1995 was $405,000.
7. MAJOR CUSTOMERS
The Company's customers primarily represent large financial institutions.
During fiscal 1995, two customers accounted for 12% and 11% of the
Company's revenues, respectively. Sales to customers in Europe, Japan, and
Canada accounted for 39%, 13% and 4%, respectively, of fiscal 1995
revenues.
8. SUBSEQUENT EVENT
On September 23, 1995, the Company entered into an agreement and plan of
reorganization with SunGard Data Systems Inc. (SunGard) whereby all of the
Company's outstanding common and preferred stock will be exchanged for a
total of 1,512,931 shares of SunGard's common stock, subject to possible
adjustments as defined in the agreement.
* * * * *
<PAGE>
RENAISSANCE SOFTWARE, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET
JUNE 30, 1995 (In thousands, except share amounts)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ASSETS
<S> <C>
CURRENT ASSETS:
Cash and equivalents $ 6,592
Accounts receivable 2,283
Prepaid expenses and other current assets 211
Deferred income taxes 332
-------
Total current assets 9,418
PROPERTY AND EQUIPMENT, Net 1,580
OTHER ASSETS 186
-------
TOTAL $11,184
=======
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 216
Deferred revenue 251
Other accrued liabilities 768
Income taxes payable 651
-------
Total current liabilities 1,886
-------
DEFERRED INCOME TAXES 28
-------
SHAREHOLDERS' EQUITY:
Convertible preferred stock, no par value; 20,000,000 shares
authorized; 2,560,000 shares outstanding; $2,560 aggregate
liquidation preference 2,000
Common stock, no par value; 30,000,000 shares authorized;
5,467,470 shares outstanding 4,066
Notes receivable from shareholders (2,641)
Deferred compensation (20)
Retained earnings 5,865
-------
Total shareholders' equity 9,270
-------
TOTAL $11,184
=======
</TABLE>
<PAGE>
RENAISSANCE SOFTWARE, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED JUNE 30, 1995 AND 1994 (In thousands)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
NET REVENUES $3,060 $2,777
------ ------
COSTS AND EXPENSES:
Research and development 918 751
Selling, marketing and support 1,098 806
General and administrative 354 349
------ ------
Total costs and expenses 2,370 1,906
------ ------
INCOME FROM OPERATIONS 690 871
OTHER INCOME, Net 102 131
------ ------
INCOME BEFORE INCOME TAXES 792 1,002
PROVISION FOR INCOME TAXES 297 381
------ ------
NET INCOME $ 495 $ 621
====== ======
</TABLE>
<PAGE>
RENAISSANCE SOFTWARE, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED JUNE 30, 1995 AND 1994 (In thousands)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
NET CASH PROVIDED BY OPERATING ACTIVITIES $1,198 $1,617
CASH FLOWS FROM INVESTING ACTIVITIES -
Purchases of property and equipment (106) (199)
CASH FLOWS FROM FINANCING ACTIVITIES -
Repurchase of common stock - (7)
------ ------
NET INCREASE IN CASH AND EQUIVALENTS 1,092 1,411
CASH AND EQUIVALENTS - Beginning of period 5,500 3,501
------ ------
CASH AND EQUIVALENTS - End of period $6,592 $4,912
====== ======
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION -
Income taxes paid $ 526 $ 713
====== ======
NONCASH INVESTING AND FINANCING ACTIVITIES -
Issuance of common stock in exchange for notes receivable $ 546 $ -
====== ======
</TABLE>
<PAGE>
RENAISSANCE SOFTWARE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. The accompanying condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management,
all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. Operating results for
the three month period ended June 30, 1995 are not necessarily indicative
of the results that may be expected or the fiscal year ending March 31,
1996.
<PAGE>
APPENDIX III
<PAGE>
Report of Independent Accountants
---------------------------------
To the Board of Directors
Intelus Corporation
We have audited the accompanying balance sheets of Intelus Corporation
as of December 31, 1994 and 1993, and the related statements of operations,
changes in stockholders' equity and cash flows for the years then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Intelus Corporation
as of December 31, 1994 and 1993, and the results of its operations and its cash
flows for the years then ended in conformity with generally accepted accounting
principles.
As discussed in Note 13, the Company has agreed to be acquired as of
August 31, 1995.
As discussed in Note 12, in 1993 the Company changed its method of
accounting for income taxes to conform with Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes".
COOPERS & LYBRAND L.L.P.
Washington, D.C.
August 29, 1995
1
<PAGE>
INTELUS CORPORATION
BALANCE SHEETS
<TABLE>
<CAPTION>
(unaudited)
ASSETS June 30, December 31,
--------------------------- ---------------------------
1995 1994 1994 1993
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Current assets:
Cash and equivalents $ 3,208 $ 12,632 $ 89,241 $ 42,225
Trade receivables, less allowance for doubtful
accounts of $115,599, $0, $100,599 and $0 2,883,809 1,643,639 2,553,158 1,877,355
Earned but unbilled receivables 2,921,178 1,714,172 1,897,805 1,648,510
Inventory 268,533 572,378 226,327 180,290
Prepaid expenses 235,412 166,200 103,291 113,985
Other current assets 41,668 17,245 108,969 11,215
------------ ------------ ------------ ------------
Total current assets 6,353,808 4,126,266 4,978,791 3,873,580
Property and equipment, less accumulated
depreciation of $432,059, $622,352, $330,281
and $547,748 920,896 478,629 693,852 420,407
Software development costs, less accumulated
amortization of $1,568,025, $1,170,641,
$1,425,265 and $927,453 2,965,596 2,316,584 2,701,797 1,878,050
Notes receivable 65,322 85,362 80,322 60,000
Other assets 9,780 10,729 13,240 11,203
------------ ------------ ------------ ------------
Total assets $ 10,315,402 $ 7,017,570 $ 8,468,002 $ 6,243,240
============ ============ ============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Note payable to bank $ 2,703,000 $ 1,048,000 $ 1,463,000 $ 700,000
Current portion of long-term debt 97,085 81,044 160,212 95,590
Current portion of lease payable 31,986 - 34,452 -
Subordinated debt to related parties 500,000 - 366,668 -
Accounts payable 1,433,733 993,854 1,271,974 576,963
Accrued expenses 453,545 272,445 163,218 183,798
Dividends payable 116,667 - - -
Deferred revenue 2,007,008 415,859 1,900,383 790,030
------------ ------------ ------------ ------------
Total current liabilities 7,343,024 2,811,202 5,359,907 2,346,381
------------ ------------ ------------ ------------
Long-term debt 291,518 261,042 202,036 93,943
------------ ------------ ------------ ------------
Long-term lease payable 135,695 - 150,263 -
------------ ------------ ------------ ------------
Deferred income taxes 249,851 249,428 249,851 249,000
------------ ------------ ------------ ------------
Other noncurrent liabilities 13,458 15,090 13,459 17,537
------------ ------------ ------------ ------------
Redeemable convertible preferred stock, par value
$.01 per share; 2,044,445 shares authorized,
issued and outstanding; liquidation preference
of $2,500,000 2,500,000 2,500,000 2,500,000 2,500,000
------------ ------------ ------------ ------------
Stockholders' equity:
Common stock, par value $.001 per share;
7,500,000 shares authorized; 3,106,143,
3,086,310, 3,106,143 and 3,083,310 shares
issued 3,106 3,086 3,106 3,083
Capital in excess of par value 8,874 777 8,874 630
Retained earnings (deficit) (230,124) 1,176,945 (19,494) 1,032,666
------------ ------------ ------------ ------------
(218,144) 1,180,808 (7,514) 1,036,379
------------ ------------ ------------ ------------
Total Liabilities And Stockholders' Equity $ 10,315,402 $ 7,017,570 $ 8,468,002 $ 6,243,240
============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
INTELUS CORPORATION
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
(unaudited)
for the six months ended June 30, for the year ended December 31,
-------------------------------- --------------------------------
1995 1994 1994 1993
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenues:
Systems and products $ 6,217,197 $ 2,950,012 $ 5,476,996 $ 4,947,299
Maintenance 893,963 744,374 1,488,408 1,348,508
------------ ------------ ------------ ------------
7,111,160 3,694,386 6,965,404 6,295,807
------------ ------------ ------------ ------------
Costs and expenses:
Cost of sales and direct operating 3,112,768 832,484 2,101,905 1,803,089
Sales, marketing and administration 3,261,425 2,377,853 5,140,701 3,233,447
Amortization of software products 392,134 230,507 497,312 376,688
Depreciation of property and equipment 295,365 75,618 131,665 166,004
------------ ------------ ------------ ------------
7,061,692 3,516,462 7,871,583 5,579,228
------------ ------------ ------------ ------------
Income (loss) from operations 49,468 177,924 (906,179) 716,579
Interest expense (152,686) (35,677) (149,118) (42,341)
Interest income 9,255 2,032 4,132 2,613
------------ ------------ ------------ ------------
Income (loss) before provision for income taxes
and cumulative effect of accounting change (93,963) 144,279 (1,051,165) 676,851
Provision for income taxes - - (995) -
Cumulative effect of accounting change - - - (14,832)
------------ ------------ ------------ ------------
Net (loss) income $ (93,963) $ 144,279 $ (1,052,160) $ 662,019
============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
INTELUS CORPORATION
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
(unaudited)
for the six months ended June 30, for the year ended December 31,
-------------------------------- --------------------------------
1995 1994 1994 1993
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net (loss) income $ (93,963) $ 144,279 $ (1,052,160) $ 662,019
Adjustments to reconcile net (loss) income to net cash
provided by operating activities
Depreciation and amortization 515,993 317,292 670,524 542,692
Deferred income taxes, net - - 851 14,832
Cash effect of changes:
Billed receivables (330,651) 233,716 (675,803) (466,418)
Unbilled receivables (1,023,374) (65,663) (249,295) (823,008)
Inventory (42,206) (392,087) (46,037) (12,565)
Prepaid expenses (132,121) (52,215) 10,694 (50,353)
Other assets 70,760 (5,556) (99,791) (5,648)
Accounts payable 161,760 416,891 695,011 258,070
Accrued expenses 290,327 89,075 (20,580) 77,603
Other noncurrent liabilities - (2,447) (4,078) (4,894)
Deferred revenue 106,625 (374,171) 1,110,353 40,023
------------ ------------ ------------ ------------
Net cash provided by operating activities (476,850) 309,114 339,689 232,353
------------ ------------ ------------ ------------
Cash flows from investing activities:
Purchases of fixed assets (328,822) (132,825) (253,662) (198,581)
Proceeds from sale of fixed assets - - - 13,276
Capitalization of software development costs (678,014) (681,223) (1,321,059) (978,724)
Issuance of note receivable 15,000 (25,362) (20,322) (60,000)
------------ ------------ ------------ ------------
Net cash used in investing activities (991,836) (839,410) (1,595,043) (1,224,029)
------------ ------------ ------------ ------------
Cash flows from financing activities:
Borrowings under note payable 1,240,000 428,000 863,000 1,520,000
Payments on note payable - (80,000) (100,000) (1,120,000)
Proceeds from issuance of long-term debt 116,696 195,099 326,549 130,956
Payments on long-term debt (90,341) (42,546) (153,834) (63,303)
Payments on capital lease (17,034) - (8,280) -
Proceeds from issuance of convertible demand notes 133,332 - 366,668 -
Proceeds from issuance of common stock - 150 8,267 -
Proceeds from issuance of preferred stock - - - 500,000
------------ ------------ ------------ ------------
Net cash provided by financing activities 1,382,653 500,703 1,302,370 967,653
------------ ------------ ------------ ------------
Net increase/(decrease) in cash and equivalents (86,033) (29,593) 47,016 (24,023)
Cash and equivalents, beginning of period 89,241 42,225 42,225 66,248
------------ ------------ ------------ ------------
Cash and equivalents, end of period $ 3,208 $ 12,632 $ 89,241 $ 42,225
============ ============ ============ ============
Noncash transactions:
Transfer of inventory to fixed assets $ - $ - $ 53,628 $ 96,446
Borrowings under capital leases - - 192,995 -
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest $ 152,686 $ 35,677 $ 149,118 $ 45,094
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
INTELUS CORPORATION
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Common Stock Capital in Retained
-------------------------- Excess of Earnings/
Shares Amount Par Value (Deficit)
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Balances, December 31, 1992 3,083,310 $ 3,083 $ 630 $ 370,647
Net Income - - - 662,019
----------- ----------- ----------- -----------
Balances, December 31, 1993 3,083,310 3,083 630 1,032,666
Net (loss) - - - (1,052,160)
Stock issued under stock option plans 22,833 23 8,244 -
----------- ----------- ----------- -----------
Balances, December 31, 1994 3,106,143 3,106 8,874 (19,494)
Preferred Stock Dividend Accrued - - - (116,667)
Net (loss) - - - (93,963)
----------- ----------- ----------- -----------
Balances, June 30, 1995 - unaudited 3,106,143 $ 3,106 $ 8,874 $ (230,124)
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
INTELUS CORPORATION
NOTES TO FINANCIAL STATEMENTS
________
1. Organization
Intelus Corporation (the Company) was incorporated on July 31,
1986, under the laws of the State of Delaware, to acquire and operate a
division of Infocel, Inc. The Company is primarily engaged in the
development, marketing, and maintenance of comprehensive document
management systems using UNIX-based distributed computer networks.
2. Summary of significant accounting policies
Interim financial statements
----------------------------
The interim financial statements are unaudited, but, in the
opinion of management, include all necessary adjustments (which
comprise only normal recurring items) required for a fair presentation
of the financial position as of June 30, 1995 and 1994 and the
results of operations, changes in stockholders' equity and cash
flows for the six months ended June 30, 1995 and 1994.
Revenue recognition
-------------------
The Company's revenues consist primarily of sales of systems and
product and fees for maintenance. Systems and product revenues are
recognized upon shipment of the equipment and acceptance of software
by the customer in accordance with Statement of Position 91-1 Software
Revenue Recognition and Statement of Position 81-1, Accounting for
Performance of Construction-Type and Certain Production-Type
Contracts. Annual maintenance fees are recorded as deferred revenue
at the time of receipt and then recognized ratably over the respective
maintenance period.
Cash and cash equivalents
-------------------------
The Company considers all highly liquid investments with original
maturities of three months or less to be cash equivalents for purposes
of the statement of cash flows.
Inventory
---------
Inventory primarily consists of computer equipment and is valued
at the lower of cost or market. Cost is determined principally on the
average cost method.
continued
8
<PAGE>
INTELUS CORPORATION
NOTES TO FINANCIAL STATEMENTS
________
Fixed assets
------------
Fixed assets are stated at cost. Depreciation is computed on the
straight-line method over the estimated useful lives of the related
assets, ranging from 3 to 7 years. Leasehold improvements are
amortized over the term of the lease or the useful life of the
improvements, whichever is less.
At the time of retirement or other disposal of fixed assets, the
cost and related accumulated depreciation are removed from the
accounts and resulting gains or losses are reflected in the statement
of operations.
Software
--------
Purchased software is amortized over useful lives of up to 5
years on a straight-line basis. Amortization expense of $29,371 and
$21,087 was recorded in 1994 and 1993, respectively.
The Company capitalizes software development costs incurred for
new products and product enhancements when technological feasibility
has been established, as evidenced by a working model. Capitalization
ceases when the new product or enhancement is available for general
release to customers, at which time amortization of the capitalized
costs begins and is included in cost of goods sold. Total
amortization expense was $468,092 and $376,688 in 1994 and 1993,
respectively. Capitalized software is amortized on a straight-line
basis over the estimated life of the products, generally three to five
years. Research and development expense, before capitalization of
software development costs, amounted to approximately $1,416,000 and
$1,350,000 for the years ended December 31, 1994, and 1993,
respectively.
continued
9
<PAGE>
INTELUS CORPORATION
NOTES TO FINANCIAL STATEMENTS
________
Income taxes
------------
Effective January 1, 1993, the Company adopted SFAS Statement No.
109, Accounting for Income Taxes. Under SFAS 109, deferred tax
liabilities and assets are recognized for the estimated future tax
consequences of temporary differences and income tax credits.
Temporary differences are primarily the result of the differences
between the tax bases of assets and liabilities and their financial
reporting amounts. Deferred tax liabilities and assets are measured
by applying enacted statutory tax rates, applicable to the future
years, in which deferred tax liabilities or assets are expected to be
settled or realized. Valuation allowances are established when
necessary to reduce deferred tax assets to the amount expected to be
realized. Income tax expense consists of the taxes payable for the
current period and the change in deferred tax assets and liabilities
during the period.
Concentration of credit risk
----------------------------
The Company sells its products to various end users in different
industries and geographic locations. The Company's five largest
customers accounted for approximately 37.3% and 30.5% of sales in 1994
and 1993, respectively. Accounts receivable included two diversified
customers whose balances accounted for approximately 37% and 25% of
the outstanding accounts receivable at December 31, 1994 and 1993,
respectively.
3. Property and equipment
Property and equipment consisted of the following:
<TABLE>
<CAPTION>
December 31, 1994 December 31, 1993
----------------- -----------------
<S> <C> <C>
Computer equipment $ 638,983 $ 794,932
Furniture and fixtures 86,446 65,691
Office equipment 239,435 48,713
Leasehold improvements 59,269 58,819
---------- ---------
1,024,133 968,155
Less accumulated depreciation (330,281) (547,748)
---------- ---------
$ 693,852 $ 420,407
========== =========
</TABLE>
4. Note payable
The Company has a promissory note payable (the Note) under a
Revolving Loan Note agreement with a bank which provides for short-term
borrowings of up to $1,000,000 and a $400,000 unsecured note at the bank's
prime rate plus 1/2%. Borrowings under the Note are limited to 80% of
eligible accounts receivable and 30% of eligible inventory. The Note is
collateralized by substantially all of the Company's assets. Accrued
continued
10
<PAGE>
INTELUS CORPORATION
NOTES TO FINANCIAL STATEMENTS
________
interest is due on demand and principal was due in full on May 31, 1993.
The bank extended the Company's due date on the Note until June 30, 1995.
As of December 31, 1994, the Company was in default with respect to several
affirmative covenants, but was granted a waiver for all of them.
On March 28, 1995, the Company received an increase in the
maximum borrowing amount under its Revolving Loan Note Agreement with its
bank. Available short-term borrowings increased to $2,500,000 and were due
and payable on June 30, 1995. Borrowings under the Note were limited to
85% of eligible accounts receivable, 60% of maintenance accounts receivable
(not to exceed $400,000) and 50% against inventory (not to exceed
$250,000). As of March 31, 1995, the Company was in default with respect
to one of the affirmative covenants, for which a waiver was received from
the bank.
On June 22, 1995, the Company received another increase in the
maximum borrowing amount under its Revolving Loan Note Agreement with its
bank. Available short term borrowings are now in the amount of $3,100,000,
and are due and payable on September 30, 1995. Borrowings under the Note
have the same limitations as the March 28, 1995 increase, except for the
addition of 30% of eligible unbilled accounts receivable (not to exceed
$500,000). Interest on the loan is at a floating rate of prime minus 1%.
As of June 30, 1995, the Company was in default with respect to several
affirmative covenants, but was granted a waiver for all of them.
Also, under the terms of the Revolving Loan Note Agreement, there
exists a Fraud Indemnification Agreement ("the Agreement") between the
majority shareholder ("the Indemnitor") and the bank whereby, with respect
to the existence or occurrence of a condition of fraud, as defined in the
Agreement, the Indemnitor agrees to indemnify the bank from any loss, cost
or expense as a result of such a condition, for all obligations between the
Company and the bank.
continued
11
<PAGE>
INTELUS CORPORATION
NOTES TO FINANCIAL STATEMENTS
________
5. Long-term debt
The Company has a term loan agreement as part of the Revolving
Loan Note Agreement (see Note 4) with the bank that permits it to borrow up
to $400,000 to purchase equipment. Individual borrowings bear interest at
the bank's prime rate plus 1% and are payable monthly over three years from
the transaction date and are collateralized by the related equipment.
Total borrowings outstanding under this agreement at December 31, 1994 and
1993 amounted to $362,248 and $189,533, respectively.
The aggregate amount of future repayment of the term loan is as
follows:
<TABLE>
<CAPTION>
Year ending
December 31,
------------
<S> <C>
1995 $160,212
1996 143,589
1997 58,447
--------
$362,248
========
</TABLE>
The Company is subject to certain covenants under its term loan
agreement. Under the most restrictive covenant, the Company is required to
maintain at all times, net worth (as defined) of not less than $1,400,000
which it has met.
continued
12
<PAGE>
INTELUS CORPORATION
NOTES TO FINANCIAL STATEMENTS
________
6. Capital lease obligations
During the year the Company entered into 60 month leases for the
purchase of a telephone system and a copier, with interest rates of 5.8%
and 10.9% respectively. Future principal repayments under the lease are as
follows:
<TABLE>
<S> <C>
1995 $ 48,251
1996 48,251
1997 48,251
1998 48,251
1999 35,486
Less: interest portion (43,775)
--------
Present value of net
minimum lease payments 184,715
Less: current portion (34,452)
--------
$150,263
========
</TABLE>
At December 31, 1994, the cost and accumulated depreciation
related to the assets held under capital lease was $192,995 and $9,650,
respectively.
7. Subordinated convertible demand note
During the year, the Company received $366,668 in advances from
its convertible preferred shareholders. The funds were used for working
capital purposes, and are due by November 14, 1995. The advances bear
interest at 8% up to November 14, 1995; 10% interest thereafter. At the
option of the holder, up to one half of the amount advanced is convertible
into common stock of the Company. The conversion price is $1.125/share of
the amount advanced if not repaid by November 14, 1995; $1.53/share if the
amount advanced is repaid by November 14, 1995.
continued
13
<PAGE>
INTELUS CORPORATION
NOTES TO FINANCIAL STATEMENTS
________
8. Redeemable convertible preferred stock
On November 30, 1990, the Company completed a private placement
of 1,600,000 shares of its Series 1 convertible preferred stock for an
aggregate amount of $2,000,000. The convertible preferred stock entitles
its holder to certain voting rights; to a cumulative dividend at the rate
of $0.125 per share per annum accruing semi-annually from day to day,
beginning on December 1, 1994 (the Accruing Dividend); to a liquidation
preference over the Company's common stock in an amount equal to $1.25 per
share, plus unpaid Accruing Dividend and any other dividends declared but
unpaid thereon; and to convert at any time, or upon occurrence of certain
events (as defined), into shares of the Company's common stock at $1.25 per
share, subject to certain antidilution adjustments.
The Company is obligated to redeem, on November 30, 1996, 1997
and 1998, one-third of the Series 1 outstanding convertible preferred stock
for the per share amount of $1.25 plus unpaid Accruing Dividend and any
other dividends declared but unpaid thereon.
On June 1, 1993, the Company completed a private placement of
444,445 shares of its Series 2 convertible preferred stock for an aggregate
amount of $500,000. The convertible preferred stock entitles its holders
to certain voting rights; to a cumulative dividend at the rate of $0.1125
per share per annum accruing semi-annually beginning on June 1, 1997 (the
Accruing Dividend); to a liquidation preference over the Company's common
stock in an amount equal to $1.125 per share, plus unpaid Accruing Dividend
and any other dividends declared but unpaid thereon; and to convert at any
time, or upon occurrence of certain events (as defined), into shares of the
Company's common stock at $1.125 per share, subject to certain antidilution
adjustments.
The Company is obligated to redeem, on each June 1, 1999, 2000
and 2001, one-third of the Series 2 outstanding convertible preferred stock
for the per share amount of $1.125 plus unpaid Accruing Dividend and any
other dividends declared but unpaid thereon.
continued
14
<PAGE>
INTELUS CORPORATION
NOTES TO FINANCIAL STATEMENTS
________
Additionally, the Company is restricted from repurchasing or
redeeming any of its common stock or from paying dividends on its common
stock without the consent of the majority of the convertible preferred
shareholders.
9. Stock option plan
The 1988 nonqualified stock option plan, as amended, provides for
the granting of options to purchase up to 828,916 shares of common stock to
eligible employees at prices not less than the fair market value of the
common stock on the date of grant. These options normally vest over a five-
year period and generally expire within ten years from the date of grant.
Information regarding this option plan is as follows:
<TABLE>
<CAPTION>
Number of Option Price
Options per Share
--------- ------------
<S> <C> <C>
Outstanding, December 31,
1992 240,000 $.05-$.50
Granted 252,000 $.05-$.50
Exercised -
Cancelled (2,000) $.05
-------
Outstanding, December 31,
1993 490,000 $.05-$5.00
Granted 285,000 $.50-$1.00
Exercised (22,833) $.05-$.50
Cancelled (84,667) $.50
Outstanding, December 31, -------
1994 667,500 $.05-$1.00
=======
</TABLE>
At December 31, 1994 and 1993, respectively, options for 77,667 and
159,416, shares of common stock remain available for issuance under the
plan.
continued
15
<PAGE>
INTELUS CORPORATION
NOTES TO FINANCIAL STATEMENTS
________
10. Commitments and contingencies
The Company currently leases office space under a noncancelable
operating sublease agreement. Future minimum rental commitments under the
sublease agreement are as follows:
<TABLE>
<CAPTION>
December 31
-----------
<S> <C>
1995 $281,682
1996 288,291
1997 219,147
--------
$789,120
========
</TABLE>
Under the terms of the sublease agreement, the Company is subject
to scheduled annual rent escalation of two percent (2%) of the previous
year's annual rent. The total amount of the base rent payment and the
escalation portion is being charged to expense using the straight-line
method over the term of the lease. In addition, the Company also pays an
allocation of the building's operating expenses. The sublease terminates
on July 31, 1997 with no renewal option.
11. Profit-sharing plan
The Company maintains a defined contribution profit-sharing plan
under Section 401(k) of the Internal Revenue Code (the Plan) which covers
substantially all of its permanent employees.
Pursuant to the Plan, eligible participants may elect to
contribute a percentage of their annual gross compensation and the Company
will contribute certain additional amounts as provided by the Plan. Total
contribution expense for the years ended December 31, 1994 and 1993,
amounted to $23,204 and $18,713, respectively.
continued
16
<PAGE>
INTELUS CORPORATION
NOTES TO FINANCIAL STATEMENTS
________
12. Income taxes
The Company adopted SFAS No. 109, "Accounting for Income Taxes",
as of January 1, 1993. As a result of this change in accounting for income
taxes, the financial statements presented have reflected a cumulative
charge against income of $14,832.
The components of the Company's net deferred tax liability are as
follows:
<TABLE>
<CAPTION>
December 31, December 31,
1994 1993
------------- ------------
<S> <C> <C>
Non-current deferred tax liability:
Capitalized software costs $ 990,000 $ 707,000
Property and equipment 6,000 -
Non-current deferred tax assets:
Property and equipment - (5,000)
Amounts related to research credits (349,000) (433,000)
Accrued liabilities (31,000) (20,000)
Net operating loss benefit (677,000) -
Accounts receivable (38,000) -
--------- ---------
(99,000) 249,000
Less valuation allowance 349,000 -
--------- ---------
Net deferred tax liability $ 250,000 $ 249,000
========= =========
</TABLE>
The types of differences between the tax bases of assets and
liabilities and their financial reporting amounts that give rise to
significant portions of deferred income tax liabilities or assets are
capitalized software costs, fixed assets, allowance for bad debts and
accrued expenses. As of December 31, 1994, the Company has the following
net operating loss and general business credit carry-forwards available:
<TABLE>
<CAPTION>
Net Operating General Business
Expiring Losses Credits
-------- ------------- ----------------
<C> <S> <C>
2005 $ - $ 8,000
2006 - 96,000
2007 71,000 95,000
2008 - 150,000
2009 1,713,000 -
---------- --------
$1,784,000 $349,000
========== ========
</TABLE>
continued
17
<PAGE>
INTELUS CORPORATION
NOTES TO FINANCIAL STATEMENTS
________
The provision for income taxes consists of the following:
<TABLE>
<CAPTION>
Year ended December 31,
1994 1993
----------- ----------
<S> <C> <C>
Federal
Current $ - $ -
Deferred (838) -
State
Current $ - $ -
Deferred (157) -
----- ------
$(995) $ -
====== ======
</TABLE>
Reconciliations between the statutory federal income tax rate and the
Company's effective income tax rate as a percentage of income (loss) before
provision for income taxes and cumulative effect of accounting change are as
follows:
<TABLE>
<CAPTION>
Year ended December 31,
1994 1993
------------- -----------
<S> <C> <C>
Statutory federal income
tax rate (34.0)% 34.0%
Statutory state income tax
rate ( 4.0) 4.0
Permanent differences 3.7 0.0
Change in valuation allowance 33.2 0.0
Other, net 1.2 0.0
Net operating loss 0.0 (38.0)
------ ------
Effective tax rate 0.1% -%
====== ======
</TABLE>
The net increase in the valuation allowance from 1993 to 1994 was $349,000.
continued
18
<PAGE>
INTELUS CORPORATION
NOTES TO FINANCIAL STATEMENTS
________
13. Subsequent event
Management's plans with regard to the refinancing of the Note payable
to the bank (see Note 4), included alternate financing through several
venture capital sources or a potential merger opportunity. On June 15,
1995, the Company and its majority stockholders signed a letter of intent to
be acquired by merger through the exchange of substantially all of the
Company's outstanding common and preferred shares for shares of the
acquiring entity at the exchange rate equating to a total company valuation
of approximately $23 million.
19
<PAGE>
APPENDIX IV
<PAGE>
Unaudited Pro Forma Combined Condensed Income Statement Data
The Unaudited Pro Forma Combined Condensed Income Statement Data
assumes that the MACESS Merger, the Renaissance Merger and the Intelus
Merger (collectively, the "Mergers") had occurred on January 1, 1992,
combining the results of SunGard, MACESS, Renaissance and Intelus for
the six months ended June 30, 1995 and 1994 and for each of the three
years in the period ended December 31, 1994, with each of the Mergers
accounted for on a pooling-of-interests basis. The pro forma information
is provided for illustrative purposes only and is not necessarily
indicative of the results of operations that actually would have been
obtained if the Mergers had been effected on the dates indicated or of
the results that may be obtained in the future. Unaudited pro forma
combined condensed balance sheet data as of June 30, 1995 and
December 31, 1994 are not provided herein because the Mergers would not
have had a material effect on SunGard's historical consolidated balance
sheets. During the nine month period ended September 30, 1995, SunGard
has completed five business acquisitions accounted for as purchases. Pro
forma data for these acquisitions are not presented since the financial
condition and results of operations as reported in SunGard's historical
financial statements would not be materially different.
The Unaudited Pro Forma Combined Condensed Income Statement Data
should be read in conjunction with the historical financial statements
and the related notes thereto of SunGard, MACESS, Renaissance and
Intelus, all of which are included or incorporated by reference herein.
<TABLE>
<CAPTION>
Six Months Ended
June 30, Years Ended December 31,
1995 1994 1994 1993 1992
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Revenues (as reported):
SunGard $246,609 $206,744 $437,190 $381,372 $324,570
MACESS 6,515 5,597 10,315 6,470 1,872
Renaissance/(1)/ 8,156 5,325 12,527 10,271 9,054
Intelus 7,111 3,694 6,965 6,296 4,795
-------- -------- -------- -------- --------
Pro Forma Combined $268,391 $221,360 $466,997 $404,409 $340,291
======== ======== ======== ======== ========
Net income (as reported):
SunGard $23,339 $19,841 $43,087 $38,474/(5)/ $25,808
MACESS 1,061 1,518 2,030 1,108 119
Renaissance/(1)/ 1,923 1,011/(6)/ 2,377 985/(6)/ 1,418
Intelus (94) 144 (1,052) 662 21
------- ------- ------- ------- -------
Pro Forma Combined/(2)/ $26,229 $22,514 $46,442 $41,229 $27,366
======= ======= ======= ======= =======
Fully diluted net income
per common share/(3)/:
SunGard (as reported) $0.61 $0.51 $1.12 $1.04/(5)/ $0.79
===== ===== ===== ===== =====
Pro Forma Combined $0.61 $0.53 $1.08 $1.00 $0.75
===== ===== ===== ===== =====
Shares used to compute fully
diluted net income per
common share:
SunGard (as reported)/(4)/ 38,348 38,534 38,502 38,352 37,982
MACESS 1,990 1,990 1,990 1,990 1,990
Renaissance 1,513 1,513 1,513 1,513 1,513
Intelus 810 810 810 810 810
------ ------ ------ ------ ------
Pro Forma Combined 42,661 42,847 42,815 42,665 42,295
====== ====== ====== ====== ======
</TABLE>
/(1)/ The fiscal year of Renaissance ends March 31. For purposes of the pro
forma financial information presented above, the fiscal years ended March
31, 1995, 1994 and 1993 are included in the 1994, 1993 and 1992 columns,
respectively. Interim six month information is presented on a calendar
year basis.
/(2)/ Excludes merger costs which are estimated to be approximately $4.5
million.
/(3)/ Fully diluted net income per common share includes assumed interest
expense savings on convertible subordinated debentures, net of income
taxes, of $1,565 and $4,337 in 1993 and 1992, respectively. The debentures
were converted into common stock of SunGard on May 12, 1993.
/(4)/ All shares have been adjusted for the two-for-one stock split which
occurred in July 1995.
/(5)/ 1993 includes after-tax gain on sale of product line of $3,371, or $0.09
per share on a fully diluted basis.
/(6)/ Includes after-tax charges of $1,150 and $164 during the fiscal year ended
March 31, 1994 and the six months ended June 30, 1994, respectively, in
connection with the settlement of litigation.
<PAGE>
SIGNATURE
---------
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 hereunto duly authorized.
Date: October 6, 1995
SUNGARD DATA SYSTEMS INC.
By: /s/ Michael J. Ruane
----------------------------
Michael J. Ruane
Vice President-Finance and
Chief Financial Officer
<PAGE>
Exhibit Index
-------------
<TABLE>
<CAPTION>
Exhibit Page
- ------- ----
<S> <C>
2.1 Agreement and Plan of Reorganization dated September 29, 1995 by and among
SunGard, Newco, MACESS and the Principals.
2.2 Agreement and Plan of Merger dated September 29, 1995 by and among SunGard,
Newco and MACESS.
23.1 Consent of Ernst & Young LLP, independent auditors, regarding
such firm's report on MACESS' audited financial statements.
23.2 Consent of Deloitte & Touche LLP, independent auditors, regarding such
firm's report on Renaissance's audited financial statements.
23.3 Consent of Coopers & Lybrand L.L.P., independent accountants, regarding
such firm's report on Intelus' audited financial statements.
99.1 Press Release dated October 2, 1995 regarding MACESS and Intelus acquisitions.
99.2 Press Release dated September 28, 1995 regarding the Renaissance acquisition.
</TABLE>
<PAGE>
EXHIBIT 2.1
AGREEMENT AND PLAN OF REORGANIZATION
dated September 29, 1995
FOR THE ACQUISITION OF
MACESS CORPORATION
BY
SUNGARD DATA SYSTEMS INC.
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
Table of Contents
-----------------
Section 1: Defined Terms................................................... -2-
1.1. "Accounts Receivable"...................................... -2-
1.2. "Asset".................................................... -2-
1.3. "Cash Asset"............................................... -2-
1.4. "Consent".................................................. -2-
1.5. "Contract"................................................. -3-
1.6. "Contract Right"........................................... -3-
1.7. "Employee Benefit Plan".................................... -3-
1.8. "Encumbrance".............................................. -3-
1.9. "GAAP"..................................................... -3-
1.10. "Hazardous Substances"..................................... -3-
1.11. "Insurance Policy"......................................... -3-
1.12. "Intangible"............................................... -4-
1.13. "Judgment"................................................. -4-
1.14. "Law"...................................................... -4-
1.15. "Obligation"............................................... -4-
1.16. "Permit"................................................... -4-
1.17. "Person"................................................... -4-
1.18. "Proceeding"............................................... -4-
1.19. "Real Property"............................................ -4-
1.20. "SEC"...................................................... -4-
1.21. "Software"................................................. -4-
1.22. "Tangible Property"........................................ -4-
1.23. "Tax"...................................................... -5-
Section 2: The Merger ..................................................... -5-
Section 3: Representations of MACESS and Principals........................ -5-
3.1. Organization............................................... -5-
3.2. Effect of Agreement........................................ -5-
3.3. Capital Stock and Ownership................................ -6-
3.4. Financial and Corporate Records............................ -7-
3.5. Compliance with Law........................................ -7-
3.6. Financial Statements....................................... -7-
3.7. Assets..................................................... -8-
3.8. MACESS' Obligations........................................ -8-
3.9. Operations Since August 31, 1995........................... -8-
3.10. Accounts Receivable........................................ -9-
3.11. Tangible Property.......................................... -9-
3.12. Real Property.............................................. -9-
3.13. Software and Intangibles.................................. -10-
3.14. Contracts................................................. -10-
3.15. Employees and Independent Contractors..................... -11-
3.16. Employee Benefit Plans.................................... -12-
3.17. Customers, Prospects and Suppliers........................ -13-
3.18. Taxes..................................................... -13-
(i)
<PAGE>
3.19. Proceedings and Judgments................................. -14-
3.20. Insurance................................................. -14-
3.21. Questionable Payments..................................... -14-
3.22. Related Party Transactions................................ -15-
3.23. Brokerage Fees............................................ -15-
3.24. Acquisition Proposals..................................... -15-
3.25. Full Disclosure........................................... -15-
Section 4: Several Representations of Principals.......................... -15-
4.1. Ownership of Shares........................................ -15-
4.2. Effect of Agreement........................................ -16-
4.3. Acquisition Proposals...................................... -16-
4.4. Brokerage Fees............................................. -16-
4.5. Full Disclosure............................................ -16-
Section 5: Representations of SunGard and Newco........................... -16-
5.1. Organization............................................... -16-
5.2. Agreement.................................................. -17-
5.3. SunGard's Stock............................................ -17-
5.4. SEC Filings................................................ -17-
5.5. Investment Matters......................................... -17-
5.6. Brokerage Fees............................................. -17-
5.7. Operations since June 30, 1995............................. -17-
Section 6: Securities Filings and Approval of the MACESS Stockholders..... -18-
6.1. Registration Statement..................................... -18-
6.2. MACESS Stockholder Approval................................ -18-
6.3. MACESS' and Principals' Representations as to
the Registration Statement................................. -18-
6.4. SunGard's and Newco's Representations as to Registration
Statement.................................................. -19-
6.5. State Securities Filings................................... -19-
Section 7: Certain Obligations of MACESS and Principals Pending Closing... -19-
7.1. Conduct of MACESS' Business................................ -19-
7.2. Interim Financial Statements............................... -21-
7.3. Access to Information...................................... -21-
7.4. Consents................................................... -21-
7.5. Acquisition Proposals...................................... -21-
7.6. Advice of Changes.......................................... -22-
7.7. Hart-Scott-Rodino Filing................................... -22-
7.8. 8-K Reports................................................ -22-
7.9. Binding Effect............................................. -22-
Section 8: Certain Obligations of SunGard and Newco Pending Closing....... -22-
8.1. Corporate Status........................................... -22-
8.2. Material Consents.......................................... -23-
8.3. SEC Reports................................................ -23-
(ii)
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Page
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8.4. Hart-Scott-Rodino Filing................................... -23-
8.5. Advice of Changes.......................................... -23-
8.6. Binding Effect............................................. -23-
Section 9: Conditions Precedent to MACESS' and Principals' Closing
Obligations.......................................................... -23-
9.1. Effectiveness of Registration Statement.................... -23-
9.2. Approval of the MACESS Stockholders........................ -24-
9.3. SunGard's and Newco's Representations...................... -24-
9.4. SunGard's and Newco's Performance.......................... -24-
9.5. Absence of Proceedings..................................... -24-
9.6. Adverse Changes............................................ -24-
9.7. Hart-Scott-Rodino.......................................... -24-
Section 10: Conditions Precedent to SunGard's and Newco's Closing
Obligations.......................................................... -24-
10.1. Qualification for Pooling Treatment........................ -24-
10.2. Effectiveness of Registration Statement.................... -24-
10.3. Affiliate Letters.......................................... -25-
10.4. Approval of the MACESS Stockholders........................ -25-
10.5. MACESS' and the Principals' Representations................ -25-
10.6. MACESS' and the Principals' Performance.................... -25-
10.7. Absence of Proceedings..................................... -25-
10.8. Adverse Changes............................................ -25-
10.9. Hart-Scott-Rodino.......................................... -25-
Section 11: Closing....................................................... -25-
11.1. Closing.................................................... -25-
11.2. Principals' Obligations at Closing......................... -26-
11.3. SunGard's and Newco's Obligations at Closing............... -28-
Section 12: Certain Obligations of Principals after Closing............... -29-
12.1. Restrictions on Dispositions of SunGard Stock.............. -29-
12.2. Cooperation with SunGard and the Surviving Corporation..... -29-
12.3. Further Assurances......................................... -29-
Section 13: Certain Obligations of SunGard and the Surviving Corporation
after Closing........................................................ -30-
13.1. Final Tax Returns.......................................... -30-
13.2. Employment Matters......................................... -30-
13.3. Employee Benefit Plans..................................... -30-
13.4. Disposition of Savings Plan................................ -30-
Section 14: Restrictive Covenants of the Principals........................ -30-
14.1. Certain Acknowledgements................................... -30-
14.2. Nondisclosure Covenants.................................... -31-
14.3. Noncompetition Covenants................................... -32-
14.4. Certain Exclusions......................................... -32-
14.5. Newsoftco.................................................. -33-
(iii)
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Page
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14.6. Enforcement of Covenants................................... -33-
14.7. Scope of Covenants......................................... -33-
Section 15: Indemnification............................................... -33-
15.1. Principals' General Indemnification........................ -33-
15.2. Indemnification Procedures................................. -34-
15.3. Limits on Indemnification.................................. -35-
15.4. Exceptions................................................. -36-
15.5. Allocation................................................. -36-
15.6. Mediation.................................................. -36-
Section 16: Other Provisions.............................................. -36-
16.1. Termination................................................ -36-
16.2. Publicity.................................................. -37-
16.3. Fees and Expenses.......................................... -37-
16.4. Notices.................................................... -38-
16.5. Survival of Representations................................ -38-
16.6. Interpretation of Representations.......................... -38-
16.7. Reliance by SunGard and Newco.............................. -38-
16.8. Entire Understanding....................................... -39-
16.9. Parties in Interest........................................ -39-
16.10. Waivers.................................................... -39-
16.11. Severability............................................... -39-
16.12. Counterparts............................................... -39-
16.13. Section Headings........................................... -39-
16.14. References................................................. -39-
16.15. Controlling Law............................................ -39-
16.16. Jurisdiction and Process................................... -40-
16.17. Post-Closing Actions by the Surviving Corporation.......... -40-
16.18. No Third-Party Beneficiaries............................... -40-
16.19. Nature of Transactions..................................... -40-
16.20. Stockholders Agent......................................... -40-
(iv)
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
Parties: MACESS Corporation
an Alabama corporation ("MACESS")
402 Office Park Drive, Suite 150
Birmingham, AL 35223
William W. Featheringill ("Featheringill")
3211 Pine Ridge Road
Birmingham AL 35213
The Featheringill Family Partnership, Ltd. ("The Family
Partnership")
402 Office Park Drive, Suite 150
Birmingham, AL 35223
Richard T. Harley ("Harley")
112 Spring Road
Birmingham, AL 35242
T. Alan Ritchie ("Ritchie")
90 Mountain Avenue
Birmingham, AL 35213
W. Sanders Pitman ("Pitman")
221 Devon Drive
Birmingham, AL 35209
John S. Williams ("Williams")
2100 Shades Crest Road
Birmingham, AL 35216
Lawrence A. Stein ("Stein")
2317 Vestbrook Drive
Birmingham, AL 35243
Thomas W. Claussen ("Claussen")
3859 Carisbrooke Drive
Birmingham, AL 35226
SunGard Data Systems Inc.
a Delaware corporation ("SunGard")
1285 Drummers Lane, Wayne, Pennsylvania 19087
SDS Merger Inc.
an Alabama corporation ("Newco")
1285 Drummers Lane, Wayne, Pennsylvania 19087
Date: September 29, 1995
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<PAGE>
Background: MACESS is in the business of designing, developing, selling,
licensing and maintaining a variety of imaging-based, automated document and
work flow management software systems and related services and products to the
managed health care industry. ("MACESS' Business"). Featheringill, The Family
Partnership, Harley, Ritchie, Pitman, Williams, Stein and Claussen
(collectively, the "Principals") own, collectively, directly and indirectly,
approximately 98% of the issued and outstanding shares of capital stock of
MACESS ("MACESS' Stock"). The parties desire that Newco be merged with and into
MACESS (the "Merger") on the terms and subject to the conditions set forth in
this Agreement and Plan of Reorganization (this "Agreement") and the Agreement
and Plan of Merger dated this date and designated as Exhibit A hereto (the
"Plan"). The Board of Directors of MACESS has determined that the Merger and
the other transactions contemplated by this Agreement and the Plan
(collectively, the "Transactions") are in the best interests of MACESS and its
stockholders ("Stockholders"). The respective Boards of Directors of SunGard
and Newco, a wholly-owned subsidiary of SunGard, have determined that the
Transactions are in the best interests of SunGard and Newco and their respective
stockholders.
Intending to be legally bound, in consideration of the mutual
agreements contained herein and subject to the satisfaction of the terms and
conditions set forth herein, the parties hereto agree as follows:
Section 1: Defined Terms
Certain defined terms used in this Agreement and not specifically defined in
context are defined in this Section 1, as follows:
1.1. "Accounts Receivable" means (a) any right to payment for goods
sold, leased or licensed or for services rendered, whether or not it has been
earned by performance, whether billed or unbilled, and whether or not it is
evidenced by any Contract (as defined in Section 1.5); (b) any note receivable;
or (c) any other receivable or right to payment of any nature.
1.2. "Asset" means any real, personal, mixed, tangible or intangible
property of any nature, including, but not limited to, Cash Assets (as defined
in Section 1.3), prepayments, deposits, escrows, Accounts Receivable (as defined
in Section 1.1), Tangible Property (as defined in Section 1.22), Real Property
(as defined in Section 1.19), Software (as defined in Section 1.21), Contract
Rights (as defined in Section 1.6), Intangibles (as defined in Section 1.12) and
good will, and claims, causes of action and other legal rights and remedies.
1.3. "Cash Asset" means any cash on hand, cash in bank or other
accounts, readily marketable securities, and other cash-equivalent liquid assets
of any nature.
1.4. "Consent" means any consent, approval, order or authorization
of, or any declaration, filing or registration with, or any application or
report to, or any waiver by, or any other action (whether similar or dissimilar
to any of the foregoing) of, by or with, any Person (as defined in
Section 1.17), which is necessary in order to take a specified action or
actions in a specified manner and/or to achieve a specified result.
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<PAGE>
1.5. "Contract" means any written or oral contract, agreement,
instrument, order, arrangement, commitment or understanding of any nature,
including, but not limited to, sales orders, purchase orders, leases, subleases,
data processing agreements, maintenance agreements, license agreements,
sublicense agreements, loan agreements, promissory notes, security agreements,
pledge agreements, deeds, mortgages, guaranties, indemnities, warranties,
employment agreements, consulting agreements, sales representative agreements,
joint venture agreements, buy-sell agreements, options or warrants.
1.6. "Contract Right" means any right, power or remedy of any nature
under any Contract (as defined in Section 1.5) including, but not limited to,
rights to receive property or services or otherwise derive benefits from the
payment, satisfaction or performance of another party's Obligations (as defined
in Section 1.15), rights to demand that another party accept property or
services or take any other actions, and rights to pursue or exercise remedies or
options.
1.7. "Employee Benefit Plan" means any employee benefit plan as
defined in Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), or any other plan, program, policy or arrangement for or
regarding bonuses, commissions, incentive compensation, severance, vacation,
deferred compensation, pensions, profit sharing, retirement, payroll savings,
stock options, stock purchases, stock awards, stock ownership, phantom stock,
stock appreciation rights, medical/dental expense payment or reimbursement,
disability income or protection, sick pay, group insurance, self insurance,
death benefits, employee welfare or fringe benefits of any nature; but not
including employment Contracts with individual employees.
1.8. "Encumbrance" means any lien, security interest, pledge,
mortgage, easement, covenant, restriction, reservation, conditional sale, prior
assignment, or other encumbrance, claim, burden or charge of any nature.
1.9. "GAAP" means generally accepted accounting principles under
United States accounting rules and regulations, consistently applied in
accordance with MACESS accounting policies, including the policies described in
Schedule 3.6; provided that in no event shall the consistent application of the
accounting policies used by MACESS have priority over generally accepted
accounting principles, regardless of materiality.
1.10. "Hazardous Substances" means any substance, waste,
contaminant, pollutant or material that has been determined by any United States
federal government authority, or any state or local government authority having
jurisdiction over MACESS' Real Property, to be capable of posing a risk of
injury or damage to health, safety, property or the environment, including, but
not limited to, (a) all substances, wastes, contaminants, pollutants and
materials defined or designated as hazardous, dangerous or toxic pursuant to any
Law of any state in which any of MACESS' leased or owned Real Property is
located or any United States Law, and (b) asbestos, polychlorinated biphenyls
("PCB's") and petroleum.
1.11. "Insurance Policy" means any public liability, product
liability, general liability, comprehensive, property damage, vehicle, life,
hospital, medical, dental, disability, worker's compensation, key man, fidelity
bond, theft, forgery, errors and omissions, directors' and officers' liability,
or other insurance policy of any nature.
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<PAGE>
1.12. "Intangible" means any name, corporate name, fictitious name,
trademark, trademark application, service mark, service mark application, trade
name, brand name, product name, slogan, trade secret, know-how, patent, patent
application, copyright, copyright application, design, logo, formula, invention,
product right or other intangible asset of any nature, whether in use, under
development or design, or inactive.
1.13. "Judgment" means any order, writ, injunction, citation, award,
decree or other judgment of any nature of any foreign, federal, state or local
court, governmental body, administrative agency, regulatory authority or
arbitration tribunal.
1.14. "Law" means any provision of any foreign, federal, state or
local law, statute, ordinance, charter, constitution, treaty, rule or
regulation.
1.15. "Obligation" means any debt, liability or obligation of any
nature, whether secured, unsecured, recourse, nonrecourse, liquidated,
unliquidated, accrued, absolute, fixed, contingent, ascertained, unascertained,
known, unknown or otherwise.
1.16. "Permit" means any license, permit, approval, waiver, order,
authorization, right or privilege of any nature, granted, issued, approved or
allowed by any foreign, federal, state or local governmental body,
administrative agency or regulatory authority.
1.17. "Person" means any individual, sole proprietorship, joint
venture, partnership, corporation, limited liability company or partnership,
association, cooperative, trust, estate, governmental body, administrative
agency, regulatory authority or other entity of any nature.
1.18. "Proceeding" means any demand, claim, suit, action, litigation,
investigation, arbitration, administrative hearing or other proceeding of any
nature.
1.19. "Real Property" means any real estate, land, building,
condominium, town house, structure or other real property of any nature, all
shares of stock or other ownership interests in cooperative or condominium
associations or other forms of ownership interest through which interests in
real estate may be held, and all appurtenant and ancillary rights thereto,
including, but not limited to, easements, covenants, water rights, sewer rights
and utility rights.
1.20. "SEC" means the United States Securities and Exchange
Commission.
1.21. "Software" means any computer program, operating system,
applications system, firmware or software of any nature, whether operational,
under development or inactive, including all object code, source code, technical
manuals, user manuals and other documentation therefor, whether in machine-
readable form, programming language or any other language or symbols, and
whether stored, encoded, recorded or written on disk, tape, film, memory device,
paper or other media of any nature.
1.22. "Tangible Property" means any furniture, fixtures, leasehold
improvements, vehicles, office equipment, computer equipment, other equipment,
machinery, tools, forms, supplies or other tangible personal property of any
nature.
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<PAGE>
1.23. "Tax" means (a) 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 of any
nature; (b) any foreign, federal, state or local organization fee, qualification
fee, annual report fee, filing fee, occupation fee, assessment, sewer rent or
other fee or charge of any nature; or (c) any deficiency, interest or penalty
imposed with respect to any of the foregoing.
Section 2: The Merger
Subject to the terms and conditions of this Agreement and the Plan, Newco
shall be consolidated and merged with and into MACESS (the "Surviving
Corporation") in accordance with the provisions of this Agreement and the
provisions of the Plan. The closing of the Merger and the other Transactions
shall take place on the Closing Date (as defined in Section 11, 11.1) and shall
be effective on the Effective Date (as defined in Section 11, 11.1).
Section 3: Representations of MACESS and Principals
Knowing that SunGard and Newco rely thereon, MACESS and the Principals,
represent and warrant, with liability to be allocated in accordance with Section
15.5, to SunGard and Newco as of the date of this Agreement, and covenant with
SunGard and Newco, as follows:
3.1. Organization. MACESS is a corporation duly organized, validly
existing and in good standing under the Laws of the State of Alabama. MACESS
possesses the full corporate power and authority to own its Assets, conduct its
business as and where presently conducted, and enter into and perform this
Agreement. MACESS has no employees residing or offices located outside of the
State of Alabama. MACESS does not own any securities of any corporation or any
other interest in any Person, except as set forth on Schedule 3.1. MACESS does
not have any predecessors. Schedule 3.1 states, for MACESS (a) its exact legal
name; (b) its jurisdiction and date of formation; (c) its federal employer
identification number; (d) its headquarters address, telephone number and
facsimile number; (e) its directors and officers, indicating all current
title(s) of each individual; (f) its registered agent and/or office in its
jurisdiction of formation (if applicable); (g) all fictitious, assumed or other
names of any type that are registered or used by it or under which it has done
business at any time since January 1, 1990; and (h) any name changes,
recapitalizations, mergers, reorganizations or similar events since its date of
formation. Accurate and complete copies of articles or certificate of
incorporation, bylaws and other organization and related documents, each as
amended to date, and all Contracts relating to the acquisition of MACESS (or its
affiliates or predecessors) have been delivered to SunGard.
3.2. Effect of Agreement. MACESS' execution, delivery and
performance of this Agreement, and its consummation of the transactions
contemplated by this Agreement, have been duly authorized by all necessary
corporate actions by its board of directors and stockholders and do not
constitute a violation of or default under its charter, bylaws and/or other
organizational documents. For MACESS, its execution, delivery and performance of
this Agreement, and its consummation of the transactions contemplated by this
Agreement, (a) except as set forth on Schedule 3.2, do not constitute a default
or breach (immediately or
-5-
<PAGE>
after the giving of notice, passage of time or both) under any Contract to which
it is a party or by which it is bound, (b) do not constitute a violation of any
Law (as defined in Section 1.14) or Judgment (as defined in Section 1.13) that
is applicable to it or to the business or Assets of MACESS, or to the
transactions contemplated by this Agreement, (c) except as set forth on Schedule
3.2, do not accelerate or otherwise modify any Obligation (as defined in Section
1.15) of MACESS, (d) do not result in the creation of any Encumbrance (as
defined in Section 1.8) upon, or give to any third party any interest in, any of
the business or Assets of MACESS, or any of the capital stock of MACESS, except
as contemplated by this Agreement and except for restrictions generally imposed
on transfer under federal and state securities Laws, and (e) except as stated on
Schedule 3.2 and except for the filing of the Certificate of Merger with the
proper officials of the State of Alabama, do not require the Consent (as defined
in Section 1.4) of any Person (as defined in Section 1.17). This Agreement
constitutes the valid and legally binding agreement of MACESS enforceable
against MACESS in accordance with its terms. A certified copy of the
resolutions duly adopted by the board of directors of MACESS authorizing MACESS
to execute, deliver and perform this Agreement and the Plan, are attached to
Schedule 3.2.
3.3. Capital Stock and Ownership. The authorized capital stock of
MACESS ("MACESS Stock") consists of: (i) 1,500,000 shares of voting common
stock, $.002 par value per share, of which 1,430,100 shares are issued and
outstanding, and 15,500 shares are held in treasury, (ii) 6,000,000 shares of
Class A non-voting common stock, $.002 par value per share, of which 5,720,400
are issued and outstanding, and 62,000 shares are held in treasury. Schedule
3.3A is an accurate and complete list of (a) the full legal names of all of the
Principals and all other stockholders of MACESS, (b) the addresses of their
respective current principal residences, (c) their social security numbers or
federal tax identification numbers, and (d) the numbers of and type of shares of
MACESS Stock owned of record by them and the certificate numbers of the stock
certificates representing such shares. MACESS has not ever authorized, offered,
sold or issued any securities other than ordinary shares of common stock and the
Class A non-voting common stock described in this Section. Except as described
on Schedule 3.3A, there are no other record or beneficial owners of any shares
of capital stock of MACESS. Except for the shares of MACESS Stock listed on
Schedule 3.3A, there are no other issued or outstanding shares of capital stock
of MACESS. Except as set forth on Schedule 3.3A, all of the issued and
outstanding shares of MACESS Stock have been duly authorized and validly issued,
and are fully paid and nonassessable, with no liability attaching to the
ownership thereof. All offerings, sales and issuances by MACESS of any shares
of capital stock were conducted in compliance with all applicable federal and
state securities Laws and all applicable state corporation Laws. Schedule 3.3B
is an accurate and complete list of all options granted by MACESS including the
full legal names of all of the holders, the addresses of their respective
current principal residences, their social security numbers, the number of
options granted, the date of grant, the exercise price, and whether or not such
options have vested as of August 31, 1995. Schedule 3.3C is an accurate and
complete list of all warrants issued by MACESS including the full legal names of
all of the holders, the addresses of their respective current principal
residences, their social security numbers or tax identification numbers, the
number of warrants issued and the exercise price. All options granted and
warrants issued have been duly authorized. Attached to Schedule 3.3B and 3.3C,
respectively, are complete and accurate copies of all options plans and all
warrants. Except for this Agreement or as described in any of Schedules 3.3A,
3.3B and 3.3C, there are no outstanding options, puts, calls, warrants,
subscriptions, stock appreciation rights, phantom stock, or other Contracts or
Contract Rights relating to the offering, sale, issuance, redemption or
disposition of any shares of capital stock, or other securities of
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<PAGE>
MACESS. Upon the consummation of the Merger, SunGard shall have good and
marketable title to all of the issued and outstanding capital stock of the
Surviving Corporation, free and clear of any Encumbrance.
3.4. Financial and Corporate Records. Except as set out in Schedule
3.6, the books and records of MACESS are and have been properly prepared and
maintained in accordance with GAAP (as defined in Section 1.9), and such books
and records fairly and accurately reflect in all material respects all of the
Assets and Obligations of MACESS and all Contracts and other transactions to
which MACESS is or was a party or by which MACESS or MACESS' Business or MACESS'
Assets is or was affected. Accurate and complete copies of the contents of the
minute books and stock books of MACESS have been delivered to SunGard. Such
minute books and stock books include (a) minutes of all meetings of the
stockholders, board of directors and any committees of the board of directors at
which any material action was taken, which minutes accurately record all actions
taken at such meetings, (b) accurate and complete written statements of all
actions taken by the stockholders, board of directors and any committees of the
board of directors without a meeting, and (c) accurate and complete records of
the issuance, transfer and cancellation of all shares of capital stock and other
securities since the date of incorporation. Neither the stockholders, board of
directors or any committee of the board has taken any material action other than
those actions reflected in the records referenced in clauses (a) and (b) of the
preceding sentence. Schedule 3.4 is an accurate and complete list of all bank
accounts, other accounts, certificates of deposit, marketable securities, other
investments, safe deposit boxes, lock boxes and safes of MACESS, and the names
of all officers, employees or other individuals who have access thereto or are
authorized to make withdrawals therefrom or dispositions thereof.
3.5. Compliance with Law. Except as set forth on Schedule 3.5,
MACESS' operations, the conduct of MACESS' Business as and where such business
has been or presently is conducted, and the ownership, possession and use of
MACESS' Assets have complied and currently do comply with all Laws (as defined
in Section 1.14) applicable to MACESS, its operations, business, Assets or
Obligations. Except as set forth on Schedule 3.5, to the knowledge of MACESS and
each of the Principals, MACESS has obtained and holds all Permits (as defined in
Section 1.16) required for the lawful operation of its business as and where
such business is presently conducted. All Permits held by MACESS are listed on
Schedule 3.5, and copies of such Permits have been delivered to SunGard and
Newco .
3.6. Financial Statements. MACESS' fiscal year ends on December 31.
Schedule 3.6A includes accurate and complete copies of the following financial
statements ("Audited Financial Statements"): (a) a balance sheet of MACESS as of
December 31, 1994 and December 31, 1993; and (b) statements of income,
statements of changes in stockholders' equity, and statements of cash flows for
the periods from January 1, 1994 to December 31, 1994, and January 1, 1993 to
December 31, 1993, and notes thereto. Schedule 3.6B includes accurate and
complete copies of all the following unaudited financial statements: ("Unaudited
Financial Statements") an unaudited balance sheet of MACESS as of August 31,
1995 ("August 1995 Balance Sheet") and related unaudited financial statements,
included but not limited to, unaudited statements of income, prepared by the
management of MACESS on an ongoing basis since the Audited Financial Statements.
All of the Audited Financial Statements were (x) prepared in accordance with
GAAP; (y) fairly present the financial condition and results of operations of
MACESS as of the dates and for the periods indicated; and (z) were audited by
Ernst & Young LLP, whose report thereon is without qualification or explanatory
paragraphs; provided, however, the method of revenue
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<PAGE>
recognition is set out in footnote number 2 (Accounting Policies) to the Audited
Financial Statements and is further explained on Schedule 3.6C. All of the
Unaudited Financial Statements were prepared in accordance with GAAP, but
exclude footnote disclosures, statements of changes in stockholder's equity,
statements of cash flows, and, except for the August 1995 Balance Sheet, normal
year-end adjustments. The Unaudited Financial Statements present fairly, in all
material respects, the financial position of MACESS as of August 31, 1995 and
the results of operations for the eight month period then ended. Set out on
Schedule 3.6C is an explanation of the generally accepted accounting policies
used by MACESS in connection with: (i) revenue recognition, (ii) capitalization
and amortization of developed Software, and (iii) fixed asset depreciation. The
Principals shall not be liable to SunGard in connection with any adverse change
in MACESS' financial statement or condition caused by a change in an accounting
policy of MACESS made after the Effective Date provided that such old accounting
policy of MACESS was in accordance with GAAP. The Principals shall be
responsible for any net loss, cost, expense or taxes resulting from any errors
or omissions in the application of such policies that may have been incurred on
or before the Effective Date, provided, however, that such amount shall be
reduced by any timing difference benefit received in future periods.
3.7. Assets. Schedule 3.7A includes detailed lists of all Assets of
MACESS reflected on the August 1995 Balance Sheet, itemized by balance sheet
account, including (a) Cash Assets, itemized by bank or other account, showing
cost and market value if different from cost; (b) Accounts Receivable, showing
customer names, individual invoice dates, individual invoice amounts and
allowances for doubtful accounts, or, in the case of earned but not billed
receivables, customer names and individual dates on which the receivables are
billable; (c) other current Assets, itemized by category and with appropriate
explanation; (d) Tangible Property, grouped as to type, showing cost,
accumulated depreciation and net book value; and (e) Software and Intangibles,
showing cost or amount capitalized, accumulated amortization and net book value.
MACESS has good and marketable title to all of its Assets and has the right to
transfer all rights, title and interest in such Assets, free and clear of any
Encumbrance (as defined in Section 1.8). Except for the Assets listed on
Schedule 3.7B, no other Assets are necessary to operate MACESS' Business.
3.8. MACESS' Obligations. Schedule 3.8 includes detailed lists of
all Obligations of MACESS reflected on the August 1995 Balance Sheet, itemized
by balance sheet account, and with aggregate net balances equal to the balances
on the August 1995 Balance Sheet, including (a) accounts payable, (b) accrued
expenses and reserves, itemized by category and with appropriate explanation,
and (c) other current and long-term liabilities. Except as described on Schedule
3.8, none of MACESS' Obligations are guaranteed by any Person.
3.9. Operations Since August 31, 1995. Except as set forth on
Schedule 3.9, from August 31, 1995 to the date of this Agreement:
(a) Except in the ordinary course of its business consistent with its
past practices, MACESS has not (a) created or assumed any Encumbrance upon any
of its business or Assets, (b) incurred any Obligation, (c) made any loan or
advance to any Person; (d) assumed, guaranteed or otherwise become liable for
any Obligation of any Person; (e) committed for any capital expenditure; (f)
purchased, leased, sold, abandoned or otherwise acquired or disposed of any
business or Assets; (g) waived any right or canceled any debt or claim; (h)
assumed or entered into any Contract other than this Agreement; (i) increased,
or
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authorized an increase in, the compensation or benefits paid or provided to any
of its directors, officers, employees, salesmen, agents or representatives; or
(j) done anything else outside the ordinary course of business, whether or not
specifically described in any of the foregoing clauses which would have a
material adverse effect on its business, Assets or financial condition.
(b) Even in the ordinary course of its business consistent with its
past practices, MACESS has not incurred any Obligation, made any loan to any
Person, acquired or disposed of any business or Assets, entered into any
Contract (other than customer contracts and other than the acquisition of
computer hardware and software directly related to customer contracts) or other
transaction, or done any of the other things described in Section 3.9(a),
involving an amount exceeding $25,000 in any single case or $100,000 in the
aggregate.
(c) There has been no material adverse change or material casualty
loss affecting MACESS, MACESS' Business, Assets or financial condition, and
there has been no material adverse change in the financial performance of
MACESS.
(d) Since August 31, 1995 (a) MACESS has not incurred any outstanding
bank debt or notes payable, (b) MACESS has not incurred any outstanding
indebtedness to any current or former stockholder, director or officer of MACESS
(excluding compensation and benefits due to such Persons in their capacities as
employees, officers or directors of MACESS and excluding indebtedness described
on Schedule 3.22) or to any affiliate (as such term is defined for purposes of
the Securities Exchange Act of 1934, as amended ("1934 Act")) of MACESS or any
of its stockholders, directors or officers, (c)except as set forth on Schedule
3.9, MACESS has not had any Obligation for any overdrafts with respect to any of
its bank accounts or other Cash Assets, and (d) no dividend or other
distribution of Cash Assets or other Assets has been made by MACESS to or on
behalf of any of the Principals (excluding compensation and benefits due to such
Persons in their capacities as employees, officers or directors of MACESS). All
deferred bonuses and compensation due from MACESS to the Principals or other
employees or agents of MACESS have been fully paid or accrued on MACESS' August
1995 Balance Sheet.
3.10. Accounts Receivable. All Accounts Receivable listed in
Schedule 3.7 arose in the ordinary course of business and are proper and valid
accounts receivable. To the knowledge of the Principals, there are no refunds,
discounts, rights of setoff or assignment affecting any such Accounts
Receivable. The accounts receivable included in Schedule 3.7 are included
utilizing the method of revenue recognition described on Schedule 3.6C.
3.11. Tangible Property. MACESS has good and marketable title to all
of its Tangible Property, free and clear of any Encumbrances. Except as set
forth on Schedule 3.11, all of MACESS' Tangible Property is located at MACESS'
offices or facilities, and MACESS has the full and unqualified right to require
the immediate return of any of its Tangible Property which is not located at
MACESS' offices or facilities. All Tangible Property used by MACESS is in good
condition, ordinary wear and tear excepted, and is sufficient for MACESS'
operations as presently conducted.
3.12. Real Property. MACESS does not own any Real Property (as
defined in Section 1.19). Schedule 3.12 is a detailed list of all Real Property
leased by MACESS, showing location, rental cost and landlord. All Real Property
under lease to or otherwise used by MACESS is in good condition, ordinary wear
and tear excepted, and is sufficient for the
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current operations of MACESS. No such Real Property, nor the occupancy,
maintenance or use thereof, is in violation of, or breach or default under, any
Contract or Law, and no notice from any lessor, governmental body or other
Person has been received by MACESS or any of the Principals or served upon any
such Real Property claiming any violation of, or breach or default under, any
Contract or Law, or requiring or calling attention to the need for any work,
repairs, construction, alteration or installations. MACESS has not placed or
caused to be placed, and neither MACESS nor any of the Principals has any
knowledge or belief that there were or are any Hazardous Substances on or under
any of MACESS' Real Property.
3.13. Software and Intangibles. Schedule 3.13 is an accurate and
complete list and description of all Software (as defined in Section 1.21) and
Intangibles (as defined in Section 1.12) owned, marketed, licensed, used or
under development by MACESS, and, in the case of Software, a product
description, the language in which it is written and the type of hardware
platform(s) on which it runs. Except for general business third party Software
which is readily, commercially available and is not embedded in or necessary to
run any of the Software products of MACESS, no other Software is required to
operate MACESS' Business. Except as explained on Schedule 3.13, MACESS has good
and marketable title to, and has the full right to use, all of the Software and
Intangibles listed on Schedule 3.13, free and clear of any Encumbrance (as
defined in Section 1.8). No rights of any third party are necessary to market,
license, sell, modify, update, and/or create derivative works for the Software
listed on Schedule 3.13. With respect to the Software listed on Schedule 3.13,
(a) MACESS maintains machine-readable master-reproducible copies, reasonably
complete technical documentation and/or user manuals for the most current
releases or versions thereof and for all earlier releases or versions thereof
currently being supported by MACESS; (b) in each case, the machine-readable copy
substantially conforms to the corresponding source code listing; (c) such
Software is written in the language set forth on Schedule 3.13, for use on the
hardware set forth on Schedule 3.13 with standard operating systems; (d) such
Software can be maintained and modified by reasonably competent MACESS
programmers familiar with such language, hardware and operating systems; and (e)
in each case, the Software operates in accordance with the user manual therefor
without material operating defects. None of the Software or Intangibles listed
on Schedule 3.13, or their respective past or current uses, has violated or
infringed upon, or is violating or infringing upon, any Software, patent,
copyright, trade secret or other Intangible of any Person. MACESS has
adequately maintained all trade secrets and copyrights with respect to the
Software. To the best knowledge of MACESS and each of the Principals, no Person
is violating or infringing upon, or has violated or infringed upon at any time,
any of the Software or Intangibles listed on Schedule 3.13. None of the
Software or Intangibles listed on Schedule 3.13 is owned by or registered in the
name of any current or former owner, stockholder, partner, director, executive,
officer, employee, salesman, agent, customer, representative or contractor of
any of the Principals nor does any such Person have any interest therein or
right thereto, including but not limited to the right to royalty payments.
3.14. Contracts. Schedule 3.14 is an accurate and complete list of
all of the following types of Contracts to which Macess is a party or by which
MACESS is bound (collectively, the "Specified Contracts"), grouped into the
following categories and, where applicable, subdivided by product line or
division: (a) customer Contracts; (b) Contracts for the purchase or lease of
Real Property or otherwise concerning Real Property owned or used by MACESS
including a description of the Real Property; (c) loan agreements, mortgages,
notes, guarantees and other financing Contracts; (d) except for Contracts for a
total commitment of less than $15,000, Contracts for the purchase, lease and/or
maintenance of
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computer equipment and other equipment, Contracts for the purchase, license,
lease and/or maintenance of software under which MACESS is the purchaser,
licensee, lessee or user, and other supplier Contracts; (e) employment,
consulting and sales representative Contracts (excluding Contracts which
constitute Employee Benefit Plans listed on Schedule 3.16, and excluding oral
Contracts with employees for "at will" employment); (f) Contracts under which
any rights in and/or ownership of any Software product of MACESS, any prior
version thereof, or any part of the customer base or business of MACESS was
acquired; and (g) except for Contracts for a total commitment of less than
$15,000, other Contracts (excluding Contracts which constitute Insurance
Policies listed on Schedule 3.20, excluding this Agreement and all other
Contracts entered into between MACESS and SunGard, or among MACESS, SunGard and
other parties in connection herewith). A description of each oral Specified
Contract is included on Schedule 3.14, and copies of each written Specified
Contract have been delivered to SunGard and Newco. Except as set forth on
Schedule 3.14, each of MACESS' license Contracts for its software products is
identical to the form license agreement therefor that is attached as part of
Schedule 3.14, and each of MACESS' maintenance Contracts is identical to the
form maintenance agreement therefor that is attached as part of Schedule 3.14.
With respect to each applicable customer Contract, Schedule 3.14 will include,
as of August 31, 1995, a complete description of all work remaining to be
performed under such Contracts (together with an estimate of the number of
person hours required to complete such work), and all credits granted to, or
other adjustments made for, the customer to be applied against future payments
or purchases. Except as provided on Schedule 3.14, all customers have accepted
the Software described in their respective customer Contracts. Except as set
forth on Schedule 3.14, with respect to each of the Specified Contracts, MACESS
neither is in default thereunder nor would be in default thereunder with the
passage of time, the giving of notice of both. Except as set forth on Schedule
3.14, to the best knowledge and belief of MACESS and each of the Principals,
none of the other parties to any Specified Contract is in default thereunder or
would be in default thereunder with the passage of time, the giving of notice or
both. Except as set forth on Schedule 3.14, MACESS has not given or received
any notice of default or notice of termination with respect to any Specified
Contract, and each Specified Contract is in full force and effect in accordance
with its terms. The Specified Contracts are all the Contracts necessary and
sufficient to operate MACESS' Business. Except as set forth on Schedule 3.14,
there are no currently outstanding proposals or offers submitted by MACESS to
any customer, prospect, supplier or other Person which, if accepted, would
result in a legally binding Contract of MACESS involving an amount or commitment
exceeding $25,000 in any single case or an aggregate amount or commitment
exceeding $100,000 in the aggregate.
3.15. Employees and Independent Contractors. Schedule 3.15A is a
list of all of MACESS' employees and (a) their titles or responsibilities; (b)
their social security numbers and principal residence address; (c) their dates
of hire; (d) their current salaries or wages; (e) their last compensation
changes and the dates on which such changes were made; (f) any specific bonus,
commission or incentive plans or agreements for or with them; and (g) any
outstanding loans or advances made to them. MACESS has delivered to SunGard and
Newco an accurate and complete list of all bonuses, commissions and incentives
paid to the employees listed on Schedule 3.15A at any time during the past
twelve months. Schedule 3.15B is a list of all sales representatives and
independent contractors engaged by MACESS, their tax identification numbers and
states of residence, their payment arrangements (if not set forth in a Contract
listed or described on Schedule 3.14), and a brief description of their jobs or
projects currently in progress. Except as limited by any employment Contracts
listed on Schedule 3.14 and except for any limitations of general application
which may be imposed
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under applicable employment Laws, MACESS has the right to terminate the
employment of each of its employees at will and to terminate the engagement of
any of its independent contractors without payment to such employee or
independent contractor other than for services rendered through termination and
without incurring any penalty or liability other than liability for severance
pay in accordance with MACESS' disclosed severance pay policy. MACESS is in
full compliance with all Laws respecting employment practices. MACESS has never
been a party to or bound by any union or collective bargaining Contract, nor is
any such Contract currently in effect or being negotiated by or on behalf of
MACESS. Since January 1, 1990, MACESS has not experienced any labor problem
that was or is material to MACESS. MACESS' relations with its employees are
currently on a good and normal basis. Except as indicated on Schedule 3.15A,
since January 1, 1994, no employee of MACESS having an annual salary of $40,000
or more has indicated an intention to terminate or has terminated his or her
employment with MACESS. Neither MACESS nor any of the Principals has any
knowledge or belief that the transactions contemplated by this Agreement will
adversely affect relations with MACESS' employees.
3.16. Employee Benefit Plans. Except as set forth on Schedule 3.16,
MACESS does not sponsor, maintain or contribute to, or have any ongoing
Obligations with respect to, any Employee Benefit Plan (as defined in
Section 1.7). Schedule 3.16 includes an accurate description of each of MACESS'
Employee Benefit Plans that is currently in effect or as to which MACESS has any
ongoing Obligation, which description indicates, generically, the employees
covered or affected thereby and all of MACESS' Obligations thereunder. Copies
of all Employee Benefit Plans described on Schedule 3.16 and all written
materials used by MACESS to describe its Employee Benefit Plans to employees
have been delivered to SunGard and Newco. Except as set forth on Schedule 3.16,
MACESS is not a party to any Contract to create any additional Employee Benefit
Plan or to continue, modify, change or terminate any of its current Employee
Benefit Plans. MACESS has no responsibility or liability with respect to a
layoff or other employment termination except as described in its severance
policies, a copy of which is attached to Schedule 3.16. If permitted or
required by applicable Law, MACESS has properly submitted, or intends to
properly submit, all Employee Benefit Plans described on Schedule 3.16, for the
purpose of meeting the applicable requirements of ERISA and/or the Internal
Revenue Code of 1986, as amended ("Code"), to the Internal Revenue Service
("IRS") for its approval within the time prescribed therefor. Copies of all
favorable determination letters from the IRS, the most recent annual returns on
Form 5500 and the most current actuarial or valuation reports (as applicable)
for all Employee Benefit Plans described on Schedule 3.16, have been delivered
to SunGard and Newco. Each such valuation report correctly shows the value of
the assets in the fund as of the date thereof, the total accrued and vested
liabilities, all of MACESS' contributions, and the assumptions on which the
calculations are based. With respect to each Employee Benefit Plan described on
Schedule 3.16, (a) MACESS has made all payments required to be made by it to
date, has accrued all payments due but not yet payable as of the date of this
Agreement in accordance with GAAP (as defined in Section 1.9, and shall have
made on or before the Effective Date all payments due as of the Effective Date;
(b) MACESS has operated and currently operates such plan in compliance with the
plan documents and to the knowledge of MACESS and the Principals all applicable
Laws, including without limitation ERISA and the Code (including, but not
limited to, Section 4980B thereof) and the regulations thereunder; (c) there has
not been any Reportable Event (as defined in ERISA); (d) there has not been any
event described in Section 4068(f) of ERISA; (e) there has not been any
violation of the reporting and disclosure provisions of the Code and ERISA; (f)
there has not been any Prohibited Transaction (as defined in ERISA or the Code);
(g) there has not been any violation of Section 404, 406 or 407
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of ERISA; and (h) there has not been any termination or partial termination of
such plan (including, but not limited to, any termination or partial termination
attributable to the transactions contemplated by this Agreement). There are no
circumstances arising out of MACESS' sponsorship of any Employee Benefit Plan
that will result in MACESS having any Obligations with respect thereto, other
than Obligations for contributions, benefit payments, administrative costs and
liabilities incurred in the ordinary course of business consistent with past
practices. There will be no Obligations of MACESS under Title IV of ERISA if any
of its Employee Benefit Plans are terminated as of the Effective Date. MACESS
has not incurred, and will not incur, any Obligation to the Pension Benefit
Guaranty Corporation (or any successor thereto), including, but not limited to,
any Obligation under Section 4063 or 4064 of ERISA. MACESS has not incurred, and
will not incur, any withdrawal liability, and MACESS does not have, and will not
have, any contingent withdrawal liability, to any multiemployer plan under
ERISA, as amended by the Multiemployer Pension Plan Amendments Act of 1980.
There has never been in existence, and there currently does not exist, any
Employee Pension Benefit Plan (as defined in Section 3(2) of ERISA) involving
MACESS that is subject to the provisions of Title IV of ERISA, or any such Plan
that is subject to the funding requirements of Section 412 of the Code or
Sections 301 et seq. of ERISA. To the knowledge of MACESS and the Principals, no
event has occurred, and no circumstances currently exist, that do or will result
in any liability under ERISA or the Code in connection with any Employee Pension
Benefit Plan that has been established, maintained or contributed to by MACESS
or any other entity or entities which, together with MACESS, constitute elements
of either a controlled group of corporations (within the meaning of Section
414(b) of the Code), a group of trades or businesses under common control
(within the meaning of Section 414(c) of the Code or Section 4001 of ERISA), 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.
3.17. Customers, Prospects and Suppliers. All customers of MACESS
have signed a Contract and are listed in the list of customers included as part
of Schedule 3.14. Schedule 3.17 is a complete list of all current active
prospects and material suppliers of MACESS. Except as set forth on Schedule
3.17, since January 1, 1992, none of MACESS' customers or suppliers has given
notice or otherwise indicated to MACESS that it will or intends to terminate or
not renew its Contract with MACESS before the scheduled expiration date or
otherwise terminate its relationship with MACESS. The relationship of MACESS
with its customers are currently on a good and normal basis and MACESS has not
experienced any material problems with customers or suppliers since January 1,
1992. Neither MACESS nor any of the Principals has any knowledge or belief that
the transactions contemplated by this Agreement will adversely affect relations
with any of MACESS' customers or suppliers. MACESS has delivered to SunGard and
Newco an accurate and complete copy of MACESS' most recent customer surveys.
3.18. Taxes. Schedule 3.18 is an accurate and complete list of all
federal, state, local, foreign and other Tax (as defined in Section 1.23)
returns and reports (including, but not limited to, information returns)
(collectively "Returns") filed by MACESS with respect to its last five (5)
fiscal years. Accurate and complete copies of all federal, state, local and
foreign income and sales tax Returns filed by MACESS with respect to its last
five fiscal years are attached to Schedule 3.18, and accurate and complete
copies of all other Tax Returns listed thereon have been delivered or made
available to SunGard. Except as explained on Schedule 3.18, (a) MACESS has
properly and timely filed all Tax Returns required to be filed by it, all of
which were accurately prepared and completed; (b) MACESS has properly withheld
from payments to its employees, agents, representatives, contractors and
suppliers all
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amounts required by Law to be withheld for Taxes; (c) except as reserved against
on the August 1995 Balance Sheet in accordance with GAAP, MACESS has paid all
amounts for Taxes required to be paid by it except for current Taxes which are
not yet due or Taxes which are being contested in good faith (as disclosed on
Schedule 3.18) by appropriate proceedings diligently prosecuted, provided that,
in either case, adequate reserves therefor have been established in accordance
with GAAP; (d) except as set forth on Schedule 3.18(d), no audit of MACESS by
any governmental taxing authority has ever been conducted, or is currently
pending or, to the knowledge of MACESS or any of the Principals, threatened; (e)
no notice of any proposed Tax audit, or of any Tax deficiency or adjustment, has
been received by MACESS, and there is no reasonable basis for any Tax deficiency
or adjustment to be assessed against MACESS; and (f) there are no agreements or
waivers currently in effect that provide for an extension of time for the
assessment of any tax against MACESS.
3.19. Proceedings and Judgments. Except as described on Schedule
3.19, (a) no Proceeding (as defined in Section 1.18) is currently pending or
threatened in writing, nor has any Proceeding occurred at any time since January
1, 1990, to which MACESS is or was a party, or by which MACESS or any of its
Assets or business is or was affected; (b) no Judgment (as defined in Section
1.13) is currently outstanding, nor has any Judgment been outstanding at any
time since January 1, 1990, against MACESS, or by which MACESS or any of its
Assets or business is or was affected; and (c) no breach of contract, breach of
warranty, tort, negligence, infringement, product liability, discrimination,
wrongful discharge or other claim of any nature has been asserted or threatened
in writing by or against MACESS at any time since January 1, 1990, and there is
no basis for any such claim. As to each matter described on Schedule 3.19,
accurate and complete copies of all pertinent pleadings, judgments, orders,
correspondence and other legal documents have been delivered to SunGard and
Newco.
3.20. Insurance. Schedule 3.20 is an accurate and complete list and
description of all Insurance Policies (as defined in Section 1.11) currently
owned or maintained by MACESS (excluding Insurance Policies that constitute
Employee Benefit Plans described on Schedule 3.16) and all liability and errors
and omissions Insurance Policies owned or maintained by MACESS and/or any of its
predecessors at any time since January 1, 1990. Except as indicated on Schedule
3.20, all such Insurance Policies are or were on an "occurrence" rather than a
"claims made" basis. MACESS has not received notice of cancellation with
respect to any such current Insurance Policy, and there is no basis for the
insurer thereunder to terminate any such current Insurance Policy. Except as
indicated on Schedule 3.20, accurate and complete copies of all Insurance
Policies described on Schedule 3.20 have been delivered to SunGard and Newco.
Each such Insurance Policy is or was in full force and effect during the
period(s) of coverage indicated on Schedule 1.11. Except as described on
Schedule 3.20, there are no claims that are pending under any of the Insurance
Policies described on Schedule 3.20.
3.21. Questionable Payments. None of the Principals, nor any of
MACESS' current or former partners, owners, stockholders, directors, executives,
officers, representatives, agents or employees (when acting in such capacity or
otherwise on behalf of MACESS or any of its predecessors), (a) has used or is
using any corporate funds for any illegal contributions, gifts, entertainment or
other unlawful expenses relating to political activity; (b) has used or is using
any corporate funds for any direct or indirect unlawful payments to any foreign
or domestic government officials or employees; (c) has violated or is violating
any provision of the Foreign Corrupt Practices Act of 1977, except where such
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violation was not, is not and will not be material to MACESS; (d) has
established or maintained, or is maintaining, any unlawful or unrecorded fund of
corporate monies or other properties; (e) has made, at any time since January 1,
1990, any false or fictitious entries on the books and records of MACESS; (f)
has made any bribe, rebate, payoff, influence payment, kickback or other
unlawful payment of any nature using corporate funds or otherwise on behalf of
MACESS; or (g) made any material favor or gift that is not deductible for
federal income tax purposes using corporate funds or otherwise on behalf of
MACESS.
3.22. Related Party Transactions. Except as described on Schedule
3.22 and except for any employment Contracts listed on Schedule 3.14, there are
no real estate leases, personal property leases, loans, guarantees, Contracts,
transactions, understandings or other arrangements of any nature between MACESS
and any current or former partners, owners, stockholders, director, executive,
officer or controlling Person of MACESS (or any of their respective
predecessors) or any other Person affiliated with MACESS (or any of their
respective predecessors).
3.23. Brokerage Fees. Except as set forth on Schedule 3.23, no
Person acting on behalf of MACESS is or shall be entitled to any brokerage or
finder's fee in connection with the transactions contemplated by this Agreement.
3.24. Acquisition Proposals. Since the date hereof, MACESS has not,
directly or indirectly through an authorized agent or representative, solicited,
initiated or responded to any inquiries or proposals from, or participated in
any discussions or negotiations with, or provided any non-public information to,
any Person or group (other than SunGard and its officers, employees,
representatives and agents) concerning sale of all or substantially all of the
Assets of MACESS, any sale of shares of capital stock, or other securities of
MACESS, or any merger, consolidation or similar transaction involving MACESS.
3.25. Full Disclosure. No representation or warranty made in this
Section 3 or pursuant hereto (a) contains any untrue statement of any fact; or
(b) omits to state any fact that is necessary to make the statements made, in
the context in which made, not false or misleading in any respect. The copies
of documents attached as Schedules to this Agreement or otherwise delivered or
made available to SunGard and Newco in connection with the transactions
contemplated by this Agreement, are accurate and complete, and are not missing
any amendments, modifications, correspondence or other related papers which
would be pertinent to SunGard's or Newco's understanding thereof in any respect.
Section 4: Several Representations of Principals
Knowing that SunGard and Newco rely thereon, each of the Principals
severally represents and warrants to SunGard and Newco as of the date of this
Agreement, and covenants with SunGard and Newco, as follows:
4.1. Ownership of Shares. Such Principal (a) is the sole legal and
beneficial owner of all shares of MACESS' Stock held by him of record, as
indicated on Schedule 3.3; (b) has good and marketable title to his shares of
MACESS Stock (as defined below), except as set forth on Schedule 4.1, free and
clear of any Encumbrance (as defined in Section 1.8); and (c) except as set
forth on Schedule 4.1, has the full legal right to transfer good and marketable
title to such shares free and clear of any Encumbrance.
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4.2. Effect of Agreement. Such Principal's execution, delivery and
performance of this Agreement, and his consummation of the transactions
contemplated by this Agreement (a) do not constitute a default or breach
(immediately or after the giving of notice, passage of time or both) under any
Contract to which he is a party or by which he is bound, (b) do not constitute a
violation of any Law (as defined in Section 1.14) or Judgment (as defined in
Section 1.13) that is applicable to him or to the business or Assets of MACESS,
or to the transactions contemplated by this Agreement, (c) do not accelerate or
otherwise modify any Obligation (as defined in Section 1.15) of MACESS, (d) do
not result in the creation of any Encumbrance (as defined in Section 1.8) upon,
or give to any third party any interest in, any of the business or Assets of
MACESS, or any of the capital stock of MACESS, except as contemplated by this
Agreement and except for restrictions generally imposed on transfer under
federal and state securities Laws, and (e) except as stated on Schedule 3.2 and
except for the filing of the Certificate of Merger with the proper officials of
the State of Alabama, do not require the Consent (as defined in Section 1.4) of
any Person (as defined in Section 1.17). This Agreement constitutes the valid
and legally binding agreement of such Principal, enforceable against him in
accordance with its terms.
4.3. Acquisition Proposals. Since the date hereof, such Principal has
not, directly or indirectly through an authorized agent or representative,
solicited, initiated or responded to any inquiries or proposals from, or
participated in any discussions or negotiations with, or provided any non-public
information to, any Person or group (other than SunGard and its officers,
employees, representatives and agents) concerning sale of all or substantially
all of the Assets of MACESS, any sale of shares of capital stock, or other
securities of MACESS, or any merger, consolidation or similar transaction
involving MACESS.
4.4. Brokerage Fees. Except as set forth on Schedule 4.4, no Person
acting on behalf of such Principal is or shall be entitled to any brokerage or
finder's fee in connection with the transactions contemplated by this Agreement.
4.5. Full Disclosure. To the best knowledge of such Principal, no
representation or warranty made by such Principal in this Section 4 contains
any untrue statement of any material fact, or omits to state any fact that is
necessary to make the statements made, in the context in which made, not false
or misleading in any material respect. To the best knowledge of such Principal,
there is no fact (excluding facts about general economic or market conditions)
that has not been disclosed to SunGard and Newco in the Schedules referenced in
this Agreement or otherwise in writing that has, or which such Principal
believes will have, (a) a material adverse effect on MACESS' business, MACESS'
Assets taken as a whole or MACESS's financial condition, or (b) a material
adverse effect on the ability of such Principal to perform his obligations under
this Agreement.
Section 5: Representations of SunGard and Newco
Knowing that the Principals rely thereon, SunGard and Newco, jointly and
severally represent and warrant to MACESS and the Principals as of the date of
this Agreement, and covenant with MACESS and the Principals, as follows:
5.1. Organization. SunGard and Newco each is a corporation that is duly
organized, validly existing and in good standing under the Laws (as defined in
Section 1.14) of the States of Delaware and Alabama, respectively. SunGard and
Newco each possesses the full corporate power and authority to own its Assets,
conduct its business as and where
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such business is presently conducted, and enter into this Agreement and the
Plan. Newco is a wholly owned subsidiary of SunGard.
5.2. Agreement. Each of SunGard's and Newco's execution, delivery and
performance of this Agreement, and its consummation of the transactions
contemplated by this Agreement, (a) have been duly authorized by all necessary
corporate actions by their respective boards of directors, and in the case of
Newco, its sole stockholder; (b) do not constitute a violation of or default
under their respective charters or bylaws; (c) do not constitute a default or
breach (immediately or after the giving of notice, passage of time or both)
under any Contract to which SunGard or Newco is a party or by which SunGard or
Newco is bound; (d) do not constitute a violation of any Law (as defined in
Section 1.14) or Judgment (as defined in Section 1.13) that is applicable to it
or to their respective businesses or Assets, or to the transactions contemplated
by this Agreement; and (e) except as stated on Schedule 5.2, do not require the
Consent (as defined in Section 1.4) of any Person (as defined in Section 1.17).
This Agreement constitutes the valid and legally binding agreement of each of
SunGard and Newco, enforceable against each of them in accordance with its
terms.
5.3. SunGard's Stock. The authorized capital stock of SunGard is
60,000,000 shares of common stock, $0.01 par value per share ("SunGard Stock"),
of which approximately 18,907,417 shares were issued and outstanding as of June
30, 1995 (such number of issued and outstanding shares is not adjusted for the
two-for-one stock spit for which the payment date was July 7, 1995), and
5,000,000 shares of preferred stock, $0.01 par value per share, none of which is
issued or outstanding. The shares of SunGard Stock to be issued as the merger
consideration ("Total SunGard Stock Issued"): (a) when issued, shall be validly
authorized, validly issued, fully paid and nonassessable; (b) constitute part of
the class of securities that has been registered under the 1934 Act; and (c)
will not be issued in violation of the preemptive right of any stockholder of
SunGard.
5.4. SEC Filings. SunGard has provided to Principals accurate and
complete copies of the following reports and documents filed by SunGard with the
SEC ("SEC Filings"): (a) SunGard's Annual Report on Form 10-K for the year ended
December 31, 1994; (b) SunGard's 1994 Annual Report to Stockholders; (c)
SunGard's April 3, 1995 Proxy Statement; and (d) SunGard's Quarterly Report on
Form 10-Q for the quarters ended March 31, 1995 and June 30, 1995. As of their
respective dates, none of the SEC Filings contained any untrue statement of any
material fact or omitted any material fact required to be stated therein or
necessary to make the statements therein not misleading, except to the extent
that any such statement or omission has been modified or superseded in a SEC
Filing subsequently filed with the SEC. The SEC Filings comply with Federal
securities law.
5.5. Investment Matters. SunGard is acquiring the MACESS Stock for its
own account for investment purposes only and not with a view to, or for sale in
connection with, any resale or distribution thereof.
5.6. Brokerage Fees. Except as set forth on Schedule 5.6, no Person
acting on behalf of SunGard is or shall be entitled to any brokerage or finder's
fee in connection with the transactions contemplated by this Agreement.
5.7. Operations since June 30, 1995. Since June 30, 1995, there has
been no adverse change or casualty loss having a material adverse effect on
SunGard and its
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subsidiaries taken as a whole, or on their businesses, assets or financial
condition taken as a whole, and there has been no material adverse change in
SunGard's and its subsidiaries' financial performance taken as a whole.
Section 6: Securities Filings and Approval of the MACESS Stockholders
6.1. Registration Statement. As promptly as practicable after the
execution of this Agreement, SunGard shall prepare and file such registration
statement (the "Registration Statement") as shall be necessary to register under
the Securities Act of 1933, as amended, ("1933 Act") the shares of SunGard Stock
to be issued and delivered to the Principals in accordance with this Agreement
and the Plan. MACESS and each Principal shall promptly provide to SunGard all
information concerning the business, financial condition and affairs of MACESS
that may be required or reasonably requested by SunGard in connection with the
preparation or filing of the Registration Statement, including without
limitation the financial statements, financial statement schedules and auditor's
consents required to be included therein or filed therewith, and shall otherwise
cooperate and cause their representatives to cooperate with SunGard in the
preparation and filing of the Registration Statement. The parties shall use
their best efforts to cause the Registration Statement to become effective as
soon as practicable and to distribute copies of SunGard's prospectus and MACESS'
information statement contained in such Registration Statement (the "Information
Statement-Prospectus") to the MACESS Stockholders. After the execution of this
Agreement and before the effectiveness of the Registration Statement, and
thereafter until the Closing Date, MACESS and each Principal shall promptly
advise SunGard of any facts that should be set forth in an amendment or
supplement to the Information Statement-Prospectus or the Registration
Statement, and each party shall take all actions that may be necessary to keep
the Registration Statement and the Information Statement-Prospectus current and
effective until the Closing Date. Except with the prior written consent of
SunGard, neither MACESS nor any Principal shall publish any communication, other
than the Information Statement-Prospectus, relating to this Agreement, the Plan
or the Transactions. SunGard shall not be required to maintain the
effectiveness of the Registration Statement or the Information Statement-
Prospectus for the purpose of resale by affiliates of MACESS.
6.2. MACESS Stockholder Approval. As promptly as practicable after
the Registration Statement becomes effective and in accordance with applicable
law, MACESS will duly hold a meeting of its Stockholders ("Stockholders
Meeting") for the purpose of voting on the Merger. MACESS shall not postpone or
adjourn the Stockholders Meeting without the prior written consent of SunGard.
Unless the board of directors of MACESS, in its good faith judgment determines
that it is otherwise required by law, MACESS shall recommend the Merger to the
Stockholders for approval. After the Stockholders shall have approved the
Merger, such approval shall not be revocable. MACESS shall not solicit proxies
from the Stockholders for use at the Stockholders Meeting. Except with the prior
written consent of SunGard, neither MACESS nor any Principal shall distribute
any materials to the Stockholders in connection with the Stockholders Meeting
other than the Information Statement-Prospectus.
6.3. MACESS' and Principals' Representations as to the
Registration Statement. MACESS and the Principals, jointly and severally,
warrant and represent to SunGard and Newco and covenant with SunGard and Newco
that, at the time the Registration Statement shall become effective and at all
times subsequent to effectiveness up to and
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including the Closing Date, the Registration Statement and all amendments or
supplements thereto, with respect to the information therein furnished by
MACESS, any Principal or its or their representatives, (a) will comply in all
material respects with the provisions of the 1933 Act, the 1934 Act and the
respective rules and regulations thereunder, and (b) will not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements contained therein not
misleading. MACESS and the Principals, jointly and severally, warrant and
represent to SunGard and Newco, that all information furnished by MACESS, any
Principal or its or their representatives for use in the filings described in or
contemplated by this Agreement and the Plan shall not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements contained therein not
misleading. MACESS and the Principals shall, jointly and severally, indemnify
and hold harmless SunGard, Newco, each Person who controls SunGard and/or Newco
(within the meaning of Section 15 of the 1933 Act) and SunGard's and Newco's
respective directors, officers and representatives, from and against any and all
losses, claims, liabilities, damages and expenses (including reasonable
attorneys' fees and court costs) that arise out of or are based upon a breach of
any of the warranties, representations and covenants of this Section 6.3.
6.4. SunGard's and Newco's Representations as to Registration
Statement. SunGard and Newco, jointly and severally, warrant and represent to
MACESS and the Principals and covenant with MACESS and the Principals that, at
the time the Registration Statement shall become effective and at all times
subsequent to effectiveness up to and including the Closing Date, the
Registration Statement and all amendments or supplements thereto, with respect
to the information therein furnished by SunGard or its representatives, (a) will
comply in all material respects with the provisions of the 1933 Act, the 1934
Act and the respective rules and regulations thereunder, and (b) will not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements contained
therein not misleading. SunGard and Newco, jointly and severally, warrant and
represent to MACESS and the Principals that all information furnished by SunGard
or its representatives for use in the filings described in or contemplated by
this Agreement and the Plan shall not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements contained therein not misleading. SunGard and Newco,
jointly and severally, shall indemnify and hold harmless MACESS, the Principals
and the directors, officers and representatives of MACESS, from and against any
and all losses, claims, liabilities, damages and expenses (including reasonable
attorneys' fees and court costs) that arise out of or are based upon a breach of
any of the warranties, representations and covenants of this Section 6.4.
6.5. State Securities Filings. SunGard shall make all filings
under applicable state securities laws that are required in connection with the
Transactions. MACESS and each Principal shall cooperate with SunGard and furnish
all information that may be required or reasonably requested by SunGard in
connection with such filings.
Section 7: Certain Obligations of MACESS and Principals Pending Closing
7.1. Conduct of MACESS' Business. Between the date of this
Agreement and the Closing Date, except as disclosed in the Schedules or with the
prior written consent of SunGard:
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(a) MACESS shall, and the Principals shall cause MACESS to, (i)
conduct its business in a diligent manner, (ii) not make any material change in
its business practices, and (iii) use its best efforts to preserve its business
organization intact, keeping available the services of its current officers,
employees, salesmen, agents and representatives, and maintaining the good will
of its customers, suppliers and other Persons having business relations with
MACESS. Each Principal involved in MACESS' daily business operations shall
remain actively involved in MACESS' daily business operations, consistent with
his past practices. MACESS and the Principals shall consult with SunGard as to
the management of MACESS' business and affairs.
(b) Except in the ordinary course of its business consistent with
its past practices, MACESS shall not, and the Principals shall not permit MACESS
to, (i) create or assume any claims, liens or other encumbrances upon any of its
business or assets, (ii) incur any debt, liability or obligation, (iii) make any
loan or advance, (iv) assume, guarantee or otherwise become liable for any debt,
liability or obligation of any third party, (v) commit for any capital
expenditure, (vi) sell, abandon or otherwise dispose of any assets, (vii) waive
any right or cancel any debt or claim, (viii) assume, enter into or modify any
contract other than this Agreement and the Plan (and any other contract
contemplated herein), (ix) increase, or authorize an increase in, the
compensation or benefits paid or provided to any of its directors, officers,
employees, salesmen, agents or representatives, or (x) do anything else outside
the ordinary course of its business consistent with its past practices, whether
or not specifically described in any of the foregoing clauses.
(c) Even in the ordinary course of its business consistent with
its past practices, MACESS shall not, and the Principals shall not permit MACESS
to, borrow or lend any funds, purchase any goods or services, lease any
equipment, incur any debt, liability or obligation, or enter into any contract
(excluding customer contracts and related commitments entered into in the
ordinary course of business consistent with past practices) or other transaction
involving, in any single case, an amount exceeding $25,000 or, in the aggregate,
an amount exceeding $100,000.
(d) MACESS shall not, and the Principals shall not permit MACESS
to, (i) permit or cause a breach or default by it under any of its contracts,
insurance policies, licenses or permits, (ii) adopt or enter into any new
Employee Benefit Plan or modify any existing Employee Benefit Plan, (iii)
participate in any merger, consolidation or reorganization, (iv) begin to engage
in any new type of business, (v) acquire the business or any bulk assets of any
other Person, (vi) completely or partially liquidate or dissolve, or (vii)
terminate any material part of its business.
(e) MACESS shall, and the Principals shall cause MACESS to, (i)
maintain its real estate and fixed personal property assets in good condition,
(ii) maintain its insurance policies in full force and effect, (iii) repair,
restore or replace any of its assets that is damaged, destroyed, lost or stolen,
(iv) comply with all applicable laws, (v) properly file all tax returns, annual
reports and other returns and reports required to be filed by it, and (vi) fully
pay when due all taxes and fees payable by it.
(f) MACESS shall, and the Principals shall cause MACESS to,
maintain its corporate existence and good standing in its jurisdiction of
incorporation. MACESS shall not, and the Principals shall not permit MACESS to,
amend its charter or bylaws.
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(g) MACESS shall not, and the Principals shall not permit MACESS
to, redeem, retire or purchase, or create, grant or issue any options, warrants
or other Contracts or Contract rights with respect to, any shares of MACESS
Stock, or any other capital stock or other securities of MACESS, or create,
grant or issue any stock options, stock appreciation rights, phantom shares or
other similar rights. Neither MACESS nor the Principals shall permit any sales
of the shares of MACESS Stock.
(h) MACESS shall not nor shall any Principal sell, assign, give,
pledge or otherwise transfer, dispose of or encumber any shares of the MACESS
Stock, or any other capital stock or other securities of MACESS owned or held by
it or him.
(i) MACESS and each Principal shall maintain all shares of the
MACESS Stock owned or held by it or him free and clear of all Encumbrances.
(j) Neither MACESS nor any Principal shall buy, sell or engage in
any other transaction involving SunGard Stock, other securities of SunGard or
any equity interests in SunGard, other than the Merger and the other
Transactions.
(k) Neither MACESS nor any Principal shall enter into any
contract or agreement that commits it or him to take any action or omit to take
any action that would be inconsistent with any of the provisions of this Section
7.1 or any other provisions of this Agreement or the Plan.
7.2. Interim Financial Statements. For each calendar month that
ends between August 31, 1995 and the Closing Date, MACESS shall, and the
Principals shall cause MACESS to, promptly prepare and deliver to SunGard
monthly financial statements, which shall be prepared in accordance with the
principles utilized in preparing the August 1995 Balance Sheet and shall reflect
all adjustments (consisting only of normal recurring adjustments) that are
necessary for a fair presentation of the financial condition of MACESS as of the
end of such month and of the results of operations of MACESS for such month.
7.3. Access to Information. For the purpose of keeping SunGard
informed as to MACESS' financial condition and business operations, between the
date of this Agreement and the Closing Date, MACESS and the Principals shall (a)
permit SunGard and its authorized representatives to have reasonable access to
MACESS' facilities and offices during normal business hours, to observe MACESS'
operations, to meet with MACESS' officers, and MACESS officers will be
responsive to all reasonable requests of SunGard for information.
7.4. Consents. Between the date of this Agreement and the Closing
Date, MACESS and the Principals shall in good faith use their best efforts to
obtain all consents and approvals of all lenders, lessors, vendors, customers
and other Persons necessary to permit the Merger and the other Transactions to
be consummated without violating any loan agreement, lease or other material
contract to which MACESS is a party or by which MACESS is bound, and to give the
notices and make the filings described on Schedule 3.2.
7.5. Acquisition Proposals. Between the date of this Agreement and
the Closing Date, neither MACESS, nor any Principal, nor any officer, employee,
representative or agent of MACESS shall, directly or indirectly, solicit,
initiate, encourage or respond to any inquiries or proposals from, or
participate in any discussions or negotiations with, or provide any non-public
information to, any Person or group (other than SunGard and its officers,
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employees, representatives and agents) concerning any bulk sale of any of
MACESS' assets, any sale of shares of capital stock or other securities of
MACESS, or any merger, consolidation or similar transaction involving MACESS.
MACESS and each Principal shall immediately advise SunGard of, and communicate
to SunGard the terms of, any such inquiry or proposal received by MACESS or any
Principal.
7.6. Advice of Changes. Between the date of this Agreement and the
Closing Date, MACESS and each Principal shall promptly advise SunGard, in
writing, of any fact of which any of them obtains knowledge and that, if
existing or known as of the date of this Agreement, would have been required to
be set forth or disclosed in or pursuant to this Agreement (it being understood
that such advice shall not be deemed to modify the representations, warranties
and covenants of MACESS and/or any Principal contained in this Agreement).
7.7. Hart-Scott-Rodino Filing. Between the date of this Agreement
and the Closing Date, Featheringill shall file on behalf of Featheringill with
respect to the Transactions the filing(s) required under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended ("HSR Act"), and shall deliver to
SunGard, accurate and complete copies of such filing(s). MACESS and the
Principals shall use their best efforts to cause the applicable waiting periods
under the HSR Act with respect to the Transactions to expire, and shall promptly
provide all information concerning the business, financial condition and affairs
of MACESS and the Principals that may be requested by the Federal Trade
Commission or the Antitrust Division of the Department of Justice in connection
with such filing(s) under the HSR Act.
7.8. 8-K Reports. MACESS, the Principals and MACESS' accountants
shall fully cooperate with SunGard and its accountants in connection with the
furnishing of information, financial statements, audit reports, consents and
other items required by SunGard in connection with the preparation and filing by
SunGard of Current Reports on Form 8-K with respect to the Transactions, and
MACESS and its accountants also shall assist SunGard and its accountants in
connection with the preparation of any "pro forma" financial information to be
included in any such Form 8-K.
7.9. Binding Effect. Subject to approval of the Merger by the
MACESS Stockholders, MACESS shall take such action as is required on its part to
consummate the Merger and the other Transactions as of the earliest practicable
date. MACESS shall not take, or cause to be taken, or to the best of its ability
permit to be taken, any action that would impair the prospect of completing the
Merger and the other Transactions. Neither MACESS nor any Principal shall
knowingly take any action that would prevent the Merger from qualifying for
pooling-of-interests accounting treatment.
Section 8: Certain Obligations of SunGard and Newco Pending Closing
8.1. Corporate Status. Between the date of this Agreement and the
Closing Date:
(a) SunGard and Newco each shall maintain its corporate existence
and good standing in the States of Delaware and Alabama, respectively, and shall
not amend its charter or bylaws in any manner that would be inconsistent with
its obligations under this Agreement or the Plan.
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(b) Neither SunGard nor Newco shall enter into any contract or
agreement that commits it to take any action or omit to take any action that
would be inconsistent with any of the provisions of this Section 8.1 or any
other provisions of this Agreement or the Plan.
8.2. Material Consents. Between the date of this Agreement and the
Closing Date, SunGard and Newco shall in good faith cooperate with MACESS and
the Principals in their efforts to obtain the consents and approvals, and to
give the notices and make the filings, described in Schedule 5.2.
8.3. SEC Reports. Between the date of this Agreement and the
Closing Date, SunGard shall file all reports and other filings required to be
filed by it under the 1934 Act, and SunGard shall deliver to MACESS and the
Principals, promptly after they become available, all registration statements,
proxy statements, reports and other filings, and all amendments thereto, that
SunGard files with the SEC.
8.4. Hart-Scott-Rodino Filing. Between the date of this Agreement
and the Closing Date, SunGard shall file on behalf of SunGard with respect to
the Transactions the filing(s) required under the HSR Act. SunGard and Newco
shall use their best efforts to cause the applicable waiting periods under the
HSR Act with respect to the Transactions to expire, and shall promptly provide
all information concerning the business, financial condition and affairs of
SunGard and Newco that may be requested by the Federal Trade Commission or the
Antitrust Division of the Department of Justice in connection with such
filing(s) under the HSR Act.
8.5. Advice of Changes. Between the date of this Agreement and the
Closing Date, SunGard shall promptly advise MACESS and the Principals, in
writing, of any fact of which it obtains knowledge and that, if existing or
known as of the date of this Agreement, would have been required to be set forth
or disclosed in or pursuant to this Agreement (it being understood that such
advice shall not be deemed to modify the representations, warranties and
covenants of SunGard and/or Newco contained in this Agreement).
8.6. Binding Effect. SunGard and Newco shall take such action as
is required on their part to consummate the Merger and the other Transactions as
of the earliest practicable date, and neither SunGard nor Newco shall take, or
cause to be taken, or to the best of its ability permit to be taken, any action
that would impair the prospect of completing the Merger and the other
Transactions. Neither SunGard nor Newco shall knowingly take any action that
would prevent the Merger from qualifying for pooling-of-interests accounting
treatment.
Section 9: Conditions Precedent to MACESS' and Principals' Closing Obligations
Each obligation of MACESS and the Principals to be performed on the
Closing Date shall be subject to the satisfaction of each of the conditions
stated in this Section 9, except to the extent that such satisfaction is waived
by MACESS in writing.
9.1. Effectiveness of Registration Statement. The Registration
Statement shall have become effective under the 1933 Act, no stop order
suspending its effectiveness shall be in effect, and no stop order proceeding
with respect thereto shall be pending or threatened.
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9.2. Approval of the MACESS Stockholders. The Merger shall have
been duly approved by the affirmative vote of MACESS Stockholders entitled to
vote at least two thirds of each class of the outstanding shares of MACESS
Stock.
9.3. SunGard's and Newco's Representations. All representations,
warranties and certifications made by SunGard and/or Newco in this Agreement or
pursuant hereto shall not have been false or misleading in any material respect.
9.4. SunGard's and Newco's Performance. All of the terms and
conditions of this Agreement to be satisfied or performed by SunGard and/or
Newco on or before the Closing Date shall have been substantially satisfied or
performed.
9.5. Absence of Proceedings. No action, suit or other proceeding
shall have been instituted (excluding any action, suit or proceeding instituted
by or on behalf MACESS or any Principal), no judgment or order shall have been
issued, and no new law shall have been enacted, on or before the Closing Date,
that seeks to or does prohibit or restrain, or that seeks damages as a result
of, the consummation of the Merger or any of the other Transactions.
9.6. Adverse Changes. There shall not have been any adverse change
or casualty loss having a material adverse effect on SunGard and its
subsidiaries taken as a whole, or on their businesses, assets or financial
condition taken as a whole, between the date of this Agreement and the Closing
Date, and there shall not have been any material adverse change in SunGard's and
its subsidiaries' financial performance taken as a whole between the date of
this Agreement and the Closing Date.
9.7. Hart-Scott-Rodino. All applicable waiting periods with
respect to the transactions contemplated by this Agreement shall have expired
under the HSR Act, and neither the Federal Trade Commission nor the Antitrust
Division of the Department of Justice shall have (a) required any party to
divest itself of any assets in order to consummate such transactions, or (b)
taken any actions to prohibit the consummation of such transactions.
Section 10: Conditions Precedent to SunGard's and Newco's Closing Obligations
Each obligation of SunGard and Newco to be performed on the Closing Date
shall be subject to the satisfaction of each of the conditions stated in this
Section 10, except to the extent that such satisfaction is waived by SunGard in
writing.
10.1. Qualification for Pooling Treatment. SunGard shall have
received a letter from Coopers & Lybrand L.L.P., dated the Closing Date, to the
effect that, based on the facts known to such accountants as of such date, the
Merger will qualify for pooling-of-interests accounting treatment if closed and
consummated in accordance with this Agreement and the Plan.
10.2. Effectiveness of Registration Statement. The Registration
Statement shall have become effective under the 1933 Act, no stop order
suspending its effectiveness shall be in effect, and no stop order proceeding
with respect thereto shall be pending or threatened.
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10.3. Affiliate Letters. SunGard shall have received, from each
affiliate of MACESS other than MACESS and the Principals (if any), a duly signed
letter, in form and substance satisfactory to SunGard, stating that such
affiliate (a) has not sold any shares of capital stock or other securities of
MACESS or of SunGard at any time during the 30-day period ending on the Closing
Date, and (b) will not sell, assign, give, pledge or otherwise transfer, dispose
of or reduce such affiliate's risk relating to any of such affiliate's shares of
capital stock or other securities of MACESS or of SunGard until SunGard shall
have published financial results covering at least 30 days of post-Merger
combined operations of SunGard and MACESS ("Publication Date") and, thereafter,
except in compliance with applicable federal and state securities laws.
10.4. Approval of the MACESS Stockholders. The Merger shall have
been duly approved by the affirmative vote of MACESS Stockholders entitled to
vote at least ninety-two percent (92%) of each class of the outstanding shares
of MACESS Stock.
10.5. MACESS' and the Principals' Representations. All
representations, warranties and certifications made by MACESS and/or any
Principal in this Agreement or pursuant hereto shall not have been false or
misleading in any material respect.
10.6. MACESS' and the Principals' Performance. All of the terms and
conditions of this Agreement to be satisfied or performed by MACESS and/or any
Principal on or before the Closing Date shall have been substantially satisfied
or performed.
10.7. Absence of Proceedings. No action, suit or other proceeding
shall have been instituted (excluding any such action, suit or proceeding
initiated by or on behalf SunGard or any of its subsidiaries), no judgment or
order shall have been issued, and no new law shall have been enacted, on or
before the Closing Date, that seeks to or does prohibit or restrain, or that
seeks damages as a result of, the consummation of the Merger or any of the other
Transactions.
10.8. Adverse Changes. There shall not have been any material
adverse change or material uninsured casualty loss affecting MACESS, or its
business, assets or financial condition, between the date of this Agreement and
the Closing Date, and there shall not have been any material adverse change in
the financial performance of MACESS between the date of this Agreement and the
Closing Date.
10.9. Hart-Scott-Rodino. All applicable waiting periods with
respect to the transactions contemplated by this Agreement shall have expired
under the HSR Act, and neither the Federal Trade Commission nor the Antitrust
Division of the Department of Justice shall have (a) required any party to
divest itself of any assets in order to consummate such transactions, or (b)
taken any actions to prohibit the consummation of such transactions.
Section 11: Closing
11.1. Closing. The closing of the Merger (the "Closing") shall be
held at a mutually agreeable time on the date of the Stockholders Meeting or as
soon thereafter as is practicable (the "Closing Date"), at such location and in
such manner as is mutually acceptable to the parties. On the Closing Date or as
soon thereafter as is practicable, the parties shall cause the Plan and a proper
Certificate or Articles of Merger to be filed with the proper officials of the
State of Alabama, and the parties shall take such further actions as may be
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required by the State of Alabama, and any other applicable laws in connection
with the consummation of the Merger. The Merger shall be effective on the date
such filing is made with the State of Alabama (the "Effective Date").
11.2. Principals' Obligations at Closing. At the Closing, the
Principals shall deliver the following to SunGard:
(a) MACESS Stock. Stock certificates representing all of the
issued and outstanding shares of MACESS Stock, together with assignments
separate from certificate in blank, dated the Effective Date and duly executed
by the Principals.
(b) Documents of Transfer. All instruments or documents necessary
to change the names of the individuals who have access to or are authorized to
make withdrawals from or dispositions of all bank accounts, other accounts,
certificates of deposits, marketable securities, other investments, safe deposit
boxes, lock boxes and safes of MACESS described on Schedule 3.4 and all keys and
combinations to all safe deposit boxes, lock boxes and safes of MACESS and other
depositories described on Schedule 3.4.
(c) Closing Certificate. A certificate, dated the Closing Date,
in form and substance satisfactory to SunGard, signed by the Chairman and
President of MACESS and by each Principal, certifying, jointly and severally,
that (i) all representations and warranties made by MACESS and/or any Principal
in this Agreement are correct in all material respects as of the Closing Date,
as if made on and as of the Closing Date, except for changes contemplated or
permitted by this Agreement, (ii) all of the terms and conditions of this
Agreement to be satisfied or performed by MACESS and/or any Principal on or
before the Closing Date have been substantially satisfied or performed, and
(iii) there has not been any material adverse change or material uninsured
casualty loss affecting MACESS, or its business, assets or financial condition,
between the date of this Agreement and the Closing Date, and there has not been
any material adverse change in MACESS' financial performance between the date of
this Agreement and the Closing Date.
(d) Articles of Mergers. The Certificate of Merger (as defined in
Section 11.3(b)), dated the Closing Date and duly executed by MACESS.
(e) Consents. The original signed copies of all Consents listed
on Schedule 3.2.
(f) Escrow. The Escrow Agreement (as defined in
Section 11.3(c)), dated the Closing Date and duly executed by MACESS, the
Stockholders Agent and each Principal.
(g) Minute Books and Resignations. All of the original minute
books and stock books of MACESS and duly executed resignations, dated the
Effective Date, of all directors and officers of MACESS other than as specified
by SunGard.
(h) Good Standing. Good standing certificates for MACESS, dated
no earlier than ten (10) days before the Closing Date, from the State of Alabama
and from each other jurisdiction in which it is qualified or registered to do
business as a foreign corporation.
(i) Incumbency Certificate. A certificate of the Secretary of
MACESS as to the incumbency and signatures of the officers of MACESS executing
this Agreement.
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(j) Resolutions. Copies of the resolutions duly adopted by the
board of directors of MACESS, authorizing MACESS to execute, deliver and perform
this Agreement and the Plan and to consummate the Transactions, certified by an
officer of MACESS as in full force and effect, without modification or
rescission, on and as of the Closing Date.
(k) Opinion of Counsel. An opinion of counsel to MACESS and the
Principals addressed to SunGard and dated the Closing Date, in form and
substance reasonably acceptable to SunGard.
(l) General Release. A General Release of MACESS, in form
acceptable to SunGard, dated the Closing Date and duly executed by each of the
Principals, releasing MACESS from all claims other than those arising under
employment contracts, and as to Richard T. Harley, a Promissory Note and
Covenant Not to Compete Agreement.
(m) Employees and Independent Contractors. Copies of employee
agreements, in the form normally used by MACESS, signed by all current employees
of MACESS who as of the date of this Agreement had not yet signed such
agreements (as identified on Schedule 14); and a copy of such an employee
agreement signed by Featheringill provided that Featheringill's employee
agreement shall acknowledge and except out the matters referred to in Section
14.5.
(n) Shareholder's Basis. A schedule listing for each Stockholder
of MACESS that Stockholder's tax basis in his or its MACESS Stock.
(o) Stock Pledge Agreements. For each Stockholder of MACESS who
received MACESS Stock on December 28, 1994 ("Note Stock") in exchange for a note
payable to MACESS ("Note"), a Stock Pledge Agreement, dated the Closing Date, in
form and substance satisfactory to SunGard, executed by such Stockholder and by
MACESS, providing for the waiver by MACESS of its repurchase rights with respect
to such Stockholder's Note Stock, in exchange for and consideration of the
receipt by MACESS of a pledge of such Stockholder's SunGard Stock received in
the Merger as collateral for such Stockholder's Note.
(p) Certain Closing Representations. A certificate, dated the
Closing Date, in form and substance satisfactory to SunGard, signed by the
Principals, in which the Principals represent and warrant to SunGard and Newco
as of the Closing Date as follows:
(i) There is no present plan or intention by the Principals
to sell, exchange, or otherwise dispose of a number of shares of SunGard Stock
(as defined in Section 5.3) received in the Merger that would reduce the
Principals' ownership of SunGard Stock to a number of shares having a value, as
of the Effective Date of the Merger, of less than 50% of the value of all of the
formerly outstanding stock of MACESS as of the same date. For purposes of this
representation shares of MACESS Stock and shares of SunGard Stock held by any of
the Principals and otherwise sold, redeemed, or disposed of prior or subsequent
to the Merger shall be included. In the Merger, shares of MACESS Stock
representing control of MACESS, as defined in Section 368(c) of the Code, will
be exchanged solely for voting stock of SunGard. Except as set forth on Schedule
3.3, MACESS does not have outstanding any warrants, options, convertible
securities, or any other type of right pursuant to which any Person could
acquire stock in MACESS that, if exercised or converted, would affect SunGard's
acquisition or retention of control of MACESS, as defined in Section 368(c) of
the Code.
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MACESS is not an investment company within the meaning of Section
368(a)(2)(F)(iii)) and (iv) of the Code.
(ii) As to each Principal, such Principal has received and
examined the Information Statement-Prospectus, as well as SunGard's April 3,
1995 Proxy Statement, SunGard's Annual Report on Form 10-K for the year ended
December 31, 1994, SunGard's 1994 Annual Report to Stockholders and SunGard's
Quarterly Reports on Form 10-Q for the quarters ended March 31, 1995 and June
30, 1995. Such Principal has had the opportunity to ask questions and receive
answers from SunGard concerning SunGard, and has been furnished with all other
information about SunGard which he or it has requested.
(q) Other Documents. All other agreements, certificates,
instruments, financial statement certifications, opinions of counsel and
documents reasonably requested by SunGard in order to fully consummate the
Transactions and carry out the purposes and intent of this Agreement and the
Plan.
11.3. SunGard's and Newco's Obligations at Closing. At the Closing,
SunGard and Newco shall deliver the following to the Principals:
(a) SunGard Stock. Certificates representing the shares of
SunGard Stock to which the Principals are entitled to at Closing, in accordance
with Section 2 and the Plan.
(b) Articles of Mergers. Articles of Merger for the State of
Alabama, in form and substance acceptable to the parties ("Certificate of
Merger"), dated the Closing Date and duly executed by Newco.
(c) Escrow. An Escrow Agreement, substantially in the form
attached hereto as Exhibit 11.3(c) ("Escrow Agreement"), dated the Closing Date
and duly executed by SunGard and the escrow agent thereunder.
(d) Closing Certificate. A certificate, dated the Closing Date,
in form and substance satisfactory to the Principals, signed by the Chief
Financial Officer of SunGard, certifying that (i) all representations and
warranties made by SunGard and/or Newco in this Agreement are correct in all
material respects as of the Closing Date, as if made on and as of the Closing
Date, except for changes contemplated or permitted by this Agreement, (ii) all
of the terms and conditions of this Agreement to be satisfied or performed by
SunGard and/or Newco on or before the Closing Date have been substantially
satisfied or performed, and (iii) there shall not have been any adverse change
or casualty loss having a material adverse effect on SunGard and its
subsidiaries taken as a whole, or on their businesses, assets or financial
condition taken as a whole, between the date of this Agreement and the Closing
Date, and there shall not have been any material adverse change in SunGard's and
its subsidiaries' financial performance taken as a whole between the date of
this Agreement and the Closing Date.
(e) Good Standing. Good standing certificates for SunGard and
Newco, dated no earlier than ten (10) days before the Closing Date, from the
States of Delaware and Alabama, respectively.
(f) Resolutions. Copies of the resolutions duly adopted by the
board of directors of SunGard and by the board of directors and the sole
stockholder of Newco,
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authorizing SunGard and Newco, respectively, to execute, deliver and perform
this Agreement and the Plan and to consummate the Transactions, certified by an
officer of SunGard or Newco, respectively, as in full force and effect, without
modification or rescission, on and as of the Closing Date.
(g) Incumbency Certificate. A certificate of the Secretary of
each of SunGard and Newco as to the incumbency and signatures of the officers of
SunGard and Newco executing this Agreement.
(h) Opinion of Counsel. An opinion of counsel to SunGard,
addressed to the Principals and dated the Closing Date, in form and substance
reasonably acceptable to the Principals,
(i) Other Documents. All other agreements, certificates,
instruments, opinions of counsel and documents reasonably requested by the
Principals in order to fully consummate the Transactions and carry out the
purposes and intent of this Agreement.
Section 12: Certain Obligations of Principals after Closing
12.1. Restrictions on Dispositions of SunGard Stock. From and after
the Closing Date, none of the Principals shall sell, assign, give, pledge
(except in connection with fully recourse bank loans) or otherwise transfer,
dispose of or reduce his risk relating to any of his shares of capital stock or
other securities of MACESS or of SunGard until the Publication Date (as defined
in Section 10.3), and, thereafter, except in compliance with applicable federal
and state securities laws.
12.2. Cooperation with SunGard and the Surviving Corporation. From
and after the Closing Date, (a) each Principal shall fully cooperate to transfer
to SunGard and the Surviving Corporation the full control and enjoyment of
MACESS' Business and Assets; (b) none of the Principals shall take any action,
directly or indirectly, alone or together with others, that obstructs or impairs
the smooth assumption by SunGard and the Surviving Corporation of MACESS'
Business and the Assets; (c) each Principal shall fully cooperate with SunGard
and the Surviving Corporation in connection with the preparation and audit of
any financial statements of MACESS for periods before the Closing Date,
including, where appropriate, the signing of such management representation
letters are required in connection with such audit; and (d) the Principals shall
promptly deliver to SunGard and the Surviving Corporation all correspondence,
papers, documents and other items and materials received by any of the
Principals or found to be in the possession of any of the Principals which
pertain to MACESS' Business or the Assets.
12.3. Further Assurances. At any time and from time to time after
the Closing Date, at SunGard's request and without further consideration (but at
SunGard's expense), each Principal shall promptly execute and deliver all such
further agreements, certificates, instruments and documents and perform such
further actions as SunGard may reasonably request, in order to fully consummate
the Merger and the other Transactions and to fully carry out the purposes and
intent of this Agreement and the Plan, including, but not limited to, such
documents and actions as may be required in connection with the continuation or
termination of MACESS' employee benefit plans, the adoption by the Surviving
Corporation of SunGard's employee benefit plans, and the filing of tax returns
of MACESS for all periods ending on or before the Effective Date.
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Section 13: Certain Obligations of SunGard and the Surviving Corporation after
Closing
13.1. Final Tax Returns. Surviving Corporation shall timely prepare
and file all federal and state income tax returns required to be filed by MACESS
for the period from January 1, 1995 through the Effective Date, and the
Principals shall fully cooperate with the Surviving Corporation with respect
thereto.
13.2. Employment Matters. All Persons who are full-time employees
of MACESS on the Effective Date shall continue to be employed by the Surviving
Corporation after the Effective Date on an "at-will" basis and for salaries or
wages consistent with the levels in effect as of the date of this Agreement.
13.3. Employee Benefit Plans. As soon as is practicable after the
Effective Date, SunGard and the executives of MACESS shall review MACESS'
Employee Benefit Plans to determine which such plans should remain in effect as
plans of the Surviving Corporation and which should be replaced with SunGard's
Employee Benefit Plans, with a view toward replacing all of MACESS' Employee
Benefit Plans with SunGard's Employee Benefit Plans except where cost factors or
unusual circumstances dictate otherwise. Immediately after the Merger, except
as provided above in this Section 13.3, the employees of MACESS shall be
entitled to participate in SunGard's applicable standard Employee Benefit Plans,
as and when such employees become eligible to participate under the terms of
such plans, and after MACESS' employees are eligible to participate in a SunGard
standard Employee Benefit Plan, the corresponding, separate Employee Benefit
Plans of MACESS shall be terminated. Each employee of MACESS shall receive
credit, to the extent possible under the applicable standard Employee Benefit
Plans of SunGard, for his or her years of service with MACESS.
13.4. Disposition of Savings Plan. After the Effective Date, the
following plans of MACESS shall be handled as follows:
(a) As soon as is practicable after the Effective Date, MACESS'
401(k) (the "401(k) Plan") shall be "frozen" and the employees of MACESS shall
begin to participate in SunGard's 401(k) Savings Plan. As soon as is practicable
after the Effective Date but not later than nine months thereafter, the full
accounts of the MACESS employees under the MACESS 401(k) Plan shall be
transferred directly to the accounts of such employees under SunGard's 401(k)
Savings Plan, and the MACESS 401(k) Plan shall terminate.
(b) As soon as is practicable after the Effective Date, the
Surviving Corporation shall adopt and join in SunGard's Employee Stock Purchase
Plan.
Section 14: Restrictive Covenants of the Principals.
14.1. Certain Acknowledgements. Each Principal expressly
acknowledges that:
(a) "Imaging Business" shall mean the developing, enhancing and
licensing of imaging-based, automated document management or work flow
management proprietary Software and computer systems that provide functionality
the same as or substantially similar to the functionality contained in the
Software products and computer systems marketed, licensed, owned, claimed to
have been owned, under development or planned by MACESS at any time prior to the
Effective Date (or, with respect to a Principal who remains an employee
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of the Surviving Corporation after the Effective Date, the date of such
Principal's termination of employment with the Surviving Corporation, SunGard or
any of its affiliates) ("Imaging Software") and providing data processing and
related services using the Imaging Software and such computer systems;
irrespective of the hardware platform or software platform on which the Imaging
Software and computer systems operate, irrespective of the technology utilized
to effect such functionality, irrespective of the markets to which the Imaging
Software and computer systems are marketed or licensed and irrespective of which
existing and/or future subsidiaries of SunGard may engage in such business.
SunGard and all existing and future subsidiaries of SunGard, including MACESS,
engaged in the Imaging Business are referred to as the "SunGard Group."
(b) The Imaging Business is highly competitive, is marketed
throughout the United States, and requires long sales "lead times" often up to
one year. MACESS expends, and the SunGard Group will expend, substantial time
and money, on an ongoing basis, to train its employees, maintain and expand its
customer base, and improve and develop its software and services.
(c) In connection with the Transactions and during his tenure as
an owner and/or executive of MACESS, he has had access to proprietary and
confidential property, knowledge and information of MACESS' operations which,
after Closing, shall be proprietary and confidential property, knowledge and
information of the SunGard Group; such property, knowledge and information must
be kept in strict confidence to protect the Imaging Business and maintain the
SunGard Group's competitive positions in the marketplace; and such knowledge and
information would be useful to competitors of the SunGard Group for indefinite
periods of time.
(d) The covenants of this Section 14 (the "Covenants") are a
material part of this Agreement and are an integral part of the obligations of
the Principals hereunder; the Covenants are supported by good and adequate
consideration; and the Covenants are reasonable and necessary to protect the
legitimate business interests of the SunGard Group.
14.2. Nondisclosure Covenants. At all times after the date of this
Agreement, for an indefinite period of time, except with SunGard's prior written
consent, or except in connection with the proper performance of services for and
as an employee of the SunGard Group, none of the Principals shall, directly or
indirectly, in any capacity:
(a) Communicate, publish or otherwise disclose to any Person, or
use for the benefit of any Person, any confidential or proprietary property,
knowledge or information of the SunGard Group or concerning any of its business,
software, assets or financial condition, no matter when or how such knowledge or
information was obtained, including without limitation (a) any information
concerning the Assets, or the conduct and details of MACESS' Business; (b) the
identity of customers and prospects, their specific requirements, and the names,
addresses and telephone numbers of individual contacts at customers and
prospects; (c) prices, renewal dates and other detailed terms of customer and
supplier Contracts and proposals; (d) pricing policies, marketing and sales
strategies, methods of delivering Software and services, and Software and
service development projects and strategies; (e) source code, object code, user
manuals, technical manuals and other documentation for Software products; (f)
screen designs, report designs and other designs, concepts and visual
expressions for Software products; (g) employment and payroll records; (h)
forecasts, budgets and other
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nonpublic financial information; and (i) expansion plans, management policies,
methods of operation, and other business strategies and policies.
(b) Disclose, use or refer to any proprietary software or other
confidential or proprietary property, knowledge or information of the SunGard
Group, no matter when or how acquired, for any purpose not in furtherance of the
business and interests of the SunGard Group, including without limitation the
purposes of designing, developing, marketing and/or selling any Software that is
similar to, visually or functionally, or competitive with any proprietary
Software of the SunGard Group.
14.3. Noncompetition Covenants. During the period beginning on the
date of this Agreement and ending on the third (3rd) anniversary of the
Effective Date (or with respect to the Principals employed by Surviving
Corporation, the later of: (i) the third (3rd) anniversary of the Effective
Date, or (ii) the first (1st) anniversary of the date of termination of
employment with SunGard or any of its affiliates), except with SunGard's prior
written consent, none of the Principals shall, directly or indirectly, in any
capacity, at any location worldwide:
(a) Communicate with or solicit any Person who is or during such
period becomes a customer, prospect, supplier, employee, salesman, agent or
representative of, or a consultant to, the SunGard Group, in any manner which
interferes or might interfere with such Person's relationship with the Imaging
Business of the SunGard Group, or in an effort to obtain any such Person as a
customer, supplier, employee, salesman, agent or representative of, or a
consultant to, any other Person that conducts a business competitive with or
similar the Imaging Business.
(b) Market or sell, in any manner other than in furtherance of
the business and interests of the SunGard Group, any Imaging Software.
(c) Establish, own, manage, operate, finance or control, or
participate in the establishment, ownership, management, operation, financing or
control of, or be a director, officer, employee, salesman, agent or
representative of, or be a consultant to, any Person that conducts an Imaging
Business.
It is the intent of the Parties that each of the Principals be prohibited for
said period from selling, marketing or furthering a system that has
substantially the same functionality as the Imaging Software and can be used in
lieu of the Imaging Software in a competitive manner against the Imaging
Software of the SunGard Group.
14.4. Certain Exclusions. Confidential and proprietary property,
knowledge and information of the SunGard Group shall not include any information
that is now known by or readily available to the general public, nor shall it
include any information that in the future becomes known by or readily available
to the general public other than as a result of any breach of the Covenants of
this Agreement. The ownership by any of the Principals of not more than five
percent (5%) of the outstanding securities of any public company shall not, by
itself, constitute a breach of the Covenants of Section 14.3, even if such
public company competes with the SunGard Group. Any noncontrolling, passive,
investment by Featheringill in the ordinary course of his venture capital
financing shall not constitute a breach of the Covenants of Section 14.3, even
if the company in which Featheringill makes such noncontrolling passive
investment competes with the SunGard Group.
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14.5. Newsoftco. The parties acknowledge that MACESS has entered
into an agreement with another company ("Newsoftco"), of which MACESS and
Featheringill are investors, to construct an electronic software system
consisting of the integration of various functions and programs described in
Exhibit 14.5 attached hereto. Based on the representations and information
contained in Exhibit 14.5, it is agreed that the development and the operation
of Newsoftco is not competitive with the current business and functionality of
MACESS and that the involvement of MACESS and Featheringill in Newsoftco shall
not constitute a breach of Section 14.3 of this Agreement.
14.6. Enforcement of Covenants. Each of the Principals expressly
acknowledges that it would be extremely difficult to measure the damages that
might result from any breach of the Covenants, and that any breach of the
Covenants will result in irreparable injury to the SunGard Group for which money
damages could not adequately compensate. If a breach of the Covenants occurs,
then the SunGard Group shall be entitled, in addition to all other rights and
remedies that it may have at law or in equity, to have an injunction issued by
any competent court enjoining and restraining the Principals and all other
Persons involved therein from continuing such breach. The existence of any
claim or cause of action that any of the Principals or any such other Person may
have against any member of the SunGard Group shall not constitute a defense or
bar to the enforcement of any of the Covenants. If the SunGard Group must
resort to litigation to enforce any of the Covenants that has a fixed term, then
such term shall be extended for a period of time equal to the period during
which a breach of such Covenant was occurring, beginning on the date of a final
court order (without further right of appeal) holding that such a breach
occurred or, if later, the last day of the original fixed term of such Covenant.
14.7. Scope of Covenants. If any Covenant, or any part thereof, or
the application thereof, is construed to be invalid, illegal or unenforceable,
then the other Covenants, or the other portions of such Covenant, or the
application thereof, shall not be affected thereby and shall be enforceable
without regard thereto. If any of the Covenants is determined to be
unenforceable because of its scope, duration, geographical area or other factor,
then the court making such determination shall have the power to reduce or limit
such scope, duration, area or other factor, and such Covenant shall then be
enforceable in its reduced or limited form.
Section 15: Indemnification
15.1. Principals' General Indemnification. From and after the
Closing Date, the Principals, with liability allocated in accordance with
Section 15.5, shall indemnify and hold harmless the members of the SunGard Group
and all affiliated SunGard entities, and their respective successors and
assigns, and their respective directors, officers, employees, agents and
representatives, from and against any and all actions, suits, claims, demands,
debts, liabilities, obligations, losses, damages, costs and expenses, including
without limitation reasonable attorney's fees and court costs, arising out of or
caused by, directly or indirectly, any or all of the following:
(a) Misrepresentation. Any misrepresentation, breach or failure
of any warranty or representation made in or pursuant to this Agreement.
(b) Unscheduled Obligations. Obligations other than: (i)
Obligations reflected on the August 1995 Balance Sheet, (ii) Obligations set
forth in Schedule 3.8, (iii) Obligations
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under Contracts listed or not required to be listed on Schedule 3.14, provided
that as of August 31, 1995, no such Obligation consisted of or resulted from a
default under or violation of any such Contract, and (iv) Obligations incurred
since August 31, 1995 and not in breach of any of the representations and
warranties made in Section 3.9 or any of the covenants of Section 7.1.
(c) Taxes. Any deficiency or adjustment for Taxes and related
interest, penalties and expenses, assessed against or imposed upon MACESS (or
its successor) with respect to any period ending on or before the Closing Date
to the extent not reserved against on the August 1995 Balance Sheet. The right
of the SunGard Group to indemnification under this Section 15.1(c) shall not be
affected by the fact that the applicable tax deficiency, adjustment, interest or
penalties may be assessed against SunGard as a result of the fact that, after
the Closing Date, MACESS shall be included in the consolidated federal income
tax returns filed by SunGard; provided that the Principals shall not be liable
for Taxes, interest, penalties and expenses to the extent resulting solely from
voluntary amendments to previously filed tax returns made after Closing by
MACESS or SunGard.
15.2. Indemnification Procedures. With respect to each event,
occurrence or matter ("Indemnification Matter") as to which any member of the
SunGard Group (the "Indemnitee") is entitled to indemnification from the
Principals (the "Indemnitor") under this Section 15:
(a) Notice. Within ten (10) days after the Indemnitee receives
written documents underlying the Indemnification Matter or, if the
Indemnification Matter does not involve a third-party action, suit, claim or
demand, promptly after the Indemnitee first has actual knowledge of the
Indemnification Matter, the Indemnitee shall give reasonably detailed notice to
the Indemnitor of the nature of the Indemnification Matter and the amount
demanded or claimed in connection therewith ("Indemnification Notice"), together
with copies of any such written documents.
(b) Defense. If a third-party action, suit, claim or demand is
involved, then, upon receipt of the Indemnification Notice, the Indemnitor
shall, at its expense and through counsel of its choice, promptly assume and
have sole control over the litigation, defense or settlement (the "Defense") of
the Indemnification Matter, except that (a) the Indemnitee may, at its option
and expense and through counsel of its choice, participate in (but not control)
the Defense; (b) if the Indemnitee reasonably believes that the handling of the
Defense by the Indemnitor may have a material adverse affect on the Indemnitee,
its business or financial condition, or its relationship with any customer,
prospect, supplier, employee, salesman, consultant, agent or representative,
then the Indemnitee may, at its option and expense and through counsel of its
choice, assume control of the Defense, provided that the Indemnitor shall be
entitled to participate in the Defense at its expense and through counsel of its
choice; (c) the Indemnitor shall not consent to any Judgment, or agree to any
settlement, without the Indemnitee's prior written consent; and (d) if the
Indemnitor does not promptly assume control over the Defense or, after doing so,
does not continue to prosecute the Defense in good faith, the Indemnitee may, at
its option and through counsel of its choice, but at the Indemnitor's expense,
assume control over the Defense. In any event, the Indemnitor and the
Indemnitee shall fully cooperate with each other in connection with the Defense,
including without limitation by furnishing all available documentary or other
evidence as is reasonably requested by the other.
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(c) Payments. All amounts owed by the Indemnitor to the
Indemnitee (if any) shall be paid in full within fifteen (15) business days
after a final Judgment (without further right of appeal) determining the amount
owed is rendered, or after a final settlement or agreement as to the amount owed
is executed.
15.3. Limits on Indemnification. Liability under this Section 15
shall be limited as follows:
(a) Threshold. No amount shall be payable under this Section 15
unless and until the aggregate amount otherwise payable under this Section 15
exceeds Six Hundred Thousand Dollars ($600,000), in which event the Indemnitor
shall pay such aggregate amount and all future amounts payable by the Indemnitor
under this Section 15.
(b) Ceiling.
(i) With respect to Indemnification Matters related to
title to or infringement caused by any Software product, or component thereof,
which was marketed, licensed, owned or claimed to have been owned by MACESS at
any time before Closing ("Software Indemnification Matter"), except as set forth
in Section 15.4, the total liability under this Section 15 shall not exceed two
thirds (2/3) of the Merger Consideration (as defined below), and each
Principal's total liability under this Section 15 shall not exceed two thirds
(2/3) of such Principal's share of the Merger Consideration, in accordance with
the applicable percentages set forth on Exhibit 15.5. "Merger Consideration"
means the Total SunGard Stock Issued multiplied by the last reported sale price
of one share of SunGard Stock, as reported on The Nasdaq Stock Market on the
Closing Date.
(ii) With respect to all other Indemnification Matters,
except as set forth in Section 15.4, the total liability under this Section 15
shall not exceed ten percent (10%) of the Merger Consideration and each
Principal's total liability under this Section 15 shall not exceed ten percent
(10%) of such Principal's share of the Merger Consideration, in accordance with
the applicable percentages set forth on Exhibit 15.5.
(c) Time Periods.
(i) With respect to Indemnification Matters expected to be
encountered in the routine audit process of a wholly-owned subsidiary, the
Indemnitor shall not be liable as to any such Indemnification Matter for which
the Indemnitee does not give an Indemnification Notice to the Indemnitor in
accordance with Section 15.2.(a) by March 31, 1996.
(ii) With respect to Software Indemnification Matters, the
Indemnitor shall not be liable as to any such Indemnification Matter for which
the Indemnitee does not give an Indemnification Notice to the Indemnitor in
accordance with Section 15.2.(a) within five (5) years after the Effective Date.
(iii) With respect to all other Indemnification Matters,
except as set forth in Section 15.4, the Indemnitor shall not be liable as to
any such Indemnification Matter for which the Indemnitee does not give an
Indemnification Notice to the Indemnitor in accordance with Section 15.2.(a)
within twelve (12) months after the Effective Date.
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15.4. Exceptions. None of the foregoing limitations shall apply
in the case of any Indemnification Matter involving (i) intentional
misrepresentation, fraud or criminal matters; or (ii) an Indemnification Matter
the basis of which is a breach of the representations and/or warranties
contained in Section 4.
15.5. Allocation.
(a) Except as to an Indemnification Matter the basis of which is
a breach of the representations and/or warranties contained in Section 4, all
liability under this Agreement shall be allocated in accordance with the
applicable percentages set forth on Exhibit 15.5. SunGard shall be paid first
from the Escrow Stock (as defined in the Escrow Agreement) to the extent
available and sufficient by having the Escrow Agent distribute from the Escrow
Stock to SunGard such number of shares of SunGard Stock as is equal to (i) the
amount for which the SunGard Group is entitled to indemnification divided by
(ii) the last reported sale price of one share of SunGard Stock, as reported on
The Nasdaq Stock Market on the Closing Date, and if the Escrow Stock is either
not available or not sufficient, then each Principal shall pay SunGard directly
such Principal's share of the insufficiency, in accordance with the applicable
percentages set forth on Exhibit 15.5.
(b) With respect to an Indemnification Matter the basis of which
is a breach of the representations and/or warranties contained in Section 4,
SunGard shall collect from such Principal's share of the Escrow Stock to the
extent available and sufficient, and if the Escrow Stock is either not available
or not sufficient, then such Principal shall pay SunGard directly the amount of
the insufficiency.
15.6. Mediation. If a dispute between the Principals and SunGard
arises out of or relates to an Indemnification Matter, and if the dispute cannot
be settled through negotiation between the parties, the parties agree first to
try in good faith to settle the dispute by non-binding mediation in Alabama
under the Mediation Rules of the American Arbitration Association with a neutral
mediator selected by the American Arbitration Association, before resorting to
litigation.
15.7. Featheringill and The Family Partnership Liability. The
foregoing in this Section 15 notwithstanding, all liability of Featheringill
and The Family Partnership under this Agreement shall be joint and several, and
for the purposes of allocating liability under Section 15.5 and determining the
maximum liability under Section 15.3.(b), the percentage applicable to the
joint and several liability of Featheringill and The Family Partnership shall
be the sum of the percentages next to their respective names on Exhibit 15.5.
Section 16: Other Provisions
16.1. Termination. At any time before the Closing, whether or not
the Merger has been approved by MACESS' Stockholders, this Agreement may be
terminated and the Merger abandoned in accordance with any of the following
methods:
(a) By the mutual written consents of SunGard and MACESS,
authorized by their respective boards of directors.
(b) By written notice from SunGard to MACESS, or from MACESS to
SunGard, if it becomes certain (for all practical purposes) that any of the
conditions to the
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closing obligations of the party giving such notice cannot be satisfied on or
before November 30, 1995, for a reason other than such party's default, and such
party is not willing to waive the satisfaction of such condition.
(c) By written notice from SunGard to MACESS, or from MACESS to
SunGard, if the Closing does not occur on or before November 30, 1995 for any
reason other than a breach of this Agreement by the party giving such notice.
16.2. Publicity. Without the prior written consent of SunGard,
neither MACESS nor any Principal shall make any public announcement regarding
the Transactions, nor shall they in any manner disseminate any information
regarding MACESS, SunGard, the Merger or the other Transactions, except through
distribution of the Registration Statement. Unless required by Law or stock
exchange or NASDAQ regulation, in the opinion of SunGard's counsel, neither
SunGard nor Newco shall make any public announcement regarding the Transactions
without first consulting with the Principals. With respect to any announcement
that any of the parties is required by Law or stock exchange or NASDAQ
regulation to issue, such party shall, to the extent possible under the
circumstances, review the necessity for the contents of the announcement with
the other party before issuing the announcement. The provisions of this Section
16.2 shall survive any termination of this Agreement for a period of five years.
16.3. Fees and Expenses.
(a) SunGard shall pay all of the fees and expenses incurred by it
and/or Newco; MACESS shall pay all of the fees and expenses incurred by it; and
the Principals shall pay any fees and expenses separately incurred by them, in
negotiating and preparing this Agreement and the Plan (and all other Contracts
and documents executed in connection herewith or therewith) and in consummating
the Transactions, except that all SEC and state filing or registration fees
shall be divided equally between MACESS and SunGard. MACESS shall not incur,
and Principals shall not permit MACESS to incur, legal, accounting, investment
banking, brokerage and other professional fees and expenses with respect to the
transactions contemplated by this Agreement, including, in an aggregate amount
exceeding $775,000.
(b) In order to induce SunGard to enter into this Agreement and
the Plan, MACESS shall make the following payments to SunGard (and Featheringill
hereby guarantees such payments) if the Merger is not consummated due to the
failure of the condition set forth in Section 10.4, provided that the failure of
MACESS Stockholders to approve the Merger is not due to a failure of one of the
conditions in Section 9 other than Section 9.2:
(i) A cash payment of Six Million Dollars ($6,000,000),
payable on December 1, 1995.
(ii) If a Later Sale (as defined below) occurs within one
year after the date of this Agreement, an additional cash payment equal to
Twenty-Five Percent (25%) of the following amount: the aggregate consideration
received by MACESS and/or the Stockholders in such Later Sale; minus Fifty-Seven
Million Dollars ($57,000,000) (or, if less than all of the \assets or shares of
MACESS are involved in the Later Sale, the corresponding portion of
$57,000,000); minus Six Million Dollars ($6,000,000). Such additional cash
payment shall be payable upon consummation of the transaction constituting the
Later Sale (whether or not such consummation shall have occurred within one year
from the date hereof).
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A "Later Sale" shall have occurred if (x) a Person other than SunGard acquires,
or commits to acquire, a majority of the outstanding shares of capital stock of
MACESS or assets of MACESS having a market value equal to Fifty Percent (50%) or
more of the aggregate market value of all of the assets of MACESS, (y) MACESS
merges or consolidates, or commits to merge or consolidate, with a Person other
than SunGard, or (z) MACESS files a registration with the SEC for a public
offering of its securities.
16.4. Notices. All notices, consents or other communications
required or permitted to be given under this Agreement shall be in writing and
shall be deemed to have been duly given (a) when delivered personally, (b) three
business days after being mailed by first class certified mail, return receipt
requested, postage prepaid, or (c) one business day after being sent by a
reputable overnight delivery service, postage or delivery charges prepaid, to
the parties at their respective addresses stated on the first page of this
Agreement. Notices may also be given by prepaid facsimile and shall be
effective on the date transmitted if confirmed within 24 hours thereafter by a
signed original sent in the manner provided in the preceding sentence. Before
the Closing, notices to MACESS shall be sent to its address stated on page one
of this Agreement to the attention of its President, with a copy sent
simultaneously to the same address to the attention of its Chief Executive
Officer and another copy sent simultaneously to Thomas A. Ritchie, Esquire,
Ritchie & Rediker, L.L.C., 312 North 23rd Street, Birmingham, Alabama. Before
the Closing, any such notice to MACESS shall suffice as notice to MACESS and to
all of the Principals. After the Closing, notices to MACESS shall be sent to
SunGard (in the manner provided below), notices to the Principals or the
Stockholders shall be sent to the Stockholders Agent in accordance with Section
16.20, and copies of notices to the Stockholders Agent shall be sent
simultaneously to Thomas A. Ritchie, Esquire, at the address stated above.
Notices to SunGard and/or Newco (before or after the Closing) shall be sent to
SunGard's address stated on page one of this Agreement to the attention of its
General Counsel, with a copy sent simultaneously to the same address to the
attention of its Chief Financial Officer. Any party may change its address for
notice and the address to which copies must be sent by giving notice of the new
addresses to the other parties in accordance with this Section 16.4, provided
that any such change of address notice shall not be effective unless and until
received.
16.5. Survival of Representations. All representations and
warranties made in this Agreement or pursuant hereto shall survive the date of
this Agreement, the Closing Date, the Effective Date and the consummation of the
Transactions.
16.6. Interpretation of Representations. Each representation and
warranty made in this Agreement or pursuant hereto is independent of all other
representations and warranties made by the same parties, whether or not covering
related or similar matters, and must be independently and separately satisfied.
Exceptions or qualifications to any such representation or warranty shall not be
construed as exceptions or qualifications to any other representation or
warranty.
16.7. Reliance by SunGard and Newco. Notwithstanding the right of
SunGard and Newco to investigate MACESS' Business, Assets and financial
condition of MACESS, and notwithstanding any knowledge determined or
determinable by SunGard and Newco as a result of such investigation, SunGard and
Newco have the unqualified right to rely upon, and have relied upon, each of the
representations and warranties made by the Principals in this Agreement or
pursuant hereto.
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16.8. Entire Understanding. This Agreement, together with the
Exhibits and Schedules hereto, states the entire understanding among the parties
with respect to the subject matter hereof, and supersedes all prior oral and
written communications and agreements, and all contemporaneous oral
communications and agreements, with respect to the subject matter hereof,
including without limitation all confidentiality letter agreements and letters
of intent previously entered into among some or all of the parties hereto. No
amendment or modification of this Agreement shall be effective unless in writing
and signed by the party against whom enforcement is sought. MACESS may agree to
any amendment or supplement to this Agreement, or a waiver of any provision of
this Agreement, either before or after the approval of the MACESS Stockholders
is obtained (as contemplated by this Agreement) and without seeking further
stockholder approval, so long as such amendment, supplement or waiver does not
result in a decrease in the Preliminary Merger Exchange Ratio (as defined in the
Plan) or have a material adverse effect on the MACESS Stockholders. This
Agreement may not be terminated except as provided in Section 16.1.
16.9. Parties in Interest. This Agreement shall bind, benefit, and
be enforceable by and against MACESS, The Family Partnership, SunGard and Newco
and their respective successors and assigns, and the individual Principals and
their respective heirs, estates and personal representatives. No party shall in
any manner assign any of its rights or obligations under this Agreement without
the express prior written consent of the other parties.
16.10. Waivers. Except as otherwise expressly provided herein, no
waiver with respect to this Agreement shall be enforceable unless in writing and
signed by the party against whom enforcement is sought. Except as otherwise
expressly provided herein, no failure to exercise, delay in exercising, or
single or partial exercise of any right, power or remedy by any party, and no
course of dealing between or among any of the parties, shall constitute a waiver
of, or shall preclude any other or further exercise of, any right, power or
remedy.
16.11. Severability. If any provision of this Agreement is construed
to be invalid, illegal or unenforceable, then the remaining provisions hereof
shall not be affected thereby and shall be enforceable without regard thereto.
16.12. Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be an original
hereof, and it shall not be necessary in making proof of this Agreement to
produce or account for more than one counterpart hereof.
16.13. Section Headings. Section and subsection headings in this
Agreement are for convenience of reference only, do not constitute a part of
this Agreement, and shall not affect its interpretation.
16.14. References. All words used in this Agreement shall be
construed to be of such number and gender as the context requires or permits.
16.15. Controlling Law. THIS AGREEMENT IS MADE UNDER, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH OF
PENNSYLVANIA APPLICABLE TO AGREEMENTS MADE AND TO BE
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PERFORMED SOLELY THEREIN, WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF
LAW.
16.16. Jurisdiction and Process. In any action between or among any
of the parties, whether arising out of this Agreement or otherwise, (a) each of
the parties irrevocably consents to the exclusive jurisdiction and venue of the
federal and state courts located in the Commonwealth of Pennsylvania; (b) if any
such action is commenced in a state court, then, subject to applicable law, no
party shall object to the removal of such action to any federal court located in
the Commonwealth of Pennsylvania; (c) each of the parties irrevocably waives the
right to trial by jury; (d) each of the parties irrevocably consents to service
of process by first class certified mail, return receipt requested, postage
prepaid, to the address at which such party is to receive notice in accordance
with Section 16.4; and (e) the prevailing parties shall be entitled to recover
their reasonable attorney's fees and court costs from the other parties.
16.17. Post-Closing Actions by the Surviving Corporation. No action
taken by the Surviving Corporation after the Closing, with respect to this
Agreement, the Plan or the Transactions, including any waiver, consent or
approval, shall be effective unless approved in writing by a majority of the
Surviving Corporation's Board of Directors.
16.18. No Third-Party Beneficiaries. No provision of this Agreement
or the Plan is intended to or shall be construed to grant or confer any right to
enforce this Agreement or the Plan, or any remedy for breach of this Agreement
or the Plan, to or upon any Person other than the parties hereto, including, but
not limited to, any customer, prospect, supplier, employee, contractor,
salesman, agent or representative of MACESS.
16.19. Nature of Transactions. The parties intend that the Merger
shall constitute a pooling-of-interests under GAAP and a tax-free reorganization
under the Internal Revenue Code of 1986, as amended.
16.20. Stockholders Agent. Featheringill shall be constituted and
appointed as agent ("Stockholders Agent") for the Principals and the
Stockholders in accordance with the following:
(a) The Stockholders Agent shall have the full power and
authority, for and on behalf of each and all of the Principals and each and all
of the Stockholders, to give and receive notices and communications, to
authorize and object to deliveries to SunGard of Escrowed Stock (as defined in
the Escrow Agreement) in satisfaction of Indemnification Matters, to select
counsel for and administer the Defense of Indemnification Matters, to agree to,
negotiate, enter into settlements and compromises of, and comply with court
orders with respect to, such matters, and to take all actions necessary or
appropriate in the judgment of the Stockholders Agent for the accomplishment of
the foregoing.
(b) Notices or communications to or from the Stockholders Agent
shall constitute notices to or from each of the Principals or each of the
Stockholders, as applicable, and no separate or individual notices to each of
the Principals or each of the Stockholders shall be required for any purposes
with respect to this Agreement unless required by law.
(c) The Stockholders Agent, in his capacity as agent on behalf of
the Principals and Stockholders, shall not be liable for any act done or omitted
hereunder as
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Stockholders Agent while acting in good faith, and any act done or omitted
pursuant to the advice of counsel shall be conclusive evidence of such good
faith. The Principals or Stockholders, as appropriate, shall severally
indemnify the Stockholders Agent and hold him harmless against any loss,
liability or expense incurred without bad faith on the part of the Stockholders
Agent and arising out of or in connection with the performance of his duties and
exercise of his rights as agent hereunder.
(d) A decision, act, consent or instruction of the Stockholders
Agent, taken in the manner set forth herein or in the Escrow Agreement, shall
constitute a decision, act, consent or instruction of all Principals or
Stockholders, as applicable, and shall be final, binding and conclusive upon
each of the Principals or each of the Stockholders, as applicable, and SunGard
and the Escrow Agent each may rely upon any decision, act, consent or
instruction of the Stockholders Agent taken in such manner as being the
decision, act, consent or instruction of each and every of the Principals or
Stockholders, as applicable. The Escrow Agent and SunGard each are hereby
relieved from any liability to any person for any acts done by them in
accordance with such decisions, acts, consents and instructions of the
Stockholders Agent taken in such manner.
(e) If Featheringill is unable to act as Stockholders Agent, then
his designee from among the Principals shall serve as Stockholders Agent (or if
he is unable to appoint such designee, Ritchie shall serve as Stockholder
Agent), upon not less than ten (10) days' prior written notice to SunGard and
the Escrow Agent.
16.21. No Offers. THIS AGREEMENT DOES NOT CONSTITUTE AN OFFER TO
SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SHARES OF COMMON STOCK OR OTHER
SECURITIES OF SUNGARD. NO SUCH OFFER SHALL BE MADE OTHER THAN BY DELIVERY OF
THE INFORMATION STATEMENT-PROSPECTUS CONTEMPLATED HEREBY.
[BALANCE OF PAGE INTENTIONALLY LEFT BLANK]
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WITNESS THE DUE EXECUTION AND DELIVERY HEREOF AS OF THE DATE FIRST STATED
ABOVE.
MACESS Corporation
By:/s/ William W. Featheringill
---------------------------------------
William W. Featheringill,
Chairman and Chief Executive Officer
SunGard Data Systems Inc.
By:/s/ Richard C. Tarbox
---------------------------------------
Richard C. Tarbox,
Vice President-Corporate Development
SDS Merger Inc.
By:/s/ Lawrence A. Gross
---------------------------------------
Lawrence A. Gross,
Vice President
Principals:
/s/ William W. Featheringill /s/ Richard T. Harley
- ------------------------------------------ --------------------------------
William W. Featheringill Richard T. Harley
/s/ T. Alan Ritchie /s/ W. Sanders Pitman
- ------------------------------------------ --------------------------------
T. Alan Ritchie W. Sanders Pitman
/s/ John S. Williams /s/ Lawrence A. Stein
- ------------------------------------------ --------------------------------
John S. Williams Lawrence A. Stein
/s/ Thomas W. Claussen
- ------------------------------------------
Thomas W. Claussen
The Featheringill Family Partnership, Ltd.
By: /s/ William W. Featheringill, General Partner
----------------------------------------------
William W. Featheringill, General Partner
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SCHEDULES AND EXHIBITS
TO
AGREEMENT AND PLAN OF REORGANIZATION
Schedules Description
- --------- -----------
3.1 Corporate Information of MACESS.
3.2 Required Authorizations and Filings.
3.3A Stockholders.
3.3B Option Holders.
3.3C Warrants.
3.4 Bank Accounts.
3.5 Compliance with Laws.
3.6A Audited Financial Statements
(included in the Information Statement-Prospectus).
3.6B Unaudited Financial Statements as of August 31, 1995.
3.6C Accounting Policies Used by MACESS.
3.7A Assets.
3.7B Assets Necessary to Operate MACESS' Business
3.8 Obligations.
3.9 Operations Since August 31, 1995.
3.11 Tangible Property.
3.12 Real Property.
3.13 Software and Intangibles.
3.14 Contracts.
3.15A Employees.
3.15B Sales Representatives and Independent Contractors.
3.16 Employee Benefit Plans.
3.17 Prospects and Suppliers.
3.18 Taxes.
3.19 Proceedings and Judgments.
3.20 Insurance.
3.22 Related Party Transactions.
3.23 MACESS Brokerage Fees.
4.1 Principals' Ownership of Shares.
4.4 Principals' Brokerage Fees.
5.2 SunGard Consents Required.
5.6 SunGard Brokerage Fees.
Exhibits Description
- -------- -----------
Exhibit A Agreement and Plan of Merger (included as
Exhibit 2.2 to this Report).
Exhibit 11.3(c) Escrow Agreement.
Exhibit 14.5 Description of Software Company in which
Featheringill may invest.
Exhibit 15.5 Allocation of Indemnification Liability Percentages.
- --------------------------------------------------------------------------------
THE REGISTRANT AGREES TO FURNISH SUPPLEMENTALLY A COPY OF ANY OMITTED SCHEDULE
OR EXHIBIT TO THE COMMISSION UPON REQUEST.
<PAGE>
EXHIBIT 2.2
AGREEMENT AND PLAN OF MERGER
Parties: MACESS Corporation
an Alabama corporation ("MACESS")
402 Office Park Drive, Suite 150
Birmingham, AL 35223
SunGard Data Systems Inc.
a Delaware corporation ("SunGard")
1285 Drummers Lane, Wayne, Pennsylvania 19087
SDS Merger Inc.
an Alabama corporation ("Newco")
1285 Drummers Lane, Wayne, Pennsylvania 19087
Date: September 29, 1995
Background: Newco is a wholly-owned subsidiary of SunGard. MACESS, SunGard,
Newco and the principal equity owners of MACESS have entered into an Agreement
and Plan of Reorganization, dated this date (the "Reorganization Agreement"),
that contemplates the consolidation and merger of Newco with and into MACESS
(the "Merger") in accordance with the provisions of the Reorganization Agreement
and the provisions of this Agreement and Plan of Merger (this "Plan").
Now, therefore, in consideration of the mutual agreements contained herein
and subject to the satisfaction of the terms and conditions set forth herein and
in the Reorganization Agreement, the parties hereto, intending to be legally
bound, agree as follows:
1. Merger. On the Effective Date (as defined below), Newco shall be
consolidated and merged with and into MACESS in accordance with the provisions
of this Plan and in compliance with the Alabama Corporation Law and any other
applicable corporate laws (the "Corporation Laws"), and the Merger shall have
the effect provided for in the Corporation Laws. MACESS (sometimes referred to
as the "Surviving Corporation") shall be the surviving corporation of the Merger
and shall continue to exist and to be governed by the laws of the State of
Alabama. The corporate existence and identity of MACESS, with its purposes and
powers, shall continue unaffected and unimpaired by the Merger, and MACESS shall
become a wholly-owned subsidiary of SunGard after the Effective Date. On the
Effective Date, MACESS shall succeed to and be fully vested with the corporate
existence and identity of Newco, and the separate corporate existence and
identity of Newco shall cease.
2. Name. The name of the Surviving Corporation shall be "MACESS
Corporation."
3. Charter. Immediately after the Merger, the Certificate of
Incorporation of the Surviving Corporation shall be that of MACESS immediately
before the Merger.
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4. Bylaws. Immediately after the Merger, the Bylaws of the Surviving
Corporation shall be those of MACESS immediately before the Merger.
5. Directors. Immediately after the Merger, the directors of the
Surviving corporation shall be the following persons, who shall serve in
accordance with the Bylaws of the Surviving Corporation:
Kenneth R. Adams
Lawrence A. Gross
Michael J. Ruane
6. Officers. Immediately after the Merger, the officers of the Surviving
Corporation shall be the following persons, who shall serve in accordance with
the Bylaws of the Surviving Corporation:
Kenneth R. Adams ....... Chairman, Chief Executive Officer
T. Alan Ritchie ........ President
W. Sanders Pitman ...... Vice President
Lawrence A. Gross ...... Assistant Vice President, Secretary
Michael J. Ruane ....... Assistant Vice President, Assistant Secretary
Andrew P. Bronstein .... Assistant Vice President, Assistant Secretary
7. Conversion of Newco Stock. On the Effective Date, each share of the
total of 1,000 shares of common stock of Newco, $1.00 par value per share,
issued and outstanding immediately before the Effective Date shall, by virtue of
the Merger and without any action on the part of the holder thereof, be
automatically converted into and become one share of voting common stock, $0.002
par value per share, of the Surviving Corporation. It is the intention of the
parties that, immediately after the Merger, SunGard shall own all of the issued
and outstanding capital stock of the Surviving Corporation.
8. Conversion of MACESS Stock On the Effective Date, each share of
capital stock of MACESS, including 1,430,100 shares of voting common stock,
$0.002 par value per share, and 5,720,400 shares of Class A non-voting common
stock, $0.002 par value per share, issued and outstanding immediately before the
Effective Date shall, by virtue of the Merger and without any action on the part
of the holder thereof, be automatically converted into and become 0.2783022 (the
"Preliminary Merger Exchange Ratio") shares of common stock of SunGard, $0.01
par value per share ("SunGard Stock"), subject to the possible adjustment
described in Section 9 of this Plan.
9. Possible Adjustment due to Recapitalization. If, between the date of
this Plan and the Effective Date, there is a change in the number of issued and
outstanding shares of SunGard Stock as a result of a stock split, reverse stock
split, stock dividend, reclassification, exchange of shares or similar
recapitalization, then the Preliminary Merger Exchange Ratio shall be
appropriately adjusted. The Preliminary Merger Exchange Ratio shall not be
adjusted as a result of any other changes in the number of issued and
outstanding shares of SunGard Stock, such as changes resulting from acquisitions
or offerings or changes resulting from exercises of stock options, purchases or
awards of stock, or similar transactions under SunGard's stock option, purchase
and award plans. The Preliminary Merger Exchange Ratio, after adjustment in
accordance with this Section 9 (if any), shall be referred to as the "Final
Merger Exchange Ratio."
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10. No Fractional Shares. No fractional shares of SunGard Stock shall be
issued as a result of the Merger. In lieu of the issuance of fractional shares,
the number of shares of SunGard Stock to be issued to each stockholder of MACESS
in accordance with this Plan shall be rounded off to the nearest whole number of
shares of SunGard Stock.
11. MACESS Stock held by MACESS. On the Effective Date, any shares of
MACESS Stock that are held by MACESS (as treasury shares) immediately before the
Effective Date shall, by virtue of the Merger and without any action on the part
of the holder thereof, be automatically canceled.
12. Exchange Procedures. SunGard shall designate its transfer agent to
act as the "Exchange Agent" under this Plan. As soon as is practicable after
the Effective Date, SunGard or the Exchange Agent shall mail, to each record
holder of an outstanding certificate that immediately before the Effective Date
represented shares of MACESS Stock, instructions for use in effecting the
surrender of such certificate to the Exchange Agent. Upon the surrender of such
certificate to the Exchange Agent in accordance with such instructions, the
Exchange Agent shall exchange such certificate for (a) a new certificate
representing 90% of such number of shares of SunGard Stock into which the shares
of MACESS Stock represented by such certificate have been converted in
accordance with this Plan ("Closing Stock"), which shall be promptly delivered
to the holder, and (b) a new certificate for the balance of such number of
shares of SunGard Stock into which the share of MACESS Stock represented by such
certificate have been converted in accordance with this Plan ("Escrow Stock"),
which shall be held and distributed in escrow in accordance with the terms of
the Escrow Agreement by and among MACESS, SunGard, Newco and the non-dissenting
stockholders of MACESS and dated as of the date hereof. If applicable, such
certificates shall be accompanied by any distributions due with respect to
shares of SunGard Stock that were paid to SunGard's stockholders of record as of
a date between the Effective Date and the date of distribution of either the
certificate representing the Closing Stock or the certificate representing the
Escrow Stock. Until surrendered in accordance with the foregoing, each
outstanding certificate that immediately before the Effective Date represented
shares of MACESS Stock shall be deemed to evidence ownership of the number of
shares of SunGard Stock into which the shares of MACESS Stock represented by
such certificate have been converted in accordance with this Plan, subject to
the escrow requirement described above; provided, however, that any such
certificate that is not properly submitted for exchange to SunGard or the
Exchange Agent within three years after the Effective Date shall no longer
evidence ownership of shares of Closing Stock or Escrow Stock and all rights of
the holder of such certificate, as a stockholder of SunGard with respect to the
shares previously evidenced by such certificate, shall cease.
13. Dissenter's Rights. Stockholders of MACESS shall be entitled to
exercise the rights of dissenting stockholders with respect to the Merger and
this Plan, as provided in the Corporation Laws. SunGard shall be responsible
for paying all cash amounts due to dissenting stockholders of MACESS.
14. Effective Date. As used in this Plan, the "Effective Date" shall mean
the date upon which this Plan and a proper Articles of Merger for the Merger
have been duly signed and filed with the proper official of the State of
Alabama.
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15. Entire Understanding. This Plan, together with the Reorganization
Agreement (and the Exhibits and Schedules thereto), states the entire
understanding among the parties hereto with respect to the subject matter hereof
and supersedes all prior oral and written communications and agreements, and all
contemporaneous oral communications and agreements, with respect to the subject
matter hereof. No amendment or modification of this Plan, and no waiver of any
provision of this Plan, shall be effective unless in writing and signed by the
party against whom enforcement is sought. MACESS may agree to any amendment or
supplement to this Plan, or a waiver of any provision of this Plan, either
before or after the approval of MACESS's stockholders is obtained (as
contemplated by the Reorganization Agreement) and without seeking further
stockholder approval, so long as such amendment, supplement or waiver does not
result in a decrease in the Preliminary Merger Exchange Ratio or have a material
adverse effect on MACESS's stockholders. The obligations of the parties under
this Plan shall be subject to all of the terms and conditions of the
Reorganization Agreement. If the Reorganization Agreement is terminated in
accordance with its terms, then this Plan shall simultaneously terminate, and
the Merger shall be abandoned without further action by the parties hereto.
16. Parties in Interest. This Plan shall bind, benefit and be enforceable
by and against the parties hereto and their respective successors and assigns.
No party hereto shall in any manner assign any of its rights or obligations
under this Plan without the express prior written consent of the other parties.
Nothing in this Plan or the Reorganization Agreement is intended to confer, or
shall be deemed to confer, any rights or remedies upon any persons other than
the parties hereto and their respective stockholders and directors.
17. Severability. If any provision of this Plan is construed to be
invalid, illegal or unenforceable, then the remaining provisions hereof shall
not be affected thereby and shall be enforceable without regard thereto.
18. Counterparts. This Plan may be executed in any number of
counterparts, each of which when so executed and delivered shall be an original
hereof, and it shall not be necessary in making proof of this Plan to produce or
account for more than one counterpart hereof.
19. Section Headings. Section and subsection headings in this Plan are
for convenience of reference only, do not constitute a part of this Plan, and
shall not affect its interpretation.
20. References. All words used in this Plan shall be construed to be of
such number and gender as the context requires or permits.
21. Controlling Law. This Plan is made under, and shall be construed and
enforced in accordance with, the laws of the State of Alabama applicable to
merger agreements made and to be performed solely therein, without giving effect
to principles of conflicts of law.
[BALANCE OF PAGE INTENTIONALLY LEFT BLANK]
A-4
<PAGE>
In testimony whereof, each undersigned corporation has caused this Agreement
and Plan of Merger to be signed by a duly authorized officer and its corporate
seal, duly attested by another such officer, to be hereunto affixed, as of the
date first stated above.
MACESS Corporation
By:/s/ William W. Featheringill
------------------------------------
William W. Featheringill,
Chairman and Chief Executive Officer
SunGard Data Systems Inc.
By:/s/ Richard C. Tarbox
------------------------------------
Richard C. Tarbox,
Vice President-Corporate Development
SDS Merger Inc.
By:/s/ Lawrence A. Gross
------------------------------------
Lawrence A. Gross,
Vice President
A-5
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the use of our report dated May 31, 1995, with respect to the
financial statements of MACESS Corporation included in the Current Report (Form
8-K) of SunGard Data Systems Inc. dated October 6, 1995.
We also consent to the incorporation by reference in the Registration Statements
(Form S-8 Nos. 33-6425, 33-14984, 33-33602, 33-42345, 33-69650 and 33-58515) of
SunGard Data Systems Inc. of our report dated May 31, 1995, with respect to the
financial statements of MACESS Corporation included in the Current Report (Form
8-K) of SunGard Data Systems Inc. dated October 6, 1995.
/s/ Ernst & Young LLP
Birmingham, Alabama
October 6, 1995
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITORS
CONSENT OF DELOITTE & TOUCHE LLP
We consent to the incorporation by reference in Registration Statement Nos.
33-6425, 33-14984, 33-33602, 33-42345, 33-69650 and 33-58515 of SunGard Data
Systems Inc. on Forms S-8 of our report dated May 17, 1995 (September 23, 1995
as to Note 8) on the financial statements of Renaissance Software, Inc. for the
year ended March 31, 1995, appearing in this Form 8-K of SunGard Data Systems
Inc.
DELOITTE & TOUCHE LLP
San Jose, California
October 6, 1995
14
<PAGE>
EXHIBIT 23.3
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in this Current Report on Form 8-K and
incorporation by reference into SunGard Data Systems Inc.'s Registration
Statements on Form S-8 (Registration Nos. 33-6425, 33-14984, 33-33602, 33-42345,
33-69650 and 33-58515) of our report, which includes explanatory paragraphs
relating to the acquisition as of August 31, 1995 and to the change in its
method of accounting for income taxes to conform with Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes" in the year ended
December 31, 1993, dated August 29, 1995, on our audits of the financial
statements of Intelus Corporation as of December 31, 1994 and 1993 and for the
years then ended.
Coopers & Lybrand L.L.P.
Washington, D.C.
October 6, 1995
<PAGE>
Exhibit 99.1
[LETTERHEAD OF SUNGARD APPEARS HERE]
News...
For Immediate Release:
October 2, 1995
Contact:
Michael J. Ruane Nancy R. Kyle Internet
(610) 341-8709 (610) 341-8171 www.sungard.com
SUNGARD DATA SYSTEMS INC.
ANNOUNCES NEW LINE OF BUSINESS AND MANAGEMENT CHANGES
Wayne, PA -- SunGard Data Systems Inc. announced today the acquisition of two
healthcare information systems companies that represent a new line of business
for the Company. On August 31, 1995, SunGard completed the acquisition of
Intelus Corporation of Rockville, Maryland. On September 29, 1995, SunGard
entered into a definitive agreement to acquire MACESS Corporation of Birmingham,
Alabama. The acquisition of MACESS is expected to be completed in the fourth
quarter of 1995.
SunGard also announced that these two acquisitions will form the nucleus of a
new business group called SunGard Technology Systems, to be headed by Kenneth R.
Adams. Mr. Adams has been the chief executive officer of SunGard's Recovery
Services Group since 1988. Before that he headed SunGard's trust accounting
subsidiary. Michael F. Mulholland, president and chief operating officer of
SunGard Recovery Services Inc., will succeed Mr. Adams as head of the Recovery
Services Group. Mr. Mulholland, age 46, has been employed by SunGard since 1987
in various executive capacities.
Both MACESS and Intelus provide work-flow management and document imaging
systems to the healthcare industry. The primary target market for MACESS' I-
MAX/(TM)/ product is managed healthcare providers, or HMO's. With approximately
forty customers, including the largest managed healthcare organization in the
United States, MACESS is a leading provider in the relatively new application of
work-flow and imaging systems for the healthcare industry. Intelus, whose
primary target market is large healthcare institutions, provides systems to
automate medical records processing for over eighty customers. Intelus
currently is completing the first installation of its newest product, ChartFlo
2000 EMR/(R)/, an electronic medical record system based on work-flow and
imaging technology. In addition to a primary emphasis on healthcare
applications, these products are also sold to banking and other financial
services markets.
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[LOGO OF SUNGARD APPEARS HERE]
<PAGE>
James L. Mann, chairman and chief executive officer of SunGard, said, "We are
delighted that we have been able to establish an initial presence in the
healthcare information systems market, which we have identified as having
attractive growth prospects. MACESS and Intelus are both fine companies, with
leading products and market positions in a relatively new and exciting
healthcare application area. We believe that both of these acquisitions will
contribute to earnings per share in 1996 and have significant potential for
future growth. As has been our practice in our investment support systems
business, we intend to make additional acquisitions of other strong computer
services companies in the healthcare market. The fact that both MACESS and
Intelus have targeted financial institutions as a secondary market fits well
with existing initiatives where SunGard has strong market presence, which should
enhance the combined companies' growth prospects in these vertical markets."
Total consideration for the two transactions will be approximately 2.8 million
shares. Each transaction will be accounted for as a pooling-of-interests.
Combined revenues of MACESS and Intelus for the first six months of 1995 were
approximately $13.6 million. Except for merger costs, neither acquisition is
expected to have a material effect on SunGard's financial results in 1995.
SunGard's business is computer service and application software. The Company is
the only large specialized provider of proprietary investment support systems,
is the pioneer and a leading provider of comprehensive computer disaster
recovery services, and also provides healthcare information systems. Its common
stock is reported on The Nasdaq Stock Market and the London Stock Exchange under
the symbol SNDT.
# # #
This statement is available in the United
Kingdom from SunGard Capital Markets Inc.,
10 Devonshire Square, London, EC2M 4YP
<PAGE>
Exhibit 99.2
[LETTERHEAD OF SUNGARD APPEARS HERE]
News...
For Immediate Release:
September 28, 1995
Contact:
Michael J. Ruane Nancy R. Kyle Internet
(610) 341-8709 (610) 341-8171 www.sungard.com
SUNGARD DATA SYSTEMS INC.
TO ACQUIRE RENAISSANCE SOFTWARE INC.
Wayne, PA -- SunGard Data Systems Inc. announced today that it has entered into
a definitive agreement to acquire Renaissance Software Inc. for approximately
1,500,000 shares of SunGard common stock, subject to adjustment. The
acquisition, which will be accounted for as a pooling-of-interests, is expected
to close in the fourth quarter of 1995. The transaction is not expected to have
a material impact on SunGard's financial results in 1995.
Renaissance, based in Los Altos, California, is a world leader in the growing
software applications market supporting large banks and other market makers that
trade over-the-counter interest rate derivatives. Renaissance, founded in 1989,
pioneered the use of object-oriented programming techniques in providing UNIX-
based systems focused on risk management and integrated front- to back-office
processing. With the acquisition of Renaissance, SunGard is reorganizing its
trading and risk management businesses under the SunGard Trading Systems Group,
formerly known as the SunGard Capital Markets Group. In addition to
Renaissance, other subsidiaries to be included in this group are SunGard Capital
Markets Inc., SunGard Futures Systems Inc., Front Capital Systems AB and
Prosoftia AB. Evrard Van Hertsen will continue as chief executive officer of
Renaissance, reporting to Cristobal I. Conde, chief executive officer of the
group.
James L. Mann, chairman and chief executive officer of SunGard Data Systems Inc.
commented, "Renaissance is one of the world's premier providers of risk
management and derivatives trading software systems. The acquisition of the
company is consistent with SunGard's strategy of growth through the acquisition
of successful, complementary businesses. Renaissance will extend SunGard's
global preeminence in supplying and supporting the widest range of advanced
systems for trading, managing and controlling derivative instruments."
Mr. Van Hertsen stated, "Joining SunGard is a very positive step for Renaissance
and its clients and employees. SunGard understands Renaissance's business and
has, through internal development and acquisition, demonstrated an ability to
sustain successful long-term product development and marketing programs."
SunGard's business is computer service and application software. The Company is
the only large specialized provider of proprietary investment support systems
and is the pioneer and a leading provider of comprehensive computer disaster
recovery services. Its common stock is reported on The Nasdaq Stock Market and
the London Stock Exchange under the symbol SNDT.
# # #
This statement is available in the United
Kingdom from SunGard Capital Markets Inc., 10
Devonshire Square, London, EC2M 4YP
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[LOGO OF SUNGARD APPEARS HERE]
